Money3 Corporation Limited
Annual Report 2019
Accelerating
Sustainable
Growth
About Money3
Money3 is a specialist provider
of vehicle finance for the
purchase and maintenance
of a vehicle in Australia and
New Zealand. Our business
model and unique approach
to customer care attracts
creditworthy customers
that are underserviced by
traditional lenders.
Money3 has a fast-growing
and high-quality loan book
with more than 47,000 active
accounts. With ~$100m in
available funding, Money3 will
continue its growth strategy.
Contents
Business Overview
Our Business Model
Key Highlights
Chairman’s & Managing
Director’s Letter
Director’s Report
Remuneration Report
Auditor’s
Independence Declaration
Directors’ Declaration
Financial Statements
Notes to the Consolidated
Statements
2
10
12
13
16
25
35
36
37
41
Independent Auditor’s Report 79
ASX Additional Information
Corporate Information
86
89
B
1/500
Registered vehicles in
Australia are financed by
Money3
1/800
Registered vehicles in New
Zealand are financed by
Go Car Finance
Setting our
growth plan
in motion
500,000+
Customers serviced
800,000+
Loans written
$1bn+
Lent
Money3 Corporation Limited
Annual Report 2019
1
1
Accelerating Sustainable Growth
Growing Our
Addressable
Market
Taking Money3’s unique
approach to New Zealand
2
GO CAR FINANCE
ACQUISITION
PROVIDES
GEOGRAPHIC
AND PRODUCT
EXPANSION
Growing our addressable market
The acquisition of Go Car Finance broadens the
geography of Money3’s footprint and increases the
addressable market. In FY20 it is expected Go Car
Finance will contribute ~10% of Group NPAT.
Organic growth will continue through dealer and
broker channels along with growing a direct sales
channel via a newly established team focussed on
returning customers.
Consistency in our credit assessment process
and our simple product structure has contributed
to significant gains in loan originations. Money3
continues to integrate with key broker partners
using proprietary technology which enhances
the quality of information into the business and
increases the processing speed of applications.
KEY FOCUS: In Australia, we have launched new
lending products to address a broader market
segment. We continue to invest in technology
solutions to improve processing efficiency
and decision effectiveness as we expand
our addressable market.
3
Money3 Corporation Limited Annual Report 2019 Accelerating Sustainable Growth
Flexible
Lending
Providing customers with tailored solutions
4
33.3%^
INCREASE IN LOAN
ORIGINATIONS
IN FY19
Tailored solutions
Money3 prides itself on understanding customers’
needs and their different circumstances by building
deep relationships through regular communication
right from the loan application stage. We tailor our
products to be affordable with flexible repayments.
Transport is often central to many critical
aspects of everyday life such as earning an income,
childcare and education. We treat our customers
with the integrity and honesty they deserve and,
in turn, Money3 enjoys exceptional customer
satisfaction and loyalty.
KEY FOCUS: Underpinning our flexible product
approach is a strict focus on origination standards
ensuring bad debts are in the range of 4.5% to 5.5%
of gross loan book.
^ Adjusted for acquisition and divestment
5
Money3 Corporation Limited Annual Report 2019 Accelerating Sustainable Growth
Focus on
Customer Care
Providing service
where others don’t
6
CUSTOMER
CENTRIC APPROACH
INCREASED FY19
CASH COLLECTIONS
BY 32.1%^
Increasing customer loyalty and satisfaction
Money3 understands income and expense
variability and works with customers towards
a solution rather than avoiding the customer.
In the past year, our customers rated us highly
for customer care. We have regular dialogue
with our customers and provide flexible and
tailored solutions to help them with their
repayments, which in turn, helps Money3 keep
its bad debt levels well within industry norms.
Many customers choose Money3 as their
preferred financier because they prefer our
flexible repayment approach. For others, it’s
because Money3 helped them to repair their
credit history and pay back loans. These loyal
and returning customers reaffirm the significance
of our customer care team, particularly as we
broaden our service offering to include more new
vehicles, larger loans and lower interest products.
KEY FOCUS: Enhance our customer feedback
program and continue our high levels of
customer satisfaction. Our focus on continuous
improvement in the customer experience is key
to our ongoing success.
^ Adjusted for acquisition and divestment
7
Money3 Corporation Limited Annual Report 2019 Accelerating Sustainable Growth
Improved Quality of
Earnings Will Enable
Money3 to Lower
Funding Costs
Maximises shareholders
returns and supports growth
8
WELL FUNDED
WITH ~$100M IN
AVAILABLE FUNDS
TO SUPPORT LOAN
BOOK GROWTH
Funding to support accelerated growth
Money3 is well funded with ~$100m available to
deploy into the vehicle finance market. While
historically, growth has been primarily funded
through equity, with the improving quality of our
receivables Money3 can comfortably sustain a
higher gearing ratio. With a strong equity base
Money3 is well positioned to handle challenges
through the economic cycle.
KEY FOCUS: Refinance and grow the debt
facility in the first half FY21 reducing funding
cost and increasing gearing.
9
Money3 Corporation Limited Annual Report 2019 Our
Business
Model
Money3 has decades of experience and deep
knowledge of providing consumers with fi nance
for their vehicles. Our operations in Australia and
New Zealand are focused on broker and dealer
channels, and increasingly, a strong direct
channel to market. Our products are simple
and transparent, and our customer centric
approach prioritises fl exible and tailored
repayments that helps our customers service
their loans.
Attract customers
We understand our customers and create value
by providing tailored products that suit their needs.
We reach our customers through both digital and
traditional channels including brokers and dealers.
We fi nance customers across a range of risk
profi les which is refl ected in our pricing range
beginning at 9.95% p.a. We build a strong and
enduring relationship with our customers which
is evident from one in four customers returning
in FY19 for a new loan or refi nancing.
Assess suitability and aff ordability
Assessment starts by collecting customers’
data from their applications and from external
sources that digitally feed into our credit
assessment engine.
Money3 employs stringent standards of credit
assessment and responsible lending built from
our experience and in line with the regulatory
requirements. Direct engagement with customers
is a key part of our decisioning process. This
enables Money3 to understand our customers’
needs in a better way.
Our partner relationships with our brokers and
dealers also play an integral role in delivering
suitable products and services to our customers.
Lend responsibly
We focus on understanding our customers
cash fl ows and lend well within their aff ordability.
10
Should a customer miss a payment, we engage
with them early and understand their diffi culties
with a sympathetic approach. Depending on the
nature of diffi culty we use a range of forbearance
tools to help our customers.
This includes:
• accepting reduced payments;
• reduced interest rates;
• payment holidays; and
• reselling vehicle to assist payments.
These measures are taken to help our customers
get back on track with their repayment schedules.
Collect payments and manage arrears
Customers can make payments in multiple ways
including direct debit, BPAY, directly from their
employer through salary deductions, debit and
credit card payments. More than 99% of our
customers opt to pay through direct debit.
In FY19, we started off ering digital payments
to our customers through partnerships.
We allow customers to choose the payment
frequency and payment methods that best suit
them. We help our customers minimise penalty
fees by encouraging them to contact us early in
case they foresee diffi culty in making repayments.
This ensures we update our banking partners
accordingly thereby avoiding dishonour fees for
our customers from the banks through which
automated payment instructions are operated.
We are fl exible with repayment profi les with the
objective of helping our customers repay the loan
thereby minimising losses for Money3.
We have developed new capabilities to message
customers to remind them of upcoming payments.
Money3 Corporation Limited
Annual Report 2019
11
Key
Highlights
48.1%
increase in Gross Loan
Book to $374m
24.6%
increase in Revenue
~$100m
funds available to
accelerate loan
book growth
$63.6m
In loan book added through
acquisition of Go Car Finance
12
Key
Highlights
FY19 was a year of transformation
for Money3 – we acquired Go Car Finance
in New Zealand, a terrifi c business with
strong growth momentum and an amazing
corporate culture. We also sold our SACC
lending business which leaves us well
capitalised for growth in FY20.
Chairman’s
& Managing
Director’s
Letter
Scott Baldwin
Chief Executive Offi cer and Managing Director
Stuart Robertson
Chairman
Dear Shareholder
I would like to thank you for your continued
support in our vision to become the leader
in providing vehicle fi nance for purchase and
maintenance of vehicles in Australia and
New Zealand.
FY19 was an exciting year of transformation,
which saw Money3 become a specialist secured
vehicle fi nance lender. We acquired Go Car Finance
in New Zealand, a terrifi c business with growth
momentum, and exited the SACC lending business.
During this transformation, we continued to maintain
our focus on growth, achieving an outstanding 48.1%
in the loan book, 24.6% in revenue and 14.2% in NPAT.
Expanding into New Zealand
Go Car Finance operates throughout New Zealand
and shares similarities with our Australian operations
in products, customer centric approach, strong
corporate culture and potential for growth. Go Car
Finance added $54.3m to the Group’s loan book
at acquisition and has achieved 17.1% growth since,
with the loan book at $63.6m at 30 June 2019.
It has also contributed over $1m to the Group
NPAT in FY19.
Money3 Corporation Limited
Annual Report 2019
13
Chairman’s
& Managing
Director’s
Letter
SACC Exit
Keeping in line with our long-term strategy to focus
on secured auto finance, we sold our SACC lending
business in May 2019. Moreover, the SACC exit also
reduces the overall regulatory risk and enables
access to low cost funding. The redeployment of
the SACC sale proceedings in secured loans and
the Go Car Finance acquisition will replace the
SACC contribution with sustainable and higher
quality earnings.
Strong organic growth
The Australian operations continued its strong
performance with good growth in loan originations
(over 19,000 up 25.6%), loan book ($310m up
22.9%) and revenue ($85.0m up 15.4%).
In November 2018, we established a new team
focussed on providing a seamless process for
returning customers. The new team has produced
very pleasing results lifting the number of returning
customers. This focussed team, along with the
introduction of a broader portfolio of products, is
expected to improve the returning customers in
FY20 and beyond.
We succeeded in piloting new digital methods in
our collection process enabling customers to make
payments digitally and modify repayment
schedules. The revenue recognition model applied
now is closely aligned with the underlying loan
cash flows which means no revenue is recognised
in the absence of cash flow. This has helped us to
manage slow paying loans and to lower bad debts.
(continued)
REVENUE
FROM
CONTINUING
OPERATIONS
GREW TO
$91.7M
24.6%
14
HELPING
CUSTOMERS
WITH FLEXIBLE
REPAYMENTS
TO SUIT THEIR
CIRCUMSTANCE
Strengthening board and executive team
Symon Brewis-Weston joined the Board in
November 2018. He brings a depth of experience
in fi nancial services. Roy Gormley joined Money3
through the acquisition of Go Car Finance and
continues to run the New Zealand operations.
Roy has deep experience in fi nance companies in
New Zealand. Finally, we welcomed Michael Neville
in June 2019 as Chief Operating Offi cer, as we
embark on our journey to widen our addressable
customer segments.
Outlook
Pursuant to the SACC exit, Money3 has
commenced a review of the Group’s strategy,
including the Money3 branding, to accelerate
sustainable growth. The key areas of focus include:
• Broadening the addressable market;
•
Investing in technology towards a seamless
origination process; and
• Securing increased funding at lower rates.
Broadening the addressable market
We have broadened our product pricing range
with interest rates starting from 9.95% p.a. and
strengthened the customer grading principles
in the credit decisioning engine which enables
us to increase pricing accuracy as well as support
lending to a wider customer segment. We continue
to invest in growing our direct sales channel.
Synergies from the acquisition of Go Car Finance
will continue in FY20 through the introduction of
direct sales and broker channels; and knowledge
sharing around origination and collection practices.
Go Car Finance is well positioned to capture a
greater share of the market – growing its loan
book and earnings signifi cantly.
Investing in technology
We continue to invest in enhancing our digital
capabilities, specifi cally in our loan origination
platform across segments, thereby increasing
productivity and decision eff ectiveness. This will
expedite approval times as well as increase the
quality of receivables originated.
Securing increased funding at lower rates
We have commenced discussions to secure
increased funding to support growth beyond
FY20. The exit from SACC lending business and
Go Car Finance acquisition has improved the
quality of earnings and positions us well to reduce
our cost of funding enabling the Group to broaden
the customer segments that we service. We expect
the gearing ratio to improve thereby increasing
shareholders’ return.
Finally, I would like to thank our business partners
and our employees in Australia and New Zealand
for their eff orts in FY19. Over the past 12 months,
we have delivered the fi nal piece of the vision we
set three years ago to stabilise the business, grow
secured lending, introduce debt funding and exit
the provision of small amount lending. Now we
start writing the next chapter and I look forward
to supporting many new and existing clients in
Australia and New Zealand.
Scott Baldwin
Chief Executive Offi cer
and Managing Director
Stuart Robertson
Chairman
Money3 Corporation Limited
Annual Report 2019
15
Corporate Governance Statement
The statement outlining Money3 Corporation Limited’s corporate governance framework and practices
in the form of a report against the Australian Securities Exchange Corporate Governance Principles
and Recommendations, 3rd Edition, is available on the Money3 website, www.money3.com.au, under
Corporate Governance in the Investors tab in accordance with listing rule 4.10.3.
Directors’ Report
Your directors present their report on the consolidated entity consisting of Money3 Corporation Limited
(“the Company”) and the entities it controlled (“the consolidated entity”/“the Group”) at the end of or
during the year ended 30 June 2019.
Directors and Company Secretary
The following persons were Directors of the Company during the whole year, unless otherwise stated,
and up to the date of this report:
• Stuart Robertson
• Leath Nicholson
• Symon Brewis-Weston (appointed on 27 November 2018)
• Scott Baldwin
• Ray Malone (resigned on 27 November 2018)
• Kang Tan (resigned on 27 August 2018)
Terri Bakos is the Company Secretary appointed on 31 October 2016. Stuart Robertson was appointed
as the Chairman of the Board on resignation of Ray Malone.
Principal Activities
The principal activities of the Group during the financial year were the provision of finance specialising
in the delivery of secured automotive loans as well as secured and unsecured personal loans. The secured
automotive loans relate to the purchase of a vehicle with the vehicle as security for the loan. The Group
also provided short term unsecured loans (also known as Small Amount Credit Contracts) through its
Branch and Online segment which comprised the subsidiaries Money3 Branches Pty Ltd and Money3
Services Pty Ltd. In May 2019, the Group sold these subsidiaries through a Management Buy Out (“MBO”)
process. Pursuant to the sale, the Group no longer offers a Small Amount Credit Contract (“SACC”)
product.
Dividends – Money3 Corporation Limited
Dividends paid to shareholders during the financial year were as follows:
Final ordinary dividend for year ended 30 June 2018 of 5.00 cents
(2017: 3.15 cents) per fully paid share paid on 23 October 2018
Interim ordinary dividend for the year ended 30 June 2019 of 5.00 cents
(2018: 4.5 cents) per fully paid share paid on 23 May 2019
Total Dividends Paid
2019
$’000
2018
$’000
8,895
4,993
9,012
17,907
7,203
12,196
16
Since the end of the financial year the Directors have declared the payment of a final 2019 ordinary
dividend of 5.00 cents per fully paid share. Based on the current number of shares on issue, the dividend
payment is expected to be $9.1m. This dividend will be paid on 22 October 2019 by the Company.
Review of operations
FY19 was another year of record performance with the Group achieving a normalised Net Profit After Tax
(“NPAT”) of $35m (2018: $32m) in line with the guidance provided to the market. The statutory NPAT is
$29.2m and a reconciliation to the normalised NPAT is given below.
Statutory NPAT
Add: Loss on sale of discontinued operations (refer Note 21)
Add: Acquisition costs in relation to Go Car Finance Acquisition
Normalised NPAT
2019
$’000
29,210
5,513
310
35,033
The key financial operating results of the Group’s continuing operations are outlined in the table below:
Total revenue
EBITDA
NPAT
Gross loan book
Loans receivable
30 Jun 19
$’000
30 Jun 18
$’000
% Change
91,703
73,618
47,494
40,498
24,193
21,183
374,000
252,537*
338,129
227,116*
24.6%
17.3%
14.2%
48.1%
* does not include comparative information for acquisition of Go Car Finance acquisition
Key highlights include:
• 48.1% increase in gross loan book
• $63.6m addition to the secured automotive loan book at 30 June 2019 through Go Car Finance acquisition
• SACC exit completed through sale of Branch and Online segment (refer Note 21)
• 15.4% increase in Broker Division Revenue to $85.0m
• 22.9% increase in Broker Division Loan Book to $310.3m
• ~$100m funds available to accelerate loan book growth in FY20
• Final FY19 dividend of 5.00 cents fully franked, taking full year dividend to 10.00 cents fully franked.
17
Money3 Corporation Limited Annual Report 2019 Directors’ Report (continued)
Segment performance
Broker Division (Australia)
Total revenue
EBITDA
Gross loan book
Loans receivable
30 Jun 19
$’000
30 Jun 18
$’000
% Change
84,923
49,858
73,618
45,887
310,369
252,537
279,203
227,116
15.4%
8.7%
22.9%
22.9%
The Broker division consists primarily of secured automotive loans up to $35,000 with terms up to
60 months. The Broker division achieved record growth in loans settled, loan book growth and revenue.
Over 19,000 loans were settled in FY19 representing 24.6% growth compared to FY18. All financing
under the Broker division is provided under the All Other Credit (“AOC”) contract, in accordance with
the National Consumer Credit Protection Act 2009.
The Broker division has partnered with over 150 accredited independent brokers across Australia and
they contribute approximately 70% of the new originations. The Broker division also receives leads from
various websites and referral partners.
International (Go Car Finance, New Zealand)
Total revenue
EBITDA
Gross loan book
Loans receivable
30 Jun 19
$’000
6,780
2,757
63,631
58,926
Go Car Finance was acquired on 12 March 2019. Go Car Finance has operations across New Zealand and
is a provider of secured automotive loans. Since acquisition, Go Car Finance achieved a gross loan book
growth of 17.1%. Go Car Finance acquisition fits within the Group’s long-term strategy.
Branch and Online segment (Discontinued)
Total revenue
EBITDA
Gross loan book
Loans receivable
30 Jun 19*
$’000
30 Jun 18
$’000
% Change
44,679
48,258
16,223
–
–
16,073
55,510
41,189
(7.4%)
0.9%
–
–
* The above represents the performance for the period from 1 July 2018 to 20 May 2019 (being the date of sale of
Branch and Online segment)
During FY19, Branch and Online segment contributed positively to the growth of the Group. Total revenue
and EBITDA had a growth of 5.8% and 15.4% on an extrapolated basis over FY18 results respectively.
18
Significant changes in the state of affairs
Other than the sale of Branch and Online segment (refer Note 21) and acquisition of Go Car Finance (refer
Note 20), there were no significant changes in the state of affairs of the Group.
Significant Matters Subsequent to the Reporting Date
In July 2019, the Group entered into an agreement with Commit Co Pty Ltd to amend certain terms and
conditions of the sale including transition arrangements for loan referrals. This included a 2% discount to
the sale price as well as crystallising the referral fees to be received by the Group during the transition
period. Subsequent to the reporting period, Commit Co Pty Ltd has paid three installments totalling
$5.4million. The above adjustments including its impact on impairment provision have been reflected
in Note 21.
Other than the above, no matters or circumstances have arisen since the end of the financial year that
have significantly affected or may significantly affect the operations of the Group, the results or the state
of affairs of the Group.
Likely Developments and Expected Results of Operations
The likely developments in the Group’s operations, to the extent that such matters can be commented
upon, are covered in the ‘Review of Operations’ section in this Report.
Environmental Regulation
The operations of the Group are not subject to any significant environmental regulations under
Australian Commonwealth, State or Territory law. The Directors are not aware of any breaches of any
environmental regulations.
Indemnification and Insurance of Directors and Officers
The Group has indemnified the Directors and Officers for costs incurred, in their capacity as a Director
or Executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the Group paid a premium in respect of a contract to insure the Directors and
Executives against a liability to the extent permitted by the Corporations Act 2001. The contract of
insurance prohibits disclosure of the nature of liability and the amount of the premium.
Non-Audit Services
There were no non-audit services provided by the auditor during the 2019 or 2018 financial years.
Proceedings on behalf of the Group
No person has applied to the Court for leave to bring proceedings to which the Group is a party, for
taking responsibility on behalf of the Group for all or part of these proceedings. No proceedings have
been brought or intervened in on behalf of the Group with leave of the Court under section 237 of the
Corporations Act 2001.
Rounding of amounts
The Group is of a kind referred to in ASIC Legislative Instrument 2016/191, relating to the “rounding off”
of amounts in the Directors’ report. Amounts in the Directors’ report have been rounded off in accordance
with the instrument to the nearest thousand dollars, or in some cases, to the nearest dollar.
19
Money3 Corporation Limited Annual Report 2019 Directors’ Report (continued)
Our Board
Stuart Robertson
Non-Executive Director & Chair of the Board
Qualification
B.Com ACA FINSIA GAICD MBA
Experience
Stuart brings experience in business advisory, investment banking, alternative
investments and funds management. Stuart provides consulting services focused
on deal origination and structuring primarily in the unlisted market.
Stuart is also a member of the Audit Committee.
Other directorships
• Praemium Limited
Scott Baldwin
Executive Director & Chief Executive Officer
Qualification
Dip. in Finance, B.Eng (Hons), MBA GAICD
Experience
Scott brings a wealth of experience in sales, marketing and technology. Appointed to
the board in 2009, Mr Baldwin established and led the growth of the secured finance
division at Money3. Prior to joining Money3, Mr Baldwin spent over a decade in a variety
of senior roles with General Electric Healthcare.
Scott is a non-voting member of the Remuneration & Nomination Committee.
Other directorships
None
Leath Nicholson
Non-Executive Director & Chair of the Audit Committee
Qualification
B.Ec (Hons) LLB (Hons) LLM (Commercial Law)
Experience
Leath brings broad commercial and legal experience specifically in the area of mergers
and acquisitions. He practises in the consumer credit regulatory sector and has
provided legal advice to Money3 on its corporate and consumer credit obligations
since 2010.
Leath is also a member of the Remuneration & Nomination Committee.
Other directorships
• AMA Group Limited
• CCP Technologies Limited
20
Symon Brewis-Weston
Non-Executive Director & Chair of the Remuneration & Nomination Committee
Qualification
B.Econ (Hons), Masters in Applied Finance
Experience
Symon brings extensive international financial services experience and a deep
understanding of the consumer finance markets having previously held the senior
positions in FlexiGroup Limited, Sovereign Assurance Limited, and the Commonwealth
Bank of Australia.
Symon is also a member of the Audit Committee.
Other directorships
• Stockco Australia Pty Ltd
• Relentless Resources Limited
Terri Bakos
Company Secretary
Qualification
B.Acc. ACA ACIS
Experience
Terri has over 20 years’ experience providing company secretarial, financial accounting
and compliance services to ASX listed and unlisted public companies in the technology,
mining and biotech sectors.
Other directorships
None
21
Money3 Corporation Limited Annual Report 2019
Directors’ Report (continued)
Our management team
Craig Harris
GM – Lending (Australia)
Craig has been with Money3 for over 10 years having held the role of Chief Financial
Officer prior to heading the Secured Automotive division. Craig brings a wealth of
experience working through varied industries including financial services, mining
and manufacturing.
Craig is instrumental in growing the Broker distribution channel and establishing the
online distribution channel.
Roy Gormley
Chief Executive Officer – Go Car Finance (New Zealand)
Roy owned the Go Car Finance group prior to Money3’s acquisition. Roy continues to
act as the Chief Executive Officer for the New Zealand operations.
Roy brings extensive experience in the consumer lending sector. Roy also owned an
accounting practice before managing Go Car Finance.
Siva Subramani
Chief Financial Officer
Siva joined Money3 in November 2017 as the Head of Treasury function before being
appointed as the Chief Financial Officer in March 2018. Prior to joining Money3 Siva
was a Director with PwC providing assurance and advisory services in the banking
and capital markets sector specialising in the asset-finance sector. Siva also brings
experience from India, UK and the Middle East.
Michael Neville
Chief Operating Officer
Michael joined Money3 in June 2019 and brings a wealth of experience in team leadership,
sales, marketing and business strategy development and execution across several industries.
Michael has held senior sales, marketing and commercial roles in leading multinational
technology companies including Woodward, GE Healthcare, Becton Dickinson,
Mölnlycke Healthcare.
Rob Camilleri
Chief Information Officer
Joining Money3 in January 2017, Rob has over 20 years in senior IT roles across the
manufacturing and FMCG sectors.
With strengths across general, operational and IT management, Rob enables delivery
of our products and services to our customers including recently implementing the
contact centre solutions for better customer engagement.
Julian Cook
Head of Marketing
Joining Money3 in 2015, Julian brings over 18 years of experience in branding,
optimising and marketing for the finance industry.
With a customer centric approach, he has demonstrated strengths in maximising
customer retention, the customer journey and marketing cost efficiencies for Money3.
Julian has also been instrumental in the creation of several brands including PaydayUK
and Cashtrain.
22
Meetings of Directors
The number of meetings of the Board and of other Committee meetings held during the year ended
30 June 2019 and the numbers of meetings attended by each Director were:
Board
Audit Committee
Remuneration &
Nomination Committee
Director
Held
Attended
Held
Attended
Held
Attended
Stuart Robertson
Leath Nicholson
Symon Brewis-Weston
Scott Baldwin
Ray Malone
Kang Tan
15
15
9
15
6
2
15
15
9
15
6
2
2
2
1
*
*
1
2
2
1
*
*
1
*
3
1
3
*
2
*
3
1
3
*
2
* Not a member of the relevant committee during the year
Directors’ Interests
Share Options
As at the date of this report, there were 5,750,000 options on issue (2018: 6,000,000). On exercise,
options convert into one ordinary share of Money3 Corporation Limited. The options carry neither right
to dividends nor voting.
Details of unissued ordinary shares in the Group under option at the date of this report are:
Issuing entity
Type
No. of shares
under option
Exercise
Price
$
Expiry Date
Money3 Corporation Ltd
Directors Options
3,750,000
1.50000
23-Nov-21
Money3 Corporation Ltd
Directors Options
2,000,000
2.50000
27-Nov-23
23
Money3 Corporation Limited Annual Report 2019 Directors’ Report (continued)
Dear Shareholder
On behalf of the Board and as the new Chair of the Remuneration and Nomination
Committee, I am pleased to present the Money3 Corporation Limited’s Remuneration
Report for the year ended 30 June 2019 as set out in pages 25 to 33.
The Remuneration Report sets out the remuneration framework for Key Management
Personnel (KMP) including directors of Money3 Corporation Limited for the year ending
30 June 2019 (FY19).
FY19 Remuneration Outcomes
As foreshadowed in the letter from the Chairman and the Managing Director, the Group’s management team
has delivered strong results in FY19 in line with market expectations. The team also successfully completed two
transformational transactions in FY19, positioning Money3 Corporation Limited for significant future growth;
the acquisition and integration of Go Car Finance in New Zealand as well as the divestment of the SACC lending
business. The financial performance for FY20 is expected to be somewhat subdued with the divestment of the
higher margin SACC lending business, however significant progress is expected to be made in cementing the
Group’s position as a strong player in the $6 billion vehicle finance market.
The FY19 remuneration outcomes reflect the attainment of market expectations of financial results and the
successful re-positioning of the Group through the New Zealand acquisition and the divestment of the SACC
lending business. These two important strategic developments provide significant upside for shareholders in
the medium term by increasing the market opportunity set for the Group and providing for improved funding
terms and alternatives in due course.
The Group’s FY19 STI plan reflected the need to reposition the business into vehicle finance (20%), delivering
underlying profitable growth (Cash NPAT 60%), continued growth of our gross loan book (20%). In FY19 the
Board also implemented a gate opener philosophy to other important measures such as risk management and
the whole of loan life experience of our customers. The Board is acutely aware that strong risk management
and great customer experience protect and grow shareholder value over time.
The Group has retained the Employee Share Plan (ESP) as approved by shareholders at the 2018 AGM as its
Long-Term Incentive Plan (LTI).
FY20 Outlook
The Group continues to evolve and has grown significantly over recent years. The Board remains cognisant
of the need to ensure the remuneration mix for Executive KMPs appropriately reflects its current market
position, opportunities and challenges. Our underlying approach to remuneration is transparent measures that
incentivise the management team to capture the opportunities and manage challenges to deliver long term
shareholder value creation.
As a result, the Board will move the LTI component of the remuneration package for KMPs (inclusive of the
Managing Director) to Performance Rights vesting after a 3-year period with TSR as the key performance criteria.
The Board will continue to set short term incentives targets which reflect the Group’s focus on delivering
higher risk adjusted returns for investors and sustained performance over the long term. The Board will also
monitor the Group’s culture to ensure behaviours reflect our values and decisions are made in the best interests
of all stakeholders.
There is no planned increase to Non-Executive Directors remuneration in FY20. We do however anticipate
the addition of at least one director during FY20 and as a result we anticipate requesting an increase in the
remuneration pool. We also anticipate that the CEO will step down from the Remuneration & Nomination
committee upon the successful recruitment of an additional director.
Yours sincerely
Symon Brewis-Weston
(Chairman Remuneration & Nomination Committee)
19 August 2019
24
Remuneration Report
Remuneration Report
The Directors of Money3 Corporation Limited (“the Company” or “Money3”) present the Remuneration
Report for the Company and its controlled entities (“the Group”) for the financial year ended 30 June 2019
prepared in accordance with the requirements of the Corporations Act 2001 (“the Act”) and audited as
required by section 308(3C) of the Act.
Key Management Personnel
The Key Management Personnel (“KMP”) covered in this Remuneration Report are those people having
authority and responsibility for planning, directing and controlling the activities of the Group, directly or
indirectly. The table below outlines the KMP at any time during the financial year and unless otherwise
indicated, were KMP for the entire year.
Name
Role
Non-Executive Directors (“NED”)
Stuart Robertson
Independent Non-Executive Director Chairman (appointed as Chairman on
27 November 2018)
Symon Brewis-Weston
Independent Non-Executive Director (appointed 27 November 2018)
Leath Nicholson
Non-Executive Director
Kang Tan
Non-Executive Director (resigned 27 August 2018)
Executive Directors
Scott Baldwin
Managing Director and Chief Executive Officer
Ray Malone
Executives
Executive Chairman (resigned 27 November 2018)
Siva Subramani
Chief Financial Officer
Craig Harris
Michael Rudd
General Manager – Lending Division
General Manager – Branch and Online Division (resigned as part of the sale
on 20 May 2019)
Rob Camilleri
Chief Information Officer
Remuneration Philosophy
The performance of the Group depends upon the quality of its Directors and Executives. To prosper,
the Group must attract, motivate and retain highly skilled directors and executives.
To that end, the Group embodies the following principles in its remuneration framework:
• Provide competitive rewards to attract high calibre executives;
• Focus on creating sustained shareholder value;
• Significant portion of executive remuneration at risk, and aligned with shareholder interests; and
• Differentiation of individual rewards commensurate with contribution to overall results and according
to individual accountability, performance and potential.
The Remuneration & Nomination Committee is responsible for determining and reviewing compensation
arrangements for the Directors, Managing Director (MD) and the senior management team. The
Remuneration & Nomination Committee assesses the appropriateness of the nature and amount of
remuneration of Directors and senior managers on a periodic basis by reference to relevant employment
market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention
of a high-quality board and executive team.
25
Money3 Corporation Limited Annual Report 2019 Remuneration Report (continued)
Remuneration Structure
NED Remuneration
The Board seeks to set aggregate remuneration at a level which provides the Group with the ability to
attract and retain Directors of the highest calibre.
The Constitution and the ASX Listing Rules specify that the aggregate remuneration of NEDs shall be
determined from time to time by a general meeting. An amount not exceeding the amount determined is
then divided between the NEDs as agreed. The current approved aggregate remuneration is $500,000
(2018: $500,000). The board has resolved to ask the shareholders to increase the limit to $750,000 in
2020 to provide flexibility in the appointment of and remuneration of all future independent NEDs.
Senior Management and Managing Director Remuneration
The Group aims to reward executives with a level and mix of remuneration commensurate with their
position and responsibilities to:
• Reward executives for Group and individual performance against targets set by reference to
appropriate benchmarks;
• Align the interests of executives with those of shareholders;
• Link reward with the strategic goals and performance of the Group; and
• Ensure total remuneration is competitive by market standards.
The executive remuneration program is designed to support the Group’s reward philosophies and to
underpin the Group’s growth strategy. The program comprises the following components:
• Fixed remuneration component; and
• Variable remuneration component including short term incentive (“STI”) and long-term incentive (“LTI”).
Fixed Remuneration
The level of fixed remuneration is set to provide a base level of remuneration which is both appropriate
to the position and is competitive in the market. Senior managers are given the opportunity to receive
their fixed (primary) remuneration in a variety of forms including cash and fringe benefits such as
motor vehicles.
Variable Remuneration – Short Term Incentive
The objective of the STI program is to link the achievement of operational targets with the remuneration
received by the executives charged with meeting those targets. The total potential STI available is set
as either a fixed amount or a percentage of their fixed remuneration depending on their individual
employment contract. STI’s are set to provide enough incentive to the senior managers to achieve the
operational targets and such that the cost to the Group is reasonable.
The individual performance of each executive is also rated and considered when determining the amount,
if any, of the short-term incentive pool allocated to each executive. The aggregate of annual STI payments
available for executives across the Group are usually delivered in the form of an annual cash bonus paid
after completion of the audited accounts.
While each executive is remunerated individually, STI eligibility requires a delivery of a minimum
of 90% of budgeted performance with maximum payment being achieved for 100% to 110% of
budgeted performance.
Looking forward, it is the view of the Board to set incentives that is highly correlated to top line revenue
growth, this is not to diminish the overall importance of profitability and Earnings Per Share Growth.
As Money3 has exited the provision of Small Amount Credit Contracts the Board expects the Group to be
able to access greater amounts of debt capital that once deployed will deliver longer term NPAT growth.
The Board acknowledges FY20 is a year where there will be a change in the quality of earnings rather
than NPAT growth. With this in mind, the Board will incentivise growth that underpins the long term
profitability of the Group.
Variable Remuneration – Long Term Incentive
The objective of the LTI plan is to reward senior managers in a manner which aligns remuneration with
the creation of shareholder wealth over the long term. As such, LTI grants are only made to executives
who can influence the generation of shareholder wealth and thus have a direct impact on the Group’s
performance against relevant long-term performance hurdles.
26
During the year, 2,000,000 options were granted (2018: nil) to the Managing Director and 328,178
performance rights (2018: 344,871) were issued to key executives.
Contract of Employment
All executives of the Group are employed under a letter of appointment with various notice periods from
1 to 6 months required to terminate their appointment.
The Managing Director’s and the Chief Financial Officer’s letter of appointment contain specified
LTI entitlements in their contracts. Other executives’ letters of appointment do not contain specified LTI
entitlements, however, they may have been granted an LTI to encourage longevity of employment and
to align financial outcomes with long term shareholder wealth creation.
Granting of out of the money options requiring executives to contribute real funds for conversion
were considered in the period post listing as the best way to align executive interests with those of
shareholders over the long term.
Currently, the Board believe granting performance rights vesting over a 3-year period is the best way
to encourage long term alignment with the Group’s strategic direction and to align financial reward
with shareholders.
Key terms of these letters of appointment are outlined below:
Name
Type of agreement
Scott Baldwin
Siva Subramani
Craig Harris
Michael Rudd
Rob Camilleri
Permanent
Permanent
Permanent
Permanent
Permanent
Base salary
including
superannuation
STI (on
target)
Termination
notice period
$475,000
$475,000
6 months
$250,000
$75,000
6 months
$285,000
$142,500
3 months
$210,000
$63,000
$230,000
$64,500
1 month
1 month
Relationship Between Remuneration Policy and Group Performance
The Managing Director and other KMP receive a base salary, superannuation and fringe benefits.
In considering the Group’s performance and creation of shareholder wealth, the Directors have regard
to the indices in respect of the current financial year and the previous four financial years. The following
table shows revenue, profits, dividends, share price, Earnings per Share (“EPS”) and KMP remuneration
at the end of each year.
Financial performance for the past five years is indicated by the following table:
Revenue ($’000)
NPAT ($’000)
Closing share price
Price increase/(decrease) $
Price increase/(decrease) %
Earnings per share (cents)
Dividend paid per share (cents)
30 June
2019
30 June
2018
30 June
2017
30 June
2016
136,382
121,876
109,638
29,210
32,028
29,086
$2.12
$0.17
9%
16.27
10.00
$1.95
$0.67
52%
19.91
9.50
$1.28
$0.08
7%
18.81
5.65
96,661
20,134
$1.20
$0.06
5%
14.21
5.25
30 June
2015
69,035
13,941
$1.14
$0.06
6%
11.82
5.25
27
Money3 Corporation Limited Annual Report 2019 Remuneration Report (continued)
Details of Remuneration
The compensation of each member of the KMP of the Group is set out below:
Short term employee
benefits
Post-
employ-
ment
benefits
Long term benefits
Salary &
fees
$
Bonus
$
Super
$
Long
service
leave
$
Share
based
payments
$
Term-
ination
$
Total
$
2019
NEDs
Stuart Robertson
Leath Nicholson
Symon Brewis-Weston
Kang Tan
NEDs Total
Executives
162,634
121,000
58,167
17,386
359,187
–
–
–
–
–
–
–
5,526
1,652
7,178
–
–
–
–
–
Scott Baldwin
487,056
427,500
25,000
34,292
Ray Malone
315,000
–
–
Siva Subramani
238,088
67,500
21,690
–
–
Craig Harris
Rob Camilleri
Michael Rudd
273,471
128,250
24,726
8,420
210,959
62,100
18,639
–
165,228
–
16,808
12,272
–
–
–
–
–
–
–
–
–
–
–
89,000
251,634
111,250
232,250
–
–
63,693
19,038
200,250
566,615
430,667 1,404,515
262,674
577,674
146,864
474,142
150,156
585,023
58,953
350,651
350,675
544,983
Executives Total
1,689,802
685,350
106,863
54,984
– 1,399,989 3,936,988
Total
2,048,989 685,350
114,041
54,984
– 1,600,239 4,503,603
28
Short term employee
benefits
Post-
employ-
ment
benefits
Long term benefits
Salary &
fees
$
Bonus
$
Super
$
Long
service
leave
$
Share
based
payments
$
Term-
ination
$
Total
$
2018
NEDs
Stuart Robertson
Leath Nicholson
Kang Tan
NEDs Total
Executives
105,024
121,000
82,192
308,216
–
–
–
–
9,976
–
7,808
17,784
–
–
–
–
Scott Baldwin
382,792
375,000
25,000
10,916
Ray Malone
Siva Subramani
300,000
66,816
–
–
–
4,671
Brett Coventry
195,076
36,301
20,010
–
50
–
Craig Harris
Michael Rudd
Rob Camilleri
257,307
79,497
25,000
4,672
195,696
58,000
23,219
2,897
214,101
13,699
19,411
86
Executives Total
1,611,788
562,497
117,311
18,621
–
–
–
–
–
–
–
–
–
–
–
–
89,000 204,000
111,250
232,250
–
90,000
200,250
526,250
356,000 1,149,708
185,417
485,417
61,545
133,082
101,573
352,960
150,156
516,632
235,958
515,770
135,480
382,777
1,226,129 3,536,346
Total
1,920,004 562,497
135,095
18,621
– 1,426,379 4,062,596
The following table shows the Executive remuneration received in each of the years, the relevant
percentages for fixed remuneration, STI and LTI:
Scott Baldwin
Ray Malone
Siva Subramani
Craig Harris
Rob Camilleri
Michael Rudd
Fixed Remuneration
At risk –STI
At risk –LTI
2019
2018
39%
55%
55%
52%
65%
36%
39%
62%
54%
51%
61%
43%
2019
30%
–
14%
22%
18%
–
2018
28%
n/a
n/a
15%
4%
11%
2019
2018
31%
45%
31%
26%
17%
64%
33%
38%
46%
34%
35%
46%
29
Money3 Corporation Limited Annual Report 2019 Remuneration Report (continued)
The following table outlines the percentage of target STI achieved (and forfeited) and the total STI
awarded, for each Executive KMP for 2019:
Scott Baldwin
Siva Subramani
Craig Harris
Rob Camilleri
Michael Rudd
STI On Target
Opportunity
$
$475,000
$75,000
$142,500
$64,500
$63,000
Achieved*
%
Forfeited
%
STI Awarded
$
90%
90%
90%
90%
–
–
–
–
–
$427,500
$67,500
$128,250
$58,050
100%
–
* The Board approved the retention of 10% of the STI for executives pending collection of receivables from the
sale of subsidiaries.
Other Transactions Related to KMP
Leath Nicholson is a director of Nicholson Ryan Lawyers and Panorama Pty Limited which Money3 has
engaged to perform legal services and compliance services respectively. Legal expenses for the current
year amounted to $670,276 (2018: $350,655) and compliance expenses for the current year amounted
to $158,400 (2018: $52,800) during the year. Amounts payable at 30 June 2019 was $16,500 (2018: Nil).
Transactions between the Group and these parties are conducted on normal commercial terms.
Loans with KMP
There were no loans with KMP during the current financial year or as at 30 June 2019 (2018: Nil).
Value of Options
The value of options is determined at grant date using the Binomial Option Pricing Model considering
factors including exercise price, expected volatility and option life and is included in remuneration on
a proportional basis from grant date to vesting date.
As the options vest over time, the cost is expensed in accordance with AASB2 Share Based Payments
over the vesting period. In the 2019 financial year, the expense for KMP was $893,590 (2018: $741,667).
Inputs into the determination of the fair value of options issued to KMP are set out below:
Exercise price
Grant date
Expiry date
Employee
– Expires
20-Oct-2019
Employee
– Expires
14-Apr-2020
Director
– Expires
23-Nov-2021
Director
– Expires
27-Nov-2023
$1.4961
$1.6961
$1.5000
$2.5000
20-Oct-2014
15-Apr-2015 28-Nov-2016 28-Nov-2018
20-Oct-2019 14-Apr-2020 23-Nov-2021 27-Nov-2023
Share price at grant date
$1.2000
$1.5200
$1.6900
$1.6950
Expected volatility
Expected dividend yield
Risk free rate
31%
3.50%
1.84%
31%
3.50%
1.84%
37%
3.33%
2.13%
30%
4.40%
2.29%
30
Share Based Compensation
The following table discloses terms and conditions of each grant of options provided as compensation, as
well as details of options exercised during the year:
Name
Issue
Date
Options
Granted
Exercise
Price
Expiry
Date
Vesting
Date
Total value
of options
exercised
during
year
$
Maximum
total value
of issue yet
to vest or
exercise
$
Craig Harris
21-Oct-13
500,000
$0.9961
21-Oct-18
21-Oct-16
109,500
Craig Harris
30-Nov-13 1,000,000
$1.4961
30-Nov-18
30-Nov-16
74,000
Scott Baldwin
30-Nov-13 1,000,000
$1.4961
30-Nov-18
30-Nov-16
74,000
–
–
–
Michael Rudd*
20-Oct-14
500,000
$1.4961
20-Oct-19
21-Oct-17
Michael Rudd*
15-Apr-15
200,000
$1.6961
14-Apr-20
14-Apr-18
Scott Baldwin
28-Nov-16 2,400,000
$1.5000 23-Nov-21
24-Nov-19
Ray Malone
28-Nov-16 1,250,000
$1.5000 23-Nov-21
24-Nov-19
Leath Nicholson
28-Nov-16
750,000
$1.5000 23-Nov-21
24-Nov-19
Stuart
Robertson
28-Nov-16
600,000
$1.5000 23-Nov-21
24-Nov-19
Scott Baldwin
28-Nov-18 2,000,000
$2.5000 27-Nov-23
27-Nov-20
–
–
–
–
–
–
–
87,000
43,620
1,068,000
556,250
333,750
267,000
256,000
* Michael Rudd was given the option to do a cashless conversion of his options pursuant to the sale of Branch and
Online division in May 2019
The options will vest if an event occurs which gives rise to a change in control of the Group. Share options
carry no rights to dividends and no voting rights. In accordance with the terms of the share option
schemes, options may be exercised at any time from the date on which they vest to the date of their
expiry, subject to any additional requirements of the allocation.
Performance Rights Granted to KMP
Name
Rob Camilleri
Siva Subramani
Siva Subramani
Grant
Date
Rights
Granted
Expiry
Date
Vesting
Date
Value of
Rights
Granted
01-Dec-17
194,871
30-Jun-22
30-Jun-21
222,445
01-Jan-18
150,000
31-Dec-22
31-Dec-21
197,288
03-Dec-18
328,178
31-Dec-21
02-Dec-21
349,411
The performance rights have been valued by reference to the underlying value of ordinary Money3 shares,
adjusted for the impact of the vesting conditions, including the rights to dividends, where appropriate.
31
Money3 Corporation Limited Annual Report 2019 Remuneration Report (continued)
KMP Equity Holdings
Details of KMP equity holdings of the Group, including their personally related parties are disclosed below.
Name
Balance at
1 July 2018
On exercise
of options*
On
vesting of
performance
rights
Ray Malone
2,452,225
Kang Tan
5,387,376
Leath Nicholson
93,727
Stuart Robertson
119,838
Symon
Brewis-Weston
Siva Subramani
–
1,925
–
–
–
–
–
–
Scott Baldwin
4,170,870
667,543
Craig Harris
1,925,810
835,086
Rob Camilleri
–
Michael Rudd
1,186,047
–
–
–
–
–
–
–
37,500
–
–
48,717
–
Net change
other
Balance on
termination
(1,282,447)
1,169,778
10,624
5,398,000
–
6,219
15,387
10,285
(58,307)
70,437
–
–
–
–
–
–
–
–
–
1,186,047
Balance as
at 30 June
2019
–
–
93,727
126,057
15,387
49,710
4,780,106
2,831,333
48,717
–
Total
15,337,818
1,502,629
86,217
(1,227,802)
7,753,825
7,945,037
* Options exercised include tranches exercised under a cashless conversion.
Options Over Ordinary Shares in the Group held by KMP
Name
Balance as
at 1 July
2018
Options
exercised
Options
granted
Balance as
at 30 June
2019
Total
exercisable
and vested
Scott Baldwin
3,400,000
(1,000,000)
2,000,000
4,400,000
Total options
unvested
4,400,000
–
–
–
–
Craig Harris
1,500,000
(1,500,000)
Michael Rudd
700,000
Ray Malone
1,250,000
Leath Nicholson
750,000
Stuart Robertson
600,000
–
–
–
–
–
–
–
–
–
–
700,000
700,000
1,250,000
750,000
600,000
–
–
–
1,250,000
750,000
600,000
Total
8,200,000 (2,500,000) 2,000,000
7,700,000
700,000
7,000,000
32
Restricted Shares in the Group held by KMP
Name
Grant Date
Restricted
Shares Held
Issue Price Expiry Date Vesting Date
Value of
Restricted
Shares
Granted
Craig Harris
01-Jul-16
484,373
$1.0320
30-Jun-21
30-Jun-20
600,623
Michael Rudd*
01-Jul-16
56,525
$1.0320
30-Jun-21
30-Jun-20
73,271
Total
540,898
673,894
* In July 2019, the restriction was released following payment for these shares.
The restricted shares have been valued by reference to the underlying value of ordinary Money3 shares,
adjusted for the impact of the vesting conditions, including the rights to dividends, where appropriate.
Restricted shares have rights including entitlement to dividends and voting.
End of Remuneration Report (Audited)
33
Money3 Corporation Limited Annual Report 2019 Directors’ Report (continued)
Auditor’s Independence Declaration
The auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is
set out on page 35 of the financial report.
Signed in accordance with a resolution of the Directors.
On behalf of the Directors
Stuart Robertson
Chairman
Melbourne
Dated 19 August 2019
34
Auditor’s Independence Declaration
Tel: +61 3 9603 1700
Fax: +61 3 9602 3870
www.bdo.com.au
Collins Square, Tower Four
Level 18, 727 Collins Street
Melbourne VIC 3008
GPO Box 5099 Melbourne VIC 3001
Australia
DECLARATION OF INDEPENDENCE BY JAMES MOONEY TO THE DIRECTORS OF MONEY3 CORPORATION
LIMITED
As lead auditor of Money3 Corporation Limited for the year ended 30 June 2019, I declare that, to the
best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Money3 Corporation Limited and the entities it controlled during the
period.
James Mooney
Partner
BDO East Coast Partnership
Melbourne, 19 August 2019
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd,
a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved
under Professional Standards Legislation.
Money3 Corporation Limited
Annual Report 2019
35
Directors’ Declaration
The Directors of Money3 Corporation Limited declare that:
1.
in the Directors’ opinion, the financial statements and the accompanying notes set out on pages 37
to 78 and the Remuneration Report in the Directors’ Report set out on pages 25 to 33, are in
accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2019
and of its performance, for the financial year ended on that date; and
(b) complying with Australian Accounting Standards (including the Australian Accounting
Interpretations), Corporations Regulations 2001 and other mandatory professional
reporting requirements;
2. the financial report also complies with International Financial Reporting Standards issued by the
International Accounting Standards Board (IASB) as disclosed in Note 1; and
3. there are reasonable grounds to believe that the consolidated entity will be able to pay its debts
as and when they become due and payable.
The Directors have been given the declarations required by Section 295A of the Corporations Act 2001
by the Managing Director and Chief Financial Officer for the financial year ended 30 June 2019.
Signed in accordance with a resolution of the Directors pursuant to section 295(5) of the Corporations
Act 2001.
On behalf of the Directors
Stuart Robertson
Chairman
Melbourne
Dated 19 August 2019
36
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
for the year ended 30 June 2019
Consolidated
2019
$’000
Consolidated
2018
$’000
91,703
73,618
Note
3
Revenue from continuing operations
Expenses from operating activities:
Bad debts expense (net of recoveries)
Movement in provision for doubtful debts expense
Bank fees and credit checks
Employee related expenses
Professional fees
Occupancy expenses
Technology expenses
Advertising expenses
Administration expenses
Loss on disposal of assets
Net finance costs
Depreciation and amortisation
Total expenses
Profit before income tax from continuing operations
Income tax expense
Profit after income tax from continuing operations
Profit from discontinued operations (attributable to equity
holders of the company)
4(a)
21(b)
Profit for the year
Profit attributable to:
Owners of Money3 Corporation Limited
Other Comprehensive income/(loss)
Exchange differences on translation of foreign operations
Other comprehensive income/(loss) for the year, net of tax
Total comprenensive income for the year
Total comprehensive income for the year is attributable to:
11,917
2,551
2,137
21,375
1,916
726
1,292
1,542
728
25
11,540
619
56,368
35,335
11,142
24,193
5,017
29,210
7,722
1,958
1,058
17,253
1,869
1,058
568
951
658
25
9,057
259
42,436
31,182
9,999
21,183
10,845
32,028
29,210
32,028
19
19
–
–
29,229
32,028
Owners of Money3 Corporation Limited
29,229
32,028
Total comprehensive income for the year attributable
to owners of Money3 Corporation Limited arises from:
Continuing operations
Discontinued operations
Earnings per share for profit from continuing operations
attributable to the ordinary equity holders of the company
Basic earnings per share (cents)
Diluted earnings per share (cents)
Earnings per share for profit attributable to the ordinary
equity holders of the company
Basic earnings per share (cents)
Diluted earnings per share (cents)
17
17
17
17
24,212
5,017
29,229
21,183
10,845
32,028
13.48
13.28
16.27
16.03
13.17
12.87
19.91
19.45
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction
with the attached notes.
37
Money3 Corporation Limited Annual Report 2019 Consolidated Statement
of Financial Position
as at 30 June 2019
ASSETS
Current assets
Cash and cash equivalents
Loans receivable
Receivable from sale of subsidiaries
Current tax receivable
Other assets
Total current assets
Non-current assets
Loans receivable
Other assets
Property, plant & equipment
Intangible assets
Deferred tax assets, net
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Borrowings
Current tax payable
Employee benefit obligations
Contingent consideration
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Employee benefit obligations
Contingent consideration
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Share capital
Reserves
Retained earnings
Total equity
Consolidated
2019
$’000
Consolidated
2018
$’000
Note
5
6
6
7
8
4(b)
9
12
10
20(c)
11
12
10
20(c)
11
13
14(a),(b)
15
36,308
166,238
7,725
–
434
46,308
130,607
–
2,222
348
210,705
179,485
151,689
180
1,853
23,572
6,502
183,796
394,501
7,165
3,437
2,388
1,412
1,783
285
16,470
116,841
424
2,062
18,722
9,172
147,221
326,706
7,313
–
–
1,622
–
308
9,243
132,570
97,825
248
4,360
150
137,328
153,798
240,703
303
–
156
98,284
107,527
219,179
163,722
153,969
4,560
72,421
4,092
61,118
240,703
219,179
The consolidated statement of financial position is to be read in conjunction with the attached notes.
38
Consolidated Statement
of Changes in Equity
for the year ended 30 June 2019
Note
Share Capital
$’000
Retained
Earnings
$’000
Reserves
$’000
Total
$’000
Total equity at 1 July 2017
125,761
51,482
4,816
182,059
Early adoption of accounting
policy (net of tax)
Restated total equity at the
beginning of the year
Profit after income tax
expense for the year
Total comprehensive income
for the year
Transactions with owners in
their capacity as owners:
Share based expenses, net
Options exercised
Dividends paid
Closing balance as at
30 June 2018
–
(10,196)
–
(10,196)
125,761
41,286
4,816
171,863
–
–
32,028
32,028
–
–
32,028
32,028
1,420
24,091
2,697*
–
–
2,022
(2,746)
3,442
21,345
(12,196)
–
(9,499)
153,969
61,118
4,092
219,179
Total equity at 1 July 2018
153,969
61,118
4,092
219,179
Profit after income tax
expense for the year
Other comprehensive income
Total comprehensive income
for the year
Transactions with owners in
their capacity as owners:
Share based expenses, net
Transfer to share capital
on vesting
Options exercised
New issue
Dividends paid
Closing balance as at
30 June 2019
20(a)
–
–
–
778
793
1,646
1,920
29,210
–
29,210
–
–
–
–
4,616*
(17,907)
–
19
19
29,210
19
29,229
2,380
3,158
(793)
(1,138)
–
–
–
508
1,920
(13,291)
163,722
72,421
4,560
240,703
* Shares issued to shareholders that elected to participate in the Dividend Reinvestment Plan.
The consolidated statement of changes in equity is to be read in conjunction with the attached notes.
39
Money3 Corporation Limited Annual Report 2019 Consolidated Statement of Cash Flows
for the year ended 30 June 2019
Consolidated
2019
$’000
Consolidated
2018
$’000
Note
Cash flows from operating activities
Interest, fees and charges from customers
138,536
120,243
Payments to suppliers and employees (GST Inclusive)
(51,336)
(39,667)
Interest received from banks
Finance costs
Income tax paid
Net cash provided by operating activities before changes
in operating assets
Loan principal advanced to customers net of
repayments
459
168
(12,227)
(8,420)
(14,231)
(20,777)
61,201
51,547
(89,163)
(56,126)
Net cash inflows/(outflows) from operating activities
18
(27,962)
(4,579)
Cash flows from investing activities
Payment for property, plant and equipment
(294)
(347)
Proceeds from sale of investments (net of cash
equivalents on hand)
Payments for purchase of business
20(b)
Net cash inflows/(outflows) from investing activities
Cash flows from financing activities
Proceeds from share issue
Proceeds from borrowings
Repayment of borrowings
Dividends paid
Net cash inflows/(outflows) from financing activities
Net increase/(decrease) in cash held
Cash and cash equivalents at the beginning of the year
33,995
(12,701)
21,000
–
–
(347)
1,245
8,076
22,280
97,347
–
(80,000)
(13,291)
(9,499)
(3,970)
30,128
(10,932)
25,202
46,308
21,106
Cash and cash equivalents at end of the year
5
35,376
46,308
The statement of cash flows is to be read in conjunction with the attached notes.
40
Notes to the Consolidated Statements
for the year ended 30 June 2019
Introduction
The financial report covers Money3 Corporation Limited (“Money3” or “the Company”) and its controlled
entities (“the Group”). Money3 is a company limited by shares whose shares are publicly traded on the
Australian Securities Exchange (ASX). Money3 is incorporated and domiciled in Australia. 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 consolidated financial statements are presented
in Australian dollars which is the functional and presentation currency of Money3 Corporation Limited and
amounts are rounded to the nearest thousand dollars, unless otherwise indicated.
The financial report was authorised for issue by the Board of the Company at a Directors meeting on the
date shown on the Declaration by the Board attached to the Financial Statements.
1. Summary of Significant Accounting Policies
(a) Basis of accounting
The financial report is a general purpose financial report which has been prepared in accordance with
the Corporations Act 2001, Australian Accounting Standards and Interpretations and complies with other
requirements of the law, as appropriate for profit oriented entities. The financial report comprises the
consolidated financial statements of the Group.
The financial statements comply with International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB).
The financial statements have been prepared on an accrual basis and are based on historical costs
modified by the revaluation of selected non-current assets, financial assets and financial liabilities for
which the fair value basis of accounting has been applied. Where necessary, comparative figures have
been adjusted to conform to changes in presentation in the current year.
The financial statements have been prepared in accordance with Australian Accounting Standards,
which are based on the Group continuing as a going concern which assumes the realisation of assets
and the extinguishment of liabilities in the normal course of business and at the amounts stated in the
financial report.
(b) Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of the Group
as at 30 June 2019 and the results of all subsidiaries for the year then ended.
Subsidiaries are all those entities over which the Company has control. The Company controls an entity
when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with
the entity and has the ability to affect those returns through its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are
de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group
are eliminated. Unrealised losses are also eliminated unless a transaction provides evidence of impairment
to the asset transferred. Accounting policies of subsidiaries have been changed where necessary to
ensure consistency with the policies adopted by the Group.
(c) Rounding of amounts
The Group and the Company are of a kind referred to in ASIC Corporations (Rounding in Financial/
Directors’ Reports) Instrument 2016/191, issued by the Australian Securities and Investments Commission,
relating to the “rounding off” of amounts in the financial report. Amounts in the financial report
have been rounded off in accordance with that Instrument to the nearest thousand dollars, unless
otherwise indicated.
(d) Critical accounting estimates, assumptions and judgements
In the application of Australian Accounting Standards, management is required to make judgements,
estimates and assumptions about the carrying value of assets and liabilities that are not readily apparent
41
Money3 Corporation Limited Annual Report 2019 Notes to the Consolidated Statements (continued)
from other sources. The estimates and associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the circumstances, the results of which
form the basis of making the judgements. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the revision affects only
that period or in the period of the revision and future periods if the revisions affect both current and
future periods.
Judgements and estimates which are material to the financial report are found in the following notes:
Note 3
Note 6
Note 8
Note 20(c) Contingent consideration
Revenue
Loans receivable
Intangible assets
(e) Notes to the financial statements
The notes to the financial statements were restructured to make the financial report more relevant and
readable, with a focus on information that is material to the operations, financial position and performance
of the Group. Additional information has also been included where it is important for understanding the
Group’s performance.
Notes relating to individual line items in the financial statements now include accounting policy
information where it is considered relevant to an understanding of these items, as well as information
about critical accounting estimates and judgements. Details of the impact of new accounting policies and
all other accounting policy information are disclosed at the end of the financial report in Note 31.
2. Segment Information
The Group has identified its operating segments based on internal reports and components of Money3
that are regularly reviewed by the chief operating decision makers in order to allocate resources to the
segments and to assess their performance.
Broker
This segment provides lending facilities in Australia generally based on the provision of an underlying
asset as security, generally referred through a broker.
International
This segment was created with the acquisition of Go Car Finance in New Zealand in March 2019, provides
lending facilities generally based on the provision of an underlying asset as security, generally referred
through a dealer.
Branch (Discontinued)
This segment provided services and lending facilities in Australia generally without the provision of an
underlying asset as security through the branch network. With the disposal of Money3 Branches Pty Ltd,
this segment is designated as discontinued.
Online (Discontinued)
This segment provided lending facilities in Australia without the provision of an underlying asset as
security through the internet. With the disposal of Money3 Services Pty Ltd, this segment is designated
as discontinued
Segment profit earned by each segment represents earnings without the allocation of central
administration costs and directors’ salaries, interest income and expense in relation to corporate facilities,
bad debt collection and income tax expense. This is the measure reported to the chief operating decision
maker for the purpose of resource allocation and assessment of segment performance. Corporate costs
have not been allocated to the underlying segments.
42
Consolidated – 2019
Broker
$’000
Branch (Dis-
cont inued)
$’000
Online (Dis-
cont inued)
$’000
International
$’000
Unallocated
$’000
Total
$’000
Segment revenue
84,923
33,528
11,151
6,780
–
136,382
EBITDA/Segment
result
Depreciation and
amortisation
Net finance costs
49,858
13,002
3,221
2,757
(5,121)
63,717
(253)
–
(76)
–
(647)
(66)
(300)
(1,342)
–
(1,216)
(10,324)
(11,540)
Profit before tax
49,605
12,926
2,574
1,475
(15,745)
50,835
Income tax expense
Loss on sale of the
subsidiaries after
income tax
Profit after tax
–
–
Loans receivable
279,203
–
–
–
–
–
–
–
–
58,926
–
–
–
(16,112)
(5,513)
29,210
338,129
Corporate expenditure is regularly reviewed throughout the year with a view to better align costs to
business units.
Broker
$’000
Branch
$’000
Online
$’000
Unallocated
$’000
Total
$’000
Consolidated – 2018
Segment revenue
EBITDA/Segment result
45,887
11,231
73,618
34,466
13,792
4,843
–
121,876
(5,389)
56,572
Depreciation and amortisation
(159)
(122)
(459)
(100)
(840)
Net finance costs
Profit before tax
Income tax expense
Profit after tax
Loans receivable
–
–
–
(9,057)
(9,057)
45,728
11,109
4,384
(14,546)
46,675
–
–
–
–
–
–
227,116
33,889
7,300
–
–
–
(14,647)
32,028
268,305
43
Money3 Corporation Limited Annual Report 2019 Notes to the Consolidated Statements (continued)
3. Revenue
Interest, fees and charges
Other
Total revenue
Consolidated
2019
$’000
Consolidated
2018
$’000
91,500
73,618
203
–
91,703
73,618
Key Estimate
The deferral of loan fees and charges assumes that the loan will be repaid in line with the agreed
repayments schedule. This key estimate is regularly reviewed, and it is unlikely any change in the estimate
will have a material impact.
Recognition and Measurement
Revenue is measured at the fair value of the consideration received or receivable and recognised to the
extent that it is probable that the economic benefits will flow to the economic entity and the revenue can
be reliably measured.
The Group bases its estimates on historical results, taking into consideration the type of customer, the
type of transaction and specifics of each arrangement and contract.
Interest, Fees and Charges
Interest, fees and charges include interest on loan products, application and credit fees, and other
period fees including arrears, default and variation fees. Revenue associated with loans is deferred and
recognised over the life of the loans using the effective interest rate method over the loan term.
44
4.(a) Income Tax
Income tax expense
Current tax
Deferred tax
Prior year adjustments
Deferred tax expense
Increase/(decrease) in deferred tax assets
Increase/(decrease) in deferred tax liabilities
Deferred tax expenses
Income tax expense is attributable to:
Profit from continuing operations
Profit from discontinued operations
Reconciliation of income tax expense to prima facie tax payable
Profit from continuing operations before income tax expense
Profit from discontinuing operations before income tax expense
Tax at the Australian tax rate of 30%
Tax effect of amounts which are not deductible/(taxable)
Share based payments
Other (deductible expenses)/(non-assessable income)/non-deductible
expenses
Adjustments recognised in the current year into tax of prior years
Adjustments recognised in the current year in relation to deferred tax
of prior years
Difference in overseas tax rates
Income tax expense
Consolidated
2019
$’000
Consolidated
2018
$’000
18,397
(2,216)
(69)
13,287
1,360
–
16,112
14,647
(2,238)
22
(2,216)
11,142
4,970
16,112
35,335
15,500
50,835
15,250
713
231
(69)
–
(13)
1,096
264
1,360
9,999
4,648
14,647
31,182
15,493
46,675
14,003
621
23
–
–
–
16,112
14,647
45
Money3 Corporation Limited Annual Report 2019 Notes to the Consolidated Statements (continued)
4.(b) Deferred Tax Assets, Net
Deferred tax balance comprises temporary differences attributable to:
Employee leave benefits
Allowance for impairment losses
Accruals and lease incentives
Borrowings
Acquisition costs capitalised
Intangibles
Net balance disclosed as deferred tax assets
4.(c) Deferred Tax Assets
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit @ 30%
Consolidated
2019
$’000
Consolidated
2018
$’000
1,218
6,591
906
48
(539)
(1,722)
6,502
1,528
7,408
231
198
–
(193)
9,172
Consolidated
2019
$’000
Consolidated
2018
$’000
2,478
743
80
24
The unused tax losses represent capital losses on the sale of subsidiaries. These losses can be carried
forward indefinitely and can be utilised to offset any capital gains in future.
Recognition and Measurement
Current Tax
Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the
taxable profit or loss for the period. It is calculated using tax rates and tax laws that have been enacted or
substantively enacted by the reporting date. Current tax for current and prior periods is recognised as a liability
(or asset) to the extent that it is unpaid (or refundable).
Deferred Tax
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to
apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or
substantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of
deductible and taxable temporary differences to measure the deferred tax asset or liability.
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 assets and liabilities are offset where there is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances, they relate to are levied by the same taxation authority.
Tax Consolidation
On 1 July 2010, Money3 Corporation Limited (“the head entity”) and its wholly owned Australian controlled
entities formed a tax consolidated group under the tax consolidation regime. The head entity and the
controlled entities in the tax consolidated group continue to account for their own current and deferred tax
amounts. The tax consolidated group has applied the group allocation approach in determining the appropriate
amount of taxes to allocate to members of the tax consolidated group.
In addition to its own current and deferred tax amounts, the head entity 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.
46
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 tax consolidated group. The tax funding
arrangement ensures that the intercompany charge equals the current tax liability or benefit of each tax
consolidated group member, resulting in neither a contribution by the head entity to the subsidiaries nor
a distribution by subsidiaries to the head entity.
5. Cash and cash equivalents
Cash in hand
Petty cash
Cash at bank and on call*
Term deposit*
Total cash and cash equivalents
Consolidated
2019
$’000
Consolidated
2018
$’000
–
–
16,308
20,000
36,308
548
4
35,755
10,001
46,308
* The interest rate on term deposits was 1.5% (2018: 2.55%); these deposits have an average maturity of 3 months.
The deposits on call (11am) have an effective interest rate of 1.4% (2018: 1.6%).
Reconciliation to cash flow statements
Cash and cash equivalents
Bank overdrafts
Cash and cash equivalents as per cash flows
Consolidated
2019
$’000
Consolidated
2018
$’000
36,308
46,308
(932)
-
35,376
46,308
Recognition and Measurement
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash
on hand and deposits held at call with financial institutions and other short-term, highly liquid investments
with original maturities of three months or less that are readily convertible to cash and are subject to an
insignificant risk of changes in value.
6. Loans Receivable
Loans receivable
Allowance for impairment losses
Total loans receivable
Current loans receivable
Non-current loans receivable
Total loans receivable
Consolidated
2019
$’000
Consolidated
2018
$’000
338,129
268,305
(20,202)
(20,857)
317,927
166,238
151,689
317,927
247,448
130,607
116,841
247,448
Gross written loans represent cash to be received at balance date. Deferred revenue represents interest,
fees and charges accumulated on individual loans which will be recognised as revenue in future periods
using the effective interest rate method. Gross written loans less deferred revenue represents the loans
receivable calculated in accordance with the accounting policy.
47
Money3 Corporation Limited Annual Report 2019 Notes to the Consolidated Statements (continued)
6. Loans Receivable (continued)
Gross written loans
Deferred revenue
Loans receivable
Consolidated
2019
$’000
Consolidated
2018
$’000
374,000
308,047
(35,871)
(39,742)
338,129
268,305
Key Estimate
Recognition of income and classification of current and non-current is in line with the expected repayment
profile of loans. Also refer Note 19(b).
Recognition and Measurement
Loans and other receivables are non-derivative financial assets, with fixed and determinable payments
that are not quoted in an active market. Loans and other receivables are initially recognised at fair value,
including direct transaction costs and are subsequently measured at amortised cost using the effective
interest method.
Loans and other receivables are due for settlement at various times in line with the terms of
their contracts.
The Group applies a three-stage approach to measuring expected credit losses (ECLs) for loans
receivable measured at amortised cost. Loans receivable move through the following three stages based
on the change in credit risk since initial recognition:
Stage 1: 12-months ECL
The Group collectively assesses ECLs on loans receivable where there has not been a significant increase
in credit risk since initial recognition and that were not credit impaired upon origination. For these loans
receivable, the Group recognises as a collective provision the portion of the lifetime ECL associated with
the probability of default events occurring within the next 12 months. The Group does not conduct an
individual assessment of exposures in Stage 1 as there is no evidence of one or more events occurring
that would have a detrimental impact on estimated future cash flows.
Stage 2: Lifetime ECL – not credit impaired
The Group collectively assesses ECLs on loans receivable where there has been a significant increase
in credit risk since initial recognition but are not credit impaired. For these loans receivable, the
Group recognises as a collective provision a lifetime ECL (i.e. reflecting the remaining term of the
loans receivable). Like Stage 1, the Group does not conduct an individual assessment on Stage 2 loans
receivable as the increase in credit risk is not, of itself, an event that could have a detrimental impact on
future cash flows.
Stage 3: Lifetime ECL – credit impaired
The Group identifies, both collectively and individually, ECLs on those exposures that are assessed as
credit impaired based on whether one or more events that have a detrimental impact on the estimated
future cash flows of that asset have occurred. For exposures that have become credit impaired, a lifetime
ECL is recognised as a collective or specific provision.
A loan receivable balance is written off when the customer is unlikely to pay their obligation and the
Group determines there is no reasonable expectation of recovery. In assessing whether reasonable
expectation of recovery exists, multiple factors are considered including days past due without
repayment, recourse available to the Group such as realisability of security, insurance payout and other
related factors.
Determining the stage for impairment
At each reporting date, the Group assesses whether there has been a significant increase in credit risk for
loans receivable since initial recognition by comparing the risk of default occurring over the remaining
48
expected life from the reporting date and the date of initial recognition. This includes quantitative and
qualitative information. Refer to Note 19. Loans receivable will move through the ECL stages as asset
quality deteriorates. If, in a subsequent period, asset quality improves and reverses any previously
assessed significant increase in credit risk since origination, then the allowance for impairment losses
reverts from lifetime ECL to 12-months ECL. Loans receivable that have not deteriorated significantly since
origination are considered to have a low credit risk. The allowance for impairment losses for these loans
receivable is based on a 12-months ECL. When an asset is uncollectible, it is written off against the related
provision. Such assets are written off after all the necessary procedures have been completed and the
amount of the loss has been determined. Subsequent recoveries of amounts previously written off reduce
the amount of the expense in the income statement.
Measurement of Expected Credit Losses (ECLs)
ECLs are derived from unbiased and probability-weighted estimates of expected loss and incorporate
all available information which is relevant to the assessment including information about past events,
current conditions and reasonable and supportable forecasts of future events and economic conditions at
reporting date.
The Group calculates ECL using three main components, a probability of default (PD), a loss given default
(LGD) and the exposure at default (EAD).
The 12-month ECL is calculated by multiplying the 12-month PD, LGD and EAD. Lifetime ECL is calculated
using the lifetime PD instead. The 12-month and lifetime PDs represent the probability of default occurring
over the next 12 months and the remaining maturity of the instrument respectively. The EAD represents
the total value the Group is exposed to when the loan receivable defaults. The LGD represents the
unrecovered portion of the EAD considering mitigating effect of realisable value of security. For further
details on how the Group calculates ECLs including the use of forward-looking information, refer to the
Credit quality of financial assets section in Note 19.
7. Property, Plant and Equipment
Year ended 30 June 2019
Gross carrying amount
Balance at 1 July 2018
Acquisition of subsidiary*
Additions
Disposals
Balance at 30 June 2019
Accumulated depreciation
Balance at 1 July 2018
Acquisition of subsidiary*
Depreciation expense
Disposals
Balance at 30 June 2019
Net carrying amount at
30 June 2019
Motor
vehicles
$’000
Rental Assets
$’000
Leasehold
Improvements
$’000
Furniture &
Equipment
$’000
Total
$’000
62
28
–
(31)
59
55
3
3
(28)
33
26
–
–
–
–
–
–
–
–
–
–
–
2,981
3,442
6,485
–
–
1,103
393
1,131
393
(2,355)
(1,083)
(3,469)
626
3,855
4,540
1,901
2,467
4,423
–
133
321
319
324
455
(1,690)
(797)
(2,515)
344
282
2,310
2,687
1,545
1,853
* Acquired on purchase of Go Car Finance. Refer Note 20.
49
Money3 Corporation Limited Annual Report 2019 Notes to the Consolidated Statements (continued)
7. Property, Plant and Equipment (continued)
Motor
vehicles
$’000
Rental Assets
$’000
Leasehold
Improvements
$’000
Furniture, &
Equipment
$’000
Year ended 30 June 2018
Gross carrying amount
Balance at 1 July 2017
Additions
Disposals
Balance at 30 June 2018
Accumulated depreciation
Balance at 1 July 2017
Depreciation expense
Disposals
Balance at 30 June 2018
Net carrying amount at
30 June 2018
Total
$’000
7,447
347
3,703
331
(592)
(1,309)
3,442
6,485
3,260
16
(295)
2,981
2,019
2,730
123
(241)
263
(526)
1,901
2,467
5,225
387
(1,189)
4,423
1,080
975
2,062
62
–
–
62
54
1
–
55
7
422
–
(422)
–
422
–
(422)
–
–
Recognition and Measurement
Property, Plant and Equipment at Cost
Property, plant and equipment is recorded at cost less accumulated depreciation and cumulative
impairment charges. Cost includes those costs directly attributable to bringing the assets into the location
and working condition necessary for the asset to be capable of operating in the manner intended by
management. Additions, renewals and improvements are capitalised, while maintenance and repairs
are expensed.
The carrying values of property, plant and equipment are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amounts may not be recoverable. 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 carrying amount.
Depreciation
Depreciation on assets is calculated using the straight-line method to allocate their cost or revalued
amounts, net of their residual values, over their estimated useful lives or, in the case of leasehold
improvements and certain plant and equipment, the shorter lease term.
Estimates of remaining useful life are made on a regular basis for all assets, with annual reassessments for
major items. The expected useful life of plant and equipment is as follows:
Leasehold improvements
2 to 10 years
Furniture, fittings and equipment
3 to 10 years
Motor vehicles
4 to 5 years
50
Goodwill
$’000
Brand
$’000
Dealer
relationships
$’000
Internally
generated
software
$’000
Customer
lists
$’000
18,136
776
3,988
973
Net book amount
18,136
8. Intangible Assets
Year ended
30 June 2019
Cost
Accumulated
amortisation
Balance at
1 July 2018
Assets acquired*
Additions
Amortisation charge
Disposals
Balance at
30 June 2019
–
18,080
7,841
–
–
(7,785)
–
776
–
776
–
–
–
(231)
3,757
–
3,988
–
(231)
–
(70)
903
–
973
–
(70)
–
18,136
776
3,757
903
Total
$’000
23,873
(301)
23,572
18,722
13,578
–
–
–
–
642
–
–
(642)
(943)
–
–
(7,785)
23,572
* Acquired on purchase of Go Car Finance. Refer Note 20.
Year ended
30 June 2018
Cost
Accumulated
amortisation
Goodwill
$’000
18,080
–
Net book amount
18,080
Balance at
1 July 2017
Additions
Amortisation charge
Disposals
Balance at
30 June 2018
18,080
–
–
–
18,080
Brand
$’000
Dealer
relationships
$’000
Internally
generated
software
$’000
Customer
lists
$’000
Total
$’000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,265
20,345
(1,623)
(1,623)
642
18,722
1,095
19,175
–
–
(453)
(453)
–
–
642
18,722
Recognition and Measurement
All intangible assets acquired in a business combination are identified and recognised separately
from goodwill where they satisfy the definition of an intangible asset and their fair value can be
measured reliably.
Goodwill represents the excess of the cost of acquisition over the fair value of the entity’s share of the net
identifiable assets of the acquired business 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.
51
Money3 Corporation Limited Annual Report 2019 Notes to the Consolidated Statements (continued)
8. Intangible Assets (continued)
Acquired brands, customer lists and dealer relationships represent separately identifiable intangible
assets from goodwill and are recognised at their fair value at acquisition date. Subsequently, they are
carried at cost less accumulated amortisation and impairment losses.
The Group amortises intangible assets with a finite useful life using the straight-line method over the
following periods:
Brand
Customer lists
Dealer relationships
Internally generated software
10 to 15 years
5 to 8 years
7 to 10 years
5 to 8 years
Cash generating units
Goodwill is allocated for impairment testing purposes to the Cash Generating Units (“CGU’s”) as given below.
Goodwill allocated to:
Broker
International
Branch
Online
Total Goodwill
2019
$’000
2018
$’000
10,295
7,841
–
–
10,295
–
5,068
2,717
18,136
18,080
Impairment testing and key assumptions
Goodwill is tested annually as to whether it has suffered impairment. The recoverable amounts of CGU’s
have been determined based on value in use calculations. These calculations require the use of assumptions.
The recoverable amount of the CGU is based on several key assumptions as detailed below.
The Group tests at least annually whether goodwill and intangible assets with indefinite useful lives
have suffered any impairment, and when there is an indication of impairment. The tests incorporate
assumptions regarding future events which may or may not occur, resulting in the need for future
revisions of estimates. There are also judgements involved in determination of CGU’s.
The recoverable amount of Broker and International was determined based on a value in use discounted
cash flow (“DCF”) model. The ‘value in use’ calculations use cash flow projections based on the 2020
financial budgets extended over the subsequent four-year period (“Forecast Period”) and applies
a terminal value calculation using estimated growth rates approved by the Board for the business relevant
to each CGU. The following are the key assumptions used in determining the recoverable value:
2020 Budget revenue growth
2020 Budget expense growth/(reduction)
Terminal value > 5 years
Revenue growth rate > 1 year
Expense growth rate > 1 year
Pre-tax discount rate applied to cash flow
52
Broker
International
20%
15%
2%
5%
3%
13.6%
34%
21%
2%
24%
18%
11.1%
The Directors concluded that, based on these assumptions, the recoverable amount exceeds the carrying
amount and as such, there is no impairment of goodwill in the current year (2018: $nil).
Management believe that any reasonable possible change in the key assumptions on which the recoverable
amount is based would not cause the carrying amount to exceed the recoverable amount of the CGU’s.
9. Trade and other payables
Current liabilities (Unsecured):
Trade payables
Accrued expenses
Total trade and other payables
Consolidated
2019
$’000
Consolidated
2018
$’000
1,891
5,274
7,165
1,085
6,228
7,313
Recognition and Measurement
Trade and other payables are recognised when the Group becomes obliged to make future payments
resulting from the purchase of goods and services. The amounts are unsecured and are usually paid
within 30 days of recognition. All amounts are short term and the carrying values are considered to be
a reasonable approximation of fair value.
10. Employee Benefit Obligations
Current
Employee leave obligations – Current
Non-Current
Employee leave obligations – Non-current
Consolidated
2019
$’000
Consolidated
2018
$’000
1,412
1,412
248
248
1,622
1,622
303
303
Total employee benefit obligations
1,660
1,925
Recognition and Measurement
The Leave obligations cover the Group’s liability for long service and annual leave.
The current portion of this liability includes all the accrued annual leave, the unconditional entitlements
to long service leave where employees have completed the required period of service and those where
employees are entitled to pro-rata payments in certain circumstances.
Liabilities for unpaid salaries, salary related costs and provisions for annual leave are recorded in the
statement of financial position at the salary rates which are expected to be paid when the liability is
settled. Obligations for long service leave and other long-term benefits are recognised at the present
value of expected future payments to be made. In determining this amount, consideration is given to
expected future salary levels and employee service histories. Expected future payments are discounted to
their net present value using Milliman corporate bond rates.
53
Money3 Corporation Limited Annual Report 2019 Notes to the Consolidated Statements (continued)
10. Employee Benefit Obligations (continued)
Other Employee Obligations – Defined Contribution Superannuation Benefits
Eligible employees of the Group receive defined contribution superannuation entitlements, for which
the Group pays the fixed superannuation guarantee contribution (currently 9.5% of the employee’s
average ordinary salary) to the employee’s superannuation fund of choice. All contributions in respect of
employees’ defined contribution entitlements are recognised as an expense when they become payable.
The Group’s obligation with respect to employees’ defined contribution entitlements is limited to its
obligation for any unpaid superannuation guarantee contributions at the end of the reporting period.
All obligations for unpaid superannuation guarantee contributions are measured at the (undiscounted)
amounts expected to be paid when the obligation is settled and are presented as current liabilities in
the Group’s statement of financial position. The defined contribution plan expense for the year was
$1,820,334 (2018: $1,708,549) and is included in employee expenses.
11. Provisions
Provisions – Current
Provisions – Non current
Total provisions
Movements in Provisions
Carrying amount at the start of the year
Acquired during the year*
Additional provision charged
Charged/(credited) to profit and loss
Amounts used during the year
Carrying amount at the end of the year
Consolidated
2019
$’000
Consolidated
2018
$’000
285
150
435
308
156
464
Consolidated
2019
$’000
Consolidated
2018
$’000
464
349
792
(309)
(861)
435
308
–
–
179
(23)
464
* Acquired on purchase of Go Car Finance. Refer Note 20.
Recognition and Measurement
Provisions are recognised when the Group has a present obligation (legal, equitable or constructive) as
a result of a present or past event and it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable estimate can be made of the amount of
the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the
present obligation at reporting date, considering the risks and uncertainties surrounding the obligation.
Where a provision is measured using the cash flows estimated to settle the present obligation, it’s carrying
amount is the discounted present value of those cash flows. As that discount is unwound it is expensed in
the statement of profit or loss.
54
12. Borrowings
Current
Overdraft facility
Finance facility
Non-current
Finance facility (net of unamortised costs)
Total borrowings
Consolidated
2019
$’000
Consolidated
2018
$’000
932
2,505
3,437
132,570
132,570
136,007
–
–
–
97,825
97,825
97,825
Recognition and Measurement
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months after the reporting date.
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings
are subsequently measured at amortised cost using the effective interest method including the
borrowing costs.
Finance Facility
In December 2017, the Company entered into a variable rate $150m finance facility for the Australian
operations. The facility agreement is for three years from the date of the initial advance, being
15 December 2017. The facility is subject to a first ranking General Security Agreement (fixed and
floating charge) over all present and after acquired assets of the Australian operations.
In March 2019, the Go Car Finance entered into a variable rate $35.8m funding facility and $1.0m overdraft
facility for the New Zealand operations. The facility terminates in April 2022 and has a security over the
property of the entities within the Go Car Finance group.
Financing Facilities Available
Finance facility
Used at balance date
Unused at balance date
Consolidated
2019
$’000
Consolidated
2018
$’000
186,800
150,000
(130,563)
(100,000)
56,237
50,000
55
Money3 Corporation Limited Annual Report 2019 Notes to the Consolidated Statements (continued)
12. Borrowings (continued)
Assets Pledged as Security
Under the terms of the financing facilities, there are general security agreements (fixed and floating
charges) over all present and after acquired assets of the Group. The carrying amounts of assets pledged
as security for borrowings are:
Current assets
– Cash and cash equivalents
– Receivables
Total current assets pledged as security
Non-current assets
– Receivables
– Property, plant and equipment
– Intangible assets
Total non-current assets pledged as security
Total assets pledged as security
Consolidated
2019
$’000
Consolidated
2018
$’000
36,308
46,308
166,238
130,607
202,546
176,915
151,689
116,841
1,853
23,572
177,114
2,062
18,722
137,625
379,660
314,540
Compliance with Loan Covenants
Money3 Corporation Limited has complied with the financial covenants of its borrowing facilities during
the 2019 and 2018 reporting periods.
13. Share Capital
Number of
Shares
2019
Number of
Shares
2018
Consolidated
2019
$’000
Consolidated
2018
$’000
Fully paid ordinary shares
182,124,820
176,264,520
163,722
153,969
Issued and paid up capital is recognised at the fair value of the consideration received by the Company.
Transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of
the share proceeds received.
56
13. Share Capital (continued)
Movement in Shares on Issue
Movement in the shares on issue of the Company during the financial year are summarised below:
Balance at the beginning of the financial
year
Issued during the year:
New issue on acquisition of Go Car Finance
Issue of shares – exercise of options
Issue of shares – employees share scheme
Transfer from reserves on vesting
Consolidated 2019
Consolidated 2018
Number of
ordinary
shares
’000
Number of
ordinary
shares
’000
Value
$’000
Value
$’000
176,265
153,969
155,889
125,761
1,055
1,658
791
–
1,920
1,646
778
793
–
16,752
1,950
–
1,674
–
24,091
1,420
–
2,697
Issue of shares – DRP
2,356
4,616
Balance at end of the financial year
182,125
163,722
176,265
153,969
Recognition and Measurement
Ordinary Shares
Ordinary shares have the right to receive dividends as declared and in the event of winding up the
Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of
and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person or
by proxy, at a meeting of the Company. The Company does not have limited authorised capital and issued
shares have no par value.
Dividend Reinvestment Plan
Money3 Corporation Limited has established a dividend reinvestment plan under which holders of
ordinary shares may elect to have all or part of their dividend entitlements satisfied by issue of new
ordinary shares rather than being paid in cash. Shares are issued under the plan at a 2.5% discount
to the market price.
Options
Information relating to the Money3 Employee Share Option Plan, including details of options issued,
exercised and lapsed during the financial year and options outstanding at the end of the year is set
out in Note 25.
57
Money3 Corporation Limited Annual Report 2019 Notes to the Consolidated Statements (continued)
14. Reserves
14.(a) Option and rights reserve
Balance at the beginning of the financial year
Share based payments expensed for the year, net of forfeitures
Transferred to share capital on vesting
Options exercised
Balance at the end of the financial year
Consolidated
2019
$’000
Consolidated
2018
$’000
4,092
2,380
(793)
(1,138)
4,541
4,816
2,022
–
(2,746)
4,092
The share option reserve is used to recognise the grant date fair value of options and rights issued to
employees and directors but not exercised.
14.(b) Foreign currency translation reserve
Balance at the beginning of the financial year
Translation differences
Balance at the end of the financial year
Consolidated
2019
$’000
Consolidated
2018
$’000
–
19
19
–
–
–
Exchange differences arising on translation of the foreign controlled entity are recognised in other
comprehensive income and accumulated in a separate reserve within equity. The cumulative amount
is reclassified to profit or loss when the net investment is disposed of.
15. Retained earnings
Balance at the beginning of the financial year
Net profit for the year
Dividends paid
Adj- Changes in accounting policies (net of Tax)
Balance at the end of the financial year
Consolidated
2019
$’000
Consolidated
2018
$’000
61,118
29,210
51,482
32,028
(17,907)
(12,196)
–
(10,196)
72,421
61,118
58
16. Dividends
Recognised amounts
Fully paid ordinary shares
Final dividend for the year ended 30 June 2018 of 5.00 cents
(2017: 3.15 cents), fully franked at 30% tax rate
Interim dividend for the year ended 30 June 2019 of 5.00 cents
(2018: 4.50 cents), fully franked at 30% tax rate
Total
Unrecognised amounts
2019
$’000
2018
$’000
8,895
4,993
9,012
17,907
7,203
12,196
Final dividend of 5.00 cents (2018: 5.00 cents) fully franked
at 30% tax rate
9,106
8,895
On 19 August 2019, the Directors declared a fully franked final dividend of 5.00 cents per share to the
holders of fully paid ordinary shares in respect of the financial year ended 30 June 2019, to be paid to
shareholders on 22 October 2019. The dividend will be paid to shareholders based on the Register of
Members on 24 September 2019. This dividend has not been included as a liability in these financial
statements. The total estimated dividend to be paid is $9.1m. The Group has $53.8m of franking credits
at 30 June 2019 (2018: $38.3m).
17. Earnings per share
(a) Basic earnings per share
From continuing operations attributable to the ordinary equity holders
of the Group
From discontinued operations
Total basic earnings per share attributable to the ordinary equity holders
of the Group
(b) Diluted earnings per share
From continuing operations attributable to the ordinary equity holders
of the Group
From discontinued operations
Total diluted earnings per share attributable to the ordinary equity
holders of the Group
Consolidated
2019
Cents
Consolidated
2018
Cents
13.48
2.79
13.17
6.74
16.27
19.91
13.28
2.75
12.87
6.58
16.03
19.45
59
Money3 Corporation Limited Annual Report 2019 Notes to the Consolidated Statements (continued)
17. Earnings per share (continued)
(c) Reconciliations of earnings used in calculating earnings per share
Basic earnings per share
Profit attributable to the ordinary equity holders of the Group
From continuing operations
From discontinued operations
(d) Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator
in calculating basic earnings per share
Dilutive potential ordinary shares
Consolidated
2019
$’000
Consolidated
2018
$’000
24,193
5,017
21,183
10,845
29,210
32,028
2019
Number
2018
Number
179,533,057
160,890,627
2,629,000
3,764,000
Weighted average number of ordinary shares and potential ordinary
shares used in calculation of diluted earnings per share
182,162,057
164,654,627
Recognition and Measurement
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.
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 shares assumed to have been issued for no
consideration in relation to dilutive potential ordinary shares. Options granted to employees and directors
are considered to be ordinary shares and have been included in the determination of diluted earnings per
share to the extent to which they are dilutive.
60
18. Reconciliation of Operating Profit after Income Tax to Net Cash Flows used
in Operating Activities
Net profit after tax
Non-cash items:
Depreciation and amortisation expense
Loss/(Profit) on sale of property, plant and equipment
Allowance for impairment losses
Amortisation of borrowing costs
Net exchange differences
Loss on sale of subsidiaries
Share based payments
Changes in Movements in assets and liabilities:
(Increase)/decrease in assets
Loans receivable
Other assets
Other receivables
Deferred tax assets
Increase/(decrease) in liabilities
Trade and other payables
Current tax payable
Provisions and employee entitlements
Consolidated
2019
$’000
Consolidated
2018
$’000
29,210
32,028
1,342
32
3,265
885
35
5,310
2,419
840
120
2,717
967
–
–
2,507
(64,479)
(39,660)
(67)
100
–
114
(1,318)
(2,932)
(7,340)
3,130
(486)
1,515
(3,198)
403
Net cash inflows/(outflows) from operating activities
(27,962)
(4,579)
61
Money3 Corporation Limited Annual Report 2019 Notes to the Consolidated Statements (continued)
19. Financial Risk Management
The Group is exposed to a variety of financial risks through its use of financial instruments. This note
discloses the Group’s objectives, policies and processes for managing and measuring these risks.
The Group’s overall risk management plan seeks to minimise potential adverse effects due to the
unpredictability of financial markets.
The Board ensures that the Group maintains a competent management structure capable of defining,
analysing, measuring and reporting on the effective control of risk inherent in the Group’s underlying
financial activities and the instruments used to manage risk. Key financial risks including interest rate risk
and credit risk are reviewed by management on a regular basis and are communicated to the Board so
that it can evaluate and impose its oversight responsibility. The Group does not enter or trade financial
instruments, including derivative financial instruments, for speculative purposes.
Specific Risks
• Market risk
• Credit risk
• Liquidity risk
Financial Assets/Liabilities Used
The principal categories of financial assets/liabilities used by the Group are:
Financial assets
• Cash and cash equivalents – Note 5
• Loans and other receivables – Note 6
Financial liabilities
• Trade and other payables – Note 9
• Borrowings – Note 12
• Contingent consideration – Note 20(c)
Objectives, Policies and Processes
The risk management policies of the Group seek to mitigate the above risks and reduce volatility on the
financial performance of the Group. Financial risk management is carried out centrally by the Finance
Department of the Group.
Capital Risk Management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going
concern while maximising the return to stakeholders through the optimisation of the debt and
equity balance. The group overall strategy remains unchanged from 2018.
In order to maintain or adjust the capital structure, the Group may adjust the dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
Gearing Ratio
The Board reviews the capital structure on a semi-annual basis. As a part of this review the
Board considers the cost of capital and the risks associated with each class of capital. Based on
recommendations of the Board the Group will balance its overall capital structure through the payment
of dividends, new share issues and share buy-backs as well as the issue of new debt or the redemption of
existing debt.
62
19. Financial Risk Management (continued)
Financial assets
Debt (long term and short-term borrowings)
Cash and cash equivalents
Net debt
Total equity
Debt to equity ratio
Note
12
5
Consolidated
2019
$’000
Consolidated
2018
$’000
136,007
97,825
(36,308)
(46,308)
99,699
51,517
240,703
219,179
41.4%
23.5%
(a) Market Risk
(i) Price risk
The Group does not hold financial assets or liabilities that are subject to price risk.
(ii) Interest Rate Risk
The Group’s exposure to market interest rates relates primarily to the Group’s short-term deposits held,
deposits at call and borrowings. The interest income earned or paid on these balances can vary due to
interest rate changes.
The Group policy is to maintain at least 60% of its borrowings at fixed rate. Where necessary, the Group
manages its cash flow interest rate risk by using floating to fixed interest rate swaps. During the current
year, there did not arise a need to take interest rate swaps.
Impact on post tax profit
Impact on equity
Interest rates – increase by 25 bps
(100 bps)
Interest rates – decrease by 100 bps
(50 bps)
2019
$’000
2018
$’000
2019
$’000
2018
$’000
(174)
(376)
(174)
(376)
698
188
698
188
(iii) Foreign exchange risk
The Group operates in Australia and New Zealand but the exposure to significant foreign currency risk
is not significant. The entities within the Group do not have any significant financial instruments that are
denominated in a currency other than their functional currency. Translation related risks are not included
in the assessment of the Group’s exposure to currency risks. However, foreign currency denominated
inter-company receivables and payables which do not form part of a net investment in a foreign operation
would be included in the sensitivity analysis for foreign currency risks.
Impact on post tax profit
Impact on equity
2019
$’000
2018
$’000
2019
$’000
2018
$’000
NZD/AUD exchange rate increase by 5%
NZD/AUD exchange rate decrease by 5%
(17)
17
–
–
(17)
17
–
–
63
Money3 Corporation Limited Annual Report 2019 Notes to the Consolidated Statements (continued)
19. Financial Risk Management (continued)
(b) Credit Risk
Credit risk is managed on a Group basis. Credit risk arises from cash and deposits with banks and financial
institutions, as well as credit exposures to outstanding receivables, net of any allowance for impairment
losses, as disclosed in the statement of financial position and notes to the financial report.
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in
financial loss to the Group. Except for its dealings with core customers, the Group has adopted a policy of
only dealing with creditworthy counterparties and obtaining sufficient collateral or other security where
appropriate, as a means of mitigating the risk of financial loss from defaults.
(i) Credit quality analysis
The following table sets out information about the credit quality of financial assets measured at amortised
cost. Explanation of terms: 12-month ECL, lifetime ECL and credit impaired are included in Note 6.
Consolidated
2019
$’000
Consolidated
2018
$’000
12-month
ECL
Lifetime ECL
– not credit-
impaired
Lifetime
ECL – credit
impaired
162,355
87,673
3,634
108
–
–
–
72,058
7,471
–
–
–
–
–
4,830
Total
162,355
87,673
75,692
7,579
4,830
Total
131,851
63,096
62,779
4,779
5,800
Loans receivable
Strong
Good
Watch list
Sub-standard
Credit impaired
Gross carrying amount, net
of deferred revenue
253,770
79,529
4,830
338,129
268,305
Allowance for impairment
(8,389)
(11,123)
(690)
(20,202)
(20,857)
Carrying amount
245,381
68,406
4,140
317,927
247,448
Quality classification definitions
• ‘Strong’ exposures demonstrate a strong capacity to meet financial commitments, with negligible to low
probability of default.
• ‘Good’ exposures demonstrate a good capacity to meet financial commitments with low default risk.
• ‘Watch list’ exposures require closer monitoring and a reasonable capacity to meet financial
instruments, with moderate default risk.
• ‘Sub-standard’ exposures require varying degree of attention and default risk is high.
• ‘Credit impaired’ exposures have been assessed as impaired.
The credit quality classifications defined above encompass a range of granular internal credit rating grades.
Cash and cash equivalents
The Group held cash and cash equivalents of $36.3m at 30 June 2019 (2018: $46.3m). The cash and cash
equivalents are held with financial institutions that are rated A to AA-, based on Fitch rating.
64
19. Financial Risk Management (continued)
(ii) Collateral held and other credit enhancements
The Group holds collateral and other credit enhancements against certain of its credit exposures. The
nature of collateral held by the Group against loans receivable are motor vehicles and trailers. There were
no significant changes in the quality of the collateral subject to normal wear and tear of the underlying
vehicles. There are no financial assets where the Group has not recognised a loss allowance because of
the collateral.
(iii) Amounts arising from Expected Credit Losses (ECL)
Expected credit loss is measured from the initial recognition of a financial asset. The maximum period
considered when measuring ECL is the maximum contractual period over which the Group is exposed to
credit risk.
Inputs, assumptions and techniques used for estimating impairment
The Group calculates ECL using three main components, a probability of default (PD), a loss given default
(LGD) and the exposure at default (EAD).
PD estimates are determined using statistical models based on internally compiled data on performance,
default information on exposures that are segmented into homogenous portfolios, generally by product.
LGD is the magnitude of the likelihood of a loss if there is a default. The Group estimates LGD parameters
based on the history of recovery rates against defaulted counterparties. The EAD represents the exposure
in the event of a default. The EAD of a financial asset is its gross carrying value less deferred revenue.
There were no changes made to the estimation techniques or significant assumptions during the
reporting period.
Significant increase in credit risk
When determining whether the risk of default has increased significantly since initial recognition, the
Group considers both quantitative and qualitative information and analysis based on the Group’s historical
experience. Each loan receivable is assigned a credit rating at initial recognition. Credit risk is deemed to
have increased significantly if the credit rating has significantly deteriorated at the reporting date relative
to the credit rating at the date of initial recognition. Deterioration in credit rating is not only based on the
number of payment dishonours but also considers other qualitative information about the customer such
as status of employment, other sources of income and credit score from credit agencies. in line with the
Group’s credit policies. A backstop approach based on delinquency is not used due to the nature of the
customer segment the Group operates in.
Modified financial assets
The contractual terms of a loan may be modified for several reasons. The revised terms usually include
extending the maturity, changes to interest rate and changes to the timing of interest and fee payments.
A loan that is renegotiated is derecognised as if the existing agreement is cancelled and a new agreement
is made on substantially different terms. Loan modifications that do not result in derecognition are
considered to be a commercial restructure. The credit risk on these loans are considered to have
increased significantly as such modifications are generally due to financial difficulties of the customer.
Forward looking economic inputs
The Group considers reasonable and supportable information that is relevant and available without undue
cost or effort for this purpose. The Group incorporates forward looking information in the measurement
of ECL as a management overlay. The economic factors that are considered includes but are not limited
to, gross domestic product, unemployment, interest rates and inflation.
The PD, LGD and EAD models which support these determinations are reviewed periodically to compare
the loss estimates against actual loss experience. Given the recent adoption of AASB 9 Financial
Instruments have been adopted in the current financial year, there is limited evidence available to make
these comparisons. Therefore, the underlying models and their calibration, including the impact of
forward-looking economic conditions remain subject to review and refinement.
65
Money3 Corporation Limited Annual Report 2019 Notes to the Consolidated Statements (continued)
19. Financial Risk Management (continued)
The following table shows the reconciliation from the opening to the closing balance of the loss allowance.
Consolidated
2019
$’000
12-month
ECL
Lifetime ECL
– not credit-
impaired
Lifetime
ECL – credit
impaired
Loans receivable
Balance at 1 July 2018
Acquired during the year*
New originations
Transfer to lifetime ECL – not credit
impaired
Transfer to lifetime ECL –credit impaired
Transfer to 12-month expected credit losses
Financial assets derecognised/written off
Net remeasurement of loss allowance
Loss allowance at 30 June 2019
12,820
2,730
24,436
(5,516)
(258)
3,308
(10,793)
(18,338)
8,389
7,469
332
–
5,516
–
(2,783)
(2,855)
3,444
11,123
568
–
–
–
258
(525)
Total
20,857
3,062
24,436
–
–
–
(3,421)
(17,069)
3,810
690
(11,084)
20,202
* Acquired on purchase of Go Car Finance. Refer Note 20.
The Group applies the AASB 9 simplified approach to measuring expected credit losses which uses a
lifetime expected loss allowance for all trade receivables and contract assets. The expected loss rates
are based on the payment profiles on the receivables, the historical loss experience, uncertainty over
recoverability and forward-looking information on macroeconomic factors affecting the ability to settle
the receivables.
At the reporting date, the gross carrying amount of receivable from the sale of subsidiaries was $9.7m.
Taking into account subsequent events (refer Note 30), the Group has determined an impairment
allowance of $2m resulting in a net carrying amount of $7.7m at reporting date.
(iv) Concentrations of credit risk
The Group operates across Australia and New Zealand, providing consumer loans. The Group does not
monitor the geographical concentration of exposure.
(c) Liquidity Risk
Liquidity risk is the risk that the Group will not be able to pay its debts as and when they fall due.
The Group has borrowings and the Directors ensure that the cash on hand is sufficient to meet the
commitments of the Company and Group at all times.
Liquidity risk arises from the Group’s management of working capital and the finance charges and
principal repayments on its debt instruments. It is the risk that the Group will encounter difficulty in
meeting its financial obligations as they fall due.
Liquidity risk includes the risk that the Group:
• will not have sufficient funds to settle a transaction on the due date;
• will be forced to sell financial assets at a value which is less than what they are worth; and
• may be unable to settle or recover a financial asset at all.
To help reduce these risks where possible, the strategy is to borrow long term and lend short term and
maintain adequate cash reserves.
66
19. Financial Risk Management (continued)
Maturity of Financial Liabilities
The Group holds the following financial instruments. Amounts presented below represent the contractual
maturities of financial liabilities at their undiscounted cash flows and their carrying value at reporting date.
Consolidated
< 1 year
$’000
1-5 years
$’000
> 5 years
$’000
Total
Contractual
cash flows
$’000
Carrying
amount
$’000
2019
Financial Liabilities:
Borrowings
11,840
147,160
Trade and other payables
Contingent consideration
7,165
1,900
–
5,700
Total financial liabilities
20,905
152,860
–
–
-
–
159,000
133,068
7,165
7,600
7,165
6,143
173,765
146,376
Australia
< 1 year
$’000
1-5 years
$’000
> 5 years
$’000
Total
Contractual
cash flows
$’000
Carrying
amount
$’000
2018
Financial Liabilities:
Borrowings
Trade and other payables
Total financial liabilities
12,088
57,082
4,775
7,313
57,082
–
–
–
–
61,857
100,000
7,313
7,313
69,170
107,313
The contractual maturities in the table above reflect gross cash flows, which may differ to the carrying
values of the liabilities at the reporting date.
Also, affecting liquidity are cash at bank and non-interest-bearing receivables and payables. Liquidity risk
associated with these financial instruments is represented by the carrying amounts as shown above.
The carrying amount of financial assets and financial liabilities recorded in the financial statements
approximates their net fair values.
The net fair values of financial assets and financial liabilities are determined as follows:
• the net fair value of financial assets and financial liabilities with standard terms and conditions and
traded on active liquid markets are determined with reference to quoted market prices; and
• the net fair value of other financial assets and financial liabilities are determined in accordance with
generally accepted pricing models based on discounted cash flow theory.
67
Money3 Corporation Limited Annual Report 2019 Notes to the Consolidated Statements (continued)
20. Business combination
(a) Summary of acquisition
On 12 March 2019, Money3 acquired 100% of the issued share capital of Go Car Finance Group (GCF),
a lender of secured automotive loans in New Zealand. The Go Car Finance acquisition is aligned with
Money’s long term strategy and provides Money3 with geographical expansion, market access and a
strong existing business.
Details of the purchase consideration, the net assets acquired, and related goodwill are given as below:
Purchase consideration (refer to (b) below)
Cash paid
Ordinary shares issued
Liability for contingent consideration
Total purchase consideration
2019
$’000
13,574
1,920
6,143
21,637
The Group has not yet completed the accounting for the acquisition of Go Car Finance. The fair values
of the assets and liabilities disclosed below have only been provisionally determined as the independent
valuations have not yet been finalised.
Cash at bank
Loans receivables
Other receivables
Other assets
Property, plant & equipment
Intangible assets
Deferred tax liabilities, net
Bank overdraft
Trade & other payables
Employee benefit obligations
Borrowings
Provisions
Net identifiable assets acquired
Add: Goodwill
Net assets acquired
Fair Value
2019
$’000
903
44,262
355
106
807
5,737
(1,247)
(30)
(4,285)
(175)
(32,288)
(349)
13,796
7,841
21,637
The goodwill is attributable to the intellectual property and the workforce. It will not be deductable for
tax purposes.
68
20. Business combination (continued)
(b) Purchase consideration – cash outflow
Outflow of cash to acquire subsidiary, net of cash acquired
Cash paid
Less: Balances acquired
Cash
Bank overdraft
Net outflow of cash – investing activities
2019
$’000
13,574
903
(30)
873
12,701
(c) Contingent consideration
In the event that Go Car Finance achieves certain pre-determined annual profitability and its growth over
the first three years post acquisition, additional consideration of up to $1.9m may be payable annually
in cash or in equity in the first two years and up to $3.8m in the third year. The potential undiscounted
amount payable under the agreement is for a pre-tax profit hurdle of $4.2m in the first year with 20%
incremental hurdles in the following two years. The fair value of the contingent consideration at 30 June
2019 is $6.1m and was estimated by calculating the present value of the future expected cash flows using
a pre-tax discount rate of 13.6% and probability adjusted three year forecast profit before tax between
$4.2m and $6.5m.
(d) Revenue and profit contribution
Since acquisition in March 2019, Go Car Finance contributed revenue of $6.8m and profit of $1.0m of
profit to the Group for the year ended 30 June 2019. Due to significant changes to the accounting policies
of Go Car Finance at acquisition, it is not practicable to determine the revenue and profit contribution
from Go Car Finance as if acquisition occurred at the beginning of the reporting period.
21. Discontinued operations
(a) Description
On 22 February 2019, the Group agreed to sell Money3 Branches Pty Ltd and Money3 Services Pty Ltd
(wholly owned subsidiaries) to Commit Co Pty Ltd. The sale was completed on 20 May 2019. The entities
sold also represents the two segments (Branch and Online). Accordingly, these segments have been
designated as ‘discontinued’ in Note 2.
(b) Financial performance and cash flow information
The financial performance and cash flow information presented are for the period from 1 July 2018 to
20 May 2019 (2019 column) and the year ended 30 June 2018.
Financial Performance
Revenue
Expenses
Profit before income tax
Income tax expense
Profit after income tax of discontinued operations
Gain/(loss) on sale of the subsidiaries after income tax (see (c) below)
Profit from discontinued operations
2019
$’000
2018
$’000
44,679
48,258
(29,179)
(32,765)
15,500
(4,970)
10,530
(5,513)
15,493
(4,648)
10,845
–
5,017
10,845
69
Money3 Corporation Limited Annual Report 2019 Notes to the Consolidated Statements (continued)
21. Discontinued operations (continued)
Cash flow
Net cash inflow/(outflow) from operating activities
Net cash inflow/(outflow) from investing activities (2019 includes
cash inflows of $35.5m from the sale of the subsidiary)
Net cash inflow/(outflow) from financing activities
2019
$’000
12,753
35,395
–
2018
$’000
22,032
–
–
Net increase in cash generated by the subsidiaries
48,148
22,032
(c) Details of the sale of subsidiaries
Sale consideration, net of impairment as included in Note 19(b)
Carrying amount of net assets sold (including allocated goodwill)
Selling costs
Loss on sale before income tax
Income tax (expense)/benefit on gain
Loss on sale after income tax
(d) Details of net assets sold
Cash and cash equivalent
Loans receivable, net
Property, plant and equipment
Other assets and intangibles
Employee liabilities
Carrying amount of net assets sold (including allocated goodwill)
2019
$’000
43,225
(48,301)
(437)
(5,513)
–
(5,513)
2018
$’000
–
–
–
–
–
–
20 May 2019
$’000
1,505
36,127
867
10,760
(958)
48,301
70
22. Controlled Entities
The consolidated financial statements incorporate the assets, liabilities and results of subsidiaries in
accordance with the accounting policy described in Note 1. The subsidiaries of the Company are:
Name
Country of
incorporation
2019
%
2018
%
Acquisition
date
2019
$’000
2018
$’000
Equity held
Investment
Australia
100
100 01-Jul-06
2,970
2,970
Money3 Loans Pty Ltd
Money3 Franchising Pty Ltd
Money3 Wodonga Pty Ltd
Australia
Australia
Australia
Australian Car Leasing Pty Ltd
Australia
Antein Pty Ltd (Glenroy)
Bellavita Pty Ltd (Northcote)
Hallowed Holdings Pty Ltd
(Clayton)
Debt Resolutions Pty Ltd
(Coburg)
Nexia Pty Ltd (Werribee)
Pechino Pty Ltd (Frankston)
Happy.com.au Pty Ltd
Tannaster Pty Ltd (Moonee
Ponds)
Tristace Pty Ltd (Geelong)
Finance Investment Group
Limited
Go Car Finance Limited
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
New Zealand
Go Car Finance 2018 Limited
New Zealand
FIG Services Limited
New Zealand
My On Road Plan Limited
New Zealand
Go Car Funding Limited
New Zealand
Go Car Funding 2018 Limited
New Zealand
Aqua Cars Limited
New Zealand
Debt Resolutions Limited
New Zealand
Money3 Branches Pty Ltd^
Money3 Services Pty Ltd^
Australia
Australia
100
100
100
100
100
100
100 01-Nov-16
100 16-Apr-07
100 13-Mar-08
100 03-May-13
–*
–*
–*
–*
–*
–*
–*
–*
100 01-Jul-06
3,100
3,100
100 01-Jul-06
3,037
3,037
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
100 01-Jul-06
100 01-Jul-06
100 01-Jul-06
100 01-Jul-06
484
1,665
1,688
484
484
1,665
1,688
484
100 01-Jul-06
2,898
2,898
100 01-Jul-06
1,742
1,742
12-Mar-19
15,494
–
–
–
–
–
–
–
–
–
12-Mar-19
12-Mar-19
12-Mar-19
12-Mar-19
12-Mar-19
12-Mar-19
12-Mar-19
12-Mar-19
100 01-Nov-06
100 01-Nov-16
–
–
–
–
–
–
–
–
–
-*
-*
–*
–*
–*
–*
–*
–*
–*
–*
-
-
Total
33,561
18,068
* The investments in these entities is less than $1,000
^ These entities were sold in May 2019. Also refer to Note 21
71
Money3 Corporation Limited Annual Report 2019 Notes to the Consolidated Statements (continued)
23. Commitments
Non-cancellable operating leases
Operating leases relate to the head offices in Melbourne and New Zealand, which have lease terms of up
to 5 years. Commitments for minimum lease payments in relation to non-cancellable operating leases are
payable as follows:
Not later than one year
Later than one year but not later than five years
More than five years
Total minimum payments
Consolidated
2019
$’000
Consolidated
2018
$’000
869
2,333
–
1,661
2,487
–
3,202
4,148
Recognition and Measurement
The Group as Lessee
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are
classified as operating leases. Payments made under operating leases are charged to the statement of
profit or loss and other comprehensive income on a straight-line basis over the term of the lease.
24. Contingent assets and liabilities
The Group does not have any contingent assets or liabilities at 30 June 2019 (2018: Nil).
25. Share Based Payments
Options
Movement in the share options of the Group during the financial year are summarised below:
2019
Weighted
average
exercise price
$
2018
Weighted
average
exercise price
$
2018
Number of
options
2019
Number of
options
Balance at the beginning of the
financial year
9,650,000
1.6000
26,990,000
1.3900
Granted during the financial year
2,000,000
2.5000
–
Exercised during the financial year
(3,230,000)
1.4638
(17,051,696)
–
1.5800
1.7000
Forfeited during the financial year
Expired during the financial year
–
–
–
–
(200,000)
(88,304)
1.3000
Balance at the end of the financial year
8,420,000
1.7587
9,650,000
Exercisable at the end of the financial year
1,420,000
1.6256
4,650,000
1.6000
1.6200
72
25. Share Based Payments (continued)
Options on issue have the following conditions:
• The options vest in full when an event occurs which gives rise to a change in control of the Company.
• If the Company, after having granted these options, restructures its issued share capital, ASX Listing
Rules will apply to the number of shares issued to the option holder on exercise of an option.
• Employee and director options will not be listed on the ASX, but application will be made for quotation
of the shares resulting from the exercise of the options.
• On issue of the resulting shares, they will rank equally with ordinary shares on issue at that time.
• Share options carry no rights to dividends and no voting rights. In accordance with the terms of the
share option schemes, options may be exercised at any time from the date on which they vest to the
date of their expiry, subject to any additional specific requirements of the allocation.
Consideration received on the exercise of options is recognised as contributed equity. No options expired
during the periods covered by the above tables.
Share options outstanding at the end of the year have the following expiry dates and exercise prices:
Grant Date
21-Oct-13
30-Nov-13
20-Oct-14
15-Apr-15
28-Nov-16
28-Nov-18
Total
Weighted average remaining contractual
life of options outstanding at the end of
the year
Restricted Shares in the Company held by KMP
Expiry Date
Exercise
Price
21-Oct-18
0.996056
30-Nov-18
1.496056
Share
Options
2019
Share
Options
2018
–
–
500,000
2,000,000
20-Oct-19
1.496056
500,000
500,000
14-Apr-20
1.696056
920,000
1,650,000
23-Nov-21
1.500000
5,000,000
5,000,000
27-Nov-23
2.500000
2,000,000
–
8,420,000
9,650,000
2.58 years
2.52 years
Name
Grant Date
Restricted
Shares
Granted
Issue Price
Expiry Date Vesting Date
Value of
Restricted
Shares
Granted
Craig Harris
01-Jul-16
484,373
$1.0320
30-Jun-21
30-Jun-20
600,623
Michael Rudd*
01-Jul-16
56,525
$1.0320
30-Jun-21
30-Jun-20
73,271
Total
540,898
673,894
*
In July 2019, the restriction was released following payment for these shares.
73
Money3 Corporation Limited Annual Report 2019 Notes to the Consolidated Statements (continued)
25. Share Based Payments (continued)
The restricted shares vest in full on the vesting date when an event occurs which give rise to a change in
control of the Company.
• Restricted shares have rights including entitlement to dividends and voting.
• On issue of the restricted shares, they will rank equally with ordinary shares on issue at that time.
Performance Rights
Movement in performance rights during the financial year are summarised below:
Balance at the beginning of the financial year
Granted during the financial year
Exercised during the financial year
Forfeited during the financial year
Balance at the end of the financial year
Exercisable at the end of the financial year
2019
Number
of rights
2018
Number
of rights
2,310,748
1,022,028
328,178
1,587,819
(772,347)
(240,974)
(69,713)
(58,125)
1,796,866
2,310,748
–
–
Performance rights granted during the year were subject to the following conditions:
• The performance rights vest in full when an event occurs which give rise to a change in control of
the Company.
• If the Company, after having granted these performance rights, restructures its issued share capital,
ASX Listing Rules will apply to the number of shares issued to the rights holder on exercise of a right.
• Employee and director performance rights will not be listed on the ASX, but application will be made for
quotation of the shares resulting from the exercise of the rights.
• On issue of the resulting shares, they will rank equally with ordinary shares on issue at that time.
• Performance rights carry no rights to dividends and no voting rights. In accordance with the terms of
the performance rights schemes, rights are automatically issued on vesting.
Performance rights outstanding at the end of the year have the following vesting dates and expiry dates:
1-Jul-16 (Issue 12)
1-Jul-17 (Issue 13)
1-Jan-18 (Issue 14)
3-Dec-18 (Issue 16)
Total
Vesting Date Expiry Dates
Performance
Rights
2019
Performance
Rights
2018
30-Jun-20
30-Jun-21
347,546
722,928
30-Jun-21
30-Jun-22
146,154
272,820
31-Dec-21
31-Dec-22
975,000
1,315,000
02-Dec-21
31-Dec-21
328,178
–
1,796,878
2,310,748
Weighted average remaining contractual life of rights outstanding
at the end of the year
2.33 years
3.24 years
74
25. Share Based Payments (continued)
The fair value of the Performance Rights has been determined by an independent advisor as defined by
AASB 2 using the following inputs as at 30 June 2019:
Grant date
Vesting date
Expiry date
Share price at measurement date
Dividend yield
2019
Issue 16
03-Dec-18
02-Dec-21
31-Dec-21
1.660
4.4%
Recognition and Measurement
Options, restricted shares and performance rights are granted under the Money3 Corporation Limited’s
Share Option Plan. Options, restricted shares and performance rights are granted under the plan for
no consideration. The Board meets to determine eligibility for the granting of options, restricted shares
and performance rights and to determine the quantity and terms of options, restricted shares and
performance rights that will be granted. The valuation of options, restricted shares and performance
rights are determined by an independent expert considering the terms and conditions upon which the
instruments were granted. The expected price volatility is based on the historical volatility (based on
the remaining life of the options), adjusted for any expected changes to future volatility due to publicly
available information.
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 issued under employee share option plan
Performance rights issued under employee share plan
Restricted shares issued under employee share plan
Total
2019
$’000
2018
$’000
894
985
501
583
873
566
2,380
2,022
Employee Share Scheme
A scheme under which shares may be issued by the Company to employees for no cash consideration
was approved. All Australian resident permanent employees (excluding executive directors, other key
management personnel of the Group and the Group company secretary) who have been continuously
employed by the group for a period of at least one year are eligible to participate in the scheme.
Employees may elect not to participate in the scheme.
Under the scheme, eligible employees may be granted up to $1,000 worth of fully paid ordinary shares
in Money3 Corporation Limited annually for no cash consideration. The number of shares issued to
participants in the scheme is the offer amount divided by the weighted average price at which the
Company’s shares are traded on the Australian Stock Exchange during the week up to and including the
date of grant. The shares are recognised at the closing share price on the grant date (grant date fair value).
Offers under the scheme are at the discretion of the Board.
Shares issued under the scheme rank equally with other fully paid ordinary shares on issue.
On 27 September 2018, 18,942 shares were issued to participating employees.
Each participant was issued with shares worth $1,000 based on the share price of $2.16. The shares had
a grant date fair value of $2.16.
75
Money3 Corporation Limited Annual Report 2019 Notes to the Consolidated Statements (continued)
26. Auditor’s Remuneration
During the year, the following fees were paid or payable for services provided by the auditor of the
Money3 Corporation Limited, its related practices and non-related audit firms.
Consolidated
2019
$
Consolidated
2018
$
(a) BDO East Coast Partnership
Audit and review of the financial reports (inclusive of GST)
185,900
238,350
(b) Network firm of BDO
Audit and review of the financial reports (inclusive of GST)
20,754
–
Total remuneration of auditors
206,654
238,350
27. Deed of cross guarantee
Money3 Corporation Limited and its wholly owned subsidiaries in Australia are parties to a deed of cross
guarantee under which each company guarantees the debts of the others. By entering into the deed, the
wholly owned entities have been relieved from the requirement to prepare a financial report and directors’
report under ASIC Corporations (Wholly owned Companies) Instrument 2016/785.
28. Parent Entity Financial Information
(a) Summary Financial Information
The financial position and results of Money3 Corporation Ltd, the parent entity, are as follows:
ASSETS
Total current assets
Total non-current assets
Total assets
LIABILITIES
Total current liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Issued capital
Share option reserve
Retained earnings
Total equity
Profit from continuing operations
Total comprehensive income
76
Company
2019
$’000
Company
2018
$’000
40,429
310,052
39,499
284,144
350,481
323,643
11,579
98,936
110,515
6,601
97,863
104,464
239,966
219,179
163,722
153,969
4,539
71,705
239,966
23,458
28,475
4,092
61,118
219,179
21,183
32,028
28. Parent Entity Financial Information (continued)
(b) Guarantees entered by the Parent Entity
The parent entity has not entered into guarantees for any of its subsidiaries (2018: Nil).
(c) Contingent Liabilities of the Parent Entity
The parent entity has no contingent liabilities at the time of the report (2018: Nil).
(d) Contractual Commitments by the Parent Entity
The parent entity has contractual commitments for leases which are disclosed within Note 23.
29. Related Party Transactions
(a) Parent and Ultimate Controlling Entity
The parent and ultimate controlling entity is Money3 Corporation Limited which is incorporated
and domiciled in Australia.
(b) Key Management Personnel Remuneration
The aggregate compensation of the KMPs of the Group is set out below:
Short term employee benefits
Post-employment benefits
Long term benefits
Share based payments
Total
Consolidated
2019
$
Consolidated
2018
$
2,734,339
2,482,501
114,041
135,095
54,984
18,621
1,600,239
1,426,379
4,503,603
4,062,596
(c) Other Transactions with KMP or their Related Parties
The financial statements include the following items of expenses that resulted from transactions other
than compensation or equity holdings with KMP and their related entities:
Leath Nicholson is a director of Nicholson Ryan Lawyers and Panorama Pty Limited which Money3 has
engaged to perform legal services and compliance services respectively. Legal expenses for the current
year amounted to $670,276 (2018: $350,655) and compliance expenses for the current year amounted to
$158,400 (2018: $52,800) during the year. Amounts payable at 30 June 2019 was $16,500 (2018: Nil).
There are no loans made by the disclosing entity or any of its subsidiaries to any KMP or their personally
related entities.
All transactions with related parties are at arm’s length on normal commercial terms and conditions and
at market prices.
77
Money3 Corporation Limited Annual Report 2019 Notes to the Consolidated Statements (continued)
30. Significant Matters Subsequent to the Reporting Date
In July 2019, the Group entered into an agreement with Commit Co Pty Ltd to amend certain terms and
conditions of the sale including transition arrangements for loan referrals. This included a 2% discount to
the sale price as well as crystallising the referral fees to be received by the Group during the transition
period. Subsequent to reporting date, Commit Co Pty Ltd had paid three instalments totalling $5.4m.
The above adjustments including its impact on impairment provision have been reflected in Note 21.
Other than the above, no matters or circumstances have arisen since the end of the financial year that
have significantly affected or may significantly affect the operations of Money3, the results or the state
of affairs of the Group.
31. Changes in Accounting Policies
Impact of Standards Issued but not yet Applied
Certain new accounting standards and interpretations have been published that are not mandatory for the
30 June 2019 reporting period and have not been early adopted by the Group. The Group’s assessment of
the impact of these new standards and interpretations is set out below:
Mandatory application
date/Date of adoption
by Group
Mandatory for financial
years commencing on
or after 1 January 2019.
The Group will adopt
the standard from
1 July 2019.
Title of standard Nature of change
Impact
AASB 16 Leases
AASB 16 was issued
in February 2016. It
will result in almost
all leases being
recognised on the
balance sheet, as the
distinction between
operating and finance
leases is removed.
Under the new
standard, an asset (the
right to use the leased
item) and a financial
liability to pay rentals
are recognised. The
only exceptions are
short-term and low
value leases.
The standard will affect the
accounting for the Group’s
operating leases. The Group
has determined that these
commitments will result in the
recognition of an asset and
a liability for future payments
but will not have a material
effect on the Group’s profit
and classification of cash flows.
Some of the commitments
maybe covered by the
exception for short-term and
low value leases and some
commitments may relate to
arrangements that will not
qualify as leases under AASB 16.
78
Independent Auditor’s Report
Tel: +61 3 9603 1700
Fax: +61 3 9602 3870
www.bdo.com.au
Collins Square, Tower Four
Level 18, 727 Collins Street
Melbourne VIC 3008
GPO Box 5099 Melbourne VIC 3001
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Money3 Corporation Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Money3 Corporation Limited (the Company) and its subsidiaries
(the Group), which comprises the consolidated statement of financial position as at 30 June 2019, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd,
a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved
under Professional Standards Legislation.
Money3 Corporation Limited
Annual Report 2019
79
Independent Auditor’s Report (continued)
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
Revenue recognition
Key audit matter
How the matter was addressed in our audit
Refer to Note 3 of the accompanying financial
Our procedures, amongst others, included:
statements
•
Understanding the Group’s revenue recognition
The Group earns revenue from various sources
policies ensuring it is in accordance with AASB 9
including interest on loan products, application and
Financial Instruments and AASB 15 Revenue from
credit fees, and other period fees including arrears,
Contracts with Customers.
default and variation fees which are required to be
recognised using the effective interest rate method.
•
Detailed analysis of deferred fees and charges to
ensure they are recognised over the life of a loan
As there are a large number of loan contracts and
using the effective interest rate method in
the terms vary by product, significant risk exists that
accordance with AASB 9 Financial Instruments.
revenue is incorrectly recognised.
•
Our Audit Information Technology specialists were
Revenue recognition is significant to our audit as the
used, in conjunction with other audit procedures,
Group may inappropriately account for interest and
to test the Group’s controls over: loan initiation
fees potentially leading to revenue and profit not
and approval; standard terms, fees and charges;
being recognised consistently over the life of a loan
calculation of interest, revenue and deferred
contract using the effective interest rate method.
revenue in respect of fees and charges; controls
for recording transactions in the company’s loan
systems and the general ledger; and testing for
duplicate loans.
•
•
•
Evaluating and testing manual controls relevant to
the approval and recording of loans to customers.
Testing a sample of loans to ensure accurate
recording of the interest, fees and charges
revenue using the effective interest rate method.
Detailed analysis of revenue and the timing of its
recognition based on expectations derived from
our industry knowledge and knowledge of the
company’s products, fees and charges.
•
Reviewing the appropriateness of the disclosures
in regards to revenue recognition.
80
Valuation and Recoverability of Loan Receivables
Key audit matter
How the matter was addressed in our audit
Refer to Note 6 of the accompanying financial
Our procedures amongst others, included:
statements
The Group has a significant balance of receivables at
30 June 2019 which consist of personal loan
contracts with customers.
•
•
Understanding the Group’s ECL model to ensure it
is in accordance with AASB 9
Detailed analysis of management’s estimate of the
impairment allowance and the adequacy of
The assessment of the recoverable value of customer
procedures and processes adopted by
loans using an Expected Credit Loss (“ECL”) model
management.
requires significant judgement, using both
qualitative and quantitative assumptions, to
estimate the recoverability of the loans receivable.
•
Detailed analysis of loans in arrears or subject to
special payment terms using prior period’s history
of loans in these categories subsequently going
In our view, correctly estimating the allowance for
into default and using this evidence to support the
impairment losses against loans receivable is
appropriateness of the impairment allowance at
significant to our audit.
year-end.
•
Testing of controls around the aging of debts in
the company’s loan software system and the
appropriateness and application of the business
rules for recognising loans in default.
•
Challenging management’s impairment allowance
based on expectations derived from our industry
knowledge and knowledge of the Group’s credit
risk and following up variances from our
expectations.
•
Evaluating the adequacy of the disclosures in the
financial report.
Money3 Corporation Limited
Annual Report 2019
81
Independent Auditor’s Report (continued)
Discontinued Operations
Key audit matter
How the matter was addressed in our audit
Refer to Note 21 of the accompanying financial
Our procedures, amongst others, included:
statements and Note 19 for discussion on
recoverability of receivable from the sale of
subsidiaries
The Group disposed of its Branches and Online
business segments through a Management Buy Out
process, which resulted in a gain from discontinued
operations in the Consolidated Statement of Profit or
Loss and Other Comprehensive Income and a
receivable from the sale of subsidiaries related to
the payment terms agreed with the purchaser. This
gain consists of the profit from operating activities
for the period prior to disposal reduced by the loss
on disposal.
This was a key audit matter due to the material
nature of the disposal, the detailed work required to
calculate the profit from discontinued operations,
the loss on disposal and to assess the recoverable
from the purchaser as well as to correctly disclose
this transaction.
•
•
•
•
•
Reviewing legal agreements to understand the key
terms and conditions of the disposal and
confirming our understanding of the transaction
with management.
Assessing the total consideration based on the
terms of the agreements including the discount
provided subsequent to the reporting date.
Performing cut-off procedures to assess the
completeness and accuracy of the assets and
liabilities de-recognised at date of disposal.
Assessing management’s recognition and
measurement of expected credit loss on the
deferred consideration receivable from the
disposal and challenging management’s
judgements and assumptions.
Examining the adequacy and accuracy of the
disclosure of the transaction within the financial
report including the reported loss on disposal and
the classification as a discontinued operation in
accordance to the requirement of AASB 5 Non-
current Assets Held for Sale and Discontinued
Operations.
82
Acquisition of Go Car Finance
Key audit matter
How the matter was addressed in our audit
Refer to Note 20 of the accompanying financial
Our procedures, amongst others, included:
statements.
•
Reviewing the purchase agreement to understand
Accounting for the acquisition of Go Car Finance is a
the key terms and conditions, and confirming our
key audit matter due to the complexity of
understanding of the transaction with
accounting for business combinations and the
management.
significant judgements and assumptions made by
management, as assisted by management’s experts,
in determining the provisional valuation of intangible
assets (including goodwill) and the contingent
consideration due to the vendors upon achieving
future performance milestones.
•
Obtaining an understanding of the transaction
including an assessment of the accounting acquirer
and whether the transaction constituted a business
or an asset acquisition.
•
Assessing management’s valuation of contingent
consideration by challenging the key assumptions
including discount rate and probability of
achievement of future profit targets.
•
Comparing the assets and liabilities recognised on
acquisition against the executed agreements and
the historical financial information provided by
the acquired business. Due to the overseas
location of the business, we engaged a BDO
network firm to assist in undertaking the audit
work on opening balances.
•
Reviewing the draft valuation report prepared by
management’s expert to assess the provisional fair
values of the identifiable intangible assets
associated with the acquisition. We engaged BDO
Corporate Finance specialists to assist with the
review.
•
Reviewing management’s disclosures of the
transaction within the financial report for
compliance with the disclosure requirement of
AASB 3 Business Combinations.
Money3 Corporation Limited
Annual Report 2019
83
Independent Auditor’s Report (continued)
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s Annual Report for the year ended 30 June 2019, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors 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 gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our auditor’s report.
84
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included on page 25 to 33 of the directors’ report for the
year ended 30 June 2019.
In our opinion, the Remuneration Report of Money3 Corporation Limited, for the year ended 30 June
2019, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO East Coast Partnership
James Mooney
Partner
Melbourne, 19 August 2019
Money3 Corporation Limited
Annual Report 2019
85
ASX Additional Information
Additional information required by the Australian Securities Exchange and not shown elsewhere in this
report is as follows. The information is current as at 12 August 2019.
(a) Distribution of equity securities
The number of shareholders, by size of holding, in each class of equity are:
Ordinary Shares
Unlisted Options &
Performance Rights
Distribution of Shareholdings
Number of
Holders
Number of
Shares
Number of
Holders
127
148,019,542
857
26,955,432
483
3,699,682
1,103
3,081,246
762
368,918
12
26
1
–
–
3,332
182,124,820
39
10,701,239
Number of
Options &
Rights
9,178,706
1,514,056
8,477
–
–
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
The number of shareholders holding less
than a marketable parcel of shares are
218
9,495
86
(b) Twenty largest holders of quoted shares are:
Name of Holder
UBS NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
RUBI HOLDINGS PTY LTD
CITICORP NOMINEES PTY LIMITED
HOSKING FINANCIAL INVESTMENTS PTY LTD
CS THIRD NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
BALDWIN BROTHERS INVESTMENTS PTY LTD
1
2
3
4
5
6
7
8
9
10
SANDHURST TRUSTEES LTD
11 WALLBAY PTY LTD
12
13
14
PLATEY PTY LTD
CRAIG HARRIS
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 2
15 MR ANDREW JOHN HOPKINS
16 MATOOKA PTY LTD
17
18
ROCSANGE PTY LTD
AUST EXECUTOR TRUSTEES LTD
19 MR GREGORY SUTHERLAND & MRS JANICE SUTHERLAND
20 MR MICHAEL RUDD
Top 20 shareholders
(c) Substantial shareholders
Listed Ordinary Shares
No. of Shares % of Holding
29,171,777
16.02
17,859,525
10,077,682
8,500,000
7,194,016
5,500,000
5,352,139
5,307,846
3,381,591
2,955,321
2,561,629
2,500,000
2,353,763
2,277,477
2,168,697
1,778,352
1,378,154
1,332,736
1,319,622
1,257,343
114,227,670
9.81
5.53
4.67
3.95
3.02
2.94
2.91
1.86
1.62
1.41
1.37
1.29
1.25
1.19
0.98
0.76
0.73
0.72
0.69
63.11
The names of the substantial shareholders who have notified the Company in accordance with section
671B of the Corporations Act 2001 are:
Tiga Trading Pty Ltd & Associated entities
No. of Shares
28,839,101
% Held
16.03%
87
Money3 Corporation Limited Annual Report 2019 ASX Additional Information (continued)
(d) Voting rights
The voting rights attached to equity securities are set out below:
(i) Ordinary shares:
Each ordinary share is entitled to one vote when a poll is called, otherwise each member present
at a meeting or by proxy has one vote on a show of hands.
(ii) Options and performance rights
Options and performance rights are not entitled to voting rights.
(e) Unquoted equity securities
The Company has issued (or may issue in the future) options and performance rights with no voting rights.
The Company has a total of 10,701,239 (2018: 11,414,069) options and performance rights on issue.
Director Options
The Company has issued 2,000,000 options during the year (2018: Nil) to the Directors (or their
nominees) (“Director Options”).
Issue Date
Options
Granted
Exercise
Price
Expiry Date Vesting Date
Scott Baldwin
28-Nov-16
2,400,000 $1.500000
23-Nov-21
24-Nov-19
Scott Baldwin
28-Nov-18
2,000,000 $2.500000
27-Nov-23
27-Nov-20
Leath Nicholson
28-Nov-16
750,000 $1.500000
23-Nov-21
24-Nov-19
Stuart Robertson
28-Nov-16
600,000 $1.500000
23-Nov-21
24-Nov-19
• The options vest in full when an event occurs which gives rise to a change in control of the Company.
• If the Company, after having granted these options, restructures its issued share capital, the number of
options to which each option holder is entitled, or the exercise price of the options must be reorganised
in accordance with the ASX Listing Rules.
• Options will not be listed on ASX, but application will be made for quotation of the shares resulting from
the exercise of the options.
• On issue of the resulting shares, the shares will rank equally with ordinary shares on issue at that time.
(f) On market buy-back
There is no current on-market buy-back of the Company’s securities.
88
Corporate Information
Money3 Corporation Limited is a company
incorporated and domiciled in Australia.
Company Directors
Stuart Robertson
Non-Executive Chairman
Leath Nicholson
Non-Executive Director
Symon Brewis-Weston
Non-Executive Director
Scott Baldwin
Managing Director
Company Secretary
Terri Bakos
Head Office
Level 1, 40 Graduate Road
Bundoora Victoria 3083
Telephone 03 9093 8255
Facsimile 03 9093 8227
Registered Office
Level 1, 40 Graduate Road
Bundoora Victoria 3083
Share Registry
Link Market Services Limited
Tower 4, 727 Collins St
Docklands Victoria 3008
Auditors
BDO East Coast Partnership
Tower 4, 727 Collins St
Docklands Victoria 3008
Solicitors
Nicholson Ryan Legal Pty Ltd
Level 7, 420 Collins Street
Melbourne Victoria 3000
Bankers
Bendigo Bank
4 Prospect Hill Road
Camberwell Victoria 3124
Bank of New Zealand
80 Queens Street
Auckland, New Zealand 1010
Stock Exchange Listing
Money3 Corporation Limited shares are listed
on the Australian Securities Exchange
(ASX code MNY)
Website
www.money3.com.au
89
Money3 Corporation Limited Annual Report 2019 This page has been left blank intentionally.
90
customercare@money3.com.au