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Marathon Digital2020
Annual Report
for the year ended 30 June 2020
MoneyMe Limited and its controlled entities
ACN: 636 747 414
OUR MISSION
To be the favourite
credit partner for
Generation Now
We are a digital consumer credit business leveraging our technology platform (the
Horizon Technology Platform) and big data analytics to deliver an innovative loan offering
to tech-savvy consumers. Founded in 2013, we have originated over $500 million in loans
through our risk-based lending platform and are well positioned to take advantage of the
sector developments and trends.
We operate in the consumer lending sector in Australia, in which lenders provide finance
solutions to consumers to fulfil a variety of personal funding requirements. Our target
customers seek fast, convenient and simple access to credit direct from their mobile
devices and at the point of sale.
Our technology platform allows applications to be completed within approximately five
minutes and funds to be disbursed or credit facilities to be available for use shortly after
an applicant is approved. Algorithms allow us to provide personalised, risk-based pricing,
which balances risk and return in our loan book.
Contents
01
Year in Review 2020
Chairman’s Letter
CEO’s Letter
Highlights
02
Directors’ Report
Directors’ Report
Remuneration Report
03
Financial Report
Financial Statements
Notes to the Consolidated Financial Statements
04
Other Information
Additional Shareholder Information
Corporate Directory
2
4
6
9
18
18
26
42
42
55
94
96
99
44
Chairman’s
Letter
On behalf of the Board of Directors, it is a
pleasure to present the MoneyMe Annual
Report for the financial year to 30 June 2020
(FY20), our first as a listed company.
FY20 was a successful and
transformative year for the company
which included the significant milestone
of listing on the Australian Securities
Exchange (ASX).
Our ability to successfully transition to
operating as a publicly listed company,
against the challenging and uncertain
backdrop of the COVID-19 pandemic,
is a testament to the resilience of our
operating model and the quality and
capability of our management team and
employees.
FY20 was a year of strong growth
and solid financial performance for
MoneyMe. I am pleased to report that
the company has outperformed our
Prospectus forecasts for both revenue
and loan originations and has delivered
strong results across all Key Operating
Metrics. Revenue increased by 49%
on the prior year to $47.7 million, 4%
ahead of Prospectus forecast. Pro
forma1 Profit Before Tax (PBT) was
$2.0 million, up 227% year-on-year
growth on the prior year and 7% ahead
of Prospectus forecasts. Statutory
Net Profit Before Tax (NPAT) was $1.3
million. The Board has resolved not to
pay a final dividend for the year ended
30 June 2020 to support ongoing
investment and business growth.
Despite the challenging business
environment created by COVID-19,
we continued to deliver on our growth
strategy to increase our market
share, successfully launched two new
products, formed a strategic alliance to
drive customer acquisition, delivered
strong financial performance, and
maintained our high levels of customer
satisfaction that continue to exceed
industry standards.
Our digital approach, combined with
our proprietary technology platform,
ensured that while all employees and
management transitioned to working
off-site as a result of COVID-19, we
were able to continue to seamlessly
deliver great customer engagement,
effectively manage the customer
origination process, proactively refine
credit decision making, and manage the
increased operational risk.
This strong performance is testament
to the resilience of our company, our
competitiveness within the market, and
our ability as a disrupter to gain market
share despite the contraction in demand
for consumer credit. We anticipate the
year ahead will present challenges for
our industry and our company, with
increased risks of unemployment.
Growth will be challenged, but we
remain confident that our digital
operating model and proprietary
technology platform have positioned
us strongly and the combination of
our newly launched products, lower
cost of funds and proactive credit risk
management will enable the business
to continue to achieve strong financial
performance.
1 The pro forma result is derived from the statutory result, and is adjusted to reflect the following: the impact of one-off
events due to the IPO Offer (“Offer”), including costs directly attributable to the Offer, the impact of AASB 16, repaid
corporate interest, public company costs, and new executive remuneration arrangements.
While our core focus remains on direct
to consumer products, in September
2020 we plan to launch a new product
in the ‘buy now, pay later’ space,
MoneyMe+. We expect this product
will be very appealing and competitive
within this established market and
will allow the company to capitalise
on the strong growth opportunities
we have identified. Our plans to enter
new international markets continue to
progress with opportunities emerging
for MoneyMe.
I am very confident that the platforms
we have, combined with our innovative
product offerings and our strong and
resilient leadership team, will position
us for strong and profitable growth as
market conditions recover.
On behalf of the Board, I would like
to thank all our employees for their
outstanding customer service, hard
work and dedication during what has
been a transformative year for our
business, while operating within the
uncertain and challenging environment
created by the COVID-19 pandemic.
We would also like to thank our
customers and shareholders for your
trust and ongoing support.
We look forward to pursuing the
opportunities we see for the business
as outlined in our Prospectus and
delivering strong shareholder returns.
Yours sincerely
Peter Coad
Chairman
Sydney, 25 August 2020
YEAR IN REVIEW 202 0
5
FY20 was a successful and transformative
year for the company which included
the significant milestone of listing on the
Australian Securities Exchange (ASX).
66
A key part of our value proposition is our
strong focus and commitment to delivering
innovative and tech-driven experiences to
customers throughout their credit life-cycle.
YEAR IN REVIEW 202 0
7
CEO’s Letter
The MoneyMe brand has gone from strength to strength, delivering
innovation and highly automated credit experiences to tech savvy
customers, and is on plan to become the favourite credit partner for
generation now. The year had many highlights and the results for FY20
are a strong indication of the commitment to growth and significant
leverage in our operating model that is delivering accelerated profit
and incremental diversification for future growth.
Our agile and highly automated
proprietary technology platform and
team have been phenomenal, launching
new products and services to fast track
our growth ambitions, and adapt to
changing market conditions.
The financial year ended 30 June 2020
was a significant year in the history of
MoneyMe and another year of strong
growth for the Group. We successfully
completed our initial public offering,
enabled Freestyle with a virtual
Mastercard, launched ListReady
and RentReady, and entered new
verticals, achieved accelerated growth,
further diversified our customer base,
outperformed our Prospectus forecasts,
while outperforming credit risk
expectations.
Financial performance
I am very pleased to report that
2020 was a strong year of financial
performance for MoneyMe.
- Pro forma1 Profit Before Tax
(PBT) of $2.0 million, up 227% on
the prior corresponding period,
driven by growth outpacing
operating expense growth in the
forecast period, outperforming
Prospectus forecast by 7%.
- Statutory Net Profit After Tax
-
(NPAT) of $1.3 million, up 300%
on the previous year, that includes
a $1.4 million income tax benefit
which reflects a resetting of
the tax cost base on listing.
Loan originations of $178.52 million,
an increase of 53% on prior
corresponding period,
underpinned by continued growth
in the Group’s Personal Loan
product and the introduction
of the Freestyle Virtual Credit
Account product, outperforming
Prospectus forecast by 6%.
- Total revenue of $47.7 million, up 49%
on the previous year, outperforming
Prospectus forecast by 4%.
- Gross loan book value of $133.6
million, up 53% on the prior year,
lower than Prospectus forecasted
by 6%, driven by increased
repayments from customers.
- MoneyMe has originated over
$485 million of loans since our
inception to 30 June 2020.
Operational performance
Throughout the year, our team
continued to deliver an outstanding set
of results, while meeting the operational
challenges created by COVID-19 and
successfully transitioning to operating
as an ASX-listed company.
We operate in an agile development
environment and have created a
diversified customer base with a
targeted and low cost origination
growth strategy, enabling us to minimise
our credit risk and move quickly and
adapt to changing market conditions.
Although temporarily delayed due to
the pandemic, our plans to establish a
bank warehouse funding facility is on
course and will substantially decrease
our capital costs and will underpin
our future growth and profitability.
To provide funding certainty, we also
secured continued access to our
existing funding facilities.
1 The pro forma result is derived from the statutory result, and is adjusted to reflect the following: the impact of one-off events due to the IPO Offer (“Offer”), including costs
directly attributable to the Offer, the impact of AASB 16, repaid corporate interest, public company costs, and new executive remuneration arrangements.
2 This number relates to principal originations.
88
New product innovation
and partnerships
Our commitment to innovation
continued to drive growth through
creating new products for the tech-
savvy generation. During the year, our
innovation lab was a hive of activity,
with our team creating and successfully
launching three new and exciting
products in market.
In December 2019, we enabled
Freestyle with a virtual Mastercard,
allowing instant transaction capability
on Android and iOS devices at point of
sale and online, positioned to replace
traditional credit cards.
ListReady, our payment solution
to homeowners for the capital
requirements involved in selling a
property. This is a strong disruptor for
the sector and to date, we have had
more than 350 agencies and 2,000
agents sign up to the platform.
RentReady, a first to market product,
is a pay later solution for property
managers and landlords, designed to
better manage the capital requirements
for their investment property.
Customer satisfaction
and awards
A key part of our value proposition is
our strong focus and commitment to
delivering innovative and tech-driven
experiences to customers throughout
their credit life-cycle.
During COVID-19, we experienced
unprecedented increased levels of
customer communications. Due to the
scalability of our platform and the high
level of automation of our service, we
were able to effectively and efficiently
manage customer communications, and
reduce our core response time to under
nine seconds for almost 90% of calls,
while recording an exceptionally high
Net Promoter Score of 84.
We have the right strategy in place,
and the foundations we have laid will
position us strongly to take advantage
of the shift in consumer preferences
for the innovative types of products
offered by MoneyMe, which provide
customers with financial control.
Closing
Our dynamic and digital operating
model, strong cash position, diversified
loan book and online distribution,
means we are well prepared to respond
to ongoing economic impacts and be
well positioned in a post COVID-19
environment.
Thank you to our shareholders for your
support, both during and following
our IPO, and Team MoneyMe for your
hard work and ongoing commitment.
I am incredibly excited about the year
ahead.
As always, we will continue to offer
a compelling value proposition and
exceptional customer service to grow our
business and deliver shareholder value.
Yours sincerely
Clayton Howes
Managing Director
and Chief Executive Officer
Sydney, 25 August 2020
During 2019, MoneyMe was recognised
for several awards. In the Finnies
Awards in the Excellence in Customer
Lending, in the Fintech Business Awards
in both the Leading Innovator of the
Year and Leading Platform Innovator
of the Year categories. We also won
Innovator of the Year at the My
Business Awards and MoneyMe was
included in the Australian Financial
Review BOSS Most Innovative
Companies list, in the top 5 most
innovative companies within the
Banking, Superannuation and Finance.
FY21 and beyond
The changing macro-environment is
creating opportunities as it is creating
challenges and our highly driven and
capable team remain focused on
achieving growth opportunities in the
year ahead.
Our specific strategic priorities include:
- Expanding our offer in more verticals,
with pricing that offers customers
market-leading value, supported by a
new wholesale bank facility.
- Expanding our reach into the buy
now, pay later segment, with our new
MoneyMe+ product that has a higher
credit offer for customers in new
verticals.
Increasing our use of automation
to support scale and drive cost and
servicing efficiency through our
artificial intelligence module, AIden®.
-
- Scaling up newly launched
innovative products in highly
attractive verticals, and launching
new products in new verticals to
increase our addressable market
and grow revenues.
- Pursuing exciting partnership
opportunities to drive customer
acquisition and support potential
expansion into new markets.
YEAR IN REVIEW 20 20
9
FY20 Performance
highlights1
Revenue up 49% YoY
Revenue of $47.7m exceeds
Prospectus forecast by 4%
Record EBITDA
Pro forma EBITDA of $3.2m beats
Prospectus forecast by over 10%2
Product innovation
Launching new products and channels across
ListReady, RentReady and MoneyMe+
$178.5m originations3
Up 53% YoY and 6% higher than
Prospectus forecast
Closing loan book balance
$133.6m up 53% YoY and 94% to
Prospectus forecast
Improving loan quality
Average Equifax score of 635 compared
to 620 in prior year
1 Forecast refers to full-year 2020 forecast as provided in MoneyMe’s Prospectus (2020F)
2 The pro forma result is derived from the statutory result, and is adjusted to reflect the following: the impact of one-off events due to the IPO Offer (“Offer”), including
costs directly attributable to the Offer, the impact of AASB 16, repaid corporate interest, public company costs, and new executive remuneration arrangements.
3 This number relates to principal originations.
1010
The MoneyMe
difference
Strong unit economics
Attractive loan unit economics benefitting
from repeat customers and low CAC1
Technology first
An intelligent modular platform that is
scalable and has processed over $400m
in originations
Large addressable market
Consumer credit originated by non-bank
lenders like MoneyMe expected to grow
from $30b in 2020 to $40b by 20242
High customer satisfaction
Strong brand advocacy and customer
satisfaction with NPS of 75+
1 Customer acquisition cost (CAC)
2 Euromonitor International Limited: Consumer Lending in Australia, 2020 edition, ‘Consumer Credit by Type’
YEAR IN REVIEW 2 02 0
11
Strong unit economics
Strong track record of revenue growth
and significant demand for future growth
Credit product innovation
Innovation is driving growth with new
products for the tech-savvy generation
Diversified loan portfolio
Diverse range of customers across
Australia in terms of location, age, and
employment. Robust risk management
Founder led team
Passionate and experienced team
dedicated to the Group’s ongoing growth
and profitability
12121212
The future
of credit is here
Successful listing on the ASX
With MoneyMe entering the ASX / S&P ALL ORDS
in just six months of Listing.
Enhancing
core products
Successful launch of two products in FY2020
ListReady and
RentReady aiming
to revolutionise the
PropTech world.
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Leading customer
experience
75+ NPS
1 Customer satisfaction data as at 31 December 2019
1414
#1 Google Ranking
Page 1 ranking for key search terms
1,100,000+
website users
$6,100
Average funded value
Artificial intelligence driving
automated decisioning
>80%
Applications are
auto-decisioned
YEAR IN REVIEW 2 02 0
15
93%
Payment
automation
35%
Customer
repeat rate
>90%
Calls answered
within 9 seconds
240,000+
Products distributed since inception
Mobile app available
for iOS and Android
870,000+
mobile app user sessions in FY20
1616
Unlocking the path
to accelerated growth
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Line of credit reimagined.
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anyone. Freestyle it with Mastercard®.
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FY19
FY20
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02
Directors’
Report
DIRECTORS’ REPORT 20 20
19
Directors’ Report
Remuneration Report
1 Introduction and Remuneration Philosophy
2 Key Management Personnel (KMP)
3 Remuneration Strategy
4 FY20 Executive KMP Remuneration
4.1 FY20 Executive KMP Remuneration Framework
4.2 FY20 Executive KMP Performance and Remuneration Outcomes
4.3 Contractual Arrangements with Executive KMP
5 FY20 Non-Executive KMP Remuneration
6 Remuneration Governance
7 Additional Statutory Disclosures
20
26
26
27
28
29
29
32
34
35
38
39
2020
Directors’ Report
The Directors present their report together with the consolidated Financial Statements and accompanying Notes of MoneyMe
Limited (the Company) and its controlled entities (the Group) for the period ended 30 June 2020 (FY20).
Information about The Directors
The Directors of the Company at the date of this report and of MoneyMe Financial Group Pty Limited were:
MoneyMe Limited1
MoneyMe Financial Group Pty Limited2
Clayton Howes
Scott Emery
Peter Coad
Jonathan Lechte
Susan Wynne
Clayton Howes
–
–
–
–
1 All MoneyMe Limited Directors held office from 11 October 2019.
2 All MoneyMe Financial Group Pty Limited Directors held office during the 2019 Financial Year. Scott Emery and Steven Bannigan were also Directors in the 2019
Financial Year and in the 2020 Financial Year until 6 December 2019 when they both resigned.
Meetings of Directors
Full Board
Audit and
Risk Committee
Remuneration and
Nomination Committee
Held
Eligible To Attend Attended
Held
Attended
Held
Attended
Clayton Howes
Scott Emery
Peter Coad
Jonathan Lechte
Susan Wynne
Steven Bannigan
*Committee Member
11
11
11
11
11
11
11
11
7
7
7
4
11
11
7
7
7
4
3
3
3
3
3
3
3
2*
3*
3*
–
–
KMP Shareholdings, Options and Rights
Shareholdings
Clayton Howes
Scott Emery
Peter Coad
Jonathan Lechte
Susan Wynne
Steven Bannigan
No.
50,294,716
47,821,802
662,126
662,126
–
26,189,405
2
2
2
2
2
2
Options
No.
–
–
–
–
–
–
1
2*
2*
–
2*
–
Rights
No.
252,000
–
–
–
60,000
–
Profiles of each member of the Board are set out below.
PETER COAD
Independent Non-Executive Chairman
Peter joined MoneyMe as the independent Non-Executive
Chairman in October 2019. Peter is also the Chairman of the
Remuneration and Nomination Committee and a member of
the Audit and Risk Management Committee.
Peter has more than 30 years’ experience in domestic and
international banking and is a specialist in financial services
and risk management with broad experience across financial
and capital markets, fund management and consumer finance.
Prior to his current role, Peter served in senior executive
roles at National Australia Bank from 2005 to 2017 where
his leadership experience included roles as Head of Global
Markets and Asset Servicing, Wholesale Banking; Chief Risk
Officer, Business Banking; and Executive General Manager of
International Branches and Transformation. Peter previously
worked for Commonwealth Bank of Australia and Chase
Manhattan Bank in Australia, Asia, and the US where he held
global and regional leadership roles in institutional banking and
financial/capital markets. Peter is a member of the Australian
Institute of Company Directors.
CLAYTON HOWES
Managing Director and Chief Executive Officer
Clayton is a co-founder and has been the Chief Executive
Officer of MoneyMe and a Board Director since its inception.
Clayton brings more than 15 years’ experience in the
development of brands, business strategy and innovation.
He has a strong background of executing capital strategies,
building new technologies to replace legacy processes, and
fostering highly engaged and rewarding team cultures. Prior to
establishing MoneyMe, Clayton spent eight years at Vodafone
and Vodafone Hutchinson Australia where his roles included
Head of Retail Channels & Head of Retail Transformation, Head
of Sales Strategy & Distribution Management, Head of Sales
Investments & Planning and Commercial Finance Manager.
During this time, Clayton was responsible for strategy, finance,
sales, and business transformation. Clayton previously worked
for Glaxo Smith Kline in United Kingdom within Strategic
Mergers Management and Planning.
Clayton has a Bachelor of Commerce degree (Statistics,
Economics and Finance) from Oxford Brookes University.
He also has a Certificate in Business Accounting from the
Chartered Institute of Management Accountants.
JONATHAN LECHTE
Independent Non-Executive Director
Jonathan joined MoneyMe as a Non-Executive Director
in October 2019 and is the Chair of the Audit and Risk
Management Committee. Prior to his appointment as a
Director, Jonathan had been a member of the MoneyMe’s
Advisory Board from 2015.
Jonathan has more than 20 years’ experience in banking
and corporate finance. Jonathan served in senior executive
roles in investment banking, fixed income markets and risk
DIRECTORS’ REPORT 20 20
21
management, including as Head of Fixed Income and Managing
Director at UBS Australia, Japan, and Asia from 1993 to 2007.
He then served as Non-Executive Director of FIIG Securities
Australia from 2008 to 2015, responsible for investment
strategy and risk governance. Most recently he has joined
Cashwerkz (ASX:CWZ) as Chief Executive Officer.
Jonathan holds a Graduate Diploma in Banking and Finance
from Monash University. He is also a graduate of the Australian
Institute of Company Directors.
SCOTT EMERY
Non-Executive Director
Scott Emery is a co-founder and has been a Non-Executive
Director of MoneyMe from its inception. He is a member of the
Audit and Risk Management Committee and Remuneration and
Nomination Committee.
Scott has over 30 years’ experience in establishing and running
property development companies across Australia. Scott is
the founder and managing director of a commercial building
company, Yarra Valley Commercial, established in 1986, where
under his guidance, the business has grown to be a national
shopfitting and building company.
SUSAN WYNNE
Independent Non-Executive Director
Susan joined MoneyMe as a Non-Executive Director in October
2019. She is a member of the Remuneration and Nomination
Committee.
Susan has more than 20 years’ corporate and government
experience, specialising in brand and business development,
stakeholder management, corporate affairs, and public
relations. Susan has served in local government on the
Woollahra Council since 2008 including terms as both Deputy
Mayor and Mayor. Susan was re-elected as the Mayor of
Woollahra in September 2019. Susan is a graduate of the
Australian Institute of Company Directors.
Information about The Company Secretary
The Group’s Company Secretary is Justin Clyne who joined
the business in October 2019. Justin Clyne is a qualified
Chartered Company Secretary and a member of the Australian
Institute of Company Directors. He was admitted as a Solicitor
of the Supreme Court of New South Wales and High Court of
Australia in 1996 before gaining admission as a Barrister in
1998. Justin has 15 years of experience in the legal profession,
acting for a number of the country’s largest corporations,
initially in the areas of corporate and commercial law before
dedicating himself full-time to the provision of corporate
advisory and company secretarial services.
Justin is a director and/or secretary of a number of publicly
listed and unlisted companies. Justin has significant experience
and knowledge in international law, the Corporations Act
2001 (Cth), the ASX Listing Rules and corporate regulatory
requirements generally. Justin holds a Master of Laws in
International Law from the University of New South Wales and
is a qualified Chartered Company Secretary.
2222
Principal Activities
The Group’s principal activity in the course of the financial year
was to provide retail consumer finance.
Operational and Financial Review
Operational Highlights
The business has experienced high growth and expansion in the
current year. Key operational highlights include:
— Year-on-year growth of 53% on the gross loan book and 49%
growth in revenue.
— The successful launch of two new products: ListReady
(August 2019) and RentReady (June 2020).
— Expansion and further diversification of our customer base
through increased loan offerings and new distribution
channels.
— High levels of customer satisfaction, with high NPS and
recognition by the Finnies Awards in Excellence in Customer
Lending.
— Greater operating efficiencies being delivered through
low fixed costs and high automation through the Horizon
technology platform, whilst increasing revenue.
— Capabilities have been built to expand the business model
through innovation, in new solutions for at Point of Sale
distribution and advances in AIden, MoneyMe’s artificial
intelligence decisioning platform.
— Recognised in Fintech Business Awards in both the Leading
Innovator of the Year and Leading Platform Innovator of the
Year, and the AFR’s most innovative companies list.
Financial Highlights
Key Financial Measures with comparatives are provided below.
Total Revenue
Profit / (Loss) Before Tax (PBT)
Net Profit After Tax (NPAT)
Net increase in cash and cash equivalents
Total Assets
Total Equity
On 12 December 2019, MoneyMe Limited listed on the
Australian Stock Exchange (ASX) via an Initial Public Offering
(IPO). The IPO has provided the business further capital to
support its high balance sheet growth strategy.
The COVID-19 pandemic has brought about many challenges
for the industry. From the Group’s perspective, COVID-19 has
impacted on a number of areas including a reduction in general
demand for consumer credit during lockdown periods, some
of the Group’s credit approved borrowers having higher credit
risk and a short term delay in executing wholesale debt capital
strategies. However, the Group’s online, low fixed cost, recurring
revenue business model mean that all these challenges are
manageable.
The Group’s digital approach, combined with a proprietary
technology platform, has ensured that while all employees
and management transitioned to working off-site as a result of
COVID-19, it was able to continue to deliver great customer
engagement, effectively manage the customer origination
process, proactively refine credit decision making, and manage
risk and operational processes. The Group implemented a
COVID-19 hardship program to support borrowers with loan
payment deferrals or payment plans. The Group secured its
Velocity warehouse facility to November 2021 to ensure
availability of it’s debt capital.
The new funding facility remains on plan for completion
in Q1 FY21, with a revised expected settlement by
30 September 2020.
30 June 2020
30 June 2019
$’000
47,671
(119)
1,299
29,317
$’000
31,894
125
324
2,559
30 June 2020
30 June 2019
$’000
166,601
46,852
$’000
86,590
3,698
DIRECTORS’ REPORT 20 20
23
Risk Management and Governance Highlights
The Group’s Risk Appetite Statement identifies seven key risks:
Credit, Liquidity, Regulatory Compliance, Operational, People,
Customer & Brand Reputation and Financial Performance.
Governance related to these risks is delegated by the Board
via two Board level committees, the Audit & Risk Management
Committee and Remuneration & Nominations Committee
and via the CEO to the Management Committee, Credit Risk
Committee, Asset & Liability Committee and Operational
Risk and Compliance Committee. The current governance
framework reflects changes implemented to support the
Group’s December 2019 ASX listing.
The Group’s Board and management committees have been
effective in helping ensure the Group has effectively responded
and managed COVID-19 related risks and impacts. The Group’s
diversified loan book, digital operating model, positive cash
position, and pro-active leadership team has also positioned
the Group to withstand the current economic conditions and
continue to capitalise on providing low-touch online delivery to
meet the rapidly evolving requirements of the target customer.
Further Information
Refer to the Annual Report, which includes the Financial
Statements and accompanying Notes for further information.
Changes in State of Affairs
During the financial year, the Group underwent an IPO
restructure. Refer to the Group’s IPO-related Prospectus, and
the Annual Financial Report for further details relating to the
IPO and restructure.
In addition, as noted above, the Group adopted AASB 16 Leases
in 2020. The adoption of AASB 16 resulted in a net reduction
to the Group’s opening retained earnings as at 1 July 2019
of $0.1m.
The Group established two new legal entities during the year
to support business expansion. The Group continues to explore
and progress business expansion opportunities in Australia
and overseas.
Other than the above, there were no significant changes in the
state of affairs of the Group during the financial year.
Revenue growth in FY20 materially reflects growth in the gross
loan receivables. PBT in FY20 materially reflects an increase in
expenses incurred to support loan book growth and the impact
of the Group’s IPO in December 2019. NPAT reflects PBT plus
an income tax benefit that materially reflects the effect of
setting up the new tax consolidated group.
The period-on-period asset increase reflects gross loan
receivable growth and recognition of a right-of-use asset
following adoption of the new AASB 16 Leases. Period-on-
period equity and cash/cash equivalent increases reflect the
completion of the IPO in December.
COVID-19 has resulted in the Group increasing financial
macro-economic overlays in a number of areas including loan
asset provisioning and the on balance sheet recognition of
deferred tax assets. The Group’s COVID-19 hardship program
has reduced loan repayment cash flows. The Group also
experienced an increase in loan asset run-off in the later part
of the 2020 financial year that appears to reflect borrower
access to government and other financial institution related
COVID-19 programs. The Group also received a $0.6m benefit
from access to government COVID-19 related stimulus
programs in the last quarter of the 2020 financial year. The
Group expects to be able to continue to access available
government stimulus measures until 31 March 2021.
Strategy & Business Plan Highlights
The business plans to continue its high balance sheet growth
strategy through a focus on increasing automation to support
scale and drive efficiency, expanding and gaining market share
through the existing product suite, entering new consumer
lending verticals through product innovation and developing
new partnerships to drive customer acquisition while
maintaining the focus to provide digital direct to consumer
lending products. The Group’s new funding warehouse facility
is expected to deliver significant lower funding costs and new
business origination capacity.
While MoneyMe experienced a year of strong growth in 2020,
the Group anticipates that COVID-19 will continue to present
challenges for both our business and our industry in the year
ahead.
The Group expects the market environment and system credit
growth will be impacted by weakened consumer confidence
resulting from the increased risks of both unemployment and
underemployment caused by the COVID-19 pandemic. The
Group’s lending portfolio growth will continue to adapt to
credit risk policies appropriately calibrated to the environment.
The Group continues to work towards expansion into
international markets in line with emerging opportunities.
The COVID-19 operating environment is expected to remain
challenging but it is expected that execution of its current
strategies by an effective and resilient leadership team, will
position the Group for continued growth and expansion.
2424
Non-audit services
Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor
are outlined in Note 24 of the Financial Report.
The Directors are satisfied that the provision of non-audit services during the year, by the auditor is compliant
with the general standard of independence for auditors imposed by the Corporations Act 2001.
The Directors are of the opinion that the services disclosed in Note 24 of the Financial Report do not
compromise the external auditor’s independence, based on advice received from the Audit Committee, for the
following reasons:
— All non-audit services have been reviewed and approved to ensure that they do not impact the integrity and
objectivity of the auditors; and
— None of the services undermine the general principles as set out in APES Code of Ethics for Professional
Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or
auditing the auditor’s own work, acting in a management or decision-making capacity for the Group, acting
as advocate for the Group or jointly sharing economic risks and rewards.
Subsequent Events
The COVID-19 environment has continued to evolve and develop during the period post 30 June 2020. In
particular, the state of Victoria began to experience a higher number of COVID-19 infections and related
deaths in more recent weeks. The government response at the federal and state level has continued to evolve,
including the announcement of further people movement restrictions within Victoria and between states, and
the announcement of further stimulus measures such as an extension to JobKeeper. The Group is continuing to
monitor the changing environment and considers that no adjustments are required as a result of changes after
30 June 2020 in relation to the critical estimates and judgements in particular as set out in Note 4. Customers
that were classified as COVID hardship have been monitored through regular reporting as well as tracking of
those customers who are no longer in COVID hardship. 80% of COVID hardship have now started to repay. This
analysis as well as the regular monitoring of portfolio level credit risk has not identified any events that would
lead the Group to require adjustment of the expected credit loss allowance.
Future Developments
The Group will continue to pursue long-term growth to support sound returns to shareholders. This includes
growing its loan book, investing in its core operating platform capabilities, and diversifying and expanding
access to debt and capital to support these initiatives.
Environmental Regulations
The Group is not subject to any particular or significant environmental regulation under laws of the
Commonwealth or of a State or Territory.
Dividends
In respect of the financial year ended 30 June 2020, no dividend was declared to the holders of fully paid
ordinary shares.
Movements in options
The table below outlines the movement in all options issued by the Group for each financial year.
No.
2019
2020
Opening
Granted
Lapsed
Buyback
Cancelled
Exercised
Closing
5,225
2,059
(504)
4,280
2,274,095
(336,710)
–
–
(2,500)
(4,280)
–
–
4,280
1,937,385
The Group cancelled employee share options issued in December 2017 and December 2018 on listing in
December 2019, replacing them with new options that reflect the same terms of the cancelled options.
DIRECTORS’ REPORT 2 02 0
25
Movements in performance rights
The table below outlines the movement in all performance rights issued by the Group for each financial year.
No.
2019
2020
Opening
Granted
Lapsed
Buyback
Cancelled
Exercised
Closing
–
–
–
–
2,074,000
(490,000)
–
–
–
–
–
–
(240,000)
1,344,000
The Group issued employee performance rights (EPRs) and board performance rights (BPRs) as part of the IPO
process. The 2020 Series 1 EPRs were exercised on listing. All BPRs lapsed due to the performance condition to
establish a new warehouse facility with a major bank or financial institution in the FY20 period not being met. Timing
for the execution of a new facility is estimated to be in Q1 FY21 due to circumstances relating to the COVID-19
pandemic.
Remuneration Report
The Remuneration Report forms part of this Directors’ Report and includes information in relation to Director
and Key Management Personnel (KMP) Remuneration, including any share options and performance rights.
Further details in relation to share-based payments are outlined in Note 20 of the Annual Report.
Indemnification of Officers and Auditors
The Group has not indemnified or agreed to indemnify an officer or auditor of the Group or of any related body
corporate against a liability incurred as such an officer or auditor, during or since the financial year, except to the
extent permitted by law.
Proceedings on behalf of the Group
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Group, or to intervene in any proceedings to which the Group is a party for the
purpose of taking responsibility on behalf of the Group for all or part of those proceedings.
Auditor
Deloitte continues in office in accordance with section 327 of the Corporations Act 2001.
A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001
is set out as part of the Annual Report.
This report is made in accordance with a resolution of Directors, pursuant to section 298(2)(a) of the
Corporations Act 2001.
Signed in accordance with a resolution of the Directors.
Peter Coad
Chairman
Sydney, 25 August 2020
Clayton Howes
Managing Director and Chief Executive Officer
Sydney, 25 August 2020
2626
Remuneration Report
1. Introduction and Remuneration Philosophy
The Directors of MoneyMe Limited (MoneyMe or Group) present the inaugural Remuneration Report for MoneyMe, which
outlines its FY20 remuneration strategy, framework and outcomes, for Non-Executive Directors, Executive Directors and other
KMP, prepared in accordance with the requirements of the Corporations Act 2001.
The MoneyMe Group includes, among other entities as particularised in the Group’s accounts, MoneyMe Financial Group Pty
Limited, which was the Group’s ultimate holding company, until 11 October 2019 when MoneyMe Limited was incorporated for the
purposes of undertaking the Initial Public Offer (IPO).
The performance of MoneyMe depends upon the Group’s ability to attract and retain high-quality KMP. In order to succeed at the
highest level, the Group must attract, motivate, and retain highly skilled talent. KMP are those persons having the authority and
responsibility for planning, directing, and controlling the activities of the Group, directly or indirectly, which includes the Board of
Directors.
To this end, the remuneration strategy outlined in section 3 and the remuneration framework outlined in section 4.1, is designed to
deliver:
— competitive remuneration aimed at attracting a high-calibre executive team;
— a clear alignment between remuneration and the overall strategic objectives;
— a focus on creating sustainable value for all of our stakeholders;
— merit-based remuneration across a diverse workforce; and
— a level of total remuneration that is competitive by market standards.
The MoneyMe Remuneration and Nomination Committee (RNC) is responsible for determining and reviewing compensation
arrangements for the KMP. The RNC assesses the appropriateness of the nature and amount of remuneration for KMP on a
periodic basis by reference to relevant market conditions with the overall objective of ensuring maximum stakeholder benefit from
the retention of a high-calibre board and executive team.
The Board of the Group believes the remuneration framework in this Remuneration Report to be appropriate given the stage and
complexity of the Group’s operations and effective to attract and retain the best KMP to operate and manage the Group.
The KMP remuneration framework is designed to support the Group’s reward philosophies and to underpin the Group’s growth
strategy. The framework comprises the following components:
— Fixed Annual Remuneration (FAR) appropriate to position and experience and which is competitive in the market;
— Short-Term Incentives (STI); and
— Long-Term Incentives (LTI) aligned to short- and long-term performance and delivery of returns to stakeholders.
All Executive KMP were provided STI and LTI incentives in FY20. Three Non-Executive KMP were provided LTI incentives in FY20.
The Board will continue to review KMP packages annually by reference to the Group’s performance, KMP performance and
comparable information from industry sectors and other listed companies in similar industries.
REMUNERATION REPORT 202 0
27
2. Key Management Personnel (KMP)
The table below details the KMP covered in the FY20 Remuneration Report.
NEDs1
Peter Coad
Scott Emery
Jonathan Lechte
Susan Wynne
Steven Bannigan
Positions Held
Term
Independent Non-Executive Chairman
Remuneration and Nomination Committee – Chair
Audit and Risk Committee – Member
Part year – appointed 11 October 2019
Non-Executive Director
Remuneration & Nomination Committee – Member
Audit and Risk Committee – Member
Full year
Independent Non-Executive Director
Audit and Risk Committee – Chair
Independent Non-Executive Director
Remuneration and Nomination Committee – Member
Former Non-Executive Director (MoneyMe Financial
Group Pty Limited)
Part year – appointed 11 October 2019
Part year – appointed 11 October 2019
Part year – until 12 December 20192
1 Refer to the earlier section of the Directors’ Report (specifically around the information about the Directors) for further information. In addition, refer to Note 5 of the
Annual Financial Report that details the Group’s IPO and business reorganisation.
2 Steve Bannigan was a Director of MoneyMe Limited’s wholly owned subsidiary, MoneyMe Financial Group Pty Limited,, up to the Group’s reorganisation ceasing on 12
December 2019. Mr. Bannigan has not been a Director of MoneyMe Limited at any time.
Executive KMP
Positions Held
Term
Clayton Howes
Managing Director (MD) & Chief Executive Officer (CEO) Full year
Neal Hawkins
Chief Financial Officer (CFO)
Part year – appointed as CFO on
26 August 2019
2828
3. Remuneration Strategy
In December 2019, MoneyMe successfully listed on the ASX following its IPO and continues in its mission “to be the favourite credit
partner for Generation Now”.
To enable the Group to remain on track to achieve its mission in the future, the Group has implemented a remuneration framework
for its Executive KMP, which balances rewarding individuals for their efforts in the period prior to IPO and incentivises individuals
to deliver on the Group’s long-term goals, in the post-IPO journey. MoneyMe also appreciates that as a publicly listed business,
there is an obligation to shareholders to ensure alignment between executive remuneration arrangements and shareholder
returns, and to disclose such arrangements in a transparent manner.
The Group’s Remuneration Philosophy is outlined in section 1. In addition, a summary of MoneyMe’s remuneration strategy
and principles, and how they relate to the Group’s mission and the Group’s FY20 remuneration framework, are outlined on the
following page.
OUR MISSION
To be the favourite credit partner for Generation Now.
REMUNERATION PRINCIPLES
To ensure our remuneration
framework enables
MoneyMe to reward, retain
and motivate key employees.
To link the remuneration
of key employees to the
creation of long-term
sustainable shareholder
value and align their interests
to shareholders through the
grant of equity.
To enable executives to
share in the future growth
of the Group’s value
and incentivise executives
to focus on the achievement
of the Group’s
long-term goals.
EXECUTIVE KMP REMUNERATION FRAMEWORK
FIXED ANNUAL
REMUNERATION
(FAR)
FAR is set at a competitive
level to our peers, enabling
us to attract and retain
key employees, to achieve
our Mission.
SHORT-TERM INCENTIVE
(STI)
By setting STI performance
conditions that align to the
achievement of the Group’s
growth strategy, the aim is
to reward employees when
the Group’s objectives are
attained.
LONG-TERM INCENTIVE
(LTI)
The grant of equity awards
(subject to performance
conditions) aims to align
Executive KMP with
shareholders and motivate
executives towards the
achievement of the Group’s
long-term goals.
REMUNERATION REPORT 202 0
29
4. FY20 Executive KMP Remuneration
4.1 FY20 Executive KMP Remuneration Framework
For Executive KMP, the remuneration package comprises of FAR and a variable mix of STI and LTI remuneration (or ‘at risk’
remuneration) as summarised for FY20 in the diagram below.
FAR
Base salary +
additional benefits +
Superannuation.
STI
LTI
Assessed against a
mix of Corporate and
Individual KPIs.
Payment
Exercise restriction on
50% of vested Rights
Assessed against
revenue, EBITDA and
strategic measures.
Exercise restriction on 50% of vested Rights
FY20
FY21
FY22
FY23
It is noted that FY20 is the performance assessment period, while FY21-FY22 is the payment / vesting period.
MoneyMe is committed to complying with its regulatory remuneration requirements, which the Group will continue to monitor,
make changes to its remuneration framework in future years as required from both a statutory perspective and also to take into
account the Group’s growth trajectory and positioning in the market as the Group seeks to grow.
(a) Executive KMP remuneration mix
The FY20 remuneration mix for MoneyMe’s CEO and CFO is displayed below, at maximum opportunity levels.
25%
LTI
38%
FAR
MD & CEO
37%
STI
12%
LTI
13%
STI
75%
FAR
CFO
3030
(b) Executive KMP remuneration elements
FAR
Description
FAR is set at a competitive level to attract and retain high-quality and experienced Executive
KMP to MoneyMe. FAR comprises of base salary, additional benefits, and superannuation
contributions at a rate of 9.5% (up to the concessional contributions cap).
Where KMP are only appointed for part of the financial year, their FAR will be pro-rated.
Market positioning
FAR levels are reviewed regularly to ensure that it remains at a competitive level. In assessing
the appropriateness of FAR levels provided to Executive KMP, MoneyMe will consider its
positioning relative to the following comparator groups:
– peer financial services and technology companies; and/or
– companies with a comparable market capitalisation to MoneyMe.
STI
Description
Executive KMP are eligible to participate in the annual STI plan, which comprised a portion
of their variable remuneration in FY20 and is subject to performance conditions. The STI
performance measures reflect operational, business development and financial outcomes, which
are assessed at a Group and individual level. In the current year they include those noted below
as part of the LTI.
For each financial year, the STI outcome will be subject to achieving a set of Corporate and
Individual KPIs which align to the achievement of the Group’s growth strategy. These will be
determined on an annual basis going forward.
Performance period
1 year (1 July 2019 to 30 June 2020).
Maximum annual opportunity CEO: $450,000
CFO: $50,000
Delivery
The STI award is wholly delivered as cash, following the end of the performance period. Should
the recipients have fulfilled either a portion or none of their KPIs the STI will be paid at an
equally proportionate rate.
Performance conditions
For each financial year, the STI outcome is subject to achieving a set of Corporate and Individual
KPIs, which align to the achievement of the Group’s growth strategy.
The performance measures reflect operational, business development and financial outcomes.
Employment conditions
The Board retains absolute discretion with respect to the treatment of STI payments for
individuals ceasing employment with the Group.
Typically however, where employment ceases or notice to cease employment has been given by
the individual or Group, prior to the payment date, no STI payment will be made.
Malus/Clawback
The Group has malus (downwards adjustment of unvested or unpaid remuneration) and
clawback (repayment of vested or paid remuneration) provisions in place for its KMP.
The Board retains absolute discretion with respect to the application of malus and clawback to
any KMP’s remuneration arrangements.
Typically, in circumstances of any serious misconduct by the individual, and/or any material
misstatement in the Financial Statements of the Group or any of its Related Bodies Corporate
during any of the preceding 3 financial years, the Board may:
– reduce current year STI outcomes yet to be paid (‘malus’); or
– request the repayment of some or all of their previous STI payments or adjust current year
remuneration arrangements (FAR and incentive arrangements) to match the amount due to be
repaid (‘clawback’).
Board discretion
The Board retains absolute discretion regarding the operation of the STI plan subject to
compliance with the ASX Listing Rules.
REMUNERATION REPORT 202 0
31
LTI
Description
Executive KMP are eligible to participate in the annual LTI plan, which comprised a portion
of their variable remuneration in FY20 and is subject to performance conditions. For FY20,
the LTI was delivered via an Employee Performance Rights (EPR – Series 2) Grant and
performance conditions are linked to key financial and non-financial measures primarily
related to the Group’s performance following IPO.
The purpose of the EPR Grant was to reward and retain key employees following the
successful listing of the Group and to incentivise these individuals to meet critical financial
and strategic goals for the remainder of the financial year following listing. While the EPR
Grant was provided in part to reward individuals for their efforts prior to IPO, performance
conditions continued to apply to the Grant post-IPO, to ensure Executive KMP are only
rewarded where Group targets continue to be achieved.
Performance period
1 year (1 July 2019 to 30 June 2020).
Exercise period
Maximum opportunity
Delivery
Allocation methodology
Performance conditions
Following the performance period, there is an additional 1- and 2-year exercise restriction.
This operates as follows:
– 50% of vested Performance Rights can be exercised on the day following the release of the
Group’s annual financial results for the financial year ended 30 June 2021; and
– 50% of the vested Performance Rights can be exercised on the day following the release of
the Group’s annual financial results for the financial year ending 30 June 2022.
Following the end of any applicable exercise restriction on any vested Performance Rights,
Executive KMP will have 2 years to exercise their Performance Rights before they lapse.
CEO: $315,000
CFO: $50,000
The maximum opportunity is the opportunity available to KMPs if they meet all
performance hurdles.
The EPR Grant is wholly delivered via Performance Rights, granted to the individual for nil
consideration.
The EPR Grant is granted on a face value basis. This is calculated as the number of
Performance Rights granted divided by MoneyMe’s IPO offer price ($1.25).
The EPR Grant is subject to 3 performance conditions over the performance period. These
performance conditions have been linked to the achievement of key financial and strategic
goals, to enable MoneyMe to achieve its Mission. The performance conditions are as follows:
– Revenue target (Corporate measure)
The Group must achieve its FY20 revenue forecast and target of $45.8m.
– EBITDA target (Corporate measure)
The Group must achieve its FY20 pro forma Earnings Before Interest, Taxes, Depreciation
and Amortisation (EBITDA) forecast and target of $2.9m.
– Strategic target (Individual measure)
This relates to individual strategic targets determined by the Group for Executive KMPs,
relating to a successful IPO capital raise of greater than $40m.
The Board assesses performance against the three measures at the end of the performance period.
3232
Employment vesting conditions The Board retains absolute discretion with respect to the treatment of Performance Rights for
Malus/clawback
individuals ceasing employment with the Group.
Typically:
– Where the individual ceases employment as a ‘bad leaver’ (i.e. due to resignation, dismissal
for cause or poor performance, or any other circumstances determined by the Board to
constitute ‘bad leaver’), any vested or unvested Performance Rights will lapse; and
– Where the individual ceases employment as a ‘good leaver’ (i.e. due to disablement, mental
illness, redundancy, death, terminal illness or for reasons other than those of a ‘bad leaver’),
any unvested Performance Rights will lapse and any vested Performance Rights will remain
exercisable until the end of the exercise period.
The Board retains absolute discretion with respect to the application of malus and clawback to
any KMP’s remuneration arrangement subject to compliance with the ASX Listing Rules.
The Group has malus (downwards adjustment of unvested or unpaid remuneration) and
clawback (repayment of vested or paid remuneration) provisions in place for its KMP.
In circumstances of any serious misconduct by the individual, and/or any material
misstatement in the Financial Statements of the Group or any of its Related Bodies Corporate
during any of the preceding 3 financial years, the Board may:
– Lapse all/a portion of unexercised Performance Rights (commonly known as ‘malus’); and/or
– Request the repayment of the after-tax value of exercised Performance Rights or adjust
current year remuneration arrangements (FAR and incentive arrangements) to match the
after-tax value of the amount due to be repaid (commonly known as ‘clawback’).
Board discretion
The Board retains absolute discretion regarding the operation of the EPR Grant subject to
compliance with the ASX Listing Rules.
Refer to section 6.4 of the MoneyMe Prospectus for further information.
4.2 FY20 Executive KMP Performance and Remuneration Outcomes
(a) Group performance
To ensure shareholder value is delivered, MoneyMe maintains a strong link between Group performance and remuneration
outcomes. Since its founding in 2013, MoneyMe has delivered significant growth in revenue, with revenue of $47.7m achieved for
the twelve months to 30 June 2020.
Since listing, MoneyMe has continued to deliver strong growth in the value of its loan book as it moves towards generating further
sustainable and profitable growth, which will ensure shareholder value is delivered in the long-term.
The key highlights of FY20 include:
— additional equity capital raised through a successful IPO in December 2019;
— above Prospectus forecast full year revenue of $47.7m;
— above Prospectus forecast full year pro forma EBITDA of $3.2m;
— successful launching of two new products - ListReady and RentReady; and
— progression to set-up a new funding facility.
REMUNERATION REPORT 202 0
33
The table below sets out a summary of the Group’s performance for the 2020 Financial Year (including pre-IPO performance).
This details the key financial measures used to assess Executive KMP’s STI and LTI outcomes (i.e. revenue and EBITDA).
Table 1: Group performance
Group performance is shown from 1 July 2019 to 30 June 2020.
$ million
Revenue
EBITDA
PBT
NPAT
Issue price of IPO
Share price at 30 June 2020
Dividends paid
(b) FY20 STI outcomes
Pro forma FY20
Forecast ($m)
Pro forma FY20
Actual ($m)
Statutory FY20
Forecast ($m)
Statutory FY20
Actual ($m)
45.8
2.9
1.9
1.8
47.7
3.2
2.0
2.8
45.8
0.9
(0.3)
(0.2)
47.7
1.1
(0.1)
1.3
$1.25
$1.14
$nil
Table 2: FY20 actual STI outcomes for the CEO and CFO
Executive KMP
Maximum STI $
% of maximum
STI vested
% of maximum
STI forfeited
STI payment $
Clayton Howes (CEO)
$450,000
Neal Hawkins (CFO)
$50,000
100%
100%
0%
0%
$450,000
$50,000
(c) FY20 LTI outcomes
Under the LTI, the EPR Grant provided to the CEO and CFO were due to be assessed at the end of the performance period ending
on 30 June 2020. Based on the performance vesting conditions, a vesting outcome of 100% was achieved. The employment vesting
conditions for the participants will be met if they are employed on the day of vesting. 50% of these vested Performance Rights will
be exercisable on the day following the release of the Group’s annual financial results for the financial year ending 30 June 2021
and the remaining 50% of these vested Performance Rights will be exercisable on the day following the release of the Group’s
annual financial results for the financial year ending 30 June 2022.
The table below outlines Executive KMP’s performance against the LTI’s performance conditions. It is noted that all three
performance hurdles are to be met for the LTI to fully vest.
Table 3: FY20 LTI outcomes for the CEO and CFO
Performance condition
Revenue target
Outcome
Achieved
Pro forma EBITDA target
Achieved
Strategic target
Achieved
FINAL VESTING OUTCOME
100%
Employment related vesting conditions are to be met.
Further detail
Revenue of $47.7m was achieved against
a target of $45.8m.
Pro forma EBITDA of $3.2m was achieved
against a target of $2.9m.
Successful completion of IPO capital raise
greater than $40m.
3434
(d) Statutory disclosure of FY20 Executive KMP remuneration
Table 4: FY20 Executive KMP remuneration
MoneyMe
Remuneration for
the years ending
30 June 2020 and
30 June 2019
FAR
STI
LTI
Financial
Year
Salary Additional
benefits1
Superannuation
Cash
payment
Performance
rights4
Total
$
$
$
$
$
$
Clayton Howes2
2020
401,179
87,186
25,000
450,000
85,909 1,049,274
2019
325,321
6,250
25,000
–
–
356,571
Neal Hawkins3
2020
231,596
2019
–
–
–
22,002
50,000
13,636
317,234
–
–
–
–
Total
2020
632,775
87,186
47,002
500,000
99,545 1,366,508
2019
325,321
6,250
25,000
–
–
356,571
1 Additional benefits include a monthly car allowance and leave entitlements. Leave is included on a net movement basis.
2 The FAR for Clayton Howes was $400,000 from 1 July 2019 to 31 October 2019. The current FAR was effective from 1 November 2019.
3 Neal Hawkins commenced employment as the Group’s CFO in August 2019.
4 Performance rights are subject to meeting the vesting criteria. The amount disclosed is representative of the accounting remuneration.
4.3 Contractual Arrangements with Executive KMP
The terms of employment (including remuneration) for Executive KMP is outlined as per their executive service agreements with
the Group. Refer to section 6.4(a) of the Group’s Prospectus for a summary of the employment agreement with Clayton Howes
(MD and CEO) and section 6.4(b) for a summary of Neal Hawkins’ (CFO) employment agreement.
Table 5: Details on executive service agreements
Name
FAR
Duration
of service
agreement
Notice period
By executive
By Group
Severance
payment
entitlement
Restraint
period
Clayton Howes
(MD and CEO)
Neal Hawkins
(CFO)
$475,0005
Ongoing
6 months
6 months
No entitlement
6 months
$295,000
Ongoing
3 months
3 months
No entitlement
12 months
5 The FAR for Clayton Howes was $400,000 from 1 July 2019 to 31 October 2019. The current FAR was effective from 1 November 2019.
REMUNERATION REPORT 202 0
35
5. FY20 Non-Executive KMP Remuneration
(a) NED contractual arrangements
NEDs are appointed on a 3-year term and must not hold office without re-election for 3 or more years or for 3 or more Annual General
Meetings since they were last elected to office. The terms of appointment for each of the Non-Executive Directors including their
remuneration is summarised in section 6.3(b) of the Prospectus.
(b) NED fees
Directors are provided with fees to compensate them for the time commitments required in their role. These fees are set at a level,
which allows the Group to attract and retain experienced and skilled Directors who are collectively responsible for the success of
the Group by directing the strategy and supervising of the Group’s business operations. The total remuneration paid to Directors is
not to exceed the fee pool, which is currently set at $650,000.
The FY20 fee levels were as follows:
Position
FY20 fees
Board Chair
$125,000
Board Members
$70,000
Committee Chair
$10,000
Directors who sit as Committee members receive no additional fees. The fees outlined above are inclusive of statutory
superannuation contributions and pro-rated for part-year Directors.
(c) NED equity plan
Equity Plan for NEDs
Description
As disclosed in the Prospectus, upon the successful listing of MoneyMe Limited on the ASX on 12
December 2019, the Group made a ‘once-off’ grant of equity incentives to some Directors (known
as the Board Performance Rights (BPR) Grant).
The purpose of the BPR Grant was to reward and retain key Directors following the successful
listing of the Group to ensure continuity and to build the shareholdings of those Directors.
This aims to enhance alignment between the interests of NEDs and the long-term interests of
MoneyMe.
Performance period
1 year (1 July 2019 to 30 June 2020).
Following the performance period, there is an additional exercise restriction on a portion of the
Performance Rights as follows:
– 50% of vested Performance Rights can be exercised on the day following the release of the
Group’s annual financial results for the financial year ended 30 June 2020; and
– 50% of the vested Performance Rights can be exercised on the day following the release of the
Group’s annual financial results for the financial year ending 30 June 2021.
This is to ensure the alignment of these NEDs with the long-term interests of MoneyMe.
Exercise period
Following the end of any applicable exercise restriction on any vested Performance Rights,
Directors will have 2 years to exercise their Performance Rights before they lapse.
Maximum opportunity
Peter Coad: $250,000
Jonathan Lechte: $250,000
Susan Wynne: participates in the EPR Grant instead as the performance conditions under the
BPR Grant are not applicable to her skillset. The maximum opportunity for
Susan Wynne under the EPR is $75,000. See section 4.1(b) for more detail on the
EPR Grant.
Scott Emery: does not participate in the BPR Grant as the Group deems his substantial
shareholding in MoneyMe, as one of its Founders, sufficiently aligns his interest to
that of shareholders.
3636
Delivery
The BPR Grant is wholly delivered via Performance Rights, granted to the individual for nil
consideration.
Allocation methodology
The BPR Grant is granted on a face value basis. This is calculated as the number of Performance
Rights granted multiplied by MoneyMe’s IPO offer price ($1.25).
Performance
vesting conditions
The BPR Grant is subject to the successful completion of establishment and financial closing of a
facility with a major bank or financial institution in FY20.
The Board retains absolute discretion with respect to the targets and outcomes assessed under
the BPR Grant, subject to compliance with the ASX Listing Rules.
Employment
vesting conditions
The Board retains absolute discretion with respect to the treatment of Performance Rights
for individuals ceasing employment with the Group subject to compliance with the ASX Listing rules.
Typically:
Malus/clawback
– where the individual ceases employment as a ‘bad leaver’ (i.e. due to resignation, dismissal for
cause or poor performance or any other circumstances determined by the Board to constitute
‘bad leaver’), any vested or unvested Performance Rights will lapse; and
– where the individual ceases employment as a ‘good leaver’ (i.e. due to disablement, mental
illness, redundancy, death, terminal illness or for reasons other than those of a ‘bad leaver’),
any unvested Performance Rights will lapse and any vested Performance Rights will remain
exercisable until the end of the exercise period.
The Board retains absolute discretion with respect to the application of malus and clawback to any
KMP’s remuneration arrangements.
The Group has malus (downwards adjustment of unvested or unpaid remuneration) and clawback
(repayment of vested or paid remuneration) provisions in place for its KMP.
In circumstances of any serious misconduct by the individual, and/or any material misstatement
in the Financial Statements of the Group or any of its Related Bodies Corporate during any of the
preceding 3 financial years, the Board may:
– lapse all/a portion of unexercised Performance Rights (commonly known as ‘malus’);
– request the repayment of the after tax value of exercised Performance Rights or adjust current
year remuneration arrangements (Director fees and BPR Grant participation) to match the after
tax value of the amount due to be repaid (commonly known as ‘clawback’.
Board discretion
The Board retains absolute discretion in regard to the operation of the BPR Grant subject to
compliance with the ASX Listing Rules.
Refer to section 6.5(d) of the MoneyMe Prospectus for further information.
REMUNERATION REPORT 202 0
37
(d) NED equity plan outcomes
Under the BPR Grant, 0% vested due to the unsuccessful completion of establishment and financial closing of a facility with a major
bank or financial institution in FY20. As these performance rights have lapsed none of the 400,000 rights under the BPR Grant plan
will be available for exercise.
Under the EPR Grant, 100% of the performance vesting conditions for Susan Wynne have been met in accordance with the table
below. The employment vesting conditions for the participant will be met given the individual is still a Director on the day of
vesting. 50% of these vested Performance Rights will be exercisable on the day following the release of the Group’s annual financial
results for the financial year ending 30 June 2021 and the remaining 50% of these vested Performance Rights will be exercisable
on the day following the release of the Group’s annual financial results for the financial year ending 30 June 2022. The table below
outlines the EPR Grant outcome for Susan Wynne.
Table 6: FY20 outcomes for NED Susan Wynne
Performance condition
Outcome
Further detail
Revenue target
Achieved
EBITDA target
Achieved
Strategic target
Achieved
FINAL VESTING OUTCOME
100%
Employment related vesting conditions are to be met.
Revenue of $47.7m was achieved against a
target of $45.8m.
EBITDA of $3.2m was achieved against a
target of $2.9m.
Successful completion of IPO capital raise
greater than $40m.
(e) Statutory disclosure of FY20 non-executive director remuneration
Table 7: FY20 non-executive director remuneration
FAR
STI
LTI
Financial
Year
Salary Additional
benefits
Superannuation
Cash
payment
Performance
rights3
MoneyMe
Remuneration for
the years ending
30 June 2020 and
30 June 2019
Peter Coad1
$
2020
74,659
2019
–
Jonathan Lechte1
2020
44,242
Scott Emery
Susan Wynne1
Steven Bannigan2
Total
2019
–
2020
24,887
2019
–
2020
38,712
2019
2020
2019
–
–
–
2020
182,500
2019
–
$
–
–
–
–
–
–
–
–
–
–
–
–
$
7,093
–
4,203
–
17,503
–
3,678
–
–
–
32,477
–
$
–
–
–
–
–
–
–
–
–
–
–
–
Total
$
81,752
–
48,445
–
42,390
–
$
–
–
–
–
–
–
44,296
86,686
–
–
–
–
–
–
44,296
259,273
–
–
1 Peter Coad, Jonathan Lechte and Susan Wynne all held office from 11 October 2019.
2 Steven Bannigan was a NED of MoneyMe Limited’s wholly owned subsidiary, MoneyMe Financial Group Pty Limited, up to the Group’s reorganisation ceasing
on 12 December 2019. Mr. Bannigan has not been a Director of MoneyMe Limited at any time.
3 Performance rights are subject to meeting the vesting criteria. The amount disclosed is representative of the accounting remuneration.
3838
6. Remuneration Governance
The Board of MoneyMe Limited is responsible for evaluating and approving the remuneration arrangements of KMP at the Group.
The Board will seek the advice and guidance of the Remuneration & Nomination Committee from time-to-time, as appropriate.
The diagram below outlines how the Board interacts with internal and external stakeholders of the Group.
Responsible for assisting the Board to
discharge its responsibilities relating
to the Executive KMP remuneration
framework and outcomes, and Non-
Executive Director remuneration.
Institutional investors and
proxy advisors to be consulted
on the Group’s remuneration
arrangements, to ensure their
feedback is received.
n &
o m m i
t e e
t
Re m u n e r a ti o
ominatio n C
N
BOARD
E
xte
r
n
E
n
a
l
S
g
a
g
t
a
e
k
e
m
h
e
o
n
l
t
d
e
r
Ultimately responsible for
the active oversight of the
remuneration framework and
its effective operation. It may
delegate the design, operation and
monitoring of the remuneration
framework to the Remuneration &
Nomination Committee.
M
a
n
a
g
e
m
e
n
t
m uneration
d visors
a l R
e
A
n
r
e
E x t
Responsible for providing the required
information to the Committee to
support their decision-making.
Management may engage external
remuneration advisors from time-to-
time to provide advice.
Remuneration advisors may be
appointed by the Remuneration
& Nomination Committee or
management to provide external
advice. No ‘remuneration
recommendations’ were
provided in FY20.
REMUNERATION REPORT 202 0
39
7. Additional Statutory Disclosures
This section provides any additional statutory disclosures not already included in the previous sections of the Remuneration
Report.
(a) Performance Rights held by KMP
The table below outlines the movements in Performance Rights for KMP, including those granted, vested, and lapsed during the
financial year.
Table 8: Movement in Performance Rights of KMP
KMP
Financial
Year
Opening
balance
Share rights granted
Share rights
vested
Share rights
lapsed
Closing
balance
Clayton Howes
Neal Hawkins
Peter Coad
Jonathan Lechte
Scott Emery
Susan Wynne
Steven Bannigan
Total
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
No.
No.
$
No.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
252,000
315,000
–
–
40,000
50,000
–
–
200,000
250,000
–
–
200,000
250,000
–
–
–
–
–
–
60,000
75,000
–
–
–
–
–
–
752,000
940,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
No.
No.
–
–
–
–
200,000
–
200,000
–
–
–
–
–
–
–
252,000
–
40,000
–
–
–
–
–
–
–
60,000
–
–
–
400,000
352,000
–
–
4040
The table below outlines the Performance Rights held by KMP under the EPR and BPR Grants.
Table 9: Performance Rights granted to KMP
KMP
Award
Grant date
Performance
period start date
No. of rights at
30 June 2020
Exercise date
Clayton Howes
EPR
16 December 2019
1 July 2019
252,000
Neal Hawkins
EPR
16 December 2019
1 July 2019
40,000
Peter Coad
BPR 14 November 2019
1 July 2019
Jonathan Lechte
BPR 14 November 2019
1 July 2019
–
–
Day after release of annual
reports for 2021/2022
Day after release of annual
reports for 2021/2022
Day after release of annual
reports for 2020/2021
Day after release of annual
reports for 2020/2021
Scott Emery
N/A
N/A
N/A
N/A
N/A
Susan Wynne
EPR
16 December 2019
1 July 2019
60,000
Day after release of annual
reports for 2021/2022
Steven Bannigan
N/A
N/A
N/A
N/A
N/A
(b) Shareholdings of KMP
The table below outlines the shareholdings of KMP and their related parties. This includes MoneyMe shares received from the
Group’s variable remuneration arrangements and shares acquired outside of these arrangements.
Table 10: Shareholdings of KMP
KMP
Opening
balance1
Cancellation of
shares2
Received on
IPO3
Purchased /
acquired
Disposed
Closing
balance
Received
on exercise
of rights or
options
No.
No.
No.
No.
No.
No.
No.
Clayton
Howes
95,737
(95,737)
51,494,716
Neal Hawkins
–
–
–
Peter Coad
1,231
(1,231)
662,126
Jonathan
Lechte
1,231
(1,231)
662,126
Scott Emery
88,479
(88,479)
47,590,802
Susan Wynne
–
–
–
Steven
Bannigan
51,665
(51,665)
27,789,405
Total
238,343
(238,343)
128,199,175
–
–
–
–
–
–
–
–
–
(1,200,000)
50,294,716
20,000
–
–
231,000
–
–
–
–
–
–
–
20,000
662,126
662,126
47,821,802
–
(1,600,000)
26,189,405
251,000
(2,800,000)
125,650,475
1 Opening balance as at 1 July 2019 for shares in MoneyMe Financial Group Pty Limited.
2 Cancellation of MoneyMe Financial Group Pty Limited shares.
3 Issuance of MoneyMe Limited shares on IPO. Note that the cancelled MoneyMe Financial Group Pty Limited shares, and the subsequent issuance of the MoneyMe
Limited shares on IPO were for the same fair value. Refer to the 2020 Annual Financial Report – Note 5 on the Group’s business reorganisation and Note 19 on the
Group’s share capital for further information.
REMUNERATION REPORT 202 0
41
(c) Prohibition on hedging of shares of unvested equity awards
Under the Group’s ‘Securities Trading Policy’, there are clear restrictions on the trading of MoneyMe shares where a person is in
possession of price sensitive information that is not generally available. This Policy applies to all KMP and also prohibits individuals
from entering into ‘protection arrangements’, which includes hedging the risk of their MoneyMe shareholding (including unvested
equity awards).
A copy of our Securities Trading Policy is available on the Group website.
(d) KMP transactions
Refer to Note 22 of the 2020 Annual Report for all related party disclosures. All related party transactions as disclosed in Note 22
are KMP transactions.
42424242
03
Financial
Report
FINANCIAL REPORT 20 20
43
43
Directors’ Declaration
Independent Auditor’s Report
Independent Auditor’s Statement of Independence
Financial Statements
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. Group Information
2. New and Amended Accounting Standards
3. Significant Accounting Policies
4. Critical Accounting Estimates and Judgements
5. Public Listing and Business Reorganisation
6. Coronavirus 2019 (COVID-19)
7. Revenue
8. Operating Expenses
9. Taxation
10. Earnings Per Share
11. Cash and Cash Equivalents
12. Other Receivables and Payables
13. Net Loan Receivables
14. Leases
15. Property, Plant and Equipment
16. Intangible Asset
17. Borrowings
18. Employee Related Provisions and KMP Remuneration
19. Share Capital
20. Reserves
21. Financial Risk Management
22. Related Party Transactions
23. Parent Entity Information
24. Remuneration of Auditors
25. Subsequent Events
44
45
50
51
51
52
53
54
55
55
56
58
64
66
66
69
69
70
72
73
74
75
78
79
79
80
81
82
83
87
90
91
92
92
FINANCIAL REPORT 2020 4444
Directors’ Declaration
In the opinion of the Directors of MoneyMe Limited:
1.
the Financial Statements and Notes are in accordance with the Corporations Act 2001,
and give a true and fair view of the financial position of the Group as at 30 June 2020,
and of its performance for the financial year ended at that date;
2. the Financial Statements are in compliance with International and Australian Financial
Reporting Standards; and
3. there are reasonable grounds to believe that the Group will be able to pay its debts as
and when they become due and payable.
The Directors have been given the declarations required by section 295A of the
Corporations Act 2001.
Signed in accordance with a resolution of the Directors made pursuant to section 295(5) of
the Corporations Act 2001.
On behalf of the Directors.
Peter Coad
Chairman
Sydney, 25 August 2020
Clayton Howes
Managing Director and Chief Executive Officer
Sydney, 25 August 2020
Independent Auditor’s Report
45
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney, NSW, 2000
Australia
Phone: +61 2 9322 7000
www.deloitte.com.au
Independent Auditor’s Report to the
Members of MoneyMe Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of MoneyMe 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 statements, 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 then ended; 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 auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional & 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.
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 for 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.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network
FINANCIAL REPORT 2020
4646
Independent Auditor’s Report
Key Audit Matter
Expected credit loss provisioning
As at 30 June 2020, the Group has
recognised $12.8m of expected credit loss
(ECL) provisions in accordance with AASB 9
Financial Instruments as disclosed in Note
4.2, 4.3, 13 and 21.2.
The models developed by management to
determine expected credit losses require
judgement and assumptions to be made by
management, including:
• Selection of criteria for identifying
significant increase in credit risk,
• Selection of parameters input into
the ECL models in relation to
probability of default, loss given
default and exposure at default,
Significant management judgement is also
required in regard to the:
• Assessment on a forward looking
basis using multiple economic
scenarios of the impact on
expected credit losses of potential
macro-economic events, including
the impact of COVID-19, and
• Assessment of expected credit loss
provisioning model risk, being the
risk that the model fails to perform
adequately, and quantification of
that risk.
Effective Interest Rate
The Group reported interest income
amounting to $43.0m in the year to 30
June 2020 and net loans receivable of
$120.8m. Interest income received from
loan receivables is determined using the
effective interest rate (EIR) method in
accordance with AASB 9 Financial
Instruments. The loan receivable balance is
measured and presented at amortised cost
using the EIR method. The Group’s
disclosure over the effective interest rate is
disclosed in Note 4.5 and 7.
Management judgement is required in
calculating the EIR, including:
•
Identifying the fees received
between parties to the loan
How the scope of our audit responded to the
Key Audit Matter
Our procedures included, but were not limited to:
• Obtaining an understanding of the
•
•
judgements made within the ECL models;
Testing the design and implementation of
relevant controls relating to loan
approvals and identification of overdue
amounts;
Testing the data inputs in calculating the
probability of default and loss given
default, such as loan outstanding days
past due status, origination date and loan
duration, hardship or default dates, loan
credit limit and interest rate, as well as
agreeing a sample of loan information to
source documentation;
•
• Assessing the provisioning methodology
with reference to relevant accounting
standards and market practices;
Evaluating the reasonability of
management’s assumptions and
judgments in relation to the selection of
parameters and criteria input into the
models in relation to the calculation of
probability of default, loss given default,
exposure at default, significant increase in
credit risk, macroeconomic forecasts and
scenarios and model risk overlays;
Engaging our internal credit risk modelling
experts to test the application of
management’s assumptions and the
mathematical accuracy of the models
through reperformance; and
•
• Challenging management’s judgements on
the macroeconomic factors and
judgemental overlays in response to the
current macroeconomic environment.
We have also assessed the appropriateness of the
disclosures in Note 4.2, 4.3, 13 and 21.2 to the
consolidated financial statements.
Our procedures included, but were not limited to:
• Assessing the Group’s accounting policy
for revenue recognition with reference to
the relevant accounting standards
including the appropriateness of the
inclusion of fees received between parties
to the loan contract in the determination
of the EIR;
Evaluating the design and implementation
of relevant controls relating to the
calculation of the EIR;
•
• Challenging management’s assumptions
used in the EIR model, including
estimated future cash flows, historical
repayment patterns and the behavioural
life of each lending product;
Independent Auditor’s Report
47
contract which need to be included
in the determination of the EIR.
• Determining the period over which
expected cash flows are estimated
to be received;
Significant management judgement is
required in calculating the EIR, including:
•
• Considering the impact of loans
which have been repaid early in the
current environment to those
estimates.
In addition, the EIR model is both manual
and complex and therefore may be subject
to arithmetical and modelling errors.
Recoverability of deferred tax assets
As at 30 June 2020 the Group has
recognised $4.3m of deferred tax assets as
disclosed in Note 9.4. Deferred tax assets
include timing differences as well as those
related to the reset of the tax base of the
Group’s intangible assets following the
Initial Public Offering of the Group in
December 2019.
In accordance with AASB 112 Income
Taxes, deferred tax assets are recognised
to the extent that it is probable that
taxable profit will be available against
which the deductible temporary difference
would be utilised.
Significant management judgement is
required to:
• Determine the assumptions and
estimates used in the preparation
of the discounted cash flow model
to value the tax base of the
intangible asset such as:
- Revenue and loan
receivable growth rates;
- Discount rates; and
-
Terminal value growth
rates.
• Determine the assumptions and
estimates used to forecast future
taxable profits including those that
are affected by current economic
conditions such as:
-
Timing of the receipt of
funding; and
- Growth rates of revenue,
loan receivables and
expected credit losses over
the next 2 to 5 years.
• Assessing the impacts of changes in
estimated cash flows due to early
repayment of loans;
• Agreeing a sample of key inputs to the
EIR model to underlying source data such
as signed loan agreements and bank
statements; and
Testing on a sample basis the
appropriateness of EIR calculation and
recalculating interest income under the
EIR method.
We have also assessed the appropriateness of the
disclosures in Note 4.5 and 7 to the consolidated
financial statements.
Our procedures included, but were not limited to:
•
In conjunction with our internal tax
specialists we assessed:
a. the appropriateness of the
revaluation of the intangible
assets for tax purposes; and
b. the deferred tax asset calculation
prepared by management under
Australian tax legislation and
relevant accounting standards;
• We engaged our internal valuation
specialists to:
a. challenge the appropriateness of
management’s growth rate and
discount rate assumptions within
the discounted cash flow model
used to value the tax base of the
intangible asset as calculated by
management’s expert; and
b. test through reperformance the
mathematical integrity of the
model.
• Assessing of the scope, competence, and
objectivity of management’s valuation
expert;
• Challenging the appropriateness of
management’s forecasts of available
future taxable profit and assessing the
reasonableness of the assumptions
underlying the preparation of these
forecasts, including the appropriateness of
these in the current economic
environment; and
• Recalculating the mathematical accuracy
of the deferred tax calculation.
We have also assessed the appropriateness of the
disclosures in Note 9.4 to the consolidated
financial statements.
FINANCIAL REPORT 2020
4848
Independent Auditor’s Report
Other Information
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2020, but does not
include the financial report and our 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.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as
intentional omissions,
involve collusion,
fraud may
misrepresentations, or the override of internal control.
forgery,
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial
report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.
Independent Auditor’s Report
49
•
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and
events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express an opinion on the financial report.
We are responsible for the direction, supervision and performance of the Group’s audit. We
remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 26 to 41 of the Directors’ Report for
the year ended 30 June 2020.
In our opinion, the Remuneration Report of MoneyMe 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.
DELOITTE TOUCHE TOHMATSU
Rebecca Jones
Partner
Chartered Accountants
Sydney, 25 August 2020
FINANCIAL REPORT 2020
5050
Independent Auditor’s Statement of Independence
Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Asia Pacific Limited and the Deloitte Network. Deloitte Touche Tohmatsu ABN 74 490 121 060 Grosvenor Place 225 George Street Sydney, NSW, 2000 Australia Phone: +61 2 9322 7000 www.deloitte.com.au 25 August 2020 Dear Board Members Auditor’s Independence Declaration to MoneyMe Limited In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the Board Members of MoneyMe Limited. As lead audit partner for the audit of the financial report of MoneyMe Limited for the year ended 30 June 2020, I declare that to the best of my knowledge and belief, there have been no contraventions of: (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (ii) any applicable code of professional conduct in relation to the audit. Yours faithfully DELOITTE TOUCHE TOHMATSU Rebecca Jones Partner Chartered AccountantsThe Board of Directors MoneyMe Limited Level 3 131 Macquarie St, Sydney, NSW, 2000 Consolidated Statement of Profit or Loss and Other
Comprehensive Income
For the year ended 30 June 2020
51
Loan interest income
Other income
Total Revenue
Interest expense
Sales and marketing expense
Product design and development expense
General and administrative expense
Depreciation and amortisation expense
Loan impairment expense
Total Operating Expenses
Profit / (Loss) Before Tax
Income tax benefit
Net Profit / (Loss) After Tax
Other comprehensive income
Total Comprehensive Income
Basic profit per share
Diluted profit per share
Note
7
7
8.2
8.1
8.1
8.1
13.3
9
10
10
2020
$’000
43,011
4,660
47,671
(12,751)
(5,049)
(2,710)
(10,322)
(985)
(15,973)
(47,790)
(119)
1,418
1,299
-
1,299
cents
1
1
2019
$’000
27,548
4,346
31,894
(8,544)
(3,388)
(1,557)
(6,199)
(231)
(11,850)
(31,769)
125
199
324
–
324
cents
132
131
The Financial Statements are to be read in conjunction with the Notes to the Financial Statements.
FINANCIAL REPORT 2020
5252
Consolidated Statement of Financial Position
As at 30 June 2020
Cash and cash equivalents
Other receivables
Net loan receivables
Current tax asset
Deferred tax asset
Right of use assets
Property, plant and equipment
Intangible asset
Total assets
Other payables
Lease liabilities
Borrowings
Current tax payable
Employee related provisions
Total liabilities
Net assets
Share capital
Reserves
Retained earnings
Total equity
Note
11
12
13
9
9
14
15
16
12
14
17
9
18
19
20
2
2020
$’000
35,379
999
120,751
–
4,296
1,905
1,105
2,166
166,601
1,913
2,120
113,126
1,580
1,010
119,749
46,852
211,800
(166,933)
1,985
46,852
2019
$’000
6,062
506
78,332
4
760
–
145
781
86,590
1,099
–
81,564
–
229
82,892
3,698
2,794
118
786
3,698
The Financial Statements are to be read in conjunction with the Notes to the Financial Statements.
Consolidated Statement of Changes in Equity
For the year ended 30 June 2020
Share Capital
Reserves
Retained Earnings
Note
Balance as at 30 June 2018
Adjustment on adoption of AASB 9
Balance as at 1 July 2018
Profit for the period
Other comprehensive income
Shares issued
Share based payment expense
20
Balance as at 30 June 2019
Adjustment on adoption of AASB 16
2
Balance as at 1 July 2019
Profit for the period
Other comprehensive income
Shares issued
Business reorganisation
Share based payment expense
19
20
20
$’000
2,794
–
2,794
–
–
–
–
2,794
–
2,794
–
–
208,706
–
300
$’000
90
–
90
–
–
–
28
118
–
118
–
–
–
(167,692)
641
$’000
1,634
(1,172)
462
324
–
–
–
786
(100)
686
1,299
–
–
–
–
Balance as at 30 June 2020
211,800
(166,933)
1,985
The Financial Statements are to be read in conjunction with the Notes to the Financial Statements.
53
Total
$’000
4,518
(1,172)
3,346
324
–
–
28
3,698
(100)
3,598
1,299
–
208,706
(167,692)
941
46,852
FINANCIAL REPORT 2020
5454
Consolidated Statement of Cash Flows
For the year ended 30 June 2020
Income from customers
Payments to suppliers and employees
Net funding interest paid
Income tax (paid) / received
Net cash inflows from operating activities
Payments for property, plant and equipment
Payments for intangible asset development
Net loan disbursements
Net cash outflows from investing activities
Proceeds from borrowings
Transaction costs related to borrowings
Principal repayment of leases
Proceeds from issued share capital
Net cash inflows from financing activities
Note
ii
i
15
16
iii
14, ii
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents
11
2020
$’000
46,928
(15,992)
(11,336)
(7)
19,593
(1,087)
(1,704)
(58,393)
(61,184)
31,562
(1,356)
(612)
41,314
70,908
29,317
6,062
35,379
2019
$’000
31,770
(10,753)
(7,315)
(32)
13,670
(158)
(466)
(46,684)
(47,308)
37,172
(975)
–
–
36,197
2,559
3,503
6,062
i: Includes interest related to cash receipts (see Note 11), interest in relation to leases (see Note 14) and interest related to
borrowings (see Note 17).
ii: These Financial Statements reflect the adoption of AASB 16 Leases. Under the transition method chosen, comparative
information has not been restated. The FY20 period results are therefore not directly comparable to the prior period. The adoption
of AASB 16 has resulted in an increase in operating cash flows reported above, which is fully offset by a reduction in financing cash
flows due to the principle repayment of leases. Refer to Note 2 for further information.
iii: Proceeds from borrowings is inclusive of the following amounts (in thousands): drawdowns from warehouse facilities of $32,525
(see Note 17), movement in borrowing costs associated with the facilities of $2,312 and repayment of shareholder loans before the
Group listed of $3,275.
The Financial Statements are to be read in conjunction with the Notes to the Financial Statements.
55
Notes to the Financial Statements
For the year ended 30 June 2020
1. Group Information
1.1 Company Information
MoneyMe Limited (the Company) is a listed public company limited by shares, incorporated and domiciled in Australia. The
Company was incorporated on 17 October 2019. The Company is also the parent and ultimate holding entity of the MoneyMe
Group. The address of its registered office and principal place of business is:
Level 3
131 Macquarie Street
Sydney NSW 2000
The principal activity of the Company and its Controlled Entities (the Group) is to provide retail consumer finance. The Group
reflects a business re-organisation that was completed in December 2019. Refer to Note 4 for further information.
1.2 Controlled Entities Information
Name
Country of Incorporation
Establishment date
Proportion of ownership
held by Group
MoneyMe Financial Group Pty Limited1
MoneyMe Finance Pty Limited2
MoneyMe Technology Pty Limited
MoneyMe Partnership Pty Limited3
MoneyMe Velocity Warehouse Trust4
MoneyMe Horizon Warehouse Trust4
ListReady Pty Limited
ListReady (NZ) Pty Limited
RentReady Pty Limited
Australia
9 May 2013
Australia
7 November 2019
Australia
7 November 2019
Australia
7 November 2019
Australia
17 December 2017
Australia
19 December 2018
Australia
29 May 2019
New Zealand
14 April 2020
Australia
7 May 2020
2020
100%
100%
100%
100%
100%
100%
100%
100%
100%
2019
100%
–
–
–
100%
100%
100%
–
–
1 Owns 100% of the shares of ListReady Pty Limited and RentReady Pty Limited.
2 Owns the residual income units relating to MoneyMe Velocity Warehouse Trust and MoneyMe Horizon Warehouse Trust. Ownership changed in the financial year
from MoneyMe Financial Group Pty Limited to MoneyMe Finance Pty Limited.
3 Owns 100% of the shares of ListReady (NZ) Pty Limited.
4 Ownership reflects capital and residual income unit ownership.
FINANCIAL REPORT 2020 5656
2. New and Amended Accounting Standards
2.1 AASB 16 Leases
AASB 16 Leases is applicable to reporting periods beginning on or after 1 January 2019 and was adopted by the Group from 1 July
2019. The standard replaces the previous standard, AASB 117 Leases. The Group has applied the requirements of AASB 16 to the
existing leases as at 1 July 2019.
AASB 16 adopts a balance sheet approach, which introduces a single lessee accounting model and requires a lessee to recognise
assets and liabilities for all leases with a term of more than 12 months. This replaces the accounting treatment for a lessee under
AASB 117 which was based on categorising the lease either as a finance lease (recognised on balance sheet) or an operating lease
(not recognised on balance sheet). The Group has recognised a ‘lease liability’ and corresponding ‘right of use’ (ROU) asset upon
adoption.
The Group chose to adopt the ‘modified retrospective approach’ under AASB 16 and therefore the impact of AASB 16 prior to the
adoption date was adjusted to opening retained earnings at 1 July 2019, with no impact to comparatives.
Two lease agreements existed as at 30 June 2020 relating to 131 Macquarie Street (“Sydney”) and 317 Hunter Street
(“Newcastle”). The Group’s Sydney lease agreement does not stipulate an option to renew and therefore it is assumed by
management that the only available option is termination. Under AASB 16, if only a lessor has the right to terminate a lease, the
non-cancellable period of the lease includes the period covered by the option to terminate the lease. Conversely, the Group’s
Newcastle lease has an option to renew for a further two years, subject to new commercial terms. The option period is included in
the lease liability disclosed in Note 14.
Further, the Group considered and determined that no embedded leases were in effect during the financial year ended 30 June
2020.
The table below highlights the impact of different accounting treatment between AASB 117 and AASB 16 on the Group’s
Statement of Profit or Loss and Other Comprehensive Income and Statement of Financial Position to at 1 July 2019 from adopting
AASB 16 under the ‘modified retrospective’ approach.
AASB 117
AASB 16
Impact of adoption of AASB 16
Statement of Profit or Loss and Other Comprehensive Income
Interest expense:
n/a
Recognition of interest
expense on lease liabilities
Higher interest expense
General and administrative
expense:
Recognition of operating lease
expense
n/a
Lower general and
administration expense
Depreciation and
amortisation expense:
Operating expenses:
n/a
Recognition of ROU asset
depreciation expense
Higher depreciation expense
Recognition of operating lease
expense
Interest expense less
depreciation expense
Higher operating expenses on
initial recognition but lower
over time
Statement of Financial Position
ROU asset:
Lease liability:
n/a
n/a
Recognition of ROU asset
Higher assets
Recognition of lease liability
Higher liabilities
In addition, it is noted that the adoption of AASB 16 has resulted in an increase in operating cash flows reported within the
Consolidated Statement of Cash Flows, which is fully offset by a reduction in financing cash flows.
The table below sets out the movement from the operating lease commitment as at 30 June 2019 as disclosed in Note 19 of the
2019 Annual Financial Report and the opening lease liability as accounted for under AASB 16.
57
Operating Lease Commitment as at 1 July 2019
Discount
Lease Liability as at 1 July 2019
$’000
2,223
(305)
1,918
The table below quantifies the impact from adopting AASB 16 relating to the prior year reflected in an adjustment to 1 July 2019
retained earnings.
AASB 117 carrying
amount
AASB 16 carrying
amount
Retained earnings
impact
Right of use asset
Lease liability
Net impact as at 1 July 2019
Opening balance deferred tax effect of lease
remeasurement
Total impact on opening retained earnings (1 July 2019)
Refer to Note 14 for further information.
2.2 AASB 17 Insurance Contracts
$ ‘000
–
–
–
–
$ ‘000
1,781
(1,918)
(137)
37
$ ‘000
1,781
(1,918)
(137)
37
(100)
AASB 17 Insurance Contracts is effective for annual reporting periods beginning on or after 1 January 2023. AASB 17 establishes
the principles for the recognition, measurement, presentation, and disclosure of insurance contracts and supersedes AASB 4
Insurance Contracts.
The Group expects to adopt AASB 17 for its 2021 Annual Financial Report. It is to be applied retrospectively unless impracticable,
in which the modified retrospective approach, or the fair value approach is applied. The Group expects the standard’s application to
the MoneyMe 2021 Annual Financial Report will be limited or de minimis given AASB 17’s focus on insurance policy issuers rather
than policy recipients.
2.3 Interpretation 23 Uncertainty over Income Tax Treatments
Interpretation 23 clarifies the recognition and measurement requirements in AASB 112 Income Taxes when there is uncertainty
over whether the relevant tax authorities will accept the proposed income tax treatments. As such, current and deferred taxes
are to be recognised based on taxable profits or losses, tax bases, unused tax losses, and tax rates where they are expected to be
accepted by the Tax Commissioner.
The Group has adopted this interpretation whereby accounting for tax treatments have been completed on the premise that
current taxes and deferred taxes are recognised to the extent that they are probable.
FINANCIAL REPORT 2020 5858
3. Significant Accounting Policies
3.1 Basis of Preparation
3.1.1 Statement of Compliance
The Group is a for-profit, private sector business. The Financial
Report is a general-purpose financial report, which has been
prepared in accordance with the Corporations Act 2001 and
authoritative pronouncements of the Australian Accounting
Standards Board (AASB) and International Financial Reporting
Standards (IFRS).
The Group has adopted all the new and revised standards and
interpretations issued by the AASB that are relevant to their
operations and effective for the current financial year.
The Consolidated Financial Statements were authorised for
issue in accordance with a resolution of the Directors on the
date as set out on the Directors’ Declaration.
Profit or loss and each component of other comprehensive
income are attributed to the owners of the Company and to
the non-controlling interests. Total comprehensive income
of entities is attributed to the owners of the Company and to
the non-controlling interests even if this results in the non-
controlling interests having a deficit balance.
When necessary, adjustments are made to the Financial
Statements of entities to bring their accounting policies into
line with the Group's accounting policies.
All intragroup assets and liabilities, equity, income, expenses,
and cash flows relating to transactions between members of
the Group are eliminated in full on consolidation. This includes
elimination of Trust entity residual income units held by the
Company that have been classified as financial liabilities at the
Trust entity level.
3.1.2 Basis of Accounting
3.1.4 Going Concern
The financial report has been prepared on a going concern
basis, which contemplates continuity of normal business
activities and realisation of assets and settlement of liabilities
in the ordinary course of business. Refer to Note 4.4 for
further details.
3.1.5 Segment Information
Management has determined that the Group has one reporting
segment being the provision of retail consumer finance. The
internal reporting framework is based on the principal activity.
The assets as presented relate to the reporting segment, as
identified above. No one customer represents greater than 10%
of the Group’s revenue. The Group operates predominately
in Australia.
3.1.6 Functional and Presentation Currency
The Financial Statements are presented in Australian dollars,
which is the Group’s functional currency.
3.1.7 Rounding
The Group is of a kind referred to in the Corporations
Instrument 2016/191, issued by the Australian Securities and
Investments Commission. Amounts in this report have been
rounded off to the nearest thousand dollars in accordance with
the Corporations Instrument 2016/191.
The Financial Statements have been prepared on the historical
cost basis, except for certain assets which, as noted, are
measured at fair value.
3.1.3 Basis of Consolidation
The Consolidated Financial Statements incorporate the
Financial Statements of the Company and entities controlled by
the Company. Control is achieved when the Company:
— Has power over the investee (i.e. existing rights that give
it the current ability to direct the relevant activities of the
investee);
— Is exposed, or has rights, to variable returns from its
involvement with the investee; and
— Has the ability to use its power over the investee to affect
its returns.
The Company reassesses whether or not it controls an investee
if facts and circumstances indicate that there are changes to
one or more of the three elements of control listed above.
When the Company has less than a majority of the voting rights
of an investee, it has power over the investee when the voting
rights are sufficient to give it the practical ability to direct the
relevant activities of the investee unilaterally. The Company
considers all relevant facts and circumstances in assessing
whether or not the Company's voting rights in an investee are
sufficient to give it power.
Consolidation of an entity begins when the Company obtains
control over the entity and ceases when the Company loses
control of the entity. Specifically, income and expenses of an
entity acquired or disposed of during the year are included
in the consolidated statement of profit or loss and other
comprehensive income from the date the Company gains
control until the date when the Company ceases to control
the entity.
59
The Group derecognises a financial asset only when the
contractual rights to the cash flows from the asset expire, or
when it transfers the financial asset and substantially all the
risks and rewards of ownership of the asset to another entity.
If the Group neither transfers nor retains substantially all the
risks and rewards of ownership and continues to control the
transferred asset, the Group recognises its retained interest in
the asset and an associated liability for amounts it may have to
pay. If the Group retains substantially all the risks and rewards
of ownership of a transferred financial asset, the Group
continues to recognise the financial asset and also recognises a
collateralised borrowing for the proceeds received.
On derecognition of a financial asset measured at amortised
cost, the difference between the asset’s carrying amount
and the sum of the consideration received and receivable is
recognised in profit or loss.
Loan receivables are written off when the Group has no
reasonable expectations of recovering the financial asset
(either in its entirety or a portion of it). This is the case
when the Group determines that the borrower does not
have assets or sources of income that could generate
sufficient cash flows to repay the amounts subject to the
write-off. A write-off constitutes a derecognition event.
3.2 Financial Instruments
3.2.1 Net Loan Receivables
3.2.1.1 Recognition, Classification and Measurement
The Group initially recognises Gross Loan Receivables at fair
value, net of any transaction costs and subsequently measures
them at amortised cost as:
— MoneyMe’s business model is to collect contractual cash
flows for its products until the account with the customer is
closed. There have been no historic sales and there are no
current plans to sell the accounts for fair value gains; and
— The Group’s contractual cash flows are solely payments of
principal and interest (SPPI) on the principal outstanding
(the SPPI test).
Transferred loan receivables into the trust are still recognised
in the Consolidated Financial Statements as the Group:
a)
is exposed to, or has rights to, variable equity returns in
its capacity as the residual unit holder (or beneficiary as
the case may be) of these trusts;
b) has the ability to impact the variable equity returns in
its capacity as the originator of loan receivables and the
servicer of these loans on behalf of the trusts; and
c)
is the sole subscriber to the Seller Notes issued by
the trusts.
The Seller Notes go towards maintaining the minimum equity
contribution/subordination buffer. In addition to the Seller
Notes, the Group’s asset-backed securitisation program
includes multiple classes of Notes, which carry a floating
interest rate.
The effective interest rate method is applied to loan receivable
balances to include related fee income. The effective interest
rate is the rate that exactly discounts estimated future cash
receipts or payments (including all fees and points paid or
received that form an integral part of the effective interest
rate, transaction costs and other premiums or discounts)
through the expected life of the financial instrument, or, where
appropriate, a shorter period, to the net carrying amount on
initial recognition.
FINANCIAL REPORT 2020 6060
3.2.1.2 Impairment
c) Exposure at default (EAD): EAD is the total value the
In accordance with AASB 9 Financial Instruments, the Group
recognises a loss provision in the Statement of Financial
Position for Expected Credit Losses (ECLs) relating to its
financial assets. Loss allowances for financial assets measured
at amortised cost are deducted from the gross carrying
amount of the assets. Net receivable related provisioning
includes an assessment in relation to the credit risk of undrawn
commitments.
ECLs are a probability-weighted estimate of credit losses.
Credit losses are measured as the present value of all cash
shortfalls (i.e. the difference between the cash flows due to the
entity in accordance with the contract and the cash flows that
the Group expects to receive). It consists of three components:
a) Probability of default (PD): PD is an estimate of the
likelihood that a loan will default within a set period.
b) Loss given default (LGD): LGD is an estimate of the loss
arising on default. The LGD model has been generated
using the method of averages in a two-step process,
which includes judgements and estimates based on
industry statistics and historical performance of the
Group’s portfolio.
business is exposed to when a loan defaults. The default
date is the day when a contractually due payment was
not received. Management has set the balance owing
on the loan to be the EAD if it is an estimate of the value
or value at the end of the period. This balance excludes
fees, as well as repayment amounts that have been
allocated to fees. The EAD is discounted back monthly
by the effective interest rate and amortised using the
latest contracted principal repayment amount.
The Group’s provisioning takes into account general hardship
(“hardship”) and COVID-19 hardship. Consumer loans are
assessed to be in hardship in line with the Group’s Responsible
Lending policy. This reflects the completion of an information
gathering, verification and assessment that concludes that
the borrower will be unable to continue to make contractual
loan repayments without experiencing substantial hardship.
A borrower maybe in substantial hardship if they can only
repay by reducing non-discretionary expenses. Consumers are
assumed to be in COVID-19 hardship if they request deferrals
or reductions to their contractual loan repayments because
of the COVID-19 environment, have not been assessed under
formal hardship and are not in arrears greater than 29 days
past due at the time of assessment.
The Group applies the three-stage AASB 9 model to determine the loss allowance of its financial assets as follows.
Stage 1:
At initial recognition, an ECL is collectively assessed and measured by classes of financial assets with the same level
of credit risk. Recognition is a product of the PD over the next 12 months, LGD and EAD. The assessment that there
has been no increase in credit risk since initial recognition is made in reference to a loan asset being less than 30 days
in arrears and not in hardship.
Loan assets identified as being under COVID-19 related hardship arrangements with arrears greater than 30
days past due are reflected as stage 1 assets. The credit risk of these assets has been assessed overall to have
not increased significantly since initial recognition even though the contractual payments are more than 30 days
past due. This reflects consideration of a number of factors, including a pro-active and supportive decision to
offer all borrowers impacted by COVID-19 to alter their scheduled repayments to accommodate the COVID-19
environment, the availability of support arrangements being offered by other financial institutions to support
businesses and individuals in the COVID-19 environment, market macro-economic forecasts and the availability of
government COVID-19 stimulus measures such as access to the JobKeeper and early access to superannuation to
allow customers to meet their commitments.
All COVID-19 hardship loans are monitored, including those with arrears greater than 30 days past due to ensure
that the credit risk has not increased significantly.
The approach to reflect loan assets identified as being under COVID-19 related hardship arrangements with arrears
greater than 30 days past due are reflected as stage 1 assets also reflects consideration of guidance from APRA and
an understanding of market practice in regard to repayments under COVID-19 support arrangements as not being
treated as in arrears.
Loan assets identified as being subject to general hardship arrangements that are not subject to COVID-19
specific related hardship arrangements are identified as having a significant increase in credit risk and are moved
to stage 3 accordingly.
Stage 1 assets exclude any loans classified in stage 2 or 3.
Stage 2:
The Group determines that there has been a significant increase in credit risk since initial recognition when a loan
exposure is greater than 30 days past due unless they are subject to COVID-19 hardship arrangements. The Group
recognises a loss provision for stage 2 assets as a product of the PD for the lifetime of the financial asset, LGD and
EAD for a stage 2 asset.
Refer to stage 1 commentary regarding classification of loan assets identified as being under COVID-19 related
hardship arrangements with arrears greater than 30 days past due.
Stage 2 assets exclude any loans classified as being in hardship or any loan classified in stage 1 or 3.
61
Stage 3:
A financial asset is in ‘default’ when one or more contractual payments are missed or in reference to loan payments
that are more than 90 consecutive days past payment. The Group recognises a loss provision as a product of the PD
for the lifetime of the financial asset, LGD and EAD for a stage 3 asset. A financial asset is written off when there is
no reasonable expectation of recovering the contractual cash flows.
Refer to stage 1 commentary regarding classification of loan assets identified as being under COVID-19 related
hardship arrangements with arrears greater than 30 days past due.
Loan assets identified as being subject to general hardship arrangements that are not subject to COVID-19 specific
related hardship arrangements are included in the assessment as stage 3 assets.
Stage 3 assets exclude any loans classified in stage 1 or 2.
Stage 3 asset related interest income is recognised net of loan losses.
When the Group exchanges with the existing lender one debt
instrument into another one with the substantially different
terms, such exchange is accounted for as an extinguishment
of the original financial liability and the recognition of a new
financial liability. Similarly, the Group accounts for substantial
modification of terms of an existing liability or part of it as
an extinguishment of the original financial liability and the
recognition of a new liability. It is assumed that the terms are
substantially different if the discounted present value of the
cash flows under the new terms, including any fees paid net of
any fees received and discounted using the original effective
rate is at least 10% different from the discounted present value
of the remaining cash flows of the original financial liability. If
the modification is not substantial, the difference between: (1)
the carrying amount of the liability before the modification;
and (2) the present value of the cash flows after modification
is recognised in profit or loss as the modification gain or loss
within other gains and losses.
Refer to Note 17 for further information.
Refer to Notes 4.2 and 13 for further information.
3.2.2 Cash, Other Receivables and Payables
3.2.2.1 Recognition, Classification and Measurement
The Group recognises and measures cash, cash equivalents,
other receivables and payables at amortised cost.
3.2.2.2 Impairment
The Group assesses cash and other receivables for impairment.
Management have assessed under the simplified approach
this to be not material, and therefore no provisioning has been
recognised in the financial year.
Refer to Note 11 for cash and cash equivalents and Note 12 for
other receivables and payables.
3.2.3 Borrowings
3.2.3.1 Recognition, Classification and Measurement
The Group recognises and measures financial liabilities when
it enters into the obligation at its fair value plus, in the case
of a financial liability not at fair value through profit or loss,
transaction costs that are directly attributable to the issue
of the financial liability. Transaction costs are defined as
incremental costs that are directly attributable to the issue of
the financial liability that would not have been incurred if the
Group had not acquired the financial instrument. The effective
interest rate method is used on borrowings to calculate
the amortised cost of a financial liability and to allocate fee
expenses over the relevant period.
The Group derecognises financial liabilities when, and only
when, the Group’s obligations are discharged, cancelled or have
expired. The difference between the carrying amount of the
financial liability derecognised and the consideration paid and
payable is recognised in profit or loss.
FINANCIAL REPORT 2020 6262
3.3 Revenue
3.4.2 Impairment of Intangible Assets
At the end of each reporting period, the Group reviews the
carrying amounts of its intangible assets, including non-financial
assets to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in
order to determine the extent of the impairment loss (if any).
When it is not possible to estimate the recoverable amount
of an individual asset, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
When a reasonable and consistent basis of allocation can be
identified, corporate assets are also allocated to individual
cash-generating units, or otherwise they are allocated to
the smallest group of cash-generating units for which a
reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible
assets not yet available for use are tested for impairment at
least annually, and whenever there is an indication that the
asset may be impaired.
The recoverable amount is the higher of fair value less costs
of disposal and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to
the asset for which the estimates of future cash flows have not
been adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to
its recoverable amount. An impairment loss is recognised
immediately in profit or loss.
When an impairment loss subsequently reverses, the carrying
amount of the asset (or a cash-generating unit) is increased
to the revised estimate of its recoverable amount, but so that
the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment
loss been recognised for the asset (or cash-generating unit)
in prior years. A reversal of an impairment loss is recognised
immediately in profit or loss.
The Group recognises revenue in accordance with AASB 9 or
AASB 15 depending on its nature and classification.
Loan Interest income, which includes all loan contractual
and non-contingent interest and fees charged, related to
loan receivables is measured and presented on an effective
interest rate basis. Under AASB 9, the effective interest rate
method is used on loan receivables, based on estimated future
cash receipts over the expected life of the financial asset. In
making their judgement of estimated future cash flows and
expected life of the loan receivables balance, management have
considered the contractual and historical repayment pattern of
the loan receivables.
The Group’s referral commission income has been classified as
revenue from contracts with customers and is recognised under
AASB 15 at a point in time when the performance obligation
has been satisfied. The performance obligation is deemed
satisfied once the lead has been provided to the respective
party and is generally payable a month or within a month after
the lead has been provided.
Income from previously written off loan balances and
contingent loan fee income (such as late fees) not classified
under the effective interest rate method is reflected as Other
Income and recognised as received at a point in time.
Refer to Notes 4.5, 7 and 8 for further information.
3.4 Intangible Assets
3.4.1 Recognition, Classification and Measurement
Software development costs are capitalised only when:
— the technical feasibility and commercial viability of the
project is demonstrated;
— the Group has an intention and ability to complete the
project and use it or sell it; and
— the cost can be measured reliably.
Such costs include payments to external contractors to develop
the software, systems and personnel costs of employees
directly involved in the project.
Subsequent expenditure on capitalised intangible assets is
capitalised only when it increases the future economic benefits
embodied in the specific assets to which it relates. All other
expenditure is expensed as incurred.
The applicable estimated useful life of the Group’s intangible
asset is 5 years.
An intangible asset is derecognised on disposal, or when no
future economic benefits are expected from use or disposal.
Gains or losses arising from derecognition of an intangible
asset, measured as the difference between the net disposal
proceeds and the carrying amount of the asset, are recognised
in profit or loss when the asset is derecognised.
Refer to Note 16 for further information.
63
The carrying amount of deferred tax assets is reviewed at each
reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled, or the asset is
realised based on tax laws and rates that have been enacted or
substantively enacted at the reporting date.
The measurement of deferred tax liabilities and assets reflects
the tax consequences that would follow from the manner in
which the Group expects, at the end of the reporting period, to
recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes
levied by the same taxation authority and the Group intends to
settle its current tax assets and liabilities on a net basis.
Deferred tax is recognised in profit or loss, except where it
relates to items that are recognised in other comprehensive
income or directly in equity, in which case, the deferred tax
is also recognised in other comprehensive income or directly
in equity respectively. Where deferred tax arises from the
initial accounting for a business combination, the tax effect is
included in the accounting for the business combination.
3.5.4 Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the
amount of goods and services tax (GST), except where the
amount of GST incurred is not recoverable from the taxation
authority, it is recognised as part of the cost of acquisition of
an asset or as part of an item of expense; or for receivables and
payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the
taxation authority is included as part of receivables or payables.
Cash flows are included in the Statement of Cash Flows on
a gross basis. The GST component of cash flows arising from
investing and financing activities which is recoverable from,
or payable to, the taxation authority is classified as operating
cash flows.
Refer to Notes 4.6 and 9 for further information.
3.5 Taxation
3.5.1 Income Tax Benefit / Expense
The income tax expense or benefit represents the sum of the
tax currently payable and the application of any deferred tax in
the period.
3.5.2 Current Tax
The tax currently payable or receivable is based on taxable
profit for the year. Taxable profit differs from net profit as
reported in the income statement because it excludes items
of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or
deductible. The Group’s liability for current tax is calculated
using tax rates that have been enacted or substantively enacted
by the end of the reporting period.
A provision is recognised for those matters for which the tax
determination is uncertain, but it is considered probable that
there will be a future outflow of funds to a tax authority. The
provisions are measured at the best estimate of the amount
expected to become payable.
Current tax is recognised in profit or loss, except where it
relates to items that are recognised in other comprehensive
income or directly in equity, in which case, the current tax is
also recognised in other comprehensive income or directly in
equity respectively.
3.5.3 Deferred Tax
Deferred tax is the tax expected to be payable or recoverable
on differences between the carrying amounts of assets and
liabilities in the Financial Statements and the corresponding
tax bases used in the computation of taxable profit. Deferred
tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the
extent that it is probable that taxable profits will be available
against which deductible temporary differences can be utilised.
Such assets and liabilities are not recognised if the temporary
difference arises from the initial recognition of goodwill or from
the initial recognition (other than in a business combination)
of other assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit. In addition,
a deferred tax liability is not recognised if the temporary
difference arises from the initial recognition of goodwill.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and
associates, and interests in joint ventures, except where
the Group is able to control the reversal of the temporary
difference and it is probable that the temporary difference
will not reverse in the foreseeable future. Deferred tax
assets arising from deductible temporary differences
associated with such investments and interests are only
recognised to the extent that it is probable that there
will be sufficient taxable profits against which to utilise
the benefits of the temporary differences and they
are expected to reverse in the foreseeable future.
FINANCIAL REPORT 2020 6464
4. Critical Accounting Estimates and Judgements
The 2020 base loss calculation allowance reflects further
model refinements and development as compared to the
2019 base loss allowance calculation. This includes the use
of additional historical data, in particular in relation to the
Freestyle product, further modelling in relation to undrawn
balances that applies a Credit Conversion Factor (CCF) rate
to undrawn balances, provisioning in relation to the ListReady
product that was launched during the 2020 financial year and
updates in relation to more recent loan book characteristics.
Personal loan and Freestyle modelling applies up to 2 years
of the most recent historic data. The Expected Credit Loss
(ECL) amortisation period was extended to 60 months for the
current year, 36 months was applied for the prior year. This
extension was made to account for longer dated receivables
now originated by the Group.
Probability of default (PD) for Personal loans has been
segmented into two groups for borrowers with employment
length greater than 1 year and less than 1 year. Personal loan
PD segmentation has not changed from prior year. Freestyle
PD has also been segmented into two groups, for borrowers
with a credit limit amount greater than $3,015 and less than
$3,015. Freestyle PD segmentation has changed from prior
year as it was previously prepared in accordance with the same
Personal loan segmentation.
Loss given default (LGD) has also been segmented into groups
to account for different risk profiles of the Groups borrowers.
The LGD for Personal loan and Freestyle has been segmented
based on borrower’s employment with a specific industry
sector. There has been no change in LGD segmentation from
prior year.
Exposure at default (EAD) maximum input for Personal loan has
increased to $50,000 in 2020 from $15,000 in the prior period
in line with the Group's current loan offering. Similarly, EAD
maximum input for Freestyle increased to $10,000 in 2020
from $5,590 in the prior period.
The Group applies a 25% CCF in relation to undrawn
commitments on Freestyle for customers who are not in
arrears. For customers who are in arrears
the CCF is reduced to 2%. The Group did not apply a CCF in
prior years.
ListReady has a lower LGD than the Personal Loan and
Freestyle products given the Group has the right to place
a caveat over the borrower’s property. ListReady related
modelling also uses more general conservative assumptions as
inputs that reflect the product’s relatively recent launch, during
the 2020 financial year, and materiality.
4.1 Overview
In the application of the Group’s accounting policies,
management is required to make judgements, estimates and
assumptions about carrying values of assets and liabilities that
are not readily apparent from other sources. The estimates and
associated assumptions are based on historical experience and
other factors that are considered to be relevant. Actual results
may differ from these estimates.
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 revision affects both current and
future periods. The significant estimates and judgements made
have been described below.
4.2 Loan Provisioning
4.2.1 Significant Increases in Credit Risk and Default
As explained in Note 3.2, expected credit losses are measured
as an allowance equal to 12-month ECL for stage 1 assets, or
lifetime ECL for stage 2 or stage 3 assets. An asset moves to
stage 2 when its credit risk has increased significantly since
initial recognition. AASB 9 does not define what constitutes
a significant increase in credit risk. The Group judges that the
credit risk of an asset has significantly increased when a loan
exposure is greater than 30 days past due, is more than 90
consecutive days past payment or in hardship. The Group judges
that a financial asset is in ‘default’ when one or more contractual
payments have been missed or in reference to loan payments
that are more than 90 consecutive days past payment and
when loans are written-off. As explained in Note 3, COVID-19
hardship loans are classified as stage 1 assets unless another
trigger is identified during the monitoring of these loans that
would result in a significant increase in credit risk.
4.3 Calculation of Loss Allowance
4.3.1 Base Loss Allowance Calculation
When measuring expected credit losses the Group uses
reasonable and supportable forward looking information,
which is based on assumptions for the future movement of
different economic drivers and how these drivers will affect
each other. Probability of default constitutes a key input in
measuring ECL. Probability of default is an estimate of the
likelihood of default over a given time horizon, the calculation
of which includes historic customer loan repayment data, the
macro-economic environment and modelling risks. Loss given
default is an estimate of the loss arising on default. It is based
on the difference between the contractual cash flows due and
those that the Group would expect to receive.
Management use data based modelling to support judgements
in this area with separate models used in relation to the
Personal Loan, Freestyle and ListReady products. Model data
inputs and reference points include loan receivable level
historic data, APRA historic loss data and forward looking
external economic factors, sourced from credible third parties.
65
An overlay to staging was applied for loans under COVID-19
hardship arrangements; where days in arrears was more than 30
these loans were modified to be stage 1. This is a new adjustment
to reflect the COVID-19 environment and arrangements in 2020
that did not exist in the prior year.
back testing, the availability of additional historical data and
further modelling in relation to undrawn balances. It also reflects
changes in assumptions and inputs used to calculate the macro-
economic overlay that has resulted in an increase in the macro-
economic overlay to reflects the COVID-19 environment.
As at 30 June 2020, $4.6m (3%) of gross loans were reclassified
as stage 1 loans due to COVID-19 hardship. $3.7m (80%) were
subject to revised payment arrangements and $0.9m (20%) were
subject to deferred payment arrangements. $0.4m of the stage
1 provision balance as at 30 June 2020 relates to COVID-19
hardship loans.
As at 30 June 2020, $1.0m (1%) of gross loans were classified
as general hardship loans all of which are subject to revised
payment arrangements. The general hardship loans account for
$0.2m of the stage 3 provision balance as at 30 June 2020.
4.3.2 Loss allowance overlay calculations
Management have also applied model risk and further macro-
economic overlays to address the risk of data modelling errors
and the uncertainty from the broader economic environment.
Macro-economic overlays have been increased significantly
when compared to the Group’s Interim reporting in particular to
reflect the COVID-19 environment. Management’s judgement
in this area also reflects reference to operational credit risk
reporting and available market benchmarking.
The principal macroeconomic indicators referenced in
the economic scenarios considered for the positions on 1
July 2019 and 30 June 2020 are Gross Domestic Product
(GDP), GDP index, GDP index change and unemployment.
GDP has been determined to have economic correlations to
inflation and unemployment, which can have a corresponding
impact on loan performance. The model also references
information from the Australian Prudential Regulation
Authority (APRA) Authorised Deposit-Taking Institution
(ADI) quarterly performance statistics for losses data, with
a set of variables obtained from the Australian Bureau of
Statistics (ABS) including GDP, GDP growth rates, headline
Consumer Price Index (CPI) growth rates, trimmed CPI
and unemployment. Economic forecast reports from the
market are used to support and validate this data further.
Macro-economic overlays have been determined based on
statistical modelling. This modelling involved regression analysis
using historical macroeconomic data sourced from the Australian
Bureau of Statistics (ABS) to support the determination of key
macro-economic predictors to be used for scenario modelling.
Scenario modelling reflects reference to a Base Case forecast
provided by a credible third party that is adjusted to determine
upside and downside scenarios. The scenarios were weighted
to determine an appropriate macro-economic overlay, with a
significantly higher weighting applied for the downside scenario
as compared to the upside scenario given the uncertainties that
relate to the COVID-19 environment. The ECL related to the
macro-economic overlay has been calculated so that it includes
the maximum loan tenor offered across the portfolio.
The 2020 loss allowance overlay calculations and approach
also reflect further model refinements and development as
compared to the 2019 base loss allowance calculation. This
includes a reduction in the model risk overlay that reflects model
Refer to Notes 3.2.1.2 and 13 for further information.
4.4 Going Concern
A Going Concern assessment has been made in reference to
accounting standard and Corporations Act 2001 requirements
to confirm that there are reasonable grounds to believe that the
Group will be able to pay its debts as and when they become due
and payable.
This assessment has included completion of the base case,
upside and downside financial projection scenarios that
take into the account the COVID-19 environment and
completion of a formal funding plan that includes stress
testing and a contingency funding plan. This business
expects to continue to operate within its set liquidity risk
appetite and continue its normal business activities.
4.5 Fee Income Recognition
The Group interest and fees on customer receivables using the
effective interest rate method that reflects the expected useful
life of the underlying financial asset and the rate that discounts
cash flows back to the present value. In making their judgements
around the expected life of the underlying customer receivables
balance and the discount rate applicable, management have
considered the contractual and historical repayment patterns
and contracted repayments of the customer receivables.
Refer to Notes 3.3 and 7 for further information.
4.6 Taxation
The Group’s current tax balances reflect management’s
assessment of the amount of tax payable or receivable in
the current period, supported by the judgement specialist
independent tax advice where deemed appropriate.
The Group’s deferred tax balances reflect an expectation to
recover or settle temporary differences that relate to tax. These
assessments and expectations reflect an interpretation of tax
legislation regarding arrangements entered into by the Group
and the application of tax rates that are expected to apply in the
period when tax liabilities are expected to settle or tax assets are
expected to be realised.
Deferred tax asset recognition reflects an assessment that it
is probable that there will be enough taxable profits against
which to utilise the benefits of the temporary differences and
that they are expected to reverse in the foreseeable future.
Management have applied overlay adjustments to all deferred
tax asset balances to reflect uncertainties relating to model
risk, business uncertainties and uncertainties that reflect the
macro-environment. The macro-economic overlay applied to the
2020 deferred tax asset balances reflects consideration of the
COVID-19 environment in particular.
Refer to Notes 3.5 and 9 for further information.
FINANCIAL REPORT 2020 6666
5. Public Listing and
Business Reorganisation
During the period, the Group undertook an Initial Public
Offering (IPO) and reorganisation. This included establishing
a listed entity, MoneyMe Limited, which became the parent
entity of MoneyMe Financial Group Pty Limited and its
controlled entities. The Company and the existing shareholders
in MoneyMe Financial Group Pty Limited acquired the holdings
of the previous shareholders in consideration for cash and
shares in the Company immediately upon IPO completion.
The IPO related restructuring is considered to be a form of
capital restructuring and group reorganisation in reference to
AASB 3 Business Combinations that is being accounted for at
book value as follows:
— the assets and liabilities of MoneyMe Limited include the
carrying values of the assets and liabilities of MoneyMe
Financial Group Pty Limited;
— the retained earnings and other equity balances recognised
in the Consolidated Financial Statements include the
existing retained earnings and other equity balances of
MoneyMe Financial Group Pty Limited; and
— the amounts recognised as issued capital in the
Consolidated Financial Statements of the MoneyMe
Limited reflects the impact of the restructure, and the
market capitalisation of the Company at the date of the IPO
completion. An offsetting entry to a reorganisation reserve
has been recognised to align total equity with the net asset
position of the Group.
During the period, the Group incurred IPO-related expenses.
IPO-related expenses related to the equity raising were
allocated against equity ($4.0m) (gross of tax), with the
remaining IPO-related expenses allocated against general and
administrative expenses ($2.4m).
6. Coronavirus 2019 (COVID-19)
The current global COVID-19 pandemic has emerged as
key challenge for businesses, governments and individuals
to manage in the first half of the 2020 calendar year. An
assessment of its impact on the Group’s key risks, as identified
in its Risk Appetite is provided below.
6.1 Credit Risk
COVID-19 can affect the ability of borrowers to meet their
obligations under their loan contracts. Borrowers exposed to
particular sectors, such as certain geographic and employment
sectors, may be directly impacted by government-enforced
regulation and lockdowns, causing income or job loss. More
broadly, reductions in forecasts in economic growth due to
COVID-19 have increased the probability of default across
loan portfolios as the impact of the deterioration in the
macroeconomic environment is an increase in the rate of
unemployment, causing strain on borrower’s ability to repay
their loans due to the resultant income or job loss.
The business has continued to originate loans with credit
decision rules calibrated through its Horizon Technology
Platform, suitable for the COVID-19 environment. The
business also implemented further new business underwriting
validations to support robust credit risk management. Hardship
arrangements were put in place from March 2020 to allow
borrowers who identified themselves as experiencing hardship
due to the COVID-19 environment to either defer payments to
30 June 2020 or agree a revised scheduled repayment plan.
Ongoing, regular and enhanced reporting and analysis of loan
book performance and new originations have been completed
as the COVID-19 environment has progressed to inform and
guide timely and appropriate decision making.
The Group is aware that some borrowers benefited from
government stimulus-related measures, such as JobKeeper or
early access to superannuation funds. It is also likely that some
borrowers may have benefited from hardship arrangements
put in place by other financial institutions. As a result of such
arrangements, some borrowers may present a lower credit risk
to the Group in the current environment than otherwise might
have been the case.
The Group adopted a robust approach in accounting for the
potential impacts of COVID-19 on credit risk and provisioning
with a significant increase made to the macro-economic
overlay above the base provision amount. Despite the inherent
uncertainties from the COVID-19 environment, the Group’s
diversified customer base and targeted origination growth
strategy continue to minimise COVID-19 related credit risk.
Refer to Notes 3.2, 4.2, 13 and 21.2 for further information.
67
6.2 Liquidity Risk
6.4 Operational Risk
COVID-19 has impacted business operational cash flows and
the availability of debt and equity capital to support business
activities and growth. Management has completed additional
reporting and analysis of liquidity risk and actual and projected
cash flows as the COVID-19 environment has progressed to
inform and guide timely and appropriate decision making.
Key specific operational risks that relate to MoneyMe include
an exposure to human error and fraud relating to employees
not carrying out their duties responsibly and in line with agreed
policy and process, the risk of technology-related processing
failures, continuing technology relevance, data security and the
reliance on third-party systems suppliers.
The business continuity plan was successfully implemented
in response to the COVID-19 environment with all staff
transitioned to working from home when required. Employee
working arrangements have evolved in response to the
environment and advice received with some staff returning to
office-based work arrangements that reflect implementation of
the appropriate the safety and wellbeing protocols.
The Group maintained 100% uptime availability throughout
the financial year with development ongoing to further
enhance and develop the core Horizon Technology Platform in
particular. There has not been any material impacts from the
use third party suppliers as a result of COVID-19.
6.5 People
The successful operation of MoneyMe depends on the
performance and expertise of its key management personnel
and high-performing employees with specialist skills. The loss
of certain key personnel, and the inability to attract and retain
replacements or new key personnel, may have a materially
adverse impact on MoneyMe’s business, operating and financial
performance, and/or growth.
Staff morale and engagement has remained high during the
COVID-19 environment and while adopting the new working
arrangements. No staff COVID-19 cases have been identified
with no loss of any personnel due to COVID-19. The business
has continued to attract and retain high-performing talent
to support current and future business performance with
a key focus maintained throughout the period to maintain
regular communication and updates and implement the latest
government health and safety requirements.
The Group’s plans to execute a new funding facility has been
delayed due to circumstances relating to the COVID-19
pandemic. This also resulted in all Board Performance Rights
lapsing as at 30 June 2020 due to the related performance
condition not being met. The new facility will allow the Group
to accelerate growth and improve revenue margins. The Group
expects to access funding from the Structured Finance Support
Fund (SFSF) via the Australian Office of Financial Management
(AOFM) to support settlement of the new warehouse facility.
The Group secured continued access to its existing trust
funding facilities to provide funding certainty to November
2021. It is anticipated that a significant balance of current trust
assets will be transferred to the new warehouse on set-up in
the 2021 financial year.
The Group has accessed a number of government COVID-19
stimulus measures that have supported operational cashflows
in the immediate term and applied AASB 120 Accounting for
Government Grants and Disclosure of Government Assistance to
account for stimulus packages the Group has been party to.
The Group continues to elect to present government related
support arrangements as deductions against related expenses,
rather than as “Other Income” as AASB 120 also allows. As at
30 June 2020, $0.6m has been offset against the Group's total
expenses (including tax expense).
The Group’s liquidity is assessed to be sound, despite the
uncertainties of the COVID-19 environment.
Refer to Notes 11 and 21.4 for further information.
6.3 Regulatory Compliance
MoneyMe is subject to a range of laws, regulations and industry
standards including (but not limited to) the National Consumer
Credit Protection Act 2009 (Cth) (NCCP Act), the Financial
Sector (Collection of Data) Act 2001 (Cth) (FSCODA) and the
Anti-Money Laundering and Counter-Terrorism Financing Act
2006 (AML/CFT) (Cth), each of which creates conduct and
disclosure obligations applicable to MoneyMe, and are liable to
change with developments in political, regulator and consumer
expectations.
Failure to comply with these laws, regulations and industry
compliance standards could adversely impact MoneyMe’s
business through civil penalty proceedings, loss or suspension
of licence, increased compliance costs, the cessation of
certain business activities, restrictions on product and service
expansion, litigation and disputes, regulatory enquiry or
investigation and reputational damage.
The Group implemented additional controls to help ensure
that new lending approvals consider any impacts from the
COVID-19 environment.
FINANCIAL REPORT 2020 6868
6.6 Customer and Brand Reputation
6.7 Financial Performance
The strength of MoneyMe’s brand and reputation is an
important part of retaining and growing its customer
bases and, accordingly, an event that has a negative impact
on MoneyMe’s brand could have a material adverse
impact on the demand for MoneyMe’s products. This
may adversely impact MoneyMe’s business, financial
condition, operating performance, and/or growth.
The Group’s Net Promoter Score (NPS) increased to 80
for the month of March 2020 and was 75 as at 30 June
2020. This represents record high customer satisfaction
level, driven by high levels of automation and no disruption
to service levels during a period when customers may
have expected long wait times and disruption to services.
The strong performance across customer service
operating metrics during the COVID-19 pandemic are
reflective of a number of productivity focused initiatives
including the use of specialised monitoring software.
MoneyMe has developed a number of growth strategies which
include increasing MoneyMe’s market penetration, increasing
MoneyMe’s Total Addressable Market through product
innovation and entering new geographies.
The Group is reporting record revenue of $47.7m for FY20,
up 49% on the prior year and outperforming Prospectus
forecast (FY20F: $45.8m). The record revenue for FY20
reflects stronger than forecast loan originations of $178.5m1,
up 53% on the prior year (FY19: $116.9m). Strong results were
achieved across its Key Operating Metrics as set-out in the
IPO Prospectus.
The strong 2020 financial result has been achieved despite
impacts by the COVID-19 environment that have included a
reduction in origination levels, higher than planned asset run-
off that appears in part to reflect the ability for some borrowers
to have early access to superannuation and higher than planned
credit loss provisioning (as outlined above).
The Group has continued to innovate and implement growth
strategies throughout the COVID-19 pandemic, including the
launch of the new RentReady product, the signing of a strategic
alliance with Cashrewards that will allow Freestyle customers
to earn cash back on purchases made online or in store using
their Mastercard and the launch of new merchant channels to
sign-up customers at point of sale.
1 This number relates to principal originations.
69
7. Revenue
The Group has further updated its estimates relating to the effective life of the underlying financial assets that is used to calculate
effective yield income since the half-year reporting period. The updates reflect review of further historic data and the expected
effective life of loan assets. The Group plans to continue to review and update its estimates in this area for future reporting periods
on the same basis.
Further details relating to Other Income is disclosed below.
Referral income
Recoveries
Other
Total other income
2020
$’000
920
1,800
1,940
4,660
2019
$’000
1,373
1,354
1,619
4,346
Recoveries represent income from loans previously written off. Recoveries amounting to $0.4m in the 2020 financial year relate
to receivables originated in the same financial year. Other income includes fees and charges related to loans that have not been
recognised as interest income under the effective interest rate methodology. It also includes bank interest income.
Refer to Note 3.3 for further information.
8. Operating Expenses
8.1 Operating expenses
Operating expenses include employee expenses of $5,458,000 in 2020 (2019: $3,844,000). These are attributed across the sales
and marketing expense, product design and development expense, and general and administrative expense categories.
The Group has deducted $0.4m across the sales & marketing, product design & development and general & administrative expense
categories in line with its access to the government COVID-19 related stimulus program in the last quarter of the 2020 financial
year. The Group expects to be able to continue to access the same government stimulus measures until 31 March 2021.
The comparatives within the Consolidated Statement of Profit or Loss and Other Comprehensive Income have been restated to
ensure consistency with the current year’s classification which is by function rather than by nature as was previously disclosed.
This better reflects the Group’s current and future operations and resulted in costs being allocated from their previous accounts to
sales and marketing expense, product design and development expense and general and administrative expense.
8.2 Interest expense
Loan financing expense
Corporate interest on debt
Interest of lease liability
Interest expense
2020
$’000
12,477
117
157
12,751
2019
$’000
8,430
114
–
8,544
Loan financing expense reflects the cost of debt financing held within the Group’s Warehouse Trust entities. Corporate interest on
debt reflects the cost of debt held outside of the Group’s Warehouse Trust entities.
Refer to Note 17 for further information.
FINANCIAL REPORT 2020 7070
9. Taxation
9.1 Overview
The restructure on listing resulted in a new tax consolidated group being created with MoneyMe Limited as its head entity. As a
result, all tax values of the Group’s assets and liabilities were reset and current and deferred tax amounts relating to transactions,
events and balances of all entities in the Group were treated as if those transactions, events and balances were the head entity’s
own, in addition to the current and deferred tax amounts arising in relation to its own transactions, events and balances. Any
adjustments to the tax bases of assets and liabilities were recognised through the Group’s Statement of Profit or Loss and Other
Comprehensive Income.
9.2 Income tax benefit
The components of tax expense comprise:
Current tax
Deferred tax
Research and Development (R&D) tax offset1
Income tax benefit
1 The R&D tax offset is an offset available for active R&D entities on eligible R&D activities.
Numerical reconciliation between tax expense and pre-tax accounting profit:
Profit before income tax
Income tax using the domestic tax rate of 27.5% in 2020 (2019: 27.5%)
Effect of expenses that are not deductible
Effect of concessions (R&D and other allowances)
Deferred tax benefit / (expense)
Income tax benefit
2020
$’000
2,242
(3,007)
(653)
(1,418)
2020
$’000
(119)
(33)
3
(36)
(1,352)
(1,418)
2019
$’000
890
(230)
(859)
(199)
2019
$’000
125
34
4
(265)
28
(199)
Tax expenses reflect access to $0.2m in government COVID-19 related stimulus programs. The cashflow impact from accessing
these arrangements has been reflected in line with the relevant cashflow expense.
9.3 Current tax payable
Opening current tax asset / (payable) balance
Current tax expense for the period
R&D tax offset
Tax instalments paid
Closing current tax asset / (payable) balance
2020
$’000
4
(2,242)
653
5
(1,580)
2019
$’000
(188)
(667)
859
–
4
9.4 Net deferred tax
Cash & cash equivalents
Other receivables
Net loan receivables
Property, plant & equipment
Right of use asset
Intangible asset
Other payables
Lease liabilities
Borrowings
Employee related provisions
IPO costs
Net
deferred tax
at 30 June
2020
AASB 16
adjustments
Net
balance at
1 July 2019
Tax cost
base reset
adjustment
Recognised
in P & L
Recognised in
equity
71
Net
deferred tax
at 30 June
2020
$'000
$'000
$'000
$'000
$'000
$'000
$'000
–
31
617
–
–
–
48
–
1
63
–
–
–
–
–
37
–
–
–
–
–
–
–
31
617
–
37
–
48
–
1
63
–
–
–
–
6
–
1,529
–
–
–
–
–
–
–
1,303
(18)
107
53
45
(91)
(1)
14
60
–
–
–
–
–
–
–
–
–
–
492
492
–
31
1,920
(12)
144
1,582
93
(91)
0
77
552
4,296
Net deferred tax asset / (liability)
760
37
797
1,535
1,472
Net
deferred tax
at 30 June
2018
AASB 9
adjustments
Net
balance at
1 July 2018
Tax cost
base reset
adjustment
Recognised
in P & L
Recognised in
equity
Net
deferred tax
at 30 June
2019
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Cash & cash equivalents
Other receivables
Net loan receivables
Property, plant & equipment
Right of use asset
Intangible asset
Other payables
Lease liabilities
Borrowings
Employee related provisions
IPO costs
–
31
52
–
–
–
–
–
–
–
–
–
–
447
–
31
499
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Net deferred tax asset / (liability)
83
447
530
–
–
–
–
–
–
–
–
–
–
–
–
–
–
118
–
–
–
48
–
1
63
–
230
–
–
–
–
–
–
–
–
–
–
–
–
–
31
617
–
–
–
48
–
1
63
–
760
A deferred tax asset has been recognised in regard to intangible assets in the period. This reflects an estimate as to the
tax recoverable on differences between the carrying amounts of the intangible assets in the Financial Statements and the
corresponding tax bases used in the computation of taxable profit at this point in time. The change in the tax base is as a result of
the business re-organisation as described in Note 3 and will be released against taxable profits over time.
The carrying amount of deferred tax assets has been reviewed as at 30 June 2020 in reference to the current COVID-19
environment in particular. It is assessed that there is appropriate certainty to support the reported deferred tax asset, with
overlays applied, after considering tax regulations, business plans and probable projected taxable profits.
It is noted that the reported deferred tax asset excludes $7.4m that is being held off-balance sheet as part of set overlays that
reflect consideration and uncertainties relating to the COVID-19 environment. The Group does not have any unused tax losses as
at 30 June 2020.
FINANCIAL REPORT 2020 7272
10. Earnings Per Share
10.1 Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of the Group by the weighted-average
number of ordinary shares outstanding during the financial year, adjusted for ordinary shares issued during the financial year.
10.2 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.
Profit/(loss) after income tax
2020
$'000
1,299
No.
2019
$'000
324
No.
Weighted average number of ordinary shares used in calculating basic EPS
154,306,113
246,134
Adjustments for calculation of diluted EPS:
Options
Rights
Weighted average number of ordinary shares used in
calculating diluted EPS
Basic profit / (loss) / EPS
Diluted profit / (loss) / EPS
–
–
2,345
–
154,306,113
248,479
cents
1
1
cents
132
131
The diluted earnings per share calculation to 30 June 2019 and 30 June 2020 only includes those options that have met the
performance hurdles including the service conditions as at the period end.
Refer to Note 19 for further information.
11. Cash and Cash Equivalents
11.1 Overview
Cash at Bank
Restricted cash held in the Group's Warehouse Trusts1
Total cash and cash equivalents
1 Refers to cash that is held by the Group that is not available for immediate ordinary business use.
11.2 Reconciliation of operating profit after income tax to net cash used in operating activities
Operating profit after income tax
Adjustments for:
Depreciation and amortisation
Share-based payment expense
Share-based payment buyback
Loan impairment expense
Interest accrued as part of borrowings
(Decrease) in trade receivables
(Decrease) in current tax
(Decrease) / Increase in deferred tax asset
Increase in trade payables
Increase in provisions
Net cash from operating activities
73
2019
$'000
947
5,115
6,062
2019
$'000
324
231
93
(65)
11,850
975
(49)
(192)
(230)
649
84
13,670
2020
$'000
26,577
8,802
35,379
2020
$'000
1,299
984
641
–
15,973
1,356
(493)
1,776
(3,537)
814
780
19,593
FINANCIAL REPORT 2020
7474
12. Other Receivables and Payables
12.1 Other receivables
Rental bond1
Other
Total other receivables
2020
$'000
354
645
999
2019
$'000
390
116
506
For the purposes of impairment assessment, the other receivable balances are considered to have low credit risk following an
assessment of the relevant counterparties. There has been no change in the estimation techniques or significant assumptions made
during the current reporting period in assessing the loss allowance for these financial assets.
1 The amount of the rental bond is held on deposit as a bank guarantee.
12.2 Other payables
Accrued expenses
Warehouse trust related payables
Other
Total other payables
2020
$'000
201
–
1,712
1,913
2019
$'000
507
240
352
1,099
13. Net Loan Receivables
13.1 Overview
Gross loan receivables
Loan provisions
Net loan receivables
13.2 Gross loan receivables
Opening balance
Loans originated during the year
Principal payments received
Loans written off
Closing balance
The above disclosure includes effective interest rate related balances.
13.3 Summary of loan provisions movements
Opening balance
AASB 9 adjustment on provisions
Additional provisioning
Loans written off
Closing balance
75
2019
$’000
87,458
(9,126)
78,332
2019
$'000
48,161
119,819
(73,134)
(7,388)
87,458
2019
$’000
3,045
1,619
11,850
(7,388)
9,126
2020
$’000
133,560
(12,809)
120,751
2020
$'000
87,458
185,372
(126,980)
(12,290)
133,560
2020
$’000
9,126
-
15,973
(12,290)
12,809
The Group’s loan book increased significantly in FY20 driven by loan originations. FY20 originations reflect continued growth in
the Group’s personal loan product and the introduction of a new Virtual Credit Account product (“Freestyle”) during 2019 and
2020. Loan book growth, alongside the booking of stage 1 provisioning, has materially driven the overall increase in the Expected
Credit Loss (ECL) and loan provisions.
The provision as a percentage of the loan book has reduced slightly from 10.4% to 9.6%. This reflects an improvement in credit
quality of the underlying loan book including customer and product mix and a reduction in provision model risk overlays due to
continued improvements in the precision of the models in the year. This has been largely offset by a significant increase in the
macroeconomic overlay that reflects the COVID-19 environment.
Refer to Note 7 for information relating to recoveries received from written-off loans.
FINANCIAL REPORT 2020
7676
13.4 Balances by impairment stage
The following tables show movements in gross carrying amounts of loan receivables subject to impairment requirements to net
loan receivables for the prior and current period.
30 June 2020
Gross loan receivables
Provision
Net loan receivables
30 June 2019
Gross loan receivables
Provision
Net loan receivables
Stage 1
$'000
126,182
(7,902)
118,280
Stage 1
$'000
72,648
(4,201)
68,447
Stage 2
$'000
4,191
(2,365)
1,826
Stage 2
$'000
13,382
(3,534)
9,848
13.5 Loan provision staging movements
The following table shows movement in provisions for the prior and current period.
Opening balance
Transfers between stages
Originations
Write-offs
Risk parameter changes
Closing balance
Stage 1
$'000
4,201
(1,366)
4,911
–
156
7,902
Stage 2
$'000
3,534
(1,592)
1,082
–
(659)
2,365
Stage 3
$'000
3,187
(2,542)
645
Stage 3
$'000
1,428
(1,391)
37
Stage 3
$'000
1,391
9,599
3,804
(12,290)
38
2,542
Total
$'000
133,560
(12,809)
120,751
Total
$'000
87,458
(9,126)
78,332
Total
$'000
9,126
6,641
9,797
(12,290)
(465)
12,809
The provision associated with the Personal Loan product was 62%, with 37% relating to the Freestyle product and the remaining
1% relating to the ListReady product.
The above table reflects a $3.7m (41%) increase in the loan receivable provision from $9.1m in 2019 to $12.8m in 2020. $9.7m
(59%) of the incremental increase in provisioning before write-offs and risk parameter changes relates to new assets that were
originated during the year. This reflects the significant balance sheet growth and originations in 2020 (refer to Note 13.1 for
further details). $15.7m (62%) of the closing loan provision before write-offs and risk parameter changes relate to assets originated
in prior periods. As expected stage 1 closing loan provision before write-offs and risk parameter changes substantially relate to
assets originated in the current period (63%) while assets originated in the prior period substantially represent stage 3 closing loan
provisioning before write-offs and risk parameter changes (74%).
The table also reflects $7.9m (62%) of the closing 2020 provision balance in the stage 1 with $2.4m (19%) in stage 2 and $2.5m
(19%) in stage 3. $6.6m of the year-on-year change in provisioning was due to a net transfer of assets between stages. Write-offs
materially relate to assets originated in the prior year. Provision modelling risk parameter changes have marginally reduced the
closing provision by $0.5m (4%).
The net parameter changes reflect a reduction in the model risk overlay that reflects model back testing, the availability of
additional historical data and further modelling in relation to undrawn balances. It also reflects changes in assumptions and
inputs used to calculate the macroeconomic overlay that has resulted in an increase in the macroeconomic overlay to reflect the
COVID-19 environment.
77
13.6 Gross loan balance provision stage movements
The following table shows movements in gross carrying amounts of loan receivables subject to provisioning requirements for the
current period.
Gross asset credit exposure staging movements
Stage 1
Stage 2
Stage 3
$'000
$'000
$'000
Total
$'000
Opening balance
Originations
72,648
13,382
1,428
87,458
185,372
–
–
185,372
Repayments, transfers between stages and parameter changes
(131,838)
(9,191)
14,049
(126,980)
Write-offs for current period loans
–
–
(12,290)
(12,290)
Closing gross loan receivables
126,182
4,191
3,187
133,560
Personal Loan
Freestyle
ListReady
74,372
49,451
2,359
2,695
1,367
129
1,657
1,507
23
78,724
52,325
2,511
Closing gross loan receivables
126,182
4,191
3,187
133,560
The above table reflects a $126.2m (95%) of 2020 closing gross loan receivables being in stage 1 provisioning.
13.7 Undrawn commitment loan balances by impairment stage
The following table shows movements in gross carrying amounts of loan receivables subject to impairment requirements to net
loan receivables for the prior and current period. Undrawn balances are considered as Stage 1 only.
30 June 2020
Gross undrawn loan receivables
Provision
Net undrawn loan receivables
Refer to Notes 3.2.1.2, 4.2 and 21 for further information.
Stage 1
$'000
13,604
(793)
12,811
Stage 2
$'000
Stage 3
$'000
–
–
–
–
–
–
Total
$'000
13,604
(793)
12,811
FINANCIAL REPORT 2020
7878
14. Leases
The Group’s lease commitments relate to leases in place for the office premises at 131 Macquarie Street, Sydney NSW 2000 and
317 Hunter Street, Newcastle NSW 2300. They have been recognised as follows in accordance with AASB 16 Leases:
14.1 Right of use asset
Balance as at 1 July 2019
Additions
Depreciation expense for the period
Balance as at 30 June 2020
14.2 Lease liability
Balance as at 1 July 2019
Additions
Interest accrual in the period
Payments in the period
Balance as at 30 June 2020
Net lease related asset / (liability)
$'000
1,781
657
(533)
1,905
$'000
1,918
657
157
(612)
2,120
(215)
A lease interest expense relating to the lease liability was recognised as part of interest expense during the period.
No explicit incremental borrowing rate has been outlined in the lease agreements. The Group has applied an incremental
borrowing rate of 7.25%
The maturity of the unwinding of the lease liability is 2 to 3 years.
Refer to Note 2 for further information.
15. Property, Plant and Equipment
Opening balance
Additions
Movements in accumulated depreciation
Closing balance
Property, plant and equipment – at cost
Accumulated depreciation
Total property, plant and equipment
79
2019
$'000
51
158
(64)
145
2019
$'000
317
(172)
145
2020
$'000
145
1,087
(127)
1,105
2020
$'000
1,404
(299)
1,105
Property, plant and equipment are stated at cost less accumulated depreciation. Cost includes expenditure that is directly
attributable to the acquisition. The Group’s policy is to provide for any "make-good" property lease-related requirements. These
are estimated to be immaterial in the 2020 and 2019 financial years.
The depreciable amount of all fixed assets is depreciated on straight-line basis over their estimated useful lives to the entity
commencing from the time the asset is held ready for use. Leasehold improvements are amortised over the shorter of either the
unexpired period of the lease or the estimated useful lives of the improvements. The estimated useful life, residual values and
depreciation method are reviewed at the end of each annual reporting period.
The carrying amount of plant and equipment is reviewed annually to ensure it is not in excess of the recoverable amount from
these assets.
The gain or loss arising on disposal or retirement of an item of plant and equipment is determined as the difference between the
sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
The estimated useful lives used in calculation of depreciation ranges from 1 to 8 years in relation to the underlying asset
being depreciated.
16. Intangible Asset
Opening balance
Additions at cost
Movements in accumulated amortisation
Closing balance
Intangible asset – at cost
Accumulated amortisation
Total intangible asset
2020
$'000
781
1,704
(319)
2,166
2020
$'000
2,795
(629)
2,166
2019
$'000
482
466
(167)
781
2019
$'000
1,090
(309)
781
FINANCIAL REPORT 2020
8080
17. Borrowings
17.1 Overview
Warehouse trust related borrowings
Related party borrowings
Total borrowings
17.2 Warehouse trust related borrowings
2020
$'000
113,126
–
113,126
2019
$'000
78,289
3,275
81,564
The Group sells customer receivables to special purpose vehicle securitisation warehouses (the MME Velocity Warehouse Trust
and the MME Horizon Warehouse Trust) through its asset-backed securitisation program. The special purpose vehicles are
consolidated as the Group owns all units of the two trusts, entitling it to 100% of the net income distribution.
Opening balance
Drawdowns
Repayments
Other
Closing balance
The table below reconciles the gross carrying amounts of securitised loan receivables.
MME Velocity Warehouse Trust1
MME Horizon Warehouse Trust1
MoneyMe Financial Group Pty Limited
Gross loan receivables
2020
$000
78,289
32,525
–
2,312
113,126
2020
$000
68,895
52,948
11,717
133,560
The figures above reflect an allocation of effective yield between loan funding sources for the current and prior year.
1 Includes Class C Note investments by MoneyMe Finance Pty Limited
17.3 Related party borrowings
The table below shows the movements in the year within the Group’s related party borrowings.
Opening balance
Drawdowns
Repayments
Other
Closing balance
2020
$000
3,275
–
(3,275)
–
–
2019
$000
40,363
37,525
–
401
78,289
2019
$000
65,652
20,069
1,737
87,458
2019
$000
4,029
2,525
(3,279)
–
3,275
All corporate debt-related party borrowings reported at 30 June 2019 were repaid in December 2019 as part of the IPO.
18. Employee Related Provisions and KMP Remuneration
18.1 Employee related provisions
Opening provisions
Additional provisions
Provision reductions
Closing provisions
81
2019
$’000
145
96
(12)
229
2020
$’000
229
969
(188)
1,010
Provision is made for employee benefits accumulated as a result of employees rendering services up to the reporting date. These
benefits include annual leave and long service leave.
18.2 KMP remuneration
Short-term employee benefits
Post-employment benefits
Share-based payments
Short-term incentives
Total KMP remuneration
2020
$’000
902
79
144
500
1,625
2019
$’000
325
31
–
–
356
KMP are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the
Group. Refer to the Remuneration Report for further information.
FINANCIAL REPORT 2020 8282
19. Share Capital
Date
Shares (No.)
Issue price
Balance
Issuance of shares
Balance
30 June 2018
246,134
–
–
30 June 2019
246,134
Issuance of shares1
July 2019
Cancellation of shares2
December 2019
6,712
(252,846)
Issuance of shares3
Transaction costs4
December 2019
136,000,000
December 2019
–
Issuance of shares on IPO
December 2019
33,200,000
2020 EPR – Series 15
December 2019
240,000
Revaluation of shares on IPO6
December 2019
–
Balance
30 June 2020
169,440,000
1 Impact of proceeds from capital raise.
2 Cancellation of MoneyMe Financial Group Pty Limited shares.
3 Issuance of MoneyMe Limited shares.
4 Transaction costs arising on IPO eligible for offset against share capital (net of tax).
5 Vesting of 2020 EPR – Series 1 on IPO. See Note 20 for further details.
446.96
–
–
–
1.25
1.25
–
$’000
2,794
–
2,794
3,000
–
–
(3,486)
41,500
300
167,692
211,800
6 The amount recognised as issued capital in the Group reflected the impact of the restructure and the capital reorganisation, and thereby the market capitalisation of
the Group at the date of the offer (less costs that are offset against issued capital). An offsetting capital reorganisation reserve was created to align total equity with the
net asset position of the Group.
20. Reserves
20.1 Overview
Reorganisation reserve
Share options
Performance rights
Share based payments reserve
Total reserves
20.2 Reorganisation reserve
Opening balance
Business reorganisation
Closing balance
83
2019
$’000
–
118
-
118
118
2019
$’000
–
–
–
2020
$’000
167,692
(194)
(565)
(759)
166,933
2020
$’000
–
167,692
167,692
The reorganisation reserve reflects the Group's IPO and business reorganisation in December 2019. The reserve was created
to align total equity with the net asset position of the Group and therefore off-set the amount recognised as issued capital in the
Group reflected the impact of the restructure and the capital reorganisation. Refer to Note 5 for further information.
20.3 Share based payments
20.3.1 Overview
The Group operates an ownership-based scheme for eligible employees and Directors to assist with the motivation, retention and
reward of certain employees and Directors. Under this scheme employees or Directors may be granted equity-settled shares or
options over shares in exchange for rendering services.
The cost of these equity-settled transactions is measured at fair value on grant date of the shares to be issued using the Black-
Scholes pricing model. The cost of equity-settled transactions is recognised as an expense with a corresponding increase in equity
over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the
actual the number of awards still on foot with the potential to vest and the expired portion of the vesting period. The amount
recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already
recognised in previous periods.
The Group cancelled employee share options issued in December 2017 and December 2018 on listing and replaced them with new
options that reflect the same terms of the cancelled options. The incremental fair value between the old and replacement options
for both tranches is nil. The Group accounts for the granting of replacement equity instruments in accordance with AASB 2 Share
Based Payments that results in the replacement options being measured at the legacy grant dates and fair value of the options they
are replacing. The number and exercise price of the replacement options reflects the changes in share equity and the number of
shares as a result of MoneyMe’s listing as a public company.
The Group issued employee performance rights (EPRs) and board performance rights (BPRs). These reflect performance rights that
were granted and vested on listing and performance rights that were granted on listing and will vest into the future.
FINANCIAL REPORT 2020 8484
The EPRs have nil consideration and exercise price. The EPR Series 2 2020 were issued subject to employee performance from
1 July 2019 to 30 June 2020 and will only vest if the EPR participant is an employee at the time of vesting. 50% of the EPRs that
remain on foot can vest on the day following the release of MoneyMe’s annual financial results for the financial year ending 30 June
2021 and 50% on the day following the release of MoneyMe’s annual financial results for the financial year ending 30 June 2022.
EPR Series 2 2020 related performance conditions being a revenue target of $45.8m, a proforma EBITDA target of $2.9m and a
successful capital raising of greater than $40m were confirmed as having been met in full by the MoneyMe Remunerations and
Nominations Committee in August 2020.
The BPRs have nil consideration and exercise price. The BPRs have been issued subject to performance from 1 July 2019 to 30
June 2020 and will only vest if the BRP participant is a Director at the time of vesting. 50% of the EPRs that remain on foot can
vest on the day following the release of MoneyMe’s annual financial results for the financial year ending 30 June 2020 and 50% on
the day following the release of MoneyMe’s annual financial results for the financial year ending 30 June 2021. The BPR related
performance condition of successfully establishing of a facility with a major bank in the year ended 30 June 2020 was not met and
therefore lapsed.
Share options
Performance rights
Opening balance
Share option expense
Performance right expense
Performance rights vested
Share based payment expense
Share options
Performance rights
Closing balance
2020
$’000
118
–
118
77
864
(300)
641
195
564
759
2019
$’000
90
–
90
28
–
–
28
118
–
118
85
20.3.2 Share options
2018 –
Series 1
2018 –
Series 2
2019 –
Series 1
2020 –
Series 1
2020 –
Series 2
Current period expense ($’000)
Weighted average exercise
price ($)
Fair value per option ($)
–
–
–
–
–
–
34.30
76.20
126.15
(26)
0.54
0.09
(50)
0.82
0.23
Grant date (contractual)
17/07/2017
01/12/2017
01/12/2018
01/12/2017
01/12/2018
Vesting date (contractual)
Fair value model volatility1
Fair value model risk-free
interest rate2
N/A
45.25%
1.67%
Fair value model dividend yield
0.00%
01/12/2020
01/12/2021
01/12/2020
01/12/2021
45.25%
37.98%
45.25%
37.98%
2.03%
0.00%
2.53%
0.00%
2.03%
0.00%
2.53%
0.00%
2020
2018 – Series 2
2019 – Series 1
2020 – Series 1
2020 – Series 2
Total
No. of options
No. of options
No. of options
No. of options
Opening balance
2,345
1,935
–
–
4,280
Granted
Lapsed
Buyback
Cancelled
Exercised
Closing balance
Exercisable at the end
of the period
–
–
–
–
–
–
(2,345)
(1,935)
–
–
–
–
-
–
1,257,461
1,016,634
2,274,095
(138,762)
(197,948)
(336,710)
–
–
–
–
–
–
–
(4,280)
–
1,118,699
818,686
1,937,385
–
–
–
2019
2018 – Series 1
2018 – Series 2
2019 – Series 1
Total
No. of options
No. of options
No. of options
Opening balance
Granted
Lapsed
Buyback
Cancelled
Exercised
Buyback
Closing balance
Exercisable at the end
of the period
2,500
–
–
(2,500)
–
–
–
–
–
2,725
–
(380)
–
–
–
–
–
2,059
(124)
–
–
–
–
2,345
1,935
–
–
5,225
2,059
(504)
–
(2,500)
–
–
4,280
–
FINANCIAL REPORT 2020 8686
20.3.3 Performance rights
2020 EPR –
Series 1
2020 EPR –
Series 2
2020 EPR –
Series 3
2020 BPR
Current period expense ($’000)
Weighted average exercise price ($)
Fair value per option ($)
(300)
0.00
1.25
(386)
0.00
1.25
(179)
0.00
1.25
–
0.00
1.25
Grant date (contractual)
11/11/2019
11/11/2019
11/11/2019
11/11/2019
Projected vesting date 1 (contractual)
12/12/2019
31/08/2021
10/11/2020
31/08/2020
Projected vesting date 2 (contractual)
Fair value model volatility1
Fair value model risk-free interest rate2
Fair value model dividend yield
n/a
n/a
n/a
n/a
31/08/2022
10/11/2021
31/08/2021
63.25%
0.78%
0.00%
63.25%
0.78%
0.00%
63.25%
0.78%
0.00%
1 The fair value model volatility rate reflects a management estimate made in reference to the share prices for similar listed entities.
2 The fair value model risk-free rate reflects a management estimate made in reference to government bond interest rates.
2020
2020 EPR –
Series 1
2020 EPR –
Series 2
2020 EPR –
Series 3
2020 BPR
Total
No. of rights
No. of rights
No. of rights
No. of rights
No. of rights
Outstanding at the beginning
of the period
–
–
–
–
–
Granted
Lapsed
Buyback
Cancelled
Exercised
Outstanding at the end of the period
Exercisable at the end of the period
240,000
1,134,000
300,000
400,000
2,074,000
–
–
–
(240,000)
–
–
(90,000)
–
–
–
–
–
–
–
1,044,000
300,000
–
–
(400,000)
(490,000)
–
–
–
–
–
–
–
(240,000)
1,344,000
–
2020 was the first year the Group issued performance rights.
87
approach used for provision staging. Loan receivables that
are deemed uncollectable are written off by the Group with
attempts to recover continued post write off.
The Group regularly reviews the adequacy of the provisioning
to ensure that it is sufficient for financial reporting purposes.
The provision is determined through management’s best
estimates of losses based on historical experience and
their experienced judgement. The Group measures the loss
allowance for a financial instrument at an amount equal to the
lifetime ECL if the credit risk on that financial instrument has
increased significantly since initial recognition. The maximum
exposure to credit risk at the reporting date to recognised
financial assets is the carrying amount, net of any allowance for
doubtful debts of those assets, as disclosed in the Consolidated
Statement of Financial Position and Notes to the Consolidated
Financial Statements.
Refer to Notes 3.2.1.2, 4.2 and 13 for further information.
21.3 Market risk
MoneyMe’s Chief Financial Officer has primary responsibility
for market risk management with oversight by the Asset and
Liability Committee.
Market risk is the risk that changes in market prices will affect
the Group’s income or the value of holdings in its financial
instruments. The objective of market risk management is to
manage and control market risk exposures within acceptable
parameters while optimising the return. The Group’s exposure
to market risk arises through interest rate changes and foreign
currency exposure.
Interest on borrowings reflects set margins above variable
market benchmark rates. The Group earns variable interest
from its loan receivables. In the event of a movement in interest
rates, the Group reviews its pricing as appropriate.
Interest rate sensitivity analysis
21. Financial Risk Management
21.1 Overview
The Group’s activities expose it to a variety of financial risks:
market risk (such as interest rate risk), credit risk and liquidity
risk. The Group uses different methods to measure and manage
the different types of risks to which it is exposed. These
methods include sensitivity analysis in the case of interest rate,
ageing analysis to manage credit risk and cash flow forecasting
to monitor and manage liquidity risk.
Risk management is carried out by senior management,
identifying and evaluating financial risks within the Group and
reporting to the board on a regular basis. The Group‘s risks and
exposures are as below.
21.2 Credit risk
MoneyMe’s Head of Operations has primary responsibility
for Credit Risk Management with oversight by the Credit
Committee which meets quarterly and more frequently if or as
required.
The Group’s exposure to credit risk arises through potential
risk a counterparty will default on its contractual obligations,
with the maximum exposure of the risk equal to the carrying
amount of these receivables at the end of the reporting period
being $133,599,605 (2019: $87,458,000).
The Group utilises its proprietary risk decisioning to mitigate
against credit risk, leveraging multiple data points including
credit agency information and bank statement data, to confirm
suitability and appropriate credit limits prior to the issuance of
credit to individual borrowers.
The Group also manages the credit risk profile of its book
through a focus on loan portfolio diversification. This is
assessed on an ongoing basis in relation to key criteria that
include customer residency and loan purpose, among other
factors. As at 30 June 2020 gross loan receivables reflected:
— 35% in NSW, 23% VIC, 23% QLD and 10% WA
2020
$‘000
2019
$‘000
(1,272)
1,272
(744)
744
— 11% in Construction, Building & Architecture, 9% in
Hospitality, Travel & Tourism, 8% in Manufacturing, Trades
& Services
Effect on profit before tax:
1% increase in interest rates
— 22% to borrowers aged from 18 to 25, 35% to borrowers
1% decrease in interest rates
Interest rate changes have been minimal during the year
and relates to cash and cash equivalents and interest-
bearing borrowings.
The Group’s exposure to foreign exchange risk is minimal and is
deemed not to be material in the current financial year.
aged 26 to 35 and 43% to borrowers over 35.
— 75% to borrowers in full time employment, 15% to
borrowers in part-time employment and 10% to self-
employed and casual borrowers
— 57% to Personal loan product borrowers and 41% to
Freestyle virtual credit account borrowers
— an average Equifax score of 635 as at 30 June 2020 (620 as
at 30 June 2019).
As a result, the Group does not have any disproportionate
exposure to any single debtor or its monitored groups of
debtors. This diversification is an important credit risk mitigant
during the COVID-19 environment in particular.
Once a loan has been advanced, the Group regularly reviews
customer collections and collections in arrears in line with the
FINANCIAL REPORT 2020 8888
21.4 Liquidity risk
MoneyMe’s Chief Financial Officer has primary responsibility for Liquidity Risk Management with oversight by the Asset and
Liability Committee.
The Group’s exposure to liquidity risk arises through potential imbalance of cash outflows exceeding inflows. Trade payables and
other financial liabilities mainly originate from the financing of loans made to customers, other fixed assets, and investments in
working capital.
Liquidity risk is managed through continuous monitoring of cash flow forecasts to actuals to ensure that liability obligations are
met when they fall due. The Group’s balance sheet shows an excess of assets over liabilities as at 30 June 2020 of $46,852,000
(2019: $3,698,000), with the Group having access to $117,500,000 in committed debt facilities to fund continued growth of the
loan portfolio. The Group’s current assets, available financing facilities, and ongoing positive operating cash flows continue to be
sufficient to satisfy all payment obligations within the time frames required. Management have undertaken an analysis to look at
the earliest terms of which contractual obligations may be paid and assessed the cash flows required.
The following tables show all contractually fixed payments and receivables for settlement, repayments and interest resulting from
recognised financial assets and liabilities including the impact of discounting.
2020
Less than 6 months
6 to 12 months
1 to 5 years
Total amounts
Cash and cash equivalents
Other receivables
Net loan receivables
Total financial assets
Other payables
Warehouse trust borrowings
Related party borrowings
Lease liability
Total financial liabilities
Net maturity
2019
Cash and cash equivalents
Other receivables
Net loan receivables
Total financial assets
Other payables
Warehouse trust borrowings
Related party borrowings
Total financial liabilities
Net maturity
$’000
35,379
645
39,780
75,804
1,913
37,269
–
290
39,472
36,332
$’000
–
–
39,536
39,536
–
37,039
–
409
37,448
2,088
$’000
–
354
41,435
41,789
–
38,818
–
1,704
40,522
1,267
$’000
35,379
999
120,751
157,129
1,913
113,126
–
2,403
117,442
39,687
Less than 6 months
6 to 12 months
1 to 5 years
Total amounts
$’000
6,062
506
4,304
10,872
1,099
25,792
600
27,491
(16,619)
$’000
$’000
–
–
22,071
22,071
–
25,633
–
25,633
(3,562)
–
–
51,957
51,957
–
26,864
2,675
29,539
22,418
$’000
6,062
506
78,332
84,900
1,099
78,289
3,275
82,663
2,237
The Group’s Horizon Trust Warehouse Facility has a legal maturity date in December 2021. The facility has a one year extension
option to December 2022. The Group’s Velocity Trust Warehouse Facility has a legal maturity date of November 2021. Both
warehouse trusts are revolving finance facilities that allow for new assets to be funded within facility funding limits.
The Group expects to settle a new warehouse facility by 30 September 2020. The settlement has been delayed as a result of the
COVID-19 environment with relatively minimal impact from this delay impacting upon the Group’s liquidity risk given its access to
existing facilities in particular.
The tables below reconcile the borrowings associated with the two warehouse trusts, including the drawn balance, facility limits
and undrawn balances. The difference between the drawn balance and total borrowings disclosed on the balance sheet includes
capitalised borrowing costs.
89
MME Velocity Warehouse Trust
MME Horizon Warehouse Trust
Drawn balances
MME Velocity Warehouse Trust
MME Horizon Warehouse Trust
Undrawn balances
MME Velocity Warehouse Trust
MME Horizon Warehouse Trust
Facility limits
2020
$'000
65,000
47,500
112,500
5,000
–
5,000
70,000
47,500
117,500
2019
$'000
61,925
19,000
80,925
8,075
–
8,075
70,000
19,000
89,000
21.5 Fair value of financial instruments
Management consider that the carrying value amount of financial assets and liabilities recognised in the Consolidated Statement of
Financial Position approximate fair values.
FINANCIAL REPORT 2020
9090
22. Related Party Transactions
22.1 Related party loans
The table below provides the total amount of related party loans, and interest expense on related party borrowings in the
financial year.
Interest expense on related party borrowings
Total related party borrowings
2020
$'000
117
–
2019
$'000
114
3,275
All corporate debt related party borrowings reported at 30 June 2019 were repaid in December 2019 as part of the IPO.
All unsecured loans, with the exception of one loan, were provided without restrictions on uses on funds and were repayable on
demand within 60-90 days of written notice by the lender. One loan had a loan maturity date of 29 August 2021.
Loans were made in accordance with the normal terms and conditions of the market with an interest rate range of 9.5% to 13.0%.
These were analysed to be arm’s length interest rates.
Outstanding balances at the 2019 year-end were unsecured, interest bearing, and settlement occurred in cash. All corporate debt
related party borrowings reported at 30 June 2019 were repaid in December 2019 as part of the IPO.
Refer to Note 17.3 for further information.
No transactions relating to equity instruments (other than those related to share-based compensation) were undertaken between
MoneyMe and any Director or KMP during the financial year, including their related parties.
22.2 Newcastle and Sydney office fit-out
A related party was engaged to complete office fit-outs in Sydney and Newcastle in the 2020 financial year. The transactions
were made in accordance with normal terms and conditions of the market with pricing assessed to be on a arms length basis. Total
contracted spend was $0.9m with $0.6m to be paid on completion of the services post 30 June 2020.
22.3 Other related parties
A related party was employed to support the ListReady sales team during the 2020 financial year. The fair value of the services are
assessed to be less than $0.02m.
23. Parent Entity Information
Set out below is the supplementary information about the parent entity.
23.1 Statement of Profit or Loss and Other Comprehensive Income
Net Profit / (Loss) After Tax
Total Comprehensive Income
23.2 Statement of Financial Position
Total assets
Total liabilities
Net assets
Total equity
91
2020
$'000
–
–
2020
$'000
43,316
–
43,316
43,316
2019
$'000
–
–
2019
$'000
–
–
–
–
23.3 Significant accounting policies
The accounting policies of the parent entity, are consistent with those of the Group, as disclosed in Note 2.
Note that the consolidation related policies are not applicable to this Note.
FINANCIAL REPORT 2020
9292
24. Remuneration of Auditors
During the financial year the following fees were paid or payable for services provided by Deloitte Touche Tohmatsu, the auditor of
the Group and its network firm:
Deloitte and related network firms
Audit or review of financial reports:
— Group
— Subsidiaries and joint operations
Statutory assurance services required by legislation to be provided by the auditor
Other assurance and agreed-upon procedures under other legislation or contractual arrangements
— Investigating Accountants report associated with an IPO
— Other services
Other services
— Tax compliance services
Total
Other services are APRA regulatory assurance reports.
25. Subsequent Events
2020
$’000
2019
$’000
349
10
359
880
20
190
1,449
209
10
219
–
–
36
255
The COVID-19 environment has continued to evolve and develop during the period post 30 June 2020. In particular, the state of
Victoria began to experience a higher number of COVID-19 infections and related deaths in more recent weeks. The government
response at the federal and state level has continued to evolve, including the announcement of further people movement
restrictions within Victoria and between states, and the announcement of further stimulus measures such as an extension to
JobKeeper. The Group is continuing to monitor the changing environment and considers that no adjustments are required as
a result of changes after 30 June 2020 in relation to the critical estimates and judgements in particular as set out in Note 4.
Customers that were classified as COVID hardship have been monitored through regular reporting as well as tracking of those
customers who are no longer in COVID hardship. 80% of COVID hardship have now started to repay. This analysis as well as the
regular monitoring of portfolio level credit risk has not identified any events that would lead the Group to require adjustment of
the expected credit loss allowance.
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93
FINANCIAL REPORT 2020 94949494
04
Other Information
FINANCIAL REPORT 20 20
95
Additional Shareholder Information
Corporate Directory
96
99
9696
Additional Shareholder Information
Additional information required pursuant to ASX Listing Rule 4.10 and not disclosed elsewhere in this report is set out below.
The information is effective as at 7 August 2020.
Corporate Governance:
The Company’s Corporate Governance Statement for the financial year ended 30 June 2020 can be found at
moneyme.com.au/investor-centre
Substantial Shareholders:
The names of substantial shareholders in MoneyMe Limited and the number of equity securities to which each substantial
shareholder and their associates have a relevant interest, as disclosed in substantial shareholder notices given to MoneyMe
Limited, are set out below.
Name of Substantial Holder
within the meaning of section
671B of the Corporations Act
Date
Number of Shares in which
the substantial holder holds a
relevant interest
% of total shares on issue
Perennial Value Management Ltd
26 March 2020
2 January 2020
18,061,980
26,189,405
16 December 2019
47,821,802
Bannigan Nominees Pty Ltd
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