20
21ANNUAL REPORT
Resimac
Group Ltd
ABN 55 095 034 003
Australian Credit Licence 247829
ASX: RMC
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Who we are
Chairman's message
CEO's message
Board of Directors
Directors' report
Remuneration report
Financial statements
Notes to the consolidated financial statements
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Directors' declaration
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10 Independent auditor's declaration
11 Independent auditor's report
12 Environment, social and governance
13 Shareholder information
14 Managing your shareholding
15 Corporate information
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Who
we are
Resimac Group Ltd ('Resimac Group') is a leading
non-bank lender and multi-channel distribution
business, recognised as Non-Bank of the Year 2020
by the Australian Mortgage Awards.
Its fully integrated business model comprises
originating, servicing and funding prime, non-
conforming residential mortgages and asset finance
products in Australia and New Zealand.
With a history dating back to 1985, Resimac Group
has a proven track record of growth and stability.
We are pleased to service over 50,000 customers
with a portfolio of home loans on balance sheet of
close to $14 billion and assets under management
of over $15 billion.
As a pioneer of the Residential Mortgage-Backed
Securities ('RMBS') industry we have one of
Australia’s most respected securitisation programs,
having issued in excess of $35 billion in domestic
and global markets since 1987.
Resimac Group has access to a diversified funding
platform with multiple warehouse lines provided by
domestic and offshore banks for short-term funding
in addition to a global securitisation program to fund
its assets longer term.
Thanks to our flexible funding programme, we
provide solutions to a wide range of customers
including the self-employed and contractors, as
well as customers with previous credit impairments
through our network of over 12,000 broker partners.
Customers with a Resimac Group loan are entitled
to an exclusive customer benefits program offering
discounts on a vast array of products and services in
Australia and New Zealand.
Resimac Group is a profitable organisation with
diverse income streams - net interest margin on
principally funded loans, annuity trail income on
non-principally funded loans and other fee income.
We operate a proprietary servicing platform and
have been issued a Standard & Poor's ('S&P')
"STRONG" Servicer Ranking, which was reaffirmed
in April 2021.
OVER
$15b
ASSETS UNDER
MANAGEMENT
2020
AUSTRALIAN
MORTGAGE
AWARDS
N
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ORIG INATION
Wholesale, 3rd Party,
Direct & White Label
distribution channels
SERVICING
Underwriting, loan
management, arrears
management
OPERATIONS
Support functions,
geographies
FUNDING
Warehouse and a
global capital markets
programme
OUR BRAND AMBASSADOR
Adam Gilchrist is the ambassador for our corporate
brand. He is also the face of our direct channel,
homeloans.com.au.
When partnering with an
organisation I look for
credibility, the approach
that the business takes to
supporting its customers
and how it conducts itself in
the community.
- Adam Gilchrist, Resimac brand ambassador
ISSUED IN
EXCESS OF
$35b
RMBS IN DOMESTIC
& GLOBAL MARKETS
A full range of home loans from Prime
Lending and Specialist Lending products
Strong funding capabilities - long standing
warehouse relationships for short-term
funding
Diversified long-term funding platform
with global multi-currency issuance
programmes
Well established white label arrangement
with leading domestic banks
Assets Under Management of over $15
billion
Diversified distribution platform
originating $4 billion+ p.a.
4
RESIMAC GROUP LTD
ANNUAL REPORT 2021
5
| MESSAGE FROM OUR CHAIRMAN
| MESSAGE FROM OUR CHAIRMAN
Message
from our Chairman
Warren McLeland
Dear shareholder,
Resimac produced a remarkable financial result for the year to 30 June 2021. A net profit after tax of $103 million, was a record
for your company, representing an astonishing growth of 87% over the previous year.
2021, was however, a roller coaster year in respect to
operating conditions. Notwithstanding the positive impact
of benign low interest rates, rising employment across
the nation and high levels of liquidity in the economy
(all of which manifested in an unexpectedly high level of
demand for home finance), industry competitiveness
was increasingly challenging. The six major banks were
particularly aggressive in their eagerness to rebuild market
share in home lending by squeezing pricing at every
available opportunity. This behaviour reduced margins
for all participants including the non-bank sector, which is
basically reliant on wholesale funding.
In the second half of 2021, we were forced to contend with
the ongoing impact of COVID-19 and in particular, the new
dramatically more infectious and severe Delta variant.
Notwithstanding the business having to switch to full time
working from home again, we were largely uninterrupted by
COVID-19 and produced record business flow.
By June, financial stress amongst borrowers had
resurfaced, necessitating Resimac to once again provide
mortgage repayment relief to support borrowers’ financial
stress. Fortuitously, State/ Territories and Federal
Governments have also provided much sought-after relief
programmes to help lessen the burden on borrowers.
The buoyant industry activity, not of all which favoured
a trend for achieving low risk growth ambitions,
demonstrates how outstanding our annual performance
was to exceed our budgeted expectations.
A major contributor to our success in 2021 has been stellar
performance in our medium-term funding programmes,
where once again Resimac’s pre-eminence in securitisation
stood out! Our ability to consistently bring an increasingly
wider variety of structures and diversified pools of
mortgages to the Australian and international bond
markets, attracts returning investors as well as encourages
new investors into one of the world’s most stable, secure
and low risk markets.
The following summary demonstrates the diversity
of our activities and the scope and size of our funding
achievements for 2021. Resimac issued $5.8 billion across
four currencies; AUD, JPY, NZD and USD. The bonds were
distributed over seven jurisdictions including Australia
(55%), USA (20%), Japan (10%), Asia ex Japan (10%), UK
(4%), Europe (1%) and New Zealand (1%). Resimac’s global
banking capacity exceeds $5 billion from major domestic
banks and five international banks spread across Asia,
Japan, Europe and the USA.
Our dedicated team of professionals incessantly focuses
on improving and enlarging our investor relations activities.
Shareholders should understand that it is Resimac’s
responsibility to satisfy investor needs. This means a
necessity to maintain daily activity and be on top of trends
in the world’s bond markets and to have the ability to reflect
investor requirements when we bring a new securitisation
transaction to the market.
Resimac’s 30+ years of experience in securitisation
is unequivocally a powerful competitive advantage,
irrespective of whether the funding markets are liquid
or tight. We are renowned for our conservatism and our
long-standing partnership relationships with major local
and international banks are testament to our stature in the
world’s biggest markets.
A major contributor
to our success
in 2021 has been
stellar performance
in our medium-
term funding
programmes,
where once
again Resimac's
pre-eminence
in securitisation
stood out.
I wish to draw shareholders’ attention to one business
transformation initiative we have been undergoing for
the last 2+ years. We are coming to an end of our biggest
project capital investment in the company’s history
with the digitalisation of our core operating IT systems
capability providing end to end processing for our loan
application to settlement procedure and processes.
Subsequent to year end, the first phase of implementation
went live in our New Zealand business in August with
the totality of the project expected to be operational by
January 2022. The productivity, efficiency and borrower
experience benefits are profound, creating a paradigm shift
in our ability to manage future growth in new business. Our
new digital engine will be driving the power for creating
fast workaround solutions to facilitate new product
developments, solve existing bottlenecks and problems,
and ultimately sustain top tier customer satisfaction
benefits to enhance trust and loyalty from our chosen
customer segments.
Along with our securitisation capability, we expect
digitalisation and our renewed focus on the customer will
overall be our principal source of competitive positioning
especially when combined with our low cost product
manufacture, sharp pricing and distribution.
On behalf of my colleagues on the Board, I acknowledge
the incessant and major contribution of our CEO, Scott
McWilliam to your company throughout the year. All
successful organisations, especially when operating
under conditions of stress and challenge, require effective
leadership and superior consistent management. Scott has
delivered that to Resimac in spades!
To our employee team, we express our gratitude for
their professionalism, enduring commitment, loyalty
and teamwork. The pleasure has been ours to count
them as colleagues and partners, working as one team to
successfully fulfil our ambitious objectives.
Warren J McLeland
Chairman
6
RESIMAC GROUP LTD
ANNUAL REPORT 2021
7
| MESSAGE FROM OUR CEO
| MESSAGE FROM OUR CEO
Message
from our CEO
Scott McWilliam
FY21 was a watershed year for Resimac Group. While the pandemic continued to plague our economy, particularly in the second
half due to the highly transmissible Delta strain, the housing market continued to boom, seeing double-digit growth nearly
everywhere in Australia.
Home Loan AUM
Increased
11%
New Zealand AUM
Increased
35%
Direct Channel AUM
Increased
10%
Resimac Group has been, and continues
to be, well-placed to service the
market’s momentum, with a strong value
proposition across multiple customer
segments - some of which are under-
serviced by the major banks.
initiatives we implemented to ensure staff
continued to feel connected and included
while working remotely. Importantly, we
didn’t draw on JobKeeper or any other
government support to subsidise our
working capital.
Our focus on meeting the needs and
wants of customers has contributed in
no small part to Resimac Group’s success
in FY21. We continued to grow our book
above system, leading to another record
normalised NPAT of $104 million (up by
87% on FY20).
We have achieved many milestones
throughout the year, celebrating 35 years
in business, winning Non-Bank of the Year
at the 2020 Australian Mortgage Awards,
launching our new homeloans.com.au
direct channel, and acquiring 100% of
International Acceptance Group (which
we subsequently relaunched as Resimac
Asset Finance).
An unwavering commitment to our long-
term growth will see us continue to invest
in our people, our technology, and our
operating model, all of which will support a
more diversified business in the future.
We’re proud of the support we’ve given
our staff throughout the year, particularly
with the various work/life balance
Our investments in technology have
been driven by the need to position our
business as not just accommodating the
needs and wants of customers today,
but ensuring that we’re flexible enough
to meet and exceed their expectations
in the future. This digital transformation
has been ongoing throughout FY21, with
the initial staged rollout expected to
complete in early 2022. But this is really
just the start of an ongoing journey of
evolving our business to remain relevant
to our customers.
Diversity of product has always been
one of Resimac Group’s core strengths,
and the launch of Resimac Asset Finance
builds on this by enabling us to offer a full
suite of lending products to consumers
and commercial borrowers. We’re
excited about the opportunities in this
under-serviced market as we expand our
footprint in asset finance and leverage the
digital investments we’ve made in other
areas of our business.
Our focus on
meeting the
needs and wants
of customers has
contributed in
no small part to
Resimac Group's
success in FY21.
The value proposition offered by brokers remains as strong
as ever, particularly within the current landscape, and their
importance to our business cannot be underestimated.
We have shown our support to the third party distribution
channel in many ways this year, such as continuing to pay
trail commissions for customers on payment moratoriums,
and restructuring our product suite to support our
wholesale distribution partners following the Best Interests
Duty.
With a growing market of customers who are comfortable
transacting online, channel diversity is another key focus
for Resimac Group. Increasingly, we’re seeing customers
move away from traditional bricks and mortar retail
distribution towards the flexibility and convenience of
digital retail distribution. Recognising this opportunity,
we’ve complemented our third party distribution channel
with a new direct-to-consumer homeloans.com.au brand,
giving customers choice in the way they interact and
engage with us.
Pleasingly, investor demand continues to be strong for our
global funding program, which provides our business with
a platform for future growth. Throughout FY21, we issued
close to $6 billion of prime and non-conforming RMBS at
the lowest senior margins since before the GFC. Stable
funding markets and lower cost of funds provide us with a
runway to aggressively target future growth in FY22 and
beyond.
We’re deeply thankful to the management team and staff
for the formative role they have played in our success,
notwithstanding the challenges posed this year by the
pandemic. We’re also thankful for the continued support of
our brokers, aggregators and other third-party distribution
partners, all of whom are critical to the ongoing growth of
our business. I would also like to extend my sincere thanks
to our board for the invaluable service and support they
have provided to our business over the last 12 months.
Scott McWilliam
CEO
8
RESIMAC GROUP LTD
ANNUAL REPORT 2021
9
| BOARD OF DIRECTORS
| BOARD OF DIRECTORS
Board of
Directors
Resimac Group Ltd
Warren
McLeland
Susan
Hansen
Wayne
Spanner
Duncan
Saville
Caroline
Waldron
Peter
Fitzpatrick
Chairman
Independent
Independent
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive
Director
Independent
Non-Executive Director
Company
Secretary
Warren is a former stockbroker and
investment banker with over 35
years of experience in domestic and
international financial services. In
addition, Warren acts as an adviser
in funds management and business
strategy to companies operating
in the Asia Pacific region. Warren is
the former Executive Chairman of
Resimac Limited.
Susan is a Chartered Accountant
and holds a Bachelor of Commerce
degree and an MBA from the
University of Cape Town. Susan has
35 years of experience including
a Big Four Accounting firm and an
investment bank (financial analysis
and risk assessment). Susan is
a Principal of a financial training
organisation based in New Zealand.
Wayne is currently the Global Chief
Strategic Alignment, Innovation
and People Officer of Norton Rose
Fulbright. He was previously the
Managing Partner of the Australian
firm from 2012 to 2020. Wayne has
extensive experience in executive
management and corporate
governance at Board level.
Duncan is a Chartered Accountant
and an experienced Non-Executive
Director. He is chairman of ICM
Limited, an international fund
manager. Duncan is a fellow of the
Institute of Chartered Accountants
Australia and New Zealand, the
Australian Institute of Company
Directors and the Financial Services
Institute of Australasia.
Caroline is a Non-Executive
Director and cross border advisor
with over 30+ years’ experience
in regulated consumer sectors
such as technology, retail and
health. Caroline brings to Resimac
commercial and governance
experience in many areas including
technology rollouts and complex
transactions. Caroline holds an
LLB Hons (London), and has been
admitted to the Bars of England and
Wales, Malaysia, Australia and New
Zealand.
Peter is a Chartered Accountant who
worked for a chartered accounting
firm and oil explorer prior to joining
Resimac Limited in 1987. Peter is
responsible for the Group’s company
secretariat function. He is a member
of the Governance Institute of
Australia and the Financial Services
Institute of Australasia. Australia and
New Zealand.
10
RESIMAC GROUP LTD
ANNUAL REPORT 2021
11
| DIRECTORS' REPORT
| DIRECTORS' REPORT
Directors'
report
Resimac Group Ltd
and its controlled entities
The Directors of Resimac Group Ltd (“Resimac” or “the Company”) and its controlled entities (“the Group”) submit herewith the
financial report for the financial year ended 30 June 2021. In order to comply with the provisions of the Corporations Act 2001,
the Directors’ Report as follows:
Information about the Directors
Names and particulars of the Directors of the Company during or since the end of the financial year are:
Mr Warren McLeland
Chairman since February 2020
Non-Executive Director
Mrs Susan Hansen
Independent Non-Executive Director
since October 2016
Warren is a former stockbroker and investment banker with
over 35 years of experience in domestic and international
financial services. In addition, Warren acts as an adviser in
funds management and business strategy to companies
operating in the Asia Pacific region. Warren is the former
Executive Chairman of Resimac Limited.
Susan is a Chartered Accountant and holds a Bachelor of
Commerce degree and an MBA from the University of Cape
Town. Susan has 35 years of experience including a Big Four
Accounting firm and an investment bank (financial analysis
and risk assessment). Susan is a Principal of a financial
training organisation based in New Zealand.
Other listed directorships (last three years):
Other listed directorships (last three years):
Chairman of Thorn Group Limited (since October 2019,
Non-Executive Director of Utilico Emerging Markets
Director since August 2019)
Limited (since September 2013)
Former Chairman of Somers Limited incorporated in
Bermuda (resigned February 2021)
Special responsibilities:
Former non-executive Director of UIL Limited (resigned
September 2019)
Special responsibilities:
Chairman of Resimac Group Ltd (since February 2020)
Chairman of the Risk and Compliance Committee (since
February 2017)
Chair of the Audit Committee (since November 2016)
Member of the Remuneration and Nomination
Committee (since November 2016)
Member of the Risk and Compliance Committee (since
November 2016)
Member of the Technology, Digital and Innovation
Committee (appointed April 2021)
Member of the Remuneration and Nomination
Chair of Resimac NZ Home Loans Limited (since May
Committee (since November 2016)
2012)
Member of the Audit Committee (since August 2017)
Mr Wayne Spanner
Independent Non-Executive Director
since February 2020
Wayne is currently the Global Chief Strategic Alignment,
Innovation and People Officer of Norton Rose Fulbright.
He was previously the Managing Partner of the Australian
firm from 2012 to 2020. Wayne has extensive experience
in executive management and corporate governance at
Board level.
Other listed directorships (last three years):
Nil
Special responsibilities:
experience in many areas including technology rollouts
and complex transactions. Caroline holds an LLB Hons
(London), and has been admitted to the Bars of England and
Wales, Malaysia, Australia and New Zealand.
Other listed directorships (last three years):
Nil
Special responsibilities:
Chair of the Technology, Digital and Innovation
Committee (appointed April 2021)
Member of the Remuneration and Nomination
Committee (appointed January 2021)
Chair of the Remuneration and Nomination Committee
Company Secretary
(since February 2020)
Member of the Risk and Compliance Committee
(appointed July 2020)
Member of the Audit Committee (appointed July 2020)
Mr Duncan Saville
Non-Executive Director
since November 2017
Duncan is a Chartered Accountant and an experienced
Non-Executive Director. He is chairman of ICM Limited,
an international fund manager. Duncan is a fellow of the
Institute of Chartered Accountants Australia and New
Zealand, the Australian Institute of Company Directors and
the Financial Services Institute of Australasia.
Other listed directorships (last three years):
Non-Executive Director of West Hamilton Holdings
Limited (since 2012); and
Former Non-Executive Director of Somers Limited
(retired February 2019).
Special responsibilities:
Member of the Technology Digital and Innovation
Committee (appointed April 2021)
Mrs Caroline Waldron
Independent Non-Executive Director
appointed November 2020
Caroline is a Non-Executive Director and cross border
advisor with over 30+ years’ experience in regulated
consumer sectors such as technology, retail and health.
Caroline brings to Resimac commercial and governance
Mr Peter Fitzpatrick
since November 2016
Peter is a Chartered Accountant who worked for a
chartered accounting firm and oil explorer prior to joining
Resimac Limited in 1987. Peter is responsible for the
Group’s company secretariat function. He is a member
of the Governance Institute of Australia and the Financial
Services Institute of Australasia.
The abovenamed Directors held office during the financial
year and since the end of the previous financial year.
Directors’ shareholdings
The following table sets out each Director’s relevant
interest in shares and rights of the company or in a related
body corporate as at 30 June 2021:
Directors
Fully paid
ordinary shares
Number of
rights over
ordinary shares
Warren McLeland
12,126,338
Susan Hansen
203,730
Wayne Spanner
15,732
Duncan Saville
254,468,487
Caroline Waldron
Nil
Nil
Nil
Nil
Nil
Nil
12
RESIMAC GROUP LTD
ANNUAL REPORT 2021
13
| DIRECTORS' REPORT
| DIRECTORS' REPORT
Remuneration of key management personnel
Results and dividends
Information about the remuneration of Key Management Personnel (KMP) is set out in the Remuneration Report section of
this Directors’ Report. The term ‘KMP’ refers to those persons having authority and responsibility for planning, directing and
controlling the activities of the Company and its controlled entities or indirectly, including any Director whether executive or
otherwise of the consolidated entity.
The information appearing on pages 15 to 18 forms part of the Directors’ Report for the financial year ended 30 June 2021 and is
to be read in conjunction with the following information:
FY21
$'000
FY20
$'000
Share options or rights granted to Directors and senior management
PROFIT
An aggregate of 387,478 shares were granted/exercised:
87,478 shares under the Employee Share Plan on 12 April 2021;
Profit attributable to ordinary equity holders of the parent
107,557
55,908
300,000 options exercised by Scott McWilliam on 28 April 2021 in relation to the FY18 Long Term Incentive Plan. Further
DIVIDENDS
details included in the Remuneration report.
Directors’ meetings
The following dividends have been paid by the Company or declared by the Directors since
the commencement of the financial year ended 30 June 2021:
The following table sets out the number of Directors’ meetings (including meetings of committees of Directors) held during the
financial year and the number of meetings attended by each Director (while they were a Director or committee member).
(a) out of the profits for the year ended 30 June 2020 and retained earnings on the fully-paid
ordinary shares:
7,334
6,087
Board meetings
Audit
COMMITTEES
Risk and
compliance
Remuneration and
nomination
Technology,
digital and
innovation2
fully-franked final dividend of 1.80 cents (FY19: 1.00 cents) per share paid on 25
September 2020.
fully-franked one off special dividend of nil cents (FY19: 0.50 cents) per share.
(A)
(B)
(A)
(B)
(A)
(B)
(A)
(B)
(b) out of the profits for the half-year ended 31 December 2020 and retained earnings on the
fully-paid ordinary shares:
DIRECTOR
Warren McLeland
Susan Hansen
Wayne Spanner
Duncan Saville
Caroline Waldron1
(A)
14
14
14
14
8
(A) Number of meetings eligible to attend.
(B) Number of meetings attended.
(B)
14
14
14
14
8
3
3
3
-
-
3
3
3
-
-
5
5
5
-
-
5
5
5
-
-
4
4
4
-
2
4
4
4
-
2
-
2
-
2
2
-
2
-
2
2
1 Appointed Independent Non-Executive Director in November 2020.
2 The Technology, Digital & Innovation committee was formed in April 2021 to provide oversight on the Group’s strategic direction.
fully-franked interim dividend of 2.40 cents (HY20: 1.20 cents) per share paid on 31
March 2021.
(c) out of the profits for the full year ended 30 June 2021 and retained earnings on the fully-
paid ordinary shares:
9,786
4,879
16,336
7,334
fully-franked final dividend of 4.00 cents (FY20: 1.80 cents) per share declared on 30
August 2021
The Company’s Dividend Reinvestment Plan (DRP) was applied to all dividends.
Principal activities
The Group is a residential mortgage and asset finance
lending business, distributing Prime and Specialist products
across multiple channels. The Group operates in Australia
and New Zealand, originating a high quality loan portfolio,
loan servicing capability, and global funding program.
The Group’s core capabilities include:
Product manufacturing: The Group applies its detailed
knowledge of the Australian and New Zealand markets
to offer products to address demand, with attractive
risk and return profiles
Distribution: Distributing loans in Australia and New
Zealand through relationships with accredited brokers,
wholesale partners and a direct-to-consumer channel;
Treasury and funding expertise: Strong long-term
relationships with global funding partners, the Group is
an experienced issuer in the global and domestic term
securitisation markets; and
Risk management: Operating a holistic enterprise risk
management and governance framework utilising the
three lines of defence model.
14
RESIMAC GROUP LTD
ANNUAL REPORT 2021
15
| DIRECTORS' REPORT
| DIRECTORS' REPORT
Debt funding
The Group maintains access to a diversified funding
platform supported by established funding relationships
and a Board approved funding strategy.
The following funding channels are used to support the
Group’s lending activities:
Corporate debt facility: Utilised for investment in
business growth;
Term securitisations: Loans that are initially funded
via a warehouse facility, are pooled and refinanced by
being sold to new funding vehicles that issue limited-
recourse independently rated asset-backed securities
to institutional investors in multiple jurisdictions;
Warehouse facilities: Third-party funders provide
limited-recourse financing to special purpose vehicles
established by the Group. At 30 June 2021, the Group
had three onshore and four offshore warehouse
funders; and
Wholesale funding partners: Provide white-label
funding with the Group receiving net interest margin.
Principal risks
The Group’s key risks include but are not limited to:
Funding risk: The funding platform currently comprises
a mix of warehouse facilities, term securitisations and
corporate debt. The Group depends on these sources
to fund mortgage originations;
Capital and liquidity requirements: The Group is
required to maintain sufficient liquidity levels under
Australian Financial Services Licence requirements;
A risk exists that the Group could be required to
contribute additional ‘first loss’ equity capital to support
the credit position of senior ranking note holders in the
warehouse facilities and term securitisations which
could impact the Group’s profitability, ability to grow
and/or could force it to raise additional capital;
Regulatory and licence compliance: The Group
is subject to extensive regulation in each of the
jurisdictions in which it conducts business. The Group
holds eight Australian Credit Licences. Changes in laws
or regulations in a market in which the Group operates
could impact the business. The Group is licensed and/
or registered to operate a number of its services across
a range of jurisdictions. Changes to these licensing
regimes, the revocation of existing licences, an inability
to renew or receive necessary licences or a change in
capital requirements could have a material adverse
effect on the Group’s business, operating and financial
performance;
Macroeconomic environment: A material downturn or
increase in unemployment, decreases in house prices,
higher interest rates, general reduction in demand for
credit and/or a reduction in borrowers’ ability to service
their debt (credit risk); and
COVID-19: The Group will continue to monitor the
effects of COVID-19 on business performance and take
action as required. COVID-19 enforced lockdowns and
border closures continue to provide macroeconomic
headwinds to the economy, with pockets of financial
stress evident. The Group’s diversified portfolio and
conservative credit policies is assisting the Group to
manage COVID-19 headwinds.
Review of operations
The Group generated a net profit after tax (NPAT) of
$107,557,000 for the year ended 30 June 2021. To
reflect the Group’s normalised earnings the NPAT has
been adjusted to separate one-off items. Management
believe the disclosure of the normalised NPAT provides
additional insight into the underlying performance for
the year, by excluding one off, non-recurring revenue
items.
The following table reconciles the unaudited normalised
earnings to the statutory NPAT for the year in
accordance with International Financial Reporting
Standards (IFRS).
FY21
Business strategy
UNAUDITED NON-IFRS INFORMATION
$'000
Statutory NPAT1
Fair value gain on investment in
financial asset (Athena)
107,557
(5,110)
Tax effect of normalised items
1,533
Normalised NPAT
103,980
1 Excludes $249k NPAT attributable to Non-Controlling interest.
Net interest income increased 29% to $242,744,000
on prior year driven by higher net interest margin and
assets under management growth.
Operating expenses of $70,677,000 increased 14%
on prior year driven by core banking and origination IT
project, higher employment and marketing costs.
Loan impairment expense decreased 88% to $2,676,000
on prior year due to COVID-19 provision in FY20.
Total home loan settlements across the Group’s direct
and third party distribution channels were $4.8 billion, up
3% on prior year.
The Group is focused on a number of growth strategies to
continue to drive revenue and profitability.
1. Organic lending growth
The Group is well-positioned to continue strong volume
growth driven by:
Customers favourably viewing the Group as an
alternative to the major lenders;
Opportunity to grow volume in the Specialist and Prime
segments of the residential mortgages market;
Opportunity to grow volume in the asset finance
segment under the newly acquired Resimac Asset
Finance brand;
Launch of the new direct to consumer brand
homeloans.com.au;
Launch of the new digital customer banking
environment in FY22;
Further investment in the Group’s brand positioning;
and
Pursuing diversification opportunities in Australia and
New Zealand.
2. Growth through acquisition
Management has demonstrated an ability to identify
and execute profit accretive acquisitions in targeted
markets consistent with the Group’s strategy;
On 1 February 2021 Resimac acquired the remaining
40% interest in Resimac Asset Finance (“RAF”, formerly
known as “IA Group”), increasing its ownership from
60% to 100%. RAF is a finance company participating
in both secured commercial and consumer lending.
The investment aligns with Resimac’s diversification
strategy and facilitates expansion into new secured
asset classes.
The Group’s assets under management at 30 June 2021
comprise:
On balance sheet home loans and advances to
customers of $13.8 billion, up 11% compared to 30
June 2020;
On balance sheet asset finance loans of $0.1 billion
White label portfolio of $1.9 billion, down 24%
compared to 30 June 2020 in line with the Group’s
strategy to cease originating White label loans; and
Combined these make up the total assets under
management of $15.8 billion.
COVID-19
The impact of COVID-19 on customer serviceability
decreased during the year, however continues to
present challenges to a small portion of the Group’s
customers. Resimac’s conservative approach to credit
risk and strong funding relationships have mostly
insulated the impacts of COVID-19. Resimac remains
committed to the safety of employees and supporting
customers and the broader community through the
ongoing challenges COVID-19 poses.
Resimac continues to support customers throughout
their home loan journey, particularly where impacted by
one off events. Resimac provided financial assistance
to customers impacted by COVID-19 in the form
of hardship payment moratoriums and repayment
flexibility during the year and continues to work with
individual customers who require ongoing assistance.
Whilst the economic rebound in FY21 in Australia
was comforting, we expect FY22 to provide further
macroeconomic challenges. Australia’s vaccine rollout
remains slow in comparison to other countries, whilst
State lockdowns and border closures continue to
drive economic headwinds. Furthermore, international
borders are expected to remain closed for the majority
of FY22 stifling the recovery in a number of industries.
Political Donations
In the year ended 30 June 2021, the Group’s political
contributions totalled $10,000 to the Liberal National
Party of Australia.
16
RESIMAC GROUP LTD
ANNUAL REPORT 2021
17
| DIRECTORS' REPORT
Funding programmes
During the year ended 30 June 2021, the following new
Residential Mortgage Backed Securities (RMBS) and
Medium Term Notes (MTNS) were issued to facilitate
assets under management growth, optimise term duration
and funding costs:
The RESIMAC Bastille Series 2020-1NC transaction
was settled on 30 July 2020 and is a domestic non-
conforming issue with a total issuance size of $1 billion;
The RESIMAC Versailles Series 2020-1 transaction was
settled on 10 September 2020 and is a New Zealand
prime and non-conforming issue with a total issuance
size of NZ$300 million;
The RESIMAC Premier Series 2020-1 transaction was
settled on 1 October 2020 and is a multi-currency prime
issue with a total issuance size of $1 billion equivalent;
The RESIMAC Premier Series 2020-3 transaction was
settled on 10 December 2020 and is a multi-currency
prime issue with a total issuance size of $1 billion
equivalent;
The RESIMAC Premier Series 2021-1 transaction was
settled on 11 March 2021 and is a multi-currency prime
issue with a total issuance of $1.5 billion equivalent; and
The RESIMAC Bastille Series 2021-1NC transaction
was settled on 29 April 2021 and is a domestic non-
conforming issue with a total issuance size of $1 billion
equivalent.
Indemnification of officers and auditors
During the financial year, the Company paid a premium
in respect of a contract insuring the Directors of the
Company, the Company Secretary and all executive
officers of the Company against a liability incurred as such
a Director, Secretary or executive officer to the extent
permitted by the Corporations Act 2001. The contract of
insurance prohibits disclosure of the nature of the liability
and the amount of the premium.
The Company has not otherwise, during or since the
financial year, except to the extent permitted by law,
indemnified or agreed to indemnify an officer or auditor of
the Company against a liability incurred.
18
RESIMAC GROUP LTD
Subsequent events
Final dividend declared
The Board of Resimac Group Ltd has declared a fully
franked final dividend of $0.04 per share. The Record
Date is 3 September 2021. The payment date will be 21
September 2021. The dividend has not been provided for in
this financial report.
Sale of White Label portfolio
On 27 July 2021 Resimac executed the sale of $0.2b of
White label loans (off balance sheet) for consideration
of $1.6m plus GST. The net present value of this loan
tranche future trail commission receivable is $1.4m, and
is recognised on the Statement of Financial Position at 30
June 2021. A gain of $0.2m on the sale will be recognised in
FY22.
Non-audit services
Details of amounts paid or payable to the auditor for non-
audit services provided during the year by the auditor are
outlined in Note 28 to the financial report.
The Directors are satisfied that the provision of non-audit
services during the year, by the auditor is compatible with
the general standard of independence for auditors imposed
by the Corporations Act 2001.
The Directors are of the opinion that the services as
disclosed in Note 28 to the financial report do not
compromise the external auditor’s independence, based
on advice received from the Audit Committee, for the
following reasons:
All non-audit services have been reviewed and
approved to ensure that they do not impact the
integrity and objectivity of the auditors; and
None of the services undermine the general principles
as set out in APES Code of Ethics for Professional
Accountants issued by the Accounting Professional and
Ethical Standards Board, including reviewing or auditing
the auditor’s own work, acting in a management or
decision making capacity for the Company, acting as
advocate for the Company or jointly sharing economic
risks and rewards.
Auditor’s independence declaration
The auditor’s independence declaration is included on page
116 of this financial report.
Rounding off amounts
Unless otherwise indicated, the Company has rounded off
amounts in this Directors’ Report and the accompanying
financial statements to the nearest thousand dollars in
accordance with ASIC Corporations Instrument 2016/191.
Total home loan
settlements
across the
Group's direct
and third party
distribution
channels were
$4.8 billion, up
3% on prior year.
| REMUNERATION REPORT
| REMUNERATION REPORT
Remuneration
report
2021
(Audited)
KMP remuneration policy (excl. Non-Executive Directors)
Remuneration objectives, strategy and principles
Remuneration and cultural activities
Summary
Key management personnel
S 1
T
2
N
E
3
T
4
N
O
5
C
6
7
8
9
10 Other remuneration information
Statutory remuneration
FY21 outcomes
Non-Executive Director remuneration
Long-term and short-term incentive plans
21
21
21
22
22
24
24
26
28
31
R
U
O
S
E
U
L
A
V
QUALITY
PASSION
RESPECT
AGILITY
PROFESSIONALISM & INTEGRITY
ACCOUNTABILITY
1. Summary
This Remuneration Report provides shareholders with an
overview of Resimac Group’s (the Group) remuneration
strategy and framework that applies to the Group’s
Directors, Key Management Personnel (KMP), Executive
Management and employees (referred to collectively as
Employees) for the year ended 30 June 2021.
Resimac’s mission is to be a customer focused
organisation, leveraging technology and data analytics
coupled with expansion of our sustainability and
Environment, Social and Governance (ESG) footprint.
This mission is facilitated by promoting a culture of
transparency, innovation and empowerment and
establishment of a remuneration framework that provides
positive outcomes for our customers, shareholders and
employees while providing fair and equitable benefits.
2. Remuneration objectives,
strategy and principles
The Group’s objective is to rewards its employees with a
level of remuneration and benefits that is commensurate
with their individual responsibilities and position within the
business.
The Board’s remuneration strategy is aligned to the
following objectives:
To attract, motivate and retain high calibre employees
to drive outcomes;
Total remuneration for KMP is achieved by a balance of
fixed and variable components;
Key Performance measures for Resimac management
(i.e. KMP and executive management) are linked to both
financial and non-financial measures, and designed
to be in the best interest of all stakeholders including
customers and shareholders;
Fixed and variable remuneration for KMP are periodically
benchmarked to ensure remuneration is in line with the
external market;
Pay parity is paramount. Fair and equitable
remuneration is applied to all employees regardless
of gender, sexual identity, age, religion, ethnicity or
disability.
3. Remuneration and cultural activities
Continuous review and assessment of our remuneration
and benefits continued throughout FY21 with a number of
initiatives being included as part of the Renumeration and
Cultural Activities plan.
These activities included:
Employee Diversity & Inclusion survey;
Pay parity reporting;
Establishment of an Employee Share Scheme offered in
March 2021 to all permanent employees with more than
6 months tenure;
Introduction of Purchased Leave for employees with
To provide fair and equitable remuneration to all
more than 6 months tenure;
employees in line with the Group’s Diversity & Inclusion
Policy;
To promote and reward behaviours within the business
that are in the interest of all stakeholders which
includes customers and shareholders;
Align effective risk management and demonstration of
appropriate behaviours, values and ethics;
To reinforce a culture of continual employee growth and
skills development;
To ensure the Group’s Governance framework operates
within and above industry best practice.
The following principles provide the basis of the
remuneration framework at Resimac:
Resimac remunerates its employees in a manner that
is market competitive whilst being acceptable to its
shareholders;
Flexible working arrangements expanded to allow for
eligible employees to work from home 2 days per week
Active encouragement of ‘Keeping in Touch Days’ for
employees on parental leave;
Expansion of existing Wellbeing Program including
wellness hours, mindfulness program, professional
online exercise classes and senior leadership health
assessments;
Workforce planning by identifying individual career
development plans, training and development
and shadowing opportunities. The purpose of the
activity is to enhance career development through
the identification of skills, interests and learning
opportunities, and to assist with succession planning.
This activity enabled risk mitigation strategies
and further employee engagement activities to
be implemented after gaining an understanding of
modernised workforce motivators.
ANNUAL REPORT 2021
21
| REMUNERATION REPORT
| REMUNERATION REPORT
4. Key management personnel
The KMP are the people who have the authority and responsibility for planning, directing, implementing and controlling the
activities of the Resimac business. The KMP are:
Position
Term as KMP
Name
CURRENT
Scott McWilliam
Jason Azzopardi
Chief Executive Officer (CEO)
Chief Financial Officer (CFO)
Andrew Marsden
General Manager - Treasury and Securitisation
Danielle Corcoran
General Manager - Governance, Change and Culture
Majid Muhammad
General Manager - Technology
FORMER
Full term
Full term
Full term
Full term
Full term
Mary Ploughman
Joint Chief Executive Officer (Joint CEO)
N/A1
1 Referenced due to Remuneration drawn in FY20, did not serve as KMP in FY21.
The Directors classified as KMP and required to be disclosed as part of this report are:
Name
CURRENT
Position
Term as KMP
Warren McLeland
Chairman, Non-Executive Director
Susan Hansen
Duncan Saville
Independent Non-Executive Director
Non-Executive Director
Wayne Spanner
Independent Non-Executive Director
Full term
Full term
Full term
Full term
Remuneration is based on the:
5.3. Long-term incentive (LTI)
role in which the person is performing (i.e.
accountability, responsibility, qualifications, skills and
experience required);
market benchmarking;
performance against set Key Performance
Indicators (KPIs); and
The LTI is a combination of an equity arrangement of
options over ordinary shares and a cash component
(pursuant to the Resimac Group Ltd Employee Share
Option and Rights Plan Rules). The grant of options
relies on the satisfaction of service and performance
conditions over a 3 year period.
achievement of performance hurdles which includes
The aim of the LTI is:
tenure.
The KMP remuneration arrangements are as follows:
5.1. Fixed remuneration
The fixed component includes base salary and
superannuation and is known as Total Fixed
Remuneration (TFR). Annually the TFR for the role
in which the KMPs and Executive Managers are
performing is reviewed to market and considered by the
Remuneration and Nomination Committee.
5.2. Short-term incentive (STI)
Each KMP and Executive Manager is eligible to receive
an annual STI. The Committee approves annual STI,
corporate and personal objectives for each KMP and
Executive Manager which comprise financial and non-
financial targets at the end of each performance period
(i.e. 1 July to 30 June). The Committee measures KMP
and Executive Managers performance against those
objectives. The amount of an STI award will depend
on whether and to what extent those objectives are
achieved. The STI assessment is undertaken in July of
each year and any award is payable in September of the
same year.
to retain key talent;
to link performance measures that align with
sustainable long-term growth;
to align long-term company performance with
shareholders expectations; and
to ensure continual regulatory and compliance
adherence.
The graphs below set out the relative mix of TFR, STI
and LTI for:
Scott McWilliam, CEO
Other KMP
37%
42%
CEO
21%
OTHER
KMP
54%
32%
14%
TFR
STI
LTI
TFR
STI
LTI
Caroline Waldron
Independent Non-Executive Director
Appointed 17 November 2020
KPIs include:
FORMER
Chum Darvall
Chairman, Independent Non-Executive Director
Michael Jefferies
Independent Non-Executive Director
N/A1
N/A1
1 Referenced due to Remuneration drawn in FY20, did not serve as KMP in FY21.
5. KMP remuneration policy (excl. Non-Executive Directors)
Resimac’s remuneration strategy for KMP and Executive Management focuses on both financial and non-financial measures and
the Board’s Remuneration & Nomination Committee assist with reviewing and recommending remuneration arrangements for
KMP and Executive Management that is both consistent and competitive with the market. The total remuneration of the KMP
and Executive Management comprise a fixed component and an at-risk variable component. The at-risk variable component is
comprised of a short-term and long-term incentive.
Strategic (brand awareness and acquisition activity);
Financial metrics including NPAT growth, cost to
income ratio and demonstrated innovative cost
initiatives;
Innovation and technology initiatives and
enhancements to allow for scale and digitalisation;
Operational efficiency and effectiveness to allow
scale;
People and culture; and
Governance through Resimac’s Risk and Compliance
frameworks which focuses on adherence to
obligations, reduction of customer complaints,
incidents and breaches.
22
RESIMAC GROUP LTD
ANNUAL REPORT 2021
23
| REMUNERATION REPORT
| REMUNERATION REPORT
6. Long-term and short-term incentive plans
6.2. Short-term incentive plan (STIP)
7.1. Overview of company performance
The table below summarises details of Resimac’s performance for key financial measures over the past four financial years.
FY21
FY20
FY19
FY18
FINANCIAL YEAR ENDED 30 JUNE
NPAT ($'000)1
107,557
55,908
47,185
25,332
Total dividends per share (cents)
Dividend payout ratio (%)
4.00
24.3
2.70
19.6
1.90
1.65
16.1
25.9
Basic earnings per share (cents)
26.37
13.75
11.75
6.37
Return on equity (ROE) (%)2
Return on assets (%)3
36.9
7.3
25.5
4.3
17.3
4.4
17.2
2.8
6.1. Long-term incentive plan (LTIP)
FY18 LTI Plan: CEO
The CEO, Scott McWilliam, was offered a LTI in FY18. The
details of the offer were:
Granted 900,000 Options pursuant to the Resimac
Group Employee Share Options and Rights Plan;
Grant Date 18 August 2017;
Exercise price of $0.55 per option;
Options vest in equal tranches of 300,000 on each
anniversary of the Grant Date:
First tranche of 300,000 vested on 1 July 2018 and
was exercised on 26 April 2021,
Second tranche of 300,000 vested on 1 July 2019
and is exercisable,
Third tranche of 300,000 vested on 1 July 2020 and
is exercisable.
Exercise period was 3 years for every tranche vesting;
and
Vesting condition was 100% tenure.
FY20 LTI Plan: KMPs and Executives
In 2019 the Board established a Long-Term Incentive
Plan (LTIP) for the CEO, KMPs and executive management
pursuant to the Resimac Group Ltd Employee Share Option
& Rights Plan Rules. The CEO, KMPs and eligible executives
were offered options over ordinary shares, and a combined
total cash component of up to $2.4m. 3,900,000 options
were granted on 15 August 2019 (900,000 allocated to the
CEO and 375,000 for each eligible Executive).
The vesting date for all options is 31 August 2022, subject
to the Group achieving:
Net Profit After Tax (NPAT) growth hurdles;
Digital transformation;
Compliance hurdles; and
Participant remaining employed with the Group until
the vesting date.
KMPs and executives participate in the annual STIP
whereby they have an opportunity to earn up to a capped
percentage of their TFR.
CEO, Scott McWilliam is eligible for a STI up to a cap of
75% of his TFR. Mr McWilliam’s performance is assessed
against predetermined KPIs by the Remuneration and
Nomination Committee at the end of each performance
period. Any STI awarded is paid in cash; 66.7% at the
end of the performance period with the remaining 33.3%
in cash deferred for 12 months subject to a look back
being undertaken by the Remuneration and Nominations
Committee.
The performance of KMPs and Executives are measured
against predetermined KPIs assessed by the CEO at the
end of each performance period and the Remuneration and
Nomination Committee are responsible for reviewing and
approving any awarded STI which will be paid 100% in cash
at the end of the performance period.
KPIs and relevant measurements will be set at the
commencement of the performance period and will be
assessed by the Remuneration and Nomination Committee
at the end of each performance period.
7. FY21 outcomes
With consideration of the uncertain economic environment
due to the impact of COVID-19 in FY21, the Remuneration
and Nominations Committee determined that KMPs
(including the CEO) would not receive an increase in fixed
remuneration for FY21 however remained eligible to
participate in the short-term incentive plan for FY21. The
long-term incentive plan granted to eligible executives
remains in place.
In July 2021, the Remuneration & Nominations Committee
resolved to recommend to the Board that the KMPs
(including the CEO) be eligible for a remuneration review,
resulting in an increased to the fixed remuneration for
KMPs for FY22.
24
RESIMAC GROUP LTD
ANNUAL REPORT 2021
25
1 NPAT excludes non-controlling interest (FY21: $249k, FY20: $99k)
2 ROE based on normalised NPAT and average shareholders’ equity per consolidated statement of financial position.
3 ROA based on statutory NPAT and total assets. As a result of the requirement under AASB 10 - Consolidated Financial Statements, the parent
company exercises control over the Special Purpose Vehicles (SPVs) and securitisation trusts, therefore significant assets have been added to the
consolidated statement of financial position without any appreciable increase in net profit.
| REMUNERATION REPORT
| REMUNERATION REPORT
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7
ANNUAL REPORT 2021
27
| REMUNERATION REPORT
| REMUNERATION REPORT
9.1.4. Board skills
A key objective for Resimac is to ensure that we have a
Board of Directors that is balanced (i.e. independence),
diverse, with a complementary mix of skills and
experience. The Board undertakes an assessment of the
skills that each Director holds biennially which is then
summarised in a skills matrix.
Although it is not expected that all Directors will have
the same skills and experience, the purpose of the
matrix is to ensure there is a balance within the board
to ensure we have diversity of thought. The matrix skills
categories include:
Strategy, planning, monitoring and policy
development
Governance
Risk and compliance
Relevant technical and industry knowledge
Stakeholder relations
Finance and audit
Commitment and contribution
Leadership
Ethics and integrity
Technology, digital and innovation
The assessment of skills ties into board succession and
selection of Directors.
9.1.5. Board evaluation reporting
The Board is committed to transparency in
determining board membership and in assessing
the performance of Directors. The Board
undertook performance reviews in 2018 and 2020.
At the conclusion of the last full evaluation in 2020
the board determined to undertake more frequent
assessments which resulted in an assessment
at the conclusion of each board meeting. By
rotation a Director is responsible for collation
of the feedback and change recommendations.
In addition, the Board carries out an evaluation
on their effectiveness at the conclusion of each
Board meeting. The purpose of this is to assess
the performance of the Board as a whole with
respect to time keeping, relevance, preparation and
outcomes.
The performance of Directors are assessed
against a range of criteria including contribution at
meetings, understanding the major risks affecting
the Group, contributing to the development of the
strategy, committing the time required to fulfill the
role and perform their responsibilities effectively,
listening and respecting the ideas of fellow
Directors and management and consistently taking
the perspective of creating shareholder value.
The Board with the assistance of the Remuneration
and Nominations Committee conducts a review
of the performance of each Director seeking re-
election at the Annual General Meeting.
9. Non-Executive Director remuneration
9.1. Overview of Non-Executive Directors’ remuneration
arrangements
9.1.1. Policy objectives
To be market competitive: aim to set Directors’
fees competitive with Non-Executive Directors in
comparable businesses with respect to product
mix, market capitalisation, geographical market and
employee size;
To ensure complementary skills: aim to ensure that the
mix of Directors at any one time is diverse and adequate
to carry out the objectives of the business; and
To safeguard independence: to exclude any
performance related element in order to preserve the
independence of the Non-Executive Directors.
9.1.2. Aggregate fees approved by shareholders
At the Annual General Meeting (AGM) of shareholders
held on 25 November 2016, the shareholders approved
the maximum aggregate fee pool per annum for non-
executives of $550,000. The Board will be proposing an
increase to the aggregate fees at the 2021 AGM.
9.1.3. Regular reviews of Directors’ fees
The Board reviews the level of Directors’ fees annually to
ensure the fees are in line with market and are suitable
for the level of skill and expertise required to carry out the
duties of Directors in a listed environment in conjunction
with holding an Australian Financial Services Licence and
several Australian Credit Licences.
The agreed fee structure is that a fee is paid to reflect the
Chairman’s responsibilities. Each Director receives a base
fee and if a Director chairs a Board committee, an additional
fee is applied. Superannuation is payable in addition to the
base fee where a Director is paid via the Resimac employee
payroll system. No fee is paid for committee membership.
The FY21 fee levels inclusive of superannuation where applicable were as follows:
Position
Maximum fee ($)
NAME
Warren McLeland
Chairman and Risk & Compliance Chair
131,400 p.a.
Susan Hansen
Independent Non-Executive Director, Audit Chair and New Zealand Chair
134,955 p.a.
Wayne Spanner
Independent Non-Executive Director and Remuneration & Nomination Chair
82,125 p.a.
Duncan Saville1
Non-Executive Director
Caroline Waldron2
Independent Non-Executive Director
70,000 p.a.
82,125 p.a.
1 Duncan Saville’s fee is exclusive of superannuation.
2 Caroline Waldron commenced on 17 November 2020.
28
RESIMAC GROUP LTD
| REMUNERATION REPORT
| REMUNERATION REPORT
9.1.6. Non-Executive Director remuneration
The fees paid or payable to the Non-Executive Directors in relation to the 2021 financial year are set out below:
10. Other remuneration information
10.1. Remuneration governance
Committee changes:
CURRENT
Warren McLelend2
FY21
FY20
Susan Hansen3
FY21
FY20
Wayne Spanner4
FY21
FY20
Duncan Saville
FY21
FY20
Caroline Waldron5
FY21
FY20
FORMER
Chum Darvall6
FY20
Michael Jefferies7
FY20
TOTAL REMUNERATION
FY21
FY20
SHORT-TERM
BENEFITS
POST-EMPLOYMENT
BENEFITS
Fees
($)
Superannuation1
($)
120,000
90,000
126,880
127,056
75,000
25,288
70,000
70,000
46,635
-
11,400
8,550
8,075
8,075
7,125
2,283
-
-
4,430
-
Total
($)
131,400
98,550
134,955
135,131
82,125
27,571
70,000
70,000
51,065
-
10.1.1. Remuneration governance and responsibility
The Resimac Board of Directors has responsibility for
setting and overseeing the Company’s remuneration
policies, practices and structure. The Board considers
recommendations made by the Remuneration and
Nomination Committee.
The remuneration framework and matters considered by
the Remuneration and Nomination Committee and the
Board include:
Review of Board size and composition (mix of skills,
qualifications, experience, independence, diversity and
other competencies);
Identification and recommendation of candidates to the
Board for nomination as members of the Board or its
Committees;
Development and implementation process for
induction and orientation of new Directors;
Review and approval of Company objectives and
appropriate KPIs relevant to the KMP annual short-term
incentive arrangement, and evaluate KMP performance
in light of those KPIs;
Review and approval of the remuneration of KMP,
Directors and senior management (including total fixed
remuneration, short-term incentives and long-term
incentives);
Approval of executive recruitment practices;
Succession planning and talent management; and
Caroline Waldron appointed 17 November 2020.
The Remuneration and Nomination Committee reviews and
makes recommendations to the Board on remuneration
governance, policies, practices and structure which
will apply to the KMP, senior management and the
Non-Executive Directors. The Committee also makes
recommendations to the Board on the Company’s
overall remuneration framework. The Remuneration and
Nomination Committee receives regular reports from
Human Resources and ensures it is abreast of all regulatory
change. The Committee meets at least 4 times per year.
10.1.3. Board changes
Caroline Waldron was appointed to the Board in
November 2020. Caroline’s appointment brings increased
independence to the Board and provides further skill with
respect to governance and technology.
Other changes to the structure of the Board and its
committees was the establishment of a Technology,
Digital and Innovation committee chaired by Caroline.
Further information on board committees is set out in the
Directors’ Report.
10.1.4. Services from remuneration consultants
The Remuneration and Nomination Committee may
request advice from independent external consultants
where appropriate. These consultants will be engaged
directly by the Remuneration and Nomination Committee.
The Company did not engage any remuneration
consultants during the year.
80,000
7,600
87,600
Diversity and inclusion in the workplace.
28,359
2,694
31,053
438,515
420,703
31,030
29,202
469,545
449,905
10.1.2. Remuneration and nomination committee
The Board has established a Remuneration and Nomination
Committee. This Committee has a formal charter and is
available on the Company’s website www.resimac.com.au.
The Remuneration and Nomination Committee members
are:
Wayne Spanner - Chair; and
Susan Hansen
Warren McLeland
1 Australian superannuation is paid where applicable. New Zealand Kiwisaver is not paid.
2 Appointed Chairman on 28 February 2020, fee reflects a prorated increase received from this date.
3 Director remuneration paid in NZD, FY21 variance due to exchange rates, no changes to base fees.
4 Appointed Independent Non-Executive Director on 28 February 2020, FY20 fee is prorated.
5 Appointed Independent Non-Executive Director on 17 November 2020.
6 Resigned as Chairman & Independent Non-Executive Director on 28 February 2020.
7 Resigned as Independent Non-Executive Director on 26 November 2019.
30
RESIMAC GROUP LTD
ANNUAL REPORT 2021
31
| REMUNERATION REPORT
| REMUNERATION REPORT
10.1.5. KMP share ownership
The table below sets out the number of shares held directly, indirectly or beneficially by the current and former KMP (including
their related parties):
NON-EXECUTIVE DIRECTORS
Warren McLeland
Susan Hansen
Wayne Spanner
Duncan Saville
Caroline Waldron
SENIOR EXECUTIVES
Scott McWilliam
Jason Azzopardi
Andrew Marsden
Danielle Corcoran
Majid Muhammad
TOTAL
Held at
1 July 2020
Net
change
Held at
30 June 2021
12,159,222
(32,884)
12,126,338
199,941
-
254,468,487
-
3,789
15,732
-
-
203,730
15,732
254,468,487
-
266,827,650
(13,363)
266,814,287
1,001,600
300,000
1,301,600
190,000
(110,000)
-
90,351
-
-
2,291
-
80,000
-
92,642
-
1,281,951
192,291
1,474,242
268,109,601
178,928
268,288,529
10.1.6. Share trading restrictions
Resimac Securities Trading Policy reflects the
Corporations Act 2001 prohibition on KMP and their
closely related parties entering into any arrangement
that would have the effect of limiting the KMP’s
exposure to risk relating to an element of their
remuneration that remains subject to restrictions on
disposal.
Resimac Directors, management team, and certain
members of their immediate family and controlled
entities are also required to obtain written consent and
clearance for security trading during trading windows
from the Chairman. All other employees must adhere
to the Securities Trading Policy and are restricted from
trading within the blackout periods.
The policy is available on the Corporate Governance
section of the Company’s website at www.resimac.com.
au. Breaches of the policy are subject to disciplinary
action, which may include termination of employment.
10.1.7. Further information on remuneration
10.1.7.1. Service agreements
Each KMP has entered into an employment contract with
the Company (Resimac Limited). These contracts have
unlimited duration however may be terminated with
relevant notice as set out below unless in the case of
serious misconduct in which the KMP may be terminated
immediately.
All KMPs are entitled to receive payment in lieu of notice
of any accrued statutory entitlement (i.e. annual and
long service leave) on cessation of their employment.
Notice period /
Termination payment
NAME
Scott McWilliam
Six months' notice (or
payment in lieu)
May be terminated
immediately for serious
misconduct
Jason Azzopardi
Three months' notice (or
payment in lieu)
May be terminated
immediately for serious
misconduct
Andrew Marsden
Three months' notice (or
payment in lieu)
May be terminated
immediately for serious
misconduct
Danielle Corcoran
Three months' notice (or
payment in lieu)
May be terminated
immediately for serious
misconduct
Majid Muhammad
One month notice (or
payment in lieu)
May be terminated
immediately for serious
misconduct
10.1.8. Related party transactions
Loans to KMP and their related parties are secured
residential mortgage loans provided in the ordinary
course of the Group’s mortgage lending business. All
loans have normal commercial terms. No amounts have
been written down or recorded as specific provisions as
the balances are considered fully collectable.
32
RESIMAC GROUP LTD
ANNUAL REPORT 2021
33
| REMUNERATION REPORT
Details regarding loans outstanding at the reporting date to KMP and their related parties, where the aggregate loan balance
exceeded $100,000 at any time during the reporting period, are outlined below.
Balance
1 July 2020
Balance
30 June 2021
Interest payable
for the year1
Highest balance
during the year
NON-EXECUTIVE DIRECTORS
($)
($)
($)
($)
Duncan Saville
9,548,343
9,322,631
334,826
9,571,874
SENIOR EXECUTIVES
Scott McWilliam
Jason Azzopardi
Danielle Corcoran
1 Interest charged on an arm’s-length basis.
1,500,000
1,925,541
1,577,079
1,620,914
379,201
370,080
43,361
45,045
11,837
1,929,059
1,623,693
379,699
13,004,623
13,239,166
435,069
13,504,325
10.1.8.1. Other transactions and balances with KMP
From time to time, Directors of the Company or its controlled entities, or their Director-related entities may obtain loans or ad
hoc services from the Group, on the same terms and conditions as those entered into by other group employees or customers.
This Directors’ report, including the remuneration report, is signed in accordance with a resolution of the Directors made
pursuant to s.298 (2) of the Corporations Act 2001.
On behalf of the Directors of Resimac Group Ltd.
Warren McLeland
Chairman
Sydney
30 August 2021
34
RESIMAC GROUP LTD
Resimac’s
mission is to be a
customer focused
organisation,
leveraging
technology and
data analytics
coupled with
expansion of our
sustainability and
Environment,
Social and
Governance (ESG)
footprint.
| CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 30 JUNE 2021
| CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 30 JUNE 2021
Financial
statements
Consolidated statement of profit or loss
for the year ended 30 June 2021
Note
FY21
$'000
FY20
$'000
PROFIT AFTER TAX
107,806
56,007
Other comprehensive income, net of income tax
Items that will not be reclassified subsequently to profit or loss:
Fair value movement on investment in BNK Banking Corporation Limited
(“BNK”) through OCI, net of tax
126
(657)
Interest income
Interest expense
Net interest income
Fee and commission income
Fee and commission expense
Other income
Employee benefits expense
Other expenses
Loan impairment expense
Profit before tax
Income tax expense
PROFIT AFTER TAX
Attributable to:
Owners of the parent
Non-controlling interest
1
2
1
2
1
2
2
2
3
Note
FY21
$'000
FY20
$'000
Items that may be reclassified subsequently to profit or loss:
Changes in fair value of cash flow hedges
467,637
459,305
Tax effect
(224,893)
(270,680)
Currency translation differences
242,744
188,625
Other comprehensive income, net of tax
(6,294)
1,888
(204)
(4,484)
522
(157)
(508)
(800)
9,856
11,340
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
103,322
55,207
(35,193)
(36,088)
Attributable to:
8,022
658
(37,489)
(35,886)
(33,188)
(26,358)
(2,676)
(22,012)
152,076
80,279
(44,270)
(24,272)
107,806
56,007
107,557
55,908
249
99
107,806
56,007
Owners of the parent
Non-controlling interest
Earnings per share
Basic
Diluted
103,072
55,112
250
95
103,322
55,207
FY21
cents per
share
FY20
cents per
share
21
21
26.37
26.21
13.75
13.72
36
RESIMAC GROUP LTD
ANNUAL REPORT 2021
37
Notes to the consolidated financial statements are included on pages 42 to 114.
| CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 30 JUNE 2021
| CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 30 JUNE 2021
Note
FY21
$'000
FY20
$'000
ASSETS
Cash and cash equivalents
Trade and other receivables
Loans and advances
Contract assets
Other financial assets
Derivative financial assets
Other assets
Plant and equipment
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LIABILITIES
4
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12
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Other liabilities
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NET ASSETS
EQUITY
Share capital
Reverse acquisition reserve
Total issued capital
Reserves
Retained earnings
Equity attributable to owners of the parent
Non-controlling interest
Notes to the consolidated financial statements are included on pages 42 to 114.
3
17
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38
RESIMAC GROUP LTD
ANNUAL REPORT 2021
39
| CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 30 JUNE 2021
| CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 30 JUNE 2021
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Payments of net loans to borrowers
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Note
FY21
$'000
FY20
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478,160
471,027
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(263,991)
49,781
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(154,961)
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Net cash used in operating activities
4
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CASH FLOWS FROM INVESTING ACTIVITIES
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Acquisition of subsidiary (RAF)
Cash acquired on acquisition of subsidiary (RAF)
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Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
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Proceeds from exercise of options
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Net cash provided by financing activities
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(8,240)
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Effects of exchange rate changes on cash balances held in foreign currencies
(49)
(308)
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4
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365,987
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40
RESIMAC GROUP LTD
ANNUAL REPORT 2021
41
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
ABOUT THIS REPORT
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
ABOUT THIS REPORT
Notes to the consolidated
financial statements
About this report
for the year ended 30 June 2021
About this report
Resimac Group Ltd (“Resimac” or “the Company”) is a
for-profit company limited by shares incorporated and
domiciled in Australia whose shares are publicly traded
on the Australian Securities Exchange. The nature of the
operations and principal activities of Resimac and entities
that it controls (referred to as “the Group”) are described in
the segment information.
The consolidated general purpose financial report of the
Group for the year ended 30 June 2021 was authorised for
issue in accordance with a resolution of the Directors on 30
August 2021. The Directors have the power to amend and
reissue the financial report.
The financial report is a general purpose financial report
which:
has been prepared in accordance with the
requirements of the Corporations Act 2001,
Australian Accounting Standards (AAS) and other
authoritative pronouncements of the Australian
Accounting Standards Board (AASB) and International
Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB);
has been prepared on a historical cost basis, and certain
financial instruments which have been measured at
fair value. The carrying values of recognised assets and
liabilities that are the hedged items in fair value hedge
relationships, which are otherwise carried at amortised
cost, are adjusted to record changes in the fair values
attributable to the risks that are being hedged;
is presented in Australian dollars with all values
rounded to the nearest thousand dollars ($’000)
unless otherwise stated, in accordance with ASIC
Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191;
presents reclassified comparative information where
required for consistency with the current year’s
presentation;
adopts all new and amended Accounting Standards and
Interpretations issued by the AASB that are relevant to
the Group and effective for reporting periods beginning
on or before 1 July 2020. Refer to Note 32 for further
details.
Key judgements and estimates
In the application of the Group’s accounting policies, the
Directors are required to make judgements, estimates
and assumptions about the carrying value of assets and
liabilities that are not readily apparent from other sources.
The estimates and associated assumptions are based on
historical experience and various other factors that are
believed to be reasonable under the circumstances, the
results of which form the basis of making judgements.
Actual results may differ from these estimates.
Judgements and estimates which are material to the
financial report are found in the following notes:
the ability to use its power over the investee to affect
its return.
Relates to
Recognition of revenue from contracts with
customers
Net present value (NPV) of future trail
commission: recognition of future
commissions receivable and payable
Recognition of Deferred Tax Assets (DTA)
and Deferred Tax Liabilities (DTL)
Impairment of other financial assets
NOTE
1
1 & 15
3
7
11
Goodwill impairment
22 & 23
Impairment of financial assets
Basis of consolidation
The consolidated financial statements comprise the
financial statements of the Group. A list of controlled
entities (subsidiaries) at year end is contained in Note 24.
The financial statements of subsidiaries are prepared for
the same reporting period as the parent company, using
consistent accounting policies. Adjustments are made to
bring into line any dissimilar accounting policies that may
exist.
Subsidiaries are consolidated from the date on which
control is obtained to the date on which control is disposed.
The Group controls an investee if and only if the Group has:
power over the investee (i.e. existing rights that give it
the current ability to direct the relevant activities of the
investee);
exposure, or rights, to variable returns from its
involvement with the investee; and
In preparing the consolidated financial statements, all
inter-company balances and transactions, income and
expenses and profits and losses resulting from intra-Group
transactions have been eliminated.
The acquisition of subsidiaries is accounted for using the
acquisition method.
Refer to Note 24 for detail on the consolidation of special
purpose vehicles.
COVID-19 impact
COVID-19 has significantly impacted equity, debt,
commodity markets and the overall global economy. The
Group has considered the impact of COVID-19 and other
market volatility in preparing its financial statements.
The Group’s process to determine the impact of COVID-19
for these financial statements is consistent with the
process disclosed and applied in its 30 June 2020 and 31
December 2020 financial statements. While the specific
areas of judgement as noted on the previous page remain
unchanged, COVID-19 resulted in the application of further
judgement within those identified areas. Expected credit
losses (Note 23) and the assessment of the impairment
of other financial assets (Note 7) required continued
judgement as a result of the impact of COVID-19.
Given the uncertainty associated with these assumptions
and estimates, actual outcomes may differ to those
forecasted which may impact the accounting estimates
included in these financial statements. Other than adjusting
events that provide evidence of conditions that existed at
the end of the reporting period, the impact of events that
arise after the reporting period will be accounted for in
future reporting periods. The impact of COVID-19 has been
discussed further in each of the related notes.
42
RESIMAC GROUP LTD
ANNUAL REPORT 2021
43
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
ABOUT THIS REPORT
Foreign currency
As at the reporting date, assets and liabilities of
overseas subsidiaries are translated into Australian
dollars at the rate of exchange at the balance sheet
date and the income statements are translated at the
average exchange rates for the year. The exchange
differences arising on the retranslation are taken
directly to a separate component of equity.
Transactions in foreign currencies are initially recorded
in the functional currency at the exchange rates
ruling at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies are
translated at the rate of exchange ruling at the balance
sheet date. Exchange differences arising from the
application of these procedures are taken to the income
statement, with the exception of differences on foreign
currency borrowings that provide a hedge against a net
investment in a foreign entity, which are taken directly to
equity until the disposal of the net investment, and then
recognised in the income statement. Tax charges and
credits attributable to exchange differences on those
borrowings are also recognised in equity.
Other accounting policies
Significant and other accounting policies that
summarise the measurement basis relevant to an
understanding of the financial statements are provided
throughout the notes to the financial statements.
The notes to the financial statements
The notes include information required to understand
the financial statements and is material and relevant
to the operations, financial position and performance
of the Group. Information is considered material and
relevant if, for example:
the amount in question is significant because of its
size or nature;
44
RESIMAC GROUP LTD
it is important for understanding the results of the
Group;
it helps to explain the impact of significant changes
in the Group’s business – for example, acquisitions
and impairment write-downs; or
it relates to an aspect of the Group’s operations that
is important to its future performance.
The notes are organised into the following sections:
Key numbers: provides a breakdown of individual line
items in the financial statements that the Directors
consider most relevant and summarises the accounting
policies, judgements and estimates relevant to
understanding these line items;
Capital: provides information about the capital
management practices of the Group and shareholder
returns for the year;
Risk: details the Group’s exposure to various financial
risks, explains how these affect the Group’s financial
position and performance, and what the Group does to
manage these risks;
Group structure: explains the Group structure and
how changes have affected the financial position and
performance of the Group;
Unrecognised items: provides information regarding
items not recognised in the financial statements but
could potentially have an impact on the Group’s financial
position and performance; and
Other: provides information on items which require
disclosure to comply with AAS and other regulatory
pronouncements, however, are not considered critical in
understanding the financial performance or position of
the Group.
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEGMENT INFORMATION
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEGMENT INFORMATION
Notes to the consolidated
financial statements
Segment information
for the year ended 30 June 2021
Segment Information
The Group has identified two reportable segments based on the nature of the products and services provided, the type of
customers for those products and services, the geographies where the business operates and the existence of discrete and
separate reporting and management teams. The internal reports of the reportable segments are regularly reviewed by the
Board and executive management team in order to allocate resources to the segment and to assess its performance.
The Group’s reportable segments under AASB 8 Operating Segments are therefore as follows:
1. Australian Lending business
2. New Zealand Lending business
Represents the distribution and lending businesses
currently captured under the Resimac, Resimac Asset
Finance and homeloans.com.au brands.
The segment contains the bulk of the Australian based
income and expense. It incorporates the new business
settled through the Australian distribution channels, the
margin net of funding costs of the On balance sheet home
loan portfolios, and the upfront and trail commission on the
White label portfolio.
The Group’s fully owned subsidiary Resimac Asset
Finance (RAF) specialises in both Australian based secured
commercial and consumer lending. Management have
assessed the impact of the RAF business on its Group
results as not material, and therefore does not represent
a reportable segment for the year ended 30 June 2021,
notwithstanding RAF is considered a separate operating
segment by Management.
Whilst the nature of the customers and products are similar
to the Australian Lending segment, given the different
jurisdiction and market conditions, management believe it
is appropriate to distinguish the result of New Zealand from
Australia.
Separating the Australian and New Zealand trading
business is supported by the operation of a dedicated
NZ board, NZ segment monthly management reporting,
separate regulatory requirements/oversight, and staff
solely accountable for the NZ business including a locally
based Head of NZ.
The following is an analysis of the Group’s revenue and results by reportable operating segments:
AUSTRALIAN LENDING
NEW ZEALAND LENDING
CONSOLIDATED
FY21
$'000
FY20
$'000
FY21
$'000
FY20
$'000
FY21
$'000
FY20
$'000
Revenue from external customers
456,616
447,982
28,899
23,321
485,515
471,303
Total segment revenue
456,616
447,982
28,899
23,321
485,515
471,303
Segment results before tax,
depreciation, amortisation,
finance costs and impairment
157,400
106,740
8,247
3,227
165,647
109,967
Depreciation and amortisation
(3,009)
(1,021)
Loan impairment
Finance costs
(2,750)
(21,653)
(7,386)
(6,283)
Segment results before income tax
144,255
77,783
(85)
74
(415)
7,821
(11)
(359)
(361)
(3,094)
(1,032)
(2,676)
(22,012)
(7,801)
(6,644)
2,496
152,076
80,279
Income tax expense1
PROFIT AFTER TAX
(44,270)
(24,272)
107,806
56,007
The following is an analysis of the Group’s assets and liabilities by reportable operating segment:
AUSTRALIAN LENDING
NEW ZEALAND LENDING
CONSOLIDATED
FY21
$'000
FY20
$'000
FY21
$'000
FY20
$'000
FY21
$'000
FY20
$'000
Segment assets
13,857,991
12,444,285
786,693
582,406
14,644,684
13,026,691
13,857,991
12,444,285
786,693
582,406
14,644,684
13,026,691
Segment liabilities
(13,547,634)
(12,201,825)
(755,564)
(555,347)
(14,303,198)
(12,757,172)
Net assets excluding tax
310,357
242,460
31,129
27,059
341,486
269,519
Tax assets2
Tax liabilities2
NET ASSETS
482
-
(20,829)
(27,833)
321,139
241,686
1 Income tax expense is disclosed on a consolidated basis, not by reportable operating segment.
2 Tax assets and liabilities are disclosed on a consolidated basis, not by reportable operating segment.
46
RESIMAC GROUP LTD
ANNUAL REPORT 2021
47
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS
Notes to the consolidated
financial statements
Key numbers
for the year ended 30 June 2021
1. Revenue
1.1. Revenue streams
The Group generates revenue primarily from net interest margin, annuity trail income on White label loans and other fee income.
Net interest income is derived from the difference between interest income on originating residential and asset finance loans,
and interest expense incurred on RMBS and warehouse facilities.
FY21
$'000
FY20
$'000
RECOGNITION & MEASUREMENT
Revenue from contracts with customers
Revenue is based on the consideration specified in a
contract with a customer. The Group recognises revenue
when it transfers control over a good or service to a
customer.
The following table provides information about the nature
and timing of the satisfaction of performance obligations
in contracts with customers, including significant payment
terms, and the related revenue recognition policies.
Interest income - loans and advances
Loans and advances are initially recognised at fair value.
Subsequent to initial recognition, the loans are measured
at amortised cost using the effective interest method
over the estimated actual (but not contractual) life of
the mortgage loan, taking into account all income and
expenditure directly attributable to the loan.
Interest income on loans and advances is recognised as it
accrues using the effective interest method. The rate at
which revenue is recognised is referred to as the effective
interest rate and is equivalent to the rate that effectively
discounts estimated future cash flows throughout the
estimated life of the net carrying value of the loan.
Acquisition costs representing mortgage insurance
premiums and upfront broker commissions related to
originating On balance sheet loans are capitalised on the
statement of financial position of the Group. These costs
are amortised to the statement of profit or loss across the
expected life of the loan in interest income.
Loans and advances in arrears or hardship at 30 June 2021
continue to accrue interest income. Consideration for
potential future credit losses on loans in arrears or hardship
is reflected in Note 23.
Interest income - bank deposits
This comprises interest income on cash-held with
Australian ADIs. Interest income is recognised as it accrues,
using the effective interest method.
Other income
Other income includes various items including but not
limited to payment received under operating leases as
income on a straight-line basis over the lease (office sub-
lease).
Revenue from contracts with customers
9,856
11,340
CLASSIFICATION & MEASUREMENT OF REVENUE
Interest income
Loans and advances
Bank deposits
Discount unwind on NPV of trail commission
Other income
Fair value gains on financial assets
Fair value gains/(losses) on interest rate swaps
Other
464,787
454,962
592
2,258
1,625
2,718
467,637
459,305
5,110
1,721
1,191
8,022
-
(1,180)
1,838
658
TOTAL REVENUE
485,515
471,303
Timing
Type of service
At a point
in time
Mortgage
origination
revenue
Nature, timing of satisfaction of performance
obligations, significant payment terms,
significant judgements used
Commission from originating White label
loans.
The performance obligations are satisfied
at the point in time the loan is settled.
Non-ongoing performance conditions are
attached to the upfront fee.
At a point
in time
Loan
management
revenue
Trail commission income on White label loans,
based on the individual monthly loan balance
outstanding each month. Trail ceases once
the loan is discharged.
At a point
in time
Lending fee
income
The contracts with the funders include
performance obligations which must be
satisfied in order to be paid trail commission
(e.g. the loan not being in arrears).
Loan fees paid by the borrower such as
application, discharge, settlement fees etc.
The performance obligation for these fees is
met at a point in time (settlement, discharge
etc) when the fee is charged to the borrower.
Revenue recognition policy under AASB 15
Once the Group has referred a successful loan
application to the lender, its performance obligations
have been met. As such, revenue is recognised at the
point in time the loan is settled. The expected value is
estimated based on historic experience.
Provisions for clawback of the upfront fee are
recognised within a period of time post-settlement and
is a variable consideration.
Revenue is recognised at the point in time the loan is
being settled and performance obligations are satisfied
according to the contracts with the funders.
The present value of the trailing commission receivable
is recognised as a contract asset and measured using
the expected value method with variable consideration
at a point in time.
Revenue is recognised when the transaction is
completed and the performance obligations are met.
48
RESIMAC GROUP LTD
ANNUAL REPORT 2021
49
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS
1.2. Disaggregation of revenue from contracts with customers
In the following table, revenue from contracts with customers is disaggregated by primary geographical market, major service
lines and timing of revenue recognition. The table also includes a reconciliation of the disaggregated revenue with the Group’s
reportable segments (See “Segment Information” on page 47).
RECOGNITION & MEASUREMENT
1.3. Assets related to contract with customers
The Group has recognised the following assets related to contracts with customers.
AUSTRALIAN LENDING
NEW ZEALAND LENDING
CONSOLIDATED
FY21
$'000
FY20
$'000
FY21
$'000
FY20
$'000
FY21
$'000
FY20
$'000
Contract assets – present value of future trail commission receivable
Current
Non-current
FY21
$'000
FY20
$'000
9,093
24,206
33,299
11,587
30,367
41,954
Primary geographical markets
Australia
New Zealand
Major service lines
Mortgage origination
Loan management
Lending fee income
8,928
10,934
-
-
8,928
10,934
2,375
2,243
4,310
-
7,307
3,627
8,928
10,934
-
928
928
-
-
928
928
928
928
-
406
406
-
-
406
406
406
406
8,928
10,934
928
406
9,856
11,340
2,375
2,243
5,238
-
7,307
4,033
9,856
11,340
9,856
11,340
9,856
11,340
Timing of revenue recognition
Service transferred at a point in time
8,928
10,934
Revenue from contracts with
customers
8,928
10,934
Interest income
Other income
External revenue as reported in
segment information
442,483
434,497
25,154
24,808
467,637
459,305
5,205
2,551
2,817
(1,893)
8,022
658
456,616
447,982
28,899
23,321
485,515
471,303
Contract assets - present value of future trail
commission receivable
The contract assets primarily relate to the Group’s rights
to receive trail commissions from lenders on White
label settled loans, over the life of the loan based on the
monthly loan balance outstanding. The contract assets
are transferred to receivables when the rights become
unconditional.
Initial recognition
Expected value of future trail commission receivable is
recognised on the origination of White label settlements.
This represents the NPV of the expected future trail
commission receivable under the origination and
management agreement, less ongoing servicing costs not
covered by transaction fees.
The initial expected value of trail commission receivable
is determined by using the discounted cash flow valuation
technique.
Subsequent measurement
Subsequent to initial recognition, the future trail
commission receivable is measured at expected value.
The carrying amounts of the trail commissions receivable
are adjusted to reflect actual and revised estimated
cash flows by recalculating the carrying amount through
computing the present value of estimated future cash
flows at the effective interest rates. The resulting
adjustment is recognised as income or expense in the
statement of comprehensive income.
A remeasurement of the underlying cash flows relating to
the trail commission receivable occurs at each reporting
date.
Key estimates and assumptions
The key estimates and assumptions underlying the
remeasurement of the estimated future cash flows include
the:
prepayment rate; and
discount rate.
FY21
FY20
Weighted average loan life (years)
3.4
3.5
Discount rate
6%
6%
Weighted average loan life
The methodology in calculating the weighted average loan
life continues usage of the commonly accepted Standard
and Poor’s definition.
Prepayment rate
In order to manage both volatility of rates over time and the
uncertainty associated with this modelling, a conservative
run-off buffer of 25% is included in the valuation by
management, and remains unchanged compared with
FY20.
Discount rate
The discount rate remains unchanged for each individual
year tranche of loans for the remainder of the loan’s life.
The discount rate is currently set at 6%, incorporating risk
free rates and estimates of the credit risk associated with
the counterparties providing the trail income, and remains
unchanged compared with FY20.
50
RESIMAC GROUP LTD
ANNUAL REPORT 2021
51
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS
2. Expenses
INTEREST
Bond and warehouse facilities
Amortisation – bond issue costs
Discount unwind on NPV of trail commission
Corporate facility
Interest on lease liabilities
FEE & COMMISSION
Mortgage origination
Loan management
Borrowing costs
RMBS financing costs
EMPLOYEE BENEFITS
Remuneration, superannuation and on-costs
Share-based payments
OTHER
Marketing
Technology expenses1 2
Audit and other professional fees1
Rent and occupancy costs
Insurance
Depreciation and amortisation
Depreciation charge of right-of-use assets
Other
Loan impairment expense
FY21
$'000
FY20
$'000
213,675
259,467
9,154
1,098
440
526
8,517
1,311
767
618
RECOGNITION & MEASUREMENT
Borrowing costs
2.1. Interest
Bond and warehouse facilities
Recognised in the profit or loss in the period in which
they are incurred. Borrowing costs include:
224,893
270,680
interest on deposits;
coupon payments on notes issued; and
other interest paid on non-securitised funding
facilities and are recognised under the effective
interest rate method. See further details under
Note 1.
Amortisation – bond issue costs
Transaction costs incurred by the Group in facilitating
the issue of debt securities by the special purpose
vehicles, are capitalised on the statement of financial
position of the parent entity as bond issue costs.
These costs are amortised to the statement of profit
or loss over the average expected life of the debt
securities using the effective interest rate method.
2.2. Fee and commission
Mortgage origination
Upfront commission payments for White label
home loans to mortgage originators, are recognised
at settlement as the services performed by the
originator are principally performed upfront.
Loan management
Includes monthly trail commission payments
to brokers for originating On balance sheet and
While label loans based on individual loan balances
outstanding.
279
434
20,495
22,898
7,144
7,275
6,730
6,026
35,193
36,088
36,697
35,305
792
581
37,489
35,886
4,805
15,722
2,399
1,294
1,801
1,199
1,895
4,073
3,277
9,669
2,611
1,395
1,369
1,032
1,920
5,085
33,188
26,358
2,676
22,012
333,439
391,024
Fees directly related to the Group’s global funding
program.
Other financing costs
Other financing costs include trustee and servicer
fees, liquidity fees, rating agency fees, and other
financing related fees.
2.3. Employee benefits
Employee benefits expense includes fixed and variable
remuneration, superannuation, and associated on-
costs.
The policy relating to share-based payments is set out
in Note 31.
2.4. Other
This mainly comprises bank fees, general
administration expenses and unrecoverable GST.
These items are expensed when incurred.
2.5. Loan impairment
Loan impairment expenses relates to the movement
in the:
specific provision;
collective provision movements for loan
impairment;
direct loan write-offs recognised during the year;
and
recoveries of previously impaired loans.
See Note 6 for detail on impairment of loans and
advances.
1 Reclassified FY20 IT consulting expenses from professional fees to technology expenses.
2 Core banking IT project costs (FY21: $7.8m; FY20: $0.2m).
52
RESIMAC GROUP LTD
ANNUAL REPORT 2021
53
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS
3. Income tax
3.1. Income tax recognised in profit or loss
CURRENT TAX
In respect of the current year
In respect of prior years
Translation loss on foreign currency assets and liabilities
DEFERRED TAX
In respect of the current year
In respect of prior years
FY21
$'000
FY20
$'000
45,156
26,754
822
12
35
22
45,990
26,811
290
(2,494)
(2,010)
(1,720)
(45)
(2,539)
3.3. Deferred tax balances
The following is the analysis of deferred tax assets (DTA) and deferred tax liabilities (DTL) presented in the consolidated
statement of financial position:
Deferred tax assets
Deferred tax liabilities
Net deferred tax assets/(liabilities)
FY21
Deferred tax assets / (liabilities)
FY21
$'000
FY20
$'000
482
(392)
90
-
(3,540)
(3,540)
Opening
balance
Current year
recognised in
profit or loss
Previously
unrecognised
in profit or loss
Recognised
directly in
equity
Recoup tax
loss against
tax liability
Acquisition
of RAF
Closing
balance
$’000
$’000
$’000
$’000
$’000
Total income tax expense recognised in the current year
44,270
24,272
Doubtful debts
The income tax expense for the year can be reconciled to the accounting profit as follows:
Profit before tax
Income tax expense calculated at 30% (FY20: 30%)
Effect of expenses that are not deductible in determining taxable profit
Effect of different tax rates of subsidiaries operating in other jurisdictions
Employee Share scheme
Other items
152,076
45,623
41
(120)
(584)
498
80,279
24,084
344
1
(54)
(93)
Plant, equipment and software
Deferred mortgage insurance
Employee entitlements
Net provision for lease make good
Other accrued expenses
Blackhole expenditure
Discount on loan
Tax losses carried forward
$’000
9,582
2
252
1,130
60
1,982
234
(1)
416
324
2,543
(89)
85
(1)
235
(178)
-
(414)
Adjustments recognised in the current year in relation to the deferred tax of prior years
Adjustments recognised in the current year in relation to the current tax of prior years
Income tax expense recognised in profit or loss
(2,010)
822
(45)
35
44,270
24,272
Lease liability
Shares
Share-based payments
Lease incentives
319
323
343
30
The tax rate used for FY21 and FY20 reconciliations above is the corporate tax rate of 30% payable by corporate entities in
Australia and 28% in New Zealand on taxable profits respectively.
Accrued income and other
(741)
73
(1,533)
174
-
444
45,458
24,282
Trail commission payable
6,317
(1,418)
3.2. Current tax assets and liabilities
CURRENT TAX
Current tax payable
FY21
$'000
FY20
$'000
(20,437)
(24,293)
(20,437)
(24,293)
Capitalised incentive commission
(12,441)
(1,042)
Loans and advances
2,476
(1,270)
Deferred bond issue cost
(2,617)
(1,172)
Derivatives
Unpaid superannuation
Trail commission receivable
1,337
50
(12,593)
(3,540)
349
3
2,597
(290)
-
806
-
-
-
(52)
(47)
1
(2)
(1)
124
842
-
(30)
367
-
-
2
-
-
-
(3)
-
-
-
-
-
(1)
-
-
(1)
-
(1,259)
1,285
-
-
-
-
1
1,888
-
-
2,010
1,910
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$’000
9,903
3,351
163
1,215
59
2,165
8
-
-
4,897
516
(1,627)
1,802
-
70
(13,483)
1,206
(3,786)
3,574
53
(9,996)
90
54
RESIMAC GROUP LTD
ANNUAL REPORT 2021
55
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS
FY20
Opening
balance
Current year
recognised in
profit or loss
Previously
unrecognised
in profit or loss
Recognised
directly in
equity
Recoup tax
loss against
tax liability
Acquisition
of RAF
Closing
balance
RECOGNITION & MEASUREMENT
Income tax expense represents the sum of the tax currently payable and deferred tax.
Deferred tax assets / (liabilities)
$’000
$’000
$’000
$’000
$’000
$’000
$’000
3.4. Current tax
Doubtful debts
4,111
5,330
Plant, equipment and software
Deferred mortgage insurance
Employee entitlements
82
358
1,069
Net provision for lease make good
60
Other accrued expenses
2,142
Blackhole expenditure
Discount on loan
Tax losses carried forward
437
(1)
103
(49)
(106)
39
-
(164)
(203)
-
77
Trail commission payable
7,091
(799)
Lease liability
Shares
Share-based payments
Lease incentives
92
41
-
30
40
-
173
-
Capitalised incentive commission
(10,513)
(1,942)
Loans and advances
4,219
(1,743)
Deferred bond issue cost
(2,736)
116
Derivatives
1,663
(170)
Unpaid superannuation
40
7
Trail commission receivable
(14,594)
2,001
Accrued income and other
1
(113)
-
-
-
(1)
-
-
-
-
-
25
7
-
13
-
1
-
-
-
-
-
-
(8)
-
-
-
-
-
-
-
-
-
145
282
157
-
13
-
3
(156)
-
-
-
-
-
-
-
-
-
-
-
149
(31)
-
23
-
4
-
-
(106)
342
-
35
-
-
-
-
-
-
-
3
-
-
-
-
-
-
-
-
-
-
-
-
-
9,582
2
252
1,130
60
1,982
234
(1)
416
6,317
319
323
343
30
(12,441)
2,476
(2,617)
1,337
50
(12,593)
(629)
(741)
Tax payable is based on taxable profit for the year. Taxable
profit differs from ‘profit before tax’ as reported in
the consolidated statement of profit or loss and other
comprehensive income due to a mix of timing and non-
assessable items. The Group's current tax is calculated
using tax rates that have been enacted or substantively
enacted by the end of the reporting period.
3.5. Deferred tax
Deferred tax is recognised on temporary differences
between the carrying amounts of assets and liabilities
in the consolidated financial statements and the
corresponding tax base used in the computation of taxable
profit.
Deferred tax liabilities (DTLs) are generally recognised for
all taxable temporary differences.
Deferred tax assets (DTAs) are generally recognised for all
deductible temporary differences to the extent that it is
probable that taxable profits will be available against which
those deductible temporary differences can be utilised.
Such DTAs and DTLs are not recognised if the temporary
difference arises from the initial recognition (other than
in a business combination) of assets and liabilities in a
transaction that affects neither the taxable profit nor the
accounting profit.
In addition, DTLs are not recognised if the temporary
difference arises from the initial recognition of goodwill.
DTLs are recognised for taxable temporary differences
associated with investments in subsidiaries and associates,
and interests in joint ventures, except where the Group is
able to control the reversal of the temporary difference and
it is probable that the temporary difference will not reverse
in the foreseeable future.
DTAs arising from deductible temporary differences
associated with such investments and interests are only
recognised to the extent that it is probable that there
will be sufficient taxable profits against which to utilise
the benefits of the temporary differences and they are
expected to reverse in the foreseeable future.
The carrying amount of DTAs is reviewed at the end of
each reporting period 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.
DTLs and DTAs are measured at the tax rates that are
expected to apply in the period in which the liability is
settled or the asset realised, based on tax rates (and tax
laws) that have been enacted or substantively enacted by
the end of the reporting period.
The measurement of DTLs and DTAs reflects the tax
consequences that would follow from the manner in which
the Group expects, at the end of the reporting period, to
recover or settle the carrying amount of its assets and
liabilities.
3.6. Current and deferred tax for the year
Current and deferred tax are recognised in the statement
of comprehensive income, except when they relate to
items that are 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.
3.7. Tax consolidation
On 1 February 2021, RAF joined the Resimac tax
consolidated group.
The assets of RAF were taken to have been acquired by
Resimac Group and the tax cost base of these assets were
reset under the Allocable Cost Amount tax consolidation
rules.
(6,305)
2,494
45
436
(106)
(104)
(3,540)
56
RESIMAC GROUP LTD
ANNUAL REPORT 2021
57
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS
3.8. Tax effect accounting by members of the tax
consolidated group
Resimac Group Ltd and its wholly-owned Australian
controlled entities have implemented the tax
consolidation legislation. The head entity Resimac
Group Ltd, and the controlled entities in the tax
consolidated group continue to account for their own
current and deferred tax amounts. The Group has
applied the group allocation approach in determining
the appropriate amount of current taxes and
deferred taxes to allocate to members of the tax
consolidated group. The current and deferred tax
amounts are measured in a systematic manner that
is consistent with the broad principles in AASB 112
Income Taxes.
In addition to its own current and deferred tax
amounts, the head entity also recognised current
tax liabilities (or assets) and the deferred tax assets
arising from unused tax losses and unused tax
credits assumed from controlled entities in the
Resimac tax consolidated group.
3.9. Nature of the tax funding agreement
Members of the Group have entered into a tax
funding agreement. Under the funding agreement
the allocation of tax within the Group is based on
a group allocation. The tax funding agreement
requires payments to/from the head entity to be
recognised via an inter-entity receivable (payable)
which is at call.
The allocation of taxes under the tax funding
agreement is recognised as an increase or decrease
in the subsidiaries’ intercompany accounts with
the tax consolidated group head company, Resimac
Group Ltd. The amounts receivable or payable under
the tax funding agreement are due upon receipt
of the funding advice from the head entity, which
is issued as soon as practical after the end of each
financial year.
KEY JUDGEMENT
The Group’s accounting for taxation requires
management’s judgement in assessing whether
deferred tax assets and certain deferred tax liabilities
are recognised on the statement of financial
position. Deferred tax assets, including those arising
from unrecouped tax losses, capital losses and
temporary differences, are recognised only where
it is considered more likely than not that they will be
recovered, which is dependent on the generation of
sufficient future taxable profits.
Assumptions about the generation of future taxable
profits depend on management’s estimates of
future cash flows. These depend on estimates of
future income, operating costs, capital expenditure,
dividends and other capital management
transactions.
Judgements and assumptions are also required
about the application of income tax legislation.
These judgements and assumptions are subject
to risk uncertainty, hence there is a possibility that
changes in circumstances will alter expectations,
which may impact the amount of deferred tax
assets and deferred tax liabilities recognised on the
statement of financial position and the amount of
other tax losses and temporary differences not yet
recognised. In such circumstances, some or all of the
carrying amounts of recognised deferred tax assets
and liabilities may require adjustment, resulting in a
corresponding credit or charge to the consolidated
statement of profit or loss and other comprehensive
income.
4. Cash and cash equivalents
Cash at bank and on hand
Cash collections account1
Restricted cash2
Reconciliation of profit after tax to the net cash flows from operating activities
Profit after tax
Non-cash items
Depreciation and amortisation
Depreciation charge of right-of-use assets
Amortisation of bond issue costs
Fair value gain on financial assets
Fair value movement on interest rate swaps
Loan impairment movement
Net loss on disposal of non-current assets
Present value of future trail commission income
Present value of future trail commission expense
Share-based payments expense
Discount on mortgage
(Increase) / decrease in assets
Trade and other receivables
Loans and advances
Other assets
Impairment allowance account
Increase / (decrease) in liabilities
Trade and other payables
Current tax payable
Interest-bearing liabilities
Provisions
Deferred tax liabilities
Note
FY21
$'000
FY20
$'000
50,622
27,757
567,687
336,730
1,500
1,500
22
619,809
365,987
107,806
56,007
2
2
2
1
2
2
1,199
1,895
9,154
(5,110)
780
2,676
944
8,655
(5,008)
792
(550)
1,032
1,920
8,517
-
3,271
22,012
-
6,694
(2,104)
581
(442)
(358)
2,147
(1,559,645)
(3,583,219)
60
23
(1,809)
(2,254)
8,646
(3,615)
(380)
19,522
(12,244)
(13,007)
212
168
(1,941)
(4,357)
Net cash flows used in operating activities
(1,447,461)
(3,483,869)
1 Cash collections account includes monies in the Special Purpose Vehicles and securitisation trusts on behalf of members in those trusts and various clearing
accounts. These funds are not available for operational use.
2 Cash held in trust as collateral.
58
RESIMAC GROUP LTD
ANNUAL REPORT 2021
59
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS
RECOGNITION & MEASUREMENT
Cash comprises cash deposits and cash equivalents that are short-term, liquid investments readily convertible to known
amounts of cash, not subject to significant risk of changes in value, and have a maturity of three months or less.
Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying
periods of between one day and three months, depending on the immediate cash requirements of the Group, and earn interest
at the respective short-term deposit rates.
5. Trade and other receivables
CURRENT
Fee and commission receivable
Prepayments
GST receivable
Deferred consideration for sale of Paywise
Sundry receivable
NON-CURRENT
Deferred consideration for sale of Paywise
Note
FY21
$'000
FY20
$'000
843
2,371
743
-
624
1,050
2,088
641
750
445
22
22
4,581
4,974
-
1,000
RECOGNITION & MEASUREMENT
All receivables are derived from the normal course of business. No maturity dates are specified as they are normally settled
within twelve months. There are no long term outstanding receivables as at the reporting date.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method, less an allowance for impairment. The credit risk of trade receivables is considered limited as they are due from
Australian financial institutions with high credit ratings.
Fee and commission receivable
This balance comprises trail commission receivables that have settlement terms of 30 days. This is initially recognised at the fair
value of the consideration receivable.
Sundry receivable
This relates to amounts received within the SPV’s on the last day of the reporting period.
6. Loans and advances
GROSS LOANS & ADVANCES
Loans and advances
Capitalised upfront commissions
Capitalised mortgage insurance costs
Deferred mortgage fee
Loans from related parties
Note
FY21
$'000
FY20
$'000
13,934,440
12,518,394
45,125
41,624
-
94
(16,240)
(17,400)
-
(2)
13,963,325
12,542,710
Less: allowance for impairment
(37,565)
(36,698)
Current
Non-current
IMPAIRMENT ALLOWANCES
Collective allowance
Specific allowance
MOVEMENT IN IMPAIRMENT ALLOWANCES
Balance at 1 July
Acquisition of RAF
Provided for during the year
Specific
Collective
Write-offs
BALANCE AT 30 JUNE
22
13,925,760
12,506,012
3,630,465
2,884,823
10,332,860
9,657,887
13,963,325
12,542,710
32,126
30,641
5,439
6,057
37,565
36,698
36,698
16,445
-
495
1,096
1,580
1,891
20,121
(1,809)
(2,254)
37,565
36,698
60
RESIMAC GROUP LTD
ANNUAL REPORT 2021
61
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS
RECOGNITION & MEASUREMENT
COVID-19
7. Other financial assets
All loans and advances are initially recognised at fair
value plus directly attributable transaction costs, and
subsequently measured at amortised cost using the
effective interest method.
Amortised cost is calculated by taking into account
any fees paid or received between parties to the
contract that are an integral part of the effective
interest rate, transactions costs, and all other
premiums or discounts on acquisition, over the
period to maturity.
Gains and losses are recognised in the statement of
comprehensive income when the loans and advances
are derecognised or impaired, as well as through the
amortisation process.
Loans past due but not impaired
Payment terms of these loans have not been
renegotiated, however no further advances are
provided until payment is made. The Group is in
direct contact with relevant borrowers to enter into
payment arrangements which will bring the account
fully up to date within an acceptable period.
For Prime Insured loans expected recoverable
amounts are adjusted to reflect lower than 100%
Lenders Mortgage Insurance (LMI) recovery
where applicable e.g. due to costs associated with
maintaining the security value within the terms of
the LMI agreement (i.e. other than fair wear and tear).
They are also reduced by the amount of higher rate
(penalty) interest and fees related to loans in arrears
which are not covered by LMI.
Loans with payments outstanding less than one
month are generally rectified by the borrower
within a short period of time, i.e. within the same
month. Loans in this category are less likely to be
representative of loans with underlying repayment
problems.
Impairment and provisioning
AASB 9 requires an Expected Credit Loss model (ECL)
at each reporting date to reflect changes in credit risk
since initial recognition of the loans and advances.
Impairment policy of loans and advances are included
in Note 22.
The impact of COVID-19 on customer serviceability
decreased during the year, however continues to
present challenges to a small amount of the Group’s
customers. Resimac’s conservative approach to
credit risk and strong funding relationships have
mostly insulated the impacts of COVID-19. Resimac
remains committed to supporting customers
and the broader community through the ongoing
challenges COVID-19 poses.
Whilst the economic rebound in FY21 in Australia
was comforting, we expect FY22 to provide further
macroeconomic challenges. Australia’s vaccine
rollout remains slow in comparison to other
countries, whilst State lockdowns and border
closures continue to drive economic headwinds.
Furthermore, international borders are expected to
remain closed for the majority of FY22 stifling the
recovery in a number of industries.
Security properties repossessed
As at 30 June 2021, the Group had exercised their
right to liquidate 16 residential properties (FY20: 41)
being the security for securitised loans. The Group
intends to sell these properties with the proceeds to
go towards clearing the outstanding balance of the
underlying loans. It is expected that the outstanding
balance will be recovered in full, unless a Stage 3
specific provision has been raised against the loan.
The transition from a COVID-19 overlay to
calculating expected future credit loss within the
ECL model for all customers is detailed in Note 23.
Listed shares – BNK Banking Corporation Limited (ASX: BBC)
Unlisted shares – Athena
Unlisted shares – Positive Group
Short-term investment
Current
Non-current
Note
FY21
$'000
FY20
$'000
22
22
22
22
4,713
7,110
3,000
260
15,083
260
14,823
15,083
1,921
2,000
3,000
260
7,181
260
6,921
7,181
Listed shares
BNK is an investment the Group intends to hold for long
term strategic purposes. As permitted by AASB 9, the
Group designated this investment at the date of initial
application as measured at fair value through other
comprehensive income. The accumulated fair value reserve
related to this investment will not be reclassified to profit
or loss. Dividends from this investment will be recognised
in profit or loss as other income when the Group’s right
to receive payment is established. At 30 June 2021, the
Group held 6,412,621 shares in BNK at a share price of
$0.735 (30 June 2020: 4,468,902 shares).
Unlisted shares
Investments that are not traded in an active market,
however classified as fair value through profit or loss
(FVTPL) are disclosed at fair value at the end of each
reporting period. The fair value testing conducted on
the unlisted shares, included assessing the impact of
COVID-19 on the current and future operating models.
The fair value assessments included comparisons against
forecasted operating performance at time of investment.
The valuation methodology for these investments is
disclosed in Note 22.
Resimac holds shares in Athena Financial Pty Ltd (“Athena”)
& Positive Finance Holdings Pty Ltd (“Positive”).
Athena recently completed a Series D capital raise at an
increased valuation compared to the Series A capital raise
Resimac invested in. Management believe it is appropriate
to increase the fair value of the 1.8% investment in Athena
to $7.1m, representing the mid-range of the pre and post
money Series D valuation.
The fair value of the 15% investment in Positive Group
remains unchanged.
Short-term investment
Term deposit with fixed or determinable payments and
fixed maturity date which the Group has the intent and
ability to hold to maturity.
ANNUAL REPORT 2021
63
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS
8. Right-of-use assets
Lease - buildings
Balance at 1 July
Additions
Acquisition of RAF
Depreciation
Foreign exchange
Balance at 30 June
Lease - buildings
Right-of-use assets at cost
Less: accumulated depreciation
TOTAL RIGHT-OF-USE ASSETS
FY21
$'000
FY20
$'000
9. Plant and equipment
Carrying amounts of:
12,279
-
Plant and equipment
256
-
14,015
191
(1,895)
(1,920)
(2)
(7)
10,638
12,279
14,510
14,256
(3,872)
(1,977)
10,638
12,279
1,919
1,919
Computer
equipment
Office
furniture
Operating
lease
equipment
Leasehold
improvement
$’000
$’000
$’000
FY21
$'000
FY20
$'000
2,192
2,192
Total
$’000
2,192
496
(17)
(751)
(1)
1,919
$’000
1,245
-
-
-
981
(217)
(264)
283
296
(3)
-
359
-
4
403
(124)
-
283
1,481
2,110
-
26
(262)
-
1,245
211
494
(622)
(1)
2,192
Balance at 1 July 2020
Additions
Disposals
Depreciation expense
Foreign exchange
BALANCE AT 30 JUNE 2021
Balance at 1 July 2019
Additions
Acquisition of RAF
Depreciation expense
Foreign exchange
BALANCE AT 30 JUNE 2020
541
176
(10)
(249)
(1)
457
590
149
25
(223)
-
541
123
24
(4)
(21)
-
122
39
58
40
(13)
(1)
123
Right-of-use assets
The Group lease offices with lease terms between 3 to 8
years. Right-of-use assets are initially measured at cost
comprise the following:
the amount of the initial measurement of lease liability;
any lease payments made at or before the
commencement date less any lease incentives
received;
any initial direct costs; and
restoration costs.
The right-of-use asset is subsequently depreciated using
the straight-line method from the commencement date
to the end of the lease term, unless the lease transfers
ownership of the underlying asset to the Group by the lease
term or the cost of the right-of-use asset reflects that
the Group will exercise a purchase option. In that case the
right-of-use asset will be depreciated over the useful life
of the underlying asset, which is determined on the same
basis as those of property and equipment. In addition, the
right-of-use asset is periodically reduced by impairment
losses, if any, and adjusted for certain remeasurements
of the lease liability. Depreciation of right-of-use asset is
recognised in the consolidated statement of profit or loss.
RECOGNITION & MEASUREMENT
Plant and equipment stated at cost less accumulated depreciation and impairment losses.
Depreciation and amortisation
Depreciation is recognised to write off the cost or valuation of assets less their residual values over their useful lives, using
the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each
reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
64
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| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS
The following useful lives are used in the calculation of depreciation:
11. Goodwill and intangible assets
Computer equipment
Office furniture
Operating lease equipment
Leasehold improvement
Years
3-4
10
3-7
Up to 40 years or life of lease,
whichever is shorter
Derecognition
Impairment
An item of plant and equipment is derecognised upon
disposal or when no future economic benefits are expected
to arise from the continued use of the asset. Any gain or
loss arising on the disposal or retirement of an item of plant
and equipment is determined as the difference between
the sale proceeds and the carrying amount of the asset and
is recognised in profit or loss.
At each reporting date, the Group reviews the carrying
amounts of plant and equipment to determine whether
there is any indication that those assets have suffered
an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated to determine
the extent of the impairment loss (if any).
10. Other assets
Reinsurance claim receivable
Other
Current
Non-current
RECOGNITION & MEASUREMENT
Reinsurance claim receivable
FY21
$'000
FY20
$'000
3,545
228
3,773
228
3,545
3,773
3,339
288
3,627
288
3,339
3,627
Prime Insurance Group Limited was purchased as part of the RHG Mortgage Corporation Limited (RHG) acquisition in 2014. Its
sole purpose is to provide insurance service and re-insurance facilities for the RHG mortgage assets and process any shortfall
claims received.
The reinsurance claim receivable is available to utilise against the reinsurance claim reserve amount in Note 16.
Goodwill
Balance at 1 July
FY21
$'000
FY20
$'000
27,430
21,766
Additional amounts recognised from business combinations occurring in the current year
-
5,664
BALANCE AT 30 JUNE
27,430
27,430
Other intangible assets
Balance at 1 July 2020
Amortisation for the year
Write-offs
BALANCE AT 30 JUNE 2021
Balance at 1 July 2019
Additions
Acquisition of RAF
Amortisation for the year
BALANCE AT 30 JUNE 2020
Software
Brand name
$'000
1,386
(397)
(879)
110
1,691
68
11
(384)
1,386
$'000
77
(51)
-
26
-
-
103
(26)
77
Total
$'000
1,463
(448)
(879)
136
1,691
68
114
(410)
1,463
11.1. Goodwill
Goodwill arising on an acquisition of a business is carried
at cost as established at the date of acquisition of the
business (less accumulated impairment losses, if any).
Impairment testing
At 30 June 2021, the Group has performed the impairment
testing, which included consideration of the impact of
COVID-19. Goodwill of $21.7m has been allocated for
impairment assessment purpose to the Australian Lending
Business segment. This segment is considered to be the
Group of cash-generating units (CGU) that are expected
to benefit from the synergies of the business combination
to which that goodwill relates. The RAF goodwill of $5.7m
is considered a separate CGU, and the associated goodwill
has been assessed for impairment testing.
A CGU to which goodwill has been allocated is tested for
impairment annually, or more frequently when there is an
indication that the unit may be impaired. If the recoverable
amount of the CGU is less than its carrying amount, the
impairment loss is allocated first to reduce the carrying
amount of any goodwill allocated to the unit and then to
the other assets of the unit pro rata based on the carrying
amount of each asset in the unit. Any impairment loss
for goodwill is recognised directly in profit or loss. An
impairment loss recognised for goodwill is not reversed in
subsequent periods.
66
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| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS
Recoverable amount of the asset
Impairment assessment
The recoverable amount is equal to the greater of:
fair value less costs to sell; and
value in use (‘VIU’).
It is not always necessary to determine both the fair
value less cost to sell and its VIU. If either of these
amounts exceed the carrying amount of the CGU, there
is no impairment of the goodwill and it is not necessary
to estimate the other amount.
As a result, the VIU methodology is considered to be
most appropriate as there is no readily available market
outside specific business sales of an equivalent sized
business to the Australian Lending business segment.
The VIU calculation requires management to estimate
future cash flows expected to arrive from the CGU and
a suitable discount rate in order to calculate present
value. For RAF, management have determined that
the fair value less cost to sell (FV) is considered most
appropriate, as the controlling interest was purchased at
arms-length in the current financial year.
Indicators of impairment
The minimum indicators of impairment have been
considered by management. These include both internal
and external sources of information such as:
significant changes (historical and future) in
the market, economic, legal or technological
environment which would have an adverse impact on
the Group;
interest rate changes which impact the discount rate
used in modelling;
evidence of a worsening financial position;
plans to discontinue operations; and
economic conditions as a result of COVID-19.
Management have assessed that there are no such
indicators which would impair the goodwill balance as at
30 June 2021.
Inputs to impairment calculations
Cash flow projections
For VIU calculations, cash flow projections are based
on corporate plans and business forecasts prepared
by management and approved by the Board. Cash flow
projections are for four years and a terminal growth rate
beyond this has been applied.
In assessing VIU, the estimated future cash flows are
discounted to their present value using a discount rate
that reflects current market assessments of the time
value of money and the risks specific to the CGU.
Furthermore, each unit or group of units to which the
goodwill is allocated shall:
represent the lowest level at which the goodwill is
monitored for internal management purposes; and
not exceed the operating segments.
The allocation of goodwill to these CGU’s is considered
appropriate.
Key judgements and assumptions
The key assumptions used for assessing the recoverable
amount of the Australian Lending Business CGU are as
below:
FY21
FY20
Growth rate for 4-year
forecast period (p.a.)
2.5%
5.3%
Discount rate (post-tax)
11.0%
11.0%
Terminal growth rate
2.0%
2.0%
The post-tax discount rate of 11% has been determined
by estimating the cost of equity that applies to the
Australian lending segment. The terminal growth rate
of 2% does not reflect the expected growth trajectory
of the Group, it is management’s conservative growth
assumption for goodwill impairment testing only.
Management conducted the following when testing the
impairment of goodwill:
revised budgets, forecasts and other assumptions
from previous impairment testing to reflect the
economic conditions at the balance date, especially
to address increased risk and uncertainty;
considered the macroeconomic impact of COVID-19
and considered outcomes where future cash flows
are reduced or operating costs increase.
In assessing the VIU for goodwill impairment assessment,
the potential impact of COVID-19 on cash flows and profit
growth have been considered under different scenarios:
1) Base case: Current management view of
macroeconomic environment:
Loan volume: Growth trajectory in line with post
COVID-19 growth
Margins: Conservative view to declining to flat margin
scenario
Costs: Growth based on CPI assumptions and
investments required to support organic growth of the
business
2) Stress scenario: Assumes severe macroeconomic
downturn resulting in a sustained downturn in Resimac
profitability of -5% CAGR over a 4 year period. The
stress scenario indicated sufficient headroom remains
for goodwill impairment purposes.
The volatility in the current financial markets due to
COVID-19 introduces challenges to impairment testing.
A second layer of stress testing was added with discount
rates ranging from 10-20% which were applied to the
base case and stress scenarios. Management tested the
stress scenario and applied a discount rate of 20%, the
recoverable amount of the CGU exceeded the recorded
carrying value for the Australian Lending Business. The full
sensitivity range is outlined as follows:
Headroom ($m)
Discount rate
Base Case
Stress Test Case
10%
694
439
11%
574
352
12%
479
282
20%
105
7
The recoverable amount of the CGU would not be less than
its carrying value in any scenario. Resimac management
do not believe there are any other assumptions based on
internal or external sources whereby the quantum of the
change will eliminate the available headroom.
For Resimac Asset Finance Group, using the Calibration
methodology within the FV concept, management believe
there are no indicators of impairment mainly due to the
following:
Resimac Asset Finance Group have outperformed initial
NPAT expectations; and
robust portfolio management and cost controls are
embedded to protect the business in the current
COVID-19 macroeconomic environment.
Impairment charge
Management believe potential impacts of COVID-19 have
been adequately considered for goodwill impairment
testing purposes at 30 June 2021. Based upon the
impairment testing performed, there is no impairment
charge for FY21 (FY20: nil).
11.2. Other intangible assets
Intangible assets with finite useful lives that are
acquired separately are carried at cost less accumulated
amortisation and accumulated impairment losses.
Amortisation is recognised on a straight-line basis over
their estimated useful lives.
The estimated useful life and amortisation method are
reviewed at the end of each reporting period, with the
effect of any changes in estimate being accounted for on a
prospective basis. Intangible assets with indefinite useful
lives that are acquired separately are carried at cost less
accumulated impairment losses.
Intellectual property
Software
Brand name
Useful life
7 years
3-5 years
2 years
ANNUAL REPORT 2021
69
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS
Recognise as an operating expense as the service is
received
13. Interest-bearing liabilities
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. As such, the
Group does not receive a software intangible asset at the
contract commencement date.
The following outlines the accounting treatment of costs
incurred in relation to SaaS arrangements:
Recognise as an operating expense over the term of the
service contract
Fee for use of application software
12. Trade and other payables
Revenue collected in advance
Collections owed to trusts
Other creditors and accruals
Commissions
Customisation costs
Configuration costs
Data conversion and migration costs
Testing costs
Training costs
Costs incurred for the development of software code that
enhances or modifies, or creates additional capability, to
existing on-premise systems and meets the definition
of and recognition criteria for an intangible asset are
recognised as intangible software assets.
Note
FY21
$'000
FY20
$'000
436
11,132
326
7,900
17,654
13,371
5,315
4,294
22
34,537
25,891
Current
34,537
25,891
RECOGNITION & MEASUREMENT
Trade creditors and other payables are generally settled
within 30 day terms and are unsecured. Trade creditors and
other payables are carried at amortised cost and represent
liabilities for goods and services provided to the Group
prior to the end of the financial year, are unpaid, and arise
when the Group becomes obliged to make future payments
in respect of the purchase of these goods and services.
Collections owed to trusts
Relates to loan repayments received from borrowers that
reside in clearing accounts not yet allocated to a trust at
balance date.
Commissions
Relates to upfront and trail commission payable to
aggregators and brokers.
Other creditors and accruals
Other creditors and accruals are unsecured payables
relating to expenses arising in the ordinary course of
business.
Debt securities on issue
Corporate debt facility
Issuance facilities
Current
Non-current
Note
FY21
$'000
FY20
$'000
13,780,348
12,421,861
-
5,000
390,303
258,755
22
14,170,651
12,685,616
3,684,369
2,917,692
10,486,282
9,767,924
14,170,651
12,685,616
RECOGNITION & MEASUREMENT
All borrowings are initially recognised at fair value of the
consideration received less direct transaction costs,
and subsequently measured at amortised cost using the
effective interest method.
Amortised cost is calculated by taking into account any
fees paid or received between parties to the contract
that are an integral part of the effective interest rate,
transaction costs, and all other premiums or discounts on
acquisition, over the period to maturity.
Gains or losses are recognised in the statement of profit or
loss when the liabilities are derecognised and also through
the amortisation process.
For further detail on the amortised cost basis of accounting
see Note 1 and 2. Details of the Group’s interest-bearing
liabilities are set out in Note 22.
13.1. Debt securities on issue
Warehouse facilities
The warehouse facilities provide funding for the initial
financing of loans and advances to customers within the
warehouse Special Purpose Vehicles (SPV). Refer to Note
24 for the consolidation of the SPVs. The security for
advances under these facilities is a combination of fixed
and floating charges over all assets of the warehouse SPVs.
If the warehouse facility is not renewed or should there
be a default under the existing terms and conditions, the
warehouse facility funder will not have a right of recourse
against the remainder of the Group. Warehouse facilities
are secured against the underlying mortgages only.
During the financial year there were no breaches to the
warehouse agreements. All warehouse facilities were
renewed, at equal or higher limits, on or before their
maturity date.
Bonds
RMBS provide duration funding for loans and advances
(securitised assets) originated by the Group. The RMBS
notes generally have a legal final maturity of 31.5 years
from issue, and a weighted average life of up to 6 years.
The RMBS SPV security is a combination of fixed and
floating charges over all assets of the RMBS SPV. Credit
losses arising from securitised assets will not result in the
bondholders having a right of recourse against the Group
(as Originator, Manager or Servicer).
During the year ended 30 June 2021, AUD $5.50 billion
and NZD $300 million of new Residential Mortgage Backed
Securities (RMBS) and Medium Term Notes (MTNS) were
issued (FY20: AUD $3.47 billion). These RMBS issuance paid
down warehouse facilities creating capacity to underwrite
new mortgages. During the financial year, there were no
breaches to the terms of the RMBS.
Collateral
Certain RMBS and warehouse SPV’s are supported by cash
collateral reserves.
70
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71
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS
13.2. Corporate debt facility
13.3. Issuance facilities
14.1. Leases
As at 30 June 2021, the Company had a $30 million
corporate facility with National Australia Bank maturing
in September 2021. The Group had an undrawn balance
of $30 million at 30 June 2021 (FY20: $25 million). In
accordance with the terms of the Group’s corporate debt
facilities, the Group is required to comply with certain
covenants. During the period and as at 30 June 2021, the
Group was compliant with these covenants.
The corporate debt facility is secured by a first-ranking
charge over the trust assets of the Group. See Note 23.7
for further detail.
The Group maintains a series of subsidiary SPV’s for the
purpose of raising financing for its RMBS-related credit
risk retention (“CRR”) obligations. CRR is a mandatory
requirement for the Group’s RMBS issuance activities in the
U.S., European, Japanese and U.K. jurisdictions where, in
general, the Group is required to hold an economic interest
of at least 5% in value of an RMBS issuance. The subsidiary
SPV’s hold a 5% vertical strip of bonds of an individual
RMBS issuance and raises secured financing from banks
and credit investors.
14. Lease liabilities
Lease liabilities included in the Statement of Financial Position
Balance at 1 July
Addition
Acquisition of RAF
Interest incurred
Payment of lease liabilities
Foreign exchange
BALANCE AT 30 JUNE
Current
Non-current
Amounts recognised in Statement of Comprehensive Income
Depreciation charge of right-of-use assets
Interest expense on lease liabilities
Amounts recognised in Statement of Cash Flows
FY21
$'000
FY20
$'000
13,622
-
541
-
526
14,803
497
618
(2,205)
(2,289)
(2)
(7)
12,482
13,622
1,520
1,566
10,962
12,056
12,482
13,622
1,895
526
1,920
618
Total cash outflows for leases
(2,205)
(2,289)
The Group assesses whether a contract is or contains
a lease, at inception of the contract. The Group
recognises a right-of-use asset and a corresponding
lease liability with respect to all lease arrangements
in which it is the lessee, except for short-term leases
(defined as leases with a lease term of 12 months or
less) and leases of low value assets. For these leases,
the Group recognises the lease payments as an
operating expense on a straight-line basis over the term
of the lease unless another systematic basis is more
representative of the time pattern in which economic
benefits from the leased assets are consumed.
The lease liability is initially measured at the present
value of the lease payments that are not paid at the
commencement date, discounted by using the rate
implicit in the lease. If the rate cannot be readily
determined, the lessee uses its incremental borrowing
rate.
Lease payments included in the measurement of the
lease liability comprise:
Fixed lease payments (including in-substance fixed
payments), less any lease incentives receivable;
Variable lease payments that depend on an index or
rate, initially measured using the index or rate at the
commencement date
The amount expected to be payable by the lessee
under residual value guarantees;
The exercise price of purchase options, if the lessee
is reasonably certain to exercise the options; and
Payments to penalties for terminating the lease, if
the lease term reflects the exercise of an option to
terminate the lease
The lease liability is presented as a separate line in the
consolidated statement of financial position.
The lease liability is subsequently measured by
increasing the carrying amount to reflect interest on
the lease liability (using the effective interest method)
and by reducing the carrying amount to reflect the lease
payments made.
The Group remeasures the lease liability and makes a
corresponding adjustment to the related right-of-use
asset whenever:
The lease term has changed or there is a significant
event or change in circumstances resulting in a
change in the assessment of exercise of a purchase
option, in which case the lease liability is remeasured
by discounting the revised lease payments using a
revised discount rate.
The lease payments change due to changes in an
index or rate or a change in expected payment under
a guaranteed residual value, in which cases the lease
liability is remeasured by discounting the revised
lease payments using an unchanged discount rate
A lease contract is modified and the lease
modification is not accounted for as a separate
lease, in which case the lease liability is remeasured
based on the lease term of the modified lease by
discounting the revised lease payments using a
revised discount rate at the effective date of the
modification.
The Group did not make any such adjustments during
the year presented.
Variable rents that do not depend on an index or rate are
not included in the measurement of the lease liability
and the right-of-use asset. The related payments are
recognised as an expense in the period in which the
event or condition that triggers those payments occurs
and are included in “Other expenses” in profit or loss
(see note 2).
The Group has applied judgement to determine the
lease term for some lease contracts in which it is a
lessee that include renewal options. The assessment
of whether the Group is reasonably certain to exercise
such options impacts the lease term, which significantly
affects the amount of lease liabilities and right-of-use
assets recognised.
72
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73
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS
15. Other financial liabilities
17. Provisions
Note
FY21
$'000
FY20
$'000
Present value of future trail commission payable
15,789
20,797
Current
Non-current
22
15,789
20,797
4,528
5,750
11,261
15,047
15,789
20,797
Employee benefits
Make good
Current
Non-current
FY21
$'000
FY20
$'000
4,760
458
5,218
4,401
817
5,218
4,116
514
4,630
3,902
728
4,630
RECOGNITION & MEASUREMENT
The Group makes trail commission payments to mortgage
originators based on monthly loan balances outstanding.
Initial Recognition
Fair value of future trail commission payable is recognised
on the origination of White label loans. This represents the
NPV of the expected future trail commission payable under
the origination and management agreement, less ongoing
servicing costs not covered by transaction fees.
Subsequent payment
Subsequent to initial recognition, the future trail
commission payable is measured at amortised cost.
The carrying amounts of the trail commissions payable are
adjusted to reflect actual and revised estimated cash flows
by recalculating the carrying amount through computing
the present value of estimated future cash flows at the
effective interest rates. The resulting adjustment is
recognised as income or expense in the statement of
comprehensive income.
A remeasurement of the underlying cash flows relating to
the trail commission payable occurs at each reporting date.
Key judgements and assumptions
Refer to Note 1 for the key estimates and judgements
underlying the remeasurement of the estimated future
cash flows.
16. Other liabilities
Reinsurance claim reserve
Non-current
FY21
$'000
FY20
$'000
3,545
3,545
3,339
3,339
3,545
3,339
The reinsurance claim reserve offsets with the reinsurance claim receivable amount in Note 10.
Balance at 1 July 2020
Additional provisions recognised
Provision utilised
BALANCE AT 30 JUNE 2021
Employee benefits
Make good
$'000
4,116
2,035
(1,391)
4,760
$'000
514
17
(73)
458
Total
$'000
4,630
2,145
(1,557)
5,218
RECOGNITION & MEASUREMENT
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
the 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 end of the reporting period, taking
into account the risks and uncertainties surrounding
the obligation. When 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).
17.1. Employee benefits
A liability is recognised for benefits accruing to employees
where the liability can be measured reliably and payment is
probable, in respect of:
wages and salaries;
annual leave;
long service leave; and
on-costs relating to the above.
Liabilities recognised in respect of employee benefits
expected to be settled within 12 months, are measured at
their nominal values using the remuneration rate expected
to apply at the time of settlement.
Liabilities recognised in respect of employee benefits which
are not expected to settle within 12 months are measured
at the present value of the estimated future cash outflows
to be made by the Group in respect of services provided by
employees up to the reporting date.
The liability for long service leave is recognised in the
provision for employee benefits. It is measured as the
present value of expected future payments for the services
provided by employees up to the reporting date.
Expected future payments are discounted using market
yields at the reporting date on high quality corporate bonds
with terms to maturity that match, as closely as possible,
the estimated future cash outflows.
17.2. Make good
Where a condition of the Group’s lease premises is to
return the property in its original condition at the end of a
lease term. The Group recognises a provision for the make
good as the expected cost of the refurbishment at the end
of the lease.
74
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75
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAPITAL
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAPITAL
Notes to the consolidated
financial statements
Capital
for the year ended 30 June 2021
18. Capital management
The Group’s capital management objectives
The Group manages its capital to ensure that entities
in the Group will be able to continue as a going concern
while maximising the return to stakeholders through the
optimisation of the debt and equity balance.
The Group operates a warehouse to securitisation
funding model for its lending business and as such makes
decisions on the amount of capital invested in the notes or
warehouses based on alternate sources of funding and the
expected return on amounts invested and with regard to
the company's cost of capital.
EQUITY
Issued capital
Reserves
Retained earnings
The Group manages its capital through various means, including:
adjusting the amount of ordinary dividends paid to shareholders;
maintaining a dividend reinvestment plan;
raising or repaying capital; and
reinvesting profits.
The capital structure of the Group consists of net debt
(borrowings as detailed in Note 13 offset by cash and bank
balances) and equity of the Group (comprising issued
capital, reserves, retained earnings and non-controlling
interests as detailed in Note 20).
The Group is not subject to any externally imposed capital
requirements.
The Board is responsible for monitoring and approving the
capital management framework within which management
operates. The purpose of the framework is to prudently
manage capital whilst optimising the debt and equity
structure.
Note
FY21
$'000
FY20
$'000
20
20
20
120,134
120,354
(18,126)
(7,556)
219,131
128,694
321,139
241,492
19. Dividends
Declared and paid during the period (fully-franked at 30 percent)
Final dividend for FY20: $0.018 (FY19: $0.010)
Special dividend for FY20: Nil (FY19: $0.005)
FY21
$'000
FY20
$'000
7,334
4,058
-
2,029
Interim dividend for FY21: $0.024 (Interim FY20: $0.012)
9,786
4,879
Proposed and unrecognised as a liability (fully-franked at 30 percent)
Final dividend for FY21: $0.04 (FY20: $0.018)
Franking credit balance
Franking credits available for future years at 30% adjusted for the
payment of income tax and dividends receivable or payable
Impact on the franking account of dividends proposed before the financial
report was issued but not recognised as a distribution to equity holders
during the period.
20. Issued capital and reserves
Issued capital
Treasury shares
Share capital
Reverse acquisition reserve1
17,120
10,966
16,336
16,336
7,334
7,334
57,198
19,170
(7,001)
(3,143)
FY21
$'000
FY20
$'000
183,011
181,895
(1,336)
-
181,675
181,895
(61,541)
(61,541)
120,134
120,354
Issued capital as at 30 June 2021 was $183,011,197 (408,404,461 ordinary shares).
During the period, the Company issued:
567,646 shares for $951,191 in respect of the Resimac Dividend Reinvestment Plan (DRP), and
387,478 shares for $165,000 to provide for LTI share options being exercised and Employee Share Plan
1 As a result of reverse acquisition accounting in the Resimac/Homeloans merger, an account was created as a component of equity. This account called ‘Reverse
acquisition reserve’ is similar in nature to share capital. The Reverse acquisition reserve is not available for distribution.
76
RESIMAC GROUP LTD
ANNUAL REPORT 2021
77
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAPITAL
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAPITAL
20.1. Issued capital
20.3. Reserves (net of income tax) and retained earnings
Balance at 30 June 2020 and 1 July 2020
407,449
181,895
Adoption of AASB 16, net of income tax
(339)
-
-
-
Balance at 1 July 2019
Issue of shares under a dividend reinvestment plan
Exercise of options – proceeds received
No. of shares -
thousands
$'000
405,790
180,548
1,059
600
1,017
330
Issue of shares under the DRP:
FY20 Dividend on 25 September 2020
HY21 Dividend on 31 March 2021
Exercise of options – proceeds received
Employee shares
Balance at 30 June 2021
312
256
300
87
398
553
165
-
408,404
183,011
Fully paid ordinary shares, which have no par value, carry one vote per share and carry a right to dividends.
20.2. Treasury shares
Treasury shares held in Resimac Group Ltd by Resimac EST Pty Ltd as Trustee for the Resimac Group Limited Employee Share
Trust, are for the benefit of eligible employees of the Resimac Group Employee Share Option and Rights Plan. Shares issued to
employees are recognised on a first-in-first-out basis.
Balance at 1 July 2019
Subscription of shares by the Trust (average price: $0.85 per share)
Allocation of shares under LTI#1
Balance at 30 June 2020
Subscription of shares by the Trust (average price: $2.13 per share)
Allocation of shares under LTI#1
Acquisition of shares (average price: $2.47 per share)
Balance at 30 June 2021
-
600
-
510
(600)
(510)
-
-
300
(300)
540
540
639
(639)
1,336
1,336
RESERVES
Cash flow
hedge
reserve
Foreign
currency
translation
reserve
Retained
earnings
Fair value
reserve
Share-
based
payment
reserve
Other
reserve
Non-
controlling
interest
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Balance at 1 July 2019
84,314
(5,876)
656
(2,065)
Adjusted balance as at 1 July 2019
83,975
(5,876)
656
(2,065)
Profit after tax
55,908
Acquisition of non-controlling interest
Changes in fair value of cash flow hedges,
net of tax
Currency translation differences
Fair value movement on investment
through OCI, net of tax
-
-
-
-
Equity dividends
(10,966)
Share-based payments
Option to acquire shares of subsidiary
Reallocation
-
-
(223)
-
-
365
-
-
-
-
-
-
-
-
-
(504)
-
-
-
-
-
-
-
-
-
(657)
-
-
-
223
88
-
88
-
-
-
-
-
-
402
-
-
-
-
-
-
-
-
-
-
-
-
(188)
-
-
-
-
99
99
-
(4)
-
-
-
-
-
BALANCE AT 30 JUNE 2020
128,694
(5,511)
152
(2,499)
490
(188)
194
(7,982)
(444)
Profit after tax
107,557
Acquisition of non-controlling interest
without a change in control
Option to acquire shares of subsidiary
Changes in fair value of cash flow hedges,
net of tax
Currency translation differences
Fair value movement on investment
through OCI, net of tax
-
-
-
-
-
Equity dividends
Share-based payments
(17,120)
-
-
-
-
(4,406)
-
-
-
-
-
(2)
-
-
(205)
-
-
-
-
-
-
-
-
126
-
-
-
-
-
-
-
-
-
1,711
-
188
-
-
-
-
-
BALANCE AT 30 JUNE 2021
219,131
(9,917)
(55)
(2,373)
2,201
(7,982)
194
249
-
-
1
-
-
-
-
No. of shares -
thousands
$'000
Balance at 1 July 2020
128,694
(5,511)
152
(2,499)
490
(188)
78
RESIMAC GROUP LTD
ANNUAL REPORT 2021
79
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAPITAL
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAPITAL
20.3. Nature and purpose of reserves
Cash flow hedge reserve
The cash flow hedging reserve represents the cumulative
effective portion of gains or losses arising on changes in
fair value of hedging instruments entered into for cash flow
hedges. The cumulative gain or loss arising on changes in
fair value of the hedging instruments will be reclassified
to profit or loss only when the hedged transaction affects
the profit or loss, or included as a basis adjustment to the
non-financial hedged item, consistent with the Group’s
accounting policy.
results and net assets of the Group's New Zealand
operations from its functional currency to the Group's
presentation currency are recognised directly in other
comprehensive income and accumulated in the foreign
currency translation reserve.
Share-based payment reserve
The share-based payments reserve is used to recognise
the value of equity-settled share-based payments provided
to employees, including KMP, as part of their remuneration.
Refer to Note 31 for further details of these plans.
Foreign currency translation reserve
20.4. Retained earnings
Exchange differences relating to the translation of the
See Note 19 in respect of payment of dividends.
21. Earnings per share
FY21
$'000
FY20
$'000
Profit attributable to ordinary equity holders of the parent ($'000)
107,557
55,908
WANOS1 used in the calculation of basic EPS (shares, thousands)
407,824
406,536
Dilutive effect of share options
2,592
1,100
WANOS1 used in the calculation of diluted EPS (shares, thousands)
410,416
407,636
EARNINGS PER SHARE
Basic (cents per share)
Diluted (cents per share)
26.37
26.21
13.75
13.72
1 Weighted average number of shares
80
RESIMAC GROUP LTD
Calculation of earnings per share
21.1. Basic earnings per share
From 28 April 2021 to 30 June 2021 (71,610,645)
Basic earnings per share is calculated as net profit
attributable to the ordinary equity holders of the parent,
adjusted to exclude any costs of servicing equity (other
than dividends), divided by the WANOS adjusted for any
bonus element.
21.2. Diluted earnings per share
Diluted earnings per share is calculated by:
dividing the net profit attributable to ordinary equity
holders of the parent; by the
WANOS outstanding during the year; plus
the WANOS that would be issued on the conversion of
all the dilutive potential ordinary options or rights into
ordinary shares.
21.3. Calculation of WANOS
Twelve months to 30 June 2021
The number of Resimac Group shares issued:
From 1 July 2020 to 24 September 2020 (96,001,762)
The number of Resimac ordinary shares on issue of
407,449,337 multiplied by the ratio of days outstanding
(86/365); plus
From 25 September 2020 to 30 March 2021
(208,907,555)
The number of Resimac shares on issue
(407,449,337) at 24 September 2020; plus
Additional shares issued on 25 September 2020
under the DRP (311,398)
multiplied by the ratio of days outstanding (187/365).
The number of Resimac shares on issue
(408,104,461) at 28 April 2021; plus
Additional shares issued on 28 April 2021 under the
LTI (300,000)
multiplied by the ratio of days outstanding (64/365).
Twelve months to 30 June 2020
The number of Resimac Group shares issued:
From 1 July 2019 to 29 September 2019 (100,893,180)
The number of Resimac ordinary shares on issue of
405,790,153 multiplied by the ratio of days outstanding
(91/366); plus
From 30 September 2019 to 26 March 2020
(198,845,864)
The number of Resimac shares on issue
(405,790,153) at 29 September 2019; plus
Additional shares issued on 30 September 2019
under the DRP (788,540)
multiplied by the ratio of days outstanding (179/366).
From 27 March 2020 to 11 May 2020 (51,134,070)
The number of Resimac shares on issue
(406,578,693) at 26 March 2020; plus
Additional shares issued on 27 March 2020 under the
DRP (270,644)
multiplied by the ratio of days outstanding (46/366).
From 12 May 2020 to 30 June 2020 (55,662,478)
The number of Resimac shares on issue
(406,849,337) at 11 May 2020; plus
From 31 March 2021 to 11 April 2021 (13,414,257)
Additional shares issued on 12 May 2020 under the
LTI (600,000)
multiplied by the ratio of days outstanding (50/366).
The number of Resimac shares on issue
(407,760,735) at 30 March 2021; plus
Additional shares issued on 31 March 2021 under the
DRP (256,248)
multiplied by the ratio of days outstanding (12/365).
From 12 April 2021 to 27 April 2021 (17,889,511)
The number of Resimac shares on issue
(408,016,983) at 11 April 2021; plus
Additional shares issued on 12 April 2021 under the
Employee Share Plan (87,478)
multiplied by the ratio of days outstanding (16/365).
ANNUAL REPORT 2021
81
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
RISK
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
RISK
Notes to the consolidated
financial statements
Risk
for the year ended 30 June 2021
22. Financial assets and financial liabilities
The Group holds the following financial instruments:
Basis of measurement
Note
FY21
$'000
FY20
$'000
Financial assets
Cash and cash equivalents
Amortised cost
Trade and other receivables
Loans and advances
Short-term investment
Investment securities – BNK
Investment securities – Athena
Investment securities – Positive Group
Derivative financial assets
Financial liabilities
Trade and other payables
Interest-bearing liabilities
Amortised cost
Amortised cost
Amortised cost
FVOCI-equity
instrument
FVTPL
FVTPL
FVTPL
Amortised cost
Amortised cost
Present value of trail commission payable
Amortised cost
Derivative financial liabilities
FVTPL
4
5
6
7
7
7
7
23
12
13
15
23
619,809
365,987
4,581
5,974
13,925,760
12,506,012
260
4,713
7,110
3,000
2,256
260
1,921
2,000
3,000
52,592
14,567,489
12,937,746
34,537
25,891
14,170,651
12,685,616
15,789
20,797
60,976
3,277
14,281,953
12,735,581
22.1. Fair values measurements and valuation processes
22.1.1. Fair value hierarchy
The different levels have been defined as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The following assets and liabilities are measured at fair value by the Group for financial reporting purposes:
Fair value
hierarchy
Valuation technique(s)
and key input(s)
FY21
$'000
FY20
$'000
Financial assets
Listed shares – BNK Banking
Corporation Limited (ASX: BBC)
Unlisted shares - Athena
Level 1
Level 3
Unlisted shares – Positive Group
Level 3
Most recent traded price and other
available market information
Acquisition value, financial performance
since acquisition. Subsequent capital
raise since acquisition adjusted for
changes in market and macroeconomic
factors
Acquisition value and strategic value from
synergies
Level 2
Level 2
Discounted cash flow. Forward interest
rates, contract interest rates
Discounted cash flow. Forward interest
rates, contract interest rates
4,713
7,110
1,921
2,000
3,000
3,000
2,256
3,330
-
49,262
Level 2
Level 2
Discounted cash flow. Forward interest
rates, contract interest rates
Discounted cash flow. Forward interest
rates, contract interest rates
472
3,277
60,504
-
In the year to 30 June 2021 there has been no change in the fair value hierarchy or the valuation techniques applied to any of the
balances above.
For further information on the use of derivatives refer to Note 23 Financial risk management.
22.1.2. Fair value of financial assets and liabilities that are not measured at fair value (but fair value disclosures are required)
With the exception of the future trail commission payable that is initially recognised at fair value and subsequently carried
at amortised cost, management consider that the carrying amounts of financial assets and liabilities recognised in the
consolidated financial statements approximate their fair values.
Interest rate swaps
Cross currency swaps
Financial liabilities
Interest rate swaps
Cross currency swaps
82
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ANNUAL REPORT 2021
83
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
RISK
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
RISK
22.2. Financial assets and liabilities
22.2.1. Recognition and initial measurement
Loans and advances and receivables (including trade and
other receivables, bank balances and cash) are non-
derivative financial assets with fixed or determinable
payments that are not quoted in an active market which
are initially recognised when they are originated. All
other financial assets and financial liabilities are initially
recognised when the Group becomes a party to the
contractual provisions of the instrument.
A financial asset (unless it is a trade receivable without
a significant financing component) or finance liability
is initially measured at fair value plus, for an item not at
FVTPL, transaction costs that are directly attributable
to its acquisition or issue. A trade receivable without a
significant financing component is initially measured at
the transaction price.
22.2.2. Classification and subsequent measurement
22.2.2.1. Financial assets
On initial recognition, a financial asset is classified as
measured at:
amortised cost
fair value through other comprehensive income
(FVOCI) – debt instrument
fair value through other comprehensive income
(FVOCI) – equity instrument
fair value through profit or loss (FVTPL)
Financial assets are not reclassified subsequent to their
initial recognition unless the Group changes its business
model for managing financial assets, in which case all
affected financial assets are reclassified on the first day
of the first reporting period following the change in the
business model.
A financial asset is measured at amortised cost if it
meets both of the following conditions and is not
designated as at FVTPL:
it is held within a business model whose objective is to
hold assets to collect contractual cash flows; and
its contractual terms give rise on specified dates to
cash flows that are solely payments of principal and
interest on the principal amount outstanding.
A debt investment is measured at FVOCI if it meets both
of the following conditions and is not designated as at
FVTPL:
it is held within a business model whose objective is
achieved by both collecting contractual cash flows
and selling financial assets; and
its contractual terms give rise on specified dates to
cash flows that are solely payments of principal and
interest on the principal amount outstanding.
On initial recognition of an equity investment that is
not held for trading, the Group may irrevocably elect to
present subsequent changes in the investment’s fair
value in OCI. This election is made on an investment-by-
investment basis.
All financial assets not classified as measured at
amortised cost or FVOCI as described above are
measured as FVTPL. This includes all derivative financial
assets and investment securities. On initial recognition,
the Group may irrevocably designate a financial asset
that otherwise meets the requirements to be measured
at amortised cost or at FVOCI as at FVTPL if doing so
eliminates or subsequently reduces an accounting
mismatch that would otherwise arise.
22.2.2.2. Financial assets - Business model
assessment
The Group determines the business model at the
level that reflects how groups of financial assets are
managed. In determining the business model, all
relevant evidence that is available at date of assessment
is used including:
how the performance of the financial assets held
within that business model are evaluated and
reported to the Group’s KMP
the risks that affect the performance of the business
model (and the financial assets held within that
business model) and, in particular, the way in which
those risks are managed; and
how managers of the business are compensated (for
example, whether compensation is based on the fair
value of the assets managed or on the contractual
cash flows collected).
Financial assets that are held for trading or are managed
and whose performance is evaluated on a fair value basis
are measured at FVTPL.
22.2.2.3. Financial assets - Assessment whether
contractual cash flows are solely payments of principal
and interest
For the purpose of this assessment, ‘principal’ is
defined as the fair value of the financial asset on initial
recognition. ‘Interest’ is defined as consideration for the
time value of money and for the credit risk associated
with the principal amount outstanding during a
particular period of time and for other basic lending risks
and costs (e.g. liquidity risk and administrative costs), as
well as a profit margin.
In assessing whether the contractual cash flows are
solely payments of principal and interest, the Group
considers the contractual terms of the instrument. This
includes assessing whether the financial asset contains
a contractual term that could change the timing or
amounts of contractual cash flows such that it would
not meet this condition. In making this assessment, the
Group considers:
contingent events that would change the amount or
timing of cash flows;
terms that may adjust the contractual coupon rate,
including variable-rate features;
prepayment and extension features; and
terms that limit the Group’s claim to cash flows from
specified assets (e.g. non-recourse features).
A prepayment feature is consistent with the solely
payments of principal and interest criterion if the
prepayment amount substantially represents unpaid
amounts of principal and interest on the principal
amount outstanding, which may include reasonable
additional compensation for early termination of the
contract. Additionally, for a financial asset acquired at
a discount or premium to its contractual par amount,
a feature that permits or requires prepayment at an
amount that substantially represents the contractual
par amount plus accrued (but unpaid) contractual
interest (which may also include reasonable additional
compensation for early termination) is treated as
consistent with this criterion if the fair value of the
prepayment feature is insignificant at initial recognition.
22.2.2.4. Financial Assets - Subsequent measurement
and gains and losses
Financial
assets at
FVTPL
Financial
assets at
amortised
cost
Debt
investments
at FVOCI
Equity
investments
at FVOCI
These assets are subsequently
measured at fair value. Net gains
and losses, including any interest or
dividend income, are recognised in
profit or loss. However, see Note 23.3
for derivatives designated as hedging
instruments.
These assets are subsequently
measured at amortised cost using
the effective interest method.
The amortised cost is reduced by
impairment loss. Interest income,
foreign exchange gains and losses
and impairment are recognised in
profit or loss. Any gain or loss on
derecognition is recognised in profit
or loss.
These assets are subsequently
measured at fair value. Interest
income is calculated using the
effective interest method. Other
net gains and losses are recognised
in OCI. On derecognition, gains
and losses accumulated in OCI are
reclassified to profit or loss.
These assets are subsequently
measured at fair value. Dividends
are recognised as income in profit
or loss unless the dividend clearly
represents a recovery of part of the
cost of the investment. Other net
gains and losses are recognised in
OCI and are never reclassified to
profit or loss.
84
RESIMAC GROUP LTD
ANNUAL REPORT 2021
85
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
RISK
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
RISK
22.2.2.5. Financial liabilities – Classification, subsequent
measurement and gains and losses
Financial liabilities are classified as either financial liabilities
at FVPTL or other financial liabilities.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL where the
liability is either held for trading or designated at fair value
through profit or loss.
A financial liability is held for trading if:
it has been incurred principally for the purpose of
repurchasing it in the near term; or
on initial recognition it is a part of a portfolio of
identified financial instruments that the Group manages
together and has a recent actual pattern of short-term
profit-taking; or
it is a derivative that is not designated and effective as a
hedging instrument.
A financial liability other than a financial liability held
for trading may be designated as at FVTPL upon initial
recognition if:
such designation eliminates or significantly reduces a
measurement or recognition inconsistency that would
otherwise arise; or
the financial liability forms part of a group of financial
assets or financial liabilities or both, which is managed
and its performance evaluated on a fair value basis,
in accordance with the Group’s documented risk
management or investment strategy, and information
about the grouping is provided internally on that basis;
or
it forms part of a contract containing one or more
embedded derivatives, and AASB 9 permits the entire
combined contract to be designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value with
any gains or losses arising on remeasurement recognised
in profit or loss. The net gain or loss recognised in profit or
loss incorporates any interest paid on the financial liability
and is included in the ‘other gains and losses' line item.
Other financial liabilities
Other financial liabilities (including borrowings and trade
and other payables) are subsequently measured at
amortised cost using the effective interest method.
The effective interest method is a method of calculating
the amortised cost of a financial liability and of allocating
interest expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated
future cash payments (including all fees and points paid or
received that form an integral part of the effective interest
rate, transaction costs and other premiums or discounts)
through the expected life of the financial liability, or (where
appropriate) a shorter period, to the net carrying amount
on initial recognition.
22.2.3. Derecognition
22.2.3.1. Financial assets
The Group derecognises a financial asset when the
contractual rights to the cash flows from the financial asset
expire, or it transfers the rights to receive the contractual
cash flows in a transaction in which substantively all of
the risks and rewards of ownership of the financial asset
are transferred or in which the Group neither transfers
nor retains substantially all of the risks and rewards of
ownership and it does not retain control of the financial
asset.
The Group enters into transactions whereby it transfers
assets recognised in its statement of financial position, but
retains either all or substantially all of the risks and rewards
of the transferred assets. In these cases, the transferred
assets are not derecognised.
22.2.3.2. Financial liabilities
The Group derecognises a financial liability when its
contractual obligations are discharged or cancelled, or
expire. The Group also derecognises a financial liability
when its terms are modified and the cash flows of the
modified liability are substantially different, in which case
a new financial liability based on the modified terms is
recognised at fair value.
On derecognition of a financial liability, the difference
between the carrying amount extinguished and the
consideration paid (including any non-cash assets
transferred or liabilities assumed) is recognised in profit or
loss.
22.2.4. Impairment of financial assets
The Group recognises loss allowances for expected credit
loss (ECL) on:
Financial assets measured at amortised cost
Contract assets
Lease receivable
The Group measures loss allowances for a financial
instrument at an amount equal to the lifetime ECL for
stage 2 or stage 3 assets if the credit risk on that financial
instrument has increased significantly since recognition,
or if the financial instrument is a purchased or originated
credit-impaired financial asset.
If the credit risk on a financial instrument has not increased
significantly since initial recognition (except for a purchased
or originated credit-impaired financial asset), the Group
measures the loss allowance for that financial instrument
at an amount equal to a 12 month ECL for stage 1 assets.
The Group applies a simplified approach for measuring the
loss allowance at an amount equal to lifetime ECL for trade
receivables, contract assets and lease receivable in certain
circumstances.
Significant increase in credit risk
An asset moves to stage 2 when its credit risk has
increased significantly since initial recognition. A significant
increase in credit risk is identified before the exposure has
defaulted and at the latest when exposure becomes 30
days past due. When determining whether the credit risk
of a financial asset has increased significantly since the
initial recognition and when estimating ECLs, the Group
considers reasonable and supportable information that
is relevant and available without undue cost effort. This
includes both quantitative and qualitative information
and analysis, based on the Group’s historical experience
and informed credit assessment and including forward-
looking information. As part of the forward-looking
assessment, the Group has considered factors including
macro-economic forecast and outlook, GDP growth,
unemployment rates and interest rates.
Credit-impaired financial assets
The movement between stage 2 and 3 will be based
on whether financial assets are credit-impaired at the
reporting date. 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 assets have
occurred.
Evidence that a financial asset is credit-impaired includes
the following observable data:
significant financial difficulty of the borrower; or
breach of contract, such us a default or delinquency in
interest or principal payments; or
becoming apparent that the borrower will enter
bankruptcy or financial re-organisation; or
past experience of collecting payments; or
an increase in the number of delayed payments in the
portfolio past the average credit period; or
observable changes in national or local economic
conditions that correlate with default on receivables.
Definition of default
shortfalls (i.e. the difference between the cash flows due
to the entity in accordance with the contract and the cash
flows that the Group expects to receive). The key inputs
used in measuring ECL include:
(a) probability of default: the PD is the likelihood of default,
applied to each underlying exposure
(b) loss given default: the LGD is the magnitude of the
expected credit loss in the event of default, taking into
consideration the mitigating effect of collateral assets
and time value of money
(c) exposure at default: the EAD represents the estimated
exposure in the event of a default
The ECL is determined with reference to the following
stages:
Stage 1: 12 month ECL
At initial recognition, for financial assets without a
significant increase in credit risk (SICR), or for financial
assets where an increase in credit risk is considered to
be low, ECL is determined based on PD over the next 12
months, adjusted for forward looking estimates (FLE).
Stage 2: Lifetime ECL not credit impaired
Where there has been a SICR, the ECL is determined
with reference to the financial asset’s lifetime PD and the
lifetime losses associated with that PD, adjusted for FLE.
The Group assesses whether there has been a SICR since
initial recognition based on qualitative, quantitative, and
reasonable and supportable FLE that includes management
judgement. Use of more alternative criteria could result in
significant changes to the timing and amount of ECL to be
recognised. Lifetime ECL is generally determined based on
the average maturity of the financial asset.
Stage 3: Lifetime ECL credit impaired
Financial assets are classified as stage 3 where they are
determined to be credit impaired, which generally matches
the Group’s definition of default which includes exposures
that are at least 90 days past due, and where the obligor is
unlikely to pay without recourse against available collateral.
The ECL for credit impaired financial assets is generally
measured as the difference between the discounted
contractual and discounted expected cash flows from the
individual exposure. For credit impaired exposure that are
modelled collectively, ECL is measured as the product of
the lifetime PD, LGD, and EAD, adjusted for FLE. Interest
income is determined with reference to the financial asset’s
amortised cost carrying value, being the financial asset’s
net carrying value after the ECL provision.
The Group considers that default has occurred at 90 days
past due.
Stage 3: Impaired Assets
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses.
Credit losses are measured as the present value of all cash
Outside of the ECL, where assets are more than 90 days
past due and a shortfall between the loan balance and the
underlying security has been identified, a specific provision
is raised for the shortfall.
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23. Financial risk management
23.1. Financial risk management objectives
23.2. Derivative financial instruments
The Group's Corporate Treasury function:
implements and executes treasury and funding
strategy;
co-ordinates access to domestic and international
financial markets; and
monitors and manages the financial risks relating to the
operations of the Group through internal monitoring
tools which analyse exposures by degree and
magnitude of risks.
The Group seeks to minimise the effects of currency and
interest rate risks by using derivative financial instruments
to hedge risk exposures.
The use of financial derivatives is governed by the Group's
Interest Rate Risk Management Policy approved by the
Board of Directors, which provide written principles on:
foreign exchange risk;
interest rate risk;
credit risk;
These risks include:
the use of financial derivatives and non-derivative
market risk (including currency risk and interest rate
financial instruments; and
risk);
economic risk;
interest rate risk;
credit risk; and
liquidity risk.
the investment of excess liquidity.
Compliance with policies and exposure limits is reviewed by
the Board on a continuous basis. The Group does not enter
into or trade financial instruments, including derivative
financial instruments, for speculative or proprietary
purposes.
Risk
Exposure arising from
Measurement
Management
Market risk -
currency
Recognised financial assets and liabilities not
denominated in Australian dollars. Foreign
currency denominated profit or losses
Cash flow
forecasting
Sensitivity analysis
Cross currency interest rate swaps
Cash flow management and
matching
Market risk -
interest rate
Mismatch in interest rates between
assets and liabilities
Sensitivity analysis
Interest rate swaps
Market risk -
equity
investment
valuation
Investments in equity securities
Sensitivity analysis
Equity investments not held for
trading
Credit risk
Mortgage portfolio and funding SPV-level
exposures, counterparty risk
Credit risk analysis
Rating agency
criteria and
analyses
Diversification, adaptive capital
structures, strong collections/
portfolio management, rating
agency provisions in transactions
documents
Liquidity risk
Borrowings, derivative financial liabilities
Rolling cash flow
forecasts
Availability of committed credit
lines and borrowing facilities,
securitisation, capital relief
transactions, structuring terms of
obligations
RECOGNITION & MEASUREMENT
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 recognised in profit or loss
immediately unless the derivative is designated and
effective as a hedging instrument, in which event the
timing of the recognition in profit or loss depends on the
nature of the hedge relationship.
23.3. Hedge accounting
The Group designates certain hedging instruments,
which includes derivatives in respect of foreign currency
risk, as cash flow hedges.
At the inception of the hedge relationship the Group
documents the relationship between the hedging
instrument and hedged item, along with 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 of 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.
Note 22.1 sets out the details of the fair values of the
derivative instruments used for hedging purposes.
23.3.1. 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 hedging reserve. The gain or loss relating to the
ineffective portion is recognised immediately in profit
or loss and is included in the other expenses or other
income line item.
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.
Hedge accounting is discontinued when:
the Group revokes the hedging relationship;
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 and 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.
23.3.2. Derivative financial assets and liabilities
The carrying values are as follows:
FY21
$'000
FY20
$'000
Derivative financial assets
Cross currency swaps
-
49,262
Interest rate swaps
2,256
3,330
2,256
52,592
Derivative financial liabilities
Cross currency swaps
60,504
-
Interest rate swaps
472
3,277
60,976
3,277
The Group seeks to minimise the effects of foreign
currency and some interest rate exposures by using
derivative instruments to hedge these positions.
Derivatives are initially recognised at fair value at
the date derivative contracts are entered into, and
subsequently measured at their fair value at each
reporting period.
During the period, currency movements drove changes
in valuation of the Groups’ cross currency swaps
hedged to our US RMBS bonds. These movements in
our derivative balances are matched with our USD bond
liabilities, with the profit/(loss) on swaps recognised in
Other Comprehensive Income.
23.4. Market risk
Market risk is the risk of an adverse impact on the
Group’s earnings resulting from changes in market
factors, such as interest rates and foreign exchange
rates.
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The following table details the notional principal
amounts outstanding at the end of the reporting period:
FY21
$'000
FY20
$'000
Notional principal value
Less than 1 year
6,935
-
1 to 2 years
2 to 5 years
152,722
24,280
694,900
503,503
854,557
527,783
The interest rate swaps settle and reset on a monthly
basis. The floating rate on the interest rate swaps is the
Bank Bill Swap Rate (BBSW) local interbank rate. The
Group will settle the difference between the fixed and
floating interest rate on a net basis.
23.4.4. Corporate interest - Sensitivity analysis
The remainder of the Group’s loan portfolio and
liabilities are held in corporate entities. The impact of a
potential +/- 10bps change in interest rates on interest
revenue and borrowing costs on balances held by the
Group for the year is set out in the table below:
FY21
$'000
FY20
$'000
10bps +/-
Impact on corporate interest revenue
Interest rate + 10bps
620
366
Interest rate - 10bps
(620)
(366)
Impact on corporate funding costs1
Interest rate + 10bps
Interest rate - 10bps
-
-
(5)
5
1 As at 30 June 2021, the corporate debt facility balance is nil.
23.4.1. Interest rate risk
Interest rate risk is the risk that the Group will
experience deterioration in its financial position as
interest rates change over time.
Interest rate exposure is driven by interest rate
mismatches between assets and liabilities (i.e.
borrowing at floating interest rates and lending with
fixed interest rates). Interest rate risk is managed by
entering into interest rate swaps subject to the Group’s
hedging and derivatives policies.
23.4.2. Interest rate risk - Sensitivity analysis
The majority of the Group’s liabilities are issued through
warehouse facilities and term securitisations in special
purpose and bankruptcy-remote entities. Under such
arrangements, the repayment profile of the bonds is
matched to the repayments collected from the loan
assets.
The Group has calculated the impact of a potential
increase or decrease in borrowing costs in limited
recourse entities for the year in the event of a +/- 10bps
change in interest rates as shown in the table below:
FY21
$'000
FY20
$'000
10bps +/-
Borrowing costs
14,158
12,669
23.4.3. Interest rate swap contracts
Under interest rate swap contracts, the Group agrees
to exchange the difference between fixed and floating
rate interest amounts calculated on agreed notional
principal amounts. Such contracts enable the Group
to mitigate the risk of changing interest rates on the
cash flow exposures on the issued variable rate debt.
The fair value of interest rate swaps at the end of the
reporting period is determined by discounting the future
cash flows using the curves at the end of the reporting
period and the credit risk inherent in the contract and is
disclosed below.
FY21
$'000
FY20
$'000
Fair value asset
Derivative financial assets
2,256
3,330
Fair value liability
Derivative financial liabilities
472
3,277
The following table details the notional principal amounts
outstanding at the end of the reporting period:
FY21
$'000
FY20
$'000
Notional principal value
2 to 5 years
2,021,479
1,462,711
2,021,479
1,462,711
23.6. Credit risk management
The Group’s primary credit risk exposures relate to its
lending activities in its principally-funded mortgage
portfolio. The Group’s primary lending activities are
concentrated in the Australian and New Zealand residential
mortgage market. The underlying credit risk in the Group’s
lending activities is commensurate with a geographically-
diverse residential mortgage portfolio.
The Board of Directors is responsible for determining the
Group’s overall appetite for credit risk and monitoring the
quality and performance of the mortgage portfolio. The
credit risk management operational framework and policy
is governed and managed by the Credit Committee.
The Group does not have any direct counterparty credit
exposure arising from its asset financing and securitisation
activities. Counterparty risk is governed, and mitigated
where required, by ratings agency criteria within the
bankruptcy-remote funding SPVs and trusts including
exposures to banks, lender’s mortgage insurance providers
and derivative counterparties.
23.6.1. Credit risk in lending
The Group has established lending policies and procedures
to manage the credit risk inherent in lending. The extent
of credit risk in the Group’s lending activities is managed
within its two origination and funding programmes, being
‘Prime’ and ‘Specialist Lending’. The Group maintains
separate credit policies for each programme and regularly
reviews and amends policies in line with economic,
operating and funding conditions.
23.4.5. Equity price risk
Equity investments in listed and unlisted shares are held for
strategic rather than trading purposes. The Group does not
actively trade these investments.
23.4.6. Equity investment valuation risk - sensitivity
analysis
If equity prices had been 10% higher / lower:
Net profit for the year ended 30 June 2021 would
increase / decrease by $1,011,000 as a result of the
changes in fair value of the investments in unlisted
shares (FY20: $500,000); and
Other comprehensive income would increase /
decrease by $471,000 as a result of the changes in fair
value of investments in listed shares (FY20: $192,000).
23.5. Foreign currency risk
23.5.1. Accounting translation
As at reporting date the Group held cash assets
denominated in New Zealand dollars (NZD).
Fluctuations in the NZD are not expected to have material
impact on the consolidated statement of profit or loss or
the consolidated statement of comprehensive income and
equity of the Group.
23.5.2. Market risk - foreign exchange on monetary items
The Group obtains funding denominated in foreign
currencies, consequently, exposures to exchange rate
fluctuations arise. These currencies include USD. The
Group manages foreign currency risk through the use of
currency derivatives.
The carrying amounts of the Group’s foreign currency
denominated assets and liabilities are as follows:
Assets
USD liabilities
(disclosed in AUD)
Liabilities
USD liabilities
(disclosed in AUD)
JPY liabilities
(disclosed in AUD)
FY21
$'000
FY20
$'000
-
49,262
45,738
14,766
-
-
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23.6.2. Exposure to credit risk
23.6.5. Credit risk management
The Group’s approach to credit management utilises a
credit risk framework to ensure that the following principals
are adhered to:
independence from risk originators;
recognition of the different risks in the various Group
businesses;
credit exposures are systematically controlled and
monitored;
credit exposures are regularly reviewed in accordance
with current up-to-date credit procedures; and
credit exposures include such exposures arising from
derivative transactions.
Each of the divisions are responsible for managing credit
risks that arise in their own areas with oversight from a
centralised credit risk management team. It is the policy of
the Group to monitor the policies of all divisions to ensure
that the risk of the Group is monitored.
Loans and advances consist of a large number of
customers, spread across diverse demographic and
geographical areas. Ongoing credit evaluation is performed
on the financial condition of loans and advances and
accounts receivable.
There is no significant concentration of risk to any single
counterparty.
The credit risk on derivative financial instruments is limited
because the counterparties are banks with high credit-
ratings assigned by international credit-rating agencies.
23.6.3. Maximum exposure to credit risk
The carrying amount of the Group’s financial assets
represents the maximum credit exposure. The Group’s
exposure to credit risk at the reporting date was:
Cash and cash equivalents
Trade and other receivables
Contract assets
Short-term investment
Derivative financial assets
Loans and advances at amortised cost – balances subject to credit risk
Note
FY21
$'000
FY20
$'000
4
5
1
7
23
6
619,809
365,987
4,581
5,974
33,299
41,954
260
260
2,256
52,592
660,205
466,767
13,934,440
12,518,394
14,594,645
12,985,161
As at 30 June 2021, 100% of the Group’s cash and cash
equivalents are held with banks or financial institutions with
a credit rating of AA- or better (FY20: 100%).
23.6.3.1 Residential mortgage borrowers
The Group manages credit risk by obtaining security over
residential mortgage property for each loan.
In monitoring the credit risk, loans are grouped according
to their credit characteristics using credit risk classification
systems. This includes the use of the Loan to Value Ratio
(LVR) to assess its exposure to credit risk from loans
originated through the securitisation programme.
For White label loans, some agreements with lenders
contain provisions requiring the Group to pay instalments
due from borrowers until securities are enforced or
an insurance claim has been paid and to purchase the
mortgage from the lender if the Group is in default. The
Group’s risk in this area is mitigated by insurance policies
and a rigorous credit assessment process.
23.6.4. Financial guarantees
The Group is exposed to credit risk in relation to financial
guarantees given to banks. The Group's maximum
exposure in this respect is the maximum amount the Group
could have to pay if the guarantees are called on. Refer to
Note 26 for the guarantees in respect of the leases.
The following table summarises the movement in expected credit loss for loans and advances for the reporting period:
Maximum exposure to credit risk
$'000
$'000
$'000
$'000
Stage 1
Collective
Stage 2
Collective
Stage 3
Collective
Stage 3
Impaired
Total
$'000
Balance as at 30 June 2021
Loans and advances
Mortgage lending
13,453,244
431,457
36,947
12,194
13,933,842
Commercial lending
598
-
-
-
598
TOTAL
13,453,842
431,457
36,947
12,194
13,934,440
Balance as at 30 June 2020
Loans and advances
Mortgage lending
12,433,112
45,248
22,826
16,571
12,517,757
Commercial lending
637
-
-
-
637
TOTAL
12,433,749
45,248
22,826
16,571
12,518,394
Expected credit loss
Balance as at 30 June 2021
Loans and advances
Mortgage lending
13,799
14,016
4,310
5,439
37,564
Commercial lending
1
-
-
-
1
TOTAL
13,800
14,016
4,310
5,439
37,565
Balance as at 30 June 2020
Loans and advances
Mortgage lending
25,864
2,441
2,335
6,057
36,697
Commercial lending
1
-
-
-
1
TOTAL
25,865
2,441
2,335
6,057
36,698
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The majority of the Group’s exposure to loans and advances is limited, as they are legally owned by special purpose vehicles
(trusts) with limited recourse to the Group. Losses on mortgage loans in these entities are therefore limited to the Group’s
investment in notes in these trusts and the residual income rights of trusts. The trust structures are designed such that losses
are covered by the income generated from the assets within the trust before the investment notes are impaired. As part of the
structure the investment notes in the trust holds first right over the loans and advances within the vehicles.
Collateral held
The value of the collateral held as security for loans in stage 2 and stage 3 collective at 30 June 2021 is $689.6 million (30 June
2020: $94.5 million).
The value of the collateral held as security for loans in stage 3 specific loans at 30 June 2021 is $8.1 million (30 June 2020: $12.0
million)
Loans are secured by the Group by having the property titles registered as a financial interest that provide the Group first
priority over any proceeds becoming available from the sale of the property. For Prime insured loan, LMI policies exist to cover
100% of the principal amount at default plus interest.
LOANS & ADVANCES AT AMORTISED COST1
0 days and <30 days
30 days and less than 60 days
60 days and less than 90 days
90 days and less than 180 days
180 days and less than 270 days
270 days and less than 365 days
365 and over
TOTAL
FY21
$'000
FY20
$'000
13,458,212
12,438,670
395,691
36,677
23,188
6,278
2,753
35,313
10,038
14,487
4,746
2,145
11,641
12,995
13,934,440
12,518,394
23.6.6. Credit risk concentrations
An analysis of the Group’s credit risk concentrations on loans and advances is provided in the following table. The amounts in the
table represent gross carrying amounts:
23.6.8. Movement in credit exposures
Stage 1
Collective
Stage 2
Collective
Stage 3
Collective
Stage 3
Impaired
LOANS & ADVANCES AT AMORTISED COST
Concentration by region
New South Wales
Victoria
Queensland
Western Australia
South Australia
Tasmania
Northern Territory
New Zealand
TOTAL
FY21
$'000
FY20
$'000
5,132,426
4,673,307
3,693,253
3,584,565
2,471,432
2,064,167
1,012,975
918,803
752,651
609,674
100,442
90,275
56,811
48,984
714,450
528,619
13,934,440
12,518,394
Total
$'000
6,057
36,698
Provision for impairment losses
$'000
$'000
$'000
$'000
Balance as at 30 June 2020
Net transfer between stages
Net re-measurement of opening
balance net of transfers
Impact of transfers between stages
and re-measurement
25,865
523
2,441
(49)
2,335
(1,025)
(14,038)
11,301
3,286
551
967
(13,515)
11,252
2,261
1,518
Net Financial Assets Originated
2,790
365
Movements in existing individually
assessed provisions and write-backs
Write-offs
Discharges/Other
Balance as at 30 June 2021
-
-
(1,340)
13,800
-
-
(42)
14,016
39
-
-
(325)
4,310
-
(301)
(1,809)
(26)
5,439
-
1,516
1,516
3,194
(301)
(1,809)
(1,733)
37,565
23.6.7. Analysis of loans and advances by past due status
Under the Group’s monitoring procedures, a significant increase in credit risk is identified before the exposure has defaulted and
at the latest when exposure becomes 30 days past due. The table below provides an analysis of the gross carrying amount of
loans and advances by past due status that are over 30 days past due.
Credit exposure
Balance as at 1 July 2020
12,433,749
45,248
22,826
16,571
12,518,394
Net transfers between stages and
financial assets originated
1,020,093
386,209
14,121
(2,568)
1,417,855
Write-offs
-
-
-
(1,809)
(1,809)
Balance as at 30 June 2021
13,453,842
431,457
36,947
12,194
13,934,440
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Stage 1
Collective
Stage 2
Collective
Stage 3
Collective
Stage 3
Impaired
Total
7,016
1,143
(563)
580
2,789
200
-
-
15,882
(602)
25,865
1,750
(958)
1,342
384
112
-
-
-
475
(280)
2,441
2,103
(699)
1,465
766
44
-
-
-
23
(601)
2,335
5,576
514
1,470
1,984
-
295
384
(2,254)
-
72
6,057
16,445
-
3,714
3,714
2,945
495
384
(2,254)
16,380
(1,411)
36,698
Provision for impairment losses
Balance as at 30 July 2019
Net transfer between stages
Net re-measurement of opening
balance net of transfers
Impact of transfers between stages
and re-measurement
Net Financial Assets Originated
Acquisition of RAF
Movements in existing individually
assessed provisions and write-backs
Write-offs
COVID-19 overlay
Discharges/Other
Balance as at 30 June 2020
Credit exposure
Balance as at 1 July 2019
10,238,294
50,406
24,334
23,986
10,337,020
Net transfers between stages and
financial assets originated
2,195,455
(5,158)
(1,508)
(5,161)
2,183,628
Write-offs
-
-
-
(2,254)
(2,254)
Balance as at 30 June 2020
12,433,749
45,248
22,826
16,571
12,518,394
COVID-19
The Group discloses expected future credit losses using
an expected credit loss (ECL) model, in line with AASB
9 requirements. The ECL model includes an overlay to
reflect potential impacts on the portfolio from adverse
macroeconomic scenarios (i.e. rising unemployment, house
price decline, low wage growth). The macroeconomic
overlay considers 3 key macroeconomic assumptions:
Australian GDP
Property prices
Unemployment rate
Several alternate macroeconomic scenarios were
considered and applied at an individual loan, dynamic
underlying security value. Where loans (in the stressed
scenario) were uninsured and had LVRs of >100%, we
calculated the shortfall required for these loans. This
was then used to calculate the macro-economic overlay.
Hardship accounts were removed for the purpose of
calculating the Macroeconomic overlay. The underlying
security value bands used in the macroeconomic overlay
are in line with the Core Logic Hedonic Index.
At 30 June 2020, the ECL model did not include expected
delinquencies from customers on COVID-19 hardship
payment moratoriums. Regulators provided guidance for
lenders that customers in COVID hardship moratoriums
were not to be considered in arrears during the
moratorium.
Consequently at 30 June 2020, the group provisioned
a COVID-19 overlay given the ECL model did not
fully capture credit risk of loans in hardship payment
moratoriums. The overlay at 30 June 2020 was $16.4m and
was included as part of the Collective Provision at 30 June
2020.
At 30 June 2021, all COVID hardship payment moratorium
periods have completed. For the small subset of customers
who entered a COVID hardship moratorium and continue
to require assistance post completion of the moratorium,
these customers are now treated under the standard
hardship procedures, and therefore are treated as in
arrears where payments are not up to date. The process
of customers previously under COVID-19 hardship
payment moratoriums transferring to standard hardship
arrangements removes the requirement for a COVID-19
overlay. All customers expected future credit loss are
included in the ECL model Collective Provision at 30 June
2021.
Management remain cautious of ongoing pockets of
financial stress in the economy. Lockdowns and border
closures continue to provide material headwinds to the
economy, with the expectation of this continuing in FY22.
Furthermore, whilst the majority of customers have
rolled off hardship moratoriums, management believe
it appropriate to flag these customers as potential for
increased credit risk in the short term.
Per the tables below, whilst the trend of customers
requiring assistance has decreased during the year,
pockets of financial stress remain. At 30 June 2020,
Resimac had 3,195 customers in active COVID-19
hardship payment moratoriums, of which 355 customers
subsequently fell into arrears. At 30 June 2021, Resimac
continue to provide support to 217 customers under
standard hardship arrangements.
Payment moratoriums at 30 June 2020 in standard hardship arrangements at 30 June 2021
Prime
Specialist
NZ & Legacy
Total
% of Portfolio
PRODUCT TYPE #
30 June 2020
30 June 2021
PRODUCT TYPE $'000
30 June 2020
30 June 2021
LOAN PURPOSE #
30 June 2020
30 June 2021
LOAN PURPOSE $'000
30 June 2020
30 June 2021
1,300
94
1,395
95
500
28
3,195
217
664,754
812,708
168,685
1,646,147
33,385
38,847
6,419
78,651
10.0
0.59
13.36
0.57
Owner occupier
Investor
Total
% of Portfolio
2,128
156
1,091,867
56,143
1,067
61
554,280
22,508
3,195
217
1,646,147
78,651
10.0
0.59
13.36
0.57
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Customers previously in COVID-19 hardship payment moratoriums in standard hardship at 30 June 2021
Prime LMI
Prime No LMI
Specialist LMI
Specialist No LMI
Total
LVR BANDING
<60%
60% - 70%
70% - 80%
80% - 90%
90% - 95%
95% - 100%
100% +
TOTAL
14
2
3
12
2
4
2
39
17
17
10
7
-
2
2
55
19
2
2
2
1
-
3
29
31
16
24
12
4
4
3
94
81
37
39
33
7
10
10
217
23.7. Liquidity risk management
Ultimate responsibility for liquidity risk management rests
with the Board of Directors, which has established an
appropriate liquidity risk management framework for the
management of the Group's short, medium and long-term
funding and liquidity management requirements.
The Group’s funding platform currently comprises a mix of:
warehouse facilities;
term securitisation;
a secured corporate debt facility; and
cash.
The majority of the Group’s liabilities represent bonds
issued by special purpose trusts through warehouse
facilities and term securitisation transactions. Under such
arrangements, bondholder recourse is limited to the assets
of the relevant special purpose trust to which the liability
relates and the repayment profile of the bonds is matched
to the repayments collected from the loan assets. Given
the limited recourse nature of these borrowings, $13.78
billion at 30 June 2021 (FY20: $12.42 billion), they have not
all been included in the table below.
The Group manages liquidity risk by maintaining adequate
reserves, banking facilities and reserve borrowing facilities,
by continuously monitoring forecast and actual cash flows,
and by matching the maturity profiles of financial assets
and liabilities.
Note 23.7.2 below sets out details of additional undrawn
facilities that the Group has at its disposal to further reduce
liquidity risk.
23.7.1. Liquidity risk tables
The following table shows the Group's remaining expected
maturity for its non-derivative financial liabilities with
agreed repayment periods. The tables have been drawn up
based on the undiscounted cash flows of financial liabilities
based on the earliest date on which the Group can be
required to pay and hence will not necessarily reconcile
with the amounts disclosed in the statement of financial
position.
The tables include both interest and principal cash flows.
To the extent that interest flows are floating rate, the
undiscounted amount is derived from interest rate curves
at the end of the reporting period. The contractual maturity
is based on the earliest date on which the Group may be
required to pay.
FINANCIAL LIABILITIES
FY21
Non-derivatives
<6 months
or on
demand
6-12
months
$'000
$'000
1-3
years
$'000
3-5
years
$'000
>5
years
$'000
Total cash
flows
Carrying
amount
$'000
$'000
Trade and other payables
34,537
-
-
-
-
34,537
34,537
Interest-bearing liabilities
Issuance facilities
12,203
20,164
96,734
261,202
-
390,303
390,303
Present value of future trail
commissions payable
2,462
2,066
5,462
2,810
2,989
15,789
15,789
Lease liabilities
1,052
1,049
4,247
4,382
3,677
14,407
12,482
50,254
23,279
106,443
268,394
6,666
455,036
453,111
Derivatives
60,976
-
-
-
-
60,976
60,976
111,230
23,279
106,443
268,394
6,666
516,012
514,087
FY20
Non-derivatives
Trade and other payables
25,891
Interest-bearing liabilities
Corporate debt facility
Issuance facilities
Present value of future trail
commissions payable
-
-
-
-
5,000
-
-
-
258,755
-
-
-
25,891
25,891
5,028
5,000
258,755
258,755
28
-
3,115
2,635
7,053
3,671
4,323
20,797
20,797
Lease liabilities
1,137
1,087
3,946
4,089
5,975
16,234
13,622
30,171
3,722
15,999
266,515
10,298
326,705
324,065
Derivatives
3,277
-
-
-
-
3,277
3,277
33,448
3,722
15,999
266,515
10,298
329,982
327,342
23.7.2. Financing facilities
Note
FY21
$'000
FY20
$'000
Secured corporate debt facility which may be extended by mutual agreement
Amount used
Amount unused
-
30,000
30,000
5,000
25,000
30,000
98
RESIMAC GROUP LTD
ANNUAL REPORT 2021
99
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
GROUP STRUCTURE
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
GROUP STRUCTURE
Notes to the consolidated
financial statements
Group structure
for the year ended 30 June 2021
24. Subsidiaries
Details of the Group’s subsidiaries at the end of the reporting period are as follows.
NAME OF SUBSIDIARY
Controlled companies
PROPORTION OF OWNERSHIP
INTEREST HELD AND VOTING
POWER HELD BY THE GROUP
Principal activity
Place of
incorporation
and operation
FY21
%
FY20
%
Access Network Management Pty Ltd
Auspack Financial Services Pty Ltd
Mortgage manager
Mortgage broker
Australia
Australia
Barnes Mortgage Management Pty Ltd
Mortgage originator and manager
Australia
Clarence Street Finance Pty Ltd
Holder of commission agreements
Australia
Clarence Street Funding No.1 Pty Ltd
Special purpose vehicle
Clarence Street Funding No.2 Pty Ltd
Participation unit holder
Clarence Street Funding No.3 Pty Ltd
Special purpose vehicle
Clarence Street Funding No.4 Pty Ltd
Special purpose vehicle
Clarence Street Funding No.6 Pty Ltd
Special purpose vehicle
Clarence Street Funding No.7 Pty Ltd
Special purpose vehicle
Clarence Street Funding No.8 Pty Ltd
Special purpose vehicle
Clarence Street Funding No.9 Pty Ltd
Special purpose vehicle
Clarence Street Funding No.10 Pty Ltd1
Special purpose vehicle
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
FAI First Mortgage Pty Ltd
Trust manager and servicer
Australia
Homeloans.com.au Pty Ltd2
Housing Financial Services Pty Ltd
Mortgage lender
Mortgage originator
Australia
Australia
1 Incorporated 28 July 2020.
2 Homeloans Pty Ltd changed its company name to Homeloans.com.au Pty Ltd on 15 August 2020.
100
100
100
100
100
100
100
100
99.9
99.9
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
NAME OF SUBSIDIARY (cont'd)
Principal activity
Controlled companies
PROPORTION OF OWNERSHIP
INTEREST HELD AND VOTING
POWER HELD BY THE GROUP
Place of
incorporation
and operation
FY21
%
FY20
%
Independent Mortgage Corporation Pty Ltd
Mortgage broker
Resimac Asset Finance Investments Pty Limited3
Holding company
Resimac Asset Finance Holdings Pty Limited4
Holding company
Resimac Asset Finance Pty Limited5
Asset finance originator and
manager
Evergreen Finance Company Pty Limited
Lender of record
Australia
Australia
Australia
Australia
Australia
RAF Structured Finance Pty Limited6
Consumer and commercial lending
Australia
IASF (NZ) Limited7
SF Mortgage Pty Ltd
Consumer and commercial lending
New Zealand
Lender of record
Australia
Parnell Road Funding No.1 Limited
Special purpose vehicle
New Zealand
Parnell Road Funding No.2 Limited
Special purpose vehicle
New Zealand
Prime Insurance Group Limited
RESIMAC Capital Markets Pty Ltd
LMI captive insurer
Trust manager
Bermuda
Australia
RESIMAC Financial Services Limited
NZ Holding company
New Zealand
RESIMAC Financial Securities Limited
NZ Trust manager and servicer
New Zealand
RESIMAC Home Loans Ltd
NZ Lender of record and trustee
New Zealand
RESIMAC Limited
Non-bank lender
Australia
RESIMAC NZ Home Loans Ltd
NZ Holding company
New Zealand
RESIMAC Premier Warehouse No.1 Pty LTD8
Unit Holder
RHG Mortgage Corporation Ltd8
RHG Mortgage Securities Pty Ltd (RMS)8
RHG Home Loan Pty Ltd9
The Servicing Company Pty Ltd
RESIMAC EST PTY LTD
0508 Home Loans Ltd
0800 Home Loans Ltd
Access Home Loans Pty Ltd
Lender of record
Mortgage trustee
Mortgage Originator
Trust servicer
Initial Trustee
Dormant
Dormant
Dormant
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
New Zealand
Australia
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
-
-
-
100
100
100
100
100
100
100
60
60
60
60
60
60
60
100
100
100
100
100
100
100
100
100
-
-
-
-
100
100
100
100
100
3 International Acceptance Investment Pty Limited changed its company name to Resimac Asset Finance Investments Pty Limited on 6 February 2021.
4 International Acceptance Holdings Pty Limited changed its company name to Resimac Asset Finance Holdings Pty Limited on 6 February 2021.
5 International Acceptance Pty Limited changed its company name to Resimac Asset Finance Pty Limited on 5 February 2021.
6 IA Structured Finance Pty Limited changed its company name to RAF Structured Finance Pty Limited on 6 February 2021.
7 Deregistered 31 January 2021
8 Ownership interest is 0% however the Group have Board control.
9 Acquired 30 June 2021.
100
RESIMAC GROUP LTD
ANNUAL REPORT 2021
101
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
GROUP STRUCTURE
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
GROUP STRUCTURE
NAME OF SUBSIDIARY (cont'd)
Principal activity
PROPORTION OF OWNERSHIP
INTEREST HELD AND VOTING
POWER HELD BY THE GROUP
Place of
incorporation
and operation
FY21
%
FY20
%
Controlled companies
Clarence St Funding No.5 Pty Ltd
Fiduciary Services Pty Ltd
Loan Packaging Australia Pty Ltd10
National Mutual Pty Ltd
RESIMAC Financial Securitisation Ltd
RESIMAC Financial Services Pty Ltd
RESIMAC Leasing Pty Ltd
International Acceptance (NZ) Limited11
Homeloans Pty Ltd12
Controlled trusts
Avoca Master Trust
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Australia
Australia
Australia
Australia
New Zealand
Australia
Australia
New Zealand
Australia
Issuer of RMBS
Australia
NZF Mortgages Warehouse A Trust
Warehouse mortgages
New Zealand
RESIMAC Bastille Master Trust13
RESIMAC Triomphe Master Trust13
Issuer of RMBS
Issuer of RMBS
Australia
Australia
RESIMAC Versailles Master Trust
Issuer of RMBS
New Zealand
RESIMAC Victoire Trust
Warehouse mortgages
New Zealand
RESIMAC Premier Series 2021-214
Issuer of RMBS
New Zealand
RMT Warehouse Trust No.213
Warehouse mortgages
RMT Securitisation Trust No.713
Issuer of RMBS
Australia
Australia
International Acceptance Trust
Consumer and commercial lending
Australia
The Trustee for the Resimac Group Limited Employee
Share Trust15
Employee share trust
Australia
99.9
100
-
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
-
99.9
100
100
100
100
100
100
60
-
100
100
100
100
100
100
-
100
100
60
-
10 Deregistered 19 August 2020.
11 Deregistered 31 January 2021.
12 Incorporated 3 August 2020.
13 This does not represent holding in capital units, percentage ownership represents control of these Trusts.
14 Incorporated 1 June 2021.
15 Ownership interest is 0% however the Group have Board control.
25.2. Details of acquisition
On 1 February 2021, Resimac exercised the option to
acquire the remaining 40% for cash consideration of
$8.24m. The carrying amount of RAF’s net assets on the
date of acquisition was $1.1m.
$'000
Carrying amount of NCI acquired
444
Consideration paid to NCI
Cash consideration – equity value for
40% of issued shares
Option to acquire remaining 40%
A decrease in equity attributable to
owners of the Company
(8,240)
(188)
(7,984)
The decrease in equity attributable to owners of the
Company comprised:
a decrease in other reserve of $7,982,000; and
a decrease in the foreign currency translation
reserve of $2,000.
Special purpose entities – securitised trusts and
funding warehouses
Special purpose entities are those entities over which
the group has no ownership interest but in effect the
substance of the relationship is such that the Group
controls the entity so as to obtain the majority of the
benefits from its operation.
The Group has established special purpose entities
to support the specific funding needs of the Group’s
securitisation programme with the aim to:
conduct securitisation activities funded by short
term warehouse facilities provided by reputable
lenders; and
hold securitised assets and issue Residential
Mortgage Backed Securities.
The special purpose entities meet the criteria of being
controlled entities under AASB 10 - Consolidated
Financial Statements.
25. Acquisition of Non-Controlling Interest
(NCI)
25.1 Accounting policies
Subsidiaries
Subsidiaries are entities controlled by the Group. The
Group ‘controls’ an entity when it is exposed to, or has
right to, variable returns from its involvement with the
entity and has the ability to affect those returns through
its power over the entity. The financial statements of
subsidiaries are included in the consolidated financial
statements from the date on which control commences
until the date on which control ceases.
Non-controlling interests
NCI are measured initially at their proportionate share
of the acquiree’s identifiable net assets at the date of
acquisition.
Changes in the Group’s interest in subsidiary that do
not result in a loss of control are accounted for as equity
transactions.
102
RESIMAC GROUP LTD
ANNUAL REPORT 2021
103
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
UNRECOGNISED ITEMS
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OTHER
Notes to the consolidated
financial statements
Unrecognised items
for the year ended 30 June 2021
26. Commitments and contingencies
26.1. Capital commitments
The Directors were not aware of any capital commitments as at the end of the financial year or arising since balance date.
26.2. Contingent liabilities
Lease guarantees
The Group has provided guarantees in respect of the leases over its premises of $585,724 (FY20: $1,415,351). The Directors
were not aware of any other contingent liabilities as at the end of the financial year or arising since balance date.
27. Subsequent events
27.1. Final dividend declared
The Board of Resimac Group Ltd declared a fully-franked final dividend of $0.04 per share. The Record Date is 3 September
2021. The payment date will be 21 September 2021. The dividend has not been provided for in this financial report.
27.2. Sale of White label portfolio
On 27 July 2021 Resimac executed the sale of $0.2b of White label loans (off balance sheet) for consideration of $1.6m plus GST.
The net present value of this loan tranche future trail commission receivable is $1.4m, and is recognised on the Statement of
Financial Position at 30 June 2021. A gain of $0.2m on the sale will be recognised in FY22.
Other than the above, there have been no circumstances arising since 30 June 2021 that have significantly affected or may
significantly affect:
(a) The operations
(b) The results of those operations, or
(c) The state of affairs of Group in future financial years.
Other
for the year ended 30 June 2021
28. Auditor’s remuneration
Deloitte Touche Tohmatsu
Audit or review of financial reports
Group
Subsidiaries
FY21
$
FY20
$
347,000
357,919
600,899
557,947
947,899
915,864
Statutory assurance services required by legislation to be provided by the auditor
114,000
13,650
Other assurance and agreed-upon procedures under other legislation or contractual
arrangements
226,000
275,608
Other services
Tax consulting services
Other consulting services
38,850
-
9,550
174,704
48,400
174,704
TOTAL REMUNERATION OF DELOITTE TOUCHE TOHMATSU
1,336,299
1,379,826
Non Deloitte Touche Tohmatsu audit firms
Audit or review of financial reports
Subsidiaries
14,000
10,000
Statutory assurance services required by legislation to be provided by the auditor
6,000
-
Other services
Tax compliance services
Tax consulting services
Other consulting services
173,344
177,648
62,531
-
50,500
44,000
TOTAL REMUNERATION OF NON DELOITTE TOUCHE TOHMATSU AUDIT FIRMS
255,875
282,148
104
RESIMAC GROUP LTD
ANNUAL REPORT 2021
105
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OTHER
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OTHER
28.1. Non-audit services
The auditor of the Group is Deloitte Touche Tohmatsu (Deloitte). It is the Group’s policy to employ Deloitte on assignments
additional to its statutory audit duties, in compliance with the Group’s independence policies, where Deloitte’s expertise and
experience with the Group are important.
Amounts owed by related parties are secured and will be settled in cash. No guarantees have been given or received. No
expense has been recognised in the current or prior years for bad or doubtful debts in respect of the amount owed by related
parties.
Compensation of KMP
The remuneration disclosures of Directors and other members of KMP during the year are provided in sections one to nine
of the remuneration report on pages 12 to 28 of this financial report designated as audited and forming part of the Directors’
Report.
The remuneration disclosures are for Resimac KMP only as presented in the Remuneration report.
KMP Compensation
Short-term benefits
Post-employment benefits
Long-term benefits
Share-based payments
FY21
$
FY20
$
2,984,062
2,422,142
125,000
102,087
32,208
310,595
413,239
346,928
3,554,509
3,181,752
The remuneration of Directors and KMP is determined by the Remuneration and Nomination Committee having regard to the
performance of individuals and market trends.
The total non-audit services fees of $274,400 represents 20.5% of the total fees paid or payable to Deloitte and related
practices for the year ended 30 June 2021 (FY20: $450,312).
29. Related party transactions
Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been
eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related
parties are disclosed below.
Trading transactions
During the year, Group entities entered into the following trading transactions with related parties that are not members of the
Group:
REVENUE RECEIVED
EXPENSES PAID
FY21
$'000
FY20
$'000
FY21
$'000
FY20
$'000
Amounts incurred to Director’s related entities1
-
-
-
-
-
-
(123)
(123)
1 Includes interest paid on debt securities on issue to Bermuda Commercial Bank Limited. This interest rate is charged at market related terms.
Sales to related parties occur at arm’s length on commercial terms in the ordinary course of business in accordance with the
terms and conditions outlined in the relevant commercial agreements with each party.
The following balances were outstanding at the end of the reporting period:
AMOUNTS OWED BY
RELATED PARTIES
AMOUNTS OWED TO
RELATED PARTIES
FY21
$'000
FY20
$'000
FY21
$'000
FY20
$'000
Other related parties of Resimac Group Ltd1
13,421
13,421
13,176
13,176
-
-
-
-
1 Includes residential mortgages to KMP or related parties lent in ordinary course of business at arm’s lengths.
106
RESIMAC GROUP LTD
ANNUAL REPORT 2021
107
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OTHER
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OTHER
30. Parent disclosures
The parent company of the Group, as at and throughout the financial year ended 30 June 2021, was Resimac Group Ltd.
Presented below is supplementary information about the parent entity.
STATEMENT OF FINANCIAL POSITION
Assets
Current
Non-current
Liabilities
Current
Non-current
NET ASSETS
Equity
Issued capital
Reserves
Accumulated losses
Attributable to members of the parent:
Profit after tax
Total comprehensive income for the period
FY21
$'000
FY20
$'000
37,127
39,745
311,635
201,385
348,762
241,130
27,602
46,047
73,649
34,946
65,876
100,822
275,113
140,308
183,853
182,072
876
485
90,384
(42,249)
275,113
140,308
149,753
149,753
(5,659)
(5,659)
30.1. Guarantees, contingent liabilities and contingent assets
At 30 June 2021, there are no financial guarantees, contingent assets or contingent liabilities (FY20: nil).
30.2. Accounting policies
The accounting policies of the parent entity, which have been applied in determining the financial information shown above, are
the same as those applied in the consolidated financial statements except as set out above. The significant accounting policies
relating to the Group are used throughout this financial report.
31. Share-based payments
31.1. Employee share option plan of the Company
The Company has a share option scheme (pursuant to
the Resimac Group Ltd Employee Share Option and
Rights Plan) for senior employees of the Company. In
accordance with the terms of the Plan, as approved
by shareholders at the 2017 Annual General Meeting,
senior employees may be granted options to purchase
ordinary shares.
Each employee share option converts into one ordinary
share of the Company on exercise. No amounts are paid
or payable by the recipient on receipt of the option.
The options carry neither rights to dividends nor voting
rights. Options may be exercised at any time from the
date of vesting to the date of their expiry.
Long-Term Incentive (LTI#1) Share Options - CEOs
Resimac offered the joint CEOs Scott McWilliam and
Mary Ploughman (ceased employment on 17 July 2019)
the opportunity to purchase 1,800,000 share options
vesting in three equal tranches on each anniversary of
the grant date. The options were granted on 18 August
2017 and all options vest within 12 months, 24 months
and 36 months of respective grant date associated with
each tranche. The options expire within 36 months of
their vesting, or one month after resignation, whichever
is the earlier. The sole vesting condition of the options
is the employees remain employed with the Company
to the respective vesting date associated with each
tranche.
The tranche 3 shares for Mary Ploughman expired due
to her cessation of employment on 17 July 2019. The
expiry dates of her tranche 1 and 2 were revised to 17
July 2020 by the Board.
Long-Term Incentive (LTI#2) Share Options - CEO and
GMs
Under the Group’s LTI share options and rights plan,
the CEO and GMs receive options over ordinary shares
and a potential cash component of $2.4m. The options
were granted on 15 August 2019 and the vesting date
for all options is 31 August 2022, subject to the Group
achieving Net Profit After Tax (NPAT) growth hurdles,
digital transformation hurdles, compliance hurdles and
remaining employed with the Group until the vesting
date.
Since the current reporting period, the LTI#1 and LTI#2
are administrated by The Trustee for the Resimac Group
Limited Employee Share Trust. The trust is consolidated
in accordance with note 24.
The trustee subscribes for the shares issued by the
Group and allocates to the employees on exercise of
options. Shares held by the trust and not yet allocated
to employees at the end of the reporting period are
shown as treasury shares in the financial statements.
During the financial year ended 30 June 2021, 540,000
(FY20: nil) Resimac shares were purchased on-market
at an average price of $2.47 per share, for a total
consideration of $1,336,233, to satisfy employee
entitlements pursuant to the LTI#1.
The fair value of share options under LTI#1 and LTI#2
is recognised as an employee benefits expense with a
corresponding increase in equity. The total expense is
recognised over the vesting period, which is the period
over which all of the specified vesting conditions are
to be satisfied. At the end of each period, the Group
revises its estimates of the number of options that are
expected to vest based on the non-market vesting
and service conditions. It recognises the impact of the
revision to original estimates, if any, in the consolidated
statement of profit or loss with a corresponding
adjustment to equity.
The fair value of the amounts payable to CEO and
GMs in respect of cash component is recognised as
an expense with a corresponding increase in liabilities,
over the vesting period. The liabilities are remeasured
to fair value at each reporting date and are presented
as employee benefit obligations in the consolidated
statement of financial position.
Employee Share Plan (ESP)
The Group commenced the Resimac Group Employee
Share Scheme (ESS) in March 2021 whereby each
financial year eligible employees are offered up to
$1,000 worth of fully paid Resimac ordinary shares for no
cash consideration.
Shares allocated under the ESS cannot be sold until the
earlier of three years after allocation or the time when
the participant is no longer employed by the Group.
The first offer under the ESS was made during April
2021. A total of 191 staff participated in this offer.
On 12 April 2021, the participants were each allocated
458 fully allocated shares based on the offer amount
of $1,000 and the 5 day volume weighted average price
(VWAP) of $2.18, resulting in a total of 87,478 shares
being allocated. The shares were allocated to staff for no
cash consideration. For the financial year ended 30 June
2021, share-based payment expense relating to the ESS
totalled $187 thousand.
108
RESIMAC GROUP LTD
ANNUAL REPORT 2021
109
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OTHER
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OTHER
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110
RESIMAC GROUP LTD
ANNUAL REPORT 2021
111
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OTHER
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OTHER
31.3. Movements in share options during the period
The following reconciles the share options outstanding at the beginning and the end of the period:
Number of
LTI options
LTI#1
Number of
LTI options
LTI#2
Number
of ESP
options
Number
of options
Total
Weighted
average
fair value $
LTI#1
Weighted
average
fair value $
LTI#2
Weighted
average fair
value $
ESP
Unvested options at 1 July 2020
300,000
3,525,000
Vested options at 1 July 2020
600,000
-
OPTIONS HELD AT 1 JULY 2020
900,000
3,525,000
-
-
-
3,825,000
600,000
4,425,000
0.09
0.08
0.08
Granted during the year
-
Exercised during the year
(300,000)
-
-
87,478
87,478
-
(87,478)
(387,478)
0.55
0.20
-
0.20
-
-
Unvested options at 30 June 2021
-
3,525,000
Vested options at 30 June 2021
600,000
-
-
-
3,525,000
-
0.20
600,000
0.09
-
OPTIONS HELD AT 30 JUNE 2021
600,000
3,525,000
-
4,125,000
0.09
0.20
-
-
-
2.14
2.14
-
-
-
31.4. Share options exercised during the period
The Trustee for the Resimac Group Limited Employee Share Trust subscribed for 300,000 fully paid ordinary shares issued by
the Group at a subscription price of $2.13 per share, being the volume weighted average price of shares at the close of trading
over a 5 day trading period up to and including 27 April 2021. Shares held by the trustee were allocated to Scott McWilliam on his
exercise of tranche 1 share options on 26 April 2021.
32. Other accounting policies
32.1. Application of new and revised accounting
standards
The Group has applied the required amendments to
Standards and Interpretations that are relevant to its
operations and effective for the current reporting period
for the first time for the financial year commencing 1 July
2020.
Software-as-a-Service (SaaS) arrangements
The International Financial Reporting Standards
Interpretations Committee (IFRIC) has issued two final
agenda decisions which impact SaaS arrangements:
112
RESIMAC GROUP LTD
Customer’s right to receive access to the supplier’s
software hosted on the cloud (March 2019).
This decision considers whether a customer receives a
software asset at the contract commencement date or
a service over the contract term.
Configuration or customisation costs in a cloud
computing arrangement (April 2021).
This decision discusses whether configuration
or customisation expenditure relating to SaaS
arrangements can be recognised as an intangible asset
and if not, over what time period the expenditure is
expensed.
The Group’s accounting policy has historically been
to capitalise all costs related to SaaS arrangement as
intangible assets in the statement of financial position.
The adoption of the above agenda decision has result
in a reclassification of these intangible assets to
recognition as an expense in the statement of profit or
loss. The new accounting policy is presented in Note 11.
IBOR Benchmark Reform: Transition from inter-bank
offered rates (IBOR) to alternative reference rates
(ARRs)
The UK Financial Conduct Authority announced on 5
March 2021 that all LIBOR settings will either cease to
be published by any administrator or will no longer be
representative at a specified future date, with a clear
message to market participants to complete transition
by the end of 2021. Specifically, 1-month USD LIBOR will
cease to be published after 30 June 2023, and all USD
LIBOR-linked contracts must transition to replacement
risk-free rates.
In addition, on 2 June 2021, the Financial Stability Board
announced that all new use of LIBOR benchmarks should
cease as soon as practicable and no later than the
timelines set out by home authorities and/or national
working groups in the relevant currencies.
The Alternative Reference Rates Committee (“ARRC”)
of the Federal Reserve Bank of New York has selected
SOFR as the replacement for LIBOR. Resimac has
adopted the ARRC-recommended LIBOR fallback
language in USD transactions completed since 2019.
In line with pronouncements from regulators and its
recent USD transactions, Resimac proposes to amend
all outstanding USD transactions completed prior to
2019 by incorporating the ARRC-recommended LIBOR
fallback language in the USD note conditions.
ARRC-recommended LIBOR fallback language
Under the ARRC fallback language adopted by Resimac:
USD LIBOR will be replaced as the benchmark for
USD Notes using Term SOFR, which is expected to
be a similar forward-looking term rate to USD LIBOR
RMBS and Derivative Amendments
Based on discussions with US dealers, Resimac
understands that incorporating the ARRC -
recommended LIBOR fallback language is consistent
with the requirements of US RMBS investors. Resimac
is therefore of the view that the proposed amendments
are desirable and not materially prejudicial to the Class
A1 Noteholders and will make required modifications to
the benchmark language in its RMBS transactions and
any associated derivative contract.
Impacts on financial reporting
AASB 2019-3 Amendments to Australian Accounting
Standards – Interest Rate Benchmark Reform issued
in October 2019, amended to AASB 7 Financial
Instruments: Disclosures, AASB 9 Financial Instruments
to provide certain reliefs in relation to interest rate
benchmark reforms. The relief relate to hedge
accounting and have the effect that the reforms should
not generally cause hedge accounting to terminate.
However, any hedge ineffectiveness should continue to
be recorded in the income statement.
In September 2020, AASB 2020-8 Amendments to
Australian Accounting Standards – Interest Rate
Benchmark Reform – Phase 2 amended standards
including AASB 7, AASB 9 and AASB 16 Leases (AASB
16) to address accounting issues following the transition
to ARR. The amendment provides practical expedients
to account for changes in the basis for determining
contractual cash flows as a result of IBOR reform under
AASB 9 and AASB 16. It provides additional temporary
reliefs from applying specific hedge accounting
requirements to hedging relationships that are
directly affected by IBOR reform and require additional
quantitative and qualitative disclosures.
The amendments are mandatorily effective for annual
reporting periods on or after 1 July 2021. Based on
management’s assessment as above, the impact is not
expected to be materially different to how the Group
currently accounts for financial instruments which have
qualified for hedge accounting.
Other amendments made to existing standards
Other amendments made to existing standards that
were mandatorily effective for the financial year
commencing 1 July 2020 did not have any material
impact on the disclosures or on the amounts recognised
in the consolidated financial statements.
32.2. New and revised accounting standards and
interpretations on issue but not yet effective
Certain new accounting standards and interpretations
have been published that are not mandatory for 30
June 2021 reporting periods and have not been early
adopted by the Group. The Group’s assessment of the
impact of these new standards and interpretations is set
out below. These standards are not expected to have
a material impact on the financial statements of the
Group in future periods.
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OTHER
| DIRECTORS' DECLARATION
Effective
for annual
reporting
periods
beginning on
or after
1 July 2021
STANDARD / AMENDMENT
AASB 2020-8 Amendments to
Australian Accounting Standards -
Interest Rate Benchmark Reform
Phase 2
AASB 2020-3 Amendments to
Australian Accounting Standards -
Annual Improvements 2018-2020
and Other Amendments AASB
1 July 2022
AASB 2020-1 Amendments to
Australian Accounting Standards -
Classification of Liabilities as
Current or Non-current
1 July 2023
The standards and interpretations listed above are not
expected to have a material impact on financial results
or financial position on adoption.
32.3. Goods and services tax (GST)
Revenues, expenses and assets are recognised net of
the amount of GST except:
where the GST incurred on a purchase of goods
and services is not recoverable from the taxation
authority, in which case the GST is recognised as part
of the costs of acquisition of the asset or as part of
the expense item as applicable; and
receivables and payables which are stated with the
amount of GST included.
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables
or payables in the statement of financial position.
Cash flows are included in the statement of cash flows
on a gross basis and the GST component of cash flows
arising from investing and financing activities, which is
recoverable from, or payable to, the taxation authority is
classified as operating cash flows.
Commitments and contingencies are disclosed net of
the amount of GST recoverable from, or payable to, the
taxation authority.
Directors'
declaration
Resimac Group Ltd
and its controlled entities
The Directors declare that:
a.
in the Directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when
they become due and payable
b.
in the Directors’ opinion, the attached financial statements are in compliance with Australian Accounting Standards as
stated in the financial statements;
c.
in the Directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations
Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and
performance of the consolidated entity and the company; and
d.
the Directors have been given the declarations required by s295.A of the Corporations Act 2001.
Signed in accordance with a resolution of the Directors pursuant to s295(5) of the Corporations Act 2001.
On behalf of the Directors
Warren McLeland
Chairman
Sydney
30 August 2021
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| INDEPENDENT AUDITOR'S DECLARATION
RESIMAC GROUP LTD & ITS CONTROLLED ENTITIES
| INDEPENDENT AUDITOR'S REPORT
RESIMAC GROUP LTD & ITS CONTROLLED ENTITIES
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1220 Australia
Tel: +61 2 9322 7000
Fax: +61 2 9322 7001
www.deloitte.com.au
The Board of Directors
Delarey Nell
Partner
Chartered Accountants
30 August 2021
Dear Board Members,
Auditor’s Independence Declaration to Resimac 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 Resimac Group Limited and its
controlled entities.
As lead audit partner for the audit of the financial report of Resimac for the year ended 30
June 2021, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation
to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
Delarey Nell
Partner
Chartered Accountants
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1220 Australia
Tel: +61 2 9322 7000
Fax: +61 2 9322 7001
www.deloitte.com.au
Independent Auditor’s Report to the Members of Resimac Group Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Resimac Group Limited (the “Company”) and its subsidiaries
(the “Group”) which comprises the consolidated statement of financial position as at 30 June 2021,
the consolidated statement of profit or loss, the consolidated statement of comprehensive income,
the consolidated statement of changes in equity and the consolidated statement of cash flows for the
year then ended, and notes to the financial statements, including a summary of significant accounting
declaration.
information,
policies
explanatory
directors’
other
and
and
the
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2021 and of their
financial performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
Liability Limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
116
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| INDEPENDENT AUDITOR'S REPORT
RESIMAC GROUP LTD & ITS CONTROLLED ENTITIES
| INDEPENDENT AUDITOR'S REPORT
RESIMAC GROUP LTD & ITS CONTROLLED ENTITIES
Key Audit Matters
Other Information
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.
Key Audit Matter
Impairment of loans and advances
As at 30 June 2021 the Group has recognised
provisions amounting to $37.6m for impairment
losses on loans and advances held at amortised
cost in accordance with the Expected Credit Loss
(ECL) approach required under AASB 9 Financial
Instruments as disclosed in Note 6, 22 and 23.
Loans and advances subject to provisioning using
the ECL model include the residential lending
loans
portfolio, personal
approved but not yet advanced.
loan portfolio and
Significant management
judgement was
necessary in determining expected credit losses,
including:
-
-
The application of the requirements of AASB
9 as reflected in the Group’s ECL model
particularly in light of the current economic
environment including the ongoing impact of
COVID-19;
The
identification of exposures with a
significant movement in credit quality to
determine whether 12-month or lifetime ECL
should be recognised; and
- Assumptions used in the ECL model such as
the financial condition of the counterparty,
repayment capacity and forward-looking
macroeconomic factors as disclosed in Note
6,22 and 23.
How the scope of our audit responded to the Key Audit
Matter
Our procedures
included, but were not limited to:
in conjunction with our specialists
Testing the design and implementation of relevant
controls over the impairment provision including:
- Assessing accuracy of data input into the system
used for determining past due status and the
approval of credit facilities; and
Evaluating the ongoing monitoring and identification
of loans displaying indicators of impairment and
whether they are migrating on a timely basis to
appropriate default stages including generation of
days past due reports.
-
Assessing impairment model adequacy
Our procedures included, but were not limited to:
the
the
- Assessing whether managements’ model adequately
relevant
requirements of
addresses
accounting standard;
Evaluating management’s assessment of the impact
of COVID-19 on the loan portfolio and hence the
estimate of ECL;
Testing on a sample basis, individual exposures to
determine if they are classified into appropriate
default stages and aging buckets for the purpose of
determining impairment loss provision;
-
-
- Assessing the reasonableness of assumptions driving
probabilities of default (PD), Loss Given Default
(LGD) and Exposure at Default (EAD); and
- Assessing reasonableness of management overlays
to the modelled collective provision, by recalculating
the coverage provided taking into account recent
history, performance and de-risking of the relevant
portfolios.
We also assessed the appropriateness of the disclosures
in Notes 6, 22 and 23 to the financial statements.
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2021 but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and 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:
(cid:31)
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.
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| INDEPENDENT AUDITOR'S REPORT
RESIMAC GROUP LTD & ITS CONTROLLED ENTITIES
| INDEPENDENT AUDITOR'S REPORT
RESIMAC GROUP LTD & ITS CONTROLLED ENTITIES
(cid:31) 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.
(cid:31) Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
(cid:31) Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial report or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Group to cease to continue as a going concern.
(cid:31) 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.
(cid:31) 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 12 to 29 of the Directors’ Report for the
year ended 30 June 2021.
In our opinion, the Remuneration Report of the Resimac Group Limited, for the year ended 30 June
2021, 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
Delarey Nell
Partner
Chartered Accountants
Sydney, 30 August 2021
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| ENVIRONMENTAL, SOCIAL & GOVERNANCE
| ENVIRONMENTAL, SOCIAL & GOVERNANCE
Environment,
social and
governance
Resimac’s approach to its Environmental,
Social and Governance ('ESG')
responsibilities is a key factor in how many
of our customers, investors, shareholders
and our employees regard our business.
We acknowledge the importance of our
contribution to the community and the
environment as corporate citizens and
the importance to our shareholders and
investors for good corporate governance.
As such, we continually incorporate
ESG into our culture and our strategy
by working together to enhance our
effectiveness, providing appropriate
disclosures and reporting our activities
and progress.
Further details of our ESG practices can
be found in our Corporate Governance
Statement and the Environmental, Social
and Governance Statement located on
our website.
Since 2010 Resimac
has planted over
40,000 trees, which
is calculated to
offset nearly five
million kilograms
of harmful CO2
emissions from the
Earth’s atmosphere.
Environment
As a leading non-bank lender, we understand the
importance of supporting the environment. We are
committed to this by:
Being carbon conscious. For every loan settled, Resimac
facilitates the planting of a Mallee Eucalypt tree in the
Australian Wheatbelt region of Western Australia. Since
2010 Resimac has planted over 40,000 trees, which
is calculated to offset nearly five million kilograms of
harmful CO2 emissions from the Earth’s atmosphere,
as well as play a role in increasing the available habitat
for local fauna.
Continually reducing the need for paper and printable
matter, both through our end-to-end digital loan
origination process for customers and by reducing
the number of printers in our offices. Additionally, all
printers have a built-in power saving function to turn off
after a short interval.
Recycling consumables and equipment in the office,
complemented by recycling facilities for employees.
This annual report has been printed on recycled paper.
Installing sensor lights and LED lighting within the office
to reduce power consumption.
Social
Introducing flexible working arrangements / working
from home and the closure of three our offices
(with staff transferring to home offices), assisting in
reducing overall greenhouse gas emissions, fossil fuel
consumption and energy usage.
Reducing domestic and international flights. The
impact of COVID-19 has allowed the business to think
differently about the need for as many face-to-face
meetings, and we have leveraged our investments
in video telephony technology to maintain face time
between staff notwithstanding geographical and
pandemic-related limitations.
In 2021, we launched a new Green Loan product in our
direct channel. With an ultra-low interest rate, the loan
makes credit more accessible to encourage customers to
join the movement towards a cleaner and more sustainable
future. The Green Loan can be used to purchase and install
energy efficient items for household improvements such
as battery packs and storage, electrical energy storage, hot
water heat pump or solar hot water system, insulation and/
or double-glazed windows and solar panels.
Our social responsibilities extend across a range of groups,
including our employees, customers, investors and the
community.
It is paramount to the future of our business that our
employees conduct themselves in a way that enables us
to deliver great service to our customers and business
partners, while displaying the company’s values of quality,
passion, agility, respect, accountability, professionalism
and integrity.
At Resimac, we recognise that an engaged team supports
a successful business. We encourage work/life balance
and offer a number of benefits such as: study support,
a flexible day, “wellness” hours, an employee assistance
program, salary continuance insurance, purchased leave
and a paid community day that enables employees to
participate in community activities with a charity of their
choice. Throughout the extended lockdowns, we also
organised complimentary group fitness sessions for staff,
a mindfulness program and resilience training provided by
our EAP partner.
In 2020, flexible working arrangements were implemented,
allowing our staff to work from home two days a week.
With our customers, we strive to provide superior service
and support throughout their journey with Resimac. We
have proactively engaged with our customers to remind
them of our financial hardship provisions – not just for
COVID-19 lockdowns, but also during natural disasters
such as the flooding that affected the eastern seaboard.
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As an entity that holds seven credit licences and an
Australian financial services licence, we must ensure
we comply with the responsible lending conduct
obligations, which we do through our credit committee,
board risk and compliance committee, our compliance
program, and quality assurance.
In 2021, the Board released a Modern Slavery Statement
and awareness training to our staff. At Resimac, we
recognise that modern slavery is a crime and a violation
of fundamental human rights. We are committed
to acting ethically and with integrity in our business
dealings and relationships, and we are committed to
preventing modern slavery in our own business and to
helping prevent modern slavery in our supply chains.
Who we partner with at Resimac is also key to our
sustainability performance. Our responsible approach
to procurement of suppliers allows us to manage and
mitigate risk.
Supporting charities that closely align with our values is
important to Resimac. We are proud to support multiple
charities and community initiatives including:
The Station
Food Ladder
local support within the Philippines
FOOD LADDER
Resimac is proud to support Food Ladder, a not-for-
profit and global pioneer in the use of environmentally
sustainable technologies to create food and economic
security for remote communities. Food ladder not
only addresses food security, but it also creates
employment and training opportunities for adults and
education outcomes for children. Food ladder systems
have benefited 31,500 individuals, with 6,000 getting a
consistent, significant part of their diet from food ladder.
Furthermore, it has created 600 jobs.
Resimac offers both financial support and assistance
with promoting awareness for the organisation.
Additionally, the charity ambassador program we
launched last year, whereby two employees have been
working closely with food ladder to raise awareness
and engagement internally and throughout the broader
community, has been highly successful. In October this
year, we are looking to launch our first co-branded Food
Ladder greenhouse in a primary school in Brisbane. In
2022, we expect to launch Food Ladder systems within
schools in Perth and Sydney also.
We are committed
to reducing our
carbon footprint,
which is why we
are encouraging
shareholders
to change their
preferred method
of correspondence
to email. Not only
is it the quickest
and most secure
way to receive
communications,
it is better for the
environment.
| ENVIRONMENTAL, SOCIAL & GOVERNANCE
STAFF CHARITY INITIATIVES
In addition to the charities that Resimac supports at
a company level, we have actively supported charity
initiatives that have been driven by staff with a company
dollar-matched donation. These initiatives include: the
World’s Greatest Shave, a fundraising initiative for blood
cancer, where we raised more than $20K; Movember,
a charity initiative to raise money for men’s health and
prostate cancer; The Push-Up Challenge in support of
mental health; and STEPtember to raise money for cerebral
palsy. These events collectively raised $100,000.
THE STATION LTD
The station is a not-for-profit drop-in centre established in
1978, located in the heart of the Sydney CBD. Its mission
is to provide a range of services to adults having difficulty
obtaining and sustaining accommodation as well as
providing food.
Resimac has a team of volunteers who help with food
service regularly, and we have a highly successful annual
collection of personal and hygiene products. We have
also supplied both dryers and washing machines. Due to
restrictions imposed by COVID-19, we have been unable to
assist with food service since February 2020, however we
have donated books and food, and will continue our support
once restrictions allow.
PHILIPPINES
Each year, we partner with our staff in Manila to choose
the organization / charity that they wish to support within
the community. Over the past twelve months, we have
supported the San Lazaro Hospital in Manila, which is a
public hospital which specialises in infectious diseases.
We donated masks, face shields, PPE, surgical gloves and
sanitiser. Further, we assisted the Gentle Hands Orphanage
with medical and cleaning supplies as they managed the
impact of COVID-19.
Governance
THE BOARD, RISK MANAGEMENT & COMPLIANCE
FRAMEWORK
Resimac has a strong governance framework in place to
ensure all regulatory obligations are adhered to in line with
our licence requirements and our position as an ASX Listed
entity.
There are several committees, policies, and procedures in
place to complement this framework including:
Risk and Compliance Committee
Audit Committee
Remuneration and Nominations Committee
Technology, Digital and Innovation Committee
Assets and Liability Committee
Pricing Committee
Credit Committee
Workplace Health & Safety Committee
Diversity & Inclusion Committee
Anti-Money Laundering Program
Compliance Framework
Enterprise Risk Framework
Quality Assurance Program
Continuous Disclosure Policy
Anti-Bribery and Corruption Policy
Each Committee has a charter that sets out its
responsibility and accountability and this charter is
reviewed annually.
Resimac has both independent internal and external audit
functions to ensure the governance framework we are
working towards is being followed. The Board has adopted a
Risk Appetite Statement and operational risk register with
key risk metrics to ensure appropriate controls are in place.
In addition, Quality Assurance Reviews are undertaken on
lending approvals by a team independent of the creditor
assessors, with control testing and quarterly obligation
attestations required by each department.
TAX OBLIGATIONS
We are committed to ensuring we meet our multi tax
obligations which include income, fringe benefit, goods
and services, payroll, stamp duty, etc, and have established
a Board-approved Tax Risk Management Policy. Best tax
practice, tax risk appetite metrics have been adopted.
ANNUAL REPORT 2021
125
| SHAREHOLDER INFORMATION
| SHAREHOLDER INFORMATION
Shareholder
information
d. Substantial shareholders
The names of the substantial shareholders of the Company and the number of equity securities in which they have a relevant
interest as disclosed in substantial shareholding notices given to the Company are set out below:
SHAREHOLDER
Somers Limited, ICM Limited, UIL Limited, Permanent Investments Limited,
Somers Isles Private Trustee Company Limited, and each other entity controlled
by Duncan Saville
246,757,304
61.91
No. of shares
%
Additional information required by the ASX and not disclosed elsewhere in this report is set out below. The information is
current as at 17 September 2021.
Opting in for electronic communication: Only 40% of our shareholders have opted in to receive electronic communications.
Consistent with our Carbon Conscious initiative and our commitment to reduce paper consumption, we encourage more
shareholders to opt-in for electronic communications.
e. Twenty largest shareholders
The 20 largest shareholders of ordinary shares on the Company's register at 17 September 2021 were:
a. Number of holders of equity securities
Ordinary Share Capital: 408,404,461 paid ordinary shares are held by 2,952 individual shareholders.
b. Voting rights
All issued ordinary shares carry one vote for each member present at the meeting on a show of hands and on a poll each
member is entitled to one vote for every ordinary share held.
c. Distribution of members and their holdings
The number of equity securities by size of holding is set out below:
SHAREHOLDER
JP Morgan Nominees Australia Pty Limited
HSBC Custody Nominees (Australia) Limited
Redbrook Nominees Pty Ltd
Motrose Pty Ltd
Warren John McLeland
National Nominees Limited
Citicorp Nominees Pty Limited
RANGE
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
TOTAL
Total holders
Units
% Units
Hartley Phillips Securities Pty Ltd (Hartley Phillips Inv Tst A/C)
866
1,100
350
524
112
457,039
2,957,141
2,757,869
15,922,472
386,309,940
2,952
408,404,461
0.11
0.72
0.68
3.90
94.59
100.00
Moat Investments Pty Ltd (Moat Investment A/C)
Westpac Banking Corporation
Acres Holdings Pty Ltd
Mr Scott Bruce Charles McWilliam
RSJSDS Pty Ltd (Salmon Super Fund A/C)
High Pass Holdings Pty Ltd (High Pass Hldgs P/L Sup A/C)
Mast Financial Pty Ltd (A to Z Investment A/C)
Esselmont Pty Ltd (The Esselmont A/C)
Minimum parcel size
Holders
Units
Gliocas Investments Pty Ltd (Gliocas Growth Fund A/C)
UNMARKETABLE PARCEL
Minimum $500.00 parcel at $2.1800 per unit
230
181
19,698
Tico Pty Ltd
Ralph Lauren 57 Pty Ltd (John James No 2 A/C)
Leuie Enterprises Pty Ltd (Matthew Leuenberger Fam A/C)
No. of shares
%
170,859,361
111,068,412
14,870,515
14,500,000
11,920,138
9,746,952
5,409,873
5,031,373
4,048,624
2,493,130
1,496,881
1,450,000
1,350,000
1,191,687
1,068,558
989,749
969,556
903,960
854,922
844,394
41.84
27.20
3.64
3.55
2.92
2.39
1.32
1.23
0.99
0.61
0.37
0.36
0.33
0.29
0.26
0.24
0.24
0.22
0.21
0.21
126
RESIMAC GROUP LTD
ANNUAL REPORT 2021
127
TOTAL
361,068,085
88.41
| MANAGING YOUR SHAREHOLDING
| CORPORATE INFORMATION
Corporate
information
Registered office and Corporate office
Level 9, 45 Clarence Street, Sydney NSW 2000
p +61 2 9248 0300
e info@resimac.com.au
w resimac.com.au
Customer enquiries: 13 38 39
Non-Executive Directors
Warren McLeland, Chairman
Susan Hansen
Duncan Saville
Wayne Spanner
Caroline Waldron
Company Secretary
Peter Fitzpatrick
Share registry
Computershare Investor Services Pty Limited
Managing your
shareholding
The Company’s share registry is managed by
Computershare Investor Services Pty Limited
(Computershare).
The Investor Centre website is the fastest, easiest
and most convenient way to view and manage your
shareholding. Investor Centre enables a shareholder to:
view the Company share price;
change your banking details;
change your address (for non-CHESS sponsored
holdings);
update your dividend instruction;
update your Tax File Number (TFN), Australian Business
Number (ABN) or exemption;
select your email and communication preferences; and
view your transaction history.
When communicating with Computershare or accessing
your holding online you will need your Securityholder
Reference Number (SRN) or Holder Identification Number
(HIN) as shown on your Issuer Sponsored / CHESS
statements.
You can also contact Computershare by:
Address
Level 3, 60 Carrington Street, Sydney NSW 2000
p 1300 850 505
e web.queries@computershare.com.au
w investorcentre.com.au
Tax file number
While it is not compulsory to provide a Tax File Number
(‘TFN’), if shareholders have not provided a TFN and
Resimac pays an unfranked or partly franked dividend, the
Company will be required to deduct tax from the unfranked
portion of the dividend at the top marginal rate plus the
Medicare Levy.
Information on Resimac Group
Resimac Group website
Up-to-date information on the Company can be obtained from the Company's website: resimac.com.au
Securities exchange listing
The Company’s shares are listed on the Australian Securities Exchange (ASX) and the Home Exchange is Sydney. Ordinary
shares are traded under the code, ASX: RMC.
Share prices can be accessed from major Australian newspapers, the Resimac Group website or at: asx.com.au
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RESIMAC GROUP LTD
ABN 55 095 034 003
Australian Credit Licence 247829
ASX: RMC
To view the 2021 Annual Report, Shareholder
and Company information, new announcements,
background information on Resimac Group
businesses and historical information, visit the
Resimac website at resimac.com.au
Resimac Group Ltd
Level 9, 45 Clarence Street
Sydney NSW 2000
p
e
w
+61 2 9248 0300
info@resimac.com.au
resimac.com.au
ABN 55 095 034 003
Australian Credit Licence 247829
ASX: RMC