c a s h c o n v e r t e r s i n t e r n at i o n a l l i m i t e d
c a s h c o n v e r t e r s
i n t e r n a t i o n a l l i m i t e d
2016
A B N 3 9 0 6 9 1 4 1 5 4 6
w w w . c A s h c o N v e r t e r s . c o m
c a s h c o n v e r t e r s i n t e r n at i o n a l l i m i t e d
c a s h c o n v e r t e r s i n t e r n at i o n a l l i m i t e d
A B o u t c A s h c o N v e r t e r s
Cash Converters International Limited is an ASX listed company
with leading Australian and international franchise, second
hand goods and financial services businesses.
The Company has a worldwide network of 737 stores in 21
countries. In Australia, there are more than 150 Cash Converters
outlets with over 2,500 employees.
The core business of Cash Converters is the ownership and
franchising of retail and financial services stores.
The Company has built unique brand strength in Australia and
internationally. This has enabled it to successfully position its
corporate and franchised stores as leading alternative retail and
financial services outlets.
Cash Converters has also successfully developed online
channels for retailing and financial services. The revenue of
these channels is growing rapidly through the attraction of new
customers, and increased sales to existing clients.
Cash Converters strategy is to maximise the value of its brand
and store network through a focus on high return businesses.
c o r p o r A t e d i r e c t o r y
d i r e c t o r s
Stuart Grimshaw
Chairman
Peter Cumins
Managing Director
Reginald Webb
Non-Executive Director
Lachlan Given
Non-Executive Director
Kevin Dundo
Non-Executive Director
c o m pA N y s e c r e tA r y
Ralph Groom
r e g i s t e r e d o f f i c e
Level 18, Citibank House
37 St George’s Terrace
Perth WA 6000
Tel: +61 8 9221 9111
w e B s i t e
www.cashconverters.com
s h A r e r e g i s t r A r
Australia:
Computershare Investor
Services Pty Ltd
Level 11
172 St Georges Terrace
Perth WA 6000
Australia
Tel:
1300 850 505
A u d i t o r s
Deloitte Touche Tohmatsu
Brookfield Place, Tower 2
123 St Georges Terrace
Perth WA 6000
Australia
s t o c k e x c h A N g e
Australian Securities Exchange
Level 40, Central Park
152 - 158 St George’s Terrace
Perth WA 6000
Australia
ASX code: CCV
__________________________________________
1
Highlights
__________________________________________
Chairman’s
2
Report
__________________________________________
Managing Director’s
Report
4
__________________________________________
Financial Results
Summary
6
__________________________________________
Review of
Operations
8
__________________________________________
Corporate Strategic Direction 10
__________________________________________
Directors’ Profiles 11
__________________________________________
Financial Report 13
__________________________________________
c o N t e N t s
h i g h l i g h t s
•
•
•
Strategy reset and restructuring to build on Company
strengths
Underlying profit growth
High brand recognition and customer satisfaction
f i N A N c i A l r e s u l t s
In 2015/16 Cash Converters International Limited’s underlying profit
(normalised EBITDA) rose 14.5 per cent to $71.9 million. This was earned
on higher revenue of $379.3 million.
These increases were achieved while the Company began implementation
of a new corporate strategy and needed to manage major sectoral and
regulatory change in Australia and the United Kingdom.
Over $33 million in restructuring costs were booked for the year. After
these and other significant ‘one off’ costs, the 2016 full year net loss was
$5.3 million compared with a net loss of $21.5 million previously.
A u s t r A l i A
Continued to perform well. Core operations produced $72.3 million
underlying EBITDA profit.
u N i t e d k i N g d o m
Operational efficiency and cost reduction efforts successful. Latest
underlying loss of $4.0 million compared with $9.0 million previously.
o N l i N e
Online channels are delivering a growing volume of sales. In
Australia, Webshop sales were up 38 per cent and online personal
loans rose 34 per cent. In the United Kingdom online sales rose over
34 per cent.
1
c h A i r m A N ’ s r e p o r t
This has been a year of challenges for the Company and has clearly
tested the patience and commitment of shareholders. After trading as
high as 66.5 cents per share after our half yearly result, the impact of a
number of external actions resulted in the reduction of the share price
to as low as 29.5 cents per share in September 2016. We do not believe
this position reflects the inherent value in the business, and management,
and your Board, are working tirelessly to ensure the unrealised value is
achieved as rapidly as possible in a responsible manner.
We are transparent on pricing which is governed by regulatory
2.
and legislative conditions, unlike services provided by other financial
institutions to other customer segments. We believe we will be the most
compliant provider of financial services to our customers and will work
closely with the regulatory bodies to ensure the appropriate outcomes
for the customer and these stakeholders. We must ensure that we create
sustainable profits and this can only be achieved by respecting the
interests of all parties and operating in a responsible manner;
As disclosed at last year’s AGM, the decision to review and reset the
strategy of Cash Converters was the first step in our Company’s
transformation into a financial services leader, better aligned with
ongoing market and regulatory changes. The early pace and efficiency
of the implementation of the strategy announced in March 2016 has
been good. However, this strategic review was overtaken by the impacts
of a new Class Action against the Company in Queensland. Parallel
to that, the Company has been cooperating with an investigation by
ASIC into responsible lending practices in relation to its small amount
credit contracts. The Company is engaged in negotiations aimed at an
Enforceable Undertaking with ASIC and has provisioned for a payment of
$12.5 million as announced to the ASX on 26 August 2016.
An integral part of our DNA is to serve a large number of customers who
are forgotten by banks. Banks have deliberately shied away from this
growing customer segment and while the financial services providers
to this customer segment adhere to the requirements as established
by Federal legislation, it appears the banks not only refuse credit to
this growing customer segment but have also determined that we are
persona non grata as they refuse to accept that this customer base has
any relevance to the wider economy. We have seen this first hand with
the refusal of banks to even allow us to open transactional facilities with
them despite our legitimacy as provided under regulatory and legislative
principles. It is somewhat disappointing that the concentration of the
banking industry dictates which industries can survive in a national
environment and which cannot.
We believe that investing in technology and analytics can
3.
only enhance our underwriting capabilities. The continued investment
in the online channels, backed by flexible technology, will also develop
economies of scale that will prove beneficial to shareholder returns;
The demand for credit from this non-prime market will not
4.
disappear. There is much discussion around how the provision of credit to
this segment should be constrained and to a degree eliminated. However,
demand for credit from this segment is not disappearing and will not
disappear. These customers demand immediacy of access to credit and
this is driving your Company to continually innovate in the provision of
credit services.
We are proud of the way we serve these customers and are committed
to a course of excellence in service that will reinforce our standing as the
preferred provider of credit to this customer segment.
The Company has some way to go before the value within our unique
portfolio of businesses is fully realised. Yet, there is no doubt strategic
clarity and disciplined execution are prerequisites for business stability
and earnings predictability.
In the United Kingdom Cash Converters has successfully returned to
operating as a master franchise. This will maximise the returns received
from the capital invested there and enable a return to profitability in 2017.
The potential final implications of this approach being driven firmly by the
banking industry do not reflect what we believe are core principles that
drive our business:
In Australia, the Company has addressed issues with its vehicle finance
business model, assessed the long term viability of some segments of
the Australian small amount credit contract (SACC) market and is set to
enter the medium amount credit contract market (MACC) in late 2016.
1.
We respect our customers and without us they have to borrow
from friends and families or worse the bottom of the shadow finance
industry. Borrowing from these sources is firstly embarrassing and further
not reflective of the independence and respect sought by this customer
base. Shrinking the avenues of opportunity for credit for these customers
is not the correct approach;
The strategy driving the transformation has been aptly described by
Cash Converters as ‘building on our strengths’. The many challenges
the Company has faced recently can distract from the reality that it has
unmatched brand and business strengths.
2
cash converters international limited Cash Converters is one of a select few Australian companies that has
reshaped a traditional business - in our case, the retailing of second
hand goods - and then leveraged that success to build a nationally and
internationally recognised brand.
we accept our Company will need to continually improve our compliance
systems and procedures to keep pace with regulatory change and
expectations.
Today, our Company has over 730 franchised and corporate stores
operating in 21 countries. During the past three decades, Cash Converters
innovations in second hand goods’ retailing are now industry standard.
Corporate transformations inevitably require substantial cultural change
and the Board acknowledges the efforts of Cash Converters’ people in
delivering early gains for the Company’s new strategy and committing to
further progress.
Similarly, our Company has helped build the small amount lending sector
in Australia. This is a sector that is not without significant operational,
regulatory and reputational challenges - yet it still provides an essential
financial service each year for nearly one million consumers in Australia.
Retaining the loyalty of our customers and shareholders is central to our
ongoing success and will continue to be a primary objective of Cash
Converters’ ongoing transformation.
The continued high levels of customer loyalty and satisfaction recorded
in the service quality surveys we conduct each year are confirmation of
the value our customers assign to the various lending products Cash
Converters provides.
We remain confident in our ability to provide responsible and innovative
solutions to our non-prime customers and continue to recognise them as
important members of the success of your Company. While the financial
year behind us has been tough we remain confident that we are building
a sustainably successful Company.
Our strategy is to build on the strengths of our brand, store network and
financial services product range. We will invest for sustainable market
leadership and profitable growth in Australia and operate solely as a
master franchise in the United Kingdom.
During the past year the Company’s earnings were impacted by planned
restructuring costs and unforseen regulatory and legal expenses. While
underlying profit was higher at $71.9 million, the full year net loss was
$5.3 million - an improvement on the previous year net loss of $21.5
million – however still a loss.
Stuart Grimshaw
Chairman
The Board has declared a final dividend of 1.0 cent per share bringing the
total dividend for the year to 3.0 cents fully franked.
The transformation of Cash Converters is at an early stage; however, we
are confident the changes underway and planned for the coming year will
return the Company to profitable growth.
from performance
We understand that market credibility comes
consistency and our strategic focus includes increased attention to risk
management.
It is clear we need to work more closely in Australia with government
and regulators to achieve a better balance between financial inclusion,
responsible lending and corporate profitability objectives. As part of that
3
c a s h c o n v e r t e r s i n t e r n at i o n a l l i m i t e d
m A N A g i N g d i r e c t o r ’ s r e p o r t
Our full year results are creditable given we have been concurrently
managing the financial performance of our various businesses and the
execution of a new corporate strategy.
We have also needed to adapt to substantial sectoral and regulatory
change in Australia and the United Kingdom.
Cash Converters’ 2016 full year revenue and underlying profit were both
higher than the previous year. Australia continued to be the standout
performer with an underlying profit of just over $72 million and good
contributions across all key business segments. The work begun last
year to increase efficiency and reduce costs in the United Kingdom
resulted in an underlying loss of $4.1 million - less than half the loss of
the previous year.
The unique market positioning of our corporate and franchise store
networks has facilitated the necessary strategic changes they required
- primarily, in the United Kingdom. We have been able to efficiently
transition to a master franchise business model and introduce a new
organisational structure there. With the closure of our lending book by
the end of 2016, the United Kingdom will operate profitably in 2017.
In Australia we have changed the strategy and business model of our
vehicle finance business. We closed Carboodle and started Green
Light Auto Finance marketing a principal and loan interest product
tailored to current motor industry requirements. Initial demand has been
encouraging and the loan book already stands at $3.3 million, since the
product launch in March 2016.
The reshaping of our financial services operations in Australia has also
involved our reviewing the operational complexity and service delivery
costs of some of our small amount credit contract (SACC) customer
segments. We will continue to be active in the overall SACC sector.
However, we will focus on the segments where we believe we can better
meet customer, regulator and company risk/return requirements.
This is not a matter specific to Cash Converters - it is a wider social,
political and business issue. National Credit Providers Association
research shows two million applications were received from new and
existing customers for SACC loans in 2014 -15 and nearly $670 million
in credit advanced. With major banks having no interest in the sector,
there is obviously substantial consumer demand that needs to be met.
Our financial services strategy is to leverage our brand strength to remain
active in the SACC market while progressively building our presence in
medium amount credit contract (MACC) lending and vehicle finance.
MACC loans range from $2K to $5K and we will begin marketing in
November 2016.
4
4
Another key aspect of our strategy is channel and revenue stream diversification to offset the full earnings
impact of market volatility and structural change. Our successful investment in online facilities is an example with
Webshop sales up 38 per cent and online personal loans up 34 per cent in Australia; and online sales rising over
34 per cent in the United Kingdom.
We have a 25 per cent interest in the Cash Converters master franchise in New Zealand that is at a relatively early
stage in terms of strategic diversification and earnings potential. We believe there are good prospects for growth
and additional corporate and franchised stores are planned for 2017.
Our priorities for the year ahead will be to continue to efficiently execute our strategy and complete the associated
restructuring of our organisation and businesses. We will need to continue to manage our planned corporate
initiatives and broader industry sectoral change. Government and regulatory requirements in regard to responsible
lending in Australia are becoming clearer and we are better placed to market small and medium amount loans.
Our Company is focussed on improvement in three broad areas: strategic clarity; comprehensive and effective
governance and risk management; and effective stakeholder engagement. These are the prerequisites for the
conduct of our business in a responsible manner.
Our profit outlook for 2017 reflects the reality that we will be in the second year of a corporate transformation
we have planned to run for a full three years. We expect a 2017 net profit in the range of $20 to $23 million.
Importantly, we have the balance sheet strength to finance our growth initiatives and underpin the structural and
business segment changes we need to make.
The capabilities and commitment of my colleagues throughout Cash Converters, as well as the ongoing support
of our franchisees, have been instrumental in our achievements during the past year. I thank them and look
forward to future collective success.
Peter Cumins
Managing Director
5
5
f i N A N c i A l r e s u l t s s u m m A r y
SEGMENT REVENUES (I)
SEGMENT RESULTS
2016
$
2015
$
2016
$
2015
$
Franchise operations
22,995,799
18,951,232
7,270,483
5,965,054
Store operations
- continuing (iv)
- discontinued
140,443,673
130,068,174
17,419,605
19,705,552
56,278,291
60,254,507
(4,388,217)
(4,698,908)
Financial services – administration (iv)
14,247,529
14,728,956
8,135,335
8,262,594
Financial services – personal loans
- continuing (iv)
- discontinued
Vehicle leasing
144,644,225
138,352,217
57,402,016
30,002,676
18,188,783
25,972,345
(344,045)
(6,006,045)
8,146,368
8,731,185
(4,598,838)
(2,687,167)
Inter-segment elimination of revenues
(25,669,441)
(24,374,301)
-
-
EBITDA totals (ii)
379,275,227
372,684,315
80,896,339
50,543,756
Head office – UK & Australia (iii)
51,345
2,208,324
(60,543,234)
(41,422,107)
EBITDA totals after head office costs (ii)
379,326,572
374,892,639
20,353,105
9,121,649
Depreciation and amortisation
Impairment
Finance costs
Income tax expense
(Loss) after income tax
Loss attributable to non-controlling interest
(Loss) attributable to members of Cash Converters
International Limited
(8,441,154)
(9,038,058)
(2,247,551)
(7,587,315)
(9,659,027)
(9,072,074)
(5,277,453)
(5,109,292)
(5,272,080)
(21,685,090)
98
201,372
(5,271,982)
(21,483,718)
(i)
(ii)
(iii)
(iv)
Segment revenues include external interest revenue
EBITDA is earnings before interest, tax, depreciation, amortisation and impairment (non IFRS unaudited measure)
2016 segment result includes the UK restructure costs of $22,667,967 and compliance provision of $12,500,000; 2015 segment
result includes class action settlement expense of $23,000,000
2015 segment results includes contract termination expense of $824,670 in store operations, $4,256,000 in financial services –
administration and $24,547,600 in financial services – personal loans
6
cash converters international limited A summary of normalised results is presented below:
Statutory EBITDA including controlling interest
Add losses attributable to non-controlling interest
EBITDA attributable to members of Cash Converters International Limited
Normalisation adjustments
Restructure costs
Other costs outside normal operating costs
Compliance provision
Class action legal fees
Stamp duty on store acquisitions
Ausgroup provision
Kentsleigh agency termination payment
Termination fees – bank facility (GLA)
NSW class action settlement provision
Redundancy costs – CCUK
EBITDA normalised
2016
$
20,353,105
98
20,353,203
33,331,472
3,246,299
12,500,000
2,441,962
-
-
-
-
-
-
2015
$
9,121,649
201,372
9,323,021
-
-
-
1,844,903
388,663
(2,927,229)
29,628,270
700,000
23,000,000
787,751
71,872,936
62,745,379
7
r e v i e w o f o p e r A t i o N s
c h A N N e l d i v e r s i t y
Cash Converters has a variety of revenue streams that continue to provide
solid earnings. This channel diversity assists our ability to strategically
respond to market and regulatory changes.
Another unique advantage our Company continues to leverage is the
inherent strength of its brand recognition and associated customer
loyalty and satisfaction. Cash Converters engages independent research
annually with the resulting brand awareness and customer satisfaction
levels being amongst the highest in the financial services sector.
In the latest financial year ending 30 June 2016, the total corporate store
(continuing) and franchise segments contributed a steady $25.4 million
to the normalised EBITDA total. Total store (continuing) and franchise
operations revenues were higher at $140.4 million (2015: $130.1 million)
and $22.9 million (2015: $18.9 million) respectively.
(continuing) contributed over $65.9 million
in
Financial services
normalised EBITDA compared with $67.1 million the previous year. Total
revenue from personal loans (continuing) was at $144.6 million (2015:
$138.4 million).
A u s t r A l i A
Cash Converters continues to have a leading presence in short term
lending. The financial services contribution to Australia’s total underlying
profit was $64.8 million (2015: $66.0 million). Corporate stores (continuing)
and franchise operations contributed $21.8 million compared with $22.5
million previously.
Green Light Auto Finance began operations in March providing a principal
and loan interest product. The loan book was $3.3 million by 30 June
2016.
u N i t e d k i N g d o m
The operational focus in the United Kingdom during the past year has
been to deliver the benefits of a cost reduction and efficiency improvement
program. The results were evident from a significantly reduced underlying
loss of $4.1 million (2015: loss of $9.0 million).
Franchise operations reported an underlying profit of $3.0 million - a
pleasing result given Cash Converters’ transition to a master franchise
business model.
o N l i N e c h A N N e l s
Cash Converters’ ongoing investment in online channels continues
to attract new customers as well as increase sales for corporate and
franchise stores.
8
cash converters international limited Webshop provides a unique platform for stores to display inventory items.
In Australia, for example, over 70,000 products are listed for sale online
and the platform is rapidly growing into a challenger for long established
online marketplaces.
In Australia, Webshop sales rose nearly 38 per cent in corporate stores,
and online personal loans were up 34 per cent. In the United Kingdom,
online retail sales rose 34 per cent.
f i N A N c e A N d B A N k i N g A r r A N g e m e N t s
During the year, Cash Converters successfully negotiated new financing
and banking arrangements.
A five year loan securitisation facility was arranged with Fortress
Investment Group on market competitive terms. Another five year
agreement was signed with a service provider for transactional banking
facilities.
Cash Converters is now well positioned to grow the business through
its new financial product range including MACC products and car loan
products.
A s i c
Cash Converters has been engaging with ASIC on matters pertaining to
its small amount credit contracts. In particular, engagement has been
in relation to compliance with responsible lending provisions applicable
to small amount credit contracts under the National Consumer Credit
Protection Act 2009 (Cth).
At the date of this report, discussions between Cash Converters and
ASIC as to the most appropriate resolution of the matter are continuing.
It appears likely that the matter will result in an enforceable undertaking
involving consumer remediation and payment of fines.
Accordingly, Cash Converters has made a provision as at 30 June
2016 in respect of potential compliance issues in its credit assessment
processes. The provision is based on Cash Converters’ estimate of the
likely outcome of discussions with ASIC, which at the date of this report
is expected to be $12.5 million.
g o v e r N m e N t i N q u i r y
The Government released in April 2016 the final report of the independent
review of small amount credit contract laws. Cash Converters has been
active in the review process lodging submissions as well as meeting
with Government representatives, agencies and the review panel. Our
Company supports most of the report’s recommendations and we
continue to consult with Government on regulations that meet consumer
interests and are commercially viable.
r e s p o N s i B l e A p p r o A c h
Cash Converters’ growth has brought commercial success and
industry leadership. It has also created operational and reputational risk
challenges - primarily in achieving balance between responsible lending
and commercial viability.
To meet these challenges our Company is focussed on improvement
in three broad areas: strategic clarity; comprehensive and effective
governance and risk management; and effective stakeholder engagement.
We regard these as the prerequisites for the conduct of our businesses
in a responsible manner.
We have made a good start to a corporate transformation to maximise the
benefits of Cash Converters’ unique brand and network assets through
sustainable growth.
We now have a clear strategic direction summarised as ‘building on our
strengths’ and are restructuring our businesses to deliver sustainable and
predictable earnings.
We have commissioned an external review of our compliance policies,
procedures and processes. This is part of our ongoing effort to ensure
we have comprehensive and effective corporate governance and risk
management.
We recognise that the operational improvement the Cash Converters
transformation will bring needs to proceed in tandem with continuous
improvement in relationships with our customers, employees, investors,
government, regulators and the communities in which we conduct
business. They are our key stakeholders.
We already have a number of initiatives underway. We regularly survey
customers to provide insights into service delivery improvements
and associated needs. We have also introduced an online financial
literacy channel called Common Cents to assist customers and the
broader community with matters such as budgeting, savings and home
renovations.
Our engagement during the past year with government and regulator
representatives on industry and specific Cash Converters matters have
been instructive and helpful in building ongoing working relationships.
These will continue to be essential if we are to resolve issues associated
with the interpretation and application of responsible lending regulations.
9
c o r p o r A t e s t r A t e g i c
d i r e c t i o N
f o c u s . B u i l d . l e A d
The new strategy we announced in early 2016 is to focus our investment and
operations; build on our current strengths; and lead our industry in customer
service and satisfaction.
We will maximise the value of our brand and our franchise network through a
focus on high return businesses. The key strategic initiatives are:
•
•
•
•
•
Invest for sustainable market leadership and profitable growth in
Australia
Operate in the United Kingdom solely as a master franchise Close
Carboodle. Build a new specialist vehicle finance company better
suited to current market needs in Australia
Assess short and medium term lending options, including entering
the MACC market
Build our brand presence in New Zealand
Continue to operate as a master franchise internationally
c h A N g e s m A d e t h i s y e A r
The strategic changes we have already made in 2016 include:
•
•
•
•
Exited corporate stores in the United Kingdom. We now service 201
franchise stores held between 50 franchisees
Winding down the United Kingdom personal loan book. Expect to
have the book closed by the end of 2016
Carboodle business closed. New motor vehicle finance company
Green Light Auto Finance - successfully launched
Booked $33.3 million in restructuring costs (slightly below anticipated
costs)
c h A N g e s p l A N N e d f o r t h e c o m i N g y e A r
The strategic changes we will make over the next 12 months include:
•
•
•
•
•
•
•
Enter the MACC market with a new product in November 2016
Focus on SACC market segments with better opportunities to meet
customer, regulator and Company risk/return requirements
Increase investment in our online retail capability and enhanced
Webshop
Add corporate and franchised stores in New Zealand
Improve our already high levels of customer service and satisfaction
Strengthen our compliance and responsible lending systems, policies
and procedures
Streamline our organisational structure
10
10
cash converters international limited
d i r e c t o r s ’ p r o f i l e s
s t u A r t g r i m s h A w
n o n - e x e c u t i v e c h a i r m a n
Mr Grimshaw joined the board on 1 November 2014 and was
appointed Non-Executive Chairman on 10 September 2015.
p e t e r c u m i N s
m a n a g i n g d i r e c t o r
Mr Grimshaw was recently the Managing Director and Chief
Executive Officer of Bank of Queensland Limited (BOQ). During
his tenure at BOQ he initiated fundamental changes to BOQ’s
culture, operating model and strategic direction and established a
strong track record of execution. In addition, a strong capital and
provisioning strategy resulted in two credit rating upgrades to A-,
and BOQ has been well supported by the equity markets with two
global equity offerings successfully raising close to $800 million.
In Mr Grimshaw’s time at the bank, BOQ attracted and developed
exceptional talent across the top four management levels and a
unique culture and brand that is now well recognized by the market.
During his 30-year career in financial services, Mr Grimshaw has
held a wide variety of other roles across many functions of banking
and finance, including eight years at the Commonwealth Bank of
Australia (CBA). At CBA, he started as Chief Financial Officer and
over time became Group Executive, responsible for core business
lines including Institutional and Business Banking as well as Wealth
Management (Asset Management and Insurance). Prior to joining
CBA, he worked for the National Australia Bank and was the Chief
Executive Officer of Great Britain, with responsibility for large UK
consumer banks Yorkshire Bank and Clydesdale Bank.
Mr Grimshaw is currently the Chief Executive Officer of EZCORP
Inc.
Mr Grimshaw represented New Zealand at the 1984 Olympics in
Field Hockey and has a Bachelor of Commerce and Administration
(Victoria University, Wellington, New Zealand) and an MBA
(Melbourne University, Australia). He has also completed the
Program for Management Development at Harvard Business
School.
Mr Cumins is an Australian national. He is the Managing Director
of Cash Converters International Limited. He joined the Group in
August 1990 as Finance and Administration Manager when the
Company had just 23 stores, becoming General Manager in March
1992. He became Group Managing Director in April 1995.
Mr Cumins is a qualified accountant, and has overseen the major
growth in the number of franchisees in Australia as well as the
international development of the Cash Converters franchise
system. His experience in the management of large organisations
has included senior executive positions in the government health
sector, specifically with the Fremantle Hospital Group, where he
was Finance and Human Resources Manager.
Mr Cumins is also a director of board of EZCORP Inc. (a substantial
shareholder in the Company) following his appointment on 28 July
2014
r e g i N A l d w e B B
n o n - e x e c u t i v e d i r e c t o r
Mr Webb has been the Non-Executive Chairman since January
1995 and to assist in the transition of the Chairman role, Mr Stuart
Grimshaw was appointed as Non-Executive Chairman on 10
September 2015.
Mr Webb has been a Non-Executive Director for many years. He
is a Fellow of the Institute of Chartered Accountants of Australia
and was for many years a Partner of PricewaterhouseCoopers
(previously Price Waterhouse). In that position he worked in both
North America and Europe as well as Australia. He was a partner
for 20 years and served on the Policy Board of that firm. He is also
a Director of D’Orsogna Limited.
11
11
d i r e c t o r s ’ p r o f i l e s
l A c h l A N g i v e N
k e v i N d u N d o
n o n - e x e c u t i v e d i r e c t o r
n o n - e x e c u t i v e d i r e c t o r
Mr Dundo joined the board on 20 February 2015. Mr Dundo practises
as a lawyer and specialises in the commercial and corporate field,
with experience in the mining sector, the service industry and the
financial services industry. He is a member of the Law Society
of Western Australia, Law Council of Australia, Australian Institute
of Company Directors and a Fellow of the Australian Society of
Certified Practising Accountants.
Mr Dundo is currently a Non-Executive Director and Chairman of
the Audit Committee of ASX-listed Imdex Limited (ASX:IMD) and
Non-Executive Chairman of ASX-listed Red 5 Limited (ASX:RED).
Mr Given joined the board on 22 August 2014. He is the Executive
Chairman of EZCORP Inc. (a substantial shareholder in the
Company) and also a Director of The Farm Journal Corporation, a
134 year old pre-eminent US agricultural media company; Senetas
Corporation Limited (ASX: SEN), the world’s leading developer
and manufacturer of certified, defence‐grade encryption solutions;
CANSTAR Pty Ltd, the leading Australian financial services ratings
and research firm; and Tab.com, a leading provider of physical
and digital records management solutions in the US, Canada and
Europe.
Mr Given began his career working in the investment banking and
equity capital markets divisions of Merrill Lynch in Hong Kong
and Sydney where he specialised in the origination and execution
of a variety of M&A, equity and equity-linked and fixed income
transactions.
Mr Given graduated from the Queensland University of Technology
with a Bachelor of Business majoring in Banking and Finance (with
distinction).
12
12
cash converters international limited
f i N A N c i A l r e p o r t
c o N t e N t s
o p e r at i n g a n d f i n a n c i a l r e v i e w
d i r e c t o r s’ r e p o rt
c o r p o r at e g o v e r n a n c e
c o n s o l i d at e d s tat e m e n t o f p r o f i t o r l o s s a n d o t h e r c o m p r e h e n s i v e i n c o m e
c o n s o l i d at e d s tat e m e n t o f f i n a n c i a l p o s i t i o n
c o n s o l i d at e d s tat e m e n t o f c h a n g e s i n e q u i t y
c o n s o l i d at e d s tat e m e n t o f c a s h f l o w s
n o t e s t o t h e f i n a n c i a l s tat e m e n t s
d i r e c t o r s’ d e c l a r at i o n
a u d i t o r’ s i n d e p e n d e n c e d e c l a r at i o n
i n d e p e n d e n t a u d i t o r’ s r e p o rt
s h a r e h o l d e r i n f o r m at i o n
______________________________________
14
______________________________________
20
__________________________________________
40
__________________________________________
41
__________________________________________
42
__________________________________________
43
__________________________________________
44
__________________________________________
45
__________________________________________
92
__________________________________________
93
__________________________________________
94
__________________________________________
96
__________________________________________
These financial statements have been organised into the
following six sections to make them less complex and more
relevant to shareholders:
1.
2.
3.
4.
5.
6.
Basis of preparation
Financial performance
Assets and liabilities
Capital structure and financing costs
Group structure
Other items
Each section sets out the accounting policies applied in
producing the relevant notes, along with details of any key
judgements and estimates used or information required
to understand the note. The purpose of this format is to
provide readers with a clearer understanding of what drives
the financial performance and financial position of the Group.
13
o p e r A t i N g A N d f i N A N c i A l r e v i e w
f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 6
Following a review of the Group operations, the results of which were announced in February 2016, the Company has taken the opportunity to
restructure its operations, with major changes to our UK and Carboodle businesses. These changes included the sale of 44 corporate stores,
the closure of a further 15 stores and the wind-down of the personal loan book in the UK, with the aim to have the book collected and closed
off by November 2016.
The review of the Carboodle business resulted in the closure of the Carboodle outlets in Melbourne, Sydney and Brisbane and a change to
the product offering for this business, moving from an operating lease to a traditional car loan, principal and interest product. This car loan
product is more readily accepted and understood by the traditional car broker network and as a result the loan book is growing strongly since
the product launch in March 2016.
These restructure changes have put the Company into a far stronger position going forward, however the cost has been high with total charges
relating to the restructure being $33,331,472. If the Group’s results are adjusted for these costs and other normalised expenses, the Group
has achieved earnings before tax, depreciation, amortisation and impairment (EBITDA) of $71,872,936, up 14.5% on the prior year figure of
$62,745,379. This result has been derived from a 1.2% growth in revenue, up $4,433,933 to $379,326,572 (2015: $374,892,639) with strong
revenue growth coming from store operations, which has increased by $10,375,499 for continuing operations.
A summary of consolidated revenues and results by significant segment is set out below:
Franchise operations
Store operations
- continuing (iv)
- discontinued
Financial services – administration (iv)
Financial services – personal loans
- continuing (iv)
- discontinued
Vehicle financing
Inter-segment elimination of revenues
EBITDA totals (ii)
Segment revenues (i)
Segment results
2016
$
2015
$
2016
$
2015
$
22,995,799
18,951,232
7,270,483
5,965,054
140,443,673
130,068,174
56,278,291
14,247,529
60,254,507
14,728,956
144,644,225
138,352,217
18,188,783
8,146,368
(25,669,441)
379,275,227
25,972,345
8,731,185
(24,374,301)
372,684,315
17,419,605
(4,388,217)
8,135,335
57,402,016
(344,045)
(4,598,838)
-
19,705,552
(4,698,908)
8,262,594
30,002,676
(6,006,045)
(2,687,167)
-
80,896,339
50,543,756
Head office – UK & Australia (iii)
51,345
2,208,324
(60,543,234)
(41,422,107)
EBITDA totals after head office costs (ii)
379,326,572
374,892,639
Depreciation and amortisation
Impairment
Finance costs
Income tax expense
(Loss) after income tax
Loss attributable to non-controlling interest
(Loss) attributable to members of Cash
Converters International Limited
20,353,105
(8,441,154)
(2,247,551)
(9,659,027)
(5,277,453)
(5,272,080)
98
9,121,649
(9,038,058)
(7,587,315)
(9,072,074)
(5,109,292)
(21,685,090)
201,372
(5,271,982)
(21,483,718)
(i)
(ii)
(iii)
(iv)
Segment revenues include external interest revenue
EBITDA is earnings before interest, tax, depreciation, amortisation and impairment (non IFRS unaudited measure
2016 segment result includes the UK restructure costs of $22,667,967 and compliance provision of $12,500,000; 2015 segment result
includes class action settlement expense of $23,000,000
2015 segment results includes contract termination expense of $824,670 in store operations, $4,256,000 in financial services –
administration and $24,547,600 in financial services – personal loans.
EBITDA was $20,353,105 (2015: $9,121,649) and the statutory net loss after tax was $5,271,982 (2015: net loss of $21,483,718).
14
cash converters international limited A summary of normalised results is presented below:
EBITDA including controlling interest
Add losses attributable to non-controlling interest
EBITDA attributable to members of Cash Converters International Limited
Normalisation adjustments
Restructure costs
Other costs outside normal operating costs
Compliance provision
Class action legal fees
Stamp duty on store acquisitions
Ausgroup provision
Kentsleigh agency termination payment
Termination fees – bank facility (GLA)
NSW class action settlement provision
Redundancy costs – CCUK
EBITDA normalised
2016
$
20,353,105
98
20,353,203
33,331,472
3,246,299
12,500,000
2,441,962
-
-
-
-
-
-
71,872,936
2015
$
9,121,649
201,372
9,323,021
-
-
-
1,844,903
388,663
(2,927,229)
29,628,270
700,000
23,000,000
787,751
62,745,379
Comments on the operations and results of these operations are set out below.
f r A N c h i s e o p e r At i o N s
The EBITDA for the franchise operations rose $1,305,429 (21.9%) during the 2016 financial year to $7,270,483 (2015: $5,965,054). The
UK franchise operations performed well delivering an EBITDA of $3,189,001, which was up $1,424,500 (80.7%) against last year’s result of
$1,764,501. This was partly due to the fact that the 2016 financial year for the UK had no bad debt write-downs that amounted to $448,000
in the previous year.
The Australian business contributed an EBITDA of $3,633,302 down against the previous year’s EBITDA of $3,698,348.
Normalised EBITDA from the international franchise operations was $448,180 (2015: $502,205). This division included a write-down of the
Mexican franchise investment amounting to $764,331, following a decision taken by EZCORP Inc to close this operation early in 2016. EBITDA
has been normalised for this charge.
The total number of franchised stores globally now stands at 666, with 201 stores in the UK, 82 in Australia and 383 throughout the rest of the
world. The Company continues to look for opportunities to expand its franchise network, both in Australia and internationally.
In January 2014 Cash Converters International Limited, through a subsidiary company, acquired a 25% equity interest in all aspects of the New
Zealand Cash Converters Master Franchisor, including corporate stores, franchise contracts and financial services. This interest was acquired
for $5.5 million, which reflects the pro-rata share of the actual investment cost incurred to date by the New Zealand Master Franchisor. Since
the acquisition in January 2014, 13 stores have been opened – 11 corporate and two franchised – taking the total number to 15 corporate and
12 franchised stores as at 30 June 2016. During the 2017 financial year it is planned to open one franchised store taking the total store number
to 28. This subsidiary contributed a loss of $1,392,037 for the period, which has been included in the head office costs in the previous table.
During the year new franchised stores were also opened in France, South Africa and Spain.
15
c o r p o r At e s t o r e s o p e r At i o N s
Corporate stores generate their revenue through the operation of retail premises across Australia and the UK, and also through online retail
sales via the Cash Converters Webshop. The stores also receive commission from Cash Converters Personal Finance business for personal
loans generated in the stores. The stores offer a mixture of ‘buys and loans’ (traditional pawn broking and second hand goods buying),
personal finance (in the form of personal loans and cash advance) and the retailing of new and second hand goods.
The strategic review of the business identified the corporate store division in the UK as requiring a significant restructure and recommended
the sale of the store network or the closure of poor performing stores. Since March 2016, 44 stores have been sold to the existing franchise
network and a further 15 stores have been closed. The cost of this restructure has been $22.7 million and is detailed below.
Goodwill / asset write offs
Redundancies
Lease commitments on closed stores
Personal loan write offs
Total restructure costs
$ MILLION
9.5
1.1
9.1
3.0
22.7
Following this restructure the UK business is in a far stronger position to generate ongoing profit following its repositioning back to a franchisor
with a 201 franchised store network.
A u s t r A l i A
The corporate store network in Australia produced a normalised EBITDA contribution of $18,181,543 (2015: $20,530,222), down $2,348,679
(11.4%) on the prior year.
A mixed result for year on year KPIs, on a like for like basis, with retail sales (including scrap gold and Webshop sales) up 8.4% on the previous
corresponding period, however pawn broking interest was slightly flat, only achieving a marginal growth of 1.1% compared to the same period
last year. Both cash advance and personal loan products performed worse than last year with outgoings down 6.3% and 4.8% respectively
on the previous corresponding period.
The total number of corporate stores in Australia as at 30 June 2016 was 71.
Revenue from online sales via the Cash Converters Webshop increased by 39.2% to $5,448,178 (2015: $3,910,341) as the site has become
more widely known for high quality second hand products. With over 70,000 products listed, most people find the site interesting and good
value for money.
u N i t e d k i N g d o m
EBITDA for the UK corporate stores reported a normalised loss of £2,144,884 ($4,388,217) (2015: loss £1,498,066 ($2,960,609)), after
normalising for costs associated with the UK restructure.
w e B s h o p
The Cash Converters Webshop was initially launched in early 2008 and expands Cash Converters’ online presence. Not only generating
revenue in its own right, Webshop is proving to be an essential ingredient in introducing people to the Cash Converters brand, with many ‘in-
store’ experiences being borne from an initial search of the online store. Customers who searched the online store and later went into a store
to complete the purchase generated retail sales of $3,115,540 during the financial year ending 30 June 2016 (2015: $1,946,274).
Webshop was initially only servicing the corporate store network, but has since been expanded to allow the franchise network to utilise the
platform and list their items for sale. The Company receives a commission based on an agreed percentage of retail sales for the provision of
the site and payment services. Each store is responsible for its own item listings and despatch.
Items listed for sale on the site can be purchased through auction or a fixed price ‘buy it now’ option. Online sales have increased 37.4% in
the UK and 37.6% in Australia over the last 12 months.
16
cash converters international limited Some key online statistics:
Registered users
Unique visitors
Total page views
Retail sales
UK
AUSTRALIA
313,000
3,610,744
63,553,121
£4,789,717
103,636
4,001,191
39,432,732
$6,488,220
f i N A N c i A l s e r v i c e s o p e r At i o N s
These divisions incorporate the trading results of Mon-E Pty Ltd (Australia), Cash Converters Personal Finance Pty Ltd (CCPF) (Australia) and
the UK Finance Division.
Mon-E Pty Ltd is responsible for providing the administration services for the Cash Converters network in Australia to offer small cash advance
loans to their customers (average loan size of approximately $403). The cash advance principal loaned is financed by the corporate stores and
the individual franchisees for the cash advances provided by their stores. Mon-E receives commission from the store network for each cash
advance processed through their systems.
CCPF provides small, largely unsecured loans through the franchise and corporate store networks in Australia and online. The principal is
funded by CCPF, which pays a commission to the stores (both corporate and franchise) for the generation of the lead and processing the
application in store.
The UK Finance Division utilises the software developed in Australia, for both cash advances and personal loans. The UK Finance Division
ceased issuing new loans in May 2016, and therefore does not form part of the Group’s continuing operations.
During the period under review the normalised EBITDA for the continuing operations in this division was $65,855,220 (2015: $67,068,870), down
$1,213,650 (1.8%) on last year. CCPF contributed an EBITDA of $57,719,885 (2015: $54,550,276), Mon-E $7,062,113 (2015: $11,483,175) and
the UK Cash Advance Division a profit of £525,341 ($1,073,222) (2015: £554,401 ($1,035,419)).
p e r s o N A l l o A N s - A u s t r A l i A
The Australian personal loan book has fallen from $119,448,669 at 30 June 2015 to $113,036,461 at 30 June 2016, a drop of 8.1%. During the
year, 77,955 (2015: 55,902) online loans were advanced totalling $85,162,510 (2015: $63,400,900), representing an increase in value of 34.3%
over the previous year. Online lending now represents 45.4% of the total principal advanced during the year.
For Australia, bad debt levels have increased to 7.6% (2015: 7.0%) of the net principal written off to the total principal advanced. The total bad
debts written off value has fallen from $45,126,911 in FY 2015 to $38,805,911 in FY 2016.
The Christmas period is one of the busiest periods for the personal loan product and this year was no exception with an amount of $24,105,300
advanced in Australia during December 2015 (December 2014: $23,008,250). The December 2015 value is the highest amount ever lent during
a month and just eclipsed the December 2014 value.
Some key operating statistics for the Australian personal finance division:
•
•
•
Total number of approved loans increased by 5.3% to 186,565
Total number of active customers increased by 2.8% to 140,635
Personal loans EBITDA up 5.8% to $57,719,885 (2015: $54,550,276)
p e r s o N A l l o A N s – u N i t e d k i N g d o m
The strategic review of the UK business identified legislation as a key risk associated with operating a UK personal loan book and as a result
recommended the wind-down of the loan book. In May 2016 the UK business stopped advancing principal in regard to personal loans. The
UK collections team are now actively collecting the book with the aim to have the majority of the book collected by November 2016.
The UK personal loan book at 30 June 2016 was £6,434,593 ($11,595,951) (2015: £9,285,480 ($19,058,925)).
During the year bad debts of £6,402,728 ($13,107,752) (2015: £8,715,133 ($16,327,227)) have been written off, which is significantly lower than
the previous year.
The EBITDA for the UK personal loan book was a loss of £230,207 ($344,045) (2015: Loss £2,815,508 ($6,006,044)).
17
c A s h A d vA N c e - A u s t r A l i A
The Company derives income from the cash advance product in multiple ways. Mon-E Pty Ltd receives a commission from all stores (both
franchise and corporate stores) for the provision of the online software platform and administrative services. In addition, the corporate store
network generates interest and loan establishment income from the loans provided to their customers.
A review of the cash advance online product was conducted in the third quarter of FY 2016 and a decision was made to cease offering
this product. This decision was based on the availability of appropriate information required from customers, the time taken to process an
application and the overall profitability of the product. During the FY2016 over $14.6 million was advanced, compared to $11.2 million in
FY2015.
The EBITDA for the Australian cash advance business was $7,062,113 (2015: $11,483,175). No normalisation adjustments were made.
Key performance indicators for Cash Advance – Australia:
•
•
•
Total principal advanced down 5.6% to $235,530,880 (2015: $249,547,610)
Average loan amount $403 (2015: $411)
Total customer numbers decreased by 2.1% to 585,110 (2015: 597,891)
c A s h A d vA N c e – u N i t e d k i N g d o m
Following the sale of the majority of the corporate store network to franchisees, the cash advance product is now only offered through the
franchise network in the UK. The normalised EBITDA for the 2016 financial year of £525,341 ($1,073,222) (2015: £554,401 ($1,035,419))
represented an increase of 3.7% on the previous period.
Key performance indicators for the UK Cash Advance product are:
•
•
•
Total principal advanced down by 18.1% to £27,820,840 (2015: £33,960,004)
Average loan amount up from £147 to £173
Total customer numbers increased by 9.3% to 196,176 (2015: 179,534)
In July 2014 the Financial Conduct Authority (FCA) published its paper on the proposed rate cap in regard to high-cost short-term credit in the
UK. Following consultation the FCA published their final paper in November 2014, with the introduction of the rate cap on 2 January 2015.
Along with the rate cap and the assumption of regulatory responsibility by the FCA on 1 April 2014, further companies have announced their
intention to restrict the level of services they currently offer under the high-cost short-term credit industry in the UK.
v e h i c l e f i N A N c i N g – g r e e N l i g h t A u t o
Following the strategic review of the Carboodle business, the operating lease product is being phased out progressively and replaced with a
principal and interest loan product. The new product is a more traditional car loan product and is more readily accepted by the finance broker
network, through which the business is being promoted. The new product has been offered since March 2016 with some success. There are
170 active loans and the loan book stands at $3,326,511 as at 30 June 2016 and is anticipated to grow by approximately $1 million per month.
As at 30 June 2016, 781 active operating leases were in place with forward contracted lease payments of $19,615,624. Total revenue for the
2016 financial year was $9,283,610.
The normalised EBITDA for the business was a loss of $2,352,823 compared to a loss of $1,987,167 for last year, after normalising for costs
associated with the restructure of $2,227,773.
c o r p o r At e o f f i c e c o s t s
These costs represent the corporate office costs for both Australia and the UK and are shown separately because these costs cannot be
allocated to any specific division/segment, and to calculate an arbitrary split of the costs would not be appropriate in obtaining an accurate
contribution from each of the divisions.
The normalised costs for the year ended 30 June 2016 were $14,580,878 (FY 2015 $15,400,790). The Australian corporate office incurred
additional legal fees during FY 2016 of $2,441,962 in relation to the ongoing Queensland Class Action, additional professional fees in regard
to the business strategic review and a review by PWC in regard to compliance and the culture of the business amounting to $1,506,044. The
corporate office costs have both been adjusted to normalise for these expenses.
18
cash converters international limited f i N A N c i N g A N d i N v e s t m e N t A c t i v i t i e s
B A N k i N g s e r v i c e s
In August 2015 Westpac Banking Corporation informed the Company that Westpac has taken the decision to cease to provide banking and
financial products and services to its customers who provide Short Term Credit Contracts (STCCs) or Small Amount Credit Contracts (SACCs)
under section 5(1) of the National Consumer Credit Protection Act 2009 (Cth). Cash Converters is a licenced provider of financial services
under the terms of this Act.
Westpac assured the Company that they would implement this decision in accordance with the Company’s contractual agreements with
Westpac, and in a considered and consultative way so as to allow the Company to establish alternative banking arrangements. The Company
replaced the securitisation facility with Westpac with a securitisation facility with Fortress Investment Group in March 2016. The Fortress facility
covers a five year term, with an initial three year loan period and an option for a two year extension at the Company’s discretion. It allows for
a drawdown of up to $100 million, compared to $70 million under the Westpac facility, with the drawdown criteria being less restrictive than
the Westpac facility.
The Company has also signed a five year agreement with a service provider to replace its Westpac transactional banking facilities. It has been
progressively transitioning its existing facilities in a measured and deliberate manner, to ensure no disruption is experienced by its customers,
franchisees, employees and suppliers. The transition to a replacement transactional banking service provider was finalised in August 2016.
o u t l o o k
Following the strategic review of the Group, a number of changes have been made to the operations, both in the UK and to the Green Light
Auto business, along with other operational changes. These changes will deliver a stronger business going forward. The Company expects
demand for the products and services in Australia, the United Kingdom and New Zealand to continue to grow. The Company is also expected
to deliver underlying profit growth.
The short-term lending industry will continue to receive a lot of attention from government and regulators. As a result, the Company will work
closely with ASIC and the Federal Government to ensure their view of responsible lending requirements is achievable without making the
entire short-term lending business unattractive for the Company and others in the industry. The Company will be making a concerted effort to
continually improve internal compliance and responsible lending systems, policies and procedures.
19
d i r e c t o r s ’ r e p o r t
f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 6
The directors of Cash Converters International Limited (the Company) submit the following report of the Company for the financial year ended
30 June 2016. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows:
i N f o r m At i o N A B o u t d i r e c t o r s
The following persons held office as directors of the Company during the whole of the financial year and until the date of this report:
Mr Stuart Grimshaw – Non-Executive Chairman
Appointed director 1 November 2014
Appointed Chairman 10 September 2015
Mr Grimshaw joined the board in 2014 and was appointed Non-Executive Chairman on 10 September 2015. Mr Grimshaw is currently the Chief
Executive Officer of EZCORP Inc. Prior to joining EZCORP in November 2014, Mr Grimshaw was the Managing Director and Chief Executive
Officer of Bank of Queensland Limited (BOQ).
During his tenure at BOQ he initiated fundamental changes to BOQ’s culture, operating model and strategic direction and established a strong
track record of execution. In addition, a strong capital and provisioning strategy resulted in two credit rating upgrades to A-, and BOQ has
been well supported by the equity markets with two global equity offerings successfully raising close to $800 million. In Mr Grimshaw’s time
at the bank, BOQ attracted and developed exceptional talent across the top four management levels and a unique culture and brand that is
now well recognised by the market.
During his 30 year career in financial services, Mr Grimshaw has held a wide variety of other roles across many functions of banking and
finance, including eight years at the Commonwealth Bank of Australia (CBA). At CBA, he started as Chief Financial Officer and over time
became Group Executive, responsible for core business lines including Institutional and Business Banking as well as Wealth Management
(Asset Management and Insurance). Prior to joining CBA, he worked for the National Australia Bank and was the Chief Executive Officer of
Great Britain, with responsibility for large UK consumer banks Yorkshire Bank and Clydesdale Bank.
Mr Grimshaw represented New Zealand at the 1984 Olympics in Field Hockey and has a Bachelor of Commerce and Administration (Victoria
University, Wellington, New Zealand) and an MBA (Melbourne University, Australia). He has also completed the Program for Management
Development at Harvard Business School.
Mr Grimshaw is a member of the Company’s Remuneration / Nomination Committee.
Over the past three years Mr Grimshaw has held directorships with the following listed companies:
Company
Commenced
Bank of Queensland Limited
1 November 2011
Ceased
31 August 2014
EZCORP Inc
3 November 2014
-
Mr Peter Cumins – Managing Director
Appointed April 1995
Mr Cumins joined the Group in August 1990 as Finance and Administration Manager when the Company had just 23 stores, becoming General
Manager in March 1992. He became Group Managing Director in April 1995.
Mr Cumins is a qualified accountant, and has overseen the major growth in the number of franchisees in Australia as well as the international
development of the Cash Converters franchise system. His experience in the management of large organisations has included senior executive
positions in the government health sector, specifically with the Fremantle Hospital Group, where he was Finance and Human Resources
Manager.
Over the past three years Mr Cumins has held directorships with the following listed company:
Company
EZCORP Inc
20
Commenced
28 July 2014
Ceased
-
cash converters international limited Mr Reginald Webb – Non-Executive Director
Appointed 1997
Retired as Non-Executive Chairman 9 September 2015
Mr Webb joined the board as a director in 1997 and was the Non-Executive Chairman from 2005 until he retired from that position on 10
September 2015. Mr Webb has advised the Company that he intends to retire from the Board following the completion of the 2016 financial
year. Mr Webb has made a very significant contribution in helping to guide the Company towards the stable and successful state that it now
enjoys.
Mr Webb is a Fellow of Chartered Accountants Australia and New Zealand and was for many years a Partner of PricewaterhouseCoopers
(previously Price Waterhouse). In that position he worked in both North America and Europe as well as Australia. He was a partner for 20 years
and served on the Policy Board of that firm. He is also a director of D’Orsogna Limited.
Mr Webb is a member of the Company’s Audit and Risk Committee and Remuneration / Nomination Committee.
Over the past three years Mr Webb has not held directorships with any listed companies other than Cash Converters International Limited.
Mr Lachlan Given – Non-Executive Director
Appointed 22 August 2014
Mr Given joined the board in 2014. He is the Executive Chairman of EZCORP Inc (a major shareholder in the Company) and also a Director
of The Farm Journal Corporation, a 134 year old pre-eminent US agricultural media company; Senetas Corporation Limited (ASX: SEN),
the world’s leading developer and manufacturer of certified, defence-grade encryption solutions; CANSTAR Pty Ltd, the leading Australian
financial services ratings and research firm; and RateCity.com Pty Ltd, one of Australia’s largest Internet based financial services comparison
organisations.
Mr Given began his career working in the investment banking and equity capital markets divisions of Merrill Lynch in Hong Kong and Sydney
where he specialised in the origination and execution of a variety of M&A, equity and equity-linked and fixed income transactions.
Mr Given graduated from the Queensland University of Technology with a Bachelor of Business majoring in Banking and Finance (with
distinction).
Mr Given is a member of the Company’s Audit and Risk Committee and Remuneration / Nomination Committee.
Over the past three years Mr Given has held directorships with the following listed companies:
Company
Commenced
Ceased
Senetas Corporation Limited
20 March 2013
EZCORP Inc
18 July 2014
-
-
Mr Kevin Dundo – Non-Executive Director
Appointed 20 February 2015
Mr Dundo joined the board on 20 February 2015. Mr Dundo practises as a lawyer and specialises in the commercial and corporate field, with
experience in the mining sector, the service industry and the financial services industry. He is a member of the Law Society of Western Australia,
Law Council of Australia, Australian Institute of Company Directors and a Fellow of the Australian Society of Certified Practising Accountants.
Mr Dundo is currently a Non-Executive Director and Chairman of the Audit Committee of ASX-listed Imdex Limited (ASX: IMD) and Non-
Executive Chairman of ASX-listed Red 5 Limited (ASX: RED).
Mr Dundo is Chair of the Company’s Audit and Risk Committee and Chair of the Remuneration / Nomination Committee.
Over the past three years Mr Dundo has held directorships with the following listed companies:
Company
Imdex Limited
Red 5 Limited
Commenced
14 January 2004
29 March 2010
Ceased
-
-
21
d i r e c t o r s’ s h A r e h o l d i N g s
The following table sets out each director’s relevant interest in shares and options in shares of the Cash Converters International Limited as at
the date of this report:
Directors
S Grimshaw
P Cumins
R Webb
L Given
K Dundo
c o m pA N y s e c r e tA r y
Mr Ralph Groom
Appointed 1995
Fully paid ordinary shares
Number
-
8,578,405
1,012,500
-
-
Share options
Number
-
3,730,000
-
-
-
Mr Groom joined Cash Converters in August 1995. Previously he was the Finance Director and Company Secretary of Tony Barlow Australia
Limited, a publicly listed retailer, where he was responsible for all financial and secretarial matters.
Mr Groom is a Fellow of the Chartered Institute of Management Accountants (UK) (ACMA), a Fellow of Certified Practicing Accountants (FCPA)
and a Fellow of the Chartered Institute of Secretaries and Administrators (FCIS). Mr Groom is also the Chief Financial Officer of the Group.
p r i N c i pA l A c t i v i t i e s
The consolidated entity’s principal activity is that of a franchisor of second hand goods and financial services stores, a provider of secured and
unsecured loans and the operator of a growing number of corporate stores, all of which trade under the Cash Converters name.
Country master franchise licences are also sold to licensees to allow the development of the Cash Converters brand but without the need for
support from Cash Converters International Limited.
r e v i e w o f o p e r At i o N s
The consolidated entity’s net loss attributable to members of the parent entity for the year ended 30 June 2016 was $5,271,982 (2015:
$21,483,718) after a charge for income tax of $5,277,453 (2015: $5,109,292).
A review of the consolidated entity’s operations and financial performance has been provided on pages 14 to 19.
c h A N g e s i N s tAt e o f A f fA i r s
During the financial year there were no significant changes in the state of affairs of the consolidated entity other than those referred to elsewhere
in this financial report and the notes thereto.
s u B s e q u e N t e v e N t s
Cash Converters has been co-operating with an investigation by ASIC into its compliance with the responsible lending provisions applicable to
small amount credit contracts under the National Consumer Credit Protection Act 2009 (Cth).
Discussions between Cash Converters and ASIC as to the most appropriate resolution to the matter are continuing. Accordingly, the Company
has booked a provision of $12.5 million in respect of any potential compliance issues in its credit assessment processes.
f u t u r e d e v e l o p m e N t s
Following the strategic review of the Group, a number of changes have been made to the operations, both in the UK and to the Green Light
Auto business, along with other operational changes. These changes will deliver a stronger business going forward. The Company expects
demand for the products and services in Australia, the United Kingdom and New Zealand to continue to grow. The Company is also expected
to deliver underlying profit growth for its continuing operations.
22
cash converters international limited d i v i d e N d s
The directors of the Company paid a fully franked interim dividend of two cents per share on 29 April 2016.
On 30 August 2016 the Company announced that it would pay a fully franked final dividend of one cent per share in respect of the financial
year ended 30 June 2016. The dividend will be fully franked and will be paid on 28 October 2016 to those shareholders on the register at the
close of business on 14 October 2016. The Company Dividend Reinvestment Plan (DRP) will apply to this dividend, providing shareholders
with the option to reinvest all or part of their eligible dividends at a discount of 2.5% to the 5 day VWAP up to and including the record date.
s h A r e s u N d e r o p t i o N o r i s s u e d o N e x e r c i s e o f o p t i o N s
Details of unissued shares or interests under option as at the date of this report are:
Issuing entity
Number of shares
under option
Class of shares
Exercise price of
option
Expiry date of
options
Cash Converters International Limited
Cash Converters International Limited
124,166
6,634,152
Ordinary
Ordinary
Nil
Nil
15 Sep 2017
30 Jun 2018
The performance rights above are in substance share options with an exercise price of nil, which vest and are immediately exercised into
ordinary shares once certain performance / vesting conditions are met.
The holders of these performance rights do not have the right, by virtue of the performance right, to participate in any share issue or interest
issue of the Company or of any other body corporate.
Shares issued as a result of the exercise of share options or performance rights during or since the end of the financial year are:
Issuing entity
Number of shares
under option
Class of shares
Exercise price of
option
Expiry date of
options
Cash Converters International Limited
583,500
Ordinary
Nil
15 Sep 2015
i N d e m N i f i c At i o N A N d i N s u r A N c e o f d i r e c t o r s A N d o f f i c e r s
During the financial year the Company paid a premium in respect of a contract insuring the directors of the Company, the Company Secretary
and all executive officers of the Company and of any related body corporate against a liability incurred as such a director, secretary or executive
officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and
the amount of the premium.
The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to
indemnify an officer or auditor of the Company or of any related body corporate against a liability incurred as such an officer or auditor.
d i r e c t o r s’ m e e t i N g s
The number of meetings of directors and meetings of committees of directors held during the year and the number of meetings attended by
each director were as follows:
Directors
Board of directors
Audit and risk committee
Remuneration / nomination
committee
Mr S Grimshaw
Mr P Cumins
Mr R Webb
Mr L Given
Mr K Dundo
Held
Attended
Held
Attended
Held
Attended
16
16
16
16
16
15
16
16
15
15
-
-
2
-
2
-
-
2
-
2
3
-
3
3
3
3
-
3
3
3
23
N o N- A u d i t s e r v i c e s
The directors are satisfied that the provision of non-audit services, during the year, by the auditor is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001.
The directors are satisfied that the provision of non-audit services during the year by the auditor did not compromise the auditor independence
requirements of the Corporations Act 2001, as the nature of the services was limited to income tax and indirect tax compliance, transaction/
compliance related matters and generic accounting advice. All non-audit services have been reviewed and approved to ensure they do not
impact the integrity and objectivity of the auditor, and none of the services undermine the general principles relating to auditor independence as
set out in Code of Conduct APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards
Board, including reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the Company, acting
as advocate for the Company or jointly sharing economic risks and rewards.
Details of the amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are outlined in note 6.6 to
the financial statements.
A u d i t o r ’ s i N d e p e N d e N c e d e c l A r At i o N
The auditor’s independence declaration is included on page 93.
24
cash converters international limited r e m u N e r At i o N r e p o r t ( A u d i t e d )
This remuneration report, which forms part of the directors’ report, sets out information about the remuneration of Cash Converters International
Limited’s key management personnel for the financial year ended 30 June 2016. The term “key management personnel” (KMP) refers to those
persons having authority and responsibility for planning, directing and controlling the activities of the consolidated entity, directly or indirectly,
including any director (whether executive or otherwise) of the consolidated entity. Details for each person covered by this report are presented
under the following headings:
1.
2.
3.
4.
5.
Key management personnel
Remuneration policy
Relationship between remuneration policy and company performance
Remuneration of key management personnel
Key terms of employment contracts
1 .
k e y m A N A g e m e N t p e r s o N N e l
The directors and other KMP of the consolidated entity during or since the end of the financial year were:
Non-executive directors
Position
Mr Stuart Grimshaw
Mr Reginald Webb
Mr Lachlan Given
Mr Kevin Dundo
Executive director
Mr Peter Cumins
Chairman (appointed 1 September 2015)
Non-executive director
Remuneration / Nomination Committee member
Non-executive director
Audit and Risk Committee member
Remuneration / Nomination Committee member
Non-executive director
Remuneration / Nomination Committee Member
Audit and Risk Committee member (appointed 1 August 2016)
Non-executive director
Chairman of Audit and Risk Committee
Chairman of Remuneration / Nomination Committee
Managing Director
Executive officers
Position
Mr Ralph Groom
Mr Mark Reid
Mr Glen Fee
Mr Martyn Jenkins
Mr Shane Prior
Mr Sam Budiselik
Mr Michael Cooke
Mr Ian Day
Chief Financial Officer and Company Secretary
Chief Executive Officer – Australia
Appointed 2 November 2015
Chief Information Officer
General Manager UK
Chief Operating Officer – Stores
Became member of KMP 1 July 2016
Chief Operating Officer – Financial Services Australia
Appointed 15 February 2016
Resigned 30 June 2016
Group Legal Counsel
Retired 31 August 2016
General Manager, Australia
Retired 31 August 2015
25
2 .
r e m u N e r At i o N p o l i c y
2 .1
e x e c u t i v e r e m u N e r At i o N p o l i c y
The following outlines the policy that applies to executive KMP (and does not apply to non-executive directors):
•
Remuneration should be composed of:
*
*
*
*
Base Package (inclusive of superannuation, allowances, benefits and any applicable fringe benefits tax (FBT) as well as any
salary sacrifice arrangements),
Short term incentive (STI) which provides a reward for performance against annual objectives, and
Long term incentive (LTI) which provides an equity-based reward for performance against indicators of shareholder benefit
or value creation, over a three year period, and
In total the sum of the elements will constitute a total remuneration package (TRP).
Both internal relativities and external market factors should be considered,
Total remuneration packages (TRPs, which include base package and incentives) should be structured with reference to market
practices and the circumstances of the Company at the time,
Base Package policy mid-points should be set with reference to P50 (the median or the middle) of the relevant market practice,
TRPs at Target (being the Base Package plus incentive awards intended to be paid for targeted levels of performance) should be set
with reference to P75 (the upper quartile, the point at which 75% of the sample lies below) of the relevant market practice so as to
create a strong incentive to achieve targeted objectives in both the short and long term,
*
The Board believes that Senior Executives (other than the CEO) should receive a similar mix of remuneration (Base Package
relative to STI and LTI) to ensure that there are similar interests in and focus upon group objectives and therefore TRPs may
depart from role specific P75 market benchmarks to a minor extent to ensure this outcome,
Remuneration will be managed within a range so as to allow for the recognition of individual differences such as the calibre of the
incumbent and the competency with which they fulfil a role (a range of +/- 20% is specified in line with common market practices),
Exceptions will be managed separately such as when particular talent needs to be retained or there are individuals with unique
expertise that need to be acquired (“Red circle” exceptions),
Termination benefits will generally be limited to the default amount allowed for under the Corporations Act (without shareholder
approval).
•
•
•
•
•
•
•
The Group’s remuneration policies were revised at the commencement of the 2016 financial year, and it should be noted that it will take some
time for all new practices to be fully migrated into alignment with the Remuneration Policy as some previous practices have been identified
as out of alignment with this policy and changes need to be made carefully so as to ensure the Company retains key talent. However base
packages currently fall within the policy range outlined, based on benchmarking undertaken during the reporting period.
2 .2
N o N- e x e c u t i v e d i r e c t o r r e m u N e r At i o N p o l i c y
The non-executive director remuneration policy applies to non-executive directors (NEDs) of the Company in their capacity as directors and as
members of committees, and can be summarised as follows:
•
Remuneration may be composed of:
*
*
*
*
*
Board fees,
Committee fees,
Superannuation,
Other benefits (if appropriate), and
Equity (if appropriate at the time, currently not applicable).
•
•
26
Remuneration will be managed within the aggregate fee limit (AFL) or fee pool approved by shareholders of the Company –
currently $800,000 in accordance with shareholder approval on 18 November 2015. Fees payable to Directors, as set out in the
chedule below, are inclusive of statutory superannuation contributions by the Company.
Termination benefits will not be paid to NEDs by the Company,
cash converters international limited
•
•
•
A policy level of Board Fees (being the fees paid for membership of the Board, inclusive of superannuation and exclusive of committee
fees) will be set with reference to the P50 (median or middle) of the market of comparable ASX listed companies,
Committee fees may be used to recognise additional contributions to the work of the Board by members of committees and the
inclusion of these should result in outcomes that, when combined with Board Fees, should cluster around the P50 of the
market of comparable ASX listed companies,
*
In relation to the Board Chair, a higher positioning in the market, such as P75, is appropriate for the Company,
Any NED remuneration package that contains equity shall be set with reference to P75 of the comparable ASX listed company
market, with equity representing the gap between P50 orientation and P75 orientation based on relevant market data. This creates
consistency between the NED remuneration policy and the remuneration policy applicable to Senior Executives,
*
Equity was not a component of NED remuneration during FY 2016 and will not apply for FY 2017.
During the year ended 30 June 2016 reporting period the following fees were applicable:
Function
Main board
Audit and risk committee
Remuneration committee
Role
Chair
Member
Chair
Member
Chair
Member
Fee including
superannuation
$170,000
$95,000
$15,000
$0
$15,000
$0
2 .3
s h o r t t e r m i N c e N t i v e ( s t i ) p o l i c y
The short term incentive policy of the Company, since the commencement of FY 2016 and beyond, is that an annual component of executive
remuneration should be at-risk and allow the Company to modulate the cost of employment to align with individual and Company performance
while motivating value creation for shareholders:
•
•
•
The STI should be paid in cash,
The STI should have a weighting in the remuneration mix that is no greater than the LTI to ensure that executives are focussed on
long term value creation,
STI deferral should not apply since the weighting of STI in the remuneration mix is sufficiently low as to make STI deferral unnecessary
and short-term risk taking is managed by overlapping annual grants of LTI.
KPIs selected should address the main drivers of value creation at the Group, business unit or individual level, as may be appropriate to the
role, with weightings that reflect the importance of each outcome. It is generally expected that the majority of the STI (highest weighting) will be
linked to Group profitability, since this is the main annual outcome that shareholders focus on and for which senior executives are accountable.
2 .4
l o N g t e r m i N c e N t i v e ( lt i ) p o l i c y
The long term incentive policy of the Company, since the commencement of FY 2016 and beyond, is that an annual component of remuneration
of executives should be at-risk and based on equity in the Company to ensure that executives hold a stake in the Company to align their
interests with those of shareholders and share risk with shareholders:
•
•
•
The LTI should be based on Performance Rights that vest based on an assessment of performance against objectives,
The measurement period should be three years,
There should be two measures of long term performance, one which best reflects internal measures of performance and one which
best reflects external measures of performance:
27
2 .4
l o N g t e r m i N c e N t i v e ( lt i ) p o l i c y ( c o N t i N u e d )
*
*
The measure that has strongest alignment with shareholders is Total Shareholder Return (TSR), however it is now recognised
that absolute TSR is influenced by overall economic movements. Therefore future grants of LTI will be offered to executives
that vest based on indexed TSR (iTSR) which removes market movements irrelevant to the performance of the Company
from assessments of the Company’s TSR performance and avoids windfall gains from changes in broad market movements
in share prices. More information on iTSR and its reasons for use is given below,
The internal measure of performance that is understood to be well accepted by stakeholders and which the Board
encourages management to focus on, is earnings per share (EPS), which will be assessed on a growth rate basis against a
vesting scale. Earnings per share links to the Company’s ability to satisfy its dividend policy and is therefore highly relevant.
2 .5
vA r i A B l e e x e c u t i v e r e m u N e r At i o N – s h o r t t e r m i N c e N t i v e ( s t i )
The Company replaced its STI plan with one that it believes is better aligned with market best practices, effective 1 July 2015. The new STI
plan has the following features:
•
•
•
•
•
•
•
Cash based (no deferral due to the mix of STI and LTI being appropriately weighted, with overlapping measurement periods that
mitigate the risk of short termism),
Performance period aligned with the financial year (12 months),
Majority weighting (60%) on a Normalised EBITDA KPI with a target of 110% of budget, a threshold of 95% of budget and a stretch
of 140% of budget,
The remainder of the STI is weighted across:
*
*
*
Minor weighting (10% to 20%) on strategic objective achievements (milestones that contribute to the delivery of 3 year
plans) where appropriate to the individual,
Business unit budget delivery for individuals with responsibility for business units (10% to 20%), and
No more than 10% weighting on individual performance assessment as determined by the Board in the case of the CEO
and by the CEO in conjunction with the Board in the case of other Senior Executives,
Weightings are adjusted as appropriate to the scope and responsibilities of each Senior Executive role,
A gate of 90% of budget normalised EBITDA applies such that no STI will be payable in relation to any measure if this condition is
not exceeded,
Target STI opportunities for FY 2017 are as follows:
*
*
MD/CEO – 50% of Base Package, and
Other Senior Executives – 30% of Base Package.
2 .6
vA r i A B l e e x e c u t i v e r e m u N e r At i o N – l o N g t e r m i N c e N t i v e ( lt i ) r i g h t s p l A N
The Company replaced its LTI plan with one that it believes is better aligned with market best practices, effective 1 July 2015. The LTI plan that
applied for FY 2016 can be summarised as follows:
•
•
•
•
28
The financial instrument is indeterminate performance rights, which is a right to the value of a share to be paid either in cash or
Company shares (at the sole discretion of the Board; necessary to address termination benefits for good-leavers, however it would
generally be expected that vested Rights would be satisfied in the form of Company shares),
The measurement period is to be not less than three years in respect of Performance Rights granted under the plan,
Retesting will not apply,
The vesting conditions/performance metrics for Performance Rights will be as follows and are intended to address both internal and
external measures of Company performance over the long term:
cash converters international limited *
*
*
*
*
*
*
*
A gate of Company TSR being positive for the measurement period will apply before performance against the vesting
conditions is assessed to ensure that the LTI will not reward executives when shareholders have lost value,
Grants of LTI are to be made each year in accordance with the remuneration policy,
50% of the grant (tranche 1) will vest based on a comparison of the Company’s TSR of the measurement period against the
All Ordinaries Accumulation Index (XAOAI), referred to as an indexed TSR (iTSR) vesting scale:
•
•
•
•
25% of the tranche will vest when the Company’s TSR is equal to the TSR of the index (threshold),
50% of the tranche will vest when the Company’s TSR is equal to 150% of the TSR of the index (target), and
100% of the tranche will vest when the Company’s TSR is equal to 200% of the TSR of the index (stretch),
Outcomes between these levels will be calculated on a pro-rata basis,
50% of the grant (tranche 2) will vest based on earnings per share (EPS) compound annual growth over the measurement
period:
•
•
•
•
25% of the tranche will vest when the EPS growth rate has been 12% (threshold),
50% of the tranche will vest when the EPS growth rate has been 16% (target), and
100% of the tranche will vest when the EPS growth rate has been 20% or more (stretch),
Outcomes between these levels will be calculated on a pro-rata basis,
In the case of a termination for other than special circumstances, unvested Performance Rights will be forfeited,
In the case of a termination in special circumstances (death, disability, redundancy), the grant of Performance Rights made
in the year of the termination will be pro-rata forfeited for the period with remaining unvested rights to be tested at the end
of the measurement period along with other participants,
In the case of a change of control or major return of capital to shareholders, unvested Performance Rights will vest in the
proportion that the share price has risen since the date of grant, and
Target LTI opportunities for FY 2017 are as follows:
•
•
MD/CEO – 75% of Base Package,
Other Senior Executives – 30% of Base Package
Previous grants of LTI were made infrequently, which were intended to vest each year over a number of years, however the previous grants
will cease to become available for vesting after FY 2017. The first grant of LTI under the new plan will become available for vesting at the
completion of FY 2018, ensuring an appropriate transition to the new LTI and granting structure.
In addition to facilitating the LTI component of remuneration, the new Rights Plan includes the facility to grant Service Rights (which vest based
on the completion of a period of service, and which are not intended to be used as part of any LTI arrangement), as well as Deferred Rights
which would be suitable for use in the case of deferred STI (currently not applicable) or salary sacrifice arrangements (currently not applicable).
2 .7
s e c u r i t i e s h o l d i N g p o l i c y
The Board currently sees a securities holding policy as unnecessary since executives receive a significant component of remuneration in the
form of equity.
2 .8
c l A w B A c k p o l i c y
The Board currently holds the view that a clawback policy is not appropriate since the intention of such policies is to return funds to shareholders
in the case of an employee causing material misstatements in the financial reports of the Company. The cost and complexity of implementing
arrangements that would make it possible for the Company to recover such funds therefore outweigh the unlikely benefit.
29
3.
r e l At i o N s h i p B e t w e e N r e m u N e r At i o N p o l i c y A N d c o m pA N y p e r f o r m A N c e
The remuneration of executive KMP is composed of three parts as outlined earlier, being:
•
•
•
Base Package, which is not intended to vary with performance but which tends to increase as the scale of the business increases
(i.e. following success),
STI which is intended to vary with indicators of annual Company and individual performance, and
LTI which is also intended to deliver a variable reward based on long-term measures of Company performance and aligns the
interests of management to shareholders.
The STI payable in relation to the completion of the year ended 30 June 2016 was paid in September 2016. On average 12% of the award
opportunity available (i.e. of the maximum opportunity) was paid. This level of award was considered appropriate under the STI scheme that
was in place during the year ended 30 June 2016.
4 .
r e m u N e r At i o N o f k e y m A N A g e m e N t p e r s o N N e l ( k m p )
4 .1
p e r f o r m A N c e A N d r e w A r d o u t c o m e s f o r y e A r e N d e d 3 0 j u N e 2 0 1 6
The following outlines the performance of the Company over the year ended 30 June 2016 and the previous four financial years:
Revenue from continuing operations
304,859,498
288,665,787
331,668,907
272,722,719
234,354,795
Year ended 30 June
2016
2015
2014
2013
2012
Net profit before tax from continuing
operations
Net profit / (loss) after tax
31,171,421
3,854,509
32,040,465
47,664,207
41,425,274
- continuing operations
25,893,968
(1,254,783)
21,132,289
32,869,972
29,416,024
- discontinued operations
(31,166,048)
(20,430,307)
-
-
Share price (cents)
- beginning of year
- end of year
Dividend (cents) (i)
- interim
- final dividend (ii)
Earnings per share (cents) from
continuing and discontinued operations
- basic
- diluted
70.0
43.5
2.00
1.00
(1.09)
(1.09)
108.0
70.0
2.00
-
(4.69)
(4.69)
107.0
108.0
2.00
2.00
5.67
5.56
64.5
107.0
2.00
2.00
8.09
7.92
(i)
(ii)
Franked to 100% at 30% corporate income tax rate.
Declared after the balance date and not reflected in the financial statements.
-
72.5
64.5
1.75
1.75
7.75
7.63
Other than with respect to share-based incentives linked to TSR, which are disclosed below, there is no direct relationship between shareholder
wealth creation and remuneration, however certain bonuses are paid based on performance targets set for the individual concerned as
discussed further in the following section. The performance targets selected are intended to be the key drivers of shareholder wealth creation,
on both the short and long term.
30
cash converters international limited Under the old LTI plan, which is still in the process of winding up, upon vesting each performance right equates to one ordinary share. The
performance rights are split into multiple tranches and are subject to various vesting conditions. One such vesting condition is the consolidated
entity achieving budgeted profit after tax for various periods, should any of the vesting conditions fail to be achieved the performance rights will
not vest, consequently there is a direct link between the creation of profit and share based payment remuneration.
4 .2
i N c e N t i v e o u t c o m e s f o r y e A r e N d e d 3 0 j u N e 2 0 1 6
The Board has received and responded to feedback regarding the links between internal and external measures of Company performance and
executive remuneration and implemented significant changes for the 2016 financial year as described above. These changes were intended
to significantly improve the links between Company performance and executive remuneration and it is accepted that in the past the links have
been largely internal.
The STI achieved in relation to the year ended 30 June 2016 was paid after the end of the year when the audit of the Company’s accounts was
signed off (i.e. during the year ending 30 June 2017). On average 12% of the award opportunity available (i.e. of the maximum opportunity)
was paid. For the year ended 30 June 2016 the Company paid short term incentives (STIs) to its senior management team based on meeting
short term targets (12 months) as detailed in section 2.5 above.
For the financial year ended 30 June 2016 the Board has reviewed the financial performance of the Group and decided that the LTIs issued
under the previous LTI Plan, due to vest in September 2016, would not vest. The previous LTI plan has been replaced for LTIs issued from 1
July 2015 as described above, so as to improve the links between long term value creation for shareholders (external measures of Company
performance) and Senior Executive reward. There are still a small number of LTIs issued under the previous Plan that may vest in future years
depending on the financial performance of the Group going forward.
4 .3
t o tA l r e m u N e r At i o N pA c k A g e ( t r p ) o u t c o m e s c o m pA r i s o N – y e A r e N d e d 3 0 j u N e 2 0 1 6
Name
Base package incl super
STI achieved (i)
Value of LTI (ii)
% of max
STI
% of TRP
$
% of TRP
(1,731,868)
-
(878,267)
$
% of TRP
Mr Peter Cumins
Mr Ralph Groom
Mr Mark Reid (iii)
Mr Ian Day (iv)
Mr Glen Fee
Mr Martyn Jenkins
Mr Michael Cooke
Mr Shane Prior (v)
Mr Sam Budiselik (vi)
853,601
421,722
316,665
326,718
310,043
296,012
543,336
276,808
102,015
100%
77%
76%
100%
87%
78%
100%
84%
100%
$
-
-
47,500
-
28,631
50,000
-
41,500
-
-
-
11%
-
100%
31%
-
40%
-
-
-
123,217
11%
52,453
-
8%
13%
-
16,025
32,499
-
(447,785)
13%
10,295
-
-
TRP
$
23%
13%
-
5%
9%
-
3%
-
544,939
416,618
326,718
354,699
378,511
95,551
328,603
102,015
(i)
(ii)
(iii)
(iv)
(v)
STIs are paid in the financial year following the year to which they relate. The STI in the above table is the STI awarded for the performance
period (i.e. the value shown for 2016 is the value earned in FY 2016 and paid during FY 2017).
Value of LTIs is calculated as the amortised charge of grants of performance rights over their vesting period. In the 2016 year amounts
expensed in prior years were reversed due to some rights lapsing, which resulted in some negative LTI values.
Appointed November 2015
Retired August 2015
Became member of KMP July 2015
(vi)
Appointed February 2016, resigned June 2016
4 .4
l i N k s B e t w e e N c o m pA N y s t r At e g y A N d r e m u N e r At i o N
The Company intends to attract the superior talent required to successfully implement the Company’s strategies at a reasonable and
appropriately variable cost by:
•
•
generally, positioning Base Packages (the fixed element) around P50 of relevant market data benchmarks;
supplementing the Base Package with at-risk remuneration, being incentives that motivate executive focus on:
31
4 .4
l i N k s B e t w e e N c o m pA N y s t r At e g y A N d r e m u N e r At i o N ( c o N t i N u e d )
*
*
short to mid-term objectives linked to the strategy via KPIs and annual performance assessments at the Company, business
unit and individual level (see relevant section of this report); and
long term value creation for shareholders by linking a material component of remuneration to those factors that shareholders
have expressed should be the long term focus of executives and the Board, being earnings per share (EPS) and indexed
(iTSR).
Following a review of the Group operations during the year ended 30 June 2016, the Company has restructured its operations, with major
changes to the UK and Carboodle businesses, including the sale of 44 corporate stores, the closure of a further 15 stores and the wind-down
of the personal loan book in the UK. These changes and the ongoing review of the Australian business units is expected to lead to an increase
in shareholder return.
32
cash converters international limited 4 .5
r e m u N e r At i o N o f k e y m A N A g e m e N t p e r s o N N e l ( s tAt u t o r y tA B l e s )
The following table outlines the remuneration received by directors and senior executives of the Company during the years ended 30 June 2016
and 2015, prepared according to statutory disclosure requirements and applicable accounting standards:
Short-term employee benefits
Post-
employment
benefits
Other
long-term
benefits
Share-
based
payments
Total
Salary and
fees
Cash bonus
Non-
monetary
benefits
Termin-
ation
benefits
Super-
annuation
2016
Non-executive directors
Mr S Grimshaw
Mr R Webb
Mr L Given
Mr K Dundo
Executive director
$
157,500
107,500
97,500
125,000
Mr P Cumins
764,157
Other executives
Mr R Groom
Mr M Reid (1)
Mr G Fee
Mr M Jenkins
Mr M Cooke
Mr S Prior (2)
Mr S Budiselik (3)
Mr I Day (4)
Total
2015
400,159
303,793
286,306
275,000
543,336
257,500
93,970
51,942
$
-
-
-
-
-
-
47,500
28,631
50,000
-
41,500
-
-
$
-
-
-
-
70,398
2,638
-
4,429
-
-
-
-
-
3,463,663
167,631
77,465
Non-executive directors
Mr S Grimshaw
Mr R Webb
Mr L Given
Mr K Dundo
Mr W Love (5)
Mr J Beal (6)
Mr D Carter (7)
Executive director
64,583
170,000
94,555
39,253
45,833
45,833
18,333
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Mr P Cumins
764,157
200,000
56,346
Other executives
Mr R Groom
Mr G Fee
Mr M Jenkins (8)
Mr M Cooke
Mr I Day
Mr D Patrick (9)
Mr M Osborne (10)
395,643
273,973
60,288
535,836
311,652
235,529
21,984
186,588
24,065
-
-
155,985
18,997
-
-
-
-
-
-
3,210
-
Total
3,077,452
566,638
78,553
$
-
-
-
-
-
-
-
-
-
-
-
-
270,332
270,332
-
-
-
-
-
-
-
-
-
-
-
-
-
411,705
100,665
512,370
$
-
-
-
-
19,046
18,925
12,872
19,308
21,012
-
19,308
8,045
4,444
122,960
-
-
-
-
-
-
-
18,783
17,775
28,314
5,727
-
17,775
59,427
-
147,801
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
$
157,500
107,500
97,500
125,000
(1,731,868)
(878,267)
123,217
544,939
52,453
16,025
32,499
416,618
354,699
378,511
(447,785)
95,551
10,295
328,603
-
-
102,015
326,718
(1,945,164)
2,156,887
-
-
-
-
-
-
-
64,583
170,000
94,555
39,253
45,833
45,833
18,333
439,817
1,479,103
221,337
840,340
49,079
375,431
-
66,015
118,350
654,186
192,467
677,879
-
-
709,871
122,649
1,021,050
5,403,864
33
(1)
(2)
(3)
(4)
(5)
Appointed November 2015
Became member of KMP July 2015
Appointed February 2016, resigned June 2016
Retired August 2015
Resigned August 2014
(6)
(7)
(8)
(9)
Resigned August 2014
Deceased January 2015
Appointed April 2015
Resigned March 2015
(10) Resigned July 2014
The STI values reported in this table are the STIs awarded for the performance period, but are paid in the financial year following the year to
which they relate (i.e. the value shown for 2016 is the value earned in FY 2016 and paid during FY 2017). The LTI value reported in this table
is the amortised accounting charge of all grants that have not lapsed or vested prior to the reporting period (but which may have lapsed or
vested in whole or in part during the period).
It should be noted that the remuneration disclosed in relation to Mr Michael Cooke, General Counsel of Cash Converters International Limited,
represents consulting fees (a retainer) paid to his firm (Cooke & Co) under a consulting agreement (negotiated 24 September 2001). The fees
cover the cost of Mr Cooke’s consulting and the work of his firm’s colleagues in relation to fulfilling the General Counsel function (solicitor) for
Cash Converters International Limited. Mr Cooke retired from this role on 31 August 2016.
4 .6
s h A r e- B A s e d pAy m e N t s g r A N t e d A s c o m p e N s At i o N f o r t h e c u r r e N t f i N A N c i A l y e A r
At the annual general meeting held on 18 November 2015, shareholders approved the establishment of the Cash Converters Rights Plan. At
the same time, the shareholders passed a resolution authorising the Board to issue 3,730,000 performance rights to the managing director, Mr
Peter Cumins. The conditions attaching to those rights were set out in the Explanatory Statement to the Notice of Annual General Meeting.
Under the Cash Converters Rights Plan, the Company may issue performance rights to employees as part of their total remuneration package.
The rights are issued free of charge and have no exercise price, but must be earned through service (in the year in which they are granted) and
the delivery of performance over a three year Measurement Period. For the year ended 30 June 2016 and in future periods, the grant of Rights
will be calculated as follows:
Number = Base package x Target LTI % x Tranche Weighting ÷ Right Value ÷ Target Vesting %
In the above calculation the Right Value is calculated as the VWAP of the Share Price leading up to the calculation date, less expected dividends
over the Measurement Period (based on the most recent dividend year). Because it is intended that stretch LTI vesting will be double the target
LTI used in the above calculation, and the stretch level of LTI must be granted up front, it is necessary to divide by the target vesting % to ensure
the correct outcome when target performance is achieved. The LTI has been set such that there is an approximately 50% expectation of target
vesting, and only a 10% expectation of stretch vesting (i.e. it is indeed that stretch LTI will vest only rarely). The above calculation is the only
method of ensuring outcomes are consistent with the Company’s policies and remuneration intentions.
Terms and conditions of share-based payment arrangements affecting remuneration of key management personnel in the current or future
financial years is set out below:
Tranche
Grant date
Grant date fair
value (i)
Exercise price
Expiry date
Vesting date
Tranche 2
Tranche 3
Tranche 9
Tranche 11
Tranche 12
Tranche 13
Tranche 14
Tranche 15
Tranche 16
30 Nov 2010
19 Sep 2011
24 Sep 2013
25 Sep 2014
25 Sep 2014
18 Nov 2015
18 Nov 2015
28 Jan 2016
28 Jan 2016
$
0.43
0.32
1.09
1.01
0.96
0.23
0.41
0.26
0.45
$
-
-
-
-
-
-
-
-
-
14 Oct 2016
14 Oct 2016
15 Sep 2016
15 Sep 2016
15 Sep 2016
15 Sep 2016
15 Sep 2016
15 Sep 2016
15 Sep 2017
15 Sep 2017
30 Jun 2018
30 Jun 2018
30 Jun 2018
30 Jun 2018
30 Jun 2018
30 Jun 2018
30 Jun 2018
30 Jun 2018
(i)
The grant date fair value is calculated as at the grant date using a Monte Carlo pricing model for tranche 13 and 15 and a binomial pricing
model for other tranches.
34
cash converters international limited It should be noted that while the life of the rights granted under the new LTI plan (i.e. the period between grant date and vesting) may be less
than three years, due to the requirement to obtain shareholder approvals and other administrative requirements, the Measurement Period will
be three years, and aligned with complete financial years.
There has been no alteration of the terms and conditions of the previous share-based payment arrangements since the grant date.
Details of share-based payments granted as compensation to key management personnel during the current financial year:
Name
Tranche
During the financial year
Number granted
Number vested
% of grant vested % of grant forfeited
Mr P Cumins
Mr P Cumins
Mr R Groom
Mr R Groom
Mr M Reid
Mr M Reid
Mr G Fee
Mr G Fee
Mr M Jenkins
Mr M Jenkins
Mr S Prior
Mr S Prior
Tranche 13
Tranche 14
Tranche 15
Tranche 16
Tranche 15
Tranche 16
Tranche 15
Tranche 16
Tranche 15
Tranche 16
Tranche 15
Tranche 16
1,865,000
1,865,000
614,280
614,280
422,220
422,220
45,276
45,276
261,600
261,600
41,009
41,009
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
During the year, the following key management personnel exercised options that were granted to them as part of their compensation. Each
option converts into one ordinary share in Cash Converters International Limited.
Name
Mr R Groom
Mr G Fee
Mr S Prior
Mr I Day
Number of options
exercised
Number of ordinary
shares issued
Amount paid
$
Amount unpaid
$
230,000
51,000
8,500
200,000
230,000
51,000
8,500
200,000
-
-
-
-
-
-
-
-
The following table summarises the value of options granted and exercised during the financial year, in relation to options granted to key
management personnel as part of their remuneration:
Name
Mr P Cumins
Mr R Groom
Mr M Reid
Mr G Fee
Mr M Jenkins
Mr S Prior
Mr I Day
Value of options granted
at grant date (i)
Value of options exercised
at exercise date (ii)
$
1,205,687
438,058
301,095
32,287
186,553
29,245
-
$
-
116,150
-
17,170
-
4,293
101,000
(i)
(ii)
The value of options granted during the financial year is calculated as at the grant date using a Monte Carlo pricing model for tranches
13 and 15 and a binomial pricing model for tranches 14 and 16. This grant date value is allocated to remuneration of key management
personnel on a straight-line basis over the period from grant date to vesting date.
The value of options exercised during the financial year is calculated as at the exercise date, based on the closing market price on the ASX
of the Company’s shares.
35
4 .6
s h A r e- B A s e d pAy m e N t s g r A N t e d A s c o m p e N s At i o N f o r t h e c u r r e N t f i N A N c i A l y e A r
( c o N t i N u e d )
The following table summarises the number of options that lapsed during the financial year, in relation to options granted to key management
personnel as part of their remuneration:
Name
Mr P Cumins
Mr M Cooke
Mr R Groom
Mr I Day
Mr G Fee
Mr R Groom
Mr I Day
Mr G Fee
Mr S Prior
Financial year in which the options were
granted
Number of options lapsed during the
current year
2011
2012
2014
2014
2014
2015
2015
2015
2015
6,000,000
1,800,000
76,666
66,666
17,000
76,667
133,333
17,000
8,500
5 .
k e y t e r m s o f e m p l o y m e N t c o N t r A c t s
Contracts of employment for Mr Peter Cumins and Mr Ralph Groom require a notice period of not less than three months from the executive
and 12 months from the Company, to terminate employment. In the event of termination by the Company, the Company may elect that the
executive does not serve the notice period, in which case 12 months’ salary would be payable. The contracts are rolling with no fixed term.
The contract of employment for Mr Mark Reid requires a notice period of not less than six months by either party to terminate employment. In
the event of termination by the Company, the Company may elect that the executive does not serve the notice period, in which case six months’
salary would be payable. The contract is rolling with no fixed term.
Contracts of employment for Mr Glen Fee and Mr Martyn Jenkins require a notice period of not less than one month by either party to terminate
employment. In the event of termination by the Company, the Company may elect that the executive does not serve the notice period, in which
case one month’s salary would be payable.
The contract of employment for Mr Shane Prior requires a notice period of not less than four weeks by either party to terminate employment.
In the event of termination by the Company, the Company may elect that the executive does not serve the notice period, in which case four
weeks’ salary would be payable.
The treatment of incentives in the case of termination is addressed in separate sections of this report that give details of incentive design. The
incentive plans are designed such that they will not give rise to a termination benefit.
None of the non-executive directors have an employment contract with the Company.
36
cash converters international limited
k e y m A N A g e m e N t p e r s o N N e l e q u i t y h o l d i N g s
f u l ly pA i d o r d i N A ry s h A r e s o f c A s h c o N v e rt e r s i N t e r N At i o N A l l i m i t e d
Balance at 1 July
2015
Granted as
remuneration
Received on
exercise of options
Net other change
Balance at 30 June
2016
Number
Number
Number
Number
Number
11,396,055
(1)
(2)
Opening balance at date of becoming member of KMP
Closing balance at date of resignation
Balance at 1 July
2014
Granted as
remuneration
Received on
exercise of options
Net other change
Balance at 30 June
2015
Number
Number
Number
Number
Number
Directors
Mr P Cumins
Mr S Grimshaw
Mr R Webb
Mr L Given
Mr K Dundo
Other key management personnel
Mr R Groom
Mr M Reid (1)
Mr G Fee
Mr M Jenkins
Mr M Cooke
Mr S Prior (1)
Mr S Budiselik (1)
Mr I Day (2)
Directors
Mr P Cumins
Mr S Grimshaw (1)
Mr R Webb
Mr L Given (1)
Mr K Dundo (1)
Mr W Love (2)
Mr J Beal (2)
Mr D Carter (1), (2)
Mr R Groom
Mr G Fee
Mr M Jenkins (1)
Mr M Cooke
Mr I Day
Mr D Patrick (2)
Mr M Osborne (2)
Other key management personnel
10,313,030
-
1,012,500
-
-
19,525
-
51,000
-
-
-
-
-
10,253,030
-
1,012,500
-
-
-
-
-
-
17,000
-
-
-
-
-
11,282,530
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
230,000
-
51,000
-
-
8,500
-
200,000
489,500
200,000
10,513,030
-
-
-
-
-
-
-
3,375
-
(8,500)
-
-
194,875
-
1,012,500
-
-
249,525
-
102,000
3,375
-
-
-
200,000
12,080,430
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
60,000
10,313,030
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
153,334
34,000
-
-
(133,809)
-
-
-
133,334
(133,334)
-
-
-
-
-
1,012,500
-
-
-
-
-
19,525
51,000
-
-
-
-
-
(1)
(2)
Opening balance at date of becoming member of KMP
Closing balance at date of resignation
37
320,668
(207,143)
11,396,055
Performance rights of Cash Converters International Limited
Balance at 1 July
2015
Granted as
remuneration
Options/rights
exercised
Options lapsed /
forfeited
Balance at 30 June
2016
Number
Number
Number
Number
Number
Directors
Mr P Cumins
Mr S Grimshaw
Mr R Webb
Mr L Given
Mr K Dundo
6,000,000
3,730,000
-
-
-
-
-
-
-
-
-
-
-
-
-
(6,000,000)
3,730,000
-
-
-
-
-
-
-
-
Other key management personnel
Mr R Groom
Mr M Reid (1)
Mr G Fee
Mr M Jenkins
Mr M Cooke
Mr S Prior (1)
Mr S Budiselik (1)
Mr I Day (2)
459,999
1,228,560
(230,000)
(153,333)
1,305,226
-
102,000
-
1,800,000
25,500
-
399,999
8,787,498
844,440
90,552
523,200
-
82,018
-
-
6,498,770
-
(51,000)
-
-
(8,500)
-
(200,000)
(489,500)
-
(34,000)
-
(1,800,000)
(8,500)
-
(199,999)
(8,195,832)
844,440
107,552
523,200
-
90,518
-
-
6,600,936
(1)
(2)
Opening balance at date of becoming member of KMP
Closing balance at date of resignation
Balance at 1 July
2014
Granted as
remuneration
Options/rights
exercised
Options lapsed /
forfeited
Balance at 30 June
2015
Number
Number
Number
Number
Number
Directors
Mr P Cumins
Mr S Grimshaw (1)
Mr R Webb
Mr L Given (1)
Mr K Dundo (1)
Mr W Love (2)
Mr J Beal (2)
Mr D Carter (1), (2)
6,000,000
-
-
-
-
-
-
-
Other key management personnel
Mr R Groom
Mr G Fee
Mr M Jenkins (1)
Mr M Cooke
Mr I Day
Mr D Patrick (2)
Mr M Osborne (2)
383,333
85,000
-
1,800,000
333,333
56,666
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
230,000
51,000
-
-
(153,334)
(34,000)
-
-
200,000
(133,334)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(56,666)
-
6,000,000
-
-
-
-
-
-
-
459,999
102,000
-
1,800,000
399,999
-
-
8,658,332
481,000
(320,668)
(56,666)
8,761,998
(1)
(2)
Opening balance at date of becoming member of KMP
Closing balance at date of resignation
38
cash converters international limited o t h e r t r A N s A c t i o N s w i t h k e y m A N A g e m e N t p e r s o N N e l
During the year the Group paid $55,074 to HopgoodGanim, a law firm in which Mr Kevin Dundo is a partner, for legal services. Legal services
were provided to the Group on terms and conditions no more favourable than those that it is reasonable to expect the Company would have
been charged if dealing at arm’s length with an unrelated party.
This directors’ report is signed in accordance with a resolution of directors made pursuant to s298(2) of the Corporations Act 2001.
On behalf of the directors
Peter Cumins
Director
Perth, Western Australia
30 September 2016
39
c o r p o r A t e g o v e r N A N c e
f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 6
The Company’s Corporate Governance Statement can be found on the Company’s website at http://www.cashconverters.com/Governance.
The following governance-related documents can also be found in the Corporate Governance section of the Company’s website:
•
•
•
•
•
•
Code of conduct
Continuous disclosure policy
Audit committee charter
Remuneration committee charter
Nomination committee charter
Share trading policy
40
cash converters international limited c o N s o l i d At e d s tAt e m e N t o f p r o f i t o r l o s s A N d o t h e r c o m p r e h e N s i v e i N c o m e
f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 6
Continuing operations
Franchise fee revenue
Financial services interest revenue
Sale of goods
Other revenues
Total revenue
Financial services cost of sales
Cost of goods sold
Other cost of sales
Total cost of sales
Gross profit
Administrative expenses
Advertising expenses
Occupancy expenses
Contract termination expense
Settlement expense
Other expenses
Finance costs
Share of net profit / (loss) of equity accounted investments
Profit before income tax
Income tax expense
Profit / (loss) for the year from continuing operations
Discontinued operations
Loss for the year from discontinued operations
Notes
2.1
2.1
2.1
2.2
2.2
2.2
2.2
2.2
2.2
5.2
2.3
5.1
2016
$
11,467,451
212,705,112
74,161,465
6,525,470
304,859,498
(41,821,050)
(40,038,650)
(4,693,335)
(86,553,035)
2015
$
10,648,740
208,878,588
63,449,932
5,688,527
288,665,787
(40,687,721)
(35,082,317)
(4,865,047)
(80,635,085)
218,306,463
208,030,702
(75,419,385)
(8,334,287)
(15,022,615)
-
-
(76,543,360)
(9,659,027)
(2,156,368)
31,171,421
(5,277,453)
25,893,968
(71,874,363)
(6,901,835)
(13,991,580)
(29,628,270)
(23,000,000)
(49,781,754)
(9,072,074)
73,683
3,854,509
(5,109,292)
(1,254,783)
(31,166,048)
(20,430,307)
Loss for the year
(5,272,080)
(21,685,090)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations
Other comprehensive (loss) / income for the year
Total comprehensive (loss) for the year
(Loss) attributable to:
Owners of the Company
Non-controlling interest
Total comprehensive loss attributable to:
Owners of the Company
Non-controlling interest
Earnings / (loss) per share
From continuing operations
Basic (cents per share)
Diluted (cents per share)
From continuing and discontinued operations
Basic (cents per share)
Diluted (cents per share)
(4,153,651)
(4,153,651)
(9,425,731)
(5,271,982)
(98)
(5,272,080)
(9,425,633)
(98)
(9,425,731)
5.37
5.24
(1.09)
(1.09)
7,633,797
7,633,797
(14,051,293)
(21,483,718)
(201,372)
(21,685,090)
(13,849,921)
(201,372)
(14,051,293)
(0.27)
(0.27)
(4.69)
(4.69)
41
2.4
2.4
2.4
2.4
The accompanying notes form an integral part of the consolidated statement of profit or loss and other comprehensive income.
c o N s o l i d At e d s tAt e m e N t o f f i N A N c i A l p o s i t i o N
f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 6
Notes
Current assets
Cash and cash equivalents
Trade receivables
Personal loan receivables
Inventories
Prepayments
Current tax receivable
Assets associated with discontinued operations
Total current assets
Non-current assets
Trade and other receivables
Plant and equipment
Deferred tax assets
Goodwill
Other intangible assets
Investments in associates
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
4.1
3.1
3.2
3.3
5.1
3.1
3.4
2.3
3.5
3.6
5.2
3.7
4.2
3.8
4.2
3.8
4.4
Equity attributable to owners of the Company
Non-controlling interests
Total equity
The accompanying notes form an integral part of the consolidated statement of financial position.
42
2016
$
73,608,681
14,754,985
101,315,301
17,611,803
9,767,192
9,850,624
226,908,586
7,448,377
234,356,963
27,868,087
13,853,519
13,075,235
107,008,562
24,034,253
4,294,818
190,134,474
2015
$
52,378,665
16,096,043
131,886,047
27,683,578
11,936,995
3,600,310
243,581,638
-
243,581,638
18,985,690
25,357,910
10,875,338
111,408,026
24,706,855
6,287,609
197,621,428
424,491,437
441,203,066
19,821,259
70,023,203
22,426,476
112,270,938
63,960,904
5,974,723
69,935,627
26,449,716
60,705,129
25,672,716
112,827,561
66,436,795
240,082
66,676,877
182,206,565
179,504,438
242,284,872
261,698,628
207,539,821
(8,725,929)
43,470,029
242,283,921
951
242,284,872
205,399,340
(2,080,407)
58,378,646
261,697,579
1,049
261,698,628
cash converters international limited c o N s o l i d At e d s tAt e m e N t o f c h A N g e s i N e q u i t y
f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 6
Issued
capital
Foreign
currency
translation
reserve
Share-based
payment
reserve
Non-
controlling
interest
acquisition
reserve
Retained
earnings
Attributable
to owners of
the parent
Non-
controlling
interest
Total
$
$
$
$
$
$
$
$
Balance at 1 July 2014
156,679,067
3,062,875 (11,662,250)
2,096,186
98,025,142 248,201,020
(3,494,699) 244,706,321
Loss for the year
Exchange differences arising
on translation of foreign
operations
Total comprehensive income
for the year
-
-
-
-
7,633,797
7,633,797
Issue of shares (net of costs)
43,837,794
Dividend reinvestment plan
4,515,708
Share-based payments
-
Shares issued on exercise of
performance rights
366,771
Dividends paid
Acquisition of non-controlling
interests
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- (21,483,718)
(21,483,718)
(201,372) (21,685,090)
-
-
7,633,797
-
7,633,797
- (21,483,718)
(13,849,921)
(201,372) (14,051,293)
-
-
1,302,876
(366,771)
-
-
-
-
43,837,794
- 43,837,794
4,515,708
1,302,876
-
-
-
-
-
1,302,876
-
- (18,162,778)
(18,162,778)
- (18,162,778)
(4,147,120)
-
-
(4,147,120)
3,697,120
(450,000)
Balance at 30 June 2015
205,399,340
10,696,672 (15,809,370)
3,032,291
58,378,646 261,697,579
1,049 261,698,628
Profit for the year
Exchange differences arising
on translation of foreign
operations
Total comprehensive income
for the year
-
-
-
-
(4,153,651)
(4,153,651)
Dividend reinvestment plan
1,571,904
Share-based payments
-
Shares issued on exercise of
performance rights
Dividends paid
568,577
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,923,294)
(568,577)
(5,271,982)
(5,271,982)
(98)
(5,272,080)
-
(4,153,651)
-
(4,153,651)
(5,271,982)
(9,425,633)
(98)
(9,425,731)
-
-
-
1,571,904
(1,923,294)
-
-
(9,636,635)
(9,636,635)
-
-
-
-
1,571,904
(1,923,294)
-
(9,636,635)
Balance at 30 June 2016
207,539,821
6,543,021 (15,809,370)
540,420
43,470,029 242,283,921
951 242,284,872
The accompanying notes form an integral part of the consolidated statement of changes in equity.
43
Notes
2.2
2.7
3.6
c o N s o l i d At e d s tAt e m e N t o f c A s h f l o w s
f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 6
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Payment for contract termination
Payment for settlement expense
Interest received
Interest received from personal loans
Net increase in personal loans advanced
Interest and costs of finance paid
Income tax paid
Net cash flows provided by operating activities
Cash flows from investing activities
Net cash paid for acquisition of controlled entities
Acquisition of intangible assets
Purchase of plant and equipment
Proceeds on disposal of non-current assets
Instalment credit loans repaid by franchisees
Net cash flows used in investing activities
Cash flows from financing activities
Dividends paid – members of parent entity
Proceeds from borrowings
Repayment of borrowings
Capital element of finance lease and hire purchase payment
Payment for change in ownership of a controlled entity
Proceeds from issue of shares
Share issue costs
Net cash flows provided by financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on the balance of cash held in foreign
currencies
Cash and cash equivalents at the end of the year
4.1
The accompanying notes form an integral part of the consolidated statement of cash flows.
44
2016
$
261,950,137
(253,760,780)
-
(23,128,219)
1,622,095
94,742,495
(25,801,507)
(10,840,541)
(14,709,711)
30,073,969
-
(3,425,868)
(5,283,385)
415,172
92,082
2015
$
242,343,005
(256,073,351)
(30,053,870)
-
566,316
98,199,057
(18,007,344)
(9,072,074)
(15,065,927)
12,835,812
(13,458,891)
(2,602,088)
(7,979,308)
-
254,710
(8,201,999)
(23,785,577)
(8,064,732)
77,815,811
(69,611,786)
(103,948)
-
-
-
35,345
21,907,315
52,378,665
(677,299)
73,608,681
(13,647,070)
24,558,206
(21,470,484)
(364,501)
(450,000)
45,030,000
(1,703,152)
31,952,999
21,003,234
26,843,072
4,532,359
52,378,665
cash converters international limited N o t e s t o t h e f i N A N c i A l s t A t e m e N t s
f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 6
(1 )
B A s i s o f p r e pA r At i o N
In this section
This section sets out the basis upon which the Group’s financial statements are prepared as a whole. Specific accounting policies
are described in the note to which they relate.
Cash Converters International Limited (the Company) is a for-profit company limited by shares, incorporated and domiciled in
Australia. Its shares are publicly traded on the Australian Securities Exchange.
The financial report of the Company for the year ended 30 June 2016 was authorised for issue in accordance with a resolution of
directors dated 30 September 2016.
( A )
s tAt e m e N t o f c o m p l i A N c e
The financial report complies with Australian Accounting Standards and International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board.
The financial report is a general purpose financial report which has been prepared in accordance with the requirements of the
Corporations Act 2001 and Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting
Standards Board. The financial report has been prepared on a historical cost basis, except where noted. The financial report is
presented in Australian dollars.
The financial report comprises the consolidated financial report of the Cash Converters Group of companies. Accounting Standards
include Australian Accounting Standards. Compliance with the Australian Accounting Standards ensures that the financial statements
and notes of the consolidated entity comply with International Financial Reporting Standards (‘IFRS’).
Comparative information within the statement of financial position in relation to accrued interest of $12,024,374 has been reclassified
from other receivables, within trade and other receivables to personal loans receivable to be comparable to current year presentation.
( B )
c h A N g e s t o A c c o u N t i N g p o l i c i e s
Adoption of new and revised Accounting Standards
The Group has adopted all of the new and revised Standards and Interpretations, including amendments to the existing standards
issued by the Australian Accounting Standards Board (the AASB) that are relevant to their operations and effective for the current
reporting period.
The adoption of these amendments has not resulted in any significant changes to the Group’s accounting policies nor any significant
effect on the measurement or disclosure of the amounts reported for the current or prior periods.
45
(1 )
B A s i s o f p r e pA r At i o N ( c o N t i N u e d )
( B )
c h A N g e s t o A c c o u N t i N g p o l i c i e s ( c o N t i N u e d )
Standards and interpretations in issue not yet adopted
At the date of authorisation of the financial statements, the Standards and Interpretations that were issued but not yet effective are
listed below:
Standard / Interpretation
Effective for annual
reporting periods
beginning on or after
Expected to be initially
applied in financial year
ending
AASB 9 ‘Financial Instruments’, and the relevant amending standards
1 January 2018
30 June 2019
AASB 15 ‘Revenue from Contracts with Customers’, AASB 2014-5
‘Amendments to Australian Accounting Standards arising from AASB
15’, AASB 2015-8 ‘Amendments to Australian Accounting Standards –
Effective date of AASB 15’
AASB 16 ‘Leases’
AASB 1057 ‘Application of Australian Accounting Standards’ and AASB
2015-9 ‘Amendments to Australian Accounting Standards – Scope and
Application Paragraphs’
AASB 2014-3 ‘Amendments to Australian Accounting Standards –
Accounting for Acquisitions of Interests in Joint Operations’
AASB 2014-4 ‘Amendments to Australian Accounting Standards –
Clarification of Acceptable Methods of Depreciation and Amortisation’
AASB 2014-9 ‘Amendments to Australian Accounting Standards –
Equity Method in Separate Financial Statements’
AASB 2014-10 ‘Amendments to Australian Accounting Standards – Sale
or Contribution of Assets between an Investor and its Associate or Joint
Venture’ and AASB 2015-10 ‘Amendments to Australian Accounting
Standards – Effective Date of Amendments to AASB 10 and AASB 128’
AASB 2015-1 ‘Amendments to Australian Accounting Standards –
Annual Improvements to Australian Accounting Standards 2012-2014
Cycle’
AASB 2015-2 ‘Amendments to Australian Accounting Standards –
Disclosure Initiative: Amendments to AASB 101’
AASB 2016-1 ‘Amendments to Australian Accounting Standards –
Recognition of Deferred Tax Assets for Unrealised Losses’
AASB 2016-2 ‘Amendments to Australian Accounting Standards –
Disclosure Initiative: Amendments to AASB 107’
AASB 2016-5 ‘Amendments to Australian Accounting Standards –
Classification and Measurement of Share-based Payment Transactions
1 January 2018
1 January 2019
30 June 2019
30 June 2020
1 January 2016
30 June 2017
1 January 2016
30 June 2017
1 January 2016
30 June 2017
1 January 2016
30 June 2017
1 January 2018
30 June 2019
1 January 2016
30 June 2017
1 January 2016
30 June 2017
1 January 2017
30 June 2018
1 January 2017
30 June 2018
1 January 2018
30 June 2019
46
cash converters international limited (1 )
B A s i s o f p r e pA r At i o N ( c o N t i N u e d )
( B )
c h A N g e s t o A c c o u N t i N g p o l i c i e s ( c o N t i N u e d )
Impact of changes to Australian Accounting Standards and Interpretations
A number of Australian Accounting Standards and Interpretations are in issue but are not effective for the current year end. The
following existing group accounting policies will change on adoption of these pronouncements:
AASB 9 ‘Financial Instruments’, and the relevant amending standards
AASB 9 applies to annual periods beginning on or after 1 January 2018. The directors of the Company anticipate that the application
of AASB 9 in the future may have a significant impact on amounts reported in respect of the Group’s financial assets and financial
liabilities. However, it is not practicable to provide a reasonable estimate of the effect of AASB 9 until the Group undertakes a detailed
review.
AASB 15 ‘Revenue from Contracts with Customers’
AASB 15 applies to annual periods beginning on or after 1 January 2018. A review of the impact that the application of AASB 15 in
the future may have on the amounts reported and disclosures made in the Group’s consolidated financial statements is still in process
and it is not practicable to provide a reasonable estimate of the effect of AASB 16 until the Group performs a detailed review.
AASB 16 ‘Leases’
AASB 16 applies to annual periods beginning on or after 1 January 2019. The directors of the Company anticipate that the application
of AASB 16 in the future may have a significant impact on amounts reported and disclosures made in the Group’s consolidated
financial statements. However, it is not practicable to provide a reasonable estimate of the effect of AASB 16 until the Group
undertakes a detailed review.
( c )
k e y j u d g e m e N t s A N d e s t i m At e s
In applying the Group’s accounting policies, management continually evaluates judgements, estimates and assumptions based
on experience and other factors, including expectations of future events that may have an impact on the Group. All judgements,
estimates and assumptions made are believed to be reasonable based on the most current set of circumstances available to
management. Actual results may differ from the judgements, estimates and assumptions. Significant judgements, estimates and
assumptions made by management in the preparation of these financial statements are outlined below:
Significant accounting judgements
In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those
involving estimations, which have the most significant effect on the amount recognised in the financial statements:
•
•
Recoverability of deferred tax assets – see note 2.3(g))
Provision for ASIC Compliance – see note 3.8
Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The
key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets
and liabilities within the next annual reporting period are:
•
•
•
Impairment of goodwill and other intangible assets – see note 3.5 and 3.6
Useful lives of other intangible assets – see note 3.6
Impairment of financial assets (including personal loan receivables) – see note 3.2
47
(1 )
B A s i s o f p r e pA r At i o N ( c o N t i N u e d )
( d )
B A s i s o f c o N s o l i d At i o N
The consolidated financial statements comprise the financial statements of Cash Converters International Limited and entities
controlled by the Company and its subsidiaries (the Group, as outlined in note 5.3). Control is achieved when the company:
•
•
•
has power over the investee:
is exposed, or has rights, to variable returns from its involvement with the investee; and
has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or
more of the three elements of control listed above.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses
control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in
the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date
when the Company ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-
controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-
controlling interests even if this results in the non-controlling interests having a deficit balance.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group
are eliminated in full on consolidation.
( e )
f o r e i g N c u r r e N c y
Both the functional and presentation currency of Cash Converters International Limited and its Australian subsidiaries is Australian
dollars ($). The functional and presentation currency of the non-Australian Group companies is the national currency of the country
of operation.
As at the reporting date the assets and liabilities of foreign subsidiaries are translated into Australian dollars at the rate of exchange
ruling at the reporting date and the statements of comprehensive income are translated at the average exchange rates for the
year. The exchange differences arising on the translation are taken directly to a separate component of equity, the foreign currency
translation reserve.
Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the
balance sheet date. Foreign currency differences arising on translation are recognised in the income statement.
( f )
o t h e r A c c o u N t i N g p o l i c i e s
Significant and other accounting policies that summarise the measurement basis used and are relevant to an understanding of the
financial statements are provided throughout the notes to the financial statements.
48
cash converters international limited (1 )
B A s i s o f p r e pA r At i o N ( c o N t i N u e d )
( g )
c h A N g e s B e t w e e N A p p e N d i x 4e ( p r e l i m i N A r y f i N A l r e p o r t ) A N d f i N A N c i A l s tAt e m e N t s
Net profit for the year from continuing operations as included in the financial statements has increased by $5,805,752 compared to
the Appendix 4E released to ASX on 30 August 2016 as a result of:
(i)
(ii)
finalisation of the Group’s taxation calculations; and
identification of certain share options which lapsed during the year, prior to vesting.
(2 )
f i N A N c i A l p e r f o r m A N c e
In this section
This section explains the results and performance of Cash Converters International Limited and the Cash Converters Group. This
section provides additional information about those individual line items in the financial statements that the Directors consider
most relevant in the context of the operations of the entity, including:
a)
b)
Accounting policies that are relevant for understanding the items recognised in the financial statements; and
Analysis of the Group’s result for the year by reference to key areas, including revenue, results by operating segment and
income tax.
2 .1
r e v e N u e
Financial services interest revenue
Personal loan interest
Loan establishment fees
Pawn broking fees
Financial services commission
Vehicle lease interest
Instalment credit loan interest
Other financial services revenue
Sale of goods
Retail sales
Vehicle trade sales
Other revenue
Bank interest
Other vehicle revenue
Other revenue
2016
$
86,075,380
53,484,827
28,127,484
40,260,082
2,644,116
1,227,398
885,825
2015
$
103,616,588
36,370,877
25,799,654
37,892,349
3,348,503
1,247,301
603,316
212,705,112
208,878,588
73,728,419
433,046
74,161,465
593,056
4,920,021
1,012,393
6,525,470
62,556,186
893,746
63,449,932
566,316
4,443,405
678,806
5,688,527
49
2 .1
r e v e N u e ( c o N t i N u e d )
Accounting policies
Franchise fees
Franchise fees and levies in respect of particular services are recognised as income when they become due and receivable and the
costs in relation to the income are recognised as expenses when incurred.
Personal loan, vehicle finance, vehicle lease and pawn broking interest
Interest revenue in relation to personal loans, vehicle finance, vehicle leases and pawn broking is accrued on a time basis by reference
to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset to that asset’s net carrying amount.
Loan establishment fee revenue
Establishment fees are deferred and recognised over the life of the loans at the effective interest rate applicable so as to recognise
revenue at a constant rate to the underlying principal over the expected life of the loan.
Other vehicle revenue
Charges relating to the vehicle leases such as vehicle maintenance, warranty, registration and insurance are recognised over the life
of the lease.
Other categories of revenue
Other categories of revenue, such as financial services commission and retail sales, are recognised when the consolidated entity has
transferred the risks and rewards of the goods to the buyer or when the services are provided. Bank interest is recognised as earned
on an accruals basis.
2 .2
e x p e N s e s
Administrative expenses
Employee benefits
Share-based payments (i)
Superannuation expense
Motor vehicle / travel costs
2016
$
70,638,825
(1,923,294)
5,320,126
1,383,728
75,419,385
2015
$
64,520,629
1,302,876
4,575,941
1,474,917
71,874,363
(i)
During the year ended 30 June 2016 a number of performance rights issued to employees of the Company lapsed unvested,
and share-based payments expense amounts that had been expensed in prior years in respect of these rights were reversed,
resulting in a negative share-based payments expense for the year. Refer to note 6.5 for further information on share-based
payments.
Occupancy expenses
Rent
Outgoings
Other
50
10,937,482
1,839,307
2,245,826
15,022,615
10,095,815
2,461,381
1,434,384
13,991,580
cash converters international limited 2 .2
e x p e N s e s ( c o N t i N u e d )
Other expenses
Legal fees
Area agent fees / commission
Professional and registry costs
Auditing and accounting services
Communications expenses
Bank charges
Loss on write down of assets
IT implementation costs
ASIC compliance settlement provision
Green Light Auto restructure costs
Other expenses from ordinary activities
Depreciation
Amortisation
Finance costs
Interest
Finance lease charge
Contract termination expense
Notes
2016
$
2015
$
3,636,073
3,042,438
16,344,966
16,803,584
5,075,509
671,014
2,673,400
3,110,716
3,736,679
2,771,928
3.8
12,500,000
2,227,773
3,566,710
782,131
2,650,026
4,279,337
1,373
-
-
-
16,928,636
11,770,936
3,588,842
3,277,824
3,434,514
3,450,705
76,543,360
49,781,754
9,592,142
9,012,439
66,885
59,635
9,659,027
9,072,074
During the year ended 30 June 2015, the Group settled on contracts to effect the termination of agency agreements with development
agents Kentsleigh Pty Ltd and Cliffview Pty Ltd (“Development Agents”). Cash consideration of $30,800,000 was paid to the
Development Agents, of which $29,628,270 was recorded as Contract Termination expenses in the statement of profit or loss and
other comprehensive income and $746,130 was recorded as an intangible asset in the statement of financial position.
Settlement expense
The settlement expense during the year ended 30 June 2015 related to the settlement of the NSW Class Action claim. Class members
comprised borrowers in New South Wales who took loans from Cash Converters subsidiaries and franchisees during the period 1 July
2010 to 30 June 2013. Refer to note 3.8 for further details.
Accounting policies
Employee benefits expense
The Group’s accounting policy for liabilities associated with employee benefits is set out in note 3.8. The policy relating to share-
based payments is set out in note 6.5.
Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership
to the lessee. All other leases are classified as operating leases.
Assets held under finance leases are initially recognised as assets of the Group at their fair value at the inception of the lease or, if
lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of
financial position as a finance lease obligation. Lease payments are apportioned between finance expenses and reduction of the
51
2 .2
e x p e N s e s ( c o N t i N u e d )
lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised
immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance
with the Group’s general policy on borrowing costs (see 4.2 below).
Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic
basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Impairment
Impairment expenses are recognised to the extent that the carrying amount of assets exceeds their recoverable amount. Refer to
note 3.5 for further details on impairment.
2 .3
tA x At i o N
This note sets out the Group tax accounting policies and provides an analysis of the Group’s income tax expense / benefit and
deferred tax balances, including a reconciliation of tax expense to accounting profit.
Income tax is accounted for using the balance sheet method. Accounting income is not always the same as taxable income,
creating timing differences. These differences usually reverse over time. Until they reverse, a deferred tax asset or liability must
be recognised in the statement of financial position.
( A )
c o N s o l i d At e d i N c o m e s tAt e m e N t
The major components of tax expense are:
Current income tax expense
Current year
Adjustment for prior years
Deferred income tax expense
Temporary differences
Adjustment for prior years
Income tax expense reported in income statement
Tax reconciliation
2016
$
7,867,930
(134,342)
(2,634,775)
178,640
5,277,453
2015
$
2,410,755
(441,146)
3,139,683
-
5,109,292
Profit / (loss) before tax from continuing operations
31,171,421
3,854,509
Income tax at the statutory rate of 30% (2015: 30%)
Adjustments relating to prior years
Income tax rate differential
Non-deductible items
Tax effect of share-based payment expense
Impairment of tax losses
Other
Income tax expense on profit before tax
52
9,351,426
44,299
(1,625,025)
(2,677,479)
(652,592)
836,824
-
5,277,453
1,156,353
756,643
(408,078)
(2,099,405)
262,876
5,358,315
82,588
5,109,292
cash converters international limited 2 .3
tA x At i o N ( c o N t i N u e d )
( B )
d e f e r r e d tA x
Deferred income tax in the balance sheet relates to the following:
Deferred tax assets
Allowance for doubtful debts
Accruals
Provision for employee entitlements
Other provisions
Other
Carry forward losses
Deferred tax liabilities
Fixed assets
Intangible assets
2016
$
7,892,162
572,901
1,985,806
691,080
2,942,799
2,792,090
2015
$
7,710,385
222,512
1,765,326
868,548
3,459,699
1,240,475
16,876,838
15,266,945
(2,582,306)
(1,219,297)
(3,801,603)
(3,243,071)
(1,148,536)
(4,391,607)
Net deferred tax assets
13,075,235
10,875,338
Reconciliation of net deferred tax assets
Opening balance at beginning of period
Tax benefit / (expense) during period recognised in profit or loss
Prior year adjustment
Other
Closing balance at end of period
( c )
u N r e c o g N i s e d d e f e r r e d tA x B A l A N c e s
Deferred income tax in the balance sheet relates to the following:
10,875,338
2,634,776
(178,640)
(256,239)
13,075,235
13,543,414
(2,595,991)
-
(72,085)
10,875,338
Tax losses - revenue
5,253,332
5,989,351
( d )
c A r r y f o r w A r d tA x l o s s e s
Carry forward losses of $2,792,090 (2015: $1,240,475) have been recognised in relation to the Group’s UK operations, which are
currently loss making. Refer to note 5.1 for more information on the UK operations and background to current period losses, and
note 2.3(g) for further information supporting the recognition of these losses.
( e )
tA x c o N s o l i d At i o N
Relevance of tax consolidation to the consolidated entity
The Company and its wholly-owned Australian resident entities have formed a tax-consolidated group with effect from 1 July 2003
and are therefore taxed as a single entity from that date. The head entity within the tax-consolidated group is Cash Converters
International Limited. The members of the tax-consolidated group are identified in note 5.3.
53
2 .3
tA x At i o N ( c o N t i N u e d )
Nature of tax funding arrangements and tax sharing agreements
Entities within the tax-consolidated group have entered into a tax funding arrangement and a tax sharing agreement with the head
entity. Under the terms of the tax funding arrangement, Cash Converters International Limited and each of the entities in the tax-
consolidated group has agreed to pay a tax equivalent payment to or from the head entity, based on the current tax liability or current
tax asset of the entity. Such amounts are reflected in amounts receivable from or payable to other entities in the tax-consolidated
group.
The tax sharing agreement entered into between members of the tax-consolidated group provides for the determination of the
allocation of income tax liabilities between the entities should the head entity default on its tax payment obligation. No amounts have
been recognised in the financial statements in respect of this agreement as payment of any amounts under the tax sharing agreement
is considered remote.
( f )
A c c o u N t i N g p o l i c i e s
Current taxes
Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or tax
loss for the period. Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to taxation
authorities. All are calculated at the tax rates and tax laws enacted or substantively enacted by the balance sheet date.
Deferred taxes
Deferred income tax liabilities are recognised for all taxable temporary differences. Deferred income tax assets are recognised for all
deductible temporary differences, carried forward unused tax assets and unused tax losses, to the extent it is probable that taxable
profit will be available to utilise them. However, deferred tax assets and liabilities are not recognised if the temporary differences
giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a business combination) which
affects neither taxable income nor accounting profit. A deferred tax liability is not recognised in relation to the temporary differences
arising from the initial recognition of goodwill.
The carrying amount of deferred income tax assets is reviewed at balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to utilise them.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is
realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the balance
sheet date.
Deferred tax assets and liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax
liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.
Current and deferred tax for the period
Current and deferred tax is recognised as an expense or income in the statement of comprehensive income, except when it relates to
items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises from
the initial accounting for a business combination, in which case it is taken into account in the determination of goodwill or excess.
( g )
k e y e s t i m At e: d e f e r r e d tA x A s s e t s
A net deferred tax asset of $13,075,235 (2015: $10,875,338) has been recognised in the consolidated statement of financial position.
This includes $2,792,090 (2015: $1,240,475) of carried forward tax losses in relation to the Group’s UK operations, which have
an indefinite availability period subject to satisfaction of the same ownership and continuity of business tests. This tax benefit
is expected to be realised over the next 3 to 5 years when taxable profits through future profitable operations are expected to be
generated to utilise the carried forward tax losses. A deferred tax asset for the UK operations has only been recognised to the extent
tax losses are recoverable against future earnings.
In making this assessment, a forward looking estimation of taxable profit was made, based on management’s best estimate of future
UK performance from continuing operations as at 30 June 2016.
Continuing operations in Australia were profitable during the current year and the Australian tax group is expected to continue to be
profitable, therefore supporting the recognition of net deferred tax assets in Australia.
54
cash converters international limited 2 .4
e A r N i N g s p e r s h A r e
Earnings per share (EPS) is the amount of post-tax profit / (loss) attributable to each share. Basic EPS is calculated on the Company’s
statutory profit for the year divided by the weighted average number of shares outstanding. Diluted EPS adjusts the basic EPS for the
dilutive effect of any instruments, such as options, that could be converted into ordinary shares. The calculation of basic earnings per
share has been based on the following profit / (loss) attributable to ordinary shareholders and weighted average number of ordinary
shares outstanding.
Reconciliation of earnings used in calculating earnings per share
Basic and diluted earnings per share
Profit / (loss) attributable to shareholders of the Company
used in calculating earnings per share
From continuing operations
From discontinued operations
Weighted average number of shares used as the denominator
Weighted average number of shares - basic
Dilutive effect of performance rights
Weighted average number of shares - diluted
2016
$
2015
$
25,894,066
(31,166,048)
(5,271,982)
Number
482,214,271
11,866,600
494,080,871
(1,053,411)
(20,430,307)
(21,483,718)
Number
458,052,281
-
458,052,281
The number of potential ordinary shares not included in the above calculation is 14,798,151 (2015: 9,406,538).
2 .5
s e g m e N t i N f o r m At i o N
The Group’s operating segments are organised and managed separately according to the nature of their operations. Each segment
represents a strategic business unit that provides different services to different categories of customer. The managing director (chief
operating decision-maker) monitors the operating results of the business units separately for the purpose of making decisions about
resource allocation and performance assessment. The consolidated entity’s reportable segments under AASB 8 Operating Segments
are therefore as follows:
Franchise operations
This involves the sale of franchises for the retail sale of second hand goods and the sale of master licenses for the development of
franchises in countries around the world.
Store operations
This segment involves the retail sale of second hand goods, cash advance and pawn broking operations at corporate owned stores
in Australia.
Financial services – personal loans
This segment comprises the Cash Converters Personal Finance personal loans business.
Financial services - administration
This segment comprises Mon-E, which is responsible for providing the internet platform and administration services for the Cash
Converters network in Australia to offer small cash advance loans to customers.
55
2 .5
s e g m e N t i N f o r m At i o N ( c o N t i N u e d )
Vehicle financing
This segment comprises Green Light Auto Group Pty Ltd, which provides motor vehicle finance since March 2016, and fully maintained
vehicles through a lease product to customers for a term of up to 4 years (a product that the Group ceased to offer during the 2016
financial year).
The segmental profit analysis has been presented for both financial years for continuing operations only. Refer to note 5.1 for
information related to the Group’s discontinued operations.
The accounting policies of the reportable segments are the same as the consolidated entity’s accounting policies.
The following is an analysis of the consolidated entity’s revenue and results by reportable operating segment for the periods under
review.
Segment profit represents the profit earned by each segment without the allocation of central administration costs and directors’
salaries, interest income and expense in relation to corporate facilities and tax expense. This is the measure reported to the managing
director (chief operating decision maker) for the purpose of resource allocation and assessment of segment performance.
56
cash converters international limited 2 .5
s e g m e N t i N f o r m At i o N ( c o N t i N u e d )
Franchise
operations
Store
operations
Financial
services -
administration
Financial
services –
personal
loans
Vehicle
financing
Corporate
head office
Total
$
$
$
$
$
$
$
Year ended 30 June 2016
Interest revenue (i)
2,052,596
56,487,718
7,251,619
144,169,742
2,743,437
-
212,705,112
Other revenue
Gross revenue
20,943,203
83,878,785
6,995,085
1,510
5,397,868
14,320
117,230,771
22,995,799
140,366,503
14,246,704
144,171,252
8,141,305
14,320
329,935,883
Less inter-company sales
(7,542,681)
(11,131,675)
(6,995,085)
-
-
-
(25,669,441)
Segment revenue
15,453,118
129,234,828
7,251,619
144,171,252
8,141,305
14,320
304,266,442
External interest revenue (ii)
-
77,170
825
472,973
5,063
37,025
593,056
Total revenue
15,453,118
129,311,998
7,252,444
144,644,225
8,146,368
51,345
304,859,498
EBITDA (iii) (iv)
7,270,483
17,419,605
8,135,335
57,402,016
(4,598,838)
(37,931,488)
47,697,113
Less inter-company
eliminations
(1,447,477)
6,121,071
(899,432)
1,220,114
-
(4,994,276)
-
Segment EBITDA
5,823,006
23,540,676
7,235,903
58,622,130
(4,598,838)
(42,925,764)
47,697,113
Depreciation and
amortisation
(234,843)
(3,935,312)
(6,937)
(295,550)
(132,709)
(2,261,314)
(6,866,665)
EBIT
5,588,163
19,605,364
7,228,966
58,326,580
(4,731,547)
(45,187,078)
40,830,448
Interest expense
-
(1,235)
-
(4,115,158)
(508,378)
(5,034,256)
(9,659,027)
Profit / (loss) before tax
from continuing operations
5,588,163
19,604,129
7,228,966
54,211,422
(5,239,925)
(50,221,334)
31,171,421
57
2 .5
s e g m e N t i N f o r m At i o N ( c o N t i N u e d )
Franchise
operations
Store
operations
Financial
services -
administration
Financial
services –
personal
loans
Vehicle
financing
Corporate
head office
Total
$
$
$
$
$
$
$
Year ended 30 June 2015
Interest revenue (i)
1,602,770
56,910,070
9,061,999
137,955,246
3,348,503
- 208,878,588
Other revenue
Gross revenue
17,348,462
73,076,699
5,664,795
-
5,366,709
3,086,836 104,543,501
18,951,232
129,986,769
14,726,794
137,955,246
8,715,212
3,086,836 313,422,089
Less inter-company sales
(6,724,478)
(11,985,028)
(5,664,795)
-
-
(948,317)
(25,322,618)
Segment revenue
12,226,754
118,001,741
9,061,999
137,955,246
8,715,212
2,138,519 288,099,471
External interest revenue (ii)
-
81,405
2,162
396,971
15,973
69,805
566,316
Total revenue
12,226,754
118,083,146
9,064,161
138,352,217
8,731,185
2,208,324 288,665,787
EBITDA (iii) (v)
5,965,054
19,705,552
8,262,594
30,002,676
(2,687,167)
(41,422,107)
19,826,602
Less inter-company
eliminations
(958,083)
5,664,795
101,600
-
-
(4,808,312)
-
Segment EBITDA
5,006,971
25,370,347
8,364,194
30,002,676
(2,687,167)
(46,230,419)
19,826,602
Depreciation and amortisation
(247,279)
(4,548,904)
(2,894)
(317,042)
(151,492)
(1,632,408)
(6,900,019)
EBIT
Interest expense
Profit / (loss) before tax from
continuing operations
4,759,692
20,821,443
8,361,300
29,685,634
(2,838,659)
(47,862,827)
12,926,583
-
(11,029)
-
(3,214,558)
(843,634)
(5,002,853)
(9,072,074)
4,759,692
20,810,414
8,361,300
26,471,076
(3,682,293)
(52,865,680)
3,854,509
(i)
(ii)
(iii)
(iv)
(v)
Interest revenue comprises personal loan interest cash advance fee income, pawn broking interest from customers and commer-
cial loan interest from third parties
External interest is interest received on bank deposits
EBITDA is earnings before interest, tax, depreciation, amortisation and impairment
Includes ASIC compliance settlement provision of $12,500,000 in corporate head office
Includes contract termination expense of $824,670 in store operations, $4,256,000 in financial services – administration and
$24,547,600 in financial services – personal loans and class action settlement expense of $23,000,000 in corporate head office
58
cash converters international limited 2 .5
s e g m e N t i N f o r m At i o N ( c o N t i N u e d )
Consolidated entity assets by reportable segment
Franchise operations
Store operations
Financial services – administration
Financial services – personal loans
Vehicle financing
Total of all segments
Unallocated assets
Total segment assets
Assets relating to discontinued operations
Unallocated
Consolidated total assets
2016
$
39,991,908
84,052,287
18,055,038
226,471,578
13,260,321
381,831,132
35,211,928
417,043,060
7,448,377
424,491,437
2015
$
16,079,365
116,808,665
18,856,029
232,389,279
14,738,476
398,871,814
42,331,252
441,203,066
-
441,203,066
Unallocated assets include various corporate assets including cash held at a corporate level that has not been allocated to the
underlying segments.
Consolidated entity liabilities by reportable segment
Franchise operations
Store operations
Financial services – administration
Financial services – personal loans
Vehicle financing
Total of all segments
Unallocated liabilities
Consolidated total liabilities
-
7,636,321
47,026
87,559,011
10,291,270
105,533,628
76,672,937
182,206,565
2,448,768
17,287,960
5,510,500
105,462,805
9,786,525
140,496,558
39,007,880
179,504,438
Unallocated liabilities include consolidated entity borrowings not specifically allocated to the underlying segments.
Other segment information
Franchise operations
Store operations
Financial services – administration
Financial services – personal loans
Vehicle financing
Total of all segments
Unallocated
Total
Depreciation, amortisation and
impairment *
Additions to non-current assets
2016
1,998,675
3,935,312
6,937
295,550
132,709
6,369,184
497,482
6,866,666
2015
1,761,508
3,872,079
238,853
861,287
151,492
2016
4,009,607
3,182,210
-
158,549
136,123
2015
6,198,528
12,563,973
746,130
314,056
184,454
6,885,219
7,486,489
20,007,141
-
321,380
-
6,885,219
7,807,869
20,007,141
*
Depreciation, amortisation and impairment from continuing operations
59
2 .5
s e g m e N t i N f o r m At i o N ( c o N t i N u e d )
Geographical information
The consolidated entity operates in two principal geographical areas – Australia (country of domicile) and the United Kingdom. The
consolidated entity’s revenue from continuing operations from external customers and information about its non-current assets by
geographical location are detailed below.
Australia
United Kingdom
Rest of world
Revenue from external customers
Non-current assets
2016
2015
2016
2015
295,435,256
278,875,390
143,654,471
145,653,727
8,967,467
456,775
9,330,240
460,157
1,241,863
15,819,065
-
-
304,859,498
288,665,787
144,896,334
161,472,792
Non-current assets include property, plant and equipment, goodwill and other intangible assets, and exclude deferred tax assets,
trade and other receivables and other financial assets.
2 .6
d i v i d e N d s
Recognised amounts
Final dividend – prior year
100% franked at 30%
Interim dividend – current year
100% franked at 30%
Unrecognised amounts
Final dividend – current year
100% franked at 30%
Per share
$
-
0.02
0.02
2016
Total
$
-
9,636,635
9,636,635
Per share
$
2015
Total
$
0.02
0.02
0.04
8,585,247
9,577,531
18,162,778
0.01
4,849,760
-
-
On 29 April 2016 the Company paid a fully franked interim dividend of 2.0 cents per share in respect of the financial year ended 30
June 2016. The total interim dividend paid was $9,636,635.
On 30 August 2016 the Company announced that it would pay a fully franked final dividend of 1.0 cent per share in respect of the
financial year ended 30 June 2016. The dividend will be fully franked and will be paid on 28 October 2016 to those shareholders on
the register at the close of business on 14 October 2016. The Company Dividend Reinvestment Plan (DRP) will apply to this dividend,
providing shareholders with the option to reinvest all or part of their eligible dividends at a discount of 2.5% to the 5 day VWAP up
to and including the record date.
The Company has Australian franking credits available of $67,786,471 on a tax paid basis (2015: $57,433,108).
60
cash converters international limited 2 .7
N o t e s t o c A s h f l o w s tAt e m e N t
Reconciliation of loss to net cash flow from operating activities:
(Loss) after tax
Non-cash adjustment to reconcile profit after tax to net cash
flows:
Amortisation
Depreciation
Impairment of non-current assets
Share-based payments
Loss on disposal of non-current assets
Share of net (profit) / loss of equity accounted investment
Changes in assets and liabilities:
Trade and loan receivables
Inventories
Other assets
Trade and other payables
Provisions
Income tax payables
Net cash provided by operating activities
2016
$
2015
$
(5,272,080)
(21,685,090)
3,333,948
5,292,662
2,247,551
(1,923,294)
12,878,123
2,032,007
14,916,935
7,647,971
975,781
(6,691,563)
3,502,745
(8,866,817)
30,073,969
3,450,705
5,587,353
7,587,315
1,302,876
1,373
(73,683)
7,790,582
(871,840)
(939,832)
19,517,317
1,125,371
(9,956,635)
12,835,812
Cash flows are included in the cash flow statement on a net basis. The GST component of cash flows arising from investing and
financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows.
(3 )
A s s e t s A N d l i A B i l i t i e s
In this section
This section shows the assets used to generate Cash Converters’ trading performance and the liabilities incurred as a result.
Information on other assets and liabilities are in the following sections:
•
•
•
Section 2 – Deferred tax assets and liabilities
Section 4 – Financing activities
Section 5 – Equity-accounted investments
3 .1
t r A d e A N d o t h e r r e c e i vA B l e s
Current
Trade receivables
Allowance for impairment losses
Total trade receivables (net)
Finance lease receivables
Vehicle finance loans
Vendor finance loans
Other receivables
Total trade receivables
(i)
(ii)
(iii)
(iv)
(v)
5,940,409
(2,308,958)
3,631,451
4,090,646
1,103,614
1,048,988
4,880,286
14,754,985
6,482,075
(2,552,611)
3,929,464
4,915,480
-
-
7,251,099
16,096,043
61
3 .1
t r A d e A N d o t h e r r e c e i vA B l e s ( c o N t i N u e d )
Non-current
Finance lease receivables
Vehicle finance loans
Loan to associate
Vendor finance loans
Other receivables
Total trade and other receivables
2016
$
2,677,018
2,102,161
14,841,429
8,163,955
83,524
27,868,087
2015
$
4,152,507
-
14,779,585
-
53,598
18,985,690
(ii)
(iii)
(vi)
(iv)
(v)
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Trade receivables include weekly franchise fees, wholesale sales, pawn broking fees, cash advance fees, default fees and
OTC fees. Where the collection of the debtor is doubtful, an allowance for impairment losses is recognised. The average
credit period on sales is 30 days. No interest is charged for the first 30 days from the date of the invoice. Thereafter, interest
is charged at 2% per month on the outstanding balance.
The Group entered into finance lease arrangements with customers for leasing of vehicles. All leases are denominated in Aus-
tralian dollars. The average term of finance leases entered into is 4 years. The Group has ceased entering into such finance
lease arrangements from March 2016.
Vehicle finance loans are secured loans advanced for financing the purchase of vehicles. The average term of these loans is
4.5 years and the average interest rate of 24.5%.
Vendor finance loans are loans made to purchasers of the Group’s UK corporate stores during the year as part of the pur-
chase agreement. The loans have various terms of up to 6 years, and after an initial interest free period, bear interest at rates
between nil and 9%. The receivables are held at amortised costs. No receivables are past due or impaired at 30 June 2016
(2015: nil).
Other receivables include GST receivable, development agent fees outstanding, sub-master license sales, Mon-E fees, finan-
cial commission and instalment credit loans.
Commercial loan advanced to Cash Converters Holdings LP (New Zealand master franchisee) with a maturity date of 15 Sep-
tember 2018. Interest is charged quarterly at a rate of 8% per annum.
As at 30 June the ageing analysis of trade receivables was as follows:
0 to 30 days
31 to 60 days past due not impaired
61 to 90 days past due not impaired
90 + days past due not impaired
Considered impaired
Balance at end of year
3,623,717
3,564,463
883
6,851
-
2,308,958
5,940,409
-
-
365,001
2,552,611
6,482,075
62
cash converters international limited 3 .1
t r A d e A N d o t h e r r e c e i vA B l e s ( c o N t i N u e d )
Accounting policy
Trade receivables and other receivables that have fixed or determinable payments that are not quoted in an active market are classified
as trade and other receivables and are measured at amortised costs using the effective interest method, less any impairment. Interest
income is recognised by applying the effective interest rate, except for short-term receivables when the effect of discounting is
immaterial.
Amounts due from lessees under finance leases are recognised as receivables at the amount of the Group’s net investment in the
leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group’s net
investment outstanding in respect of the leases.
Allowance for impairment losses
As at 30 June 2016 trade receivables and instalment credit loans of $2,308,958 (2015: $2,552,611) were impaired and fully provided
for. Movements in the provision for impairment of trade receivables were as follows:
Balance at beginning of year
Impairment losses recognised on receivables
Amounts written off as uncollectible
Balance at end of year
Amounts receivable under finance leases
2016
$
2,552,611
311,292
(554,945)
2,308,958
2015
$
2,343,601
209,010
-
2,552,611
Minimum lease payments
Present value of minimum lease
payments
2016
$
2015
$
2016
$
2015
$
Not later than one year
7,029,584
8,629,484
5,173,710
5,608,220
Later than one year and not later than
five years
7,613,940
14,643,524
13,132,189
21,761,673
Less unearned finance income
(6,792,796)
(12,000,946)
2,677,018
7,850,728
-
4,152,507
9,760,727
-
Present value of minimum lease
payments receivable
Allowance for uncollectible lease
payments
7,850,728
9,760,727
7,850,728
9,760,727
(1,083,064)
6,767,664
(692,740)
9,067,987
(1,083,064)
6,767,664
(692,740)
9,067,987
Unguaranteed residual values of assets leased under finance leases at the end of the reporting period are estimated at $2,213,466 (30
June 2015: $2,436,913). The residual amounts have been excluded from the above calculations in the present value amounts – the
amounts only relate to the minimum repayments.
The interest rate inherent in the leases is fixed at the contract date for the entire lease term. The average effective interest rate
contracted is approximately 26.6% (30 June 2015: 27.6%) per annum.
63
3 .2
p e r s o N A l l o A N r e c e i vA B l e s
Current
Personal short term loans
Allowance for impairment losses
Deferred establishment fees
Total personal loan receivables
2016
$
139,526,313
(26,301,848)
(11,909,164)
101,315,301
2015
$
173,542,051
(29,104,301)
(12,551,703)
131,886,047
(i), (ii)
(iii)
(i)
(ii)
(iii)
The credit period provided in relation to personal short term unsecured loans varies from 30 days to 12 months. Interest
is charged on these loans at a fixed rate which varies dependent on the state or country of origin. An allowance has been
made for estimated unrecoverable amounts arising from loans already issued, which has been determined by reference to
past default experience. Before accepting any new customers, the consolidated entity uses an external scoring system to
assess the potential customer’s credit quality and define credit limits by customer. There is no concentration of credit risk
within the personal loan book.
Refer to note 1(g) for information in relation to reclassification of accrued interest income as at 30 June 2015.
Deferred establishment fees relate to establishment fees charged on personal loans. The full amount of the fee is deferred at
the commencement of the loan and is the recognised through the income statement at an effective interest rate over the life
of the loan. The balance shown above reflects the amount of the fees still to be recognised at the end of the reporting period.
As at 30 June the ageing analysis of personal loan receivables was as follows:
0 to 30 days
31 to 60 days past due not impaired
61 to 90 days past due not impaired
90 + days past due not impaired
Considered impaired
Balance at end of year
Allowance for impairment losses
110,461,090
1,434,022
401,278
160,537
27,069,386
139,526,313
138,184,591
3,470,740
1,378,082
759,707
29,748,931
173,542,051
As at 30 June 2016 personal loan receivables of $26,301,848 (2015: $29,104,301) were impaired and fully provided for. Movements
in the provision for impairment of personal loan receivables were as follows:
Balance at beginning of year
Impairment losses recognised on receivables
Amounts written off as uncollectible
Balance at end of year
29,104,301
39,302,975
(42,105,428)
26,301,848
31,135,507
41,270,137
(43,301,343)
29,104,301
In determining the recoverability of a personal loan, the consolidated entity considers any change in the credit quality of the receivable
from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer
base being large and unrelated. Accordingly, the directors believe that there is no further credit provision required in excess of the
allowance for doubtful debts.
Accounting policy
Loan receivables that have fixed or determinable payments that are not quoted in an active market are classified as loan receivables
and are measured at amortised costs using the effective interest method, less any impairment. Interest income is recognised by
applying the effective interest rate, except for short-term receivables when the effect of discounting is immaterial.
64
cash converters international limited Key estimate – impairment of financial assets
The impairment of personal loans requires the consolidated entity to assess impairment regularly. The credit provisions raised (specific
and collective) represent management’s best estimate of the losses incurred in the loan portfolio at reporting date based on their
experienced judgment. The collective provision is estimated on the basis of historical loss experience for assets with similar credit
characteristics. The historical loss experience is adjusted based on current observable data and events. The use of such judgments
and reasonable estimates is considered appropriate.
3 .3
i N v e N t o r i e s
New and pre-owned goods at cost
New and used motor vehicles at cost
Accounting policies
2016
$
16,926,741
685,062
17,611,803
2015
$
26,343,262
1,340,316
27,683,578
Inventories are valued at the lower of cost and net realisable value. Costs, including purchase costs on a first in first out basis are
assigned to inventory on hand by the method most appropriate to each particular class of inventory, with the majority being valued
on a first in first out basis. Net realisable value represents the estimated selling price less all estimated costs of completion and costs
necessary to make the sale.
3 .4
p l A N t A N d e q u i p m e N t
Leasehold
improvements
Plant and
equipment
Equipment
under finance
lease
Leasehold
improvements
under finance
lease
Total
$
$
$
$
$
Cost
Balance at 1 July 2014
11,251,563
29,092,902
18,970
1,049,277
41,412,712
Additions
Disposals
Foreign currency exchange
differences
1,605,851
6,373,457
(9,588)
(1,058,293)
371,535
1,923,749
-
-
-
-
-
-
7,979,308
(1,067,881)
2,295,284
Balance at 30 June 2015
13,219,361
36,331,815
18,970
1,049,277
50,619,423
Additions
2,651,925
1,346,055
Transfers to intangible assets
-
(4,626,451)
-
-
-
-
3,997,980
(4,626,451)
Disposals
(3,497,193)
(19,746,233)
(18,970)
(1,202)
(23,263,598)
Foreign currency exchange
differences
(28,637)
(186,734)
Balance at 30 June 2016
12,345,456
13,118,452
-
-
-
(215,371)
1,048,075
26,511,983
65
3 .4
p l A N t A N d e q u i p m e N t ( c o N t i N u e d )
Leasehold
improvements
Plant and
equipment
Equipment
under finance
lease
Leasehold
improvements
under finance
lease
Total
$
$
$
$
$
Depreciation and impairment
Balance at 1 July 2014
3,821,095
14,284,390
18,970
701,494
18,825,949
Disposals
(9,588)
(1,056,921)
Depreciation expense
1,520,475
3,937,056
Impairment
162,288
268,394
Foreign currency exchange
differences
176,062
1,307,976
Balance at 30 June 2015
5,670,332
18,740,895
Disposals
(2,106,408)
(15,679,312)
Depreciation expense
1,693,455
3,477,608
Impairment
-
116,301
Foreign currency exchange
differences
(24,603)
(182,719)
Balance at 30 June 2016
5,232,776
6,472,773
Net book value
As at 30 June 2015
As at 30 June 2016
7,549,029
17,590,920
7,112,680
6,645,679
-
-
-
-
18,970
(18,970)
-
-
-
-
-
-
-
(1,066,509)
129,822
5,587,353
-
-
430,682
1,484,038
831,316
25,261,513
-
(17,804,690)
121,599
5,292,662
-
-
116,301
(207,322)
952,915
12,658,464
217,961
25,357,910
95,160
13,853,519
Total depreciation expense for the year ended 30 June 2016 includes $1,703,820 of depreciation (2015: $2,152,839) relating to
discontinued operations.
Accounting policies
Plant and equipment, leasehold improvements and equipment under finance lease are stated at cost less accumulated depreciation
and impairment. Cost includes expenditure that is directly attributable to the acquisition of the item. In the event that settlement
of all or part of the purchase consideration is deferred, cost is determined by discounting the amounts payable in the future to their
present value as at the date of acquisition.
Depreciation is provided on plant and equipment. Depreciation is calculated on a straight line basis so as to write off the net cost
or other revalued amount of each asset over its expected useful life to its estimated residual value. Leasehold improvements are
depreciated over the period of the lease or estimated useful life, whichever is the shorter, using the straight line method. The
estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period. The
following estimated useful lives are used in the calculation of depreciation:
Leasehold improvements
Plant and equipment
Equipment under finance lease
Fixtures and fittings
8 years
5 years
5 years
8 years
66
cash converters international limited 3 .5
g o o d w i l l
Gross carrying amount
Balance at beginning of year
Additional amounts recognised from business combinations
occurring during year
Adjustments arising on finalisation of acquisition accounting
Notes
2016
$
2015
$
118,564,660
110,726,057
-
-
Derecognised on disposal of discontinued operations
5.1
(11,458,794)
Foreign currency exchange differences
Balance at end of year
Accumulated impairment losses
Balance at beginning of year
Impairment losses for year
Derecognised on disposal of discontinued operations
5.1
Foreign currency exchange differences
Balance at end of year
(97,304)
107,008,562
7,156,633
1,353,851
(8,514,558)
4,074
-
8,792,395
(2,665,410)
-
1,711,618
118,564,660
-
7,156,633
-
-
7,156,633
Net carrying amount
At beginning of year
At end of year
Accounting policies
111,408,026
107,008,562
110,726,058
111,408,026
Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the acquisition date).
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the
acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date
amounts of the identifiable assets acquired and the liabilities assumed.
If, after reassessment, the consolidated entity’s interest in the fair value of the acquiree’s identifiable net assets exceeds the sum of
the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously
held equity interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.
Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated
to each of the Group’s cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to
which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may
be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated
first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis
of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
67
3 .5
g o o d w i l l ( c o N t i N u e d )
Allocation of goodwill to cash-generating units
Goodwill has been allocated for impairment testing purposes to the following cash-generating units or groups of cash-generating
units:
•
•
•
•
Financial services – administration (Mon-E)
Financial services – personal loans (CCPF)
Corporate stores (Australia)
Corporate stores (UK)
The carrying amount of goodwill allocated to cash-generating units that are significant individually or in aggregate is as follows:
Financial services – administration (Mon-E)
Financial services – personal loans (CCPF)
Corporate stores (Australia)
Corporate stores (UK)
Goodwill arising on Australian store acquisitions
2016
$
17,292,967
73,268,103
16,447,492
-
2015
$
17,292,967
73,268,103
16,447,493
4,399,463
107,008,562
111,408,026
The goodwill recognised as a result of the acquisition of Australian franchise stores is allocated between corporate stores (Australia)
and financial services – personal loans (CCPF).
Impairment losses recognised
Year ended 30 June 2016
Impairment testing of non-current assets, including those with indefinite useful lives, using value in use calculations, at 31 December
2015 identified goodwill balances of $1,353,851, other intangible asset balances of $777,399 and plant and equipment balances of
$116,301 that were not considered recoverable. These balancess related to specific stores within the UK corporate stores network.
Subsequent to the impairment testing, all of the UK corporate stores were sold, resulting in the derecognition of any related goodwill
as part of the loss on disposal. These disposals occurred following the strategic decision to sell the UK corporate retail operations
to allow capital to be allocated elsewhere within the Group. Refer to note 5.1 for further information.
Year ended 30 June 2015
Impairment testing of non-current assets, including those with indefinite useful lives, using value in use calculations, for the year
ended 30 June 2015 identified goodwill balances of $7,156,634 and property, plant and equipment of $430,681 that were not
considered recoverable.
These balances related to specific stores within the UK corporate stores network. Following the introduction of the Consumer Credit
(Cost Cap) 2014 in the United Kingdom in January 2015, there was a drop in personal and cash advance loan volumes, impacting
the overall profitability of the UK operations. As a result of this legislation, further compounded by continued challenging trading
conditions for certain stores, the impairment charges noted above were recognised.
Impairment testing
Commentary on impairment testing approach applicable to all CGUs
Impairment modelling for each cash generating unit (CGU) has been prepared separately. Working capital requirements are factored
into the modelling based on historic requirements for each CGU, and vary in line with revenue growth. Capital investment, required
to run the business (i.e. replacement and non-expansionary capital expenditure) has been included based on detailed estimates for
the next financial year and incremental growth in subsequent years consistent with increasing revenues.
The recoverable value of all non-current assets, including goodwill, property, plant and equipment (note 3.4) and other intangible
assets (note 3.6) is assessed using the impairment testing as outlined in this note.
68
cash converters international limited
3 .5
g o o d w i l l ( c o N t i N u e d )
Impact of regulations
Both the financial services – administration (Mon-E) and personal loans (CCPF) businesses operate in a regulated industry. Any future
changes to applicable legislation may have a significant impact on the consolidated entity’s operations, and returns generated, in a
positive or negative manner.
The impairment testing for these businesses is based on management’s expectation of performance, taking into account applicable
legislative requirements at the date of the impairment testing, being 30 June 2016. Any material change to legislation impacting these
businesses in future periods may have a significant positive or negative impact on future performance.
Financial services – administration (Mon-E)
The recoverable value of Mon-E is determined based on a value in use calculation which uses cash flow projections based on financial
budgets approved by management covering a five-year period, and a pre-tax discount rate of 14.4% per annum (2015: 13.2% per
annum).
Cash flows beyond the five year period are estimated using a terminal value calculated under standard valuation principles
incorporating a 2.5% growth rate (2015: 2.5%).
Revenue is forecast to decrease in the first year of the five year forecast period due to decreasing loan volumes as a result of changes
to the Group’s credit assessment processes as a result of the regulatory review discussed in note 3.8, before recovering with the
average growth rate assumed over years 2 to 5 being below the levels historically observed. Forecast EBITDA margins reduce due
to volume decreases resulting from changes in the credit assessment process.
Financial services – personal loans (CCPF)
The recoverable amount for Cash Converters Personal Finance is determined based on a value in use calculation which uses cash
flow projections based on financial budgets approved by management covering a five-year period, and a pre-tax discount rate of
14.5% per annum (2015: 13.3% per annum).
Cash flows beyond the five year period are estimated using a terminal value calculated under standard valuation principles
incorporating a 2.5% growth rate (2015: 2.5%).
Revenue is forecast to decrease in the first two years of the five year forecast period due to decreasing loan volumes as a result of
changes to the Group’s credit assessment processes as a result of the regulatory review discussed in note 3.8, before recovering
with the average growth rate over years 3 to 5 being below the levels historically observed. Forecast bad debt rates are comparable
to recent rates experienced, and forecast EBITDA margins reduce as a result of forecast increases in costs, due largely to the above
changes in the credit assessment process, as well as amendments to the Group’s loan products.
Corporate stores (Australia)
The recoverable amount for Australian corporate stores is determined based on a value in use calculation which uses cash flow
projections based on financial budgets approved by management covering a five-year period, and a pre-tax discount rate of 12.5%
per annum for Australia (2015: 13.7% per annum).
Cash flows beyond the five year period are estimated using a terminal value calculated under standard valuation principles
incorporating a 2.5% growth rate (2015: 2.5%).
Cash advance revenue is forecast to decrease in the first year of the five year forecast period due to decreasing loan volumes as
a result of changes to the Group’s credit assessment processes as a result of the regulatory review discussed in note 3.8, before
recovering with the average growth rate assumed over years 2 to 5 being below the levels historically observed. Forecast EBITDA
margins reduce as a result of forecast increases in costs, due largely to the above changes in the credit assessment process.
Impairment sensitivity disclosures
As noted above, based on the impairment testing completed for all cash generating units, management believe that apart from CCPF,
any reasonably possible change in the key assumptions on which the recoverable amount is based would not cause the aggregate
carrying amount to exceed the aggregate recoverable amount of cash-generating unit.
The impact of changes to key assumptions for the recoverable amount of the CCPF operations are summarised below.
69
3 .5
g o o d w i l l ( c o N t i N u e d )
CGU
Carrying value
Discount rate (pre-tax)
Discount rate (pre-tax) required to trigger impairment / breakeven recoverable value
Adverse change to forecast compound growth required to trigger impairment / breakeven recoverable
value
Adverse change to bad debt write-off required to trigger impairment / breakeven recoverable value
3 .6
o t h e r i N tA N g i B l e A s s e t s
Allocation of other intangible assets to cash generating units
CCPF
$83,375,535
12.0%
20.9%
-22.2%
+4.4%
Other intangible assets are allocated to their respective cash-generating unit and tested for impairment annually. Refer to note 3.5 for
details of impairment testing. The recoverable value of other intangible assets is assessed using the same assumptions and methods
as the goodwill for the related cash generating units
The carrying amount of reacquired rights, and trade names / customer relationships allocated to cash generating units that are
significant individually or in aggregate is as follows:
Franchise operations (Australia)
Franchise operations (UK)
Financial services – administration (Mon-E)
Financial services – personal loans (CCPF)
Corporate stores (Australia)
Corporate stores (UK)
Vehicle leasing
Categories of other intangible assets
2016
$
8,317,666
1,221,646
746,130
10,829,634
2,908,608
-
10,569
2015
$
6,747,862
1,700,000
746,130
5,393,612
4,826,343
5,281,036
11,872
24,034,253
24,706,855
Reacquired
rights
Trade names
& customer
relationships
Software Software under
finance lease
Total
$
$
$
$
$
Cost
Balance at 1 July 2014
8,421,908
15,421,835
10,058,904
446,588
34,349,235
Acquisitions through business
combinations
Additions
Disposals
Adjustments *
Foreign currency exchange
differences
631,839
746,130
-
174,210
-
-
-
1,855,958
(13,232)
1,438,000
1,340,000
-
122,001
-
7,507
-
-
-
-
-
806,049
2,602,088
(13,232)
2,778,000
129,508
Balance at 30 June 2015
11,359,878
16,936,045
11,909,137
446,588
40,651,648
70
cash converters international limited 3 .6
o t h e r i N tA N g i B l e A s s e t s ( c o N t i N u e d )
Categories of other intangible assets (continued)
Reacquired
rights
Trade names
& customer
relationships
$
172,035
-
$
-
-
(3,697,657)
(68,000)
Software Software under
finance lease
Total
$
3,637,854
4,626,451
(5,702,175)
$
-
-
(397,895)
$
3,809,889
4,626,451
(9,865,727)
(134,769)
-
(408)
-
(135,177)
Additions
Transfers from plant & equipment
Disposals
Foreign currency exchange
differences
Balance at 30 June 2016
7,699,487
16,868,045
14,470,859
48,693
39,087,084
Amortisation and impairment
Balance at 1 July 2014
3,339,030
5,398,845
3,358,238
353,256
12,449,369
Disposals
-
-
(13,232)
-
(13,232)
Amortisation expense
1,207,512
1,107,429
1,095,764
40,000
3,450,705
Foreign currency exchange
differences
50,444
-
7,507
-
57,951
Balance at 30 June 2015
4,596,986
6,506,274
4,448,277
393,256
15,944,793
Disposals
(1,837,707)
(162,983)
(2,587,337)
(384,563)
(4,972,590)
Amortisation expense
Impairment
Foreign currency exchange
differences
480,468
777,399
(30,310)
1,043,355
1,770,125
40,000
3,333,948
-
-
-
(409)
-
-
777,399
(30,719)
Balance at 30 June 2016
3,986,836
7,386,646
3,630,656
48,693
15,052,831
* Adjustments in the 2015 financial year arose from the finalisation of acquisition accounting
Net book value
As at 30 June 2015
As at 30 June 2016
6,762,892
10,429,771
7,460,860
53,332
24,706,855
3,712,651
9,481,399
10,840,203
-
24,034,253
Total amortisation expense for the year ended 30 June 2016 includes $56,124 of amortisation (2015: nil) relating to discontinued
operations.
The useful economic life of reacquired rights is assessed on an individual asset basis in accordance with AASB 3 Business
Combinations and AASB 138 Intangible Assets, where the useful economic life is equal to the remaining life of each store’s franchise
agreement with the consolidated entity, in place at the acquisition date. The directors review the useful economic life annually.
The useful economic life of customer relationships is assessed on an individual asset basis, and is currently amortised over five years
from the date of acquisition; being the historic average customer life. The directors review the useful economic life annually.
Trade names are stated at cost to the consolidated entity and relate to amounts recognised either through the buy-back of overseas
sub-master license rights, or through direct acquisition of regional sub-master rights in Australia by Cash Converters Pty Ltd. The
depreciable amount of all trade names is amortised on a straight-line basis over their useful economic life, where material. The useful
economic life of the trade names has been assessed on an individual asset basis and is not more than 100 years from the date of
acquisition. The directors review the useful economic life annually.
71
3 .6
o t h e r i N tA N g i B l e A s s e t s ( c o N t i N u e d )
Accounting policies
Trade names
Trade names are recorded at cost less accumulated amortisation and impairment. Amortisation is charged on a straight line basis
over the asset’s estimated useful lives of 100 years. The estimated useful life and amortisation method is reviewed at the end of each
annual reporting period.
Customer relationships
Customer relationships are recorded at fair value at acquisition date less accumulated amortisation and impairment. Customer
relationships are recognised when franchise operations are acquired by the consolidated entity as required under AASB 3 Business
Combinations and AASB 138 Intangible Assets and are amortised over 5 years; being the historic average customer life.
Reacquired rights
Reacquired rights are recorded at fair value at acquisition date less accumulated amortisation and impairment. Reacquired rights are
recognised when franchise operations are acquired by the consolidated entity as required under AASB 3 ‘Business Combinations’
and AASB 138 ‘Intangible Assets’, and are amortised over the remaining life of the right concerned or the useful economic life of the
asset where the reacquired right is indefinite.
Software
Software development expenditure incurred is recognised when it is possible that future economic benefits that are attributable to
the asset will flow to the entity. Following initial recognition of the development expenditure, the cost model is applied requiring the
asset to be carried at cost less any accumulated amortisation and accumulated impairment losses. Any expenditure carried forward
is amortised on a straight line basis over the estimated useful life of 8 years; which is based on historic experience
Key estimate – useful lives of other intangible assets
The consolidated entity reviews the estimated useful lives of other intangible assets at the end of each annual reporting period. The
estimation of the remaining useful lives of the other intangible assets requires the entity to make significant estimates based on both
past performance and expectations of future performance. The carrying amount of other intangible assets at the balance sheet date
was $24,034,253 (2015: $24,706,855).
3 .7
t r A d e A N d o t h e r pAyA B l e s
Current
Trade payables
Accruals
2016
$
2,414,691
17,406,568
19,821,259
2015
$
6,592,330
19,857,386
26,449,716
The consolidated entity has financial risk management policies in place to ensure that all payables are paid within the allowed credit
period in order to avoid the payment of interest on outstanding accounts.
72
cash converters international limited 3 .8
p r o v i s i o N s
Current
Employee benefits
Fringe benefits tax
Class action settlement
ASIC compliance
Onerous lease contracts
Other
Non-current
Employee benefits
Onerous lease contracts
2016
$
6,321,245
49,206
-
12,500,000
2,204,494
1,351,531
22,426,476
298,111
5,676,612
5,974,723
2015
$
5,644,339
28,377
20,000,000
-
-
-
25,672,716
240,082
-
240,082
(i)
(ii)
(iii)
(iii)
(i)
(ii)
The provision for Class Action Settlement related to the settlement of the NSW Class Action claim. Class members comprised
borrowers in New South Wales who took loans from Cash Converters subsidiaries and franchisees during the period 1 July 2010
to 30 June 2013.
Cash Converters has been co-operating with an investigation by ASIC into its compliance with the responsible lending provi-
sions applicable to small amount credit contracts under the National Consumer Credit Protection Act 2009 (Cth). Discussions
between Cash Converters and ASIC as to the most appropriate resolution to this matter are continuing. Accordingly, the
Company has recognised a provision of $12.5 million in respect of any potential compliance issues in its credit assessment
processes. The provision is based on Cash Converters’ best estimate of the likely outcome of discussions with ASIC at the date
of this financial report.
(iii)
The provision for onerous lease contracts relates to the Group’s discontinued UK operations
Accounting policies
Provisions are recognised when the consolidated entity has a present obligation, the future sacrifice of economic benefits is probable,
and the amount of the provision can be measured reliably.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting
date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows
estimated to settle the present obligation, its carrying amount is the present value of those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the
receivable is recognised as an asset if it is virtually certain that recovery will be received and the amount of the receivable can be
measured reliably.
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave and
personal leave when it is probable that settlement will be required and they are capable of being measured reliably. Liabilities
recognised in respect of short-term employee benefits are measured at their nominal values using the remuneration rate expected to
apply at the time of settlement. Liabilities recognised in respect of long-term employee benefits are measured as the present value
of the estimated future cash outflows to be made by the Group in respect of services provided by employees up to reporting date.
Key estimate – ASIC compliance provision
As disclosed in note 6.7, as at 30 June 2016 the Group has recognised a provision in respect of potential compliance issues in its
credit assessment processes.
73
(4 )
c A p i tA l s t r u c t u r e A N d f i N A N c i N g c o s t s
In this section
This section outlines how the Group manages its capital structure and related financing costs, including its balance sheet liquidity
and access to capital markets.
The Board determines the appropriate capital structure of Cash Converters, specifically how much is raised from shareholders
(equity) and how much is borrowed from financial institutions and capital markets (debt), in order to finance the Group’s activities
both now and in the future.
The Board considers Cash Converters, capital structure and its dividend policy at least twice a year ahead of announcing results,
in the context of its ability to continue as a going concern, to execute the strategy and to deliver its business plan.
4 .1
c A s h A N d c A s h e q u i vA l e N t s
Cash on hand
Cash at bank
2016
$
2,831,149
70,777,532
73,608,681
2015
$
3,609,478
48,769,187
52,378,665
Cash at bank includes restricted cash of $21,059,967 (2015: $11,256,938) that is held in accounts controlled by the CCPF Receivables
Trust No 1 that was established to operate the Company’s securitisation facility with Fortress Finance (2015: Westpac Bank). The
facility prescribes that cash deposited in this account can only be used to fund new principal advances. Surplus funds at the end of
the period are redistributed in keeping with the terms of the securitisation facility.
4 .2
B o r r o w i N g s
Current
Securitisation facility
Loans – vehicle finance
Hire purchase and lease liabilities
Non-current
Loans – vehicle finance
Bonds
Hire purchase and lease liabilities
(i)
(ii)
(ii)
(iii)
67,047,088
2,944,723
31,392
70,023,203
4,431,672
59,451,760
77,472
63,960,904
57,731,221
2,869,873
104,035
60,705,129
7,129,205
59,198,726
108,864
66,436,795
(i)
(ii)
(iii)
The securitisation facility represents a liability owed by CCPF Receivables Trust No 1, a consolidated subsidiary established as
part of the borrowing arrangement with the Fortress Investment Group. This liability is secured against eligible personal loan
receivables originated by CCPF, which have been assigned to the Trust and generally have a maturity of less than twelve months.
Collections from Trust receivables are used to pay interest of the securitisation facility, with the remainder remitted to CCPF on
a monthly basis. The facility has been presented as a current liability because the Trust does not have the unconditional right
to defer settlement of the liability for at least twelve months after the reporting period. In the ordinary course of business the
consolidated entity currently expects to utilise this facility until at least 15 March 2019.
Loans – Vehicle Finance represents a vehicle leasing facility with FleetPartners for the provision of high quality fully maintained
vehicles for the use of Green Light Auto’s customers. The underlying financing from FleetPartners is repayable in line with the
contractual repayments from the customer and is therefore repayable over the underlying vehicle lease term.
Represents a September 2013 issue of $60 million of senior unsecured 7.95% notes which mature in September 2018 with FIIG
Securities Limited. Direct borrowing costs have been capitalised and offset against the liability.
74
cash converters international limited 4 .2
B o r r o w i N g s ( c o N t i N u e d )
Accounting policies
Borrowings are recorded initially at fair value, net of transaction costs. Subsequent to initial recognition, borrowings are measured
at amortised cost with any difference between the initial recognised amount and the redemption value being recognised in profit and
loss over the period of the borrowing using the effective interest rate method. All other borrowing costs are recognised in profit or
loss in the period in which they are incurred.
Assets held under finance leases are initially recognised at their fair value or, if lower, at amounts equal to the present value of the
minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the
balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease
obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly
against income.
Financing arrangements
Unrestricted access was available at balance date to the following lines of credit:
Total facilities
Bank overdrafts
Securitisation facilities
Bond
Term loans
Used at balance date
Bank overdrafts
Securitisation facilities
Bond
Term loans
Unused at balance date
Bank overdrafts
Securitisation facilities
Bond
Term loans
2016
$
300,000
100,000,000
60,000,000
-
2015
$
504,708
70,000,000
60,000,000
10,000,000
160,300,000
140,504,708
-
68,750,000
60,000,000
-
-
57,923,291
60,000,000
-
128,750,000
117,923,291
300,000
31,250,000
-
-
31,550,000
504,708
12,076,709
-
10,000,000
22,581,417
The bank overdraft facilities may be drawn at any time and may be terminated by the bank without notice. Interest rates are variable
and are currently between two and two and three quarter percentage points above the bank base rate.
Refer to note 4.3 for further information in relation to financial instruments.
Loan covenants and review events
The Group has borrowing facilities which are subject to various covenants and review events.
75
4 .3
f i N A N c i A l r i s k fA c t o r s
The Cash Converters Group’s activities expose the Group to a variety of financial risks: market risks (including currency risk and
interest rate risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of
financial markets and seeks to minimise potential adverse effects on financial performance.
Financial risk and capital management is carried out in accordance with policies approved by the Board. The Board reviews and
approves written principles of overall risk management, as well as written policies covering specific areas such as managing capital,
mitigating interest rates, liquidity, foreign exchange and credit risk. The Audit and Risk Committee assists the Board in monitoring
the implementation of risk management policies.
( A )
c At e g o r i e s o f f i N A N c i A l i N s t r u m e N t s
Financial assets
Cash and cash equivalents
Trade and other receivables
Personal loan receivables
Financial liabilities
Trade and other payables
Borrowings
2016
$
73,608,681
42,623,072
101,315,301
217,547,054
19,821,259
133,984,107
153,805,366
2015
$
52,378,665
35,081,733
131,886,047
219,346,445
26,449,716
127,141,924
153,591,640
The Group has no material financial assets or liabilities that are held at fair value.
( B )
f i N A N c i A l r i s k m A N A g e m e N t o B j e c t i v e s
The consolidated entity’s treasury function provides services to the business, co-ordinates access to domestic and international
financial markets, and manages the financial risks relating to the operations of the consolidated entity. The consolidated entity does
not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. The consolidated
entity’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates.
( c )
m A r k e t r i s k
The consolidated entity’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest
rates. There has been no change to the consolidated entity’s exposure to market risks or the manner in which it manages and
measures the risk from the previous period.
( d )
f o r e i g N c u r r e N c y r i s k m A N A g e m e N t
The consolidated entity undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate
fluctuations arise. Exchange rate exposures are relatively small and spot rates are normally used. There are no foreign currency
denominated monetary assets or monetary liabilities in the consolidated entity at the reporting date (2015: nil).
76
cash converters international limited 4 .3
f i N A N c i A l r i s k fA c t o r s ( c o N t i N u e d )
( e )
i N t e r e s t r At e r i s k m A N A g e m e N t
The Company and the consolidated entity are exposed to interest rate risk as entities in the consolidated group borrow funds at
variable rates and place funds on deposit at variable rates. Personal loans issues by the consolidated entity are at fixed rates. The
risk is managed by the consolidated entity by monitoring interest rates.
The Company and the consolidated entity’s exposures to interest rates on financial assets and financial liabilities are detailed in the
liquidity risk management section of this note.
Interest rate sensitivity analysis
The sensitivity analyses below have been determined based on the exposure to interest rates at the reporting date and the stipulated
change taking place at the beginning of the financial year and held constant throughout the reporting period. A 50 basis point increase
or decrease is used because this represents management’s assessment of the possible change in interest rates.
At reporting date, if interest rates had been 50 basis points higher or lower and all other variables were held constant, the Group’s net
profit would increase/decrease by approximately $1,141 (2015: decrease/increase by approximately $288,656).
The Group’s sensitivity to interest rates has decreased during the current period mainly due to repaying variable rate borrowings and
increasing its fixed rate finance leases.
( f )
c r e d i t r i s k m A N A g e m e N t
Credit risk refers to the risk that a counter-party will default on its contractual obligations resulting in financial loss to the consolidated
entity. The consolidated entity measures credit risk on a fair value basis. The consolidated entity does not have any significant credit
risk exposure to any single counterparty or any group of counterparties having similar characteristics, other than its franchisees. The
consolidated entity has a policy of obtaining sufficient collateral or other securities from these franchisees. The majority of loans
within the financing division relate to loans made by Cash Converters Personal Finance which makes both secured and unsecured
personal loans. Credit risk is present in relation to all unsecured loans made which is managed within an agreed corporate policy on
customer acceptance and ongoing review of recoverability.
( g )
l i q u i d i t y r i s k m A N A g e m e N t
Ultimate responsibility for liquidity risk management rests with the board of directors, who have built an appropriate liquidity
risk management framework for the management of the consolidated entity’s short, medium and long-term funding and liquidity
management requirements. The consolidated entity manages liquidity risk by maintaining adequate cash reserves, banking facilities
and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching maturity profiles of financial
assets and liabilities. Included in note 4.2 is a listing of additional undrawn facilities that the Company / consolidated entity has at
its disposal to further reduce liquidity risk.
Liquidity and interest risk tables
Financial liabilities
The following table details the consolidated entity’s remaining contractual maturity for its financial liabilities. The table has been
drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the consolidated entity can
be required to pay. The table includes both interest and principal cash flows.
To the extent that interest flows are at floating rates, the undiscounted amount is derived from interest rate curves at the end of the
reporting period. The contractual maturity is based on the earliest date on which the consolidated entity may be required to pay.
77
4 .3
f i N A N c i A l r i s k fA c t o r s ( c o N t i N u e d )
1 year or less
1 to 5 years
More than 5
years
Weighted
average
effective
interest rate
%
0.00
7.59
7.95
7.90
0.00
7.50
7.95
5.20
$
19,821,259
$
-
3,202,002
5,364,755
-
70,732,500
74,181,250
-
97,204,511
76,097,255
26,449,716
-
3,196,951
8,866,634
-
75,502,500
59,982,739
-
89,629,406
84,369,134
$
-
-
-
-
-
-
-
-
-
-
Total
$
19,821,259
8,566,757
70,732,500
74,181,250
173,301,766
26,449,716
12,063,585
75,502,500
59,982,739
173,998,540
2016
Non-interest bearing
Finance lease liability – fixed rate
Fixed interest rate instruments
Variable interest rate instruments
2015
Non-interest bearing
Finance lease liability – fixed rate
Fixed interest rate instruments
Variable interest rate instruments
Financial assets
The following table details the consolidated entity’s expected maturity for its financial assets. The table below has been drawn up
based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets except
where the Company / consolidated entity anticipates that the cash flow will occur in a different period.
1 year or less
1 to 5 years
More than 5
years
Weighted
average
effective
interest rate
2016
Non-interest bearing
0.00
6,105,518
%
$
$
-
Fixed interest rate instruments
112.94
175,673,042
17,600,000
Variable interest rate instruments
1.07
69,714,597
-
251,493,157
17,600,000
2015
Non-interest bearing
0.00
17,569,267
-
Fixed interest rate instruments
120.05
186,991,512
18,800,000
Variable interest rate instruments
1.51
48,381,137
-
252,941,916
18,800,000
$
-
-
-
-
-
-
-
-
Total
$
6,105,518
193,273,042
69,714,597
269,093,157
17,569,267
205,791,512
48,381,137
271,741,916
The amounts included above for variable interest rate instruments for both assets and liabilities is subject to change if actual rates
differ from those applied in the above average calculations.
78
cash converters international limited 4 .3
f i N A N c i A l r i s k fA c t o r s ( c o N t i N u e d )
( h )
fA i r vA l u e o f f i N A N c i A l i N s t r u m e N t s
The fair value of the Group’s financial assets and liabilities are determined on the following basis:
Financial assets and financial liabilities that are measured at fair value on a recurring basis
Subsequent to initial recognition, at fair value financial instruments are grouped into Levels 1 to 3 based on the degree to which the
fair value is observable. Levels are defined as follows:
•
•
•
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets
of liabilities.
Level 2 fair value measurements are those derived from inputs other than quoted prices included with Level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that
are not based on observable market data (unobservable inputs).
At 30 June 2016 and 30 June 2015 the Group has no material financial assets and liabilities that are measured on a recurring basis
at fair value.
Financial assets and financial liabilities that are not measured at fair value on a recurring basis (but where fair value disclosures are
required)
At 30 June 2016 and 30 June 2015, the carrying amount of financial assets and financial liabilities for the Group is considered to
approximate their fair values.
The fair value of the monetary financial assets and financial liabilities is based upon market prices where a market price exists or by
discounting the expected future cash flows by the current interest rates for assets and liabilities with similar risk profiles.
4 .4
i s s u e d c A p i tA l
2016
Number
2015
Number
2016
$
2015
$
Balance at beginning of year
481,248,259
428,886,124
205,399,340
156,679,067
Issued during the year
Dividend reinvestment plan
3,144,278
4,586,133
1,571,904
4,515,708
Shares issued on exercise of
performance rights
Placement
Share issue costs
583,500
-
-
376,002
47,400,000
-
568,577
-
-
366,771
45,030,000
(1,192,206)
Balance at end of year
484,976,037
481,248,259
207,539,821
205,399,340
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Changes to the Corporations Act abolished the authorised capital and par value concept in relation to share capital from 1 July 1998.
Therefore the Company does not have a limited amount of authorised capital and issued shares do not have a par value.
79
(5 )
g r o u p s t r u c t u r e
In this section
This section provides information which will help users understand how the group structure affects the financial position and
performance of the Group as a whole. The Group includes entities that are classified as associates, which are accounted for using
the equity method.
In this section of the notes there is information about:
Transactions with non-controlling interests; and
Changes to the structure that occurred during the year as a result of business combinations or the disposal of a discontinued
operation.
5 .1
d i s c o N t i N u e d o p e r At i o N s
( A )
d e s c r i p t i o N
On 29 February 2016, the Company announced that its UK operation would return to its original role as a master franchisor and
subsequently disposed of all the assets and liabilities of the majority of its corporate owned stores to franchisees, with the remainder
closed, and ceased lending through its UK personal loan book. Assets disposed included plant and equipment, intangible assets
(reacquired rights, trade names and customer relationships) and store inventory.
( B )
f i N A N c i A l p e r f o r m A N c e A N d c A s h f l o w i N f o r m At i o N
The results of the discontinued operations (UK retail and personal loan business) included in the loss for the year are set out below.
During the year ended 30 June 2016 these results were included in the store operations and financial services – personal loans
operating segments. The comparative loss and cash flows from discontinued operations have been re-presented to include those
operations classified as discontinued in the current year.
Revenue
Expenses
Impairment of non-current assets
Loss on disposal of assets
Loss before income tax
Income tax expense
2016
$
74,467,074
(93,302,599)
(2,247,551)
(10,082,972)
(31,166,048)
-
2015
$
86,226,852
(99,069,844)
(7,587,315)
-
(20,430,307)
-
Loss after income tax of discontinued operations
(31,166,048)
(20,430,307)
Net cash flows from discontinued operations
Net cash outflows from operating activities
Net cash inflows from investing activities
Net cash outflows from financing activities
Net cash (outflows) / inflows from discontinued operations
(6,050,046)
415,172
(13,521)
(5,648,395)
(1,447,932)
2,164,337
(137,940)
578,465
80
cash converters international limited 5 .1
d i s c o N t i N u e d o p e r At i o N s ( c o N t i N u e d )
Accounting policies
A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents
a separate major line of business or geographical area of operations, is part of a single coordinated plan to dispose of such a line of
business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations
are presented separately in the statement of profit or loss.
( c )
l o s s o N d i s p o s A l o f A s s e t s
Consideration received
Cash
Deferred sales proceeds
Total consideration received
Assets disposed
Current assets
Plant and equipment
Goodwill
Other intangible assets
Total assets disposed
Loss on disposal of assets
( d )
A s s e t s A s s o c i At e d w i t h d i s c o N t i N u e d o p e r At i o N s
The following assets were reclassified as associated with discontinued operations as at 30 June 2016:
Assets associated with discontinued operations
Personal loan receivables
5 .2
i N v e s t m e N t i N A s s o c i At e s
Balances of the investments in associates and joint ventures are as follows:
Balance at beginning of year
Net profit / (loss) for year
Write off of investment in associate
Foreign exchange adjustment in value of investment
Balance at end of year
2016
$
7,448,377
6,287,609
(1,392,037)
(764,331)
163,577
4,294,818
2016
$
251,735
9,900,165
10,151,900
9,779,679
4,937,704
2,807,941
2,709,548
20,234,872
10,082,972
2015
$
-
6,213,926
73,683
-
-
6,287,609
Associates are those entities over which Cash Converters has significant influence, but not control or joint control, over the financial
and operating policies. Significant influence is the power to participate in the financial and operating policy decisions of the investee,
but not control or joint control over those policies.
81
5 .2
i N v e s t m e N t i N A s s o c i At e s ( c o N t i N u e d )
The financial statements include Cash Converters’ share of the total recognised gains and losses of associates on an equity accounted
basis, from the date that significant influence commences until the date that significant influence ceases. If Cash Converters’ share
of losses exceeds its interest in an associate, their carrying amount is reduced to nil and recognition of further losses is discontinued
except to the extent that Cash Converters has incurred legal of constructive obligations or made payments on behalf of the associate.
Unrealised gains on transactions between Cash Converters and its associates are eliminated to the extent of Cash Converters’
interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the
asset transferred.
During the year, the Company held an investment in the New Zealand Cash Converters Master Franchisor. The Company holds a 25%
equity interest in all aspects of the New Zealand enterprise, including corporate stores, franchise contracts and financial services.
In the prior year, the Company was involved in a joint venture with EZCORP Inc in South America and Mexico. During the year ended
30 June 2016 EZCORP Inc made a decision to close this operation and accordingly the Company’s 20% equity interest in the joint
venture of $764,331 was written off during the year.
5 .3
c o N t r o l l e d e N t i t i e s
( A )
c o m p o s i t i o N o f t h e g r o u p
Controlled entities of Cash Converters International Limited:
Name of entity
Country of
incorporation
BAK Property Pty Ltd (1)
Cash Converters (Cash Advance) Pty Ltd (1) (2)
Cash Converters Finance Corporation Limited
Cash Converters (NZ) Pty Ltd
Cash Converters Personal Finance Pty Ltd (1) (2)
Cash Converters Pty Ltd (1) (2)
Cash Converters (Stores) Pty Ltd (1) (2)
Cash Converters UK Holdings PLC
Cash Converters USA, Inc
Cash Converters USA Limited
Finance Administrators of Australia Pty Ltd (1) (2)
Green Light Auto Group Pty Limited (1) (2)
Mon-E Pty Ltd (1) (2)
Safrock Finance Corporation (QLD) Pty Ltd (1) (2)
Safrock Finance Corporation WA Pty Ltd (1) (2)
CCPF Warehouse Trust No 1
CCPF Receivables Trust No 1
Australia
Australia
Australia
Australia
Australia
Australia
Australia
UK
USA
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ownership interest
2016
100%
100%
2015
100%
100%
64.33%
64.33%
100%
100%
100%
100%
100%
99.285%
99.285%
100%
100%
100%
100%
100%
-
100%
100%
100%
100%
100%
100%
99.285%
99.285%
100%
100%
100%
100%
100%
100%
-
(1)
These companies are parties to the Deed of Cross Guarantee and members of the Closed Group as at 30 June 2016.
(2)
These companies are members of the tax consolidated group.
82
cash converters international limited 5 .3
c o N t r o l l e d e N t i t i e s ( c o N t i N u e d )
( B )
d e e d o f c r o s s g u A r A N t e e
Cash Converters International Limited and certain wholly-owned companies (the Closed Group), identified in (a) above, are parties
to a Deed of Cross Guarantee (the Deed). The effect of the Deed is that members of the Closed Group guarantee to each creditor
payment in full of any debt in the event of winding up of any of the members under certain provisions of the Corporations Act 2001.
ASIC Class Order 98/1418 (as amended) provides relief to parities to the Deed from the Corporations Act 2001 requirements for
preparation, audit and lodgement of financial reports and directors’ reports, subject to certain conditions as west out therein.
Pursuant to the requirements of this Class Order, a summarised consolidated Statement of Profit or Loss and Other Comprehensive
Income for the year ended 30 June 2016 and consolidated Statement of Financial Position as at 30 June 2016, comprising the
members of the Closed Group after eliminating all transactions between members are set out on the following pages.
Summarised statement of profit or loss and comprehensive income
Profit / (loss) before income tax
Income tax benefit / (expense)
Total comprehensive income
Summary of movements in Closed Group’s retained earnings
Retained earnings at beginning of year
Net profit / (loss)
Dividends paid or provided for
Retained earnings at end of year
2016
$
14,500,532
(7,417,899)
7,082,633
87,302,134
7,082,633
(9,636,635)
84,748,132
2015
$
1,607,191
(5,046,765)
(3,439,574)
111,023,851
(5,558,939)
(18,162,778)
87,302,134
83
5 .3
c o N t r o l l e d e N t i t i e s ( c o N t i N u e d )
Statement of financial position
Current assets
Cash and cash equivalents
Trade receivables
Personal loan receivables
Inventories
Other assets
Current tax receivable
Total current assets
Non-current assets
Trade and other receivables
Plant and equipment
Deferred tax assets
Goodwill
Other intangible assets
Investments in associates
Other financial assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
84
2016
$
68,696,815
12,038,115
101,315,301
17,444,611
9,101,816
9,850,624
2015
$
45,100,663
30,231,344
101,512,744
16,188,446
8,947,418
3,600,310
218,447,282
205,580,925
42,564,087
13,833,302
10,283,144
53,669,724
19,219,346
9,523,712
107,008,562
107,554,692
22,812,606
4,294,818
30,250,139
231,046,658
449,493,940
18,099,298
70,023,203
20,221,982
19,990,382
6,287,609
30,250,139
246,495,604
452,076,529
39,420,596
60,691,522
5,672,716
108,344,483
105,784,834
63,960,904
298,111
64,259,015
172,603,498
276,890,442
207,539,821
(15,397,511)
84,748,132
276,890,442
66,436,795
240,082
66,676,877
172,461,711
279,614,818
205,399,340
(13,086,656)
87,302,134
279,614,818
cash converters international limited 5 .4
pA r e N t e N t i t y d i s c l o s u r e s
The financial information of the parent entity, Cash Converters International Limited has been prepared on the same basis as the
consolidated financial report.
( A )
s tAt e m e N t o f f i N A N c i A l p o s i t i o N
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
( B )
c o m p r e h e N s i v e i N c o m e
Profit for the year
Other comprehensive income
Total comprehensive income
2016
$
5,071,726
267,284,669
272,356,395
-
60,000,000
60,000,000
2015
$
3,452,819
253,423,027
256,875,846
-
60,000,000
60,000,000
212,356,395
196,875,846
207,539,810
192,599,681
540,420
4,276,165
-
4,276,165
212,356,395
196,875,846
-
-
-
-
-
-
( c )
g u A r A N t e e s e N t e r e d i N to B y pA r e N t e N t i t y i N r e l At i o N to t h e d e B t s o f i t s s u B s i d i A r i e
Cross guarantees have been provided by the parent entity and its controlled entities as listed in note 5.3. The fair value of the cross
guarantee has been assessed as $Nil based on the underlying performance of the entities in the cross guarantee.
Guarantee provided under the deed of cross guarantee (1)
2,140,975
2,140,975
(1)
Cash Converters International Limited has provided a cross guarantee to HSBC for a BACS facility provided to CCUK.
85
(6 )
o t h e r i t e m s
In this section
This section includes additional information not disclosed elsewhere in the report but required to be disclosed to comply with the
Accounting Standards, the Corporations Act 2001 or the Corporations Regulations.
6 .1
c o N t i N g e N t l i A B i l i t i e s
In the course of its normal business the consolidated entity occasionally receives claims and writs for damages and other matters
arising from its operations. Where, in the opinion of the directors it is deemed appropriate, a specific provision is made, otherwise the
directors deem such matters are either without merit of or such kind or involve such amounts that would not have a material adverse
effect on the operating results or financial position of the economic entity if disposed of unfavourably.
The Company has been co-operating with an investigation by ASIC into its compliance with the responsible lending provisions
applicable to small amount credit contracts under the National Consumer Credit Protection Act 2009 (Cth). Discussions between
Cash Converters and ASIC as to the most appropriate resolution to the matter are continuing. A provision of $12,500,000 has been
recognised as at 30 June 2016 as disclosed in note 3.8. The provision is based on Cash Converters’ best estimate of the likely
outcome of discussions with ASIC at the date of this financial report, and therefore could ultimately vary if the final terms differ to
those currently anticipated.
On 31 July 2015 the Company was served with a statement of claim lodged with the New South Wales Registry of the Federal Court
of Australia by Mr Sean Lynch, seeking to commence a class action claim on behalf of borrowers resident in Queensland who took
out personal loans from the Company’s subsidiaries during the period from 30 July 2009 to 30 June 2013.
On 27 April 2016 the Company was served with a statement of claim lodged with the New South Wales Registry of the Federal Court
of Australia by Ms Kim McKenzie commencing a class action claim on behalf of borrowers resident in Queensland who took out cash
advance loans during the period from 28 April 2010 to 30 June 2013.
Since 1 July 2013 all Cash Converters lending has been undertaken in accordance with the national regulatory regime introduced by
the Federal Government. These proceedings attack the brokerage fee system used for customers between 30 July 2009 and 30 June
2013. The brokerage fee system has not been used since 30 June 2013.
The potential financial impact of either class action noted above cannot be reliably estimated at this time given the early stage of
proceedings.
The directors are not aware of any other material contingent liabilities in existence as at 30 June 2016 requiring disclosure in the
financial statements. For events subsequent to 30 June 2016 giving rise to contingent liabilities, refer to note 6.7.
6 .2
c o m m i t m e N t s
Operating leases
Operating leases relate to office accommodation and retail premises with lease terms of between 5 to 10 years, with an option to
extend for a further 5 years. All operating lease contracts contain market review clauses in the event that the consolidated entity
exercises its option to renew. The consolidated entity does not have an option to purchase the leased assets at the expiry of the
lease period.
Non-cancellable operating lease commitments payable:
Within one year
One to five years
Later than five years
86
2016
$
12,440,462
30,005,994
7,561,480
50,007,936
2015
$
13,137,443
35,484,635
11,599,805
60,221,883
cash converters international limited 6 .2
c o m m i t m e N t s ( c o N t i N u e d )
Capital expenditure
As at 30 June 2016, capital expenditure commitments were $390,513 (2015: $1,800,000).
6 .3
r e l At e d pA r t y d i s c l o s u r e s
The immediate parent and ultimate controlling party of the Group is Cash Converters International Limited.
Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated
on consolidation and are not disclosed in this note.
During the year the Group paid $55,074 to HopgoodGanim, a law firm in which Mr Kevin Dundo is a partner, for legal services. Legal
services were provided to the Group on terms and conditions no more favourable than those that it is reasonable to expect the
Company would have been charged if dealing at arm’s length with an unrelated party.
EZCORP Inc (EZCORP) is a related party of the Company because the Company is an associate due to the substantial holding of
the Company’s listed shares by EZCORP. The balances and transactions between the Company and EZCORP relate to the South
American and Mexican joint venture (refer note 5.2).
Other than share based payments (as disclosed in note 6.5) and shareholdings of key management personnel (as disclosed in the
remuneration report), the parent, its subsidiaries, associates and key management personnel made no related party transactions
during the reporting period.
6 .4
k e y m A N A g e m e N t p e r s o N N e l d i s c l o s u r e s
Details of directors and other members of key management personnel of Cash Converters International Limited during the year are:
•
•
•
•
•
•
•
•
•
•
•
•
•
Mr Stuart Grimshaw (Non-Executive Chairman)
Mr Reginald Webb (Non-Executive Director)
Mr Lachlan Given (Non-Executive Director)
Mr Kevin Dundo (Non-Executive Director)
Mr Peter Cumins (Managing Director)
Mr Mark Reid (General Manager – Australia, appointed 2 November 2015)
Mr Ralph Groom (Company Secretary, Chief Financial Officer)
Mr Glen Fee (Chief Information Officer)
Mr Martyn Jenkins (General Manager – UK)
Mr Shane Prior (Chief Operating Officer – Stores, became member of KMP 1 July 2015)
Mr Sam Budiselik (Chief Operating Officer – Financial Services Australia, appointed 15 February 2016, resigned 30 June 2016)
Mr Michael Cooke (Legal Counsel, retired 31 August 2016)
Mr Ian Day (General Manager – Australia, retired 31 August 2015)
The aggregate compensation of the key management personnel of the consolidated entity is set out below:
Short-term employee benefits
Post-employment benefits
Share-based payments
2016
$
3,979,091
122,960
(1,945,164)
2,156,887
2015
$
4,235,013
147,801
1,021,050
5,403,864
87
6 .5
s h A r e- B A s e d pAy m e N t s
Cash Converters rights plan
The Cash Converters rights plan, which was approved by shareholders on 18 November 2015, allows the directors of the Company
to issue performance rights which will vest into ordinary shares in the Company upon the achievement of certain vesting conditions.
As at 30 June 2016, the shareholders had approved the issue of 15,920,500 performance rights under the Company’s previous rights
plan, approved by shareholders on 30 November 2010 and 6,634,152 performance rights under the new rights plan, to the managing
director and the Company’s senior management team in various tranches with each tranche containing different vesting conditions.
Each right entitles the holder to subscribe for one fully paid ordinary share in the Company at the exercise price of nil. During the
reporting period, a total of 6,634,152 performance rights were granted in Tranches 13, 14, 15 and 16 to senior executives of the
Company.
The following arrangements were in existence during the current reporting period:
Tranche
Grant date
Number of rights
Grant date fair
value
Exercise price
Expiry date
2
3
6
8
9
10
11
12
13
14
15
16
30 Nov 2010
19 Sep 2011
25 Sep 2012
24 Sep 2013
24 Sep 2013
25 Sep 2014
25 Sep 2014
25 Sep 2014
18 Nov 2015
18 Nov 2015
28 Jan 2016
28 Jan 2016
6,000,000
1,800,000
176,997
199,001
198,998
207,501
207,501
207,498
1,865,000
1,865,000
1,452,076
1,452,076
$0.43
$0.31
$0.68
$1.15
$1.09
$1.06
$1.01
$0.96
$0.23
$0.41
$0.26
$0.45
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
14 Oct 2016
1 Jul 2016
1 Jul 2015
1 Jul 2015
1 Jul 2016
1 Jul 2015
1 Jul 2016
1 Jul 2017
30 Jun 2018
30 Jun 2018
30 Jun 2018
30 Jun 2018
Fair value of performance rights granted during the year
The weighted average fair value of the performance rights granted during the financial year is $0.34 (2015: $1.01). Where relevant,
the expected life used in the model is based on the earliest vesting date possible for each tranche, based on the vesting conditions.
Grant date
Option pricing model
Grant date share price
Exercise price
Expected volatility
Option life
Dividend yield
Risk-free interest rate
Tranche 13
Tranche 14
Tranche 15
Tranche 16
18 Nov 2015
18 Nov 2015
28 Jan 2016
28 Jan 2016
Monte Carlo
Binomial
Monte Carlo
Binomial
$0.51
$0.00
40%
2.6 years
2.4 years
2.13%
$0.51
$0.00
40%
2.6 years
2.4 years
2.13%
$0.55
$0.00
40%
2.6 years
2.4 years
1.92%
$0.55
$0.00
40%
2.6 years
2.4 years
1.92%
88
cash converters international limited 6 .5
s h A r e- B A s e d pAy m e N t s ( c o N t i N u e d )
Movement in performance rights during the year
The following table illustrates the number of, and movements in, performance rights during the year. The performance rights were
issued at no charge, and the weighted average exercise price is nil. No rights were exercisable at the end of the current year.
Outstanding at beginning of year
Granted during year
Forfeited / lapsed during year
Exercised during year
Expired during year
Outstanding at end of year
Share options exercised during the year
2016
Number
8,997,497
6,634,152
(8,289,831)
(583,499)
-
2015
Number
8,807,665
622,500
(56,666)
(376,002)
-
6,758,319
8,997,497
Tranche
Grant date
Number exercised
Exercise date
Share price at exercise
date
Year ended 30 June 2016
6
8
10
Year ended 30 June 2015
5
7
25 Sep 2012
24 Sep 2013
25 Sep 2014
25 Sep 2012
24 Sep 2013
Share options lapsed during the year
176,997
199,001
207,501
583,499
177,001
199,001
376,002
16 Sep 2015
16 Sep 2015
16 Sep 2015
16 Sep 2014
16 Sep 2014
$0.505
$0.505
$0.505
$1.12
$1.12
Tranche
Grant date
Number lapsed
Year ended 30 June 2016
2
3
9
11
12
30 Nov 2014
19 Sep 2011
24 Sep 2013
25 Sep 2014
25 Sep 2014
6,000,000
1,800,000
198,998
207,501
83,332
8,289,831
Year ended 30 June 2015
6
25 Sep 2012
56,666
89
6 .5
s h A r e- B A s e d pAy m e N t s ( c o N t i N u e d )
Share options outstanding at year end
The total number of options outstanding at 30 June 2016 was 6,758,319 (2015: 8,997,497).
Tranche
Grant date
Number of rights
Grant date fair
value
Exercise price
Expiry date
12
13
14
15
16
25 Sep 2014
18 Nov 2015
18 Nov 2015
28 Jan 2016
28 Jan 2016
124,166
1,865,000
1,865,000
1,452,076
1,452,076
6,758,319
$0.96
$0.23
$0.41
$0.26
$0.45
$0.00
$0.00
$0.00
$0.00
$0.00
1 Jul 2017
30 Jun 2018
30 Jun 2018
30 Jun 2018
30 Jun 2018
The weighted average remaining contractual life for the performance rights outstanding at 30 June 2016 was 2.0 years (2015: 1.2
years).
Accounting policies
The consolidated entity provides benefits to executives of the consolidated entity in the form of share-based payment transactions,
whereby key management personnel render services in exchange for options (equity-based transactions).
The current plan to provide these benefits is the Executive Performance Rights Plan. The cost of the equity-settled transactions with
employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value
is determined by using an appropriate valuation methodology.
The cost of equity-based transactions is recognised, together with a corresponding increase in equity, over the period in which the
performance and/or service conditions are fulfilled (the vesting period), ending on the date on which the relevant employees become
fully entitled to the award (vesting date).
At each subsequent reporting date until vesting, the cumulative charge to the profit or loss is the product of:
•
•
•
The grant date fair value of the award.
The current best estimate of the number of the awards that will vest, taking into account such factors as the likelihood of
non-market performance conditions being met.
The expired portion of the vesting period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market
condition.
Where the terms of an equity-settled award are modified, as a minimum, an expense is recognised as if the terms had not been
modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as
measured at the date of modification.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share
90
.
cash converters international limited
6 .6
A u d i t o r’ s r e m u N e r At i o N
Auditor of the parent entity
Audit / review of the financial report
Taxation services
Other non-audit services
Related practice of the parent entity auditor
Audit
Taxation services
2016
$
545,900
12,500
-
111,880
85,740
756,020
2015
$
402,750
46,725
20,373
110,932
201,351
782,131
The auditor of Cash Converters International Limited is Deloitte Touche Tohmatsu.
6 .7
e v e N t s s u B s e q u e N t t o t h e e N d o f t h e y e A r
Cash Converters has been co-operating with an investigation by ASIC into its compliance with the responsible lending provisions
applicable to small amount credit contracts under the National Consumer Credit Protection Act 2009 (Cth). Discussions between
Cash Converters and ASIC as to the most appropriate resolution to the matter are continuing. Accordingly, the Company has booked
a provision of $12.5 million in respect of any potential compliance issues in its credit assessment processes.
Other than the above, there has not been any matter or circumstance other than that referred to in the financial statements or notes
thereto, that has arisen since the end of the financial year, that has significantly affected or may significantly affect the operations of
the Group.
91
d i r e c t o r s ’ d e c l A r A t i o N
The directors declare that:
a)
b)
c)
in the directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable;
in the directors’ opinion, the attached financial statements are in compliance with International Financial Reporting Standards,
as stated in note 1 to the financial statements;
in the directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act
2001, including compliance with accounting standards and giving a true and fair view of the financial position and performance
of the consolidated entity; and
d)
the directors have been given the declarations required by s295A of the Corporations Act 2001.
At the date of this declaration the Company is within the class of companies affected by ASIC Class Order 98/1418. The nature of
the deed of cross guarantee is such that each company which is party to the deed guarantees to each creditor payment in full of any
debt in accordance with the deed of cross guarantee.
In the directors’ opinion, there are reasonable grounds to believe that the Company and the companies to which the ASIC Class Order
applies, as detailed in note 5.3 to the financial statements will, as a group, be able to meet any obligations or liabilities to which they
are or may become subject, by virtue of the deed of cross guarantee.
Signed in accordance with a resolution of the directors made pursuant to s295(5) of the Corporations Act 2001.
On behalf of the directors
Peter Cumins
Director
Perth, Western Australia
30 September 2016
92
cash converters international limited Deloitte Touche Tohmatsu
ABN 74 490 121 060
Brookfield Place, Tower 2
123 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
The Board of Directors
Cash Converters International Limited
Level 18, 37 St Georges Terrace
Perth WA 6000
30 September 2016
Dear Directors
Cash Converters International Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the
following declaration of independence to the directors of Cash Converters International
Limited.
As lead audit partner for the audit of the financial statements of Cash Converters International
Limited for the financial year ended 30 June 2016, I declare that to the best of my knowledge
and belief, there have been no contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
Peter Rupp
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited.
Cash Converters International Limited
Annual report 2016
84
93
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Brookfield Place, Tower 2
123 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
Independent Auditor’s Report to the
members of Cash Converters International
Limited
Report on the Financial Report
We have audited the accompanying financial report of Cash Converters International Limited,
which comprises the statement of financial position as at 30 June 2016, the statement of profit or
loss and other comprehensive income, the statement of cash flows and the statement of changes
in equity for the year ended on that date, notes comprising a summary of significant accounting
policies and other explanatory information, and the directors’ declaration of the consolidated
entity, comprising the company and the entities it controlled at the year’s end or from time
to time during the financial year as set out on pages 41 to 92.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that
gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the directors determine is necessary to
enable the preparation of the financial report that gives a true and fair view and is free from
material misstatement, whether due to fraud or error. In Note 1, the directors also state, in
accordance with Accounting Standard AASB 101 Presentation of Financial Statements , that the
consolidated financial statements comply with International Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. Those standards require
that we comply with relevant ethical requirements relating to audit engagements and plan and
perform the audit to obtain reasonable assurance whether the financial report is free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s judgement,
including the assessment of the risks of material misstatement of the financial report, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control,
relevant to the company’s preparation of the financial report that gives a true and fair view, in
order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the company’s internal control. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness
of accounting estimates made by the directors, as well as evaluating the overall presentation of
the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited.
Cash Converters International Limited
Annual report 2016
94
94
cash converters international limited Auditor’s Independence Declaration
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001. We confirm that the independence declaration required by the
Corporations Act 2001, which has been given to the directors of Cash Converters International
Limited, would be in the same terms if given to the directors as at the time of this auditor’s
report.
Opinion
In our opinion:
(a) the financial report of Cash Converters International Limited is in accordance with the
Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2016
and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001;
and
(b) the consolidated financial statements also comply with International Financial Reporting
Standards as disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 25 to 39 of the directors’ report for
the year ended 30 June 2016. The directors of the company are responsible for the preparation
and presentation of the Remuneration Report in accordance with section 300A of the
Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report,
based on our audit conducted in accordance with Australian Auditing Standards.
Opinion
In our opinion the Remuneration Report of Cash Converters International Limited for the year
ended 30 June 2016, complies with section 300A of the Corporations Act 2001.
DELOITTE TOUCHE TOHMATSU
Peter Rupp
Partner
Chartered Accountants
Perth, 30 September 2016
Cash Converters International Limited
Annual report 2016
95
95
1.
N u m B e r o f h o l d e r s o f e q u i t y s e c u r i t i e s
( A )
d i s t r i B u t i o N o f h o l d e r s o f e q u i t y s e c u r i t i e s
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
( B )
v o t i N g r i g h t s
Holders
Number
886
2,221
1,327
2,170
253
6,857
Fully paid ordinary shares
Number
481,280
6,353,714
10,424,911
65,909,169
401,806,963
484,976,037
Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a meeting or by proxy has one vote
on a show of hands.
( c )
l e s s t h A N m A r k e tA B l e pA r c e l o f s h A r e s
The number of shareholders holding less than a marketable parcel is 1,613, given a share price of $0.31 per share.
( d )
s u B s tA N t i A l s h A r e h o l d e r s
Ordinary shareholder
Number of shares
EZCORP Inc
HSBC Custody Nominees (Australia) Limited
RBC Investor Services Australia Nominees Pty Limited
JP Morgan Nominees Australia Limited
151,948,000
43,833,912
39,118,145
30,990,969
2.
t w e N t y l A r g e s t e q u i t y s e c u r i t y h o l d e r s
Ordinary shareholder
Number of shares
1.
2.
3.
4.
5.
6.
7.
8.
9.
EZCORP Inc
HSBC Custody Nominees (Australia) Limited
RBC Investor Services Australia Nominees Pty Limited
JP Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
BNP Paribas Noms Pty Ltd
National Nominees Limited
BNP Paribas Nominees Pty Ltd
RBC Investor Services Australia Nominees Pty Limited
10. Riolane Holdings Pty Ltd
11. Mrs Diana Kathryn Cumins
12. RBC Investor Services Australia Pty Limited
13. Mr Michael Piperoglou
14. Narlack Pty Ltd
15. Mr & Mrs D’Souza
16. Mr Zhen-Jia Wu & Mrs Xian Jin
17. Ms Choi Chu Lee
18. MICPIP Nominees Pty Ltd
19. LEMPIP Nominees Pty Ltd
20. Mr Christopher John Francis
151,948,000
43,833,912
39,118,145
30,990,969
22,150,882
11,907,178
8,619,431
8,363,507
4,251,786
3,895,226
3,752,511
2,284,003
2,135,381
1,913,094
1,884,816
1,516,362
1,200,000
1,108,540
1,090,804
1,037,931
% of issued
shares
31.33
9.04
8.07
6.39
% of issued
shares
31.33
9.04
8.07
6.39
4.57
2.46
1.78
1.72
0.88
0.80
0.77
0.47
0.44
0.39
0.39
0.31
0.25
0.23
0.22
0.21
96
343,002,478
70.72
cash converters international limited c a s h c o n v e r t e r s i n t e r n at i o n a l l i m i t e d
c a s h c o n v e r t e r s i n t e r n at i o n a l l i m i t e d
A B o u t c A s h c o N v e r t e r s
Cash Converters International Limited is an ASX listed company
with leading Australian and international franchise, second
hand goods and financial services businesses.
The Company has a worldwide network of 737 stores in 21
countries. In Australia, there are more than 150 Cash Converters
outlets with over 2,500 employees.
The core business of Cash Converters is the ownership and
franchising of retail and financial services stores.
The Company has built unique brand strength in Australia and
internationally. This has enabled it to successfully position its
corporate and franchised stores as leading alternative retail and
financial services outlets.
Cash Converters has also successfully developed online
channels for retailing and financial services. The revenue of
these channels is growing rapidly through the attraction of new
customers, and increased sales to existing clients.
Cash Converters strategy is to maximise the value of its brand
and store network through a focus on high return businesses.
c o r p o r A t e d i r e c t o r y
d i r e c t o r s
Stuart Grimshaw
Chairman
Peter Cumins
Managing Director
Reginald Webb
Non-Executive Director
Lachlan Given
Non-Executive Director
Kevin Dundo
Non-Executive Director
c o m pA N y s e c r e tA r y
Ralph Groom
r e g i s t e r e d o f f i c e
Level 18, Citibank House
37 St George’s Terrace
Perth WA 6000
Tel: +61 8 9221 9111
w e B s i t e
www.cashconverters.com
s h A r e r e g i s t r A r
Australia:
Computershare Investor
Services Pty Ltd
Level 11
172 St Georges Terrace
Perth WA 6000
Australia
Tel:
1300 850 505
A u d i t o r s
Deloitte Touche Tohmatsu
Brookfield Place, Tower 2
123 St Georges Terrace
Perth WA 6000
Australia
s t o c k e x c h A N g e
Australian Securities Exchange
Level 40, Central Park
152 - 158 St George’s Terrace
Perth WA 6000
Australia
ASX code: CCV
c a s h c o n v e r t e r s i n t e r n at i o n a l l i m i t e d
c a s h c o n v e r t e r s
i n t e r n a t i o n a l l i m i t e d
2016
A B N 3 9 0 6 9 1 4 1 5 4 6
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