2021
Appendix 4E and Annual Report
Cash Converters International Limited
ABN 39 069 141 546
Annual Report – 30 June 2021
Table of Contents
Appendix 4E – Results for announcement to the market ...................................................................................... 2
Corporate directory ................................................................................................................................................ 4
Operating and financial review............................................................................................................................... 5
Directors' report ................................................................................................................................................... 14
Remuneration report ............................................................................................................................................ 22
Auditor’s independence declaration .................................................................................................................... 42
Corporate governance statement ........................................................................................................................ 43
Financial statements ............................................................................................................................................. 44
Independent auditor’s report to the members .................................................................................................. 115
Shareholder information .................................................................................................................................... 119
30 June 2021
Cash Converters International Limited
1
Appendix 4E
Cash Converters International Limited
Appendix 4E
Preliminary Financial Report
for the year ended 30 June 2021
(previous corresponding period 30 June 2020)
ABN 39 069 141 546
Appendix 4E – Results for announcement to the market
2021
$'000
2020
$'000
Change
$'000
%
Revenue from ordinary activities
201,346
262,021
(60,675)
-23%
Profit / (loss) from ordinary activities after tax
attributable to members
Net profit / (loss) for the period attributable to
members
16,199
(10,491)
26,690
nm1
16,199
(10,491)
26,690
nm1
Basic profit / (loss) earnings per fully paid ordinary
share
2.62
(1.70)
cents per share
Net tangible asset backing per ordinary share
20.99
20.68
cents per share
1 Not meaningful
The Right of Use Asset under AASB 16 Leases has been excluded from tangible assets, while the lease liability
has been included in liabilities.
This report should be read in conjunction with any announcements made in the period by the Company in
accordance with the continuous disclosure requirements of the Corporations Act 2001 and the ASX Listing Rules.
Additional Appendix 4E disclosure requirements can be found in the directors’ report and the 30 June 2021
financial statements and accompanying notes.
Dividends per ordinary share / distributions
2021 interim dividend
2021 final dividend
Amount
per
security
(cents)
Franked
amount
per
security
Record
date
Paid /
payable
date
1.00
1.00
100% 25-Mar-21
14-Apr-21
100%
24-Sep-21
14-Oct-21
30 June 2021
Cash Converters International Limited
2
Appendix 4E
Dividends
The directors of the Company have declared a final dividend of 1.00 cent per share with the release of the final
year end results and reporting date of 29 August 2021. The dividend will be 100% franked and will be paid on 14
October 2021 to those shareholders on the register at the close of business on 24 September 2021.
With the declaration of this dividend, the Company’s Dividend Reinvestment Plan (DRP) has been suspended.
There is no provision for a final dividend in respect of the year ended 30 June 2021. Provisions for dividends to
be paid by the Company are recognised in the Consolidated Statement of Financial Position as a liability and a
reduction in retained earnings once the dividend has been declared.
Financial statements
Released with this Appendix 4E report are the following statements:
• Consolidated statement of profit or loss and other comprehensive income together with the notes to the
Statement
• Consolidated statement of financial position together with the notes to the Statement
• Consolidated statement of changes in equity together with the notes to the Statement
• Consolidated statement of cash flows together with the notes to the Statement
This report is based on consolidated financial statements which have been audited.
Details over entities over which control has been gained or lost
During the period the Group acquired trade and other assets of six franchise stores.
Details of associates and joint venture entities
The Group holds a 25% equity interest in Cash Converters Master Franchise for New Zealand which generates
income from corporate stores, franchise contracts, financial services and software. The Group’s share of the
profit of $1.707 million is reflected in the financial result for the period (June 2020: $1.038 million after the
recognition of an impairment loss in relation to this investment).
30 June 2021
Cash Converters International Limited
3
Corporate directory
Corporate directory
Directors
Mr Jason Kulas
Mr Sam Budiselik
Mr Peter Cumins
Mr Lachlan Given
Ms Julie Elliott
Mr Robert Hines
Mr Henry Shiner
Company Secretary
Mr Leslie Crockett
Non-Executive Chairman
Managing Director
Executive Deputy Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Registered and principal office
Level 11, 141 St Georges Terrace
Perth WA 6000
Australia
Tel:
+61 (8) 9221 9111
Web: www.cashconverters.com
Share registrar
Computershare Investor Services Pty Ltd
Level 11
172 St Georges Terrace
Perth WA 6000
Australia
Tel:
1300 850 505
Auditors
Deloitte Touche Tohmatsu
Brookfield Place, Tower 2
123 St Georges Terrace
Perth WA 6000
Australia
Stock Exchange
Australian Securities Exchange
Level 40, Central Park
152-158 St Georges Terrace
Perth WA 6000
Australia
ASX code:
CCV
30 June 2021
Cash Converters International Limited
4
Operating and financial review
Operating and financial review
Cash Converters International Limited (“Cash Converters” or “the Company”) and entities controlled by the
Company and its subsidiaries (“the Group”) is diverse, generating revenues from franchising, consumer retail
store operations, personal finance and vehicle finance and is supported by a corporate head office in Perth,
Western Australia. The Group operates in Australia and the United Kingdom and has an equity interest of 25%
in Cash Converters New Zealand. There is a franchise presence in a further 12 countries around the world.
Impact of COVID-19
The operational response to the COVID-19 pandemic has been instrumental in ensuring business continuity
throughout the course of the financial year. All of the Group’s Australian locations have successfully maintained
productivity while transitioning to a combination of work-from-home and safe store or office-based activity for
employees including online fulfilment (click and collect and payment portal service) for customers. Focus
remained on customer service with emphasis on safe work practices protecting both customers and employees
alike. The Group has continued to focus on the health and wellbeing of its employees and customers, observing
the necessary hygiene and social distancing measures.
The ability to service customers while ensuring a safe environment and remaining profitable demonstrates
resilience and an ability to operate effectively during periods of significant uncertainty and change. Of the 23,336
store trading days considered available in FY 2021 across Australian stores, “lockdowns” have resulted in an
estimated 2,374 lost trading days – a 10% reduction in available days across all Australian stores. 2,083 of these
lost trading days originate in the state of Victoria representing 28% of available trading days lost.
In the United Kingdom, franchised store closures were experienced for 207 days of the financial year with a
minimal click and collect service available through some of the period. No stores have closed permanently due
to COVID-19, and 2 new franchise stores were opened during the year.
Cash Converters has several master franchise arrangements in other countries, which operate sub franchised
stores. Many of these stores have been the subject of government-mandated closures during the COVID-19
pandemic. These store closures have had no material financial impact on the Group.
It is worth noting that no entities within the Australian group made direct claims under the JobKeeper Payment
scheme allowances. As with the prior year, economic support packages provided to affected workers, businesses
and the broader community negatively impacted demand for personal loans, however, did stimulate retail
activity.
Government stimulus payments to Australian customers significantly impacted borrower demand and
accelerated loan repayments in the first half of FY 2021. Whilst borrower demand and business activity
throughout the second half of FY 2021 has recovered somewhat, the softer second half earnings result is due to
these COVID-19 related factors.
Pricing and risk settings have been adjusted and the Group has significantly rebuilt the personal lending books.
There has been measured growth in the vehicle finance book based on a prudent view on the significant increase
seen in used vehicle asset valuations. Retail inventory and pawnbroking books have also recovered with
intermittent lockdowns during the year actively managed to ensure our stores remained safe.
Despite the progress made domestically and abroad towards limiting the spread of COVID-19, significant
uncertainty remains. There is prevailing uncertainty with respect to forward-looking statements and there has
been a focus on presenting appropriate disclosure with respect to business impacts, risks and uncertainties and
key assumptions.
30 June 2021
Cash Converters International Limited
5
Operating and financial review
Key financial performance highlights:
The strength of the Company’s business model has remained particularly evident over the past 12 months with
the Company’s customer service proposition having been successfully integrated - with physical store assets
operating in tandem with industry-leading online digital assets. As the ongoing normalisation of the trading
environment hopefully continues, the momentum in the Company’s loan books should continue to generate
customer and shareholder value, as will the new product releases and operational efficiency initiatives.
A strong financial result was achieved in the financial year, compared to the previous corresponding year, as
outlined in the table below:
Total revenue
Profit / (loss) for the year
EBIT 2
EBITDA 2
As reported
2021
$’000
201,346
16,199
28,800
45,312
2020
$’000
262,021
(10,491)
(693)
19,168
Operating 1
2021
$’000
201,346
16,199
28,800
45,312
20203
$’000
262,021
19,573
42,255
62,116
1
2
3
The operating results for FY 2020 are presented net of the significant expense items outlined below that were directly associated with
the settlement of class action litigation claims, to aid the comparability and usefulness of the financial information reflecting the
underlying performance of the business. This information should be considered in addition to, but not instead of or superior to, the
Group’s financial statements prepared in accordance with IFRS. The operating results presented may be determined or calculated
differently by other companies, limiting the usefulness of those measures for external comparative purposes.
The Company reports EBIT calculated as earnings before interest expense and tax and EBITDA calculated as EBIT before depreciation
and amortisation. EBIT and EBITDA are non-IFRS measures and are alternative performance measures reported in addition to but not
as a substitute for the performance measures reported in accordance with IFRS. These measures focus directly on operating earnings
and enhance comparability between periods. The non-IFRS measures calculated and disclosed have not been audited in accordance
with Australian Accounting Standards although the calculation is compiled from financial information that has been audited.
For FY 2020 EBIT and EBITDA are presented in the table above as reported and on an operating basis to illustrate the impact of the
significant expense inclusive of legal costs incurred on a class action litigation claim. In October 2019, the Group agreed to a settlement
payment of $42.500 million ($32.500 million payable upfront and $10.000 million payable by September 2020) on the Lynch class
action lawsuit. This action had been previously lodged on behalf of borrowers residing in Queensland who took out personal loans
between July 2009 and June 2013. The settlement received Federal Court approval on 24 March 2020 and upon payment of the
balance of $10.000 million by 30 September 2020, the matter finalised. These costs were reported in the Head Office segment.
The commencement of FY 2021 was characterised by challenging and uncertain operating conditions including
reduced lending demand with elevated levels of stimulus resulting in personal loan books contracting and an
increase experienced in the early repayment rate on the vehicle loan books. As foreshadowed the trend reversed
during the latter part of the first half.
30 June 2021
Cash Converters International Limited
6
Operating and financial review
Through the second half the loan book growth rate has continued to improve, most significantly in personal
lending in the last two months of the financial year. Vehicle finance demand has remained supressed with
escalating second-hand vehicle prices evidencing a relative imbalance in supply and demand and a noted scarcity
in available vehicles becoming apparent by year end.
Principal advanced1
Personal finance
Vehicle finance
Total
2021
$’000
220,837
6,713
227,550
2020
$’000
230,948
18,839
249,787
Variance
-4.4%
-64.4%
1 Principal advanced represents the aggregate loan funding advance to customers, Pawnbroking and Cash
Advance services are included in personal finance.
Gross loan books
Personal finance
Vehicle finance
Total
2021
$’000
133,786
44,279
178,065
2020
$’000
104,129
61,456
165,585
Variance
28.5%
-28.0%
Although revenue has been impacted, the Group has demonstrated an ability to successfully navigate through
an unfavourable environment to deliver strong results and maintain momentum for continued performance,
particularly in relation to an expectation of growing the personal loan books and stability in the vehicle loan
book. Second half lending momentum has been encouraging as credit demand somewhat normalised and
government stimulus was unwound.
Successfully insourcing the collections function from a third-party in H2 FY 2021 has provided an improved
customer service proposition to our customers across the entire value chain. This initiative is already yielding
promising improvements in customer satisfaction, cure rates and overhead cost reductions.
Bad debt expense has been significantly reduced during the year, much of this is driven by customers benefiting
from fiscal stimulus and electing to reduce loan commitments. There has also been evident improvement in
credit performance because of refinements in credit decisioning and the early impacts of the inhouse collections
enhancements. There is also a favourable impact from the movement in the expected credit loss allowance year
on year which has positively contributed to earnings because of the reduced value of the loan book balances on
which the provision is set.
As highlighted earlier, in Australia, the Victorian stores experienced a significant negative impact in earnings
because of extended closures during the year. Across the other states the Company demonstrated the
advantage of its online channel and geographic diversity both on a state-by-state basis as well as the balance
between metropolitan and regional store presence. Retail inventory which is generated through the second-
hand goods trade cycle has recovered during the year as consumer retail behaviour trended back to longer term
norms. The pawnbroking loan book has increased significantly during the year with customers familiar with the
product returning as fiscal stimulus was unwound by the government. The profit margin in stores has been
managed through controlling overhead costs.
30 June 2021
Cash Converters International Limited
7
Operating and financial review
Through FY 2021 the Company has acquired the trade and other assets of six Australian franchise stores. New
greenfield hybrid stores were also opened. With the acquisition and expansion strategy one of continued
disciplined growth, we continue to expand our distribution network to reach new customers.
In the United Kingdom, during FY 2021 the results were impacted by the waiver of franchise fees for each month
franchise stores were unable to open due to COVID-19 restrictions and discounts applied to them for the
remainder of the year. Profit margins have improved because of an organisational restructure and reduced
overheads. Stores were able to offer a click and collect service for some of the period which has enabled the
network to build upon the online brand.
In the UK operations, the next five years is expected to see a positive, year on year growth in profit driven by
the opening of new stores by the existing and new franchise operators. Having significantly reduced its capital
commitments after the restructuring in 2016 and now conducting the far lower risk operation as a master
franchisor, the UK operation is looking forward to expanding its franchise network and providing key
development support to its existing and new franchisees, alongside increasing its online presence. Growth plans
in 2021/22 include to expand the network of stores with the current franchisees and new franchisees over the
next five years – the future of the business is forecast to be one of sustainable growth. Profit has been achieved
over the last three years, including during COVID impacted trading conditions.
Ongoing taxable profit forecasts have supported recognising in full the deferred tax asset (DTA) that arises from
carry forward tax losses from previous years. The assessment has required the application of judgement. The
impact to the consolidated accounting net profit after taxation of the group when translated to Australian dollars
has resulted in the equivalent $ 4.227 million being recognised through the current year income tax expense
line in the statement of profit or loss and other comprehensive income.
Consolidated revenues and results by significant segment as reported are set out below:
Personal finance
Vehicle financing
Store operations
Franchise operations
Totals before head office costs
Head office
Totals after head office costs
Depreciation, amortisation and impairment
Finance costs
Profit / (Loss) before income tax
Income tax (expense) / benefit
Profit / (Loss) for the year
Segment revenues
2020
$’000
102,352
18,522
123,944
16,874
261,692
329
262,021
2021
$’000
72,675
13,368
102,667
12,450
201,160
186
201,346
Segment EBITDA 1
2020
$’000
49,171
2,882
25,749
10,118
87,920
(68,752)
19,168
(19,861)
(12,607)
(13,300)
2,809
(10,491)
2021
$’000
38,581
11,669
13,818
8,436
72,504
(27,192)
45,312
(16,512)
(11,717)
17,083
(884)
16,199
1
The Company reports EBIT calculated as earnings before interest expense and tax and EBITDA calculated as EBIT before depreciation
and amortisation. EBIT and EBITDA are non-IFRS measures and are alternative performance measures reported in addition to but not
as a substitute for the performance measures reported in accordance with IFRS. These measures focus directly on operating earnings
and enhance comparability between periods.
30 June 2021
Cash Converters International Limited
8
Operating and financial review
EBITDA on an operating basis is set out below:
Personal finance
Vehicle financing
Store operations
Franchise operations
Totals before head office costs
Head office
Total EBITDA 1
1
Operating basis 2
2020
$’000
49,171
2,882
25,749
10,118
87,920
(25,804)
62,116
2021
$’000
38,581
11,669
13,818
8,436
72,504
(27,192)
45,312
2
The Company reports EBIT calculated as earnings before interest expense and tax and EBITDA calculated as EBIT before depreciation
and amortisation. EBIT and EBITDA are non-IFRS measures and are alternative performance measures reported in addition to but not
as a substitute for the performance measures reported in accordance with IFRS. These measures focus directly on operating earnings
and enhance comparability between periods. The non-IFRS measures calculated and disclosed have not been audited in accordance
with Australian Accounting Standards although the calculation is compiled from financial information that has been audited.
The operating results for FY 2020 are presented net of the significant expense items outlined above that were directly associated with
the settlement of class action litigation claims, to aid the comparability and usefulness of the financial information reflecting the
underlying performance of the business. This information should be considered in addition to, but not instead of or superior to, the
Group’s financial statements prepared in accordance with IFRS. The operating results presented may be determined or calculated
differently by other companies, limiting the usefulness of those measures for external comparative purposes. The non-IFRS
information has not been audited or reviewed in accordance with Australian Auditing Standards.
Key financial position highlights:
Cash and cash equivalents
Loan receivables
Trade and other receivables
Inventories
Intangible assets
Other assets
Total assets
Borrowings
Other liabilities
Total liabilities
Total equity
30-Jun-21
$'000
72,166
150,286
9,627
24,128
128,903
92,814
477,924
69,353
88,793
158,146
30-Jun-20
$'000
106,548
135,206
11,630
15,221
128,338
82,891
479,834
87,792
85,671
173,463
Variance
-32.3%
11.2%
-17.2%
58.5%
0.4%
12.0%
-21.0%
3.6%
-8.8%
319,778
306,371
4.4%
The Group closed the year with a strong balance sheet, which has included the loan book rebuilding through
late 1H21 and into the second half of the year.
The Group reported a net cash reduction of $34.539 million (2020: $24.775 million net cash inflow).
The Group closed the year with undrawn securitisation facility funding lines of $79.750 million.
Net operational cash flow generated was $1.685 million (2020: $70.111 million). Operational cash flow
generated in the prior year includes the significant net settlements on loan books and decreased outgoings
experienced, particularly in the last quarter for FY 2021. In the current year the funding of recovery in loan
outgoings and in retail inventory was sourced from operational cash flow. In FY 2020, the Group determined to
fund the class action settlement of $42.500 million (and the associated legal costs) with cash on hand generated
from operations. $32.500 million was paid during the FY 2020 year with the final settlement payment paid on
30 September 2020.
30 June 2021
Cash Converters International Limited
9
Operating and financial review
Financing activities resulted in net repayment of borrowings of $26.105 million (2020: $43.560 million) and
dividend payments net of the DRP proceeds of $3.665 million (2020: Nil). Cash flows used in investing activities
of $6.454 million (2020: $1.776 million) included $6.684 million (2020: Nil) invested in franchise store
acquisitions.
The Group has responded in the assessment of the expected credit loss allowance to the potential impact of
COVID-19. In addition to the usual considerations applied, the assessment has required the application of
judgement in anticipation of potential pandemic related influences. Suitable reserves have been incorporated
including for an assessment of economic risk and the impact to modelling risk of potentially unrepresentative
data because of out of norm consumer behaviour due to fiscal stimulus. The overall provision as a percentage
of the gross loan book has decreased from the prior year at 18.3 % to 15.6 % with the main driver of the change
being a reduced economic risk reserve.
Inventories increased year-on-year from a low point in FY 2020 which was a result of COVID-19 related retail
demand and includes an appropriate assessment of obsolescence provision.
Consistent with previous financial years, the carrying value of intangible assets has been assessed for and
recorded net of any required impairment charge. Included in the assessment of the carrying value of goodwill is
the application of judgement with respect to possible regulatory changes on which there remains uncertainty
and on which the Group has determined a low likelihood, as well as the potential impact of COVID-19.
The disciplined evaluation of investment opportunities and allocation of capital continues and with a strong
balance sheet in place the Board has, with the results release, declared a fully franked final dividend of 1 cent
per fully paid ordinary share.
Included in Other Assets in the financial information summarised above is a right-of-use asset with recognition
of a corresponding lease liability, and the carrying value of the investment in the New Zealand operation
inclusive of the provision impairment which remains unchanged from last year.
The reduction in the Fortress Investment Group (“Fortress”) securitisation funding facility balance year on year
reflects the funding of lending activity from operationally generated cash flow during the financial year, with
available cash on hand at year end exceeding the borrowings drawn down amount.
Culture and people
The values and culture of Cash Converters are the foundation of its success and the reason it has continued to
operate for over 37 years. The Company recognises the importance of its reputation and standing within the
community and with its key stakeholders, such as customers, employees, suppliers, creditors, law makers and
regulators.
A refreshed expression of the “Core Values” was released during the Reporting Period after a period of internal
consultation. All team members are encouraged to embrace these values. Performance in accordance with these
values is acknowledged and rewarded through Annual Performance Awards and includes an award for a Values
Champion.
30 June 2021
Cash Converters International Limited
10
Operating and financial review
The Values Statement is encapsulated as follows:
We’re real people who are passionate and proud
• We’re genuine, friendly and from your neighbourhood. We’re passionate and proud to be here
helping our customers.
We’re caring and respectful
• We’re here to listen and find ways to help makes things possible, supportive of our customers and
our colleagues. There’s no judgement here. We treat everyone as an individual.
We’re tenacious problem solvers
• We don’t back down. We always try our best to help others, no matter how hard the task seems.
The Net Promotor Score (NPS) system is used to measure customer engagement. NPS is measured on a
customer’s willingness to recommend Cash Converters to a friend or family member. Customers are surveyed
at multiple stages of the journey and this data is referenced daily to improve service and celebrate team
members.
With a positive NPS score of 61 (2020: 62) Cash Converters demonstrates the significant value it adds to its
customers and the wider community.
Business Risk Assessment
Like all businesses, Cash Converters faces uncertainty and the ability to understand, manage and mitigate risk
provides a competitive advantage.
The Company’s ability to accurately assess value, purchase and sell quality consumer goods at appropriate prices
is influenced by many factors. Again, while acknowledging these risks, the depth of skill and experience in this
specialist area is a source of competitive advantage for Cash Converters. The second-hand retail offer continued
to appeal to value and environmentally conscious customers and to date, has stood the Company in good stead
throughout the COVID-19 pandemic.
As a responsible provider of personal finance products there is an inherent risk that customers may not meet
their expected repayments as they manage their financial commitments. Cash Converters’ success in working
with these customers over time is based on many factors that mitigate compliance risk and risk of default with
those who may subsequently experience financial difficulty. These include:
•
•
•
•
Treating customers with empathy, care, and respect;
A high investment in engagement methods to provide customers with freedom of choice;
Efficient and thorough understanding and assessment of customer eligibility prior to origination; and
A value-driven culture where a premium is placed on customer service and unlocking possibilities together.
While responsible lending policies and a customer-first approach aims to minimise risk, credit risk is influenced
by factors outside the control of Cash Converters such as unemployment, relative income growth, consumer
confidence and interest rates. The risk of default is ever-present. Cash Converters often has the advantage in
offering credit products to customers that it has served over many years and knows well, affording a unique
opportunity to provide a high level of service.
30 June 2021
Cash Converters International Limited
11
Operating and financial review
Cash Converters welcomes the industry emphasis towards non-financial risk, including conduct and culture as
well as detecting, deterring, and disrupting criminal abuse of the financial system. The Company views these
commitments as an area of continuous improvement and continues to strengthen its risk management and
compliance capabilities while engaging transparently with financial service sector regulators (ASIC and
AUSTRAC).
There has been a marked increase in cyber-criminal activities globally over the last year that impact all
companies, large and small, but which also pose a greater risk to those companies with a large online customer
base. Through an uplifted cyber security program, the Company’s cyber defences were enhanced with a focus
on educating team members on the dangers of cyber-crime activities.
The Federal Government continues to consider several proposed responsible lending changes for the banks and
credit licence holders, operating under the regulated National Credit Act. As a part of this review several
recommendations are included in relation to proposed SACC lending rule changes, one of which is an income
cap for employed borrowers.
Cash Converters has already proactively adopted the other recommendations, in advance of any legislative
change and remains well equipped to deal with any outcome. New non-SACC product research and development
has progressed well, with several new product releases planned for late calendar year 2021. Continuing to
diversify loan books remains an ongoing priority, as does addressing increasing competition from lenders
operating under National Credit Act exemptions, that do not provide consumers with many of the sensible
safeguards that Cash Converters provides in relation to assessing consumer affordability, loan suitability and
hardship protections. Cash Converters remains committed to continue offering all personal finance products
under the National Consumer Credit Protection Act.
Outside of these exists the accepted risks of regulatory change, poorly executed strategy, failure to respond
appropriately to changes in technology and the threat posed through competitor behaviours, all of which are a
source of constant consideration and review by the Company’s management team and Board of Directors.
Outlook
While the new financial year commenced with great promise the rapid extent of change within recent weeks
has been a pertinent reminder that the COVID-19 impact is dependent upon the longevity and severity of the
pandemic, the pace of business re-openings and rebound, the impact of government responses and the degree
to which customer behaviours return to historical norms.
From 1 July, while in the United Kingdom all franchise stores have remained open and trading, in New South
Wales, Australia, of the estimated 497 trading days available since balance sheet date there have been
approximately 467 trading days in which NSW stores either closed or were significantly affected by limited
opening hours as the result of the NSW lockdowns. In Victoria, approximately 722 of 1,235 available trading
days have been impacted. In the context of Cash Converters operations, the balance of the country has
experienced less disruption with the focus on ensuring the safety of customers and staff team members. Trading
days is the number of stores owned multiplied by days a store would reasonably be expected to trade.
Cash Converters’ proven ability to respond effectively to these changes and geographic diversity continues to
provide a competitive advantage.
The Company is of the view that it is well positioned to respond to the eventual increase in demand for personal
and vehicle financing.
30 June 2021
Cash Converters International Limited
12
Operating and financial review
The advantage of a diversified in-store and online customer offering has been demonstrated, particularly in the
current economic climate. A key pillar of Cash Converters’ strategy over the following 12 months is to continue
to consolidate its position domestically as a lender and retailer of choice, and to expand its financial product
offering. The Company will continue to invest in the acquisition of franchise stores which will yield shareholder
returns from inception, as well as strategically selected greenfield store openings, which will result in an earnings
lag in the early period of settlement but are expected to yield profitability over the longer term.
Dealing with so many customers in the personal lending market provides an opportunity to leverage data
analytics to generate new product insights, optimise default rates and offer risk rated pricing. This capability
provides an opportunity to address new markets and serve new customer segments. New non-SACC product
research, development and testing continues to progress well and continuing to diversify loan books remains an
ongoing priority. Cash Converters remains committed to continue offering all personal finance products under
the National Consumer Credit Protection Act.
The strength of the balance sheet provides the Company with greater resources to better serve its customers at
a time when they need it most. To deliver on its strategy the Company is investing in its critical capabilities of
risk and compliance, technological innovation, and product development. These capabilities will be deployed to
capitalise upon any near-term opportunities with the intention of generating long-term value for customers and
shareholders.
30 June 2021
Cash Converters International Limited
13
Directors’ report
Directors’ report
The directors of Cash Converters International Limited submit the following report of the Company for the
financial year ended 30 June 2021. To comply with the provisions of the Corporations Act 2001, the directors
report as follows:
Information about directors
The following persons held office as directors of the Company during the whole of the financial year and until
the date of this report unless otherwise stated:
Mr Jason Kulas – Non-Executive Chairman
Appointed director 28 August 2020
Appointed Chairman 28 August 2020
Mr Kulas has over 25 years’ experience across banking and financial sectors. Mr Kulas joined EZCORP Inc. as
President and Chief Financial Officer in February 2020 and was appointed Chief Executive Officer of that
company in July 2020.
He has held a variety of other executive-level finance and operations positions, most recently with Santander
Consumer USA Inc., a NYSE listed full-service consumer finance company, where he served in a series of roles
including Chief Executive Officer, President, Chief Financial Officer and a member of the Board from 2007 to
2017. Between 1995 - 2007 Mr Kulas was an investment banker with JP Morgan in a series of roles culminating
in the role of Managing Director at JPMorgan Securities.
Mr Kulas is on the Company’s Board as a nominee of significant shareholder, EZCORP, Inc. and as Chairman,
pursuant to the Subscription Agreement dated 17 August 2009 between EZCORP and the Company (released to
ASX on 9 November 2009). Accordingly, he is not considered to be an independent director.
Over the past 3 years Mr Kulas has held directorships with the following listed company:
Company
EZCORP Inc
(non-executive director)
EZCORP Inc
Executive Director
Commenced
8 April 2019
6 July 2020
Mr Sam Budiselik – Managing Director
Appointed director 18 December 2020
Ceased
28 February 2020
Mr Budiselik was appointed Chief Executive Officer in February 2020 after serving as Chief Operating Officer
(COO) and interim-CEO. Before joining Cash Converters he was COO at stockbroking and wealth management
firm Paterson’s Securities, in addition to holding a number of Director positions across franchise, consulting and
commercial drone businesses.
Mr Budiselik has spent a total of 12 years abroad during his career working for investment banks UBS and
Barclays Capital in London, New York and Singapore before returning to Australia.
Over the past 3 years Mr Budiselik has not held any directorships with other listed companies.
30 June 2021
Cash Converters International Limited
14
Directors’ report
Mr Peter Cumins – Executive Deputy Chairman
Appointed director April 1995
Appointed Executive Deputy Chairman 23 January 2017
Mr Cumins joined the Company in August 1990 as Finance and Administration Manager when the Company had
23 stores, becoming General Manager in March 1992. He became Managing Director in April 1995. Mr Cumins
moved from this role to the role of Executive Deputy Chairman on 23 January 2017.
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 3 years Mr Cumins has held a directorship with the following listed company:
Company
EZCORP Inc
Commenced
28 July 2014
Ceased
9 April 2019
Ms Julie Elliott – Non-Executive Director
Appointed director 14 April 2020
Ms Elliott is currently a Company Director and Consultant and has over 30 years’ experience in both executive
and director roles across banking, financial services and government. Her previous positions include Chief
Executive Officer at Bank of Sydney, Chair of State Trustees Limited and senior management roles with major
banks. In addition to various advisory and consulting roles, Ms Elliott is currently a Director and Chair of the
governance and remuneration committee at P&N Bank, and a Director of Asia Pacific Capital Ltd and Grow
Finance Limited (formerly Australian Invoice Finance Limited). She is a Fellow and Graduate of the Australian
Institute of Company Directors and a Fellow of Chartered Accountants Australia & New Zealand and FINSIA.
Ms Elliott is the Chair of the Company’s Governance, Remuneration and Nomination Committee, and a member
of the Audit and Risk Committee.
Over the past 3 years Ms Elliott has not held any directorships with other listed companies.
Mr Lachlan Given – Non-Executive Director
Appointed director 22 August 2014
Until 18 September 2019 Mr Given held the role of Executive Chairman of EZCORP Inc and is now Head of M&A
and Funding. He is also a Director of The Farm Journal Corporation, a 138 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 and CANSTAR Pty Ltd, the leading Australian financial services
ratings and research firm.
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).
Over the past 3 years Mr Given has held directorships with the following listed companies:
Company
Senetas Corporation Limited
EZCORP Inc
Commenced
20 March 2013
18 July 2014
Ceased
-
18 September 2019
30 June 2021
Cash Converters International Limited
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Directors’ report
Mr Robert Hines – Non-Executive Director
Appointed director 14 April 2020
Mr Hines brings over 30 years’ experience in banking and finance services, agriculture and energy sectors with
senior executive roles focusing on finance, retail and operations.
Mr Hines retired from his executive role as Chief Operating Officer at Queensland Sugar Limited (QSL) at the end
of October 2020. Mr Hines joined QSL in 2013 as Chief Financial Officer. Prior to joining QSL, Mr Hines was a
Director, CFO Advisory at KPMG and he held Chief Financial Officer roles with several leading Queensland
companies including, Bank of Queensland Limited, Suncorp Group Limited and Queensland Investment
Corporation (QIC). He brings extensive operational and financial expertise to the Board. He is a senior Fellow of
FINSIA and a Fellow of the Australian Institute of Company Directors, Institute of Chartered Accountants and
CPA Australia.
Mr Hines is the Chair of the Company’s Audit and Risk Committee, and a member of the Governance,
Remuneration and Nomination Committee.
Over the past 3 years Mr Hines has not held any directorships with other listed companies.
Mr Henry Shiner – Non-Executive Director
Appointed director 1 July 2021
Mr Shiner has accumulated experience over many years of Senior Executive Management and Strategic
positions, most recently in the Quick Service Restaurant industry, where he held the positions of Vice President,
Chief Information Officer of McDonald’s APAC and then as Vice President Global Financial Transformation – IT,
at McDonald's Corporation. Mr Shiner has held Non-Executive Director roles on the National Board of Ronald
McDonald Charities, Craveable Brands, DragonTail Systems, NoahFace, Guroo Producer, Slikr and Advisory Board
roles with numerous other companies.
Prior to McDonald’s, Mr Shiner held Senior Executive positions in Norske Skog, Fletcher Challenge Paper,
Honeywell Ltd and AGL. His experience across these markets have included leading Strategic Planning,
Technology Strategy and Development, Franchising, Cyber Security, Manufacturing operations and Governance
and Quality Management.
In addition to an honours degree in Chemical Engineering, Henry has graduated in Management Studies focused
on Global Strategy execution from the IMD School in Lausanne, Switzerland and is a member and graduate of
the Australian Institute of Company Directors.
Over the past 3 years Mr Shiner has held a directorship with the following listed company:
Company
Dragontail Systems Limited
Commenced
13 May 2020
Ceased
-
Mr Stuart Grimshaw – Non-Executive Chairman
Appointed director 1 November 2014
Appointed Chairman 10 September 2015
Resigned with effective date 28 August 2020
During the financial year, Mr Grimshaw retired from his directorship with the Company.
Mr Grimshaw held the role of Chief Executive Officer of EZCORP Inc (a major shareholder in the Company) until
6 July 2020. Prior to joining EZCORP in November 2014, Mr Grimshaw was the Managing Director and Chief
Executive Officer of Bank of Queensland Limited (BOQ).
30 June 2021
Cash Converters International Limited
16
Directors’ report
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.
As at the date of Mr Grimshaw’s resignation, he had held a directorship with the following listed companies over
the past three years:
Company
EZCORP Inc
Commenced
3 November 2014
Ceased
6 July 2020
Mr Kevin Dundo – Non-Executive Director
Appointed director 20 February 2015
Resigned with effective date 23 November 2020
During the financial year, Mr Dundo retired from his directorship with the Company.
Mr Dundo practices 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. At the time of his retirement Mr Dundo was a Non-
Executive Director of Imdex Limited (ASX: IMD) and Avenira Limited (ASX: AEV) and Non-Executive Chairman of
Red 5 Limited (ASX: RED).
During the financial year until his resignation Mr Dundo was a member of the Company’s Audit and Risk
Committee and Remuneration and Nomination Committee.
As at the date of Mr Dundo’s resignation he had held directorships with the following listed Companies over the
past three years:
Company
Imdex Limited
Red 5 Limited
Avenira Limited
Commenced
14 January 2004
29 March 2010
22 October 2019
Ceased
-
-
-
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Cash Converters International Limited
17
Directors’ report
Directors’ shareholdings
The following table sets out each director’s relevant interest in shares and options in shares of Cash Converters
International Limited as at the date of this report:
Directors
Mr S Grimshaw1
Mr S Budiselik
Mr P Cumins
Mr K Dundo1
Ms J Elliott
Mr L Given
Mr J Kulas
Mr H Shiner
Mr R Hines
1 No longer a director and therefore holdings not disclosed.
Fully paid ordinary shares
Number
-
248,375
8,175,694
-
147
-
-
-
422,000
Share options
Number
-
9,992,454
-
-
-
-
-
-
-
Company Secretary
Mr Brad Edwards
Appointed 30 June 2017
Resigned with effect from 1 July 2021
With a background in law, Mr Edwards has extensive private practice and corporate experience, most notably
with the Bank of Queensland Limited (ASX: BOQ) for 15 years, where he held the roles of Company Secretary
and Group General Counsel. His career encompasses banking and financial services, retail franchising, regulatory
matters, dispute resolution and class action litigation, capital markets and mergers and acquisitions.
Mr. Leslie Crockett
Appointed with effect from 1 July 2021
A chartered accountant, Mr Crockett has experience working across a range of industries including financial
services, property development, construction, retail and manufacturing covering jurisdictions in Australia,
Europe, the United Kingdom, Africa, the USA, and the Caribbean. Prior to joining Cash Converters in June 2020,
he was the Chief Financial Officer of a listed financial services group for over seven years and served there as
the Company Secretary from early 2013 to September 2015. Mr Crockett qualified as a chartered accountant
with Deloitte, where he provided audit, consulting, financial advisory, risk management and tax services. He
holds a Bachelor of Accounting Science from the University of South Africa and business qualifications from
Melbourne Business School and the University of Southern Queensland. Mr Crockett will continue in his current
role as Chief Financial Officer.
Principal activities
The principal activity of Cash Converters International Limited and its subsidiaries (the Group) is that of a
franchisor, retailer of second-hand goods and financial services stores, a provider of secured and unsecured
loans and the operator of a number of corporate stores in Australia, 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.
Review of operations
The Group’s net profit attributable to members of the parent entity for the year ended 30 June 2021 was $16.199
million (2020: net loss $10.491 million) after an income tax charge of $884,000 (2020: benefit $2.809 million). A
review of the Group’s operations and financial performance has been provided on pages 5 to 13.
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Directors’ report
Changes in state of affairs
During the financial year there were no significant changes in the state of affairs of the Company other than
those referred to elsewhere in this financial report and the notes thereto.
Subsequent events
In a COVID-19 context, the Group has noted the recent further waves of infections and ease of transmission of
the Delta variant since mid-June 2021, which has led to quick and extended lockdowns and the reinstatement
of certain government support measures to protect the economy and jobs.
The recent outbreaks have impacted significant aspects of everyday lives and the flow on effects to the economy
and related business effects remain highly uncertain. State governments have ordered lockdowns which have
resulted in disruptions, in particular to in-store trade including the following:
• Greater Sydney closures from 27th June and the rest of NSW impacted by closures from 6th August to
the date of this report
• Victoria store closures during 16th July to 27th July and from 6th August to the date of this report
South Australia store closures from 20th July to 27th July
(except Geelong which was not closed from 10th August to 21st August)
• ACT store trade impacted from 13th August until the date of this report
•
• Greater Brisbane closures from 30th June to 1st July and a further period from 1st August to 8th August
•
•
Cairns store closures from 9th August to 11th August
Perth store closures from 29th June to 2nd July
There were no other significant events occurring after the balance date which may affect either the Group’s
operations or results of those operations or the Group’s state of affairs.
Future developments
Likely developments in expected results of the Group’s operations in subsequent years and the Group’s business
strategies are referred to elsewhere in this report.
Dividends
The directors of the Company have declared a final dividend of 1.00 cent per share with the release of the final
year end results and reporting date of 29 August 2021. The dividend will be 100% franked and will be paid on 14
October 2021 to those shareholders on the register at the close of business on 24 September 2021.
With the declaration of this dividend, the Company’s Dividend Reinvestment Plan (DRP) has been suspended
and will not apply to this dividend.
Shares under option or issued on exercise of options
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
Measurement
Date
Cash Converters International Limited
Cash Converters International Limited
7,880,556
10,101,190
Ordinary
Ordinary
Nil
Nil
30 Jun 2022
30 Jun 2023
The performance rights above are in substance share options with an exercise price of nil, which vest and may
potentially be exercised into ordinary shares once certain performance / vesting conditions are met.
30 June 2021
Cash Converters International Limited
19
Directors’ report
The holders of these performance rights do not have the right, by virtue of the performance right, to participate
in any share or other interest issue other than bonus share issues of the Company or of any other body
corporate.
No shares have been issued as a result of the exercise of share options or performance rights during or since the
end of the financial year.
Indemnification and insurance of directors and officers
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.
Directors’ meetings
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
Held
Attended
Held
Attended
Remuneration
Governance,
and Nomination Committee
Held
Attended
Mr S Grimshaw
Mr J Kulas
Mr S Budiselik
Mr P Cumins
Mr K Dundo
Ms J Elliott
Mr L Given
Mr R Hines
1
3*
3*
4*
1
7
4*
7
* Denotes directors who were not a member of the Committee but attended meetings by invitation.
1
3*
2*
4*
1
5
4*
5
2
8
5
10
4
10
10
10
2
8
5
10
4
10
10
10
1
4
2
5
2
5
5
5
1
6
4
7
3
7
7
7
Non-audit services
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 21 to the financial statements.
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Directors’ report
Rounding off of amounts
The Company is a company of the kind referred to in ASIC Corporations (Rounding in Financials / Directors’
Reports) Instrument 2016/191, dated 24 March 2016, and in accordance with that Corporations Instrument,
amounts in the directors’ report and the financial statements are rounded off to the nearest thousand dollars,
unless otherwise indicated.
Auditor’s independence declaration
The auditor’s independence declaration is included on page 42.
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Directors’ report
Remuneration report
Remuneration report (audited)
Contents
1.
2.
3.
4.
5.
6.
7.
8.
9.
Persons addressed and scope of the Remuneration Report ................................................................... 22
Remuneration Governance ..................................................................................................................... 23
Remuneration Framework and link to Strategy ...................................................................................... 24
Performance and reward summary ......................................................................................................... 27
Performance outcomes for FY 2021 including STI and LTI assessment ................................................... 28
Remuneration records for FY 2021 (statutory disclosures) ..................................................................... 34
Employment terms for executive key management personnel .............................................................. 36
Changes in KMP-held equity .................................................................................................................... 37
Non-Executive Director fee policy rates for FY 2020 and FY 2021 and fee limit ..................................... 40
1. Persons addressed and scope of the Remuneration Report
This remuneration report forms part of the directors’ report for the year ended 30 June 2021 and has been
prepared in accordance with the Corporations Act, applicable regulations and the Company’s policies regarding
key management personnel (KMP) remuneration governance.
KMP includes all directors and executives who have authority and responsibility for planning, directing and
controlling the activities of the Company. On that basis, the following roles / individuals are addressed in this
report:
Non-executive directors
Mr Jason Kulas
Mr Stuart Grimshaw
Ms Julie Elliott
Mr Lachlan Given
Mr Robert Hines
Mr Kevin Dundo
Executive directors
Chairman and non-executive director (from 28 August 2020)
Chairman and non-executive director (to 28 August 2020)
Audit and Risk Committee member (to 28 August 2020)
Governance, Remuneration and Nomination Committee member (to 28 August
2020)
Non-executive director
Audit and Risk Committee member
Chair of Governance, Remuneration and Nomination Committee
Non-executive director
Non-executive director
Chair of Audit and Risk Committee
Governance, Remuneration and Nomination Committee member
Audit and Risk Committee member (to 23 November 2020)
Governance, Remuneration and Nomination Committee member (to 23 November
2020)
Mr Sam Budiselik
Mr Peter Cumins
Managing Director (from 18 December 2020)
Chief Executive Officer
Executive Deputy Chairman
Executive key management personnel
Ms Lisa Stedman
Mr James Miles
Mr Leslie Crockett
Mr Brad Edwards
Mr Peter Egan
Chief Operating Officer (from 7 September 2020)
Chief Technology Officer (designated from 1 July 2020)
Chief Financial Officer
General Counsel and Company Secretary
Chief Risk Officer (resigned 23 October 2020)
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Directors’ report
Remuneration report
2. Remuneration Governance
The following describes how the Board, the Governance, Remuneration and Nomination Committee and the
Managing Director interact to set the remuneration structure and determine the remuneration outcomes for
the Group:
2.1. Board
The Board is responsible for the structure of remuneration for directors and executive key management
personnel. The goal is to maximise the effectiveness of remuneration in the creation of long-term shareholder
value.
2.2. Governance, Remuneration and Nomination Committee
The Governance, Remuneration and Nomination Committee is responsible for reviewing and setting strategy
incorporated in the remuneration policies and practices on behalf of the Board. Executive remuneration levels
are reviewed annually by the Committee in line with the Remuneration Policy and with reference to market
movements. The Committee is responsible for making recommendations to the Board on:
a) remuneration strategy to attract and retain talent to drive long term sustainable results;
b) recruitment, retention, and termination policies and procedures for executive key management personnel;
c) base salaries for executives and Board and Committee fees for non-executive Directors;
d) short term incentives for executive key management personnel; and
e) equity-based incentive remuneration plans.
The Corporate Governance Statement and the Governance, Remuneration and Nomination Committee Charter
provide further information on the role of this Committee. These documents and related policies and practices
are available on the Company website at https://www.cashconverters.com/governance.
The performance review of the Managing Director is undertaken by the Chairman of the Board, reviewed by the
Governance, Remuneration and Nomination Committee, and approved by the Board.
2.3. Managing Director
The performance reviews of executive key management personnel and other direct reports are undertaken by
the Managing Director, reviewed by the Governance, Remuneration and Nomination Committee and approved
by the Board.
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Directors’ report
Remuneration report
3. Remuneration Framework and link to Strategy
3.1. Executive key management personnel including Managing Director
The remuneration policies are designed to ensure that remuneration outcomes are aligned with the long-term
success of the Group and to also attract and retain talent to drive long term sustainable results and strategy.
Incentives are based on the achievement of sustained growth in earnings as well as relative shareholder return
while adhering to sound risk management and governance principles.
The remuneration strategy is underpinned by the following principles and remuneration structure in the table
below:
• align remuneration with customer and shareholder interests;
• support an appropriate risk culture and exemplary employee conduct;
• differentiate pay for behaviour and performance in line with our vision and strategy;
• provide market competitive and fair remuneration;
• recognise the role of non-financial drivers in long term value creation;
• enable recruitment and retention of talented employees; and
• be simple, flexible and transparent.
These measures provide a clear and strong correlation between performance and reward and align the interests
of executive key management personnel including the Managing Director with those of the Company’s
shareholders. The overall remuneration structure for the year ended 30 June 2021 remains similar to the prior
year comprising:
Fixed Remuneration
Purpose
Attract and retain high quality
executives through market
competitive and fair
remuneration
Short-Term Incentive (STI)
Long-Term Incentive (LTI)
Ensure a portion of
remuneration is variable, at-risk
and linked to the delivery of
agreed plan targets for financial
and non-financial measures
that support strategic priorities
Align executive accountability and
remuneration with the long-term
interests of shareholders by
rewarding the delivery of sustained
Group performance over the long
term
Delivery
Base salary and superannuation
as per the Superannuation
Guarantee (Administration) Act
1992
Awarded in cash and restricted
shares based on an assessment
of performance over the
preceding year
Awarded in performance share rights
which potentially vest after three
years, based on the following:
•
50 per cent dependent on
earnings per share compound
annual growth rate over a three-
year performance period; and
50 per cent dependent on total
shareholder return (TSR) relative
to the ASX Small Ordinaries (XSO)
Index over the same three-year
performance period
•
Alignment to performance
Set with reference to market
benchmarks in the financial
retail services industries as
well as the size, responsibilities,
and complexity of the role, and
skills and experience. Individual
performance impacts fixed
remuneration adjustments
Performance is assessed using a
scorecard comprising financial
and non-financial measures
linked to the key strategic
priorities articulated above
Performance is assessed against
Earnings per share and TSR which are
measures aligned to shareholders
(measured over three years)
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Directors’ report
Remuneration report
Strategic objectives were articulated as part of the Chairman’s address and the CEO presentation at the FY 2020
shareholder Annual General Meeting. Regular market updates have been provided during the financial year with
progress reports, including the half-year report and full year results investor presentations, aligned to the key
objectives.
Aligned to strategic intent, the remuneration structure ensures that if the Group under-performs on its earnings
and / or return targets, no STI will be payable to executive key management personnel. Under-performance over
the longer-term will also result in no vesting of performance rights.
Eligibility to participate in the STI and/or LTI is at the recommendation of the Governance, Remuneration and
Nomination Committee and approval of the Board. The participation level in terms of percentage of fixed
remuneration to set STI target awards and the grant of performance rights which may vest over the three-year
performance period is determined annually as part of the remuneration review process. The assessment is based
on benchmarked relevant market practice in similar companies with similar characteristics.
Remuneration for all executives is reviewed at least annually. There is no guaranteed increase in any executive’s
employment contract.
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Directors’ report
Remuneration report
3.2. Executive Director: Executive Deputy Chairman Arrangements
During the year, consistent with the terms of his employment contract, the Governance, Remuneration and
Nomination Committee and Board approved a variation to the fixed remuneration package for the Executive
Deputy Chairman. The base salary per annum was increased from $371,597 to $441,426 reflecting the previously
allocated remuneration value assigned to the usage of a fully maintained company car. The Company was
released from the contractual requirement to provide usage of the fully maintained company car.
Under the terms of the employment contract, the Governance, Remuneration and Nomination Committee and
Board approved the outright sale of the motor vehicle that had previously been provided to the Executive
Deputy Chairman. The sale was conducted at arms-length market value and settled in full on the date of transfer
of ownership.
Superannuation as per the Superannuation Guarantee (Administration) Act 1992 remains payable and
consistent with the prior year, the Executive Deputy Chairman does not participate in any Incentive Plan.
3.3. Non-Executive Director Arrangements
The Remuneration Policy is designed to ensure that remuneration outcomes enable the Company to attract,
retain and motivate the high calibre of Non-Executive Directors required for it to meet its objectives.
A Non-Executive Director is not entitled to receive performance-based remuneration. They may be entitled to
fees or other amounts, as the Board determines, where they perform duties outside the scope of the ordinary
duties of a director. They may also be reimbursed for out-of-pocket expenses incurred.
3.4. Securities Trading Policy
The Securities Trading Policy imposes trading restrictions on all employees, contractors and consultants who are
considered to be in possession of market sensitive information. In addition are restrictions in the form of closed
periods for KMP who are prohibited from trading in the Company’s securities, except:
•
in a six-week trading window period commencing 24 hours after the release of the final and half-yearly
financial results;
• after release of a disclosure document offering equity Securities in the Company; or
• dates as declared by the Board in the circumstances that the Board is of the view that the market can
reasonably be expected to be fully informed on those dates.
KMP are prohibited from entering into contracts to hedge their exposure to any securities held in the Company.
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Directors’ report
Remuneration report
4. Performance and reward summary
4.1. Remuneration policy and link to performance
As outlined above, in setting the Company’s remuneration strategy, the Governance, Remuneration and
Nomination Committee makes recommendations which demonstrate a clear and strong correlation between
performance and reward and align the interests of executive key management personnel with those of the
Company’s shareholders.
The following table shows the statutory key performance indicators of the Group over the last five years:
Revenue from continuing operations
Net profit / (loss) before tax from
continuing operations
Net profit / (loss) after tax
- continuing operations
- discontinued operations
Profit/(loss) after tax
Share price
- beginning of year
- end of year
Dividend (i)
- interim
- final dividend
Earnings per share from continuing and
discontinued operations
- basic
- diluted
(i)
Franked to 100% at 30% corporate income tax rate.
2021
$’000
201,346
Year ended 30 June
2019
$’000
281,565
2020
$’000
262,021
2018
$’000
260,345
2017
$’000
271,241
17,083
(13,300)
(2,366)
31,271
28,198
16,199
-
16,199
(10,491)
-
(10,491)
(1,692)
-
(1,692)
22,503
-
22,503
20,618
-
20,618
Cents
Cents
cents
Cents
cents
17.5
22.0
1.0
1.0
2.62
2.55
16.0
17.5
-
-
31.0
16.0
-
-
(1.70)
(1.70)
(0.27)
(0.27)
31.5
31.0
-
-
4.55
4.43
43.5
31.5
-
-
4.21
4.12
30 June 2021
Cash Converters International Limited
27
Directors’ report
Remuneration report
5. Performance outcomes for FY 2021 including STI and LTI assessment
With the Group having announced the intention to return to being a dividend paying company, an interim
dividend of $0.01 per share was declared and then paid with the release of the half year results, and a final
dividend of $0.01 has been declared with the release of the full year results.
The operational response to the COVID-19 pandemic has been commendable. All the Group’s locations have
successfully maintained productivity while transitioning to a combination of work-from-home and store or
office-based activity. Focus remained on customer service with emphasis on safe work practices. Pricing and risk
settings have been adjusted and the Group has significantly rebuilt the personal lending books with a measured
growth rate in the vehicle finance book based on a prudent view on the significant increase seen in used vehicle
asset valuations. Retail inventory and pawnbroking books have also recovered with intermittent lockdowns
during the year actively managed to ensure our stores remained safe.
These operational achievements have put the Group in a strong position. With $72.166 million in cash and cash
equivalents and nearly $80 million in undrawn credit lines, the Group can continue to invest and look for
opportunities during a period of uncertainty.
The Group reported success in progressing the strategic pillars of Australian network expansion, new product
development and operational excellence by completing six key franchise store acquisitions, opening new
greenfield stores and piloting new finance products. Executing a sensible growth strategy remains a key focus of
the management team with increasing profitability anticipated throughout FY 2022 and beyond.
In considering the award of STI and LTI remuneration the Board has been cognisant of the challenging economic
environment, including the effect of COVID-19. Consistent with performance incentives as awarded across the
broader business the Board has recognised executive performance and delivery of profit in a year of
unprecedented challenges and the need to attract and retain the team in a period of abnormal economic
uncertainty and ongoing regulatory scrutiny.
Short-term incentives (STI)
The STI component of remuneration currently consists of a cash bonus that is focused on a balanced scorecard
approach, with financial and non-financial measures. Awards under the STI required that the target profit
threshold set as part of the annual budgeting process was met. Individuals are only eligible to receive a fixed
remuneration adjustment, STI or LTI where the individual has met the risk and compliance requirements
established under the annually reviewed Risk Management Framework.
The performance of the Group and each division is reviewed and measured with reference to how risk is
managed in line with a balance risk scorecard aligned to the risk appetite and the results influence remuneration
outcomes. The key risks that are considered include capital, credit, market, equity, liquidity, risk culture, financial
crime, reputation, conduct, operational and compliance risk. The Board reserves the right to amend, vary or
revoke the terms of any incentive plan from time to time, at its sole and absolute discretion.
30 June 2021
Cash Converters International Limited
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Directors’ report
Remuneration report
The STI achieved in relation to the FY 2021 period has been accrued in the FY 2021 results and is payable on
release of the audited financial results.
The key performance indicators (KPIs) are selected based on what needs to be achieved over the performance
period to achieve the business strategy over the longer term, varied to reflect individual executive roles and
responsibilities. The average amount awarded to KMP in STI as a percentage of target STI for FY 2021 was
100%.
In relation to the completed FY 2021 period the following KPIs and weightings applied to Participants:
Feature
Description
Maximum
opportunity
Individual award outcomes are determined on individual and Group performance through
outperformance of a balanced scorecard. The performance measures comprise a mix of
financial and non-financial metrics linked to Group and business unit targets. Together they
provide a balanced assessment of performance against measurable initiatives that support
the delivery of the Group’s strategy. Proportion of award relative to base salary varies by role
and tenure, and ranges from 30% to 100%.
Performance
metrics
Performance outcomes are determined through assessment of the balanced scorecard and
are subject to two key assessments (gateways):
•
•
adherence to risk and compliance requirements established under the annually
reviewed Risk Management Framework
target profit threshold set as part of the annual Strategy setting and budget process
Key Performance Indicators (KPIs) are aligned to the strategic priorities of sustained growth
in earnings and relative shareholder return.
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Directors’ report
Remuneration report
Individual performance measures
Strategic Goal
Strategic
Priority &
Weighting
Required KPI threshold / Smart
measurements
Rationale for award
Behavioural
Competencies
10%
Requirement to
consistently
meet required
behavioural
competencies
Assessed across Values, Accountability,
Culture, Innovation, Compliance and
Strategy
Balanced
assessment of
individual
performance to
support the
delivery of the
Group’s strategy
Role appropriate financial and non-
financial measures linked to Group and
business unit targets on Operational
Excellence, Product Development, and
Network Expansion, set and approved
with approval of Group Strategy by the
Board at commencement of the
financial year. Strategic Goals outlined
in investor presentation and market
updates including the FY 2020 AGM.
Individual
Objectives
aligned to
strategic
delivery
Between 3 to 5
KPIs
aggregating to
40 %
Performance reviews of
executive key management
personnel undertaken by
the Managing Director,
reviewed by the
Governance, Remuneration
and Nomination Committee
and approved by the Board.
Managing Director
approved by the Board.
Assessment of
performance of executive
key management personnel
to KPIs aligned to strategic
goals undertaken by the
Managing Director,
reviewed by the
Governance, Remuneration
and Nomination Committee
and approved by the Board.
Managing Director
approved by the Board.
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Cash Converters International Limited
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Directors’ report
Remuneration report
Shared performance measures
Strategic
Priority &
Weighting
Our Customers
10%
Strategic Goal
Required KPI threshold / Smart
measurements
Rationale for award
Improve our
customer
experience
As measured by an average NPS of >60
and brand re-launch engagement of
60% SA/A in pulse survey by June 2021
Achieved NPS of 61. Pulse
survey post Brand release
scored that 87% of people
who saw the new brand,
strongly agreed/agreed
that they would consider
Cash Converters as a brand
for them
Our
Shareholders
10%
Increase
Shareholder
value
As measured by the development and
execution of a strategic plan that
results in annual share price growth
Strategic Plan delivered
and endorsed. YoY share
price growth of 25.7%
Our People
10%
Enhance our
people
capability
As measured by the implementation of
an annual process that analyses all
employees against
performance/potential/desire criteria
and results in the active/ongoing
development for 100% of those
identified as key talent
People Effectiveness and
Capability System has
been implemented. Key
talent identified with
specific development plans
in place
Operations
10%
Improve our
operational
efficiency
As measured by the successful in
housing of collections customer
servicing, to budget, enabling all
compliance measures
Completed with required
ACL licence amendment
achieved
Conduct and
Risk
Management
10%
Embed a risk
culture
As measured by embedding the
principles of risk management
framework delivering an effective “3
Lines of Defence” model across the
organisation
Annual Board Risk
Management Framework
review demonstrated that
an effective “3 Lines of
Defence” model has been
embedded and a strong
risk culture led from the
top
Following the end of the Measurement Period (the financial year) the Board assessed the extent to which target
levels of performance had been achieved in relation to each KPI and determined the total award payable.
30 June 2021
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Directors’ report
Remuneration report
Executive
Mr S Budiselik
Mr L Crockett
Mr B Edwards
Mr J Miles
Ms L Stedman
Target STI
opportunity
$525,000
$175,000
$175,000
$150,000
$90,000
% of fixed
remuneration
100%
50%
50%
50%
30%
% achieved
% forfeited
100%
100%
100%
100%
100%
-
-
-
-
-
Long-term incentives (LTI)
At the Annual General Meeting held on 18 November 2015, shareholders approved the Cash Converters Rights
Plan (Plan). The Plan was reapproved by shareholders at the Annual General Meeting on 29 November 2018.
The Plan is available for review at Cash Converters Rights Plan Rules (https://www.cashconverters.com/wp-
content/uploads/2021/06/Cash-Converters-Rights-Plan-Rules.pdf).
The Plan provides eligible participants with an incentive plan that recognises ongoing contribution to the
achievement by the Company of its strategic goals, and to provide a means of attracting and retaining skilled
and experienced employees. Participation in the LTI Plan is at the discretion of the Board.
Subject to the achievement of performance conditions, participants may be entitled to be granted Performance
Rights and / or Indeterminate Rights as approved by the Board.
LTI payments are delivered in Performance Rights which vest into Shares on the achievement of certain
performance criteria or, Indeterminate Rights, where the Board, in their absolute and unfettered discretion,
make a cash payment equivalent to the number of vested Indeterminate Rights multiplied by the then value of
the Company’s share price.
The LTI is designed to align the interests of shareholders and executive key management personnel by
motivating and rewarding participants to achieve compound annual earnings growth and produce strong
shareholder returns over the medium- to long-term.
The LTI right grant awards made to eligible participants in September 2020 were offered across two equal
tranches and based on performance hurdles in which each hurdle operates independently and applies to 50 per
cent of the potential LTI allocation. The Board believes this structure provides a balance between alignment of
shareholder returns whilst mitigating the risk of excessive focus on share price performance.
30 June 2021
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Directors’ report
Remuneration report
Compound annual earnings growth
Performance Level
Stretch
>Target & Threshold & 5% & <10%
5%
>2.5% & <5%
2.5%
<2.5%
% of Tranche Vesting
100%
Pro-rata
50%
Pro-rata
25%
Nil
Growth in total shareholder returns (TSR)
Performance Level
Stretch
>Target & Threshold & Index +5% & < Index +10%
=Index +5%
>Index +2.5% & < Index +5%
=Index +2.5%
5 years
Post-tax discount rate applied to cash flows
Personal finance
34%
2%
3% to 5%
2%
10.6%
Store operations
30%
1%
2%
2%
10.6%
For the year ended 30 June 2020, the key assumptions, included below, for forecast revenue growth rates
reflected the range of assumptions in the scenarios developed spanning varying lending recovery rates post
COVID-19 in FY 2021 and FY 2022, as well as the impact of PEA legislation changes in FY 2023 (impacting cash
flows beyond year 2). Probability weightings were applied to the scenarios.
Assumption
2021 budget revenue growth / (reduction)
2022 forecast revenue growth / (reduction)
Revenue growth rate beyond year 2
Terminal growth rate > 5 years
Post-tax discount rate applied to cash flows
Personal finance
(26%) to (30%)
29% to 37%
(20%) to 5%
2%
10.6%
Store operations
(8%) to (9%)
7%
(5%) to 1%
2%
10.6%
Impairment sensitivity
Sensitivity tests were performed on key assumptions regarding discount rate and bad debt forecasts.
Management has considered a scenario in which the impact of government responses to COVID-19 would cause
a further delay in the FY 2022 forecasted growth. This indicated that when management assumptions are
sensitised for identified reasonably possible changes, no impairment would be recognised.
30 June 2021
Cash Converters International Limited
77
Notes to the financial statements
8.e)
Intangible assets
Allocation of other intangible assets to CGUs
Franchise operations (excluding UK)
Franchise operations (UK)
Personal finance
Store operations
Vehicle financing
2021
$'000
2020
$'000
5,657
1,279
5,762
4,559
2,341
19,598
5,085
1,722
8,053
3,363
3,148
21,371
Other intangible assets are allocated to their respective CGU and tested for impairment when impairment
indicators are identified. Intangible assets with indefinite lives included within other intangible assets are tested
for impairment annually. Refer to note 8.d 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 CGUs.
No impairment has been recognised in the year ended 30 June 2021 (2020: Nil).
Categories of other intangible assets
Reacquired
Rights
Trade names
& customer
relationships
Software
Total
$'000
7,622
-
(746)
(9)
6,867
-
1,733
-
29
8,629
5,466
-
329
(4)
5,791
-
371
11
6,173
$'000
$'000
$'000
16,850
-
-
-
16,850
-
527
-
-
17,377
8,853
-
127
-
8,980
-
155
-
9,135
25,292
2,962
(5,584)
6
22,676
1,120
-
(2,051)
8
21,753
8,521
(3,776)
5,511
(5)
10,251
(1,453)
4,048
7
12,853
49,764
2,962
(6,330)
(3)
46,393
1,120
2,260
(2,051)
37
47,759
22,840
(3,776)
5,967
(9)
25,022
(1,453)
4,574
18
28,161
Cost
Balance at 1 July 2019
Additions
Disposals
Foreign currency exchange differences
Balance at 30 June 2020
Additions
Additions from business combinations
Disposals
Foreign currency exchange differences
Balance at 30 June 2021
Amortisation
Balance at 1 July 2019
Disposals
Amortisation expense
Foreign currency exchange differences
Balance at 30 June 2020
Disposals
Amortisation expense
Foreign currency exchange differences
Balance at 30 June 2021
See note 25.n for the accounting policy.
30 June 2021
Cash Converters International Limited
78
Notes to the financial statements
8.f)
Deferred tax balances
Deferred tax assets
Allowance for expected credit losses
Accruals
Provision for employee entitlements
Other provisions
Leases
Other
Carry forward losses
Deferred tax liabilities
Fixed assets
Intangible assets
Other
Net deferred tax assets
Reconciliation of net deferred tax assets
Opening balance at beginning of period
Tax expense during period recognised in profit or loss
Tax on business combinations
Prior year adjustment
Transfer current year tax benefit
Other
Deferred tax asset on recognition of carry forward UK losses
Closing balance at end of period
2021
$'000
2020
$'000
7,700
612
2,613
1,486
1,497
89
7,065
21,062
9,128
686
2,322
415
688
178
6,566
19,983
(1,334)
(417)
(16)
(1,767)
(687)
(1,097)
(18)
(1,802)
19,295
18,181
18,181
(2,649)
(158)
(386)
-
80
4,227
19,295
14,820
136
-
(542)
3,792
(25)
-
18,181
A net deferred tax asset of $19.295 million (2020: $18.181 million) has been recognised in the consolidated
statement of financial position. There is a critical accounting judgement with respect the recognition of deferred
tax assets including where they arise from previous years losses and will be offset against any future taxes on
profit. In making this assessment, a forward-looking estimation of taxable profit was made, based on
management’s best estimate of future performance from continuing operations as at 30 June 2021.
This includes a deferred tax asset in respect of carry forward losses of $7.065 million (2020: $2.758 million)
recognised in relation to the Group’s UK operations. Profit has been achieved in the last three years with the FY
2021 year reflecting utilisation of the carry forward losses because of taxable profits arising. Ongoing taxable
profit forecasts have supported recognising in full the deferred tax asset (DTA) that arises from unused tax losses
from previous years.
Continuing operations in Australia made a taxable profit during the current year and is expected to be profitable
in future years, therefore supporting the recognition of net deferred tax assets arising from temporary
differences in Australia.
See note 25.e for the accounting policy.
30 June 2021
Cash Converters International Limited
79
Notes to the financial statements
8.g)
Provisions
Current
Employee benefits
Fringe benefits tax
Onerous lease contracts
Other
Non-current
Employee benefits
Onerous lease contracts
Movements in the provisions were as follows:
2021
Carrying amount at start of year
Acquired through business combinations
Transfer from reserves for awards granted
Charged to profit or loss
Utilised during the year
Foreign currency exchange differences
Carrying amount at end of year
2020
Carrying amount at start of year
Charged to profit or loss
Utilised during the year
Foreign currency exchange differences
Carrying amount at end of year
See note 25.r for the accounting policy.
2021
$'000
2020
$'000
7,975
29
767
1,028
9,799
735
236
971
6,942
54
82
977
8,055
798
459
1,257
Employee
benefits
Fringe
benefits
tax
Onerous
lease
contracts
Other
Total
$'000
$'000
$'000
$'000
$'000
7,740
216
-
804
(50)
-
8,710
7,115
625
-
-
7,740
54
-
-
1
(26)
-
29
41
13
-
-
54
541
-
-
444
-
18
1,003
1,343
(539)
(263)
-
541
977
-
227
285
(469)
8
1,028
9,312
216
227
1,534
(545)
26
10,770
257
725
-
(5)
977
8,756
824
(263)
(5)
9,312
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Cash Converters International Limited
80
Notes to the financial statements
9.
Issued capital
2021
Number
2020
Number
2021
$'000
2020
$'000
Balance at beginning of year
616,437,946
616,437,946
248,714
248,714
Issued during the year
Balance at end of year
11,107,069
-
2,499
-
627,545,015
616,437,946
251,213
248,714
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.
Additional fully paid ordinary shares were issued during 2021 under the Dividend Reinvestment Plan for the
dividend paid on 14 April 2021.
See note 25.u for the accounting policy.
10. Cash flow information
10.a) Reconciliation of profit after income tax to net cash inflow from operating activities
Profit / (loss) after tax
Non-cash adjustment to reconcile profit after tax to net cash flows:
Amortisation
Depreciation
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
2021
$'000
2020
$'000
16,199
(10,491)
4,574
11,592
890
346
(1,707)
(14,482)
(8,112)
265
(9,635)
1,015
740
1,685
5,967
11,281
(366)
2,623
(957)
46,632
5,125
2,907
9,493
811
(2,914)
70,111
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.
30 June 2021
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81
Notes to the financial statements
10.b) Non-cash investing and financing activities
Net Recognition of right of use asset and liability
Share based payment reserve transferred to retained earnings
Share based payment reserve transferred to provisions
10.c) Reconciliation of liabilities arising from financing activities
2021
$'000
2020
$'000
18,429
285
227
(2,205)
180
-
2021
Securitisation facility
Transaction costs and other
Lease liabilities
2020
Securitisation facility
Transaction costs and other
Lease liabilities
Opening
Net
cashflows
$'000
$'000
Non-cash
transaction
costs
$'000
Closing
$'000
89,250
(1,458)
53,043
140,835
(19,000)
(42)
(11,582)
(30,624)
-
603
22,948
23,551
70,250
(897)
64,409
133,762
124,500
(1,164)
-
123,336
(35,250)
(1,458)
(11,022)
(47,730)
-
1,164
64,065
65,229
89,250
(1,458)
53,043
140,835
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82
Notes to the financial statements
11. Critical estimates and judgements
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 6.c
• Classification of contingent liabilities – see note 16
Significant accounting estimates and assumptions
Impairment of goodwill and other intangible assets – see note 8.d
Incremental borrowing rate used in calculating lease asset and liability values – see note 8.c
Impairment of equity investment in associate – see note 15.c
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:
•
•
•
• Useful lives of other intangible assets – see note 25.n
•
•
• What constitutes a business combination – see note 14
Impairment of financial assets (including loan receivables) – see note 7.b
Impairment for inventory – see note 8.a
30 June 2021
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83
Notes to the financial statements
Capitalisation of configuration and customisation costs in SaaS arrangements
Note 25.z describes the entity’s accounting policy in respect of customisation and configuration costs incurred
in implementing SaaS arrangements. In applying the entity’s accounting policy, the directors made the following
key judgements that may have the most significant effect on the amounts recognised in financial statements.
Part of the customisation and configuration activities undertaken in implementing SaaS arrangements may entail
the development of software code that enhances or modifies, or creates additional capability to the existing on-
premise software to enable it to connect with the cloud-based software applications (referred to as bridging
modules or APIs).
Judgement was applied in determining whether the additional code meets the definition of and recognition
criteria for an intangible asset in AASB 138 Intangible Assets.
12. Financial risk management
The 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.
The Group’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 Group. The
Group does not enter into or trade financial instruments, including derivative financial instruments, for
speculative purposes.
12.a) Categories of financial instruments
Financial assets
Cash and cash equivalents
Trade and other receivables
Loan receivables
Financial liabilities
Trade and other payables
Borrowings
2021
$'000
2020
$'000
72,166
9,627
150,286
232,079
106,548
11,630
135,206
253,384
13,027
69,353
82,380
23,316
87,792
111,108
The Group has no material financial assets or liabilities that are held at fair value. See note 12.j.
30 June 2021
Cash Converters International Limited
84
Notes to the financial statements
12.b) Market risk
The Group’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 Group’s exposure to market risks or the manner in which it
manages and measures the risk from the previous period.
12.c)
Foreign exchange risk
The Group 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 to translate
transactions into the reporting currency. There are no foreign currency denominated monetary assets or
monetary liabilities in the Group at the reporting date (2020: nil) other than in the functional currency of the
operating entity.
12.d) Cash flow and fair value interest rate risk
The Company and the Group 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. Loans issued by the Group are at fixed rates. The
risk is managed by the Group by monitoring interest rates.
The Company and the Group’s exposures to interest rates on financial assets and financial liabilities are detailed
in the liquidity risk management section of this note.
12.e)
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 $198 thousand (2020:
increase/decrease by approximately $129 thousand).
12.f)
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial
loss to the Group. The Group measures credit risk on a fair value basis. The Group does not have any significant
credit risk exposure to any single counterparty or any group of counterparties having similar characteristics,
other than its franchisees. Refer to note 7.b. The Group has a policy of obtaining sufficient collateral or other
securities from these franchisees. The majority of loans within the financing divisions relate to loans made by
Cash Converters Personal Finance and Green Light Auto which may be both secured and unsecured loans. Credit
risk is present in relation to all loans made, which is managed within an agreed corporate policy on customer
acceptance and ongoing review of recoverability. For secured loans, the fair value of the credit risk considers
the underlying value of the collateral against the loan.
30 June 2021
Cash Converters International Limited
85
Notes to the financial statements
12.g)
Liquidity risk
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 Group’s short, medium and long-
term funding and liquidity management requirements. The Group 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 7.f is a
listing of additional undrawn facilities that the Company / Group has at its disposal to further reduce liquidity
risk.
12.h) Remaining contractual maturity for its financial liabilities
The following table details the Group’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 Group 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
Group may be required to pay.
1 year or
less
1 to 5
years
More
than 5
years
Total Carrying
value
30 June
$'000
$'000
$'000
$'000
$'000
13,027
6,341
19,368
-
73,221
73,221
23,316
7,001
30,317
-
99,531
99,531
-
-
-
-
-
-
13,027
79,561
92,588
13,027
69,353
82,380
23,316
106,533
129,849
23,316
87,792
111,108
2021
Non-interest bearing
Variable interest rate instruments
2020
Non-interest bearing
Variable interest rate instruments
The amounts included above for variable interest rate instruments are subject to change if actual rates differ
from those applied in the above average calculations.
30 June 2021
Cash Converters International Limited
86
Notes to the financial statements
12.i)
Financial assets
The following table details the Group’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 / Group anticipates that the cash flow will occur in a different period.
2021
Non-interest bearing
Fixed interest rate instruments
Variable interest rate instruments
2020
Non-interest bearing
Fixed interest rate instruments
Variable interest rate instruments
1 year or
less
1 to 5
years
Total
More
than 5
years
$'000
$'000
$'000
$'000
40,587
7,245
30,683
78,515
41,109
8,240
63,469
112,818
-
3,434
-
3,434
-
5,564
-
5,564
-
-
-
-
40,587
10,679
30,683
81,949
41,109
-
13,804
-
-
63,469
- 118,382
The amounts included above for variable interest rate instruments are subject to change if actual rates differ
from those applied in the above average calculations.
12.j)
Fair value of financial instruments
The fair value of the Group’s financial assets and liabilities are determined on the following basis:
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 2021 and 30 June 2020, 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.
30 June 2021
Cash Converters International Limited
87
Notes to the financial statements
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 or 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 2021 and 30 June 2020, the Group has no material financial assets and liabilities that are measured
on a recurring basis at fair value.
13. Capital management
13.a) Risk management
The Board determines the appropriate capital structure of the Group, 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 the Group’s 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.
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.
13.b) Dividends
Recognised amounts
1H21 dividend on fully paid ordinary
shares held on 25 March 2021 paid on
14 April 2021
Unrecognised amounts
The Directors have recommended the
payment of a final fully franked
dividend.
2021
Cents per
share
2020
$'000
Cents per
share
$'000
1.00
6,164
1.00
6,275
-
-
-
-
The Company did not pay a dividend in respect of the financial year ended 30 June 2020.
30 June 2021
Cash Converters International Limited
88
Notes to the financial statements
Franking credits
Franking credits available on a tax paid basis.
See note 25.v for the accounting policy.
14. Business combination – provisional accounting applied
2021
$'000
2020
$'000
65,369
68,379
During the period the Group acquired the trade and other assets of six Cash Converters franchised stores in
Australia for total consideration of $6.738 million. There were no acquisitions in the year ending 30 June 2020.
Store
Morley
Melbourne City
Blacktown
Richmond
Coconut Grove
Palmerston
State
WA
VIC
NSW
NSW
NT
NT
Acquisition date
8 October 2020
10 December 2020
11 March 2021
11 March 2021
17 June 2021
18 June 2021
The values identified in relation to the acquisitions are provisional as at the reporting date.
14.a)
Summary of acquisition
Net assets acquired
Cash and cash equivalents
Trade and other receivables
Loan receivables
Inventories
Plant and equipment
Other intangible assets
Deferred tax liability
Provisions
Consideration satisfied in cash
Goodwill arising on
acquisition
2021
$'000
54
55
1,156
824
425
2,260
(158)
(216)
4,400
6,738
2,338
Goodwill arose in the business combination because the cost of the combination included a control premium
paid to acquire the stores. In addition, the consideration paid for the combination effectively included amounts
in relation to the benefit of expected synergies, revenue growth, future market development and the assembled
workforce of the stores. These benefits are not recognised separately from goodwill as the future economic
benefits from them cannot be reliably measured.
No amount of the goodwill recognised is expected to be deductible for tax purposes.
30 June 2021
Cash Converters International Limited
89
Notes to the financial statements
14.b) Purchase consideration – cash outflow
Cash outflow to acquire franchise stores
Cash consideration
Less cash balances acquired
Net outflow of cash - investing activities
14.c) Revenue and profit contribution
2021
$'000
6,738
(54)
6,684
The acquired business contributed revenues of $2,782,266 and net profit before income tax of $280,626 to the
group for the period from 8 October 2020 to 30 June 2021.
If the acquisitions had all occurred on 1 July 2020, for the year ended 30 June 2021 consolidated pro-forma
revenue for the group would include an additional $5,986,268 and the consolidated pro-forma net profit before
income tax would include an additional $744,635. These amounts have been calculated using the data examined
as part of the due diligence conducted prior to each store acquisition.
14.d) Acquisition related costs
Acquisition-related costs of $449,511 that were not directly attributable to the issue of shares are included in
administrative expenses in the statement of profit or loss and in operating cash flows in the statement of cash
flows.
14.e)
Significant accounting judgements
The Group has applied judgement in determining what constitutes a business combination as well as applying
judgement to classifying the individual businesses acquired as individually immaterial and as such has disclosed
the business acquisitions in aggregate. This is consistent with past acquisitions of franchise stores.
14.f)
Significant accounting estimates and assumptions
The Group has applied judgement in determining the fair values assigned to the individual assets and liabilities
acquired with each franchise store under the business combination.
30 June 2021
Cash Converters International Limited
90
Notes to the financial statements
Separately Identifiable Intangible Assets
To calculate Customer Relationships and Reacquired Rights, the Group has used the ‘excess earnings’ method
which measures the value of an intangible assets after excluding the proportion of the cash flows that are
attributable to other assets.
In assessing the Fair Value of the Customer Relationships, the excess earnings methodology was applied by
forming assumptions on the retention rates of Personal Finance and Pawnbroking customers of the business
and forecasting the expected cash flows to be derived from these relationships based on revenue assumptions.
In assessing the Fair Value of the Reacquired Rights, the excess earnings approach was used where the value of
the Reacquired Rights was assessed as being the net present value of the future cash flows which are expected
to be generated over the remaining contractual life of the franchise agreement. The cash flows which were
allocated to the Fair Value of the Customer Relationships were deducted in this assessment to avoid any double
counting of cash flows.
15. Interests in other entities
15.a)
Subsidiaries
Controlled entities of Cash Converters International Limited:
Name of entity
Country
incorporation
of
Ownership interest
2021
2020
Cash Converters (Cash Advance) Pty Ltd
Cash Converters Finance Corporation Limited
Cash Converters (NZ) Pty Ltd
Cash Converters Personal Finance Pty Ltd
Cash Converters Pty Ltd
Cash Converters (Stores) Pty Ltd
Cash Converters UK Holdings PLC
Cash Converters USA, Inc
Cash Converters USA Limited
CC Acquisitions Pty Ltd
Finance Administrators of Australia Pty Ltd
Green Light Auto Group Pty Limited
Mon-E Pty Ltd
Safrock Finance Corporation (QLD) Pty Ltd
CCPF Receivables Trust No 1
1
2
3
4
3
3
1
1
1
1
1
1
2
2
2
2
2
2
2
2
Australia
Australia
Australia
Australia
Australia
Australia
UK
USA
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100%
64.33%
100%
100%
100%
100%
100%
0%
99.285%
100%
100%
100%
100%
100%
100%
100%
64.33%
100%
100%
100%
100%
100%
99.285%
99.285%
100%
100%
100%
100%
100%
100%
1
2
3
4
These companies are parties to the Deed of Cross Guarantee and members of the Closed Group as at 30 June 2021.
These companies are members of the tax consolidated group.
Non-controlling interest is not considered material in these subsidiaries.
Entity dissolved on 28 April 2021.
30 June 2021
Cash Converters International Limited
91
Notes to the financial statements
15.b) Deed of cross guarantee
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 Corporations Instrument 2016/785, issued on 28
September 2016, provides relief to parties 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 set
out therein.
Pursuant to the requirements of this Corporations Instrument, a summarised consolidated Statement of Profit
or Loss and Other Comprehensive Income for the year ended 30 June 2021 and consolidated Statement of
Financial Position as at 30 June 2021, 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 (expense) / benefit
Total comprehensive income / (loss)
Summary of movements in Closed Group’s retained earnings
Retained earnings at beginning of year
Transfer reserve balance
Dividend paid
Net profit
Retained earnings at end of year
2021
$'000
2020
$'000
6,213
(5,186)
1,027
(12,841)
2,824
(10,017)
2021
$'000
2020
$'000
88,458
285
(6,164)
1,027
83,606
98,295
180
-
(10,017)
88,458
30 June 2021
Cash Converters International Limited
92
Notes to the financial statements
Statement of financial position
Current assets
Cash and cash equivalents
Trade and other receivables
Loan receivables
Inventories
Prepayments
Current tax receivable
Total current assets
Non-current assets
Trade and other receivables
Loan receivables
Plant and equipment
Right-of-use assets
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
Lease liabilities
Current tax payable
Borrowings
Provisions
Total current liabilities
Non-current liabilities
Lease liabilities
Borrowings
Provisions
Total non-current
liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
2021
$'000
66,871
1,768
120,586
23,748
1,288
-
214,261
4,168
29,700
5,551
59,171
12,231
109,305
18,590
7,168
30,250
276,134
2020
$'000
102,897
735
97,149
14,900
1,259
1,424
218,364
14,589
38,057
4,535
50,139
15,423
106,967
20,299
6,636
30,250
286,895
490,395
505,259
11,128
6,667
550
51,318
9,182
78,845
57,396
18,035
735
20,051
6,092
-
60,618
7,329
94,090
45,783
27,174
798
76,166
73,755
155,011
167,845
335,384
337,414
251,213
565
83,606
335,384
248,714
242
88,458
337,414
30 June 2021
Cash Converters International Limited
93
Notes to the financial statements
15.c)
Interests in associates
Balance at beginning of year
Net profit for year
Provision for impairment of investment
Return on investment received
Foreign exchange adjustment in value of investment
Balance at end of year
2021
$'000
2020
$'000
6,636
1,707
-
(1,124)
(51)
7,168
6,452
3,338
(2,300)
(659)
(195)
6,636
Associates are those entities over which the Company 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.
The financial statements include the Company’s 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 the Company’s 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 the Company has incurred
legal or constructive obligations or made payments on behalf of the associate.
Unrealised gains on transactions between the Company and its associates are eliminated to the extent of the
Company’s 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 Cash Converters Holdings Limited Partnership, the
master franchisor in New Zealand. The Company holds a 25% equity interest (ownership and voting interest) in
all aspects of the New Zealand enterprise, including corporate stores, franchise contracts and financial services.
The provision for impairment of the investment in the prior year arose because of changes to consumer credit
laws during FY 2020. While no change was assessed to be required in the current year, to the extent that the
recoverable amount of the investment subsequently increases any reversal of the impairment loss is recognised
in accordance with AASB 136 Impairment of Assets.
Summarised financial information
Summarised financial information in respect of the Group’s interest in Cash Converters Holdings Limited
Partnership is set out below. The summarised financial information below represents amounts before intragroup
eliminations.
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
2021
$'000
2020
$'000
8,471
4,207
(493)
(2,717)
9,468
7,943
4,266
(425)
(2,848)
8,936
30 June 2021
Cash Converters International Limited
94
Notes to the financial statements
16. Contingent liabilities
In the course of its normal business the Group 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 or of 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 previously disclosed that on 7 August 2020, AUSTRAC issued a Notice on Cash Converters Pty
Ltd, a wholly owned subsidiary of the Group. Issued under subsection 167(2) of the Anti-Money Laundering and
Counter-Terrorism Financing Act 2006 (Cth), the Notice required information and documents be given and
produced on or before 2 October 2020. The relevant period to which the Notice applies is 14 February 2014 to
14 February 2020. The Company has continued to co-operate fully with AUSTRAC and complied by responding
to the requirements outlined in the Notice on or before the requested due date, as well as addressing in a timely
manner all follow up information requests.
Additionally, the Group has significantly strengthened its Anti-Money Laundering and Counter-Terrorism
Financing (AML/CTF) Program with ongoing constructive engagement with the regulator. An Independent
Review has been completed by a leading AML/CTF compliance expert. The review was completed to ensure that
the AML/CTF Program is aligned to the money laundering/terrorism funding risks faced, is compliant with the
AML/CTF Rules, and is being followed. Where opportunities have been identified where Cash Converters could
enhance the AML/CTF Program to more appropriately document and reflect the systems and controls it has
designed and implemented, these were considered, and the required changes have been actioned and
completed. The close out of the Independent Review has included keeping the regulator informed.
At the date of this report the outcome is unknown as AUSTRAC have not completed their investigation and
therefore it is not possible to determine the extent of any potential financial impact to the Group. Consequently,
no amounts have been recognised or provided for as contingent liabilities at the date of this report.
The directors are not aware of any other material contingent liabilities in existence as at 30 June 2021 requiring
disclosure in the financial statements.
30 June 2021
Cash Converters International Limited
95
Notes to the financial statements
17. Commitments
Capital expenditure
As at 30 June 2021, capital expenditure commitments were Nil (2020: Nil).
Other contractual commitments
Within one year
One to five years
2021
$'000
1,641
3,170
4,811
2020
$'000
295
1,098
1,393
18. Events occurring after the reporting period
In a COVID-19 context, the Group has noted the recent further waves of infections and ease of transmission of
the Delta variant since mid-June 2021, which has led to quick and extended lockdowns and the reinstatement
of certain government support measures to protect the economy and jobs. The recent outbreaks have impacted
significant aspects of everyday lives and the flow on effects to the economy and related business effects remain
highly uncertain. State governments have ordered lockdowns which have resulted in disruptions, in particular
to in-store trade including the following:
• Greater Sydney closures from 27th June and the rest of NSW impacted by closures from 6th August to
the date of this report
• Victoria store closures during 16th July to 27th July and from 6th August to the date of this report
South Australia store closures from 20th July to 27th July
(except Geelong which was not closed from 10th August to 21st August)
• ACT store trade impacted from 13th August until the date of this report
•
• Greater Brisbane closures from 30th June to 1st July and a further period from 1st August to 8th August
•
•
Cairns store closures from 9th August to 11th August
Perth store closures from 29th June to 2nd July
There were no other significant events occurring after the balance date which may affect either the Group’s
operations or results of those operations or the Group’s state of affairs.
30 June 2021
Cash Converters International Limited
96
Notes to the financial statements
19. Related party transactions
19.a)
Subsidiaries
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.
19.b) Key management personnel compensation
Details of directors and other members of KMP of Cash Converters International Limited during the year are:
• Mr Stuart Grimshaw (Chairman and non-executive director to 28 August 2020)
• Mr Jason Kulas (Chairman and non-executive director, appointed 28 August 2020)
• Mr Kevin Dundo (Non-executive director to 23 November 2020)
• Ms Julie Elliott (Non-executive director)
• Mr Robert Hines (Non-executive director)
• Mr Lachlan Given (Non-executive director)
• Mr Sam Budiselik (Chief Executive Officer; Managing director, appointed 18 December 2020)
• Mr Peter Cumins (Executive Deputy Chairman)
• Mr Leslie Crockett (Chief Financial Officer)
• Mr Brad Edwards (General Counsel and Company Secretary)
• Mr Peter Egan (Chief Risk Officer to 23 October 2020)
• Ms Lisa Stedman (Chief Operating Officer, appointed 7 September 2020)
• Mr James Miles (Chief Technology Officer, designated from 1 July 2020)
The aggregate compensation of the KMP of the Group is set out below:
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Share-based payments
Termination benefits
2021
$
4,134,388
171,558
25,345
656,482
270,513
5,258,286
2020
$
4,295,040
112,947
(24,019)
(194,373)
302,500
4,492,095
19.c)
Transactions with other related parties
During the year an amount of $120,000 (2020: $120,000) was paid for consulting services to an entity controlled
by Mr P Cohen, the beneficial owner of EZCORP Inc, the Company’s largest shareholder.
During the year, consistent with the terms of his employment contract, the Governance, Remuneration and
Nomination Committee and Board approved a restructure of the fixed remuneration package of the Executive
Deputy Chairman. The base salary per annum was increased from $371,597 to $441,426 and the Company was
released from the contractual requirement to provide usage of a fully maintained company car.
30 June 2021
Cash Converters International Limited
97
Notes to the financial statements
Under the terms of the employment contract, the Governance, Remuneration and Nomination Committee
approved the outright sale of the motor vehicle that had previously been provided, to the Executive Deputy
Chairman. The sale was conducted at arms-length market value and settled in full on the date of transfer of
ownership.
Other than share-based payments (as disclosed in note 20) and shareholdings of Key Management Personnel
(KMP) (as disclosed in the remuneration report), the parent, its subsidiaries, associates and KMP made no other
related party transactions during the reporting period.
20. Share-based payments
20.a)
Employee 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.
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 13,224,956 performance rights were granted in Tranches 29 and 30
to senior executives of the Company.
The following arrangements were in existence during the current reporting period:
Tranche
Grant date
Grant date
fair value
Exercise
price
Expiry date
Number
23
24
27
28
29
30
19 Dec 2018
19 Dec 2018
9 June 2020
9 June 2020
29 Sep 2020
29 Sep 2020
$ 0.146
$ 0.240
$ 0.171
$ 0.195
$ 0.096
$ 0.150
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
30 Jun 2021 1,954,529
30 Jun 2021 1,954,529
30 Jun 2022 5,100,544
30 Jun 2022 5,100,544
30 Jun 2023 6,612,478
30 Jun 2023 6,612,478
30 June 2021
Cash Converters International Limited
98
Notes to the financial statements
20.b)
Fair value of performance rights granted during the year
The weighted average fair value of the performance rights granted during the financial year is $0.12 (2020:
$0.18). 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 29
Tranche 30
29 Sep 2020
Monte Carlo
$0.15
$0.00
0.5
2.75 years
0.00%
0.17%
29 Sep 2020
Binomial
$0.15
$0.00
0.5
2.75 years
0.00%
0.17%
20.c) 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
To be cash settled at vesting
Outstanding at end of year
2021
Number
2020
Number
14,110,146
13,224,956
(9,353,356)
-
(2,052,076)
15,929,670
10,973,770
10,201,088
(7,064,712)
-
-
14,110,146
20.d)
Share options exercised during the year
No share options were exercised during the years ended 30 June 2021 or 30 June 2020.
30 June 2021
Cash Converters International Limited
99
Notes to the financial statements
20.e)
Share options forfeited / lapsed during the year
Tranche
Year ended 30 June 2021
23
24
27
28
29
30
Year ended 30 June 2020
21
22
23
24
25
26
Grant date
Number
19 Dec 2018
19 Dec 2018
9 Jun 2020
9 Jun 2020
29 Sep 2020
29 Sep 2020
14 Feb 2018
14 Feb 2018
19 Dec 2018
19 Dec 2018
26 Mar 2019
26 Mar 2019
1,954,529
1,954,529
1,160,266
1,160,266
1,561,883
1,561,883
9,353,356
999,380
999,380
689,343
689,343
1,843,633
1,843,633
7,064,712
20.f)
Share options outstanding at year end
The total number of options outstanding at 30 June 2021 was 15,929,670 (2020: 14,110,146). The equivalent of
2,052,076 options will be cash settled at their vesting dates if they are determined under the Equity Plan Rules
to vest. A provision has been recognised for these at 30 June 2021.
Tranche
27
28
29
30
Grant date Grant date
fair value
Exercise
price
Expiry date
Number
9 June 2020
9 June 2020
29 Sep 2020
29 Sep 2020
$ 0.171
$ 0.195
$ 0.096
$ 0.150
$0.00
$0.00
$0.00
$0.00
30 Jun 2022 3,256,282
30 Jun 2022 3,256,282
30 Jun 2023 4,708,553
30 Jun 2023 4,708,553
15,929,670
The weighted average remaining contractual life for the options outstanding at 30 June 2021 was 1.6 years
(2020: 1.7 years).
30 June 2021
Cash Converters International Limited
100
Notes to the financial statements
21. Remuneration of auditors
The auditor of Cash Converters International Limited is Deloitte Touche Tohmatsu.
Auditor of the parent entity
Audit / review of the financial report
Other non-audit services
Related practice of the parent entity auditor
Audit
Taxation services
2021
2020
721,899
539,530
54,092
-
775,991
50,160
18,310
608,000
22. Earnings per share
22.a) Reconciliations 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
22.b) 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
2021
$'000
2020
$'000
16,199
(10,491)
2021
Number
2020
Number
618,781,081
15,929,670
634,710,751
616,437,946
8,970,232
625,408,178
30 June 2021
Cash Converters International Limited
101
Notes to the financial statements
23. Assets pledged as security
See note 7.d for cash and cash equivalents designated as restricted cash to operate the securitisation facility and
for cash on deposit as security for banking facilities.
See note 7.f for the borrowing facility secured against eligible receivables.
24. Parent entity financial information
The financial information of the parent entity, Cash Converters International Limited has been prepared on the
same basis as the consolidated financial report.
Statement of financial position
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
Comprehensive income
Profit / (Loss) for the year
Other comprehensive income
Total comprehensive loss
2021
$'000
2020
$'000
14
320,076
320,090
1,476
251,986
253,462
653
-
653
41
-
41
319,437
253,421
251,213
716
67,508
319,437
248,714
337
4,370
253,421
2021
$'000
69,302
-
69,302
2020
$'000
(492)
-
(492)
During the year, the subsidiaries declared dividends to the parent entity.
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
Cross guarantees have been provided by the parent entity and its controlled entities as listed in note 15.b.
Cash Converters International Limited has provided a cross guarantee to HSBC for a BACS facility provided to
CCUK.
30 June 2021
Cash Converters International Limited
102
Notes to the financial statements
25. Summary of significant accounting policies
This note provides a list of the significant accounting policies adopted in the preparation of these consolidated
financial statements to the extent they have not already been disclosed in the other notes above. These policies
have been consistently applied to all the years presented, unless otherwise stated. The financial statements are
for the group consisting of Cash Converters International Limited and its subsidiaries.
25.a)
Principles of consolidation and equity accounting
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 15).
Control is achieved when the Company:
• has power over the investee;
•
• has the ability to use its power to affect its returns.
is exposed, or has rights, to variable returns from its involvement with the investee; and
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.
25.b)
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker.
Segment reporting is at note 2.
30 June 2021
Cash Converters International Limited
103
Notes to the financial statements
25.c)
Foreign currency translation
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.
25.d) Revenue recognition
Accounting policy is at note 3.
25.e)
Income tax
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.
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) that affect 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.
30 June 2021
Cash Converters International Limited
104
Notes to the financial statements
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.
25.f)
Leases
The Group assesses whether a contract is or contains a lease, at inception of the contract. A contract is, or
contains a lease, if the contract conveys the right to control the use of an identified asset for a period of time in
exchange for consideration. To assess whether a contract conveys the right to control the use of an identified
asset, the Group assesses whether:
• The contract involves the right of use of an identified asset – this may be specified explicitly and should be
physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier
has a substantive substitution right, then the asset is not identified;
• The Group has the right to obtain substantially all of the economic benefits from the use of the asset
throughout the period of use; and
• The Group has the right to direct the use of the asset.
At inception or reassessment of a contract that contains a lease component, the Group allocates the
consideration in the contract to each lease component based on their relative stand-alone prices.
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease i.e. the date the underlying
asset is available for use. Right-of-use assets are subsequently measured at cost, less any accumulated
depreciation and impairment losses and adjusted for any remeasurement of lease liabilities.
The cost of the right-of-use asset comprises the initial lease liability amount, initial direct costs incurred when
entering into the lease less lease incentives received and an estimate of the costs to be incurred in dismantling
and removing the underlying asset and restoring the site on which it is located to the condition required by the
terms and conditions of the lease.
Unless the Group is reasonably certain of obtaining ownership of the leased asset at the end of the lease term,
the recognised right-of-use asset is depreciated on a straight-line basis over the shorter of its estimated useful
life and the lease term.
An impairment review is undertaken for any right-of-use asset that shows indicators of impairment and an
impairment loss is recognised against any right-of-use asset that is impaired.
30 June 2021
Cash Converters International Limited
105
Notes to the financial statements
Lease liabilities
The lease liability is initially measured at the present value of the fixed and variable lease payments to be made
over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less
any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts
expected to be paid under residual value guarantees. The lease payments also include the exercise price of a
purchase option reasonably certain to be exercised by the Group. The lease payments are discounted using the
interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases
in the Group, the lessee’s incremental borrowing rate is used, being the rate that the individual lessee would
have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar
economic environment with similar terms, security and conditions.
Lease payments to be made under reasonably certain extension options are also included in the measurement
of the liability.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease
liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments
made.
The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use
asset) whenever:
•
the lease term has changed or there is a significant event or change in circumstances resulting in a change in
the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting
the revised lease payments using a revised discount rate;
the lease payments change due to changes in an index or rate or a change in expected payment under a
guaranteed residual value, in which case the lease liability is remeasured by discounting the revised lease
payments using an unchanged discount rate (unless the lease payments change is due to a change in a
floating interest rate, in which case a revised discount rate is used); and
•
• a lease contract is modified and the lease modification is not accounted for as a separate lease, in which case
the lease liability is remeasured based on the lease term of the modified lease by discounting the revised
lease payments using a revised discount rate at the effective date of the modification.
The Group adjusted the lease liability due to changes in lease payments and lease terms during the year ended
30 June 2021.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases i.e. those leases that have
a lease term of 12 months or less. It also applies the lease of low-value assets recognition exemption to leases
that are considered of low value (less than $7,500). Payments associated with short-term leases (buildings,
equipment and vehicles) and all leases of low-value assets are recognised on a straight-line basis as an expense
in profit or loss. Low-value assets comprise IT equipment and small items of office furniture.
Incremental borrowing rate
To determine the incremental borrowing rate, the Group:
• where possible, uses recent third-party financing received by the individual lessee as a starting point,
adjusted to reflect changes in financing conditions since third party financing was received; and
• uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by
the Group, which does not have recent third-party financing, and adjustments specific to the lease (e.g. term,
country, currency and security).
30 June 2021
Cash Converters International Limited
106
Notes to the financial statements
Extension and termination options
Extension and termination options are included in several property leases across the Group. These are used to
maximise operational flexibility in terms of managing the assets used in the Group’s operations. Most of the
extension and termination options held are exercisable only by the Group and not by the respective lessor.
In determining the lease term, management considers all facts and circumstances that create an economic
incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods
after termination options) are only included in the lease term if the lease is reasonably certain to be extended
(or not terminated).
Most extension options in head office leases have been included in the lease liability.
The lease term is reassessed if an option is exercised (or not exercised) or the Group becomes obliged to exercise
(or not exercise) it. The assessment of reasonable certainty is only revised if a significant event or a significant
change in circumstances occurs, which affects this assessment, and that is within the control of the lessee.
25.g) Business combinations
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration
for each acquisition is measured at the aggregate of the fair values (at the date of exchange) of assets given,
liabilities incurred or assumed, and equity instruments issued by the consolidated entity in exchange for control
of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.
The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition
under AASB 3 Business Combinations are recognised at their fair value at the acquisition date, except that:
• deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are
recognised and measured in accordance with AASB 112 Income Taxes and AASB 119 Employee Benefits
respectively;
liabilities or equity instruments related to the replacement by the consolidated entity of an acquiree’s share-
based payment awards are measured in accordance with AASB 2 Share-based Payment; and
•
• assets (or disposal groups) that are classified as held for sale in accordance with AASB 5 Non-current Assets
Held for Sale and Discontinued Operations are measured in accordance with that Standard.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the
combination occurs, the consolidated entity reports provisional amounts for the items for which the accounting
is incomplete. Those provisional amounts are adjusted during the measurement period, or additional assets or
liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of
the acquisition date that, if known, would have affected the amounts recognised as of that date. The
measurement period is the period from the date of acquisition to the date the consolidated entity obtains
complete information about facts and circumstances that existed as of the acquisition date – and is subject to a
maximum of one year.
30 June 2021
Cash Converters International Limited
107
Notes to the financial statements
25.h)
Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested
annually for impairment, or more frequently if events or changes in circumstances indicate that they might be
impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the
asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair
value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at
the lowest levels for which there are separately identifiable cash inflows which are largely independent of the
cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than
goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each
reporting period.
25.i)
Prepayments
Prepayments for goods and services which are to be provided in future years are recognised as prepayments
and amortised over the period in which the economic benefits are received.
25.j)
Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand,
deposits held at call with financial institutions, other short-term, highly liquid investments with original
maturities of three months or less that are readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings
in current liabilities in the balance sheet.
25.k)
Trade receivables
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.
The group applies the simplified approach to measuring expected credit losses which uses a lifetime expected
loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have been
grouped based on shared credit risk characteristics and the days past due.
25.l)
Inventories
Inventories are valued at the lower of cost and net realisable value. Costs, including purchase costs are assigned
to individual inventory items on hand. Net realisable value represents the estimated selling price less all
estimated costs of completion and costs necessary to make the sale.
30 June 2021
Cash Converters International Limited
108
Notes to the financial statements
25.m) Property, plant and equipment
Plant and equipment and leasehold improvements 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
Fixtures and fittings
Computer equipment
25.n)
Intangible assets
8 years
5 years
8 years
3 years
Reacquired rights and customer relationships acquired through business combinations are recognised at fair
value at acquisition date less accumulated amortisation and impairment.
Trade names relating to repurchased sub-master licenses both overseas and in Australia are recognised at cost
less accumulated amortisation.
Software development expenditure is recognised as an asset when it is possible that future economic benefits
attributable to the asset will flow. Software assets are recognised at cost less accumulated amortisation.
Intangible assets are amortised as follows:
Asset
Reacquired rights
Customer relationships
Trade names
Software
Amortisation period
The remaining life of each franchise agreement as at the acquisition date
Useful life of 5 years based on historic average customer relationships
Indefinite life intangible
Useful life of 5 years based on historic experience
Key estimate – useful lives of other intangible assets
The Company 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 other intangible assets requires the entity to make
significant estimates based on both past performance and expectations of future performance.
25.o)
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial
year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade
and other payables are presented as current liabilities unless payment is not due within 12 months after the
reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost
using the effective interest method.
30 June 2021
Cash Converters International Limited
109
Notes to the financial statements
25.p) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in profit or loss over the period of the borrowings using the effective interest method.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged,
cancelled or expired. The difference between the carrying amount of a financial liability that has been
extinguished or transferred to another party and the consideration paid, including any non-cash assets
transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.
Where the terms of a financial liability are renegotiated and the entity issues equity instruments to a creditor to
extinguish all or part of the liability (debt for equity swap), a gain or loss is recognised in profit or loss, which is
measured as the difference between the carrying amount of the financial liability and the fair value of the equity
instruments issued.
Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of
the liability for at least 12 months after the reporting period.
25.q) Borrowing costs
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that
it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-
down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn
down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility
to which it relates.
25.r)
Provisions
Provisions are recognised when the Group 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, the carrying amount is
the present value of those cash flows
When some or all 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.
30 June 2021
Cash Converters International Limited
110
Notes to the financial statements
25.s)
Employee benefits
Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits and annual leave that are expected to be
settled wholly within 12 months after the end of the period in which the employees render the related service
are recognised in respect of employees’ services up to the end of the reporting period and are measured at the
amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee
benefit obligations in the balance sheet.
Other long-term employee benefit obligations
Liabilities for long service leave and annual leave that are not expected to be settled wholly within 12 months
after the end of the period in which the employees render the related service. These obligations are measured
as the present value of expected future payments to be made in respect of services provided by employees up
to the end of the reporting period using the projected unit credit method. Consideration is given to expected
future wage and salary levels, experience of employee departures and periods of service. Expected future
payments are discounted using appropriate market yields at the end of the reporting with terms that match, as
closely as possible, the estimated future cash outflows. Remeasurements as a result of experience adjustments
and changes in actuarial assumptions are recognised in profit or loss.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an
unconditional right to defer settlement for at least 12 months after the reporting period, regardless of when the
actual settlement is expected to occur.
25.t)
Share-based payments
The Group provides benefits to executives of the Group in the form of share-based payment transactions,
whereby KMP render services in exchange for options (equity-based transactions). These performance rights are
indeterminate rights and confer the right (following valid exercise) to the value of an ordinary Share in the
Company at the time, either settled in Shares that may be issued or acquired on-market, or settled in the form
of cash, at the discretion of the Board (a feature intended to ensure appropriate outcomes in the case of
terminations).
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; and
• 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 vesting is conditional upon a market condition and awards do not ultimately
vest, amounts previously charged to the share-based payment reserve are reversed directly to retained earnings,
and not to profit and loss.
30 June 2021
Cash Converters International Limited
111
Notes to the financial statements
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.
For cash-settled share-based payments, a liability is recognised for the goods or services acquired, measured
initially at the fair value of the liability. At each reporting date until the liability is settled, and at the date of
settlement, the fair value of the liability is remeasured, with any changes in fair value recognised in profit or loss
for the year.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of
dilutive earnings per share.
25.u) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
25.v) Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the
discretion of the entity, on or before the end of the reporting period but not distributed at the end of the
reporting period.
25.w) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing:
•
the profit attributable to owners of the company, excluding any costs of servicing equity other than ordinary
shares
• by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the year and excluding treasury shares.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account:
•
the after-income tax effect of interest and other financing costs associated with dilutive potential ordinary
shares, and
the weighted average number of additional ordinary shares that would have been outstanding assuming the
conversion of all dilutive potential ordinary shares.
•
30 June 2021
Cash Converters International Limited
112
Notes to the financial statements
25.x)
Rounding of amounts
The Company is a company of the kind referred to in ASIC Corporations (Rounding in Financial/Directors’
Reports) Instrument 2016/191, dated 24 March 2016, and in accordance with that Corporations Instrument
amounts in the financial report are rounded off to the nearest thousand dollars, unless otherwise indicated.
25.y) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is
not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the
asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of
GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the
balance sheet.
The GST components of cash flows arising from investing or financing activities which are recoverable from, or
payable to the taxation authority, are presented as operating cash flows.
25.z)
Software-as-a-Service (SaaS) arrangements
SaaS arrangements are service contracts providing the Company with the right to access the cloud provider’s
application software over the contract period. Costs incurred to configure or customise, and the ongoing fees to
obtain access to the cloud provider's application software, are recognised as operating expenses when the
services are received.
Some of these costs incurred are for the development of software code that enhances or modifies, or creates
additional capability to, existing on-premise systems and meets the definition of and recognition criteria for an
intangible asset. These costs are recognised as intangible software assets and amortised over the useful life of
the software on a straight-line basis. The useful lives of these assets are reviewed at least at the end of each
financial year, and any change accounted for prospectively as a change in accounting estimate.
30 June 2021
Cash Converters International Limited
113
Directors’ declaration
Directors’ declaration
The directors declare that:
a)
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 Group; and
the directors have been given the declarations required by s295A of the Corporations Act 2001.
b)
c)
d)
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 15.a 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
Jason A Kulas Chairman
Perth, Western Australia
29 August 2021
30 June 2021
Cash Converters International Limited
114
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
Deloitte Touche Tohmatsu
Tower 2, Brookfield Place,
123 St Georges Tce,
Perth WA 6000, Australia
Tel: +61 (0) 8 9365 7000
Fax: +61 (0) 8 9365 7001
www.deloitte.com.au
Independent Auditor’s Report to the members of
Cash Converters International Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Cash Converters International Limited (the “Company”) and its
subsidiaries (the “Group”), which comprises the consolidated statement of financial position as at 30 June 2021,
the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of
changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
(i)
(ii)
giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial
performance for the year then ended; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our
report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are
relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial report for the current period. These matters were addressed in the context of our audit of the
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
115
Key audit matter
How the scope of our audit responded to the Key
Audit Matter
Allowance for expected credit loss – loan receivables
As disclosed in Note 7.b, the carrying value of loan
receivables as at 30 June 2021 was $150.3 million,
net of allowance for expected credit loss of $27.8
million.
The assessment of the recoverable value of loans
requires significant judgements in determining the
approach for estimating expected credit losses.
Management uses an expected credit loss model
taking into account the historical losses observed,
current conditions of the loan receivables and
forecast future economic conditions.
Significant judgement has been applied to assess the
likely future economic conditions using an
assessment of:
•
•
pre-COVID historical loss data compared to
last twelve months historical loss data;
current hardship arrangements and
repayment experience; and
• macroeconomic model overlay
incorporating publicly available forecasts
for unemployment rates.
Carrying value of non-current assets
As disclosed in Notes 8.d and 8.e, the carrying value
of goodwill and other intangible assets as at 30 June
2021 is $109.3 million and $19.6 million respectively.
Management undertakes impairment testing to
assess the recoverability of goodwill and intangible
assets annually.
We focussed on the impairment assessment for the
goodwill of $109.3 million and the intangible assets
of $10.3 million in personal finance and store
operations as indicators of impairment existed.
The assessment of the recoverable value requires
significant judgement in respect of assumptions and
estimates in preparing a value in use model (‘VIU’)
such as:
•
•
•
•
discount rates;
forecast retail growth rates;
forecast loan volumes; and
forecast bad debt levels.
Our procedures included, but were not limited to:
•
evaluating the key controls management have in
place in relation to loan originations, collections,
arrears management and the estimation of the
expected credit losses;
challenging the assumptions and methodology used
to determine the timing of recognition of loss events
and significant increase in credit risk, probability of
default, loss given default;
challenging whether the recent recovery history,
which had been impacted by government stimulus
packages for COVID, has been appropriately
considered in setting the assumptions;
testing, on a sample basis, the accuracy and
completeness of the historical data utilised in the
model;
in conjunction with our credit modelling specialists,
developing an expected range of the allowance for
impairment losses;
assessing the current hardship arrangements for
amounts repaid on a sample basis; and
assessing the appropriateness of the disclosures in
Note 7.b.
Our procedures included, but were not limited to:
•
obtaining an understanding of the key control's
management has in place in relation its impairment
assessment of goodwill and other intangible assets
comparing the forecasts used in the impairment
assessment to the Board approved business plan;
assessing historical forecasting accuracy by
comparing actual result to forecast;
in conjunction with our valuation experts,
we challenged the key assumptions and
methodologies used, in particular:
•
•
•
•
the discount rate against that of comparable
companies;
forecast loan volumes for personal loans
against recent actual levels and related
trending;
forecast bad debt levels for personal loans;
and
forecast retail and pawn broking revenue;
evaluating the probability weighted scenarios
applied by the company for the impacts of the
potential legislation changes on future personal loan
volumes;
sample testing management’s models for
mathematical accuracy; and
assessing the appropriateness of the disclosures in
Note 8.d.
116
•
•
•
•
•
•
•
•
•
•
•
•
Other Information
The directors are responsible for the other information. The other information comprises the information
included in the annual financial report for the year ended 30 June 2021, but does not include the financial report
and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
Responsibilities of the Directors 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 preparing the financial report, the directors are responsible for assessing the ability of the Group to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit. We also:
•
•
•
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit 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 Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the financial report or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Group to cease to continue as a going concern.
117
•
•
Evaluate the overall presentation, structure and content of the financial report, including the disclosures,
and whether the financial report represents the underlying transactions and events in a manner that
achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are responsible for
the direction, supervision and performance of the Group audit. We remain solely responsible for our
audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards
applied.
From the matters communicated with the directors, we determine those matters that were of most significance
in the audit of the financial report of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 22 to 40 of the Directors’ Report for the year ended
30 June 2021.
In our opinion, the Remuneration Report of Cash Converters International Limited, for the year ended 30 June
2021, complies with section 300A of the Corporations Act 2001.
Responsibilities
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.
DELOITTE TOUCHE TOHMATSU
Leanne Karamfiles
Partner
Chartered Accountants
Perth, 29 August 2021
118
Shareholder information
Shareholder information
As at 11 August 2021
Distribution of holders of equity securities
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Voting rights
Holders
Number
Fully paid
ordinary
shares
Number
657
1,137
639
1,250
325
4,008
270,845
3,233,832
4,977,184
44,423,513
574,639,641
627,545,015
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.
Less than marketable parcel of shares
There were 986 holders of less than a marketable parcel of ordinary shares.
Substantial shareholders
Ordinary shareholder
1. EZCORP Inc
2. Perpetual Limited
3. Fidelity Management & Research Company LLC
4. Carol Australia Holdings Pty Ltd
5. First Sentier Investors Holdings Pty Limited
6. Ryder Capital Limited
7. Commonwealth Bank of Australia
Number of
shares
% of issued
shares
225,077,991
44,640,346
43,023,094
41,397,986
38,464,142
35,750,000
33,175,692
35.87%
7.24%
6.98%
6.72%
6.24%
5.70%
5.38%
30 June 2021
Cash Converters International Limited
119
Shareholder information
Twenty largest equity security holders
Ordinary shareholder
1. EZCORP Inc
2. HSBC Custody Nominees (Australia) Limited
3. Citicorp Nominees Pty Limited
4. J P Morgan Nominees Australia Pty Limited
5. Riolane Holdings Pty Ltd
6. Mrs Lilian Jeanette Warmbrand
7. Mr Frederick Benjamin Warmbrand
8. Croxted Group P/L
9. Rayment Family Investments P/L
10. Mr Kamil Umit Yesilyurt
11. Vadina Pty Limited
12. Cash Converters Franchisees Association Inc
13. Consvest Pty Ltd
14. Acres Holdings Pty Ltd
15. Hopes & Wishes Pty Ltd
16. BNP Paribas Nominees Pty Ltd Six Sis Ltd
17. BNP Paribas Noms Pty Ltd
18. Kamala Holdings Pty Ltd
19. Mr Peter Cumins
20. Fiske PLC
20. Mr David Clement Hobby
Number of
shares
223,702,991
92,984,774
50,418,298
39,581,713
6,075,226
6,017,542
3,088,697
2,950,423
2,907,931
2,816,734
2,718,750
2,710,375
2,600,000
2,500,000
2,450,000
2,342,113
2,175,509
2,154,896
2,100,468
2,000,000
2,000,000
456,296,440
% of
issued
shares
35.65%
14.82%
8.03%
6.31%
0.97%
0.96%
0.49%
0.47%
0.46%
0.45%
0.43%
0.43%
0.41%
0.40%
0.39%
0.37%
0.35%
0.34%
0.33%
0.32%
0.32%
72.71%
30 June 2021
Cash Converters International Limited
120
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