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Annual Report 2019
Collection House Limited ABN 74 010 230 716
Our Brands
Collection House Limited (ASX: CLH) is Australia’s leading end-to-end receivables management
company. We provide solutions to organisations and individuals that span the entire credit
management lifecycle and beyond.
With 786 staff in offices across Brisbane, Sydney, Victoria and New Zealand, and 135 in the Philippines, the
Collection House Group offers stakeholders a range of professional, ethical and effective products and services.
We enjoy strong business relationships with major Australian and international banks, financial institutions, large
corporations, local Councils, public utilities, SMEs and Government agencies.
Our ongoing success is a result of the breadth of our service offering, our deeply ingrained approach to ethical
debt recovery, and our commitment to technology to continually evolve our service and capabilities.
Founded in 1994 and listed on the Australian Securities Exchange in 2000, the Group is made up
of a number of brands offering a range of professional, ethical and effective products and services:
Debt collection and receivables
management for third parties
Debt purchasing and recovery
Legal services including
insolvency administration
Nationally recognised training provider
in financial services and leadership
Customer service outsourcing
for third parties
Licensed specialist finance broker
for the provision of credit
Tailored debt collection services,
specialising in Local Government
New Zealand supplier of receivables
and debt management
Provision of financial hardship
services for third parties
Collection House Limited Annual Report 2019 Contents
1
2 Chairman’s Report
4
Income Statement
Managing Director and Chief Executive
Officer’s Report
6 Board of Directors
8 Executive Management Team
9 FY19 Financial Results
10 Corporate Governance
11 Directors’ Report
30 Auditor’s Independence Declaration
31
32 Statement of Comprehensive Income
33 Balance Sheet
34 Statement of Changes in Equity
35 Statement of Cash Flows
36 Notes to the Financial Statements
76 Directors’ Declaration
77
81 Shareholder Information
83 Corporate Directory
Independent Auditor’s Report
Notice of Annual General Meeting
The AGM of Collection House Limited will be held on 01 November 2019 at 12:00pm at Pullman and Mercure,
King George Square, Corner of Ann and Roma Streets, Brisbane, Queensland.
Collection House Limited Annual Report 2019Overview Corporate Governance Financial Report Additional Information Overview 2
Chairman’s Report
“ We remain committed to
redefining the debt collections
industry through putting
our customers at the heart
of everything we do, helping
them get back on the road to
financial freedom.”
Leigh Berkley
Chairman
A year of growth
I am pleased to present another consistent
result for our shareholders in FY19, with
the Company posting an 8% increase in net
profit, and record Purchase Debt Ledger (PDL)
purchases of $133m, up 63% on last year.
Our performance has been underpinned by the customer-
centric approach we adopt across the business, the
expansion of our quality PDL purchases, and our ongoing
commitment to superior data analytics and leading edge
technology.
During the past year, we continued to grow the business, with
the strategic acquisitions of New Zealand-based Receivables
Management (NZ) Ltd (RML), and the PDL book and selected
assets of ACM Group in Sydney. We welcome our new
colleagues from RML and ACM to the team, and it is good
to see the integration of the businesses going so well.
The results for the Collection Services segment were 2%
down in FY19, largely due to delayed referrals from some
clients due to the Financial Services Royal Commission and
the federal elections. These issues have now resolved, with
referrals and collections trending well so far in FY20.
We remain committed to redefining the debt collections
industry through putting our customers at the heart of
everything we do, helping them get back on the road
to financial freedom. We are a highly compliance-driven
Company, and we maintain excellent relationships with
our clients as a result of our exemplary track record on
complaints and regulatory compliance.
This ethical approach has also seen us move into new areas,
and has driven our strategic investment in Australian digital
bank, Volt. We are proud of the work we are doing with Volt,
because there is a strong alignment in our values and vision
to make Australians’ financial journeys simpler and better.
More news will follow as Volt launches its new products.
Capital for new investments
FY19 was a record year for us on PDL investments. We
have continued to look carefully at our capital structure and
borrowing, so we can take advantage of the opportunities
ahead in terms of expected market growth in FY20 and the
potential to further increase our market share.
During FY19, we completed the second transaction under
our partnership with global investment house Balbec
Capital LP. This transaction provided us with $25 million
of unencumbered cash up front, which we are investing
in new, higher yielding PDL books.
In addition, the Group also retains in principle access
to $100 million in off balance sheet finance through the
partnership with Balbec. At this stage the facility remains
undrawn, and we expect to hit our $80-100m guidance on
PDL purchases without drawing down on this facility.
The Balbec relationship is an illustration of how Collection
House is moving to a less capital intensive and more
innovative capital structure, with stable cash flows being
moved off balance sheet and recycled into higher yielding
portfolios, where we can apply our skills and further lift
the return on shareholder funds.
Investing in Technology
Investment in leading technology is a core strength of our
business, and we are positioning Collection House to adopt
competencies and capabilities from the fintech industry.
Our data analytics capability provides us with a competitive
advantage in terms of modelling the cost to collect, the
likelihood of recovery and most efficient strategy down to
account level, and places us in a strong position to buy debt
at the right price and successfully assess affordable payment
arrangements for our customers.
Using machine learning and data analytics to streamline debt
collection, we are able to analyse consumer behaviour and
determine when and how they should be contacted about
their debt, as well as the best payment options to offer. This
is making our offers of financial resolution more manageable
for people in debt, and I am excited to see the new version of
our customer portal, Kash AI, approaching launch. Kash AI will
Collection House Limited Annual Report 2019 Chairman’s Report (continued)
be able to interact with our customers
like never before, with the ability to
sense upset or distress, allowing us to
direct the customer to a member of our
highly skilled Resolutions team.
While service channels continue
to move online, the majority of our
customers still require personal
relationships with us, and we
continue to invest in training and skills
development for our people, in order
to provide them with all the necessary
competencies to further grow in
our organisation.
The Board
I was pleased to be re-elected to the
Board at last year’s AGM along with the
election of Non-Executive Directors
Sandra Birkensleigh and Catherine
McDowell. Sandra and Catherine have
brought a wealth of experience from
the accountancy, banking, financial
services and investment industries.
Together with Non-Executive Director
Michael Knox and CEO and Managing
Director Anthony Rivas, your Board has
a diverse and relevant range of talent,
skills and experience that will ensure
the effective governance of Collection
House in achieving its strategic goals
into the future.
During the year, the Board also
announced the reappointment of
Anthony Rivas as our CEO and
Managing Director for a further three
years. The renewal of Anthony’s
contract recognises the contribution
he has made to the continued
success of the company and building
shareholder value.
Collection House also welcomed
a new Chief Financial Officer and
Company Secretary Doug McAlpine
following the departure of Kristine May,
who had been with the company for
seventeen years in a range of roles.
Doug has previously held similar roles
in the resources, property and general
investment sectors, and we are already
seeing the benefits of his experience
and contribution to the Executive
Leadership Team. The Board and I
would also like to extend our sincere
thanks to Kristine for her valuable
contribution over many years, and wish
her well for her future endeavours.
Looking ahead
The outlook for Collection House in
FY20 is positive as we continue to
grow our market share in Australia and
New Zealand through the acquisition
of debt portfolios at the right price.
For the first time, we have provided
Cash Collections guidance for the PDL
segment at $145-155m, including PDL
purchases of $80-100m in FY20.
On the PDL supply side things look
very healthy for the year ahead,
particularly in the context of expected
market growth, our conservative
implementation of AASB 9, and
developments in the sector potentially
leading to a reduced pool of trusted
buyers for PDLs. The brief headwinds
we encountered in the Collection
Services segment are now behind us,
with collections returning to 2018 levels.
On a personal note, I am very proud
to have been granted Australian
residency earlier this year, allowing me
to work ever closer with the Board and
executive team of Collection House as
we continue to grow the business.
Our partnership with Balbec puts us
in a strong position to take advantage
of opportunities as they arise. We also
anticipate a positive contribution from
our alliance with Volt. We are confident
that our strong client relationships, tied
3
to the data-driven and customer-centric
approach we take to our business, are
positioning us well for the changes
which are occurring in our industry, and
for the expected growth ahead.
In conclusion, on behalf of the Board,
I would like to thank our shareholders
for their continued support, and all our
colleagues in the business for their
hard work and dedication over the
past year. I would also like to thank
my fellow Board members for their
wise counsel and commitment, and
Anthony and the Executive Leadership
Team for the numerous successful
projects and improvements they have
brought about during the year. I look
forward to working together in FY20
to achieve our goals and to deliver
enhanced value to our shareholders,
our customers, and the wider
stakeholder community.
Leigh Berkley
Chairman
Overview Corporate Governance Financial Report Additional Information Collection House Limited Annual Report 2019 4
Managing Director and Chief Executive Officer’s Report
“ Collection House delivered
a solid result in the 2019
financial year with each
segment of our business
playing its part.”
Anthony Rivas
Managing Director & CEO
The company reported a Net Profit After
Tax of $28.3 million, which was eight percent
higher than the previous year, and we
exceeded our 19.2 – 19.5 cents earnings per
share guidance, delivering a result of 20.5cps.
This was achieved through the tailwind of
improved profit recognition under the new
accounting standards and a stronger second
half, which contributed almost 60% of the
full year result.
Our performance is the result of our commitment to redefining
the collections industry through our data-driven approach.
This is providing us with insights into our customers and
driving enhanced productivity across the business, the fruits
of which will become more apparent as we expand the scale
of our operations in the years ahead.
For consumers who suffer hardship, and for all customers
that engage with us, our focus is always to help them
rehabilitate their finances, enabling them to get back on the
road to financial freedom. This approach has the support of
the financial institutions that work with us and has proved
beneficial in a year when the financial services sector faced
intense scrutiny as part of the Financial Services Banking
Royal Commission.
As a company, we have implemented numerous proactive
steps to assist vulnerable customers and help them resolve
their financial difficulties. We work closely with the community
advocacy sector, which allows us to better respond to each
customer’s circumstances and implement best practice in
every engagement.
As a consequence of our approach, we have a strong
compliance and regulatory track record. These areas of
performance are critical, as they equip us with the social
license to operate. We provide complete transparency
in this area to allow our debt vendors, who can track our
performance, the reassurance they require to maintain
both one-off and forward flow agreements with us.
We will provide more details over the course of the new
financial year, but our new relationship with Volt Bank goes
to the heart of the respectful way we treat our customers,
and how we see the role of our business evolving to
provide additional assistance to help them regain control
of their finances.
FY19 in review
Purchased Debt Ledger segment
Our Australian and New Zealand debt buying businesses
performed reasonably well in FY19, and this performance is
expected to further improve in FY20. Our ongoing success
is underpinned by our data analytics and we have placed a
high level of importance on building our capabilities in recent
years, so we can make sound judgements about the pricing
and the quality of the debt portfolios in which we invest.
With our in-house skills and systems developed, diminishing
competition and financing available - both on and off
balance sheet - we are well placed to acquire PDLs against
the backdrop of a consistent market opportunity in the
coming year.
We are supported by the growing relationship we have
established with global private investment firm Balbec Capital
LP. During the year, the partnership delivered its second
transaction under the Portfolio Enhancement Programme
(PEP). This resulted in the Company receiving $25 million up
front in unencumbered cash in exchange for the assignment
of a proportion of the cash flows from a $59 million segment
of the arrangement book. We retain the option to repurchase
the residual rights to collect the remaining Arrangements at
the end of the five-year agreement.
Entering into deals such as this allows us to recycle capital
into new portfolios, where we can further apply our skills
to lift returns on shareholders’ funds.
Separately and in addition, the Balbec partnership has now
provided us with a $100 million in principle facility to invest
in PDLs and arrangement books in the future.
Collection House Limited Annual Report 2019 Managing Director and Chief Executive Officer’s Report (continued)
5
Key areas of interest for us both are the
digitisation of hardship identification,
assessment and treatment programmes
and the integration of components of
our customer portal. This collaboration
will deliver innovative products which
will support our customers, but it will
also accelerate the pace of our digital
transformation.
FY20 and beyond
We will continue to leverage our
technology investments to gain
operating advantage from an
expanding revenue base. Our
portal and the Volt relationship offer
significant growth potential beyond the
scope of our normal business.
Our outlook for FY20 is positive as we
have a structural opportunity to gain
market share, against the backdrop of
a positive cyclical outlook in the debt
purchasing industry in Australia and
New Zealand.
We expect FY20 to be a record year for
the Company, and we look forward to
sharing that success with all our clients,
employees and shareholders.
In closing, I would like to express my
thanks to the Board of Directors for
their collaboration and involvement
in the strategic initiatives during
FY19. Of particular note has been
the wise counsel and participation of
our Chairman Leigh Berkley, whose
industry and regulatory experience
have been an invaluable asset this year.
I would also like to thank my talented
Executive Leadership Team members
for their determination, persistence and
overall support. I am delighted with
our appointment of Doug McAlpine
as our new Chief Financial Officer. His
experience adds further strength to our
already well-rounded team.
Finally, I would like to acknowledge
our fantastic group of employees at
Collection House. Their job is not
easy, and it requires a great deal of
resilience and empathy to execute the
role well. The success we deliver to all
our stakeholders is as a direct result
of their commitment.
Anthony Rivas
Managing Director & CEO
Given these positive developments we
were able to achieve a record level of
purchasing in FY19, up 63 percent on
the previous year. Our investment in
technology and the skills development
of our people has also supported our
collection process. This has helped
to deliver productivity increases and
collections growth of seven percent,
which should accelerate to at least
30 percent in FY20.
The investment in our platform and
capabilities provided us with significant
confidence to seek out opportunities
for acquisitive expansion, and during
the year we acquired the PDLs of ACM
Group in Australia and Receivable
Management (NZ) Ltd. Both the ACM
portfolio and Receivables Management
business will greatly benefit from the
application of our technology and
analytical skills.
The ACM acquisition provided us with
increased volumes, diversification into
the telecommunication sector, as well
as expanding our capacity in Sydney.
The Receivables Management
acquisition positions us to become
a leading acquirer of PDLs in New
Zealand, given the company’s 30
year history in that country. The New
Zealand PDL market remains nascent
compared to Australia and we expect
it to develop in a similar way in coming
years.
Collection Services segment
Collection Services revenue was
$67.6 million down 2% on prior year.
This was below our original budget,
with short term factors, being the timing
of the federal election and the Financial
Services Royal Commission, having
impacted client and consumer activity.
We were not overly alarmed, in light of
the significant disruption for our clients,
and are pleased to report that since
the year end there has been a return to
normal activity levels.
We continue to broaden the services
we offer our clients through extending
our Collection Services platform. As
always, we are committed to a rigorous
compliance regime and customer
rehabilitation and support.
Technology
The online portal we have developed to
assist our customers who prefer a self-
service option, continues to grow well,
and in the second half accounted for
over eight percent of Cash Collections
in Lion Finance. Given the success
of the portal, we are now partnering
with a leader in Artificial Intelligence
and Emotional Intelligence to turn our
avatars Kash and soon Kara into digital
humans.
Ultimately, our aim is to help create
better services and experiences for our
customers and to help us grow a better
and more innovative Collection House.
Our systems and processes have
also led to an increase in the number
of individuals who are entering into
recurring payment arrangements.
Our collaborations and investment in
Volt Bank are also part of our ongoing
digital transformation strategy, and
we are working together to develop
analytical tools and resources that will
be available when Volt Bank launches
its products.
Overview Corporate Governance Financial Report Additional Information Collection House Limited Annual Report 2019 6
Board of Directors
Leigh Berkley
Chairman
Michael Knox
Non-executive Director
Anthony Rivas
Managing Director & CEO
Appointed: July 2016
Having qualified as a Chartered
Accountant, Mr Berkley has more than
25 years’ experience in the collections
and debt purchase industry, is
immediate past President of the Credit
Services Association (CSA) in the UK
and assisted the Australian Collectors
& Debt Buyers Association (ACDBA)
develop their Code of Practice.
Having been granted Australian
residency this year, Leigh stepped
down from his role as Director of
External Affairs and Development of
Arrow Global Group Plc, one of the
UK’s largest consumer debt purchasers
engaging with government and
regulators, trade bodies and consumer
advice organisations.
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.
Leigh is the Vice President of the
European trade body FENCA where
he is leading the development of a
Code of Conduct for GDPR for the
Collections industry across Europe, and
regularly presents at conferences and
trade body forums around the world.
Leigh was also the 2019 President of
the International Collectors Group and
a Trustee of the FairLife Charity, and is
a former Director of the Money Advice
Liaison Group in the UK.
Appointed: March 2017
Mr Knox was an Australian Trade
Commissioner serving in Saudi Arabia
and Indonesia. He joined Morgans (now
Morgans Financial Limited) in Sydney in
1988. He was Chief Institutional Options
Dealer until moving to Brisbane in 1990
as Economist and Strategist. He joined
the Board of Morgan Stockbroking in
1996. He became Director of Strategy
and Chief Economist in 1998. Michael
remained on the Board of Morgans
until 2012.
Michael has served on many
Queensland Government advisory
committees. He was Chairman of the
Queensland Food Industry Strategy
Committee in 1992, a Member of the
Consultative Committee of the Ipswich
Development Board in 1993, a Member
of the Queensland Tourism Strategy
Committee in 1994 and a Member of
the Ministerial Advisory Committee
on Economic Development in 1997.
From 2003 to 2012, he was Chairman
of the Advisory Committee of School
of Economics and Finance at the
Queensland University of Technology.
He has been a Governor of the
American Chamber of Commerce from
1997 to 2007. In 2008, Michael joined
the Board of The City of Brisbane
Investment Corporation Pty Ltd.
Michael remained on the Board until
2016. Michael was the President of the
Economic Society of Australia (Qld) Inc
from 2009 to 2013.
See pages 15 to 17 for further information on the Board of Directors.
Appointed: November 2017
Anthony Rivas has over 25 years’
experience in the area of credit and
collections, and extensive international
experience in three continents.
Anthony served as Managing Director
of Australian Receivables Limited until
July 2016, after joining the company
in 2013.
With an initial mandate to optimise
costs, Anthony successfully led the
team to achieve EBITDA targets each
year under his leadership and improved
staff turnover rates.
Anthony joined NCO/EGS in 2011,
and led the Mexican operations for
the company as Vice President of
Operations. Here he was responsible
for five facilities across Mexico,
including collection agents, visitor
agents, field attorneys and legal
services.
Prior to joining NCO/EGS, Anthony
worked and consulted in India,
Australia, UK, and the USA. His
accomplishments included:
- Assisting companies to bring
purchased debt portfolios to India for
the first time
- Vice President of Operations/
Training for Global Vantedge (an OSI
company) in the USA and India
- VP Operations at a 1000+ FTE facility,
and surpassing US benchmarks
for various clients in Bankcard and
Telecommunications
Anthony has managed debt portfolios
for a major international debt purchaser
and successfully participated in the
sale and transition of the portfolios to
international investors. His technical
developments include building
automated skip waterfall systems,
leveraging fetch technology to the
internet with no agent involvement;
system upgrades to enhance collector
and reporting efficiency, enabling
real time reporting; and helping lead
Performance Management System
training for OSI’s markets in the USA.
Collection House Limited Annual Report 2019 Board of Directors (continued)
7
Catherine McDowell
Non-executive Director
Sandra Birkensleigh
Non-executive Director
Appointed: September 2018
Catherine McDowell has more than 30
years’ experience in the investment
and financial services industry in
senior executive and advisory roles,
predominantly with Barclays Bank, and
more recently with ANZ.
In Catherine’s role with Barclays
International as Managing Director,
she oversaw a substantial international
wealth business before moving to New
Zealand in 2005.
Catherine was the Managing Director
at ANZ and the National Bank Private
Banking and Wealth business (New
Zealand). She was responsible for
integrating these two businesses and
creating a significant wealth business.
Catherine subsequently moved to
Australia to build the Private Bank
and Trust business while managing
E-Trade. During her career Catherine
spent 10 years in New York, 15 years
in London and 8 years in New Zealand
and Australia.
She has more than 15 years of Board
experience with not for profit, listed
and non-listed companies. Her
current roles include Non-Executive
Director of the National Provident
Fund and Chair of the Investment
Committee and Independent Director
for the Todd Family Office. Catherine
was recently appointed to the AMP
Superannuation Board.
Appointed: September 2018
Sandra Birkensleigh is a Non-Executive
Director of MLC Limited, Chair of the
Audit Committte and a member of
the Risk Committee and Disclosure
Committee.
Sandra is also a Non-Executive Director
of Auswide Bank, Chair of their Audit
Committee and member of the Risk
and Remuneration committees. She is a
Non-Executive Director of 7 Eleven, and
Chair of their Audit and Risk committee,
and a Non-Executive Director of
Horizon Oil Limited, Chair of their Audit
Committee and a member of the Risk
and Remuneration and Nomination
Committees.
Sandra is also an independent member
of the Audit Committee for the Reserve
Bank of Australia, a Council Member
and Chair of the Audit and Risk
Committee of the University of the
Sunshine Coast.
She is also a Non-Executive Director
of the National Disability Insurance
Agency and Chair of the Audit and Risk
Committees and member of the People
and Remuneration Committee. She is a
member of the Investment Committee
for the Public Trustee of Queensland.
Sandra also sits on the boards of
the Tasmanian Finance Corporation
(Tascorp) and is Chair of the Audit
Committee. She was recently appointed
as Chair of the Financial Services
Committee for the Institute of Internal
Auditors of Australia.
Previously, Sandra held the role of
Senior Partner of PwC until February
2013 and was the Global Head of
Governance Risk and Compliance
Services for PwC for five years. Sandra
has a Bachelor of Commerce from
University of New South Wales, is a
Chartered Accountant, a Graduate of
the Australian Institute of Company
Directors and a Certified Compliance
Professional (Fellow).
Overview Corporate Governance Financial Report Additional Information Collection House Limited Annual Report 2019 8
Executive Management Team
Appointed: July 2019
Doug was previously with Silver Chef Limited where he served most recently as the EGM of
Australia and New Zealand and prior to that, CFO. Doug has previously held similar roles in
the resources, property and general investment sectors. In addition to strong financial and
commercial capability, Doug has a solid grounding in receivables financing and extensive
experience working with the professional investment community.
Doug began his career at Ernst & Young. He is a Chartered Accountant with twenty years
of accounting and finance experience, fifteen of which have been as CFO with listed public
companies in Australia.
Doug McAlpine
CFO and Company Secretary
Appointed: July 2017
Anand joined the Group on 26 July 2017, bringing over 15 years’ experience in the field of
data science and predictive analytics for the financial services domain, primarily focussed on
accounts receivables and debt collection.
Working with the US market leader in the debt collection industry for the last 12 years, he has
vast experience in building pricing models, forecasting models, and optimisation models for
operations in the financial services sector.
He has a proven track record in bridging strong symbiotic relationships between analytics
and operations that are quintessential to be successful in our business.
Appointed: September 2017
Jonathon joined Collection House Group on 6 September 2017, bringing over 16 years’
experience as a solicitor in Sydney and London including being the Chief Legal Officer for
Australian Receivables Limited and Forbes Dowling Lawyers (FDL).
Since joining Collection House, he has had oversight of all legal matters, compliance,
securities law and provides direction on corporate governance. He advised the company
and was key in negotiations for the acquisition of Receivables Management (NZ) Limited and
the assets of ACM Group, investment in Australian neo-bank Volt, the Portfolio Enhancement
Program Agreements with Balbec Capital LP and completed the merger of company’s two
legal practices MCC Legal and CLH Lawyers.
As Chief Legal Officer of Australian Receivables Limited Jonathon successfully acquired
Turnbull Bowles Lawyers, strengthening FDL’s position and expanding legal services, client
engagement and productivity.
As a solicitor in the United Kingdom his focus was helping clients navigate successfully
through the global financial crisis, acting on large scale litigation and pursuing cross boarder
insolvency matters.
Appointed: July 2018
Denica joined the group in July 2015, following an extensive career in the financial services
industry and operational management. Denica has worked in senior roles leading large-
scale change programs specialising in business transformation, contact centre optimisation
for global organisations, industry, peak bodies, Local and Federal Government agencies.
Denica leads our operational teams across Australia, New Zealand and the Philippines.
Drawing on over 15 years leadership experience at both the operational and executive level,
Denica is instrumental in shaping and executing CLH’s operational strategy, delivering best-
in-class solutions for our clients and customers.
Anand Adusumilli
Chief Data Scientist
Jonathon Idas
Chief Legal Officer
Denica Saunders
Chief Operating Officer
Collection House Limited Annual Report 2019 FY19 Financial Results
9
8.2c
Dividend
Per Share
(cents)
22.3c
Earnings
Per Share
(cents)
$30.7m
$229.1m
Net Profit
After Tax
($million)
Shareholder
Equity
($million)
10
8
6
4
2
0
1
.
9
8
7
.
8
7
.
8
7
.
FY15
FY16
FY17
FY18
25
20
2
.
8
15
10
5
0
FY19
35
.
30
3
2
2
25
20
15
10
5
0
FY19
250
.
7
200
0
3
150
100
50
0
FY19
1
.
6
2
.
5
2
2
.
6
8
1
.
4
7
1
FY15
FY16
FY17
FY18
.
2
9
1
.
2
7
1
.
0
4
1
.
8
2
1
FY15
FY16
FY17
FY18
1
.
9
2
2
.
5
6
0
2
.
6
8
8
1
.
3
0
8
1
.
7
0
7
1
FY15
FY16
FY17
FY18
FY19
$203.3m
PDL Cash Collections
& Commissions
($million)
47.7%
Net Debt/
Net Debt + Equity
(%)
13.9%
Average Return
on Equity
(%)
250
200
150
100
50
0
50
40
3
.
3
0
2
30
20
10
0
FY19
1
.
6
7
1
3
.
1
8
1
.
0
3
7
1
.
7
5
9
1
FY15
FY16
FY17
FY18
15
.
7
7
4
12
.
6
9
3
.
7
7
3
.
3
9
3
.
4
9
3
9
6
3
.
8
3
1
.
9
3
1
1
.
3
1
.
6
0
1
3
9
.
FY15
FY16
FY17
FY18
0
FY19
FY15
FY16
FY17
FY18
FY19
Collection House Limited Annual Report 2019Overview Corporate Governance Financial Report Additional Information Overview 10
Corporate Governance
Collection House
Limited’s 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.
Board Composition
As at 30 June 2019, the Board comprised of five Directors
(including the Chair), four of whom are Independent Non-
Executive Directors.
On 1 July 2018, the Board comprised of three Directors
(including the Chair), two of whom were Independent Non-
Executive Directors
During the reporting period, two additional directors,
Catherine McDowell and Sandra Birkensleigh were
appointed and stood for election at the AGM. Both were
returned as Directors.
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
On 17 September 2018, the following Committees, each with
its own Charter, were reinstated by the Board, together with
its functions, powers and delegations:
– Audit and Risk Management Committee
– PDL Investment Committee
– Remuneration and Nomination Committee
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.
The Corporate Governance Statement is available
online
The Company’s listing on the Australian Securities Exchange
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 2019, 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 Investors – Corporate Governance.
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 of
Directors
PDL
Investment
Committee
Remuneration
and Nomination
Committee
Audit & Risk
Management
Committee
Internal
Audit
Chief
Executive
Officer
Executive
Management
Team
Collection House Limited Annual Report 2019 Overview
Corporate Governance
Financial Report
Additional Information
11
Directors’ Report
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 2019.
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:
– Leigh Berkley - Chairman
– Michael Knox
– Anthony Rivas
– Sandra Birkensleigh (appointed 17 September 2018)
– Catherine McDowell (appointed 17 September 2018)
See pages 6 to 7 for profile information on the Directors.
Principal activities
The Company has two reportable segments: Purchased Debt Ledgers (PDLs), and Collection Services.
The principal activities of the Group were the provision of debt collection services and the purchase of consumer debt.
There were no significant changes in the nature of the activities of the Group during the year.
Overview of Group operations and financial results
Key Information
Revenue
Net Profit after tax for the year
Earnings per share (EPS)
Dividends for the year *
30 June 2019
$’000
30 June 2018
$’000
Change
%
161,057
30,690
22.3
8.2
143,863
26,123
19.2
7.8
12
18
16
5
*
Total dividends for the year of 8.2 cents (interim 4.1 cents paid 28 March 2019, final 4.1 cents to be paid 25 October 2019), fully franked.
The Dividend reinvestment plan remains in place at a discount of 5%
The headline numbers reflect a mixed story with strong PDL growth a lower than expected performance in cash collection
and offset by a positive change from the adoption of AASB 9 Financial Instruments which favourably impacted interest income
recognised during the period. Overall, trading conditions for both the Collection Services and PDL segments were challenging,
as financial services sector clients, from whom the Group purchases or manages debt, had to deal with a rapidly changing
regulatory environment and general disruption leading into the federal election. While there was short term disruption, the
Group is well positioned to deliver an improved FY20 result through substantially higher cash and accounting earnings from the
Company’s enlarged portfolio of PDL assets.
The Directors are of the view that the business is not performing at the level expected with Cash Collection initiatives not
delivering until late in the period due to significant late growth and the Collection Services division disrupted by external factors.
The Company is focussed on ensuring we are maximising every opportunity to engage with customers and work collaboratively
to remedy their financial circumstances. Pleasingly, our process and technology initiatives are delivering improvements initial
evidence of which is apparent post year end.
The Company is committed to its strategy of being early adopters of technology and being innovative in our utilisation of capital
through strategically optimising our PDL portfolio. The Company delivered significant growth in its PDL asset base and strong
growth in the rate at which customers are moving to payment arrangements. The RML acquisition in New Zealand significantly
strengthens the Group’s presence in that market. The Company’s enlarged customer base and its technology initiatives are
expected to deliver improved value to both customers and shareholders in FY20.
Collection House Limited Annual Report 2019Directors’ Report 12
Key financial results – by segment – Audited ($’000)
Collection Services
Purchased Debt
Ledgers (PDLs)
Consolidated
30 June 2019
$ ‘000
30 June 2018
$ ‘000
30 June 2019
$ ‘000
30 June 2018
$ ‘000
30 June 2019
$ ‘000
30 June 2018
$ ‘000
Revenue
Sales
Interest and other income
Total segment revenue
Intersegment elimination
Consolidated revenue
Results
Segment result
Interest expense and borrowing costs
Unallocated revenue less unallocated
expenses
Profit before tax
Taxation
NPAT
67,604
69,038
–
–
67,604
69,038
–
93,660
93,660
–
75,002
75,002
67,604
93,660
161,264
69,038
75,002
144,040
(207)
(177)
67,604
69,038
93,660
75,002
161,057
143,863
9,264
12,564
52,090
36,695
61,354
(7,658)
(10,093)
43,603
(12,913)
30,690
49,259
(5,778)
(5,887)
37,594
(11,471)
26,123
Adoption of AASB 9 Financial Instruments
The Group adopted AASB 9 in full for the first time in FY19, including applying the effective interest rate (“EIR”) method of
revenue recognition and the new requirement to recognise both revaluation gains and losses on its portfolio of PDLs at each
reporting date through profit and loss. At 30 June 2019, no revaluation gains or losses were recognised in respect of the
Company’s PDL portfolio.
Purchased Debt Ledger (PDL) Segment
The Purchase Debt Ledger segment reported revenue of $93.7 million, up 25% on FY18. This includes a $9.8 million pre-tax
profit from the PEP transaction with Balbec previously announced. This transaction liberated capital from mature payment
arrangements, lessening our requirement for additional debt capital to fund investments in new PDL acquisitions to drive growth
and improved financial returns. The Group anticipates a year of lower acquisitive growth in FY20 after the exceptional expansion
($133m) in FY19.
Collection Services Segment
Collection Services revenue was $67.6 million down 2% on prior year. This decline was driven by short term external factors,
being the timing of the federal election and the Financial Services Royal Commission which both impacted client activity. As
this reflected a short term aberration, overheads were maintained during the year. The fixed cost nature of the operation meant
EBIT fell to $9.3 million (FY18: $12.9 million), below our initial expectations of a flat economic performance on the prior period.
Although disappointing, management considers this a reasonable result during a period of significant market disruption for
our clients.
Cost Structure
Directly attributable variable costs exhibited only a minor increase year on year, reflective of continually improving operating
initiatives and system efficiencies. Employee costs were up substantially on prior year reflecting ongoing investment in agent and
legal teams, but also in IT and business intelligence support functions. There was an element of employee cost growth in FY19
linked to the integration of the ACM and RML businesses acquired during the year which is non-recurring.
Corporate and administrative costs also increased, but similar to employee costs, there was some level of cost linked to the
ACM and RML transactions which is non-recurring. Finance costs were up year on year as a result of debt drawn to fund PDL
acquisitions, but remain generally proportionate to revenue. The effective income tax rate will be close to 30% as no material
permanent differences exist.
Collection House Limited Annual Report 2019 Directors’ Report 13
Capital Management
The Group’s total assets at 30 June 2019 were $471 million, up 27% on prior year. No material change to working capital and
gross assets are up in line with PDL acquisition activity during the year. Total debt was up in line with PDL growth.
Net gearing at year end was 48%. The Group continues to generate strong operational cash flow, a significant proportion of
which is reinvested into the asset base. The Group is working within its facilities and gearing framework and the step-up in
cash collections expected in FY20 will provide adequate funding for the Company to continue to be active in the market for
PDL books. The Group also retains in principle access to $100 million in off balance sheet finance through the partnership
with Balbec.
People and Culture
The Company is focused on running its business within a framework of values which commits us to make a contribution across
a range of stakeholders, including shareholders, clients, customers, employees and the wider community. During FY19, we
formalised strategies for better supporting our employees and our customers, reducing our environmental impact and creating
more meaningful engagement with wider community initiatives. The Company recognises that its social license to operate is
dependent on continually displaying a culture of transparency and integrity which its clients, customers and the wider community
can rely upon. The Group takes these obligations seriously and has comprehensive policies and procedures in place to ensure
these high standards of behaviour are achieved.
Technology and Innovation
The Company reaffirms its strategy of becoming an industry leader in the development and implementation of technology
solutions which improve employee, client and customer experience, but also generate operating efficiencies. The Group
continues to invest each year in the improvement to C5, its underlying collection and customer management platform.
During FY19, 8% of collections were generated from the online customer portal.
Business strategies and prospects for future financial years
Our core business strategy is to grow the business by:
– Continuing to invest in our existing business
– Continuing to expand into new business segments within Collection Services
– Creating and building complementary business model adjacencies
Key Risks
Our key risks are:
– Overpaying on PDL investments
– Failing to collect PDLs in accordance with our pricing models
– Changes to regulations governing our activities or breaching of compliance obligations
– Failure to retain existing and acquire new agency clients
– Availability of appropriately priced capital to support the Company’s growth objectives
– Disruption to systems and operation due to cyber breach or privacy breaches
– Failure to maintain appropriate level of investment in information systems to improve customer experience
The Audit and Risk Management Committee provides Board oversight to the management of risk mitigation strategies that
are implemented for the Group.
Collection House Limited Annual Report 2019Directors’ ReportOverview Corporate Governance Financial Report Additional Information 14
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 2018
Final 2018 ordinary
Interim 2019 ordinary
Cents per
share
Total amount
$’000
Date of
payment
3.9
4.1
5,349
5,665
26 October 2018
28 March 2019
After 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 2019 ordinary
Cents per
share
Total amount
$’000
Date of
payment
4.1
5,710
25 October 2019
Significant changes in the state of affairs
There were no significant changes in the state of affairs of the Group during the financial year.
Matters subsequent to the end of the financial year
The Directors have recommended the payment of a final fully franked ordinary dividend of 4.1 cents per fully paid share to be
paid on 25 October 2019 out of retained profits and a positive net asset balance as at 30 June 2019.
Other than the matters discussed above, no matter or circumstance has arisen since 30 June 2019 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.
Collection House Limited Annual Report 2019 Directors’ Report 15
Information on directors
Leigh Berkley
Independent, Chairman
Experience
Having qualified as a Chartered Accountant, Mr Berkley has more than 25 years’ experience in
the collections and debt purchase industry, is immediate past President of the Credit Services
Association (CSA) in the UK and assisted the Australian Collectors & Debt Buyers Association
(ACDBA) develop their Code of Practice.
Having been granted Australian residency this year, Leigh stepped down from his role as Director
of External Affairs and Development of Arrow Global Group Plc, one of the UK’s largest consumer
debt purchasers engaging with government and regulators, trade bodies and consumer advice
organisations.
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.
Leigh is the Vice President of the European trade body FENCA where he is leading the
development of a Code of Conduct for GDPR for the Collections industry across Europe, and
regularly presents at conferences and trade body forums around the world. Leigh was also the
2019 President of the International Collectors Group and a Trustee of the FairLife Charity, and is a
former Director of the Money Advice Liaison Group in the UK.
Mr Berkley was appointed to the Board of Collection House Limited on 1 July 2016.
Mr Berkley was appointed Chairman of Collection House Limited on 29 November 2017.
Special responsibilities
Chair of the PDL Investment Committee
Interest in shares
71,200 ordinary shares in CLH
Michael Knox
Independent, Non-executive Director
Experience
Mr Knox was an Australian Trade Commissioner serving in Saudi Arabia and Indonesia. He joined
Morgans (now Morgans Financial Limited) in Sydney in 1988. He was Chief Institutional Options
Dealer until moving to Brisbane in 1990 as Economist and Strategist. He joined the Board of
Morgan Stockbroking in 1996. He became Director of Strategy and Chief Economist in 1998.
Michael remained on the Board of Morgans until 2012.
Michael has served on many Queensland Government advisory committees. He was Chairman
of the Queensland Food Industry Strategy Committee in 1992, a Member of the Consultative
Committee of the Ipswich Development Board in 1993, a Member of the Queensland Tourism
Strategy Committee in 1994 and a Member of the Ministerial Advisory Committee on Economic
Development in 1997. From 2003 to 2012, he was Chairman of the Advisory Committee of School
of Economics and Finance at the Queensland University of Technology. He has been a Governor
of the American Chamber of Commerce from 1997 to 2007. In 2008, Michael joined the Board of
The City of Brisbane Investment Corporation Pty Ltd. Michael remained on the Board until 2016.
Michael was the President of the Economic Society of Australia (Qld) Inc from 2009 to 2013.
Mr Knox was appointed to the Board of Collection House Limited on 24 March 2017.
Special responsibilities
Nil
Interest in shares
60,000 ordinary shares in CLH
Collection House Limited Annual Report 2019Directors’ ReportOverview Corporate Governance Financial Report Additional Information 16
Anthony Rivas
Managing Director
Experience
Anthony Rivas has over 25 years’ experience in the area of Credit and Collections, and extensive
international experience in three continents.
Anthony has served as Managing Director of Australian Receivables Limited until July 2016, after
joining the company in 2013.
With an initial mandate to optimise costs, Anthony successfully led the team to achieve EBITDA
targets each year under his leadership and improved staff turnover rates.
Anthony joined NCO/EGS in 2011, and led the Mexican operations for the company as Vice
President of Operations. Here he was responsible for five facilities across Mexico, including
collection agents, visitor agents, field attorneys and legal services.
Prior to joining NCO/EGS, Anthony worked and consulted in India, Australia, UK, and the USA. His
accomplishments included:
– Assisting companies to bring purchased debt portfolios to India for the first time
– Vice President of Operations/Training for Global Vantedge (an OSI company) in the USA and
India
– VP Operations at a 1000+ FTE facility, and surpassing US benchmarks for various clients in
Bankcard and Telecommunications
Anthony has managed debt portfolios for a major international debt purchaser and successfully
participated in the sale and transition of the portfolios to International investors. His technical
developments include building automated skip waterfall systems, leveraging fetch technology
to the internet with no agent involvement; system upgrades to enhance collector and reporting
efficiency, enabling real time reporting; and helping lead Performance Management System
training for OSI’s markets in the USA.
Mr Rivas was appointed Managing Director on 24 November 2017.
Special responsibilities
Nil
Interest in shares
6,690 ordinary shares in CLH
71,409 FY17 deferred shares in CLH
77,584 FY18 deferred shares in CLH
95,796 FY19 deferred shares in CLH
Catherine McDowell
Independent, Non-executive Director
Experience
Catherine McDowell has more than 30 years’ experience in the investment and financial services
industry in senior executive and advisory roles, predominantly with Barclays Bank, and more
recently with ANZ.
In Catherine’s role with Barclays International as Managing Director, she oversaw a substantial
international wealth business before moving to New Zealand in 2005.
Catherine was the Managing Director at ANZ and the National Bank Private Banking and Wealth
business (New Zealand). She was responsible for integrating these two businesses and creating a
significant wealth business.
Catherine subsequently moved to Australia to build the Private Bank and Trust business while
managing E-Trade. During her career Catherine spent 10 years in New York, 15 years in London
and 8 years in New Zealand and Australia.
She has more than 15 years of Board experience with not for profit, listed and non-listed
companies. Her current roles include Non-Executive Director of the National Provident Fund
and Chair of the Investment Committee and Independent Director for the Todd Family Office.
Catherine she was recently appointed to the AMP Superannuation Board.
Catherine was appointed to the Board of Collection House on 17 September 2018.
Special responsibilities
Chair of the Remuneration and Nomination Committee
Interest in shares
No ordinary shares in CLH
Collection House Limited Annual Report 2019 Directors’ Report 17
Sandra Birkensleigh
Independent, Non-executive Director
Experience
Sandra Birkensleigh is a Non-Executive Director of MLC Limited, Chair of the Audit Committte and
a member of the Risk Committee and Disclosure Committee.
Sandra is also a non-executive Director of Auswide Bank, Chair of their Audit Committee and
member of the Risk and Remuneration committees. She is a Non-Executive Director of 7 Eleven,
and Chair of their Audit and Risk committee, and a Non-executive Director of Horizon Oil Limited,
Chair of their Audit Committee and a member of the Risk and Remuneration and Nomination
Committees.
Sandra is also an independent member of the Audit Committee for the Reserve Bank of Australia,
a Council Member and Chair of the Audit and Risk Committee of the University of the Sunshine
Coast.
She is also a Non-executive Director of the National Disability Insurance Agency and Chair of the
Audit and Risk Committees and member of the People and Remuneration Committee. She is a
member of the Investment Committee for the Public Trustee of Queensland. Sandra also sits on
the boards of the Tasmanian Finance Corporation (Tascorp) and is Chair of the Audit Committee.
She was recently appointed as Chair of the Financial Services Committee for the Institute of
Internal Auditors of Australia.
Previously, Sandra held the role of Senior Partner of PwC until February 2013 and was the Global
Head of Governance Risk and Compliance Services for PwC for five years. Sandra has a Bachelor
of Commerce from University of New South Wales, is a Chartered Accountant, a Graduate of the
Australian Institute of Company Directors and a Certified Compliance Professional (Fellow).
Sandra was appointed to the Board of Collection House on 17 September 2018.
Special responsibilities
Chair of the Audit and Risk Management Committee
Interest in shares
No ordinary shares in CLH
Company Secretary
Doug McAlpine was appointed as the Chief Financial Officer (“CFO”) and Company Secretary on 1 July 2019.
Doug was previously with Silver Chef Limited where he served most recently as the EGM of Australia and New Zealand and
prior to that, CFO. Doug has previously held similar roles in the resources, property and general investment sectors. In addition
to strong financial and commercial capability, Doug has a solid grounding in receivables financing and extensive experience
working with the professional investment community.
Doug began his career at Ernst & Young. He is a Chartered Accountant with twenty years of accounting and finance experience,
fifteen of which have been as CFO with listed public companies in Australia.
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
2019, and the number of meetings attended by each Director were:
2019
Leigh Berkley
Michael Knox
Anthony Rivas
Sandra Birkensleigh
(Appointed on 17 September 2018)
Catherine McDowell
(Appointed on 17 September 2018)
Meetings of committees
Directors
Audit and Risk
Management
PDL Investment
Remuneration and
Nomination
Attended
Held
Attended
Held
Attended
Held
Attended
Held
10
9
10
8
7
10
10
10
8
8
7
6
7
7
7
7
7
7
7
7
10
3
10
4
4
10
10
10
10
10
5
4
5
5
5
5
5
5
5
5
All committees were reconstituted effective 17 September 2018. Prior to that date, all committee matters were considered by the
Board of Directors.
Collection House Limited Annual Report 2019Directors’ ReportOverview Corporate Governance Financial Report Additional Information 18
Remuneration Report – AUDITED
This Remuneration Report outlines the overall remuneration strategy, framework and practices adopted by the Group for FY19
for Non-Executive Directors (NEDs), the 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
B
C
D
E
F
G
H
I
J
Directors and other Key Management Personnel disclosed in this report
Remuneration governance
Executive remuneration policy and framework
Relationship between remuneration and the Group’s performance
Non-executive Director remuneration policy
Details of remuneration of Directors and Key Management Personnel
Service agreements
Share-based compensation
Equity instruments held by Key Management Personnel
Additional information
Director and Executive Remuneration
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 FY19
Board of Directors
Leigh Berkley
Michael Knox
Chairman (Non-Executive)
Director (Non-Executive)
Anthony Rivas
Managing Director and Chief Executive Officer
Sandra Birkensleigh
Director (Non-Executive) (appointed 17 September 2018)
Catherine McDowell
Director (Non-Executive) (appointed 17 September 2018)
Executive Leadership Team (ELT)
Anthony Rivas
Chief Executive Officer (CEO)
Kristine May
Chief Financial Officer (CFO) and Company Secretary (resigned 30 June 2019)
Anand Adusumilli
Chief Data Scientist
Jonathon Idas
Chief Legal Officer
Denica Saunders
Chief Operating Officer (COO) (appointed 1 July 2018)
Doug McAlpine
Chief Financial Officer (CFO) and Company Secretary (appointed 1 July 2019)
Collection House Limited Annual Report 2019 Directors’ Report 19
B Remuneration governance
Overall remuneration strategy, framework and practices adopted by the Group are governed by the Board and the Remuneration
and Nomination Committee. These functions include consideration of the following:
– How the remuneration policies are applied to members of the ELT
– The basis of short and long-term performance-based incentive payments for members of the ELT
– The appropriate fees for NEDs.
Fundamental to all arrangements is that all KMP 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 Section C: ‘Executive Remuneration Policy and
Framework’ section of the Remuneration Report.
The objectives of the Group’s remuneration policies are to ensure remuneration packages for KMP reflect their duties,
responsibilities and level of performance – as well as to ensure all KMP are motivated to pursue the long-term growth and
success of the Group.
In determining the remuneration of all KMP, 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 KMP 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.
Use of external advisors
In performing its role, the Remuneration and Nominations 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 help achieve the objectives of the Group’s remuneration strategy. External
benchmarking of executive and director remuneration arrangements were provided by PricewaterhouseCoopers (PwC) during
the period the fees for which were $47,212. Results of the external remuneration advisors include the hiring of high calibre
non- executive directors and the performance of an independent review on the Directors and Executives remuneration package.
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 ELT 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 Remuneration and Nomination Committee and the Board reviews the remuneration packages for members of the ELT
annually by reference to individual performance against key individual objectives, the Group’s consolidated results and market
data. The performance review of the CEO is undertaken by the Chair of the Board who then makes a recommendation to the
Board. The performance review of the other members of the ELT is undertaken by the CEO and approved by the Board.
The Group aims to reward members of the ELT 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 ELT pay and reward framework has three components:
– Total fixed remuneration (TFR) including superannuation and benefits
– Short-term incentives (STIs), paid in cash or shares
– 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
ELT including the CEO.
Collection House Limited Annual Report 2019Directors’ ReportOverview Corporate Governance Financial Report Additional Information 20
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 ELT member. Members of the ELT are offered a competitive TFR that
comprises the cash salary, superannuation and non-monetary benefits. The TFR for ELT 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. The TFR is usually fixed for a 12-month period with any
changes effective from 1 September each financial year. An ELT member’s remuneration is also reviewed upon any change of
duties.
Retirement benefits for ELT
There are no additional retirement benefits made available to members of the ELT, 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 ELT 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’.
ELT members have the opportunity to earn an annual STI if pre-defined targets are achieved. The CEO had a target STI
opportunity of 75 percent of TFR, with 60 percent of the determined amount to be paid in cash and 40 percent deferred payment
to be provided in shares at the end of the contract period. Other ELT personnel each have a cash-based STI opportunity of up to
25 percent of TFR.
STIs for the ELT in FY19 were based on scorecard measures and weightings. The 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 ELT are recommended by the CEO to the Board based on the ELT meeting financial and
non- financial target performance objectives set by the CEO.
There is a high degree of alignment between the Company strategy and the ELT’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
Chief Executive Officer
Chief Financial Officer/Company Secretary
Chief Data Scientist
Chief Legal Officer
Chief Operating Officer (appointed 1 July 2018)
Financial
Performance
Objectives
Non-Financial
Performance
Objectives
80%
80%
80%
80%
80%
20%
20%
20%
20%
20%
The financial performance objectives are the same for all Senior Executives, providing a common objective for the ELT.
The non-financial ELTs 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 ELT.
Collection House Limited Annual Report 2019 Directors’ Report 21
CEO STI targets for FY19 and FY18
Payment of the STI is discretionary and subject to the requirement to achieve a minimum of 5% growth in EPS in a financial year,
as well as the achievement of the individual personal objectives outlined below:
Performance category
Metrics
Weighting (%)
Financial
Non-Financial
– Earnings per share (EPS)
– Compliance
–
–
Innovative Solutions implemented
Improvement of Corporate Culture
80
10
5
5
A summary of the actual STI Financial outcomes achieved is included in Section D.
Deferred Shares – CEO short-term incentive scheme
Under the Group’s short-term incentive (STI) scheme, the CEO is entitled to receive 60% of his annual STI achieved in cash, and
40% in the form of rights to deferred shares of Collection House Limited, issuable at the end of his contract period, subject to
him being employed by the Group at the end of the contract period. The rights will automatically convert into one ordinary share
each on vesting, at an exercise price of nil. The CEO will not receive dividends, or be entitled to vote in relation to the deferred
shares prior to the vesting date of 1 July 2019. The number of rights to be granted is determined based on the amount of the
STI awarded divided by the weighted average price at which the Company’s shares are traded on the Australian Securities
Exchange over the five trading days preceding the date of issue.
The maximum value of deferred shares issuable in relation to 30 June 2019 was $154,551. The Board has determined that the
CEO is entitled to 75% of the maximum entitlement and shares to the value of $115,913 will be issued post year end.
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 ELT 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 ELT 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 ELT 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 ELT and eligible employees 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.
FY19 Performance Rights Awarded
No unlisted performance rights over ordinary shares in the Company were granted during the current year under the PRP to the
ELT and other eligible employees.
Collection House Limited Annual Report 2019Directors’ ReportOverview Corporate Governance Financial Report Additional Information 22
FY18 Performance Rights Awarded
For the FY18 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. The hurdles and the proportion of performance rights that will vest as a
percentage if the target is achieved, are outlined below:
Performance Hurdles – Compound EPS Growth
0% – 5.00%
5.01% – 7.50%
7.51% – 10.00%
More than 10.01%
% of Pool
Nil
33.33%
66.66%
100%
For the period, 341,071 unlisted performance rights over ordinary shares in the Company were granted under the PRP to the ELT
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 2020 as highlighted above.
As announced at 25th June 2019, the CEO has been reappointed for a further 3 year term. As part of his commitment to the Group
and its shareholders, the CEO has forgone 2,000,000 of his 3,000,000 performance rights as at FY19.
For the period 1 July 2016 to 30 June 2019, 1,403,513 unlisted performance rights over ordinary shares in the Company were
granted to the ELT 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 2019 as highlighted above.
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 is 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 has absolute discretion in relation to payments under both the STI and LTI schemes.
D Relationship between remuneration and the Group’s performance
Group performance and its link to LTI
The overall level of reward for members of the ELT 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.
Net profit after tax ($m)
Dividends declared (franked)
Share price commenced
Share price ended
2015
$22.5
2016
$18.6
2017
$17.4
2018
$26.1
2019
$30.7
9.1 cents
7.8 cents
7.8 cents
7.8 cents
8.2 cents
$1.88
$2.23
$2.23
$1.10
$1.10
$1.16
$1.16
$1.49
$1.49
$1.21
Basic EPS (including discontinued operations)
17.2 cents
14.0 cents
12.8 cents
19.2 cents
22.3 cents
Collection House Limited Annual Report 2019 Directors’ Report 23
Details of remuneration: cash bonuses and performance rights
For each cash bonus and grant of performance rights included in the table on page 28 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. Other than the deferred payment shares, 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 in the options reserve has been determined as the fair
value of the performance rights at grant date.
Cash bonus
Deferred Payment
Shares
Performance rights
Awarded
%
Forfeited
%
Awarded
%
Forfeited
%
Financial
year
granted
Vested
%
Forfeited
%
Lapsed
%
Financial
years in
which
performance
rights may
be vested
(subject
to certain
qualifying
hurdles)
Maximum
total
value of
performance
rights in
options
reserve
Anthony
Rivas*
Kristine May
(resigned
30 June 2019)
Anand
Adusumilli
Jonathon
Idas
Denica
Saunders
75%
80%
80%
–
–
75%
80%
80%
80%
25%
20%
20%
100%
100%
25%
20%
20%
20%
90%
10%
75%
80%
80%
25%
2019
20%
2018
20%
2017
–
–
–
–
–
–
–
–
–
–
–
–
2018
2017
2019
2018
2019
2018
2019
–
–
–
–
–
–
–
–
–
–
66%
100%
100%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2020
1,294,470
2021
2020
–
–
–
–
2021
27,047
–
–
2021
27,375
–
–
*
Under the terms of the CEO’s employment agreement, 40% of the FY17 STI is payable in shares at the end of the employment contract, and
is contingent upon the CEO being employed by the Company at the end of the contract period.
Collection House Limited Annual Report 2019Directors’ ReportOverview Corporate Governance Financial Report Additional Information 24
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. NEDs 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 NED fee pool limit is $900,000 per annum, as approved by shareholders at the Group’s Annual
General Meeting as at 25 October 2013. The FY19 aggregate total NED fees distribution is $512,900 (including superannuation).
Payments are allowed for additional responsibilities for the Chair of each Board Committee. Fees and payments to NED reflect
the demands that are made on, and the responsibilities of, the Directors.
The table below summarises the NED fees for FY19 (exclusive of superannuation):
FEES
Base fees
Chair
Other Non-Executive Directors
Additional fees
Audit and Risk Management Committee Chair
Audit and Risk Management Committee Member
Remuneration and Nomination Committee Chair
Remuneration and Nomination Committee Member
PDL Investment Committee Chair
PDL Investment Committee Member
FY19*
FY18
$175,000
$165,000
$95,000
$90,000
$25,000
$15,000
$Nil
$Nil
$25,000
$15,000
$Nil
$Nil
$25,000
$15,000
$Nil
$Nil
*
Change in Directors’ remuneration was effective as at 1/1/2019.
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.
Collection House Limited Annual Report 2019 Directors’ Report 25
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
Post-
employment
Other long
term
Share-based
payments
Salary
and fees
STI Cash
bonus
Non-
monetary
benefits
Super-
annuation
benefits
Total
Annual
and long
service
leave
Termination
benefits
Rights
Total
Proportion of
remuneration
performance
related
2019
194,098
2018
182,326
2017
106,650
2019
92,500
2018
90,000
2017
24,557
2019
90,288
2019
90,288
–
–
–
–
–
–
–
–
12,569 206,667
–
–
–
–
–
–
182,326
106,650
92,500
90,000
24,557
90,288
7,213
4,396
2,850
8,788
8,550
2,302
8,577
–
–
–
–
–
–
–
–
–
–
–
213,880
186,722
109,500
101,288
98,550
–
26,879
98,865
–
90,288
8,577
98,865
In Dollars
Non-Executive Directors
Leigh Berkley
Chairman
Michael Knox
Non-Executive
Director
Sandra Birkensleigh
Non-Executive
Director
(appointed
17 September 2018)
Catherine McDowell
Non-Executive
Director
(appointed
17 September 2018)
Short-term
In Dollars
Salary
and fees
STI Cash
bonus
Non-
monetary
benefits
Total
Executive Director and other Key Management Personnel
Post-
employment
Other long
term
Super-
annuation
benefits
Annual
and long
service
leave
Share-based payments
Termination
benefits
Rights **
Deferred
Shares*
Total
Proportion of
remuneration
performance
related
2019 484,921
173,870
33,569 692,360
46,067 26,067
– 431,490
115,913 1,311,897
2018
433,418
173,400
32,126 638,944
38,788
31,284
– 431,490
115,600 1,256,106
2017
421,731
159,600
51,536 632,867
40,064
22,237
– 431,490
106,400 1,233,058
2019 247,029
–
4,705
251,734
23,468
–
208,938
–
2018 234,556
63,000
4,549
302,105
22,283
13,844
2017
158,276
62,000
2,938
223,214
15,036
5,876
2019 279,567
59,027
9,034 347,628
26,559
14,683
2018
248,124
49,000
–
297,124
23,572
1,445
2019 278,439
61,200
4,902 344,541
26,452
–
2018
205,721
50,000
–
255,721
19,543
11,802
2019 287,644
70,833
4,705
363,182
27,326
13,299
–
–
–
–
–
–
–
56,214
8,542
8,892
1,066
9,000
1,079
–
–
–
–
–
–
–
–
–
484,140
394,446
252,668
397,762
323,207
379,993
288,145
403,807
55%
57%
57%
0%
30%
28%
17%
15%
18%
18%
18%
Anthony Rivas
Managing
Director/Chief
Executive Officer
Kristine May
Chief Financial
Officer/Company
Secretary (resigned
30 June 2019)
Anand Adusumilli
Chief Data
Scientist
Jonathon Idas
Chief Legal Officer
Denica Saunders
Chief Operating
Officer
(appointed 1 July
2018)
-
*
**
For recently appointed ELT, the remuneration information provided in the table relates to the period from the date of appointment as ELT
to 30 June 2019, unless otherwise stated.
Deferred shares represent 40 percent of STI, payable to the CEO at the end of his contract term.
FY19 Performance rights (LTI) were not approved by the Board at the date of this report.
Collection House Limited Annual Report 2019Directors’ ReportOverview Corporate Governance Financial Report Additional Information 26
G Service agreements
Remuneration and other terms of employment for the CEO and other Key Management Personnel are also formalised in service
agreements. Except for the CEO who has a six month notice period, all contracts with members of the ELT may be terminated
early by either party with three months’ notice. The Company, 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.
Anthony Rivas
CEO & Managing Director
Annual fixed remuneration
Performance bonus
Performance rights
$692,360 inclusive of superannuation and non-monetary
benefits for FY19.
$386,376 was the maximum STI opportunity in relation
to FY19 (60% cash, 40% deferred payment in shares at
the end of the contract period (deferred payment shares),
provided the CEO remains employed by the Company at
the end of the contract period).
3,000,000 at risk performance rights were granted
during FY17, of which 2,000,000 were foregone during
FY19. No performance rights granted in FY19.
Contract period
3 years to 30 June 2022.
Kristine May
CFO & Company Secretary
(resigned 30 June 2019)
Annual fixed remuneration
$251,734 inclusive of superannuation and non-monetary
benefits for FY19.
Performance cash bonus
There is no STI opportunity in relation to FY19.
Performance rights
FY18 & FY17 performance rights have forfeited.
Anand Adusumilli
Chief Data Scientist
Annual fixed remuneration
$347,628 inclusive of superannuation and non-monetary
benefits for FY19.
Performance cash bonus
$78,703 was the maximum STI opportunity in relation to
FY19, actual was $59,027.
Performance rights
17,559 at risk performance rights were granted during
FY18.
No performance rights granted in FY19.
Jonathon Idas
Chief Legal Officer
Annual fixed remuneration
$344,541 inclusive of superannuation and non-monetary
benefits for FY19.
Denica Saunders
Chief Operating Officer
(appointed 1 July 2018)
Performance cash bonus
$76,499 was the maximum STI opportunity in relation to
FY19, actual was $61,200.
Performance rights
17,772 at risk performance rights were granted during
FY18.
No performance rights granted in FY19.
Annual fixed remuneration
$363,182 inclusive of superannuation and non-monetary
benefits for FY19.
Performance cash bonus
$62,963 was the maximum STI opportunity in relation to
FY19, actual was $70,833.
Performance rights
No performance rights granted in FY19.
Collection House Limited Annual Report 2019 Directors’ Report
27
H Share-based compensation
Performance rights
Performance rights have been granted to certain eligible employees under the Company’s Performance Rights Plan (PRP).
Performance rights granted under the PRP 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 ELT are set
out below.
Name
Anthony Rivas
Kristine May
(resigned 30 June 2019)
Anand Adusumilli
Jonathon Idas
Denica Saunders
(appointed 1 July 2018)
Number of performance
rights granted/issued
during the year
Number of performance
rights vested/issuable
during the year
2019
2018
2019
2018
–
–
–
–
–
–
62,286
17,599
17,772
–
–
–
–
–
–
–
–
–
–
–
The assessed fair value at grant date of performance rights compensation granted to members of the ELT has been 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.
Equity instruments held by key management personnel
I
Performance rights
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.
2019
Name
Balance at
start of the
year
Granted as
compensation
Vested
Lapsed
Balance at
end of the
year
Vested and
issuable
Un-vested
Anthony Rivas
3,000,000
Kristine May
(resigned 30 June
2019)
Anand Adusumilli
Jonathon Idas
Denica Saunders
(appointed 1 July
2018)
121,673
17,599
17,722
–
–
–
–
–
–
–
(2,000,000)
1,000,000
1,000,000
–
–
–
–
(121,673)
–
–
–
–
17,599
17,722
–
–
–
–
–
–
–
17,599
17,722
–
Collection House Limited Annual Report 2019Directors’ ReportOverview Corporate Governance Financial Report Additional Information 28
Share holdings
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.
2019
Non-Executive Directors
Category
Leigh Berkley
Michael Knox
Sandra Birkensleigh
Catherine McDowell
2019
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Executive Director and other key
management personnel
Category
Balance at
start of the
year, or on
appointment
3,700
–
–
–
Balance at
start of the
year
Other
changes
during
the year
67,500
60,000
–
–
Other
changes
during
the year
Balance at
the end of
the year
71,200
60,000
–
–
Balance at
the end of
the year
Anthony Rivas
Kristine May
(resigned 30 June 2019)
Anand Adusumilli
Jonathon Idas
Denica Saunders
(appointed 1 July 2018)
Ordinary Shares
Deferred payment shares
3,690
71,409
3,000
6,690
173,380
244,789
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
–
–
–
–
–
–
–
–
–
–
–
–
J Additional information
Loans to Directors and Executives
There were no loans to Directors or members of the ELT during FY19.
Shares under performance rights
LTIs are provided to certain eligible employees via the PRP. Total un-issued ordinary shares of the Group under performance
rights at the date of this report are detailed below.
Date
rights
effective
Number
of rights
granted/to be
issued
Issue
price of
shares
No of shares
issued
2017
No of
unvested
shares and
vested but
not yet
issued shares
under rights
Expiry date
1/7/16
1/7/17
3,747,550
341,071
Nil
Nil
Nil
Nil
1,141,738
30 September 2019
261,775
30 September 2020
Performance rights
PRP
PRP
Additional information – Unaudited
Insurance of officers
During the financial year the Group paid premiums 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.
Collection House Limited Annual Report 2019 Directors’ Report 29
Proceedings
On 15 March 2019, the Group was provided with a copy of a claim and statement of claim, which had been filed in the Supreme
Court of Queensland on the same date. The claim for damages is for $2,800,000 and proceedings are still being defended by
the Group.
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
– 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 Group’s auditor, 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 services
Taxation compliance services
Accounting advice and due diligence services
Audit and review of financial statements
Total paid or payable to KPMG
2019
$
66,700
3,100
120,700
196,690
387,190
258,280
645,470
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 30.
Rounding of amounts
The Group is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Report) 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
Leigh Berkley
Chairman
30 August 2019
Collection House Limited Annual Report 2019Directors’ ReportOverview Corporate Governance Financial Report Additional Information
30
Auditor’s Independence Declaration
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Collection House Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Collection House Limited
for the financial year ended 30 June 2019 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.
KPMG
Scott Guse
Partner
Brisbane
30 August 2019
30
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.
Collection House Limited Annual Report 2019 Income Statement
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 equity holders of the Company:
Basic earnings per share
Diluted earnings per share
The above income statement should be read in conjunction with the accompanying notes.
31
Consolidated
Notes
30 June 2019
$’000
30 June 2018
$’000
5
6
6
6
7
161,057
143,863
161,057
(25,968)
(57,100)
(4,624)
(8,189)
(775)
(13,140)
(7,658)
43,603
(12,913)
30,690
30,690
143,863
(24,793)
(52,115)
(4,820)
(7,666)
(1,082)
(10,015)
(5,778)
37,594
(11,471)
26,123
26,123
Cents
Cents
29
29
22.3
22.0
19.2
18.8
for the year ended 30 June 2019Overview Corporate Governance Financial Report Additional Information Collection House Limited Annual Report 2019 32
Statement of Comprehensive Income
Profit for the year
Other comprehensive income, net of income tax
Items that may be reclassified subsequently to profit or loss
Consolidated
Notes
30 June 2019
$’000
30 June 2018
$’000
30,690
26,123
Exchange differences on translation of foreign operations
21(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
(642)
(642)
(77)
(77)
30,048
26,046
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
for the year ended 30 June 2019Collection House Limited Annual Report 2019 Balance Sheet
ASSETS
Current assets
Cash and cash equivalents
Receivables
Purchased debt ledgers
Other assets
Total current assets
Non-current assets
Purchased debt ledgers
Equity investments
Property, plant and equipment
Intangible assets
Receivables
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Bank Overdraft
Payables
Borrowings
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
The above balance sheet should be read in conjunction with the accompanying notes.
33
Consolidated
Notes
30 June 2019
$’000
30 June 2018
$’000
8
9
10
11
10
12
13
14
9
8
15
18
16
17
18
19
16
17
20
21(a)
21(b)
1,596
12,871
52,466
167
67,100
509
20,382
54,215
42
75,148
357,837
259,192
8,500
2,710
33,842
558
403,447
470,547
–
14,609
14,667
3,782
3,810
1,937
–
2,084
34,041
498
295,815
370,963
2,601
14,404
–
2,714
3,290
2,660
38,805
25,669
195,933
131,900
1,505
103
5,053
202,594
241,399
229,148
116,413
365
112,370
229,148
616
190
6,011
138,717
164,386
206,577
113,727
157
92,693
206,577
as at 30 June 2019Overview Corporate Governance Financial Report Additional Information Collection House Limited Annual Report 2019 34
Statement of Changes in Equity
Consolidated
Balance at 1 July 2017
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
Acquisition of treasury shares
Employee share rights-value of employee services
Dividends provided for or paid
Balance at 30 June 2018
Balance at 1 July 2018
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
Acquisition of treasury shares
Withdrawal of treasury shares
Employee share rights-value of employee services
Dividends provided for or paid
Balance at 30 June 2019
Attributable to owners of
Collection House Limited
Notes
Contributed
equity
$’000
112,079
–
–
–
1,581
67
–
–
1,648
113,727
113,727
–
–
–
2,882
(300)
104
–
–
2,686
116,413
20
21
22
20
21
22
Reserves
$’000
(615)
–
(77)
(77)
–
–
849
–
849
157
157
–
(642)
(642)
–
–
850
–
850
365
Retained
earnings
$’000
77,169
26,123
–
Total
equity
$’000
188,633
26,123
(77)
26,123
26,046
–
–
–
(10,599)
(10,599)
92,693
92,693
30,690
1,581
67
849
(10,599)
(8,102)
206,577
206,577
30,690
–
(642)
30,690
30,048
–
–
–
(11,013)
(11,013)
2,882
(300)
104
850
(11,013)
(7,477)
112,370
229,148
The above statement of changes in equity should be read in conjunction with the accompanying notes.
for the year ended 30 June 2019Collection House Limited Annual Report 2019 Statement of Cash Flows
35
Consolidated
Notes
30 June 2019
$’000
30 June 2018
$’000
Cash flows from operating activities
Receipts from customers and debtors (inclusive of goods and services tax)
Payments to suppliers and employees (inclusive of goods and services tax)
Income taxes paid
Net cash inflow (outflow) from operating activities
31
Cash flows from investing activities
Payments for property, plant and equipment
Payment for leasehold improvements
Payments for purchased debt ledgers
Payment for equity instrument
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
Dividends paid to Company’s shareholders
Proceeds from issues of shares and other equity securities
Purchase of treasury shares
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
Cash at bank and on hand
Bank Overdraft
Cash and cash equivalent at end of year
The above statement of cash flows should be read in conjunction with the accompanying notes.
22
8
213,402
191,304
(115,625)
(95,663)
97,777
(10,956)
86,821
(1,086)
(714)
95,641
(9,778)
85,863
(431)
5
(132,633)
(81,324)
(8,500)
(2,901)
–
(966)
(145,834)
(82,716)
78,702
(837)
(1,591)
(5,618)
(11,013)
2,882
(300)
8,700
(139)
(1,452)
(4,550)
(10,599)
1,581
–
62,225
(6,459)
3,212
(2,092)
476
1,596
1,596
–
1,596
(3,312)
1,151
69
(2,092)
509
(2,601)
(2,092)
Collection House Limited Annual Report 2019for the year ended 30 June 2019Overview Corporate Governance Financial Report Additional Information 36
Notes to the Financial Statements
for the year ended 30 June 2019
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 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
30 August 2019 by the Directors of the Company.
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 new standards and amendments to standards mandatory
for the first time in the annual reporting period commencing
1 July 2018 do not impact amounts recognised in the current
or prior period, and are not likely to affect future periods.
Refer to Note 1(z) for further details.
(iii) 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.
(iv) 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.
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(z)).
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 Managing Director.
(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.
Collection House Limited Annual Report 2019 37
1
Summary of significant accounting policies
(continued)
(d) Foreign currency translation (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 application of the
credit-adjusted effective interest rate (“EIR”) to the amortised
cost of the PDLs under AASB 9 Financial Instruments.
Interest is shown net of any adjustments to the carrying
amount of PDLs as a result of changes in estimated cash
flows. The EIR is the rate that discounts estimated future cash
receipts of the PDLs to the net carrying amount (i.e. the price
paid to acquire the asset).
(ii)
Call option income – reflects the revenue the
company earns by selling the right to purchase
future collections of an eligible portfolio of PDLs
to a third party.
Revenue is recognised for accounting purposes when a call
option contract is signed, as from the date the third party
receives a substantial portion of the cash flows and the
Group has no future rights or entitlement to the collections
on that portfolio.
(iii) Rendering of services – commission revenue
Revenue from rendering services is recognised to the extent
that the performance obligation has been met, revenue
benefits is expected to flow to the Group and the revenue
can be reliably measured.
(iv) 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.
(v) 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.
Income tax
(f)
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.
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.
Collection House Limited Annual Report 2019 Notes to the Financial StatementscontinuedOverview Corporate Governance Financial Report Additional Information 38
1
Summary of significant accounting policies
(continued)
Income tax (continued)
(f)
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 17). 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 25). 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.
Impairment of assets
(i)
Goodwill is not subject to amortisation and is tested 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 14).
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 and
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.
(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.
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.
(i)
Financial assets subsequently measured at amortised
cost - PDLs
Classification
PDLs 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.
Collection House Limited Annual Report 2019 Notes to the Financial Statementscontinued 39
1
Summary of significant accounting policies
(continued)
(l) Other financial assets (continued)
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 credit-adjusted
effective interest method, less any impairment losses.
Impairment
The carrying amount of the PDLs is continuously reviewed
to ensure that the carrying amount is not impaired. Due to
the characteristics of the Group’s investment in PDLs, they
are considered as purchased or originated credit impaired
(“POCI”) assets under AASB 9. Where the carrying amount
exceeds the present value of the estimated future cash flows
discounted at the asset’s original Effective Interest Rate
(“EIR”), the Group recognises an impairment loss. Favourable
changes in lifetime expected credit lossess are recognised
as an impairment gain, even if the favourable change is more
than the amount previously recognised in profit or loss.
(ii) Equity investments
At the initial recognition, the Group will measure a financial
asset at fair value with the transaction costs that are directly
attributable to the acquisition. The Group will make the
designation whether the investments meet fair value through
other comprehensive income (FVOCI) criteria based on the
strategic purpose to hold the equity investment for long term
rather than short term trading.
After subsequent recognition, any gains or losses on these
instruments are recognised in other comprehensive income
and not the profit and loss.
(m) Fair value estimation of financial assets and liabilities
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) 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(r).
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
– Leased plant and equipment
4-12 years
3-5 years
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.
(o)
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
annually, 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).
Collection House Limited Annual Report 2019 Notes to the Financial StatementscontinuedOverview Corporate Governance Financial Report Additional Information 40
1
(o)
Summary of significant accounting policies
(continued)
Intangible assets (continued)
IT development and software
(ii)
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 10 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. 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.
(p) 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.
(q) 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.
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.
(r) 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.
(s) 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.
(t) 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.
Collection House Limited Annual Report 2019 Notes to the Financial Statementscontinued 41
1
Summary of significant accounting policies
(continued)
(u) Contributed equity
Ordinary shares are classified as equity.
(t) Employee benefits (continued)
(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 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 30.
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 30.
(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.
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 entity 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.
(v) Dividends
Provision is made for the amount of any dividend declared,
being appropriately authorised and no longer at the
discretion of the entity, on or before the end of the reporting
period but not distributed at the end of the reporting period.
(w) 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 29).
(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.
(x) 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.
Collection House Limited Annual Report 2019 Notes to the Financial StatementscontinuedOverview Corporate Governance Financial Report Additional Information 42
1
Summary of significant accounting policies
(continued)
(y) 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.
(z) New accounting standards and interpretations
The Group’s assessment of the impact of new standards
and interpretations is set out below.
AASB 9 Financial Instruments
AASB 9 Financial Instruments (“AASB 9”) addresses the
classification, measurement and derecognition of financial
assets and liabilities, introduces new rules for hedge
accounting and a new impairment model for financial assets.
This standard replaces AASB 139 Financial Instruments:
Recognition and Measurement.
The details of new significant accounting policies and the
nature and effect of the changes to previous accounting
policies are set out below.
Classification and measurement of financial assets and
financial liabilities
The Group adopted the classification of financial asset
requirements of the standard by early adopting AASB 9
Financial Instruments (December 2010) (“AASB 9 (2010)”) and
associated amending standards. Therefore the adoption of
AASB 9 has not had an impact on the Group’s accounting
policies relating to the classification and measurement of
financial assets and financial liabilities.
Impairment of financial assets
AASB 9 replaces the ‘incurred loss’ model in AASB 139 with
an ‘expected credit loss’ (“ECL”) model. The new impairment
model applies to financial assets classified at amortised
cost, debt instruments measured at fair value through other
comprehensive income (“FVOCI”), contract assets under AASB
15 Revenue from Contracts with Customers, lease receivables,
loan commitments and certain financial guarantee contracts.
ECLs are a probability-weighted estimate of credit losses.
Credit losses are measured as the present value of all cash
shortfalls (i.e. the difference between the cash flows due to
the entity in accordance with the contract and the cash flows
that the Group expects to receive).
The Group measures the loss allowance for a financial
instrument at an amount equal to the lifetime ECL if the credit
risk on that financial instrument has increased significantly
since initial recognition, or if the financial instrument is a
purchased or originated credit impaired (“POCI”) asset.
If the credit risk on a financial instrument has not increased
significantly since initial recognition (except for a POCI
asset), the Group measures the loss allowance for that
financial instrument at an amount equal to a 12 month ECL.
When determining whether the credit risk of a financial
asset has increased significantly since initial recognition
and when estimating ECLs, the Group considers reasonable
and supportable information that is relevant and available.
This includes both quantitative and qualitative information
and analysis, based on the Group’s historical experience
and informed credit assessment and including forward-
looking information. The maximum period considered when
estimating ECLs is the maximum contractual period over
which the Group is exposed to credit risk.
Impairment of financial assets: Purchase Debt Ledgers
(“PDLs”)
Due to the characteristics of the Group’s investment in
PDLs, they are considered POCI assets under AASB 9.
The Group measures ECLs for PDLs at an amount equal to
lifetime expected credit losses and are incorporated into the
calculation of the Effective Interest Rate (“EIR”). Where the
carrying amount exceeds the present value of the estimated
future cash flows discounted at the asset’s original EIR, the
Group recognises an impairment loss. Favourable changes
in lifetime expected credit losses are recognised as an
impairment gain, even if the favourable changes are more
than the amount previously recognised in profit or loss as
an impairment loss. The estimation of ECL’s includes an
assessment of forward-looking economic assumptions which
are determined on a probability-weighted basis based on
reasonable and supportable forecasts.
For the assessment of forward-looking assumptions, the Group
considers a number of indicators which impact the recoverability
of PDLs and degradation of forecast expected cash flows.
The estimation and application of this forward-looking
information requires significant judgment and is subject to
appropriate internal governance and scrutiny. The Group
leverages its existing cash flow models to inform these ECLs.
Upward impairments (write-ups) are increases to carrying
values, discounted at the credit-adjusted EIR rate, of the
acquired debt portfolios as a result of reassessments to their
estimated future cash flows and are recognised in the line
item impairment gains on portfolio investments at amortised
cost. Any subsequent reversals to write-up are also recorded
as impairment loss on portfolio investments.
Impairment of financial assets: Other financial assets
The Group applies the simplified approach for measuring the
loss allowance at an amount equal to lifetime ECL for trade
receivables, contract assets and lease receivables.
The Group has applied the low credit risk exemption to
cash and cash equivalents and the simplified approach to
trade and other receivables. Neither of these approaches
has resulted in a significant impact for the carrying value or
these items, and no transition adjustment has been made to
opening retained earnings.
Transitional impact on implementation of AASB 9
The implementation of AASB 9 resulted in the following
financial assets and liabilities being reclassified or remeasured:
– The impairment allowance for PDLs was remeasured
due to the adoption of the ECL model. There was no
material variance between the carrying value of the
portfolio and present value of the estimated future cash
flows discounted at the credit-adjusted EIR. As such, no
adjustments were recorded upon transition.
– Interest income is recognised using the effective interest
rate method applying a credit-adjusted EIR under AASB 9.
Collection House Limited Annual Report 2019 Notes to the Financial Statementscontinued 43
1
(z)
Summary of significant accounting policies (continued)
New accounting standards and interpretations (continued)
AASB 15 Revenue from Contracts with Customers
AASB 15 Revenue from Contracts with Customers (“AASB 15”) became effective for the reporting period beginning on 1 July 2018.
AASB 15 establishes a comprehensive framework for determining whether, and how much and when revenue is recognised. It
replaced AASB 118 Revenue, AASB 111 Construction Contracts and related interpretations.
The Group has adopted AASB 15 using the cumulative effect method (without practical expedients), with the effect of initially
applying this standard recognised at the date of initial application (i.e. 1 July 2018). Accordingly, comparative information has not
been restated. Based on the Group’s assessment of revenue streams, there is no impact on the Group’s financial statements and
no transition adjustment has been made to opening retained earnings.
Below is a summary of the major services provided and the Group’s accounting policy on recognition as a result of adopting
AASB 15. Under AASB 15, revenue is recognised when a customer obtains control of the goods or services. Determining the
timing of the transfer of control – at a point in time or over time – requires judgement.
Category
Recognition
Nature and timing of satisfaction of
Performance Obligations
Revenue Recognition
under AASB 15
Impact of
AASB 15
Over time
Rendering
of services:
Commission
Revenue
The Group receives commissions for the provision of debt
collection services. Commission structures are based on
contract terms and include;
– Percentage based on the value of collections;
– Fees for collection activities;
– Fees for full time equivalents (FTE); and
– Fees for other collection related services.
The Group is also entitled to receive performance
incentives, bonuses and rebates for various contracts.
Where activities are performed by third parties, and are
on-charged to the customer at cost or with a margin,
the Group recognises revenue for these services as the
Principal.
AASB 15
did not
have a
significant
impact on
the Group’s
accounting
policies.
Under AASB 15, income
is recognised over
time with the relevant
measure of progress
being the collections
output at the end of
each period.
Re-estimation of
variable consideration
is completed at each
reporting date.
New accounting standards issued but not yet effective
(i)
AASB 16 Leases (applicable to annual reporting periods commencing on or after 1 January 2019)
AASB 16 will result in the majority of leases being recognised on balance sheet, as the distinction between operating and finance
leases is removed. Under the new standard, a lessee initially recognises and measures a right-of-use asset representing its right
to use the underlying asset, and a lease liability representing its obligation to make lease payments on a present value basis
taking into consideration the contractual lease period and likely periods subject to optional extension. Subsequently, a leasee
measures a right-of-use asset similarly to other non-financial assets and lease liabilities similarly to other financial liabilities. The
only exceptions are short-term and low-value leases.
The Group has undergone an assessment of the impact on its consolidated financial statements. The Group will recognise
right-of-use assets and lease liabilities for the operating lease agreements in place for its office premises. Based on the Group’s
calculations to date, the value of the lease liability on date of transition is expected to be $40,168,890. In addition, the nature
of expenses related to those leases will now change, as AASB 16 replaces the straight-line operating lease expense with a
depreciation charge for right-of-use assets and interest expense on lease liabilities.
The Group plans to apply AASB 16 initially on 1 July 2019, using a modified retrospective approach. Therefore, the cumulative
effect of adopting AASB 16 will be recognised as an adjustment to the opening balance of retained earnings at 1 July 2019, with
no restatement of comparative information. When applying a modified retrospective approach to leases previously classified
as operating leases under AASB 117, the lessee can elect, on a lease-by-lease basis, whether to apply a number of practical
expedients on transition. The Group is assessing the potential impact of using these practical expedients.
(ii)
AASB 3 Business Combinations (applicable to annual reporting periods commencing on or after 1 January 2020)
The Group has elected to adopt the recent amendment to AASB3, which provides an alternative regime to simplify the assessment
of whether a transaction should be accounted for as a business combination or an asset acquisition. The recent amendment
enables the acquirer to apply a concentration test, which evaluates whether the majority of the fair value of assets acquired is
concentrated into a single identifiable asset or group of assets. If this test is satisfied, the acquirer can elect to treat the entire
transaction as an asset acquisition and avoid the accounting and disclosure obligations applicable to a business acquisition.
No restatement to comparatives required as this will only impact transactions in the current financial year.
Collection House Limited Annual Report 2019 Notes to the Financial StatementscontinuedOverview Corporate Governance Financial Report Additional Information 44
1
Summary of significant accounting policies
(continued)
(aa) Parent entity financial information
The financial information for the parent entity, Collection
House Limited, disclosed in Note 27 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.
2 Financial risk management
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 Team 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 2019, 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 2019 and 2018,
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.
Collection House Limited Annual Report 2019 Notes to the Financial Statementscontinued 45
2 Financial risk management (continued)
(a) Market risk (continued)
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.
The Group has no interest swap arrangement in 2019 and the impact from interest rate risk is not material for the year.
As at the reporting date, the Group had the following variable rate borrowings:
Consolidated
Borrowings
Bank overdraft
Net exposure to cash flow interest rate risk
30 June 2019
30 June 2018
Weighted
average
interest rate
%
Weighted
average
interest rate
%
Balance
$’000
3.8%
210,600
–
–
210,600
3.4%
6.7%
Balance
$’000
131,900
2,601
134,501
Sensitivity
At 30 June 2019, 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 $369,000 lower/higher (2018 - change of 25 bps: $236,000 lower/higher), mainly as
a result of higher/lower interest expense from net borrowings. Other components of equity would have been $369,000 lower/
higher (2018 - $236,000 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.
The following table summarises the sensitivity of the Group’s financial assets and financial liabilities to interest rate risk.
Consolidated
30 June 2019
Borrowings
Bank Overdraft
Total increase/(decrease) in financial liabilities
Consolidated
30 June 2018
Financial liabilities
Borrowings
Bank Overdraft
Total increase/(decrease) in financial liabilities
Carrying
amount
$’000
210,600
–
Carrying
amount
$’000
6
131,900
2,601
Interest rate risk
–25 bps
+25 bps
Profit
$’000
369
–
369
Equity
$’000
369
–
369
Profit
$’000
(369)
–
(369)
Equity
$’000
(369)
–
(369)
Interest rate risk
–25 bps
+25 bps
Profit
$’000
Equity
$’000
Profit
$’000
Equity
$’000
–
231
5
236
–
231
5
236
(–)
(231)
(5)
(236)
(–)
(231)
(5)
(236)
Collection House Limited Annual Report 2019 Notes to the Financial StatementscontinuedOverview Corporate Governance Financial Report Additional Information 46
2 Financial risk management (continued)
(b) Credit risk
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 assets
Total financial assets
30 June
2019
$’000
1,596
13,429
410,303
167
30 June
2018
$’000
509
20,880
313,407
42
425,495
334,838
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. The effective interest rate is calculated on initial recognition and reflects a constant periodic return
on the carrying value of the loans.
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
2019, no impairment charge was recognised (30 June 2018: nil). 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.
Collection House Limited Annual Report 2019 Notes to the Financial Statementscontinued 2 Financial risk management (continued)
(c) Liquidity risk (continued)
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
47
Consolidated
30 June
2019
$’000
14,400
12,500
30 June
2018
$’000
43,100
10,408
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.
The facility was subject to meeting a number of financial undertakings. The undertakings are reviewed by the Audit and Risk
Management Committee quarterly, 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 18.
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 2019
Non-derivatives
Non-interest bearing
Fixed rate
Variable rate
Total non-derivatives
At 30 June 2018
Non-derivatives
Non-interest bearing
Fixed rate
Variable rate
Total non-derivatives
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
Total
contractual
cash flows
$’000
14,609
–
–
14,609
–
–
14,667
–
–
–
–
–
12,567
14,667
183,366
195,933
Less than
6 months
$’000
6 – 12
months
$’000
Between 1
and 2 years
$’000
Between 2
and 5 years
$’000
–
–
–
–
14,609
–
210,600
225,209
Over 5
years
$’000
Total
contractual
cash flows
$’000
14,404
2,601
–
17,005
–
–
–
–
–
–
6
6
–
–
131,900
131,900
–
–
–
–
14,404
2,601
131,906
148,911
Collection House Limited Annual Report 2019 Notes to the Financial StatementscontinuedOverview Corporate Governance Financial Report Additional Information 48
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
Annually the Group tests whether goodwill has suffered
any impairment, in accordance with the accounting
policy stated in Note 1(x). 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 14 for details of these
assumptions and the potential impact of changes to the
assumptions.
(ii) PDLs
PDLs are considered as purchased or originated credit
impaired (“POCI”) assets and are initially recognised at
fair value plus any directly attributable acquisition costs.
Subsequent to initial recognition, PDLs are measured at
amortised cost using the credit-adjusted effective interest
method, less/plus any impairment losses/gains. 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.
– assessment of the credit-adjusted effective interest
rate, which 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.
(iii) Estimated impairment of non-financial assets and
intangible assets other than goodwill
Annually 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, including future increases in wages and
salaries, future on-cost rates, discount rates, and experience
of employee departures and period of service.
(ii)
Useful lives of property, plant and equipment, and
intangible assets other than goodwill
The Group’s management determines the estimated useful
lives and related depreciation and amortisation charges for
property, plant and equipment at the time of acquisition. As
described in Note 1(n) useful lives are reviewed regularly
throughout the year for appropriateness.
Collection House Limited Annual Report 2019 Notes to the Financial Statementscontinued 49
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 Chief Executive Officer 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.
(b) Segment information provided to the Board
2019
Segment revenue
Sales to external customers
Intersegment sales
Total sales revenue
Interest and other 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
Collection
services
$’000
Purchased
debt ledgers
$’000
All other
segments
$’000
Consolidated
$’000
67,085
519
67,604
–
67,604
140
191
331
93,329
93,660
9,264
52,090
–
(207)
(207)
–
(207)
(10,093)
(7,658)
67,225
503
67,728
93,329
161,057
51,261
(7,658)
43,603
(12,913)
30,690
56,423
30,598
416,862
207,722
(2,738)
(919)
470,547
241,399
Acquisitions of property, plant and equipment, intangibles and
other non-current segment assets
4,627
139,033
Total acquisitions
Depreciation and amortisation expense
Total depreciation and amortisation
Other non-cash expenses
2,229
1,624
241
80
1,346
–
771
143,660
143,660
4,624
4,624
1,667
Collection House Limited Annual Report 2019 Notes to the Financial StatementscontinuedOverview Corporate Governance Financial Report Additional Information 50
4 Segment information (continued)
(b) Segment information provided to the Board (continued)
2018
Segment revenue
Sales to external customers
Intersegment sales
Total sales revenue
Interest and other 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
Collection
services
$’000
Purchased
debt ledgers
$’000
All other
segments
$’000
Consolidated
$’000
68,652
386
69,038
–
69,038
106
–
106
74,896
75,002
12,564
36,695
–
(177)
(177)
–
(177)
(5,887)
(5,778)
(11,471)
68,758
209
68,967
74,896
143,863
43,372
(5,778)
37,594
(11,471)
26,123
49,835
28,468
321,618
136,543
(490)
(625)
370,963
164,386
Acquisitions of property, plant and equipment, intangibles and
other non-current segment assets
1,208
83,047
–
Total acquisitions
Depreciation and amortisation expense
Total depreciation and amortisation
Other non-cash expenses
3,162
1,383
275
451
51,920
1,071
84,255
84,255
4,820
4,820
53,442
(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
2019
$’000
148,913
11,595
549
30 June
2018
$’000
138,484
5,037
209
30 June
2019
$’000
447,845
20,208
2,494
30 June
2018
$’000
358,964
9,822
2,177
30 June
2019
$’000
116,058
26,688
914
30 June
2018
$’000
81,796
2,459
–
161,057
143,730
470,547
370,963
143,660
84,255
Australia
New Zealand
Philippines
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.
Collection House Limited Annual Report 2019 Notes to the Financial Statementscontinued 51
4 Segment information (continued)
(c) Geographical information (continued)
(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
2019
%
30 June
2018
%
30 June
2019
%
30 June
2018
%
Margin on segment revenue
14
18
56
49
(d) Other segment information
Fees for services provided 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.
5 Revenue
Interest income
Commission
Gain on sale of PDLs
Call option income
Other revenue
Consolidated
30 June
2019
$’000
75,419
67,232
14,500
3,409
497
30 June
2018
$’000
58,935
68,637
10,119
5,645
527
Revenue from continuing operations
161,057
143,863
Collection House Limited Annual Report 2019 Notes to the Financial StatementscontinuedOverview Corporate Governance Financial Report Additional Information 52
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
Finance expenses
Interest and finance charges paid/payable
Amount capitalised
Finance costs expensed
Rental expense relating to operating leases
Minimum lease payments
Total rental expense relating to operating leases
Consolidated
30 June
2019
$’000
30 June
2018
$’000
893
893
897
897
3,138
3,018
199
–
394
3,731
4,624
7,658
–
7,658
8,189
8,189
497
38
370
3,923
4,820
5,798
(20)
5,778
7,666
7,666
Collection House Limited Annual Report 2019 Notes to the Financial Statementscontinued
7
Income tax expense
53
Consolidated
30 June
2019
$’000
30 June
2018
$’000
(a)
Income tax expense
Income tax expense – Profit from continuing operations
12,913
11,471
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 19)
(Decrease) increase in deferred tax liabilities (Note 19)
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Profit from continuing operations before income tax expense
Tax at the Australian tax rate of 30% (2018 – 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
11,999
1,034
(120)
12,913
(456)
1,490
1,034
11,815
(523)
179
11,471
(277)
(246)
(523)
43,603
13,080
37,594
11,278
21
7
13,108
(195)
(195)
12,913
228
(10)
(51)
11,445
26
11,471
11,471
8 Cash and cash equivalents
(a) Reconciliation of cash at the end of the year
The above figures are reconciled to cash at the end of the financial year as shown in the statement of cash flows as follows:
Bank Overdraft
Cash at bank and on hand
Balances per statement of cash flows
Consolidated
30 June
2019
$’000
–
1,596
1,596
30 June
2018
$’000
(2,601)
509
(2,092)
(b) Bank overdraft right of set-off
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.
Collection House Limited Annual Report 2019 Notes to the Financial StatementscontinuedOverview Corporate Governance Financial Report Additional Information
54
9 Trade and other receivables
Current
Net trade receivables
Trade receivables
Provision for impairment of receivables (a)
Accrued revenue
Other assets
Prepaid expenses
Non-current
Prepaid expenses
Consolidated
30 June
2019
$’000
30 June
2018
$’000
6,434
(146)
6,288
3,039
938
2,606
12,871
12,253
(163)
12,090
4,752
869
2,671
20,382
558
13,429
498
20,880
Impaired trade receivables
(a)
As at 30 June 2019 current trade receivables of the Group with a value of $359,000 (2018: $241,000) were assessed as
potentially impaired. The amount of the provision was $146,000 (2018: $163,000). 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
2019
$’000
359
359
30 June
2018
$’000
241
241
Consolidated
30 June
2019
$’000
30 June
2018
$’000
163
318
(42)
(293)
146
81
449
(95)
(272)
163
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.
Collection House Limited Annual Report 2019 Notes to the Financial Statementscontinued 55
9 Trade and other receivables (continued)
(b) Past due but not impaired
As at 30 June 2019, trade receivables of the Group of $3,735,000 (2018: $2,109,000) 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
At beginning of year
Net additions
ACM Group Limited *
Receivables Management (NZ) Limited *
Gross PDL Collections
Interest income
Disposal of PDLs
As end of year
Consolidated
30 June
2019
$’000
2,912
824
3,735
30 June
2018
$’000
1,383
726
2,109
Consolidated
30 June
2018
$’000
54,215
259,192
313,407
30 June
2019
$’000
52,466
357,837
410,303
313,407
74,335
41,349
21,331
(102,529)
75,419
(13,009)
410,303
* Acquisition of ACM Group Limited and Receivables Management (NZ) Limited (RML) have met the AASB3 asset concentration test and treated
as PDL acquisition.
PDLs are considered as purchased or originated credit impaired (“POCI”) assets and are measured at amortised cost using the
effective interest rate method in accordance with AASB 9: Financial Instruments.
The credit-adjusted 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
Current
Consolidated
30 June
2019
$’000
30 June
2018
$’000
167
167
42
42
Collection House Limited Annual Report 2019 Notes to the Financial StatementscontinuedOverview Corporate Governance Financial Report Additional Information 56
12 Equity investments
Investment in Volt Corporation Ltd
Consolidated
30 June
2019
$’000
8,500
8,500
30 June
2018
$’000
–
–
On 22 January 2019, the Group acquired an equity investment in Volt Corporation Ltd. The Group designated the investment
above as equity securities at fair value through other comprehensive income (FVOCI) because these equity securities represents
investments that the Group intends to hold for the long term for strategic purposes. The investment in Volt Corporation Ltd
represents the total of shares acquired (1,081,838 units) at the subscription price of $7.857.
13 Property, plant and equipment
At 1 July 2017
Cost or fair value
Accumulated depreciation
Net book amount
Year ended 30 June 2018
Opening net book amount
Additions
Disposals
Depreciation charge
Transfers
Closing net book amount
At 30 June 2018
Cost or fair value
Accumulated depreciation
Net book amount
Year ended 30 June 2019
Opening net book amount
Additions
Disposals
Depreciation charge
Transfers
Closing net book amount
At 30 June 2019
Cost or fair value
Accumulated depreciation
Net book amount
533
3,062
Plant and
equipment
$’000
Leasehold
improvements
$’000
Motor
Vehicles
$’000
Work-in-
progress
$’000
9,115
(7,639)
1,476
1,476
44
(1)
(571)
–
948
9,158
(8,210)
948
5,183
(4,130)
1,053
1,053
2
(8)
(325)
–
722
5,177
(4,455)
722
–
–
–
–
–
–
–
–
–
–
–
–
533
–
533
–
–
–
(119)
414
414
–
414
Plant and
equipment
$’000
Leasehold
improvements
$’000
Motor
Vehicles
$’000
Work-in-
progress
$’000
948
717
(0)
(543)
171
1,293
10,046
(8,753)
1,293
722
737
(0)
(351)
–
1,108
5,914
(4,806)
1,108
–
9
–
–
–
9
9
–
9
414
57
–
–
(171)
300
300
–
300
Total
$’000
14,831
(11,769)
3,062
46
(9)
(896)
(119)
2,084
14,749
(12,665)
2,084
Total
$’000
2,084
1,520
(0)
(894)
–
2,710
16,269
(13,559)
2,710
(a) Non-current assets pledged as security
Refer to Note 18 for information on non-current assets pledged as security by the Group.
Collection House Limited Annual Report 2019 Notes to the Financial Statementscontinued 14 Intangible assets
At 1 July 2017
Cost
Accumulated amortisation and
impairment
Net book amount
Year ended 30 June 2018
Opening net book amount
Exchange differences
Additions - internal development
Amortisation charge
Impairment charge
Disposals
Transfers
57
Goodwill
$’000
Computer
software
$’000
Customer
contracts
$’000
Other
intangible
assets
$’000
Work-in-
progress –
cost*
$’000
Total
$’000
1,648
53,114
23,490
25,305
2,487
(3,763)
19,727
(11,702)
13,603
(1,180)
1,307
19,727
13,603
1,307
–
125
–
–
(3,018)
(497)
–
–
2,096
12,806
–
–
–
810
184
(133)
51
51
–
–
(38)
–
(13)
–
0
171
(171)
–
–
1,648
1,648
–
1,156
–
(124)
–
(1,977)
703
827
(124)
703
Closing net book amount
19,722
At 30 June 2018
Cost
Accumulated amortisation and
impairment
Net book amount
23,490
27,526
2,487
(3,768)
19,722
(14,720)
12,806
(1,677)
810
Year ended 30 June 2019
Opening net book amount
Exchange differences
Additions - internal development
Amortisation charge
Impairment charge
Disposals
Transfers
Goodwill
$’000
Computer
software
$’000
Customer
contracts
$’000
Other
intangible
assets
$’000
Work-in-
progress –
cost*
$’000
19,722
12,806
–
378
(3,100)
–
(10)
1,891
11,965
810
–
–
(199)
–
–
–
611
–
–
–
–
–
–
–
–
703
–
2,753
–
–
–
(1,916)
1,540
Closing net book amount
19,726
At 30 June 2019
Cost
Accumulated amortisation and
impairment
Net book amount
23,490
29,785
2.487
(3,764)
19,726
(17,820)
11,965
(1,876)
611
171
(171)
–
1,664
57,597
(124)
1,540
(23,755)
33,842
* Work-in-progress includes capitalised development costs of an internally generated intangible asset which is under development.
Impairment tests for goodwill
(a)
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, and include a terminal value
calculation. The growth rate does not exceed the long-term average growth rate for the business in which the CGU operates.
(16,778)
36,336
36,336
(5)
1,281
(3,553)
(124)
(13)
119
34,041
54,501
(20,460)
34,041
Total
$’000
34,041
4
3,131
(3,299)
–
(10)
(25)
33,842
(5)
–
–
–
–
–
4
–
–
–
–
–
Collection House Limited Annual Report 2019 Notes to the Financial StatementscontinuedOverview Corporate Governance Financial Report Additional Information
58
14 Intangible assets (continued)
(b) Key assumptions used for value-in-use calculations
CGU
Growth rate
(revenue)
Growth rate
(expenses)
30 June
2019
%
30 June
2018
%
30 June
2019
%
30 June
2018
%
Discount rate *
30 June
2019
%
30 June
2018
%
Collection services
5.00
5.00
3.00
3.00
12.70
12.70
* In performing the value-in-use calculation, the Group has applied the post-tax (2018: post-tax) discount weighted average cost of capital to
discount the forecast future attributable post tax (2018: post-tax) cash flows.
Impairment charge
(c)
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 (2018: 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, and as
such there is no reasonably possible change in key assumptions that would give rise to an impairment.
15 Trade and other payables
Trade payables
Accrued expenses
Other payables
16 Provisions
Current
Employee benefits
Make good
Fringe benefits tax
Non-current
Employee benefits
Consolidated
30 June
2019
$’000
5,579
7,633
1,397
14,609
30 June
2018
$’000
6.623
5,944
1,837
14,404
Consolidated
30 June
2019
$’000
30 June
2018
$’000
3,123
652
35
3,810
103
103
2,715
570
5
3,290
190
190
Collection House Limited Annual Report 2019 Notes to the Financial Statementscontinued 59
16 Provisions (continued)
(a) Movements in provisions
Movements in each class of provision during the financial year, other than employee benefits, are set out below:
2019
Current
Carrying amount at start of year
– additional provisions recognised
– payments/other sacrifices of economic benefits
Carrying amount at end of year
2018
Current
Carrying amount at start of year
– additional provisions recognised
– payments/other sacrifices of economic benefits
Carrying amount at end of year
Make
good
$’000
Fringe
benefits tax
$’000
570
82
–
652
570
–
–
570
5
201
(171)
35
47
149
(191)
5
(b) Superannuation plans
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.
17 Other financial liabilities
Current
Finance lease liabilities
Lease incentive liabilities
Other current financial liabilities
Non-current
Lease incentive liabilities
Other non-current financial liabilities
18 Borrowings
Secured
Bank loans – current
Bank loans – non-current
Total secured borrowings
Consolidated
30 June
2019
$’000
30 June
2018
$’000
–
572
1,365
1,937
5,053
–
5,053
6
572
2,082
2,660
5,197
814
6,011
Consolidated
30 June
2019
$’000
30 June
2018
$’000
14,667
195,933
210,600
–
131,900
131,900
Collection House Limited Annual Report 2019 Notes to the Financial StatementscontinuedOverview Corporate Governance Financial Report Additional Information
60
18 Borrowings (continued)
(a) Secured liabilities and assets pledged as security
The total secured liabilities are as follows:
Bank loans – current
Bank loans – non-current
Total secured liabilities
Consolidated
30 June
2019
$’000
30 June
2018
$’000
14,667
195,933
210,600
–
131,900
131,900
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 of its Australian-owned entities.
The carrying amounts of assets pledged as security for borrowings are:
Current
Floating charge
Cash and cash equivalents
Receivables
Purchased debt ledgers
Total current assets pledged as security
Non-current
Floating charge
Receivables
Purchased debt ledgers
Plant and equipment
Total non-current assets pledged as security
Total assets pledged as security
Consolidated
30 June
2019
$’000
30 June
2018
$’000
Notes
8
9
10
9
10
13
1,596
12,871
52,466
66,933
558
357,837
2,710
361,105
428,038
509
20,382
54,215
75,106
498
259,192
2,084
261,774
336,880
(b) Fair value
The carrying amounts and fair values of borrowings at the end of reporting period are:
Group
On-balance sheet (i)
Non-traded financial liabilities
Bank loans – current
Bank loans – non-current
30 June 2019
30 June 2018
Carrying
amount
$’000
Fair value
$’000
Carrying
amount
$’000
Fair value
$’000
14,667
195,933
210,600
14,667
195,933
210,600
–
131,900
131,900
–
131,900
131,900
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 repriced 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, as it is not due for renewal until January 2020.
(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.
Collection House Limited Annual Report 2019 Notes to the Financial Statementscontinued
19 Deferred tax balances
(a) Deferred tax assets
The balance comprises temporary differences attributable to:
Tax losses
Provisions and employee benefits
Lease incentives
Accruals
Share based payments
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
Movements –
Consolidated
At 30 June 2017
– to profit or loss
At 30 June 2018
Movements –
Consolidated
At 30 June 2018
– to profit or loss
At 30 June 2019
Provisions
and
employee
benefits
$’000
Tax losses
$’000
Lease
incentive
$’000
Accruals
$’000
Share
based
payments
$’000
Doubtful
debts
$’000
190
(117)
73
1,185
171
1,356
1,509
222
1,731
47
33
80
–
–
–
24
25
49
Provisions
and
employee
benefits
$’000
Tax losses
$’000
Lease
incentive
$’000
Accruals
$’000
Share
based
payments
$’000
Doubtful
debts
$’000
73
88
161
1,356
222
1,578
1,731
(43)
1,688
80
(3)
77
–
156
156
49
(5)
44
61
Consolidated
30 June
2019
$’000
30 June
2018
$’000
161
1,578
1,688
77
156
44
–
–
3,704
(3,704)
–
3,248
456
3,704
73
1,356
1,731
80
–
49
–
(41)
3,248
(3,248)
–
2,971
277
3,248
Total
$’000
2,971
277
3,248
Total
$’000
3,289
415
3,704
Collection House Limited Annual Report 2019 Notes to the Financial StatementscontinuedOverview Corporate Governance Financial Report Additional Information
62
19 Deferred tax balances (continued)
(b) Deferred tax liabilities
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
Consolidated
30 June
2019
$’000
30 June
2018
$’000
2,600
2,602
7
–
5,209
5,209
(3,704)
1,505
3,115
743
6
–
3,864
3,864
(3,248)
616
Consolidated
30 June
2019
$’000
30 June
2018
$’000
Movements:
Opening balance at 1 July
Charged/(credited) to the income statement (Note 7)
Closing balance at 30 June
Movements – Consolidated
At 30 June 2017
– to profit or loss
At 30 June 2018
Movements – Consolidated
At 30 June 2018
– to profit or loss
At 30 June 2019
3,864
1,345
5,209
Property,
plant and
equipment
$’000
Purchased
debt
$’000
3,451
(336)
3,115
653
90
743
Property,
plant and
equipment
$’000
Purchased
debt
$’000
3,115
(515)
2,600
743
1,859
2,602
Prepayments
$’000
Other
$’000
6
–
6
–
–
–
Prepayments
$’000
Other
$’000
6
1
7
–
–
–
4,110
(246)
3,864
Total
$’000
4,110
(246)
3,864
Total
$’000
3,864
1,345
5,209
Collection House Limited Annual Report 2019 Notes to the Financial Statementscontinued
63
Company
Company
2019
Shares
2018
Shares
2019
$’000
2018
$’000
139,279,060
137,152,058
117,077
(467,482)
(354,286)
(664)
138,822,752
136,797,772
116,413
114,195
(468)
113,727
20 Contributed equity
(a) Share capital
Ordinary shares – fully paid
Treasury shares
Total contributed equity
(b) Movements in ordinary share capital
Issues of ordinary shares during the year
Date
Details
1 July 2017
29 March 2018
30 June 2018
1 July 2017
Opening balance
Dividend reinvestment plan issues
Less: Transaction costs arising on share issues
Closing balance
Opening balance
26 October 2018
Dividend reinvestment plan issues
28 March 2019
Dividend reinvestment plan issues
Less: Transaction costs arising on share issues
Less: Transaction costs arising on share issues
Number of
shares
135,889,764
1,262,294
–
137,152,058
137,152,058
1,018,199
1,108,803
–
$’000
112,614
1,589
(8)
114,195
114,195
1,468
(8)
1,429
(7)
30 June 2019
Closing balance
139,279,060
117,077
(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) Treasury shares
When share capital recognised as equity is repurchased or held by employee share plans and subject to vesting conditions, the
amount of the consideration paid, including directly attributable costs, is recognised as a deduction from equity. When treasury
shares are sold or reissued subsequently, the amount received is recognised as an increase in equity.
(e) 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.
(f) Employee share scheme
Information relating to the employee share scheme, including details of shares issued under the scheme, is set out in Note 30.
(g) 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 30.
(h) 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.
Collection House Limited Annual Report 2019 Notes to the Financial StatementscontinuedOverview Corporate Governance Financial Report Additional Information 64
20 Contributed equity (continued)
(h) Capital risk management (continued)
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.
This strategy was followed during both the 2019 and 2018 financial years.
21 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
Consolidated
30 June
2019
$’000
2,472
(2,107)
365
30 June
2018
$’000
1,622
(1,465)
157
Consolidated
30 June
2019
$’000
30 June
2018
$’000
1,622
850
2,472
773
849
1,622
Collection House Limited Annual Report 2019 Notes to the Financial Statementscontinued
21 Reserves and retained earnings (continued)
(a) Reserves (continued)
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
(c) Nature and purpose of reserves
65
Consolidated
30 June
2019
$’000
30 June
2018
$’000
(1,465)
(642)
(2,107)
(1,388)
(77)
(1,465)
Consolidated
30 June
2019
$’000
92,693
30,690
(11,013)
112,370
30 June
2018
$’000
77,169
26,123
(10,599)
92,693
(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.
22 Dividends
(a) Ordinary shares
Fully franked final dividend for the year ended 30 June 2018 – 3.9 cents per share
(2017 – 3.9 cents)
Fully franked interim dividend for the year ended 30 June 2019 – 4.1 cents per share
(2018 – 3.9 cents)
Dividends paid in cash or satisfied by the issue of shares under the dividend reinvestment plan
during the years ended 30 June 2019 and 2018 were as follows:
Paid in cash
Satisfied under the Dividend Reinvestment Plan
Consolidated
30 June
2019
$’000
30 June
2018
$’000
5,348
5,300
5,665
11,013
5,299
10,599
8,116
2,897
11,013
9,018
1,581
10,599
Collection House Limited Annual Report 2019 Notes to the Financial StatementscontinuedOverview Corporate Governance Financial Report Additional Information
66
22 Dividends (continued)
(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 4.1 cents per fully paid ordinary share (2018 – 3.9 cents, fully franked). The
aggregate amount of the proposed dividend expected to be paid on 25 October 2019 out of retained
profits and a positive net balance sheet at 30 June 2019, but not recognised as a liability at year end, is
Consolidated
30 June
2019
$’000
30 June
2018
$’000
5,710
5,710
5,349
5,349
(c) Franked dividends
The franked portions of the final dividends recommended after 30 June 2019 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 2019.
The financial effect of this dividend has not been brought to account in the financial statements for the year ended 30 June 2019
and will be recognised in subsequent financial reports.
Franking credits available for subsequent financial years based on a tax rate of 30% (2018 – 30%)
Consolidated
30 June
2019
$’000
48,178
48,178
30 June
2018
$’000
42,083
42,083
The above amounts represent the balance of the franking account as at the end of the reporting period, adjusted for:
(a)
(b)
(c)
(d)
franking credits that will arise from the payment of the amount of the provision for income tax;
franking debits that will arise from the payment of dividends recognised as a liability at the reporting date;
franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date; and
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.
23 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) Other auditors – Villaruz, Villaruz & Co (“VVC”)
Audit and review of the financial statements - Manila
Total auditors’ remuneration
Other services
Auditors of the Company – KPMG
In relation to accounting advice and due diligence services
In relation to taxation services
Consolidated
30 June
2019
$
30 June
2018
$
258,280
69,800
328,080
278,465
68,470
346,935
5,105
5,105
3,898
3,898
196,690
120,700
317,390
47,962
200,393
248,355
Collection House Limited Annual Report 2019 Notes to the Financial Statementscontinued 67
24 Contingencies
(a) Contingent liabilities
The Group had contingent liabilities at 30 June 2019 in respect of:
Claims
On 15 March 2019, the Group was provided with a copy of a claim and statement of claim, which had been filed in the Supreme
Court of Queensland on the same date. The claim for damages is for $2,800,000 and proceedings are still being defended by
the Group.
Purchase Agreement with Put & Call Option with Insolve Capital Australia Pty Ltd (Balbec Capital LP)
(a)
The Group had assigned five years’ cash flow to Insolve Capital Australia Pty Ltd (Balbec Capital LP) through a put and call
option agreement.
(b)
The Group has the option to repurchase the residual rights to collect the remaining arrangements at the end of the five-year
agreement, at a market price determined by the performance of the accounts during the term of the agreement.
The two purchase agreements with Put & Call option have the following expiry dates:
– 3 November 2023
– 2 December 2024
Guarantees
(a)
Bank Guarantees (secured) exist in respect of satisfying contract terms amounting to $6,732,334 (2018: $6,032,045). During
the period, the increase is mainly contributed by new Bank Guarantees that were required to secure performance of new
Lease premises.
(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.
No material losses are anticipated in respect of any of the above contingent liabilities.
25 Commitments
(a) Capital commitments
Capital expenditure contracted for in relation to purchased debt commitments at the reporting date but not recognised as
liabilities is as follows:
Within one year
Later than one year, but not later than five years
Consolidated
30 June
2019
$’000
38,387
4,616
43,003
30 June
2018
$’000
32,040
210
32,250
(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
2019
$’000
30 June
2018
$’000
3,236
31,605
5,328
40,169
6,684
25,906
20,548
53,138
Collection House Limited Annual Report 2019 Notes to the Financial StatementscontinuedOverview Corporate Governance Financial Report Additional Information
68
25 Commitments (continued)
(c) Non-cancellable finance leases
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
2019
$’000
30 June
2018
$’000
–
–
–
–
–
–
6
–
–
–
–
6
26 Related party transactions
(a) Group companies
Details of the parent company, the ultimate parent company and interests in subsidiaries are set out in Note 28.
(b) Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payments
Consolidated
30 June
2019
$
30 June
2018
$
2,479,189
1,877,336
183,028
54,049
208,938
565,295
127,687
58,375
–
605,450
3,490,499
2,668,848
Detailed remuneration disclosures are provided in sections A-J of the remuneration report on pages 18 to 28.
(c) Other transactions with key management personnel or entities related to them
No other transactions were made with 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 directors of related parties and their director-related entities. Transactions with wholly owned
related parties are eliminated on consolidation.
Collection House Limited Annual Report 2019 Notes to the Financial Statementscontinued 27 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
69
Company
30 June
2019
$’000
30 June
2018
$’000
6,612
431,439
438,051
26,790
248,695
275,485
116,413
2,475
43,677
162,565
18,868
18,868
9,334
338,436
347,770
22,144
174,451
196,595
113,727
1,625
35,823
151,175
20,380
20,380
(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 24.
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 24 for contingent liabilities entered into by the Group. For information about guarantees given by the parent entity,
please see above.
Collection House Limited Annual Report 2019 Notes to the Financial StatementscontinuedOverview Corporate Governance Financial Report Additional Information 70
28 Subsidiaries
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
Safe Horizons Pty Ltd (formerly Cashflow Accelerator Pty Ltd)
ThinkMe Finance Pty Ltd
Collective Learning and Development Pty Ltd
CLH Legal Group Pty Ltd
Lion Finance Pty Ltd
Midstate CreditCollect Pty Ltd
CLH Business Services Pty Ltd
Collection House Limited Employee Share Plan Trust
Controlled entities – incorporated in New Zealand
Collection House (NZ) Limited
Lion Finance Limited
Receivables Management (NZ) Limited
Receivables Management (International) Limited
Creditnet International Limited
Receivables Finance Limited
Southern Receivables Limited **
R.J.K Receivables Limited **
Allied Recoveries Limited **
Controlled entities – incorporated in Philippines
Collection House International BPO, Inc *
2019
%
2018
%
100
100
100
100
100
100
100
100
100
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.
As of 28 June 2019, Allied Recoveries Limited and R.J.K. Receivables Limited have been amalgamated to become Southern Receivables Limited.
29 Earnings per share
(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
Consolidated
30 June
2019
Cents
30 June
2018
Cents
22.3
22.3
22.0
22.0
19.2
19.2
18.8
18.8
Collection House Limited Annual Report 2019 Notes to the Financial Statementscontinued 29 Earnings per share (continued)
(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
(d) Weighted average number of shares used as the denominator
71
Consolidated
30 June
2019
$’000
30 June
2018
$’000
30,690
30,690
26,123
26,123
30,690
30,690
26,123
26,123
Consolidated
30 June
2019
Number
30 June
2018
Number
Weighted average number of ordinary shares used as the denominator in calculating basic
earnings per share
137,637,841
135,831,985
Adjustments for calculation of diluted earnings per share:
Performance Rights
Weighted average number of ordinary shares and potential ordinary shares used as the
denominator in calculating diluted earnings per share
(e)
Information concerning the classification of securities
1,972,323
3,281,896
139,610,164
139,113,881
(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 100% 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 30.
30 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.
During the reporting period ending 30 June 2019, there are no unlisted performance rights were issued to a number of eligible
employees as these rights have been deferred to FY20.
Collection House Limited Annual Report 2019 Notes to the Financial StatementscontinuedOverview Corporate Governance Financial Report Additional Information
72
30 Share-based payments (continued)
(a) Performance Rights Plan (continued)
During the reporting period ending 30 June 2018, 341,071 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 PR2018.
Effective date
PR2018
1 July 2017
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
Compound EPS growth over performance
period of:
0% to 5.00%
5.01% to 7.50%
7.51% to 10%
More than 10.01%
Nil
33.33%
66.66%
100%
Performance between 5% to 10% will be assessed on a sliding scale basis up to a
maximum of 341,071 shares.
Exercise conditions and Vesting Date The Performance Rights Test Date will be 30 June 2020 (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) whether, and to what extent, the Performance Hurdles applicable as at the Test Date
have been satisfied;
(b) the number of Performance Rights (if any) that will become Vested Performance
Rights as at the Test Date; and
(c) 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 2020
A Performance Right lapses, to the extent it has not been exercised, on the earlier to
occur of:
(a) where Performance Hurdles have not been satisfied as at the relevant Test Date;
(b) if an eligible employee’s employment with the Company or Related Body Corporate
ceases before the Vesting Date;
(c) the day the Board makes a determination that the Performance Rights lapses
because of breach, fraud or dishonesty; and
5 Day volume weighted average
Share price
$1.5404
(d) 30 September 2020.
(1)
Test Date: the date at which assessment against the Performance Conditions are made by the Board. For PR2018, the Test Date will be
30 June 2020.
Collection House Limited Annual Report 2019 Notes to the Financial Statementscontinued 73
30 Share-based payments (continued)
(a) Performance Rights Plan (continued)
During the reporting period ending 30 June 2017, 3,747,550 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 PR2017.
Effective date
PR2017
1 July 2016
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
Compound EPS growth over performance
period of:
0% to 5.00%
5.01% to 7.50%
7.51% to 10%
More than 10.01%
Nil
33.33%
66.66%
100%
Performance between 5% to 10% will be assessed on a sliding scale basis up to a
maximum of 3,747,550 shares.
Exercise conditions and Vesting Date The Performance Rights Test Date will be 30 June 2019 (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:
(d) whether, and to what extent, the Performance Hurdles applicable as at the Test Date
have been satisfied;
(e) the number of Performance Rights (if any) that will become Vested Performance
Rights as at the Test Date; and
(f)
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 2019
A Performance Right lapses, to the extent it has not been exercised, on the earlier to
occur of:
(e) where Performance Hurdles have not been satisfied as at the relevant Test Date;
(f)
if an eligible employee’s employment with the Company or Related Body Corporate
ceases before the Vesting Date;
(g) the day the Board makes a determination that the Performance Rights lapses
because of breach, fraud or dishonesty; and
5 Day volume weighted average
Share price
$1.2945
(h) 30 September 2019.
(1)
Test Date: the date at which assessment against the Performance Conditions are made by the Board. For PR2017, the Test Date will be
30 June 2019.
Collection House Limited Annual Report 2019 Notes to the Financial StatementscontinuedOverview Corporate Governance Financial Report Additional Information 74
30 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 – 2019
1 July 2016
30 September 2019
1 July 2017
30 September 2020
Nil
Nil
Total
3,213,133
341,071
3,554,204
–
–
–
– 2,071,395
1,141,738
–
–
79,296
261,775
2,150,691
1,403,513
–
–
–
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 – 2018
1 July 2016
30 September 2019
1 July 2017
30 September 2020
Nil
Nil
Total
3,260,657
–
3,260,657
–
341,071
341,071
–
–
–
47,524
3,213,133
–
341,071
47,524
3,554,204
–
–
–
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.
(c) Employee Share Plan
The Group introduced the Collection House Limited Exempt Employee Share Plan, providing eligible employees with an
opportunity to acquire a beneficial ownership of shares in the Company. The Plan is administered by CPU Share Plans Pty
Limited. This Trust is consolidated in accordance with Note 1 (b) and Note 28.
All Australian and New Zealand resident employees were entitled to participate in the Plan subject to meeting certain eligibility
criteria. Employees eligible to participate in the Group’s Performance Rights Plans detailed at (a) above where not eligible to
participate in the Plan. Eligible employees may elect not to participate in the Plan.
Shares issued by the Trust to employees are acquired on-market prior to issue. Shares held by the Trust and not yet issued to
employees at the end of the reporting period are shown as treasury shares in the financial statements (refer Note 20).
Under the Plan, eligible employees may be granted up to $1,000 worth of fully paid ordinary shares in Collection House Limited
annually for no cash consideration. The number of shares issued to participants is the offer amount divided by the average price
of the shares acquired on the Australian Securities Exchange during the on-market purchase period. The shares are recognised
at the closing share price on the grant date, as an issue of treasury shares, and as part of employee benefit costs in the period
the shares are granted.
Collection House Limited Annual Report 2019 Notes to the Financial Statementscontinued 75
30 Share-based payments (continued)
(c) Employee Share Plan (continued)
Shares issued under the scheme may not be sold until the earlier of three years after issue, or cessation of employment by the
Group. In all other respects, shares rank equally with other fully paid ordinary shares on issue.
The total number of shares granted to participating employees on 28 September 2018 was 133,390. The trade price of the shares
issued as at grant date was $1.61, and the shares had a grant date fair value of $1.58.
(d) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period as part of employee benefit
expense were as follows:
Performance rights plan
Deferred shares – CEO short-term incentive
Employee share plan
Total expenses arising from share-based payment transactions
31 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
2019
$’000
30 June
2018
$’000
620
124
107
851
599
80
237
916
Consolidated
30 June
2019
$’000
30,690
6,326
42,041
29
955
(18)
411
1,591
6,067
749
3,910
(7,720)
(1,043)
876
1,068
889
30 June
2018
$’000
26,123
7,439
51,807
211
916
83
124
1,452
4,326
(1,913)
(6,638)
(2,988)
2,695
533
2,211
(518)
86,821
85,863
32 Events occurring after the reporting period
(a) Dividend
A fully franked final dividend of 4.1 cents, totalling $5.7 million, has been declared, payable on 25 October 2019. No provision has
been raised in these accounts for this amount.
Collection House Limited Annual Report 2019 Notes to the Financial StatementscontinuedOverview Corporate Governance Financial Report Additional Information 76
Directors’ Declaration
In the directors’ opinion:
(a)
the financial statements and notes set out on pages 31 to 75 are in accordance with the Corporations Act 2001, including:
(i)
(ii)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements, and
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2019 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.
Leigh Berkley
Chairman
Brisbane
30 August 2019
Collection House Limited Annual Report 2019for the year ended 30 June 2019
Independent Auditor’s Report
to the Members
77
Independent Auditor’s Report
To the shareholders of Collection House Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of
Collection House Limited (the Company).
In our opinion, the accompanying Financial Report
of the Company is in accordance with the
Corporations Act 2001, including:
•
•
giving a true and fair view of the Group's
financial position as at 30 June 2019 and of its
financial performance for the year ended on
that date; and
complying with Australian Accounting
Standards and the Corporations Regulations
2001.
Basis for opinion
The Financial Report comprises:
•
•
Consolidated Balance Sheet as at 30 June
2019;
Consolidated Income Statement, Consolidated
Statement
Income,
Consolidated Statement of Changes in Equity,
and Consolidated Statement of Cash Flows for
the year then ended;
of Comprehensive
• Notes including a summary of significant
accounting policies;
• Directors' Declaration.
The Group consists of the Company and the
entities it controlled at the year-end or from time to
time during the financial year.
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit
of the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements
of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled
our other ethical responsibilities in accordance with the Code.
Key Audit Matters
Key Audit Matters are those matters that, in our professional judgement, were of most significance in our
audit of the Financial Report of the current period.
This matter was addressed in the context of our audit of the Financial Report as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on this matter.
89
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.
Collection House Limited Annual Report 2019 Overview Corporate Governance Financial Report Additional Information
78
Value of the Purchased Debt Ledger portfolio ($410,303,000)
Refer to Note 10 to the Financial Report
The key audit matter
How the matter was addressed in our audit
The Purchased Debt Ledgers (PDL) portfolio
recognised by the Group consists of a portfolio of
credit-impaired receivables. We consider this a
key audit matter given the:
•
significance of the PDLs to the Group’s
financial position;
valuation of PDLs is a complex area and we
are required to exercise a high level of
judgement in considering the recoverability of
the carrying value of PDLs; and
the Group has invested considerable time and
effort in developing its PDL impairment model
during the year.
•
•
The Group utilises a PDL impairment model for
the purpose of calculating the present value of the
PDLs. Under AASB 9 Financial Instruments a PDL
is considered to be purchased or originated credit-
impaired financial assets and at each reporting
date, the Group recognises in profit or loss the
estimated change in lifetime expected credit
losses (ECL) as an impairment gain or loss.
Favourable changes
lifetime ECL are
in
recognised as an impairment gain. Favourable
changes arise when actual cash collections
exceed those initially forecast for the portfolio. For
example, this could include higher collections
from payment arrangements or
legal action
compared to what was anticipated when the
portfolio was acquired. An impairment loss arises
when there is a deficiency in cash collections
compared to that initially forecast and reflected in
the credit-adjusted effective interest rate (EIR).
incorporates a
The PDL
number of judgements such as the following
specific recoverability characteristics of PDLs:
•
impairment model
age and type of debt (i.e. utilities, credit card,
personal loan);
payment history and the current repayment
status of customers;
historical debt collection statistics and the
credit-adjusted effective interest rate;
future collection estimates generated using a
combination of both internal and external
information; and
estimated term to maturity.
•
We focused on the significant assumptions
applied in the impairment model, including the
Group’s assumptions at which expected cash
flows will be recovered from customers and
•
•
•
Working with our valuation and modelling specialists,
our audit procedures included:
•
and
related
Testing key
in the debt
internal controls
collection process, including the collection call
centre process
information
technology system controls.
Challenging assumptions used by the Group in
determining the value of the PDL portfolio, with
a view to identifying areas of management bias.
Our challenge of key assumptions was based
on:
–
interest
the accuracy of previous estimates applied
by the Group in the prior year model,
including debt collection forecasting, credit-
rate, and
adjusted effective
estimated PDL life, when compared to
actual historical data;
identifying unusual ratios and trends in key
estimates when compared
to actual
historical experience;
the credit-adjusted effective
analysing
interest rate applied by comparing with
historical cash collections and amortisation
rates; and
assessing forecast collection estimates by
performing sensitivity analysis and for a
sample
their
classification type to the underlying account
history and characteristics.
compared
PDLs,
of
–
–
–
•
90
Collection House Limited Annual Report 2019 Independent Auditor’s Reportcontinued
79
implicit interest rate (“credit-adjusted effective
interest rate”).
We involved our specialists in the areas of
valuation, model logic and integrity and various
cash flow assumptions when assessing this Key
Audit Matter.
Other Information
Other Information is financial and non-financial information in Collection House Limited’s annual reporting
which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible
for the Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In
doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or
our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information,
and based on the work we have performed on the Other Information that we obtained prior to the date of
this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
•
•
•
preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001
implementing necessary internal control to enable the preparation of a Financial Report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error
assessing the Group and Company's ability to continue as a going concern and whether the use of the
going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless they either intend to liquidate
the Group and Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
•
•
to obtain reasonable assurance about whether the Financial Report as a whole is free from material
misstatement, whether due to fraud or error; and
to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of this
Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and
Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This
description forms part of our Auditor’s Report.
91
Collection House Limited Annual Report 2019 Independent Auditor’s ReportcontinuedOverview Corporate Governance Financial Report Additional Information
80
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report of
Collection House Limited for the year ended 30
June 2019, complies with Section 300A of the
Corporations Act 2001.
The Directors of the Company are responsible for the
preparation and presentation of the Remuneration
Report in accordance with Section 300A of the
Corporations Act 2001.
Our responsibilities
We have audited Sections A to J of the Remuneration
Report which is contained in the Directors’ report for
the year ended 30 June 2019.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
KPMG
Scott Guse
Partner
Brisbane
30 August 2019
92
Collection House Limited Annual Report 2019 Independent Auditor’s Reportcontinued
Shareholder Information
The shareholder information set out below was applicable as at 30 August 2019.
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 1,070 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:
Name
1.
2.
3.
4.
5.
Ankla Pty Ltd
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
JP Morgan Nominees Australia Limited
Neweconomy com au Nominees Pty Limited <900 Account>
6. Mr Frederick Benjamin Warmbrand (FB & LJ Warmbrand Super A/C)
7.
8.
9.
Durbin Superannuation Pty Ltd (Durbin Family S Fund A/C)
National Nominees Limited (DB A/C)
Kemp SMSF Pty Ltd (Kemp Super Fund A/C)
10. BNP Paribas Nominees Pty Ltd
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