Annual
Report
2019
Eclipx Group Limited
ACN 131 557 901
About Eclipx Group
Eclipx Group is an established leader in vehicle fleet
leasing and management in Australia and New Zealand.
Eclipx Group’s primary brands include FleetPartners,
FleetPlus and FleetChoice.
For more information visit www.eclipx.com.
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Contents
Chairman’s Letter
Chief Executive Officer’s Letter
Business Overview
Year in Review
Environmental, Social and Governance
Board of Directors
Corporate Directory
Financial Report
Shareholder Information
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 Chairman’s
Letter
On behalf of the Eclipx Group Board,
I present the 2019 Eclipx Group
Annual Report for the year ended
30 September 2019.
While the overall performance of the Eclipx Group
in FY19 was disappointing, in the second half we
made significant changes to our business model
and at the executive level, designed to improve
the Group’s operating and financial performance.
2019 performance and
operating environment
In FY19, the Eclipx Core business (FleetPartners,
FleetPlus and FleetChoice) combined to deliver
Earnings Before Interest, Tax, Depreciation
Amortisation (EBITDA) of $81.9m (5% down on
FY18 $86.2m) and a Net Profit After Tax excluding
Amortisation and One Off Costs (NPATA) of
$46.5m (19.3% down on FY18 $57.6m).
In a challenging market, the core businesses, that
have a long and successful history, were solid in
a year when business confidence was negatively
impacted by uncertainty in the political and
economic environments, locally and globally.
Also we experienced the impact of multiple
reviews of the Australian financial services sector
and a consequential decrease in demand for credit.
The Australian new car sales market has been in
steady decline for the past 18 months, falling by
7.9% in FY19. Importantly, in a weak market for new
cars, our novated business experienced strong
volume growth. The core business also maintained
a solid performance in the sale of vehicles as they
came off lease, producing profits well above their
residual values with the weakening demand in the
new car market benefited used car values.
The Non-Core business units were a substantial
drag on earnings, delivering an EBITDA $22.5m loss
(FY18 $25.7m EBITDA profit) and an NPATA loss of
$22.7m (FY18 $11.5m NPATA profit). We experienced
continuing deterioration in performance of
GraysOnline, areyouselling.com.au, Eclipx
Commercial Australia, Right2Drive and CarLoans.
Commencing in November last year, through
to end of March we were working towards
the completion of a merger with McMillan
Shakespeare (ASX: MMS). This merger was
based on sound financial and industrial logic
offering a range of attractive synergies, with
3
both businesses contributing complementary
capabilities. Unfortunately, we were unable to
complete this transaction and early in April 2019
we agreed with MMS to terminate the scheme.
The Board has taken positive action implementing
steps to address the negative trends that are
evident in our sector, developing and implementing
a Simplification Plan with the following core
activities:
\ Refreshing the senior leadership team (with
significant changes made described below)
\ Disposal of underperforming Non-Core
businesses (GraysOnline, areyouselling.com.
au and Commercial Equipment have already
been sold)
\ Restructure our funding arrangements to
de-risk the balance sheet (completed by
end October 2019)
\ Reducing day to day shared operating costs,
setting a target cost to income ratio of 45% to
be achieved by end FY21 (by end September,
2019), achievable by a combination of sales of
some of our Non-Core businesses and other
restructuring initiatives. So far the Group has
achieved a 43% reduction in head count from
12 months prior;
\ Refocusing on the Core fleet and novated
businesses (the Core business has remained
solid throughout this period of transition,
cost-out programme and consolidation of
operations).
While we have made good progress in all areas of
the Simplification Plan, the completion of the sale of
some of our underperforming Non-Core businesses
and our actions to sell the remainder has meant that
the Group incurred significant losses on sale.
Our people
Commencing early in 2019, the Board made
plans for and earlier this year we implemented
significant changes in our executive leadership.
May 2019 brought the appointment of a new Chief
Executive Officer, Julian Russell. Following his
appointment and in conjunction with the Board,
Julian refined and commenced execution of the
Simplification Plan.
The Board promoted Bevan Guest to Chief
Commercial Officer, bringing together a combination
of Julian’s and Bevan’s skills and experience that
enabled rapid implementation of the revised Core
business strategy including Non-Core business
divestments, refreshment of the senior leadership
team, cost reductions and balance sheet de-risking.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 4
Across the Eclipx Group, our people continue with
their program of commitment to the communities
in which we live and work. Again this year we
encouraged participation in a range of not-for-
profits activities within the Eclipx volunteering
program. We also fundraised across the Group for
various causes in individual and team fund raising
initiatives including “Steptember” and “Movember”.
As the Australian regulatory environment continues
to undergo substantial change we remain watchful
to ensure we meet our responsibilities to both
our customers and the communities in which
we operate.
Priorities and outlook
The Board sincerely regrets that the proposed
merger with MMS did not complete. It is also
extremely disappointing that the need to
restructure our debt facilities as a result of the
poor operating performance of our non-core
business units does not allow us to pay an
interim and final dividend for FY19.
In this transition phase we are deeply committed
to focusing on our Core business to produce
stable, predictable earnings growth and to
achieve a strong return on capital. We believe our
ongoing investment in technology, our attention
to achieving operating efficiencies and with a
renewed focus on our user experience is already
being reflected in significant improvement in our
customer engagement.
In FY20 we are continuing with the implementation
of the Simplification program, exiting remaining
Non-Core businesses, further strengthening the
balance sheet, to progress towards a targeted
cost to income ratio of 45% by the end of financial
year 2021 whilst investing in sustainable Core
business growth. All are clear strategic actions,
designed to deliver superior long term returns
for you, our investors.
The 2019 Annual Report includes the Director’s
Report and the audited Financial Statements, with
comprehensive details of the Group’s operations
and financial results across each business unit.
Kerry Roxburgh
Chairman
In addition to the appointment of Julian and
Bevan to their new roles, Eclipx has substantially
refreshed its senior executive leadership team,
with six changes to date amongst its top ten
executives.
Sincerely, I express my appreciation to all those
making up the Eclipx Group comprising the
Board of Directors, our executive leaders and all
their team members across Australia and New
Zealand. A key priority of our Simplification Plan
strategy includes retention and investment in
key talent, and I compliment the current team
on their commitment, their loyalty and for their
engagement to provide exceptional service and
outcomes for our customers.
Earlier this year, we all celebrated when the
FleetPlus team won both the “Innovation and
Growth Partner” of the Year award and the
coveted “Partner of the Year” award at Coca-
Cola Amatil’s Partner for Growth Awards in May
2019. These achievements are built on everyone
in the business doing their best to provide an
outstanding customer experience.
Despite all the challenges we faced in FY19;
retention of our larger clients for extended periods
was another pleasing achievement. This along
with new contract wins highlights our capability
to consistently deliver customer value in a highly
competitive market.
I would also like to express my sincere appreciation
to our customers and to investors, as well as our
capital market partners for their continuing support
and for wise counsel throughout what has been an
extremely challenging time.
Environmental, societal and
corporate governance
In a busy 12 months, environmental, societal and
corporate governance (ESG) has remained a high
priority at Eclipx.
Our fleet businesses continued with actions that
reduce our environmental impact. FleetPlus again
achieved carbon neutral status against the National
Carbon Offset Standard, by reducing its carbon
emissions with the introduction of efficiencies
in electricity use and improved management of
both air and road travel. FleetPartners for the first
time has achieved 99% compliance in achieving its
carbon neutral certification.
Eclipx recently established a Diversity Committee
responsible for driving and embedding our diversity
strategy across the Group. We continue with our
commitment to a diverse workforce, with better
conversations and better results for customers.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019
5
Strengthen balance sheet
A combination of earnings underperformance and
a capital drag from the Non-Core businesses led
to an overall increase in the Group’s corporate
debt leverage ratio. In May 2019, we set about
restructuring the corporate debt, including the
examination of a range of alternative debt structures
to tailor the debt facility for a more simplified
business. A primary intent of the restructure was to
provide the Group with flexibility as we transition to
a more simplified end-state.
In September 2019, the Group entered into an
agreement with its existing lenders to amend
and extend its existing facilities with maturities
extending out to a three- and six-year term, with
added covenant flexibility reflected in a pricing grid.
While we reduce the corporate debt leverage ratio
to below 2.0x for two consecutive quarters, we will
not be declaring a dividend.
Pleasingly, we have already made progress towards
de-leveraging the corporate debt. The Gross Debt
was reduced from $350.2 million (net debt:
$256 million) in March 2019 to a pro-forma Gross
Debt of $265.2 million by 30 September 2019
(net debt: $189 million).
At our FY19 results on 13 November 2019, we
announced that we are targeting a further
reduction in our Gross Debt to circa $175 million.
This is expected to be achieved through
a combination of capital release from an
Australian securitisation transaction, further
business divestments, a $20 million annual
debt amortisation and through other portfolio
optimisation activities.
The Australian securitisation transaction was
completed on 12 December 2019, permanently
releasing $15 million of capital which has been
applied to the reduction of our Gross Debt. This
Australian transaction follows the completion of
our second ever securitisation transaction in the
New Zealand during September 2019.
With a de-risked balance sheet, including extended
warehouse facilities, the Group can now prioritise
the execution phase of the Simplification Plan,
being cost optimisation and a refocus on the Core.
Chief Executive
Officer’s Letter
Dear shareholders,
It has been just over six months since I joined the
team at Eclipx Group. Since then, we have been
working intensely on the reduction of business
complexity and earnings volatility associated
with the recent underperformance of the Group.
We refer to this as the Simplification Plan, which
is intended to deliver sustainable outcomes for
all of our stakeholders, and most importantly,
outperformance for you, the Eclipx Group
shareholders.
The Simplification Plan has been developed to
restore the Group as a market leading fleet and
novated leasing platform in Australia and New
Zealand. This “Core” fleet business has been
producing stable, predictable earnings and a
strong return on capital for over 30 years.
The Simplification Plan has four primary objectives
being, the divestment of Non-Core businesses; a
strengthening of our balance sheet; a sustainable
reduction in our operating cost base and a refocus
on our core businesses.
Non-Core divestments
The “Non-Core” perimeter includes businesses that
had been acquired in recent years. These Non-Core
businesses did not reach their potential under
Group ownership largely due to the ineffective
management of integration. In turn, this resulted in
earnings volatility and a weakening of the Group’s
quality of earnings.
In May 2019, the Group defined the following
businesses as Non-Core: GraysOnline,
areyouselling.com.au, Eclipx Commercial,
Right2Drive and CarLoans. We subsequently
commenced a process of preparing these
businesses for divestment.
We divested GraysOnline and areyouselling.com.
au in July 2019, followed by a sale of Commercial
Equipment in September 2019. As we sit here today,
we expect to sell Right2Drive and CarLoans during
the FY20 year, and like the 2019 divestments, we
intend to apply the sale proceeds to the reduction
of our corporate debt.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 6
Refocus on the Core
With the entire refocus of the Group back onto
the Core, we intend to develop our go-to-
market offering in both fleet leasing and novated.
Our dedicated team have earned the Group
a reputation for providing an industry leading
customer service proposition.
This is reflected in our increasing net promotor score
and a strong customer retention rates at circa 97%.
Our focus is to generate a sustainable risk adjusted
return on capital for our shareholders, and in a
responsible manner.
Our novated business has seen good recent wins
and experienced strong volume growth in recent
times, with circa 12% growth in FY19. This reflects
recent investment in the team and processes to
develop and broaden our customer penetration.
While we our leaders in the provision of fleet
products and services to Corporate market
customers, we are examining the feasibility of
expanding our addressable market into mid-market
and smaller customers, where we can generate a
good risk adjusted return on capital and incremental
growth. We have been carrying out market-based
testing and development of a product more
suited to a mid-market customer base. We have
also commenced discussions with some strategic
partnerships which we will develop over the coming
year. At the same time, we have been exiting
customers with lower risk adjusted return on capital
including funded and managed counterparties.
Conclusion
While FY19 has been a challenging year for the
Group and its shareholders, we have put a much
stronger executive team in place to execute our
Simplification Plan, and bring the business back to
its high-performance Core. The entire fleet team
is aligned to delivering positive outcomes for
all of our stakeholders, including long-term and
sustainable performance for our shareholders.
Julian Russell
Chief Executive Officer
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 7
Business
Overview
Eclipx Group is an established leader
in fleet leasing and management in
Australia and New Zealand providing:
Fleet leasing and management
Vehicle sales, trade-ins and
consumer motor finance
Novated leasing
Car hire and medium term accident
replacement vehicles
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 8
Eclipx Group Businesses
During FY19, Eclipx group was divided into Core and Non-Core businesses. The Core being high quality Fleet
and Novated businesses. The Non-Core businesses are intended to be sold during FY20.
Operating across both Australia and New Zealand, FleetPartners and FleetPlus are leading providers
of fleet management, leasing and salary packaging solutions. Utilising leading technology and decades
of expertise, innovative and tailored solutions are provided to a diverse range of customers, including
multi-nationals, corporates, small to medium sized businesses and individuals. In addition to its Core
fleet services and novated leasing they also provide solutions across accident management, short
term rentals, driver education and telematics, including driver behaviour data and car pool bookings.
FleetChoice provides novated leasing and salary packaging administration services for small to
medium sized organisations and their employees across Australia, making reporting easy via a
combination of direct contact and online reporting tools to streamline tax and compliance. In
addition to its Core fleet and finance services, it also assists customers to access a nation-wide
supplier network offering fleet discounts, full vehicle servicing, maintenance and repairs.
CarLoans.com.au is an online service that assists individuals to secure the best car loan to suit their
needs. The business sources loans from a wide range of Australian lenders and recommends loans
that meet the individual requirements of each customer. CarLoans can assist with secured loans, as
well as operating and finance leases.
Georgie offers a new way to buy new cars. Georgie’s team of car buying specialists help customers find
a car deal that fits their lifestyle with the bulk buying power of Eclipx Group and its experienced team.
Operating 24 hours a day, 7 days a week from locations across Australia and New Zealand,
Right2Drive provides “not at fault” drivers with like-for-like loan vehicles after an accident. It also
supplies rentals to the corporate and leisure sectors and has served more than 100,000 customers
during its brief history, with a customer satisfaction rating of NPS +86 (amongst the highest in the
world). With a fleet of over 3,000 vehicles, including more than 100 different makes and models (from
economy, to luxury SUVs and a wide range of utes and vans), Right2Drive has a large and broad fleet
of vehicles to suit every need.
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ECLIPX GROUP LIMITED | ANNUAL REPORT 2019
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ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 10
Year in Review
Whilst the Core financial performance was stable,
the residual Non-Core businesses remained a critical
constraint on Group performance.
Core
CORE PERFORMANCE WAS RESILIENT HALF ON HALF
\ FY19 EBITDA: $81.9 million
\ FY19 Cash NPATA: $46.5 million
Go to market brands:
41.3
1.1
0.9
(2.7)
40.6
1H19
EBITDA
Net
Operating
Income
(excl. EOL)
End of Lease
Income
(EOL))
Operating
Expenses
2H19
EBITDA
• Core operating performance solid driven by NOI and EOL improvement
• Operating expense increase included increased D&O insurance policy premium and overlap
between new and previous executive teams
Non-Core
NON-CORE BUSINESSES REMAINED INCONSISTENT PERFORMERS
\ FY19 EBITDA: ($22.4) million
\ FY19 Cash NPATA: ($22.7) million
Sold in 2H19:
For Sale in FY20:
(9.4)
(1.1)
4.9
(6.9)
(0.6)
(13.0)
1H19
EBITDA
Grays/AYS
Commercial
Equipment
R2D
Car Loans
2H19
EBITDA
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 11
Environmental,
Social &
Governance
Corporate responsibility and
sustainability is a high priority at
Eclipx. Our primary focus is to ensure
robust stewardship of the business
and to deliver sustainable long term
growth while operating in an ethical
and transparent way.
Environment
Our workforce
Developing our people
Health and safety
Diversity, inclusion & benefits
Community support
Corporate governance
Values and integrity
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 12
Addressing our
fleet businesses’
environmental impact
In FY19 Eclipx’s fleet businesses continued
to focus on playing their part to reduce
their environmental impact.
FleetPlus continued to achieve carbon
neutral status against the National Carbon
Offset Standard, by reducing its carbon
emissions through the introduction of
efficiencies in electricity use, air and
road travel. The business then offset
its remaining emissions by investing in
renewable energy certificates and carbon
credits.
FleetPartners also takes its commitment
to the environment seriously and for the
first time has achieved 99% compliance in
achieving carbon neutral certification.
Environment
At Eclipx we have a number
of solutions to help reduce
our environmental impact and
climate risk.
Eclipx’s partnership with the Clean Energy Finance
Corporation (CEFC) has continued, with the aim
of increasing the uptake of low emissions vehicles
across Australia. Our partnership with CEFC provides
corporate, government and not-for-profit fleet
customers with access to discounted interest rates
when choosing eligible low emissions passenger
and light commercial vehicles. We have now
financed more than $56.2 million worth of vehicles
in our clean energy funding facility, since its
establishment in 2015.
We also recycle at the majority of our business
locations through designated bins which separate
paper, organic and plastic waste for collection.
Empty toner cartridges and waste containers are
also recycled through a third party and e-waste is
either redirected or responsibly disposed of.
Eclipx has not received any fines during the
reporting period for non-compliance with
environmental laws and regulations.
Volunteering: CUE Haven
FleetPartners donate time via staff volunteer
days to undertake conservation work at
CUE Haven on Kaipara Harbour on the North
Island of New Zealand. Cue Haven is a former
dairy farm undergoing restoration by the
community into a sustainable native forest
reserve. FleetPartners’ volunteers have been
busy building pathways and boardwalks to
assist in the preservation of over 167,000
native trees that have been recently planted.
CUE Haven will become a community space
for environmental education and exploration
when infill planting and infrastructure
development are completed.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 13
Our workforce
TURNOVER (%)
Voluntary (%)
Involuntary (%)
AGE DIVERSITY (%)
<20
20-29
30-39
40-49
50-59
60+
GENDER DIVERSITY
Group
Board (%)
Group Executive (%)
Management (%)
Individual (%)
Australia Only
Management (%)
Individual (%)
New Zealand Only
Management (%)
Individual (%)
FY19
FY18
30
17
1%
27%
32%
22%
15%
3%
M
67
87
67
56
M
66
57
M
71
50
F
33
13
33
44
F
34
43
F
29
50
22
7
1%
24%
32%
23%
15%
5%
M
71
94
69
63
M
71
64
M
58
54
F
29
6
31
37
F
29
36
F
42
46
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019
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Developing our people
Eclipx employees are required
to carry out compliance and risk
related training throughout the
year on various topics including:
Anti-money laundering, privacy, fraud awareness,
anti-bribery and corruption, workplace health and
safety, diversity and equality and cyber security.
In FY19, Eclipx’s employees completed approximately
5,000 hours of training on these topics.
Health & Safety
Workplace health and safety
management is a very important
aspect of Eclipx’s operations.
We aim to create and maintain a safe environment
for all employees, contractors, customers and visitors.
Eclipx employs a team of workplace health and
safety professionals to guide our compliance to
relevant health and safety laws and regulations,
through a health and safety management system,
which supports planned, orderly and effective
control over health and safety issues.
We also ensure our people are held accountable
and responsible for workplace health and safety
performance and that they proactively manage
health and safety risks through identifying
hazards, reporting near misses and carrying out
risk assessments to eliminate or control any
identified hazards.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 15
Diversity, inclusion and benefits
Eclipx Group offers an inclusive
work environment for our
diverse mix of employees.
Regardless of our employees gender, age, disability,
ethnicity, marital or family status, religious or cultural
background, sexual orientation and gender identity
we aim to provide an inclusive and diverse culture.
We also provide a supportive and rewarding
working environment that offers a range of
development opportunities and benefits:
DIVERSITY COMMITTEE
We recently established a Diversity Committee
responsible for driving and embedding our diversity
strategy across the Group. With a varied and diverse
workforce across Australia and New Zealand our
life experiences and personal perspectives make
us think and react differently, solve problems
differently, and see different opportunities. We
continue with our commitment to a diverse
workforce, with better conversations and better
results for customers.
Our Diversity Committee members receive
appropriate training through the Diversity Council
of Australia and are charged with being advocates
of change to ensure diversity and inclusion are
ingrained throughout the business.
EMPOWERING WOMEN
Women in Eclipx (WinE) has now been running
for over a year. Officially launched in FY18 WinE
is an employee led networking group set up to
enable women to have the opportunity to meet
and learn from each other and to build meaningful
connections across the Eclipx Group.
It’s also about building our female employees’
confidence and independence by providing them
with opportunities to learn new skills including
wealth building, resilience training and how to
juggle family life whilst still having a career.
The Group’s vision is to inspire, develop and
empower Eclipx’s female employees’ by creating
networking, ideas sharing and mentoring
opportunities.
Several WinE events took place over the last year
including Women in Leadership Conference and
breakfast meetings with Linda Jenkinson from the
Eclipx Board.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 16
Women in leadership
Conference
“It was a fantastic opportunity to be at the
conference to listen to advice from so many
inspirational women leaders. The theme
that resonated from all the speakers was
the importance of being an authentic leader.
When we are our authentic self, we are
most able to draw from our strengths.
Some of us may feel that one must always
wear a professional hat as people leaders,
but it was great to have affirmations from a
group of outstanding women, that we can be
both, the professional and our authentic self.”
Christina Quan
Head of Contract Administration,
Client Services. FleetPlus
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 MENTORING PROGRAM
We launched Supporting Eclipx Talent (SET)
Mentoring Program in FY19 with 20 mentees and
20 mentors from different business units across
Eclipx. The 10-month program will consist of
monthly catch ups between each mentor and
mentee, quarterly professional development
workshops and mid-program and end of program
check ins and evaluations.
SET is an exciting initiative for Eclipx that will help
create opportunities for employees to access a
broader network and enhance their own personal
development. The program will also encourage
cross-Group collaboration and sharing of
knowledge and experiences.
VOLUNTEER LEAVE
We encourage and support our employees to
engage with the communities they live and
work in, while also driving engagement and
collaboration amongst employees. One day of
paid volunteering leave is offered to all permanent
and fixed term employees (with a contract term
of 12 months or more) on an annual basis, so they
can take the time out to support a cause they are
passionate about, as an individual or as part of a
team. Eclipx provided 286 hours of paid leave to
employees volunteering in FY19.
17
Volunteering: Anglicare
FleetPartners were honoured to present
Anglicare Victoria with a $30,000 donation
as a part of their community partnership
in FY19.
Anglicare Victoria is one of the state’s
largest providers of out-of-home care for
young people and children throughout
Victoria, and everything they do focuses
on preventing, protecting and empowering
disadvantaged Victorian children, young
people and families.
FleetPartners employees have regularly
volunteered with Anglicare at their
breakfasts for people experiencing
homelessness, to pack food hampers at
Christmas and as participants in Anglicare’s
annual Altitude Shift - an event which
challenges corporate teams, schools and
individuals to face their fears and abseil
down the St James building in Melbourne
(which is 27 floors high).
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 Graduate program
Our inaugural Graduate Program was
launched in FY19, welcoming 7 graduates
on-board. Through the 18-month structured
program graduates will be completing
rotations based on their degree and area
of interest, working closely with Eclipx
employees who will help champion their
development and guide them through the
first phases of their career.
The first rotation has now started for the
7 graduates across Risk Analytics, Business
Intelligence, Procurement and Product
Development, Fleet Australia, FleetPartners
NZ, Finance and Human Resources.
Community support
Engagement with and support
of the communities we live and
work is a priority at Eclipx.
At Eclipx we continuously provide our people with
opportunities to participate in the environmental,
social and sustainability programs and causes they
are passionate about.
Across our businesses employees dedicate time,
funds, skills and knowledge to various not-for-profits.
Eclipx employees participated in a number
of volunteering and fundraising initiatives
throughout FY19, including ‘Steptember’ for the
fourth year running. Steptember is an annual
campaign to raise funds and awareness for the
Cerebral Palsy Alliance and this year, more than
150 Eclipx employees across Australia and New
Zealand raising over $14,500.
18
FLEXIBLE WORK
We believe that fostering an environment in which
our employees can better integrate and balance
their work life and personal commitments, will
ensure we can attract and retain a diverse and
talented workforce now and into the future. We
also recognise that this approach leads to greater
productivity, wellbeing and job satisfaction.
DRESS FOR YOUR DAY
We understand every day is different for every
person within Eclipx. We want our employees to feel
comfortable and empowered to their jobs which is
why we’re embracing ‘dress for your day’. The choice
is up to our employees based on a common-sense,
professional approach and does not apply where
mandatory safety uniforms are required.
ENGAGEMENT
We have launched a monthly employee newsletter
to share our successes, wins and business updates
and to direct employees back to the Group intranet.
We also launched an online CEO suggestion box
enabling employees to provide feedback, comments
and suggestions either directly or anonymously with
over 60 submissions in the first six months.
PARENTAL LEAVE
We offer 12 weeks of paid leave for primary carers
and one week of paid leave for secondary carers,
along with flexible return to work options. We
also offer an optional Keeping in Touch Plan to
employees on parental leave, including 10 optional
Keeping in Touch working days.
This allows employees to transition more smoothly
back into their role and team, remain connected to
the business, become familiar with new or updated
processes, and able to maintain and refresh their
skills. Eclipx also provides all employees with access
to an Employee Assistance Program.
INTERNAL MOBILITY
We aim to provide employees with meaningful work
and development opportunities across the Group’s
various brands. Internal mobility opportunities may
take the form of a secondment, permanent transfer or
relocation to a new office, state or country.
STUDY ASSISTANCE
We offer study assistance to employees as an
acknowledgement of our most important resource
- our employees and the knowledge, skills and
values they bring to work. The Group recognises
that the personal growth and development of our
employees improves individual and organisational
capability and is an integral part of the success of
our people and business.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 Corporate governance
The Eclipx Board believes
that sound governance is
fundamental to ongoing success
and growth.
The Eclipx Group Board is committed to
implementing the highest possible standards
of corporate governance and its underlying
commitment to excellence is enshrined in its
approach to governance.
The Eclipx Board ensures that sound governance
is fundamental to ongoing success and growth.
that its practices are consistent with the Third
Edition of the Australian Securities Exchange (ASX)
Corporate Governance Council’s Principles and
Recommendations.
To support these principles, we have established
distinct management committees, each of which
has a dedicated charter which outlines the purpose,
responsibilities, composition, guidelines and source
of decision-making authority.
The Asset Risk Committee reviews and approves
the parameters in taking asset risk and residual
values, and the Risk Management Committee
identifies, assesses and reviews the key enterprise
risks and relevant mitigating control activities and
their effectiveness in accordance with our Risk
Management Framework.
The Workplace Health and Safety Committee
addresses workplace health and safety and
regulatory compliance, and the Project Steering
Committee governs the approval, scheduling and
execution of new project initiatives with oversight
of all discretionary work undertaken.
The Board reviews the governance framework
periodically to ensure we continue to uphold
the highest governance standards. As part of
our commitment to corporate responsibility and
sustainability, Eclipx has also adopted a scorecard
to measure our performance and track our progress
to this end.
19
Values and integrity
The Board of Directors, as Eclipx’s highest
governance body, sets an expectation that
Eclipx’s values and ethical standards are
reflected in our operations.
Eclipx is committed to maintaining the
highest ethical standards in the conduct
of its business activities and has adopted a
Code of Conduct that applies to all Directors
and employees, and where relevant and
to the extent possible, consultants and
contractors of Eclipx.
The Code of Conduct outlines how Eclipx
expects its representatives to behave and
conduct business in the workplace, on a
range of issues.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 20
Board of Directors
Kerry Roxburgh
Gail Pemberton
Chairman since 26 March 2015 and Independent
Non-Executive Director since 26 March 2015
Independent Non-Executive Director
since 26 March 2015
Kerry Roxburgh has over 50 years’ experience in
financial services. He is a Practitioner Member of the
Stockbrokers and Financial Advisers Association.
He is Chairman of the Eclipx Group Ltd, the
immediate past Chairman of Tyro Payments Ltd
where he was a non- executive director from April
2008 retiring at their AGM in October, 2019. For
22 years until November this year, he served as
the Lead Independent non-executive Director of
Ramsay Health Care Ltd. He is also a Non-Executive
Director of the Medical Indemnity Protection
Society and of MIPS Insurance Ltd, chairing their
Group Investment Committee.
Kerry was previously the CEO of E*TRADE Australia
and was subsequently Non-Executive Chairman until
it was acquired by the ANZ Bank in 2007. Prior to his
time at E*TRADE in Australia, Kerry was an Executive
Director at the HSBC Bank Australia where, for
10 years he held various positions including Head
of Corporate Finance and Executive Chairman of
HSBC James Capel in Australia. Prior to the HSBC,
Kerry spent 20 years as a Chartered Accountant at
HLB Mann Judd until 1986 and previously at Arthur
Andersen. For 10 years until 2014, Kerry was the
inaugural Chairman of the Charter Hall Group (ASX
Code: CHC) and in 2015 he retired after 20 years as
Chairman of the Board of Tasman Cargo Airlines (a
member of the DHL International network) and he
was previously a member of the Advisory Board of
AON Risk Solutions in Australia.
In addition to Eclipx Group Ltd, during the last three
years Kerry also served as a non-executive Director
of Ramsay Health Care Ltd (appointed in July 1997)”.
Gail Pemberton’s executive roles have included
Chief Operating Officer UK at BNP Paribas Securities
Services and CEO and Managing Director, BNP
Paribas Securities Services, Australia and New
Zealand. Gail joined BNP Paribas after a highly
successful 20-year career at Macquarie Bank, where
she worked for 20 years, holding the role of Group
CIO for 12 years and subsequently as COO of the
Financial Services Group in her last three years at
Macquarie.
Gail’s current Board roles include Non-Executive
Director of Eclipx (ASX:ECX), the Sydney Metro and
Chair of Prospa (ASX:PGL). She previously served
on the Boards of Arq Group (ASX:ARQ), OneVue
(ASX:OVH), SIRCA and RoZetta Technology and
Onthehouse (ASX:OTH) as independent Chair,
and as a Candidate Non-Executive Director of
the Colonial First State Group (formerly to be
demerged from Commonwealth Bank of Australia
ASX:CBA) and as Non-Executive Director for PayPal
Australia, QIC, UXC (ASX:UXC), Baycorp, Alleron
Funds Management, Air Services Australia, the
Sydney Opera House Trust and Harvey World Travel
(ASX:HWT).
Gail was awarded the Order of Australia (AO) in the
2018 Australia Day Honours list for distinguished
service to the finance and banking industry, to
business through a range of roles, as an advocate
for technology, and as a mentor to women.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 21
Board of Directors
CONTINUED
Trevor Allen
Russell Shields
Independent Non-Executive Director
since 26 March 2015
Independent Non-Executive Director
since 26 March 2015
Russell Shields has more than 35 years’ experience in
financial services, including six years as Chairman of
ANZ Bank, Queensland and Northern Territory.
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. He was previously Chairman of Onyx
Property Group Pty Ltd.
During the last three years Russell has also served as
a Director for the following listed companies: Aquis
Entertainment Ltd (appointed August 2015) and
Retail Food Group Ltd (resigned October 2018).
Trevor Allen has over 40 years’ 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 and
Freedom Foods Group Ltd and a Non-Executive
Alternate Director, Company Secretary and Public
Officer of Australian Fresh Milk Holdings Pty Ltd.
He is also a Non-Executive Director of Topco
Investments Pty Ltd, the holding company of Real
Pet Food Company Limited.
Prior to undertaking non-executive roles in 2012,
Trevor held 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.
Trevor 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.
During the last three years Trevor has also served
as a Director for the following companies: Yowie
Group Ltd (resigned January 2018) and Brighte
Capital Pty Ltd (resigned June 2018).
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 22
Corporate Directory
Eclipx Group Limited
ACN 131 557 901
Eclipx Group is listed on the
Australian Securities Exchange under
the ASX code of ECX.
Directors
Kerry Roxburgh – Chairman
Gail Pemberton
Trevor Allen
Russell Shields
Linda Jenkinson
Group General Counsel
and Company Secretary
Matthew W. Sinnamon
Registered Office and
Principal Administration Office
Level 6, 601 Pacific Highway
St Leonards, NSW 2065, Australia
T: +61 2 8973 7272 F: +61 2 8973 7171
Share Registry
Link Market Services Limited
Level 12, 680 George Street
Sydney, NSW 2000
T: +61 2 8280 7100 F: +61 2 9287 0303
Auditor
KPMG
Tower 3, International Towers Sydney
300 Barangaroo Avenue
Sydney, NSW 2000
T: +61 2 9335 7000 F: +61 2 9335 7001
Corporate Governance Statement
For a copy of Eclipx’s Corporate
Governance Statement visit:
investors.eclipxgroup.com/Investor-
Centre
Linda Jenkinson
Independent Non-Executive Director
since 4 January 2018
Linda Jenkinson is a proven global entrepreneur
who has started three multi-national companies,
one of which listed on the NASDAQ.
Most recently she was the co-founder of John Paul,
a global concierge services and digital solutions
company that services some of the world’s leading
customer facing businesses.
Linda is currently a Director of Guild Group Holdings
and Chair of Guild Trustee Services, a Director of
Air New Zealand (AIR) in New Zealand, a Director
of Harbour Asset Management, Chair of UNICEF
New Zealand and the Director and Secretary of the
Massey Foundation in the United States. Previously
she was a partner at A.T. Kearney in their Global
Financial Services Practice and was a leader in A.T.
Kearney Global Sourcing Practice.
Linda holds a Master of Business Administration
from The Wharton School, University of
Pennsylvania and a Bachelor of Business Studies
from Massey University.
In 2016, Linda was named a World Class New
Zealander by Kea and as one of the most influential
women in the Bay Area for 2014 by the San
Francisco Business Times.
In 2014 Linda was a recipient of Massey University’s
Sir Geoffrey Peren Award, which recognises a
graduate who has reached the highest level of
achievement or who has been of significant service
to the university, community or nation.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 Financial
Report
for the year ended
30 September 2019
Directors’ Report
Lead Auditor’s Independence Declaration
23
24
39
Letter from Remuneration and Nomination Committee (unaudited) 40
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 Discontinued operations
2.3 Revenue
2.4 Expenses
2.5 Earnings per share
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 Restatement of 2017 balances
6.8 Events occurring after the reporting period
Directors’ Declaration
Independent Auditor’s Report
42
63
64
65
66
67
74
74
77
79
82
83
85
89
89
91
91
92
93
97
97
98
105
105
107
108
109
110
110
115
116
116
118
119
120
121
123
124
124
125
126
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 24
Directors’ Report
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 2019.
1. DIRECTORS
The following persons were Directors of the Company during the financial year and up to the date of this report:
KERRY ROXBURGH
BCOM, MBA, MeSAFAA
GAIL PEMBERTON
MA (UTS), FAICD, GCERT FIN
Chairman since 26 March 2015, Independent Non-
Executive Director since 26 March 2015.
Independent Non-Executive Director since 26
March 2015.
Kerry Roxburgh has over 50 years’ experience in
financial services. He is a Practitioner Member of the
Stockbrokers and Financial Advisers Association.
He is Chairman of the Eclipx Group Ltd, the
immediate past Chairman of Tyro Payments Ltd
where he was a Non-Executive director from April
2008 retiring at their AGM in October, 2019. For
22 years until November this year, he served as
the Lead Independent Non-Executive Director of
Ramsay Health Care Ltd. He is also a Non-Executive
Director of the Medical Indemnity Protection
Society and of MIPS Insurance Ltd, chairing their
Group Investment Committee.
Kerry was previously the CEO of E*TRADE Australia
and was subsequently Non-Executive Chairman until
it was acquired by the ANZ Bank in 2007. Prior to his
time at E*TRADE in Australia, Kerry was an Executive
Director at the HSBC Bank Australia where, for
10 years he held various positions including Head
of Corporate Finance and Executive Chairman of
HSBC James Capel in Australia. Prior to HSBC, Kerry
spent 20 years as a Chartered Accountant at HLB
Mann Judd until 1986 and previously at Arthur
Andersen. For 10 years until 2014, Kerry was the
inaugural Chairman of the Charter Hall Group (ASX
Code: CHC) and in 2015 he retired after 20 years as
Chairman of the Board of Tasman Cargo Airlines (a
member of the DHL International network) and he
was previously a member of the Advisory Board of
AON Risk Solutions in Australia.
In addition to Eclipx Group Ltd, during the last three
years Kerry also served as a non-executive Director
of Ramsay Health Care Ltd (appointed in July 1997).
Gail Pemberton’s executive roles have included
Chief Operating Officer UK at BNP Paribas Securities
Services and CEO and Managing Director, BNP
Paribas Securities Services, Australia and New
Zealand. Gail joined BNP Paribas after a highly
successful 20-year career at Macquarie Bank, where
she worked for 20 years, holding the role of Group
CIO for 12 years and subsequently as COO of the
Financial Services Group in her last three years at
Macquarie.
Gail’s current Board roles include Non-Executive
Director of Eclipx (ASX:ECX), the Sydney Metro and
Chair of Prospa (ASX:PGL).
She previously served on the Boards of Arq
Group (ASX:ARQ), OneVue (ASX:OVH), SIRCA and
RoZetta Technology and Onthehouse (ASX:OTH)
as independent Chair, and as a Candidate Non-
Executive Director of the Colonial First State Group
(formerly to be demerged from Commonwealth
Bank of Australia ASX:CBA) and as Non-Executive
Director for PayPal Australia, QIC, UXC (ASX:UXC),
Baycorp, Alleron Funds Management, Air Services
Australia, the Sydney Opera House Trust and
Harvey World Travel (ASX:HWT).
Gail was awarded the Order of Australia (AO) in the
2018 Australia Day Honours list for distinguished
service to the finance and banking industry, to
business through a range of roles, as an advocate
for technology, and as a mentor to women.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 25
Directors’ Report
CONTINUED
TREVOR ALLEN
BCOM (HONS), CA, FF, FAICD
LINDA JENKINSON
BBS, MBA
Independent Non-Executive Director since 26 March
2015.
Independent Non-Executive Director since 4
January 2018.
Trevor Allen has over 40 years’ 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 and
Freedom Foods Group Ltd and a Non-Executive
Alternate Director, Company Secretary and Public
Officer of Australian Fresh Milk Holdings Pty Ltd.
He is also a Non-Executive Director of Topco
Investments Pty Ltd, the holding company of Real
Pet Food Company Limited.
Prior to undertaking non-executive roles in 2012,
Trevor held 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.
Trevor 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.
During the last three years Trevor has also served
as a Director for the following companies: Yowie
Group Ltd (resigned January 2018) and Brighte
Capital Pty Ltd (resigned June 2018).
Linda Jenkinson is a proven global entrepreneur
who has started three multi-national companies,
one of which listed on the NASDAQ.
Linda is currently a Director of Guild Group Holdings
and Chair of the Guild Trustee Services, and a
Director of Jaxsta Ltd (JXT-AX).
In New Zealand Linda is a Director of Air New
Zealand (AIR), a Director of Harbour Asset
Management and the Chair of Unicef New Zealand.
In the United States Linda is a Trustee and Secretary
of the Massey Foundation.
Most recently she was the co-founder of John Paul,
a global concierge services and digital solutions
company that services some of the world’s leading
customer facing business. Previously she was a
partner at A.T. Kearney in their Global Financial
Services Practice and was a leader in A.T. Kearney’s
Global Sourcing Practice.
Linda holds a Master of Business Administration
from The Wharton School, University of
Pennsylvania and a Bachelor of Business Studies
from Massey University.
RUSSELL SHIELDS
FAICD
Independent Non-Executive Director since 26
March 2015.
Russell Shields has more than 35 years’ experience
in financial services, including six years as Chairman
of ANZ Bank, Queensland and Northern Territory.
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. He was previously Chairman of Onyx
Property Group Pty Ltd.
During the last three years Russell has also served
as a Director for the following listed companies:
Aquis Entertainment Ltd (appointed August 2015)
and Retail Food Group Ltd (resigned October 2018).
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 26
Directors’ Report
CONTINUED
IRWIN (‘DOC’) KLOTZ
2. COMPANY SECRETARY
Chief Executive Officer and Managing Director
resigned 13 May 2019.
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, CPA, FAICD
Deputy Chief Executive Officer and Chief Financial
Officer resigned 5 July 2019.
Mr Garry McLennan has over 40 years’ of corporate
and financial services experience 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.
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 2019 financial year and the number
of meetings attended by each Director. During the
year a total of 42 Board meetings, 14 Audit and Risk
Committee meetings and eight Remuneration and
Nomination Committee meetings were held.
Board
Audit and Risk
Committee
Remuneration and
Nomination Committee
Director
Held
Attended
Held
Attended
Held
Attended
Kerry Roxburgh
Gail Pemberton
Trevor Allen
Russell Shields
Linda Jenkinson
Garry McLennan
Doc Klotz
42
42
42
42
42
32
34
41
40
41
39
32
32
34
14
14
14
14
-
-
-
12
14
14
13
-
-
-
8
8
8
-
8
-
-
7
8
8
-
5
-
-
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019
27
Directors’ Report
CONTINUED
4. REVIEW OF OPERATIONS
Principal activities
Eclipx provides fleet leasing, management and vehicle rental services to corporate, SME and consumers in
Australia and corporate and SME customers in New Zealand.
Group financial performance
Throughout the first half of the year, Eclipx was engaged in executing the Scheme of Arrangement with
McMillan Shakespeare (ASX: MMS) a leading salary packaging and novated lease provider. The merger was
founded on strong industrial logic, leveraging the Core competencies of both businesses to deliver improved
scale and meaningful synergies, thereby delivering improved shareholder value to both sets of shareholders.
Despite the merits of this transaction both parties agreed to terminate the Scheme in April this year. The Eclipx
Board had developed the “Simplification Plan” as an alternative option to the proposed merger. Shortly after
termination of the merger, the Eclipx Board initiated this plan with the appointment of a new leadership team,
notably the new Chief Executive Officer (CEO), Julian Russell and Chief Commercial Officer, Bevan Guest.
In conjunction with the Board, Julian moved to immediately refine and execute the Simplification Plan,
including a renewed focus on the Core business, divestment of Non-Core businesses, a comprehensive resizing
of the cost base and de-risking of the capital structure.
At the end of September, the Group has made good progress in executing the Simplification Plan with the
sale of GraysOnline, areyouselling.com.au and Eclipx Commercial Finance in the second half of FY19. The two
remaining Non-Core businesses, CarLoans and Right2Drive are to be offered for sale in 2020 financial year, the
latter being classified as held for sale in the financial statements at fair value.
The Group measures financial performance adopting the following non-IFRS measures:
\ Net operating income - this represents net earnings after direct costs.
\ EBITDA - the earnings after non-direct costs and excluding depreciation and amortisation of non-fleet
assets, share based payments recognised as equity and the interest expenses on corporate debt excluding
any interest expense on debt allocated to fleet assets.
\ Cash NPATA - the earnings of the Group excluding significant costs deemed to be non-recurring due to
the nature of the cost and the amortisation of all intangibles.
\ Cash NPAT - the earnings of the Group excluding significant costs deemed to be non-recurring due to
the nature of the cost and the amortisation of acquired intangibles.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 28
Directors’ Report
CONTINUED
The table below reconciles the non-IFRS measures with the statutory profit reported in the Group Statement
of Profit or Loss and Other Comprehensive Income.
Net operating income
173,278
182,236
2019
Core
$'000
2018*
Core
$’000
2019
Non-Core
2018*
Non-Core
$’000
88,578
$’000
132,512
2019
Group
$’000
2018*
Group
$’000
261,856
314,748
Bad and doubtful debts
(1,259)
(1,142)
(5,100)
(1,095)
(6,359)
(2,237)
Operating expense
(90,078)
(94,902)
(105,938)
(105,643)
(196,016)
(200,545)
EBITDA
81,941
86,192
(22,460)
25,774
59,481
111,966
Depreciation and amortisation
(3,414)
(2,534)
(1,073)
Share based payments
(2,201)
(351)
(37)
(1,181)
(103)
(4,487)
(3,715)
(2,238)
(454)
Holding company debt interest
(10,473)
(6,980)
(8,048)
(7,844)
(18,521)
(14,824)
Tax
Cash NPATA
(19,326)
(18,709)
8,914
(5,133)
(10,412)
(23,842)
46,527
57,618
(22,704)
11,513
23,823
69,131
Software amortisation post tax
(4,796)
(2,505)
(2,311)
(1,281)
(7,107)
(3,786)
Cash NPAT
41,731
55,113
(25,015)
10,232
16,716
65,345
Reconciling items to statutory profits
Amortisation of other intangibles
(3,705)
(3,796)
(2,467)
(2,090)
(6,172)
(5,886)
Impairment of intangibles
(27,658)
Loss on disposals
Fair value adjustment
Significant items
Tax
-
-
-
(178,801)
(116,215)
(21,569)
-
-
(206,459)
(116,215)
(21,569)
-
-
-
-
(27,980)
17,447
(380)
1,208
(6,898)
(11,130)
(34,878)
(11,510)
9,673
4,065
27,120
5,273
Statutory Profit
(165)
52,145
(341,292)
1,077
(341,457)
53,222
* Restated to reflect the full retrospective adoption of AASB 15 and prior period restatement.
Net operating income
The decrease in Core net operating income is mainly attributable to a decrease in the net earnings from
ex-fleet vehicles being sold, mainly as a result of the category mix of vehicles being returned. The Group
experienced an increase in lease extensions, which impacts the timing of any profits on fleet vehicles as the
Group only recognises a profit on vehicles returned and subsequently sold.
The decrease in Non-Core net operating income is due to a decrease in trading performance in Grays’ industrial
and insolvency sector (GraysOnline was disposed of on 31 July 2019) and a decrease in the trading performance
of Right2Drive as this business unit exited the uninsured segment of the market. It also reassessed the new
accounting standard’s impact of cash collections on revenue recognition.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 29
Directors’ Report
CONTINUED
4. REVIEW OF OPERATIONS (continued)
EBITDA
The decline in Core EBITDA is largely attributable to a decrease in net operating income partially offset by
savings in operating expenses.
The decline in Non-Core EBITDA is as a result of a decrease in net operating income and a rise in bad and
doubtful debts, where Eclipx Commercial Finance recognised impairments against its viewble exposure.
Cash NPATA
Core Cash NPATA was negatively impacted by:
\ an increase in depreciation of fixture and fittings as the Group reassessed the useful life of assets in
leased premises;
\ an increase in share based payments when the previous CEO resigned and unvested grants remain on
foot and the issue of new grants to staff; and
\ an increase in holding company interest on debt as the Group had a higher level of borrowings
compared to the prior comparative period (“pcp”).
Cash NPAT
Software previously in development went into production in the last quarter of the 2018 financial year. The first
time amortisation charge on these systems negatively impacted Cash NPAT in FY19.
Reconciling items to statutory profit
Set out below is a summary of the major reconciling items between cash NPAT and statutory profit.
The impairment of intangibles in Core of $27.7m relates to the:
\ Impairment of the lease system in New Zealand of $12.7m, reviewed following the restructure of the
business and the appointment of a new leadership team;
\ Impairment of software of $4.9m, following a restructure of the Group and disposals of GraysOnline and
of Eclipx Commercial finance;
\ Impairment of software across the Core fleet and novated business of $6.6m, arising after the new
leadership team reviewed the software in use across the fleet business; and
\ Impairment of customer relationships of $3.5m following a review of the profitability of the product
being offered in New Zealand and its carrying value.
The significant reconciling items in Core includes the cost associated with the McMillan Shakespeare merger
and Core incurred costs associated with the Group restructuring.
The impairment of intangibles in Non-Core of $178.8m relates to:
\ The impairments in goodwill previously announced in 1H19 accounts against Right2Drive ($59.2m) and
against GraysOnline ($59.2m);
\ Further goodwill was written off in Right2Drive ($10.8m) and in CarLoans ($30.2m) following the
appointment of the new leadership team;
\ Impairment was booked against acquired intangibles at Right2Drive ($12.8m) and at CarLoans ($0.3m);
and Impairment of software was also booked in Right2Drive ($4.5m) and in CarLoans ($1.8m).
The Non-Core recognised losses on disposals of GraysOnline and Eclipx Commercial Finance of $116.2m.
Right2Drive has been revalued to fair value. As a result, a non-cash impairment of $21.6m has been recognised
in 2019.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 30
Directors’ Report
CONTINUED
Segment performance
The Group announced a Senior Executive Leadership Renewal on 13 May 2019, when a new Chief Executive
Officer was appointed. The Group subsequently made an announcement to the market on 31 May 2019 of its
Simplification Plan, saying:
\ Core business would include the fleet and novated leasing management and services to corporate,
SME and consumers in Australia and corporate and SME customers in New Zealand.
\ Core business segments would be Australia Commercial, Australia Consumer and New Zealand.
\ Non-Core business were identified as for disposal, including GraysOnline.
As a result, in the FY19, financial statements segment classifications have changed.
Set out below is a summary of the FY19 segment results, compared with FY18:
Australia Commercial
Net operating income $106.0m (2018: $120.2m)
EBITDA $55.1m (2018: $61.4m)
Cash NPATA $30.3m (2018: $40.7m)
Australia Commercial provides complete fleet management services and associated services to Australian
businesses.
The financial performance of the Australia Commercial segment was impacted by:
\ lower net income on vehicles being returned at the end of the lease, resulting from a reduction in the
number of heavy commercial and light commercial vehicles sold during the period;
\ lower margin on maintenance;
\ decreased interest margin associated with the ineffective portion of the interest rate swaps and costs
to terminate interest rate hedges where customers have settled or changed lease terms;
\ increase in the allocation of holding company debt interest;
\ increased depreciation and amortisation of leasehold improvements and software;
\ increased share based payments expenditure; and
\ savings in operating expenditure as the Group began to eliminate duplicated roles with the
consolidation of fleet and reduction of costs as unprofitable business relationships are reviewed and
discontinued.
Australia Consumer
Net operating income $28.6m (2018: $22.5m)
EBITDA $14.9m (2018: $11.3m)
Cash NPATA $8.8m (2018: $8.3m)
Australia Consumer provides novated leasing and salary packaging to customers in the Australian market.
The financial performance of the Australia Consumer segment was positively impacted by the growth
experienced in the novated segment, while minimising operating costs to support this growth.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 31
Directors’ Report
CONTINUED
4. REVIEW OF OPERATIONS (continued)
New Zealand
Net operating income $38.7m (2018: $39.6m)
EBITDA $11.9m (2018: $13.5m)
Cash NPATA $7.5m (2018: $8.6m)
New Zealand provides complete fleet management services and associated services and asset finance to the
small medium enterprise market in New Zealand.
The financial performance of the New Zealand segment was negatively impacted by:
\ lower revenue on vehicles being returned at the end of the lease, where customers extended the
period of the lease;
\ lower margin on maintenance;
\ decreased interest margin associated with the ineffective portion of interest rate swaps;
\ an increase in the allocation of holding company debt interest;
\ increases in amortisation costs associated with the leasing system, which went live in New Zealand in
late calendar 2018; and
\ increases in share based payments expenditure.
Non-Core
Net operating income $30.9m (2018: $50.9m)
EBITDA ($22.0m loss) (2018: $7.9m)
Cash NPATA ($17.9m loss) (2018: $1.1m)
Non-Core segment consists of CarLoans, Eclipx Commercial Finance and Right2Drive. Eclipx Commercial
Finance was sold on 13 September 2019. Right2Drive has been classified as held for sale and its financial
performance is disclosed in discontinued operations. CarLoans is being prepared for sale although at 30
September 2019 the business did not meet the requirements as being held for sale under the accounting
standards.
The financial performance of the Non-Core segment was negatively impacted by:
\ decreased revenue in Right2Drive, following a decision to exit the uninsured at fault parties segment;
\ decreased revenue in Right2Drive as revenue recognition is adjusted to account for the overall level of
cash collections; and
\ increases in bad debts largely due to the recognition of impairments on the Viewble exposure.
Grays (including areyouselling.com.au)
Net operating income $57.7m (2018: $81.5m)
EBITDA ($0.4m loss) (2018: $17.9m)
Cash NPATA ($4.8m loss) (2018: $10.5m)
GraysOnline was sold on 31 July 2019. In the 10 months ended 31 July 2019, GraysOnline experienced a decrease
in the trading performance in the industrial and insolvency sector, partially offset by an increase in revenue in
the auto segment of the business.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 32
Directors’ Report
CONTINUED
5. FINANCIAL POSITION
Trade receivables and other assets
Trade and other receivables decreased largely due to the disposal of GraysOnline, Eclipx Commercial Finance
and reclassification of Right2Drive as held for sale.
Inventory
Inventory has largely decreased due to the sale of GraysOnline. At the time of disposal, the GraysOnline
inventory carrying value was $7.9m.
Finance leases
The level of finance leases written in Core increased in 2019 against the pcp. The carrying value of finance
leases decreased as a result of the disposal of Eclipx Commercial Finance and a decrease in the number of
finances leases funded through the Eclipx funding structure. The Group has the ability to fund new finance
leases through its warehouse structure or through third party funding. The Group increased the level of third
party funding increasing cash flows and revenue recognised under brokerage income. Finance leases are
predominantly used to fund novated leases.
Operating leases reported as property, plant and equipment
Operating leases reported as property, plant and equipment decreased as a result of a lower number of new
operating leases entered into as customers retained existing vehicles and extended leases coupled with an
increase in the number of operating leases funded by third parties.
Intangibles
Intangible assets decreased with the write down of goodwill of acquired intangibles and of software coupled
with the disposal of GraysOnline and of Eclipx Commercial Finance.
At 31 March 2019 the Group had impaired the carrying value of goodwill associated with GraysOnline and with
Right2Drive where the carrying value of those cash generating units (CGU) was compared against their value
in use.
Following the appointment of a new leadership team and implementation of the Simplification Plan, all
intangible assets were tested for impairment. Additional impairments to intangible assets described above
were recognised at 30 September 2019.
Borrowings
Borrowings reported at 30 September 2019 include an amount of $285.7m (2018: $340.2m) relating to corporate
debt. The Group used cash generated from the sale of GraysOnline to repay corporate debt. At 25 October
2019, the Group, with the support of its existing corporate debt lenders, entered into an agreement to amend
and extend the terms of its corporate funding.
Cash flows
In the financial year ended 30 September 2019, the Group increased its total cash holdings including restricted
cash by $31.6m (2018: $12.8m). The significant items impacting cash flow this year were:
\ Proceeds from disposal of GraysOnline and Eclipx Commercial Finance $70.8m;
\ Payment of a FY18 final dividend of $25.6m;
\ Additional investment in software and property, plant and equipment $13.6m;
\ Repayment of Corporate debt $54.5m
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 33
Directors’ Report
CONTINUED
5. FINANCIAL POSITION (continued)
Funding
Eclipx looks to optimise its funding facilities with committed funding facilities that cater for the forecast
business growth. At 30 September 2019, Eclipx had undrawn debt facilities of $218.6m (2018: $286.8m).
For leasing finance facilities where Eclipx acts as the funder, funding is 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 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).
6. GOING CONCERN
This financial report has been prepared on the basis that the Group is a going concern.
The half-year report included a note to clarify the appropriateness of this treatment, referring to the
simplification plan and restructure of its banking facilities that support this view. The Group has executed and
delivered against its plan, supporting the preparation of this financial report as a going concern.
For the financial year ended 30 September 2019 the Group:
\ Generated net cash inflow from operating activities of $382.6m, which is an improvement of $62.2m
compared to the pcp;
\ Paid a dividend of $25.6m, relating to final dividends declared for 2018;
\ Incurred costs of $16.7m relating to the merger with McMillan Shakespeare Group, that did not proceed;
\ Generated cash of $70.8m from the sale of GraysOnline Group and Eclipx Commercial Equipment
Finance;
\ Reduced its corporate debt borrowings by $54.5m; and
\ Increased cash by $31.6m.
Following a strategic review of the business the Group embarked on its Simplification Plan to refocus on its
well established, Core business. Since 31 May 2019 the following has been delivered:
\ GraysOnline and Eclipx Commercial Equipment Finance have been sold;
\ Right2Drive is held for sale, carried at fair value with a sale process underway;
\ The Group has refreshed the executive team;
\ Reduced operating costs, for example via the relocation of the head office to existing premises;
\ On 25 October 2019 the Group extended its corporate debt maturities (to Oct 2022 and July 2025 for
the corporate debt facility and US private placement note respectively) and amended the terms of the
corporate debt facilities and US private placement note purchase agreement;
\ The Group’s cash flow forecasts, demonstrate continued compliance with the covenant criteria under
the amended corporate debt facilities and US private placement note purchase agreement;
\ Extended warehouse funding facilities and issued an asset-backed securities transaction FP Ignition
Series 2019-1; and
\ Conserved capital by not declaring a dividend.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 34
Directors’ Report
CONTINUED
The Group will continue implementing its simplification and optimisation strategy by:
\ Focusing on the fleet business and enhancing profitability by reviewing business relationships to
maximise returns;
\ Growing in the novated leasing product offering; and
\ Improving the cost to income ratio of the Core business.
Following the extension and amendment of the corporate debt facilities and US private placement note
purchase agreement, successful execution of the simplification initiatives, and by continued focus on
simplifying and optimising the Group, the Directors are of the opinion that the preparation of the financial
report as a going concern is appropriate.
7. BUSINESS STRATEGIC OBJECTIVES
The strategy of the Eclipx Group is to refocus the Group on its Core businesses which are the provision of fleet
leasing, management and vehicle rental services to corporate, SME and consumers in Australia and corporate
and SME customers in New Zealand.
The Group successfully executed on the sale of GraysOnline and Eclipx Commercial Finance with work
proceeding on the sale of the remaining Non-Core businesses, Right2Drive and CarLoans.
The return to Core means Eclipx is a simpler business where head office infrastructure and costs can be
reduced and processes across the Core business can be streamlined as the business moves to a single lease
platform.
These initiatives allow the Group to decrease its costs to serve and implement best practice in customer
service to grow margins and profits.
The Group continues to be a leader in its funding models and has successfully extended its warehouse funding
lines and issued its second ABS in New Zealand. Corporate debt has been reset and $54.4m has been repaid.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 35
Directors’ Report
CONTINUED
8. KEY RISKS
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 an 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.
• Eclipx has multiple disposal channels for vehicles returning
at the end of the lease, allowing the Company to minimise
any losses on vehicles where the residual value is above
the market value.
• Residual values are reviewed regularly by the pricing and risk
team and adjusted based on market 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 mitigates the interest rate risk by hedging the
portfolio and funding is provided based on the contractual
maturity of the lease.
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 may be unable to access funding on competitive
terms
• Eclipx has a diversified funding structure which includes
multiple funding parties.
Disposal of Non-Core businesses
Reduction in the number of new passenger vehicles sold
• Funding facilities are negotiated and agreed on an annual
basis.
• The Non-Core businesses have been made available for
sale with a plan to sell the businesses during FY2020.
• Management has appointed experienced advisors and key
personnel who have the required knowledge and skill to
execute on these transactions.
• The Core business has a diverse mix of vehicles including,
light commercial and heavy commercial vehicles. This
mitigates exposure to one segment.
• The Group is growing in the consumer segment as it
continues to educate customers about novated leases and
continues to grow the sale of novated leasing.
Maintaining a high quality employee base
• The Group has a process in place to identify and develop
key talent.
• Key staff are incentivised through STI and LTI plans
• STI and LTI plans have been refreshed to reward individuals
for achievements against individual targets which are
aligned to the Group targets.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 36
Directors’ Report
CONTINUED
9. SUBSEQUENT EVENTS
In September 2019 the Group reached agreements with the funders of the corporate debt facility to extend
and amend the facility. The funders provided a waiver for the covenant testing as at 30 September 2019
subject to all parties formalising the new agreement by 31 October 2019. As of 25 October 2019, the Group
formalised the agreements with the parties to the corporate debt facility to amend and extend the facility
on terms consistent with those agreed in September 2019. The agreement will further support the Group as it
continues to deliver on its simplification and optimisation strategy.
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 Directors’ Report, financial statements or notes thereto.
11. ENVIRONMENTAL FACTORS
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
Dividend paid during the financial year was:
Final dividends paid
2018 final dividend paid on 25 January 2019; 8.00 cents per ordinary share
franked to 100% (2017: 7.75 cents)
Interim dividends paid
2019 interim dividend - no dividend was declared; (2018: 8.00 cents)
Total dividends paid
Final dividends proposed but not recognised at year end
2019 final dividend - no dividend was declared; (2018: 8.00 cents)
No dividends were declared for the year ended 30 September 2019.
2019
$'000
2018
$'000
25,571
24,335
-
25,571
-
25,319
49,654
25,571
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 37
Directors’ Report
CONTINUED
13. INDEMNIFICATION OF DIRECTORS AND OFFICERS
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 ended 30
September 2019. 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 has
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.
Eclipx acquired non-audit services from KPMG where the utilisation of KPMG would be beneficial to Eclipx due
to the specific skills and knowledge the non-audit service team would have regarding the transaction and the
impact this could have on the Group. The following non-audit services were acquired from KPMG:
\ KPMG provided transactional services and debt advisory services relating to the proposed merger with
McMillan Shakespeare Limited, and
\ KPMG Debt Advisory services assisted with the roll-over of the corporate debt and the impact of
introducing an additional funder to the structure.
Following review of the services provided by KPMG for the year ended 30 September 2019 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 to KPMG were as follows:
Audit and assurance services
Audit and review of financial statements
1,502,809
1,032,933
2019
$
2018
$
Non-audit services
Proposed merger with McMillan Shakespeare Limited
Other transactional advisory services
Debt restructuring
Total remuneration for non-audit services for KPMG
Total remuneration for KPMG
968,008
62,259
353,488
1,383,755
2,886,564
-
-
769,520
769,520
1,802,453
A copy of the auditor’s independence declaration is set out on page 39 of this financial report, and forms part
of the Directors Report.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019
38
Directors’ Report
CONTINUED
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.
Kerry Roxburgh
Chairman
Sydney
12 November 2019
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 39
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 2019 there have been:
(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in
relation to the audit; and
(ii) no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Dean Waters
Partner
Melbourne
12 November 2019
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.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 40
Letter from Remuneration
and Nomination Committee (unaudited)
30 SEPTEMBER 2019
Dear Shareholders,
On behalf of the Board, I am pleased to present Eclipx Group Limited’s (Eclipx) FY19 Remuneration Report.
The Remuneration Report provides a summary of the Executive KMP Remuneration Framework for FY19, pay
outcomes for FY19 and details the objectives of the revised FY20 Remuneration Framework.
Summary of Eclipx Performance
In summary, Eclipx’s FY19 financial performance was very disappointing, principally due to the
underperformance of our Non-Core businesses of GraysOnline, areyouselling.com.au, Commercial Equipment
Finance Australia, Right2Drive and CarLoans. However, the performance of our Core businesses of Fleet and
Novated Leasing was solid, notwithstanding a challenging market backdrop.
Further disappointment arose in April 2019 when the proposed merger between McMillan Shakespeare (ASX:
MMS) and Eclipx was terminated by mutual agreement. If implemented, the merger would have been highly
complementary for the two companies, offering material synergies for the merged entity which would have
created the largest salary packaging and fleet management company in Australia.
The Eclipx Simplification Plan
Given these events, the Eclipx Board identified the key structural, people and business changes that would
be crucial to Eclipx’s future growth and designed the Eclipx Simplification Plan. The four pillars of that
Simplification Plan are a renewed focus on our Core business of Fleet and Novated Leasing, divestment of
Non-Core businesses, a comprehensive resizing of the cost base and de-risking of the capital structure.
In accordance with the Simplification Plan, in May 2019 the Board agreed with Doc Klotz that he would step
down as CEO and on the same day the Board appointed Julian Russell in his place. Also at that time, Bevan
Guest was appointed to the newly created role of Chief Commercial Officer. Following Julian’s appointment,
and with the agreement and support of the Board, Julian immediately accelerated the execution of the
Simplification Plan
Former CEO, Doc Klotz, received his contractual entitlement of six months paid notice (provided as gardening
leave), with his unvested long term incentives remaining on foot for the time being (subject to their terms
of issue). The transition of the CEO was achieved seamlessly, something the Board believes was in the best
interests of Eclipx and its shareholders
The Board is delighted with the performance of Julian and Bevan since their appointment. Julian’s deep
understanding of Eclipx’s business and the many ways it interacts with the markets in which it operates,
together with Bevan’s expertise within the fleet and novated leasing industry, should ensure the success of the
revised business strategy of simplification with its focus on our Core business.
In addition to the appointment of Mr Russell and Mr Guest to their new roles, Eclipx has further refreshed
the executive leadership team, with six new appointments made to the top ten executive roles since May
2019. These include the appointment of an Acting CFO, Jason Muhs, and the exits from Eclipx of the remaining
former KMP executives: CFO, Garry McLennan, and COO, Jeff McLean. The new executive appointments are
fundamental to the performance and execution of the revised business strategy of Eclipx. A key priority in
this strategy includes a focus on retention and investment in key talent through the future Executive KMP
Remuneration Framework
Remuneration outcomes in FY19
While retention payments were made to certain strong performing business-critical staff in FY19, no payments
were made or will be made to KMP or senior executives under the Eclipx FY19 STI program. The FY17 long term
incentive (LTI) was tested at the end of FY19, and the award did not vest as it failed to meet the required
Absolute Cash EPS and TSR performance hurdles for the testing period.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 41
Changes to the Executive KMP Remuneration Framework for FY20
The Remuneration Framework, has been revised for FY20 to align the Executive KMP Remuneration Framework
with Eclipx’s strategic priorities. Our revised framework is designed to focus on our Core Fleet and Novated
Leasing business, to manage Eclipx’s capital effectively, and to deliver consistent returns for our shareholders.
Changes to the Executive KMP Remuneration Framework for FY20 include:
\ Revising the incentive structure by removing STI and delivering variable remuneration via LTI only.
\ Delivering LTI via Options in FY20 (rather than through a mix of Rights and Options) for KMP.
\ Changing the performance hurdles for LTI for better alignment with the Eclipx’s business simplification
strategy.
\ Introducing malus forfeiture guidelines to LTI, addressing financial and non-financial matters.
\ In addition, Eclipx has introduced greater structure, consistency and alignment of incentives for the non-
KMP leadership executives.
No changes to fixed remuneration for Executive KMP are proposed for FY20.
This framework, including the use of options for LTI awards, will be reviewed annually to ensure it remains fit
for purpose to drive and reward executive performance and business outcomes required each year.
Further details of the changes to the Executive KMP Remuneration Framework for FY20 are set out in Section 5.
I look forward to the opportunity to answer any questions regarding the Remuneration Report from
shareholders at the Eclipx Annual General Meeting in February 2020.
Yours faithfully,
Gail Pemberton
Chair of the Remuneration and Nomination Committee
12 November 2019
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 42
Remuneration Report (audited)
The Remuneration and Nomination Committee (Committee) of the Board presents the Eclipx Group Limited
Remuneration Report (Report) for the year ended 30 September 2019 (FY2019).
The Report is presented in the following sections:
1. Introduction
2. Remuneration governance
3. Link to business strategy and executive retention
4. Executive KMP remuneration
5. Remuneration framework changes for FY20
6. Performance against key metrics
7. Non-Executive Director fees
8. Service agreements
9. Executive remuneration disclosures
10. Additional disclosures
11. Other transactions
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 43
Remuneration Report (audited)
CONTINUED
1. INTRODUCTION
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
Group’s strategy.
The KMP comprises both current Executive KMP (Chief Executive Officer, Chief Commercial Officer), former
Executive KMP, and Non-Executive Directors.
For the year ended 30 September 2019, the KMP were:
Position
Term as KMP
Non-Executive Directors
Kerry Roxburgh
Independent Chairman
Gail Pemberton
Independent Non-Executive Director
Trevor Allen
Independent Non-Executive Director
Russell Shields
Independent Non-Executive Director
Linda Jenkinson
Independent Non-Executive Director
Full Year
Full Year
Full Year
Full Year
Full Year
Executive KMP
Current Executives
Julian Russell
Bevan Guest
Former Executive Directors
Chief Executive Officer
Chief Commercial Officer
Appointed 13 May 2019
Appointed 13 May 2019
Doc Klotz
Chief Executive Officer and Managing Director
Ceased being a KMP 13 May 2019
Garry McLennan
Deputy Chief Executive Officer and Chief Financial Officer Ceased employment 5 July 2019
Former Senior Executive
Jeff McLean
Chief Operating Officer
Ceased employment 31 July 2019
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 44
Remuneration Report (audited)
CONTINUED
2. REMUNERATION GOVERNANCE
The committee consists of four Independent Non-Executive Directors:
\ Ms Gail Pemberton (Committee Chair);
\ Mr Kerry Roxburgh;
\ Mr Trevor Allen; and
\ Ms Linda Jenkinson
The following diagram summarises 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 KMP; and
\ The design and positioning of remuneration elements, including fixed and at risk pay,
equity-based incentive plans and other employee compensation arrangements.
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 design and valuation of equity awards, including
tax and accounting advice.
In FY19 no remuneration recommendations (as defined by
the Corporations Act 2001) were requested or provided
from EY or by any other advisors.
The Chief Executive Officer
is responsible for making
recommendations to the
Committee in relation to the
remuneration of the Executive
KMP and for the whole Group.
3. LINK TO BUSINESS STRATEGY AND EXECUTIVE RETENTION
The Group’s remuneration strategy and framework rewards performance in areas critical to the achievement
of Group strategy. This is achieved by attracting and retaining talented people who are motivated to achieve
performance targets aligned with both the business strategy and in the long term interests of shareholders.
During the year, extraordinary demands were made on a number of executive staff, and the Board therefore
implemented a retention scheme deliverable through individual retention payments to non-KMP executives only.
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CONTINUED
3. LINK TO BUSINESS STRATEGY AND EXECUTIVE RETENTION (continued)
Business strategy
For most of the first half of FY19, the Group’s attention was directed towards a Scheme Implementation
Agreement with McMillan Shakespeare (ASX: MMS) a leading salary packaging and novated lease provider.
With market consolidation expected to deliver shareholder value, we identified sound industrial logic with
MMS that included a range of material synergies.
However, in April 2019 we agreed with MMS to terminate the scheme. For the remainder of the financial year,
Eclipx focused immediately thereafter on making significant changes in the executive leadership of the Group
and subsequently on revising the Group’s strategy to a new focus on Simplification. The diagram below outlines
Eclipx’s revised strategy and the link between the Group’s Remuneration strategy and performance measurement.
Revised Strategy FY19
On 31 May 2019, Eclipx Group introduced a Simplification Plan focusing on the Core fleet and novated
business to:
\ Concentrate on high quality businesses that produce stable, predictable earnings and generate
strong return on capital
\ Invest in organic growth of these through Core business units
\ Invest in strong executable innovation and product development
\ Improve management accountability and ownership of outcomes
\ Provide simplicity and transparency
\ Deliver superior long-term value to shareholders through profitable growth.
FY19 Executive KMP Remuneration Strategy
The Eclipx Group remuneration strategy seeks to:
1. Deliver sustainable shareholder value by:
\ Ensuring there is a significant at risk component of total remuneration opportunity;
\ Assessing performance and the 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. Deliver sustainable shareholder value by:
\ Ensuring the remuneration strategy is simple, transparent and consistently applied;
\ Offering a competitive total remuneration opportunity and ensuring remuneration is differentiated
based on capability and performance; and
\ Incentivising key talent to deliver business performance that rewards them for accelerating
shareholder value creation.
Link to Performance
Remuneration outcomes are linked to performance through:
Setting fixed remuneration to reflect the individual’s experience, capability and the value they
bring to the Group;
Requiring a significant portion of executive remuneration to be at risk;
Ensuring that KPIs focus on strategic business objectives designed to deliver shareholder value;
Applying challenging financial and non-financial metrics to measure short and long term performance;
Ensuring that LTI will only vest as a result of achieving earnings per share growth.
Fixed
STI
LTI
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CONTINUED
4. EXECUTIVE KMP REMUNERATION FRAMEWORK
Remuneration components
The diagram below outlines the Group’s remuneration elements and purpose of each element. Further detail is
outlined in the subsequent sub-sections.
Remuneration framework
At risk remuneration
Fixed remuneration
STI
LTI
Reflects the individuals experience,
capability and value to the Group.
Motivate and reward individuals for
achieving financial and non-financial
results linking pay to performance.
e
s
o
p
r
u
P
Motivate, retain and reward key
employees, focusing on sustainable
long-term performance, and
providing participants with exposure
to Eclipx shares.
4.1 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, along with the other elements of Total Remuneration
for Executive KMP, is determined with reference to comparable roles in
companies which have a similar market capitalisation. Fixed remuneration for
each individual is set based on their experience, capability and the value they
bring to the Group.
4.2 Short term incentives
The following table outlines the major features of the Executive KMP FY19 STI plan. Note the STI will be
eliminated for Executive KMP for FY20. Further detail is provided in Section 5.
Who is eligible to participate in the STI plan?
How is performance evaluated?
Is there a minimum profit gateway?
Eligibility to participate in the STI plan is determined by the Board. All
Executive KMP participated in the FY19 STI plan, except for the CEO Julian
Russell as he was appointed less than 5 months before the end of the
financial year.
The Committee is responsible for making recommendations to the Board
regarding the performance and at risk remuneration of Executive KMP.
At least 95% of the Group’s profitability target must be achieved before
any STI award might be payable to Executive KMP. Once this gateway is
achieved the percentage achievement of KPIs will determine individual
STI outcomes within an overall STI pool, determined by the Board.
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4. EXECUTIVE KMP REMUNERATION FRAMEWORK (continued)
What are the FY19 KPI’s?
All KPIs are set to be challenging and reward a significant achievement. The FY19 KPI
weightings follow:
Current Executives
Julian Russell (1)
Ineligible for STI in FY19
Bevan Guest
A balanced sCorecard with a combination of financial, strategic and
non-financial KPIs were agreed, such as:
• Delivery of FY19 Core forecast EBITDA,
• Shared development of the Core strategic direction to position
for growth, and
• The build out of succession planning through the Core business
where gaps exist.
KPI
Financial
People
Customer
Strategy
Individual
Former Executive Directors
Doc Klotz
Garry McLennan
60%
60%
5%
10%
Former Senior Executive
Jeff McLean
60%
5%
5%
-
5%
15%
15%
15%
15%
5%
25%
(1) Julian Russell did not participate in the KMP FY19 STI plan. Please refer to the section
FY19 Performance Outcomes in Section 4.4 for additional detail.
The combination of KPIs were chosen because the Board believes there needs to be
a balance between financial measures and those metrics which support the Group’s
strategic initiatives which are linked to long term strategy and drive future returns for
shareholders.
Why were these KPIs chosen?
What is the target STI opportunity? Target STI opportunity is set out in Section 4.3
Are executives able to earn more
than the target STI opportunity?
How is the Award delivered?
Executive KMP are not eligible to receive more than their target STI amount.
The STI Award is partly paid in cash and a portion is deferred into equity for 12
months, the ratio between cash and equity is at the discretion of the Board. Awards
are paid or converted into equity following finalisation of the audited year-end
financial statements.
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CONTINUED
4.3 FY19 STI Performance Outcomes
The table below outlines the KPIs that applied to the Executive KMP in relation to the FY19 STI, and the
extent to which KPIs were achieved. The financial KPI (at least 95% of the Group’s profitability target must be
achieved) is a gateway to the FY19 KMP STI that was not achieved.
KPI
Financial
Weighting (1)
Target
Level of achievement
Gateway +60% Achievement of Company Financial
Target (Cash NPATA)
Did not achieve target
($46.5m Core Cash NPATA was achieved)
People
10-15%
Customer
0-5%
Strategy
5-10%
Individual
10-20%
Drive employee engagement,
talent management and safety risk
management
Drive Net Promoter SCore (NPS)
improvements
Execute strategic M&A
opportunities
KPIs related to new partnerships,
internal and external communication,
projects and cross-company initiatives
(1) The weighting varies for each KMP; these are specified in Section 4.2.
Not applicable, as gateway
Financial hurdle was not met.
4.4 FY19 STI Payment Outcomes
No Executive KMP received an STI payment for FY19, as the minimum profit gateway (95% of Cash NPATA) was not met.
The following table outlines the target STI opportunity and the 100% forfeiture of STI awards for each Executive KMP in FY19.
STI opportunity as % of fixed
remuneration
STI earned as
% of target
STI forfeited as
% of target
Target STI
opportunity for FY19
Minimum
Target
Name
Current Senior Executives
Julian Russell (2)
Bevan Guest (3)
Former Executive Directors
Doc Klotz
Garry McLennan
Former Senior Executive
N/A
$125,000 (4)
$900,000
$700,000 (5)
Jeff McLean
$318,250 (5)
N/A
0%
0%
0%
0%
N/A
50%
100%
100%
67%
N/A
0%
0%
0%
0%
N/A
100%
100%
100%
100%
(1) Table reflects opportunity as a KMP.
(2) Julian Russell did not participate in the KMP FY19 STI plan.
(3) Bevan Guest was eligible for and received a promotion bonus of $212,500 as part of the terms of his appointment on 20 August
2018 to Managing Director, Fleet conditional on specific performance targets. The cash bonus was paid on 29 August 2019 in
recognition of exceeding his performance targets of delivery of profitable business results and high customer satisfaction (NPS)
levels. Note that at this time Mr Guest was not a KMP and his bonus was outside the KMP STI bonus scheme/rules.
(4) Amount presented is prorated based on 4.5 months’ service as KMP.
(5) Amount presented is based on full year target STI opportunity for FY19 (not prorated).
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4. EXECUTIVE KMP REMUNERATION FRAMEWORK (continued)
4.5 FY19 Long term incentives (LTI)
The key current executives (Julian Russell and Bevan Guest) commenced as KMP partway through FY19, and are therefore
participating in transitional LTI arrangements for FY19. As a result, some of the terms relating to vesting and exercising of
these options are differ slightly from the former Executive Directors and Senior Executive (these differences are noted in the
table below).
The following table outlines the major features of the Executive KMP FY19 LTI plan. Note, the LTI will be revised from FY20.
Further detail on the FY20 remuneration framework changes is provided in Section 5.
Who is eligible to
participate in the plan?
Eligibility to participate in the LTI plan is determined by the Board. All Executive KMP
participated in the FY19 LTI plan.
What Executives received
a FY19 LTI grant?
Current Executives
In FY19, LTI arrangements were offered by Eclipx in the form of Options.
What performance period
applies?
Former Executives
In FY19, an LTI grant was made to Executive Directors and Senior Executives (Mr Klotz, Mr
McLennan and Mr McLean). The Executive Director grants were approved by shareholders at
the Annual General Meeting.
Awards made under the LTI Plan are subject to a three-year performance period.
Current Executives
Awards made to the current executives will vest three years from the date of grant and be
exercisable for a one-year period after vesting.
Former Executives
Awards made to former Executive Directors and Senior Executive will vest three years from
the first day of the applicable financial year (Performance Period).
How was the FY19 LTI
delivered?
The LTI is provided through a Rights and/or Options (Award). The number of Rights and/or
Options granted in respect of each Award is determined by the Board subject to shareholder
approval for any “executive director”.
The Group uses the fair value methodology when calculating the number of Rights and/or
Options to grant each year. The mix of Rights to Options is determined by the Board annually.
To ensure consistency and simplicity, the Group continues to allocate the number of Rights
and Options using a fair value methodology. To increase transparency for our shareholders a
comparison of the fair value and face value of the Rights and Options for the Executive KMP is
set out below:
Vehicle
Number
Granted
Fair
Value
Face
Value (1,2)
Current Executives
Julian Russell
Bevan Guest
Options
Options
6,363,636
$1,400,000
2,840,911
$625,000
N/A
N/A
(1) Because Options have an exercise price, there is no simple approach to represent the face value
of Options.
(2) On the date the Options were granted (24 May 2019) the Options were “underwater”, as the
exercise price of the Options ($1.20) was 32% higher than the closing share price of $0.91 on 24
May 2019. These Options were granted under the existing LTI plan as a transitional service award
following the exit of a former KMP Executive and the appointment of the two new KMP Executives.
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CONTINUED
How is the LTI delivered?
(continued)
Vehicle
Number
Granted
Fair
Value
Face
Value (1,2)
Former Executive Directors
Doc Klotz
Garry McLennan
Options
Rights
Options
Rights
1,160,000
290,000
1,160,000
290,000
$272,600
$474,150
$290,000
$474,150
N/A
$696,000
N/A
$696,000
Former Senior Executive
Jeff McLean
Options
Rights
600,000
150,000
$151,200
$241,500
N/A
$360,000
(1) Because Options have an exercise price, there is no simple approach to present the face value of
Options.
(2) The face value of Rights is calculated using a share price of $2.40, being the closing share price
on the date the Rights were granted (11 February 2019). The face value of the Rights does not take
into account the performance hurdles that must be met before the Rights may vest.
Are dividends paid during
the performance period?
No
What performance
hurdles need to be met?
Current Executives
The Award is subject to an ‘in-built’ share price hurdle (i.e., the ‘out-of-the money’ strike price of
the option acts as an absolute share price hurdle). On the date the Options were granted (24
May 2019) the Options were “underwater”, as the exercise price of the Options ($1.20) was 32%
higher than the closing share price of $0.91 on 24 May 2019.
Former Executives
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).
The TSR and EPS performance hurdles are applied independently such that the portion of an
Award subject to one hurdle can vest regardless of whether the other hurdle is met.
Relative TSR component
Relative TSR was selected as a performance measure to directly align executive remuneration
with returns delivered to shareholders, relative to other ASX-listed companies. TSR is a method
of calculating the return shareholders would earn if they held a notional number of shares
over a period of time. TSR measures the percentage growth in the company’s share price plus
the value of dividends received during the period, assuming that all of those dividends are re-
invested into new shares.
The Group’s relative TSR is measured against constituents of the ASX 200 (excluding GICS
Industry “Metals & Mining” companies) over the vesting period for each grant. The Comparator
Group was selected to ensure a robust and meaningful comparator group size, given the small
number of listed direct competitors in the Australian market.
Miraqle Metrics, a division of Orient Capital provides the Group with a periodic TSR Calculation
and Ranking Reports which ranks the TSR performance of the Group against the constituents
of the Comparator Group. The percentage of Awards comprising the relative TSR component
that vests, if any, will be based on the following:
Relative TSR percentile ranking
Financial
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%
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4. EXECUTIVE KMP REMUNERATION FRAMEWORK (continued)
What performance
hurdles need to be met?
(Continued)
Absolute Cash EPS component
Absolute Cash EPS was selected as a performance measure as EPS growth is a key strategic
objective for the Group. The EPS targets are set annually with consideration to earnings and
EPS forecasts, based on the following process:
• Prior to each grant Management will prepare three-year earnings forecasts and calculate the
three-year growth rate.
• Forecasts are then converted into a three-year Compound Annual Growth Rate (CAGR)
which will represent the growth required to achieve the EPS target by the end of the
performance period. The CAGR is referred to in setting the top of the vesting range.
• These forecasts are provided to the Committee who will review the appropriateness of the
proposed targets and recommend the final targets to the Board for approval.
For the FY19 Award, the percentage of Awards subject to the Absolute Cash EPS hurdle that
vest, if any, will be determined based on the Group’s compound annual growth in Absolute
Cash EPS over the Performance Period by reference to the “base year” Absolute Cash EPS. FY18
will be the base year for Awards granted under the FY19 LTI Offer. Accordingly, to determine
the growth in Absolute Cash EPS, the Absolute Cash EPS achieved in FY21 will be compared
to Absolute Cash EPS achieved in FY18, and the level of compound annual growth (stated as a
percentage) will determine the proportion of the Absolute Cash EPS hurdled Awards that vest.
The Group’s annual compound
Cash EPS growth rate
% of Cash EPS hurdled Awards that vest
Below 7% compound annual growth
At 7% compound annual growth
Nil
50%
Between 7% and 10% compound annual
growth
Straight line pro rata vesting between 50%
and 100%
At or above 10% compound annual growth
100%
How are the performance
awards valued?
Current Executives
The Options granted to current Executives on 24 May 2019 are subject to a service condition.
These awards are valued by using the Binomial Tree methodology.
Former Executives
The TSR hurdled Awards are valued via the Monte-Carlo simulation method.
The Absolute Cash EPS hurdle Awards are 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.
Is retesting available for
any of the performance
hurdles?
Grants made from FY19 onwards
There is no retesting for grants from FY19 onwards, to better align with market practice.
Grants made prior to FY19
If 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.
There is no retesting for the Absolute EPS tranche.
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.
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 appropriate.
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CONTINUED
What happens if there is a
change of control?
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.
Grants made in FY19
Given the proposed transaction with Mcmillan Shakespeare was current when the FY19 LTI
Awards were granted, special rules applied:
• In the event of a 50% change of control of the Group by 30 June 2019, all unvested Awards
will lapse.
• In the event of a 50% change of control of the Group on or after 1 July 2019, all unvested
Awards will vest in full and be automatically exercised, subject to the Board determining
that an alternative treatment should apply.
• Where a transaction or event, other than a 50% Change of Control, occurs after 30 June 2019
that in the opinion of the Board should be treated as a change of control for the purposes of
the Plan, the Board can determine the appropriate treatment of unvested Awards.
Grants made prior to FY19
In the event of a 30% change of control of the Group, all unvested Awards will vest in full.
4.6 LTI Outcomes
The TSR portion of the FY16 LTI Award was retested for the last time at the end of FY19. The corresponding
portion of the award did not meet the required performance hurdle for TSR and the award forfeited.
The FY17 LTI was tested at the end of FY19. The award:
\ Failed to meet the required performance hurdle for EPS growth and thus the corresponding portion of
the award forfeited.
\ Failed to meet the required performance hurdle for TSR. The corresponding portion of the award (50%)
will be eligible for a one-time retest in FY20.
The FY17 LTI was tested at the end of FY19 and failed to meet the required performance hurdle for EPS growth
and thus the corresponding portion of those grants (50%) have lapsed. The TSR target set for 50% of the FY17
grant was also not met and as a result that portion will be eligible for a one-time retest in FY20.
The table below summarises the performance and outcomes for the LTI grants that were subject to
performance testing during FY19.
% LTI
tranche
that vested
% LTI
tranche
forfeited
0%
100%
Plan
Award
Type
Performance
Condition
Number
of awards
granted
FY16 LTI (retest
TSR component)
(1)
Rights
TSR tranche
92,500
Options
TSR tranche
400,000
TSR tranche
71,500
EPS tranche
71,500
FY17 LTI
Rights
Options
Performance outcomes
Relative TSR performance hurdle
not achieved
Relative TSR performance hurdle
not achieved
Relative TSR performance hurdle
not achieved
Absolute EPS cash performance
hurdle not achieved
TSR tranche
440,000
Relative TSR performance hurdle
not achieved
0%
EPS tranche
440,000
Absolute EPS cash performance
hurdle not achieved
50%
100%
50%
100%
(1) If Awards subject to the 50% TSR hurdle do not vest in full during the initial three-year Performance Period, 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 to mitigate the impact of potential share price volatility and was removed for grants from FY19 grants onwards.
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4. EXECUTIVE KMP REMUNERATION FRAMEWORK (continued)
4.7 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 for FY19.
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 FY19 is set out below. This incorporates the FY19 Target
STI Opportunity and the actual FY19 LTI grant value.
Note the below is the target remuneration mix for Executive KMP. Executive KMP are not eligible to receive
more than their target STI amount.
FY19 Remuneration mix for current executives
Executive KMP Remuneration Opportunity Mix
Julian Russell
Bevan Guest
34%
39%
20%
66%
41%
Fixed Remuneration
STI Maximum Opportunity
FY19 LTI Grant (Fair Value)
Remuneration mix for former Executives
Former Executive Directors
Doc Klotz
Garry McLennan
Former Senior Executive
Jeff McLean
Fixed Remuneration
STI maximum
Opportunity
FY19 LTI Grant
(Fair Value)
36%
33%
40%
36%
33%
27%
27%
34%
33%
5. REMUNERATION FRAMEWORK FOR FY20
Eclipx Group has introduced a Simplification Plan which places a sole focus on the Core fleet business. To
support delivery of the Group’s new strategy, Eclipx has revised the Group’s remuneration framework for FY20.
Our revised remuneration framework for FY20 is designed to be simple and transparent for both our
employees and to our shareholders. The diagram below outlines our remuneration objectives and framework
for FY20.
FY20 Remuneration Objectives
Support the
business strategy
and shareholder
alignment
Simple and
transparent
remuneration
framework
Consistent
approach to the
way we reward all
Executives
Drive a culture of
rewarding high
performance and
engagement
Reward
and retain
key successors
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CONTINUED
5.1 FY20 Executive Remuneration Framework for Executive KMP
Fixed Remuneration
Variable Remuneration
\ Remains unchanged based on FY2020.
\ Comprises base salary, non-monetary
benefits and superannuation.
All variable remuneration will be delivered
via LTI only.
Vehicle
\ Determined with reference to
\ The LTI Award will be provided
comparable roles in companies which
have a similar market capitalisation
and similar growth aspirations to
Eclipx.
through Options (number of Options
granted in respect to each Award will
be determined by the board) based on
target remuneration mix.
\ Fixed remuneration for each individual
Performance hurdles
is set based on their experience,
capability and the value they bring to
the Group.
\ The award will be subject to one
performance hurdle, growth, the
quantum of which will be reviewed
annually by the board.
\ Malus forfeiture guidelines will be
introduced to address financial and
non-financial matters.
5.2 FY20 Remuneration Framework for non-KMP Executive Leadership team
The non-KMP Executive leadership team will participate in an LTI Plan (similar in structure to the KMP
Executive LTI plan). Delivering 100% of variable remuneration via equity across the STI and LTI components of
remuneration and providing alignment between the Executive KMP (LTI), Executive leadership team (STI/LTI)
and shareholders.
This framework, including the award of options will be reviewed annually to ensure it remains fit for purpose
to encourage and reward behavior and business outcomes required each year.
6. PERFORMANCE AGAINST KEY METRICS
The following table provides information on performance against key metrics over the past five years:
IPO
2015
2016
2017
2018
2019
Cash NPATA ($'000)
Cash EPS (cents)
Share Price at the end of the year
-
-
$2.30
2015
final
6.50
2016
interim
6.75
2016
final
7.00
2017
interim
7.50
Dividend paid
(cents)
48,585
55,330
68,275
78,108
23,823
20.23
$3.01
2017
final
7.75
22.19
$4.07
25.11
$4.05
24.69
$2.57
2018
interim
8.00
2018
final
8.00
2019
interim
0.00
7.45
$1.79
2019
final
0.00
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CONTINUED
7. NON-EXECUTIVE DIRECTOR FEES
7.1 Policy 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.
Following are the Non-Executive Director fees for FY19 and Committee membership as at 30 September 2019:
Committee
Chairman fee (C)
Member fee (Y)
Kerry Roxburgh
Trevor Allen
Linda Jenkinson
Gail Pemberton
Russell Shields
Board
$250,000
$125,000
C
Y
Y
Y
Y
2019 Fee p.a. $
Audit & Risk
Committee
Remuneration & Nomination
Committee
$25,000
$12,500
Y
C
-
Y
Y
$25,000
$12,500
Y
Y
Y
C
-
In certain circumstances (such as periods of merger and acquisition activity), Non-Executive Directors may also be eligible for an
additional “special service payment”. Due to the substantially increased workload for Directors as a result of the proposed merger
with McMillan Shakespeare in FY19, the Board determined that special circumstances applied. Accordingly, in November 2018, an
amount of $30,000 was paid to each non-executive director. This amount is disclosed as cash in the table in Section 7.3.
7.2 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 FY19, there were no salary sacrifice deductions to acquire share rights.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 56
Remuneration Report (audited)
CONTINUED
7.3 Non-Executive Directors (Cash and Share based payments)
The following table shows details of fees received by the Non-Executive Directors:
Salary and Fees
Short term
benefits
Post-employment
benefits
Share based
payments
Cash $ (1)
Value of share
rights $ (2)
Non-monetary
$
Superannuation
$ (2)
Equity settled $
Total $
Kerry Roxburgh (Chairman)
FY19
FY18
Russell Shields
FY19
FY18
Trevor Allen
FY19
FY18
Gail Pemberton
FY19
FY18
Linda Jenkinson
FY19
FY18
284,350
135,750
153,420
125,571
176,793
118,781
176,793
83,935
153,420
89,641
-
125,000
-
-
-
31,250
-
62,500
-
-
-
-
-
-
-
-
-
-
-
-
20,650
14,250
14,080
11,929
15,634
12,469
15,707
8,773
14,080
8,516
-
-
-
-
-
-
-
-
-
-
305,000
275,000
167,500
137,500
192,500
162,500
192,500
155,208
167,500
98,157
(1) The Board use discretion to make a one-off “special service payment” in the amount of $30,000 to each Non-Executive Director
(paid in November 2019) due to the proposed McMillan Shakespeare and Eclipx merger and in recognition of the total number of
Board Meetings which occurred during FY19 (64 in total - 42 Board, 14 ARC and 8 RemCo). The additional payment is included as a
cash payment.
(2) FY18-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.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019
57
Remuneration Report (audited)
CONTINUED
8. SERVICE AGREEMENTS
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 (1)
Restraint
of Trade
Current Senior Executives
Julian Russell
FleetPartners
Pty Ltd
Nine months
by either
party
Bevan Guest
FleetPartners
Pty Ltd
Immediate
termination
Nine months
by Executive;
Six months
by Company
Former Executive Directors / Senior Executive
Doc Klotz
Garry McLennan
Fleet Holdings
(Australia) Pty
Ltd
Six months
by either
party
Immediate
termination
Jeff McLean
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.
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
12 months
following expiry
of notice period
Six months
following expiry
of notice period
(1) All termination entitlements are capped at 12 months’ remuneration, per relevant legislative requirements.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019
58
Remuneration Report (audited)
CONTINUED
9. EXECUTIVE REMUNERATION DISCLOSURES
Statutory Remuneration for Executive KMP
The following Executive KMP remuneration table has been prepared in accordance with the accounting
standards and has been audited. The values in the table below align with the amounts expensed in Eclipx’s
financial statements.
Short term benefits
Long term benefits
Non-
monetary
$ (2)
Salary
and
fees
$ (1)
Movement
in annual
leave
provision
$ (3)
Cash
bonus
payable
in respect
of current
year $ (4)
Non-
monetary
$ (5)
Super-
annuation
$
Share
based
payments
equity
settled
$ (12)
Total $
Termination
Payments
$ (6)
Current Senior Executives
Julian Russell (7)
FY19
270,411
2,177
20,744
-
225
8,113
164,931
466,601
Bevan Guest (8)
FY19
223,667 -
14,466
281,473
25,414
8,113
196,760
749,893
-
-
Former Executive Directors
Doc Klotz (9)
FY19
991,847 97,425
24,836
FY18
867,139 161,531
28,425
Garry McLennan (10)
FY19
517,154 46,891
(33,886)
FY18
679,553 5,297
(10,501)
Senior Executive
Jeff McLean (11)
FY19
378,124 10,358
(7,381)
FY18
441,667 10,146
(4,528)
-
-
-
-
-
19,528
18,101
12,947
20,196
799,165
1,945,748
450,000
1,394
1,096,786
16,045
15,997
(261,670)
300,531
13,393
20,196
9,091
717,029
10,499
8,975
17,493
20,196
(138,802)
270,291
26,704
503,160
-
-
-
-
-
(1) Salary and Fees is pro-rated for the period that the executives are KMP and also include termination fees.
(2) Amount represents car parking, medical insurance, flights home, tax services and fringe benefits tax.
(3) Amount represents annual leave provisions. Negative movement indicates leave taken during the year exceeded leave
accrued during the current year.
(4) FY19 amount represents the cash incentives earned from 13 May 2019 and includes the agreed incentives in place prior to
the appointment as KMP.
(5) Amount represents long service leave provisions.
(6) Termination Payments to Doc Klotz reflects the 6 month notice period from 13 May 2019 to 12 November 2019.
(7) Appointed as Chief Executive Officer on 13 May 2019.
(8) Appointed as Chief Commercial Officer on 13 May 2019.
(9) Ceased as KMP on 13 May 2019.
(10) Ceased employment on 5 July 2019.
(11) Ceased employment on 31 July 2019.
(12) The expense reflected in share based payments equity settled for Doc Klotz relates to his LTI instruments issued during
FY17 to FY19, which were approved at the relevant annual general meetings. The LTI instruments are subject to the plan
rules and will only vest based on the performance hurdles of these instruments. The expense of $799,165 is the fair value
of remaining unvested instruments subject to TSR and eligible for retesting which had not been expensed at the time he
ceased his role as a KMP. The face value of the instruments on foot for Doc Klotz as at 13 May 2019 was $635,655. The share
based payments equity settled for Garry McLennan and Jeff McLean relates to unvested LTI instruments which have been
forfeited and the expense recognised has been reversed in FY19 where the service period condition has not been satisfied.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 59
Remuneration Report (audited)
CONTINUED
9. EXECUTIVE REMUNERATION DISCLOSURES (continued)
Actual Remuneration Received
The table below provides shareholders with a view of remuneration that was received by Executive KMP
in FY19 and FY18. The Board believes that presenting information in this manner enhances clarity and
transparency for shareholders. Remuneration detailed prepared in accordance with statutory obligations and
accounting standards are contained above in Section 9.1.
Salary
and fees $ (1)
Cash bonus
paid in current
year $ (3)
Superannuation
$
Equity that
vested $ (2)
Total $
Current Executive Directors
Julian Russell
FY19
259,996
-
10,788
Bevan Guest
FY19
216,762
212,500
8,576
Former Executive Directors
-
-
-
270,783
437,839
900,000
Doc Klotz
FY19 (4)
FY18
Garry McLennan
FY19
FY18
Former Senior Executive
Jeff McLean
FY19
FY18
879,468
-
20,532
864,139
850,000
20,196
1,204,514
2,938,849
558,445
-
16,054
-
574,499
697,748
700,000
20,196
1,204,514
2,622,458
384,496
-
435,888
212,500
19,889
20,196
-
-
404,385
668,584
(1) Salary and superannuation are paid fortnightly and may vary depending on the number of pay cycles within any given year.
(2) Represents the value of loan shares granted pre IPO that vested during the year, calculated as the number of loan shares that
vested multiplied by the closing market price of Eclipx shares on the vesting date, less the loan amount outstanding.
(3) FY19 amount represents the bonus paid in relation to the KMP period 13 May 2019 to 27 August 2019. FY18 amounts represent
bonus in respective to the performance of FY17, paid in FY18.
(4) FY19 payments to Doc Klotz include the pro-rated amount from 13 May 2019 to 30 September 2019 as part of his agreed 6
months gardening leave.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 60
Remuneration Report (audited)
CONTINUED
Details of outstanding awards
The minimum value of the outstanding Awards is nil if no performance for the Absolute Cash EPS hurdled
options 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 the vesting period.
KMP
Plan
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
l
l
e
s
s
u
R
n
a
i
l
u
J
I
T
L
l
a
n
o
i
t
i
s
n
a
r
T
9
1
Y
F
l
a
n
o
i
t
i
s
n
a
r
T
9
1
Y
F
I
T
L
t
s
e
u
G
n
a
v
e
B
I
T
L
9
1
Y
F
I
T
L
8
1
Y
F
8
1
0
2
Y
F
I
T
L
7
1
0
2
Y
F
I
T
L
6
1
0
2
Y
F
Options
Service
6,363,636
$1.20
0.22
1,400,000
Options
Service
2,840,911
$1.20
0.22
625,000
TSR tranche
50,000
Rights
EPS tranche
50,000
Service
50,000
TSR tranche
200,000
EPS tranche
200,000
TSR tranche
22,500
EPS tranche
22,500
TSR tranche
90,000
EPS tranche
90,000
Options
Rights
Options
-
-
-
$2.54
$2.54
-
-
$4.18
$4.18
1.22
2.07
2.07
0.26
0.28
2.47
3.70
0.65
0.68
69,000
103,500
103,500
52,000
56,000
55,575
83,250
58,500
61,200
Rights
Service
200,000
-
2.26
452,000
TSR tranche
150,000
$2.05
0.29
43,500
EPS Tranche
150,000
$2.05
TSR tranche
22,500
EPS tranche
22,500
-
-
0.55
2.18
3.13
82,500
49,050
70,425
TSR tranche
137,500
$3.60
0.53
72,875
Options
Rights
Options
EPS tranche
137,500
$3.60
Rights
TSR tranche
20,000
-
0.55
1.86
75,625
37,200
Options
TSR tranche
75,000
$3.06
0.35
43,500
y
a
M
3
2
2
2
0
2
y
a
M
3
2
1
2
0
2
r
e
b
m
e
v
o
N
0
1
r
e
b
m
e
v
o
N
0
1
t
s
u
g
u
A
7
1
r
e
b
m
e
v
o
N
0
1
r
e
b
m
e
v
o
N
0
1
r
e
b
m
e
v
o
N
0
1
1
2
0
2
0
2
0
2
1
2
0
2
0
2
0
2
9
1
0
2
8
1
0
2
y
a
M
3
2
3
2
0
2
y
a
M
3
2
3
2
0
2
r
e
b
m
e
v
o
N
0
1
r
e
b
m
e
v
o
N
0
1
t
a
s
t
r
e
v
n
o
C
3
2
0
2
2
2
0
2
g
n
i
t
s
e
v
t
s
u
g
u
A
7
1
2
2
0
2
r
e
b
m
e
v
o
N
0
1
r
e
b
m
e
v
o
N
0
1
1
2
0
2
0
2
0
2
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019
61
Remuneration Report (audited)
CONTINUED
KMP
Plan
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
Rights
TSR tranche
145,000
EPS tranche
145,000
Options
TSR tranche
580,000
EPS tranche
580,000
Rights
TSR tranche
EPS tranche
79,000
79,000
Options
TSR tranche
316,000
EPS tranche
316,000
Rights
TSR tranche
EPS tranche
71,500
71,500
Options
TSR tranche
440,000
EPS tranche
440,000
-
-
$2.54
$2.54
-
-
$4.18
$4.18
-
-
$3.60
$3.60
Rights
TSR tranche
92,500
-
Options
TSR tranche
400,000
$3.06
1.22
2.05
0.23
0.24
1.99
3.34
0.41
0.41
2.28
3.46
0.68
0.72
1.34
0.35
l
z
t
o
K
c
o
D
I
T
L
9
1
Y
F
I
T
L
8
1
Y
F
I
T
L
7
1
Y
F
I
T
L
6
1
Y
F
176,900
297,250
133,400
139,200
157,210
263,860
129,560
129,560
163,020
247,390
299,200
316,800
123,950
140,000
r
e
b
m
e
v
o
N
0
1
r
e
b
m
e
v
o
N
8
r
e
b
m
e
v
o
N
4
r
e
b
m
e
v
o
N
0
1
1
2
0
2
0
2
0
2
9
1
0
2
8
1
0
2
r
e
b
m
e
v
o
N
0
1
r
e
b
m
e
v
o
N
8
r
e
b
m
e
v
o
N
4
r
e
b
m
e
v
o
N
0
1
1
2
0
2
2
2
0
2
1
2
0
2
0
2
0
2
10.1 Equity instruments
This table shows details of share and option holdings of KMP:
Held as at
30 September 2019
Net
Change
Held as at
30 September 2019
Shares
Rights Options (1)
Shares
Rights
Options
Shares
Rights
Options
Non-Executive Directors
Kerry Roxburgh
(Chairman)
239,611
Russell Shields
285,647
Trevor Allen
179,846
Gail Pemberton
428,545
Linda Jenkinson
3,258
Executives
Julian Russell
-
-
-
-
-
-
-
200,000
50,000
185,000
50,000
-
-
Bevan Guest
400,745
330,000
905,000
Former Executive
Doc Klotz (2)
3,878,954
486,000
2,312,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
239,611
285,647
179,846
428,545
3,258
6,363,636
-
-
-
-
-
-
-
200,000
50,000
185,000
50,000
-
6,363,636
130,000
3,165,911
400,745
460,000
4,070,911
197,500
760,000
3,878,954
683,500
3,072,000
Garry McLennan (3)
3,971,432(4) 486,000
2,312,000 (40,000)(5) (486,000)(6) (2,312,000)(6) 3,931,432
Jeff McLean (7)
910,809
303,000
1,515,000
-
(303,000)(6) (1,515,000)(6) 910,809
-
-
-
-
(1) Options for Non-Executive Directors 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
(2) Doc Klotz resigned as an Executive KMP on 13 May 2019. The net change represents his holdings at the time of resignation.
(3) Garry McLennan resigned as an Executive KMP on 5 July 2019. The net change represents his holdings at the time of resignation.
(4) Includes 43,478 shares held by a close family member of the Former Executive KMP
(5) The net change of (40,000) refers to shares held by a close family member of the Former Executive KMP
(6) The outstanding LTI Awards for Mr McLennan and Mr McLean lapsed on resignation.
(7) Jeff McLean resigned as an Executive KMP on 31 July 2019. The net change represents his holdings at the time of resignation.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019
62
Remuneration Report (audited)
CONTINUED
10.2 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.
Pre-IPO loan share plan
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. Treatment of the loan shares upon cessation of employment are
as follows:
\ Mr Klotz’s and Mr McLennan’s loan shares vested and loan is required to be repaid by 1 October 2021,
unless shares sold earlier.
\ Mr McLean’s loan shares were settled 15 October 2019.
\ Mr Guest loan shares are to be settled 14 days post the release of the financial report for 2019.
Details of these loans are as follows:
KMP
Opening loan
balance $
1 October 2018
Closing loan
balance $
30 September 2019
Number of
vested loan
shares
Loan value per
vested loan
share
Doc Klotz
5,854,967
5,854,967
3,539,118
Garry McLennan
5,854,967
5,854,967
3,539,118
Jeff McLean
1,186,666
1,131,512
866,985
Bevan Guest
124,315
118,216
94,700
$1.65
$1.65
$1.37
$1.25
Loan
expiry date
September
2021
September
2021
September
2019
September
2019
(1) Loan repayments apply to Mr McLean only and equate to dividends paid less tax applicable on dividends.
IPO loan share plan (FY15)
Mr Klotz and Mr McLennan were granted loan shares under the FY15 LTI plan. The loan shares under the FY15
LTI plan vested and the loan will be required to be repaid within 90 days of cessation of employment.
Details of these loans are as follows:
Opening loan
balance $
1 October
2018
Closing loan
balance $
30 September
2019 (1)
Number of
unvested
loan shares
relating to
loan
Number
of vested
loan shares
relating to
loan
Loan value
per vested
loan share
KMP
Grant date
Doc Klotz
22 April 2015
3,253,080
3,172,440
Garry
McLennan
Bevan
Guest
22 April 2015
3,162,550
3,065,660
22 April 2015
593,000
574,840
-
-
-
1,600,000
1,600,000
$1.98
$1.92
Loan expiry
date
April 2020
April 2020
300,000
$1.92
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.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 Statement of Profit or Loss
and Other Comprehensive Income
FOR THE YEAR ENDED 30 SEPTEMBER 2019
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
Goodwill Impairment
Software Impairment
Other Intangible Impairment
Fixture and fittings Impairment
Employee benefit expense
Depreciation, amortisation and impairment expense
Operating overheads
Total overheads
Operating finance costs
(Loss)/profit before income tax from continuing operations
Income tax benefit / (expense)
(Loss)/profit from continuing operations
(Loss)/profit after tax from discontinued operations
(Loss)/profit for the year
Other comprehensive income
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 (loss)/income for the year, net of tax
Total comprehensive income for the year
(Loss)/profit attributable to:
Owners of Eclipx Group Limited
63
Consolidated
2019
$’000
2018*
$’000
Notes
2.3
2.3
2.4
3.5
3.5
3.5
3.1
2.4
2.4
2.4
2.6
2.2
713,029
690,534
(460,695)
(433,226)
(73,390)
178,944
(1,281)
(30,218)
(25,994)
(3,815)
(1,613)
(62,921)
(72,578)
(14,926)
(63,985)
(66,552)
190,756
(1,143)
-
-
-
-
(1,143)
(72,967)
(9,450)
(42,918)
(151,489)
(125,335)
(18,521)
(53,987)
6,634
(47,353)
(294,104)
(341,457)
(13,759)
2,580
(11,179)
(352,636)
(14,185)
50,093
(12,923)
37,170
16,052
53,222
171
(2,055)
(1,884)
51,338
(341,457)
53,222
Total comprehensive (loss)/income for the year attributable to:
Owners of Eclipx Group Limited
(352,636)
51,338
Earnings per share from continuing and discontinuing operations
Basic earnings per share
Diluted earnings per share
2.5
2.5
(107.0)
(107.0)
16.9
16.6
* Restated to reflect the adoption of AASB 15, discontinued operations and a prior period restatement. Comparatives have
not been restated for the adoption of AASB 9 as permitted under the standard. Refer to Note 1 for the impact to the Group
on the initial adoption of AASB 9 and AASB 15.
The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019
Statement of Financial Position
AS AT 30 SEPTEMBER 2018
ASSETS
Cash and cash equivalents
Restricted cash and cash equivalents
Trade receivables and other assets
Inventory
Assets classified as held for sale
Finance leases
Operating leases reported as property, plant and equipment
Deferred tax assets
Property, plant and equipment
Intangibles
Total assets
LIABILITIES
Trade and other liabilities
Provisions
Liabilities classified as held for sale
Derivative financial instruments
Other
Borrowings
Deferred tax liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained earnings
Total equity
64
Note
4.3
4.3
3.3
2.2
3.2
3.1
2.6
3.1
3.5
3.4
2.2
4.4
4.1
2.6
4.5
6.1
Consolidated
2018*
$’000
62,078
146,180
188,180
38,565
-
2017**
$’000
59,078
136,157
129,283
25,171
-
541,438
440,772
1,052,114
1,051,848
2,771
13,845
2,671
14,304
2019
$’000
97,134
142,544
81,718
33,983
41,516
407,542
959,187
2,176
8,600
475,302
829,631
806,609
2,249,702
2,874,802
2,665,893
111,227
9,283
3,457
31,369
3,413
138,934
13,713
-
9,037
3,538
143,002
19,879
-
9,715
2,784
1,604,705
1,814,320
1,610,407
5,143
27,161
39,783
1,768,597
2,006,703
1,825,570
481,105
868,099
840,323
654,765
167,797
(341,457)
481,105
654,765
635,246
17,046
196,288
868,099
12,357
192,720
840,323
* Restated to reflect the adoption of AASB 15 and a prior period restatement. Comparatives have not been restated for the
adoption of AASB 9 as permitted under the standard. Refer to Note 1 for the impact to the Group on the initial adoption of
AASB 9 and AASB 15.
** 2017 Statement of Financial Position has been restated to reflect the adoption of AASB 15 and a prior period restatement.
Refer to Note 6.7 for the impact on the initial adoption AASB 15 and a prior period restatement.
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019
65
Statement of Changes in Equity
FOR THE YEAR ENDED 30 SEPTEMBER 2019
Attributable to owners of Eclipx Group Limited
Contributed
equity
Reserves
Retained
earnings
Total equity
Consolidated
Note
$’000
$’000
$’000
$’000
Balance at 30 September 2017, as previously reported
635,246
12,357
Adjustment on initial application of AASB 15 and
restatement (net of tax)*
-
-
215,660
(22,940)
863,263
(22,940)
Re-stated balance as at 30 September 2017
635,246
12,357
192,720
840,323
Profit for the year*
Cash flow hedges
Foreign currency translation
Total comprehensive income for the year
Issue of rights for acquisition of CarBuyers
Transactions with owners in their capacity as owners:
Employee share schemes
Movement in treasury reserve
Issue of shares under the Dividend Reinvestment Plan
Issue of shares on exercise of Options
Dividends paid
5.1
4.7
-
-
-
-
-
-
-
18,421
1,098
-
-
171
(2,055)
(1,884)
1,581
454
4,538
-
-
-
53,222
53,222
-
-
53,222
-
-
-
-
-
171
(2,055)
51,338
1,581
454
4,538
18,421
1,098
(49,654)
(49,654)
Balance at 30 September 2018
654,765
17,046
196,288
868,099
Restated balance at 30 September 2018
654,765
17,046
196,288
868,099
Adjustment on initial application of AASB 9 **
Re-stated balance as at 1 October 2018
-
-
654,765
17,046
(12,511)
183,777
(12,511)
855,588
Transfer to dividend reserve
(Loss) / profit for the year
Cash flow hedges
Foreign currency translation
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Employee share schemes
Movement in treasury reserve
Dividends paid
Balance at 30 September 2019
-
-
-
-
-
-
-
-
654,765
183,777
(183,777)
-
-
(341,457)
(341,457)
(13,759)
2,580
(11,179)
2,238
1,486
(25,571)
167,797
-
-
(13,759)
2,580
(341,457)
(352,636)
-
-
-
(341,457)
2,238
1,486
(25,571)
481,105
5.1
4.7
* The Group applied AASB 15 under a full retrospective method and the Group has restated prior period for the items reflected
under note 1.0.
** The Group applied AASB 9 retrospectively with the cumulative effect recognised as an adjustment to the opening statement
offinancial position as at 1 October 2018.
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019
Statement of Cash Flows
FOR THE YEAR ENDED 30 SEPTEMBER 2019
66
Consolidated
2019
$’000
2018
$’000
Note
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
6.6
1,081,912
1,018,588
(596,206)
(595,497)
485,706
423,091
(19,279)
(23,743)
2,811
(86,676)
382,562
2,553
(81,554)
320,347
Cash flows from investing activities
Purchase of items reported under operating leases
3.1
(307,296)
(391,936)
Purchase of items reported under finance leases
(184,732)
(251,689)
Purchase of property, plant and equipment and intangibles
Payment for transaction cost on disposed groups
Payment for acquisitions (net of cash acquired)
Proceeds from sale of discontinued operations
Proceeds from sales of items reported under operating leases
(13,574)
(7,449)
-
70,764
219,159
(32,896)
-
(7,298)
-
202,596
Net cash outflow from investing activities
(223,128)
(481,223)
Cash flows from financing activities
Proceeds from borrowings
Repayments of borrowings
Dividends paid
Proceeds from settlement of long term incentive plans
Net cash inflow from financing activities
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
453,635
915,965
(556,678)
(713,975)
(25,571)
(31,233)
811
2,961
(127,803)
173,718
31,631
208,257
(210)
12,842
195,235
181
Cash and cash equivalents at end of the year, net of overdraft
4.3
239,678
208,258
** Cash flows relating to operating finance costs was previously included in “Payments to suppliers and employees”. To better
reflect the nature this expense incurred from finance costs, the cash flows have been reclassified to “Interest paid”.
As a result of this reclassification, for the year ended 30 September 2018, cash outflow relating to “Payments to suppliers and
employees” has decreased to $595,497,000 from $609,682,000, and cash outflow relating to “Interest paid” has increased to
$81,554,000 from $67,369,000 previously.
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019
67
1.0 Introduction to the Report
Statement of compliance
Significant accounting policies
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 12 November 2019.
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.
The Statement of financial position is prepared with
assets and liabilities presented in order of liquidity.
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.
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. 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 2019
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.
(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
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 68
1.0 Introduction to the Report
CONTINUED
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.
Going concern
The financial report has been prepared on the basis
that the Group is a going concern.
Following a strategic review of the business the
Group embarked on its Simplification Plan to
refocus on its well established, Core business. Since
31 May 2019 the following has been delivered:
\ GraysOnline and Eclipx Commercial Equipment
Finance have been sold;
\ Right2Drive is held for sale, carried at fair
value with a sale process underway;
\ The Group has refreshed the executive team;
\ Reduced operating costs, for example via
the relocation of the head office to existing
premises;
\ On 25 October 2019 the Group extended its
corporate debt maturities (to Oct 2022 and
July 2025 for the corporate debt facility and
US private placement note respectively) and
amended the terms of the corporate debt
facilities and US private placement note
purchase agreement;
\ The Group’s cash flow forecasts, demonstrate
continued compliance with the covenant
criteria under the amended corporate debt
facilities and US private placement note
purchase agreement;
\ Extended warehouse funding facilities and
issued an asset-backed securities transaction
FP Ignition Series 2019-1; and
\ Conserved capital by not declaring a dividend.
For the financial year ending 30 September 2019 the
Group:
The Group will continue to deliver on the
simplification and optimisation strategy by:
\ Generated net cash inflow from operating
activities of $382.6m, which is an improvement
of $62.2m compared to the pcp;
\ Focusing on the fleet business and
enhancing profitability by reviewing business
relationships to maximise returns;
\ Paid a dividend of $25.6m, relating to final
\ Growing in the novated leasing product
dividends declared for 2018;
offering; and
\ Incurred costs of $16.7m relating to the
merger with McMillan Shakespeare Group,
that did not proceed;
\ Generated cash of $70.8m from the sale of
GraysOnline Group and Eclipx Commercial
Equipment Finance;
\ Reduced its corporate debt borrowings by
$54.5m; and
\ Increased cash by $31.6m.
\ Improving the cost to income ratio of the
Core business.
Following the extension and amendment of the
corporate debt facilities and US private placement
note purchase agreement, successful execution
of the simplification initiatives, and by continued
focus on simplifying and optimising the Group, the
Directors are of the opinion that the preparation
of the financial report as a going concern is
appropriate.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 69
1.0 Introduction to the Report
CONTINUED
Changes in significant accounting policies
Accounting for leases as a lessor
Except for the changes below, the Group has
consistently applied the accounting policies set
out in the notes to the financial statements to all
periods presented in these consolidated financial
statements.
New and revised standards and interpretations
not yet adopted by the Group
AASB 16 Leases
AASB 16, which was issued in 2016, sets out the
principles for the recognition, measurement,
presentation and disclosure of leases.
It will replace the existing accounting requirements
for leases, under AASB 117, effective from 1 October
2019 for the Group.
Accounting for leases as a lessee
AASB 16 requires lessees to recognise most leases
on the balance sheet in the form of a right-of-use
asset (ROUA) and a corresponding lease liability. The
standard allows exemptions for short-term leases
(less than 12 months) and for leases on low value
assets. The new standard is expected to impact
leases which are currently classified as operating
leases, which are predominantly property.
As a result of the adoption of AASB 16, the Group
will recognise depreciation expense on ROUAs, on a
straight-line basis over the lease term, and interest
expense on lease liabilities.
On transition to AASB 16, the Group has applied
a modified retrospective approach to leases
previously measured as operating leases under
AASB 117. The modified retrospective approach
applied is to measure the ROUA as an amount equal
to the lease liability adjusted for any prepaid or
accrued lease payments.
As at 1 October 2019, the Group is expecting
to recognise lease liability of $21.3 million and
ROUAs of $20.9 million. The Group has applied the
modified retrospective approach on adoption of
the standard. Under this approach, the cumulative
effect of adoption is recognised as an adjustment to
opening retained earnings as at 1 October 2019, with
no restatement of comparative information.
The Groups accounting as a lessor is substantially
unchanged under AASB 16.
New Australian Accounting Standards and
amendment standards that are effective in the
current period
AASB 9 Financial Instruments
Financial assets
AASB 9 has three classification categories
for financial assets; amortised cost, fair value
through other comprehensive income (FVTOCI)
and fair value through profit or loss (FVTPL). The
classification is based on the business model under
which the financial instrument is managed and its
contractual cash flows.
The Group has applied the following policies for
the newly adopted classification categories under
AASB 9:
Amortised cost - A financial asset will be measured
at amortised cost if both of the following conditions
are met:
\ the financial asset is held within a business
model whose objective is to hold financial
assets in order to collect contractual cash
flows; and
\ the contractual terms of the financial asset
give rise on specified dates to cash flows that
are solely payments of principal and interest
on the principal outstanding.
FVTOCI - A financial asset will be measured at
FVTOCI if both of the following conditions are met:
\ the financial asset is held within a business
model whose objective is achieved by both
collecting contractual cash flows and selling
financial assets; and
\ the contractual terms of the financial asset
give rise on specified dates to cash flows that
are solely payments of principal and interest
on the principal outstanding.
FVTPL - All financial assets that are not measured
at amortised cost or FVTOCI will be measured
at FVTPL. All financial assets that are equity
instruments will be measured at FVTPL unless the
Group irrevocably elects to present subsequent
changes in the fair value in other comprehensive
income. The Group has not made this election.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 70
1.0 Introduction to the Report
CONTINUED
Impairment
AASB 9 has replaced the incurred loss model of
AASB 139 with an expected loss model, resulting
in an acceleration of impairment loss recognition.
The impairment requirements apply to the Group’s
net investment in finance lease receivables, trade
and other receivables and the Group will recognise
impairments using the simplified approach and
record lifetime expected credit losses, as allowed
under AASB 9 for lease receivables and trade and
other receivables.
Measurement
To measure the expected credit loss (ECL) the
Group applies probability of default (PD) x exposure
at default (EAD) x loss given default (LGD). The
Group has applied the simplified approach,
measuring ECL equal to the discounted lifetime
expected credit losses.
Macroeconomic scenarios
The assessment of credit risk, and the estimation of
ECL, will be unbiased and probability weighted, and
will incorporate all relevant available information
relevant to the assessment, including information
about past events, current conditions and
reasonable and supportable information about
future events and economic conditions at the
reporting date. The Group has established a process
whereby forward-looking macroeconomic scenarios
and probability weightings are developed for ECL
calculation purposes. The final probability-weighted
ECL will be calculated from a baseline, an upside
scenario and a downside scenario.
Hedging
The Group has applied the revised hedge accounting
disclosures required by AASB 7 Financial Instruments:
Disclosures for the year ending 30 September 2019.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 71
1.0 Introduction to the Report
CONTINUED
AASB 15 Revenue from Contracts with Customers
The Group has adopted AASB 15 Revenue from Contracts with Customers from 1 October 2018. AASB 15
replaced the previous revenue recognition criteria applied under AASB 118.
AASB 15 establishes a single comprehensive model which is based on the principle that revenue is recognised
when control of a good or service transfers to a customer. AASB 15 provides significantly more guidance
particularly with respect to the identification of performance obligations, determination of the transaction
price, and allocation of value within multiple element arrangements. AASB 15 applies to contracts with
customers except for revenue arising from items such as financial instruments and leases. A material
component of the Group’s revenue arises from financial instruments (refer to the finance income revenue
recognition policy for further information).
In accordance with the transition provisions of AASB 15, the Group has adopted the new standard using the
full retrospective method of adoption and has restated comparatives for the 2018 financial year.
The Group’s policies for the identification of performance obligations, determination of the transaction price
and the resulting recognition of revenue were already largely aligned with the requirements of AASB 15,
however after completing a detailed review of the Group’s revenue streams, the major changes are shown in
the adjustment tables on the following pages.
The impact of adopting new accounting standards AASB 9, AASB 15 and prior period restatement in the
Consolidated Statement of Financial Position as summarised in the table below:
30 Sep 18
Reported
$’000
Adjustments
for AASB 15
$’000
Prior period
Restatements
$’000
30 Sep 18
Restated
$’000
Adjustments
for AASB 9
$’000
1 Oct 18
Restated
$’000
Ref.
62,078
146,180
-
-
-
-
62,078
146,180
-
-
62,078
146,180
1,2,5,6
208,870
(11,177)
(9,513)*
188,180
(7,930)
180,250
1,2,6
38,565
545,486
1,052,114
2,771
13,845
829,631
-
(4,048)
-
-
-
-
-
-
-
-
-
-
38,565
541,438
1,052,114
2,771
13,845
829,631
-
38,565
(9,942)
531,496
-
-
-
-
1,052,114
2,771
13,845
829,631
2,899,540
(15,225)
(9,513) 2,874,802
(17,872)
2,856,930
Statement of Financial Position
ASSETS
Cash and cash equivalents
Restricted cash and cash
equivalents
Trade receivables and other
assets
Inventory
Finance leases
Operating leases reported as
property, plant and equipment
Deferred tax assets
Property, plant and equipment
Intangibles
LIABILITIES
Trade and other liabilities
4
118,246
20,272
416
138,934
Provisions
Derivative financial instruments
Other
Borrowings
13,713
9,037
3,538
1,814,320
-
-
-
-
-
-
-
-
13,713
9,037
3,538
1,814,320
-
-
-
-
-
138,934
13,713
9,037
3,538
1,814,320
Deferred tax liabilities
40,670
(10,530)
(2,979)
27,161
(5,361)
21,800
1,999,524
9,742
(2,563) 2,006,703
(5,361)
2,001,342
EQUITY
Contributed equity
Reserves
Retained earnings
1,2,4,5,6
654,765
17,046
228,205
900,016
-
-
(24,967)
(24,967)
-
-
654,765
17,046
-
-
(6,950)
196,288
(12,511)
654,765
17,046
183,777
(6,950)
868,099
(12,511)
855,588
* Restatement comprises of $6.4m relating to 2018 and $3.1m relating to 2017. The restatement relates to adjustments to
Right2Drive regarding judgements made in respect to the amount of revenue to recognise and processing errors.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 72
1.0 Introduction to the Report
CONTINUED
The impact of adopting new accounting standards AASB 15 and the prior period restatement in the
Consolidated Statement of Profit or Loss as at 30 September 2018 are summarised in the table below:
Statement of profit
or Loss and Other
Comprehensive Income
Revenue from
continuing operations
Ref.
Sep 18
Reported
$’000
Adjust-
ments for
AASB 15
$’000
Prior period
Restate-
ments
$’000
Sep 18
Adjust-
ments for
AASB and
Prior period
$’000
Dis-
continued
Operations
Restatement
$’000
Sep 18
Restated
$’000
Finance income
Maintenance and
management income
Related products and
services income
Operating lease rentals
Brokerage income
Sundry income
End of lease income -
vehicle sales
End of lease income - other
Rental hire income
Auction commissions
Recovery of expenses
Sale of goods
Cost of revenue
Maintenance and
management expense
Related products and
services expense
Cost of goods sold -
vehicles
Impairment on operating
leased assets
Depreciation on operating
leased assets
Rental hire expenses
Recoverable expenses
Cost of goods sold - other
2
4
1
2
3
5
3
5
3
-
-
-
-
-
-
-
-
111,149
102,958
5,104
-
33,566
(979)
205,405
20,785
7,481
19,078
17,598
82,238
68,846
15,800
73,622
-
(8,442)
-
183,518
-
(12,279)
(6,401)
-
-
-
-
-
-
116,253
102,958
(10,484)
2,768
105,769
105,726
32,587
1,954
34,541
205,405
12,343
7,481
202,596
17,598
63,558
68,846
15,800
73,622
4,305
(814)
(4,618)
202
209,710
11,529
2,863
202,798
-
17,598
(63,558)
(68,846)
(15,800)
(73,622)
-
-
-
-
758,526
166,922
(6,401)
919,047
(228,513)
690,534
39,932
6,927
-
-
-
183,518
402
203,868
29,248
17,423
61,984
-
-
(10,173)
-
-
359,784
173,345
-
-
-
-
-
-
-
-
-
39,932
-
39,932
6,927
(38)
6,889
183,518
402
-
-
183,518
402
203,868
(1,383)
202,485
19,075
17,423
61,984
(19,075)
(17,423)
(61,984)
-
-
-
533,129
(99,903)
433,226
(1) AASB 15: Loan establishment fees: Loan establishment fees disclosed within related products and services,
are recognised over the life of the contract as the performance obligation is satisfied. Loan establishment fees
were previously recognised upfront with the performance of a significant piece of work.
(2) AASB 15: Brokerage income: The Group receives brokerage income representing commissions received for
the origination of contracts. Upon application of AASB 15, a select number of brokerage deals are required to
be accounted for as finance income.
(3) AASB 15: Income from the sale of fleet vehicles: The Group recognises income from the sale of fleet vehicles
at the end of the lease term. Historically, any gain or loss on disposal was recognised on a net basis. On
application of AASB 15, the Group has determined it is acting as a principal in the transaction, primarily due to
holding the inventory risk of the vehicles. This change has resulted in the disclosure of a separate line item, End
of lease income - vehicle sales. The Group has recognised a corresponding increase in the cost of goods sold.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 73
1.0 Introduction to the Report
CONTINUED
There is no net impact to the statement of profit or loss.
AASB 15 Revenue from Contracts with Customers (continued)
(4) AASB 15: Maintenance income: Historically, the Group recognised maintenance income by applying the
percentage of completion method to a portfolio of contracts. Under AASB 15, the Group is required to apply
the recognition criteria against individual leases. The Group is required to maintain the vehicle in accordance
with the manufacturers requirements and therefore the performance obligation is satisfied over the term of
the contract. In applying the principles of AASB 15, the Group performed a review of all lease contracts and
determined the revenue attributable to each individual lease using a maintenance profile supported by market
data of expected service costs and intervals. In applying the principles of AASB 15, the Group was required
to recognise an additional deferred revenue liability. The corresponding adjustment was to retained earnings
representing the performance obligation that existed at the beginning of the comparative period. Refer to the
maintenance and management revenue recognition policy for further information.
(5) AASB 15: Variable rental consideration: The Group provides motor vehicles to not-at-fault individuals and
the amounts are recovered from the at fault individuals. The Group has historically accounted for any discounts
or credits as a cost of revenue expense. Applying the principles of AASB 15, discounts or credits meet the
definition of variable consideration. On transition, the Group has included amounts expected to be received
net of any discount or credit, and only to the extent that these are highly probable that the cumulative
amount of revenue recognised will not be subject to significant reversal in the future.
(6) AASB 9: Impairment provisions: The Group adopted AASB 9 on 1 October 2018, without restatement of
comparative financial information, resulting in a one-off reduction to opening retained earnings post tax
of $12.5m and an increase to impairment provisions as compared to that recognised under AASB 139. This
includes an increase in provisions of $9.9m net investment in finance lease receivables, $4.3m in trade and
other receivables and $3.6m contract receivables measured at amortised cost. These increases are as a result
of impairment provisions in prior year being recognised using AASB 139’s incurred loss model. In contrast, AASB
9 introduces the expected loss model, removing the requirement for a credit event to have occurred before
credit losses are recognised.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 74
2.0 Business Result for the Year
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 Discontinued operations
2.3 Revenue
2.4 Expenses
2.5 Earnings per share
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 reviewed regularly by the Group’s Chief Operating
Decision Maker in assessing performance and in determining the allocation of resources.
The Group announced a Senior Executive Leadership Renewal on 13 May 2019, where a new Chief Executive
Officer was appointed. The Group subsequently made an announcement to the market on 31 May 2019, that
the Group will be simplifying and identified Core and Non-Core business segments. Core businesses would
include fleet leasing management and services to corporate SME and consumers in Australia and corporate
SME customers in New Zealand. Core business segments would be Australia Commercial, Australia Consumer
and New Zealand Core. Non-Core relates to business that are available for divestment and Grays which
was disposed. The segments have been identified on how the Chief Operating Decision Maker monitors
performance and allocates resources.
The segments disclosures for the prior period have been restated to reflect the changes for the segment
classification. The segment information for the reportable segments for the year ended 30 September 2019 is
as below:
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 75
2.0 Business Result for the Year
CONTINUED
2.1 SEGMENT INFORMATION (continued)
Identification of reportable segments (continued)
2019
Australia
Commercial
$’000
Australia
Consumer
$’000
New
Zealand
$’000
Non-Core*
$’000
Grays^
$’000
Total
$’000
Net operating income
105,975
28,638
38,665
30,869
57,709
261,856
Bad and doubtful debts
(1,087)
72
(244)
(5,420)
320
(6,359)
Operating expenses
(49,773)
(13,799)
(26,506)
(47,494)
(58,444)
(196,016)
EBITDA
55,115
14,911
11,915
(22,045)
(415)
59,481
Depreciation and amortisation
(4,881)
(1,319)
(3,976)
(2,318)
(2,145)
(14,639)
Share Based Payments
(1,659)
(448)
(94)
(37)
-
(2,238)
Holding company debt interest
(8,046)
(840)
(1,587)
(5,029)
(3,019)
(18,521)
Amortisation acquired intangibles
(2,811)
(343)
(551)
(913)
(1,554)
(6,172)
Impairments and write-offs
(9,091)
(2,457)
(16,110)
(119,670)
(59,131)
(206,459)
Significant material non-recurring items
(25,045)
(1,761)
(1,174)
(42,823)
(101,859)
(172,662)
Tax
(1,160)
(2,703)
3,950
17,590
2,076
19,753
Statutory net profit after tax
2,422
5,040
(7,627)
(175,245)
(166,047)
(341,457)
Post tax add back impairments and
write-offs
Post tax add back amortisation acquired
intangibles
Post tax add back significant material
non-recurring items
Cash net profit after tax including
amortisation of software
6,363
1,720
11,599
113,831
59,131
192,644
1,968
240
397
639
1,088
4,332
17,532
1,233
844
41,596
99,992
161,197
28,285
8,233
5,213
(19,179)
(5,836)
16,716
Software amortisation (post tax)
1,997
540
2,259
1,319
992
7,107
Cash net profit after tax
30,282
8,773
7,472
(17,860)
(4,844)
23,823
^ The disposal of GraysOnline and areyouselling.com was completed as at and effective from 31 July 2019
* Non-Core includes the entities associated with CarLoans, Right2Drive (which is held for sale) and Eclipx Commercial
Finance which was sold on 13 September 2019.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019
76
2.0 Business Result for the Year
CONTINUED
2.1 SEGMENT INFORMATION (continued)
Identification of reportable segments (continued)
2018
Australia
Commercial
$’000
Australia
Consumer
$’000
New
Zealand
$’000
Non-Core*
$’000
Grays^
$’000
Total
$’000
Net operating income
120,155
22,520
39,561
50,992
81,520
314,748
Bad and doubtful debts
(498)
-
(644)
(1,125)
30
(2,237)
Operating expenses
(58,249)
(11,239)
(25,414)
(41,991)
(63,652)
(200,545)
EBITDA
61,408
11,281
13,503
7,876
17,898
111,966
Depreciation and amortisation
(3,445)
(1,835)
(833)
(1,015)
(1,996)
(9,124)
Share Based Payments
(271)
(54)
(26)
(19)
(84)
(454)
Holding company debt interest
(5,285)
(499)
(1,196)
(5,015)
(2,829)
(14,824)
Amortisation acquired intangibles
(2,913)
(355)
(528)
(504)
(1,620)
(5,920)
Significant material non-recurring items
(277)
-
(103)
(3,333)
(7,796)
(11,509)
Tax
(11,789)
(1,609)
(3,029)
304
(790)
(16,913)
Statutory net profit after tax
37,428
6,929
7,788
(1,706)
2,783
53,222
Post tax add back impairments and
write-offs
Post tax add back amortisation acquired
intangibles
Post tax add back significant material
non-recurring items
Cash net profit after tax including
amortisation of software
-
-
-
-
-
-
2,068
252
380
353
1,010
4,063
194
-
74
2,333
5,459
8,060
39,690
7,181
8,242
980
9,252
65,345
Software amortisation (post tax)
980
1,135
390
86
1,195
3,786
Cash net profit after tax
40,670
8,316
8,632
1,066
10,447
69,131
* Non-Core includes the entities associated with CarLoans, Right2Drive and Eclipx Commercial Finance.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019
77
2.0 Business Result for the Year
CONTINUED
2.2 DISCONTINUED OPERATIONS
On 31 July 2019, the Group completed the sale of GraysOnline and AreYouSelling to Quadrant Private Equity
for an enterprise value of A$60 million. Management committed to a plan to sell this segment early in 2019,
following a strategic decision to place greater focus on the Group’s Core business segments.
On 13 September 2019, the Group completed the sale of Eclipx Commercial and the FP Turbo Series 2015-
1 Equipment Trust to Grow Asset Finance Pty Limited for A$17.7 million. The disposal was effective as at 31
August 2019, and encompassed all the issued shares of Eclipx Commercial Pty Limited, all of the issued units
and notes of the Equipment Trust, and the Equipment held by the trust.
Details of the sales are as follows:
Loss on sale of disposed groups
Proceeds from disposal of discontinued operations
Less cash and cash equivalents disposed of (including restricted cash):
Net carrying value of assets of discontinued operations at date of disposal (excluding cash)
Amount receivable per completion accounts
Transaction costs, net of tax
Tax expense
Loss on disposal of discontinued operations after tax
The carrying amounts of assets and liabilities as at the date of sale were:
Financial position of the disposed groups as at the date of the sale:
Cash and Cash equivalents (including restricted cash)
Trade and Other receivables
Inventory
Property, Plant and equipment
Finance Leases
Operating leases reported as PP&E
Intangibles
Trade and other liabilities
Provisions
Borrowings
Deferred tax asset
Less cash and cash equivalents disposed:
Net carrying value of assets excluding cash and cash equivalents
2019
$’000
75,957
(5,193)
70,764
(181,028)
1,498
(7,449)
(186,979)
-
(116,215)
2019
$’000
5,193
34,756
7,925
3,896
96,551
5,848
142,061
(2,531)
(3,978)
(114,583)
11,083
186,221
(5,193)
181,028
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019
78
2.0 Business Result for the Year
CONTINUED
(i) Results of discontinued operations
The financial performance and cash flow information presented are for the period to the effective date of
disposal (2019 column) and the year ended 30 September 2018. The effective date of disposal for GraysOnline
and areyouselling.com was 31 July 2019 and the effective date for Eclipx Commercial was 13 September 2019.
The financial performance and cash flow information below includes Right2Drive.
Revenue
Cost of revenue
Impairment losses on loans and receivables
Fair value adjustment
Goodwill impairment
Software impairment
Other intangible impairment
Employee benefit expense
Depreciation and amortisation
Operating expenses
(Loss)/profit from operating activities
Income tax
Loss on sale of discontinued operations
2019
$’000
169,075
(88,798)
(5,078)
(21,569)
(129,120)
(4,524)
(12,787)
(56,211)
(5,882)
(36,114)
(191,008)
13,119
(116,215)
2018
$’000
228,513
(99,903)
(1,095)
-
-
-
-
(60,552)
(5,547)
(41,374)
20,042
(3,990)
-
Total comprehensive (loss)/profit from discontinued operations
(294,104)
16,052
Earnings per share from discontinued operations
Basic Earnings per share, from discontinued operations - cents per share
Diluted earnings per share, from discontinued operations - cents per share
(92.16)
(92.16)
5.11
5.00
Cash flow from discontinued operations
Net cash flows from operating activities
Net cash flows from investing activities
Net cash flows from financing activities
Net cash flows from discontinued operations
39,465
(5,182)
(34,804)
(521)
(21,000)
(9,355)
36,442
6,087
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019
79
2.0 Business Result for the Year
CONTINUED
2.2 DISCONTINUED OPERATIONS (continued)
(ii) Asset held for sale
As at 30 September 2019, the assets and liabilities that were classified as held for sale relates to Right2Drive
Group, which consists of Right2Drive Australia, Right2Drive New Zealand and Onyx Car rentals. No
comparatives are disclosed as these assets were not deemed held for sale in the prior year. The Right2Drive
Group sale process has commenced with a financial adviser being appointed, information pack distributed and
process letters being delivered to interested parties The Group is expecting the sale process to be completed
in financial year 2020.
Assets held for sale
Trade and other receivables
Liabilities held for sale
Other liabilities
Provisions
Trade and other liabilities
2019
$’000
41,516
41,516
1,074
1,412
971
3,457
The fair value of the asset held for sale is calculated using various inputs which would include a combination of
indicative bid prices for the assets and external security value identified for the business.
2.3 REVENUE
Recognition and measurement
Revenue is recognised when the Group satisfies its obligations in relation to the provision of goods and
services to its customers in the ordinary course of business. Revenue is measured at an amount that reflects
the consideration to which the Group expects to be entitled in exchange for performing these obligations. The
Group’s revenue is disaggregated by the nature of the product or service.
Finance income
The Group purchases vehicles to lease to customers and earns a spread, or net interest income, being the
difference between the interest component of the lease rental income it receives from customers and its cost
of funds. The Group recognises net interest income over the life of the lease. Interest income from finance
lease contracts is recognised 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. The effective interest rate
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 future asset. Payments collected from the lease are allocated between
reducing the net investment in the lease and recognising interest income.
Operating lease rentals
The Group purchases vehicles to lease to customers and collects rentals in relation to these operating leases.
The operating lease instalments (or rental income) are recognised in the financial statements in their entirety
on a straight-line basis over the lease term.
The instalments are classified and presented in ‘Operating lease rentals’.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019
80
2.0 Business Result for the Year
CONTINUED
Maintenance and management income
The Group earns maintenance and management fees from related products and services. Income related
to maintenance and management services is recognised over the term of the lease contract based on the
percentage of completion method. The allocation of income over the term is based on a maintenance profile
supported by market data of expected service costs and intervals. The difference between the amounts
received and amounts recognised as income is accounted for as deferred revenue disclosed within trade and
other liabilities.
Sale of goods
The Group earns revenue from the sale of goods, which also includes ex-fleet and purchased vehicles. Sales
are recognised when control of the products has transferred, being when the products are delivered to the
customer, usually evidenced in the form of a delivery docket. Amounts disclosed as revenue are net of sales
returns and trade discounts.
Brokerage, commissions and advice services income
The Group earns fees for the origination of financing from third party banks and financial institutions. Revenue
is recognised when the related service has been provided. This is deemed to be at settlement date.
The Group also earns finder fees for introducing individuals to car dealerships, which recognises revenue
consistent with the treatment above.
End of lease income - Vehicle sales
The Group earns income on the sale of vehicles from terminated lease contracts. The Group acts as the
principal in these transactions and proceeds are recognised on a gross basis. Revenue is recognised at the
point in time the vehicle is sold and there are no remaining performance obligations.
End of lease income - other
The Group earns other end of lease income for variations in contractual terms related to early termination,
mileage and excessive wear and tear of the vehicle. The fees are recognised at a point in time, upon
termination of the lease contract.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019
81
2.0 Business Result for the Year
CONTINUED
2.3 REVENUE (continued)
Sale of goods (continued)
Cost of revenue
Cost of revenue comprises the cost associated with providing the service components of the lease. 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.
Revenue 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 - Vehicle Sales**
End of lease income - other
Total revenue from continuing operations
Cost of revenue:
Maintenance and management expense
Related products and services expense
Cost of goods sold
Impairment on operating leased assets
Depreciation on operating leased assets
Total cost of revenue
2019
$’000
2018*
$’000
109,034
103,339
39,216
201,851
19,106
3,873
219,441
17,169
713,029
43,713
11,631
207,742
485
197,124
460,695
105,769
105,726
34,541
209,710
11,529
2,863
202,798
17,598
690,534
39,932
6,889
183,518
402
202,485
433,226
* Comparatives have been restated for the transition to AASB 15 and prior period restatement. Refer to Note 1.0
** The above amounts totalling $384,975,000 (2018: $357,457,000) represents the Group’s revenue derived from contracts with
customers, in accordance with AASB15.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019
82
2.0 Business Result for the Year
CONTINUED
2.4 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 profit or loss and other 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
ten 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)
Operating finance costs
Facility finance costs
Total operating finance costs
Operating overheads
Rental of premises
Technology costs
Restructuring costs
Acquisition related costs
Merger Related Costs
Other overheads
Total operating overheads
2019
$’000
3,472
3,741
7,713
14,926
70,131
3,259
73,390
18,521
18,521
7,793
10,105
7,888
-
16,658
21,541
63,985
2018
$’000
2,828
3,420
3,202
9,450
66,910
(358)
66,552
14,185
14,185
7,576
7,607
1,135
2,682
-
23,918
42,918
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019
83
2.0 Business Result for the Year
CONTINUED
2.5 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.
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.
Consolidated
2019
2018
Restated
Cents
Cents
Continuing and discontinuing earnings per share
Total basic earnings per share attributable to the ordinary equity holders of the company
Total diluted earnings per share attributable to the ordinary equity holders of the
company
(107.0)
(107.0)
16.9
16.6
Reconciliation of earnings used in calculating Basic and Diluted earnings per share
Consolidated
2019
2018
Restated
$’000
$’000
Profit attributable to the ordinary equity holders of the company used in calculating
basic earnings per share and diluted earnings per share:
(341,457)
53,222
From continuing and discontinuing operations
(341,457)
53,222
Weighted average number of shares used as the denominator
Consolidated
2019
2018
Number
Number
Weighted average number of ordinary shares used as the denominator in calculating
diluted earnings per share
319,111,693
321,085,520
Weighted average number of ordinary shares used as the denominator in calculating
basic earnings per share
319,111,693
314,209,530
The weighted average number of shares is only adjusted for dilution purposes, where this will decrease the
earnings per share or increase the loss per share, accordingly no adjustment is made in 2019 to the weighted
average number of ordinary shares used as the denominator in the calculation of diluted earnings per share.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019
2.0 Business Result for the Year
CONTINUED
Impact of discontinued operations, new accounting standards and prior period
restatement
(Loss)/profit from discontinued operations
Post tax impact of applying AASB15
Post tax impact of prior period restatement
Impact of discontinued operations
Basic earnings per share
Diluted earnings per share
Impact of new accounting standards
Basic earnings per share
Diluted earnings per share
Impact of prior period restatement
Basic earnings per share
Diluted earnings per share
84
Consolidated
2019
2018
Restated
$’000
$’000
(294,104)
-
-
16,052
(4,518)
(4,481)
Consolidated
2019
Cents
(92.2)
(92.2)
-
-
-
-
2018
Cents
5.0
5.1
1.4
1.4
1.4
1.4
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019
85
2.0 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.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019
2.0 Business Result for the Year
CONTINUED
(i) Reconciliation of income tax expense
(Loss)/profit from continuing operations before income tax expense
(Loss)/profit from discontinuing operations before income tax expense
Prima facie tax rate of 30.0% (2018 - 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
Grays loss on disposal
ECF loss on disposal
Contingent consideration
Finance income on convertible notes
Goodwill Impairment
Tax losses utilised
FV adjustment
Transaction costs
Other
86
Consolidated
2019
$’000
(53,987)
(307,223)
(361,210)
(108,363)
169
-
28,237
4,393
(35)
-
47,801
-
6,471
1,207
367
2018 Restated
$’000
50,093
20,042
70,135
21,041
(247)
101
-
-
(476)
(582)
-
(2,963)
-
-
39
Income tax (benefit)/expense
(19,753)
16,913
Income tax expense comprises of:
Current tax
Deferred tax
Income tax (benefit)/expense is attributable to:
(Loss)/profit from continuing operations
(Loss)/profit from discontinuing operations
Income tax (benefit)/expense
6,586
(26,339)
(19,753)
(6,634)
(13,119)
(19,753)
20,553
(3,640)
16,913
12,923
3,990
16,913
Effective tax rate
5.4%
24.1%
The effective tax rate for 2019 is impacted by the impairment of goodwill, loss of disposal groups and fair value adjustments which
is not deductible and decreases the effective benefit on the loss from continuing and discontinuing operations.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019
87
2.0 Business Result for the Year
CONTINUED
2.6 TAXATION (continued)
(ii) Movement of deferred tax
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$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
7,534
(39)
5,361
(9)
(7,194)
(1,656)
3,997
3,997
5,329
3,383
-
2,631
699
5,897
-
1
-
-
86
8,798
8,798
-
9,228
9,228
-
-
-
3,159
4,472
(28,490)
9,984
4,161
2,678
(18,714)
5,162
-
-
-
-
(24,390)
26,339
11,258
(1,516)
1,446
3,531
11,093
13,125
(2,032)
1,735
-
(20,847)
(37,618)
-
(37,618)
(864)
(85)
(724)
5,166
5,166
-
2,752
2,099
(1,357)
8,527
(3,631)
-
(3,631)
(7,190)
(11,083)
(2,967)
40,314
(43,281)
(38,138)
38,138
(2,967)
2,176
(5,143)
2019
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)
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019
2.0 Business Result for the Year
CONTINUED
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f
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r
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l
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b
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i
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y
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
891
625
2,854
3,014
-
-
150
(433)
(88)
(180)
53
-
-
-
-
7,534
7,534
5,329
5,329
2,631
2,631
-
-
-
2018
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)
596
5,254
2,758
6,499
-
-
(39,465)
4,651
2,737
(20,621)
-
-
-
-
-
-
-
(46,605)
10,530
2,979
125
131
(498)
(789)
2,050
3,640
-
-
-
-
53
(3,558)
(38)
3,159
9,169
(6,010)
6,822
2,213
(143)
5,051
-
-
-
(28,490)
-
(28,490)
4,161
4,161
-
(18,714)
-
(18,714)
(38)
(24,390)
28,824
(53,214)
(ii) Franking credits
Franked dividends (Australia)
Franking credits available for subsequent financial years based on a tax rate of 30%
(26,053)
26,053
(24,390)
2,771
(27,161)
Consolidated
2019
2018
$’000
$’000
5,523
5,523
11
11
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 based
on estimates. 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.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019
3.0 Operating Assets and Liabilities
This section provides information relating to the operating assets and liabilities of the Group.
89
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 other 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.
Consolidated
2019
Opening net book amount
Additions
Transfers to inventory
Depreciation charge - discontinued operations
Disposal - discontinued operations
Impairment charge
Depreciation charge - continuing operations
Foreign exchange variation
Closing net book amount
2019
Cost
Accumulated depreciation and impairment
Net book amount
Plant and
equipment
$’000
Fixture and
fittings
$’000
Motor vehicles
and equipment
$’000
6,227
2,328
-
(351)
(2,020)
-
(1,955)
7
4,236
18,151
(13,915)
4,236
7,618
2,477
-
(752)
(1,876)
(1,613)
(1,517)
27
4,364
13,467
(9,103)
4,364
1,052,114
307,296
(207,311)
-
-
(485)
(197,124)
4,697
959,187
1,457,805
(498,618)
959,187
Total
$’000
1,065,959
312,101
(207,311)
(1,103)
(3,896)
(2,098)
(200,596)
4,731
967,787
1,489,423
(521,636)
967,787
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 90
3.0 Operating Assets and Liabilities
CONTINUED
Consolidated
2018
Opening net book amount
Finalisation as part of business combination
Disposals
Additions
Transfers to inventory
Impairment charge
Depreciation charge
Foreign exchange variation
Closing net book amount
2018
Cost
Accumulated depreciation and impairment
Net book amount
Plant and
equipment
$’000
Fixture and
fittings
$’000
Motor vehicles
and equipment
$’000
Total
$’000
8,184
(528)
(3,098)
4,102
-
-
(2,434)
1
6,227
19,475
(13,248)
6,227
6,120
1,051,848
1,066,152
-
-
2,882
-
-
(1,381)
(3)
7,618
14,618
(7,000)
7,618
-
-
391,936
(185,334)
(402)
(203,868)
(2,066)
1,052,114
1,944,831
(892,717)
1,052,114
(528)
(3,098)
398,920
(185,334)
(402)
(207,683)
(2,068)
1,065,959
1,978,924
(912,965)
1,065,959
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
Consolidated
2019
$’000
2018
$’000
268,656
690,531
959,187
4,236
4,364
8,600
262,731
789,383
1,052,114
6,227
7,618
13,845
Total property, plant and equipment
967,787
1,065,959
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.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 91
3.0 Operating Assets and Liabilities
CONTINUED
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.
Gross investment
Unearned income
Provision for Doubtful debt / expected credit allowance
Amount expected to be recovered within 12 months
Amount expected to be recovered after more than 12 months
Consolidated
2019
$’000
475,508
(56,101)
(11,865)
407,542
153,484
254,058
407,542
2018 Restated
$’000
629,622
(88,184)
-
541,438
178,060
363,378
541,438
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.
Collectability of trade receivables is disclosed as part of credit risk. Refer to note 4.2.
Net trade receivables
Trade receivables
Credit hire receivables
Provision for doubtful debts/expected credit allowance
Sundry debtors
Prepayments
Other assets
Current tax receivable
Total trade receivables and other assets
Consolidated
2019
$’000
54,618
-
(1,187)
53,431
7,933
17,415
47
2,892
81,718
2018 Restated
$’000
69,079
56,009
(4,458)
120,630
38,235
24,595
67
4,653
188,180
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 92
3.0 Operating Assets and Liabilities
CONTINUED
A significant portion of the outstanding amounts are expected to be recovered within 12 months. The net
carrying value of trade receivables is considered a reasonable approximation of fair value.
The movement in credit hire receivables is due to the classification of Right2Drive being deemed held for sale
and is disclosed under note 2.2.
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.
Consolidated
2019
$’000
32,513
4,726
20,927
-
7,776
483
26,311
18,491
111,227
2018
Restated
$’000
44,418
4,824
15,678
7,677
8,970
814
36,168
20,385
138,934
Consolidated
2019
$’000
111,227
-
111,227
2018 Restated
$’000
138,542
392
138,934
Trade payables
Lease liability
Accrued expenses
Current tax liabilities
Maintenance income received in advance
Contingent and deferred consideration
Other payables
Deferred Revenue
Total trade and other liabilities
Amount expected to be settled within 12 months
Amount expected to be settled after more than 12 months
Total trade and other liabilities
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.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 93
3.0 Operating Assets and Liabilities
CONTINUED
3.5 INTANGIBLES (continued)
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
2019
Opening net book amount
36,050
Additions
-
23,152
-
62,084
8,769
Amortisation charge -
continuing operations
Impairment charge -
continuing operations
Impairment charge -
discontinued operations
Amortisation charge -
discontinued operations
708,345
-
-
829,631
8,769
(11,454)
(194)
(3,547)
(7,713)
-
(3,815)
(25,994)
(30,218)
(60,027)
(12,787)
-
(4,524)
(129,120)
(146,431)
(1,702)
(263)
(2,814)
-
(4,779)
Disposed as part of discontinued
operation
Foreign exchange variation
Closing net book amount
(19,530)
-
1,837
(2,266)
40
13,301
(10,713)
250
19,345
(109,552)
(142,061)
1,364
440,819
1,654
475,302
2019
Cost
Accumulated amortisation and
impairment
Net book amount
18,721
29,342
71,165
538,907
658,135
(16,884)
1,837
(16,041)
13,301
(51,820)
19,345
(98,088)
440,819
(182,833)
475,302
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 94
3.0 Operating Assets and Liabilities
CONTINUED
Brand names
$’000
Customer
relationships
$’000
Software
$’000
Goodwill
$’000
Total
$’000
2018
Opening net book amount
37,009
27,121
41,477
701,002
806,609
Acquired as part of business
combination (note 2.5)
Additions
Amortisation charge
Foreign exchange variation
Finalisation as part of business
combination
1,018
-
(1,976)
(1)
-
Closing net book amount
36,050
-
-
(3,944)
(25)
-
23,152
-
25,912
(5,262)
(43)
-
62,084
8,237
-
-
(600)
(294)
708,345
9,255
25,912
(11,182)
(669)
(294)
829,631
2018
Cost
Accumulated amortisation and
impairment
Net book amount
(i) Impairment of assets
39,864
37,492
80,697
708,345
866,398
(3,814)
36,050
(14,340)
23,152
(18,613)
62,084
-
708,345
(36,767)
829,631
The Group noticed an indicator of impairment for goodwill and testing was performed in March 2019. Goodwill
held against Right2Drive and Grays was impaired at March comparing carrying value to value in use.
The Group and McMillan Shakespeare mutually terminated the Scheme Implementation Agreement on 3 April
2019. Following this the Board initiated its Simplification Plan with the appointment of a new Chief Executive
Officer.
The simplification plan was a renewed focus on the Core business, which is the fleet and novated business and a
strategy to dispose of Non-Core businesses.
A new leadership team was recruited and Non-Core businesses were disposed of. This leadership renewal
and focus on Core resulted in the carrying value of intangible assets to be re-assessed and impairments were
recognised. The impairments related to Non-Core assets where the value in use model calculated a value
below the carrying value. The disposals of the Grays and Eclipx Commercial finance resulted in impairment of
software. Software in the Core was assessed and an impairment was recognised against the carrying value.
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.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 3.0 Operating Assets and Liabilities
CONTINUED
3.5 INTANGIBLES (continued)
(i) Impairment of assets (continued)
Australia Commercial
Australia Consumer
New Zealand Commercial
Grays
Goodwill allocation at 30 September
95
Consolidated
2019
$’000
282,493
46,475
111,851
-
440,819
2018
$’000
330,707
154,896
110,511
112,231
708,345
The recoverable amount of each of the Group’s CGUs were determined based on value-in-use calculations,
consistent with the methods used as at 30 September 2018. These calculations require the use of assumptions,
which includes business unit’s approved budget, using three year projected cash flows.
Goodwill is reviewed on an annual basis or more frequently if events or changes in circumstances indicate a
potential impairment.
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 projected future cash flows generated from the
businesses. Cash flows were projected based on budget approved by the Board for the applicable CGU, with
an extrapolation of expected cash flows into perpetually using the growth rates determined by management.
The following table sets out the key assumptions for each of the Group’s CGUs.
30 September 2019
30 September 2018
Australia
Commercial
Australia
Consumer
New
Zealand
Non-Core
Australia
Commercial
Australia
Consumer
New
Zealand
Grays
2.5%
2.5%
2.0%
2.5%
2.6%
2.6%
2.6%
2.6%
11.0%
12.0%
11.5%
12.0%
11.0%
11.0%
11.0%
11.0%
Long term
growth rate
Post-tax
discount rate
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 International Monetary Fund. 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 GOODWILL
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.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 96
3.0 Operating Assets and Liabilities
CONTINUED
Significant estimate: Impact of possible change in key assumptions
The goodwill associated with acquisition of Carloans and Right2Drive was tested following the restructure of the
Group into Core and Non-Core business segments. The budget for these business segments did reflect a change
in the expected future cash flows due to the change in internal and external factors associated with a business
being defined as Non-Core. These changes reflected in the budget for FY20, resulted in an impairment being
recognised in goodwill across Carloans and Right2Drive.
The recoverable amount in New Zealand Commercial, Australia Commercial and Australia Consumer was higher
than the carrying amount and therefore no impairment was recognised.
The following sensitivity change to the New Zealand CGU is deemed to be reasonably possible and would result
in an impairment charge, assuming all other assumptions are held constant:
Key Assumptions
Discount Rate
Terminal Growth Rate
Sensitivity
+ 28 bps
- 27 bps
Impact of sensitivity
Result in value in use being equal to carrying value
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 97
4.0 Capital Management
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 16 months (2018: 19 months).
Bank loans
Notes payable
Borrowing costs
Total secured borrowings
Amount expected to be settled within 12 months
Amount expected to be settled after more than 12 months
Consolidated
2019
$’000
285,700
1,331,640
(12,635)
1,604,705
369,537
1,235,168
1,604,705
2018
$’000
340,200
1,484,115
(9,995)
1,814,320
345,878
1,468,442
1,814,320
Bank loans
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 $221,433,000 (2018: $323,358,000).
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 $1,509,273,000 (2018: $1,739,732,000).
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
Consolidated
2019
$’000
1,617,340
218,587
1,835,927
2018
$’000
1,824,315
286,790
2,111,105
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 98
4.0 Capital Management
CONTINUED
Financial covenants
The Group has complied with financial covenants of its borrowing facilities during the 2019 and 2018 reporting
periods.
The financial covenant testing for the bank loans at 30 September 2019 were waived as a result of the
amendments to the facility.
The Group reached an agreement as of 25 October 2019 with its borrowers under the Bank loans facilities to
amend the financial covenants and to extend the term of the facility.
Reconciliation of movements of liabilities to cash flows arising from financing activities
Liabilities arising from financing activity
Borrowing balance 30 Sep 2018
Proceeds from borrowings
Repayments of borrowings
Non cash movements
Borrowing as part of discontinued operations
Foreign exchange
Amortisation of capital borrowing cost
Borrowing balance 30 Sep 2019
Borrowing
$’000
1,814,320
453,635
(556,678)
(114,583)
5,091
2,920
1,604,705
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 risk management program focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the financial performance of the Group. The Group is exposed to a variety
of financial risks: market risk (this includes foreign exchange risk and interest rate risk), credit risk and liquidity
risk. The Group uses different methods to measure different types of risk to which it is exposed. These methods
include sensitivity analysis in the case of interest rate and foreign exchange risk, and ageing analysis for credit risk.
Market risk
(i) Foreign exchange risk
The Group operates in Australia and in New Zealand and is exposed to foreign exchange risk arising 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% (2018:10%) 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 2019, had the Australian dollar weakened/strengthened by 10%
(2018:10%) 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 $529,736 (2018: $850,039)
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.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 99
4.0 Capital Management
CONTINUED
4.2 FINANCIAL RISK MANAGEMENT (continued)
(ii) Interest rate risk
2019
2018
Weighted
average
interest rate
Balance
Weighted
average
interest rate
Balance
%
$’000
%
$’000
6.350%
65,000
6.350%
65,000
Borrowings
- Fixed interest rate
- Floating interest rate
3.456%
1,539,705
4.000%
1,749,320
Interest rate swaps (notional principal amount)
2.141%
(1,416,929)
2.417%
(1,636,120)
Unhedged variable debt
122,776
113,200
Interest rate risk results principally from repricing risk from the Group lease portfolio and borrowings. The
Group’s lease receivables are fixed rate lease contracts. The interest rate is fixed for the life of the contract.
Lease contracts are typically originated with an average maturity of between four to five years.
The borrowings to fund the leases are variable rate borrowings where the rates are regularly reset to current
market rates. Interest rate risk is managed by entering into interest rate swaps, whereby the Group pays fixed
rate and receives floating rate.
The Group settles monthly net interest receivable or payable. The Group remeasures the hedging instruments
at fair value and recognises a gain or loss in other comprehensive income and deferred to the hedging
reserve, where the hedge is effective. It is reclassified into the Income Statement if the hedging relationship
ceases. In the year ended 30 June 2019, an expense of $3.8m was reclassified into profit and loss (2018: $nil).
The Group recognised a loss on hedge ineffectiveness of $2.3m (2018: profit of $0.3m)
The Group hedges 100% of the lease book that is financed through the Groups funding structures. This
100% hedging strategy results in hedge ineffectiveness where the Group provides funding and no external
borrowing is used.
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 (2018: 100 bps) and a decrease by 100
bps (2018: 100 bps) across the yield curve.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 4.0 Capital Management
CONTINUED
100
2019
Financial assets
Cash and cash equivalents
Finance leases
- Fixed interest rate
Total (decrease)/increase
Financial liabilities
Borrowings
- Fixed interest rate
- Floating rate
Trade and other liabilities
Derivatives used for hedging
Total increase/(decrease)
2018
Financial assets
Cash and cash equivalents
Finance leases
- Fixed interest rate
Total (decrease)/increase
Financial liabilities
Borrowings
- Fixed interest rate
- Floating rate
Trade and other liabilities
Derivatives used for hedging
Total increase/(decrease)
Interest rate risk
Carrying
amount
-100 bps
Profit/
equity
+100 bps
Profit/
equity
$’000
$’000
$’000
239,678
(2,397)
2,397
407,542
-
-
647,220
(2,397)
2,397
65,000
-
-
1,539,705
15,397
(15,397)
111,227
31,369
-
(14,216)
1,747,301
1,181
-
14,216
(1,181)
Interest rate risk
Carrying
amount
-100 bps
Profit/
equity
+100 bps
Profit/
equity
$’000
$’000
$’000
208,258
(2,083)
2,083
541,438
-
-
749,696
(2,083)
2,083
65,000
-
-
1,749,320
17,493
(17,493)
138,934
-
9,037
(16,361)
1,962,291
1,132
-
16,361
(1,132)
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 101
4.0 Capital Management
CONTINUED
4.2 FINANCIAL RISK MANAGEMENT (continued)
Credit risk
The recoverability of trade receivables is reviewed on an ongoing basis. A loss allowance account (provision
for impairment of trade receivables) is recognised when there is a difference between all contractual cash
flows that are due to the Group in accordance with the contract and all the cash flows the Group expects
to receive (ie all cash shortfalls), discounted at the original effective interest rate (or credit-adjusted
effective interest rate for purchased or originated credit-impaired financial assets). Previously, a provision for
impairment of trade receivables was recognised when there was objective evidence that the Group would
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 would enter bankruptcy or financial reorganisation,
and default or delinquency in payments were considered indicators that the trade receivable is impaired.
For amounts due under leases, delinquency would be for amounts more than 30 days overdue. Credit hire
contract assets due have different indicators for impairment due to the nature of the product.
AASB 9 affects the following assets that have been grouped based on shared credit risk characteristics and the
days past due:
\ Net investment in finance lease receivables
\ Trade and other receivables
\ Credit hire contract assets
For the above asset classes, the Group has applied the AASB 9 simplified approach to measuring expected
credit losses, resulting in the recognition of a lifetime expected loss allowance. AASB 9 requires the Group to
consider forward-looking information in measuring credit losses, as well as different macroeconomic scenarios.
As a result, the impairment provisions recognised reflect expected credit losses as a result of possible default
events that could occur over the expected life of the financial instruments.
This macroeconomic information is used to calculate and apply an overlay to calculated impairment provisions.
Definition of default
Based on the disaggregation above, the Group has defined default as:
\ For all assets excluding contract receivables: default occurs no later than when a payment is 90 days
past due.
\ For credit hire assets: the Group determines default to have occurred based on management judgement
as informed by exhibited recovery behaviours, overall portfolio performance, and counterparty type.
A breach of contract as a result of non-payment (ie. default) would result in an asset being credit-impaired.
Write-off
Balances are written off, either partially or in full, against the related allowance when there is no reasonable
expectation of recovery.
For all balances, write-off takes place only at the completion of collection procedures, or where it no longer
becomes economical to continue attempts to recover. Subsequent recoveries of amounts previously written
off decrease the amount of impairment losses recorded in the income statement.
Scenario
Expectation
Base Case
This scenario is reflective of the economy as-is with minor volatility.
Upside
This scenario is reflective of a scenario that is benign as compared to the baseline scenario
Downside
This scenario is reflective of an adverse economic period as compared to the baseline scenario
Weighting
60%
20%
20%
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 102
4.0 Capital Management
CONTINUED
Impairment provisions
The Group’s total impairment provisions from 1 October 2018 to 30 September 2019 is set out below,
reconciling the opening loss allowance to the closing loss allowance. No significant changes to estimation
techniques or assumptions were made during the reporting period.
Net investment
in finance lease
receivables
Trade and other
receivables
Credit hire
receivables
$’000
1,544
9,941
11,485
5,984
(2,477)
(3,127)
11,865
$’000
3,049
4,247
7,296
(495)
(3,539)
(2,075)
1,187
$’000
-
3,683
3,683
1,532
(3,997)
(1,218)
-
Closing loss allowance as at 30 September 2018
– calculated under AASB 139
Amounts restated through opening retained earnings
Opening loss allowance as at 1 October 2018
- calculated under AASB 9
Increase / Decrease in allowance
Write-offs
Balance derecognised at disposal and held for sale
Closing loss allowance as at 30 September 2019
– calculated under AASB 9
Note that the above periods reflect the Group’s position since adoption of AASB 9. In accordance with the
transition provisions, there is no requirement to restate comparatives. Therefore, the above amounts as at 1
October 2018 will not reconcile to the amounts disclosed in the Statement of Financial Position’s comparative
provisions.
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.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 103
4.0 Capital Management
CONTINUED
4.2 FINANCIAL RISK MANAGEMENT (continued)
Liquidity risk (continued)
Contractual maturities of
financial liabilities 2019
Non-derivatives
Less than
1 year
Between
1 and 2 years
Between
2 and 5
years
Over
5 years
Total
contractual
cash flows
Carrying
amount
$’000
$’000
$’000
$’000
$’000
$’000
Trade and other liabilities
(111,227)
-
-
-
(111,227)
(111,227)
Borrowings
Provisions
(412,235)
(373,929)
(888,010)
(32,371)
(1,706,545)
(1,604,705)
(6,990)
(2,293)
-
-
(9,283)
(9,283)
Total non-derivatives
(530,452)
(376,222)
(888,010)
(32,371)
(1,827,055)
(1,725,215)
Derivatives
Interest rate swaps
(15,388)
(10,774)
(5,585)
(138)
(31,885)
(31,369)
Total derivatives
(15,388)
(10,774)
(5,585)
(138)
(31,885)
(31,369)
Contractual maturities of
financial liabilities 2018
Non-derivatives
Less than
1 year
Between
1 and 2 years
Between
2 and 5
years
Over
5 years
Total
contractual
cash flows
Carrying
amount
$’000
$’000
$’000
$’000
$’000
$’000
Trade and other liabilities
(138,542)
(268)
(124)
-
(138,934)
(138,934)
Borrowings
Provisions
(391,478)
(392,650)
(1,085,937)
(64,666)
(1,934,731)
(1,814,320)
(9,711)
(4,002)
-
-
(13,713)
(13,713)
Total non-derivatives
(539,731)
(396,920)
(1,086,061)
(64,666)
(2,087,378)
(1,966,967)
Derivatives
Interest rate swaps
(7,273)
(2,305)
(117)
Total derivatives
(7,273)
(2,305)
(117)
436
436
(9,259)
(9,037)
(9,259)
(9,037)
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 104
4.0 Capital 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.
2019
Financial liabilities
Derivatives used for hedging
Total financial liabilities
2018
Financial liabilities
Derivatives used for hedging
Total financial liabilities
Level 1
Level 2
Level 3
Total
$’000
$’000
$’000
$’000
-
-
31,369
31,369
-
-
31,369
31,369
Level 1
Level 2
Level 3
Total
$’000
$’000
$’000
$’000
-
-
9,037
9,037
-
-
9,037
9,037
There were no transfers between levels for recurring fair value measurements during the year. With the
exception of the fixed term loan, fair value of financial liabilities and financial assets approximates the
carrying value.
The fixed term loan has a carrying value of $65,000,000 and a fair value of $67,878,545.
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.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 105
4.0 Capital Management
CONTINUED
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.
Unrestricted
Operating accounts
Restricted
Collections accounts
Liquidity reserve accounts
Vehicle servicing and maintenance reserve accounts
Cash and bank and on hand
Consolidated
2019
$’000
97,134
97,134
61,909
47,263
33,372
142,544
2018
$’000
62,078
62,078
82,776
32,920
30,484
146,180
Total as disclosed in the statement of cash flows
239,678
208,258
The weighted average interest rate received on cash and cash equivalents for the year was 1.25% (2018: 1.32%).
Liquidity reserve, 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.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 106
4.0 Capital Management
CONTINUED
(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.
(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:
Interest rate swaps - cash flow hedges
Total derivative financial instrument liabilities
Amount expected to be settled within 12 months
Amount expected to be settled after more than 12 months
Total derivative financial instrument liabilities
Consolidated
2019
$’000
31,369
31,369
14,908
16,461
31,369
2018
$’000
9,037
9,037
7,353
1,684
9,037
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 107
4.0 Capital Management
CONTINUED
4.5 CONTRIBUTED EQUITY
Recognition and measurement
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.
2019
Shares
2018
Shares
2019
$’000
2018
$’000
Share capital
Fully paid ordinary shares
319,111,693
319,111,693
654,765
654,765
Other equity securities
Treasury shares
Total issued equity
Movements in ordinary share capital
Date
Details
1 October 2017
Opening balance
19 January 2018
22 April 2018
28 May 2018
2 July 2018
Treasury shares
525,000
525,000
-
-
319,636,693
319,636,693
654,765
654,765
Issue of shares under the Dividend Reinvestment Plan
- 2017 final dividend
Loan shares vested
Issue of shares on exercise of options
Issue of shares under the Dividend Reinvestment Plan
- 2018 interim dividend
Closing balance
319,111,693
654,765
Number
of shares
$’000
310,518,887
635,246
2,080,270
8,121
2,950,000
-
415,000
1,098
3,147,536
10,300
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
Loan shares vested
Closing balance
Number
of shares
2019
Number
of shares
2018
525,000
3,475,000
-
(2,950,000)
525,000
525,000
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019
108
4.0 Capital Management
CONTINUED
4.6 COMMITMENTS
a. Lease commitments: Group as lessee
i. 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
Later than five years
Consolidated
2019
$’000
7,281
15,323
12,453
35,057
2018
$’000
16,309
27,524
23,525
67,358
ii. Finance leases
The Group leases fixed assets with lease expiring 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:
Consolidated
2019
$’000
1,664
1,749
3,413
2018
$’000
1,046
2,492
3,538
Within one year
Later than one year but not later than five years
b. Lease commitments: Group as lessor
i. Finance leases
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
2019
$’000
175,242
300,173
93
475,508
2018
$’000
209,185
419,017
1,420
629,622
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 109
4.0 Capital Management
CONTINUED
4.6 COMMITMENTS (continued)
b. Lease commitments: Group as lessor (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 not recognised 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
2019
$’000
2018
$’000
287,288
361,753
13,394
662,435
309,259
366,859
19,285
695,403
c. Contractual commitments for the acquisition of property, plant or equipment
The Group had contractual commitments for the acquisition of property, plant or equipment totalling
$50,885,687 (2018: $50,740,320). 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
2019
$’000
2018
$’000
Final dividends paid
2018 final dividend paid on 25 January 2019; 8.00 cents per ordinary share franked to
100% (2017: 7.75 cents)
25,571
24,335
Interim dividends paid
2019 interim dividend - no dividend was declared; (2018: 8.00 cents)
Total dividends paid
Final dividends proposed but not recognised at year end
-
25,571
25,319
49,654
2019 final dividend - no dividend was declared; (2018: 8.00 cents)
-
25,571
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019
110
5.0 Employee Remuneration & Benefits
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.
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, Monte-
Carlo simulation pricing model and Black-Scholes option 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.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019
5.0 Employee Remuneration & Benefits
CONTINUED
111
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 2019, the following awards were provided under the following employee
share ownership plans:
Options and rights
The awards granted will be subject to testing against total shareholder return (TSR), earnings per share (EPS)
or they will only be subject to remaining in the service of the Group at the time of vesting. Set out below are
summaries of options granted under each plan:
Loan shares
Grant date Expected
vesting
date
2019
25 Sep 08
08 May 13
25 Sep 14
10 Mar 15
22 Apr 15
2018
25 Sep 08
08 May 13
25 Sep 14
10 Mar 15
22 Apr 15
-
-
-
-
-
-
-
-
-
-
Exercise
price
Weighted
average
exercise
price
Balance
at start of
the year
Granted
during
the year
Forfeited
during
the year
Vested
and
exercised
during
the year
Unvested
balance
at end of
the year
Vested
balance
not
exercised
Number Number
Number
Number
Number
Number
$0.90
$2.03
$0.90
$2.03
$1.25-$1.65 $2.30
$2.30
$2.30
$0.90
$2.03
$2.30
$2.30
$0.90
$2.03
33,645
129,744
9,307,311
330,000
5,200,000
787,500
129,744
$1.47-$1.65 $2.30
10,474,328
$2.30
$2.30
$2.30
$2.30
420,000
5,850,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(639,104)
(80,000)
(200,000)
(753,855)
-
(1,167,017)
(90,000)
(650,000)
-
-
-
-
-
-
-
-
-
-
33,645
129,744
8,668,207
250,000
5,000,000
33,645
129,744
9,307,311
330,000
5,200,000
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 5.0 Employee Remuneration & Benefits
CONTINUED
112
Options
Grant date Expected
vesting
date
Exercise
price
Weighted
average
exercise
price
Balance
at start
of the
year
Granted
during
the year
Forfeited
during
the year
Vested
and
exercised
during
the year
Unvested
balance
at end of
the year
Vested
balance
not
exercised
Number Number
Number
Number
Number
Number
2019
22-Apr-15
-
$2.30
$2.30
775,000
10-Nov-15
30-Sep-18
$3.06
$3.06
3,455,000
19-Feb-16
30-Sep-18
$3.06
$3.06
1,625,000
5-Sep-16
30-Sep-19
$3.80
$3.80
1,000,000
4-Nov-16
30-Sep-19
$3.60
$3.60
4,210,000
17-Feb-17
30-Sep-19
$3.60
$3.60
1,760,000
08-Nov-17
30-Sep-20
$4.18
$4.18
3,640,000
22-Feb-18
30-Sep-20
$4.18
$4.18
1,264,000
24-Aug-18
30-Sep-20
$4.18
$4.18
300,000
-
-
-
-
-
-
-
-
-
(75,000)
(2,460,000)
(1,225,000)
-
(1,470,000)
(880,000)
(1,390,000)
(632,000)
-
8-Jan-19
30-Sep-21
$2.54
$2.54
- 4,100,000 (1,580,000)
11-Feb-19
30-Sep-21
$2.54
$2.54
- 2,320,000
(1,160,000)
31-May-19
23-May-20
$1.20
$1.20
- 3,448,275
24-May-19
24-May-22
$1.20
$1.20
- 9,204,547
18-Jul-19
17-Jul-22
$1.60
$1.60
-
1,690,822
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
700,000
995,000
400,000
1,000,000
2,740,000
880,000
2,250,000
632,000
300,000
2,520,000
1,160,000
3,448,275
9,204,547
1,690,822
-
-
-
-
-
-
-
-
-
-
-
-
-
2018
22-Apr-15
-
$2.30
$2.30
1,175,000
10-Nov-15
30-Sep-18
$3.06
$3.06
3,730,000
19-Feb-16
30-Sep-18
$3.06
$3.06
1,625,000
5-Sep-16
30-Sep-19
$3.80
$3.80
1,000,000
4-Nov-16
30-Sep-19
$3.60
$3.60 4,605,000
17-Feb-17
30-Sep-19
$3.60
$3.60
1,760,000
-
-
-
-
-
-
(275,000)
-
-
(395,000)
08-Nov-17
30-Sep-20
$4.18
$4.18
- 3,750,000
(110,000)
22-Feb-18
30-Sep-20
$4.18
$4.18
24-Aug-18
30-Sep-20
$4.18
$4.18
-
-
1,264,000
300,000
-
-
-
(400,000)
-
775,000
-
-
-
-
-
-
-
-
3,455,000
1,625,000
1,000,000
4,210,000
1,760,000
3,640,000
1,264,000
300,000
-
-
-
-
-
-
-
-
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 113
5.0 Employee Remuneration & Benefits
CONTINUED
5.1 SHARE BASED PAYMENTS (continued)
(i) Long Term Incentive Plan (continued)
Rights
Grant date
Expected
vesting date
Balance at
start of the year
Granted during
the year
Forfeited during
the year
Unvested balance
at end of the year
Number
Number
Number
Number
2019
10-Nov-15
30-Sep-18
19-Feb-16
30-Sep-18
4-Nov-16
30-Sep-19
17-Feb-17
30-Sep-19
835,000
370,000
479,000
286,000
08-Nov-17
30-Sep-20
1.050,000
22-Feb-18
30-Sep-20
24-Aug-18
17-Aug-21
08-Jan-19
30-Sep-21
11-Feb-19
30-Sep-21
31-May-19
31-May-20
2018
10-Nov-15
30-Sep-18
19-Feb-16
30-Sep-18
4-Nov-16
30-Sep-19
17-Feb-17
30-Sep-19
08-Nov-17
30-Sep-20
22-Feb-18
30-Sep-20
24-Aug-18
17-Aug-21
316,000
200,000
-
-
-
865,000
400,000
489,000
286,000
-
-
-
-
-
-
-
-
-
-
(582,500)
252,500
(277,500)
92,500
(158,000)
321,000
(143,000)
143,000
(425,000)
625,000
(158,000)
158,000
-
200,000
1,820,000
(640,000)
1,180,000
580,000
(290,000)
290,000
312,500
-
312,500
-
-
-
-
(30,000)
835,000
(30,000)
370,000
(10,000)
479,000
-
286,000
1,090,000
(40,000)
1,050,000
316,000
200,000
-
-
316,000
200,000
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 114
5.0 Employee Remuneration & Benefits
CONTINUED
(i) Fair value of options granted
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. Fair value of awards granted
subject only to service conditions is independently determined using the Black-Scholes 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 and rights granted during current and
previous years are as follows:
Grant date
Award type
First test
date
Retest date
Vesting date
Expiry date
Share price
at grant
Exercise
price
Expected life
18
Jul
2019
31
May
2019
31
May
2019
24
May
2019
11
Feb
2019
11
Feb
2019
8
Jan
2019
8
Jan
2019
8
Jan
2019
23
Aug
2018
22
Feb
2018
22
Feb
2018
8
Nov
2017
8
Nov
2017
Options
Rights
Options
Options
Options
Rights
Options
Rights
Rights
Options
Options
Rights
Rights
Options
N/A
N/A
N/A
N/A
30
Sep
2021
30
Sep
2021
30
Sep
2021
N/A
30
Sep
2021
30
Sep
2020
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-
18
Jul
2022
18
Jul
2023
17
Nov
2019
31
May
2021
17
Nov
2019
31
May
2021
23
May
2022
23
May
2023
30
Nov
2021
8
Jan
2024
30
Nov
2021
8
Jan
2024
30
Nov
2021
8
Jan
2024
30
Nov
2021
8
Jan
2024
30
Nov
2021
8
Jan
2024
N/A
4
Nov
2020
23
Aug
2023
30
Sep
2020
30
Sep
2021
4
Nov
2020
23
Aug
2023
30
Sep
2020
30
Sep
2021
4
Nov
2020
23
Aug
2023
30
Sep
2020
30
Sep
2021
4
Nov
2020
8
Aug
2022
30
Sep
2020
30
Sep
2021
4
Nov
2020
8
Aug
2022
$1.49
$1.12
$1.12
$0.91
$2.40 $2.40 $2.43
$2.43
$2.43
$2.69
$3.78
$3.78
$4.18
$4.18
$1.60 Nil
$1.20
$1.20
$2.54 Nil
$2.54 Nil
Nil
$2.05
$4.18 Nil
Nil
$4.18
3.5
years
1.2
years
1.2
years
3.5
years
2.8
years
2.8
years
2.9
years
4.0
years
4.0
years
3.6
years
3.8
years
2.8
years
4.1
years
4.5
years
Volatility
50%
50%
50%
50%
27%
27%
27%
27%
27%
26%
28%
28%
28%
28%
Risk free
interest rate
Dividend
yield (p.a)
Average
assessed fair
value per
instrument
0.91%
1.12%
1.12%
1.12%
1.64%
1.64%
1.88%
1.88%
1.88%
2.09%
2.23%
2.09%
2.06%
2.11%
2.60%
2.60%
2.60%
2.60%
5.71%
5.71%
5.67%
5.67%
5.67%
6.01%
4.59%
4.59%
4.06%
4.06%
$0.43
$1.12
$0.20 $0.22
$0.24
$1.64
$0.27
$2.07
$1.73
$0.42
$0.44 $2.67
$2.99
$0.67
N/A: Not Applicable
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 115
5.0 Employee Remuneration & Benefits
CONTINUED
5.1 SHARE BASED PAYMENTS (continued)
(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:
Consolidated
2019
$’000
2018
$’000
Awards issued to employees of controlled entities during the year
2,238
454
(iii) Terms and conditions of Share Schemes
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
Termination benefits
Long-term employee benefits
Share-based payments
Consolidated
2019
$’000
3,333
143
450
72
760
4,758
2018
$’000
3,047
123
-
40
37
3,247
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 116
6.0 Other
6.1 RESERVES
Recognition and measurement
Share-based payment reserve
The share based payment reserve is used to recognise:
\ the fair value of options and rights 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.
Foreign currency translation reserve
The foreign currency translation reserve is used to recognise exchange differences arising from translation of
the financial statements of foreign operations to Australian Dollars.
Dividend reserve
The earnings generated by the Group prior to the write offs and losses on disposal have been transferred to
the dividend reserve.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 6.0 Other
CONTINUED
6.1 RESERVES (continued)
Reconciliation of reserves
Hedging reserve - cash flow hedges
Treasury reserve
Foreign currency translation reserve
Share based payments reserve
Dividend reserve
Total reserve
Movements in reserves
Hedging reserve - cash flow hedges
Balance 1 October
Revaluation
Deferred tax
Balance as at 30 September
Share based payments reserve
Balance 1 October
Rights issued as part of the Car buyers acquisition
Awards issued to employees of controlled entities during the year
Balance at 30 September
Dividend reserve
Balance 1 October
Transfer from retained earnings
Dividend paid
Balance at 30 September
117
Consolidated
2019
$’000
(19,698)
7,015
401
21,873
158,206
167,797
(5,939)
(19,655)
5,896
(19,698)
19,635
-
2,238
21,873
-
183,777
(25,571)
158,206
2018
$’000
(5,939)
5,529
(2,179)
19,635
-
17,046
(6,110)
244
(73)
(5,939)
17,600
1,581
454
19,635
-
-
-
-
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 118
6.0 Other
CONTINUED
6.2 PARENT ENTITY INFORMATION
(ii) 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
Consolidated
2019
$’000
299
702,197
702,496
(8,043)
(280,296)
(288,339)
654,765
76,189
(316,739)
414,215
2018
$’000
239
1,140,140
1,140,379
(38,415)
(336,984)
(375,399)
654,765
13,766
96,449
764,980
Profit/(loss) for the year
(316,739)
(67)
(iii) Guarantees entered into by the parent entity
As at 30 September 2019 there were 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, FleetPlus Novated Pty Limited,
PackagePlus Australia Pty Limited, Eclipx Insurance Pty Ltd, CarInsurance.com.au Pty Ltd, Right2Drive Pty Ltd,
Anrace Pty Ltd, Eclipx MMF Finance Pty Ltd and Accident Services 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.
(iv) Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities as at 30 September 2019 or 2018. For information about
guarantees given by the parent entity, see above.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 119
6.0 Other
CONTINUED
6.3 RELATED PARTY TRANSACTIONS
(i) Controlling entity
The parent entity of the Group is Eclipx Group Limited.
(ii) 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
PLS Notes (Australia) Pty Ltd
Fleet Holding (Australia) 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
Eclipx Commercial Pty Ltd (a)
Right2Drive Pty Ltd (d)
Anrace Pty Ltd (d)
ECX Turbo 2017-1
Eclipx - MIPS Member Finance Trust
FP Turbo Series 2016-1 Trust
Accident Services Pty Ltd
GEG No. 1 Pty Ltd (b)
Grays (NSW) Pty Ltd (b)
FP Turbo Warehouse Trust 2014-1 (Australia)
Fleet Partners Franchising Pty Ltd
Eclipx Insurance Pty Ltd
CarInsurance.com.au Pty Ltd
Car Insurance Pty Ltd
CLFC Pty Ltd
CarLoans.com.au Pty Ltd
Fleet Choice Pty Ltd
FP Turbo Series 2015-1 Equipment Trust (a)
FleetPlus Asset Securisation Pty Ltd (c)
FP Turbo Government Lease Trust 2016-1
Eclipx MMF Finance Pty Ltd
GEG International Pty Ltd (b)
GraysOnline (SA) Pty Ltd (b)
Grays (VIC) Pty Ltd (b)
Gray Eisdell Timms (WA) Pty Ltd (b)
GEG Capital Pty Ltd (b)
GLC Fine Wines & Liquor Pty Ltd (b)
Gray Eisdell Timms (QLD) Pty Ltd (b)
GEM Trust (b)
Grays Finance Pty Ltd (b)
New Zealand
FleetPlus Ltd (NZ)
CarLoans.co.nz Ltd
Fleet NZ Limited
Fleetpartners NZ Trustee Ltd
Truck Leasing Ltd
FP Ignition Trust 2011-1 New Zealand
Eclipx Pacific Leasing Solutions (NZ) Limited
FleetPartners NZ Trust
Eclipx Leasing Finance (NZ) Limited
PLS Notes (NZ) Ltd
Right2Drive (New Zealand) Ltd (d)
Eclipx NZ Ltd
Eclipx Fleet Holding (NZ) Ltd
FPNZ Warehouse Trust 2015-1
FP Ignition 2017 Warehouse Trust
FP Ignition 2017 B Trust
Grays Auctions Ltd (NZ) (b)
(a) On 13 September 2019, the Group completed the 100% disposal of Eclipx Commercial Pty Ltd and the FP Turbo Series 2015-1
Equipment Trust.
(b) On 31 July 2019, the Group completed the 100% disposal of Grays eCommerce Group Limited and Areyouselling.com.au.
(c) The Group does not have control of FleetPlus Asset Securisation Pty Ltd.
(d) Right2Drive Pty Ltd and Right2Drive (New Zealand) Ltd are subject to a committed sale process that is expected to be
completed by 30 September 2020 and as a consequence all assets, liabilities, revenue and expenses of both companies have been
have been reclassified to Held for Sale and Discontinued Operations.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 120
6.0 Other
CONTINUED
(iii) Transactions with other related parties
(a) Logbook Me Pty Limited
Eclipx Group Limited is party to a contract with Logbook Me Pty Limited (LogbookMe) which supplies a
software product that utilises GPS tracking devices which Eclipx on sells to its customers. This product allows
Eclipx fleet customers to manage their fringe benefits and fuel tax costs on their fleet as well as fulfilling key
driver safety monitoring obligations under workplace health and safety legislation. 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, which have been achieved. The term of the contract is 10 years from
15 October 2014. The device, freight and subscription fees paid to LogbookMe amounted in 2019 to $925,576
(2018: $668,049); the increase resulting from incremental product sales to Eclipx customers.
The LogbookMe tool provided to Eclipx has been instrumental in securing corporate and government tenders.
Mr Doc Klotz (Chief Executive Officer to 13 May 2019) and Mr Garry McLennan (Deputy Chief Executive Officer
and Chief Financials Officer to 5 July 2019) acquired shares in LogbookMe in 2013, prior to becoming employed
by Fleet Holdings (Australia) Pty Ltd.
The contract with LogbookMe has been negotiated on an arms length basis with Board oversight.
(b) WorkSCore Pty Ltd
Discontinued operations of Grays eCommerce Group Limited and Right2Drive Pty Ltd are parties to a
contract with WorkSCore Pty Ltd (WorkSCore), which provides access to their software to measure the
ongoing wellbeing of people in the organisation. During the year, license fees and services paid to WorkSCore
amounted to $47,543.
Mr Jeff McLean (Chief Operating officer to 31 July 2019) is a Co-founder and non-executive Director of
WorkSCore.
The contract with WorkSCore has been negotiated on an arms length basis.
6.4 REMUNERATION OF AUDITORS
During the year the following fees were paid or payable for services provided by the auditor of the Group.
Consolidated
2019
$
2018
$
(a) Audit and assurance services
Audit Services
KPMG Australian firm:
Audit and review of financial statements
1,502,809
1,032,933
(b) Non-audit services
KPMG Australian firm:
Proposed merger with McMillan Shakespeare Limited
Transactional services
Debt restructuring
Total remuneration for non-audit services for KPMG
Total remuneration for KPMG
968,008
62,259
353,488
1,383,755
2,886,564
-
-
769,520
769,520
1,802,453
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 121
6.0 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, FleetPlus Novated Pty Limited, PackagePlus Australia Pty Limited, Eclipx
Insurance Pty Ltd, CarInsurance.com.au Pty Ltd, Right2Drive Pty Ltd, Anrace Pty Ltd, Eclipx MMF Finance
Pty Ltd and Accident Services 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
Goodwill Impairment
Software Impairment
Other Intangible Impairment
Fixture and fittings Impairment
Employee benefit expense
Depreciation and amortisation expense
Operating overheads
Total overheads
Operating finance costs
(Loss)/profit before income tax
Income tax expense
(Loss)/profit for the year from continuing operations
Discontinued operations
(Loss)/Profit for the year, net of tax
Other comprehensive (loss), net of tax
Total comprehensive (loss)/ income for the year
* Restated to reflect the adoption of AASB 15 and a prior period restatement.
Consolidated
2019
$’000
332,661
(158,329)
(35,926)
138,406
(1,326)
(30,218)
(13,342)
(357)
(965)
2018*
$’000
531,170
(344,293)
(46,305)
140,572
(493)
-
-
-
-
(46,208)
(493)
(48,597)
(10,337)
(88,218)
(147,152)
(17,427)
(72,381)
4,416
(67,965)
(294,104)
(362,069)
(11,179)
(373,248)
(51,100)
(8,097)
(32,740)
(91,937)
(10,913)
37,229
(9,924)
27,305
16,052
43,357
(1,884)
41,473
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 122
6.0 Other
CONTINUED
Set out below is a consolidated statement of financial position as at reporting date of the Closed Group.
Consolidated
ASSETS
Cash and cash equivalents
Restricted cash and cash equivalents
Trade and other receivables
Asset held for sale
Inventory
Finance leases
Operating leases reported as property, plant and equipment
Property, plant and equipment
Receivables - advances to related parties
Deferred tax assets
Intangibles
Total assets
LIABILITIES
Trade and other liabilities
Provisions
Derivative financial instruments
Liabilities held for sale
Other
Borrowings
Payables - Advances from related parties
Deferred tax liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained earnings
Total equity
* Restated to reflect the adoption of AASB 15 and a prior period restatement.
2019
$’000
74,788
102,908
55,488
41,516
21,267
366,672
563,384
6,991
173,290
37,563
350,423
1,794,290
68,218
8,169
22,231
3,457
2,828
2018*
$’000
54,271
96,567
152,844
-
22,145
509,120
644,727
12,160
117,478
30,388
691,683
2,331,383
37,420
12,819
5,049
-
3,538
1,180,755
1,393,030
15,401
38,597
13,978
29,606
1,339,656
1,495,440
454,634
835,943
654,765
161,938
(362,069)
656,569
15,712
163,662
454,634
835,943
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 123
6.0 Other
CONTINUED
6.6 RECONCILIATION OF CASH FLOW FROM OPERATING ACTIVITIES
Consolidated
(Loss)/profit after tax for the year
Loss from disposal of discontinued operations
Depreciation and amortisation
Amortisation of capitalised borrowing costs
Doubtful debts
Impairment expenses
Share based payments expense
Fleet and stock impairment
Unwind on contingent consideration
Net gain on sale of non-current assets
Hedging loss / (gain)
Exchange rate variations on New Zealand cash and cash equivalents
Net cash inflow from operating activities before change in assets and liabilities
Change in operating assets and liabilities:
Increase in trade and other receivables
Principal settlement of finance leases
Increase in deferred tax assets/ liabilities
Increase/(decrease) in trade and other liabilities
Decrease in current provisions
Decrease in other current liabilities
Net cash inflow from operating activities
2019
$’000
(341,457)
294,104
212,050
2,920
1,281
61,640
2,238
485
-
(21,039)
2,314
212
214,748
(6,143)
209,565
(11,963)
(22,867)
(443)
(335)
382,562
2018 Restated
$’000
53,222
-
218,865
-
2,237
-
454
402
(3,007)
(26,702)
(358)
(182)
244,931
(57,936)
150,748
(8,715)
429
(6,626)
(2,484)
320,347
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 124
6.0 Other
CONTINUED
6.7 RESTATEMENT OF 2017 BALANCES
The Group retrospectively applied AASB 15 and restated amounts associated with Right2Drive processing
errors and estimates made regarding the recognition of revenue.
30 September 2017
Reported
Increase /
(decrease)
30 September 2017
Restated
Statement of Financial Position (extract)
Trade receivables and other assets
Finance leases
Trade and other liabilities
Deferred tax liabilities
Net assets
Retained earnings
Total Equity
$’000
138,533
444,544
123,591
49,276
863,263
215,660
863,263
(9,250)
(3,772)
19,411
(9,493)
(22,940)
(22,940)
(22,940)
$’000
129,283
440,772
143,002
39,783
840,323
192,720
840,323
6.8 EVENTS OCCURRING AFTER THE REPORTING PERIOD
In September 2019 the Group reached agreements with the funders of the corporate debt facility to extend
and amend the facility.
The funders provided a waiver for the covenant testing as at 30 September 2019 subject to all parties
formalising the new agreement by 31 October 2019. On 25 October 2019 the Group formalised the agreements
with the parties to the corporate debt facility to amend and extend the facility on terms consistent with
those agreed in September 2019. The agreement will further support the Group as it continues to deliver on its
simplification and optimisation strategy.
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.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019 DIRECTORS’ DECLARATION FOR THE YEAR ENDED 30 SEPTEMBER 2019
125
Directors’
Declaration
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 67 to 124 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 2019 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 2019.
(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
12 November 2019
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019
126
Independent Auditor’s Report
To the shareholders of Eclipx Group Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of Eclipx
Group Limited (the Company).
In our opinion, the accompanying Financial
Report of the Company is in accordance with the
Corporations Act 2001, including:
• giving a true and fair view of the Group’s financial
position as at 30 September 2019 and of its
financial performance for the year ended on that
date; and
• complying with Australian Accounting Standards
and the Corporations Regulations 2001.
The Financial Report comprises:
• Statement of Financial Position as at 30
September 2019
• 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 then ended
• Notes including a summary of significant
accounting policies
• Directors’ Declaration.
The Group consists of the Company and the
entities it controlled at the year end or from time
to time during the financial year.
Basis of opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements
of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our
other ethical responsibilities in accordance with the Code.
Key Audit Matters
The Key Audit Matters we identified are:
• Valuation of intangible assets
• Setting of vehicle residual values
• Revenue recognition
Key Audit Matters are those matters that, in our
professional judgement, were of most significance
in our audit of the Financial Report of the current
period.
These matters were addressed in the context of
our audit of the Financial Report as a whole, and
in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
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.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 127
Valuation of intangible assets – ($475.3m)
Refer to Note 3.5 in the Financial Report.
The key audit matter
How the matter was addressed in our audit
Valuation of the Group’s intangible assets is a Key
Audit Matter due to the size of the balance (being
21% of total assets) and conditions impacting the
Group such as operating results not meeting budget
in 2019; and a re-set of the Group’s strategy to focus
on Core businesses and develop a divestment plan
for Non-Core businesses. This resulted in:
•
•
•
•
reallocation of intangible assets across new
Cash Generating Units (CGUs) during the year;
impairment write-downs of $159.3m against
goodwill across the Grays, Australian
Consumer, Right2Drive and CarLoans CGUs
during the year;
impairment write-downs of $47.1m against
brand names, customer relationships and
software intangible assets during the year; and
a high level of judgement involved by us in
assessing the re-allocation of goodwill and
intangible assets across new CGUs, inputs into
the valuation models underlying the Group’s
assessment for impairment of goodwill and
intangible assets during the year and triggers
of impairment indicators for intangible assets.
We focused on the identification of new CGUs and
the reallocation of goodwill and intangible assets
including the events and changes in conditions that
lead to a change of CGUs and the method used to
reallocate goodwill and intangible assets.
We also focused on the significant forward-looking
assumptions the Group applied to its value in use
models, including:
•
•
forecast growth rates for the Group’s
underlying cash flows, which can vary based on
a range of factors such as the number and fleet
size of new customer wins, industry growth
projections and inflation expectations. The
Group operates across different geographies
with varying market dynamics, which increases
the risk of inaccurate forecasts; and
discount rates, which are complex in nature
and may vary according to the conditions and
the environment the specific CGUs are subject
to from time to time.
Working with our valuation specialists, our
procedures relating more specifically to goodwill
included:
• We considered the Group’s determination of
their new CGUs based on our understanding
of changes to the operations of the Group’s
business and how independent cash flows
were generated, against the requirements of
the accounting standards.
• We analysed the Group’s internal reporting to
assess changes to the Group’s monitoring and
management of activities and assessed the
reallocation of goodwill and intangible assets
on this basis.
• We analysed the Group’s assessment of
impairment prior to the reallocation of
goodwill.
• We evaluated the value in use valuation
methodology adopted by the Group with
reference to the requirements of accounting
standard AASB 136 Impairment of Assets.
• We assessed the integrity of the value in use
models used, including the accuracy of the
underlying calculation formulas.
• We assessed the Group’s discount rates
against publicly available data for a group of
comparable entities. We also independently
developed discount rate ranges considered
comparable using publicly available market
data for comparable entities, adjusted by risk
factors specific to the CGUs and the industry
and geography they operate in.
• We compared the forecast cash flows
contained in the value in use models to Board
approved budgets.
• We challenged the Group’s cash flow forecast
and growth assumptions, including those
relating to the fleet size of new customer wins
using our knowledge of the Group. We also
used our knowledge of the Group’s industry
and past performance, industry growth
projections and inflation expectations across
different geographies to assess the cash flow
forecast. We compared the Group’s long-term
growth and inflation assumptions to published
studies of industry trends and expectations
across different geographies, and considered
differences experienced across the Group’s
operations.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 128
Valuation of intangible assets – ($475.3m)
Refer to Note 3.5 in the Financial Report.
The key audit matter
How the matter was addressed in our audit
In addition to value in use models, we considered
other valuation techniques and models used by the
Group to determine recoverable values of individual
intangible assets including software intangible
assets.
We involved valuation specialists to supplement
our senior audit team members in assessing this Key
Audit Matter.
• We assessed the accuracy of previous Group
forecasts to inform our evaluation of forecasts
incorporated in the models.
• We considered the sensitivity of the models
by varying key assumptions such as discount
rates and forecast growth rates, within a
reasonably possible range, to identify those
assumptions at higher risk and to assess the
presence of indicators of impairment.
• We recalculated the impairment charge in the
Grays, Australia Consumer, Right2Drive and
CarLoans CGU models and compared it against
the recorded amount disclosed.
• We assessed the disclosures in the Financial
Report using our understanding of the Group
obtained from our testing and against the
requirements of the relevant accounting
standards.
Our procedures relating more specifically to brand
names, customer relationships and software
intangible assets included:
• We considered the Group’s determination of
impairment indicators for intangible assets
based on our understanding of changes to the
operations and performance of the Group’s
business, against the requirements of the
accounting standards.
• We evaluated the valuation methodology
adopted by the Group to assess impairment
of intangible assets, being the relief of royalty
method, against the requirements of the
accounting standards.
• We assessed the integrity of the models
used, including the accuracy of the underlying
calculation formulas.
• We assessed the consistency of inputs used
in the models to those used in the goodwill
value in use models.
• We recalculated the impairment charge
against intangible assets and compared it
against the recorded amount disclosed.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 129
Setting of vehicle residual values
Refer to Critical Accounting Estimates and Assumptions and disclosures over residual values in the context of
property, plant and equipment in Note 3.1 in the Financial Report.
The key audit matter
How the matter was addressed in our audit
Residual value setting relating to fleet vehicles is a Key
Audit Matter due to:
•
•
•
the significant audit effort required and the high
degree of judgement applied by us in assessing the
Group’s valuation of residual values;
the flow on impact residual value setting has on
a number of key accounts in the Group’s Financial
Report, including vehicle depreciation and
impairment; and
the timing of revenue recognition across the
term of a lease may be affected by aggressive or
conservative residual value setting as it impacts the
level of revenue recognised during the term of the
lease compared to at the end of the lease.
We focused on vehicle impairment and vehicle trading
profit as well as the robustness of the process as
indicators of the Group’s ability to set accurate residual
values.
We considered the Group’s following significant
judgements used in the vehicle impairment model:
•
•
•
expected forecast residual value at the end of the
lease term;
periodical future lease-related fee cash flow
assumptions; and
assumptions on the timing and future condition
of vehicles returned at the end of the lease, and
associated cash flows.
Our procedures included:
•
•
•
•
•
•
Understanding the process by which residual
values are set by the Group.
Testing a sample of key controls for the Group’s
residual valuation process such as the monthly
review and approval of residual value changes
by senior management to assess residual value
setting on fleet vehicles.
Comparing a sample of approved residual value
changes to the updated residual values in the
lease system.
Assessing the Group’s judgement on future
lease-related fee cash flows and end of lease
cash flow assumptions. This is based on the
timing and future condition of returned
vehicles used in the vehicle impairment
model by comparing to historical cash flow
experience for a sample of previous leases.
Assessing the Group’s ability to forecast vehicle
residual values by selecting a statistical sample
of vehicles disposed of during the year. We
compared the sale price to sales invoices and
written down values to assess the ability of the
Group to accurately value assets at the end of
the lease term.
Comparing a sample of the current residual
values of vehicles against the current market
value of those vehicles sourced from an
independent database of used vehicle
valuations.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 130
Revenue recognition ($713.0m)
Refer to Note 2.3 in the Financial Report.
The key audit matter
How the matter was addressed in our audit
Our procedures included:
Some of the Group’s revenue streams include a
high level of estimation or accounting complexity.
Measurement and recognition of these revenue streams
is a Key Audit Matter due to the audit effort arising from:
•
•
The estimation of maintenance revenue using a
stage of completion method. We focussed on the
key assumptions of the average age, term and
usage of the vehicle fleet as well as the proportion
of maintenance costs incurred compared to
expected for the vehicle type;
The dependence of the Group on the automation of
lease invoicing including the allocation of revenue
to different revenue streams;
•
The significant judgement required by the Group in
assessing the revenue recorded in relation to rental
hire income. The historical collectability rates of this
income increases our audit effort in this area.
•
•
•
Assessing the Group’s revenue recognition
policies against relevant accounting standards.
Recalculating and assessing the Group’s
estimates of the stage of completion of the
contracted maintenance of leased assets by
checking the mathematical accuracy of the
stage of completion model. We checked the
average age, term and usage assumptions for
consistency with internal system generated
lease portfolio statistics.
Challenging the Group’s judgement in
determining the key assumptions by
comparing the average cost of maintenance
activities performed to publicly available
market rates and costs.
• With the assistance of our IT specialists,
In addition to the above, the transition to the new
accounting standard AASB 15 Revenue from Contracts
with Customers resulted in additional disclosure of the
transition adjustments. We focused on the transitional
disclosures as a key audit matter due to the audit effort
required from the:
•
•
complex nature of the changes to the accounting
standard and the impact on accounting for services
revenue requiring senior team involvements.
testing key automated controls within the
leasing database, including the automated
system allocation of revenue to different
revenue streams.
Challenging the Group’s judgement on the
net rental hire revenue recorded based on
the historical and expected recoverability of
rental hire income and associated credit hire
contract assets. This is used by the Group to
determine the amount of revenue expected to
be received net of any discount or credit, and
only to the extent that it is highly probable
that the cumulative amount recognised will
not be subject to significant reversal in the
future. We assess historical collectability rates,
test a sample of cash receipts and evaluate
trends in recoverability of rental hire revenue.
• We evaluated disclosures relating to AASB 15
as follows:
- we selected a sample of revenue streams
assessed by the Group to determine the
transitional impacts of the new standard and
we evaluated the conclusions reached by the
Group using our understanding of the contracts
obtained in the procedures noted above, in the
context of the requirements of AASB 15; and
- we compared these disclosures to:
॰ amounts included in the Group’s underlying
calculations for consistency; and
॰ o our understanding of the various
transitional adjustments and the disclosure
requirements of the accounting standards.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 131
Other Information
Other Information is financial and non-financial information in Eclipx Group Limited’s annual reporting which
is provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for the
Other Information.
The Other Information we obtained prior to the date of this Auditor’s Report was the Directors’ Report and the
Remuneration Report. The Chairman’s Letter, Managing Director’s Report, Our History, Eclipx Group Positioning.
Financial Highlights, Business Overview, Corporate Sustainability, Board of Directors, Corporate Directory and
Shareholder Information sections of the Annual Report are expected to be made available to us after the date
of the Auditor’s Report.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not and
will not express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In
doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or our
knowledge obtained in the audit, or otherwise appears to be materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information, and
based on the work we have performed on the Other Information that we obtained prior to the date of this
Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
•
•
•
preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001
implementing necessary internal control to enable the preparation of a Financial Report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error
assessing the Group and Company’s ability to continue as a going concern and whether the use of the
going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless they either intend to liquidate
the Group and Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
•
to obtain reasonable assurance about whether the Financial Report as a whole is free from material
misstatement, whether due to fraud or error; and
•
to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of the
Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing
and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This
description forms part of our Auditor’s Report.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 132
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report of Eclipx
Group Limited for the year ended 30 September
2019, complies with Section 300A of the
Corporations Act 2001.
The Directors of the Company are responsible for the
preparation and presentation of the Remuneration
Report in accordance with Section 300A of the
Corporations Act 2001.
Our responsibilities
We have audited the Remuneration Report included
in the Directors’ report for the year ended 30
September 2019.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
KPMG
Dean Waters
Partner
Melbourne
12 November 2019
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 133
Shareholder Information
INVESTOR INFORMATION
Additional information required by the ASX and not shown elsewhere in this report is as follows, and is current
as at 9 December 2019.
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
2,696
1,605
701
681
80
5,763
46.78
27.85
12.16
11.82
1.39
100
Ordinary
shares held
542,088
4,497,594
5,407,927
17,828,931
291,360,153
319,636,693
% of
ordinary shares
0.17
1.41
1.69
5.58
91.15
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
Number of
option holders
% of
option holders
Options
held
% of
options
-
-
-
2
2
4
-
-
-
50
50
100
-
-
-
100,000
385,000
485,000
-
-
-
20.6
79.4
100
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 134
Shareholder Information
CONTINUED
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
-
-
5
21
27
53
-
-
9.4
39.6
51.0
100
Number of
rights holders
% of
rights holders
-
2
5
28
12
47
-
4.3
10.6
59.6
25.5
100
Options
held
-
-
50,000
1,082,500
39,061,301
40,193,801
Rights
held
-
10,000
50,000
1,076,312
3,132,204
4,268,516
% of
options
-
-
0.1
2.7
97.2
100
% of
rights
-
0.2
1.2
25.2
73.4
100
Substantial Shareholder Notices (as disclosed to the ASX)
Shareholders
Yarra Funds Management Limited;
Yarra Capital Management Holdings Pty Ltd;
Yarra Management Nominees Pty Ltd;
AA Australia Finco Pty Ltd;
TA SP Australia Pty Ltd;
TA Universal Investment Holdings Ltd
Maso Capital Investments Limited
Blackwell Partners LLC – Seires A
Star V Partners
Maso Capital Arbitrage Fund Limited
Maso Capital Partners Limited
Ordinary
shares held
36,267,531
% of
issued shares
11.3465
Date of notice
12/11/2019
18,475,660
5.78
03/10/2019
H.E.S.T Australia Ltd as Trustee for Health
Employees Superannuation Trust Australia
Dimensional Entities
16,014,505
16,012,535
5.01
5.01
30/09/2019
25/09/2019
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 Shareholder Information
CONTINUED
Twenty largest shareholders
Rank Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
ARGO INVESTMENTS LIMITED
CS THIRD NOMINEES PTY LIMITED
BNP PARIBAS NOMS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
G HARVEY NOMINEES PTY LTD
SOLIUM NOMINEES (AUSTRALIA) PTY LTD
GMCM INVESTMENTS PTY LTD
MR IRWIN DAVID KLOTZ
BNP PARIBAS NOMINEES PTY LTD
UBS NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
SOLIUM NOMINEES (AUSTRALIA) PTY LTD
YOOGALU PTY LTD
CS FOURTH NOMINEES PTY LIMITED
MR NICHOLAS ANDREW JOHNSON & MRS JANE ELIZABETH JOHNSON
WARBONT NOMINEES PTY LTD
9 Dec 2019
67,108,281
63,705,581
49,451,352
31,027,623
14,086,416
9,678,183
5,199,562
4,311,554
3,947,616
3,803,975
3,539,118
3,538,954
3,249,200
2,658,038
2,036,385
1,904,435
1,630,434
1,168,669
1,130,000
1,005,954
Total 274,181,330
Balance of register 45,455,363
135
%IC
21.00
19.93
15.47
9.71
4.41
3.03
1.63
1.35
1.24
1.19
1.11
1.11
1.02
0.83
0.64
0.60
0.51
0.37
0.35
0.31
85.78
14.22
Grand total 319,636,693
100.00
Unmarketable parcel of shares
The number of shareholders holding less than a marketable parcel of ordinary shares is 1,991.
314 shares comprise a marketable parcel at Eclipx Group’s closing share price of $1.61 as at 9 December 2019.
Securities subject to escrow arrangements
No securities remain subject to escrow arrangements.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 136
Shareholder Information
CONTINUED
Unquoted equity securities
Non-Executive Director Options
There are 485,000 unquoted options, with a $2.65 exercise price on issue to four five option holders. Further
details of the Non-executive Director Options are outlined as follows:
Option holder
Kerry Roxburgh
Gail Pemberton
Trevor Allen
Russell Shields
Options held
% of options
200,000
50,000
185,000
50,000
41.2
10.3
38.2
10.3
On-market buy-back
There is no current on-market buy-back in relation to Eclipx Group securities.
On-market purchases
There were no on-market purchases by the Company during FY19.
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.
Options – No voting rights.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 137
Level 6, 601 Pacific Highway, St Leonards, NSW 2065 T: +61 2 8973 7272 | F: +61 2 8973 7171 info@eclipx.com | www.eclipx.com
ECLIPX GROUP LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019