Money3
Annual Report 2020

Plain-text annual report

Helping Drive Customer Satisfaction Money3 Corporation Limited Annual Report 2020 M o n e y 3 C o r p o r a t i o n L i m i t e d / A n n u a l R e p o r t 2 0 2 0     Through Smarter, Tailored Lending 1/450 registered vehicles in Australia are financed by Money3 $1bn+ vehicles funded Contents Our Business Our Business Model Profitable Growth Flexible Lending Focus on Customer Care Financial Resilience Financial Highlights Chairman & Managing Directors’ Letter Financial Report Corporate Governance Statement 2 4 6 7 8 9 10 11 14 15 Director’s Report Remuneration Report Auditor’s Independence Declaration Directors’ Declaration Financial Statements Independent Auditor’s Report ASX Additional Information Corporate Information 15 25 36 37 38 80 85 IBC Money3 Corporation Limited / Annual Report 2020 50,000+ active customers 1/700 registered vehicles in New Zealand are financed by Money3 1 100,000+ vehicles funded What we do Money3 is a specialist provider of consumer finance for the purchase and maintenance of a vehicle in Australia and New Zealand. Our business model and unique approach to customer care attracts customers that are underserviced by mainstream banks. Our Business Product offering Money3 offers a range of products to service the needs of our customer base: Product Vehicle Loans – Secured Personal Loans – Secured Personal Loans – Unsecured Location Australia New Zealand Australia Australia 2 Loan range up to $75,000 up to $75,000 up to $12,000 up to $8,000 Term 2-5 years 2-5 years 2-3 years 1-2 years Assets Financed Security type Loan count 45,378 1,473 855 316 173 Of the total vehicles funded, over 500 are new vehicles. Helping Drive Customer SatisfactionMoney3 Corporation Limited / Annual Report 2020 Helping people to a better everyday life Brands Money3 has a separate brand in each geographic location: Australia New Zealand Distribution Money3 goes to market via a number of distribution channels that provides options and flexibility for the customers to access product offerings in the way that best suits them: 3 Broker Australia & New Zealand Leads from accredited brokers Dealer New Zealand Leads from accredited dealers D2C* Australia & New Zealand Customers who prefer to apply online, millennials * Direct to Customers. 146 8 10 7 8 Our Business Model Money3 has decades of experience and deep knowledge of providing consumers with finance 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 flexible and tailored repayments that helps our customers service their loans. 4 Attract customers Collect payments and manage arrears Assess suitability and affordability Responsible lending Helping Drive Customer SatisfactionMoney3 Corporation Limited / Annual Report 2020 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 difficulty 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 flexible with repayment profiles 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. Should a customer miss a payment, we engage with them early and understand their difficulties with a sympathetic approach. Depending on the nature of difficulty 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. 5 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 finance customers across a range of risk profiles which is reflected in our pricing range beginning at 9.95% p.a. We build a strong and enduring relationship with our customers which is evident from 32% of customers returning in FY20 for a new loan or refinancing. Assess suitability and affordability 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. Responsible lending We focus on understanding our customers cash flows and lend well within their affordability. 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 offering digital payments to our customers through partnerships. Helping Drive Customer Satisfaction 6 Our differentiation Profitable Growth Taking Money3’s profitable business model to new customers segments Growing our addressable market We are focussed on the consumer finance market through our vehicle and personal finance products. The Group has a long history of strong profitable growth and growing market share in an expanding number of customer segments. FY21 Focus • Expanding our product reach into the near prime vehicle finance market; • Broadening our presence in the sub-prime vehicle finance market via further geographic expansion; and • Accelerating growth through opportunistic acquisitions. Money3 is broadening its market share in the near prime segment Money3 Corporation Limited / Annual Report 2020 Our differentiation Flexible Lending Responsible lender with tailored solutions Tailored solutions We pride ourselves on understanding customers’ needs and their different circumstances by building deep relationships through regular communication right from the point of application stage. We understand income and expense variability and work with customers towards a solution rather than avoiding the customer. We tailor our products to be affordable, suitable and flexible. FY21 Focus Continuing our investments in smart technologies for application processing to enhance efficiency and effectiveness. 7 32% of new origination in FY20 in Australia are from returning customers Helping Drive Customer Satisfaction Our differentiation Focus on Customer Care Providing service where others don’t Customer centric culture We invest time to understand our customer base enabling us to identify and manage repayment disruptions early. Many customers choose Money3 as their preferred financier because they prefer our flexible repayment approach. For others, it is 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 rate products. FY21 Focus Continue to manage our customers in servicing their loan through the current economic cycle and maintain the quality of the loan book. 8 36.3% increase in cash collections in FY20 Money3 Corporation Limited / Annual Report 2020 Our differentiation Financial Resilience Maximises shareholder returns Strong capital base and well funded With a strong equity base and significant headroom in covenants, Money3 is well positioned to handle challenges through the current economic cycle. Money3 is well funded with ~$65m 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. FY21 Focus Optimising capital structure to support sustained and profitable growth in new customer segments. Well funded with ~$65m in available funds to support growth 9 Financial Highlights 10 Revenue* s n o i l l i m $ FY20 FY19 FY18 FY17 FY16 FY15 EBITDA* s n o i l l i m $ FY20 FY19 FY18 FY17 FY16 FY15 EPS* s t n e c FY20 FY19 FY18 FY17 FY16 FY15 Dividends s t n e c FY20 FY19 FY18 FY17 FY16 FY15 Loan Book* s n o i l l i m $ FY20 FY19 FY18 FY17 FY16 FY15 124.0 CAGR 33% 49.1 46.3 40.5 CAGR 31% 91.7 73.6 56 46.1 29.7 30.5 21.6 12.7 12.08 13.00 13.20 CAGR 18% 10.30 8.00 5.20 8.00 CAGR 9% 10.00 9.50 5.65 5.25 5.25 433.8 372.8 CAGR 32% 252.5 213.8 150.5 107.0 * From continuing operations. 35.3% increase in revenue to $124.0m 16.4% in loan book growth to $433.8m 31.1% increase in EBITDA normalised (continuing operations) 30.1% increase in NPAT normalised (continuing operations) Helping Drive Customer Satisfaction Money3 Corporation Limited / Annual Report 2020 Chairman & Managing Directors’ Letter Dear Shareholders, On behalf of the Board of Directors we are pleased to present you with Money3’s FY20 Annual Report. 13.1% in loan book growth in Australia 11 This year has seen unprecedented challenges, both locally and globally, facing not only Money3 but our society as a whole. As we write this, Victoria, where our head office is located, has entered stage four restrictions, with a nightly curfew in place and mandatory closure of the office. To say the world is a very different place to twelve months ago would be an understatement. These events have changed how we do business and live our lives. In January of this year we watched in awe as bushfires ravaged parts of Australia. In Melbourne, so close were the bushfires to our workplace, we had to close the Bundoora office due to smoke coming from the Plenty Gorge fires, only a few hundred metres from our doorstep. This ensured that we reviewed and updated our business continuity plans, including investment in working from home technology. Little did we know at the time, that the COVID-19 pandemic would be testing our resilience and plans so quickly. Our thoughts and sympathies go out to those who have been affected by the bush fires and COVID-19 through the loss of their jobs or more personally through illness or the loss of loved ones. We would also like to thank our staff, who have worked tirelessly, often remotely, and made many sacrifices for the Group and ensured customers continue to receive the level of customer service they have become used too. It has been an important year for the Group in terms of consolidating our strategy of moving away from a physical branch network providing small amount credit contracts to being a leading provider of vehicle finance through our digital platform, and maintaining our well recognized ‘human touch’. In addition, the Group has expanded its product reach and launched products targeting the large near prime market. We believe that not only is the Group extremely well placed to service this market, that it also significantly increases the addressable market in which the Group operates. Chairman’s & Managing Directors’ Letter continued 12 Financials The consolidation of these transformative actions through the year have helped underpin our solid results, despite the headwinds referred to above. The transformation into a specialist vehicle and personal finance company in Australia and New Zealand has seen strong growth in the core business. Full year Revenue from continuing operations increased 35.3% to $124.0m, while cash collections grew 36.3% to $277.2m and Gross Loan Book grew 16.4% to $433.8m In February 2020, the Group confirmed guidance of $30.0m NPAT from continuing operations for FY20. Subsequently, considering the unknown impact, including the duration of COVID-19 would have on the Group’s operations, the Board withdrew guidance in March 2020. During Q4 FY20, the Group suspended loan activities in New Zealand whilst in stage 4 lock-down. Domestically, in light of the uncertain economic environment during stage 3 restrictions, the Group tightened its lending criteria in Australia. Government stimulus programs in Australia and New Zealand have seen the majority of our clients maintain their pre-pandemic levels of income. This, coupled with the Group’s focus on collections and the importance to customers of having access to a vehicle, has led to customers actively reducing their outstanding loan balance through this period. Collections during the COVID-19 lockdown generated excess cash to operating expenses, enabling the Group to reduce its financing facility while closing the year with a strong balance sheet. This ensures that the Group is well placed to weather any prolonged downturn due to the pandemic and is also well positioned to take advantage of any acquisition opportunities that may present themselves. Gross Loan Book grew 16.4% during the year to $433.8m, with most of the growth occurring in the first 6 months. With restrictions lifting in New Zealand toward the end of the financial year we saw strong origination growth albeit tightened lending criteria, with July 2020 becoming one of our strongest months of new loan originations on record in New Zealand. Pleasingly, bad debts have remained within the guided range of 4.5% to 5.5%. Notwithstanding this, the Group has revised its ongoing provisioning given the outlook of the economy and has taken up a one off, non-cash impairment provision on the basis of significant uncertainty and potential for worsening economic conditions. FY20 Normalised NPAT was $32.3m, an increase of 14.2% on the prior corresponding period when adjusting for the one-off, non-cash economic outlook provision because of COVID-19. Statutory NPAT was $24.2m, down 14.5% on FY19. COVID-19 impact on results With an uncertain economic environment presenting itself in FY21 the Board of Directors felt it prudent to stress test numerous scenarios, including a sharp downturn in the economy with significantly increased unemployment levels. This has led to a one-off increase in the impairment provision of approximately 3% of the loans receivable, or a one-off $10.1m expense to the Profit and Loss statement for FY20. For clarity, under normal conditions, the economic outlook provision would not be required. Our Staff There is an old saying that adversity brings out the best in us. We have seen this during the year with our staff. I would like to take this opportunity to thank each one of them. They have worked tirelessly and at times under great strain and stress during the Victorian Government’s imposed COVID-19 restrictions. Having been able to continue providing the level of service the Group is known for, while producing an outstanding financial result, is largely down to the determination and dedication of our valued staff. We cannot thank them enough for their focus on the customer. Helping Drive Customer SatisfactionMoney3 Corporation Limited / Annual Report 2020 Community During the previous summer many Australians were impacted by the unprecedented bush fires across the country. The fires were of such scale, that our colleagues in Auckland were impacted by the smoke haze traveling across the Tasman. While there were many heroes during this period, on a local note, there were volunteer firefighters who worked tirelessly protecting Melbourne’s northern suburbs, including Money3’s head office. Money3 was delighted to be able to financially support the local volunteer fire brigades. 32.4% loan book growth in New Zealand By investing in further technology enhancements, customers will receive quicker decisions on their applications, whilst the Group continues to improve productivity. Product Expansion During the year, the Group completed a strategic review of the market and its product offerings. This resulted in an expansion into the near prime sector, broadening the addressable market of the Group. 13 Outlook While we are expecting volatility due to the pandemic, we anticipate loan book growth through FY21 due to expanding market reach and increased product offering. Finally, I would like to thank you, our shareholders, for your continued support as we continue our transformation into a leading provider of vehicle and personal finance. Regards Stuart Robertson Chairman Scott Baldwin Managing Director and Chief Executive Officer During the year, the staff at Money3 also held a gala evening to raise funds for the Big Group Hug, a charity supporting vulnerable families with children experiencing situational hardship or disadvantage. We were delighted to see most of the staff in Melbourne participate in the event. New Board member In September 2019 we welcomed Ms Kate Robb to the Board as an Independent Non-Executive Director. Kate was appointed Chair of the Audit, Risk and Compliance Committee, capitalising on her 20+ years’ experience in Audit, Compliance & Risk Management. Investment in digital Technology The Group continues to invest in technology that allows customers to digitally apply for finance whilst ensuring compliance with our responsible lending obligations. Contents 14 Corporate Governance Statement Directors’ Report Remuneration Report Auditor’s Independence Declaration Directors’ Declaration Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements 1. 2. 3. Summary of Significant Accounting Policies Segment Information Revenue 4 (a). Income Tax 4 (b). Deferred Tax Assets, Net 4 (c). Tax Losses 5. 6. Cash and Cash Equivalents Loans Receivable 7 (a). Property, Plant and Equipment 7 (b). Leases 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. Intangible Assets Trade and Other Payables Employee Benefit Obligations Provisions Borrowings Share Capital Reserves Retained Earnings Dividends Earnings Per Share Cash flow information Financial Risk Management Business Combination Discontinued Operations Controlled Entities Commitments Contingent Assets and Liabilities Share Based Payments Auditor’s Remuneration Deed of Cross Guarantee Parent Entity Financial Information Related Party Transactions Significant Matters Subsequent to the Reporting Date 31. Impact of Standards Issued but not yet Applied Independent Auditor’s Report ASX Additional Information 15 15 25 36 37 38 39 40 41 42 42 47 48 49 49 50 50 51 53 54 55 57 57 58 58 60 61 61 62 62 63 65 71 71 73 73 73 74 77 77 77 78 79 79 80 85 Helping Drive Customer SatisfactionMoney3 Corporation Limited / Annual Report 2020 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 2020. 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 • Symon Brewis‑Weston • Scott Baldwin • Kate Robb (appointed 1 September 2019) • Leath Nicholson (resigned 15 November 2019) Terri Bakos is the Company Secretary appointed on 31 October 2016. Principal Activities The principal activities of the Group during the financial year were the provision of finance specialising in secured vehicle loans as well as secured and unsecured personal loans. There have been no significant changes to the Group’s principal activities during the year. Dividends – Money3 Corporation Limited Dividends paid to shareholders during the financial year were as follows: Final dividend for the year ended 30 June 2019 of 5.00 cents (2018: 5.00 cents), fully franked at 30% tax rate Interim dividend for the year ended 30 June 2020 of 5.00 cents (2019: 5.00 cents), fully franked at 30% tax rate Total Dividends Paid 2020 $’000 2019 $’000 9,122 8,895 9,253 18,375 9,012 17,907 Since the end of the financial year the Directors have declared the payment of a final 2020 ordinary dividend of 3.00 cents per fully paid share. Based on the current number of shares on issue, the dividend payment is expected to be $5.6m. This dividend will be paid on 9 October 2020 by the Company. 15 Helping Drive Customer Satisfaction Directors’ Report (continued) Review of operations FY20 was another year of strong performance with double digit growth despite COVID-19 impact. The Group achieved a normalised Net Profit After Tax (“NPAT”) of $32.3m (in line with the guidance provided to the market). The statutory NPAT is $24.2m and a reconciliation to the normalised NPAT is given below. Statutory NPAT Economic outlook provision One-off write off in New Zealand operations COVID-19 technology expenses Wage subsidy Tax on the above Normalised NPAT 2020 $m 24.2 10.1 2.8 0.8 (2.1) (3.5) 32.3 The key financial operating results of the Group’s continuing operations are outlined in the table below: 16 Total revenue EBITDA NPAT Gross loan book Loans receivable Segment performance Australia Total revenue EBITDA Gross loan book Loans receivable 30 Jun 20 $’000 124,034 49,081 22,192 433,857 387,250 30 Jun 19 $’000 (Restated) 91,703 46,318 23,341 372,821 333,212 % Change 35.3% 6.0% (4.9%) 16.4% 16.2% 30 Jun 20 $’000 102,774 48,500 351,163 316,507 30 Jun 19 $’000 (Restated) 84,923 49,858 310,369 279,202 % Change 21.0% (2.7%) 13.1% 13.4% The Australia division consists primarily of secured automotive loans up to $75,000 with terms up to 60 months. All financing under the Australia division is provided under the All Other Credit (“AOC”) contract, in accordance with the National Consumer Credit Protection Act 2009. Money3 Corporation Limited / Annual Report 2020 New Zealand Total revenue EBITDA Gross loan book Loans receivable 30 Jun 20 $’000 21,260 6,397 82,694 70,743 30 Jun 19 $’000 (Restated) 6,780 1,578 62,452 54,010 % Change 213.6% 305.4% 32.4% 31.0% 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. Branch and Online segment (Discontinued) Total revenue EBITDA Gross loans book Loans receivable 30 Jun 20 $’000 30 Jun 19* $’000 – 2,000 – – 44,679 16,219 – – % Change – (87.7%) – – * The above represents the performance for the period from 1 July 2018 to 20 May 2019 (date of sale). With the disposal of Money3 Branches Pty Ltd (Branches) and Money3 Services Pty Ltd (Online) on 20 May 2019, this segment was designated as discontinued. 17 Significant changes in the state of affairs The Group continues to transform itself into a specialist automotive finance company in Australia and New Zealand, with remarkable growth in the core business. During the first half of FY20, the Group recorded $62.7m revenue and $15.7m NPAT. While revenue continued to be in line with expectations in the second half of FY20, COVID-19 has a significant impact on the Gross Loan Book and related impairment provisioning. COVID-19 Since April 2020, the Group has been significantly impacted by COVID-19. While cash collections continued to be strong during this period which helped to maintain, if not marginally improve the loan book quality, there has been a significant reduction in new loan originations. Lending criteria were tightened including exposure to select industries. The significant uncertainty over the future economic outlook resulted in an increase to the impairment provision by $10.1m (pre-tax). In March 2020, the Group drew down an additional $40.0m from its Australian facility but repaid $10.0m as a result of strong cash collections. At 30 June 2020, there is approximately $65m in available funds and with significant headroom in the debt covenants, the Group’s liquidity is strong and is well placed to weather any prolonged downturn as a result of COVID-19. Other than the above, there were no significant changes in the state of affairs of the Group. Directors’ Report (continued) Significant Matters Subsequent to the Reporting Date 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. 18 Non‑Audit Services There were no non‑audit services provided by the auditor during the 2020 or 2019 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. Helping Drive Customer SatisfactionMoney3 Corporation Limited / Annual Report 2020 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 Former directorships in last 3 years • None Kate Robb Non‑Executive Director & Chair of the Audit Committee Qualification B.Acc. ACA GAICD Experience Kate brings more than 20 years of governance, internal audit, risk management and compliance experience. She has held senior management roles within a number of ASX‑listed companies. In addition to this, Kate also spent seven years with PwC during which she provided governance services to a variety of listed and privately owned entities. Kate is also a member of the Remuneration & Nomination Committee. Other directorships • Sandringham Community Financial Services Limited – Independent Member of Audit Committee Former directorships in last 3 years • None 19 Directors’ Report (continued) 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 Former directorships in last 3 years • Managing Director of FlexiGroup from 2017 to 2018 Scott Baldwin Managing Director & Chief Executive Officer 20 Dip. in Finance, B.Eng (Hons), MBA GAICD Qualification Experience Mr Baldwin has been an employee of Money3 for over 12 years, a shareholder since listing in 2006, and was appointed to the Board of Directors in 2009 as an Executive Director, in 2015 he assumed the role of Managing Director and Chief Executive Officer. Mr Baldwin has led the strategic transformation of Money3 into a fast growing consumer auto finance business. Prior to joining Money3, Mr Baldwin spent over a decade in a variety of senior roles with General Electric Healthcare. Other directorships • None Former directorships in last 3 years • None 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, financial services, automotive, mining and biotech sectors. Other directorships • None Former directorships in last 3 years • None Helping Drive Customer SatisfactionMoney3 Corporation Limited / Annual Report 2020 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. 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. 21 Carly Crowe Risk and Compliance Manager Carly re‑joined Money3 in April 2020 having worked previously for the business as Compliance Manager for four years up until 2017. For the last three years, Carly has been Compliance Manager with MoneyQuest, a mortgage broking aggregator, specialising in regulatory compliance, training, complaints management and audit and was a member of the Executive Management Team and Chair of the Compliance Committee. Lisa McRae Human Resources Manager Lisa joined Money3 in April 2020 as Human Resources Manager. Most recently, Lisa was HR Director for Kitchen Group and her career has spanned the retail, infrastructure, healthcare, energy and banking sectors. Lisa has been a member of leadership teams in both multi‑national and Australian Corporations including Transurban Limited, an ASX20 Company. She brings to Money3 over 10 years financial services experience gained in the banking sector and more recently HR expertise in company acquisitions. Helping Drive Customer Satisfaction Directors’ Report (continued) Roy Gormley Director of Go Car Finance (New Zealand) Roy owned the Go Car Finance group prior to acquisition. Roy was the former 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. Paul Verhoeven CEO – Go Car Finance (New Zealand) Paul joined Money3 in February 2020 having enjoyed a wealth of experience in financial institutions in New Zealand, Australia and Europe. Prior to joining us, Paul held Managing Director roles within the Eclipx Group, leading the FleetPartners brand for 6 years in both Australia and New Zealand and taking these businesses through to an ASX listing in 2015. Paul also headed up the Lending teams for UDC Finance over 4 years and enjoyed time as a member of the Executive Committee for the Financial Services Federation. Meetings of Directors The number of meetings of the Board and of other Committee meetings held during the year ended 30 June 2020 and the numbers of meetings attended by each Director were: 22 Board Audit Committee Remuneration & Nomination Committee Director Held Attended Held Attended Held Attended Stuart Robertson Leath Nicholson Symon Brewis-Weston Scott Baldwin Kate Robb 13 6 13 13 10 13 6 13 13 10 2 1 2 * 1 2 1 2 * 1 3 * 3 * 3 3 * 3 * 3 * Not a member of the relevant committee during the year. Money3 Corporation Limited / Annual Report 2020 Options and Performance Rights Share options Unissued ordinary shares under option of Money3 Corporation Limited at the date of this report are given below: Grant Date 20-Oct-14 15-Apr-15 28-Nov-16 28-Nov-18 Total Expiry Date Exercise Price 20-Oct-19 14-Apr-20 1.49606 1.69606 Share Options 2020 Share Options 2019 – – 500,000 920,000 23-Nov-21 1.50000 4,180,000 5,000,000 27-Nov-23 2.50000 2,000,000 2,000,000 6,180,000 8,420,000 As at the date of this report, there were 4,180,000 options on issue (2019: 5,750,000) held by the Directors. On exercise, options convert into one ordinary share of Money3 Corporation Limited. The options carry neither right to dividends nor voting. No options were granted to the directors or any of the five highest remunerated officers of the Group during or since the end of the financial year. Performance rights Performance rights of Money3 Corporation Limited on issue at the date of this report are given below: 23 Grant Date 1-Jul-16 1-Jul-17 1-Jan-18 3-Dec-18 1-Jul-19 Total Vesting Date Expiry Date Performance Rights 2020 Performance Rights 2019 30-Jun-20 30-Jun-21 173,773 347,546 30-Jun-21 30-Jun-22 – 146,154 31-Dec-21 31-Dec-22 625,000 975,000 02-Dec-21 31-Dec-21 218,786 328,178 30-Jun-22 30-Jun-22 150,000 – 1,167,559 1,796,878 Performance rights granted during the year are given below: Grant Date 01-Jul-19 Equity Instrument Quantity Granted Vesting Date Expiry date Rights 150,000 30-Jun-22 30-Sep-22 The above grants were made to staff who are part of the top five highest remunerated officers of the Group. No performance rights were granted to the directors or any of the five highest remunerated officers of the Group since the end of the financial year. Performance rights carry neither right to dividends nor voting. Directors’ Report (continued) Dear Shareholder On behalf of the Board and as the Chair of the Remuneration & Nomination Committee (“the Committee”), I am pleased to present the FY20 Remuneration Report over the following pages. FY20 saw the commencement of Stage 1 of a program to restructure the way we remunerate and incentivise our Key Executives and Management. Stage 2 will commence in FY21. FY20 Remuneration Outcomes During the year, the Group implemented a Long Term Incentive (“LTI”) program vesting after 3 years with TSR and EPS performance criteria. Although only two Executives received allocations of Performance Rights under the program in FY20, most Executives will be eligible to receive allocations in the coming years. As the Performance Rights vest after 3 years, the first allotment of shares under this program will not occur until FY23. The Group’s historical Short Term incentive (“STI”) program continued during the year. Allocations under this program were set by the Board under recommendation from Management and the Remuneration & Nomination committee taking into account industry based salary expectations and negotiations. The award of any STI was subject to a performance gateway and achievement of set financial and non‑financial key performance indicators (KPIs). Due to the impact of COVID‑19 on the Group’s financial performance for the last 3 months of FY20 and the additional accounting provisions based on economic outlook (non‑cash expense), the Group did not achieve the gateway criteria for the STIs to be awarded, although individual KMPs did achieve many of their KPIs for the period. 24 It was noted by the Board and the Committee that the Group’s performance for the 9 months ended 31 March 2020 did exceed the budget for that period. If the Group had continued to perform in line with this performance for the last 3 months of the year, then the Group would have met the performance gateway and all Key Executives and employees would have received their STI awards. During the COVID‑19 pandemic Key Executives and staff continued to perform under extenuating circumstances, while for the good of the Group opting to work a 4 day week, with the 5th day as unpaid or offset against annual leave. The Board, in recognition of employees’ commitment and that the economic provision that impacted the P&L was required based on a conservative future view on the economy and not actual performance, agreed to award a one‑time bonus in recognition of their efforts during the year. For Key Executives, this equated to 50% of their potential STI allocation for the period. FY21 Remuneration Program FY21 will see the implementation of Stage 2 of the Group’s Key Executive remuneration restructure. Executives will be allocated potential STIs and LTIs based on a % mix of their Fixed Remuneration (“FR”). STI performance criteria will be based around financial and non‑financial indicators, depending on the position of the KMP or executive, with a greater emphasis on non‑financial indicators. The LTI program enacted in FY20 will continue. The Committee recommended this restructure to the remuneration mix taking into consideration recent implications from COVID‑19 and the move in market & industry expectations. The Committee believes that this restructure will continue to align and reward Executives for the delivery of long term shareholder wealth creation. Yours sincerely Symon Brewis‑Weston (Chairman, Remuneration & Nomination Committee) 17 August 2020 Helping Drive Customer SatisfactionMoney3 Corporation Limited / Annual Report 2020 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 2020 prepared in accordance with the requirements of the Corporations Act 2001 (“the Act”) and audited as required by section 308(3C) of the Act. 1. Key Management Personnel The Key Management Personnel (“KMP”) covered in this Remuneration Report includes Non- Executive Directors (“NED”) and those executives who are deemed to have the 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 who unless otherwise indicated, were KMP for the entire year. Name Role Non-Executive Directors Stuart Robertson Independent Non-Executive Chairman Symon Brewis-Weston Independent Non-Executive Director Kate Robb Independent Non-Executive Director (appointed 1 September 2019) Leath Nicholson Non-Executive Director (resigned 15 November 2019) Executive Directors Scott Baldwin Executives Siva Subramani Craig Harris Rob Camilleri Managing Director and Chief Executive Officer Chief Financial Officer General Manager – Lending Chief Information Officer (resigned 17 September 2019) 25 2. NED Remuneration Structure The Board seeks to set aggregate remuneration at a level which provides the Group with the ability to attract and retain Non-Executive 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 $750,000 (2019: $500,000). 3. Remuneration Framework The below sections cover the executive Director (Managing Director) and KMP remuneration framework. 3.1 Governance The Board has established a Remuneration and Nomination Committee that oversees the development and implementation of the remuneration framework. The Committee regularly undertakes remuneration benchmarking for the Managing Director (“MD”) and executive KMP. 3.2 Principles and framework The performance of the Group depends upon the quality of its MD and executive KMP. To prosper, the Group must attract, motivate and retain highly skilled people. The remuneration is structured in such a way that it encourages MD and executive KMP in creating both short term and long term value for the shareholders and achieve strategic objectives of the Group. The Group regularly benchmarks remunerations against relevant peers, being ASX listed companies of similar size, structure and industry to that of Money3 and current market employment conditions. The remuneration principles and framework are outlined below. Remuneration Report (continued) Reward Principals Attract, retain and engage high performing executives Align performance to strategy objective execution, including both short term and long term goals Encourage and motivate executives to maximise shareholder value Framework Components Fixed Remuneration (“FR”) Fixed remuneration comprises base salary and statutory superannuation contributions. This may be delivered as a combination of cash and other non‑financial benefits as elected by the individual. There is no guaranteed increase in the employment contracts. Fixed remuneration is reviewed annually by the Remuneration and Nomination Committee. 26 Short Term Incentive (“STI”) Performance measure Strategic objective Measured based on the following factors: • Scope and complexity of the role; and • Individual capability and skill, experience, and performance. The remuneration is set at competitive levels to attract, retain and engage key talent to execute the Group’s strategies. STI is an incentive based on the financial, strategic and operational objectives of the Group. The STI is delivered as cash. The size of the STI opportunity is 100% of the Fixed Remuneration for the MD and up to 30% of the Fixed Remuneration for all other executive KMP. Measured based on the following factors: • Achievement of financial targets set for the current financial year; and • Achievement of short terms goals as determined by the board. The STI aligns remunerations with achievement of immediate priorities of the Group which support shareholder value. Long Term Incentive (“LTI”) LTI is an equity based plan based on achievement of long term performance conditions measured over a three year period. The size of the LTI opportunity is 100% of the Fixed Remuneration for the MD and up to 30% of the Fixed Remuneration for all other executive KMP. MD and the executive KMP may achieve up to 150% of their LTI allocation should the Group achieve outstanding growth over the performance period. LTI targets are reviewed on an annual basis by the Remuneration and Nomination Committee and includes the following performance and service conditions: LTI incentivises management to deliver outcomes over the long term and is aligned with shareholder interests. The three year vesting period encourages consideration of long term future of the Group. It is important that targets set are both challenging and achievable. • Composite Total Shareholder Return (“CTSR”) consisting of an Absolute and Relative Total Shareholder Return – 50% LTI allocation; • Earnings Per Share (“EPS”) growth targets – 50% LTI allocation; and • Remaining employed in the Group through the vesting period. • The LTI allocation for each of the performance measures may vary from time to time. For FY20 LTI Program, the LTI allocation was 50% for each of the performance measures, i.e. 50% for CTSR and 50% for EPS. Helping Drive Customer SatisfactionMoney3 Corporation Limited / Annual Report 2020 FY20 LTI Program – Payout scale The payout is represented as a % of Target EPS hurdles Growth hurdle Below 8% 8% – 10% 10% – 12.5% Above 12.5% TSR hurdles (composite) Relative TSR ASX 200 Financials Index (AXFI) Payout as a % of Target <25th percentile <8% Nil 25th percentile 25% 50th percentile 50% 75th percentile 75% Absolute TSR Growth 8% – 10% 10% – 12.5% 25% 50% 75% 100% (Target) 50% 75% 100% (Target) 125% Nil 50% 100% (Target) 150% >12.5% 75% 100% (Target) 125% 150% For FY19, LTI allocation was based on financial and operation targets and did not include performance measures based on CTSR and EPS. These performance measures were introduced in FY20. 27 3.3 Remuneration Mix A significant portion of the MD and executive KMP remuneration is linked to short term and long term goals of the Group effectively aligning the staff performance and shareholder value. The relative weightings of the components of the remuneration is given below: Executive KMP – Remuneration Mix CEO 33% 33% 33% CFO GM Lending 63% 63% 19% 19% 19% 19% 0% 20% 40% 60% 80% 100% FR STI LTI Helping Drive Customer Satisfaction Remuneration Report (continued) 3.4 Remuneration Delivery The following table provides a timeline of when the remuneration is delivered. Component Year 1 Year 2 Year 3 Year 4 Fixed Remuneration Performance measured Cash payment Short Term Incentive Performance measured Cash payment Long Term Incentive Performance measured Issue of shares 28 Until FY19, LTI allocation vest on an annual basis based on financial and operational targets. The above table provides information on LTI plans for FY20 and onwards. 3.5 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. Key terms of these contracts are given below: Name Role Scott Baldwin Chief Executive Officer Siva Subramani Chief Financial Officer Type of employment Permanent Permanent Craig Harris General Manager – Lending Permanent Termination notice period 6 months 6 months 3 months Base salary including superannuation $550,000 $260,000 $330,000 4. Group Performance and Remuneration Outcomes 4.1 Group Financial Performance Revenue ($’000) NPAT ($’000) Closing share price Price increase/(decrease) $ Price increase/(decrease) % Earnings per share (cents) Dividend paid per share (cents) 30 June 2020 124,034 24,192 $1.55 ($0.57) (27%) 13.17 10.00 30 June 2019 (Restated) 136,382 28,358 $2.12 $0.17 9% 15.79 10.00 30 June 2018 30 June 2017 30 June 2016 121,876 32,028 $1.95 $0.67 52% 19.91 9.50 109,638 29,086 $1.28 $0.08 7% 18.81 5.65 96,661 20,134 $1.20 $0.06 5% 14.21 5.25 Money3 Corporation Limited / Annual Report 2020 4.2 Details of Remuneration The compensation of each member of the KMP of the Group is set out below: Short term employee benefits Post– employment benefits Long term benefits Salary & fees $ Bonus $ Super $ Long service leave $ Term- ination $ Share based payments $ Total $ 2020 NEDs Stuart Robertson 179,550 Symon Brewis-Weston Kate Robb Leath Nicholson NEDs Total Executives 101,791 84,018 40,333 405,692 – – – – – – 9,670 7,982 – 17,652 – – – – – Scott Baldwin 478,417 275,000 25,000 27,079 Siva Subramani 226,266 39,000 21,950 – Craig Harris 284,120 49,500 25,000 13,203 – – – – – – – – Rob Camilleri 50,597 – Executives Total 1,039,400 363,500 10,403 82,353 Total 1,445,092 363,500 100,005 – 40,282 40,282 82,315 82,315 82,315 37,083 216,633 – – 111,461 92,000 46,354 86,687 83,437 506,781 276,333 1,081,829 244,382 531,598 220,156 591,979 – 143,315 740,871 2,348,721 824,308 2,855,502 29 Helping Drive Customer Satisfaction Remuneration Report (continued) Short term employee benefits Post– employment benefits Long term benefits Salary & fees $ Bonus $ Super $ Long service leave $ Term- ination $ Share based payments $ Total $ 2019 NEDs Stuart Robertson 162,634 Leath Nicholson 121,000 Symon Brewis-Weston Kang Tan NEDs Total Executives 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 Craig Harris 273,471 128,250 30 Rob Camilleri Michael Rudd 210,959 165,228 62,100 – – 21,690 24,726 18,639 16,808 Executives Total 1,689,802 685,350 106,863 Total 2,048,989 685,350 114,041 – – 8,420 – 12,272 54,984 54,984 – – – – – – – – – – – 89,000 251,634 111,250 232,250 – – 63,693 19,038 200,250 566,615 430,667 1,404,515 262,674 146,864 150,156 58,953 577,674 474,142 585,023 350,651 350,675 544,983 – 1,399,989 3,936,988 – 1,600,239 4,503,603 The following table shows the Executive remuneration received in each of the years, the relevant percentages for fixed remuneration, STI and LTI: Scott Baldwin Siva Subramani Craig Harris Fixed Remuneration At risk –STI At risk –LTI 2020 49% 47% 55% 2019 39% 55% 52% 2020 25% 7% 8% 2019 30% 14% 22% 2020 26% 46% 37% 2019 31% 31% 26% 4.3 FY20 Fixed Remuneration Outcomes In FY20, the Fixed Remunerations of the Managing Director and CEO, the CFO and the General Manager – Lending was increased by 15.8%, 4% and 15.8% respectively, effective from 1 July 2019. All KMP including the NEDs took up to 20% pay cut between April and May 2020 in response to managing the impact of COVID-19 on the Group performance. Money3 Corporation Limited / Annual Report 2020 4.4 FY20 STI Outcomes The following table outlines the percentage of target STI achieved (and forfeited) and the total STI awarded, for each Executive KMP for 2020: Scott Baldwin Siva Subramani Craig Harris STI On Target Opportunity $ 550,000 78,000 99,000 Achieved % Forfeited % One-off bonus $ 0% 0% 0% 100% 100% 100% 275,000 39,000 49,500 It was noted by the Board and the Committee that the Group’s performance for the 9 months to March 2020 did exceed the budget for that period. Due to the impact of COVID-19 on the Group’s performance for the last 3 months of FY20 and the additional non-cash accounting provisions that the Group has taken, the Group did not achieve the minimum NPAT gateway criteria for the STIs to be awarded, although individual KMPs did achieve many of their KPIs for the period. During the COVID-19 pandemic, Executives and staff continued to perform under extenuating circumstances. Considering all of the above factors, the Board agreed to award a one-off bonus equivalent to 50% of the potential STI. 4.5 FY20 LTI Outcomes 4.5.1 New Grants in FY20 Name Craig Harris Equity Instrument Grant Date Quantity Granted Vesting Date Expiry Date 31 Rights 01–Jul–19 100,000 30–Jun–22 30–Sep–22 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. 4.5.2 Historical Grants under previous LTI Schemes to KMP Name Siva Subramani Siva Subramani Rob Camilleri* Craig Harris Equity Instrument Rights Rights Rights Restricted shares Grant Date Quantity Granted Vesting Date Expiry Date 03–Dec–18 328,178 02–Dec–21 31–Dec–21 01–Jan–18 01–Dec–17 150,000 31–Dec–21 31–Dec–22 194,871 30–Jun–21 30–Jun–22 01-Jul-16 484,373 30–Jun–20 30–Jun–21 * Rob Camilleri resigned on 17 September 2019 and paid $102,647 to exercise his unvested performance rights as approved by the Board. The LTI Grants were tested for achievement of vesting conditions/hurdles at each of the respective vesting dates. Based on satisfactory achievement of the hurdles, performance rights were converted and issued as ordinary shares to the Executive KMP. Helping Drive Customer Satisfaction Remuneration Report (continued) 4.5.3 Options over ordinary shares held by KMP Name Stuart Robertson Leath Nicholson Scott Baldwin Total Balance at 1 July 2019 Options granted Options exercised Balance on termination Balance at 30 June 2020 Vested and exercisable Unvested 600,000 750,000 4,400,000 5,750,000 – – – – (600,000) – – 750,000 – – – – – – (220,000) – 4,180,000 2,180,000 2,000,000 (820,000) 750,000 4,180,000 2,180,000 2,000,000 4.5.4 Rights held by KMP Name Craig Harris Siva Subramani Rob Camilleri* Total Balance at 1 July 2019 Rights granted Rights exercised Balance at 30 June 2020 Vested and exercisable – 100,000 – 100,000 440,678 146,154 – – (146,892) 293,786 (146,154) – 586,832 100,000 (293,046) 393,786 – – – – Unvested 100,000 293,786 – 393,786 32 * Rob Camilleri resigned on 17 September 2019 and paid $102,647 to exercise his unvested performance rights as approved by the Board. 5. Other information 5.1 KMP Equity Holdings (ordinary shares) Name Balance at 1 July 2019 On exercise of options On vesting of performance rights Net change other Balance on termination Balance as at 30 June 2020 Stuart Robertson 126,057 600,000 Leath Nicholson 93,727 Symon Brewis-Weston Kate Robb 15,387 – – – – Scott Baldwin 4,780,106 220,000 Craig Harris 2,831,333 Siva Subramani Rob Camilleri* 49,710 48,717 – – – – – – – – – 146,892 146,154 72,918 – 798,975 – 93,727 – 25,356 37,000 99,030 60,702 2,387 – – – – – 40,743 37,000 5,099,136 2,892,035 198,989 – 194,871 – Total 7,945,037 820,000 293,046 297,393 288,598 9,066,878 * Rob Camilleri resigned on 17 September 2019 and paid $102,647 to exercise his unvested performance rights as approved by the Board. Money3 Corporation Limited / Annual Report 2020 5.2 Loans to KMP There were no loans to KMP during the current financial year or as at 30 June 2020 (2019: Nil). 5.3 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 AASB 2 Share Based Payments over the vesting period. For the year ended 30 June 2020 financial year, the expense for KMP was $359,771 (2019: $893,590). Inputs into the determination of the fair value of options issued to KMP are set out below: Particulars Exercise price Grant date Expiry date Share price at grant date Expected volatility Expected dividend yield Risk free rate Employee Expires 20-Oct-19 $1.4961 Employee Expires 14-Apr-20 $1.6961 Director Expires 23–Nov–21 Director Expires 27–Nov–23 $1.5000 $2.5000 20-Oct-14 15-Apr-15 28-Nov-16 28-Nov-18 20-Oct-19 14-Apr-20 23-Nov-21 27-Nov-23 $1.2000 $1.5200 $1.6900 $1.6950 31% 3.50% 1.84% 31% 3.50% 1.84% 37% 3.33% 2.13% 30% 4.40% 2.29% 33 5.4 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 Grant date Options granted Exercise price Vesting date Exercised during the year Expiry date Value of unvested/ unexercised options Stuart Robertson Leath Nicholson Scott Baldwin Scott Baldwin 28-Nov-16 600,000 $1.5000 24-Nov-19 600,000 23-Nov-21 – 28-Nov-16 750,000 $1.5000 24-Nov-19 – 23-Nov-21 333,750 28-Nov-16 2,400,000 $1.5000 24-Nov-19 220,000 23-Nov-21 970,100 28-Nov-18 2,000,000 $2.5000 27-Nov-20 – 27-Nov-23 256,000 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. Remuneration Report (continued) 5.5 Other Transactions Related to KMP Money3 engaged with Nicholson Ryan Lawyers and Panorama Pty Limited to perform legal services and compliance services respectively. Both these entities are related to Leath Nicholson (NED until 15 November 2019). Legal expenses for the current period amounted to $66,279 (2019: $670,276) and compliance expenses for the current period amounted to $52,800 (2019: $158,400). Amounts payable at 30 June 2020 was nil (2019: $16,500). During the year Money3 also engaged with Moses & Pope Pty Ltd which is related to Symon Brewis‑Weston (NED) to perform project advisory in the current year amounting to $3,300 (2019: nil). Amounts payable at 30 June 2020 was nil (2019: nil). All transactions with related parties are at arm’s length on normal commercial terms and conditions and at market prices. End of Remuneration Report (Audited) 34 Helping Drive Customer SatisfactionMoney3 Corporation Limited / Annual Report 2020 Directors’ Report (continued) The auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 36 of the financial report. Signed in accordance with a resolution of the Directors. On behalf of the Directors Scott Baldwin Director Melbourne 17 August 2020 35 Helping Drive Customer Satisfaction 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 2020, 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. 36 This declaration is in respect of Money3 Corporation Limited and the entities it controlled during the period. James Mooney Director BDO Audit Pty Ltd Melbourne, 17 August 2020 BDO Audit Pty Ltd ABN 33 134 022 870 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 Audit Pty Ltd 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 2020 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 38 to 79 and the Remuneration Report in the Directors’ Report set out on pages 25 to 34, 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 2020 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 Company will be able to pay its debts as and when they become due and payable. 4. at the date of this declaration, there are reasonable grounds to believe that the entity and the consolidated entities identified in Note 22 to the financial statements will as a consolidated entity be able to meet any liabilities to which they are, or may become subject because of the deed of cross guarantee described in Note 27 to the financial statements. 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 2020. Signed in accordance with a resolution of the Directors pursuant to section 295(5) of the Corporations Act 2001. On behalf of the Directors 37 Scott Baldwin Director Melbourne 17 August 2020 Helping Drive Customer Satisfaction Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2020 Consolidated 2020 $’000 Consolidated 2019 $’000 (Restated) 124,034 91,703 Note 3 Revenue from continuing operations Expenses from operating activities: ®Bad debt expense (net of recoveries) ®Movement in allowance for impairment losses ®Loan origination and servicing costs ®Employee related expenses ®Professional fees ®Technology expenses ®Advertising expenses ®Loss on disposal of assets ®Finance costs, net ®Depreciation and amortisation ®Other expenses Total expenses Profit before income tax from continuing operations ®Income tax expense 38 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) Items that may be reclassified to profit or loss Exchange differences on translation of foreign operations Other comprehensive income/(loss) for the year, net of tax Total comprehensive income for the year Total comprehensive income for the year is attributable to: Owners of Money3 Corporation Limited 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 23,625 14,363 5,454 22,128 2,677 3,963 1,218 268 15,060 1,883 1,257 91,896 32,138 9,946 22,192 2,000 24,192 13,097 2,551 3,108 21,216 1,916 1,835 572 25 11,540 625 1,065 57,550 34,153 10,812 23,341 5,017 28,358 24,192 28,358 (252) (252) 19 19 23,940 28,377 23,940 28,377 21,940 2,000 23,940 23,360 5,017 28,377 12.08 11.97 13.17 13.05 13.00 12.81 15.79 15.56 The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the attached notes. Money3 Corporation Limited / Annual Report 2020 Consolidated Statement of Financial Position as at 30 June 2020 ASSETS Current assets  Cash and cash equivalents  Loans receivable  Receivable from sale of subsidiaries  Other assets Non‑current assets  Loans receivable  Property, plant & equipment  Right‑of‑use assets  Intangible assets  Deferred tax assets  Other assets Total assets LIABILITIES Current liabilities  Trade and other payables  Borrowings  Current tax payable  Lease Liabilities  Employee benefit obligations  Contingent consideration  Derivative financial instruments  Provisions Non‑current liabilities  Borrowings  Employee benefit obligations  Lease liabilities  Contingent consideration  Provisions Total liabilities Net assets EQUITY  Share capital  Reserves  Retained earnings Total equity Note 5 6 6 7(a) 7(b) 8 4(b) 9 12 7(b) 10 20(b) 11 12 10 7(b) 20(b) 11 13 14(a),(b) 15 Consolidated 2020 $’000 Consolidated 2019 $’000 (Restated) 44,474 145,835 – 2,551 192,860 210,587 1,845 1,913 22,849 11,243 264 248,701 441,561 7,387 1,336 4,920 749 1,510 1,740 31 116 17,789 168,422 273 1,533 3,019 673 173,920 191,709 249,852 169,472 3,570 76,810 36,308 129,440 7,725 435 173,908 187,307 1,853 – 23,572 6,502 180 219,414 393,322 7,165 3,437 2,058 – 1,412 1,783 – 285 16,140 132,570 248 – 4,360 150 137,328 153,468 239,854 163,722 4,560 71,572 249,852 239,854 39 The consolidated statement of financial position is to be read in conjunction with the attached notes. Consolidated Statement of Changes in Equity for the year ended 30 June 2020 Total equity at 1 July 2018 153,969 61,121 4,092 219,182 Note Share Capital $’000 Retained Earnings $’000 Reserves $’000 Total $’000 40 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:  Issue of shares   Share based payment expenses, net Transfer to share capital on vesting  Options exercised  Dividends paid Closing balance as at 30 June 2019 (Restated) Total equity at 1 July 2019 Transition adjustments on adoption of new accounting standards and interpretations • AASB 16 Leases • AASB Interpretation 23 Restated total equity at 1 July 2019 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:  Issue of shares Share based payment expenses, net Transfer from reserves to share capital on exercise  Dividends paid Closing balance as at 30 June 2020 – – – 28,358 – 28,358 1,920 778 793 1,646 4,616* – – – – – 19 19 – 28,358 19 28,377 1,920 2,380 3,158 (793) (1,138) – 508 (17,907) – (13,291) 163,722 163,722 71,572 71,572 4,560 4,560 239,854 239,854 1(d) 1(f) – – (161) (418) – – (161) (418) 163,722 70,993 4,560 239,275 – – – 2,153 – 1,887 1,710* 24,192 – – (252) 24,192 (252) 24,192 (252) 23,940 – – – – 2,153 1,149 1,149 (1,887) – (18,375) – (16,665) 169,472 76,810 3,570 249,852 * 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. Helping Drive Customer SatisfactionMoney3 Corporation Limited / Annual Report 2020 Consolidated Statement of Cash Flows for the year ended 30 June 2020 Cash flows from operating activities  Interest, fees and charges from customers  Other income  Payments to suppliers and employees (GST Inclusive)  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 Consolidated 2020 $’000 Consolidated 2019 $’000 Note 127,163 138,328 1,891 208 (36,418) (51,336) 226 (14,919) (12,260) 459 (12,227) (14,231) 65,683 61,201 (82,721) (89,163) Net cash inflows/(outflows) from operating activities 18 (17,038) (27,962) Cash flows from investing activities  Payment for property, plant and equipment (771) (294)  Proceeds from sale of investments  (net of cash equivalents on hand)  Payments for purchase of business Net cash inflows/(outflows) from investing activities Cash flows from financing activities 20(b)  Proceeds from share issue  Proceeds from borrowings  Repayment of borrowings  Repayment of lease liabilities  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 41 9,725 (1,463) 7,491 1,645 45,863 (11,546) (649) (16,665) 18,648 9,101 35,376 33,995 (12,701) 21,000 1,245 8,076 – – (13,291) (3,970) (10,932) 46,308 Effects of exchange rate changes on cash and cash equivalents (3) – Cash and cash equivalents at end of the year 5 44,474 35,376 The consolidated statement of cash flows is to be read in conjunction with the attached notes. Notes to the Consolidated Financial Statements for the year ended 30 June 2020 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). 42 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 2020 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. Inter‑company 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) New standards adopted by the Group The Group had to change its accounting policies and made a modified retrospective adjustment as a result of adopting AASB 16 Leases. The impact of the adoption of the leasing standard and the new accounting policies are disclosed in Note 1(d). (d) Changes in accounting policies AASB 16 Leases The Group has adopted AASB 16 from 1 July 2019 but has not restated comparatives for year ended 30 June 2019 reporting period, as permitted under the specific transitional provisions in Helping Drive Customer SatisfactionMoney3 Corporation Limited / Annual Report 2020 the standard. The reclassifications and the adjustments arising from the new leasing rules are recognised in the opening balance sheet on 1 July 2019. On adoption of AASB 16, the Group recognised lease liabilities in relation to leases which had previously been classified as ‘operating leases’ under the principles of AASB 117 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of 1 July 2019. Lease liabilities include the net present value of the following lease payments: • fixed payments (including in‑substance fixed payments), less any lease incentives receivable, and • variable lease payments that are based on an index or a rate. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities on 1 July 2019 was 6.3%. Operating lease commitments disclosed as at 30 June 2019 Discounted using the lessee’s incremental borrowing rate of at the date of initial application (less): short‑term leases recognised on a straight–line basis as expense Lease liabilities recognised as at 1 July 2019 of which Current lease liabilities Non‑current lease liabilities Lease liabilities Consolidated 1 July 2019 $’000 3,202 2,970 (39) 2,931 657 2,274 2,931 43 The associated right‑of‑use assets for property leases were measured on a retrospective basis as if the new rules had always been applied. The recognised right‑of‑use assets relates to properties and the carrying amount at 1 July 2019 is $2.7m. The net impact on retained earnings as at 1 July 2019 was a decrease of $0.16m. The Group leases various offices. Rental contracts are typically made for fixed periods of 3 to 5 years but may have extension options. Lease terms are negotiated on an individual basis and contain different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes. Until the financial year ended 30 June 2019, leases of property, plant and equipment were classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) were charged to profit or loss on a straight‑line basis over the period of the lease. From 1 July 2019, leases are recognised as a right‑of‑use asset and a corresponding liability at the date at which the leased asset is available for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right‑of‑use asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight‑line basis. Notes to the Consolidated Financial Statements (continued) Right‑of‑use assets are measured at cost comprising the following: • the amount of the initial measurement of lease liability; • any lease payments made at or before the commencement date less any lease incentives received; • any initial direct costs, and • restoration costs. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions. Payments associated with short‑term leases are recognised on a straight‑line basis as an expense in profit or loss. Short‑term leases are leases with a lease term of 12 months or less. In applying AASB 16 for the first time, the Group has used the following practical expedients permitted by the standard: • accounting for operating leases with a remaining lease term of less than 12 months as at 1 July 2019 as short‑term leases; • reliance on previous assessments on whether leases are onerous; and • the use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease. 44 The Group has also elected not to reassess whether a contract is or contains a lease at the date of initial application. Instead, for contracts entered into before the transition date the Group relied on its assessment made applying AASB 117 and Interpretation 4 Determining whether an Arrangement contains a Lease. The Group did not have any leases that were previously classified as finance leases. There were no onerous lease contracts that would have required an adjustment to the right‑of‑use assets at the date of initial application. In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). Potential future cash outflows of $3.2m have not been included in the lease liability because it is not reasonably certain that the leases will be extended (or not terminated). The assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this assessment and that is within the control of the lessee. Loans receivable In FY20, the Group undertook a detailed review of the loans receivable management process in its New Zealand operations. This resulted in changes to the commercial practices as well as changes to the accounting policy around recognition of credit risk sharing arrangements with dealers. The New Zealand operations have profit and risk share arrangements with distributors (car dealers), wherein certain types of loans are originated at a discount which is for the purpose of managing credit risk. Previously, these discounts were recognised in the month of loan origination and the loans were recognised at their gross value with the shared risk portion recognised as part of the allowance for impairment losses. Under the new policy, the discount is recognised as a deferred revenue against the loan book. The increase in the deferred revenue and reduction in the loan receivable has resulted in a corresponding decrease in the allowance for impairment losses. The loans receivable balance includes a reclassification of $3.7m from impairment provision into deferred revenue. This has not impact on the net loans receivable balance. Helping Drive Customer SatisfactionMoney3 Corporation Limited / Annual Report 2020 Changes to the accounting policies have been applied retrospectively and comparative periods have been restated. The impact of the restatement of the prior period balances is given below. The effect of the changes on the comparative period for the Statement of Financial Position and the Statement of Profit or Loss and Other Comprehensive Income (including earnings per share) is given below. Statement of Financial Position  Loans receivable, net  Current tax payable Net assets  Retained Earnings Total equity Consolidated 30 June 2019 $’000 Increase/ (decrease) $’000 317,927 2,388 240,704 72,422 240,704 (1,180) (330) (850) (850) (850) Consolidated 30 June 2019 $’000 Increase/ (decrease) $’000 Consolidated 30 June 2019 $’000 (Restated) 316,747 2,058 239,854 71,572 239,854 Consolidated 30 June 2019 $’000 (Restated) Statement of profit or loss and other comprehensive income  Bad debts expense (net of recoveries)  Income tax expense Profit after income tax from continuing operations 11,917 11,142 24,193 1,180 (330) (850) 13,097 10,812 23,343 45 Basic earnings per share  From continuing operations  From discontinuing operations Total basic earnings per share Diluted earnings per share  From continuing operations  From discontinuing operations Total basic earnings per share Cents Cents Cents 13.48 2.79 16.27 13.29 2.75 16.04 (0.48) – (0.48) (0.48) – (0.48) 13.00 2.79 15.79 12.81 2.75 15.56 (e) Changes in accounting estimates In FY20, management undertook a review of the internal credit risk management process in the New Zealand operations. As a result changes were made to the timing of recognition of bad debts and a rebuttable presumption of loan default was adjusted to be at 120 days arrears. Additionally, management undertook a detailed review of the recoverability of credit impaired portfolio of loans in the New Zealand operations specifically in the light of the COVID‑19 situation. Due to the inherent uncertainties arising from COVID‑19, management estimates the probability of loan recoverability to be very low and has fully written off the portfolio in the current financial year amounting to $2.8m (pre‑tax). This change in accounting estimate does not have any impact on future periods. Notes to the Consolidated Financial Statements (continued) (f) 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 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. An adjustment has been recorded upon adoption of AASB Interpretation 23 Uncertainty over Income Tax Treatments. The Group has identified a tax liability relating to a closed tax period. There is uncertainty as to whether the Australian Tax Office (ATO) will elect to reopen the closed period, and as to the amount of liability, interest and penalties if they elect to do so. Having evaluated the probabilities, an adjustment of $0.4m has been recorded reducing opening retained earnings at 1 July 2019. 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 Revenue Loans receivable Intangible assets 46 Note 20(b) Contingent consideration (g) Notes to the financial statements The notes to the financial statements have been structured to make the financial report 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 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 other accounting policy information are disclosed in Note 31. (h) Other information The classification of current and non‑current loans receivable is based on the amount of the principal balance that is expected to be collected within 12 months and the beyond 12 months from the reporting date respectively. Following a review of the underlying calculations as presented in the financial report at 30 June 2019, $38.6m has been reclassified from current to non‑current loans receivable at 30 June 2019. This change has no impact on the revenue, profit, total assets, total liabilities, net assets and equity of the comparative period. Any subsidies received by the Government during the year have been disclosed net of the relevant expense. (i) 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. Helping Drive Customer SatisfactionMoney3 Corporation Limited / Annual Report 2020 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. Australia This segment provides lending facilities in Australia generally based on the provision of an underlying asset as security, generally referred through a broker. New Zealand This segment provides lending facilities in New Zealand 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 in May 2019, 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 in May 2019, 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. Corporate expenditure is regularly reviewed throughout the year with a view to better align costs to business units. 47 Consolidated – 2020 Segment revenue EBITDA/Segment result Depreciation and amortisation Net finance costs Profit before tax Income tax expense Profit after tax Loans receivable Australia $’000 New Zealand $’000 102,774 48,500 (646) (11,358) 36,496 21,260 6,397 (405) (3,702) 2,290 Branch & Online (Discontinued) $’000 – 2,000 – – Unallocated $’000 Total $’000 – 124,034 (5,816) (832) 51,081 (1,883) – (15,060) 2,000 (6,648) 34,138 (9,946) 24,192 316,507 70,743 – 387,250 Notes to the Consolidated Financial Statements (continued) Consolidated – 2019 Segment revenue EBITDA/Segment result Depreciation and amortisation Net finance costs New Zealand $’000 (Restated) 6,780 1,578 (68) (1,216) Australia $’000 84,923 49,858 (253) – Branch (Discon‑ tinued) $’000 33,528 13,002 Online (Discon‑ tinued) $’000 11,151 3,217 Unallocated $’000 Total $’000 (Restated) – 136,382 (5,118) 62,537 (76) – (643) (304) (1,344) – (10,324) (11,540) Profit before tax 49,605 294 12,926 2,574 (15,746) 49,653 Income tax expense Loss on sale of subsidiaries (post tax) Profit after tax – – – – Loans receivable 279,202 54,010 – – – – – – – – – (15,782) (5,513) 28,358 333,212 3. Revenue 48 Interest, fees and charges Other Total revenue Key Estimate Consolidated 2020 $’000 Consolidated 2019 $’000 122,134 1,900 124,034 91,457 246 91,703 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 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. Helping Drive Customer SatisfactionMoney3 Corporation Limited / Annual Report 2020 4 (a). Income Tax Income tax expense Current tax Prior year adjustments Total current tax expense Deferred tax expense Increase / (decrease) in deferred tax assets Increase / (decrease) in deferred tax liabilities Deferred tax expenses Income tax expense 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 Amortisation of intangibles Other (non‑assessable income) / non‑deductible expenses Prior year adjustments Difference in overseas tax rates Income tax expense 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 Contingent consideration, fair value effect Acquisition costs capitalised Intangibles Net balance disclosed as deferred tax assets 49 Consolidated 2020 $’000 Consolidated 2019 $’000 (Restated) 14,606 18,067 51 (69) 14,657 17,998 (4,377) (334) (4,711) 9,946 9,946 – 9,946 32,138 2,000 34,138 10,241 346 (307) (370) 51 (15) (2,238) 22 (2,216) 15,782 10,812 4,970 15,782 34,153 15,500 49,653 14,896 713 – 231 (69) 11 9,946 15,782 Consolidated 2020 $’000 Consolidated 2019 $’000 1,179 10,509 1,282 – 169 (482) (1,414) 11,243 1,218 6,591 906 48 – (539) (1,722) 6,502 Notes to the Consolidated Financial Statements (continued) 4 (c). Tax Losses Unused tax losses for which no deferred tax asset has been recognised Potential tax benefit @ 30% Consolidated 2020 $’000 Consolidated 2019 $’000 (Restated) 6,263 1,879 6,263 1,879 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 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 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. 50 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. 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 inter‑company 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 at bank and on call* Term deposit* Total cash and cash equivalents Consolidated 2020 $’000 Consolidated 2019 $’000 44,474 – 44,474 16,308 20,000 36,308 * The deposits on call (11am) have an effective interest rate of 0.25% (2019: 1.4%). Interest on term deposit (2019: 1.5%). Helping Drive Customer SatisfactionMoney3 Corporation Limited / Annual Report 2020 Reconciliation to cash flow statements Cash and cash equivalents Bank overdrafts Cash and cash equivalents as per cash flows Recognition and Measurement Consolidated 2020 $’000 Consolidated 2019 $’000 44,474 36,308 – (932) 44,474 35,376 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 Net loans receivable Current loans receivable Non‑current loans receivable Net loans receivable Consolidated 2020 $’000 Consolidated 2019 $’000 (Restated) 387,250 333,212 (30,828) (16,465) 356,422 145,835 210,587 356,422 316,747 129,440 187,307 316,747 51 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. Gross written loans Deferred revenue Loans receivable Key Estimate Consolidated 2020 $’000 Consolidated 2019 $’000 (Restated) 433,857 372,821 (46,607) (39,609) 387,250 333,212 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: Notes to the Consolidated Financial Statements (continued) 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. 52 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 expected life from the reporting date. 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. Helping Drive Customer SatisfactionMoney3 Corporation Limited / Annual Report 2020 7 (a). Property, Plant and Equipment Year ended 30 June 2020 Gross carrying amount Balance at 1 July 2019 Exchange differences Additions Disposals Balance at 30 June 2020 Accumulated depreciation Balance at 1 July 2019 Exchange differences Depreciation expense Disposals Balance at 30 June 2020 Net carrying amount at 30 June 2020 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 Recognition and Measurement Property, Plant and Equipment at Cost Motor vehicles $’000 Leasehold Improvements $’000 Furniture & Equipment $’000 Total $’000 626 3,855 4,540 – – (626) (26) 788 (51) (28) 788 (677) – 4,566 4,623 2,310 2,687 Motor vehicles $’000 Leasehold Improvements $’000 Furniture & Equipment $’000 59 (2) – – 57 33 (1) 3 – 35 22 344 – 26 (370) – – 62 28 – (31) 59 55 3 3 2,981 – – (2,355) 626 1,901 – 133 (11) 484 (40) 2,743 1,823 3,442 1,103 393 (1,083) 3,855 (12) 513 (410) 2,778 1,845 Total $’000 6,485 1,131 393 (3,469) 4,540 53 2,467 4,423 321 319 324 455 (28) (1,690) (797) (2,515) 33 26 344 282 2,310 1,545 2,687 1,853 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. Notes to the Consolidated Financial Statements (continued) 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 7 (b). Leases This note provides information for leases where the group is a lessee. (i) Amounts recognised in the statement of financial position: Right‑of‑use assets Buildings 54 Lease liabilities Current Non‑current Consolidated 2020 $’000 Consolidated 2019 $’000 1,913 1,913 749 1,533 2,282 – – – – – For adjustments recognised on adoption of AASB 16 on 1 July 2019, please refer to Note 1(d). There were no additions to the right‑of‑use assets during the 2020 financial year. (ii) Amounts recognised in the statement of profit or loss. The statement of profit or loss shows the following amounts relating to leases: Depreciation charge of right‑of‑use assets – Buildings Interest expense (included in finance cost) Consolidated 2020 $’000 Consolidated 2019 $’000 647 164 811 – – – The total cash outflow for leases in for the financial year ended 30 June 2020 was $0.8m. Helping Drive Customer SatisfactionMoney3 Corporation Limited / Annual Report 2020 8. Intangible Assets Year ended 30 June 2020 Cost Accumulated amortisation Net book amount Balance at 1 July 2019 Amortisation charge Balance at 30 June 2020 Year ended 30 June 2019 Cost Accumulated amortisation Net book amount Balance at 1 July 2018 Assets acquired Amortisation charge Disposals Balance at 30 June 2019 Dealer relationships $’000 Internally generated software $’000 Customer lists $’000 Goodwill $’000 18,136 – 18,136 18,136 – Brand $’000 776 – 776 776 – 3,988 973 (785) 3,203 3,757 (554) (239) 734 903 (169) 18,136 776 3,203 734 Dealer relationships $’000 Internally generated software $’000 Customer lists $’000 Goodwill $’000 18,136 – 18,136 18,080 7,841 – (7,785) Brand $’000 776 – 776 – 776 – – 3,988 973 (231) 3,757 – 3,988 (231) – (70) 903 – 973 (70) – 18,136 776 3,757 903 Total $’000 23,873 (1,024) 22,849 23,572 (723) 22,849 Total $’000 23,873 (301) 23,572 18,722 13,578 (943) (7,785) 23,572 55 – – – – – – – – – 642 – (642) – – 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 and Brand are considered to be indefinite life intangible assets and are not amortised. Instead, they are 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. 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, all definite life intangible assets are carried at cost less accumulated amortisation and impairment losses. Notes to the Consolidated Financial Statements (continued) The Group amortises intangible assets with a finite useful life using the straight‑line method over the following periods: Customer lists Dealer relationships 5 to 8 years 7 to 10 years Internally generated software 5 to 8 years Cash generating units Goodwill and Brand are allocated to the Cash Generating Units (CGUs) as given below for impairment testing purposes. Australia New Zealand Total Goodwill and Brand 2020 $’000 10,295 8,617 18,912 2019 $’000 10,295 8,617 18,912 Impairment testing and key assumptions Goodwill and Brand are tested annually as to whether it has suffered impairment. The recoverable amounts of CGUs 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. 56 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 CGUs. The recoverable amount of Australia and New Zealand CGUs 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: 2021 Budget revenue growth 2021 Budget expense growth Terminal value > 5 years Revenue growth rate > 1 year Expense growth rate > 1 year Pre–tax discount rate applied to cash flow Australia New Zealand 9.3% 9.6% 2.0% 8.0% 2.5% 15.3% 44.0% 29.7% 2.0% 15.0% 4.0% 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 (2019: $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 CGUs. Helping Drive Customer SatisfactionMoney3 Corporation Limited / Annual Report 2020 9. Trade and Other Payables Current liabilities (Unsecured): Trade payables Accrued expenses Taxes payable Unearned revenue Total trade and other payables Recognition and Measurement Consolidated 2020 $’000 Consolidated 2019 $’000 1,723 5,305 85 274 7,387 1,482 5,274 197 212 7,165 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 Employee leave obligations – Current Employee leave obligations – Non‑current Total employee benefit obligations Recognition and Measurement Consolidated 2020 $’000 Consolidated 2019 $’000 1,510 273 1,783 1,412 248 1,660 57 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. Other Employee Obligations – Defined Contribution Superannuation Benefits Eligible employees of the Group receive defined contribution superannuation entitlements, for which the Group pays the fixed contribution to the employee’s superannuation fund of choice or the New Zealand Inland Revenue (for NZ operations). 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 $1,291,455 (2019: $1,820,334) and is included in employee expenses. Notes to the Consolidated Financial Statements (continued) 11. Provisions Provisions – Current Provisions – Non‑current Total provisions Movements in Provisions Carrying amount at the start of the year Acquired during the year Exchange differences Additional provision charged Amounts used during the year Carrying amount at the end of the year Recognition and Measurement Consolidated 2020 $’000 Consolidated 2019 $’000 116 673 789 285 150 435 Consolidated 2020 $’000 Consolidated 2019 $’000 435 – (6) 1,188 (828) 789 464 349 – 792 (1,170) 435 58 Provisions relate to (i) profit share arrangements with dealers in New Zealand operations ($0.7m) which are payable at the end of the loan term based on performance of the underlying loans; and (ii) make‑good provision on leased premises ($0.1m) in Australia operations payable on termination of the lease. There is no movement in make good provisions during the year. 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, its 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 and other comprehensive income. 12. Borrowings Current Overdraft facility Finance facility Non‑current Finance facility (net of unamortised costs) Total borrowings Consolidated 2020 $’000 Consolidated 2019 $’000 – 1,336 1,336 932 2,505 3,437 168,422 168,422 169,758 132,570 132,570 136,007 Helping Drive Customer SatisfactionMoney3 Corporation Limited / Annual Report 2020 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 has been extended until 15 December 2021 with an ability to further extend by one more year until 15 December 2022. 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. The facility is subject to a 2% line fee on the unutilised portion. In March 2019, the Go Car Finance entered into a variable rate $35.8m funding facility and $1.0m overdraft facility. The facility matures in April 2022 and BNZ has security over the property of the entities within the Go Car Finance Group. The facility is subject to a 1% commitment fee. Financing Facilities Available Finance facility Used at balance date Unused at balance date Assets Pledged as Security Consolidated 2020 $’000 Consolidated 2019 $’000 194,452 194,466 (173,518) (138,229) 20,934 56,237 59 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 Compliance with Loan Covenants Consolidated 2020 $’000 Consolidated 2019 $’000 (Restated) 44,474 145,835 190,309 36,308 129,440 165,748 210,587 187,307 1,845 22,849 235,281 1,853 23,572 212,732 425,590 378,480 Money3 Corporation Limited has complied with the financial covenants of its borrowing facilities during the 2020 and 2019 reporting periods. Notes to the Consolidated Financial Statements (continued) 13. Share Capital Number of Shares 2020 Number of Shares 2019 Consolidated 2020 $’000 Consolidated 2019 $’000 Fully paid ordinary shares 185,285,095 182,124,820 169,472 163,722 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. Movement in Shares on Issue Consolidated 2020 Consolidated 2019 Number of ordinary shares ’000 Number of ordinary shares ’000 Value $’000 Value $’000 Balance at the beginning of the financial year 182,125 163,722 176,265 153,969 Issued during the year: New issue on acquisition of Go Car Finance Issue of shares – exercise of options Issue of shares – employees share scheme Issue of shares – DRP 204 1,398 766 792 485 2,285 1,270 1,710 1,055 1,658 791 2,356 1,920 1,646 1,571 4,616 60 Balance at end of the financial year 185,285 169,472 182,125 163,722 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. 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. Helping Drive Customer SatisfactionMoney3 Corporation Limited / Annual Report 2020 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 Balance at the end of the financial year Consolidated 2020 $’000 Consolidated 2019 $’000 4,541 1,149 (1,887) 3,803 4,092 2,380 (1,931) 4,541 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 2020 $’000 Consolidated 2019 $’000 19 (252) (233) – 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. 61 15. Retained Earnings Balance at the beginning of the financial year Transition adjustments on adoption of new accounting standards and interpretations Net profit for the year Dividends paid Balance at the end of the financial year Consolidated 2020 $’000 Consolidated 2019 $’000 (Restated) 71,572 61,121 (579) – 24,192 28,358 (18,375) (17,907) 76,810 71,572 Notes to the Consolidated Financial Statements (continued) 16. Dividends Recognised amounts Fully paid ordinary shares Final dividend for the year ended 30 June 2019 of 5.00 cents (2018: 5.00 cents), fully franked at 30% tax rate Interim dividend for the year ended 30 June 2020 of 5.00 cents (2019: 5.00 cents), fully franked at 30% tax rate Total Unrecognised amounts 2020 $’000 2019 $’000 9,122 8,895 9,253 18,375 9,012 17,907 Final dividend of 3.00 cents (2019: 5.00 cents) fully franked at 30% tax rate 5,559 9,106 On 17 August 2020, the Directors declared a fully franked final dividend of 3.00 cents per share to the holders of fully paid ordinary shares in respect of the financial year ended 30 June 2020, to be paid to shareholders on 9 October 2020. The dividend will be paid to shareholders based on the Register of Members on 3 September 2020. This dividend has not been included as a liability in these financial statements. The total estimated dividend to be paid is $5.6m. The Group has $50.4m of franking credits at 30 June 2020 (2019: $47.4m). 17. Earnings Per Share 62 (a) Basic earnings per share attributable to the ordinary equity holders of the Group From continuing operations From discontinued operations Total basic earnings per share (b) Diluted earnings per share attributable to the ordinary equity holders of the Group From continuing operations From discontinued operations Total diluted earnings per share (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 Consolidated 2020 Cents Consolidated 2019 Cents (Restated) 12.08 1.09 13.17 11.97 1.08 13.05 13.00 2.79 15.79 12.81 2.75 15.56 Consolidated 2020 $’000 Consolidated 2019 $’000 22,192 2,000 24,192 23,341 5,017 28,358 Helping Drive Customer SatisfactionMoney3 Corporation Limited / Annual Report 2020 (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 Weighted average number of ordinary shares and potential ordinary shares used in calculation of diluted earnings per share 2020 Number 2019 Number 183,649,537 179,533,057 2,629,000 1,671,304 185,320,841 182,162,057 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. 18. Cash flow information 18 (a) Reconciliation of Operating Profit after Income Tax to Net Cash Flows used in Operating Activities 63 Net profit after tax Non‑cash items  Depreciation and amortisation expense  Loss on sale of property, plant and equipment  Allowance for impairment losses  Amortisation of borrowing costs  Net exchange differences  Net fair value adjustments  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  Lease liabilities  Contingent consideration  Deferred tax assets  Increase / (decrease) in liabilities  Trade and other payables  Current tax payable  Provisions and employee entitlements Net cash inflows / (outflows) from operating activities Consolidated 2020 $’000 Consolidated 2019 $’000 (Restated) 24,192 28,358 1,883 268 14,362 367 (159) 564 – 1,149 (54,393) 28 (2,128) (649) (486) (4,681) 465 2,367 (187) (17,038) 1,342 32 3,265 885 35 – 5,310 2,419 (63,296) (67) 100 – – (1,318) (7,340) 2,799 (486) (27,962) Notes to the Consolidated Financial Statements (continued) 18 (b) Non‑cash investing and financing activities Acquisition of Right‑of‑Use‑Assets (on adoption of AASB 16) Issue of shares under Employee Share plan Issue of shares – partial business combination settlement Consolidated 2020 $’000 Consolidated 2019 $’000 (Restated) 2,931 1,887 485 5,303 – 1,931 1,920 3,851 18 (c) Net debt reconciliation This section sets out an analysis of net debt and the movements in net debt for each of the periods presented. Cash and cash equivalents Borrowings & lease liabilities – current Borrowings & lease liabilities – non‑current Net debt 64 Cash and cash equivalents Borrowings & lease liabilities – fixed interest rates Borrowings – variable interest rates Net debt Net debt at 1 July 2018 Acquisition of Go Car Finance Cash flows Borrowings $’000 (100,000) (30,153) (8,076) Net debt as at 30 June 2019 (138,229) Consolidated 2020 $’000 Consolidated 2019 $’000 (Restated) 44,474 (2,085) 36,308 (3,437) (173,715) (134,792) (131,326) (101,921) 44,474 (10,763) 36,308 (10,171) (165,037) (128,058) (131,326) (101,921) Liabilities from financing activities Leases $’000 Subtotal $’000 Cash and cash equivalents $’000 (100,000) 46,308 (30,153) 932 Total $’000 (53,692) (29,221) (8,076) (10,932) (19,008) (138,229) 36,308 (101,921) – – – – Recognised on adoption of AASB 16 Exchange differences Cash flows Net debt as at 30 June 2020 – (138,229) – (35,289) (173,518) (2,931) (2,931) – 649 (2,931) – (2,931) (141,160) 36,308 (104,852) – (3) (3) (34,640) 8,169 (26,471) (2,282) (175,800) 44,474 (131,326) Helping Drive Customer SatisfactionMoney3 Corporation Limited / Annual Report 2020 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(b) 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’s overall strategy remains unchanged from 2019. 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. 65 Notes to the Consolidated Financial Statements (continued) 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. Financial assets Debt (long term and short‑term borrowings) Cash and cash equivalents Net debt Total equity Debt to equity ratio (a) Market Risk (i) Price risk Notes 12 5 Consolidated 2020 $’000 Consolidated 2019 $’000 (Restated) 169,758 136,007 (44,474) (36,308) 125,284 249,852 50.1% 99,699 239,854 41.6% The Group does not hold financial assets or liabilities that are subject to price risk. 66 (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. Interest rates – increase by 25 bps (100 bps) Interest rates – decrease by 100 bps (50 bps) (iii) Foreign exchange risk Impact on post tax profit Impact on equity 2020 $’000 2019 $’000 2020 $’000 2019 $’000 (226) (174) (226) (174) 905 698 905 698 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 are be included in the sensitivity analysis for foreign currency risks. NZD/AUD exchange rate increase by 5% NZD/AUD exchange rate decrease by 5% Impact on post tax profit Impact on equity 2020 $’000 (538) 538 2019 $’000 (17) 17 2020 $’000 (538) 538 2019 $’000 (17) 17 Helping Drive Customer SatisfactionMoney3 Corporation Limited / Annual Report 2020 (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 2020 $’000 Consolidated 2019 $’000 (Restated) Lifetime ECL – not credit‑ impaired – – 61,971 8,827 – Lifetime ECL – credit impaired Total Total – – – – 3,311 179,062 123,084 71,830 9,963 3,311 159,013 86,492 75,370 7,507 4,830 67 Loans receivable 12‑month ECL Strong Good Watch list Sub‑standard Credit impaired Gross carrying amount, net of deferred revenue 179,062 123,084 9,859 1,136 – 313,141 70,798 3,311 387,250 333,212 Allowance for impairment (14,921) (14,545) (1,362) (30,828) (16,465) Carrying amount 298,220 56,253 1,949 356,422 316,747 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 $44.5m at 30 June 2020 (2019: $36.3m). The cash and cash equivalents are held with financial institutions that are rated A to AA–, based on Fitch ratings. (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 Notes to the Consolidated Financial Statements (continued) 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 homogeneous 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 68 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 include 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. COVID‑19 had a significant impact on the adjustments arising from forward looking information. The Group took an additional provision of $10.1m pre‑tax to the expected credit losses rate when considering the future economic outlook as a result of COVID‑19. Helping Drive Customer SatisfactionMoney3 Corporation Limited / Annual Report 2020 The following table shows the reconciliation from the opening to the closing balance of the loss allowance. Loans receivable 12‑month ECL Balance at 1 July 2019 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 2020 4,652 – 8,456 (2,558) (8) 1,378 (1,436) 4,437 14,921 Consolidated 2020 $’000 Lifetime ECL – credit impaired Total 690 16,465 – – – 8 (140) (3,146) 3,950 1,362 – 8,456 – – – (6,119) 12,026 30,828 Lifetime ECL – not credit‑ impaired 11,123 – – 2,558 – (1,238) (1,537) 3,639 14,545 For all trade receivables and contract assets, the Group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance. 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. 69 (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. Notes to the Consolidated Financial Statements (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. 2019 Financial Liabilities: 70 Borrowings* Trade and other payables Contingent consideration 2020 Financial Liabilities: Borrowings* Trade and other payables Lease liabilities Contingent consideration Total financial liabilities 24,522 188,587 < 1 year $’000 1‑5 years $’000 > 5 years $’000 Total Contractual cash flows $’000 Consolidated Carrying amount $’000 14,429 183,218 7,387 837 1,869 – 1,632 3,737 – – – – – 197,647 173,518 7,387 2,469 5,606 7,387 2,282 4,759 213,109 187,946 < 1 year $’000 1‑5 years $’000 > 5 years $’000 Total Contractual cash flows $’000 Consolidated Carrying amount $’000 11,840 7,165 1,900 147,160 – 5,700 – – – – 159,000 138,229 7,165 7,600 7,165 6,143 173,765 151,537 Total financial liabilities 20,905 152,860 * Gross of borrowing costs. 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. Helping Drive Customer SatisfactionMoney3 Corporation Limited / Annual Report 2020 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. There has been no adjustment to the changes to the fair values of the assets and liabilities acquired upon completion of the provisional accounting. (b) 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 first earnout payment of $1.9m was made on 7 April 2020 settled partly through cash and equity. The fair value of the contingent consideration at 30 June 2020 is $4.8m (2019: $6.1m) and was estimated by calculating the present value of the future expected cash flows using a pre‑tax discount rate of 15.3% and probability adjusted three year forecast profit before tax between $4.2m and $6.5m. 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. 71 (b) Financial performance and cash flow information The financial performance and cash flow information presented are for the year ended 30 June 2020 and the comparative period is from 1 July 2018 to 20 May 2019. 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 Cash flow Net cash inflow / (outflow) from operating activities Net cash inflow / (outflow) from investing activities (includes – incl cash inflows of $2m ($35.5m, 2019) from the sale of the subsidiary $9.7m (2019: $35.5m) Net increase in cash generated by the subsidiaries 2020 $’000 – – – – – 2,000 2,000 2020 $’000 – 2019 $’000 44,679 (29,179) 15,500 (4,970) 10,530 (5,513) 5,017 2019 $’000 12,753 9,725 9,725 35,395 48,148 Notes to the Consolidated Financial Statements (continued) (c) Details of the sale of subsidiaries Sale consideration, net of impairment provision Carrying amount of net assets sold (including allocated goodwill) Selling costs Reversal of impairment provision Profit / (Loss) on sale before income tax Income tax (expense)/benefit on gain Gain / (Loss) on sale after income tax (d) Details of net assets sold Details of net assets sold as at 20 May 2019 are given below: Cash and cash equivalent Loans receivable, net Property, plant and equipment, other assets (including intangibles) Employee liabilities 72 Carrying amount of net assets sold (including allocated goodwill) 2020 $’000 – – – 2,000 2,000 – 2019 $’000 43,225 (48,301) (437) – (5,513) – 2,000 (5,513) 20 May 2019 $’000 1,505 36,127 11,627 (958) 48,301 Helping Drive Customer SatisfactionMoney3 Corporation Limited / Annual Report 2020 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: Country of incorporation Equity held 2020 % 2019 % Acquisition date 01‑Nov‑16 16‑Apr‑07 13‑Mar‑08 03‑May‑13 01‑Jul‑06 01‑Jul‑06 01‑Jul‑06 01‑Jul‑06 01‑Jul‑06 01‑Jul‑06 01‑Jul‑06 01‑Jul‑06 01‑Jul‑06 Investment 2020 $’000 2019 $’000 –* –* –* –* 3,100 3,037 2,970 484 1,665 1,688 484 2,898 1,742 –* –* –* –* 3,100 3,037 2,970 484 1,665 1,688 484 2,898 1,742 12‑Mar‑19 15,494 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 –* –* –* –* –* –* –* –* –* –* –* –* –* –* –* –* 33,562 33,562 73 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Name Money3 Loans Pty Ltd Money3 Franchising Pty Ltd M3 Group Services Pty Ltd^ Australian Car Leasing Pty Ltd Antein Pty Ltd Bellavita Pty Ltd Hallowed Holdings Pty Ltd Debt Resolutions Pty Ltd Nexia Pty Ltd Pechino Pty Ltd Happy.com.au Pty Ltd Tannaster Pty Ltd Tristace Pty Ltd Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Finance Investment Group Limited Go Car Finance Limited 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 Total * The investments in these entities is less than $1,000. ^ Formerly Money3 Wodonga Pty Ltd. 23. Commitments There are no commitments as at 30 June 2020 (2019: $3.2m). Non‑cancellable operating leases previously disclosed as commitments are now disclosed under Note 7(b) Leases. 24. Contingent Assets and Liabilities There are no contingent assets or liabilities at 30 June 2020 (2019: Nil). Notes to the Consolidated Financial Statements (continued) 25. Share Based Payments Options Movement in the share options of the Group during the financial year are summarised below: 2020 Weighted average exercise price $ 2019 Weighted average exercise price $ 2019 Number of options 2020 Number of options Balance at the beginning of the financial year 8,420,000 1.7587 9,650,000 Granted during the financial year – – 2,000,000 Exercised during the financial year (1,502,846) 1.5640 (3,230,000) Forfeited during the financial year* (737,154) 1.6115 – Balance at the end of the financial year 6,180,000 1.8236 8,420,000 Exercisable at the end of the financial year 4,180,000 1.5000 1,420,000 1.6000 2.5000 1.4638 – 1.7587 1.6256 * Forfeitures relate to cash less exercise of options. 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; 74 • On issue of the resulting shares, they will rank equally with ordinary shares on issue at that time; and • 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 20‑Oct‑14 15‑Apr‑15 28‑Nov‑16 28‑Nov‑18 Total Expiry Date 20‑Oct‑19 14‑Apr‑20 Exercise Price $ Share Options 2020 Share Options 2019 1.49606 1.69606 – – 500,000 920,000 23‑Nov‑21 1.50000 4,180,000 5,000,000 27‑Nov‑23 2.50000 2,000,000 2,000,000 6,180,000 8,420,000 Weighted average remaining contractual life of options outstanding at the end of the year 2.05 years 2.58 years Helping Drive Customer SatisfactionMoney3 Corporation Limited / Annual Report 2020 Restricted Shares in the Company held by KMP Name Craig Harris Grant Date Restricted Shares Held Issue Price Vesting Date Expiry Date 01‑Jul‑16^ 121,093 $1.0320 30‑Jun‑20 30‑Jun‑21 ^ At Grant date a total of 484,373 restricted shares were issued; 25% of these shares vests annually and final vesting date is 30 June 2020. 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 2020 Number of rights 2019 Number of rights 1,796,878 2,310,748 150,000 328,178 (754,319) (772,347) (25,000) (69,701) 1,167,559 1,796,878 – – 75 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; and • 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: Vesting Date Expiry Dates Performance Rights 2020 Performance Rights 2019 30‑Jun‑20 30‑Jun‑21 173,773 347,546 30‑Jun‑21 30‑Jun‑22 – 146,154 31‑Dec‑21 31‑Dec‑22 625,000 975,000 02‑Dec‑21 31‑Dec‑21 218,786 328,178 30‑Jun‑22 30‑Jun‑22 150,000 – Weighted average remaining contractual life of rights outstanding at the end of the year 1,167,559 1,796,878 1.56 years 2.33 years 1‑Jul‑16 1‑Jul‑17 1‑Jan‑18 3‑Dec‑18 1‑Jul‑19 Total Notes to the Consolidated Financial Statements (continued) The fair value of the Performance Rights has been determined in accordance with AASB 2 using the following inputs: Grant date Vesting date Expiry date Share price at measurement date Dividend yield Recognition and Measurement 2020 01‑Jul‑19 30‑Jun‑22 30‑Sep‑22 2.11 4.4% Options, restricted shares and performance rights are granted under the Money3 Corporation Limited’s Share Option 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 generally 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: 76 Options issued under employee share option plan Performance rights issued under employee share plan Restricted shares issued under employee share plan Total Employee Share Scheme 2020 $’000 386 613 150 1,149 2019 $’000 894 985 501 2,380 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. Helping Drive Customer SatisfactionMoney3 Corporation Limited / Annual Report 2020 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 2020 $ Consolidated 2019 $ (a) BDO Audit Pty Ltd* Audit and review of the financial reports (inclusive of GST) 187,000 185,900 (b) Network firm of BDO Audit and review of the financial reports (inclusive of GST) 97,037 20,754 Total remuneration of auditors 284,037 206,654 * The BDO entity performing the audit of the group transitioned from BDO East Coast Partnership to BDO Audit Pty Ltd on 14 February 2020. The disclosures include amounts received or due and receivable by BDO East Coast Partnership, BDO Audit Pty Ltd, and their respective related entities. 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. 77 28. Parent Entity Financial Information (a) Summary Financial Information The financial position and results of Money3 Corporation Limited, 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 2020 $’000 2019 $’000 22,612 365,101 387,713 11,304 126,733 138,037 40,429 310,052 350,481 11,579 98,936 110,515 249,676 239,966 169,472 163,722 3,572 76,632 4,539 71,705 249,676 239,966 22,070 22,070 23,456 23,456 Notes to the Consolidated Financial Statements (continued) (b) Guarantees entered by the Parent Entity The parent entity has not entered into guarantees for any of its subsidiaries (2019: Nil). (c) Contingent Liabilities of the Parent Entity The parent entity has no contingent liabilities at the time of the report (2019: Nil). (d) Contractual Commitments by the Parent Entity The parent entity has contractual commitments for leases of $1.4m covering the period from July 2020 to December 2022 (2019: $2.0m). 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: 78 Short term employee benefits Post‑employment benefits Long term benefits Share based payments Total Consolidated 2020 $ Consolidated 2019 $ 1,890,907 2,734,339 100,005 40,282 114,041 54,984 824,308 1,600,239 2,855,502 4,503,603 (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: Money3 engaged with Nicholson Ryan Lawyers and Panorama Pty Limited to perform legal services and compliance services respectively. Both these entities are related to Leath Nicholson (NED until 15 November 2019). Legal expenses for the current period amounted to $66,279 (2019: $670,276) and compliance expenses for the current period amounted to $52,800 (2019: $158,400). Amounts payable at 30 June 2020 was nil (2019: $16,500). Money3 also engaged with Moses & Pope Pty Ltd which is related to Symon Brewis‑Weston (NED) to perform project advisory in the current year amounting to $3,300 (2019: nil). Amounts payable at 30 June 2020 was nil (2019: nil). There were no loans made during the year 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. Helping Drive Customer SatisfactionMoney3 Corporation Limited / Annual Report 2020 30. Significant Matters Subsequent to the Reporting Date 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. 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 2020 reporting period and have not been early adopted by the Group. As at the date of this report there are no new accounting standards that have been issued but not yet applied that have a material effect on the results of the Group. 79 Helping Drive Customer Satisfaction Independent Auditor’s Report 80 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 2020, 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 2020 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 (including Independence Standards) (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 Audit Pty Ltd ABN 33 134 022 870 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 Audit Pty Ltd 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 2020 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 they are in accordance with AASB 9 including interest on loan products, application Financial Instruments and AASB 15 Revenue from and credit fees, and other period fees including Contracts with Customers. arrears, 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 using the effective interest rate method in As there are a large number of loan contracts and accordance with AASB 9 Financial Instruments. the terms vary by product, significant risk exists that revenue is incorrectly recognised. • Our Audit Information Technology specialists were used, in conjunction with other audit procedures, to Revenue recognition is significant to our audit as test the Group’s controls over: loan initiation and the Group may inappropriately account for approval; standard terms, fees and charges; interest and fees potentially leading to revenue calculation of interest, revenue and deferred and profit not being recognised consistently over revenue in respect of fees and charges; controls for the life of a loan contract using the effective recording transactions in the company’s loan interest rate method. systems and the general ledger; and testing for 81 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. Helping Drive Customer Satisfaction Independent Auditor’s Report (continued) 82 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 and Note 1(d) for the changes in accounting policies in relation to loans receivable. The Group has a significant balance of receivables at 30 June 2020 which consist of personal loan contracts with customers. The assessment of the recoverable value of customer loans using an Expected Credit Loss (“ECL”) model requires significant judgement, using both qualitative and quantitative assumptions, to estimate the recoverability of the loans receivable. Further, the impact of the COVID-19 pandemic on the macroeconomic environment could potentially have an adverse effect on the recoverability of the Group’s loan receivables. Additional audit considerations have been required to respond to the latest developments arising from the COVID-19 pandemic. In our view, correctly estimating the allowance for impairment losses against loans receivable is significant to our audit. • • • • • • • Understanding the Group’s ECL model to ensure it is in accordance with AASB 9 Financial Instruments. Detailed analysis of management’s estimate of the impairment allowance and the adequacy of procedures and processes adopted by management. Detailed analysis of loans in arrears or subject to special payment terms using prior period’s history of loans in these categories subsequently going into default and using this evidence to support the appropriateness of the impairment allowance at year-end. Testing of controls around the ageing 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 assessing the reason for variances from our initial expectations. In response to the future economic uncertainty present in the COVID-19 climate, we performed a detailed review of the forward looking information aspect of the ECL model. In evaluating the model’s reasonableness, we challenged the assumptions made against our understanding of the economic environment faced by the Group to satisfy ourselves that the revised calculations are in compliance with the requirements as prescribed in AASB 9 Financial Instruments. Considering the change in policy within the Group’s New Zealand operations relating to the recognition of bad debts and the treatment of the deferred revenue with the support of our component auditors (BDO in New Zealand) to satisfy ourselves that the revised policies are in compliance with the requirements as prescribed in AASB 9 Financial Instruments. • Evaluating the adequacy of the disclosures in the financial report. Money3 Corporation Limited / Annual Report 2020 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 2020, 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: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf This description forms part of our auditor’s report. 83 Helping Drive Customer Satisfaction Independent Auditor’s Report (continued) Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 25 to 34 of the directors’ report for the year ended 30 June 2020. In our opinion, the Remuneration Report of Money3 Corporation Limited, for the year ended 30 June 2020, 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 Audit Pty Ltd 84 James Mooney Director Melbourne, 17 August 2020 Money3 Corporation Limited / Annual Report 2020 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 5 August 2020. (a) Distribution of Equity Securities The number of shareholders, by size of holding, in each class of equity are: Distribution of Shareholdings Number of Holders Number of Shares Number of Holders Number of Options & Rights % % Ordinary Shares Unlisted Options & Performance Rights 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 123 152,070,770 82.0 838 537 1,156 1,073 25,531,272 4,057,379 3,089,851 535,823 3,727 185,285,095 13.8 2.2 1.7 0.3 100 267 17,067 6 29 4 1 – 6,498,786 88.4 810,624 33,908 4,241 – 11.0 0.5 0.1 – 100 40 7,347,559 (b) Twenty Largest Holders of Quoted Shares are: 85 Name of Holder UBS NOMINEES PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED J P MORGAN NOMINEES AUSTRALIA PTY LIMITED NATIONAL NOMINEES LIMITED RUBI HOLDINGS PTY LTD CITICORP NOMINEES PTY LIMITED HOSKING FINANCIAL INVESTMENTS PTY LTD CS THIRD NOMINEES PTY LIMITED BALDWIN BROTHERS INVESTMENTS PTY LTD SANDHURST TRUSTEES LTD CRAIG HARRIS MATOOKA PTY LTD EQUITAS NOMINEES PTY LIMITED HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 WALLBAY PTY LTD 16 17 18 19 DASH GROWTH LIMITED MR MICHAEL RUDD PLATEY PTY LTD CITICORP NOMINEES PTY LIMITED 20 BNP PARIBAS NOMS PTY LTD Top 20 shareholders Listed Ordinary Shares No. of Shares % of Holding 28,467,714 16,482,826 15,053,189 12,543,237 8,500,000 8,024,244 5,523,000 4,745,344 3,710,000 3,013,002 2,353,763 1,769,515 1,735,165 1,707,904 1,695,108 1,641,433 1,504,326 1,500,000 1,358,000 1,025,149 15.36 8.90 8.12 6.77 4.59 4.33 2.98 2.56 2.00 1.63 1.27 0.96 0.94 0.92 0.91 0.89 0.81 0.81 0.73 0.55 122,352,919 66.03 ASX Additional Information (continued) (c) Substantial Shareholders The names of the substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001 are: Thorney Opportunities Ltd (TOP), Tiga Trading Pty Ltd & associated entities No. of Shares % Held 27,632,253 14.91% (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 holdings greater than 20% The following unlisted options were issued to directors outside of the Employee Equity Share Plan. (i) Scott Baldwin & Associates 86 (ii) Ray Malone 4,180,000 1,250,000 (f) Equity securities subject to escrow The following shares issued outside of the Employee Equity Share Plan are subject to voluntary escrow arrangements: (i) 263, 736 Ordinary Shares escrowed to 11 March 2022. (g) On Market Buy‑Back There is no current on‑market buy‑back of the Company’s securities. Helping Drive Customer SatisfactionCorporate Information Company Directors Auditors Stuart Robertson Non-Executive Director (Chairman) Symon Brewis-Weston Non-Executive Director Kate Robb 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 Street Melbourne Victoria 3008 BDO Audit Pty Ltd Tower 4, Level 18, 727 Collins Street Melbourne 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 www.money3.com.au M o n e y 3 C o r p o r a t i o n L i m i t e d / A n n u a l R e p o r t 2 0 2 0     

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