Annual Report 2022
Openpay Group ................................................... 2
ANZ FY22 Highlights ........................................... 2
Chairman’s Letter .................................................... 4
CEO Message ........................................................... 6
FY23 Strategy . .......................................................... 9
Why is Openpay unique? .................................. 11
Openpay (B2C) .......................................................12
Our Hidden Gem, Opypro (B2B) ................ 16
Our Technology & Innovation ....................... 14
Environmental, Social & Governance ...... 22
Risks & Challenges .............................................. 27
Directors’ Report . ............................................ 31
Review of Performance ...................................... 31
Remuneration Report . ....................................... 38
Auditor’s Independence Declaration ...... 50
Financial Report ................................................ 51
Financial Statements .......................................... 52
Notes to the Financial Statements ............. 56
Directors’ Declaration ....................................... 94
Independent Auditor’s Report ..................... 95
Additional Information . .................................. 102
Corporate Information ......................................... iii
contents
ii | Openpay Group Limited Annual Report 2022
We would like to express our appreciation to Openpay’s loyal
shareholders who continue to place their trust and confidence
in our Company. In FY22 we took tough but measured and
deliberate decisions to simplify the business.
In FY23 we will leverage the benefits of a leaner and more
efficient business, to solidify our path and deliver profitability
by June 2023.
Annual Report 2022 Openpay Group Limited | 1
ANZ FY22 Highlights
Total Transaction Value (TTV)
Up 49%
YoY
CAGR 54%
Active Plans
Up 50%
YoY
CAGR 92%
B2C Revenue
Up 40%
YoY
CAGR 34%
Active Merchants
Up 9%
YoY
CAGR 42%
Active Customers
Up 21%
YoY
CAGR 35%
Opypro Total Transaction Value
Up 683%
YoY
Opypro Active Trading Accounts
Up 114%
YoY
FY19
FY20
FY21
FY22
95
156
231
344
Total Transaction Value
($m)
FY19
FY20
FY21
FY22
Active Plans
(m)
0.2
0.6
1.2
1.8
FY19
FY20
FY21
FY22
B2C Revenue
($m)
11.0
16.8
18.8
26.3
FY19
FY20
FY21
FY22
Active Merchants
(’000)
1.4
2.1
3.7
4.1
2 | Openpay Group Limited Annual Report 2022
FY21
FY22
Total Tranasction Value
Opypro ($m)
5.2
40.7
FY19
FY20
FY21
FY22
Active Customers
(’000)
131
210
265
321
FY19
FY20
FY21
FY22
Revenue Margin1
11.6%
10.7%
8.2% 7.7%
FY21
FY22
Active Trading Accounts
Opypro ('000)
5.2
11.2
FY19
FY20
FY21
FY22
Net Tansaction Margin
(NTM)2
4.4%
3.1%
2.9% 2.9%
FY19
FY20
FY21
FY22
Net Transaction Loss
(NTL)3
2.0%
1.0%
1.0%
1.2%
1. Calculated as B2C revenue as a percentage of Total Transaction Value.
2. Calculated as Net Transaction Margin as a percentage of Total Transaction Value.
3. Calculated as absolute Net Transaction Loss as a percentage of Total Transaction Value.
Annual Report 2022 Openpay Group Limited | 3
Chairman’s Letter
Dear fellow shareholders,
FY22 has been a year of
proactive change for the
Openpay Group, against
a backdrop of weakening
financial markets, coupled with
a challenging macroeconomic
environment. Our swift and
focused decisions have
delivered continued growth
and our strongest ever
results across key metrics,
while continuing to optimise
our cost base and improve
our core unit economics.
As the world emerges from
the global disruption caused
by COVID-19 and learns to live
with the post-pandemic “new
normal”, the Buy Now Pay Later
(BNPL) sector continues to face
considerable operational and
regulatory uncertainty, which
has been mirrored by similar
volatility in equity capital
markets. This has caused many
BNPL businesses around the
world to make significant
changes to their operations
and business models.
Openpay has led the way
in adapting our business
to the fast-changing global
headwinds impacting the
BNPL sector. In January 2022,
we announced a strategic
review, focused on simplifying
Openpay’s regional approach.
The Board made the difficult
but timely decision to exit
the UK market while seeking
opportunities to monetise
our proven UK platform.
We also implemented a
revised strategy to accelerate
our path to profitability in
Australia, incorporating a
range of savings initiatives
and efficiency measures in
conjunction with revised
customer payment plan
pricing, to deliver increased
profit margins across our
targeted industry verticals.
This new pricing strategy has
consistently delivered industry-
leading margins and has
further diversified our revenue
mix between merchant fees
and customer plan fees,
differentiating Openpay from
its more traditional pay-in-four
peer set which rely heavily
on merchant fees as their
primary source of income.
In the US, corporate advisors
were appointed to assist with
the search for potential parties
who could invest directly into
our US operations to support
our projected business growth
in the world’s largest BNPL
market. Despite entering
into a number of promising
Openpay’s Australian
business continues to
perform strongly and has
delivered record results
across a range of
key metrics in FY22,
both in its B2C (Openpay)
and B2B (Opypro)
operations.
4 | Openpay Group Limited Annual Report 2022
discussions with credible
US strategic and institutional
investors, the continuing
volatility and uncertainty
in the US macroeconomic
environment and equity
markets had a direct adverse
impact on their underlying
investment appetite.
Having pursued a number
of detailed discussions with
potential US investors and
recognising the significant
level of capital investment
required to support forecast
lending growth, Openpay
Group announced it would
indefinitely pause its existing
US operations and cease
loan originations in July 2022.
This was a difficult decision
to make in what has been
a very challenging market
environment. The Board
remains incredibly proud
of what Openpay and its
dedicated US team achieved
in such a short space of
time, and we will continue to
pursue viable opportunities
to further leverage and
monetise our US platform.
Targeting profitability in
Australia by June 2023
Openpay’s Australian business
continues to perform strongly
and has delivered record
results across a range of key
metrics in FY22, both in its
B2C (Openpay) and B2B
(Opypro) operations. In FY23,
we will continue our efforts to
optimise our capital structure
and reduce funding costs.
We remain confident that our
Australian core operations
will reach sustainable
profitability by June 2023.
Our payment plan offerings
are even more valuable to
customers in an inflationary
environment against a
backdrop of rising interest
rates. Our instalment plans
enable consumers to lock in
today’s price and pay over
time, for more considered,
larger and longer-term
purchases across key verticals.
Given this flexibility, we
continue to experience
strong demand across all
our targeted verticals, where
we offer complete pricing
transparency to all our
customers and merchants.
We focus on industries
where our larger and
longer-term plans can make
a true difference, deliver
higher transaction margins
and achieve a stronger
portfolio performance. Our
plans are available across
Automotive, Healthcare
(including Dentistry,
Veterinary and Hospitals),
Home Improvement,
Education and Retail.
Our business model is different
from peers in the typical pay-
in-four BNPL segment that offer
shorter-term plans, normally
lower in value. Openpay fills
the gap between the highly
competitive pay-in-four / BNPL
space and the more traditional
consumer credit providers.
For merchants, offering a
diverse range of payment
solutions consistently increases
average transaction sizes and
improves customer loyalty
and experience, enabling
them to spread the cost over
a longer period of time. For
our customers, we provide
responsible and highly flexible
pricing terms, helping them
manage their budgets and
household cashflow. This
means our unique value
proposition attracts both
merchant and consumer
fees, delivering strong and
diversified unit economics.
In addition to our consumer
offering, Openpay has further
diversified its revenues with
Opypro, a capital-light and
low-risk SaaS solution. In
FY22, Opypro added HP and
Kogan.com to the platform
with great success. The
pipeline for new enterprise
customers continues to grow
and mature, placing Opypro
on its way to claiming a
significant share of the Group’s
future business performance.
We will continue to execute on
our strategy, offering a smarter
way to pay for customers as
well as businesses, and look
forward to another exciting
year ahead as we remain
laser-focused on delivering
sustainable profitability in our
core Australian operations.
On behalf of our entire Board
of Directors, I would like to
express our appreciation to
Openpay’s loyal shareholders
who continue to place
their trust and confidence
in our Company.
We are also grateful to our
customers and merchants for
their continued support and
loyalty throughout FY22. We
look forward to continuing
to work collaboratively on
delivering our differentiated
plans to provide a valuable
outcome for customers
and merchants alike.
Lastly, I would like to thank our
senior management team and
employees for their wonderful
contribution to Openpay’s
achievements in FY22. They
have all been instrumental
in steering the business
through a very challenging
market environment.
Patrick Tuttle
Openpay Chairman
Annual Report 2022 Openpay Group Limited | 5
CEO Message
Dear valued shareholders,
FY22 was a year like no other,
prompting well-considered
change for the Openpay
Group. In light of the current
economic and market
conditions, we proactively
made several strategic
decisions to simplify and focus
the business on sustainable
growth, solidifying its path to
profitability. These decisions
resulted in an exit from the
UK market in January 2022
and pausing US operations
in July 2022 to enable focus
on our Australian business,
our most mature and best
performing region, that
remains on track to deliver
cash EBITDA profitability by
June 2023 on a monthly basis.
Thanks to the support
from our shareholders,
commitment from customers
and merchants, and the
dedication from our team, the
Australian business has gone
from strength to strength over
the past 12 months. It has
yielded record results, market-
leading margins and low net
bad debts. This performance
has extended across both
our B2C (Openpay) and
B2B (Opypro) businesses.
Openpay (B2C platform)
In ANZ FY22, we recorded
our strongest performance
to date across our leading
indicators, which continues to
grow as we experience higher
demand for our product.
• Active Customers
321k (+21% YoY)
• Active Plans reached
1.8m (+50% YoY)
• 92% of plans are from
repeat customers,
with 65% holding
multiple plans
• Average plan value was
$239, and average plan
length was 3.3 months
Openpay’s focus on merchant
selection and acquisition
across target verticals led
to innovation, including
launching a new vertical in
Education, and the continued
growth in Active Merchants by
9% year-on-year to reach 4.1k
at the end of the financial year.
Through partnering with large
aggregators, we’ve continued
to be successful in driving
seamless integration with new
merchants and customers.
In FY22, we integrated with
several major eCommerce,
point of sale (POS) and
payment gateway platforms.
Some of the significant
integrations included:
BigCommerce, Shopify’s new
payment platform, Apparel
21, Till Payments, Quest
Payments and Insyte CRM.
Openpay’s unique point of
difference remains widely
understood and supported by
customers who seek choice
and flexibility of simple plan
options for purchases in-store
and online.
6 | Openpay Group Limited Annual Report 2022
Throughout FY22, we
increased brand awareness
through marketing campaigns
and partnerships. We signed
as an official partner of the
Melbourne Storm Rugby
League Club, supporting
and amplifying our unique
commitment to sporting
memberships and fans all
over Australia. In December
our Christmas campaign, “Tis
the season to spend smarter”,
delivered strong customer
engagement and our best
December results ever.
Openpay’s unique point of
difference remains widely
understood and supported
by customers who seek
choice and flexibility of simple
plan options for purchases
in-store and online. In FY22, to
further improve the customer
and merchant experience,
we streamlined our plan
options and standardised our
pricing across all merchants
and verticals. We abolished
establishment fees to focus
on fixed fortnightly fees for
each plan where applicable.
This offers customers more
certainty and transparency
around pricing wherever
they shop with Openpay,
while retaining the choice
and flexibility they trust
and love. Many customers
have shared this trust with
others, via reviews and a
Trustpilot rating of 4.7.
In May, Openpay launched
its annual trade event
“OpenMay”, offering premium
and exclusive merchant
deals to customers. This
delivered uplift in TTV across
all verticals, making May
2022 the second highest
trading month in Openpay’s
history behind December.
This was then beaten in
June 2022, delivering our
largest TTV month on record.
We are seeing the current
economic environment
drive increased demand for
Openpay and our flexible
range of plans. In ANZ FY22,
we experienced TTV and
revenue records, delivered
market-leading margins and
maintained a high-quality
portfolio, with very low net
bad debts and arrears.
• Our TTV grew to a record
$344m (+49% YoY), with
highest ever revenue of
$26.3m (+40% YoY)
• Revenue margin of
7.7% (2H FY22 revenue
margin of 8.1%)
• Net Transaction Margin
(NTM) of 2.9%
(2H FY22 NTM of 3.1%)
• Net Transaction Loss
(NTL) of -1.0% (2H FY22
NTL of -1.0%)
• Net bad debts improved
to 1.6% (1.7% in FY21)
• Arrears also improved
to 1.1% (1.9% in FY21)
Opypro (B2B platform)
Our Software-as-a-Service
(SaaS) solution, Opypro,
also delivered record
growth throughout FY22
as businesses returned to
work for the second half
of the financial year.
In FY22, Opypro
performed strongly:
• TTV grew 683% to
$40.7 million
• Revenue increased
304% to $878k
• Active accounts increased
114%, reaching over 11,200
• The number of
transactions through
the platform rose
753% to over 215,000
transactions in FY22
We added new enterprise
customers to the platform
and continue to field strong
interest for this emerging
product, resulting in a growing
and maturing pipeline. This
is largely in enterprise clients
across many verticals aligned
to our B2C business, including
but not limited to: Automotive,
Healthcare and Retail.
Our Proprietary Technology
Our technology stack
continues to evolve and in
FY22 we delivered several
key product developments
to improve user experience,
increase security and reliability
and enrich credit decisioning.
In addition, our data platform
has been enhanced to allow
for automated reporting,
with better insights to
support business decisions
resulting in further business
efficiencies. We expect this
to continue as we further
develop our technology
across both B2C and B2B.
Annual Report 2022 Openpay Group Limited | 7
Our People
To the whole Openpay
team, our Board and
leadership, thank you for
all your efforts in FY22!
Our people are our greatest
strength and with renewed
focus on Australia, the team
is better together. This strong
culture led to Openpay
being named in the Top 3 of
the AFR Boss “Best Places
To Work” Awards for the
Financial Services sector, the
culmination of which helps
attract, develop, and retain
our top talent. A big thanks
to all of our team - you are
resilient, you are valued,
and you are focused.
We remain committed to
empowering our people,
promoting from within the
Company and supporting
our staff through what have
been challenging times.
We leverage experience
and insights to deliver
high productivity and a
flexible working model
that encourages staff to
achieve their best every day,
and they absolutely do.
FY23 Path to Profit
In FY23, we remain
committed to executing
on our strategy to deliver
cash EBITDA profitability
by June 2023. Our strategy
has six main pillars that will
deliver consistent results and
market-leading margins, while
ensuring quality customers
and engaged merchants:
1. Convert and retain
customers that have
already signed up to
drive more value from the
existing customer base
2. Grow the customer base
through our verticalised
strategy, while focusing
on high-quality customers
and profitable segments
3. Continue to deliver
merchant value to
increase Openpay
adoption and advocacy
4. Scale the Opypro
platform across verticals
5. Drive cost efficiencies
and productivity
improvements without
restricting growth
6. Retain and attract top
talent while maintaining
flexible ways of working
In closing, I want to extend my
thanks and appreciation to our
shareholders, merchants and
customers for your continued
support, in what has been
a year of positive change
for the Openpay Group.
We’ve made the necessary
decisions in a challenging
environment to ensure we
are focused, energised
and committed to deliver
continued sustainable growth
and profitability by June 2023.
Yours sincerely,
Dion Appel
Openpay CEO
CEO Message Continued
Our people are our
greatest strength and
with renewed focus on
Australia, the team is
better together.
Openpay named Top 3
AFR Boss “Best Places To Work”
8 | Openpay Group Limited Annual Report 2022
FY23 Strategy
Delivering profitability in a
changing market environment.
1. Convert
Customers
Convert and retain
approved customers
to drive increased
value from existing
customers
2. Grow
Verticals
Grow the customer
base through our
verticalised strategy,
while focusing on high
quality customers and
profitable segments
3. Deliver
Value
Continue to deliver
merchant value to
increase acquisition
and advocacy
4. Scale
Opypro
Scale Opypro
(B2B) trade account
management platform
across target verticals
5. Continuous Improvement
Drive cost efficiencies and productivity improvements without restricting growth
6. Top Talent
Retain and attract talent while maintaining flexible ways of working
Key Business Objectives
Key Operational Objectives
Annual Report 2022 Openpay Group Limited | 9
10 | Openpay Group Limited Annual Report 2022
Why is Openpay unique?
Openpay Group Ltd (ASX: OPY) is a
fast-growing and highly differentiated
fintech solution provider. The Company
supports both B2C and B2B platforms.
Openpay offers much more than pay-in-4, with plans
ranging to 24 months, enabling more considered
purchases up to $20,000. Openpay is accepted
in verticals including: Automotive, Healthcare,
Retail, Home Improvement and Education.
Openpay’s B2B platform, Opypro, is a leading
SaaS solution that successfully removes the friction
between suppliers and trade buyers to deliver a
positive customer experience. Opypro is an end-to-
end fully digitised platform enabling transactions
in-store and online. The platform supports the
application and onboarding process, ongoing
account management and business processing,
including invoicing, remittance and reconciliation.
We provide a smarter
way to pay – for
consumers (B2C) and
businesses (B2B).
In B2C, through
Openpay, our embedded
consumer finance
platform and in B2B,
through Opypro,
our trade account
management platform.
Annual Report 2022 Openpay Group Limited | 11
Openpay - our differentiated embedded
consumer finance platform
In FY22, we continued to grow our core
verticals whilst investing in scaling up new
ones, with the aim of reaching cash EBITDA
profitability by June 2023.
Education
Home Improvement
Healthcare
Automotive
Retail
12.3
8.9
4.2
3.9
3.2
Average Plan Length (months) – FY22
Education
Home Improvement
Healthcare
Automotive
Retail
Average Transaction Value – FY22
$3,517
$2,691
$804
$638
$193
Openpay is an embedded
finance solution delivering
flexible repayment plans
that help manage cashflow
and household budgeting.
Openpay offers much more
than pay-in-4, with plans
ranging to 24 months,
enabling more considered
purchases up to $20,000.
Openpay is accepted
in verticals including
Automotive, Healthcare,
Retail, Home Improvement
and Education.
Our growth strategy has
always been about creating
a brand and product that is
unique and different in the
market. Our differentiated
model is appealing to a
wider base of merchants and
customers, allowing us to build
a sustainable business from
diverse sectors. This attracts a
more mature, financially savvy
customer base with preferable
risk profiles, delivering higher
average transaction values.
12 | Openpay Group Limited Annual Report 2022
Whilst the country was
navigating out of COVID
lockdowns, our higher value,
more considered retail trade
remained strong, with total
transaction value of $253m
in FY22, a 53% increase
when compared to FY21,
with 49% of the transactions
being online and 51% in-store
in the financial year.
A strong focus on omnichannel
and awareness saw
growth from established
and new partners.
“We are excited to be
partnering with Openpay
and to be able to offer this
flexible payment solution to
our customers, giving them
the choice to pay in a way that
works for them and allowing
consumers to spread the cost of
their purchases over time. We
look forward to strengthening
this partnership with the
Openpay team going forward.”
Brent England –
General Manager
IT & Digital at Brand Collective
Many macro factors made
trade challenging for the
Automotive industry in
FY22, including extended
lockdowns, yet Openpay
saw continued growth of
31% in FY22. This led to a
total transaction value of
$40m this financial year.
Active plans increased
27% this financial year.
Given our diverse range
of sub-industries, average
transaction value remained
high at $638 and the average
plan length was 3.9 months,
reinforcing our value to the
Automotive industry.
We worked strategically with
our partners to make the most
of every sales opportunity.
“We have been in partnership
with Openpay since 2019. It has
actually been a very useful tool
for promoting service work that
would have otherwise lapsed.
The convenience and interest-
free payment options using
Openpay is something that we
promote to our customers.”
April Harwood –
Chief Sales Officer
JAX Tyres and Auto
Retail
Automotive
Some of our Retail Partners:
Some of our Automotive Partners:
Annual Report 2022 Openpay Group Limited | 13
New sub-industries
emerged in Hospitals,
Community Hubs,
Audiology and Dental
Aligners, complemented
by continued growth in
our core sub-industries of
Dental and Veterinary.
Many health partners utilise
the full service Openpay
provides, from the lower value
2-4 month plans right up to
the $20,000 sales over 24
months. Active plans grew
36% this financial year, with
an average transaction value
of $804 and average plan
length of 4.2 months in FY22.
“Having flexible finance
options available is key to
improving case acceptance
as the cost of orthodontic
treatment as a lump sum can
be overwhelming for patients.
We are delighted to work
with Openpay as one of our
preferred suppliers of flexible
patient finance. Through this
relationship, Clear Aligner
Excellence practices are set
to enjoy a higher number of
new case starts, enabling
them to treat more patients
and increase revenue.”
Dr Geoff Hall and Dr Jesse
Green
Directors at Clear Aligner
Excellence
Healthcare
Healthcare has been
the headline of the past
few years, undergoing
major change throughout
the pandemic. Openpay
saw strong growth
in FY22, with total
transaction value reaching
$34 million, an increase of
41% compared to FY21.
Some of our Healthcare Partners:
Openpay - our differentiated embedded
consumer finance platform Continued
14 | Openpay Group Limited Annual Report 2022
Home Improvement
remained steady
throughout FY22 as
Australians emerged
from COVID restrictions.
Openpay continued to
build on partnerships
with key merchants
in Bunnings (Kitchens
division), Spotlight
(Blinds division), National
Tiles and Carpet Call.
In Home Improvement, our
average transition value is
over $2,600 and average
plan length of 8.9 months,
as people use Openpay to
add value to their home.
FY22 saw the emergence
of a new core vertical for
Openpay in Education, as
many consumers upskilled,
changed industries and
invested in personal
development in the
post-pandemic period.
We partnered with leading
higher education provider
RMIT Online to provide
Openpay to their growing
number of students.
Alongside this was a strategic
partnership with Nelnet
International, a leading
technology platform for the
higher education sector.
Education
Home Improvement
Some of our Home Improvement Partners:
Some of our Education Partners:
Annual Report 2022 Openpay Group Limited | 15
Our Hidden Gem, Opypro (B2B)
Launched in Australia in
2019, the Opypro SaaS
platform was designed to
remove friction and error
from the buyer-supplier
relationship, by fully
digitising the trade credit
management solution.
Just like our approach with
B2C, our approach to B2B
is also highly differentiated.
Many existing business
account providers are
forced to use old-world,
manual and semi-automated
solutions to service trade
customer relationships. But
Opypro allows companies to
manage their trade accounts
digitally, from application to
transaction and remittance.
Opypro resolves a few key
problems for its business
customers, including:
• automated onboarding,
with credit checks in
under 10 minutes
• automated invoicing and
payment reconciliation
• the ability to view
transaction data in real time
In addition, our
solution provides:
• an improved customer
experience
• embedded funding through
a partnership with Lumi
• analytics and reporting
• improved working capital
and revenue acceleration
Openpay’s two core B2B
products, Opypro and
Opypro+ Credit, enable us
to meet the varied needs
of enterprise merchants in
the Australian market.
In FY22, Openpay
commissioned Forrester
Consulting to evaluate
the role of buyer account
management platforms in
supporting buyer-supplier
relationships. The research
further validated the need for
an end-to-end trade account
management SaaS platform
like Opypro, and highlights
the expected benefits.
Benefits of adopting a buyer account management platform
1. Profitability
Improved payment
success and profitability
66% improved profitability
74% reduced payment
failures
2. Cashflow
Improved cashflow
58% reduced DSO
62% reduced cost of failed
payment recovery
65% reduced bad debt
resulting from failed
payments
3. Productivity
Increased employee
productivity
60% reduced time wastage
and improved
employee productivity
4. Experience
Elevated buyer
experience
58% improved the business
buyer experience
58% reduced business
buyer churn
Base: 200 senior IT and business decision-makers with responsibility for or influence over business buyer credit account management strategy and solutions at their organisation
Source: A commissioned study conducted by Forrester Consulting on behalf of Openpay in 2021
16 | Openpay Group Limited Annual Report 2022
Opypro Total
Transaction Value ($m)
Opypro Revenue
($000)
Opypro Active Trading
Accounts (’000)
Opypro Transactions
(’000)
FY21
FY22
FY21
FY22
FY21
FY22
FY21
FY22
5.2
40.7
217
878
5.2
11.2
25
215
Opypro FY22 Performance
Customers and Partners
Opypro is a high-margin
SaaS platform, with
leading Australian brands
already onboarded, and
key partnerships with
major distributors and
technology partners.
Strong Pipeline
Pipeline growth remains
strong and maturing with
potential customers in verticals
including Automotive,
Healthcare, Retail and
Building & Construction.
Key initiatives to grow the
pipeline revolve around
partnerships, our current
merchant database,
marketing activity and
referrals from current clients.
Partnerships for Growth
Our partnership with
Lumi has allowed Opypro
to tap into the SME and
mid-market segments,
and ensures Opypro stays
capital-light and low risk.
A partnership with AWS is
currently underway which
will see Opypro become
an accredited Amazon
Partner, allowing Opypro to
be introduced and sold to
relevant customers of AWS.
Furthermore, Opypro plans
are to be listed on the AWS
Marketplace, first focusing
on the Australian region, with
an option to move into global
markets, at a time that aligns
with the Company’s strategy.
Opypro Customers:
Opypro Partners:
“Opypro provides our accounts teams
with the fastest way to check balances,
reconcile accounts and pay their bills
with ease. So we not only help the
shopper with giving time back, but also
the finance and accounts teams.”
Jarrad Nass
GM B2B, Woolworths
Annual Report 2022 Openpay Group Limited | 17
Our Technology & Innovation
Throughout
FY22, we
deployed
several major
initiatives,
delivering
continued
improvements
to both the
customer and
merchant
experience.
Our customers’
personal information
is always protected.
In line with our customer-
centric view of what we do,
we continued to invest in
platform enhancements,
delivering advanced
security on our customer
portal to ensure Personal
Identifiable Information
(PII) is even more secure.
Our platform continued
to integrate with
partners in FY22.
We integrated with major
new eCommerce and
various point of sale (POS)
platforms. The majority of
the integrations were native,
built into the core of these
platforms, thereby enabling us
to switch on new merchants
with minimal to no effort.
Some of the key integrations
include BigCommerce,
Shopify’s new payment
platform, Apparel 21, Quest
Payments and Insyte CRM.
Openpay is now available
across 32 online channels
and 23 in-store (POS)
platforms, helping to expand
our presence to over 8,600
active merchant locations.
Our merchants’ experience
is reaching new heights.
We also completed several
initiatives to improve the
merchant experience,
delivering ease of integration
and onboarding.
We created a new Developer
Portal using the ReadMe
platform, consolidating
multiple documentation sites.
All Openpay’s integration
documentation, API
references, branding assets
and more are now available in
one place, with a fresh look,
simple navigation and ease
of access for third parties
and preferred partners.
We also developed an
Openpay Demo POS to assist
in demonstrating the in-store
journey to merchants and
partners, resulting in faster
and more efficient delivery
of integration projects.
We have made a number
of enhancements to our
Integrations API, including
allowing merchants to
automate the reconciliation
process by extracting the
transactions via an API. We
also developed a utility to
test the merchant integration
API, which simulates in-
store and online journeys
and identifies any issues in
the flow. It’s a great tool to
run after API changes.
Our credit decisioning
engine continues to
learn and get smarter.
We continued to make
improvements to our
Automated Risk Management
(ARM) system in FY22,
enabling us to roll out
this platform to all our
channels in FY23.
The deployment of our
Credit Decisioning Engine
has resulted in improved
risk assessment and process
efficiencies, resulting in
reduced deployment times for
future enhancements, while
improving our responsible
approach to lending.
Our mobile journey
and app security have
been enhanced.
During the year we rolled
out additional features, such
as biometrics (FaceID and
Fingerprint) for login. This
improved both the user
experience and the security
of the mobile applications.
Fully integrated
digital user trend and
behavioral analytics
Our apps and products are
now fully integrated with
state of the art software
which allows us to discover
powerful user trends,
identify, troubleshoot,
and fix costly bugs.
18 | Openpay Group Limited Annual Report 2022
Our tech continues to evolve
Just as customers are at the
centre of everything we do,
our powerful technology
platform forms the backbone
of Openpay’s business.
Annual Report 2022 Openpay Group Limited | 19
We have a maturing pipeline
and successfully launched
HP and Kogan.com
onto the Opypro platform,
and are seeing a steady
flow of orders come through
the system.
20 | Openpay Group Limited Annual Report 2022
Our data lake and
warehouse are enriched
and insightful.
We enhanced our data
architecture by ingesting
data from different source
systems into our centralised
global data lake. We also
established a consolidated
data warehouse model for
Openpay operational data,
enabling reduced costs,
automated reporting for all
business users and insights to
support business decisions.
The centralised data lakehouse
(a solution combining
elements of the data
warehouse with those of the
data lake) equipped us to:
• Establish data integration
with advanced data
science tools, which will
be strategically leveraged
by our Credit Risk, Fraud
and Finance teams
• Reduce operational costs
with our capacity to replace
the old analytics platform
and automate the process
• Establish auto refreshed
analytics reporting
dashboards for our global
functional teams to self-
configure and publish
• Deliver targeted analytics
reporting for our Marketing
and Treasury teams
• Build credit models to
provide more advanced
decisioning and better
options for our customers
Our back-office is
becoming automated.
During FY22, we automated
a lot of our back-office
functions, including:
• A new daily loan write-off
process to replace the
manual monthly one
• Improved Political Exposed
Person and Sanction
screening in New Zealand
• Improved hardship
processing
• Improved write-off
processes that will
auto reconcile against
the affected loans
• Improved collection
capabilities
Our Opypro platform
is progressing and
gaining traction.
We continued to build out our
product offering in partnership
with Woolworths, with the
final changes made to support
the transition of their existing
in-store accounts to Opypro
and have consolidated
invoicing available.
Our Technology & Innovation Continued
What’s Next?
Well, we’re already into FY23, and we’re moving quickly
on the following major projects to ensure we can support
the business goals to reach profitability by June 2023.
This continued investment in our core technology will underpin
our growth as we innovate for the Australian market.
Key projects include:
• Introduce new journeys and revamp existing solutions
• Continuous platform uplift
• Ongoing improvements to Cyber Security capabilities
• Enhancement of our data platform to
provide new and additional insights
• Continuous development and enhancement
of the Opypro B2B platform
Annual Report 2022 Openpay Group Limited | 21
Environmental, Social & Governance
We pride
ourselves
on our
transparent
relationships
with our
merchants,
partners,
customers
and investors.
Everything we
do is fuelled
by our core
beliefs.
Governance
The Board is responsible
for approving Openpay’s
Environmental, Social &
Governance (ESG) framework
including major ESG policies.
In line with its Charter,
the Board Audit and Risk
Management (ARMC) and
Enterprise Risk Committee
(ERC) helps the Board to adopt
governance standards and
review how environmental
and social risk management
policies operate.
Diversity and Inclusion
Diversity and inclusion are a
key focus of Openpay. We
are proud of our strong and
diverse workforce and are
committed to supporting
and further developing this
through attracting, recruiting,
engaging and retaining
diverse talent, while aligning
our culture and management
systems with this commitment.
Some examples of our
efforts include:
• Education: Building
awareness of diversity
and inclusion at Openpay,
learning about our
roadmap and charter,
conscious/unconscious
bias awareness training.
• Policy: Conducting regular
reviews of our workplace
policies to ensure inclusive
language and equal access
to best practice employee
benefits and entitlements,
irrespective of gender.
• Process: Our recruitment
and other performance
processes are regularly
reviewed in line with local
antidiscrimination and EEO
laws to make sure that we
continue to provide equal
opportunity, eliminate bias,
and attract a greater number
of diverse candidates.
• Environment: We recognise
and celebrate our strong
and diverse workforce,
and have initiated in-office
events such as celebrating
Pride Month, Drag Bingo
and IDAHOBIT Day,
which has provided team
members with avenues
to come together based
on shared identity or life
experiences. These events
promote a greater sense of
connection and belonging,
and an environment in
which our people can share,
learn and be inspired.
Openpay has been
recognised in FY22 by the
Australian Financial Review
BOSS Best Places to Work,
where we placed 3rd within
the Financial Services
Industry. The framework
was based on 10 elements,
which included our highest
ranked - purpose, flexibility,
wellbeing and equality. This
award is nominated and
entered into by existing
team members reflecting
on our ways of working,
engagement and ability to
be their employer of choice.
Diversity Targets
Achieved
• Increase representation
of underrepresented
groups in applications to
form baseline metric
• 10% of vacancies filled
by internal promotions
• 100% participation in
ongoing diversity and
inclusion education
22 | Openpay Group Limited Annual Report 2022
We remain committed to
achieving gender balance
at a senior leadership
level. In FY22 our gender
balance was impacted
by a reduction in senior
leadership across the
board with the wind-down
of the UK business.
The gender balance within
the mid-level leader range
was also impacted this
year following changes
in our organisational
levelling, which altered the
categorisation of several
leadership roles. Despite
this, we are confident that
our pipeline of future female
leaders is strengthening.
Board
Senior
Leaders
Male
75%
62.5%
Female
25%
37.5%
Women in Product
and Technology
We actively promote careers
in product and technology
for women, and partner
with several diversity-based
organisations, including
HackerX and WomenHack.
Staying healthy and well
The health and safety of
our team members and
contractors is the highest
priority for Openpay. Our
range of holistic wellbeing
initiatives includes mental
health, physical health and
financial wellbeing resources,
plus a flexible work structure
and free, anonymous
counselling services through
our EAP partnerships. We
recorded no injuries in the
workplace or within our
remote workforce through
FY22, and fully complied
with internal regulations
and applicable OHS laws.
Support for our people
through COVID-19
The impact of the pandemic
continued to be felt by our
team members as restrictions
continued to ease in our
region. To support a safe return
to the office, we introduced
and continue to evolve safety
measures in line with local
government guidance.
As a responsible employer,
we encourage team members
to be vaccinated and offer
team members up to two days
of Paid Vaccination Leave.
Given the impact of frequent
lockdowns and restricted
movement in FY22, we
partnered with mental
health experts, allied
health professionals and
fitness instructors to adapt
our health and wellbeing
offering into a virtual Mind,
Movement, Munch & Money
program, designed to
promote holistic wellbeing.
Support for Working
Parents
In FY22, our working parents
were impacted severely by the
frequent closure of schools.
Throughout the year, we
built channels via our internal
comms platform that allowed
parents to crowdsource
ideas, tips and activities to
engage their children.
We organised activities
and events specifically for
Openpay kids like colouring
competitions and kids
yoga classes, and senior
leaders even got involved
by reading short stories
in a virtual story time.
Feedback gained from a
recent team survey shows
that our members feel the
changes and flexibility
provided have improved
their work/life balance and
increased their productivity.
“As the parent of a young child,
it was really important to find
an employer who is flexible
and accommodating of work/
life balance, while providing a
stimulating work environment.”
Bec Carmen, Sales
Co-Ordinator
Our average age of Openpay employees
is 30 with most employees aged 25-34.
55-60
45-54
35-44
25-34
18-24
9%
43%
30%
15%
1%
Annual Report 2022 Openpay Group Limited | 23
Adapting to a changing
environment
The Openpay team is made up
of 143 individuals in Australia.
In adopting a hybrid work
model, we expect the number
of remote team members
to increase over the coming
years. We have invested in
technology to allow team
members working remotely
to participate virtually during
in-person events, and our
famous ‘robots’ provide
remote workers with an
‘in person’ experience by
streaming them into the office
from the comfort of home. You
can even pop by a colleague’s
desk to ask a question.
Adopting a hybrid work model
has allowed us to look further
afield for new talent. Our
‘talent first, location second’
approach has expanded our
talent pool considerably and
uncovered markets which
were previously inaccessible,
contributing to a reduction
in our average recruitment
time – now 24 days, down
from 33 days last FY.
Learning and
Development (L&D)
Every single team member
has participated in learning
events in FY22, with over
90% delivered virtually
due to an expansion of our
internal capabilities through
a new L&D function.
In addition to our own
developed programs,
team members have access
to the LinkedIn Learning
platform, and are encouraged
to participate in both
curated and self-selected
learning programs.
With our investment in L&D,
we also aim to provide
equal opportunity for team
members to progress their
career at Openpay. In
partnership with Microsoft,
we are also part of Microsoft
Enterprise Skills Initiative
(ESI), which allows our entire
technology team to get free
certified Microsoft training.
In FY22, 15.6% of roles were
filled by internal candidates.
To support the growth of this
figure, we have introduced
one-on-one career coaching,
a job shadowing program,
team-based learning programs
and professional mentoring.
Environmental, Social & Governance Continued
In a recent team survey,
over 95% of our team told
us that the changes to
our ways of working since
moving to a remote model
have either met or exceeded
their expectations.
24 | Openpay Group Limited Annual Report 2022
Openpay in the community
Everyone on our team has
a cause important to them.
Openpay actively engages
with these communities
through both financial and
non-financial support. In
FY22 this included Impact
for Women, a volunteer-run
charity making a difference
to women and children
who are fleeing extreme
violence at home.
We empower our team
to make a difference by
donating to local charities
through Openpay’s team
member referral program.
For each successful team
member referral made by an
employee, they can donate
up to $3,000 to a charity of
their choice. All donations
are matched by Openpay.
Leaving a lighter footprint
Sustainability is a journey. It
starts with looking inwards
at how we can minimise the
negative impacts of our own
operations to reduce our
carbon footprint and waste .
The COVID-19 pandemic has
led to significant reductions
in our energy usage,
consumables usage, business
travel and waste – a happy side
effect of a difficult year. As we
resume office-based work,
we aim to carry this efficiency
forward, exploring meaningful
ways to reduce our emissions.
Measures already in
place include:
• Office locations designed
to facilitate public transport
or biking to work
• Team members encouraged
to use virtual meeting
technology over in-
person meetings
• We recycle paper,
cardboard, plastic, coffee
cups and green waste
• Team members get Keep
Cups to prevent the usage
of disposable coffee cups
• We use environmentally-
friendly cleaning products
• We use technology to
facilitate digital signatures
for documents, reducing
paper and toner waste
• We encourage local
sourcing of products to
reduce the use of packaging
and transportation
• Our offices are fitted
with energy-saving LED
lights and sensors
• We encourage teams
to focus their energy
on key initiatives for
greater outcomes
Moving forward
We take our responsibility to
the Earth seriously. Openpay
is currently undergoing the
B-Corp accreditation process,
and in FY23, we’ll further
advance our commitment to
sustainability by establishing
a committee to govern
our efforts in identifying
and focusing on specific
sustainability goals.
To ensure we live up
to our sustainability
commitment, we will:
• Refine and evolve our
sustainability approach
through research, education
and engagement
• Consider the sustainability
risks and opportunities,
set appropriate goals
and track our progress
• Engage with investors
and other stakeholders
on sustainability matters
• Analyse the overlap
between ESG reporting
requirements and other
reporting frameworks,
aligning with the most
appropriate to support
our disclosures
• Report on progress in
our Annual Report, to our
Risk and Sustainability
Committees, and our Board
Annual Report 2022 Openpay Group Limited | 25
26 | Openpay Group Limited Annual Report 2022
Risks & Challenges
Regulatory Landscape
As the payments industry, in
particular BNPL, continues
to evolve and adapt within a
rapidly changing environment,
we will continue to work
collaboratively to champion
business conduct and
regulation that manages
risks, delivers responsible
customer outcomes and
fosters a setting for business
and economic growth.
Openpay, as a founding
signatory and long-standing
BNPL Code compliant
member, together with
our industry body AFIA,
proactively engages in
dialogue with regulators,
governments, consumer
advocates and stakeholders
regarding the existing
challenges and proactively
offers solutions for constructive
policy debates, so they can
deliver tangible results on
the key issues of importance
to the Australian economy.
Principally, as revised on
March 2022, the Code
continues to set the
standards to (a) promote a
customer-centric approach
to the design, marketing and
distribution of a BNPL Product
or Service, (b) promote
high industry standards of
service for customers and
build best practices across
the BNPL Industry, and (c)
compliance with legal and
industry obligations.
Risk Management
Approach
Openpay prides itself on being
a risk-conscious organisation
with an integrated risk
management approach that is
supported by risk ownership
and accountability. At
Openpay, we subscribe to a
philosophy that risk is a shared
responsibility, and that risk
ownership and accountability
is the cornerstone to providing
and delivering sustainable,
ethical and responsible
products and services to our
customers and merchants.
As such, our business unit and
functional leaders have a very
clear direction with regard to
the geographical, industry and
nuanced risks and challenges
encountered and anticipated,
in pursuit of delivering on
our strategic objectives.
Openpay is a key contributor
to finding solutions for
complex regulatory challenges,
and proudly advocates for
innovation and positive
change in our industry.
Annual Report 2022 Openpay Group Limited | 27
Risks and Challenges
Openpay’s Approach
Strategic
We continue to operate in a highly competitive
environment, which means there’s a risk of new
providers or existing competitors delivering a
comparatively superior product or experience.
There is also a risk of competitors consolidating
or partnering to deliver benefits at a scale
that we can’t effectively compete with.
There are ongoing and noticeably shifting
trends by the market, our customers and
broader consumer behaviour with an
increasing need to make core products and
services available through digital channels.
Openpay’s ability to increase revenue and
achieve profitability is dependent on the ability
to profitably scale the business, which in turn is
dependent on increases in transaction volumes
and growth in our customer and merchant base.
Failure to grow may materially impact our ability
to achieve economies of scale and increase
market share, which may have an adverse
impact on Openpay’s financial performance.
Failure to attract or retain existing key
management personal could have
an adverse impact on Openpay.
Openpay maintains a unique position in the
market relative to its competitors that can be
built upon and continue to be diversified.
The ‘moats’ we have created around our longer,
larger and verticalised products, has become and
will remain to be a winning strategy providing
thousands of merchants and tens of thousands
of customers with access to our product.
Our go-to-market approach and maturity
regarding our digitally available offerings enable
us to meet, exceed and continuously evolve
with this expectation and consumer needs.
Openpay is continuing to optimise our digital
acquisition strategy to attract and acquire
customers in new and existing demographics.
This strategy is continuing to provide
more qualified leads to our program and
combined with our utilisation campaigns, we
are continuing to see increased transaction
volume from new and existing customers.
Openpay’s growth strategy is centred on our
diversified mix of industry verticals, each with
their own trading dynamics. Our focus in Retail,
Automotive, Healthcare, Education and Home
Improvement allows us to spread our merchant
concentration and vertical concentration risk to
overcome macro factors that may affect one or
more of these verticals. We also trade in-store and
online, mitigating risks that may affect one channel.
Across these verticals there are also various levels of
competition. As Openpay’s product offering caters
from 2-24 month plans and $1-$20k lends, this allows
us to enter and grow in a wider mix of verticals.
Openpay is continually improving its culture through
the use of technology and enablement programs
like engagement surveys to ensure management
has a holistic view on employee satisfaction and
is aware of any potential risks that may arise.
Regulatory &
Compliance
We are subject to a range of laws, regulations,
and industry compliance requirements in the
jurisdictions in which we conduct business.
Openpay’s dedicated legal and compliance
functions proactively engages with legislation,
regulation, and the respective regulators to
ensure effective management of all obligations.
We continuously monitor the legislative and
regulatory landscape for relevant changes
and collaboration with industry bodies and
regulators in constructive dialogue.
28 | Openpay Group Limited Annual Report 2022
Risks and Challenges
Openpay’s Approach
Liquidity and
Funding
We anticipate the market volatility, both
globally and domestically, to remain
throughout the financial year with added
strain on the global financial markets.
Our business model is reliant on the ability to
pay merchants while enabling customers to
use Openpay services to acquire goods and
services. If sufficient liquid funds are not available
to transfer to merchants within the specific
service levels agreed, in relation to purchases
made by the customers, there is a risk that the
merchant may become dissatisfied and not
offer Openpay as a payment solution. This
could have an adverse effect on Openpay’s
operations and financial performance.
Openpay’s Treasury function continually
works with new and existing debt providers,
as well as investors and investment banks
(domestically and abroad) to identify the
most appropriate funding solutions for the
current and future business requirements.
Openpay monitors its existing portfolio
of merchants and its funding position
to ensure that sufficient funds are
available for every day operations.
Bad and
Doubtful
Debts
A portion of Openpay’s operating expenses
are as a result of customers delaying or
failing to meet their payment obligation.
Excessive exposure to bad and doubtful
debts could be caused by failure to
enhance our control systems.
Openpay has heavily invested in uplifting
its decisioning capabilities and continues to
invest further in ensuring models and control
systems are maintained and remain effective.
Cyber
Security
& Data
Protection
Openpay collects and holds a range of
personal and commercial information about
customers and merchant partners. There
is a risk that Openpay’s systems, or those
of its third-party service providers, may be
impacted by external malicious attacks.
Openpay deploys defence-in-depth strategies to
strengthen its security posture and uses a mix of
governance, technical and procedural controls
to prevent, detect and manage any cyber-attacks
or unauthorised access to data we hold.
Technology
As a fintech, ongoing development and
advancement of our technology platform
remains a core focus to ensuring Openpay’s
product and services remain relevant and
able to evolve at the required pace.
With unrelenting investment in our platforms, we
continuously incorporate dynamic feedback to
further refine and improve upon our technologies,
capability and end-to-end services.
Openpay proactively manages relationships
with third party services throughout the entire
vendor lifecycle, particularly those supporting
key business processes. To ensure Openpay
deals with reputable and reliable partners,
due diligence is undertaken on all vendors
prior to onboarding, followed by ongoing
monitoring to ensure that service disruptions
are identified early and managed proactively.
As part of Openpay’s Business Continuity
Framework, all critical services are identified
including dependencies on third parties,
which is used as a key input into the design
and implementation of resilient solutions to
minimise the impact of any disruptions.
Annual Report 2022 Openpay Group Limited | 29
30 | Openpay Group Limited Annual Report 2022
Directors’ Report
31
Remuneration Report
38
Auditor’s Independence Declaration
50
Financial Report
51
Consolidated statement of profit or loss and other
comprehensive income
52
Consolidated balance sheet
53
Consolidated statement of changes in equity
54
Consolidated statement of cash flows
55
Notes to the consolidated financial statements
56
Directors' declaration
94
Independent Auditor's Report
95
Additional Security Exchange Information
102
Corporate Information
iii
General information
These financial statements are consolidated financial statements for the
Group consisting of Openpay Group Ltd and its subsidiaries. A list of major
subsidiaries is included in note 27. The consolidated financial statements
are presented in Australian dollars.
Openpay Group Ltd is a company limited by shares, incorporated and
domiciled in Australia. Its registered office and principal place of business
is at Level 9, 469 La Trobe Street, Melbourne VIC 3000. Its shares are
listed on the Australian Securities Exchange.
The consolidated financial statements were authorised for issue, in
accordance with a resolution of directors, on 30 September 2022. The
directors have the power to amend and reissue the financial statements.
contents
Directors’ Report.
Annual Report 2022 Openpay Group Limited | 31
Your directors present their report on the consolidated entity
consisting of Openpay Group Ltd (‘Openpay’ or ‘the Company’)
and the entities it controlled at the end of, or during, the year
ended 30 June 2022 (together “the Consolidated Entity” or
“the Group”).
DIRECTORS AND COMPANY SECRETARY
The following people were directors and company secretary
of Openpay Group Ltd during the period and unless otherwise
indicated remain in office as at the date of this report:
Patrick Tuttle
Chair, Independent Non-Executive Director
Michael Eidel (resigned 18 January 2022)
Managing Director and CEO
Sibylle Krieger
Independent Non-Executive Director
Yaniv Meydan
Non-Executive Director
Kelly Bayer Rosmarin (resigned 15 January 2022)
Independent Non-Executive Director
David Phillips
Non-Executive Director
Edward Bunting (Interim Group CEO from 12 January 2022)
Company Secretary and Interim Group CEO
PRINCIPAL ACTIVITIES
Openpay Group Ltd (ASX: OPY) is a leading payments fintech,
delivering smart and friendly solutions to pay and get paid.
Openpay delivers an omnichannel financing solution that
extends beyond traditional Buy Now, Pay Later in the form of
their next-generation “BNPL 2.0” product. BNPL 2.0 provides the
gateway to complete transactions, up to $20,000 with payback
terms of up to 24-months, across underserved BNPL verticals,
including Automotive, Healthcare, Home Improvement,
Education, and Retail.
Openpay has fine-tuned its innovative products for both
consumers and merchants, providing transparent terms with
quick credit decisions and customisable payment plans for
consumers, along with a B2B payment offering that facilitates
end-to-end trade account management. Openpay operates
predominately in Australia after the Company made the
decision to exit the United Kingdom market in January 2022 and
indefinitely cease its United States operations in July 2022.
DIVIDENDS
No dividends were declared or paid since the start of the
financial year. No recommendation for payment of dividends has
been made.
REVIEW OF OPERATIONS
Openpay Group Ltd is a fast-growing and highly differentiated
fintech solution provider. The Company supports both B2C and
B2B platforms.
Openpay’s B2C platform is an embedded finance solution
delivering flexible repayment plans that help manage cashflow
and household budgeting. Plans range from 2–24 months
and enable transactions up to $20,000. Openpay is accepted
in verticals including: Automotive, Healthcare, Retail, Home
Improvement and Education.
Openpay’s B2B platform, OpyPro, is a SaaS solution that enables
merchants to manage their trade accounts via an end-to-end
digitised platform enabling transactions in-store and online.
The platform supports the application and onboarding process,
ongoing account management and business processing,
including invoicing, remittance, and reconciliation.
In FY22, Openpay Group announced a strategy simplification,
focused on an accelerated path to profitability in Australia and
New Zealand (ANZ). As a result, the Group significantly reduced
its UK operations with a view to exit that market. In July 2022,
Openpay also announced its withdrawal from the US market,
leaving ANZ as its core operating jurisdiction.
REVIEW OF PERFORMANCE
Openpay ANZ showed strong growth across all key B2C metrics
in FY22:
Total Transaction Value increased 49% to a record $344 million
Active Plans increased by 50% to 1.8 million
Active Merchants increased by 9% to 4.1k as we selectively
on-boarded new merchants
Active Customers increased by 21% to 321k
Revenue increased by 40% to $26.3 million
Opypro continues to grow in FY22 with record performance:
TTV up 683% to $40.7 million
Active trading accounts increased by 114% to 11.2k
Delivering market-leading margins in FY22:
Revenue Margin of 7.7%
Net Transaction Margin (NTM) of 2.9%
Net Transaction Loss (NTL) of -1.0%
Continued strong trends in arrears and bad debts:
Arrears down to 1.1% from 1.9% in FY21
Net Bad Debts stable at 1.6% in FY22 (FY21: 1.7%)
In Australia, Openpay is present both in-store and online in the Retail
vertical, but also across a range of specialised verticals, including
Automotive, Healthcare, Home Improvement and Education.
Directors’ Report.
32 | Openpay Group Limited Annual Report 2022
The mix of online and in-store presences enabled Openpay
to continue to grow despite market conditions resulting from
COVID-19 lockdowns during FY22. The strategy of being in
verticals meaningful to customers, such as Healthcare - in
areas like dental, optometry, audiology and hospitals - helped
Openpay to balance the risk of fraud and bad debts, as the
trusted relationship between the Merchant (such as the family
dentist) and the Customer (the patient) usually assures a level of
commitment to bill payments.
During the financial year, Openpay continued to sign merchants
and integrate with major platform and aggregator partners to
enable merchants to simply “switch on” Openpay as a payment
type. This strategy is designed to deliver transaction volume and
merchant growth at scale.
Openpay’s differentiated B2B SaaS platform also continued to
deliver strong growth. In partnership with Lumi, Openpay is
now also able to offer a funded B2B solution, Opypro+ Credit.
A “hidden-gem” for the Group, Opypro onboarded to the
platform HP and Kogan.com this financial year.
Opypro Total Transaction Value increased to $40.7 million in
FY22 (growth of 683% vs FY21)
Opypro Active Trading Accounts reached 11,200 in FY22
(an increase of 114% vs FY21)
The Opypro pipeline of new partnerships is maturing with new
B2B partnerships expected to be announced early in FY23 as we
scale Opypro across target verticals.
FINANCIAL PERFORMANCE
The Group’s statutory loss for this financial year of $83.2 million
included a foreign exchange rate loss of $0.8 million (2021: FX
gain $0.3 million) representing an increase of 33% on the prior
year (2021: $62.7 million).
Openpay saw significant growth in total income to $34.2 million
(+30%) for the year ended 30 June 2022 (2021: $26.3 million).
Operating income grew by $6 million (+23%) to $32 million
(2021: $26 million). Key drivers for the revenue uplift included
growth of Openpay’s underlying TTV achieved, accompanied
by improvements in all key operating metrics as discussed above
and the scale up of Opypro.
Group operating expenses increased by $14 million (+18%)
to $95.7 million (2021: $81.4 million). Operating expenses
included non-cash share-based payments expense of
$3.3 million and the increase in employee benefits expense to
$44.1 million (+59%) was reflective of Openpay’s global strategy
and investment into the US region.
Receivables impairment expense decreased by $2.8 million
(-23%) to $9.4 million compared to prior period (2021:
$12.2 million). This was a result of continuous refinement to
the way Openpay managed asset quality leading to lower
chargebacks, higher recoveries and better credit quality.
Financing costs of $17.7 million for the year increased by $12 million
(+212%) as a result of growth in the Australian receivables book,
utilisation of the working capital facility to fund rollout of the global
structure, and accelerated expensing of capitalised costs related to
the US loan facility as the Group adjusted its assumption of utilisation
in anticipation of the decision to indefinitely pause its US operations
being made (2021: $5.7 million).
EBITDA for the financial year was a loss of $61.5 million, an increase
of 12%, from prior period (2021: $55.1 million). This result is reflective
of the significant investment into the US market during the year.
The Group’s loss for the year ended 30 June 2022 from operating
activities was $82.5 million representing an increase of 31% on
the prior year (2021: $63.1 million).
Financial Performance
30 June 2022
$m
30 June 2021
$m
Change
Income
32.0
26.0
23%
Other income
2.3
0.3
698%
Total income
34.2
26.3
30%
Receivables impairment expense
(9.4)
(12.2)
(23%)
Employee benefits expense
(44.1)
(27.7)
59%
Share-based payments expense
(3.3)
(2.1)
59%
Advertising and marketing expense
(5.7)
(7.2)
(21%)
Other operating expenses
(33.3)
(32.2)
3%
Operating expenses
(95.7)
(81.4)
18%
EBITDA
(61.5)
(55.1)
12%
Depreciation and amortisation expense
(3.3)
(2.3)
41%
Finance costs
(17.7)
(5.7)
212%
Statutory net loss before tax
(82.5)
(63.1)
31%
Annual Report 2022 Openpay Group Limited | 33
OUTLOOK
In FY23, Openpay:
expects to implement a simplified business model focused
on best use of capital
expects to realise further business efficiencies while
continuing to grow
remains committed to deliver cash EBITDA profitability by
June 2023 on a monthly basis,
as we provide a smarter way to pay – for consumers (B2C) and
businesses (B2B).
In order to ensure the Group has sufficient funding, management
continually assesses anticipated cash flows such that the business
is appropriately scaled in line with growth forecasts. Based
on the Group’s forecasts, the Group will be required to renew
existing facilities and obtain additional funding, either through
debt or equity, to support its plans. The Group is confident that
they will continue to be successful in obtaining funding and
capital, in the future, given its track record to date.
In the event that:
the Group is not successful in renewing existing funding at
expiry date, or
conditions of existing funding (drawn or undrawn) are not
satisfied, or
existing funding is withdrawn under relevant provisions, or
the Group’s receivables growth materially exceeds current
plans, or
operating results materially underperform against current
plans, or
the Group cannot secure additional funds through working
capital facilities or equity
then alternative funding, either debt or equity, in excess of that
currently in place or planned will be required to support the
business.
As a result of these matters, there is a material uncertainty that
may cast significant doubt on the Group’s ability to continue as
a going concern and, therefore, that it may be unable to realise
its assets and discharge its liabilities in the normal course of
business.
The Directors believe that the funds available from existing
cash reserves and renewal of debt facilities which occurred
subsequent to year end, capital raised post period end,
combined with sourcing new funds through (but not limited to)
securing additional debt facilities and/or the issue of new shares,
would provide the Group with sufficient working capital to carry
out its stated objectives for at least the next 12-month period
from the date of signing these financial statements and have
therefore prepared the financial statements on a going concern
basis, which assumes the realisation of assets and settlement of
liabilities in the normal course of business.
Please refer to Note 4 Going Concern for further details.
OPENPAY (B2C)
In FY23, Openpay will continue to move toward higher value,
longer term and more customised plans across the Company’s
specialist verticals, delivering substantial value to both merchants
and customers.
This strategy has delivered market-leading margins as a precursor
of anticipated sustainable, long-term profitability.
Openpay Australia will continue to leverage the strong
foundations created across Retail and specialised verticals of
Automotive, Healthcare, Home Improvement, and Education to:
drive more value from the existing customer base
focus on high quality customers and profitable segments
deliver merchant value to increase Openpay adoption
and advocacy.
OPYPRO (B2B)
In FY23, Opypro is expected to grow as a unique B2B solution
for enterprise customers, diversifying the Company’s revenue
streams and further contributing to its bottom line.
The trade account management platform will continue to
see investment in its core technology platform, product
innovations and advanced analytics to pursue further scale across
target verticals.
Directors’ Report.
34 | Openpay Group Limited Annual Report 2022
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Business strategy
In January 2022, the Company advised the market it was
implementing a number of structural and strategic changes
across the Group aimed at accelerating its pathway to
profitability in its Australian B2C and B2B businesses. These
changes included a material withdrawal from the UK market
as well as seeking US investment from a financial partner given
the scale of capital requirements for the US market.
In July 2022, the Company announced that given the current
macroeconomic and public market conditions, together with
the likely ongoing capital investment required in the US to fund
its progress for an extended period, Openpay had decided
to pause its existing US operations indefinitely and cease loan
originations on the Opy USA platform.
Openpay’s decision will result in no further expenses in its
existing US operations in the near term, subject to one-off costs
associated with the restructuring. Openpay believes that the
ongoing capital and funding requirements are best allocated
to the Australian business given its continued strong growth,
market-leading margins and unique market positioning.
Key Management Personnel changes
As part of the strategy simplification, the Group announced on
12 January 2022 the departure of the Managing Director and
Group CEO Michael Eidel and appointment of Edward Bunting
as Interim Group CEO.
There were no other significant changes in the state of affairs of
the consolidated entity during the financial year.
MATTERS SUBSEQUENT TO THE END OF
THE FINANCIAL YEAR
With the exception of the item listed below, no other matters
or circumstances have occurred subsequent to 30 June 2022
that have significantly affected, or may significantly affect, the
operations of the Group, the results of those operations or the
state of affairs of the Group in subsequent financial years.
US operations
On 1 July 2022, the Group announced that given the current
macroeconomic and public market conditions, together with the
likely ongoing capital investment required in the US to fund its
progress for an extended period, Openpay has decided to pause
its existing US operations indefinitely and cease loan originations
on the Opy USA platform.
Openpay’s decision will immediately result in no further
expenses in its existing US operations in the near term, subject
to one-off costs associated with the restructuring. These costs
are estimated to be approximately US$4.9 million of which
US$4 million relates to staff severance costs and US$0.9 million
relates to supplier terminations. As at 30 June 2022, while the
decision to pause the US had not been made, the Group’s
assumption was that the warehouse facility was no longer likely
to be utilised. As a result, additional costs of US$2.1 million
were recognised at 30 June 2022 to reflect the accelerated
recognition of upfront costs and deferred warrant costs in
relation to this facility. Payment of the expected restructuring
costs and approximately US$2.6 million of expenditure incurred
during the year as part of normal operations will be settled over
approximately the next 12 months to minimise the impact on the
Company’s working capital requirements.
Capital Raise and Share Placement Plan
In August 2022, the Company completed the Placement and
Share Purchase Plan (SPP) announced on 23 May 2022. This
followed the general meeting held on 10 August 2022 to
seek shareholder approval to ratify the issue of shares under
Tranche 1 of the placement, and approve the issue of shares
under Tranche 2 of the placement and the SPP. Funds to be
received totalled $23.8 million net of transaction costs, of
which $17.5 million was received subsequent to year-end
and $8 million was used to repay a working capital facility that
remains available for use.
Funding Facilities
Subsequent to year end, the review period for the Receivables
funding facility concluded and under the amended agreement,
the new minimum restricted cash requirement reduced to
$750,000 and the additional review period term that applied in
the event of a material uncertainty was also removed.
The working capital facility of $10 million due to mature in
October 2022 was amended to mature in October 2023 with an
additional uncommitted tranche available at the discretion of the
lender.
The corporate debt facility of $30 million due to mature in
October 2022 was extended to mature in July 2023.
ENVIRONMENTAL REGULATION
The Group’s operations are not regulated by any significant
environmental regulation.
Annual Report 2022 Openpay Group Limited | 35
INFORMATION ON DIRECTORS
The following information is current as at the date of this financial report.
Patrick Tuttle BEc (Accounting and Finance), CA. Independent Chair, Non-Executive Director
Expertise and
experience
Patrick joined Openpay in November 2019. Patrick has in excess of 30 years’ experience in non-bank,
consumer, SME and asset-based finance.
Patrick is an Australian Chartered Accountant and has previously acted as divisional finance director for a
range of operating businesses within Macquarie Bank Limited, before becoming finance director of Pepper
Group in 2001. Patrick became CEO of Pepper Group’s Australian mortgage lending and asset finance
business in 2008, before also being appointed as Co-Group CEO of Pepper’s global business in 2012,
a role he held until March 2017.
Other current
directorships
Non-Executive Chairman – COG Financial Services Limited (ASX: COG)
Non-Executive Director – Shift Financial Pty Ltd, Azora Finance Pty Ltd, Beforepay Group Limited
(ASX: B4P), and Divipay Pty Ltd
Non-Executive Director of Australian Ireland Fund Limited (registered charity)
Former listed
directorships in
last 3 years
Douugh Limited (ASX: DOU)
Special responsibilities
Chair of the Board
Interests in shares and
options
Ordinary shares – Openpay Group Ltd
205,537
Options over ordinary shares – Openpay Group Ltd
Nil
Sibylle Krieger LLB(Hons), LLM, FAICD, MBA. Non-Executive Director
Expertise and
experience
Sibylle joined Openpay in November 2019. Sibylle is a professional independent Non-Executive
Director with over 35 years’ experience as a commercial lawyer, economic regulator and Non-Executive
Director of a range of companies.
Sibylle’s particular focus as a Non-Executive Director has been on corporate governance, organisational
culture and remuneration governance in sectors undergoing significant change or reform.
Other current
directorships
Non-Executive Director – My State Limited (ASX: MYS), AEMO Services Limited and Ventia Services
Group Limited (ASX:VNT)
Former listed
directorships in
last 3 years
Non-Executive Chair – Xenith IP Group Limited
Non-Executive Director – Vector Limited
Special responsibilities
Chair of the Audit and Risk Management Committee
Chair of the Remuneration and Nomination Committee (from 15 January 2022)
Interests in shares
and options
Ordinary shares – Openpay Group Ltd
92,003
Options over ordinary shares – Openpay Group Ltd
Nil
Directors’ Report.
36 | Openpay Group Limited Annual Report 2022
David Phillips LLB(Hons), LLM, BComm. Non-Executive Director
Expertise and
experience
David joined the board of Openpay in September 2017. David has nearly 25 years’ experience in financial
services, 14 of which were with Investec where he has been the Head of Structured Finance, Global
Co-head of Investec Aviation Finance and Head of Investec Emerging Companies. David is the Managing
Director and Chief Investment Officer of Commencer Capital, fund manager and investment committee
member of the Commencer Capital Emerging Companies Fund, and non- executive, independent
member of the investment committee of W23, the venture capital arm of Woolworths Group Limited.
David has held a number of board positions including Goshawk Aviation Limited, IGAF and IASL as well as
numerous Investec investee companies. David was a Responsible Manager on Investec licenses related to
certain fund management activities it carried on.
Prior to joining Investec, David was a Director in the Corporate Advisory division of Deutsche Bank for
5 years where he was involved in large mergers and acquisitions transactions both domestically and
offshore, and prior to that was a tax adviser and lawyer with KPMG and Freehills respectively.
Other current
directorships
Executive Director: Commencer Capital (and related subsidiary)
Non-Executive Director: Dresden Optics, MadeComfy, Comestri and Tiliter
Former listed
directorships
in last 3 years
None
Special responsibilities
None
Interests in shares
and options
Ordinary shares – Openpay Group Ltd
113,496
Options over ordinary shares – Openpay Group Ltd
Nil
Yaniv Meydan Non-Executive Director
Expertise and
experience
Yaniv is a co-founder of Openpay and has extensive experience in structured and property finance,
receivables financing and business operations both globally and in Australia.
Yaniv has been the CEO of the Meydan Group since 2004. He is responsible for the Meydan Group’s
worldwide operations. Yaniv has a key role in the strategic and senior management of all of the Meydan
Group’s finance, operational and new business activities within Australia and international markets.
Other current
directorships
None
Former listed
directorships
in last 3 years
None
Special responsibilities
None
Interests in shares
and options
Ordinary shares – Openpay Group Ltd
24,155,592
Options over ordinary shares – Openpay Group Ltd
Nil
Annual Report 2022 Openpay Group Limited | 37
Edward Bunting LLB, BComm, Company Secretary and Interim Group CEO
Expertise and
experience
Edward Bunting has over 10 years’ experience as a corporate, commercial and regulatory lawyer with
leading Australian and international organisations. Prior to his appointment, Edward was General Counsel
at Meydan Group which involved extensive advisory services to listed and unlisted companies. Edward
previously served in legal and commercial roles at Ashurst, Cricket Australia and Toyota Australia. Edward is
a member of the Law Institute of Victoria and is admitted as a barrister and solicitor in Victoria.
Other current
directorships
None
Former listed
directorships
in last 3 years
None
Special responsibilities
None
Interests in shares
and options
Ordinary shares – Openpay Group Ltd
187
Options over ordinary shares – Openpay Group Ltd
609,760
MEETINGS OF DIRECTORS
The numbers of meetings of the Company’s Board of Directors and of each board committee held during the year ended 30 June
2022, and the numbers of meetings attended by each director were:
Board of Director
Meetings
Audit & Risk
Committee Meetings
Remuneration &
Nomination
Committee Meetings
Number
eligible
to attend
Number
attended
Number
eligible
to attend
Number
attended
Number
eligible
to attend
Number
attended
Patrick Tuttle
9
9
2
2
-
-
Sibylle Krieger
9
9
2
2
2
2
Yaniv Meydan
9
9
-
-
2
2
David Phillips
9
9
2
2
-
-
Kelly Bayer Rosmarin
5
5
-
-
2
2
Michael Eidel
5
5
-
-
2
2
Edward Bunting (Company Secretary)
9
9
2
2
2
2
Remuneration Report.
38 | Openpay Group Limited Annual Report 2022
The Openpay Group Ltd 2022 remuneration report outlines
key aspects of our remuneration policy and framework, and
remuneration awarded this year. The report is set out under the
following main headings:
–
Key management personnel (KMP) covered in this report;
–
Remuneration philosophy;
–
Performance;
–
Details of remuneration;
–
Service agreements with executive KMP;
–
Non-executive director arrangements;
–
Share-based compensation;
–
Additional disclosures relating to KMP; and
–
Other information
Key management personnel covered in this report
–
Patrick Tuttle, Non-Executive Chairman;
–
Sibylle Krieger, Non-Executive Director;
–
Yaniv Meydan, Non-Executive Director;
–
David Phillips, Non-Executive Director;
–
Kelly Bayer Rosmarin, Non-Executive Director
(until 15 January 2022);
–
Edward Bunting, Interim Group Chief Executive Officer
(from 12 January 2022);
–
Michael Eidel, Managing Director and Group Chief
Executive Officer (Group CEO until 11 January 2022 and
Director until 18 January 2022);
–
Oliver Josem, Group Chief Financial Officer
(from 1 June 2022) and
–
Jussi Nunes, Group Chief Financial Officer
(until 31 May 2022)
Remuneration philosophy
The board reviews and determines our remuneration policy and
structure annually to ensure it remains aligned to business needs,
and meets our remuneration principles. In particular the board
aims to ensure that remuneration practices are:
–
Competitive and reasonable, enabling the company to
attract and retain key talent
–
Aligned with the company’s strategic and business
objectives and the creation of shareholder value
–
Transparent and easily understood; and
–
Acceptable to shareholders.
The KMP remuneration framework is designed to support the
Company’s reward philosophies and to underpin the Company’s
growth strategy. The framework comprises the following
components:
Fixed Remuneration – consists of base salary plus
superannuation and is set to reflect the market median for the
role, having regard to the responsibilities and complexity of
the role, and the experience and skills required to successfully
perform the role. Fixed Remuneration is paid in cash.
Short Term Incentive (STI) – based on an assessment of a
balanced scorecard (with threshold and target levels of
vesting in respect of each measure). Eligible employees are
entitled to a maximum cash bonus of between 40% and 50%
of their fixed annual remuneration. Short Term Incentives
consists of a cash component (50%) payable at the end of
the performance period and a deferred component (50%).
The deferred component is also paid in cash of which 25%
is payable on the 1st anniversary of the vesting date and 25%
payable on the 2nd anniversary of the vesting date.
Long Term Incentive – aligned to the delivery of long-term
performance and delivery of returns to shareholders.
Performance conditions for senior management are based
on the achievement of growth targets for revenue and total
shareholder return (with threshold and target levels of vesting
in respect of each measure) over a three-year period. Awards
for other employees vest over a three-year period with a
service condition only. Long Term Incentives are delivered
through the issue of Performance Rights and/or Options.
The Remuneration and Nomination Committee (RNC) is
responsible for determining and reviewing compensation
arrangements for the KMP. The RNC determines the
appropriateness, and amount, of remuneration for each KMP
annually by reference to relevant market conditions with the
overall objective of ensuring maximum stakeholder benefit from
the retention of a high-quality board and executive team.
All remuneration paid to KMP is valued at the cost to the
Company and expensed. Options granted were independently
valued or in the case of some full value options and performance
rights, volume-weighted average price (VWAP) was adopted,
and the benefits are amortised over the vesting period.
The Board will continue to review KMP packages annually by
reference to the Company’s performance, KMP performance,
and comparable information from industry sectors and other
listed companies in similar industries.
Annual Report 2022 Openpay Group Limited | 39
Performance
We aim to align our executive remuneration to our strategic and business objectives and the creation of shareholder value. The
table below outlines the Group’s performance as required by the Corporations Act 2001 in addition to other key operating metrics.
However, these are not necessarily always consistent with all the measures used in determining the variable amounts of remuneration.
As a result, there may not always be a direct correlation between the statutory key performance measures and the variable
remuneration awarded. Share price is only presented from FY20 onwards as the Company became listed on 16 December 2019.
2022
2021
2020
2019
2018
Loss for the year ($)
(82,455,823)
(63,059,351)
(35,401,258)
(14,682,165)
(4,439,260)
Dividend payments
-
-
-
-
-
Increase/(decrease) in share price %
(91.6%)
(31.9%)
58.5%
N/A
N/A
TTV (ie underlying sales) ($)
413,650,434
339,350,848
192,828,657
97,299,999
60,478,377
Active customers (#)
556,983
540,746
319,324
132,573
82,221
Active plans (#)
2,390,983
1,982,211
823,873
250,168
119,613
Buy Now Pay Later income ($)
31,951,208
26,031,528
18,004,736
10,992,809
6,835,402
Short Term Incentive Overview
STI performance is assessed against a balanced scorecard of measures across five categories being financial, customer, people and
culture, strategy execution, and reputation and risk management as set out below. The balanced scorecard reflects annual objectives
aligned with our key value drivers and generation of long-term value for our shareholders.
Balance Scorecard
Performance Conditions
Measures
Weight
Rationale
Financial (40%)
Revenue Growth
20% Strong revenue growth and cost controls directly
impacts on shareholder value.
Net Transaction Margin
10%
Operating Profit Before Tax
10%
Customer (30%)
Number of Active Merchants
10% Continued expansion of the Merchant and Customer
base drives the growth in underlying transactional
value which is the basis of our short term and
mid-term expansion strategy.
Number of Active Customers
10%
Number of Active Plans
10%
People & Culture (10%)
Employee Net Promoter Score
5% Employees are essential to the success of Openpay.
We are committed to attracting and retaining the
highest quality employees and strive to provide
them with exciting and satisfying opportunities.
Attrition Rate – Senior Leadership
and Direct Reports
5%
Strategy Execution (10%)
Achievement of FY22 Strategic
Initiatives
10% Execution on key initiatives drives the basis of
innovation and expansion for continued future
growth.
Reputation and Risk
Management (10%)
Review of Management’s response
to risk events including customer
complaints during FY22
10% Managing our compliance and risk environment
is a crucial aspect of ensuring the business is a
good corporate citizen and is responsive to all our
customers’ feedback.
Remuneration Report.
40 | Openpay Group Limited Annual Report 2022
The Board has assessed performance against the balanced scorecard for FY22 as shown below.
BSC Performance
Conditions
FY22 Outcome
Commentary on outcome
Financial (40%)
Not met (<50%)
Group Revenue growth was hindered by the regulatory and
economic challenges of scaling the overseas regions. This
has resulted in the Group’s decision to exit the UK market in
January 2022 and indefinitely cease US operations from 1 July
2022 in order to focus on growing the Australian business.
Standalone, the Australian business achieved 96% of its
FY22 revenue growth aspirations.
Group net transaction margin was not met due to insufficient
scale in the overseas regions and the added cost of exiting/
ceasing operations in the UK and US. However, the
Australian region achieved 91% of its NTM % target.
Operating loss for the year was reflective of the costs
associated with building up the overseas regions and
subsequent withdrawal to allow focus on leveraging the
simplified company structure to scale the Australian business
and achieve cashflow positive EBITDA in FY23.
Customer (30%)
Partially met (Threshold >50%)
Number of Active Merchants not met due to insufficient scale
from overseas regions but offset by 84% achieved by the
Australian business.
Number of Active Customers: partially met mainly driven by
the Australian business.
Number of Active Plans: fully met mainly driven by the
Australian business.
People & Culture (10%)
Partially met (Threshold >50%)
Threshold employee engagement score met for ANZ.
Attrition rate for senior leadership was in line with
expectations following the pivot in business strategy to a
simplified structure.
Strategy Execution (10%)
Not met
Exited the UK in January 2022
Indefinitely ceased US operations from July 2022
Leverage simplified structure to build up the Australian
business towards cashflow positive EBIDTA profitability
in FY23.
Reputation and Risk
Management (10%)
Fully met (Target 100%)
Risk frameworks simplification in line with strategic objectives
No major regulatory incidents
Annual Report 2022 Openpay Group Limited | 41
Long Term Incentive Overview
All Long Term Incentives (LTIs) awarded by the Company take the form of non-share equity, either options or performance rights. In
addition to the program of LTIs already in place for executives and senior management, in FY22 the Company introduced a broad-
base program of LTIs available to all other employees.
As in the previous year, the LTIs issued to executive and senior management are assessed against two equally-weighted performance
hurdles: Revenue Compound Average Growth Rate and Absolute Total Shareholder Return. Both are measured over a three year
performance period, and the participant must also remain continuously employed for their LTIs to vest. These measures were selected
as they are reflective of the key value drivers of the business over the long term and, in the Board’s view, strike an appropriate balance
between growth and long-term profitability.
The LTIs issued under the broad-base program vest in 3 equal tranches over a 3-year period on the condition that the participant
remains employed on the relevant anniversary.
Options and performance rights issued for sign-on and retention purposes vest over a 1 or 2 year period on the condition of
continuous employment. These were introduced to ensure the Company continues to attract and retain talent in the market.
During the year, the Board issued 616,962 options under the LTI program to KMP. For further information, see the Long Term Incentive
Plan section of this report.
Details of Remuneration
The following table shows details of the remuneration expense recognised for the Company’s KMP measured in accordance with the
requirements of the accounting standards.
Fixed remuneration
Variable remuneration
Member of KMP
Financial
Year
Salary &
Fees
$
Annual
and long
service
leave
$
Super-
annuation
$
Cash
bonus
$
Options
$
Total
$
Performance
related
Executive director
Michael Eidel (until
18 January 2022)
2022
261,758
22,384
12,906
-
-
297,047
0%
2021
478,706
10,853
21,715
-
110,778
622,052
18%
Other KMP
Edward Bunting (from
12 January 2022)
2022
172,962
18,135
10,568
-
4,747
206,412
2%
2021
-
-
-
-
-
-
0%
Oliver Josem (from
1 June 2022)
2022
23,435
2,292
700
-
498
26,924
2%
2021
-
-
-
-
-
-
0%
Jussi Nunes (until
31 May 2022)
2022
322,263
27,302
32,083
-
130,000
511,649
0%
2021
286,953
22,251
27,205
-
138,398
474,807
29%
Andrew Burns (until
4 September 2020)
2022
-
-
-
-
-
-
-
2021
166,015
-
9,361
-
-
175,376
0%
Total executive
director and other
KMP
2022
780,418
70,113
56,257
-
135,245 1,042,032
2021
931,674
33,104
58,281
-
249,176
1,272,235
Remuneration Report.
42 | Openpay Group Limited Annual Report 2022
Fixed remuneration
Variable remuneration
Member of KMP
Financial
Year
Salary &
Fees
$
Annual
and long
service
leave
$
Super-
annuation
$
Cash
bonus
$
Options
$
Total
$
Performance
related
Non-executive directors
Patrick Tuttle
2022
160,000
-
-
-
-
160,000
2021
160,000
-
-
-
-
160,000
Sibylle Krieger
2022
118,985
-
11,898
-
-
130,883
2021
109,589
-
10,411
-
-
120,000
Yaniv Meydan
2022
91,324
-
9,132
-
-
100,457
2021
91,324
-
8,676
-
-
100,000
David Phillips1
2022
100,000
-
-
-
-
100,000
2021
100,000
-
-
-
-
100,000
Kelly Bayer Rosmarin
(until 15 January 2022)
2022
59,583
-
-
-
-
59,583
2021
110,000
-
-
-
-
110,000
Total NED
remuneration
2022
529,892
-
21,030
-
-
550,923
2021
570,913
-
19,087
-
-
590,000
Total KMP
remuneration
expensed
2022
1,310,310
70,113
77,287
-
135,245 1,592,955
2021
1,502,587
33,104
77,368
-
249,176
1,862,235
1
David Phillips was engaged by the Company to provide other consultation and advisory services to the Board of Openpay from 1 June 2022 for a period of 6 to 12
months.
Annual Report 2022 Openpay Group Limited | 43
Service agreements with executive KMPs
Remuneration and other terms of employment for executive KMP are formalised in service agreements. Details of these agreements
are as follows:
Name:
Michael Eidel
Title:
Chief Executive Officer and Managing Director
Agreement commenced:
21 November 2019 until 18 January 2022
Contract duration:
Stepped down from role as Group CEO from 12 January 2022, and resigned as Director on 18 January
2022. Employment ended on 12 July 2022.
Term of agreement:
Annual salary of $500,000, inclusive of superannuation contributions. Michael was eligible to receive a
discretionary short term incentive bonus of up to $250,000 and options under the long term incentive
plan up to a value equal to 100% of his fixed annual remuneration.
Payments made to Michael upon termination of his employment have not exceeded the maximum
amount permitted by the Corporations Act without Shareholder approval.
Name:
Jussi Nunes
Title:
CFO
Agreement commenced:
7 September 2020 until 31 May 2022
Contract duration:
Employment ended on 31 May 2022
Term of agreement:
Annual salary of $350,000 plus superannuation contributions. Jussi was eligible to receive a
discretionary short term incentive bonus of up to $140,000 and options under the long term incentive
plan up to a value equal to 50% of his fixed annual remuneration.
Payments made to Jussi upon termination of his employment have not exceeded the maximum amount
permitted by the Corporations Act without Shareholder approval.
Name:
Edward Bunting
Title:
Interim Group CEO
Agreement commenced:
12 January 2022
Contract duration:
Ongoing contract
Term of agreement:
Annual salary of $385,000 plus superannuation contributions. Edward is eligible to receive a
discretionary short term incentive bonus of up to 30% of base salary and options under the long term
incentive plan up to a value equal to 50% of his fixed annual remuneration.
Edward may terminate his employment with Openpay on provision of 6 months’ notice. Openpay may
terminate Edward’s employment on provision of 6 months’ notice.
Openpay may elect to pay Edward in lieu of all or part of any notice period, with such payment to be
based on Edward’s remuneration over the relevant period.
Edward’s employment may also be terminated by Openpay without notice in certain circumstances such
as serious misconduct, material breach of any Openpay company policy or anything that would entitle
Openpay to summarily terminate the employment at common law.
Any payments made to Edward upon termination of his employment will be limited to the maximum
amount permitted by the Corporations Act without Shareholder approval.
Remuneration Report.
44 | Openpay Group Limited Annual Report 2022
Name:
Oliver Josem
Title:
CFO
Agreement commenced:
Assumed CFO role from 1 June 2022. Agreement terms below apply from 1 July 2022
Contract duration:
Ongoing contract
Term of agreement:
During June 2022, remuneration was based on pro rated annual total fixed remuneration of
US$220,000.
From 1 July 2022, annual total fixed remuneration of US$263,606 (AU$380,000), inclusive of
superannuation contributions. Oliver is eligible to receive a discretionary short term incentive bonus of
up to 40% of base salary and options under the long term incentive plan up to a value equal to 50% of
his fixed annual remuneration.
Oliver may terminate his employment with Openpay on provision of 6 months’ notice. Openpay may
terminate Oliver’s employment on provision of 6 months’ notice.
Openpay may elect to pay Oliver in lieu of all or part of any notice period, with such payment to be
based on Oliver’s remuneration over the relevant period.
Oliver’s employment may also be terminated by Openpay without notice in certain circumstances such
as serious misconduct, material breach of any Openpay company policy or anything that would entitle
Openpay to summarily terminate the employment at common law.
Any payments made to Oliver upon termination of his employment will be limited to the maximum
amount permitted by the Corporations Act without Shareholder approval.
KMP have no entitlement to termination payments in the event of removal for misconduct.
Non-executive director arrangements
Non-executive directors receive a Board fee and fees for chairing or participating on Board committees. They do not receive
performance-based pay or retirement allowances. The fees are inclusive of superannuation. Director fees were established as part of
the IPO by the Board taking into account comparable roles and market data provided by the remuneration adviser, as appointed by
the Board, and are expected to be reviewed annually. The maximum annual aggregate directors’ fee pool limit is $1 million and will be
presented for approval by the shareholders at the annual general meeting.
Base fees
Chair
$150,000
Other non-executive directors
$90,000
Additional fees
Audit and risk committee – chair
$20,000
Audit and risk committee - member
$10,000
Remuneration and nomination committee – chair
$20,000
Remuneration and nomination committee – member
$10,000
All non-executive directors enter into a service agreement with the Company in the form of a letter of appointment. The letter
summarises the board policies and terms, including remuneration, relevant to the office of director.
Annual Report 2022 Openpay Group Limited | 45
Share-Based Compensation
Issue of Shares
There were no shares issued to KMP as part of compensation during the year ended 30 June 2022.
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of KMP in this financial year or future
reporting years are as follows:
Option Category
Grant Date
Expiry Date
Exercise Price
Fair Value
per Option at
Grant Date
Revenue LTI (MPOs)
26 July 21
17 March 31
$3.71
$0.42
Revenue LTI (ZEPOs)
26 July 21
17 March 31
Nil
$1.25
Sign Ons (ZEPOs)
26 July 21
21 January 31
Nil
$3.71
TSR LTI (MPOs)
26 July 21
17 March 31
$3.71
$0.05
TSR LTI (ZEPOs)
26 July 21
17 March 31
Nil
$0.06
Revenue LTI (MPOs)
31 January 22
1 December 31
$1.43
$0.14
Revenue LTI (ZEPOs)
31 January 22
1 December 31
Nil
$0.53
Revenue LTI (ZEPOs)
31 January 22
1 December 31
Nil
$0.53
TSR LTI (MPOs)
31 January 22
1 December 31
$1.43
$0.02
TSR LTI (ZEPOs)
31 January 22
1 December 31
Nil
$0.03
TSR LTI (ZEPOs)
31 January 22
1 December 31
Nil
$0.03
Long Term Incentive Plan
The Group has established an Equity Incentive Plan (EIP) designed to provide long-term incentives (LTIs) in the form of non-share
equity to eligible employees, directors and advisors to the Company. Under the EIP, the Group has in the FY22 provided:
an annual LTI program for executive and senior management, under which two categories of options were issued:
–
for employees in Australia and New Zealand, zero strike price options (ZEPOs), which are nil exercise price options, and
for employees in the US, performance rights (PRs) which are similar to ZEPOs but convert to shares automatically following
vesting; and
–
market price options (MPOs) which have an exercise price referable to the fair value of options at the date of the grant.
These LTIs are assessed against two equally-weighted performance hurdles: revenue compound average growth rate and
absolute total shareholder return. Both are measured over a three year performance period specific to each annual grant, and the
participant must also remain continuously employed for their LTIs to vest.
an LTI program for remaining permanent employees, under which ZEPOs and PRs (for US employees) were issued. These LTIs vest
in 3 equal tranches over a 3-year period on the condition that the participant remains employed on the relevant anniversary. It is
intended this program will also be offered annually.
Sign-On and Retention ZEPOs and PRs to selected employees. These awards vest over a 1 or 2 year period on the condition of
continuous employment.
ZEPOs and PRs subject to individually established performance hurdles for advisors to the Company. These awards vest over
periods up to 18 months.
All awards have been granted under the EIP for no consideration, carry no dividend or voting rights, and on exercise or conversion
carry an entitlement to ordinary shares in the Company.
Remuneration Report.
46 | Openpay Group Limited Annual Report 2022
The number of options in the Company held by each of the Company’s KMP, including their related parties, during the year ended 30 June 2022 is set out below:
Balance at
1 July 2021
Granted as
Remuneration
Vested
Forfeited
Balance at 30 June 2022
Member of KMP and
Option Category
Number
%
Exercised
Number
%
Vested and
exercisable
Unvested
Edward Bunting (from 12 January 2022)
Retention Offer (MPOs)1
171,429
-
-
-
-
-
-
171,429
-
Revenue LTI (MPOs)
53,572
93,862
-
-
-
-
-
-
147,434
Revenue LTI (ZEPOs)
23,438
48,295
-
-
-
-
-
-
71,733
TSR LTI (MPOs)
53,571
93,861
-
-
-
-
-
-
147,432
TSR LTI (ZEPOs)
23,437
48,295
-
-
-
-
-
-
71,732
Michael Eidel (until 18 January 2022)
Retention Offer (MPOs)1
1,428,571
-
-
-
-
-
-
1,428,571
-
Revenue LTI (MPOs)
261,905
-
-
-
-
-
-
-
261,905
Revenue LTI (ZEPOs)
125,515
-
-
-
-
-
-
-
125,515
TSR LTI (MPOs)
261,904
-
-
-
-
-
-
-
261,904
TSR LTI (ZEPOs)
125,514
-
-
-
-
-
-
-
125,514
Oliver Josem (from 1 June 2022)
Revenue LTI (MPOs)
16,072
7,772
-
-
-
-
-
-
23,844
Revenue LTI (ZEPOs)
7,032
3,886
-
-
-
-
-
-
10,918
TSR LTI (MPOs)
16,071
7,772
-
-
-
-
-
-
23,843
TSR LTI (ZEPOs)
7,031
3,886
-
-
-
-
-
-
10,917
Jussi Nunes (until 31 May 2022)
Sign Ons (ZEPOs)
-
35,040
35,040
100
-
-
-
35,040
-
Revenue LTI (MPOs)
-
90,482
-
-
-
90,482 100
-
-
Revenue LTI (ZEPOs)
-
46,666
-
-
-
46,666 100
-
-
TSR LTI (MPOs)
-
90,480
-
-
-
90,480 100
-
-
TSR LTI (ZEPOs)
-
46,665
-
-
-
46,665 100
-
-
Kelly Bayer Rosmarin (until 15 January 2022)
125,000
-
-
-
-
-
100
125,000
-
1
Retention Offer options vested immediately on admission of the Group to the official list of ASX.
Annual Report 2022 Openpay Group Limited | 47
Additional Statutory Information
Shares Held by KMP
The number of ordinary shares in the Company held by each of the Company’s KMP, including their related parties, during the year
ended 30 June 2022 is set out below:
Member of KMP
Balance at
1 July 2021
Granted as
Remuneration
Received on
Exercise
Other
Changes
Held at
30 June
2022
Michael Eidel (until 18 January 2022)
251,023
-
-
-
251,023
Jussi Nunes (until 31 May 2022)
24,305
-
-
-
24,305
Patrick Tuttle
205,537
-
-
-
205,537
Sibylle Krieger
92,003
-
-
-
92,003
Yaniv Meydan
24,155,592
-
-
-
24,155,592
Kelly Bayer Rosmarin (until 15 January 2022)
26,560
-
-
-
26,560
David Phillips
113,496
-
-
-
113,496
Edward Bunting (from 12 January 2022)
187
-
-
-
187
Oliver Josem (from 1 June 2022)
625
-
-
-
625
Other Transactions with KMP
There were no loans made during the year to any KMP.
This concludes the remuneration report, which has been audited.
Directors’ Report.
48 | Openpay Group Limited Annual Report 2022
SHARES UNDER OPTION
Unissued ordinary shares
Unissued ordinary shares of Openpay Group Ltd under option at the date of this report are as follows:
Grant date
Expiry date
Exercise price
Number under
option
22 November 2019
18 February 2023
$0.00
357,143
22 November 2019
1 January 2024
$1.60
1,428,571
22 November 2019
9 December 2029
$1.60
528,572
22 November 2019
21 January 2030
$0.00
125,000
23 June 2020
18 February 2023
$0.00
82,696
23 June 2020
1 January 2024
$0.00
156,250
23 June 2020
1 January 2024
$1.60
357,143
23 June 2020
15 July 2030
$0.00
242,913
23 June 2020
15 July 2030
$1.60
555,228
25 November 2020
1 January 2024
$0.00
94,779
25 November 2020
1 January 2024
$2.64
166,666
26 July 2021
21 January 2031
$0.00
35,040
26 July 2021
17 March 2031
$0.00
116,281
26 July 2021
17 March 2031
$3.71
204,457
26 July 2021
26 June 2031
$0.00
103,742
26 July 2021
28 June 2031
$0.00
38,744
26 July 2021
28 June 2031
$3.71
68,122
26 July 2021
31 December 2099
$0.00
1,588,295
31 January 2022
9 November 2026
$0.00
253,245
31 January 2022
1 July 2031
$0.00
46,984
31 January 2022
1 December 2031
$0.00
988,949
31 January 2022
1 December 2031
$1.43
1,584,142
Total
9,122,962
No option or performance right holder has any right under the options or performance rights to participate in any other share issue of
the Company or any other entity.
Included in these options are options and performance rights granted as remuneration to the directors and key management
personnel.
INSURANCE OF OFFICERS AND INDEMNITIES
The Group has indemnified each director and the company secretary against liabilities or loss that may arise from their position as
officers of the Group and its controlled entities, to the extent permitted by law, under agreements between each director and the
Company.
During the financial period, the Group paid a premium in respect of a contract insuring the directors of the company, the company
secretary and executive officers of the Company and of any related body corporate against liabilities incurred by such a director,
company secretary or executive officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the amount of the premium.
Annual Report 2022 Openpay Group Limited | 49
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which
the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately
after this directors’ report.
AUDIT AND NON-AUDIT SERVICES
Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers Australia) for audit and non-audit services during the
year are disclosed in Note 26 Remuneration of auditors.
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise
and experience with the company and/or the Group are important.
The board of directors, in accordance with advice provided by the audit committee, is satisfied that the provision of the non-audit
services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors
are satisfied that the provision of non-audit services by the auditor did not compromise the auditor independence requirements of the
Corporations Act 2001 for the following reasons:
all non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and objectivity of
the auditor, and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for
Professional Accountants.
This report is made in accordance with a resolution of directors.
Patrick Tuttle
Chairman
Melbourne
30 September 2022
50 | Openpay Group Limited Annual Report 2022
Auditor’s Independence Declaration.
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Auditor’s Independence Declaration
As lead auditor for the audit of Openpay Group Ltd for the year ended 30 June 2022, I declare that to
the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Openpay Group Ltd and the entities it controlled during the period.
Sam Garland
Melbourne
Partner
PricewaterhouseCoopers
30 September 2022
Annual Report 2022 Openpay Group Limited | 51
Financial Report 2022
52 | Openpay Group Limited Annual Report 2022
Consolidated
Note
2022
$
2021
$
Income
6
34,246,176
26,319,069
Expenses
Receivables impairment expense
10
(9,377,822)
(12,210,293)
Employee benefits expense
(44,094,758)
(27,705,482)
Share-based payments expense
25
(3,272,121)
(2,063,936)
Depreciation and amortisation expense
7
(3,280,052)
(2,321,157)
Advertising and marketing expense
(5,666,176)
(7,162,163)
Other operating expense
7
(33,314,810)
(32,248,905)
Finance costs
7
(17,696,260)
(5,666,484)
Loss before income tax expense
(82,455,823)
(63,059,351)
Income tax expense
8
–
–
Loss after income tax expense for the year attributable to
the owners of Openpay Group Ltd
24
(82,455,823)
(63,059,351)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations
22
(786,279)
338,265
Other comprehensive income for the year, net of tax
(786,279)
338,265
Total comprehensive income for the year attributable to
the owners of Openpay Group Ltd
(83,242,102)
(62,721,086)
Cents
Cents
Basic earnings per share
23
(61.69)
(56.06)
Diluted earnings per share
23
(61.69)
(56.06)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
Consolidated Statement of Profit or Loss and
Other Comprehensive Income.
For the year ended 30 June 2022
Annual Report 2022 Openpay Group Limited | 53
Consolidated
Note
2022
$
2021
$
ASSETS
CURRENT ASSETS
Cash and cash equivalents
9
10,343,521
52,078,094
Receivables
10
63,919,786
57,527,246
Other current assets
11
2,987,999
5,031,160
Other financial assets at amortised cost
15
–
22,060
TOTAL CURRENT ASSETS
77,251,306
114,658,560
NON-CURRENT ASSETS
Receivables
10
2,060,733
924,650
Property, plant and equipment
12
548,315
829,410
Intangible assets
13
2,470,244
4,325,748
Right-of-use assets
14
1,398,313
2,424,348
Other financial assets at amortised cost
15
260,711
372,951
TOTAL NON-CURRENT ASSETS
6,738,316
8,877,107
TOTAL ASSETS
83,989,622
123,535,667
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
16
10,609,830
10,861,297
Borrowings
17
32,890,258
18,329,843
Lease liabilities
18
738,446
1,233,047
Financial liabilities at fair value through profit and loss
19
111,601
–
Employee benefits
20
1,928,028
1,740,195
Other liabilities
1,453,833
850,000
TOTAL CURRENT LIABILITIES
47,731,996
33,014,382
NON-CURRENT LIABILITIES
Borrowings
17
50,045,779
28,682,043
Lease liabilities
18
1,030,725
1,565,083
Employee benefits
20
113,923
101,585
Other liabilities
–
850,000
TOTAL NON-CURRENT LIABILITIES
51,190,427
31,198,711
TOTAL LIABILITIES
98,922,423
64,213,093
NET ASSETS/(LIABILITIES)
(14,932,801)
59,322,574
EQUITY
Issued capital
21
190,304,832
182,745,390
Reserves
22
4,459,867
3,818,861
Accumulated losses
24
(209,697,500)
(127,241,677)
TOTAL EQUITY/(DEFICIENCY)
(14,932,801)
59,322,574
The above consolidated balance sheet should be read in conjunction with the accompanying notes
Consolidated Balance Sheet.
As at 30 June 2022
54 | Openpay Group Limited Annual Report 2022
Consolidated
Issued
capital
$
Reserves
$
Retained
profits
$
Non-
controlling
interest
$
Total equity
$
Balance at 1 July 2020
138,160,501
1,532,374
(64,182,326)
–
75,510,549
Loss after income tax expense for the year
–
–
(63,059,351)
–
(63,059,351)
Other comprehensive income for the year,
net of tax
–
338,265
–
–
338,265
Total comprehensive income for the year
–
338,265
(63,059,351)
–
(62,721,086)
Transactions with owners in their capacity
as owners:
Issue of share capital, net of transaction costs
(note 21)
44,240,604
–
–
–
44,240,604
Share-based payments (note 25)
–
2,063,936
–
–
2,063,936
Options exercised
344,285
(115,714)
–
–
228,571
Balance at 30 June 2021
182,745,390
3,818,861
(127,241,677)
–
59,322,574
Consolidated
Issued
capital
$
Reserves
$
Retained
profits
$
Non-
controlling
interest
$
Total
deficiency
in equity
$
Balance at 1 July 2021
182,745,390
3,818,861
(127,241,677)
–
59,322,574
Loss after income tax expense for the year
–
–
(82,455,823)
–
(82,455,823)
Other comprehensive income for the year,
net of tax
–
(786,279)
–
–
(786,279)
Total comprehensive income for the year
–
(786,279) (82,455,823)
–
(83,242,102)
Transactions with owners in their capacity
as owners:
Issue of share capital, net of transaction costs
(note 21)
6,262,525
–
–
–
6,262,525
Share-based payments (note 22)
–
1,427,285
–
–
1,427,285
Options exercised
1,296,917
–
–
–
1,296,917
Balance at 30 June 2022
190,304,832
4,459,867
(209,697,500)
–
(14,932,801)
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
Consolidated Statement of Changes in Equity.
For the year ended 30 June 2022
Annual Report 2022 Openpay Group Limited | 55
Note
Consolidated
2022
$
2021
$
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
433,145,668
359,943,793
Payments to merchants
(419,147,976)
(357,044,460)
Payments to suppliers and employees (inclusive of GST)
(78,766,184)
(63,948,176)
Interest received on cash and cash equivalents
27,052
113,008
Interest paid - borrowings
(12,700,547)
(5,027,891)
Interest paid - leases
(264,497)
(429,169)
Net cash used in operating activities
33
(77,706,484)
(66,392,895)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment
12
(224,352)
(329,634)
Payments for intangibles
13
–
(3,716,354)
Net cash from/(used in) investing activities
(224,352)
(4,045,988)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings
31,509,427
9,015,507
Proceeds from capital raisings
6,441,536
46,437,583
Capital raising costs
(179,011)
(1,968,408)
Principal elements of lease payments
(1,027,011)
(1,369,917)
Net cash from financing activities
36,744,941
52,114,765
Net decrease in cash and cash equivalents
(41,185,895)
(18,324,118)
Cash and cash equivalents at the beginning of the financial year
52,078,094
70,058,763
Effects of exchange rate changes on cash and cash equivalents
(548,678)
343,449
Cash and cash equivalents at the end of the financial year
9
10,343,521
52,078,094
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
Consolidated Statement of Cash Flows.
For the year ended 30 June 2022
Notes to the Consolidated Financial Statements.
For the year ended 30 June 2022
56 | Openpay Group Limited Annual Report 2022
NOTE 1:
SIGNIFICANT CHANGES TO
OPERATIONS AND ACTIVITIES DURING
AND AFTER THE CURRENT REPORTING
PERIOD
Business strategy
Events during the reporting period
In January 2022, the Company advised the market it was
implementing a number of structural and strategic changes
across the Group aimed at accelerating its pathway to
profitability in its Australian B2C and B2B businesses. These
changes included a material withdrawal from the UK market
as well as seeking US investment from a financial partner
given the scale of capital requirements for the US market. The
financial results for the period include the costs associated with
withdrawing from the UK market such as staff termination costs,
closure of the UK office and exit from commercial contracts.
Collection of the UK receivables and repayment of the related
funding facility is expected to continue until November 2022.
Events after the reporting period
In July 2022, the Company announced that given the current
macroeconomic and public market conditions, together with
the likely ongoing capital investment required in the US to fund
its progress for an extended period, Openpay had decided
to pause its existing US operations indefinitely and cease loan
originations on the Opy USA platform.
Openpay’s decision will result in no further expenses in its
existing US operations in the near term, subject to one-off costs
associated with the restructuring. Openpay believes that the
ongoing capital and funding requirements are best allocated
to the Australian business given its continued strong growth,
market-leading margins and unique market positioning. Please
refer to Note 35 for further details.
Key Management Personnel changes
As part of the strategy simplification, the Group announced on
12 January 2022 the departure of the Managing Director and
Group CEO Michael Eidel and appointment of Edward Bunting
as Interim Group CEO.
The Company announced on 1 July 2022 that as the business
leverages a simplified operating structure towards growing the
strong Australian business, Edward Bunting would step down
as Interim Group CEO and Dion Appel would become CEO of
Openpay.
There were no other significant changes in the state of affairs of
the consolidated entity during the financial year.
NOTE 2:
SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
These general-purpose financial statements have been prepared
in accordance with Australian Accounting Standards and other
authoritative pronouncements of the Australian Accounting
Standards Board and the Corporations Act 2001.
The financial statements are for the Group consisting of Openpay
Group Ltd and its subsidiaries. Openpay Group Ltd is a company
limited by shares, incorporated and domiciled in Australia.
Openpay Group Ltd is a for-profit entity for the purpose of
preparing the financial statements.
Compliance with IFRS
The consolidated financial statements of Openpay Group Ltd also
comply with International Financial Reporting Standards (IFRS) in
their entirety as issued by the International Accounting Standards
Board (IASB).
The following is a summary of the material accounting policies
adopted by the economic entity in the preparation of the financial
report, that have not been disclosed elsewhere in the financial
statements. The accounting policies have been consistently
applied, unless otherwise stated.
The financial statements were approved by the Board of Directors
and authorised for issue on 30 September 2022. The directors
have the power to amend and reissue the financial statements.
Historical cost convention
These financial statements have been prepared on the historical
cost basis except for certain financial instruments (including
derivative instruments) that have been measured at fair value.
New and amended standards adopted by the Group
Certain new accounting standards and amendments were
applicable for the first time for the reporting period commencing
1 July 2021. These new standards and amendments did not have
any impact on the amounts recognised in prior periods and are
not expected to significantly affect the current or future periods.
New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been
published that are not mandatory for 30 June 2022 reporting
periods and have not been early adopted by the Group.
These standards are not expected to have a material impact
on the entity in the current or future reporting periods and on
foreseeable future transactions.
Principles of consolidation
Subsidiaries are all entities (including structured entities) over
which the Group has control. The Group controls an entity where
the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those
Notes to the Consolidated Financial Statements.
For the year ended 30 June 2022
Annual Report 2022 Openpay Group Limited | 57
returns through its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control
is transferred to the Group. They are deconsolidated from the
date that control ceases.
Inter-company transactions, balances and unrealised gains
on transactions between Group companies are eliminated.
Unrealised losses are also eliminated unless the transaction
provides evidence of impairment of the transferred asset.
Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with those policies adopted by
the Group.
Segment reporting
Operating segments are reported in a manner consistent with
the internal reporting provided to the Chief Operating Decision
Maker. The Group operates within one operating segment. Refer
to note 5.
Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the Group’s
entities are measured using the currency of the primary economic
environment in which the entity operates (“the functional
currency”). The consolidated financial statements are presented
in Australian Dollars ($) which is Openpay Group Ltd’s functional
and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates at the dates of the
transactions. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation of
monetary assets and liabilities denominated in foreign currencies
at year end exchange rates are generally recognised in profit
or loss. They are deferred in equity if they relate to qualifying
cash flow hedges and qualifying net investment hedges or are
attributable to part of the net investment in a foreign operation.
Foreign exchange gains and losses that relate to borrowings are
presented in the statement of profit or loss, within finance costs.
All other foreign exchange gains and losses are presented in the
statement of profit or loss on a net basis within other operating
expenses.
Non-monetary items that are measured at fair value in a foreign
currency are translated using the exchange rates at the date
when the fair value was determined. Translation differences on
assets and liabilities carried at fair value are reported as part of
the fair value gain or loss. For example, translation differences
on non-monetary assets and liabilities such as equities held at
fair value through profit or loss are recognised in profit or loss
as part of the fair value gain or loss and translation differences
on non-monetary assets such as equities classified at fair value
through other comprehensive income are recognised in other
comprehensive income.
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 balance sheet presented are
translated at the closing rate at the date of that balance sheet
income and expenses for each statement of profit and loss
and 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.
Income
Buy Now Pay Later Income
Openpay Buy Now Pay Later income (BNPL income) includes
merchant and consumer fees described below and is recognised
in the consolidated statement of profit or loss using the effective
interest rate (EIR) method. The Group recognises BNPL income
over the expected life of the associated end consumer’s BNPL
receivable.
Merchant fees
Merchant fees are derived from the difference between the
customer’s underlying sale transaction value and the amount
paid to the merchant for that transaction, and are based on a
percentage of the customer sale transaction value for each BNPL
consumer plan. Openpay pays merchants upfront the net amount
of the previous day’s orders less the merchant fees applicable
and Openpay then assumes all non-repayment risk from the
customer.
Consumer fees
BNPL services are designed with flexibility for the best consumer
experience and value considering the associated credit and
other business risks. Consumer fees include all fees payable by
BNPL customers including fixed transaction fees (establishment,
plan management, and redraw fees) and late fees. Depending
on the terms and conditions of each BNPL product plan entered
into and the associated plan duration, the amount of the fixed
transaction fees for each payment can vary. Late fees arise and are
Notes to the Consolidated Financial Statements.
For the year ended 30 June 2022
58 | Openpay Group Limited Annual Report 2022
recognised when customers fail to make scheduled repayments.
As late fees are due immediately, they are not discounted. Late
fees amounted to $6.8 million in FY22 (FY21: $6.6 million) of
which $379k (FY21: $625k) were uncollected and included in
the value of receivables at year end.
Opypro income
Opypro, the Group’s B2B offering, generates revenue via
transaction fees for delivery of completed transactions and fees
for the set-up of new customer accounts on the Opypro platform.
Transaction fees are generated from providing a payment
solution for partners using the Opypro platform where the
Group receives a fee based on a percentage of the transaction
volume for every successful transaction. The new customer set-
up fees are a per customer fee and represent compensation for
performing account opening procedures. Both the transaction,
and customer set-up, fees are accounted for as and when they
are earned.
Income tax
The income tax expense or credit for the period 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 and its subsidiaries and
associates 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 bases of assets
and liabilities and their carrying amounts in the consolidated
financial statements. However, deferred tax liabilities are not
recognised if they arise from the initial recognition of goodwill.
Deferred income tax is also not accounted for if it arises from
initial recognition of an asset or liability in a transaction other than
a business combination that at the time of the transaction affects
neither accounting nor taxable profit or loss. Deferred income tax
is determined using tax rates (and laws) that have been enacted
or substantially enacted by the end of the reporting period and
are expected to apply when the related deferred income tax
asset is realised, or the deferred income tax liability is settled.
Deferred tax assets are recognised only if it is probable that
future taxable amounts will be available to utilise those temporary
differences and losses.
Deferred tax liabilities and assets are not recognised for
temporary differences between the carrying amount and tax
bases of investments in foreign operations where the company
is able to control the timing of the reversal of the temporary
differences and it is probable that the differences will not reverse
in the foreseeable future.
Deferred tax assets and liabilities are offset where there is a
legally enforceable right to offset current tax assets and liabilities
and where the deferred tax balances relate to the same taxation
authority. Current tax assets and tax liabilities are offset where
the entity has a legally enforceable right to offset and intends
either to settle on a net basis, or to realise the asset and settle the
liability simultaneously.
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.
Tax consolidation legislation
Openpay Group Ltd and its wholly-owned Australian controlled
entities have implemented the tax consolidation legislation. The
head entity, Openpay Group Ltd and the controlled entities in
the tax consolidated Group account for their own current and
deferred tax amounts. These amounts are measured as if each
entity in the tax consolidated Group continues to be a stand-
alone taxpayer in its own right.
In addition to its own current and deferred tax amounts,
Openpay Group Ltd also recognises the current tax liabilities (or
assets) and the deferred tax assets arising from unused tax losses
and unused tax credits assumed from controlled entities in the
tax consolidated Group.
The entities have also entered into a tax funding agreement
under which the wholly-owned entities fully compensate
Openpay Group Ltd for any current tax payable assumed and
are compensated by Openpay Group Ltd for any current tax
receivable and deferred tax assets relating to unused tax losses
or unused tax credits that are transferred to Openpay Group Ltd
under the tax consolidation legislation. The funding amounts
are determined by reference to the amounts recognised in the
wholly-owned entities’ financial statements.
Assets or liabilities arising under tax funding agreements with
the tax consolidated entities are recognised as current amounts
receivable from or payable to other entities in the Group.
Any difference between the amounts assumed and amounts
receivable or payable under the tax funding agreement are
recognised as a contribution to (or distribution from) wholly-
owned tax consolidated entities.
Annual Report 2022 Openpay Group Limited | 59
Cash and cash equivalents
For the purpose of presentation in the statement of cash flows,
cash and cash equivalents includes cash on hand, deposits held
at call with financial institutions, other short-term, highly liquid
investments with original maturities of three months or less that
are readily convertible to known amounts of cash and which
are subject to an insignificant risk of changes in value, and bank
overdrafts. Bank overdrafts are shown within borrowings in
current liabilities in the balance sheet.
Plan receivables
Plan receivables are generated in the ordinary course of business.
They are generally due for settlement within 1 to 720 days. If
collection of the amount is expected in one year or less, they are
classified as current assets, otherwise, they are classified as non-
current assets. The Group’s model is to hold the receivables with
the objective to collect the contracted cashflows. Plan receivables
are initially recognised at fair value and are subsequently
measured at amortised cost less an allowance for impairment.
Impairment
The Group applies the general provision approach to account
for expected credit losses on receivables measured at amortised
cost. Expected credit losses are based on the difference between
the contractual cashflows due in accordance with the receivable
terms and all the cash flows that the Group expects to receive.
The Group has developed a model loss rate curve to estimate
future losses expected to be incurred on plan receivables. The
model loss rate curve is developed by factoring in historical loss
rates by consumer credit risk groups over time. The Group also
considers the impact of external macro-economic factors in the
expected credit loss rate.
At each reporting date, the Group assesses impairment risk on
initial recognition of the receivables and movements in the ageing
of outstanding receivables to estimate the expected credit losses.
The Group classifies its receivables into three stages and
measures the expected credit loss based on credit migration
between the stages. Refer to note 10 for further details on the
methodology applied to estimate expected credit losses.
Other receivables are recognised at amortised cost, less any
allowance for expected credit losses.
Derivative financial instruments
Derivatives are initially recognised at fair value on the date
a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The
accounting for subsequent changes in fair value depends on
whether the derivative is designated as a hedging instrument,
and if so, the nature of the item being hedged.
Derivatives are classified as current or non-current depending on
the expected period of realisation.
Changes to the fair value of derivatives at each reporting date is
recognised through the statement of profit and loss.
Property, plant and equipment
Property, plant and equipment is stated at historical cost less
depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. The carrying amount of any component accounted for
as a separate asset is derecognised when replaced. All other
repairs and maintenance are charged to profit or loss during the
reporting period in which they are incurred.
All property, plant and equipment is depreciated on a straight-line
basis over the expected useful life of the asset. The expected
useful life of assets within each asset class are as follows:
Furniture and fittings
5 years
IT equipment
3 years
The residual values, useful lives and depreciation methods are
reviewed, and adjusted if appropriate, at each reporting date.
An asset’s carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount is greater than
its estimated recoverable amount.
Gains and losses on disposals are determined by comparing
proceeds with carrying amount. These are included in profit or loss.
Leases
Leases are recognised as a right-of-use asset and a corresponding
liability at the date at which the leased asset is available for use by
the Group.
Assets and liabilities arising from a lease are initially measured
on a present value basis. Lease liabilities include the net present
value of the following lease payments:
fixed payments (including in-substance fixed payments), less
any lease incentives receivable;
variable lease payments that are based on an index or a rate; and
amounts expected to be payable by the lessee under residual
value guarantees;
the exercise price of a purchase option if the lessee is
reasonably certain to exercise that option; and
payments of penalties for terminating the lease, if the lease
term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate implicit
in the lease. If that rate cannot be determined, the lessee’s
incremental borrowing rate is used, being the rate that the lessee
would have to pay to borrow the funds necessary to obtain an
Notes to the Consolidated Financial Statements.
For the year ended 30 June 2022
60 | Openpay Group Limited Annual Report 2022
asset of similar value in a similar economic environment with
similar terms and conditions.
Each lease payment is allocated between the liability and finance
cost. The finance cost is charged to profit or loss over the lease
period so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period. The right-of-use
asset is depreciated over the shorter of the asset’s useful life and
the lease term on a straight-line basis.
Right-of-use assets are measured at cost comprising the following:
the amount of the initial measurement of lease liability
any lease payments made at or before the commencement
date less any lease incentives received
any initial direct costs, and
restoration costs.
Payments associated with short-term leases and leases of low-
value assets are recognised on a straight-line basis as an expense
in profit or loss. Short-term leases are leases with a lease term of
12 months or less.
Intangible assets
The Group has developed technology to support its core
activities of providing technology-based payment solutions to
merchants and customers.
Development costs that are directly attributable to the design
and testing of the technology are recognised as an intangible
asset when the following criteria are met:
It is technically feasible to complete the technology so that it
will be available for use;
Management intends to complete the technology and use or
sell it;
There is an ability to use or sell the technology;
It can be demonstrated how the technology will generate
probable future economic benefits;
Adequate technical, financial and other resources to
complete the development and to use or sell the technology
are available; and
The expenditure attributable to the technology during its
development can reliably measured.
Directly attributable costs that are capitalised as part of the
technology include payments to external contractors, any purchase
of materials and equipment, and personnel costs of employees
directly involved in the project. Capitalised development costs
are recorded as intangible assets and amortised from the point at
which the asset is ready for use using the straight-line method. The
expected useful lives of intangible assets are as follows:
Core enterprise assets
5 years
Strategic value generating assets
1-3 years
Platform enhancements and integrations
1-2 years
Costs associated with maintaining the technology are
recognised as an expense as incurred. Research expenditure and
development expenditure that do not meet the criteria above
are recognised as an expense as incurred. Development costs
previously recognised as an expense are not recognised as an
asset in a subsequent period.
Intangible assets that are not ready for use as at the reporting
date are assessed for impairment in accordance with policy set
out below.
Impairment of non-financial assets
Assets are tested for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount
by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair
value less costs of disposal and value in use. For the purposes
of assessing impairment, assets are grouped at the lowest levels
for which there are separately identifiable cash inflows which
are largely independent of the cash inflows from other assets or
groups of assets (cash-generating units). Non-financial assets
other than goodwill that suffered an impairment are reviewed
for possible reversal of the impairment at the end of each
reporting period.
Trade and other payables
These amounts represent liabilities for goods and services
provided to the Group prior to the end of the financial year
which are unpaid. The amounts are unsecured and are usually
paid within 30 days of recognition. Trade and other payables
are presented as current liabilities unless payment is not due
within 12 months after the reporting period. They are recognised
initially at their fair value and subsequently measured at
amortised cost using the effective interest rate method.
Prepayments
These amounts represent advanced payments for goods or
services to be received in a future period. Prepaid expenses are
presented as current assets and are recognised initially at their
fair value and subsequently measured at amortised cost.
Borrowings
Borrowings are initially recognised at fair value, net of transaction
costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of
transaction costs) and the redemption amount is recognised
in profit or loss over the period of the borrowings using the
effective interest rate method. Fees paid on the establishment of
loan facilities are recognised as transaction costs of the loan to
the extent that it is probable that some or all of the facility will be
drawn down. In this case, the fee is deferred until the draw-down
occurs. To the extent there is no evidence that it is probable
that some or all of the facility will be drawn down, the fee is
Annual Report 2022 Openpay Group Limited | 61
capitalised as a prepayment for liquidity services and amortised
over the period of the facility to which it relates.
Where borrowings include a conversion option, the portion of
the proceeds that relate to the fair value of the conversion option
are recognised as an embedded derivative. The embedded
derivative is recognised at fair value through profit and loss.
Borrowings are removed from the balance sheet when the
obligation specified in the contract is discharged, cancelled
or expired. The difference between the carrying amount of a
financial liability that has been extinguished or transferred to
another party and the consideration paid, including any non-cash
assets transferred or liabilities assumed, is recognised in profit or
loss as other income or finance costs.
Borrowings are classified as current liabilities unless the Group
has an unconditional right to defer settlement of the liability for at
least 12 months after the reporting period.
Borrowing costs and Deferred Borrowing costs
Borrowing costs are recognised as an expense in the period in
which they are incurred. Deferred borrowing costs are costs
related obtaining a loan, is capitalised upon initial recognition
and amortised over the life of the relevant loan using the effective
interest method.
Provisions
Provisions are recognised when the Group has a present
legal or constructive obligation as a result of past events, it is
probable that an outflow of resources will be required to settle
the obligation and the amount has been reliably estimated.
Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood
that an outflow will be required in settlement is determined by
considering the class of obligations as a whole. A provision is
recognised even if the likelihood of an outflow with respect to any
one item included in the same class of obligations may be small.
Provisions are measured at the present value of management’s
best estimate of the expenditure required to settle the present
obligation at the end of the reporting period. The discount rate
used to determine the present value is a pre-tax rate that reflects
current market assessments of the time value of money and the
risks specific to the liability. The increase in the provision due to
the passage of time is recognised as interest expense.
Employee benefits
Short-term obligations
Liabilities for wages and salaries, including non-monetary
benefits 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 liabilities are presented as current
employee benefit obligations in the balance sheet.
Other long-term employee benefit obligations
The Group also has liabilities for long service leave and annual
leave 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. These obligations are therefore 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 using market yields at the end of the
reporting period of government bonds with terms and currencies
that match, as closely as possible, the estimated future cash
outflows. Remeasurements as a result of experience adjustments
and changes in actuarial assumptions are recognised in
profit or loss.
The obligations are presented as current liabilities in the balance
sheet if the entity does not have an unconditional right to defer
settlement for at least 12 months after the reporting period,
regardless of when the actual settlement is expected to occur.
Share-based payments
Share-based compensation benefits are provided to employees
via the Openpay Equity Incentive Plan. Information relating to
these plans is set out in note 25.
Equity Incentive Plan
The fair value of options granted under the Openpay Equity
Incentive Plan is recognised as a share-based payments expense
with a corresponding increase in equity.
The total amount to be expensed is determined by reference to
the fair value of the options granted:
Including any market performance conditions (for example,
the entity’s share price);
Excluding the impact for any service and non-market
performance vesting conditions (for example, sales growth
targets, profitability and an employee remaining an employee
of the entity over a specified time period);
Including the impact of non-vesting conditions (for example
the requirement for employees to hold shares for a specified
period of time).
The total expense is recognised over the vesting period, which
is the period over which all of the specific vesting conditions
are to be satisfied. At the end of each period, the entity revises
estimates of the number of options that are expected to vest
based on the non-market vesting and service conditions.
Notes to the Consolidated Financial Statements.
For the year ended 30 June 2022
62 | Openpay Group Limited Annual Report 2022
It recognises the impact of the revision to original estimates, if
any, in profit or loss, with a corresponding adjustment to equity.
Profit-sharing and bonus plans
The Group recognises a provision for bonuses where contractually
obligated or where there is a past practice that has created a
constructive obligation.
Assets and liabilities measured at fair value are classified into three
levels, using a fair value hierarchy that reflects the significance of
the inputs used in making the measurements. Classifications are
reviewed at each reporting date and transfers between levels are
determined based on a reassessment of the lowest level of input
that is significant to the fair value measurement.
For recurring and non-recurring fair value measurements,
external valuers may be used when internal expertise is either
not available or when the valuation is deemed to be significant.
External valuers are selected based on market knowledge and
reputation. Where there is a significant change in fair value of
an asset or liability from one period to another, an analysis is
undertaken, which includes a verification of the major inputs
applied in the latest valuation and a comparison, where
applicable, with external sources of data.
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.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing:
the profit attributable to owners of the Company, excluding
any costs of servicing equity other than ordinary shares
by the weighted average number of ordinary shares
outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the year and
excluding treasury shares
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into account:
the after-income tax effect of interest and other financing
costs associated with dilutive potential ordinary shares, and
the weighted average number of additional ordinary shares
that would have been outstanding assuming the conversion
of all dilutive potential ordinary shares
Goods and Services Tax (‘GST’) and other similar taxes
Revenues, expenses and assets are recognised net of the amount
of associated GST, unless the GST incurred is not recoverable
from the tax 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 amount of
GST receivable or payable. The net amount of GST recoverable
from, or payable to, the tax authority is included in other
receivables or other payables in the balance sheet.
Cash flows are presented on a gross basis. The GST components
of cash flows arising from investing or financing activities
which are recoverable from, or payable to the tax authority, are
presented as operating cash flows.
NOTE 3:
CRITICAL ACCOUNTING JUDGEMENTS,
ESTIMATES AND ASSUMPTIONS
The preparation of financial statements requires the use of
accounting estimates which, by definition, will seldom equal
actual results. Management needs to exercise judgement in
applying the Group’s accounting policies.
This note provides an overview of the areas that involve a higher
degree of judgement or complexity and of items which are more
likely to be materially adjusted due to estimates and assumptions
turning out to be incorrect.
Detailed information about each of these estimates and
judgements is included in other notes together with information
about the basis of calculation for each affected line item in the
financial statements.
Going concern - refer note 4
Provision for expected credit loss on plan receivables - refer note 10
NOTE 4:
GOING CONCERN
The Group’s business model is to make payments to merchants
in advance of the Group receiving the purchase price over time
from the customer. The business model and the stage of the
Group’s development requires external debt and equity funding
to support the growth in customer receivables, the Group’s
continued investment in platform capability and its operational
expenditure until it reaches scale and is in a profitable position.
For the year ended 30 June 2022, the Group generated a net
operating cash outflow of $77.7 million, a net loss after tax of
$82.5 million and as at 30 June 2022 had negative net assets of
$14.9 million.
Annual Report 2022 Openpay Group Limited | 63
Funding sources
Cash and cash equivalents:
As at 30 June 2022, the Group held unrestricted cash and cash equivalents of $7.8 million (30 June 2021: $51.6 million). A further
$2.5million was held as restricted cash to meet conditions of borrowings ($2 million was required by the lender).
Subsequent to period end, in August 2022 the Company completed the Placement and Share Purchase Plan (SPP) announced on
23 May 2022. This followed the general meeting held on 10 August 2022 to seek shareholder approval to ratify the issue of shares
under Tranche 1 of the placement, and approve the issue of shares under Tranche 2 of the placement and the SPP. Funds received
subsequent to year-end totalled $17.5 million net of transaction costs.
Borrowings available for ongoing Australian activities:
As at 30 June 2022, the Group also had available to it the following Australian sources of funding through receivables and working
capital funding arrangements:
Facility and Permitted Use
Facility
Amount
Committed
Amount
Drawn
Committed
Available Uncommitted
Maturity
Receivables Funding Facilities
Receivables funding in Australia
$65,000,000
$55,000,000
$50,500,000
$4,500,000
$10,000,000
Jan-24
Total receivables funding facilities $65,000,000 $55,000,000 $50,500,000 $4,500,000 $10,000,000
Working Capital Facilities
Working Capital
$10,000,000
$10,000,000
$3,834,909
$6,165,091
-
Oct-221
Working Capital
$30,000,000
$25,000,000
$25,000,000
-
$5,000,000
Oct-222
Total working capital facilities
$40,000,000 $35,000,000 $28,834,909
$6,165,091
$5,000,000
1
Working capital facility has been extended to mature in October 2023 after the period ended.
2
Working capital facility has been extended to mature in July 2023 after the period ended.
Receivables Funding Facilities
Receivables funding facility of $65 million maturing January 2024, $10 million of which is uncommitted and subject to funder
approval. The $55 million of committed funding was drawn to $50.5 million at 30 June 2022 with $4.5 million committed and
available (subject to funder drawdown approval and the review event described below).
Following a material uncertainty related to going concern being noted in the Group’s financial reports for the period ending 31
December 2021, a review period for this facility had commenced. During this review period the funder required that $2 million of
additional cash be held in a restricted account (included in restricted cash disclosed above). Subsequent to year end, the review
period concluded and under the amended agreement, the new minimum restricted cash requirement was reduced to $750,000
and the additional review period term that applied in the event of a material uncertainty was also removed.
Working Capital Facilities
Working capital facility of $10 million with a related party maturing in October 2022 was drawn to $3.8 million at 30 June 2022
with $6.2 million available to fund operating expenses. After the period ended, this facility was amended to mature in October
2023 with an additional uncommitted tranche of $2.5 million available at the discretion of the lender.
Corporate debt facility of $30 million with a related party, $5 million of which is uncommitted. The $25 million of committed
funding was fully drawn at 30 June 2022. Subsequent to year end, the facility was extended to mature in July 2023.
The Group is required to comply with certain conditions and debt covenants in relation to its funding facilities, which include: Loan-to-
Value Ratio (LVR) requirements and sufficient cash allocated to lender-controlled cash accounts. The Group has complied with all such
requirements during the period and up to the date of this report.
Notes to the Consolidated Financial Statements.
For the year ended 30 June 2022
64 | Openpay Group Limited Annual Report 2022
Funding sources in UK and US subject to run-off or expected to be terminated by the Group:
As at 30 June 2022, the Group also had available to it the following foreign sources of funding through receivables funding
arrangements:
Facility and Permitted Use
Facility Amount
Committed
Amount
Drawn
Committed
Available
Uncommitted
Maturity
Receivables Funding
Facilities
Receivables funding in UK
$105,801,446
$44,083,936
$3,526,715
$40,557,221
$61,717,510
Nov-22
Receivables funding in US
$393,961,388
$196,980,694
-
$196,980,694
$196,980,694
Apr-24
Total receivables funding
facilities
$499,762,834 $241,064,630 $3,526,715 $237,537,915
$258,698,204
The Group has a receivables funding facility in the UK of £60 million (approximately $105.8 million) which is drawn to $3.6 million
and maturing in November 2022 that will not be renewed as it is in run-off following the decision in January 2022 to materially
withdraw from the UK market.
The Group also has a receivables funding facility in the US of US$271.4 million (approximately $393.9 million) that was terminated
after year end, following the decision in July 2022 to pause operations and cease originations in the US market (the relevant costs
of terminating the facility are included in Note 35).
Ongoing Cash Flow Management
In order to ensure the Group has sufficient funding, management continually assesses anticipated cash flows such that the business
is appropriately scaled in line with growth forecasts. Based on the Group’s forecasts, the Group will be required to renew existing
facilities and obtain additional funding, either through debt or equity, to support its plans. The Group is confident that they will
continue to be successful in obtaining funding and capital, in the future, given its track record to date.
Negotiations to amend all three Australian facilities to ensure continued availability has concluded successfully after the period ended.
In the event that:
the Group is not successful in renewing existing funding at expiry date, or
conditions of existing funding (drawn or undrawn) are not satisfied, or
existing funding is withdrawn under provisions discussed above, or
the Group’s receivables growth materially exceeds current plans, or
operating results materially underperform against current plans, or
the Group cannot secure additional funds through working capital facilities or equity
then alternative funding, either debt or equity, in excess of that currently in place or planned will be required to support the business.
As a result of these matters, there is a material uncertainty that may cast significant doubt on the Group’s ability to continue as a going
concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business.
The Directors believe that the funds available from existing cash reserves and renewal of debt facilities which occurred subsequent
to year end, capital raised post period end, combined with sourcing new funds through (but not limited to) securing additional debt
facilities and/or the issue of new shares, would provide the Group with sufficient working capital to carry out its stated objectives
for at least the next 12-month period from the date of signing these financial statements and have therefore prepared the financial
statements on a going concern basis, which assumes the realisation of assets and settlement of liabilities in the normal course of
business.
Annual Report 2022 Openpay Group Limited | 65
NOTE 5:
SEGMENT INFORMATION
Identification of reportable operating segments
The Group provides embedded finance payment solutions by partnering with merchants to provide repayment plans to customers
in-store, in-app and online. The Group is also scaling up its B2B SaaS platform which aims to streamline accounts management and
billing for goods and services. The Interim Group Chief Executive Officer is the Chief Operating Decision Maker (CODM) and monitors
the operating results on a consolidated basis. The Group has concluded that it has one reportable segment. Further, noncurrent assets
related to locations outside Australia are not considered individually material as at 30 June 2022. Additionally, as of 30 June 2022,
management has not found any significant difference in the economic performance of those geographic locations to justify a separate
reportable segment.
Disaggregation of income by geographic region
Consolidated
2022
$
2021
$
Australia and New Zealand
27,197,732
19,044,294
Rest of the World
4,753,476
6,987,234
NOTE 6:
INCOME
Consolidated
2022
$
2021
$
Income
Buy Now Pay Later income
31,073,867
25,814,143
Opypro income
877,341
217,385
Total income
31,951,208
26,031,528
Other income
Fair value gain on liabilities at fair value through profit and loss
2,292,776
–
Interest received and other income
2,192
287,541
Total other income
2,294,968
287,541
Income
34,246,176
26,319,069
Notes to the Consolidated Financial Statements.
For the year ended 30 June 2022
66 | Openpay Group Limited Annual Report 2022
NOTE 7:
EXPENSES
Other operating expenses
Consolidated
2022
$
2021
$
Processing and data costs
(10,286,505)
(10,041,193)
Professional services
(11,908,229)
(13,429,104)
Technology and communication
(8,513,625)
(4,827,635)
Sales, general and administrative
(2,606,451)
(3,950,973)
Total other operating expenses
(33,314,810)
(32,248,905)
Finance costs
Consolidated
2022
2021
$
$
Interest and finance costs – borrowings
(17,431,762)
(5,237,315)
Interest and finance costs – leases
(264,498)
(429,169)
Total finance costs
(17,696,260)
(5,666,484)
Depreciation and amortisation
Consolidated
2022
2021
$
$
Depreciation – property, plant and equipment
(400,256)
(329,972)
Depreciation – right-of-use assets
(1,024,292)
(1,505,262)
Amortisation – intangible assets
(1,855,504)
(485,923)
Total depreciation and amortisation
(3,280,052)
(2,321,157)
Annual Report 2022 Openpay Group Limited | 67
NOTE 8:
INCOME TAX
This note provides an analysis of the Group’s income tax expense, shows what amounts are recognised directly in equity and how the
tax expense is affected by non-assessable income and non-deductible items. It also explains significant estimates made in relation to
the Group’s tax position.
Numerical reconciliation of income tax expense and tax at the statutory rate
Consolidated
2022
2021
$
$
Loss before income tax expense
(82,455,823)
(62,981,131)
Tax at the statutory tax rate of 30%
(24,736,747)
(18,894,339)
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Difference in tax rates for foreign subsidiary
4,165,476
2,925,851
Share-based payments
862,740
537,871
Other
166,767
402,964
Subtotal
(19,541,764)
(15,027,653)
Deferred tax assets not recognised
19,541,764
15,027,653
Income tax benefit
–
–
Tax losses
2022
2021
$
$
Unused tax losses for which no deferred tax asset has been recognised
193,280,917
114,584,502
Potential tax benefit at 30% (Australia)
33,924,368
22,975,791
Potential tax benefit at 19% (United Kingdom)
8,936,135
5,979,225
Potential tax benefit at 21% (United States)
6,965,154
1,371,075
Total potential tax benefit
49,825,657
30,326,091
The unused losses have been incurred by the Group, the Directors have determined it is not prudent to recognise the deferred tax
asset as at 30 June 2022. The unrecognised tax losses can be carried forward indefinitely, subject to the loss recoupment rules under
the tax law of each separate jurisdiction being satisfied. Refer below for further details.
Components of deferred tax assets not recognised
Consolidated
2022
2021
$
$
Deferred tax assets not recognised comprises temporary differences attributable to:
Employee benefits
551,757
518,095
Research and development costs for inhouse software expensed
689,292
795,130
Deferred receivables
132,546
111,856
Provision for impairment of receivables
1,067,948
1,100,804
Tax losses carried forward
49,825,657
30,326,091
Other
(723,983)
(850,524)
Total deferred tax assets not recognised
51,543,217
32,001,452
Notes to the Consolidated Financial Statements.
For the year ended 30 June 2022
68 | Openpay Group Limited Annual Report 2022
NOTE 9:
CASH AND CASH EQUIVALENTS
Consolidated
2022
2021
$
$
Current assets
Cash at bank and on hand
10,343,521
52,078,094
Restricted cash
The cash and cash equivalents disclosed above includes $2,500,000 (2021: $515,260) in restricted cash not available to the Group
at balance date. The minimum restricted cash required by the funder is $2 million. The restricted cash is held in Openpay SPV Pty
Ltd. The cash is restricted under debt covenants to meet Loan to Valuation Ratio requirements on eligible receivables funded plus
minimum cash holding requirements held as a result of a review event on the Group’s receivables funding facility in Australia. The
review event has concluded subsequent to year end and the minimum restricted cash has been reduced to $750,000.
NOTE 10: RECEIVABLES
Consolidated
2022
2021
$
$
Current assets
Plan receivables – face value
67,613,105
62,100,601
Unearned future income
(20,992)
(206,461)
67,592,113
61,894,140
Provision for expected credit loss
(3,672,327)
(4,366,894)
Net current plan receivables
63,919,786
57,527,246
Non-current assets
Plan receivables – face value
2,540,147
1,098,868
Unearned future income
(420,827)
(152,996)
2,119,320
945,872
Provision for expected credit loss
(58,587)
(21,222)
Net non-current plan receivables
2,060,733
924,650
Total plan receivables
65,980,519
58,451,896
Consolidated
2022
2021
$
$
Movement in provision for expected credit loss
Balance at the beginning of the year
(4,388,116)
(2,121,662)
Increase in plan receivables impairment recognised in profit or loss during the period
(10,209,966)
(12,381,912)
Receivables written off during the period as uncollectible
10,867,167
10,115,458
Closing provision
(3,730,915)
(4,388,116)
The Group classifies its plan receivables into three stages, based on the age of receivables, to determine the impairment charge and
provision.
Annual Report 2022 Openpay Group Limited | 69
The Group has defined the three stages as follows:
Stage
Measurement Base
Receivables not yet due
(Stage 1)
While the receivables are not yet due, a loss allowance has been established based on the expected credit
losses from a default event occurring over the next 12 months.
Receivables past due
1 to 90 days
(Stage 2)
The provisioning model utilises receivables past due 1 day as the absolute criteria to identify significant
increases in credit risk. Although there is usually no objective evidence of impairment, when a consumer
has not paid by the due date, the Group considers this to demonstrate there has been a significant increase
in credit risk. As a result, the loss allowance for that receivable is measured at an amount equal to the
lifetime ECL, being expected credit losses that result from all possible default events over the expected
life of the receivables. BNPL income on the relevant receivables remains calculated on the gross carrying
amount of the receivable.
Receivables past due
90 days or more
(Stage 3)
Stage 3 includes receivables aged 90 days or more and where it is considered there is objective evidence
of impairment at reporting date. Ageing greater than 90 days is considered to have an adverse impact on
the estimated future cash flows of the receivables. The loss allowance is measured at an amount equal to
the lifetime ECL for increased credit risk and BNPL income is calculated on the net carrying amount.
Definition of default and credit-impaired assets
A receivable is considered to be in default at 90 days past due or if it satisfies the criteria for being written off. It is the Group’s policy to
write off balances that are outstanding for over 120 days or when the Group is unlikely to receive the outstanding amount in full based
on internal or external indicators.
Calculation of expected credit loss
In order to calculate the expected credit losses as described above, the Group has developed a model that considers both
quantitative and qualitative information, including historical loss experience, internal expert risk assessment and data examination,
and forward-looking information and analysis. Historical balances, as well as the proportion of those balances that have been written
off over time, are used as a basis to determine the probability of default (PD). The PD is then applied to the receivables based on the
stage to calculate the base ECL.
The Group also considers forward looking adjustments, including macroeconomic factors that are not captured within the base
ECL calculations. The inclusion of forward-looking information increases the degree of judgement required to assess effects on the
Group’s ECLs. The inclusion of forward-looking adjustments in calculating ECL allowances adjusts the overall ECL through market
based macro-overlays. Openpay has identified unemployment rate as the key variable that is used to incorporate forward-looking
adjustments into the overall provision. The predicted relationship between this key variable and the key model inputs in measuring
the ECL has been developed by analysing historical data as part of the model build, calibration, and validation process. The final
probability weighted ECL amount is calculated from a baseline estimate, upside case and downside scenario.
In addition to the ECL calculated based on modelling of historical losses and the incorporation of forward looking economic factors,
the Group employs additional ‘overlays’ where required to account for information that is not the subject of existing modelling or
forecasts and known limitations in the models employed, to the extent these exist. As at 30 June 2022, these overlays included an
adjustment for Model Risk but were not material.
Movements in face value of and provisions for plan receivables by ECL stage
The tables below provide movements in the Group’s face value of plan receivables and provisions for expected credit loss of plan
receivables. The movements are attributable to the following items:
Transfers to/(from) stages: net movements due to transfers of credit exposures between ECL stage. The transfers between each
are based on opening balances.
Net remeasurement on stage transfer: net movements in provisions for expected credit loss due to transfers of credit exposures
between stages. The transfers between each stage are based on closing balances of the stage they were transferred into.
Net plan receivables originated: net movements due to new plan receivables originated or repaid during the period.
Write-offs: the total gross derecognition of plan receivables and their provisions during the period.
Model changes: the impact of changes in model parameters, assumptions and forward-looking information.
Foreign exchange and other movements: other movements including the impact of changes in foreign exchange rates.
Notes to the Consolidated Financial Statements.
For the year ended 30 June 2022
70 | Openpay Group Limited Annual Report 2022
Stage 1
Stage 2
Stage 3
Total
Face
Value
ECL
Face
Value
ECL
Face
Value
ECL
Face
Value
ECL
$
$
$
$
$
$
$
$
Balance at 1 July 2021
57,021,279
1,627,892
5,243,056
1,855,996
935,134
904,228 63,199,469
4,388,116
Transfers to/from
Stage 1
28,693
9,184
(28,693)
(9,184)
-
-
-
-
Stage 2
(93,957)
(1,014)
93,957
1,014
-
-
-
-
Stage 3
(82,224)
(1,108)
(42,773)
(18,258)
124,997
19,366
-
-
Net remeasurement
on stage transfer
-
(9,166)
-
9,822
-
63,715
-
64,371
Net plan receivables
originated
8,386,298
(217,491) 4,226,293
3,924,559
5,917,703
5,967,763 18,530,294
9,674,831
Write-offs
(470,506)
(470,506)
(3,904,115)
(3,904,115) (6,492,546) (6,492,546) (10,867,167) (10,867,167)
Change in models
-
(7,746)
-
212,016
-
(3,152)
-
201,118
Foreign exchange
and other movements
(768,740)
167,181
(37,054)
6,016
96,449
96,449
(709,345)
269,646
Balance at 30 June
2022
64,020,843
1,097,226
5,550,671
2,077,866
581,737
555,823
70,153,251
3,730,915
Stage 1
Stage 2
Stage 3
Total
Face
Value
ECL
Face
Value
ECL
Face
Value
ECL
Face
Value
ECL
Balance at 1 July 2020 47,427,330
983,582
2,480,347
943,009
202,098
195,071
50,109,775
2,121,662
Transfers to/from
Stage 1
50,339
16,113
(50,339)
(16,113)
-
-
-
-
Stage 2
(101,194)
(1,079)
101,194
1,079
-
-
-
-
Stage 3
(11,671)
(128)
(310)
(134)
11,981
262
-
-
Net remeasurement
on stage transfer
-
(16,075)
-
9,593
-
6,534
-
52
Net plan receivables
originated
9,454,052
659,434
5,716,278
3,931,826
7,770,632
7,753,109
22,940,962 12,344,369
Write-offs
(210,781)
(210,781) (2,998,494) (2,998,494) (6,906,183) (6,906,183) (10,115,458) (10,115,458)
Change in models
-
-
-
-
-
-
-
-
Foreign exchange
and other movements
413,204
196,826
(5,620)
(14,770)
(143,394)
(144,565)
264,189
37,490
Balance as at
30 June 2021
57,021,279
1,627,892
5,243,056
1,855,996
935,134
904,228
63,199,469
4,388,116
NOTE 11: OTHER CURRENT ASSETS
Consolidated
2022
2021
$
$
Prepayments
2,520,618
4,640,290
Sundry debtors
467,381
390,870
Total other current assets
2,987,999
5,031,160
Annual Report 2022 Openpay Group Limited | 71
NOTE 12: PROPERTY, PLANT AND EQUIPMENT
Consolidated
2022
2021
$
$
Furniture and fittings - at cost
600,289
615,399
Less: Accumulated depreciation
(340,497)
(224,601)
259,792
390,798
IT equipment - at cost
854,296
913,732
Less: Accumulated depreciation
(565,773)
(475,120)
288,523
438,612
Total property, plant and equipment
548,315
829,410
Movements in carrying amounts of property, plant and equipment
Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the year:
IT equipment
Furniture and
fittings
Total
Consolidated
$
$
$
Balance at 1 July 2020
313,496
511,152
824,648
Additions
342,511
1,901
344,412
Disposals
(14,779)
-
(14,779)
Depreciation expense
(207,394)
(122,578)
(329,972)
Exchange differences
4,778
323
5,101
Balance at 30 June 2021
438,612
390,798
829,410
Additions
224,352
-
224,352
Disposals
(101,972)
(8,690)
(110,662)
Depreciation expense
(277,915)
(122,341)
(400,256)
Exchange differences
5,446
25
5,470
Balance at 30 June 2022
288,523
259,792
548,315
NOTE 13: INTANGIBLE ASSETS
Consolidated
2022
2021
$
$
Software – at cost
4,831,455
4,831,455
Less: Accumulated amortisation
(2,361,211)
(505,707)
Total intangible assets
2,470,244
4,325,748
Notes to the Consolidated Financial Statements.
For the year ended 30 June 2022
72 | Openpay Group Limited Annual Report 2022
Movements in intangible assets
Movement in the carrying amounts for each class of intangible assets between the beginning and the end of the year:
Internally
developed
technology
Work in
progress
Total
Consolidated
$
$
$
Balance at 1 July 2020
183,713
911,604
1,095,317
Additions
-
3,716,354
3,716,354
Transfers in/(out)
4,627,958
(4,627,958)
-
Amortisation expense
(485,923)
-
(485,923)
Balance at 30 June 2021
4,325,748
-
4,325,748
Amortisation expense
(1,855,504)
-
(1,855,504)
Balance at 30 June 2022
2,470,244
-
2,470,244
NOTE 14: RIGHT-OF-USE ASSETS
The Group leases its offices in Australia. The lease on the Group’s offices in the United Kingdom were terminated during the year
ended 30 June 2022. Rental contracts are typically made for a fixed period of 2 to 5 years. There are no extension options on the
Group’s leases. The Group recognises right-of-use assets and lease liabilities in relation to these leases based on the accounting
policies described in note 2. The Group’s weighted average incremental borrowing rate applied to the lease liabilities was 11.80%.
Consolidated
2022
2021
$
$
Non-current assets
Land and buildings - right-of-use
3,270,461
4,995,872
Less: Accumulated depreciation
(1,872,148)
(2,571,524)
Total right-of-use asset
1,398,313
2,424,348
Movements in the carrying amounts of right-of-use assets
Movement in the carrying amounts for each class of right-of-use assets between the beginning and the end of the year:
Consolidated
$
Balance at 1 July 2020
3,913,296
Depreciation expense
(1,505,262)
Exchange differences
16,314
Balance at 30 June 2021
2,424,348
Depreciation expense
(1,024,292)
Exchange differences
(1,743)
Balance at 30 June 2022
1,398,313
Annual Report 2022 Openpay Group Limited | 73
NOTE 15: OTHER FINANCIAL ASSETS AT AMORTISED COST
Consolidated
2022
2021
$
$
Current assets
Other financial assets
–
22,060
Non-current assets
Security deposits
260,711
372,951
Total other financial assets at amortised cost
260,711
395,011
NOTE 16: TRADE AND OTHER PAYABLES
Consolidated
2022
2021
$
$
Current liabilities
Trade payables
5,643,188
4,473,512
Other payables
4,966,642
6,387,785
Total trade and other payables
10,609,830
10,861,297
NOTE 17: BORROWINGS
Consolidated
2022
2021
$
$
Current liabilities
Commercial bills
4,978,304
18,329,843
Working capital facility
27,911,954
–
32,890,258
18,329,843
Non-current liabilities
Commercial bills
50,045,779
28,682,043
Total borrowings
82,936,037
47,011,886
Commercial Bills
The Group has access to a number of wholesale debt facilities for
the funding of receivables.
As at 30 June 2022, the Group had access to a facility in Australia
totalling $65 million: $55 million committed tranche (subject to
funder approval under the review event described below) and
a further $10 million uncommitted tranche (subject to funder
approval). This facility was drawn to $50.5 million as at 30 June,
leaving $4.5 million in unused committed facilities as described
above. Following a material uncertainty related to going concern
being noted in the Group’s financial reports for the period
ending 31 December 2021, a review period commenced. During
this review period the funder required that $2 million of cash be
held in a restricted account. The review event has concluded
subsequent to year end and the minimum restricted cash has
been reduced to $750,000.
The Group also has a £60 million (approximately $105.8 million)
facility in the UK of which £25 million is committed and
£35 million is uncommitted. This facility is drawn to £2 million
(approximately $3.5 million), leaving £23 million in unused
facilities of which £35 million is uncommitted. This facility was to
mature in November 2022 and is not expected to be extended
as UK plan receivables are in run off.
The loan facility in the US consists of a warehouse funding
agreement of US$271.4 million (approximately $393.9
million) of which US$137.5 million is committed (and subject to
fulfilling certain conditions that are not currently satisfied) and
US$135.7 million is uncommitted. The facility was undrawn at
30 June 2022. This facility was due to mature in April 2024 but
was terminated early based on the decision to cease operations
in the US subsequent to year end.
Notes to the Consolidated Financial Statements.
For the year ended 30 June 2022
74 | Openpay Group Limited Annual Report 2022
Working Capital Facilities
As at 30 June 2022, the Group had access to a working capital
facility with a related party totalling $10 million. This facility’s
maturity date was in October 2022. This facility was drawn to
$3.8 million as at 30 June 2022. Subsequent to year end, this
facility was amended to mature in October 2023 with a further
$2.5 million uncommitted tranche available at the discretion of
the lender.
The Group had access to a second working capital facility with a
related party totalling $25 million, with additional uncommitted
funding of $5 million subject to fulfilling certain conditions and
funder approval. This facility had a maturity date in October
2022. This facility was drawn to $25 million as at 30 June 2022.
Subsequent to year end, this facility was extended to mature in
July 2023.
Debt Covenants
The wholesale debt facilities are subject to covenants that are
in line with standard market practice given the nature of the
financing facilities. The primary covenant for the receivables
facility is a maximum Loan-to-Value Ratio (LVR) which varies
based on negotiated terms. The LVR is measured as the value
of the facility drawn over total eligible receivables funding
plus restricted cash. Debt covenants have been complied
with through the period and as at 30 June 2022. The primary
covenant for the working capital facilities is a minimum cash
balance required to be held.
The Australian receivables funding facility included an additional
review period term that in the event of a material uncertainty
related to going concern being noted in the Group’s financial
reports, a review period would commence for 14 days.
This occurred in the Group’s financial reports for the period
ending 31 December 2021, following which a review period
commenced. During this review period the funder required that
$2 million of cash be held in a restricted account (included in
restricted cash disclosed above). Subsequent to year end, the
review period concluded and under the amended agreement,
the new minimum restricted cash requirement reduced to
$750,000 and the additional review period term that applied in
the event of a material uncertainty was also removed.
NOTE 18: LEASE LIABILITIES
Consolidated
2022
2021
$
$
Current liabilities
Lease liabilities
738,446
1,233,047
Non-current liabilities
Lease liabilities
1,030,725
1,565,083
Total lease liabilities
1,769,171
2,798,130
NOTE 19: FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT AND LOSS
Consolidated
2022
2021
$
$
Current liabilities
Opening Balance
–
–
Initial recognition of warrants
2,403,140
–
Fair value gain on liabilities at fair value through profit and loss
(2,292,776)
–
Foreign exchange differences
1,237
–
Warrants Closing Balance
111,601
–
Annual Report 2022 Openpay Group Limited | 75
As part of agreements to extend funding arrangements and
raise additional working capital during the half year ended
31 December 2021, two tranches of warrants were committed to
or issued, and have been recognised as financial liabilities. The
value of the warrants at issuance was considered as a transaction
cost.
The first tranche was issued in October under the funding
arrangement for a revolving credit facility with Goldman Sachs
Bank USA. This tranche was an issuance of 1.02 million warrants,
as announced on 7 October 2021.
Each warrant confers the right (but not the obligation) to
subscribe for one Ordinary Share at the subscription price of
$1.3042 per warrant (being the 30-day VWAP of the Company
as at 5 October 2021), subject to adjustment, or to receive cash
consideration (at the warrant holder’s discretion).
The warrants issued under the first tranche are exercisable (in full
or in part) from the date being 18 months after the issue date,
until the 7th anniversary of the issue date. The warrant holder is
also entitled to elect to receive a cash settlement in lieu of shares
on exercise of the warrants.
The second tranche of up to 6 million warrants was agreed
to be issued under a loan amendment and announced on 22
December 2021, and 4 million warrants were issued 4 January
2022 on the drawing down by Openpay of the first tranche
facility. This tranche was issued as part of an extension of the
Group’s existing $25 million working capital facility with OP
Fiduciary Pty Ltd, and agreement for additional uncommitted
funding of up to $5 million. A further 2 million warrants may be
issued, subject to an incremental $5 million being made available
and being drawn down by Openpay.
Each warrant issued under the second tranche confers the right
(but not the obligation) to subscribe for one Ordinary Share
at the subscription price (subject to adjustment) or to receive
a cash consideration (at the warrant holder’s discretion). The
subscription price payable on exercise of the warrants shall be
the lower of $0.3825 per warrant (being 50% of the share price
on the date immediately prior to entry into the amendment to the
existing facility), and the 30 day VWAP of the Company prior to
the date of exercise of the warrants.
The warrants issued under the second tranche are exercisable (in
full or in part) from the issue date until the 3rd anniversary of the
issue date. The warrant holder is also entitled to elect to receive a
cash settlement in lieu of shares on exercise of the warrants.
Refer to note 29 for further information on financial risk
management.
Refer to note 30 for further information on fair value
measurement.
NOTE 20: EMPLOYEE BENEFITS
Consolidated
2022
2021
$
$
Current liabilities
Annual Leave
1,862,187
1,686,257
Long Service Leave
65,841
53,938
1,928,028
1,740,195
Non-current liabilities
Leave obligations
113,923
101,585
Total employee benefits
2,041,951
1,841,780
The leave obligations cover the Group’s liabilities for long service leave and annual leave which are classified as either other long-term
benefits or short-term benefits, as explained in note 2.
The current portion of this liability includes all the accrued annual leave, the unconditional entitlements to long service leave where
employees have completed the required period of service and also for those employees who are entitled to pro-rata payments in
certain circumstances.
Notes to the Consolidated Financial Statements.
For the year ended 30 June 2022
76 | Openpay Group Limited Annual Report 2022
NOTE 21: ISSUED CAPITAL
Consolidated
2022
2021
2022
2021
Shares
Shares
$
$
Ordinary shares - fully paid
158,279,339
130,773,716
190,304,832
182,745,390
Movements in ordinary share capital
2022
2021
2022
2021
Nos
Nos
$
$
Opening balance
130,773,716
107,868,028
182,745,390
138,160,501
Options exercised
665,888
142,857
1,296,917
344,285
Issue of share capital, net of costs
26,839,735
22,762,831
6,262,525
44,240,604
Closing balance
158,279,339
130,773,716
190,304,832
182,745,390
Ordinary shares
Ordinary shares entitle the holder to participate in dividends, and to share in the proceeds of winding up the Company in proportion
to the number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and on a poll
each share is entitled to one vote.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
NOTE 22: RESERVES
Consolidated
2022
2021
$
$
Foreign currency translation reserve
(1,642,971)
(856,692)
Share-based payments reserve
6,102,838
4,675,553
Total reserves
4,459,867
3,818,861
Foreign currency translation reserve
Exchange differences arising on translation of the foreign controlled entity are recognised in other comprehensive income as
described in note 2 and accumulated within a separate reserve within equity. The cumulative amount is reclassified to profit or loss
when the net investment is disposed of.
Share-based payments reserve
This reserve records the cumulative value of employee service received for the issue of share options. When the option is exercised
the amount in the share option reserve is transferred to share capital.
Annual Report 2022 Openpay Group Limited | 77
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Foreign currency
translation
reserve
Share-based
payments
reserve
Total
Consolidated
$
$
$
Balance at 1 July 2020
(1,194,957)
2,727,331
1,532,374
Foreign currency translation
338,265
–
338,265
Share-based payments expense
–
2,063,936
2,063,936
Options exercised
–
(115,714)
(115,714)
Balance at 30 June 2021
(856,692)
4,675,553
3,818,861
Foreign currency translation
(786,279)
–
(786,279)
Share-based payments expense
–
1,427,285
1,427,285
Balance at 30 June 2022
(1,642,971)
6,102,838
4,459,867
NOTE 23: LOSS PER SHARE
Consolidated
2022
2021
$
$
Loss after income tax attributable to the owners of Openpay Group Ltd
(82,455,823)
(63,059,351)
Loss after income tax attributable to the owners of Openpay Group Ltd used in
calculating diluted earnings per share
(82,455,823)
(63,059,351)
Number
Number
Weighted average number of ordinary shares used in calculating basic earnings per share
133,668,050
112,481,958
Weighted average number of ordinary shares used in calculating diluted earnings
per share
133,668,050
112,481,958
Cents
Cents
Basic earnings per share
(61.69)
(56.06)
Diluted earnings per share
(61.69)
(56.06)
Potential ordinary shares as at 30 June 2022 are not dilutive and therefore no adjustment is required to the denominator used in
calculating loss earnings per share.
NOTE 24: ACCUMULATED LOSSES
Consolidated
2022
2021
$
$
Accumulated losses at the beginning of the financial year
(127,241,677)
(64,182,326)
Loss after income tax expense for the year
(82,455,823)
(63,059,351)
Accumulated losses at the end of the financial year
(209,697,500)
(127,241,677)
Notes to the Consolidated Financial Statements.
For the year ended 30 June 2022
78 | Openpay Group Limited Annual Report 2022
NOTE 25: SHARE-BASED PAYMENTS
The Group has established an Equity Incentive Plan (Plan) designed to provide long-term incentives to eligible employees, directors
and advisors (Awards). Under the Plan, cash, performance rights, options or shares may be granted to participants. Participation in
the Plan is at the Board’s discretion and no individual has a contractual right to participate in the Plan or to receive any guaranteed
benefits.
During the year ended 30 June 2022, Awards granted under the Plan comprise Zero Exercise Price Options (ZEPOs), or for US
employees and advisors Performance Rights (PRs) which are similar to ZEPOs but convert to shares automatically following vesting,
and Market Price Options (MPOs) which have an exercise price referable to the fair value of options at the date of the grant.
All Awards were granted for no consideration and carry no dividend or voting rights.
Set out below is an overview of the Group’s equity awards during the year ended 30 June 2022.
Long Term Incentive (LTI)
Awards offered to executives and senior management under the LTI plan included nil price options (ZEPOs) or Performance Rights
(PRs) for employees in the US, and market price options (MPOs) which have an exercise price referable to the fair value of options at
the date of the grant.
The amount of options that will vest under the LTI are assessed against two equally-weighted performance hurdles: the Group’s Total
Shareholder Return (TSR) and Revenue CAGR over a three year performance period. The vesting of options is also contingent on
service based conditions whereby the participant must also remain employed by the Company.
ZEPOs and PRs (for employees in the US) were granted to other employees. These options vest in 3 equal tranches over a 3-year
period on the condition that the participant remains employed on the relevant anniversary.
During the year ended 30 June 2022, the Company issued 1,523,305 ZEPOs and 2,465,781 MPOs. All options will expire 10 years
past the grant date. Options are granted under the plan for no consideration and carry no dividend or voting rights.
Retention options
The Retention Offer options are zero priced options (ZEPOs) issued to various employees and have service-based vesting conditions
of 12 months from the employee’s start date or 1 July 2021. Vested Retention Offer ZEPOs have an expiry date of ten years after the
grant date. The company issued 74,163 retention options during the year ended 30 June 2022. Options are granted under the plan
for no consideration and carry no dividend or voting rights.
Sign Ons
Awards offered under the Sign on plan were either Performance Rights issued with either a service-based condition which vested
in two tranches over a 2 year period or with individualised performance hurdles or ZEPOs. All options will expire 10 years past the
grant date. The Group awarded 2,385,014 Sign On options during the year all of which had a grant date during the year. Options are
granted under the plan for no consideration and carry no dividend or voting rights.
Advisory Board Awards
Advisor Awards in the form of ZEPOs or PRs with individualised service and performance conditions were granted to parties the
Company has engaged with. All Advisor Awards granted vest within 18 months of grant and expire within 10 years of grant. During the
year ended 30 June 2022, the Company granted 608,874 Advisor Awards. Options are granted under the plan for no consideration
and carry no dividend or voting rights.
Annual Report 2022 Openpay Group Limited | 79
Set out below are summaries of options granted under the plan:
LTI Options
Retention Options
2022
2021
2022
2021
No.
#
WAEP
$
No.
#
WAEP
$
No.
#
WAEP
$
No.
#
WAEP
$
Outstanding at
the beginning
of the year
ZEPOs
603,316
$
–
567,912
$
–
125,000
$
–
125,000
$
–
MPOs
1,329,036
$
1.73
1,298,084
$
1.60
2,314,286 $
1.60
2,457,143
$
1.60
Granted during
the year
ZEPOs
1,523,305 $
–
94,779
$
–
74,163
$
–
–
$
–
MPOs
2,465,781
$
1.83
166,666
$
2.64
-
$
–
–
$
–
Forfeited during
the year
ZEPOs
(406,010) $
–
(59,375) $
–
(27,179) $
–
–
$
–
MPOs
(859,060) $
1.89
(135,714) $
1.60
-
$
–
–
$
–
Exercised
during the year
ZEPOs
–
$
–
–
$
–
–
$
–
–
$
–
MPOS
–
$
–
–
$
–
–
$
–
(142,857) $
1.60
Outstanding at
the end of the
year
ZEPOs
1,720,611
$
–
603,316
$
–
171,984
$
–
125,000 $
–
MPOS
2,935,757 $
1.76
1,329,036
$
1.73
2,314,286 $
1.60
2,314,286
$
1.60
Exercisable at
the end of the
year
MPOs
–
–
–
–
2,314,286
1.60
–
–
ZEPOs
–
–
–
–
171,984
–
–
–
Notes to the Consolidated Financial Statements.
For the year ended 30 June 2022
80 | Openpay Group Limited Annual Report 2022
Sign Ons
Advisor Awards
2022
2021
2022
2021
No.
#
WAEP
$
No.
#
WAEP
$
No.
#
WAEP
$
No.
#
WAEP
$
Outstanding at
the beginning
of the year
ZEPOs
–
$
–
–
$
–
–
$
–
–
$
–
MPOs
–
$
–
–
$
–
–
$
–
–
$
–
Granted during
the year
ZEPOs
2,385,014
$
–
–
$
–
608,874
$
–
–
$
–
MPOs
–
$
–
–
$
–
–
$
–
–
$
–
Forfeited during
the year
ZEPOs
(77,899) $
–
–
$
–
(30,921) $
–
–
$
–
MPOs
–
$
–
–
$
–
–
$
–
–
$
–
Exercised during
the year
ZEPOs
(683,780) $
–
–
$
–
(220,966) $
–
–
$
–
MPOS
–
$
–
–
$
–
–
$
–
–
$
–
Outstanding at
the end of the
year
ZEPOs
1,623,335 $
–
–
$
–
356,987
$
–
–
$
–
MPOS
–
$
–
–
$
–
–
$
–
–
$
–
Exercisable at
the end of the
year
MPOs
–
–
–
–
–
–
–
–
ZEPOs
35,040
–
–
–
103,742
–
–
–
Fair value of options granted
The assessed fair value at grant date of options granted during the period ended 30 June 2022 ranges between $0.02 and $3.71 per
option.
The fair value at grant date is independently determined using an adjusted form of the Black-Scholes Model which includes a Monte
Carlo simulation model that takes into account the exercise price, the term of the option, the impact of dilution (where material), the
share price at grant date and expected price volatility of the underlying share, the expected dividend yield, the risk-free interest rate
for the term of the option and the correlations and volatilities of the peer Group companies.
Annual Report 2022 Openpay Group Limited | 81
The model inputs for options granted during the period ended 30 June 2022 included:
Grant Date
Expiry Date
Exercise
Price
Fair Value
per option
Share
price at
grant
date
Dividend
Yield
Expected
volatility
Risk free
interest rate
No. of
options
issued
26/07/2021
20/01/2031
$
-
$
0.06
1.25
0%
60% to 80%
0.03% to 0.58%
102,337
26/07/2021
20/01/2031
$
-
$
1.25
1.25
0%
60% to 80%
0.03% to 0.58%
102,340
26/07/2021
20/01/2031
$
3.71
$
0.05
1.25
0%
60% to 80%
0.03% to 0.58%
213,999
26/07/2021
20/01/2031
$
3.71
$
0.42
1.25
0%
60% to 80%
0.03% to 0.58%
214,007
26/07/2021
21/01/2031
$
-
$
3.71
1.25
0%
60% to 80%
0.03% to 0.58%
35,040
26/07/2021
26/06/2031
$
-
$
1.25
1.25
0%
60% to 80%
0.03% to 0.58%
251,887
26/07/2021
26/06/2031
$
-
$
1.56
1.25
0%
60% to 80%
0.03% to 0.58%
70,504
26/07/2021
26/06/2031
$
-
$
2.26
1.25
0%
60% to 80%
0.03% to 0.58%
33,238
26/07/2021
28/06/2031
$
-
$
0.06
1.25
0%
60% to 80%
0.03% to 0.58%
19,371
26/07/2021
28/06/2031
$
-
$
1.25
1.25
0%
60% to 80%
0.03% to 0.58%
942,676
26/07/2021
28/06/2031
$
-
$
2.14
1.25
0%
60% to 80%
0.03% to 0.58%
45,524
26/07/2021
28/06/2031
$
-
$
2.25
1.25
0%
60% to 80%
0.03% to 0.58%
37,583
26/07/2021
28/06/2031
$
-
$
2.26
1.25
0%
60% to 80%
0.03% to 0.58%
923,303
26/07/2021
28/06/2031
$
-
$
2.26
1.25
0%
60% to 80%
0.03% to 0.58%
92,330
26/07/2021
28/06/2031
$
-
$
2.26
1.25
0%
60% to 80%
0.03% to 0.58%
98,485
26/07/2021
28/06/2031
$
-
$
2.33
1.25
0%
60% to 80%
0.03% to 0.58%
44,379
26/07/2021
28/06/2031
$
-
$
2.47
1.25
0%
60% to 80%
0.03% to 0.58%
43,430
26/07/2021
28/06/2031
$
-
$
2.54
1.25
0%
60% to 80%
0.03% to 0.58%
25,599
26/07/2021
28/06/2031
$
-
$
2.65
1.25
0%
60% to 80%
0.03% to 0.58%
61,370
26/07/2021
28/06/2031
$
-
$
2.65
1.25
0%
60% to 80%
0.03% to 0.58%
14,728
26/07/2021
28/06/2031
$
-
$
2.68
1.25
0%
60% to 80%
0.03% to 0.58%
39,940
31/01/2022
9/11/2026
$
-
$
0.53
0.53
0%
55% to 65%
0.78% to 1.55%
253,245
31/01/2022
1/07/2031
$
-
$
0.53
0.53
0%
55% to 65%
0.78% to 1.55%
74,163
31/01/2022
1/12/2031
$
-
$
0.03
0.53
0%
55% to 65%
0.78% to 1.55%
509,434
31/01/2022
1/12/2031
$
-
$
0.53
0.53
0%
55% to 65%
0.78% to 1.55%
770,450
31/01/2022
1/12/2031
$
1.43
$
0.02
0.53
0%
55% to 65%
0.78% to 1.55%
1,018,879
31/01/2022
1/12/2031
$
1.43
$
0.14
0.53
0%
55% to 65%
0.78% to 1.55%
1,018,896
Total
7,057,137
The expected price volatility is based on historic volatility (based on the remaining life of the options), adjusted for any expected
changes to future volatility due to publicly available information.
Notes to the Consolidated Financial Statements.
For the year ended 30 June 2022
82 | Openpay Group Limited Annual Report 2022
NOTE 26: 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:
Consolidated
2022
2021
$
$
Audit and review of financial reports
673,200
520,000
Total remuneration for audit and review of financial reports
673,200
520,000
Other services
Other advisory services
15,708
304,876
Total other services
15,708
304,876
Total remuneration of PricewaterhouseCoopers Australia
688,908
824,876
NOTE 27: INTERESTS IN SUBSIDIARIES
The Group’s subsidiaries are set out below. Unless otherwise stated, they have share capital consisting solely of ordinary shares that
are held directly by the Group, and the proportion of ownership interests held equates to the voting rights held by the Group. The
country of incorporation or registration is also their principal place of business.
Subsidiary
Principal place of
business /
Country of
Incorporation
Ownership
interest
Ownership
interest
Principal Activities
2022
2021
%
%
Openpay Pty Ltd
Australia
100
100
(1)
Openpay SPV Pty Ltd
Australia
100
100
(2)
Openpay Solutions Pty Ltd
Australia
100
100
(3)
Openpay SPV 2 Pty Ltd
Australia
100
100
(4)
Openpay SPV 3 Pty Ltd
Australia
100
100
(5)
Openpay UK Limited
United Kingdom
100
100
(6)
Openpay UK SPV 1 Ltd
United Kingdom
100
100
(7)
OPY USA Inc
United States
100
100
(8)
Openpay NZ Ltd
New Zealand
100
–
(9)
(1)
Australian operations
(2) Special purpose vehicle for AU finance/funding arrangements
(3) Holder of Australian Credit Licence
(4) Special purpose vehicle for AU finance/funding arrangements
(5) Special purpose vehicle for funding as required
(6) United Kingdom operations
(7) Special purpose vehicle for UK finance/funding arrangements
(8) United States operations
(9) Employing entity in NZ
Annual Report 2022 Openpay Group Limited | 83
NOTE 28: RELATED PARTY TRANSACTIONS
Key management personnel compensation
Key management personnel remuneration (excluding Directors Fees) included within employee expenses for the year is shown below:
Consolidated
2022
2021
$
$
Short-term employee benefits
836,468
964,778
Post-employment benefits
69,337
58,281
Share-based payments
130,000
249,176
Total related party transactions
1,035,805
1,272,235
Transactions with other related parties
Consolidated
2022
2021
$
$
Interest and financing fees on working capital facility
4,640,770
–
As outlined in note 17, the Group has a working capital facility of $10 million (June 2021: $10 million) with an entity over which a
director and shareholder of the Group has significant influence.
The facility was drawn to $3.8 million as at 30 June 2022 and had a maturity date of 25 October 2022 (extended after the period
ended to 31 October 2023). Interest is payable on any drawn amounts. The facility obtained was based on normal commercial terms
and conditions comparable to those the Group has obtained in other arms-length facilities.
The Group has access to a second working capital facility with an entity over which a shareholder of the Group has significant
influence totalling $30 million (June 2021: $25 million).
This facility had an expected maturity date on 6 October 2022 (extended after the period ended to 6 July 2023). This facility was
drawn to $25 million as at 30 June 2022. Interest is payable on any drawn amounts. The facility obtained was based on normal
commercial terms and conditions comparable to those the Group has obtained in other arms-length facilities.
NOTE 29: FINANCIAL RISK MANAGEMENT
The Group’s principal financial instruments comprise receivables, payables, cash and short-term deposits and interest-bearing
borrowings.
The Group manages its exposure to key financial risks, including interest rate risk, foreign currency risk, liquidity and credit risk in
accordance with the Group’s financial risk management policy.
These mitigations include monitoring levels of exposure to interest rate and foreign exchange risk and assessments of market forecasts
for interest rate and foreign exchange, and by depositing funds with several different banking institutions. Ageing analysis and
monitoring of specific credit allowances are undertaken to manage credit risk. Liquidity risk is monitored through the development of
future rolling cash flow forecasts.
Notes to the Consolidated Financial Statements.
For the year ended 30 June 2022
84 | Openpay Group Limited Annual Report 2022
Interest rate risk
The Group’s exposure to market interest rates relate primarily to the Group’s cash and cash equivalents,
other financial assets and interest-bearing borrowings
Foreign currency risk
Risk that fluctuations in foreign exchange rates may impact the Group’s results. The Group’s
consolidated balance sheet at 30 June 2022 can be affected by movements in the US Dollar, New
Zealand Dollar, and Great British Pound.
Credit risk
The Group’s exposure to credit risk arises from potential default of plan receivables, with a maximum
exposure equal to the carrying amount of these instruments.
The Group regularly reviews the adequacy of the provision for expected credit loss to ensure that it
is sufficient to mitigate credit risk exposure in terms of financial reporting. The provision for expected
credit loss represents management’s best estimate at reporting date of the expected credit losses based
on their experienced judgement. Further details have been provided in Note 2 and Note 10.
Credit risk also arises from cash held with bank and financial institutions.
Liquidity risk
The Group’s objective is to maintain a balance between continuity of funding and flexibility through
the use of credit facilities. The Group mitigates funding and liquidity risks by ensuring it has (1) sufficient
funds on hand to meet its working capital and investment objectives; (2) has sufficient restricted cash
allocated in SPV controlled cash accounts to meet LVR requirements (3) is focused on improving
operational cash flow; (4) has adequate flexibility in financing facilities to balance the growth objectives
with short-term and long-term liquidity requirements and (5) complied with all debt and working capital
covenants.
Equity Price Risk
The Group is exposed to the equity price risk arising from its Warrants issued to funders which is
measured at fair value using the Black Scholes option valuation model at reporting date. These warrants
have been recorded as financial liabilities at 30 June 2022. The valuation of financial liabilities has the
share price of Openpay (which is listed on the Australian Securities Exchange) as the key input.
Interest rate risk
At balance date, the Group had the following mix of financial assets and liabilities exposure to variable interest rate risk:
2022
2021
$
$
Financial assets
Cash and cash equivalents
980,550
34,376,610
Total financial assets
980,550
34,376,610
Financial liabilities
Interest bearing borrowings
(50,045,779)
(28,726,381)
Total financial liabilities
(50,045,779)
(28,726,381)
Net exposure
(49,065,229)
5,650,229
During the 2022 financial year the weighted average of the variable interest rate component for interest bearing borrowings subject
to interest rate risk was 10.1% (2021: 8.5%). Interest rate risk is based on the variable component of interest bearing borrowings that is
exposed to change.
There are no other financial liabilities subject to interest rate risk as at 30 June 2022. The Group has not hedged any interest rate risks
during the year or at 30 June 2022.
Annual Report 2022 Openpay Group Limited | 85
The following sensitivity analysis is based on the interest rate risk exposures in existence at the reporting date. At 30 June, if interest
rates had moved, as illustrated in the table below, with all other variables held constant, post tax loss and equity would have been
affected as follows:
Post tax profit Higher / (Lower)
Equity Higher / (Lower)
2022
$
2021
$
2022
$
2021
$
Judgements of reasonable possible
movements
-0.25% (25 basis points)
104,171
75,000
104,171
75,000
+2.00% (200 basis points.
2021: 1% or 100 basis points)
(833,370)
(300,000)
(833,370)
(300,000)
Foreign currency risk
The Group has not hedged any foreign currency risk during the financial year or at 30 June 2022.
At 30 June 2022, the Group has the following exposure to foreign currency, expressed in Australian dollars.
Consolidated
2022
2021
$
$
Financial assets
Cash and cash equivalents
NZD
31,014
97,693
GBP
1,897,921
10,837,447
USD
571,082
48,998
Total
2,500,017
10,984,138
Receivables and other financial assets
NZD
192,005
280,174
GBP
3,636,194
20,420,085
USD
86,305
99,787
Total
3,914,504
20,800,046
Financial liabilities
Trade and other payables
NZD
48,748
15,436
GBP
386,342
602,928
USD
3,973,470
1,634,487
Total
4,408,560
2,252,851
Notes to the Consolidated Financial Statements.
For the year ended 30 June 2022
86 | Openpay Group Limited Annual Report 2022
The aggregate net foreign exchange gains/losses recognised in profit or loss were as follows:
Consolidated
2022
2021
$
$
Net foreign exchange gain/(loss) recognised in loss before income tax
64,579
(53,633)
The following sensitivity analysis is based on the foreign currency risk exposures in existence at the reporting date. At 30 June, if
foreign exchange rates had moved, as illustrated in the table below, with all other variables held constant, post tax profit and equity
would have been affected as follows:
Post tax profit
Higher / (Lower)
Equity
Higher / (Lower)
Judgements of reasonable possible movements
2022
2021
2022
2021
$
$
$
$
AUD / NZD +5%
(8,714)
(18,122)
(8,714)
(18,122)
AUD / NZD -5%
8,714
18,122
(8,714)
18,122
AUD / USD +5%
165,804
74,285
165,804
74,285
AUD / USD -5%
(165,804)
(74,285)
165,804
(74,285)
AUD / GBP +5%
(257,389)
(1,532,730)
(257,389)
(1,532,730)
AUD / GBP -5%
257,389
1,532,730
(257,389)
1,532,730
Credit risk
Credit risk arises from cash and cash equivalents and credit exposures to customers through outstanding plan receivables.
Risk management
Credit risk is managed on a Group basis.
The Group utilises its proprietary risk decision models to assess and mitigate credit risk for plan receivables before advancing funds.
The Group regularly reviews the adequacy of the provision for expected credit loss to ensure that it is sufficient to mitigate credit
risk exposure in terms of financial reporting. Third party providers are engaged to review the inputs used in the Group’s impairment
models.
Impairment of financial assets
The Group’s plan receivables are subject to impairment assessment under the expected credit loss model. While cash and cash
equivalents are also subject to the impairment requirements of AASB 9, any impairment loss is expected to be immaterial due to the
Group’s banking partners having strong credit ratings. A description of the credit loss model applied by the Group to plan receivables
decision making can be found in note 10.
Annual Report 2022 Openpay Group Limited | 87
The provision for expected credit loss is measured on the following basis. The Group has developed a model loss rate curve to
estimate future losses expected to be incurred on plan receivables. The model loss rate curve is developed by factoring in historical
loss rates by consumer credit risk groups over time. The Group also considers the impact of external macro-economic factors in the
expected credit loss rate. The Group note that the expected credit losses have not been discounted for the time value of money due
to the short-term nature of most consumer plans which have a duration of less than 6-12 months, and the Group has assessed the
financial impact of discounting as immaterial.
Net impairment losses on financial assets recognised in the profit or loss
During the year, the following losses were recognised in profit or loss in relation to impaired financial assets:
Consolidated
2022
2021
$
$
Impairment losses on movement in provision for expected loss for plan receivables
9,377,822
12,210,293
Net impairment losses on financial assets
9,377,822
12,210,293
Liquidity risk
Liquidity risk management involves maintaining sufficient cash and the availability of funding through an adequate amount of
committed credit facilities to meet obligations when due and to ensure there is sufficient cash allocated in Openpay SPV Pty Ltd, the
lender-controlled cash account, to meet LVR requirements.
Management monitors rolling budgets of the Group’s liquidity reserve (comprising the undrawn borrowing facilities below) and cash
and cash equivalents on the basis of expected cash flows and expected cash restrictions.
Financing arrangements
The Group had access to the following undrawn borrowing facilities (committed and uncommitted) at the end of the reporting period:
Consolidated
2022
2021
$
$
Expiring within one year
507,401,210
92,097,993
Expiring beyond one year
14,500,000
70,000,000
Total undrawn borrowing facilities
521,901,210
162,097,993
Refer to note 4 and note 17 for further details on availability of borrowings as at 30 June 2022.
Maturities of financial liabilities
The table below analyses the Group’s financial liabilities into relevant maturity groups based on their contractual maturities.
The amounts disclosed in the table are the contractual undiscounted cashflows and do not include future interest. Balances due within
12 months equal their carrying values as the impact of discounting is not significant.
Notes to the Consolidated Financial Statements.
For the year ended 30 June 2022
88 | Openpay Group Limited Annual Report 2022
Less than 6
months
Between
6 and 12
months
Between 1
and 2 years
Between 2
and 5 years
Total
contractual
cashflows
Carrying
amount of
liabilities
$
$
$
$
$
$
As at 30 June 2022
Trade payables
5,643,188
-
-
-
5,643,188
5,643,188
Borrowings
-
32,361,624
50,500,000
-
82,861,624
82,936,037
Lease liabilities
450,499
456,349
943,122
219,122
2,069,092
1,769,171
Total
6,093,687
32,817,973
51,443,122
219,122
90,573,904 90,348,396
Less than 6
months
Between
6 and 12
months
Between 1
and 2 years
Between 2
and 5 years
Total
contractual
cashflows
Carrying
amount of
liabilities
$
$
$
$
$
$
As at 30 June 2021
Trade payables
4,473,512
-
-
-
4,473,512
4,473,512
Borrowings
-
18,419,598
30,000,000
-
48,419,598
47,011,886
Lease liabilities
854,721
438,797
906,848
1,101,323
3,301,689
2,798,130
Total
5,328,233
18,858,395
30,906,848
1,101,323
56,194,799
54,283,528
The timing of expected outflows is not expected to be materially different from contracted cashflows. The carrying value of financial
assets and liabilities approximates their fair value.
Equity Price Risk
As detailed in Note 19, Openpay has reported a financial liability at 30 June 2022 in relation to the warrants issued to funders. These
warrants have been valued at a fair value of $111,601 using the Black Scholes option valuation model.
The fair values have been based the Volume Weighted Average Price (VWAP) from all trades on 30 June 2022, volatility of 65% to 75%
(midpoint 70%), a risk free rate of 2.73% to 3.36% to match the effective lives of the warrants and discount for lack of marketability. A
fair value gain of $2,291,539 has been recorded, being the movement in the fair values of the warrants during the reporting period.
The valuation of the above mentioned financial liabilities has Openpay’s share price as the key input.
The sensitivity analyses below have been determined based on the exposure to Openpay’s share price at 30 June 2022. If Openpay’s
share price had been 50% higher/lower:
Post tax profit
Higher / (Lower)
Equity
Higher / (Lower)
2022
2021
2022
2021
Judgements of reasonable possible movements
$
$
$
$
-50%
2,375,917
-
2,375,917
-
+50%
2,154,597
-
2,154,597
-
Annual Report 2022 Openpay Group Limited | 89
NOTE 30: FAIR VALUE MEASUREMENT
Fair value hierarchy
The following tables detail the consolidated entity’s assets and liabilities, measured or disclosed at fair value, using a three level
hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1: The fair value of financial instruments traded in active markets (such as publicly traded derivatives and equity securities) is
based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the group
is the current bid price. These instruments are included in level 1.
Level 2: The fair value of financial instruments that are not traded in an active market (e.g. over-the-counter derivatives) is determined
using valuation techniques that maximise the use of observable market data and rely as little as possible on entity specific estimates. If
all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the
case for unlisted equity securities.
Level 1
Level 2
Level 3
Total
Consolidated - 2022
$
$
$
$
Liabilities
Warrants
-
-
111,601
111,601
Total liabilities
-
-
111,601
111,601
Valuation techniques for fair value measurements categorised within level 3
Warrants have been valued using option pricing models, with maximum usage of market inputs, however key judgements were
required to be made regards to the volatility, expected life and dividend yield inputs as these are forward looking estimates over the
life of the option. Changes in these inputs are not expected to materially impact the fair value of the warrants.
Level 3 assets and liabilities
Movements in level 3 assets and liabilities during the current and previous financial year are set out below:
Warrants
Consolidated
$
Balance at 1 July 2020
–
Balance at 30 June 2021
–
Additions
2,403,140
Gains recognised in profit or loss
(2,291,539)
Balance at 30 June 2022
111,601
Total gains for the current year included in profit or loss that relate to level 3 assets held at
the end of the current year
2,291,539
Notes to the Consolidated Financial Statements.
For the year ended 30 June 2022
90 | Openpay Group Limited Annual Report 2022
The level 3 assets and liabilities unobservable inputs and sensitivity are as follows:
Description
Unobservable inputs
Range (weighted average)
Warrants
Share price
$0.14
Volatility
65% - 75%
Exercise price
$0.3825 to $1.3043
Expected life
2.5 years to 6.3 years
Dividend yield
Nil
Risk free rate
2.73% - 3.36%
Valuation process
Openpay engages third party service providers to assist with the valuation of warrants at each reporting date. The work of the service
provider is overseen by the Openpay finance team.
The valuation of the warrants uses a number of inputs including share price, expected volatility of share price, exercise price, expected
dividend yield, the risk-free interest rate and expected life (or exercise date) of the options.
The main level 3 inputs used by the Group are derived and evaluated as follows:
Share price has been determined based on the Volume Weighted Average Price from all trades on 30 June 2022
Expected volatility was calculated using the historic volatility of the Openpay share price
NOTE 31: CAPITAL MANAGEMENT
The Group’s objectives when managing capital are to:
Safeguard their ability to continue as a going concern, in order to provide returns for shareholders and benefits for other
stakeholders, and
Maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital
to shareholders or issue new shares or sell assets to reduce debt.
Debt covenants
As detailed in note 17, the Group has various financing facilities in place. Covenants have been complied with throughout the year
and up to the date of this report.
Dividends
No dividends have been paid or declared. The Directors have not recommended the payment of any dividends post year end.
Franking credits
There are no franking credits available for subsequent reporting periods.
NOTE 32: COMMITMENTS
(a) Capital commitments
The Group had no capital commitments as at 30 June 2022 (2021: Nil).
(b) Bank guarantees
The Group has two bank guarantees totalling $1,648,797 as at 30 June 2022 (2021: $1,648,797). The bank guarantees relate to
security for the Group’s lease of its premises and obligations under an employment contract.
Annual Report 2022 Openpay Group Limited | 91
NOTE 33: CASH FLOW INFORMATION
Reconciliation of loss after income tax to net cash inflow
from operating activities
Consolidated
2022
2021
$
$
Loss after income tax expense for the year
(82,455,823)
(63,059,351)
Adjustments for:
Depreciation and amortisation
3,280,052
2,321,157
Receivables impairment
10,209,966
12,389,978
Non cash share-based payments
3,272,121
2,063,936
Net capitalisation of finance costs
2,998,989
327,220
Change in operating assets and liabilities:
Increase in other operating assets
(15,695,426)
(26,542,444)
Increase in trade and other payables
683,637
6,106,609
Net cash used in operating activities
(77,706,484)
(66,392,895)
Net debt reconciliation
The Group’s cash and net debt position at the end of the reporting period is as follows:
Consolidated
2022
2021
$
$
Cash and cash equivalents
10,343,521
52,078,094
Borrowings – repayable within one year
(32,890,258)
(18,329,843)
Borrowings – repayable after one year
(50,045,779)
(28,682,043)
Net cash
(72,592,516)
5,066,208
Consolidated
2022
2021
$
$
Cash and cash equivalents
10,343,521
52,078,094
Gross debt – fixed interest rates
(32,890,258)
(18,329,843)
Gross debt – variable interest rates
(50,045,779)
(28,682,043)
Net cash
(72,592,516)
5,066,208
Notes to the Consolidated Financial Statements.
For the year ended 30 June 2022
92 | Openpay Group Limited Annual Report 2022
NOTE 34: PARENT ENTITY INFORMATION
Summary financial information
The individual financial statements for the parent entity, Openpay Group Ltd, show the following aggregate amounts.
Statement of profit or loss and other comprehensive income
Parent
2022
2021
$
$
Profit after income tax
13,672,987
8,709,026
Total comprehensive income
13,672,987
8,709,026
Balance sheet
Parent
2022
2021
$
$
Total current assets
–
–
Total assets
203,977,819
191,454,416
Total current liabilities
–
–
Total liabilities
–
–
Equity
Issued capital
190,304,832
182,745,390
Retained profits
13,672,987
8,709,026
Total equity
203,977,819
191,454,416
Contingent liabilities of the parent entity
There are no contingent liabilities as at 30 June 2022 (2021: nil).
Determining the parent entity financial information
The financial information for the parent entity has been prepared on the same basis as the consolidated financial statements, except as
set out below:
Investments in subsidiaries
Investments in subsidiaries are accounted for at cost in the financial statements of Openpay Group Ltd.
Tax consolidation legislation
The financial information for the parent entity has been prepared on the same basis as the consolidated financial statements, except as
set out below:
(i) Investments in subsidiaries
Investments in subsidiaries are accounted for at cost in the financial statements of Openpay Group Ltd.
(ii) Tax consolidation legislation
Openpay Group Ltd and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. The head
entity, Openpay Group Ltd and the controlled entities in the tax consolidated Group account for their own current and deferred tax
amounts. These amounts are measured as if each entity in the tax consolidated Group continues to be a stand-alone taxpayer in its
own right.
Annual Report 2022 Openpay Group Limited | 93
In addition to its own current and deferred tax amounts, Openpay Group Ltd also recognises the current tax liabilities (or assets) and
the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated
Group.
The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate Openpay Group
Ltd for any current tax payable assumed and are compensated by Openpay Group Ltd for any current tax receivable and deferred
tax assets relating to unused tax losses or unused tax credits that are transferred to Openpay Group Ltd under the tax consolidation
legislation. The funding amounts are determined by reference to the amounts recognised in the wholly-owned entities’ financial
statements.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as current amounts
receivable from or payable to other entities in the Group.
Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised
as a contribution to (or distribution from) wholly-owned tax consolidated entities.
NOTE 35: EVENTS OCCURRING AFTER THE REPORTING PERIOD
With the exception of the item listed below, no other matters or circumstances have occurred subsequent to 30 June 2022 that have
significantly affected, or may significantly affect, the operations of the Group, the results of those operations or the state of affairs of
the Group in subsequent financial years.
US operations
On 1 July 2022, the Group announced that given the current macroeconomic and public market conditions, together with the likely
ongoing capital investment required in the US to fund its progress for an extended period, Openpay has decided to pause its existing
US operations indefinitely and cease loan originations on the Opy USA platform.
Openpay’s decision will immediately result in no further expenses in its existing US operations in the near term, subject to one-off
costs associated with the restructuring. These costs are estimated to be approximately US$4.9 million of which US$4 million relates
to staff severance costs and US$0.9 million relates to supplier terminations. As at 30 June 2022, while the decision to pause the US
had not been made, the Group’s assumption was that the warehouse facility was no longer likely to be utilised. As a result, additional
costs of US$2.1 million were recognised at 30 June 2022 to reflect the accelerated recognition of upfront costs and deferred warrant
costs in relation to this facility. Payment of the expected restructuring costs and approximately US$2.6 million of expenditure incurred
during the year as part of normal operations will be settled over approximately the next 12 months to minimise the impact on the
Company’s working capital requirements.
Capital Raise and Share Placement Plan
In August 2022, the Company completed the Placement and Share Purchase Plan (SPP) announced on 23 May 2022. This followed
the general meeting held on 10 August 2022 to seek shareholder approval to ratify the issue of shares under Tranche 1 of the
placement, and approve the issue of shares under Tranche 2 of the placement and the SPP. Funds to be received totalled $23.8
million net of transaction costs, of which $17.5 million was received subsequent to year-end and $8 million was used to repay a
working capital facility that remains available for use.
Funding Facilities
Subsequent to year end, the review period for the Receivables funding facility concluded and under the amended agreement, the
new minimum restricted cash requirement reduced to $750,000 and the additional review period term that applied in the event of a
material uncertainty was also removed.
The working capital facility of $10 million due to mature in October 2022 was amended to mature in October 2023 with an additional
uncommitted tranche available at the discretion of the lender.
The corporate debt facility of $30 million due to mature in October 2022 was extended to mature in in July 2023.
94 | Openpay Group Limited Annual Report 2022
In the directors’ opinion:
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations
Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the International
Accounting Standards Board as described in note 2 to the financial statements;
the attached financial statements and notes give a true and fair view of the consolidated entity’s financial position as at 30 June
2022 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and
payable.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
Patrick Tuttle
Chairman
30 September 2022
Directors’ Declaration.
Annual Report 2022 Openpay Group Limited | 95
Independent Auditor’s Report.
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Independent auditor’s report
To the members of Openpay Group Ltd
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Openpay Group Ltd (the Company) and its controlled entities
(together the Group) is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the Group's financial position as at 30 June 2022 and of its
financial performance for the year then ended
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
භ
the consolidated balance sheet as at 30 June 2022
භ
the consolidated statement of changes in equity for the year then ended
භ
the consolidated statement of cash flows for the year then ended
භ
the consolidated statement of profit or loss and other comprehensive income for the year then
ended
භ
the notes to the consolidated financial statements, which include significant accounting policies
and other explanatory information
භ
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
Independent Auditor’s Report.
96 | Openpay Group Limited Annual Report 2022
Material uncertainty related to going concern
We draw attention to Note 4 in the financial report, which indicates that the Group incurred a net
operating cash outflow of $77.7 million and net loss of $82.5 million for the year ended 30 June 2022
and had net liabilities of $14.9 million as at 30 June 2022.
The ability of the Group to continue as a going concern is dependent upon maintaining existing cash
reserves, extending existing debt facilities and securing additional funding, either through debt or
equity.
These conditions, along with other matters set forth in Note 4, indicate that a material uncertainty
exists that may cast significant doubt on the Group's ability to continue as a going concern. Our
opinion is not modified in respect of this matter.
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
Materiality
භ
For the purpose of our audit we used overall Group materiality of $840 thousand, which
represents approximately 1% of the Group’s total assets.
භ
We applied this threshold, together with qualitative considerations, to determine the scope of
our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of
misstatements on the financial report as a whole.
භ
We chose Group total assets because, in our view, it is the benchmark against which the
performance of the Group is most commonly measured.
භ
We utilised a 1% threshold based on our professional judgement, noting it is within the range of
commonly acceptable thresholds.
Annual Report 2022 Openpay Group Limited | 97
Audit Scope
භ
Our audit focused on where the Group made subjective judgements; for example, significant
accounting estimates involving assumptions and inherently uncertain future events.
භ
For the year ended 30 June 2022, the Group was principally involved in providing services to
customers and merchants in Australia, the United Kingdom, United States and New Zealand,
which they report under one operating segment.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context. We communicated the key audit matters to the Audit
and Risk Committee.
In addition to the matter described in the Material uncertainty related to going concern section, we
have determined the matter(s) described below to be the key audit matters to be communicated in our
report.
Key audit matter
How our audit addressed the key audit
matter
Provision for expected credit losses (ECL)
on receivables
(Refer to note 3 and 10)
Under the requirements of Australian
Accounting Standards, a provision for losses on
receivables from customers is recognised on an
Expected Credit Loss (ECL) basis. ECLs are
required to incorporate forward-looking
information, reflecting potential future economic
events.
To meet the requirements of Australian
Accounting Standards, the Group has
developed ECL models which incorporate
assumptions including the Probability of Default,
Loss Given Default and the Group’s definition of
a significant increase in credit risk.
Judgement is applied in determining the
appropriate construct of the model and relevant
assumptions. The models rely on data elements
We developed an understanding of the control
activities relevant to our audit relating to the
Group’s provision for ECL and assessed
whether they were appropriately designed and
were operating effectively throughout the year,
including certain controls related to
completeness and accuracy of inputs to the ECL
calculations.
In addition to controls testing we, along with
PwC credit risk modelling experts, performed
the following substantive procedures, amongst
others:
භ
Assessed the ongoing appropriateness
of the Group’s methods for developing
the estimate by reference to the nature
of the estimate and the requirements of
Australian Accounting Standards;
භ
Evaluated the actual outcomes of
previous accounting estimates for ECL
Independent Auditor’s Report.
98 | Openpay Group Limited Annual Report 2022
Key audit matter
How our audit addressed the key audit
matter
and certain post model adjustments (overlays)
are applied based on the Group’s judgement.
The calculation of ECL also includes
consideration of multiple future economic
scenarios. This requires judgement in
determining the ECL under different economic
scenarios and the Group’s view of the
probability of these scenarios occurring.
Given the inherent estimation uncertainty in this
area and the extent of judgement involved, we
considered this to be a key audit matter.
and the results of model monitoring
performed, which included back-testing
of actual losses against expected
losses;
භ
Assessed the appropriateness of certain
forward-looking information incorporated
into the ECL calculation process
including the macroeconomic scenarios
considered by the Group, and the
probability weightings applied to the
scenarios;
භ
Evaluated whether the model design
and adjustments to the model output
meet the measurement objectives of
Australian Accounting Standards, are
appropriate in the circumstance and
whether judgements have been applied
consistently. This included assessing
the appropriateness of overlays
identified by the Group;
භ
Evaluated the appropriateness of data
used to develop ECL in the context of
Australian Accounting Standards and
whether the data is relevant and reliable
in the circumstances and has been
appropriately understood or interpreted
by the Group;
භ
Tested the completeness and accuracy
of a sample of certain critical data
elements used as inputs to the ECL
models to relevant source
documentation;
භ
Tested the mathematical accuracy, on a
sample basis, of the calculations of ECL
and assessed whether they were in
accordance with the method;
භ
Considered events occurring
subsequent to balance date until the
date of signing the auditor’s report on
the provision for ECL; and
භ
Evaluated the reasonableness of the
disclosures made in Note 10, including
those related to estimation uncertainty,
Annual Report 2022 Openpay Group Limited | 99
Key audit matter
How our audit addressed the key audit
matter
against the requirements of Australian
Accounting Standards.
IT General Controls
The Group’s operations and financial reporting
systems are dependent on its IT systems for the
processing and recording of a significant volume
of transactions. The Group’s controls over key
financial IT systems include:
භ
Overall IT governance, including
policies and procedures;
භ
Change management controls;
භ
Access controls over programs and
data; and
භ
IT operation controls (i.e. system
monitoring and backups).
User access management controls are intended
to ensure staff have appropriate access to IT
systems and that access is appropriately
provisioned and monitored, to mitigate the
potential for fraud or error as a result of
underlying changes to an application or data
Change management controls are particularly
important because they are intended to ensure
changes to IT systems and data are
appropriately initiated, tested, approved and
implemented
We considered this to be a key audit matter
because of the reliance on IT systems, and key
financial IT dependencies, such as reports and
calculations, in the financial reporting process.
Our audit procedures over the IT General
Controls included, amongst others:
භ
Developed an understanding of IT
Systems relevant to the financial
reporting of the Group and associated
IT application controls and IT
dependencies in manual controls;
භ
Tested whether certain IT general
control activities relevant to our audit
were appropriately designed and were
operating effectively throughout the
year;
භ
Where we identified design or operating
effectiveness testing control deficiencies
relevant to our audit, we performed
alternative or additional audit
procedures to address the risk(s)
presented; and
භ
These included further tests, on a
sample basis, to assess the accuracy of
selected system calculations and the
completeness and accuracy of
information contained in certain reports
used in our audit procedures.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 30 June 2022, but does not include the
financial report and our auditor’s report thereon.
Independent Auditor’s Report.
100 | Openpay Group Limited Annual Report 2022
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
auditor's report.
Annual Report 2022 Openpay Group Limited | 101
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 3 to 4 of the directors’ report for
the year ended 30 June 2022.
In our opinion, the remuneration report of Openpay Group Ltd for the year ended 30 June 2022
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
Sam Garland
Melbourne
Partner
30 September 2022
Additional Security Exchange Information.
102 | Openpay Group Limited Annual Report 2022
In accordance with ASX Listing Rule 4.10, Openpay provides the
following information to shareholders not elsewhere disclosed in
this Annual Report. The information is current as 23 September
2022 (Reporting Date).
CORPORATE GOVERNANCE
Openpay’s Directors and management are committed to
conducting Openpay’s business in an ethical manner and aspire
to the highest standard of corporate governance. The Board
assesses its corporate governance policies and procedures
to ensure they are suitable and meet corporate governance
standards and regulatory requirements. Openpay’s corporate
governance policies and charters are available at https://
investors.openpay.com.au/site/investor-centre/corporate-
governance.
For the 2022 financial year, Openpay’s governance
practices substantially complied with the ASX Corporate
Governance Council’s Corporate Governance Principles
and Recommendations (Fourth Edition) (Principles and
Recommendations). Further details are provided in Openpay’s
Corporate Governance Statement, which sets out the key
components of Openpay’s corporate governance practices and
frameworks, and states how Openpay substantially complied
with the Principles and Recommendations.
Openpay’s Corporate Governance Statement, together with
the ASX Appendix 4G, have been lodged with the ASX and are
available at https://investors.openpay.com.au/site/investor-
centre/corporate-governance.
SUBSTANTIAL HOLDERS
As at the Reporting Date, the names of the substantial holders of Openpay and the number of equity securities in which those
substantial holders and their associates have a relevant interest, as disclosed in the substantial holding notices given to Openpay, are
as follows:
Holder of Equity Securities
Class of Equity
Securities
Number of Equity
Securities Held
% of Total Issued
Securities Capital in
Relevant Class
Program Force Pty Ltd, Yemiva Pty Ltd, BNPL Pty Ltd,
Horizons Equity Pty Ltd, Moshe Meydan, Yaniv Meydan
and Eido Meydan
Fully paid ordinary
shares
65,822,258
28.38
Health Care Ventures Holdings Limited, Chow Tai
Fook Enterprises Limited, Swift Hunter Limited and
The CTF Group
Fully paid ordinary
shares
23,204,078
14.67
NUMBER OF HOLDERS
As at the Reporting Date, the number of holders in each class of equity securities is as follows:
Class of Equity Securities
Number of Holders
Fully paid ordinary shares
13,823
Unlisted options
130
Performance rights
22
Warrants
2
LESS THAN MARKETABLE PARCELS OF ORDINARY SHARES (UMP SHARES)
The number of holders of less than a marketable parcel of ordinary shares based on the closing market price at the Reporting Date is as
follows:
Total Shares
UMP Shares
UMP Holders
% of Issued Shares
Held By UMP
Holders
231,910,272
7,673,109
9555
3.31
Annual Report 2022 Openpay Group Limited | 103
VOTING RIGHTS OF EQUITY SECURITIES
The only class of equity securities on issue in Openpay that carries
voting rights is fully paid ordinary shares.
At the Reporting Date, there were 13,823 holders of a total of
231,910,272 ordinary shares of Openpay.
At a general meeting of the Company, every holder of ordinary
shares present in person or by proxy, attorney or representative
has one vote on a show of hands and on a poll, one vote for each
ordinary share held. On a poll, every member (or the member’s
proxy, attorney or representative) is entitled to vote for each
fully paid share held and in respect of each partly paid share, is
entitled to a fraction of a vote equivalent to the proportion of the
amount paid up (not credit) on that partly paid share bears to the
total amounts paid and payable (excluding amounts credited) on
that share. Amounts paid in advance of a call are ignored when
calculating the proportion.
DISTRIBUTION OF HOLDERS OF EQUITY SECURITIES
The distribution of holders of equity securities on issue in Openpay as at the Reporting Date is as follows:
Distribution of Ordinary Share Holders
Holding Ranges
Holders
Total Units
%
1 – 1,000
6,970
3,204,670
1.38
1,001 – 5,000
4,096
10,217,431
4.41
5,001 – 10,000
1,113
8,496,563
3.66
10,001 – 100,000
1,442
42,524,558
18.34
100,001 and over
202
167,467,050
72.21
Totals
13,823
231,910,272
100.00
Distribution of Option Holders
Holding Ranges
Holders
Total Units
%
1 – 1,000
12
9,794
0.14
1,001 – 5,000
65
133,730
1.96
5,001 – 10,000
5
39,560
0.58
10,001 – 100,000
36
1,549,202
22.65
100,001 and over
12
5,106,067
74.67
Totals
130
6,838,353
100.00
Distribution of Performance Rights Holders
Holding Ranges
Holders
Total Units
%
1 – 1,000
1
699
0.06
1,001 – 5,000
6
17,133
1.53
5,001 – 10,000
2
15,077
1.34
10,001 – 100,000
12
526,687
46.97
100,001 and over
1
561,755
50.10
Totals
22
1,121,351
100.00
Additional Security Exchange Information.
104 | Openpay Group Limited Annual Report 2022
Distribution of Warrant Holders
Holding Ranges
Holders
Total Units
%
1 – 1,000
0
0
0
1,001 – 5,000
0
0
0
5,001 – 10,000
0
0
0
10,001 – 100,000
0
0
0
100,001 and over
2
5,022,271
100.00
Totals
2
5,022,271
100.00
TWENTY LARGEST SHAREHOLDERS
Openpay has only one class of quoted securities, being ordinary shares. The names of the 20 largest holders of ordinary shares, and
the number of ordinary shares and percentage of capital held by each holder, is as follows:
Rank
Holder Name
Balance as
at Reporting
Date
%
1.
PROGRAM FORCE PTY LTD
41,666,666
17.97
2.
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
23,488,632
10.13
3.
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
16,863,906
7.27
4.
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
12,506,822
5.39
5.
BNP PARIBAS NOMINEES PTY LTD
10,186,838
4.39
6.
JUST GROUP INVESTMENT PTY LTD
6,250,001
2.70
7.
COLOURDOME PTY LTD
4,748,071
2.05
8.
CITICORP NOMINEES PTY LIMITED
4,728,171
2.04
9.
V-LEADER PTY LTD
2,741,905
1.18
10.
JAGEN GROUP INVESTMENT PTY LTD
2,083,333
0.90
11.
JECCEM MANAGEMENT PTY LTD
1,566,667
0.68
12.
MR EDMOND WING KIN CHEUNG & MRS ELIZA SIU LING CHEUNG
1,430,000
0.62
13.
MRS SUIQING BAO
1,093,830
0.47
14.
BNP PARIBAS NOMS PTY LTD
1,035,757
0.45
15.
SUPERHERO SECURITIES LIMITED
996,796
0.43
16.
RBFT PTY LTD
907,278
0.39
17.
KJ & RJ RETIREMENT PLAN PTY LTD
739,676
0.32
18.
BNPL PTY LTD
678,228
0.29
19.
AGILEAN PTY LTD
670,689
0.29
20.
MR POH SENG TAN
650,000
0.28
Total number of shares of Top 20 Holders
135,033,266
58.23
Total Issued Capital
231,910,272
100.00
Annual Report 2022 Openpay Group Limited | 105
UNQUOTED EQUITY SECURITIES
Openpay has the following classes of unquoted equity securities on issue.
Class of Unquoted Securities
Number of
Securities
Number of Holders
Unlisted options
6,838,353
130
Performance rights
1,121,351
22
Warrants
5,022,271
2
OP FIDUCIARY PTY LTD holds 4,000,000 Warrants (being 79.65% of the Warrants on issue) and GOLDMAN SACHS BANK USA holds
1,022,271 Warrants (being 20.35% of the Warrants on issue.
MICHAEL EIDEL holds 32.22% of the unlisted options on issue.
BRIAN SHNIDERMAN holds 50.10% of the performance rights on issue.
OTHER INFORMATION
Openpay is not currently conducting an on-market buy-back.
There are no issues of securities approved for the purposes of item 7 of section 611 of the Corporations Act 2001 (Cth) that have not yet
been completed.
No securities were purchased on-market during the reporting period under or for the purposes of an employee incentive scheme or
to satisfy the entitlements of the holders of options or other rights to acquire securities granted under an employee incentive scheme.
106 | Openpay Group Limited Annual Report 2022
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Annual Report 2022 Openpay Group Limited | iii
Corporate Information
Openpay Group Ltd ACN 637 148 200
BOARD OF DIRECTORS
Patrick Tuttle
(Chair, Independent Non-Executive Director)
Sibylle Krieger
(Independent Non-Executive Director)
Yaniv Meydan
(Non-Executive Director)
David Phillips
(Non-Executive Director)
COMPANY SECRETARY
Company Secretary is Edward Bunting
REGISTERED OFFICE
Level 9
469 La Trobe Street
Melbourne VIC 3000
Telephone: +61 1300 168 359
Email: investors@openpay.com.au
Website: openpay.com.au
SOLICITORS
Clayton Utz
Level 18
333 Collins Street
Melbourne VIC 3000
AUDITOR
PricewaterhouseCoopers
Level 19
2 Riverside Quay
Southbank VIC 3006
SHARE REGISTRY
Automic Pty Ltd
Level 5
126 Phillip Street
Sydney NSW 2000
Telephone: +61 1300 288 664
SECURITIES EXCHANGE LISTING
Openpay’s ordinary shares are quoted on the
Australian Securities Exchange (ASX)
Openpay was admitted to the official list of the
ASX on 16 December 2019 (ASX issuer code: OPY)