Prospa Group Limited
Appendix 4E
Preliminary final report
1. Company details
Name of entity:
ABN:
Reporting period:
Previous period:
Prospa Group Limited
13 625 648 722
For the year ended 30 June 2023
For the year ended 30 June 2022
1. Results for announcement to the market
Statutory Results Summary
Total income
(Loss)/profit after income tax benefit attributable to the
owners of Prospa Group Limited
Total comprehensive (loss)/income for the period
attributable to the owners of Prospa Group Limited
30 June
2023
$'000
270,181
(44,863)
30 June
2022
$'000
166,874
6,726
(46,261)
11,077
Change
%
62
767
518
Dividend information
Prospa Group Limited ("Prospa", the "Group" or the "Company") has not paid nor proposes to pay dividends for the
year ended 30 June 2023 (30 June 2022: nil).
Earnings per share
Basic (loss)/earnings per share
Diluted (loss)/earnings per share
30 June 2023
30 June 2022
cents
(27.54)
(27.54)
cents
4.12
4.12
Prospa Group Limited
Appendix 4E
Preliminary final report
2. Net tangible assets
Net tangible assets per ordinary security
Right-of-use assets have been included in the net tangible asset calculation.
3. Entities over which control has been gained or lost
30 June 2023 30 June 2022
cents
60.12
cents
62.94
On 7 December 2022, the Group established the PROSPArous Trust 2022-1, a $200 million Term Asset-Backed
Security issuance in the public markets, secured on Small Business Loans and Line of Credit products.
During the year ended 30 June 2023, the Group decided not to extend the Prospa Trust Series 2018-1 Security
Trust and the Prospa Trust Series 2019-1 Security Trust. Formal closure of both Trusts was effected on 3
February 2023.
There has been no other gain or loss of control of entities during the year ended 30 June 2023.
4. Associates and joint ventures
The Group has not engaged in the acquisition or disposal of associates, nor has it engaged in any joint ventures
during the year ended 30 June 2023 or the previous corresponding period.
5. Basis of preparation
This preliminary final report is based on the Consolidated Financial Statements of Prospa Group Limited, audited
by Deloitte Touche Tohmatsu. Further information about the results is included in the Full Year Results
Presentation and can be obtained via the ASX website or by visiting the Group's website at www.prospa.com.
6. Review of operations
Additional Appendix 4E disclosure requirements and commentary on the operating performance, the strategic
highlights and the financial position of the Group are contained in the Consolidated Financial Statements for the
year ended 30 June 2023 and in the Directors’ Report for the year ended 30 June 2023.
This document should be read in conjunction with the FY23 Annual Report and any public announcements made
in the reporting period by the Group.
Annual Report
30 June 2023
Prospa Group Limited
ACN 625 648 722
Prospa Group Limited
Contents
For the year ended 30 June 2023
Contents
Chair’s and Chief Executive’s Letter
Corporate Directory
Directors’ Report
Auditor’s Independence Declaration
Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Directors’ declaration
Auditor’s Report
Shareholders’ Information
2
4
5
35
36
37
38
39
40
100
101
105
1
Prospa Group Limited
Chair’s and Chief Executive Officer’s Letter
For the year ended 30 June 2023
Chair’s and Chief Executive Officer’s
Letter
Dear Shareholder,
Financial markets and the operating environment for our small business customers faced another year of
challenging economic conditions. Small businesses across Australia and New Zealand were faced with higher
costs of doing business due to rising interest rates, energy prices, cost of and access to labour and falling
demand. In these times, we have remained focused on supporting the needs of our customers while at the same
time pro-actively managing our credit risk settings.
The strength of our business model in complex operating environments underwrote our revenue in FY23 of
$285.6 million, which was an increase of 60.2% from FY22, with FY23 closing gross loans of $862.2 million, up
22.9% on FY22.
The challenging economic environment has highlighted the importance of our real-time dynamic credit risk
settings that allow us to continually adjust commercial and risk settings to optimise financial outcomes. We were
pleased to have achieved originations of $753.7 million in FY23, up 2.9% on FY22; supported by our agile business
model.
In response to these tighter conditions, we have witnessed higher level of arrears in certain industry verticals,
and accordingly, the Company has implemented a set of targeted measures to manage credit performance across
its portfolio. These adjustments have resulted in a reduction in total customer approvals in certain sectors. We
are pleased to note, however, that the Company has begun to witness a decline in early-stage arrears
demonstrating the positive results of those measures. We also closed FY23 with elevated Expected Credit Loss
(ECL) provisioning of 12.7%. The 5.5% increase on FY22 is representative of an increasingly difficult environment
incorporated into our economic overlay.
We have continued to invest in our new banking platform which is now partially operational. We expect to
complete the full rollout of the new platforms by the end of FY24, and at that time, we will deliver a lower
technology and operations cost base for the core business making it a much more scalable business. Given the
emphasis that the current economic environment necessitates on credit quality, we will also be investing in
refining our proprietary Credit Decision Engine (CDE). Our CDE allows us to continually adjust commercial and
risk settings to optimise financial outcomes and facilitates real-time dynamic risk-profiling so we can specifically
target customers and sectors based on changing market conditions.
We remain focused on delivering shareholder value while supporting our customers in a sustainable manner and
consistent with these ambitions, we have streamlined our operating cost base generating a run rate improvement
of $12 million p.a. and leading to an operating cost to revenue ratio of 37.5% for FY23.
During FY23, we incurred impairments of $24.9 million, related to our software intangible assets. The Board
believes the development of the software remains an appropriate and important use of shareholder capital, with
focus on building a stronger and more sustainable business. Together with elevated provisioning, this led to a
decrease in Profit Before Tax to $64.1 million loss.
2
Prospa Group Limited
Chair’s and Chief Executive Officer’s Letter
For the year ended 30 June 2023
The business continued to deliver strong cash generation during the year and we were pleased with a 64.5%
increase in operating cashflow (before cash advanced to customers) to $96.8 million at 30 June 2023. Cash and
cash equivalents for FY23 were $96.9 million (of which $25.8 million was unrestricted cash) and unused funding
facilities were at $140.1 million at 30 June 2023. In July 2023, the Company established a $12 million corporate
debt facility, which was a proactive and prudent decision to support the growth of the business and act as a
buffer should economic headwinds intensify.
Throughout the year our cost of funds rose to 7.0% and whilst this was expected, given a backdrop of rate rises,
pleasingly the business maintained an attractive yield reflected in a 0.7% increase in FY23’s portfolio yield to
34.8%. The Group’s net interest margin was 28.5% for FY23.
As operating conditions remain uncertain, we have chosen to focus on the existing product offerings within the
business and as a result we have paused the development of the Prospa Business Overdraft product. We will
continue to evaluate our capital investment plans and are committed to delivering innovation to our customers
over the medium term. Our outstanding Net Promoter Score of 70+ is representative of our continued
commitment to our small business customers.
Our performance over the last 12 months would not have been possible without the efforts from all our
employees. On behalf of the board and management, we would like to thank each staff member for their hard
work and enthusiasm in helping maintain Prospa as the number one online small business lender in Australia and
New Zealand.
Thank you to our customers and partners for their loyalty and support throughout the year - your contributions
are integral to Prospa operating as a successful technology-enabled lender with a customer-centric focus.
A final thanks to our shareholders, funders, and banking partners for their ongoing support. We are committed to
delivering sustainable growth, driving further operating efficiencies and creating a profitable business. We look
forward to updating you on the progress we make over the next 12 months.
Yours sincerely,
Gail Pemberton AO
Chair
Greg Moshal
Chief Executive Officer
3
Prospa Group Limited
Corporate Directory
For the year ended 30 June 2023
Directors
Company Secretary
Registered office
Principal place of business
Share register
Auditor
Gail Pemberton – Chair and Independent Non-Executive Director
Fiona Trafford-Walker – Independent Non-Executive Director
Mary Ploughman – Independent Non-Executive Director
Avi Eyal – Non-Executive Director
Greg Moshal – Chief Executive Officer & Executive Director
Beau Bertoli – Chief Revenue Officer & Executive Director
Stephanie Rowland
Level 1, 4-16 Yurong Street
Sydney NSW 2000
Australia
1300 882 867
Level 1, 4-16 Yurong Street
Sydney NSW 2000
Australia
1300 882 867
Link Market Services Limited
Level 12, 680 George Street
Sydney NSW 2000
1300 554 474
Deloitte Touche Tohmatsu
Quay Quarter Tower
Level 46, 50 Bridge Street
Sydney, NSW, 2000
+612 9322 7000
Stock exchange listing
Prospa Group Limited shares are listed on the Australian Securities
Exchange (ASX: PGL).
Website
www.prospa.com
Corporate Governance Statement
The Directors and management are committed to conducting the
business of Prospa Group Limited in an ethical manner and in
accordance with the highest standards of corporate governance.
Prospa Group Limited has complied with the ASX Corporate
Governance Council’s Corporate Governance Principles and
Recommendations (Fourth Edition) (“Recommendations”) to the
extent appropriate to the size and nature of its operations. The
Corporate Governance Statement sets out the Recommendations
that were followed during the reporting period and identifies and
explains any Recommendations that were not followed. This was
approved by the Board of Directors at the same time as the Annual
Report and can be found at https://investor.prospa.com/investor-
centre/.
4
Prospa Group Limited
Directors' Report
For the year ended 30 June 2023
The Directors present their report, together with the financial statements, on the consolidated entity (referred to
hereafter as the "Group") consisting of Prospa Group Limited ("Prospa" or "the Company") and the entities it
controlled at the end of, or during, the year ended 30 June 2023.
Directors
The following persons were Prospa Group Limited directors during the whole financial year and up to the date of
this report unless otherwise stated.
Information
on Directors
Name:
Gail Pemberton, AO
Title:
Independent Non-Executive Chair
Qualifications:
Gail has an MA from UTS, and a Graduate Certificate in Finance from Griffith University.
She is also a Fellow of the Australian Institute of Company Directors
Experience and
expertise:
Gail has been a Director of the Company since May 2018 and Chair since February 2019.
She was previously a Director of Prospa Advance Pty Ltd from March 2018.
Gail has more than 35 years’ experience in banking and wealth management and is a
specialist in technology and operations.
Gail has previously served on the Boards of ARQ Group (ASX:ARQ), OneVue (ASX:OVH),
SIRCA and RoZetta Technology and Onthehouse (ASX:OTH) as independent Chair, and as
a Non-Executive Director on PayPal Australia, QIC, UXC (ASX:UXC).
Prior to taking up a Non-Executive Director career, Gail was COO, UK at BNP Paribas and
CEO and Managing Director, BNP Paribas, Australia and New Zealand. She was
previously Group Chief Information Officer and Financial Services Group COO at
Macquarie Bank.
In January 2018 Gail was awarded an Order of Australia for distinguished service to the
finance and banking industry, to business through a range of roles, as an advocate for
technology and as a mentor to women.
Other current
directorships:
Gail is currently a Non-Executive Director and the Chair of FleetPartners (ASX:FPR) and a
Non-Executive Director of Land Services WA, Sydney Metro, Symbio (ASX:SYM) and
HSBC Australia.
Special
responsibilities:
Gail is a member of the Audit and Risk Committee and a member of the Remuneration,
People and Nomination Committee.
5
Prospa Group Limited
Directors' Report
For the year ended 30 June 2023
Name:
Fiona Trafford-Walker
Title:
Independent Non-Executive Director
Qualifications:
Fiona holds a B.Ec. (Hons) from James Cook University and a Master of Finance from
RMIT University. She is also a graduate of the Australian Institute of Company Directors.
Experience and
expertise:
Fiona has been a Director of the Company since May 2018, and was previously a Director
of Prospa Advance Pty Ltd from March 2018.
Fiona was previously an Investment Director at Frontier Advisors, where she was a
member of the firm’s Investment Committee and Governance Advisory team. She was the
inaugural Managing Director at Frontier Advisors and played a critical role in growing the
firm. Fiona has more than 25 years’ experience advising institutional asset owners and
investors on investment and governance-related issues.
In 2013, Fiona was awarded inaugural Woman of the Year in the Money
Management/Super Review of Women in Financial Services Awards and was ranked one
of the top 10 global Asset Consultants from 2013 to 2016, and again in 2019. In 2016,
Fiona was announced as a winner in The Australian Financial Review and Westpac 100
Women of Influence Awards in the Board/Management category.
Other current
directorships:
Fiona is currently an Independent Non-Executive Director of Link Administration Holdings
(ASX:LNK) where she also chairs the Audit Committee, Perpetual Limited (ASX:PPT), the
Victorian Funds Management Corporation (VFMC) and FleetPartners (ASX:FPR), where
she chairs the Audit and Risk Committee. She is also a member of the Investment
Committee for the Walter and Eliza Hall Institute.
Special
responsibilities:
Fiona is the Chair of the Audit and Risk Committee and a member of the Remuneration,
People and Nomination Committee.
Name:
Mary Ploughman
Title:
Independent Non-Executive Director
Qualifications:
Mary has a Bachelor of Economics from the University of Sydney, is a Graduate of the
Australian Institute of Company Directors, and an Associate of the Securities Institute of
Australia.
Experience and
expertise:
Mary has been a Director of the Company since March 2021.
Mary has 30 years of financial services, capital markets, securitisation, mergers and
acquisitions, governance and risk management experience on a range of financial
institutions, infrastructure and not for profit boards in Australia and New Zealand.
Prior to these roles, Mary served as Joint Chief Executive Officer of non-bank lender
Resimac and as Non-Executive Director of Sydney Motorway Corporation, until its sale to
6
Prospa Group Limited
Directors' Report
For the year ended 30 June 2023
Transurban in 2018. Mary was also Deputy Chair of the National Committee for the
Australian Securitisation Forum from 2013 to 2017. Mary was awarded the Kanga News
Market Achievement Award in 2016 and was made a Fellow of the Australian
Securitisation Forum.
Other current
directorships:
Mary is currently Chair of Plenti Group Limited (ASX:PLT) and a member of the People
and Culture Committee. Mary is also on the Board of Qualitas Limited (ASX:QAL) and
Chair of the Nomination, Remuneration and Governance Committee. Mary is currently
Chair of Pitcher Partners, a Senior Advisor with Gresham Partners Limited and an advisor
to Indigenous Business Australia.
Special
responsibilities:
Mary is the Chair of the Remuneration, People and Nomination Committee and is a
member of the Audit and Risk Committee.
Name:
Avi Eyal
Title:
Non-Executive Director
Qualifications:
Avi has a BSc in Electronic and Computer Engineering from the University of Natal in
South Africa.
Experience and
expertise:
Avi has been a Director of the Company since May 2018 and was previously a Director of
Prospa Advance Pty Ltd from its incorporation in 2012. Avi has been instrumental to the
development of Prospa.
Avi has almost 25 years’ experience in founding, scaling and running global technology and
finance companies.
Avi is the co-founder and Managing Partner of Entrée Capital which led Prospa’s seed and
Series A funding and has participated in each funding round. Avi brings extensive finance
and technology and governance, risk and compliance (GRC) knowledge to Prospa.
Avi has previously served as Board Director for a number of companies including Riskified
(NYSE:RSKD), Gastrofix (TSE:LSPD), HouseParty (Epic Games), Flyt (LSE:JE), Scan Inc.
(NYSE:SNAP), Torii and others.
In 2010 Avi received the Johnnie Walker Entrepreneur of the Year Award and in 2018
through 2023 was listed by Forbes Inc as rising to #3 on the Top 25 European Venture
Capitalists (Midas List). He is also listed #46 on the Forbes Global Investors Midas List.
Other current
directorships:
Avi is a current Board Director of Monday.com (NASDAQ:MNDY), BW Robotics,
Broadlume, Anchor, Broadlume, Rivery and other technology companies in the UK, EU,
USA and Israel.
Special
responsibilities:
Avi is a member of the Remuneration, People and Nomination Committee.
7
Prospa Group Limited
Directors' Report
For the year ended 30 June 2023
Name:
Greg Moshal
Title:
Chief Executive Officer & Executive Director
Qualifications:
Greg has a BCom in Accounting from Monash University.
Experience and
expertise:
Greg is a Co-Founder of Prospa and has been an Executive Director of the Company since
April 2018 and Executive Director of Prospa Advance Pty Ltd from 2011. Greg been
instrumental to the establishment of Prospa.
Greg has ten years’ experience in financial services with Prospa and prior to this had eight
years’ experience in creating and scaling start-ups, with two previous successful exits.
Prior to founding Prospa, Greg was involved in the start and scaling of a consumer service
chain and an international consumer product franchise, and successfully exited both.
Greg is passionate about product, design and technology and developing cash flow
products and services that help small businesses to prosper.
In 2017 Greg was jointly awarded Fintech Leader of the Year by Fintech Australia and was
jointly awarded the NSW Pearcey Tech Entrepreneur of the Year Special Recognition
award.
Other current
directorships:
Special
responsibilities:
None
None
Name:
Title:
Beau Bertoli
Chief Revenue Officer & Executive Director
Qualifications:
Beau has a BCom in Economics and Finance from Sydney University.
Experience and
expertise:
Beau is a Co-Founder of Prospa and has been an Executive Director of the Company
since April 2018 and Executive Director of Prospa Advance Pty Ltd since 2013. Beau has
been instrumental to the establishment of Prospa.
Beau has 16 years’ experience in financial services and has founded a technology start-up
and managed a consumer product retailer. He is responsible for Prospa’s Go To Market
capability and strategies to deliver revenue for the Group.
Beau is passionate about building and growing high performing teams and creating cash
flow products and services that keep small business moving.
8
Prospa Group Limited
Directors' Report
For the year ended 30 June 2023
In 2017 Beau was jointly awarded Fintech Leader of the Year by Fintech Australia and
was jointly awarded the NSW Pearcey Tech Entrepreneur of the Year Special Recognition
award.
Prior to co-founding Prospa, Beau held senior positions including National Sales Manager
at financial services company FlexiGroup (now humm) (ASX:FXL).
Other current
directorships:
Special
responsibilities:
None
None
Directors’ interests in Prospa shares, rights and options are outlined in the Remuneration Report.
Dividends
No dividends were paid, recommended or declared during the current or previous financial year.
9
Prospa Group Limited
Directors' Report
For the year ended 30 June 2023
Review of operations
Principal Activities
Established in 2012, Prospa is Australia and New Zealand’s #1 online lender to small business. The Company
listed on the Australian Securities Exchange in 2019 and currently serves 21,000 active customers to help them
unleash their potential and achieve their business goals. Prospa has delivered over $3.6 billion in loans and
facilities to more than 50,000 unique small business customers since inception.
Prospa engages with a network of more than 15,000 distribution partners, including finance brokers, aggregator
networks, online affiliates, accountants and other advisers to facilitate referrals and customer acquisitions across
Australia and New Zealand.
Prospa's growth strategy is to scale its credit product portfolio and deliver an all-in-one digitally enhanced
experience for every small business owner, saving them time and providing real time insights specific to their
business. Since launching Prospa’s Line of Credit product in New Zealand in March 2022, over 1,100 small
businesses have taken up the offer as an effective revolving product that supports businesses with frequent or
seasonable cash flow fluctuations.
Prospa’s All-in-One Business Account integrates Prospa’s credit products, financial management and payment
tools to deliver a frictionless solution. This opens up new ways for Prospa to regularly engage with customers,
gaining further insights to enable delivery of personalised service and product offerings, extending lifetime value
and driving greater customer retention.
Prospa continues to invest in technology, helping to facilitate digital and real-time enhancements delivering
faster approvals and driving greater operational efficiencies. This has been combined with Prospa's dynamic risk-
based pricing capability, where interest rates associated with a credit request are determined based on a robust
credit risk assessment for each individual customer within Prospa's risk appetite.
The overall quality of Prospa's customer experience remains highly engaged, with Prospa continuing to hold a
market-leading Net Promoter of 70+, and Prospa being ranked #1 in the Non-bank Financial Services category
for small business loans in Australia and New Zealand on independent review site TrustPilot.
Financial Overview
Prospa delivered originations of $753.7 million, up 2.9% on the prior corresponding period (”pcp”) (FY22: $732.5
million1). Small business loans represented 72.6% (FY22: $547.5 million) of originations during the year, down
5.3% on pcp (FY22: $578.2 million) whereas the Line of Credit originations were $206.2 million, up 33.6% on pcp
(FY22: $154.3 million).
1 Small retrospective changes in origination figures may occur as result of back dated cancellations or modifications to support customer
outcomes.
10
Prospa Group Limited
Directors' Report
For the year ended 30 June 2023
The New Zealand business continues to grow, with originations contributing $160.9 million for the year (FY22:
$122.9 million), bolstered by the national launch in July 2022 of Line of Credit in New Zealand.
Prospa achieved 30.6% year-on-year growth in active customers to 21,000. As a result of continued demand for
funds, closing gross loans reached $862.2 million, an increase of 22.9% on pcp (FY22: $701.3 million), of which
Line of Credit was $268.1 million.
Total revenue increased by 60.2% over pcp to $285.6 million (FY22: $178.3 million), due to a higher portfolio yield
of 34.8% (FY22: 34.1%). The yield was supported by continuing customer demand and some targeted increases in
interest rates, offset by tightening credit standards.
Bad debts net of recoveries increased over the year to a total of $81.0 million (FY22: $30.1 million). This is
reflective of the more challenging environment that small businesses are enduring as a result of increasing
interest rates and slowing customer demand. Due to the changing environment, Prospa tightened credit risk
settings and implemented targeted measures to manage credit performance across the portfolio. This has led to
a reduction in customer approvals in certain sectors. During the year, the business increased its focus on debt
collection and recoveries, through increased investment in systems and people.
Expected credit loss provisioning increased to 12.7% of closing gross loans (FY22: 7.2%), including a
macroeconomic overlay of 4.2% (FY22: 1.3%). The provision increased by $58.5 million during the half-year, $47
million of this increase was the 2.6 percentage point increase in the provision coverage driven by the slowing
economy putting pressure on small business owners' cashflow. $11.5 million of the increase was due to a $160.9
million increase in closing gross loans from 30 June 2022. The overlay increase was driven by economic forecasts
for FY24 and beyond, suggesting further pressure on the economy through reduced GDP and higher cash rates.
During the year, Prospa continued to invest in system re-platforming, improving and building new products.
Some of this investment was capitalised during the first half of the year in line with Prospa’s accounting policy.
Prospa ceased capitalisation when the requirements under the policy were no longer met. As part of the year-end
assessment of the carrying value of assets (as required by AASB 136 Impairment of Assets), Prospa tested for
impairment and as a result, the Group recognised a full impairment loss of $24.9 million on its software intangible
assets. The Group will continue to monitor and account for its investment in technology and platform going
forward in accordance with its accounting policy. The Board believes that the development of the software
remains an appropriate and important use of shareholder capital, with a focus on building a stronger and more
sustainable business in the long term.
Despite investment in product and technology, Prospa’s operating cost base, measured using employee and
operating costs as a percentage of revenue, improved to 37.5% (FY22: 47.2%) demonstrating the scalability of the
business. In March 2023, Prospa undertook a cost restructure, resulting in streamlining of our operating model
and rationalisation of product builds. This resulted in a $0.8 million restructuring charge and a $1.0 million run
rate saving per month.
11
Prospa Group Limited
Directors' Report
For the year ended 30 June 2023
Portfolio Management & Funding
Prospa continues to take proactive measures to address credit performance across all risk grades and industry
segments. As at 30 June 2023, any expected credit losses are adequately covered within the increased expected
credit loss provision percentage. Net bad debts as a percentage of average gross loans are 9.9%, compared to
5.7% in FY22.
The focus remains on maintaining the credit quality of the book, given the continued uncertainty in the operating
environment for small businesses.
While interest rates continue to rise, Prospa’s cost of funds has increased at a slower pace, from 5.0% in FY22 to
7.0% in FY23. The Net Interest Margin (NIM) is only down 1.1 percentage points to 28.5% (FY22: 29.6%), as the
business focused on maintaining yield.
In December 2022, Prospa undertook its second Asset Backed Securitisation (“ABS”) of $200 million, following
on from its inaugural issue in H1 FY22. As of 30 June 2023, Prospa had $921.4 million of secured funding
facilities, a 31.3% increase on pcp (FY22: $702.0 million), of which $140.1 million was undrawn (FY22: $59.2
million).
Total cash ended the year at $96.9 million (FY22: $105.8 million), of which $25.8 million was unrestricted (FY22:
$49.9 million). In addition, and not included in the closing cash position, as advised to the ASX on 7 July 2023,
Prospa announced the establishment of a $12 million corporate debt facility to support and provide an additional
proactive liquidity option.
Share Buyback
Prospa is committed to enhancing shareholder returns and purchased 1.55 million shares via an on-market
buyback between July 2022 and December 2022. The buyback expired on 16 February 2023, and there is no
current intention to re-introduce the buyback, as the Board has determined to preserve capital.
Material business risks
The following is a summary of material business risks that could adversely affect our financial performance and
growth potential in future years. These risks should be considered within the context of the current period of
continued economic uncertainty, which is impacting the small business sectors in Australia and New Zealand.
Deterioration of the economic environment could have a negative impact on many of the areas detailed below, as
well as Prospa’s ability to fulfil its strategy as a whole.
Credit
Credit risk is the risk of financial loss to Prospa if a customer or counterparty to a financial instrument fails to
meet its contractual obligations. Prospa has exposure to credit risk on all its term loans and revolving facilities. To
manage and mitigate credit risk, Prospa has developed a comprehensive credit risk framework and policies,
which encompass all stages of the credit cycle – origination, evaluation, approval, documentation, settlement,
ongoing administration, and collection activities. Prospa has established criteria for making small business
lending decisions, which can vary by loan purpose, industry segment, past credit performance and cash flow. For
12
Prospa Group Limited
Directors' Report
For the year ended 30 June 2023
larger exposures, Prospa reviews key financial risk ratios, including interest coverage, debt serviceability and
balance sheet structure.
The credit risk framework is also designed in such a way that it allows for adequacy of lending controls and
commercial flexibility in a closed feedback, approval, and communication loop. As such, the risk framework is
designed to remain relevant and responsive to evolving external conditions.
Prospa has bolstered its recoveries capability through operational process improvements, the use of specialist
collection agencies, and renegotiated debt sale arrangements.
Financial & Funding
Prospa needs to be a financially sustainable, competitive, and efficient organisation, with a balance sheet and
access to funding that can consistently support its strategic and growth ambitions. We continue to build our
long-term financial viability and overall financial strength. Prospa has long-term relationships with key funding
partners providing $921.4 million of funding lines through warehouse funding and public ABS’s. The business
accessed the public markets for its second ABS in December 2022 and borrowed $12 million from a corporate
debt facility in July 2023.
Liquidity risk
Given Prospa’s reliance on third-party funding, Prospa is exposed to liquidity risk. Liquidity risk is the risk that
Prospa will not meet its financial obligations as they fall due. Prospa has a diversified funding model and
comprises a mix of securitisation warehouse facilities (funded through multiple domestic and global funders),
corporate debt facilities, equity, and balance sheet cash.
Prospa manages liquidity risk by maintaining cash reserves and available borrowing facilities and continuously
monitors actual and forecast cash flows. Prospa seeks to have sufficient liquidity to meet its liabilities when due,
under both normal and stressed conditions.
Market risk
Market risk, specifically interest rate and foreign exchange risk, can adversely impact Prospa’s earnings.
Prospa is exposed to interest rate risk because Prospa borrows funds at variable interest rates. The interest
payable under its funding arrangements is linked to variable Benchmark Rates (in Australia, either Bank Bill Swap
Rates (“BBSW”) or Bank Bill Swap Bid Rate (“BBSY”) and in New Zealand, the Bank Bill Market (BKBM) rate).
Where necessary, Prospa partly manages the risk using interest rate cap contracts held with other independent
financial institutions with a credit rating of A3 or higher. Hedging activities are evaluated regularly to align with
interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies are applied.
Prospa is exposed to foreign exchange risk through its New Zealand operations. To minimise this risk, Prospa has
funded its New Zealand operations in local currency, restricting the exchange rate translation and transaction
risk to Prospa’s equity invested in the New Zealand operations. Prospa also pays certain overseas suppliers in
foreign currency. However, payments made in foreign currency are not of significant value to have a material
impact on Prospa’s results.
Legal, Regulatory and Compliance
Prospa places great importance on meeting its legal, regulatory and compliance requirements and understands
that successfully adhering to the letter and the spirit of any laws, regulations, and guidelines will enable it to
13
Prospa Group Limited
Directors' Report
For the year ended 30 June 2023
meet the expectations of its key internal and external stakeholders, including customers and regulatory and
governance bodies.
Prospa’s products are significantly influenced by government policy, regulations and industry-based codes of
practice, which apply to the financial services and non-bank lending industries in which Prospa operates. Prospa
is exposed to compliance risk, being the risk of regulatory action or policy change resulting from a failure to abide
by compliance obligations, which may negatively affect Prospa’s financial position or reputation.
In addition, any material new or altered law, regulation or policy which impacts Prospa’s products could require
Prospa to increase spending and employee resources on regulatory compliance and/or change its business
practices, which could adversely affect Prospa’s operations and profitability.
Technology, including Cyber & IT Security
Prospa has invested and will continue to invest in having strong technological capability, systems and controls in
keeping the data it holds secure and safe.
Prospa is dependent on the effective performance, reliability and availability of its technology platforms,
communications systems, the internet, and cloud-based hosting services through which it operates.
There is a risk that Prospa’s security and technical precaution measures will not be sufficient to prevent
unauthorised access to its systems. Operational or business delays, and damage to reputation, may result from
any disruption or failure of Prospa’s systems and product delivery platforms, which may be caused by events
outside Prospa’s control. This could lead to claims against Prospa by its customers, reduce the attractiveness of
Prospa’s products and services to its customers, partners, and subject Prospa to legal action, penalties and/or
regulatory scrutiny and the potential termination of customer contracts.
Operational
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people, and systems or
from external events – either intentional or accidental. Prospa has in place a framework to allow for the
identification, assessment, management, monitoring and reporting of operational risks. The framework helps
inform, establish, and define policies, strengthen processes, test control effectiveness and drive improvement in
the way Prospa manages and mitigates operational risks and obligations.
Prospa also has in place a fit-for-purpose compliance framework that provides a strong foundation for all credit
risk assessments and ongoing monitoring. All applications are screened in accordance with Prospa’s Anti-Money
Laundering and Counter-Terrorism Financing Program. Prospa pro-actively manages fraud risk through various
fraud checks at the onboarding stage and continuous transaction monitoring throughout the customer lifecycle.
Prospa continues to invest in operational risk capabilities to ensure we meet the evolving needs in a changing
operating environment which now includes multiple products and two geographies.
Prospa manages all operational risk and compliance settings in accordance with its Risk Appetite Statement via a
dedicated Operational Risk & Compliance Team. This team regularly reports insights, incident detail and Internal
Audit findings to Prospa's Audit & Risk Committee.
14
Prospa Group Limited
Directors' Report
For the year ended 30 June 2023
Future developments
Our bold ambition is to make Prospa indispensable to SMEs with solutions that simplify small business cash flow
by building digital financial solutions to help our customers make payments, fund growth and reduce
administration. Leveraging our extensive data and insights, we are investing in our technology stack to scale
existing products and create new financial management tools that will help improve customer experiences, drive
efficiencies, and proactively manage portfolio performance.
Significant changes in the state of affairs
There were no significant changes in the state of affairs of the Group during the financial year.
Environmental regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth, State, or
Territory law.
Prospa is aware of the Sustainability Disclosure Standards issued by the International Sustainability Standards
Board in June 2023. Prospa acknowledges the importance of sustainability reporting and will consider their
applicability for our future reporting.
Company Secretary
Mr Ross Aucutt held the position of Company Secretary of the Group from 1 June 2022 to 20 April 2023. Mr
Aucutt is the Chief Financial Officer of Prospa. Mr Aucutt has a strong background in non-bank disruptive
finance business models and the financial markets generally, where he has worked at a senior level in large
domestic and international organisations.
Ms Stephanie Rowland was appointed to the position of Company Secretary of the Group on 20 April 2023. Ms
Rowland is also Prospa’s Legal Counsel and is admitted to the Supreme Court of New South Wales. Ms Rowland
has a background in banking and finance law, general corporate law and disputes, with experience working on a
broad range of matters relating to financial services domestically and internally.
Meetings of Directors
The number of meetings of the Company's Board of Directors (“the Board”) held during the year ended 30 June
2023, and the number of meetings attended by each Director were:
Board
Held
Attended
Remuneration, People and
Nomination Committee
Attended
Held
Gail Pemberton
Greg Moshal
Beau Bertoli
Avi Eyal
Mary Ploughman
Fiona Trafford-Walker
13
13
13
13
13
13
6
6
6
6
6
6
13
13
13
10
13
12
15
6
6
6
5
6
6
Audit and Risk
Committee
Held
7
7
7
-
7
7
Attended
7
7
7
-
7
7
Prospa Group Limited
Directors' Report
For the year ended 30 June 2023
Held: represents the number of meetings held when the Director held office or was a relevant committee
member.
Committee Membership
As at the date of this report, the Group has an Audit and Risk Committee and a Remuneration, People and
Nomination Committee. The members of each committee are as follows:
Audit & Risk Committee
Remuneration, People and Nomination Committee
Fiona Trafford-Walker - Chair
Mary Ploughman - Chair
Gail Pemberton
Mary Ploughman
Avi Eyal
Gail Pemberton
Fiona Trafford-Walker
16
Prospa Group Limited
Directors' Report
For the year ended 30 June 2023
Remuneration Report (audited)
1.
Key Management Personnel
The Committee presents the Remuneration Report of the Group for the period 1 July 2022 to 30 June 2023. This
Report forms part of the Directors' Report and has been audited in accordance with section 300A of the
Corporations Act 2001.
The Remuneration Report details the remuneration arrangements for Prospa's Key Management Personnel
(“KMP”). KMP are those persons who have authority and responsibility for planning, directing and controlling the
entity's activities, directly or indirectly, including all Directors. Table 1 outlines the KMP of the Group during
FY23.
Table 1. Prospa KMP
Name
Executive KMP
Greg Moshal
Beau Bertoli
Position
Term as KMP
Executive Director and Chief
Executive Officer
Executive Director and Chief
Revenue Officer
Full year
Full year
Ross Aucutt
Chief Financial Officer
Full year
Non-Executive Directors
Gail Pemberton
Independent Non-Executive Chair
Full year
Fiona Trafford-Walker
Avi Eyal
Mary Ploughman
Independent Non-Executive
Director and Chair of the Audit and
Risk Committee
Non-Executive Director
Independent Non-Executive
Director
Chair of the Remuneration, People
and Nomination Committee
Full year
Full year
Full year
17
Prospa Group Limited
Directors' Report
For the year ended 30 June 2023
2.
Remuneration Framework and Governance
Remuneration framework
Our remuneration framework enables us to adjust remuneration outcomes in line with the performance of the
business and broader economic conditions as they evolve. It aims to reward Executives with a mix of fixed and
variable remuneration appropriate to their position, responsibilities, and performance, in a way that aligns with
the Company's strategy, culture and values and is underpinned by remuneration principles that are fit for
purpose. Full details of the executive reward framework are provided in section 6.
The Committee is responsible for determining and reviewing executive remuneration arrangements for
Executives and Directors in line with our Strategy and the Prospa Culture and Values. The Executive
remuneration framework is designed to align executive and shareholder interests consistent with the following
principles:
- Reward financial and non-financial performance that creates success for Prospa
over the short and long term;
- Attract, motivate and retain high calibre talent;
- Drive the right behaviours and compliance;
- Be fit for purpose for the business we are now and aspire to be;
- Everyone in the business should share in wealth creation;
- Short-term incentives truly vary with business performance; and
- Be fair and transparent.
Our Reward framework is a mix of fixed, variable, short-term and long-term remuneration underpinned by a
performance management framework based on “what” executives are delivering and “how” they are delivering it.
Remuneration governance
The Remuneration, People and Nominations Committee is responsible for reviewing and recommending to the
Board the nature and amount of remuneration for Non-Executive Directors and Executives. In particular, the
Committee is responsible for:
- Determining Non-Executive Director and Executive remuneration outcomes;
- Determining participation in and performance targets for incentive plans, including employee equity
plans;
- Approving major changes to company remuneration policies and arrangements; and
- Recommending whether offers will be made under any of the Company’s employee equity incentive plans.
From time to time, the Committee may engage independent consultants to provide remuneration advice. During
the 2023 financial year, Ernst & Young were engaged as independent remuneration advisor.
No remuneration recommendations, as defined in the Corporations Act 2001, were provided by Ernst & Young or
any other advisor during the year.
18
Prospa Group Limited
Directors' Report
For the year ended 30 June 2023
3.
Prospa Performance and Shareholder Return
As shown below in Table 2, Prospa has achieved year-on-year growth in total income with a 14.6% CAGR over
FY19 to FY23. In FY23, a total income of $270.2 million was achieved, a 61.9% improvement from FY22.
Net Profit after tax (“NPAT”) was a loss of $44.9 million, down from last year’s profit of $6.7 million. See the
Review of Operations in the FY23 Annual Report for commentary on the results.
Table 2 summarises the statutory earnings and share price performance of the Group for the last five financial
years.
Table 2. Group performance summary
$ million
Total income
FY23
270.2
FY22
166.9
FY21
110.5
FY20
133.2
FY19
136.4
NPAT
(44.9)
6.7
(9.5)
(24.9)
(24.7)
Share price high ($)
Share price low ($)
Share price close ($)
0.85
0.27
0.34
1.25
0.55
0.65
1.09
0.67
1.00
5.09
0.40
0.96
4.55
3.49
3.63
4.
FY23 Remuneration Outcomes
Executive KMP remuneration in FY23
The Board determines Executive KMP remuneration outcomes. The Remuneration, People and Nomination
Committee (“RPNC”) reviews and recommends Executive KMP remuneration outcomes to the Board considering
incumbent capability, experience, market movements, the remuneration principles and individual, business unit
and Group performance.
Fixed remuneration
For FY23, the KMP received increases of approximately 4% to their base salary (excluding superannuation) in line
with the company-wide base salary increase budget.
Short term incentive plan (“STIP”)
No short-term incentive payments were awarded for FY23, notwithstanding that Executives achieved 79% of
combined business and individual measures. For FY23, the Board and Executive Directors adjusted all Executive
KMP STI outcomes to nil to reflect the Company’s financial performance.
19
Prospa Group Limited
Directors' Report
For the year ended 30 June 2023
Table 3. STI performance and outcomes
Performance measures
Weighting
% Combined
performance achieved
% Adjusted
outcome
Business measures of success:
- Gross Profit
- Originations
- Total active customers
- Net Promoter Score (“NPS”)
- People
Individual measures of success
70%
30%
79%
0%
Long term incentive plan (“LTI”)
The LTI relating to FY23 was granted to the Executive KMP in November 2022. Refer to Table 10 for further
details of the FY23 LTIP grants.
No current on-foot or legacy LTI vested in FY23.
The remuneration outcomes table below summarises the remuneration the current Executives received in their
KMP roles during the financial year ended 30 June 2023. Presenting this information gives shareholders greater
clarity and transparency of Executive take-home pay. It complements Table 5, the statutory remuneration table,
in accordance with accounting standards.
Table 4. Executive KMP Cash and Variable Remuneration Outcomes in FY23
KMP
G. Moshal
B. Bertoli
R. Aucutt
Fixed
Remuneration1
STIP awarded
for FY23
Face Value Performance
Rights awarded during FY232
565,638
565,638
462,715
-
-
-
316,890
316,890
197,317
In contrast to Table 4, details of the FY23 remuneration expense recognised for the Group's Executive KMP for
the reporting period measured in accordance with Australian Accounting Standards ("AAS") for Executive KMP
are set out in the statutory table below, Table 5.
1 Fixed remuneration is inclusive of superannuation.
2 This represents the face value of Performance Rights granted to KMP under the FY22 Executive LTI as approved by Shareholders at the
FY22 AGM.
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Prospa Group Limited
Directors' Report
For the year ended 30 June 2023
Table 5. Statutory Executive KMP Remuneration Outcomes in FY23
Short-term employee
benefits
Post-
employment
benefits
Name
Year Salary
and fees2
Cash
bonus3
Rights
Other
benefits
Superannuation
Other
long-
term
benefits
Long
service
leave
Share-
based
payments1
Options and
rights
Total
remuneration
Performance
related
G. Moshal 2023 540,346
-
-
2022 511,539 147,000 36,750
B. Bertoli 2023 540,346
-
-
2022 511,539 147,000 36,750
-
-
-
-
25,292
16,272
185,198
767,108
23,568 28,395
157,789
905,041
25,292
21,771
185,198
772,607
23,568 22,604
157,789
899,250
R. Aucutt 2023 437,423
-
-
1,200
25,292
3,655
167,373
634,943
2022 425,000 165,430 28,858
1,200
23,568
1,143
85,203
730,402
24%
38%
24%
38%
26%
34%
5.
FY24 Remuneration
In considering the ongoing health of the business and the focus on FY24 performance, the Board has determined
to make no LTI grant to KMP or Executives in FY24.
Although no LTI will be granted in FY24, the Executive KMP retain substantial shareholdings or existing awards
on foot ensuring continued alignment between Executive KMP and shareholders. Please refer to Tables 11 and 12
for details of current KMP equity holdings.
To focus Executives on stabilising the business and returning to profitability through a challenging economic and
performance period, the Board has approved increasing the FY24 STI Maximum to 150% of each KMP’s current
STI maximum. The FY24 STI will remain subject to the same deferral restrictions (20% deferred for one year) as
prior awards under the STI scheme. In the absence of an FY24 grant under the LTI, the STI will also provide an
element of retention to the Executive KMP.
The FY24 Short Term Incentive framework is proposed to incorporate additional profitability metrics as a part of
the Incentive scorecard and as a gate on any STI outcome at year end.
6.
Remuneration Framework Overview
The executive remuneration framework balances key business value drivers in the STIP by incorporating
measures such as profitability, originations and customer metrics with a long-term shareholder value creation in
the LTIP. Vesting of the LTIP is subject to meeting the EBITDA and Revenue performance conditions; the LTI is
delivered as performance rights.
1 This represents the share-based payment expense for options and rights granted to executive KMP. The values of the options and rights are
calculated at the grant date. The amounts disclosed as part of remuneration for the financial year have been determined by amortising the
grant date value on a straight-line basis over the period from the grant date to vesting date.
2 Salary and fees excludes the movement in the annual leave provision.
3 The minimum possible cash bonus value payable to each KMP is $nil. The Board determines the maximum possible value and has overall
discretion to reduce, cancel or claw back any remuneration.
21
Prospa Group Limited
Directors' Report
For the year ended 30 June 2023
The structure consists of the following.
- Fixed remuneration set by benchmarking against a group of peer organisations.
- Short-term incentive Plan ("STIP") – a cash payment subject to annual performance targets, with 20%
-
deferred into restricted rights for one year.
Long-term incentive Plan ("LTIP") - Offered in FY23, which consisted of performance exercisable rights
that will vest subject to EBITDA and Revenue performance conditions. Options remain exercisable for
two years following vesting. Vesting occurs after three years and is subject to meeting a minimum
performance threshold.
FY23 Short-term Incentive Plan (“STIP”)
STIP Design
Key Terms
Purpose of the
STIP
Aligning executives with the Company's strategy, culture, values, and shareholder
interests.
Award delivery
Provided performance conditions are met over the one-year performance period; the STIP
award is delivered as follows:
- 80% in cash at the end of the performance period; and
- 20% granted in restricted rights, with allocation on a face value basis from the 10-
day Volume Weighted Average Price, vesting on the date one-year post-grant.
Performance
metrics
Performance metrics are assessed annually and set according to business needs.
For FY23, STIP performance was assessed according to:
- Business measures of success (70%):
- Gross Profit
- Originations
- Total active customers
- NPS
- People
-
Individual measures of success (30%):
- An assessment of individual measures such as achievement of corporate
goals, budget alignment, people, customers, and delivery of key strategic
projects.
Performance
Targets
A minimum performance threshold of 75% of targets applied to any financial metric
before an incentive can be paid.
Threshold
Target
Performance 75%
% Outcome 80%
100%
100%
STI outcomes are assessed on a straight-line basis between threshold and target.
The originations threshold target must be met for the non-financial/individual
performance metrics to be payable.
22
Prospa Group Limited
Directors' Report
For the year ended 30 June 2023
STIP Design
Key Terms
Restricted rights
vesting
Restricted rights vest one-year following grant and automatically convert to shares
(subject to trading windows).
Dividends and
voting rights
Restricted rights do not carry dividends or voting rights before vesting. Shares allocated on
vesting of rights have the same dividend and voting rights as other ordinary shares.
Cessation of
employment and
change of control
Cessation of employment
- Where a participant ceases employment before payment of cash/vesting of
restricted rights, all STIP awards are forfeited.
- An employee must be employed at the STIP payment date to receive a payment
for their STIP award.
- Good leavers may receive a pro-rata award, subject to Board and management
discretion.
Change of control
- Board retains full discretion to determine deferred award treatment where a
change of control event has occurred.
Governance
Before vesting, all STIP awards are subjected to Board risk review. Should any substantial
breach of regulatory compliance or material misstatements be identified, the award can be
reduced to zero.
FY23 Long-term Incentive Plan
The terms of the FY23 LTIP grant are outlined below.
LTIP Design
Key terms
Purpose of the
LTIP
Award Delivery
To motivate and retain key employees by aligning to the shareholder value they create.
The FY23 LTIP is structured as Performance Rights, being a Right to receive a Prospa
share for nil consideration on the exercise date, subject to meeting the performance
conditions. The Performance Rights will be issued for nil consideration and are not
transferable.
Eligibility
All Executive KMP
Performance
period and
condition
FY23 LTIP Rights vest at the end of three years, subject to testing against an aggregate
Annual EBITDA and Revenue performance condition. 50% of the award will be tested
independently against each metric, so one performance condition may vest regardless of
whether the other performance condition has been achieved.
At the start of each relevant financial year (FY23, FY24, and FY25), the Board will set
annual EBITDA and Revenue targets for the relevant financial year. Threshold targets will
also be set at 80% of Prospa’s annual EBITDA target and 90% of Prospa’s annual
Revenue target for each relevant financial year.
23
Prospa Group Limited
Directors' Report
For the year ended 30 June 2023
LTIP Design
Key terms
Following the end of the performance period, the Company will aggregate the threshold
and maximum annual targets for each metric. 50% of the Rights tested against each
metric will vest if Prospa achieves the aggregated threshold target, and 100% of the
Rights tested will vest if Prospa achieves the aggregated maximum performance target.
Rights will vest on a straight-line basis between the threshold and maximum targets.
The Board retains discretion to adjust the targets and/or how EBITDA and Revenue is
calculated to address matters that materially affect the EBITDA and Revenue outcomes
and are considered by the Board to be outside management’s influence and/or control.
Vesting
restrictions
FY23 LTIP Rights will vest on the Vesting Date to the extent the performance conditions
are determined to have been satisfied by the Board at the end of the performance period.
Cessation of
employment and
change of control
Governance
Dividend and
other rights
Cessation of employment
- Unless the Board determines otherwise, unvested awards lapse on cessation of
-
employment due to either resignation, or termination for cause / gross
misconduct.
In all other cases, unless the Board determines otherwise, participants who cease
employment holding unvested rights may have their rights prorated subject to
board discretion and continue to be performance tested under the vesting
schedule.
Change of control
- The Board retains full and complete discretion to determine award treatment
where a change of control event occurs.
Prior to vesting, all FY23 LTIP Rights are subjected to Board risk and reputation review,
and should any substantial breach of regulatory compliance and material misstatements
be identified, the award can be reduced, including to zero.
FY23 LTIP Rights do not carry any dividend or voting rights. Shares allocated on vesting
and exercise carry the same dividend and voting rights as other shares issued by the
Company.
The Executive Incentive Securities:
- Do not confer any right to a return of capital, whether in a winding up, upon a
reduction in capital or otherwise;
- Do not confer any right to participate in the surplus profit or assets of the entity
upon a winding up; and
- Do not confer any right to participate in new issues of securities such as bonus
issues or entitlement issues.
Dealing
Performance Rights as part of the FY23 LTIP cannot be dealt with. Shares allocated on
vesting and exercise of Performance Rights can be dealt with subject to the Company’s
Securities Dealing Policy.
Employee Equity Arrangements
Please refer to Note 35 to the consolidated financial statements for details of Employee share-based payments.
24
Prospa Group Limited
Directors' Report
For the year ended 30 June 2023
7.
Contractual Arrangements
Remuneration and other terms of employment for Executive KMP are formalised in service agreements. Details of
these agreements are outlined in Table 6.
Table 6. Executive KMP contractual arrangements
Greg Moshal
Chief Executive
Officer
Beau Bertoli
Chief Revenue
Officer
Ross Aucutt
Chief Financial
Officer
Contract type
Ongoing
Ongoing
Ongoing
Fixed remuneration
Termination notice by either
party
$546,000 +
superannuation
$546,000 +
superannuation
$442,000 +
superannuation
6 months
6 months
6 months
Termination notice with cause
Immediate
Immediate
Immediate
Post-employment restraints
Restrictions operate for up to 12 months post-employment and include:
- Non-competition restraints, some of which purport to operate
across Australia only;
- Restrictions against soliciting certain Group clients and customers
and from providing certain services to those clients or customers;
- Restrictions against inducing suppliers of the Group to cease
supply to the Group; and
- Restrictions against soliciting the Group's employees, contractors
or Directors.
8. Non-Executive Director Remuneration
Fees
Prospa's Non-Executive Director fee policy is designed to attract and retain high-calibre directors and recognise
their contribution to the work of the Board and associated Committees. Table 7 outlines the annual base fees
paid by the Company to Non-Executive Directors (which may be awarded in cash or equity). All Non-Executive
Director fees are inclusive of statutory superannuation contributions. Non-Executive Directors in any financial
year must not exceed a fee pool of $900,000, as approved by Shareholders at a General Meeting of the
Company.
Table 7. Non-Executive Director fees
Board and committee fees
($ incl super)
Board
Audit and Risk committee
Remuneration, People and
Nomination committee
Chair
180,000
25,000
15,000
Member
100,000
Nil
Nil
25
Prospa Group Limited
Directors' Report
For the year ended 30 June 2023
Directors are entitled to the reimbursement of travel and other expenses directly relating to their Board role.
Any Director who performs extra services, makes any special exertions for the benefit of the Company or who
otherwise performs services which, in the opinion of the Board, are outside the scope of the ordinary duties of a
Non-Executive Director, may be remunerated for the services (as determined by the Board) out of the funds of
the Company. No additional cash fees were paid to the Non-Executive Directors in FY23.
Prospa does not pay benefits (other than statutory entitlements) on retirement to Non-Executive Directors.
Table 8 outlines statutory remuneration paid to Non-Executive Directors in FY23 in accordance with AAS.
Table 8. Non-Executive Director Statutory Remuneration
Fees
$
Superannuation
benefits
$
Share-based
payments
$
Name
G. Pemberton
F. Trafford-Walker
A. Eyal1
M. Ploughman
Year
2023
2022
2023
2022
2023
2022
2023
2022
167,444
163,592
125,000
125,000
100,000
100,000
104,072
104,545
12,556
16,359
-
-
-
-
10,928
10,455
22,101
7,558
15,348
7,558
12,278
Total
202,101
187,509
140,348
132,558
112,278
-
100,000
14,120
-
129,120
115,000
Non-Executive Director Equity Plan ("NEDEP")
In line with Prospa's ownership culture, the Company had a NEDEP, which allowed Non-Executive Directors to
acquire rights that convert to restricted shares in lieu of some or all of their cash Board fees. The NEDEP is not
subject to any performance or service conditions, and the rights have an exercise price of $nil.
1 Avi Eyal is based overseas, and all fees are paid in Australian Dollars.
26
Prospa Group Limited
Directors' Report
For the year ended 30 June 2023
FY23 Non-Executive Director Options
Non-Executive Director Options were granted in November 2022, subject to continued service at the vesting
date. Options will be net-settled upon exercise in the form of shares. Upon exercise, the number of shares issued
will be equivalent to the net market value of Prospa’s shares at exercise minus the net exercise price of the
Options being exercised. The options granted to each Non-Executive Director are outlined in Table 9.
Table 9. Terms and Conditions of Non-Executive Director Options Granted
Name
Number of
options
granted
Grant date
Vesting date and
exercisable date
Expiry date
Exercise
price
Fair value
per option
at grant date
G. Pemberton
459,571
23/11/2022
23/11/2025
23/11/2028
$0.7602
F. Trafford-Walker
319,147
23/11/2022
23/11/2025
23/11/2028
$0.7602
A. Eyal
255,317
23/11/2022
23/11/2025
23/11/2028
$0.7602
M. Ploughman
293,615
23/11/2022
23/11/2025
23/11/2028
$0.7602
$0.25
$0.25
$0.25
$0.25
9.
Additional Statutory Disclosures
The information in the following section has been prepared in accordance with statutory requirements and AAS.
Long-Term Incentive Plan and other equity awards information
No LTI options or deferred rights vested in FY23.
Table 10 outlines the details of the Executive KMP FY23 LTIP grants.
Legacy Equity Plans
The sign-on options granted to Ross Aucutt in March 2021 remain unvested and on-foot.
The pre-IPO options granted to Gail Pemberton, Fiona Trafford-Walker and Aviad Eyal in December 2018,
January 2019 and June 2019 remain on-foot as vested options. They will expire in December 2023, January 2024
and June 2024.
27
Prospa Group Limited
Directors' Report
For the year ended 30 June 2023
Table 10. Executive KMP Equity Awards Granted in FY23
Number
granted
Grant
date
48,343
23/11/2022
528,150
23/11/2022
48,343
23/11/2022
528,150
23/11/2022
37,961
23/11/2022
328,861
23/11/2022
Name
G.
Moshal
B.
Bertoli
R.
Aucutt
2022
STIP
Deferral
2023
LTIP
Grant
2022
STIP
Deferral
2023
LTIP
Grant
2022
STIP
Deferral
2023
LTIP
Grant
Number
forfeited
/ lapsed
Number
Vested
Granted
($)
Vesting
date and
exercisable
date
Fair
value
per right
at grant
date
Expiry
date
-
-
-
-
-
-
- 29,006 23/11/2023 23/11/2023
$0.60
- 316,890 01/08/2025 23/11/2027
$0.60
- 29,006 23/11/2023 23/11/2023
$0.60
- 316,890 01/08/2025 23/11/2027
$0.60
-
22,777 23/11/2023 23/11/2023
$0.60
-
197,317 01/08/2025 23/11/2027
$0.60
28
Prospa Group Limited
Directors' Report
For the year ended 30 June 2023
Table 11. KMP Equity Movements
Balance of
rights,
options,
and loan
shares as
at 30 June
2022
1,029,487
Rights,
options,
and loan
shares
granted in
FY23
-
-
-
48,343
528,150
KMP
G. Moshal
B. Bertoli
1,029,487
R. Aucutt
G. Pemberton
F. Trafford-
Walker
-
-
48,343
528,150
500,000
641,0261
-
-
-
-
37,961
328,861
95,556
25,000
-
-
-
459,571
95,556
25,000
-
-
-
319,147
A. Eyal
95,592
-
M. Ploughman
-
-
255,317
293,615
Rights,
options,
loan
shares
vested in
FY23
Rights,
options,
and loan
shares
exercised
in FY23
Rights,
options,
and loan
shares
forfeited
in FY23
Balance
of rights,
options,
and loan
shares as
at 30 June
2023
Balance
of rights,
options,
and loan
shares as
at 30 June
2023
(vested)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,029,487
48,343
528,150
1,029,487
48,343
528,150
500,000
641,026
37,961
328,861
-
-
-
-
-
-
-
-
-
-
95,556
95,556
25,000
25,000
459,571
-
95,556
95,556
25,000
25,000
319,147
-
95,592
95,592
255,317
293,615
-
-
The number of shares in the Company held during the financial year by each Non-Executive Director and
Executive KMP of the Group, including their personally related parties, is outlined in Table 12.
1 The Grant of 641,026 Long Term Incentive Options to R. Aucutt in FY22 was incorrectly labelled as G. Pemberton in the 2022 Remuneration
Report. This has been corrected in the table above.
29
Prospa Group Limited
Directors' Report
For the year ended 30 June 2023
Table 12. KMP Equity Holdings
Received on
exercise of
rights,
options, loan
shares
Balance at 1 July
2022
24,850,732
9,761,301
-
373,320
47,719
2,970,914
50,000
-
-
-
-
-
-
-
Purchased /
Acquired
311,100
-
-
-
-
-
-
Disposed
Balance at 30
June 2023
-
-
-
-
-
-
-
25,161,832
9,761,301
-
373,320
47,719
2,970,914
50,000
KMP
G. Moshal
B. Bertoli
R. Aucutt
G. Pemberton
F. Trafford-
Walker
A. Eyal
M. Ploughman
Loans and other transactions
No loans have been granted to any KMP. There were no transactions involving equity instruments, other than
those outlined in Tables 10, 12 and 13, with KMP or related parties.
Securities Dealing Policy
The Company has adopted a Securities Dealing Policy, which provides that Directors and employees must not
deal in the Company's securities when they are aware of inside information. Directors and certain restricted
employees must not deal in the Company's securities during any of the following blackout periods:
- The period from the close of trading on the ASX on 30 June each year until the day following the
announcement to ASX of the full-year results;
- The period from the close of trading on the ASX on 31 December each year until the day following the
announcement to ASX of the half-year results;
- The period from the close of trading on the ASX at the end of the relevant month until the day following
the announcement to ASX of any trading update; and
- Any other period that the Board specifies from time to time.
Directors and restricted employees must receive prior approval for any proposed dealing in the Company's
securities outside of the above blackout periods (including any proposed dealing by one of their connected
persons). In accordance with Corporations Act obligations, Prospa's Securities Dealing Policy prohibits key
management personnel and Directors from entering into hedging arrangements in relation to Prospa securities,
including unvested awards in the Executive Incentive Plan ("EIP"). In addition, the EIP Plan Rules restrict
employees from entering into hedging arrangements in relation to unvested awards under the EIP. Any attempt
to hedge awards in contravention of the Securities Dealing Policy or EIP Plan Rules will result in forfeiture, and
the Board may consider disciplinary action.
This concludes the Remuneration Report which has been audited.
30
Prospa Group Limited
Directors' Report
For the year ended 30 June 2023
Shares under option
Unissued ordinary shares of Prospa Group Limited under option at the date of this report are as follows.
Grant date
30/11/2018
01/12/2018
25/01/2019
1/04/2019
10/04/2019
14/05/2019
11/06/2019
14/04/2020
14/04/2020
30/03/2021
30/03/2021
31/08/2021
22/10/2021
22/10/2021
01/12/2021
23/11/2022
Expiry date
30/11/2023
01/12/2023
25/01/2024
01/04/2024
10/04/2024
14/05/2024
11/06/2024
14/04/2024
14/04/2024
30/03/2026
30/03/2026
31/08/2025
30/06/2026
22/10/2026
22/10/2026
23/11/2028
Exercise
Number
price
$3.64
$3.64
$4.19
$3.64
$3.64
$3.64
$4.35
$0.88
$0.95
$0.97
$1.07
$0.89
$0.96
$0.96
$0.96
$0.76
under option
191,499
92,592
191,112
54,000
72,501
60,000
75,000
1,397,500
1,180,000
250,000
250,000
252,320
700,000
1,815,583
2,700,000
1,327,650
10,609,757
As of 30 June 2023, 10,609,757 options were outstanding, of which 3,916,524 were vested and exercisable. No
person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue
of the Company or of any other body corporate.
31
Prospa Group Limited
Directors' report
For the year ended 30 June 2023
Shares under rights
Unissued ordinary shares of Prospa Group Limited under performance rights as at the date of this report are as
follows.
Grant date
13/07/2020
15/03/2021
07/09/2021
22/10/2021
28/02/2022
29/08/2022
24/10/2022
15/11/2022
23/11/2022
Expiry date
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Exercise
Number
price under rights
$0.00
$0.00
$0.00
50,328
28,856
90,044
$0.00
2,069,724
$0.00
$0.00
131,760
52,783
$0.00
4,043,792
$0.00
1,030,093
$0.00
1,519,808
9,017,188
As of 30 June 2023, 9,017,188 rights were outstanding, of which nil were vested and exercisable. No person entitled
to exercise the performance rights had or has any right by virtue of the performance right to participate in any
share issue of the Company or any other body corporate.
Shares issued on the exercise of options
There were no ordinary shares of Prospa Group Limited issued during the year ended 30 June 2023 on the
exercise of options granted.
Shares issued on the exercise of rights
The following ordinary shares of Prospa Group Limited were issued during the year ended 30 June 2022 on
exercise of employee rights granted.
Date performance rights granted
12/08/2019
12/08/2019
13/01/2020
13/07/2020
15/03/2021
22/10/2021
24/10/2022
32
Exercise
price
Number of
shares
issued
$0.00
$0.00
$0.00
$0.00
$0.00
80,088
33,069
41,640
58,715
55,477
$0.00
1,104,540
$0.00
712,819
2,086,348
Prospa Group Limited
Directors' report
For the year ended 30 June 2023
Indemnity and insurance of officers
The Company has indemnified the Directors and Executives of the Company for costs incurred in their capacity
as a Director or Executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the Company paid a premium for a contract to insure the Directors and Executives of
the Company against liability to the extent permitted by the Corporations Act 2001. The insurance contract
prohibits disclosure of the nature of the liability and the amount of the premium.
Indemnity and insurance of auditor
During or since the end of the financial year, the Company has not indemnified or agreed to indemnify the
Company's auditor or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium regarding a contract to insure the auditor of the
Company or any related entity.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings
on behalf of the Company or to 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 part of those proceedings.
Post balance date events
On 7 July 2023, Prospa announced the establishment of a $12 million corporate debt facility to support and
provide an additional proactive liquidity option.
No other matter or circumstance has arisen since 30 June 2023 that has significantly affected, or may
significantly affect, the Group’s operations, the results of those operations, or the Group’s state of affairs in
future financial years.
Non-audit services
During the year, Deloitte Touche Tohmatsu (“Deloitte”), the Group’s external auditor, performed certain other
services in addition to the audit of the financial statements. Details of the amounts paid or payable to Deloitte for
non-audit services provided during the financial year are outlined in Note 26 to the financial statements.
The Directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by
another person or firm on the auditor’s behalf), is compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001.
33
Prospa Group Limited
Directors' report
For the year ended 30 June 2023
The Directors are of the opinion that the services as disclosed in Note 26 to the financial statements do not
compromise the external auditor’s independence requirements of the Corporations Act 2001 for the following
reasons:
-
-
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity
and objectivity of the 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 issued by the Accounting Professional and Ethical
Standards Board, including reviewing or auditing the auditor’s own work, acting in a management or
decision-making capacity for the Company, acting as advocate for the Company or jointly sharing
economic risks and rewards.
Officers of the Company who are former partners of Deloitte
There are no officers of the Company who are former partners of Deloitte.
Rounding of amounts
The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities
and Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in
accordance with that Corporation’s Instrument to the nearest thousand dollars, or in certain cases, the nearest
dollar.
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.
Auditor
Deloitte continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made under a resolution of Directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the Directors
Greg Moshal
Director and Chief Executive Officer
Gail Pemberton
Independent Director and Chair
29 August 2023
Sydney
34
Prospa Group Limited
Auditor’s Independent Declaration
For the year ended 30 June 2023
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Quay Quarter Tower
Level 46, 50 Bridge Street
Sydney, NSW, 2000
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322
7001 www.deloitte.com.au
29 August 2023
The Board of Directors
Prospa Group Limited
Level 1, 4-16 Yurong Street
Sydney NSW 2000
Dear Board Members,
Auditor’s Independence Declaration to Prospa Group Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration
of independence to the directors of Prospa Group Limited.
As lead audit partner for the audit of the financial report of Prospa Group Limited for the year ended 30 June
2023, I declare that to the best of my knowledge and belief, there have been no contraventions of:
(i)
(ii)
The auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
Any applicable code of professional conduct in relation to the audit.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
Heather Baister
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
35
Prospa Group Limited
Consolidated statement of profit or loss
and other comprehensive income
For the year ended 30 June 2023
Income
Interest income
Other income
Total income
Interest Expense
Gross profit
Expenditure
Loan impairment expense
Employee expenses
Operating expenses
Share-based payments
Depreciation
Amortisation
Impairment of intangible asset
Interest on lease liabilities
Total expenditure
(Loss)/profit before income tax benefit
Income tax benefit
(Loss)/profit after income tax benefit for the year attributable to the
owners of Prospa Group Limited
Other comprehensive income/(loss), net of income tax
Items that may be subsequently reclassified to profit or loss
Foreign currency translation
Fair value (loss)/gain on cash flow hedge
Fair value (loss)/gain on cost of hedging
Other comprehensive (loss)/income for the year, net of income tax
Total comprehensive (loss)/income for the year attributable to the
owners of Prospa Group Limited
Basic (loss)/earnings per share
Diluted (loss)earnings per share
Note
Consolidated
30 June
2023
30 June
2022
$'000
$'000
151,957
14,917
166,874
(23,311)
143,563
(47,316)
(48,201)
(35,856)
(2,950)
(2,580)
(4,687)
-
(308)
4
5
6
7
8
240,366
29,815
270,181
(52,044)
218,137
(139,448)
(66,215)
(41,388)
35
(3,882)
(2,467)
(3,710)
(24,880)
(237)
15
15
6
9
21
(282,227)
(141,898)
(64,090)
19,227
(44,863)
1,665
5,061
6,726
20
20
129
(1,299)
(228)
(1,398)
(46,261)
34
34
(27.54)
(27.54)
(869)
1,979
8
1,118
7,844
4.12
4.12
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying
notes.
36
Prospa Group Limited
Consolidated statement of financial position
As at 30 June 2023
Assets
Cash and cash equivalents
Bank deposits
Loan receivables
Other financial assets
Derivative financial assets
Prepayments and other assets
Property, plant and equipment
Right of use assets
Intangible assets
Deferred tax assets
Total assets
Liabilities
Trade and other payables
Employee benefits
Lease liabilities
Borrowings
Current tax liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Note
Consolidated
30 June
2023
$'000
30 June
2022
$'000
10
96,944
105,767
41
-
11
752,746
650,525
12
13
14
15
9
16
17
14
18
9
1,313
610
656
2,838
3,058
3,244
67
274
5,858
7,938
-
17,934
38,280
19,734
898,963
808,864
10,554
12,846
9,067
8,001
7,262
9,545
779,120
640,822
-
1,452
806,003
672,666
92,960
136,198
19
610,949
611,808
20
(415,923)
(418,407)
21
(102,066)
(57,203)
92,960
136,198
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
37
Prospa Group Limited
Consolidated statement of changes in equity
For the year ended 30 June 2023
Consolidated
Balance at 1 July 2021
Profit after income tax benefit for the year
Fair value gain on cash flow hedge reserve
Fair value gain on cost of hedging reserve
Foreign currency translation
Total comprehensive income for the year
Share-based payment transactions:
Share-based payments (Note 35)
Exercise of options
Cash settled rights
Share buyback
Sale of loan shares
Issued
capital
(Note 19)
$'000
Reserves Accumulated
losses
(Note 21)
$'000
(Note 20)
$'000
Total
equity
$'000
610,919
(422,475)
(63,929)
124,515
-
-
-
-
-
-
-
20
(16)
(416)
1,301
-
6,726
1,979
8
(869)
1,118
-
2,950
-
-
-
-
-
-
-
6,726
-
-
-
-
-
-
6,727
1,979
8
(869)
7,844
-
2,950
20
(16)
(416)
1,301
Balance at 30 June 2022
611,808
(418,407)
(57,203)
136,198
Consolidated
Balance at 1 July 2022
Loss after income tax benefit for the year
Fair value loss on cash flow hedge reserve
Fair value loss on cost of hedging reserve
Foreign currency translation
Total comprehensive loss for the year
Share-based payment transactions:
Share-based payments (Note 35)
Share buyback
Treasury share purchase
Balance at 30 June 2023
Issued
capital
(Note 19)
$'000
Reserves Accumulated
losses
(Note 21)
$'000
(Note 20)
$'000
Total
equity
$'000
611,808
(418,407)
(57,203)
136,198
-
-
-
-
-
-
(640)
(219)
-
(44,864)
(44,864)
(1,299)
(228)
129
-
-
-
(1,299)
(228)
129
(1,398)
(44,864)
(46,262)
3,882
-
-
-
3,882
(640)
(219)
610,949
(415,923)
(102,067)
92,959
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
38
Prospa Group Limited
Consolidated statement of cash flows
For the year ended 30 June 2023
Cash flows from operating activities
Interest received
Other income received
Interest paid
Payments to suppliers and employees
Net cash provided by operating activities before movement in loans
advanced
Note
Consolidated
30 June
2023
30 June
2022
Restated*
$'000
$'000
256,226
161,483
17,705
11,546
(52,646)
(24,225)
(124,507)
(89,969)
96,778
58,835
Net increase in loans advanced to customers
Net cash used in operating activities
1
33
(230,289)
(297,941)
(133,511)
(239,106)
Cash flows from investing activities
Payment for other financial assets
Payments for intangibles
(Increase)/decrease in bank deposits
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Principal repayment of lease liabilities
Share buyback
Treasury share purchase
Proceeds from exercise of options
Proceeds from sale of loan shares
Cash settled employee rights
Net cash from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
(225)
(610)
(10,656)
(15,408)
(41)
1,095
(10,922)
(14,923)
430,845
389,066
(292,323)
(107,579)
(2,462)
(2,294)
(640)
(219)
-
-
-
(416)
-
20
1,301
(16)
135,201
280,082
(9,232)
26,053
105,767
80,377
409
(663)
Cash and cash equivalents at the end of the financial year
10
96,944
105,767
*Comparative information has been restated to align to the presentation with the current period in respect of the
reclassification of net movement in loans advances to customers from investing activities to operating activities.
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
39
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
1. Significant accounting policies
The principal accounting policies adopted in preparing the financial statements are set out below. These policies
have been consistently applied to all the years presented unless otherwise stated. The financial statements show
the results of the Group together with supplementary information about the parent entity.
Basis of preparation
These general purpose financial statements have been prepared following the Australian Accounting Standards
and Interpretations issued by the Australian Accounting Standards Board (“AASB”) and the Corporations Act
2001, as appropriate for for-profit oriented entities. These financial statements also comply with International
Financial Reporting Standards issued by the International Accounting Standards Board (”IASB”).
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable,
the revaluation of financial assets and liabilities at fair value through profit or loss, financial assets at fair value
through other comprehensive income and loans and other receivables which are measured at amortised cost.
Going concern
The financial statements of the Group have been prepared on a going concern basis. The Board of Directors has
assessed the Group’s ability to continue as a going concern. In making this assessment, the Board has considered
the following key factors:
- Budget and cash flow forecasts have been prepared which extend to 30 September 2024. These
demonstrate that the Group will have access to sufficient liquid resources to meet forecast operational
expenditure and loan originations over that period;
- The Group has access to unrestricted cash of $25.8 million as at 30 June 2023 (30 June 2022: $49.9
million). See Note 10;
- The establishment of a $12 million corporate debt facility announced on 7 July 2023 to support and
provide an additional proactive liquidity option (not included in unrestricted cash at 30 June 2023);
- An increase in net cash provided by operating activities before movement in loans advanced for the year
ended 30 June 2023 of $96.8 million (30 June 2022: $58.8 million);
- The statutory loss before tax for the year ended 30 June 2023 of $64.1 million is driven by the increase in
expected credit loss provision ($58.5 million) and the intangible asset impairment ($24.9 million). These
are non-cash items totalling $83.4 million;
- The Group has $921.4 million in available third-party facilities as at 30 June 2023 (30 June 2022: $442.9
million) including unused facilities of $140.1 million (30 June 2022: $59.2 million), with a weighted
average duration of 38 months. See Note 18; and
- The key events concerning the Group’s borrowings as described in Note 18, which demonstrate
confidence by Prospa's funders in the performance of the portfolio and the available liquidity.
In addition to the information noted above, steps have been taken during the year ended 30 June 2023 in
response to the worsening economic environment.
40
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
- Management tightened credit risk settings and implemented targeted measures to manage credit
performance across the portfolio;
- An increased focus on debt collection and recoveries, through increased investment in systems and
people; and
- A cost restructure was undertaken, resulting in a simplification and reduction of certain product builds.
This resulted in a $0.8 million restructuring charge and a $1.0 million run rate saving per month.
The Board is satisfied that the Group has the resources to continue for the foreseeable future and pay debts as
they fall due.
Foreign currency translation
The financial statements are presented in Australian dollars, which is Prospa Group Limited’s functional and
presentation currency, and includes foreign currency transactions translated into Australian dollars using the
exchange rates prevailing at the dates of the transactions.
Rounding of amounts
The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities
and Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in
accordance with that Corporation’s Instrument to the nearest thousand dollars, or in certain cases, the nearest
dollar.
Principles of consolidation
These consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Prospa Group
Limited (“Company” or “parent entity”) as at 30 June 2023 and the results of all subsidiaries and trusts for the
year then ended. Prospa Group Limited and its subsidiaries and trusts together are referred to as the “Group” in
these financial statements.
Subsidiaries and trusts are all those entities over which the Group has control. The Group controls an entity when
the Group is exposed to or has rights to, variable returns from its involvement with the entity and can affect
those returns through its power to direct the entity’s activities. Subsidiaries and trusts are fully consolidated
from the date control is transferred to the Group. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of
the asset transferred. Accounting policies of the Group are applied consistently by all subsidiaries and trusts.
New or amended Accounting Standards and Interpretations adopted
The Group has adopted all the new and revised Standards and Interpretations issued by the Australian
Accounting Standards Board (AASB) that are relevant to its operations and effective for an accounting period
that begins on or after 1 July 2022.
New and revised Standards and amendments thereof and Interpretations effective for the current year that are
relevant to the Group include:
41
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
- AASB 2020-3 Amendments to Australian Accounting Standards – Annual Improvements 2018-2020 and
Other Amendments
- AASB 2021-7 Amendments to Australian Accounting Standards – Effective Date of Amendments to
AASB 10 and AASB 128 and Editorial Corrections
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted.
Reclassification of cash flows
For the year ended 30 June 2023, the Group has changed its accounting policy for the presentation of cashflows
in relation to net increase in loans and advances to customers and reclassified these from cash flows from
investing activities to cash flows from operating activities. The change provides more relevant and reliable
information for users of the financial statements by providing information in a more comparable manner to other
market participants.
As a result, the comparative period cash flows were reclassified with net increase in loans advanced to customers
in cash flows from investing activities to operating activities. Net cash used in investing activities reduced by
$297 million from $312.8 million to $14.9 million with a corresponding change to operating activities from a cash
inflow of $58.8 million to a cash outflow of $239.1 million in the consolidated statement of cash flows for the year
ended 30 June 2022. This reclassification had no impact on the statement of financial position or to profit or loss.
The historic presentation is compared to the revised presentation below.
Cash flow from operating activities
Net cash provided by operating activities before
movement in loans advanced to customers
Net movement in loans advanced to customers
Net cash (used in)/from operating activities
Cash flows from investing activities
Net movement in loans advances to customers
Net cash used in investing activities
30 June 2022
$’000
(After reclassification)
30 June 2022
$’000
(Previously presented)
58,835
(297,941)
(239,106)
-
(14,923)
-
-
58,835
(297,941)
(312,864)
Where necessary, comparative information has been reclassified to be consistent with current period disclosures.
This has resulted in $0.1 million in interest earned on cash deposits being reclassified in the prior period
comparative information from other income to interest income.
42
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts in the financial statements, which, by definition, will seldom equal
the actual results. Management continually evaluates its judgements and estimates in relation to assets,
liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and
assumptions on historical experience and other factors, including expectations of future events, which they
believe to be reasonable under the circumstances. There are no critical accounting judgements, estimates and
assumptions that are likely to affect the current or future financial years.
The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within subsequent reporting periods are discussed below.
It also requires management to exercise judgment in applying the Group’s accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant
to the financial statements, are disclosed in the following notes:
– Note 4 Effective interest rate
– Note 9 Recoverability of deferred tax assets
– Note 11 Expected credit loss
– Note 15 Impairment of Intangible assets
3. Operating segments
The Group’s operations consist primarily of providing loans to small businesses in Australia and New Zealand.
The Group has considered the requirements of AASB 8 Operating Segments and assessed that the Group has
only one operating segment, representing the consolidated results. The chief operating decision makers include
the Non-Executive Directors, Chief Executive Officer, Chief Revenue Officer and Chief Financial Officer. They are
responsible for allocating resources to operating segments and assessing their performance.
The Group’s total income can be analysed by geography as follows.
Australia
New Zealand
Total
Consolidated
30 June
2023
$'000
30 June
2022
$'000
216,463
138,148
53,718
28,726
270,181
166,874
The Group’s loan receivables analysed by geography are disclosed in Note 23.
Other non-current assets include intangible assets and right of use assets that arise predominantly within
Australia.
43
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
4. Interest income
Accounting policy
The Group provides financing to small businesses and derives the majority of its revenue from the loans and
receivables accounted for under AASB 9 Financial Instruments.
Revenue is recognised for key items as follows.
Interest income
Interest income is recognised using the effective interest method in accordance with AASB 9 Financial
Instruments, based on estimated future cash receipts over the expected life of the financial asset. The effective
interest method calculates the amortised cost of a financial asset and allocates the interest income over the
relevant period using the effective interest rate. The effective interest rate is the rate that exactly discounts
estimated future cash payments or receipts through the expected life of the financial asset to the net carrying
amount of the financial asset. Interest income for loans with objective evidence of impairment, Stage 3 loans (See
Note 23), is recognised on a net basis and fully impaired.
When calculating the effective interest rate, the Group considers interest on loans, and any fees that are an
integral part of the loan, such as origination fees. The calculation does not consider future expected credit losses.
Interest earned on cash deposits is recognised using the effective interest method in accordance with AASB 9.
Transaction costs
Broker commissions directly attributable to the origination of loans are recognised using the effective interest
method in accordance with AASB 9. These are included as part of the initial measurement of the related loan
receivable and are therefore recognised as part of the effective interest rate of the underlying financial asset.
Critical accounting judgements, estimates and assumptions
Effective interest method
This estimate requires judgement as to the expected life of the financial asset, which may differ due to early
repayment and deferrals to its contractual life and is reviewed on an ongoing basis.
Consolidated
30 June
2023
$'000
30 June
2022
$'000
253,163
163,231
(15,389)
(11,410)
2,592
136
240,366
151,957
Interest income on lending portfolio
Transaction costs amortisation
Bank interest
44
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
5. Other income
Accounting policy
Other income includes fees not directly attributable to the origination of loans and interest on cash deposits.
Fee income is recognised at a point in time or over time when the performance obligation has been satisfied, at
the transaction price determined in the loan contract. Fee income is comprised of late fees (recognised for
services transferred at a point in time) and subscription fees (recognised for services transferred over time).
Identify the contract with a customer;
Identify the separate performance obligations;
AASB 15 Revenue requires the use of a principle-based five-step recognition and measurement model. The five
steps are:
1.
2.
3. Determine the transaction price;
4. Allocate the transaction price to each performance obligation identified in Step 2; and
5. Recognise revenue when a performance obligation is satisfied.
Where there is variable consideration in calculating a transaction price, revenue will only be recognised if it is
highly probable that a significant revenue reversal will not subsequently occur. AASB 15 applies to contracts with
customers except for revenue from items such as financial instruments where the revenue is assessed to be in
scope of AASB 9.
Fee revenue for loans with objective evidence of impairment, Stage 3 loans (See Note 23), is not recognised as
the Group does not consider it probable that it will collect the consideration to which it is entitled.
Fee income - late fees
Fee income - subscription fees
6.
Interest expense
Consolidated
30 June
2023
30 June
2022
$'000
$'000
22,544
10,670
7,271
4,247
29,815
14,917
Accounting policy
The Group’s operations are funded by a combination of securitisation trust warehouse facilities, term facilities,
and cash held on the balance sheet. Interest expense is recognised as it accrues using the effective interest rate
method. Interest on the Group’s trust warehouse facilities and the term facilities is disclosed as interest expense.
Transaction costs directly attributable to the establishment of warehouse facilities and term facilities are initially
capitalised and then recognised in interest expense over the expected life of the related facility.
45
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
The total interest expense, as calculated using the effective interest rate method, is set out below:
Interest expense
Interest on lease liabilities
Consolidated
30 June
2023
30 June
2022
$'000
$'000
52,044
23,311
237
308
52,281
23,619
Interest expense for the year to 30 June 2023 was reduced by $2.0 million from the realised gains on the settled
portion of the hedging instrument (30 June 2022: $nil). See Note 12.
Interest on lease liabilities is recognised in accordance with AASB 16 Leases.
7.
Loan impairment expense
The loan impairment expense reported in the statement of profit or loss and other comprehensive income
comprises the following key items.
Receivables written-off during the year as bad debts
Movement in provision (Note 23)
Recoveries
Consolidated
30 June
2023
30 June
2022
$'000
$'000
96,513
47,123
58,493
17,254
(15,558)
(17,061)
139,448
47,316
8. Expenditure
Accounting policy
Foreign currency transactions
Operating expenses include the realised and unrealised impact of foreign currency transactions.
Foreign currency gains and losses arise from the settlement of foreign currency transactions throughout the year
and from the translation of financial assets and liabilities denominated in foreign currencies at year-end.
46
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
Operating Expenses
General and administration expense
Sales and marketing expense
Product, design, technology and analytical expense
9. Taxation
Consolidated
30 June
2023
$'000
30 June
2022
$'000
10,827
17,690
12,871
10,639
17,178
8,039
41,388
35,856
Accounting policy
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported
in profit or loss because it excludes items of income or expense that are taxable or deductible in other years, and
it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated
using tax rates enacted or substantively enacted by the end of the reporting period.
A provision is recognised for those matters for which the tax determination is uncertain, but it is considered
probable that there will be a future outflow of funds to a tax authority. The provisions are measured at the best
estimate of the amount expected to become payable. The assessment is based on the judgement of tax
professionals within the Company supported by previous experience in respect of such activities and, in certain
cases, based on specialist independent tax advice.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of
assets and liabilities in the financial statements and the corresponding tax bases used in the computation of
taxable profit and is accounted for using the liability method. Deferred tax liabilities are generally recognised for
all taxable temporary differences, and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a
business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the
accounting profit. In addition, a deferred tax liability is not recognised if the temporary difference arises from the
initial recognition of goodwill.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is
no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates expected to apply when the liability is settled or the asset is realised
based on tax laws and rates that have been enacted or substantively enacted at the reporting date.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the
47
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount
of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the
Group intends to settle its current tax assets and liabilities on a net basis.
Current tax and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items recognised in other
comprehensive income or directly in equity, in which case the current and deferred tax are also recognised in
other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the
initial accounting for a business combination, the tax effect is included in the accounting for the business
combination.
Tax consolidation legislation
Prospa Group Limited and its wholly owned Australian controlled entities have implemented the tax consolidation
legislation. Consequently, these entities are taxed as a single entity and the deferred tax assets and liabilities of
these entities are set-off in the consolidated financial statements.
The head entity, Prospa Group Limited, and the controlled entities in the Tax Consolidated Group account for
their own current and deferred tax accounts. These tax amounts are measured as if each entity was a stand-
alone taxpayer in its own right. In addition to its own current and deferred tax amounts, Prospa Group Limited
also recognises the current tax liabilities (assets) and the deferred tax assets arising from unused tax losses and
unused tax credits assumed from controlled entities in the Tax Consolidated Group.
Assets or liabilities arising under the Tax Funding Agreement with the members of the Tax Consolidated Group
are recognised as amounts receivable from or payable to other entities in the Group. Any difference between the
amounts assumed and receivable or payable under the Tax Funding Agreement are recognised as a contribution
to (or distribution from) the Tax Consolidated Group members.
Other 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 acquiring 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
statement of financial position.
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.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax
authority.
48
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
Critical accounting judgements, estimates and assumptions
Recovery of deferred tax assets
Deferred tax assets are recognised for temporary deductible differences and unused tax losses only if the Group
considers it probable that future taxable amounts will be available to utilise those temporary differences and
losses. The Group assesses the extent to which deferred tax assets will be recoverable in the short term by
comparing forecast taxable profits to existing deferred tax assets and unused tax losses. The assessment of
recoverability involves the use of judgement as to future performance of the business, which is by its nature an
estimate and uncertain.
Amounts recognised in profit or loss
Current tax
Current year
Adjustment recognised for prior periods
Deferred tax
Origination and reversal of temporary differences
Adjustment recognised for prior periods
Aggregate income tax benefit
Numerical reconciliation of income tax (benefit)/expense and tax at the statutory rate
(Loss)/profit before income tax benefit
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Entertainment expenses
Share-based payments
Other non-deductible items
Effect of tax rates in foreign jurisdictions
Deferred tax assets brought to account on unused losses
Adjustment recognised for prior periods
Income tax benefit
Consolidated
30 June
2023
$'000
30 June
2022
$'000
27
1,308
(1,452)
(1,425)
-
(17,695)
(6,369)
(107)
-
(19,227)
(5,061)
(64,090)
(19,227)
1,665
500
53
1,165
27
314
35
885
(92)
255
-
(6,644)
(1,559)
(19,227)
-
(5,061)
49
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
Deferred taxes comprise temporary differences attributable to the following.
Deferred tax assets
Employee benefits
Provision for impairment of loan receivables
Property, plant and equipment, right-of-use asset and intangibles
Blackhole expenditure booked in relation to IPO
General provisions and other
Capitalised borrowing costs
Derivative financial instruments
Unused losses
Difference on foreign exchange
Net deferred tax assets
Consolidated
30 June
2023
$'000
30 June
2022
$'000
2,262
2,167
32,843
15,241
1,761
1,838
-
103
(768)
(197)
2,745
(469)
502
122
(727)
(851)
1,688
(246)
38,280
19,734
As at 30 June 2023, the Group has cumulative unused tax losses of $9.1 million (30 June 2022: $5.6 million),
equating to a future tax benefit of $2.7 million (30 June 2022: $1.7 million). A deferred tax asset of $2.7 million
has been recognised to reflect this (30 June 2022: $1.7 million).
Management has assessed the recoverability of the cumulative unused tax losses and the temporary timing
differences as at 30 June 2023. Deferred tax assets relating to unused losses and deductible temporary
differences are recognised only to the extent that it is probable that future taxable profit will be available against
which the benefits of the deferred tax asset can be utilised. Management has determined that sufficient profits
will be available against which the deferred tax asset can be utilised. This assessment is based on the latest
multi-year budget approved by the Board. The Group is expected to generate taxable income from 2024 onwards.
50
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
10. Cash and cash equivalents
Accounting policy
Cash and cash equivalents include cash on hand, deposits held at call with financial institutions and other short-
term, highly liquid investments with original maturities of three months or less that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of changes in value.
Cash and cash equivalents - unrestricted
Cash and cash equivalents - restricted
Consolidated
30 June
2023
$'000
25,770
71,174
30 June
2022
$'000
49,905
55,862
96,944
105,767
Restricted cash is held by the Securitisation Trusts, and whilst the cash held in the Securitisation Trusts is not
available to settle the liabilities of the Group, it is available to:
- Purchase further receivables originated by the Group at any time (i.e. recycle cash);
- Pay down the warehouse facility in the relevant trust; and
- Distribute any excess income to the residual unit holder each month after paying interest and fee
expenses.
11. Loan receivables
Accounting policy
Loan receivables are initially recognised at fair value and subsequently measured at amortised cost using the
effective interest method, less any allowance for expected credit losses. The initial fair value of loan receivables
includes capitalised origination fees net of capitalised transaction costs.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
Amortised cost
A financial asset will be measured at amortised cost if both of the following conditions are met:
-
-
the financial asset is held within a business model whose objective is to hold financial assets to collect
contractual cash flows; and
the contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal outstanding.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset
expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the
asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of
ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset
51
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and
rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and
also recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying
amount and the sum of the consideration received and receivable is recognised in profit or loss.
Critical accounting judgements, estimates and assumptions
Expected credit losses (“ECL”)
The allowance for ECL assessment requires a high degree of estimation and judgement. It is modelled using
assumptions concerning the ECL, including evaluating significant increases in credit risk since initial recognition,
recent loss experience, historical collection rates, forward looking information and assessment of default. The
Group has updated its macroeconomic forward-looking scenarios with current inflation and consumption-related
scenarios for the current year. The actual credit losses in future years may be higher or lower. See Note 23 for
further details.
Loan receivables
Less: Allowance for expected credit losses (Note 23)
Consolidated
30 June
2023
30 June
2022
$'000
$'000
862,223
701,329
(109,477)
(50,804)
752,746
650,525
Of the total loan receivables, $589.8 million before ECL is expected to be repaid within 12 months of the
reporting date (30 June 2022: $423.1 million), with the remainder to be collected after 12 months.
12. Derivative financial assets
Accounting policy
Interest rate cap
To reduce the risk of changing interest rates associated with the Group’s borrowings, Prospa holds two interest
rate cap contracts. The Group seeks to minimise the effects of interest rate risks by using this derivative financial
instrument to hedge risk exposures. Derivatives are initially recognised at fair value at the date the derivative
contracts are entered into and are subsequently remeasured to their fair value at each reporting period. The
resulting gain or loss is immediately recognised in profit or loss unless the derivative is designated and effective
as a hedging instrument. In this event, the timing of the recognition in profit or loss depends on the nature of the
hedge relationship.
See Notes 18, 20 and 23 for further details.
52
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
Hedge accounting
The Group designates certain hedging instruments, which includes derivatives in respect of interest rate risk, as
cash flow hedges. At the inception of the hedge relationship, the Group documents the relationship between the
hedging instrument and hedged item, its risk management objectives and its strategy for undertaking various
hedge transactions.
Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging
instrument that is used in a hedging relationship is effective in offsetting changes in fair values or cash flows of
the hedged item attributable to the hedged risk, which is when the hedging relationships meet all the following
hedge effectiveness requirements:
-
-
-
there is an economic relationship between the hedged item and the hedging instrument;
the effect of credit risk does not dominate the value changes that result from that economic relationship;
and
the hedge value is largely reflective of the hedged item.
The Group designates only the intrinsic value of option contracts as a hedged item, i.e. excluding the time value of
the option. The changes in the fair value of the aligned time value of the option are recognised in other
comprehensive income and accumulated in the cost of hedging reserve. As the hedged item is transaction-
related, the time value is reclassified to profit or loss when the hedged item affects profit or loss. Those
reclassified amounts are recognised in profit or loss in the same line as the hedged item.
Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow
hedges is recognised in other comprehensive income and accumulated under the heading of cash flow hedge
reserve. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss. Amounts
previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss,
in the same line as the recognised hedged item.
Cost of hedging
The cost of hedging reflects the gain or loss on the portion excluded from the designated hedging instrument that
relates to the time value option of the interest rate cap contract. It is initially recognised in other comprehensive
income and accounted for similarly to gains or losses on cash flow hedges.
Hedge accounting is discontinued when:
-
-
the hedging instrument expires or is sold, terminated, or exercised; or
the Group no longer qualifies for hedge accounting.
Any cumulative gain or loss recognised in other comprehensive income and accumulated in equity at that time
remains in equity. It is recognised when the forecast transaction is ultimately recognised in profit or loss. When a
forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised
immediately in profit or loss in finance costs.
53
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
Derivatives
Derivative transactions are administered under International Swaps and Derivatives Association (“ISDA”) Master
Agreements. The derivatives are presented on a gross basis since the Group does not have any legally
enforceable right to set-off nor intends to settle on a net basis. In addition, the Group’s master netting
arrangement (ISDA) does not allow for the right to off-set as a result of credit events, such as default.
Contract
Interest Rate
Cap #1
Start Date
15 September
2021
Maturity
Date
15 June
2024
Principal
as at 30 June
2023
Initial
Principal
$190,000,000 $146,962,163 1:1
Hedging
Ratio
Interest Rate
Cap #2
7 December
2022
18 June
2025
$187,400,000 $187,400,000 1:1
Risk being hedged
Hedging movement in cash
flow due to movement in
base interest rate.
Hedging movement in cash
flow due to movement in
base interest rate.
Cash Flow Hedges
The following table details interest rate cap contracts outstanding at the end of the reporting period and their
related hedged items.
30 June 2023
Hedging instruments
Change in
hedging
instrument
for the
period
$'000
Change in
hedged item
for the
period
$'000
Settled
portion of
hedging
instrument
realised
losses/(gain)
net of tax
$'000
Hedging
gain/(loss)
recognised
in cash flow
hedge
reserve net
of tax
$'000
Cost of
hedging
reserve net
of tax
$'000
Carrying
amount of
hedging
instrument
$'000
656
656
(1,856)
(1,856)
1,856
1,856
(1,370)
(1,370)
680
680
(221)
(221)
Carrying
amount of
hedging
instrument
Change in
Hedging
instrument
Settled
portion of
hedging
instrument
realised
losses/(gain)
Change in
Hedged
item
Hedging
gain/(loss)
recognised
in cash flow
hedge
reserve net
of tax
Cost of
hedging
reserve net
of tax
30 June 2022
Hedging instruments
$’000
$’000
$’000
$’000
$'000
$’000
2,838
2,838
2,827
2,838
(2,827)
(2,838)
-
-
1,979
1,979
8
8
The interest rate caps held by the Group are amortising in nature - the underlying principal remains static for 12
months following the start date and subsequently amortises in line with the expected cash collections from
underlying loans.
54
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
The interest rate caps settle monthly. The floating rate on the interest rate caps is 1-month BBSW. The Group
will settle the difference between the fixed and floating interest rate on a net basis. The interest rate cap
contracts exchange floating rate interest amounts for fixed rate interest amounts and are designated as a cash
flow hedge to reduce the Group’s cash flow exposure resulting from variable interest rates on borrowings. The
interest rate cap and the interest payments on the loan occur simultaneously. The amount accumulated in equity
is reclassified to profit or loss over the period that the floating rate interest payments on debt affect profit or loss.
The counterparties to the Group’s interest rate caps are major Australian banks with credit ratings of A3 or
higher assigned by international credit rating agencies.
Cash flow hedge reserve
The cash flow hedge reserve represents the cumulative gains and losses on hedging instruments deemed
effective in cash flow hedges. The cumulative deferred gain or loss on the hedging instrument is recognised in
profit or loss only when the hedged transaction affects the profit or loss, or is included directly in the initial cost.
Balance at 1 July (net of tax)
Gain/(loss) arising on changes in fair value of hedging instruments during the period
Income tax arising on changes in fair value of hedging instruments during the period
(Gain)/loss reclassified to profit or loss – hedged item has affected profit or loss
Income tax related to amounts reclassified to profit or loss
Balance at 30 June (net of tax)
Consolidated
30 June
2023
$’000
30 June
2022
$’000
1,979
101
(30)
(1,957)
587
680
-
2,827
(848)
-
-
1,979
Cost of Hedging reserve
The cost of hedging reserve represents the effects of changes in fair value of the time value of an option when
only the intrinsic value of the option is designated as the hedging instrument. The changes in fair value of the
time value of an option and their related reclassification adjustments and amortisation per risk category is
presented below.
Consolidated
30 June
2023
$'000
30 June
2022
$'000
Balance at 1 July (net of tax)
Changes in fair value of the time value of an option in relation to time-period related
hedged items during the period
Income tax related to changes in fair value of the time value of an option
Amortisation to profit or loss of changes in fair value of the time value of an option in
relation to time-period related hedged items
Income tax related to time-period related hedged items amortised to profit or loss
Balance at 30 June (net of tax)
8
(641)
192
315
(95)
(221)
-
11
(3)
-
-
8
55
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
13. Property, plant and equipment
Accounting policy
Property, plant and equipment is stated at historical cost less accumulated depreciation and impairment.
Historical cost includes expenditure 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.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and
equipment (excluding land) over their expected useful lives as follows:
Plant and equipment 3-5 years
The residual values, useful lives and depreciation methods are reviewed and adjusted if appropriate at each
reporting date.
Leasehold improvements are depreciated over the unexpired period of the lease or the estimated useful life of the
assets, whichever is shorter.
Plant and equipment - at cost
Less: Accumulated depreciation
14. Leases
Consolidated
30 June
2023
30 June
2022
$'000
$'000
4,457
4,457
(4,390)
(4,183)
67
274
Accounting policy
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at
cost, which comprises the following:
-
-
-
-
the initial amount of the lease liability
adjusted for, as applicable, any lease payments made at or before the commencement date net of any
lease incentives received,
any initial direct costs incurred, and,
an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and
restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the
estimated useful life of the asset, whichever is shorter. Where the Group expects to obtain ownership of the
leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are
56
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
reviewed for impairment in accordance with relevant Australian Accounting Standards (see Note 15) and are
adjusted for any remeasurement of lease liabilities.
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the
present value of the lease payments to be made over the term of the lease, discounted using the interest rate
implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Lease
payments comprise of:
-
-
-
-
fixed payments less any lease incentives receivable,
variable lease payments that depend on an index or a rate,
amounts expected to be paid under residual value guarantees,
exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any
anticipated termination penalties.
The variable lease payments that do not depend on an index or a rate are expensed in the period they are
incurred.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss
over the lease period using the effective interest method.
The Group remeasures the lease liability whenever the lease term has changed, when there is a change in the
assessment of exercise of a purchase option and when the future lease payments change due to changes in an
index or rate or a change in expected payment under guaranteed residual value. When a lease liability is
remeasured, an adjustment is made to the corresponding right-of-use asset, or to profit or loss if the carrying
amount of the right-of-use asset is $nil.
The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term
leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are
expensed to profit or loss. See Note 28 for further detail.
Amounts recognised in the statement of financial position
Right-of-use assets
At cost
Additions
Less: Accumulated depreciation
Lease liabilities
Current
Non-current
Total lease liabilities
57
Consolidated
30 June
2023
30 June
2022
$'000
$'000
13,945
8,802
180
5,143
(8,267)
(6,007)
5,858
7,938
2,668
4,594
7,262
2,442
7,103
9,545
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
Lease payment maturity analysis
Less than 1 year
1 to 2 years
2 to 3 years
3 to 4 years
Amounts recognised in profit or loss
Depreciation
Right-of-use assets
Interest expense
Interest on lease liabilities
The movement in the Group’s leases is further analysed below.
Consolidated
30 June
2023
30 June
2022
$'000
$'000
2,843
2,951
1,746
-
7,540
2,442
2,616
2,786
1,701
9,545
Consolidated
30 June
2023
30 June
2022
$'000
$'000
2,260
2,128
237
308
Lease liability
Lease liability
30 June
2022
Interest
incurred
Net cash
flows
Non-cash
movements
30 June
2023
9,545
237
(2,967)
138
7,262
30 June
2021
Interest
incurred
Net cash
flows
Non-cash
movements
30 June
2022
6,732
308
(2,602)
5,107
9,545
58
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
15.
Intangible assets
Accounting policy
Intangible assets acquired are initially recognised at cost. Finite life intangible assets are subsequently measured
at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the
derecognition of intangible assets are measured as the difference between net disposal proceeds and the
intangible asset's carrying amount. The method and useful lives of finite life intangible assets are reviewed
annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by
changing the amortisation method or period.
Software
Expenditure on acquiring and developing software costs are recognised as intangible assets if, and only if, all of
the following conditions have been demonstrated:
- The technical feasibility of completing the intangible asset so that it will be available for use or sale;
- The intention to complete the intangible asset and use or sell it;
- The ability to use or sell the intangible asset;
- How the intangible asset will generate probable future economic benefits;
- The availability of adequate technical, financial and other resources to complete the development and to
use or sell the intangible asset; and
- The ability to measure reliably the expenditure attributable to the intangible asset during its development.
The expenditure capitalised comprises all directly attributable costs, including direct labour. Other development
expenditures that do not meet these criteria are recognised as an expense as incurred. Capitalised software costs
are amortised on a straight-line basis over the period of their expected benefit when the asset is ready for use.
The intangible assets are amortised over their useful lives as follows.
Software (acquired)
Software development (in-house)
5 years
2-5 years
During the year ended 30 June 2022, the Group revised the estimated useful life attached to its legacy loan
management system from 3 years to 2 years. As a result of this change there was no material increased
amortisation expense. Remaining software development (in-house) continued to be amortised over 5 years during
the financial period prior to the impairment assessment referenced below.
Software-as-a-Service (“SaaS”) arrangements
SaaS arrangements are service contracts providing the Group with the right to access the cloud provider’s
application software over the contract period. Costs incurred to configure or customise and the ongoing fees for
obtaining access to the cloud provider’s application software are recognised as operating expenses when the
services are received.
Capitalised costs are predominantly incurred for developing software code that enhances or modifies, or creates
additional capability to enhance or create existing on-premise systems and meets the definition of and
recognition criteria for an intangible asset. These costs are recognised as intangible software assets and
amortised over the useful life of the software on a straight-line basis. The useful lives of these assets are
reviewed at least at the end of each financial year, and any change accounted for prospectively as a change in
accounting estimate.
59
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
Non-financial Assets
Non-financial assets are reviewed 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. Consistent with the Group’s accounting policies and relevant
Australian Accounting Standards, the Group has considered impairment indicators arising as of 30 June 2023.
During the year, Prospa continued to invest in system re-platforming, improving and building new products. Some
of this investment was capitalised during the first half of the year in line with Prospa’s accounting policy. Prospa
ceased capitalisation when the requirements under the policy were no longer met. As part of the year-end
assessment of the carrying value of assets (as required by AASB 136 Impairment of Assets), Prospa has tested for
an impairment and as a result software intangible assets have been fully impaired. The Group will continue to
monitor and account for its investment in technology and platform going forward in accordance with its accounting
policy.
As a result, during the year ended 30 June 2023, the Group recognised an impairment loss of $24.9 million on its
software intangible assets.
The carrying amounts of the Group's intangible assets at 30 June 2023 are $nil (30 June 2022: $17.9 million).
Software development (in-house) - at cost
Less: Accumulated amortisation
Less: Impairment expense
Movement in intangible assets
Opening balance
Additions
Amortisation expense
Impairment of intangible assets
Closing balance
Consolidated
30 June
2023
30 June
2022
$'000
$'000
44,892
34,235
(20,012)
(16,301)
(24,880)
-
-
17,934
Consolidated
30 June
2023
$'000
17,934
9,442
(2,496)
(24,880)
30 June
2022
$'000
7,213
15,408
(4,687)
-
-
17,934
The increase in software development in the year relates to the Group's increased investment in technology and
new products capitalised in accordance with the Group's accounting policy in the first half of the year, prior to
the performance of the impairment test noted above.
60
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
16. Trade and other payables
Accounting policy
These amounts represent liabilities for goods and services provided to the Group before the end of the financial
year and which are unpaid. They are recognised initially at fair value and subsequently measured at amortised
cost using the effective interest method. The amounts are unsecured and due to their short-term nature, are not
discounted.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past
event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made
of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation.
Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying
amount is the present value of those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a
third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and
the amount of the receivable can be measured reliably.
Trade creditors
Other payables
Accruals
Other taxation and superannuation
Consolidated
30 June
2023
30 June
2022
$'000
$'000
3,706
610
4,600
1,638
4,281
779
5,663
2,123
10,554
12,846
As at 30 June 2023, trade and other payables of $10.6 million are current (30 June 2022: $12.8 million).
61
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
17. Employee benefits
Accounting policy
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave are
measured at the amounts expected to be paid when the liabilities are settled.
The liability for annual leave and long service leave is measured at the present value of expected future payments
in respect of services provided by employees up to the reporting date 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 reporting date on high-quality
corporate bonds with terms to maturity that match the estimated future cash outflows.
Annual leave provision
Long service leave provision
Employee benefits
Consolidated
30 June
2023
30 June
2022
$'000
$'000
3,221
920
4,926
9,067
2,659
674
4,668
8,001
As at 30 June 2023, employee benefits of $8.4 million are current (30 June 2022: $7.4 million) and $0.7 million
are non-current (30 June 2022: $0.6 million).
18. Borrowings
Accounting policy
Borrowings are initially recognised at the fair value of the consideration received, net of transaction costs directly
attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the
effective interest method.
Borrowings are removed from the statement of financial position 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 other income or other expenses.
Other financial instruments
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual
provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value.
Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial
liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to, or
deducted from, the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.
62
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
The Group’s business operations are funded by a combination of securitisation trust notes (warehouse facilities
and term facilities), cash and contributed equity.
Securitisation trust notes
Less: unamortised transaction costs on trusts
Consolidated
30 June
2023
$'000
30 June
2022
$'000
781,680
643,244
(2,560)
(2,422)
779,120
640,822
The weighted average duration of the availability period of the securitisation trust notes is 38 months (as at 30
June 2023).
The movement in the Group’s borrowings during the year is further analysed below.
Securitisation trust notes
643,244
138,521
(85) 781,680
Less: unamortised transaction costs on trusts
(2,422)
(1,389)
1,251
(2,560)
640,822
137,132
1,166 779,120
30 June
2022
Net cash
flows
Non-cash
movements
30 June
2023
30 June
2021
Net cash
flows
Non-cash
movements
30 June
2022
Securitisation trust notes
361,503
281,487
254 643,244
Less: unamortised transaction costs on trusts
(1,614)
(2,149)
1,341
(2,422)
359,889
279,338
1,595 640,822
Non-cash movements relate to the amortisation of transaction costs on trusts. In accordance with the effective
interest rate method, initial transaction costs associated with establishing the financial liabilities are capitalised
into the securitisation note balances, and subsequently amortised through interest expense in the consolidated
statement of profit or loss. The cash flow in relation to the initial expenditure is captured within interest and
other finance costs paid within the consolidated statement of cash flows.
Securitisation trust notes
As at 30 June 2023, the Group had five securitisation trust warehouses and two public Term Asset Backed
Securitisation (“ABS”) vehicles with a twelve to fourteen-month revolving facility. The Group regularly sells its
loan receivables to these securitisation trust warehouses and the ABS vehicles whilst in their revolving period.
63
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
The trusts are consolidated as the Group:
a)
b)
c)
Is exposed to, or has rights to, variable returns in its capacity as the residual unit holder (or beneficiary as
the case may be) of these trusts;
In its capacity as the originator of loan receivables and the servicer of these loans on behalf of the trusts,
can impact the variable returns; and
Is the sole subscriber to the Seller Notes issued by the trusts. These Seller Notes maintain the minimum
equity contribution subordination buffer and funding non-conforming receivables. In addition to the
Seller Notes, the Group’s asset-backed securitisation program includes multiple classes of Notes,
including Class A to Class F Notes that carry a floating interest rate. The notes are secured on a limited
recourse basis on the receivables within the Trusts. The facilities under the program have different
maturity dates ranging from February 2024 to February 2028.
Key events concerning the Group’s borrowings during the year ended 30 June 2023 are outlined below.
- From July 2022, Prospa Advance Pty Limited replaced Perpetual Nominees Limited as Manager across all
of its securitisation trust warehouses and was appointed Manager to the latest public Term ABS vehicle.
- On 1 July 2022, Prospa increased the capacity of Propela Trust by $67.5 million to $135.0 million.
- On 26 August 2022, Prospa extended the term of the Prospa Kea Trust Series 2021-1 by 18 months.
- On 30 September 2022, Prospa increased the capacity of the Prospa Kea Trust Series 2021-2 by NZ
$36.0 million to NZ $126.0 million.
- On 18 November 2022, Prospa increased the capacity of the Prospa Kea Trust Series 2021-1 by NZ $60.0
million to NZ $92.5 million by introducing a senior funder into the class A Notes.
- On 7 December 2022, Prospa established the PROSPArous Trust 2022-1, a $200 million public Term ABS
issuance, secured by both Small Business Loans and Line of Credit products. This ABS has a 14-month
revolving facility and will then commence paydown in March 2024. This is the second public ABS
issuance of its kind in Australia, the first being the PROSPArous Trust 2021-1.
During the year ended 30 June 2023, the Group took the decision that the Prospa Trust Series 2018-1 and the
Prospa Kea Trust Series 2019-1 would not be extended and formal closure of both Trusts was effected on 3
February 2023.
Assets pledged as security
The gross carrying amounts of assets pledged as security for current and non-current borrowings in the
securitisation warehouses are summarised below.
Loan receivables
Consolidated
30 June
2023
30 June
2022
$'000
$'000
846,894
671,305
The amount recognised above represents the carrying value of loan receivables held by the Group’s Securitisation
Trusts. This excludes loan receivables totalling $15.3 million held by Prospa Advance Pty Ltd and Prospa NZ
Limited as at 30 June 2023 (30 June 2022: $30.0 million)
64
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
Financing arrangements
Unrestricted access was available at the reporting date to the following third-party facilities.
Total facilities
Securitisation trusts
Drawn
Securitisation trusts
Undrawn
Securitisation trusts
Consolidated
30 June
2023
$'000
30 June
2022
$'000
921,418
701,984
781,340
642,819
140,077
59,165
Funding Costs
The borrowings related to trusts are linked to floating interest rates. The weighted average interest rate for the
year ended 30 June 2023 was 7.0% p.a. (30 June 2022: 5.0% p.a.).
19.
Issued capital
Accounting policy
Issued capital
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.
Treasury shares
Where the Group reacquires its own equity instruments, these are presented within Issued capital as Treasury
shares. These are recognised at cost and deducted from equity. Treasury shares are shares issued to the
Employee Share Trust which are pending allocation under the Group’s long-term incentive plan (See Note 35).
Treasury Shares may be transferred to an employee as the employee exercises options or an employee’s rights
convert. No gain or loss is recognised in profit or loss on the Group’s own equity instruments’ purchase, sale,
issue or cancellation.
Ordinary shares - fully paid
Treasury shares - fully paid
Consolidated
30 June
2023
Shares
30 June
2022
30 June
2023
30 June
2022
Shares
$'000
$'000
163,358,745
162,497,355
611,168
611,808
16,811
1,469,335
(219)
-
163,375,556
163,966,690
610,949
611,808
65
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
Movements in ordinary share capital
Details
Balance
Exercise of options
Conversion of employee rights
Cash elected employee rights
Share buyback
Increase to issued capital
Treasury share transfer
Sale of loan shares
Balance
Conversion of employee rights
Share buyback
Treasury share purchase
Increase to issued capital
Treasury share transfer
Balance
Date
Shares
$'000
30 June 2021
162,926,570 610,919
90,967
186,576
(15,882)
20
-
(16)
(690,876)
(416)
33,069
(33,069)
-
-
-
1,301
30 June 2022
162,497,355 611,808
2,086,348
-
(861,134)
(640)
(363,824)
(219)
270,000
(270,000)
-
-
30 June 2023
163,358,745 610,949
On 16 February 2022, the Group announced an on-market share buyback program of up to 10% of the Group’s
issued share capital.
During the year ended 30 June 2023, the Group repurchased 861,134 shares (30 June 2022: 690,876 shares) for
$0.6 million (30 June 2022: $0.4 million) under this program. The shares were repurchased at the prevailing
market price on the date of the buyback. The buyback ended on the 14 February 2023.
Movements in treasury share capital
Details
Balance
Exercise of options
Conversion of employee rights
Ordinary share capital transfer
Balance
Conversion of employee rights
Share purchase
Ordinary share capital transfer
Balance
Date
1 July 2021
30 June 2022
30 June 2023
Shares
$'000
1,560,302
(90,967)
(33,069)
33,069
1,469,335
(2,086,348)
363,824
270,000
16,811
-
-
-
-
-
-
-
-
-
66
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company
in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par
value and the Company does not have a limited amount of authorised capital.
Every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall
have one vote.
20. Reserves
Foreign currency reserve
Share option reserve
Re-organisation reserve
Cash flow hedge reserve, net of tax
Cost of hedging reserve, net of tax
Consolidated
30 June
2023
$’000
30 June
2022
$’000
(990)
(1,119)
16,851
12,969
(432,244)
(432,244)
680
(220)
1,979
8
(415,923)
(418,407)
Foreign currency reserve
The reserve recognises exchange differences arising from the translation of the financial statements of foreign
operations to Australian dollars. It also recognises gains and losses on hedges of the net investments in foreign
operations.
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at
the reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using
the average exchange rates, which approximate the rates at the dates of the transactions for the period. All
resulting foreign exchange differences are recognised in other comprehensive income through the foreign
currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is
disposed of.
Share option reserve
The reserve recognises the value of equity benefits provided to employees and directors as part of their
remuneration and other parties as part of their compensation for services.
Re-organisation reserve
During the year ended 30 June 2019, the Group undertook an IPO and Group re-organisation, which was
accounted for by applying the reverse acquisition accounting principles of AASB 3 Business Combinations.
The re-organisation reserve was created to align total equity with the net asset position of the Group.
67
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
Cash flow hedge reserve
Cash flow hedging reserve is shown net of tax benefit of $0.6 million (30 June 2022: tax expense of 0.8 million).
See Note 9 for further tax expense detail.
Cost of hedging reserve
Cost of hedging reserve is shown net of tax benefit of $0.1 million (30 June 2022: nil). See Note 9 for further tax
expense detail.
Foreign
currency
translation
reserve
Re-
organisation
reserve
Cash flow
hedge
reserve
Cost of
hedging
reserve
Share
option
reserve
Total
$’000
$’000
$’000
$’000
$’000
$’000
Balance at 30 June 2021
(250)
(432,244)
Foreign currency translation
(869)
Fair value changes in cash
flow hedges
Share-based payments
-
-
-
-
-
-
-
1,979
-
Balance at 30 June 2022
(1,119)
(432,244)
1,979
-
-
8
-
8
-
10,019
(422,475)
-
-
(869)
1,987
2,950
2,950
12,969
(418,407)
-
-
129
(1,528)
-
(1,299)
(228)
Foreign currency translation
129
Fair value changes in cash
flow hedges
Share-based payments
-
-
-
-
-
Balance at 30 June 2023
(990)
(432,244)
21. Accumulated losses
Accumulated losses at the beginning of the financial year
(Loss)/profit after income tax benefit for the year
Accumulated losses at the end of the financial year
22. Dividends
-
680
-
3,882
3,882
(220)
16,851
(415,923)
Consolidated
30 June
2023
30 June
2022
$’000
$’000
(57,203)
(63,929)
(44,863)
6,726
(102,066)
(57,203)
The Group has not paid and does not propose to pay dividends for the year ended 30 June 2023 (30 June 2022:
nil).
68
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
23. Financial risk management
Financial risk management objectives
The Group’s activities expose it to various financial risks, primarily credit risk, market risk (including price risk,
foreign currency risk and interest rate risk) and liquidity risk. The Group’s risk management program focuses on
understanding drivers of financial risk and seeks to minimise potential adverse effects on the financial
performance of the Group. The Group does not enter into or trade financial instruments for speculative purposes,
including derivative financial instruments.
Management has responsibility for establishing and operating the Group’s enterprise risk management
framework, identifying and analysing risks faced by the Group, and developing procedures responding to these
risks under the Board approved Risk Appetite Statement. The Board is responsible for monitoring these risks and
the continued oversight of the risk management policies and procedures.
These are discussed individually below.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to
meet its contractual obligations. Credit risk for the Group is concentrated in loan receivables.
The Group provides short term loans to companies in the small business sector and has a framework and
supporting policies for managing credit risk associated with its lending activities. The framework and policies
encompass all stages of the credit cycle – origination, evaluation, approval, documentation, settlement, ongoing
administration and collection activities. The Group has established criteria for making lending decisions, which
can vary by industry segment, past credit performance and loan purpose. When establishing credit risk appetite
and ongoing monitoring of exposure to credit risk, the Group focuses on key financial risk ratios, including
interest coverage, debt serviceability and balance sheet structure.
When providing finance, the Group obtains security through personal guarantees from the borrower’s directors if
the borrower is a company. If the global exposure limit of the customer is greater than $150,000, the Group will
also obtain a charge over assets from the borrower and guarantor if applicable. For loan receivables greater than
$10,000 where the account exceeds 30 days past due, a caveat may be lodged against the guarantor.
Due to the more challenging environment that small businesses are enduring as a result of increasing interest
rates and slowing customer demand, Prospa tightened credit risk settings and implemented targeted measures
to manage credit performance across the portfolio. This has led to a reduction in customer approvals in certain
sectors. In addition, the business increased its focus on debt collection and recoveries. The changing
performance of the portfolio and the deteriorating economic environment has resulted in the increased provision
for expected credit losses in the year.
The maximum exposure to credit risk at the reporting date of financial assets is the carrying amount, net of any
provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the
financial statements. The Group has credit commitments of $123.4 million as at 30 June 2023 in undrawn Line of
Credit facilities (30 June 2022: $95.3 million). The Expected Credit Loss (“ECL”) in relation to these undrawn
facilities is $4.2 million as at 30 June 2023 (30 June 2022: $2.5 million).
69
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
The Group’s customers are grouped into similar risk categories using two proprietary categories of Premium and
Non-premium, with Premium including customers with lower credit risk. These categories are created by
analysing similar risk characteristics that have historically predicted when an account is likely to go into
default. Customers grouped according to these predictive characteristics are assigned a Probability of Default
(“PD”) and a Loss Given Default (“LGD”) relative to their category. The credit quality of these categories is based
on a combination of behavioural factors, delinquency trends and PD estimates.
Model stages
Under AASB 9, a three-stage approach is applied to measuring expected credit losses based on credit migration
between the stages.
Stage 1
Stage 2
Financial assets that have not had a significant increase in credit risk since initial recognition. For
these assets, 12 months of expected credit losses are recognised. There is a rebuttable presumption
that stage 1 assets comprise loans less than or equal to 30 days past due.
Financial assets that have experienced a significant increase in credit risk since initial recognition but
do not have objective evidence of impairment. For these assets, lifetime expected credit losses are
recognised.
Stage 3
Financial assets that have objective evidence of impairment. For these assets, lifetime expected credit
losses are recognised.
The following table summarises loan receivables by stage and by risk category.
Premium – 30 June 2023
Loan receivables
Stage 1
Stage 2
Stage 3
$’000
$’000
$’000
Total
$’000
405,453
11,812
8,861
426,126
Allowance for expected credit losses
(18,646)
(5,354)
(7,088)
(31,088)
386,807
6,458
1,773
395,038
Non-premium – 30 June 2023
Loan receivables
Stage 1
Stage 2
Stage 3
$’000
$’000
$’000
Total
$’000
379,019
27,982
29,096
436,097
Allowance for expected credit losses
(34,898)
(16,691)
(26,800)
(78,389)
344,121
11,291
2,296
357,708
70
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
Total – 30 June 2023
Loan receivables
Stage 1
Stage 2
Stage 3
$’000
$’000
$’000
Total
$’000
784,472
39,794
37,957
862,223
Allowance for expected credit losses
(53,544)
(22,045)
(33,888)
(109,477)
730,928
17,749
4,069
752,746
Premium – 30 June 2022
Loan receivables
Allowance for expected credit losses
Non-premium – 30 June 2022
Loan receivables
Allowance for expected credit losses
Total – 30 June 2022
Loan receivables
Allowance for expected credit losses
Stage 1
Stage 2
Stage 3
$’000
$’000
$’000
Total
$’000
307,153
(9,325)
297,828
9,433
(1,883)
7,550
1,998
318,584
(1,678)
(12,886)
320
305,698
Stage 1
Stage 2
Stage 3
$’000
$’000
$’000
Total
$’000
345,198
(19,655)
325,543
24,062
(8,012)
16,050
13,485
382,745
(10,251)
(37,918)
3,234
344,827
Stage 1
Stage 2
Stage 3
$’000
$’000
$’000
Total
$’000
652,351
(28,980)
33,495
(9,895)
15,483
701,329
(11,929)
(50,804)
623,371
23,600
3,554
650,525
71
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
The following table illustrates the movement in loan receivables.
Stage 1
Stage 2
Stage 3
Opening loan receivable balance (1 July 2022)
Transfers
$’000
652,351
$’000
$’000
33,495
15,483
701,329
Total
$’000
Transfers from Stage 1 to Stage 2
(41,201)
41,201
-
Transfers from Stage 1 to Stage 3
(100,591)
-
100,591
Transfers from Stage 2 to Stage 1
Transfers from Stage 2 to Stage 3
Transfers from Stage 3 to Stage 1
Transfers from Stage 3 to Stage 2
Repayments made
Loans originated
Net movement in accrued interest and fees
Receivables written off during the year as bad debts
Closing loan receivable balance (30
June 2023)
1,941
-
100
-
(1,941)
-
(18,286)
18,286
-
19
(100)
(19)
(648,460)
(12,874)
(1,728)
(663,062)
923,521
(3,189)
-
-
-
923,521
(1,820)
1,957
(3,052)
-
(96,513)
(96,513)
784,472
39,794
37,957
862,223
Opening loan receivable balance (1 July 2021)
Transfers
$’000
393,116
$’000
19,126
Stage 1
Stage 2
Stage 3
Total
$’000
$’000
14,883
427,125
Transfer from Stage 1 to Stage 2
(32,849)
32,849
-
Transfer from Stage 1 to Stage 3
Transfer from Stage 2 to Stage 1
Transfer from Stage 2 to Stage 3
Transfer from Stage 3 to Stage 1
Transfer from Stage 3 to Stage 2
Repayments made
Loan originated
Net movement in accrued interest and fees
Receivables written off during the year as bad debts
(39,312)
-
39,312
279
-
215
-
(279)
-
(9,330)
9,330
-
86
(215)
(86)
(467,975)
(8,841)
(2,373)
(479,189)
799,006
(129)
-
-
(116)
-
799,006
1,755
1,510
-
(47,123)
(47,123)
Closing loan receivable balance (30 June 2022)
652,351
33,495
15,483
701,329
Allowance for expected credit loss
Credit risk arising from the financial assets of the Group is limited to the carrying value of cash and cash
equivalents, loan receivables, trade receivables and derivative financial instruments. The Group’s maximum
exposure to credit risk, excluding the value of any collateral or other security at reporting date, is the carrying
amount disclosed in the consolidated statement of financial position and notes to the financial statements, plus
72
-
-
-
-
-
-
-
-
-
-
-
-
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
any undrawn customer facilities. The Group’s credit risk on cash and cash equivalents is limited and has been
determined not to be material. The counterparties are major Australian and international banks with favourable
credit ratings assigned by international credit rating agencies.
The Group establishes an allowance for loan impairment that represents its estimate of expected future losses
regarding loan receivables. Loan receivables and portfolio performance are subject to ongoing assessment and
continuous monitoring by the Group to ensure adequate allowance for expected credit losses.
The movement in the Group’s allowance for expected credit losses is detailed below.
Opening allowance for expected credit losses (1 July
2022)
$'000
28,980
$'000
9,895
Stage 1
Stage 2
Stage 3
Total
$'000
$'000
11,929
50,804
Transfer from Stage 1 to Stage 2
Transfer from Stage 1 to Stage 3
Transfer from Stage 2 to Stage 1
Transfer from Stage 2 to Stage 3
Transfer from Stage 3 to Stage 1
Transfer from Stage 3 to Stage 2
(1,823)
(4,452)
1,029
-
87
-
1,823
-
-
4,452
(1,029)
(9,690)
-
16
-
9,690
(87)
(16)
-
-
-
-
-
-
Provisions recognised during the year in the profit or loss
29,723
21,030
104,433
155,186
Receivables written off during the year as bad debts
-
-
(96,513)
(96,513)
Closing allowance for expected credit losses (30 June
2023)
53,544
22,045
33,888
109,477
Stage 1
Stage 2
Stage 3
Opening allowance for expected credit losses (1 July
2021)
Transfer from Stage 1 to Stage 2
Transfer from Stage 1 to Stage 3
Transfer from Stage 2 to Stage 1
Transfer from Stage 2 to Stage 3
Transfer from Stage 3 to Stage 1
Transfer from Stage 2 to Stage 2
$'000
17,443
$'000
6,008
(1,006)
(1,204)
79
-
163
-
1006
-
(79)
(2,267)
-
65
Total
$'000
$'000
10,249
33,700
-
1,204
-
2,627
(163)
(65)
-
-
-
-
-
-
Provisions recognised during the year in profit or loss
13,505
5,522
45,200
64,227
Receivables written off during the year as bad debts
-
-
(47,123)
(47,123)
Closing allowance for expected credit losses (30 June
2022)
28,980
9,895
11,929
50,804
The allowance for expected credit losses for loan receivables as a percentage of receivables has increased from
7.2% of the gross receivables balance as at 30 June 2022 to 12.7% as at 30 June 2023.
73
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
Measurement of expected credit loss
The Group uses a three-stage approach ECL model to calculate expected credit losses for loan receivables. The
ECL is measured by calculating the probability-weighted estimates of cash shortfalls over the expected life of the
instrument.
The expected credit loss model considers three main parameters, which are:
- Probability of default (“PD”): the likelihood that a customer will default over a given time frame;
-
Loss given default (“LGD”): the magnitude of the expected credit loss in the event of default; and
- Exposure at default (“EAD”): the estimated outstanding balance of the loan receivable at the time of
default.
Internally developed statistical models derive these parameters based on historical portfolio information. The
measurement of expected credit losses is a function of the probability of default, the loss given default and the
exposure at default.
PD is calculated by assessing the probability of loan receivables progressing through successive stages of
delinquency through to write-off. The LGD is estimated using historical loss rates adjusted for relevant and
supportable factors for individual exposures, such as the customer's credit rating. EAD is modelled as a
regression problem, using only defaulted contracts and is calculated using the credit conversion factor.
Various other factors and forward-looking information are considered when calculating PD, LGD and
EAD. Considerations include the potential for default due to economic conditions and the credit quality of the
loan receivable.
Expected life
In considering the lifetime time frame for expected credit losses in stages 2 and 3, the standard generally
requires use of the remaining contractual life adjusted where appropriate for prepayments, extension and other
options. For revolving lines of credit that include both a drawn and undrawn component, the Group’s contractual
ability to demand repayment and cancel the undrawn commitment does not limit the exposure to credit losses to
the contractual notice period. For these facilities, the estimated lifetime is based on historical behaviour.
Significant Increase in Credit Risk ("SICR")
The Group considers a combination of qualitative and quantitative information when assessing whether a
financial instrument has experienced a significant increase in credit risk. This includes:
Loan receivables which are greater than 30 days past due (Stage 1 to Stage 2 transfer); and
-
- Collection status. For example, loan receivables with modified repayment terms, such as temporary full or
partial payment deferrals or restructured loans. (Stage 1 to Stage 2 transfer).
Credit-impaired financial assets (Stage 3)
At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit-
impaired. A financial asset is credit-impaired when one or more events that have a detrimental impact on the
estimated future cash flows of the financial asset have occurred.
74
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
Evidence that a financial asset is credit-impaired includes the following observable data:
- A breach of contract, such as default or being more than 90 days past due;
- Significant financial difficulty of the customer; or
-
It is probable that the customer will enter bankruptcy, liquidation or other financial re-organisation.
A metric used by the Group when assessing the performance of loan receivables and overall portfolio health is
their ageing, split by those aged 0 to 30 days, 31 to 90 days and those aged 90+ days. The following table
illustrates loan receivables by age.
Loan receivables aged 0 to 30 days
Loan receivables aged 31 to 90 days
Loan receivables aged over 90 days
Consolidated
30 June
2023
30 June
2022
$'000
$'000
795,646
670,329
35,769
17,770
30,808
13,230
862,223
701,329
Macroeconomic scenarios
Expected credit losses are a probability-weighted estimate of credit losses over the expected life of the financial
instrument. The Group has a process for incorporating forward-looking economic scenarios and determining the
probability weightings assigned to each scenario in determining the overall ECL. The Group prepared a base,
upside and downside scenario based on economic variables relevant to the respective jurisdictions of the
customer, either Australia or New Zealand. Further information on each of these scenarios is described
below. The Group has incorporated this into the overall allowance for expected credit losses using an economic
overlay described in more detail below.
Economic overlay
In addition to the standard modelled provision as at 30 June 2023 of 8.4% (30 June 2022: 5.9%), the Group has
set aside an economic overlay of 4.3% (30 June 2022: 1.3%) as a forward-looking provision to arrive at a total
expected credit loss as a percentage of receivables of 12.7% (30 June 2022: 7.2%).
The total forward-looking provision is determined by performing economic stress testing on the Group’s
customer base. In making this assessment, the loan receivables portfolio was segmented into different risk
categories against which the customer’s capacity to pay and the expected recovery period could be assessed.
The Group is cognisant of the challenges to the economic outlook due to inflationary pressures, lower consumer
demand and rising interest rates. Prospa continues to adjust financial and risk settings to optimise commercial
outcomes, and despite rising interest rates, demand for small business credit remains strong. The Group has
updated its macroeconomic scenarios; with current inflation and consumption related scenarios.
In addition to the PD, LGD and EAD inputs described above, a range of other observable data points, including
but not limited to credit risk grade, recent dishonours, days past due, total arrears, Equifax Individual Report
75
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
score and industry classification, were captured in the Group’s standard modelled provision. To the observed
default data, consideration of forward-looking economic information is applied to appropriately reflect the
difference between economic conditions over the period of historic observation, current economic conditions and
the Group’s view of economic conditions over the expected lives of the loan receivables.
The resulting model analyses expected credit losses under three alternative macroeconomic scenarios. In arriving
at the reported economic overlay, the Group considered a probability-weighted outcome of each macroeconomic
scenario.
The definitions of each scenario and the weighting applied have been revised from 30 June 2022 as more recent
data became available. The definitions of forward-looking economic scenarios as at 30 June 2023 have been
updated to reflect the current economy whilst also forming a basis for future stress testing. The following tables
provide an overview of the scenarios considered at 30 June 2023 and 30 June 2022.
30 June 2023
Scenario
Weighting
Expectation
Upside
10%
Baseline
80%
Downside
10%
This scenario reflects an economy with stronger economic growth driven by
lower inflationary pressures. This scenario contemplates a peak in interest
rates in June 2023 followed by aggressive cuts to interest rates which increase
disposable income spurring an increase in consumer spending. Gross domestic
product is forecast to return to the historical pre-pandemic average trend.
This scenario is considered the most likely macroeconomic outcome. The
baseline scenario contemplates inflation to have peaked, leading to interest
rates remaining at similar levels over the next twelve months. Gross domestic
product is forecast to slow in 2023 and then moderately growing in the first
and second half of 2024.
This scenario is the most conservative and reflects the less likely but more
severe negative macroeconomic conditions. In this scenario, further interest
rate rises are expected, driven by persistent high inflation. Interest rates stay
elevated into 2024 dragging down consumer spending due to reduced
disposable income and consequently slowing GDP growth for the remainder of
2023 and into 2024.
30 June 2022
Scenario
Weighting
Expectation
Upside
5%
Baseline
75%
This scenario reflects the economy recovering at an accelerated pace followed
by sustained moderate growth. In this scenario, household consumption and
higher inflation driven by stronger wealth effects and reduced uncertainty
related to positive health outcomes.
This scenario is considered the most likely macroeconomic outcome. The
baseline scenario contemplates that inflationary pressures will persist for the
next twelve months due to strong demand and ongoing capacity constraints
and return to levels consistent with official targets beyond that horizon. This
assumes gross domestic product is forecast to return to its pre-pandemic
trend in 2023.
Downside
20%
This scenario is the most conservative and reflects the less likely but more
severe negative macroeconomic conditions of a recession due to the economic
76
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
shock caused by US-led recession or the tightened supply chain caused by
regional conflicts, e.g. the current Russian-Ukraine war. This assumes much
lower Australian GDP growth and a rise in cash rate beyond current market
expectations.
Write-off policy
The Group writes off loan receivables in whole or in part when there is no longer any reasonable expectation of
recovery. Indicators that there is no longer a reasonable expectation of recovery include when the loan is more
than 180 days past due or where enforcement activity has ceased due to significant deterioration in collection
status, for example, customers impacted by bankruptcy or liquidation.
During the year ended 30 June 2023, loan receivables of $3.2 million (30 June 2022: $4.7 million) were written
off but remain subject to enforcement activity by the Group.
Loan impairment expense is reported by the Group net of recoveries including recoveries from debt sale
agreements. For the year ended 30 June 2023, recoveries in connection with debt sale agreements were $11.5
million (30 June 2022: $8.6 million).
Loan receivables classification
The portfolio of loan receivables the Group is exposed to is well diversified across industries, geographies, and
customers. Therefore, the Group has no material credit risk exposure to any single debtor or group of debtors
under the loan receivables contracts entered into by the Group.
The following table analyses of the Group’s loan receivables by Prospa defined industry classification.
Consolidated
30 June
2023
30 June
2022
$'000
$'000
18,674
13,876
191,417
174,274
25,096
20,082
26,970
29,497
130,758
20,197
21,004
91,802
50,106
39,475
162,301
127,857
146,683
118,500
23,460
22,463
47,352
9,909
41,693
10,106
862,223
701,329
Art and Lifestyle
Building and Trade
Financial Services
Hair and Beauty
Health
Hospitality
Manufacturing
Professional Services
Retail
Transport
Wholesale
Other
The Group’s loan receivables can also be analysed by geography as follows.
77
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
Australian Capital Territory
New South Wales
Northern Territory
Queensland
South Australia
Tasmania
Victoria
Western Australia
New Zealand
Consolidated
30 June
2023
30 June
2022
$'000
$'000
10,120
9,079
234,228
190,420
6,772
6,721
158,985
134,964
48,215
11,569
39,150
8,271
175,526
142,620
60,597
156,211
55,690
114,414
862,223
701,329
Modification of financial assets
The Group sometimes modifies the contractual agreement in respect of loan receivables provided to customers
due to commercial renegotiations or for financially distressed customers, to maximise recovery. Such
restructuring activities include extended payment term arrangements, payment holidays and payment
forgiveness. Restructuring policies and practices are based on indicators or criteria which, in management's
judgement, indicate that payment will most likely continue. The Group has assessed loans restructured during
the period and determined that no material modification gain or loss arose.
Market risk
Market risk is the risk that changes in market prices, such as those outlined below, will affect the Group’s
income or the value of holdings in its financial instruments. Market risk management aims to manage and control
market risk exposures within acceptable parameters while optimising returns.
Interest rate risk
The Group is exposed to interest rate risk because the Group borrows funds at variable interest rates. The
interest payable under the non-recourse funding arrangements is linked to variable Benchmark Rates (in
Australia, either BBSW or BBSY and in New Zealand the Bank Bill Market (“BKBM”) rate). The Group manages
the risk where necessary using interest rate cap contracts held with other independent financial institutions with
a credit rating of A3 or higher. Prospa holds two interest rate cap contracts which partially manages interest rate
risk. These derivative financial instruments are initially measured at fair value with changes in fair value
recognised in other comprehensive income. Hedging activities are evaluated regularly to align with interest rate
views and defined risk appetite, ensuring the most cost-effective hedging strategies are applied.
The interest rate exposure of the Prospa Trust Series PROSPArous 2021-1 Security Trust and the Prospa Trust
Series PROSPArous 2022-1 Security Trust is hedged by these interest rate caps. See Note 12 for further detail.
The Group has responded to the rising interest rate environment through yield focus and margin monitoring,
repricing customer interest rates where reasonable.
78
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
Interest rate sensitivity analysis
The sensitivity analyses below have been determined based on the exposure to interest rates for both derivative
and non-derivative instruments at the reporting date. For floating rate liabilities, the analysis is prepared
assuming the amount of liability outstanding at the reporting date was outstanding for the whole year. A 0.25 per
cent increase or decrease is used when reporting interest rate risk internally to key management personnel and
represents a linear sensitivity assessment of a change in interest rates.
If interest rates had been 0.25 per cent higher/lower and all other variables were held constant, the Group’s:
- Profit for the year ended 30 June 2023 would decrease/increase by $1.5 million (30 June 2022:
decrease/increase by $1.3 million). This is mainly attributable to the Group’s exposure to interest rates on
its variable rate borrowings, and does not take into account the benefit of interest rate increases on loans
to customers; and
- Other comprehensive income would increase by $0.3 million (30 June 2022: increase/decrease by $0.8
million) as a result of the interest rate cap contracts classified as a cashflow hedge.
Foreign currency risk
The Group pays certain overseas suppliers in foreign currency and is exposed to foreign currency risk through
foreign exchange rate fluctuations. However, payments made in foreign currency are not of a significant enough
value to have a material impact on the Group’s result. Borrowings and loan receivables in relation to the Group’s
foreign operations are denominated in New Zealand Dollars, which is the functional currency of these
subsidiaries. As such, there is no material foreign currency risk to local operations.
Liquidity risk
Liquidity risk is the risk that the Group will not meet its financial obligations as they fall due. The Group has a
diversified funding model and comprises a mix of securitisation warehouse facilities, equity and cash. Subsequent
to the end of the financial period, the Group has accessed additional liquidity through the provision of a corporate
debt facility. See note 37 for further detail.
The Group manages operational liquidity risk by maintaining cash reserves and available borrowing facilities and
by continuously monitoring actual and forecast cash flows. The Group seeks to have sufficient liquidity to meet
its liabilities when due, under both normal and stressed conditions.
Liquidity risk is managed by ensuring:
- Total third-party facilities in each currency to have minimum committed undrawn headroom of 10%;
- Ensuring no more than 40% of all funding matures in any twelve-month window;
- Term ABS’s are settled every twelve to eighteen months;
- The weighted average duration of the availability period of the trust warehouse facilities is at least 18
months; and
- Minimum unrestricted cash holdings.
Remaining contractual maturities
The following tables detail the Group’s remaining contractual maturity for its non-derivative financial liabilities.
The tables have been prepared using the undiscounted cash flows of financial liabilities, based on the earliest
date on which the financial liabilities are required to be paid. The tables include both interest and principal cash
flows disclosed as remaining contractual maturities and, therefore, these totals may differ from their carrying
amount in the statement of financial position.
79
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
Consolidated - 30 June 2023
$'000
$'000
$'000
$'000
1 year or
less
Between 1
and 3 years
More than
3 years
Remaining
contractual
maturities
Non-derivatives
Non-interest bearing
Trade and other payables
Interest-bearing
Lease liability
Borrowings
Total non-derivatives
10,554
-
-
10,554
2,773
4,613
-
7,386
64,419
642,502
336,783
1,042,704
77,746
646,115
336,783
1,060,644
1 year or
less
Between 1
and 3 years
More than 3
years
Remaining
contractual
maturities
Consolidated 30 June 2022
$'000
$'000
$'000
$'000
Non-derivatives
Non-interest bearing
Trade and other payables
Interest-bearing
Lease liability
Borrowings
Total non-derivatives
12,846
-
-
12,846
2,649
5,632
1,716
9,997
63,114
586,056
78,398
727,568
78,609
591,688
80,114
750,411
Covenants
The Group has various financial and non-financial triggers and portfolio parameters under its Securitisation Trust
financing facilities to ensure a good mix of assets within the portfolios which ultimately perform within the
Group’s desired risk thresholds. Ongoing non-compliance of such triggers and portfolio parameters can affect
funding availability, repayments, and the Group’s liabilities. Receivables funded within the Securitisation Trust
facilities are tested against these triggers and parameters each time a receivable is sold into the Trusts and
monthly. These triggers and parameters are closely monitored and pro-active and/or corrective steps taken to
ensure ongoing compliance and availability of funding, which may require the Group to seek amendments,
waivers or consider alternative borrowing arrangements, which could result in additional debt or raising equity.
There were no unauthorised breaches of any triggers or portfolio parameters at year-end.
80
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
24. Fair value measurement
Accounting policy
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure
purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date; and assumes that the
transaction will take place either: in the principal market; or in the absence of a principal market, in the most
advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or
liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement
is based on its highest and best use. Valuation techniques that are appropriate in the circumstances, and for
which sufficient data are available to measure fair value are used, maximising the use of relevant observable
inputs and minimising the use of unobservable inputs.
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. Transfers between levels are determined based on a reassessment of the lowest level of input
significant to the fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is
either unavailable or when the valuation is deemed 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 data sources.
Fair value hierarchy
Where applicable, the Group's assets and liabilities are measured 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:
Level 2:
Level 3:
Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can
access at the measurement date
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly
Unobservable inputs for the asset or liability
The following table presents the classification into the three levels for each of the Group’s assets and liabilities
carried at fair value.
81
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
Assets
Interest rate cap (Level 2)
Total assets
Consolidated
30 June
2022
$'000
30 June
2023
$'000
656
656
2,838
2,838
The Group has considered all financial assets and liabilities not carried at fair value to determine whether the
carrying value accurately reflects fair value. In all cases, the carrying amount of financial assets and financial
liabilities, which include cash, client receivables, payables and borrowings, are considered to be a reasonable
approximation of their fair values.
There were no transfers between levels during the financial year.
25. Key management personnel
Key management personnel are those persons with authority and responsibility for planning, directing and
controlling the entity's activities, directly or indirectly, including any director (whether executive or otherwise) of
that entity.
The remuneration of Directors and other members of key management during the year were as follows:
Salaries and other short-term employee benefits
Post-employment benefits
Other long-term benefits
Share-based payment
Consolidated
30 June
2023
$'000
30 June
2022
$'000
2,016
2,496
99
42
602
2,759
115
52
418
3,081
82
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
26. Remuneration of auditors
During the financial year, the following fees were paid or payable for services provided by Deloitte, the auditor of
the Company, its network firms and unrelated firms:
Deloitte and related network firms
Audit or review of financial reports
- Group
- Subsidiaries and joint operations
Consolidated
30 June
2023
30 June
2022
$
$
539,770
521,003
27,500
22,000
567,270
543,003
Statutory assurance services required by legislation to be provided by the auditor
52,250
52,250
Other services
Tax compliance services
31,066
33,185
Total paid or payable to Deloitte and related network firms
650,586
628,438
Other Auditors and their related network firms
Audit or review of financial reports:
- Subsidiaries and joint operations
27. Guarantees and contingent liabilities
94,600
65,189
The Group has provided guarantees in respect of the leases over its premises of $1,327,384 (FY22: $1,327,384).
The Group had no contingent liabilities as at the end of the financial year or arising since balance date.
83
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
28. Commitments
The following table summarises the operating lease commitments of the Group:
Operating lease commitments - computer equipment
Committed at the reporting date and recognised as liabilities, payable:
Within one year
One to five years
Total minimum lease payments
Consolidated
30 June
2023
30 June
2022
$'000
$'000
203
14
217
262
237
499
The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term
leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are
expensed to profit or loss.
29. Related party transactions
Parent entity
Prospa Group Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 31.
Key management personnel
Disclosures relating to key management personnel are set out in Note 25, and the remuneration report included
in the Directors’ report.
Transactions with related parties
On 7 July 2023, Prospa announced the establishment of a $12 million corporate debt. See Note 37.
Of the $12 million, some of the directors and Key Management Personnel of the Group have invested in the
facility. The total exposure of this participation is $1.0 million. This participation was via a funding trust provided
by an independent third party and, therefore, on arms' length terms and consistent with other debt investors in
the facility.
There were no other transactions with related parties during the year ended 30 June 2023 and the year ended 30
June 2022.
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and previous reporting
date.
84
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
Loans to/from related parties
Other than as noted above, there were no loans to or from related parties at the current and previous reporting
date.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
30. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Profit/(loss) after income tax
Total comprehensive income
Statement of financial position
Total assets
Total liabilities
Equity
Issued capital
Re-organisation reserve
Share-based payments reserve
Accumulated losses
Total equity
Consolidated
30 June
2023
30 June
2022
$'000
$'000
(451)
(451)
(605)
(605)
Consolidated
30 June
2023
30 June
2022
$'000
$'000
189,099
186,526
-
-
610,949
611,808
(432,244)
(432,244)
(16,851)
(6,457)
189,099
(12,969)
(6,007)
186,526
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2023 and 30 June 2022.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2023 and 30 June
2022.
85
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in relevant notes
to the consolidated financial statements.
31.
Interests in subsidiaries and trusts
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries
and trusts in accordance with the accounting policy described in Note 1.
Principal place of business /
Country of incorporation
Name
Prospa Advance Pty Ltd
Prospa Trust Series 2018-1 Security Trust 1
Prospa Trust Series Pioneer Security Trust 1
Australia
Australia
Australia
Prospa Trust Series Prosparity Security Trust 1
Australia
Prospa Trust Series Propela Security Trust 1
Prospa Trust Series PROSPArous 2021-1 Security
Trust 1
Australia
Australia
Prospa Trust Series PROSPArous 2022-1 Security
Trust 1
Australia
Prospa Finance Pty Ltd
Prospa Innovations Pty Ltd 2
Prospatarian Pty Ltd 2
Prospa NZ Limited 2
Prospa Kea Series 2019-1 2
Prospa Kea Series 2021-1 2
Prospa Kea Series 2021-2 2
Australia
Australia
Australia
New Zealand
New Zealand
New Zealand
New Zealand
Ownership interest
30 June
2023
30 June
2022
%
100%
-
100%
100%
100%
100%
%
100%
100%
100%
100%
100%
100%
100%
0%
100%
100%
100%
100%
-
100%
100%
100%
100%
100%
100%
100%
100%
100%
1 Ownership is through Prospa Advance Pty Ltd, which is both the Participation Unitholder and Residual Unitholder of the trusts.
2 Ownership is through Prospa Advance Pty Ltd.
On 7 December 2022, the Group established the PROSPArous Trust 2022-1, a $200 million Term Asset-Backed
Security issuance in the public markets, secured on Small Business Loan and Business Line of Credit products.
During the year ended 30 June 2023, the Group decided not to extend the Prospa Trust Series 2018-1 Security
Trust and the Prospa Trust Series 2019-1 Security Trust. Formal closure of both Trusts was effected on 3
February 2023.
86
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
32. Deed of cross guarantee
The parent entity, Prospa Group Limited and the subsidiaries set out below are party to a deed of cross
guarantee under which each company guarantees the debts of the others:
Prospa Advance Pty Ltd
Prospa Innovations Pty Ltd
Prospa Finance Pty Ltd
Prospatarian Pty Ltd
By entering into the deed, the wholly-owned subsidiaries have been relieved from the requirement to prepare
financial statements and directors' reports under Corporations Instrument 2016/785 issued by the Australian
Securities and Investments Commission.
During the year ended 30 June 2022, Prospa Advance Pty Ltd became a limited Australian Financial Services
License (“AFSL”) holder. As an AFSL holder, Prospa Advance Pty Ltd is required to prepare annual general
purpose financial statements.
The effect of the Deed is that the Company guarantees to each creditor payment in full of any debt in the event of
winding up of any of the subsidiaries under certain provisions of the Corporations Act 2001.
The above companies represent a 'Closed Group' for the purposes of the Corporations Instrument.
Set out below is a consolidated statement of profit or loss and other comprehensive income and consolidated
statement of financial position of the 'Closed Group'.
87
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
Consolidated statement of profit or loss and other comprehensive income
Interest income
Other income
Interest Expense
Gross profit
Loan impairment expense
Employment expenses
Operating expenses
Share-based payments
Depreciation
Amortisation
Impairment of intangible asset
Interest on lease liabilities
(Loss)/profit before income tax benefit
Income tax benefit
30 June
2023
$'000
192,165
24,299
(36,696)
179,768
(111,480)
(64,730)
(21,582)
(3,882)
(2,418)
(3,709)
(24,880)
(229)
(53,143)
16,195
30 June
2022
$'000
124,754
13,395
(15,995)
122,154
(40,294)
(47,086)
(20,344)
(2,886)
(2,558)
(4,686)
-
(305)
3,995
2,928
(Loss)/profit after income tax benefit
(36,948)
6,923
Other comprehensive income
Fair value (loss)/gain on cash flow hedge
Fair value (loss)/gain on cost of hedging
Other comprehensive income for the year, net of tax
Total comprehensive (loss)/income for the year
(1,299)
(228)
(1,527)
(38,475)
1,979
8
1,987
8,910
88
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
Equity - accumulated losses
Accumulated losses at the beginning of the financial year
(Loss)/profit after income tax benefit
Accumulated losses at the end of the financial year
Consolidated statement of financial position
Assets
Cash and cash equivalents
Bank deposits
Loan receivables
Intercompany loan receivables
Other financial assets
Derivative Financial Asset
Prepayments and other assets
Investment in subsidiary
Property, plant and equipment
Right-of-use asset
Intangible assets
Deferred tax
Total assets
Liabilities
Trade and other payables
Current tax liabilities
Employee benefits
Lease liabilities
Borrowings
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
89
30 June
2023
$'000
(49,169)
(36,948)
(86,117)
30 June
2023
$'000
30 June
2022
$'000
(56,092)
6,923
(49,169)
30 June
2022
$'000
33,994
58,718
-
-
617,674
543,093
16,183
1,313
656
3,037
21,444
67
5,732
-
31,709
731,809
9,872
0
8,884
7,123
595,692
621,571
110,238
8,008
610
2,838
3,163
21,444
274
7,901
17,933
14,908
678,890
12,307
1,452
7,864
9,507
503,454
534,584
144,306
610,949
611,808
(414,592)
(418,333)
(86,119)
110,238
(49,169)
148,925
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
33. Reconciliation of profit/(loss) after income tax to net cash from operating activities
Profit/(loss) after income tax benefit for the year
Adjustments for:
Depreciation and amortisation
Impairment of intangible asset
Share-based payments
Foreign exchange differences
Interest income accrual
Other income
Amortisation of borrowing costs
Loan impairment expense
Tax on derivatives recognised in equity
Movement in other accruals
Change in operating assets and liabilities:
(Increase)/decrease in prepayments and other assets
Increase in deferred tax assets
Increase/(decrease) in current tax liability
Increase/(decrease) in trade and other payables
Increase/(decrease) in employee benefits
Net cash provided by operating activities before movement in loans advanced
30 June
2023
$'000
(44,863)
Consolidated
30 June
2022
$'000
6,726
6,167
24,880
3,882
(279)
708
(12,346)
(224)
139,449
2,040
(220)
186
(19,933)
(1,452)
(2,290)
1,064
96,769
7,267
-
2,950
(59)
(1,751)
(3,503)
(554)
47,316
(2,383)
(1,219)
(793)
(4,087)
1,452
5,083
2,390
58,835
Net increase in loans advanced to customers
Net cash used in operating activities
(230,289)
(297,941)
(133,520)
(239,106)
90
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
34. Earnings per share
Accounting policy
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Prospa Group Limited,
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
financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account the after income tax effect of interest and other financing costs associated with dilutive potential
ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in
relation to dilutive potential ordinary shares.
Profit/(loss) after income tax attributable to the owners of Prospa Group Limited
(44,863)
6,726
30 June
2023
30 June
2022
$'000
$'000
Weighted average number of ordinary shares used
in calculating basic earnings per share
Weighted average number of ordinary shares used
in calculating diluted earnings per share
Basic (loss)/earnings per share
Diluted (loss)/earnings per share
35. Share-based payments
Number
162,916,535 163,129,046
162,916,535
163,151,960
(27.54)
(27.54)
Cents
4.12
4.12
Accounting policy
Equity-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or rights and options over shares, provided to employees in
exchange for rendering services.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently
determined using the Binomial, Monte Carlo simulation approach or Black-Scholes option pricing model that
91
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date
and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for
the term of the option. Judgements are also applied in relation to estimations of the number of options which are
expected to vest, by reference to historic leaver rates and expected outcomes under relevant performance
conditions.
The cost of equity-settled transactions is recognised as an expense with a corresponding increase in equity over
the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the
award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting
period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each
reporting date less amounts already recognised in previous periods.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market
conditions are considered to vest irrespective of whether or not that market condition has been met, provided all
other conditions are satisfied.
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the
equity instruments at the date they are granted, the probability of both market and non-market conditions being
met and the likelihood of employees meeting tenure conditions.
The fair value is determined by using either the Monte Carlo simulation approach or the Black-Scholes model,
taking into account the terms and conditions upon which the instruments were granted. The accounting
estimates and assumptions relating to equity-settled share-based payments would have no impact on the
carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss
and equity.
In 2018, Prospa established the Equity Incentive Plan Rules, under which the following plans were created -
Executive Incentive Plan (“EIP”), an Employee Equity Plan (“EEP”) and a Non-Executive Director Equity Plan
(“NEDEP”). This supplemented the Group’s existing long-term incentive plan (“LTIP”).
In FY21, the Board commenced a review of the Group’s remuneration strategy in light of the changed business
and market circumstances since Prospa listed on the Australian Stock Exchange in 2019. A remuneration
framework was developed that aimed to more appropriately align outcomes to shareholders, incentivise the
firm’s senior leaders, and build on Prospa’s strong employee shareholder culture.
In FY22, following a review of Prospa’s remuneration framework, share options were granted under the EIP
(rather than performance rights) and the Employee LTI Plan (“ELP”) was created under the Equity Incentive Plan
Rules and offers of Performance Rights were made to certain employees.
Total expense of share-based payment transactions for the year ended 30 June 2023 was $3.9 million (30 June
2022: $3.0 million).
Share options
LTIP
The LTIP enabled the Group to offer eligible employees options to subscribe for shares in the Company. The
Group has previously provided Loan Shares to certain employees, which involve purchasing shares in the
Company, funded by loans from the Company. However, since 2017, the Group has ceased to offer new Loan
92
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
Shares, with existing loan shares now in runoff.
The LTIP requires the holder to remain in full-time employment for options to vest. There are a number of key
performance indicators covering both financial and non-financial measures.
During the year ended 30 June 2023:
- No options were granted under the LTIP;
- 573,000 options were cancelled or forfeited;
-
1,846,124 options expired without being exercised;
- No options were exercised and converted to shares; and
- No options were exercised through net settlement.
EIP
The EIP was created to assist in the motivation, reward and retention of key employees and has been designed to
align with the interests of Shareholders. The EIP requires the holder to remain in employment for options to vest
and in some tranches has performance conditions subject to Absolute Total Shareholder Return over the vesting
period.
During the year ended 30 June 2023:
- No options were granted under the EIP;
- No options were cancelled or forfeited; and
- No options were exercised and converted to shares.
Non-Executive Director Options
The issue of options under the Non-Executive Director Options Plan was approved by Shareholders at the 2022
Annual General Meeting and requires the holder to remain a Non-Executive Director of the company for options
to vest.
During the year ended June 2023:
-
1,327,650 options were granted under the Non-Executive Director Options Plan with an exercise price of
$0.76;
- No options were cancelled or forfeited; and
- No options were exercised and converted to shares.
93
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
The table below shows the number and weighted average exercise price (WAEP) of, and movement in, share
options during the year:
Outstanding at 1 July
Granted during the year
2023
Number
11,701,231
1,327,650
2023
WAEP
$1.27
$0.76
2022
Number
11,816,670
5,467,903
Forfeited, cancelled, or expired during the year
(2,419,124)
$1.26
(5,299,705)
Exercised during the year
Outstanding at 30 June
Exercisable at 30 June
-
-
(283,637)
10,609,757
$1.13
11,701,231
3,916,524
-
6,315,644
2022
WAEP
$2.21
$0.96
$3.18
$0.75
$1.27
-
The weighted average share price during the year ended 30 June 2023 was 59 cents (30 June 2022: 89 cents).
The remaining contractual life of share options outstanding as at 30 June 2023 was 2.9 years (30 June 2022: 3.1
years).
The exercise price of the share options is equal to the market price of the underlying shares on the date of grant.
The range of exercise prices for options outstanding at the financial year end was $0.76 to $4.35 (30 June 2022:
$0.88 to $4.35).
The contractual term of share options ranges from 4 to 6 years.
For the options granted during the current and previous financial year, the valuation model inputs used to
determine the fair value at the grant date, are as follows:
Grant date
Expiry date
31/08/2021
31/08/2025
22/10/2021
30/06/2026
22/10/2021
30/06/2026
22/10/2021
22/10/2026
22/10/2021
22/10/2026
22/10/2021
22/10/2026
01/12/2021
22/10/2026
23/11/2022
23/11/2028
Share price
at grant
date
Exercise
price
Expected
volatility
Dividend
yield
Risk-free
interest
rate
Fair value
at grant
date
$0.91
$0.96
$0.96
$0.96
$0.96
$0.96
$0.80
$0.60
$0.89
60.00%
$0.96
60.00%
$0.96
60.00%
$0.96
60.00%
$0.96
60.00%
$0.96
60.00%
$0.96
60.00%
$0.76
58.50%
-
-
-
-
-
-
-
-
0.58%
$0.328
1.20%
$0.371
1.20%
$0.402
1.20%
$0.423
1.20%
$0.412
1.20%
$0.389
1.35%
$0.274
3.29%
$0.247
The expected life of the share options is based on historical data and current expectations and is not necessarily
indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical
volatility over a period similar to the life of the options is indicative of future trends, which may not necessarily be
the actual outcome.
94
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
The fair value of the options is calculated at the date of grant using either the Black Scholes option-pricing model
or Monte Carlo simulation approach and allocated to each reporting period evenly over the period from grant date
to vesting date. The value disclosed is the portion of the fair value of the options recognised as an expense in each
reporting period.
Performance rights
NEDEP
The NEDEP allows non-executive directors to acquire rights, in lieu of some of their cash Board fees. The NEDEP
is not subject to any performance or service conditions, and the rights have an exercise price of $nil.
No rights were granted under the NEDEP during the year ended 30 June 2023 (30 June 2022: nil).
Deferred KMP STI (Short Term Incentives)
The KMP Deferred STI was implemented in FY22 to defer 20% of the KMP’s STI for 1 year. The Deferred STI is
provided in the form of rights.
Performance conditions in relation to these rights are determined by the Board and are linked to both Group and
individual performance. These awards vest one-year after the date of grant, following the release of the
Company’s annual results. Vesting is also subject to continued employment until vesting date.
Rights under the Deferred KMP STI are issued for nil consideration and have no exercise price. During the year
ended 30 June 2023:
-
134,647 performance rights were granted;
- No performance rights were exercised and converted to shares; and
- No performance rights were cancelled or forfeited.
Grant date
Expiry date
Exercise
price
Balance at
the start
of the
period
Granted Exercised
Expired/
forfeited/
other
Balance at
the end of
the period
23/11/2022
23/11/2023
n/a
-
134,647
-
-
134,647
EIP
The Executive Incentive Plan (EIP) was reviewed in FY23 to assist in the motivation, reward, and retention of
KMP. The EIP in FY23 was issued in Performance Rights (rather than options) and is linked to Group EBITDA and
Revenue performance at the end of a three-year period. Vesting is also subject to continued employment until
vesting date.
Rights under the EIP are issued for nil consideration and have no exercise price. During the year ended 30 June
2023:
-
1,385,161 performance rights were granted;
- No performance rights were exercised and converted to shares; and
- No performance rights were cancelled or forfeited.
95
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
Grant date
Expiry date
Exercise price
Balance at
the start
of the
period Granted Exercised
Expired/
forfeited/
other
Balance at
the end of
the period
23/11/2022
15/11/2027
n/a
- 1,385,161
-
- 1,385,161
EEP
The EEP was created to assist in the motivation, reward and retention of employees who do not participate in the
EIP.
Performance conditions in relation to these rights are determined by the Board and are linked to both Group and
individual performance. These are tested over a one-year performance period linked to the Company's annual and
half-yearly reporting periods.
After testing the performance conditions and the end of the performance period, any rights that remain on foot
will vest as follows.
- 50% after one year on the day following the release of the Company's full year audited results (or the day
falling 6 months after, as applicable) for the relevant financial year: and
- 50% after one year on the day following the release of the Company's full year audited results (or the day
falling 6 months after, as applicable) for the subsequent financial year.
Vesting is also subject to continued employment until vesting date.
Rights under the EEP are issued for nil consideration and have no exercise price. During the year ended 30 June
2023:
-
-
-
65,123 performance rights were granted;
235,920 performance rights were exercised and converted to shares; and
121,075 performance rights were cancelled or forfeited.
During the year ended 30 June 2022:
- 311,112 performance rights were granted;
-
193,176 performance rights were cancelled or forfeited.
96
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
Details of performance rights granted under the EEP during the year ended 30 June 2023 are outlined below.
Grant date
Expiry date
Exercise
price
12/08/2019
13/01/2020
13/07/2020
15/03/2021
07/09/2021
n/a
n/a
n/a
n/a
n/a
n/a
28/02/2022
29/08/2022 31/08/2025
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Balance at
the start of
the period
118,157
46,936
117,431
115,404
102,908
177,876
-
Granted Exercised
Expired/
forfeited/
other
Balance at
the end of
the period
-
-
-
-
-
-
65,123
(113,157)
(41,640)
(58,715)
(55,477)
-
-
-
(5,000)
(5,296)
(8,388)
(31,071)
(12,864)
(46,116)
(12,340)
0
0
50,328
28,856
90,044
131,760
52,783
ELP
The ELP was launched in October 2021 and replaces the EEP. Performance conditions in relation to these rights
are determined by the Board and are linked to individual performance.
Following testing of the performance conditions and the end of the performance period, any rights that remain on
foot will vest.
Rights under the ELP are issued for nil consideration and have no exercise price. During the year ended 30 June
2023:
-
-
-
7,019,799 performance rights were granted;
1,817,359 performance rights were exercised and converted to shares; and
2,151,933 performance rights were cancelled or forfeited.
The following rights will convert to shares at the end of a three-year period, subject to company EBITDA and
revenue targets, individual performance and continued employment.
Grant date
Expiry date
Exercise price
Balance at
the start
of the
period Granted Exercised
Expired/
forfeited/
other
Balance at
the end of
the period
15/11/2022
n/a
n/a
- 1,030,093
-
- 1,030,093
The following rights will convert to shares over a three-year period, vesting annually in thirds, subject to
individual performance and continued employment.
97
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
Grant date
Expiry date
Exercise price
22/10/2021
n/a
24/10/2022
n/a
n/a
n/a
Balance at
the start
of the
period Granted Exercised
Expired/
forfeited/
other
Balance at
the end of
the period
1,619,287
- (539,750)
(139,207) 940,330
- 2,030,202 (172,286) (244,572) 1,613,344
The following rights will convert to shares over a three-year period with 25% vesting after year 1, 25% vesting
after 2 years and 50% vesting after 3 years, subject to individual performance and continued employment.
Grant date
Expiry date
Exercise price
22/10/2021
24/10/2022
n/a
n/a
n/a
n/a
Balance at
the start
of the
period Granted Exercised
Expired/
forfeited/
other
Balance at
the end of
the period
2,473,815
- (564,790)
(779,631)
1,129,394
- 3,959,504 (540,533)
(988,523) 2,430,448
The fair value of performance rights has been determined as follows:
Grant date Expiry date
Share
price at
grant date
Exercise
price
Expected
volatility
Dividend
yield
Risk-free
interest
rate
Fair value
at grant
date
12/08/2019
12/08/2024
$4.30
13/01/2020
13/01/2025
$2.08
13/07/2020
13/07/2025
$0.95
15/03/2021
15/03/2025
$0.88
07/09/2021
07/09/2026
$1.10
22/10/2021
22/10/2026
$0.96
28/02/2022
28/02/2027
$0.82
29/08/2022
31/08/2025
$0.85
24/10/2022
24/10/2025
$0.70
15/11/2022
31/08/2025
$0.64
23/11/2022
23/11/2023
$0.60
23/11/2022
29/08/2025
$0.60
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
36. Capital management
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$4.300
$2.080
$0.945
$0.880
$1.100
$0.960
$0.823
$0.850
$0.70
$0.64
$0.60
$0.60
The Group’s capital includes issued capital and all other equity reserves attributable to the equity holder of the
parent. The Group’s objective is to maintain a strong capital base to foster the support of its investors, funders
and other business partners and enable the future growth initiatives of the Group. The Board reviews these
objectives periodically.
98
Prospa Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2023
Prospa purchased 1.55 million shares via an on-market buyback between July 2022 and December 2022. The
buyback expired on 16 February 2023, and there is no current intention to re-introduce the buyback, as the Board
has determined to preserve capital.
There were no other changes to the Group’s approach to capital management during the period.
37. Post balance date events
On 7 July 2023, Prospa announced the establishment of a $12 million corporate debt facility to support and
provide an additional proactive liquidity option.
No other matter or circumstance has arisen since 30 June 2023 that has significantly affected, or may
significantly affect the Group’s operations, the results of those operations, or the Group’s state of affairs in
future financial years.
99
Prospa Group Limited
Directors' declaration
For the year ended 30 June 2023
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 1 to the financial
statements;
the attached financial statements and notes give a true and fair view of the Group's financial position as
at 30 June 2023 and of its performance for the financial year ended on that date;
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable; and
at the date of this declaration, there are reasonable grounds to believe that the members of the
Extended Closed Group will be able to meet any obligations or liabilities to which they are, or may
become, subject by virtue of the deed of cross guarantee described in note 32 to the financial
statements.
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
Greg Moshal
Director and Chief Executive Officer
Gail Pemberton
Independent Director and Chair
29 August 2023
Sydney
100
Prospa Group Limited
Independent auditor's report to the members of Prospa Group Limited
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Quay Quarter Tower
Level 46, 50 Bridge Street
Sydney, NSW, 2000
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
www.deloitte.com.au
Independent Auditor’s Report to the
Members of Prospa Group Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Prospa Group Limited (the “Company”) and its subsidiaries (the “Group”)
which comprises the consolidated statement of financial position as at 30 June 2023, the consolidated
statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity
and the consolidated statement of cash flows for the year then ended, and notes to the financial statements,
including material accounting policy information and other explanatory information, and the directors’
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
• Giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its financial performance
for the year then ended; and
• Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of
our report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are
relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report for the current period. These matters were addressed in the context of our audit of the
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
101
Prospa Group Limited
Independent auditor's report to the members of Prospa Group Limited
Key Audit Matter
How the scope of our audit responded to the
Key Audit Matter
IT Systems
The Group’s operations and financial reporting processes
are reliant on automated processes, controls and data
managed by IT systems.
As a result, the integrity of the financial reporting process
and underlying IT systems form a key component of our
audit as a significant number of account balances are
impacted by the IT systems.
We identified the IT systems that impact financial reporting
as a key audit matter because of the:
•
•
Reliance on technology that is integral to the operation
of key business processes and financial reporting;
Importance of the IT controls in maintaining an
effective control environment. A key interdependency
exists between the ability to rely on IT controls and the
ability to rely on financial data, system configured
automated controls and system reports; and
Continued investment in IT controls supporting the
application systems relevant to the Group’s financial
reporting activities.
Expected credit loss provision
•
As at 30 June 2023, the Group has recognised $109.5m of
expected credit loss (ECL) provisions on loans and advances
in accordance with AASB 9 Financial Instruments as
disclosed in Note 11 and Note 23.
The ECL models developed by management to determine
expected credit losses require significant judgement and
assumptions including:
•
•
•
Selection of criteria for identifying a significant increase
in credit risk;
Selection of parameters input into the models in
relation to probability of default and loss given default;
and
Forward looking economic scenarios that consider the
impact on expected credit losses of potential macro-
economic events,
rate
the
including
environment and inflation pressures.
interest
In conjunction with our IT specialists, our procedures
included, but were not limited to:
•
•
•
•
related
controls
to user access,
Developing an understanding of the IT environment
and the identification of key financial systems and
processes;
Testing the design, implementation, and operating
effectiveness of the IT relevant financial reporting
systems and processes of the Group, including the key
IT
change
management, data reliability and data integrity;
Testing the IT automated controls and IT dependant
manual controls that were key to our audit testing in
order to assess the accuracy of certain system reports
and calculations, such as the automated calculations of
interest; and
Evaluating the remediation of previously identified IT
control matters, including mitigating controls in order
to respond to the impact on our overall audit approach.
Our procedures included, but were not limited to:
• Obtaining an understanding of the judgements made
within the expected credit loss models;
•
• Understanding relevant controls relating to customer
loan approval processes and identification of overdue
amounts;
the provisioning methodologies with
Assessing
reference to Australian Accounting Standards and
market practices;
Evaluating management’s assumptions and judgments
in relation to the selection of parameters and criteria
loss model. This
input
included:
o Assessing the probability of default, loss given
default and exposure at default applied within the
credit provision model;
into the expected credit
•
o Challenging management’s judgements in respect
to the macroeconomic factors and judgemental
overlays
current
macroeconomic environment; and
response
the
to
in
o Testing a sample of write-offs and recoveries;
o Testing the completeness of the credit
loss
provision.
We have also assessed the appropriateness of the
disclosures in Note 7, 11 and 23 to the financial statements.
102
Prospa Group Limited
Independent auditor's report to the members of Prospa Group Limited
Other Information
• The directors are responsible for the other information. The other information comprises the information
included in the Group’s Annual Report for the year ended 30 June 2023, but does not include the financial
report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report, or our
knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we
have performed, we conclude that there is a material misstatement of this other information, we are required
to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the
103
Prospa Group Limited
Independent auditor's report to the members of Prospa Group Limited
audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause
the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and
whether the financial report represents the underlying transactions and events in a manner that achieves fair
presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the financial report. We are responsible for the direction,
supervision and performance of the Group’s audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards
applied.
From the matters communicated with the directors, we determine those matters that were of most significance
in the audit of the financial report of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 16 to 30 of the Directors’ Report for the year ended
30 June 2023.
In our opinion, the Remuneration Report of Group, for the year ended 30 June 2023, complies with section 300A
of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
DELOITTE TOUCHE TOHMATSU
Heather Baister
Partner
Chartered Accountant
Sydney, 29 August 2023
104
Prospa Group Limited
Shareholders’ Information
For the year ended 30 June 2023
Shareholders’ Information
In accordance with ASX Listing Rule 4.10, the Company provides the following information to shareholders not
elsewhere disclosed in this Annual Report. The information provided is current as at 31 July 2023 (Reporting
Date).
Corporate Governance Statement
The Company’s Corporate Governance Statement, together with the ASX Appendix 4G, have been lodged with
the ASX and are available at https://investor.prospa.com/investor-centre/.
The Company is committed to conducting business to the highest standard of corporate governance. The Board
regularly reviews its corporate governance policies and processes to ensure they are appropriate and meet
requisite standards. The Company’s corporate governance policies and charters are all available at
https://investor.prospa.com/investor-centre/.
Substantial holders
As at the Reporting Date, the names of the substantial holders of the Company and the number of equity
securities in which those substantial holders and their associates have a relevant interest, as disclosed in
substantial holding notice given to the Company, are as follows:
Holder
CURFORE PTY LTD
GREGORY MOSHAL
AIRTREE VENTURES ENTITIES
BEAUMONT BERTOLI
AUSTRALIAN SUPER
Class of Equity
Securities
Number of Equity
Securities Held
% of Total
Issued
Securities
Capital in
Relevant
Class
ORDINARY
SHARES
ORDINARY
SHARES
ORDINARY
SHARES
ORDINARY
SHARES
ORDINARY
SHARES
52,092,763
31.89
25,161,8321
15.40
14,605,1852
9,761,3013
8.94
5.97
6,771,718
4.14
1 The equity securities held by Gregory Moshal reflect his current interests as disclosed in his Appendix 3Y change of director’s interest notice released to the ASX
on 24 April 2023.
2 Airtree Ventures entities are Airtree Ventures Opportunity Fund Trusco Pty Ltd and Airtree Ventures GP Pty Ltd.
3 The equity securities held by Beaumont Bertoli reflect his current interests as disclosed in his Appendix 3Y change of director’s interest notices released to the
ASX on 7 December 2021.
105
Prospa Group Limited
Shareholders’ Information
For the year ended 30 June 2023
Number of holders
As at the Reporting Date, the number of holders in each class of equity securities as follows:
Class of Equity Securities
FULLY PAID ORDINARY SHARES
OPTIONS TO ACQUIRE ORDINARY SHARES
RIGHTS TO ACQUIRE ORDINARY SHARES
Number of Holders
1,513
40
140
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:
UMP Shares
469,560
UMP Holders
674
% of Issued Shares held by
UMP Holders
0.29
Voting rights of Equity Securities
The only class of equity securities on issue in the Company that carries voting rights is fully paid ordinary shares.
As at the Reporting Date, there were 1,513 holders of a total of 163,375,556 ordinary shares of the Company.
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 his or her proxy, attorney or representative) is entitled to vote for each fully paid share held.
Distribution of holders of equity securities
The distribution of holders of equity securities on issue in the Company as at the Reporting Date is as follows:
Distribution of ordinary shareholders
Holdings Range
Holders
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
54
239
168
546
506
1,513
106
Total Units
153,093,473
7,026,950
1,307,921
1,396,213
284,444
% of
Issued Capital
93.71
4.49
0.80
0.85
0.15
163,375,556
100.00
Prospa Group Limited
Shareholders’ Information
For the year ended 30 June 2023
Distribution of option holders
Holdings Range
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Holders
Total Units
%
18
10
12
0
0
40
9,996,757
94.22
505,000
4.76
108,000
1.02
-
-
-
-
10,609,757
100.00
Distribution of holders of rights
Holdings Range
Holders
100,001
10,001
5001
1001
1
Total
24
69
15
32
0
140
Total Units
4,988,003
3,746,368
100,807
109,798
%
55.76
41.88
1.13
1.23
-
-
8,944,976
100.00
Twenty largest shareholders
The Company only has one class of quoted securities, being ordinary shares. The names of the 20 largest
shareholders of ordinary shares, and the number of ordinary shares and percentage of capital held by each holder,
is as follows:
Rank Holder Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
SPINOZA INVESTMENTS PTY LTD
INTERNATIONAL GROUP OF COMPANIES PTY LTD
AIRTREE VENTURES OPPORTUNITY FUND TRUSCO PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
SQUARE PEG GLOBAL FUND 2015 PTY LTD
AIRTREE VENTURES GP PTY LTD
DANITA LOWES
PACIFIC CUSTODIANS PTY LIMITED
EUCLID CAPITAL PARTNERS LLC
AVIAD EYAL
PROSPATARIAN PTY LTD
GARRETT SMYTHE LTD
HOLMNER INVESTMENTS PTY LTD
PARTNERS FOR GROWTH IV LP
107
Balance as
at Reporting Date
%
63,054,456
38.59
25,012,340
15.40
9,701,240
9,487,236
6,771,718
5,809,758
5,117,949
2,826,246
2,676,368
2,566,437
2,419,280
1,711,599
1,457,780
1,200,000
1,189,186
5.94
5.81
4.14
3.56
3.13
1.73
1.64
1.57
1.48
1.05
0.89
0.73
0.73
Prospa Group Limited
Shareholders’ Information
For the year ended 30 June 2023
16
17
18
19
MR RICHARD MILLER
TUBBIN INVESTMENTS PTY LTD
ALUA NOMINEES PTY LTD
SENGLEA HOLDINGS PTY LTD
20
BNP PARIBAS NOMS PTY LTD
Total number of Shares of Top 20 Holders
Total Remaining Holders’ Balance
Grand total
1,066,147
1,033,611
650,000
634,045
610,455
0.65
0.63
0.40
0.39
0.37
144,995,851
88.75
18,379,705
11.25
163,375,556
100.00
Escrow
As at the Reporting Date, the Company does not have any securities on issue that are being subject to escrow.
Unquoted equity securities
As at the Reporting Date, the number of each class of unquoted securities on issue, and the number of holders in
each class are as follows:
Class of Equity Securities
Number of Securities
Number of Holders
OPTIONS TO ACQUIRE ORDINARY SHARES
RIGHTS TO ACQUIRE ORDINARY SHARES
10,609,757
8,944,976
40
140
No person holds 20% or more of any class of unquoted equity securities on issue.
Securities purchased on-market
No securities were purchased on-market during the reporting period.
Other Information
On 16 February 2022, the Company announced an on-market share buy-back of up to 10% of its issued share
capital on market over a 12-month period. The buyback ended on 14 February 2023. A total of 1,552,010 shares
were bought back under the share buy-back program.
There are no issues of securities approved for the purposes of item 7 of section 611 of the Corporations Act that
have not yet been completed.
108