OFX Group Limited Annual Report 2016

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FY2016 Annual Report · OFX Group Limited

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OUR FUTURE IS CLEAR

ANNUAL REPORT 2016

OzForex Group Limited
ACN 165 602 273

CONTENTS
02 WE ARE OFX...
04

OFX PROVIDES GLOBAL
PAYMENT SOLUTIONS

06 OUR STRATEGY
07 BRAND AND MARKETING
07 TECH STORY
08 OUR VALUES
10 OUR KEY ACHIEVEMENTS

12 FINANCIAL HIGHLIGHTS
13 CHAIRMAN’S LETTER
16 CEO’S LETTER
18 EXECUTIVE TEAM
21

2016 DIRECTORS’ REPORT
AND FINANCIAL REPORT
89 SHAREHOLDER INFORMATION
91 CORPORATE INFORMATION

WHATEVER THE REASON
FOR AN INTERNATIONAL
MONEY TRANSFER, WE
UNDERSTAND HOW
IMPORTANT IT IS TO EACH
CUSTOMER. WE TREAT
EVERY TRANSFER LIKE
IT’S THE ONLY THING THAT
MATTERS TO US.

ANNUAL GENERAL MEETING
4PM ON WEDNESDAY 3 AUGUST 2016

OZFOREX GROUP LIMITED

ACN 165 602 273

LEVEL 19, 60 MARGARET STREET

SYDNEY NSW 2000

ANNUAL REPORT 2016

WE ARE OFX...

ESTABLISHED SINCE
1998, OFFERING
BANK TO BANK
INTERNATIONAL MONEY
TRANSFER SERVICES

FINTECH GROWTH
COMPANY WITH
PREDOMINATELY ONLINE
TRANSACTIONS AND
24/7 PHONE SUPPORT

SPECIALISING IN
TRANSACTION SIZES OVER
$10K FOR SMALL‑MEDIUM
BUSINESSES AND HIGH NET
WORTH CUSTOMERS

14M

OPPORTUNITY
TO REACH
14M HOUSEHOLDS
IN THE US ALONE

DOUBLING REVENUE
OVER THE NEXT
THREE YEARS THROUGH
ACCELERATE STRATEGY

02 OZFOREX GROUP

Our customer, her story...
MAINTAINING A HARD‑EARNED HOME FROM HOME

After spending many winters skiing
in Chamonix, France, Martha and her
husband decided to buy property there.

“Initially, I was frustrated with the cost
of wiring money to France. It took a long
time, the exchange rate was poor, and
the transfer fees were large. There had

to be something better available online –
that’s how I found OFX.

OFX has excellent rates and you know
exactly how much of your hard-earned
money will arrive at your bank account.
Plus, the wire fees are more than fair –
it’s a bargain.”

ANNUAL REPORT 2016

OFX
PROVIDES GLOBAL
PAYMENT SOLUTIONS

San Francisco
San Francisco

Toronto
Toronto

London
London

OFX Toronto
processing payments

OFX London
processing payments

PAYMENT
PROCESSING

OFX Sydney
processing payments

How OFX works as a business:

The client is called by OFX,
identified and their reason
for transfer evaluated.

An electronic verification
(EV) check is performed;
if further ID is required,
it is requested and vetted.

Transfer is booked and
currency is purchased by OFX
through a panel of wholesale
foreign exchange providers.

OFX covers foreign
exchange market exposure
via peer to peer netting and
clears residual balances.

04 OZFOREX GROUP

San Francisco

Toronto

London

Hong Kong

How OFX disrupts:

Standard rate – the
rate banks and other
providers ordinarily
give to customers.

OFX rate – the
rate OFX provides
customers, with a
small margin taken.

Interbank rate –
the rate banks
give each other to
swap currency.

Up to 85% saving
on average.

Average margin
rate taken by
OFX – 0.55%.

Sydney

Auckland

How OFX works as a business:

Global payments made locally:

A client registers and makes a
transfer through our online platform.

They transfer funds from their
bank account into a local OFX bank
account in that country.

OFX then transfers the funds from
our local bank account within the
country they are sending money to.

ANNUAL REPORT 2016

OUR STRATEGY

In August 2015, we announced that we would
double revenue within the next three years.
In order to deliver our vision and achieve this goal,
we have implemented the Accelerate Strategy,
which has three core enablers at its heart:
Brand and Marketing, Technology and People.

06 OZFOREX GROUP

BRAND AND MARKETING

We’re moving from seven
independent brands to
a single global brand,
OFX. We have already
launched OFX in Australia
and are rolling the brand
out globally.

•

Brand differentiation – stand out versus our competitors

• Efficiency – team productivity, and ability to diversify media

• More identifiable to customers moving markets

TECH STORY

We’re a disruptor in the Financial Services industry – the original Australian Fintech. We continue
to successfully merge the finance and technology world to drive innovation, which is fundamental
to deliver on customer expectations, and continue to disrupt.

VELOCITY OF
FEATURES DELIVERED

FY15

FY16

FY17

Technology and people are the key enablers for
our business. Over the last six months, we have
brought product and technology together with
dedicated product teams, and implemented a
technology restructure to ensure that we remain
agile and deliver successfully on our vision.

Our key technology investments involve moving
production and product development to Amazon
Web Services, enabling better business decisions
through big data, exploiting global cloud‑based
phone and call centre solutions and investments
in our new websites.

ANNUAL REPORT 2016

number of features deliveredOUR VALUES

OUR PEOPLE

The People and Culture team helps to ensure that our more than 270 employees achieve their
best self. New office space in Sydney, Toronto and Auckland has seen a dramatic increase
in enjoyment and productivity, together with being a very attractive element of our overall
employee value proposition. People and Culture initiatives such as Elevate, which focuses on
wellness and overall OFX experience; the Good Vibes Committee, which delivers fun social
occasions; and training, reward and recognition programs linked closely to our values ensure
that OFX continues to attract and retain the highest calibre of employees. A large element of the
OFX culture continues to be driven by diversity of gender (over 40% of our business is supported
by women) and nationality (47 different nationalities ensure innovative thinking and customer
empathy) alongside the values shared by everyone at OFX.

08 OZFOREX GROUP

PUSH
BOUNDARIES
THERE’S ALWAYS A SMARTER
WAY. FIND IT. USE IT. WIN.

GSD
WE ARE SELF STARTERS
AND TEAM FINISHERS.

ALWAYS KEEP
LEARNING
GROW YOUR EXPERTISE.
SHARE IT FREELY.

WE’RE BETTER
TOGETHER
UNDERSTAND INTUITIVELY,
DEFINE ARTICULATELY AND
SOLVE JOINTLY.

INSPIRE CUSTOMER
CONFIDENCE
YOUR COMMITMENT TO
THEM WILL EARN THEIR
COMMITMENT TO US.

ANNUAL REPORT 2016

OUR KEY ACHIEVEMENTS

Launch of the
Accelerate Strategy

PEOPLE:
Richard Kimber,
Chief Executive Officer.

PEOPLE:
Kirsten Pollard,
Head of People and Culture.
Maria Loyez,
Chief Marketing Officer.
Adam Smith,
Chief Operating Officer.

TECHNOLOGY:
Toronto network
upgrade.

April
2015

10 OZFOREX GROUP

TECHNOLOGY:
Mobile app launch.

PEOPLE:
Karin Visnick,
Acting Head of
North America.

TECHNOLOGY:
Xero integration.

MARKETING:
Web analytics integration
with Google stack.
OFX brand positioning
and tone of voice.
Programmatic display
activity launched.
Set up content and
social team.

MARKETING:
Lower minimum
transaction spend.
OFX brand identity
finalised.

October
2015

PEOPLE:
Neville Lacey,
Head of UK and Europe.
New offices, Toronto.

PEOPLE:
Craige Pendleton‑Browne,
Chief Technology Officer.
New offices, Sydney.

PEOPLE:
Ken Wills, Head of Canada.

TECHNOLOGY:
Sydney network upgrade.
OFX.com website launch.
Partner currency widgets.
Corporate onboarding
customer due diligence (CDD).
OFX.com running on
Amazon Web Services.

TECHNOLOGY:
Big data
warehouse.

March
2016

MARKETING:
Weekend trading.

TECHNOLOGY:
Lifesize video
conferencing.

MARKETING:
Proprietary quantitative
study in field to determine
market sizing and
consumer need.
Refreshed consumer
focused public relations.
Internal roll‑out of brand.
Rebrand to OFX
in Australia.

ANNUAL REPORT 2016

FINANCIAL HIGHLIGHTS

UNDERLYING EBITDA ($M)

UNDERLYING NPAT ($M)

NET OPERATING INCOME ($M)

2014

2015

2016

28.3

34.5

36.1

2014

2015

2016

20.1

24.3

23.9

2014

2015

2016

72.6

90.1

103.9

15%

ACTIVE CLIENTS

TRANSACTIONS

TURNOVER ($B)

2014

2015

2016

Macquarie became a
51% shareholder.

Toronto office opened
and CanadianForex
brand launched.

Established first
international payments
solution with Macquarie.

Annual international
payments transaction
turnover exceeded
$1 billion.

London office
opened and UKForex
brand launched.

International
payments services
offered 24 hours a
day, 5 days a week.

120,500

142,500

150,900

2014

2015

2016

581,100

702,800

784,200

2014

2015

2016

13.6

16.6

19.6

12%

18%

Annual international payments
transaction turnover exceeded
$7 billion.

Hong Kong office opened and
ClearFX brand launched.

San Francisco office opened
and USForex brand launched.

Established international
payment solution with
Travelex in the UK.

Funds associated
with Accel Partners
and The Carlyle
Group became
shareholders.

Launched Macquarie
International Money
Transfers service
for Macquarie staff
and retail clients
in Australia.

OFX brand
launched.

OzForex Group Limited
publicly listed on the
Australian Stock Exchange.

40% GROWTH
IN ACTIVE CLIENTS SINCE ASX LISTING.

0
0
0
0
5
1

0
0
0
0
0
1

0
0
0
0
5

150,900 ACTIVE CLIENTS
HAVE TRUSTED US WITH THEIR INTERNATIONAL TRANSFERS IN THE PAST 12 MONTHS.

Year

s
t
n
e

i
l

c
e
v

i
t
c
A

12 OZFOREX GROUP

CHAIRMAN’S LETTER

PETER WARNE
CHAIRMAN

Dear shareholder

The past year has
been one of transition
for the Company and,
whilst we have once
again delivered strong
results, we have
also weathered our
challenges well.

2016 RESULTS

OFX is the leading international payments business
in Australia and New Zealand, and this position
was further cemented during the year. We have
demonstrated our ability to scale in this market,
and the opportunity to penetrate this market further
remains significant. Our newest geography, the
United States, is also experiencing growth, and
we continue to expect that this market will be our
largest future market opportunity.

OFX passed a significant milestone in delivering net
operating income of $103.9million, up 15% on the
previous year. We also grew active clients by 6% to
150,900. OFX sent money to almost 200 countries on
behalf of its customers. Last year, our turnover grew
to $19.6billion.

Notwithstanding our final outcome we did miss the
EBTDA guidance we gave at the Annual General
Meeting, and we updated that guidance in February
with a slightly reduced guidance for the full year,
which was ultimately delivered. This was due to
factors both within and outside of our control,
principally during the third quarter. Subsequently,
the factors within our control have been addressed,
and we saw a more positive fourth quarter to the
year which enabled us to deliver full year results
within the reforecast we provided. As a consequence,
Executives gave up their short‑term incentive bonus,
as the outcome did not meet the hurdle rate.

During the third quarter, the Company was faced
with an unsolicited takeover bid in the form of a
preliminary, non‑binding, indicative conditional
proposal from Western Union. After careful
consideration, the Board agreed to grant Western
Union access to exclusive due diligence. In the end,
this process took a great deal longer than expected
and did not result in a successful transaction. The
investment of time and the significant distraction
created by this process cannot be underestimated.
It was undoubtedly a factor that led to a softer third
quarter performance. The Board acknowledges the
enormous commitment shown by the Executive
Team during the process.

THE BOARD AND THE EXECUTIVE TEAM

The Board welcomed Richard Kimber as its new CEO
to OFX at the beginning of June last year. Richard
has 25 years of diverse global leadership experience
that has included several chief executive and
board roles in the financial services and technology
sectors and has extensive experience in consumer
financial services, marketing, search and social
media, as well as capital markets.

Richard very quickly went on to strengthen the OFX
Executive Team with a number of key appointments.

The team was boosted with the appointment of
Maria Loyez, Chief Marketing Officer, Adam Smith
joined as Chief Operating Officer to lead the global
operations and Kirsten Pollard was appointed as
Head of People and Culture.

Craige Pendleton‑Browne was appointed as Chief
Technology Officer and brings a wealth of experience
in the technology sector, in particular in software
development. He has rapidly transformed the
technology team, and it is pleasing to see the velocity
of delivery already ramping up under Craige’s leadership.

Most recently, Karin Visnick has moved from an
acting role to being appointed Executive Vice
President – General Manager North America. Karin
has a strong background in Silicon Valley and was
most recently a senior product leader at eBay.
She is based in our San Francisco office.

The Board is very pleased with the composition of
the entire Executive Team and the background, skills
and experience that each member brings to OFX.

The Board is confident that with our investments
in people, technology and facilities, the solid
foundations are now in place to deliver on our
Accelerate strategy over the next three years.

CAPITAL MANAGEMENT

OFX continues to have a robust balance sheet with
no external interest bearing debt and strong cash
flow conversion. This strong financial position allows
us to continue to invest in the business to meet our
goals and execute on our Accelerate Strategy.

SHAREHOLDER RETURNS

The Board was pleased to announce a dividend
of 3.1 cents per share fully franked. The dividend
payment will have a record date of 10 June 2016 and a
payment date of 24 June 2016. This brings the total to
$16.1million for the year. The Group’s dividend policy is
to pay out approximately 70%‑80% of NPAT per annum
and this remains unchanged from last year.

ACKNOWLEDGEMENTS

OFX has the foundations in place from which to
realise its growth potential and to continue to scale.
The Board is very pleased with the progress to date
and has confidence in the entire Company to deliver
the strategy it has set out.

On behalf of the Board and Executive Team, we
wish to express our thanks to our customers, our
business partners and to our very dedicated OFX
team around the world and to you, our shareholders,
for your continued support.

ANNUAL REPORT 2016

14 OZFOREX GROUP

Our customer, his story...
HOW TO BUILD THE PERFECT PROPERTY PORTFOLIO

At the age of 22, Chris started investing
in property. At 27, he relocated to Australia,
taking his property portfolio with him.

across banks when I looked at using OFX.
The difference was considerable, and
I haven’t looked back.”

“I began pulling equity out of my UK
properties, transferring the money to
Australia. I was moving up to $100,000
at a time and was comparing rates

Chris is now a regular host on Sky News
Business, and also travels around Australia
and Asia conducting seminars using OFX
to pay for venues and sponsorships.

ANNUAL REPORT 2016

CEO’S LETTER

Dear shareholder

I am delighted to be presenting my first annual report as Managing Director and CEO of the
OzForex Group. We have had a turbulent year, with a number of challenges thrown our way.

I am very proud of the courage and resilience
demonstrated by our leadership team as we
actively dealt with a range of external events,
whilst at the same time putting in place the
foundations of our new strategy. This testing
period has placed us in a position to flex the
operations of the business and allowed me
to deeply understand the levers we have and
where we need to strengthen our capability.

Whilst the fundamentals of our business remain
incredibly strong, we have to continue to innovate
and iterate like all modern companies in an
increasingly technologically driven world. We
spent a lot of time considering our key strategic
questions, and now have real clarity on our future
direction, our growth ambitions and the tactics to
achieve them. I believe that good strategy is about
making clear choices, and that we have made
significant strides in detailing our path forward
and are now well underway in executing the vision.

We are a global Fintech company competing in
an enormous market where we have a distinct and
unique position that will scale significantly with
marketing and sales investment.

During the year, we saw net operating income pass
the significant $100million milestone, with a large
portion of that revenue being derived offshore.
This milestone is a key point in setting a baseline
for our growth objective.

ACCELERATE STRATEGY

At the AGM in August 2015, I presented the
Company’s Accelerate Strategy and our goal to
double FY16 revenue to $200million by FY19. The
Accelerate Strategy is based around three pillars
of increasing penetration in the Australian market,
leveraging our global footprint outside Australia
and targeting adjacent products. To deliver
on this strategy, 2017 will be focused around
strengthening our core customer proposition
and building an even more scalable and agile
digital platform. As we outlined at the AGM, we
will be making additional investment, and 2017
will see selected cost expansion to support the
strategy, and flatter overall profit, before we see
the benefits of the investment paying off towards
the end of the year and then into 2018 and beyond.

A NEW BRAND

Most significantly, during the year, OzForex Group
made its first step in its global rebranding away
from its geographically specific naming standard
to becoming a single global brand and domain
– OFX (www.ofx.com). This initial step occurred
in December with the launch of the OFX brand
and totally new public website in Australia. The
benefits of this change will be seen in marketing
efficiencies and in stronger brand recognition
across our international operations.

We will invest in our brand by broadening our
marketing channels beyond search marketing to
include marketing in social media, television, print
and other channels. Our advertising will be highly
targeted using our data platform to ensure that
we achieve greater awareness, consideration and
conversion. Our customers have always endorsed
our services, and we consistently achieve net
promoter scores above 65%; this drives great word
of mouth referrals. The opportunity to spread the
word more widely and increase awareness of our
services is one we must harness.

24/7

Since January, we have been delivering 24/7
service to our customers using our ‘follow the sun’
service model, enabling our customers to transact
at a time that suits them and have access to our
customer service team for help when they need
it. This is a clear example of harnessing latent
opportunity within our business. We have identified
a number of other areas to leverage our existing
scale and operational reach.

PEOPLE AND CULTURE

During the year, we moved our Sydney
headquarters to a more modern working
environment. We also used this move to
re‑articulate our beliefs and behavioural norms.
Achieving our growth plans will require a strong
performance‑oriented culture, where diversity and
inclusion are harnessed to achieve great results.
I am very keen to foster an environment where
everyone in our team feels empowered to take
initiative and challenge outdated conventions
for a better outcome.

The OFX team grew globally to more than 270 by
year end, and we expect that the growth will be
similar in the 2017, year with particular emphasis
in the technology and product teams.

RICHARD KIMBER
MANAGING DIRECTOR AND CEO

16 OZFOREX GROUP

PRODUCT DEVELOPMENT

PROFITABLE GROWTH

OFX has a proprietary technology platform that has
been built over several years. There is a significant
amount of intellectual property in our software,
and we will continue to invest in the scalability of
our platform and the way we develop and deploy
our code to support our growth.

As OFX’s platform continues to evolve, we are
very focused on accelerating the pace of delivery
and, to achieve that, we will move our systems to
a cloud‑based environment using Amazon Web
Services during 2017. Craige Pendleton‑Browne,
our new Chief Technology Officer has taken over
the leadership of our product teams and integrated
them with the technology teams. This approach
is already seeing an increase in the number of
features we are able to launch per release and
a tighter linkage between our business and
technical teams.

During 2016, we delivered a new transactional
mobile app, enabling our customers to make
international payments wherever they are and
whenever they want. There have been more than
55,000 downloads of the app since it was launched
in August, with one in 10 transactions now being
undertaken on a mobile device. I expect this
proportion will continue to grow.

BANKING PARTNERS AND BREADTH
OF CURRENCIES

Our banking partners are an integral part of our
business model. We were delighted to add to
the strength of our banking relationships during
the year with the addition of another two key
global banking partners supporting our growth,
particularly in important markets in New Zealand,
India and some Nordic countries.

During the year, we increased the number of
countries that we paid to almost 200, using the
880 currency pairs available to us.

OFX is well positioned to address the vast
opportunity in the international payments market.
There remains significant growth in current and
new geographies.

Our strategic priorities are to:

•

Continue penetration in our primary market
of Australia and New Zealand through efficient
online engagement and building of brand
awareness through diversified marketing
channels in social media, online, mobile
and television;

Place clear emphasis on international
expansion, with particular focus on
North America;

Continue evolution of the technology platform
and move to an AWS cloud‑based environment
to enable rapid innovation and cadence in
delivery of features;

Continue development of our customer service
model through product innovation;

Further embed ourselves in ecosystems with
global brands.

We have made a substantial start on our
Accelerate journey and have the financial
resources and balance sheet to internally support
the investment in our organic growth.

OUTLOOK

We are well on our way to the goal we set ourselves
of delivering $200million in revenue by 2019.

We have bolstered our leadership, begun our move
to a single global brand under OFX, developed
a clear marketing strategy and are increasing
the speed of innovation through a cloud‑based
technical environment and an empowered
global team.

We are confident and excited about our future.
Thank you for your ongoing support.

ANNUAL REPORT 2016

EXECUTIVE TEAM

RICHARD KIMBER
MANAGING DIRECTOR AND CEO

Richard Kimber is Managing Director and Chief
Executive Officer of the OzForex Group.

Richard Kimber has 25 years of diverse global
leadership experience that has included several chief
executive and board roles. Richard has lived and
worked in Australia, Hong Kong, the USA and the UK.

He worked for the HSBC Group for eight years in
several ecommerce roles and was the president of
online payments for North America and Global Head
of Internet Marketing. He was then promoted to

ADAM SMITH
CHIEF OPERATING OFFICER

Adam Smith commenced his role as Chief Operating
Officer at OFX in October 2015. Adam has more
than 20 years of experience in top tier financial
institutions, most recently as Co‑Head of ANZ ETFS.
Prior to OFX, Adam has held a number of commercial
and operational positions within ANZ Global Markets,

Chief Executive of Firstdirect Bank in the UK – the
pioneering service leader using direct channels.

Richard then became the first Regional Managing Director
of Google in South East Asia. Whilst at Google, he led all
the commercial and country operations in the region and
more than doubled its multi‑billion dollar revenues.

He has extensive experience in financial services,
marketing, social media and capital markets. He is
an active investor in technology start‑ups, sits on
the boards of RTI (internet cable) and Unlockd Media
(mobile advertising).

Richard holds a Bachelor of Science in Psychology/
Statistics and an MBA from the Macquarie Graduate
School of Management (1992).

Macquarie Group and Deutsche Bank. Adam combines
a strong background in financial markets products
with an extensive knowledge of business support
functions such as product development, technology,
operations, risk and finance.

Adam has a Bachelor of Economics from the University
of Sydney and a Master of Business (Finance) from the
University of Technology (Sydney).

CRAIGE PENDLETON‑BROWNE
CHIEF TECHNOLOGY OFFICER

Craige Pendleton‑Browne is Chief Technology Officer and
commenced his role in November 2015. Craige has more
than 20 years of experience in technology roles, with
over 15 years of those working in digital. He has worked
as Chief Technology Officer in both the UK and Australia.
His most recent roles include Chief Technology Officer

for News Digital Media, Head of Content and Digital for
News Corp Australia and Chief Technology Officer of
iCareHealth, Australia’s leading provider of residential
aged care software. Craige has extensive experience
in creating the technology vision and strategy as well
as a proven ability to execute and deliver.

He has a Bachelor of Science in Computer Science
as well as an MBA from London Business School.

MARIA LOYEZ
CHIEF MARKETING OFFICER

Maria Loyez joined OFX in August 2015 as Chief
Marketing Officer. Maria has 18 years’ experience in
commercial roles encompassing strategy consulting,
business development and marketing. She has spent
the last nine years in marketing leadership roles,
including most recently at AMP, where she was the
Director of Channel Marketing, and prior to that

as Head of Marketing Communications at Optus for
seven years. She is a strategic marketeer who was
awarded 2012 AdNews Top 40 under 40.

Maria also has start‑up experience, having worked
at Virgin Management Limited in London, where
she launched Virgin Mobile in France, Canada and
South Africa. Maria has a Master of Engineering,
Mechanical Engineering with European Studies
from the University of Bristol.

MARK LEDSHAM
CHIEF FINANCIAL OFFICER

Mark Ledsham joined OFX as Chief Financial Officer
in April 2008. Since joining OFX, Mark has developed
a robust financial control framework driving the
Company’s strategies. Prior to joining OFX, Mark worked
in the finance department of Macquarie Group’s retail

section, BFS, and was responsible for the financial
management of the section’s strategic investments.
Mark brings over 11 years’ experience working in public
practice and both privately owned and publicly listed
international companies.

Mark graduated from the University of Manchester,
where he gained a BA Honours degree in Accounting and
Finance, and qualified as a Chartered Accountant in 2004.

18 OZFOREX GROUP

JASON ROHLOFF
CHIEF RISK OFFICER

Jason Rohloff is the Chief Risk Officer at OFX and has
previously held the positions of Head of Compliance
and Chief Operating Officer at OFX. Prior to joining OFX
in 2007, Jason spent four years at Macquarie Group
and, prior to that, was at Westpac Bank and in retail
stock broking in New Zealand. Jason has 18 years
of broad operational experience working with retail,

JEFF PARKER
CHIEF ENTERPRISE OFFICER

Jeff Parker commenced working with OFX in
September 2013 as Chief Operating Officer responsible
for the operations, treasury and banking functions of
the business globally. Recently, Jeff moved into his
new role as Chief Enterprise Officer, responsible for
building and growing the business to business side

wholesale and institutional clients across a number
of financial products and services including foreign
exchange, equities, cash instruments, bonds and
unit trusts.

Jason holds a Bachelor of Commerce and
Administration from Victoria University in Wellington,
New Zealand, a Diploma of Financial Markets from
the Securities Institute of Australia and an Advanced
Diploma of Financial Services from the Australian
Financial Markets Association.

of the business. Jeff has over 13 years’ experience
across operations, strategy, consulting and mergers
and acquisitions. Prior to joining OFX, Jeff held roles
at Macquarie, Accenture and JP Morgan.

Jeff holds a Bachelor of Science in Management
Sciences from the University of Manchester in England
and qualified as a Chartered Management Accountant
(ACMA) in 2006.

KARIN VISNICK
EXECUTIVE VICE PRESIDENT – GENERAL MANAGER
NORTH AMERICA

Karin Visnick joined OFX in July 2015. She brings more
than 15 years experience in product management,
marketing, and business operations, working for both

large Fortune 500 companies such as Yahoo!, The
Gap, and eBay to small start up organisations. She
has spent the majority of her career in the technology
space, with extensive experience in the e‑commerce
and finance industries.

Karin holds a Bachelor of Arts in Mathematics from
the University of Virginia, Charlottesville, Virginia.

KIRSTEN POLLARD
HEAD OF PEOPLE AND CULTURE

Prior to joining OFX, Kirsten had a 10‑year career
in global equities at Merrill Lynch and four years in
a profitable start‑up business.

Kirsten Pollard began working with OFX in November
2014 and commenced her role as Head of People and
Culture in September 2015.

She has a Bachelor of Commerce from the University
of Western Australia and has attended an Executive
Education program at the Harvard Business School.

LINDA COX
GROUP COMPANY SECRETARY AND
HEAD OF INVESTOR RELATIONS

Linda Cox commenced working with OFX in early
2014 as Company Secretary. Prior to joining the Group,
Linda had operated her own company secretarial
services business where her key clients included
dual listed companies, Xero, Trade Me Group and

Summerset Group. Prior to that, she was Company
Secretary for Telecom New Zealand (now Spark
New Zealand).

Linda holds a Bachelor of Laws degree from Victoria
University of Wellington and a Diploma in Investor
Relations from the Australasian Investor Relations
Association. She is admitted to the bar in New Zealand
and Australia and is a Fellow of the Governance
Institute of Australia.

ANNUAL REPORT 2016

Our customer, his story...
HELPING A BUSINESS BOOM

James Johnson, Managing Director
of energy efficiency company Shine On,
has been importing energy efficiency
products from China since 2009.

“In 2011, we did an audit and realised that
we were spending far too much money
on money transfers. Our first priority

at the time was to find the best rates;
an acquaintance recommended OFX.”

James signed up and made his company’s
first invoice with OFX – making an
estimated saving of over $1,000.

In the years since Shine On partnered
with OFX, it has saved over $80,000
in international money transfers.

20 OZFOREX GROUP

2016 DIRECTORS’ REPORT
AND FINANCIAL REPORT

65 NOTE 9.

PROPERTY, PLANT AND EQUIPMENT

66 NOTE 10.

INTANGIBLE ASSETS

67 NOTE 11.

DEFERRED INCOME TAX ASSETS/
(LIABILITIES)

67 NOTE 12. CLIENT LIABILITIES

67 NOTE 13.

OTHER LIABILITIES (CURRENT
LIABILITIES)

68 NOTE 14. PROVISIONS

68 NOTE 15. CONTRIBUTED EQUITY

69 NOTE 16. RETAINED EARNINGS

69 NOTE 17.

DIVIDENDS PAID AND DISTRIBUTIONS
PAID OR PROVIDED FOR

69 NOTE 18. CAPITAL

70 NOTE 19. COMMITMENTS

NOTE 20.

NOTES TO THE STATEMENT
OF CASH FLOWS

CONTENTS
22 DIRECTORS’ REPORT

32 REMUNERATION REPORT

47 AUDITOR’S INDEPENDENCE

DECLARATION

48 FINANCIAL REPORT

48 STATEMENT OF COMPREHENSIVE

INCOME

49 STATEMENT OF FINANCIAL POSITION

71 NOTE 21. RELATED PARTY INFORMATION

50 STATEMENT OF CHANGES IN EQUITY

72 NOTE 22. KEY MANAGEMENT PERSONNEL

51 STATEMENT OF CASH FLOWS

52 NOTES TO THE FINANCIAL

STATEMENTS

52 NOTE 1.

SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES

60 NOTE 2.

SEGMENT INFORMATION

73 NOTE 23. EMPLOYEE EQUITY PARTICIPATION

76 NOTE 24. CONTINGENT LIABILITIES AND ASSETS

76 NOTE 25. FINANCIAL RISK MANAGEMENT

77 NOTE 25.1 CREDIT RISK

80 NOTE 25.2 LIQUIDITY RISK

80 NOTE 25.3 MARKET RISK

62 NOTE 3.

PROFIT FOR THE FINANCIAL YEAR

83 NOTE 26.

FAIR VALUES OF FINANCIAL
ASSETS AND LIABILITIES

63 NOTE 4.

INCOME TAX EXPENSE

64 NOTE 5.

CASH AND CASH EQUIVALENTS

64 NOTE 6.

RECEIVABLES DUE FROM FINANCIAL
INSTITUTIONS

64 NOTE 7.

DERIVATIVE FINANCIAL INSTRUMENTS
AT FAIR VALUE THROUGH PROFIT
AND LOSS

64 NOTE 8.

OTHER ASSETS

84 NOTE 27. REMUNERATION OF AUDITORS

84 NOTE 28.

EVENTS OCCURRING AFTER
BALANCE SHEET DATE

85 NOTE 29. EARNINGS PER SHARE

85 NOTE 30.

PARENT ENTITY
FINANCIAL INFORMATION

86 DIRECTORS’ DECLARATION

87 INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF OZFOREX
GROUP LIMITED

89 SHAREHOLDER INFORMATION

91 CORPORATE INFORMATION

ANNUAL REPORT 2016

DIRECTORS’ REPORT
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

The Directors of OzForex Group Limited (OzForex, the Company), submit their report (including the Remuneration Report), Statement of
Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the year ended 31 March 2016 and the Statement of
Financial Position as at 31 March 2016 of the Company and its subsidiaries (the Consolidated Entity, the Group), the auditor’s report, and report
as follows:

1. DIRECTORS
The Directors of the Company as at 31 March 2016 at any time during or since the end of the financial year are:

PETER WARNE
CHAIRMAN – BA, FAICD

Member of the Audit, Risk and Compliance Committee and Member of the Remuneration
and Nomination Committee
Age: 60 years
Appointed: 19 September 2013
Independent Director
Residence – Sydney, Australia

Peter joined OzForex in September 2013 and has over 30 years’ experience in banking and finance.
Peter’s prior professional experience includes 12 years as Head of Bankers Trust Australia Limited’s
Financial Markets Group.

Current directorships
Chairman: Australian Leisure and Entertainment Property Group; Macquarie Group Limited;
Macquarie Bank Limited
Director: ASX Limited
Member: NSW Treasury Corporation; Patron of Macquarie University Foundation
Interest in shares: 250,000 ordinary shares

RICHARD KIMBER

MANAGING DIRECTOR AND
CHIEF EXECUTIVE OFFICER
– BSC, MBA (MACQUARIE)

Age: 47 years
Appointed: 1 June 2015
Not independent
Residence – Sydney, Australia

Richard was appointed Managing Director and Chief Executive Officer on 1 June 2015. Richard has 25 years
of diverse global leadership experience that has included several chief executive and board roles in the
banking and technology sectors and has extensive experience in financial services, marketing, social media
and capital markets.

Current Directorships
Director: RTI Cable Limited; Unlockd Media Limited; Strone Limited.
Interest in shares: 21,000 ordinary shares, 135,995 performance rights, 400,000 options.

MELINDA CONRAD

NON-EXECUTIVE DIRECTOR –
MBA (HARVARD), FAICD

Chair of the Remuneration and Nomination Committee and Member of the Audit,
Risk and Compliance Committee
Age: 47 years
Appointed: 19 September 2013
Independent Director
Resident – Sydney, Australia

Melinda joined OzForex in September 2013 and has over 20 years’ experience in business strategy and
marketing. Melinda’s prior professional experience includes executive roles at Harvard Business School,
Colgate-Palmolive, and several retail businesses. Melinda was previously a director of APN News & Media
Limited and David Jones Limited.

Current directorships
Director: The Reject Shop Limited; the George Institute for Global Health; the Australian Brandenburg Orchestra
Member: Minter Ellison Advisory Council; Australian Institute of Company Directors Corporate
Governance Committee
Interest in shares: 100,000 ordinary shares

22 OZFOREX GROUP

The Directors of OzForex Group Limited (OzForex, the Company), submit their report (including the Remuneration Report), Statement of

Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the year ended 31 March 2016 and the Statement of

Financial Position as at 31 March 2016 of the Company and its subsidiaries (the Consolidated Entity, the Group), the auditor’s report, and report

as follows:

1. DIRECTORS

The Directors of the Company as at 31 March 2016 at any time during or since the end of the financial year are:

PETER WARNE

Member of the Audit, Risk and Compliance Committee and Member of the Remuneration

CHAIRMAN – BA, FAICD

and Nomination Committee

Age: 60 years

Appointed: 19 September 2013

Independent Director

Residence – Sydney, Australia

Financial Markets Group.

Current directorships

Macquarie Bank Limited

Director: ASX Limited

Peter joined OzForex in September 2013 and has over 30 years’ experience in banking and finance.

Peter’s prior professional experience includes 12 years as Head of Bankers Trust Australia Limited’s

Chairman: Australian Leisure and Entertainment Property Group; Macquarie Group Limited;

Member: NSW Treasury Corporation; Patron of Macquarie University Foundation

Interest in shares: 250,000 ordinary shares

RICHARD KIMBER

Age: 47 years

MANAGING DIRECTOR AND

CHIEF EXECUTIVE OFFICER

– BSC, MBA (MACQUARIE)

Appointed: 1 June 2015

Not independent

Residence – Sydney, Australia

Richard was appointed Managing Director and Chief Executive Officer on 1 June 2015. Richard has 25 years

of diverse global leadership experience that has included several chief executive and board roles in the

banking and technology sectors and has extensive experience in financial services, marketing, social media

and capital markets.

Current Directorships

Director: RTI Cable Limited; Unlockd Media Limited; Strone Limited.

Interest in shares: 21,000 ordinary shares, 135,995 performance rights, 400,000 options.

MELINDA CONRAD

Chair of the Remuneration and Nomination Committee and Member of the Audit,

NON-EXECUTIVE DIRECTOR –

MBA (HARVARD), FAICD

Age: 47 years

Risk and Compliance Committee

Appointed: 19 September 2013

Independent Director

Resident – Sydney, Australia

Limited and David Jones Limited.

Current directorships

Melinda joined OzForex in September 2013 and has over 20 years’ experience in business strategy and

marketing. Melinda’s prior professional experience includes executive roles at Harvard Business School,

Colgate-Palmolive, and several retail businesses. Melinda was previously a director of APN News & Media

Director: The Reject Shop Limited; the George Institute for Global Health; the Australian Brandenburg Orchestra

Member: Minter Ellison Advisory Council; Australian Institute of Company Directors Corporate

Governance Committee

Interest in shares: 100,000 ordinary shares

GRANT MURDOCH

NON-EXECUTIVE DIRECTOR –
MCOM (HONS), FAICD, FICAA.

Chair of the Audit, Risk and Compliance Committee
Appointed: 19 September 2013
Age: 64 years
Independent Director
Resident – Brisbane, Australia

DOUGLAS SNEDDEN

NON-EXECUTIVE DIRECTOR –
BEC, MAICD

Grant joined OzForex in September 2013 and has over 35 years’ experience in accounting and corporate
finance. Grant’s prior professional experience includes Head of Corporate Finance for Ernst & Young
Queensland, and he is a graduate of the Kellog Advanced Executive Program at the North Western
University, Chicago, United States.

Current directorships
Director: ALS Limited; QIC Limited; Redbubble Limited, UQ Holdings Limited
Other: Senator of the University of Queensland; Adjunct Professor School of Business,
Economics and Law at the University of Queensland; member of Queensland State Council of AICD
Interest in shares: 145,000 ordinary shares

Member of the Remuneration and Nomination Committee and Member of the Audit,
Risk and Compliance Committee
Age: 58 years
Appointed: 16 March 2015
Independent Director
Resident – Sydney, Australia

Doug joined OzForex in March 2015 and has over 30 years’ experience in finance, consulting,
strategic management and outsourcing. Doug has previously worked as Country Managing Director
of Accenture Australia.

Current directorships
Director: Broadspectrum Limited; Sirca Technology Limited
Chairman: Odyssey House NSW; McGrath Foundation; Chris O’Brien Lifehouse
Interest in shares: 39,000 ordinary shares

NEIL HELM

CHIEF EXECUTIVE OFFICER
AND MANAGING DIRECTOR –
BSC (HONS)

Age: 51
Appointed: 2 September 2013
Resigned: 1 June 2015
Not independent
Residence – Sydney, Australia

Neil commenced working with OzForex in June 2007 and resigned as an employee of the Group
on 6 August 2015.

Prior to joining the Group, Neil was a Senior Manager at Accenture, a Business Manager for the
Foreign Exchange Division at Bankers Trust Australia and an Executive Director at Macquarie.
Neil is AFMA accredited and was a responsible manager for the OzForex Group’s AFSL.

Interest in shares as at 6 August 2015: 176,250 performance rights in the OzForex Group Limited
Performance Rights Plan and 275,000 ordinary shares.

ANNUAL REPORT 2016

DIRECTORS’ REPORT CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

2. STATE OF AFFAIRS AND SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
In the Directors’ opinion, there have been no significant changes in the state of affairs of the Group during the year. A further review of matters
affecting the Group’s state of affairs is contained on pages 26 and 27 in the Operating and Financial Review.

3. STATUTORY AND UNDERLYING INFORMATION
As required for statutory reporting purposes, the consolidated financial statements of the Consolidated Entity have been presented for the financial
year ended 31 March 2016.

The Group’s statutory financial information for the year ended 31 March 2016 and for the comparative year ended 31 March 2015 present the
Group’s performance in compliance with statutory reporting obligations.

To assist shareholders and other stakeholders in their understanding of the Group’s financial information as a publicly listed entity, additional
underlying financial information for the years ended 31 March 2016 and 31 March 2015 are provided in the Operating and Financial Review
section of this report.

A reconciliation of the Company’s statutory and underlying financial information is included on page 27.

The reconciliation and the underlying information have not been audited.

4. DIRECTORS
The following persons were Directors of the Group either during the year or as at 31 March 2016:

Peter Warne

Richard Kimber1

Neil Helm2

Melinda Conrad

Grant Murdoch

Douglas Snedden

Chairman

Managing Director and Chief Executive Officer (CEO)

Managing Director and Chief Executive Officer

Non-Executive Director

1. Mr Kimber was appointed a Director on 1 June 2015.

2. Mr Helm ceased to be a Director on 1 June 2015.

The background, qualifications and experience of each of the Directors as at the date of this report are included on pages 22 and 23.

5. COMPANY SECRETARY
Ms Linda Cox was appointed Group Company Secretary and Head of Investor Relations of OzForex on 31 January 2014. Ms Cox has over 16 years
of experience working in company secretarial roles in ASX and NZX listed companies including Telecom Corporation of New Zealand Limited
(now Spark), Xero Limited and Trade Me Group Limited. Ms Cox holds a Bachelor of Laws from Victoria University of Wellington and a Diploma of
Investor Relations. She is a Fellow of the Governance Institute of Australia and a member of the NSW Law Society.

24 OZFOREX GROUP

6. DIRECTORS’ MEETINGS
The following table shows meetings held between 1 April 2015 and 31 March 2016 and the number attended by each Director or Committee member.

Director

P Warne

R Kimber1,2

N Helm1,3

M Conrad

G Murdoch4

D Snedden

Board

Audit, Risk and Compliance Committee

Remuneration and Nomination
Committee

Eligible

Attended

Eligible

Attended

Eligible

Attended

1. Mr Kimber and Mr Helm attended the Audit, Risk and Compliance Committee and the Remuneration and Nomination Committee meetings at the invitation of the Committees.

2. Mr Kimber was appointed a Director on 1 June 2015.

3. Mr Helm ceased to be a Director on 1 June 2015.

4. Mr Murdoch attended the Remuneration and Nomination Committee meetings at the invitation of the Committee.

7. DIRECTORS’ INTERESTS
The relevant interest of each Director in the equity of the Company as at the date of this report is outlined in the table below. All interests are
ordinary shares unless otherwise stated.

P Warne

R Kimber

M Conrad

G Murdoch

D Snedden

Type

ordinary

performance rights

share options

ordinary

Opening
balance

150,000

–

50,000

95,000

–

Acquisition

Disposals/
forfeit

100,000

21,000

135,995

400,000

50,000

39,000

–

Closing
balance

250,000

21,000

135,995

400,000

100,000

145,000

39,000

There were no disposals of shares by the Directors during the year or share transactions post year end.

8. PRINCIPAL ACTIVITIES
The Group’s principal activity during the year was the provision of international payments and foreign exchange services.

9. DIVIDENDS AND DISTRIBUTIONS
Dividends paid or declared by the Company during and since the end of the year are set out in Notes 17 and Notes 28 to the Financial
Statements respectively.

Per share (cents)

Total amount ($’000)

Franked5

Payment date

5. All dividends are fully franked based on tax paid at 30%.

Final 2016

Interim 2016

Final 2015

3.100

7,440

100%

3.600

8,640

100%

3.584

8,602

100%

24 June 2016

18 December 2015

26 June 2015

ANNUAL REPORT 2016

DIRECTORS’ REPORT CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

10. OPERATING AND FINANCIAL REVIEW
A summary of financial results for the years ended 31 March is outlined below:

Net operating income1

Underlying EBITDA2

Underlying EBITDA margin3

Underlying net profit (after tax)4

Underlying earnings per share (EPS) (cents)5

Statutory EBITDA2

Statutory EBITDA margin3

Statutory net profit (after tax)

Earnings per share (cents)

Cash balance as at 31 March6

2016
$’000

103,913

34,453

33.2%

23,889

9.95

31,488

30.3%

21,814

9.09

2015
$’000

90,144

32,758

36.3%

24,266

10.11

32,758

36.3%

24,266

10.11

Growth

15.3%

5.2%

(1.6%)

(3.9%)

(10.1%)

162,890

174,004

(6.3%)

1. Net operating income is the combination of interest income and net fee and commission income. Net operating income is a non-IFRS measure.

2. Earnings before interest, tax, depreciation and amortisation (EBITDA) is a non-IFRS measure that is unaudited.

3. EBITDA margins are calculated with reference to net operating income.

4. Underlying net profit (after tax) (NPAT) is net profit after tax adjusted for one-time expenses. Underlying net profit (after tax) is a non-IFRS measure that is unaudited.

Refer to the NPAT reconciliation on page 27.

5. Underlying earnings per share was calculated with reference to underlying net profit after tax.

6. Cash includes cash held for subsequent settlement of client liabilities and term deposits of all maturities. The net cash position after client liabilities is $38.1 million

at 31 March 2016 (31 March 2015: $49.4 million).

Higher active client numbers with an increased propensity to deal in 2016 helped to drive revenue growth, increasing net operating income by
15.3% to $103.9 million. As part of the enablement phase of the Accelerate Strategy, significant investment was made in the Group’s core business
processes and infrastructure and, together with the one-off impacts of corporate actions, rebranding to OFX and an Executive Team restructure,
resulted in statutory net profit after tax (NPAT) decreasing by 10.1% to $21.8 million.

Underlying NPAT adjusted for the one-off impacts was down by 1.6% to $23.9 million. In order to better understand the underlying NPAT of the
Group, the reconciliation is outlined on the following page.

Australia and New Zealand (ANZ) and Europe were the two largest contributors to the Group’s fee and commission income. These regions
experienced growth of 18.4% and 9.0% respectively. They continue to provide the majority of the Group’s fee and commission income, delivering
72.8% of the Group total. The proportion attributable to ANZ and Europe has decreased marginally from 73.1 % for the year ended 31 March 2015.
This decrease is being driven by the strong growth being achieved in the Group’s core strategic growth market, North America.

In North America, there are operations in Canada and the US. As at 31 March 2016 the Group was able to operate in 46 of the states in the United
States of America and has been continuing to develop its presence in North America, utilising search engine marketing, social media and customer
advocacy in order to gain brand awareness. The US customers of the North American segment have, in the main, been with the Group less than
four years; however, the existing customer base is becoming more significant. This growth has enabled the Group to grow fee and commission
income by 35.9% to $17.6 million. North America’s contribution to the Group’s fee and commission income increased from 13.5% in the year
ended 31 March 2015 to 15.8% in the year ended 31 March 2016.

Hong Kong remained the Group’s key Asian focus during the year. The segment experienced 16.7% growth in fee and commission income
to $2.1 million. Hong Kong is typified by a banking market place that offers significantly lower retail margins than in other geographies.

26 OZFOREX GROUP

The International Payment Solutions (IPS) division (Wholesale division) continued to develop the Group’s existing branded partnership solutions for
Macquarie Bank, ING and MoneyGram in Australia and New Zealand, as well as the Group’s global partner Travelex (Australia, New Zealand, Canada
and the US). The IPS division’s fee and commission income decreased by 3.9% to $10.6 million due to the closure of the OzForex ‘branded’ prepaid
Travel Card in November 2015. The Group also introduced its embedded payments functionality into the cloud-based accounting software Xero.

Underlying NPAT

Corporate action costs after tax

Rebranding expenditure after tax

Executive Team restructure costs after tax

Statutory NPAT

Growth
%

(1.6)

2016
$’000

23,889

(827)

(506)

(742)

2015
$’000

24,266

–

21,814

24,266

(10.1)

EBITDA is a non-IFRS unaudited measure that is calculated by deducting interest and adding back tax, depreciation and amortisation. The
reconciliation is outlined below:

Underlying EBITDA

Corporate action costs before tax

Rebranding expenditure before tax

Executive Team restructure costs before tax

Statutory EBITDA

Add back interest income

Earnings before tax, depreciation and amortisation (EBTDA)1

Less income tax expense

Less depreciation and amortisation

Statutory NPAT

2016
$’000

34,453

(1,182)

(723)

(1,060)

31,488

1,662

33,150

(9,979)

(1,357)

21,814

2015
$’000

32,758

–

32,758

1,754

34,512

(9,667)

(579)

24,266

Growth
%

5.2

(3.9)

(5.2)

(3.9)

(3.2)

(134.4)

(10.1)

1. The Group actively uses its cash balances as part of its hedging strategy, making the interest income integral to its earnings. For this reason, the Group regularly uses

EBTDA as a measure of performance.

The Group’s financial position remains strong. The balance sheet consists predominantly of cash and client liabilities. The cash position net of client
liabilities decreased to $38.1 million from $49.4 million as a result of significant investment in capital items due to two office moves in Toronto and
Sydney, and investment in core business applications such as the new website and mobile app. The Group currently has no external debt.

Cash1,2

Client liabilities1

Net cash position

1. Cash and client liabilities can vary greatly depending on the timing of deal flows.

2. Cash includes cash held for subsequent settlement of client liabilities and term deposits of all maturities.

The financial position provides a good platform to pursue future growth opportunities.

2016
$’000

162,890

(124,827)

38,063

2015
$’000

174,004

(124,591)

49,413

Growth
%

(6.4)

(0.2)

(23.0)

ANNUAL REPORT 2016

DIRECTORS’ REPORT CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

11. STRATEGY
The Group is embarking on the execution phase of the three-year Accelerate Strategy with the aim of doubling revenue. The Group’s key strategic
focus is on expanding penetration within the Australian market to reinforce its presence as the market leader, increase offshore presence with
a focus on the US and expanding adjacent opportunities within the wholesale market. Critical to our success will be maintaining and sustaining a high
performing diverse workforce across all office locations.

OPERATIONAL HIGHLIGHTS

• Developed brand positioning, rolled out new brand with new website in Australia and started website build for other markets globally.

• Conducted quantitative research study in key markets to size the market that OFX operates in, and better understand consumers and

how to realise the opportunity.

• Invested in acquisition capability and started to expand beyond search as a marketing medium.

• Invested in social media capability in the marketing team and significantly increased customer engagement.

• Implemented relational database in order to better understand and respond to customers.

• Updated mobile app to be transactional.

• Integrated into Xero, Australia’s largest cloud accounting platform, which significantly reduces manual processing effort and eliminates
the chance of human error when processing invoices. Capability has been rolled out in Australia, New Zealand and the UK to date.

• Developed a new suite of representational state transfer (REST)-based application programming interfaces (APIs) that makes it easy for
partners to integrate their system into our international payments platform, removing the need for partners to build their own capability.

• Launched an accounts receivable facility for clients selling internationally through online marketplaces who receive foreign currencies with

a need to translate back to their home currency.

• Employed three new key executives.

• Developed product impact teams in order to increase development efficiencies within the IT department.

• Successfully moved to a cloud-based server hosting environment.

• Launched a 24 hour, 7 days a week service, providing customers with the convenience of transacting on weekends. The service will enable

customers to make international transfers, speak to an OFX customer representative and check current exchange rates 363 days of the year,
24 hours a day.

• Implemented new telephony infrastructure that will deliver superior customer service and operational efficiencies.

• Established an Operational Compliance team within the business to reduce customer on-boarding times.

• Developing the capability of the treasury function to facilitate better customer pricing and enhanced internal risk management practices.

• Added new banking partners to support our global growth plans, as our network banking relationship is a key strategic asset and competitive

advantage of our business.

• Initiated the money transmitter licensing process for Ohio, Hawaii and New Hampshire in the US, which would bring our licensed states

to 49 out of 50.

• Received favourable outcomes from all the external regulatory examinations conducted in a number of jurisdictions throughout the year.

• Continued to invest in fraud risk management systems and technology integration.

• Accepted as a member of the Fraud Focus Group Committee in Australia for 2016, the first time a business like OFX has been appointed

to the Committee.

• Continued to investigate merger and acquisition opportunities in offshore markets to aid geographic expansion.

• Relocated the Sydney and Toronto teams to new offices to accommodate future growth expectations.

28 OZFOREX GROUP

12. RISK
The potential risks associated with the Group’s business are outlined below. The list does not show every risk that may be associated with the
Group, and the occurrence or consequences of some of the risks described are partially or completely outside the control of the Group, its Directors
and senior management. There is also no guarantee or assurance that the risks will not change or that other risks will not emerge:

• Competition – A substantial increase in competition could result in the Group’s services becoming less attractive to consumer or business
clients and partner companies; require the Group to increase its marketing or capital expenditure; or require the Group to lower its spreads or
alter other aspects of its business model to remain competitive. The Group continues to invest in product innovation, marketing efforts and
monitoring competition to ensure that it is able to respond to such challenges.

• Relationships with banking counterparties – The Group relies on a range of banking counterparties to conduct its business, particularly
to provide its network of local and global bank accounts and act as counterparties in the management of foreign exchange and interest rate
risk. There is a risk that one or more of these banks may cease to deal with the Group (which may occur on short notice), cease to deal with
international payments services generally, substantially reduce the services it offers, substantially alter the terms on which it is willing to offer
services to the Group, exit one or more of the markets for which the Group uses its services, or collapse. This has occurred in the past and may
occur again in the future. The Group manages this risk by having a suite of banking service providers to ensure that there is redundancy in its
banking relationships to operate effectively.

• Regulatory compliance – The international payments market is a highly regulated area of economic activity. The Group devotes significant
resources to comply with applicable regulations. However, there is a risk that any new or changed regulations could require the Group to
increase its spending on regulatory compliance and/or change its business practices, which could adversely affect the Group’s profitability.
There is a risk that such regulations could also make it uneconomic for the Group to continue to operate in places where it currently does
business. In addition, there is a risk that evidence of a serious failure to comply with laws may result in severe penalties, including being forced
to cease doing business as a result of a revocation or cancellation of one or more of the Group’s regulatory licences or authorisations.

• Information technology (IT) – The Group’s business operations rely on IT infrastructure and systems. Any interruptions to these operations

could impair the Group’s ability to operate its customer-facing websites, which could have a negative impact on performance. The Group has
a number of operational processes and disaster risk recovery plans in place to mitigate this risk.

• Data security – Through the ordinary course of business, the Group collects a wide range of personal and financial data from clients. The Group
takes measures to protect this data; however, there is a risk that a cyber-attack may result in data being compromised, resulting in loss of
information integrity, breaches of the Group’s obligations under applicable laws or client agreements and website and system outages, each
of which may potentially have a material adverse impact on the Group’s reputation and financial performance.

• Fraud – There is a risk that, if the Group’s services are used to transfer money in connection with a fraud or theft, the Group may be required

to take steps to recover the funds involved and may in certain circumstances be liable to repay amounts that it accepted for transfer, even after
it has made the corresponding international payment. For example, when the Group accepts payment by direct debit, it may ultimately be held
liable for the unauthorised use of bank account details in an illegal activity and be required to refund the transaction. If the rate of refunds
becomes excessive, banks and card associations also may require the Group to pay additional penalties. The Group has a range of fraud
prevention controls in place to mitigate this risk.

• Foreign exchange rate fluctuations – The Group may be affected by a change in the value of currencies, in particular a strengthening of the
Australian dollar, which may impact both transaction turnover and reported earnings. The Group continues to increase its geographic footprint
and therefore the diversity of its currency flows in order to mitigate the impact of any one currency’s fluctuation.

13. OUTLOOK
OzForex is a high growth business with a strong balance sheet, no external interest bearing debt and strong cash flow conversion. The focus is
on growth in net operating income and EBTDA but still with the emphasis on cost containment and efficiency. There will be continued investment
in people, new opportunities, marketing and sales initiatives and development of the Group’s IT and physical infrastructure.

The Group’s wholesale business, which includes international payment services, is a large and growing market driven by increases in global
population and migration, leading to a larger level of cross border transactions and investment. OzForex is participating in, and in many respects
leading, a successful industry disruption of traditional international payment methods and processes, driven by technology. OzForex will look
to continue developing its strong position in the market through its:

• Scalable proprietary technology platform;

• Attractive customer value proposition;

• Large portfolio of Tier 1 banking relationships;

• Effective operational risk and compliance management;

• Clearly defined organic and inorganic growth strategies.

ANNUAL REPORT 2016

DIRECTORS’ REPORT CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

14. EVENTS SUBSEQUENT TO BALANCE DATE
As at the date of this report, the Directors are not aware of any circumstance that has arisen since 31 March 2016 that has significantly affected,
or may significantly affect the Group’s operations in future financial years, the results of those operations in future financial years, or the Group’s
state of affairs in future financial years.

15. LIKELY DEVELOPMENTS AND EXPECTED RESULTS
While the impacts of foreign exchange market conditions make accurate forecasting challenging, it is currently expected that the combined
net profit for the financial year ending 31 March 2017 will be up on the financial year ended 31 March 2016.

The key growth driver for the business is the number of active clients (the number of clients who have transacted at least once in the prior
12 months). The growth in active clients for the financial year ended 31 March 2016 was up 5.9% to 150,900.

The existing client base of the North American segment is expected to continue to become a more significant portion of the segments active
clients. This will help to drive further profitability in the North American market, increasing the segment’s contribution to the Group’s profit for
the financial year ending 31 March 2017.

While Europe is a more competitive market, growth in active clients in this region is expected to be more challenging. It is expected to be broadly
in line with the financial period ended 31 March 2016. Subject to consistent currency exchange rates, contribution in the UK is expected to be up
in the financial year ending 31 March 2017.

The Australia and New Zealand segment is expected to continue to be the largest single contributor to the net profit of the Group. The growth
in contribution, assuming a constant Australian dollar exchange rate, is expected to be in line with the growth in active clients.

The tax rate for the financial year ending 31 March 2017 is expected to be in line with the financial year ended 31 March 2016.

Accordingly, the Group’s result for the financial year ending 31 March 2017 is expected to be up on the result in the financial year ended
31 March 2016, with the potential for a better result if market conditions continue to improve, and the Group’s investment in above the line
marketing is more successful than anticipated.

The Group’s short-term outlook remains subject to the range of challenges outlined in the risks on page 29, including market conditions,
the impact of volatility in the foreign exchange markets, the cost of its customer acquisition through online channels, potential regulatory
changes and tax uncertainties.

OzForex remains well positioned to deliver continued growth in the short to medium term.

16. INSURANCE AND INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Directors of the Company, and such other officers as the Directors determine, are entitled to receive the benefit of an indemnity contained
in the Constitution of the Company, to the extent allowed by the Corporations Act 2001.

The Company has entered into a standard form deed of indemnity, insurance and access with the Non-Executive Directors against liabilities they
may incur in the performance of their duties as Directors of the Company, to the extent permitted by the Corporations Act 2001. The indemnity
operates only to the extent that the loss or liability is not covered by insurance.

During the year, the Company has paid premiums in respect of contracts insuring the Directors and Officers of the Company against liability
incurred in that capacity to the extent allowed by the Corporations Act 2001. The terms of the policies prohibit disclosure of the details of the
liability and premium paid.

30 OZFOREX GROUP

17. NO OFFICERS ARE FORMER AUDITORS
No officer of the Consolidated Entity has been a partner of an audit firm or a Director of an audit company that is the auditor of the Company
and the Consolidated Entity for the financial year.

18. NON-AUDIT SERVICES
The Company may decide to employ the external auditor on assignments additional to its statutory audit duties where the auditor’s expertise
and experience with the Company and/or the Group are important.

The Audit, Risk and Compliance Committee is required to pre-approve all audit and non-audit services provided by the external auditor.
The Committee is not permitted to approve the engagement of the auditor for any non-audit services that may impair or appear to impair the
external auditor’s judgement or independence in respect of the Company.

The Board has considered the non-audit services provided during the year by the auditor and, in accordance with written advice provided by
resolution of the Audit, Risk and Compliance 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 Companies Act 2001 for the following reasons:

• All non-audit services were subject to the corporate governance procedures adopted by the Group and have been reviewed by the Audit,

Risk and Compliance 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 set out in APES110 Code of Ethics
for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision making
capacity for the Group, acting as an advocate for the Group or jointly sharing risk or rewards.

During the year, the following fees were paid or payable for non-audit services provided by the external auditor (PWC) of the Company to its
related practices and non-related audit firms:

Due diligence services

Taxation services

Total remuneration for non-audit services

2016
$’000

148

178

2015
$’000

–

19. AUDITOR’S INDEPENDENCE DECLARATION
A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 in relation to the audit for the year
ended 31 March 2016 is on page 47 of this report.

20. CHIEF EXECUTIVE OFFICER/CHIEF FINANCIAL OFFICER DECLARATION
The Chief Executive Officer and the Chief Financial Officer have given the declarations to the Board concerning the Group’s Financial Statements
and other matters as required under section 295A(2) of the Corporations Act 2001.

21. ROUNDING AMOUNTS
The Group is of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998 and, in accordance with that Class Order, amounts in the
directors’ report and the financial report are rounded off to the nearest thousand dollars, unless otherwise indicated.

ANNUAL REPORT 2016

REMUNERATION REPORT
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

INTRODUCTION
The Directors are pleased to present the Group’s Remuneration Report describing the remuneration practices for the Group’s Non-Executive
Directors and Group Executive Team (Executives), including key management personnel (KMP).

The information provided in this Remuneration Report has been prepared in accordance with the requirements of the Corporations Act 2001 (Cth)
(the Corporations Act) and has been audited as required by section 308(3C) of the Corporations Act.

Sections 1-5 set out the remuneration arrangements that apply to all Executives.

Section 6 sets out the remuneration disclosures required in respect of KMP Executives.

Sections 7-8 set out the remuneration disclosures required in respect of Non-Executive Directors.

1. REMUNERATION SNAPSHOT
Executives of the Group receive Total Reward Remuneration (TRR) that comprises fixed and variable (at risk) annual pay. The three components
of the remuneration framework are outlined as follows:

Total Fixed Remuneration (TFR)

Short Term Incentive (STI)

• 15-50% of TRR

Long Term Incentive (LTI)

• 15-30% of TRR

• TFR is set by reference to benchmark
market information for comparable
roles and individual performance

• Includes cash, non-financial benefits,

and superannuation

• 50% of target STI is based on

• Grant of performance rights or share

non-financial PIs and 50% of target
STI is based on financial KPIs

• Paid in cash

• EBTDA gateway

options under the Long Term Incentive Plan

• Designed to link long-term Executive

reward with value creation

• Three-year performance period

• Performance hurdles linked to EBTDA

and EPS

2. ROLE OF THE REMUNERATION AND NOMINATION COMMITTEE
The Remuneration and Nomination Committee (‘Remuneration Committee’) is responsible for reviewing and making recommendations to the
Board on the remuneration arrangements for the CEO and Executives. The Charter of the Remuneration and Nomination Committee is available
on the Group’s website at www.ofx.com.

To assist in performing its duties and making recommendations to the Board, the Remuneration Committee seeks independent advice from
external consultants on various remuneration-related matters. The Remuneration Committee follows protocols around the engagement and use
of external remuneration consultants to ensure compliance with the relevant Executive remuneration legislation.

During the year, the Company engaged 3 Degrees Consulting to provide remuneration recommendations as defined under the Corporations Act
2001 in relation to the CEO and Executive remuneration structure to be implemented in FY17, including STI and LTI design features and incentive
opportunities, as well as the retention arrangements put in place upon the unsolicited, non-binding indicative proposal from Western Union.
3 Degrees Consulting was paid $96,800 for these services.

The Board is satisfied that this advice received from 3 Degrees Consulting was made free from undue influence from the KMP to whom the
recommendations relate as 3 Degrees Consulting was engaged by and reported directly to, the Chair of the Remuneration Committee. In this
regard, in addition to adhering to Board approved protocols, 3 Degrees Consulting provided a formal declaration to the Chair of the Remuneration
Committee. The recommendations were made free from undue influence from Executives to whom the advice was related.

In addition to providing remuneration recommendations, 3 Degrees Consulting provided market practice data and advice on other aspects of
the Company’s remuneration framework throughout the year including governance, legal and stakeholder communications. Together, for these
additional remuneration related services, 3 Degrees Consulting was paid $62,950.

32 OZFOREX GROUP

3. EXECUTIVE REMUNERATION PRINCIPLES AND STRUCTURE

PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION

The objective of the Executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered.
The framework aligns Executive reward with achievement of strategic objectives and the creation of value for shareholders and conforms to
market practice for delivery of reward.

The Board, in consultation with external remuneration consultants, ensures that Executive reward satisfies the following key criteria for good
reward governance practices:

• Competitiveness and reasonableness;

• Incorporates shareholders’ feedback;

• Performance linkage/alignment of Executive compensation;

• Transparency.

Other criteria which are considered in the Company’s remuneration principles are:

• Alignment to shareholders’ interests:

• has economic profit as a core component of plan design;

• focuses on sustained growth in shareholder wealth, growth in share price and delivering constant return on assets as well as focusing

the Executive on key non-financial drivers of value;

• attracts and retains high quality Executives.

• Alignment to participant interests:

• rewards capability and experience;

• reflects competitive reward for contribution to growth in shareholder wealth;

• provides a clear structure for earning rewards;

• provides recognition for contribution to operational performance.

OVERVIEW OF EXECUTIVE REMUNERATION COMPONENTS

The Total Reward Remuneration (TRR) framework provides a blend of fixed short-term and long-term incentives and has three components:

• Fixed – TFR;

• At Risk – STI;

• At Risk – LTI.

The relative proportion of ‘fixed’ and ‘target at risk’ components of Executive remuneration varies by Executive. Executives with a closer link to
the growth drivers of the business have a higher proportion of ‘at risk’, whilst Executives more aligned to risk and compliance functions have
a lower ‘at risk’ component. The table below outlines the percentage allocations for the CEO and the Executives. Participation in special retention
plans is not taken into account in determining the Executives’ percentage allocations.

Total Reward Remuneration

CEO1

CEO2

Executives

Fixed

TFR

40%

33%

50%-70%

At Risk

Target STI

30%

50%

15%-30%

Target LTI

30%

17%

15%-20%

1. Mr Helm ceased to be CEO on 1 June but remained an employee until 6 August 2015

2. Mr Kimber was appointed CEO on 1 June 2015

Remuneration is reviewed annually to ensure it remains competitive within the market. Remuneration increases are subject to merit and are
in respect of Executives, subject to the approval of the Remuneration Committee. The Remuneration Committee has the discretion to change
performance-based elements of remuneration, including short-term and long-term incentives, at any time, where it considers it appropriate.

ANNUAL REPORT 2016

REMUNERATION REPORT CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

3. EXECUTIVE REMUNERATION PRINCIPLES AND STRUCTURE CONTINUED

OVERVIEW OF EXECUTIVE REMUNERATION COMPONENTS CONTINUED

Total Fixed Remuneration (TFR)
TFR may be delivered as a combination of cash and prescribed non-financial benefits at the Executives’ discretion.

Executives are offered a competitive base pay that comprises the fixed cash component of pay and rewards inclusive of superannuation.
External remuneration consultants from time to time provide analysis and advice to ensure TFR is set to reflect the market for a comparable role.

(i) Benefits
Executives may structure their remuneration to include non-cash benefits.

(ii) Superannuation
Retirement benefits are provided via defined contributions to approved superannuation funds.

Short Term Incentive (STI)
The key details of the STI Plan for the FY16 financial year are as outlined below:

STI component

Details

Eligibility

Opportunity

KPIs

Payment

Delivery

All Executives participated in the STI Plan during the year.

The size of the STI opportunity available to each Executive is based on their accountabilities and impact of their role on
the Company. This is typically in the range of 15-50% of TRR.
Executives who commence or leave during the financial year are generally paid a pro-rata share of their STI entitlements.

The STI is subject to the achievement of annual KPIs. See (i) below for further detail.

Payments of the STI are made after the financial results are released in May.

Cash.

(i) Key performance indicators
The Remuneration Committee will annually approve the KPIs to link the STI Plan and the level of payout if the KPI targets are met. This includes
setting any maximum payout under the STI Plan, and minimum levels of performance. The Remuneration Committee is responsible, after the
preparation of the financial statements each year (in respect of financial measures) and after a review of performance against non-financial
measures by the CEO (and in the case of the CEO, by the Board following recommendation by the Committee), for recommending to the Board
the final STI payout for the previous financial year. The Board retains the discretion to vary the final STI payout if performance is considered to be
deserving of either a greater or lesser amount.

The KPI’s linked to the STI Plan comprise two equal tranches (50% each) and within each tranche are a series of objectives. To be eligible for
access to STI, a minimum EBTDA performance must be achieved of at least 90% of target EBTDA. Target EBTDA is approved by the Board at the
commencement of the performance period. Tranche A are non-financial performance indicators for the particular Executive and Tranche B are
financial performance indicators.

(ii) Tranche A (50%)
The non-financial performance indicators are designed to drive leadership performance and behaviours consistent with the role and expectations
for that individual Executive. These include objectives around leadership and culture, risk and compliance and project management. A maximum of
50% of the total target STI is available in Tranche A. If an Executive does not meet a minimum performance threshold in Tranche A, they are not
eligible to participate in Tranche B.

34 OZFOREX GROUP

(iii) Tranche B (50%)
The financial performance indicators are an appropriate way to align the delivery of the Group’s objective of delivering growth to the shareholders
and ultimately improving shareholder returns. In the event of outperformance against the target financial performance indicators, there is a potential
additional 20% outperformance bonus available on the Total STI (Tranche A and Tranche B). If financial performance is more than 25% negative to
target then no STI will be payable irrespective of whether the minimum performance threshold in Tranche A was met for a particular Executive.

The financial performance indicators for 2016 were:

• Net operating income;

• EBTDA (earnings before tax, depreciation and amortisation);

• New dealing clients; and

• Net active clients.

(iv) 2016 STI outcome
For the 2016 financial year, the minimum gateway performance of 90% of the EBTDA target set at the start of the financial year was not met.
Therefore, as explained under (i) above, irrespective of performance under Tranche A or Tranche B, no STI was payable for the year. The amount
of target STI forfeited by KMPs is set out below.

KMP

R Kimber1

M Ledsham

M Loyez2

A Smith3

C Pendleton-Browne4

Former KMP5

L Cox6

J Davidson7

S Griffin8

N Helm9

D Higgins10

J Parker6

J Rohloff6

Target
STI payment

% of Target
STI payable

% of Target
STI forfeited

624,525

116,667

71,673

53,537

56,464

4,732

19,506

106,084

124,648

52,700

35,133

15,726

100%

1. R Kimber commenced employment with the Group 1 June 2015.

2. M Loyez commenced employment with the Group 3 August 2015.

3. A Smith commenced employment with the Group 6 October 2015.

4. C Pendleton-Browne commenced employment with the Group 16 November 2015.

5. The amount shown as the target STI payment is the target payment for the period that employee was a KMP, not the full year payment.

6. L Cox, J Parker and J Rohloff ceased being a KMP on 31 May 2015, but remain Executives. L Cox is a part-time employee.

J Davidson ceased to be an employee on 4 September 2015.

8. S Griffin resigned as a KMP and employee on 18 September 2015.

9. N Helm ceased to be an employee on 6 August 2015.

10. D Higgins resigned as KMP on 30 September 2015, and ceased to be an employee on 31 March 2016.

ANNUAL REPORT 2016

REMUNERATION REPORT CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

3. EXECUTIVE REMUNERATION PRINCIPLES AND STRUCTURE CONTINUED

OVERVIEW OF EXECUTIVE REMUNERATION COMPONENTS CONTINUED

Long Term Incentive (LTI)
Long-term incentives are provided to Executives pursuant the OzForex Group Long Term Incentive Plan (‘the LTI Plan’). The key details of the plan
are as outlined below:

LTI components

Details

Objective

Eligibility

Instrument

The LTI Plan is designed to link long-term Executive reward with the ongoing creation of shareholder value,
with the allocation of equity awards which are subject to satisfaction of performance hurdles.

Under the LTI Plan, either performance rights or options can be issued.

All Executives participated in the LTI Plan in the 2016 financial year if they were an employee at the start of the
year. In certain circumstances, one-off allocations of performance rights have been made as part of the initial
employment arrangements of a particular Executive.

Performance rights enable the Executive KMP to acquire an ordinary share in the Company in the future
subject to time-based and performance-based vesting conditions being achieved. They are granted for nil cash
consideration and have a nil exercise price. They carry no right to vote or receive a dividend.

Award value

An Executive KMP LTI award is typically in the range of 15-30% of their TRR.

Allocation methodology

The number of performance rights issued to each Executive KMP is calculated by dividing their LTI target value
by the value per right, being the volume weighted share price in the five days prior to issuance adjusted for the
probability of achieving performance levels, and the present value of expected dividends that will not be received
by employees during the vesting period.

Allocation timing

Generally, performance rights will be issued annually in June. An additional issuance of performance rights
outside of the annual issuance may occur as a retention mechanism at different times.

Performance period

Three years.

Vesting conditions

Performance rights are subject to a performance hurdle and ongoing employment.

The performance hurdle to apply to each issuance of performance rights will be determined by the Board
at the time of issue.

Forfeiture conditions

Performance rights will automatically be converted to one ordinary share upon the vesting date provided the
Executive complies with the rules of the LTI Plan. Performance rights that are not converted will be forfeited where:

• The expiry date applicable to the performance right is reached; and

• If, upon the employee ceasing to be employed or their employment is terminated, the Board notifies the

employee of the forfeiture; or

• Performance conditions are not met.

Any performance rights which do not vest following testing of the performance hurdles at the end of the
performance period will be automatically forfeited.

Shareholder approval

Any performance rights to be issued to the CEO are subject to shareholder approval.

Changes in share capital

If there are any changes in the share capital of the Company (such as a rights issue, subdivision, consolidation
or reduction in capital) then the Directors may make adjustments as they consider appropriate subject to the ASX
Listing Rules.

Implications of the CEO stepping down during 2016
On 6 February 2015, the Company announced that Neil Helm CEO would be stepping down over the forthcoming months. As a result the Board
resolved as follows with regard to the performance rights on issue to him at that time:

• That the 46,454 performance rights issued in February 2014 will be forfeited, being a pro-rata amount of the original 176,250 performance

rights issued at that time, known as the IPO Performance Rights. The balance of 129,796 performance rights will remain on foot subject to the
terms and conditions set out under ‘IPO performance rights issuance’ (Section 4) below. The Board has determined that 31.2% of these will
vest on 7 June 2016.

• That 474,653 performance rights would be forfeited (being 304,653 of the 330,000 performance rights issued in December 2014 and the
further 170,000 performance rights for which shareholder approval was intended to be sought in 2015). This leaves 25,347 performance
rights which will remain on foot and subject to the terms and conditions that were approved by shareholders at the 2014 AGM. These
performance rights are eligible to vest on 7 June 2017, subject to satisfying the performance conditions set out in the 2014 Notice of Meeting.
The 25,347 performance rights represent the pro-rata portion of the standard annual allocation of performance rights that were issued and
does not include any portion of the special issuance of performance rights that were approved at the 2014 AGM.

36 OZFOREX GROUP

In both cases, the pro-rata calculation has been determined by reference to the end of Mr Helm’s six month notice period following the date
of his resignation, being 6 August 2015.

Performance rights and options issued during 2016
At the 2015 Annual General Meeting approval was sought to grant the CEO, Mr Kimber, an initial issuance of performance rights and options
under the LTI Plan.

There was a standard annual issuance of performance rights to Executives in June 2015 (FY15 performance rights). The performance conditions
that apply to FY15 performance rights, including to Mr Kimber are as follows:

Performance Measurement
Period (PMP)

Vesting Gateway
(EPS CAGR)

100% vesting

Pro-rata vesting:
25% - 100%

0% vesting

Vesting schedule (EBTDA CAGR)

% of allocation
eligible to vest
(vesting date)

1 April 2015 – 31 Mar 2018
(36 months)

≥17%

≥22%

17%-22%

<17%

100% (7 June 2018)

The options issued to Mr Kimber will vest 50% on 30 June 2018 and 50% on 30 June 2019 subject to ongoing employment conditions as shown
on page 44.

Two new Executives, Mr Smith and Mr Pendleton-Browne, were granted a one-off initial issuance of performance rights at the commencement
of their employment to replace forfeited incentives from their previous employment. No performance hurdles apply to the issuances to Mr Smith
and Mr Pendleton-Browne, except tenure.

Further information on the number of performance rights and options held by KMPs can be found in Section 6 of this Remuneration Report.

Additional retention arrangements implemented during 2016
In light of the unsolicited, non-binding indicative proposal from Western Union (Indicative Proposal) as announced on 19 November 2015, the Board
considered the need to put retention arrangements in place for new Executives who commenced in the six months prior to that Proposal.

Since the commencement of Richard Kimber as CEO of OzForex on 1 June 2015, the Company has recruited five new Executives being the
Chief Operating Officer, Chief Technology Officer, Head of People and Culture, Chief Marketing Officer and Acting Head of North America.

A total retention pool of $2.66 million was allocated to the six Executives who commenced in their roles during the six months prior to the receipt
of the Indicative Proposal. This included $1.25 million allocated to CEO, Richard Kimber.

The Board believed that these arrangements were fair and reasonable in the circumstances because the new Executives had little or no unvested
equity allocated to them under the Company’s LTI Plan and as such presented a retention risk if provided with more certain offers of employment.
It was in shareholders’ best interests that the services of Mr Kimber and newer Executives were retained to lead the Company during the period
of uncertainty and beyond.

The retention arrangement remains on foot until 31 December 2016, such that if a change of control event occurs before then, the retention pool
will vest in favour of eligible Executives as to 50% upon a change of control, and 50% six months from financial close of any transaction to ensure
continuity and retention post the transaction period.

The retention pool will be progressively reduced/replaced by any LTI granted (which for the next LTI grant to the CEO will be subject to shareholder
approval at the next AGM) before any change of control transaction completes (or if no change of control transaction eventuates) with normal
performance conditions attached to ensure Executives do not receive any windfall gain from the arrangements if there is no change of control.

Longer serving Executives who have multiple grants under the existing LTI Plan still on foot will not be entitled to participate in the retention pool.
The Board has indicated, however, that it intends to exercise discretion such that all unvested incentives will vest in full, subject to satisfactory
individual performance, should a change of control transaction occur.

In the event there has been no change of control by 31 December 2016, the balance of the retention pool that has not been granted in LTI will lapse.

As per AASB 137 Provisions, Contingent Liabilities and Contingent Assets, there is no requirement to recognise a provision and therefore expense
for this arrangement until the likelihood of the arrangement crystallising, on a change of control event, becomes probable. A change of control
event has currently been assessed as remote and so there is no requirement to provide for this expense.

ANNUAL REPORT 2016

REMUNERATION REPORT CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

4. LEGACY (IPO RELATED) REMUNERATION PRACTICES

IPO PERFORMANCE RIGHTS ISSUANCE

As foreshadowed in the prospectus prior to the IPO (sections 6.3.1 – 6.3.3 of the Prospectus), all Executives who were employed by the Company
at the listing date (and others who were members of the Leadership Team at the time of the IPO) were issued performance rights on the listing
date, which subject to satisfaction of relevant performance conditions will vest on 7 June 2016 (reflecting a 32-month vesting period to align the
vesting date with annual issuances of performance rights). A key performance condition for full vesting of the performance rights will be that the
Group meets or exceeds earnings growth targets for the performance period and the employment of the relevant Executive at the vesting date.
The performance conditions will be measured for the period 1 October 2013 to 31 March 2016 (Performance Period), or 30 months.

The Board has determined that the vesting of some or all of the performance rights would be determined on the basis outlined below:

Performance level

At or above Target

EBTDA over a 30-month Performance Period
to 31 March 2016

Greater than or equal to 18% CAGR

Vesting level

100%

Between Threshold and Target

Between 13% and 18% CAGR

Pro-rata from 25% to 100%

Below Threshold

Below 13%

The Board considered EBTDA to be an appropriate hurdle as one that best aligned the interest of shareholders with those of the Executives.

176,250 performance rights were issued to the previous CEO, Neil Helm, and 360,325 (KMPs 253,000) performance rights were issued to
Executives and several other select employees on 26 February 2014. These performance rights were valued using a trinomial model and
discounted for the probability of achieving performance levels and the present value of dividends that will not be received by employees during
the vesting period. They were issued at a nil exercise price with a 32-month vesting period. The vesting date is 7 June 2016.

The Board has determined that EBTDA over the 30-month performance period from 1 October 2013 to 31 March 2016 was 13.41% and therefore
31.2% of the performance rights will vest on 7 June 2016.

See Section 6 for further detail. The details of these performance rights were also outlined in the prospectus.

5. GROUP PERFORMANCE
As the Company only listed on 11 October 2013, it is not possible to present five years of financial company performance data. The Group’s
2014-2016 annual financial performance measures are listed below. The financial measures for the Group for the period 1 April 2013 to
11 October 2013 are based on the results of OzForex Limited (formerly OzForex Pty Limited), as the Group’s financial results have been
prepared as a continuation of the OzForex Limited consolidated group.

Performance metrics

Net operating income1

EBTDA

Underlying EBTDA

Active clients

Basic earnings per share2

Underlying basic earnings per share3

Dividend per share4

Closing share price

2016

$103.9m

$33.1m

$36.1m

150,900

9.09cps

9.95cps

$0.07184cps

2.02

2015

$90.1m

$34.5m

142,500

10.11cps

$0.05875

2014

$72.6m

$22.4m

$29.4m

120,500

6.84cps

8.92cps

N/A

2.41

3.30 (1.30 above ‘retail’ price)

1. Net operating income, a non-IFRS measure, is the combination of ‘Interest income’ and ‘Net fee and commission income’.

2. For the calculation of EPS refer to Note 29 of the financial statements.

3. Underlying basic earnings per share is the basic earnings per share calculation utilising the Underlying NPAT of the Group.

4. This represents dividends distributed in the period.

38 OZFOREX GROUP

6. KEY MANAGEMENT PERSONNEL (KMP)
On appointment as CEO, Richard Kimber made an assessment of the KMP and resolved to reduce the number of Executives involved in planning,
directing and controlling the Group’s activities. This was formalised by the introduction of the Strategy Execution Committee which is
representative of the KMPs. The following Executives and Non-Executive Directors of the Group were classified as KMP during the 2016
financial year and unless otherwise indicated were classified as KMP for the entire year.

Craige Pendleton-Browne

Chief Technology Officer (CTO)

Executives

Richard Kimber

Adam Smith

Maria Loyez

Mark Ledsham

David Higgins

Jacqueie Davidson

Jason Rohloff

Jeff Parker

Linda Cox

Neil Helm

Simon Griffin

Non-Executive Directors

Peter Warne

Melinda Conrad

Grant Murdoch

Douglas Snedden

Title

Term as KMP in 2016

Managing Director and Chief Executive Officer (CEO)

From 1 June 2015

Chief Operating Officer (COO)

Chief Marketing Officer (CMO)

Chief Financial Officer (CFO)

Chief Technology Officer (CTO)

Head of Human Resources

Chief Risk Officer

Chief Enterprise Officer

From 6 October 2015

From 16 November 2015

From 3 August 2015

Full year

Resigned 30 September 2015

Resigned 4 September 2015

Until 31 May 2015

Company Secretary and Head of Investor Relations

Until 31 May 2015

Managing Director and Chief Executive Officer

Resigned 6 August 2015

Chief Commercial Officer (CCO)

Resigned 18 September 2015

Chairman

Non-Executive Director

Full year

CONTRACTUAL ARRANGEMENTS

Richard Kimber – Managing Director and CEO
Mr Kimber was appointed Managing Director and CEO effective 1 June 2015. For the 2016 financial year, Mr Kimber’s remuneration arrangements
comprised a combination of TFR, STI and LTI with greater weighting to STI as shown on page 33. Mr Kimber’s TFR is $500,000 and he was also
eligible for STI at a target amount of $750,000. Initial equity awards of performance rights to the value of $250,000 and 400,000 options were
approved at the Annual General Meeting on 4 August 2015. The performance hurdles applying to this issuance are set out on page 37.

As explained on page 35, no STI was payable for the 2016 financial year as the minimum gateway performance was not met.

The terms of his appointment and termination arrangements are set out below.

Contract components

Details

Duration

Termination by Executive

Ongoing contracts

Six months’ notice

Termination by the Company

Six months’ notice

Post-employment restraints

Six month post-employment restraints.

Treatment of STI and LTI

Upon termination, if the CEO is considered a good leaver (such as cessation due to redundancy), the CEO
will be entitled to a pro-rata STI award. Board discretion applies to the treatment of any unvested LTI.

ANNUAL REPORT 2016

REMUNERATION REPORT CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

6. KEY MANAGEMENT PERSONNEL (KMP) CONTINUED

CONTRACTUAL ARRANGEMENTS CONTINUED

KMP Executive (excluding Managing Director and CEO) employment contracts and notice periods

Contract components

Details

Duration

All KMP Executive have ongoing contracts

Termination by Executive

Six months’ notice for all KMP Executive

Termination by the Company

Six months’ notice for all KMP Executive

Post-employment restraints

Treatment of STI and LTI

M Loyez, C Pendleton-Browne, A Smith have six-month post-employment restraints. No other KMP
Executive have post-employment restraints.

Upon termination, if the KMP Executive is considered a good leaver (such as cessation due to redundancy),
the KMP Executive will be entitled to a pro-rata STI award. Board discretion applies to the treatment of
any unvested LTI.

EXECUTIVE REMUNERATION DISCLOSURES

Short-term employee benefits

Post-
employment
benefits

Long-term
benefits

Share-based payments1

Cash
salary
and fees

Cash
bonus

Non-
monetary
benefits2

Other3

Super-
annuation

Long
service
leave

Per-
formance
rights

Options

Total

71,170

42,587

551,076

419,129

–

330,810

–

311,469

67,000

197,132

–

152,159

–

124,221

–

17,236

–

18,190

–

19,177

18,531

12,872

–

9,654

–

7,765

–

10,660

282,681

6,079

157,368

–

61,170

–

18,199

–

643,328

560,447

210,004

–

222,983

–

167,421

–

Current KMP

R Kimber4

M Ledsham

M Loyez5

A Smith6

C Pendleton-
Browne7

Year

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

40 OZFOREX GROUP

Short-term employee benefits

Post-
employment
benefits

Long-term
benefits

Share-based payments1

Cash
salary
and fees

Cash
bonus

Non-
monetary
benefits2

Super-
annuation

Other3

Long
service
leave

Per-
formance
rights

Options

Total

23,492

106,471

82,859

164,996

167,483

–

32,895

–

36,163

–

326,469

107,416

157,348

–

452,108

329,253

147,907

–

296,469

40,000

54,293

–

296,469

98,075

43,134

–

263,469

50,000

–

44,257

–

118,564

–

2,485

10,056

9,414

15,572

14,350

18,531

8,927

17,892

9,588

18,531

3,147

18,531

3,147

18,531

108

135

2,982

4,719

2,887

8,252

2,244

16,800

38,313

(37,181)

38,313

(88,981)

172,068

28,663

97,485

(87,547)

5,508

129,897

335

863

47,221

146,568

36,159

(9,272)

125,654

–

42,806

187,843

99,431

255,179

214,398

629,203

197,825

904,990

72,192

490,405

104,743

559,978

83,303

448,382

Year

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

2016

1,899,967

–

17,236

162,821

118,716

19,829

8,354

42,587

2,609,510

2015

2,217,920

760,802

–

136,175

15,864

905,666

–

4,036,427

Former KMP8

L Cox9

J Davidson10

S Griffin11

N Helm12

D Higgins13

J Parker9

J Rohloff9

Total KMP
remuneration
(Group)

1. The share-based payments reflect the amounts accrued during the period. No performance rights or share options vested during the year ended 31 March 2016.

2. Non-monetary benefits received by C Pendleton-Browne related to relocation costs paid by the Company as part of him becoming an employee of the Group.

3. Other payments relate to amounts paid as part of a termination including pay in lieu of notice.

4. R Kimber commenced employment with the Group 1 June 2015.

5. M Loyez commenced employment with the Group 3 August 2015.

6. A Smith commenced employment with the Group 6 October 2015.

7. C Pendleton-Browne commenced employment with the Group 16 November 2015.

8. The 2016 disclosures shown for former KMP are up until the date they ceased to be a KMP.

9. L Cox, J Parker and J Rohloff ceased being a KMP on 31 May 2015, but remain Executives. L Cox is a part-time employee.

10. J Davidson resigned as a KMP and employee on 4 September 2015.

11. S Griffin resigned as a KMP and employee on 18 September 2015.

12. N Helm resigned as a KMP and employee on 6 August 2015.

13. D Higgins resigned as KMP on 30 September 2015, and ceased to be an employee on 31 March 2016.

ANNUAL REPORT 2016

REMUNERATION REPORT CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

6. KEY MANAGEMENT PERSONNEL (KMP) CONTINUED

FIXED AND AT-RISK REMUNERATION

The percentage of remuneration received as fixed pay and at-risk pay during the year ending 31 March 2016 by the Executive KMP is outlined below:

Name

R Kimber

M Ledsham

M Loyez

A Smith

C Pendleton-Browne

PERFORMANCE RIGHTS

Fixed
remuneration

Other

At risk – STI

79.36%

55.96%

100.00%

72.57%

78.83%

–

10.30%

–

At risk – LTI

Rights

12.91%

44.04%

–

27.43%

10.87%

Options

7.73%

–

Details of the performance rights provided as remuneration to each of the Executive KMP during the financial year are set out below.

On vesting, each performance right is convertible into one ordinary share of the Company. No exercise price is payable and no performance
rights vested during the period.

Further information on the performance rights is set out in Note 23 of the Financial Statements.

Issuance

IPO rights

Retention rights

Tranche 1

Tranche 2

Tranche 3

FY15 performance rights

Retention rights Executive A1

Date performance
rights can be
converted into
shares

Value per
performance right
at grant date
$

Grant date

11 October 2013

7 June 2016

20 October 2014

26 June 2015

16 October 2015

7 June 2017

7 June 2018

7 June 2019

7 June 2018

7 June 2017

1.83

2.21

1.84

2.51

To be determined

Performance
achieved

Partly

% vested

31.2%2

–

Retention rights Executive B1

20 November 2015

20 November 2018

2.42

To be determined

1. The Group issued the retention rights (Executive A & Executive B) during the 2016 financial year for new Executives employed during the period in lieu of forfeited

incentive amounts from previous employment.

2. See further details in Section 4 of this Remuneration Report.

42 OZFOREX GROUP

The movement in the performance rights over the year is outlined below:

Number of
performance
rights granted
during
the year

Number
vested during
the year

Value of
rights at
grant date
$

Number of
performance
rights forfeited
during
the year

Held at
1 April 2015

Held at
31 March 2016

Current KMP

R Kimber

FY15 performance rights

Total

M Ledsham

IPO rights

Retention rights

FY15 performance rights

Total

A Smith

Retention rights Executive A

Total

C Pendleton-Browne

Retention rights Executive B

Total

Former KMP

L Cox

Retention rights

FY15 performance rights

Total

J Davidson

Retention rights

FY15 performance rights

Total

D Higgins

IPO rights

Retention rights

FY15 performance rights

Total

S Griffin

IPO rights

Retention rights

FY15 performance rights

Total

–

135,995

55,000

450,000

–

505,000

–

150,000

–

150,000

–

150,000

52,500

350,000

–

402,500

57,500

500,000

–

557,500

–

59,838

92,829

82,645

–

19,326

–

22,337

–

57,118

–

62,558

–

250,231

100,650

994,500

110,102

–

37,840

–

1,205,252

37,840

233,001

200,001

331,500

35,560

367,060

331,500

41,100

372,600

96,075

773,500

105,097

974,672

105,225

1,105,000

115,107

1,325,332

–

150,000

17,345

167,345

36,145

327,792

38,079

402,016

41,229

475,677

46,419

563,325

135,995

17,160

450,000

59,838

526,998

92,829

82,645

150,000

19,326

169,326

–

4,992

16,355

22,208

19,039

57,602

16,271

24,323

16,139

56,733

ANNUAL REPORT 2016

REMUNERATION REPORT CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

6. KEY MANAGEMENT PERSONNEL (KMP) CONTINUED

PERFORMANCE RIGHTS CONTINUED

N Helm

IPO rights

Retention rights

Total

J Rohloff

IPO rights

Retention rights

FY15 performance rights

Total

J Parker

IPO rights

Retention rights

FY15 performance rights

Total

129,796

25,347

155,143

47,000

350,000

–

397,000

41,000

450,000

–

491,000

–

51,134

–

57,118

–

322,538

1,105,000

1,427,538

86,010

773,500

94,087

953,597

75,030

994,500

105,097

1,174,627

89,300

–

89,300

32,336

–

32,336

28,208

–

28,208

40,496

25,347

65,843

14,664

350,000

51,134

415,798

12,792

450,000

57,118

519,910

OPTIONS
Details of the options provided as remuneration to each of the Executive KMP during the financial year are set out below.

On vesting, each option is convertible into one ordinary share of the Company. The exercise price is $2.49. No options vested during the period.

Further information on the options is set out in Note 23 of the Financial Report.

Issuance

Share options tranche 1

Share options tranche 2

The movement in the share options over the year is outlined below.

Grant date

1 June 2015

Date options can be
converted into shares

30 June 2018

30 June 2019

Value
of options at
grant date

$0.52

$0.50

R Kimber

Share options tranche 1

Share options tranche 2

Total

Number
of options
granted during
the year

Number
vested during
the year

Value
of options at
grant date
$

Number
of options
forfeited
during the year

Held at
1 April 2015

Held at 31
March 2016

–

200,000

400,000

–

104,000

100,000

204,000

–

200,000

400,000

44 OZFOREX GROUP

7. NON-EXECUTIVE DIRECTOR DISCLOSURES

FEE FRAMEWORK

The Board seeks to set fees for the Non-Executive Directors that reflect the demands which are made on and the responsibilities of the Directors,
and at a level which will attract and retain directors of the highest quality.

The Non-Executive Director fees are based on the findings of a benchmarking exercise undertaken by KPMG prior to the listing which reviewed
Board remuneration relative to peer and comparable sized companies.

Going forward, Non-Executive Directors’ fees will be reviewed from time to time and they may seek the advice of external remuneration advisers
for this purpose. There were no changes in fees during the year.

FEE POOL

The maximum total of all fees payable to all Non-Executive Directors was set at $1,000,000 per annum, prior to listing. To preserve independence,
Non-Executive Directors do not receive any equity as part of their remuneration and do not receive any performance-related compensation.
Non-Executive Directors receive superannuation contributions where required by Superannuation Guarantee legislation.

Fees applicable for 2016

Role

Chairperson fee

Base Director fee

Committee Chair fee

Committee Member fee

Statutory Non-Executive Director Fees for the year ended 31 March 2016
Details of the fees paid to the Non-Executive Directors are outlined below.

Non-Executive Directors

P Warne

M Conrad

G Murdoch

D Snedden

W Allen1

Total Non-Executive Director remuneration (Group)

1. W Allen resigned as non-Executive Director on 31 March 2015.

200,000

100,000

25,000

15,000

Total

230,394

230,000

140,000

125,000

130,583

–

115,000

625,977

610,000

Short-term
employee
benefits

Cash salary
and fees

Post-
employment
benefits

Super-
annuation

211,217

211,314

127,854

127,927

114,155

114,221

119,254

–

115,000

572,480

568,462

19,177

18,686

12,146

12,073

10,845

10,779

11,329

–

53,497

41,538

Year

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

ANNUAL REPORT 2016

REMUNERATION REPORT CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

8. NON-EXECUTIVE DIRECTOR SHAREHOLDINGS
Details of the Non-Executive Director and their affiliates’ shareholdings in OzForex Group Limited are set out below.

Non-Executive Director

P Warne

M Conrad

G Murdoch

D Snedden

Shares held
at the
beginning of
the year

Shares held
at the end
of the year

Movements

150,000

125,000

50,000

95,000

50,000

–

100,000

25,000

50,000

–

50,000

45,000

39,000

–

250,000

150,000

100,000

50,000

145,000

95,000

39,000

–

Year

2016

2015

2016

2015

2016

2015

2016

2015

9. SECURITIES TRADING POLICY
All Directors and employees are required to comply with the Group’s Securities Trading Policy in undertaking any trading in the Company’s
shares and may not trade if they are in possession of any inside information. Directors and employees can only trade during the specified
trading windows immediately following the release of the half year and full year results and the annual meeting. In addition, Directors and
certain restricted employees may only trade during the trading windows with prior written clearance as set out in the Policy. The Policy prohibits
employees who participate in any equity-based plan from entering into any transaction in relation to unvested securities which would have the
effect of limiting the economic risk of an unvested security.

10. OUTLOOK
The Group will continue to review and adjust its reward mechanisms annually, as required to ensure that its long-term growth aspirations are met.
In particular, a new Executive remuneration structure is being implemented for the 2017 financial year, which has been specifically structured to
ensure close alignment of Executives to the delivery of the Accelerate Strategy and the long-term creation of shareholder value.

Further details about the new Executive remuneration structure will be provided in the 2017 annual report.

This report is made in accordance with a resolution of the Directors.

On behalf of the Board

PETER WARNE
CHAIRMAN

16 May 2016

RICHARD KIMBER
MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER

16 May 2016

46 OZFOREX GROUP

AUDITOR’S INDEPENDENCE DECLARATION

Auditor’s Independence Declaration

As lead auditor for the audit of OzForex Group Limited for the year ended 31 March 2016, I declare
that to the best of my knowledge and belief, there have been:

no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and

no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of OzForex Group Limited and the entities it controlled during the
period.

CPG Cooper
Partner
PricewaterhouseCoopers

Sydney
16 May 2016

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

Liability limited by a scheme approved under Professional Standards Legislation.

ANNUAL REPORT 2016

STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

Interest and similar income

Interest income

Fee and commission income

Fee and commission expense

Net fee and commission income

Other income

Total other income

Employment expenses

Occupancy expenses

Promotional expenses

IPO-related expenses

Other operating expenses

Total operating expenses

Net profit before income tax

Income tax expense

Net profit after income tax

Net profit attributable to ordinary equity holders of OzForex Group Limited1

Other comprehensive income

Exchange differences on translation of foreign operations2

Total comprehensive income

Total comprehensive income attributable to:

Ordinary equity holders of OzForex Group Limited

1. Represents profit from continuing operations.

2. Represents other comprehensive income that may be reclassified to profit or loss.

Notes

2016
$’000

1,662

111,246

(8,995)

102,251

–

(38,979)

(3,855)

(15,306)

–

(13,980)

(72,120)

31,793

(9,979)

21,814

2015
$’000

1,754

95,646

(7,256)

88,390

101

(30,430)

(2,122)

(13,909)

(96)

(9,755)

(56,312)

33,933

(9,667)

24,266

(33)

21,781

314

24,580

21,781

24,580

Cents

Earnings per share based on profit from continuing operations,
attributable to the ordinary equity holders of the parent entity:

Basic

Fully diluted

9.09

8.99

10.11

10.03

The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

48 OZFOREX GROUP

STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2016

Notes

2016
$’000

2015
$’000

Assets

Cash and cash equivalents

Receivables due from financial institutions

Derivative financial instruments – positive values

Other assets

Property, plant and equipment1

Intangible assets1

Prepaid income tax

Deferred income tax assets

Total assets

Liabilities

Client liabilities

Derivative financial instruments – negative values

Other liabilities

Current tax liabilities

Provisions

Deferred income tax liabilities

Total liabilities

Net assets

Equity

Ordinary share capital

Foreign currency translation reserve

Share-based payments reserve

Retained earnings

Total capital and reserves attributable to equity holders of OzForex Group Limited

Total equity

1. Comparative information has been restated to conform to presentation in the current year. Please see Note 10 for further details.

The above Statement of Financial Position should be read in conjunction with the accompanying notes.

142,088

20,802

26,977

3,202

6,512

2,760

1,945

1,310

205,596

124,827

20,297

4,754

–

2,467

152,367

53,229

24,360

278

2,298

26,293

53,229

168,804

5,200

10,294

3,083

1,014

198

–

3,919

192,512

124,591

10,327

4,263

2,686

2,999

144,881

47,631

24,360

311

1,239

21,721

47,631

ANNUAL REPORT 2016

STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

Balance at 1 April 2014

Net profit, after income tax

Other comprehensive income, net of tax

Total comprehensive income

Transactions with equity holders in their
capacity as equity holders:

Share issue

Dividends and distributions paid

Employee share options
– value of employee services

Share-based payment expense

Balance at 31 March 2015

Net profit, after income tax

Other comprehensive income, net of tax

Total comprehensive income

Transactions with equity holders in their
capacity as equity holders:

Share issue

Dividends and distributions paid

Employee share options
– value of employee services

Share-based payment expense

Notes

Contributed
equity
$’000

24,360

–

24,360

–

Balance at 31 March 2016

24,360

Foreign
currency
translation
reserve¹
$’000

Share-based
payments
reserve¹
$’000

(3)

–

314

–

311

–

(33)

–

278

–

(91)

1,239

1,148

1,239

–

1,016

1,059

2,298

Total equity
$’000

36,003

24,266

314

24,580

–

(14,100)

(91)

1,239

(12,952)

47,631

21,814

(33)

21,781

–

(17,242)

1,016

(16,183)

53,229

Retained
earnings
$’000

11,555

24,266

–

24,266

–

(14,100)

–

(14,100)

21,721

21,814

–

21,814

–

(17,242)

–

(17,242)

26,293

1. The foreign currency translation reserve and the share-based payments reserve are non-distributable reserves of the Group.

The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.

50 OZFOREX GROUP

STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

Cash flows from operating activities

Interest received

Total cash inflows from customers

Total cash outflows to customers, suppliers and employees

Income tax paid

Net cash flows from operating activities

Cash flows from investing activities

Loss on sale of property, plant and equipment

Payments for property, plant and equipment

Payments for intangible assets

Payments for deposits with financial institutions

Net cash flows used in investing activities

Cash flows from financing activities

Dividends paid

Net cash flows used in financing activities

Net increase in cash

Cash and cash equivalents at the beginning of the financial year

Exchange (losses)/gains on cash and cash equivalents

Cash and cash equivalents at the end of the financial year

142,088

The above Statement of Cash Flows should be read in conjunction with the accompanying notes.

Comparative information has been restated to conform to presentation in the current year.

Notes

2016
$’000

2015
$’000

1,662

1,754

19,596,083

16,647,053

(19,569,976)

(16,599,859)

(11,994)

15,775

–

(6,490)

(2,927)

(15,602)

(25,019)

(17,242)

(26,486)

168,804

(230)

(10,444)

38,504

–

(548)

(192)

(5,000)

(5,740)

(14,100)

18,664

148,558

1,582

168,804

ANNUAL REPORT 2016

NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(I) BASIS OF PREPARATION

OzForex Group Limited (the Company) is a company limited by shares incorporated and domiciled in Australia whose shares are publicly traded
on the Australian Securities Exchange.

The principal accounting policies adopted in the preparation of this financial report and that of the previous financial year are set out below.
These policies have been consistently applied to all the periods presented, unless otherwise stated.

The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. OzForex Group Limited is a for-profit entity for the
purpose of preparing the financial statements. OzForex Group Limited and its subsidiaries together are referred to in this financial report as the Group.

The Directors have the power to amend and reissue the financial report.

Compliance with IFRS as issued by the IASB
Compliance with Australian Accounting Standards ensures that the financial report complies with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board (IASB). Consequently, this financial report has also been prepared in accordance
with and complies with IFRS as issued by the IASB.

Historical cost convention
This financial report has been prepared under the historical cost convention, as modified by the revaluation of certain assets and liabilities
(including derivative instruments) at fair value.

Critical accounting estimates and significant 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 judgement in the process of applying the accounting policies. The notes to the financial
statements set out areas involving a higher degree of judgement or complexity, or areas where assumptions are significant to the Group and the
consolidated financial report such as:

• Fair value of financial instruments (Notes 1(viii) and 26).

• Accounting for remuneration arrangements (Notes 1(xv), 22 and 23).

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including reasonable expectations
of future events. Management believes the estimates used in preparing the financial report are reasonable. Actual results in the future may differ
from those reported and therefore it is reasonably possible, on the basis of existing knowledge, that outcomes within the next financial year that
are different from our assumptions and estimates could require an adjustment to the carrying amounts of the assets and liabilities reported.

New Accounting Standards and amendments to Accounting Standards that became effective in the current financial year
When a new accounting standard is first adopted, any change in accounting policy is accounted for in accordance with the specific transitional
provisions (if any), otherwise retrospectively.

The Group’s and parent entity’s assessment of the impact of the key new Accounting Standards, amendments to Accounting Standards and
Interpretations is set out below.

No new key Accounting Standards and amendments to Accounting Standards became applicable to the Group in the current financial year.

New Accounting Standards, amendments to Accounting Standards and Interpretations that are not yet effective
AASB 9 Financial Instruments and consequential amendments – AASB 9 will replace AASB 139 Financial Instruments: Recognition and
Measurement. It will lead to changes in the accounting for financial instruments, primarily relating to:

Financial assets: A financial asset is measured at amortised cost only if it is held within a business model whose objective is to collect contractual cash
flows and the asset gives rise to cash flows on specified dates that are payments solely of principal and interest (on the principal amount outstanding).
All other financial assets are measured at fair value. Changes in fair value of financial assets carried at fair value are reported in the income statement.

Financial liabilities: The component of change in fair value of financial liabilities designated at fair value through profit or loss due to an entity’s
own credit risk are presented in other comprehensive income, unless this creates an accounting mismatch. If a mismatch is created or enlarged, all
changes in fair value (including the effects of credit risk) are presented in profit or loss. These requirements may be applied early without applying
all other requirements of AASB 9.

Hedge accounting: Hedge accounting is more closely aligned with financial risk management, and may be applied to a greater variety of hedging
instruments and risks.

52 OZFOREX GROUP

All other key requirements for classification and measurement of financial liabilities have been carried forward unamended from AASB 139.
The recognition and derecognition requirements in AASB 139 have also been retained and relocated to AASB 9 unamended.

AASB 9 is effective for annual reporting periods beginning on or after 1 January 2018. The Group will first apply AASB 9 in the financial year
beginning 1 April 2018. The Group is continuing to assess the full impact of the new requirements on the consolidated financial statements.

AASB 15 Revenue from Contracts with Customers – The AASB has issued a new standard for the recognition of revenue. This will replace
AASB 118 which covers contracts for services. The new standard is based on the principle that revenue is recognised when control transfers to
a customer – so the notion of control replaces the existing notion of risks and rewards.

AASB 15 is effective for annual periods beginning on or after 1 January 2017. The Group will first apply AASB 15 in the financial year beginning
1 April 2017. The impact of AASB 15 on the Group’s financial statements on initial application has not yet been assessed.

IFRS 16 Leases – The International Accounting Standards Board issued IFRS 16 in January 2016. The standard sets out the principles for the
recognition, measurement, presentation and disclosure of leases for both lessees and lessors. Lessees will be required to bring all leases on
Balance Sheet as the distinction between operating and finance leases has been eliminated. Lessor accounting remains largely unchanged.

IFRS 16 is effective for annual reporting periods beginning on or after 1 January 2019. The Group will first apply IFRS 16 in the financial year
beginning 1 April 2019. The Group is continuing to assess the full impact of the new requirements on the consolidated financial statements.

(II) PRINCIPLES OF CONSOLIDATION

Subsidiaries
The consolidated financial report comprises the assets and liabilities of all subsidiaries of OzForex Group Limited (‘the Company’) as at
31 March 2016 and the results of all subsidiaries for the year then ended.

Subsidiaries are all those entities over which the Group has the power to direct the relevant activities, exposure to significant variable returns
and the ability to utilise power to affect the Group’s own returns. The determination of control is based on current facts and circumstances and
is continuously assessed.

The acquisition method of accounting is used to account for business combinations by the Group (refer to Note 1(xix)).

Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also
eliminated unless the transaction provides evidence of the impairment of the asset transferred.

Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Investments in subsidiaries are accounted for at cost in the separate financial statements of OzForex Limited in accordance with AASB 127
Separate Financial Statements.

(III) SEGMENT REPORTING

Operating segments are identified on the basis of internal reports to senior management about components of the Group that are regularly
reviewed by senior management and the board of directors who have been identified as the chief operating decision makers, in order to allocate
resources to the segment and to assess its performance. Information reported to senior management and the board of directors for the purposes
of resource allocation and assessment of performance is specifically focused on core products and services offered, comprising five reportable
segments as disclosed in Note 2. Information about products and services and geographical segments is based on the financial information used
to produce the Group’s financial statements.

(IV) FOREIGN CURRENCY TRANSLATIONS

Functional and presentation currency
Items included in the financial statements of foreign operations are measured using the currency of the primary economic environment in which
the foreign operation operates (the functional currency). The Group’s financial statements are presented in Australian dollars, which is OzForex
Group Limited’s functional currency and the Group’s presentation currency.

Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates
of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in other
comprehensive income as a result of meeting net investment hedge accounting requirements.

ANNUAL REPORT 2016

NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(IV) FOREIGN CURRENCY TRANSLATIONS CONTINUED

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

• Assets and liabilities for each Statement of Financial Position presented are translated at the closing rate at the date of the Statement of

Financial Position;

• Income and expense for each Statement of Comprehensive Income are translated at average exchange rates (unless this is not a reasonable
approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at
the dates of the transactions); and

• All resulting exchange differences are recognised in other comprehensive income.

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

(V) REVENUE

Revenue is measured at the fair value of the consideration received or receivable. Revenue is recognised for the major revenue streams as follows:

Interest income
Interest income is recognised using the effective interest rate method. When a receivable is impaired, the Group reduces the carrying value
amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and
continues unwinding the discount as interest income.

Fee and commission income
Fee and commission income consists of the margin generated from foreign currency spreads, fees charged on low-value transactions and the cost
or benefit of the Group’s hedging policy. The cost or benefit of the Group’s hedging policy is the result of changes in exchange rates between the
time when a client rate is agreed and the subsequent hedge transaction is entered.

As a result of timing differences inherent to OzForex Group Limited’s policy of aggregating and netting foreign currency contracts, these two
balances should be viewed in combination to give a true reflection of revenue generated for the period. Fee and commission income is presented
inclusive of realised and unrealised income earned from the sale of foreign currency contracts to customers.

(i) Unrealised gain/loss on foreign exchange contracts
Gains and losses on foreign exchange contract financial assets/liabilities arise from fair valuation of foreign exchange contract financial assets/
liabilities recognised in profit or loss.

(ii) Retranslation of foreign exchange assets and liabilities
Gains and losses arise from the retranslation of foreign currency denominated assets/liabilities into functional currency.

Fee and commission expense
Fee and commission expenses are transaction costs which relate to fees paid to partners and transactional banking fees.

Dividends and distributions
Dividends and distributions are recognised as income when the entity becomes entitled to the dividend or distribution.

54 OZFOREX GROUP

(VI) INCOME TAXES

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

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

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax base of assets and liabilities
and their respective carrying amounts which give rise to a future tax benefit, or where a benefit arises due to unused tax losses, but are only
recognised in both cases to the extent that it is probable that future taxable amounts will be available to utilise those temporary differences or tax
losses. Deferred tax liabilities are recognised when such temporary differences will give rise to taxable amounts being payable in future periods.
Deferred tax assets and liabilities are recognised at the tax rates expected to apply when the assets are recovered or the liabilities are settled.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the
deferred tax balances relate to the same taxation authority. Current tax assets and liabilities are offset when there is a legally enforceable right
to offset and an intention to either settle on a net basis, or realise the asset and settle the liability simultaneously. Current and deferred taxes
attributable to amounts recognised directly in equity are also recognised directly in equity.

The Group and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation as of 15 October 2013. As a
consequence, these entities are taxed as a single entity and the deferred tax assets and liabilities current and deferred tax is recognised in profit
or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also
recognised in other comprehensive income or directly in equity, respectively.

(VII) DIVIDENDS

Provision for dividends to be paid by the Group are recognised on the Statement of Financial Position as a liability and a reduction in retained
earnings when the dividend has been declared.

(VIII) DERIVATIVE INSTRUMENTS

Derivative instruments entered into by the Group include forward rate agreements and options in the foreign exchange markets. These derivative
instruments are principally used for the risk management of existing financial assets and liabilities.

All derivatives, including those used for Statement of Financial Position hedging purposes, are recognised on the Statement of Financial Position
and are disclosed as an asset where they have a positive fair value at balance date or as a liability where the fair value at balance date is negative.

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, including recent market transactions, and valuation techniques, including
discounted cash flow models and option pricing models, as appropriate. Movements in the carrying amounts of derivatives are recognised in the
Statement of Comprehensive Income, unless the derivative meets the requirements for cash flow or net investment hedge accounting.

(IX) HEDGE ACCOUNTING

The Group designates certain derivatives or financial instruments as hedging instruments in qualifying hedge relationships. On initial designation
of the hedge, the Group documents the hedge relationship between hedging instruments and hedged items, as well as its risk management
objectives and strategies. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether hedging
relationships have been and will continue to be highly effective. Derivatives or financial instruments of the Group are designated as net
investment hedge relationships.

Net investment hedges
For a derivative or borrowing designated as hedging a net investment in a foreign operation, the gain or loss on revaluing the derivative or
borrowing associated with the effective portion of the hedge is recognised in the foreign currency translation reserve and subsequently released
to the income statement when the foreign operation is disposed of. The ineffective portion is recognised in the Statement of Comprehensive
Income immediately. The fair values of various financial instruments used for hedging purposes are disclosed in Note 26.

ANNUAL REPORT 2016

NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(X) INVESTMENTS AND OTHER FINANCIAL ASSETS

Classification
With the exception of derivatives which are classified separately in the Statement of Financial Position, the remaining investments in financial
assets are classified in the following categories: other financial assets at fair value through profit or loss, loans and receivable. The classification
depends on the purpose for which the investments were acquired, which is determined at initial recognition and, except for other financial assets
at fair value through profit or loss, is re-evaluated at each reporting date.

(i) Other financial assets at fair value through profit or loss
This category includes only those financial assets which have been designated by management as held at fair value through profit or loss on initial
recognition. The policy of management is to designate a financial asset as such if the asset contains embedded derivatives which must otherwise
be separated and carried at fair value; if it is part of a group of financial assets managed and evaluated on a fair value basis; or if by doing so
eliminates, or significantly reduces, a measurement or recognition inconsistency that would otherwise arise. Interest income on debt securities
designated as at fair value through profit or loss is recognised in the Statement of Comprehensive Income in interest income using the effective
interest method as disclosed in Note 1(v).

(ii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

Recognition and derecognition
Regular purchases and sales of financial assets are recognised on trade-date, the date on which the Group commits to purchase or sell the asset.
A regular way of purchase or sale of a financial asset under contract is a purchase or sale that requires delivery of the assets within the period
established generally by regulation or convention in the marketplace.

Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the
Group has transferred substantially all the risks and rewards of ownership.

Subsequent measurement
Loans and receivables are carried at amortised cost using the effective interest method.

Financial assets at fair value through profit or loss are subsequently carried at fair value. Gains or losses arising from changes in the fair value
of the ‘other financial assets at fair value through profit or loss’ category are presented in the Statement of Comprehensive Income.

The fair value of investments that are actively traded in organised financial markets are determined by reference to quoted market bid prices at
the close of business on the balance sheet date. For investments with no active market, fair values are determined using valuation techniques.
Such techniques include: using recent arm’s length market transactions; reference to the current market value of another instrument that
is substantially the same; discounted cash flow analysis and option pricing models making as much use of available and supportable market data
as possible and keeping judgemental inputs to a minimum.

Impairment
Impairment is assessed at the end of each reporting period based on whether there is objective evidence that a financial asset or group of
financial assets is impaired.

If there is evidence of impairment for any of the financial assets carried at amortised cost, the loss is measured as the difference between the
asset’s carrying amount and the present value of estimated future cash flows. The cash flows are discounted at the financial asset’s original
effective interest rate. The loss is recognised in the Statement of Comprehensive Income.

56 OZFOREX GROUP

(XI) PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at historical cost less accumulated depreciation and accumulated impairment losses, if any. Assets
are reviewed for impairment at each reporting date. Historical cost includes expenditure directly attributable to the acquisition of the asset.

Depreciation on assets is calculated on a straight-line basis to allocate the difference between their cost and their residual values over their
estimated useful lives, at the following rates:

• Furniture and fittings

• Leasehold improvements1

• Computer equipment

• Plant and equipment

10 per cent to 20 per cent

20 per cent

33 per cent

20 per cent to 33 per cent

1. Where remaining lease terms are less than five years, leasehold improvements are depreciated over the lease term.

Useful lives and residual values are reviewed annually and reassessed in light of commercial and technological developments. If an asset’s carrying
value is greater than its recoverable amount due to an adjustment to its useful life, residual value or impairment, the carrying amount is written
down immediately to its recoverable amount. Adjustments arising from such items and on disposal of fixed assets are recognised in the Statement
of Comprehensive Income.

Gains and losses on disposal are determined by comparing proceeds with the asset’s carrying amount and are recognised in the Statement of
Comprehensive Income.

(XII) INTANGIBLE ASSETS

Certain internal and external costs directly incurred in acquiring and developing certain software are capitalised and amortised over the estimated
useful life, usually a period of three years. Costs incurred on software maintenance are expensed as incurred.

(XIII) PROVISIONS

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

(ii) Other long-term employee benefit obligations
The liabilities for long service leave and employee bonus provisions that are not expected to be settled wholly within 12 months after the end of
the period in which the employees render the related service are recognised in the provision for employee benefits and measured as the present
value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the
projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods
of service. Expected future payments are discounted at the end of the reporting period using market yields of government bonds with terms and
currencies that match, as closely as possible, the estimated future cash outflows.

Provisions for unpaid employee benefits are derecognised when the benefit is settled, or is transferred to another entity and the Group is legally
released from the obligation and do not retain a constructive obligation.

ANNUAL REPORT 2016

NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(XIV) EARNINGS PER SHARE

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. Refer to Note 15 for information concerning the classification of securities.

(XV) PERFORMANCE-BASED REMUNERATION

Share-based payments
OzForex Group long term incentive plan
The Group provides benefits to its employees (including key management personnel) in the form of share-based payments, whereby employees
render services in exchange for shares or rights over shares (equity settled transactions). The fair value of each performance right is estimated at grant
date using a Monte Carlo simulation and discounted for the probability of employee retention and the probability of achieving performance levels.

The cost of equity settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance
and/or service conditions are fulfilled (the performance period). At each subsequent reporting date until vesting, the cumulative charge to the
income statement is in accordance with the vesting conditions as set out under the Group’s Long Term Incentive Plan (Note 23).

Equity settled awards granted by the Company to employees of subsidiaries are recognised in the subsidiaries’ separate financial statements as an
expense with a corresponding credit to equity. As a result, the expense recognised by the Group is the total expense associated with all such awards.
Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer awards vest than were originally anticipated.

The Group currently does not provide benefits in the form of cash settled share-based payments.

Share option plan
During the year ended 31 March 2016, OzForex Group Limited operated share options plans which were granted to Managing Director and CEO
Richard Kimber. OzForex Group Limited recognised a share option expense in relation to options granted with the offsetting adjustment
recognised as a contribution of capital from the shareholders. The options were measured at their grant dates based on their fair value and using
the number expected to vest. This amount will be recognised as an expense evenly over the respective vesting periods.

The fair value of each option was estimated on the date of grant using a trinomial option pricing framework. The following key assumptions were
adopted for grants made during the financial year:

Risk free rate

Expected life

Volatility of share price

Dividend yield

Share options
tranche 1

2.96 per cent

4 years

25 per cent

2.41 per cent

Share options
tranche 2

2.96 per cent

5 years

25 per cent

2.41 per cent

OzForex Limited annually revises its estimates of the number of options that are expected to become exercisable. Where appropriate, the impact of
revised estimates is reflected in the income statement over the remaining vesting period, with a corresponding adjustment to the share option reserve.

Short-term incentives
Staff profit share scheme
The Group recognises a liability and an expense for profit share based on a formula that takes into consideration the growth rate of the Group’s
earnings before tax and the employee’s performance over the financial year.

Short-term incentive plan
The Group recognises a liability and an expense for 15-50% of the Total Reward Remuneration (TRR) of Executives and select employees.
The short-term incentive awards are based on the achievement of annual Key Performance Indicators (KPIs).

(XVI) CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash on hand and deposits held at short call with financial institutions with original maturity of three months
or less.

58 OZFOREX GROUP

(XVII) RECEIVABLES DUE FROM FINANCIAL INSTITUTIONS

Receivables due from financial institutions are primarily short-term deposits with an original maturity of greater than three months that are
brought to account at the gross value of the outstanding balance. Interest is brought to account in the Statement of Comprehensive Income
as interest income (see Note 1(v)).

(XVIII) LEASES

Leases entered into by the Group as lessee are operating leases. The total fixed payments made under operating leases are charged to the income
statement on a straight-line basis over the period of the lease.

(XIX) BUSINESS COMBINATIONS

The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets
are acquired. The consideration transferred for the acquisition of a subsidiary comprises the:

• Fair values of the assets transferred;

• Liabilities incurred;

• Equity interests issued by the Group;

• Fair value of any asset or liability resulting from a contingent consideration arrangement; and

• Fair value of any pre-existing equity interest in the subsidiary.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured
initially at their fair values at the acquisition date.

Acquisition-related costs are expensed as incurred. The excess of the:

• Consideration transferred;

• Amount of any non-controlling interest in the acquired entity; and

• Acquisition-date fair value of any previous equity interest in the acquired entity

over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net
identifiable assets of the subsidiary acquired, the difference is recognised directly in profit or loss as a bargain purchase.

(XX) CLIENT LIABILITIES

Client liabilities represent an obligation of the Group for amounts unpaid to customers that transacted with the Group prior to the end of the
financial year. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

(XXI) GST

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

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

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

(XXII) CONTRIBUTED EQUITY

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity
as a deduction, net of tax, from the proceeds.

(XXIII) ROUNDING OF AMOUNTS

The Company is of a kind referred to in Australian Securities and Investments Commission Class Order 98/100 (as amended), relating to the
‘rounding off’ of amounts in the financial report. Amounts in the financial report have been rounded off in accordance with that Class Order to
the nearest thousand dollars unless otherwise indicated.

ANNUAL REPORT 2016

NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

NOTE 2. SEGMENT INFORMATION
The Group operates international payment services in defined geographic regions (based on client location) and international payment
solutions globally.

International Payment Solutions is a package offered to strategic partners which consists of the OFX IT platform, customer service, compliance
sophistication, banking relationships, and payments capabilities.

Australia and
New Zealand
$’000

60,099

Europe
$’000

20,897

North
America
$’000

17,574

Asia
$’000

2,119

10,557

International
Payment
Solutions
$’000

Consolidated
$’000

18,670

7,982

725

584

3,527

155,138

–

18,379

(5,554)

29,344

–

7,456

(477)

(117,742)

(15,507)

827

–

(23,636)

5,204

37,396

827

2,872

(5,554)

5,708

5,204

(1,491)

–

5,965

(477)

–

111,246

31,488

(1,357)

1,662

31,793

(9,979)

21,814

210,317

(6,031)

1,310

205,596

(158,376)

6,031

(22)

(152,367)

51,941

–

1,288

53,229

Year ended
31 March 2016

Segment revenue

Fee and commission income

Total segment revenue

Segment result

EBITDA

Depreciation and amortisation

Interest income

Profit before income tax

Income tax expense

Profit for the year

Segment assets

At 31 March 2016

Segment assets

Intergroup eliminations

Deferred tax assets

Total assets

Segment liabilities

At 31 March 2016

Segment liabilities

Intergroup eliminations

Deferred tax liabilities

Total liabilities

Segment net assets

Intergroup eliminations

Net deferred tax

Total net assets

60 OZFOREX GROUP

Year ended
31 March 2015

Segment revenue

Fee and commission income

Total segment revenue

Segment result

EBITDA1

Depreciation and amortisation

Interest income

Profit before income tax

Income tax expense

Profit for the year

Segment assets

At 31 March 2015

Segment assets

Intergroup eliminations

Deferred tax assets

Total assets

Segment liabilities

At 31 March 2015

Segment liabilities

Intergroup eliminations

Deferred tax liabilities

Total liabilities

Segment net assets

Intergroup eliminations

Net deferred tax

Total net assets

Australia and
New Zealand
$’000

50,740

Europe
$’000

19,165

North
America
$’000

12,935

Asia
$’000

1,816

10,990

International
Payment
Solutions
$’000

Consolidated
$’000

20,153

7,077

1,173

643

3,712

149,035

–

24,238

(10,937)

23,784

(3,342)

6,430

(615)

(119,340)

14,894

(21,329)

(18,304)

(787)

29,695

14,894

2,909

(10,937)

5,480

(3,342)

5,643

(615)

–

95,646

32,758

(579)

1,754

33,933

(9,667)

24,266

203,487

(14,894)

3,919

192,512

(159,760)

14,894

(15)

(144,881)

43,727

–

3,904

47,631

1. Comparative information has been restated to conform to presentation in the current year.

ANNUAL REPORT 2016

NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

NOTE 3. PROFIT FOR THE FINANCIAL YEAR
Net profit before income tax has been determined as follows:

Interest income

Interest and similar income received/receivable

Interest income

Net fee and commission income

Realised margin and fees on foreign exchange contracts

Unrealised gains/(losses) on foreign exchange contracts

Retranslation of foreign exchange assets and liabilities

Fee and commission expense

Net fee and commission income

Other income

Reimbursement of IPO expenses1

Other

Total other income

Employment expenses

Salary-related costs including commissions2

Employee benefits

Share-based payments2

Defined contribution plan

Provision for annual leave

Provision for long service leave

Total compensation expense

Other employment expenses including on-costs, staff procurement and staff training

Total employment expenses

Occupancy expenses

Operating lease rentals

Depreciation: Furniture, fittings and leasehold

Other occupancy expenses

Total occupancy expenses

Promotional expenses

Advertising

Other promotional expenses

Total promotional expenses

2016
$’000

1,662

104,628

6,376

242

(8,995)

102,251

–

(31,531)

(1,058)

(1,059)

(1,769)

(206)

202

(35,421)

(3,558)

(38,979)

(2,606)

(613)

(636)

(3,855)

(14,095)

(1,211)

(15,306)

2015
$’000

1,754

97,906

(2,272)

(7,256)

88,390

101

(24,784)

(1,023)

(1,148)

(1,339)

(21)

(59)

(28,374)

(2,056)

(30,430)

(1,509)

(150)

(463)

(2,122)

(13,007)

(902)

(13,909)

1. Relates to income to the Group from arranger fees in relation to the IPO.

2. Comparative information has been restated to conform with presentation in the current year. Share-based payments previously formed part of salary-related costs

including commissions. This has been classified separately in the current year.

62 OZFOREX GROUP

IPO-related expenses

Professional fees1

Total IPO-related expenses

Other operating expenses

Professional fees

Information technology

Depreciation and amortisation: computer equipment and software

Communication expenses

Compliance expenses

Insurance expenses

Travel expenses

Bad and doubtful debts expense

Non-recoverable GST

Other expenses

Total other operating expenses

1. Relates to costs incurred by the Group while acting as an arranger throughout the IPO transaction.

NOTE 4. INCOME TAX EXPENSE

(a) Income tax expense

Current tax expense

Adjustments for current tax of prior periods

Total tax on profits for the year

Deferred income tax:

Decrease/(Increase) in deferred tax assets

Increase/(Decrease) in deferred tax liabilities

Total deferred income tax expense/(benefit)

Total income tax expense

(b) Reconciliation of income tax expense to prima facie tax payable

Profit before income tax expense

Prima facie income tax expense on operating profit2

Tax effect of amounts adjusted in calculating taxable income:

Other items

Total income tax expense

2. Prima facie income tax on operating profit is calculated at the rate of 30% (2015: 30%).

The Group has a tax year ending on 30 September.

No tax losses were transferred to the parent or utilised during the period.

2016
$’000

2015
$’000

–

(3,942)

(2,172)

(744)

(682)

(1,824)

(844)

(999)

(1,091)

(446)

(1,236)

(96)

(3,222)

(1,196)

(429)

(601)

(1,510)

(581)

(728)

(845)

(131)

(512)

(13,980)

(9,755)

2016
$’000

2015
$’000

8,058

(695)

7,363

2,609

2,616

9,979

31,793

9,538

441

9,979

8,785

(695)

8,090

1,598

(21)

1,577

9,667

33,933

10,180

(513)

9,667

ANNUAL REPORT 2016

NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

NOTE 5. CASH AND CASH EQUIVALENTS (CURRENT ASSETS)

Cash held 1

Cash held for subsequent settlement of client liabilities

Total cash and cash equivalents

2016
$’000

17,261

124,827

142,088

2015
$’000

44,213

124,591

168,804

Included in cash and cash equivalents are balances of $14,612,000 (2015: $13,760,000) which are held as collateral by counterparties for over the counter derivative
transactions and other services.

NOTE 6. RECEIVABLES DUE FROM FINANCIAL INSTITUTIONS (CURRENT ASSETS)

Receivables due from financial institutions2

Total receivables due from financial institutions

2016
$’000

20,802

2015
$’000

5,200

Included in receivables due from financial institutions are balances of $10,414,000 (2015:$0) which are held as collateral by counterparties for over the counter derivative
transactions and other services.

Receivables due from financial institutions relate to term deposits with an original maturity of more than three months, but less than 12 months.

NOTE 7. DERIVATIVE FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

Value of forward contracts – positive values

Value of forward contracts – negative values

Total derivative financial instruments at fair value through profit or loss3

3. All derivative financial instruments are expected to mature within 12 months after the reporting date.

NOTE 8. OTHER ASSETS (CURRENT ASSETS)

Prepayments

Goods and services tax receivable

Other debtors

Total other assets

2016
$’000

26,977

(20,297)

6,680

2015
$’000

10,294

(10,327)

(33)

2016
$’000

2,216

384

602

3,202

2015
$’000

1,469

379

1,235

3,083

64 OZFOREX GROUP

NOTE 9. PROPERTY, PLANT AND EQUIPMENT

Furniture, fittings and leasehold improvements

Cost

Less accumulated depreciation

Exchange adjustment

Total furniture, fittings and leasehold improvements

Computer equipment

Cost

Less accumulated depreciation

Exchange adjustment

Total computer equipment

Total property, plant and equipment

Reconciliation of the movement in the Group’s property, plant and equipment at their written-down value:

Balance at 31 March 2014

Acquisitions

Disposals

Depreciation expense

Exchange adjustment

Balance at 31 March 2015

Acquisitions

Disposals

Depreciation expense

Exchange adjustment

Balance at 31 March 2016

Furniture,
fittings and
leasehold
improvements
$’000

Computer
equipment
$’000

531

191

–

(193)

–

529

5,665

–

(613)

–

5,581

421

357

–

(294)

485

825

–

(379)

–

931

2016
$’000

2015
$’000

7,319

(1,738)

–

5,581

2,769

(1,838)

–

931

6,512

1,648

(1,119)

–

529

1,938

(1,454)

485

1,014

Total
$’000

952

548

–

(487)

1,014

6,490

–

(992)

–

6,512

ANNUAL REPORT 2016

NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

NOTE 10. INTANGIBLE ASSETS

Website and mobile application

Cost

Less accumulated amortisation

Total website and mobile application

Software1

Cost

Less accumulated depreciation

Exchange adjustment

Total software

Total intangible assets

2016
$’000

2015
$’000

2,519

(212)

2,307

1,116

(663)

–

453

2,760

–

702

(507)

198

1. Software has been reclassified into intangible assets from property, plant and equipment. In the prior year software on its own was not significant and therefore was
included within property, plant and equipment. With the additions of the website and mobile application intangible assets became significant and as a result software
was reclassified to its appropriate classification.

Reconciliation of the movement in the Group’s intangible assets

Website
and mobile
application
$’000

Software
$’000

Total
$’000

–

2,519

–

(212)

2,307

192

–

(92)

198

408

–

(153)

453

192

–

(92)

198

2,927

–

(365)

2,760

Balance at 31 March 2014

Acquisitions

Disposals

Amortisation expense

Exchange adjustment

Balance at 31 March 2015

Acquisitions

Disposals

Amortisation expense

Balance at 31 March 2016

66 OZFOREX GROUP

NOTE 11. DEFERRED INCOME TAX ASSETS/(LIABILITIES)

Deferred income tax assets

The balance comprises temporary differences attributable to:

Provisions and accrued expenses

IPO expenditure deemed capital for taxation

Financial instruments

Total deferred income tax assets

Deferred income tax liabilities

The balance comprises temporary differences attributable to:

Other timing differences

Total deferred income tax liabilities

Net deferred income tax assets1

2016
$’000

2015
$’000

1,575

1,739

(2,004)

1,310

(22)

1,288

1,338

2,571

3,919

(15)

3,904

1. Unless otherwise stated the material portion of the balance represents amounts expected to be settled within 12 months after the reporting date.

The principles of the balance sheet method of tax effect accounting have been adopted whereby the income tax expense for the financial year
is the tax payable on the current period’s taxable income adjusted for changes in deferred tax assets and liabilities attributable to temporary
differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements. The tax assets relating to
deductible temporary differences are not carried forward as an asset unless the benefit is probable of realisation.

The deferred tax assets have been applied against deferred tax liabilities to the extent that they are expected to be realised in the same period,
within the same tax paying entity.

NOTE 12. CLIENT LIABILITIES
Client liabilities of $124,827,000 (2015: $124,591,000) relate to amounts owed to clients in order to settle outstanding deals. Client liabilities are
unsecured and are short term in nature. The carrying amounts of client liabilities are assumed to be the same as their fair values, due to their
short-term nature (expected to be settled within 12 months after the balance sheet date).

NOTE 13. OTHER LIABILITIES (CURRENT LIABILITIES)

Accrued charges and sundry liabilities

Trade creditors2

Other

Total other liabilities

2016
$’000

3,382

1,321

4,754

2015
$’000

2,437

743

1,083

4,263

2. Unless otherwise stated the material portion of the balance represents amounts expected to be settled within 12 months after the reporting date.

ANNUAL REPORT 2016

NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

NOTE 14. PROVISIONS

Current – provision for employee entitlements

Annual leave

Employee benefits

Long service leave

Non-current – provision for employee entitlements

Long service leave

Total provisions

Movements in provision balances

Annual leave

Employee benefits

Long service leave

Total

NOTE 15. CONTRIBUTED EQUITY

Ordinary share capital

Opening balance of fully paid ordinary shares

Closing balance of fully paid ordinary shares

Total equity contribution

ORDINARY SHARES

2016
$’000

2015
$’000

1,175

964

2,174

293

2,467

Additional
provisions
made

Release of
provisions

1,923

964

2,955

(1,725)

(1,492)

(270)

(3,487)

2016
$’000

24,360

977

1,492

241

2,710

289

2,999

Carrying
amount at
the end of
the period

1,175

964

328

2,467

2015
$’000

24,360

Carrying
amount at
beginning of
the period

977

1,492

530

2,999

2016
Number
of shares

2015
Number
of shares

240,000,000

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

Each ordinary shareholder is entitled to one vote per share held.

68 OZFOREX GROUP

NOTE 16. RETAINED EARNINGS

Balance at the beginning of the financial year

Profit attributable to ordinary equity holders of OzForex Group Limited

Dividends paid

Balance at the end of the financial year

NOTE 17. DIVIDENDS PAID AND DISTRIBUTIONS PAID OR PROVIDED FOR

First interim dividend paid ($0.03600 (2015: $0.03500) per share)1

Final dividend paid ($0.03584 (2015: $0.02375) per share)1,2

Total dividends paid

1. These dividends were 100% franked at the 30% corporate tax rate.

2. The final dividend relates to the year ended 31 March 2015 which was declared on 26 May 2015.

2016
$’000

21,721

21,814

(17,242)

26,293

2016
$’000

(8,640)

(8,602)

(17,242)

2015
$’000

11,555

24,266

(14,100)

21,721

2015
$’000

(8,400)

(5,700)

(14,100)

Dividend per share is calculated based on the ordinary shares outstanding on the dividend declaration date. Details of the movement in the
number of shares outstanding are disclosed in Note 15 and details of the share transactions are disclosed in the directors’ report.

Franked dividends

Franking credits available for subsequent financial years based on a tax rate of 30% (2015: 30%)

8,122

4,699

The above amounts represent the balance of the franking account as at the end of the financial period, adjusted for franking credits that will arise
from the payment of the amount of the provision for income tax.

NOTE 18. CAPITAL
The Group’s capital management strategy is to maximise shareholder value through optimising the level and use of capital resources.

2016
$’000

2015
$’000

The Group’s capital management objectives are to:

• Ensure sufficient capital resource to support the Group’s business and operational requirements.

• Maintain sufficient capital to exceed externally imposed capital requirements.

• Safeguard the Group’s ability to continue as a going concern.

Periodic reviews of the entity’s capital requirements are performed to ensure the Group is meeting its objectives.

Capital is defined as share capital plus reserves.

During the financial year ended 31 March 2016, the Group has continued to meet its capital requirements under the licence and no breaches have
occurred. The Group has satisfied its externally imposed capital requirements.

ANNUAL REPORT 2016

NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

NOTE 19. COMMITMENTS

OPERATING LEASES

The Group leases offices under non-cancellable operating leases expiring within one to seven years. The leases have escalating clauses and
renewable rights. On renewal, the terms of the leases are renegotiated.

During the year ended 31 March 2016 the Group entered into two new operating leases for office space in Sydney and Toronto. This resulted
in a significant increase when compared to the prior year.

Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:

2016
$’000

2,479

8,129

2,739

13,347

2015
$’000

1,714

4,106

–

5,820

2016
$’000

2015
$’000

21,814

24,266

1,357

1,059

230

–

(6,713)

(33)

(119)

2,609

727

(532)

(4,631)

15,775

579

1,148

(1,582)

–

3,011

314

550

1,598

17,174

(21)

(6,178)

(2,355)

38,504

Not later than one year

Later than one year and not later than five years

Later than five years

Total capital and other expenditure commitments

NOTE 20. NOTES TO THE STATEMENT OF CASH FLOWS

RECONCILIATION OF CASH AND CASH EQUIVALENTS

Reconciliation of profit from ordinary activities after income tax
to net cash flows from operating activities

Profit from ordinary activities after income tax

Adjustments to profit from ordinary activities

Depreciation and amortisation

Share-based payments expense

Foreign exchange revaluation

Loss on disposal of property, plant and equipment

Fair value changes on financial assets and liabilities at fair value through profit or loss

Movement in foreign currency translation reserve

Changes in assets and liabilities

(Increase)/decrease in debtors and prepayments

Decrease in deferred tax assets

Increase in accrued charges and creditors

Increase/(decrease) in deferred tax liabilities

(Decrease) in provisions for employee entitlements

(Decrease) in tax provision

Net cash flows from operating activities

Comparative information has been restated to conform to presentation in the current year.

70 OZFOREX GROUP

NOTE 21. RELATED PARTY INFORMATION

(A) ULTIMATE PARENT ENTITY

The ultimate parent entity is OzForex Group Limited.

(B) SUBSIDIARIES

All entities have a 31 March financial year end.

The following entities are wholly-owned subsidiaries of the Company

Entity

CanadianForex Limited

OzForex (HK) Limited

OzForex Limited

OFX Australia Pty Limited

OFX Group Pty Limited

OFX (SNG) PTE. Limited

NZForex Limited

UKForex Limited

USForex Incorporated

Country of
incorporation

Canada

Hong Kong

Australia

Singapore

New Zealand

United Kingdom

United States

Equity
holding

100%

Disclosures relating to directors and other key management personnel are set out in Note 22.

(D) TRANSACTIONS WITH OTHER RELATED PARTIES

Directors and parent entities of OzForex Group Limited may from time to time have investments in entities which transact with OzForex Group
Limited. These transactions are based on normal commercial terms and conditions.

Transactions with Cloudbreak Settlements Pty Limited relate to arranger fees and costs incurred relating to the initial public offering and are as follows:

Transaction type

Income received

Expense incurred

2016
$’000

–

2015
$’000

ANNUAL REPORT 2016

NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

NOTE 22. KEY MANAGEMENT PERSONNEL

(A) DIRECTORS

(I) Chairman – Non-Executive
Peter Warne

(II) Executive Director
Richard Kimber (appointed on 1 June 2015)

Neil Helm (resigned as director on 1 June 2015)

(III) Non-Executive Director
Grant Murdoch

Melinda Conrad

Douglas Snedden

(B) OTHER KEY MANAGEMENT PERSONNEL

The following persons also had authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly,
during the financial year.

Name

Mark Ledsham

Maria Loyez (appointed 3 August 2015)

Adam Smith (appointed on 6 October 2015)

Position

Chief Financial Officer

Chief Marketing Officer

Chief Operating Officer

Craige Pendleton-Browne (appointed on 16 November 2015)

Chief Technology Officer

Jason Rohloff (ceased being a KMP on 31 May 2015)

Head of Compliance

Jeff Parker (ceased being a KMP on 31 May 2015)

Chief Wholesale Officer

Employer

OzForex Group Limited

Linda Cox (ceased being a KMP on 31 May 2015)

Company Secretary and Head of Investor Relations OzForex Limited

Jacqueie Davidson (resigned on 4 September 2015)

Head of Human Resources

Simon Griffin (resigned on 18 September 2015)

Chief Commercial Officer

David Higgins (ceased being a KMP on 30 September 2015)

Chief Technology Officer

OzForex Limited

OzForex Group Limited

Remuneration

Short-term employee benefits

Post-employment benefits

Termination payments

Long-term employee benefits

Share-based payments

Total remuneration paid to key management personnel

Detailed remuneration disclosures are provided in the remuneration report.

2016
$

2015
$

2,489,683

3,547,185

172,213

162,821

19,829

390,941

177,713

–

15,864

905,666

3,235,487

4,646,428

72 OZFOREX GROUP

(D) SHARE HOLDINGS AND SHARE OPTIONS

The number of shares and share options in the Company held during the financial year by each Director of OzForex Group Limited and other key
management personnel of the Group, including their personal related parties, are set out below.

Ordinary shares

Shareholding
movement
during
the year

Shares
held at
31 March 2016

Shares
held at
31 March 2015

150,000

100,000

–

50,000

95,000

–

27,500

–

21,000

50,000

39,000

–

250,000

21,000

100,000

145,000

39,000

27,500

–

Directors of OzForex Group Limited

P Warne

R Kimber

M Conrad

G Murdoch

D Snedden

Other key management personnel of the Group

M Ledsham

M Loyez

A Smith

C Pendleton-Browne

NOTE 23. EMPLOYEE EQUITY PARTICIPATION

SHARE-BASED PAYMENTS

The Group provides benefits to its employees (including key management personnel) in the form of share-based payments, whereby employees
render services in exchange for shares or rights over shares (equity settled transactions).

The cost of equity settled transactions is recognised as an expense in the Statement of Comprehensive Income, together with a corresponding
increase in equity, over the period in which the performance and/or service conditions are fulfilled (the vesting period), ending on the date
on which the relevant employees become fully entitled to the award (the vesting date). At each subsequent reporting date until vesting, the
cumulative charge to the Statement of Comprehensive Income is in accordance with the vesting conditions.

Equity settled awards granted by the Company to employees of subsidiaries are recognised in the subsidiaries’ separate financial statements as an
expense with a corresponding credit to equity. As a result, the expense recognised by the Group is the total expense associated with such awards.
Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer awards vest than were originally anticipated.

OzForex Group Long Term Incentive Plan
The Group has a Long Term Incentive Plan for employees (including Executives) identified by the Board. The plan is based on the grant of
performance rights that vest into shares on a one-to-one basis at no cost to the employee. Settlement of the performance rights is made in
ordinary shares.

If the employee leaves during or before the performance period due to illness, redundancy or death, any granted rights which the Board has
the discretion to allow them to vest, otherwise will lapse. If the employee leaves due to other reasons, the granted rights may be forfeited at
the Board’s discretion.

The plan was modified in 2016 to allow the issuance of share options.

There were no cancellations during 2016.

ANNUAL REPORT 2016

NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

NOTE 23. EMPLOYEE EQUITY PARTICIPATION CONTINUED

(A) ISSUANCES UNDER THE OZFOREX GROUP LONG TERM INCENTIVE PLAN

Issuance

IPO rights

Retention rights
tranches 1, 2 & 3

Employee LTI rights

FY15 performance
rights

Retention rights
Executive A & B

Description

The Group issued the IPO rights during the 2014 financial year for Executives and other select employees identified by the
Board. Performance rights granted in this plan will vest subject to performance hurdles approved by the Board which are
based on Group EBTDA.

The Group issued the retention rights (tranches 1, 2 & 3) during the 2015 financial year for Executives and other select
employees identified by the Board. Performance rights granted in this plan will vest subject to performance hurdles
approved by the Board which are based on earnings per share (EPS) and the Group EBTDA. There is a minimum standard
for earnings per share compound annual growth rate (EPS CAGR) performance that must be achieved in order for any
performance right to vest.

The Group issued the Employee LTI rights during the 2015 financial year for select employees identified by the Board.
This plan will vest subject to the employees, who have been granted shares, remaining in employment until the vesting
date. This plan is not subject to any performance hurdles.

The Group established the FY15 performance rights during the 2016 financial year for Executives and select employees
identified by the Board. Performance rights granted in this plan will vest subject to performance hurdles approved by the
Board which are based on earnings per share (EPS) and the Group EBTDA. There is a minimum standard for earnings per share
compound annual growth rate (EPS CAGR) performance that must be achieved in order for any performance right to vest.

The Group issued the retention rights (Executive A & Executive B) during the 2016 financial year for new Executives
employed during the period in lieu of forfeited incentive amounts from previous employment. This plan will vest
subject to the Executives, who have been granted shares, remaining in employment until the vesting date. This plan
is not subject to any performance hurdles.

Share options
tranches 1 & 2

The Group issued share options to the CEO, Richard Kimber, during the 2016 financial year to ensure immediate alignment
with shareholder interests. These options will vest subject to ongoing employment on the vesting date. This is a once off
grant which is not subject to any performance hurdles.

(B) VESTING CONDITIONS OF PERFORMANCE RIGHTS

Vesting level (EBTDA CAGR)

EPS CAGR

100% 25%-100%

N/A

≥ 18%

≥ 16%

≥ 14%

N/A

≥ 17%

N/A

≥ 18%

≥ 23%

≥ 21%

≥ 19%

N/A

13%-18%

18%-23%

16%-21%

14%-19%

N/A

≥ 22%

17%-22%

N/A

<13%

<18%

<16%

<14%

N/A

<17%

N/A

Performance
period

30 Months

42 Months

54 Months

N/A

36 Months

N/A

Issuance

IPO rights

Retention rights tranche 1

Retention rights tranche 2

Retention rights tranche 3

Employee LTI rights

FY15 performance rights

Retention rights Executive A

Retention rights Executive B

74 OZFOREX GROUP

Set out below are summaries of performance rights and share options granted under the OzForex Group Long Term Incentive Plan.

Issuance

Performance rights

IPO rights

Retention rights tranche 1

Retention rights tranche 2

Retention rights tranche 3

Employee LTI rights

FY15 performance rights

Retention rights Executive A

Retention rights Executive B

Share options

Share options tranche 1

Share options tranche 2

Performance
period
end date

31 March 2016

31 March 2017

31 March 2018

31 March 2019

N/A

31 March 2018

N/A

Balance
as at
31 March
2015

427,047

883,347

858,000

884,000

220,814

–

Granted
during
the year

Exercised
during
the year

Forfeited/
cancelled
during
the year

Balance
as at
31 March
2016

–

490,719

92,829

82,645

200,000

–

(302,405)

(299,969)

(346,500)

(357,000)

(23,932)

(101,843)

–

124,642

583,378

511,500

527,000

196,882

388,876

92,829

82,645

200,000

Rights are vested after the performance period. The performance period ends at the end of the relevant financial year and will vest upon approval
by the Board in June of that year.

As all vesting dates lie in the future, no performance rights or share options were exercisable (or have been exercised) at balance date. The table
below shows the number and fair value of performance rights and share options granted at grant date.

Grant date

Performance
period

Vesting date

Number
of rights
granted

Value of
rights as at
grant date

Price per
share at
grant date

Issuance

Performance rights

IPO rights

Retention rights tranche 1

Retention rights tranche 2

Retention rights tranche 3

Employee LTI rights

FY15 performance rights

11 October 2013

1 October 2014

26 June 2015

2016

2017

2018

2019

N/A

2018

N/A

1 June 2016

7 June 2017

7 June 2018

7 June 2019

7 June 2016

7 June 2018

7 June 2017

Retention rights Executive A

16 October 2015

Retention rights Executive B

20 November 2015

N/A 20 November 2018

536,575

1,097,250

1,130,500

225,555

490,719

92,829

82,645

981,932

2,424,923

2,498,405

498,477

902,923

233,001

200,001

1.83

2.21

1.84

2.51

2.42

ANNUAL REPORT 2016

NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

NOTE 23. EMPLOYEE EQUITY PARTICIPATION CONTINUED

The fair value of each performance right at grant date was estimated by taking the market price of the Company’s shares on that date discounted
for the probability of employee retention, probability of achieving performance levels and the present value of expected dividends that will not be
received by the employees during the vesting period.

Issuance

Share options

Share options tranche 1

Share options tranche 2

Grant date

Vesting date

Number
of options
granted

Value of
options as at
grant date

Price per
option at
grant date

1 June 2015

30 June 2018

1 June 2015

30 June 2019

200,000

104,000

100,000

$0.52

$0.50

The fair value of the share options was calculated using a trinomial pricing model. The inputs were as follows:

Grant

Share options tranche 1

Share options tranche 2

Underlying
share price
at grant date

$2.52

Exercise
price

$2.49

Expected
volatility1

Dividend
yield

Risk free
interest rate

Contractual
life

25%

2.41%

2.96%

4 years

5 years

1. The expected price volatility is based on the historic volatility, adjusted for any expected changes to future volatility due to publicly available information.

(D) EXPENSES ARISING FROM SHARE-BASED PAYMENT TRANSACTIONS

Expenses arising from share-based payment transactions recognised during the period as part of employee benefit expenses were as follows:

Performance rights

Share options

Total share-based payment expense

2016
$’000

1,016

1,059

2015
$’000

1,148

–

1,148

NOTE 24. CONTINGENT LIABILITIES AND ASSETS
In light of the unsolicited, non-binding indicative proposal from Western Union as announced on 19 November 2015, the Board considered
the need to put retention arrangements in place for new Executives who commenced in the six months prior to that proposal. A total
retention pool of $2.66 million was allocated to the six Executives who commenced in their roles during the six months prior to the receipt
of the Indicative proposal. The retention arrangement remains on foot until 31 December 2016, such that if a change of control event occurs
before that date the retention pool will vest in favour of the eligible Executives. In the event that there has been no change of control by
31 December 2016, the balance of the retention pool not granted in long term incentives will lapse.

NOTE 25. FINANCIAL RISK MANAGEMENT

RISK MANAGEMENT

Risk is an integral part of the Group’s businesses. The main risks faced by the Group are market risk, credit risk, liquidity risk, operational risk and
legal compliance risk. Responsibility for management of these risks lies with the individual businesses giving rise to them. It is the responsibility
of the Executive Team and the Risk Committee to ensure appropriate assessment and management of these risks.

The risks which the Group is exposed to are managed on a globally consolidated basis for OzForex Group Limited as a whole, including all
subsidiaries, in all locations. The Group’s approach to risk ensures that risks in subsidiaries are subject to the same rigour and risk acceptance
decisions at the parent entity level (i.e. not differentiating where the risk is taken within the OzForex Group).

76 OZFOREX GROUP

NOTE 25.1 CREDIT RISK

Credit risk arises from cash and cash equivalents, favourable derivative financial instruments and deposits with banks and financial institutions,
as well as credit exposures to wholesale and retail customers, including outstanding receivables and committed transactions. Bad and doubtful
debts for the year are disclosed in Note 3 and can be caused by counterparty defaults or fraudulent transactions.

Credit risk within the Group is managed on a group basis by the Executive Team. At an entity level the Group actively monitors the forward
positions of its counterparties to ensure adequate collateral is held against a client position.

The balances disclosed in the credit risk tables below exclude financial assets that are subject to risks other than credit risk, such as equity
investments or banknotes and coin.

Maximum exposure to credit risk
The table below details the concentration of credit exposure of the Group’s assets to significant geographical locations and counterparty types.
The amounts shown represent the maximum credit risk of the Group’s assets. In all cases this is equal to the carrying value of the assets with the
exception of derivatives which are recorded at the maximum credit exposure.

Consolidated

Australia

Financial institutions

Other

Total Australia

New Zealand

Financial institutions

Other

Total New Zealand

Asia

Financial institutions

Other

Total Asia

Europe

Financial institutions

Other

Total Europe

North America

Financial institutions

Other

Total North America

Other

Financial institutions

Other

Total Other

Total gross credit risk

2016

Derivative
financial
instrument-
positive
values
$’000

Cash and
cash
equivalents
$’000

48,168

–

48,168

30,294

–

30,294

8,692

–

8,692

21,485

–

21,485

26,805

6,644

–

6,644

142,088

884

12,540

13,424

1,656

2,581

4,237

4,750

4,799

1,285

1,367

691

154

845

–

2,305

26,977

Other
assets
$’000

20,802

521

21,323

–

312

–

Total
$’000

69,854

13,061

82,915

31,950

2,666

34,616

13,442

110

13,552

21,567

1,597

23,164

27,496

161

27,657

6,644

2,305

8,949

21,788

190,853

ANNUAL REPORT 2016

NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

NOTE 25. FINANCIAL RISK MANAGEMENT CONTINUED

NOTE 25.1 CREDIT RISK CONTINUED

Consolidated

Australia

Financial institutions

Other

Total Australia

New Zealand

Financial institutions

Other

Total New Zealand

Asia

Financial institutions

Other

Total Asia

Europe

Financial institutions

Other

Total Europe

North America

Financial institutions

Other

Total North America

Other

Financial institutions

Other

Total Other

2015

Derivative
financial
instrument-
positive
values
$’000

Cash and
cash
equivalents
$’000

80,559

–

80,559

10,828

–

10,828

8,972

–

8,972

24,223

–

24,223

41,501

–

41,501

2,721

–

2,721

111

1,911

2,022

267

355

622

–

327

3,996

1,464

5,460

253

414

667

–

1,196

Other
assets
$’000

5,200

1,067

6,267

–

169

–

304

–

Total
$’000

85,870

2,978

88,848

11,095

524

11,619

8,972

386

9,358

28,219

1,768

29,987

41,754

429

42,183

2,721

1,196

3,917

Total gross credit risk

168,804

10,294

6,814

185,912

78 OZFOREX GROUP

Credit quality of financial assets
The credit quality of financial assets is managed by the Group using internal credit ratings.

The table below shows the credit quality by class of financial asset for Statement of Financial Position lines.

Credit Quality – 2016

Cash and cash equivalents

– Financial institutions

Derivative financial instruments – positive values

– Financial institutions

– Other

Other assets

– Financial institutions

– Other

Total

Credit Quality – 2015

Cash and cash equivalents

– Financial institutions

Derivative financial instruments – positive values2

– Financial institutions

– Other

Other assets

– Other

Total

Neither past due nor impaired

Investment
grade
$’000

Below
investment
grade
$’000

Unrated1
$’000

Total
$’000

142,088

8,064

–

20,802

–

170,954

–

18,913

–

986

19,899

142,088

8,064

18,913

20,802

986

190,853

Neither past due nor impaired

Investment
grade
$’000

Below
investment
grade
$’000

Unrated1
$’000

Total
$’000

168,804

4,627

–

5,200

178,631

–

5,667

1,614

7,281

168,804

4,627

5,667

6,814

185,912

1. Unrated balances relate to amounts due from entities that are not graded by the Company or by a public ratings agency.

2. Comparative information has been restated to conform to presentation in the current year.

There are no balances that are past due or impaired as at 31 March 2016 (2015: Nil).

ANNUAL REPORT 2016

NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

NOTE 25. FINANCIAL RISK MANAGEMENT CONTINUED

NOTE 25.2 LIQUIDITY RISK

Liquidity risk is the risk of an entity encountering difficulty in meeting obligations with financial liabilities when they are due. Liquidity risk within
the Group is managed on a group basis by Group Treasury.

If counterparty banks do not provide the volume of counterparty hedging required by the OzForex Group, the Group would be exposed to
movements in exchange rates and interest rates. The Group manages this liquidity risk by ensuring that at any point in time a minimum of two
counterparty banks facilitate counterparty hedging.

Contractual undiscounted cash flows
The table below summarises the maturity profile of the Group’s financial liabilities as at 31 March 2016 based on contractual undiscounted
repayment obligations. Repayments which are subject to notice are treated as if notice were given immediately. However, the Group expects that
many customers will not request repayment on the earliest date the Group could be required to pay and the table does not reflect the expected
cash flows indicated by the Group’s deposit retention history.

Derivatives and trading portfolio liabilities are included in the less than three months column at their fair value. Liquidity risk on these items is
not managed on the basis of contractual maturity, since they are not held for settlement according to such maturity and will frequently be settled
in the short term at fair value. Derivatives designated in a hedging relationship are included according to their contractual maturity.

2016

Other liabilities1

Derivative financial instruments

Inflows

(Outflows)

Total

2015

Other liabilities1

Derivative financial instruments

Inflows

(Outflows)

Total

On demand
$’000

3 months
or less
$’000

3 to 12
months
$’000

1 to 5
years
$’000

Over
5 years
$’000

(1,210)

(127,163)

–

(315)

–

(1,210)

876,846

(874,488)

(124,805)

360,641

(356,425)

4,216

1,323

(1,217)

(209)

(1,218)

(127,909)

(2,686)

(304)

–

(1,218)

716,965

(717,249)

(128,193)

156,215

(155,964)

(2,435)

–

(304)

–

Total
$’000

(128,688)

1,238,810

(1,232,130)

(122,008)

(132,117)

873,180

(873,213)

(132,150)

1. Excludes items that are not financial instruments and non-contractual accruals and provisions.

NOTE 25.3 MARKET RISK

Market risk is the exposure to adverse changes in the value of Group’s trading portfolios as a result of changes in market prices or volatility.
The Group is exposed to the following risks in each of the major markets in which it trades:

• Interest rates: changes in the level, shape and volatility of yield curves, the basis between different interest rate securities and derivatives

and credit margins;

• Foreign exchange: changes in spot and forward exchange rates and the volatility of exchange rates.

Market risk of the Group is managed on a globally consolidated basis for the Group as a whole, including all subsidiaries, in all locations. The Group’s
internal approach to risk ensures that risks in subsidiaries are subject to the same rigour and risk acceptance decisions at the parent entity level.

80 OZFOREX GROUP

Interest rate risk
The Group has exposure to non-traded interest rate risk generated by cash and cash equivalents. The Group also offers forward contracts to its
clients that enable clients to lock in exchange rates up to 12 months in advance. In addition to movements in foreign exchange rates (which are
managed in the manner described under foreign currency risk further in this Note), these forward contract transactions are exposed to changes in
interest rates. To manage this risk, the Group runs interest scenario testing across the aggregated transactions and may enter into swap contracts
with counterparty banks to reduce their aggregate exposure when applicable.

The table below indicates the Group’s sensitivity to movements in interest rates as at 31 March 2016 and 31 March 2015.

Movement in basis points (%)

AUD

CAD

EUR

GBP

NZD

SGD

USD

Other

Total

Movement in basis points (%)

AUD

CAD

EUR

GBP

NZD

SGD

USD

Other

Total

31 March 2016

+50

-50

+50

-50

Sensitivity
of profit
before tax
$’000

Sensitivity
of equity
after tax
$’000

368

143

129

814

(368)

(33)

(31)

(53)

(143)

(9)

(129)

(48)

(814)

261

102

576

(261)

(25)

(24)

(38)

(102)

(6)

(84)

(36)

(576)

31 March 2015

+50

-50

+50

-50

Sensitivity
of profit
before tax
$’000

Sensitivity
of equity
after tax
$’000

457

189

870

(457)

(11)

(47)

(45)

(16)

(189)

(20)

(85)

(870)

322

126

613

(322)

(9)

(33)

(32)

(12)

(126)

(16)

(63)

(613)

ANNUAL REPORT 2016

NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

NOTE 25. FINANCIAL RISK MANAGEMENT CONTINUED

NOTE 25.3 MARKET RISK CONTINUED

Foreign currency risk
When a foreign exchange transaction is booked, the exchange rate (and therefore the amount of foreign currency which the Group will be required
to deliver to the client’s beneficiary) is agreed. Typically, funding from the client for the international payment is not received by the Group for
another 12 to 24 hours and in that time the available exchange rate (which the Group could use to acquire the required currency) is likely to have
moved. The Group manages this risk at the time the transaction is agreed by regular hedging of its net foreign currency exposures with one of its
counterparty banks.

To manage the movement in foreign exchange rates, the Group’s technology platform aggregates transactions across its entire client base and
nets out buy transactions against sell transactions. The Group’s staff clear exposures by entering into hedging contracts with counterparty banks
pursuant to internal guidelines which provide for hedging to occur once exposure to a single currency reaches or exceeds a defined threshold.
The Group’s financial risk on these exposures is limited to potential loss or gain from currency movements which may occur between when the
transaction with the client is booked and when hedging occurs.

The table below indicates the Group’s sensitivity to movements in foreign currency exchange rates as at 31 March 2016 and 31 March 2015.

31 March 2016

+10%

-10%

+10%

-10%

Sensitivity
of profit
before tax
$’000

Sensitivity
of equity
after tax
$’000

(10)

(12)

(75)

(5)

(3)

(99)

(59)

(97)

(4)

(60)

(50)

(4)

(11)

(17)

(79)

31 March 2015

+10%

-10%

+10%

-10%

Sensitivity
of profit
before tax
$’000

Sensitivity
of equity
after tax
$’000

(32)

(115)

(21)

(20)

(1)

(53)

115

(14)

(80)

(22)

(80)

(15)

(13)

(1)

(37)

(10)

(56)

Movement in exchange rate (%)

CAD

EUR

GBP

NZD

SGD

USD

Other

Total

Movement in exchange rate (%)

CAD

EUR

GBP

NZD

SGD

USD

Other

Total

82 OZFOREX GROUP

NOTE 26. FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. Fair value reflects the amount for which an asset could be exchanged or a liability settled, between
knowledgeable, willing parties in an arm’s length transaction. Quoted prices or rates are used to determine fair value where an active market
exists. If the market for a financial instrument is not active, fair values are estimated using present value or other valuation techniques, using
inputs based on market conditions prevailing on the measurement date.

The values derived from applying these techniques are affected by the choice of valuation model used and the underlying assumptions made
regarding inputs such as timing and amounts of future cash flows, discount rates, credit risk, volatility and correlation.

Financial instruments measured at fair value are categorised in their entirety, in accordance with the levels of the fair value hierarchy prescribed
under the accounting standards as outlined below:

Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – inputs other than quoted prices in an active market (for example, over-the-counter derivatives) are determined using valuation
techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates;

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

The appropriate level for an instrument is determined on the basis of the lowest level input that is significant to the fair value measurement.

The following methods and significant assumptions have been applied in determining the fair values of financial instruments:

Liabilities, financial assets and liabilities at fair value through profit or loss, derivative financial instruments and other transactions undertaken
for trading purposes are measured at fair value by reference to quoted market prices when available (e.g. listed securities). If quoted market prices
are not available, then fair values are estimated on the basis of pricing models or other recognised valuation techniques.

The following methods and significant assumptions have been applied in determining the fair values of financial instruments which are carried
at amortised cost:

• The fair values of liquid assets and other instruments maturing within three months approximate their carrying amounts. This assumption

is applied to liquid assets and the short-term elements of all other financial assets and financial liabilities.

• The fair value of demand deposits with no fixed maturity is approximately their carrying amount as they are short term in nature or are payable

on demand.

• The fair values of balances due from/to related entities are approximated by their carrying amount as the balances are generally receivable/

payable on demand.

The table below summarises the carrying value and fair value of all financial instruments of the Group at 31 March.

Assets

Cash

Receivables due from financial institutions

Derivative financial instruments – positive values

Total financial assets

Liabilities

Client liabilities

Derivative financial instruments – negative values

Total financial liabilities

2016
Carrying
amount
$’000

142,088

20,802

26,977

189,867

124,827

20,297

145,124

2016
Fair value
$’000

142,088

20,802

26,977

189,867

124,827

20,297

145,124

2015
Carrying
amount
$’000

168,804

5,200

10,294

184,298

124,591

10,327

134,918

2015
Fair value
$’000

168,804

5,200

10,294

184,298

124,591

10,327

134,918

The above financial assets and liabilities held at amortised cost are measured at fair value on a non-recurring basis and are all classified as Level 2
in the fair value hierarchy.

ANNUAL REPORT 2016

NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

NOTE 26. FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES CONTINUED
The following table summarises the levels of the fair value hierarchy for financial instruments measured at fair value of the Group at 31 March:

Assets

Derivative financial instruments – positive values

Total assets

Liabilities

Derivative financial instruments – negative values

Total liabilities

2016
Level 2
$’000

26,977

20,297

2016
Total
$’000

26,977

20,297

2015
Level 2
$’000

10,294

10,327

2015
Total
$’000

10,294

10,327

NOTE 27. REMUNERATION OF AUDITORS
During the year, the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and
non‑related audit firms:

(a) PricewaterhouseCoopers Australia

Audit and review of financial statements

Total remuneration for audit and other assurance services

Taxation services

Due diligence services

Total remuneration of PricewaterhouseCoopers Australia

(b) Non-PricewaterhouseCoopers audit firms

Audit and review of financial reports

Total remuneration of non-PricewaterhouseCoopers audit firms

Total auditors’ remuneration

2016
$

2015
$

303,847

148,006

29,675

481,528

33,480

515,008

373,866

86,324

–

460,190

11,422

471,612

It is the Company’s policy to employ PricewaterhouseCoopers (PwC) on assignments additional to their statutory audit duties where PwC’s expertise
and experience with the Company are important. These assignments are principally tax advice and due diligence reporting on acquisitions, or where
PwC is awarded assignments on a competitive basis. It is the Company’s policy to seek competitive tenders for all major consulting projects.

NOTE 28. EVENTS OCCURRING AFTER BALANCE SHEET DATE

DIVIDEND DETERMINED

On 16 May 2016, a dividend of $0.031 per share ($7,440,000) was determined.

Ex‑dividend date

Record date

Payment date

9 June 2016

10 June 2016

24 June 2016

There were no other material post balance sheet events occurring after the reporting date requiring disclosure in these financial statements.

As the parent entity, OzForex Group Limited is a holding company which has no trading profits, dividends declared but not paid will be funded
through the profits of subsidiary entities.

84 OZFOREX GROUP

NOTE 29. EARNINGS PER SHARE

(a) Basic earnings per share

From continuing operations attributable to the ordinary equity holders of the Company

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

(b) Diluted earnings per share

From continuing operations attributable to the ordinary equity holders of the Company

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

Basic earnings per share

Profit from continuing operations

Diluted earnings per share

Profit from continuing operations

2016
Cents

9.09

8.99

$’000

2015
Cents

10.11

10.03

$’000

21,814

24,266

21,814

24,266

(d) Weighted average number of shares used as denominator

Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share

240,000,000

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

242,735,382

241,839,264

NOTE 30. PARENT ENTITY FINANCIAL INFORMATION

SUMMARY FINANCIAL INFORMATION

Statement of Financial Position

Investment in subsidiary

Total assets

Ordinary share capital

Total equity

Profit or loss for the year1

Total comprehensive income

1. Profit for the year relates to intercompany dividends received.

Earnings per share based on profit from continuing operations,
attributable to the ordinary equity holders of the parent entity:

Basic earnings per share

Diluted earnings per share

Parent entity

2016
$’000

24,360

17,242

2015
$’000

24,360

14,100

Cents

7.18

7.10

5.88

5.83

ANNUAL REPORT 2016

DIRECTORS’ DECLARATION

In the Directors’ opinion:

(a) the financial statements and notes for the year ended 31 March 2016 are in accordance with the Corporations Act 2001, including;

(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements, and

(ii) giving a true and fair view of the consolidated entity’s financial position as at 31 March 2016 and of its performance for the financial year

ended on that date, and

(b) there are reasonable grounds to believe that OzForex Group Limited will be able to pay its debts as and when they become due and

payable, and

(c) Note 1(i) confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International

Accounting Standards Board.

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

This declaration is made in accordance with a resolution of the Directors.

On behalf of the Board:

PETER WARNE
CHAIRMAN

RICHARD KIMBER
MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER

16 May 2016

86 OZFOREX GROUP

INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF OZFOREX GROUP LIMITED

Independent auditor’s report to the members of OzForex
Group Limited

Report on the financial report
We have audited the accompanying financial report of OzForex Group Limited (the company), which
comprises the statement of financial position as at 31 March 2016, the statement of comprehensive
income, statement of changes in equity and statement of cash flows for the year ended on that date, a
summary of significant accounting policies, other explanatory notes and the directors’ declaration for
OzForex Group Limited (the consolidated entity). The consolidated entity comprises the company and
the entities it controlled at year’s end or from time to time during the financial year.

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

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

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

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

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

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

Liability limited by a scheme approved under Professional Standards Legislation.

ANNUAL REPORT 2016

INDEPENDENT AUDITOR’S REPORT CONTINUED
TO THE MEMBERS OF OZFOREX GROUP LIMITED

Auditor’s opinion
In our opinion:

(a)

the financial report of OzForex Group Limited is in accordance with the Corporations Act 2001,
including:

(i)

(ii)

giving a true and fair view of the consolidated entity's financial position as at 31 March
2016 and of its performance for the year ended on that date; and

complying with Australian Accounting Standards and the Corporations Regulations
2001.

(b)

the financial report and notes also comply with International Financial Reporting Standards as
disclosed in Note 1.

Report on the Remuneration Report
We have audited the remuneration report included in pages 32 to 46 of the directors’ report for the
year ended 31 March 2016. 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.

Auditor’s opinion
In our opinion, the remuneration report of OzForex Group Limited for the year ended 31 March 2016
complies with section 300A of the Corporations Act 2001.

PricewaterhouseCoopers

CPG Cooper
Partner

Sydney
16 May 2016

88 OZFOREX GROUP

SHAREHOLDER INFORMATION

The shareholder information set out below is current as at 30 April 2016.

CORPORATE GOVERNANCE STATEMENT
In accordance with ASX Listing Rule 4.10.3, the Company’s 2016 Corporate Governance Statement can be found on its website at
www.ozforex.com.au/investors/corporate governance.

DISTRIBUTION OF SHAREHOLDERS AS AT 30 APRIL 2016

Number of shares

1-1,000

1,001-5,000

5,001-10,000

10,001-100,000

100,001-999,999,999

Total

Total holders of
ordinary shares

1,236

3,404

1,709

1,644

8,060

Number of
ordinary shares

742,822

9,960,589

13,601,432

40,356,966

175,338,191

240,000,000

% of
Issued capital

0.31

4.15

5.67

16.82

73.06

100.00

There were 173 holders of less than a marketable parcel of ordinary shares, based on a market price of $2.16 at the close of trading on 30 April 2016.

TWENTY LARGEST SECURITY HOLDERS OF ORDINARY SHARES AS AT 30 APRIL 2016

Rank

Name

Units

% of units

10.

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.

J P MORGAN NOMINEES AUSTRALIA LIMITED

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED

NATIONAL NOMINEES LIMITED

CITICORP NOMINEES PTY LIMITED

BNP PARIBAS NOMS PTY LTD

G AND A LORD PTY LTD

MR MATTHEW GILMOUR

CITICORP NOMINEES PTY LIMITED

MIRRABOOKA INVESTMENTS LIMITED

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED

BNP PARIBAS NOMINEES PTY LTD

BNP PARIBAS NOMS (NZ) LTD

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED–GSCO ECA

RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED

AMCIL LIMITED

MAP CAPITAL PTY LTD

CS FOURTH NOMINEES PTY LIMITED

BNP PARIBAS NOMINEES PTY LTD

MR JOHN LETCHER HOCKING + MRS JEANNETTE ANNE HOCKING

M & J GILMOUR PTY LTD

Totals: top 20 holders of fully paid ordinary shares

Total remaining holders balance

41,937,787

36,887,566

23,231,784

18,935,339

9,844,783

9,600,000

9,245,200

1,906,850

1,750,000

1,717,944

1,686,000

1,631,957

1,333,537

1,308,695

1,275,000

1,000,000

873,533

803,039

660,000

599,806

166,228,820

73,771,180

17.47

15.37

9.68

7.89

4.10

4.00

3.85

0.79

0.73

0.72

0.70

0.68

0.56

0.55

0.53

0.42

0.36

0.33

0.28

0.25

69.26

30.74

ANNUAL REPORT 2016

SHAREHOLDER INFORMATION CONTINUED

UNQUOTED EQUITY SECURITIES AS AT 31 MARCH 2016
Performance rights and share options issued under the OzForex Group Long Term Incentive Plan which, subject to vesting conditions, entitle the holder
to ordinary shares:

Performance rights

Share options

Number held

2,507,752

400,000

Number of
holders

SUBSTANTIAL SHAREHOLDERS
Substantial shareholders (holding not less than 5%) as shown in substantial shareholder notices received by the Company pursuant to 671B of the
Corporations Act 2001 as at 30 April 2016 are shown below.

AustralianSuper Pty Limited

National Australia Bank

Number held

12,370,760

12,295,698

% of issued
capital

5.15%

5.12%

VOTING RIGHTS
The voting rights are governed by clause 37 of the Company’s Constitution, which provides that every member present personally or by proxy,
attorney or representative, shall on a show of hands have one vote and on a poll shall have one vote for every share held.

ORDINARY SHARES
On a show of hands, every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

PERFORMANCE RIGHTS
There are no voting rights attached to performance rights issued under the OzForex Group Long Term Incentive Plan.

BUYBACK
There is no current on-market buyback.

90 OZFOREX GROUP

CORPORATE INFORMATION

DIRECTORS

OFX FINANCIAL CALENDAR

Mr Peter Warne (Chairman)
Mr Richard Kimber (Managing Director and CEO)
Ms Melinda Conrad
Mr Grant Murdoch
Mr Douglas Snedden

COMPANY SECRETARY

Ms Linda Cox

17 MAY 2016

2016 full year result

10 JUNE 2016

Record date for 2016 final dividend

24 JUNE 2016

NOTICE OF ANNUAL GENERAL MEETING

Payment date for 2016 final dividend

3 AUGUST 2016

Annual General Meeting

NOVEMBER 2016

2017 interim result

MAY 2017

2017 full year result

Wednesday 3 August at 4pm
Establishment Hotel
252 George Street
Sydney NSW 2000
Australia

PRINCIPAL REGISTERED OFFICE IN AUSTRALIA

Level 19
60 Margaret Street
Sydney NSW 2000
Australia
Ph +61 2 8667 8000
Fax +61 2 8667 8080
Email investors@ofx.com.au

SHARE REGISTER

Computershare Registry Services Pty Limited
60 Carrington Street
Sydney NSW 2000
Australia

Ph +61 3 9415 4000
Ph 1300 850 505 (Australian shareholders)

AUDITOR

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

STOCK EXCHANGE LISTING

OzForex Group shares are listed on the Australian Securities
Exchange: OFX

WEBSITE ADDRESS

www.ofx.com

ANNUAL REPORT 2016