2016
ANNUAL REPORT
About Collection House Group
Table of Contents
Collection House Limited (the Group) is a leading
Australasian receivables management company,
providing solutions that span the entire credit
management lifecycle and beyond – incorporating
receivables outsourcing, debt collection services,
debt purchasing, legal services, financial services
training, customer service outsourcing, finance
broking, and financial hardship management
services.
We have strong business relationships with major
Australian and international banks, financial
institutions, large corporations, public utilities and
Government agencies.
With more than 950 staff in offices across
Brisbane, Sydney, Victoria, Adelaide, New Zealand
and the Philippines, the Collection House Group
offers stakeholders a range of professional, ethical
and effective products and services.
Collection House is different from competitors
in a number of ways: the breadth of our service
offering; our approach to ethical debt recovery
(which is ingrained in our culture); and our
commitment to technology to continually evolve
our service and capabilities.
Debt collection and receivables
management
Debt purchasing and recovery
Legal services including insolvency
administration
Tailored debt collection services,
specialising in Local Government
About Collection House Group ...........................................2
Corporate Social Responsibility ........................................22
FY16 Financial Results .....................................................................3
Corporate Governance ...............................................................23
Chairman’s Report ................................................................... 4
Directors’ Report ...............................................................................27
Chief Executive Officer’s Report ................................... 6
Auditor’s Independence Declaration ..........................53
Board of Directors .................................................................10
Financial Statements .....................................................................55
Executive Management Team .......................................12
Shareholder Information ........................................................121
FY16 Review of Operations ....................................................14
Corporate Directory ....................................................................123
FY16 Financial Results
Dividend
Per Share
(cents)
7.8
(cents)
Net Profit
After Tax
($)
18.6
(million)
PDL Cash Collections
& Commissions
($)
Average Return
on Equity
(%)
Shareholder
Equity
($)
180.3
(million)
181.3
(million)
Net Debt/
Net Debt + Equity
(%)
10.6
(percent)
37.7
(percent)
Earnings
Per Share
(cents)
14.0
(cents)
Nationally recognised training provider
in financial services and leadership
Provision of customer service activities
on behalf of organisations
Licensed specialist finance broker
for the provision of credit
Provision of financial hardship services
on behalf of organisations
9.1
8.0
7.8
7.2
6.4
12
13 14 15 16
Year
17.2
14.7
14
13.7
12.1
22.5
18.7
18.6
15.6
12.7
12 13 14 15 16
Year
181.3
176.1
150.8
136.1
126.5
13.4 13.4 13.8
12.4
10.6
180.3
170.7
156.0
123.3
109.2
44.5
41.4 38.9
39.6
37.7
12 13 14 15 16
Year
12 13 14 15 16
Year
12 13 14 15 16
Year
12 13 14 15 16
Year
12 13 14 15 16
Year
2
Collection House Group
2016 Annual Report
3
Chairman’s Report
Dear fellow Shareholders,
The 2016 financial year was a challenging
year for the Group, and after several years of
record financial results it tested our Board and
management team to respond to the challenge and
maintain focus on long term value creation.
The market’s reaction in late 2015 and early 2016
was blunt, and we moved quickly to address
the operational issues which caused the poor
performance in the first half.
2016’s net profit after tax was $18.6 million, which
included some one-off costs for our head office
relocation and for restructuring. With these items
excluded, the underlying NPAT was $20.9 million,
which is 7% down on FY15.
Revenue across the Group increased, particularly
in the Collection Services segment. However,
Purchased Debt Ledger (PDL) collections of $123.3
million was slightly down on the previous year,
largely due to the lower PDL investment which was
flagged at the beginning of FY16.
Many of the actions taken this financial year were
with an eye to the future and positioning the Group
to be able to capitalise on sustainable growth
opportunities.
Key to this is our balance sheet, with gearing
levels at the end of the financial year at 37.7%
- comfortably below the Board’s target limit of
40% - and with our three year bank funding facility
successfully renewed at a lower overall borrowing
cost. This provides us with capacity to invest in
Purchased Debt Ledgers when desired.
Furthermore, the CEO transition is now complete,
with the commencement in early July of our new
Chief Executive Anthony Rivas. Anthony joins the
Collection House Group with extensive collections
knowledge and experience, having worked in the
industry across the world for his entire career.
Anthony’s deep operational knowledge is an asset
to our Company as we continue to focus on
performance improvement initiatives Group-wide,
and look to expand into natural adjacencies to
ensure sustainable shareholder value.
Part of the year’s repositioning focus has also
incorporated the Board, with a Board renewal
process undertaken and two new Non-executive
Directors appointed. Leigh Berkley is a debt
purchase and collections senior executive based
in the UK who brings extensive collections
experience to the Board table; and Lev Mizikovsky
is an experienced company director and major
shareholder in CLH. They both bring fresh thinking
and new ideas to the Board and we welcome their
input and contribution.
With Anthony’s arrival, we have taken the
opportunity in the first quarter of this financial
year to refresh the Group’s strategy, Purpose
statement and values. We have crystallised the
Purpose of the CLH Group as being to strengthen
clients’, customers’ and shareholders’ financial
situation through our exceptional people – offering
education, innovative products and services to all.
In other words, we want to strengthen our clients’
financial situation by providing a world class service
that allows them to focus on their core capabilities;
we want to strengthen our customers’ financial
situations by helping them meet their obligations
in a way they can manage and potentially improve
their access to credit going forward; and we
want to improve the financial situation of you,
our shareholders, by delivering consistent and
predictable returns.
There are a number of key enablers to be able to
deliver on this Purpose, with two of the major
ones being our people and our technology.
We are committed to providing an environment
that rewards, recognises and develops all
members of the Collection House Group to help
them become the leading providers of credit
management solutions in Australasia. And we are
equally committed to continue our investment in
developing and utilising technology in ways that
will keep us efficient and relevant in this digital age.
Our focus in FY17 is on stabilising our core
collections business through productivity and
efficiency initiatives, and also on growing our
existing business and new subsidiaries. This is
outlined in detail in Anthony’s report over the
following pages. We are enthusiastic about the
breadth of innovation and new products on the
roadmap for FY17 and beyond.
In closing, there are a number of acknowledgements
I would like to make. As always, I would like to
recognise the efforts of my fellow Board members,
and acknowledge employees of each of the
divisions that make up the Collection House Group
for their efforts and commitment over the past year.
I would like to take this opportunity to thank
Matthew Thomas for his 17 years service to
Collection House. Matthew held many roles with
the Company over this time, including Chief
Information Officer, Chief Operating Officer, and
then finally Managing Director and Chief Executive
Officer. Matthew had many achievements in his
varied positions, not least the role he played in
establishing the National Hardship Register, and
on behalf of the Board and the staff at Collection
House I would like to thank him for his commitment
and service.
I would also like to acknowledge and thank Adrian
Ralston, who served as our Chief Financial Officer
for almost 13 years until 2016; and Dennis Punches
and David Gray, who both retired from the Board
over the past 12 months. Dennis, who was Deputy
Chairman and involved as a Director since 1998,
announced his retirement at our Annual General
Meeting last October. David Gray served as a
Director from 2011 until August this year and made
a significant contribution to the Board, particularly
through his role as Chair of the Remuneration and
Nomination Committee. Once again, on behalf of
the Board I would like to thank both Dennis and
David for their contributions, and we wish them the
best in their retirement.
As announced recently, this will be my last report
to you as Chairman of the CLH Group, as I will also
be retiring from the Board at the Annual General
Meeting in November. With the CEO transition and
Board renewal process complete, I will be handing
the baton to long-standing Director Kerry Daly at
the AGM. I have enjoyed my time with Collection
House, in particular seeing the ongoing growth and
diversification of the Group into a broader financial
services company. With another fresh chapter
of evolution now underway, the future looks
promising.
David Liddy
Chairman
We are committed to providing an environment that rewards,
recognises and develops all members of the CLH Group
4
Collection House Group
2016 Annual Report
5
Chief Executive Officer’s Report
I am delighted to provide my first report to you as
Collection House Limited’s new Chief Executive
Officer.
I joined Collection House because I fundamentally
believe there is an opportunity to move this
company from prominent to pre-eminent. The
Collection House Group has had a number of
successes in the past, however we are now faced
with the challenge of repositioning ourselves and
taking steps to address the concerns of you,
our investors.
The industry we work in is similar to many others
in today’s world: technology is a critical driver
that can enable us to become more efficient as
well as effective. In today’s economy, our industry
no longer respects tradition – it appreciates and
rewards innovation. By embracing this mindset and
working smarter, we will be able to diversify our
offerings to our customers: the individuals we help
each day to get back on track.
Therefore, in this first report to shareholders I
would like to share with you our plans for FY17
and ahead, as well as providing a summary of the
FY16 year’s performance.
FY16 overview
The 2016 statutory net profit after tax was $18.6
million, or $20.9 million on an underlying basis.
Total revenue increased 5.3% to $133 million,
driven by organic growth in the Collection Services
segment which increased 19.1%. This segment
added a number of new clients throughout the
year, including appointment to the ATO panel and
the subsequent creation of a Government Services
division.
In terms of the Purchased Debt Ledger (PDL)
segment, collections of $123.3 million were down
3% compared to the previous year, mainly due to
lower PDL investment in FY16. Pleasingly however,
PDL collections as a percentage of face value was
maintained at 8% year-on-year, which reflects
the quality of our PDL book and our ability to
largely maintain PDL collections despite reduced
investment. Furthermore, we improved our ability
to liquidate older assets – 62% of PDL recoveries
in FY16 were from PDLs purchased over two
years ago, while recoveries from books more than
three years old represented over 40%. These are
promising signs for the year ahead.
Throughout the year, the Group continued its
investments in future growth drivers, not least
of which are our people. Michelle Cummins was
appointed as Chief People and Culture Officer in
late 2015, and has realigned the Human Resources
function to become a broader service delivering
improvements to the recruitment process, staff
engagement and training. This has already been
evidenced in the increase in tenure of Lion Finance
staff over the second half of 2016.
Another key growth driver is technology. Collection
House’s technology and capabilities in this area
have long been a competitive advantage, and we
are committed to continuing our research and
development in digital and software development.
Throughout the 2016 financial year this included
continued investment in our proprietary C5
operating platform, which is one of the best I’ve
come across globally. The team also delivered
improvements to our customer portal, established
a new data centre, and launched our first
smartphone app for customers.
The Group’s strong commitment and reputation
for ethical and compliant business practices is one
of the things that attracted me to this position.
This runs through our collections practice –
which was demonstrated by the ACCC’s recent
independent research showing Collection House
had the lowest complaint rates in the industry, and
our industry Ombudsman’s annual report into EDR
complaints. It also extends to our commitment to
our corporate social responsibility program, which
we continue to grow; and our founding support of
the National Hardship Register.
Our updated strategic framework:
the game plan
In the first quarter of FY17, the Executive Leadership
Team and I reviewed and refreshed the Group’s
FY17 strategy, including redefining the Collection
House Group’s Purpose, Mission, Vision Statements,
strategic pillars, goals, and company values.
The Executive team is charged with owning specific
tasks under each of the strategic pillars. All goals
have been “rolled down” to each employee in the
organisation, so they all know the part they play in
achieving our Purpose, Mission and Vision.
We have a clear and united path forward, and I
am committed to keeping you updated as to our
progress towards these objectives.
OUR STRATEGIC FOUNDATION
Purpose
To strengthen clients’, customers’ and share-
holders’ financial situation through our
exceptional people – offering education,
innovative products and services to all.
Mission
To enable our people to be the leading
provider of credit management solutions in
Australasia, exceeding expectations of our
clients, customers and investors.
Vision Statements
•
We will be the industry leader and partner of choice by
embracing change, fostering creativity and innovation,
and delivering results that exceed expectations and
providing a world class service.
•
•
By investing in our people, we create a culture igniting
energy, enthusiasm, empowerment and pride every day.
We will achieve this through learning, development,
rewards and recognition.
We will be supportive and involved in our communities
through our leadership, education and collaboration..
OUR FY17 STRATEGIC PILLARS
2
3
1
GROW
Top Line
Revenue
Attract
Train
Develop
Retain
Demonstrate
our brand value
and connection
to you by
becoming an
insight leader
OUR FY17 KEY GOALS
4
DRIVE
Overall
Efficiency
5
Relentless pursuit
of delivering and
communicating
financial
performance
Establish new
business lines
Grow our
legal,
training and
contingent
services
Implement a
sales force
Recruit the
right people
Engage in
ongoing
training and
learning
Build career
pathways
Successfully
market our
brand value
Drive positive
community
outcomes
Get extensive
client and
customer
feedback and
act on it
Introduce
technology
that supports
improved
collections
Bring efficiency
into everything
we do
Launch new
digital products
Improve shareholder
confidence and
investor perceptions
Turn client
relationships into
authentic and lasting
partnerships
Intensify financial
performance
monitoring and
intervention
OUR VALUES
Stewardship
Act like an owner. Leave
things better today than you
did yesterday.
Challenging Boundaries
Embrace change.
Positively invent, improve
and optimise.
Aiming High Together
Don’t settle for good… and then
don’t settle for great. Drive each
other to be the best and get better.
Respect, Integrity and
Accountability
Be considerate, be honest
and own your decisions.
Cooperative and
Collaborative Spirit
Share knowledge, develop
others and enable everyone
to achieve our common
goals.
6
Collection House Group
2016 Annual Report
7
Chief Executive Officer’s Report
FY17 and beyond
When the FY16 results were announced in mid-
August, I had been with the Group for six weeks and
I was asked what my first impressions of Collection
House were. I responded that I had four key
observations:
•
•
•
•
The calibre of the people within the many
brands and divisions of the Collection House
Group is extremely high
The proprietary collections platform C5 is
one of the best platforms I’ve come across,
and there are consequently a number of
opportunities to further leverage this application
both internally and externally
There are a number of opportunities to enhance
operational effectiveness across the Group’s
core business of collections and across our
other divisions
There are concurrently a number of
opportunities for growth into adjacent business
areas in the short- and long-term.
I’d specifically like to expand on the last two points,
as these are key focus areas for the Group in FY17.
Enhancing our operational effectiveness is about
improving our core business, and ensuring we are as
productive and efficient as possible for the benefit of
our clients and shareholders.
We are doing this in a number of ways, including:
•
Reviewing and renewing our vendor
relationships
• Undertaking an in-depth review of skip tracing
services (location of missing delinquent payers)
across the Group
•
•
•
•
Positioning our brand to improve consumer
interaction when contacting customers and
leaving messages
Enhancing and growing the productivity and
sustainability of our Manila operations where
possible
Leveraging available data sources to identify
individuals with the ability to pay their
obligations
Productivity reviews and optimisation across
the Group to maximise efficiency.
Speaking of efficiency, we are in the midst of
updating our contact centre technology, the
heartbeat to our future optimised model. At the time
of writing we are undertaking a full scope pilot with
technology company QPC, who are agents for the
globally recognised ‘Interactive Intelligence’ (ININ)
contact centre solution. This product will increase
the number of available dialer seats six-fold and
beyond – it is a game-changer for our business,
with benefits including increasing efficiency per
hour within our agent base, reducing idle time,
and rigorous split skill call distribution; as well as
providing tools previously unavailable such as
voice analytics and survey support. I look forward
to providing an update on this pilot at the Annual
General Meeting in November.
In today’s economy,
our industry no longer
respects tradition
– it appreciates and
rewards innovation.
By embracing this
mindset and working
smarter, we will be able
to diversify our offerings
to our customers: :the
individuals we help each
day to get back on track.
We are taking steps to further diversify our business
as well. Recently, we created two new business
divisions as natural adjacencies to our existing
capabilities, providing our salesforce with the ability
to explore additional opportunities with existing
clients and increasing the wave of offerings for
potential new clients in the marketplace.
One of these new businesses is CLH Business
Services, a vertical created to service first party direct
relationships across our financial services vertical
and emerging customer service vertical. With our call
centres, systems and trained people, we can assist
clients with the core and non-core areas of their
business, including answering customer queries,
taking initial applications and/or front-end validation,
and general customer service activities including
early stage recoveries and reselling opportunities.
The second subsidiary, Safe Horizons, will enable
clients to outsource their financial hardship services
to us. Collection House is very experienced at
managing and assisting customers through short,
medium and long-term financial difficulty with
dignity and follow-up – we are therefore naturally
placed to offer a service to clients to help rehabilitate
their customers in an appropriate and sensitive way
that is customised to their business. This builds on
our pedigree of being one of the key players in the
establishment of the National Hardship Register.
Both of these new business lines are an opportunity
for the Group to organically increase our services to
existing clients, as well as find new opportunities in
the marketplace across Australasia.
Finally, I would like to take this opportunity to
sincerely thank our Chairman David Liddy, the Board
of Directors, our clients and suppliers, and also the
full Collection House team for your warm welcome
as I have settled in to the Group. I am excited
about our journey together, and am committed to
achieving outcomes for all of you moving forward.
Anthony Rivas
Chief Executive Officer
8
Collection House Group
2016 Annual Report
9
Board of Directors
David Liddy AM
Chairman
Joined 2012
Member of the Remuneration and
Nomination Committee
Kerry Daly
Independent, Non-executive Director
Philip Hennessy
Independent, Non-executive Director
Julie-Anne Schafer
Independent, Non-executive Director
Leigh Berkley (from 1/7/16)
Independent, Non-executive Director
Lev Mizikovsky (from 1/7/16)
Non-executive Director
Joined 2009
Chair of the Audit and Risk
Management Committee
Joined 2013
Member of the Audit and Risk
Management and the Remuneration
and Nomination Committees
Joined 2014
Joined 2016
Joined 2016
Member of the Remuneration
and Nomination Committee
(Chair from 5/8/16)
Member of the Audit and Risk
Management Committee
(from 27/7/16)
Member of the Audit and Risk
Management and the Remuneration
and Nomination Committee
(from 27/7/16)
The Collection House Group is led by an experienced and
professional Board of Directors, all of whom bring great
breadth and depth of financial and commercial acumen
to the business.
Please refer to the Director’s Report on page 31 for further information.
Dennis Punches
(retired 23/10/15)
Deputy Chair
Joined 1998
Matthew Thomas
(retired as MD 30/6/16)
Managing Director
Joined 2013
Chief Executive Officer
David Gray
(retired 5/8/16)
Independent, Non-executive Director
Joined 2011
Chair of the Remuneration and
Nomination Committee;
Member of the Audit and Risk
Management Committee
10
Collection House Group
2016 Annual Report
11
Executive Management Team
(As at 1 September 2016)
Anthony Rivas
Chief Executive Officer
George Wilson
Chief Financial Officer
Michelle Cummins
Chief People & Culture Officer
Anthony joined the Collection
House Group on 6 July 2016,
bringing more than 25 years’
experience in the collections
and receivables industry across
three continents.
Most recently the Managing
Director of Australian
Receivables Limited (ARL), a
wholly owned subsidiary of
global customer service leaders
Alorica, Anthony brings a
proven ability to drive results,
build a productive culture, and
deliver value.
He is responsible for the overall
management of the Group and
the achievement of results for
all stakeholders.
George joined the Group on
1 September 2016. He has
extensive financial and general
management experience
in large public and private
companies, including Burswood
Limited, Repcol Limited and
Coogee Chemicals Pty Ltd.
He is responsible for all
aspects of the Group’s
financial management
including reporting, planning
and analysis, taxation, and
investor relations.
George holds a Bachelor
of Accounting degree from
Glasgow University, is a
Chartered Accountant, and
a graduate of the Australian
Institute of Company
Directors.
Michelle was appointed to the
Chief People & Culture Officer
role in November 2015. She has
more than 15 years’ experience
in human resource management;
and oversees attracting and
retaining talent, learning and
development, culture and
employee engagement and
succession planning.
Michelle holds a Graduate
Diploma in Management
from RMIT, and a Masters in
Employment Relations from
Griffith University. She is a
member of the US-based
Community Association
Managers International
Certification Board (CAMICB)
as the HR International Subject
Matter Expert; is a member of
the RMIT MBA & EMBA Advisory
Board and the National Education
Advisory Board for Strata
Community Association (SCA);
and is a Certified Professional
with the Australian Human
Resources Institute.
Marcus Barron
Chief Information Officer
Marcus has been with the
Group for more than 13
years, and is responsible for
all of the Group’s information
technology and data analysis
requirements.
Applying his experience to
both the operational and
technological divisions of
the Group, Marcus’ main
responsibility is to deliver
superior technological
solutions for internal and
external stakeholders.
He holds a Bachelor of
Information Technology from
the University of Queensland.
Julie Tealby
Company Secretary and
Chief Risk Officer
Julie has been with the Group
for more than 15 years, and
has held the position of
Company Secretary since
2013.
As Chief Risk Officer she
oversees the Group’s Risk,
Internal Audit, Compliance,
Resolutions and Corporate
Legal and Governance.
Julie holds a Graduate
Diploma in Corporate
Governance, a Bachelor of
Business (Accountancy), and
a Graduate Certificate in
Internal Audit. She is a Fellow
of the Governance Institute
of Australia and Chartered
Secretaries, a member of CPA
Australia, and is a professional
member of the Institute of
Internal Auditors.
The Executive
Management
Team comprises
experienced
professionals
who are
committed to
delivering the
Group’s strategy
for the benefit
of all
stakeholders.
12
Collection House Group
2016 Annual Report
13
FY16 Review of Operations
LION FINANCE
Lion Finance is the Group’s purchased debt entity, responsible for the
collection of Purchased Debt Ledgers (PDLs) the Group has bought
from credit providers such as banking and finance companies, telco’s
and utility companies. Lion Finance is the largest division within the
Collection House Group in terms of annual profit contribution and
accounting for around one third of the Group’s total staff members.
At the end of FY16, Lion Finance had more than 262,000 active debt
accounts with a combined face value of $1.5 billion.
FY16 OUTCOMES
•
•
•
•
Supporting our Team Leaders for success. In FY16, significant focus
has been on developing and implementing programs to enhance
the capability of the current leaders in our business. January 2016
saw the introduction and roll out of an end-to-end Team Leader
management approach. Ensuring alignment of practice across all
Lion sites, the training provided Team Leaders with coaching and
mentoring to make them more effective in their roles. Adherence
to this new structure has achieved consistency across the Lion
Finance leadership team, and has created an opportunity and
environment for the daily application of best practice. The new Team
Leader model also includes more focused performance measures,
rationalised management information, and better processes
designed to support performance improvement and coaching.
Relocation, growth and stabilisation of a successful operation at
the first-class working environment of our Brisbane head office.
Lion Finance were the first team to move into the new headquarters,
with more than 100 staff relocating between July and December
2015. Strong succession planning enabled more than 10 internal
staff transfers to move into leadership roles over this period.
Collaborative workspaces in the new location ensure our managers
practise inclusive leadership, and positively influenced the stronger
performance growth in the second half of the year.
People and process optimisation. Changes and improvements to
the Lion Finance staff training model have led to improved results
from orientation and induction. The newly created “model office”
aspect of new starter induction has reduced the speed to proficiency
of Customer Service Officers by four months, and significantly
improved performance-based attrition in the second half of 2016.
The continued growth and improved partnership with Cashflow
Financial Advantage – now ThinkMe. The ThinkMe broker service
has become an integral part of a collaborative approach with
Lion Finance’s customers. Lion is now able to facilitate financial
opportunities to Australians that have impaired credit histories
through referral (where appropriate) to ThinkMe to assist with
refinancing or debt consolidation. In 2016, more than 1,000
Lion Finance customers were referred.
COLLECTION SERVICES
The Collection Services division provides debt collection and account servicing on behalf of third parties,
across a broad range of industries – including banking and finance, insurance, telecommunications,
government, utilities, and automotive companies. Our experienced teams act as an extension of our client’s
internal accounts and collections team, resulting in increased recoveries and net returns for our clients whilst
protecting their relationship with their customers.
Lion Finance
is the largest
division within
the Collection
House Group
FY16 OUTCOMES
•
•
•
Increase in total revenue from the Collection
Services segment. Revenue from this segment
has continued to grow over the past five years,
growing 19.1% to $58 million in FY16.
Successful on-boarding of a significant
two-year Federal government contract in April
2016 and creation of a Government Services
division. The appointment to the Australian
Taxation Office panel followed substantial
effort and preparation, not only throughout
the procurement process, but also in strategic
preparations over a number of years to be in
a position to access these opportunities. For
example, the ATO contract is being serviced
from a purpose built, secure Government
Business facility within the new Brisbane
headquarters.
Continued investment in forming long-term
partnerships. Over the past financial year, our
team has continued to focus on securing
long-term business partnerships - through
acquiring new clients, and also through
•
•
re-investing in existing partnerships in the form
of new technology and analytical approaches to
improve collections effectiveness and customer
experience. This approach optimises returns for
both the Group and the clients we serve.
Re-established our position in New Zealand.
With the key appointment of an experienced
Executive to the position of New Zealand
Country Manager in mid-2015, significant
focus has been placed on re-establishing
our position in this market. These efforts are
bearing fruit, with Collection House (NZ) Limited
now participating in either exclusive or panel
insurance agreements for more than 80% of the
general insurance industry in New Zealand.
Increased operational efficiencies and
outputs. We have continued to focus on
improving efficiency over the past year, through
improvements to resource planning, targeted
staff training, tailored debt treatment analytics,
and further automation through the continued
migration onto our C5 proprietary collections
and CRM platform.
14
Collection House Group
2016 Annual Report
15
FY16 Review of Operations
CLH LAWYERS
CLH Lawyers is a wholly owned subsidiary and the incorporated legal practice of the Group. Acting for both
Lion Finance and external clients, the firm currently employs 64 staff across its operations in Queensland,
NSW and Victoria, and is considered a boutique provider of legal services. Part of the success of CLH Lawyers
is its specialisation: we are a debt recovery, litigation and insolvency firm. It’s what we do and what we know.
CLH Lawyers
is a specialist
debt recovery,
litigation and
insolvency firm
FY16 OUTCOMES
•
•
Delivered strongest result to date.
CLH Lawyers has continued to grow internally
and externally, and the firm achieved its highest
net profit contribution to date in FY16.
Continuing brand expansion into external
markets. A focus over the past 18 months
has been to expand into external markets in
order to diversify our revenue streams. This
commenced in December 2014 with the
rebranding to CLH Lawyers – positioning
the firm as a specialist legal practice, whilst
leveraging the reputation and the backing of the
Collection House Group. In FY16 we undertook
a range of marketing initiatives to leverage this
new brand, including the development of a new
client-facing website (www.clhlawyers.com.au).
•
•
Secured a number of new key clients.
A number of new business and Government
clients have been secured throughout the year,
which will continue to drive FY17 revenue.
Improved offering for Government clients.
We invested in a software platform to better
service our Government clients, which will
continue to drive client satisfaction and
further streamline operations. Local and state
Government remains a key external growth
market for the firm.
COLLECTIVE LEARNING
& DEVELOPMENT
Collective Learning and Development (CLAD)
is the Group’s registered training organisation,
specialising in the delivery of financial services,
credit, receivables management and leadership
courses. CLAD provides this training internally to
the various divisions within the Group, and also
delivers training services externally to a range of
businesses and Government agencies.
FY16 OUTCOMES
•
•
•
Continued development of Collection
House Group staff. All staff joining the Group
are given the opportunity to undertake a
Certificate III in Mercantile Agents. A further
95 staff completed the training and
assessment for this nationally recognised
qualification in FY16.
Furthermore, we completed the transition
of our traineeship development sessions to
online delivery, which has already assisted
in increasing the completion rate for these
sessions. We will continue to look for
opportunities to deliver training online.
Expanded our training service offering.
During the year, we have substantially
expanded our suite of non-accredited
training courses available to external clients.
As well as our respected mercantile training
services, we can now offer clients training
courses on:
•
•
Financial literacy
Leadership development
• DiSC People Profiling
•
The Five Behaviours of a Cohesive Team.
Increased our external client base.
In line with our strategy to increase our
revenue contribution to the Group,
CLAD were successful in acquiring new
external clients this year to provide both
nationally recognised training courses and
non-accredited training.
16
Collection House Group
2016 Annual Report
2016 Annual Report
17
17
FY16 Review of Operations
MIDSTATE CREDITCOLLECT
Midstate CreditCollect (MCC) is a boutique
collection agency based in regional Victoria, offering
personalised credit management, debt collection
and legal services in a non-call centre environment.
As a wholly owned subsidiary of the Group, MCC
services Victorian-based businesses, water authorities
and Government agencies as well as major national
companies.
FY16 OUTCOMES
•
•
•
•
Continued client and revenue expansion.
MCC acquired several new major clients in FY16,
including a number of local Government bodies.
We also renewed several existing contracts
including a national telecommunications provider.
Expansion into the education sector.
As part of MCC’s strategic focus to diversify
revenue sources, a key outcome in FY16
was securing clients in the education sector,
particularly TAFE colleges and universities.
A refreshed marketing approach. To support
our client acquisition and retention efforts,
MCC undertook a range of marketing initiatives
throughout the year, including a new client-
facing website (www.midstatecc.com.au),
the production of a corporate DVD outlining
our service offering, and hosting a number of
local Government / water authority education
seminars for existing and prospective clients.
Ensuring client satisfaction. In line with our
brand promise, MCC has continued to meet our
clients’ expectations: 100% of participants in
our annual client survey rated their satisfaction
with MCC as either very or highly satisfied; and
87% of participants’ rated our services as above
average or excellent value for money.
100%
of client survey participants rated
their satisfaction with MCC as
very or highly satisfied
TECHNOLOGY
The Technologies team are responsible for all
I.T. frameworks and systems, data management,
analytics and business intelligence, and digital
strategy. The Group’s technology has long been a
competitive advantage, and plays a key role in our
ability to improve productivity, enhance customer
service, and to maintain our position as an industry
leader.
FY16 OUTCOMES
•
•
Continued investment in C5, our proprietary
collections platform. C5 (or Controller Version
5) is the Group’s custom built CRM software
solution. C5 uses best-of-breed technology to
embed 23 years of our intellectual property into
a collections platform that is designed to drive
efficiency, effectiveness and compliance.
The value of this platform was demonstrated
with the on-boarding of the ATO contract
during the year – this contract was on-
boarded in record time for the Group despite
the complexity added by stringent security
requirements.
Data Vault project delivering value.
The Data Vault project involves building a
customised enterprise data warehouse solution
using modern data architecture. The purpose
is to allow the Group to store and access our
increasing volumes of data in ways that allows
our Analytics team to have a dynamic view of
information in almost real time.
The project delivered its first three reporting
“products” during the year, providing analytics
•
•
•
on the characteristics of debt portfolios over
time, adherence to payment commitments,
and information about staffing levels.
Improved campaigns functionality.
A review and revamp of our campaigns
functionality – the C5 tool for managing the
treatment of debts in bulk – has enabled
collection of more meaningful analytics, and
the ability to create more structured and
automated treatment plans.
Improved customer portal. Improvements
delivered to the customer portal have increased
the number of customers using this self-service
channel, reducing physical mail production by
more than 10%.
Development of an industry-first smartphone
app. The Digital team delivered a mobile app
which enables customer offers to be sent and
claimed via mobile. The initial take-up of this
app and subsequent offers has been positive,
and will continue to be developed in FY17.
Our proprietary platform C5
enabled the on-boarding of
a significant new contract in
record time for the Group
18
Collection House Group
2016 Annual Report
19
FY16 Review of Operations
PEOPLE & CULTURE
COMPLIANCE & RISK MANAGEMENT
The People & Culture team support all human resources and organisational development needs for the
Collection House Group. This ranges from recruitment and induction through to training and development,
reward and recognition programs, and employee engagement initiatives. With people at the very core of
the Group’s services, the People & Culture team’s role is focused on developing an engaged and productive
workforce to underpin the Group’s performance.
FY16 OUTCOMES
•
•
•
•
•
First-class working environment. The Brisbane
headquarter relocation has been completed,
with all Brisbane staff now in one purpose-
built fit-out in Newstead. All operating units
are now located in the same office for the first
time in several years, with capacity for future
growth. Employees have access to excellent
facilities and break-out areas, and collaborative
workspaces are equipped with state-of-the-art
technology to allow enhanced interaction and
communication.
New name and new approach to HR.
The Human Resources team rebranded in
FY16 to People & Culture, and adopted a
business partnership approach to each division
within the Group. This included appointment
of dedicated business partners, a review of
how People & Culture could support each
department, and the introduction of ‘stay,
engagement and exit’ surveys to enable the
identification of trends.
Improved recruitment and training programs.
To enable better recruitment and reduce
turnover amongst Customer Service Officers
(CSO’s), a number of changes have been
implemented to the recruitment, induction
and training processes. This included the
identification of the attributes of a “model
CSO”, and adjusting the recruitment process
accordingly to capture ideal applicants. The
success of this approach was evidenced in the
increase in tenure of Lion Finance staff over
the second half.
The Group’s first Leadership Academy designed
and launched. To better meet the needs of our
business, and help Collection House Group
on our journey to be industry best practice in
learning and organisational development, an
in-house Leadership Academy was developed
and launched during the year. The Academy is
made up of four levels to cover all employees,
and is designed to provide development to
leaders at all levels to effectively fulfil the
requirements of their role. It also serves as
a succession planning tool to provide high
performers with the ability to step up to the
next level when roles become available.
Continued commitment to valuing and
promoting diversity. Collection House Group
updates its Diversity Policy annually, setting
measurable objectives each year to ensure
that our commitment to diversity becomes
embedded in our operations. In FY16 our
objectives were targeted at gender diversity,
specifically around the inclusion of female
candidates in senior management and Board
recruitment processes and increasing the
number of women in management positions.
Further information is available in our
Corporate Governance statement.
Proportion of female employees
across the Group
Proportion of female employees in
Senior Manager positions
Proportion of female employees in
Senior Executive positions
Proportion of women on the Board
61%
34%
40%
17%
958
staff are currently
employed by
Collection House Group
14.5%
of our workforce
are bi-lingual
87%
of our employees
work full-time
7%
of our staff
work part-time
5%
of our staff are casual
2%
of our employees
are on parental leave
The Group Risk team perform a critical compliance and oversight role of all areas within the Group, including
Internal Audit, Compliance and Corporate Governance. The team also includes Corporate Legal services for
the Group; and interacts with customers in need through the Resolutions and the Hardship teams.
Ongoing commitment to supporting
customers in financial hardship.
The Resolution and Hardship Team have
continued to work closely throughout FY16
with customers experiencing hardship and
their representatives, to understand customers’
individual financial situations and provide
appropriate resolutions that are beneficial for
both parties.
Resolution and Hardship Team representatives
attended a number of state and national
Financial Counsellors’ conferences throughout
the year, to ensure we remain informed of
contemporary issues affecting financially
vulnerable customers, such as domestic
violence.
FY16 OUTCOMES
•
•
Improved risk management processes.
A complete review of the Group’s risk
management and incident response processes
was undertaken during the year, integrating
the ‘three lines of defence’ model into our
Risk Management framework to align with
APRA guidelines and ISO 31000. As part of the
three lines of defence, the Risk team have set
a robust governance structure to provide clear
accountability and responsibility for ownership
and management of risks incorporating the
front line, risk and compliance functions and
Internal Audit, with consistent and continuous
oversight from the Board and Executive
Management.
The Compliance framework was also reviewed
throughout the year to better align with the
Group’s risk management framework, and
has resulted in enhanced monitoring of the
Group’s compliance requirements.
Finally, Business Continuity Management
(BCM) processes continue to be tested and
reviewed by the Risk team, to ensure alignment
with the Group’s risk management processes.
•
Continued track record of ethical collection
practice. We are proud of our track record of
ethical collection practice, as evidenced by the
ACCC’s 2015 research showing CLH had the
lowest number of complaints in the industry
with 0.05 complaints per collection staff1.
Further independent evidence of our ethical
approach is demonstrated through data
released annually by our industry Ombudsman,
with the most recent results showing the Group
had just under 40 External Dispute Resolution
(EDR) complaints per 100,000 active accounts2.
Furthermore, a new Queensland State
Government client obtained this year advised
they chose Collection House due to our
sensitive collection practices and trusted
collection approach.
1 https://www.accc.gov.au/publications/research-into-the-australian-debt-collection-industry
2 http://www.cio.org.au/publications/annual-report-on-operations/annual-report-on-operations-2015/
20
Collection House Group
2016 Annual Report
21
Corporate Social Responsibility
Corporate Governance
As part of our ongoing commitment to ethical,
lawful and respectful business conduct,
Collection House Group commits to and delivers
a dedicated Corporate Social Responsibility
(CSR) program each year. Our ethos is to achieve
profitability in a socially and environmentally
responsible manner.
The CSR program focuses on four
key areas:
1
2
3
4
Supporting the community
– we give back to our communities
and contribute to the social good
Protecting the environment
– we maintain sustainable business
practices and environmentally
responsible conduct
Respect for the law
– we commit to the spirit and intent
of the law, including the protection
of the financially vulnerable
Engaging stakeholders
– we preserve our constructive
engagement with stakeholders,
consistent with our commitment
to open and transparent business
practices.
This program is based on the international standard
ISO 26000 Guidance on Social Responsibility, to
ensure our activity in this space is informed by
international best practice.
FY16 OUTCOMES
In FY16 we:
•
•
•
•
Continued our support of St Vincent de Paul’s
Clemente Program, which assists people to
re-engage with their communities through
free education programs. Collection House
Group staff volunteer as learning partners with
Clemente students.
Continued our support of financial literacy
education for young Australians through
our partnership with the Financial Basics
Foundation. Our partnership this year resulted
in the production of a new ‘Financial Literacy
in Practice’ classroom resource for secondary
school teachers called Slaying the Debt
Dragon; and the successful piloting of having
a Collection House staff member help present
this information in the classroom.
Commenced a pilot program with WEstjustice,
a community legal centre in Melbourne’s west,
on ‘Restoring Financial Safety’: a family violence
and financial security project. The project
connects the community sector with industry
through direct contact points for community
workers to reach trained staff within institutions
like Collection House, and a checklist of agreed
financial security protocols.
Continued our support and advocacy of
the National Hardship Register, which was
officially launched in February 2016. Collection
House played a key role in the establishment
of this Register, which is a joint initiative
between the Australian Collectors and Debt
Buyers Association (ACDBA) and the financial
counselling sector to help address the issue of
long-term and severe financial hardship faced
by a number of vulnerable customers.
•
Continued our support of financial counsellors
nationally, through sponsorship of attendance
at professional development conferences.
The 2016 CSR Outcomes Report is available at
www.collectionhouse.com.au.
The Board considers its current members to have
an appropriate mix of skills that enable the Board
to discharge its responsibilities, and deliver the
Company’s strategy and corporate objectives.
Board Committees
The Board has established two Committees,
each with its own Charter:
•
•
Audit and Risk Management Committee
Remuneration and Nomination Committee
The Board Committees play a crucial part in the
governance framework.
Communication with Shareholders
Collection House Limited uses a range of methods
to communicate with shareholders, including
written and electronic communications.
Shareholders are able to make enquiries with the
Group at any time through the Investor Enquiries
page on the Group’s website.
Collection House Limited’s Board (the Board) and
its Senior Executives are committed to achieving
and demonstrating the highest standard of good
corporate governance practices, and fostering a
culture that values ethical behaviour and integrity.
The Board keeps the governance system under
regular review to ensure that it reflects changes
in law and keeps pace with best practice
developments in corporate governance.
Board Composition
As at 30 June 2016 (noting the retirement of the
Managing Director’s position effective from this
day), the Board comprised six Directors (including
the Chair), five of whom are Non-executive
Directors. During the year, Dennis Punches
announced his retirement as a Director effective
from 23 October 2015.
On 1 July 2016, the Board comprised of seven
Directors (including the Chair), all of whom are
Non-executive Directors - including Leigh Berkley
and Lev Mizikovsky (a substantial shareholder) who
were appointed to the Board on 1 July 2016.
As at the date of this report, the Board comprises
six Directors, with David Gray retiring from the
Board effective 5 August 2016.
Board of
Directors
Remuneration
& Nomination
Committee
Audit & Risk
Management
Committee
Internal
Audit
Chief
Executive
Officer
Executive
Management
Team
The Corporate Governance Statement is available online.
The Company’s listing on the Australian Securities Exchange (ASX) means it must comply with the
Corporations Act 2001, the ASX Listing Rules and other Australian laws. As part of this compliance,
Collection House Limited (the Group) is required to disclose how it has applied the Recommendations
contained in the ASX Corporate Governance Council’s Principles and Recommendations – 3rd Edition (the
Principles and Recommendations) during the financial year ending 30 June 2016, explaining any departures
from them. The Group has, unless otherwise stated, followed the Principles and Recommendations
throughout the year.
More information about Collection House Limited’s Board and Management, corporate governance policies,
procedures and practices is in the Corporate Governance Statement available on the website at
www.collectionhouse.com.au under the heading Investor Centre – Corporate Governance.
22
Collection House Group
2016 Annual Report
23
Our Purpose Statement
To strengthen clients’, customers’ and shareholders’ financial situation
through our exceptional people – offering education, innovative products
and services to all.
Directors’ Report
FY2016 highlights
• Net profit after tax for the year was
$18.6 million (2015: $22.5 million)
•
•
•
Earnings per share (EPS) were 14.0 cents
(2015: 17.2 cents)
Shareholder equity was $180.3 million
(2015: $170.7 million)
Total dividends for the year of 7.8 cents
(interim 3.9 cents paid 1 April 2016, final 3.9
cents to be paid 21 October 2016),
fully franked.
Overview of Group operations and
financial results
The consolidated Net Profit After Tax (NPAT) of
$18.6 million for the year ended 30 June 2016
decreased 17.4 percent from $22.5 million in the
previous year. Total revenue for the Group was
$132.7 million, an increase of 5.3 percent. Basic
earnings per share decreased 18.6 percent to
14.0 cents per share.
The Directors present their report on the
consolidated entity (referred to hereafter as the
Company or the Group) consisting of Collection
House Limited and the entities it controlled for the
financial year ended 30 June 2016.
Directors
The following persons were Directors of the Group
during the whole of the financial period and up to
the date of this report, unless stated otherwise:
• David Liddy AM
• Dennis Punches (retired 23 October 2015)
• Matthew Thomas (retired as Managing
Director 30 June 2016)
•
Kerry Daly
• David Gray (retired 5 August 2016)
•
•
•
•
Philip Hennessy
Julie-Anne Schafer
Leigh Berkley (appointed 1 July 2016)
Lev Mizikovsky (appointed 1 July 2016)
See pages 31 to 34 for profile information on the
Directors.
Principal activities
The principal activities of the Group during the
financial year were the provision of debt collection
services and receivables management throughout
Australasia and the purchase of debt by its special
purpose subsidiary Lion Finance Pty Ltd. There
were no significant changes in the nature of the
activities of the Group during the year.
26
Collection House Group
2016 Annual Report
27
Key financial results - by segment - Audited ($’000)
Collection services
Purchased Debt
Ledgers (PDLs)
Consolidated
30 June
2016
$ ‘000
30 June
2015
$ ‘000
30 June
2016
$ ‘000
30 June
2015
$ ‘000
30 June
2016
$ ‘000
30 June
2015
$ ‘000
57,909
48,751
57,909
74,639
77,552
74,639
48,751
77,552
Revenue
Sales
Interest income
Total segment revenue
57,909
48,751
74,639
77,552
132,548
126,303
Intersegment elimination
146
(260)
Consolidated revenue
57,909
48,751
74,639
77,552
132,694
126,043
Results
Segment result
Interest expense and
borrowing costs
Unallocated revenue less
unallocated expenses
Profit before tax
Taxation
NPAT
9,001
9,373
29,297
31,898
38,298
41,271
(6,147)
(5,915)
(6,167)
(3,464)
25,984
31,892
(7,422)
18,562
(9,409)
22,483
Collection Services business
Consolidated Collection Services (third party
servicing) revenue increased year on year by 18.8
percent. The segment result for the year of $9.0
million decreased 4.0 percent from the previous
year result of $9.4 million.
Growth was achieved in FY16 across this sector
through:
• New Government Services division and
dedicated call centre established, which
includes the new ATO contract.
•
The finance brokerage Cashflow Financial
Advantage rebranded as ThinkMe – a full
service broker matching reputable credit
providers with our customers.
• Collection House (NZ) won a number of new
contracts, and now participates in either
exclusive or panel agreements for more than
80 percent of the general insurance market
in NZ.
• CLH Legal Group launched a new client-facing
website and several marketing initiatives and
secured a number of new clients.
PDL business
Total PDL collections decreased 3.4 percent to
$123.3 million for the year ended 30 June 2016.
The segment result for the year was $29.3 million,
a decrease of 8.2 percent. This result included
$4.1 million profit on the sale of PDLs during the
period. PDL acquisitions at cost were $61.9 million
compared to $71.4 million in 2015.
62 percent of PDL recoveries in FY16 were
from PDLs purchased over two years ago, while
recoveries from PDLs of more than three years age
was over 40 percent – demonstrating ability to
liquidate older assets.
The repayment arrangements and litigated
accounts portfolio had a face value of $357 million
as at 30 June 2016, from which $247 million is
expected to be recovered.
Review of financial position
The Group’s net assets increased 5.9 percent to
$180.3 million. Total net borrowings decreased to
$109.3 million in 2016, down from $111.8 million
in 2015.
Business strategies and prospects
for future financial years
Four key focus areas have been identified to
improve operational effectiveness in future years.
These include:
The Group’s net cash flow from operating activities
was $84.3 million, an increase of 8.5 percent.
•
Net debt decreased by $2.5 million over the year,
and net debt/net debt plus equity closed at 37.7
percent at 30 June 2016.
Trialling new contact centre technology,
which will increase the number of dialer
seats available six-fold, provide workforce
management tools, and allow real-time
speech analytics for the first time
•
Introducing new skip tracing tools
Investment for future performance
• New brand positioning
During the year, the Group continued its
investments in future growth drivers, including:
•
Relocating the Group’s headquarters which
brings all Brisbane staff into the same
location for the first time in several years and
accommodates capacity for future growth
• Continued investment in technology
initiatives, including ongoing enhancement of
the Group’s proprietary collections platform
C5; improved analytical capabilities through
the data warehouse ‘Data Vault’ project;
improvements to the Group’s campaigns
functionality; and the delivery of an industry-
first smartphone app which enables offers to
be sent to customers and claimed via mobile
•
A new Chief People & Culture Officer
was appointed during the year, who has
since realigned the HR function and
made improvements to recruitment, staff
engagement and training – as evidenced in
the increase in tenure of Lion Finance staff
over the second half.
The Group continues to develop and implement
its Corporate Social Responsibility programs;
and demonstrate its commitment to ethical debt
collection practices through its dedicated Hardship
Assistance team.
•
Reviewing vendor relationships and
renegotiating agreements.
The Group’s growth will be driven by:
•
Productivity improvements delivered by the
above initiatives
• New business divisions, including CLH
Business Services and Safe Horizons
•
Reviewing and enhancing the Manila
operations
• Ongoing investment in innovation, technology
and analytics.
Risks
The Group remains committed to managing its
risks. The most significant risks to the business
include the ability to service the needs of clients in
a manner that generates profits for the Group, the
ability to accurately determine the price which the
Group will pay for debts, the ability to accurately
determine the value of the purchased debt
portfolio at a point in time, and the ability to put
debtors onto a payment plan.
Risk mitigation strategies are implemented for all
key risks and regularly reported on to the Audit and
Risk Mangement Committee and the Board.
The Board and Management are resolved to deliver
consistent earnings growth year on year, while
maintaining gearing levels over time to deliver
superior risk adjusted returns.
28
Collection House Group
2016 Annual Report
29
Directors’ ReportDirectors’ Report Matters subsequent to the end of
the financial year
1. Dividend
The Directors have recommended the payment of
a final fully franked ordinary dividend of 3.9 cents
per fully paid share to be paid on 21 October 2016
out of retained profits and a positive net asset
balance as at 30 June 2016.
Other than the matters discussed above, no matter
or circumstance has arisen since 30 June 2016
that has significantly affected, or may significantly
affect:
a.
b.
c.
the Group’s operations in future financial
years, or
the results of those operations in future
financial years, or
the Group’s state of affairs in future financial
years.
Environmental regulation
The Group’s operations are not regulated by any
significant environmental regulation under a law of
the Commonwealth or of a state or territory.
Dividends
Dividends paid or declared by the Company to
members since the end of the previous financial
year were:
Declared and
paid during the
year 2016
Cents
per
share
Total
amount
$’000
Date of
payment
Final 2015
ordinary
Interim 2016
ordinary
4.7
6,214
3.9
5,190
16 Oct
2015
1 Apr
2016
After the balance date the following dividends
were proposed by the Directors. The dividends
have not been provided for, and there are no
income tax consequences:
Declared
after end of
year
Final 2016
ordinary
Cents
per share
Total
amount
$’000
3.9
5,245
Date of
payment
21 Oct
2016
Significant changes in the
state of affairs
Significant changes in the state of affairs of the
Group during the financial year were as follows:
a.
The Group raised capital of $3.1 million
from a Dividend Reinvestment Plan.
Information on directors
David Liddy AM
Qualifications
Experience
Special responsibilities
Independent, Non-executive Chair.
MBA.
Mr Liddy has over 43 years of banking experience, including appointments in
Australia, London and Hong Kong. He was appointed as Collection House
Limited’s Chair in March 2012.
Mr Liddy is also a Non-executive Director of Steadfast Group Limited and
Emerchants Limited.
Previously, he was MD and CEO of Bank of Queensland Limited from
2001-2011 and Chair of Financial Basics Foundation and Financial Basics
Community Foundation from 2011-2014.
Mr Liddy was appointed as a Member of the Order of Australia in the 2016
Australia Day honours.
Mr Liddy holds an MBA, is a Senior Fellow of the Financial Services Institute of
Australasia and a Fellow of the Australian Institute of Company Directors.
Chair of the Board.
Member of the Remuneration Committee from 5 December 2013.
Member of the Remuneration and Nomination Committee from
10 July 2014.
Interest in shares
150,000 ordinary shares in CLH.
Dennis Punches
Qualifications
Experience
Non-executive Deputy Chairman.
BS.
Mr Punches was first appointed to the Collection House Limited Board in July
1998. In 2000 he was appointed as Chair of the Board. In 2009 he stepped
down as Chair to become the Group’s Deputy Chair.
He is presently co-Chair of International Collectors Group and a Trustee for
Wisconsin’s Carroll University. He is a former Director of Attention LLC Inc,
Analysis and Technology Inc, and co-founder and former Chair of Payco
American Corporation
Special responsibilities
Deputy Chair of the Board.
Interest in shares
3,502,535 ordinary shares in CLH.
Matthew Thomas
Managing Director and Chief Executive Officer.
Experience
Mr Thomas has over 24 years of experience in the finance and collections
industry and has been with Collection House Limited for the past 17 years. He
was appointed to the Board in March 2013.
Since starting with Collection House as a Customer Service Officer in 1999,
Mr Thomas has been promoted to various positions, including IT Manager
and Chief Information Officer. In 2007, Mr Thomas was promoted to
Chief Operating Officer. In this role he had responsibility for all collection
operations as well as Group IT strategy and business analysis. Mr Thomas was
appointed as the Group’s Chief Executive Officer in July 2010 and Managing
Director in March 2013.
Mr Thomas is currently a Director of the Australian Collectors and Debt Buyers
Association and a Fellow of the Australian Institute of Company Directors.
Special responsibilities
Managing Director and Chief Executive Officer.
Interest in shares and performance rights
502,495 ordinary shares in CLH. 1,067,776 performance rights over ordinary
shares in CLH.
30
Collection House Group
2016 Annual Report
31
Directors’ ReportDirectors’ Report
Kerry Daly
Qualifications
Experience
Independent, Non-executive Director.
BBus (Acc).
Mr Daly has over 31 years of experience in the financial services sector. Mr
Daly was elected a Director of Collection House Limited on 30 October
2009.
Mr Daly is currently a Non-executive Director of Trustees Australia Limited.
During the period 1987 to December 2000, Mr Daly was MD and CEO of The
Rock Building Society Limited where he initiated its demutualisation and was
responsible for its ASX listing. From January 2001, he served as Executive
Director of the fixed interest brokerage and investment banking business
Grange Securities Limited.
Special responsibilities
Chair of the Audit and Risk Management Committee.
Interest in shares
394,607 ordinary shares in CLH.
David Gray
Qualifications
Experience
Special responsibilities
Independent, Non-executive Director.
BSc (UK), Honorary Doctorate.
Mr Gray has more than 21 years of experience in senior executive positions
with large national and international companies. He is currently the Chair of
Queensland Cyber Infrastructure, a position he has held since March 2008,
Chair of Australian Urban Infrastructure Network, a position he has held since
2010 and is an adjunct professor at QUT and Chairman of Zuuse, a position
he has held since March 2015.
Previously, Mr Gray was Deputy Chair of the Civil Aviation Safety Authority
(CASA) from 2009 to 2014, a Director of Brisbane Airport Corporation from
2010 to 2014, Chair of Queensland Motorways from 2006 to 2010, Chair
of WaterSecure from 2008 to 2011, MD of Boeing Australia from 1995 to
2006, MD of GEC Marconi (Australia) from 1990 to 1995 and Divisional Chief
Executive of GEC (Australia) Heavy Engineering from 1984 to 1990.
Mr Gray was appointed to Collection House Limited’s Board on 28 June 2011
and elected a Director on 28 October 2011.
Chair of the Remuneration Committee from 5 December 2013.
Chair of the Remuneration and Nomination Committee from 10 July 2014.
Member of the Audit and Risk Management Committee from 1 July 2015.
Interest in shares
183,098 ordinary shares in CLH.
Philip Hennessy
Experience
Special responsibilities
Independent, Non-executive Director.
Mr Hennessy was, until February 2013, Queensland Chair of KPMG, Chartered
Accountants. After 12 years in that role and some 30 years being involved in
all aspects of corporate insolvency and reconstruction, he retired from KPMG
in July 2013.
As Queensland Chair of KPMG, he was responsible for the leadership of KPMG
in the Queensland market. This role included operational efficiency, strategic
direction, go to market strategy, engagement of KPMG’s people, engagement
with its clients and KPMG’s connection to the community.
Mr Hennessy is currently a Director of Metro Mining Limited and a Director
of Blue Sky Alternatives Access Fund Limited. He is also on a number of not-
for-profit organisations Board of Directors and advises a number of private
companies.
Mr Hennessy was appointed to the Board of Collection House Limited on 22
August 2013 and elected a Director on 25 October 2013.
Member of the Audit and Risk Management Committee from
5 December 2013.
Member of the Remuneration and Nomination Committee from
10 July 2014.
Interest in shares
50,000 ordinary shares in CLH.
Julie-Anne Schafer
Independent, Non-executive Director.
Qualifications
Experience
LLB (Hons), FAICD
Ms Schafer is an accomplished Director with experience across a broad
range of industries. She has worked in a number of Non-executive Director
roles with a focus on business outcomes, customers, risk management and
governance.
She is President of the National Competition Council and is a Non-executive
Director of CS Energy, Av Super, Catholic Church Insurance Ltd and Aviation
Australia Pty Ltd.
Ms Schafer was previously the Chair of RACQ and RACQ Insurance, had
former directorships including Queensland Rail, and was a Commissioner of
the National Transport Commission. She was a Non-executive Director of
the Territory Insurance Office prior to its sale.
Ms Schafer is a facilitator for the Australian Institute of Company Directors in
Strategy and Risk Management. She is also a member of the Australian and
New Zealand Institute of Insurance and Finance.
Ms Schafer was appointed to the Board of Collection House Limited on
28 January 2014.
Special responsibilities
Member of the Remuneration Committee from 28 January 2014.
Member of the Remuneration and Nomination Committee from 10 July 2014.
Interest in shares
66,500 ordinary shares in CLH.
32
Collection House Group
2016 Annual Report
33
Directors’ ReportDirectors’ Report Leigh Berkley
Qualifications
Experience
Independent, Non-executive Director.
BA (Hons) in Accounting and Business Finance (Manchester University),
Chartered Accountant (ICAEW), Member of the Chartered Institute of Credit
Management UK
Mr Berkley has more than 25 years’ experience in the collections and
debt purchase industry, and is currently the President of the Credit
Services Association (CSA) in the UK. He is a regular visitor to Australia, and
assisted the Australian Collectors & Debt Buyers Association (ACDBA) develop
the recently launched ‘Code of Practice’.
Mr Berkley is currently the Director of External Affairs and Development of
Arrow Global Group Plc, one of the UK’s largest consumer debt purchasers
and providers of receivables management solutions. Prior to this, he was the
CEO and main shareholder of Tessera Credit Group, a debt purchaser and
collection agency, which he led for over 16 years before successfully
negotiating a sale of its assets to Arrow Global in December 2014.
Mr Berkley is currently in his third year as President of the Credit Services
Association (CSA), he sits on a number of Government and industry advisory
bodies, and regularly presents at conferences and trade body forums around
the world.
Mr Berkley was appointed to the Board of Collection House Limited on 1 July
2016.
Special responsibilities
Member of the Audit and Risk Management Committee from
27 July 2016.
Interest in shares
No ordinary shares in CLH.
Lev Mizikovsky
Qualifications
Experience
Special responsibilities
Non-executive Director.
FAICD
Mr Mizikovsky founded Tamawood Limited in July 1989 and served as
its Managing Director from 1989 to 1997 and then from 2003 to 2010.
The Company listed on the ASX in August 2000 and in December 2000,
Tamawood Limited acquired Dixon Homes. He is currently serving as a
Non-executive Director of the Company.
Mr Mizikovsky is currently Non-executive Chairman of AstiVita Limited (AIR)
and has been a Director of AstiVista Limited since October 2009. Since
2015 Mr Mizikovsky has been a director of Advanced Nano Technologies
LTD (ANO) and is also a Non-executive Chairman of unlisted public software
development company Resiweb LTD.
Mr Mizikovsky has been a Fellow of the Australia Institute of Company
Directors (AICD) since 1997 and is a major shareholder in a number of
Queensland-based public companies including Collection House Limited
and Lindsay Australia Limited.
Mr Mizikovsky was appointed to the Board of Collection House Limited on
1 July 2016.
Member of the Audit and Risk Management Committee from
27 July 2016.
Member of the Remuneration and Nomination Committee from
27 July 2016.
Interest in shares
15,627,008 ordinary shares in CLH.
Company Secretary
The Company Secretary is Julie Tealby.
Mrs Tealby holds a Graduate Diploma in Corporate Governance, Bachelor of Business (Accountancy) and
a Graduate Certificate in Internal Audit. Mrs Tealby is a Fellow of the Governance Institute of Australia
and Chartered Secretaries, a member of the Australian Institute of Company Directors, a member of CPA
Australia (for 17 years), a member of the CEO Institute and is completing their Future CEO program, and
is a professional member of the Institute of Internal Auditors. Since August 2014, Mrs Tealby has been
the Group’s Chief Risk Officer. From 2005-2014, Mrs Tealby had also been the Group’s Internal Auditor.
Previously Mrs Tealby held Board and Company Secretary positions with the Financial Basics Foundation
and the Financial Basics Community Foundation. Prior to 2001, Mrs Tealby held the position of Financial
Controller and Company Secretary with Collection House Limited.
Meetings of Directors
The number of meetings of the Group’s Board of Directors and of each board committee held during the
year ended 30 June 2016, and the number of meetings attended by each Director were:
2016
David Liddy
Dennis Punches*
Matthew Thomas
Kerry Daly
David Gray
Philip Hennessy
Julie-Anne Schafer
Meetings of committees
Directors
Audit and Risk
Management
Remuneration
and Nomination
A
9
3
9
9
9
9
9
B
9
3
9
9
9
9
9
A
**
**
**
9
9
9
**
B
**
**
**
9
9
9
**
A
4
**
**
**
4
4
4
B
4
**
**
**
4
4
4
A Number of meetings attended.
B Number of meetings held during the time the director held office or was
a member of the committee during the year.
* Dennis Punches retired at the 23 October 2015 AGM
** Not a member of the relevant Board Committee.
34
Collection House Group
2016 Annual Report
35
Directors’ ReportDirectors’ Report
Remuneration Report – AUDITED
This Remuneration Report outlines the overall
remuneration strategy, framework and practices
adopted by the Group for FY16 for Non-
executive Directors (NEDs), the Managing
Director and Chief Executive Officer and other
Key Management Personnel (KMP). It has been
prepared in accordance with the requirements
of the Corporations Act 2001 (Cth), as amended
(the Act) and its regulations. The information
provided in this Remuneration Report has been
audited as required by Section 308(3C) of the Act.
The Remuneration Report contains the following
sections:
A Directors and other key management
personnel disclosed in this report
The Group’s Directors and key management
personnel for FY16 (continued)
Board of Directors (continued)
David Gray
Director (Non-Executive)
Philip Hennessy
Director (Non-Executive)
Julie-Anne Schafer Director (Non-Executive)
Executive Management Team (EMT)
Matthew Thomas
MD and CEO (retired MD
30/6/2016)
Adrian Ralston
Chief Financial Officer (CFO)
Paul Freer
Chief Operating Officer (COO)
(ceased 4/12/2015)
B
C
D
Remuneration governance
Executive remuneration policy and
framework
Kylie Lynam
Relationship between remuneration and the
Group’s performance
Michelle Cummins
General Manager – Human
Resources and Corporate
Services (ceased 24/12/2015)
Chief People and Culture
Officer (CPCO) (appointed
30/11/2015)
Chief Information Officer
(CIO)
Marcus Barron
Julie Tealby
Company Secretary and Chief
Risk Officer (CRO)
The following changes occurred after the reporting
date and before the date the financial report was
authorised for issue:
•
Leigh Berkley and Lev Mizikovsky were
appointed as Non-executive Directors on
1 July 2016 subject to confirmation by
shareholders’ resolution at the Company’s
next Annual General Meeting.
• Matthew Thomas retired as CEO on 5 July
2016.
•
Anthony Rivas was appointed as Chief
Executive Officer on 6 July 2016.
• David Gray retired as Non-executive Director
on 5 August 2016.
•
Adrian Ralston resigned as Chief Financial
Officer effective 18 August 2016.
• George Wilson was appointed Chief Financial
Officer, commencing 1 September 2016.
E Non-executive Director remuneration policy
F
G
H
I
Details of remuneration of Directors and key
management personnel
Service agreements
Share-based compensation
Equity instruments held by key management
personnel
J
Additional information
A Directors and other key management
personnel disclosed in this report
The key management personnel include those
who have the authority and responsibility, directly
or indirectly, to plan, direct and control the major
activities of the Group.
The Group’s Directors and key management
personnel for FY16
Board of Directors
David Liddy AM
Chair (Non-Executive)
Dennis Punches
Deputy Chair (Non-Executive)
(retired 23/10/2015)
Matthew Thomas
Managing Director (MD) and
Chief Executive Officer (CEO)
(Executive)(retired as MD 30
June 2016)
Kerry Daly
Director (Non-Executive)
B Remuneration governance
Use of external consultants
The Remuneration and Nomination Committee
(the Committee) comprised four independent
NEDs during the reporting period.
The Committee primarily considers and makes
recommendations to the Board regarding:
• How the remuneration policies are applied to
members of the EMT
•
The basis of short and long-term performance-
based incentive payments for members of the
EMT; and
•
The appropriate fees for NEDs.
The MD and CEO attended certain Committee
meetings by invitation, where management input is
required. The MD and CEO was not present during
any discussions related to his own remuneration
arrangements.
Fundamental to all arrangements is that all key
management personnel must contribute to the
achievement of short and long-term objectives,
enhance shareholder value, avoid unnecessary or
excessive risk taking and discourage behaviour that
is contrary to the Group’s values.
Details of the short and long-term incentive
schemes are set out below in the ‘Executive
Remuneration Policy and Framework’ section of the
Remuneration Report.
The objectives of the Group’s remuneration
policies are to ensure remuneration packages for
key management personnel reflect their duties,
responsibilities and level of performance – as well
as to ensure all key management personnel are
motivated to pursue the long-term growth and
success of the Group.
In determining the remuneration of all key
management personnel, the Board aims to ensure
that the remuneration policies and framework:
•
•
•
•
Are fair and competitive and align with the
long-term interests of the Group
Incentivise all key management personnel to
pursue the short and long-term growth and
success of the Group within an appropriate risk
control framework
Are competitive and reasonable, enabling
the Group to attract and retain key talent,
knowledge and experience
Are aligned to the Group’s strategic and
business objectives and the creation of
shareholder value
• Have a transparent reward structure with a
risk proposition that is linked to the achievement
of pre-determined performance targets.
In performing its role, the Committee may directly
commission and receive information, advice and
recommendations from independent, external
advisers. This is done to ensure the Group’s
remuneration packages are appropriate, reflect
industry standards and will help achieve the
objectives of the Group’s remuneration strategy.
During the later half of FY15 the Committee
engaged the services of Mercer Consulting
(Australia) Pty Ltd (Mercer) to:
• Conduct a review of fees paid to its
Board Chairman and NEDs relative to a
comparator group of Australian listed
companies (comparator group) and propose
recommendations on future Board fee
structure
• Conduct a review of remuneration paid
to the members of the EMT relative to a
comparator group of companies and propose
recommendations on the EMT members’
remuneration levels and structure for the FY16
period.
Both Mercer and the Committee are satisfied
the advice received from Mercer is free from
undue influence from the KMP to whom the
recommendations apply. The fees paid to Mercer
for remuneration recommendations were Nil for
the FY16 period (FY15 $40,000). No other advisory
services were provided by Mercer during FY16 (FY15
$16,000).
To ensure that the remuneration recommendations
were free from undue influence the Committee
ensured the following arrangements were followed:
• Mercer was engaged by, and reported
directly to, the Chair of the Committee. Any
agreements for the provision of remuneration
consulting services were executed by the Chair
of the Committee under delegated authority on
behalf of the Board
•
The report containing the remuneration
recommendations was provided by Mercer
directly to the Chair of the Committee
• Mercer was permitted to speak to management
throughout the engagement to understand
company processes, practices and other
business issues and obtain management
perspectives. However, Mercer was not
permitted to provide any member of
management with a copy of their draft or
final report that contained the remuneration
recommendations.
36
Collection House Group
2016 Annual Report
37
Directors’ ReportDirectors’ Report
Remuneration Mix
CEO
OTHER
EMTS
CFO
LTI
STI
Fixed Remuneration
Securities Trading Policy
The trading of shares issued to eligible employees
under any of the Group’s employee equity plans
was subject to, and conditional upon, compliance
with the Group’s Securities Trading Policy.
Members of the EMT are prohibited from entering
into any hedging arrangements over unvested
performance rights under the Group’s Performance
Rights Plan (PRP). The Group would consider a
breach of this policy as misconduct, which may lead
to disciplinary action and potentially dismissal.
C Executive remuneration policy and
framework
The Group’s executive remuneration strategy
is designed to attract, motivate and retain high
performing individuals and align the interests of
executives with shareholders.
The Board reviews the remuneration packages
for members of the EMT annually by reference
to individual performance against key individual
objectives, the Group’s consolidated results and
market data. The performance review of the MD
and CEO is undertaken by the Chair of the Board
who then makes a recommendation to the Board
via the Remuneration and Nomination Committee.
The performance review of the other members
of the EMT is undertaken by the MD and CEO and
approved by the Board via the Remuneration and
Nomination Committee.
The Group aims to reward members of the EMT
with a level of remuneration commensurate
with their responsibilities and position within the
Group, and their ability to influence shareholder
value creation. The remuneration framework
links rewards with the strategic objectives and
performance of the Group.
The EMT pay and reward framework has three
components:
•
•
•
Total fixed remuneration including
superannuation and benefits
Short-term incentives (STIs), paid in cash
Long-term incentives (LTIs) through
participation in the Performance Rights
Plan (PRP), which has been approved by
the Board.
The combination of these components amount
to the total remuneration package or total
employment cost for members of the EMT.
The following summarises the target remuneration
mix of the EMT:
Total fixed remuneration
Structured as a total employment cost package,
the total fixed remuneration (TFR) may be
delivered as a combination of cash and prescribed
non-financial benefits at the discretion of the
EMT member. Members of the EMT are offered
a competitive TFR that comprises the cash salary
and superannuation and non-monetary benefits.
TFR for EMT members is reviewed annually to
ensure the pay is in line with the role, experience
and performance and remains competitive with
the market. Group and individual performance
are considered during the annual remuneration
review. TFR is usually fixed for a 12-month period
with any changes effective from 1 September each
financial year. An EMT member’s remuneration is
also reviewed upon any change of duties.
The Board approved total remuneration increases
of between 1 and 8 percent for the majority of
the EMT members, with the exception of the CIO
whose remuneration increased by 21 percent in
line with Mercer’s recommendations based on the
Comparative Group.
Retirement benefits for EMT
There are no additional retirement benefits made
available to members of the EMT, other than
those required by statute or by law and under the
shareholder approved performance rights plans.
Short-term incentives (STIs)
To ensure that remuneration for members of the
EMT are aligned to the Group’s performance, a
portion of their remuneration, in line with their
ability to influence results, is performance based
and, therefore, ‘at risk’.
EMT members have the opportunity to earn an
annual cash-based STI if pre-defined targets are
achieved. The MD and CEO had a target STI
opportunity of 87 percent of TFR. Other EMT
personnel each have a STI opportunity of 30
percent of TFR.
STIs for the EMT in FY16 were based on scorecard
measures and weightings. The MD and CEO key
performance objective targets were set by the
Board at the beginning of the financial year and
aligned to the Group’s strategic and business
objectives, as outlined below.
The STIs for other members of the EMT are
recommended by the MD and CEO to the Board
based on the MD and CEO’s financial and non-
financial target performance objectives.
There is a high degree of alignment between the
Company strategy and the EMT’s STI performance
objective targets. The relative weights of financial
versus non-financial performance targets for each
executive are detailed below and are based on their
position and influence on the financial results. The
weightings strive to provide a balance between the
Company’s overall financial goals and the ability
of the individual executives to influence these and
other strategic outcomes.
Position
Managing
Director and
CEO
Chief Financial
Officer
Chief Operating
Officer (ceased
4/12/2015)
GM HR and
Corporate
Services (ceased
24/12/2015)
Chief People and
Culture Officer
(appointed 30
November 2015)
Chief Information
Officer
Company
Secretary & Chief
Risk Officer
Financial
Performance
Objectives
Non-Financial
Performance
Objectives
60%
60%
60%
40%
40%
40%
20%
80%
20%
80%
20%
20%
80%
80%
The financial performance objectives are the same
for all Senior Executives, providing a common
objective for the EMT (weighting are different as
highlighted above).
The non-financial EMTs have a high degree of
variability between technology projects, people
and culture, and processes that reflect the
individual roles, and include measures such as
achieving strategic outcomes, developing people
and culture, growth, business development,
differentiation, innovation, digital development and
other key initiatives during the financial year.
Each executive has a high degree of clarity on their
individual performance objectives and priorities,
as established by their scorecard. They also have
an understanding of the inter-relationship of their
individual performance objectives to the objectives
of the other members of the EMT.
38
Collection House Group
2016 Annual Report
39
Directors’ Report19%15%62%19%32%32%36%21%61%18%Directors’ Report
Objectives, once agreed, are identified as strategic
projects or initiatives. These are tracked via the
Strategic Project Team, who provide updates to
the EMT on a monthly basis and the Board at each
reporting period. The process provides oversight
for the Board on the progress of all agreed
objectives.
This structure ensures that STIs are only paid when
an individual member of the EMT delivers against
their performance objectives and the Group’s
strategic goals.
MD and CEO STI targets for FY16
Performance
category
Metrics
Weighting
(%)
60
15
15
Financial
Net profit after tax, debt
and debt plus equity and
earnings per share (EPS)
Technology
(Internal
Capability)
Key strategic technology
initiatives annually agreed
by the Board
People and
Culture
(Intangibles)
Customers,
clients,
regulators,
investor
(external
Stakeholders)
Digital Development
Innovation
Employee engagement
Progress towards diversity
objectives
Succession planning for all
EMTs and senior leaders
Development of Leadership
talent
Consumer product through
ThinkMe (Brokerage
business)
Investor Engagement
10
Business Development
with gains in target market
sectors
A summary of the actual STI Financial outcomes
achieved is included in Section D.
Cessation of employment
For resignation or termination for cause, any
STI is forfeited, unless otherwise determined
by the Board.
For any other reason, the Board may award
STI on a pro-rata basis taking into account
time and the current level of performance
against performance hurdles.
Long-term incentives (LTIs)
LTIs are awarded to the Group’s EMT by way of
performance rights via the Performance Rights
Plan (PRP). The LTI program has the objective
of delivering long-term shareholder value by
incentivising members of the EMT to achieve
sustained financial performance over a three-year
period (with no opportunity to retest).
Annual grants of performance rights are proposed
to be made to the Group’s EMT under the PRP.
The number of performance rights granted
is calculated based on the weighted average
share price over the five trading days before the
grant date. Sections H and I provide details of
performance rights granted, vested, exercised and
lapsed during the year.
Performance rights were awarded to various
eligible employees pursuant to the PRP, at a nil
exercise price and subject to a three-year tenure
hurdle. This is contingent on the achievement of
certain financial performance hurdles, which are
approved by the Board each financial period.
The performance rights will not vest unless the
Group’s financial performance meet these hurdles.
The Board set these hurdles to ensure that the
EMT were focused on the delivery of increased
shareholder value through the achievement of
the short and long-term goals of the Group.
Participants in the PRP do not receive distributions
or dividends on unvested LTI grants.
FY16 Performance Rights Awarded
The MD and CEO was granted performance rights
in FY16 representing 87 percent of TFR. Other EMT
personnel were granted performance rights in FY16
representing 30 percent of TFR with the exception
of the CFO who was granted performance rights
representing 35 percent of TFR.
For the FY16 performance rights the Board chose
Earnings Per Share (EPS) as the key financial
measurement as EPS growth will ensure that long-
term shareholder value is achieved.
Up to 50 percent of awarded performance
rights will be capable of vesting where average
compound EPS growth over the Performance
Period (1 July 2015 to 30 June 2018) is at least
5 percent. Up to an additional 50 percent of
awarded performance rights will be capable of
vesting on a sliding scale capped at 10 percent
average compound EPS growth (hence 1 percent
per 0.1 percent of additional EPS growth).
For the period 1 July 2015 to 30 June 2018,
467,365 unlisted performance rights over ordinary
shares in the Company were granted during the
current year under the PRP to the EMT and other
eligible employees. The performance rights
will vest (and therefore be capable of being
exercised) depending on the Group achieving
certain performance hurdles as at 30 June 2018 as
highlighted above.
FY15 Performance Rights Awarded
For FY15 the performance hurdles were based
on the satisfactory achievement of performance
conditions approved by the Board. The hurdles
and the proportion of performance rights that will
vest as a percentage if the target is achieved, are
outlined below:
Performance Conditions
% of Pool
Average ROE
Debt/Debt + Equity
EPS Base
EPS Stretch
Total
10%
10%
30%
50%
100%
For the period 1 July 2014 to 30 June 2017,
680,184 unlisted performance rights over ordinary
shares in the Company were granted during the
prior year under the PRP to the EMT and other
eligible employees. The performance rights
will vest (and therefore be capable of being
exercised) depending on the Group achieving
certain performance hurdles as at 30 June 2017 as
highlighted above.
FY14 Performance Rights Awarded
For FY14 the performance hurdles were based
on the satisfactory achievement of performance
conditions approved by the Board. The hurdles
and the proportion of performance rights that will
vest as a percentage if the target is achieved, is
outlined below:
The performance rights will vest (and therefore
be capable of being exercised) depending on the
Group achieving certain performance hurdles as at
30 June 2016.
A summary of the actual LTI Financial outcomes
achieved is included in Section D.
Cessation of employment
For ‘uncontrollable events’ (including death, serious
injury and disability and forced early retirement,
retrenchment or redundancy), any LTI that are
capable of becoming exercisable if performance
hurdles are met at the next test date will become
vested performance rights. The Board, at its
discretion, may determine the extent to which any
other unvested performance rights, that have not
lapsed, will become vested performance rights.
For any other reason, all unvested LTI awards will
lapse immediately, unless otherwise determined by
the Board.
Change of control
Where a proposal is publicly announced in relation
to the Group which the Board reasonably believes
may lead to a change in control event, all unvested
LTI awards, that have not lapsed, will vest and
become exercisable.
Clawback
The Group will reduce, cancel or clawback any
performance-based remuneration in the event of
serious misconduct or a material misstatement of
the Group’s financial statements.
Discretion
The Board have absolute discretion in relation to
payments under both the STI and LTI schemes.
D
Relationship between remuneration
and the Group’s performance
Performance Conditions
% of Pool
Group performance and its link to STI
Average ROE
Debt/Debt + Equity
EPS Base
EPS Stretch
Total
25%
15%
30%
30%
100%
For the period 1 July 2013 to 30 June 2016,
839,830 unlisted performance rights over ordinary
shares in the Company were granted under the
PRP to the EMT and other eligible employees.
Based on the achievements of the Group this year,
the Committee determined that the EMT had not
achieved the key financial performance targets.
In making this assessment, the Committee
considered the following financial factors:
• Net Profit after tax reduced from $22.5 million
to $18.6 million
• Net debt/Net debt plus equity was in excess of
40% for the majority of the year
•
EPS decreased from 17.2 cents to 14.0 cents
40
Collection House Group
2016 Annual Report
41
Directors’ ReportDirectors’ Report The table below shows the actual STI Financial
outcomes achieved for FY16.
Financial
Performance
Measure
Net profit
after tax
Debt and debt
plus equity
EPS
Maximum
Potential
%
Actual
Achieved
%
10
10
40
Nil
Nil
Nil
The Committee also considered the following
non-financial factors including the achievement
of progress towards non-financial supporting
objectives under technology, people and culture
and external stakeholders such as:
•
•
•
Technology - these included enhancements
to the proprietary collections platform
C5; improved analytical capabilities and
campaigns functionality; improvements to
the customer portal (which has enabled an
increase in the number of customers using
this self-service channel and therefore
reducing physical mail); and the delivery of an
industry-first smartphone app.
People and Culture – improvements in
recruitment, staff engagement and training
as evidenced in increased tenure of staff for
our biggest segment over the second half;
development of the ‘Leadership Academy’ (a
12 month leadership development course in-
house for all levels of employees); successful
succession plan for key management; and the
achievement of Diversity objectives.
External stakeholders – growing and
rebranding of the consumer business ThinkMe
ahead of its next phase of expansion; and
the formation of a Government Services
collection centre, including the on-boarding
of a significant Federal government client.
Not withstanding that progress was made against
certain non-financial objectives, the Committee
considered that the overall financial performance
of the Group was unsatisfactory and took the
view that a number of the EMT had not met their
performance objectives.
Group performance and its link to LTI
The overall level of reward for members of the
EMT takes into account the performance of
the Group over a number of years, with greater
emphasis given to the current and previous year.
Details of the relationship between the
remuneration policy and Group’s performance
over the last five years is detailed below.
2012
2013
2014
2015
2016
Net profit after
tax ($m)
$12.6 $15.6 $18.7 $22.5 $18.6
Dividends
declared
(franked)
Share price
commenced
Share price
ended
Basic EPS
(including
discontinued
operations)
6.4
cents
7.2
cents
8.0
cents
9.1
cents
7.8
cents
$0.69 $0.80 $1.65 $1.88 $2.23
$0.79 $1.65 $1.88 $2.23 $1.10
12.1
cents
13.6
cents
14.7
cents
17.2
cents
14.0
cents
The vesting of LTI awards for the year ended 30
June 2016 is linked to the Group’s EPS, average
ROE and Gearing performance. Based on the
achievements of the Group’s financial performance
over the three-year performance period ended
30 June 2016 the Committee determined that the
EMT had not achieved its performance hurdles.
The table below outlines the Group’s performance
measures for the three-year performance period
ended 30 June 2016 and the actual percentage
achieved to these targets.
Performance
Measure
Maximum
Potential %
Actual achieved
%
EPS
Average ROE
Net Debt/Net
Debt plus Equity
60
25
15
Nil
Nil
Nil
Based on the above performance, the Board has
determined that the performance rights granted for
the performance period ended 30 June 2016 (the
FY14 grant) will lapse with no vesting.
Upon Paul Freer (former COO) leaving the Group,
he was issued 56,268 shares on 11 December 2015
in accordance with the performance right plan.
Details of remuneration: cash bonuses and performance rights
For each cash bonus and grant of performance rights included in the table on page 47 the percentage of
the available bonus or grant that was paid, or that vested, in the financial year, and the percentage that was
forfeited because the person did not meet the service and performance criteria, is set out below.
No part of the STI is payable in future years. No performance rights will vest unless the vesting conditions
are met, hence the minimum value of the performance rights yet to vest is nil. The maximum value of the
performance rights yet to be expensed has been determined as the amount of the grant date fair value of the
performance rights that are yet to be expensed.
Cash bonus 2016
Performance rights
Awarded
%
Forfeited
%
Financial
year
granted
Vested
%
Forfeited
%
Lapsed
%
Financial years
in which
performance
rights may be
issued (subject to
certain qualifying
hurdles)
Maximum
total value of
performance
rights yet to
be expensed
Matthew
Thomas
Adrian
Ralston
-
-
100%
100%
Paul Freer
75%
25%
Kylie
Lynam
Michelle
Cummins
Marcus
Barron
-
100%
89%
11%
2016
74%
26%
Julie
Tealby
46%
54%
2014
2015
2016
2014
2015
2016
2014
2015
2016
2014
2015
2016
2014
2015
2016
2014
2015
2016
-
-
-
-
-
-
100
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100
100
100
100
100
-
-
-
-
-
-
-
100
-
-
100
-
-
-
-
-
-
-
-
100
-
-
100
-
-
2017
2018
2019
2017
2018
2019
2017
2018
2019
2017
2018
2019
-
2017
2018
2019
2017
2018
2019
-
730,573
561,073
-
129,949
130,318
-
-
-
-
-
-
-
-
82,192
79,924
-
86,765
71,462
42
Collection House Group
2016 Annual Report
43
Directors’ ReportDirectors’ Report
For further information in relation to Directors’
remuneration, including fees paid in accordance
with statutory rules and applicable accounting
standards, refer to Section F below.
Note that the changes in the NED fee structure do
not require an increase in the Directors’ fee pool
limit.
Retirement allowances for Directors
There are no retirement allowances paid to
Non-executive Directors.
F Details of remuneration of Directors and key management personnel
Amounts of remuneration
Details of the remuneration of Directors and all other key management personnel (as defined in AASB 124 Related
Party Disclosures) of the Group are set out below.
Short-term benefits
Post-
employment
In Dollars
Salary
and fees
STI
Cash
bonus
Non-
monetary
benefits
Total
Super-
annuation
benefits
Other
long
term
Annual
and long
service
leave
Share-
based
payments
Termination
benefits
Rights
Total
Non-executive Directors
David Liddy AM
Chair
Dennis Punches
Deputy Chair
Kerry Daly
Non-executive
Director
David Gray
Non-executive
Director
Philip Hennessy
Non-executive
Director
Julie-Anne
Schafer
Non-executive
Director
2016 164,811
2015 158,000
2016
28,125
2015
70,000
2016 104,731
2015
95,000
2016 104,327
2015
80,000
2016
89,865
2015
84,442
2016
89,596
2015
75,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
164,811
158,000
28,125
70,000
15,657
15,010
-
-
104,731
9,949
95,000
- 104,327
80,000
89,865
84,442
89,596
9,025
9,911
7,600
8,537
8,022
8,512
75,000
7,125
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
180,468
173,010
28,125
70,000
114,680
104,025
114,238
87,600
98,403
92,464
98,108
82,125
E Non-executive Director remuneration
policy
Non-executive Director’s (NEDs) fees are
determined within an aggregate Directors’ fee
pool limit, which is periodically recommended
for approval by shareholders. Non-executive
Directors do not receive share options or
performance rights. The maximum aggregate
fee pool and the fee structure is reviewed
annually against fees paid to NEDs of comparable
companies. The Board considers advice from
external advisors when undertaking the annual
review process.
The maximum annual aggregate Directors’
fee pool limit is $900,000 per annum and was
approved by shareholders at the Group’s AGM on
25 October 2013. The FY16 aggregate total Non-
executive Director fees distribution is $634,022
(including superannuation). The Board will not
seek any increase to the annual aggregate NED fee
pool limit at the 2016 AGM.
Payments are allowed for additional responsibilities
for the Chair of each Board Committee. Fees and
payments to Non-executive Directors reflect the
demands that are made on, and the responsibilities
of, the Directors.
The table below summarises the NED fees for FY16
(exclusive of superannuation):
FEES
Base fees
Chair
FY16
FY15
$165,000*
$158,000*
Other Non-executive
Directors
$90,000
70,000
Additional fees
Audit and Risk
Management
Committee Chair
Audit and Risk
Management
Committee Member
Remuneration
and Nomination
Committee Chair
Remuneration
and Nomination
Committee Member
$15,000
$25,000
$Nil
$10,000
$15,000
$10,000
$Nil
$5,000
* The Chair’s fee covers his entire engagement on the Board.
44
Collection House Group
2016 Annual Report
45
Directors’ ReportDirectors’ Report
Short-term benefits
Post
employ-
ment
Other
long
term
Share-
based
payments
Salary
and fees
STI Cash
bonus
Non-
monetary
benefits
Total
Super-
annuation
benefits
Annual
and long
service
leave
Term-
ination
benefits
Rights
Total
In Dollars
Executive Director and other Key Management Personnel
Proportion
of remu-
neration
perfor-
mance
related
Matthew
Thomas
MD/CEO
Adrian
Ralston
Chief
Financial
Officer
Paul Freer
Chief
Operating
Officer
(ceased
4/12/2015)
Kylie Lynam
General
Manager
– Human
Resources
(ceased
24/12/2015)
Michelle
Cummins
Chief People
and Culture
Officer
(appointed
30/11/2015)
Marcus
Barron
Chief
Information
Officer
Julie Tealby
Chief Risk
Officer +
Company
Secretary
2016 593,708
-
3,910
597,618
29,978
23,452
2015
527,479 498,096
3,747 1,029,322
50,110
-`
2016
333,875
-
3,910
337,785
31,681
5,260
2015
311,413
94,096
3,747
409,256
29,688
-
-
-
-
-
(495,204)
155,844
(318%)
483,283 1,562,715
63%
(72,767)
301,959
(24%)
66,336
505,280
32%
2016
233,119
35,189
1,649
269,958
27,980
3,145
45,775
(12,981)
333,877
7%
2015
327,754
97,822
3,747
429,323
31,215
-
2016
193,841
-
1,855
195,696
13,032
(1,489)
2015
219,446
64,096
3,747
287,289
20,952
-
2016
105,961
33,000
2,304
141,265
10,066
8,266
2015
-
-
-
-
-
-
2016 232,800
59,000
3,910
295,710
22,116
6,793
2015
187,237
56,096
3,747
247,080
21,739
-
2016 213,040
33,200
3,910
250,150
20,239
5,613
2015 202,808
63,096
3,747
269,651
21,271
-
-
-
-
-
-
-
-
-
-
110,003
570,541
36%
(65,420)
141,819
(46%)
58,990
367,231
34%
-
159,597
21%
-
-
-
(52,742)
271,877
2%
45,738
314,557
32%
(34,458)
241,544
(1%)
26,418
317,340
28%
-For recently appointed EMT, the remuneration information provided in the table below relates to the period from the date of appointment as
EMT to FY16, unless otherwise stated.
G Service agreements
Remuneration and other terms of employment for the MD and CEO and other key management personnel
are also formalised in service agreements. Except as otherwise stated, all contracts with members of the EMT
may be terminated early by either party with three months’ notice. Collection House, at its full discretion,
may make a payment in lieu of the notice period, either partially or in full. Major provisions of the agreements
relating to remuneration are set out below.
Matthew Thomas
MD and CEO
Annual fixed remuneration
Performance cash bonus
Performance rights
Adrian Ralston
CFO
Annual fixed remuneration
Performance cash bonus
Performance rights
Paul Freer
COO
(ceased 4
December 2015)
Annual fixed remuneration
Performance cash bonus
Performance rights
$642,541 inclusive of superannuation and non-monetary
benefits for FY16.
$561,079 was the maximum STI opportunity in relation to FY16.
419,919 at risk performance rights were issued FY14.
394,574 at risk performance rights were granted during FY15.
253,283 at risk performance rights were granted during FY16.
$372,344 inclusive of superannuation and non-monetary
benefits for FY16.
$111,703 was the maximum STI opportunity in relation to FY16.
56,269 at risk performance rights were issued in FY14.
70,184 at risk performance rights were issued during FY15.
58,829 at risk performance rights were granted during FY16.
$375,354 inclusive of superannuation and non-monetary
benefits for FY16.
$112,606 was the maximum STI opportunity in relation to FY16.
56,269 at risk performance rights were issued in FY14.
73,829 at risk performance rights were issued during FY15.
50,833 at risk performance rights were granted during FY16.
Kylie Lynam
General Manager –
Human Resources
and Corporate
Services
(Resigned 24
December 2015)
Michelle Cummins
Chief People and
Culture officer
(appointed 30
November 2015)
Marcus Barron
CIO
Annual fixed remuneration
Performance cash bonus
Performance rights
$266,414 inclusive of superannuation and non-monetary
benefits for FY16.
$79,924 was the maximum STI opportunity in relation to FY16.
56,269 at risk performance rights were issued in FY14.
50,345 at risk performance rights were issued during FY15.
36,080 at risk performance rights were granted during FY16.
Annual fixed remuneration
Performance cash bonus
Performance rights
$210,714 inclusive of superannuation and non-monetary
benefits for FY16.
$63,214 was the maximum STI opportunity in relation to FY16.
Nil
Annual fixed remuneration
Performance cash bonus
Performance rights
$266,414 inclusive of superannuation and non-monetary
benefits for FY16.
$79,924 was the maximum STI opportunity in relation to FY16.
43,671 at risk performance rights were issued in FY14.
44,391 at risk performance rights were issued during FY15.
36,080 at risk performance rights were granted during FY16.
Julie Tealby
Company
Secretary and
Chief Operating
Officer
Annual fixed remuneration
Performance cash bonus
Performance rights
$238,207 inclusive of superannuation and non-monetary
benefits for FY16.
$71,462 was the maximum STI opportunity in relation to FY16.
46,861 at risk performance rights were issued during FY15.
32,260 at risk performance rights were granted during FY16.
46
Collection House Group
2016 Annual Report
47
Directors’ ReportDirectors’ Report
H Share-based compensation
Performance rights
I
Equity instruments held by key management personnel
Performance rights
Performance rights have been granted to certain eligible employees under the Collection House
Performance Rights Plan (PRP).
Details of performance rights over ordinary shares in the Company provided as remuneration to each
Director of Collection House Limited and other key management personnel of the Group, are set out below.
Performance rights granted under the PRP respectively carry no dividend or voting rights. When exercisable,
each performance right is convertible into one ordinary share of Collection House Limited.
Details of performance rights over ordinary shares in the Group provided as remuneration to members
of the EMT are set out below.
2016
Matthew
Thomas
Number of performance rights
granted/issued during the year
Number of performance rights
vested/ issuable during the year
Adrian Ralston
126,453
58,829
Name
1. Matthew Thomas
2. Adrian Ralston
3. Paul Freer
4. Kylie Lynam
5. Marcus Barron
6. Julie Tealby
2016
253,283
58,829
50,833
36,080
36,080
32,260
2015
394,574
70,184
73,829
50,345
44,391
46,861
2016
-
-
56,269
-
-
-
2015
502,495
50,250
80,000
50,250
20,100
10,050
The assessed fair value at grant date of performance rights compensation granted to members of the EMT
has been independently determined and is calculated using the five day volume weighted average price
(VWAP) of one ordinary share over the five days preceding the grant. The expense is recognised over the
vesting period. The expense for each relevant financial year will require an assessment at each reporting date
of the probability that each performance hurdle will be achieved.
Balance
at start of
the year
Granted as
compensation
Vested
Lapsed
Balance
at end of
the year
Vested
and
issuable
Un-vested
814,493
253,283
-
-
(419,919)
647,857
(56,269)
129,013
Paul Freer
Kylie Lynam
130,098
106,614
Marcus Barron
88,062
Julie Tealby
67,437
Share holdings
50,833
(56,269)
(124,662)
36,080
36,080
32,260
-
-
-
(142,694)
(43,671)
80,471
(20,576)
79,121
-
-
-
-
-
-
-
-
647,857
129,013
-
-
80,471
79,121
The number of shares in the Company held during the financial year by each Director of Collection House
Limited and other key management personnel of the Group, including their personally related parties, are set
out below.
2016
Non-executive Directors
David Liddy AM
Dennis Punches*
Kerry Daly
David Gray
Philip Hennessy
Julie-Anne Schafer
Balance at
start of the year
Other changes
during the year
Balance at the
end of the year
150,000
3,502,535
394,607
195,999
50,000
62,500
-
(3,502,535)
-
-
-
4,000
150,000
-
394,607
195,999
50,000
66,500
* Retired from Board 23 October 2015. Shares held upon retirement are included in other changes.
48
Collection House Group
2016 Annual Report
49
Directors’ ReportDirectors’ Report
Balance
at start of the
year
Received
during the
year on the
exercise of
options
Received
on vesting of
performance
rights
Other
changes
during the
year
Balance
at the end
of the year
2016
Executive Director and other key management personnel
Matthew Thomas
Adrian Ralston
Paul Freer*
Kylie Lynam*
Michelle Cummins
Marcus Barron
Julie Tealby
447,137
25,000
7,000
168,777
-
1,000
6,196
-
-
-
-
-
-
-
502,495
(447,137)
50,250
-
136,269
(143,269)
50,250
(219,027)
-
20,100
10,050
-
(11,000)
(8,305)
502,495
75,250
-
-
-
10,100
7,941
* Shares held upon cessation of employment are included in other changes
J Additional information
Loans to Directors and Executives
There were no loans to Directors or members of the EMT during FY16.
Shares under performance rights
LTIs are provided to certain eligible employees via the PRP. Total un-issued ordinary shares of the Group
under option at the date of this report are detailed below.
Performance
rights
PRP
PRP
PRP
Date
rights
effective
1/7/13
1/7/14
1/7/15
Number
of rights
granted/to
be issued
Issue
price of
shares
839,830
680,184
467,365
Nil
Nil
Nil
Number
of shares
issued
2016
64,666
Nil
Nil
Number of
unvested shares
and vested but not
yet issued shares
under rights
Expiry date
Nil
30 September 2016
680,184
30 September 2017
467,365
30 September 2018
Additional information – UNAUDITED
Insurance of officers
During the financial year the Group paid premiums of $87,701 in respect of Directors’ and Officers’ liability
and legal expenses’ and insurance. This was for current and former Directors and Officers, including senior
executives of the Group and Directors, Senior Executives and Secretaries of its controlled entities.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may
be brought against the Directors or Officers in their capacity as Directors or Officers of entities in the Group,
and any other payments arising from liabilities incurred by the Directors or Officers in connection with such
proceedings. This does not include such liabilities that arise from conduct involving a wilful breach of duty
by the Directors or Officers or the improper use by the Directors or Officers of their position or of information
to gain advantage for themselves or someone else or to cause detriment to the Group.
Proceedings on behalf of the Group
No person has applied to the Court under section
237 of the Corporations Act 2001 for leave to
bring proceedings on behalf of the Group, or to
intervene in any proceedings to which the Group
is a party, for the purpose of taking responsibility
on behalf of the Group for all or part of those
proceedings.
No proceedings have been brought or intervened
in on behalf of the Group with leave of the Court
under section 237 of the Corporations Act 2001.
Non-audit services
During the year KPMG, the Group’s auditor, has
performed certain other services in addition to the
audit and review of financial statements.
The Board has considered the non-audit services
provided during the year by the auditor, and the
Audit and Risk Management Committee is satisfied
that the provision of those non-audit services
during the year by the auditor is compatible
with, and did not compromise, the auditor
independence requirements of the Corporations
Act 2001 for the following reasons:
•
•
all non-audit services were subject to the
corporate governance procedures adopted
by the Group and have been reviewed by the
Audit and Risk Management Committee to
ensure they do not impact the integrity and
objectivity of the auditor; and
the non-audit services provided do not
undermine the general principles relating
to auditor independence as set out in
APES 110 Code of Ethics for Processional
Accountants, as they did not involve reviewing
or auditing the auditor’s own work, acting in
a management or decision making capacity
for the Group, acting as an advocate for the
Group or jointly sharing risks and rewards.
Details of the amounts paid and payable to the
auditors of the Group, KPMG, are set out below.
Services other than audit
and review of financial
statements:
Other regulatory audit
services
Trust account audits
Loan covenant
compliance
Other assurance
services
Review of CreditCollect
acquisition earn out
calculation
Other services
Taxation compliance
services
R&D Tax Incentive
IT Disaster Recovery Plan
Consultancy services in
relation to ATO
on-boarding project
Audit and review of financial
statements
Total paid or payable
to KPMG
2016
$
36,500
6,250
3,500
52,000
60,000
24,457
25,010
207,717
166,989
374,706
50
Collection House Group
2016 Annual Report
51
Directors’ ReportDirectors’ Report
Directors’ Report
Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations
Act 2001 is set out on page 53.
Rounding of amounts
The Group is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities
and Investments Commission, relating to the ‘rounding off’ of amounts in the Directors’ report. Amounts in
the Directors’ report have been rounded off in accordance with that Corporations Instrument to the nearest
thousand dollars, or in certain cases, to the nearest dollar.
This report is made in accordance with a resolution of Directors.
Collection House Limited
David Liddy AM
Chairman
52
Collection House Group
Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001
Auditor’s Independence Declaration
To: the directors of Collection House Limited
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial
year ended 30 June 2016 there have been:
(i)
(ii)
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the
audit.
Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001
KPMG
To: the directors of Collection House Limited
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial
year ended 30 June 2016 there have been:
Scott Guse
(i)
Partner
(ii)
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the
audit.
Brisbane
18 August 2016
KPMG
Scott Guse
Partner
Brisbane
18 August 2016
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
53
2016 Annual Report
53
53
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
Liability limited by a scheme approved under
International Cooperative (“KPMG International”), a Swiss entity.
Professional Standards Legislation.
Financial Statements
Table of Contents
Income statement ......................................................................................................................................................................................................... 56
Statement of comprehensive income ............................................................................................................................................................ 57
Balance sheet ................................................................................................................................................................................................................... 58
Statement of changes in equity ........................................................................................................................................................................ 59
Statement of cash flows .......................................................................................................................................................................................... 60
Notes to the financial statements ..................................................................................................................................................................... 61
Directors’ declaration................................................................................................................................................................................................ 118
Independent auditor’s report to the members ...................................................................................................................................... 119
54
Collection House Group
2016 Annual Report
55
Financial Statements:
Income Statement
For the Year Ended 30 June 2016
Revenue
Revenue from continuing operations
Direct collection costs
Employee expenses
Depreciation and amortisation expense
Operating lease rental expense
Restructuring expenses
Other expenses
Finance costs
Profit before income tax
Income tax expense
Profit from continuing operations
Profit for the year attributable to equity holders of
Collection House Limited
Earnings per share for profit attributable to the ordinary equity holders
of the Company:
Basic earnings per share
Diluted earnings per share
Consolidated
30 June
2016
$’000
30 June
2015
$’000
132,694
126,043
132,694
126,043
(22,250)
(57,667)
(3,948)
(6,420)
(1,222)
(9,056)
(6,147)
25,984
(7,422)
18,562
(16,515)
(56,551)
(2,445)
(6,087)
-
(6,638)
(5,915)
31,892
(9,409)
22,483
18,562
22,483
Cents
Cents
14.0
13.9
17.2
17.1
Notes
5
6
6
6
6
7
28
28
The above income statement should be read in conjunction with the accompanying notes.
Financial Statements:
Statement of Comprehensive Income
For the Year Ended 30 June 2016
Profit for the year
Other comprehensive income, net of income tax
Items that may be reclassified subsequently to profit or loss
Notes
Consolidated
30 June
2016
$’000
30 June
2015
$’000
18,562
22,483
Exchange differences on translation of foreign operations
20(a)
Other comprehensive income for the year, net of income tax
Total comprehensive income for the year attributable to
equity holders of Collection House Limited
21
21
(684)
(684)
18,583
21,799
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
56
Collection House Group
2016 Annual Report
57
Financial Statements:
Balance Sheet
As at 30 June 2016
ASSETS
Current assets
Cash and cash equivalents
Receivables
Purchased debt ledgers
Other current assets
Total current assets
Non-current assets
Purchased debt ledgers
Property, plant and equipment
Intangible assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Payables
Current tax liabilities
Provisions
Other financial liabilities
Total current liabilities
Non-current liabilities
Borrowings
Deferred tax liabilities
Provisions
Other financial liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained profits
Total equity
Consolidated
30 June
2016
$’000
30 June
2015
$’000
Notes
8
9
10
11
10
12
13
14
15
16
17
18
15
16
8,938
9,969
61,071
1,108
81,086
7,222
10,265
57,167
1,089
75,743
204,241
198,822
4,277
37,364
5,475
35,614
245,882
239,911
326,968
315,654
15,085
16,013
3,337
4,454
1,032
2,027
3,067
2,149
23,908
23,256
118,200
119,000
378
366
3,811
1,854
402
477
122,755
121,733
146,663
144,989
180,305
170,665
19
20(a)
20(b)
111,006
105,307
(1,029)
70,328
2,188
63,170
180,305
170,665
Financial Statements:
Statement of Changes in Equity
For the Year Ended 30 June 2016
Consolidated
Notes
Balance at 1 July 2014
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their
capacity as owners:
Contributions of equity net of
transaction costs
Employee share rights -
value of employee services
Dividends provided for or paid
Balance at 30 June 2015
Balance at 1 July 2015
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their
capacity as owners:
Contributions of equity net of
transaction costs
Employee share rights -
value of employee services
Dividends provided for or paid
19
20
21
19
20
21
Attributable to owners of
Collection House Limited
Contributed
equity
$’000
Reserves
$’000
Retained
earnings
$’000
Total
equity
$’000
102,285
1,959
51,745
155,989
-
-
-
-
22,483
22,483
(684)
(684)
-
(684)
22,483
21,799
3,022
-
-
-
913
-
-
3,022
913
-
(11,058)
(11,058)
3,022
913
(11,058)
(7,123)
105,307
105,307
2,188
2,188
63,170
170,665
63,170
170,665
-
-
-
-
21
21
18,562
18,562
-
21
18,562
18,583
3,053
-
2,646
(3,238)
-
-
3,053
(592)
-
-
(11,404)
(11,404)
5,699
(3,238)
(11,404)
(8,943)
Balance at 30 June 2016
111,006
(1,029)
70,328
180,305
The above statement of changes in equity should be read in conjunction with the accompanying notes.
The above balance sheet should be read in conjunction with the accompanying notes.
58
Collection House Group
2016 Annual Report
59
Statement of cash flows
Notes to the financial statements
Consolidated
30 June
2016
$’000
30 June
2015
$’000
Notes
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax)
192,273
180,702
Payments to suppliers and employees (inclusive of goods and services tax)
(100,402)
(89,103)
Income taxes paid
91,871
91,599
(7,588)
(13,930)
Net cash inflow (outflow) from operating activities
30
84,283
77,669
Cash flows from investing activities
Payments for property, plant and equipment
Payments for leasehold improvements
Payments for purchased debt ledgers
Payments for intangible assets
Net cash (outflow) inflow from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Borrowing costs
Interest paid
(422)
(240)
(540)
(297)
(61,862)
(71,396)
(4,633)
(3,093)
(67,157)
(75,326)
1,900
19,700
(3,203)
(1,364)
(1,445)
(1,439)
(4,384)
(4,224)
Dividends paid to Company's shareholders
21
(11,404)
(11,058)
Proceeds from issues of shares and other equity securities
Net cash (outflow) inflow from financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of year
8
The above statement of cash flows should be read in conjunction with the accompanying notes.
3,053
(15,483)
1,643
7,222
73
8,938
3,022
4,637
6,980
381
(139)
7,222
These financial statements are for the consolidated entity consisting of Collection House Limited (the
Company) and its subsidiaries (the Group).
Collection House Limited is a public company incorporated and domiciled in Australia.
The financial statements were authorised for issue on 18 August 2016 by the directors of the Company.
1 Summary of significant accounting policies
The principal accounting policies adopted in the preparation of these consolidated financial statements are
set out below. These policies have been consistently applied to all the years presented, unless otherwise
stated.
(a) Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting
Standards and interpretations issued by the Australian Accounting Standards Board and the Corporations Act
2001. Collection House Limited is a for-profit entity for the purpose of preparing the financial statements.
(i) Compliance with IFRS
The consolidated financial statements of the Collection House Limited Group also comply with International
Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
(ii) New and amended standards adopted by the Group
The group has applied the following standards and amendments for the first time for their annual reporting
period commencing 1 July 2015:
•
AASB 2014-1 Amendments to Australian Accounting Standards (including Part A: Annual Improvements
2010-2012 and 2011-2013 Cycles)
The adoption of these new standards did not materially affect any of the amounts recognised in the current
period or any prior period and are not likely to affect future periods.
(iii) Early adoption of standards
The Group has elected to continue to early adopt the following pronouncements:
•
AASB 9 Financial Instruments (December 2010) and AASB 2010-7 Amendments to Australian Accounting
Standards arising from AASB 9 (December 2010)
This includes applying the revised pronouncement to the comparatives in accordance with AASB 108
Accounting Policies, Changes in Accounting Estimates and Errors. None of the items in the financial
statements had to be restated as a result of applying these standards.
(iv) Historical cost convention
These financial statements have been prepared under the historical cost convention, as modified by the
revaluation of financial assets, financial assets and liabilities (including derivative instruments) at fair value
through profit or loss, and certain classes of property, plant and equipment.
(v) Critical accounting estimates
The preparation of financial statements requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of applying the Group’s accounting policies.
The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates
are significant to the financial statements are disclosed in note 3.
(b) Principles of consolidation
(i) Subsidiaries
Subsidiaries are all entities over which the Group has control. The group controls an entity when the group is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect
those returns through its power to direct the activities of the entity.
60
Collection House Group
2016 Annual Report
61
Financial Statements:Financial Statements:For the Year Ended 30 June 2016For the Year Ended 30 June 2016
Notes to the financial statements
Notes to the financial statements
1 Summary of significant accounting policies (continued)
1 Summary of significant accounting policies (continued)
(b) Principles of consolidation (continued)
(i) Subsidiaries (continued)
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are
de-consolidated from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the Group (refer to
note 1(h)).
Intercompany transactions, balances and unrealised gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment
of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
There are currently no non-controlling interests in the Group.
(c) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker. The chief operating decision maker, who is responsible for allocating resources
and assessing performance of the operating segments, has been identified as the Board of Directors.
(d) Foreign currency translation
(i)
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency
of the primary economic environment in which it operates (‘the functional currency’). The consolidated
financial statements are presented in Australian dollars, which is Collection House Limited’s functional and
presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing
at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of
such transactions and from the translation at year end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in profit or loss, except when they are deferred in equity
as qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net
investment in a foreign operation.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange
rates at the date when the fair value was determined. Translation differences on assets and liabilities carried
at fair value are reported as part of the fair value gain or loss.
(iii) Group companies
The results and financial position of foreign operations that have a functional currency different from the
presentation currency are translated into the presentation currency as follows:
•
•
assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that
balance sheet;
income and expenses for each income statement and statement of comprehensive income are
translated at average exchange rates (unless this is not a reasonable approximation of the cumulative
effect of the rates prevailing on the transaction dates, in which case income and expenses are translated
at the dates of the transactions), and
•
all resulting exchange differences are recognised in other comprehensive income.
(d) Foreign currency translation (continued)
(iii) Group companies (continued)
On consolidation, exchange differences arising from the translation of any net investment in foreign entities,
and of borrowings and other financial instruments designated as hedges of such investments, are recognised
in other comprehensive income. When a foreign operation is sold or any borrowings forming part of the net
investment are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain
or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and
liabilities of the foreign operation and translated at the closing rate.
(e) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as
revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third parties.
The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that
future economic benefits will flow to the Group and specific criteria have been met for each of the Group’s
activities as described below.
Revenue is recognised for the major business activities as follows:
(i)
Interest income – Purchased Debt Ledgers (PDL’s)
Interest income is recognised using the effective interest method under AASB 9 Financial Instruments.
Interest is shown net of any adjustments to the carrying amount of purchased debt ledgers as a result of
changes in estimated cash flows.
(ii) Rendering of services – commission revenue
Revenue from rendering services is recognised to the extent that it is probable that the revenue benefits will
flow to the Group and the revenue can be reliably measured.
(iii) Sale of non-current assets
The net gain or loss on disposal of non-current assets is included as either income or an expense at the date
control of the asset passes to the buyer, usually when an unconditional contract of sale is signed.
The gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the
time of disposal and the net proceeds on disposal.
(iv) Dividends
Revenue from dividends and distributions from controlled entities is recognised by the Parent Entity when
they are declared by the controlled entities.
Revenue from dividends from other investments is recognised when received.
(f)
Income tax
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income
based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and
liabilities attributable to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at
the end of the reporting period in the countries where the Company’s subsidiaries and associates operate
and generate taxable income. Management periodically evaluates positions taken in tax returns with respect
to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where
appropriate on the basis of amounts expected to be paid to the tax authorities.
62
Collection House Group
2016 Annual Report
63
Financial Statements:Financial Statements:For the Year Ended 30 June 2016For the Year Ended 30 June 2016 Notes to the financial statements
Notes to the financial statements
1 Summary of significant accounting policies (continued)
1 Summary of significant accounting policies (continued)
(f)
Income tax (continued)
(h) Business combinations (continued)
Deferred income tax is provided in full, using the liability method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements.
However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill.
Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a
transaction other than a business combination that at the time of the transaction affects neither accounting
nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been
enacted or substantially enacted by the end of the reporting period and are expected to apply when the
related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount
and tax bases of investments in foreign operations where the company is able to control the timing of the
reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable
future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax
assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either
to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Collection House Limited and its wholly owned Australian controlled entities have implemented the tax
consolidation legislation. As a consequence, these entities are taxed as a single entity and the deferred tax
assets and liabilities of these entities are set off in the consolidated financial statements.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised
in other comprehensive income or directly in equity. In this case, the tax is also recognised in other
comprehensive income or directly in equity, respectively.
(g) Leases
Leases of property, plant and equipment where the Group, as lessee, has substantially all the risks and rewards
of ownership are classified as finance leases (note 16). Finance leases are capitalised at the lease’s inception
at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The
corresponding rental obligations, net of finance charges, are included in other current financial liabilities and
other non-current financial liabilities. Each lease payment is allocated between the liability and finance costs.
The finance cost is charged to the profit or loss over the lease period so as to produce a constant periodic
rate of interest on the remaining balance of the liability for each period. The property, plant and equipment
acquired under finance leases is depreciated over the asset’s useful life or over the shorter of the asset’s
useful life and the lease term if there is no reasonable certainty that the Group will obtain ownership at the
end of the lease term.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group
as lessee are classified as operating leases (note 24). Payments made under operating leases (net of any
incentives received from the lessor) are charged to profit or loss on a straight line basis over the period of the
lease.
(h) Business combinations
The acquisition method of accounting is used to account for all business combinations, regardless of
whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of
a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity interests
issued by the Group. The consideration transferred also includes the fair value of any asset or liability
resulting from a contingent consideration arrangement and the fair value of any pre existing equity interest in
the subsidiary. Acquisition related costs are expensed as incurred. Identifiable assets acquired and liabilities
and contingent liabilities assumed in a business combination are measured initially at their fair values at the
acquisition date.
The excess of the consideration transferred over the fair value of the Group’s share of the net identifiable
assets acquired is recorded as goodwill. If this amount is less than the fair value of the net identifiable
assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is
recognised directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are
discounted to their present value as at the date of exchange. The discount rate used is the entity’s
incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an
independent financier under comparable terms and conditions.
(i)
Impairment of assets
Goodwill is not subject to amortisation and is tested semi-annually for impairment, or more frequently
if events or changes in circumstances indicate that it might be impaired. Other assets are reviewed 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 to sell and
value-in-use (refer to Note 13). 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).
(j) Cash and cash equivalents
For the purpose of presentation in the cash flow statement, 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 where applicable bank overdrafts. Where applicable,
bank overdrafts are shown within borrowings in current liabilities in the consolidated balance sheet.
(k) Trade receivables
Trade receivables are recognised initially at fair value less provision for impairment. Trade receivables are due
for settlement no more than 30 days from the date of recognition, and are presented as current assets unless
collection is not expected for more than 12 months after the reporting date.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be
uncollectible are written off by reducing the carrying amount directly. An allowance account (provision for
impairment of trade receivables) is used when there is objective evidence that the Group will not be able to
collect all amounts due according to the original terms of the receivables. Significant financial difficulties
of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or
delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is
impaired. The amount of the impairment allowance is the difference between the asset’s carrying amount
and the estimated future cash flows. Cash flows relating to short-term receivables are not discounted if the
effect of discounting is immaterial.
The amount of the impairment loss is recognised in profit or loss within other expenses. When a trade
receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent
period, it is written off against the allowance account. Subsequent recoveries of amounts previously written
off are credited against other expenses in profit or loss.
(l) Other financial assets
Classification
The Group classifies financial assets as subsequently measured at either amortised cost or fair value on the
basis of both the Group’s business model for managing the financial assets and the contractual cash flow
characteristics of the financial asset.
64
Collection House Group
2016 Annual Report
65
Financial Statements:Financial Statements:For the Year Ended 30 June 2016For the Year Ended 30 June 2016 Notes to the financial statements
Notes to the financial statements
1 Summary of significant accounting policies (continued)
1 Summary of significant accounting policies (continued)
(l) Other financial assets (continued)
(m) Fair value estimation of financial assets and liabilities
The classification depends on the purpose for which the financial assets were acquired. Management
determines the classification of its financial assets at initial recognition and re evaluates this designation at
each reporting date.
Financial assets subsequently measured at amortised cost - PDLs
(i)
Classification
Purchased debt ledgers have been included in this category of financial assets as the Group’s business
model for managing the PDLs and the characteristics of the contractual cash flows of the financial asset are
consistent with this measurement approach.
PDLs are included as non-current assets, except for the amount of the ledger that is expected to be realised
within 12 months of the balance sheet date, which is classified as a current asset.
Subsequent Measurement
PDLs are initially recognised at cost, as cost reflects fair value plus any incidental costs of acquisition and
thereafter measured at amortised cost using the effective interest method, less any impairment losses.
Net gains on financial assets are disclosed in the income statement as interest income net of any change in
value of the ledgers.
Impairment
The carrying amount of the PDLs is continuously reviewed to ensure that the carrying amount is not impaired.
PDLs are collectively assessed for impairment as they are not considered to be individually significant within
the portfolio and they have similar credit risk characteristics.
A PDL is considered to be impaired if the carrying amount exceeds the present value of the estimated future
cash flows discounted at the asset’s original effective interest rate. Impairment losses are recognised in
the income statement. When a subsequent change in estimated future cash flows causes the amount of
impairment loss to reverse, the reversal in impairment is recognised in the income statement to the initial
amount of the original impairment loss.
(ii) Trade receivables
Trade receivables are subsequently carried at amortised cost using the effective interest method.
Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on trade date i.e. the date on which the
Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive
cash flows from the financial assets have expired or have been transferred and the Group has transferred
substantially all the risks and rewards of ownership.
Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset
not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the
financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in
profit or loss.
(iii) Impairment
The Group assesses at the end of each reporting period whether there is objective evidence that a financial
asset or group of financial assets is impaired. A financial asset or group of financial assets is impaired and
impairment losses are incurred only if there is objective evidence of impairment as a result of one or more
events that occurred after the initial recognition and that loss event has an impact on the estimated future
cash flows of the financial asset or group of financial assets that can be readily estimated.
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement
or for disclosure purposes.
The fair value of financial instruments that are not traded in an active market is determined using valuation
techniques. The Group uses estimated discounted cash flows to determine fair value.
(n) Other current assets
(i)
Legal and court costs capitalised
Significant legal and court costs associated with purchased debt and incurred subsequent to acquisition have
been capitalised in recognition that it is expected beyond reasonable doubt future economic benefits will
flow to the Group as a result of the expenditure being incurred.
These costs are amortised on a straight line basis over the period of their expected benefit, which is not
expected to exceed twelve months.
(o) Property, plant and equipment
All items of property, plant and equipment are initially recorded at cost at the date of acquisition, being
the fair value of the consideration provided plus incidental costs directly attributable to the acquisition.
Subsequent costs are included in the assets carrying amount, or recognised as a separate asset as
appropriate, only when it is probable that future economic benefits associated with the item will flow to the
Group, and the cost of the item can be measured reliably.
Where settlement of any part of cash consideration is deferred, the amounts payable are recorded at their
present value, discounted at the rate applicable to the Company if similar borrowings were obtained from an
independent financier under comparable terms and conditions.
The costs of assets constructed or internally generated by the Group, other than goodwill, include the cost of
materials and direct labour. Directly attributable overheads and other incidental costs are also capitalised to
the asset. Borrowing costs are capitalised to qualifying assets as set out in note 1(s).
Expenditure, including that on internally generated assets, is only recognised as an asset when the Group
controls future economic benefits as a result of the costs incurred, it is probable that those future economic
benefits will eventuate, and the costs can be measured reliably. Costs attributable to feasibility and alternative
approach assessments are expensed as incurred.
All assets are depreciated using the straight line method over their estimated useful lives taking into account
estimated residual values, with the exception of leased assets, which are depreciated over the shorter of the
lease term and their useful lives.
Assets are depreciated or amortised from the date of acquisition or, in respect of internally constructed
assets, from the time an asset is completed and held ready for use.
The estimated useful lives of property, plant and equipment for current and comparative periods are as
follows:
•
Plant and equipment
• Computer equipment
4-12 years
3-5 years
•
Leased plant and equipment
Term of Lease
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each
reporting period. When changes are made, adjustments are reflected prospectively in current and future
periods only.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount (note 1(i)).
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are
included in profit or loss.
66
Collection House Group
2016 Annual Report
67
Financial Statements:Financial Statements:For the Year Ended 30 June 2016For the Year Ended 30 June 2016
Notes to the financial statements
Notes to the financial statements
1 Summary of significant accounting policies (continued)
1 Summary of significant accounting policies (continued)
(p) Intangible assets
(i) Goodwill
Goodwill is measured as described in note 1(h). Goodwill on acquisitions of subsidiaries is included in
intangible assets. Goodwill is not amortised but it is tested for impairment every six months, or more
frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less
accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of
goodwill relating to the entity sold.
Goodwill is allocated to cash generating units for the purpose of impairment testing. The allocation is made
to those cash generating units or groups of cash generating units that are expected to benefit from the
business combination in which the goodwill arose, identified according to operating segments (note 4).
(ii)
IT development and software
Costs incurred in developing products or systems and costs incurred in acquiring software and licenses
that will contribute to future period financial benefits through revenue generation and/or cost reduction
are capitalised to software and systems. Costs capitalised include external direct costs of materials and
service and direct payroll and payroll related costs of employees’ time spent on the project. Amortisation
commences from the point at which the asset is ready for use, and is calculated on a straight line basis over
periods generally ranging from 2 to 15 years. Useful lives are reviewed at each reporting date and adjusted if
appropriate.
IT development costs include only those costs directly attributable to the development phase and are only
recognised following completion of technical feasibility and where the Group has an intention and ability to
use the asset.
(iii) Customer contracts
The customer contracts were acquired as part of a business combination (see note 27 for details). They are
recognised at their fair value at the date of acquisition and are subsequently amortised on a straight-line basis
over periods ranging from 2 to 10 years.
(iv) Other intangible assets
Licences and intellectual property are considered to have a definite useful life and are carried at cost less
accumulated amortisation. All costs associated with the maintenance and protection of these assets are
expensed in the period consumed.
(q) Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of 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 from the
reporting date.
(r) Borrowings
All borrowings are recognised at their principal amounts subject to set off arrangements which represent the
present value of future cash flows associated with servicing the debt. Where interest is payable in arrears the
interest expense is accrued over the period it becomes due and it is recorded at the contracted rate as part of
“Other payables”.
Where interest is paid in advance, the interest expense is recorded as a part of “Prepayments” and released
over the period to maturity.
Borrowings are removed from the consolidated 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.
(r) Borrowings (continued)
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.
(s) Borrowing costs
Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time
that is required to complete and prepare the asset for its intended use or sale. Other borrowing costs are
expensed.
Borrowing costs include interest, amortisation of discounts or premiums relating to borrowings, amortisation
of ancillary costs incurred in connection with arrangement of borrowings, foreign exchange losses net of any
hedged amounts on borrowings, including trade creditors and lease finance charges.
Ancillary costs incurred in connection with the arrangement of borrowings are capitalised and amortised over
the life of the borrowings.
(t) Provisions
(i) Make good
The Group is required to restore the leased premises for a number of its premises to their original condition at
the end of the respective lease terms. A provision has been recognised for the estimated expenditure required
to remove any leasehold improvements. These costs have been capitalised as part of the cost of leasehold
improvements and are amortised over the shorter of the term of the lease or the useful life of the assets.
(ii) Legal provisions
Provisions for legal claims are recognised when the Group has a present legal or constructive obligation as
a result of past events, it is probable that an outflow of resources will be required to settle the obligation and
the amount has been reliably estimated. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement
is determined by considering the class of obligations as a whole. A provision is recognised even if the
likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
(iii) Recognition and measurement
Provisions are measured at the present value of management’s best estimate of the expenditure required to
settle the present obligation at the end of each reporting period. The discount rate used to determine the
present value is a pre-tax rate that reflects current market assessments of the time value of money and the
risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest
expense.
(u) Employee benefits
(i) Short term obligations
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be
settled 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 liability for annual leave is recognised in
the provision for employee benefits. All other short-term employee benefit obligations are presented as
payables.
(ii) Long-term employee benefit obligations
The liability for long service leave and annual leave which is not expected to be settled within 12 months after
the end of the period in which the employees render the related service is recognised in the provision for
employee benefits and measured as the present value of expected future payments to be made in
68
Collection House Group
2016 Annual Report
69
Financial Statements:Financial Statements:For the Year Ended 30 June 2016For the Year Ended 30 June 2016 Notes to the financial statements
Notes to the financial statements
Summary of significant accounting policies (continued)
1 Summary of significant accounting policies (continued)
(u) Employee benefits (continued)
(ii) Long term employee benefit obligations (continued)
respect of services provided by employees up to the end of the reporting period. Consideration is given
to expected future wage and salary levels, experience of employee departures and periods of service.
Expected future payments are discounted using market yields at the end of the reporting period on national
government bonds with terms to maturity and currency that match, as closely as possible, the estimated
future cash outflows.
The obligations are presented as current liabilities in the consolidated balance sheet if the entity does not
have an unconditional right to defer settlement for at least twelve months after the reporting date, regardless
of when the actual settlement is expected to occur.
(iii) Superannuation Plans
The Company and other controlled entities make statutory contributions to several superannuation funds
in accordance with the directions of its employees. Contributions are expensed in the period to which they
relate.
(iv) Share based payments
Share based compensation benefits are provided to the Chief Executive Officer via the employment
agreement between the Company and the Chief Executive Officer.
Share based compensation benefits are provided to employees other than the Chief Executive Officer via the
Collection House Limited Performance Rights Plan. Further details are set out in note 29.
The fair value of the performance rights granted under the PRP was independently determined.
The fair value at grant date has been calculated using the five day volume weighted average price (VWAP).
The expense is recognised over the vesting period. The expense for each relevant financial year will require
an assessment at each reporting date of the probability that each performance hurdle will be achieved. This
probability factor will then be multiplied by the total number of rights apportioned to each performance
hurdle to determine the number used in calculating the charge to profit and loss. Further details are set out
in note 29.
(v) Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement date, or
when an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises
termination benefits when it is demonstrably committed to either terminating the employment of current
employees according to a detailed formal plan without possibility of withdrawal or to providing termination
benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12
months after the end of the reporting period are discounted to present value.
(v) Contributed equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of
tax, from the proceeds.
Where any group company purchases the Company’s equity instruments, for example as the result of a
share buy-back or a share-based payment plan, the consideration paid, including any directly attributable
incremental costs (net of income taxes) is deducted from equity attributable to the equity holders of
Collection House Limited as treasury shares until the shares are cancelled or reissued. Where such ordinary
shares are subsequently reissued, any consideration received, net of any directly attributable incremental
transaction costs and the related income tax effects, is included in equity attributable to the equity holders of
Collection House Limited.
(w) 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.
(x) Earnings per share
(i) 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 (note 28).
(ii) 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.
(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 consolidated balance sheet.
Cash flows are presented on a gross basis. 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.
(z) Rounding of amounts
The Company is of a kind referred to in ASIC Corporations Instrument 2016/191, issued by the Australian
Securities and Investments Commission, relating to the ‘rounding off’ of amounts in the financial statements.
Amounts in the financial statements have been rounded off in accordance with that Corporations Instrument
to the nearest thousand dollars, or in certain cases, the nearest dollar.
(aa) New accounting standards and interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for the 30
June 2016 reporting period and have not been early adopted by the Group. The Group’s assessment of the
impact of these new standards and interpretations is set out below.
At the date of authorisation of the financial report, the following relevant Standards and Interpretations were
issued but not yet effective:
(i)
(ii)
AASB 9 Financial Instruments (December 2014) and associated Amending Standards (applicable to
annual reporting periods beginning on or after 1 January 2018)
AASB 15 Revenue from Contracts with Customers (applicable to annual reporting periods commencing
on or after 1 January 2018)
(iii) AASB 16 Leases (applicable to annual reporting periods commencing on or after 1 January 2019)
70
Collection House Group
2016 Annual Report
71
Financial Statements:Financial Statements:For the Year Ended 30 June 2016For the Year Ended 30 June 2016 Notes to the financial statements
Notes to the financial statements
1 Summary of significant accounting policies (continued)
2 Financial risk management
(aa) New accounting standards and interpretations (continued)
The Group does not expect to adopt the new standards before their operative date. The Group is currently
evaluating the impact of the new standards, however AASB 9 and AASB 15 are not expected to have a material
impact on the Group.
Under AASB 16, the Group will be required to recognise all leases on balance sheet, except for short term
leases, and leases of low value assets. This change may have a material impact on the Group, however the
extent of the impact is unable to be reliably determined until closer to application date, once the mix and
maturity of leases held by the Group at that point is able to be determined.
There are no other standards that are not yet effective and that are expected to have a material impact on the
Group in the current or future reporting periods and on foreseeable future transactions.
(ab) Parent entity financial information
The financial information for the parent entity, Collection House Limited, disclosed in note 26 has been
prepared on the same basis as the consolidated financial statements, except as set out below.
(i)
Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the financial
statements of Collection House Limited. Dividends received from associates are recognised in the parent
entity’s profit or loss, rather than being deducted from the carrying amount of these investments.
(ii) Tax consolidation legislation
Collection House Limited and its wholly-owned Australian controlled entities have implemented the tax
consolidation legislation.
The head entity, Collection House Limited, and the controlled entities in the tax consolidated group account
for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax
consolidated group continues to be a stand alone taxpayer in its own right.
In addition to its own current and deferred tax amounts, Collection House Limited also recognises the current
tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits
assumed from controlled entities in the tax consolidated group.
The entities have also entered into a tax funding agreement under which the wholly owned entities fully
compensate Collection House Limited for any current tax payable assumed and are compensated by
Collection House Limited for any current tax receivable and deferred tax assets relating to unused tax losses
or unused tax credits that are transferred to Collection House Limited under the tax consolidation legislation.
The funding amounts are determined by reference to the amounts recognised in the
wholly-owned entities’ financial statements.
The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice
from the head entity, which is issued as soon as practicable after the end of each financial year.
The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax
instalments.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as
current amounts receivable from or payable to other entities in the group.
Any difference between the amounts assumed and amounts receivable or payable under the tax funding
agreement are recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities.
The Group’s financial assets and liabilities consist mainly of PDLs, deposits with banks, trade and other
receivables, payables and borrowings.
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk and
interest rate risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on
the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial
performance of the Group. The Group uses different methods to measure different types of risk to which it
is exposed. These methods include sensitivity analysis in the case of interest rate and foreign exchange risks,
and aging analysis for credit risk.
Risk management is carried out by the finance department under policies approved by the Audit and Risk
Management Committee of the Board. Under the authority of the Board of Directors the Audit and Risk
Management Committee ensures that the total risk exposure of the Group is consistent with the Business
Strategy and within the risk tolerance of the Group. Regular risk reports are tabled before the Audit and Risk
Management Committee.
Within this framework, the Finance team identifies, evaluates and manages financial risks in close
co-operation with the Group’s operating units.
(a)
Market risk
Market risk is the risk that changes in market prices such as foreign exchange rates and interest rates will
affect the Group’s income.
(i)
Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency
exposures, primarily with respect to the New Zealand (NZ) Dollar and the Philippine Peso. Fluctuations in
either of these currencies may impact the Group’s results.
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities
denominated in a currency that is not the entity’s functional currency.
Sensitivity
At 30 June 2016, had the Australian Dollar weakened/strengthened by 10% against the NZ Dollar or the
Philippine Peso with all other variables held constant, the impact for the year would have been immaterial to
both profit for the year and equity.
(ii) Cash flow and fair value interest rate risk
As the Group has no significant interest bearing assets, the Group’s income and operating cash flows are not
materially exposed to changes in market interest rates.
The Group’s main interest rate risk arises from long-term borrowings. Borrowings issued at variable rates
expose the Group to cash flow interest rate risk. During 2016 and 2015, the Group borrowings at variable
rates were denominated in Australian Dollars only.
Group finance facilities are a combination of overdraft and short-term commercial bill facilities, all of which
are on a variable interest rate basis. In the current interest rate environment, this approach maximises
available cash with minimal exposure to interest rate movements. All aspects of the financing arrangements,
including interest rate structuring can be reviewed as required during the life of the facility.
The Group analyses interest rate exposure in the context of current economic conditions. Management
monitors the impact on profits of specific interest rate increases, and annual budgets and ongoing forecasts
are framed based upon group and market expectations of interest rate levels for the coming year.
72
Collection House Group
2016 Annual Report
73
Financial Statements:Financial Statements:For the Year Ended 30 June 2016For the Year Ended 30 June 2016 Notes to the financial statements
Notes to the financial statements
2 Financial risk management (continued)
(a)
Market risk (continued)
The Board of Directors have authorised the use of interest rate swaps as a tool for managing interest rate
risk within the Group. At 30 June 2016, the Group has entered into four interest rate swaps, as outlined
below.
On 16 May 2014, the Company confirmed an interest rate swap transaction for a notional amount of $46m at
a fixed rate of 3.05% per annum effective as at 28 July 2014 and continuing until 27 January 2017. On 21 July
2014, the Company confirmed an interest rate swap transaction for a notional amount of $14.5m at a fixed
rate of 2.92% per annum effective as at 21 September 2015 and continuing until 27 January 2017. On 21 July
2014, the Company confirmed an interest rate swap transaction for a notional amount of $15m at a fixed rate
of 2.91% per annum effective as at 7 September 2015 and continuing until 27 January 2017. On 9 February
2015, the Company confirmed an interest rate swap transaction for a notional amount of $20m at a fixed rate
of 1.86% per annum effective as at 9 February 2015 and continuing until 9 February 2018.
As at the reporting date, the Group had the following variable rate borrowings and interest rate
swap contracts outstanding:
Consolidated
30 June 2016
30 June 2015
Weighted
average
interest rate %
Balance
$’000
Weighted
average
interest rate %
Balance
$’000
Bank overdrafts and bank loans
3.0%
118,200
3.5%
119,000
Interest rate swaps (notional principal amount)
3.6%
(95,500)
3.7%
(108,100)
Sensitivity
At 30 June 2016, if interest rates had changed by +/- 25 basis points from the year end rates with all other
variables held constant, post-tax profit for the year would have been $41,000 lower/higher (2015 - change
of 25 bps: $21,000 lower/higher), mainly as a result of higher/lower interest expense from net borrowings.
Other components of equity would have been $41,000 lower/higher (2015 - $21,000 lower/higher) mainly
as a result of an increase/decrease in cash not required for interest payments. Other financial assets and
liabilities are not interest bearing and therefore are not subject to interest rate risk.
Net exposure to cash flow interest rate risk
22,700
10,900
Total increase / (decrease) in financial liabilities
2 Financial risk management (continued)
(a)
Market risk (continued)
The following table summarises the sensitivity of the Group’s financial assets and financial liabilities to interest
rate risk.
Consolidated
30 June 2016
Financial liabilities
Borrowings
Total increase / (decrease) in financial liabilities
Total increase / (decrease)
Consolidated
30 June 2015
Financial liabilities
Borrowings
Total increase / (decrease)
(b) Credit risk
Interest rate risk
-25 bps
+25 bps
Carrying amount
$'000
Profit
$'000
Equity
$'000
Profit
$'000
Equity
$'000
429
22,700
1
40
41
41
1
40
41
41
(1)
(40)
(41)
(41)
(1)
(40)
(41)
(41)
Interest rate risk
-25 bps
+25 bps
Carrying amount
$'000
Profit
$'000
Equity
$'000
Profit
$'000
Equity
$'000
931
10,900
2
19
21
21
2
19
21
21
(2)
(19)
(21)
(21)
(2)
(19)
(21)
(21)
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails
to meet its contractual obligations, and arises principally from cash and cash equivalents, as well as credit
exposures to clients, including outstanding receivables and committed transactions.
The carrying amount of financial assets represents the maximum credit exposure.
Cash and cash equivalents
Receivables
Purchased debt ledgers
Other current assets
Total financial assets
30 June 2016
$’000
30 June 2015
$’000
8,938
9,969
265,312
1,108
285,327
7,222
10,265
255,989
1.089
274,565
Credit risk in relation to PDLs is managed via managements’ approach in determining the initial purchase
price to pay for a portfolio of debt. At acquisition, the PDL is initially recognised at fair value at a portfolio
level, being the transaction price and thereafter at amortised cost, less any impairment losses. Most PDLs, by
their nature are impaired on acquisition which is reflected in the fair value at acquisition. Amortised cost is
measured as the present value of forecast future of cash flows using the effective interest rate method.
74
Collection House Group
2016 Annual Report
75
Financial Statements:Financial Statements:For the Year Ended 30 June 2016For the Year Ended 30 June 2016
Notes to the financial statements
Notes to the financial statements
2 Financial risk management (continued)
(b) Credit risk (continued)
2 Financial risk management (continued)
(c) Liquidity risk (continued)
The effective interest rate is calculated on initial recognition and reflects a constant periodic return on the
carrying value of the loans.
The group set off can be drawn upon at any time and the term debt option can be drawn upon within
2 days. The group set off is repayable on demand, and the term debt is repayable at the end of the term.
Management continuously monitor cash flows and the carrying value of the PDLs. An impairment is assessed
on a regular basis by management and is identified on a portfolio basis following evidence that the PDL is
impaired. An impairment is recognised where actual performance and re-forecast future cash flows deviate
to below the initial effective interest rate. During the year ended 30 June 2016, no impairment charge was
recognised (30 June 2015: nil) as future cash flows remain at a rate above the initial effective interest rate. All
income from the recovery of PDLs has been recognised as interest.
Ongoing credit risk is managed through the application of a valuation model, which forecasts recoverability
based on the historical experience of the company based on metrics such as debt type, age, and customer
status.
The Group has no significant concentrations of trade credit risk. The Group has policies in place to ensure
that services are made to customers with an appropriate credit history.
The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect
of trade and other receivables. Refer to Note 9 for further details.
(c) Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its
financial liabilities that are settled by delivering cash or another financial asset.
Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through
an adequate amount of committed credit facilities to meet obligations when due. Due to the dynamic nature
of the underlying businesses, the Finance Team aims to maintain flexibility in funding by keeping committed
credit lines available.
Management monitors rolling forecasts of the Group’s liquidity reserve (comprising the undrawn borrowing
facilities below) and cash and cash equivalents on the basis of expected cash flow. Cash flows are forecast
on a day-to-day basis across the Group to ensure that sufficient funds are available to meet requirements on
the basis of expected cash flows. In addition, the Group’s liquidity management policy involves projecting
cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring
balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt
financing plans.
Financing arrangements
The Group had access to the following undrawn borrowing facilities at the end of the reporting period:
Term debt facility
Group set off
Consolidated
30 June
2016
$’000
6,800
12,500
30 June
2015
$’000
6,000
7,500
The facility, which was syndicated in January 2014, was subject to meeting a number of financial
undertakings. The undertakings are reviewed by the Audit and Risk Management Committee each month, and
are reported on to the finance provider bi-annually. All companies within the Group are required to notify the
finance provider of any event of default as soon as it becomes aware of them.
In addition to the above the Group is required to keep the finance provider fully informed of relevant details
of the Group as they arise.
Further details of the banking facility are set out in note 17.
Maturities of financial liabilities
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the
remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table
are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances,
as the impact of discounting is not significant.
Contractual maturities
of financial liabilities
At 30 June 2016
Less than
6 months
$'000
6 - 12
months
$'000
Between
1 and 2 years
$'000
Between
2 and 5 years
$'000
Over 5
years
$'000
Non-derivatives
Non-interest bearing
15,085
Variable rate
-
Total non-derivatives
15,085
-
-
-
-
429
429
-
118,200
118,200
-
-
-
Less than 6
months
$'000
6 - 12
months
$'000
Between 1 and
2 years
$'000
Between 2 and
5 years
$'000
Over 5
years
$'000
At 30 June 2015
Non-derivatives
Total
contractual
cash flows
$'000
15,085
118,629
133,714
Total
contractual
cash flows
$’000
Non-interest bearing
16,013
Variable rate
-
Total non-derivatives
16,013
-
-
-
-
931
931
-
119,000
119,000
-
-
-
16,013
119,931
135,944
76
Collection House Group
2016 Annual Report
77
Financial Statements:Financial Statements:For the Year Ended 30 June 2016For the Year Ended 30 June 2016
Notes to the financial statements
Notes to the financial statements
4 Segment information
(a) Description of segments
Individual business segments are identified on the basis of grouping individual products or services subject
to similar risks and returns. The business segments reported are: Collection Services and Purchased Debt
Ledgers. The Group has identified its operating segments based on the internal reports that are reviewed and
used by the Board of Directors (chief operating decision makers) in assessing performance and determining
the allocation of resources.
The consolidated entity is organised on a global basis into the following divisions by product and service type.
Collection Services
The earning of commissions on the collection of debts for clients.
Purchased Debt Ledgers
The collection of debts from client ledgers acquired by the Group.
All other segments
All other segments includes unallocated revenue and expenses, intersegment eliminations, interest,
borrowings, and income tax expenses.
3 Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that may have a financial impact on the Group and that are believed
to be reasonable under the circumstances.
(a) Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will,
by definition, seldom equal the related actual results. The estimates and assumptions that have a significant
risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial
year are discussed below.
(i) Estimated impairment of goodwill
Each six months the Group tests whether goodwill has suffered any impairment, in accordance with
the accounting policy stated in note 1(p). The recoverable amounts of cash-generating units have been
determined based on value-in-use calculations. These calculations require the use of assumptions. Refer to
note 13 for details of these assumptions and the potential impact of changes to the assumptions.
(ii) PDLs
PDLs are initially recognised at fair value plus any directly attributable acquisition costs. Subsequent to initial
recognition, PDLs are measured at amortised cost using the effective interest method, less any impairment
losses. Management continue to monitor the performance and key estimates used in determining whether
any objective evidence exists that a PDL may be impaired. This includes:
•
•
re-forecasting expected future cash flows every six months. An impairment is recognised where actual
performance and re-forecast future cash flows deviate to below the initial effective interest rate. Refer to
note 10 for further details.
regular assessment of the estimated forecast amortisation rate applied to PDLs. For the year ended 30
June 2016, the company has estimated that PDLs amortise at a rate of 43 percent per annum (30 June
2015: 43%).
(iii) Estimated impairment of non financial assets and intangible assets other than goodwill
Each six months the Group tests whether the non-financial assets or intangible assets of the Group (other
than goodwill) have suffered any impairment, in accordance with the accounting policy stated in note
1(i). The recoverable amounts of cash-generating units have been determined based on value-in-use
calculations. These calculations require the use of assumptions.
(iv) Performance rights
The Group determines the amount to be posted to the share based payments reserve based on
management’s best estimate of employees meeting their performance hurdles. The value of performance
rights could change if the number of employees that meet their performance hurdles differs significantly
from managements estimate.
(b) Critical judgements in applying the entity’s accounting policies
(i) Employee benefits
Management judgment is applied in determining the key assumptions used in the calculation of long service
leave at balance date:
•
•
•
•
future increases in wages and salaries
future on-cost rates
discount rates
experience of employee departures and period of service
(ii) Useful lives of property, plant and equipment
The Group’s management determines the estimated useful lives and related depreciation charges for
property, plant and equipment at the time of acquisition. As described in note 1(o) useful lives are reviewed
regularly throughout the year for appropriateness.
78
Collection House Group
2016 Annual Report
79
Financial Statements:Financial Statements:For the Year Ended 30 June 2016For the Year Ended 30 June 2016 Notes to the financial statements
Notes to the financial statements
4 Segment information (continued)
(b) Segment information provided to the Board
4 Segment information (continued)
(b) Segment information provided to the Board (continued)
Collection
services
$’000
Purchased debt
ledgers
$’000
All other
segments
$’000
Consolidated
$’000
57,459
450
57,909
-
57,909
-
-
-
74,639
74,639
9,001
29,297
-
146
146
-
146
(6,167)
(6,147)
(7,422)
57,459
596
58,055
74,639
132,694
32,131
(6,147)
25,984
(7,422)
18,562
164,050
22,830
267,518
(107,673)
107,049
18,683
323,895
148,562
2016
Segment revenue
Sales to external customers
Intersegment sales
Total sales revenue
Interest income
Total segment revenue
Segment result
Segment result
Interest expense and borrowing costs
Profit before income tax
Income tax expense
Profit for the year
Segment assets and liabilities
Segment assets
Segment liabilities
Other segment information
Acquisitions of property, plant and
equipment, intangibles and other
non-current segment assets
Total acquisitions
Collection
services
$’000
Purchased debt
ledgers
$’000
All other
segments
$’000
Consolidated
$’000
47,848
903
48,751
-
48,751
-
-
-
77,552
77,552
-
(260)
(260)
-
47,848
643
48,491
77,552
(260)
126,043
9,373
31,898
(3,464)
(5,915)
(9,409)
37,807
(5,915)
31,892
(9,409)
22,483
182,145
19,766
259,515
(126,006)
131,564
(6,341)
315,654
144,989
2015
Segment revenue
Sales to external customers
Intersegment sales
Total sales revenue
Interest income
Total segment revenue
Segment result
Segment result
Interest expense and borrowing costs
Profit before income tax
Income tax expense
Profit for the year
Segment assets and liabilities
Segment assets
Segment liabilities
Other segment information
Acquisitions of property, plant and
equipment, intangibles and other
non-current segment assets
Total acquisitions
13,182
64,166
-
3,475
73,819
-
Depreciation and amortisation expense
1,806
901
1,241
Total depreciation and amortisation
Other non-cash expenses
346
48,751
1,427
Depreciation and amortisation expense
1,148
886
411
Total depreciation and amortisation
Other non-cash expenses
245
50,247
1,226
77,348
77,348
3,948
3,948
50,524
77,294
77,294
2,445
2,445
51,718
80
Collection House Group
2016 Annual Report
81
Financial Statements:Financial Statements:For the Year Ended 30 June 2016For the Year Ended 30 June 2016
Notes to the financial statements
Notes to the financial statements
4 Segment information (continued)
(c) Geographical information
The consolidated entity operates in two main geographical areas, Australia and New Zealand.
Segment revenues from sales
to external customers
Segment assets
Acquisitions of property, plant
and equipment, intangibles
and other non-current
segment assets
30 June
2016
$’000
30 June
2015
$’000
30 June
2016
$’000
30 June
2015
$’000
30 June
2016
$’000
30 June
2015
$’000
5 Revenue
Interest income
Commission
Gain on sale of PDLs
Other revenue
Consolidated
30 June
2016
$’000
70,564
57,571
4,075
484
30 June
2015
$’000
76,704
47,970
848
521
Australia
127,456
121,001
312,330
304,526
77,341
77,288
Revenue from continuing operations
132,694
126,043
New Zealand
4,642
4,399
Philippines
-
-
9,657
1,908
9,893
1,236
3
3
3
3
132,098
125,400
323,895
315,654
77,348
77,294
Segment revenues are allocated based on the country in which the customer is located. Segment assets and
capital expenditure are allocated based on where the assets are located.
(i) Accounting policies
Segment information is prepared in conformity with the accounting policies of the entity as disclosed in note
1 (c) and AASB 8 Operating Segments.
Segment revenues, expenses, assets and liabilities are those that are directly attributable to a segment and
the relevant portion that can be allocated to the segment on a reasonable basis. Segment assets include all
assets used by a segment and consist primarily of operating cash, receivables, property, plant and equipment
and goodwill and other intangible assets, net of related provisions. While most of these assets can be directly
attributable to individual segments, the carrying amounts of certain assets used jointly by segments are
allocated based on reasonable estimates of usage. Segment liabilities consist primarily of trade and other
payables, employee benefits and interest bearing liabilities. Segment assets and liabilities do not include
income taxes.
Unallocated items mainly comprise interest or dividend-earning assets and revenue, interest bearing loans,
borrowing costs and corporate assets and expenses.
Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are
expected to be used for more than one period.
(ii) Segment margins
Collection Services
Purchased debt ledgers
30 June
2016
%
30 June
2015
%
30 June
2016
%
30 June
2015
%
Margin on segment revenue
16
19
39
41
(d) Other segment information
Sales between segments are carried out at arm’s length and are eliminated on consolidation. The revenue
from external parties reported to the chief operating decision maker is consistent with that in the income
statement.
6 Expenses
Profit before income tax includes the following specific expenses:
Depreciation
Leasehold improvements, plant and equipment
Total depreciation
Amortisation
Computer software
Customer contracts
Business formation costs
Stamp Duty
Total amortisation
Total depreciation and amortisation
Write off of assets (included in other expenses)
Plant and equipment
Leasehold improvements
Total write off of assets
Consolidated
30 June
2016
$’000
30 June
2015
$’000
2,000
2,000
1,109
364
38
437
1,948
3,948
778
942
1,720
1,116
1,116
535
330
38
426
1,329
2,445
-
-
-
82
Collection House Group
2016 Annual Report
83
Financial Statements:Financial Statements:For the Year Ended 30 June 2016For the Year Ended 30 June 2016
Notes to the financial statements
Notes to the financial statements
6 Expenses (continued)
Finance expenses
Interest and finance charges paid/payable
Amount capitalised (a)
Finance costs expensed
Rental expense relating to operating leases
Minimum lease payments
Total rental expense relating to operating leases
Restructuring expenses
Restructure costs
Total restructuring expenses
(a) Capitalised borrowing costs
Consolidated
30 June
2016
$’000
30 June
2015
$’000
6,378
(231)
6,147
6,420
6,420
1,222
1,222
6,357
(442)
5,915
6,087
6,087
-
-
The capitalisation rate used to determine the amount of borrowing costs to be capitalised is the weighted
average interest rate applicable to the entity’s outstanding borrowings during the year, in this case 4.9%
(2015 – 5.1%).
7
Income tax expense
(a) Income tax expense
Income tax expense - Profit from continuing operations
Income tax expense is attributable to:
Current tax
Deferred tax
Under (over) provided in previous years
Aggregate income tax expense
Deferred income tax (revenue) expense included in income tax
expense comprises:
Decrease (increase) in deferred tax assets (note 18)
(Decrease) increase in deferred tax liabilities (note 18)
Consolidated
30 June
2016
$’000
30 June
2015
$’000
7,422
9,409
9,337
(1,476)
(439)
7,422
(1,596)
120
1,476
9,708
523
(822)
9,409
125
398
523
7
Income tax expense (continued)
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Consolidated
30 June
2016
$’000
25,984
7,795
30 June
2015
$’000
31,892
9,568
(176)
21
(196)
7,444
(22)
(22)
7,422
231
25
(201)
9,623
(214)
(214)
9,409
Profit from continuing operations before income tax expense
Tax at the Australian tax rate of 30% (2015 - 30%)
Tax effect of amounts which are not deductible (taxable) in
calculating taxable income:
Non-deductible expenses
Effect of tax rates in foreign jurisdictions
Tax exempt (income) / loss
Adjustments for current tax of prior periods
Income tax expense
8 Cash and cash equivalents
(a) Reconciliation of cash at the end of the year
The below figures are reconciled to cash at the end of the financial year as shown in the statement of cash
flows as follows:
Cash at bank and on hand
Balances per statement of cash flows
(b) Bank overdraft right of set-off
Consolidated
30 June
2016
$’000
8,938
8,938
30 June
2015
$’000
7,222
7,222
With effect from 1 July 2004, the Company holds a contractual right of set off between the current overdraft
balance and the cash at bank balances.
84
Collection House Group
2016 Annual Report
85
Financial Statements:Financial Statements:For the Year Ended 30 June 2016For the Year Ended 30 June 2016 Notes to the financial statements
Notes to the financial statements
9 Trade and other receivables
Net trade receivables
Trade receivables
Provision for impairment of receivables (a)
Accrued revenue
Other assets
Prepaid expenses
Consolidated
30 June
2016
$’000
30 June
2015
$’000
6,043
(93)
5,950
2,339
194
1,486
9,969
5,302
(96)
5,205
3,383
(22)
1,699
10,265
(a) Impaired trade receivables
As at 30 June 2016 current trade receivables of the Group with a value of $164,000 (2015 - $426,000)
were assessed as potentially impaired. The amount of the provision was $93,000 (2015 - $96,000). The
individually impaired receivables mainly relate to debtors which have been outstanding for more than 90
days. It has been assessed that a portion of these receivables are expected to be recovered.
The ageing of these receivables is as follows:
Over 3 months
Movements in the provision for impairment of receivables are as follows:
At 1 July
Provision for impairment recognised during the year
Receivables written off during the year as uncollectible
Unused amount reversed
Consolidated
30 June
2016
$’000
164
164
30 June
2015
$’000
426
426
Consolidated
30 June
2016
$’000
30 June
2015
$’000
96
98
(3)
(98)
93
49
81
(1)
(33)
96
9 Trade and other receivables (continued)
(a) Impaired trade receivables (continued)
The creation and release of the provision for impaired receivables has been included in ‘other expenses’ in
the income statement. Amounts charged to the allowance account are generally written off when there is no
expectation of recovering additional cash.
The other classes within trade and other receivables do not contain impaired assets and are not past due.
Based on the credit history of these other classes, it is expected that these amounts will be received when
due. The Group does not hold any collateral in relation to these receivables.
(b) Past due but not impaired
As at 30 June 2016, trade receivables of the Group of $709,000 (2015 - $1,056,000) were past due but not
impaired. These relate to a number of independent customers for whom there is no recent history of default.
The ageing analysis of these trade receivables is as follows:
Up to 3 months
Over 3 months
10 Purchased debt ledgers
Current
Non-current
Consolidated
30 June
2016
$’000
675
34
709
30 June
2015
$’000
1,052
4
1,056
Consolidated
30 June
2016
$’000
30 June
2015
$’000
61,071
57,167
204,241
198,822
265,312
255,989
PDLs are measured at amortised cost using the effective interest method in accordance with AASB 9 Financial
Instruments.
The effective interest rate is the implicit interest rate based on forecast collections determined in the period
of acquisition of an individual PDL and equates to the Internal Rate of Return (IRR) of the forecast cash flows
without any consideration of collection costs.
11 Other current assets
Other deposits
Legal and court costs capitalised - net
Consolidated
30 June
2016
$’000
30 June
2015
$’000
21
1,087
1,108
120
969
1,089
86
Collection House Group
2016 Annual Report
87
Financial Statements:Financial Statements:For the Year Ended 30 June 2016For the Year Ended 30 June 2016 Notes to the financial statements
Notes to the financial statements
12 Property, plant and equipment
13 Intangible assets
Plant and
equipment
$'000
Leasehold
improvements
$'000
Leased plant and
equipment
$'000
Work-in-
progress
$'000
Total
$'000
At 1 July 2014
Cost or fair value
Accumulated depreciation
Net book amount
Year ended 30 June 2015
7,682
(5,882)
1,800
4,520
(1,923)
2,597
Opening net book amount
1,800
2,597
-
-
-
-
-
-
-
-
-
-
-
-
1,039
13,241
-
(7,805)
1,039
5,436
1,039
5,436
1,072
1,171
-
-
(16)
(1,116)
(1,558)
-
553
5,475
553
14,311
-
(8,836)
553
5,475
99
(8)
(666)
1,261
2,486
8,952
(6,466)
2,486
-
(8)
(450)
297
2,436
4,806
(2,370)
2,436
Plant and
equipment
$'000
Leasehold
improvements
$'000
Leased plant and
equipment
$'000
Work-in-
progress
$'000
Total
$'000
2,486
122
(68)
(655)
444
2,329
9,450
(7,121)
2,329
2,436
1,109
(1,085)
(1,404)
331
1,387
5,161
(3,774)
1,387
-
-
-
-
-
-
-
-
-
553
783
5,475
2,014
-
-
(1,153)
(2,059)
(775)
-
561
4,277
561
15,172
-
(10,895)
561
4,277
Additions
Disposals
Depreciation charge
Transfers
Closing net book amount
At 30 June 2015
Cost or fair value
Accumulated depreciation
Net book amount
Year ended 30 June 2016
Opening net book amount
Additions
Disposals
Depreciation charge
Transfers
Closing net book amount
At 30 June 2016
Cost or fair value
Accumulated depreciation
Net book amount
Goodwill
$'000
Computer
software
$'000
Customer
contracts
$'000
Other
intangible
assets
$'000
Work-in-
progress –
cost *
$'000
Total
$'000
At 1 July 2014
Cost
Accumulated amortisation
and impairment
23,484
8,190
(3,763)
(6,990)
Net book amount
19,721
1,200
Year ended 30 June 2015
2,487
(148)
2,339
184
(19)
165
10,797
45,142
-
(10,920)
10,797
34,222
Opening net book amount
19,721
1,200
2,339
165
10,797
34,222
Exchange differences
Additions - internal
development
Amortisation charge
Disposals
Transfers
(2)
-
-
-
-
Closing net book amount
19,719
At 30 June 2015
-
63
(535)
(7)
2,642
3,363
-
-
-
-
-
(2)
2,241
2,304
(330)
(38)
-
-
-
-
-
-
(2,642)
(903)
(7)
-
2,009
127
10,396
35,614
Cost
23,482
10,887
Accumulated amortisation
and impairment
(3,763)
(7,524)
2,487
(478)
Net book amount
19,719
3,363
2,009
184
(57)
127
10,396
47,436
-
(11,822)
10,396
35,614
Year ended 30 June 2016
Opening net book amount
19,719
3,363
2,009
127
10,396
35,614
-
41
-
-
-
-
-
8
3,214
3,255
(1,111)
(364)
(38)
Exchange differences
Additions - internal
development
Amortisation charge
Disposals
Transfers
8
-
-
-
-
Closing net book amount
19,727
At 30 June 2016
Cost
23,490
22,060
Accumulated amortisation
and impairment
(3,763)
(8,635)
-
11,132
13,425
-
-
1,645
2,487
(842)
-
-
(11,132)
(1,513)
-
-
2,478
37,364
2,478
50,699
-
(13,335)
2,478
37,364
-
-
89
184
(95)
89
(a) Non current assets pledged as security
Refer to note 17 for information on non-current assets pledged as security by the Group.
Net book amount
19,727
13,425
1,645
88
Collection House Group
2016 Annual Report
89
*Work-in-progress includes capitalised development costs of an internally generated intangible asset which is under development.
Financial Statements:Financial Statements:For the Year Ended 30 June 2016For the Year Ended 30 June 2016
Notes to the financial statements
Notes to the financial statements
13 Intangible assets (continued)
(a) Impairment tests for goodwill
All goodwill is allocated to the Company’s Collection Services cash-generating unit (CGU).
The recoverable amount of the CGU is determined based on value-in-use calculations. These calculations
use cash flow projections based on financial budgets approved by management covering a five-year period.
Cash flows are not extrapolated beyond five years. The growth rate does not exceed the long-term average
growth rate for the business in which the CGU operates.
(b) Key assumptions used for value-in-use calculations
CGU
Growth rate (revenue)*
Growth rate (expenses)**
Discount rate ***
30 June
2016
%
30 June
2015
%
30 June
2016
%
30 June
2015
%
30 June
2016
%
30 June
2015
%
Collection services
5.00
5.00
3.00
3.00
12.70
12.50
* Revenue growth has been set at 5% for the period of the calculation.
** Expense growth rate has been set at the current inflation rate for the period of the calculation.
*** In performing the value-in-use calculation, the Group has applied the pre-tax discount weighted average cost of capital to discount the
forecast future attributable pre-tax cash flows.
(c) Impairment charge
As a result of the impairment evaluation, the Group has determined that the carrying value of intangible assets
does not exceed their value-in-use, and no impairment charge was required (2015:Nil).
(d) Impact of possible changes in key assumptions
Collection services
There is a substantial margin between the calculated value-in-use and the carrying value of all assets within
the CGU. If the risk-free rate used in the value-in-use calculation had been 22.5% at 30 June 2015 rather
than 12.5%, there would have been no impact on the resulting impairment evaluation (2015: Nil).
If the estimated revenue growth is increased to 10.00% and expenses growth held at 3.00%, there is no
impact on the resulting impairment evaluation. If the revenue growth rate is decreased to -2.00%
(i.e. declining revenue) and expense growth is set at 3.00%, there is no impact on the resulting impairment
evaluation. To reflect the Company’s current practice of managing revenue and expenses simultaneously,
growth in revenue and growth in expenses has been considered together rather than in isolation.
14 Trade and other payables
Trade payables
Accrued expenses
Other payables
15 Provisions
Current
Employee benefits
Make good
Fringe benefits tax
Non-current
Employee benefits
Consolidated
30 June
2016
$’000
7,054
5,788
2,243
15,085
30 June
2015
$’000
4,790
9,626
1,597
16,013
Consolidated
30 June
2016
$’000
30 June
2015
$’000
3,283
1,105
66
4,454
366
366
3,039
-
28
3,067
402
402
90
Collection House Group
2016 Annual Report
91
Financial Statements:Financial Statements:For the Year Ended 30 June 2016For the Year Ended 30 June 2016 Notes to the financial statements
Notes to the financial statements
15 Provisions (continued)
(a) Movements in provisions
Movements in each class of provision during the financial year, other than employee benefits, are set out below:
16 Other financial liabilities
2016
Current
Carrying amount at start of year
- additional provisions recognised
- payments / other sacrifices of economic benefits
Carrying amount at end of year
2015
Current
Carrying amount at start of year
- additional provisions recognised
- payments / other sacrifices of economic benefits
Carrying amount at end of year
(b) Superannuation plans
Make
good
$’000
Fringe
benefits tax
$’000
-
1,105
-
1,105
-
-
-
-
28
269
(231)
66
41
194
(207)
28
All employees are entitled to varying levels of benefits on retirement, disability or death. The superannuation
plans provide accumulated benefits. Employees contribute to the plans at various percentages of their
wages and salaries. Where there is a legal requirement the Company contributes the appropriate statutory
percentage of employees’ salaries and wages.
Current
Contingent consideration (note 27 (a))
Finance lease liabilities
Lease incentive liabilities
Other current financial liabilities
Non-current
Finance lease liabilities
Lease incentive liabilities
17 Borrowings
Secured
Bank loans
Total secured non-current borrowings
(a) Secured liabilities and assets pledged as security
The total secured liabilities are as follows:
Bank loans
Total secured liabilities
Consolidated
30 June
2016
$’000
30 June
2015
$’000
250
249
415
118
1,032
180
3,631
3,811
1,545
454
-
150
2,149
477
-
477
Consolidated
30 June
2016
$’000
118,200
118,200
Consolidated
30 June
2016
$’000
118,200
118,200
30 June
2015
$’000
119,000
119,000
30 June
2015
$’000
119,000
119,000
92
Collection House Group
2016 Annual Report
93
All bank loans are denominated in Australian dollars and are secured by a fixed and floating charge over all of
the assets and any uncalled capital of the parent entity and certain of its controlled entities.
Financial Statements:Financial Statements:For the Year Ended 30 June 2016For the Year Ended 30 June 2016
Notes to the financial statements
Notes to the financial statements
17 Borrowings (continued)
The carrying amounts of assets pledged as security for borrowings are:
18 Deferred tax balances
(a) Deferred tax assets
The balance comprises temporary differences attributable to:
Tax losses
Provisions and employee benefits
Lease incentives
Accruals
Unearned revenue
Doubtful debts
Future deductible windup costs
Other
Set-off of deferred tax liabilities pursuant to set-off provisions (b)
Net deferred tax assets
Movements:
Opening balance at 1 July
Credited / (charged) to the income statement (note 7)
Closing balance at 30 June
Consolidated
30 June
2016
$’000
506
1,403
1,214
88
29
28
3
19
3,290
(3,290)
-
1,694
1,596
3,290
30 June
2015
$’000
238
1,356
-
53
-
29
6
12
1,694
(1,694)
-
1,819
(125)
1,694
Current
Floating charge
Cash and cash equivalents
Receivables
Purchased debt ledgers
Total current assets pledged as security
Non-current
Floating charge
Purchased debt ledgers
Plant and equipment
Total non-current assets pledged as security
Total assets pledged as security
Notes
8
9
10
10
12
Consolidated
30 June
2016
$’000
30 June
2015
$’000
8,938
9,969
61,071
79,978
7,222
10,265
57,167
74,654
204,241
198,822
4,277
208,518
288,496
5,475
204,297
278,951
(b) Fair value
The carrying amounts and fair values of borrowings at the end of reporting period are:
30 June
2016
30 June
2015
Carrying
amount
$'000
Fair value
$'000
Carrying
amount
$'000
Fair value
$'000
Group
On-balance sheet (i)
Non-traded financial liabilities
Bank loans
118,200
118,200
119,000
119,000
118,200
118,200
119,000
119,000
As noted, none of the classes of liabilities are readily traded on organised markets in standardised form.
(i) On-balance sheet
The fair value of current borrowings equals their carrying amount. The facility is structured as a series of
loan instruments which are renewed on a regular basis with terms of less than six months, and the impact
of discounting on such instruments is not material. The rolling nature of the loan instruments is designed to
provide the Group with maximum flexibility within the overall facility, however the overall facility is classified
as non-current.
(c) Risk exposures
Information about the Group’s exposure to interest rate and foreign currency changes is provided in note 2.
For an analysis of the sensitivity of borrowings to interest rate risk and foreign exchange risk refer to note 2.
94
Collection House Group
2016 Annual Report
95
Financial Statements:Financial Statements:For the Year Ended 30 June 2016For the Year Ended 30 June 2016
Notes to the financial statements
Notes to the financial statements
18 Deferred tax balances (continued)
18 Deferred tax balances (continued)
Movements –
Consolidated
At 30 June 2014
- to profit or loss
At 30 June 2015
Movements –
Consolidated
At 30 June 2015
- to profit or loss
At 30 June 2016
Tax
losses
$'000
297
(59)
238
Tax
losses
$'000
238
268
506
Provisions
and
employee
benefits
$'000
1,257
99
1,356
Provisions
and
employee
benefits
$'000
1,356
47
1,403
(b) Deferred tax liabilities
Lease
incentive
$'000
Accruals
$'000
Unearned
revenue
$'000
-
-
-
224
(171)
53
-
-
-
Lease
incentive
$'000
Accruals
$'000
Unearned
revenue
$'000
-
1,214
1,214
53
35
88
-
29
29
Future
deduc-
tible
windup
costs
$'000
9
(3)
6
Future
deduc
-tible
windup
costs
$'000
6
(3)
3
Doub-
tful
debts
$'000
15
14
29
Doub-
tful
debts
$'000
29
(1)
28
Other
$'000
17
(5)
12
Total
$'000
1,819
(125)
1,694
Other
$'000
12
7
19
Total
$'000
1,694
1,596
3,290
The balance comprises temporary differences attributable to:
Property, plant and equipment
Purchased debt
Prepayments
Other
Total deferred tax liabilities
Set-off of deferred tax liabilities pursuant to set-off provisions (a)
Net deferred tax liabilities
Movements:
Opening balance at 1 July
Charged / (credited) to the income statement (note 7)
Closing balance at 30 June
Consolidated
30 June
2016
$’000
30 June
2015
$’000
3,044
605
6
13
3,668
3,668
(3,290)
378
3,548
120
3,668
2,956
577
4
11
3,548
3,548
(1,694)
1,854
3,150
398
3,548
Movements -
Consolidated
At 1 July 2014
- to profit or loss
At 30 June 2015
Movements -
Consolidated
At 30 June 2015
- to profit or loss
At 30 June 2016
Property, plant
and equipment
$'000
2,255
701
2,956
Property, plant
and equipment
$'000
2,956
88
3,044
19 Contributed equity
(a) Share capital
Purchased
debt
$'000
882
(305)
577
Purchased
debt
$'000
577
28
605
Prepayments
$'000
Other
$'000
2
2
4
11
-
11
Prepayments
$'000
Other
$'000
4
2
6
11
2
13
Company
2016
Shares
2015
Shares
134,489,172
131,199,651
134,489,172
131,199,651
Company
2016
$'000
111,006
111,006
111,006
Ordinary shares
Fully paid
Total contributed equity
Total
$'000
3,150
398
3,548
Total
$'000
3,548
120
3,668
2015
$'000
105,307
105,307
105,307
96
Collection House Group
2016 Annual Report
97
Financial Statements:Financial Statements:For the Year Ended 30 June 2016For the Year Ended 30 June 2016
Notes to the financial statements
Notes to the financial statements
19 Contributed equity (continued)
(b) Movements in ordinary share capital
Issues of ordinary shares during the year
Date
Details
1 July 2014
Opening balance
17 October 2014
Dividend reinvestment plan issues
27 March 2015
Dividend reinvestment plan issues
Less: Transaction costs arising on share issues
30 June 2015
Closing balance
1 July 2015
Opening balance
1 September 2015
Performance Rights Plan
16 October 2015
Dividend reinvestment plan issues
11 December 2015
Performance Rights Plan
1 April 2016
Dividend reinvestment plan issues
Less: Transaction costs arising on share issues
Number of shares
$'000
129,717,785
102,285
725,442
756,424
-
1,424
1,617
(19)
131,199,651
105,307
131,199,651
105,307
1,019,670
789,260
64,666
1,415,925
-
2,546
1,729
100
1,349
(25)
30 June 2016
Closing balance
134,489,172
111,006
(c) Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company
in proportion to the number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to
one vote, and upon a poll each share is entitled to one vote.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
(d) Dividend reinvestment plan
The Company has established a dividend reinvestment plan under which holders of ordinary shares may elect
to have all or part of their dividend entitlements satisfied by the issue of new ordinary shares rather than by
being paid in cash. Shares are issued under the plan at a 5% discount to the market price.
(e) Employee share scheme
Information relating to the employee share scheme, including details of shares issued under the scheme,
is set out in note 29.
(f) Performance rights
Information relating to the performance rights plan adopted as a means of rewarding and incentivising key
employees, including details of rights issued during the financial year, is set out in note 29.
19 Contributed equity (continued)
(g) Capital risk management
The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern,
and to provide adequate returns for shareholders and benefits for other stakeholders.
“Capital” includes all funding provided under the Group’s funding facility (net of cash balances for which
a right of offset is held) plus equity as shown in the balance sheet.
In order to maintain or adjust the capital structure, the Group may:
•
•
•
•
•
draw down or repay debt funding;
adjust the amount of dividends paid to shareholders;
negotiate new or additional facilities or cancel existing ones;
return capital to shareholders or issue new shares or
sell assets to reduce debt.
The Group manages capital to ensure that the goals of continuing as a going concern and the provision
of acceptable stakeholder returns are met.
Arrangements with the Group’s financiers are in place to ensure that there is sufficient undrawn credit
available to meet unforeseen circumstances should they arise. Financing facilities are renegotiated on
a regular basis to ensure that they are sufficient for the Group’s projected growth plus a buffer. As far
as possible, asset purchases are funded from operational cash flow, allowing undrawn balances to be
maintained. Cash is monitored on a daily basis to ensure that immediate and short term requirements can be
met. By maintaining a buffer of undrawn funds, the Company reduces the risk of liquidity and going concern
issues.
Management of the mix between debt and equity impacts the Group’s Cost of Capital and hence ability to
provide returns to stakeholders, primarily the funding institutions and shareholders. The Group maintains
its debt-to-equity mix in accordance with its immediate needs and forecasts at any point in time. Effective
management of the capital structure maximises profit and hence franked dividend returns to shareholders.
When additional funding is required, it is sourced from either debt or equity, depending upon management’s
evaluation as to which is the most appropriate at that point in time.
The financing facility includes all funding provided by the Group’s main bankers. Details of financing facilities
are set out in note 2.
Quantitative analyses are conducted by management using contributed equity balances shown above
together with the drawn and undrawn loan balances disclosed in note 2.
As part of the financing facility, the Company is required to monitor a number of financial indicators as
specified by the financiers. The Group monitors the indicators on a monthly basis and reports to the funding
providers every six months. The Group has comfortably met these covenants at all times during the year.
This strategy was followed during both the 2016 and 2015 financial years.
98
Collection House Group
2016 Annual Report
99
Financial Statements:Financial Statements:For the Year Ended 30 June 2016For the Year Ended 30 June 2016
Notes to the financial statements
Notes to the financial statements
20 Reserves and retained earnings
(a) Reserves
Share-based payments reserve
Foreign currency translation reserve
Movements:
Share-based payments reserve
Balance 1 July
Rights expense
Balance 30 June
Movements:
Foreign currency translation reserve
Balance 1 July
Currency translation differences arising during the year
Balance 30 June
(b) Retained earnings
Movements in retained earnings were as follows:
Balance 1 July
Net profit for the year
Dividends
Balance 30 June
Consolidated
30 June
2016
$’000
191
(1,220)
(1,029)
30 June
2015
$’000
3,429
(1,241)
2,188
Consolidated
30 June
2016
$’000
30 June
2015
$’000
3,429
(3,238)
191
2,516
913
3,429
Consolidated
30 June
2016
$’000
30 June
2015
$’000
(1,241)
21
(1,220)
(557)
(684)
(1,241)
Consolidated
30 June
2016
$’000
63,170
18,562
(11,404)
70,328
30 June
2015
$’000
51,745
22,483
(11,058)
63,170
20 Reserves and retained earnings (continued)
(c) Nature and purpose of reserves
(i) Share-based payments reserve
The share-based payments reserve is used to recognise the fair value of performance rights issued to
employees that have not yet vested, or those that have vested at year end but not yet been issued as shares.
(ii) Foreign currency translation reserve
Exchange differences arising on translation of the foreign operations are recognised in other comprehensive
income as described in note 1(d) and accumulated in a separate reserve within equity. The cumulative
amount is reclassified to profit or loss when the net investment is disposed of.
21 Dividends
(a) Ordinary shares
Consolidated
30 June
2016
$’000
30 June
2015
$’000
Fully franked final dividend for the year ended 30 June 2015 – 4.7 cents per
share (2014 – 4.1 cents)
6,214
5,318
Fully franked interim dividend for the year ended 30 June 2016 – 3.9 cents
per share (2015 – 4.4 cents)
Dividends paid in cash or satisfied by the issue of shares under the
dividend reinvestment plan during the years ended 30 June 2016 and
2015 were as follows:
Paid in cash
Satisfied under the Dividend Reinvestment Plan
(b) Dividends not recognised at the end of the reporting period
In addition to the above dividends, since year end the directors have
recommended the payment of a fully franked final dividend of 3.9 cents per
fully paid ordinary share (2015 – 4.7 cents, fully franked). The aggregate
amount of the proposed dividend expected to be paid on 21 October 2016
out of retained profits and a positive net balance sheet at 30 June 2016,
but not recognised as a liability at year end, is
5,190
11,404
8,326
3,078
11,404
5,740
11,058
8,017
3,041
11,058
5,245
5,245
6,166
6,166
100
Collection House Group
2016 Annual Report
101
Financial Statements:Financial Statements:For the Year Ended 30 June 2016For the Year Ended 30 June 2016
Notes to the financial statements
Notes to the financial statements
21 Dividends (continued)
(c) Franked dividends
The franked portions of the final dividends recommended after 30 June 2016 will be franked out of existing
franking credits or out of franking credits arising from the payment of income tax in the year ending 30 June
2017.
The financial effect of this dividend has not been brought to account in the financial statements for the year
ended 30 June 2016 and will be recognised in subsequent financial reports.
Franking credits available for subsequent financial years based on
a tax rate of 30% (2015 – 30%)
Consolidated
30 June
2016
$’000
30 June
2015
$’000
34,404
30,397
34,404
30,397
The above amounts represent the balance of the franking account as at the end of the reporting period,
adjusted for:
(a) franking credits that will arise from the payment of the amount of the provision for income tax;
(b) franking debits that will arise from the payment of dividends recognised as a liability at the
reporting date;
(c) franking credits that will arise from the receipt of dividends recognised as receivables at the
reporting date; and
(d) franking credits that may be prevented from being distributed in subsequent financial years.
The consolidated amounts include franking credits that would be available to the parent entity if distributable
profits of subsidiaries were paid as dividends.
22 Remuneration of auditors
During the year the following fees were paid or payable for services provided by the auditor of the parent
entity, its related practices and non-related audit firms:
Audit and review services
(a) Auditors of the Company – KPMG
Audit and review of the financial statements
Other regulatory audit services
Total auditors' remuneration
(b) Auditors of the Company - PKF Hacketts Audit
Audit and review of the financial statements
Other regulatory audit services
Total auditors' remuneration
(c) Other auditors
Audit and review of the financial statements
Other regulatory audit services
Total auditors' remuneration
Other services
Auditors of the Company – KPMG
Review of CreditCollect acquisition earn out calculation
In relation to taxation services
In relation to information technology services
Consolidated
30 June
2016
$
30 June
2015
$
166,989
42,750
209,739
-
-
-
-
-
-
148,900
88,000
236,900
3,729
27,100
30,829
3,500
112,000
49,467
164,967
4,143
-
4,143
-
-
-
-
102
Collection House Group
2016 Annual Report
103
Financial Statements:Financial Statements:For the Year Ended 30 June 2016For the Year Ended 30 June 2016
Notes to the financial statements
Notes to the financial statements
23 Contingencies
(a) Contingent liabilities
The Group had contingent liabilities at 30 June 2016 in respect of:
Claims
There were no claims of a material nature during the relevant period.
Guarantees
(a)
Bank Guarantees (secured) exist in respect of satisfactory contract performance in the normal course
of business for the Group amounting to $8,076,875 (2015: $7,293,344). During the period, the Group
replaced Bank Guarantees and obtained additional Bank Guarantees to secure our continued
performance in the normal course of business resulting in the increase. It is expected that some Bank
Guarantees will be returned in the coming year, reducing the liability.
(b)
Guarantees and Indemnities (secured) given by the Company and certain of its subsidiaries in support
of the existing Syndicated Loan Facility provided by Westpac Banking Corporation and Commonwealth
Bank of Australia, are currently in place.
Paragraphs (a) and (b) above are secured by a Fixed and Floating charge over the assets of the Company and
certain of its subsidiaries of the Group and may give rise to liabilities in the Group, if the associates do not
meet their respective obligations under the terms of the contracts, subject to the guarantees.
24 Commitments (continued)
(b) Non-cancellable operating leases
The Group leases its offices under non-cancellable operating leases expiring at various times during
the next eleven years. The leases have varying terms, escalation clauses and renewal rights.
On renewal, the terms of the leases are renegotiated.
Commitments for minimum lease payments in relation to non-cancellable
operating leases are payable as follows:
Within one year
Later than one year but not later than five years
Later than five years
Consolidated
30 June
2016
$’000
30 June
2015
$’000
6,608
25,098
31,220
62,926
5,626
23,532
36,771
65,929
No material losses are anticipated in respect of any of the above contingent liabilities.
(c) Non-cancellable finance leases
24 Commitments
(a) Capital commitments
Capital expenditure contracted for at the reporting date but not recognised as liabilities is as follows:
Purchased debt ledgers
Consolidated
30 June
2016
$’000
16,525
16,525
30 June
2015
$’000
41,372
41,372
The Group leases items of plant and equipment and intangibles under finance leases expiring within
three years.
Commitments for minimum lease payments in relation to non-cancellable
finance leases are payable as follows:
Within one year
Later than one year but not later than five years
Later than five years
Minimum lease payments
Less: Future finance charges
Recognised as a liability
Consolidated
30 June
2016
$’000
30 June
2015
$’000
310
185
-
495
(19)
476
572
495
-
1,067
(54)
1,013
104
Collection House Group
2016 Annual Report
105
Financial Statements:Financial Statements:For the Year Ended 30 June 2016For the Year Ended 30 June 2016
Notes to the financial statements
Notes to the financial statements
25 Related party transactions
(a) Group companies
Details of the parent company, the ultimate parent company and interests in subsidiaries are set out in note
27.
(b) Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payments
Consolidated
30 June
2016
$
30 June
2015
$
2,669,637
3,316,517
207,658
229,562
51,042
45,775
-
-
(733,572)
790,768
2,240,540
4,336,847
Detailed remuneration disclosures are provided in sections A-J of the remuneration report on pages
36 to 50.
(c) Other transactions with key management personnel or entities related to them
No other transactions were made to key management personnel or entities related to them other than
as appropriate payments for performance of their duties.
(d) Transactions with other related parties
The classes of non director-related parties are:
• wholly owned controlled entities;
•
directors of related parties and their director-related entities.
Transactions
There were no transactions with non-wholly owned related parties. Transactions with wholly owned related
parties are eliminated on consolidation.
26 Parent entity financial information
(a) Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Balance sheet
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Shareholders' equity
Contributed equity
Reserves
Retained earnings
Capital and reserves attributable to owners of Collection House Limited
Profit or loss for the year
Total comprehensive income
Company
30 June
2016
$’000
12,320
288,689
301,009
22,790
148,236
171,026
30 June
2015
$’000
6,375
276,474
282,849
17,061
141,345
158,406
111,006
105,309
191
18,786
129,983
14,487
14,487
3,430
15,704
124,443
15,311
15,311
(b) Guarantees entered into by the parent entity
The parent entity has entered into guarantees with certain of its subsidiaries as set out in note 23.
No liability was recognised by the parent entity or the consolidated entity in relation to this guarantee,
as the fair value is immaterial.
(c) Contingent liabilities of the parent entity
Refer to note 23 for contingent liabilities entered into by the parent entity. For information about guarantees
given by the parent entity, please see above.
106
Collection House Group
2016 Annual Report
107
Financial Statements:Financial Statements:For the Year Ended 30 June 2016For the Year Ended 30 June 2016 Notes to the financial statements
Notes to the financial statements
27 Subsidiaries
28 Earnings per share
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in note 1(b):
Parent and Ultimate Parent company:
Collection House Limited
Controlled entities - incorporated in Australia
Cashflow Accelerator Pty Ltd
ThinkMe Pty Ltd (formerly CashFlow Financial Advantage Pty Ltd)
Collective Learning and Development Pty Ltd
CLH Legal Group Pty Ltd (formerly Reliance Legal Group Pty Ltd)
Lion Finance Pty Ltd
Midstate CreditCollect Pty Ltd
PH Collections (Australasia) Pty Ltd
Controlled entities - incorporated in New Zealand
Collection House (NZ) Limited
Lion Finance Limited
Controlled entities - incorporated in Philippines
Collection House International BPO, Inc *
2016
%
2015
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
* Collection House International BPO, Inc started up on 10 May 2012 and commenced business operations on 1 April 2013. While Collection
House Limited holds legal and beneficial ownership of 9,995 issued shares in the subsidiary, it has beneficial ownership of 5 issued shares
in the subsidiary, held on trust for Collection House Limited by each of the five appointed directors of the subsidiary, in accordance with
Philippines law, representing all of the issued shares in the subsidiary currently.
(a) Other acquisitions
Collection House acquired the commercial agency business of CreditCollect on 14 February 2013, via its subsidiary
Midstate CreditCollect Pty Ltd (formerly Midstate Credit Management Services Pty Ltd). The agreement for the sale
of the business calculates a possible aggregate purchase price of $4,077,500 including a contingent consideration
component of $3,323,500 of which $3,095,014 has been paid at 30 June 2016. A final payment of $250,000 was
made on 1 July 2016 in order to finalise the acquisition. This amount was recorded as a liability at 30 June 2016,
as outlined in Note 16, with the excess of $21,514 paid over and above that calculated as contingent consideration
expensed to the Income Statement at 30 June 2016. Total goodwill of $836,500 was recognised in relation to the
business acquisition, in addition to customer contracts intangible assets of $2,487,000, as outlined in note 13.
(a) Basic earnings per share
From continuing operations attributable to the ordinary equity holders of
the Company
Total basic earnings per share attributable to the ordinary equity holders
of the Company
(b) Diluted earnings per share
From continuing operations attributable to the ordinary equity holders of
the Company
Total diluted earnings per share attributable to the ordinary equity holders
of the Company
(c) Reconciliations of earnings used in calculating earnings per share
Basic earnings per share
Profit attributable to the ordinary equity holders of the Company used in
calculating basic earnings per share
Diluted earnings per share
Profit attributable to the ordinary equity holders of the Company used in
calculating diluted earnings per share
Consolidated
30 June
2016
Cents
30 June
2015
Cents
14.0
14.0
13.9
13.9
17.2
17.2
17.1
17.1
Consolidated
30 June
2016
$’000
30 June
2015
$’000
18,562
18,562
18,562
18,562
22,483
22,483
22,483
22,483
Consolidated
30 June
2016
Number
30 June
2015
Number
(d) Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator
in calculating basic earnings per share
133,024,624
130,500,443
Adjustments for calculation of diluted earnings per share:
Performance Rights
232,363
884,800
Weighted average number of ordinary shares and potential ordinary shares used
as the denominator in calculating diluted earnings per share
133,256,987
131,385,243
108
Collection House Group
2016 Annual Report
109
Financial Statements:Financial Statements:For the Year Ended 30 June 2016For the Year Ended 30 June 2016
Notes to the financial statements
Notes to the financial statements
28 Earnings per share (continued)
(e) Information concerning the classification of securities
(i) Performance rights
Performance rights issued to employees under the Performance Rights Plan (PRP) are considered to be
potential ordinary shares and have been included at the probability rate of 30% in the determination of diluted
earnings per share to the extent to which they are dilutive. The performance rights have not been included
in the determination of basic earnings per share. Details relating to the performance rights are set out in note
29.
29 Share-based payments
(a) Performance Rights Plan
In line with the executive remuneration framework, the Board approved and adopted the Performance Rights
Plan (PRP), effective on and from 1 July 2012, as a means of rewarding and incentivising its key employees.
The PRP was extended to the then Chief Executive Officer (CEO), and to eligible employees.
Future performance rights may be issued by the Board pursuant to the PRP. The board determines the
value of shares granted based on the individual’s performance. Future performance rights may vest at the
discretion of the Board, subject to not only individual service conditions being met, but also, Company
performance hurdles being achieved.
29 Share-based payments (continued)
(a) Performance Rights Plan (continued)
During the reporting period ending 30 June 2016, 467,365 unlisted performance rights were issued to a
number of eligible employees pursuant to the PRP. A summary of these performance rights is identified
below as PR2016.
Effective date
PR2016
1 July 2015
Earliest possible Vesting date
The performance rights cannot vest earlier than the Test Date(1)
Performance hurdles based on
the satisfactory achievement of
performance conditions approved
by the Board
Performance Conditions
% off Pool
Average compound EPS growth over
performance period of at least 5%
Additional amount capable of vesting on
a sliding scale capped at 10% average
compound EPS growth
Total
50%
50%
100%
Exercise conditions and
Vesting Date
Exercise price
Expiry date
The Performance Rights Test Date will be 30 June 2018 (Test Date) after
which, the Board will determine whether or not the Performance Hurdles
have been achieved.
As soon as reasonably practicable after each Test Date applicable to any
Performance Period, the Board shall determine in respect of each eligible
employee, as at that Test Date:
whether, and to what extent, the Performance Hurdles applicable as
at the Test Date have been satisfied;
the number of Performance Rights (if any) that will become Vested
Performance Rights as at the Test Date; and
the number of Performance Rights (if any) that will lapse as a result
of the non-satisfaction of Performance Hurdles as at the Test Date,
and shall provide written notification to each eligible employee as to that
determination.
a.
b.
c.
Nil
30 September 2018
A Performance Right lapses, to the extent it has not been exercised, on the
earlier to occur of:
a.
b.
c.
d.
where Performance Hurdles have not been satisfied as at the relevant
Test Date;
if an eligible employee’s employment with the Company or Related
Body Corporate ceases before the Vesting Date;
the day the Board makes a determination that the Performance
Rights lapses because of breach, fraud or dishonesty; and
30 September 2018.
5 Day volume weighted
average Share price
$2.2152
(1) Test Date: the date at which assessment against the Performance Conditions are made by the Board.
For PR2016, the Test Date will be 30 June 2018.
110
Collection House Group
2016 Annual Report
111
Financial Statements:Financial Statements:For the Year Ended 30 June 2016For the Year Ended 30 June 2016
Notes to the financial statements
Notes to the financial statements
29 Share-based payments (continued)
(a) Performance Rights Plan (continued)
29 Share-based payments (continued)
(a) Performance Rights Plan (continued)
During the reporting period ending 30 June 2015, 680,184 unlisted performance rights were issued to a
number of eligible employees pursuant to the PRP. A summary of these performance rights is identified
below as PR2015.
During the reporting period ending 30 June 2014, 839,828 unlisted performance rights were issued to a
number of eligible employees pursuant to the PRP. A summary of these performance rights is identified
below as PR2014.
Effective date
PR2015
1 July 2014
Effective date
PR2014
1 July 2013
Earliest possible Vesting date
The performance rights cannot vest earlier than the Test Date(1)
Earliest possible Vesting date
The performance rights cannot vest earlier than the Test Date(2)
Performance hurdles based on
the satisfactory achievement of
confidential performance
conditions approved by the
Board
Performance Conditions
% off Pool
Average ROE
Debt/Debt + Equity
EPS Base
EPS Stretch
Total
10%
10%
30%
50%
100%
Performance hurdles based on
the satisfactory achievement of
confidential performance
conditions approved by the
Board
Performance Conditions
% off Pool
Average ROE
Debt/Debt + Equity
EPS Base
EPS Stretch
Total
25%
15%
30%
30%
100%
Exercise conditions and
Vesting Date
The Performance Rights Test Date will be 30 June 2017 (Test Date) after which,
the Board will determine whether or not the Performance Hurdles have been
achieved.
Exercise conditions and
Vesting Date
The Performance Rights Test Date will be 30 June 2016 (Test Date) after which,
the Board will determine whether or not the Performance Hurdles have been
achieved.
As soon as reasonably practicable after each Test Date applicable to any
Performance Period, the Board shall determine in respect of each eligible
employee, as at that Test Date:
a.
b.
c.
whether, and to what extent, the Performance Hurdles applicable as
at the Test Date have been satisfied;
the number of Performance Rights (if any) that will become Vested
Performance Rights as at the Test Date; and
the number of Performance Rights (if any) that will lapse as a result
of the non-satisfaction of Performance Hurdles as at the Test Date,
and shall provide written notification to each eligible employee as to that
determination.
As soon as reasonably practicable after each Test Date applicable to any
Performance Period, the Board shall determine in respect of each eligible
employee, as at that Test Date:
a.
b.
c.
whether, and to what extent, the Performance Hurdles
applicable as at the Test Date have been satisfied;
the number of Performance Rights (if any) that will become Vested
Performance Rights as at the Test Date; and
the number of Performance Rights (if any) that will lapse as a result
of the non-satisfaction of Performance Hurdles as at the Test Date,
and shall provide written notification to each eligible employee as to that
determination.
Exercise price
Expiry date
Nil
30 September 2017
Exercise price
Expiry date
Nil
30 September 2016
A Performance Right lapses, to the extent it has not been exercised, on the
earlier to occur of:
a.
b.
c.
d.
where Performance Hurdles have not been satisfied as at the relevant
Test Date;
if an eligible employee’s employment with the Company or Related
Body Corporate ceases before the Vesting Date;
the day the Board makes a determination that the Performance
Rights lapses because of breach, fraud or dishonesty; and
30 September 2017.
A Performance Right lapses, to the extent it has not been exercised, on the
earlier to occur of:
a.
b.
c.
d.
where Performance Hurdles have not been satisfied as at the relevant
Test Date;
if an eligible employee’s employment with the Company or Related
Body Corporate ceases before the Vesting Date;
the day the Board makes a determination that the Performance Rights
lapses because of breach, fraud or dishonesty; and
30 September 2016.
5 Day volume weighted
average Share price
$1.8515
5 Day volume weighted average
Share price
$1.5479
(1) Test Date: the date at which assessment against the Performance Conditions are made by the Board.
For PR2015, the Test Date will be 30 June 2017.
(2) Test Date: the date at which assessment against the Performance Conditions are made by the Board.
For PR2014, the Test Date will be 30 June 2016.
112
Collection House Group
2016 Annual Report
113
Financial Statements:Financial Statements:For the Year Ended 30 June 2016For the Year Ended 30 June 2016
Notes to the financial statements
Notes to the financial statements
29 Share-based payments (continued)
(a) Performance Rights Plan (continued)
During the reporting period ending 30 June 2013, 1,356,238 unlisted performance rights were issued to a
number of eligible employees pursuant to the PRP. A summary of these performance rights is identified
below as PR2013.
Effective date
PR2013
1 Jul 2012(3)
Earliest possible Vesting date
The performance rights cannot vest earlier than the Test Date(4)
Performance hurdles based on
the satisfactory achievement of
confidential performance
conditions approved by the
Board
Exercise conditions and
Vesting Date
Performance Conditions
% off Pool
Average ROE
Debt/Debt + Equity
EPS Base
EPS Stretch
Total
25%
25%
25%
25%
100%
The Performance Rights Test Date will be 30 June 2015 (Test Date) after
which, the Board will determine whether or not the Performance Hurdles
have been achieved.
As soon as reasonably practicable after each Test Date applicable to any
Performance Period, the Board shall determine in respect of each eligible
employee, as at that Test Date:
a.
b.
c.
whether, and to what extent, the Performance Hurdles applicable as
at the Test Date have been satisfied;
the number of Performance Rights (if any) that will become Vested
Performance Rights as at the Test Date; and
the number of Performance Rights (if any) that will lapse as a result
of the non-satisfaction of Performance Hurdles as at the Test Date,
and shall provide written notification to each eligible employee as to that
determination.
Exercise price
Expiry date
Nil
30 September 2015
A Performance Right lapses, to the extent it has not been exercised, on the
earlier to occur of:
a.
b.
c.
where Performance Hurdles have not been satisfied as at the relevant
Test Date;
if an eligible employee’s employment with the Company or Related
Body Corporate ceases before the Vesting Date;
the day the Board makes a determination that the Performance
Rights lapses because of breach, fraud or dishonesty; and
d.
30 September 2015.
5 Day volume weighted average
Share price
$0.7960
(3) Except for Paul Freer, whose Performance Rights commenced 4 March 2013, and five day volume weighted average share price
is $1.5950.
(4) Test Date: the date at which assessment against the Performance Conditions are made by the Board. For PR2013, the Test Date
will be 30 June 2015.
29 Share-based payments (continued)
(a) Performance Rights Plan (continued)
Set out below are summaries of rights issued under the plan:
Effective
Date
Expiry date
Exercise
price
Balance at
start of the
year
Granted
during
the year
Vested
during the
year
Lapsed
during
the year
Balance at
end of the
year
Vested and
issuable at
end of the
year*
Number
Number
Number
Number
Number
Number
Company - 2016
30 September
2016
30 September
2017
30 September
2018
Nil
Nil
Nil
1 July
2013
1 July
2014
1 July
2015
Total
816,733
680,184
-
-
-
467,365
64,666
752,067
-
-
-
124,174
556,010
86,913
380,452
1,496,917
467,365
64,666
963,154
936,462
-
-
-
-
Effective
Date
Expiry date
Exercise
price
Balance at
start of the
year
Granted
during
the year
Vested
during the
year
Lapsed
during
the year
Balance at
end of the
year
Vested and
issuable at
end of the
year*
Number
Number
Number
Number
Number
Number
Company – 2015
1 July
2012
30 September
2015
4 March
2013
30 September
2015
30 September
2016
30 September
2017
1 July
2013
1 July
2014
Total
Nil
Nil
Nil
Nil
1,231,114
100,000
831,430
-
-
-
-
680,184
939,667
291,447
80,000
20,000
-
-
939,667
80,000
-
-
14,697
816,733
-
680,184
-
-
2,162,544
680,184
1,019,667
326,114
1,496,917
1,019,667
* Vested performance rights were issued on 1 September 2015.
Fair Value of Performance Rights Issued
The assessed fair value at issue date of all performance rights is set out above. The fair value at issue date is
determined based on the five day volume weighted average share price prior to issue date.
114
Collection House Group
2016 Annual Report
115
Financial Statements:Financial Statements:For the Year Ended 30 June 2016For the Year Ended 30 June 2016
Notes to the financial statements
Notes to the financial statements
29 Share-based payments (continued)
31 Events occurring after the reporting period
(b) Expenses arising from share-based payment transactions
(a) Dividend
Total expenses arising from share-based payment transactions recognised during the period as part of
employee benefit expense were as follows:
A fully franked final dividend of 3.9 cents, totalling $5.2 million, has been declared, payable on 21 October
2016. No provision has been raised in these accounts for this amount.
Employee share options
Employee performance rights
Total expenses arising from share-based payment transactions
Consolidated
30 June
2016
$’000
-
850
850
30 June
2015
$’000
-
913
913
30 Reconciliation of profit after income tax to net cash inflow from operating
activities
Profit for the year
Depreciation and amortisation
Amortisation of purchased debt ledgers
Asset write offs
Non-cash employee benefits expense - share based payments
Provision for doubtful debts
Other non-cash expenses
Borrowing costs
Interest paid
Change in operating assets and liabilities
(Increase) / decrease in trade debtors and bills of exchange
(Increase) / decrease in sundry debtors
(Increase) / decrease in other non-current assets
Increase / (decrease) in trade creditors
Increase / (decrease) in sundry creditors and accruals
Increase / (decrease) in current tax liability
Increase / (decrease) in deferred tax liabilities
Net cash inflow (outflow) from operating activities
Consolidated
30 June
2016
$’000
18,562
6,135
48,629
1,740
(593)
(3)
541
1,445
4,702
(57)
417
(2,206)
2,264
2,872
1,311
(1,476)
84,283
30 June
2015
$’000
22,483
4,839
50,090
-
913
47
524
1,439
4,480
(126)
(1,287)
(2,440)
1,581
(353)
(5,044)
523
77,669
116
Collection House Group
2016 Annual Report
117
Financial Statements:Financial Statements:For the Year Ended 30 June 2016For the Year Ended 30 June 2016
Directors’ declaration
Independent auditor’s report to the members
In the directors’ opinion:
a.
the financial statements and notes set out on pages 56 to 117 are in accordance with the
Corporations Act 2001, including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements, and
(ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2016 and of its
performance for the financial year ended on that date,
b.
there are reasonable grounds to believe that the company will be able to pay its debts as and when they
become due and payable, and
Note 1(a) confirms that the financial statements also comply with International Financial Reporting Standards
as issued by the International Accounting Standards Board.
The directors have been given the declarations by the chief executive officer and chief financial officer required by
section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
David Liddy
Chairman
Brisbane
18 August 2016
118
Collection House Group
Independent auditor’s report to the members of Collection House Limited
Report on the financial report
Directors’ responsibility for the financial report
We have audited the accompanying financial report of Collection House Limited (the company),
Independent auditor’s report to the members of Collection House Limited
which comprises the consolidated Balance sheet as at 30 June 2016, and consolidated Income
statement, consolidated Statement of comprehensive income, consolidated Statement of changes
Report on the financial report
in equity and consolidated Statement of cash flows for the year ended on that date, notes 1 to 31
comprising a summary of significant accounting policies and other explanatory information and
the directors’ declaration of the Group comprising the company and the entities it controlled at
the year’s end or from time to time during the financial year.
We have audited the accompanying financial report of Collection House Limited (the company),
which comprises the consolidated Balance sheet as at 30 June 2016, and consolidated Income
statement, consolidated Statement of comprehensive income, consolidated Statement of changes
in equity and consolidated Statement of cash flows for the year ended on that date, notes 1 to 31
comprising a summary of significant accounting policies and other explanatory information and
the directors’ declaration of the Group comprising the company and the entities it controlled at
the year’s end or from time to time during the financial year.
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 is free from material misstatement whether due to fraud or
error. In note 1, the directors also state, in accordance with Australian Accounting Standard
AASB 101 Presentation of Financial Statements, that the financial statements of the Group
comply with International Financial Reporting Standards.
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 is free from material misstatement whether due to fraud or
error. In note 1, the directors also state, in accordance with Australian Accounting Standard
AASB 101 Presentation of Financial Statements, that the financial statements of the Group
comply with International Financial Reporting Standards.
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. These Auditing
Standards require that we comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable assurance whether the financial
report is free from material misstatement.
Directors’ responsibility for the financial report
Auditor’s responsibility
Auditor’s responsibility
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s judgement,
Our responsibility is to express an opinion on the financial report based on our audit. We
including the assessment of the risks of material misstatement of the financial report, whether
conducted our audit in accordance with Australian Auditing Standards. These Auditing
due to fraud or error. In making those risk assessments, the auditor considers internal control
Standards require that we comply with relevant ethical requirements relating to audit
relevant to the entity’s preparation of the financial report that gives a true and fair view in order
engagements and plan and perform the audit to obtain reasonable assurance whether the financial
to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
report is free from material misstatement.
evaluating the appropriateness of accounting policies used and the reasonableness of accounting
An audit involves performing procedures to obtain audit evidence about the amounts and
estimates made by the directors, as well as evaluating the overall presentation of the financial
report.
disclosures in the financial report. The procedures selected depend on the auditor’s judgement,
including the assessment of the risks of material misstatement of the financial report, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation of the financial report that gives a true and fair view in order
to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by the directors, as well as evaluating the overall presentation of the financial
report.
We performed the procedures to assess whether in all material respects the financial report
presents fairly, in accordance with the Corporations Act 2001 and Australian Accounting
Standards, a true and fair view which is consistent with our understanding of the Group’s
financial position and of its performance.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001.
We performed the procedures to assess whether in all material respects the financial report
presents fairly, in accordance with the Corporations Act 2001 and Australian Accounting
Standards, a true and fair view which is consistent with our understanding of the Group’s
financial position and of its performance.
119
2016 Annual Report
119
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
Independence
Corporations Act 2001.
In conducting our audit, we have complied with the independence requirements of the
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
Liability limited by a scheme approved under
International Cooperative (“KPMG International”), a Swiss entity.
Professional Standards Legislation.
119
Financial Statements:Financial Statements:For the Year Ended 30 June 2016For the Year Ended 30 June 2016
Financial Statements:
Independent auditor’s report to the members
For the Year Ended 30 June 2016
Independent auditor’s report to the members of Collection House Limited
Report on the financial report
2001.
Report on the financial report
performance for the year ended on that date; and
Independent auditor’s report to the members of Collection House Limited
We have audited the accompanying financial report of Collection House Limited (the company),
which comprises the consolidated Balance sheet as at 30 June 2016, and consolidated Income
statement, consolidated Statement of comprehensive income, consolidated Statement of changes
in equity and consolidated Statement of cash flows for the year ended on that date, notes 1 to 31
comprising a summary of significant accounting policies and other explanatory information and
the directors’ declaration of the Group comprising the company and the entities it controlled at
the year’s end or from time to time during the financial year.
Auditor’s opinion
Directors’ responsibility for the financial report
In our opinion:
The directors of the company are responsible for the preparation of the financial report that gives
(a) the financial report of the Group is in accordance with the Corporations Act 2001, including:
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
(i) giving a true and fair view of the Group’s financial position as at 30 June 2016 and of its
We have audited the accompanying financial report of Collection House Limited (the company),
preparation of the financial report that is free from material misstatement whether due to fraud or
which comprises the consolidated Balance sheet as at 30 June 2016, and consolidated Income
error. In note 1, the directors also state, in accordance with Australian Accounting Standard
(ii) complying with Australian Accounting Standards and the Corporations Regulations
AASB 101 Presentation of Financial Statements, that the financial statements of the Group
statement, consolidated Statement of comprehensive income, consolidated Statement of changes
comply with International Financial Reporting Standards.
in equity and consolidated Statement of cash flows for the year ended on that date, notes 1 to 31
(b) the financial report also complies with International Financial Reporting Standards as
comprising a summary of significant accounting policies and other explanatory information and
Auditor’s responsibility
disclosed in note 1.
the directors’ declaration of the Group comprising the company and the entities it controlled at
the year’s end or from time to time during the financial year.
Our responsibility is to express an opinion on the financial report based on our audit. We
Report on the remuneration report
conducted our audit in accordance with Australian Auditing Standards. These Auditing
Standards require that we comply with relevant ethical requirements relating to audit
We have audited the Remuneration Report included in pages 36 to 50 of the Directors’ Report
engagements and plan and perform the audit to obtain reasonable assurance whether the financial
for the year ended 30 June 2016. The directors of the company are responsible for the
The directors of the company are responsible for the preparation of the financial report that gives
report is free from material misstatement.
preparation and presentation of the remuneration report in accordance with Section 300A of the
a true and fair view in accordance with Australian Accounting Standards and the Corporations
Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report,
An audit involves performing procedures to obtain audit evidence about the amounts and
based on our audit conducted in accordance with auditing standards.
Act 2001 and for such internal control as the directors determine is necessary to enable the
disclosures in the financial report. The procedures selected depend on the auditor’s judgement,
preparation of the financial report that is free from material misstatement whether due to fraud or
including the assessment of the risks of material misstatement of the financial report, whether
Auditor’s opinion
due to fraud or error. In making those risk assessments, the auditor considers internal control
error. In note 1, the directors also state, in accordance with Australian Accounting Standard
In our opinion, the remuneration report of Collection House Limited for the year ended 30 June
relevant to the entity’s preparation of the financial report that gives a true and fair view in order
AASB 101 Presentation of Financial Statements, that the financial statements of the Group
2016, complies with Section 300A of the Corporations Act 2001.
to design audit procedures that are appropriate in the circumstances, but not for the purpose of
comply with International Financial Reporting Standards.
expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by the directors, as well as evaluating the overall presentation of the financial
KPMG
report.
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. These Auditing
We performed the procedures to assess whether in all material respects the financial report
presents fairly, in accordance with the Corporations Act 2001 and Australian Accounting
Standards require that we comply with relevant ethical requirements relating to audit
Scott Guse
Standards, a true and fair view which is consistent with our understanding of the Group’s
engagements and plan and perform the audit to obtain reasonable assurance whether the financial
Partner
financial position and of its performance.
report is free from material misstatement.
Directors’ responsibility for the financial report
Auditor’s responsibility
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
An audit involves performing procedures to obtain audit evidence about the amounts and
basis for our audit opinion.
Brisbane
disclosures in the financial report. The procedures selected depend on the auditor’s judgement,
18 August 2016
Independence
including the assessment of the risks of material misstatement of the financial report, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation of the financial report that gives a true and fair view in order
to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by the directors, as well as evaluating the overall presentation of the financial
report.
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
119
120
We performed the procedures to assess whether in all material respects the financial report
presents fairly, in accordance with the Corporations Act 2001 and Australian Accounting
Standards, a true and fair view which is consistent with our understanding of the Group’s
financial position and of its performance.
Collection House Group
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
120
basis for our audit opinion.
Independence
Corporations Act 2001.
In conducting our audit, we have complied with the independence requirements of the
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
Liability limited by a scheme approved under
International Cooperative (“KPMG International”), a Swiss entity.
Professional Standards Legislation.
119
Shareholder Information
The shareholder information set out below was applicable as at 18 August 2016.
A. DISTRIBUTION OF EQUITY SECURITIES
Analysis of numbers of equity security holders by size of holding:
Class of equity security
Ordinary shares
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 and over
Total
There were 926 holders of less than a marketable parcel of ordinary shares.
B. EQUITY SECURITY HOLDERS
Twenty largest quoted equity security holders
The names of the twenty largest holders of quoted equity securities are listed below:
Holders
Shares
3,379
2,006,839
6,620
18,590,682
2,250
17,152,740
1,682
40,295,491
70
56,443,420
14,001
134,489,172
Name
1.
2.
3.
4.
5.
6.
7.
8.
9.
Ankla Pty Ltd
HSBC Custody Nominees (Australia) Limited
JP Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
Poltick Pty Ltd
Rollee Pty Ltd
Mr Frederick Benjamin Warmbrand (FB & LJ Warmbrand Super A/C)
Durbin Superannuation Pty Ltd (Durbin Family S Fund A/C)
Nowcastle Pty Ltd
10.
Skylevi Pty Ltd (Superfun Super Fund A/C)
11.
Garrett Smythe Limited
12.
BNP Paribas Noms Pty Ltd (DRP)
13.
14.
15.
Navigator Australia Ltd (MLC Investment Sett A/C)
National Nominees Limited
ABN AMRO Clearing Sydney Nominees Pty Ltd (Custodian A/C)
16. Mr Haiying Wu
17. Mrs Li Fan
18. HSBC Custody Nominees (Australia) Limited – A/C 2
19.
Sunstar Australia Pty Ltd
20. Mr Kerry Daly
Total
Units
12,295,529
10,109,352
8,758,250
5,925,775
1,538,684
1,053,839
929,184
830,000
740,366
623,944
564,430
557,090
554,737
467,740
462,731
456,789
448,800
438,389
418,485
394,607
% of issued
capital
9.14
7.52
6.51
4.41
1.14
0.78
0.69
0.62
0.55
0.46
0.42
0.41
0.41
0.35
0.34
0.34
0.33
0.33
0.31
0.29
47,568,721
35.37
2016 Annual Report
121
Shareholder Information
Corporate Directory
Unquoted equity securities
Details of these Performance Rights are set out at note 29 of the financial statements
Effective
Date
Expiry date
Exercise
price
Balance
at start of
the year
Granted
during
the year
Vested
during
the year
Lapsed
during
the year
Balance
at end of
the year
Vested
and
issuable
at end of
the year
Number
Number
Number
Number
Number
Number
Company 2016
1 July
2013
1 July
2014
1 July
2015
Total
30 September
2016
30 September
2017
30 September
2018
Restricted securities
Nil
816,733
Nil
680,184
-
-
Nil
-
467,365
64,666
752,067
-
-
-
124,174
556,010
86,913
380,452
1,496,917
467,365
64,666
963,154
936,462
-
-
-
-
All issued shares in Collection House Limited are quoted on the ASX and there are no shares subject to
escrow or other regulated restrictions.
C. SUBSTANTIAL HOLDERS
Substantial shareholders of ordinary shares in the Company are set out below:
Holder
Ankla Pty Ltd, Poltick Pty Ltd, Nowcastle Pty Ltd, Skylevi Pty Ltd (Superfun
Superfund) and Sunstar Australia Pty Ltd (combined shareholdings)
HSBC Custody Nominees (Australia) Limited
JP Morgan Nominees Australia Limited
D. VOTING RIGHTS
Units
% of issued
capital
15,627,008
10,547,741
8,758,250
11.61
7.84
6.51
The voting rights attaching to each class of equity securities are set out below:
(a) Ordinary shares
On a show of hands, every member present at a meeting in person or by proxy shall have one vote and upon
a poll each share shall have one vote.
(b) Options
No voting rights.
Directors
David Liddy
Chair (Non-Executive)
Kerry Daly
Director (Non-Executive)
Philip Hennessy
Director (Non-Executive)
Julie-Anne Schafer
Director (Non-Executive)
Leigh Berkley
Director (Non-Executive)
(appointed 1 July 2016)
Lev Mizikovsky
Director (Non-Executive)
(appointed 1 July 2016)
Executive Management Team
Anthony Rivas
Chief Executive Officer
(appointed 6 July 2016)
George Wilson
Chief Financial Officer
(appointed 1 September 2016)
Michelle Cummins
Chief People and Culture Officer
(appointed 30 November 2015)
Marcus Barron
Chief Information Officer
Julie Tealby
Chief Risk Officer and Company Secretary
Main contact
Julie Tealby
Company Secretary
T: +61 7 3100 3418
E: Julie.Tealby@collectionhouse.com.au
Principal registered office
in Australia
Level 12, 100 Skyring Terrace
Newstead Qld 4006
T: +61 7 3292 1000
F: +61 7 3832 0222
W: www.collectionhouse.com.au
Postal address
PO Box 2247
Fortitude Valley BC Qld 4006
Share register
Computershare Investor Services Pty Ltd
GPO Box 2975
Melbourne Vic 3000
T: 1300 850 505
F: +61 7 3237 2152
W: www.computershare.com.au
Auditor
KPMG
71 Eagle Street
Brisbane Qld 4000
Stock exchange listing
Collection House Limited shares are listed
on the Australian Securities Exchange (ASX).
The home exchange is Sydney.
ASX code
CLH
Investor and client presentation
The Group’s latest investor and client
presentation is available at
www.collectionhouse.com.au
Notice of Annual General Meeting
The AGM of Collection House Limited will be held on 4 November 2016 at 11:00am at the
Emporium Hotel, 1000 Ann Street, Fortitude Valley, Brisbane, Queensland
122
Collection House Group
123
123
Collection House Group
Collection House Group
2016 Annual Report
2016 Annual Report
2016 Annual Report
2016 Annual Report
2016 Annual Report123
123
123
123
123
HEAD OFFICE:
Level 12, 100 Skyring Terrace,
Newstead QLD 4006
T: +61 7 3292 1000
F: +61 7 3832 0222
www.collectionhouse.com.au