Annual
Report
2020
E C L I P X G R O U P L I M I T E D
A C N 1 3 1 5 5 7 9 0 1
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 are FleetPartners,
FleetPlus and FleetChoice.
For more information visit www.eclipx.com
Contents
Chairman’s Letter
Chief Executive Officer’s Letter
Business Overview
Financial Highlights
Values
Environmental, Social & Governance
Board of Directors
Corporate Directory
Financial Report
2
4
6
8
10
12
21
23
24
Shareholder’s Information
143
2
Chairman’s
Letter
Dear Shareholders,
The Simplification Plan
On behalf of your Board and of the
Eclipx Group executive team, it’s with
pleasure we present our 2020 Annual
Report for the financial year ended
30 September 2020.
Our core Fleet and Novated
leasing businesses delivered a
solid result in a most challenging
macroeconomic and sociological
environment, navigating the
COVID-19 Pandemic crisis well
throughout the last seven months
of this financial year.
Despite the negative impact of
COVID-19, our executive successfully
executed the Simplification Plan
more than 13 months ahead of
schedule, whilst announcing our
Strategic Pathways plan underpinning our next
growth phase. Understandably, since March 2020,
we have concentrated on doing all we can to
work with our executive and with each customer
impacted by the Pandemic, assisting each one to
manage this crisis.
2020 performance and operating
environment
In FY20, the Eclipx core Fleet and Novated
businesses delivered Earnings Before Interest, Tax,
Depreciation, Amortisation (EBITDA) of $85.4m,
representing a like for like annual growth rate over
the previous financial year of 4.3% and a Net Profit
After Tax excluding Amortisation and One Off Costs
(NPATA) of $47.5m, up 2.2% compared with FY19.
The primary growth drivers included strong end
of lease sale outcomes experienced in a better-
than-expected used car market, combined with a
robust credit performance in our portfolio and the
benefits arising from operating cost and funding
cost optimisation initiatives, that were part of the
Simplification Plan.
In May 2019, the Group outlined its “Simplification
Plan”, aimed at bringing the Group back to a pure-
play fleet management platform by the end of
September 2021. Implementation of this plan was
based upon four pillars:
› divestment of six non-core businesses;
› optimisation of the Group cost base;
› de-risking of the Group Balance Sheet; and
› a refocus on our core Fleet and Novated
businesses.
On behalf of the Board, I am pleased to report that in
FY20, under the capable leadership of Julian Russell,
the Simplification Plan was successfully completed
some 13 months ahead of our target. Along with the
FY20 year-on-year growth rates in core EBITDA and
NPATA reported above, all six non-core businesses
were exited, the reduction in our cost base was
ahead of our initial target, and by year end we
achieved a 56% reduction in gross corporate debt.
In parallel with the execution of Simplification, the
Group was able to launch its Strategic Pathways
plan, focussing on growth in three target markets –
Corporate, Novated and SMEs.
Our people
It is with pleasure that I advise that throughout
FY20, implementation of the Group Simplification
Plan was achieved without any material impact
upon customers or the Fleet and Novated
businesses. Significant changes were made to the
executive team commencing in May 2019, with the
majority of new appointments being made during
FY20. These newly appointed executives managed
the execution of the Simplification Plan, whilst
planning and commencing implementation of the
Group’s Strategic Pathways.
I pay tribute to all Eclipx Group employees,
who have each made significant contributions
throughout FY20, demonstrating their resilience,
commitment and consistency through a year of
internal change and external challenges, much of it
brought about by the COVID-19 Pandemic. I thank
our employees whose dedication ensured Eclipx
maintained its reputation for service leadership
to our customers, evidenced in our consistently
strong NPS.
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I was saddened earlier this year to say farewell to
our loyal employee, colleague and great friend Jason
Muhs. Although he battled for many years with
cancer, right until the end Jason worked tirelessly,
most recently as Head of Strategy and Interim
Chief Financial Officer. Jason played a major role in
the development and early implementation of the
Simplification Plan. On behalf of the entire Eclipx
Group family, I express our sincere sympathy and our
thanks to Jason’s family and to all of his friends.
Also, I express sincere appreciation to all those
making up the Eclipx Group comprising the Board
of Directors, our executive leaders and to all their
team members both in Australia and throughout
New Zealand. In what has been an extraordinarily
challenging year, I compliment and thank the
current team for their loyalty, resilience and
commitment to provide exceptional service to our
customers, in the interests of our investors and the
wider community.
Finally, on behalf of the Eclipx Group, I express my
sincere thanks and appreciation to our customers,
and to our shareholders for their continuing
support and feedback throughout this year.
COVID-19 response
The ongoing COVID-19 Pandemic demanded a multi-
faceted response. This included, but was not limited
to, ensuring the health and safety of our employees,
who worked endlessly supporting our customers
and suppliers. In the early months of COVID-19, our
particular attention was liquidity preservation and
risk management. Under the capable leadership
of our Chief Executive Officer Julian Russell, the
Eclipx Group managed well and sensitively, quickly
enabling remote working whilst maintaining
excellent customer support, whilst keeping the
Board, the investors and our funders well informed.
That said, the effects of this Pandemic are likely to
be with us throughout FY21 and beyond.
Environmental, social and governance
In an unusual yet busy 12 months, environmental,
social and governance (ESG) continues as a high
priority at the Eclipx Group.
This year, significant steps were taken to address
our environmental responsibilities, including
our continuing focus on carbon offsets. I am
most pleased to report our FleetPlus business
retained its 100% carbon offset status for the third
consecutive year. Also, the Group is committed to
achieving permanent carbon neutrality, seeking
“Climate Active” status certification in FY21.
Throughout the Eclipx Group, our people
maintained their strong commitment to the
communities in which we live and work. This year
the Group provided support to every employee
who volunteered for the Rural Fire Service and
to all other frontline responders during the
catastrophic 2019/2020 bushfires. In response
to these bushfires, the Group implemented an
“adopt a koala” campaign whilst also committing
to dollar matching at numerous charitable events,
including a number of bushfire relief funds and
“STEPtember”.
Last, the Board reviews its governance framework
periodically to ensure we uphold the highest
standards. As a part of our commitment to
corporate responsibility and sustainability,
Eclipx has adopted a scorecard to measure our
performance and to track our progress.
Priorities and Outlook
The Group is committed to implementing the
next phase of its Strategic Pathways following
completion of its Simplification Plan. This strategy
is the Group’s roadmap with actions directed
towards sustainable growth from three target
markets: Corporate, Novated and SME.
Investment is currently being directed at enhancing
relevant market capabilities, including digital
platforming and improved customer in-life
experiences, combined with upgrading the Group’s
technology infrastructure. These clear strategic
actions are designed to deliver superior financial
performance over the medium term.
The 2020 Annual Report includes the Directors’
Report and audited Financial Statements, with
comprehensive details of the Group’s operations
and financial results across each business unit.
Kerry Roxburgh
Chairman
4
Chief Executive
Officer’s Letter
Dear Shareholders,
The FY20 financial year commenced
with good momentum in our core
fleet and novated leasing business
and with continued progress against
our Simplification Plan.
Notwithstanding this, the 2019/20
catastrophic bushfire season had
a significant impact on customers,
employees and the operating
environment. This crisis was closely
followed by the emergence of the
COVID-19 pandemic, which came
late in our second quarter, presenting
unprecedented disruption to our
customers, employees and the
broader economy.
These crises posed serious potential
threats to our Group, but we took
proportionate mitigation steps to manage these
risks, and we continue to do so for the ongoing
COVID-19 situation.
Despite these crises and the consequential
economic disruption, we are very proud that our
Group’s core fleet and novated business delivered
core standalone EPS growth of 22% in FY20
compared to FY19. Further, the Group completed
its Simplification Plan, more than one year ahead of
schedule and has already commenced the execution
of our next phase of strategy, Strategic Pathways.
COVID-19
When COVID-19 emerged late in our first half, we
acted quickly and decisively. Beyond staff well-
being and maintaining a strong customer service
proposition, our initial priority was de-risking liquidity.
Through lease extensions, cash and inventory
management, we reinforced the liquidity position
to $181m, a net 70% increase in liquidity between
April and September 2020. During FY20, we further
reduced our corporate net debt by 47% to $99m,
bringing gearing down to 1.1x, compared to just over
3.0x twelve months prior at the end of FY19.
New business writings (NBW) were impacted by
the disruption of the COVID environment for two
primary reasons. Firstly, we deliberately sought
to incrementally extend leases in order to avoid
potential liquidity issues, should the used car
market have been closed. These incremental
extensions effectively replaced NBW in the period.
Secondly, NBW saw some reduction in line with
business uncertainty and supply chain disruption
caused by COVID.
While we saw a resurgence of tenders and new
business opportunities in our fourth quarter,
business confidence remained volatile and decision
making was slower than usual.
Simplification Plan completed
13 months ahead of initial schedule
In May 2019, shortly after I joined Eclipx Group,
we set out the Simplification Plan with the specific
objective of returning our business to a market
leading fleet management organisation.
There were four primary goals of the Simplification
Plan, namely the divestment of our six defined
non-core businesses, de-risking our balance sheet
through a 50% ($175m) reduction in our corporate
debt, increasing profitability through a net reduction
in costs of $15m per annum, and a strategic re-
focus on our core businesses.
The non-core business divestment program was
finalised with the sale of our last remaining non-
core business, Right2Drive, in August 2020. The
divestment program was critical to de-risking of
our Group balance sheet, reducing the debt balance
with sales proceeds, while removing earnings drag
from non-performing businesses.
Since the commencement of the Simplification Plan,
we have reduced gross corporate debt from $350m
in March 2019 to $155m in September 2020, $20m
ahead of our initial target. The leverage ratio (net
debt to EBITDA), a corporate debt covenant, was
circa 1.1x in FY20, a huge improvement compared
to more than 3.0x in FY19.
The EBITDA constituent of the leverage ratio has
been helped, in part, by our cost optimisation
execution. On a run-rate basis, our Group
consolidated operating cost base was $84.0m at
30 September 2020, compared to $99.5m in FY19,
a net $15.5m per annum reduction, marginally
ahead of our initial $15m reduction target.
The Group outperformed each of the Simplification
Plan targets, 13 months ahead of the initial
end-FY21 target date. The execution of our
Simplification Plan ahead of time and budget has
given us great confidence in the strength and
potential of our core businesses, and our Group’s
capability to execute on plan.
We are well positioned to execute on the next
phase of our strategy, Strategic Pathways, a plan
that has been carefully developed in parallel to the
execution of Simplification.
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Strategic Pathways
Strategic Pathways represents the next phase of
our Group strategy. The plan has been specifically
developed to further penetrate our three primary
market segments, being Corporate operating
leases, SME operating leases and Novated leasing.
The plan also defines the initiatives required
to drive profitable growth in these three large
target markets.
Australian Corporates (Fleets greater than 20
vehicles) represent roughly 2.1 million vehicles, of
which circa 50% is estimated to be outsourced to
fleet management organisations, like Eclipx Group.
The Group has invested in its technology platform
to enable better quality tools and propositions for
our clients. There has also been a heavy focus on
the development of our direct B2B sales channels,
including alignment of sales incentives to deliver the
best outcomes for shareholders.
Our Novated business has customers with
approximately 880,000 employees, which is about
1.6% penetrated by Eclipx. This is low relative to
sector benchmarking, and gives us a good organic
runway for growth. The low penetration rate reflects
an historic underinvestment in this product offering.
Over the last 18 months, the Group has invested,
and continues to invest in the development of this
business, including the development of an end-to-
end digital platform. This platform is expected to
be rolled out during FY21. As the broader economic
confidence re-emerges, our Novated business is
expected to provide a good tailwind for our Group.
Australian SMEs (Fleets with less than 20 vehicles)
represent roughly 1.3 million vehicles, of which
only circa 2% are outsourced to fleet management
organisations to date. While the domestic SME
operating lease market is largely uncontested,
the product is equally not well understood, unlike
the UK and Europe where operating lease product
penetration in the SME market has recently seen
strong acceleration. Our two critical tasks in
SME operating leasing is the finalisation of our
go-to-market digital platform aimed at improving
customer in-life experiences, and the selection of
appropriate distribution partners.
Customer, Community and Employees
When COVID-19 emerged, the team moved quickly
to remote working with limited disruption to
productivity and customers. The team has achieved
a number of outstanding outcomes for the Group
and its customers including the establishment of
the Group’s financial assistance (hardship) program,
which provides temporary relief to customers
impacted by COVID-led economic disruption.
During the year, the Group provided support to all
employees volunteering for the Rural Fire Service
and other front-line responders to the 2019/2020
bushfires. The Group committed to dollar matching
on a number of charitable events including bushfire
relief, STEPtember, and introduced an ‘adopt a
koala’ campaign for new novated customers from
January through to April 2020. Throughout the
year, the Group continued its support of Mental
Awareness week, Movember, and Red Cross blood
donation across Australia.
The safety and well-being of our employees is a
major priority for the Group. The impact of the
COVID-19 environment has required an emphasis
on expanding well-being measures, particularly
given the severity of second stage lockdowns
in Victoria, where a significant proportion of our
employees are based. These measures included
our existing employee assistance (counselling)
program, offering support to our employees and
their family members. We also introduced the
Resilience Project program and access to zoom-
based Reborn Fitness classes for all employees, as
well as internal social network community events
and many other well-being initiatives.
Outlook
We are very pleased with the FY20 full year result
and believe it reflects strongly on the Group’s
business model and team. With Simplification
behind us, the business is now in a much stronger
position to pursue profitable growth while
managing external risks.
Strategic Pathways has a very clear execution
pathway to deliver the Group growth in each of our
target markets. The implementation of the next
stage of our strategy is already well underway and
we feel confident in the outlook for our business.
We are currently carrying a conservative liquidity
position given the uncertainty in the macro
environment. Notwithstanding this, we expect
solid organic capital generation in FY21 and
therefore through the course of FY21, we will
continue to assess the best use of capital having
regard to balancing macro risks, organic growth
investment alternatives and with the ultimate goal
of maximising capital returns to our shareholders.
Julian Russell
Chief Executive Officer
6 - 7
Eclipx Group Businesses
Eclipx Group has three go-to-market
brands:
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.
Business
Overview
Eclipx Group is an established
leader in fleet leasing and
management in Australia and
New Zealand providing:
F L E E T L E A S I N G
A N D M A N A G E M E N T
N O V A T E D L E A S I N G
S A L A R Y P A C K A G I N G
S O L U T I O N S
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Financial Highlights
1
2
GROWTH IN
EARNINGS
REFLECTS BUSINESS
DEFENSIVE QUALITIES
c. 70%
Increase in available liquidity in the
last six months
c. 47%
Decrease in corporate net
debt in FY20
SIMPLIFICATION
COMPLETED
ONE YEAR AHEAD
OF SCHEDULE
3
4
5
FOCUS ON PROFITABLE
GROWTH THROUGH
THREE TARGET
MARKETS
CORPORATE | NOVATED | SME
“STRATEGIC PATHWAYS“
($m unless
specified)
FY20A FY19A Var
(+/-)
C O R E I N C O M E S U M M A R Y
NOI (pre-
provisions)1
174.1
173.8
+0.2%
EBITDA2
85.4
81.9
+4.3%
NPATA
47.5
46.5
+2.2%
A U M O F & N B W
AUMOF ($bn)
2.0
2.1
(4.1%)
NBW
6903
7614
(9.3%)
B A L A N C E S H E E T
Gross debt
155
286
(45.7%)
Net debt
99
189
(47.3%)
Net debt
to EBITDA5
1.10x
3.03x
1.93x
Available liquidity6 1817
1066
70.1%
Notes:
1. NOI pre-provisions represents Net Operating Income
and EOL income, but before credit and fleet impairment
provisions.
2.
3.
4.
5.
6.
7.
EBITDA pre AASB 16 adoption.
Includes $61m of proactive and incremental targeted
extensions deliberatively executed due to COVID
environment in 2H20. Excludes $4m of lower profitability
panel business given 100% of panel business has been
run off as at 30 September 2020.
Excludes $25m of lower profitability panel business
given 100% of panel business has been run off as at
30 September 2020.
Adjusted net debt (includes other financial
indebtedness) to adjusted EDITA as reported to ECX
lenders for covenant reporting.
Available liquidity 2H20 vs 1H20.
Includes $56m of unrestricted cash and cash
equivalents plus $125m of available revolver capacity.
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Simplification Completed
one year ahead of plan
$350m
$175m $155m
1H19
gross debt
Targeted
gross debt
FY20
gross debt
2
Strengthened
balance sheet
1
Non-core
divestments
Simplification
Plan
3
Cost
optimisation
4
Investment in
sustainable core growth
Run-rate opex
$84.0m
Reduced by
>$15m since FY19
Corporate
SME
Novated
Our team is always greater
than the sum of its parts
O U R T E A M I S :
• Highly respectful
• Your biggest challenger
• Your strongest critic
• Your best supporter
Ownership, accountability
& pride in everything we do
W E A R E A C C O U N T A B L E F O R :
• Ourselves
• Our customers
• Our colleagues
• Our company
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Values
Eclipx Group are proud to have
launched CARE, the new company
Values designed to guide and
drive employee engagement
and to strengthen relationships
with customers, partners and
shareholders.
CARE stands for Collaboration,
Accountability, Reimagine and
Excellence.
Dream big, ask why and
seek out positive change
W E C H A L L E N G E :
• Status quo
• Conventional wisdom
• Our assumptions
• Each other respectfully
Deliver beyond
expectations, every day
W E T H R I V E O N :
• Beating customer expectations
• Building relationships
• Creating opportunities
• Winning for our team
Environmental,
Social &
Governance
Corporate responsibility,
sustainability and employee
wellbeing are high priorities at
Eclipx. Our primary focus is to
ensure robust stewardship of the
business and to deliver sustainable
long term growth whilst operating
in an ethical and transparent way.
E N V I R O N M E N T
H E A LT H A N D W E L L B E I N G
O U R W O R K F O R C E
D E V E L O P I N G O U R P E O P L E
H E A LT H & S A F E T Y
D I V E R S I T Y, I N C L U S I O N
& B E N E F I T S
C O M M U N I T Y S U P P O R T
C O R P O R A T E G O V E R N A N C E
V A L U E S A N D I N T E G R I T Y
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Environment
Health and Wellbeing
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.
With a commitment to employee
health and wellbeing, Eclipx partnered
with the Resilience Project during
COVID lockdown to provide an online
wellbeing program created to support
physical and mental health.
The Resilience Project’s top 10 strategies for
building resilience and happiness were shared with
all employees via an email series twice a week and
was available on the Group Intranet and Workplace.
The Resilience Project combined with the new
Employee Assistance Program has provided a
holistic support network for all employees during a
potentially difficult time.
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.
Support for
Bushfire Victims
To assist recovery efforts from the
catastrophic bushfires Eclipx pledged
to adopt a koala on behalf of every
new Novated Lease customer from
22 January to 29 February 2020.
We were pleased to donate $26,760 to
the Port Macquarie Koala Hospital to
assist with the rescue and treatment
of sick and injured koalas followed
by their release back to the bush
where possible.
Our Workforce
T U R N O V E R ( % )
Total (%)
Voluntary (%)
Involuntary (%)
A G E D I V E R S I T Y ( % )
<20 (%)
20-29 (%)
30-39 (%)
40-49 (%)
50-59 (%)
60+ (%)
G E N D E R D I V E R S I T Y
Group
Board (%)
Group Executive (%)
Management (%)
Individual (%)
Australia Only
Management (%)
Individual (%)
New Zealand Only
Management (%)
Individual (%)
FY20
FY19
35
69
31
0
15
37
26
15
5
M
60
90
67
55
M
69
59
M
67
44
F
40
10
33
45
F
31
41
F
33
56
47
64
36
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
14 - 15
Developing our people
Eclipx employees are also offered
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
FY20, Eclipx’s employees completed approximately
2,500 hours of training on these topics.
Health & Safety
Workplace health and safety
management is a very important
aspect of Eclipx’s operations, and
we aim to create and maintain a
safe environment for all employees,
contractors, customers and visitors.
Eclipx has designated 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 2020 Diversity, inclusion
and benefits
Eclipx Group offers an inclusive work
environment for our diverse mix of
employees regardless of their gender,
age, disability, ethnicity, marital or
family status, religious or cultural
background, sexual orientation and
gender identity.
We also provide a supportive and rewarding
working environment that offers a range of
development opportunities and benefits:
Diversity Committee
Our Diversity Committee is 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.
International Women’s Day
On International Women’s Day 2020
we were thrilled to have Susan Alberti
AC come to our Richmond office to
speak to staff across our businesses
and share her inspirational story.
Susan, is one of Australia’s pre-eminent
philanthropists, having donated millions
of dollars to medical research and other
charitable causes over her successful
business career. Susan has been both
a Board member and Vice President of
the Western Bulldogs Football Club and
was named by the Herald Sun as one
of the top 20 most influential women in
sport for 2020.
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FleetPartners
Supporting Children
The Alan Duff Charitable Foundation,
better known as Duffy Books in Homes
is a literacy programme aimed at
breaking the cycle of booklessness
amongst children at low decile
schools throughout New Zealand. The
programme was developed following a
visit by Alan Duff to Camberley School
in Hastings in 1992. FleetPartners has
been a supporter of Duffy Books in
Homes for over 10 years providing the
Westpac Duffy Theatre team a Mazda
CX5 to drive around NZ, educating NZ
school children on the value of books
and reading.
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 confidence and
independence by providing women 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 employee’s
by creating networking, ideas sharing and
mentoring opportunities.
A number of WINE events took place over
the last year both online and in person
including a webinar on Unconscious Bias and
an International Women’s Day presentation by
Susan Alberti at the Richmond office.
Volunteer leave
We encourage and support our employees to
safely 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.
We provided support to all employees
volunteering for the Rural Fire service and
other front line responders to the 2019/2020
bushfires in Australia.
Community support
Engagement with and support of
the communities we live and work
in is a priority at Eclipx and 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 fundraising initiatives throughout FY20, including
“Movember” to raise money for men’s health. Staff
also donated money and food in response to the
bushfires in 2019/2020. Whilst FleetPartners were
involved in Steptember, raising over $30,000 for
Cerebral Palsy Alliance - an organisation committed
to supporting children and adults living with
cerebral palsy.
We also continued to support Mental Health
Awareness Week and Red Cross blood donation
across Australia.
18 - 19
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.
These 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.
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.
Richmond office.
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 fortnightly virtual town hall
meeting to keep employees updated and connected
with our successes, wins and business updates. Our
Group intranet has regular updates coupled with an
online CEO suggestion box enabling employees to
provide feedback, comments and suggestions either
directly or anonymously.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020
Corporate governance
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.
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 Board reviews the governance framework
periodically to ensure we continue to uphold
the highest governance standards.
The Board believes that sound governance is
fundamental to ongoing success and growth
and wherever possible, that it’s practices
are consistent with the Third Edition of
the Australian Securities Exchange (ASX)
Corporate Governance Council’s Principles
and Recommendations.
To support these principles, Eclipx has
established several distinct management and
executive committees, each of which has a
dedicated charter which outlines the purpose,
responsibilities, composition, guidelines and
source of decision making authority. The
following are the three executive committees:
Executive Committee: executes Eclipx’s
strategy, develops business plans and ensures
alignment with risk appetite.
Risk Committee: identifies, assesses and
reviews the key enterprise risks and relevant
mitigating control activities and their
effectiveness in accordance with our Risk
Management Framework.
Cost Committee: ensures that Eclipx operates
in accordance with it’s approved annual
budget, specifically in respect to operational
and capital expenditure.
20 - 21
Board of Directors
Kerry C D Roxburgh
Gail Pemberton
Chairman since 26 March 2015, Independent
Non-Executive Director since 26 March 2015
Independent Non-Executive Director since
26 March 2015
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), MNF (ASX:MNF),
the Sydney Metro, Land Services WA and Chair
of Prospa (ASX:PGL). She previously served on
the Boards of Arq Group (ASX:ARQ), OneVue
(ASX:OVH), SIRCA and RoZetta Technology
as independent Chair, and as Non-Executive
Director for PayPal Australia, QIC, UXC (ASX:UXC)
amongst others.
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.
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 2019, he served as the Lead Independent
Non-Executive Director of Ramsay Health Care Ltd.
For 17 years, he was also a Non-Executive Director
of the Medical Indemnity Protection Society and of
MIPS Insurance Ltd, chairing their Group Investment
Committee until 2020.
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, Kerry also serves as
a member of the Executive Advisory Board for Team
Thrive Pty Ltd, and since July 2020 he is Chairing a
bid under the Federal Cooperative Research Centre
(“CRC”) grant scheme for Australian research into
“Blockchain & the Trust Economy”.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 22
Board of Directors
C O N T I N U E D
Trevor Allen
Russell Shields
Independent Non-Executive Director since
26 March 2015
Independent Non-Executive Director since
26 March 2015
Trevor Allen has over 40 years’ corporate and
commercial experience, primarily as a corporate
and financial adviser to Australian and international
corporates.
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 and Chairman of
Maritime Capital Shipping Ltd, an unlisted Hong
Kong dry bulk shipping company.
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).
He is a Non-Executive Director of Peet Ltd and
Freedom Foods Group Ltd and a Non-Executive
Director 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
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.
Linda is currently a Chair of Guild Trustee Services,
Gold Cross Products & Services as well as the Chair
of Jaxsta Ltd (JXT-AX). In New Zealand Linda is a
Director of Air New Zealand (AIR-NZ), a Director
of Harbour Asset Management and the Chair of
UNICEF Aotearoa New Zealand. Linda also acts
an Advisory Board chair for Valocity Global. 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 businesses. 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.
22 - 23
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
Australia
T: +61 2 8280 7100 F: +61 2 9287 0303
Auditor
KPMG
Tower 3, International Towers Sydney
300 Barangaroo Avenue
Sydney, NSW 2000
Australia
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
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Financial
Report
for the year ended
30 September 2020
Directors’ Report
Lead Auditor’s Independence Declaration
Letter from Remuneration and Nomination Committee (unaudited)
Remuneration Report (audited)
Financial Statements
Statement of Profit or Loss and Other Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
1.0 Introduction to the Report
2.0 Business Result for the Year
2.1 Segment information
2.2 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 Right-of-use assets
3.3 Finance leases
3.4 Trade receivables and other assets
3.5 Trade and other liabilities
3.6 Lease liabilities
3.7 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 Government subsidies
6.5 Remuneration of auditors
6.6 Deed of cross guarantee
6.7 Reconciliation of cash flow from operating activities
6.8 Events occurring after the reporting period
Directors’ Declaration
Independent Auditor’s Report
25
41
42
44
64
64
66
67
68
69
69
75
75
78
81
84
86
88
92
92
95
96
97
98
99
100
104
104
105
113
113
115
116
118
119
119
125
126
126
128
128
130
131
131
134
134
135
136
24 - 25
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 2020.
1. Directors
The following persons were Directors of the Company during the financial year and up to the date of this report:
K E R R Y R O X B U R G H
B C O M , M B A , M E S A F A A
G A I L P E M B E R T O N M A ( U T S ) ,
F A I C D , G C E R T F I N ( G R I F F I T H )
Chairman since 26 March 2015, Independent
Non-Executive Director since 26 March 2015
Independent Non-Executive Director since
26 March 2015
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 MNF Group (ASX:
MNF), 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, as a Non-
Executive Director for PayPal Australia, QIC and
UXC (ASX:UXC) amongst others.
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.
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 2019, he served as the Lead Independent
Non-Executive Director of Ramsay Health Care Ltd.
For 17 years, he was also a Non-Executive Director
of the Medical Indemnity Protection Society and of
MIPS Insurance Ltd, chairing their Group Investment
Committee until 2020.
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, Kerry also serves as
a member of the Executive Advisory Board for Team
Thrive Pty Ltd, and since July 2020 he is Chairing a
bid under the Federal Cooperative Research Centre
(“CRC”) grant scheme for Australian research into
“Blockchain & the Trust Economy”.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Directors’ Report
C O N T I N U E D
T R E V O R A L L E N B C O M ( H O N S ) ,
C A , F F, F A I C D
Independent Non-Executive Director since
26 March 2015
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
Director 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).
L I N D A J E N K I N S O N B B S , M B A
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.
Linda is currently a Chair of Guild Trustee Services,
Gold Cross Products & Services as well as the
Chair of Jaxsta Ltd (JXT-AX). In New Zealand Linda
is a Director of Air New Zealand (AIR-NZ), a Director
of Harbour Asset Management and the Chair of
Unicef Aotearoa New Zealand. Linda also acts as
an Advisory Board chair for Valocity Global. 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.
R U S S E L L S H I E L D S F A I C D
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 and Chairman of Maritime
Capital Shipping Ltd, an unlisted Hong Kong dry
bulk shipping company.
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).
26 - 27
2. Company Secretary
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 2020 financial year and the number of
meetings attended by each Director. During the year a total of 14 Board meetings, six Audit and Risk Committee
meetings and five People, Culture, 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
Linda Jenkinson
Russell Shields
14
14
14
14
14
14
14
14
14
13
7
7
7
n/a
7
7
7
7
n/a
6
5
5
5
5
5
5
5
5
n/a
n/a
4. Review of operations
Principal activities
We are one of Australia’s leading providers of fleet management services and operate in Australia and New
Zealand. Our products include a comprehensive range of motor vehicle fleet services from acquisitions, leasing,
in-life fleet management and remarketing.
Simplification Plan
During the 2020 financial year, the Group completed, 12 months ahead of schedule, the Simplification Plan that
was first outlined by the Board during the 2019 financial year. This includes accomplishing the following key
objectives:
Divesting all non-core businesses
Reducing operating expenses, on a run-rate basis, by $15.0 million
Strengthening the balance sheet by reducing holding company debt to $155.0 million which is $20.0 mil-
lion below the $175.0 million Simplification Plan target
The Group is now focused on developing the core fleet business and its strategy.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020
Directors’ Report
C O N T I N U E D
5. Impact of coronavirus (COVID-19)
The COVID-19 pandemic and the measures undertaken to contain it have had significant social, medical and
economic impacts in Australian and New Zealand that continue to unfold with the ultimate extent of the
impacts still unknown.
This socio-economic crisis required a multifaceted response by the Group. The response includes but is not
limited to ensuring the health and safely of employees, working closely with customers and suppliers in their
support, increasing the rigor around liquidity and risk management and enacting appropriate mitigation actions
across all other aspects of the Group’s operations.
The effects on the fleet management sector will be dependent on the severity and duration of the pandemic.
The main impacts on the Group during the 2020 financial year, are summarized below:
Australia and New Zealand Commercial
New business writings (NBW) between March 2020 to September 2020 fell to 79% of pre COVID-19
levels defined by the period of October 2019 to February 2020. This was driven by a number of COVID-19
related factors:
Increased level of lease extensions, as clients looked to delay replacing fleets given the uncertain econom-
ic outlook created by COVID-19;
Decreased demand for new leases driven by low business confidence created by the effect of
COVID-19; and
Delay in deliveries of new motor vehicles driven by the global supply chain disruption created by COVID-19.
Brokerage income that is earned as a result of NBW funded via a principal and agency (P&A) arrangement was
reduced by $4.2 million in 2020 compared to 2019 from the fall in NBW.
Impairment losses relating to specific clients that have defaulted on payments as a consequence of COVID-19
on their business has been limited to $2.0 million.
Demand for second-hand motor vehicles has increased in Australia and New Zealand during the COVID-19
pandemic which has allowed the Group to reduce its inventory level to $18.4 million and earn end of
lease income of $2,659 per motor vehicle which is $191 greater per vehicle than the first half of the 2020
financial year.
Novated
New business writings (NBW) between March 2020 to September 2020 fell to 81% of pre COVID-19 levels
defined by the period of October 2019 to February 2020. This was driven in the main by decreased demand for
new leases as consumer confidence fell as a result of COVID-19.
Brokerage income that is earned as a result of NBW and funded via a principal and agency (P&A) arrangement
was reduced by $0.7 million in 2020 compared to 2019 due to the fall in NBW.
A provision for impairment losses relating to specific clients that operate in severely impacted industries, was
raised for $0.4 million.
With respect to managing the risks presented as a result of COVID-19, the Group is taking or has taken the
following actions:
Working with customers to extend lease contract maturities where it is mutually beneficial
Temporarily reduced the employee cost base through salary reductions including Non-Executive directors’ fees
Restricting all non-essential operating and capital expenditure
Amending the calculation of covenant ratios on its corporate debt by removing Non-Core EBITDA to more
appropriately reflect cash generation in the Group
Working with the Australian Office of Financial Management (AOFM) with respect to potential support for
securitisation trusts to assist in financing hardship cases
28 - 29
Critical accounting estimates
The critical accounting estimates and key judgements of the Group have required additional considerations and
analysis due to the impact of COVID-19. Given the uncertainty of the extent of the pandemic, changes to the
estimates and outcomes that have been applied in the measurement of the Group’s assets and liabilities that
may arise in the future.
The key impacts on the financial statements, including the application of critical estimates and judgements, are
as follows:
Provision for impairment losses on finance leases and trade receivables
In March 2020, the IASB published IFRS 9 and COVID-19, a document that reinforces the fact that IFRS 9 does
not provide a mechanistic approach in accounting for impairment provisions.
The AASB 9 impairment methodology has remained consistent with prior periods. The Group revised the
weighting of the model’s multiple economic scenarios (MES) from base (60%), upside (20%) and downside
(20%) to base (50%) and downside (50%). Considering the uncertainty surrounding the effect from COVID-19,
the Group also implemented a model adjustment by applying the highest historical expected credit loss rate
since the model inception. This model adjustment resulted in an incremental credit impairment loss provision
of $2.5 million.
The Group also recorded a $0.4 million impairment relating to novated leases for the employees of specific
clients that operate in severely impacted industries. Based upon the rate at which employees defaulted on
their first payment after the deferral period, the Group applied an impairment provision for all novated leases
currently with deferred payments or in default.
Provision for impairment losses on operating leases
The Group assumes residual value risk on leased motor vehicles which exposes the Group to the movement in
second-hand prices of these assets.
The AASB 136 Impairment of Assets methodology for impairing operating leases has remained consistent with
prior periods including the incorporation of forecasted sale proceeds on the disposal of motor vehicles at lease
end. The model used by the Group to estimate future sale proceeds is based on nearly 30 years of experience.
An observable effect from the COVID-19 pandemic has been an increase in second-hand motor vehicle prices
which, when applied with the model, results in higher forecasted sale proceeds which in turn, has reduced
the amount of provision for impairment required on the Group’s operating leases by $1.3 million. To take into
account the expected short term impact of higher second-hand motor vehicle prices, the Group has applied a
4.68% reduction to forecasted sale proceeds in order to mitigate the temporary inflationary effect of COVID-19
on second-hand motor vehicle forecasts. This results in a $1.6 million additional provision. Taking the offsetting
impact of both provisions into account results in a net impact on the income statement of $0.3 million.
Maintenance revenue
Maintenance revenue is recognized in accordance with AASB 15 Revenue from Contracts with Customers and
is based upon years of external and internal data to calculate the percentage of maintenance revenue to be
recognised in line with the level of services provided as part of our obligations under the lease. Accordingly,
maintenance revenue is recognised progressively on a lease over time, with the age of the lease being the
most practical proxy for services provided. During the months of April 2020 to September 2020, the Group
witnessed a decrease in the utilisation of its fleet and as a result, a decrease in maintenance expenditure which
was driven by the restrictions on movement imposed by State and Territory governments in response to the
COVID-19 outbreak.
In order to match the delay in revenue with the delay in services provided as a result of the COVID-19
restrictions, the Group has deferred the recognition of $2.5 million maintenance revenue during the
financial year.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Directors’ Report
C O N T I N U E D
5. Impact of coronavirus (COVID-19) (continued)
Impairment of non-financial assets
At each reporting period, the Group reviews the carrying amount of its intangible assets to determine whether
there is any indication of impairment. If any such indication exists, the recoverable amount of the affected
assets are evaluated in accordance with AASB 136 Impairment of Assets.
The Group tested goodwill for impairment. This included updating the assumptions and cash flow forecasts
to reflect the potential impact of COVID-19 on the Group. The Group also tested goodwill under a downside
scenario that included lower growth rates and higher cash flow discount rates. No impairment losses were
required to be recognised on goodwill including the downside case. Further details of the Group’s test for
goodwill impairment are outlined in Note 3.7 in the Financial report.
No indication of impairment was identified on other intangible assets as a result of COVID-19.
Summary of COVID-19 overlays
Director
Held
Attended
Held
Provision for impairment losses on finance leases and trade
Provision for impairment losses on operating leases
Maintenance revenue
3.1
1.6
2.5
7.2
1.3
(1.3)
n/a
-
4.4
0.3
2.5
7.2
6. Group financial performance
During the 2020 financial year, the Group successfully completed the Simplification Plan, a full 12 months
ahead of schedule. This included the sale of the remaining non-core businesses of CarLoans and Right2Drive,
the comprehensive resizing of the cost base by $15.5 million and the reduction of corporate debt to $155.0
million which is $20.0 million below the Simplification Plan target.
The completion of the Simplification Plan was achieved during a period of unprecedented operating
challenges due to the COVID-19 pandemic, which underscores the achievement by the Group.
The Group measures financial performance adopting the following non-IFRS measures:
Net operating income (NOI). This represents earnings before tax after direct costs such as interest ex-
pense on debt allocated to fleet assets, depreciation and amortisation of fleet assets. NOI also includes
end of lease income.
Earnings before interest, taxes, depreciation and amortization (EBITDA). This represents earnings before
taxes after indirect costs such as wages, occupancy and technology costs. It also includes impairment
expenses. EBITDA excludes depreciation and amortisation of non-fleet assets, share based payments and
interest expense on corporate debt, other than interest expense on debt allocated to fleet assets.
Cash net profit after taxes and amortization (NPATA). This represents earnings of the Group after tax. It
excludes significant costs deemed to be non-recurring due to the nature of the cost as well as excluding
the amortisation of all intangibles.
Cash net profit after tax (NPAT). This represents the earnings of the Group after tax excluding significant
costs deemed to be non-recurring due to the nature of the cost. It also excludes the amortisation of ac-
quired intangibles.
30 - 31
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. The statutory profit includes the impact of the adoption
of AASB16.
Core
Non-core
Group
$’m
2020
2019
2020
2019
2020
2019
Net operating income
173.7
173.3
Bad and doubtful debts
(4.4)
(1.3)
11.3
0.3
88.6
(5.1)
185.0
261.9
(4.1)
(6.4)
Operating expense
(78.7)
(90.1)
(24.8)
(105.9)
(103.5)
(196.0)
EBITDA
90.6
81.9
(13.2)
(22.4)
77.4
59.5
Depreciation and amortisation
Share based payments
(6.6)
(6.0)
(3.4)
(2.2)
Holding company debt interest
(10.9)
(10.5)
(19.6)
(19.3)
(1.3)
(1.1)
-
(5.1)
5.7
-
(8.0)
8.9
(7.9)
(6.0)
(4.5)
(2.2)
(16.0)
(18.5)
(13.9)
(10.4)
Tax
Cash NPATA
Software amortisation
Tax
Cash NPAT
47.5
46.5
(13.9)
(22.6)
33.6
23.9
(3.5)
1.0
45.0
(6.8)
2.0
41.7
-
-
(3.4)
1.1
(13.9)
(24.9)
(3.5)
1.0
31.1
(10.2)
3.1
16.8
Reconciling items to statutory profits
Amortisation of acquired intangibles
(3.8)
(3.7)
Impairment of intangibles
Loss on disposals
Fair value adjustment
Significant items
Tax
Statutory Profit
-
-
-
(8.3)
3.6
36.5
(27.7)
-
-
(28.0)
17.4
(0.3)
-
-
(2.5)
(3.8)
(6.2)
(178.8)
-
(206.5)
(2.5)
(116.2)
(2.5)
(116.2)
-
(3.1)
1.2
(21.6)
-
(21.6)
(6.9)
9.7
(11.4)
(34.9)
4.8
27.1
(18.3)
(341.2)
18.2
(341.5)
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Directors’ Report
C O N T I N U E D
6. Group financial performance (continued)
Net operating income (NOI)
Net operating income (NOI) within the Core business increased by $0.4 million compared to the 2019 financial
year. The NOI increase was a result of:
Higher net interest margin created by the issuance of asset-backed securitisations in Australia and New
Zealand during the financial year
Higher end-of-lease income as a result of more motor vehicles sold during the financial year and at a high-
er average income per sold motor vehicle
Offset by lower management fees from the decrease in the average number of motor vehicles being
managed by the Group during the financial year and lower brokerage income as a result of lower new
business writings
Net operating income within the Non-Core business decreased by $77.3 million compared to the 2019 financial
year. This was due to the divestment of non-core businesses by the Group during the course of the 2019 and
2020 financial years such as Grays, Eclipx Commercial Finance, CarLoans and Right2Drive.
EBITDA
EBITDA within the Core business increased by $8.7 million compared to the 2019 financial year. In addition
to the positive impact from higher NOI, the Core business also saw a $11.4 million decrease in operating
expenses. This decrease was driven by the successful execution of the Group’s Simplification Plan with respect
to resizing the cost base. Lower operating expenses includes a $5.3 million impact from the adoption of
accounting standard AASB 16 Leases, which reclassified lease rental costs below the EBITDA line.
Partially offsetting the impact from lower operating expenses was the increase in the provision for credit
impairment losses. This increase was largely driven by a $3.1 million management overlay in relation
to COVID-19.
EBITDA within the Non-Core business increased by $9.2 million compared to the 2019 financial year. Offsetting
the above mentioned reduction of Non-Core NOI of $77.3 million were lower operating expenses of $81.1
million and lower impairment losses of $5.4 million. These reductions were due to the divestment of non-
core businesses by the Group during the course of the 2019 and 2020 financial years such as Grays, Eclipx
Commercial Finance, CarLoans and Right2Drive.
Cash NPATA
Cash NPATA within the Core business increased by $1.0 million compared to the 2019 financial year. In addition
to the above mentioned EBITDA increase of $8.7 million, was the reclassification of lease rental costs from
EBITDA as a result of the adoption of accounting standard AASB 16 Leases. Further offsetting the EBITDA
result was the transition of the Group’s executive remuneration program from short-term incentives to long-
term incentives which saw an increase in share-based payments of $3.8 million.
Cash NPATA within the Non-Core business increased by $8.7 million compared to the 2019 financial year. In
addition to the above mentioned EBITDA increase of $9.2 million, was the reclassification of lease rental costs
from EBITDA as a result of the adoption of accounting standard AASB 16 Leases. Further offsetting the EBITDA
result was the reduction in holding company debt expense of $2.9 million.
32 - 33
Reconciling items to statutory profit
The major reconciling items between Cash NPAT and statutory profit include:
Amortisation of other intangibles
The $3.8 million amortisation of other intangibles in the Core business represents the amortisation of brand
names and customer relationships. There was no adjustment for the Non-core business in the 2020 financial
year as the intangibles for Grays and Right2Drive were written off in the 2019 financial year.
Impairment of intangibles
The 2019 impairment of intangibles in Core of $27.7 million related to the impairment of IT systems following
a review by the newly appointed management after the restructure of the business and the impairment of
customer relationships following a review of the profitability of a product being offered in New Zealand.
The 2019 impairment of intangibles in Non-Core of $178.8 million related to the impairment of goodwill,
acquired intangibles and software of Right2Drive, GraysOnline and CarLoans. All Non-core operations were
disposed of by 30 September 2020.
Loss on disposal
During the financial year, the Non-Core operations disposed of Right2Drive and Carloans which recognized a
loss on disposal of $2.5 million.
Significant items
Significant expense items incurred in the Core business for the 2020 financial year are linked to the
Group’s Simplification Plan with respect to cost optimization. Primarily these relate to costs associated
with redundancy payments to employees and exit costs of premises. An expense associated with the
early repayment of holding company debt during the period is also included under significant items for the
Core business.
Significant items for the Non-Core business for the 2020 financial year relate to the restructure of Right2Drive
and an adjustment to the sale proceeds for Eclipx Commercial Finance upon the finalisation of the completion
accounts during the financial year. Significant items for the 2019 financial year across both the Core and Non-
Core businesses included $16.6 million related to the unsuccessful merger with McMillian Shakespeare and
$7.7 million related to the subsequent restructure of the Group.
The Group adopted AASB 16 Leases from 1 October 2019. Information about adoption of the new accounting
standard is contained in Note 1. of the Financial Statements. The AASB 16 standard provides a single lessee
accounting model, requiring lessees to recognise a right-of-use asset (ROUA) and a lease liability for leases with
the exception of short-term (less than 12 months) and low value leases. The standard has the effect of bringing
what were previously off-balance sheet lease obligations, onto the balance sheet in the form of a ROUA and a
Lease Liability. For the Group, this predominately relates to premises agreements. In addition to the balance
sheet impact, the application of AASB 16 re-classifies lease operating expenses, that were previously included
in EBITDA, into interest and depreciation which appear below the EBITDA line.
The Group’s accounting for leases as a lessor, where it provides motor vehicle leases to its customers, remains
largely unchanged under AASB 16. The Group will make no change in its treatment of finance leases that
transfer all the risks and rewards incidental to ownership of the assets, or of operating leases that do not
transfer substantially all the risk and rewards incidental to ownership of the underlying assets.
The ongoing COVID-19 pandemic increases the uncertainty associated with estimations made in the
preparation of these 2020 financial statements. Information about the Group’s approach is provided in Section
5 of this Directors’ Report and in Note 1 of the Financial Statements.
With respect to the potential impacts of COVID-19, the Group made 30 September 2020 estimates based upon
all information the Board considers relevant at this time. However, it’s likely subsequent economic conditions
will result in materially different outcomes (better or worse) than the accounting estimates used in the
preparation of these financial statements.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Directors’ Report
C O N T I N U E D
6. Group financial performance (continued)
Segment performance
Australia Commercial
($m)
Net operating income
EBITDA
2020
102.9
51.5
2019
106.0
55.1
The Australia Commercial segment specialises in fleet leasing and management that operates under the
trading names of FleetPlus and FleetPartners.
EBITDA within the Australia Commercial segment decreased by $3.6 million compared to the 2019 financial
year. NOI decreased by $3.1 million as a result of lower brokerage commission from lower new business
writings which was adversely impacted by the effects of COVID-19. Management fees were also lower as the
business transitioned away from low returning products. The lower EBITDA is also driven by $0.3 million of
higher operating expenses in the 2020 financial year. Higher operating expenses arise as a result of “stranded”
costs, previously allocated to Non-Core operations, returning to the Core business with the disposition of Non-
Core assets. These costs more than offset the combined beneficial impact of the Group’s Simplification Plan to
optimise costs, and the reclassification of premises rental expenses below the EBIDTA line with the adoption of
accounting standard AASB 16 Leases.
In addition to the above drivers, a $0.2 million increase in provision for credit impairment also contributed to the
EBITDA decrease.
Novated
($m)
Net operating income
EBITDA
2020
24.7
11.8
2019
28.6
14.9
The Novated segment specialises in novated leasing and salary packaging. It operates in Australia under the
trading names of FleetChoice, FleetPlus and FleetPartners.
EBITDA within the Novated segment decreased by $3.1 million compared to the 2019 financial year. A $3.9
million decrease in NOI was a result of lower new business writings which were adversely impacted by the
effects of COVID-19 and drove the EBITDA decrease.
This was partially offset by $0.9 million of lower operating expenses.
New Zealand Commercial
($m)
Net operating income
EBITDA
2020
46.1
27.3
2019
38.7
11.9
34 - 35
The New Zealand Commercial segment specialises in fleet leasing and management and operates under the
trading names of FleetPlus and FleetPartners. This segment also operates three used vehicle dealerships under
the trading name of AutoSelect.
EBITDA within the New Zealand Commercial segment increased by $15.4 million compared to the 2019
financial year. A combination of margin expansion and increased end-of-lease income helped drive a $7.4
million increase in NOI.
Furthermore, the successful execution of the Group’s Simplification Plan with respect to cost optimization
helped reduce operating expenses by $10.9 million along with the reclassification of premises rental expenses
below the EBITDA line with the adoption of accounting standard AASB 16 Leases.
This was partially offset by a $2.9 million increase in impairment losses.
Non-core
($m)
Net operating income
EBITDA
2020
11.3
(13.2)
2019
88.6
(22.4)
This segment includes the 2020 financial results of Right2Drive an accident replacement vehicle provider and
CarLoans which is an online lending provider of consumer financing for vehicle purchases. As both businesses
were sold by the Group during the 2020 financial year, the Non-Core segment is no longer operating as at 30
September 2020.
EBITDA within the Non-Core segment increased by $9.2 million compared to the 2019 financial year.
The sale of the Group’s non-core operations including Eclipx Commercial Finance, Grays, CarLoans and
Right2Drive during the 2019 and 2020 financial years as part of the Group’s Simplification Plan, is driving the
reduction in NOI in 2020 by $77.3 million.
7. Financial position
Inventory
Inventory was $18.4 million as at 30 September 2020 which is a reduction of $15.6 million compared to 30
September 2019. As one of the strategic responses to the economic crisis created by the COVID-19 pandemic,
the Group reduced the inventory position in order to preserve liquidity. As the pandemic has progressed, an
observable effect has been an increase in second-hand motor vehicle prices.
Finance leases
Finance leases were $370.3 million as at 30 September 2020 which is a reduction of $37.2 million compared to
30 September 2019. The decrease of this balance was driven by a combination of a decrease in new business
writings in the 2020 financial year as a consequence of the COVID-19 pandemic and due to a greater portion
of finance leases being funded by our principal and agency (P&A) partners as opposed to by our warehouse
facilities.
Operating leases reported as property, plant and equipment
Operating leases were $867.2 million as at 30 September 2020 which is a reduction of $92.0 million compared
to 30 September 2019. The decrease of this balance was driven by a $5.3 million reduction in equipment leases
in New Zealand, which is a product no longer offered, a decrease in new business writings in the 2020 financial
year as a consequence of the COVID-19 pandemic and due to a greater portion of operating leases being
funded by our principal and agency (P&A) partners as opposed to by our warehouse facilities.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Directors’ Report
C O N T I N U E D
7. Financial position (continued)
Borrowings and funding
As at 30 September 2020, gross borrowings include an amount of $155.0 million drawn against the holding
company debt facility. This represents a $130.7 million reduction to the 30 September 2019 balance. After
deducting cash and cash equivalents, the holding company net debt borrowing as at 30 September 2020 was
$99.3 million representing a $89.3 million reduction to the balance at 30 September 2019.
The remaining borrowings of $1,190.0 million relates to funding directly associated with finance and operating
leases that the Group provides to its customers along with the inventory of vehicles in the process of being
sold. This funding is provided by a combination of warehouse and asset backed securitisation funding
structures.
Warehouse facilities are so called 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 via the creation of special purpose asset backed securitisation vehicles (backed by the assets
initially financed via the warehouse) which issue debt securities to wholesale investors such as domestic and
international banks and institutional funds.
The Group aims to optimise its funding facilities with committed funding facilities to cater for expected
business growth. At 30 September 2020, the Group had undrawn debt facilities of $342.7 million.
Total Group assets and liabilities ($m)
As at
30 September
2020
As at
30 September
2019
% change
Inventory
Finance leases
Operating leases
Other assets
Total assets
Borrowings
Other liabilities
Total liabilities
Cash flows
18.4
370.3
867.2
34.0
407.5
959.2
1,255.9
1,400.7
776.6
849.0
2,032.5
2,249.7
1,345.0
1,604.7
179.0
163.9
1,524.0
1,768.6
(46)%
(9)%
(10)%
(10)%
(9)%
(10)%
(16)%
9%
(14)%
The Group saw cash and cash equivalents, including restricted cash, decrease by $37.4 million during
the 2020 financial year compared to an increase of $31.6 million during the prior corresponding period.
The decrease was driven by a $130.7 million repayment of holding company debt partially offset by cash
generated by the positive EBITDA result and the $6.4 million of net proceeds from the sale of CarLoans and
Right2Drive.
As at 30 September 2020, the Group held $55.8 million of unrestricted cash and $152.0 million of
restricted cash.
36 - 37
8. Going concern
This financial report has been prepared on the basis that the Group is a going concern.
The Group has considered its ability to continue as a going concern, using projected cash flow forecasts and
other Group metrics and information for at least the next 12 months from the approval of these financial
statements, taking into consideration an estimation of the continued business impacts of COVID-19. This
assessment assumes the Group will be able to continue trading and realise assets and discharge liabilities in
the ordinary course of business beyond this period.
At 30 September 2020 the Group held unrestricted cash reserves of $55.8 million, and undrawn capacity
under its holding company debt facilities of $121.7 million maturing October 2022. The Group’s going
concern assumption is supported by the following:
The Group held unrestricted cash reserves of $55.8 million, and undrawn capacity under its debt facilities
of $121.7 million;
The amendment during the 2020 financial year to holding company debt covenant ratios provides the
Group with material headroom;
All non-core businesses have been divested;
Group operating expenses have been reduced, on a run-rate basis, by $15 million; and
The Group is now solely focused on growing the core fleet business.
9. Business strategic objectives
With the successful execution of the Group’s Simplification Plan during the 2020 financial year, the strategy
of the Group is now focused on accelerating growth across all of its three core segments.
At the forefront of this strategy will be a technology led offering that ensures our client experience is
market leading through its speed, simplicity and transparency. The Group will also continue to leverage the
competitive advantage which is derived from its diverse funding model.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Directors’ Report
C O N T I N U E D
10. Key risks
The following risks represent those where the Board and the Executive Leadership Team are focusing
their efforts.
Key risk
Mitigating factors
The Group may inaccurately
set and forecast vehicle
residual values and there
may be unexpected falls in
used vehicle prices
The Group may be exposed
to increased funding costs
due to changes in market
conditions
The Group is exposed to
credit risk
The Group performs a monthly portfolio revaluation using market information on all
assets where the Group is at risk on the residual value and any impairment identified is
immediately recognised.
The Group has multiple disposal channels for vehicles returning at the end of the lease,
allowing the Group 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.
The Group has materially reduced the inventory held by taking advantage of the current
strong used car prices being experienced in the market
The Group has a diversified funding structure which includes multiple funding parties.
Funding margins are negotiated and agreed on an annual basis.
The Group has the ability to charge any margin increase onto new business that is
written in the year.
The Group mitigates the interest rate risk by hedging the portfolio and funding is pro-
vided based on the contractual maturity of the lease.
The Group 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.
Reduction in the number
of new passenger vehicles
sold
The Group’s growth is comprised of leases from a diverse mix of vehicles in addition
to passenger vehicles including, light commercial and heavy commercial vehicles. This
mitigates exposure to one vehicle segment.
The Group is growing in the Novated 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 short-term and long-term incentive plans.
Incentive plans have been refreshed to reward individuals for achievements.
Exposure to cyber-attacks
The Group undertakes key actions to detect, contain, monitor and secure internal and
external facing systems. Some of these actions include:
Improved layers of monitoring
Penetration testing on critical systems
Education program to ensure increased vigilance of our staff with respect to various
forms of cyber-attacks
Program of continued upgrading of systems
11. Subsequent events
No 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.
12. Changes in state of affairs
During the financial year, there were no significant change to the state of affairs of the Group other than that
referred to in the Director’s report, financial statements or notes thereto.
38 - 39
13. Environmental factors
The Group is not subject to any significant environmental regulation under Australian Commonwealth, State
or Territory law. The Group recognises its obligations to its stakeholders being customers, shareholders,
employees and the community, to operate in a way that lowers the impact both it, and its customers, have on
the environment.
14. Dividends
No dividend were declared for the year ended 30 September 2020 (2019: nil). Details of dividends paid and
dividends determined are outlined in Note 4.7 in the financial report.
15. Indemnification of Directors and Officers
The Directors and Officers of the Group are indemnified against liabilities pursuant to agreements with the
Group. The Group 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.
16. Non-audit services
KPMG, the external auditors of the Group provided non-audit services during the 2020 financial year. 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.
The Group acquired non-audit services from KPMG only where the utilisation of KPMG would be beneficial
to the Group 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.
Following a review of the services provided by KPMG for the 2020 financial year, 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:
($m)
Audit and assurance services
2020
$
2019
$
Audit and review of financial statements
1.03
1.50
Non-audit services
Proposed merger with McMillan Shakespeare Limited
Debt restructuring
Other transactional advisory services
Total remuneration for non-audit services for KPMG
Total remuneration for KPMG
-
0.08
-
0.08
1.11
0.97
0.35
0.06
1.38
2.89
A copy of the auditor’s independence declaration is set out on page 16 of this financial report, and forms part
of the Directors Report.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Directors’ Report
C O N T I N U E D
17. 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
40 - 41
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 of Eclipx Group Limited for the
year ended 30 September 2020 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
KPMG
Dean Waters
Partner
Melbourne
Peter Zabaks
Partner
Sydney
10 November 2020
10 November 2020
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All
rights reserved. The KPMG name and logo are trademarks used under license by the independent member
firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards
Legislation.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Letter from Remuneration and Nomination Committee
3 0 S E P T E M B E R 2 0 2 0
Dear Shareholders,
On behalf of the Board, I am pleased to present Eclipx Group Limited’s (Group) FY20
Remuneration Report.
Group performance highlights
In FY19, the Group embarked upon a comprehensive restructure designed to streamline
its business, enhance performance and support future growth. This restructure, known
as the “Simplification Plan”, focused on four key pillars: seeing the Group divest of its non-
core businesses, strengthen its balance sheet, optimise its costs and invest in sustainable
core growth.
Driving the success of the Simplification Plan is the Group’s revised executive team. In
addition to promoting Bevan Guest to Chief Commercial Officer, over the last 16 months,
the Group has refreshed eight of the ten executive team roles, which in FY20 included the appointment
of Damien Berrell as the Group Chief Financial Officer, as well as new appointments to the roles of Chief
Information Officer, Head of People & Culture, Chief Risk Officer, Head of Strategy and Group Treasurer.
The efforts of the renewed executive team, and all of the Group’s employees, over the last 16 months have
seen the Group deliver against the targets set under the Simplification Plan, more than one year ahead
of expectations. This included the divestment of all six non-core businesses (with the final divestment
of Right2Drive completing in August 2020), an annualised reduction of more than $15m in the Group’s
operating expenses and a 56% reduction in gross corporate debt.
The Group’s core business has also remained strong in FY20, increasing profitability despite challenging
market conditions and the significant impact of the COVID-19 pandemic. This strong performance is a
testament to the flexibility and commitment of the Group’s workforce, including the dedicated financial
hardship team established to support customers through the COVID-19 pandemic and the sales teams
tasked with proactively offering customers extensions to existing leases.
With the successful execution of the Simplification Plan, our Chief Executive Officer (CEO), Julian Russell,
and the renewed executive team will continue to pursue the Group’s strategic objectives through FY21
and beyond.
COVID-19 response – overview of FY20 remuneration
To address the impact of the pandemic, the Group implemented the COVID-19 Employee Optimisation Plan
designed to retain its talented team and maintain the high standard of customer service associated with our
brands. This prompt action meant the Group avoided employee stand downs while maintaining our strong
customer service culture.
As part of this plan, for a period of three months commencing in April 2020:
› The Chairman and Non-Executive Directors accepted a reduction of 25% and 20% respectively in their
Board fees; and
› The CEO, Chief Commercial Officer and Chief Financial Officer accepted a respective reduction of 50%,
40% and 30% in their fixed remuneration.
In addition to the above, during FY20:
› Our Executive KMP were not eligible to receive any short-term incentive (STI) payments in line with the
removal of STI from our executive remuneration framework; and
› No long-term incentive (LTI) grants vested with our Executive KMP.
E CLIPX GROUP LIMITE D | ANN UAL R EPO RT 202 0
42 - 43
Approach to FY21 executive remuneration
(i) Fixed remuneration
There is no proposal to change the quantum of fixed remuneration for the Executive KMP or of Board
fees in FY21.
(ii) Variable remuneration
The Group’s share price experienced a sharp decline from late February 2020 as a consequence of COVID-19
and the associated challenging equity market conditions.
During FY20, reflecting the need to ensure our key employees were incentivised to deliver on the Group’s
Simplification Plan and to drive share price performance in the interests of our shareholders in a difficult
operating environment, the Board decided to bring forward the award of an FY21 equity incentive by
making a once-off grant of premium priced options to executives and selected employees in April 2020 with
exercise prices set at a 20% and 35% premium to the Group’s share price at the time of grant (FY21 Variable
Remuneration Options).
These FY21 Variable Remuneration Options were made in lieu of our standard LTI award for FY21 (scheduled
to be granted in November 2020). The options created value for our key employees only when there was a
significant recovery of the Group’s performance, sustainability and share price in a challenging and uncertain
operating environment.
The FY21 Variable Remuneration Options reflected the unique circumstances created by COVID-19 and the
Board intends to revert to our standard LTI arrangements in FY22. As noted above, our Executive KMP do not
receive an STI under our executive remuneration framework.
Subsequently, the Board have been pleased to see the Group’s share price recovering (see section 4.3),
notwithstanding the continuing volatility and uncertainty in the market. The Group’s share price trajectory
is, in large part, due to the actions of the recipients of the FY21 Variable Remuneration Options, setting the
Group up for success in FY21 and beyond.
The FY21 Variable Remuneration Options reflected the unique circumstances created by COVID-19 and the
Board intends to revert to our standard LTI arrangements in FY22. As noted above, our Executive KMP do not
receive an STI under our executive remuneration framework.
The Board will continue to review the remuneration framework annually to ensure it remains fit for purpose to
drive the delivery of the Group’s strategy and reward performance in line with the delivery of long-term value
for our shareholders.
I look forward to the opportunity to answer any questions regarding the Remuneration Report from
shareholders at the Eclipx Annual General Meeting in February 2021.
Yours faithfully,
Gail Pemberton
Gail Pemberton
Chair of the Remuneration and Nomination Committee
Remuneration
Report
(audited)
for the year ended
30 September 2020
1. Who is covered by this Report?
2. FY20 at a glance
3. Overview of executive remuneration at Eclipx
4. Link between Group performance and
remuneration outcomes
5. Remuneration framework for FY21
6. Remuneration governance
7. Non-Executive Director fees
8. Executive service agreements and statutory
remuneration disclosures
9. Additional required disclosures
45
46
47
50
54
56
57
58
60
44 - 45
1. Who is covered by this Report?
This Report covers the Group’s key management personnel (KMP), who are the people responsible for
determining and executing the Group’s strategy. For the year ended 30 September 2020, the KMP were:
Name
Executive KMP
Julian Russell
Bevan Guest
Damien Berrell
Non-Executive Directors
Kerry Roxburgh
Gail Pemberton
Trevor Allen
Russell Shields
Position
Term at KPMG
Chief Executive Officer
Chief Commercial Officer
Full Year
Full Year
Chief Financial Officer
Appointed 18 April 2020
Independent Chairman
Full Year
Independent Non-Executive Director
Full Year
Independent Non-Executive Director
Full Year
Independent Non-Executive Director
Full Year
Linda Jenkinson
Independent Non-Executive Director
Full Year
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Remuneration Report (audited)
C O N T I N U E D
2. FY20 at a glance
The following table outlines the key focus areas and remuneration outcomes for FY20.
Key focus
area or outcome
Highlights / Details
Impact of COVID-19
on remuneration
The Group took a number of measures in response to COVID-19 as part of
its commitment to retain and reward its talented team and to ensure team
consistency, a customer-centric culture and the preservation of our market
leading customer proposition and service.
Further information
On FY20 executive
remuneration
outcomes: Section 4
One of these measures was the COVID-19 Employee Optimisation Plan,
implemented in April 2020, that saw a three months temporary cash
remuneration reduction for the Board, the executive team, all employees in
New Zealand and employees with a salary above $70,000 in Australia.
The level of remuneration reductions varied as follows:
Executives and employees
Chief Executive Officer
Chief Commercial Officer
Chief Financial Officer
Executive Committee members
50% reduction
40% reduction
30% reduction
30% reduction
All other employees
0-20% reduction
Board
Chairman
Non-Executive directors
25% reduction
20% reduction
LTI vesting
outcomes in FY20
No LTI grants vested in FY20 as threshold EPS and TSR performance
targets were not met. As a result, the FY18 LTI and re-tested FY17 LTI
expired unvested.
Section 4
As noted above, in line with our new executive remuneration framework,
Executive KMP were not eligible to receive any STI payments in FY20.
FY21 Variable
Remuneration
Options
In April 2020, a once-off grant of premium priced options (FY21 Variable
Remuneration Options) was made to Executive KMP in lieu of any FY21 LTI
awards, reflecting the unique circumstances created by COVID-19.
Two tranches of options were granted with exercise prices set at a 20% and
35% premium respectively to the Group’s five-day VWAP preceding the date
of grant.
The use of premium-priced options was to deliver value to Executive KMP
and encourage them to focus on executing the Group’s Simplification Plan
and to drive the Group’s share price performance in the interests of our
shareholders, as the options would only deliver value only if there was a
material increase in the Group’s share price.
On key terms of
the FY21 Variable
Remuneration
Options: Section 5
Changes in FY21
As noted above, the once-off grant of FY21 Variable Remuneration Options
replaced the LTI for FY21. No other changes are proposed in FY21. The
Board intends to revert to our standard executive remuneration framework
(including our LTI arrangements) in FY22.
On the FY21
executive
remuneration
framework: Section 5
46 - 47
3. Overview of executive remuneration at Eclipx
3.1 Our remuneration strategy
Simplification Plan
Our Simplification Plan is intended to establish the Group as the market leading fleet and
novated leasing platform in Australia and New Zealand and is built on 4 pillars:
Investing in sustainable fleet and novated core growth
Divesting non-core assets
Strengthening the balance sheet
Optimising costs
Remuneration Strategy
The Group’s remuneration strategy seeks to attract, retain and incentivise key talent to
support business performance that delivers sustainable long-term shareholder value
creation.
3.2 Our remuneration objectives
Alignment to
performance
Simple and
Transparent
Support the
business
strategy and
stakeholder
alignment
Simple and
transparent
remuneration
framework
Market
competitive
Reward and
retain key
successors
Equitable
Culture
Consistent
approach to
the way we
reward all
Executives,
based on
capability and
performance
Drive a
culture of
rewarding high
performance
and
engagement
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020
3. Overview of executive remuneration at Eclipx (continued)
3.3 Executive KMP remuneration framework
The Group’s remuneration framework was revised in FY19 to support the delivery of the Simplification Plan.
Remuneration components
Fixed remuneration
LTI
What is it?
Purpose
Base salary, non-monetary benefits and
superannuation
Attract and retain key talent based on
capability and experience to deliver strategy
Options allocated using a fair value methodology
Motivate, retain and reward key employees,
focusing on sustainable long-term performance,
and providing participants with exposure to the
Group’s shares
Link to performance Set based on the individual’s experience,
capability and value they bring to the Group
Will only deliver value to participant where strong
share price growth occurs
Alignment with
business strategy
Attract and retain based on comparable roles
in companies with similar market capitalisation
Rewards individuals for delivering business
performance that accelerates shareholder value
creation
Remuneration delivery
The following diagram provides an overview of the Executive KMP annual remuneration opportunity.
Annual remuneration
Fixed
remuneration
Base salary,
superannuation and
other benefits
100% cash
paid in year
LTI
Performance period
100% subject to an Absolute Cash EPS hurdle
100% equity vest after
three year performance
period subject to
performance
Fixed remuneration is paid within the year, while the long-term incentive opportunity is subject to a three-year
performance period. The above is the standard annual Executive KMP remuneration structure and excludes
the one-off FY21 Variable Remuneration Options issued in April 2020 in lieu of a standard FY21 LTI award
(scheduled to be issued in November 2020). While there will be no FY21 LTI grant, the Board intends to revert
to the traditional LTI approach from FY22.
Remuneration Report CONTINUED 48 - 49
Remuneration mix
The remuneration mix for the Executive KMP consists of fixed and at-risk remuneration. For FY20, the at-risk
remuneration opportunity comprised of an LTI grant.
The remuneration components for each Executive KMP are expressed as a percentage of total remuneration.
The following diagram sets out the remuneration mix for Executive KMP.
Julian Russell
Bevan Guest
Damian Berrell
69%
57%
59%
31%
43%
41%
Fixed Remuneration
FY20 LTI Grant (Fair Value)
Remuneration mix for FY20 excludes the FY21 Variable Remuneration Options grant.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 4. Link between Group performance
and remuneration outcomes
4.1 FY20 remuneration outcomes
Actual remuneration awarded during FY20 comprises:
Total fixed remuneration (cash salary and superannuation). As noted above, in response to COVID-19 and
the challenging market conditions, the CEO, Chief Commercial Officer and Chief Financial Officer accepted
reductions of 50%, 40% and 30% respectively in their total fixed remuneration for a period of three months
from April 2020.
During FY20:
No STI awards were made to Executive KMP, in line with the decision to remove the STI from the new
remuneration framework.
No LTI grants vested. Following testing of the FY18 LTI and re-testing of the FY17 LTI, the EPS and TSR
performance targets (as set out in the FY18 and FY17 Remuneration Reports, respectively) had not been
met and both awards expired unvested.
The table below presents the remuneration paid to Executive KMP in FY20 (note: the table is not prepared in
accordance with Australian Accounting Standards. The statutory remuneration tables for Executive KMP are
in Section 8.2).
Total fixed remuneration
Cash bonus paid
Equity vested
($)1
($)
($)2
Total
($)
Julian Russell
Bevan Guest
Damien Berrell3
638,600
552,820
156,095
-
-
-
-
-
-
638,600
552,820
156,095
(1) Salary and superannuation are paid fortnightly and may vary depending on the number of pay cycles within any given year.
Total fixed remuneration includes the temporary reduction from April 2020.
(2) No equity vested in respect of the FY17 and FY18 LTI grants.
(3) Mr Berrell’s actual total remuneration reflects remuneration received since his appointment as CFO on 18 April 2020.
Remuneration Report CONTINUED 50 - 51
4.2 Historical performance against key metrics
The table below summarises key financial metrics achieved for the last five years.
FY16
FY17
FY18
FY19
FY20
Cash NPATA (‘$000)
55,330
68,275
78,108
23,823
33,615
Cash EPS (cents)
Statutory EPS (cents)
Share price at the end of the year
Interim dividend paid (cents)
Final dividend paid (cents)
22.19
18.88
$4.07
6.75
7.00
25.11
20.31
$4.05
7.50
7.75
24.69
19.80
$2.57
8.00
8.00
7.45
(107.00)
$1.79
-
-
10.52
5.76
$1.54
-
-
4.3 FY20 share price performance
The following graph represents the Group’s share price for the FY20 period (1 October 2019 to 30 September
2020) and provides a comparison of share price performance (rebased on the Group’s share price) against
identified listed market peers, McMillan Shakespeare, SG Fleet and Smartgroup.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 4. Link between Group performance and remuneration outcomes (continued)
4.4 FY20 LTI grant
The following table outlines the key features of the Executive KMP FY20 LTI plan for grants to Executive KMP
during FY20.
Key feature
Detail
Who is eligible
to participate?
Eligibility to participate in the LTI plan is determined by the Board. All Executive KMP participated in the
FY20 LTI.
What
performance
period applies?
The FY20 LTI is subject to a three-year performance period and will be exercisable for a one-year period
after vesting.
How was
the FY20 LTI
delivered?
The FY20 LTI is provided through a grant of Options. The number of Options granted is determined by
the Board based on a percentage of the Executive’s fixed remuneration and the fair value of an Option
calculated when the Options were granted.
The Group uses the fair value methodology to calculate the number of Options granted each year for
consistency and simplicity. The table below presents the number and fair value of the Options granted to
Executive KMP under the FY20 LTI.
Julian Russell3
Bevan Guest
Damien Berrell
Are dividends
paid during the
vesting period?
No.
Number Granted
4,590,164
2,360,656
747,682
Fair Value
$1,400,000
$720,000
$228,043
How is the FY20
LTI valued?
The Options granted to Executive KMP are valued using the Binomial Tree methodology.
Remuneration Report CONTINUED 52 - 53
What
performance
hurdles need to
be met?
The FY20 LTI is subject to the following performance hurdles, both of which must be achieved for
Executive KMP to realise value from the Options.
There is no retesting of performance hurdles. Any Options which do not vest following testing will lapse
immediately.
Performance
hurdle
‘In-built’ share
price
Why was it chosen?
Detail
The ‘out-of-the money’ strike
price of the Options acts as an
absolute share price hurdle,
which aligns Executive KMP with
shareholder interests.
On the date the Options were granted (27
November 2019), the Options were “underwater”,
as the exercise price of the Options ($1.63) was 3%
higher than the closing share price of $1.59 on 27
November 2019.
Absolute Cash
EPS
Absolute Cash EPS was selected
as a performance measure as
EPS growth is a key strategic
objective for the Group.
For the FY20 LTI, the percentage of the Options
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 FY19 Absolute Cash EPS.
To determine the growth in cash EPS, the cash
EPS achieved in FY22 will be compared to cash
EPS achieved in FY19, and the level of compound
annual growth (CAGR), stated as a percentage, will
determine the proportion of Options that vest, as
outlined in the below table.
CAGR from
FY19 to FY22
% of Options
that vest
Below 3% CAGR
At 3% CAGR
Between 3% and 5%
CAGR
Nil
50%
Straight line pro-rated
vesting between 50%
and 100%
At or above 5% CAGR
100%
What happens
if an Executive
KMP ceases
employment?
What happens
if there is a
change of
control?
Where an Executive KMP ceases employment defined by the Group as resignation or termination for
cause, any unvested Options are forfeited, unless otherwise determined by the Board.
Where an Executive KMP ceases employment for any other reason, unvested Options will continue
“on-foot” and will vest at the end of the original performance period. Note the Plan Rules provide the
Board with discretion to determine that a different treatment should apply at the time of cessation,
if applicable.
A change of control occurs where, as a result of any event or transaction, a new person or entity
becomes entitled to a significant percentage of shares in the Group.
In the event of a 50% change of control of the Group, all unvested Options will vest in full and will
be exercisable until the end of the original exercise period, subject to the Board determining that an
alternative treatment should apply.
Where a transaction or event occurs, other than a 50% Change of Control, that in the opinion of the
Board should be treated as a change of control for the purposes of the Plan, the Board can deter-
mine the appropriate treatment of unvested Options
Malus
In the event of fraud, dishonest conduct or breach of duty or obligation owed to the Group by the
participant, the Board has the discretion to lapse all unvested Options
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 5. Remuneration framework for FY21
5.1 Overview
In FY21:
There are no proposed changes to Executive KMP fixed remuneration.
No STI awards will be made to Executive KMP, following the removal of the STI program from the execu-
tive remuneration framework in FY20.
No LTI grants will be made to Executive KMP in FY21 (i.e. in November 2020), reflecting the once-off
FY21 Variable Remuneration Options issued in April 2020, reflecting the unique circumstances created by
COVID-19 (refer section 5.2 below). The Board intends to revert to the standard LTI program from FY22.
5.2 FY21 Variable Remuneration Options
From late February 2020, the Group experienced a significant decline in its share price as a consequence of
COVID-19 and the significant business challenges created by the global pandemic.
While the FY21 LTI was scheduled to be granted in November 2020, to focus on share price performance
in the near term in the interests of our shareholders amidst the difficult operating environment, the Board
decided to make an earlier grant of premium-priced options (FY21 Variable Remuneration Options) to
Executive KMP in April 2020 (in lieu of their FY21 LTI).
As set out below, the exercise prices of the two tranches of the FY21 Variable Remuneration Options were
set at a 20% and 35% premium to the Group’s share price at the time of grant, which meant that the options
would not deliver any value to Executive KMP unless there was a material increase in the Group’s share price.
The Board adopted this course of action for the following reasons:
it is critical to the success of the Group that Executive KMP are motivated and incentivised to deliver on
the Simplification Plan and to drive share price performance. The options were intended to strengthen the
alignment between the interests of the Group’s shareholders and Executive KMP and provide more “skin in
the game” to motivate Executive KMP in challenging market conditions; and
the equity awards held by Executive KMP were also materially “out of the money” at the time of grant of
the FY21 Variable Remuneration Options and some new appointments at the Executive KMP level did not
hold meaningful positions in the Group’s LTI plans due to tenure. The FY21 Variable Remuneration Options
were structured to support retention of key talent who were necessary to deliver on the Simplification Plan
and to generate long-term sustainable value for our shareholders.
Key terms of the grants made to Executive KMP are outlined in the following table:
Key feature
Detail
The FY21 Variable Remuneration Options are subject to service over an eighteen- month vesting period
and will be exercisable for a one-year period after vesting.
Over what time
period will the
FY21 Variable
Remuneration
Options be
delivered?
Remuneration Report CONTINUED 54 - 55
How are the
FY21 Variable
Remuneration
Options
delivered?
The FY21 Variable Remuneration Options are provided in the form of Options over Eclipx Group Limited
ordinary shares in two tranches:
Tranche 1: Exercise price of $0.75
Tranche 2: Exercise price of $0.85.
The exercise prices for the Options were set at a 20% and 35% premium to the share price at grant (being
the VWAP for the last 5 days prior to grant).
The number of Options granted was determined by the Board based on a percentage of the Executive’s
fixed remuneration and the fair value of an Option calculated when the Options were granted. The Group
uses the fair value methodology when calculating the number of Options to grant.
The table below presents the number and fair value of the Options granted to the Executive KMP.
Tranche 11
Tranche 22
Number Granted
Fair Value
Number Granted
Fair Value
Julian Russell3
4,402,516
$611,950
5,147,059
$602,206
Bevan Guest
2,264,151
$314,717
2,647,059
$309,706
Damien Berrell
864,780
$120,204
1,011,029
$118,290
(1) On the date the Options were granted (9 April 2020) the Options were “underwater”, as the exercise
price of the Options ($0.75) was set based on a 20% premium to the VWAP for the last 5 days prior
to issue of the FY21 Variable Remuneration Options.
(2) On the date the Options were granted (9 April 2020) the Options were “underwater”, as the exercise
price of the Options ($0.85) was set based on a 35% premium to the VWAP for the last 5 days prior
to issue of the FY21 Variable Remuneration Options.
(3) The Fair Value of FY21 Variable Remuneration Options issued to Julian Russell was $1.21 million,
13% lower than the $1.4 million that was contracted to be paid as an FY21 grant in his employment
contract, the summary of which was disclosed to the ASX on 9 April 2020.
Are dividends
paid during the
vesting period?
No.
How are the
FY21 Variable
Remuneration
Options valued?
What happens
if a participant
ceases
employment?
What happens
if there is a
change of
control?
The Options granted to participants are valued by using the Binomial Tree methodology.
Where a participant ceases employment defined by the Group as resignation or termination for cause,
any unvested Options are forfeited, unless otherwise determined by the Board.
Where a participant ceases employment for any other reason, unvested Options will continue “on-foot”
and will vest at the end of the original vesting period. Note that the Plan Rules provide the Board with
discretion to determine that a different treatment should apply at the time of cessation, if applicable.
A change of control occurs where, as a result of any event or transaction, a new person or entity
becomes entitled to a significant percentage of shares in the Group.
In the event of a 50% change of control of the Group, all unvested Options will vest in full, and Op-
tions will be exercisable until the end of the original exercise period, subject to the Board determin-
ing that an alternative treatment should apply.
Where a transaction or event occurs, other than a 50% Change of Control, that in the opinion of the
Board should be treated as a change of control for the purposes of the Plan, the Board can deter-
mine the appropriate treatment of unvested Options.
Malus
In the event of fraud, dishonest conduct or breach of duty or obligation owed to the Group by the
participant, the Board has the discretion to lapse all unvested Options.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 6. Remuneration governance
Board
The Board oversees the Group’s Remuneration Policy, which involves:
Monitoring the performance of Senior Executives; and
Approving Executive KMP remuneration (based on the recommendations of the Committee).
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 benefit programs.
Management
The Chief Executive Officer
is responsible for making
recommendations to the
Committee in relation to
the remuneration of the
Executive KMP.
Audit and Risk
Committee
The Audit and Risk
Committee advises the
Committee of material risk
management issues or
compliance breaches.
Remuneration
Advisors
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, includ-
ing tax and account-
ing advice.
No remuneration
recommendations (as
defined by the Corporations
Act 2001) were requested
from or provided by EY or
any other advisors.
Remuneration Report CONTINUED
56 - 57
7. Non-Executive Director fees
7.1 Overview
Non-executive Directors (NEDs) receive base fees and committee membership fees, inclusive of statutory
superannuation. Fees are reviewed and set annually by the Board.
NEDs do not participate in any variable remuneration plans. There are no changes to Board fees in FY21.
NEDs may participate in “Eclipx Non-Executive Director Share Rights Contribution Plan” which was approved
by shareholders in 2016, under which NEDs may elect to sacrifice up to 50% of base fees (excluding
committee fees) to acquire shares on a pre-tax basis.
Share rights are not subject to performance conditions.
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 FY20, Mr Kerry Roxburgh elected to sacrifice a proportion of his base Board fees to acquire share
rights (see table below).
The table below outlines the Board fee structure and excludes the temporary reduction in Board fees for
three months from April 2020. Fees in FY20 are within the approved aggregate Board fee pool of $1.4 million.
Committee
Board
Audit & Risk Committee
Remuneration & Nomination Committee
Chairman fees
Member fees
($)
250,000
25,000
25,000
($)
125,000
12,500
12,500
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 7.2 FY20 remuneration
The following table shows remuneration received by NEDs in FY20. As noted in section 2, the Chair and Non-
Executive Directors accepted a reduction of 25% and 20% respectively in their Board fees for three months
from April 2020.
Salary and fees
Short
term
benefits
Post-
employment
benefits
Share
based
payments
Fees
sacrificed
to acquire
share rights
Non-
monetary
Super-
annuation
($)
($)
126,999
120,313
Cash
($)
284,350
119,292
153,420
Kerry
Roxburgh
(Chairman)
Russell
Shields
FY20
FY19
FY20
FY19
Trevor Allen
FY20
147,359
Gail
Pemberton
Linda
Jenkinson
FY19
FY20
FY19
FY20
FY19
176,793
140,982
176,793
119,292
153,420
-
-
-
-
-
-
-
-
-
Equity
settled
($)
-
-
-
-
-
-
-
-
-
-
Total
($)
257,813
305,000
130,625
167,500
154,375
192,500
154,375
192,500
130,625
167,500
($)
10,502
20,650
11,333
14,080
7,016
15,634
13,393
15,707
11,333
14,080
-
-
-
-
-
-
-
-
-
-
8. Executive service agreements and statutory
remuneration disclosures
8.1 Executive service agreements
The table below details the key individual terms and conditions of employment applying to Executive KMP.
Julian Russell
Bevan Guest
Damien Berrell
Notice period
9 months by either party
9 months by the Executive
6 months by either party
6 months by the Company
Termination entitlement
when initiated by Company
9 months
6 months
6 months
The following terms and conditions are standard for all Executive KMP:
Serious misconduct
Restraint of trade
Immediate termination
12 months following expiry of notice period
Remuneration Report CONTINUED
58 - 59
8.2 Executive KMP statutory remuneration
The following Executive KMP remuneration table has been prepared in accordance with the accounting
standards and has been audited. The values in the table below align with the amounts expensed in the
Group’s financial statements.
Short term benefits
Long term benefits
Salary
Non-
monetary
Annual
leave
Cash
bonus
Long
Service
Leave
Super-
annuation
Share
based
payments
($)1
($)2
($)
($)3
($)4
($)
($)5
Total
($)
Julian
Russell
Bevan
Guest6
Damien
Berrell7
FY20
617,828
6,531
26,980
FY19
270,411
2,177
20,744
FY20
532,049
40,115
28,948
-
-
-
585
20,772
1,377,873
2,050,569
225
8,113
164,931
466,601
58,935
20,772
950,680
1,631,498
FY19
223,667
10,481
14,466
281,473
25,414
8,113
196,760
749,893
FY20
146,502
2,127
14,109
-
153
9,593
253,760
426,244
(1) Salary is pro-rated for the period the executives were Executive KMP.
(2) Amount represents motor vehicle, car parking, medical insurance, flights home, tax services and fringe benefits tax.
(3) Amounts represent the ‘turnaround’ cash incentive granted in FY19 in relation to Mr. Guest’s appointment as Chief Commercial
Officer and paid in early FY20, and a cash incentive earned prior to appointment as Executive KMP.
(4) Amount represents long service leave provisions.
(5) In accordance with the accounting standards, remuneration includes a proportion of the fair value of the Options and Rights
awarded under the LTI program from current and prior years. The fair value is determined as at grant date and is progressively
allocated over the vesting period. The amount included in remuneration above may not be indicative of the benefit (if any) that
KMP may ultimately realise should the equity instrument vest. A grant of performance rights was made and cancelled in FY20.
(6) Appointed 13 May 2019.
(7) Appointed 18 April 2020.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Remuneration Report
C O N T I N U E D
9. Additional statutory disclosures
9.1 Outstanding awards
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 Payments over the vesting period.
n
o
i
t
i
d
n
o
C
e
c
n
a
m
r
o
f
r
e
P
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e
S
e
c
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S
S
P
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c
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p
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a
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A
s
n
o
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t
p
O
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n
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p
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p
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p
O
P
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K
Plan
l
l
e
s
s
u
R
n
a
i
l
u
J
FY21 Variable
Remuneration
Options
FY20 LTI
FY19 LTI
Fair value at
grant date
Number
of Awards
Granted
Exercise
price
Per
Instrument
Total Value
of Award
Grant Date
($)
($)
($)
Vesting
date/ first
exercise
date
Expiry Date
4,402,516 04/04/20
$0.75
0.14
611,950
30/09/21
30/09/22
5,147,059 04/04/20
$0.85
0.12
602,206
30/09/21
30/09/22
4,590,164 27/11/19
$1.63
0.31
1,400,000 27/11/22
26/11/24
6,363,636 24/05/19
$1.20
0.22
1,400,000 23/05/22
23/05/23
60 - 61
FY21 Variable
Remuneration
Options
FY20 LTI
FY19 LTI
FY19 LTI
t
s
e
u
G
n
a
v
e
B
FY18 Grant
FY18 LTI
FY17 LTI
s
n
o
i
t
p
O
s
n
o
i
t
p
O
s
n
o
i
t
p
O
s
n
o
i
t
p
O
s
n
o
i
t
p
O
s
n
o
i
t
p
O
s
t
h
g
R
i
s
t
h
g
R
i
s
t
h
g
R
i
s
n
o
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t
p
O
s
n
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t
p
O
s
t
h
g
R
i
s
n
o
i
t
p
O
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p
O
s
t
h
g
R
i
s
t
h
g
R
i
s
n
o
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p
O
s
t
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g
R
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e
c
i
v
r
e
S
e
c
i
v
r
e
S
S
P
E
e
c
i
v
r
e
S
R
S
T
S
P
E
R
S
T
S
P
E
e
c
i
v
r
e
S
R
S
T
S
P
E
e
c
i
v
r
e
S
R
S
T
S
P
E
R
S
T
S
P
E
R
S
T
R
S
T
2,264,151 04/04/20
$0.75
0.14
314,717
30/09/21
30/09/22
2,647,059 04/04/20
$0.85
0.12
309,706
30/09/21
30/09/22
2,360,656 27/11/19
$1.63
0.31
720,000
27/11/22
26/11/24
2,840,911 24/05/19
$1.20
0.22
625,000
23/05/22
23/05/23
200,000
17/12/18
$2.54
0.26
52,000
10/11/21
16/12/23
200,000
17/12/18
$2.54
0.28
56,000
10/11/21
16/12/23
50,000
17/12/18
50,000
17/12/18
50,000
17/12/18
-
-
-
1.22
61,000
10/11/21
16/12/23
2.07
103,500
10/11/21
16/12/23
2.07
103,500
10/11/21
16/12/23
150,000
17/08/18
$2.05
0.29
43,500
30/11/20
16/08/23
150,000
17/08/18
$2.05
0.55
82,500
30/11/20
16/08/23
200,000
17/08/18
-
2.26
452,000
18/08/21
16/08/23
90,000
08/11/17
$4.18
0.65
58,500
08/11/20
08/11/22
90,000
08/11/17
$4.18
0.68
61,200
08/11/20
08/11/22
22,500
08/11/17
22,500
08/11/17
-
-
2.47
55,575
08/11/20
08/11/22
3.70
83,250
08/11/20
08/11/22
137,500
04/11/16
$3.60
0.53
72,875
04/11/19
04/11/21
22,500
04/11/16
-
2.18
49,050
04/11/19
04/11/21
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020
Remuneration Report
C O N T I N U E D
9.1 Outstanding awards (continued)
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e
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S
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a
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A
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n
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p
O
s
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o
i
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p
O
s
n
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t
p
O
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n
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i
t
p
O
P
M
K
Plan
l
l
e
r
r
e
B
n
e
m
a
D
i
FY21 Variable
Remuneration
Options
FY20 Sign-on
Grant1
FY20 LTI
Fair value at
grant date
Number
of Awards
Granted
Exercise
price
Per
Instrument
Total Value
of Award
Grant Date
($)
($)
($)
Vesting
date/ first
exercise
date
Expiry Date
864,780
04/04/20
$0.75
0.14
120,204
30/09/21
30/09/22
1,011,029 04/04/20
$0.85
0.12
118,290
30/09/21
30/09/22
819,672
27/11/19
$1.63
0.31
250,000
27/11/22
26/11/24
747,682
27/11/19
$1.63
0.31
228,043
27/11/22
26/11/24
(1) In recognition for forgoing incentives from his former employer, Mr Berrell was issued a sign-on grant in the form of options
with the total fair value of $250,000. These options vest in November 2022 and were considered necessary by the Board to attract
an executive of Mr Berrell’s calibre and fleet industry experience to the Group.
9.2 Equity instruments
The table below shows details of the share and option holdings of KMP:
Held as at
30 September 2019
Net
Change
Held as at
30 September 20204
Shares
Rights
Options1
Shares
Rights2
Options1
Shares
Rights
Options
Non-Executive Directors
Kerry
Roxburgh
(Chairman)
Russell
Shields
239,611
285,647
Trevor Allen
179,846
Gail
Pemberton
428,545
Linda
Jenkinson
3,258
Current Directors
Julian
Russell
-
-
-
-
-
-
-
200,000
4,449
85,657
(200,000)
244,060
85,657(3)
50,000
185,000
10,000
50,000
-
6,363,636
-
-
-
-
-
-
-
(50,000)
285,647
(185,000)
189,846
(50,000)
428,545
-
3,258
14,139,739
-
-
-
-
-
-
-
-
-
-
-
20,503,375
Bevan Guest 400,745
460,000 4,070,911 (350,000)
(42,500)
7,059,366
50,745
417,500
11,130,277
Damien
Berrell
-
-
-
-
-
3,443,163
-
-
3,443,163
(1) Options for Non-Executive Directors were purchased at IPO at an issue price of $0.24 per option. The options expired on 21 April
2020. Each option was exercisable over one share with an exercise price of $2.645, immediately vested and exercisable.
(2) Net change of rights for Executive KMP include the grant of performance rights made and cancelled in FY20
(3) Represent Share Rights held by Mr Roxburgh under the NED Share Right Contribution Plan (see section 7.1) as at 30 September
2020. Share rights convert automatically into shares at the commencement of the first trading window following the grant of rights.
(4) No equity instrument had vested as at 30 September 2020
62 - 63
9.3 Loans
Loan shares issued under the Group’s LTI plans prior to FY16 were funded by the Group. Recourse under the
loans is limited to the shares and the proceeds of any sale of the shares. The loan is interest free and must
be repaid by the expiry date.
Pre-IPO loan share plan
Former CEO Mr Doc Klotz, Former CFO Mr Garry McLennan and Former COO Mr Jeff McLean were offered
loan shares under the share ownership plan prior to the IPO that are not subject to vesting conditions.
Treatment of the loan shares upon the cessation of their employment was as follows:
Mr Klotz’s and Mr McLennan’s loan shares vested, and the loan is required to be repaid by 1 October 2021,
unless the shares are sold earlier.
Mr McLean’s loan shares were settled on 15 October 2019.
Chief Commercial Office Bevan Guest was also offered loan shares under the same share ownership plan
prior to IPO. Mr Guest’s loan shares were settled on 26 November 2019.
Details of these loans are as follows:
Opening loan
balance on 1
October 2019
Closing loan
balance on 30
September 2020
Loan Share Holder
($)
($)
Number of vested
loan shares
Loan value per
vested loan share
Loan expiry date
Doc Klotz
5,854,967
5,854,967
3,539,118
Garry McLennan
5,854,967
5,854,967
3,539,118
Jeff McLean
1,131,512
Bevan Guest
118,216
-
-
-
-
$1.65
$1.65
-
-
September 2021
September 2021
-
-
9.4 Other transactions
Transactions with other related parties are made on normal commercial terms and conditions.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Statement of Profit or Loss and Other Comprehensive Income
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
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
Software Impairment
Other Intangible Impairment
Fixture and fittings Impairment
Total impairment
Employee benefit expense
Depreciation and amortisation expense
Operating overheads
Total overheads
Operating finance costs
Profit/(loss) before income tax from continuing operations
Notes
2020
$’000
2019*
$’000
2.3
2.3
2.4
3.7
3.7
3.1
2.4
2.4
2.4
2.4
674,248
709,401
(442,024)
(460,692)
(58,456)
(73,390)
173,768
175,319
(4,428)
(1,259)
-
(24,200)
(398)
-
(3,458)
(1,613)
(4,826)
(30,530)
(65,155)
(68,934)
(13,793)
(13,880)
(26,787)
(61,992)
(105,735)
(144,806)
(20,815)
(18,521)
42,392
(18,538)
Income tax (expense)/benefit
2.6
(12,162)
5,070
Profit/(loss) from continuing operations
30,230
(13,468)
Loss after tax from discontinued operations
2.2
(12,025)
(327,989)
Profit/(loss) for the year
18,205
(341,457)
Other comprehensive income
Items that may be reclassified to profit or loss
Changes in the fair value of cash flow hedges
Exchange differences on transaction of foreign operations
Other comprehensive income/(loss) for the year
1,659
(291)
1,368
(13,759)
2,580
(11,179)
Total comprehensive income/(loss) for the year
19,573
(352,636)
Profit/(loss) attributable to:
Owners of Eclipx Group Limited
Total comprehensive income/(loss) for the year attributable to:
18,205
(341,457)
Owners of Eclipx Group Limited
19,573
(352,636)
* The Group has initially applied AASB 16 at 1 October 2019, using the modified retrospective approach. Under this approach,
comparative information is not restated and the cumulative effect of initially applying AASB 16 is recognised in retained earnings at
the date of initial application. Comparative information has been re-presented due to a discontinued operation. See Note 1.0 and 2.2.
The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
Notes
2020
Cents
64 - 65
2019*
Cents
(107.0)
(107.0)
(4.2)
(4.2)
5.8
5.6
9.6
9.3
(3.8)
(3.8)
(102.8)
(102.8)
Earnings per share from continuing and discontinued operations
Basic earnings per share
Diluted earnings per share
Earnings per share from continuing operations
Basic earnings per share
Diluted earnings per share
Earnings per share from discontinued operations
Basic earnings per share
Diluted earnings per share
2.5
2.5
2.5
2.5
2.5
2.5
*The Group has initially applied AASB 16 at 1 October 2019, using the modified retrospective approach. Under this approach,
comparative information is not restated and the cumulative effect of initially applying AASB 16 is recognised in retained earnings
at the date of initial application. Comparative information has been re-presented due to a discontinued operation. See Note
1.0 and 2.2.
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 2020 Statement of Financial Position
A S A T 3 0 S E P T E M B E R 2 0 2 0
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
Right-of-use assets
Intangibles
Total assets
LIABILITIES
Trade and other liabilities
Provisions
Liabilities classified as held for sale
Derivative financial instruments
Other
Borrowings
Lease liabilities
Deferred tax liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained earnings
Total equity
Consolidated
Notes
2020
$’000
2019
$’000
4.3
4.3
3.4
2.2
3.3
3.1
2.6
3.1
3.2
3.7
55,776
97,134
152,022
142,544
68,534
18,425
-
81,718
33,983
41,516
370,299
407,542
867,164
959,187
3,366
6,029
21,565
2,176
8,600
-
469,306
475,302
2,032,486
2,249,702
3.5
107,771
111,227
2.2
4.4
4.1
3.6
2.6
4.5
6.1
9,810
-
9,283
3,457
28,091
31,369
-
3,413
1,344,992
1,604,705
23,774
9,563
-
5,143
1,524,001
1,768,597
508,485
481,105
654,765
654,765
176,972
167,797
(323,252)
(341,457)
508,485
481,105
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
66 - 67
Statement of Changes in Equity
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
Attributable to owners of Eclipx Group Limited
Consolidated
Contributed
equity
Reserves
Retained
earnings
Total equity
Note
$’000
$’000
$’000
$’000
Balance at 30 September 2018
654,765
17,046
196,288
868,099
Adjustment on initial application of AASB 9 *
-
-
(12,511)
(12,511)
Re-stated balance as at 1 October 2018
654,765
17,046
183,777
855,588
Transfer to dividend reserve
Loss 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
5.1
4.7
-
-
-
-
-
-
-
-
183,777
(183,777)
-
-
(341,457)
(341,457)
(13,759)
2,580
-
-
(13,759)
2,580
(11,179)
(341,457)
(352,636)
2,238
1,486
(25,571)
-
-
-
2,238
1,486
(25,571)
Balance at 30 September 2019
654,765
167,797
(341,457)
481,105
Balance at 30 September 2019**
654,765
167,797
(341,457)
481,105
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
5.1
4.7
-
-
-
-
-
-
-
-
18,205
18,205
1,659
(291)
1,368
5,984
1,823
-
-
-
1,659
(291)
18,205
19,573
-
-
-
5,984
1,823
-
Balance at 30 September 2020
654,765
176,972
(323,252)
508,485
* The Group applied AASB 9 retrospectively and took advantage of the exemption from restating prior periods in respect of
AASB 9’s classification and measurement requirements. The effect of applying AASB 9 was recognised in retained earnings at 1
October 2018.
** The Group has initially applied AASB 16 at 1 October 2019, using the modified retrospective approach. Under this approach,
comparative information is not restated and the cumulative effect of initially applying AASB 16 is recognised in retained earnings
at the date of initial application. Refer to Note 1.0.
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Statement of Cash Flows
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
Cash flows from operations
Receipts from customers
Payments to suppliers and employees
Cash generated from operating activities
Income tax received / (paid)
Interest received
Interest paid
Consolidated
Notes
2020
$’000
2019
$’000
755,453
1,081,912
(264,107)
(596,206)
491,346
485,706
2,138
1,172
(19,279)
2,811
(77,837)
(86,676)
Net cash inflow from operating activities
6.7
416,819
382,562
Cash flows from investing activities
Purchase of items reported under operating leases reported as property, plant
and equipment
3.1
(266,041)
(307,296)
Purchase of items reported under finance leases
(141,408)
(184,732)
Purchase of property, plant and equipment and intangibles
(2,626)
(13,574)
Payment for transaction cost on disposed groups
Proceeds from sale of discontinued operations
Proceeds from completion payments
-
6,383
406
(7,449)
70,764
-
Proceeds from sales of items reported under operating leases
217,093
219,159
Net cash outflow from investing activities
(186,193)
(223,128)
Cash flows from financing activities
Proceeds from borrowings
Repayments of borrowings
Payment of lease liabilities
Dividends paid
Proceeds from settlement of long term incentive plans
383,139
453,635
(643,586)
(556,678)
(4,161)
-
-
(25,571)
1,822
811
Net cash inflow from financing activities
(262,786)
(127,803)
Net increase in cash and cash equivalents
(32,160)
31,631
Cash and cash equivalents at the beginning of the financial year, net of overdraft
239,678
208,257
Exchange rate variations on New Zealand cash and cash equivalent balances
280
(210)
Cash and cash equivalents at end of the year, net of overdraft
4.3
207,798
239,678
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
68 - 69
1.0 Introduction To The Report
Statement of compliance
These general purpose financial statements of the consolidated results of Eclipx Group Limited (ACN 131
557 901) have been prepared in accordance with the Accounting Standards and Interpretations issued
by the Australian Accounting Standards Board and the Corporations Act 2001. The consolidated financial
statements comply with International Financial Reporting Standards (IFRS) adopted by the International
Accounting Standards Board (IASB).
The financial report was authorised for issue by the Board of Directors on 10 November 2020.
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.
Significant accounting policies
The significant accounting policies adopted in the preparation of the financial report are set out below.
Other significant accounting policies are contained in the notes to the financial report to which they
relate. 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 2020 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.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
Significant accounting policies (continued)
(ii) Foreign currency translation
Functional and presentation currency
The consolidated financial statements are presented in Australian dollars (AUD), which is also the functional
currency of the Company.
Foreign currency transactions and balances
Foreign currency transactions are translated into the functional currency of the respective Group entity, using
the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains
and losses resulting from the settlement of such transactions and from remeasurement of monetary items
at year end exchange rates are recognised in profit or loss.
Non-monetary items are not retranslated at year-end and are measured at historical cost (translated using
the exchange rates at the date of transaction), except for non-monetary items measured at fair value which
are translated using the exchange rates at the date when fair value was determined.
Foreign operations
In the Group’s financial statements, all assets, liabilities and transactions of Group entities with a functional
currency other than AUD are translated into AUD upon consolidation. The functional currency of the entities
in the Group has remained unchanged during the reporting period.
On consolidation, assets and liabilities have been translated into AUD at the closing rate at the reporting date.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity have been treated as assets
and liabilities of the foreign entity and translated into AUD at the closing rate. Income and expenses have
been translated into AUD at the average rate over the reporting period. Exchange differences are charged
or credited to other comprehensive income and recognised in the currency translation reserve in equity. On
disposal of a foreign operation, the cumulative translation differences recognised in equity are reclassified to
profit or loss and recognised as part of the gain or loss on disposal.
Going concern
The financial report has been prepared on the basis that the Group is a going concern.
The Group has considered its ability to continue as a going concern, using projected cash flow forecasts and
other Group metrics and information for at least the next 12 months from the approval of these financial
statements, taking into consideration an estimation of the continued business impacts of COVID-19. This
assessment assumes the Group will be able to continue trading and realise assets and discharge liabilities in
the ordinary course of business beyond this period.
At 30 September 2020 the Group held unrestricted cash reserves of $55.8 million, and undrawn capacity
under its holding company debt facilities of $121.7 million maturing October 2022. The Group’s going
concern assumption is supported by the following:
The Group held unrestricted cash reserves of $55.8 million, and undrawn capacity under its debt facilities
of $121.7 million;
The amendment during the 2020 financial year to holding company debt covenant ratios provides the
Group with headroom;
All non-core businesses have been divested;
Group operating expenses have been reduced, on a run-rate basis, by $15 million; and
The Group is now solely focused on growing the core fleet business.
70 - 71
Changes in significant accounting policies
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
A number of new standards are issued, but not yet effective. Early application is permitted; however the
Group has not early adopted the new or amended standards in preparing the financial statements.
New Australian Accounting Standards and amendment standards that are effective in the
current period
The Group applied AASB 16 Leases from 1 October 2019. The nature and effect of the changes as a result of
adoption of this new accounting standard is described below. A number of other new standards are also effective
in this financial year, but do not have a material impact on the consolidated financial statements of the Group.
AASB 16 Leases
The Group applied AASB 16 using the modified retrospective approach, under which the cumulative effect
of initial application is recognised in retained earnings at 1 October 2019 and the comparative information is
not restated.
Group as lessor
The Group’s accounting for leases as a lessor remains largely unchanged under AASB 16. The Group will
continue to classify leases as finance leases if it transfers all the risks and rewards incidental to ownership
of the assets, or operating leases if it does not transfer substantially all the risk and rewards incidental to
ownership of the underlying assets.
Group as lessee
On transition to AASB 16, the Group has applied a modified retrospective approach. Accordingly, information
presented for the comparative period has not been restated and it is presented as previously reported,
under AASB 117.
In applying AASB 16 for the first time, the Group used the following practical expedients when applying AASB
16 to leases previously classified as operating leases under AASB 117:
Applied a single discount rate to a portfolio of leases with similar characteristics;
Applied the exemption not to recognise right-of-use assets and liabilities for leases with less than 12
months to end of the lease term;
Excluded initial direct costs at date of initial application; and
Applied hindsight when determining the lease term if the contract contains options to extend of terminate
the lease.
Right-of-use assets
The Group recognises a right-of-use asset (ROUA) where the Group has control of an asset for a period of
more than 12 months. Assets are recorded initially at cost and depreciated on a straight-line basis over the
term of the lease. The cost of the asset is defined as:
The value of the corresponding lease liabilities recognised;
Adjusted for any lease payments made at or before the lease commencement date (if applicable); plus
An estimate of make good provisions; less
Any lease incentive received.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
New Australian Accounting Standards and amendment standards that are effective in the current
period (continued)
AASB 16 Leases (continued)
Lease liabilities
Lease liabilities are measured at the present value of the lease payments to be made over the lease term as
at the commencement of the lease. The present value is calculated by discounting the lease payments using
the lessee’s incremental borrowing rate.
The incremental borrowing rate is the rate that the Group would have to pay to borrow funds necessary to
obtain an asset of similar value to the ROUA in a similar economic environment, with similar terms, security
and conditions. Application of the incremental borrowing rate is adopted where the interest rate implicit in
the lease cannot be readily determined, which is generally the case for leases in the Group.
Lease payments due within the next 12 months are recognised within current lease liabilities; payments due
after 12 months are recognised within non-current lease liabilities. Interest on the lease liability in each period
during the lease term shall be the amount that produces a constant periodic rate of interest on the remaining
balance of the lease liability. Interest expense on the lease liability is a component of finance costs and
presented in the statement of profit or loss.
Lease liabilities include the net present value of the following lease payments:
Fixed payments, less any lease incentives receivable;
Variable lease payments that are based on an index or a rate; and
Payments of penalties for the termination of the lease, if the lease term reflects the lessee exercising
that option.
The short-term lease exemption will be applied to leases that are less than 12 months. These leases are
recognised on a straight-line basis as an expense.
Critical judgement in determining lease term
In determining the lease term, the Group considers all facts and circumstances that create an economic
incentive to exercise an extension option, or not to exercise a termination option. Extension options are only
included in the lease term if the lease is reasonably certain to be extended. The lease term is reassessed if an
option is actually exercised or the Group becomes obliged to exercise it.
Impact on application
On adoption of AASB 16 the Group recognised a lease liability of $24,769,305 and lease ROUA of
$25,290,367, with a corresponding entry in provision for make good $521,062. As a result, there is no overall
impact to retained earnings at adoption.
The weighted average incremental borrowing rate applied to the lease liabilities on 1 October 2019 was 4.42%.
A reconciliation of the new lease liabilities to the amounts disclosed at 30 September 2019 as commitments
is provided below.
Operating lease commitments disclosed at 30 September 2019
Discounted applying the incremental borrowing rate
Leases classified as short term
Amendments to lease term
Leases associated with discontinued operations
Lease liabilities recognised as at 1 October 2019
$
35,056,966
(5,384,104)
(2,675,789)
(43,631)
(2,184,137)
24,769,305
72 - 73
$
25,290,367
(4,289,862)
614,391
(50,043)
21,564,853
ROU Asset recognised as at 1 October 2019
Depreciation
Additions
Foreign exchange movements
ROU Asset as at 30 September 2020
Impact of coronavirus (COVID-19)
The preparation of the financial report requires the use of management judgement, estimates and
assumptions. These estimates and judgements are reviewed on an ongoing basis. The ongoing COVID-19
pandemic has increased the estimation uncertainty in the preparation of the financial report.
The estimation uncertainty is associated with:
the extent and duration of disruption to business as a result of ongoing actions from consumers, busi-
nesses and governments to contain the spread of the virus;
the extent and duration of the expected economic downturn. This includes forecasts for economic growth,
unemployment, interest rates and inflation; and
the effect of government incentives and support put in place to support businesses and consumers
through this economic downturn.
The Group has formed estimates based on information that was available as at 30 September 2020, this
information was deemed to be reasonable in forming these estimates. The actual economic conditions
are likely to be different from the estimates used and this may result in material differences between the
accounting estimates applied and the actual results of the Group for future periods.
The significant estimates impacted are predominantly related to provision for impairment of inventory,
provision for impairment of operating leases reported as property, plant and equipment, provision for
impairment losses on finance leases and trade receivables, recognition of maintenance revenue and the
carrying value of goodwill.
The impact of COVID-19 on these estimates is discussed below and / or in the relevant note of the
consolidated financial statements.
Provision for impairment of inventory
Inventory is held at the lower of cost and net realisable value, where net realisable value is defined as the
selling price less the estimated cost necessary to make the sale. At 30 September 2020 management
performed an analysis at the individual inventory line level and assessed the net realisable value for
each asset. Where the net realisable value was below the carrying value, an impairment was recognised.
Management applied judgement as to the value that would be realised on the sale of the vehicle.
At 31 March 2020 the Group recognised a provision for the additional holding costs of inventory where an
estimation was made that inventory will be held for an additional 90 days compared to pre-COVID-19 levels.
The Group has subsequently released this provision as the Group is experiencing high demand for used
motor vehicles and inventory has decreased from $32.9 million (31 March 2020) to $18.4 million.
Provision for impairment losses on operating leases reported as property, plant and equipment
The Group assumes lease residual value risk on motor vehicles which exposes the Group to the movement
in second-hand prices of these assets. The AASB 136 Impairment of Assets methodology for impairing
operating leases has remained consistent with prior periods including the incorporation of forecasted sale
proceeds on the disposal of motor vehicles at lease end. The model used by the Group to estimate future
sale proceeds is based on nearly 30 years of experience.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
New Australian Accounting Standards and amendment standards that are effective in the current
period (continued)
Impact of coronavirus (COVID-19) (continued)
An observable effect from the COVID-19 pandemic has been an increase in second-hand motor vehicle
prices. The impact from the current high second-hand motor vehicle prices results in higher forecasted sale
proceeds which in turn, reduces the amount of provision required on the Group’s operating leases.
The Group has applied a 4.68% reduction to these forecasted sale proceeds in order to mitigate the
temporary inflationary effect of COVID-19 on second-hand motor vehicle forecasts. This results in $1.6
million additional provision.
Provision for impairment losses on finance leases and trade receivables
In March 2020, the IASB published IFRS 9 and COVID-19, a document that reinforces the fact that IFRS 9
does not provide a mechanistic approach in accounting for impairment provisions.
The AASB 9 impairment methodology has remained consistent with prior periods. The Group revised the
weighting of the model’s multiple economic scenarios (MES) from base (60%), upside (20%) and downside
(20%) to base (50%) and downside (50%).
Considering the uncertainty surrounding the effect from COVID-19, the Group also implemented a model
adjustment by applying the highest historical expected credit loss rate since the model inception. This model
adjustment resulted in an incremental credit impairment loss provision of $2.5 million.
The Group also recognised a $0.4 million impairment relating to novated leases for the employees of specific
client that operates in a severely impacted industry. Based upon the rate at which employees defaulted on
their first payment after the deferral period, the Group applied an impairment provision for all novated leases
currently with deferred payments or subsequently in default.
Maintenance revenue
Maintenance revenue is recognized in accordance with AASB 15 Revenue from Contracts with Customers
and is based upon years of external and internal data to calculate the percentage of maintenance revenue
to be recognised in line with the level of services provided as part of our obligations under the lease.
Accordingly, maintenance revenue is recognised progressively on a lease over time, with the age of the lease
being the most practical proxy for services provided.
During the months of April 2020 to September 2020, the Group witnessed a decrease in the utilisation of
its fleet and as a result, a decrease in maintenance expenditure which was driven by the restrictions on
movement imposed by State and Territory governments in response to the COVID-19 outbreak.
In order to match the delay in revenue with the delay in services provided as a result of the COVID-19
restrictions, the Group has deferred the recognition of $2.5 million maintenance revenue during the
financial year.
Impairment of non-financial assets
At each reporting period, the Group reviews the carrying amount of its intangible assets to determine
whether there is any indication of impairment. If any such indication exists, the recoverable amount of the
affected assets are evaluated in accordance with AASB 136 Impairment of Assets.
Given the uncertainty around the effect of COVID-19, the Group tested goodwill for impairment. This included
updating the assumptions and cash flow forecasts to reflect the potential impact of COVID-19 on the Group.
The Group also tested goodwill under a downside scenario of that included lower growth rates and higher
cash flow discount rates. No impairment losses were required to be recognised on goodwill including the
downside case.
Further details of the Group’s test for goodwill impairment are outlined in Note 3.7 in the financial report.
74 - 75
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 has identified Core and Non-Core business segments. Core businesses include fleet leasing
management and services to corporate small and medium enterprises (“SME”) and consumers in Australia
and corporate SME customers in New Zealand. Core business segments are Australia Commercial, Novated
and New Zealand Commercial. Non-Core relates to business that have been disposed by 30 September 2020
and were part of the simplification plan announced to the market in 2019. The segments have been identified
based on how the Chief Operating Decision Maker monitors performance and allocates resources.
The Chief Operating Decision Maker amended the name of Australia Consumer to Novated, this is to more
accurately reflect the activities carried on in this segment where historically this segment included activities
associated with CarLoans (Non-core), which was disposed of on 6 May 2020. The segment information for
the reportable segments for the year ended 30 September 2020 is as below:
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
2.0 Business Result for the Year (continued)
2.1 Segment information (continued)
2020
Australia
Commercial
$’000
Novated
$’000
New
Zealand
Commercial
Non-core*
$’000
$’000
Total
$’000
Net operating income
102,917
24,751
46,070
11,278
185,016
Bad and doubtful debts
(1,285)
(15)
(3,128)
312
(4,116)
Operating expenses
(50,084)
(12,932)
(15,644)
(24,799)
(103,459)
EBITDA
51,548
11,804
27,298
(13,209)
77,441
Depreciation and amortisation
(3,714)
(1,457)
(5,002)
(1,288)
(11,461)
Share Based Payments
(3,347)
(760)
(1,877)
-
(5,984)
Holding company debt interest
(7,828)
(1,118)
(1,928)
(5,121)
(15,995)
Amortisation acquired intangibles
Significant material non-recurring
items**
(3,359)
(7,692)
(409)
-
(27)
(589)
-
(3,795)
(5,585)
(13,866)
Tax
(7,682)
(2,418)
(5,005)
6,970
(8,135)
Statutory net profit after tax
17,926
5,642
12,870
(18,233)
18,205
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
2,351
286
19
-
2,656
5,413
-
450
4,360
10,223
25,690
5,928
13,339
(13,873)
31,084
Software amortisation (post tax)
Cash net profit after tax
1,247
26,937
317
6,245
967
-
2,531
14,306
(13,873)
33,615
* Non-core includes the entities associated with CarLoans, Right2Drive and Eclipx Commercial Finance.
** Significant material non-recurring items relate to loss on disposal of discontinued operations, disposal related costs and
restructuring costs.
76 - 77
2019
Australia
Commercial
Novated
New
Zealand
Commercial
Non-core*
Grays**
$’000
$’000
$’000
$’000
$’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)
Holding company debt interest
(8,046)
Amortisation acquired
intangibles
(2,811)
(448)
(840)
(343)
(94)
(37)
-
(2,238)
(1,587)
(5,029)
(3,019)
(18,521)
(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
* Non-core includes the entities associated with CarLoans, Right2Drive and Eclipx Commercial Finance.
** The Group completed the sale of GraysOnline and AreYouSelling on 31 July 2019 in the 2019 financial year.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020
Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
2.0 Business Result for the Year (continued)
2.2 Discontinued operations
On 6 May 2020, the Group completed the sale of CarLoans.com.au and Georgie (CarLoans) to FirstMac
Limited for a value of $2.0 million. The Group received $0.4 million at transaction close and will receive the
remaining $1.6 million on a quarterly basis from December 2020 to September 2021.
On 6 August 2020, the Group completed the sale of Right2Drive to Growth Factor Group for an amount
of up to $26.5 million. The Group received $15.0m at transaction close, and will receive an additional
deferred consideration of $4.2m 18 months after completion. The Group is entitled to a further contingent
consideration of up to $7.3 million, payable at six-month intervals from 6 August 2020 for a period of up to 24
months, based on pre-agreed collection rates on the Right2Drive debtor book at the date of sale.
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.
CarLoans was not previously classified as held-for-sale or as a discontinued operation. The comparative
consolidated statement of profit or loss and OCI for the year of 2019 has been re-presented to show the
discontinued operation separately from continuing operations.
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)
Deferred and contingent consideration
Transaction costs
Tax benefit
Loss on disposal of discontinued operations after tax
2020
$’000
15,414
(9,031)
6,383
(16,004)
11,048
(4,338)
(9,294)
427
(2,484)
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
Property, Plant and equipment
Operating leases reported as PP&E
Intangibles
Right-of-use assets
Trade and other liabilities
Liabilities held for sale
Lease liabilities
Provisions
Deferred tax asset
Less cash and cash equivalents disposed:
Net carrying value of assets excluding cash and cash equivalents
78 - 79
2020
$’000
9,031
32,266
422
426
84
1,585
(863)
(21,569)
(1,461)
(2,064)
7,178
25,035
(9,031)
16,004
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
2.0 Business Result for the Year (continued)
2.2 Discontinued operations (continued)
(i) Results of discontinued operations
The financial performance and cash flow information presented are for the period to the effective date
of disposal (2020 column) and the year ended 30 September 2019. The effective date of disposal for
Right2Drive was 6 August 2020 and the effective date for Carloans was 6 May 2020.
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 from operating activities
Income tax benefit
Loss on sale of discontinued operations
2020
$’000
2019*
$’000
38,125
172,704
(26,847)
(88,801)
312
(5,100)
-
-
-
-
(21,569)
(159,338)
(6,319)
(13,144)
(13,619)
(59,855)
(1,288)
(6,927)
(9,826)
(38,107)
(13,143)
(226,456)
3,602
14,682
(2,484)
(116,215)
Total comprehensive loss from discontinued operations
(12,025)
(327,989)
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
(3.8)
(3.8)
(102.8)
(102.8)
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
* Comparatives have been re-present to reclass CarLoans to discontinued operations.
6,141
(99)
40,627
(6,032)
-
(34,804)
6,042
(209)
80 - 81
(ii) Asset held for sale
As at 30 September 2020, there were no assets classified as held for sale in the Group. 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. The sale process was
completed in financial year 2020.
Assets held for sale
Trade and other receivables
Liabilities held for sale
Other liabilities
Provisions
Trade and other liabilities
2020
$’000
-
-
-
-
-
-
2019*
$’000
41,516
41,516
1,074
1,412
971
3,457
The fair value of the asset held for sale was 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 2020 Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
2.0 Business Result for the Year (continued)
2.3 Revenue (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. Deferred maintenance income amounted to $17.4m (2019: $18.5m) and will be recognised
over the remaining term of the respective lease contracts.
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.
Sundry income
The Group earns sundry income which includes commissions from finance and warranty product referrals;
and short term flexible rentals to customers. Revenue is recognised when the service has been provided.
This is deemed to be at settlement date for product referrals; and over time for short term rental vehicles.
Cost of revenue
Cost of revenue comprises the cost associated with providing the service components of the lease. Cost of
revenue is recognised as incurred.
82 - 83
Consolidated
2020
$’000
2019*
$’000
96,036
108,967
99,930
103,340
34,991
37,073
184,838
201,851
13,568
17,746
4,162
3,814
225,822
219,441
14,901
17,169
674,248
709,401
43,636
10,338
43,713
11,628
207,526
207,742
321
485
180,203
197,124
442,024
460,692
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
* Comparatives have been re-presented to reclassify CarLoans figures to discontinued operations.
** The above amounts totalling $378,473,000(2019: $381,414,000) represents the Group’s revenue derived from contracts with
customers, in accordance with AASB15.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
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.
The right-of-use asset is subsequently depreciated using the straight-line method over the term of the lease.
Operating finance costs
Facility finance costs and lease liability interest is recognised in the statement of profit or loss and other
comprehensive income using the effective interest method.
Facility finance restructure costs are recognised in the statement of profit or loss and other comprehensive
income as and when they are incurred.
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.
84 - 85
Consolidated
2020
$’000
2019*
$’000
2,323
1,778
5,402
4,290
3,414
3,666
6,800
-
Profit before income tax includes the following specific expenses:
Depreciation and amortisation
Plant and equipment - fixture and fittings
Amortisation - Intangible assets
Software
Right-of-use assets
Total depreciation and amortisation expense
13,793
13,880
Lease finance costs
Interest and finance charges - Third parties
Hedge (gain) / loss
Total lease finance costs
Operating finance costs
Facility finance costs
Lease liabilities interest
Facility finance restructure
Total operating finance costs
Operating overheads
Rental of premises
Technology costs
Restructuring costs
Merger related costs
Other overheads
Total operating overheads
* Comparatives have been re-presented to reclassify CarLoans figures to discontinued operations.
59,714
70,131
(1,258)
3,259
58,456
73,390
14,943
18,521
1,052
4,820
-
-
20,815
18,521
1,096
8,243
3,303
158
13,987
26,787
7,584
9,974
7,703
16,630
20,101
61,992
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
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.
Profit / (loss) attributable to the ordinary shareholders
Profit / (loss) attributable to the ordinary equity holders of the company used in
calculating basic earnings per share and diluted earnings per share
Profit/(loss) from continuing operation
Profit/(loss) from discontinued operation
From continuing and discontinued operations
Weighted average number of shares used as the denominator
Consolidated
2020
$’000
2019*
$’000
30,230
(13,468)
(12,025)
(327,989)
18,205
(341,457)
Consolidated
2020
2019
Number
Number
Weighted average number of ordinary shares used as the denominator in calculating
basic earnings per share
315,854,276
319,111,693
Weighted average number of ordinary shares used as the denominator in calculating
diluted earnings per share
324,673,926
319,111,693
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 was made in 2019 to the
weighted average number of ordinary shares used as the denominator in the calculation of diluted earnings
per share.
Continuing and discontinuing earnings per share
Continuing and discontinuing earnings per share
Basic earnings per share
Diluted earnings per share
Impact of continuing operations
Basic earnings per share
Diluted earnings per share
Impact of discontinuing operations
Basic earnings per share
Diluted earnings per share
86 - 87
2019
Cents
(107.0)
(107.0)
2019
Cents
(4.2)
(4.2)
(102.8)
(102.8)
Consolidated
2020
Cents
5.8
5.6
Consolidated
2020
Cents
9.6
9.3
(3.8)
(3.8)
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
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 oth-
er 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.
(i) Reconciliation of income tax expense
88 - 89
Consolidated
2020
$’000
201*
$’000
Profit/(loss) from continuing operations before income tax expense
42,392
(18,538)
Loss from discontinuing operations before income tax expense
(16,054)
(342,672)
Prima facie tax rate of 30.0% (2019 - 30.0%)
New Zealand tax rate differentials
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
Grays loss on disposal
ECF loss on disposal
R2D gain on disposal
CarLoans gain on disposal
Contingent consideration
Goodwill impairment
FV adjustment
Transaction costs
Other
26,338
(361,210)
7,901
(108,363)
(372)
169
-
328
(143)
(286)
-
-
-
617
90
28,237
4,393
-
-
(35)
47,801
6,471
1,207
367
Income tax (benefit)/expense
8,135
(19,753)
Income tax expense comprises of:
Current tax
Deferred tax
Income tax (benefit)/expense is attributable to:
Profit/(loss) from continuing operations
Loss from discontinuing operations
Income tax (benefit)/expense
Effective tax rate
3,531
4,604
8,135
6,586
(26,339)
(19,753)
12,162
(5,070)
(4,027)
(14,683)
8,135
(19,753)
31%
5.4%
The effective tax rate for 2020 was impacted by the gain or loss on sale of disposal groups and certain
transaction costs which are not deductible and decreases the effective benefit on the loss from continuing
and discontinuing operations.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
2.0 Business Result for the Year (continued)
2.6 Taxation (continued)
(ii) Movement of deferred tax
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$’000
$’000
$’000
$’000
$’000
$’000
$’000
11,191
1,663
(776)
(7,194)
4,884
4,884
Deferred revenue
8,798
(2,101)
(410)
9,228
(338)
(646)
-
-
-
6,287
6,287
8,244
8,244
9,647
(2,779)
Leasing adjustments
(37,618)
(1,717)
Transaction costs
5,251
(1,145)
Intangible assets
(2,274)
1,813
-
-
-
-
1,935
1,458
10,263
12,020
(1,757)
2,300
(203)
-
(37,035)
-
(37,035)
(85)
3,818
3,818
-
(840)
(1,357)
(2,658)
-
(2,658)
4,223
(4,604)
(646)
2,006
(7,178)
(6,197)
35,253
(41,450)
Set off DTL
against DTA
Net tax assets/
(liabilities)
(31,887)
31,887
(6,197)
3,366
(9,563)
2020
Doubtful debt
provision
Hedging assets and
liabilities
Accruals, employee
provisions and other
-
-
-
-
-
90 - 91
D
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$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
7,534
(39)
5,361
(9)
(7,194)
(1,656)
3,997
3,997
-
1
-
-
86
-
8,798
8,798
9,228
9,228
-
-
-
-
-
-
-
(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
(1,357)
8,527
(3,631)
-
(3,631)
2019
Doubtful debt
provision
Deferred revenue
5,329
3,383
-
Hedging assets and
liabilities
Accruals, employee
provisions and other
2,631
699
5,897
3,159
4,472
Leasing adjustments
(28,490)
9,984
Transaction costs
4,161
2,678
Intangible assets
(18,714)
5,162
(24,390)
26,339
11,258
2,099
(7,190)
(11,083)
(2,967)
40,314
(43,281)
Set off DTL
against DTA
Net tax assets/
(liabilities)
(iii) Franking credits
(38,138)
38,138
(2,967)
2,176
(5,143)
Consolidated
2020
$’000
2019
$’000
Franked dividends (Australia)
Franking credits available for subsequent financial years based on a tax rate of 30%
(2019: 30%)
5,817
5,523
5,817
5,523
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 2020
Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
3.0 Operating Assets and Liabilities
This section provides information relating to the operating assets and liabilities of the Group.
3.1 Property, plant and equipment
Recognition and measurement
Property, plant and equipment
Property, plant and equipment are stated at historical cost less depreciation. Historical cost includes
expenditure that is directly attributable to the acquisition of the items. Cost may also include transfers from
equity of any gains/losses on qualifying cash flow hedges of foreign currency purchases of property, plant
and equipment.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to
the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is
derecognised. All other repairs and maintenance are charged to the statement of profit or loss and 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.
92 - 93
Total
$’000
967,787
266,550
Plant and
equipment
Fixture
and fittings
Motor vehicles
and equipment
$’000
$’000
$’000
4,236
290
-
(702)
(40)
-
4,364
219
959,187
266,041
-
-
-
-
(175,834)
(175,834)
-
-
(321)
(702)
(40)
(321)
(1,505)
(818)
(180,203)
(182,526)
(2)
2,277
(13)
3,752
(1,706)
(1,721)
867,164
873,193
17,843
(15,566)
10,606
(6,854)
1,353,785
1,382,234
(486,621)
(509,041)
Consolidated
2020
Opening net book amount
Additions
Transfers to inventory
Disposals
Disposal - discontinued operations
Impairment charge
Depreciation charge - continuing
operations
Foreign exchange variation
Closing net book amount
2020
Cost
Accumulated depreciation and
impairment
Net book amount
2,277
3,752
867,164
873,193
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
3.0 Operating Assets and Liabilities (continued)
3.1 Property, plant and equipment (continued)
Consolidated
Plant and
equipment
Fixture
and fittings
Motor vehicles
and equipment
$’000
$’000
$’000
Total
$’000
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
6,227
2,328
-
(409)
(2,020)
-
(1,897)
7
4,236
7,618
2,477
1,052,114
1,065,959
307,296
312,101
-
(207,311)
(207,311)
(752)
(1,876)
(1,613)
(1,517)
27
4,364
-
-
(485)
(1,161)
(3,896)
(2,098)
(197,124)
(200,538)
4,697
4,731
959,187
967,787
18,151
(13,915)
13,467
(9,103)
1,457,805
1,489,423
(498,618)
(521,636)
Net book amount
4,236
4,364
959,187
967,787
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
2020
$’000
2019
$’000
284,045
268,656
583,119
690,531
867,164
959,187
2,277
3,752
6,029
4,236
4,364
8,600
Total property, plant and equipment
873,193
967,787
94 - 95
Key estimate and judgement: Leased property
The Group owns assets where the residual value of the asset and useful life of the asset needs to be assessed at
each reporting date. The residual value of the asset is impacted by the condition, age, usage of the asset and the
demand for the asset at the end of its useful life. The Group uses internal and external data to calculate the residual
value of the asset and the expected useful life of the asset. The residual value and useful life of the asset is used to
calculate the depreciation and net book value of the asset. The actual value to be realised on the final disposal of the
asset will impact the profit and loss on sale of the asset in the period that the sale occurs.
3.2 Right-of-use assets
Recognition and measurement
The Group has initially applied AASB 16 at 1 October 2019, using the modified retrospective approach,
comparative information is not restated and the cumulative effect of initially applying AASB 16 is recognised
in retained earnings at the date of initial application. Please refer to note 1.0 for the impact on application.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability
adjusted for any lease payments made at or before the commencement date, plus any initial direct costs
incurred and an estimate of costs to dismantle and remove the underlying asset or restore the underlying
asset or the site on which it is located, less any lease incentives received. The right-of-use asset is
subsequently depreciated using the straight-line method over the term of the lease.
(i) Movements in net book value of right-of-use assets
Balance at 1 Oct 2019
Depreciation charge for the year
Additions to right-of-use assets
Net foreign currency exchange differences
Balance at 30 September 2020
Leases terminating within 12 months
Leases terminating after more than 12 months
Buildings
Equipment
$’000
25,290
(4,230)
197
(50)
21,207
$’000
-
(60)
418
-
358
Total
$’000
25,290
(4,290)
615
(50)
21,565
2020
$’000
3,895
17,670
21,565
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
3.0 Operating Assets and Liabilities (continued)
3.3 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
Expected credit allowance
Consolidated
2020
$’000
2019
$’000
423,607
475,508
(39,599)
(56,101)
(13,709)
(11,865)
370,299
407,542
Amount expected to be recovered within 12 months
142,622
153,484
Amount expected to be recovered after more than 12 months
227,677
254,058
The future lease payments under non-cancellable leases are disclosed in note 4.6(a).
370,299
407,542
96 - 97
3.4 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
Expected credit loss
Sundry debtors
Prepayments
Other assets
Current tax receivable
Total trade receivables and other assets
Consolidated
2020
$’000
46,650
(2,182)
44,468
2019
$’000
54,618
(1,187)
53,431
17,500
7,933
6,532
17,415
34
-
47
2,892
68,534
81,718
A significant portion of the above amounts are expected to be recovered within 12 months. The net carrying
value of trade receivables is considered a reasonable approximation of fair value.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020
Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
3.0 Operating Assets and Liabilities (continued)
3.5 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.
Trade payables
Customer related liabilities
Accrued expenses
Current tax liabilities
Maintenance income received in advance
Contingent and deferred consideration
Other payables
Deferred Revenue
Consolidated
2020
$’000
2019
$’000
34,295
32,513
3,725
4,726
11,350
20,927
3,189
11,056
231
26,513
17,412
-
7,776
483
26,311
18,491
Total trade and other liabilities
107,771
111,227
Amount expected to be settled within 12 months
Total trade and other liabilities
Consolidated
2020
$’000
2019
$’000
107,771
111,227
107,771
111,227
98 - 99
3.6 Lease liabilities
Recognition and measurement
Lease liabilities are measured at the present value of the lease payments to be made over the lease term as
at the commencement of the lease. The present value is calculated by discounting the lease payments using
the lessee’s incremental borrowing rate.
The incremental borrowing rate is the rate that the Group would have to pay to borrow funds necessary to
obtain an asset of similar value to the right-of-use asset in a similar economic environment, with similar
terms, security and conditions. Application of the incremental borrowing rate is adopted where the interest
rate implicit in the lease cannot be readily determined, which is generally the case for leases in the Group.
Lease payments due within the next 12 months are recognised within current lease liabilities; payments
due after 12 months are recognised within non-current lease liabilities. Interest on the lease liability in each
period during the lease term shall be the amount that produces a constant periodic rate of interest on the
remaining balance of the lease liability. Interest expense on the lease liability is a component of finance cost
and presented in the statement of profit or loss.
The Group leases buildings and equipment. Lease liabilities include the net present value of the following
lease payments:
Fixed payments, less any lease incentives receivable; and
Payments of penalties for the termination of the lease, if the lease term reflects the lessee exercising
that option.
(i) Maturity analysis - contractual undiscounted cash flow
Less than one year
One to five years
More than five years
Total undiscounted lease liabilities as 30 September
(ii) Lease liabilities included in the statement of financial position at 30 September
Leases terminating within 12 months
Leases terminating after more than 12 months
(iii) Amounts recognised in profit or loss
Lease liabilities interest
Income from sub-leasing right-of-use assets
(iv) Amounts recognised in statement of cash flow
Financing cash outflow relating to the principal portion of lease payments
Operating cash outflow relating to the interest expense portion of lease payments
Total cash outflow for leases
2020
$’000
5,240
13,731
9,072
28,043
4,260
19,514
23,774
(1,052)
226
4,161
1,144
5,305
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020
Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
3.0 Operating Assets and Liabilities (continued)
3.7 Intangibles
Recognition and measurement
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the net identifiable assets
of the acquired controlled entities at the date of acquisition. Goodwill on acquisitions of controlled entities
are included in intangible assets. Goodwill is not amortised. Instead, goodwill is tested for impairment
annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is
carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include
the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to a cash-generating unit (CGU) for the purpose of impairment testing. The allocation
is made to those CGU’s that are expected to benefit from the business combination in which the
goodwill arose.
Customer relationships and brand names
Other intangible assets include customer relationships and brand names acquired as part of business
combinations and recognised separately from goodwill. Customer relationships are amortised over 10 years
on a straight line basis. Brand names are amortised over 20 years on a straight line basis.
Software
Software costs include only those costs directly attributable to the development phase and are only
recognised following completion of technical feasibility and where the Group has an intention and ability to
use the asset.
100 - 101
Brand
Names
Customer
relationships
Software
Goodwill
$’000
$’000
$’000
$’000
Total
$’000
2020
Opening net book amount
1,837
13,301
19,345
440,819
475,302
Additions
-
-
2,117
Amortisation charge - continuing operations
(123)
(1,655)
(5,402)
Impairment charge - continuing operations
Foreign exchange variation
-
-
(398)
-
-
(10)
-
-
-
(525)
2,117
(7,180)
(398)
(535)
Closing net book amount
1,714
11,248
16,050
440,294
469,306
2020
Cost
18,721
29,342
73,120
538,382
659,565
Accumulated amortisation and impairment
(17,007)
(18,094)
(57,070)
(98,088)
(190,259)
Net book amount
1,714
11,248
16,050
440,294
469,306
Brand
Names
Customer
relationships
Software
Goodwill
$’000
$’000
$’000
$’000
Total
$’000
2019
Opening net book amount
36,050
23,152
62,084
708,345
829,631
Additions
-
-
8,769
Amortisation charge
(119)
(3,547)
(6,800)
Impairment charge - continuing operations
-
(3,458)
(24,200)
-
-
-
8,769
(10,466)
(27,658)
Impairment charge - discontinued operations
(12,787)
Amortisation charge - discontinued
operations
(1,777)
(357)
(263)
(6,319)
(159,338)
(178,801)
(3,726)
-
(5,766)
Disposed as part of discontinued operation
(19,530)
(2,266)
(10,713)
(109,552)
(142,061)
Foreign exchange variation
-
40
250
1,364
1,654
Closing net book amount
1,837
13,301
19,345
440,819
475,302
2019
Cost
18,721
29,342
71,165
538,907
658,135
Accumulated amortisation and impairment
(16,884)
(16,041)
(51,820)
(98,088)
(182,833)
Net book amount
1,837
13,301
19,345
440,819
475,302
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
3.0 Operating Assets and Liabilities (continued)
3.7 Intangibles (continued)
(i) Impairment of assets
For the year ending 30 September 2020, the Group recognised impairments of $0.4 million against customer
relationships upon annual impairment review.
For the year ending 30 September 2019, the Group recognised impairments upon annual impairment review
following restructure of the group, new leadership and implementation of The Simplication Plan for renewed
focus on the Core business.
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are
tested annually for impairment, or more frequently if events or changes in circumstances indicate that they
might be impaired. Other assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount
by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher
of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets
are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely
independent of the cash inflows from other assets or groups of assets (CGUs). Non-financial assets other
than goodwill that suffered impairment are reviewed for possible reversal of the impairment at the end of
each reporting period.
For the purpose of annual impairment testing, goodwill is allocated to the following CGUs, which are the units
expected to benefit from the synergies of the business combinations in which the goodwill arises.
Australia Commercial
Novated
New Zealand Commercial
Goodwill allocation at 30 September
Consolidated
2020
$’000
2019
$’000
282,493
282,493
46,475
46,475
111,326
111,851
440,294
440,819
The recoverable amount of each of the Group’s CGUs was determined based on value-in-use calculations,
consistent with the methods used as at 30 September 2019. These calculations require the use of
assumptions, which includes business unit’s approved budget and 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 Group tested for impairment at 31 March 2020 as a result of the COVID-19
pandemic which was expected to have an impact on the future cash flows and earnings.
The impairment test is applied consistently to all CGUs that have goodwill allocated. The value in use is
determined by discounting projected future cash flows. Cash flows are projected based on budgets approved
by the Board, with an extrapolation of expected cash flows into perpetuity using the growth rates determined
by management.
The following table sets out the key assumptions for each of the Group’s CGUs.
102 - 103
30 September 2020
30 September 2019
Australia
Commercial
Novated
New Zealand
Commercial
Australia
Commercial
Novated
New Zealand
Commercial
Long term growth rate
Post-tax discount rate
2.5%
11.4%
2.5%
2.0%
2.5%
2.5%
12.0%
12.3%
11.0%
12.0%
2.0%
11.5%
Growth rates are reviewed based on data available in the market and adjusted based on forecasted
expectations of the industry performance, historical data and risks to these expectations. Long term growth
rates are based on target rates of the Reserve Bank of Australia and Reserve Bank of New Zealand while
considering the economic data from the International Monetary Fund.
Based on the methodology outlined above, the recoverable amount in New Zealand Commercial, Australia
Commercial and Novated CGU’s were higher than the carrying amount of those CGU’s and therefore no
impairment was recognised. The Australia Consumer CGU was renamed to Novated. The change was made
to more accurately reflect the activities carried on in this CGU where historically this included activities
associated with CarLoans which was disposed on 6 May 2020.
The New Zealand Commercial CGU has seen a material improvement in Cash net profit after tax, where the
CGU has seen an increase in cash net profit after tax from $7.5m in 2019 to $14.3m in 2020, this represents
an increase of $6.8m. This material increase has decreased the probability of an impairment of goodwill
allocated to the New Zealand CGU.
The Group tested various scenarios as to the level that value-in-use would be equal to carrying value:
For New Zealand Commercial a decrease in annual cash flow of 25.6%, terminal negative growth rate, or
an increase in discount rate to 15.3% will result in its value in use being equal to carrying value.
For Australia Commercial a decrease in annual cash flow of 18.7%, terminal growth rate to 0.5% or an
increase in discount rate to 13.0% will result in the value in use being equal to carrying value.
For Australia Commercial a decrease in annual cash flow of 18.7%, terminal growth rate to 0.5% or an
increase in discount rate to 13.0% will result in the value in use being equal to carrying value.
Key estimate and judgement: Impairment of goodwill
The testing of goodwill requires management to make estimates as to the future cash flows of the CGU’s. Where the
actual cash flows of the CGU are lower than the estimated cash flows, the Group may recognise an impairment on
goodwill. To address this risk management tests for likely scenarios which could impact the cash flows of the CGU’s
and makes an assessment on the likelihood of this to occur based on internal and external data..
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
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.
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. Fair value approximates carrying
value in relation to borrowings except for the fixed term loan (refer to note 4.2 for details).
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 15 months (2019: 16 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
2020
$’000
2019
$’000
155,000
285,700
1,199,899
1,331,640
(9,907)
(12,635)
1,344,992
1,604,705
373,089
369,537
971,903
1,235,168
1,344,992
1,604,705
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 $148,764,000 (2019: $221,433,000).
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 $1,389,485,000 (2019:
$1,509,273,000).
104 - 105
Financing arrangements
The Group had access to the following undrawn borrowing facilities at the end of the reporting period:
Loan facilities used at reporting date
Loan facilities unused at reporting date
Total loan facilities available
Financial covenants
Consolidated
2020
$’000
2019
$’000
1,354,899
1,617,340
342,730
218,587
1,697,629
1,835,927
The Group has complied with financial covenants of its borrowing facilities during the 2020 and 2019
reporting periods.
Reconciliation of movements of liabilities to cash flows arising from financing activities
Liabilities arising from financing activity
Borrowing balance 30 Sep 2019
Proceeds from borrowings
Repayments of borrowings
Non cash movements
Foreign exchange
Amortisation of capital borrowing cost
Borrowing balance 30 Sep 2020
Borrowing
$’000
1,604,705
383,139
(643,586)
(1,958)
2,692
1,344,992
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.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
4.0 Capital Management (continued)
4.2 Financial risk management (continued)
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% (2019:10%) 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 2020, had the Australian dollar weakened/strengthened by 10%
(2019:10%) 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 $994,129 (2019: $529,736)
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.
(ii) Interest rate risk
2020
2019
Weighted
average
interest rate
%
Weighted
average
interest rate
%
Balance
$’000
Balance
$’000
7.100%
53,570
6.350%
65,000
Borrowings
- Fixed interest rate
- Floating interest rate
2.544%
1,291,423
3.456%
1,539,705
Interest rate swaps (notional principal amount)
1.613%
(1,277,323)
2.141%
(1,416,929)
Unhedged variable debt
14,100
122,776
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 September 2020, an expense of $1.7m was reclassified into
profit and loss (2019: $3.8m). The Group recognised a gain on hedge ineffectiveness of $1.3m (2019: loss
of $2.3m).
106 - 107
The Group hedges 100% of the lease book that is financed through the Group’s 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 (2019: 100 bps) and a decrease by
100 bps (2019: 100 bps) across the yield curve.
2020
Interest rate risk
Carrying amount
-100 bps
Profit/equity
+100 bps
Profit/equity
$’000
$’000
$’000
Financial assets
Cash and cash equivalents
207,798
(2,078)
2,078
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)
370,299
578,097
-
(2,078)
-
2,078
53,570
-
-
1,291,423
12,914
(12,914)
107,771
-
28,091
(12,773)
1,480,855
141
-
12,773
(141)
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
4.0 Capital Management (continued)
4.2 Financial risk management (continued)
2019
Interest rate risk
Carrying amount
-100 bps
Profit/equity
+100 bps
Profit/equity
$’000
$’000
$’000
Financial assets
Cash and cash equivalents
239,678
(2,397)
2,397
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)
Credit risk
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)
The recoverability of finance lease receivables and trade and other receivables is reviewed on an ongoing
basis. A loss allowance account (provision for impairment) 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).
To manage credit risk the Group has a credit assessment process. Leases are provided to novated and
commercial customers. Credit underwriting typically includes the use of either an application scorecard and
credit bureau report or a detailed internal risk profile review, including a review of the customer against a
comprehensive credit database. Internal credit review and verification processes are also used depending on
the applicant.
The credit risk function consists of dedicated credit employees who apply the Group’s credit and
underwriting policy within specific approval authorities. The credit risk team monitors the performance of the
portfolio and considers the macro environment to manage exposure to specific clients and specific sectors.
The Group has a specialist collections function, which manages all delinquent accounts.
The provision for impairment under AASB 9: Financial Instruments applies to the Group’s net investment
in finance lease receivables and trade and other receivables. The Group will recognise provision for
impairments using the simplified approach and record lifetime expected credit losses, as allowed under
AASB 9 for lease receivables and trade and other receivables.
108 - 109
Measurement
To measure the expected credit loss (ECL) the group uses a credit loss model developed at a product level
based on shared risk characteristics. The key model inputs used in measuring the ECL include:
Exposure at Default (EAD): represents the calculated exposure in the event of a default. The EAD for
finance leases is the principal amount outstanding at reporting date.
Probability of Default (PD): the development of PDs is developed at a product level considering shared
credit risk characteristics. In calculating the PD, 24 months of historical delinquency transition matrices
are used to develop a point in time PD estimate.
Loss Given Default (LGD): the LGD is the magnitude of the ECL in a default event. The LGD is estimated
using three years of historical recovery experience.
Macroeconomic scenarios
The assessment of credit risk, and the estimation of ECL, will be unbiased and probability weighted,
and incorporate all 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 report 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 amount will be calculated from a baseline, an upside scenario and a downside scenario.
The weightings of each scenario as applied for 2020 and 2019 are as below:
Scenario
Expectation
Weighting 2019
Weighting 2020
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
60%
20%
20%
50%
-
50%
In calculating an ECL the Group includes forward looking information. The Group has identified a number
of key indicators that are considered, the most significant of which are unemployment rate, gross domestic
product, interest rates and inflation. The predicted relationships between these key indicators and the key
model inputs in measuring the ECL have been developed by analysing historical data as part of the model
build, calibration and validation process. These indicators are assessed semi-annually. Three possible
scenarios are applied: Base Case, Upside and Downside. The forward-looking inputs are applied to the
macroeconomic scenarios.
Definition of default
Default is generally defined as the point when the borrower is unlikely to pay its credit obligations in full or the
borrower is more than 90 days past due.
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.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020
Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
4.0 Capital Management (continued)
4.2 Financial risk management (continued)
Impairment provisions
The Group’s total impairment provisions from 1 October 2019 to 30 September 2020 is set out below,
reconciling the opening loss allowance to the closing loss allowance. Except as disclosed in note 1, no
significant changes to estimation techniques or assumptions were made during the reporting period.
Opening loss allowance as at 1 October 2018 calculated under AASB 9
Increase / (Decrease) in loss allowance
Write-offs
Balance derecognised at disposal and held for sale
Opening loss allowance as at 1 October 2019 calculated under AASB 9
Increase / (Decrease) in loss allowance
Write-offs
Balance derecognised at disposal and held for sale
Net investment
in finance lease
receivables
Trade and other
receivables
$’000
11,485
5,984
(2,477)
(3,127)
11,865
3,170
$’000
7,296
(495)
(3,539)
(2,075)
1,187
2,245
(1,326)
(1,250)
Closing loss allowance as at 30 September 2020 – calculated under AASB 9
13,709
2,182
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.
110 - 111
Contractual maturities
of financial liabilities
Less than
1 year
Between
1and
2 years
Between
2 and
5 years
2020
Non-derivatives
$’000
$’000
$’000
Over
5 years
$’000
Total
contractual
cash flows
Carrying
amount
$’000
$’000
Trade and other liabilities
(107,771)
-
-
-
(107,771)
(107,771)
Borrowings
Provisions
(397,218)
(315,892)
(659,285)
(28,916)
(1,401,311)
(1,344,992)
(7,786)
(2,024)
-
-
(9,810)
(9,810)
Total non-derivatives
(512,775)
(317,916)
(659,285)
(28,916)
(1,518,892)
(1,462,573)
Derivatives
Interest rate swaps
(15,567)
(7,869)
(4,781)
Total derivatives
(15,567)
(7,869)
(4,781)
(60)
(60)
(28,277)
(28,091)
(28,277)
(28,091)
Contractual maturities
of financial liabilities
Less than
1 year
Between
1and
2 years
Between
2 and
5 years
2019
Non-derivatives
$’000
$’000
$’000
Over
5 years
$’000
Total
contractual
cash flows
Carrying
amount
$’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)
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
4.0 Capital Management (continued)
4.2 Financial risk management (continued)
Fair value risk
This section explains the judgements and estimates made in determining the fair values of the assets
and liabilities that are recognised and measured at fair value in the financial statements. To provide an
indication about the reliability of the inputs used in determining fair value, the Group has classified its assets
and liabilities into the three levels prescribed under the accounting standards. An explanation of each level
follows underneath the table.
2020
Financial liabilities
Derivatives used for hedging
Total financial liabilities
2019
Financial liabilities
Derivatives used for hedging
Total financial liabilities
Level 1
$’000
-
-
Level 1
$’000
-
-
Level 2
$’000
28,091
28,091
Level 2
$’000
31,369
31,369
Level 3
$’000
-
-
Level 3
$’000
-
-
Total
$’000
28,091
28,091
Total
$’000
31,369
31,369
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 $53,570,000 and a fair value of $52,376,000.
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.
112 - 113
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
Total as disclosed in the statement of cash flows
Consolidated
2020
$’000
55,776
55,776
52,316
54,153
45,553
2019
$’000
97,134
97,134
61,909
47,263
33,372
152,022
142,544
207,798
239,678
The weighted average interest rate received on cash and cash equivalents for the year was 0.23%
(2019: 1.25%).
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 2020 Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
4.0 Capital Management (continued)
4.4 Derivative financial instruments (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
2020
$’000
28,091
28,091
15,053
13,038
28,091
2019
$’000
31,369
31,369
14,908
16,461
31,369
114 - 115
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.
Share capital
Fully paid ordinary shares
315,090,932
319,111,693
654,765
654,765
2020
Shares
2019
Shares
2020
$’000
2019
$’000
Other equity securities
Treasury shares
Total issued equity
Movements in ordinary share capital
4,545,761
525,000
-
-
319,636,693
319,636,693
654,765
654,765
1 October 2019 Opening balance 1 October 2019
319,111,693
654,765
1 October 2019 Purchase of treasury shares
23 April 2020 Purchase of treasury shares
21 July 2020 Loan shares vested
23 July 2020 Loan shares vested
31 July 2020 Purchase of treasury shares
4 August 2020 Purchase of treasury shares
(2,641,579)
(1,475,000)
119,018
433,092
(85,657)
(370,635)
-
-
-
-
-
-
Balance 30 September 2020
315,090,932
654,765
Treasury shares
Treasury shares are shares in Eclipx Group Limited that are held by Eclipx Group Limited Employee Share
Trust or by staff under loans. These shares are issued under the Eclipx Group Limited Employee Share
scheme and the executive LTI plan. The shares that have not been settled in cash are funded with a loan and
are in substance an option and are reflected with zero value until such time that they are settled in cash so
as to exercise the option.
Details
Opening balance
Shares transferred to fully paid ordinary shares
Purchase of treasury shares
Closing balance
Number of
shares
Number of
shares
2020
2019
525,000
525,000
(552,110)
4,572,871
-
-
4,545,761
525,000
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
4.0 Capital Management (continued)
4.6 Commitments
a. Lease commitments: Group as lessee
On adoption of AASB16 in 2020, the Group recognised all leases for which the Group contracted as lessee
in financial statements as right-of-use assets and lease liabilities. Please refer to note 3.2 and note 3.6
for details.
Following table sets out the lease commitments as at 30 September 2019.
i. Operating leases
The Group leases equipment 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:
Details
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
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:
Details
Within one year
Later than one year but not later than five years
Consolidated
2019
$’000
1,664
1,749
3,413
b. Lease commitments: Group as lessor
i. Finance leases
Future 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
ii. Operating leases
Lease payments receivable on leases of motor vehicles are as follows:
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
116 - 117
Consolidated
2020
$’000
2019
$’000
166,276
175,242
257,317
300,173
14
93
423,607
475,508
Consolidated
2020
$’000
2019
$’000
280,724
287,288
308,911
361,753
11,686
13,394
601,321
662,435
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
$43,889,996 (2019: $50,885,687). These commitments are not recognised as liabilities as the relevant assets
have not yet been received.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020
Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
4.0 Capital Management (continued)
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:
Final dividends paid
No dividends paid in 2020 (2019: 2018 final dividend paid on 25 January 2019; 8.00
cents per ordinary share franked to 100%)
Total dividends paid
Consolidated
2020
$’000
-
-
2019
$’000
25,571
25,571
118 - 119
5.0 Employee Remuneration and 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. A total of expense of $3.7
million (2019: $4.3 million) was recognised in the financial year.
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 determined using a Black-Scholes Option Pricing Model or Monte-Carlo
Simulation that takes into account the: exercise price; term of the option; share price at grant date; expected
volatility of the underlying share; expected dividend yield and the risk free interest rate for the term of the
option. Non-market and service based 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 2020 Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
5.0 Employee Remuneration and Benefits (continued)
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 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.
Options and rights are subject to the same performance hurdles. The performance hurdles include “total
share holder return” (“TSR”) and earnings per share (“EPS”) components, in addition to a service condition.
TSR is a performance measure based on returns to shareholders, relative to other ASX-listed companies.
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. EPS is based on the
compound annual growth rate (“CAGR”) of the Group’s earnings per share. Refer to remuneration report for
further details of these performance hurdles.
(i) Long Term Incentive Plan
For the year ended 30 September 2020, the following awards were provided under the following employee
share ownership plans:
Options and rights
The awards granted will be subject to testing against earnings per share (EPS) and individual performance or
they will only be subject to remaining in the service of the Group at the time of vesting.
120 - 121
Set out below are summaries of options granted under each plan:
Loan shares
Grant 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
2020
25-Sep-08 $0.90
08-May-13 $2.03
$0.90
$2.03
33,645
129,744
25-Sep-14 $1.25 - $1.65
$2.30
8,668,207
10-Mar-15 $2.30
22-Apr-15
$2.30
2019
25-Sep-08 $0.90
08-May-13 $2.03
$2.30
$2.30
$0.90
$2.03
250,000
5,000,000
33,645
129,744
25-Sep-14 $1.25 - $1.65
$2.30
9,307,311
10-Mar-15 $2.30
22-Apr-15
$2.30
$2.30
$2.30
330,000
5,200,000
-
-
-
-
-
-
-
-
-
-
-
-
(33,645)
(129,744)
(679,162)
(910,809)
-
(250,000)
(5,000,000)
-
-
-
-
-
-
-
-
(639,104)
(80,000)
(200,000)
-
-
-
-
-
-
-
-
-
-
-
-
7,078,236
-
-
33,645
129,744
8,668,207
250,000
5,000,000
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
Options
Expected
vesting
date
Exercise
price
Grant date
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
option
not
exercised
Number
Number
Number
Number
Number
Number
2020
22-Apr-15 -
$2.30
$2.30
700,000
10-Nov-15 30-Sep-18 $3.06
$3.06
995,000
19-Feb-16 30-Sep-18 $3.06
$3.06
400,000
-
-
-
(700,000)
(995,000)
(400,000)
5-Sep-16
30-Sep-19 $3.80
$3.80 1,000,000
- (1,000,000)
4-Nov-16
30-Sep-19 $3.60
$3.60 2,740,000
- (2,740,000)
17-Feb-17 30-Sep-19 $3.60
$3.60
880,000
-
(880,000)
08-Nov-17 30-Sep-20 $4.18
$4.18 2,250,000
- (1,695,000)
22-Feb-18 30-Sep-20 $4.18
$4.18
632,000
24-Aug-18 30-Sep-20 $4.18
$4.18
300,000
-
-
(632,000)
(150,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
555,000
-
150,000
8-Jan-19
30-Sep-21 $2.54
$2.54 2,520,000
- (1,280,000)
- 1,240,000
11-Feb-19 30-Sep-21 $2.54
$2.54 1,160,000
- (1,160,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
31-May-19 23-May-20 $1.20
$1.20 1,690,822
24-May-19 24-May-22 $1.20
$1.20 9,204,547
-
-
(241,546)
(433,092)
- 1,016,184
-
- 9,204,547
18-Jul-19
17-Jul-22
$1.60
$1.60 3,448,275
- (1,091,954)
- 2,356,321
27-Nov-19 27-Nov-22 $1.63
4-Apr-20
30-Sep-21 $0.75
4-Apr-20
30-Sep-21 $0.85
2019
$1.63
$0.75
$0.85
- 14,117,344 (1,932,786)
- 12,184,558
- 12,361,635
(204,402)
- 12,157,233
- 14,452,206
238,970)
- 14,212,236
22-Apr-15 -
$2.30
$2.30
775,000
-
(75,000)
10-Nov-15 30-Sep-18 $3.06
$3.06 3,455,000
- (2,460,000)
19-Feb-16 30-Sep-18 $3.06
$3.06 1,625,000
- (1,225,000)
-
-
-
995,000
400,000
-
700,000
5-Sep-16
30-Sep-19 $3.80
$3.80 1,000,000
-
-
- 1,000,000
4-Nov-16
30-Sep-19 $3.60
$3.60 4,210,000
- (1,470,000)
- 2,740,000
17-Feb-17 30-Sep-19 $3.60
$3.60 1,760,000
-
(880,000)
-
880,000
08-Nov-17 30-Sep-20 $4.18
$4.18 3,640,000
- (1,390,000)
- 2,250,000
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
-
-
(632,000)
-
-
-
632,000
300,000
8-Jan-19
30-Sep-21 $2.54
11-Feb-19 30-Sep-21 $2.54
31-May-19 23-May-20 $1.20
24-May-19 24-May-22 $1.20
18-Jul-19
17-Jul-22
$1.60
$2.54
$2.54
$1.20
$1.20
$1.60
- 4,100,000 (1,580,000)
- 2,520,000
- 2,320,000 (1,160,000)
- 1,160,000
- 1,690,822
- 9,204,547
- 3,448,275
-
-
-
- 1,690,822
- 9,204,547
- 3,448,275
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
122 - 123
Rights
Grant date
Expected
vesting date
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
option
not exercised
Number
Number
Number
Number
Number
Number
2020
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
252,500
92,500
321,000
143,000
625,000
158,000
200,000
08-Jan-19
30-Sep-21
1,180,000
11-Feb-19
30-Sep-21
31-May-19
31-May-20
27-Nov-19
27-Nov-20
27-Nov-19
15-Nov-21
9-Dec-19
9-Dec-19
4-Apr-20
4-Apr-21
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
290,000
312,500
-
-
-
-
835,000
370,000
479,000
286,000
08-Nov-17
30-Sep-20
1,050,000
316,000
200,000
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
(i) Fair value of options granted
-
-
-
-
-
-
-
-
-
-
(252,500)
(92,500)
(321,000)
(143,000)
(467,500)
(158,000)
-
(620,000)
(290,000)
-
-
-
-
-
-
-
-
-
(44,642)
(218,572)
-
-
-
-
157,500
-
200,000
560,000
-
-
-
-
-
-
-
-
-
-
-
49,286
461,986
(33,438)
295,268
(88,328)
-
-
428,548
206,940
368,898
-
(368,898)
243,898
(243,898)
-
-
-
-
-
-
-
(582,500)
(277,500)
(158,000)
(143,000)
(425,000)
(158,000)
-
-
-
-
1,820,000
(640,000)
580,000
(290,000)
312,500
-
-
-
252,500
92,500
321,000
143,000
625,000
158,000
200,000
1,180,000
290,000
312,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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:
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
e
t
a
d
t
n
a
r
G
e
p
y
t
d
r
a
w
A
t
s
e
t
t
s
r
i
F
e
t
a
d
g
n
i
t
s
e
V
e
t
a
d
e
t
a
d
y
r
i
p
x
E
e
c
i
r
p
e
r
a
h
S
t
n
a
r
g
t
a
i
e
s
c
r
e
x
E
e
c
i
r
p
4
Apr
2020
4
Apr
2020
4
Apr
2020
9
Dec
2019
27
Nov
2019
27
Nov
2019
27
Nov
2019
18
Jul
2019
31
May
2019
31
May
2019
24
May
2019
11
Feb
2019
11
Feb
2019
08
Jan
2019
08
Jan
2019
08
Jan
2019
Options Options
Rights
Rights
Options
Rights
Rights
Options
Rights
Options
Options
Options
Rights
Options
Rights
Rights
N/A N/A
N/A
N/A
30
Sep
2022
30
Sep
2021
30
Sep
2020 N/A
N/A
N/A
N/A
30
Sep
2021
30
Sep
2021
30
Sep
2021 N/A
30
Sep
2021
30
Sep
2021
30
Sep
2021
4
Apr
2020
9
Dec
2019
27
Nov
2022
27
Nov
2021
27
Nov
2020
18
Jul
2022
17
Nov
2019
17
Nov
2019
23
May
2022
30
Nov
2021
30
Nov
2021
30
Nov
2021
30
Nov
2021
30
Nov
2021
18
Jul
23
31
May
21
31
May
21
23
May
23
08
Jan
24
08
Jan
24
08
Jan
24
08
Jan
24
08
Jan
24
$0.65 $0.65 $0.65 $1.61 $1.59 $1.59 $1.59 $1.49 $1.12 $1.12 $0.91 $2.40 $2.40 $2.43 $2.43 $2.43
$0.75 $0.85 Nil
Nil
$1.63 Nil
Nil
$1.60 Nil
$1.20 $1.20 $2.54 Nil
$2.54 Nil
Nil
d
e
t
c
e
p
x
E
e 2
f
i
l
years
2
years
1
year N/A
3.5
years
2
years
1
year
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
y
t
i
l
i
t
a
o
V
l
e
t
a
r
t
s
e
r
e
t
n
i
e
e
r
f
k
s
R
i
.
)
a
p
(
d
e
y
i
l
d
n
e
d
v
D
i
i
57.30%57.30% -
40%
-
-
-
50%
50%
50%
50%
27%
27%
27%
27%
27%
0.24% 0.24% 0.24% 0.65% 0.65% 0.65% 0.65% 0.91% 1.12% 1.12% 1.12% 1.64% 1.64% 1.88% 1.88% 1.88%
5.05% 5.05% -
-
5.05% 5.05% 5.05% 2.60% 2.60% 2.60% 2.60% 5.71% 5.71% 5.67% 5.67% 5.67%
r
i
a
f
d
e
s
s
e
s
s
a
e
g
a
r
e
v
A
t
n
e
m
u
r
t
s
n
i
r
e
p
e
u
a
v
l
$0.14 $0.12 $0.65 $1.61 $0.31 $1.51 $1.59 $0.43 $1.12 $0.20 $0.22 $0.24 $1.64 $0.27 $2.07 $1.73
N/A: Not Applicable
124 - 125
(ii) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period as part of employee benefit expense
were as follows:
Awards issued to employees of controlled entities during the year
Consolidated
2020
$’000
5,984
2019
$’000
2,238
(iii) Terms and conditions of Share Schemes
The share based payments issued are subject to vesting conditions described above. 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
2020
$’000
2,189
105
-
60
2,582
4,936
2019
$’000
3,333
143
450
72
760
4,758
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
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.
126 - 127
Consolidated
2020
$’000
2019
$’000
(18,039)
(19,698)
8,838
110
7,015
401
27,857
21,873
158,206
158,206
176,972
167,797
(19,698)
(5,939)
2,153
(494)
(19,655)
5,896
(18,039)
(19,698)
21,873
19,635
Reconciliation of reserves
Hedging reserve - cash flow hedges (a)
Treasury reserve
Foreign currency translation reserve
Share based payments reserve (b)
Dividend reserve (c)
Total reserve
Movements in reserves
(a) Hedging reserve - cash flow hedges
Balance at 1 October
Revaluation
Deferred tax
Balance as at 30 September
(b) Share based payments reserve
Balance at 1 October
Awards issued to employees of controlled entities during the year
5,984
2,238
Balance at 30 September
27,857
21,873
(c) Dividend reserve
Balance at 1 October
Transfer from retained earnings
Dividend paid
Balance at 30 September
158,206
-
-
-
183,777
(25,571)
158,206
158,206
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
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
Reserve
Retained earnings
Profit/(loss) for the year
Consolidated
2020
$’000
2019
$’000
158
299
596,412
702,197
596,570
702,496
(9,231)
(8,043)
(167,007)
(280,238)
(176,238)
(288,281)
654,765
654,765
85,098
76,189
(319,531)
(316,739)
420,332
414,215
(2,792)
(316,739)
(iii) Guarantees entered into by the parent entity
As at 30 September 2020 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, Car Insurance Pty Limited, FleetPlus Holdings Pty Limited, Fleet Choice
Pty Ltd, FleetPlus Pty Limited, FleetPlus Novated Pty Limited, PackagePlus Australia Pty Limited, Eclipx
Insurance Pty Ltd, CarInsurance.com.au 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 2020 or 2019. For information
about guarantees given by the parent entity, see above.
6.3 Related party transactions
(i) Controlling entity
The parent entity of the Group is Eclipx Group Limited.
128 - 129
(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
FP Turbo Warehouse Trust 2014-1 (Australia)
PLS Notes (Australia) Pty Ltd
Fleet Partners Franchising Pty Ltd
Fleet Holding (Australia) Pty Ltd
Eclipx Insurance Pty Ltd
Fleet Partners Pty Ltd
CarInsurance.com.au Pty Ltd
FleetPlus Holdings Pty Limited
Car Insurance Pty Ltd
FleetPlus Pty Ltd
CLFC Pty Ltd (a)
FleetPlus Novated Pty Ltd
CarLoans.com.au Pty Ltd (a)
PackagePlus Australia Pty Ltd
Fleet Choice Pty Ltd
CLFC Media Holdings Pty Ltd (a)
Accident Services Pty Ltd
Eclipx Commercial Pty Ltd
FleetPlus Asset Securisation Pty Ltd (c)
Right2Drive Pty Ltd (b)
Anrace Pty Ltd (b)
FP Turbo Government Lease Trust 2016-1
Eclipx MMF Finance Pty Ltd
FP Turbo Series 2016-1 Trust
Eclipx - MIPS Member Finance Trust
New Zealand
FleetPlus Ltd (NZ)
CarLoans.co.nz Ltd (a)
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
FPNZ Warehouse Trust 2015-1
PLS Notes (NZ) Ltd
FP Ignition 2017 Warehouse Trust
Right2Drive (New Zealand) Ltd (b)
FP Ignition 2017 B Trust
Eclipx NZ Ltd
Eclipx Fleet Holding (NZ) Ltd
(a) On 6 May 2020, the Group completed the 100% disposal of CLFC Pty Ltd, CarLoans.com.au Pty Ltd, CLFC
Media Holdings Pty Ltd and Carloans.co, nz Ltd.
(b) On 6 August 2020, the Group completed the 100% disposal of Right2Drive Pty Ltd, Anrace Pty Ltd and
Right2Drive (New Zealand) Ltd.
(c) The Group does not have control of FleetPlus Asset Securisation Pty Ltd.
(iii) Transactions with other related parties
Except for the matters disclosed above, there were no material transactions with other related parties.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
6.0 Other (continued)
6.4 Government subsidies
At the time of the announcement of the government subsidies the Group worked with its advisors to
assess its eligibility under the schemes. Where the Group met the requirements, it applied for the available
government subsidies. The Group was able to retain all its employees and no staff were furloughed as a
result of COVID-19.
While not a requirement under JobKeeper the Group’s actual trading performance was tested against the
estimated turnover on a monthly basis and the Group stopped making claims under the scheme where
actual performance was better than estimated. For the year ended 30 September 2020 the Group received
the following government subsidies.
Subsidy name
JobKeeper Payment
Country
Australia
COVID-19 Wage Subsidy
New Zealand
Continuing
operations
Discontinued
operations
2020
$’000
2,022
640
2,662
2020
$’000
1,733
94
1,827
The subsidies have been accounted for as a reduction to employee benefit expense in the Statement of Profit
or Loss and Other Comprehensive Income.
130 - 131
6.5 Remuneration of auditors
During the year the following fees were paid or payable for services provided by the auditor of the Group.
Consolidated
2020
$
2019
$
(a) Audit and assurance services
Audit Services
KPMG Australian firm:
Audit and review of financials
1,029,145
1,502,809
(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
6.6 Deed of cross guarantee
-
-
968,008
62,259
81,298
353,488
81,298
1,383,755
1,110,443
2,886,564
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, Car Insurance Pty Limited,
FleetPlus Holdings Pty Limited, Fleet Choice Pty Ltd, FleetPlus Pty Limited, FleetPlus Novated Pty Limited,
PackagePlus Australia Pty Limited, Eclipx Insurance Pty Ltd, CarInsurance.com.au 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, pursuant to ASIC Corporations
(Wholly Owned Companies) Instrument 2016/785, the wholly owned entities have been relieved from
the Corporations Act 2001 requirements for preparation, audit and lodgement of financial reports, and
Directors’ reports.
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’.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020
Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
6.0 Other (continued)
6.6 Deed of cross guarantee (continued)
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
Consolidated
2020
$’000
2019*
$’000
451,887
329,298
(288,280)
(158,329)
(36,323)
(35,926)
Net operating income before operating expenses and impairment charges
127,284
135,043
Impairment losses on loans and receivables
Software Impairment
Other Intangible Impairment
Fixture and fittings Impairment
Total impairment
Employee benefit expense
Depreciation and amortisation expense
Operating overheads
Total overheads
Operating finance costs
Profit/(loss) before income tax
Income tax expense
Profit/(loss) for the year from continuing operations
Discontinued operations
Profit/(loss) for the year, net of tax
Other comprehensive income/(loss), net of tax
Total comprehensive income/(loss) for the year
* Comparatives have been re-presented to reclassify CarLoans to discontinued operations.
(1,300)
(1,304)
-
(11,547)
(398)
-
-
(965)
(1,698)
(13,816)
(50,430)
(45,084)
(9,464)
(9,340)
(23,342)
(86,427)
(83,236)
(140,851)
(18,601)
(17,427)
23,749
(37,051)
(7,051)
2,884
16,698
(34,167)
(9,421)
(327,905)
7,277
(362,072)
1,815
9,092
(11,179)
(373,251)
132 - 133
Set out below is a consolidated statement of financial position as at reporting date of the Closed Group.
ASSETS
Cash and cash equivalents
Restricted cash and cash equivalents
Trade and other receivables
Asset held for sale
Inventory
Finance leases
Consolidated
2020
$’000
2019
$’000
33,968
74,788
107,758
102,908
56,311
-
9,401
55,488
41,516
21,267
338,608
366,672
Operating leases reported as property, plant and equipment
495,899
563,384
Property, plant and equipment
Receivables - advances to related parties
Deferred tax assets
Right-of-use assets
Intangibles
Total assets
LIABILITIES
Trade and other liabilities
Provisions
Derivative financial instruments
Liabilities held for sale
Other
Borrowings
Lease liabilities
Payable - advances from related parties
Deferred tax liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained earnings
Total equity
2,948
6,991
151,950
173,290
26,620
37,563
7,502
-
348,377
350,423
1,579,342
1,794,290
85,224
68,218
7,582
8,169
18,923
22,231
-
-
3,457
2,828
960,748
1,180,755
8,651
16,870
9,563
-
15,401
38,597
1,107,561
1,339,656
471,781
454,634
654,765
654,765
171,808
161,938
(354,792)
(362,069)
471,781
454,634
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Notes to the Financial Statements (continued)
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
6.0 Other (continued)
6.7 Reconciliation of cash flow from operating activities
Profit/(loss) 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
Net gain on sale of non-current assets
Hedging (gain) / loss
Exchange rate variations on New Zealand cash and cash equivalents
Consolidated
2020
$’000
2019
$’000
18,205
(341,457)
12,025
294,104
193,996
212,050
2,692
4,428
398
5,984
321
2,920
1,281
61,640
2,238
485
(25,057)
(21,039)
(1,258)
(280)
2,314
212
Net cash inflow from operating activities before change in assets and liabilities
211,454
214,748
Change in operating assets and liabilities:
Decrease/(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
28,004
(6,143)
178,463
209,565
(2,413)
(11,963)
3,598
(22,867)
(1,512)
(775)
(443)
(335)
416,819
382,562
6.8 Events occurring after the reporting period
There were no matters or circumstances that 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.
E CLIPX GROUP LIMITE D | ANN UAL R EPO RT 202 0
134 - 135
Directors’ Declaration
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
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 34 to 93
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 2020 and of its
performance for the financial year ended on that date; and
ii. Complying with Australian Accounting Standards (including the Australian Accounting Interpre-
tations) 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
6.6 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 Corporations (Wholly owned Companies) Instrument 2016/785.
(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 2020.
(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
Kerry Roxburgh
Chairman
Sydney
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 finan-
cial position as at 30 September 2020 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:
Consolidated Statement of financial position as at
30 September 2020;
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 ac-
counting policies; and
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 for 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 (including Independence Standards) (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 goodwill
Setting of vehicle residual values
Revenue recognition in relation to mainte-
nance income
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 global organisation of independent member firms affiliated with
KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are
trademarks used under license by the independent member firms of the KPMG global organisation.
Liability limited by a scheme approved under Professional Standards Legislation
136 - 137
Valuation of goodwill ($440.3m)
Refer to Note 3.7 Intangibles to the Financial Report
The key audit matter
How the matter was addressed in our audit
A key audit matter was the Group’s annual testing of
goodwill for impairment, given the size of the balance
(being 22% of total assets) and the higher estimation
uncertainty continuing from the business disruption
impact of the COVID-19 global pandemic. We focused
on the significant forward-looking assumptions the
Group applied in their value in use models, including:
forecast cash flows, growth rates and terminal
growth rates – the Group has experienced busi-
ness disruption and competitive market conditions
in the current year, as a result of COVID-19. This
impacted the Group through lower levels of new
business writings as a result of increased lease
extensions, decreased demand for new leases and
global supply chain disruption, impacting brokerage
income. Credit impairments increased due to re-
vised weighting of the impairment model’s multiple
economic scenarios (MES) to reflect uncertainty
surrounding the effect from COVID-19. Demand for
second-hand vehicles increased reducing inven-
tory and increasing end of lease income. These
conditions and the uncertainty of their continuation
increase the possibility of goodwill being impaired,
plus the risk of inaccurate forecasts or a signifi-
cantly wider range of possible outcomes for us to
consider. We focused on the expected rate of re-
covery for the Group and what the Group considers
as their future business model when assessing the
feasibility of the Group’s forecast cashflows; 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.
In addition to the above, the carrying amount of the
net assets of the Group exceeded the Group’s market
capitalisation at year-end, increasing the possibility
of goodwill being impaired. This further increased our
audit effort in this key audit area.
We involved valuation specialists to supplement our
senior audit team members in assessing this Key
Audit Matter.
Our procedures included:
We assessed the Group’s determination of CGU
assets for consistency with the assumptions
used in the forecast cash flows and the require-
ments of the accounting standards.
We considered the appropriateness of the value in
use method applied by the Group to perform the
annual test of goodwill for impairment against the
requirements of the accounting standards.
We assessed the integrity of the value in use mod-
el used, including the accuracy of the underlying
calculation formulas.
We met with management/those charged
with governance to understand the impact of
COVID-19 to the Group, the impact of government
response programs to the FY20 results and po-
tential future impacts to the Group.
We compared the forecast cash flows contained
in the value in use model to the Group’s budget
approved by the Board.
We challenged the Group’s cash flow forecast and
growth assumptions, including those relating to
the ability to write new business going forward
to offset the reduction in the current period and
COVID-19 recovery period using our knowledge
of the Group. We also used our knowledge of the
Group’s industry and past performance including
under COVID-19 conditions, industry growth pro-
jections and inflation expectations across differ-
ent geographies to assess the cash flow forecast.
We assessed the accuracy of previous Group
forecasts to inform our evaluation of forecasts
incorporated in the model.
We considered the sensitivity of the model by
varying key assumptions, such as forecast growth
rates, terminal growth rates and discount rates,
within a reasonably possible range. We consid-
ered the interdependencies of key assumptions
when performing the sensitivity analysis and what
the Group consider to be reasonably possible.
We did this to identify those CGUs at higher risk
of impairment and those assumptions at higher
risk of bias or inconsistency in application and to
focus our further procedures.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Independent Auditor’s Report
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
Valuation of goodwill ($440.3m) (cont.)
How the matter was addressed in our audit
(cont.)
Working with our valuation specialists we chal-
lenged the Group’s growth assumptions in light of
the expected continuation of uncertainty of busi-
ness disruption. We compared forecast growth
rates and terminal growth rates to authoritative
published studies of industry trends and expecta-
tions, and considered differences for the Group’s
operations.
Working with our valuation specialists we
independently developed a discount rate range
considered comparable using publicly available
market data for comparable entities, adjusted by
risk factors specific to the Group and the industry
it operates in.
Working with our valuation specialists we as-
sessed an appropriate takeover premium to be
applied to the current market capitalisation and
compared that to the total Group value-in-use
premium above the market capitalisation as at re-
porting date. We compared the market capitalisa-
tion at and around reporting date to the carrying
value of net assets of the Group.
We assessed the disclosures in the Financial
Report using our understanding of the Group ob-
tained from our testing against the requirements
of the relevant accounting standards.
138 - 139
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 Property, plant and equipment 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 im-
pairment; and
the timing of revenue recognition across the term
of a lease may be affected by setting different
residual values 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 testing as well as
the robustness of the residual value setting 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, in particular how the economic impacts
of the COVID-19 pandemic may alter residual
values and the adequacy of the Group’s overlay to
address this impact;
periodical future lease-related fee cash flow as-
sumptions; 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 and testing a sample
of key controls over the Group’s residual valuation
process, such as the monthly review and approval
of residual value changes by senior management.
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. The assessment is based
on the expected timing and future condition of
returned vehicles applied in the Group’s vehi-
cle impairment model, including the economic
impact of COVID-19 on the extension of leases
and comparing the estimated cash flows to the
historical cash flow experience for a sample of
previous leases.
Assessing the forecast sales prices ascribed to
vehicles at the end of their lease and the associat-
ed cash flows against recent prices achieved and
trends in the market.
Assessing the adequacy of the Group’s COVID-19
overlay to address the economic impact of the
COVID-19 pandemic and how this reflects the
relationship between current sales prices of vehi-
cles and forecast sales prices.
Assessing the Group’s ability to forecast vehicle
residual values by selecting a statistical sample of
vehicles disposed of during the year. We com-
pared the sale price achieved to sales invoices for
accuracy, and then compared it to the recorded
written down values as assessed in prior periods,
enabling us to assess the ability of the Group to
accurately estimate values of assets forecast into
the end of the lease term.
Comparing a sample of the current recorded
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 2020 Independent Auditor’s Report
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
Revenue recognition in relation to maintenance and management income ($99.9m)
Refer to Note 2.3 Revenue to the Financial Report
The key audit matter
How the matter was addressed in our audit
Maintenance income, which is a component of
maintenance and management income presented in
Note 2.3 of the financial report, includes a high level
of estimation and accounting complexity. This area
is a Key Audit Matter due to increased audit effort
arising from:
Stage of completion accounting which inherently
requires judgement by the Group to determine
where in the lifecycle of maintenance the vehicle
is at reporting date, along with potential re-estima-
tions of total lifecycle maintenance.
Increased estimation uncertainty particularly in
forecasting the timing and cost of lifetime main-
tenance services, due to the recent reduction in
maintenance spend of customers, likely from
the economic impacts of the COVID-19 pandem-
ic, compared to historic patterns. This includes
the adequacy of the Group’s overlay to address
these impacts.
We focused on the Group’s 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.
Our procedures included:
Assessing the Group’s revenue recognition poli-
cies against relevant accounting standards.
Recalculating and assessing the Group’s esti-
mates of the stage of completion of the contract-
ed maintenance for a sample of leased assets.
We checked the mathematical accuracy of the
stage of completion model. For a sample of
maintenance leases, we checked the average age,
term and usage assumptions in the model for
consistency with the servicing and maintenance
profile, which is based on internal lease portfolio
statistics of the vehicle type. The completeness
and accuracy of these statistics of the internal
lease portfolio was assessed through the testing
of relevant IT application controls.
Challenging the Group’s judgement in determining
the key assumptions by comparing the average
cost of lifetime maintenance activities performed
to publicly available market costs of servic-
ing vehicles.
Assessing the reasonableness of the assump-
tions associated with the COVID-19 maintenance
overlay by comparing the profit margins on
maintenance work performed to historical mainte-
nance profit margins.
We assessed the disclosures in the financial
report against the requirements of the accounting
standards.
140 - 141
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 About Eclipx Group, The Chairman’s Letter, Chief Executive Officer’s Letter,
Business Overview, Year in Review, Environmental Social and Governance, 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 mis-
statement, 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: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our Auditor’s Report.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 Independent Auditor’s Report
F O R T H E Y E A R E N D E D 3 0 S E P T E M B E R 2 0 2 0
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report of
Eclipx Group Limited for the year ended 30
September 2020, 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 pages 19 to 33 of the Directors’ report for the year
ended 30 September 2020.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
KPMG
KPMG
Dean Waters
Partner
Melbourne
Peter Zabaks
Partner
Sydney
10 November 2020
10 November 2020
142 - 143
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 7 December 2020.
Distribution of holders of quoted equity securities
Fully paid ordinary shares
Range of holdings
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
TOTAL
Number of
shareholders
% of
shareholders
Ordinary shares
held
% of ordinary
shares
2,532
1,280
529
501
73
51.52%
456,222
26.04%
3,521,694
10.76%
4,093,662
10.19%
13,205,782
0.14%
1.10%
1.28%
4.13%
1.49%
298,359,333
93.34%
4,915
100%
319,636,693
100%
Distribution of holders of unquoted equity securities
LTI Options
Range of holdings
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
TOTAL
LTI Rights
Range of holdings
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
TOTAL
Number of
option holders
% of option
holders
Options held
% of options
0
2
1
5
25
33
0%
6.06%
3.03%
0
10,000
10,000
15.15%
140,000
0%
0.02%
0.02%
0.27%
75.76%
52,233,987
99.69%
100%
52,393,987
100%
Number of
option holders
% of option
holders
Options held
% of options
0
4
2
19
2
27
0%
14.81%
7.41%
0
15,000
20,000
0%
1.18%
1.58%
70.37%
636,940
50.25%
7.41%
100%
595,634
46.99%
1,267,574
100%
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020
Shareholder Information
Substantial Shareholder Notices (as disclosed to the ASX)
Shareholders
Ordinary shares
held
% of issued
shares
Date of notice
Victorian Funds Management Corporation
15,987,221
5.002
30.11.2020
Yarra Funds Management Limited ACN 005 885 567 (YFM); Yarra
Capital Management Holdings Pty Ltd ACN 614 782 795 (YCMH);
Yarra Management Nominees Pty Ltd ACN 616 681 068 (YMN); AA
Australia Finco Pty Ltd ACN 614 781 172 (Finco); Ta Sp Australia
Topco Pty Ltd ACN 612 486 452 (Topco); TA Universal Investment
Holdings Ltd (Universal)
40,368,678
12.6296
8.10.2020
H.E.S.T Australia Limited as Trustee for Health Employees
Superannuation Trust Australia
16,008,693
5.01
22.09.2020
Vinva Investment Management
Mitsubishi UFJ Financial Group, Inc.
JPMorgan Chase & Co. and its affiliates
H.E.S.T Australia Limited as Trustee for Health Employees
Superannuation Trust Australia
Renaissance Smaller Companies Pty Ltd
Macquarie Group Limited (‘MQG’); and its controlled bodies
corporate listed in Annexure A
16,223,222
16,225,941
21,996,798
16,495,696
16,471,438
19,813,096
5.08
5.08
6.88
5.16
5.15
6.19
3.09.2020
4.06.2020
29.05.2020
15.05.2020
24.03.2020
2.03.2020
Commonwealth Bank of Australia ACN 123 123 124 (CBA) and its
related bodies corporate listed in annexure A
16,023,374
5.01
14.02.2020
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
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
CS THIRD NOMINEES PTY LIMITED
ARGO INVESTMENTS LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
BNP PARIBAS NOMINEES PTY LTD
BNP PARIBAS NOMS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
SOLIUM NOMINEES (AUSTRALIA) PTY LTD
G HARVEY NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
GMCM INVESTMENTS PTY LTD
MR IRWIN DAVID KLOTZ
UBS NOMINEES PTY LTD
NETWEALTH INVESTMENTS LIMITED
CITICORP NOMINEES PTY LIMITED
YOOGALU PTY LTD
BRISPOT NOMINEES PTY LTD
07 Dec 2020
81,874,056
59,806,790
40,616,586
21,326,889
14,484,576
12,086,416
7,309,728
5,816,216
5,609,791
4,398,061
4,285,394
3,947,616
3,636,329
3,539,118
3,538,954
3,452,251
3,072,251
2,352,000
1,630,434
1,302,956
Total
284,086,412
Balance of register
35,550,281
144 - 145
%IC
25.61
18.71
12.71
6.67
4.53
3.78
2.29
1.82
1.76
1.38
1.34
1.24
1.14
1.11
1.11
1.08
0.96
0.74
0.51
0.41
88.88
11.12
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 1,908.
281 shares comprise a marketable parcel at Eclipx Group’s closing share price of $1.78.
Securities subject to escrow arrangements
No securities remain subject to escrow arrangements.
On-market buy-back
There is no current on-market buy-back in relation to Eclipx Group securities.
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 On-market purchases
During FY2020, the Company purchased:
85,657 ordinary shares on-market for the purposes of its Non-Executive Director Salary Sacrifice Share
Rights Plan, at an average price per ordinary share of $1.41; and
370,635 ordinary shares on-market for the purposes of its Employee Share Scheme, at an average price
per ordinary share of $1.40.
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.
Statement of Profit or Loss and Other Comprehensive Income FOR THE YEAR ENDED 30 SEPTEMBER 2020 146 - 147
ECLIPX GROUP LIMITED | ANNUAL REPORT 2020 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