FlexiGroup Limited

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—
Annual Report 2015

 
 
 
 
Annual Report Contents

Directors’ Report 

Corporate Governance Statement 

Auditor’s Independence Declaration 

Annual Financial Statements 

Notes to the Financial Statements 

Directors’ Declaration 

Independent Auditor’s Report 

Shareholder Information 

Corporate Directory 

2

29

40

41

47

91

92

94

96

1

 FLEXIGROUP ANNUAL REPORT 2015AS AT 30 JUNE 2015

 Directors’ Report

Your Directors present their report on the consolidated entity 
(referred to hereafter as the Group or Company) consisting of 
FlexiGroup Limited (“the Company”) and the entities it controlled 
at the end of, or during, the year ended 30 June 2015.

Directors

The following persons were Directors of FlexiGroup Limited during 
the year and up to the date of this report except otherwise stated: 

Chris Beare (resigned 10 August 2015) 

Tarek Robbiati (resigned 7 August 2015) 

Andrew Abercrombie

Rajeev Dhawan

R John Skippen

Anne Ward (resigned 10 August 2015) 

Company secretary

Matthew Beaman(*) (resigned 23 April 2015)

Julianne Lyall-Anderson (appointed 23 April 2015)

(*) Matthew Beaman continues in his role as Group General Counsel

Principal activities

The principal activities during the year continued to be the 
provision of:
 ●
 ● No Interest ever loans
Interest free cards
 ●

Lease and rental financing services

During the year, the Group acquired Telecom Rentals Limited 
(“TRL”), a wholly owned subsidiary of Spark New Zealand Limited. 
The acquisition will enable the Company to consolidate its 
distribution footprint and provide significant scale for our existing 
business in New Zealand. Other than the acquisition of TRL, there 
were no significant changes in the nature of activities that occurred 
during the year. Also refer below on Key Developments section of 
the Operating and Financial Review.

OPERATING AND FINANCIAL REVIEW

The Board presents its 2015 Operating and Financial Review, 
which is designed to provide shareholders with a clear and concise 
overview of FlexiGroup’s operations, financial position, business 
strategies and prospects for future financial years. The review 
complements the financial report.

FLEXIGROUP’S OPERATIONS

Business model
FlexiGroup is a diversified financial services group providing no 
interest ever, leasing, vendor finance programs, interest free and 
Visa cards, managed print services, mobile broadband, lay-by and 
other payment solutions to consumers and businesses.

Through our network of over 16,000 merchant, vendor and retail 
partners the Group has extensive access to four key markets, 
Business to Consumer, Business to Business, Retail to Consumers 
(and small business customers) and online. Our success as a 
business is linked to the success of our merchant, vendor and retail 
partners. FlexiGroup leverages its core strengths which include a 
highly developed marketing and sales function, a highly efficient 
call centre and strong funding sources to increase our volumes and 
drive value for the business.

FlexiGroup primarily operates through five core business areas, 
which span: 
 ● No Interest Ever products and cheque guarantee services 

 ●

 ●

 ●

 ●

offered through diverse merchants by Certegy.
The Interest Free Cards business offers personal finance 
products which include in store finance or a Visa card tailored 
to suit the needs of the Australian market.
Consumer and SME (Leases) which offers leasing products 
through key partners including major Australian retailers. 
The Consumer and SME business also includes Blink which 
offers mobile broadband services.
The New Zealand business offers leasing products primarily 
to small and medium sized businesses and was identified 
as a separate reportable segment in financial year 2014. 
The recently acquired TRL business is reported as part of the 
New Zealand segment.
Enterprise offers leases (typically larger sized commercial 
transactions) through vendor programs and direct to medium 
and large businesses. Enterprise was expanded in 2014 
through the acquisition of Think Office Technology (TOT) which 
provides a full suite of office equipment, tailored print services, 
cloud computing solutions and traditional technology services 
throughout regional Queensland.

FlexiGroup operates predominantly within the Australia and 
New Zealand markets within a diverse range of industries including 
home improvement, solar energy, print equipment, fitness, IT, 
electrical appliance, navigation systems, trade equipment and 
point of sale systems.

Receivables origination volumes are a key driver of profitability 
as new receivables create an interest income stream that is 
recognised in future years as customers pay down their debt. 
FlexiGroup targets receivables growth through its sales structures 
and also through its vendor and retail partnerships. Profitability 
is also driven by the level of impairments and controlling cost of 
funds and operating expenses.

2

FLEXIGROUP ANNUAL REPORT 20152015 Operating Results
The table below shows the key operational metrics for the 2015 financial year for FlexiGroup and its segments:

No Interest 
Ever

Interest 
Free Cards

Leasing 
Australia

Leasing  
New Zealand

Enterprise

Unallocated

Group

Summary of Results

2015
$m

2014
$m

2015
$m

2014
$m

2015
$m

2014
$m

2015
$m

2014
$m

2015
$m

2014
$m

2015
$m

2014
$m

2015
$m

2014
$m

Net portfolio income

93.4

85.1

33.6

32.8

89.5

89.4

18.4

14.3

38.3

29.0

Operating expenses

(29.7)

(25.5)

(9.1)

(15.3)

(37.4)

(52.7)

(8.3)

(6.1)

(24.1)

(11.4)

Impairment losses on loans 
& receivables

Amortisation of acquired 
intangible assets 

Impairment of goodwill 
and other intangible assets

Cancelled share 
based payments

(14.4)

(13.5)

(6.7)

(5.3)

(19.6)

(12.3)

(1.0)

(0.6)

(2.8)

(2.4)

(0.1)

(0.3)

 (2.1)

 (1.7) 

(4.1)

(0.5)

–

 – 

 – 

 – 

 – 

 – 

 – 

 – 

 – 

 (12.5) 

 – 

 – 

–

 – 

 – 

 – 

(1.9)

(0.3)

 – 

 – 

 – 

 – 

 – 

 – 

Profit before tax

49.2

45.8

15.7

10.5

28.4

11.4

9.1

7.6

10.5

14.9

Income tax expense

(14.8)

(13.8)

(5.2)

(4.4)

(4.5)

(2.1)

(2.2)

(2.1)

(3.5)

(5.0)

Profit after tax

Adjustments for 
underlying profit(1)

34.4

32.0

10.5

6.1

23.9

9.3

6.9

5.5

7.0

9.9

–

0.3

1.8

 4.9 

2.3

16.6

 0.1 

 0.2 

3.2

0.2

Cash NPAT(ii)

34.4

32.3

12.3

11.0

26.2

25.9

7.0

5.7

10.2

10.1

Basic earnings per share  
(EPS) (cents)

Cash earnings per share 
(Cash EPS) (cents)

Volume ($)

Closing Net Receivables

 – 

 – 

 – 

 – 

 – 

 – 

 – 

 – 

 – 

 – 

 – 

 – 

552

478

507

453

237

232

200

210

180

302

189

326

 – 

 – 

62

166

 – 

 – 

38

66

 – 

 – 

 – 

 – 

105

250

149

263

 – 

 – 

 – 

 – 

 – 

–

–

 – 

–

 – 

 – 

 – 

 – 

 – 

 – 

 –  273.2 250.6

 –  (108.6) (111.0)

 – 

(44.5)

(34.1)

 – 

(7.2)

(2.8)

 – 

 (5.2) 

–

–

 (12.5) 

 (5.2) 

(5.2)  112.9

85.0

 – 

(30.2)

(27.4)

 (5.2)  82.7

57.6

 5.2 

7.4

27.4

 – 

90.1

85.0

 – 

 27.2 

19.0

 – 

 29.6 

28.0

 –  1,136 1,083

 –  1,428 1,318

(i)  Cash NPAT reflects the reported net profit after tax adjusted for items highlighted in Note 3 Segment Information on page 57. The analysis of results below is 
primarily based on Cash NPAT so as to align the information that is given to users of financial reports to the way the Directors view the business and to assist 
better understanding of the Group’s performance. The Directors believe that Cash NPAT is the most appropriate measure of maintainable earnings of the Group 
and therefore best reflects the core drivers and ongoing influences upon those earnings. Cash NPAT is used by the Directors for purposes of providing market 
guidance to shareholders and the market, and is calculated on a consistent basis each year. 

FlexiGroup recorded a statutory profit of $82.7m, an increase of 44% year on year. Cash NPAT was $90.1m, an increase of 6% year on 
year. The increase in statutory profit was driven by the non-recurrence of several one off, non-recurring expenses relating to impairment 
of goodwill and IT software, acquisition of business costs and related integration expenses and strategic review expenses that were 
incurred in prior year and general growth in the business.

Cash EPS increased by 6% to 29.6 cents per share on the prior comparative period, in line with the 6% increase in Cash NPAT in 2015.

The key drivers of the Statutory Profit and Cash NPAT changes in financial year were:
 ● Net portfolio income increased by 9% to $273.2m, underpinned by an 8% increase in receivables. The increase in receivables is driven 
by strong growth in Interest free cards and Certegy, and also due to the acquisition of TRL during the year. The Enterprise business 
saw a 30% decrease in volume primarily driven by internal structural changes that led to a decrease in current year.
Impairment losses increased by 30% to $44.5m. When measured as percentage of average receivables, impairment losses increased 
to 3.3% from 2.7% in prior year. The increase in losses is as a result of a higher portion of the book being consumer which has higher 
losses and the run off of the acquired RentSmart book. 

 ●

 ● Operating expenses decreased by 2% to $108.6m, however, excluding several net one off costs incurred in prior year of circa $14m, 

 ●

expenses increased by 14% driven by the full year consolidation of TOT and Equico.
Sales volume grew by 5% to $1,136m. The New Zealand segment recorded growth of 63% underpinned by the acquisition of TRL and 
organic growth. Increased investment in the Interest Free Cards business has seen significant volume growth of 19% and increased 
card activation. Certegy recorded steady volume growth of 9% with solar volumes remaining stable. The Consumer and SME business 
recorded a 5% decline in volume. Enterprise volume declined due to internal changes that are aimed towards long term sustainability 
for the business.

3

 FLEXIGROUP ANNUAL REPORT 2015DIRECTORS’ REPORT (CONTINUED)

Further details on operating results are provided in the segment 
analysis below. 

 ●

Key developments (incorporating significant changes 
in the state of affairs)

On 30 April 2015, the Company announced the acquisition of 
Telecom Rentals Limited, a wholly owned subsidiary of Spark New 
Zealand Limited for a total Enterprise value of $108.4m, comprised 
of net tangible assets of $95.6m and goodwill of $12.8m. The 
acquisition provides the Company with significant scale for 
the existing New Zealand business and allows the Company to 
penetrate new distribution channels through the Spark Digital 
channel and leveraging the already established Equico brand in 
the education sector. This offers the Company the opportunity to 
tender for all government IT leasing contracts with a wide range 
of partners.

SEGMENT RESULTS ANALYSIS

No Interest Ever (Certegy)
Certegy’s Cash NPAT is $34.4m, an increase of 7% on the prior 
comparative period, driven by:
 ● Net portfolio income increased by 10% to $93.4m 

which was driven by a 6% growth in receivables. Cost 
of funds also reduced by 6% compared to prior year. 
VIP loyalty program initiatives continue to contribute 
significantly to volume growth.
Impairment losses of $14.4m are in line with expectations 
and receivables growth. This reflects the ongoing work 
on Certegy’s risk controls and the effectiveness of new 
collection initiatives.

 ●

 ●

 ● Operating expenses increased by 16.5% to $29.7m, primarily 
driven by costs to support volume growth initiatives, such as 
VIP campaign and direct consumer marketing. 
Sales volume increased by 9% to $552m with solar volumes 
remaining stable. The 9% volume growth in the second 
half of the financial year was supported by higher internal 
and external promotional activity, VIP marketing and new 
sales generation.
Closing receivables increased by 6% to $478m, in line with 
volume growth that was achieved through new relationships 
and industry diversification.

 ●

Interest Free Cards
Interest Free Cards’ Cash NPAT is $12.3m, an increase of 
12% on prior year driven by growth in the receivables book 
of 10%, achieved through the online investment program. 
Other drivers include: 
 ● Net portfolio income increased by 2% to $33.6m, attributable 
to an increase in receivables, lower funding costs and the 
adoption of a new simplified fee structure for new interest 
free accounts.
Impairment losses were $6.7m a 26% increase on prior year. 
The increase reflects the growth in the receivables portfolio. 

 ●

 ● Operating expenses decreased by 41% on prior year to 

$9.1m. The decrease is as a result of pre-tax $5m one off 
integration costs incurred in prior year. Excluding the 
impact of integration costs, expenses are relatively stable 
for the business. 

4

Sales volume increased by 19% to $237m and receivables 
increase to $232m reflect a strong focus towards driving 
interest free volumes through strategic partnerships in 
Retail and Homeowner segments, delivering an uplift in 
interest free volumes of 8%. The launch of new compelling 
card propositions into the Once Credit brand has delivered 
increased card activation, utilisation and card spend. Increased 
investment in cards portfolio management campaigns has 
contributed to 30% uplift in card spend.

Consumer and SME Leasing – Australia (including Ireland)
Cash NPAT was $26.2m, an increase of 1% on prior year, driven by:
 ● Net portfolio income increased by 0.1% to $89.5m. This has 
been driven by improved product yield mix which includes 
the impact of improved end of term processes which are also 
driving increased customer engagement and trade up rates.
Impairment losses increased by 59% to $19.6m, driven by 
higher mix of Consumer within the portfolio and the resulting 
provision increase required in addition to higher losses 
experienced on acquired RentSmart portfolio which is running 
off rapidly.

 ●

 ● Operating expenses decreased by 29% to $37.4m. 

This decrease is due to significant acquisition and integration 
costs of $9.9m pre-tax in prior year compared to $2.5m in 
current year. The company continues to realise cost efficiencies 
as a result of the consolidation of the Manila operations and 
ongoing projects delivered to create operating efficiencies. 
Cost control remains a key area for the company in driving 
profitability.
Sales volume decreased by 5% to $180m. This is a result of 
competition pressures in a challenging SME market. This has 
been partly offset by strong performance within the consumer 
business both in established channel partners and channels 
added through the RentSmart acquisition. This business is 
beginning to see positive return from its digital investment 
both through increasing numbers of transactions, improved 
customer experience and reversing the trend of declining 
average deal sizes.
Closing receivables were $302m, a 7% decrease on prior year. 
This has been impacted by both the declining volumes in SME 
and run off on the acquired RentSmart portfolio.

 ●

 ●

New Zealand Leasing
New Zealand’s Cash NPAT is $7.0m, an increase of 23% on the prior 
comparative period. The increase was driven by:
 ● Net portfolio income increased by 29% to $18.4m which was 

mainly due to full year of Equico income which contributed 
strong end of term performance.
Acquisition of TRL whose results are consolidated from 
May 2015.

 ●

 ●

 ● Operating expenses increased by 36% to $8.3m due to full 
year Equico costs and part year incremental TRL costs and 
costs incurred to drive volume growth.
Sales volume increased by 63% to $62m with growth 
predominantly from lower risk Education and SME segments.
Closing receivables increased by 152% to $166m due to TRL 
acquisition and strong organic growth in existing channels.
Further volume opportunities exist through signing of 
an exclusive agreement with Apple for commercial and 
education leasing.

 ●

 ●

AS AT 30 JUNE 2015FLEXIGROUP ANNUAL REPORT 2015Enterprise
Enterprise’s Cash NPAT of $10.2m represents a 1% increase on the prior comparative period, driven by:
 ● Net portfolio income increased by 32% to $38.3m, largely driven by a full year consolidation of TOT results.
 ●

Impairment losses increased by 17% to $2.8m, however remained flat measured against average net receivables at 1.1%. 
The Enterprise portfolio continues to demonstrate a low impairment loss ratio, largely driven by continued focus on assets with 
higher credit quality.

 ● Operating expenses increased by 111% to $24.1m driven by full year consolidation of TOT.
 ●
 ●

Sales volume decreased by 30% to $105m due to a senior management restructure during the year.
Closing receivables decreased by 5% to $250m, due to the slow volume growth as explained above.  
Volumes are expected to increase in 2016 via new distribution channels and broker programs.

FINANCIAL POSITION AND CASH FLOWS

Set out below is a summary of the financial position of the group.

Summary financial position

Cash at bank

Receivables and customer loans

Inventories

Other assets

Goodwill and intangibles

Total assets

Borrowings

Other liabilities

Total liabilities

Equity

Gearing(ii)

ROE(iii)

Cash inflows from operating activities 

(i)  Gearing is recourse borrowings as a percentage of equity excluding intangible assets.
(ii)  Calculated based on Cash NPAT as detailed on page 3 as a percentage of average equity.

RECEIVABLES

June 2015
$m

June 2014
$m

 130.3 

 1,451.5 

4.2 

5.2 

 195.0 

 1,786.2 

 1,274.5 

 101.2 

 1,375.7 

 410.5 

21%

23%

121.2

 106.6 

 1,347.2 

2.8 

 6.1 

 161.8 

 1,624.5 

 1,132.6 

 106.9 

 1,239.5 

 385.0 

20%

23%

124.3

Receivables (including other debtors) increased by 8% to $1,451.5m. The increase is primarily driven by significant growth in the Interest 
free cards business and the acquisition of TRL in New Zealand. Volume growth of 5% sustained receivables. The Company continues to 
expand its distribution network and the acquisition of TRL has added significant scale, which will see the Company continue to grow 
receivables in the future in a sustainable way.

RETURN ON EQUITY (‘RoE’)

The Company has continued to achieve consistently high returns underpinned by growth in profitability. Increases in equity have been 
complimented by continual earnings accretive acquisitions. The Company continues to have a strong ROE of 23%.

GEARING

FlexiGroup continues to maintain a conservative capital structure with corporate debt gearing of 21% (2014: 20%). The Company 
continues to optimise its capital structure to ensure that its sources of funding maximise shareholder value. Although the leverage ratio 
increased, the level is within the Company’s long term financial strategy. The Company continues to fund value accretive acquisitions 
through a combination of debt, equity and its own cash resources. Non-recourse borrowings are secured against the Company’s 
receivables and the contract terms are matched, with future interest cash flows generally fixed through use of interest rate swaps.

5

 FLEXIGROUP ANNUAL REPORT 2015DIRECTORS’ REPORT (CONTINUED)

CASH FLOWS

Cash inflows from operating activities are steady on prior year, 
with a slight decrease of 2% to $121.2m. The Company continues 
to generate substantial operating cash flows to support its 
investment activities and returns to shareholders.

Cash outflows from investing activities decreased by 49% to 
$97.6m, driven primarily by a reduction in net investments in 
receivables. However over the same period, capital expenditure 
increased by 49% to $26.4m due to expenditure on capital projects 
to support the Company medium to long term strategy. Cash 
outflows due to business combinations reduced by 43% to $21.8m.

Cash inflows from financing activities decreased by 99% to $0.6m, 
driven mainly by a decrease in borrowings and higher dividends 
payment.

FUNDING

FlexiGroup maintains a conservative funding strategy; to retain 
multiple committed funding facilities for all scale businesses, 
combined with an active debt capital markets presence. The Group 
currently has revolving wholesale debt facilities in place with five 
Australian trading banks and a major institutional entity, plus 
numerous institutional investors in its Asset Backed Securities 
(ABS) program.

During the 2015 financial year the Group; 
 ●

completed two ABS issues, the $210m Flexi ABS Trust 2015-1 
in April 2015 and the $285m Flexi ABS Trust 2015-2 in June 
2015, and
implemented an additional $110m funding in New Zealand 
following the acquisition of TRL Limited.

 ●

At balance sheet date the Group had $1,735.5m of wholesale debt 
facilities, with $482.6m undrawn and no indications that facilities 
will not be extended. Wholesale facilities have no bullet repayment 
on maturity, with outstanding balances repaying in line with 
receivables if availability periods were not to be extended. These 
facilities are secured against underlying pools of receivables with 
no credit recourse back to FlexiGroup.

The Group’s $100m of corporate debt facilities were drawn to 
$45m at balance date. These facilities are secured by the assets 
of the Group, and with a maturity date in 2017.

BUSINESS STRATEGIES AND PROSPECTS

FlexiGroup will continue with its growth strategy that is aimed 
at creating and maximising shareholder returns and value.

FlexiGroup continues to be focused on growing receivables and 
profitability through targeting lower risk receivables in the No 
Interest Ever, Interest free cards segments and also expanding 
its footprint in large ticket leases in the Enterprise segment and 
New Zealand. The New Zealand business has become a niche 
growth engine for the Company following the acquisition of TRL. 
The Company will consolidate growth in the Interest free cards 
segment through utilising its available scale as a result of the 
combined Interest Free Cards business. The Company will also 
continue to benefit from accessing new retailer relationships and 
enhancement of distribution channels. TOT acquisition has started 
contributing and the Company will continue leveraging the channel 
to drive growth in the Enterprise business.

6

The company is actively executing its strategy, with $26.4m 
spent during the year on replacing and upgrading core systems 
to support future growth. The Company realises that its future 
growth is hinged on its online capability hence is pursuing the 
digital growth strategy as part of the overall capital expenditure 
program. The company is largely driven by:
 ●
 ●

having a clear strategy as communicated in May 2014, and 
quality of execution, underpinned by wholesale improvements 
in core financial systems and online capability.

Volume

The Company will continue to grow volume by leveraging existing 
merchant relationships and pursuing new sales channels in 
the future. The increased capacity through the acquisition of 
RentSmart has allowed the Company to mitigate headwinds within 
the Consumer and SME business. The New Zealand business 
will benefit from the opportunities provided by the Ministry of 
Education and the Spark Digital channels that result from the 
TRL acquisition.

Additionally, the completion of the consolidation and alignment 
of sales force across the Consumer and SME and Interest free 
cards is expected to drive growth in distribution network through 
leveraging full product range and best practices. The Company 
will continue to drive cost savings through rationalisation of IT 
and operational platforms in the Interest free cards business and 
remove duplication.

Acquisitions

As part of the Company’s growth strategy, FlexiGroup continues 
to look at potential acquisition targets that suit its diversification 
strategy and only considers targets that are value accretive. The 
TRL acquisition completed on 30 April 2015 fits the overall strategic 
and commercial direction that the Company is pursuing and the 
company will continue in that direction.

Innovation

The Company continues to identify underserviced markets as 
part of its overall growth strategy and will look at innovating new 
products to service those markets.

Prospects for future financial years

The business strategies put in place are to ensure that the 
Company continues its growth trajectory in the foreseeable 
future. FlexiGroup has invested in its investment program to 
facilitate generating significant value for its shareholders in future 
years, subject to macro-economic conditions remaining stable. 
The Group will continue to selectively acquire Consumer and 
Commercial finance businesses that provide additional scale in 
existing segments or a highly scalable platform in a new segment 
of the market.

The Company faces a number of risks including inability to achieve 
volume growth targets, availability and cost of funds, deterioration 
of credit quality or impairments and strategy execution risk which 
may impact on its ability to achieve its targets.

AS AT 30 JUNE 2015FLEXIGROUP ANNUAL REPORT 2015Shareholder returns

TSR

Dividends per share (cents)

Cash EPS (cents)

Share price (high)

Share price (low)

Share price (close)

Earnings per share

Basic earnings per share

Diluted earnings per share

Cash earnings per share

Years ended 30 June

2015

(14%)

17.75

29.64

$4.00

$2.70

$2.91

2014

(26%)

16.50

28.04

$4.99

$2.98

$3.17

2013

92%

14.50

25.10

$4.74

$2.55

$4.36

2012

18%

12.50

22.40

$2.65

$1.60

$2.60

2011

76%

11.50

20.00

$2.39

$1.17

$2.07

2015
cents

27.2

27.1

29.6

Dividends on ordinary shares

Final dividend for the year – payable October

Dividends paid during the year

Interim dividend for the year – paid in April

Final dividend for 2014 (PY:2013) – paid in October

Total dividends paid during the year

Total dividends declared for the financial year

2015

2014

cents

9.00

 8.75 

8.50

17.25

17.75

$m

27.40

 26.70 

25.80

52.50

54.10

cents

8.50

 8.00 

7.50

15.50

16.50

2010

73%

7.50

17.50

$1.78

$0.66

$1.38

2014
cents

19.0

18.9

28.0

$m

25.80

 24.80 

22.80

47.10

50.20

The final dividend for 2015 has a record date of 11 September 2015 and is expected to be paid on 16 October 2015. 

Matters subsequent to end of the financial year

No other matter or circumstance has arisen since 30 June 2015 that has significantly affected, or may significantly affect:
a) 
b) 
c) 

the company’s operations in future financial years, or
the results of those operations in future financial years, or
the company’s state of affairs in future financial years.

Environmental regulation

The Group’s operations are not regulated by any significant environmental regulation under a law of the Commonwealth or of a State 
or Territory.

7

 FLEXIGROUP ANNUAL REPORT 2015TAREK ROBBIATI 
(Age 50)

Non-Independent, Executive,  
Chief Executive Officer  
(resigned 7 August 2015)

Experience
Tarek was appointed CEO of FlexiGroup on 
1 November 2012 and commenced work 
at FlexiGroup on 21 January 2013. He was 
appointed a Director of the Company on 
28 January 2013. Prior to joining FlexiGroup, 
from 2009-2012 Tarek was Group Managing 
Director of Telstra International Group and 
Chairman of CSL Ltd, the mobile service 
provider of Telstra International Group 
based in Hong Kong. From 2007-2009, 
Tarek was CEO of CSL Ltd in Hong Kong, 
and prior to that between 2005-2007 he 
was Deputy Chief Financial Officer of Telstra 
Corporation Ltd in Melbourne. On 23 June 
2015, Tarek gave notice of his resignation 
from the Group and he officially resigned 
on 7 August 2015. 

Other current directorships
None

Former directorships in last three years
None

Special responsibilities
Chief Executive Officer

Interests in shares and options
None

ANDREW ABERCROMBIE 
(Age 59)

Founding Director
Non-Independent, Non-Executive

BEc, LLB, MBA

Experience
Andrew became a Director and CEO of 
the original Flexirent business in 1991. 
He was appointed a Director of the public 
Company for the IPO in November 2006. 
Andrew is an experienced commercial and 
tax lawyer and was a founding partner 
in a legal firm operating in Sydney and 
Melbourne. Following several years in 
property investment and tax consulting, he 
co-founded the Flexirent business in 1991 
and was Chief Executive Officer until 2003. 

Other current directorships
None

Former directorships in last three years
None

Special responsibilities
Member of the Nomination Committee

Interests in share and options
76,765,251 ordinary shares in FlexiGroup 
Limited

DIRECTORS’ REPORT (CONTINUED)

INFORMATION ON DIRECTORS

CHRIS BEARE 
(Age 64)

Chairman, Independent, Non-Executive

BSc, BE (Hons), MBA, PhD, FAICD

Experience
Chris was appointed a Director of the 
Company on 1 July 2014 and Chairman on 
23 July 2014. 

Chris has significant experience in 
international business, technology, 
strategy, finance and management and 
as an independent director. Chris joined 
investment bank Hambros Australia in 
1991, became Head of Corporate Finance in 
1994 and joint Chief Executive in 1995. After 
Hambros was acquired by Société Générale 
in 1998 Chris remained a Director of SG 
Australia until 2002. Prior to Hambros, Chris 
was Executive Director of Melbourne based 
Venture Capital firm Advent Management 
Group which he joined in 1987 after various 
roles in Telecom Australia culminating in 
the position of Head of Strategy. Chris has 
strong interests in technology. In 1998 
he helped form Radiata, a technology 
start-up in Sydney and Silicon Valley, and as 
Chair and Chief Executive Officer steered 
it to a successful sale to Cisco Systems in 
2001. He has been a Director of a number 
of other technology companies. Chris is 
also Chairman Saluda Medical Pty Ltd and 
Cohda Wireless Pty Ltd. Chris resigned 
from the Company on 10 August 2015.  

Other current directorships
Chairman DEXUS Property Group  
(ASX: DXS)

Former directorships in last three years
None

Special responsibilities
Chairman of Nomination Committee and a 
Member of Remuneration Committee and 
Audit & Risk Committee.

Interests in shares and options
Nil

8

AS AT 30 JUNE 2015FLEXIGROUP ANNUAL REPORT 2015RAJEEV DHAWAN 
(Age 49)

R JOHN SKIPPEN 
(Age 67)

ANNE WARD 
(Age 55)

Independent, Non-Executive

Independent, Non-Executive, ACA

Independent, Non-Executive

BCom, ACA, MBA

Experience
Rajeev represented Colonial First State 
Private Equity managed funds (“CFSPE”) on 
the Board of Flexirent Holdings Pty Limited 
from February 2003 to December 2004. 
Upon CFSPE’s exit from Flexirent Holdings 
in December 2004, Rajeev continued in an 
advisory capacity to the Flexirent business. 
Currently a partner of Equity Partners, 
Rajeev has 22 years’ venture capital and 
private equity experience and has been a 
Director of a number of listed and unlisted 
portfolio companies.

Other current directorships
None

Former directorships in last three years
None

Special responsibilities
Chair of Remuneration Committee, 
Member of Audit & Risk Committee and 
Nomination Committee.

Interests in shares and options
208,048 ordinary shares in FlexiGroup 
Limited

Experience
John was appointed a Director of the 
Company in November 2006. John was 
the Finance Director and Chief Financial 
Officer of Harvey Norman Holdings Limited 
for 12 years. John was involved in the 
establishment of the original agreement 
between Flexirent Holdings Pty Limited 
and Harvey Norman in 1995. John has 
over 34 years’ experience as a chartered 
accountant and has extensive experience 
in mergers and acquisitions, strategy, 
international expansion, property and 
taxation.

Other current directorships
Super Retail Group Limited 
Slater & Gordon Limited 

Former directorships in last three years
Emerging Leaders Investment Limited

Special responsibilities
Chair of Audit & Risk Committee, Member 
of Remuneration Committee and 
Nomination Committee

Interests in shares and options
115,000 ordinary shares in 
FlexiGroup Limited

B.A., LLB (Melb), FAICD

Experience
Anne was appointed a Director of the 
Company in January 2013. Anne is 
presently Chairman of Colonial First State 
Investments Ltd, Avanteos Investments Ltd, 
Chairman of the Qantas Superannuation 
Limited, Zoos Victoria and the Centre for 
Investor Education. 

Prior to becoming a professional director, 
Anne was a commercial lawyer for 28 years 
advising major corporations on strategic 
transactions, mergers and acquisitions, 
capital markets, contract law and 
regulation and corporate governance. She 
was General Counsel for National Australia 
Bank for Australia and Asia and was a 
partner at national law firms Minter Ellison 
and Herbert Geer. Anne resigned from the 
Company on 10 August 2015.

Other current directorships
MYOB Group Limited

Former directorships in last three years
None

Special responsibilities
Member of Remuneration Committee, 
Nomination Committee and Audit & Risk 
Committee.

Interests in shares and options
None

9

 FLEXIGROUP ANNUAL REPORT 2015DIRECTORS’ REPORT (CONTINUED)

MEETINGS OF DIRECTORS

FlexiGroup Limited

Board meetings

Audit and Risk 
Committee

Nomination 
Committee

Remuneration 
Committee

Held

Attended

Held

Attended

Held

Attended

Held

Attended

9

9

9

9

9

9

9

9

9

9

9

9

3

3

+

3

3

3

3

3

+

3

3

3

8

+

8

8

8

8

8

+

8

8

8

8

4

+

+

4

4

4

4

+

+

4

4

4

C Beare

T Robbiati

A Abercrombie

R Dhawan

R J Skippen

A Ward

+ Not a member of the relevant committee

COMPANY SECRETARY

Julianne Lyall-Anderson LLB (Hons), Grad Dip Legal Practice, has 19 years’ experience as a Company Secretary. Prior to joining FlexiGroup, 
Julianne was Group Company Secretary at McWilliam’s Wines Group Limited, Wattyl Limited and Dyno Nobel Limited. Julianne was 
appointed Group Company Secretary on 23 April 2015.

Matthew Beaman LLB (Hons), B.Comm, was appointed as Company Secretary on 20 November 2013 and resigned on 23 April 2015, 
and continues as Group General Counsel. Matt joined FlexiGroup in September 2013, bringing more than 15 years’ private practice 
and in-house legal experience in banking and finance with a focus on small and large-ticket asset finance transactions. Prior to joining 
FlexiGroup, Matt held roles in private-practice environments with leading domestic and international law firms. Matt was the Chief Legal 
Counsel for CIT Group Asia-Pacific from 2005–2009. From October 2009, Matt was Deputy General Counsel of Lloyds Banking Group 
Australia (Lloyds International) and was elevated to the position of General Counsel in March 2012.

10

AS AT 30 JUNE 2015FLEXIGROUP ANNUAL REPORT 2015Voting and comments made at the company’s 2014 Annual 
General Meeting
FlexiGroup received 50.3% of “yes” votes on its remuneration 
report for the 2014 financial year. We take this vote seriously. Since 
that time we have met widely with Proxy Advisors and several of 
our major shareholders to better understand their concerns.

As a result, we have taken external advice from Mercers and 
re-examined the structure of our LTIP. The revised LTIP we 
introduced this financial year has four tranches with testing and 
awards in each year, but based only on the performance in that 
year. We have set this with a sales restriction of up to three years 
on each award for each employee. This ensured that employees 
were introduced to holding equity early and by having to hold the 
equity under a sales restriction were more rapidly aligned with 
shareholders. Our alternative was to move to a more conventional 
3 or 4 year performance award system. There are varying opinions 
regarding the use of a one year performance measure, but the 
more conventional approach would not have seen key employees 
holding equity for some time. 

With the help of our advisers we are planning to transition our one 
year hurdles with sales restrictions to two year hurdles and then 
3 year hurdles with gradually reducing sales restrictions. We are 
examining transitioning that award into a 2 year award spanning 
1 July 2014 to 30 June 2016 against appropriately set hurdles. An 
award for the period 1 July 2015 to 30 June 2017 would also be 
granted, again against appropriate hurdles. We will report on this 
in next year’s Remuneration report.

Thank you for your continued interest in FlexiGroup. 

Yours sincerely,

Rajeev Dhawan
Remuneration Committee Chairman.

MESSAGE FROM THE REMUNERATION COMMITTEE 
CHAIRMAN

Dear Shareholder, 

The 2015 financial year was another year of strong performance 
as the Group continued to deliver against its strategy in 
challenging market conditions. The 2015 financial year has built 
on the performance of 2014, balancing a strong focus on business 
results for this year in parallel with a significant program of work 
that is focused on investing in the success of the Group in the 
coming years.

Significant improvements have been made across the organisation 
to ensure greater return on investment for shareholders in 
the next five years. These improvements have been delivered 
via the implementation of technology and infrastructure that 
improves productivity, and enhances the customer experience. 
The investment in customer experience is reflected in the positive 
trend in our Net Promoter Scores (NPS) across the majority of our 
products during the last twelve months. 

While the 2015 financial year has set a strong platform to support 
future growth, the achievement this year has delivered in line with 
market guidance. As a result, remuneration for both the Executive 
Team and employees across the organisation was set at an average 
increase in line with CPI. 

Awards under the Annual Short Term Incentive (STI) Scheme 
were determined based on a scorecard containing both financial 
and non-financial metrics. These metrics included stretch goals. 
Further details about the STI plan for this year have been included 
in this report. The key difference to last year’s measures was the 
addition of a customer metric within the corporate component of 
the plan. This year, the maximum payments made to any Executive 
under the STI scheme was 87%. 

Details on the Long Term Incentive Plan (LTIP) and the outcomes 
are contained on pages 19-28 of the Remuneration Report. 

During the year, we have reviewed our Executive Remuneration 
Framework, with the assistance of an external remuneration 
advisor. The purpose of this review is to ensure that our 
remuneration aligns to market expectations, balancing our focus 
on retention of key personnel and creation of shareholder value.

Our CEO resigned on 23 June 2015 and left the Company on 7 
August 2015. He was only paid his 6 month notice period, some 
of which we asked him to serve. He received no other resignation 
benefit, no LTIP award, he had no outstanding performance rights 
or options and he held no equity in the company. He elected to 
forfeit any STI award for the year ended 30 June 2015.

The Board is committed to ensuring the Remuneration Report 
presents an accurate and concise view of executive remuneration, 
complying with requirements under the Corporations Act 2001. 
We are confident that FlexiGroup’s remuneration policies support 
the Group’s strategic and financial goals and we will continue to 
monitor this alignment in the coming year.

11

 FLEXIGROUP ANNUAL REPORT 2015DIRECTORS’ REPORT (CONTINUED)

Remuneration Report

The directors are pleased to present the company’s 2015 
remuneration report which sets out remuneration information for 
FlexiGroup Limited’s non-executive directors, executive directors 
and other key management personnel.

Directors and key management personnel disclosed in this report

Name 

Position

Non-executive and executive directors – see pages 8-9

Other key management personnel (“KMP”) 

David Stevens 
Rob May 
Peter Lirantzis 
Michael Burke 
Anthony Roberts 

Chief Financial Officer
General Manager – Certegy
Chief Operating Officer
General Manager – Consumer and SME 
General Manager – Enterprise 

Anthony Roberts resigned as KMP on 5 September 2014, the date he ceased 
being a KMP. Nicholle Lindner was disclosed as KMP in the prior year comparative 
period and ceased being KMP at the beginning of the 2015 financial year upon her 
resignation.

SECTION A – GOVERNANCE AND PRINCIPLES OF 
REMUNERATION AT FLEXIGROUP

Remuneration Committee

The Remuneration Committee is responsible for reviewing 
and making recommendations to the FlexiGroup Board, on the 
remuneration philosophy, framework and policies for the group. 
The Committee is responsible for making recommendations to 
the Board on remuneration policies and Directors, and Executives’ 
remuneration. 

The Remuneration Committee undertakes the following activities 
for the Group:
 ●

Reviews and provides recommendations to the Board 
on remuneration, recruitment and retention policies for 
Executives;
Reviews and provides advice regarding the Key Performance 
Indicators (KPIs) for the Group and for individual Executives 
that underpin the Short Term Incentive program;
Reviews and provides recommendations to the Board 
on remuneration policies for the broader organisation 
(non-executives);
Reviews Remuneration Policies annually to ensure that 
the policies comply with the Group’s objectives and risk 
management framework;
Provides annual recommendations to the Board on the 
individual remuneration arrangements for the CEO, Executive 
Team and any other Key Management Personnel; 
Approves overall Group remuneration budgets and Short 
Term Incentive Scheme payments for non-Executive Group 
employees; and
Reviews and provides recommendations to the Board 
regarding remuneration for Non-Executive Directors.

 ●

 ●

 ●

 ●

 ●

 ●

The Remuneration Committee regularly reviews the Remuneration 
Framework to ensure that it adheres to the Group’s overall 
risk management framework and that any risks identified are 
addressed in a timely manner. 

The Remuneration Committee is made up of independent  
Non-Executive Directors and consists of the following members:
 ●
 ●
 ●
 ●

Rajeev Dhawan (Chairman);
Chris Beare; 
John Skippen; and
Anne Ward.

Independent Remuneration Consultant

In consultation with external remuneration consultants, the 
Group aims to provide an executive remuneration framework 
that is market competitive and complementary to the reward 
strategy of the organisation. During the year, FlexiGroup Limited’s 
Remuneration Committee engaged the services of Mercer to 
review our executive remuneration framework with a view to 
making recommendations for 2016 financial year. 

Mercer was paid $37,000 to provide advice on Executive 
remuneration. Mercer has confirmed that the draft 
recommendations have been made free from undue influence 
by members of the group’s key management personnel. 

12

AS AT 30 JUNE 2015FLEXIGROUP ANNUAL REPORT 2015The following arrangements were made to ensure that the 
remuneration recommendations were free from undue influence:
 ● Mercer was engaged by, and reported directly to, the chair of 

the remuneration committee. The agreement for the provision 
of remuneration consulting services was executed by the chair 
of the remuneration committee and the chair of the company. 

As a consequence, the board is satisfied that the recommendations 
were made free from undue influence from any members of the 
key management personnel. 

Remuneration Strategy, Policy and Principles

The objective of our Remuneration policies is to attract, motivate 
and retain the most talented employees and become an employer 
of choice in the Australasian marketplace. We recognise that 
having the right people in place within the organisation is a key 
competitive advantage and determinant of the Group’s success. 
As such, it is important to us that our market rates and benefits 
are competitive with similar sized organisations, while also 
ensuring that we retain our focus on managing our operational 
expenditures to drive the best possible outcome for our customers 
and shareholders.

 ●

 ●

We have a number of key principles that underpin our 
Remuneration Policy: 
 ●

To provide competitive remuneration packages that enable 
the Group to attract high calibre candidates who will make 
a positive impact on the performance of the Group;
To ensure that our people are focusing on driving the short 
and long term goals of the Group, within the appropriate risk 
framework;
All remuneration structures must be aligned to FlexiGroup’s 
business strategy and reinforce our culture and values 
– payment of incentives must be directly linked to the 
achievement of specific, measurable strategic business 
objectives and reward must only be allocated where 
achievement against Key Performance Indicators (KPIs) can 
be demonstrated; 
Any decisions made regarding remuneration variations must 
be commercially responsible, and considerate of budget, as 
well as business requirements and shareholder interests; 
 ● Our employees should be rewarded consistently for like work 

 ●

against market relativities, irrespective of gender, age or other 
irrelevant demographic factors – the key differentiator in pay 
for individuals should be performance. 

Alignment to shareholders’ interests is a key principle for 
the Group when considering Executive remuneration. 
When considering the design of the Executive Remuneration 
Framework and in particular, any incentive arrangements, the 
Board aims to ensure that all arrangements have profitability as a 
core component of plan design and focus on sustained growth in 
shareholder wealth as measured by growth in earnings per share 
and other financial and non-financial performance indicators.

This is balanced with a focus on ensuring that participants’ 
interests are also represented in considering incentive design, 
by focusing on rewarding capability and experience while also 
providing recognition for participant contribution and effort. 

SECTION B – EXECUTIVE REMUNERATION 
FRAMEWORK AT FLEXIGROUP

The remuneration framework in place for the Executive team 
(including the CEO) is consistent with the Group’s Remuneration 
Policy which is based on a Total Remuneration approach. 
This comprises of a mix of fixed and variable pay in the form of 
cash and performance rights. The framework aligns executive 
rewards with achievement of strategic objectives and the creation 
of value for shareholders and conforms to market best practice for 
delivery of reward.

Total Remuneration for our Executive team is comprised of three 
elements:

 ●

 ●

 ●

Fixed remuneration – which includes cash salary and 
employer superannuation components. This amount takes 
into consideration a number of factors including the size and 
complexity of the role; the requirements of the role; the skills 
and experience the individual brings to the role; as well as the 
market relativity for like roles in the financial services industry

Short Term Incentive – this payment is a percentage of the 
fixed remuneration amount and is set against risk-adjusted 
financial targets and non-financial targets that support the 
Group’s strategy. These targets are usually a mix of group and 
individual performance objectives for the year

Long Term Incentive – this is comprised of performance share 
rights which vest over a fixed period if performance hurdles 
are achieved. The performance hurdles are a combination of 
earnings per share and total shareholder return targets set by 
the Board at inception of the incentive plans

Fixed Remuneration

The Executive team are offered competitive fixed remuneration 
amounts that reflect the key performance requirements of 
their roles. Fixed Remuneration is reviewed annually in line with 
the financial year (1 July to 30 June). Any increases to Executive 
Remuneration need to be approved by the Board and come into 
effect from 1 July, following an annual performance review which 
is conducted at the end of the financial year. 

Remuneration is benchmarked against market data provided by 
remuneration consultants for companies that are similar to the 
Group in terms of industry, size and complexity. 

In line with our focus on driving a pay for performance culture, a 
key determinant of whether any increases to Fixed Remuneration 
will apply year to year is performance against specific financial 
and non-financial metrics that are set for each individual at the 
beginning of the financial year. 

The Fixed Remuneration for KMPs is set out in page 24 of 
this report. 

13

 FLEXIGROUP ANNUAL REPORT 2015DIRECTORS’ REPORT (CONTINUED)

Short Term Incentive

The Executive team participate in a Short Term Incentive scheme 
that is based on performance against key financial and non-
financial measures. 

The STI opportunity for the CEO is fixed at 100% of fixed 
remuneration and Senior Executives range between 30% and 50% 
of fixed remuneration (‘target’) depending on role type. The Board 
has set the maximum opportunity available to the CEO and Senior 
Executives to 150% of target. In 2015, the maximum STI achieved 
against their target by any of the KMP was 87%.

The structure of the STI is designed to achieve alignment of 
organisational performance to our strategic goals. The STI 
contains both Corporate Shared Goals (based on the Group’s 
strategic objectives) as well as individual goals that are aligned to 
the Group’s strategic objectives but unique to each department. 
The Corporate Shared Goals are consistent across the Group and 
were introduced in 2014 to drive a collaborative approach within 
the organisation to achieve business success and shareholder 
value within the financial year.

For the Shared Corporate Goals, there are three performance 
levels against which outcomes will be assessed to determine the 
amount of any STI payment: 
 ● Gateway (a minimum performance outcome that must 
be achieved before any STI payment will be made 
regarding the measure); 
Target (achievement of the Business Plan goal set in the 
relevant year); and 
Stretch (a stretch goal that that can only be achieved by 
outstanding business results). 

 ●

 ●

For the 2015 financial year, the executive team STI was weighted 
at 45% for the Corporate Shared Goals and 55% for the goals that 
their departments contribute to the Group’s strategy. The goals 
were a mix of financial and non-financial goals, but all of the 
goals were linked to the Group’s strategy. Payments are made in 
September, and payment amounts are recommended after the 
annual performance review process. 

The maximum payment amount for the STI was capped at 150% 
and the final payment of the STI is at the discretion of the Board.

Long-term incentives to the CEO and Senior Employees are 
provided via the FlexiGroup Long Term Incentive Plan (‘LTIP’). 
Information on the plan is detailed in Section C of this report. 
The FlexiGroup LTIP is part of FlexiGroup’s remuneration strategy 
and is designed to align the interests of FlexiGroup management 
and shareholders and assist FlexiGroup in the attraction, 
motivation and retention of executives. In particular, the LTIP 
is designed to provide relevant executives with an incentive for 
future performance, with conditions for the vesting and exercise 
of options and performance rights under the LTIP encouraging 
those executives to remain with FlexiGroup and contribute to 
the future performance of the Group. The Company’s founding 
shareholders approved the terms, the implementation and the 
operation of the LTIP on 20 November 2006.

Under the LTIP, eligible persons participating in the LTIP may 
be granted options and/or performance rights on terms and 
conditions determined by the Board from time to time. An 
option and a performance right are both rights to acquire a 

14

share, subject to the satisfaction of applicable vesting and/or 
exercise conditions. The main difference between an option and 
a performance right is that an exercise price as determined by the 
Board is required to be paid to exercise a vested option, whereas 
a performance right has nil exercise price unless otherwise 
determined by the Board. Options and performance rights granted 
under the plan carry no dividend or voting rights.

The Board is responsible for administering the LTIP in accordance 
with the LTIP Rules and the terms and conditions of specific 
grants of options and/or performance rights to participants in 
the LTIP. The Board may determine which persons will be eligible 
to participate in the LTIP from time to time. Eligible persons may 
be invited to apply to participate in the LTIP. The Board may in its 
discretion accept such applications.

SECTION C – LINKING REMUNERATION TO 
PERFORMANCE (THE OPERATION OF INCENTIVE 
BASED PLANS AT FLEXIGROUP) 

The remuneration framework is designed to attract and retain 
Executives by rewarding them for goals that are directly aligned 
to the Group’s business strategy. All FlexiGroup incentives are 
linked to both short term and long term performance goals, as 
outlined below.

Short Term Incentive for 2015

Outlined below is the structure of the financial year 2015 Short 
Term Incentive scheme.

FY15 Short Term Incentive scheme

35% These measures represent the 

Financial measures 
(Cash NPAT, Operating 
cash flows, Receivables 
and Volumes)

NPS

5%

company’s key performance 
metrics. Receivables and volumes 
are key value drivers for the 
company.

Net Promoter Score (NPS) is a 
survey based measure of how 
strongly our customers promote 
the services of our products in 
preference to our competitors. 

Our Engagement score for 
2015 was derived from a survey 
undertaken by AON Hewitt.  
The target for 2015 was a stretch 
target requiring improvement 
against the 2014 survey and 
favourable performance against 
external benchmarks.

Individual Objectives

55% Individual objectives are 

set at the beginning of the 
financial year and are aligned 
to the Group strategy. They 
are focused on Department 
contributions to the strategy 
as well as implementation of 
core Technology projects and 
other key activities aligned to 
shareholder returns.

Long Term Incentive 

Engagement

5%

AS AT 30 JUNE 2015FLEXIGROUP ANNUAL REPORT 2015The Board identified these measures as they are a critical 
link between achieving the Group’s strategic objectives and 
increasing shareholder value. The financial measures were 
set in order to support delivery of the 2015 forecast; the NPS 
measure was set in line with our strategic objective to improve 
our customers’ experience with us; and our engagement measure 
is included to ensure we drive productivity improvements via 
employee satisfaction. 

Each of the Corporate Shared Goals within the STI plan operate 
independently from each other, however, given the importance 
of Cash NPAT for shareholders, a minimum threshold level of 
Cash NPAT performance must be delivered by the Group in order 
for any bonus to be paid to Executives. Failure to achieve the 
threshold will result in a nil payment to Executives.

Outlined below is the 2015 Short Term Incentive opportunity at 
target for each of the Executive Team as a percentage of their 
Fixed Remuneration. 

Role

CEO

GMs, COO, CFO

Other Senior Executives

Opportunity

0 – 100%

0 – 50%

0 – 30%

Long Term Incentive Arrangements for 2015 

The Company has three LTIPs currently in place. The old plans 
awarded in 2011 and 2013 financial years will be tested against 
the 2015 financial year performance and will wind down or remain 
unexercised based on the results of that testing. The 2015 plan was 
awarded in December 2014 and is the primary plan that is in place 
going forward.

Details of the performance rights awarded on 
1 December 2014 to the CEO and Senior Executives 

The following sets out the key features of the awards to the CEO 
and Senior Executives.

The Performance Rights are to be allocated in 4 equal tranches. 
The Performance Rights allocated in each tranche will vest on, and 
become exercisable on or after, the applicable Vesting Date to the 
extent that certain performance-based conditions are achieved 
in the relevant Performance Period and a tenure condition is 
satisfied.

The Performance Periods applicable to each of the performance-
based Vesting Conditions are as follows:

Tranche 

Performance period

1

2

3

4

2015 (1 July 2014 to 30 June 2015)

2016 (1 July 2015 to 30 June 2016)

2017 (1 July 2016 to 30 June 2017)

 2018 (1 July 2017 to 30 June 2018)

The testing date (“Testing Date”) for a Performance Period is 
the results announcement date for the financial year of that 
Performance Period.

The Performance Rights will be performance tested against the 
following performance-based Vesting Conditions: 

Percentage of rights 

Performance condition

60% of each Tranche of 
Performance Rights

Cash EPS growth targets for the 
relevant Performance Period are met

40% of each Tranche of 
Performance Rights

Relative TSR for the relevant 
Performance Period compared to 
the S&P/ASX 200 Index (excluding 
resources companies)

Cash EPS growth performance condition

The first performance-based Vesting Condition is based on growth 
on adjusted “Cash NPAT” earnings per shares measure used 
by the Company to track earnings per share on an underlying 
performance basis. This adjusted “Cash NPAT” earnings per share 
measure (“Cash EPS”) is calculated by the Company for a financial 
year as:
 ●

the reported statutory net profit after tax for the financial 
year, after adding back the amount of intangibles amortisation 
recorded in the annual accounts and after adjusting for any 
material one-off income or expense items the Board believes 
are appropriate to reflect underlying recurring earnings;
divided by the weighted average number of ordinary shares 
on issue during the year.

 ●

This is consistent with how the Company reports its “Cash NPAT” 
in its investor presentations. 

The performance condition tests the growth in Cash EPS for 
the relevant Performance Period financial year above the Cash 
EPS for the immediately preceding financial year, measured as a 
percentage, (“Cash EPS Growth”).

The Cash EPS Growth condition will be satisfied for a Performance 
Period in accordance with the following table:

Cash EPS Growth target

Cash EPS growth less than 7.5% 

Cash EPS growth of 7.5% 

Percentage of Performance  
Rights available in given 
year satisfying condition

Nil 

30%

Cash EPS growth greater than 7.5% 
but less than 10% 

Pro-rata straight line 
between 30% and 60%

Cash EPS growth of 10%

60%

Cash EPS growth greater than 10% 
but less than 12.5% 

Pro-rata straight line 
between 60% and 100%

Cash EPS growth equal to or greater 
than 12.5%

100%

15

 FLEXIGROUP ANNUAL REPORT 2015DIRECTORS’ REPORT (CONTINUED)

Relative TSR performance condition

Disposal restriction

The second performance-based Vesting Condition for each 
tranche of Performance Rights relates to the Company’s Total 
Shareholder Return (“TSR”) for the relevant Performance 
Period when compared to the peer group of companies in the  
S&P/ASX 200 Index (excluding resources companies). 

The CEO and Senior Executives may not dispose of, deal in, or 
grant a security interest over any interest in, a Performance Right 
without the prior written consent of the Board, which may be given 
subject to such conditions as the Board sees fit in relation to the 
proposed dealing.

For each Performance Period, the TSR for the Company will be 
determined by calculating the amount by which the sum of:
 ●

the 3 month volume weighted average price (“VWAP”) for 
FlexiGroup Shares in the period up to and including the 
30 June at the end of the relevant Performance Period; and
the dividends paid on a Company Share during the relevant 
Performance Period, exceeds the 3 month VWAP for the 
Company’s Shares in the period up to and including 1 July at 
the beginning of the relevant Performance Period, expressed 
as a percentage.

 ●

The CEO and Senior Executives may not dispose of, deal in, or 
grant a security interest over any interest in, a Share allocated on 
exercise of a Vested Performance Right for any relevant period 
determined by the Board. 

The Board has imposed a disposal restriction on the Shares the 
subject of this approval which will be granted on the exercise of 
any Vested Performance Rights. The disposal restriction will be 
enforced by allocating Shares that are allocated on the exercise of 
the Vested Performance Rights. The disposal restrictions on those 
Shares will be lifted at the relevant Restriction Period End Date as 
set out below:

Relative TSR target 

Less than 50th percentile of 
companies in S&P/ASX 200 Index 
(excluding resources companies)

50th percentile of companies in  
S&P/ASX 200 Index (excluding 
resources companies)

Greater than 50th percentile but 
less than the 75th percentile of 
companies in S&P/ASX 200 Index 
(excluding resources companies) 

Greater than or equal to 75th 
percentile of companies in  
S&P/ASX 200 Index (excluding 
resources companies) 

Percentage of Performance 
Rights available in given 
year satisfying condition

Nil

50%

Tranches of Shares 
allocated on 
exercise of Vested 
Performance 
Rights tranches

% of Shares 
allocated on 
vesting and  
exercise of 
Performance Rights

Tranche 1

33%

33%

33%

50%

50%

50%

50%

50%

Restriction Period 
End Date

15 October 2016

15 October 2017

15 October 2018

15 October 2018

15 October 2018

15 October 2019

15 October 2020

15 October 2021

Pro-rata straight line 
between 50% and 100%

Tranche 2

100%

Tranche 3

Tranche 4

The Board may also implement any such other arrangements 
(including a holding lock) as it determines are necessary to enforce 
this restriction.

The Board has the discretion to amend or waive any disposal 
restrictions on the Shares the subject of this approval which will 
be granted on the exercise of any Vested Performance Rights at 
any time until the disposal restriction ends, if the Board believes it 
is appropriate to do so to reflect the Company’s or the employee’s 
circumstances. 

Once any Board imposed restriction is removed, and subject to the 
Company’s Trading Policy, Shares acquired on exercise of Vested 
Performance Rights may be dealt with freely.

The Board has the discretion to amend either the Cash EPS growth 
performance condition or the relative TSR performance condition 
at any time during the relevant Performance Period applicable to 
those Performance Rights if the Board believes it is appropriate to 
do so to reflect the Company’s circumstances.

Vesting Date and Expiry Date

Tranche

Vesting date

Expiry date

1 

2

3

4

1 Sept 2015

1 Sept 2016

1 Sept 2017

1 Sept 2018

15 Oct 2018

15 Dec 2018

15 Oct 2020

15 Oct 2021

Vested Performance Rights that are not exercised before the 
relevant expiry date will lapse in accordance with the LTIP Rules.

16

AS AT 30 JUNE 2015FLEXIGROUP ANNUAL REPORT 2015Retention rights

At the beginning of the 2015 financial year, the Board approved an issuance of one off special retention rights. The rights were on the 
following terms:
 ●

A one off offer based on a service condition of 15 October 2015. No performance conditions (Cash EPS or TSR) are attached to these 
retention rights. 

Details of the performance rights and performance options awarded between June 2011 and August 2012 to Senior Executives
The following tables set out the key features of the awards to Senior Executives.

Instrument

Each performance right and option (‘award’) represents an entitlement to one ordinary share.

Performance hurdles/
vesting conditions

Awards will vest on, and become exercisable on or after, the Vesting Date to the extent that certain 
performance conditions that are based on the financial performance of FlexiGroup are met.

The measures used to determine FlexiGroup’s financial performance is Earnings Per Share growth targets 
(‘Cash EPS hurdle’) and Total Shareholder Return (‘TSR hurdle’). Each tranche is broken down into Cash EPS 
and TSR hurdles as set out in the table below.

Each award’s tranches consists of 50% Cash EPS performance hurdle and 50% TSR hurdle.

Cash EPS performance 
target

The first performance-based Vesting Condition is based on adjusted Cash NPAT earnings per share measure 
used by the Company to track earnings per share on an underlying performance basis. This adjusted Cash 
NPAT earnings per share measure (‘Cash EPS’) is calculated by the Company for a financial year as:
 ●

the reported statutory net profit after tax for the financial year, after adding back the amount of acquired 
intangibles amortisation recorded in the annual accounts and after adjusting for any material one-off 
income or expense items the Board believes appropriate to reflect underlying recurring earnings;
divided by the weighted average number of ordinary shares on issue during the year.

 ●

Performance testing (‘testing date’) against the Cash EPS hurdle will take place on the date of announcement 
of the relevant annual financial results of FlexiGroup. The Board has the discretion to vary at any time the 
Cash EPS hurdle applicable to all or part of the performance rights and options.

The Cash EPS hurdles for the various awards between June 2011 and August 2012 are summarised in the table below.

Award date

Tranche

% 
Cash 
EPS

Relevant 
performance 
period

Cash EPS 
hurdle 
(cents)

Below 
threshold

At
 threshold

Maximum 
threshold

Retesting

Vesting scale

Jun 11

Jun 11

Aug 12

3

1

1

2

50%

2015

(a)28.0

0%

50%

refer (b)

(b)28.4

50%-100%

50%

2015

(a)28.0

0%

(b)28.4

50%-100%

100%

100%

100%

100%

100%

100%

50%

2015

(a)25.1

0%

66%

refer (b) 

(b)25.8

66%-100%

100%

100%

50%

2015

(a)28.0

0%

50%

refer (b) 

(b)28.4

50%-100%

100%

100%

No

No

No

No

No

No

No

No

17

 FLEXIGROUP ANNUAL REPORT 2015 
DIRECTORS’ REPORT (CONTINUED)

TSR performance target

The second performance hurdle set by the Board in relation to each Tranche is based on TSR growth of the 
Company measured against other companies in the S&P/ASX 300 Index (not including resources companies). 

The TSR for FlexiGroup will be determined by calculating the amount by which the sum of:
 ●

the 30 day volume weighted average price (‘VWAP’) for FlexiGroup Shares in the period up to and 
including 30 June at the end of the relevant Performance Period; and 
the dividends paid on a FlexiGroup Share during the relevant performance period, 

 ●

exceeds the 30 day VWAP for FlexiGroup Shares in the period up to and including 1 July at the beginning of 
the relevant performance period, expressed as a percentage. The relative TSR performance condition will be 
satisfied in accordance with the following:

Nil – if the Company’s TSR ranked in the 4th quartile (i.e. 76th to 100th ranking) of companies in S&P/ASX 300 
Index (excluding resources companies).

25% – if the Company’s TSR equals performance of the 75th ranking company in S&P/ASX 300 Index 
(excluding resources companies).

Pro rata between 25% and 50% – if the Company’s TSR ranked in the 3rd quartile (i.e. 51st to 75th ranking) of 
companies in S&P/ASX 300 Index (excluding resources companies).

Pro rata between 50% and 100% – if the Company’s TSR ranked in the 2nd quartile (i.e. 26th to 50th ranking) 
of companies in S&P/ASX 300 Index (excluding resources companies).

100% if the Company’s TSR ranked in the 1st quartile (i.e. 1st to 25th ranking) of companies in S&P/ASX 300 
Index (excluding resources companies).

Why vesting conditions 
were chosen

The vesting conditions were chosen as performance conditions as they reflect, at the date they were granted, 
the generation of significant shareholder value.

Vesting & Exercise date

Award Date

Tranche

Vesting date

Expiry date

Jun 2011 

Jun 2011

Aug 2012

3

1

1

2

1 Dec 2014

1 Dec 2014

1 Dec 2014

1 Dec 2014

31 Dec 2016

31 Dec 2016

31 Mar 2016

31 Mar 2016

Exercise period

From vesting date to expiry date.

Disposal restriction

No disposal restriction imposed at the time of this grant.

From time to time, the Board exercises its discretion on revising vesting conditions, where necessary, as allowed by the FlexiGroup LTIP.

Retesting – Cash EPS & TSR

There will be no testing of these instruments beyond the 2015 financial year results.

18

AS AT 30 JUNE 2015FLEXIGROUP ANNUAL REPORT 2015SECTION D – REMUNERATION OUTCOMES FOR 2015

Incentives paid to the CEO and Group Executives are directly linked to the Group’s financial performance. Outlined below are details for 
the CEO and KMP payments relating to incentives.

STI performance outcomes
Name

Position

Tarek Robbiati

David Stevens

Rob May

Peter Lirantzis

Michael Burke

Chief Executive Officer

Chief Financial Officer

General Manager – Certegy

Chief Operating Officer

General Manager – Consumer and SME

STI target ($)

STI outcome ($)

900,000

192,500

131,381

218,958

69,000

–*

139,178

114,165

158,337

44,666**

* 

 At his election, Mr T Robbiati forfeited his 2015 STI outcome. This forfeiture was accepted by the Board. Upon his departure on 7 August 2015, Mr Robbiati was paid 
$332,301 for the remaining component of his 6 month notice period. No other termination benefits were paid to him. 

**  Pro rata for five months service.

LTI performance outcomes

The Vesting conditions attached to LTI awards at grant date are chosen so as to align rewards to the CEO and Senior Executives with the 
generation of shareholder value. The following table provides the Group’s TSR, dividend, share price and Cash earnings per share over 
the last 5 years.

TSR (%)

Dividends per share (cents)

Cash EPS (cents)

Share price – high

Share price – low

Share price – close

2015

(14)

17.75

29.64

$4.00

$2.70

$2.91

Years ended 30 June

2014

(26)

16.5

28.04

$4.99

$2.98

$3.17

2013

92

14.5

25.1

$4.74

$2.55

$4.36

2012

18

12.5

22.4

$2.65

$1.60

$2.60

2011

76

11.5

20.0

$2.39

$1.17

$2.07

The vesting outcomes for awards made to Senior Executives under FlexiGroup LTI Plan that reached vesting date during the reporting 
period are set out below.

Commencement 
Date

Test date

TSR Quartile in 
Ranking GroupTSR Vested* %

EPS Vested 
%

Lapsed**
%

Remain in 
Plan***

Type of Instrument

Options

Performance rights

Performance rights

3 Jun 2011

3 Jun 2011

1 Dec 2014

4th Quartile

1 Dec 2014

4th Quartile

5 Aug 2011

1 Dec 2014

4th Quartile

Options

10 Aug 2012

1 Dec 2014

4th Quartile

*  8% of the TSR hurdle lapsed, giving an overall 4% lapsing of the instruments on issue.
*  all unvested instruments qualified for retesting based on the 2015 financial results.
**  refers to outstanding instruments for both EPS & TSR hurdles. 

–

–

–

–

50

50

50

50

–

–

–

4

75%

75%

75%

71%

19

 FLEXIGROUP ANNUAL REPORT 2015DIRECTORS’ REPORT (CONTINUED)

Options issued to top five remunerated Non–KMP officers

Details of performance rights granted to key management personnel are disclosed on page 21 below. In financial year 2015, no 
instruments were issued to an officer who is among the five highest remunerated officers of the company and the group, but not a key 
management person and hence not disclosed in the remuneration report.

The terms and conditions of each grant of options, performance rights and deferred shares affecting remuneration in the previous, this 
or future reporting periods are as follows:

Tranche 
number

Date vested 
and exercisable

1 Dec 2013
1 Dec 2014

Expiry date

31 Dec 2015
31 Dec 2016

Exercise

price*

$

Nil
Nil

Value per option, 
performance right
at grant date

$1.645
$1.455

Grant date

3 June 2011

3 June 2011

5 Aug 2011

5 Aug 2011

30 Nov 2011

23 April 2012

23 April 2012

10 August 2012

26 November 2012

26 November 2012

17 June 2013

3 July 2014

1 December 2014

2
3

1

2
2
3

3

1

1

2
2

3

3

1
1

1
1

1

1
2

2

1
1
2
2

1

2
1

2

1

1

1

1
1

2
2
3
3

4
4

1 Dec 2014

31 Dec 2016

$2.11

1 Dec 2013
1 Dec 2013
1 Dec 2014

31 Dec 2015
31 Dec 2015
31 Dec 2016

1 Dec 2014

31 Dec 2016

1 Dec 2014

31 Dec 2016

1 Dec 2014

31 Dec 2016

1 Sep 2013
1 Sep 2013

31 Dec 2014
31 Dec 2014

1 Sep 2014

31 Dec 2015

1 Sep 2014

31 Dec 2015

1 Dec 2013
1 Dec 2013

1 Dec 2014
1 Dec 2014

31 Dec 2015
31 Dec 2015

31 Dec 2016
31 Dec 2016

1 Dec 2014

31 Dec 2016

1 Dec 2014
1 Dec 2014

31 Dec 2016
31 Dec 2016

1 Dec 2014

31 Dec 2016

1 Dec 2016
1 Dec 2016
1 Dec 2016
1 Dec 2016

31 Mar 2017
31 Mar 2017
31 Mar 2017
31 Mar 2017

1 Dec 2016

31 Dec 2020

1 Dec 2016
1 Dec 2016

31 Dec 2020
31 Dec 2020

1 Dec 2016

31 Dec 2020

1 Dec 2016

31 Dec 2020

1 Dec 2016

31 Dec 2020

15 Oct 2015

31 Mar 2016

1 Sep 2015
1 Sep 2015

1 Sep 2016
1 Sep 2016
1 Sep 2017
1 Sep 2017

1 Sep 2018
1 Sep 2018

15 Oct 2018
15 Oct 2018

15 Oct 2018
15 Oct 2018
15 Oct 2019
15 Oct 2020

15 Oct 2021
15 Oct 2021

Nil
Nil
Nil

Nil

$2.29

$2.29

Nil
Nil

Nil

Nil

Nil
Nil

$2.27
$2.27

$3.05

$3.05
$3.05

$3.05

Nil
Nil
Nil
Nil

$3.57

$3.57
$3.57

$3.57

$4.29

$4.29

–

Nil
Nil

Nil
Nil
Nil
Nil

Nil
Nil

$0.51

$1.66
$1.25
$1.57

$0.98

$0.48

$0.36

$2.03
$1.42

$1.93

$1.08

$2.14
$1.80

$0.48
$0.36

$0.58

$0.55
$0.58

$0.50

$3.17
$2.98
$3.17
$2.91

$1.02

$0.99
$1.02

$0.87

$1.02

$0.99

$3.02

$2.81
$0.44

$2.65
$1.40
$2.49
$1.31

$2.35
$1.23

* The exercise price must be paid by the option holder to exercise the option when it vests.

20

AS AT 30 JUNE 2015FLEXIGROUP ANNUAL REPORT 2015Details of options over ordinary shares in the company provided as remuneration to each Director of FlexiGroup Limited and each of the 
key management personnel of the parent entity and the group are set out below. When exercisable, each option and performance right 
is convertible into one ordinary share of FlexiGroup Limited. Further information on the options and performance rights is set out in 
Note 23 to the financial statements.

Name

Directors of FlexiGroup Limited

C Beare

T Robbiati

A Abercrombie

R Dhawan

R J Skippen

A Ward

Executives of FlexiGroup Limited

D Stevens

R May

P Lirantzis

M Burke

A Roberts

Number of 
performance 
rights  granted
during the year

Value of 
performance 
rights granted 
during the year
$

Number of 
options and 
performance 
rights vested 
during the year

Number of 
options and 
performance 
rights lapsed 
during the year

Financial year 
of issue of 
lapsed options 
and rights 

–

–

1,280,000

2,538,240

–

–

–

–

360,000

320,000

380,000

300,000

–

–

–

–

–

732,200

652,880

781,020

592,480

–

–

–

–

–

–

–

76,350

163,750

75,000

–

–

–

1,280,000

–

–

–

–

2,400

5,000

–

–

–

2015

–

–

–

–

2013

2013

–

–

168,333

2012 and 2013

The assessed fair value at grant date of performance rights granted to the individuals is allocated equally over the period from grant date 
to vesting date, and the amount is included in the remuneration table on page 24. Fair values at grant date are independently determined 
using a binomial tree option pricing methodology that takes into account the exercise price, the term of the options and performance 
rights, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend 
yield and the risk-free interest rate for the term of the options and performance rights.

The model inputs for performance rights granted during the year ended 30 June 2015 included:
a)  Exercise price: nil, performance rights issued
b)  Grant date: 1 December 2014
c)  Expiry date: various per performance rights granted, refer table on page 18
d)  Share price at grant date: $2.94
e)  Expected price volatility of the Company’s shares: 30% 
f)  Expected dividend yield: 5.6% – 6%
g)  Risk-free interest rate: 2.35% – 2.45%

Shares provided on exercise of remuneration options and performance rights 

In current year, 53,647 ordinary shares in the Company were issued as a result of the exercise of remuneration options and 
performance rights.

21

 FLEXIGROUP ANNUAL REPORT 2015DIRECTORS’ REPORT (CONTINUED)

ADDITIONAL INFORMATION

Details of remuneration: STI cash payments and options and performance rights 

For each STI cash payment and grant of options and performance rights, the percentage of the available bonus or grant that was paid, 
or that vested, in the financial year, and the percentage that was forfeited because the person did not meet the service and performance 
criteria is set out below. The options and performance rights vest in accordance with the vesting schedules detailed below. No options 
and/or performance rights will vest if the conditions are not satisfied, hence the minimum value of the rights yet to vest is nil.

The maximum value of the rights yet to vest has been determined as the amount of the fair value at grant date of the rights that are yet 
to be expensed.

2015 
STI Cash 
payment
$

STI 
Outcome 
as % 
of target
%

STI % 
of target 
forfeited
%

LTI Year 
granted

Prior year 
equity 
awards 
Vested 
during 
2015
%

Prior year 
equity 
awards 
Forfeited 
during 
2015
%

Financial 
years in which 
options, 
performance 
rights may 
vest

Maximum 
total 
value of 
grant yet  
to vest
$

–

–

25

25

25

– 

25

25

25

– 

100

–

–

–

4

–

–

– 

4

–

–

–

–

–

n/a

n/a

30/6/2016- 
30/6/2019

30/6/2015

30/6/2015

30/6/2015

30/6/2016- 
30/6/2019

30/6/2015

30/6/2015

30/6/2015

30/6/2016- 
30/6/2019

477,059

–

–

–

419,149

–

–

–

483,949 

–

–

30/6/2016- 
30/6/2019

432,109

Name

Executive Directors 
of FlexiGroup Limited

T Robbiati 

Executives 
of FlexiGroup

D Stevens

–

–

100

2015

139,178

72

28

2015

R May

114,165

87

13

P Lirantzis

158,337

M Burke

44,666

72

65

28

35

2013

2011

2011

2015 

2013

2011

2011

2015

2012

2015

22

AS AT 30 JUNE 2015FLEXIGROUP ANNUAL REPORT 2015 
 
 
 
 
 
 
 
Shares under options and performance rights 

Amounts of remuneration

Details of the remuneration of the Directors and the Key 
Management Personnel (as defined in Australian Accounting 
Standards Board (“AASB”) 124 Related Party Disclosures) of 
FlexiGroup Limited and its subsidiaries are set out in the following 
tables. The cash bonuses are dependent on the satisfaction of 
performance conditions as set out in the section headed Short-term 
performance incentives above.

The Key Management Personnel of FlexiGroup Limited are the 
Directors and certain executives that report directly to the CEO.

As at the date of this report, there were 6,437,724 unissued 
ordinary shares of FlexiGroup Limited subject to options 
or performance rights. Of those unissued ordinary shares, 
1,513,975 are subject to option with expiry dates of 31 December 
2016 and exercise prices ranging from $2.11 – $3.05, with 
a weighted average exercise price of $2.47. The remaining 
4,923,749 unissued ordinary shares are the subject of 
performance rights with expiry dates between 31 December 2015 
and 15 October 2021. 

No option holder has any right under the option to participate in 
any other share issues of the Company or any other entity.

Non-Executive Directors

Fees and payments to Non-Executive Directors reflect the 
demands that are made on and the responsibilities of the Non-
Executive Directors. Non-Executive Directors’ fees and payments 
are reviewed annually and benchmarked where appropriate by 
the Board. Non-Executive Directors do not receive share options. 
Non-Executive Directors may opt each year to receive a percentage 
of their remuneration in FlexiGroup Limited shares which would 
be acquired on-market. Shareholders approved this arrangement 
on 20 November 2006 but no Directors have as yet elected to 
participate in the arrangement.

Non-Executive Directors’ fees

The current base remuneration was approved on 20 July 2011. 
Non-Executive Directors’ fees are determined within an aggregate 
Directors’ fee pool limit of $1.2 million.

The following fee structure was applicable for the 2015 financial 
year:

Base fees (per annum)

C Beare (Chairman)

A Abercrombie

Other Non-Executive Directors

Additional fees (per annum)

Audit & Risk Committee – Chairman

Remuneration Committee – Chairman

$250,000

$160,000

$120,000

$25,000

$25,000

In addition to the above fees, Directors also receive superannuation 
contributions required under government legislation.

A Director is entitled to reimbursement for reasonable travelling, 
accommodation and other expenses in attending meetings and 
carrying out their duties.

Under clause 10.11 of the Company’s constitution, subject to the 
Listing Rules and Corporations Act, the Company may pay a former 
Director, or the personal representatives of a Director who dies 
in office, a retirement benefit in recognition of past services of an 
amount determined by the Directors. The Company may also enter 
into a contract with a Director providing for payment of the retiring 
benefit. No such contracts have been entered into to date. Despite 
having this clause in the Company’s constitution, the Company 
does not intend to pay such benefits to Directors. 

23

 FLEXIGROUP ANNUAL REPORT 2015DIRECTORS’ REPORT (CONTINUED)

2015

Name

Non-Executive Directors

M Jackson*

C Beare (Chairman)*

A Abercrombie

R Dhawan

R J Skippen

A Ward

Subtotal non-executive directors

Executive Directors

T Robbiati

Subtotal Executive Directors

Other key management personnel  
(refer to page 12 for positions)

D Stevens

R May

P Lirantzis

M Burke****

A Roberts*****

Short-term employee benefits

Post-
employment 
benefits

Long-
term
benefits

Share-based 
payments 
expense*** 

Cash salary
 and fees
$

STI cash
 payment
$

Other
 benefits**

  $

Super-
annuation
$

Long 
service
 leave
$

Total 
earnings
$

$

20,833

250,000

160,000

145,000

145,000

120,000

840,833

900,000

900,000

–

–

–

–

–

–

–

–

–

366,217

259,298

139,178

114,165

415,757

158,337

126,027

44,666

–

–

–

–

–

–

–

–

–

–

28,939

–

–

45,502

–

139,301

1,979

18,783

15,200

13,775

13,775

11,398

74,910

–

–

18,783

22,496

22,159

11,973

4,323

–

–

–

–

–

–

–

–

–

–

–

–

–

– 

–

–

–

–

22,812

268,783

175,200

158,775

158,775

131,398

915,743

900,000

900,000

11,799

6,498

–

–

–

106,881

642,858

113,712

545,108

125,398

721,651

39,519

222,185

(73,043)

116,083

Subtotal other key 
management personnel

Total key management  
personnel compensation (group)

1,212,801

456,346

168,240

79,734

18,297

312,467

2,247,885

2,953,634

456,346

168,240

154,644

18,297

312,467

4,063,628

* 
** 

Mr C Beare was appointed Chairman effective 24 July 2014, replacing Ms M Jackson, who ceased being Chairman on that date.
 Mr R May’s other benefits include car, health, life insurances and FBT which are paid by the Company. Mr A Robert’s benefits relate to his termination benefits and 
accumulated annual leave payments.

***  Remuneration for share-based payments represents amounts expensed during the year for accounting purposes.
**** 

 Mr M Burke was appointed as General Manager – Consumer and SME with effect from 27 January 2015. Amounts shown above are effective from date of 
appointment.

*****  Mr A Roberts ceased being a KMP on 5 September 2014 upon his resignation. Amounts shown in his remuneration include amounts earned up to that date and 

his termination benefits, which are included as other benefits above.

24

AS AT 30 JUNE 2015FLEXIGROUP ANNUAL REPORT 20152014

Name

Non-Executive Directors

M Jackson (Chairman)

A Abercrombie

R Dhawan

R J Skippen

A Ward

Cash 
salary
 and fees
$

250,000

160,000

145,000

145,000

120,000

Short-term employee benefits

Post-
employment 
benefits

Long-
term
benefits

Share-based 
payments 
expense**

STI cash
 payment
$

Other
 benefits*
$

Super-
annuation
$

Long 
service
 leave
$

Total 
earnings***

$

273,125

174,800

158,413

158,413

131,100

895,851

$

–

–

–

–

–

–

Share-based
 payments
 cancellation***

$

–

–

–

–

–

–

874,287

2,559,237

3,845,860

874,287

2,559,237

3,845,860

–

–

–

–

–

–

–

–

–

–

–

–

23,125

14,800

13,413

13,413

11,100

75,851

–

–

–

–

–

–

–

–

–

–

Subtotal non-executive directors

820,000

Executive Directors

T Robbiati

850,000

654,500 180,450

Subtotal Executive Directors

850,000

654,500 180,450

Other key 
management personnel  
(refer to page 12 for positions)

D Stevens****

R May

A Roberts

N Lindner

P Lirantzis*****

Subtotal other key 
management personnel

332,225

84,000

–

17,775

12,421

112,566

558,987

232,096

122,854

22,869

30,666

5,846

226,423

640,754

265,620

59,653

265,918

87,033

358,299

86,084

–

–

–

23,149

24,082

24,295

–

–

–

68,115

416,537

87,554

464,587

916,112

79,429

548,107

–

–

–

–

1,454,158

439,624

22,869

119,967

18,267

574,087

2,628,972

916,112

Total key management  
personnel compensation (group) 3,124,158

Total1

1,094,124 203,319

195,818 18,267

1,448,374

6,084,0601

 4,761,9721

10,846,032

* 

** 

Mr R May’s other benefits include car, health, life insurances and FBT which are paid by the Company. Mr T Robbiati’s other benefits relate to one off relocation 
travel benefits and related FBT.
Remuneration for share-based payments represents amounts expensed during the year for accounting purposes. Included as part of share-based payments is 
$800,000 plus the accrued interest relating to the forgiveness of Mr T Robbiati’s loan.

***  Total earnings represent total KMP compensation excluding share-based payments cancellation. Accounting standards require that a cancellation of equity 
instruments be accounted for as an acceleration of vesting, therefore recognising immediately the amount that would otherwise have been recognised for 
services received over the remainder of the vesting period. The result of the cancellation is included as an expense in the income statement for accounting 
purposes but has been excluded from total earnings above on the basis that the amounts have not vested to the individuals. For details of the cancellation refer 
to page 18.

****  Mr D Stevens was appointed CFO effective 1 July 2013 upon the resignation of Garry McLennan. Mr McLennan’s termination payments amounted to $190,647 

which included accrued leave. Mr Stevens was previously Head of Finance & Planning.

***** Mr P Lirantzis became a KMP on 1 July 2013. Mr Lirantzis’ role as Chief Information Officer was combined with that of leading Operations. Amounts shown above 

relate to Mr Lirantzis’ earnings for the full year ended 30 June 2014.

25

 FLEXIGROUP ANNUAL REPORT 2015DIRECTORS’ REPORT (CONTINUED)

The relative proportions of ongoing remuneration that are linked to performance and those that are fixed are as follows:

Name

Executives of FlexiGroup

T Robbiati*

D Stevens

R May

P Lirantzis

M Burke

A Roberts*

Fixed remuneration

At Risk – STI

At Risk – LTI

2015

2014

2015

2014

2015

2015

 2014

 2014

%

100

62

58

61

62

100

%

40

65

45

70

n/a

69

%

–

22

21

22

20

–

%

26

15

19

16

n/a

14

Rights
%

Options
%

Rights
%

Options
%

–

14

16

16

18

–

–

2

5

1

–

–

12

5

12

7

n/a

3

22

15

24

7

n/a

14

*  Mr T Robbiati’s total remuneration for 2015 is reflected as 100% fixed remuneration due to his election to forfeit any STI for 2015, upon his departure on 7 August 

2015. The performance rights that were awarded to him during 2015 financial year were also forfeited. Mr A Roberts did not earn any STI or LTI due to his resignation 
on 5 September 2014.

SERVICE AGREEMENTS

Remuneration and other terms of employment for the Chief Executive Officer and the other Key Management Personnel are formalised 
in service agreements. Each of these agreements can provide for the provision of short term performance incentives, eligibility for the 
FlexiGroup Long Term Incentive Plan (‘LTIP’), other benefits including the use of a Company motor vehicle, tax advisory fees, payment of 
benefits forgone at a previous employer, relocation, living, tax equalisation, travel and accommodation expenses while an executive is 
required to live away from their normal place of residence.

All employment agreements are unlimited in term but capable of termination at agreed notice by either the Company or the executive. 
The Company can make a payment in lieu of notice. The notice period for each Executive are listed in the table below.

In the event of retrenchment, the executives listed in the table on page 12 are entitled to the payment provided for in the service 
agreement. The employment of the executives may be terminated by the Company without notice by payment in lieu of notice. Upon 
termination of employment, the Board exercises its discretion on payment of a pro-rata STI entitlement and early vesting of any unvested 
LTIs held by the above KMP.

The service agreements also contain confidentiality and restraint of trade clauses.

The provisions of the agreements relating to notice period and remuneration are listed in the table below.

Name

T Robbiati

D Stevens

R May

P Lirantzis

M Burke

Term of agreement 
and notice period*

Total Fixed 
Remuneration**

Termination 
payments***

6 months

6 months

6 months

6 months

6 months

900,000

385,000

322,500

438,000

345,000

6 months

6 months

6 months

6 months

6 months

*  Notice applies to either party.
**  Base salaries are for financial year ended 30 June 2014. They are reviewed annually by the remuneration committee.
***  Base salary payable if the company terminates employee with notice, and without cause, (e.g., for reasons other than unsatisfactory performance).

26

AS AT 30 JUNE 2015FLEXIGROUP ANNUAL REPORT 2015Equity instrument disclosures relating to Directors and Key Management Personnel

Options and performance rights holdings

Balance at  
start of year

Granted as 
compensation

Exercised

Other  
changes

Balance at 
end of year

Vested and 
exercisable

Unvested

–

1,280,000

–

(1,280,000)

–

–

–

Name

2015

Executive Director

T Robbiati

Other Key 
Management Personnel

D Stevens 

R May 

P Lirantzis

M Burke

A Roberts

2014

225,000

450,000

150,000

–

168,334

Executive Directors

T Robbiati

3,390,000

Other Key 
Management Personnel

D Stevens 

R May 

A Roberts

N Lindner

P Lirantzis

325,000

625,000

201,667

1,000,000

250,000

360,000

320,000

380,000

300,000

–

–

–

–

–

–

–

(41,250)

(6,250)

(75,000)

–

–

–

(100,000)

(175,000)

(33,333)

(2,400)

(5,000)

–

–

(168,334)

(3,390,000)

–

–

–

–

(1,000,000)

541,350

758,750

455,000

300,000

–

–

225,000

450,000

168,334

–

35,100

506,250

157,500

75,000

–

–

–

–

–

–

–

601,250

380,000

300,000

–

–

225,000

450,000

168,334

–

(100,000)

–

150,000

50,000

100,000

27

 FLEXIGROUP ANNUAL REPORT 2015DIRECTORS’ REPORT (CONTINUED)

Shareholding disclosures relating to Directors and Key Management Personnel

Balance at  
start of year

Received during the 
year on the exercise 
of performance 
rights options

Other changes  
during the year

Balance at 
end of year

–

76,765,251

391,048

115,000

–

–

72,500

32,000

100,000

–

–

1,926,012

76,765,251

392,997

115,000

–

–

–

–

–

–

–

–

–

–

–

–

–

41,250

6,250

75,000

–

–

–

–

–

–

–

–

100,000

175,000

33,334

–

100,000

–

–

(183,000)

–

–

–

(93,750)

(38,250)

(115,000)

–

–

–

–

(1,949)

–

–

–

(27,500)

(143,000)

(33,334)

–

–

–

76,765,251

208,048

115,000

–

–

20,000

–

60,000

–

–

1,926,012

76,765,251

391,048

115,000

–

–

72,500

32,000

–

–

100,000

Name

2015

Non-Executive Directors

C Beare (Chairman)

A Abercrombie

R Dhawan

R J Skippen

A Ward

Executive Director

T Robbiati

Other Key Management Personnel

D Stevens

R May 

P Lirantzis

M Burke

A Roberts

2014

Non-Executive Directors

M Jackson (Chairman)

A Abercrombie

R Dhawan

R J Skippen

A Ward

Executive Directors

T Robbiati

Other Key Management Personnel

D Stevens 

R May 

A Roberts

N Lindner

P Lirantzis

28

AS AT 30 JUNE 2015FLEXIGROUP ANNUAL REPORT 2015Corporate Governance Statement 

Directors’ indemnification

Declaration of interests

During the year ended 30 June 2015, the Company paid insurance 
premiums in respect of a Directors’ and Officers’ Liability insurance 
contract. Disclosure of the total amount of the premium and the 
nature of the liabilities in respect of such insurance is prohibited 
by the policy.

Indemnity of auditors

The Company has indemnified its auditors against any liability 
(including legal costs) that the auditors incur in connection with 
any claim by a third party arising from the Company’s breach of 
its agreement with its auditors.

Proceedings on behalf of the Company

No person has applied for leave of Court to bring proceedings 
on behalf of the Company or intervene in any proceedings 
to which the Company is a party for the purpose of taking 
responsibility on behalf of the Company for all or any part or 
those proceedings. The Company was not a party to any such 
proceedings during the year.

No proceedings have been brought or intervened in on behalf 
of the Company with leave of the Court under section 237 of   
Corporations Act 2001.

Non-audit services

The Company may decide to employ the auditor on assignments 
additional to their statutory audit duties where the auditor’s 
expertise and experience with the Company and/or the 
Group are important.

Details of the amounts paid or payable to the auditor 
(PricewaterhouseCoopers) for audit and non-audit services 
provided during the year are set out in Note 31 of the 
financial statements.

Other than as disclosed in the financial statements, no Director 
of the Company has received or become entitled to receive a 
benefit other than remuneration by reason of a contract made 
by the Company or a related corporation with a Director or with 
a firm of which he is a member, or with a Company in which he has 
a substantial financial interest except that Flexirent Capital Pty 
Limited has rented premises in Melbourne owned by a company 
associated with Mr A Abercrombie. The lease is on standard 
market terms.

Rounding of amounts

The Company is of a kind referred to in Class Order 98/100, 
issued by the Australian Securities and Investments Commission, 
relating to the “rounding off” of amounts in the Directors’ Report 
and Financial Report. Some amounts in the Directors’ Report and 
Financial Report have been rounded off in accordance with that 
Class Order to the nearest hundred thousand dollars in accordance 
with that class order.

Auditor’s independence declaration

A copy of the auditor’s independence declaration as required under 
section 307C of the Corporations Act 2001 is set out on page 40 and 
forms part of this report.

Auditor

PwC continues in office in accordance with section 327 of the 
Corporations Act 2001. 

This Report is made in accordance with a resolution of Directors.

The Board of Directors has considered the position and, in 
accordance with advice received from the Audit & Risk Committee, 
is satisfied that the provision of the non-audit services is 
compatible with the general standard of independence for 
auditors imposed by the Corporations Act 2001. The Directors are 
satisfied that the provisions of non-audit services by the auditor, 
as set out in note 30 of the consolidated financial statements, did 
not compromise the auditor independence requirement of the 
Corporations Act 2001 for the following reasons:
 ●

all non-audit services have been reviewed by the Audit & Risk 
Committee to ensure they do not impact the impartiality and 
objectivity of the auditor
none of the services undermine the general principle relating 
to auditor independence as set out in APES 110 Code of Ethics 
for Professional Accountants.

 ●

Andrew Abercrombie
Chairman

Sydney 
17 August 2015

29

FLEXIGROUP ANNUAL REPORT 2015 
AS AT 30 JUNE 2015

CORPORATE GOVERNANCE STATEMENT (CONTINUED)

This Corporate Governance Statement sets out details of the 
Company’s corporate governance practices for the financial year 
ended 30 June 2015 (Reporting Period) including the Company’s 
position relating to each of the Australian Securities Exchange 
(ASX) Corporate Governance Council’s (ASX CGC) Corporate 
Governance Principles and Recommendations 3rd Edition 
(Recommendations).

For the purpose of preparing this Corporate Governance Statement, 
the Company has reviewed its current corporate governance 
policies and practices against the Recommendations in respect of 
the Reporting Period. As recommended by the ASX CGC, further 
information in relation to corporate governance practices is publicly 
available on the Company’s website at www.flexigroup.com.

FlexiGroup is committed to seeking to ensure that its policies 
and practices meet the highest levels of disclosure and the best 
practice in corporate governance in a manner that is appropriate 
to the particular circumstances of the Company.

The Board has established a framework of processes and 
guidelines for the governance of FlexiGroup that includes 
corporate policies and monitoring procedures, financial and 
operational business risk management and internal control 
systems and standards for ensuring lawful and ethical conduct.

On 23 June 2015, the Company announced that Mr Tarek Robbiati 
had given notice of his resignation as Managing Director and Chief 
Executive Officer to the Company. On 6 August 2015, the Company 
announced that it was releasing Tarek Robbiati from his position 
early and that Tarek Robbiati would be leaving the Company with 
effect from 7 August 2015. The Company also announced that 
Mr David Stevens (Chief Financial Officer (CFO)) and  
Mr Peter Lirantzis (Chief Operating Officer (COO)) would lead the 
Company until a new Chief Executive Officer (CEO) was appointed. 

On 10 August 2015, the Company announced that Dr Chris 
Beare and Ms Anne Ward had resigned as Chairman and 
non-executive independent Director (respectively) and that 
Mr Andrew Abercrombie had been appointed as Chairman. 
Andrew Abercrombie is a non-executive Director but is not 
considered to be an independent Director because Andrew 
Abercrombie holds (indirectly) 25% of the shares currently on issue 
in the Company. Having regard to the current composition of the 
Board, the Board believes that Andrew Abercrombie is best placed 
to act as Chairman given his history with and understanding of 
the Company.

As such, as at the date of this Corporate Governance Statement, 
the Board and each Board Committee consists of Andrew 
Abercrombie, Mr John Skippen and Mr Rajeev Dhawan. The Board 
and each Board Committee is comprised of non-executive 
Directors and a majority of independent Directors. The Board had 
commenced a search earlier in the calendar year for additional 
non-executive Directors and the Board anticipates being able 
to make appointments in a relatively short period of time. 

30

PRINCIPLE 1 – LAY SOLID FOUNDATIONS FOR 
MANAGEMENT AND OVERSIGHT

RECOMMENDATION 1.1

Board responsibilities

The Board has overall responsibility for the conduct and 
governance of FlexiGroup including its strategic direction and 
supervision and review of the management of its businesses and 
affairs. The Board’s roles and responsibilities are formalised in the 
Board Charter, which defines the matters reserved for the Board 
and its Committees and those responsibilities delegated to the 
CEO and management. A copy of the Board Charter is available on 
the Company’s website at www.flexigroup.com.au/investorcentre/
corporategovernance. 

Within the scope of the governance framework established by the 
Board, management of the business and operations of FlexiGroup 
is delegated to the CEO subject to the oversight and supervision of 
the Board.

The Board’s responsibilities include:
1.  

2. 

3.  

4.  

5.  

6.  

7.  

8.  

9. 

 providing strategic direction for and approving corporate 
business strategies and objectives developed by management;
 monitoring the operational and financial position and 
performance of the Company;
 identifying the principal risks faced by the Company 
and requiring management to establish and implement 
appropriate internal controls and monitoring systems to 
manage and reduce the impact of these risks;
 requiring that financial and other reporting mechanisms are 
put in place which result in accurate and timely information 
being provided to the Board and the Company’s shareholders 
and the financial market as a whole being fully informed of all 
material developments relating to the Company;
 appointing the CEO, approving other key executive 
appointments and planning for executive succession;
 overseeing and evaluating the performance of the CEO and 
other senior executives of the Company;
 reviewing and approving remuneration for the senior 
executives of the Company;
 approving the Company’s budgets and business plans and 
monitoring the management of the Company’s capital, 
including the progress of any major capital expenditures, 
acquisitions or divestitures;
 utilising procedures to ensure that financial results are 
appropriately and accurately reported on a timely basis in 
accordance with all legal and statutory requirements;

10.    adopting appropriate procedures to ensure compliance with 
all laws, governmental regulations and accounting standards;

11.    approving and reviewing from time to time, the Company’s 
internal compliance procedures, including any codes of 
conduct and taking all reasonable steps to ensure that the 
business of the Company is conducted in an open and ethical 
manner; and

12.   regularly reviewing and to the extent necessary, amending 

the Board and Committee Charters.

FLEXIGROUP ANNUAL REPORT 2015Under its Charter, the Nomination Committee is responsible for 
the functions specified in Recommendation 2.1. 

Charters for all the Board Committees are available on the 
Company’s website at www.flexigroup.com.au/investorcentre/
corporategovernance.

Details of the number of meetings of the Board and of each 
Committee held during the Reporting Period and of each Director’s 
attendance at those meetings are set out in the Directors’ Report 
on page 10.

Management responsibilities

The management of the Company and its businesses and affairs is 
the responsibility of the CEO and the senior executives including:
1.  

 developing business plans, budgets and strategies for the 
Board’s consideration and, subject to the Board’s approval, 
implementing these plans, budgets and strategies;
 operating the Company within the business parameters 
set by the Board and, where the proposed transactions, 
commitments or arrangements exceed those parameters, 
referring the matter to the Board for consideration and 
approval;
 identifying and managing operational and other risks, where 
those risks could have a material impact on the Company’s 
business, formulating strategies for managing these risks 
for consideration by the Board and, subject to the Board’s 
approval, implementing these strategies;
 managing the Company’s current financial and other reporting 
mechanisms together with managing day-to-day operations 
within the budget;
 implementing the Company’s internal controls and procedures 
for monitoring these controls and ensuring that these controls 
and procedures are appropriate and effective;
 providing the Board with accurate and sufficient information 
regarding the Company’s operations on a timely basis and 
in particular, that the Board is made aware of all relevant 
matters relating to the Company’s performance (including 
future performance), financial condition, operating results 
and prospects and potential material risks so that the Board 
is in an appropriate position to fulfil its corporate governance 
responsibilities; and
 implementing all policies, processes and codes of conduct 
approved by the Board.

2. 

3. 

4.  

5. 

6. 

7.  

To facilitate the execution of its responsibilities, the Board has 
established Committees to oversee and report to the Board 
on particular areas of responsibility. All Directors receive all 
Committee papers and minutes and are entitled to attend any 
Committee meeting. Each Committee reports to the next Board 
meeting. The Board has established the following Committees:

Audit & Risk Committee

During the Reporting Period, the composition of the Audit & Risk 
Committee was as follows: Chair: John Skippen, Members: Anne 
Ward, Chris Beare and Rajeev Dhawan. As at the date of this 
Corporate Governance Statement, the composition of the Audit 
& Risk Committee was as follows: Chair: John Skippen. Members: 
Andrew Abercrombie, Rajeev Dhawan.

The Audit & Risk Committee oversees compliance with accounting 
and financial reporting obligations, and reviews internal financial 
controls, the role of the internal and external auditors (including 
the independence of the external auditors) and the Company’s 
financial risk management activities.

Remuneration Committee

During the Reporting Period, the composition of the Remuneration 
Committee was as follows: Chair: Rajeev Dhawan. Members: Anne 
Ward, Chris Beare, John Skippen. As at the date of this Corporate 
Governance Statement, the composition of the Remuneration 
Committee was as follows: Chair: Rajeev Dhawan. Members: 
Andrew Abercrombie, John Skippen.

The Remuneration Committee supervises the Company’s 
remuneration policies and executive and employee remuneration 
including superannuation and executive performance. 
The Remuneration Committee also undertakes certain functions 
relating to the composition of the Board and members of the 
Board that Recommendation 2.1 prescribes for a Nomination 
Committee.

Nomination Committee

During the Reporting Period, the composition of the Nomination 
Committee was as follows: Chair: Chris Beare. Members: Andrew 
Abercrombie, Anne Ward, John Skippen and Rajeev Dhawan. As at 
the date of this Corporate Governance Statement, the composition 
of the Nomination Committee was as follows: Chair: Rajeev 
Dhawan. Members: Andrew Abercrombie, John Skippen.

The Nomination Committee assists and advises the Board on:
(a) Director selection and appointment practices; 
(b) Director performance evaluation processes and criteria; 
(c) Board composition; and 
(d) succession planning for the Board and senior management, 
to ensure that the Board is of a size and composition conducive 
to making appropriate decisions, with the benefit of a variety of 
perspectives and skills, and in the best interests of the Company as 
a whole.

31

 FLEXIGROUP ANNUAL REPORT 2015AS AT 30 JUNE 2015

CORPORATE GOVERNANCE STATEMENT (CONTINUED)

Directors’ Independent advice
Directors are empowered to seek independent external advice, as 
necessary, at the Company’s expense, subject to prior consultation 
with the Chairman. Where appropriate, advice obtained at the 
Company’s expense will be made available to the Company.

RECOMMENDATION 1.2

When a vacancy arises on the Board, the Nomination Committee 
manages the process for the selection and appointment of new 
Directors to the Board. The Nomination Committee identifies 
candidates with appropriate skills, knowledge, experience, 
independence and expertise and recommends them to the Board. 
The Company undertakes appropriate background and screening 
checks prior to nominating a Director for election. Shareholders 
are provided with all material information in the Company’s 
possession concerning the Director standing for election or 
re-election in the explanatory notes accompanying the notice 
of meeting.

RECOMMENDATION 1.3

Directors appointed by the Board to fill a casual vacancy are 
engaged by a written letter of appointment setting out the 
terms and conditions of their appointment. They are required 
to stand for re-election by the shareholders at the next 
Annual General Meeting. 

All non-executive Directors are engaged via a written letter 
of appointment setting out the terms and conditions of their 
appointment. All executive Directors and other senior executives 
enter into written agreements with the Company setting out the 
terms of their appointment and employment.

DIVERSITY AND INCLUSION AT FLEXIGROUP

FlexiGroup recognises the value of recruiting, developing and 
retaining employees from a diverse range of backgrounds, 
genders, knowledge, experience and abilities. By focusing on 
encouraging diversity within our team and ensuring that we have 
an inclusive work environment, FlexiGroup also recognises that 
a strong and diverse internal workforce is able to provide even 
better support for our customers. 

We encourage diversity and inclusion across our business in a 
number of ways. We firmly embrace the principle of meritocracy 
with any recruitment, promotion or remuneration decisions 
being based on performance and capabilities, we ensure that we 
have robust readily available policies that support diversity which 
underpin our operating model, and we actively support programs 
within our business that support diversity and inclusiveness. 

One of our key strategic goals is to be an employer of choice, which 
means that we are committed to the principles of Equal Employment 
and the provision of a work environment that is free from unlawful 
discrimination, harassment, and victimisation and bullying. 
The Company sees diversity as recognising and valuing the 
contribution of people from different backgrounds, with different 
perspectives and experiences. The focus of diversity and inclusion 
within FlexiGroup includes gender, age, sexual orientation, 
disability, ethnicity, religion and cultural background.

Measurable objectives for 2014-2015 and progress

As outlined in last year’s report, the Diversity Policy that was 
communicated to the wider FlexiGroup community through 
internal structures set four broad measurable gender diversity 
objectives for the Reporting Period (three of these were consistent 
with the 2013-2014 financial year). 

RECOMMENDATION 1.4

The Company Secretary attends all meetings of the Board and is 
accountable to the Board through the Chairman. The Company 
Secretary is responsible for ensuring that the Company complies 
with its statutory requirements.

During the Reporting Period, the Board has focused on the 
following broad measurable objectives, with a specific focus 
on gender diversity:
 ●

Achieve a diverse environment that drives engagement 
and inclusion;

 ● Undertake an annual review of trends across key metrics;
 ●

Performance, career development, talent identification 
and succession planning; and
Increase awareness and accessibility of Flexible Working 
Arrangements across the organisation.

 ●

Achieve a diverse environment that drives engagement 
and inclusion
One of our key focus areas for the Reporting Period was gender 
diversity. A significant body of work was completed on ensuring 
that our policies and practices internally were supportive of 
encouraging equal participation of women within the workplace. 
This included a refresh of our flexible work practices within the 
organisation as well as updating our maternity leave policies and 
recruitment processes. We also undertook our second gender 
pay equity review during 2015, with minimal action required to be 
taken as a result of this review. We are very pleased to advise that 
FlexiGroup was again compliant during the Reporting Period with 
the Workplace Gender Equality Act 2012. 

PRINCIPLE 1.5 

The Company has a formal Diversity Policy which ensures that the 
Company meets its diversity obligations which includes, but is not 
limited to, gender, ethnicity, cultural background, disability, age or 
educational experience. 
The Board believes that diversity is a key business priority and 
creates a work environment which benefits from innovation by 
bringing together different perspectives to the business.

The Board:
(a) has established a Diversity Policy;
(b)  has established measurable objectives for achieving gender 

diversity; and

(c)  annually assesses both the measurable objectives for achieving 

gender diversity and the progress in achieving them.

The Diversity Policy is available on the Company’s website at  
www.flexigroup.com.au/investorcentre/corporategovernance.

32

FLEXIGROUP ANNUAL REPORT 2015The Company aims to ensure that its employee population reflects 
the diversity, in particular the gender diversity, of the communities 
in which we operate. As at the end of the Reporting Period:
 ●
 ●
 ●
 ●

37% of the Group’s employees were women; 
females represented 31% of the Group’s management staff;
20% of the executive level roles were held by women; and
the Board had one female Director.

While the overall numbers of women within the organisation has 
remained consistent during the Reporting Period in line with last 
financial year’s internal target (37%) and there has been some 
improvements in these statistics in the management numbers 
during the last financial year (up 3% to 31%), we still need to retain 
a focus on gender based initiatives to drive greater improvements 
over the next twelve months.

We have also continued to offer six weeks paid maternity leave to 
eligible employees in addition to the government paid parental 
leave scheme, which has helped us support women returning to 
work after taking maternity leave. 

Annual review of trends across various metric measures
The Company measured and reviewed various gender metrics 
during the Reporting Period to identify issues that affect gender 
balance in the workplace. The results show a healthy mix based 
on industry wide trends. The following gender metrics were 
monitored across the Company during the Reporting Period:
 ●

the workplace profile showing the split by gender at various 
levels up to Board level;
parental leave statistics;
statistics provided by our Employee Assistance Provider; and
analysis from the Hewitt survey and other pulse survey results, 
which enabled us to identify the engagement levels of females 
within the organisation compared to the general population.

 ●
 ●
 ●

Performance, career development, talent identification and 
succession planning
FlexiGroup has various initiatives in place to assist female 
employees and ensure the provision of an equal opportunity 
to develop and progress to senior management positions. 
All employees are encouraged to develop and grow their 
performance and career through regular tailored conversations. 
FlexiGroup engages in a regular talent and succession planning 
process across all levels of the organisation. As part of this 
process, we have commenced tracking succession plans with 
a view to gender participation. 

As a result of our focus on gender diversity and inclusion, 
FlexiGroup introduced a development initiative in April 2015 
focused on building the leadership capability of a cross section 
of our front line and middle management female leaders. 
This program aims to develop leadership capability and confidence 
for female leaders via a leadership program, regular networking 
forums, and exposure to successful internal and external leaders. 

Increase awareness and accessibility of Flexible Working 
Arrangements across the organisation 

During the Reporting Period, FlexiGroup undertook a review 
of our Flexible Working Arrangements policies and practices. 
A policy was made available to all employees that provided greater 
clarity regarding flexible working options in addition to part time 
working arrangements. In addition to a mix of fixed and variable 
part time arrangements across our business, where practicable 
we also have a number of employees working flexibly from home. 
In a recently conducted survey, 73% of FlexiGroup employees 
responded favourably to the question of whether they feel they 
have the flexibility to modify their work schedule to address 
personal situations. 

For the next financial year, the Board’s aim is to achieve the 
following key diversity metrics:

Key diversity metrics

Female representation 
– Board, Executive 
Team and Management

Engagement of 
identified groups 

Flexible Working 
Arrangements

Female representation among  
non-executive Directors of 
approximately 20% 
Female representation among the 
Executive Team of approximately 20%

Objective – No statistically significant 
differences in Employee Engagement 
scores based on gender or age  
(both gender and age can be identified as 
a result of our surveys while maintaining 
privacy of individuals)

Objective – a minimum of 5% of the 
employee population having accessed 
Flexible Working Arrangements during 
the financial year

33

 FLEXIGROUP ANNUAL REPORT 2015AS AT 30 JUNE 2015

CORPORATE GOVERNANCE STATEMENT (CONTINUED)

RECOMMENDATION 1.6

PRINCIPLE 2 – STRUCTURE THE BOARD TO ADD VALUE

The Company has a process for periodically evaluating the 
performance of the Board, its committees and individual Directors. 

The Remuneration Committee is responsible for determining 
the process for evaluating the performance of the Board, its 
committees and individual Directors. Evaluations are conducted 
annually. The performance evaluation process is conducted by way 
of questionnaires to effectively review:
 ●
 ●

the performance of the Board and each of its committees; and
the individual performance of the Chairman and each Director, 
including the CEO.

The questionnaires are completed by each Director and the 
responses compiled by the Chairman. The reports on the 
performance of the Board and each committee are provided 
to all Directors and discussed by the Board. The report on the 
Chairman’s performance is provided to the Chairman and 
the Remuneration Committee. The Chairman meets with the 
Remuneration Committee to discuss the findings of his report. 
The report on each individual Director is provided to the individual 
and the Chairman. The Chairman meets individually with each 
Director to discuss the findings of their report.

The Remuneration Committee reviews and makes 
recommendations to the Board on the criteria for the 
evaluation of the performance of the CEO, and conducts the 
evaluation of the performance of the CEO. The Remuneration 
Report on pages 12-28 discloses the process for evaluating 
the performance of senior executives, including the CEO. 

A performance evaluation of the Board, its committees and 
individual Directors was undertaken for the Reporting Period 
in accordance with the above process.

RECOMMENDATION 1.7

The Company has a process for periodically evaluating the 
performance of the CEO and its other senior executives.

The Board, in conjunction with the Remuneration Committee, is 
responsible for approving performance objectives for the CEO 
and other senior executives, and evaluating the performance of 
each senior executive against these objectives. The objectives are 
set for each senior executive at the beginning of each financial 
year and reflect specific financial and non-financial metrics which 
are aligned to the Company’s strategy. The performance of each 
senior executive in respect of a financial year is measured against 
those metrics. A performance evaluation of senior executives 
was undertaken for the Reporting Period in accordance with the 
above process. 

Remuneration is reviewed annually by the Remuneration 
Committee in line with the financial year and is dependent on 
each senior executive’s performance against their objectives. 
Any increases to executive remuneration need to be approved 
by the Board and are effective from 1 July, following the annual 
performance review. 

There is a further discussion on the performance objectives and 
the performance of each KMP in the Remuneration Report at  
pages 12-28.

34

RECOMMENDATION 2.1

Nomination Committee

The Board has a Nomination Committee which has adopted a 
Nomination Committee Charter. During the Reporting Period, 
the composition of the Nomination Committee was as follows: 
Chair: Chris Beare. Members: Andrew Abercrombie, Anne Ward, 
John Skippen and Rajeev Dhawan. As at the date of this Corporate 
Governance Statement, the composition of the Nomination 
Committee was as follows: Chair: Rajeev Dhawan Members: 
Andrew Abercrombie, Rajeev Dhawan. With the exception of 
Andrew Abercrombie, all members of the Nomination Committee 
are independent, including the Chairman. The number of times the 
Nomination Committee met throughout the Reporting Period and 
the attendance rates of its members are contained on page 10.

The Committee is a committee of the Board established in 
accordance with the Company’s constitution and authorised by the 
Board to assist it in fulfilling its statutory, fiduciary and regulatory 
responsibilities. It has the authority and power to exercise the role 
and responsibilities set out in its charter and under any separate 
resolutions of the Board. 

The Nomination Committee assists and advises the Board on:
(a)  Director selection and appointment practices; 
(b)  Director performance evaluation processes and criteria; 
(c)  Board composition; and 
(d)    Succession planning for the Board and senior management, 

to ensure that the Board is of a size and composition 
conducive to making appropriate decisions, with the benefit 
of a variety of perspectives and skills, and in the best interests 
of the Company as a whole.

Under its Charter, the Nomination Committee is responsible for the 
functions specified above.

The Nomination Committee Charter is disclosed on the 
Company’s website at www.flexigroup.com.au/investorcentre/
corporategovernance.

RECOMMENDATIONS 2.2-2.5

Composition of the Board and independence

During the Reporting Period, the Board adopted a policy of 
ensuring that it was composed of a majority of independent non-
executive Directors, who with other Directors, including the CEO, 
comprised an appropriate mix of skills to provide the necessary 
breadth and depth of knowledge and experience to meet the 
Board’s responsibilities and objectives. The Board reviews its 
membership to ensure that it offers the range of business skills 
and expertise demanded by the Company’s operations. Details of 
each person who acted as Director during the Reporting Period, 
including each person’s name, length of service, skills, experience, 
relevant qualifications and expertise, are set out on pages 8-9.

During the Reporting Period, the Directors on the Board 
collectively had a combination of skills and experience in the 
competencies set out in the table below. These competencies are 
set out in the skills matrix that the Board uses to assess the skills 
and experience of each Director and the combined capabilities of 
the Board. The skills matrix also indicates the areas in which the 
Board is seeking to increase its depth of skills.

FLEXIGROUP ANNUAL REPORT 2015Board skills matrix benchmarking table
This table sets out the skills and diversity criteria that the Company assesses against for the purposes of the Board skills matrix developed 
in accordance with recommendation 2.2 of the ASX Guidelines (3rd Edition).

General skills and attributes

Skills
 ●

150+ ASX Boards 
experience
Entrepreneur
 ●
 ●
Leadership
 ● Governance
Strategy
 ●
Finance
 ●
Audit, risk and 
 ●
compliance
IT and technology

 ●
 ● HR
 ●

Business 
development.

Function
 ●
 ●
 ● Operations.

Finance;
Accounting; and

International  
management
Americas/  
 ●
Europe; and
Asia.

 ●

Professional  
director skills
 ●
 ●
 ●
 ●
 ●

Risk and compliance;
Financial and audit;
Strategy;
Policy development;
Executive  
management; and
Previous board 
experience.

 ●

Interpersonal skills
Leadership
 ●
Ethics and integrity
 ●
Contribution
 ●
 ● Negotiation.

Governance skills
 ●

Board experience – listed and non-listed 
environments; and
Executive experience reporting to external/internal 
boards.

 ●

Business/Industry skills
 ●
 ● Mergers and acquisitions experience, including due 

Business management experience and qualifications;

diligence and integration;
Legal experience and qualifications;
Risk management;
Professional marketing;

 ●
 ●
 ●
 ● Overseas experience;
 ●
 ●
 ●

IT and online digital platforms;
People management strategy; and
Project management/change management.

During the Reporting Period, the Board considered that collectively 
the Directors had the range of skills, knowledge and experience 
necessary to direct the Company. The non-executive Directors 
contributed operational knowledge, an understanding of the 
industry in which the Company operates, knowledge of financial 
markets and an understanding of the health, safety, environmental 
and community matters that are important to the Company. 
The CEO brought an additional perspective to the Board through 
a thorough understanding of the Company’s business.

During the Reporting Period, with the exception of the CEO, 
all of the Directors were non-executive Directors, including the 
Chairman, and the Board determined that each of the non-
executive Directors (other than Andrew Abercrombie because 
Andrew Abercrombie holds (indirectly) 25% of the shares currently 
on issue in the Company) were independent, including the 
Chairman. As at the date of this Corporate Governance Statement, 
a majority of the Board is independent and the entire Board is 
non-executive.

Determination of a non-executive Director’s independence is 
based on a Board’s individual and on-going assessment that the 
Director is free of any relationship or any material business interest 
that could be reasonably considered to interfere with the exercise 
of their independent judgement and conflict with the interests of 
the Company. 

In order for a Director to be considered independent, the Board 
must determine that the Director does not have a material 
relationship with the Company other than as a consequence 
of being a Director. A “material relationship” includes a direct 
or indirect relationship that could reasonably be considered to 
influence, in a material way, a Director’s decision in relation to the 
Company. When considering whether a relationship is “material”, 
the Board will consider the materiality to each of the Company, the 
Director and the person or organisation with which the Director 
is related (for example, as a customer or supplier). The Board has 

not set quantitative materiality thresholds to be used in assessing 
whether a relationship is a “material relationship” and it considers 
all relationships on a case-by-case basis.

The Board regularly reviews the independence of each Director. 
Any Director who considers that he or she has, or may have, a 
conflict of interest or a material personal interest in any matter 
concerning the Company is required to give the Directors 
immediate notice of the interest.

Each non-executive Director is also appointed to at least one 
Committee. Each Committee has a Charter defining its roles and 
responsibilities.

There is no specific term of office for non-executive Directors. 
The date of appointment of each non-executive Director is set out 
on pages 8-9.

RECOMMENDATION 2.6

Induction training is provided to all new Directors. The training 
includes provision of an induction manual and discussions with 
the CEO and senior executives. The induction materials include 
information about the Company’s strategy, culture, values, 
key policies, the Company’s financial, operational and risk 
management position, the rights and responsibilities of Directors 
and the role of the Board and its committees. All Directors 
are expected to maintain the skills required to discharge their 
obligations. The Company provides professional development 
opportunities for Directors to develop and maintain their skills 
and knowledge. 

35

FLEXIGROUP ANNUAL REPORT 2015 
AS AT 30 JUNE 2015

CORPORATE GOVERNANCE STATEMENT (CONTINUED)

PRINCIPLE 3 – ACT ETHICALLY AND RESPONSIBLY

RECOMMENDATION 3.1

Code of Conduct

The Company has a formal Code of Conduct which all Directors, 
officers, senior executives and employees of the Company and 
subsidiaries and entities that the Company directly or indirectly 
controls are required to adhere to, together with a comprehensive 
range of corporate policies, which details the framework for 
acceptable corporate behaviour. The Code of Conduct also applies 
to contractors, consultants and associates of the Company. 
Together, these set out the procedures that personnel are required 
to follow in a range of areas including share trading, employment 
practices and regulatory compliance. The corporate policies are 
reviewed periodically.

The Code of Conduct sets out the ethical standards and rules of 
the Company and provides a framework for how the Company will 
operate its business in a manner that will protect its stakeholders. 
The objective of the Code is to:
1.  

 provide a benchmark for professional behaviours throughout 
the Company;
 support the Company’s business reputation and corporate 
image within the community; and
 make Directors and employees aware of the consequences if 
they breach Company policy. 

2.  

3.  

A copy of the Company’s Code of Conduct and other policies are 
available on the Company’s website at www.flexigroup.com.au/
investorcentre/corporategovernance.

Policy on Trading in Company’s Securities

Director’s and employee’s shareholdings and share trading are 
subject to the Company’s Trading Policy, which restricts the times 
when a Director or employee can purchase or sell Company 
securities.

The Company’s Trading Policy permits Directors and employees of 
the Company to acquire and sell the Company’s shares only when 
they are not in possession of price sensitive information that is not 
generally available to the market.

Further, the Company’s Trading Policy provides that to avoid 
drawing an adverse inference of unfair dealing, Directors and 
employees must not deal in the Company’s shares in the month 
immediately before the half yearly results and yearly results are 
publicly available and in the month preceding the Annual General 
Meeting.

Notwithstanding this Policy, there is no period during which an 
individual is exempt from the requirements of the Corporations Act 
in relation to insider trading provisions.

A copy of the Company’s Trading Policy and other 
policies are available on the Company’s website at  
www.flexigroup.com.au/investorcentre/corporategovernance.

36

PRINCIPLE 4 – SAFEGUARD INTEGRITY IN CORPORATE 
REPORTING

RECOMMENDATION 4.1

Audit & Risk Committee

The Audit & Risk Committee of Directors is comprised of a majority 
of independent non-executive Directors. All members have 
appropriate business and financial expertise to act effectively as 
members of the Company, as determined by the Board.

During the Reporting Period, the composition of the Audit & Risk 
Committee was as follows: Chair: John Skippen. Members: Anne 
Ward, Chris Beare, Rajeev Dhawan. As at the date of this Corporate 
Governance Statement, the composition of the Audit & Risk 
Committee was as follows: Chair: John Skippen. Members: Andrew 
Abercrombie, Rajeev Dhawan. During the Reporting Period, all 
members of the Audit & Risk Committee were independent, 
including the Chairman. The qualifications and experience of the 
members is set out on pages 8-9 along with the number of times 
the Audit & Risk Committee met throughout the Reporting Period 
and the attendance rates of its members on page 10. The Audit & 
Risk Committee Charter is disclosed on the Company’s website at 
www.flexigroup.com.au/investorcentre/corporategovernance.

The Audit & Risk Committee provides advice and assistance to 
the Board in fulfilling the Board’s responsibilities relating to the 
Group’s financial risk management and compliance systems and 
practice, financial statements, financial and market reporting 
processes, internal accounting and control systems, internal and 
external audit and such other matters as the Board may request 
from time to time.

The Audit & Risk Committee’s processes are designed to establish 
a proactive framework and dialogue in which the Committee, 
management and external and internal auditors review and 
assess the risk framework, the quality of the earnings, liquidity 
and the strength of the income statements and balance sheets, 
and transparency and accuracy of reporting. In fulfilling its 
responsibilities, the Audit & Risk Committee reviews the processes 
the CEO (or, in the interim until a new CEO is appointed, the group 
of people primarily and directly responsible to the Directors for the 
general and overall management of the Company) and CFO have in 
place to support their certifications to the Board.

The Company has performance appraisal and remuneration 
policies for the Board, the Board’s Committees, individual Directors 
and executives. The Board engages expert external assistance, as 
appropriate, in reviewing and implementing these policies.

FLEXIGROUP ANNUAL REPORT 2015RECOMMENDATION 4.2

Certifications

In accordance with section 295A of the Corporations Act, for the 
Reporting Period, the executives primarily and directly responsible 
to the Directors for the general and overall management of the 
Company until a new CEO is appointed (being David Stevens (CFO) 
and Peter Lirantzis (COO)) have certified to the Board that:
– 

 the financial records of the Company have been properly 
maintained in accordance with section 286 of the 
Corporations Act;
 the financial statements and the notes to the financial 
statements comply with Accounting Standards, the 
Corporations Regulations 2001 and other mandatory 
professional reporting requirements; and
 the financial statements and the notes to the financial 
statements give a true and fair view of the financial position 
and performance of the Company and consolidated entity.

– 

– 

In addition, David Stevens and Peter Lirantzis have stated to the 
Board in writing that: 
– 

 the Company’s financial report is founded on sound systems 
of risk management and internal compliance and control 
which implements the policies adopted by the Board; and
 the Company’s risk management and internal compliance and 
control system is operating effectively in all material respects.

– 

Further, assurance regarding the integrity of the Company’s 
control systems is provided by the internal audit function which 
reports directly to the Audit & Risk Committee.

The Company has the following guiding principles to ensure the 
independence of the Auditor:
1.  

 the Audit & Risk Committee will review and assess the 
independence of the external auditor, including but not limited 
to any relationships with the Company or any other entity that 
may impair the external auditor’s judgement or independence 
in respect of the Company;
 the Audit & Risk Committee will request an annual 
confirmation of independence from the external auditor;
 any non-audit work performed by the external auditor will 
require approval from the Audit Committee; and
 the Audit & Risk Committee will require the rotation of the 
audit signing partner and the independence review partner 
every five years.

2. 

3.  

4. 

RECOMMENDATION 4.3

The Board requests that PricewaterhouseCoopers, the Company’s 
external auditor, attends the Annual General Meeting of the 
Company and is available to answer shareholder questions 
relating to the audit of the Company’s financial statements, 
preparation and content of the auditor’s report, the accounting 
policies adopted by the Company and auditor independence. 
PricewaterhouseCoopers has provided the Audit & Risk Committee 
with a confirmation of its independence for the Reporting Period. 

The Board has determined that it is satisfied as to the independence 
of the external auditor in relation to the Reporting Period and the 
audit of the Financial Report for the Reporting Period.

PRINCIPLE 5 – MAKE TIMELY AND 
BALANCED DISCLOSURE

The Board recognises the importance of keeping the market fully 
informed of the Company’s activities and of communicating openly 
and clearly with all stakeholders.

The Company has a Disclosure and Communication Policy 
to ensure compliance with the ASX Listing Rules continuous 
disclosure requirements and the Corporations Act 2001. 
The Company has established a Disclosure Committee which 
manages the Company’s compliance with its disclosure obligation 
and the Policy. The Company’s Disclosure and Communication 
Policy is available on the Company’s website at  
www.flexigroup.com.au/investorcentre/corporategovernance.

Information considered to require disclosure is announced 
immediately through the ASX. Key presentations given by Company 
personnel to investors and institutions are also lodged simultaneously 
with the ASX. Following the lodgement of an announcement with ASX, 
key communications are placed on the Company’s website. General 
and historical information about the Company and its operations is 
also available on the Company’s website.

PRINCIPLE 6 – RESPECT THE RIGHTS OF SHAREHOLDERS

It is the Board’s aim that the Company maintains effective 
communications and keeps its shareholders fully informed of 
significant developments and activities of the Company as well 
as provide them with the facilities to allow them to exercise their 
rights as security holders effectively.

This commitment is achieved by:
1.  

2. 

3. 

4. 

5.  

 complying with the ASX Listing Rules and the Corporations Act 
2001 continuous disclosure and reporting requirements;
 distribution of the Annual Report to all shareholders other 
than any who notify the Company that they do not wish to 
receive it, as well as publishing Annual Reports and financial 
statements on the Company’s website at  
www.flexigroup.com.au/investorcentre/corporategovernance;
 holding an accessible and informative Annual General 
Meeting. The Board requests the external auditor to attend 
the Annual General Meeting of the Company and be available 
to answer shareholder questions relating to the audit of the 
Company’s financial statements, preparation and content of 
the auditor’s report, the accounting policies adopted by the 
Company and auditor independence;
 regularly updating the Company’s website  
(www.flexigroup.com.au) to include annual and interim 
reports, market announcements, and presentations as well 
financial and shareholder information to ensure transparency 
and a high level of communication of the Company’s 
operations and financial situation, to the extent that this 
information is not commercially sensitive; and
 responding to questions and comments at the AGM which 
were submitted by shareholders in advance of the AGM on the 
management of the Company.

The Company encourages direct electronic contact from 
shareholders – the Company’s website has a “contact us” section 
which allows shareholders to submit an electronic form with 
questions or comments and sets out the email address for the 
Company’s share registry. 

37

FLEXIGROUP ANNUAL REPORT 2015 
CORPORATE GOVERNANCE STATEMENT (CONTINUED)

PRINCIPLE 7 – RECOGNISE AND MANAGE RISK

Certifications

Risk Management

The Board recognises that risk management and internal control 
are fundamental to sound management and that oversight of such 
matters is a key responsibility of the Board. The Company has a 
risk management policy framework and governance structure 
designed to ensure that the risks of conducting business are 
properly managed. Management is responsible to the Board 
for identifying, managing, reporting upon and implementing 
measures to address risk.

RECOMMENDATION 7.1

The Board oversees and reviews the effectiveness of risk 
management in the organisation and is assisted and advised in this 
role by the Audit & Risk Committee. During the Reporting Period, the 
composition of the Audit & Risk Committee was as follows: Chair: John 
Skippen. Members: Anne Ward, Chris Beare, Rajeev Dhawan. During 
the Reporting Period, all members of the Audit & Risk Committee 
were independent, including the Chairman. As at the date of this 
Corporate Governance Statement, the composition of the Audit & Risk 
Committee was as follows: Chair: John Skippen. Members: Andrew 
Abercrombie, Rajeev Dhawan. The number of times the Audit & Risk 
Committee met throughout the Reporting Period and the attendance 
rates of its members is set out on page 10. 

The Audit & Risk Committee Charter which sets out the role 
and responsibilities of the Committee is disclosed on the 
Company’s website at www.flexigroup.com.au/investorcentre/
corporategovernance. The Company has adopted a risk 
management statement as required by the Audit & Risk 
Committee Charter.

The Audit & Risk Committee has responsibility for managing 
risk. However, ultimate responsibility for risk oversight and risk 
management vests with the Board. The Company has identified 
key risks within the business. In the ordinary course of business, 
management monitors and manages these risks. Key operational 
and financial risks are presented to and reviewed by the Board.

RECOMMENDATION 7.2

The Board delegates the review of the Company’s risk 
management framework to the Audit & Risk Committee to satisfy 
itself that it continues to be sound and operate within the risk 
appetite set by the Board. The risk management framework is 
reviewed on at least an annual basis.

There have been no material changes to the Company’s risk 
framework during the Reporting Period.

RECOMMENDATION 7.3

The Company maintains an internal audit function which reviews 
and reports to the Audit & Risk Committee on the effectiveness 
of these mechanisms. Management provides regular compliance 
assurance reports to the Board and its Committees.

38

In accordance with section 295A of the Corporations Act, for the 
Reporting Period, the executives primarily and directly responsible 
to the Directors for the general and overall management of the 
Company until a new CEO is appointed (being David Stevens (CFO) 
and Peter Lirantzis (COO)) have certified to the Board that:
– 

 the financial records of the Company have been properly 
maintained in accordance with section 286 of the 
Corporations Act;
 the financial statements and the notes to the financial 
statements comply with Accounting Standards, the 
Corporations Regulations 2001 and other mandatory 
professional reporting requirements; and
 the financial statements and the notes to the financial 
statements give a true and fair view of the financial position 
and performance of the Company and consolidated entity.

– 

– 

In addition, David Stevens and Peter Lirantzis have stated to the 
Board in writing that: 
– 

 the Company’s financial report is founded on sound systems of 
risk management and internal compliance and control which 
implements the policies adopted by the Board; and
 the Company’s risk management and internal compliance and 
control system is operating efficiently and effectively in all 
material respects in relation to the financial reporting risks.

– 

RECOMMENDATION 7.4

The Company does not have any material exposure to economic, 
environmental or social sustainability risks.

PRINCIPLE 8 – REMUNERATE FAIRLY AND 
RESPONSIBLY

The Board has a Remuneration Committee which has a 
Remuneration Committee Charter.

RECOMMENDATION 8.1

During the Reporting Period, the composition of the Remuneration 
Committee was as follows: Chair: Rajeev Dhawan. Members: Anne 
Ward, Chris Beare, John Skippen. During the Reporting Period, 
all members of the Remuneration Committee were independent, 
including the Chairman. As at the date of this Corporate 
Governance Statement, the composition of the Remuneration 
Committee was as follows: Chair: Rajeev Dhawan. Members: 
Andrew Abercrombie, John Skippen. 

The Remuneration Committee Charter is disclosed on the 
Company’s website at www.flexigroup.com.au/investorcentre/
corporategovernance. Details of the number of meetings of the 
Remuneration Committee held during the period and of each 
member’s attendance at those meetings are set out on page 10.

The Company has performance appraisal and remuneration 
policies for the Board, the Board’s Committees, individual Directors 
and executives. The Board engages expert external assistance, as 
appropriate, in reviewing and implementing this Policy.

The CEO’s performance evaluation of key executives is 
periodically reviewed by the Remuneration Committee. 
The performance evaluation of the CEO is undertaken by 
the Remuneration Committee.

AS AT 30 JUNE 2015FLEXIGROUP ANNUAL REPORT 2015Remuneration Committee

The Remuneration Committee assists and advises the Board 
on remuneration policies and practices for the Board, the 
CEO, the CFO, senior management and other persons whose 
activities, individually or collectively, affect the financial 
soundness of the Company.

(c) 

(b) 

The Remuneration Committee responsibilities include:
 the ongoing appropriateness and relevance of the 
(a) 
remuneration framework for the chairperson and the non-
executive Directors (including the process by which any pool 
of Directors’ fees approved by the shareholders is allocated to 
Directors);
 the Company’s policy on remuneration for the CEO and 
senior management, any changes to the policy and the 
implementation of the policy (including any shareholder 
approvals required);
 the total remuneration packages for the CEO and senior 
management (including base pay, incentive payments, equity 
based awards, superannuation and other retirement rights, 
employment contracts), any changes to remuneration package 
and recommending proposed award after performance 
evaluation procedures;
 the Company’s recruitment, retention and termination policies 
for the CEO and senior management and any changes to those 
policies;
 incentive schemes, if appropriate, for the CEO and senior 
management;
 equity based plans, if appropriate, for the CEO, senior 
management and other employees;

(d) 

(e) 

(f) 

(g)   superannuation arrangements for Directors, senior executives 

and other employees;

RECOMMENDATION 8.2

Remuneration Report

In accordance with section 300A of the Corporations Act, disclosures 
in relation to Director and executive remuneration are included 
in a separate component of the Directors’ Report, entitled 
Remuneration Report. The Remuneration Report is set out on 
pages 12-28 and contains details of the Company’s remuneration 
philosophy, structure, including fixed and variable remuneration.

Board Remuneration

Remuneration of the non-executive Directors is fixed rather than 
variable to ensure that Board membership of an appropriate mix 
and calibre is maintained and aligned with remuneration trends 
in the marketplace. Remuneration levels and trends are reviewed 
with the assistance of independent external remuneration 
consultants, when appropriate.

CEO and Executive Remuneration

The underlying principles of risk and reward for performance  
remuneration are set out in the Remuneration Report on 
pages 12- 28. These principles recognise the different levels of 
contribution of management to the short-term and long-term 
success of the Company. A key element is the principle of reward for 
performance that is dependent upon both personal and Company 
performance. Every employee undergoes a formal performance 
appraisal each financial year which is used, in part, to determine 
that employee’s remuneration in the financial year ahead.

The CEO’s performance is continuously monitored and annually 
assessed. The assessment is used to determine, in part, the level 
of “at risk” remuneration paid to the CEO.

(h)  monitoring and providing input to the Board regarding:

RECOMMENDATION 8.3

(i) 

 legislative, regulatory or market developments likely to 
have a significant impact on the Company and legislative 
compliance in employment issues;

(ii)  the remuneration trends across the Company; and
(iii)   major changes to employee benefits structures in 

the Company.

As set out above, the Company offers equity based plans, 
if appropriate, for the CEO, senior management and other 
employees. The Company’s Trading Policy prohibits participants 
in equity based plans from entering into transactions which limit 
the economic risk of participating in the equity based plan whilst 
the relevant interests granted pursuant to an equity-based plan 
remain unvested. The Company’s Trading Policy is disclosed on 
the Company’s website at www.flexigroup.com.au/investorcentre/
corporategovernance.  

39

 FLEXIGROUP ANNUAL REPORT 2015 
 
 
AS AT 30 JUNE 2015

Auditor’s Independence Declaration

Auditor’s Independence Declaration 

As lead auditor for the audit of FlexiGroup Limited for the year ended 30 June 2015, I declare that to the 
best of my knowledge and belief, there have been: 

a)  no contraventions of the auditor independence requirements of the Corporations Act 2001 in 

relation to the audit; and 

Auditor’s Independence Declaration 
b)  no contraventions of any applicable code of professional conduct in relation to the audit. 

This declaration is in respect of FlexiGroup Limited and the entities it controlled during the period. 
As lead auditor for the audit of FlexiGroup Limited for the year ended 30 June 2015, I declare that to the 
best of my knowledge and belief, there have been: 

a)  no contraventions of the auditor independence requirements of the Corporations Act 2001 in 

relation to the audit; and 

b)  no contraventions of any applicable code of professional conduct in relation to the audit. 
SJ Smith 
This declaration is in respect of FlexiGroup Limited and the entities it controlled during the period. 
Partner 
PricewaterhouseCoopers 

Sydney 
17 August 2015 

SJ Smith 
Partner 
PricewaterhouseCoopers 

Sydney 
17 August 2015 

PricewaterhouseCoopers, ABN 52 780 433 757 
Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY  NSW  1171 
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au 

Liability limited by a scheme approved under Professional Standards Legislation. 

40

PricewaterhouseCoopers, ABN 52 780 433 757 
Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY  NSW  1171 
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au 

Liability limited by a scheme approved under Professional Standards Legislation. 

FLEXIGROUP ANNUAL REPORT 2015 
 
 
 
  
  
   
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
  
  
   
 
 
 
 
  
 
 
 
 
 
 
FlexiGroup Limited and its controlled entities
Annual Financial Statements – 30 June 2015
ABN 75 122 574 583

These financial statements are the consolidated financial 
statements of the consolidated entity consisting of FlexiGroup 
Limited and its subsidiaries. The financial statements are 
presented in Australian currency.

FlexiGroup Limited is a Company limited by shares, incorporated 
and domiciled in Australia. Its registered office and principal place 
of business is:
Level 8, The Forum
201 Pacific Highway
St Leonards NSW 2065

A description of the nature of the consolidated entity’s operations 
and its principal activities is included in the Operating and Financial 
Review in the Directors’ Report on page 2, which is not part of 
these financial statements.

The financial statements were authorised for issue by the Directors 
on 17 August 2015. The directors have the power to amend and 
reissue these financial statements.

Through the use of the internet, we have ensured that our 
corporate reporting is timely, complete, and available globally 
at a minimum cost to the Company. All press releases, financial 
statements and other information are available at Investor 
Information on our website: www.flexigroup.com.au.

Contents

Consolidated Income Statement

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Notes to the Financial Statements

Directors’ Declaration

Independent Auditor’s Report 

Shareholder Information

Corporate Directory

Page

42

43

44

45

46

47

91

92

94

96

41

FLEXIGROUP ANNUAL REPORT 2015 
FOR THE YEAR ENDED 30 JUNE 2015

Consolidated  
Income Statement

Total portfolio income

Interest expense

Net portfolio income

Employment expenses

Receivables and customer loans impairment expenses

Depreciation and amortisation expenses

Impairment of goodwill and other intangible assets

Operating expenses

Profit before income tax

Income tax expense

Profit for the year attributable to shareholders of FlexiGroup Limited

Earnings per share for profit attributable to the ordinary  
equity holders of the Company:

Basic earnings per share

Diluted earnings per share

Notes

4

5

12,13

5

6

Consolidated

2015
$m

340.8

(67.6)

273.2

(61.6)

(44.5)

(9.4)

–

(44.8)

112.9

(30.2)

82.7

2014
$m

318.1 

(67.5)

250.6

(66.1)

(34.1)

(10.0)

(12.5)

(42.9)

85.0

(27.4)

57.6

Cents

Cents

21

21

27.2

27.1

19.0

18.9

The above consolidated income statement should be read in conjunction with the accompanying notes.

42

FLEXIGROUP ANNUAL REPORT 2015FOR THE YEAR ENDED 30 JUNE 2015

Consolidated Statement of  
Comprehensive Income

Profit for the year

Other comprehensive income

Items that may be reclassified to profit or loss

Exchange differences on translation of foreign operations

Changes in the fair value of cash flow hedges, net of tax

Other comprehensive income for the year, net of tax

Total comprehensive income for the year attributable to shareholders of FlexiGroup Limited

Consolidated

2015
$m

82.7

(3.4)

(2.5)

(5.9)

76.8

2014
$m

57.6

3.3

0.1

3.4

61.0

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

43

FLEXIGROUP ANNUAL REPORT 2015Consolidated Statement  
of Financial Position

Assets

Current assets

Cash and cash equivalents

Receivables

Customer loans

Inventories

Total current assets

Non-current assets

Receivables

Customer loans

Plant and equipment

Goodwill

Other intangible assets

Total non-current assets

Total assets

Liabilities

Current liabilities

Payables

Borrowings

Current tax liabilities

Provisions

Deferred and contingent consideration

Total current liabilities

Non-current liabilities

Borrowings

Derivative financial instruments

Provisions

Deferred tax liabilities

Total non-current liabilities

Total liabilities

Net assets

Equity

Contributed equity

Reserves

Retained earnings

Total equity

Consolidated

2015
$m

2014
$m

Notes

7

9

10

8

9

10

11

12

13

14

15

16

15

17

16

6(e)

18

19(a)

19(b)

130.3

339.0

533.9

4.2

1,007.4

410.2

168.4

5.2

150.4

44.6

778.8

106.6

307.5

492.7

2.8

909.6

385.4

161.6

6.1

134.1

27.7

714.9

1,786.2

1,624.5

35.7

774.6

9.2

4.5

5.9

44.5

680.4

9.0

4.7

8.7

829.9

747.3

499.9

7.3

1.0

37.6

545.8

1,375.7

410.5

161.9

(3.0)

251.6

410.5

452.2

3.7

0.7

35.6

492.2

1,239.5

385.0

161.2

2.4

221.4

385.0

The above consolidated statement of financial position should be read in conjunction with the accompanying notes

44

AS AT 30 JUNE 2015FLEXIGROUP ANNUAL REPORT 2015FOR THE YEAR ENDED 30 JUNE 2015

Consolidated Statement of  
Changes in Equity

2014

Balance at the beginning of the year

Profit for the year

Other comprehensive income

Total comprehensive income for the year

Share based payment expense

Transfer from share based payments on issue of shares under Long Term 
Incentive Plan 

Shares issued for Lombard acquisition

Transfer to share capital

Other changes in share based payment

Share capital reserve (Note 19)

Dividends provided for or paid (Note 20)

Balance at the end of the year

2015

Balance at the beginning of the year

Profit for the year

Other comprehensive income

Total comprehensive income for the year

Share based payment expense

Exercise of employee share options 

Transfer to share capital

Other changes in share based payment

Dividends provided for or paid (Note 20)

Balance at the end of the year

Contributed
Equity
$m

153.1

–

–

–

–

2.6

2.6

2.9

–

–

–

161.2

161.2

–

–

–

–

0.5

0.2

–

–

161.9

Consolidated 

Reserves
$m

Retained 
Earnings
$m

0.6 

–

3.4

3.4

7.0

(2.6)

(2.6)

(2.9)

(0.8)

0.3

–

2.4

2.4 

–

(5.9)

(5.9)

0.8

–

(0.2)

(0.1)

–

(3.0)

210.9

57.6

–

57.6

–

–

–

–

–

–

(47.1)

221.4

221.4

82.7

–

82.7

–

–

–

–

(52.5)

251.6

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

Total
$m

364.6

57.6

3.4

61.0

7.0

–

–

–

(0.8)

0.3

(47.1)

385.0

385.0

82.7

(5.9)

76.8

0.8

0.5

–

(0.1)

(52.5)

410.5

45

 FLEXIGROUP ANNUAL REPORT 2015AS AT 30 JUNE 2015

Consolidated Statement 
of Cash Flows

Cash flows from operating activities

Interest and fee income received from customers

Payment to suppliers and employees

Borrowing costs

Taxes paid

Net cash inflows from operating activities

Cash flows from investing activities

Payment for purchase of plant and equipment and software

Loans to related parties

Payment for business acquisitions

Payment for deferred consideration relating to business acquisitions

Net movement in:

 Customer loans

 Receivables due from customers

Net cash outflows used in investing activities

Cash flows from financing activities

Dividends paid

Proceeds from issue of ordinary shares

Net movement in borrowings

Net cash inflows from financing activities

Notes

22

29(d)

25(a)(b) 

25(d)

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the year

Effects of exchange rate changes on cash and cash equivalents

Cash and cash equivalents at the end of the year

7

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

Consolidated

2015
$m

340.0

(118.3)

(68.7)

(31.8)

121.2

(26.4)

–

(18.8)

(3.0)

(64.3)

14.9

(97.6)

(52.5)

0.5

52.6

0.6

24.2

106.6

(0.5)

130.3

2014
$m

324.2

(101.8)

(69.1)

(29.0)

124.3

(17.7)

(0.8)

(38.0)

–

(70.9)

(63.0)

(190.4) 

(47.1)

–

96.1

49.0

(17.1)

122.8

0.9

106.6

46

FLEXIGROUP ANNUAL REPORT 2015      
Notes to the Financial Statements

Contents of the notes to the consolidated financial statements

Page

1.

2.

3.

4.

5.

6.

7.

8.

9.

Summary of significant accounting policies

Critical accounting estimates

Segment information

Total portfolio income

Expenses

Income tax expense

Cash and cash equivalents

Current assets – Inventories

Current and non-current assets – Receivables

10. Current and non-current assets – Customer loans

11. Non-current assets – Plant and equipment

12. Non-current assets – Goodwill

13. Non-current assets – Other intangible assets

14.  Current liabilities – Payables

15. Current and non-current liabilities – Borrowings

16. Current and non-current liabilities – Provisions

17.  Non-current liabilities – Derivative financial instruments

18. Contributed equity

19. Reserves and retained earnings

20. Dividends

21. Earnings per share

22. Reconciliation of profit after income tax to net cash inflow from operating activities

23. Share-based payments

24. Financial risk management

25. Business combination

26. Lease commitments

27.  Contingent liabilities

28. Group entities

29. Key management personnel disclosures

30. Related party transactions

31. Remuneration of auditors

32. Closed group

33.  Parent entity financial information

34. Securitisation and special purpose vehicles

35. Events occurring after the reporting period

48

56

57

59

59

60

61

61

62

62

63

64

66

66

66

67

67

67

69

70

71

71

72

75

80

83

83

84

86

87

88

89

90

90

90

47

 FLEXIGROUP ANNUAL REPORT 2015AS AT 30 JUNE 2015

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

1. 

 SUMMARY OF SIGNIFICANT 
ACCOUNTING POLICIES

This note provides a list of all significant accounting policies 
adopted in the preparation of these consolidated financial 
statements. These policies have been consistently applied to all the 
years presented, unless otherwise stated. The financial statements 
are for the consolidated entity (the Group) consisting of FlexiGroup 
Limited and its subsidiaries.

a.  Basis of preparation

These general purpose financial statements have been prepared 
in accordance with Australian Accounting Standards and 
interpretations issued by the Australian Accounting Standards 
Board and the Corporations Act 2001. FlexiGroup Limited is a for-
profit entity for the purpose of preparing financial statements.

(i)  Compliance with IFRS
The consolidated financial statements of FlexiGroup Limited also 
comply with International Financial Reporting Standards (IFRS) as 
issued by the International Accounting Standards Board (IASB).

(ii)  New and amended standards adopted by the Group
The Group has applied the following standards and amendments 
for first time for their annual reporting period commencing 1 July 
2014 and they have not had any material effect on its financial 
position or performance:
 ●
 ●
 ●

AASB 1031 (2013) Materiality
AASB 1048 (2013) Interpretation of Standards
AASB 2012-3 Amendments to Australian Accounting Standards 
– Offsetting-Financial Assets and Financial Liabilities
AASB 2013-3 Amendments to AASB 136 – Recoverable Amount 
Disclosures for Non-Financial Assets
AASB 2013-4 Amendments to Australian Accounting Standards 
– Novation of Derivatives and Continuation of Hedge Accounting
AASB 2013-5 and AASB 2012-3 Amendments to Australian 
Accounting Standards – Investment Entities
AASB 2013-9 Amendments to Australian Accounting Standards 
– Conceptual Framework, Materiality and Financial Instruments
AASB 2014-1 Amendments to Australian Accounting Standards 
– Part A: Annual Improvements 2010-2-12 and 2011-2013 Cycles
AASB 2014-1 Amendments to Australian Accounting Standards 
– Part C: Materiality
AASB 2014-2 Amendments to AASB 1053 – Transition to and 
between Tiers, and related Tier 2 Disclosure Requirements

 ●

 ●

 ●

 ●

 ●

 ●

 ●

(iii)  New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been 
published that are not mandatory for 30 June 2015 reporting 
periods and have not been early adopted by the Group. 

The following new standards to be applied in future periods are 
set out below and the Group is in the process of working out the 
implications of these standards:

– AASB 2015-1 Amendments to Australian Accounting Standards – 
Annual Improvements to Australian Accounting Standards 2012-2014 
Cycle – This standard refers to amendments to existing accounting 
standards in relation to IFRS 5, IFRS 7, IAS 19 and IAS 34. This 
standard is mandatory for adoption by the Group for the year 
ending 30 June 2017. Initial application is not expected to result in 
any material impact to the Group.

48

– AASB 2015-2 Amendments to Australian Accounting Standards 
– Disclosure Initiative: Amendments to AASB 101 – This standard 
facilitates improved reporting, including and emphasis on only 
including material disclosures, clarity on the aggregation and 
disaggregation of line items, the presentation of subtotals, the 
ordering of notes and the identification of significant accounting 
policies. This standard is mandatory for adoption by the Group for 
the year ending 30 June 2017. Initial application is not expected to 
result in any material impact to the Group.

– AASB 2015-3 Amendments to Australian Accounting Standards 
arising from the withdrawal of AASB 1031 Materiality. Guidance 
on materiality is located in AASB 101 Presentation of Financial 
Statements going forward. This standard is mandatory for adoption 
by the Group for the year ending 30 June 2016. Initial application is 
not expected to result in any material impact to the Group.

– AASB 9 Financial Instruments, AASB 2014-7 Amendments to 
Australian Accounting Standards arising from AASB 9 and AASB 
2014-8 Amendments to Australian Accounting Standards arising 
from AASB 9 – Application of AASB 9 – This standard makes 
significant changes to the way financial assets are classified for 
the purpose of determining their measurement basis and also to 
the amounts relating to fair value changes which are to be taken 
directly to equity. This standard also makes significant changes to 
hedge accounting requirements and disclosures. This standard is 
mandatory for adoption by the Group for the year ending 30 June 
2019. The financial impact to the Group of adopting AASB 9 has not 
yet been quantified.

– AASB 15 Revenue from Contracts with Customers – The standard 
contains a single model that applies to contracts with customers 
and two approaches to recognising revenue: at a point in time or 
over time. The model features a contract-based five-step analysis 
of transactions to determine whether, how much and when 
revenue is recognised. This standard is mandatory for adoption by 
the Group for the year ending 30 June 2018. The financial impact to 
the Group of adopting AASB 15 has not yet been quantified.

(iv)  Historical cost convention
These financial statements have been prepared under the 
historical cost convention, as modified by the revaluation of 
financial assets and liabilities (including derivative instruments) at 
fair value. Some disclosures in the income statement, statement 
of financial position, statement of cash flows and notes to the 
financial statements for comparatives have been reclassified to be 
consistent with current period disclosures.

(v)  Critical accounting estimates
The preparation of financial statements requires the use of certain 
critical accounting estimates. It also requires management to 
exercise its judgement in the process of applying the Group's 
accounting policies. The areas involving a higher degree of 
judgement or complexity, or areas where assumptions and 
estimates, are significant to the financial statements and are 
disclosed in Note 2.

FLEXIGROUP ANNUAL REPORT 2015 
b.  Principles of consolidation 

(i)   Subsidiaries
The consolidated financial statements incorporate the assets and 
liabilities of all subsidiaries of FlexiGroup Limited (“Company” 
or “parent entity”) as at 30 June 2015 and the results of all the 
subsidiaries for the year then ended. FlexiGroup Limited and its 
subsidiaries together are referred to in these financial statements 
as the Group or the consolidated entity.

Subsidiaries are all those entities (including special purpose 
entities) over which the Group has control. The Group controls 
an entity when the Group is exposed to, or has rights to, variable 
returns from its involvement with the entity and has the ability to 
affect those returns through its power to direct the activities of the 
entity. Subsidiaries are fully consolidated from the date on which 
control is transferred to the Group. They are deconsolidated from 
the date that control ceases. 

The acquisition method of accounting is used to account for the 
acquisition of subsidiaries by the Group (refer to Note 1(g)).

Intercompany transactions, balances and unrealised gains on 
transactions between Group companies are eliminated. Unrealised 
losses are also eliminated unless the transaction provides evidence 
of the impairment of the asset transferred. Accounting policies 
of subsidiaries have been changed where necessary to ensure 
consistency with the policies adopted by the Group. 

Investments in subsidiaries are accounted for at cost in the 
individual financial statements of FlexiGroup Limited.

(ii)    Employee Share Trust
The consolidated entity utilises a trust to administer the 
consolidated entity’s employee share scheme. The trust is 
consolidated into the consolidated entity. 

c.  Segment reporting

Operating segments are reported in a manner consistent with 
the internal reporting provided to the chief operating decision 
maker. The chief operating decision maker, who is responsible for 
allocating resources and assessing performance of the operating 
segments, has been identified as the Chief Executive Officer. 
Operating segments are described in Note 3.

d.  Foreign currency translation

(i)  Functional and presentation currency
Items included in the financial statements of each of the Group’s 
entities are measured using the currency of the primary economic 
environment in which the entity operates (‘’the functional 
currency”). The consolidated financial statements are presented 
in Australian dollars, which is FlexiGroup Limited’s functional and 
presentation currency.

(ii)  Transactions and balances
Foreign currency transactions are translated into the functional 
currency using the exchange rates prevailing at the dates of the 
transactions. Foreign exchange gains and losses resulting from 
the settlement of such transactions and from the translation of 
monetary assets and liabilities denominated in foreign currencies 
at year end exchange rates are generally recognised in profit 
or loss, except when they are deferred in equity as qualifying 
cash flow hedges and qualifying net investment hedges or are 
attributable to part of the net investments in foreign operations.

Foreign exchange gains and losses that relate to borrowings are 
presented in the income statement, within finance costs. All other 
foreign exchange gains and losses are presented in the income 
statement on a net basis within other income or other expenses.

Non-monetary items that are measured at fair value in a foreign 
currency are translated using the exchange rates at the date when 
the fair value was determined. Translation differences on assets 
and liabilities carried at fair value are reported as part of the fair 
value gain or loss. For example, translation differences on non-
monetary assets and liabilities such as equities held at fair value 
through profit or loss are recognised in profit or loss as part of the 
fair value gain or loss and translation differences on non-monetary 
assets such as equities classified as available-for-sale financial 
assets are recognised in other comprehensive income.

(iii)  Group companies
The results and financial position of all the Group entities (none of 
which has the currency of a hyperinflationary economy) that have 
a functional currency different from the presentation currency are 
translated into the presentation currency as follows:
 ●

assets and liabilities for each balance sheet presented are 
translated at the closing rate at the date of the balance sheet.
income and expenses for each income statement and 
statement of comprehensive income are translated at average 
exchange rates (unless this is not a reasonable approximation 
of the cumulative effect of the rates prevailing on the 
transaction dates, in which case income and expenses are 
translated at the dates of the transactions) and
all resulting exchange differences are recognised in other 
comprehensive income.

 ●

 ●

On consolidation, exchange differences arising from the 
translation of any net investment in foreign entities, and of 
borrowings and other financial instruments designated as hedges 
of such investments, are recognised in other comprehensive 
income. When a foreign operation is sold or any borrowings 
forming part of the net investment are repaid, a proportionate 
share of such exchange difference is recognised in the income 
statement, as part of the gain or loss on sale where applicable.

Goodwill and fair value adjustments arising on the acquisition of 
a foreign entity are treated as assets and liabilities of the foreign 
entities and translated at the closing rate.

49

 FLEXIGROUP ANNUAL REPORT 2015AS AT 30 JUNE 2015

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

1.    SUMMARY OF SIGNIFICANT ACCOUNTING 

(vi)  Mobile broadband revenue

POLICIES (CONTINUED)

e.  Revenue recognition

Revenue is measured at the fair value of the consideration received 
or receivable. Amounts disclosed as revenue are net of returns, 
trade allowances, rebates and amounts collected on behalf of 
third parties. 

The Group recognises revenue when the amount of revenue 
can be reliably measured, it is probable that future economic 
benefits will flow to the entity and specific criteria have been met 
for each of the Group’s activities as described below. The Group 
bases its estimates on historical results, taking into consideration 
the type of customer, the type of transaction and the specifics 
of each arrangement. Revenue is recognised for the major 
business activities as follows:

(i)  Lease finance interest income
Lease finance interest income is recognised by applying discount 
rates implicit in the leases to lease balances receivable at the 
beginning of each payment period.

Secondary lease income, including rental income on extended 
rental assets, is recognised when it is due on an accruals basis. 
Proceeds from the sale of rental assets are recognised upon 
disposal of the relevant assets.

(ii)  Interest income on customer loans
Interest income on loans is recognised in the income statement 
using the effective interest method. The effective interest method 
is a method of calculating the amortised cost of a financial asset 
and of allocation of the interest income over the relevant period. 
The effective interest rate is the rate that exactly discounts 
estimated future cash payments or receipts through the expected 
life of the financial instrument or, when appropriate, a shorter 
period to the net carrying amount of the financial asset or financial 
liability. When calculating the effective interest rate, the Group 
estimates cash flows considering all contractual terms of the 
financial instrument but does not consider future credit losses.

(iii)  Interest income – bank accounts/loss reserves
Interest income on bank and loss reserve balances is recognised 
using an effective interest method.

(iv)   Sale of goods
Revenue from sale of goods includes revenue from sale of 
equipment, parts and accessories. The revenue is recognised 
on delivery of goods sold.

Other portfolio income:

(v)  Equipment protection plan revenue
The Group operates an equipment protection and debt waiver plan 
entitled Protect Plan. Protect Plan revenue is recognised in the 
month it is due on an accruals basis. A provision for outstanding 
expected claims is recognised in the balance sheet for the cost of 
Protect Plan claims which have been incurred at year end, but have 
not yet been notified to the Group, or which have been notified to 
the Group but not yet paid.

Revenue relating to the sale of modems is recognised when the 
Group entity has delivered the goods to the dealer. Delivery does 
not occur until the products have been shipped to the specified 
location, the risks of obsolescence and loss have transferred to the 
dealer and the dealer has accepted the products. Revenue relating 
to the broadband contracts is recognised on an accruals basis over 
the life of the contract.

(vii) Cheque guarantee revenue
Revenue is recognised when the service associated with the 
guarantee has been provided on an accruals basis. All monthly fees 
are recognised in revenue in the month to which they relate.

f. 

Income tax

The income tax expense or revenue for the period is the tax 
payable on the current period’s taxable income based on the 
national income tax rate for each jurisdiction adjusted by changes 
in deferred tax assets and liabilities attributable to temporary 
differences and to unused tax losses.

The current income tax charge is calculated on the basis of the tax 
laws enacted or substantively enacted at the end of the reporting 
period in the countries where the companyʹs subsidiaries and 
associates operate and generate taxable income. Management 
periodically evaluates positions taken in tax returns with respect 
to situations in which applicable tax regulation is subject to 
interpretation. It establishes provisions where appropriate on the 
basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, 
on temporary differences arising between the tax bases of assets 
and liabilities and their carrying amounts in the consolidated 
financial statements. However, deferred tax liabilities are not 
recognised if they arise from the initial recognition of goodwill. 
Deferred income tax is also not accounted for if it arises from initial 
recognition of an asset or liability in a transaction other than a 
business combination that at the time of the transaction affects 
neither accounting nor taxable profit or loss. Deferred income tax 
is determined using tax rates (and laws) that have been enacted or 
substantially enacted by the end of the reporting period and are 
expected to apply when the related deferred income tax asset is 
realised or the deferred income tax liability is settled.

Deferred tax assets are recognised for deductible temporary 
differences and unused tax losses only if it is probable that future 
taxable amounts will be available to utilise those temporary 
differences and losses.

Deferred tax liabilities and assets are not recognised for temporary 
differences between the carrying amount and tax bases of 
investments in 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.

Deferred tax assets and liabilities are offset when there is a 
legally enforceable right to offset current tax assets and liabilities 
and when the deferred tax balances relate to the same taxation 
authority. Current tax assets and liabilities are offset when there is 
a legally enforceable right to offset and an intention to either settle 
the liability simultaneously. 

50

FLEXIGROUP ANNUAL REPORT 2015The Company and its wholly owned Australian controlled 
entities have implemented the tax consolidation legislation. As 
a consequence these entities are taxed as a single entity and the 
deferred tax assets and liabilities of these entities are set-off in 
the consolidated financial statements. Current and deferred tax 
is recognised in the Income statement except to the extent that 
it relates to items recognised in other comprehensive income 
or directly in equity. In this case, the tax is also recognised in 
comprehensive income or directly in equity respectively.

Tax consolidation legislation
FlexiGroup Limited and its wholly-owned Australian controlled 
entities have implemented the tax consolidation legislation.

The head entity, FlexiGroup Limited, and the controlled entities 
in the tax consolidated Group account for their own current and 
deferred tax accounts. These tax amounts are measured as if each 
entity in the tax consolidation was a stand-alone taxpayer in its 
own right.

In addition to its own current and deferred tax amounts, 
FlexiGroup Limited also recognises the current tax liabilities 
(assets) and the deferred tax assets arising from unused tax losses 
and unused tax credits assumed from controlled entities in the tax 
consolidation Group.

Assets or liabilities arising under tax funding agreements with the 
tax consolidated entities are recognised as amounts receivable 
from or payable to other entities in the Group. Details about the 
tax funding agreement are disclosed in Note 6(f). Any difference 
between the amounts assumed and amounts receivable or payable 
under the tax funding agreement are recognised as a contribution 
to (or distribution from) wholly-owned tax consolidation entities.

g.   Business combinations

The acquisition method of accounting is used to account for all 
business combinations, regardless of whether equity instruments 
or other assets are acquired. The consideration transferred for 
the acquisition of a subsidiary comprises the fair values of the 
assets transferred, the liabilities incurred and the equity interests 
issued by the Group. The consideration transferred also includes 
the fair value of any asset or liability resulting from a contingent 
consideration arrangement and the fair value of any pre-existing 
equity interest in the subsidiary. Acquisition-related costs are 
expensed as incurred.

Identifiable assets acquired and liabilities and contingent liabilities 
assumed in a business combination are, with limited exceptions, 
measured initially at their fair values at the acquisition date. On 
an acquisition-by-acquisition basis, the Group recognises any 
non-controlling interest in the acquiree either at fair value or at 
the non-controlling interest's proportionate share of the acquiree’s 
net identifiable assets. 

The excess of the consideration transferred, amount of any 
non-controlling interest in the acquired entity and acquisition-
date fair value of any previous equity interest in the acquiree 
over the fair value of the Group’s share of the net identifiable 
assets acquired is recorded as goodwill. If those amounts are less 
than the fair value of the net identifiable assets of the subsidiary 
acquired and the measurement of all amounts has been reviewed, 
the difference is recognised directly in profit or loss as a 
bargain purchase.

Where settlement of any part of cash consideration is deferred, 
the amounts payable in the future are discounted to their present 
value as at the date of exchange. The discount rate used is the 
entityʹs incremental borrowing rate, being the rate at which 
a similar borrowing could be obtained from an independent 
financier under comparable terms and conditions.

Contingent consideration is classified either as equity or a financial 
liability. Amounts classified as a financial liability are subsequently 
remeasured to fair value with changes in fair value recognised in 
profit or loss.

h.   Lease receivables – Group is lessor

The Group has classified its leases as finance leases for accounting 
purposes. Under a finance lease, substantially all the risks and 
benefits incidental to the ownership of the leased asset are 
transferred by the lessor to the lessees. The Group recognises 
at the beginning of the lease term an asset at an amount equal 
to the aggregate of the present value (discounted at the interest 
rate implicit in the lease) of the minimum lease payments and an 
estimate of the value of any unguaranteed residual value expected 
to accrue to the benefit of the Group at the end of the lease term.

(i)  Unearned interest
Unearned interest on leases and other receivables is brought to 
account over the life of the lease contract based on the interest 
rate implicit in the lease.

(ii)   Initial direct transaction costs
Initial direct costs (leases) or transaction costs (loans) incurred 
in the origination of leases and loans are included as part 
of receivables in the balance sheet and are amortised in the 
calculation of lease income and interest income.

i.  Loan receivables

Loan receivables are non-derivative financial assets with fixed or 
determinable payments that are not quoted in an active market. 
They arise when the Group provides loans to customers via 
products such as interest free loans/cards, Certegy Ezi-pay.

j.  Provision for doubtful debts

Losses on lease and loan receivables are recognised when they are 
incurred, which requires the Group to identify objective evidence 
that the receivable is impaired, and make best estimate of incurred 
losses inherent in the portfolio. The method for calculating the 
best estimate of incurred losses depends on the size, type and 
risk characteristics of the related financing receivable. For the 
majority of the receivables, the assessment is made collectively 
at a portfolio level, however individually significant receivables 
(primarily in the Enterprise portfolio) are assessed individually. 

The estimate requires consideration of historical loss experience, 
adjusted for current conditions, and judgements about the 
probable effects of relevant observable data, including present 
economic conditions such as delinquency rates, financial health 
of specific customers and market sectors, and the present 
and expected future levels of employment. The underlying 
assumptions, estimates and assessments used to provide for 
losses are updated periodically to reflect the Group’s view of 
current conditions which can result in changes to assumptions. 
Changes in such estimates can significantly affect the provision 
for doubtful debts.

51

 FLEXIGROUP ANNUAL REPORT 2015AS AT 30 JUNE 2015

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

1.    SUMMARY OF SIGNIFICANT ACCOUNTING 

POLICIES (CONTINUED) 

k.   Other Debtors

Other debtors are recognised initially at fair value and 
subsequently measured at amortised cost, using the effective 
interest rate method, less provision for impairment. Other 
debtors are generally due for settlement within 30 days. They are 
presented as current assets unless collection is not expected for 
more than 12 months after the reporting date.

l.  Leases – used by the Group

Leases of property, plant and equipment where the Group has 
substantially all the risks and rewards of ownership are classified 
as finance leases. Finance leases are capitalised at the lease’s 
inception at the lower of the fair value of the leased property or the 
present value of the minimum lease payments. The corresponding 
rental obligations, net of finance charges, are included in other 
long-term payables. Each lease payment is allocated between the 
liability and finance cost. The finance cost is charged to the income 
statement over the lease period so as to produce a constant 
periodic rate of interest on the remaining balance of the liability for 
each period. The property, plant and equipment acquired under 
finance leases is depreciated over the shorter of the asset’s useful 
life and the lease term.

Leases in which a significant portion of the risks and rewards of 
ownership are retained by the lessor are classified as operating 
leases. Payments made under operating leases (net of any 
incentives received from the lessor) are charged to the income 
statement on a straight-line basis over the period of the lease.

In the event of the Group sub-leasing any of its operating leases, 
the lease income is recognised on a straight-line basis over the 
lease term.

m.  Cash and cash equivalents

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

n.  Investments

The Group classifies its investments in the following categories: 
 ●
 ●
 ●
 ●

financial assets at fair value through profit or loss, 
loans and receivables, 
held-to-maturity investments, and 
available-for-sale financial assets. 

The classification depends on the purpose for which the 
investments were acquired. Management determines the 
classification of its investments at initial recognition and, in the 
case of assets classified as held-to-maturity, re-evaluates this 
designation at the end of each reporting period.

(i)  Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial 
assets held for trading which are acquired principally for the 
purpose of selling in the short term with the intention of making 
a profit. Derivatives are also categorised as held for trading 
unless they are designated as hedges. Assets in this category are 
classified as current assets if they are expected to be settled within 
12 months; otherwise they are classified as non-current.

The Group had no assets in this category at 30 June 2015 (2014: $nil).

(ii)  Loans and receivables
Loans and receivables are non-derivative financial assets with fixed 
or determinable payments that are not quoted in an active market. 
They arise when the Group provides money, goods or services 
directly to a debtor with no intention of selling the receivables. 
They are included in current assets, except for those with 
maturities greater than 12 months after the balance sheet date.

(iii)  Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets 
quoted in an active market with fixed or determinable payments 
and fixed maturities that the Group’s management has the positive 
intention and ability to hold to maturity. If the Group were to sell 
other than an insignificant amount of held-to maturity financial 
assets, the whole category would be tainted and reclassified as 
available-for-sale. Held-to-maturity financial assets are included 
in non-current assets, except for those with maturities less than 
12 months from the end of the reporting period, which would be 
classified as current assets. 

The Group had no assets in this category at 30 June 2015 (2014: $nil).

(iv)  Available-for-sale financial assets
Available-for-sale financial assets, comprising principally 
marketable equity securities, are non-derivatives that are either 
designated in this category or not classified in any of the other 
categories. They are included in non-current assets unless the 
investment matures or management intends to dispose of the 
investment within 12 months of the end of the reporting period. 
Investments are designated as available-for-sale if they do not 
have fixed maturities and fixed or determinable payments and 
management intends to hold them for the medium to long term. 

The Group had no assets in this category at 30 June 2015 (2014: $nil).

o.   Derivatives and hedging activities

Derivatives are initially recognised at fair value on the date 
a derivative contract is entered into and are subsequently 
remeasured to their fair value at the end of each reporting period. 
The accounting for subsequent changes in fair value depends on 
whether the derivative is designated as a hedging instrument, and 
if so, the nature of the item being hedged. 

The Group designates all derivatives held as at 30 June 2015 and 
30 June 2014 as hedges of a particular risk associated with the 
cash flows of recognised assets and liabilities and 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 

52

FLEXIGROUP ANNUAL REPORT 2015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.

The fair values of derivative financial instruments used for hedging 
purposes are disclosed in Note 17. Movements in the hedging 
reserve in shareholdersʹ equity are shown in Note 19(a). The full fair 
value of a hedging derivative is classified as a non-current asset or 
liability when the remaining maturity of the hedged item is more 
than 12 months; it is classified as a current asset or liability when 
the remaining maturity of the hedged item is less than 12 months. 

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 reclassified to profit or loss 
in the periods when the hedged item affects profit or loss (for 
instance when the forecast sale that is hedged takes place). 
The gain or loss relating to the effective portion of interest rate 
swaps hedging variable rate borrowings is recognised in profit or 
loss within interest expense.

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.

Certain derivative instruments do not qualify for hedge accounting. 
Changes in the fair value of any derivative instrument that does not 
qualify for hedge accounting are recognised immediately in profit 
or loss and are included in other income or other expenses.

p.  Inventories

Inventories are measured and lower of cost and net realisable 
value. The cost of inventories is based on the first-in, first-out 
principle. Inventories comprise of office equipment, parts and 
toners, returned rental equipment, extended rental equipment 
after the end of the contractual rental period and mobile 
broadband stock.

q.  Plant and equipment

Plant and equipment is 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 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 any component accounted for as 
a separate asset is derecognised when replaced. All repairs and 
maintenance are charged to the income statement during the 
reporting period in which they are incurred.

Depreciation is calculated using the diminishing value method to 
allocate their cost or revalue amounts, net of their residual values, 
over their estimated useful lives, as follows:

Depreciable assets

Depreciation rate

Plant and equipment

20-40%

The assets’ residual values and useful lives are reviewed, and 
adjusted if appropriate, at each balance sheet date.

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 of the asset disposed. 
These are included in the income statement.

r. 

Intangibles

(i)  Goodwill
Goodwill represents the excess of the cost of an acquisition over 
the fair value of the Group’s share of the net identifiable assets of 
the acquired subsidiary at the date of acquisition. 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 cash-generating units for the purpose of 
impairment testing. The allocation is made to those cash-generating 
units or Groups of cash-generating units that are expected to 
benefit from the business combination in which the goodwill arose, 
identified according to operating segments (Note 3).

(ii)  IT development and software
Costs incurred on software development projects (relating to 
the design and testing of new or improved software products) 
are recognised as intangible assets when it is probable that the 
project will be a success considering its commercial and technical 
feasibility and its costs can be measured reliably. The expenditure 
capitalised comprises all directly attributable costs, including direct 
labour. Other development expenditures that do not meet these 
criteria are recognised as an expense as incurred. Capitalised 
development costs are recorded as an intangible asset and 
amortised from the point at which the asset is ready for use over 
its useful life from 3 to 7 years.

(iii)  Merchant and customer relationships and other rights
Merchant and customer relationships acquired as part of a 
business combination are recognised separately from goodwill. 
The assets are measured at fair value at the date of acquisition less 
accumulated amortisation and impairment losses. Amortisation is 
calculated based on the timing of the projected cash flows of the 
relationships from 3 to 7 years.

(iv)  Non-Compete Agreements
Non-Compete Agreements have a finite useful life and are carried 
at cost less accumulated amortisation and impairment losses. 
Amortisation is calculated using the straight-line method to 
allocate the cost of non-compete arrangements over their term, 
generally 2 years.

53

 FLEXIGROUP ANNUAL REPORT 2015NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

1.    SUMMARY OF SIGNIFICANT ACCOUNTING 

v.  Provisions

POLICIES (CONTINUED) 

s.  Impairment of assets

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 tested 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 purpose of assessing 
impairment, assets are grouped at the lowest levels for which 
there are separately identifiable cash inflows which are largely 
independent of the cash inflows from other assets or groups of 
assets (cash generating units). Non-financial assets other than 
goodwill that suffered an impairment are reviewed for possible 
reversal of the impairment at each reporting period.

Provisions for legal claims, service warranties and make good 
obligations are recognised when the Group has a present legal or 
constructive obligation as a result of past events, it is probable that 
an outflow of resources will be required to settle the obligation 
and the amount has been reliably estimated. Provisions are not 
recognised for future operating losses.

Where there are a number of similar obligations, the likelihood 
that an outflow will be required in settlement is determined by 
considering the class of obligations as a whole. A provision is 
recognised even if the likelihood of an outflow with respect to any 
one item included in the same class of obligations may be small.

Provisions are measured at the present value of management’s 
best estimate of the expenditure required to settle the present 
obligation at the balance sheet date. The discount rate used to 
determine the present value reflects current market assessments 
of the value of money and the risks specific to the liability. The 
increase in the provision due to the passage of time is recognised 
as interest expense.

t.  Trade and other payables

w.  Employee benefits

These amounts represent liabilities for goods and services 
provided to the Group prior to the end of the financial year which 
are unpaid. The amounts are unsecured and are usually paid within 
30 days of recognition. Trade and other payables are presented as 
current liabilities unless payment is not due within 12 months after 
the reporting period. They are recognised initially at their fair value 
and subsequently measured at amortised cost using the effective 
interest method. 

u.  Borrowings

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 income statement over the period of the borrowings using the 
effective interest method. Fees paid on the establishment of loan 
facilities, which are not an incremental cost relating to the actual 
draw-down of the facility, are recognised as prepayments and 
amortised on a straight-line basis over the term of the facility.

Borrowings are removed from the balance sheet when the 
obligation specified in the contract is discharged, cancelled or 
expired. The difference between the carrying amount of a financial 
liability that has been extinguished or transferred to another 
party and the consideration paid, including any non-cash assets 
transferred or liabilities assumed, is recognised in other income 
or other expenses.

Where the terms of a financial liability are renegotiated and 
the entity issues equity instruments to a creditor to extinguish 
all or part of the liability (debt for equity swap), a gain or loss is 
recognised in profit or loss, which is measured as the difference 
between the carrying amount of the financial liability and the fair 
value of the equity instruments issued.

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 balance sheet date.

(i)  Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits 
and annual leave expected to be settled within 12 months after 
the end of the period in which the employees render the related 
service are recognised in respect of employees’ services up to the 
end of the reporting period and are measured at the amounts 
expected to be paid when the liabilities are settled. The liability 
for annual leave is recognised in the provision for employee 
benefits and presented as current in the statement of financial 
position. All other short-term employee benefit obligations are 
presented as payables.

(ii)  Other long-term employee benefit obligations 
The liability for long service leave and annual leave which is not 
expected to be settled within 12 months after the end of the period 
in which the employees render the related service is recognised 
in the provision for employee benefits and measured as the 
present value of expected future payments to be made in respect 
of services provided by employees up to the end of the reporting 
period using the projected unit credit method. 

Consideration is given to expected future wage and salary levels, 
experience of employee departures and periods of service. 
Expected future payments are discounted using market yields at 
the end of the reporting period on government bonds with terms 
and currencies that match, as closely as possible, the estimated 
future cash outflows.

The obligations are presented as current liabilities in the balance 
sheet if the entity does not have an unconditional right to defer 
settlement for at least twelve months after the reporting date, 
regardless of when the actual settlement is expected to occur.

(iii)  Profit-sharing and bonus plans
The Group recognises a provision where contractually obliged 
or where there is a past practice that has created a constructive 
obligation.

54

AS AT 30 JUNE 2015FLEXIGROUP ANNUAL REPORT 2015(iv)  Share-based payments

z.  Earnings per share

Share-based compensation benefits are provided to certain 
employees. Information relating to these schemes is set out in 
Note 23.

The fair value of such instruments is recognised as an expense 
with a corresponding increase in equity. The fair value is 
measured at grant date and recognised over the period during 
which the relevant party becomes unconditionally entitled to the 
instruments.

 ●

(i)  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 ordinary shares 
outstanding during the financial year, adjusted for bonus 
elements in ordinary shares issued during the year and 
excluding treasury shares.

Fair values at grant date are independently determined using a 
binomial tree option pricing methodology that takes into account 
the exercise price, the term of the options, the impact of dilution, 
the share price at grant date and expected price volatility of the 
underlying share, the expected dividend yield and the risk-free 
interest rate for the term of the options.

The fair value of the instruments granted is adjusted to reflect 
market vesting conditions, but excludes the impact of any non-
market vesting conditions (for example, profitability and sales 
growth targets). Non-market vesting conditions are included in 
assumptions about the number and value of instruments that 
are expected to become exercisable. The share-based payment 
expense recognised each period takes into account the most 
recent estimate.

Upon the exercise of instruments, the balance of the share-based 
payments reserve relating to those instruments is transferred to 
share capital and the proceeds received (if any), net of any directly 
attributable transaction costs, are credited to share capital.

x.  Contributed equity

Ordinary 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. Where any 
Group company purchases the company’s equity instruments, 
for example as the result of a share buy-back or a share-based 
payment plan, the consideration paid, including any directly 
attributable incremental costs (net of income taxes) is deducted 
from equity attributable to the owners of FlexiGroup Limited as 
treasury shares until the shares are cancelled or reissued. Where 
such ordinary shares are subsequently reissued, any consideration 
received, net of any directly attributable incremental transaction 
costs and the related income tax effects, is included in equity 
attributable to the owners of FlexiGroup Limited. 

y.  Dividends

Provision is made for the amount of any dividend declared, being 
appropriately authorised and no longer at the discretion of the 
entity, on or before the end of the financial year but not distributed 
at balance date.

(ii)   Diluted earnings per share
Diluted earnings per share adjusts the figures used in the 
determination of basic earnings per share to take into account
the after income tax effect of interest and other financing 
 ●
costs associated with dilutive potential ordinary shares; and
the weighted average number of additional ordinary shares 
that would have been outstanding assuming the conversion 
of all dilutive potential ordinary shares.

 ●

aa. Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount 
of associated GST, unless the GST incurred is not recoverable from 
the taxation authority. In this case it is recognised as part of the 
cost of acquisition of the asset or as part of the expense. 

Receivables and payables are stated inclusive of the amount of GST 
receivable or payable. The net amount of GST recoverable from, or 
payable to, the taxation authority is included with other receivables 
or payables in the balance sheet.

Cash flows are presented on a gross basis. The GST components 
of cash flows arising from investing or financing activities which 
are recoverable from, or payable, to the taxation authority are 
presented as operating cash flows.

ab. Rounding of amounts

The Company is of a kind referred to in Class Order 98/100, 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 Class Order to the nearest hundred thousand 
dollars, or in certain cases, to the nearest dollar.

ac. Parent entity financial information

The financial information for the parent entity, FlexiGroup Limited, 
disclosed in Note 33 has been prepared on the same basis as the 
consolidated financial statements, except as set out below. 

Investments in subsidiaries

(i) 
Investments in subsidiaries are accounted for at cost less allowance 
for impairment in the financial statements of FlexiGroup Limited.

55

 FLEXIGROUP ANNUAL REPORT 2015AS AT 30 JUNE 2015

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

1.    SUMMARY OF SIGNIFICANT ACCOUNTING 

2.  CRITICAL ACCOUNTING ESTIMATES

POLICIES (CONTINUED) 

(ii)  Tax consolidation legislation

FlexiGroup Limited and its wholly-owned Australian controlled 
entities have implemented the tax consolidation legislation.

The head entity, FlexiGroup Limited, and the controlled entities 
in the tax consolidated Group account for their own current and 
deferred tax amounts. These tax amounts are measured as if each 
entity in the tax consolidated Group continues to be a stand-alone 
taxpayer in its own right.

In addition to its own current and deferred tax amounts, 
FlexiGroup Limited also recognises the current tax liabilities (or 
assets) and the deferred tax assets arising from unused tax losses 
and unused tax credits assumed from controlled entities in the tax 
consolidated Group.

The entities have also entered into a tax funding agreement as 
detailed in Note 6(f).

Estimates and judgements are continually evaluated and are based 
on historical experience and other factors, including expectations 
of future events that may have a financial impact on the entity and 
that are believed to be reasonable under the circumstances.

Critical accounting estimates and assumptions

The Group makes estimates and assumptions concerning the 
future. The resulting accounting estimates will, by definition, 
seldom equal the related actual results. The estimates and 
assumptions that have a significant risk of causing a material 
adjustment to the carrying amount of assets and liabilities within 
the next financial year are discussed below.

(i)  Estimation of unguaranteed residuals on leases
The Group estimates the value of unguaranteed lease residuals 
based on its prior experience for similar contracts. Where 
applicable, residual values are set at rates ranging between 0% and 
20% depending on asset type and the duration of the contract.

(ii)  Provision for doubtful debts
The Group estimates losses incurred on its loans and lease 
receivables in accordance with the policy set out in Note 1(j).

(iii)  Assessment of impairment of goodwill and investments 
in subsidiaries

Under the accounting standards, the Group is required to 
perform an annual assessment as to whether there has been any 
impairment of its goodwill. In addition, the Group is required to 
perform an impairment assessment of other assets in the event 
it identifies an indicator of impairment. Details of the basis of 
performance of the assessment are set out in Note 12.

(iv)  Acquired intangible assets
Under the accounting standards, the assets and liabilities of 
businesses acquired through a business combination is to be 
measured at their acquisition date fair values. The Group applies 
judgements in selecting valuation techniques and setting valuation 
assumptions to determine the acquisition date fair values and to 
estimate the useful lives of these assets as set out in Notes 1(g),(r) 
and Note 25.

(v)  Fair value of financial instruments
All derivatives are recognised and measured at fair value. 
The derivatives are valued using valuation techniques that utilise 
observable market inputs. The fair value of financial instruments is 
included within Note 24(e).

(vi)  Share based payment expense
In determining the share based payments expense for the period, 
the Group makes various assumptions in determining the fair 
value of the instruments and the probability of non-market vesting 
conditions being met as set out in Note 1(w)(iv) and Note 23.

(vii) Taxation
Judgement is required in determining provisions held in respect 
of uncertain tax positions. The Group estimates its tax liabilities 
based on its understanding of the relevant tax law in each of the 
countries in which it operates and seeks independent advice where 
appropriate.

56

FLEXIGROUP ANNUAL REPORT 20153.  SEGMENT INFORMATION

(a)  Description of segments

Management has determined the operating segments based on the reports reviewed by the Chief Executive Officer that are used to make 
strategic decisions. The Chief Executive Officer and the Board, in addition to statutory profit after tax, assess the business on a Cash NPAT 
basis. Cash NPAT is defined as statutory profit after tax, adjusted for the after tax effect of material one off items that the Chief Executive 
Officer and Board believe do not reflect ongoing operations of FlexiGroup Limited and amortisation of acquired intangible assets.

The Chief Executive Officer considers the business from a product perspective and has identified five reportable segments; the Consumer 
& SME Leasing (consisting of FlexiRent, SmartWay, FlexiWay, FlexiCommercial and Blink), New Zealand (NZ) leasing (including Telecom 
Rentals Limited), No Interest Ever business (Certegy), Enterprise (consisting of commercial leasing business and Think Office Technology) 
and Interest Free Cards business (Lombard and Once Credit).

The Group operates in Australia, New Zealand and Ireland. The operating segments are identified according to the nature of the products 
and services provided with whole of New Zealand disclosed separately and Ireland included within Consumer and SME Leasing.

The segment information provided to the Chief Executive Officer for the reportable segments for the year ended 30 June 2015 is as below: 

(b)  Operating segments

No Interest 
Ever 
$m

Interest  
Free Cards 
$m

C&SME 
Leasing –  
Aust (inc Ire) 
$m

NZ Leasing 
$m

Enterprise 
$m

Total 
$m

2015

Total portfolio income

Interest expense

Net portfolio income 

Other expenses

Impairment losses on loans and receivables 

Amortisation of acquired other intangible assets

Profit before income tax

Income tax expense

Statutory profit for the year

One-off adjustments:

Acquisition costs(1)

One-off non-cash adjustments:

Residual value loss(2)

Recurring non-cash adjustments:

Amortisation of acquired intangible assets(3)

Cash net profit after tax

Total segment assets

114.5

(21.1)

93.4

(29.7)

(14.4)

(0.1)

49.2

(14.8)

34.4

–

–

–

34.4

608.7

42.4

(8.8)

33.6

(9.1)

(6.7)

(2.1)

15.7

(5.2)

10.5

–

–

1.8

12.3

271.6

112.7

(23.2)

89.5

(37.4)

(19.6)

(4.1)

28.4

(4.5)

23.9

1.9

–

0.4

26.2

468.4 

22.4

(4.0)

18.4

(8.3)

(1.0)

–

9.1

(2.2)

6.9

0.1

–

–

7.0

187.9

48.8

(10.5)

38.3

(24.1)

(2.8)

(0.9)

10.5

(3.5)

7.0

–

2.5

0.7

10.2

340.8

(67.6)

273.2

(108.6)

(44.5)

(7.2)

112.9

(30.2)

82.7

2.0

2.5

2.9

90.1

249.6

1,786.2

(1)  

 Acquisition costs incurred in business combinations were treated as Cash NPAT adjustments as they are not expected to impact on future earnings of the acquired 
entities or the Group as whole.

(2)  Residual value loss relate to a single contract for photographic printing equipment. This loss is not expected to recur as the Group does not have any other 

significant exposures of this nature.

(3)  The acquisition of companies over the years has resulted in the recognition of merchant and customer relationships that are amortised over their useful lives 

ranging between 3 and 7 years. The amortisation of acquired intangible assets (excluding IT development and software), is a cash earnings adjustment because it 
is a non-cash item and does not affect cash distributions available to shareholders.  

57

 FLEXIGROUP ANNUAL REPORT 2015AS AT 30 JUNE 2015

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

3.  SEGMENT INFORMATION  (CONTINUED)

No 
Interest 
Ever
$m

Interest
Free 
Cards
$m

C&SME
Leasing
–  Aust
(inc Ire)
$m

NZ
 Leasing
$m

Enterprise
$m

Unallocated
$m

Total
$m

2014

Total portfolio income

Interest expense

Net portfolio income 

Other expenses

Impairment losses on loans and receivables 

Amortisation of acquired other intangible assets

Impairment of goodwill and other intangible assets

Cancelled share based payments(1)

Profit before income tax 

Income tax expense

Statutory profit for the year

One-off adjustments:

Acquisition and integration costs(1)

One-off non-cash adjustments:

Impairment of goodwill and other intangible 
assets(2)

Cancelled share based payments(3)

Recurring non-cash adjustments:

Amortisation of acquired intangible assets(4)

Cash net profit after tax

Total segment assets

107.7

(22.6)

85.1

(25.5)

(13.5)

(0.3)

–

–

45.8

(13.8)

32.0

–

–

–

0.3

32.3

42.4

(9.6)

32.8

(15.3)

(5.3)

(1.7)

–

–

10.5

(4.4)

6.1

112.5

(23.1)

89.4

(52.7)

(12.3)

(0.5)

(12.5)

–

11.4

(2.1)

9.3

17.2

(2.9)

14.3

(6.1)

(0.6)

–

–

–

7.6

(2.1)

5.5

3.6

7.1

0.2

–

–

1.3

11.0

9.2

–

0.3

25.9

–

–

–

5.7

77.9

533.6

221.3

528.1

38.3

(9.3)

29.0

(11.4)

(2.4)

(0.3)

–

–

14.9

(5.0)

9.9

–

–

–

0.2

10.1

263.6

–

–

–

–

–

–

(5.2)

(5.2)

–

(5.2)

–

–

5.2

–

–

–

318.1

(67.5)

250.6

(111.0)

(34.1)

(2.8)

(12.5)

(5.2)

85.0

(27.4)

57.6

10.9

9.2

5.2

2.1

85.0

1,624.5

(1)  Acquisition costs incurred for the acquisition of various entities and costs incurred in integrating acquired business into the broader Group were treated as 

Cash NPAT adjustments as they are not expected to impact on future earnings of the acquired and integrated entities or the Group as whole. The integration of 
the entities was completed at 30 June 2014 and the costs are not expected to be recurring in financial year 2015. The Company also incurred costs relating to the 
long term strategy review of the business. These costs are not expected to be recurring and have been adjusted to arrive at a normalised Cash NPAT figure. 

(2)  As part of the broader strategic plan, the Group will spend money on revamping and replacing the existing IT legacy systems. As a result, the recoverable amounts 
of IT systems was assessed and written down during the year. Additionally, an impairment review of the Paymate business resulted in goodwill of $1.9m being 
impaired. These impairments are non-cash, non-recurring and have no impact on the company’s ability to pay dividends and have been adjusted to arrive at a 
maintainable cash earnings amount. 

(3)  This expense is unallocated to any operating segments. Upon cancellation of share based incentive scheme, such a cancellation is to be accounted for as an 

acceleration of vesting, hence the need to recognise immediately the amount that otherwise would have been recognised for services received over the remainder 
of the vesting period. The Board approved a cancellation of equity instruments that were awarded to the CEO and Senior Executives in the 2013 financial year. 
The resultant expense is non-cash, non-recurring and has been adjusted to reflect cash earnings for the year. 

 (4)   The acquisition of companies over the years has resulted in the recognition of merchant and customer relationships that are amortised over their useful lives 
ranging between 3 and 7 years. The amortisation of intangible assets (excluding IT development and software), is a cash earnings adjustment because it is a  
non-cash item and does not affect cash distributions available to shareholders. 

58

FLEXIGROUP ANNUAL REPORT 20154.  TOTAL PORTFOLIO INCOME

Gross interest and finance lease income

Amortisation of initial direct transaction costs (Note 1(h)(ii))

Other portfolio income

Sale of goods

Other income 

Interest income – banks

Total portfolio income 

5.  EXPENSES

Depreciation of plant and equipment (Note 11)

Amortisation of other intangible assets (Note 13)

Total depreciation and amortisation

Operating expenses

Acquisition costs relating to business combinations

Advertising and marketing 

Cost of goods sold

Information technology and communication 

Operating lease rental expenses 

Other occupancy, equipment and related costs

Outsourced operations costs

Professional, consulting and other service provider costs

Other 

Total operating expenses

2015
$m

288.2

(32.5)

74.2

7.5

0.4

3.0

2014
$m

285.4

(34.6)

59.6

3.5

0.6

3.6

340.8

318.1

2015
$m

2.2

7.2

9.4

2.5

3.4

4.0

11.2

4.0

2.5

4.9

10.7

1.6

44.8

2014
$m

1.8

8.2

10.0

3.6 

3.8

1.5

9.2

4.5

2.2

3.7

12.1

2.3

42.9

59

 FLEXIGROUP ANNUAL REPORT 2015AS AT 30 JUNE 2015

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

6.  INCOME TAX EXPENSE

(a)  Income tax expense

Current tax

Deferred tax expense

Overprovision in prior years

(b)  Numerical reconciliation of income tax expense to prima facie tax payable

Profit from continuing operations before income tax

Tax at the Australian tax rate of 30%

Tax effect of amounts which are not deductible (taxable) in calculating taxable income:

Permanent differences(1)

Effect of differences in tax rates in foreign jurisdiction

Overprovision in prior years 

2015
$m

35.0

(4.7)

(0.1)

30.2

112.9

33.9

(3.1)

(0.5)

(0.1)

30.2

2014
$m

24.7

3.0

(0.3)

27.4

85.0

25.5

2.5

(0.3)

(0.3)

27.4

(1) 

Includes amortisation of intangibles, share based payments and goodwill impairment and others.

(c)  Amounts recognised directly in equity

Deferred income tax expense related to items taken directly to equity

(1.1)

(0.1)

(d)  Deferred tax expense representing movements in deferred tax assets/liabilities

Difference between lease principal to be returned as assessable income and depreciation on leased  
assets to be claimed as a tax deduction

Initial direct transaction costs

Other intangible assets 

Provisions and other liabilities

(e)  Deferred tax assets and liabilities:

Deferred tax assets

Provisions and other liabilities

Total deferred tax assets

Deferred tax liabilities

Difference between lease principal to be returned as assessable income and depreciation  
on leased assets to be claimed as a tax deduction

Initial direct transaction costs

Other intangible assets

Total deferred tax liabilities

Net Deferred tax liabilities 

Amounts expected to be settled within 12 months

Amounts expected to be settled after more than 12 months 

(5.0)

(0.3)

0.7

(0.1)

(4.7)

14.0

14.0

39.1

10.3

2.2

51.6

37.6

10.0

27.6

37.6

0.6

0.6

(0.2)

2.0

3.0

12.1

12.1

34.8

10.0

2.9

47.7

35.6

10.7

24.9

35.6

60

FLEXIGROUP ANNUAL REPORT 2015(f)  Tax consolidation legislation

FlexiGroup Limited and its wholly-owned Australian controlled entities implemented the tax consolidation legislation from December 2006. 
The accounting policy on implementation of the legislation is set out in Note 1(f).

On adoption of the tax consolidation legislation, the entities in the tax consolidated Group entered into a tax sharing-agreement which, 
in the opinion of the Directors, limits the joint and several liability of the wholly-owned entities in the case of a default by the head entity, 
FlexiGroup Limited.

The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate FlexiGroup Limited 
for any current tax payable assumed and are compensated by FlexiGroup Limited for any current tax receivable and deferred tax assets 
relating to the unused tax losses or unused tax credits that are transferred to FlexiGroup Limited under the tax consolidation legislation. 
The funding amounts are determined by reference to the amounts recognised in the wholly-owned entities’ financial statements.

The amounts receivable/payable under the tax funding agreement is due upon receipt of the funding advice from the head entity which is 
issued as soon as practicable after the end of the financial year. The head entity may also require payment of interim funding amounts to 
assist with its obligations to pay tax instalments. The funding amounts are recognised as current inter-company receivables.

7.  CASH AND CASH EQUIVALENTS

Cash at bank and on hand

Reconciliation to cash at the end of the year

The above figures reconcile to cash at the end of the financial year, as shown in the statement of cash 
flows, as follows:

Balances as above

Balances per statement of cash flows

2015
$m

130.3

2014
$m

106.6

130.3

130.3

106.6

106.6

Included in cash at bank are amounts of $100.9 million (2014: $81.4 million) which are held as part of the Group’s funding arrangements 
and are not available to the Group.

8.  CURRENT ASSETS – INVENTORIES

Equipment, parts and accessories

Rental equipment

2015
$m

2.7

1.5

4.2

2014
$m

2.3

0.5

2.8

61

 FLEXIGROUP ANNUAL REPORT 2015AS AT 30 JUNE 2015

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

9.  CURRENT AND NON-CURRENT ASSETS – RECEIVABLES

Gross investment in finance lease receivables (3)

Guaranteed residuals

Unguaranteed residuals

Unamortised initial direct transaction costs

Unearned future income

Net investment in finance lease receivables (2)

Provision for doubtful debts 

Net investment in finance leases after provision for doubtful debts

Other debtors

Total receivables (1)

Disclosed as current and non-current on the statement of financial position:

Current

Non-current

(1) Total receivables

Represented as follows:

Gross investment in finance lease receivables:

Due within one year

Due after one year but not later than five years 

Unearned future income

Net investment in finance lease receivables (2)

Provision for doubtful debts 

Net investment in finance leases after provision for doubtful debts

Net investment in finance lease receivables analysed as follows:

Due within one year

Due after one year but not later than five years

(2) Total net investment in finance lease receivables

2015
$m

838.4

8.5

53.7

34.9

(183.7)

751.8

(14.3)

737.5

11.7

749.2

339.0

410.2

749.2

445.5

490.0

(183.7)

751.8

(14.3)

737.5

334.3

417.5

751.8

2014
$m

779.6

10.3

53.3

36.5

(188.6)

691.1

(9.1)

682.0

10.9

692.9

307.5

385.4

692.9

412.8

466.9

(188.6)

691.1

(9.1)

682.0

300.9

390.2

691.1

(3) Refer to Note 24(c) for disclosure of impaired lease and loan receivables, past due but not impaired receivables and the fair value of receivables.

10.  CURRENT AND NON-CURRENT ASSETS – CUSTOMER LOANS

Loan receivables(1)

Provision for doubtful debts

 2015

2014

Current
$m

Non-current
$m

Current
$m

Non-current
$m

540.3

(6.4)

533.9

170.6

(2.2)

168.4

500.3

(7.6)

492.7

163.7

(2.1)

161.6

(1)  Refer to Note 24(c) for disclosure of impaired lease and loan receivables, past due but not impaired receivables and the fair value of receivables.

62

FLEXIGROUP ANNUAL REPORT 2015(a)  Movement in provision for doubtful debts

Provision for doubtful debts – receivables (Note 9)

Provision for doubtful debts – customer loans 

Total provision for doubtful debts

Carrying amount at beginning of the year

Additions through business combinations

Provided for during the year

Receivables and loans written off

Recovery of receivables and loans previously provided for

Carrying amount at end of the year

11.  NON-CURRENT ASSETS – PLANT AND EQUIPMENT

30 June 2014

Cost or fair value

Accumulated depreciation

At written down value

Movement in plant and equipment at written down value

Balance at the beginning of the year

Additions through business combinations

Additions

Disposals

Depreciation 

Balance at the end of the year

30 June 2015

Cost or fair value

Accumulated depreciation

At written down value

Balance at the beginning of the year

Additions through business combinations

Additions

Disposals

Depreciation 

Balance at the end of the year

2015
$m

14.3

8.6

22.9

18.8

1.1

3.0

–

–

22.9

2014
$m

9.1

9.7

18.8

18.3

6.3

–

(5.4)

(0.4)

18.8

Plant and 
equipment
$m

15.8

(9.7)

6.1

4.4

1.9

1.7

(0.1)

(1.8)

6.1

15.2

(10.0)

5.2

6.1

–

1.7

(0.4)

(2.2)

5.2

63

 FLEXIGROUP ANNUAL REPORT 2015AS AT 30 JUNE 2015

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

12.  NON-CURRENT ASSETS – GOODWILL

(a)   Movements in goodwill

Balance at the beginning of the year

Additions or fair value adjustments through business combinations 

 ●

 ●

Acquisition of subsidiaries (Note 25(a)(b)(c)(d))

Rentsmart (fair value adjustment, Note 25(c))

 ● Other

Impairment

Balance at the end of the year

(b)   Impairment testing for cash generating units containing goodwill

For the purpose of impairment testing, goodwill is allocated to the Group’s operating business 
units which represent the lowest level within the Group at which goodwill is monitored for internal 
management purposes.

The aggregate carrying amounts of goodwill allocated to each unit(s) are as follows:

Consumer & SME 

No interest ever 

Interest free cards

New Zealand

Think Office Technology

2015
$m

2014
$m

134.1

100.9 

14.4

1.8

0.1

–

35.3 

–

(0.2)

(1.9)

150.4

134.1 

75.9

29.7

18.9

14.5

11.4

74.0 

29.7 

18.9 

1.6 

9.9

150.4

134.1 

The carrying amount of goodwill of each CGU is tested for impairment at each statutory reporting date and whenever there is an 
indicator that the asset may be impaired. If an asset is impaired, it is written down to its recoverable amount. The recoverable amount is 
based on a value in use calculation using cash flow projections based on the Board approved 2016 financial year budget. Cash flows for a 
further 4 year period were extrapolated using declining growth rates such that the long term terminal growth was determined at 2% - 3% 
which does not exceed the long term average for the industry and economy. 

64

FLEXIGROUP ANNUAL REPORT 2015 
The key assumptions used in determining value in use for 30 June 2015 are:

Assumption

How determined

Forecast revenues  
and expenses

Long-term growth rate

Cost of Equity Capital

Weighted Average Cost of  
Capital (WACC)

Consumer and SME – 2% (2014: 2%)

Forecast revenues and expenses beyond the 2016 financial year budget period have been extrapolated 
using declining growth rates such that the long-term terminal growth rates are as follows:
 ●
 ● No interest ever – 3% (2014: 3%)
 ●
 ● New Zealand – 3% (2014: 3%)
 ●

Think Office Technology – 3% (2014: 3%)

Interest free cards – 3% (2014: 3%)

The above long-term growth rate for each of the CGUs does not exceed the long-term average growth 
rate for the business in which the CGU operates.

The discount rate applied to the cash flows of each of the Group’s operations is based on the risk free 
rate for ten year Commonwealth Government bonds as at 30 June 2015, adjusted for a risk premium 
to reflect both the increased risk of investing in equities and the risk of the specific Group operating 
company. In making this adjustment, inputs required are the equity markets risk premium (that is the 
required increased return required over and above a risk free rate by an investor who is investing in 
the market as a whole) and the risk adjustment, beta, applied to reflect the risk of the specific Group 
operating company relative to the market as a whole, giving rise to the CGU specific Cost of Equity 
Capital. Geared cash flows are used to calculate recoverable amounts for all CGUs, other than Think 
Office Technology, given that debt and interest underpin the CGUs’ operations.

For the Think Office Technology CGU, ungeared cash flows are used hence a CGU specific WACC is used 
to calculate recoverable amounts. WACC is calculated with reference to relative weighting of cost of 
equity and cost of debt (calculated based on the CGU long term capital structure). The discount rates 
used for impairment testing are:
 ●
 ● No Interest Ever – 12.6% (2014: 12.6 %)
 ●
 ● New Zealand – 12.5% (2014: 12.7%)
 ●

Think Office Technology – 12.7% (2014: 20.5%)(1)

Consumer and SME – 13.7% (2014: 15.7%)

Interest free cards – 12.9% (2014: 13.0%)

(1) 

In prior year, Think Office Technology impairment testing was done immediately after the acquisition and the discount rate used was based on the acquisition price 
implied discount rate. For 2015, the discount rate is based on market variables, hence the change in the rate from prior year.

Sensitivity analysis
The Group has conducted sensitivity analysis on the assumptions above to assess the effect on recoverable amount of changes in the key 
assumptions.

The Group is satisfied that all the assumptions on which the recoverable amounts are based are fair and reasonable, and that currently, 
there are no reasonably possible changes to these assumptions that would cause the aggregate carrying amount to exceed the 
aggregate recoverable amount of any of the Group’s CGUs as at 30 June 2015.

65

 FLEXIGROUP ANNUAL REPORT 2015AS AT 30 JUNE 2015

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

13. NON-CURRENT ASSETS – OTHER INTANGIBLE ASSETS

IT
development
and software
$m

Merchant
 and customer
 relationships 
and other 
rights
$m

Non-compete
 agreements
$m

Brand 
name
$m

At 1 July 2013

Additions

Additions and changes in fair value through 
business combinations

Disposals

Amortisation 

Impairment

At 30 June 2014

At 1 July 2014

Additions

Disposals

Amortisation

At 30 June 2015

14.  CURRENT LIABILITIES – PAYABLES

Trade payables

Other payables

17.8

16.1

(1.1)

(0.7)

(5.3)

(10.6)

16.2

16.2

24.7

(0.6)

(3.7)

36.6

2.2

–

10.1

–

(2.3)

–

10.0

10.0

–

–

(2.6)

7.4

1.6

–

–

–

(0.5)

–

1.1

1.1

–

–

(0.9)

0.2

–

–

0.5

–

(0.1)

–

0.4

0.4

–

–

–

0.4

2015
$m

35.6

0.1

35.7

Total
$m

21.6

16.1

9.5

(0.7)

(8.2)

(10.6)

27.7

27.7

24.7

(0.6)

(7.2)

44.6

2014
$m

44.3 

0.2

44.5

15.  CURRENT AND NON-CURRENT LIABILITIES – BORROWINGS

Secured

Corporate debt

Secured loans

Total secured current borrowings

Loss reserve

 2015

2014

Current
$m

Non-current
$m

Current
$m

Non-current
$m

–

790.2

790.2

(15.6)

774.6

45.0

465.7

510.7

(10.8)

499.9

–

695.4

695.4

(15.0)

680.4

45.0

418.4

463.4

(11.2)

452.2

Assets pledged as security
The loans are secured by rentals and payments receivable in respect of the underlying lease and loan receivable contracts.

Under the terms of the funding arrangements, some of the funders retain a part of the gross amount funded as security against credit 
losses on the underlying leases. This amount is referred to as a ‘loss reserve’ and represents a reduction in the amount borrowed.

66

FLEXIGROUP ANNUAL REPORT 2015Unrestricted access was available at balance date to the following lines of credit before loss reserves:

Total loan facilities available

Loan facilities used at balance date

Loan facilities unused at balance date

16.  CURRENT AND NON-CURRENT LIABILITIES – PROVISIONS

Employee benefits (1)

Other (2)

2015
$m

1,835.5

(1,300.9)

2014
$m

1,711.6

(1,158.8) 

534.6

552.8

 2015

2014

Current
$m

Non-current
$m

Current
$m

Non-current
$m

4.0

0.5

4.5

1.0

–

1.0

4.2

0.5

4.7

0.7

–

0.7

(1)  The provision for employee benefits relates to the Group’s liability for annual and long service leave.
(2)  There are nil movements in this provision.

17.  NON-CURRENT LIABILITIES – DERIVATIVE FINANCIAL INSTRUMENTS

Interest rate swaps

Risk exposures and fair value measurements

2015
$m

7.3

2014
$m

3.7

Information about the Group's exposure to credit risk, foreign exchange and interest rate risk and about the methods and assumptions 
used in determining fair values is provided in Note 24. The maximum exposure to credit risk at the end of the reporting period is the 
carrying amount of each class of derivative financial liabilities mentioned above.

18.  CONTRIBUTED EQUITY

(a)  Share capital
Ordinary Shares – fully paid

Parent entity

2015
Shares

2014
Shares

304,149,707

303,873,857

67

 FLEXIGROUP ANNUAL REPORT 2015AS AT 30 JUNE 2015

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

18.  CONTRIBUTED EQUITY (CONTINUED)

(b)  Movement in ordinary share capital

1 July 2013

Issue of shares to executives under FlexiGroup Long Term Incentive Plan(1)

Issue of shares to employees from treasury shares(1)

Transfer from treasury shares(1)

Expired prior-period options(1) 

Transfer from capital reserve

30 June 2014 

(1)  On a combined basis $5.5m was transferred from share based payment reserve, refer to Note 19(a) for further information.

1 July 2014

Issue of shares to employees from treasury shares

Issue of shares on vesting of options

30 June 2015 

(c)  Ordinary shares

Consolidated

Number of
 shares 
(m)

301.1

1.8

0.3

–

–

0.7

$m

153.1

2.2

0.2

2.0

1.1

2.6

303.9

161.2

303.9

0.2

0.1

304.2

161.2

0.5

0.2

161.9

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the 
number of and amounts paid on the shares held.

On a show of hands every holder of ordinary shares present at a meeting in persons or by proxy, is entitled to one vote, and upon a poll 
each share is entitled to one vote. There is no current on market buy back of shares.

(d)  Options and performance rights 

Information relating to the FlexiGroup Employee Options and Performance Rights Plan, including details of options and performance 
rights exercised and lapsed during the financial year and options and performance rights outstanding at the end of the financial year, is 
set out in Note 23.

(e)  Treasury shares

Treasury shares are shares in FlexiGroup Limited that are held by the FlexiGroup Tax Deferred Employee Share Plan Trust for the purposes 
of issuing shares under the FlexiGroup Long Term Incentive Plan (see Note 23 for further information). 

Movement in treasury shares

1 July 2013

Issue of shares to employees from treasury shares

Transfer to share capital

30 June 2014 

1 July 2014

Utilised against vested options

30 June 2015

(f)  Capital risk management

Number of
 shares 
(m)

0.5

(0.2)

(0.1)

0.2

0.2

(0.2)

–

$m

2.2

(0.2)

(2.0)

–

–

–

–

The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can continue to 
provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of 
capital. Consistent with others in the industry, the Group monitors capital on the basis of its gearing ratio. In order to maintain or adjust 
its capital structure, the Group considers its issue of new capital, return of capital to shareholders and dividend policy as well as its plans 
for acquisition and disposal of assets.

68

FLEXIGROUP ANNUAL REPORT 201519.  RESERVES AND RETAINED EARNINGS

2015
$m

2014
$m

(a)  Reserves
Share-based payment reserve

Foreign currency translation reserve

Cash flow hedge reserve

Share capital reserve

Movements:

Share-based payments reserve

Balance at 1 July

Transfer to share capital

Share-based payments expense

Other changes

Balance at 30 June

Movements:

Foreign currency translation reserve

Balance at 1 July

Other comprehensive income

Balance at 30 June

Movements:

Share capital reserve

Balance at 1 July

For issue through business combinations (Note 25)

Transfer to share capital

Balance at 30 June

Movements:

Cash flow hedge reserve

Balance at 1 July

Other comprehensive income

Balance at 30 June

(b)  Retained earnings
Movements in retained profits were as follows:

Balance at 1 July

Net profit for the year

Dividends

Balance at 30 June

1.1

0.8

(5.2)

0.3

(3.0)

0.6

(0.2)

0.8

(0.1)

1.1

4.2

(3.4)

0.8

0.3

–

–

0.3

(2.7)

(2.5)

(5.2)

0.6

4.2

(2.7)

0.3

2.4

(0.1)

(5.5)

7.0

(0.8)

0.6

0.9

3.3

4.2

2.6

0.3

(2.6)

0.3

(2.8)

0.1

(2.7)

221.4

82.7

(52.5)

251.6

210.9

57.6 

(47.1)

221.4

69

 FLEXIGROUP ANNUAL REPORT 2015AS AT 30 JUNE 2015

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

19.  RESERVES AND RETAINED EARNINGS (CONTINUED)

(c)  Nature and purpose of reserves

(i)  Foreign currency translation reserve
Foreign currency translation of the foreign controlled entities is taken to the foreign currency translation reserve as described in Note 
1(d). The reserve is recognised in profit and loss when the net investment is disposed of.

(ii)  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
other share-based payment transactions

(iii)  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 as described in Note 1(o). Amounts are reclassified to profit or loss when the associated hedge transaction affects 
profit or loss.

(iv)  Share capital reserve
The share capital reserve relating to the Group’s obligation on a non-compete arrangement entered into with former employees was 
settled in shares in previous year. As part of the acquisition of Australian Print Holdings Pty Limited (trading as Think Office Technology), 
a portion of the purchase consideration is a contingent amount to be settled in equity if the stated performance hurdles are met. 

20.  DIVIDENDS

Final dividends paid

2014 final dividend paid on 17 October 2014: 8.5 cents (2013 final dividend paid on  
18 October 2013: 7.5 cents) per ordinary share franked to 100% 

Interim dividends paid

2015: 8.75 cents (2014: 8 cents) per ordinary share franked to 100% 

Total dividends paid(1)

Final dividends proposed but not recognised at year end

2015: 9.0 cents (2014: 8.5 cents) per ordinary share franked to 100% 

(1)  All dividends are franked at a tax rate of 30%.

Franked dividends
The franked dividends recommended after 30 June 2015 will be franked out of existing franking credits, 
or out of franking credits arising from the payment of income tax in the year ending 30 June 2015.

Parent entity

2015
$m

25.8

26.7

52.5

27.4

Franking credits available for subsequent financial years based on a tax 
rate of 30% (2014: 30%)

Consolidated

Parent entity

2015
$m

20.4

2014
$m

10.5

2015
$m

20.4

2014
$m

22.8

24.3

47.1

25.8

2014
$m

10.5

The above amounts are calculated from the balance of the franking account as at the end of the reporting period, adjusted for franking 
credits and debits that will arise from the settlement of liabilities or receivables for income tax and dividends after the end of the year. 
The consolidated amounts include franking credits that would be available to the parent entity if distributable profits of subsidiaries were 
paid as dividends.

70

FLEXIGROUP ANNUAL REPORT 201521.  EARNINGS PER SHARE

a.  Earnings per share
Total basic earnings per share attributable to the ordinary equity holders of the Company

Total diluted earnings per share attributable to the ordinary equity holders of the Company

b.  Reconciliation of earnings used in calculating earnings per share
Profit attributable to the ordinary equity shareholders of the Company used in calculating:

– basic earnings per share

– diluted earnings per share

c.  Weighted average number of ordinary shares
Weighted average number of ordinary shares used in calculation of basic earnings per share

Add: potential ordinary shares considered dilutive

Weighted average number of ordinary shares used in calculating diluted earnings per share

2015
Cents

2014
Cents

27.2

27.1

2015
$m

82.7

82.7

19.0

18.9

2014
$m

57.6

57.6

2015
Number

2014
Number

303,958,501

303,221,676

1,215,825

752,041

305,174,326

303,973,717

Information concerning the classification of securities

Options
Options and performance rights granted to employees under the FlexiGroup Long Term Incentive Plan are considered to be potential 
ordinary shares and have been included in the determination of diluted earnings per share to the extent to which they are dilutive. 
The options and performance rights have not been included in the determination of basic earnings per share. Details relating to the 
options and performance rights are set out in Note 23.

22. RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH INFLOW FROM OPERATING ACTIVITIES

Net profit for the year after tax

Receivables and loan impairment expenses

Depreciation and amortisation

Impairment of goodwill and other intangible assets

Share-based payment expense

Exchange differences

Other non-cash movements

2015
$m

82.7

44.5

9.4

–

0.8

(2.0)

1.3

2014
$m

57.6

34.1

10.0

12.4

6.9 

0.3

1.0

Net cash inflows from operating activities before changes in assets and liabilities

136.7

122.3

Change in operating assets and liabilities:

(Increase)/decrease in other receivables

(Decrease)/increase in payables

Increase in inventories

Decrease/(increase) in current tax liabilities

(Decrease)/increase in net deferred tax liabilities

Net cash inflows from operating activities

(0.6)

(11.8)

(1.3)

0.3

(2.1)

1.2

2.9 

(0.8)

(4.2)

2.9

121.2

124.3

71

 FLEXIGROUP ANNUAL REPORT 2015AS AT 30 JUNE 2015

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

23.  SHARE-BASED PAYMENTS

a.  Long Term Incentive Plan

The establishment of the FlexiGroup Long Term Incentive Plan (‘LTIP’) was approved by the founding shareholders on 20 November 
2006. The LTIP is designed to provide relevant employees with an incentive for future performance, with conditions for the vesting and 
exercise of options and performance rights and under the LTIP encouraging those executives to remain with FlexiGroup and contribute 
to the future performance of the Company. Under the plan, participants are granted either an option or right which only vests if certain 
performance standards are met.

The Board may determine which persons will be eligible to participate in the LTIP from time to time. Eligible persons may be invited to 
apply to participate in the LTIP. The Board may in its discretion accept such applications.

The table below shows options and performance rights granted under the plan:

Consolidated and parent entity – 2015

Grant date

Expiry 
date

Exercise 
price

Balance at
 start of the
 period

Granted
 during the
 period

Exercised
 during the
 period

Forfeited
 during the
 period

Balance 
at end of 
the period

Vested and 
exercisable 
at the end of 
the period

Number

Number

Number

Number

Number

Number

3/6/11

3/6/11

5/8/11

19/3/12

23/4/12

10/8/12

3/7/14

1/12/14

Total

31/12/16

31/12/16

31/12/16

31/12/16

31/12/16

31/3/16

31/3/16

15/10/18

15/10/19

31/10/20

31/10/21

(21,250)

(16,669)

38,751

–

(176,125)

(275,000)

852,875

81,125

76,670

1,304,000

24,998

150,000

20,000

971,000

–

–

–

–

–

–

$0.00

$2.11

$0.00

$2.18

$2.27

$3.05

$0.00

–

(75,000)

(5,000)

–

–

–

(164,385)

(235,515)

24,998

75,000

15,000

571,100

140,000

–

140,000

–

–

–

75,000

5,000

271,350

–

–

$0.00

–

6,080,000

–

(1,360,000)

4,720,000

2.546,668

6,220,000

(441,760)

(1,887,184)

6,437,724

432,475

Weighted average exercise price

$2.39

$2.00

$0.58

The weighted average share price at the date of exercise of options and performance rights exercised during the year ended 30 June 2015 
was $3.57 (2014: $4.27).

The weighted average remaining contractual life of share options and performance rights outstanding at the end of the year was 3.6 years 
(2014: 1.5 years).

72

FLEXIGROUP ANNUAL REPORT 2015Consolidated and parent entity – 2014

Grant date

Expiry 
date

Exercise 
price

Balance at
 start of the
 period

Granted
 during the
 period

Exercised
 during the
 period

Forfeited
 during the
 period

Balance 
at end of 
the period

Vested and 
exercisable 
at the end of 
the period

Number

Number

Number

Number

Number

Number

31/12/11

31/12/12

31/12/11

31/12/12

31/12/14

15/9/17

8/6/18

31/12/14

31/12/15

31/12/16

31/12/16

31/12/14

31/12/15

31/12/16

31/12/15

31/12/16

31/12/16

31/12/15

31/12/16

31/3/16

31/12/20

31/3/17

31/12/20

31/12/20

8/12/06

2/10/07

15/9/10

15/9/10

8/6/11

3/6/11

3/6/11

5/8/11

19/3/12

19/3/12

23/4/12

23/4/12

10/8/12

21/1/13

21/1/13

2/4/13

17/6/13

Total

Weighted average exercise price

$1.98(1)

2,727,895(1)

$2.47(1)

78,058(1)

$0.00

$0.00

$0.00

1,080,000

161,250

144,250

$0.00

$2.11

569,832

2,534,000

$0.00

240,501

$0.00

$2.18

$0.00

$2.27

$3.05

$3.57

$0.00

$3.99

$4.29

100,000

150,000

27,000

20,000

1,451,000

3,000,000

600,000

300,000

1,000,000

14,183,786

$2.32

(1)  Expired prior period options adjusted in share capital.
(2)  Relates to cancelled share based payment instruments.

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

(2,727,895)(1)

(78,058)(1)

(1,080,000)

(161,250)

(144,250)

–

–

–

–

–

–

–

–

(368,162)

(125,000)

76,670

–

(1,230,000)

1,304,000

(215,503)

(100,000)

–

(27,000)

–

–

–

–

–

–

–

–

–

–

–

(480,000)

(3,000,000)(2)

(600,000)(2)

(300,000)(2)

(1,000,000)(2)

24,998

–

150,000

50,000

–

20,000

971,000

–

–

–

–

–

–

–

–

–

–

–

(2,096,165)

(9,540,953)

2,546,668

50,000

$2.39

73

 FLEXIGROUP ANNUAL REPORT 2015AS AT 30 JUNE 2015

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

23. SHARE-BASED PAYMENTS (CONTINUED)

Fair value of options and performance rights
Fair values at grant date are independently determined using a binomial tree option pricing methodology that takes into account the 
exercise price, the term of the options and performance rights, the impact of dilution, the share price at grant date and expected price 
volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the options.

The model inputs for performance rights granted during the year ended 30 June 2015 included:
a)  Exercise price: nil, performance rights issued
b)  Grant date: 1 December 2014
c)  Expiry date: various per performance rights granted, refer table on page 16
d)  Share price at grant date: $2.94
e)  Expected price volatility of the Company’s shares: 30% 
f)  Expected dividend yield: 5.6% - 6%
g)  Risk-free interest rate: 2.35% - 2.45%

Shares provided on exercise of remuneration options and performance rights
53,647 (2014: 1,790,666) ordinary shares in the Company were issued as a result of the exercise of any remuneration options and 
performance rights.

b.  Employee share plan

The Employee Share Acquisition (Tax Exempt) Plan (“ESAP”) is a general employee share plan pursuant to which grants of shares may be 
offered to employees of FlexiGroup on terms and conditions as determined by the Board from time to time. No shares were issued under 
this plan in 2015.

The Board is responsible for administering the ESAP in accordance with the ESAP Rules and the terms and conditions of specific grants of 
shares to participants in the ESAP. The ESAP Rules include the following provisions:

Eligibility
The Board may determine which persons will be eligible to be offered the opportunity to participate in the ESAP from time to time. 
The Board may make offers to eligible persons for participation in the ESAP.

Terms of offer
The Board has the discretion to determine the specific terms and conditions applying to each offer, provided that:

The terms of the offer do not vary the disposal restrictions imposed on shares under the ESAP Rules under which shares acquired under 
the ESAP cannot be transferred, sold or otherwise disposed of until the earlier of:
 ●

The time when the participant is no longer employed by FlexiGroup or by the Company that was the employer of the participant as at 
the time the shares were acquired, or
The third anniversary of the date on which the shares were acquired, and
The offer does not include any provisions for forfeiture of shares acquired under the ESAP in any circumstances.

 ●
 ●

Consideration for grant
The Board may determine the price at which the shares will be offered to an employee. Shares may be granted at no cost to the employee 
or the Board may determine that market value or some other price is appropriate.

Allocation of shares
Shares allocated under the ESAP may be existing shares or newly issued shares. Allocated shares must be held in the name of the 
employee. Any shares that are issued under the ESAP will rank equally with those traded on the ASX at the time of issue. A participant 
under the ESAP is entitled to receive distributions/dividends made in respect of, and exercise voting rights attaching to, shares held under 
the ESAP (whether or not the shares are subject to disposal restrictions).

Restrictions on shares
Shares acquired under the ESAP will be subject to the disposal restrictions described above. FlexiGroup will implement such 
arrangements (including a holding lock) as it determines are necessary to enforce this restriction. 

Once the restriction is removed, and subject to FlexiGroup’s Share Trading Policy, shares acquired under the ESAP may be dealt with 
freely. Details of FlexiGroup’s Share Trading Policy in the Corporate Governance Statement.

Employee gift offer
There were no employee gift offers in the year ended 30 June 2015 (2014: Nil).

74

FLEXIGROUP ANNUAL REPORT 2015c.  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: 

Options and performance rights issued under LTIP

24. FINANCIAL RISK MANAGEMENT

Overview

2015
$

2014
$

787,471

6,923,429

The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential 
adverse effects on the financial performance of the Group. 

The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk and interest rate risk), credit risk 
and liquidity risk.

The Group uses derivative financial instruments – interest rate swaps – to hedge certain risk exposures. Derivatives are exclusively used 
for hedging purposes i.e. not as trading or other speculative instruments. 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/
credit scorecard analysis for credit risk.

Risk management is primarily carried out by the financial analysis, treasury and credit and risk departments. 

Market risk

Market risk is the risk of an adverse impact on Group earnings resulting from changes in market factors, such as interest rates and 
foreign exchange rates, commodity prices and equity prices. 

a.  Interest rate risk

Interest rate risk results principally from the repricing risk or differences in the repricing characteristics of the Group’s receivable portfolio 
and borrowings. 

The Group’s lease receivables and customer loans consist of:
 ●

Fixed rate consumer and commercial instalment lease contracts. The interest rate is fixed for the life of the contract. Lease contracts 
are typically originated with maturities ranging between one and five years and generally require the customer to make equal 
monthly payments over the life of the contract. The majority of leases are funded within two weeks of being settled with the rental 
stream discounted at a fixed rate of interest to determine the borrowing amount. 
An interest free consumer loan portfolio where the payments are fixed for the term of the loan.
An interest free card business portfolio where the payments are variable for the term of the loan.

 ●
 ●

Borrowings to fund the receivables are a mix of fixed rate borrowings and variable rate borrowings where the rates are reset regularly 
to current market rates. Interest rate risk is managed on these borrowings by entering into interest rate swaps, whereby the Group pays 
fixed rate and receives floating rate. 

The contracts require settlement of net interest receivable or payable monthly. The settlement dates coincide with the dates on which 
interest is payable on the underlying debt. The contracts are settled on a net basis. The gain or loss from remeasuring the hedging 
instruments at fair value is recognised in other comprehensive income and deferred in equity in the hedging reserve, to the extent that 
the hedge is effective. It is reclassified into profit or loss when the hedged interest expense is recognised. In the year ended 30 June 2015 
nil amounts were reclassified into profit or loss (2014 – Nil) and included in interest expenses. There was no hedge ineffectiveness in the 
current or prior year.

At the end of the reporting period, the Group had the following variable rate borrowings outstanding:

Floating rate borrowings

Interest rate swaps (notional principal amount)

Unhedged variable borrowings

2015

2014

Weighted average
 interest rate 
%

2.22%

2.24%

Weighted average
 interest rate 
%

2.72%

2.70%

$m

1,163.4

(911.6)

251.8

$m

1,022.5

(797.4)

179.6

75

 FLEXIGROUP ANNUAL REPORT 2015 
AS AT 30 JUNE 2015

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

24.  FINANCIAL RISK MANAGEMENT (CONTINUED)

Interest rate risk sensitivity analysis 
The analysis demonstrates the impact of 100 basis point change in interest rates, with all other variables held constant.

A sensitivity level of +/-100 basis point change is determined considering the range of interest rates applicable to the following variable 
rate financial assets and financial liabilities in the Group: 

Cash and cash equivalents

Loss reserve on borrowings

Floating rate borrowings

Interest rate swaps (notional principal amount)

2015
$m

130.3

26.4

1,163.4

911.6

2014
$m

106.6 

26.2

1,022.5

797.4

(1)  Based on the variable rate financial assets and financial liabilities held at 30 June 2015, if interest rates had changed by, +/- 100 basis point from the year-end rates 

with all other variables held constant, the impact on the Group’s after-tax profits and equity on above exposures would have been $3.0m lower/$3.1m higher (2014: 
$1.5m lower/$1.4m higher).

Cash flow hedges
The Group hedges a portion of the variability in future cash flows attributable to the interest rate risk on floating rate borrowings 78% 
(2014 – 82%) using derivatives such as interest rate swaps.

There were no forecast transactions for which cash flow hedge accounting had to be ceased as a result of the forecast transaction no 
longer being expected to occur in the current or prior period.

b.  Foreign exchange risk

Foreign exchange risk results from an impact on the Group’s profit after tax and equity from movements in foreign exchange rates.

Changes in value would occur in respect of translating the Group’s capital invested in overseas operations into Australian dollars at 
reporting date (translation risk).

The Group does not hedge the capital invested in the overseas operations thereby accepting the foreign currency translation risk on 
invested capital.

The Parent entity had no exposures to interest rate risk and foreign exchange risk for both current and prior year.

c.  Credit risk

Credit risk is the risk that a contracting party will not complete its obligations under a financial instrument and, as a result, cause the 
Group to incur a financial loss. The Group has exposure to credit risk on all financial assets included in its balance sheet. The Group’s 
maximum exposure to credit risk on its financial assets is its carrying amount.

To manage credit risk, the Group has developed a comprehensive credit assessment process. Loans and receivables consist mainly of 
lease and loan contracts provided to consumer and commercial customers. Credit underwriting typically includes the use of either an 
application score-card and credit bureau report or a detailed internal risk profile review for each application, including a review of the 
customer against a comprehensive credit database. Internal credit review and verification processes are also used depending on the 
applicant. 

At origination, a credit assessment system along with information from two national credit bureau determines the creditworthiness of 
applications based on the statistical interpretation of a range of application information. These credit risk assessments are supported 
by reviews of certain applications by dedicated credit staff who apply the Group’s credit and underwriting policy within specific approval 
authorities. Portfolio performance and credit risk of new applications is monitored monthly by the Pricing, Risk and Credit Committee. 
The Group has a specialist collection function which manages all delinquent accounts. 

A primary measure of delinquency used by the Group is the proportion of contracts with an outstanding payment that is 30, 60, 90+ days 
past due. For the purposes of measurement of past due amounts, an account is considered delinquent if it is overdue on a contractual 
payment by one day. The total principal owing on the contract is defined as the past due amount. 

Counterparty risk is where the Group incurs credit exposures to banks as a consequence of hedging of interest rate risks. Credit limits for 
counterparties are based on external ratings and the Group manages and controls its credit risk by setting limits on the amount of risk it 
is willing to accept for individual counterparties and by monitoring exposures in relation to such limits.

76

FLEXIGROUP ANNUAL REPORT 2015Loans and receivables

The Group’s lease and loan receivable balances are high volume low value lease and loan receivables advanced to individual customers 
and small businesses. In the vast majority of cases no externally assessed credit rating is available for these counterparties.

The table below provides information about customer loans and receivables from customers by payment due status.

30 June 2015

Unimpaired past due loans and receivables

Past due under 30 days

Past due 30 days to under 60 days

Past due 60 days to under 90 days

Past due 90 days and over

Total unimpaired past due loans and receivables

Total unimpaired loans and receivables(1)

Unimpaired past due as a percentage of total unimpaired loans and receivables

Unimpaired past due 30 days and over as a percentage of total unimpaired loans and receivables

As at 30 June 2014

Unimpaired past due loans and receivables

Past due under 30 days

Past due 30 days to under 60 days

Past due 60 days to under 90 days

Past due 90 days and over

Total unimpaired past due loans and receivables(1)

Total unimpaired loans and receivables

Unimpaired past due as a percentage of total unimpaired loans and receivables

Unimpaired past due 30 days and over as a percentage of total unimpaired loans and receivables

(1)  This excludes unamortised initial direct transactions costs and gross of provision for doubtful debts.

Contracts

$m

38,772

12,013

5,032

5,683

61,500

674,983

38,501

10,125

5,121

4,647

58,394

654,727

83.3

16.0

6.1

3.1

108.5

1,427.9

7.6%

1.8%

76.9

18.1

8.4

3.4

106.8

1,318.6

8.1%

2.3%

For impaired lease receivables, the Group has a right to recover the leased asset and for impaired loan receivables the Group, in certain 
instances, has access to collateral. Given the large number of small dollar accounts comprising the portfolio it is not practical to assess the 
value of the collateral. 

For the majority of its receivables, the Group does not identify any individual receivables as significant, and accordingly for those 
receivables, no unimpaired past due loans are identified and the allowance for losses is calculated on a collective basis. However a 
small portion of the Group’s receivables are individually significant (primarily in the Enterprise portfolio). At 30 June 2015, there were no 
material individually significant impaired loans.

The Group either writes off or recognises a 100% allowance for all past due receivables between 120 and 180 days past due (2014: 120 and 
180 days past due) depending on the portfolio.

d.  Liquidity risk

Liquidity risk is the risk that the Group cannot meet its financial liabilities or take advantage of investment opportunities at a reasonable 
cost in a timely manner. Treasury is responsible for ensuring that the Group has continuous access to funds in accordance with policies 
established and monitored by the Board. 

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through 
an adequate amount of committed credit facilities. Surplus funds are only invested with licensed banks in the countries in which the 
Group operates.

77

 FLEXIGROUP ANNUAL REPORT 2015AS AT 30 JUNE 2015

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

24.  FINANCIAL RISK MANAGEMENT (CONTINUED)

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 contractual amortisation payments. Details of unused available loan facilities are set out in Note 15. 

Amounts due to funders are repaid directly by rentals and repayments received from the Group’s customers. 

For the current year, the Group raised funding of $495m through the asset-backed securitisation program and proceeds from its 
operating cash flows.

Loan covenants
The Group has complied with all debt covenants throughout the reporting period for its borrowings.

Contractual maturity of financial liabilities on an undiscounted basis
The table below shows cashflows associated with financial liabilities including derivative financial liabilities within relevant maturity 
Groupings based on the earliest date in which the Group may be required to pay. 

The balances in the table will not agree to amounts presented in the balance sheet as amounts incorporate net cashflows on an 
undiscounted basis and include both principal and associated future interest payments.

It should be noted this is not how the Group manages its liquidity risk which is detailed above.

At 30 June 2015 

Non-derivative financial liabilities

Payables

Borrowings before loss reserves

Derivative financial instruments

Interest rate swaps

Total undiscounted financial liabilities

At 30 June 2014

Non-derivative financial liabilities

Payables

Borrowings before loss reserves

Derivative financial instruments

Interest rate swaps

Total undiscounted financial liabilities

Less than 
1 year
$m

1 to 2 
years
$m

2 to 5 
years
$m

5 years
 plus
$m

35.7

831.0

5.3

872.0

44.5

742.9

2.8

790.2

–

325.1

2.1

327.2

–

284.8

1.1

285.9

–

203.3

0.3

203.6

–

193.6

0.1

193.7

–

0.3

–

0.3

–

–

–

–

Total
$m

35.7

1,359.7

7.7

1,403.1

44.5 

1,221.3

4.0

1,269.8

e.  Fair value of financial assets and financial liabilities

Fair value reflects the amount for which an asset could be exchanged or a liability settled, between knowledgeable, willing parties in 
an arm’s length transaction. Quoted prices or rates are used to determine fair value where an active market exists. If the market for a 
financial instrument is not active, fair values are estimated using present value or other valuation techniques, using inputs based on 
market conditions prevailing on the measurement date.

Financial instruments measured at fair value are categorised under a three level hierarchy as outlined below:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or 
indirectly (i.e. derived from prices).

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The Group has assessed its financial instruments recorded at fair value and are categorised as per below under fair value hierarchy.

78

FLEXIGROUP ANNUAL REPORT 2015The table below summarises the carrying amount and fair value of financial assets and financial liabilities held at amortised cost. 
The methodology and assumptions used in determining fair values are as follows:

Cash and cash equivalents
The carrying amount of cash and cash equivalents is an approximation of fair value as they are short term in nature or are receivable 
on demand.

Receivables and customer loans
The fair value of lease receivables and customer loans are estimated by discounting the future contractual cash flows at the current 
market interest rate that is available to the Group. The nominal value (including unamortised initial direct transaction costs) less 
estimated credit adjustments of lease receivables and customer loans are assumed to approximate their fair values.

Payables
The carrying amount of payables is an approximation of fair values as they are short term in nature.

Borrowings
The fair value of borrowings is estimated by discounting the future contractual cash flows at the current market interest rate that is 
available to the Group.

2015

Financial assets

Cash and cash equivalents

Receivables

Customer loans

Financial liabilities

Payables

Borrowings(1)

– Floating interest rate(1)

– Fixed interest rate

Total borrowings before loss reserves

2014

Financial assets

Cash and cash equivalents

Receivables

Customer loans

Financial liabilities

Payables

Borrowings(1)

– Floating interest rate (1)

– Fixed interest rate

Total borrowings before loss reserves

(1)  Refer Note 24(a) for further information on how the Group manages its interest rate risk.

Carrying
 amount 
$m

Fair value
$m

Note

7

9

10

14

16

7

9

10

14

16

130.3

749.2

702.3

130.3

749.2

702.3

35.7

35.7

1,163.4

137.5

1,300.9

1,163.4

138.8

1,302.2

106.6

692.9

654.3

106.6

692.9

654.3

44.5

44.5

1,022.5

136.3

1,158.8

1,022.5

137.3

1,159.8

Fair value hierarchy
The fair value hierarchy is determined by reference to observability of inputs into the fair value models.

Receivables and customer loans
Unobservable inputs such as historic and current product margins are considered to determine the fair value. These are classified as 
Level 3.

Borrowings
These are classified as level 2 as the inputs into the fair value models used to determine fair value are observable. 
Other financial assets and financial liabilities are classified as Level 1.

79

 FLEXIGROUP ANNUAL REPORT 2015NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

25.  BUSINESS COMBINATION

Acquisition 2015

(a)  Summary of acquisition – Telecom Rentals Limited (TRL)
On 30 April 2015 the Group announced the acquisition of 100% of the issued share capital of TRL, a wholly owned subsidiary of Spark New 
Zealand Limited. The acquisition provides the Group with significant scale for the existing New Zealand business and allows the Group to 
penetrate new distribution channels. Details of the purchase consideration, the net tangible assets acquired and goodwill are as follows:

Purchase consideration

Cash paid

Senior portfolio acquisition debt(1)

Credit support for senior portfolio acquisition debt

The carrying amounts and fair values of the assets and liabilities acquired were:

Cash and cash equivalents

Receivables

Other assets

Deferred tax assets

Trade and other payables 

Deferred tax liabilities

Net tangible assets

Consideration

Goodwill and intangible assets recognised

Comprising:

– Goodwill

Carrying 
value
$m

0.1

101.0

0.7

0.3

(3.0)

(3.5)

95.6

$m

17.0

74.0

17.4

108.4

Provisional
 fair value(2)

$m

0.1

101.0

0.7

0.3

(3.0)

(3.5)

95.6

108.4

12.8

12.8

12.8

(1)  As part of the funding for TRL acquisition, the Group obtained a senior portfolio debt instrument that was backed by a subsequent securitisation of TRL 

receivables. Consequently, the cash outflow disclosed in investing activities in the statement of cash flows represents the equity value that the Group paid on the 
acquisition.

(2)  The initial accounting of the acquisition of Telecom Rentals Limited is stated on a provisional basis due to late finalisation of the acquisition on 26 June 2015. 

Purchase price allocation will be performed during first half 2016.

The acquired business contributed total portfolio income of $1.2m and net profit after tax of $0.6m to the Group from 1 May 2015, the 
date on which risks and rewards of ownership was transferred. If the acquisition had occurred on 1 July 2014, total portfolio income and 
profit at June 2015 would have been $7.2m and $2.4m respectively. These amounts have been calculated using the Group accounting 
policies and by adjusting the results of the subsidiary to reflect the additional depreciation and amortisation that would have been 
charged assuming the fair value adjustments to property, plant and equipment and intangible assets had applied from 1 July 2014, 
together with the consequential tax effects.

(b) 

 The Group also acquired certain assets of Digital Business Technology Pty Limited through the Think Office Technology 
subsidiary on 2 March 2015. 

The purchase consideration consisted of an outright cash payment of $1.8m. The consideration resulted in a goodwill amount of $1.6m 
being recognised.

80

AS AT 30 JUNE 2015FLEXIGROUP ANNUAL REPORT 2015Acquisition 2014

(c)  Summary of acquisition – RentSmart 
At 30 June 2014, provisional business combinations accounting was disclosed. Following finalisation of tax values, deferred tax liabilities 
have been adjusted and are disclosed as final value.

On 31 January 2014 the Group completed the acquisition of 100% of the issued share capital of the entities making up the Australian and 
New Zealand operations of ThinkSmart Limited (RentSmart ANZ). RentSmart is a Consumer and SME leasing provider, which expands the 
distribution network of the Group’s existing business. Details of the purchase consideration, the net assets acquired and goodwill are 
as follows:

Purchase consideration

Cash paid

The carrying amounts and fair values of the assets and liabilities acquired were:

$m

42.4

42.4

Carrying 
value
$m

Provisional  
fair value
$m

Final  
fair value
$m

Cash and cash equivalents

Receivables

Other assets

Plant and equipment

Other intangible assets

Deferred tax assets

Trade and other payables

Loans and borrowings

Deferred tax liabilities

Net carrying value

Consideration

Goodwill and intangible assets recognised

Comprising:

– Goodwill

– Merchant relationships

– IT Software

13.7

47.0

0.2

0.5

4.2

1.5

(3.4)

(36.6)

(0.5)

26.6

13.7

41.5

0.1

–

–

2.0

(3.5)

(36.6)

(0.5)

16.7

42.4

25.7

23.9

1.7

0.1

25.7

13.7

41.5

0.1

–

–

2.0

(3.5)

(36.6)

(2.3)

14.9

42.4

27.5

23.9

1.7

0.1

25.7

81

 FLEXIGROUP ANNUAL REPORT 2015NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

25.  BUSINESS COMBINATION (CONTINUED)

(d)  Summary of acquisition – Australian Print Holdings Pty Limited (trading as Think Office Technology (‘TOT’))
At 30 June 2014, provisional business combinations accounting was disclosed. These have now been finalised and there are no material 
changes to the goodwill.

On 12 March 2014 the Group completed the acquisition of 100% of the issued share capital of Australian Print Holdings Pty Limited, a 
photocopier and equipment finance specialist. Details of the purchase consideration, the net assets acquired and goodwill are as follows:

Purchase consideration

Cash paid

Deferred and contingent consideration(1) 

$m

6.0

9.0

15.0

(1)  There have been no changes on the valuation of the contingent consideration in 2015 financial year. $3.0m of the deferred settlement fell due on 1 December 2014 

and was duly settled.

Cash and cash equivalents

Receivables

Inventories

Other assets

Plant and equipment

Goodwill

Trade and other payables 

Borrowings

Deferred tax liabilities

Net carrying value

Consideration

Goodwill and intangible assets recognised

Comprising:

– Goodwill

– Merchant relationships and supplier agreements

– IT Software

– Brand name

Carrying 
value
$m

1.2

1.9

1.5

–

2.0

8.7

(4.0)

(2.2)

–

9.1

Provisional
 fair value(2)

$m

1.2

1.8

1.5

–

2.0

–

(4.0)

(2.2)

(1.7)

(1.4)

15.0

16.4

9.9

6.0

0.1

0.4

16.4

(e) 

 The Group finalised fair values of assets of Equico Limited, a New Zealand based leasing company that it acquired on 
21 March 2014. No material changes to goodwill recorded on 30 June 2014 which was $1.6m.

82

AS AT 30 JUNE 2015FLEXIGROUP ANNUAL REPORT 201526.  LEASE COMMITMENTS

Lease commitments for property, plant and equipment
Operating leases are entered into to meet the business needs of the entities in the Group. Leases are for 
premises and plant and equipment. Lease rentals are determined in accordance with market conditions 
when leases are entered into or on rental review dates.

Non-cancellable operating leases contracted for but not capitalised in the financial statements due:

– within one year

– later than one year but not later than five years

– later than five years

2015
$m

2014
$m

3.9

11.2

3.6

18.7

4.2

7.0

–

11.2

FlexiGroup entered into a call centre service agreement, where the Group will receive call centre services for an initial period of 3 years. 
At 30 June 2015, the minimum future commitment on this agreement was approximately $17.1 million. Additionally, in the normal course 
of the business at 30 June 2015 the Group has approved customer loan and lease receivable accounts which have not been drawn at year 
end. Committed amounts are typically drawn within a short period of the loan or lease being approved.

27.  CONTINGENT LIABILITIES

There are no material contingent liabilities at the date of this report (2014: $nil).

83

 FLEXIGROUP ANNUAL REPORT 2015AS AT 30 JUNE 2015

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

28.  GROUP ENTITIES

The consolidated financial statements incorporate the assets, liabilities and results of the following controlled entities in accordance with 
the accounting policy described in Note 1(b):

Country of 
incorporation

Footnote

 Percentage of 
shares held

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

New Zealand

Ireland

Ireland

Australia

Australia

New Zealand

Australia

Australia

Australia

Australia

Australia

Australia

Australia

New Zealand

New Zealand

Australia

Australia

Australia

Australia

Australia

Australia

(2)

(2)

(2)

(2)

(2)

(1)

(2)

(2)

2015

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

–

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

2014

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

–

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

Entity name

FlexiGroup SubCo Pty Limited 

Flexirent Holdings Pty Limited 

Flexirent Capital Pty Limited 

Flexirent SPV Number 1 Pty Limited

Flexirent SPV Number 2 Pty Limited

Flexirent SPV Number 3 Pty Limited

Flexirent SPV Number 4 Pty Limited

Flexicare Claims Management Pty Limited 

Flexirent SPV No 6 Pty Limited

Subfinco Pty Limited

Certegy Ezi-Pay Pty Ltd 

FlexiGroup Tax Deferred Employee Share Plan Trust

FlexiGroup Employee Share Plan Trust

FlexiGroup Management Pty Limited 

FlexiGroup New Zealand Limited 

Flexirent Ireland Group Holdings Limited

Flexirent Ireland Limited

Flexirent SPV Number 7 Pty Limited

Flexi ABS Trust 2010-1

FlexiGroup NZ SPV1 Limited

Flexi ABS Trust 2010-2

Flexi ABS Trust 2011-1

Flexi Online Pty Limited 

Flexi ABS Warehouse Trust No. 2

Flexi ABS Trust Warehouse No. 3

Lombard Finance Pty Limited 

Lombard Warehouse Trust No.1

Flexi Online New Zealand Limited

FlexiGroup NZ SPV 2 Limited

Flexi ABS Trust 2012-1

Flexi LCAL Warehouse Trust

Once Credit Pty Limited 

Lighthouse Warehouse Trust No.9

Flexirent SPV Number 8 Pty Limited

Flexi ABS Trust 2013-1

84

FLEXIGROUP ANNUAL REPORT 2015Entity name

Flexi ABS Trust 2013-2

RentSmart Unit Trust

RentSmart Pty Limited 

SmartCheck Pty Limited 

RentSmart Finance Limited 

RentSmart Servicing Pty Limited 

RentSmart Trust

RentSmart (NZ) Pty Limited

Australian Print Holdings Pty Limited 

TOT CNS Pty Limited 

TOT TSV Pty Limited 

TOT MKY Pty Limited 

TOT GNE Pty Limited 

TOT SC Pty Limited 

TOT TBA Pty Limited 

ICT Finance Pty Limited

FlexiGroup NZ SPV 3 Limited

Flexi ABS Trust 2014-1

Flexi ABS Trust 2015-1

Flexi ABS Trust 2015-2

TRL Leasing Limited

Country of 
incorporation

Footnote

 Percentage of 
shares held

Australia

Australia

Australia

Australia

Australia

Australia

Australia

New Zealand 

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

New Zealand

Australia

Australia

Australia

New Zealand

2015

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

 (2)

 (2)

(2)

(2)

 (2)

 (2)

 (2)

 (2)

 (2)

(2)

(2)

(1)

(1)

(1)

(1)

2014

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

–

–

–

(1)  Controlling interest acquired during the year ended 30 June 2015.
(2)  These controlled entities have entered into a deed of cross guarantee (refer Note 34) with the Company pursuant to ASIC Class order 98/1418 dated 13 August 
1998. These controlled entities and the Company form a closed group (closed group is defined as Group of entities comprising a holding entity and its related 
wholly owned entities). Relief was granted to these controlled entities from the Corporations Act 2001 (Cth) requirements for preparation, audit and publication of 
an annual financial report.

85

 FLEXIGROUP ANNUAL REPORT 2015AS AT 30 JUNE 2015

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

29.  KEY MANAGEMENT PERSONNEL DISCLOSURES

(a)  Directors
The following persons were Directors of FlexiGroup Limited during the financial year:

C Beare 

T Robbiati(1) 

A Abercrombie

R J Skippen

R Dhawan 

A Ward

Chairman – Non-Executive Director (resigned 10 August 2015)

Executive Director (resigned 7 August 2015)

Non-Executive Director

Non-Executive Director

Non-Executive Director

Non-Executive Director (resigned 10 August 2015)

(b)  Other key management personnel
The following persons also had authority and responsibility for planning, directing and controlling the activities of the Group during 
the financial year:

T Robbiati 

D Stevens

R May 

P Lirantzis 

M Burke

A Roberts(1)

Chief Executive Officer 

Chief Financial Officer

General Manager – Certegy

Chief Operating Officer

General Manager – Consumer and SME

General Manager – Enterprise

(c)  Key management personnel compensation

Short-term employee benefits

Post-employment benefits

Long-term benefits

Share-based payments

Total earnings(1)

Share-based payments cancellation

Total

2015
$

2014
$

3,578,220

4,421,601

154,644

18,297

195,818

18,267

312,467

1,448,374

4,063,628

6,084,060

–

4,761,972

4,063,628

10,846,032

(1)  Total earnings represent total KMP compensation excluding share based payments cancellation. Accounting standards require that a cancellation of equity 
instruments be accounted for as an acceleration of vesting, therefore recognising immediately the amount that would otherwise have been recognised for 
services received over the remainder of the vesting period. The result of the cancellation is included as an expense in the income statement for accounting 
purposes but has been excluded from total earnings above on the basis that the amounts have not vested to the individuals. 

Further remuneration disclosures are provided in sections A–D of the Remuneration Report on pages 12 to 28.

86

FLEXIGROUP ANNUAL REPORT 2015(d)  Other transactions with related parties
Rental of Melbourne premises
Flexirent Capital Pty Limited has rented premises in Melbourne owned by entities associated with Mr A Abercrombie.  
The rental arrangements for this premises are based on market terms.

Rental expense for premises

Loan to key management personnel

Opening balance

Loan advanced

Loan forgiveness

Closing balance

30.  RELATED PARTY TRANSACTIONS

(a)  Parent entity
The parent entity of the Group is FlexiGroup Limited.

(b)  Subsidiaries
Interests in Group entities are set out in Note 28.

Transactions with related parties
There were no transactions between the Group and related parties other than those disclosed in Note 29(d).

2015
$

2014
$

179,872

178,533

2015
$

–

–

–

–

2014
$

–

800,000

(800,000)

–

87

 FLEXIGROUP ANNUAL REPORT 2015AS AT 30 JUNE 2015

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

31. REMUNERATION OF AUDITORS

During the year the following fees were paid or payable for services provided by the auditor of the parent entity and its related parties.

a. Audit and assurance services

Audit Services

PwC Australian firm:

Audit and review of financial statements

Related practices of PwC Australian firm

Other assurance Services

PwC Australian firm:

Other assurance services including due diligence services

Total remuneration for audit and assurance services

b. Non-audit services

Taxation services

PwC Australian firm:

Tax compliance and advice on transactions

Related practices of PwC Australian firm

Total remuneration for taxation services

Total remuneration for non-audit services

Total remuneration of PwC

2015
$

2014
$

525,000

11,761

500,000

11,693

117,992

654,753

411,763

923,456

11,322

97,728

109,050

32,921

6,222

18,937

25,159

25,159

763,803

948,615

It is the Group’s policy to employ PwC on assignments additional to its statutory audit duties where PwC’s expertise and experience with 
the Group are important. These assignments are principally regulatory audits, procedures performed as part of completing funding 
agreements, tax advice and due diligence reporting on acquisitions, or where PwC is awarded assignments on a competitive basis.

88

FLEXIGROUP ANNUAL REPORT 201532. CLOSED GROUP
The table below presents the consolidated pro forma income statement and balance sheet for the Company and controlled entities which 
are party to the deed of cross guarantee (referred to as a closed group). For further information refer Note 28, footnote (2). The effects 
of transactions between entities to the deed are eliminated in full in the consolidated income statement and consolidated statement 
of financial position.

(a)   Pro forma income statement

Profit before income tax

Income tax benefit/(expense)

Net profit for the year

(b)   Pro forma statement of financial position

Assets
Current assets
Cash and cash equivalents
Receivables and customer loans
Inventories

Total current assets

Non-current assets
Receivables and customer loans
Plant and equipment
Goodwill
Other intangible assets
Other financial assets

Total non-current assets

Total assets

Liabilities
Current liabilities
Payables
Borrowings
Current tax liabilities
Provisions
Deferred and contingent consideration

Total current liabilities

Non-current liabilities
Borrowings
Deferred tax liabilities
Provisions

Total non-current liabilities

Total liabilities

Net assets

Equity
Contributed equity
Reserves
Accumulated (losses)/retained profits

Total equity

2015
$m

8.4

3.8

12.2

2015
$m

54.7
65.4
3.5

123.6

50.1
5.0
148.8
44.5
22.9

271.3

394.9

51.5
106.1
11.4
4.2
5.9

179.1

45.0
27.2
0.9

73.1

252.2

142.7

159.6
(16.7)
(0.2)

142.7

2014
$m

60.4

(2.3)

58.2

2014
$m

33.7
75.6
2.0

111.3

59.3
5.8
132.5
27.6
92.4

317.6

428.9

39.9
93.9
8.5
4.5
8.6

155.4

45.0
27.0
0.7

72.7

228.1

200.8

159.8
0.9
40.1

200.8

89

 FLEXIGROUP ANNUAL REPORT 2015AS AT 30 JUNE 2015

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

33.  PARENT ENTITY FINANCIAL INFORMATION

(a)  Summary financial information

The parent entity financial information is presented as follows:

Balance sheet

Current assets

Total assets

Current liabilities

Total liabilities

Shareholders’ equity

Issued share capital

Share based payment reserve

Accumulated (losses)/retained profits

Profit for the year

Total comprehensive income

2015
$m

47.8 

276.2 

(6.3)

(6.3)

563.7 

(10.2)

(283.6)

269.9 

–

–

2014
$m

134.4 

331.7 

(9.9)

(9.9)

563.1 

(10.1)

(231.2)

321.8 

50.0

50.0

(b)  Guarantees entered into by the parent entity

Pursuant to Australian Securities and Investment Commission Class Order 98/1418 dated 13 August 1998, relief was granted to certain 
controlled entities (Note 28, footnote (2)) from the Corporations Act 2001 (Cth) requirements for preparation, audit and publication of 
annual financial reports. It is a condition of the Class Order that the Company and each of the controlled entities enter into a deed of cross 
guarantee. The effect of the deed is that the Company guarantees to each creditor payment in full of any debt in the event of winding up 
of any of the controlled entities under certain provisions of the Corporations Act 2001 (Cth). 

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.

(c)  Contingent liabilities and contractual commitments of the parent entity

The parent entity has no contingent liabilities or contractual commitments as at 30 June 2015 (2014: $nil).

34. SECURITISATION AND SPECIAL PURPOSE VEHICLES

The Group sells receivables and customer loans to securitisation vehicles through its asset-backed securitisation program and other 
special purpose vehicles. The securitisation and special purpose vehicles are consolidated as set out in Note 28 as the Group is exposed 
or has rights to variable returns and has the ability to affect its returns through its power over the securitisation vehicles. The Group may 
serve as a sponsor, server, liquidity provider, purchaser of notes and/or purchaser of residual interest units.

The table below presents assets securitised and the underlying borrowings as a result of the securitisations.

Receivables

Customer loans 

Cash held by securitisation vehicles

Borrowings related to receivables and customer loans

35.  EVENTS OCCURRING AFTER THE REPORTING PERIOD

There have been no significant events occurring after the end of the reporting period.

90

2015
$m

1,116.5

224.1

99.2

1,439.8

1,227.9

2014
$m

1,003.2

197.0

87.7

1,287.9

1,083.1

FLEXIGROUP ANNUAL REPORT 2015Directors’ Declaration

In the Directors’ opinion:
(a)  the financial statements and Notes set out on pages 41 to 90 are in accordance with the Corporations Act 2001, including: 

(i) 

(ii) 

 complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting 
requirements; and 
 giving a true and fair view of the consolidated entity’s financial position as at 30 June 2015 and of its performance for 
the financial year ended on that date; and 

(b) 

(c) 

 there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and 
payable; and
 at the date of this declaration, there are reasonable grounds to believe that the members of the closed group identified in 
Note 32 will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue to the deed of 
cross guarantee in Note 32. 

Note 1(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by the 
International Accounting Standards Board.

The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 
295A of the Corporations Act 2001.

Andrew Abercrombie 
Chairman

Sydney
17 August 2015

91

 FLEXIGROUP ANNUAL REPORT 2015 
 
AS AT 30 JUNE 2015

Independent Auditor’s Report

Independent auditor’s report to the members of FlexiGroup Limited 
Report on the financial report 
We have audited the accompanying financial report of FlexiGroup Limited (the company), which comprises 
the consolidated statement of financial position as at 30 June 2015, the consolidated income statement, 
consolidated statement of comprehensive income, consolidated statement of changes in equity and 
consolidated statement of cash flows for the year ended on that date, a summary of significant accounting 
policies, other explanatory notes and the directors’ declaration for FlexiGroup Limited (the consolidated 
entity). The consolidated entity comprises the company and the entities it controlled at year’s end or from 
time to time during the financial year. 

Directors’ responsibility for the financial report 
The directors of the company are responsible for the preparation of the financial report that gives a true and 
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such 
internal control as the directors determine is necessary to enable the preparation of the financial report that 
is free from material misstatement, whether due to fraud or error. In Note 1 (a), the directors also state, in 
accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial 
statements comply with International Financial Reporting Standards. 

Auditor’s responsibility 
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our 
audit in accordance with Australian Auditing Standards. Those standards require that we comply with 
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain 
reasonable assurance whether the financial report is free from material misstatement. 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the 
financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the 
risks of material misstatement of the financial report, whether due to fraud or error. In making those risk 
assessments, the auditor considers internal control relevant to the consolidated entity’s preparation and fair 
presentation of the financial report in order to design audit procedures that are appropriate in the 
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal 
control. An audit also includes evaluating the appropriateness of accounting policies used and the 
reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation 
of the financial report.  

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our 
audit opinion. 

Independence 
In conducting our audit, we have complied with the independence requirements of the Corporations Act 
2001. 

PricewaterhouseCoopers, ABN 52 780 433 757 
Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY  NSW  1171 
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au 

Liability limited by a scheme approved under Professional Standards Legislation. 

92

FLEXIGROUP ANNUAL REPORT 2015 
 
 
 
 
93

 FLEXIGROUP ANNUAL REPORT 2015AS AT 30 JUNE 2015

Shareholder Information

The shareholder information set out below was applicable as at 31 July 2015:

A.  DISTRIBUTION OF EQUITY SECURITIES

1 – 1,000

1,001 – 5,000

5,001 – 10,000

10,001 – 50,000

50,001 – 100,000

100,001 and over 

Total

There were 425 holders of less than a marketable parcel of Ordinary shares.

B.  EQUITY SECURITY HOLDERS

Twenty largest quoted equity security holders.
The names of the 20 largest holders of quoted equity securities are listed below:

Class of equity security

Ordinary shares

Options

No. of 
holders

No. of 
shares

No. of 
holders

No. of 
options

2,875

1,595,562

5,428

14,807,576

2,033

15,421,380

1,548

31,216,680

140

9,880,417

108

231,228,092

304,149,707

–

–

–

–

–

–

–

–

–

–

–

–

Name

National Nominees Limited

The Abercrombie Group Pty Ltd

JP Morgan Nominees Australia Limited 

HSBC Custody Nominees (Australia) Limited

Citicorp Nominees Pty Limited 

BNP Paribas Noms Pty Ltd 

UBS Wealth Management Australia Nominees Pty Ltd

Behan Superannuation Pty Ltd

Citicorp Nominees Pty Limited (Colonial First State Inv A/C)

Mr Brendan Charles Behan & Mrs Dawn Helen Behan

National Nominees Pty Limited

BNP Paribas Noms (NZ) Ltd

Warbont Nominees Pty Ltd

Sandhurst Trustees Ltd

RBC Investor Services Australia Nominees Pty Limited

SM & RW Brown Pty Ltd

Merlor Holdings Pty Ltd

HSBC Custody Nominees (Australia) Limited – A/C 3

Catholic Church Insurance Limited

Aust Executor Trustees Ltd

Total

94

Ordinary shares

Number 
held

60,741,122

57,258,977

32,043,399

20,243,103

16,889,254

5,805,787

5,554,460

4,760,000

2,641,749

2,750,000

1,759,261

1,735,859

902,018

810,827

679,623

600,000

577,242

537,309

519,436

475,000

Percentage
 of issued
 shares
%

19.97

18.82

10.54

6.66

5.55

1.91

1.83

1.57

0.87

0.90

0.58

0.57

0.30

0.27

0.22

0.20

0.19

0.18

0.17

0.16

215,558,567

70.87

FLEXIGROUP ANNUAL REPORT 2015Unquoted equity securities

Options and performance rights issued under the FlexiGroup Limited Long Term Incentive Plan  
to take up ordinary shares

The Company has no other unquoted equity securities.

C.   SUBSTANTIAL HOLDERS

Substantial holders in the Company are set out below:

The Abercrombie Group

D.  VOTING RIGHTS

Number 
on issue

Number 
of holders

6,437,724

53

Number 
held

Percentage 
%

76,765,251

25.24

The voting rights attaching to equity securities are set out below:

(a)  Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have 
one vote.

(b)  Options and performance rights
No voting rights.

95

 FLEXIGROUP ANNUAL REPORT 2015AS AT 30 JUNE 2015

Corporate Directory

Directors
Andrew Abercrombie (Chairman)
Rajeev Dhawan
R John Skippen

Secretary
Julianne Lyall-Anderson

Notice of Annual General Meeting
The Annual General Meeting of FlexiGroup Limited  
will be held at Sofitel Sydney Wentworth, 61-101 Phillip Street,  
Sydney at 4pm on 23 November 2015.

Principal registered office  
in Australia
Level 8, The Forum
201 Pacific Highway
St Leonards NSW 2065
Australia

Share Register
Link Market Services Limited
Level 12
680 George Street
Sydney NSW 2000
Australia

Auditor
PricewaterhouseCoopers
Darling Park Tower 2
201 Sussex Street
Sydney NSW 2000
Australia

Solicitors
King & Wood Mallesons
Level 60, Governor Phillip Tower
1 Farrer Place
Sydney NSW 2000
Australia

Bankers
Commonwealth Banking Corporation
Westpac Banking Corporation

Securities Exchange listing
FlexiGroup Limited shares are listed on the  
Australian Securities Exchange

Website
www.flexigroup.com.au

96

FLEXIGROUP ANNUAL REPORT 2015FlexiGroup Limited ABN 75 122 574 583 

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