More annual reports from MyState Limited:
2023 Report2 0
2 1
Annual Report
The human way to bank.
s
t
h
g
i
l
i
h
g
H
e
c
n
a
m
r
o
f
r
e
P
2
MyState Limited - Annual Report 2021
Contents
MyState Values
Highlights
Group Performance
Chairman’s Report
Managing Director’s Report
Our Strategy
MyState Bank
Approach to Risk
TPT Wealth
2021 ESG Snapshot
Board of Directors
Key Management Personnel
Directors’ Report
Financial Report
Information Relating to Shareholders
Corporate Directory
5
6
7
8
10
14
16
20
21
22
28
30
32
62
110
111
Annual General Meeting
Virtual (online) AGM – Wednesday 20 October 2021
at 10.30am (AEDST). Due to the continuing uncertainty
created by the COVID-19 pandemic, the Board has
determined to hold an online Annual General Meeting
(AGM) again this year. This approach will provide a safe
environment for shareholders to participate in
the meeting.
In response to COVID-19, the Australian Government has
passed the Treasury Law Amendments (2021 Measure
No. 1) Act 2021 which allow notices of meeting and
other information regarding the AGM to be provided to
shareholders electronically and also released to the ASX
where it can be viewed and downloaded.
This year our Notice of AGM will be published online at
mystatelimited.com.au and released to the ASX on
Friday 17 September 2021.
Corporate Governance
The Board of MyState Limited is committed to upholding
the highest levels of corporate governance and
subscribes to the Corporate Governance Principles and
Recommendations published by the ASX Corporate
Governance Council in order to promote investor
confidence in the company and within the broader
market. In addition, the Australian Prudential Regulation
Authority (APRA) requires MyState Limited, as the non-
operating holding company of a bank, to comply with
the prudential obligations that apply directly to the
bank. To this end, the Board of MyState Limited has a
governance framework whereby the appropriate Board
policies, meeting the APRA prudential requirements,
apply across the Group.
MyState Limited’s Board-approved Corporate
Governance Statement is available on the Company’s
website at mystatelimited.com.au
s
t
n
e
t
n
o
C
3
MyState Limited - Annual Report 2021
MyState Values
Create
Customer
‘WOW’
Chase
the Better
Collaborate
to Win
› We walk in our customers’ shoes and appreciate
their perspectives.
› We think and act in the best interest of our
customers.
› We are clear, concise and trustworthy in our
customer interactions.
› We design and deliver exceptional customer
experiences, with a human touch.
› We make things simpler and easier for
our customers.
› We are bold in our ambition.
› We seek out and embrace the change that is
required to succeed.
› We have the courage to try new things and
grow from our failures.
› We simplify (and digitise) to deliver exceptional
customer experiences, with a human touch.
› We seek industry-leading productivity and
always drive for better outcomes.
› We care for each other, our customers,
partners and community.
› We give our best, do the right thing, and trust
our colleagues to do the same.
› We hold each other to account.
› We openly share information so that
everyone can make informed decisions.
› We reach out across teams to rapidly solve
problems – and celebrate our successes
and learnings!
l
s
e
u
a
V
e
t
a
t
S
y
M
5
MyState Limited - Annual Report 2021
.
Key Highlights
Net profit after tax
+20.9%
from FY20
$36.3m
NPAT was supported by
increased net interest income
and active cost management.
Earnings per share
+19.2%
39.2cps
from FY20
A positive increase in EPS in line
with NPAT growth.
Customer deposits
+13.2%
$4.5b
from FY20
Growth in customer deposits has
been driven by the award-winning
MyState Bank Bonus Saver
Account. Home lending growth of
6.8% to $5.5b, equivalent to
1.3 times system growth.
Final dividend
13.0cps
The Directors have declared a fully
franked final dividend of 13 cents
per share. The dividend will be
payable on 21 September 2021 to
shareholders on the register at the
record date of 26 August 2021.
Return on equity
Net promoter score
+116bps
10.3%
from FY20
Significant growth in return on
equity which compared favourably
to other banks and is above
regional bank peers.
+47
MyState continues to record
a high customer NPS, driving
the strongest period of organic
customer growth we have
experienced.
s
t
h
g
i
l
i
h
g
H
y
e
K
6
MyState Limited - Annual Report 2021
.
Group Performance
.
0
4
1
5
2
4
1
.
5
2
4
1
.
.
0
3
1
1
.
0
3
5
.
1
3
0
.
1
3
1
.
0
3
.
3
6
3
.
0
4
3
.
0
5
3
.
2
4
3
.
9
2
3
.
2
9
3
.
5
4
1
.
5
4
1
.
5
4
1
.
5
4
1
.
5
2
1
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
NPAT
($ million)
Earnings per share
(cents)
Dividends – fully
franked per share
(cents)
f
l
a
h
d
n
2
f
l
a
h
t
s
1
.
0
0
1
1
.
0
1
7
.
9
.
2
9
.
3
0
1
.
9
5
6
7
.
2
6
.
8
4
6
.
8
2
6
3
.
1
6
1
.
8
8
.
5
9
8
.
4
9
8
.
5
9
9
.
0
2
1
1
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
Return on average
equity (%)
Cost-to-income
ratio1 (%)
Net interest income
($ million)
(1) 2021 excludes restructure costs
e
c
n
a
m
r
o
f
r
e
P
p
u
o
r
G
7
MyState Limited - Annual Report 2021
Chairman’s Report
Chairman’s Report
Statutory net profit after tax for
the 2021 financial year was up
20.9% to
$36.3 million
and earnings per share increased
19.2% to
39.2 cents
The 2021 financial year was full of challenges but every
step along the way the professionalism of our team
has delivered appropriate and measured responses,
effectively navigating the COVID operating conditions.
from a revised assessment of the potential impact of
COVID-19 on our customers and the consequent release
to profit of a proportion of the provisioning put in place
in the 2020 financial year.
Our evolution as a digital bank that services a more
geographically diverse customer base has continued
and MyState Bank is well placed for further growth over
the next few years.
The total loan book grew 6.0% to $5.6 billion, and
the home loan book enjoyed an above-system 6.8%
increase. Customer deposits grew 13.2% over the prior
year to reach $4.5 billion.
The comprehensive re-working of its products, services
and processes means that TPT Wealth is also well
positioned for growth.
Operating performance
The contribution from TPT Wealth fell, in part reflecting
reduced management fee income but also investments
in the business to re-position for growth, but pleasingly
funds under management (FUM) increased 3.4% for the
full year to a total of $1.105 billion as at 30 June 2021.
Statutory net profit after tax for the 2021 financial year
was up 20.9% to $36.3 million and earnings per share
increased 19.2% to 39.2 cents.
Core earnings (operating profit before restructure
costs, bad and doubtful debts expense and income tax)
increased 11.9% to $53.6 million.
The cost to income ratio (excluding restructure costs) fell
by 153bps to 61.3% for the full year supported by gains
from technology investments and careful management
of operating expenses.
The contribution from MyState Bank was significantly
improved, benefiting from lower cost of funds and also
t
r
o
p
e
R
s
’
n
a
m
r
i
a
h
C
8
8
Dividend and capital
In the 2020 financial year, the Board determined to not pay
a final dividend to ensure a strong capital position given the
challenges and uncertainties we faced due to COVID-19.
It was pleasing that the Board was comfortable to
resume dividend payments in March 2021 with an interim
dividend of 12.5 cents per share and we have declared
a final dividend of 13 cents per share payable
in September 2021.
The dividend payout ratio at 69.3% remains comfortably
inside the targeted range of 60-80%.
MyState Limited - Annual Report 2021
MyState Limited - Annual Report 2021
“Our evolution as a digital bank that services a more geographically
diverse customer base has continued and MyState Bank is well
placed for further growth over the next few years.”
Growth strategy
Over the past few years, we have moved to position
MyState Bank as a trusted and respected digital
challenger brand with demonstrated capability in making
financial things simpler for our customers. Since 30 June
2016, the MyState bank loan book has increased by a
very commendable 45%.
And at TPT Wealth, we are part way through a re-
positioning of the business to improve the customer
experience and in the process target significant
growth in FUM.
As part of a comprehensive review of our competitive
position, the Board and Executive determined that there
was an opportunity to accelerate the growth trajectory in
both businesses. This will ensure that we will continue to
be competitive and provide the services our customers
expect while improving shareholder value.
Retirement of Managing
Director & CEO
In August 2021 Managing Director & CEO Melos Sulicich
advised the Board of his intention to retire at the end
of 2021. Mr Sulicich has been an inspirational leader,
transforming the business, sharpening its focus, and
creating a platform for sustained growth. The Board has
commenced the process to find a new Managing Director.
Board changes
In June, the Board appointed Mr Stephen Davy as a
Non-Executive Director, effective 1 July 2021. Formerly
Chief Executive Officer and Managing Director of Hydro
Tasmania, Mr Davy has also held senior executive roles
at Hydro Tasmania, Eraring Energy, Societe Generale
and Bankers Trust and started his banking career at
Macquarie Bank.
Capital raise
Acknowledgements
It was in this context that the Board determined to
undertake a significant capital raise that will facilitate
growth while maintaining a strong capital position.
In May 2021, MyState raised $55.5m through a
$24.2 million partially underwritten Entitlement Offer to
eligible retail investors and a $31.3 million Placement and
Entitlement Offer to existing and new institutional investors.
The support for the capital raise reflected investors
endorsement of the growth strategy.
Looking forward
We have sought to position both MyState Bank, and
more recently TPT Wealth, with market-leading products
and services that reflect an increasingly digital world.
That focus will continue with ongoing refinements
planned in the 2022 financial year.
The increased number of shares on issue will result
in a modest decline in earnings per share in the 2022
financial year, but we expect that growth in earnings per
share will resume in 2023 and beyond as we deliver the
planned growth in both the MyState loan book and
TPT Wealth FUM.
It has been an extraordinary effort from everyone in the
MyState team in the last 12 months. Through challenging
times, we have shown our resilience and ability to
quickly pivot to continue servicing our customers
under evolving conditions.
I particularly acknowledge the role of our Managing
Director and CEO, Melos Sulicich, and the Executive
who have provided exemplary leadership, not only
ensuring we help our customers with their essential
financial needs – in what for many were challenging
circumstances, but also furthering the transition that
has set the business so that we have the confidence to
embark on a significantly sharper growth trajectory.
To my fellow directors, thank you for your commitment
and wise counsel.
Finally, I’d like to thank you, our shareholders. The last
financial year has seen us set up the base we need to
truly become a digitally enabled multi-channel bank and
wealth management business and I hope you’ll stay with
us for the journey.
Miles Hampton
Chairman
t
r
o
p
e
R
s
’
n
a
m
r
i
a
h
C
9
MyState Limited - Annual Report 2021
Managing Director’s Report
Total loan book
$5.6 billion
Return on equity (ROE)
10.3%
Net interest income grew 12.5% to
$112 million
The year in review was a pivotal year for MyState.
While operating conditions were volatile, we performed
strongly. We supported and grew our customer base,
increased our loan book, deposits and funds under
management, and finalised our 2025 strategy that will
see us targeting rapidly increasing customer numbers,
deposits and lending at MyState Bank and funds under
management at TPT Wealth.
It is the right strategy. The industry is in a very low growth
environment and is still dealing with the challenges of
significantly increased regulation. Key to succeeding
in this environment is ensuring you are a trusted brand,
being customer-centric and agile enough to service
changing customer needs, being digitally enabled to
scale appropriately, and having a strong balance sheet.
Our FY21 results show we are on the right track. We are
investing in marketing and distribution to drive increased
customer acquisition, increasing investment in digital
innovation and managing operating expenses while
maintaining a culture focused on delivering positive and
intuitive customer experiences.
This focus, together with our recent capital raising,
enables us to build on our current momentum
and rapidly accelerate growth, creating value for
shareholders. Our strategy will build on our strong
financial position, demonstrated execution capability
and leading customer net promoter score (NPS) to
access growth opportunities from a geographically
diverse customer base via an excellent digital offering.
Financial overview
The financial results for FY21 are very good – among the
best for MyState.
Core earnings (operating profit before restructure
costs, bad and doubtful debts expense and income
tax) increased 11.9%. As the Chairman mentioned, our
NPAT and EPS both enjoyed around 20% growth.
For the year to 30 June 2021, MyState achieved a return on
equity (ROE) of 10.3%, up an impressive 116bps on 2020.
The growth in our total loan book to $5.6 billion, as
well as our lower funding costs enabled our net interest
income to grow 12.5% to $112 million. MyState also
improved its net interest margin (NIM) by 10bps over
2020 to 196bps.
The higher NIM was underpinned by increasing
customer deposits, favourable deposit interest rates
and lower wholesale funding costs reflective of current
liquidity conditions.
t
r
o
p
e
R
s
’
r
o
t
c
e
r
i
i
D
g
n
g
a
n
a
M
10
10
MyState Limited - Annual Report 2021
“Our FY21 results show we are on the right track.
We are investing in marketing and distribution to drive
increased customer acquisition, increasing investment
in digital innovation and managing operating expenses
while maintaining a culture focused on delivering
positive and intuitive customer experiences.“
Our accelerated home loan and retail deposit growth
will continue, while maintaining a focus on asset quality.
In 2021 our cost to income ratio (excluding restructure
costs) fell by 153bps to 61.3%, and operating leverage
will further improve as operational efficiencies
flow through.
Accelerating home loan and
retail deposit growth
In FY21, home loan applications increased 13% while
settlements were up 23%. These results have delivered
strong lending growth, despite an increasingly
competitive home lending environment.
Our customer funding ratio increased from 69.1% to
73.4% in the last 12 months, allowing us to reduce
wholesale and securitised funding from 30.9% to 26.6%,
providing increased funding flexibility for the future.
Customer deposits grew 13.2% in the 12 months to
June 2021. We now have a simpler business model
and products. A good example is our award-winning
MyState Bank Bonus Saver Account which achieved
319% growth during the year, driven by an active
digital acquisition campaign.
Growth in these areas in 2021 has been led by
customer acquisition – particularly younger
customers.
TPT Wealth transformation
now allows scale
TPT Wealth has seen huge change over the last two
years. It is a longstanding institution that is trusted by a
range of investors including charitable trusts, trustees
of institutions and corporates and has good investor
retention. Recently we moved from a face-to-face
business model to a more typical funds management
model with a greater focus on delivering services online.
Extensive investment in new fund and wealth
management technology systems will enable the
business to scale and support significant growth
in funds under management. Easier application
processes and smoother interactions enabled
by digital enhancements are making it easier for
customers to engage with TPT Wealth.
Customer experience
We remain very pleased with our customer engagement.
In short, our customers trust us to assist them and be
aligned with what they need. MyState staff seek to build
relationships with customers, delivering a human way to
bank, enabled by technology.
Our customer NPS, which finished the year at +47, is
among the highest in the sector. It reflects our efforts to
empower customers through digital services and care
with a human touch.
t
r
o
p
s
e
t
R
h
g
s
’
i
r
l
h
o
g
t
c
i
H
e
r
e
i
D
c
n
g
a
n
m
g
r
a
o
n
f
r
a
e
M
P
i
11
MyState Limited - Annual Report 2021
Managing Director’s Report
Culture and community
Looking ahead
Our culture has been driving these results. The
Tasmanian community is an integral part of MyState’s
DNA, defining who MyState is, what we stand for, our
attitude, tone and style.
While we have always been very customer-focused,
we now have a culture of continuous improvement with
the capacity to adapt to new challenges and meet our
customers’ evolving needs.
Community-wise it has been a big year. We continue
our sponsorship of Football Tasmania, the MyState
Bank Student Film Festival and we have just gained the
naming rights for the biggest indoor entertainment and
sporting facility in Tasmania – MyState Bank Arena.
I would like to thank our team for the way they adapted to
continue to service our customers through the pandemic.
Our ability to create a seamless work from home/office
environment allowed us to provide flexibility and choice.
And of course, our frontline staff who ensured we managed
to keep our branches open at all times.
While the banking environment is becoming even more
competitive and will operate under increased regulation,
MyState’s 2025 strategy builds on our strong financial
position and high NPS to scale via a strong digital and
AI-enabled offering across all states from our heartland
in Tasmania.
Building on the trust our customers place in us, we are
well placed to continue to simplify financial services
and make them more intuitive to use. We have built a
culture that continually innovates and improves services
to deliver accelerated growth, while maintaining current
asset quality, targeting ROE and EPS increases over the
medium term as capital is deployed, and creating value
for shareholders and all our stakeholders.
This marks my final report to MyState shareholders as
I retire at the end of December, after what will be seven
and a half years with the organisation. I have thoroughly
enjoyed my time at MyState and working with our
wonderful staff, our fantastic customers and all the other
stakeholders that bring the company together. The
business is in a wonderful position to drive significant
organic growth and I wish the company all the very best
of success for the future.
Melos Sulicich
Managing Director and Chief Executive Officer
t
r
o
p
e
R
s
’
r
o
t
c
e
r
i
i
D
g
n
g
a
n
a
M
12
MyState Limited - Annual Report 2021
Our Strategy
Our ambition is to grow our share in deposits, lending and funds under management.
Our growth strategy is focused and bold. It builds on our strong financial position and high customer NPS to access
specific growth opportunities in eastern seaboard markets, via a strong digital and AI-enabled offering.
Culture and capability
Drive a culture of customer centricity and
execution excellence.
Operations
Simplify, digitise and automate
processes and create
value through productivity
improvements.
Customer experience
and acquisition
Deliver a digital and intuitive customer
experience by providing easy access
banking and wealth services.
Distribution
A simple core product set
distribution through expanded
digital and third-party channels.
Our PURPOSE
is to help people
achieve their dreams
Our MISSION
is to create simple
and trustworthy digital
experiences for our
customers
Enablers
Continuous improvements program
driving innovation and process
automation.
A strong and flexible capital position
with robust risk culture.
Values
Create customer ‘WOW’
Chase the better
Collaborate to win
We are executing the boldest strategy in our history
with an overarching ambition to significantly accelerate
growth in customer numbers, deposits, lending, and
funds under management. The strategy will see
us seeking to take advantage of our position as a
respected and established digital challenger brand
with demonstrated capability in making financial things
simpler for our customers.
Enhanced by the capital raise announced in May 2021
and completed in June 2021, our strategy focuses on
four main areas that underpin the whole business and for
which you will see examples in the rest of this report:
y
g
e
t
a
r
t
S
r
u
O
14
› Culture and capability
› Customer experience and acquisition
› Enhanced distribution; and
› Operations productivity
Culture and capability
Having the right culture and capability is fundamental.
We have invested in working with our people to develop
three core values to position ourselves to execute the
2025 strategy:
MyState Limited - Annual Report 2021
‘Create customer wow’ where we are designing and
delivering exceptional customer experiences with a
human touch. We can do this because we think and act
in the best interests of our customers, appreciate their
perspectives and are clear and trustworthy.
‘Chase the better’ is being bold so we can embrace
the change that is continually required to succeed and
always drive better outcomes. We are simplifying and
digitising to deliver things faster and more accurately.
‘Collaborate to win’ is about openly sharing information
so we can collectively make informed decisions, caring
for each other, our customers, and other stakeholders.
We have reduced the number of administration and
process-oriented roles and increased staff numbers in
customer facing, servicing, and marketing roles to cater
for increasing customer numbers at the service levels
they want – in order to create this ‘customer wow’.
We are undertaking several programs to train and
upskill staff, develop team capabilities and grow a
company-wide culture of continuous improvement
and innovation – ‘chase the better’. This will attract
new talent that promotes our growth objectives and
enhances operational excellence focused on the value
of ‘collaborate to win’.
Our strategy is supported by a strong risk culture that is
embedded into the values of MyState employees, with all
employees now undertaking risk management training.
This allows us to stay true to our human approach to
banking and wealth management, backed by a strong
digital capability and enhanced by our customer-facing
digital proposition.
Customer experience and
acquisition
Our streamlined processes, developed from the outset to
serve the needs of our customers, and data analytics are
now helping us anticipate what customers want, allowing
us to personalise our marketing more effectively.
Our new digital and intuitive customer experience
provides easy and convenient access to all our
banking and wealth services which we can now
dramatically grow. And we are investing to replace
our internet and mobile banking platform during the
second half of FY22.
We are focused on increasing our national footprint
through digital acquisition strategies aimed at sections
of mainland Australia where we are seeing an influx
of new customers. The success of our campaigns is
becoming apparent and can be seen in the increasing
geographic dispersion of our loan book.
However, we also back up these increased digital
options with convenience for our customers through
alternative channels such as phone banking and a
traditional core branch network in Tasmania. That way
we provide the human touch we’re renowned for, which
is represented by our excellent customer NPS and which
separates us from most in the industry.
Enhanced distribution
This is where we provide additional ways to scale and
support customer acquisition. We will continue to refine
and simplify our core product set to ensure it remains
relevant and meets the evolving needs of customers. We
also ensure this product set is more efficiently distributed
through expanded digital and third-party channels such
as mortgage brokers, where trusted relationships and
ability to service leads quickly are paramount.
By building on the technology platforms and associated
infrastructure now in place and implementing strategies
across these four main areas, we will continue to
innovate to attract and retain the best staff and
customers, ensuring access to simple, intuitive
financial services.
Our transition to a digitally enabled bank and wealth
management business is now seeing the investment of
prior years to deliver improvements in customer growth,
customer deposits, core earnings, and ROE and EPS
increases over the medium term.
Our continued investments will ensure a world-class
user experience, incorporating robotics functionality to
develop efficiencies and scalability in our processes that
will support the growth of the bank well into the future.
Operations productivity
This is the engine room. We are investing heavily in digital
capabilities to automate and digitise back-end processes
to make banking more convenient and seamless for
customers, and faster and more efficient for us.
We’re continually simplifying the business, products,
and systems, allowing us to streamline operations and
automate processes, which also allows us to increase
productivity, manage costs efficiently and invest savings
into our growth.
y
g
e
t
a
r
t
S
r
u
O
15
MyState Limited - Annual Report 2021
MyState Bank
The way we service our customers is almost unrecognisable from five years ago. Work over the last 12 months
has seen us continue to transform into a digitally enabled bank built on a modern, scalable technology platform.
We are on par with the best in the Australian market, providing our customers with the options of online, phone,
internet, mobile or face-to-face banking, with a human touch.
This is backed up by upgraded systems and simpler, more agile processes that allow a high calibre team to
dramatically improve our customer experience through greater efficiency, quality, and speed.
Geared for growth
We’ve delivered a platform that will allow us to scale.
This year we started leveraging the platform to
grow quickly through our focus on home loans and
customer deposits.
During the year 17,000 new customers called MyState
their bank – a 30% increase in one year. Tellingly, 93% of
these new customers came through digital channels.
We continued to focus on low-risk, owner-occupied
lending with a loan to valuation ratio of less than 80%,
while also being a strong supporter of the First Home
Loan Deposit Scheme.
Technology innovation and
efficiency gains
MyState has invested heavily in digital banking
capabilities to automate and digitise back-end
processes to accelerate the processing of loan
applications and provide a more seamless customer
banking experience.
We have also introduced artificial intelligence (AI) in
our back office to predict customer behaviour in our
home loan book that is particular to a customer’s
circumstances. We now have over 30 robotics processes
at work in our back office which together have improved
customer wait times and accuracy and provide a
platform for us to scale our operations.
We focus on delivering a consistently speedy time from
application to approval for our customers and mortgage
broker partners and have optimised back-end processes
so we can deal with an increasing number of home
loan applications.
This allows our staff to focus on the needs of customers
rather than needing to devote time on the more
administrative tasks.
During the year, 93% of our new customers were
acquired digitally. Our e-statement levels have risen
24% in the last two years to 53% of all customers opting
to receive their statements electronically – saving us
time and money, being more convenient and allowing
customers to receive their statements quicker, and doing
our part to help save the environment.
Upgrades in infrastructure are now starting
to pay off, with many customers enjoying the option of
face-to-face, our customer care team and internet or
mobile banking.
The restructure of our retail banking business led to
significant savings. The closure of six branches and a
re-organisation of the TPT Wealth business in the last
financial year led to a $2.6 million restructure charge.
The remaining seven branches located in Tasmania will
support the longstanding loyal customer base. Savings
from these initiatives are being reinvested into increased
marketing and distribution capability to grow the business.
k
n
a
B
e
t
a
t
S
y
M
16
16
MyState Limited - Annual Report 2021
“MyState has invested heavily in digital banking capabilities
to automate and digitise back-end processes to accelerate
applications and provide a more seamless customer
banking experience.“
MyState Bank app
MyState’s mobile app is another example of our market-
leading AI which now allows customers to gain insight
into spending and saving habits, helping optimise costs
and payments to help achieve their financial goals.
We’re now investing in a new internet and mobile
banking platform which is due for delivery in FY22.
Home loan diversification
As our loan book becomes more nationally
representative, it reduces concentration risk, and
we expect this trend to continue. We enhanced our
distribution capability and capacity and increased our
business development resourcing.
This transformation to be more digitally available
through alternative channels, such as mobile apps and
online allows us to fuel growth outside our traditional
core branch network. Our reduction of physical branches
has freed up resources, allowing us to focus on the
branches we retained as well as building out the loan
book nationally with new customer acquisitions.
Supporting our customers
through the pandemic
While operating conditions throughout 2020 were
uncertain, challenging times often bring out the best in
people. The whole team at MyState came through the
crisis well and focused on supporting customers to help
them through the economic impact of the pandemic. We
set up systems to help customers in need, including the
ability to service individual cases appropriately.
We’re also proud that all our branches remained open
right through the pandemic and that we ensured all our
staff could operate safely.
As at 30 June 2021, there were 35 customers remaining
on some form of assistance (representing 0.2% of the
total home loan portfolio – down from a peak of 10.9% a
year before). With these improving conditions and more
positive economic outlook, the forward-looking credit
loss overlay has been reduced from $2.5 million as at
30 June 2020 to $1.5 million.
Following the more recent delta outbreak and
subsequent lock-downs across mainland Australia,
a total of 87 customers (representing 0.73% of the
portfolio) had sought some form of assistance as at 31
August 2021. The majority of these customers are based
in New South Wales and Victoria. We will continue to
support impacted customers over the coming months.
k
n
a
B
e
t
a
t
S
y
M
17
MyState Limited - Annual Report 2021
MyState Bank
“We are on par with the best in the Australian market, providing our
customers with the options of online, phone, internet, mobile or
face-to-face banking, with a human touch.”
Marketing to the mainland from
our strength in our heartland
Our commitment to increasing digital capabilities and
use of automation has paid off as we have continued
to build momentum in our marketing driven growth
strategy with 93% of new customers now coming
through digital channels. This has come from continued
investment in capability, partnerships and building
our brand.
Despite the significant growth, we have not lost sight of
the importance of deepening our relationships with our
customers. While we have strong brand presence in our
home state of Tasmania, we have significantly expanded
our marketing activities across Australia. This is all
possible because of our trusted brand, award-winning
products, and human touch.
Brokers
The broker channel remains important for MyState to
grow and scale as part of the 2025 strategy. We have
created valuable relationship-based partnerships with
brokers, building on the trust in our brand and
our products.
Meeting evolving customer
needs through multiple
channels
Customers are becoming more digitally enabled. But
what they really want is the convenience to deal with us
when and how they choose. We have responded to these
changing needs by redesigning customer journeys, using
digital as an enabler, and refining products to focus on
the things our customers want.
Our customers are moving to many digital channels.
More than 50% of customers now use e-statements
and over 71% of customers are now using internet and
mobile banking.
However, our customer care team, based in Tasmania,
is also key for those customers who still want or need to
speak to people. A major system upgrade has allowed
MyState to construct a leading support operation for
customers when they call and allows for more efficient
use of resources and intuitive and quicker outcomes for
customers so they can get off the phone and on with
their lives.
We received top customer satisfaction awards from
Mozo and Canstar for our MyState Bank Bonus Saver
Account and our MyState Bank Glide Account, which we
use to drive deposit volume.
MyState has one of the highest net promoter scores
(NPS) in the industry concluding the year at +47,
demonstrating the bank’s ability to empower customers
through digital services and care with a human touch.
k
n
a
B
e
t
a
t
S
y
M
18
MyState Limited - Annual Report 2021
Approach to Risk
Appropriate management of financial and non-
financial risks is a key focus throughout the business
and part of the platform upon which we’ve built our
2025 growth strategy.
We continue to invest in embedding risk awarness and
management culture into the business. This year saw
an improvement in our training programs, educating
and alerting our staff to indicators of risk and potential
threats to customers.
New and enhanced frameworks are ensuring risk
is identified, managed, and mitigated quickly. We
conduct regular reviews of risk frameworks to ensure
we continue to meet our regulatory obligations,
including the recommendations from the Royal
Commission into Banking and Financial Services, and
our purpose and mission to deliver the best outcomes
for customers.
We believe this means aligning with the spirit of the
law and how it affects people, rather than just ticking
a compliance box. This approach has also been
central to our coordinated COVID-19 response where
we examine risk through a customer and employee
perspective –ensuring the human service element
remains central.
This year new risk management processes and
systems were introduced, including use of robotics
and automation to complete previously manual
tasks, increasing scalability while improving risk
management – this area is evolving, so agility is key.
We also commenced initiatives in privacy, information
safety, fraud detection and customer advocacy to
support and protect our customers.
The Risk team upgraded reporting and analytics
to provide insight into events that may impact the
Group’s risk appetite and ability to deliver strategic
outcomes. This includes enhanced reporting and
accountability through the introduction of Divisional
Risk Management Committees. Using these insights,
MyState is continually optimising processes and
looking to refine and remain on top of risks to the
bank and our customers.
MyState’s risk profiling has been key to maintaining
the quality of the loan portfolio growth of the last 12
months. The Bank’s prudent lending practices helped
us deliver an arrears outcome considerably below the
benchmark of regional peers and the major banks.
“This year new risk management processes and systems were
introduced, including use of robotics and automation to complete
previously manual tasks, increasing scalability while improving risk
management – which is always evolving, so this agility is key.”
k
s
i
R
o
t
h
c
a
o
r
p
p
A
20
MyState Limited - Annual Report 2021
TPT Wealth
Our TPT Wealth business is replicating the
transformational success of MyState Bank.
In FY21, we outsourced some investment functions,
launched a new trustee services platform and
changed our legacy commercial lending system.
These initiatives have enabled more synergies,
allowing us to scale and support growth in funds under
management as part of the 2025 strategy.
This year we have undertaken a shift to combine
face-to-face transactional operations with a
modern digital offering to our funds management
business, with almost a third of our investors using
our new digital portal.
With funds under management increasing during the
year to $1.105 billion, driven by growth in our range
of income funds, we began the task of updating our
products to ensure we remain relevant for customers
who seek regular income.
We received our first independently rated, high
investment grade four star ‘superior’ rating from
SQM Research for the TPT Fixed Term Fund. TPT
Wealth is pursuing new ratings for the Long Term
Fund and Select Mortgage Fund to allow further
access to third-party distributors and wholesale
markets and grow FUM.
Like the Bank, TPT Wealth is also increasing reach
outside the heartland of Tasmania. The new technology
platforms greatly enhance our distribution capability
and capacity. This year we have begun to harness this
by increasing our business development resourcing with
new managers on the eastern seaboard, complementing
our established operations now led by two corporate
offices in Hobart and Launceston.
“We have undertaken a shift to combine face-to-face transactional
operations with a modern digital offering to our funds management
business, with almost a third of our investors now using our digital portal.”
h
t
l
a
e
W
T
P
T
21
MyState Limited - Annual Report 2021
2021 ESG Snapshot
+47 customer
net promotor
score
$2.4m of
community grants
since 2001
Net trust
score 86%
Compliance
with Modern
Slavery Act
46% women in
leadership
53% of customers
on e-statements
Helped new home
buyers through the
First Home Loan
Deposit Scheme
Over 1,900
customers assisted
during COVID
Our approach
As a proud Tasmanian company, we understand firsthand the importance of managing and balancing our
environmental, social and governance impacts.
During FY21, as part of our updated 2025 strategy, the Board and Executive team reviewed and developed
MyState’s ESG roadmap. While we have previously reported aspects of our ESG practices, this year we revised
our approach, which is now guided by evolving best practices and feedback from our stakeholders.
We conducted a materiality issues workshop where we identified key sustainability issues for MyState,
captured stakeholder perspectives and prioritised a set of material topics that have guided our FY21
sustainability reporting.
Our policies and charters which support our ESG agenda can be found on the corporate governance page
of the MyState Limited website at mystatelimited.com.au and include: Customer Charter, Code of Conduct,
Diversity Policy, Human Rights Statement, Modern Slavery Statement and Supplier Code of Conduct.
How we listen
MyState’s stakeholder groups include customers, investors, our people, communities, regulators, government
and suppliers. In FY21, we captured the voice of our stakeholders through a number of formal and informal
feedback methods.
Customers
› Face-to-face interaction in our
branches
› Locally operated contact
centre
› Online through our website,
app, email
› Real time feedback from our
customer advocacy survey
› Customer Advocate Office
and external dispute resolution
bodies
› Third party brokers
Shareholders, Analysis and
Rating Agencies
› Regular briefings and meetings
with investors and analysts
› Financial results and market
presentations
› Credit rating agency reviews
› Annual General Meeting
Employees
› Internal communications
channels – email, town hall
meetings and face to face
conversations
› Senior leadership forums
› Employee experience survey
› Workplace culture survey
› Employee consultation
committees
› Annual risk culture survey
t
o
h
s
p
a
n
S
G
S
E
22
22
MyState Limited - Annual Report 2021
Communities
› Communications with our
community partners
› MyState Foundation
grant program
› Fundraising initiatives
› Partnerships for pathways
to employment
Government and Regulators
› Meetings with regulators
and government
› Participation in policy
development through
submissions to inquiries
and reviews
Suppliers
› Regular meetings with suppliers
› Established supplier code
of conduct and human rights
statement
› Contract renewals, risk
assessments and joint
agreements
What matters the most
Our materiality assessment represents the ESG issues that matter the most to our organisation. Six key
materiality issues using the Global Reporting Initiative as a guide were identified, validated and prioritised by
MyState’s ESG project group.
Supporting customers
Governance, conduct
and culture
Helping our people to
be their best
Digital enablement
and data security
Environmental
sustainability
Community investment
Supporting customers
Why is this important?
We can help customers achieve their dreams by
making things easier, helping customers make
good choices and putting things right if they
go wrong.
NPS
+47
Helped
new home
buyers
through the
FHLDS
17,000
new
customers
Our mission is to create simple and trustworthy
digital experiences for our customers. We care for our
customers and continue to be there to assist them
during COVID. We are one of the customer advocacy
leaders in the sector with an NPS of +47.
We know customers are expecting more functionality
from online and mobile banking. Our online banking
system and AI-driven insights make it easy for
customers to gain a better understanding of their
spending and saving habits, helping them optimise
costs and payments to achieve their financial goals.
Our trusted brand and high level of customer
advocacy has seen 17,000 new customers join
MyState in FY21.
In 2021 we participated in the federal government’s
First Home Loan Deposit Scheme (FHLDS), helping
many new customers into their first home.
t
o
h
s
p
a
n
S
G
S
E
23
MyState Limited - Annual Report 2021
2021 ESG Snapshot
Governance, conduct & culture
Why are these important?
They are the foundations of conducting our
business in an ethical, responsible and transparent
way including driving the right behaviours that put
the needs of stakeholders first.
Modern Slavery Statement
Our support for human rights begins with doing
business in a way that respects the rights of
people and prevents human rights abuses.
In February 2021 we submitted our first Modern
Slavery Statement which outlines the steps we
are taking to minimise the risk of slavery and
human trafficking in our supply chain.
Our Modern Slavery Statement can be found
on the MyState Limited website at
mystatelimited.com.au
t
o
h
s
p
a
n
S
G
S
E
24
MyState Limited - Annual Report 2021
We uphold the highest levels of corporate governance
and subscribe to the Corporate Governance
Principles and Recommendations published by the
ASX Corporate Governance Council. Our Corporate
Governance Statement can be found on the MyState
Limited website mystatelimited.com.au
In 2020, we conducted a self-assessment of our
governance, culture, remuneration and accountability
(GCRA) practices. This identified several strengths
that we have developed and embedded in our
operations and culture. Commensurate with the size
and complexity of the Group, the GCRA assessment
also identified some opportunities. As a result, in
2021 we continue to refine and improve our risk
management practices and frameworks in the areas
of accountability and remuneration with a focus on
risk culture.
We regularly review our remuneration framework
against the changing regulatory environment and
market practice to attract and retain appropriately
skilled staff and adhere to prudential standards.
External advice is obtained as required.
The oversight of our remuneration framework
is provided by the Board’s Group People and
Remuneration Committee.
2021 ESG Snapshot
Helping our people to be their best
Why is this important?
To drive a culture of customer centricity
and execution excellence we rely on our
people being at their best.
Workplace diversity
We continue to place a strong focus on increasing
our diversity and inclusivity to provide equal
opportunities and create a workplace that is fair,
values differences, and promotes a sense of
belonging. We have a three-year Board-approved
Diversity Plan, with success monitored against
Board-approved targets. In 2021, our programs
focused on employee wellbeing and women in the
workplace, with our flagship event celebrating
International Women’s Day featuring Layne
Beachley. In 2021, 46% of all leadership roles were
filled by women, 29% of the Board Directors are
female, and 44% of the Executive team (direct
reports to the CEO) are women.
We have a clear purpose and mission. In 2021, with
the input of a cross section of people across our
organisation, we refreshed our values – Create
customer ‘wow’, Chase the better and Collaborate
to win.
Create customer ‘wow’ is about walking in
our customers’ shoes and understanding their
perspective. Chase the better is about being bold
about our ambition and embracing the change
required to succeed. Collaborate to win is giving
our best and doing the right thing by each other, our
customers, partners and the community.
We capture the voice of our people through culture
and engagement surveys. We also hold our Belong
forum which is our diversity and inclusion cooperative.
Our workplace health and safety committee
meets regularly to review how we work. We want to
understand how our people are feeling, what has
worked well and what areas can be improved.
During the 2020 COVID-19 lockdown, all our office
and our customer care team staff worked remotely,
communicating digitally with customers and
colleagues with no loss in productivity and even some
advancements. This has continued in 2021 with many
of our people choosing flexible work arrangements.
We also provide a wellbeing program for our people
so that they are engaged, productive and able to help
us grow by assisting our customers through positive
experiences.
t
o
h
s
p
a
n
S
G
S
E
25
MyState Limited - Annual Report 2021
2021 ESG Snapshot
Digital enablement and data security
MyState’s ‘human way to bank’ is supported by our
strong digital capability and enhanced customer-
facing digital proposition.
We continue to evolve and develop our digital
capabilities and use of automation. We have
simplified our processes through the increasing use of
robotics and were early adopters of the new payments
platform (NPP) and digital wallets.
MyState’s digital transformation has simplified our
business and improved customer experience through
greater efficiency, quality and speed.
We have responded to the changing needs of our
customers by rationalising product portfolios and
redesigning customer journeys and by using digital
technologies we’ve industrialised core processes from
end to end.
The improved resilience of our operations includes
enhanced oversight of the services provided by
our third-party providers as well as the continued
enhancement of our cyber and information security.
Why are these important?
As a national digital bank, we must, change and
evolve our systems and products to meet our
customers’ increasing expectations, keep their
money safe and protect their data.
94% of
transactions
complete digitally
$809m in
online customer
deposits
t
o
h
s
p
a
n
S
G
S
E
26
MyState Limited - Annual Report 2021
2021 ESG Snapshot
Environmental sustainability
Why is this important?
It will help us transition to a low carbon economy.
84% of our
fleet are hybrid
vehicles
Hobart head
office NABERS
four star rated
Community investment
Why is this important?
It will enable us to make a difference
and support our communities.
MyState Bank Arena
When we set big goals we follow up with big
actions, and in 2021 we announced our three
year naming rights sponsorship of the Derwent
Entertainment Centre which will be named
the MyState Bank Arena. Once the upgrade is
completed, it will become the heart of Tasmanian
entertainment and sport, hosting major concerts
and live performances, as well as becoming the
home of the JackJumpers that will see the State
re-enter the National Basketball League after a
25-year hiatus.
As a Tasmanian founded and headquartered
company, we are proud to have 90% of our operations
in a state that is now 100% self-sufficient in renewable
energy.
MyState acknowledges the increased dialogue from
governments, policymakers and community about
climate change. As part of the financial services
sector, MyState has a role to play in assisting the
transition to a lower carbon economy, through both
the resources we utilise directly and through our
financing activities.
To reduce MyState’s carbon footprint, in 2020 we
started replacing our fleet with hybrid vehicles as
leases expired. In 2021, 84% of our fleet are now
hybrid vehicles. Our head office in Hobart is a
National Australian Built Environment Rating System
(NABERS) four star rated property and more than 53%
of our customers have opted for e-statements.
Through the MyState Foundation, which celebrates
20 years of giving in 2021, we help young people in
Tasmania access opportunities by supporting a range
of charitable programs and activities. Each year,
grants of up to $10,000 are distributed to a number
of eligible organisations. Since 2001 the MyState
Foundation has granted over $2.4 million supporting
close to 300 initiatives. These are a rich, diverse group
of organisations and charities that are engaged in
education or development projects for young people.
This year, with the added pressures from the
COVID-19 pandemic, the MyState Foundation
provided extra assistance to help charitable
organisations meet day-to-day expenses and keep
them operating. Through our internal giving program,
staff also regularly donate to designated local
charities and programs.
As an extension of our Football Tasmania sponsorship,
MyState Bank has been announced as the new
naming rights sponsor for Tasmania’s Women’s
Super League and sponsorship of all of Tasmania’s
referees. With Tasmania boasting the highest female
participation in the sport across Australia, MyState
Bank’s sponsorship will help grow football in Tasmania
even further and contribute to reducing the gender
divide in sport, enabling communities across the state
to continue to enjoy football’s vast array of health and
social benefits.
t
o
h
s
p
a
n
S
G
S
E
27
MyState Limited - Annual Report 2021
Board of Directors
MyState Bank Limited
(Chair), TPT Wealth Ltd
(Chair), MyState Community
Foundation Limited
Group Nominations and Corporate
Governance Committee (Chair), Group Risk
Committee, Group Digital and Marketing
Committee, Group Audit Committee, Group
People and Remuneration Committee
Miles Hampton
Chairman and Independent
Non-Executive Director
BEc (Hons), FCPA, FAICD
Miles has been a Non-Executive Director since February 2009 and became Chairman in
October 2013, and prior, a Director of Tasmanian Perpetual Trustees Limited (now TPT Wealth
Ltd) from July 2006. He is the former Managing Director of ASX-listed Roberts Limited, a
position he held from 1987 until 2006. He is the former Chairman of Forestry Tasmania, Hobart
Water and TasWater and former Deputy Chairman of the Van Diemen’s Land Company. Miles
has served on the Boards of Ruralco Holdings Ltd, Australian Pharmaceutical Industries Ltd,
Wentworth Holdings Ltd, Money3 Corporation Ltd, HMA Ltd, Gibsons Ltd and Impact
Fertilisers Pty Ltd.
MyState Bank Limited, TPT Wealth Ltd, MyState Community Foundation
Limited, Connect Asset Management Pty Ltd
Melos was appointed Managing Director and Chief Executive Officer in July 2014. He has
extensive experience in a diverse range of businesses and industry sectors covering petrol
retailing, financial services, industrial services, health care, transport and logistics. He is currently
a Non-Executive Director of the Australian Banking Association Limited. From 2008 to 2013, he
held the position of Chief Executive Officer of RAMS Financial Group, a subsidiary of Westpac.
Prior to this, he held general management positions for companies including Spotless Group,
Adsteam Marine, Mayne Group, Colonial Group Limited, Colonial UK Limited and the Shell
Company of Australia.
MyState Bank Limited,
TPT Wealth Ltd
Group Risk Committee
Stephen was appointed as a Non-Executive Director in July 2021. He was formerly Chief
Executive Officer and Director of Hydro Tasmania, a position he held from 2013 to 2020. Prior to
that role he held senior executive roles at Hydro Tasmania, Eraring Energy, Societe General and
Bankers Trust and started his banking career at Macquarie Bank. Stephen is also a Director
at Shaw Contracting and at Volunteering Tasmania and has a senior role at UPC/AC
Renewables Australia.
Melos Sulicich
Managing Director and Chief
Executive Officer
BBus, GAICD, SA FIN
Stephen Davy
Independent Non-Executive
Director
BSc (Hons)
MyState Bank Limited,
TPT Wealth Ltd, MyState
Community Foundation Limited
(Chair)
Group Risk Committee (Chair), Group
Nomination and Corporate Governance
Committee, Group Digital and Marketing
Committee
Robert Gordon
Independent Non-Executive
Director
BSc, MIFA, MAICD, FAMI
Robert has been a Non-Executive Director since February 2009 and prior, a Director of MyState
Bank Limited, (previously connectfinancial), from July 1998. He is the current President of
the Institute of Foresters of Australia (IFA) and Football Federation Tasmania and Chair of the
Supported Affordable Accommodation Trust.
He is the former Managing Director of Forestry Tasmania and has previously served on the
Board of a number of companies in the tourism, research and development, construction and
infrastructure industries.
MyState Limited - Annual Report 2021 Sibylle Krieger
Independent Non-Executive
Director
LLB (Hons), LLM, FAICD, MBA
Warren Lee
Independent Non-Executive
Director
BCom, CA
MyState Bank Limited,
TPT Wealth Ltd
Group People and Remuneration Committee
(Chair), Group Risk Committee, Group
Nominations and Corporate Governance
Committee
Sibylle has been a Non-Executive Director since December 2016 and has over 35 years of broad
commercial experience as a lawyer, economic regulator, company director and independent
consultant with focus on heavily regulated sectors.
She was a partner in two large commercial law firms for 22 years and has over 15 years’
experience as a Non-Executive Director. Sibylle is currently a Non-Executive Director of
Openpay Group Limited (ASX:OPY) and AEMO Services Limited and has previously served
as Chair of Xenith IP Group Limited (ASX:XIP) and as a Director of Sydney Ports Corporation,
Allconnex Water, TasWater, Vector Limited (NZX:VCT), Alarcon Limited, the Australian Energy
Market Operator Ltd, and a trustee of the Royal Botanic Gardens and Domain Trust and Sydney
Grammar School.
MyState Bank Limited,
TPT Wealth Ltd
Group Digital and Marketing Committee
(Chair), Group Audit Committee, Group
Risk Committee
Warren was appointed as a Non-Executive Director in October 2017. He has extensive
experience in the international financial services industry, including 15 years at AXA in senior
management positions within the company’s Australian and Asian businesses.
Warren was previously the Chief Executive Officer of the Victorian Funds Management
Corporation and Chief Executive Officer, Australia and New Zealand for AXA Asia Pacific
Holdings Limited. He is currently a Non-Executive Director of Tower Limited, Go Hold Limited
and MetLife Limited, and is a member of Chartered Accountants Australia and New Zealand.
MyState Bank Limited,
TPT Wealth Ltd
Group Audit Committee, Group Risk
Committee, Group People and Remuneration
Committee, Group Digital and Marketing
Committee
Vaughn Richtor
Independent Non-Executive
Director
BA (Hons), MAICD
Vaughn was appointed as a Non-Executive Director in September 2019. He has held CEO
roles in Asia and is the former CEO of ING DIRECT Australia and CEO Challenger and Growth
Countries – Asia, ING Group after joining ING in London in 1991 as Deputy General Manager
UK and Ireland. Vaughn is a Non-Executive Director of Rest Super and also a current adviser
to both Rhizome and Spriggy. He is a prior Board member of TMB Bank in Thailand, ING Vysya
Bank in India, Kookmin Group in Korea, and a Non-Executive Director, and later Chairman,
of Ratesetter Australia. In addition, he writes and speaks extensively on leadership, corporate
culture, customer centricity and digital banking.
MyState Bank Limited,
TPT Wealth Ltd
Group Audit Committee (Chair),
Group Risk Committee
Andrea has been a Non-Executive Director since October 2017. She is an experienced Non-
Executive Director, auditor and accountant with over 35 years’ experience in financial services.
She is a Fellow of Chartered Accountants Australia & New Zealand, and both a member and
accredited facilitator of the Australian Institute of Company Directors.
Andrea Waters
Independent Non-Executive
Director
BCom, FCA, GAICD
She is a former partner with KPMG, specialising in financial services audit. Andrea is the Interim
Chairman of Grant Thornton Australia Ltd and Director of Bennelong Funds Management
Group, Citywide Service Solutions Pty Ltd, Colonial Foundation and Genworth Mortgage
Insurance Australia Limited (ASX:GMA). Prior, she was a Director of The Lord Mayor’s Charitable
Foundation, Chartered Accountants Australia & New Zealand, Cancer Council Victoria,
CareSuper and CashConverters International Limited (ASX:CCV).
s
r
o
t
c
e
r
i
D
f
o
d
r
a
o
B
29
MyState Limited - Annual Report 2021
Key Management
Personnel
Huw Bough
General Manager, Banking
Appointed June 2021
DipFS(FP), DipF&MB, MAICD
Huw is the General Manager, Banking and has responsibility for the banking division
which includes retail branches, call centre, business banking and the mortgage
broker channel.
Huw has recently returned to MyState after two years having previously served for
four years as the Group’s General Manager Retail Banking, Business Banking and
Broker. Most recently he consulted to Avant, helping establish a specialist JV for
medical professionals. His prior roles include various general management positions
at RAMS Financial Group and Westpac.
Gary Dickson
Chief Financial Officer
Appointed October 2019
BCom, MBA (Executive), FCA
As Chief Financial Officer, Gary is responsible for managing the finance, treasury,
regulatory reporting, strategy and property functions for MyState. Gary is also a
Director of Connect Asset Management Pty Ltd.
Gary has over 25 years of experience in a variety of financial roles, with 12 years of
CFO experience. His most recent position was at ME Bank as CFO, where he drove
strong growth in key financial metrics during his six-year tenure. Prior to this, Gary
held the position of CFO for AXA Australia for five years. His prior financial services
roles include senior positions with the Colonial First State Group, the Investments &
Insurance Services division at Commonwealth Bank and Portfolio Partners Limited.
Alan Logan
General Manager, Wealth Management
Appointed August 2021
MBA, GAICD, AdDipFS
Alan is responsible for the strategic, financial and ongoing management of the
MyState Limited Group’s Wealth Management division, TPT Wealth Limited, which
specialises in Asset Management and Trustee Services.
With over 25 years’ experience in the financial services sector, Alan was previously the
General Manager for Godfrey Pembroke and MLC Connect and prior to this, General
Manager of ANZ Advice and Distribution and ANZ Financial Planning. He has also
held roles with BT Funds Management, Sealcorp and National Mutual. Alan is also a
Non-Executive Director for the Prior Family Foundation and Director, Royal Botanic
Gardens Victoria Foundation.
Mandakini (Mandy)
Khanna
Chief Risk Officer
Appointed December 2015
BCom, GAICD, FGIA
Mandy is responsible for the management of the financial and non-financial risks of
the MyState Limited Group. Mandy and her team are responsible for strengthening
risk culture and risk frameworks, building a culture of accountability and sharpening
the focus on customer outcomes at MyState.
Mandy has over 20 years’ experience in banking and retail financial and has held
senior risk management positions in GE Capital across Asia Pacific. Prior to joining
MyState, Mandy was the Chief Credit Officer for GE Capital in Asia Pacific.
Heather McGovern
General Manager, Digital and Marketing
Appointed March 2019
BA Comms
Heather is the General Manager, Digital and Marketing and has responsibility for the
Group’s digital, innovation, customer experience, brand and marketing divisions.
Heather has over 20 years’ experience in digital and marketing roles within the
financial services sector having worked with American Express, the Royal Bank of
Canada, National Australia Bank and AIA Australia. Prior to joining MyState, Heather
held the role of Chief Product & Marketing Officer with BankVic where she played a
key role in the expansion of its digital offering. Her rich international career includes
roles based in Italy and Canada as well as in Australia.
Paul Moss
General Manager, Technology,
Operations and Product
Appointed May 2015
BEng (Hons)
As General Manager, Technology, Operations and Product, Paul is responsible
for the strategic direction and delivery of MyState Limited Group’s back office
processing, technology and products.
Paul was previously a Director of IT Advisory at KPMG, following 11 years at Betfair
in the UK and Australia as Director of Information Systems and Operations,
focusing on strategy development, global infrastructure deployments and customer
experience. Prior, Paul occupied technical leadership positions in UK-based
investment banks.
Janelle Whittle
General Manager, People and Culture
Appointed January 2018
BCom, MHRM
Janelle has overall responsibility for MyState Limited Group’s human resources
function, including remuneration and benefits, health and safety, recruitment and
employee relations.
People and Culture leads internal communications and has a key role in developing
and fostering organisational culture and capability to support MyState’s growth
aspirations. Janelle has over 20 years’ experience in human resource management
across a number of industries including aquaculture, utilities and higher education.
Her previous senior leadership positions in human resources include General
Manager People and Culture at Aurora Energy, and Director Organisational Design
and Change at the University of Tasmania.
l
e
n
n
o
s
r
e
P
t
n
e
m
e
g
a
n
a
M
y
e
K
31
MyState Limited - Annual Report 2021
MyState Limited - Annual Report 2021
Directors’ Report
Your Directors present their report on MyState Limited for the
year ended 30 June 2021.
Directors
Principal activities
› Miles Hampton BEc (Hons), FCPA, FAICD
Chairman and independent Non-Executive Director.
Banking Services
› Melos Sulicich BBus, GAICD, SA FIN
Managing Director and Chief Executive Officer
- Executive Director.
›
›
›
Stephen Davy BSc (Hons)
Independent Non-Executive Director.
(commenced 1 July 2021)
Robert Gordon BSc, MIFA, MAICD, FAMI
Independent Non-Executive Director.
Sibylle Krieger LLB (Hons), LLM, FAICD, MBA
Independent Non-Executive Director.
› Warren Lee BCom, CA
Independent Non-Executive Director.
›
›
Vaughn Richtor BA (Hons), MAICD
Independent Non-Executive Director.
Andrea Waters BCom, FCA, GAICD
Independent Non-Executive Director.
Company Secretary
›
Scott Lukianenko Ad Dip BMgmt, Grad Dip BA,
GIA (Cert).
› Personal, residential and business banking
› Transactional, internet & mobile banking
› Savings and investments
›
Insurance and other alliances
Trustee Services
› Estate planning
› Estate and trust administration
› Power of attorney
› Corporate trustee
Funds Management
› Managed fund investments
Dividends
MyState Limited (MyState) provides banking, trustee
and managed fund products and services through
its wholly-owned subsidiaries MyState Bank Limited
(MyState Bank) and TPT Wealth Limited
(TPT Wealth).
There have been no significant changes in the
nature of the principal activities of the Group
during the year.
In respect of the half year ended 31 December 2020,
a fully franked dividend of 12.5 cents per share,
amounting to $11.508m was paid on 16 March 2021.
The Directors have declared a fully franked final dividend
of 13.0 cents per share. The dividend will be payable on
21 September 2021 to shareholders on the register at the
record date of 26 August 2021, taking the final dividend
for the full year to 25.5 cents per share.
t
r
o
p
e
R
’
s
r
o
t
c
e
r
i
D
32
MyState Limited - Annual Report 2021
Directors’ Report (continued) for the year ended 30 June 2021
Operating and financial review
Financial performance
The Group recorded a net profit after income tax for the
year ended 30 June 2021 of $36.34m, an increase of
20.9% on the prior corresponding period (pcp) to
30 June 2020 of $30.06m.
Earnings per share increased by 19.2% to 39.18 cents per
share (FY20: 32.86 cents per share) and return on equity
increased 116bps to 10.32%, which compares favourably
to other banks recently reported results and is well above
regional bank peers.
Pre-provision operating profit of $53.6m* increased
11.9% on pcp, driven by improved net interest income,
up 12.5% to $112.0m, reflecting growth in lending assets
and improved net interest margin (NIM), which increased
10bps on the pcp. The increase in NIM reflected
significantly lower funding costs, driven by lower retail
deposit and wholesale interest rates.
The loan book grew $320m or 6% during FY21
compared with $237m or 4.7% in FY20. The market for
owner-occupied home loans remained very competitive
during the period. Despite this, the home loan book grew
$349m (6.8% or 1.3 times system) over the year.
With increasing numbers of customers choosing to
transition to digital transactions both the banking and
wealth businesses reduced their physical footprint
through the closure of six branches (two in Tasmania
and the remaining four in Central Queensland) and a
consolidation of some properties across Tasmania.
The cost of this restructure was approximately $2.6m
with the resulting cost savings reinvested into growth-
related initiatives.
Operating costs, excluding restructure costs, increased
$3.9m or 4.9% driven by increased investment in
capability, digitisation and marketing.
Group net profit after tax ($M)
30.99
30.06
36.34
FY
19
FY
20
FY
21
Despite a period of significant change and the
challenges presented by COVID-19, MyState’s customer
net promoter score was +47 at 30 June 2021. MyState’s
score remains among the leading financial services
providers, and is significantly above most banking peers
and reflects the close relationship we have with our
existing customers.
TPT Wealth’s earnings were well below the pcp. This
in part reflected investment decisions as we reposition
the business, but also reflected persistently low interest
rates and the decision to reduce the management fee
on the At Call Fund in order to support investor returns.
Funds under management were marginally ahead of the
previous year.
High credit quality maintained in FY21
MyState Bank remains focused on low risk, owner
occupied lending with a loan to valuation ratio of less
than 80%.
The banking loan portfolio grew 6% on pcp, reaching
$5,592 million at 30 June 2021.
Impairment expense was $5.9m lower with the prior
period expense reflecting in part the increase in
90+ days arrears at 30 June 2020, but principally a
significant increase in the forward looking economic
overlay in response to the uncertainty created by the
COVID-19 pandemic. The current period write-back
was a result of reduced arrears due to the improved
economic outlook, in particular for unemployment and
house prices.
Thirty and 90 day arrears remain below industry
benchmarks at 0.55% and 0.24% respectively (30 June
2020: 0.61% and 0.35%).
Total book composition ($M)
5,276
5,592
36
68
41
7
4
4
5
,
42
71
61
2
0
1
,
5
5,037
51
69
65
2
5
8
4
,
4,549
55
72
64
8
5
3
4
,
Jun
18
Jun
19
Jun
20
Jun
21
Housing Loans
Personal Loans
Business/ Agri / Commercial
Overdrafts
1 Excludes capitalised origination costs
t
r
o
p
e
R
’
s
r
o
t
c
e
r
i
D
33
*Pre-provision operating profit is defined as profit before impairment expense / (recovery), restructure costs and income tax expense.
MyState Limited - Annual Report 2021
Directors’ Report (continued) for the year ended 30 June 2021
Exposure to investor and interest only lending
remains low.
The increase in loans with a loan-to-valuation (LVR)
greater than 90% since FY19 reflects the success of the
Bank’s participation in the Federal Government’s First
Home Loan Deposit Scheme (FHLDS), which is all owner
occupied. The FHLDS is an Australian Government
initiative to support eligible customers to purchase their
first home sooner with as little as a 5% deposit. The
National Housing Finance and Investment Corporation
provides a guarantee of up to a maximum amount of
15% of the value of a property (as assessed by MyState)
purchased under the scheme.
Home loan book - LVR profile ($M)
>90%
85% - 90%
25%
80% - 85%
Customer deposits increased by 13% in the period
driven by significant growth in the award-winning Bonus
Saver Account with the majority of customers acquired
via digital and online channels. Importantly, our online
originated deposit portfolio grew from $274m to $809m
(195%) during the year. MyState Bank’s reliance on
securitisation funding reduced during the year as a result
of the increase in customer deposits.
Customer deposits ($M)
3,662
1,593
3,942
1,987
2,069
1,955
4,462
2,965
1,497
Jun
21
507
411
339
0
9
1
,
4
354
372
343
3
3
0
4
,
197
302
370
3
8
9
3
,
<80%
75%
Jun
19
Jun
20
Customer deposit at call
Customer deposit at term
Jun
19
Jun
20
Jun
21
Net interest margin expansion
Net interest income benefited from significantly lower
funding costs, with total interest expense falling 41.4%
on the pcp, while interest income fell by just 12.7%.
Net interest margin (NIM) increased 10bps on
the pcp to 1.96%.
NIM trend
+10bps
1.94%
1.97%
1.96%
1.86%
1.80%
FY
19
FY
20
1H
21
2H
21
FY
21
t
r
o
p
e
R
’
s
r
o
t
c
e
r
i
D
34
MyState Limited - Annual Report 2021
Directors’ Report (continued) for the year ended 30 June 2021
Non-interest income from banking activities
Non-interest income from banking activities continued to trend lower (by $0.75m or 5.5% on the pcp) reflecting the
increased uptake of digital products and preferences for lower cost self-serve functionality.
TPT Wealth
From a financial perspective, TPT Wealth had a
disappointing year. Income from wealth management
activities was $2.21m or 14% lower than the pcp,
driven by lower fees from trustee-related services and
management fees.
Significant restructuring initiatives were undertaken
in TPT Wealth over the past 18 months with fund
administration and fund accounting outsourced,
investment management for TPT Wealth’s growth funds
outsourced, and TPT Wealth’s core lending and trustee
systems replaced.
In June 2021, the Fixed Term Fund was awarded a 4 star
rating from SQM Research, which is expected to help
increase inflows into the fund from retail investors.
Strong capital position
Funds under management ($M)
3
5
1
,
1
0
7
1
,
1
9
6
0
,
1
3
0
1
,
1
5
0
1
,
1
Jun
18
Jun
19
Jun
20
Dec
20
Jun
21
The Group has maintained a strong capital position with all capital ratios comfortably above regulatory minimums.
The Group’s total capital ratio increased 183bps in the period to 14.84% at 30 June 2021 and
the Group’s Common Equity Tier 1 ratio improved by 201bps.
The strong capital position was bolstered by the raising of $55.5 million in June through the issue of 12,903,075
shares at $4.30 each to existing retail and existing and new institutional shareholders.
13.01%
2.77%
0.00%
1.94%
11.07%
0.59%
1.72%
1.80%
0.16%
0.43%
14.84%
1.76%
13.08%
Jun
20
Capital
Initiatives
Securitised
assets
Profit
Dividends
Paid
Secured
mortgage
lending
Capitalised
intangibles
Other assets
growth
Jun
21
t
r
o
p
e
R
’
s
r
o
t
c
e
r
i
D
35
MyState Limited - Annual Report 2021
Directors’ Report (continued) for the year ended 30 June 2021
COVID-19 assistance to customers
Total loans with assistance (facilities, no.)
Following the onset of the COVID-19 global pandemic,
MyState Bank has supported over 1,900 customers
through a range of measures including loan deferrals,
moving customers to interest only loans or by reducing
minimum monthly repayments. At 30 June 2021,
approximately 35 customers remain on some form
of assistance representing 0.2% of total home loan
balances (down from a peak of 10.9% in June 2020).
While the Australian economy has performed more
strongly than expected over the past year, with strong
house price growth and declining unemployment levels,
the ongoing disruption caused by the pandemic is
expected to continue to impact on economic activity.
The fiscal support provided by both state and federal
governments is welcomed and MyState Bank will
continue to support impacted customers over the
coming months. MyState did not receive any direct
support such as JobKeeper during the period.
1,739
209
1,530
301
77
224
76
48
28
35
20
15
Jun 20
Dec 20
Apr 21
Jun 21
Defer Repayments
Reduce Repayments/Change to Interest Only
Total loans with assistance (balances, $M)
$575m
71
503
$126m
30
96
$28m
19
10
$11m
6
5
Jun 20
Dec 20
Apr 21
Jun 21
Defer Repayments
Reduce Repayments/Change to Interest Only
Home lending assistance
10.9%
7.2%
2.4%
1.3%
0.5%
0.3%
0.2%
0.1%
Jun 20
Dec 20
Apr 21
Jun 21
% of total home loan facilities
% of total home loan balances
t
r
o
p
e
R
’
s
r
o
t
c
e
r
i
D
36
MyState Limited - Annual Report 2021
Directors’ Report (continued) for the year ended 30 June 2021
Community
MyState seeks to make a genuine difference to our
customers and the communities within which we operate.
Since 2001, the MyState Foundation has awarded more
than $2.4 million in grants to help more than 90 not-
for-profit organisations in Tasmania with a focus on
empowering youth.
Retirement of Managing Director
In early August 2021, we announced that Managing
Director and CEO Melos Sulicich had advised the Board
that he intended to retire on 31 December 2021.
Melos had resigned in January 2020, but subsequently
withdrew his resignation at the request of the Board
and agreed to stay on until at least September 2021 to
guide the company through the impact of COVID-19
on the business.
Melos has done a great job transforming MyState
into a highly scalable, modern challenger bank and
wealth management business and we acknowledge the
leadership that he has provided.
We are sorry to lose him and have greatly appreciated
his preparedness to stay on and see us through the
impacts of COVID-19.
The Board has commenced the process to find a new
Managing Director and CEO.
Outlook
The Board has endorsed a plan to accelerate the
growth in lending at MyState Bank and non-bank
lending at TPT Wealth.
The economy, and in particular employment, is proving
resilient and the Board remain comfortable with the
level of credit loss provisioning, even with the recent
disruptions to parts of the economy caused by recent
COVID-19 outbreaks and consequent lockdowns in parts
of the economy.
At MyState Bank, we expect to achieve strong growth
in lending assets while maintaining a high level of credit
quality and cost discipline. The business also expects to
realise the benefits from recent restructuring activity
and investment in its digital capabilities, distribution
and marketing to grow the customer base nationally,
while maintaining a strong risk culture to manage
the risks associated with an uncertain, but improving
economic environment.
At TPT Wealth we expect to grow FUM and non-bank
lending and to also benefit from the transformation of
the business over recent years.
The recent capital raise will likely dilute earnings per
share growth in the short term but in the medium term
we expect to see gains in both EPS and ROE.
Lead auditor’s independence
declaration under section 307C
of the Corporations Act 2001
The lead auditor’s independence declaration is set out
on page 39 and forms part of the Directors’ Report for
the year ended 30 June 2021.
Rounding of amounts
In accordance with applicable financial reporting
regulations and current industry practices, amounts
in this report have been rounded-off to the nearest
one thousand dollars, unless otherwise stated. Any
discrepancies between totals and sums of components
in charts contained in this report are due to rounding.
Events subsequent to
balance date
In the opinion of the Directors, there has not arisen, in
the period between the end of the financial year and the
date of this report, any other material item, transaction
or event that is likely to significantly affect the operations
of the Group.
Environmental regulation
The Company is not subject to significant
environmental regulation.
t
r
o
p
e
R
’
s
r
o
t
c
e
r
i
D
37
MyState Limited - Annual Report 2021
Directors’ Report (continued) for the year ended 30 June 2021
Directors’ meetings
The number of meetings of Directors (including meetings
of the committees of Directors) held during the year and
the number of meetings attended by each director are
as indicated in the following table:
A – Number of meetings attended.
B – Number of meetings eligible to attend.
MYS
Directors
MYS Board
Meetings
Group Audit
Commitee
Group Risk
Committee
Group
People &
Remuneration
Committee
Group Digital
& Marketing
Committee
Group
Nominations
& Corporate
Governance
Committee
R Gordon
M Hampton
S Krieger
W Lee
V Richtor
M Sulicich
A Waters
A
11
11
11
11
11
11
11
B
11
11
11
11
11
11
11
A
B
A
n/a
n/a
n/a
4
4
n/a
n/a
4
4
4
4
n/a
n/a
4
4
5
5
n/a
5
n/a
n/a
B
n/a
5
5
n/a
5
n/a
n/a
A
6
6
6
6
6
B
6
6
6
6
6
n/a
n/a
6
6
A
5
5
5
n/a
n/a
n/a
n/a
B
5
5
5
n/a
n/a
n/a
n/a
A
4
4
B
4
4
n/a
n/a
4
4
n/a
n/a
4
4
n/a
n/a
Indemnification and insurance
of Directors and Officers
The Company has paid, or agreed to pay, a premium
in relation to a contract insuring the Directors and
Officers listed in this report against those liabilities for
which insurance is permitted under section 199B of the
Corporations Act 2001.
The Company has not otherwise, during or since the
relevant period, indemnified or agreed to indemnify an
Officer or Auditor of the Company or of any related body
corporate against a liability incurred as such an Officer
or Auditor.
Non-audit services
During the year, Wise Lord & Ferguson, the Company’s
auditor, has performed certain other services in addition
to their statutory duties. Further details are set out in
note 8.2 to the financial statements.
The Board has considered the non-audit services
provided during the year by the auditor and, in
accordance with written advice provided by the Group
Audit Committee, is satisfied that the provision of those
non-audit services during the year by the auditor is
compatible with, and did not compromise, the auditor
independence requirements of the Corporations Act
2001, for the following reasons:
›
All non-audit services were subject to the corporate
governance procedures adopted by the Company
and have been reviewed by the Group Audit
Committee, to ensure that they do not impact the
integrity and objectivity of the auditor; and
›
The non-audit services provided do not
undermine the general principles relating to
auditor independence as they related to technical
disclosure issues.
t
r
o
p
e
R
’
s
r
o
t
c
e
r
i
D
38
MyState Limited - Annual Report 2021
Directors’ Report (continued) for the year ended 30 June 2021
Auditor’s independence declaration to the Directors
AAuuddiittoorr’’ss IInnddeeppeennddeennccee DDeeccllaarraattiioonn ttoo tthhee DDiirreeccttoorrss ooff MMyySSttaattee LLiimmiitteedd
In relation to our audit of the financial report of MyState Limited for the financial year ended
30 June 2021, to the best of my knowledge and belief, there have been no contraventions of the
auditor independence requirements of the Corporations Act 2001 or any applicable code of
professional conduct.
DDAANNNNYY MMCCCCAARRTTHHYY
Partner
Wise Lord & Ferguson
Date: 20 August 2021
t
r
o
p
e
R
’
s
r
o
t
c
e
r
i
D
39
Liability limited by a scheme approved under Professional Standards Legislation.
1st Floor 160 Collins Street, Hobart TAS 7000
GPO Box 1083 Hobart TAS 7000
03 6223 6155
Move Forward
email@wlf.com.au
www.wlf.com.au
9
MyState Limited - Annual Report 2021
Directors’ Report (continued) for the year ended 30 June 2021
MyState Limited
Remuneration Report
Contents
This Remuneration Report forms part of the
1. Key Management Personnel
Directors’ Report and outlines the Director and
Executive remuneration arrangements of MyState
Limited (the Company or MYS) for the year ended
30 June 2021, in accordance with the requirements
of the Corporations Act 2001 and its regulations.
2. Remuneration Strategy
2.1 Remuneration Philosophy
2.2 Consequences of Performance on
Shareholder Wealth
For the purposes of this report, Key Management
2.3 Remuneration Governance
Personnel (KMP) are defined as those persons
having authority and responsibility for planning,
directing and controlling the major activities of
the Company, directly or indirectly, including any
Director (whether Executive or otherwise) of
the Company.
3. Non-Executive Director Remuneration
4. Managing Director and Executive
Remuneration
4.1 Total Fixed Reward
4.2 Short Term Incentive
4.3 Executive Long Term Incentive Plan
4.4 Banking Executive Accountability Regime
4.5 Review of Executive Remuneration
5. Statutory Tables
6. Shareholdings of Key Management Personnel
7. Loans to Key Management Personnel
8. Executive Employment Agreements
t
r
o
p
e
t
r
R
o
p
n
e
o
R
i
t
a
’
s
r
r
e
o
n
t
u
c
m
e
r
e
i
D
R
40
40
MyState Limited - Annual Report 2021
MyState Limited - Annual Report 2021
Directors’ Report (continued) for the year ended 30 June 2021
1. Key management personnel
The key management personnel (KMP) of the Company in office during the year and up to the date of this report were
as follows:
Movements in the 2021
Financial Year
Appointed 24 June 2021
Commenced role 1 July 2021
Name | Title
Non-Executive Directors
Miles Hampton | Chairman
Stephen Davy
Robert Gordon
Sibylle Krieger
Warren Lee
Vaughn Richtor
Andrea Waters
Executive Director
Melos Sulicich | Managing Director and Chief Executive Officer
Executives
Gary Dickson | Chief Financial Officer
Mandakini Khanna | Chief Risk Officer
Alan Logan | General Manager Wealth Management
Due to commence 30 August 2021
Paul Moss | General Manager Technology, Operations and Product
Heather McGovern | General Manager Digital and Marketing
Anthony MacRae | General Manager Banking
Ceased 30 June 2021
Huw Bough | General Manager Banking
Appointed 1 June 2021
Commenced role 30 June 2021
Craig Mowll | General Manager Wealth Management
Ceased 18 June 2021
Janelle Whittle | General Manager People and Culture
t
r
o
p
e
R
’
s
r
o
t
c
e
r
i
D
41
MyState Limited - Annual Report 2021
MyState Limited - Annual Report 2021
Directors’ Report (continued) for the year ended 30 June 2021
2. Remuneration Strategy
2.1 Remuneration Philosophy
The objective of MyState Limited’s Remuneration Policy
is to promote personal and collective behaviours that
deliver good customer outcomes, sustained financial
performance, appropriate risk management and
maintain the good reputation of the Group.
The MyState Limited Remuneration Policy is designed to
achieve this objective by having:
› Appropriately balanced measures of employee
performance that inform variable performance
based pay for Executives and other eligible
employees, including short and long term
incentive plans;
› Recognition and reward for strong performance
linked to favourable customer outcomes and
sustainable shareholder returns;
› A considered balance between the capacity to pay
and the need to attract and retain capable staff at
all levels;
› Structuring of the remuneration of risk and
financial control personnel, including performance
based components, so not to compromise the
independence of these personnel in carrying out
their functions;
› Board discretion in the assessment and application
of malus or clawback of Executive incentives
(whether vested or unvested) as an ultimate means
to mitigate unintended consequences of variable
pay and to preserve the interests of shareholders
and customers; and
› Short term and long term incentive performance
criteria integrated within the overall risk
management of the Group.
In accordance with best practice corporate governance,
the structure of Non-Executive Director remuneration is
separate and distinct from Executive remuneration.
2.2 Consequences of Performance on Shareholder Wealth
In considering the Company’s performance and benefits for Shareholder wealth, the Group People and Remuneration
Committee has regard to the following metrics:
Indicator
2017
Statutory profit after income tax ($'000)
30,080
Statutory earnings per share (cents)
34.04
2018
31,461
34.97
2019
2020
2021
30,987
30,060
36,341
34.17
32.86
39.18
Dividends paid ($'000)
25,042
25,794
26,016
26,241
11,508
Share price (dollars)
Statutory average return on equity (%)
Statutory cost to income ratio (%)
4.85
10.0
65.9
5.01
10.1
64.0
4.49
9.7
64.8
3.93
9.2
62.8
4.68
10.31
63.1
The performance measures for triggering both the Group’s Short Term Incentive Plan (STI) and Executive Long
Term Incentive Plan (ELTIP) have been tailored to align “at-risk” remuneration performance hurdle thresholds to the
delivery of financial and operational objectives and sustained growth in shareholder value.
STI includes both financial and non-financial metrics.
ELTIP performance measures for all offers are weighted equally between relative total shareholder return (TSR)
performance and return on equity (ROE). The relative TSR is a measure which incorporates both dividends paid and
movements in share prices, while the ROE is a measure of corporate profitability.
t
r
o
p
e
R
’
s
r
o
t
c
e
r
i
D
42
MyState Limited - Annual Report 2021
Directors’ Report (continued) for the year ended 30 June 2021
2.3 Remuneration Governance
The Group People and Remuneration Committee assists the Directors in discharging the Board’s responsibilities in
relation to remuneration governance and provides oversight to support the Company in achieving its culture and
capability ambitions. The Committee reviews and makes recommendations to the Board on:
› Remuneration arrangements for Directors, the Managing Director and other Senior Executives, having regard
to comparative remuneration data, independent advice and compliance with the requirements of APRA
Prudential Standards and the Banking Executive Accountability Regime (BEAR);
› Human Resource policies and practices, ratification of industrial instruments and oversight of compliance with
legal and regulatory requirements; and
› Oversight of the Group capability to deliver on strategic objectives and to support the Group’s business
operations and culture, including succession planning and other matters such as the Company’s Employee
Share Scheme and other incentive schemes for Executives and Employees.
The Group People and Remuneration Committee aims to ensure that there is no conflict of interest regarding
Executive Director involvement in Board decisions on remuneration packages and also in monitoring the involvement
of Management generally in Committee discussions and deliberations regarding remuneration policy. No Executive is
directly involved in deciding their own remuneration.
3. Non-Executive Director Remuneration
The Company’s Non-Executive Directors (NEDs)
receive only fees, including statutory superannuation,
for their services and the reimbursement of reasonable
expenses. They do not receive any retirement benefits
other than statutory superannuation.
The Board determines the fees paid to NEDs taking
into account the level of skill and experience required to
conduct the role and that the fee scale will enable the
Company to attract and retain talented NEDs.
The Board obtains independent advice from
remuneration consultants on a regular basis.
The aggregate remuneration paid to all the NEDs,
inclusive of statutory superannuation, may not exceed
the amount fixed by Shareholders which is currently
$950,000.
Each NED currently receives $110,000 per annum,
inclusive of statutory superannuation, and the Chairman
receives $236,500 per annum, inclusive of statutory
superannuation.
The Chairs of committees (other than the Board
Chair if he or she chairs a committee) receive an
additional $10,000, per annum, inclusive of statutory
superannuation.
t
r
o
p
e
R
’
s
r
o
t
c
e
r
i
D
43
MyState Limited - Annual Report 2021
Directors’ Report (continued) for the year ended 30 June 2021
4. Managing Director and Executive Remuneration
MyState Limited structures its remuneration framework
for the Managing Director and each Executive directly
reporting to the Managing Director (Executive) to:
› Support MyState Limited’s purpose and mission
› Reflect the company’s values, and
› Allow the Executive to drive our strategy
Total remuneration packages offered to the Executive
are based on a notional Total Target Reward which can
comprise three elements:
› Total Fixed Reward (TFR), which includes cash
salary, superannuation contributions and any
salary sacrifice.
› Cash based short term incentives (STI) which
provides appropriate short-term rewards for our
focus on driving strong customer acquisition,
increasing investment in digital innovation and
managing operating expenses, while maintaining a
culture centred on delivery with positive customer
experiences; and
› Equity based long term incentives (ELTIP)
which reinforce the focus on achieving longer
term strategic objectives for our multi-year
transformation journey and embedding the
fundamental structures that will allow us to take
advantage of evolving market conditions and meet
customer needs quickly, and therefore create
long-term value for shareholders.
4.1 Total Fixed Reward
The Group People and Remuneration Committee
annually reviews Executive remuneration taking into
account responsibilities, performance, qualifications
and experience. External remuneration consultants are
appointed on a regular basis to provide advice to the
Committee on structure and market comparison.
4.2 Short Term Incentive
The STI is an incentive with possible reward for Executive
members dependent on their contribution towards the
company’s short and medium term goals.
Each year, the Group People and Remuneration
Committee recommends to the Board the KPI’s for the
Managing Director.
The Managing Director recommends KPIs for Executives
to the Group People and Remuneration Committee who
subsequently make a recommendation to the Board.
At the end of the financial year, the Managing Director
assesses the performance of the Executives against their
KPIs and makes a recommendation for each Executive
to the Group People and Remuneration Committee as to
the STI payment.
At the end of the financial year, the Group People and
Remuneration Committee assesses the performance of the
Managing Director against the KPIs for the financial year.
After consultation with the Chair of the Group Audit
Committee, and the Chair of the Group Risk Committee,
the Group People and Remuneration Committee
recommends the STI payments to be made to the
Managing Director and Executives for approval by the
Board. Approval of an STI to the Managing Director
or Executives is at the complete discretion of the
Board. The Board discretion may result in a reduction
or forfeiture of payment. In addition, the annual STI
component awarded may be reduced for forfeited if the
Company and the individual Executive does not meet
‘gateways’ approved by the Board at the start of the
financial year.
The following key performance measures for the STI
component and the level of achievement were assessed
by the Board in respect to the FY21 financial year.
t
r
o
p
e
R
’
s
r
o
t
c
e
r
i
D
44
MyState Limited - Annual Report 2021
Directors’ Report (continued) for the year ended 30 June 2021
Drivers
Measures
Performance
Earnings
Increasing earnings per share
Financial
Net interest
margin
Funds under
management
Cost to income
ratio
People
People
Customer
Customer
Risk and
Compliance
Risk management
and reputation
Strategic
Projects
Strategic projects
Managed in accordance with Board expectations
Growing funds under management (TPT)
Optimising operational efficiencies to improve the ratio
of total operating costs (excluding bad and doubtful debt
charges) to total income (the sum of net interest and non-
interest income).
Positive employee experience scores
Positive leadership and workplace culture development
Net customer growth
NPS scores significantly above the sector average
Risks in the business have been managed in accordance
with the Risk Management Framework and the Board-
approved risk appetite. There are no outstanding
regulatory matters.
Successful implementation of individual strategic projects
that contribute to the ongoing development and efficiency
of the organisation.
Exceeded or met target
Partially met target
Below target
The three gateways for FY21 are summarised below:
Gateway
Group Risk
Profit before Tax and exclusive of
Executive Management STI and
Company Performance Bonus
(PBT Before Incentives)
Values and Behaviours (Individual)
Assessment measures
If MyState Limited does not meet compliance and risk management
obligations, its reputation is materially damaged, capital adequacy and
liquidity fall below prudential range(s), or if an accountable person does not
meet their personal accountability BEAR obligations, STI may be reduced
or forfeited at Board discretion.
If PBT and Incentives is below FY21 budget, STI may be reduced
or forfeited.
Executives must live the MyState Limited values and meet or exceed
expectations as assessed against the values by their manager. If not, STI
may be reduced or forfeited. The Board may also exercise discretion.
t
r
o
p
e
R
’
s
r
o
t
c
e
r
i
D
45
MyState Limited - Annual Report 2021
Directors’ Report (continued) for the year ended 30 June 2021
The Board has determined that all the FY21 gateways
had been met. The Board notes that MyState Limited
did not receive any JobKeeper benefits. Performance
against three joint performance measures, earnings per
share, net interest margin and cost to income ratio have
been wholly met.
It was particularly pleasing that the key non-financial
measures, customer NPS and net customer growth,
was higher than the previous year.
If the results on which any STI reward was based are
subsequently found by the Board to have been the
subject of deliberate management misstatement, error,
misrepresentation or act or omission, which the Group
People and Remuneration Committee or the Board
(acting reasonably) considers would have resulted
in the KPIs not being satisfied, or there is otherwise a
reward decision incorrectly made, the Board may require
repayment of the whole or part of the relevant STI,
in addition to taking any other disciplinary actions.
Payment of a STI to the Managing Director or Executive,
who are accountable persons, is subject to the Board
being satisfied that the payment may be made under
the BEAR.
Current STI Offers
Details of the STI payments for the 2020/2021 financial
year and the 2019/2020 financial year are set out in the
following tables.
Key Management
Personnel
% Max.
(of TFR)
Max.
Payable
% Awarded % Forfeited
$ Amount
Paid
% Which
is not yet
Assessed for
Payment
2020/2021
Melos Sulicich
Gary Dickson
Mandakini Khanna
Heather McGovern
Anthony MacRae
Craig Mowll(1)
Paul Moss
Janelle Whittle
2019/2020*
Melos Sulicich
Gary Dickson(1)
David Harradine(1)
Mandakini Khanna
Heather McGovern
Anthony MacRae
Craig Mowll
Paul Moss
Janelle Whittle
50%
30%
30%
30%
30%
30%
30%
30%
50%
30%
30%
30%
30%
30%
30%
30%
30%
$312,500
89.30%
10.70%
$279,063
$120,000
90.65%
9.35%
$108,780
$117,000
94.90%
5.10%
$111,033
$99,000
86.40%
13.60%
$85,536
$117,000
$113,153
0%
0%
100%
100%
$0
$0
$109,500
92.45%
7.55%
$101,233
$90,750
88.65%
11.35%
$80,450
$312,500
$88,110
$37,504
$117,000
$99,000
$117,000
$117,000
$109,500
$87,000
0%
0%
0%
0%
0%
0%
0%
0%
0%
100%
100%
100%
100%
100%
100%
100%
100%
100%
$0
$0
$0
$0
$0
$0
$0
$0
$0
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1) Pro-rata Max Payable based on commencement and cessation dates as applicable.
* For the 2019 / 2020 financial year in response to COVID-19 the Managing Director and Executives agreed to forfeit any STI.
t
r
o
p
e
R
’
s
r
o
t
c
e
r
i
D
46
MyState Limited - Annual Report 2021
t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
47
MyState Limited - Annual Report 2021
Directors’ Report (continued) for the year ended 30 June 2021
4.3 Executive Long Term
Incentive Plan
The ELTIP provides a long term “at risk” incentive,
assessed over a three year performance period. It was
established by the Board to encourage and motivate
the Executive, comprising the Managing Director and
participating Executives, by rewarding them with shares
for helping to create long term value for the Company’s
shareholders. Participating Executives are allocated fully
paid ordinary shares in the Company without payment
on their part if performance criteria specified by the
Board are satisfied in a set performance period. Until
30 June 2021 the offers were in the form of shares;
however, beyond that date offers will be in the form of
performance rights that, on vesting would deliver to
participants one Share for each vested performance right.
Each year, an offer may be made to individual
members of the Executive as determined by the
Board. The maximum value of the offer is determined
as a percentage of the TFR of each member of the
Executive. As a general guide, noting that the Board
has absolute discretion to vary, the current percentages
used are 70% for the Managing Director and 30% for
participating Executives. The maximum value of the offer
is converted into a number of fully paid ordinary shares
or performance rights based upon the volume weighted
average price (VWAP) of shares calculated over the
period of twenty (20) trading days to 30 June
immediately prior to the commencement of the
performance period for the relevant offer. The number of
shares or performance rights that may deliver shares is
then nominally fixed.
In order for the shares or performance rights to vest,
certain performance criteria must be satisfied within
the predetermined performance period. Both the
performance criteria and the performance period are
set by the Board, at its absolute discretion. The Board
has set the three financial years, commencing with the
year in which an offer is made under the plan, as the
performance period, with relative TSR, and post-tax
underlying ROE for the “2018” and “2019” offers.
Relative TSR and statutory ROE have been set as the
performance criteria for the “2020” offers and “2021”
offers. The Board may adjust the statutory ROE
performance criteria for one-off items for the 2020 and
subsequent offers.
At the end of the performance period, or as soon
as possible thereafter, the Board will determine, at
its complete discretion, the number of shares or
performance rights that have vested and the number of
shares in which the Managing Director and participating
Executive may become entitled under the terms of the
relevant offer and ELTIP rules.
The Board has set a period of five years from
commencement of the performance period before
an allocation of shares to an Executive can be made,
creating a deferral period of a further two years between
the conclusion of the performance period and the
allocation of shares.
Any ELTIP reward payment to the Managing Director
and participating Executives on satisfaction of the
performance criteria under any ELTIP offer is subject
to reassessment and possible reduction or forfeiture,
during the deferral period (or earlier in the performance
period), if the Board considers an adjustment event
has occurred (as described in the ELTIP). This enables
the Board to adjust variable remuneration (potentially
to zero) if such adjustments are necessary to, among
other things, protect the financial soundness of the
Company or respond to significant unexpected or
unintended consequences that were not foreseen by
the Board. In addition, where a participating Executive
is also an accountable person under the BEAR,
the delivery of shares to the Executive (and/or any
associated payment) will be subject to the Board’s
positive assessment that their accountability obligations
have been met. The number of shares that may be
allocated (and/or value of any associated payment) may
be reduced or cancelled to the extent that the Board
determines that the accountability obligations have not
been met.
Allocation of shares to the Managing Director and
eligible Executives is ultimately at the complete
discretion of the Board. The ELTIP rules provide for
an independent Trustee to act at the direction of the
Company, and the trustee may acquire and hold shares
on behalf of Executives that have received an allocation
of shares. The participating Executive cannot transfer
or dispose of shares before they have been allocated
to them, which will not occur until the end of the deferral
period specified in the ELTIP rules or relevant offer.
A direction to the Trustee to allocate shares to each
eligible Executive will be made in accordance with their
entitlement under the relevant offer and ELTIP rules.
Any shares or performance rights to be allocated to the
Managing Director under this Plan require shareholder
approval in accordance with ASX Listing Rules.
On accepting an ELTIP offer made by the Company,
participating Executives are required to not hedge
their economic exposure to any allocated non-vested
entitlement. Failure to comply with this directive will
constitute breach of duty and may result in forfeiture of
the offer and / or dismissal.
t
r
o
p
e
R
’
s
r
o
t
c
e
r
i
D
48
MyState Limited - Annual Report 2021
Directors’ Report (continued) for the year ended 30 June 2021
Commencement of employment during
a financial year
Where an Executive commences employment with
the Company post 1 July in a given year, the following
conditions will apply in respect of ELTIP:
› Upon recommendation by the Managing Director,
and, if deemed eligible by the Board, the Executive
shall receive a pro-rata offer for that year, unless that
person commences employment between 1 April and
30 June, in which case, they shall not be entitled to
receive an offer for that financial year; and
› Calculations for ELTIP entitlements in terms of
the 20 day VWAP, must be consistent with the
offers for that year, irrespective of the date that
an employee commences or to whom an offer to
participate is made.
Cessation of employment
On separation from the Company, participants will be
eligible to receive shares only if the separation is due to a
Qualifying Reason.
A Qualifying Reason, as defined by the ELTIP Plan Rules,
is death, total and permanent disability, retirement at
normal retirement age, redundancy or other such reason
as the Board, in its absolute discretion, may determine.
Where an ELTIP participant ceases employment with
MyState Limited during a performance period, the
offer will be assessed by the Board at the end of the
performance period along with all other participants
subject to meeting the 12 month employment hurdle that
applies to any ELTIP offer.
The allocation of shares to any ELTIP participant where
the Executive is an accountable person, is subject to the
BEAR. Shares will not be delivered to ELTIP participants,
or any payment made, to the extent it would cause the
Company to contravene its obligations under the BEAR.
Entitlement to dividend income on shares
During the period that allocated shares for a
participating Executive are held by the Trustee, the
participating Executive is entitled to receive the income
arising from dividend payments on those shares and
to have the Trustee exercise the voting rights on those
shares in accordance with their instructions.
For the avoidance of doubt, for ELTIP offers made after
1 July 2018, the Company will not direct the Trustee
to allocate the shares to the participating Executive’s
account during the specified two year deferral period.
The two year deferral period commences after the end
of the relevant performance period. During this period,
such participants have no entitlement to any dividends
or voting rights in respect of the shares.
Details of offers made under the ELTIP are set out in the following table.
Offer
“2018”
“2019”
“2020”
Performance period
1 July 2018 to 30 June 2021
1 July 2019 to 30 June 2022 1 July 2020 to 30 June 2023
The comparator group
Members of the S&P/ASX300
Fair value of shares on
offer date(1)
Managing Director $2.52
Other Executives $2.17
Managing Director $2.49
Other Executives $2.49
Managing Director $3.36
Other Executives $3.36
Offer date
- Managing Director
- Other Executives(3)
18 October 2018
7 January 2019
28 October 2019
28 October 2019
16 November 2020
16 November 2020
Value of offer(2)
- Managing Director
- Other eligible Executives
$312,500
$651,727
$312,500
$787,664
$312,500
$649,500
1) The fair value of offers that are assessed and awarded on market based conditions is determined on the grant date in accordance with AASB 2. The
fair value is used by the Group to recognise an expense over the performance period for the TSR component of offers.
2) The value of the offer is the maximum value calculated as at the date of offer to the KMP(s) at that time. As such, it may include the value of offers
made to individuals who are no longer KMP’s of the Company.
3) In respect of the “2018” Offer, a pro-rata offer made to Anthony MacRae and Heather McGovern on the 25th of February 2019 and 18th of March 2019
respectively. Pro-rata offer made in respect of the “2019” Offer to Gary Dickson on the 16th of March 2020.
t
r
o
p
e
R
’
s
r
o
t
c
e
r
i
D
49
MyState Limited - Annual Report 2021
Directors’ Report (continued) for the year ended 30 June 2021
Calculation of the Reward
TSR Component
The ELTIP Offers TSR components will vest on the following basis:
For the 2018 and 2019 offers:
MYS TSR Relative to the ASX 300
Percentage of the Applicable Reward that will Vest:
Below the mid-point percentage
At the median ASX300
0%
50%
Between the median and 75th percentile
Straight line basis between 50% and 100%
Above the 75th percentile
100%
For the 2020 offers:
MYS TSR Relative to the ASX 300
Percentage of the Applicable Reward that will Vest:
Below the 25th percentile
At the 25th percentile
0
25%
Between the 25th and 75th percentile
Straight line basis between 25% and 100%
Above the 75th percentile
100%
For the 2021 offers:
MYS TSR Relative to the ASX 300
Percentage of the Applicable Reward that will Vest:
Below the 50th percentile
At the 50th perenctile
0%
50%
Between the 50th percentile and the 75th percentile
Straight line basis between 50% and 100%
At or above the 75th percentile
100%
t
r
o
p
e
R
’
s
r
o
t
c
e
r
i
D
50
MyState Limited - Annual Report 2021
Directors’ Report (continued) for the year ended 30 June 2021
ROE Component
The performance period for the ROE component for the ELTIP reward will be based upon on the Company’s post-tax
ROE and will be payable on the following basis:
For the 2018 and 2019 offers:
MYS Aggregate Absolute Post Tax Underlying ROE for
the Performance Period:
Percentage of the Applicable Reward that will Vest:
Below 30.00%
30.00%
30.00% to 31.50%
31.50% or above
For the 2020 offers:
0%
50%
Straight line basis from 50% to 100%
100%
MYS Aggregate Statutory ROE, which may be adjusted
for one-off items at the discretion of the board, for the
Performance Period:
Percentage of the Applicable Reward that will Vest:
Below 27.00%
27.00%
27.00% to 30.00%
30.00% or above
For the 2021 offers:
0%
25%
Straight line from 25% to 100%
100%
Statutory ROE with Board discretion to adjust for one-
off items:
Percentage of the Applicable Reward that will Vest:
Below 30%
30%
30% to 31.50%
31.5% or above
0%
50%
Straight line basis from 50% to 100%
100%
t
r
o
p
e
R
’
s
r
o
t
c
e
r
i
D
51
MyState Limited - Annual Report 2021
Directors’ Report (continued) for the year ended 30 June 2021
Actual and Potential ELTIP Share Allocations
The following tables detail, for current and former KMP, the status of offers made under the ELTIP. The “2017” offer
performance period was completed on 30 June 2020. The “2018” offer performance period was completed on
30 June 2021.
Offer
Name
Component
Maximum
Offer
Forfeited/
Lapsed
Vested in
the 2020/21
Financial
Year
Not yet
Assessed for
Vesting
Number of Shares
r
e
f
f
O
”
8
1
0
2
“
Melos Sulicich(1)
Anthony MacRae
Heather McGovern
David Harradine
Mandakini Khanna
Paul Moss
Craig Mowll
Janelle Whittle
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
32,188
32,187
4,590
4,589
2,934
2,933
11,742
11,742
11,124
11,124
10,506
10,506
11,556
11,555
8,961
8,961
-
32,187
2,300
4,589
-
2,933
5,833
11,742
-
11,124
-
10,506
5,790
11,555
-
8,961
16,126
-
-
-
1,470
-
-
-
5,573
-
5,264
-
-
-
4,489
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Offer
Name
Component
Maximum
Offer
Forfeited/
Lapsed
Vested in
the 2019/20
Financial
Year
Not yet
Assessed for
Vesting
Number of Shares
r
e
f
f
O
”
7
1
0
2
“
Melos Sulicich
Huw Bough
Katherine Dean
David Harradine
Mandakini Khanna
Paul Moss
Andrew Polson
Chris Thornton
Janelle Whittle(2)
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
29,307
29,307
10,092
10,092
9,786
9,786
11,315
11,315
10,551
10,550
10,092
10,092
10,092
10,092
10,245
10,245
3,888
3,887
12,485
29,307
10,092
10,092
9,786
9,786
11,315
11,315
4,495
10,550
4,299
10,092
10,092
10,092
10,245
10,245
1,656
3,887
16,822
-
-
-
-
-
-
-
6,056
-
5,793
-
-
-
-
-
2,232
-
1) The awarding of the 2018 offer is subject to shareholder approval subsequent to the publishing of this report.
2) Pro-rata Max Payable based on commencement dates as applicable.
t
r
o
p
e
R
’
s
r
o
t
c
e
r
i
D
52
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
MyState Limited - Annual Report 2021
Directors’ Report (continued) for the year ended 30 June 2021
The “2019”, “2020” and “2021” offers have not been assessed for vesting. The following table shows the maximum
number of shares available under each of these offers:
Name
Component
“2019” Offer
“2020” Offer
Number of Shares
“2021” Offer
Melos Sulicich
Gary Dickson (1)
David Harradine (2)
Mandakini Khanna
Heather McGovern
Anthony MacRae
Paul Moss
Craig Mowll
Janelle Whittle
Huw Bough
Alan Logan(3)
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
34,036
34,035
9,570
9,570
-
-
12,743
12,743
10,783
10,782
12,743
12,743
11,926
11,926
12,743
12,743
9,476
9,475
-
-
-
-
38,676
38,675
14,852
14,851
-
-
14,480
14,480
12,252
12,252
14,480
14,480
13,552
13,552
14,480
14,480
10,767
10,767
-
-
-
-
-
-
12,500
12,500
-
-
12,188
12,187
10,313
10,312
-
-
11,407
11,406
-
-
9,844
9,844
12,188
12,187
-
-
1) Pro-rata offer made for “2019”.
2) The “2019” Offer extended to David Harradine was forfeited due to less than 12 months of the performance period having been served.
3) Pro-rata “2021” offer to be determined post commencement.
t
r
o
p
e
R
’
s
r
o
t
c
e
r
i
D
53
MyState Limited - Annual Report 2021
Directors’ Report (continued) for the year ended 30 June 2021
4.4 Banking Executive
Accountability Regime
MyState accountable persons are registered with APRA.
Each accountable person has an agreed accountability
statement that sets out the accountabilities relevant to
their role in relation to BEAR. Any entitlement to variable
remuneration may be subject to deferral, reduction or
forfeiture under the BEAR even if performance criteria
have been met.
The BEAR requires authorised deposit-taking institutions
(including the Company) to defer payment of a
prescribed minimum amount of variable remuneration
for a minimum period of four years. The requirement for
variable remuneration to be deferred does not apply if
the amount that would be deferred is less than $50,000.
The deferral period is subject to extension, as
determined by the Board, or reduction, as determined
by the Board and approved by APRA. At the end of the
applicable deferral period, any entitlement to deferred
variable remuneration will be assessed against each
individual meeting their accountable person obligations.
If an accountable person fails to comply with his or
her accountability obligations, their deferred variable
remuneration will be reduced by an amount that is
proportionate to the failure or may be cancelled, as
determined by the Board.
4.5 Review of Executive
Remuneration
During FY21 the Group People and Remuneration
Committee commissioned independent advice in
respect of the structure and performance criteria for
executive variable remuneration. With the benefit of that
advice the Board decided to make a number of changes
which take effect from 1 July 2021.
5. Statutory Tables
Salary &
Fees
Cash
Bonus (1)
Other
Short Term
Benefits
Non-
Monetary
Benefits
Post-Employ-
ment Superan-
nuation
Termi-
nation
Benefits
Share-
based
Payment(3)
Total
Non-Executive Directors
Miles
Hampton
Robert
Gordon
Vaughn
Richtor
Sibylle
Krieger
Warren
Lee
Stephen
Lonie
Andrea
Waters
Total NED
2021
209,004
2020
201,922
2021
89,849
2020
87,449
2021
97,211
2020
76,042
2021
106,049
2020
101,875
2021
106,049
2020
98,933
2021
2020
2021
-
42,731
116,124
2020
100,702
2021
724,286
2020
709,654
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
393
-
-
-
-
-
-
-
-
-
-
-
-
-
393
-
19,855
19,183
26,275
25,390
9,235
7,224
10,075
9,678
10,075
9,399
-
4,059
-
9,567
75,515
84,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
229,252
221,105
116,124
112,839
106,446
83,266
116,124
111,553
116,124
108,332
-
46,790
116,124
110,269
800,194
794,154
t
r
o
p
e
R
’
s
r
o
t
c
e
r
i
D
54
MyState Limited - Annual Report 2021
Directors’ Report (continued) for the year ended 30 June 2021
Salary &
Fees
Cash
Bonus (1)
Other
Short Term
Benefits
Non-
Monetary
Benefits
Post-Employ-
ment Superan-
nuation
Termi-
nation
Benefits
Share-
based
Payment(3)
Total
Executive
Melos
Sulicich
Huw
Bough
Katherine
Dean
David
Harradine
Mandakini
Khanna
Anthony
MacRae
Heather
McGovern
Paul Moss
Craig
Mowll
Janelle
Whittle
Gary
Dickson
Total
Executive
Total KMP
2021
623,077
279,063
2020
600,000
2021
36,986
2020
2021
2020
2021
-
-
-
-
2020
149,678
-
-
-
-
-
-
-
2021
369,863
111,033
2020
355,954
2021
372,019
2020
365,000
-
-
-
2021
312,961
85,536
2020
301,370
-
2021
353,077
101,233
2020
339,806
2021
383,075
2020
369,469
-
-
-
2021
276,519
80,450
2020
264,840
-
2021
389,423
108,780
2020
264,219
-
2021 3,117,000
766,095
2020 3,010,336
-
2021
3,841,286
766,095
2020 3,719,990
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,095
1,788
-
-
-
-
-
-
-
-
-
-
-
-
25,961
25,000
3,514
-
-
-
-
8,365
35,137
36,409
25,481
25,000
29,731
28,630
1,302
25,961
-
-
-
1,302
-
-
-
25,001
20,295
20,531
27,245
25,160
25,961
20,716
3,699
219,286
1,788
214,812
4,092
294,801
1,788
299,312
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
156,698
1,085,894
80,956
707,744
-
40,500
3,075
3,075
-
-
2,895
2,895
4,046
4,046
(3,225)
154,818
56,434
572,467
28,010
420,373
50,573
448,073
17,469
407,469
42,132
470,360
14,316
344,316
52,892
534,465
26,399
391,206
24,390
427,760
21,743
411,743
42,505
428,021
18,299
308,299
43,532
567,696
10,005
294,940
473,202
4,579,282
219,942
3,446,878
473,202
5,379,476
219,942
4,241,032
1) The cash bonus shown is the actual amount awarded in respect of each financial year’s STI offers.
2) Non-Monetary Benefits consist of car parking expense, travel & accommodation and entertainment.
3) Share based payment amounts have been calculated in accordance with the relevant accounting policy and Accounting Standard. The fair value of
the share grant is calculated at the date of grant and is allocated to each reporting period evenly over the period from grant date to vesting date. This
fair value will generally be different to the value of shares at the time they vest. The value disclosed is the portion of the fair value of the share grant
allocated to this reporting period. These amounts represent share grants which will only vest to the KMP when certain performance and service criteria
are met. In some circumstances all, or a portion, of the shares may never vest to the KMP. As these figures are based on accrual accounting and not
a reflection of actual cash paid or shares vested, negative figures can result in the event of accrual reversals being recorded. Amounts stated are in
respect of the period that the individual held a role of a KMP.
t
r
o
p
e
R
’
s
r
o
t
c
e
r
i
D
55
MyState Limited - Annual Report 2021
t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
56
MyState Limited - Annual Report 2021
Directors’ Report (continued) for the year ended 30 June 2021
6. Shareholdings of Key Management Personnel
Non-Executive Director Minimum Shareholding
Requirement
A minimum shareholding requirement has been
implemented for all Non-Executive Directors
(NED MSR).
Non-Executive Directors, in the absence of approval
from the Board to the contrary, are required to acquire
and maintain, directly or indirectly, shares in MyState
Limited to the equivalent of one year’s pre-tax base
Director’s fee. The NED MSR must be achieved within
four years of their appointment.
Managing Director Minimum Shareholding
Requirement (MD MSR)
In the absence of approval from the Board to the contrary,
the MD MSR will apply to the Managing Director.
The MD MSR will be 50% of TFR and must be achieved
within four years of appointment.
Any shares subject to deferral (including shares which
may be allocated in respect of vest performance rights),
from the 2018 ELTIP offer onwards, will be recognised for
the purposes of MD MSR. The shares in MyState Limited
(ASX code: MYS) may be held directly or indirectly, and
may include shares obtained prior to commencement of
employment and/or Shares acquired through ELTIP or
any other scheme.
Related Parties of KMP Shareholdings
Details regarding the holdings by KMP and their related
parties of ordinary shares in the Company are set out
in the following table. Related parties include close
members of the family of the KMP. It also includes
entities under joint or several control or significant
influence of the KMP and their close family members.
No equity transactions with KMP, other than those arising
as payment for compensation, have been entered into
with the Company.
t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
57
MyState Limited - Annual Report 2021
Director’s Report (continued) for the year ended 30 June 2021
Key Management
Personnel
Number of
Shares at
Commence-
ment of Finan-
cial Year
Granted as
Compensation
to be held by
ELTIP trustee(1)
Net Change
Other
Number of
Shares at End
of Financial
Year
Number of
Shares at End
of Financial
Year Held by
ELTIP Trustee
(2)
Non-Executive Directors
Miles Hampton
750,000
Robert Gordon
Sibylle Krieger
Warren Lee
Vaughn Richtor
Andrea Waters
26,587
26,132
24,004
2,500
22,093
Sub Total
851,316
Executives
-
-
-
-
-
-
-
148,362
898,362
7,138
718
3,637
9,331
9,963
33,725
26,850
27,641
11,831
32,056
179,149
1,030,465
-
-
-
-
-
-
-
Melos Sulicich
119,086
16,126
23,804
159,016
79,911
Gary Dickson
Heather McGovern
-
-
Mandakini Khanna
12,564
Paul Moss
Janelle Whittle
Huw Bough
Sub Total
12,301
6,946
5,000
-
1,470
5,573
5,264
4,489
-
-
-
1,545
338
715
758
-
1,470
19,682
17,903
12,150
5,758
-
1,470
19,682
17,903
6,721
-
155,897
32,922
27,160
215,979
125,687
1) These amounts are the shares awarded for the “2018 Offer”. The awarding of these shares was approved on 20 August 2021 with the exception of
those relating to Melos Sulicich whose shares are subject to shareholder approval. These shares have not yet been issued to the Trustee to hold on
behalf of the Executives.
2) The shares that are held in trust are also shown in the balance at the end of the financial year totals and include those shares yet to be issued to the
Trustee under the “2018 Offer”.
7. Loans to Key Management Personnel
There are no loans made by MyState subsidiaries to KMP or their related parties in 2021.
Related parties include close members of the family of the KMP. They also includes entities under joint or several
control or significant influence of the KMP and their close family members.
t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
58
MyState Limited - Annual Report 2021
Directors’ Report (continued) for the year ended 30 June 2021
8. Executive Employment Agreements
The Managing Director and Executives are employed under individual open ended employment contracts that set out
the terms of their employment.
Com-
Con-
menced
tract
in Role
Term
1 July 2014 Ongoing $625,000
TFR
Incumbent
Melos
Sulicich(1)
Short Term
Incentive
(maximum)
50% of TFR in
2021 financial
year
ELTIP
(maximum)
50% of TFR in
2021 financial
year
60% of TFR in
2022 financial
year
70% of TFR in
2022 financial
year
Huw
Bough
1 June 2021 Ongoing $390,000
30% TFR
30% of TFR
upon invitation
to participate
30% TFR
30% of TFR
upon
invitation to
participate
Alan
Logan
30 August
2021
Ongoing $370,000
Gary
Dickson
Mandakini
Khanna
Anthony
MacRae
Heather
McGovern
Paul Moss
Craig Mowll
Janelle
Whittle
19 October
2019
1
December
2015
12
February
2019
18 March
2019
13 May
2015
16 July
2018
22 January
2018
Ongoing $400,000
Ongoing $390,000
Ongoing $390,000
Ongoing $330,000
Ongoing $365,000
Ongoing $390,000
Ongoing $315,000
1) Required to hold shares to the value of 50% of TFR.
Signed in accordance with a resolution of the Directors.
Termination Provisions in the
Event of Termination by the
Company
Notice:
The contract may be terminated by
the Company with 26 weeks notice or
payment in lieu of notice.
Entitlement:
the date of termination.
› Pro-rata STI payment applied as at
› Payment of STI if the performance
› Pro-rata ELTIP allocation, made
period is complete but not yet paid.
following the completion of the
applicable performance periods.
Notice:
Each contract can be terminated by the
Company upon provision of three months
notice.
Entitlement:
the date of termination.
› Pro-rata STI payment applied as at
› Payment of STI if the performance
› Pro-rata ELTIP allocation, made
period is complete but not yet paid.
following the completion of the
applicable performance periods.
Notice:
Each contract can be terminated by the
Company upon provision of three months
notice.
Entitlement:
› Payment of the equivalent of six
months TFR (inclusive of the provision
of three months notice).
the date of termination.
› Pro-rata STI payment applied as at
› Payment of STI if the performance
› Pro-rata ELTIP allocation, made
period is complete but not yet paid.
following the completion of the
applicable performance periods.
Miles Hampton
Chairman
Hobart, dated this 20 August 2021
Melos Sulicich
Managing Director and Chief Executive Officer
t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
59
MyState Limited - Annual Report 2021
Financial Report
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
60
MyState Limited - Annual Report 2021
Financial Report
Chairman Report
Results for the year
Contents
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Section 1 Corporate information and basis of accounting
1.1
1.2
1.3
1.4
Reporting entity
Basis of accounting
Use of estimates and judgement
Provisions (other than for impairment of financial assets)
Section 2 Financial performance
2.1
2.2
2.3
2.4
2.5
2.6
2.7
Net banking operating income
Income from wealth management activities
Income from other activities
Expenses
Earnings per share
Dividends
Segment financial information
Section 3 Capital and financial risk management
3.1
3.2
3.3
Capital management strategy
Financial risk management
Average balance sheet and sources of net interest income
Section 4 Financial assets and liabilities
4.1
4.2
4.3
4.4
4.5
4.6
4.7
Cash and liquid assets
Financial instruments
Loans and advances
Transfer of financial assets (securitisation program)
Deposits and other borrowings including subordinated notes
Other liabilities
Fair value of financial instruments
Section 5 Non-financial assets, liabilities and equity
5.1
5.2
5.3
5.4
5.5
Property, plant and equipment and right-of-use assets
Investment property
Intangible assets and goodwill
Employee benefits provisions
Share capital
Section 6 Income tax expense, current and deferred tax balances
6.1
Income tax expense, current and deferred tax balances
Section 7 Group structure and related parties
7.1
7.2
7.3
Parent entity information
Controlled entities and principles of consolidation
Related party disclosures
Section 8 Other notes
63
64
64
65
66
67
67
67
67
68
69
69
70
70
71
71
74
76
82
83
85
86
88
89
89
90
91
92
93
95
96
96
99
100
101
102
103
103
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
62
My State Limited Annual Report 2021
8.1
8.2
8.3
8.4
Contingent liabilities and expenditure commitments
Remuneration of auditors
Events subsequent to balance date
Other significant accounting policies and new accounting standards and disclosures 103
MyState Limited - Annual Report 2021
Financial Report (continued) for the year ended 30 June 2021
Consolidated Income Statement
Interest income
Interest expense
Net interest income
Non-interest income from banking activities
Net banking operating income
Income from wealth management activities
Income from other activities
Total operating income
Less: Expenses
Personnel costs
Administration costs
Technology costs
Occupancy costs
Marketing costs
Governance costs
Restructure costs
Total operating expenses
Profit before impairment and tax expense
Impairment expense / (recovery) on loans and advances
Profit before tax
Income tax expense
Profit for the year
Profit attributable to the:
Equity holders of MyState Limited
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Notes
30 June 2021
$’000
30 June 2020
$’000
2.1
2.1
2.1
2.2
2.3
2.4
2.4
2.4
2.4
4.3
6.1
2.5
2.5
164,336
188,330
(52,385)
(88,808)
111,951
12,951
124,902
13,618
-
99,522
13,699
113,221
15,636
3
138,520
128,860
39,615
15,346
16,200
4,763
6,394
2,580
2,559
37,417
15,518
14,751
5,461
5,250
2,556
-
87,457
80,953
51,063
(995)
52,058
15,717
36,341
47,907
4,921
42,986
12,926
30,060
36,341
30,060
39.18
39.18
32.86
32.86
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
The accompanying notes form part of these financial statements.
63
MyState Limited - Annual Report 2021
Financial Report (continued) for the year ended 30 June 2021
Consolidated Statement of Comprehensive Income
Profit for the year
Other comprehensive income / (expense)
Items that may be reclassified subsequently to profit or loss
Cash flow hedges - Net gains / (losses) taken to equity
Income tax effect
Items that will not be reclassified subsequently to profit or loss
Changes in the fair value of equity investments at fair value through
other comprehensive income
Total other comprehensive income / (expense) for the year
Total comprehensive income for the year
Total comprehensive income for the year is attributable to:
Notes
30 June 2021
$’000
30 June 2020
$’000
36,341
30,060
434
(130)
(184)
55
-
(1000)
304
36,645
(1,129)
28,931
Equity holders of MyState Limited
36,645
28,931
Consolidated Statement of Financial Position
Assets
Cash and liquid assets
Due from other financial institutions
Other assets
Financial instruments
Loans and advances
Property, plant and equipment and right-of-use assets
Investment property
Current and deferred tax assets
Intangible assets and goodwill
Total assets
Liabilities
Due to other financial institutions
Deposits and other borrowings including subordinated notes
Employee benefits provisions
Other liabilities
Tax liabilities
Total liabilities
Net assets
Equity
Share capital
Retained earnings
Reserves
Total equity
Notes
30 June 2021
$’000
30 June 2020
$’000
4.1
4.2
4.3
5.1
5.2
6.1
5.3
4.5
5.4
4.6
6.1
80,266
31,859
7,032
116,502
34,615
6,762
707,166
542,565
5,607,300
5,286,114
11,678
3,801
9,896
83,478
19,491
-
5,286
84,471
6,542,476
6,095,806
18,821
25,617
6,079,794
5,704,778
5,240
20,605
2,802
5,674
21,165
4,250
6,127,262
5,761,484
415,214
334,322
5.5
208,196
152,775
207,282
182,449
(264)
(902)
415,214
334,322
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
64
The accompanying notes form part of these financial statements.
MyState Limited - Annual Report 2021
Financial Report (continued) for the year ended 30 June 2021
Consolidated Statement of Changes in Equity
Share
capital
$’000
Retained
earnings
$’000
Note
Employee
equity
benefits
reserve
$’000
Hedging
reserve
$’000
Other
reserve
$’000
Total
$’000
148,707
178,629
640
(477)
At 1 July 2019
Profit for the year
Other comprehensive income /
(expense)
Total comprehensive income
for the year
Equity issued under employee
share scheme
Equity issued under executive
long term incentive plan
Equity issued under dividend
reinvestment plan
Share based payment expense
recognised
Dividends paid
At 30 June 2020
At 1 July 2020
Profit for the year
Other comprehensive income /
(expense)
Total comprehensive income
for the year
Equity issued under employee
share scheme
Equity issued under executive
long term incentive plan
Equity issued under dividend
reinvestment plan
Equity issued under
institutional placement and
entitlement offer
Equity issued under retail
entitlement offer
5.5
5.5
5.5
2.6
5.5
5.5
5.5
Share based payment expense
recognised
5.5
Entitlement offer share
issuance costs, net of tax
Dividends paid
At 30 June 2021
-
-
30,060
-
-
30,060
88
170
3,810
-
-
-
-
-
-
(26,240)
152,775
182,449
152,775
182,449
-
-
-
36,341
-
36,341
84
167
1,397
5.5
31,280
5.5
24,203
-
(1,710)
-
-
-
-
-
-
-
-
-
-
-
(170)
-
234
-
704
704
-
-
-
-
(167)
-
-
-
501
-
-
-
-
-
327,499
30,060
(129)
(1,000)
(1,129)
(129)
(1,000)
28,931
-
-
-
-
-
(606)
(606)
-
304
-
-
-
-
88
-
3,810
234
- (26,240)
(1,000)
334,322
(1,000)
334,322
-
-
36,341
304
304
-
36,645
-
-
-
-
-
-
-
-
-
-
-
84
-
1,397
-
31,280
-
24,203
-
501
-
(1,710)
-
(11,508)
2.6
-
(11,508)
208,196
207,282
1,038
(302)
(1,000)
415,214
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
The accompanying notes form part of these financial statements.
65
MyState Limited - Annual Report 2021
Financial Report (continued) for the year ended 30 June 2021
Consolidated Statement of Cash Flows
Cash flows from operating activities
Interest received
Interest paid
Fees and commissions received
Other non-interest income received
Payments to suppliers and employees (i)
Income tax paid
(Increase)/decrease in operating assets:
Due from other financial institutions
Financial instruments
Loans and advances
Increase/(decrease) in operating liabilities:
Due to other financial institutions
Deposits and other borrowings
Notes
30 June 2021
$’000
30 June 2020
$’000
178,286
202,671
(54,343)
(96,054)
25,777
2,027
(76,756)
(21,905)
26,893
3,400
(73,597)
(12,989)
3,336
(8,581)
(163,814)
(93,615)
(334,763)
(251,207)
(3,868)
(2,022)
323,729
371,464
Net cash flows from / (used in) operating activities
4.1
(122,294)
66,363
Cash flows from investing activities
Purchase of intangible assets
Proceeds from sale of property, plant and equipment
Purchase of property, plant and equipment
Net cash flows from / (used in) investing activities
Cash flows from financing activities
Employee share issue
Entitlement and placement offer share issue
(Receipts)/payments for lease liabilities
Subordinated notes
Floating rate notes issue
(4,282)
(4,425)
-
(499)
(4,781)
84
55,339
(2,757)
(146)
49,976
11
(637)
(5,051)
88
-
(2,565)
110
-
Dividends paid net of dividend reinvestment plan
2.6
(11,657)
(22,437)
Net cash flows from / (used in) financing activities
Net increase / (decrease) in cash held
Cash at beginning of financial year
Closing cash carried forward
90,839
(24,804)
(36,236)
116,502
36,508
79,994
4.1
80,266
116,502
(i) Excludes payments of lease liabilities following the application of AASB 16 Leases. Comparatives have been restated to disclose
outflows from lease liabilities separately.
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
66
The accompanying notes form part of these financial statements.
MyState Limited - Annual Report 2021
Notes to the Consolidated
Financial Statements
for the year ended 30 June 2021
1.1 Reporting entity
MyState Limited (the Company) is incorporated
and domiciled in Australia and is a company limited
by shares that are publicly traded on the Australian
Securities Exchange. The address of its registered
office and principal place of business is 137 Harrington
Street, Hobart Tasmania 7000. The consolidated
financial statements of MyState Limited and its
subsidiaries (the Group) were authorised for issue by
the Directors on 20 August 2021.
1.2 Basis of accounting
These consolidated financial statements are general
purpose financial statements which have been
prepared in accordance with the Corporations
Act 2001, Australian Accounting Standards and
Interpretations, and other requirements of the law.
The financial report complies with Australian
equivalents to International Financial Reporting
Standards (“AIFRS”).
The financial statements comprise the consolidated
financial statements of the Group. For the purpose of
preparing the consolidated financial statements, the
Company is a for-profit entity.
Where necessary, comparative figures have been
re-classified and re-positioned for consistency with
current period disclosures.
The consolidated financial statements have been
prepared on the basis of historical cost, except for
certain properties and financial instruments that are
measured at revalued amounts or fair values at the
end of each reporting period, as explained in the
accounting policies.
Rounding of amounts
The Company is a company of the kind referred to
in Australian Securities and Investments Commission
(ASIC) Class Order 2016/191, and, in accordance with
that Class Order, amounts in the financial report are
rounded off to the nearest thousand dollars, unless
otherwise indicated. All amounts are presented in
Australian dollars.
1.3 Use of estimates and
judgements
The preparation of the financial report in conformity
with Australian Accounting Standards requires the
use of certain critical accounting estimates. It also
requires management to exercise judgment in the
process of applying the accounting policies. The
notes to the financial statements set out areas
involving a higher degree of judgment or complexity,
or areas where assumptions are significant to the
financial report such as:
› Loan origination cost amortisation, refer note 2.1;
› Impairment losses on loans and advances, refer
note 4.3;
› Fair value of financial instruments, refer note 4.7;
› Impairment assessment of intangibles and goodwill,
refer note 5.3;
› Recoverability of deferred tax assets, refer note 6.1; and
› Assessment of right-of-use assets and lease
liabilities, refer notes 4.6 and 5.1.
1.4 Provisions (other than for
impairment of financial assets)
Provisions are recognised when the Group has a
legal, equitable or constructive obligation to make a
future sacrifice of economic benefits to other entities
as a result of past transactions or other past events
and it is probable that a future sacrifice of economic
benefits will be required and a reliable estimate can
be made of the amount of the obligation.
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
67
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
2.1 Net banking operating income
Interest income
Loans and advances
Investment securities
Total interest income
Interest expense
At call deposits
Fixed term deposits
Financing cost - leases
Total interest expense
Non-interest income from banking activities
Transaction fees
Loan fees
Banking commissions
Other banking operations income
30 June 2021
$’000
30 June 2020
$’000
160,912
180,914
3,424
7,416
164,336
188,330
12,851
38,217
1,317
52,385
3,918
4,674
2,984
1,375
11,450
76,150
1,208
88,808
4,513
4,462
3,018
1,706
Total non-interest income from banking activities
12,951
13,699
Income accounting policy
Income is recognised to the extent that it is probable that the economic benefits will flow to the entity and the
income can be reliably measured. The following specific recognition criteria must also be met before income
is recognised.
Interest
Interest income is accrued using the effective interest rate method, which is the rate that exactly discounts
estimated future cash receipts through the expected life of the financial instrument. Loan origination fees are
recognised as components of the calculation of the effective interest rate method in relation to originated loans,
and therefore effect the interest recognised in relation to this portfolio of loans. The average life of loans in the
relevant loan portfolios is reviewed annually to ensure the amortisation methodology for loan origination fees
is appropriate.
Interest expense is calculated on an accruals basis using the effective interest rate method. The effective
interest rate method is the rate that exactly discounts future payments through the expected life of the
financial instrument.
Non-interest income from banking activities
Refer to the “income accounting policy” in note 2.2.
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
68
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
2.2 Income from wealth management activities
Funds management income
Other fees and commissions
Total income from wealth management activities
Funds management income and fiduciary activities
30 June 2021
$’000
30 June 2020
$’000
9,412
4,206
13,618
10,315
5,321
15,636
TPT Wealth Limited, a controlled entity of the Group, acts as Responsible Entity, Trustee and Funds Manager
for eight managed investment schemes. The investment schemes place monies with external wholesale fund
managers, direct mortgages and mortgaged backed securities, term deposits and other investments. The clients
include individuals, superannuation funds and corporate investors.
The assets and liabilities of these funds are not included in the Consolidated Financial Statements. Income
earned by the Group in respect of these activities is included in the Consolidated Income Statement of the Group
as “Funds management income”.
The following table shows the balance of the unconsolidated funds under management and funds under advice
that gives rise to funds management and other fees and commissions income respectively:
Funds under management
Funds under advice
Other fees and commissions
30 June 2021
$’M
30 June 2020
$’M
1,105
487
1,069
402
TPT Wealth Limited provides private client tax accounting services and acts as trustee and executor of estates.
“Other fees and commissions income” is the income earned from these activities.
Income accounting policy
The Group earns three main types of fees and commissions under contracts with customers. The first income type is
single performance obligation contracts, such as transaction services, where the performance obligation is performed
and consideration received in quick succession. Income from these contracts is recorded as the performance
obligations are satisfied. The second income type is where contracts with the customer are for the performance of
multiple obligations over time and the customer only benefits from delivery of all those obligations together over time,
for example the provision of trustee services and services to funds under management. For these contracts, income is
recognised over the service period. The third type of income is insurance intermediary income where the performance
obligations are satisfied substantially at the time of referring the customer and economic benefits flow to the Group
over time. The Group has estimated that nil income will be brought forward as a contract asset under these contracts
due to the insufficient probability of the timing and amount of future income that will flow from these contracts. This
income is therefore recorded when received.
2.3 Income from other activities
Profit on sale of property, plant and equipment assets
30 June 2021
$’000
30 June 2020
$’000
-
3
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
69
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
2.4 Expenses
The following items are included within each item of specified expenses:
Occupancy costs include:
Operating lease payments
Depreciation - right of use lease assets
Depreciation - buildings and leasehold improvements
Technology costs include:
Amortisation - computer software
Administration costs include:
30 June 2021
$’000
30 June 2020
$’000
(114)
2,934
362
379
3,254
482
5,275
4,874
Depreciation - furniture, equipment and computer hardware
276
322
Restructure costs include (i):
Depreciation - early termination of right-of-use lease assets
Termination payments
Loss on disposal of fit out costs
Other
Total restructure costs
1,215
952
248
144
2,559
-
-
-
-
-
(i) During the period, branches in Queensland were closed and properties in Northern Tasmania were consolidated. The restructure costs
include the cost to early terminate leases and redundancy costs related to impacted staff.
Expense accounting policy
Depreciation and amortisation expense
The Group adopts the straight line method of depreciating property, plant and equipment and amortising
intangible assets over the estimated useful lives, commencing from the time the asset is held ready for use.
Leasehold improvements and right-of-use assets are depreciated over the shorter of either the unexpired
expected term of the lease or the estimated useful life of the improvements. Estimated useful lives are:
Buildings
Office furniture, fittings & equipment
Building fit-out
Computer hardware
Software
Right-of-use assets
40 years
4-7 years
4-15 years
3 years
3-10 years
2-15 years
Each year the useful life of assets are evaluated. The remaining useful life of select core banking systems has
been revised and extended in the current year as the Group has implemented significant increased functionality
and, in turn, longevity of these sytems over their initial capacity. The revised remaining useful life is within the
above stated parameters however the total life since original core system implementation is in excess of the
above stated lives in some instances.
2.5 Earnings per share
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
70
Basic earnings per share from continuing operations
Diluted earnings per share from continuing operations
30 June 2021
cents
30 June 2020
cents
39.18
39.18
32.86
32.86
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
Earnings per share accounting policy
Basic earnings per share is calculated by dividing the Group’s profit attributable to ordinary equity holders
by the weighted average number of ordinary shares outstanding during the financial year. Diluted earnings
per share is calculated by dividing the Group’s profit attributable to ordinary equity holders by the weighted
average number of ordinary shares that would be issued on the exchange of all the dilutive potential ordinary
shares into ordinary shares.
The following table details the weighted average number of shares used in the calculation of basic and diluted
earnings per share:
Weighted average number of ordinary shares used in calculating basic and
diluted earnings per share
Number
Number
92,761,685
91,491,358
2.6 Dividends
Dividends paid
2019 Final dividend paid - 14.5 cents per share
2020 Interim dividend paid - 14.25 cents per share
2020 Final dividend paid - 0 cents per share
2021 Interim dividend paid - 12.5 cents per share
Total dividends paid
Date of
payment
30 June 2021
$’000
30 June 2020
$’000
1 Oct 2019
2 Apr 2020
N/A
16 Mar 2021
-
-
-
11,508
11,508
13,204
13,036
-
-
26,240
The dividends paid during the year were fully franked at the 30 per cent corporate tax rate.
30 June 2021
$’000
30 June 2020
$’000
Franking credit balance
The amount of franking credits available for the subsequent financial year are:
Franking account balance as at the end of the period at 30%
82,890
67,568
Franking credits that will arise from the payment of income tax payable at
the end of the period
4,049
2,314
Dividends not recognised at the end of the financial year
On 20 August 2021, the Directors resolved to pay a final dividend for the 2021 financial year of 13.0 cents per
share or $13.686m total to be paid on 21 September 2021, fully franked at the 30 per cent corporate tax rate.
This dividend has not been brought to account as the amount had not been determined at the reporting date.
This dividend will reduce the balance of the franking account by $5.865m.
2.7 Segment financial information
Operations of reportable segments
The Group has identified two operating divisions and a corporate division, which are its reportable segments.
These divisions offer different products and services and are managed separately. The Group’s management
committee review internal management reports for each of these divisions at least monthly.
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
71
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
Banking division
The Banking division’s product offerings include lending; encompassing home loans, personal, overdraft, line
of credit and commercial products, transactional savings accounts and fixed term deposits and insurance
products. It delivers these products and services through its branch network, digital channels and third party
channels. The Banking division is conducted by the MyState Bank Limited Group.
Wealth Management division
The Wealth Management division is a provider of funds management and trustee services. It operates
predominantly within Tasmania. It holds $1.105 billion (2020: $1.069 billion) in funds under management on
behalf of personal, business and wholesale investors as the responsible entity for eight managed investment
schemes. The Wealth Management division is conducted by TPT Wealth Limited which is a trustee company
licensed within the meaning of Chapter 5D of the Corporations Act 2001 and is the only private trustee company
with significant operations in Tasmania.
Corporate and consolidation division
The corporate division is responsible for the governance of the Group. The corporate division charges the
operating divisions on a cost recovery basis for costs it has incurred. This division is also where eliminations are
allocated between the Banking division and the Wealth Management division.
Year ended 30 June 2021
Interest income
Interest expense
Other income
Transaction fees
Loan fee income
Banking commissions
Other banking operations income
Funds management income
Other wealth management fees and commissions
Income from other activities
Total operating income
Expenses
Personnel costs
Administration costs
Technology costs
Occupancy costs
Marketing costs
Governance costs
Impairment expense / (recovery)
Restructure costs (i)
Income tax expense
Segment profit for the year
Segment balance sheet information
Segment assets
Segment liabilities
Wealth
Management
$’000
Corporate
and
Consolidation
$’000
Total
$’000
Banking
$’000
164,358
(52,370)
(12)
(2)
(10)
(13)
164,336
(52,385)
3,918
4,674
2,984
1,695
-
-
-
-
-
-
-
9,412
4,206
-
-
-
-
(320)
-
-
-
3,918
4,674
2,984
1,375
9,412
4,206
-
125,259
13,604
(343)
138,520
27,241
6,338
6,036
39,615
20,999
2,964
(8,617)
15,346
14,893
1,017
290
16,200
4,532
6,042
549
(1,180)
2,277
15,002
144
344
181
185
282
646
87
8
4,763
6,394
1,850
2,580
-
-
69
(995)
2,559
15,717
34,904
1,503
(66)
36,341
6,467,120
24,307
51,049
6,542,476
6,123,366
1,426
2,470
6,127,262
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
72
(i) Costs related to the restructure for the Banking Division are $2.277M and for the Wealth Management division are $0.282M.
Refer to note 2.4 for further information.
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
Year ended 30 June 2020
Interest income
Interest expense
Other income(i)
Transaction fees
Loan fee income
Banking commissions
Other banking operations income
Funds management income
Other Wealth Management fees and commissions
Income from other activities
Total operating income
Expenses
Personnel costs
Administration costs
Technology costs
Occupancy costs
Marketing costs
Governance costs
Impairment expense /(recovery)
Income tax expense
Segment profit for the year
Segment balance sheet information
Segment assets
Segment liabilities
Banking
$’000
Wealth
Management
$’000
Corporate and
Consolidation
$’000
Total
$’000
188,105
(88,800)
182
(1)
43
(7)
188,330
(88,808)
4,513
4,462
3,018
1,914
-
-
515
-
-
-
-
10,315
5,321
-
-
-
(208)
-
-
-
(512)
4,513
4,462
3,018
1,706
10,315
5,321
3
113,727
15,817
(684)
128,860
27,267
19,272
14,067
5,070
4,878
604
4,888
11,335
26,346
6,107
2,951
4,043
(6,705)
563
359
349
104
33
1,610
3,741
121
32
23
1,848
-
(19)
(27)
37,417
15,518
14,751
5,461
5,250
2,556
4,921
12,926
30,060
6,056,509
25,195
14,102
6,095,806
5,795,422
2,183
(36,121)
5,761,484
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
73
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
3.1 Capital management strategy
The Group’s capital management strategy is to adhere to regulatory requirements and maximise shareholder
value through optimising the level and use of capital resources, whilst also providing the flexibility to take
advantage of opportunities as they may arise.
The Group’s capital management objectives are to:
› Comply with internal and regulatory capital requirements;
› Ensure sufficient capital resource is available to support the Group’s business, operational and investment
activities;
› Maintain balance sheet resilience to safeguard the Group’s ability to continue as a going concern; and
› Support MyState Limited’s and MyState Bank Limited’s credit rating.
The Group’s capital management policy considers each of internal, regulatory and rating agency capital
requirements. Under APS 110 Capital Adequacy, the ultimate responsibility for the prudent management of
capital resides with the Board of Directors. The Board must ensure that an appropriate level and quality of
capital is maintained, commensurate with the type, amount and concentration of risk exposures.
The Group’s regulatory capital requirements are measured on a Level 1 and Level 2 basis.
Level 1 is comprised of MyState Bank Limited (the ADI) and ConQuest 2010-1R.
Level 2 is comprised of the wider MyState Limited prudential group. This group includes MyState Limited (the
non-operating holding company), MyState Bank Limited, Connect Asset Management Limited (the Securitisation
programme Manager) and ConQuest 2010-1R.
All entities that are consolidated for accounting purposes are included within the Level 2 regulatory capital
calculation except for certain securitisation vehicles and TPT Wealth Limited.
The Group has developed a detailed Internal Capital Adequacy Assessment Plan (ICAAP). This plan covers the
capital requirements of the Group on a Level 1 and Level 2 basis (as previously described) as well as TPT Wealth
Limited. The Group’s capital position is monitored on a frequent basis and is reported to the Board monthly. The
ICAAP also includes a three year forecast of capital adequacy which is prepared and submitted to the Board at
least annually.
The ICAAP aims to ensure that adequate planning activities take place so that the Group is effectively capitalised.
The ICAAP encompasses known financial events, dividend policy, capital raisings, securitisation and stress testing.
The Board has currently set a minimum total capital adequacy ratio of 12.5% for the Group. Capital adequacy of the
Group on a level 2 basis is detailed in the following table:
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
74
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
Qualifying capital
Common equity tier 1 capital
Paid-up ordinary share capital (i)
Retained earnings
Reserves excluding general reserve for credit losses
Total common equity tier 1 capital
Less: Regulatory adjustments
Deferred expenditure including deferred tax assets
Goodwill and intangibles
Other deductions
Total regulatory adjustments
Net common equity tier 1 capital
Tier 2 capital
Subordinated notes (ii)
General reserve for credit losses
Total capital
Risk weighted assets
Capital adequacy ratio
30 June 2021
$’000
30 June 2020
$’000
208,197
219,127
44
152,775
197,231
(310)
427,368
349,696
24,818
68,913
41,733
135,464
291,904
20,728
72,006
42,297
135,031
214,665
32,706
6,380
30,769
6,826
330,990
252,260
2,231,100
1,939,372
14.84%
13.01%
(i) On the 24th June 2021, the Group raised $24.2 million (5,628,573 shares at $4.30 each) under a retail entitlement offer. This followed
an institutional entitlement offer and fully underwritten institutional placement (Placement) which raised $11.3 million and $20 million
respectively (7,274,502 ordinary shares at $4.30 each) from existing and new institutional investors, on the 2nd June 2021.
(ii) On the 14th August 2015, the Group issued $25 million of floating rate subordinated notes (“notes”). The issuer was MyState Bank
Limited. The notes had a term of 10 years to 14th August 2025, and paid interest quarterly at a floating rate equal to the three-month
BBSW plus a margin of 5% per annum. The issuer redeemed these notes on 14 August 2020 having obtained APRA’s prior written
approval.
On the 10th July 2020, the Group issued $25 million of floating rate subordinated notes (“notes”). The issuer was MyState Limited. The
notes have a term of 10 years, maturing 10 July 2030, and pay interest quarterly at a floating rate equal to the three-month BBSW plus a
margin of 4.35% per annum. The issuer has the option to redeem these notes on 10 July 2025 and each quarterly interest payment date
thereafter, and for certain regulatory events (in each case subject to APRA’s prior written approval). On the same date, and with the same
terms, MyState Bank Limited issued $25 million of floating rate subordinated notes to MyState Limited with terms identical to those issued
by MyState Limited.
On the 28th September 2016, the Group issued $10 million of floating rate subordinated notes (“notes”). The issuer was MyState Bank
Limited. The notes have a term of 10 years, maturing 28th September 2026, and pay interest quarterly at a floating rate equal to the
three-month BBSW plus a margin of 4.25% per annum. The issuer has the option to redeem all or some of the notes on 28th September
2021 and each quarterly interest payment date thereafter, and for certain regulatory events (in each case subject to APRA’s prior written
approval).
If APRA notifies the issuer that a non-viability trigger event has occurred, the notes will be converted into ordinary shares of MyState
Limited, or written-off. For the notes issued on the 28th September 2016, the amount included in the Group’s Level 2 Tier 2 regulatory
capital is a percentage equal to that of the external interest in the Group’s regulatory capital. The amount included in the Group’s Level 1
Tier 2 regulatory capital is 100%. For the notes issued on the 10th July 2020, the amount included in the Group’s Level 1 and Level 2 Tier 2
regulatory capital is 100%.
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
75
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
3.2 Financial risk management
Risk management is an integral part of the Group’s business processes. The Board sets policy to mitigate risks
and ensure the risk management framework is appropriate, to direct the way in which the Group conducts
business. Promulgated Board approved policies ensure compliance throughout the business, which are
monitored by way of a dedicated compliance system. Risk management plans exist for all documented risks
within the Group and these plans are reviewed regularly by the Executive Management Team, the Group Risk
Committee and the Board. Business units are accountable for risks in their area and are responsible for ensuring
the appropriate assessment and management of these risks.
Risk exposure profile
The Group actively monitors a range of risks, which are not limited to, but include the following:
› Credit risk,
› Market risk; and
› Liquidity risk.
3.2.1 Credit risk
Approach to credit risk management
Credit risk arises within the Group’s lending and treasury investment activities and is the risk that a counterparty
may fail to complete its contractual obligations when they fall due.
The Group’s approach to managing this risk is to separate prudential control from operational management by
assigning responsibility for approval of credit exposures to specific individuals and management committees.
The Group Risk Committee has oversight of credit risk exposures and the Enterprise Risk Committee monitors
credit related activities through regular reporting processes, including monitoring large exposure to single groups
and counterparties. The roles of funding and oversight of credit are separate.
Board approved lending policies guide the processes for all loan approvals by subsidiary operations. All loans
over a designated amount, whether within delegated limits or not, are reported to the Group Risk Committee on a
regular basis. Any loan outside of delegated limits must be approved by the Board prior to funding.
Maximum exposure to credit risk
The amounts disclosed in the following table are the maximum exposure to credit risk, before taking account of
any collateral held or other credit enhancements. For financial assets recognised in the Statement of Financial
Position, the exposure to credit risk equals their carrying amount. For customer commitments, the maximum
exposure to credit risk is the full amount of the committed facility as at the reporting date.
Cash and liquid assets
Due from other financial institutions
Other assets
Financial instruments
Loans and advances
Customer commitments (i)
Maximum exposure to credit risk
(i) For further information regarding these commitments, refer to note 8.1.
30 June 2021
$’000
30 June 2020
$’000
80,266
31,859
7,032
116,502
34,615
6,762
707,166
542,565
826,323
700,444
5,607,300
5,286,114
200,392
145,870
6,634,015
6,132,428
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
76
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
The credit quality of financial assets has been determined based on Standard and Poor’s credit ratings for financial
assets other than loans and advances at amortised cost. For loans and advances at amortised cost, the assets
identified as being “closely monitored” are those assets that are greater than 30 days past due. New facilities are
loans that have been funded within the financial year.
Credit quality of financial assets
Financial assets other than loans and advances at amortised cost
Equivalent S&P rating A+ and above
Equivalent S&P rating A and below
Loans and advances at amortised cost
New Facilities - not closely monitored
New Facilities - closely monitored
Continuing facilities - not closely monitored
Continuing facilities - closely monitored
Total on balance sheet exposure to credit risk
Loans and advances at amortised cost past due analysis
Not past due
Past due days:
31 to 60 days
61 to 90 days
More than 90 days
Total loans and advances at amortised cost
Estimate of collateral held against past due assets
Estimate of collateral held
30 June 2021
$’000
30 June 2020
$’000
476,364
349,959
382,699
317,745
1,544,649
1,304,934
364
591
4,036,862
3,954,565
25,425
26,024
6,433,623
5,986,558
5,576,675
5,254,085
11,492
5,760
13,373
8,889
4,750
18,390
5,607,300
5,286,114
45,588
45,027
To mitigate credit risk, the bank (ADI) holds collateral against select loans and advances in the form of a
mortgage charge over property. The bank can take possession of the security held against the loans and
advances as a result of customer default. The collateral shown above is an estimate of the value of collateral
held, it is not practicable to determine the fair value.
Credit quality is impacted by concentration risk created by the ensuing vulnerability of assets to similar
conditions such as economic or political factors. The Group monitors the geographical diversification of its loans
and advances. An analysis of this concentration of credit risk at the reporting date is shown in the following table:
Tasmania
Victoria
New South Wales
Queensland
Western Australia
Australian Capital Territory
South Australia
Northern Territory
Gross loans and advances at amortised cost
There are no loans that individually represent 10% or more of shareholders’ equity.
30 June 2021
$’000
30 June 2020
$’000
2,223,256
2,131,726
981,390
918,936
1,122,964
1,105,970
1,106,049
962,515
77,467
76,999
50,601
43,897
7,094
50,149
41,088
5,668
5,612,718
5,293,051
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
77
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
3.2.2 Market risk
Managing market risk
Market risk is the exposure to adverse changes in the value of the Group’s portfolio as a result of changes in
market prices or volatility. The Group is exposed primarily to interest rate risk.
Interest rate risk exposure
The operations of the ADI are subject to the risk of interest rate fluctuations as a result of mismatches in the
timing of the repricing of interest rates on their assets and liabilities.
Value at Risk (VaR)
The following table indicates the VaR based on historical data. The Group estimates VaR as the potential loss
in earnings from adverse market movements over a 20 day holding period to a 99% confidence level. VaR takes
account of all material market variables that may cause a change in the value of the loan portfolio. Although an
important tool for the measurement of market risk, the assumptions underlying the model are limited to reliance
on historical data.
Value at risk (post-tax) based on historic data
Average
Minimum
Maximum
Derivatives
30 June 2021
$’000
30 June 2020
$’000
1,531
980
2,999
1,533
1,076
2,111
The Group is exposed to changes in interest rates. The only derivative instruments currently entered into by
the Group are interest rate swaps. The Group protects its portfolio of fixed rate loans, and exposure to variable
rate debt obligations, by paying fixed rates to swap providers and receiving variable rates in return. The variable
receipts mitigate the exposure to interest rate changes that will impact on the Group’s variable rate
payment obligations.
Derivatives accounting policy
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and subsequently
remeasured to their fair value. Fair values are obtained from quoted market prices in active markets. Movements
in the carrying amounts of derivatives are recognised in the Consolidated Income Statement, unless the
derivative meets the requirements for hedge accounting.
The Group documents the relationship between the hedging instruments and hedged items at inception of the
transaction, as well as its risk management objective and strategy for undertaking various hedge transactions.
The Group also documents its assessment of whether the derivatives used in hedging transactions have been
or will continue to be, highly effective in offsetting changes in the fair values or cash flows of hedged items.
This assessment is carried out both at inception and on a monthly basis.
Cash flow hedges
The Group has cash flow hedges that are used to hedge the variability of interest rates in relation to certain
liabilities. These derivative instruments are established with terms that exactly match the terms of the liability
designated as the hedged item and therefore form highly effective relationships. The portion of the liability
designated in the hedging relationship is determined by reference to specific fixed rate assets within the loan
portfolio. Sources of ineffectiveness are limited to credit risk of parties to the relationship. The Group tests for
ineffectiveness each month. The variability in fair values attributable to an item designated as a cash flow hedge
is recognised in Other Comprehensive Income to the extent of the hedge’s effectiveness. Any ineffective portion
of the change in the fair value of a derivative is recognised immediately in the Consolidated Income Statement.
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
78
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
Derivatives that do not qualify for hedge accounting
If a derivative expires or is sold, terminated, or exercised, or no longer meets the criteria for hedge accounting,
or the designation is revoked, then hedge accounting is discontinued and the amount recognised in Other
Comprehensive Income remains in Other Comprehensive Income until the forecast transaction affects the
Consolidated Income Statement. If the forecast transaction is no longer expected to occur, it is reclassified to
the Consolidated Income Statement as a reclassification adjustment.
When a derivative is not designated in a qualifying relationship, all changes in its fair value are recognised
immediately in the Consolidated Income Statement, as a component of net income from other financial
instruments carried at fair value.
3.2.3 Liquidity risk
Managing liquidity risk
Liquidity risk is the risk that the Group is unable to meet its financial and statutory obligations as they fall due,
which could arise due to mismatches in cash flows.
The Group maintains a portfolio of highly marketable assets that can be liquidated in the event of an unforeseen
interruption of cash flows. The Group also has committed lines of credit that it can access to meet its liquidity
needs. Liquidity scenarios are calculated under stressed and normal operating conditions, to assist in
anticipating cash requirements providing adequate reserves.
The Group’s objective is to manage its funds in a way that will facilitate growth in core business under a wide
range of market conditions. The Group maintains, and adheres to, an Internal Risk Management Framework
(LRMF). This process includes acknowledgements of liquidity risks within the Group and justification of the
amount of liquidity that is being held based on the liquidity risk profile of the organisation.
Group Treasury is responsible for implementing liquidity risk management strategies in accordance with the
LRMF. The Group’s Assets and Liabilities Committee (ALCO) assists the Board with oversight of asset and liability
management including liquidity risk management. The Group’s liquidity policies are approved by the Board after
endorsement by the Group Risk Committee and the Banking Group’s ALCO.
On the 19th of March 2020 the RBA established a Term Funding Facility (TFF) that offered ADI’s three-year
funding at a rate of 0.25% per annum to support the Australian economy through COVID-19. MyState Bank, the
Group’s ADI, was granted an allowance of $109.032 million which was fully drawn ahead of the 30 September
2020 deadline.
On the 1st September 2020, the RBA announced changes to the TFF, including a Supplementary Allowance that
provided ADI’s additional three year funding at a rate of 0.10%. MyState Bank was granted an allowance of
$75.650 million which was fully drawn ahead of the 30 June 2021 deadline.
The combined drawn amount as at the reporting date of $184.682 million is reported within “term deposits”.
Funding obtained under the TFF has been secured by $219.350 million of eligible asset backed self-
securitisation. The funding was drawn down progressively and will therefore be able to be repaid progressively at
the end of each respective three year term.
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
79
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
Liquidity risk exposures
The Group is exposed to liquidity risk primarily through its banking activities. The Group’s contractual cash
flows associated with its financial liabilities and hedging derivatives, within relevant maturity groupings is as
follows. These are presented on an undiscounted basis and, therefore, will not agree to amounts presented on
the Consolidated Statement of Financial Position as they incorporate principal and associated future
interest payments.
On demand
$’000
< 3 months
$’000
3 months to
1 year
$’000
1 year to
5 years
$’000
> 5 years
$’000
Total
$’000
2021
At call deposits
2,965,447
-
Due to other financial
institutions
Term deposits
Negotiable certificates of
deposit
Subordinated notes
Floating rate notes
Securitisation liabilities
-
-
-
-
-
-
18,821
-
-
-
-
- 2,965,447
-
18,821
632,137
807,082
242,796
-
1,682,015
281,279
-
-
-
281,279
380
253
1,141
6,087
50,335
57,943
1,013
55,065
-
56,331
82,541
247,622
808,855
-
1,139,018
Contractual amounts payable 2,965,447
1,015,411
1,056,858
1,112,803
50,335 6,200,854
Derivative liability
-
163
1,922
13,775
-
15,860
2020
At call deposits
1,986,905
-
Due to other financial
institutions
Term deposits
Negotiable certificates of
deposit
Subordinated notes
Securitisation liabilities
-
-
-
-
-
-
-
-
-
25,617
1,025,116
920,749
38,756
219,096
9,965
-
-
1,986,905
-
-
-
25,617
1,984,621
229,061
427
1,281
6,830
35,710
44,248
92,130
276,391
1,206,010
-
1,574,531
Contractual amounts payable 1,986,905
1,362,386
1,208,386
1,251,596
35,710
5,844,983
Derivative liability
-
122
1,410
8,753
-
10,285
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
80
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
Contractual maturity of assets and liabilities
The contractual maturities of the Group’s financial assets and liabilities as at the reporting date are contained in
the following table. The Group expects that certain assets and liabilities will be recovered or settled at maturities
which are different to their contractual maturities.
30 June 2021
30 June 2020
< 12 months
$’000
> 12 months
$’000
Total
$’000
< 12 months
$’000
> 12 months
$’000
Total
$’000
80,266
31,859
7,032
-
-
-
80,266
116,502
31,859
34,615
7,032
6,762
-
-
-
116,502
34,615
6,762
351,018
356,148
707,166
313,261
229,304
542,565
66,042
5,541,258
5,607,300
69,741
5,216,373
5,286,114
536,217
5,897,406
6,433,623
540,881
5,445,677
5,986,558
Financial assets
Cash and liquid assets
Due from other financial
institutions
Other assets
Financial instruments
Loans and advances (i)
Total financial assets
Financial liabilities
Due to other financial institutions
(18,821)
Other liabilities
(20,605)
-
-
(18,821)
(20,605)
(25,617)
(21,165)
-
-
(25,617)
(21,165)
Deposits
Subordinated notes
Floating rate notes
(4,685,945)
(242,796) (4,928,741) (3,895,668)
(304,919) (4,200,587)
-
-
(34,662)
(34,662)
(49,976)
(49,976)
-
-
(34,808)
(34,808)
-
-
Securitisation liabilities
(267,457)
(798,958) (1,066,415)
(368,521)
(1,100,862)
(1,469,383)
Total financial liabilities
(4,992,828) (1,126,392) (6,119,220) (4,310,971) (1,440,589) (5,751,560)
Net contractual amounts
receivable / (payable)
(4,456,611)
4,771,014
314,403 (3,770,090)
4,005,088
234,998
(i) Contractual recovery is subject to evolving regulatory and industry support for counterparties requesting such support, as at the
reporting date, the primary support provided to borrowers is repayment deferral periods.
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
81
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
3.3 Average balance sheet and sources of net interest income
The following table shows the major categories of interest-earning assets and interest-bearing liabilities,
together with their respective interest earned or paid by the Group and the average interest rates. Averages are
calculated based on the balance at each month end.
30 June 2021
30 June 2020
Average
balance
$’000
Interest
$’000
Average rate
%
Average
balance
$’000
Interest
$’000
Average rate
%
Average assets and interest
income
Interest-earning assets
Cash and liquid assets
102,751
21
0.02%
94,219
Financial instruments
608,672
3,403
0.56%
494,983
241
7,175
Loans and advances (i)
5,173,127
160,912
3.11% 4,873,672
180,914
0.26%
1.45%
3.71%
Total average interest-earning
assets
5,884,550
164,336
2.79% 5,462,874
188,330
3.45%
Non-interest earning assets
141,968
-
-
145,239
-
-
Total average assets
6,026,518
164,336
2.73% 5,608,113
188,330
3.36%
Average liabilities and
interest expense
Interest-bearing liabilities
Deposits and derivatives
4,563,415
30,861
0.68% 4,033,629
54,751
Notes and bonds on issue
1,300,339
20,206
1.55% 1,457,203
32,849
1.36%
2.25%
Total average interest-bearing
liabilities
5,863,754
51,067
0.87% 5,490,832
87,600
1.60%
Non-interest bearing liabilities
42,846
-
-
53,338
-
-
Total average liabilities
5,906,600
51,067
0.86% 5,544,170
87,600
1.58%
Reserves
332,453
-
-
310,388
-
-
Total average liabilities and
reserves
6,239,053
51,067
0.82% 5,854,559
87,600
1.50%
(i) The offset account average balance included in Loans and advances is $232.382 million (2020: $264.109 million).
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
82
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
4.1 Cash and liquid assets
Notes, coins and cash at bank
Other short term liquid assets
Total cash and liquid assets
Reconciliation of profit for the year to net cash provided by operating
activities
Profit for the year
Add / (less) items classified as investing / financing activities or non-cash items:
Depreciation of property, plant and equipment
Depreciation of right of use assets
Amortisation of intangible assets
Loss / (gain) on sale of equipment
Bad and doubtful debts expense net of recoveries
Share based payment
Tax movement within reserves
Changes in assets and liabilities:
Decrease / (increase) in due from other financial institutions
Decrease / (increase) in loans and advances
Decrease / (increase) in financial instruments
Decrease / (increase) in other assets
Decrease / (increase) in deferred tax assets
Increase / (decrease) in due to other financial institutions
Increase / (decrease) in deposits and other borrowings
Increase / (decrease) in employee benefits provisions
Increase / (decrease) in tax liabilities
Net cash flows used in operating activities
30 June 2021
$’000
30 June 2020
$’000
75,469
4,797
80,266
110,831
5,671
116,502
36,341
30,060
638
3,626
5,275
248
(995)
501
(130)
804
3,254
4,874
143
4,921
234
55
2,756
(43,070)
(320,192)
(237,944)
(164,167)
(93,416)
(270)
(614)
(4,619)
642
(1,153)
(13,138)
325,186
408,772
(434)
(5,444)
(122,294)
291
1,034
66,363
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
83
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
Cash and liquid assets accounting policies
Cash and liquid assets
Cash and liquid assets in the Consolidated Statement of Financial Position and for the purposes of the
Consolidated Statement of Cash Flows comprise cash at bank and in hand and short-term deposits with
an original maturity of less than three months, net of outstanding bank overdrafts. Cash flows arising from
deposits, share capital, investments, loans to subsidiaries and investments in associates are presented on a net
basis in the Statement of Cash Flows.
Cash Flow statement
Cash flows arising from the following activities are presented on a net basis in the Statement of Cash Flows:
› Customer deposits and withdrawals from savings and fixed-term deposit accounts;
› Movements in investments;
› Amounts due to and from other financial institutions;
› Customer loans and advances; and
› Dividends paid.
Where operational income and expense accruals and prepayments are included in the above line items,
the movements will differ between the statement of financial position and the disclosure in this note.
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
84
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
4.2 Financial instruments
Financial instruments at amortised cost
Negotiable certificates of deposits
Term deposits
Floating rate notes
Other deposits
30 June 2021
$’000
30 June 2020
$’000
317,703
35,700
353,258
1,068
298,616
35,700
207,178
2,117
Total financial instruments at amortised cost
707,729
543,611
Financial instruments at fair value
Derivatives
Other financial instruments at fair value
Total financial instruments
(563)
(1,046)
-
-
707,166
542,565
Financial instruments accounting policies
Financial instruments at amortised cost
Financial instruments at amortised cost are those non-derivative financial assets that the Group has acquired
with the objective of holding in order to collect contractual cash flows. The contractual terms of the financial
asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal
amount outstanding.
Financial instruments at fair value
Financial instruments other than those carried at amortised cost, are carried at their fair value at the reporting
date. Note 4.7 contains information on how the Group determines fair values. Fair value gains and losses are
recognised in comprehensive income until the derecognition date, at which point the net gains and losses are
transferred to profit or loss for that instrument.
Derecognition of financial assets and liabilities
Financial assets are derecognised when the contractual rights to receive cash flows from the assets have
expired, or where the Group has transferred its contractual rights to receive the cash flows of the financial assets
and substantially all the risks and rewards of ownership. Financial liabilities are derecognised when they are
extinguished, i.e. when the obligation is discharged, cancelled or expired.
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
85
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
4.3 Loans and advances
Classification of loans and advances at amortised cost
Residential loans secured by mortgage
Personal loans and unsecured overdrafts
Overdrafts secured by mortgage
Commercial loans
Total loans and advances at amortised cost
Specific provision for impairment
Collective provision for impairment
Total loans and advances at amortised cost net of provision for
impairment
Loans and advances at amortised cost accounting policy
30 June 2021
$’000
30 June 2020
$’000
5,468,427
5,119,511
46,989
29,200
68,102
67,351
35,398
70,791
5,612,718
5,293,051
50
5,368
305
6,632
5,607,300
5,286,114
Loans and other receivables that have fixed or determinable payments that are not quoted in an active market
are classified as “loans and advances”. Loans and advances are recognised on trade date and are measured
at amortised cost using the effective interest method, less any impairment. Interest income is recognised by
applying the effective interest rate, except for short-term receivables when the effect of discounting
is immaterial.
Provision for impairment
Provision for impairment
Specific provision for impairment
Opening balance
Net specific provision funding
Write-off of previously provisioned facilities
Closing balance of specific provision for impairment
Collective provision for impairment
Opening balance
Net collective provision funding
Write-off of previously provisioned facilities
Closing balance of collective provision for impairment
Charge to profit for impairment on loans and advances
Increase / (decrease) in specific provision for impairment
Increase / (decrease) in collective provision for impairment
Bad debts recovered
Bad debts written off directly
Less charge related to discontinued operation
Total impairment (recovery) / expense on loans and advances
30 June 2021
$’000
30 June 2020
$’000
305
(255)
-
50
6,632
(1,037)
(227)
5,368
(255)
(1,037)
(675)
972
-
(995)
266
39
-
305
2,098
4,595
(61)
6,632
39
4,595
(831)
1,118
-
4,921
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
86
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
The Group has undertaken a review of the expected credit loss of its lending portfolios against relevant specific
economic conditions under varying scenarios. The review considered the macroeconomic outlook, customer
credit quality, the quality of collateral held and exposure at default as at the reporting date. These model
inputs including forward-looking information have been revised in recognition that COVID-19 is a key driver
of the estimates therein. The modelled expected credit loss (ECL) is sensitive to the speed and resilience of
post-COVID-19 economic normalisation, and the longevity of any monetary and fiscal intervention, as these
influence both the probability of default, and the value of collateral that may be utilised. Whilst the inputs have
been revised, the underlying methodology for calculating the ECL is consistently applied in the current and
comparative period as described in the ‘Impairment of financial assets accounting policy’ presented below.
In arriving at the reported ECL, the following assumptions have been considered the more probable outcome as
at the reporting date:
› Australian unemployment rates to return to pre-COVID-19 levels of approximately 5% in the 2022 financial
year and remaining stable as economic activity returns gradually towards normalised levels.
› Australian house prices increase by approximately 6% in the 2022 financial year and 5% in 2023 calendar year.
› The Reserve Bank of Australia maintaining the cash rate at historic lows until 2023 to continue to support
economic activity in this COVID-19 environment.
Given the more recent COVID-19 outbreaks and resulting lock downs in mainland Australia, future economic
conditions that result in outcomes that differ from the current estimate are possible and will be accounted for in
future periods.
Impairment of financial assets accounting policy
Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets
are considered to be impaired when there is objective evidence that, as a result of one or more events that
occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment
have been affected. The primary source of credit risk for the Group arises on its loan portfolio. In relation to this
portfolio, the Group maintains a specific provision and a collective provision.
Specific provisions for impairment are made against individual risk rated credit facilities where a loss is expected.
The provisions are measured as the difference between a financial asset’s carrying amount and the expected
future cash flows.
All other loans and advances that do not have an individually assessed provision are assessed collectively for
impairment. The collective provisions are calculated using an Expected Credit Loss (ECL) model. This model is
forward looking and does not require evidence of an actual loss event for impairment provisions to
be recognised.
The Group applies a three-stage approach to measuring the ECL based on credit risk since origination. The
Group estimates ECL through modelling the probability of default, loss given default and exposure at default,
as follows:
Stage 1 - Performing - This category includes financial assets that have not experienced a significant increase
in credit risk since their origination. For these financial assets an allowance equivalent to 12 month’s ECL is
recognised, which represents the credit losses expected to arise from defaults occurring over the next 12 months.
Stage 2 - Under-performing - This category includes financial assets that have experienced a significant
increase in credit risk since their origination and are not credit impaired. For these financial assets an allowance
equivalent to lifetime ECL is recognised. Lifetime ECL is the credit losses expected to arise from defaults
occurring over the remaining life of the financial assets.
Stage 3 - Non-performing (impaired) - This category includes financial assets that are credit impaired. The
provision is also equivalent to the lifetime ECL. The difference to the provision calculated on stage 2 loans is
that the stage 3 loan calculation is not discounted over a future period, but rather the provision is calculated at
nominal value.
Financial assets in stage 1 and stage 2 are assessed for impairment collectively, whilst those assets in stage 3 are
subject to either collective or specific impairment assessment.
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
87
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
Significant changes in credit risk
Significant increases in credit risk for financial assets are assessed by comparing the risk of a default occurring
over the expected life of a financial asset at the reporting date compared to the corresponding risk of default at
origination. In determining what constitutes a significant increase in credit risk, the Group considers qualitative and
quantitative information. The judgement to determine this is primarily based on changes in internal customer risk
grades since origination of the facility. For all of the Group’s loan portfolios, in addition to the primary indicator, a
mathematical model has been developed to identify where a facility’s recent behaviour has deteriorated significantly
from its original behaviour.
Key judgements and estimates made by the Group include the following:
Forward looking information
The measurement of expected credit losses needs to reflect an unbiased probability-weighted range of possible
future outcomes. AASB 9 provides limited guidance on how to meet this requirement and consequently, the
Group has developed an approach considered appropriate for its credit portfolio, informed by emerging
market practices.
In applying forward looking information in its AASB 9 credit models, the Group considered three alternate
economic scenarios (base case, strong recovery and moderate recession), to ensure a sufficient unbiased
representative sample is included in estimating ECL. At 30 June 2021, the forward looking component of the
collective provision for doubtful debts is $1.473m (2020: $2.510M).
4.4 Transfer of financial assets (securitisation program)
Some loans and advances to customers are sold by the Group to securitisation vehicles. The transfer takes the
form of the Group assuming an obligation to pass cash flows from the underlying assets to investors in the notes.
The Group utilises its securitisation program to provide regulatory capital relief and funding diversification.
The following table sets out the carrying values at the transaction date of financial assets transferred during the
financial year in this manner to vehicles that provide regulatory capital relief and the value of the associated
liabilities issued from the vehicles. This table does not include transfer of assets to the securitisation vehicle in
which the Group is the bond holder.
Transferred financial assets:
Loans and advances
Associated financial liabilities
Securitisation liabilities to external investors
Transfer of financial assets accounting policy
30 June 2021
$’000
30 June 2020
$’000
-
-
541,940
528,081
Once assets are transferred to a securitisation vehicle, the Group does not have the ability to use the transferred assets during
the term of the arrangement. The Group does not have any loans transferred to unconsolidated securitisation vehicles.
The consolidated securitisation vehicles generally transfer all the risks and rewards of ownership of the assets to the
investors in the notes. However, derecognition of the transferred assets from the Group is prohibited because the cash
flows that the securitisation vehicles collect from the transferred assets on behalf of the investors are not passed to
them without material delay. In these cases, the consideration received from the investors in the notes in the form of cash
is recognised as a financial asset and a corresponding financial liability is recognised. The investors in the notes have
recourse only to the cash flows from the transferred financial assets.
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
88
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
4.5 Deposits and other borrowings including subordinated notes
Deposits
At call deposits
Term deposits
Negotiable certificates of deposit
Total deposits
Other borrowings
Subordinated notes(i)
Floating rate notes(ii)
Securitisation liabilities
30 June 2021
$’000
30 June 2020
$’000
2,965,447
1,986,905
1,682,015
1,984,621
281,279
229,061
4,928,741
4,200,587
34,662
49,976
34,808
-
1,066,415
1,469,383
Total deposits and other borrowings including subordinated notes
6,079,794
5,704,778
Concentration of deposits:
Customer deposits
Wholesale deposits
Subordinated notes(i)
Floating rate notes(ii)
Securitisation liabilities
Total deposits
4,462,773
3,941,537
465,968
259,050
34,662
49,976
34,808
-
1,066,415
1,469,383
6,079,794
5,704,778
(i) Refer to note 3.1 (ii) for details regarding the subordinated notes issue.
(ii) On the 16th June 2021, floating rate notes with a face value of $50m and term of 4 years were issued to MyState Limited.
There are no customers who individually have deposits which represent 10% or more of total liabilities.
Deposits and other borrowings accounting policy
Deposits and other borrowings are initially measured at fair value, net of transaction costs and are subsequently measured
at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.
The Group does not currently hold any financial liabilities at fair value.
4.6 Other liabilities
Trade payables and related accruals
Lease liabilities
Total other liabilities
Lease liabilities
30 June 2021
$’000
30 June 2020
$’000
8,699
11,906
20,605
6,502
14,663
21,165
Lease liabilities are initially measured at the present value of the future lease payments at the commencement date,
discounted using the interest rate implicit in the lease (or if that rate cannot be readily determined, the lessee’s incremental
borrowing rate).
Lease payments are allocated between principal and interest expense. Interest expense is recognised as a financing cost
within interest expense (refer note 2.1) in the income statement over the lease period. Any variable lease payments not
included in the measurement of the lease liability are also recognised in the income statement in the period in which the
event or condition that triggers those payments occurs. Lease liabilities are remeasured when there is a change in future
lease payments arising from a change in lease term, an assessment of an option to purchase the underlying asset, an
index or rate, or a change in the estimated amount payable under a residual value guarantee. When the lease liability is
remeasured, a corresponding adjustment is made to the carrying value of the Right-of-use (ROU) asset, or, in the income
statement, where the carrying value of the ROU asset has been fully written down. The ROU asset is recorded in property,
plant and equipment and right-of-use assets (refer to note 5.1).
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
89
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
4.7 Fair value of financial instruments
Classification of financial instruments
Cash and liquid assets and amounts due from financial institutions are carried at cost. As these assets are short
term assets, their cost is considered to approximate their fair value.
The following financial assets and liabilities are also carried at amortised cost:
› Financial instruments;
› Loans and advances;
› Deposits; and
› Other borrowings.
The aggregate net fair value of financial assets and financial liabilities which are carried at amortised cost is:
Financial assets
Financial instruments
Loans and advances
Total financial assets
Financial liabilities
Deposits
30 June 2021
30 June 2020
Carrying
value
$’000
Net fair value
$’000
Carrying
value
$’000
Net fair value
$’000
707,729
725,199
543,611
543,339
5,607,300
5,613,341
5,286,114
5,295,507
6,315,029
6,338,540
5,829,725
5,838,846
4,928,741
4,928,719
4,200,587
4,203,504
Other borrowings including subordinated notes
1,151,053
1,150,973
1,504,191
1,504,191
Total financial liabilities
6,079,794
6,079,692
5,704,778
5,707,695
Fair value hierarchy
The level in the fair value hierarchy of the inputs used in determining the fair values is shown below. The fair value
of these assets is:
Level 1 - inputs that are prices quoted for identical instruments in active markets;
Level 2 - inputs based on observable market data other than those in level 1; and
Level 3 - inputs for which there is no observable market data.
Where the expected maturity is in excess of 12 months, the fair value is discounted to its present value. During the
year, there have been no material transfers between levels of the fair value hierarchy.
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
90
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
2021
Financial assets
Financial instruments
Loans and advances
Financial liabilities
Deposits
Other borrowings including subordinated notes
2020
Financial assets
Financial instruments
Loans and advances
Financial liabilities
Deposits
Other borrowings including subordinated notes
Level 1
value
$’000
Level 2
value
$’000
Level 3
value
$’000
Total
value
$’000
-
-
-
-
-
-
-
-
725,199
-
725,199
-
5,613,341
5,613,341
4,928,719
1,150,973
-
-
4,928,719
1,150,973
543,339
-
543,339
-
5,295,507
5,295,507
4,203,504
1,504,191
-
-
4,203,504
1,504,191
The Group has performed a VaR analysis at note 3.2, Market risk. VaR takes account of all material market
variables that may cause a change in the value of the loan portfolio, being 100% of Level 3 inputs.
5.1 Property, plant and equipment and right-of-use assets
Land and buildings
At revalued amount
Accumulated depreciation
Plant and equipment
At cost
Accumulated depreciation
Right-of-use assets - land and buildings
At cost
Accumulated depreciation
Total property, plant and equipment
30 June 2021
$’000
30 June 2020
$’000
7,351
(6,629)
722
5,433
(4,826)
607
14,938
(4,589)
10,349
11,678
12,890
(8,202)
4,688
5,395
(4,567)
828
16,429
(2,454)
13,975
19,491
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
91
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
Property, plant and equipment accounting policy
Land and buildings
Following initial recognition at cost, land and buildings are carried at a revalued amount, being their fair value
at the date of the revaluation less any subsequent accumulated depreciation on buildings and accumulated
impairment losses. Independent valuations are performed with sufficient regularity to ensure the carrying amount
does not differ materially from the asset’s fair value at the Consolidated Statement of Financial Position date.
Fair value, is determined by reference to market-based evidence, which is the amount for which the assets
could be exchanged between a knowledgeable willing buyer and seller in an arm’s length transaction as at
valuation date.
Any revaluation surplus is credited to the asset revaluation reserve included in the equity section of the
Consolidated Statement of Financial Position, unless it reverses a revaluation decrease of the same asset
previously recognised in the Consolidated Income Statement. Any revaluation deficit is recognised in the
Consolidated Income Statement unless it directly offsets a previous surplus of the same asset in the asset
revaluation reserve.
Plant and equipment and right-of-use (ROU) assets
Plant and equipment and right-of-use assets, including leasehold improvements, are measured at cost less
accumulated depreciation and any impairment in value. The cost of ROU assets correspond to the amount
recognised for the lease liability on initial recognition together with any lease payments made at or before the
commencement date net of any lease incentives received and initial direct costs.
Impairment of property, plant and equipment and right-of-use assets
The carrying values of property, plant and equipment and right-of-use assets are reviewed for impairment when
events or changes in circumstances indicate the carrying value may not be recoverable. For an asset that does
not generate largely independent cash flows, the recoverable amount is determined for the cash-generating unit
to which the asset belongs.
Derecognition of property, plant and equipment and right of use assets
An item of property, plant and equipment or right-of-use asset is derecognised upon disposal or when no
future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on
derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying
amount of the item) is included in the Consolidated Income Statement in the year the item is derecognised.
5.2 Investment property
Land and buildings
At revalued amount
Accumulated depreciation
Total investment property
t
r
o
p
e
R
l
30 June 2021
$’000
30 June 2020
$’000
5,293
(1,492)
3,801
3,801
-
-
-
- -
i
a
c
n
a
n
F
i
92
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
Investment property accounting policy
Land and buildings
Following initial recognition at cost, land and buildings are carried at a revalued amount, being their fair value
at the date of the revaluation less any subsequent accumulated depreciation on buildings and accumulated
impairment losses. Independent valuations are performed with sufficient regularity to ensure the carrying
amount does not differ materially from the asset’s fair value at the Consolidated Statement of Financial Position
date. Fair value, is determined by reference to market-based evidence, which is the amount for which the
assets could be exchanged between a knowledgeable willing buyer and seller in an arm’s length transaction as
at valuation date.
Any revaluation surplus is credited to the asset revaluation reserve included in the equity section of the
Consolidated Statement of Financial Position, unless it reverses a revaluation decrease of the same asset
previously recognised in the Consolidated Income Statement. Any revaluation deficit is recognised in the
Consolidated Income Statement unless it directly offsets a previous surplus of the same asset in the asset
revaluation reserve.
5.3 Intangible assets and goodwill
Year ended 30 June 2021
At 1 July 2020, net of accumulated amortisation
65,152
19,319
84,471
Goodwill
$’000
Software
$’000
Total
$’000
Additions
Disposals
Amortisation
-
-
-
4,282
4,282
-
-
(5,275)
(5,275)
At 30 June 2021, net of accumulated amortisation
65,152
18,326
83,478
At 30 June 2021
Cost (gross carrying amount less impairment)
Accumulated amortisation
Net carrying amount
Year ended 30 June 2020
65,152
19,319
84,471
-
(993)
(993)
65,152
18,326
83,478
At 1 July 2019, net of accumulated amortisation
65,152
Additions
Disposal
Amortisation
-
-
-
At 30 June 2020, net of accumulated amortisation
65,152
19,827
4,425
(59)
(4,874)
19,319
84,979
4,425
(59)
(4,874)
84,471
At 30 June 2020
Cost (gross carrying amount less impairment)
Accumulated amortisation
Net carrying amount
65,152
36,784
101,936
-
(17,465)
(17,465)
65,152
19,319
84,471
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
93
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
Intangibles accounting policy
Intangible assets acquired separately are capitalised at cost and from a business combination are capitalised
at fair value as at the date of acquisition. Following initial recognition, the cost model is applied to the class of
intangible assets. The useful lives of these intangible assets are assessed to be either finite or infinite. Where
amortisation is charged on assets with finite lives, this expense is taken to the Consolidated Income Statement.
Certain costs directly incurred in acquiring and developing software are capitalised and amortised over the
estimated useful life.
Intangible assets are tested for impairment where an indicator of impairment exists and, in the case of indefinite
life intangibles (limited to Goodwill), annually, either individually or at the cash-generating unit level. Useful lives
are also examined on an annual basis and adjustments, where applicable, are made on a prospective basis.
Goodwill is treated as an indefinite life intangible, software and other intangibles. Refer to note 2.4 Expenses for
the useful life of tangible and intangible assets.
Impairment testing of Goodwill
For the purpose of impairment testing, goodwill has been allocated to the Group’s two cash-generating units
(CGU’s) the Banking Business and the Wealth Management Business. These CGU’s represent the lowest level
within the Group at which the goodwill is monitored for internal management purposes. The aggregate carrying
amounts of goodwill allocated to each CGU for the purpose of impairment testing is as follows:
Banking Business
Wealth Management Business
Total goodwill
30 June 2021
$’000
30 June 2020
$’000
40,189
24,963
65,152
40,189
24,963
65,152
The Group’s assessment of goodwill value-in-use exceeds the carrying value allocated to the CGU’s and
included in the financial statements.
The recoverable amounts for each CGU’s value-in-use was determined using cash flow projections from Board
approved financial budgets for the year ending 30 June 2022. Growth rates have been applied from year two
through to year ten. Cash flows are projected by undertaking detailed calculations for each income and expense
category over a five year period and are then extrapolated off the 5th year, which is the lowest point of growth.
An exit value is calculated at the end of 10 years, based on an implied terminal value earnings multiple of 9.7
and 12.0 for the Banking Business and the Wealth Management Business respectively, and a long-term growth
rate not exceeding industry. A post-tax discount rate of 9.9% (14.1% pre-tax) and 8.0% (11.4% pre tax) was used
for the Banking Business and the Wealth Management Business respectively. Certain income categories are
modelled by projecting growth in relevant portfolio balances and the resulting income derived there-from. Other
non-portfolio related income streams and expense categories are modelled by projecting real rates of growth
(above inflation) for each category. Terminal value is determined at year ten using the assumption that the CGU
achieves no real growth above inflation into perpetuity. The growth rates applied do not exceed the long-term
average growth rate for the business which the CGU operates. The discount rate used of 9.9% reflects the
Group’s post-tax nominal weighted average cost of capital, which has been reviewed by externally engaged
advisers and approved by the Board. Average inflation is projected to be 2.2%. The method for determining
value-in-use is consistent with that adopted in the comparative period.
The key assumptions adopted in assessing Banking’s value-in-use are the rate of growth in the balance of the
housing loan portfolio and the outlook for net interest margin (NIM). Taking into account management’s past
experiences and external evidence, the assumptions that have been adopted for both of these components are
considered to be conservative. NIM projections reflect the current low interest rate environment. Management
expects that, over time, these assumptions will be positively exceeded and that any reasonably possible change
to assumptions used in Management’s assessment will not result in impairment.
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
94
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
The key assumption adopted in assessing Wealth Management’s value-in-use is the rate of growth in income
derived from management fee (MF) income. MF income is derived from its activities as the responsible entity for
various Managed Investment Schemes (MIS). MF income derived is directly related to the portfolio balances of
the MIS. Other sources of income for the Wealth Management Business are its Trustee Services divisions. Taking
into account Management’s past experiences and external evidence, the assumptions adopted are considered
reasonable and conservative. Management’s assessment of Wealth Management’s value-in-use exceeds its
carrying value. Any reasonably possible change to assumptions used in Management’s assessment will not result
in impairment.
Goodwill accounting policy
Goodwill on the acquisition of businesses is carried at cost as established at the date of the acquisition of the
business less accumulated impairment losses, if any.
For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash generating units (or
groups of CGU’s) that is expected to benefit from the synergies of the combination.
A CGU to which goodwill has been allocated is tested for impairment annually, or more frequently when there
is an indication that the unit may be impaired. If the recoverable amount of the CGU is less than its carrying
amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the
CGU and then to the other assets of the unit pro rata based on the carrying amount of each asset in the CGU.
Any impairment loss for goodwill is recognised directly in profit or loss. An impairment loss recognised for
goodwill is not reversed in subsequent periods. On disposal of the relevant CGU, the attributable amount of
goodwill is included in the determination of the profit or loss on disposal.
Impairment of subsidiaries accounting policy
Investments in subsidiaries are tested annually for impairment or more frequently if events or changes in
circumstances indicate that the carrying value may not be recoverable. An impairment loss is recognised for the
amount by which the investment’s carrying amount exceeds its recoverable amount (which is the higher of fair
value less costs to sell and value in use). At each balance sheet date, the investments in subsidiaries that have
been impaired are reviewed for possible reversal of the impairment.
5.4 Employee benefits provisions
Balances
Provision for annual leave
Provision for long service leave
Total employee benefits provisions
Due to be settled within 12 months
Due to be settled in more than 12 months
Total employee benefits provisions
Employee benefits accounting policy
30 June 2021
$’000
30 June 2020
$’000
2,006
3,234
5,240
3,879
1,361
5,240
2,194
3,480
5,674
4,304
1,370
5,674
Liabilities for salaries, wages and annual leave are recognised in respect of employees’ service up to the
reporting date. Where settlement is expected to occur within twelve months of the reporting date, the liabilities
are measured at their nominal amounts based on the remuneration rates which are expected to be paid when
the liability is settled. Where settlement is expected to occur later than twelve months from reporting date,
the liabilities are measured at the present value of payments which are expected to be paid when the liability
is settled.
A liability for long service leave is recognised and measured at the present value of expected future payments
to be made in respect of services provided up to the reporting date. Consideration is given to expected future
wage and salary levels, experience of employee departures and periods of service.
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Contributions are made by the Group to employee superannuation funds and are charged as expenses
when incurred.
95
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
5.5 Share capital
Issued and paid up ordinary shares
Movements in ordinary share capital
Opening balance
Shares issued pursuant to the
- Group employee share scheme
- Executive long term incentive plan
30 June 2021
$’000
30 June 2020
$’000
208,196
152,775
30 June 2021
30 June 2020
Number of
shares
Amount
$’000
Number of
shares
Amount
$’000
92,008,862
152,775 91,040,545
148,707
21,853
34,063
84
167
18,885
41,310
88
170
- Dividend reinvestment plan
307,239
1,397
908,122
3,810
- Institutional placement and entitlement offer
7,274,502
31,280
- Retail entitlement offer
5,628,573
24,203
- Less: Share issue transaction costs, net of tax
-
(1,710)
-
-
-
-
-
-
Closing balance
Terms and conditions
105,275,092
208,196 92,008,862
152,775
Ordinary shares have the right to receive dividends as declared from time to time and, in the event of a winding
up of the Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number
of shares and amounts paid up on the shares held. Ordinary shares entitle their holder to one vote per share,
either in person or by proxy at meetings of the Company.
The Company does not have authorised capital or par value in respect of its issued shares.
The Group offers share based remuneration, refer to note 7.3 and the Remuneration Report for further
information regarding these arrangements.
6.1 Income tax expense, current and deferred tax balances
The major components of income tax expense /(benefit) are:
Income tax expense
Current income tax charge
Adjustment in respect of current income tax of previous years
Adjustments in respect of deferred income tax of previous years
Adjustments in respect of equity / goodwill
Relating to origination and reversal of temporary differences
Total income tax expense
t
r
o
p
e
R
l
A reconciliation between tax expense and accounting profit
before income tax multiplied by the Group’s applicable income
tax rate is as follows:
Income tax expense attributable to:
Accounting profit before income tax
The income tax expense comprises amounts set aside as:
i
a
c
n
a
n
F
i
96
30 June 2021
$’000
30 June 2020
$’000
14,794
14,343
78
(10)
611
244
15,717
117
(141)
50
(1,443)
12,926
52,058
42,986
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
Provision attributable to the current year at the statutory rate of 30%,
being:
- Prima facie tax on accounting profit before tax
15,617
12,896
30 June 2021
$’000
30 June 2020
$’000
- Under / (over) provision in prior year
Expenditure not allowable for income tax purposes
Other
Income tax expense reported in the consolidated income
statement
Total income tax expense
Weighted average effective tax rates
Deferred income tax relates to the following:
Deferred tax assets
Employee entitlements
Provisions
Doubtful debts
Other
Total deferred tax assets
Current tax receivable
Total tax assets
Deferred tax liabilities
Financial assets at fair value
Property, plant and equipment
Other
Total deferred tax liabilities
Current tax payable
Total tax liabilities
63
36
1
(24)
31
23
15,717
12,926
15,717
30.2%
12,926
30.1%
1,572
221
1,662
2,445
5,900
3,996
9,896
68
2,387
347
2,802
-
2,802
1,702
227
1,990
1,367
5,286
-
5,286
68
1,342
534
1,944
2,306
4,250
Movements in deferred tax balances
Opening balance
(Charged)/credited to income statement
Credited/(charged) to equity
Adjustments for deferred tax of prior years
Deferred tax assets
Deferred tax liabilities
30 June 2021
$’000
30 June 2020
$’000
30 June 2021
$’000
30 June 2020
$’000
5,286
13
611
(10)
4,133
1,092
61
-
1,944
858
-
-
2,367
(564)
-
141
Closing balance
5,900
5,286
2,802
1,944
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
97
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
Taxation accounting policy
Income tax expense is recognised in the Consolidated Income Statement, except to the extent that it relates
to items recognised directly in other comprehensive income, in which case it is recognised in the Consolidated
Statement of Comprehensive Income. Income tax expense on the profit or loss of the period comprises current
tax and deferred tax.
Current tax payable
Current tax payable is the expected tax payable on the taxable income for the financial year using tax rates that
have been enacted, and any adjustment to tax payable in respect of previous years.
Deferred tax
Deferred income tax is provided on all temporary differences at reporting date. Temporary differences are
calculated at each reporting date as the difference between the carrying amount of assets and liabilities for
financial reporting purposes and their tax base.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
› Where the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability
in a transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and
› When the taxable temporary differences associated with the investments in subsidiaries and the timing of the
reversal of the temporary differences can be controlled and it is probable that the temporary differences will
not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax
assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which
the deductible temporary differences and the carry forward of unused tax assets and unused tax losses can be
utilised except:
› When the deferred income tax asset relating to the deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time of the
transaction, affect neither the accounting profit nor the taxable profit and loss; and
› When the deductible temporary differences are associated with investments in subsidiaries, in which case
a deferred tax asset is only recognised to the extent that it is probable that the temporary differences will
reverse in the foreseeable future and taxable profit will be available against which the temporary differences
can be utilised.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current
tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable
entity and the same taxable authority.
The Group undertakes transactions in the ordinary course of business where the income tax treatment requires
the exercise of judgement. The Group estimates its tax liability based on its understanding of the tax law.
Tax consolidation
The Group has elected to be taxed as a single entity under the tax consolidation regime. The head company
is MyState Limited. The members of the Group have entered into a tax sharing agreement that provides for
the allocation of income tax liabilities among the entities should the head entity default on its tax payment
obligations. No amounts have been recognised in the financial statements in respect of this agreement on the
basis that the possibility of default is remote.
The Company and the controlled entities in the tax consolidated group continue to account for their own
current and deferred tax amounts. The Company has applied the separate tax payer within group approach
in determining the appropriate amount of current taxes and deferred taxes to allocate to members of the tax
consolidated group.
In addition to its own current and deferred tax amounts, the Company also recognises the current tax liabilities
(or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from
controlled entities in the tax consolidated group.
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
98
Any difference between the amounts assumed and amounts receivable or payable under the tax funding
agreement are recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities.
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
7.1 Parent entity information
The accounting policies of the parent entity, which have been applied in determining the financial information
shown below, are the same as those applied in the consolidated financial statements. Refer to note 1 and policy
notes within the financial statements for a summary of the significant accounting policies relating to the Group.
Statement of Financial Position
Assets
Cash and liquid assets
Other receivables
Related party receivables
Investments in subsidiaries
Current and deferred tax assets
Total assets
Liabilities
Other liabilities
Other borrowings
Related party payables
Tax liabilities
Employee benefits provisions
Total liabilities
Net assets
Equity
Share capital
Retained earnings
Reserves
Total equity
Financial performance
Profit after income tax for the year
Other comprehensive income
Total comprehensive income
30 June 2021
$’000
30 June 2020
$’000
318
965
25,000
321,392
5,510
1,040
690
3,465
262,613
661
353,385
268,469
2,536
25,000
2,921
32
457
30,946
565
-
11
2,368
394
3,338
322,239
265,131
314,124
258,702
7,071
1,044
5,738
691
322,239
265,131
12,841
28,130
-
-
12,841
28,130
The parent entity has not entered into any guarantees and does not have any contingent liabilities as at 30 June
2021 (30 June 2020: nil).
Transactions between the Company and the consolidated entities principally arise from the provision of
management and governance services. All transactions with subsidiaries are in accordance with regulatory
requirements, the majority of which are on commercial terms. All transactions undertaken during the financial
year with the consolidated entities are eliminated in the Consolidated Financial Statements. Amounts due from
and due to entities are presented separately in the Statement of Financial Position of the Company except where
offsetting reflects the substance of the transaction or event.
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
99
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
7.2 Controlled entities and principles of consolidation
Details of the Group’s material subsidiaries at the end of the reporting period are as follows.
Significant subsidiaries
MyState Bank Limited
TPT Wealth Limited
Principal activities
Banking
Wealth Management
Connect Asset Management Pty Ltd
Manager of Securitisation Vehicles
Australia
Basis of consolidation accounting policy
Country of
Incorporation
Ownership
Interest
Australia
Australia
100%
100%
100%
The consolidated financial statements incorporate the financial statements of the Company and entities
(including structured entities) controlled by the Company and its subsidiaries. Control is achieved when the
Company:
› Has power over the investee;
› Is exposed, or has rights, to variable returns from its involvement with the investee; and
› Has the ability to use its power 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 these three elements of control.
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, including:
› The size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other
vote holders;
› Potential voting rights held by the Company, other vote holders or other parties;
› Rights arising from other contractual arrangements; and
› Any additional facts and circumstances that indicate that the Company has, or does not have, the current
ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at
previous shareholders’ meetings.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the
Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed
of during the year are included in the Consolidated Income Statement and Other Comprehensive Income from
the date the Company gains control until the date when the Company ceases to control the subsidiary.
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 subsidiaries 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 subsidiaries to bring their accounting
policies in 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.
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
100
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
7.3 Related party disclosures
The ultimate parent entity and controlling entity is MyState Limited. Balances and transactions between the
Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation
and are not disclosed in this note. Details of transactions between the Group and other related parties are
disclosed in the following paragraphs.
Managed Investment Schemes
Within the Group, TPT Wealth Limited (TPT) is a Responsible Entity for Managed Investment Schemes (Funds)
and, accordingly, has significant influence over their activities. TPT receives management fees from these Funds.
TPT also pays expenses of the Funds for which it is reimbursed. TPT and the Company have also invested in
these Funds and receive distributions on these investments. These investments are made on the same terms and
conditions that apply to all investors in these Funds. Details of these transactions and balances are as follows:
Consolidated
TPT
30 June
2021
$’000
30 June
2020
$’000
30 June
2021
$’000
30 June
2020
$’000
Management fees received
9,412
10,315
9,412
10,315
Balance of investment held at year end
2,553
2,297
2,509
Distributions received from managed funds
(35)
190
(23)
316
161
The Funds have:
› Accepted money on deposit from Directors and Executives or entities associated with Directors and
Executives at prevailing Fund rates and conditions;
› Loaned money to MyState Bank, in the form of term deposits and negotiable certificates of deposit, totalling
$2.55M (2020: $2.30M); and
› Invested in the ConQuest Trusts Residential Mortgage Backed Securities Program in the form of Class A and
B notes totalling $28.94M (2020: $35.59M).
These deposits are made on the same terms and conditions that apply to all similar transactions.
Key Management Personnel
Individual Directors and Executive compensation disclosures
Information regarding individual Directors, Executive compensation, and equity instruments disclosures,
as required by the Corporations Regulation 2M.2.03, is provided in the Remuneration Report section of the
Directors’ report. Disclosure of the compensation and other transactions with key management personnel (KMP)
is required pursuant to the requirements of Australian Accounting Standard AASB 124 Related Party Disclosures.
The KMP of the Group is comprised of the Non Executive Directors, Managing Director and Chief Executive
Officer and certain Executives.
Key management personnel compensation
The key management personnel compensation comprised:
Short-term employee benefits
Post employment benefits
Share-Based payment (i)
Termination benefits
30 June 2021
$’000
30 June 2020
$’000
4,611
3,722
295
473
-
299
220
-
(i) These amounts are estimates of compensation and include a portion that will only vest to the Managing Director or Executive when
certain performance criteria are met or a ‘Capital Event’ occurs. The fair value of shares is calculated at the date of grant and is allocated
to each reporting period over the period from grant date to vesting date. The value disclosed is the portion of the fair value of the shares
allocated to this reporting period.
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
101
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
8.1 Contingent liabilities and expenditure commitments
MSB has provided guarantees to third-parties in order to secure the obligations of customers. The range of
situations in which guarantees are given include:
› Local Government Authorities, to secure the obligations of property and sub-divisional developers to
complete infrastructure developments;
› Local Government Authorities, Schools and other building owners, to secure the obligations of building
contractors to complete building works;
› Landlords, to secure the obligations of tenants to pay rent; and
› CUSCAL, to secure payroll and direct debit payments processed by CUSCAL on behalf of customers.
Customer commitments
Loans approved but not advanced to borrowers
Undrawn continuing lines of credit
Performance guarantees
Total customer commitments
30 June 2021
$’000
30 June 2020
$’000
134,076
62,458
3,858
77,755
63,443
4,672
200,392
145,870
Guarantees are issued in accordance with approved Board policy. Those guarantees over $10,000 are required
to be secured. In the event that a payment is made under a guarantee, the customer’s obligation to MSB is
crystallised in the form of an overdraft or loan.
TPT Wealth Limited ceased being a non-broker participant in the Clearing House Electronic Sub Register System
operated by the Australian Securities Exchange during the 2021 financial year. As such, this company no longer
maintains a deposit with Bendigo and Adelaide Bank Limited (2020: $1,000,000) as collateral for the guarantee
on the settlement account.
Estate Administration
TPT Wealth Limited acts as executor and trustee for a significant number of trusts and estates. In this capacity,
this company has incurred liabilities for which it has a right of indemnity out of the assets of those trusts and
estates. Accordingly, these liabilities are not reflected in the financial statements.
Other contracted commitments for expenditure on plant and equipment as at the reporting date are for only
minimal amounts.
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
102
MyState Limited - Annual Report 2021
Notes to the Consolidated Financial Statements (continued) for the year ended 30 June 2021
8.2 Remuneration of auditors
During the financial year, the following fees which are shown exclusive of GST claimed were paid or payable for
services provided by the auditor of the Group, Wise Lord & Ferguson:
Audit services
Audit of the financial statements of the consolidated entities
Total remuneration for audit services
Audit related services
Assurance related services
Audit of loans and other services to the securitisation program
Total remuneration for audit related services
Other non-external audit related services
Other services
Total remuneration for non-audit related services
Total remuneration for services provided
30 June 2021
$’000
30 June 2020
$’000
401
401
50
6
56
10
10
467
390
390
46
8
54
64
64
508
8.3 Events subsequent to balance date
On 9 August 2021, MyState Limited announced that Managing Director and Chief Executive Officer, Melos
Sulicich, will be retiring on 31 December 2021. The Company has commenced the process to appoint a
successor. There were no other matters or circumstances that have arisen since the end of the year which
significantly affected or may significantly affect the operations of the Group, the results of those operations, or
the state of affairs of the Group in future financial periods.
8.4 Other significant accounting policies, new accounting standards
and disclosures
The principal accounting policies, which are consistent with those applied in the comparative period unless
otherwise stated, that have been adopted in the preparation of the financial report are set out in this section and
the preceding sections.
(i) Other assets
Other assets comprise accounts receivable, accrued income and prepayments. Accounts receivable are initially
recorded at the fair value of the amounts to be received and are subsequently measured at amortised cost using
the effective interest rate method, less any provision for impairment loss.
(ii) Other liabilities
Other liabilities comprise accounts payable and accrued expenses and represent liabilities for goods and
services received by the Group that remain unpaid at the end of the reporting period. The balance is recognised
as a current liability with the amounts normally paid within 30 days of the recognition of the liability.
(iii) New and revised accounting standards
The Group has adopted the following new standards and amendments to standards:
› AASB 2018-7 Amendments to Australian Accounting Standards – Definition of Material
› AASB 2019-1 Amendments to Australian Accounting Standards – References to the Conceptual Framework
› AASB 2019-2 Amendments to Australian Accounting Standards
› AASB 2019-3 Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Adoption of the above has not resulted in any changes in how the Group currently applies accounting standards.
103
MyState Limited - Annual Report 2021
Directors’
Declaration
for the year ended 30 June 2021
In accordance with a resolution of the Directors of MyState Limited, we state that:
1. In the opinion of the Directors:
(a) The financial statements and notes of the Group set out on pages 63 to 103 are in accordance with the
Corporations Act 2001, including:
(i) Giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its performance
for the year ended on that date; and
(ii) Complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements; and
(b) There are reasonable grounds to believe that MyState Limited will be able to pay its debts as and when
they become due and payable.
2. The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 by
the Chief Executive Officer and Chief Financial Officer for the financial year ended 30 June 2021.
3. The financial statements and notes also comply with International Financial Reporting Standards as disclosed in
note 1.2.
This declaration is made in accordance with a resolution of the Directors.
On behalf of the Board
Miles Hampton
Chairman
Melos Sulicich
Managing Director and Chief Executive Officer
Hobart, dated 20 August 2021.
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
104
MyState Limited - Annual Report 2021
Independent
Auditor’s Report
IInnddeeppeennddeenntt AAuuddiittoorr’’ss RReeppoorrtt
To the Shareholders of MyState Limited
RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
OOppiinniioonn
We have audited the financial report of MyState Limited (the Company) and its subsidiaries (the Group), which
comprises the consolidated statement of financial position as at 30 June 2021, the consolidated income statement,
the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting
policies and other explanatory information and the Directors’ declaration of the Company.
In our opinion the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
I.
II.
giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial performance
for the year then ended; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
BBaassiiss ffoorr OOppiinniioonn
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 and Ethical Standards Board’s APES 110 Code of
Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia; and
we have fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
KKeeyy AAuuddiitt MMaatttteerrss
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial report of the current period. These matters were addressed in the context of our audit of the financial report
and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter
below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Financial Report
section of our report, including in relation to these matters. Accordingly, our audit included the performance of
procedures designed to respond to our assessment of the risks of material misstatement of the financial statements.
The results of our audit procedures, including the procedures performed to address the matters below, provide the
basis for our audit opinion on the accompanying Financial Report.
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Liability limited by a scheme approved under Professional Standards Legislation.
105
1st Floor 160 Collins Street, Hobart TAS 7000
GPO Box 1083 Hobart TAS 7000
03 6223 6155
Move Forward
email@wlf.com.au
www.wlf.com.au
78
MyState Limited - Annual Report 2021
Independent Auditor’s Report (continued) for the year ended 30 June 2021
11.. OOppeerraattiioonn ooff IITT ssyysstteemmss aanndd CCoonnttrroollss
Key audit matter
How our audit addressed the matter
This is a key audit matter because a significant part of
the Group’s financial reporting process is heavily reliant
on IT systems with automated processes and controls
for the capture, processing, storage and extraction of
information.
There have been substantial changes to the Group’s IT
landscape in the 2021 financial year and it has been
essential to ensure appropriate user access and change
management protocols exist and are being observed.
These protocols are important because they ensure that
access and changes to IT systems and related data are
made and authorised in an appropriate manner.
These key controls mitigate potential fraud or error
because of change to an application or underlying data.
MyState has outsourced arrangements for a number of
key IT processes.
We focus our audit on those IT systems and controls that are
significant to the Group’s financial reporting process.
We assessed and tested the design and operating effectiveness
of the Group’s IT controls, including those over user access and
change management as well as data reliability and integrity.
This involved assessing:
Technology control environment and governance;
•
• Change management processes
for
software
applications;
• Access controls designed to enforce segregation of
•
duties;
System development, reviewing the appropriateness of
management’s testing and implementation controls;
• We carried out direct tests of the operation of key
programs to establish the accuracy of calculations, the
correct generation of reports, and to assess the correct
operation of automated controls and technology-
dependent manual controls; and
Third party reports on IT systems and controls.
•
For outsourced providers, we obtain assurance from third party
auditors on the design and operating effectiveness of controls.
22.. RReeccooggnniittiioonn aanndd MMeeaassuurreemmeenntt –– IInnttaannggiibbllee AAsssseettss
Refer to Note 5.2 ‘Intangible assets and goodwill’
Key audit matter
How our audit addressed the matter
The recognition and measurement of intangible assets
is a key audit matter because of the Group’s ongoing
investment in new systems and the judgement required
to:
To address the risk of material misstatement and obtain
following
sufficient audit evidence, we performed
procedures over intangible assets:
the
• We evaluated and tested the Group’s processes for
• Recognise when costs incurred transition from
recognising intangible assets;
research to development; and
• Assess the useful life of IT assets.
The Group continues to enhance its IT systems and
online servicing capability. During the financial year, a
number of strategic projects were developed and
implemented. New systems were researched, designed,
projects commenced and completed. A review of the
useful life of IT systems was undertaken.
There is also a high level of judgement required in the
Group’s annual testing of impairment of goodwill with
significant forward looking assumptions used in the
valuation models.
• We reviewed amounts capitalised
for significant
projects currently being completed by the group. This
included a retrospective assessment of amounts
capitalised in early stages of significant projects;
• We reviewed the Group’s processes for considering the
completion of projects and commencement of
amortisation;
• We ensured intangible assets made redundant through
new projects were written off;
• We reviewed the useful lives applied to IT systems to
ensure they are reasonable; and
• We reviewed the goodwill valuation model and forward
looking assumptions applied to each CGU of the Group.
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
106
79
MyState Limited - Annual Report 2021
Independent Auditor’s Report (continued) for the year ended 30 June 2021
33.. PPrroovviissiioonn ffoorr IImmppaaiirrmmeenntt oonn LLooaannss aanndd AAddvvaanncceess
Refer to Note 4.3 ‘Loans and advances’
Key audit matters
How our audit addressed the matter
To address the risk of material misstatement and obtain
sufficient audit evidence, we performed
following
procedures over the provisions for impairment on loans and
advances:
the
• Assessed the governance oversight;
• Reviewed and tested the calculation of the expected
credit loss model, including the specific provision,
collective provision for impairment and management
overlays;
• Considered the assumptions within the management
•
•
overlays;
Ensured the methodology for write off of debt was
consistent with prior periods;
Tested the accuracy of the data used to calculate the
provision;
• Reviewed a sample of current arrears balances and
reviewed follow up procedures, including whether
specific
in arrears had been
appropriately provided for; and
financial assets
• Reviewed management assessments of provision for
loans that exceed specific thresholds.
The provision for impairment on loans and advances is
a key audit matter because the loans and advances
balance is significant to the Group and the significant
judgement inherent in the provisioning model. The
provisioning model is determined in accordance with
the requirements of AASB 9 Financial Instruments.
Provision for impairment of loans and advances that
exceed specific thresholds are individually assessed by
management with reference to future cash repayments
and proceeds from the realisation of security.
Other loans that do not have an individually assessed
provision are assessed on a portfolio basis with loans
with similar risk characteristics.
Key areas of judgement included:
•
•
•
•
The design of the expected credit loss model
used;
The selection of assumptions adopted such as
the probability of default, loss given default,
looking
exposure at default and forward
information, and the impact of COVID-19 on
these assumptions;
The design of the management overlays
applied in response to significant economic
events; and
The stress test modelling undertaken to verify
provisioning levels.
OOtthheerr IInnffoorrmmaattiioonn
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 2021, 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 accordingly 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.
RReessppoonnssiibbiilliittiieess ooff tthhee DDiirreeccttoorrss ffoorr tthhee FFiinnaanncciiaall RReeppoorrtt
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.
t
r
o
p
e
R
l
80
i
a
c
n
a
n
F
i
107
MyState Limited - Annual Report 2021
Independent Auditor’s Report (continued) for the year ended 30 June 2021
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.
AAuuddiittoorr’’ss RReessppoonnssiibbiilliittiieess ffoorr tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
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 fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• 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.
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 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, related safeguards.
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
81
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
108
MyState Limited - Annual Report 2021
Independent Auditor’s Report (continued) for the year ended 30 June 2021
adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
RReeppoorrtt oonn tthhee RReemmuunneerraattiioonn RReeppoorrtt
OOppiinniioonn oonn tthhee RReemmuunneerraattiioonn RReeppoorrtt
We have audited the Remuneration Report included in the Directors' Report (pages 40 to 59 of this Annual Report)
for the year ended 30 June 2021.
In our opinion, the Remuneration Report of MyState Limited, for the year ended 30 June 2021 complies with section
300A of the Corporations Act 2001.
RReessppoonnssiibbiilliittiieess
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.
DDAANNNNYY MMCCCCAARRTTHHYY
Partner
Wise Lord & Ferguson
Chartered Accountants
Date: 20 August 2021
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
82
109
MyState Limited - Annual Report 2021
Information relating
to shareholders
Range of Units (Snapshot) as at 23 August 2021
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 Over
Rounding
Total
Total holders
Units
% Units
55,778
3,198
1,161
1,161
52
22,964,462
8,065,271
8,212,094
25,351,017
40,694,832
61,350
105,287,676
21.81
7.66
7.80
24.08
38.65
0.00
100.00
Unmarketable Parcels
Minimum $ 500.00 parcel at $ 5.4000 per unit
Minimum
Parcel Size
93
Holders
397
Units
9,699
Selection Criteria: Hide Unmarketable Parcels: Shown Control Account: Included
Top Holders (Grouped) as at 23 August 2021
Rank Range
Total holders
Units
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
n
o
i
t
a
m
r
o
f
n
I
l
r
e
d
o
h
e
r
a
h
S
110
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
SELECT MANAGED FUNDS LTD
MR BRIAN DAVID FAULKNER
MR KENNETH JOSEPH HALL
Continue reading text version or see original annual report in PDF format above