Eclipx Group Limited
ACN 131 557 901
Annual
Report 2016
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Level 32, 1 O’Connell Street
Sydney NSW 2000
T +61 2 8973 7272
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info@eclipx.com
F +61 2 8973 7171
W www.eclipx.com
Fleet leasing, fleet
management, equipment
finance and short
term rentals
Eclipx Group is a market leader in vehicle mobility
solutions including fl eet leasing, fl eet management
and diversifi ed fi nancial services in Australia and
New Zealand.
Eclipx Group provides businesses and consumers
with a range of solutions they need to access: fl eet
leasing and management, connected in-vehicle
technology (telematics), commercial equipment
fi nance, novated leasing, consumer vehicle fi nance
and insurance, and medium term vehicle rental and
accident replacement.
Our focus is on providing excellent customer
service and value add solutions for our customers
which translates into high growth for our
shareholders. We do this with:
A commitment to putting our customer fi rst
by delivering outstanding customer service and
experiences, including Net Promoter Scoring (NPS);
Market-leading proprietary technology which
off ers fi rst-to-market innovation and online
technology solutions which provides customers
with real-time visibility and management of their
vehicles supported by a range of online products
and services; and
A well established, scalable and diverse funding
model which provides cost-eff ective, capital-
effi cient and innovative funding solutions.
SHAREHOLDER INFORMATION
Unmarketable parcel of shares
The number of shareholders holding less than a marketable parcel of ordinary shares is 107. 136 shares comprise
a marketable parcel at Eclipx Group’s closing share price of $3.70.
Securities subject to escrow arrangements
Class of restricted securities
Fully paid ordinary shares
Unquoted equity securities
Non-executive Director Options
Shares held
Date escrow period ends
3,645,519
22 April 2017
There are 1,000,000 unquoted options, with a $2.65 exercise price on issue to fi ve option holders. Further details
of the Non-executive Director Options are outlined as follows:
Options held
% of options
200,000
200,000
200,000
200,000
200,000
There is no current on-market buy-back in relation to Eclipx Group securities.
During the reporting period there were no on-market purchases of Eclipx Group securities.
Ordinary Shares – on a show of hands every member present at a meeting in person or by proxy shall have one
vote and upon a poll each ordinary share shall have one vote.
Options – No voting rights.
Statement regarding use of cash and assets
Eclipx Group has used its cash and assets in a form readily convertible to cash that it had at the time between
admission to the Offi cial List and the end of the reporting period in a way consistent with its business objectives
set out in the Prospectus dated 26 March 2015.
Option holder
Kerry Roxburgh
Gail Pemberton
Trevor Allen
Russell Shields
Gregory Ruddock
On-market buy-back
On-market purchases
Voting Rights
2
ECLIPX GROUP LIMITED ANNUAL REPORT 2016
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107
CONTENTS
Our History
Chairman’s Letter
Managing Director’s Report
Eclipx Group Strategy
Financial Highlights
Business Overview
Board of Directors
Corporate Directory
Financial Report
04
06
08
10
12
14
18
20
21
3
OUR HISTORY
With 29 years of corporate history, Eclipx
Group has developed a strong platform of
capabilities. In the last two years the business
has undergone an exciting transformation led
by a talented executive team.
1987
Australian
company
founded as a JV
between ANZ
and JMJ Fleet
1995
ANZ acquires
100% of AVIS
Fleet NZ
2001
ANZ acquires
PL Lease
Management
1990
ANZ and Linfox
form JV to
establish NZ
fleet business
1996
ANZ acquires
100% of the
Australian and
NZ JVs
4
ECLIPX GROUP LIMITED ANNUAL REPORT 2016 2008
Nikko sold
FleetPartners to
GIC and Ironbridge
Late
2014
Acquisitions of
FleetPlus and
Carloans.com.au
Late
2015
Eclipx exceeds
FY15 NPATA
Prospectus
guidance
Late
2016
Eclipx
exceeds
FY16 NPATA
guidance
2006
ANZ sold
FleetPartners
to Nikko
Investments
Early
2014
Significant
executive
reorganisation
Early
2015
Rebrand as Eclipx
Group and list on
the ASX
Early
2016
Acquisition of
Right2Drive
5
CHAIRMAN’S LETTER
6
On behalf of the Board and the wonderful Eclipx
team, we are delighted to present the Eclipx
Group Annual Report for 2016.
It’s our pleasure to report that we have
experienced growth across all our business
segments, resulting in a $55.3 million cash Net
Profit After Tax and Amortisation (NPATA), an
increase of 14% on the previous financial year.
Further highlights for the 2016 financial year
including:
An increase in Cash Earnings Per Share (EPS)
of 10% to 22.2 cents
New Business Writings (NBW) of $913 million,
an increase of 15% over the previous
financial year
$2.04 billion in Assets Under Management or
Financed (AUMOF), an increase of 15% over
the previous financial year, maintaining an
NPATA margin at 2.9%
99,254 Vehicles Under Management or
Financed, an increase of 24% on the previous
financial year
Further diversification into adjacent markets,
through the acquisition of the Right2Drive
business, providing replacement vehicles
to not at fault drivers. Since acquiring
Right2Drive in May the business has been
meeting our growth expectations
A fully franked final dividend of 7.0 cps with a
record date of 30 December 2016, payable on
20 January 2017
An increase in our Net Promoter Score to 38
ECLIPX GROUP LIMITED ANNUAL REPORT 2016
This year’s solid results reflect the high calibre of
our leadership team, their talent, their passion
and their commitment to our customers.
I am particularly pleased about the way the
Eclipx culture is evolving. In a fast changing
world, our people approach Eclipx customer
needs individually, with enthusiasm, with
curiosity, always looking for innovative solutions.
The collaborative way in which our team
operates is reflected in the growth we are seeing.
Delivering on our Vision
Our vision is to provide market leading online
mobility solutions to Consumers, SMEs,
Corporates and Government businesses and
disrupt the way the fleet leasing and the fleet
management sectors have traditionally operated
in Australia and New Zealand:
Focusing on seamless delivery of online
customer solutions and straight through
processing;
Constant innovation with new product
development;
Originating business, through new alternative
distribution channels, including digital;
Diversifying into adjacent markets including
Commercial Equipment, Consumer financing
of vehicles and medium term car rental/
accident replacement vehicles.
I’m pleased to say we have made considerable
progress in achieving our vision with these
recent successes:
The acquisition of Right2Drive
Diversification of our distribution through
new partnerships and alliances
Incorporation of insurance and telematics
efficiencies to our customers, that improves
our customer retention, whilst supporting
significant new account wins into the
Eclipx fleet
Realisation of supply chain and acquisition
synergies
Our own investments in technology and
scale efficiencies, reflecting in cost/income
reductions.
Positive Outlook
It has been an exciting and rewarding year
at Eclipx!
We exceeded our guidance for the second
year in a row since listing and we are looking
forward to the new financial year in anticipation
and with confidence. Our focus is customer
centric, supported by technology and product
innovation that combine to provide a strong
platform for growth.
Fellow shareholders, your Board is pleased
about our 2016 operational performance and
we appreciate your continuing support. We are
looking forward to rewarding you by delivering
sustained total shareholder returns.
In closing I would like to thank the Board, our
management and our outstanding Eclipx team
for their energy, their support and for delivering
a record result in 2016 and for their continuing
commitment to excellence.
Kerry Roxburgh
Chairman
7
MANAGING DIRECTOR’S REPORT
Australia - Commercial
The Australian Commercial segment finished
the 2016 financial year with a 15% growth in
new business writings to $436 million and an
11% increase in Assets Under Management or
Financed (AUMOF) to $1.02 billion.
These new account wins will continue to
underpin strong growth into future years.
Significant new business wins in the government
and large corporate segments are highlighted
by Eclipx’s inclusion on several government fleet
panels and securing government and corporate
sole supply contracts.
These new customer wins reflect Eclipx’s key
competitive differentiators including telematics
and expertise in procuring and managing
medium/heavy commercial vehicles.
New Zealand - Commercial
The New Zealand Commercial segment increased
new business writings by 15% to $191 million
highlighting the success of Eclipx’s investment
in innovative technology and new distribution
initiatives.
New Zealand secured the fleet management
of 9,000 vehicles in the second quarter 2016,
creating a number of new revenue streams and
cross-sell opportunities. New Zealand continues
to diversify its distribution by establishing
alliances with 100 franchised Motor Vehicle
Dealers across a range of vehicle manufacturers,
leveraging our on-line application and approval
processes.
Assets under management or financed finished
the 2016 financial year at $446 million, up 19% on
the previous year.
It is with great pleasure that I present to you
Eclipx Group’s 2016 Annual Report.
We have delivered another year of strong
growth in both new business volumes and
earnings with a robust performance across our
fleet and consumer businesses.
Our results are an outcome of our continued
success in our fleet businesses, increasing profit
on sale of used vehicles and the continued
success in the consumer segment enhanced by
the acquisition of Right2Drive.
Economic conditions continue to be favourable
in Australia and New Zealand providing growth
opportunities for Eclipx’s products and services,
as evidenced by our expanding pipeline of new
business writings.
8
ECLIPX GROUP LIMITED ANNUAL REPORT 2016 Australia Consumer
Our People
The Consumer segment, incorporating Carloans.
com.au, the novated leasing businesses of
FleetPartners and FleetPlus in Australia and
the recently acquired Right2Drive business,
experienced accelerated growth in the 2016
financial year with a 53% increase in NPATA to
$8.7 million.
Since being acquired in May 2016, Right2Drive
has delivered to expectations and increased its
distribution by expanding its branch network by
three to 19.
Significant Cash and Diversified
Funding Sources
Eclipx has extensive and diversified sources
of funding including committed warehouse
and corporate debt facilities, asset-backed
securitisations and principal and agency
arrangements with a total of 20 funding partners
and debt investors.
Eclipx has also refinanced and increased its
corporate debt facility to $300 million, increasing
the associated debt tenor to a mix of three and
five year maturities.
Eclipx finished the 2016 financial year with $474
million in cash and committed undrawn facilities,
providing significant headroom for growth.
Our Customers
Throughout 2016, we continued to strengthen
relationships with our customers which was
reflected in our Net Promoter Score increasing
to 38.
Our focus on delivering exceptional customer
service has ensured retention of existing
customers and driven new customer growth.
We continue to be committed to attracting,
recruiting, engaging and retaining diverse
talent and building a culture that supports high
performance. We recognise that the passion,
energy and dedication of our people has been
integral to achieving our successes in 2016 and
we would like to thank every member of the
Eclipx team for their contribution.
Thank you to the Eclipx team for your support
and commitment to a solid 2016 performance
and I look forward to leading Eclipx into its next
exciting year.
Doc Klotz
Chief Executive Officer and Managing Director
9
ECLIPX GROUP STRATEGY
PROGRESS SINCE IPO
Leveraging our core competencies to
execute against our strategy.
Grow our presence in fleet
Leverage funding expertise to
improve competitiveness
Significant new account pipeline from
New specialised funding facilities
growth will continue to underpin future
for Government
growth in fleet
Corporate debt facilities increased
Diversification into Government and highly
and extended
rated Corporate sectors
Continue to build sales and distribution
resources and infrastructure
Clean Energy Funding provides competitive
advantage in pricing lower emission vehicles
Extended and expanded Principal &
Agency facilities
$474 million in committed undrawn facilities
and cash available for growth
10
ECLIPX GROUP LIMITED ANNUAL REPORT 2016
Use scale efficiencies and cross
sell to increase margins
Acquisition Synergies
Use telematics to build a competitive
Commercial Equipment
advantage in real time fleet analytics and
FBT cost management
Continued diversification of end of lease
disposal and re-leasing channels
Leverage scale to support cost efficiencies
and supply chain improvements
Consumer Finance
Medium term car rental
Expansion of the Group’s digital asset base
11
FINANCIAL HIGHLIGHTS
$55.3 Million
CASH NPAT1
14%
GROWTH PCP2
$913 Million
NEW BUSINESS WRITINGS3
15%
GROWTH PCP2
$2.04 Billion
ASSETS UNDER MANAGEMENT
15%
GROWTH PCP2
13.75 Cents
DIVIDEND PER SHARE4
112%
GROWTH PCP2
22.2 Cents
CASH EARNINGS PER SHARE
10%
GROWTH PCP2
1. CASH NPAT – Cash net profit after tax reflects net profit after tax adjusted for the after tax effect of the amortisation of intangible
assets and material one-off adjustments or costs that do not reflect the ongoing operations of the business. Refer to page 58.
2. PCP – Prior Comparative Period. 3. New Business Writings excludes sale and leaseback agreements totaling $47.4 million in FY15
and $19.0 million in FY16. 4. FY15 dividend of 6.5 cents per share is for the second half of FY15 period only post listing.
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ECLIPX GROUP LIMITED ANNUAL REPORT 2016 Financial year 2016
$ MILLION
Net Operating Income (NOI)
Cash NPATA1
New Business Writings (NBW)2
AUMOF3 (closing)
VUMOF4 (units)
Cash EPS5 (cents)
Dividend per share6 (cents)
We have delivered
significant growth in new
business written volumes
and profitability across all
three business segments.
FY15 ACTUAL
FY16 ACTUAL
GROWTH PCP
171.0
48.6
793
1,770
80,221
20.2
6.50
196.3
55.3
913
2,035
99,254
22.2
13.75
15%
14%
15%
15%
24%
10%
112%
FY16 NPATA of $55.3 million, up 14% on FY15
Fully franked final dividend of 7.0 cps to be paid on
20 January 2017
AUMOF increased $265 million (15%) to $2.04 billion
whilst maintaining NPATA margins and high
credit quality
NBW increased 15% to $913 million – reflects new
account wins and growth across all segments
Vehicles financed or managed now exceeds
99,000 vehicles
Right2Drive acquires Onyx Car Rentals providing
critical mass in the Melbourne market
Increased corporate facility to $300 million and
extended term to three and five years – provides
low cost capital for growth
Cash EPS 22.2c, up 10% on FY15
FY17 NPATA expected to be $65.5 to $67.0 million,
implying growth of c18%–21% on FY16
1. Cash NPATA is net profit after tax and tax adjusted add back of intangibles 2. NBW excludes sale and leaseback agreements totaling $47.4 million in
FY15 and $19.0 million in FY16 3. AUMOF is assets under management or financed, includes balance sheet and principal and agency (P&A) funded assets
4. VUMOF is vehicles under management or financed, includes fleet managed vehicles which are not financed 5. Cash EPS is defined as each period’s
NPATA divided by the total number of ordinary shares on issue for that period irrespective of the date of issuance in the respective period. Total shares
on issue have increased in FY16 due to take-up of Eclipx’s dividend reinvestment plan and the issuance of shares for the acquisition of Right2Drive
6. FY15 dividend of 6.5 cents per share is for the second half of FY15 period only post listing.
13
BUSINESS OVERVIEW
Review of Operations
Eclipx Group is a customer services focussed and
technology-driven financial services organisation,
providing fleet leasing and management services,
equipment finance, novated leasing, consumer
vehicle loans and medium term car rentals to
corporate customers and consumers in Australia
and New Zealand. Following our listing on the
Australian Securities Exchange in 2015, on 29
June 2016 we entered the S&P/ASX 200 index.
Through our portfolio of brand names,
“FleetPartners”, “FleetPlus”, “CarLoans.com.
au”, “Fleet Choice”, “Eclipx Commercial”
and “Right2Drive”, we have $2.04 billion of
assets under management or finance as
at 30 September 2016. Growth of assets
under management or finance is a key driver
of profitability as new receivables create
management, finance and other income streams
that are recognised throughout the life of a
lease. Profitability is also driven by the amount
of impairments and controlling cost of funds
and operating expenses. A key to our success
in financial year 2016 was increasing our assets
under management or finance by 15% over the
previous year whilst reducing our cost-to-income
ratio from 57.5% to 55.8%, on a like-for-like
basis, through increased scale and supply chain
improvements.
Our business is structured in three segments:
Australian Commercial (Fleet and
Equipment) – this segment comprises of
our Australian fleet leasing and management
businesses (FleetPartners and FleetPlus) and
our equipment financing business (Eclipx
Commercial).
New Zealand Commercial – this segment
comprises of our New Zealand fleet leasing
and management businesses (FleetPartners
and FleetPlus) and our used vehicle retail
sales outlet (AutoSelect).
Australian Consumer – this segment
comprises of our novated and online
consumer loans businesses (FleetPartners,
FleetPlus, CarLoans.com.au and Fleet
Choice) and our new medium term car rental
business (Right2Drive).
On 19 May 2016, we acquired Right2Drive, a
leading medium term accident replacement/
car rental operator and existing FleetPartners
customer. This business provides rental
replacement vehicles to eligible “not-at-fault”
drivers that have accident damaged cars. This
market is underdeveloped, relatively immature
and fragmented in Australia and New Zealand.
This acquisition permits further diversification
of our end of lease disposal channels whilst
also presenting itself as a highly strategic and
natural extension of fleet leasing. Since acquiring
Right2Drive, we have expanded its branch
network to 19 branches across Australia and
New Zealand and the business is well placed for
continued growth.
Australia Commercial
(Fleet and Equipment)
Our new business writings in the Australian
Commercial segment grew by 15% over the prior
year to $436 million. Total fleet and commercial
assets under management or financed in
Australia closed the year at $1,024 million.
14
ECLIPX GROUP LIMITED ANNUAL REPORT 2016
Diversification
The diversification and optimisation of end-of-
term vehicle remarketing continues to yield
positive results. Channel optimisation, whereby
we seek to dispose of end-of-lease vehicles
through the channel that yields the best return,
was enhanced this year through the acquisition
of Right2Drive.
Connected Fleet Solutions
Our market leading telematics offering continues
to on-board new customers and provide FBT and
vehicle management solutions.
Buoyant services sector
Elsewhere, with growth in the services sector of
the economy, Eclipx Commercial is benefitting
from an uptick in business from organisations in
health, education, legal and financial services.
Significant growth opportunities
With the large number of new relationship
wins, there is a significant growth opportunity
over the next three to five years. We are also
planning to leverage opportunities to expand
our “share of wallet” by providing clients with
ancillary products and services.
Outlook
We will continue to build on the sales
momentum established over the last two years
through our competitive advantage in funding
supported by the sale of ancillary products
including telematics.
15
We have grown our fleet size through new
customer wins and investing in our existing
relationships through replacing expiring leases.
Winning new customers and minimising
customer churn is instrumental to growing fleet
size over time, and we have had no material
customer losses in financial year 2016.
Over the year we have had significant new
business wins in the government and large
corporate customer segment through leveraging
our key competitive differentiators in telematics
and medium/heavy commercial vehicle expertise.
Lower costs
We have continued to reduce overheads from
larger customer fleet sizes, technology initiatives
and scale efficiencies.
Improved customer satisfaction
Net Promoter Score programs introduced in
financial year 2015 have continued to enhance
our customer relationships and improve
satisfaction. We have focused on improving
processes that customers have identified as
needing improvement to enhance the overall
customer experience.
BUSINESS OVERVIEW
New Zealand Commercial
With growth of 15% against the prior year,
the New Zealand Commercial Fleet segment
delivered $191 million in new business writings in
financial year 2016.
On-line origination
Our online origination platform now
encompasses 100 franchised motor vehicle
dealers across a range of brands. Together with
on-line credit approval technology, we are
successfully differentiating our New Zealand
business from other fleet leasing competitors.
Continuing diversification
Right2Drive’s newly established presence in New
Zealand provides a new distribution channel for
end of lease vehicles in this market.
Outlook
To further grow our New Zealand business, we
will focus on growing the cross-sell of ancillary
products including telematics.
16
ECLIPX GROUP LIMITED ANNUAL REPORT 2016 Australia Consumer
Search Engine Optimisation
We achieved strong profit growth of 53%
in the Australian Consumer segment from
significant novated wins for the FleetPartners
and FleetPlus businesses, growing CarLoans and
the Right2Drive business, which contributed $1.6
million in profit over a four-month period. Overall,
new business writings grew to $286 million and
assets under management grew to $566 million
in financial year 2016.
Distribution
A key initiative of financial year 2016 for
the CarLoans business was broadening
its distribution channels to include
performancedrive.com.au, a content-led car
review website owned by Eclipx, and a retail
presence through a partnership with Manheim, a
global vehicle auction operator.
The acquisition of Right2Drive permits further
diversification of our end of lease disposal
channels whilst also presenting itself as a highly
strategic and natural extension of fleet leasing.
We have lowered the average cost of lead
acquisition through better search engine
marketing optimisation. Together with new
social media initiatives, we are being smarter
about how we reach new customers.
Cross-sell opportunities
We continue to target opportunities to cross-sell
novated business into our existing commercial
customer base.
Outlook
Right2Drive’s expanded branch network
together with initiatives in our novated and
CarLoans businesses has the segment poised for
continued growth.
17
BOARD OF DIRECTORS
KERRY ROXBURGH, BCOM, MBA, MESAA
Chairman since 26 March 2015, Independent Non-Executive Director since
26 March 2015
Mr Kerry Roxburgh has more than 50 years’ experience in the financial services industry. He is
currently Chairman of Tyro Payments Ltd. He is the Lead Independent Non-Executive Director of
Ramsay Health Care Ltd, a Non-Executive Director of the Medical Indemnity Protection Society
and of MIPS Insurance Ltd. He is also a Chartered Accountant and a Practitioner Member of the
Stockbrokers Association of Australia. Kerry was previously Chairman of Tasman Cargo Airlines
Pty Ltd, Deputy Chairman of Marshall Investments Pty Ltd and member of the Advisory Board
of AON Risk Solutions in Australia.
GAIL PEMBERTON, MA, FAICD
Independent Non-Executive Director since 26 March 2015
Ms Gail Pemberton has more than 30 years’ experience in banking and wealth management,
and is a specialist in technology and operations.
Prior to taking up a Non-Executive Director career, Gail was Chief Operating Officer, UK at
BNP Paribas Securities Services and CEO and Managing Director, BNP Paribas Securities
Services, Australia and New Zealand. She was previously Group CIO, and subsequently
Financial Services Group COO at Macquarie Bank. Her current board roles include Chairman
of OneVue Limited and SIRCA Technology Pty Ltd and Non-Executive Director of QIC Ltd,
PayPal Australia Pty Ltd and Melbourne IT Ltd.
Gail previously was Chairman of Onthehouse, and served on the board of Alleron Funds
Management, Air Services Australia, the Sydney Opera House Trust and Harvey World Travel
and UXC Ltd. She has also provided independent consulting services to the NSW Government
Department of Premier and Cabinet on their Corporate and Shared Services reform program.
TREVOR ALLEN, BCOM (HONS), CA, FF, MAICD
Independent Non-Executive Director since 26 March 2015
Mr Trevor Allen has more than 38 years’ of corporate and commercial experience, primarily as
a corporate and financial adviser to Australian and international corporates.
Trevor is currently Chairman of Brighte Capital Pty Ltd and a Non-Executive Director of
Peet Limited, Freedom Foods Group Ltd, and Yowie Group Limited. He is a Non-Executive
Alternate Director, Company Secretary and Public Officer of Australian Fresh Milk Holdings
Pty Limited and Fresh Dairy One Pty Limited. Trevor was previously a Non-Executive Director
of the Juvenile Diabetes Research Foundation, a member of FINSIA’s Corporate Finance
Advisory Committee for 10 years, and a board member of AON Superannuation Pty Ltd.
Trevor was previously an Executive Director - Corporate Finance at SBC Warburg and its
predecessors for eight years, where he led corporate finance teams on major M&A advisory
and capital markets assignments. He was a Corporate Finance Partner at KPMG for nearly
12 years and, at the time of his retirement from KPMG in 2011, he was the Lead Partner in its
National Mergers and Acquisitions group.
18
ECLIPX GROUP LIMITED ANNUAL REPORT 2016 RUSSELL SHIELDS, FAICD, SA FIN
Independent Non-Executive Director since 26 March 2015
Mr Russell Shields has more than 35 years’ experience in financial services, including six years
as Chairman Queensland and Northern Territory for ANZ Bank. He is currently a Non-Executive
Director of Aquis Entertainment Limited and Retail Food Group Ltd. Previously, Russell was the
Chairman of Onyx Property Group Pty Ltd.
Prior to joining ANZ, Russell held senior executive roles with HSBC, including Managing
Director Asia Pacific – Transport, Construction and Infrastructure, and State Manager
Queensland, HSBC Bank Australia.
GREG RUDDOCK, BCOM
Non-Executive Director since 26 March 2015, Chairman to 26 March 2015
Mr Greg Ruddock is currently the Joint Chief Executive Officer of Ironbridge and co-leads
investment and portfolio management activities. He has 14 years’ of private equity experience
with Gresham Private Equity and Ironbridge.
Prior to joining Ironbridge, Greg spent seven years with Wesfarmers in mergers and
acquisitions, five years with Kalamazoo Limited in various senior roles, and four years as
a Director of Gresham Private Equity.
DOC KLOTZ
Chief Executive Officer and Managing Director since 27 March 2014
Mr Doc Klotz has over 25 years’ experience in senior executive roles in the financial services
and travel industries in Australia, New Zealand and the United States.
Prior to joining Eclipx in 2014, Doc was Head of Operations at FlexiGroup, an ASX 200
company (ASX: FXL). He also has senior executive experience with Travel Services
International, Hotels.com and Expedia, Inc. in the United States.
GARRY McLENNAN, BBUS, FCPA, FAICD
Deputy Chief Executive Officer and Chief Financial Officer since 27 March 2014
Mr Garry McLennan has over 35 years’ of experience in financial services including five years
as Chief Financial Officer at FlexiGroup, an ASX 200 company (ASX: FXL).
Prior to his time at FlexiGroup, Garry spent 23 years at HSBC Bank Australia where he was
Chief Financial Officer and subsequently Chief Operating Officer. He has previously served on
the board of HSBC Bank Australia and The Australian Banking Industry Ombudsman Ltd.
Garry currently serves on the Board Audit Committee of Intersect, a full-service eResearch
support agency.
19
Corporate Directory
Eclipx Group Limited
ACN 131 557 901
Eclipx Group is listed on the Australian Securities Exchange under the ASX code of ECX.
Share registry
Link Market Services Limited
Level 12, 608 George Street,
Sydney South, NSW 2000, Australia
Tel: +61 2 8280 7100
Fax: +61 2 9287 0303
Auditor
KPMG
Tower 3, International Towers Sydney
300 Barangaroo Avenue, Sydney 2000
Tel: +61 2 9335 7000
Fax: +61 2 9335 7001
Directors
Kerry Roxburgh – Chairman
Trevor Allen
Doc Klotz
Garry McLennan
Gail Pemberton
Greg Ruddock
Russell Shields
Group General Counsel and
Company Secretary
Matthew W. Sinnamon
Registered office and principal
administration office
Level 32, 1 O’Connell Street
Sydney, NSW, 2000, Australia
Tel: +61 2 8973 7272
Fax: +61 2 8973 7171
Corporate Governance Statement
A copy of the Eclipx Corporate Governance Statement is available at:
http://investors.eclipxgroup.com/Investor-Centre/?page=Corporate-Governance
20
ECLIPX GROUP LIMITED ANNUAL REPORT 2016 FINANCIAL REPORT
For the year ended 30 September 2016
CONTENTS
Director’s Report
Lead Auditor’s Independence Declaration
Letter from Remuneration and Nomination Committee (unaudited)
Remuneration Report (audited)
Financial Statements
Statement of Profit or Loss and Other Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
1.0 Introduction to the Report
2.0 Business Result for the Year
2.1 Segment information
2.2 Revenue
2.3 Expenses
2.4 Earnings per share
2.5 Business combinations
2.6 Taxation
3.0 Operating Assets and Liabilities
3.1 Property, plant and equipment
3.2 Finance leases
3.3 Trade receivables and other assets
3.4 Trade and other liabilities
3.5 Intangibles
4.0 Capital Management
4.1 Borrowings
4.2 Financial risk management
4.3 Cash and cash equivalents
4.4 Derivative financial instruments
4.5 Contributed equity
4.6 Commitments
4.7 Dividends
5.0 Employee Remuneration and Benefits
5.1 Share based payments
5.2 Key management personnel disclosure
6.0 Other
6.1 Reserves
6.2 Parent entity information
6.3 Related party transactions
6.4 Remuneration of auditors
6.5 Deed of cross guarantee
6.6 Reconciliation of cash flow from operating activities
6.7 Events occurring after the reporting period
Director’s Declaration
Independent Auditor’s Report
Shareholder Information
22
35
36
37
51
52
53
54
55
58
59
61
62
63
67
70
72
72
73
74
77
78
82
83
84
85
87
88
93
94
95
96
97
98
100
101
102
103
105
21
The Directors present their report on the consolidated entity (referred to hereafter as Group or Eclipx) consisting
of Eclipx Group Limited (Company) and the entities it controlled at the end of, or during, the year ended 30
September 2016.
Directors
1.
The following persons were Directors of the Company during the financial year and up to the date of this report:
KERRY ROXBURGH
BCOM, MBA, MESAA
Chairman since 26 March 2015, Independent Non-Executive Director since 26 March 2015
Mr Kerry Roxburgh has more than 50 years’ experience in the financial services industry. He is Chairman of Tyro
Payments Ltd. Until 31 December 2015, he was Chairman of Tasman Cargo Airlines Pty Ltd, and Deputy Chairman
of Marshall Investments Pty Ltd. He is the Lead Independent Non-Executive Director of Ramsay Health Care
Ltd, a Non-Executive Director of the Medical Indemnity Protection Society and of MIPS Insurance Ltd. Until
30 September 2016, he was also a member of the Advisory Board of AON Risk Solutions in Australia.
He was previously CEO of E*TRADE Australia and was subsequently Non-Executive Chairman until June 2007,
when it was acquired by ANZ Bank. Prior to his time at E*TRADE, Kerry was an Executive Director of HSBC Bank
Australia where, for 10 years, he held various positions including Head of Corporate Finance and Executive
Chairman of HSBC James Capel Australia.
Prior to HSBC, he spent more than 20 years as a Chartered Accountant with HLB Mann Judd and previously
at Arthur Andersen.
He is a Practitioner Member of the Stockbrokers Association of Australia.
In addition to Eclipx Group Ltd, during the last three years Kerry also served as a Director for the following listed
companies: Ramsay Health Care Ltd (appointed July 1997) and Charter Hall Ltd (retired November 2014).
GAIL PEMBERTON
MA (UTS), FAICD
Independent Non-Executive Director since 26 March 2015
Ms Gail Pemberton has more than 30 years’ experience in banking and wealth management and is a specialist
in technology and operations.
Prior to taking up a Non-Executive Director career, Gail was Chief Operating Officer, UK at BNP Paribas Securities
Services and CEO and Managing Director, BNP Paribas Securities Services, Australia and New Zealand. She was
previously Group CIO, and subsequently Financial Services Group COO at Macquarie Bank.
Her current board roles include Chairman of OneVue Ltd and SIRCA Technology Pty Ltd and Non-Executive
Director of QIC Ltd, PayPal Australia Pty Ltd and Melbourne IT Ltd.
She previously was Chairman of Onthehouse, and served on the board of Alleron Funds Management, Air
Services Australia, the Sydney Opera House Trust, Harvey World Travel and UXC Ltd. She has also provided
independent consulting services to the NSW Government Department of Premier and Cabinet on their Corporate
and Shared Services reform program.
In addition to Eclipx Group Ltd, during the last three years Gail also served as a Director for the following listed
companies: OneVue Ltd (appointed 2007) and Melbourne IT Ltd (appointed May 2016).
22
ECLIPX GROUP LIMITED ANNUAL REPORT 2016DIRECTORS’ REPORT TREVOR ALLEN
BCOM (HONS), CA, FF, MAICD
Independent Non-Executive Director since 26 March 2015
Mr Trevor Allen has 38 years’ of corporate and commercial experience, primarily as a corporate and financial
adviser to Australian and international corporates.
He is a Non-Executive Director of Peet Ltd, Freedom Foods Group Ltd and Yowie Group Ltd. He is
a Non-Executive Alternate Director, Company Secretary and Public Officer of Australian Fresh Milk Holdings
Pty Ltd and Fresh Dairy One Pty Ltd. Trevor is the Chairman of Brighte Capital Pty Ltd. Until August 2016 he
was a board member of Aon Superannuation Pty Ltd, the trustee of the Aon Master Trust. He was a member
of FINSIA’s Corporate Finance Advisory Committee for 10 years up until December 2013.
Prior to undertaking non-executive roles, he had senior executive positions as an Executive Director – Corporate
Finance at SBC Warburg and its predecessors for eight years and as a Corporate Finance Partner at KPMG for
nearly 12 years. At the time of his retirement from KPMG in 2011, he was the Lead Partner in its National Mergers
and Acquisitions group.
He was Director - Business Development for Cellarmaster Wines from 1997 to 2000, having responsibility for the
acquisition, integration and performance of a number of acquisitions made outside Australia in that period.
In addition to Eclipx Group Ltd, during the last three years Trevor also served as a Director for the following listed
companies: Peet Ltd (appointed April 2012), Freedom Food Group Ltd (appointed July 2013) and Yowie Group Ltd
(appointed March 2015).
RUSSELL SHIELDS
FAICD, SA FIN
Independent Non-Executive Director since 26 March 2015
Mr Russell Shields has more than 35 years’ experience in financial services including six years as Chairman
Queensland and Northern Territory for ANZ Bank.
He is a Non-Executive Director of Aquis Entertainment Ltd and Retail Food Group Ltd. Previously Russell was
the Chairman of Onyx Property Group Pty Ltd.
Prior to joining ANZ, he held senior executive roles with HSBC including Managing Director Asia Pacific
– Transport, Construction and Infrastructure and State Manager Queensland, HSBC Bank Australia.
In addition to Eclipx Group Ltd, during the last three years Russell also served as a Director for the following
listed companies: Aquis Entertainment Ltd (appointed August 2015) and Retail Food Group Ltd (appointed
December 2015).
GREG RUDDOCK
BCOM (UWA)
Non-Executive Director since 26 March 2015, Chairman to 26 March 2015
Mr Greg Ruddock is the Joint Chief Executive Officer of Ironbridge and co-leads investment and portfolio
management activities. He has 14 years’ of private equity experience with Gresham Private Equity and Ironbridge.
Prior to joining Ironbridge, he spent seven years with Wesfarmers in mergers and acquisitions, five years with
Kalamazoo Ltd in various senior roles, and four years as Director of Gresham Private Equity.
Greg has represented the Ironbridge Funds on the boards of Stardex, Super Amart, BBQs Galore, Easternwell,
ISGM and AOS.
23
DIRECTORS’ REPORT 1.
Directors (continued)
IRWIN (‘DOC’) KLOTZ
Chief Executive Officer and Managing Director since 27 March 2014
Mr Doc Klotz has over 25 years’ experience in senior executive roles in the financial services and travel industries
in Australia, New Zealand and the United States.
Prior to joining Eclipx in 2014, he was Head of Operations at FlexiGroup, an ASX 200 company (ASX: FXL).
He has senior executive experience with Travel Services International, Hotels.com and Expedia, Inc. in the
United States.
GARRY McLENNAN
BBUS (UTS), FCPA, FAICD
Deputy Chief Executive Officer and Chief Financial Officer since 27 March 2014
Mr Garry McLennan has over 35 years’ of experience in financial services including five years as Chief Financial
Officer at FlexiGroup, an ASX 200 company (ASX: FXL).
Prior to his time at FlexiGroup, he spent 23 years at HSBC Bank Australia where he was Chief Financial Officer
and subsequently Chief Operating Officer. He has previously served on the board of HSBC Bank Australia and
The Australian Banking Industry Ombudsman Ltd.
Garry currently serves on the Board Audit Committee of Intersect, a full-service eResearch support agency.
Company Secretary
2.
Mr Matt Sinnamon was appointed Company Secretary and Group General Counsel on 27 October 2014.
He is admitted to the Supreme Court of New South Wales and the High Court of Australia. He is a member
of the Governance Institute of Australia, a Chartered Secretary and is entered on the Roll of Public Notaries.
The Company Secretary function is responsible for ensuring the Company complies with its statutory duties
and maintains proper documentation, registers and records. The role provides advice to the Directors and
officers about corporate governance and legal matters.
3. Directors’ Meetings
The table below sets out the numbers of meetings held during the 2016 financial year and the number
of meetings attended by each Director. During the year nine Board meetings, four Audit and Risk Committee
meetings and two Remuneration and Nomination Committee meetings were held.
Board
Audit and Risk Committee
Remuneration and
Nomination Committee
Held
Attended
Held
Attended
Held
Attended
9
9
9
9
9
9
9
9
9
9
8
9
9
9
4
–
4
4
4
–
–
4
–
4
3
4
–
–
2
2
2
–
–
–
–
2
2
2
–
–
–
–
Director
Kerry Roxburgh
Gail Pemberton
Trevor Allen
Russell Shields
Gregory Ruddock
Garry McLennan
Doc Klotz
24
ECLIPX GROUP LIMITED ANNUAL REPORT 2016DIRECTORS’ REPORT 4.
Review of operations
Business acquisitions
On 31 March 2016 the Group acquired the business and assets of FleetSmart, a division of Cardlink Systems Ltd
(FleetSmart). The principal activity of the business acquired is the provision of vehicle fleet management. The
business was acquired to support the business’ growth strategy in vehicle fleet management in the New Zealand
market. FleetSmart recorded a profit before tax of $1.1m for the period under review.
On 19 May 2016 Eclipx acquired Right2Drive Pty Ltd (Right2Drive). The principal activity of the business acquired
is the provision of rental replacement vehicles to “not at fault” drivers that have accident damaged cars requiring
repair. The business was acquired to provide a platform to expand into the medium term vehicle rental market.
Right2Drive recorded a profit before tax of $3.4m for the period under review.
Principal activities
Eclipx is a diversified financial services organisation that provides complete fleet management services, corporate
and consumer asset backed finance and medium term vehicle rentals to the Australian and New Zealand
market. As at 30 September 2016 Eclipx managed or financed in excess of 99,000 vehicles across Australia and
New Zealand.
In Australia the Group operates under six primary brands: FleetPartners, FleetPlus, FleetChoice, CarLoans.com.au,
Right2Drive and Eclipx Commercial.
In New Zealand the Group operates under five primary brands: FleetPartners, FleetPlus, CarLoans.co.nz,
Right2Drive and AutoSelect.
Business model
Eclipx generates revenue in different ways across its brands that can broadly be split as below:
Eclipx-funded model (used primarily by FleetPartners and Eclipx Commercial) is where Eclipx purchases
vehicles to lease to customers and earns a spread, or net interest income, being the difference between the
interest income it receives from customers and its cost of funds. Eclipx recognises net interest income over
the life of the lease;
Third-party-funded model (used primarily by FleetPlus, FleetChoice and CarLoans) is where Eclipx acts
as a broker or agent that arranges vehicle financing for the customer from third party banks and financial
institutions. Under this model, as compensation for originating new business, Eclipx earns part of its revenue
from upfront brokerage commissions paid by the third-party funders;
Eclipx earns management and maintenance fees, ancillary revenue from related products and services and
end of lease income; and
Vehicle rental (Right2Drive) is where Eclipx rents motor vehicles to “not at fault” drivers that have accident
damaged vehicles. Eclipx recognises rental income for the period that the vehicle has been rented and costs
directly associated with the rental will be disclosed under cost of revenue.
Eclipx believes Net Operating Income is a key measure of financial and operating performance for its businesses
as it takes into account the direct costs incurred in generating gross revenue.
The origination of new business is a key driver of profitability and the group targets growth through
business-to-business relationships and online and word of mouth business-to-consumer. The Group drives
profitability by managing revenue, income generating assets, credit quality and operating expenses.
25
DIRECTORS’ REPORT 4.
Review of operations (continued)
The core capabilities of Eclipx are:
Vehicle, fleet
and asset
management
Eclipx supports its core vehicle fleet leasing activities by offering customers a broad
range of vehicle management services, including initial vehicle procurement, ongoing
maintenance, supply management and contract amendments during and at the end
of a lease. Eclipx also enhances the value of its products and quality of service to
customers by leveraging economies of scale and relationships with third party suppliers.
Credit risk
assessment and
management
Treasury and
access to
funding
Residual
value risk
management
Technology
Eclipx draws on nearly 30 years of operating experience, a wealth of proprietary
data (including customer credit performance, arrears management, loss rates, and
recovery rates), and external credit reporting data from local credit bureaus, to assess
the credit risk of customers. The proprietary data and experience assists Eclipx in
pricing transactions and estimating the quantum of potential credit losses. Eclipx’s
credit risk assessment team operates independently from the sales teams with
established processes to ensure formal credit policies are followed. Technology and
credit scorecards are used to enable prompt credit decision making and control the
consistency of assessment.
Eclipx needs access to funding in order to purchase vehicles that it leases to its
customers. Eclipx utilises facilities called warehouse facilities (which in turn may
be refinanced through the issuance of asset backed securities), corporate debt
and cash. In the broker funding model, Eclipx arranges funding for customers from
third party banks and other funders (under principal and agency arrangements
or introducer arrangements).
Eclipx typically sells a vehicle at the end of the lease and seeks to recover net proceeds
equal to or greater than the residual value. In order to manage residual value risk, Eclipx
seeks to estimate accurately future used car values with the assistance of a proprietary
algorithm, actively monitor car usage and maintenance to manage in-life lease
modifications and maximise end of lease sale proceeds.
Customer-focused technology solutions and innovation are critical components
of Eclipx’s business model. They assist Eclipx in providing a competitive and attractive
proposition to customers. Technology solutions are focused both on delivering value
or services to customers (e.g. through faster processing times), and on streamlining
internal operations to improve efficiency and risk management. Eclipx has commenced
and is intending to continue to drive efficiency improvements to make IT innovation
a competitive advantage by upgrading and consolidating IT platforms, infrastructure
and apps.
Sales and
distribution
Eclipx seeks to create a customer-centric, service-driven, culture, supported by aligned
commission and incentive structures for staff, and a multi-channel and multi-brand sales
and customer acquisition strategy.
26
ECLIPX GROUP LIMITED ANNUAL REPORT 2016DIRECTORS’ REPORT 4.
Review of operations (continued)
Group Financial Performance
The table below shows the key financial performance metrics for the 2016 financial year of the Group and
its segments:
Australia
Commercial
Australia
Consumer
Total
New Zealand
Commercial
Total
2016
$’m
2015
$’m
2016
$’m
2015
$’m
2016
$’m
2015
$’m
2016
$’m
2015
$’m
2016
$’m
2015
$’m
112.4
110.3
45.1
25.9
157.5
136.2
38.8
34.8
196.3
171.0
(1.7)
(1.5)
(0.6)
(0.3)
(2.3)
(1.8)
(0.3)
(0.3)
(2.6)
(2.1)
Net operating income
before operating expenses
after impairment charges
Depreciation and
amortisation of non financial
assets
Operating expenses
(54.9)
(57.2)
(30.9)
(16.8)
(85.8)
(74.0)
(22.3)
(19.7)
(108.1)
(93.7)
Profit before tax,
non-recurring costs
and interest
Holding company debt
interest
Adjustments and
amortisation of
intangible assets
Tax
Statutory net profit
after tax
Material one-off
adjustments not reflecting
ongoing operations
(post tax)
Intangibles amortisation
(post tax)
Cash net profit after tax
55.8
51.6
13.6
8.8
69.4
60.4
16.2
14.8
85.6
75.2
(3.8)
(4.0)
(1.2)
(0.7)
(5.0)
(4.7)
(2.3)
(2.1)
(7.3)
(6.8)
(7.6)
(13.1)
(24.4)
(6.6)
(5.4)
(2.1)
(4.3)
(1.1)
(13.0)
(15.2)
(28.7)
(7.7)
(0.5)
(3.7)
(1.8)
(2.7)
(13.5)
(18.9)
(30.5)
(10.4)
31.3
16.6
4.9
2.7
36.2
19.3
9.7
8.2
45.9
27.5
2.7
14.3
2.6
36.6
2.8
33.7
2.5
1.3
8.7
2.5
0.5
5.7
5.2
16.8
0.1
3.9
45.3
3.3
39.4
0.2
10.0
0.9
0.1
9.2
5.3
17.7
4.1
55.3
3.4
48.6
Whilst a non-IFRS measure, cash net profit after tax (Cash NPATA) reflects net profit after tax adjusted for the after tax effect of the amortisation of
intangible assets and material one off adjustments or costs that do not reflect the ongoing operations of the business. The material one off adjustment
for 2016 is for costs associated with acquisitions and significant debt and business restructuring. The adjustment for 2015 relates to costs that existed
in the business prior to the initial public offer which no longer exist in the business and costs associated with the initial public offer.
Net operating income before operating expenses after impairment charges
Net operating income before operating expenses after impairment charges is $25.3m favourable to the prior
period. The favourable variance has been achieved by: an increase in the volume of new business writings;
the integration of the Right2Drive and FleetSmart acquisition; an increase in selling prices of vehicles that have
been returned at the end of the lease; and additional revenue being received from the sale of related products
and services. The Group continues to experience pressure on interest and revenue margin as it continues to grow
through FleetPartners and FleetPlus in the large corporate and government sectors.
Operating expenses
Operating expenditure has increased $14.4m compared to the prior period. The increase in operating expenditure
is predominantly as a result of the incremental costs associated with Right2Drive and FleetSmart.
27
DIRECTORS’ REPORT 4.
Review of operations (continued)
Holding company debt interest
The increase of $0.5m to the prior period is as a result of the incremental borrowings under the facility.
The amounts drawn under the facility increased from $100.0m to $130.0m.
Adjustments and amortisation of intangible assets
The Group incurred costs that are not reflective of the Group net profit relating to the ongoing operations of the
business. The adjustments for 2016 relate to costs incurred as a result of the business acquisitions of Right2Drive
and FleetSmart, restructuring of the business and the costs incurred in early terminating the existing corporate
debt originated in 2015. The table below shows the value of adjustments for 2016 and 2015:
Cost description
Transaction and restructuring costs
Contingent consideration
Capital structure
Replacement of holding company debt
Amortisation of intangibles
2016
$’m
5.1
–
–
2.5
5.9
13.5
2015
$’m
14.7
(1.4)
12.5
–
4.7
30.5
The transaction and restructuring costs for 2015 predominantly relates to costs associated with the initial public
offering and acquisitions of CarLoans and FleetPartners New Zealand. The capital structure costs for 2015 relate
to costs to support the capital structure of the Group prior to being listed on the Australian Securities Exchange.
Statutory net profit after tax
The statutory profit for 2016 has increased to $45.9m; this represents a growth of $18.4m against the prior period.
The predominant factors attributed to this growth are:
Increase in the value of new business writings as the Group continues to expand into the large corporate and
government sectors;
Expansion through acquisition of Right2Drive and FleetSmart;
Decrease in significant non-recurring costs; and
Management of operating costs.
Cash net profit after tax
Eclipx has increased Cash NPATA by $6.7m or 13.8%. This was achieved by increasing net operating income and
managing the increase in operating expenses.
28
ECLIPX GROUP LIMITED ANNUAL REPORT 2016DIRECTORS’ REPORT 4.
Review of operations (continued)
Segment results
In the accompanying financial report and consistent with prior periods, Eclipx has identified and disclosed the
results of three operating segments:
Australia Commercial
Australia Consumer
New Zealand Commercial
Description
Brands
Vehicles under
management
or financed
(VUMOF)
Vehicle fleet leasing
and management
business in Australia.
Commercial
equipment finance
and leasing.
Eclipx has
a diversified funding
structure which
includes multiple
funding parties.
FleetPartners
FleetPlus
Eclipx Commercial
Online broker
facilitating consumer
financing for vehicles
in Australia.
Consumer novated
leasing business
in Australia.
Medium term rental
to “not at fault
drivers”.
Vehicle fleet leasing
and management
business in New
Zealand.
Used vehicle retail
sales.
Medium term rental
to “not at fault
drivers”.
FleetPartners
FleetPlus
FleetChoice
CarLoans.com.au
Right2Drive
FleetPartners
FleetPlus
AutoSelect
CarLoans.co.nz
Right2Drive
49.9%
20.1%
30.0%
Number of vehicles
49,487
19,981
29,786
Net operating income
after bad debts
before operating
expenses
57.2%
23.0%
19.8%
$m
$112.4m
$45.1m
$38.8m
Contribution
to Cash NPATA
66.2%
15.7%
18.1%
$m
$36.6m
$8.7m
$10.0m
29
DIRECTORS’ REPORT 4.
Review of operations (continued)
Australia Commercial
The Australia Commercial segment has contributed 66.2% (2015: 69.1%) to the Cash NPATA of the Group.
The segment has seen growth in new business writings of 15.0%. The segment has reported a net operating
income of $112.4m which is $2.1m favourable to the amount reported for 2015.
Continued focus on the customer, building on our customer relationships and competitive pricing has allowed
the business to experience growth in new business writings. The segment has been successful in increasing its
market share with large corporates and has been successful in joining the panel for NSW state fleets.
Technology and operational improvements initiatives have allowed the segment to decrease its operational
expenses by $2.3m, which combined with the increase in net operating income has allowed the segment
to grow Cash NPATA by 8.6%.
Eclipx Commercial has achieved a 37.8% growth in new business writings. Eclipx Commercial has allowed the
Group to expand the product offering on financing to include non-vehicle assets; this continues to provide
opportunities for cross selling finance and introducing new clients to the Group.
Australia Consumer
This segment has contributed 15.7% (2015: 11.8%) to the Cash NPATA of the Group. The net operating income of
$45.1m (2015: $25.9m) which represents a growth of $19.2m against the prior period was predominantly as a result
of the Right2Drive acquisition and the growth in CarLoans.com.au.
The segment was able to achieve a growth of 16.0% in new business writings, this was achieved through:
Amending of the work hours of the CarLoans.com.au workforce;
Restructuring the sales team to maximise on existing relationships and the skills of people in the organisation;
and
Widening the delivery channel to our customers.
New Zealand Commercial
The New Zealand Commercial segment has contributed 18.1% (2015: 19.1%) to the Cash NPATA of the Group.
The vehicles under management or financed for New Zealand has increased by 10,742 as a result of the
acquisition of FleetSmart and growth in the historical FleetPartners and FleetPlus businesses. New Zealand
continues to grow its strategic relationships so as to provide co-branded operating lease products to new
vehicle sales outlets.
AutoSelect, the retail sales channel continues to outperform the wholesale disposal options.
Financial position
5.
The Group financial position as at 30 September 2016 is summarised below:
Summary of financial position
Cash and cash equivalents
Restricted cash and cash equivalents
Receivables and inventory
Leases
Intangibles
Other
Total assets
Borrowings
Trade and other liabilities
Other
Total liabilities
Net assets
30
2016
$’m
60.9
117.4
115.9
1,348.4
597.4
20.5
2,260.5
1,415.0
128.7
58.0
1,601.7
658.8
2015
$’m
58.1
106.4
83.3
1,153.9
504.8
22.9
1,929.4
1,231.2
96.4
49.7
1,377.3
552.1
ECLIPX GROUP LIMITED ANNUAL REPORT 2016DIRECTORS’ REPORT 5.
Financial position (continued)
Receivables and inventory
Receivables have predominantly increased as a result of the acquisition of Right2Drive and FleetSmart, coupled
with an increase in the amounts being invoiced on a monthly basis to fleet customers that are payable within
their contract terms.
Leases
Leases have increased against the prior period by $194.5m or 16.9%. This increase is attributable to the increased
business writings that have been experienced across the entire Group. The increased business writings and
increased income generating assets have created a base for profit in the coming years as the business derives
annuity income on these assets over the remaining contractual term. The lower bad debt provisions and portfolio
impairments are an indication of the quality of assets included in these numbers. The provision for impairment
held against operating leases for 2016 is $5.1m (2015: $10.1m).
Borrowings
Borrowings for 2016 include an amount of $130.0m relating to corporate debt. The remaining amount of $1,285.0m
relates to funding directly associated with leases and inventory. The value of borrowings has increased in line
with the increase in leases.
Cash flows
For the financial year ended 30 September 2016, the Group increased the total cash holdings including restricted
cash by $13.7m.
The significant items impacting cash flow this year were:
An increase in finance and operating leases and inventory which were partially funded through cash;
The payment of dividends; and
Additional investment in software, plant and equipment and fixture and fittings.
Funding
Eclipx looks to optimise the funding facilities that it has in place. Eclipx maintains committed funding facilities
to cater for the forecasted business growth and as at 30 September 2016, Eclipx had undrawn debt facilities
of $405.0m.
For leasing finance facilities where Eclipx acts as the funder, funding will be provided by a combination of
warehouse and asset backed securitisation funding structures. Funders (major trading banks and institutional
investors) provide financing to a special purpose vehicle established by Eclipx which is used to fund the purchase
of assets that are to be leased to customers. These facilities are also known as revolving warehouse facilities
because they can be drawn and repaid on an ongoing basis up to an agreed limit subject to conditions. A group
of assets funded via a warehouse facility can be pooled together and refinanced by issuing securities (backed
by those assets) to investors in public wholesale capital markets (such as domestic and international banks and
institutional funds).
During the 2016 financial year Eclipx:
Replaced the corporate debt facility;
Rolled over all warehouse facilities; and
Established an additional warehouse facility for the financing of state government leases.
31
DIRECTORS’ REPORT Business strategic objectives
6.
Eclipx is focussed on improving business performance through a focus on enhancing and building on customer
relationships, enhancement and development of technology, growth in the consumer segment and acquisitions.
Strategic objective
Execution
To grow the market share in the
fleet business.
Three year compound annual growth rate in new business writings
of 19%.
Expanded into the state government and large corporate markets.
Diversify into adjacent markets.
Diversified through the acquisitions of CarLoans and Right2Drive.
Established the Eclipx Commercial business.
Leverage the Group’s
funding expertise to improve
competitiveness.
Standalone warehouses to fund equipment finance, consumers and
state government to optimise funding rates and capital structures.
Diversified funding sources to allow expansion.
The Group has refinanced the corporate debt facility.
Utilisation of efficiencies of scale
and cross selling.
Introduction of telematics devices to assist clients in fleet management
to reducetheir operating costs.
Cross selling of equipment finance, operating leases and novated leases
to clients.
The Group has leveraged the scale of the organisation to realise supply
chain improvements.
Key risks
7.
The key risks facing Eclipx are those risks that will have an impact on the financial performance and the execution
of the strategy.
Key risk
Mitigating Factors
Eclipx may inaccurately set and
forecast vehicle residual values
and there may be unexpected
falls in used vehicle prices.
Eclipx performs a monthly portfolio revaluation using market
information on all assets where Eclipx is at risk on the residual value
and any impairment identified is immediately recognised.
Residual values are reviewed regularly by the pricing and risk team
and adjusted based on market information and actual performance.
Eclipx may be exposed to
increased funding costs due
to changes in market conditions.
Eclipx has a diversified funding structure which includes multiple
funding parties.
Funding margins are negotiated and agreed on an annual basis.
Eclipx will have the ability to charge any margin increase onto new
business that is written in the year.
Eclipx is exposed to credit risk.
Eclipx has a dedicated credit team that assesses risk drawing on
nearly 30 years of operating experience, a wealth of proprietary data
(including customer credit performance, arrears management, loss
rates, and recovery rates), and external credit reporting data from local
credit bureaus.
Eclipx has diversified the consumer segment to include non-novated
services so as to provide alternative product offerings to consumers.
Eclipx has a diversified funding structure which includes multiple
funding parties.
Funding facilities are negotiated and agreed on an annual basis.
Eclipx mitigates the interest rate risk by hedging the portfolio and
funding is provided based on the contractual maturity of the lease.
Eclipx may be affected by
changes in fringe benefits tax
legislation in Australia.
Eclipx may be unable to access
funding on competitive terms.
32
ECLIPX GROUP LIMITED ANNUAL REPORT 2016DIRECTORS’ REPORT 8. Outlook
For the financial year ended 30 September 2016 Eclipx has been able to exceed the targets set in terms
of its financial performance, growth of assets under management or financed and growth in the customer
and client base.
For the 2017 financial year Eclipx is forecasting to achieve growth in Cash NPATA and this will be achieved by:
Growing the volume of new business writings in all segments;
Managing the competitive price pressures experienced in the market;
Consolidation of platforms and processes;
Realising efficiencies of the Group;
Investing in technology; and
Growing the presence of Eclipx in the market.
Subsequent events
9.
On 27 October 2016, the Group entered into an agreement to acquire Anrace Pty Ltd trading as Onyx Car Rentals
(Onyx). The transaction is expected to complete on or about 15 November 2016. On completion, the Group will
acquire all of the share capital of Onyx for a consideration of $9.8m which will be settled with available cash.
On 1 November 2016 the Board declared a fully franked dividend of 7.00 cents per share.
Except for the matters disclosed above, no other matter or circumstance has occurred since the end of the
reporting period that may materially affect the Group’s operations, the results of those operations or the Group’s
state of affairs in future financial years.
10. Changes in state of affairs
During the financial year, there was no significant change in the state of affairs of the Group other than that
referred to in the financial statements or notes thereto.
Environmental factors
11.
Eclipx is not subject to any significant environmental regulation under Australian Commonwealth or State Law.
Eclipx recognises its obligations to its stakeholders (customers, shareholders, employees and the community)
to operate in a way that lowers the impact it and its customers has on the environment. During the course of
the year Eclipx has worked with funders and customers to support initiatives on improving their carbon footprint.
12. Dividends
Dividends paid during the financial year were as follows:
Fully franked final dividend for the year ended 30 September 2015 of 6.50 cents per ordinary
Fully franked final dividend for the year ended 30 September 2015 of 6.50 cents per
ordinary share paid on 29 January 2016.
Fully franked interim dividend for the year ended 30 September 2016 of 6.75 cents per
ordinary share paid on 30 June 2016.
2016
$’000
15,613
16,287
31,900
2015
$’000
–
–
–
On 1 November 2016, the Directors declared a fully franked final dividend for the year ended 30 September 2016
of 7.00 cents per ordinary share, to be paid on 20 January 2017 to eligible shareholders on the register
as at 30 December 2016. This equates to a total estimated dividend of $18,513,851 based on the number of
ordinary shares on issue as at 30 September 2016. The financial effect of dividends declared after the reporting
date are not reflected in the 30 September 2016 financial statements and will be recognised in subsequent
financial reports. The Group will offer a Dividend Reinvestment Plan at a 1.5% discount with no participation limits.
33
DIRECTORS’ REPORT Indemnification of Directors and Officers
13.
The Directors and Officers of Eclipx are indemnified against liabilities pursuant to agreements with Eclipx. Eclipx
has entered into insurance contracts with third party insurance providers, in accordance with normal commercial
practices. Under the terms of the insurance contracts, the nature of the liabilities insured against and the amount
of premiums paid are confidential.
14. Non audit services
KPMG, the external auditors of Eclipx provided non audit services during the financial year end 30 September
2016. The role of the external auditor is to provide an independent opinion that the financial reports are true
and fair and that they comply with applicable regulations. The Audit and Risk Committee have implemented
processes and procedures to review the independence of the external auditors and to ensure that they may
only provide services that are consistent with their role of external auditor.
Following review of the services provided by KPMG for the year ended 30 September 2016 the Directors are
satisfied that the provision of non-audit services is compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001 in view of the nature and amount of the services provided, and
that all non-audit services were subject to the corporate governance procedures adopted by the Company.
The fees paid or payable for non-audit services provided by KPMG were as follows:
Non audit services
Transactional services including IPO
Debt restructuring
Reporting and limited assurance engagements
Tax services
2016
$
2015
$
179,134
1,560,878
540,000
60,000
–
779,134
226,939
1,787,817
A copy of the auditor’s independence declaration is set out on page 35 on this financial report, and forms part
of the Directors Report.
15. Rounding of amounts
The company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports} Instrument
2016/191, issued by the Australian Securities and Investments Commission, relating to the “rounding off” of
amounts in the Directors’ Report and the Financial Report. Amounts, unless otherwise stated, have been rounded
off to the nearest whole number of thousands of dollars.
This Directors’ Report is signed on behalf of the Directors in accordance with the resolution of Directors made
pursuant to section 298(2) of the Corporations Act 2001.
Doc Klotz
Chief Executive Officer
Kerry Roxburgh
Chairman
Sydney
1 November 2016
34
ECLIPX GROUP LIMITED ANNUAL REPORT 2016DIRECTORS’ REPORT ABCD
Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001
To: the directors of Eclipx Group Limited
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial
year ended 30 September 2016 there have been:
(i)
(ii)
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the
audit.
KPMG
Andrew Dickinson
Partner
Sydney
1 November 2016
KPMG, an Australian partnership and a member
firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity.
Liability limited by a scheme
approved under Professional
Standards Legislation.
35
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.
LEAD AUDITOR’S INDEPENDENCE DECLARATION 30 September 2016
Dear Shareholders
On behalf of the Board, I am pleased to present Eclipx Group Limited’s (Group) FY2016 remuneration report.
The year finished strongly, with positive growth in cash earnings per share, net profit after tax and amortization,
assets under management or finance and new business writings. Executive Key Management Personnel
(Executive KMP) achieved or exceeded the majority of their key performance indicator targets, which is reflected
in the short-term incentive awards. No long-term incentive (LTl) awards vested during 2016, as the first grants of
LTl awards made at IPO are due to vest in FY2017.
We reviewed our Executive KMP remuneration structure during FY2016 and determined that current
arrangements remain aligned with the Group’s business strategy, focus on relative shareholder returns and our
growth in earnings per share, are market competitive, and appropriately motivate, retain and reward Executive
KMP. The Board will keep the Group’s remuneration arrangements under review, to ensure Executive KMP
continue to be strongly aligned with shareholder interests.
I look forward to the opportunity to discuss the Report with shareholders at the Group’s Annual General Meeting
in February 2017.
Yours faithfully
Gail Pemberton
Chair of the Remuneration and Nomination Committee
1 November 2016
36
ECLIPX GROUP LIMITED ANNUAL REPORT 2016LETTER FROM REMUNERATION AND NOMINATION COMMITTEE (UNAUDITED) The Remuneration and Nomination Committee (Committee) of the Board presents the Eclipx Group Limited
Remuneration Report (Report) for the year ended 30 September 2016 (FY2016).
The Report has been audited as required by section 308(3C) of the Corporations Act 2001 and is presented in the
following sections:
Introduction
1.
2. Remuneration governance
3. Link to strategy
4. Remuneration framework
5. Performance against key metrics
6. Non-executive directors fees
7. Service agreements
8. Executive KMP remuneration disclosures
9. Equity instruments
10. Loans
11. Other transactions
Introduction
1.
The Report outlines the Group’s approach to remuneration, its link to the Group’s business strategy, and
how performance has been reflected in the remuneration outcomes for Key Management Personnel (KMP).
This report covers the KMP of the Group, who are the people responsible for determining and executing
the strategy. This Group is comprised of both Executive KMP (CEO/MD, Deputy CEO/CFO and COO), and
Non-Executive Directors. For the purposes of this Report, the term “Executive KMP” covers both Executive
Directors and Senior Executives that are KMP of the Group.
For the year ended 30 September 2016, the KMP were:
KMP
Position
Term as KMP
Non-Executive Directors
Kerry Roxburgh
Gregory Ruddock
Gail Pemberton
Trevor Allen
Russell Shields
Executive Directors
Doc Klotz
Garry McLennan
Senior Executive
Jeff McLean
Independent Chairman
Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Full Year
Full Year
Full Year
Full Year
Full Year
Chief Executive Officer and Managing Director
Deputy Chief Executive Officer and Chief Financial Officer
Full Year
Full Year
Chief Operating Officer
Full Year
37
REMUNERATION REPORT (AUDITED) Remuneration governance
2.
The committee consists of three Independent Non-Executive Directors:
Ms Gail Pemberton (Committee Chair);
Mr Kerry Roxburgh; and
Mr Trevor Allen.
The following diagram demonstrates how the Board, Committee, Remuneration Advisors and Management
interact to set the remuneration structure and determine remuneration outcomes for the Group:
Board
The Board oversees the Group’s Remuneration Policy
Remuneration and Nomination Committee
The Committee is responsible for making recommendations to the Board in relation to the Remuneration Policy.
This may include recommendations in relation to:
Remuneration strategy;
The appointment, performance and remuneration of Non-Executive Directors, Executive Directors and
Senior Executives; and
The design and positioning of remuneration elements, including fixed and “at risk” pay, equity-based
incentive plans and other employee benefits programs.
Remuneration Advisors
Management
The Committee has appointed Ernst & Young (EY)
as the external remuneration advisor to the Group.
EY provides independent advice in relation to:
Market remuneration practices and trends;
Regulatory frameworks; and
The valuation and vesting of equity awards.
No remuneration recommendations (as defined
by the Corporations Act 2001) were requested
or provided from EY or any other advisors.
The Chief Executive Officer and Managing Director
is responsible for making recommendations to
the Remuneration and Nomination Committee
in relation to the remuneration of the Deputy CEO
and CFO and Senior Executives.
38
ECLIPX GROUP LIMITED ANNUAL REPORT 2016REMUNERATION REPORT (AUDITED) Link to strategy
3.
The Group’s remuneration strategy supports rewarding outperformance in areas critical to the achievement
of Group strategy. This is achieved by attracting and retaining talented people who are motivated to achieve
challenging performance targets aligned with both the business strategy and the long-term interests of
shareholders. The following diagram illustrates the link between business strategy and remuneration outcomes:
Strategy
The Eclipx Strategy is to grow by:
Transforming its business activities into an online fleet management and customer financial
solutions business;
Growing the consumer business and expanding into other adjacent consumer markets in the medium
term;
Leveraging capabilities and commercial customer relationships to organically grow businesses; and
Leveraging management’s expertise and experience in acquisitions, integration and monetization
to participate in further industry consolidation where appropriate.
The Eclipx Remuneration Strategy seeks to:
1. Deliver sustainable shareholder value by:
Remuneration Strategy
– Ensuring there is a significant ‘at-risk’ component of total remuneration;
– Assessing performance and the short term incentive (STI) plan outcomes against financial and
non-financial KPIs linked to the Eclipx Strategy; and
– Aligning long term incentive (LTI) plan performance hurdles with targeted shareholder returns.
2. Attract, retain and motivate talent by:
– Ensuring the remuneration strategy is simple, transparent and consistently applied;
– Offering a competitive total remuneration opportunity;
– Rewarding superior performance; and
– Providing the opportunity for wealth creation through the LTI plan.
Link to Performance
Remuneration outcomes are linked to performance through:
Requiring a significant portion of executive remuneration to be “at risk”;
Applying a profitability gateway that must be achieved before any STI payment is made to Executive KMP;
Applying challenging financial and non-financial KPIs to measure short and long term performance; and
Ensuring that KPIs focus on strategic business objectives designed to deliver shareholder value.
39
REMUNERATION REPORT (AUDITED) 4.
Remuneration framework
Remuneration components and outcome
(i)
Fixed remuneration
What is included in
fixed remuneration?
Fixed remuneration comprises base salary, non-monetary benefits and
superannuation.
How is fixed
remuneration
determined?
Fixed remuneration for the Executive KMP group is determined with reference
to comparable roles in companies which have a similar market capitalisation, operate
in a similar industry, and have similar growth aspirations to Eclipx. Fixed remuneration
for each individual is set based on their experience and the value they bring to the
Group.
(ii)
Short term incentives
The following table outlines the major features of the FY2016 STI plan
What is the purpose
of the STI?
To motivate and reward participants for achieving specific measurable financial and
non-financial results which link pay to performance and hence contribute to the
achievement of the Eclipx strategy.
Who is eligible
to participate in the
STI plan?
Eligibility to participate in the STI plan is determined by the Board. All Executive KMP
participated in the FY2016 STI plan.
How is performance
evaluated?
The Committee is responsible for making recommendations to the Board regarding
the performance and ‘at risk’ remuneration of Executive KMP.
Is there a minimum
profit gateway?
At least 95% of the Group’s profitability target must be achieved before any right
to an award will be available to Executive KMP. Once this gateway is achieved the
percentage achievement of KPIs will determine individual STI outcomes.
What are the
FY2016 KPIs?
The FY2016 KPIs were set as follows:
55% weighting to the Group Financial KPI
30% weighting to People, Customer and Strategy KPIs
15% to individual KPIs which included financial and operational deliverables
All KPIs are set to be challenging and represent a significant achievement.
Why were these
KPIs chosen?
The combination of KPIs was chosen because the Board believes that there needs
to be a balance between financial measures and those metrics which support the
Group’s long term strategy and determines future returns for shareholders.
What is the
maximum STI
opportunity?
Executive KMP may not currently receive more than their target STI amount.
How is the award
delivered?
Awards are paid in cash following the finalisation of the audited year-end financial
statements.
40
ECLIPX GROUP LIMITED ANNUAL REPORT 2016REMUNERATION REPORT (AUDITED) 4.
Remuneration framework (continued)
Remuneration components and outcome (continued)
(ii)
Short term incentives (continued)
FY2016 Performance Outcomes
The minimum profit gateway (95% of Cash NPATA) was achieved for FY2016, allowing for an individual’s STI
award to be calculated based on their achievement of certain KPIs.
The table below outlines the KPIs that applied to the Executive KMP in FY2016, and the level of achievement
against each respective KPI. 85% of KPIs are shared (i.e., Financial, People, Consumer and Strategy), with the
remaining 15% based on individual KPIs.
KPI
Weighting
Level of achievement
Financial: Cash NPATA
People: Employee engagement
Customer: Net promoter score (NPS)
Strategy: Strategy and risk deliverables
55%
10%
10%
10%
Exceeded target
Between threshold and target
Exceeded target
At target
Individual: Financial and operational deliverables
15%
The majority of individual KPIs were
achieved or exceeded by each Executive KMP
FY2016 STI Outcomes
The following table outlines the STI awarded to each Executive KMP for FY2016:
Name
Executive Directors
Doc Klotz
Garry McLennan
Senior Executive
Jeff McLean
Target STI
opportunity
for FY2016
STI opportunity as %
of fixed remuneration
Minimum
Target
STI earned
as % of target
STI forfeited
as % of target
$850,000
$700,000
$212,500
0%
0%
0%
100%
100%
50%
94%
95%
94%
6%
5%
6%
41
REMUNERATION REPORT (AUDITED) 4.
Remuneration framework (continued)
Remuneration components and outcome (continued)
(iii)
Long term incentives
The following table outlines the major features of the FY2016 LTI plan
What is the purpose
of the LTI plan?
Who is eligible to
participate in the
plan?
When was the grant
made?
The Group established an LTI plan to assist in the motivation, retention and reward
of key employees. The LTI plan is designed to align participants’ efforts with the
interests of shareholders by providing participants with exposure to Eclipx Group
Limited shares.
Eligibility to participate in the LTI plan is determined by the Board. All Executive KMP
participated in the FY2016 LTI plan.
The FY2016 LTI grant was made to Senior Executives on 10 November 2015. The
Executive Director grants were approved at the Annual General Meeting and granted
on 19 February 2016.
What performance
period applies?
Awards made under the LTI Plan are subject to a three year performance period
commencing on the first day of the applicable financial year (Performance Period).
The FY2016 LTI performance period commenced on 1 October 2015 and will conclude
on 30 September 2018.
How is the LTI
delivered?
The LTI is provided through a mix of Rights and Options (Award). The number of
Rights and Options granted in respect of each Award is determined by the Board.
The exercise price for the FY2016 Options was set at $3.06 which represented the
share price on 10 November 2015.
Dividends are not payable on the Award.
The Award is subject to the following equally weighted performance hurdles:
a) Relative Total Shareholder Return (TSR) versus Comparator Group (50% of total
grant); and
b) Absolute Earnings per Share (EPS) Growth (50% of total grant).
Relative TSR component
The percentage of Awards comprising the relative TSR component that vests, if any,
will be based on the Company’s TSR ranking against the constituents of the ASX 200
(excluding GICS Industry “Metals & Mining” companies) over the Performance Period.
Relative TSR percentile ranking
% of relative TSR hurdled Awards that
vest
Below the 51st percentile
At the 51st percentile
Nil
50%
Between the 51st and 75th percentile
Straight line pro rata vesting between
50% and 100%
At or above the 75th percentile
100%
Absolute EPS component
The Board reviews the target prior to every grant to ensure alignment with the
business strategy. The targets have been set with reference to market expectations
and in line with key industry competitors.
For the FY2016 Award, the percentage of Awards subject to the Cash EPS hurdle that
vest, if any, will be determined based on the Group’s compound annual growth in Cash
EPS over the Performance Period by reference to the “base year” Cash EPS. FY15 will be
the base year for Awards granted under the FY16 LTI Offer. Accordingly, to determine
the growth in Cash EPS, the Cash EPS achieved in FY18 will be compared to Cash EPS
achieved in FY15, and the level of compound annual growth (stated as a percentage)
will determine the proportion of the Cash EPS hurdled Awards that vest.
Are dividends
paid during the
performance period?
What performance
hurdles need
to be met?
42
ECLIPX GROUP LIMITED ANNUAL REPORT 2016REMUNERATION REPORT (AUDITED) 4.
Remuneration framework (continued)
Remuneration components and outcome (continued)
(iii)
Long term incentives (continued)
What performance
hurdles need
to be met? (cont)
The Group’s annual compound Cash
EPS growth rate
Below 7% compound annual growth
At 7% compound annual growth
Between 7% and 10% compound
annual growth
% of Cash EPS hurdled Awards that vest
Nil
50%
Straight line pro rata vesting between
50% and 100%
At or above 10% compound annual growth
100%
How are the
performance
awards valued?
The TSR hurdled Awards are valued via the Monte-Carlo simulation method. TSR
has been chosen as a performance hurdle because it provides a direct link between
executive reward and shareholder return (relative to the Group’s peers). Testing will
be completed by an independent expert at the end of each vesting period.
The Cash EPS hurdle is valued via the Binominal tree method and has been chosen
as it provides evidence of the Group’s growth in earnings and is directly linked to
shareholder returns and the Group’s overall strategic objectives. Testing will be
completed against the audited financial accounts at the end of each vesting period.
Is retesting
available for any
of the performance
hurdles?
If, as a result of exceptional circumstances, Awards subject to the 50% TSR
component only do not vest in full during the first Performance Period, they have
the opportunity for a single retest over an extended performance period ending
12 months after the completion of the first Performance Period.
Retesting was introduced upon listing in 2015 due to the volatility of the share price
and the market. The Board determined that retesting continued to be appropriate for
the FY2016.
What happens if
an Executive KMP
ceases employment?
Where an Executive KMP ceases employment defined by the Group as resignation
or termination for cause, any unvested LTI Awards (or vested and unexercised
Awards) are forfeited, unless otherwise determined by the Board.
What happens if
there is a change
of control?
Where an Executive KMP ceases employment for any other reason, unvested
Awards will continue “on-foot” and will be tested at the end of the original vesting
period. Note that the Plan Rules provide the Board with discretion to determine that
a different treatment should apply at the time of cessation, if applicable.
A change of control occurs where, as a result of any event or transaction, a new
person or entity becomes entitled to a significant percentage of shares in the Group.
In the event of a change of control of the Group the following treatment will apply:
Upon a 50% change of control, all unvested Awards will vest in full;
Upon a 30% change of control, all unvested Awards will vest in full, unless, prior
to the 30% change of control occurring, the Board determines otherwise.
FY2016 LTI Outcomes
No LTI Awards vested during the FY2016 business year.
43
REMUNERATION REPORT (AUDITED) 4.
Remuneration framework (continued)
Remuneration components and outcome (continued)
(iii)
Long term incentives (continued)
Executive KMP Remuneration Opportunity Mix
Each Executive KMP has a remuneration opportunity mix that consists of fixed and ‘at-risk’ remuneration.
The ‘at-risk’ remuneration opportunity comprises a STI opportunity and LTI grant.
The relative mix of the three remuneration components is determined by the Board on the recommendation of
the Committee.
The components are reviewed on an annual basis and quantum set to recognise the responsibilities of each role.
The remuneration opportunity mix that applied for FY2016 is set out below:
Executive KMP Remuneration Opportunity Mix
Doc Klotz
37%
37%
26%
Garry McLennan
35%
35%
30%
Jeff McLean
31%
15%
54%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Fixed remuneration
STI Maximum
LTI Grant
Note: The FY2016 LTI grant to Mr McLean reflects that he did not receive an LTI grant at the time of the IPO.
Performance against key metrics
5.
The following table provides information on FY2016 performance against key metrics:
Consolidated
Cash NPATA ($’000)
Cash EPS (cents)
Share price at the beginning of the year
Share price at the end of the financial year
Change in share price
Dividend paid (cents)
1 Represents offer price from IPO.
2015
48,585
20.23
$2.30 1
$3.01
30.9%
n/a
2016
55,330
22.19
$3.01
$4.07
35.2%
13.25
44
ECLIPX GROUP LIMITED ANNUAL REPORT 2016REMUNERATION REPORT (AUDITED) 6. Non-executive director fees
Fees paid to Non-Executive Directors reflect the demands and responsibilities of each position. Fees are
benchmarked against an appropriate group of comparator companies and determined within the approved
aggregate Directors’ fee pool limit of $1.4 million per annum. Non-Executive Directors do not receive variable
remuneration and base fees are inclusive of mandatory superannuation contributions.
There were no changes to Non-Executive Director fees during FY2016 and the following fee structure was
applicable for the full year:
Base fees (per annum)
Chairman (K Roxburgh)
Other Non-Executive Directors
Additional fees (per annum)
Audit and Risk Committee – Chair (T Allen)
Audit and Risk Committee – Member (K Roxburgh, R Shields, G Ruddock)
Remuneration and Nomination Committee – Chair (G Pemberton)
Remuneration and Nomination Committee – Member (K Roxburgh, T Allen)
$250,000
$125,000
$25,000
$12,500
$20,000
$10,000
Non-Executive Director fees for Mr Greg Ruddock are paid to Ironbridge Capital Management Pty Ltd and not
to Mr Ruddock directly.
Share Rights Contribution Plan
The Share Rights Contribution Plan was established to facilitate Non-Executive Director shareholdings in the
Company and improve the alignment of Non-Executive Director interests with those of shareholders.
Under the plan, Non-Executive Directors may elect to sacrifice, on a pre-tax basis, up to 50% of base Director
fees (excluding Committee fees) to acquire share rights. The share rights will not be subject to performance
conditions. However, if a participant ceases to hold office before their share rights convert to shares, all share
rights will lapse and the fee amount sacrificed under the Share Rights Contribution Plan will be returned
to the participant.
During FY2016, all Non-Executive Directors elected to sacrifice the maximum of 50% of base Director fees
to acquire share rights. Subject to the Company’s Securities Trade Policy, the salary sacrifice contributions
are scheduled to be converted into Share Rights in November 2016.
45
REMUNERATION REPORT (AUDITED) 6. Non-executive director fees (continued)
Non-Executive Directors (Cash and Share based payments)
The following table shows details of fees received by the Non-Executive Directors:
Short term benefits
Salary and
fees – value
of share
rights
$ 1
Salary and
fees – cash
$
135,787
130,919
125,000
–
68,493
64,717
89,470
75,307
75,342
68,247
44,308
62,500
–
62,500
–
62,500
–
–
Post-
employment
benefits
Share based
payments
Non-
monetary
$
Super-
annuation
$ 1
Equity
settled
$ 4
Total
$
–
–
–
–
–
–
–
–
–
11,713
9,523
6,507
6,148
8,030
7,154
7,158
6,483
4,515
–
249,999
272,500
390,441
–
124,998
–
124,998
–
124,998
137,500
195,863
160,000
207,459
145,000
199,728
–
48,823
Kerry Roxburgh (Chairman)
FY2016
FY2015 2
Russell Shields
FY2016
FY2015 2
Trevor Allen
FY2016
FY2015 2
Gail Pemberton
FY2016
FY2015 2
Nick Johnson 3
FY2015
1 Salary sacrifice contributions made in respect of the Share Rights Contributions Plan are included as salary and fees. Superannuation contributions
do not apply to the salary sacrifice component.
2 Mr Roxburgh, Mr Shields, Mr Allen and Ms Pemberton commenced as Non-Executive Directors on 26 March 2015.
3 Mr Johnson was a Non-Executive Director until 26 March 2015.
4 Mr Roxburgh, Mr Shields, Mr Allen and Ms Pemberton received a one-off offer of shares, to the value of one year’s base fees, as compensation for
their services and increased workload during the period leading up to the IPO.
46
ECLIPX GROUP LIMITED ANNUAL REPORT 2016REMUNERATION REPORT (AUDITED) Service agreements
7.
The Group’s Executives are employed under ongoing common law contracts. The table below outlines the
employment and termination terms for each Executive.
Service
agreement
Employing
Entity
Notice
period
Serious
misconduct
Termination
entitlement
Restraint of
Trade
Fleet Holdings
(Australia)
Pty Ltd
Six months
by either
party
Immediate
termination
Chief Executive
Officer and
Managing
Director
Deputy Chief
Executive
Officer and Chief
Financial Officer
Chief Operating
Officer
FleetPartners
Pty Ltd
When termination
is initiated by the
Company, up to
six month’s fixed
remuneration may
be paid in lieu of
notice. Payments are
capped at 12 months’
remuneration per
relevant legislative
requirements
12 months
following expiry
of notice period
Six months
following expiry
of notice period
8.
Executive remuneration disclosures
Statutory Remuneration for Executive KMP
The following table shows details of the remuneration received by Executives during FY2016:
Short term benefits
Long term benefits
Cash
bonus
payable
in respect
of current
year
$
Movement
in annual
leave
provision
$ 2
Non-
monetary
$ 3
Super-
annuation
$
Share
based
payments
equity
settled
$
Total
$
Salary
and fees
$
Non-
monetary
$ 1
830,236
834,571
137,036
20,060
14,400
799,000
69,773
850,000
680,236
642,841
5,628
1,686
(36,631)
665,000
82,047
700,000
2,301
3,238
1,872
2,666
19,764
18,698
517,546
2,320,283
176,667
1,973,007
19,764
18,698
517,546
1,853,415
176,667
1,624,605
405,236
382,840
8,463
2,522
22,612
199,750
(6,077)
200,000
1,136
1,146
19,764
18,770
121,059
778,020
–
599,201
Executive Directors
Doc Klotz
FY2016
FY2015
Garry McLennan
FY2016
FY2015
Senior Executive
Jeff McLean
FY2016
FY2015
1 Amount represents car parking, medical insurance, flights home and fringe benefits tax. FY2015 non-monetary values have been revised to separate
the non-monetary amounts from the annual leave provision.
2 Amount represents annual leave provisions. Negative movement indicates leave taken during the year exceeded leave accrued during the current
year. This is to be read in conjunction with Salary and Fees column.
3 Amount represents long service leave provisions.
47
REMUNERATION REPORT (AUDITED) 8.
Executive remuneration disclosures (continued)
Actual Remuneration Received
The following table shows details of the actual remuneration received by Executive KMP in FY2016:
Short term
benefits
Long term
benefits 2
Salary and fees
$ 1
Cash bonus paid
in current year
$
Superannuation
$
Total
$
862,930
830,724
707,161
638,596
850,000
850,000
700,000
600,000
19,765
19,276
19,765
19,276
1,732,695
1,700,000
1,426,926
1,257,872
418,750
379,834
200,000
100,000
19,765
18,553
638,515
498,387
Executive Directors
Doc Klotz
FY2016
FY2015
Garry McLennan
FY2016
FY2015
Senior Executive
Jeff McLean
FY2016
FY2015
1 Salary and superannuation are paid fortnightly and may vary depending on the number of pay cycles within any given year.
2 There were no share based payments that vested during FY2016.
Details of outstanding awards
The maximum value of loan shares that may vest in future years that will be recognised as share-based payments
in future years is set out in the table below. The amount reported is the value of share-based payments
calculated in accordance with AASB2 Share-based payment over vesting period.
KMP
Award type
Performance
condition
Number
of awards
granted
Exercise
price
Fair value
per award
(at grant
date)
$
Fair value
of award
(at grant
date)
$
Vesting
date/first
exercise date
Expiry date
Doc Klotz
Loan shares TSR tranche 1
400,000
TSR tranche 2
400,000
EPS tranche 1
400,000
EPS tranche 2
400,000
Garry McLennan Loan shares TSR tranche 1
400,000
TSR tranche 2
400,000
EPS tranche 1
400,000
EPS tranche 2
400,000
$2.30
$2.30
$2.30
$2.30
$2.30
$2.30
$2.30
$2.30
0.57
0.63
0.59
0.63
0.57
0.63
0.59
0.63
228,000 21 April 2017 21 April 2020
252,000 21 April 2018 21 April 2020
236,000 21 April 2017 21 April 2020
252,000 21 April 2018 21 April 2020
228,000 21 April 2017 21 April 2020
252,000 21 April 2018 21 April 2020
236,000 21 April 2017 21 April 2020
252,000 21 April 2018 21 April 2020
48
ECLIPX GROUP LIMITED ANNUAL REPORT 2016REMUNERATION REPORT (AUDITED) The minimum value of the outstanding Awards is nil if no performance hurdles are met. The maximum value of
Awards that may vest in future years that will be recognised as share-based payments in future years is set out
in the table below. The amount reported is the value of share-based payments calculated in accordance with
AASB2 Share-based payment over vesting period.
KMP
Award type
Performance
condition
Number
of awards
granted
Exercise
price
Doc Klotz
Rights
TSR tranche
EPS tranche
92,500
92,500
Options
TSR tranche
400,000
EPS tranche
400,000
Garry McLennan Rights
TSR tranche
EPS tranche
92,500
92,500
Options
TSR tranche
400,000
EPS tranche
400,000
Jeff McLean
Rights
TSR tranche
EPS tranche
70,000
70,000
Options
TSR tranche
350,000
EPS tranche
350,000
–
–
$3.06
$3.06
–
–
$3.06
$3.06
–
–
$3.06
$3.06
Equity instruments
9.
This table shows details of share and option holdings of KMP:
Fair value
per award
(at grant
date)
$
Fair value
of award
(at grant
date)
$
Vesting
date/first
exercise date
Expiry date
1.34
2.38
0.35
0.36
1.34
2.38
0.35
0.36
1.86
2.75
0.58
0.60
123,950
220,150
140,000
144,000
123,950
220,150
140,000
144,000
130,200
192,500
203,000
210,000
10 Nov 2018 10 Nov 2020
Held at 1 October 2015
Net Change
Held as at 30 September 2016
Shares
Rights Options 4
Shares
Rights
Options
Shares
Rights
Options
Non-Executive Directors
Kerry Roxburgh
(Chairman)
Russell Shields
Trevor Allen
Gail Pemberton
133,695 1
69,347 1
69,347 1
79,347 1
Greg Ruddock
500,000
Executive Directors
Doc Klotz
Garry McLennan
3,802,954
3,821,432 2
Senior Executive
Jeff McLean
1,678,200 3
–
–
–
–
–
–
–
–
200,000
200,000
200,000
200,000
–
–
–
–
200,000
100,000
–
–
–
–
–
–
–
–
–
–
133,695
69,347
69,347
79,347
600,000
–
–
–
–
–
200,000
200,000
200,000
200,000
200,000
–
–
–
–
–
185,000
800,000 3,802,954
185,000
800,000
185,000
800,000 3,821,432
185,000
800,000
–
140,000
700,000 1,678,200
140,000
700,000
1
In lieu of cash payment, each of the four independent Non-Executive Directors received a one-off offer of Shares, to the value of one year’s base
fees as compensation for services during the period leading up to the IPO. As these shares relate to past services, they are not subject to any
performance conditions or additional service requirements.
2 43,478 of these shares are held by a close family member of the Executive KMP.
3 1,460,809 of these Shares are held in escrow for two years after listing. Shares are also subject to the Company’s Securities Trading Policy.
4 Options were purchased at IPO at an issue price of $0.24 per option. Each option is exercisable over one share with an exercise price of 264.50
cents, immediately vested and exercisable, and with an expiry date of 21 April 2020.
49
REMUNERATION REPORT (AUDITED) 10. Loans
Loan shares issued under the Group’s LTI plans prior to FY2016 were funded by the Group. Recourse under the
loans is limited to the shares and proceeds of any sale of the shares. The loan is interest free and must be repaid
by the expiry date.
Mr Klotz, Mr McLennan and Mr McLean were offered loan shares under the share ownership plan prior to the IPO
that are not subject to vesting conditions. Details of these loans are as follows:
KMP
Doc Klotz
Garry McLennan
Jeff McLean
Opening loan
balance
$
Closing loan
balance
$
Number of vested
loan shares not
yet exercised
5,854,967
5,854,967
2,375,667
5,854,967
5,854,967
2,234,7701
3,777,954
3,777,954
1,460,809
Exercise
price
Loan expiry
date
$2.30
$2.30
$2.30
September 2021
September 2021
September 2019
1 Loan repayments apply to Mr McLean only and equate to dividends paid less tax applicable on dividends.
Mr Klotz and Mr McLennan were granted loan shares under the FY2015 LTI plan for which loans are still
outstanding and subject to vesting conditions. Details of these loans are as follows:
KMP
Doc Klotz
Grant date
22 April 2015
Garry McLennan
22 April 2015
Opening loan
balance
$
Closing loan
balance
$ 1
3,680,000
3,680,000
3,551,960
3,525,670
Number
of unvested
loan shares
relating to
loan
1,600,000
1,600,000
Exercise
price
Loan expiry
date
$2.30
$2.30
April 2020
April 2020
1 Loan repayments relate to dividends paid on the relevant shares less tax applicable on dividends. A higher tax rate applies to Mr Klotz as a result
of his United States citizenship and resulting tax obligations.
11. Other transactions
Transactions with other related parties are made on normal commercial terms and conditions. Refer to Note 6.3
related party for more information.
50
ECLIPX GROUP LIMITED ANNUAL REPORT 2016REMUNERATION REPORT (AUDITED) for the year ended 30 September 2016
Consolidated
Revenue from continuing operations
Cost of revenue
Lease finance costs
Net operating income before operating expenses and impairment charges
Impairment losses on loans and receivables
Employee benefit expense
Depreciation, amortisation and impairment expense
Operating overheads
Total overheads
Operating finance costs
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income/(expense)
Item that may be reclassified to profit or loss
Changes in the fair value of cash flow hedges
Exchange differences on translation of foreign operations
Other comprehensive income/(expense) for the year, net of tax
Total comprehensive income for the year
Profit attributable to:
Owners of Eclipx Group Limited
Total comprehensive income for the year attributable to:
Owners of Eclipx Group Limited
Note
2.2
2.2
2.3
2.3
2.3
2.3
2.6(i)
2016
$’000
2015
$’000
504,837
479,568
(241,537)
(240,538)
(65,097)
198,203
(66,417)
172,613
(1,989)
(1,616)
(71,835)
(8,526)
(41,259)
(121,620)
(9,828)
64,766
(18,898)
45,868
(65,978)
(6,799)
(41,545)
(114,322)
(18,686)
37,989
(10,435)
27,554
(643)
5,290
4,647
(6,590)
(277)
(6,867)
50,515
20,687
45,868
27,554
50,515
20,687
Cents
Cents
Earnings per share
Basic earnings per share
Diluted earnings per share
2.4
2.4
18.88
18.55
15.43
15.36
The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
51
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Consolidated
ASSETS
Current assets
Cash and cash equivalents
Restricted cash and cash equivalents
Trade receivables and other assets
Finance leases
Inventory - Motor vehicles
Operating leases reported as property, plant and equipment
Total current assets
Non-current assets
Property, plant and equipment
Operating leases reported as property, plant and equipment
Deferred tax assets
Intangibles
Finance leases
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other liabilities
Borrowings
Derivative financial instruments
Provisions
Other
Total current liabilities
Non-current liabilities
Trade and other liabilities
Borrowings
Provisions
Deferred tax liabilities
Derivative financial instruments
Other
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained earnings
Total equity
Note
2016
$’000
2015
$’000
4.3
4.3
3.3
3.2
3.1
3.1
3.1
2.6(ii)
3.5
3.2
3.4
4.1
4.4
3.4
4.1
2.6(ii)
4.4
4.5
6.1
60,922
117,376
95,321
104,645
20,532
212,268
611,064
11,050
786,983
9,519
597,369
244,494
1,649,415
2,260,479
58,162
106,403
62,254
79,695
20,972
219,799
547,285
9,965
700,012
12,958
504,784
154,379
1,382,098
1,929,383
123,509
303,713
10,643
5,712
607
93,562
296,082
9,468
4,080
385
444,184
403,577
5,210
1,111,326
1,493
28,257
10,057
1,137
1,157,480
1,601,664
658,815
455,484
3,470
199,861
658,815
2,859
935,079
1,564
23,693
9,367
1,122
973,684
1,377,261
552,122
375,005
(8,776)
185,893
552,122
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
52
ECLIPX GROUP LIMITED ANNUAL REPORT 2016STATEMENT OF FINANCIAL POSITIONas at 30 September 2016 Consolidated
Balance at 1 October 2014
Profit for the year
Cash flow hedges
Foreign currency translation
Total comprehensive income for the year
Acquired as part of business combinations
Issue of new shares for acquisition of Fleet
NZ Limited
Transactions with owners in their capacity
as owners:
Issue of shares for settlement of CRPS
Issue of shares of promissory notes
Issue of shares on Initial Public Offering
Transaction costs, net of tax
Employee share schemes
Movement in treasury reserve
Transfer from treasury reserve to retained earnings
Distribution of trust capital and applied capital
2.5
2.5
5.1
Contributed
equity
$’000
Note
Reserves
$’000
84,366
(2,325)
Retained
earnings
$’000
105,745
27,554
–
–
27,554
51,909
–
–
–
–
–
–
–
1,130
(445)
Total
equity
$’000
187,786
27,554
(6,590)
(277)
20,687
51,909
63,301
43,000
84,301
104,389
(4,352)
816
730
–
(445)
–
–
–
–
–
63,301
43,000
84,301
104,389
(4,352)
–
–
–
–
–
(6,590)
(277)
(6,867)
–
–
–
–
–
–
816
730
(1,130)
–
Balance at 30 September 2015
375,005
(8,776)
185,893
552,122
Balance at 1 October 2015
Profit for the year
Cash flow hedges
Foreign currency translation
Total comprehensive income for the year
Issue of new shares and rights for acquisition
of Right2Drive Pty Ltd
Transactions with owners in their capacity
as owners:
Employee share schemes
Movement in treasury reserve
Issue of shares under the Dividend
Reinvestment Plan 1
Dividends paid
375,005
–
–
–
–
(8,776)
–
(643)
5,290
4,647
185,893
45,868
–
–
45,868
2.5
73,819
3,708
5.1
4.7
–
–
6,660
–
2,860
1,031
–
–
–
–
–
–
(31,900)
199,861
552,122
45,868
(643)
5,290
50,515
77,527
2,860
1,031
6,660
(31,900)
658,815
Balance at 30 September 2016
455,484
3,470
1 The issuance of shares under the Dividend Reinvestment Plan included the issuing of 1,084,412 shares on 29 January 2016 and 958,099 ordinary
shares on 30 June 2016.
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
53
STATEMENT OF CHANGES IN EQUITYfor the year ended 30 September 2016 Consolidated
Cash flows from operations
Receipts from customers
Payments to suppliers and employees**
Income tax paid
Interest received
Interest paid
Net cash inflow from operating activities
Cash flows from investing activities
Purchase of items reported under operating leases
Purchase of items reported under finance leases 1
Purchase of property, plant and equipment and intangibles
Payment for acquisitions (net of cash acquired)
Acquired as part of acquisition of Fleet NZ Limited
Settlement of deferred consideration
Proceeds from sales of items reported under operating leases
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayments of borrowings
Dividends paid
Proceeds from issuing of shares
Distribution of trust capital and applied capital
Settlement of promissory notes
Net cash inflow from financing activities
Note
2016
$’000
2015
$’000
6.6
3.1
744,193
(303,479)
440,714
(8,125)
2,561
(64,633)
370,517
(431,452)
(221,435)
(10,174)
(388)
–
–
159,487
(503,962)
630,658
(201,232)
429,426
(9,954)
3,817
(66,599)
356,690
(420,553)
(165,172)
(11,274)
(11,622)
38,226
(9,000)
164,072
(415,323)
811,156
653,179
(640,721)
(562,750)
(25,240)
–
–
–
145,195
–
97,701
(446)
(73,422)
114,262
11,750
55,629
164,565
108,731
1,983
178,298
205
164,565
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year,
net of overdraft
Exchange rate variations on New Zealand cash and cash equivalent
balances
Cash and cash equivalents at end of the year, net of overdraft
4.3
** Cash flows relating to the finance leases were previously included in “Payments to suppliers and employees”. To better reflect the
nature of income generating assets purchased, the cash flows have been reclassified to “Purchase of items reported under finance
leases”.
As a result of this reclassification, for the year ended 30 September 2015, cash outflow relating to “Payments to suppliers and
employees” has decreased to $201,232,000 from $366,404,000, and cash outflow relating to “Purchase of items reported under finance
leases” has increased to $165,172,000 from nil previously.
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
54
ECLIPX GROUP LIMITED ANNUAL REPORT 2016STATEMENT OF CASH FLOWSfor the year ended 30 September 2016 Statement of compliance
These general purpose Financial Statements of the consolidated results of Eclipx Group Limited (ACN 131 557 901)
have been prepared in accordance with the Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board and the Corporations Act 2001. The consolidated financial statements comply with
International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board
(IASB).
The financial report was authorised for issue by the Board of Directors on 1 November 2016.
Basis of preparation
These Financial Statements have been prepared under the historical cost convention, except for the financial
assets and liabilities (including derivative instruments) at fair value through profit or loss and certain classes
of property, plant and equipment.
Rounding of amounts
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) 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 Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
Critical accounting estimates and assumptions
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.
Accounting estimates and judgements
Impairment of goodwill
Income taxes
Residual value and fair value adjustment
Note
Page
3.5
2.6
3.1
74
67
70
Significant accounting policies
The significant accounting policies adopted in the preparation of the financial report are set out below. Other
significant accounting policies are contained in the notes to the financial report to which they relate to. The
financial statements are for the Group consisting of Eclipx Group Limited (Company) and its controlled entities.
(i)
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all controlled entities of Eclipx
Group Limited as at 30 September 2016 and the results of all controlled entities for the year ended. Eclipx
Group Limited and its controlled entities together are referred to in this financial report as the Group or the
consolidated entity.
The Company controls an entity if it is exposed, or has rights, to variable returns from its involvement with
the controlled entity and has the ability to affect those returns through its power over the controlled entity.
All controlled entities have a reporting date of 30 September.
Profit or loss and other comprehensive income of controlled entities acquired or disposed of during the year
are recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable.
In preparing the financial report, all intercompany balances, transactions and unrealised profits arising within
the consolidated entity are eliminated in full.
55
NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20161.0 Introduction to the report (ii)
Foreign currency translation
Functional and presentation currency
The consolidated financial statements are presented in Australian dollars (AUD), which is also the functional
currency of the Company.
Foreign currency transactions and balances
Foreign currency transactions are translated into the functional currency of the respective Group entity, using
the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and
losses resulting from the settlement of such transactions and from remeasurement of monetary items at year end
exchange rates are recognised in profit or loss.
Non-monetary items are not retranslated at year-end and are measured at historical cost (translated using the
exchange rates at the date of transaction), except for non-monetary items measured at fair value which are
translated using the exchange rates at the date when fair value was determined.
Foreign operations
In the Group’s financial statements, all assets, liabilities and transactions of Group entities with a functional
currency other than AUD are translated into AUD upon consolidation. The functional currency of the entities
in the Group has remained unchanged during the reporting period.
On consolidation, assets and liabilities have been translated into AUD at the closing rate at the reporting date.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity have been treated as assets
and liabilities of the foreign entity and translated into AUD at the closing rate. Income and expenses have been
translated into AUD at the average rate over the reporting period. Exchange differences are charged or credited
to other comprehensive income and recognised in the currency translation reserve in equity. On disposal of
a foreign operation, the cumulative translation differences recognised in equity are reclassified to profit or loss
and recognised as part of the gain or loss on disposal.
New and revised standards and interpretations adopted by the Group
The Group has adopted, for the first time, certain standards that made changes to a number of existing Australian
Accounting Standards and they have not had any material effect on the Group’s financial position or performance.
These standards have been set out below.
AASB 2015-3: Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031 Materiality.
56
ECLIPX GROUP LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20161.0 Introduction to the report (continued) New and revised standards and interpretations not yet adopted by the Group
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the Group for the annual reporting period ended 30 September 2016
and are set out below. The impact of these new or revised Accounting Standards and Interpretations has not yet
been determined.
Application of
Standard
Application by
Group
1 January 2018
1 October 2018
1 January 2018
1 October 2018
1 January 2019
1 October 2019
Reference
Description
AASB 9 Financial
Instruments
AASB 15
Revenue from
Contracts with
Customers
AASB 16 Leases
The AASB has issued the complete AASB 9. The new
standard includes revised guidance on the
classification and measurement of financial assets,
including a new expected credit loss model for
calculating impairment, and supplements the
new general hedge accounting requirements
previously published.
The standard contains a single model that applies
to contracts with customer and two approaches
to recognising revenue: at a point in time or over
time. The model features a contract-based five-step
analysis of transactions to determine whether, how
much and when revenue is recognised.
AASB 16 removes the classification of leases as either
operating leases or finance leases – for the lessee
– effectively treating all leases as finance leases.
Short-term leases (less than 12 months) and leases
of low-value assets (such as personal computers)
are exempt from the lease accounting requirements.
There are also changes in accounting over the
life of the lease. In particular, companies will now
recognise a front-loaded pattern of expense for
most leases, even when they pay constant annual
rentals. Lessor accounting remains similar to current
practice – i.e. lessors continue to classify leases as
finance and operating leases.
57
NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20161.0 Introduction to the report (continued) This section provides the information that is most relevant to understanding the financial performance of the
Group during the financial year and, where relevant, the accounting policies applied and the critical judgements
and estimates made.
2.1 Segment information
2.2 Revenue
2.3 Expenses
2.4 Earnings per share
2.5 Business combinations
2.6 Taxation
2.1 Segment information
Identification of reportable segments
An operating segment is a component of an entity that engages in business activities from which it may earn
revenue and incur expenses, whose operating results are regularly reviewed by the Group’s Chief Operating
Decision Maker in order to effectively allocate Group resources and assess performance.
The Group has identified its operating segments based on the internal reports that are reviewed and used by the
Chief Operating Decision Makers to make strategic decisions. The Chief Operating Decision Makers are the Chief
Executive Officer and the Deputy Chief Executive Officer.
Three reportable segments have been identified: Australia Commercial, Australia Consumer and New Zealand
Commercial. The segments are based on the class of customer to which services are provided. Services in all
segments include the provision of lease finance and fleet management to customers.
In addition to statutory profit after tax, the business is assessed on a Cash Net Profit After Tax (Cash NPATA)
basis. Whilst a non-IFRS measure, Cash NPATA is defined as statutory profit after tax, adjusted for the after tax
effect of material one-off items that do not reflect the ongoing operations of the Group and amortisation of
acquired intangible assets. Each of these operating segments is managed separately as each of these service lines
requires different resources as well as marketing approaches.
2016
Net operating income before operating
expenses and impairment charges
Depreciation and amortisation of
non-financial assets
Bad and doubtful debts
Operating expenses
Profit before tax, non-recurring costs
and interest
Australia
Commercial
$’000
Australia
Consumer
$’000
Australia
Total
$’000
New Zealand
Commercial
$’000
Total
$’000
113,885
45,052
158,937
39,266
198,203
(1,663)
(1,531)
(568)
–
(2,231)
(1,531)
(336)
(458)
(2,567)
(1,989)
(54,870)
(30,874)
(85,744)
(22,289)
(108,033)
55,821
13,610
69,431
16,183
85,614
Holding company debt interest
Adjustments 1
Tax
Statutory net profit after tax
(3,828)
(7,606)
(13,099)
31,288
(1,216)
(5,450)
(2,083)
4,861
(5,044)
(13,056)
(15,182)
36,149
Intangibles amortisation including tax
impact
Restructure and acquisition costs including
tax impact
Cash net profit after tax
2,651
1,313
3,964
2,669
36,608
2,502
8,676
5,171
45,284
(2,295)
(453)
(3,716)
9,719
214
113
10,046
(7,339)
(13,509)
(18,898)
45,868
4,178
5,284
55,330
1 Adjustments relate to acquisition related costs, corporate debt restructuring costs, amortisation of intangibles and other restructuring costs.
58
ECLIPX GROUP LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20162.0 Business result for the year 2.1 Segment information (continued)
2015
Net operating income before operating
expenses and impairment charges
Depreciation and amortisation of
non-financial assets
Bad and doubtful debts
Operating expenses
Profit before tax, non-recurring costs
and interest
Holding company debt interest
Adjustment 1
Tax
Statutory net profit after tax
IPO and acquisition costs and capital
proforma adjustments including tax impact
Intangibles amortisation including tax
impact
Cash net profit after tax
Australia
Commercial
$’000
Australia
Consumer
$’000
Australia
Total
$’000
New Zealand
Commercial
$’000
Total
$’000
112,191
25,914
138,105
34,508
172,613
(1,514)
(1,884)
(267)
–
(1,781)
(1,884)
(274)
268
(2,055)
(1,616)
(57,207)
(16,759)
(73,966)
(19,708)
(93,674)
51,586
8,888
60,474
14,794
75,268
(3,942)
(24,392)
(6,612)
16,640
(742)
(4,305)
(1,152)
2,689
(4,684)
(28,697)
(7,764)
19,329
(2,116)
(1,782)
(2,671)
8,225
(6,800)
(30,479)
(10,435)
27,554
14,288
2,521
16,809
900
17,709
2,779
33,707
490
5,700
3,269
39,407
53
9,178
3,322
48,585
1 Adjustments relate to IPO and acquisition costs, amortisation of intangibles and interest expense relating to the previous capital and debt structure
prior to IPO.
2.2 Revenue
Recognition and measurement
The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future
economic benefits will flow to the entity and specific criteria have been met for each of the Group’s activities
as described below. The Group bases its estimates on historical results, taking into consideration the type of
customer, the type of transaction and the specifics of each arrangement.
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.
Finance income
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of
calculating the amortised cost of a financial asset and allocating the interest income over the relevant period
using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through
the expected life of the financial asset to the net carrying amount of the financial asset.
Operating lease rentals
Rental revenue arising from operating lease contracts is brought to account in the period it is earned. The
operating lease rentals are recognised on a straight line basis over the lease term. The instalments are classified
and presented in finance income and operating lease rentals.
Maintenance and management income
Maintenance income is recognised over the life of the contract with reference to the stage of completion.
Management income and management fees are recognised on a straight line basis over the term of the contract.
59
NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20162.0 Business result for the year (continued) 2.2 Revenue (continued)
Brokerage, commissions and advice services income
Income is recognised when the relevant services have been provided and a reliable estimate of the income can
be made.
End of lease income
End of lease income includes profits on the sale of vehicles from terminated lease contracts and other revenue
generated at the end of a lease.
Rental hire income
Rental hire income is brought to account in the period it is earned.
Cost of revenue
Cost of revenue comprises the cost associated with providing the service components of the lease instalments
and rental hire income. Cost of revenue is recognised for each reporting period by reference to the stage
of completion when the outcome of the services contracts can be estimated reliably. The stage of completion
of services contracts is based on the proportion that costs incurred to date bear to total estimated costs.
Rental hire expense includes amounts paid to third parties for vehicles under operating leases.
From continuing operations:
Finance income
Maintenance and management income
Related products and services income
Operating lease rentals
Brokerage income
Sundry income
End of lease income
Rental hire income
Consolidated
2016
$’000
2015
$’000
101,642
97,484
30,011
200,461
16,695
7,672
31,876
18,996
103,520
97,525
27,452
202,467
14,722
6,065
27,817
–
Total revenue from continuing operations
504,837
479,568
Cost of revenue:
Maintenance and management expense
Related products and services expense
Impairment on operating leased assets
Depreciation on operating leased assets
Rental hire expense
Total cost of revenue
41,629
4,797
(118)
189,413
5,816
241,537
43,645
4,172
1,851
190,870
–
240,538
60
ECLIPX GROUP LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20162.0 Business result for the year (continued) 2.3 Expenses
Recognition and measurement
Depreciation
Depreciation on assets is calculated using the straight line method to allocate their cost, net of their residual
values, over their estimated useful lives, as follows:
Motor vehicles 2-10 years;
Furniture and fittings 3-10 years; and
Plant and equipment 3-10 years.
Interest expense
Interest expense is recognised in the statement of comprehensive income using the effective interest method.
Amortisation
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 is calculated on a straight line
basis over periods generally ranging from three to five years for non-core costs, and seven to 10 years for core
system software costs.
Profit before income tax includes the following specific expenses:
Depreciation and amortisation
Plant and equipment - fixture and fittings
Amortisation - Intangible assets
Software
Total depreciation and amortisation expense
Lease finance costs
Interest and finance charges - Third parties
Hedge loss/(gain)
Total lease finance costs
Operating finance costs
Interest expense promissory notes - Related parties
Interest expense convertible redeemable preference shares
Facility finance costs
Total operating finance costs
Operating overheads
Rental of premises
Technology costs
Restructuring costs
Acquisition related costs
IPO costs
Other overheads
Total operating overheads
Consolidated
2016
$’000
2015
$’000
2,567
3,711
2,248
8,526
64,633
464
65,097
–
–
9,828
9,828
6,668
7,301
1,760
3,301
–
22,229
41,259
2,055
3,203
1,541
6,799
66,599
(182)
66,417
8,421
1,253
9,012
18,686
6,308
8,830
–
1,672
13,376
11,359
41,545
61
NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20162.0 Business result for the year (continued) 2.4 Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of fully paid
ordinary shares outstanding during the financial year and excluding treasury shares.
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
Consolidated
2016
Cents
18.88
18.88
2015
Cents
15.43
15.43
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.
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
Reconciliation 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:
From continuing operations
Diluted earnings per share
Profit attributable to the ordinary equity holders of the company used in calculating
diluted earnings per share
From continuing operations
Weighted average number of shares used as the denominator
Consolidated
2016
Cents
18.55
18.55
2015
Cents
15.36
15.36
Consolidated
2016
$’000
2015
$’000
45,868
45,868
27,554
27,554
45,868
45,868
27,554
27,554
Consolidated
2016
Number
2015
Number
Weighted average number of ordinary shares used as the denominator in calculating
basic earnings per share
242,954,968
178,573,004
Weighted average number of ordinary shares used as the denominator in calculating
diluted earnings per share
247,295,831
179,412,444
62
ECLIPX GROUP LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20162.0 Business result for the year (continued) 2.5 Business combinations
Recognition and measurement
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 controlled
entity 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
controlled entity. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities
and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially
at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any
non-controlling interests in the acquiree either at fair value or at the non-controlling interests’ proportionate
share of the acquiree’s net identifiable assets.
The excess of the consideration transferred and the amount of any non-controlling interests in the acquiree over
the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the
fair value of the net identifiable assets of the controlled entity 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.
Contingent and deferred consideration is classified either as equity or a financial liability. Amounts classified as
a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss.
Summary of acquisition – Right2Drive
On 19 May 2016, the Group acquired the Right2Drive Group (Right2Drive) that consisted of the following entities:
Right2Drive Pty Ltd and Right2Drive (New Zealand) Ltd. Right2Drive’s principal activity is the provision of rental
replacement vehicles to “not at fault” drivers that have accident damaged cars requiring repair. Right2Drive was
acquired to provide a platform to expand into the medium term vehicle rental segment.
Provisional goodwill of $59,904,000 is primarily related to growth expectations, expected future profitability,
the substantial skill and expertise of Right2Drive’s workforce and expected cost synergies. The goodwill that
arose from this business combination is not expected to be deductible for tax purposes.
The purchase price allocation is provisional and may be revised within 12 months of acquisition date.
Right2Drive recorded revenue of $18,996,000 and a profit before tax of $3,430,000 for the period from 19 May
2016 to 30 September 2016. If Right2Drive had been acquired on 1 October 2015, revenue of the Group for the
year would have increased by $22,138,000, and profit before tax for the year would have increased by $1,828,000.
Summary of acquisition – FleetSmart
On 31 March 2016 the Group acquired the business and assets of FleetSmart, a division of Cardlink Systems
Limited (FleetSmart). The principal activity of the business acquired is the provision of vehicle fleet management.
The business was acquired to support the business’ growth strategy in vehicle fleet management in the New
Zealand market.
Provisional goodwill of $2,924,000 is primarily related to expected cost synergies and future profitability.
None of the goodwill recognised is expected to be deductible for income tax purposes.
Contingent consideration of $5,678,000 is payable by the Group if certain performance criteria are achieved,
this is payable over a period of up to eight years.
Deferred consideration amounted to $924,000 and is payable over a period of five years.
The purchase price allocation is provisional and may be revised within 12 months of acquisition date.
FleetSmart recorded revenue of $2,064,000 and profit before tax of $1,067,000 for the period from 31 March 2016
to 30 September 2016. If FleetSmart had been acquired on 1 October 2015, revenue of the Group for the year
would have increased by $1,427,000 and profit before tax for the year would have increased by $814,000.
63
NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20162.0 Business result for the year (continued) 2.5 Business combinations (continued)
The following tables summarise the consideration paid, the fair values of assets acquired and liabilities assumed
at the acquisition dates.
Purchase consideration
Cash paid
Deferred consideration
Contingent consideration
Issue of shares in Eclipx Group Limited
Issue of rights in Eclipx Group Limited
Total
Acquisition-related costs are not included as part of consideration transferred and
have been recognised as an expense in the consolidated statement of profit or loss
and other comprehensive income, as part of other expenses. The expense recognised
during the period is:
Fair values of assets acquired and liabilities assumed:
Cash and cash equivalents
Trade and other receivables
Property, plant and equipment
Deferred tax assets
Intangible asset - Brand name
Intangible asset - Customer relationships
Trade and other liabilities
Provisions
Deferred tax liabilities
Total identifiable net assets
Provisional goodwill on acquisition
Purchase consideration
Purchase consideration - cash (outflow)/inflow
Cash consideration
Less: Balances acquired
(Outflow)/inflow of cash – Investing activities
64
Right2Drive
2016
$’000
FleetSmart
2016
$’000
1,130
–
–
73,819
3,708
78,657
–
924
5,678
–
–
6,602
2,759
542
Right2Drive
Provisional
Fair value
$’000
FleetSmart
Provisional
Fair value
$’000
742
14,993
633
971
14,373
–
(6,375)
(2,272)
(4,312)
18,753
59,904
78,657
–
–
18
–
–
5,083
–
–
(1,423)
3,678
2,924
6,602
Right2Drive
$’000
FleetSmart
$’000
(1,130)
742
(388)
–
–
–
ECLIPX GROUP LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20162.0 Business result for the year (continued) 2.5 Business combinations (continued)
Summary of acquisition – CarLoans
On 16 October 2014, the Group concluded the 100% acquisition of the CarLoans Group (CarLoans) that consisted
of the following entities: CarLoans.com.au Pty Limited, Fleet Choice Pty Limited, CarLoans.co.nz Limited and CLFC
Media Holdings Pty Limited. CarLoans’ principal activities include the provision of vehicle financing and leasing,
salary packaging and fleet management services. CarLoans was acquired to support the business’ growth strategy
in vehicle financing in the Australian and New Zealand markets.
Goodwill of $30,218,000 is primarily related to growth expectations, expected future profitability, the substantial
skill and expertise of CarLoans’ workforce and expected cost synergies. The goodwill that arose from this
business combination is not expected to be deductible for tax purposes.
CarLoans recorded a profit before tax of $561,000 for the period from 16 October 2014 to 30 September 2015.
If CarLoans had been acquired on 1 October 2014, revenue of the Group for the year ended 30 September 2015
would have increased by $482,000, and profit before tax for the year would have decreased by $115,000.
Summary of acquisition – NZ Group
On 1 October 2014, a Group restructure was undertaken whereby Fleet NZ Limited and its controlled entities
(NZ Group), a related party of the Group incorporated in New Zealand and controlled by the same consortium
of investors was acquired. The NZ Group was acquired for a consideration of $63,301,000 satisfied by the issuance
of shares in Eclipx. As the transaction occurred under common control, the Group had the ability to record
acquired assets at book value at acquisition. The difference between the book value of net assets acquired and
purchase consideration had been recorded in retained earnings.
The operating results and assets and liabilities of the NZ Group have been consolidated from 1 October 2014. The
assets and liabilities of the NZ Group in Australian Dollars was recognised using the carrying value as at the date
of acquisition.
The following tables summarise the consideration paid, the fair and carrying values of assets acquired and
liabilities assumed at the acquisition dates.
Purchase consideration
Cash paid
Deferred consideration
Cumulative convertible redeemable preference shares issued
Issue of shares in Eclipx Group Limited
Total
CarLoans
2015
$’000
NZ Group
2015
$’000
11,668
6,000
12,000
–
29,668
–
–
–
63,301
63,301
Acquisition-related costs are not included as part of consideration transferred and have
been recognised as an expense in the consolidated statement of profit or loss and other
comprehensive income, as part of other expenses. The expense recognised during the
period is:
1,572
100
65
NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20162.0 Business result for the year (continued) 2.5 Business combinations (continued)
Fair and carrying values of assets acquired and liabilities assumed:
Cash and cash equivalents
Trade and other receivables
Finance leases
Derivative financial instruments
Inventory
Property, plant and equipment
Deferred tax assets
Intangible asset - Brand name
Intangible asset - Goodwill
Intangible asset - Software
Operating leases reported as property, plant and equipment
Trade and other liabilities
Borrowings
Provisions
Deferred tax liabilities
Total identifiable net assets
Goodwill on acquisition
Amount recognised in retained earnings
Purchase consideration
Purchase consideration - cash (outflow)/inflow
Cash consideration
Less: Balances acquired
(Outflow)/inflow of cash – Investing activities
CarLoans
Fair value
$’000
NZ Group
Carrying
value
$’000
46
2,415
–
–
–
–
–
703
–
–
–
(3,185)
–
(472)
(57)
(550)
30,218
–
29,668
38,226
16,129
11,821
246
8,532
1,022
7,574
10
106,281
86
287,260
(65,238)
(272,365)
(2,423)
(21,951)
115,210
–
(51,909)
63,301
CarLoans
$’000
NZ Group
$’000
(11,668)
46
(11,622)
–
38,226
38,226
66
ECLIPX GROUP LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20162.0 Business result for the year (continued) 2.6 Taxation
Recognition and measurement
Current tax
Current tax assets and liabilities are measured at the amount of income taxes payable or recoverable in respect
of the taxable profit or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted
or substantively enacted by the reporting date.
Deferred tax
Deferred tax is accounted for in respect of temporary differences arising from differences between the carrying
amount of assets and liabilities and the corresponding tax base.
Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised
for all deductible temporary differences, unused tax losses and tax offsets, to the extent that it is probable that
sufficient future taxable profits will be available to utilise them.
However, deferred tax assets and liabilities are not recognised for:
taxable temporary differences that arise 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;
temporary differences between the carrying amount and tax bases of investments in controlled entities
where the parent entity 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; and
taxable temporary differences arising from goodwill.
Deferred tax assets and liabilities are measured at the tax rates and tax laws that are expected to apply the
year when the asset is utilised or liability is settled, based on tax rates and tax laws that have been enacted
or substantively enacted at the reporting date.
Income taxes relating to items recognised directly in equity are recognised directly in equity and not in the
statement of profit or loss and other comprehensive income.
Offsetting deferred tax balances
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation
authority and the Group intends to settle its current tax assets and liabilities on a net basis.
Tax consolidation legislation
Eclipx Group Limited and its wholly owned Australian controlled entities are part of a tax-consolidated group
under Australian taxation law. Eclipx Group Limited is the head entity in the tax-consolidated group. Entities
within the tax-consolidated group have entered into a tax funding arrangement and a tax sharing agreement
with the head entity. Under the terms of the tax funding arrangement, Eclipx Group Limited and each of the
entities in the tax-consolidated group have agreed to pay (or receive) a tax equivalent payment to (or from)
the head entity, based on the current tax liability or current tax asset of the entity.
67
NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20162.0 Business result for the year (continued) 2.6 Taxation (continued)
(i) Reconciliation of income tax expense
Profit from continuing operations before income tax expense
Prima facie tax rate of 30.0% (2015 - 30.0%)
New Zealand tax rate differentials
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
Share based payments not deductible
Deferred consideration
Contingent consideration
Finance income on convertible notes
Other
Income tax expense
Income tax expense comprises of:
Current tax
Deferred tax
Adjustments for current tax of prior periods
Income tax expense
Effective tax rate
(ii) Movement of deferred tax
Consolidated
2016
$’000
64,766
19,430
(327)
434
–
(210)
(489)
60
2015
$’000
37,989
11,397
(237)
315
(381)
–
(489)
(170)
18,898
10,435
15,391
3,507
–
18,898
10,238
513
(316)
10,435
29.2%
27.5%
2016
Doubtful debt provision
Deferred revenue
Hedging assets and
liabilities
Accruals, employee
provisions and other
Opening
balance
$’000
Charged
to profit
or loss
$’000
775
139
5,547
746
40
114
29,241
(4,262)
Leasing adjustments
(37,703)
(2,862)
Acquisition cost
Intangible assets
–
(8,734)
612
2,105
Charged to
other com-
prehensive
income and
equity
$’000
–
–
268
–
–
–
–
(10,735)
(3,507)
268
Acquired
through
business
combi-
nation
$’000
636
–
–
Reclassi-
fication
$’000
–
–
–
Closing
balance
$’000
Deferred
tax asset
$’000
2,157
179
2,157
179
5,929
5,929
Deferred
tax
liability
$’000
–
–
–
(10,443)
10,443
–
–
–
437
14,973
41,722
(26,749)
–
–
(30,122)
612
(5,837)
(12,466)
–
612
–
(30,122)
–
(12,466)
(4,764)
(18,738)
50,599
(69,337)
Set off DTL against DTA
Net tax assets/(liabilities)
68
(41,080)
41,080
(18,738)
9,519
(28,257)
ECLIPX GROUP LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20162.0 Business result for the year (continued) Opening
balance
$’000
1,890
835
Charged
to profit
or loss
$’000
(1,426)
(696)
17,043
(3,146)
(3,718)
(8,648)
7,227
3,069
(5,561)
3,718
700
(513)
Charged to
other com-
prehensive
income and
equity
$’000
Reclassi-
fication
to current
tax payable
$’000
Acquired
through
business
combi-
nation
$’000
Closing
balance
$’000
Deferred
tax asset
$’000
775
139
775
139
5,547
5,547
311
–
–
Deferred
tax
liability
$’000
–
–
–
–
–
–
–
–
7,264
29,241
29,241
(7,831)
(21,165)
(37,703)
–
–
–
–
(786)
(8,734)
–
–
–
(37,703)
–
(8,734)
4,758
(7,831)
(14,376)
(10,735)
35,702
(46,437)
–
–
1,865
–
–
–
2,971
(317)
2,893
2.6 Taxation (continued)
2015
Doubtful debt provision
Deferred revenue
Hedging assets and
liabilities
Accruals, employee
provisions and other
Leasing adjustments
Acquisition cost
Intangible assets
Set off DTL against DTA
Net tax assets/(liabilities)
(iii) Franking credits
(22,744)
22,744
(10,735)
12,958
(23,693)
Consolidated
2016
$’000
9,144
9,144
2015
$’000
18,907
18,907
Franked dividends (Australia)
Franking credits available for subsequent financial years based on a tax rate of 30%
Key estimate and judgement: Taxation
The Group is subject to income taxes in Australia and New Zealand. Significant judgement is required in
determining the provision for income taxes. There are many transactions and calculations undertaken during
the ordinary course of business for which the ultimate tax determination is uncertain. The Group recognises
liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where
the final tax outcome of these matters is different from the amounts that were initially recorded, such
differences will impact the current and deferred tax provisions in the period in which such determination is
made.
69
NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20162.0 Business result for the year (continued)
NOTES TO THE FINANCIAL STATEMENT
for the year ended 30 September 2016
3.0 Operating assets and liabilities
This section provides information relating to the operating assets and liabilities of the Group.
3.1 Property, plant and equipment
Recognition and measurement
Property, plant and equipment
Property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure
that is directly attributable to the acquisition of the items. Cost may also include transfers from equity of any
gains/losses on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.
Subsequent costs are included in the asset’s 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. The carrying amount of the replaced part is derecognised. All other
repairs and maintenance are charged to the statement of profit or loss and comprehensive income during the
reporting period in which they are incurred.
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.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are
included in the statement of profit or loss and other comprehensive income.
Leased property
Leased property is stated at cost less accumulated depreciation and impairment. Cost includes initial direct costs
incurred in negotiating and arranging the operating lease contract. In the event that the settlement of all or part
of the purchase consideration is deferred, cost is determined by discounting the amounts payable in the future
to their present value at the date of acquisition.
Depreciation is brought to account on leased property. Depreciation is calculated on a straight line basis so as
to write off the net cost of each asset over its expected useful life (being the term of the related lease contract)
to its estimated residual value. The assets’ residual values and useful lives are revised, and adjusted if appropriate,
at the end of each reporting period.
Residual values are assessed for impairment and in the event of a shortfall, an impairment charge is recognised
in the current period.
Plant and
equipment
$’000
Fixture and
fittings
$’000
Motor
vehicles and
equipment
$’000
Total
$’000
585,029
288,282
(2,350)
427,254
(173,671)
(1,851)
727
107
1,863
3,540
–
–
578,382
287,260
–
420,553
(173,671)
(1,851)
(600)
(190,870)
(192,925)
–
5,637
8,807
(3,170)
5,637
8
8
919,811
929,776
1,418,431
1,438,102
(498,620)
(508,326)
919,811
929,776
5,920
915
(4,213)
3,161
–
–
(1,455)
–
4,328
10,864
(6,536)
4,328
Consolidated
2015
Opening net book amount
Acquired as part of business combinations (note 2.5)
Reclassifications
Additions
Transfers to inventory
Impairment charge
Depreciation charge
Foreign exchange variation
Closing net book amount
2015
Cost
Accumulated depreciation and impairment
Net book amount
70
ECLIPX GROUP LIMITED ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENT
for the year ended 30 September 2016
3.0 Operating assets and liabilities (continued)
3.1 Property, plant and equipment (continued)
Consolidated
2016
Opening net book amount
Acquired as part of business combinations (note 2.5)
Additions
Transfers to inventory
Impairment charge
Depreciation charge
Foreign exchange variation
Closing net book amount
2016
Cost
Accumulated depreciation and impairment
Net book amount
Plant and
equipment
$’000
Fixture and
fittings
$’000
Motor
vehicles and
equipment
$’000
Total
$’000
4,328
512
1,717
-
-
(1,574)
14
4,997
5,637
139
1,240
-
-
(993)
30
6,053
919,811
929,776
-
651
431,452
434,409
(175,282)
(175,282)
118
118
(189,413)
(191,980)
12,565
999,251
12,609
1,010,301
13,093
(8,096)
4,997
10,188
1,487,900
1,511,181
(4,135)
(488,649)
(500,880)
6,053
999,251
1,010,301
Motor vehicle and equipment operating leases reported as property, plant
and equipment
Operating leases terminating within 12 months
Operating leases terminating after more than 12 months
Net book amount of property, plant and equipment
Plant and equipment
Fixture and fittings
Total property, plant and equipment
Consolidated
2016
$’000
2015
$’000
212,268
786,983
999,251
219,799
700,012
919,811
4,997
6,053
11,050
4,328
5,637
9,965
1,010,301
929,776
Key estimate and judgement: Leased property
The Group reviews the value of leased property at regular intervals. Determining the residual value and any
fair value adjustment on leased motor vehicles requires the use of assumptions, including the future value
of motor vehicles, economic and vehicle market conditions and dynamics.
71
3.2 Finance leases
Recognition and measurement
Amounts due from lessees under finance leases are recorded as receivables. Finance lease receivables are initially
recognised at amounts equal to the present value of the minimum lease payments receivable plus the present
value of any guaranteed residual value expected to accrue at the end of the lease term. Finance lease payments
are allocated between interest revenue and reduction of the lease receivable over the term of the lease in order
to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.
Assets leased under finance leases are classified and presented as lease receivables.
Current
Gross investment
Unearned income
Non-current
Gross investment
Unearned income
Consolidated
2016
$’000
2015
$’000
123,624
(18,979)
104,645
275,782
(31,288)
244,494
93,459
(13,764)
79,695
173,996
(19,617)
154,379
The future minimum lease payments under non-cancellable leases are disclosed in note 4.6(c).
3.3 Trade receivables and other assets
Recognition and measurement
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method, less provision for impairment. Trade receivables are generally due for settlement within 30 days.
The amount of the impairment loss is recognised in profit or loss within impairment losses on loans and receivables.
When a trade receivable for which an impairment allowance had been recognised becomes uncollectable in
a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously
written off are credited against impairment losses on loans and receivables in profit or loss.
Collectability of trade receivables is disclosed as part of credit risk. Refer to note 4.2.
Net trade receivables
Trade receivables
Provision for doubtful debts
Sundry debtors
Prepayments
Other assets
Current tax receivable
Total trade receivables and other assets
Consolidated
2016
$’000
2015
$’000
57,335
(5,242)
52,093
17,005
17,720
34
8,469
95,321
34,654
(3,332)
31,322
9,388
14,312
34
7,198
62,254
All amounts are short-term. The net carrying value of trade receivables is considered a reasonable approximation
of fair value.
72
ECLIPX GROUP LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20163.0 Operating assets and liabilities (continued) 3.3 Trade receivables and other assets (continued)
All of the Group’s trade receivables and other assets have been reviewed for indicators of impairment. Certain
trade receivables were found to be impaired and an allowance for credit losses of $5,242,195 (2015: $3,331,567)
has been recorded accordingly.
Movements in the provision for impairment of receivables are as follows:
At 1 October
Acquired as part of business combinations
Provision for doubtful debts recognised/(released) during the year
At 30 September
Consolidated
2016
$’000
3,332
2,121
(211)
5,242
2015
$’000
6,241
1,141
(4,050)
3,332
The creation and release of the provision for impaired receivables has been included in the statement of profit
or loss and other comprehensive income. Amounts charged to the allowance account are generally written off
when there is no expectation of recovering additional cash.
3.4 Trade and other liabilities
Recognition and measurement
These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year
which are unpaid.
Current liabilities
Trade payables
Lease liability
Accrued expenses
Current tax liabilities
Maintenance income received in advance
Contingent and deferred considerationa
Other payables
Total current trade and other liabilities
Non-Current Liabilities
Contingent and deferred consideration a
Other payables
Total non-current trade and other liabilities
Consolidated
2016
$’000
2015
$’000
40,010
7,927
17,102
16,834
11,793
1,576
28,267
123,509
Consolidated
2016
$’000
4,569
641
5,210
29,449
9,088
13,521
3,168
10,856
-
27,480
93,562
2015
$’000
–
2,859
2,859
a Under the terms of the sale agreement on the acquisition of FleetSmart, a further cash component of consideration may be payable over a period
of eight years of up to $5,233,000, based on achievement of certain performance conditions. The contingent consideration was an estimate of the
probable consideration that was to be paid as at the end of the reporting period. Deferred consideration of $912,000 is payable over a period of
five years.
73
NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20163.0 Operating assets and liabilities (continued) 3.5 Intangibles
Recognition and measurement
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the net identifiable assets
of the acquired controlled entities at the date of acquisition. Goodwill on acquisitions of controlled entities
are included in intangible assets. Goodwill is not amortised. Instead, goodwill 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 a cash-generating unit (CGU) for the purpose of impairment testing. The allocation is
made to those CGU’s that are expected to benefit from the business combination in which the goodwill arose.
Customer relationships and brand names
Other intangible assets include customer relationships and brand names acquired as part of business
combinations and recognised separately from goodwill. Customer relationships are amortised over 10 years
on a straight line basis. Brand names are amortised over 20 years on a straight line basis.
Software
Software 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.
Brand names
$’000
Customer
relationships
$’000
Software
$’000
Goodwill
$’000
Total
$’000
2015
Opening net book amount
Acquired as part of business
combination (note 2.5)
Reclassifications from plant and
equipment
Additions
Amortisation charge
Foreign exchange variation
Closing net book amount
2015
Cost
Accumulated amortisation and impairment
Net book amount
2,457
28,863
2,668
326,802
360,790
713
–
1,150
(188)
–
4,132
4,341
(209)
4,132
–
–
–
(3,015)
–
25,848
29,342
(3,494)
25,848
86
136,499
137,298
2,350
5,227
(1,541)
2
8,792
16,683
(7,891)
8,792
–
360
–
2,351
2,350
6,737
(4,744)
2,353
466,012
504,784
466,012
–
516,378
(11,594)
466,012
504,784
74
ECLIPX GROUP LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20163.0 Operating assets and liabilities (continued) 3.5 Intangibles (continued)
Brand Names
$’000
Customer
relationships
$’000
Software
$’000
Goodwill
$’000
Total
$’000
2016
Opening net book amount
4,132
25,848
8,792
466,012
504,784
Acquired as part of business combination
(note 2.5)
Additions
Amortisation charge
Foreign exchange variation
Closing net book amount
2016
Cost
Accumulated amortisation and impairment
Net book amount
14,373
34
(457)
3
18,085
18,751
(666)
18,085
5,083
–
(3,254)
256
27,933
34,681
(6,748)
27,933
–
62,828
11,487
(2,248)
46
18,077
28,377
(10,300)
18,077
–
–
4,434
533,274
533,274
–
533,274
82,284
11,521
(5,959)
4,739
597,369
615,083
(17,714)
597,369
Impairment of assets
(i)
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested
annually for impairment, or more frequently if events or changes in circumstances indicate that they might be
impaired. Other assets are 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. 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 (CGUs). Non-financial assets other than goodwill that suffered
impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
For the purpose of annual impairment testing, goodwill is allocated to the following CGUs, which are the units
expected to benefit from the synergies of the business combinations in which the goodwill arises.
Australia Commercial
Australia Consumer
New Zealand Commercial
Goodwill allocation at 30 September
Consolidated
2016
$’000
280,780
136,567
115,927
533,274
2015
$’000
280,780
76,663
108,569
466,012
75
NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20163.0 Operating assets and liabilities (continued) 3.5 Intangibles (continued)
Goodwill is reviewed on an annual basis or more frequently if events or changes in circumstances indicate
a potential impairment. There is no impairment recognised in 2016 (2015: nil). The impairment test is applied
consistently for all CGUs that have goodwill allocated and is based on value in use. The value in use was
determined by discounting future cash flows generated from the businesses. Cash flows were projected based
on a three-year forecast prepared by management for the applicable CGU, with an extrapolation of expected
cash flows for the units’ remaining useful lives using the growth rates determined by management.
Long term growth rate: Australia 2.50% (2015: 2.50%)
Long term growth rate: New Zealand 3.00% (2015: 3.00%)
Discount rates (post tax) 11.00% (2015: 11.00%)
Growth rates are reviewed on an annual basis and adjusted based on forecasted expectations of the industry
performance, historical data and risks to these expectations. Long term growth rates are based on forecast
economic data from the Reserve Bank Australia and the Reserve Bank New Zealand.
The discount rate takes into consideration the capital and financing structure of the business going forward and
adjusted to factor in the changes to the cash flow model which considers the net cash flows and the distribution
of these cash flows to equity investors.
Key estimate and judgement: Impairment of assets
The Group tests annually whether goodwill has suffered any impairment. The recoverable amounts of
cash-generating units have been determined based on value-in-use calculations. These calculations require
the use of assumptions.
76
ECLIPX GROUP LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20163.0 Operating assets and liabilities (continued) This section provides information relating to the Group’s capital structure and its exposure to financial risk, how
they affect the Group’s financial position and performance, and how the risks are managed. The capital structure
of the Group consists of debt and equity.
4.1 Borrowings
Recognition and measurement
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in the statement of profit or loss and other comprehensive income over the period of the
borrowings using the effective interest method. Fair value approximates carrying value in relation to borrowings.
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 end of the reporting period.
The secured borrowings may be drawn at any time and is subject to annual review. Subject to the continuance
of satisfactory credit ratings, the borrowing facilities may be drawn at any time and have an average maturity
of 12 months (2015: 12 months).
Current – secured
Notes payable
Borrowing costs
Total secured current borrowings
Non-current – secured
Bank loans
Notes payable
Borrowing costs
Total secured non-current borrowings
Bank loans
Consolidated
2016
$’000
2015
$’000
305,577
(1,864)
303,713
298,426
(2,344)
296,082
130,000
984,665
100,000
838,194
(3,339)
(3,115)
1,111,326
935,079
Bank loans are secured by fixed and floating charge over the assets of the Company and all wholly owned
subsidiaries. The carrying amount of assets pledged as security was $187,825,000 (2015: $151,353,000).
Notes payable
Notes payable are secured by fixed and floating charge over the motor vehicles and equipment that are leased to
customers. The carrying amount of assets pledged as security was $1,465,766,000 (2015: $1,260,288,000).
Financing arrangements
The Group had access to the following undrawn borrowing facilities at the end of the reporting period:
Loan facilities used at reporting date
Loan facilities unused at reporting date
Total loan facilities available
Financial covenants
Consolidated
2016
$’000
2015
$’000
1,420,242
1,236,620
404,961
1,825,203
282,234
1,518,854
The Group has complied with financial covenants of its borrowing facilities during the 2016 and 2015
reporting periods.
77
NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20164.0 Capital management 4.2 Financial risk management
This note explains the Group’s exposure to financial risks and how these risks could affect the Group’s future
financial performance. Current year profit or loss information has been included where relevant to add
further context.
Risk management
The Group’s capital management objectives are to:
ensure the Group’s ability to continue as a going concern; and
provide an adequate return to shareholders, by pricing products and services commensurately with the
level of risk.
The Group monitors capital on the basis of the carrying amount of equity plus its subordinated loan, less cash and
cash equivalents as presented on the face of the statement of financial position and cash flow hedges recognised
in other comprehensive income.
Management assesses the Group’s capital requirements in order to maintain an efficient overall financing
structure whilst avoiding excessive leverage. This takes into account the subordination levels of the Group’s
various classes of debt. The Group manages the capital structure and makes adjustments to it in the light
of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain
or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital
to shareholders, issue new shares, or sell assets to reduce debt.
Net debt
Total equity
Capital-to-overall financing ratio
Market risk
(i)
Foreign exchange risk
Consolidated
2016
$’000
2015
$’000
1,236,741
1,066,596
658,815
53%
552,122
52%
The Group operates internationally and is exposed to foreign exchange risk arising from various currency
exposures, primarily with respect to the New Zealand dollar.
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 and net investments in foreign operations.
The Group manages its exposures to the New Zealand dollar by ensuring that its assets and liabilities in New
Zealand are predominantly in New Zealand dollars.
For sensitivity measurement purposes, a +/- 10% (2015:10%) sensitivity in foreign exchange rates to the Australian
dollar has been selected as this is considered realistic given the current levels of exchange rates, the recent levels
of volatility and market expectations for future movements in exchange rates. Based on the financial instruments
held at 30 September 2016, had the Australian dollar weakened/strengthened by 10% (2015:10%) against the New
Zealand dollar compared to year-end rates, with other variables held constant, the consolidated entity’s after-tax
profits for the year and equity would have been $1,159,074 (2015: $836,848) higher/lower, as a result of exposure
to exchange rate fluctuations of foreign currency operations. All foreign exchange risk is due to the translation
of the New Zealand entities on consolidation.
78
ECLIPX GROUP LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20164.0 Capital management (continued) 4.2 Financial risk management (continued)
(ii)
Interest rate risk
2016
2015
Weighted
average
interest rate
%
4.011%
2.900%
Weighted
average
interest rate
%
4.563%
3.108%
Balance
$’000
1,415,039
(1,263,911)
151,128
Balance
$’000
1,231,160
(1,174,786)
56,374
Borrowings
Interest rate swaps (notional principal amount)
Unhedged variable debt
Interest rate sensitivity analysis
The sensitivity analysis below has been determined based on the exposure to interest rates at the reporting
date and assuming that the rate change occurs at the beginning of the financial year and is then held constant
throughout the reporting period.
The selected basis points (bps) increase or decrease represents the Group’s assessment of the possible change
in interest rates. A positive number indicates a before-tax increase in profit and equity and a negative number
indicates a before-tax decrease in profit and equity.
Sensitivities have been based on an increase in interest rates by 100 bps (2015: 100 bps) and a decrease by 100 bps
(2015: 100 bps) across the yield curve.
2016
Financial assets
Cash and cash equivalents
Finance leases
– Fixed interest rate
Total (decrease)/increase
Financial liabilities
Borrowings
– Floating rate
Payables
Derivatives used for hedging
Total increase/(decrease)
Interest rate risk
Carrying
amount
$’000
–100 bps
Profit/equity
$’000
+100 bps
Profit/equity
$’000
178,298
(1,783)
1,783
349,139
527,437
–
(1,783)
–
1,783
1,415,039
14,150
(14,150)
128,719
20,700
1,564,458
–
(11,596)
2,554
–
3,431
(10,719)
79
NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20164.0 Capital management (continued)
4.2 Financial risk management (continued)
2015
Financial assets
Cash and cash equivalents
Finance leases
– Fixed interest rate
Total (decrease)/increase
Financial liabilities
Borrowings
– Floating rate
Payables
Derivatives used for hedging
Total increase/(decrease)
Credit risk
Interest rate risk
Carrying
amount
$’000
–100 bps
Profit/equity
$’000
+100 bps
Profit/equity
$’000
164,565
(1,646)
1,646
234,074
398,639
–
(1,646)
1,646
1,231,160
96,422
18,835
1,346,417
12,312
–
(10,024)
2,288
(12,312)
–
9,069
(3,243)
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible
are written off by reducing the carrying amount directly. An allowance account (provision for impairment of
trade receivables) is used when there is objective evidence that the Group will not be able to collect all amounts
due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability
that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are
considered indicators that the trade receivable is impaired. For amounts due under leases, delinquency would
be for amounts more than 30 days overdue. Receivables due under credit hire have different indicators for
impairment due to the nature of the product. The amount of the impairment allowance is the difference between
the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original
effective interest rate.
The credit quality of financial assets is managed by the Group using internal indicators based on their current
probability of default. These indicators are compared to market benchmarks to enable wider comparisons.
Finance leases are secured against individual assets. The carrying values of the assets held as security
approximate the written down value of the finance leases.
Unimpaired past due loans and receivables
Past due under 30 days
Unimpaired past due loans and receivables
Past due 30 days to under 60 days
Past due 60 days to under 90 days
Past due 90 days and over
Total unimpaired past due loans and receivables
Total unimpaired loans and receivables
Unimpaired past due as a percentage of total unimpaired loans and receivables
Unimpaired past due 30 days and over as a percentage of total unimpaired loans
and receivables
80
Consolidated
2016
$’000
2015
$’000
7,887
5,165
4,418
2,852
8,479
23,636
52,093
45%
2,004
92
199
7,460
31,322
24%
30%
7%
ECLIPX GROUP LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20164.0 Capital management (continued) 4.2 Financial risk management (continued)
2016 includes trade receivables associated with the newly acquired credit hire business, Right2Drive. The credit
hire business looks to recover costs from the party at fault or their insurance company. The ageing of credit hire
receivables would, by its nature, be materially higher than non-credit hire receivables. The period of ageing is not
the main characteristic that defines an impairment for credit hire.
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the
availability of funding through an adequate amount of committed credit facilities to meet obligations when
due and to close out market positions. To mitigate against liquidity risk, the Group maintains cash reserves and
committed undrawn credit facilities to meet anticipated funding requirements for new business. In addition,
the Group can redraw against its committed credit limits if the principal outstanding is reduced by the
contractual amortisation payments. Details of unused available loan facilities are set out in note 4.1.
Management monitors rolling forecasts of the Group’s liquidity reserve (comprising the undrawn borrowing
facilities) and cash and cash equivalents on the basis of expected cash flows. In addition, the Group’s liquidity
management policy involves projecting cash flows 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.
Amounts due to funders are repaid directly by rental and repayments received from the Group’s customers.
The table below analyses the Group’s contractual financial liabilities into relevant maturity groupings. The amounts
disclosed below are the contractual undiscounted cash flow. Balances due within 12 months equal their carrying
balances as the impact of discounting is not significant. For interest rate swaps, the cash flows have been
estimated using forward interest rates applicable at the end of the reporting period.
Contractual maturities
of financial liabilities
2016
Non-derivatives
Less than
1 year
$’000
Between
1 and 2 years
$’000
Between
2 and 5 years
$’000
Over
5 years
$’000
Total
contractual
cash flows
$’000
Carrying
amount
$’000
Trade and other liabilities
(123,509)
(1,890)
(2,851)
(469)
(128,719)
(128,719)
Borrowings
Provisions
(351,084)
(345,897)
(779,918)
(62,782)
(1,539,681)
(1,415,039)
(5,712)
(1,493)
–
–
(7,205)
(7,205)
Total non-derivatives
(480,305)
(349,280)
(782,769)
(63,251)
(1,675,605)
(1,550,963)
Derivatives
Interest rate swaps
Total derivatives
Contractual maturities
of financial liabilities
2015
Non-derivatives
(10,123)
(10,123)
(6,563)
(6,563)
(4,512)
(4,512)
(255)
(255)
(21,453)
(21,453)
(20,700)
(20,700)
Less than
1 year
$’000
Between
1 and 2 years
$’000
Between
2 and 5 years
$’000
Over
5 years
$’000
Total
contractual
cash flows
$’000
Carrying
amount
$’000
Trade and other liabilities
(93,563)
(2,000)
(859)
–
(96,422)
(96,422)
Borrowings
Provisions
(343,507)
(303,235)
(638,562)
(68,155)
(1,353,459)
(1,231,160)
(4,080)
(1,564)
–
–
(5,644)
(5,644)
Total non-derivatives
(441,150)
(306,799)
(639,421)
(68,155)
(1,455,525)
(1,333,226)
Derivatives
Interest rate swaps
Total derivatives
(10,235)
(10,235)
(6,500)
(6,500)
(3,012)
(3,012)
205
205
(19,542)
(19,542)
(18,835)
(18,835)
81
NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20164.0 Capital management (continued) 4.2 Financial risk management (continued)
Fair value risk
This section explains the judgements and estimates made in determining the fair values of the assets and
liabilities that are recognised and measured at fair value in the financial statements. To provide an indication
about the reliability of the inputs used in determining fair value, the Group has classified its assets and liabilities
into the three levels prescribed under the accounting standards. An explanation of each level follows underneath
the table.
2016
Financial liabilities
Derivatives used for hedging
Total financial liabilities
2015
Financial liabilities
Derivatives used for hedging
Total financial liabilities
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
–
–
20,700
20,700
–
–
20,700
20,700
Level 1
$’000
Level 2
$’000
Level 3
$’000
–
–
18,835
18,835
–
–
Total
$’000
18,835
18,835
There were no transfers between levels for recurring fair value measurements during the year.
A description of the level in the hierarchy is as follows:
Level 2: The fair value of assets and liabilities that are not traded in an active market (for example, over-the-counter
derivatives) is determined using valuation techniques which maximise the use of observable market data and rely
as little as possible on entity-specific estimates. If all significant inputs required to fair value an asset or liability
are observable, these are included in level 2.
Valuation techniques used to determine fair values
The fair values of interest rate swaps is calculated as the present value of the estimated future cash flows based
on observable yield curves. The fair value of interest rates swaps are included in level 2. No other assets or liabilities
held by the Group are measured at fair value.
4.3 Cash and cash equivalents
Recognition and measurement
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash
on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original
maturities of three months or less that are readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings
in current liabilities in the statement of financial position. Restricted cash, that represents cash held by the entity
as required by funding arrangements, is disclosed separately on the statement of financial position and combined
for the purpose of presentation in the statement of cash flows.
82
ECLIPX GROUP LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20164.0 Capital management (continued) 4.3 Cash and cash equivalents (continued)
Unrestricted
Operating accounts
Restricted
Operating accounts
Liquidity reserve accounts
Vehicle servicing and maintenance reserve accounts
Cash at bank and on hand
Total as disclosed in the statement of cash flows
Consolidated
2016
$’000
60,922
60,922
31,933
42,707
42,736
117,376
178,298
2015
$’000
58,162
58,162
28,766
38,860
38,777
106,403
164,565
The weighted average interest rate received on cash and cash equivalents for the year was 1.10% (2015: 1.61%).
Liquidity reserve, collection, maintenance reserve, vehicle servicing, collateral and customer collection accounts
represent cash held by the entity as required under the funding arrangements and are not available as free cash
for the purposes of operations of the Group until such time as the obligations of each trust are settled. Term
deposit accounts are also not available as free cash for the period of the deposit.
4.4 Derivative financial instruments
Recognition and measurement
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
subsequently remeasured to their fair value. The method of recognising the resulting gain or loss depends
on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
The Group designates certain derivatives as hedges of highly probable forecast transactions (cash flow hedges).
The Group documents at the inception of the hedging transaction the relationship between hedging instruments
and hedged items, as well as its risk management objective and strategy for undertaking various hedge
transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis,
of whether the derivatives that are used in hedging transactions have been and will continue to be highly
effective in offsetting changes in fair values or cash flows of hedged items.
(i)
Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow
hedges is recognised in other comprehensive income and accumulated in reserves in equity. The gain or loss
relating to the ineffective portion is recognised immediately in profit or loss within other income or other expense.
Amounts accumulated in equity are recycled in the statement of profit or loss and other comprehensive income
in the periods when the hedged item will affect profit or loss (for instance, when the forecast sale that is hedged
takes place). However, when the forecast transaction that is hedged results in the recognition of a non-financial
asset (for example, inventory) or a non-financial liability, the gains and losses previously deferred in equity are
transferred from equity and included in the measurement of the initial cost or carrying amount of the asset
or liability.
When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for
hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised
when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer
expected to occur, the cumulative gain or loss that was reported in equity is immediately reclassified to profit
or loss.
83
NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20164.0 Capital management (continued)
4.4 Derivative financial instruments (continued)
(ii)
Derivatives that do not qualify for hedge accounting
Where a derivative instrument does not qualify for hedge accounting or hedge accounting has not been
adopted, changes in the fair value of these derivative instruments are recognised immediately in the statement
of profit or loss and other comprehensive income.
(iii) Derivatives
Derivatives are only used for economic hedging purposes (to hedge interest rate risk) and not as trading
or speculative instruments. The Group has the following derivative financial instruments:
Current liabilities
Interest rate swaps - cash flow hedges
Total current derivative financial instrument liabilities
Non-current liabilities
Interest rate swaps - cash flow hedges
Total non-current derivative financial instrument liabilities
Total derivative financial instrument liabilities
4.5 Contributed equity
Recognition and measurement
Consolidated
2016
$’000
10,643
10,643
10,057
10,057
20,700
2015
$’000
9,468
9,468
9,367
9,367
18,835
Ordinary fully paid shares are classified as equity. Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Share capital
Fully paid ordinary shares
Other equity securities
Treasury shares
Total issued equity
2016
Shares
2015
Shares
2016
$’000
2015
$’000
258,058,584
233,781,298
455,484
375,005
6,425,000
6,425,000
–
–
264,483,584
240,206,298
455,484
375,005
84
ECLIPX GROUP LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20164.0 Capital management (continued) 4.5 Contributed equity (continued)
Movements in ordinary share capital
Date
1 October 2014
1 October 2014
1 October 2014
22 April 2015
22 April 2015
22 April 2015
22 April 2015
Details
Opening balance
Issue of new shares for acquisition of Fleet NZ Limited
Loan shares vested
Issue of shares for settlement of CRPS
Issue of shares for promissory notes
Issue of shares on Initial Public Offering
Transaction costs, net of tax
30 September 2015
Closing balance
29 January 2016
19 May 2016
30 June 2016
Issue of shares under the Dividend Reinvestment Plan
– 2015 final dividend
Issue of new shares for acquisition of Right2Drive Pty Ltd
Issue of shares under the Dividend Reinvestment Plan
– 2016 interim dividend
30 September 2016
Closing balance
Treasury shares
Number of
shares
95,527,903
26,059,844
11,563,053
18,695,649
36,652,534
45,282,315
$’000
84,366
63,301
–
43,000
84,301
104,389
–
(4,352)
233,781,298
375,005
1,084,412
22,234,775
3,381
73,819
958,099
3,279
258,058,584
455,484
Treasury shares are shares in Eclipx Group Limited that are held by Eclipx Group Limited Employee Share Trust
or by staff under loans. These shares are issued under the Eclipx Group Limited Employee Share scheme and the
executive LTI plan. The shares that have not been settled in cash are funded with a loan and are in substance an
option and are reflected with zero value until such time that they are settled in cash so as to exercise the option.
Details
Opening balance
Shares transferred to fully paid ordinary shares
Issue of treasury shares
Closing balance
4.6 Commitments
a.
Telecommunication commitments
Number of
shares 2016
Number of
shares 2015
6,425,000
10,204,578
–
–
(11,563,053)
7,783,475
6,425,000
6,425,000
Telecommunication commitments contracted for at the end of the reporting period but not recognised
as liabilities, are as follows:
Telecommunication commitments
Consolidated
2016
$’000
5,686
2015
$’000
9,543
85
NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20164.0 Capital management (continued) 4.6 Commitments (continued)
b.
i.
Lease commitments: Group as lessee
Operating leases
The Group leases motor vehicles and commercial premises under non-cancellable operating leases expiring
within the next five years. The leases have varying terms, escalation clauses and renewal rights. On renewal,
the terms of the leases are renegotiated.
Commitments in relation to leases contracted for at the end of each reporting period but not recognised
as liabilities, are as follows:
Within one year
Later than one year but not later than five years
Consolidated
2016
$’000
12,000
20,167
32,167
2015
$’000
5,653
18,303
23,956
ii.
Finance leases
The Group leases fixed assets which lease expires within the next five years.
Commitments in relation to leases contracted for at the end of each reporting period and recognised as liabilities,
are as follows:
Within one year
Later than one year but not later than five years
c.
i.
Lease commitments: Group as lessor
Finance leases
Consolidated
2016
$’000
607
1,137
1,744
2015
$’000
385
1,122
1,507
Future minimum lease payments due to the Group under non-cancellable leases, are as follows:
Commitments in relation to finance leases are receivable as follows:
Within one year
Later than one year but not later than five years
Later than five years
Consolidated
2016
$’000
2015
$’000
123,624
275,660
122
93,459
173,801
195
399,406
267,455
86
ECLIPX GROUP LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20164.0 Capital management (continued)
4.6 Commitments (continued)
ii.
Operating leases
Minimum lease payments receivable on leases of motor vehicles are as follows:
Minimum lease payments under non-cancellable operating leases of motor vehicles
notrecognised in financial statements are receivable as follows:
Within one year
Later than one year but not later than five years
Later than five years
Consolidated
2016
$’000
2015
$’000
314,676
360,229
25,080
699,985
277,179
339,319
16,999
633,497
d.
Contractual commitments for the acquisition of property, plant or equipment
The Group had contractual commitments for the acquisition of property, plant or equipment totalling $62,535,510
(2015: $47,686,119). These commitments are not recognised as liabilities as the relevant assets have not yet
been received.
4.7 Dividends
Recognition and measurement
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the
discretion of the entity, before or at the end of the financial year but not distributed at balance date.
Details of dividends paid and proposed during the financial year are as follows:
Consolidated
2016
$’000
2015
$’000
Final dividends paid
2015 final dividend paid on 29 January 2016: 6.50 cents per ordinary share franked to 100%
15,613
Interim dividends paid
2016 interim dividend paid on 30 June 2016: 6.75 cents per ordinary share franked to 100%
Total dividends paid
16,287
31,900
–
–
–
Final dividends proposed but not recognised at year end
2016: 7.00 cents (2015: 6.50 cents) per ordinary share franked to 100%
18,514
15,613
On 1 November 2016, the Directors declared a fully franked final dividend for the year ended 30 September 2016
of 7.00 cents per ordinary share, to be paid on 20 January 2017 to eligible shareholders on the register as at
30 December 2016. This equates to a total estimated distribution of $18,513,851 based on the number of ordinary
shares on issue as at 30 September 2016. The final 2016 dividend has not been declared at the reporting date and
therefore is not reflected in the financial statements.
87
NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20164.0 Capital management (continued)
Recognition and measurement
Long service leave
The liability for long service leave 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 using the projected unit credit method. Consideration is given to expected future
wage and salary levels, experience of employee departures and periods of service. Expected future payments
are discounted using 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.
Retirement benefit obligations
The Group makes payments to employees’ superannuation funds in line with the relevant superannuation
legislation. Contributions made are recognised as expenses when they arise.
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.
Bonus plans
The Group recognises a liability and an expense for bonuses on a formula that takes into consideration the profit
attributable to the Company’s shareholders after certain adjustments. The Group recognises a provision where
contractually obliged or where there is a past practice that has created a constructive obligation.
5.1 Share based payments
Share based payments
Share based compensation benefits are provided to employees via the Eclipx Group LTI plan.
The fair value of options granted under the Eclipx Group LTI plan is recognised as an expense by the employing
entity that receives the employee’s services. with a corresponding increase in equity. The fair value is measured
at grant date and recognised over the period during, which the employees become unconditionally entitled
to the options (vesting period).
The fair value at grant date is independently determined using a Binomial tree option pricing model and
Monte-Carlo simulation pricing model that takes into account the exercise price, the term of the option, the
impact of dilution, the share price at grant date and expected price volatility of the underlying share, the
expected dividend yield and the risk free interest rate for the term of the option. The fair value of the options
granted is then adjusted to reflect market vesting conditions, but excludes the impact of any non-market vesting
conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in the
assumptions about the number of options that are expected to become exercisable. At the end of each reporting
period, the Group revises its estimate of the number of options that are expected to become exercisable.
The employee benefit expense recognised each period takes into account the most recent estimate. The impact
of the revision to original estimates, if any, is recognised in the statement of profit or loss and other
comprehensive income, with a corresponding adjustment to equity.
In the event a share scheme is cancelled, the remaining unexpensed fair value of the original grant for those
options still vesting at the date of cancellation is taken as a charge to the statement of profit or loss and other
comprehensive income.
88
ECLIPX GROUP LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20165.0 Employee remuneration and benefits 5.1 Share based payments (continued)
Loan shares
Eclipx Group Limited issued shares to senior management employees of the Group with consideration
satisfied by loans to the employees granted by Eclipx Group Limited. These arrangements are considered
to be “in substance options” and treated as share-based payments. Whilst the above awards have been made
by Eclipx Group Limited, the employees provide services to other entities within the Group, and therefore the
associated expenses are borne by those entities that receive the relevant employees’ services.
Options
Eclipx Group Limited issued options to key employees of the Group. Whilst the above awards have been made
by Eclipx Group Limited, the employees provide services to other entities within the Group, and therefore the
associated expenses are borne by those entities that receive the relevant employees’ services. Options do not
carry a right to receive any dividends. If options vest and are exercised to receive shares, these shares will be
eligible to receive any dividends.
Rights
Eclipx Group Limited issued rights to key employees of the Group. Whilst the above awards have been made
by Eclipx Group Limited, the employees provide services to other entities within the Group, and therefore the
associated expenses are borne by those entities that receive the relevant employees’ services. Rights do not carry
a right to receive any dividends. If rights vest and are exercised to receive shares, these shares will be eligible
to receive any dividends.
The loan shares, options and rights are subject to the same performance hurdles. Refer to remuneration report for
details of these performance hurdles.
(i)
Long Term Incentive Plan
For the year ended 30 September 2016, the following awards were provided under the following employee share
ownership plans:
Options and rights
Each award is subject to testing against certain total shareholder return (TSR) and earnings per share (EPS)
conditions on the third year anniversary of the grant.
For the year ended 30 September 2015, the following awards were provided under the following employee share
ownership plans:
Loan shares and options
Each award has two equal weighted tranches which are subject to testing against certain total shareholder
return (TSR) andearnings per share (EPS) conditions on 21 April 2017 for tranche 1 and 21 April 2018 for tranche 2.
Both tranche 1 and 2 are subject to retest on 21 April 2018 and 21 April 2019 respectively, to the extent that awards
subject to TSR conditions do not vest after the initial performance period.
89
NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20165.0 Employee remuneration and benefits (continued) 5.1 Share based payments (continued)
Set out below are summaries of options granted under each plan:
Loan shares
Expected
vesting
date
Exercise
price
Weight-
ed
average
exercise
price
Balance
at start
of the
year
Number
Granted
during
the year
Number
Forfeited
during
the year
Number
Uplift 1
Number
Vested
and
exercised
during
the year
Number
Un-
vested
balance
at end of
the year
Number
Vested
option
not ex-
ercised
Number
–
–
–
–
–
–
–
–
–
–
–
–
–
–
787,500
129,744
– 11,190,775
– 450,000
– (150,000)
– (150,000)
– 2,950,000
– 2,950,000
–
–
$0.90
787,500
$2.03
129,744
$2.30 11,190,775
$2.30 450,000
$2.30 3,100,000
$2.30 3,100,000
$0.90 5,170,000
$2.03
345,984
–
–
–
–
–
–
–
–
$2.30 8,697,500
– 2,493,275
$2.30
$2.30
$2.30
– 450,000
– 3,212,500
– 3,212,500
–
–
–
–
–
(112,500)
(112,500)
– (545,000) (3,837,500)
– (216,240)
–
–
787,500
129,744
– 11,190,775
– 450,000
–
–
–
– 3,100,000
– 3,100,000
–
–
Grant date
2016
25-Sep-08
08-May-13
25-Sep-14
10-Mar-15
22-Apr-15
21–Apr–17
22-Apr-15
21–Apr–18
2015
25-Sep-08
08-May-13
25-Sep-14
10-Mar-15
22-Apr-15
21–Apr–17
22-Apr-15
21–Apr–18
$0.90
$2.03
$2.30
$2.30
$2.30
$2.30
$0.90
$2.03
$2.30
$2.30
$2.30
$2.30
1 Uplift is a result of the acquisition of the NZ Group.
90
ECLIPX GROUP LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20165.0 Employee remuneration and benefits (continued) 5.1 Share based payments (continued)
Options
Grant date
2016
Expected
vesting date
Exercise
price
Weighted
average
exercise
price
Balance
at start
of the year
Number
Granted
during the
year
Number
Forfeited
during the
year
Number
Balance
at end
of the year
Number
22-Apr-15
21-Apr-17
22-Apr-15
21-Apr-18
10-Nov-15
30-Sep-18
19-Feb-16
30-Sep-18
5-Sep-16
30-Sep-19
2015
22-Apr-15
21-Apr-17
22-Apr-15
21-Apr-18
Rights
Grant date
2016
10-Nov-15
19-Feb-16
Expected
vesting date
30–Sep–18
30–Sep–18
$2.30
$2.30
$3.06
$3.06
$3.80
$2.30
$2.30
$2.30
$2.30
$3.06
$3.06
$3.80
$2.30
$2.30
800,000
800,000
–
–
(75,000)
(75,000)
725,000
725,000
–
–
–
–
–
4,025,000
(150,000)
3,875,000
1,625,000
1,000,000
–
–
1,625,000
1,000,000
887,500
887,500
(87,500)
(87,500)
800,000
800,000
Balance at
start of the
year Number
Granted
during the
year Number
Forfeited
during the
year Number
Balance at
end of the
year Number
–
–
970,000
400,000
(35,000)
–
935,000
400,000
91
NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20165.0 Employee remuneration and benefits (continued) 5.1 Share based payments (continued)
(i)
Fair value of options granted
The average assessed fair value at grant date of options granted during the year was: 10 November 2015 - $0.59
per option; 19 February 2016 - $0.36 per option; and 5 September 2016 - $0.60 per option (2015: $0.38). The average
assessed fair value at grant date of rights granted during the year was: 10 November 2015 - $2.31 per right; and
19 February 2016 - $1.86 per right. The average assessed fair value at grant date of loan shares granted during the
year ended 30 September 2015 was $0.61 per share. The fair value for awards granted under Relative TSR vesting
conditions is independently determined using the Monte-Carlo simulation pricing model, whilst the fair value for
awards granted under EPS Hurdle vesting conditions is independently determined using the Binomial tree pricing
model. The models take into account the exercise price, the term of the option, the impact of dilution, the share
price at grant date and expected price volatility of the underlying share, the expected dividend yield and risk free
interest rate for the term of the option.
The model inputs for options granted are as follows:
5 September
2016
19 February
2016
19 February
2016
10 November
2015
10 November
2015
Options
Options
Rights
Options
Rights
30 September
2019
30 September
2018
30 September
2018
30 September
2018
30 September
2018
30 September
2020
30 September
2019
30 September
2019
30 September
2019
30 September
2019
30 November
2019
10 November
2018
10 November
2018
10 November
2018
10 November
2018
4 September
2021
10 November
2020
10 November
2020
10 November
2020
10 November
2020
$3.80
$3.80
$2.62
$3.06
$2.62
Nil
$3.06
$3.06
$3.06
Nil
4.1 years
3.8 years
3.0 years
4.0 years
3.0 years
29%
1.53%
4.15%
30%
1.85%
3.50%
30%
1.78%
3.50%
30%
2.06%
3.50%
30%
1.93%
3.50%
22 April 2015
Loan shares/Options
1
2
21 April 2017
21 April 2018
21 April 2018
21 April 2019
21 April 2017
21 April 2018
21 April 2020
21 April 2020
$2.30
$2.30
$2.30
$2.30
3.5 years
4.0 years
30%
1.91%
5.0%
30%
1.93%
5.0%
Grant date
Award type
First test date
Retest date
First vesting date
Loan repayment date/expiry date
Share price at the grant date
Loan/exercise price
Expected life
Volatility
Risk free interest rate
Dividend yield (p.a)
Grant date
Award type
Tranche
First test date
Retest date
First vesting date
Loan repayment date/expiry date
Share price at the grant date
Loan/exercise price
Expected life
Volatility
Risk free interest rate
Dividend yield (p.a)
92
ECLIPX GROUP LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20165.0 Employee remuneration and benefits (continued) 5.1 Share based payments (continued)
The expected price volatility is representative of the level of uncertainty expected in the movements of the
Company’s share price over the life of the award. The price volatility was determined considering:
the tendency of newly listed entities to show decreasing volatility early in their life;
volatility of comparable listed companies; and
the mean reversion tendency of volatilities.
(ii)
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:
Awards issued to employees of controlled entities during the year
(iii)
Terms and conditions of Share Schemes
Consolidated
2016
$’000
2,860
2015
$’000
816
The share based payments issued since the IPO are subject to vesting conditions. Refer to the remuneration
report for details of these vesting conditions.
5.2 Key management personnel disclosure
Short-term employee benefits
Post-employment benefits
Long-term employee benefits
Share-based payments
Consolidated
2016
$’000
4,505
93
5
1,156
5,759
2015
$’000
4,164
89
8
978
5,239
93
NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20165.0 Employee remuneration and benefits (continued)
6.1 Reserves
Recognition and measurement
Share-based payment reserve
The share based payment reserve is used to recognise:
the fair value of options issued to Directors and employees but not exercised;
the fair value of shares issued to Directors and employees; and
other share-based payment transactions.
Cash flow hedge reserve
The hedging reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are
recognised in other comprehensive income. Amounts are reclassified to profit or loss when the associated hedge
transaction affects profit or loss.
Treasury reserve
Treasury shares are unpaid loan shares in Eclipx Group Limited that have been issued as part of the Eclipx Group
Share scheme and the executive LTI plan. See note 5.1 for further information.
Consolidated
2016
$’000
2015
$’000
(13,335)
(1,298)
4,965
13,138
3,470
(12,692)
(2,329)
(325)
6,570
(8,776)
(12,692)
(911)
268
(6,102)
(9,278)
2,688
(13,335)
(12,692)
6,570
3,708
2,860
13,138
5,754
–
816
6,570
Reconciliation of reserves
Hedging reserve - cash flow hedges
Treasury reserve
Foreign currency translation reserve
Share based payments reserve
Total reserves
Movements in reserves
Hedging reserve - cash flow hedges
Balance 1 October
Revaluation
Deferred tax
Balance 30 September
Share based payments reserve
Balance 1 October
Rights issued as part of the Right2Drive Pty Ltd acquisition
Awards issued to employees of controlled entities during the year
Balance at 30 September
94
ECLIPX GROUP LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20166.0 Other 6.2 Parent entity information
(i)
Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Statement of financial position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Shareholders equity
Issued share capital
Reserves
Retained earnings
Profit for the year
Consolidated
2016
$’000
2015
$’000
1,232
778,612
779,844
(12,829)
(127,609)
(140,438)
5,175
699,841
705,016
(9,853)
(112,508)
(122,361)
455,484
375,005
5,144
178,778
639,406
1,285
(1,743)
209,393
582,655
214,646
(ii) Guarantees entered into by the parent entity
There are cross guarantees given by Eclipx Group Limited, Pacific Leasing Solutions (Australia) Pty Limited,
Leasing Finance (Australia) Pty Limited, Fleet Holding (Australia) Pty Limited, PLS Notes (Australia) Pty Limited,
Fleet Partners Pty Limited, Fleet Aust Subco Pty Limited, Fleet Partners Franchising Pty Limited, CLFC Pty Limited,
Car Insurance Pty Limited, FleetPlus Holdings Pty Limited, CarLoans.com.au Pty Ltd, Fleet Choice Pty Ltd, CLFC
Media Holdings Pty Limited, FleetPlus Pty Limited, Eclipx Commercial Pty Ltd, FleetPlus Novated Pty Limited,
PackagePlus Australia Pty Limited, Eclipx Insurance Pty Ltd, Right2Drive Pty Ltd and CarInsurance.com.au Pty Ltd.
No liability was recognised by the parent entity or the consolidated entity in relation to the above guarantee as
the fair value of the guarantee is immaterial.
(iii) Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities as at 30 September 2016 or 2015. For information about
guarantees given by the parent entity, see above.
95
NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20166.0 Other (continued) 6.3 Related party transactions
(i)
Transactions within the wholly owned Group
The following transactions occurred with related parties:
The related party payables among Australian entities are interest free and are not due for payment within the
next 12 months.
(ii) Controlling entity
The parent entity of the Group is Eclipx Group Limited.
(iii)
Interest in other entities
The controlled entities of the Group listed below were wholly owned during the current and prior year, unless
otherwise stated:
Australia
Fleet Aust Subco Pty Ltd
FP Turbo Trust 2007-1 (Australia)
Pacific Leasing Solutions (Australia) Pty Ltd
FP Turbo Series 2014-1 Trust
Leasing Finance (Australia) Pty Ltd
FP Turbo Warehouse Trust 2014-1 (Australia)
PLS Notes (Australia) Pty Ltd
Fleet Partners Franchising Pty Ltd
Fleet Holding (Australia) Pty Ltd
Eclipx Insurance Pty Ltd
Fleet Partners Pty Ltd
FleetPlus Holdings Pty Limited
FleetPlus Pty Ltd
FleetPlus Novated Pty Ltd
PackagePlus Australia Pty Ltd
CLFC Media Holdings Pty Ltd 2
Eclipx Commercial Pty Ltd
Right2Drive Pty Ltd 1
New Zealand
FleetPlus Ltd (NZ)
CarLoans.co.nz Ltd 2
Fleet NZ Limited 3
Pacific Leasing Solutions (NZ) Limited 3
Leasing Finance (NZ) Limited 3
PLS Notes (NZ) Ltd 3
Right2Drive (New Zealand) Ltd 1
CarInsurance.com.au Pty Ltd
Car Insurance Pty Ltd
CLFC Pty Ltd 2
CarLoans.com.au Pty Ltd 2
Fleet Choice Pty Ltd 2
FP Turbo Series 2015-1 Equipment Trust
FleetPlus Asset Securisation Pty Ltd 4
FP Turbo Government Lease Trust 2016-1
Fleet Holding (NZ) Ltd 3
Fleetpartners NZ Trustee Ltd 3
Truck Leasing Ltd 3
FP Ignition Trust 2011-1 New Zealand 3
FleetPartn s NZ Trust 3
FPNZ Warehouse Trust 2015-1 3
1 On 19 May 2016, the Group concluded the 100% acquisition of the Right2Drive Group.
2 On 16 October 2014, the Group concluded the 100% acquisition of the CarLoans Group.
3 On 1 October 2014, a Group restructure was undertaken whereby Fleet NZ Limited and its controlled entities (NZ Group), a related party of the
Group incorporated in New Zealand and controlled by the same consortium of investors was acquired by the Group.
4 The Group does not have control of FleetPlus Asset Securisation Pty Ltd.
96
ECLIPX GROUP LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20166.0 Other (continued) 6.3 Related party transactions (continued)
(iv) Transactions with other related parties
(a)
Relationship with Ironbridge and Sing Glow
During the year, Eclipx Group Limited has incurred $137,500 in fees from Ironbridge Capital Management PLC
in relation to Director Fees for G Ruddock. Refer to the remuneration report for further information.
Certain existing owners, including the Ironbridge Funds and Sing Glow, were parties to a shareholders deed
in relation to Eclipx Group Limited which was entered on or about 29 July 2008 and amended from time to time
since that date. Ironbridge (a nominee of the Ironbridge Funds) and Sing Glow (or its nominee) were together
paid in 2016 fees of $nil (2015: $581,914) for providing advisory services to Eclipx Group Limited. The shareholders
deed referred to above terminated on completion of the IPO and no further fees will be paid under it from
that date.
(b)
Logbook Me Pty Limited
Eclipx Group Limited is party to a contract with Logbook Me Pty Limited (LogbookMe) which supplies a fringe
benefits tax, fuel tax credit, driver safety and fleet management tool to Group for distribution to its customers,
including by means of GPS tracking devices. LogbookMe has agreed not to distribute its product to other
fleet management and vehicle finance providers for the term of the contract, subject to minimum subscriber
volumes. The term of the contract is 10 years from 15 October 2014. Eclipx paid a one-off fee to LogbookMe under
the contract of $571,429 during FY2015 and is obliged to pay per device fees to LogbookMe based on usage.
The device, freight and subscription fees paid to LogbookMe amounted in 2016 to $219,571 (2015: $119,291).
The Chief Executive Officer and Deputy Chief Executive Officer have a direct equity interest in LogbookMe.
6.4 Remuneration of auditors
During the year the following fees were paid or payable for services provided by the auditor of the Group.
(a) Audit and assurance services
Audit Services
KPMG Australian firm:
Audit and review of financial statements
686,254
629,832
Consolidated
2016
$
2015
$
(b) Non-audit services
KPMG Australian firm:
Debt restructuring
Transactional services including IPO
Reporting and limited assurance engagements
Tax services
Total remuneration for non-audit services for KPMG
Total remuneration for KPMG
540,000
179,134
60,000
–
779,134
–
1,560,878
–
226,939
1,787,817
1,465,388
2,417,649
97
NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20166.0 Other (continued) 6.5 Deed of cross guarantee
Eclipx Group Limited, Pacific Leasing Solutions (Australia) Pty Limited, Leasing Finance (Australia) Pty Limited,
Fleet Holding (Australia) Pty Limited, PLS Notes (Australia) Pty Limited, Fleet Partners Pty Limited, Fleet Aust
Subco Pty Limited, Fleet Partners Franchising Pty Limited, CLFC Pty Limited, Car Insurance Pty Limited, FleetPlus
Holdings Pty Limited, CarLoans.com.au Pty Ltd, Fleet Choice Pty Ltd, CLFC Media Holdings Pty Limited, FleetPlus
Pty Limited, Eclipx Commercial Pty Ltd, FleetPlus Novated Pty Limited, PackagePlus Australia Pty Limited, Eclipx
Insurance Pty Ltd, CarInsurance.com.au Pty Ltd and Right2Drive Pty Ltd are parties to a deed of cross guarantee
under which each company guarantees the debts of the others. By entering into the deed, the wholly owned
entities have been relieved from the requirement to prepare a financial report and directors’ report under Class
Order 98/1418 (as amended) issued by the Australian Securities and Investments Commission.
The above companies represent a ‘Closed Group’ for the purposes of the Class Order, and as there are no other
parties to the deed of cross guarantee that are controlled by Eclipx Group Limited, they also represent the
‘Extended Closed Group’.
Set out below is a statement of profit or loss and other comprehensive income for the year of the Closed Group.
Statement of profit or loss and other comprehensive income
Revenue from continuing operations
Cost of revenue
Lease finance costs
Net operating income before operating expenses and impairment charges
Impairment losses on loans and receivables
Net operating income before operating expenses
Employee benefit expense
Depreciation and amortisation expense
Operating overheads
Total overheads
Operating finance costs
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income/(loss), net of tax
Total comprehensive income for the year
Consolidated
2016
$’000
2015
$’000
412,201
(166,171)
(41,861)
204,169
(1,530)
202,639
(58,073)
(7,894)
(32,062)
(98,029)
(6,515)
98,095
(13,812)
84,283
4,647
88,930
347,629
(166,860)
(42,602)
138,167
(1,884)
136,283
(52,978)
(6,451)
(40,497)
(99,926)
(14,569)
21,788
(7,292)
14,496
(6,867)
7,629
98
ECLIPX GROUP LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20166.0 Other (continued) 6.5 Deed of cross guarantee (continued)
Set out below is a consolidated statement of financial position as at reporting date of the Closed Group.
ASSETS
Current assets
Cash and cash equivalents
Restricted cash and cash equivalents
Trade and other receivables
Finance leases
Inventory
Operating leases reported as property, plant and equipment
Total current assets
Non-current assets
Property, plant and equipment
Operating leases reported as property, plant and equipment
Deferred tax assets
Intangibles
Finance leases
Receivables - Advances to related parties
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other liabilities
Borrowings
Other
Derivative financial instruments
Provisions
Payables - Advances from related parties
Total current liabilities
Non-current liabilities
Trade and other liabilities
Borrowings
Other
Provisions
Derivative financial instruments
Total non-current liabilities
Total liabilities
Net assets
Consolidated
2016
$’000
2015
$’000
49,326
72,371
73,768
98,906
10,673
132,580
437,624
49,860
65,771
47,486
74,712
11,818
145,351
394,998
9,938
8,895
488,826
448,266
3,737
471,182
232,993
55,764
1,262,440
1,700,064
7,475
394,985
147,448
53,645
1,060,714
1,455,712
23,784
165,145
607
6,534
4,919
4,250
57,255
173,380
385
7,076
3,500
3,723
205,239
245,319
5,236
852,518
1,137
1,491
7,628
868,010
1,073,249
2,667
711,658
1,122
1,564
6,584
723,595
968,914
626,815
486,798
99
NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20166.0 Other (continued) 6.5 Deed of cross guarantee (continued)
EQUITY
Contributed equity
Reserves
Retained earnings
Total equity
6.6 Reconciliation of cash flow from operating activities
Profit after tax for the year
Depreciation and amortisation
Doubtful debts
Share based payments expense
Fleet and stock impairment
Interest on promissory notes
Corporate debt restructuring costs
Unwind on contingent consideration
Net (gain)/loss on sale of non-current assets
Hedging gain
Exchange rate variations on New Zealand cash and cash equivalents
Consolidated
2016
$’000
2015
$’000
455,484
375,005
(1,282)
(8,437)
172,613
626,815
120,230
486,798
Consolidated
2016
$’000
45,868
197,939
1,989
2,860
(118)
–
1,615
(778)
(16,234)
464
(1,983)
2015
$’000
27,554
197,669
1,616
1,057
1,851
8,452
–
1,447
(8,685)
(182)
(205)
Net cash inflow from operating activities before change in assets and liabilities
231,622
230,574
Change in operating assets and liabilities:
Increase in trade and other receivables
Increase in finance leases **
Decrease/(increase) in deferred tax assets/liabilities
Increase in trade and other liabilities
Increase/(decrease) in current tax liabilities
Decrease in current provisions
Increase in other current liabilities
Net cash inflow from operating activities
7,975
106,370
2,437
16,671
6,515
(2,010)
937
(1,211)
92,325
3,528
17,212
7,608
(4,370)
11,024
370,517
356,690
** Cash flows relating to purchases of finance leases were previously included in cash flows from operating activities. To better reflect
the nature of income generating assets purchased, the cash flows have been reclassified as cash flows from investing activities.
As a result of this reclassification, for the year ended 30 September 2015, movement in finance leases has increased to $92,325,000
from (2015: ($72,847,000)) reported previously.
100
ECLIPX GROUP LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20166.0 Other (continued) 6.7 Events occurring after the reporting period
On 27 October 2016, the Group entered into an agreement to acquire Anrace Pty Ltd trading as Onyx Car Rentals
(Onyx). The transaction is expected to complete on or about 15 November 2016. On completion, the Group will
acquire all of the share capital of Onyx for a consideration of $9.8m which will be settled with available cash.
On 1 November 2016, the Board declared a fully franked dividend of 7.00 cents per share.
Except for the matters disclosed above, no other matter or circumstance has occurred since the end of the
reporting period that may materially affect the Group’s operations, the results of those operations or the Group’s
state of affairs in future financial years.
101
NOTES TO THE FINANCIAL STATEMENTfor the year ended 30 September 20166.0 Other (continued) In the opinion of the Directors of Eclipx Group Limited (Group):
(a) The consolidated Financial Statements and notes of the Group that are set out on pages 51 to 101 are
in accordance with the Corporations Act 2001, including:
(i) Giving a true and fair view of the Group’s financial position as at 30 September 2016 and of its
performance for the financial year ended on that date; and
(ii) Complying with Australian Accounting Standards (including the Australian Accounting Interpretations)
and the Corporations Regulations 2001; and
(b) There are reasonable grounds to believe that the Group will be able to pay its debts as and when they
become due and payable.
(c) There are reasonable grounds to believe that the Group and the group entities identified in Note 6.5 will be
able to meet any obligations or liabilities to which they are or may become subject to by virtue of the Deed
of Cross Guarantee between the Company and those group entities pursuant to ASIC Class Order 98/1418.
(d) The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from
the Chief Executive Officer and Chief Financial Officer for the financial year ended 30 September 2016.
(e) The Directors draw attention to note 1 of the consolidated financial statements which includes a statement
of compliance with International Financial Reporting Standards.
Signed in accordance with a resolution of the Directors:
Kerry Roxburgh
Chairman
Sydney
1 November 2016
Doc Klotz
Chief Executive Officer
102
ECLIPX GROUP LIMITED ANNUAL REPORT 2016DIRECTORS’ DECLARATION ABCD
Independent auditor’s report to the members of Eclipx Group Limited
Report on the financial report
We have audited the accompanying financial report of Eclipx Group Limited (the Company),
which comprises the consolidated statement of financial position as at 30 September 2016, and
consolidated statement of profit or loss and other comprehensive income, consolidated statement
of changes in equity and consolidated statement of cash flows for the year ended on that date,
notes 1.0 to 6.7 comprising a summary of significant accounting policies and other explanatory
information and the directors’ declaration of the Group comprising the Company and the entities
it controlled at the year’s end or from time to time during the financial year.
Directors’ responsibility for the financial report
The directors of the Company are responsible for the preparation of the financial report that
gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the directors determine is necessary to
enable the preparation of the financial report that is free from material misstatement whether due
to fraud or error. In note 1.0, the directors also state, in accordance with Australian Accounting
Standard AASB 101 Presentation of Financial Statements, that the financial statements of the
Group comply with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. These Auditing
Standards require that we comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable assurance whether the financial
report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s judgement,
including the assessment of the risks of material misstatement of the financial report, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation of the financial report that gives a true and fair view in order
to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by the directors, as well as evaluating the overall presentation of the financial
report.
We performed the procedures to assess whether in all material respects the financial report
presents fairly, in accordance with the Corporations Act 2001 and Australian Accounting
Standards, a true and fair view which is consistent with our understanding of the Group’s
financial position and of its performance.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
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.
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.
103
INDEPENDENT AUDITOR’S REPORT ABCD
Independence
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001.
Auditor’s opinion
In our opinion:
(a) the financial report of the Group is in accordance with the Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the Group’s financial position as
at 30 September 2016 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations
2001.
Report on the remuneration report
We have audited the Remuneration Report included in pages 19 to 33 of the directors’ report for
the year ended 30 September 2016. The directors of the company are responsible for the
preparation and presentation of the remuneration report in accordance with Section 300A of the
Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report,
based on our audit conducted in accordance with auditing standards.
37
50
Auditor’s opinion
In our opinion, the remuneration report of Eclipx Group Limited for the year ended 30
September 2016, complies with Section 300A of the Corporations Act 2001.
KPMG
Andrew Dickinson
Partner
Sydney
1 November 2016
104
ECLIPX GROUP LIMITED ANNUAL REPORT 2016INDEPENDENT AUDITOR’S REPORT Investor information
Additional information required by the ASX and not shown elsewhere in this report is as follows, and is current
as at 9 November 2016.
Distribution of holders of quoted equity securities
Fully paid ordinary shares
Range of holdings
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Number of
shareholders
% of
shareholders
Ordinary shares held
% of
ordinary shares
323
565
228
214
70
1,400
23.07
40.36
16.29
15.29
5.00
100
129,580
1,506,845
1,739,428
5,211,785
255,895,946
264,483,584
0.05
0.57
0.66
1.97
96.75
100
Distribution of holders of unquoted equity securities
Non-executive Director Options
Range of holdings
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
LTI Options
Range of holdings
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
LTI Rights
Range of holdings
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Number of
option holders
% of
option holders
Options held
% of
options
–
–
–
–
5
5
–
–
–
–
100
100
Number of
option holders
% of
option holders
–
–
10
59
29
98
–
–
10.2
60.2
29.6
100
Number of
rights holders
% of
rights holders
–
–
26
17
4
47
–
–
55.3
36.2
8.5
100
–
–
–
–
1,000,000
1,000,000
Options held
–
–
100,000
2,525,000
10,070,000
12,695,000
Rights held
–
–
260,000
866,000
698,000
1,824,000
–
–
–
–
100
100
% of
options
–
–
0.8
19.9
79.3
100
% of
rights
–
–
14.3
47.5
38.2
100
105
SHAREHOLDER INFORMATION Substantial Shareholder Notice
Shareholders
Vinva Investment Management
Bennelong Funds Management Group Pty Ltd
Ironbridge Group
AMP Limited and related bodies corporate
Twenty largest shareholders
Shareholders
Ordinary shares held
% of issued shares
Date of notice
14,031,318
24,330,515
21,579,974
16,157,807
5.32
10.08
8.94
6.70
23/06/2016
23/05/2016
13/05/2016
11/05/2016
Ordinary shares held % of ordinary shares
1
2
3
4
5
6
7
8
9
10
11
11
12
12
13
13
14
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
RBC Investor Services Australia Nominees Pty Limited – BKCUST
Citicorp Nominees Pty Limited
National Nominees Limited
Clantern Holdings BV
BNP Paribas Noms Pty Ltd – DRP
RBC Investor Services Australia Pty Limited – VFA
AMP Life Limited
Solium Nominees (Australia) Pty Ltd
Irwin Klotz
GMCM Investments Pty Ltd 1
Aust Executor Trustees Ltd – Ironbridge Capital IIB
Aust Executor Trustees Ltd – Ironbridge Capital IIA
G Harvey Nominees Pty Ltd
Yoogalu Pty Ltd
BNP Paribas Nominees Pty Ltd – Agency Lending DRP
15 Mr Nicholas Andrew Johnson & Mrs Jane Elizabeth Johnson
16
Ritchie Investments Pty Ltd
17 Michdam Pty Limited
18 Mr Nicholas Andrew Johnson
19
19
Teffom Holdings Pty Ltd
SZM Trustee Company Ltd
20 Citicorp Nominees Pty Limited – Colonial First State INV
1 Shares held on trust for Garry McLennan, Director of Eclipx Group Limited
53,839,990
48,756,305
19,217,108
18,937,431
18,230,105
14,102,846
13,559,709
9,766,030
8,957,034
7,120,860
3,802,954
3,777,954
3,738,564
3,738,564
1,630,434
1,630,434
1,571,963
1,485,635
1,460,809
1,340,033
1,336,766
1,304,348
1,304,348
909,680
20.36
18.43
7.27
7.16
6.89
5.33
5.13
3.69
3.39
2.69
1.44
1.43
1.41
1.41
0.62
0.62
0.59
0.56
0.55
0.51
0.51
0.49
0.49
0.34
106
ECLIPX GROUP LIMITED ANNUAL REPORT 2016SHAREHOLDER INFORMATION Fleet leasing, fleet
management, equipment
finance and short
term rentals
Eclipx Group is a market leader in vehicle mobility
A commitment to putting our customer fi rst
solutions including fl eet leasing, fl eet management
by delivering outstanding customer service and
and diversifi ed fi nancial services in Australia and
experiences, including Net Promoter Scoring (NPS);
New Zealand.
Eclipx Group provides businesses and consumers
off ers fi rst-to-market innovation and online
with a range of solutions they need to access: fl eet
technology solutions which provides customers
leasing and management, connected in-vehicle
with real-time visibility and management of their
technology (telematics), commercial equipment
vehicles supported by a range of online products
Market-leading proprietary technology which
fi nance, novated leasing, consumer vehicle fi nance
and services; and
and insurance, and medium term vehicle rental and
accident replacement.
Our focus is on providing excellent customer
effi cient and innovative funding solutions.
service and value add solutions for our customers
which translates into high growth for our
shareholders. We do this with:
SHAREHOLDER INFORMATION
Unmarketable parcel of shares
The number of shareholders holding less than a marketable parcel of ordinary shares is 107. 136 shares comprise
a marketable parcel at Eclipx Group’s closing share price of $3.70.
Securities subject to escrow arrangements
Class of restricted securities
Fully paid ordinary shares
Unquoted equity securities
Non-executive Director Options
Shares held
Date escrow period ends
3,645,519
22 April 2017
There are 1,000,000 unquoted options, with a $2.65 exercise price on issue to fi ve option holders. Further details
of the Non-executive Director Options are outlined as follows:
Option holder
Kerry Roxburgh
Gail Pemberton
Trevor Allen
Russell Shields
Gregory Ruddock
Options held
% of options
200,000
200,000
200,000
200,000
200,000
20
20
20
20
20
On-market buy-back
There is no current on-market buy-back in relation to Eclipx Group securities.
On-market purchases
During the reporting period there were no on-market purchases of Eclipx Group securities.
Voting Rights
Ordinary Shares – on a show of hands every member present at a meeting in person or by proxy shall have one
vote and upon a poll each ordinary share shall have one vote.
A well established, scalable and diverse funding
model which provides cost-eff ective, capital-
Options – No voting rights.
Statement regarding use of cash and assets
Eclipx Group has used its cash and assets in a form readily convertible to cash that it had at the time between
admission to the Offi cial List and the end of the reporting period in a way consistent with its business objectives
set out in the Prospectus dated 26 March 2015.
2
ECLIPX GROUP LIMITED ANNUAL REPORT 2016
107
Eclipx Group Limited
ACN 131 557 901
Annual
Report 2016
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1
6
Level 32, 1 O’Connell Street
Sydney NSW 2000
T +61 2 8973 7272
E
info@eclipx.com
F +61 2 8973 7171
W www.eclipx.com