1
2019 ANNUAL REPORT1918/annualreport Resimac
Group Ltd
ABN 55 095 034 003
Australian Credit Licence 247829
ASX: RMC
Contents
Who We Are
Message from the Chairman
Message from the CEO
Board of Directors
Directors’ Report
Financial Statements
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditors’ Declaration
Independent Auditors’ Report
Corporate Social Responsibility
Shareholder Information
Corporate Information
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2019 ANNUAL REPORT
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5
Who
We Are
Resimac Group Ltd is one of Australia and
New Zealand’s most established non-bank
lenders. With over 30 years experience in
delivering home finance solutions, we’re
proud to be servicing over 50,000 current
customers.
As a pioneer of the Residential Mortgage-
Backed Securities (RMBS) industry we
have one of Australia’s most respected
securitisation programs, having issued over
A$28b across more than 47 transactions.
We have distribution to over 85% of
mortgage brokers, as well as our products
being available to consumers via our direct
channels.
Assets Under
Management
in excess of
$13b
PRODUCTS
Resimac offers a range
of mortgage solutions -
both Prime and Specialist
Lending.
CHANNELS
Resimac offers customers
their “Channel of Choice”.
They can engage with us
via Brokers, Online and
Direct.
Resimac 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 February 2019.
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
ORIGINATION
Wholesale, 3rd Party,
Direct & White
Label distribution
channels
FUNDING
Warehouse and a
global capital markets
programme
Our Service
Proposition
SERVICING
Underwriting, loan
management, arrears
management
OPERATIONS
Support functions,
geographies
A full range of
home loans from
Prime Lending and
Specialist Lending
products
Assets
Under
Management
in excess of
$13 billion
Diversified
distribution
platform
originating
$4.1 billion p.a.
We understand the requirements of our customers,
employees and stakeholders, and are building a best-in-class
business that delivers against those requirements.
RESIMAC GROUP LTD2019 ANNUAL REPORT 6
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RESIMAC GROUP LTD
2019 ANNUAL REPORT
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Message from
the Chairman
CHUM
DARVALL
Chairman
$47.2m
$31.1m
$117.9m
56.6%
STATUTORY
NPAT
86%
NORMALISED
NPAT
NET INTEREST
INCOME
COST TO INCOME
RATIO (NORMALISED)
19%
15%
510bps
$3.6b
$10.2b
$13.4b
1.5c
PRINCIPALLY FUNDED
SETTLEMENTS
PRINCIPALLY
FUNDED AUM
1%
19%
TOTAL
AUM
11%
FINAL DIVIDEND
FINAL DIVIDEND OF 1.0c PLUS
ONE OFF SPECIAL DIVIDEND OF
0.5c PER SHARE (FULLY FRANKED)
Dear Shareholders,
Financial year 2019 has been a very positive year for
plus a one-off special dividend of 0.5 cents per
Supporting our growth is that the non-bank
Nominations Committee and was a member of the
our organisation across a number of fronts.
share.
market share continued to rise during FY19, and
Audit Committee.
In December 2018, we changed the name of the
The reduction in the cost to income ratio
company from Homeloans Limited to Resimac
from 61.7% to 56.6% showed effective cost
Group Ltd, and consolidated our brand to Resimac.
management discipline within the organisation.
This consolidation allowed us to further leverage
our excellent reputation in both the capital and debt
Navigating the Market
markets, and has been well received. We took this
The Royal Commission into Banking and property
opportunity to simplify our product offering to the
market movements presented challenges to our
broker market which was welcomed by the industry
industry. However, our credit and risk management
our channel diversification strategy served us well.
We were happy to actively support the Third Party
channel as the findings from the Royal Commission
were released, recognising its importance to the
55% of consumers who choose to use brokers. In
addition, our ongoing focus on the development
of our Direct channel has established a strong
foundation for growth over coming years.
Mike has brought experience ranging from mergers
and acquisitions to public company governance, and
is a person of considerable commercial acumen. On
behalf of the Board and Resimac Group, I sincerely
thank Mike for his invaluable contribution and wish
him well.
With Thanks
and has been a success.
practises were validated during this year, both in
We are encouraged by our progress towards our
FY19 was a very successful year for Resimac Group
terms of our origination processes, and our low loss
goal of over 2% market share in originations over
and I would like to extend my thanks to our CEO,
Industry-Leading Performance
and delinquency levels that outperform industry
the next 3 years.
Scott McWilliam, the management team and staff
for their contribution and commitment to our
Resimac Group is pleased to report strong financial
benchmarks.
results across all key areas.
Key highlights include a normalised Net Profit After
Tax (NPAT) result of $31.1m, up 19% on FY18; and
Net Interest Margin (NIM) however, we have still
experienced a pleasing lift in Net Interest Income of
a fully-franked final dividend of 1.0 cents per share,
15% vs FY18.
Cost of funds volatility created some pressure on
Board Movements
company.
At the conclusion of our AGM and Board meeting in
November, Mike Jefferies will step down from the
Resimac Group board. Mike served on the Resimac
board from 2011 and was appointed to the Resimac
Group Board in Oct 2016. During his tenure with
the group, he Chaired the Remuneration and
Chum Darvall
Independent Non-Executive Chairman
RESIMAC GROUP LTD2019 ANNUAL REPORT 8
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RESIMAC GROUP LTD
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Message from
the CEO
FY19: A Year of Transformation
Financial Year 2019 was a year of change for our
organisation.
Our rebrand activity gave us an opportunity to
consolidate our products and service offering
across the industry and generated great
momentum. We were pleased to continue
that momentum by actively supporting the
Organisational Resilience
Despite the challenges in the industry in FY19,
our organisation has demonstrated incredible
resilience, and delivered impressive results for our
broker channel after the findings from the
shareholders.
Royal Commission, and helping to ensure that
all consumers continue to access the choice
Strong Growth in Revenue & Earnings
and competition that a strong broker channel
While the industry experienced a drop in new
facilitates.
business originations of 12.9%, we achieved
consistent settlements year on year vs FY18.
Our digital program achieved its first milestone
with the implementation of a new workflow
FY19 normalised NPAT increased 19% vs FY18.
system establishing a foundation for further digital
Our principally funded Assets Under Management
transformation initiatives and scale opportunities
(AUM) grew by 19%, and our Net Interest Income
within the organisation. In addition, we established
also increased by 15% driven by AUM growth,
strategic partnerships with Athena and Positive
stable funding costs and BBSW normalising from
Group, further supporting our digital capability and
the December / January peak.
diversifying our asset classes.
Revenue & Earnings
70
60
50
m
$
40
30
20
10
0
42.2
10.5
40.3
8.2
62.8
16.6
55.1
14.5
51.0
12.9
51.6
13.3
18
16
14
12
10
8
6
4
2
0
NPAT
(normalised)
m
$
Net
Interest
Income
H1 17
H2 17
H1 18
H2 18
H1 19
H2 19
SCOTT
MCWILLIAM
CEO
Ongoing Momentum with our
Funding Program
Resimac has continued to strengthen its funding
capabilities with new warehouse lines established
with UOB (Singapore), MUFG and Deutsche
Bank, extending duration profiles and developing
strategic relationships.
We also continued to develop our RMBS program
with an inaugural 144a issuance in the US market,
providing a deep investor base for Specialist
Lending asset class growth. Private bond
placement transactions were also completed with
new banking relationships, securing $600m of
incremental funding with a 6 year duration profile
– the longest in Resimac’s issuance history.
Ongoing Operational Efficiencies
In addition to the successful implementation
of our workflow system as the first step in our
digital journey, we made great inroads in achieving
efficiencies within our operating model.
The decision to move our Direct Sales team to
Sydney has allowed us to access a larger talent
pool and support our growth objectives for the
channel.
To add further support to our operating model,
we have expanded our operations in Manila, and
refined our processes, to assist with scale in our
back-end operations.
Our work in this area contributed to a 510bps
reduction in our cost to income ratio, from 61.7%
in FY18 to 56.6% in FY19.
A Platform for Future Growth
Our FY19 results have provided a strong
foundation for our ongoing growth in the
non-bank sector. It’s pleasing to note that the
challenges as outlined in the Chairman's message,
are now facilitating positive change: BBSW has
stabilised, loan originations and the property
market are improving, and the broker channel has
never been stronger - thanks to the actions of
many parties post the Royal Commission findings.
Next steps for the Group in FY20 is to continue
to focus our efforts on customer centric process
improvement and digital automation, driving
operational efficiencies and scale. We intend
to grow our market share by increasing our
penetration in the broker channel, focusing on
Specialist Lending, and expanding our Direct
channel.
RESIMAC GROUP LTD2019 ANNUAL REPORT 10
Message from the CEO
FY19: A Year of Transformation
Customer Centric Process Improvement & Digital Automation
CUSTOMER GROUP
& EXPERIENCE
DEFINITION
PROCESS
IMPROVEMENTS
DIGITAL
AUTOMATION
§ Borrowers
§ Employees
§ Brokers
§ Shareholders
§ Investors
§ Regulators
Functional process consolidation
Increased Manila support
Site consolidation
Ongoing process efficiency reviews
GL system upgrade
Salesforce implementation (workflow)
Online app experience (Athena
partnership)
Third party origination process
remediation
Self-service capability
Core system upgrade
Optimal Customer Journey
2019 ANNUAL REPORT
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11
Board of
Directors
Improved
conversion rates
and customer
experience
Increased
settlements
Increased
life of loan
Lower
origination and
servicing
expenses
Increased
scalability to
support growth
objectives
Chum Darvall
Chairman
Independent
Non-Executive Director
Susan Hansen
Independent
Non-Executive Director
Michael Jefferies
Independent
Non-Executive Director
Our funding program remains a focus, having already
Thanks to our Team
raised $2bn in term funding in FY20 from the global
capital markets with significant support from the
Asia Pacific & Japanese region and the US. The Group
continues to receive strong support from domestic
and offshore institutional debt investors along with
I join with the Chairman thanking the management
team and staff of Resimac Group for their contribution
to our great results. I’d also like to thank our Board for
their support over the last 12 months.
new balance sheet financing offers from banks, further
We can all be proud of the results we have achieved
augmenting the Group’s asset growth objectives.
in FY19, and the foundation we have built for future
growth in FY20 and beyond.
Scott McWilliam
Chief Executive Officer
Warren McLeland
Non-Executive Director
Duncan Saville
Non-Executive Director
RESIMAC GROUP LTD2019 ANNUAL REPORT 12
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RESIMAC GROUP LTD
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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 2019. In order to comply with the provisions of the
Corporations Act 2001, the Directors’ Report as follows:
Information about the Directors
Mr Michael Jefferies
Independent Non-Executive Director
since October 2016
Mr Duncan Saville
Non-Executive Director
since November 2017
Michael is a Chartered Accountant and holds a
Duncan is a Chartered Accountant and an experienced
Bachelor of Commerce degree. He has extensive
non-executive director. He is chairman of ICM Limited,
experience in finance and investment, including 20
an international fund manager. He is a fellow of the
years as an executive at Guinness Peat Group, and
Institute of Chartered Accountants Australia and New
currently serves on a number of boards.
Zealand, the Australian Institute of Company Directors
and the Financial Services Institute of Australasia.
Other listed directorships (last three years):
§ Independent Non-Executive director of Ozgrowth
Other listed directorships (last three years):
Limited (since October 2007)
§ Non-Executive director of West Hamilton Holdings,
§ Independent Non-Executive director of Afterpay
incorporated in Bermuda (since 2012)
Touch Group Limited (since June 2017) having
§ Former Non-Executive director of Touchcorp
The names and particulars of the Directors of the Company during or since the end of the financial year are:
formerly been Executive Chairman and Acting Chief
Limited (retired 30 August 2017), and Somers
Mr Cholmondeley (Chum) Darvall, AM
Mrs Susan Hansen
Chairman since November 2017
Independent Non-Executive Director
Independent Non-Executive Director
since October 2016
Chum was previously Non-Executive Vice Chairman
Susan is a Chartered Accountant and holds a Bachelor
of Deutsche Bank and prior to that Chief Executive
of Commerce degree and an MBA from the University
Officer of Deutsche Bank Australia and New Zealand
of Cape Town. Susan has 35 years of experience
from 2002 to 2011. He was also formerly the Chairman
including a Big Four Accounting firm and an investment
of TransGrid appointed by the New South Wales
bank (financial analysis and risk assessment). Susan is
Government, until its sale in December 2015. Chum
a Principal of a financial training organisation based in
holds a Bachelor of Arts degree, is a Senior Fellow
New Zealand.
of the Financial Services Institute of Australia and
a Fellow of the Australian Institute of Company
Other listed directorships (last three years):
Executive of Touchcorp Limited and Independent
Limited (retired 5 September 2018), both
Non-Executive director of Afterpay Limited prior
incorporated in Bermuda.
to the merger of these two companies to form
Afterpay Touch Group Limited (resigned January
2018)
§ Former Non-Executive director of Cue Energy
Resources Limited and New Zealand Oil and Gas
Limited, incorporated in New Zealand (resigned
§ Independent Non-Executive Chairman of Pantoro
from both on 14 December 2017).
Limited (since October 2016)
Special responsibilities:
Special responsibilities:
§ Member of the Remuneration and Nomination
§ Member of the Remuneration and Nomination
Committee (appointed 21 February 2018).
Committee (appointed 21 February 2018). Previous
Chair of this Committee from 10 November 2016 to
21 February 2018
§ Member of the Audit Committee (since November
Directors.
Special responsibilities:
§ Non-Executive director of Utilico Emerging Markets
2016)
Limited (since 2013)
§ Chairman of Resimac Group Ltd (appointed 13
Special responsibilities:
November 2017)
§ Chair of the Audit Committee (since November
§ Chair of the Remuneration and Nomination
2016)
Committee (appointed 21 February 2018). Member
§ Member of the Remuneration and Nomination
since 24 August 2017
Committee (since November 2016)
§ Member of the Risk and Compliance Committee
§ Member of the Risk and Compliance Committee
(appointed 24 August 2017)
(since November 2016)
§ Chair of Resimac NZ Home Loans Limited
Resimac is one of Australia
and New Zealand’s premier
non-bank home loan lenders.
RESIMAC GROUP LTD2019 ANNUAL REPORT 14
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RESIMAC GROUP LTD
15
Mr Warren McLeland
Non-Executive Director
since October 2016
Warren is a former stockbroker and investment
banker with over 35 years experience in domestic
and international financial services. In addition, he
acts as an adviser in funds management and business
Directors’ Shareholdings
Shares Options or Rights Granted to Directors & Senior Management
The following table sets out each director’s relevant
There were no shares granted to the senior management during the year.
interest in shares and rights of the company or in a
related body corporate as at 30 June 2019:
Fully paid
ordinary
shares
Number of
rights over
ordinary
shares
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).
Directors’ Meetings
strategy to companies operating in the Asia Pacific
Directors
region. He is the former Executive Chairman of
Resimac Limited.
Other listed directorships (last three years):
§ Chairman of Somers Limited incorporated in
Bermuda (since 2010)
Chum Darvall
1,787,078
Susan Hansen
107,023
Michael Jefferies
1,714,691
§ Non-Executive director of UIL Limited (since 2013)
Warren McLeland
11,996,695
Duncan Saville
253,913,646
Nil
Nil
Nil
Nil
Nil
Special responsibilities:
§ Chair of the Risk and Compliance Committee
(since February 2017)
§ Member of the Remuneration and Nomination
Committee (since November 2016)
§ Member of the Audit Committee (appointed 24
August 2017)
Company Secretary
Mr Peter Fitzpatrick
Since October 2016
Peter is a Chartered Accountant who worked for a
chartered accounting firm and oil explorer prior to
joining RESIMAC Limited in 1987. He is a member of
the Governance Institute of Australia and the Financial
entity).
Services Institute of Australasia.
Remuneration of Key Management
Personnel
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
During the year, 11 Board meetings, 4 Audit, 4 Risk and Compliance and 4 Remuneration and Nomination Committee
meetings were held.
Committees
Board Meetings
Audit
Risk & Compliance
Remuneration &
Nomination
(A)
11
11
11
11
11
(B)
11
10
11
11
11
(A)
(B)
(A)
(B)
(A)
(B)
-
4
4
4
-
-
4
4
4
-
4
4
-
4
-
4
4
-
4
-
4
4
4
4
4
4
3
4
3
4
Chum Darvall
Susan Hansen
Michael Jefferies
Warren McLeland
Duncan Saville
(A) Number of meetings eligible to attend.
(B) Number of meetings attended.
RESIMAC GROUP LTD2019 ANNUAL REPORT 16
2019 ANNUAL REPORT
17
17
Results & Dividends
Principal Activities
The information appearing on pages 16 to 21 forms part of the Directors’ Report for the financial year ended 30 June
The Group is a residential mortgage lender and multi-
§ Risk management: Operating with a holistic
2019 and is to be read in conjunction with the following information:
FY19
$’000
FY18
$’000
channel distribution business specialising in Prime and
enterprise risk management and governance
Specialist lending. The Group operates in targeted
framework utilising the three lines of defence
market segments and asset classes in Australia and
model; and
New Zealand.
§ Collections management: Specialised collections
Profit
Profit attributable to ordinary equity holders of the parent
47,185
25,320
developed a high quality lending portfolio, loan
capabilities and a solution-based approach to
As a non-bank financial institution, the Group has
processes based on deep experience, analytical
Dividends
The following dividends have been paid by the Company or declared by the Directors since
the commencement of the financial year ended 30 June 2019:
(a) out of the profits for the year ended 30 June 2018 and retained earnings on the fully-paid
ordinary shares:
§ fully-franked final dividend of 0.90 cents (FY17: 0.75 cents) per share paid on 12
3,594
2,953
October 2018.
(b) out of the profits for the half-year ended 31 December 2018 and retained earnings on the
fully-paid ordinary shares:
§ fully-franked interim dividend of 1.00 cents (HY18: 0.90 cents) per share paid on 25
4,001
3,587
March 2019
(c) out of the profits for the full year ended 30 June 2019 and retained earnings on the fully-
6,087
3,594
paid ordinary shares:
§ fully-franked final dividend of 1.00 cents (FY18: 0.90 cents) per share declared on 27
August 2019
§ fully-franked one off special dividend of 0.50 cents (FY18: Nil) per share declared on
27 August 2019.
The Company’s Dividend Reinvestment Plan (DRP) was applied to the interim and final
dividend.
servicing capability, and funding platform through
customer management.
a combination of organic growth and targeted
acquisitions across Australia and New Zealand.
The Group offers a broad range of residential
mortgage lending products, underpinned by a
comprehensive risk-based pricing methodology.
The Group’s business model provides a diversified
base of revenue generated at multiple points
across the customer relationship and includes loan
origination, lending, and mortgage management.
The Group’s core capabilities include:
Debt Funding
The Group maintains access to a diversified
funding platform supported by established funding
relationships and the 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;
§ Warehouse facilities: Third-party funders provide
limited-recourse financing to special purpose
§ Product manufacturing: Expertise in residential
vehicles established by the Group;
mortgages gives the Group flexibility in providing a
range of products with attractive risk-return profiles
in Australia and New Zealand. The Group applies its
detailed knowledge of borrowers to develop new
products that address unmet demand;
§ Distribution: Distributing loans in Australia and
New Zealand through relationships with accredited
brokers and white-label partners, in addition to a
direct-to-customer 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;
§ Term securitisations: Loans that are initially funded
via a warehouse facility can be pooled together and
refinanced by being sold to new funding vehicles
that issue limited-recourse independently rated
asset-backed securities to institutional investors in
multiple jurisdictions; and
§ Wholesale funding partners: Provide white-label
arrangements with the Company receiving an
upfront commission and on-going management
trail for servicing these customers. Loans funded
through this channel are referred to as non-
principally funded and do not sit on the Group’s
balance sheet.
RESIMAC GROUP LTD2019 ANNUAL REPORT 18
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RESIMAC GROUP LTD
2019 ANNUAL REPORT
19
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Principal Risks
Business Strategy
Review of Operations
The Group’s key risks include, but are not limited to:
The Group is focused on a number of growth
The Group generated a net profit after tax (NPAT) of
strategies to continue to drive revenue and
$47,185,000 for the year ended 30 June 2019. To reflect
Unaudited non-IFRS information
§ Funding risk: The funding platform currently comprises
a mix of warehouse facilities, term securitisations and
profitability over coming years:
corporate debt. The Group depends on these sources to
1. Organic Lending Growth
fund mortgage originations;
§ Capital and liquidity requirements: The Group is
required to maintain sufficient liquidity levels under
Australian Financial Services Licence requirements;
The Group is well-positioned to continue to build
upon strong volume growth, driven by:
§ Capitalising on the Group’s unique position as
a non-bank lender with customers favourably
viewing the Group as an alternative to the major
the Group’s normalised earnings the NPAT has been
adjusted to separate one-off items, which are included in
the result for the financial year ended 30 June 2019.
The following table reconciles the unaudited normalised
NPAT to the statutory NPAT (in accordance with
International Financial Reporting Standards (IFRS)) for
Statutory NPAT
De-recognition of investment in
Associate (Finsure)
Gain on disposal of subsidiary (Paywise)
the year.
Non-recurring income
A risk exists that the Group could be required to
lenders.
Management believe the disclosure of the normalised
Tax effect of normalised items
§ Opportunity to grow volume in the Specialist and
NPAT provides additional insight into the underlying
Prime segments of the residential mortgages
performance for the year, by excluding one off, non-
Normalised NPAT
market;
recurring revenue items.
FY19
$’000
47,185
(5,810)
(13,104)
(467)
3,305
31,109
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 its business. The
Group holds a number of Australian Credit Licences.
Changes in laws or regulations in a market in which the
§ Continuing development of all distribution
channels and further investment in the Group’s
brand positioning;
§ Equity investments in aligned Financial Services
companies including Athena Financial Pty Ltd
(“Athena”) and Positive Group (acquired on 3 July
2019); and
Group operates could impact the business. The Group
§ Pursuing diversification opportunities in
is licensed and/or registered to operate a number of
Australia and New Zealand.
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; and
§ Macroeconomic environment: A material downturn,
a sustained outbreak of higher inflation, shocks to the
financial system, a material 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).
2. Growth Through Acquisition
§ Management has demonstrated a strong
track-record in identifying and executing profit
accretive acquisitions in targeted markets that
are consistent with the Group’s strategy; and
§ The Group expects that it will be able to
capitalise on opportunities stemming from
regulatory change and capital markets volatility,
and is focused on executing these opportunities
in a disciplined and structured manner through
the use of a dedicated internal mergers and
acquisitions team.
Total revenues and other income of $468,755,000 increased 21% on prior year.
Net interest income increased by 15% to $117,853,000. Operating expenses increased by 1% on prior year.
Loan impairment expense increased by 83% to $2,966,000, however remains low in absolute terms.
Total mortgage settlement flows across the Group’s combined distribution channels (i.e. both principally funded and
non-principally funded) were $4.1 billion1, down 7% on the prior year.
§ Settlements of principally funded lending of $3.6 billion1 down 1% on prior year; and
§ Settlements of the non-principally funded portfolio were $0.5 billion, down 36% on the prior year reflecting the
continued shift in focus to growing the principally funded portfolio.
The highlights of the Group’s financial position and the assets under management at 30 June 2019 include:
§ Principally funded loans and advances to customers increased 19% on the prior year to $10.2 billion1; and
§ Non-principally funded portfolio was $3.2 billion, down 7% on the prior year.
Combined these make up the total assets under management portfolio of $13.4 billion1.
The Group’s net assets increased by 21% from 30 June 2018, largely attributable to underlying profit growth.
1 Principally funded settlement and assets under management exclude loans originated by Athena ($0.1 billion) in FY19, included in the consolidated
financial statements. Management does not consider the Athena loan portfolio as part of the Group’s principally funded portfolio.
RESIMAC GROUP LTD2019 ANNUAL REPORT 20
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RESIMAC GROUP LTD
21
Funding Programmes
§ The RESIMAC Bastille Series 2018-1NC transaction
Indemnification of Officers &
Auditors
was settled on 16 August 2018 and is a multi-
During the financial year, the Company paid a
currency non-conforming issue with a total issuance
premium in respect of a contract insuring the
Directors of the Company as named above, the
Company Secretary and all executive officers of
the Company against a liability incurred as such
a Director, Secretary or executive officer to the
Subsequent Events
Final Dividend Declared
The Board of Resimac Group Ltd declared a fully-franked final dividend of $0.01 per share and a fully-franked special
dividend of $0.005 per share. The Record Date is 6 September 2019. The payment date will be 30 September 2019. The
dividend has not been provided for in this financial report.
Positive Group Investment
On 3 July 2019, the Company invested $3m for a 15% stake in Positive Group which specialises in asset finance solutions
size of $1 billion equivalent.
§ The RESIMAC Premier Series 2018-2 transaction
was settled on 26 November 2018 and is a multi-
currency Prime issue with a total issuance size of
$750 million equivalent.
§ The RESIMAC Premier Series 2019-1 transaction
was settled on 29 March 2019 and is a domestic
prime issue with a total issuance size of $600
million.
§ The RESIMAC Triomphe Trust – Warehouse Series
No.7 was settled on 10 April 2019 and is a domestic
prime and non-conforming warehouse with a total
facility size of $1 billion
§ The RESIMAC Versailles Series 2019-1 transaction
was settled on 29 April 2019 and is a New Zealand
prime and non-conforming issue with a total
issuance size of NZ$250 million.
Significant changes in state of affairs
Following approval of a special resolution by
shareholders at the Annual General Meeting of the
Company held 26 November 2018, the Company
changed its name from Homeloans Limited to Resimac
Group Ltd. The ASX trading code changed from HOM
to RMC on 4 December 2018.
extent permitted by the Corporations Act 2001.
for consumers, and small business. Resimac holds an option to acquire a further 10%.
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.
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 26 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 26 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.
The Group’s net assets
The auditor’s independence declaration is included on page 124 of this financial report.
Auditor’s Independence Declaration
increased by 21%
from 30 June 2018,
largely attributable to
underlying profit growth.
Rounding Off of 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.
RESIMAC GROUP LTD2019 ANNUAL REPORT 22
22
RESIMAC GROUP LTD
23
Directors’
Report
Remuneration Report 2019
(Audited)
CONTENTS
Section
Details
1
2
3
4
5
6
7
8
Executive Summary
Key Management Personnel
KMP Remuneration Policy
Outcomes
Statutory Remuneration
Long-Term & Short-Term Incentive Plans
Non-Executive Director Remuneration
Other Remuneration Information
1. Executive Summary
2. 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:
Name
Current
Position
Term as KMP
Scott McWilliam
Chief Executive Officer (CEO)
Full Term
Jason Azzopardi
Chief Financial Officer (CFO)
Appointed 3 July 2018
Former
Mary Ploughman
Joint Chief Executive Officer (Joint CEO)
Ceased 26 June 20191
Ian Parkes
Chief Financial Officer (CFO)
Ceased 5 April 2018
The Non-Executive Directors classed as KMP and required to be disclosed as part of this report are:
Name
Current
Position
Term as KMP
Chum Darvall
Chairman, Independent Non-Executive Director
Susan Hansen
Independent Non-Executive Director
Michael Jefferies
Independent Non-Executive Director
Warren McLeland
Non-Executive Director
Duncan Saville
Non-Executive Director
Full Term
Full Term
Full Term
Full Term
Full Term
Page
22
23
24
25
26
27
28
30
This Remuneration Report sets out the remuneration framework and outlines the details and outcomes of Key
Management Personnel (KMP) for Resimac for the year ended 30 June 2019.
Former
Robert Scott
Independent Non-Executive Director
Ceased 26 November 2018
Robert Salmon
Independent Non-Executive Director
Ceased 13 November 2017
1 Mary Ploughman ceased being Joint CEO on 18 January 2019, however remained a Director of Resimac Limited until 26 June 2019.
RESIMAC GROUP LTD2019 ANNUAL REPORT 24
24
RESIMAC GROUP LTD
25
3. KMP Remuneration Policy
4. Outcomes
The total remuneration package of the KMP comprise
The STI awarded for the 30 June 2019 year will be
4.1. Overview of Company Performance
a fixed component and an at risk component.
paid in 100% cash. Mr McWilliam’s STI award includes
The remuneration is based on the:
§ role in which they are performing (i.e.
a deferred component which will be subject to a look
back and once assessed, will be paid in July 2020.
accountability, responsibility, qualifications, skill
In determining the STI payable to the KMP this year,
and experience required); and
§ market benchmarking.
the Remuneration and Nomination Committee
undertook a review of each person’s performance
against their individual KPIs for the FY19 performance
The KMP remuneration arrangements are as follows:
period in July 2019.
3.1. Fixed Base Package
The fixed component includes superannuation
and is known as Total Fixed Remuneration (TFR).
This amount is subject to an annual review by the
Remuneration and Nomination Committee.
3.2. Short-Term Incentive (STI)
The STI is assessed at the end of each performance
period (i.e. 1 July to 30 June). This assessment is
against predetermined Key Performance Indicators
(KPIs) set by the Remuneration and Nomination
Committee at the beginning of the performance
period.
KPIs include:
§ Strategic;
§ Financial;
§ Innovation and technology;
§ Operational efficiency and effectiveness;
§ People and culture; and
§ Risk and compliance components.
3.3. Long-Term Incentive (LTI)
The LTI is an equity arrangement of either options over
ordinary shares or performance shares (pursuant to
the Resimac Group Employee Share Option and Rights
Plan rules) where an allocation is considered each year.
The aim of the LTI is:
§ Retention of key senior talent
§ To align long term company performance with its
shareholders; and
§ Ensure continual regulatory adherence.
The Group applies its
detailed knowledge of
borrowers to develop
new products that address
unmet demand.
The table below summarises details of Resimac’s performance for key financial measures over the past five financial
years. The comparative years FY15-FY16 are shown for the pre-merger Resimac Group Ltd (previously known as
Homeloans Limited) and its controlled subsidiaries. These results do not include Resimac Limited.
Merged
Resimac
pre-acquisition
Financial year ended 30 June
FY19
FY18
FY17
FY16
FY15
NPAT ($’000)
47,185
25,332
15,780
5,253
5,608
Total dividends per share (cents)
1.90
1.65
2.752
4.0
4.0
Dividend payout ratio (%)
16.1
25.9
62.6
80.5
75.0
Closing share price (cents as at 30 June)
64.0
57.0
43.0
44.0
58.0
Basic earnings per share (cents)
11.75
6.37
4.39
4.96
5.33
Return on equity (ROE) (%)3
17.3
17.2
11.2
Return on assets (%)1
4.4
2.8
2.3
11.9
1.8
13.3
2.0
1 As a result of the requirement under AASB 10 – Consolidated Financial Statements, the parent company exercises control over the SPVs and
securitisation trusts, and therefore significant assets have been added to the consolidated statement of financial position without any appreciable
increase in net profit.
2 In October 2016, the Board of Resimac Group Ltd paid a final dividend of 2.0 cents per share to existing Resimac Group Ltd shareholders prior to the
completion of the merger with Resimac Limited.
3 ROE based on normalised NPAT and average shareholders equity per consolidated statement of financial position.
RESIMAC GROUP LTD2019 ANNUAL REPORT 26
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2019 ANNUAL REPORT
27
27
6. Long-Term & Short-Term Incentive Plans
6.1. LTI Plan
The CEO was offered a LTI in the 2018 year as per the
300,000 vested in August 2018 and is exercisable);
following terms and conditions:
§ The exercise period is 3 years for each tranche vesting;
§ Received 900,000 Options pursuant to the Resimac
and
Group Employee Share Option and Rights Plan;
§ The vesting condition is 100% tenure.
§ The grant date was 18 August 2017;
§ The exercise price is $0.55 per option;
§ These options will vest in equal tranches of 300,000 on
each anniversary of the Grant Date (the first tranche of
The table below sets out details of the movement for the
share rights and options granted and vested during the
year.
Held at
1 July 2019
Granted
during year
Vested during
the year
Unvested at
30 June 2019
Held at
30 June 2019
900,000
-
900,000
-
1,800,000
-
-
-
-
-
300,000
600,000
900,000
-
-
-
300,000
600,000
900,000
-
-
-
600,000
1,200,000
1,800,000
KMP
Current
Scott McWilliam
Jason Azzopardi
Former
Mary Ploughman
Ian Parkes
TOTAL
6.2. STI Plan
Each KMP has a contractual STI in which they have an
Effective from 3 July 2018, Mr Azzopardi is eligible for
opportunity to earn up to a percentage of their TFR.
a STI of 30% of his TFR, subject to Board discretion. Mr
From 1 July 2018 to 31 January 2019, Mr McWilliam
was eligible for a STI up to 50% of his TFR. Effective
from 1 February 2019, Mr McWilliam is eligible for a
STI up to 75% of his TFR. Mr McWilliam’s performance
against predetermined KPIs will be assessed by the
Azzopardi’s performance against predetermined KPIs
will be assessed by the Remuneration and Nomination
Committee at the end of each performance period. Any
STI awarded will be paid in cash 100% at the end of the
performance period.
Remuneration and Nomination Committee at the end of
KPIs and relevant measurements will be set at the
each performance period. Any STI awarded will be paid in
commencement of the performance period and will
cash 66.7% at the end of the performance period, with
be assessed by the Remuneration and Nomination
the remaining 33.3% in cash deferred for 12 months.
Committee at the end of each performance period.
RESIMAC GROUP LTD2019 ANNUAL REPORT
28
28
RESIMAC GROUP LTD
29
7. Non-Executive Director Remuneration
7.1. Overview of Non-Executive Directors' Remuneration Arrangements
7.1.1. Policy Objectives
and the Board is not intending to increase this pool at this
§ To be market competitive: aim to set Directors’ fees
year’s AGM.
that are competitive with Non-Executive Directors in
comparative companies;
§ To ensure complementary skills: aim to ensure that
the mix of Directors at any one time are diverse and are
adequate to carry out the objectives of the business;
and
7.1.3. 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 and with
an Australian Financial Services Licence and several
§ To safeguard independence: to exclude any
Australian Credit Licences.
performance related element in order to preserve the
independence of the Non-Executive Directors.
The agreed fee structure is that a fee is paid to reflect
the Chairman’s responsibilities. Each Director receives
7.1.2. Aggregate Fees Approved by Shareholders
a base fee and if a Director chairs a Board committee,
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-
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
executives of $550,000. This amount is the current pool
committee membership.
The 2019 fee levels were as follows:
Name
Position
Maximum Fee ($)
Chum Darvall
Chairman and Remuneration & Nomination Chair
Susan Hansen
Non-Executive Director, Audit Chair and New Zealand Chair
Michael Jefferies
Non-Executive Director
Warren McLeland
Non-Executive Director and Risk & Compliance Chair
Duncan Saville
Non-Executive Director
120,000
130,000
70,000
75,000
70,000
7.1.4. Board Skills & Performance Review
The Board undertakes from time to time a review of the skills that each holds and is then summarised in a skills matrix. In
addition, the Board carries out an assessment of the performance of the Board as a whole and of each committee. The
last review was conducted in March 2018. These assessments are conducted in-house however if any Board member
wishes to have an independent review the appropriate consultant will be appointed.
7.1.5. Non-Executive Director Remuneration
The fees paid or payable to the Non-Executive Directors in relation to the 2019
financial year are set out below:
Short-Term
Benefits
Post-Employment
Benefits
Fees
($)
Superannuation
($)
Total
($)
Proportion
performance
related
(%)
Current
Chum Darvall1
FY19
FY18
Susan Hansen
FY19
FY18
Michael Jefferies
FY19
FY18
Warren McLeland
FY19
FY18
Duncan Saville2
FY19
FY18
Former
Robert Scott3
FY19
FY18
Robert Salmon4
FY19
FY18
131,400
104,120
112,399
105,000
70,000
72,500
75,000
75,000
70,000
44,321
($)
34,494
81,250
-
5,700
137,100
-
104,120
9,342
9,975
6,650
6,888
7,125
7,125
-
-
($)
-
-
-
121,741
114,975
76,650
79,388
82,125
82,125
70,000
44,321
34,494
81,250
-
($)
(%)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
25,756
2,447
28,203
Total Remuneration
FY19
FY18
493,293
507,947
28,817
26,435
522,110
534,382
1 Appointed as Chairman on 13 November 2017. Chum Darvall’s FY19 fee reflects the $120,000
maximum fee, plus an $11,400 correction for prior period underpayment.
2 Appointed Non-Executive Director on 13 November 2017.
3 Resigned as Independent Non-Executive Director on 26 November 2018.
4 Resigned as Independent Non-Executive Director on 13 November 2017.
RESIMAC GROUP LTD2019 ANNUAL REPORT 30
30
RESIMAC GROUP LTD
31
8. Other Remuneration Information
8.1. Remuneration Governance
8.1.1. Remuneration Governance & Responsibility
8.1.2. Remuneration & Nomination Committee
The Resimac Board of Directors has the
responsibility for setting and overseeing the
The Board has established a Remuneration and
Nomination Committee. This Committee has a
Company’s remuneration policies, practices and
formal charter. This charter is available on the
structure. The Board considers recommendations
Company’s website www.resimac.com.au.
made by the Remuneration and Nomination
Committee.
The remuneration framework and matters
considered by the Remuneration and Nomination
Committee and the Board include:
§ Review Board size and composition (mix of
skills, qualifications, experience and other
competencies);
§ Identify and recommend candidates to the
Board for nomination as members of the Board
or its Committees;
§ Develop and implement a process for induction
and orientation of new Directors;
§ Review and approve 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 approve the remuneration of KMP,
The Remuneration and Nomination Committee
members are:
§ Chum Darvall – Chair; and
§ Susan Hansen, Michael Jefferies, Warren
McLeland and Duncan Saville as members.
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 Remuneration and Nomination Committee
receives regular reports from Human Resources
and meets at least 4 times per year.
8.1.3. Services From Remuneration Consultants
The Remuneration and Nomination Committee
may request advice from independent external
Directors and senior management (including
consultants where appropriate. These
total fixed remuneration, short term incentives
and long term incentives);
consultants will be engaged directly by the
Remuneration and Nomination Committee.
§ Approve executive recruitment practices;
§ Succession planning; and
§ Diversity and inclusion in the workplace.
The Company did not engage any remuneration
consultants during the year.
8.1.4. 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
Chum Darvall
Susan Hansen
Michael Jefferies
Warren McLeland
Duncan Saville
Senior Executives
Scott McWilliam
Jason Azzopardi
Former
Mary Ploughman1
Robert Scott2
Ian Parkes3
Robert Salmon4
Held at
1 July 2018
1,428,973
Net
change
358,105
Held at
30 June 2019
1,787,078
103,270
3,753
107,023
669,774
1,044,917
1,714,691
11,814,190
182,505
11,996,695
248,794,304
5,119,342
253,913,646
262,810,511
6,708,622
269,519,133
1,301,600
(300,000)
1,001,600
-
25,000
25,000
1,301,600
(275,000)
1,026,600
83,716
2,226,629
197,743
6,376,334
8,884,422
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
272,996,533
6,433,622
270,545,733
1 Ceased as KMP on 26 June 2019.
2 Resigned as Independent Non-Executive Director on 26 November 2018.
3 Ceased as KMP on 5 April 2018.
4 Resigned as Independent Non-Executive Director on 13 November 2017.
RESIMAC GROUP LTD2019 ANNUAL REPORT 32
32
RESIMAC GROUP LTD
33
8.1.5. Share Trading Restrictions
8.1.6. Further Information on Remuneration
Details regarding loans outstanding at the reporting date to KMP and their related parties, where the aggregate loan
Resimac Securities Trading Policy reflects the
8.1.6.1. Service Agreements
balance exceeded $100,000 at any time during the reporting period, are outlined below.
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 consent and clearance in writing for
security trading during trading windows from
the Chairman. All other staff 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.
Each KMP has entered into an employment contract
with the Company. These contracts have unlimited
duration however may be terminated with relevant
notice.
All KMP 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.
Set out below are the notice periods for each KMP.
Scott McWilliam
Notice Period / Termination Payment:
§ Six months’ notice (or payment in lieu)
§ May be terminated immediately for serious
misconduct
Jason Azzopardi
Notice Period / Termination Payment:
§ Three months’ notice (or payment in lieu)
§ May be terminated immediately for serious
misconduct
8.1.7. Related Party Transactions
Loans to KMP and their related parties are secured
residential mortgage loans provided in the ordinary
course of the Resimac Group Ltd 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.
Details regarding loans outstanding at the reporting
date to KMP and their related parties, where the
aggregate loan balance exceeded $100,000 at any
time during the reporting period, are outlined below.
Name
Balance
1 July 2018
Balance
30 June 2019
Interest payable
for the year1
Highest balance
during the year
Non-Executive Directors
($)
($)
($)
($)
Duncan Saville
Robert Scott2
5,322,444
5,211,424
247,697
5,342,567
1,000,000
N/A
41,452
1,003,559
6,322,444
5,211,424
289,149
6,346,126
1 Interest charged on an arm’s-length basis.
2 Ceased as KMP on 26 November 2018.
8.1.7.1. Other Transactions & Balances With KMP
From time to time, directors of the Company or its controlled entities, or their director-related entities, may purchase
goods or services from the Group. These purchases are on the same terms and conditions as those entered into by other
group employees or customers and are trivial or domestic in nature.
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.
Cholmondeley Darvall
Chairman and Non-Executive Director
Sydney
27 August 2019
RESIMAC GROUP LTD2019 ANNUAL REPORT 34
34
RESIMAC GROUP LTD
35
Financial
Statements
Consolidated Statement of Profit or Loss
for the year ended 30 June 2019
Interest income
Interest expense
Net interest income
Fee and commission income (Revenue from customers under AASB 15)
Fee and commission expense
De-recognition of investment in Associate (Finsure)
Gain on disposal of subsidiary
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
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2019
Note
FY19
$’000
FY18
$’000
47,185
25,332
(39)
(41)
(2,065)
-
(3,995)
1,054
1,199
(316)
669
(593)
(4,231)
104
Note
FY19
$’000
FY18
$’000
1
445,233
358,337
2
(327,380)
(255,825)
PROFIT AFTER TAX
Other comprehensive income, net of income tax
Items that will not be reclassified subsequently to profit or loss:
Reversal of prior year reserve on trust wind up
Fair value movement on investment in BNK Banking Corporation Limited (“BNK”)
through OCI, net of tax
117,853
102,512
Items that may be reclassified subsequently to profit or loss:
1
2
23
22
1
2
2
2
18,982
27,580
(31,515)
(33,425)
5,810
13,104
-
-
4,540
2,140
(37,658)
(38,196)
(24,208)
(23,056)
(2,966)
(1,623)
63,942
35,932
3
(16,757)
(10,600)
47,185
25,332
47,185
25,320
-
12
47,185
25,332
Changes in fair value of cash flow hedges
Tax effect
Currency translation differences
Other comprehensive income, net of tax
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD
42,954
25,436
Attributable to:
Owners of the parent
Non-controlling interest
Earnings per share
Basic
Diluted
42,954
25,424
-
12
42,954
25,436
FY19
cents per
share
FY18
cents per
share
19
11.75
6.37
19
11.75
6.35
Notes to the consolidated financial statements are included on pages 39 to 122.
RESIMAC GROUP LTD2019 ANNUAL REPORT 36
2019 ANNUAL REPORT
37
37
Consolidated Statement of Financial Position
as at 30 June 2019
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RESIMAC GROUP LTD2019 ANNUAL REPORT
38
38
RESIMAC GROUP LTD
39
Consolidated Statement of Cash Flows
for the year ended 30 June 2019
Cash flows from operating activities
Interest received
Interest paid
Receipts from loan fees and other income
Payments to suppliers and employees
Payments of net loans to borrowers
Income tax paid
Note
FY19
$’000
FY18
$’000
452,335
373,471
(318,583)
(242,037)
51,674
56,803
(150,270)
(134,710)
(1,713,838)
(1,992,903)
(9,736)
(5,211)
Net cash used in operating activities
4
(1,688,418)
(1,944,587)
Cash flows from investing activities
Payment for plant, equipment and intangible assets
Loans to related parties
Payments for new investments
Proceeds on disposal of Paywise
Cash on disposal of subsidiary
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Swap payments
Payment of dividends
Payment of finance lease
Net cash provided by financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the period (1 July)
Effects of exchange rate changes on cash balances held in foreign currencies
(2,456)
(2,172)
(6)
(8,375)
(2,000)
-
12,000
-
(9,994)
-
(2,456)
(10,547)
8,748,825
15,739,613
(7,027,463)
(13,766,779)
(949)
(4,387)
(252)
(1,150)
(3,961)
-
1,715,774
1,967,723
24,900
12,589
198,905
187,109
985
(793)
Cash and cash equivalents at the end of the period
4
224,790
198,905
Notes to the consolidated financial statements are included on pages 39 to 122.
Notes to the Consolidated
Financial Statements
About This Report
for the year ended 30 June 2019
About This Report
Resimac Group Ltd (“Resimac” or “the Company”) is a
§ has been prepared on a historical cost basis, except
for-profit company limited by shares incorporated and
for investments held by associates and certain
domiciled in Australia whose shares are publicly traded
financial instruments which have been measured at
on the Australian Securities Exchange. The nature of
fair value. The carrying values of recognised assets and
the operations and principal activities of Resimac and its
liabilities that are the hedged items in fair value hedge
entities that it controls (referred to as "the Group") are
relationships, which are otherwise carried at amortised
described in the segment information.
cost, are adjusted to record changes in the fair values
The consolidated general purpose financial report of the
Group for the year ended 30 June 2019 was authorised
for issue in accordance with a resolution of the Directors
on 27 August 2019. 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);
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 2018. Refer to Note 30
for further details; and
§ equity accounts for associates listed at Note 23.
Key Judgements & Estimates
In the application of the Group’s accounting policies, the
are based on historical experience and various other
Directors are required to make judgements, estimates
factors that are believed to be reasonable under the
and assumptions about the carrying value of assets
circumstances, the results of which form the basis of
and liabilities that are not readily apparent from other
making judgements. Actual results may differ from these
sources. The estimates and associated assumptions
estimates.
RESIMAC GROUP LTD2019 ANNUAL REPORT 40
40
RESIMAC GROUP LTD
41
Notes to the Consolidated Financial Statements
About this Report (for the year ended 30 June 2019)
Judgements and estimates which are material to the financial report are found in the
following notes:
Note
Relates to
1
3
Recognition of revenue from contracts with customers
Recognition of deferred tax assets and liabilities
1 & 13
Net present value (“NPV”) of future trail commission: recognition of future commissions
receivable and payable
10
15
Goodwill impairment
Provisions – long service leave
20 & 21
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 22.
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.
Foreign Currency
The Notes to the Financial Statements
As at the reporting date, the assets and
The notes include information which is required to
liabilities of overseas subsidiaries are translated
understand the financial statements and is material
into Australian dollars at the rate of exchange
and relevant to the operations, financial position and
ruling at the balance sheet date and the income
performance of the Group. Information is considered
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.
material and relevant if, for example:
§ the amount in question is significant because of its
size or nature;
§ it is important for understanding the results of the
Group;
Transactions in foreign currencies are
§ it helps to explain the impact of significant changes
initially recorded in the functional currency
in the Group’s business – for example, acquisitions
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 are
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
then recognised in the income statement. Tax
management practices of the Group and shareholder
charges and credits attributable to exchange
returns for the year;
Subsidiaries are consolidated from the date on which control is obtained to the date on which control
is disposed.
differences on those borrowings are also
recognised in equity.
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
§ the ability to use its power over the investee to affect its return.
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 of accounting.
Refer to Note 22 for detail on the consolidation of Special Purpose Vehicles (SPV).
Other Accounting Policies
Significant and other accounting policies that
summarise the measurement basis used are
relevant to an understanding of the financial
statements and are provided throughout the
notes to the financial statements.
Risk: discusses 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 aspects of the Group
structure and how changes have affected the
financial position and performance of the Group;
Unrecognised items: provides information about
items that are 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.
RESIMAC GROUP LTD2019 ANNUAL REPORT 42
2019 ANNUAL REPORT
43
43
Notes to the Consolidated
Financial Statements
Segment Information
for the year ended 30 June 2019
Whilst the nature of the customers and products are
similar to the Australian Lending segment, given the
Management have assessed the impact of Paywise business on its group results as not material and therefore does not
represent a major line of business or geographic area of operations. Therefore Paywise is not presented as a discontinued
different jurisdiction and market conditions, management
operation for the year ended 30 June 2019, notwithstanding that Paywise is disclosed as an operating segment.
Segment Information
AASB 8 Operating Segments requires operating
segments to be identified on the basis of internal reports
about components of the Group that are regularly
reviewed by the Board and executive management team
believe it is appropriate to distinguish the result of New
Zealand from Australia.
(the chief operating decision makers (CODM)) in order
The support for this as a separate segment includes
to allocate resources to the segment and to assess its
the operation of a separate NZ board and management
performance.
The Group has identified three reportable segments
based on the nature of the products and services
reporting; it has separate regulatory requirements/
oversight; and staff who are solely accountable for the NZ
business.
provided, the type of customers for those products and
Under AASB 8, this segment cannot be aggregated with
services, the geographies where the business operates
the Paywise segment as the aggregation criteria are not
and the existence of discrete and separate reporting and
met.
management teams. The following summary describes
the operations in each of the Group’s reportable
3. Paywise Business
segments.
The Group’s reportable segments under AASB 8 are
therefore as follows:
1. Australian Lending Business
Represents the distribution and lending businesses
currently captured under the Resimac and State
Custodians brands.
The segment contains the bulk of the Australian based
income and expense. It incorporates the new business
settled through the various distribution channels, the
margin net of funding costs of the principally funded loan
portfolios and the upfront and trail commission on the
non-principally funded loan portfolio.
On 24 May 2019, the Group sold its 100% equity stake
in its wholly owned subsidiary Paywise Pty Limited for
total cash consideration of $14 million in a management
buyout agreement. The economic effective date of this
transaction is 30 April 2019. The income and expenses
of Paywise up to 30 April 2019 are included in the FY19
consolidated financial statements.
Paywise is a salary packaging service provider that
operates independently to Resimac’s core Australian
and New Zealand lending business which has been
previously disclosed as a separate operating segment
on the basis that the CODM allocate resources and
assess its performance separately. It provides services
to employers and employees to manage salary packaging
arrangements. It receives service fees and commission
2. New Zealand Lending Business
income.
Information regarding these segments is presented below. The accounting policies of the reportable segments are the
same as the Group’s accounting policies.
The following is an analysis of the Group’s revenue and results by reportable operating segments:
Australian
Lending
New Zealand
Lending
Paywise1
Consolidated
FY19
$’000
FY18
$’000
FY19
$’000
FY18
$’000
FY19
$’000
FY18
$’000
FY19
$’000
FY18
$’000
Revenue from external customers
439,646
363,970
22,056
16,018
7,053
8,069
468,755
388,057
Total segment revenue
439,646
363,970
22,056
16,018
7,053
8,069
468,755
388,057
Segment results before tax,
depreciation, amortisation, finance
costs and impairment
69,498
40,124
2,834
2,186
432
1,109
72,764
43,419
Depreciation and amortisation
(1,090)
(860)
(11)
(24)
(158)
(239)
(1,259)
(1,123)
Loan impairment
Finance costs
(3,041)
(1,644)
75
21
(4,334)
(4,563)
(263)
(178)
-
-
-
(2,966)
(1,623)
-
(4,597)
(4,741)
Segment results before income tax
61,033
33,057
2,635
2,005
274
870
63,942
35,932
Income tax expense2
PROFIT AFTER TAX
(16,757)
(10,600)
47,185
25,332
1 FY19 includes Paywise segment result for the period from 1 July 2018 to 30 April 2019. FY18 revenue reclassified between Australian lending and Paywise
segment to consistently align to how management view and report the business in FY19.
2 Income tax expense is grouped on a consolidated basis, not by reportable operating segment.
RESIMAC GROUP LTD2019 ANNUAL REPORT 44
44
RESIMAC GROUP LTD
45
Notes to the Consolidated Financial Statements
Segment Information (for the year ended 30 June 2019)
The following is an analysis of the Group’s assets and liabilities by reportable operating segment:
Australian
Lending
New Zealand
Lending
Paywise1
Consolidated
FY19
$’000
FY18
$’000
FY19
$’000
FY18
$’000
FY19
$’000
FY18
$’000
FY19
$’000
FY18
$’000
Notes to the Consolidated
Financial Statements
Key Numbers
for the year ended 30 June 2019
1. Revenue
The effect of initially applying AASB 15 on the Group’s revenue from contracts with customers is described in Note 30.
1.1. Revenue Streams
The Group generates revenue primarily from net interest margin on principally funded loans, annuity trail income on non-
principally funded loans and other fee income.
Segment assets
10,210,822
8,556,597
505,635
397,350
10,210,822
8,556,597
505,635
397,350
Segment liabilities
(10,019,239)
(8,414,912)
(488,099)
(367,271)
Tax liabilities3
-
-
-
-
(10,019,239) (8,414,912)
(488,099)
(367,271)
NET ASSETS
191,583
141,685
17,536
30,079
-
-
-
-
-
-
3 Tax liabilities are grouped on a consolidated basis instead of by reportable operating segment.
15,003
10,716,457
8,968,950
15,003
10,716,457
8,968,950
(14,107)
(10,507,338) (8,796,290)
-
(12,995)
(9,935)
(14,107)
(10,520,333) (8,806,225)
896
196,124
162,725
Revenue from contracts with customers
Interest income
Loans and advances
Bank deposits
Discount unwind on NPV of trail commission
Other income
Total revenue
Recognition & Measurement
Interest Income - Loans & Advances
FY19
$’000
FY18
$’000
18,982
27,580
438,895
352,259
3,152
2,685
3,186
3,393
445,233
358,337
4,540
2,140
468,755
388,057
Revenue arising from issuing residential loans which are
Interest income is the key component of this revenue
funded by the warehouse facility is initially recognised at
stream and is recognised as it accrues using the
the fair value of the consideration received or receivable
effective interest method. The rate at which revenue is
when it is probable that future economic benefits will flow
recognised is referred to as the effective interest rate
to the Group and these benefits can be measured reliably.
and is equivalent to the rate that effectively discounts
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.
estimated future cash flows throughout the estimated
life to the net carrying value of the loan. Acquisition costs
are also spread across the estimated life of the loan.
RESIMAC GROUP LTD2019 ANNUAL REPORT
46
2019 ANNUAL REPORT
4747
Notes to the Consolidated Financial Statements
Key Numbers (for the year ended 30 June 2019)
Interest Income - Bank Deposits
Revenue From Contracts with Customers
This comprises interest income on funds invested.
Revenue is measured based on the consideration
Interest income is recognised as it accrues, using the
specified in a contract with a customer. The Group
effective interest method.
recognises revenue when it transfers control over a good
Other Incomes
Other income predominately comprises:
§ changes in fair value of financial assets through profit
or loss; and
§ fees earned in the Paywise business which is
recognised as the services are provided.
or service to a customer.
The following table provides information about the nature
and timing of the satisfaction of performance obligation
in contracts with customers, including significant
payment terms, and the related revenue recognition
policies.
CLASSIFICATION & MEASUREMENT OF REVENUE
Type of
Service
Mortgage
origination
revenue
Nature, Timing of Satisfaction
of Performance Obligations,
Significant Payment Terms,
Significant Judgements Used
Commission from originating
non-principally funded loans.
Revenue is recognised at the
point in time the loan is settled.
No-ongoing performance
conditions are attached to the
upfront fee.
Revenue
Recognition Policy
under AASB 118 &
AASB 139
Revenue is
recognised at the
time the loan is
settled and receipt
of commission.
Loan
management
revenue
Trail commission income on
non-principally funded loans,
based on the individual monthly
loan balance outstanding each
month.
On initial
recognition, trail
commission revenue
and receivables
were recognised
at fair value, being
the expected future
trail commission
receivables
discounted to their
NPV.
Subsequent to initial
recognition, the
trail commission
asset is measured at
amortised cost.
Impact of
Change in
Accounting
Policy
No material
impact
No material
impact
Revenue Recognition
Policy under AASB 15
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.
The present value of
the trailing commission
receivable is recognised
under AASB 15 as a
contract asset and
measured using
the expected value
method with variable
consideration at a point
of time.
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).
Type of
Service
Vehicle
financing
commission
Net loan fees
Salary
packaging
Nature, Timing of Satisfaction
of Performance Obligations,
Significant Payment Terms,
Significant Judgements Used
Upfront commission received
by Paywise from vehicle finance
and insurance providers for the
origination of vehicle leases.
There are no performance
obligations after the finance
lease is settled.
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.
Fees derived from salary
packaging services. Customers
are invoiced monthly. The work
required to fulfil these services
does not vary month to month.
Revenue
Recognition Policy
under AASB 118 &
AASB 139
Revenue is
recognised at the
time the services
are provided to the
customer and the
revenue can be
reliably measured.
Revenue is
recognised upon
receipt of fees
Revenue is
recognised at the
time the services
are provided to the
customer and the
revenue can be
reliably measured.
Impact of
Change in
Accounting
Policy
No material
impact
No material
impact
Revenue Recognition
Policy under AASB 15
Revenue is recognised
at the time the
transaction is completed
when settled and the
performance obligations
are met.
Revenue is recognised
when the transaction
is completed and the
performance obligations
are met.
Revenue is recognised at
the time the transaction
is completed and the
performance obligations
are met.
No material
impact
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 43).
RESIMAC GROUP LTD2019 ANNUAL REPORT 48
48
RESIMAC GROUP LTD
2019 ANNUAL REPORT
49
49
Notes to the Consolidated Financial Statements
Key Numbers (for the year ended 30 June 2019)
Australian
Lending
New Zealand
Lending
Paywise
Consolidated
FY19
$’000
FY18
$’000
FY19
$’000
FY18
$’000
FY19
$’000
FY18
$’000
FY19
$’000
FY18
$’000
Primary geographical markets
Australia
New Zealand
Major service lines
Mortgage origination
Loan management
Salary packaging
Vehicle financing commission
Net loan fees
13,130
21,025
-
-
13,130
21,025
2,532
7,150
-
-
7,927
9,555
-
-
3,448
3,543
13,130
21,025
Timing of revenue recognition
Service transferred at a point in time
13,130
21,025
Revenue from contracts with
customers
13,130
21,025
-
295
295
-
-
-
-
295
295
295
295
-
185
185
-
-
-
-
185
185
185
185
5,557
6,370
18,687
27,395
-
-
295
185
5,557
6,370
18,982
27,580
-
-
2,679
2,878
-
-
-
2,704
3,666
-
2,532
7,150
2,679
2,878
3,743
7,927
9,555
2,704
3,666
3,728
5,557
6,370
18,982
27,580
5,557
6,370
18,982
27,580
5,557
6,370
18,982
27,580
Interest income
Other income
External revenue as reported in
segment information
422,305
342,125
22,756
16,029
172
183
445,233
358,337
4,211
820
(995)
(196)
1,324
1,516
4,540
2,140
Recognition & Measurement
1.3. Assets Related to Contract with Customers
The Group has recognised the following assets related to contracts with customers.
Contract assets - present value of future trail commissions
Current
Non-current
FY19
$’000
14,940
33,708
48,648
FY18
$’000
17,493
39,667
57,160
Contract Assets - Present Value of Future Trail Commission Receivable
The contract assets primarily relate to the Group’s rights to consideration for trail commission. The Group receives trail
commissions from lenders on non-principally funded settled loans over the life of the loan based on the loan book balance
outstanding to which the Group is entitled. The contract assets are transferred to receivables when the rights become
unconditional.
Initial Recognition
Key Judgements
Expected value of future trail commission receivable is
recognised on the origination of non-principally funded
and other third party loan settlements at inception.
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.
The recognition of the future trail commission
receivable and payable (and resulting revenue/
expense) is an area of management judgment due to
the different recognition criteria existing within the
accounting standards. Decisions around key inputs
potentially have a material impact on the balances.
Management judgment is required with respect to
the determination of:
§ Prepayment rate
Of all the key inputs for NPV modelling, it is
prepayment or run-off rates to which the model
is most sensitive. In observing prior years’ actual
run-off performance, there can be variations over
time of up to 25% on individual seasoning bands
and variations of over 10% for year-on-year overall
run-off.
In order to manage both volatility of rates over
time and also the uncertainty associated with this
modelling, a conservative run-off buffer of 25% is
included in the valuation by management.
A remeasurement of the underlying cash flows relating to
§ Discount rates
date.
Key Estimates & Assumptions
The key estimates and assumptions underlying the
remeasurement of the estimated future cash flows
include the:
§ prepayment rate; and
§ discount rate.
Weighted average loan life (years)
Discount rate
FY19
FY18
3.1
6%
3.1
6%
Weighted average loan life.
The methodology in calculating the weighted average
loan life uses the commonly accepted Standard and
Poor’s definition.
For the purposes of the valuation technique
required by the standard, the discount rate is set
each year and remains unchanged for that 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 FY18.
Given trail income receivables are due from strongly
rated major financial institutions, this credit risk is
regarded as appropriate.
439,646
363,970
22,056
16,018
7,053
8,069
468,755
388,057
the trail commission receivable occurs at each reporting
RESIMAC GROUP LTD2019 ANNUAL REPORT 50
2019 ANNUAL REPORT
51
51
Notes to the Consolidated Financial Statements
Key Numbers (for the year ended 30 June 2019)
2. Expenses
Interest
Bond and warehouse facilities
Amortisation – bond issue costs
Discount unwind on NPV of trail commission
Net swap payments
RMBS facility funding1
Corporate facility1
Other1
Fee and commission
Mortgage origination
Loan management
Borrowing costs
Other financing costs
Employee benefits
Remuneration, bonuses, superannuation and on-costs
Share-based payments
Other
Marketing and IT
Audit and other professional fees
Rent and occupancy costs
Insurance
Depreciation and amortisation
Other
Loan impairment
FY19
$’000
FY18
$’000
308,167
242,493
6,987
1,525
5,295
1,569
975
1,128
7,690
1,670
366
4,237
1,103
-
327,380
255,825
1,788
6,241
19,353
20,519
5,777
1,924
4,597
4,741
31,515
33,425
37,614
38,153
44
43
37,658
38,196
9,019
3,122
8,745
3,303
4,011
3,398
1,017
861
1,259
1,123
5,780
5,626
24,208
23,056
2,966
1,623
423,727
352,125
Recognition & Measurement
2.1. Interest
Bond & Warehouse Facilities
2.2. Fee & Commission
Mortgage Origination
Borrowing costs are recognised in profit or loss in the
Upfront commission payments for non-principally
period in which they are incurred.
Borrowing costs include:
§ 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 detail under Note 1.
Deferred Costs
Transaction costs representing mortgage insurance
premiums and upfront commissions paid on principally
funded loans incurred by the Group in establishing
mortgage loans are capitalised on the statement
of financial position of the Group. These costs are
amortised to the income statement over the period over
which the Group is expected to receive interest income.
The amortisation rate closely aligns with the rate of
reduction of the underlying mortgage portfolio. The rate
of reduction of the outstanding mortgage portfolio is
calculated based on the historical behaviour of the total
mortgage balances of the past 10 years.
On a consolidated basis these transaction costs are
included as part of the amortised cost of the loans per
Note 6.
Amortisation – Bond Issue Costs
Transaction costs incurred by the Group, as manager of
the mortgage program, 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 income statement over the average expected life of
the debt securities using the effective interest method.
On a consolidated basis, these costs are included as part
of the amortised cost of the debt securities.
funded loans to mortgage originators, brokers
and commissioned staff. This is recognised upon
settlement as the services performed by the
originator is principally performed upfront.
Loan Management
For non-principally funded business, trail
commission payments to brokers and commissioned
staff based on the loan book balance outstanding.
Borrowing Costs
Fees directly related to public RMBS deals.
Other Financing Costs
Other financing costs includes trustee and servicer
fees, liquidity fees, rating agency fees, and other
financing related fees.
2.3. Employee Benefits
Employee benefits expenses include remuneration,
bonuses, superannuation, redundancies and
associated on-costs as incurred.
The policy relating to share-based payments is set
out in Note 29.
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; and
§ direct loan write-offs recognised during the year.
See Note 6 for detail on impairment of loans and
advances.
1 FY18 interest expenses on RMBS facility funding and corporate facility have been removed from other interest expense to assist users of the financial
statements.
RESIMAC GROUP LTD2019 ANNUAL REPORT 52
52
RESIMAC GROUP LTD
53
Notes to the Consolidated Financial Statements
Key Numbers (for the year ended 30 June 2019)
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
FY19
$’000
FY18
$’000
15,368
10,663
(175)
(1,121)
(14)
(3)
15,179
9,539
2,368
(790)
1,578
126
935
1,061
Total income tax expense recognised in the current year
16,757
10,600
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% (FY18: 30%)
Effect of expenses that are not deductible in determining taxable profit
Effect of different tax rates of subsidiaries operating in other jurisdictions
Write down of deferred tax assets
Difference in tax and accounting treatment of Paywise disposal
Other items
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
63,942
35,932
19,183
10,780
98
(8)
-
245
6
199
(1,609)
-
58
(444)
17,722
10,786
(790)
(175)
-
(186)
16,757
10,600
The tax rate used for FY19 and FY18 reconciliations above is the corporate tax rate of 30% payable by corporate entities in
Australia on taxable profits under tax law in that jurisdiction.
3.2. Current tax assets and liabilities
Current tax
Current tax payable
FY19
$’000
FY18
$’000
(6,690)
(2,048)
(6,690)
(2,048)
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
FY19
DT in relation to:
Doubtful debts
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
FY19
$’000
FY18
$’000
15,615
18,993
(21,920)
(26,880)
(6,305)
(7,887)
Current
year
recognised
in profit
or loss
$’000
Opening
balance
$’000
Previously
unrecognised
in profit
or loss
$’000
Recognised
directly in
equity
$’000
Recoup
tax loss
against tax
liability
$’000
Disposal of
Paywise
$’000
Closing
balance
$’000
1,199
2,170
374
1,461
446
1,173
60
2,405
701
-
964
368
(171)
(88)
27
-
(28)
(264)
3
-
(1,196)
-
(3)
-
(166)
-
(4)
-
-
-
-
-
-
-
-
-
(861)
-
-
-
-
-
-
(12)
-
4,111
82
358
(128)
1,069
-
(69)
-
-
-
-
-
-
-
-
60
2,142
437
(1)
103
7,091
92
-
41
30
-
-
-
-
-
-
-
-
-
-
-
885
-
Trail commission payable
11,356
(1,598)
(2,667)
Lease liability
Derivatives
Shares
Lease incentives
28
(5)
-
30
64
5
(1,743)
-
-
-
899
-
18,993
(3,425)
(1,938)
3,055
(861)
(209)
15,615
DT in relation to:
Capitalised incentive commission
Loans and advances
Deferred bond issue cost
Derivatives
Unpaid superannuation
11,915
(3,339)
2,277
(1,176)
-
1,368
(880)
455
712
(40)
Trail commission receivable
17,266
(2,672)
(2,790)
-
-
-
-
-
Accrued income and other
(63)
-
62
20
-
4
(1,199)
-
-
-
26,880
(1,057)
(2,728)
(1,175)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,513
(4,219)
2,736
(1,663)
(40)
14,594
(1)
21,920
(7,887)
(2,368)
790
4,230
(861)
(209)
(6,305)
RESIMAC GROUP LTD2019 ANNUAL REPORT 54
2019 ANNUAL REPORT
55
55
Notes to the Consolidated Financial Statements
Key Numbers (for the year ended 30 June 2019)
Current
year
recognised
in profit
or loss
$’000
Recognised
directly in
equity
$’000
Recoup
tax loss
against tax
liability
$’000
Additional
amounts
recognised
from business
combination
$’000
Opening
balance
$’000
318
950
514
1,120
60
2,590
989
1,766
9,983
-
4
30
29
446
(68)
57
-
184
(339)
-
31
65
-
(4)
-
(369)
51
-
2,079
(706)
28
1
-
-
(10)
-
(4)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(802)
-
-
-
-
Closing
balance
$’000
374
1,461
446
1,173
60
2,405
701
964
11,356
28
(5)
30
18,324
2,417
(942)
(4)
(802)
18,993
FY18
DT in relation to:
Doubtful debts
Plant, equipment and software
Deferred mortgage insurance
Employee entitlements
Net provision for lease make good
Other accrued expenses
Blackhole expenditure
Tax losses carried forward
Trail commission payable
Lease Liability
Derivatives
Lease incentives
DT in relation to:
Capitalised incentive commission
Loans and advances
Deferred bond issue cost
Derivatives
6,446
5,397
(2,312)
(1,122)
1,761
(2,032)
516
256
84
95
-
284
(261)
(209)
(7)
(935)
(12)
-
-
316
-
-
304
(308)
-
-
-
-
-
-
-
11,915
(3,339)
2,277
(1,176)
17,266
(63)
26,880
(802)
(7,887)
Trail commission receivable
19,969
(2,442)
Accrued income and other
208
24,040
(5,716)
(62)
2,543
(126)
Recognition & Measurement
Income tax expense represents the sum of the tax currently payable and deferred tax.
3.4. Current Tax
The tax currently 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 because of items of income or expense that are
taxable or deductible in other years and items that are never taxable or deductible. 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 bases used in the computation of
taxable profit.
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.
Deferred tax liabilities (DTLs) are generally recognised
3.6. Current and Deferred Tax for the Year
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.
Current and deferred tax are recognised in profit
or loss, 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 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.
RESIMAC GROUP LTD2019 ANNUAL REPORT 56
56
RESIMAC GROUP LTD
57
Notes to the Consolidated Financial Statements
Key Numbers (for the year ended 30 June 2019)
3.8. 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 Judgements
The Group’s accounting for taxation requires management’s judgment 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.
Judgments and assumptions are also required about the application of income tax
legislation. These judgments 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 & 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
Amortisation of bond issue costs
Gain on derecognition of investment in Finsure, net of tax
Gain on disposal of Paywise
Loss on financial assets classified available for sale
Fair value movement on interest rate swaps
Note
FY19
$’000
FY18
$’000
10,566
15,181
212,723
182,060
1,501
1,664
20
224,790
198,905
47,185
25,332
2
2
1,259
1,123
6,987
5,295
(4,067)
-
(13,104)
-
-
443
(419)
(463)
2,966
59
1,623
59
8,939
4,846
(4,924)
(480)
Loan impairment movement
2
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
(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
Derivative financial liabilities
Deferred tax liabilities
2
44
43
(3,389)
464
(1,718,453)
(1,990,625)
(176)
(54)
(537)
1,064
(7,126)
5,246
4,133
2,048
(9,218)
1,820
20
-
(703)
(3,835)
1,403
2,167
Net cash flows used in operating activities
(1,688,418)
(1,944,587)
1 Cash collections account includes monies in the SPVs, securitisation trusts and Paywise (FY18 only) 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 for the borrowing facilities.
RESIMAC GROUP LTD2019 ANNUAL REPORT
58
Notes to the Consolidated Financial Statements
Key Numbers (for the year ended 30 June 2019)
Recognition & Measurement
Cash comprises cash on hand and demand deposits. Cash
Cash at bank earns interest at floating rates based on
equivalents are short-term, highly liquid investments that
daily bank deposit rates. Short-term deposits are made
are readily convertible to known amounts of cash and
for varying periods of between one day and three months,
6. Loans & Advances
Gross loans and advances
Loans and advances
Capitalised incentive costs
which are subject to an insignificant risk of changes in value
depending on the immediate cash requirements of the
Capitalised mortgage insurance costs
and have a maturity of three months or less at the date of
Group, and earn interest at the respective short-term
acquisition.
deposit rates.
Deferred mortgage fee
Loans from related parties
Less: allowance for impairment
Current
Non-current
Impairment allowances
Collective allowance
Specific allowance
5. Trade & Other Receivables
Current
Fee and commission receivable
Prepayments
GST receivable
Deferred consideration for sale of Paywise (refer Note 22)
Sundry receivable
Non-current
Deferred consideration for sale of Paywise (refer Note 22)
Note
20
20
FY19
$’000
FY18
$’000
2,493
3,318
2,029
1,741
1,153
1,278
1,000
3,024
-
928
9,699
7,265
1,000
-
Movement in impairment allowances
Balance at 1 July
Adoption of AASB 9
Recognition & Measurement
trade receivables. AASB 9 provides a simplified approach
Provided for during the year
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.
for measuring the loss allowance at an amount equal to
lifetime ECL for trade receivables. Impairment policy of
trade and other receivables is included in Note 20.
Fee & Commission Receivable
Trade receivables are recognised initially at fair value
Upfront and trail commission are on settlement terms of
and subsequently measured at amortised cost using
30 days. This is initially recognised at the fair value of the
the effective interest method, less an allowance for
consideration receivable.
impairment.
Sundry Receivable
AASB 9 requires an expected credit loss model (“ECL”) to
account for expected credit losses and changes in those
expected credit losses at each reporting date to reflect
This relates to amounts received within the Residential
Mortgage Trusts (RMT) SPVs on the last day of the
reporting period and where settlements are not yet
changes in credit risk since initial recognition of the
completed.
§ Specific
§ Collective
Written off
Balance at 30 June
2019 ANNUAL REPORT
59
59
Note
FY19
$’000
FY18
$’000
10,337,020
8,619,505
35,263
31,393
214
546
(14,137)
(11,229)
(2)
(8)
10,358,358
8,640,207
(16,445)
(6,594)
20
10,341,913
8,633,613
2,382,422
1,987,248
7,975,936
6,652,959
10,358,358
8,640,207
10,869
2,975
5,576
3,619
16,445
6,594
6,594
5,530
7,422
-
2,511
455
(537)
848
775
(559)
16,445
6,594
RESIMAC GROUP LTD2019 ANNUAL REPORT
60
60
RESIMAC GROUP LTD
Notes to the Consolidated Financial Statements
Key Numbers (for the year ended 30 June 2019)
Recognition & Measurement
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 (Stage 2 & 3 Collective)
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 & Provisioning
Impairment policy of loans and advances is included in Note 20.
Security Properties Repossessed
As at 30 June 2019, the Group had exercised their right to liquidate 46
residential properties (FY18: 40) 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 specific loan).
7. Other Financial Assets
Listed shares – BNK Banking Corporation Limited (ASX: BBC)
Unlisted shares – Athena
Short-term investment
Current
Non-current
61
FY18
$’000
-
-
260
260
260
-
260
Note
20
20
20
FY19
$’000
2,860
2,000
260
5,120
260
4,860
5,120
Listed Shares
Unlisted Shares
Investment in BNK represents an investment the
Investments that are not traded in an active market, but
Group intends to hold for long term strategic purposes.
classified as fair value through profit or loss (FVTPL) and
As permitted by AASB 9, the Group designated this
disclosed at fair value at the end of each reporting period.
investment at the date of initial application as measured
at fair value through other comprehensive income. The
Short-Term Investment
accumulated fair value reserve related to this investment
Term deposit with fixed or determinable payments and
will not be reclassified to profit or loss. Dividends from
fixed maturity date which the Group has the intent and
this investment continue to be recognised in profit or
ability to hold to maturity.
loss as other income when the Group’s right to receive
payment is established. At 30 June 2019, the Group
held 4,468,902 shares in BNK at a share price of $0.64.
BNK Banking Corporation Limited previously known as
Goldfield Money Limited changed its company name on
20 March 2019 (refer to Note 23).
RESIMAC GROUP LTD2019 ANNUAL REPORT 62
2019 ANNUAL REPORT
6363
Notes to the Consolidated Financial Statements
Key Numbers (for the year ended 30 June 2019)
8. Plant & Equipment
Carrying amounts of:
Plant and equipment
Balance at 1 July 2018
Additions
Disposals and write-offs
Disposal of Paywise
Depreciation expense
Foreign exchange
Balance at 30 June 2019
Balance at 1 July 2017
Additions
Disposals and write-offs
Depreciation expense
Foreign exchange
Balance at 30 June 2018
FY19
$’000
FY18
$’000
2,110
2,625
2,110
2,625
Plant and
equipment
at cost
$’000
Equipment
under finance
lease at cost
$’000
Total
$’000
2,625
-
2,625
588
(56)
(164)
(884)
1
2,110
-
-
-
-
-
-
588
(56)
(164)
(884)
1
2,110
1,346
5
1,351
2,146
-
2,146
(62)
(803)
-
(5)
(62)
(808)
(2)
-
(2)
2,625
-
2,625
Recognition & Measurement
Plant and equipment is stated at cost less accumulated depreciation and impairment losses.
Depreciation & 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.
The following useful lives are used in the calculation of depreciation:
Leasehold improvement and office furniture
Office machines and computer equipment
Derecognition
Years
5
3-5
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.
9. Other Assets
Reinsurance claim receivable
Collateral deposit
Other
Current
Non-current
Recognition & Measurement
Reinsurance Claim Receivable
FY19
$’000
FY18
$’000
2,907
2,669
-
683
238
76
3,145
3,428
238
759
2,907
2,669
3,145
3,428
Prime Insurance Group Ltd 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 14.
Collateral Deposit
The Group provided the following financial guarantees during the year:
§ Westpac Banking Corporation (WBC) guarantee on Paywise’s Melbourne office lease; and
§ WBC guarantee to secure Paywise’s fleet funded Caltex fuel card product.
On 24 May 2019, the Group disposed of its wholly owned subsidiary Paywise Pty Limited. Refer
to “Segment Information’ for further information.
RESIMAC GROUP LTD2019 ANNUAL REPORT 64
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2019 ANNUAL REPORT
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65
Notes to the Consolidated Financial Statements
Key Numbers (for the year ended 30 June 2019)
10. Goodwill & Intangible Assets
Goodwill
Balance at 1 July
Balance at 30 June
Other intangible assets
Balance at 1 July
Additions
Disposals and write offs
Disposal of Paywise
Amortisation for the year
Balance at 30 June
FY19
$’000
FY18
$’000
21,766
21,766
21,766
21,766
332
530
1,868
110
(2)
(132)
(375)
-
-
(308)
1,691
332
Total goodwill and other intangible assets
23,457
22,098
10.1. Goodwill
Recoverable Amount of the Asset
Goodwill arising on an acquisition of a business is carried at
The recoverable amount is equal to the greater of:
cost as established at the date of acquisition of the business
(less accumulated impairment losses, if any).
§ fair value less costs to sell; and
§ value in use (‘VIU’).
Impairment Testing
It is not always necessary to determine both the fair value
For the purposes of impairment testing, goodwill is allocated
less cost to sell and its VIU. If either of these amounts exceed
to each of the Group's cash-generating units (CGU’s or
the carrying amount of the CGU, there is no impairment of
groups of CGU’s) that is expected to benefit from the
the goodwill and it is not necessary to estimate the other
synergies of the combination.
amount.
A CGU to which goodwill has been allocated is tested for
As a result, the VIU methodology is considered to be most
impairment annually, or more frequently when there is an
appropriate as there is no readily available market outside
indication that the unit may be impaired. If the recoverable
specific business sales of an equivalent sized business to the
amount of the CGU is less than its carrying amount, the
Australian Lending business segment.
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.
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.
Indicators of Impairment
The minimum indicators of impairment have been
considered by management. These include both
Key Judgements & Assumptions
The key assumptions used for assessing the
recoverable amount of the Australian Lending Business
internal and external sources of information such as:
CGU are set out below:
§ 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; and
§ plans to discontinue operations.
Management have assessed that there are no such
indicators which would impair the goodwill balance as
at 30 June 2019.
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.
Impairment Assessment
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.
Goodwill arising from the business combination in the
prior period has been allocated for impairment testing
purposes to the Australian Lending Business segment.
This segment is considered to be the CGU that is
expected to benefit from the synergies of the business
combination.
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
Growth rate for 4 year forecast period (p.a)
Discount rate (post-tax)
Terminal growth rate
FY19
10%
11%
2%
The post-tax discount rate of 11% has been determined by
estimating the cost of equity that applies to the Australian
lending segment, and the terminal growth rate of 2%
reflects management’s assumption of growth in profit
before tax after four years.
Sensitivity to Change in Assumptions
Management believes that possible changes in the
assumptions, such as +/- 1% discount rate and the
terminal growth rate, would not cause the recoverable
amount of the CGU to be less than its carrying value.
Furthermore, the VIU based on the key judgements and
assumptions is broadly in line with the current market
capitalisation.
Impairment Charge
Based upon the impairment testing performed, there is no
impairment charge for FY19 (FY18: nil).
10.2. 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
§ not exceed the operating segments.
accumulated impairment losses.
The allocation of goodwill to these CGU’s is considered
appropriate.
Intellectual property
Software
Useful life
7 years
3-5 years
RESIMAC GROUP LTD2019 ANNUAL REPORT 66
2019 ANNUAL REPORT
67
67
Notes to the Consolidated Financial Statements
Key Numbers (for the year ended 30 June 2019)
11. Trade & Other Payables
12. Interest Bearing Liabilities
Revenue collected in advance1
Collections owed to trusts
Other creditors and accruals
Fleet management funds1
Commissions
Note
FY19
$’000
FY18
$’000
462
8,442
8,043
10,988
11,769
14,660
-
4,941
5,020
4,541
20
25,294
43,572
Current
25,294
43,572
1 On 24 May 2019, the Group disposed of its wholly owned subsidiary Paywise Pty Limited. Refer to “Segment Information’ for further information.
Recognition & Measurement
Trade creditors and other payables, which are generally
Other Creditors & Accruals
settled within 30 day terms and are unsecured, are
carried at amortised cost and represent liabilities for
goods and services provided to the Group prior to the
Other creditors and accruals are unsecured payables
relating to expenses arising in the ordinary course
of business. They are usually paid within 30 days of
end of the financial year that are unpaid and arise when
the Group becomes obliged to make future payments in
recognition.
respect of the purchase of these goods and services.
Fleet Management Funds
Revenue Collected in Advance
Funds held by Paywise to administer salary packaging for
Represents cash held by Paywise to administer fleet
management. This cash is not available for use by Paywise
except to settle future costs in relation to these services
its client’s employees is nil as at 30 June 2019 (FY18: $7.5
for customers.
million).
Collections Owed to Trusts
Relates to collections received from borrowers that
reside in clearing accounts that have not yet been
allocated to a trust.
Debt securities on issue
Corporate debt facility
Issuance facilities
Debt securities on issue - related parties
Lease liability
Current
Non-current
Note
FY19
$’000
FY18
$’000
10,232,170
8,517,820
30,000
24,000
186,051
172,639
2,400
2,400
-
252
20
10,450,621
8,717,111
2,403,643
2,004,936
8,046,978
6,712,175
10,450,621
8,717,111
Recognition & Measurement
All borrowings are initially recognised at fair value of
12.1. Debt Securities on Issue
the consideration received less 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,
transaction costs, and all other premiums or discounts on
acquisition, over the period to maturity.
Gains or losses are recognised in the statement
of comprehensive income when the liabilities
are derecognised and also as well as 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 20.
Warehouse Facilities
The warehouse facilities provide funding for the initial
financing of loans and advances to customers within the
warehouse SPV. Refer to Note 22 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 on or before their maturity date.
RESIMAC GROUP LTD2019 ANNUAL REPORT 68
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69
Notes to the Consolidated Financial Statements
Key Numbers (for the year ended 30 June 2019)
Bonds
RMBS are issued to 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 2019, AUD 3.35 billion and NZD 250 million of new
Residential Mortgage Backed Securities (RMBS) and Medium Term Notes (MTNS)
were issued (FY18: AUD 3.25 billion and NZD 250 million). 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 SPVs are supported by cash collateral reserves.
12.2. Corporate Debt Facility
As at 30 June 2019, the Company had a $40 million corporate facility with National
Australia Bank maturing in October 2019. The Group had an undrawn balance of
$10.0 million at 30 June 2019 (FY18: $2.0 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 2019, 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 21.7 for further detail.
12.3. Issuance Facilities
The Group maintains a series of subsidiary SPVs 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 SPVs hold a 5%
vertical strip of bonds of an individual RMBS issuance and raises secured financing
from banks and credit investors.
12.4. Debt Securities on Issue - Related Parties
In line with its ordinary course of business, the Group issues debt securities to related
party investors. A performance guarantee in respect to timely payment of interest and
principal on these debt securities is provided. Subordinated notes in one controlled
entity (SPV), which were held by a related party as at 30 June 2019 amount to
$2,400,000 (FY18: $2,400,000).
13. Other Financial Liabilities
Present value of future trail commission payable
Current
Non-current
Note
FY19
$’000
FY18
$’000
22,901
27,848
20
22,901
27,848
7,032
8,555
15,869
19,293
22,901
27,848
Recognition & Measurement
The Group makes trail commission payments to introducers and commission staff based on the loan book
balance outstanding.
Initial Recognition
Fair value of future trail commission payable is recognised on the origination of non-principally funded
and other third party loan settlements at inception. 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 Estimates & Assumptions
Refer to Note 1 for the key estimates and judgements underlying the remeasurement of the estimated future
cash flows.
RESIMAC GROUP LTD2019 ANNUAL REPORT 70
2019 ANNUAL REPORT
7171
Notes to the Consolidated Financial Statements
Key Numbers (for the year ended 30 June 2019)
14. Other Liabilities
Reinsurance claim reserve
Non-Current
The reinsurance claim reserve offsets with the reinsurance claim receivable amount in Note 9.
15. Provisions
Employee benefits
Make good
Other
Current
Non-current
FY19
$’000
FY18
$’000
2,907
2,669
2,907
2,669
2,907
2,669
FY19
$’000
FY18
$’000
3,571
3,923
414
414
65
104
4,050
4,441
3,305
3,847
745
594
4,050
4,441
Balance at 1 July 2018
Additional provisions recognised
Reductions resulting from remeasurement or settlement without cost
Balance at 30 June 2019
Employee
benefits
$'000
Make
good
$'000
Other
$'000
Total
$’000
3,923
568
(920)
3,571
414
104
4,441
-
-
414
-
568
(39)
65
(959)
4,050
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
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
§ a reliable estimate can be made of the amount of
benefits which are not expected to settle within 12
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
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.
reporting period, taking into account the risks
The liability for long service leave is recognised in
and uncertainties surrounding the obligation.
the provision for employee benefits. It is measured
When a provision is measured using the cash flows
as the present value of expected future payments
estimated to settle the present obligation, its
for the services provided by employees up to the
carrying amount is the present value of those cash
reporting date.
flows (when the effect of the time value of money is
material).
Expected future payments are discounted using
market yields at the reporting date on high quality
15.1. Debt securities on Issue - Related Parties
corporate bonds with terms to maturity that match,
A liability is recognised for benefits accruing to
as closely as possible, the estimated future cash
employees in respect of:
§ wages and salaries;
§ annual leave;
§ long service leave; and
§ on-costs relating to the above
where costs maybe they are capable of being
measured reliably and probable that settlement
will be required.
outflows.
15.2. Make Good
Where a condition of the Group’s lease premises
to return the property in its original condition at
the end of the lease term. The Group recognises a
provision for the make good as the expected cost of
the refurbishment at the end of the lease.
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RESIMAC GROUP LTD
73
Notes to the Consolidated
Financial Statements
Capital
for the year ended 30 June 2019
16. Capital Management
The Group’s Capital Management Objectives
The Group manages its capital to ensure that entities
The capital structure of the Group consists of net debt
in the Group will be able to continue as going concerns
(borrowings as detailed in Note 12 offset by cash and
while maximising the return to stakeholders through the
bank balances) and equity of the Group (comprising
optimisation of the debt and equity balance.
issued capital, reserves, retained earnings and non-
The Group operates a warehouse to securitisation
funding model for its lending business and as such makes
The Group is not subject to any externally imposed
decisions on the amount of capital invested in the notes
capital requirements.
controlling interests as detailed in Note 18).
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.
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
18
18
18
FY19
$’000
FY18
$’000
119,007
115,799
(7,197)
(3,011)
84,314
49,937
196,124
162,725
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 into book growth.
17. Dividends
Declared and paid during the period (fully-franked at 30 percent)
Final dividend for FY18: $0.009 (FY17: $0.0075)
Interim dividend for HY19: $0.01 (Interim FY18: $0.009)
Proposed and unrecognised as a liability (fully-franked at 30 percent)
Final dividend for FY19: $0.01 (FY18: $0.009)
Special dividend for FY19: $0.005 (FY18: Nil)
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.
FY19
$’000
FY18
$’000
3,594
2,953
4,001
3,587
7,595
6,540
4,058
3,594
2,029
6,087
-
3,594
17,312
13,280
(2,609)
(1,540)
18. Issued Capital & Reserves
Share capital
Reverse acquisition reserve1
Note
FY19
$’000
FY18
$’000
180,548
177,340
(61,541)
(61,541)
119,007
115,799
1 As a result of reverse acquisition accounting, an equity 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.
Issued capital as at 30 June 2019 was amended to $180,548,083 (405,790,153 ordinary shares).
During the period, the Company issued 6,442,421 shares for $3,207,468 in respect of the Resimac Dividend
Reinvestment Plan (DRP).
RESIMAC GROUP LTD2019 ANNUAL REPORT 74
2019 ANNUAL REPORT
7575
Notes to the Consolidated Financial Statements
Capital (for the year ended 30 June 2019)
18.1. Fully Paid Ordinary Shares
Balance at 1 July 2017
No. of
shares –
Thousands
Note
$’000
393,687
174,762
Reserves
Cash flow
hedge
reserve
$'000
Foreign
currency
translation
reserve
$'000
Retained
earnings
$'000
Fair value
reserve
$'000
Share-
based
payment
reserve
$'000
Non-
controlling
interest
$'000
Issue of shares under a dividend reinvestment plan
5,661
2,578
Balance at 1 July 2018
49,937
(3,041)
Balance at 30 June 2018 and 1 July 2018
399,348
177,340
Adoption of AASB 9, net of income tax
(5,213)
-
Issue of shares under the DRP:
§ FY18 Dividend on 12 October 2018
§ HY19 Dividend on 25 March 2019
Balance at 30 June 2019
791
5,651
462
2,746
405,790
180,548
Fully paid ordinary shares, which have no par value, carry one vote per share and carry a right to dividends.
18.2. Reserves (Net of Income Tax) and Retained Earnings
Reserves
Cash flow
hedge
reserve
$'000
Foreign
currency
translation
reserve
$'000
Retained
earnings
$'000
Fair value
reserve
$'000
Share-
based
payment
reserve
$'000
Non-
controlling
interest
$'000
Balance at 1 July 2017
31,136
(3,738)
580
Profit after tax
Changes in fair value of cash flow hedges, net of tax
Currency translation differences
Acquisition of non-controlling interest
Equity dividends
Share-based payments
Balance at 30 June 2018
25,320
-
-
21
(6,540)
-
-
697
-
-
-
-
-
-
(593)
-
-
-
49,937
(3,041)
(13)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
43
43
9
12
-
-
(21)
-
-
-
Adjusted balance as at 1 July 2018
44,724
(3,041)
Profit after tax
47,185
-
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
Balance at 30 June 2019
-
-
-
(7,595)
-
(2,835)
-
-
-
-
84,314
(5,876)
656
(2,065)
(13)
-
(13)
-
-
669
-
-
-
-
-
-
-
-
-
(2,065)
-
-
43
-
43
-
-
-
-
-
45
88
-
-
-
-
-
-
-
-
-
-
18.3. Nature & Purpose of Reserves
Foreign currency translation reserve
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
Exchange differences relating to the translation of
the 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
on changes in fair value of the hedging instruments that
currency translation reserve.
are recognised and accumulated under the heading of
cash flow hedging reserve 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.
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 29 for further details of
these plans.
18.3. Retained earnings
See Note 17 in respect of payment of dividends.
RESIMAC GROUP LTD2019 ANNUAL REPORT 76
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RESIMAC GROUP LTD
77
Notes to the Consolidated Financial Statements
Capital (for the year ended 30 June 2019)
19. Earnings Per Share
FY19
$’000
FY18
$’000
Profit attributable to ordinary equity holders of the parent ($'000)
47,185
25,320
WANOS1 used in the calculation of basic EPS (shares, thousands)
401,433
397,467
Dilutive effect of shares options
241
1,563
WANOS1 used in the calculation of diluted EPS (shares, thousands)2
401,674
399,030
Earnings per share
Basic (cents per share)
Diluted (cents per share)
11.75
11.75
6.37
6.35
1 Weighted average number of shares
2 The variance in the WANOS used in the calculation of the basic EPS and the diluted EPS is attributable to in-substance
options
Calculation of Earnings Per Share
19.1. Basic Earnings Per Share
19.2. Diluted Earnings Per Share
Basic earnings per share is calculated as net
Diluted earnings per share is calculated by:
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.
§ 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.
19.3. Calculation of WANOS
Twelve months to 30 June 2019
The number of Resimac Group shares issued:
§ From 1 July 2018 to 11 October 2018 (112,692,648)
The number of Resimac ordinary shares on issue of 399,347,732 multiplied by the
ratio of days outstanding (103/365); plus
§ From 12 October 2018 to 24 March 2019 (179,788,553)
w The number of Resimac shares on issue (399,347,732) at 12 October 2018; plus
w Shares issued on 12 October 2018 under the DRP (791,425)
multiplied by the ratio of days outstanding (164/365).
§ From 25 March 2019 to 30 June 2019 (108,951,877)
w The number of Resimac shares on issue (400,139,157) at 25 March 2019; plus
w Additional shares issued on 25 March 2019 under the DRP (5,650,996)
multiplied by the ratio of days outstanding (98/365).
Twelve months to 30 June 2018
The number of Resimac shares issued:
§ From 1 July 2017 to 4 October 2017 (103,545,095)
The number of Resimac ordinary shares on issue of 393,687,080 multiplied by the
ratio of days outstanding (96/365); plus
§ From 5 October 2017 to 8 April 2018 (203,111,233)
w The number of Resimac shares on issue (393,687,080) at 4 October 2017; plus
w Shares issued on 5 October 2017 under the DRP (4,891,415)
multiplied by the ratio of days outstanding (186/365).
§ From 9 April 2018 to 30 June 2018 (90,810,580)
w The number of Resimac shares on issue (398,578,495) at 8 April 2018; plus
w Shares issued on 9 April 2018 under the DRP (769,237)
multiplied by the ratio of days outstanding (83/365).
RESIMAC GROUP LTD2019 ANNUAL REPORT 78
2019 ANNUAL REPORT
7979
Notes to the Consolidated
Financial Statements
Risk
for the year ended 30 June 2019
20. Financial Assets & Financial Liabilities
The Group holds the following financial instruments:
Financial assets
Cash and cash equivalents
Trade and other receivables
Loans and advances
Short-term investment
Investment securities – BNK
FVOCI-equity instrument
Investment securities – Athena
Derivative financial assets
FVTPL
FVTPL
Basis of measurement
Amortised cost
Amortised cost
Note
4
5
FY19
$’000
FY18
$’000
224,790
198,905
10,699
7,265
Amortised cost
6
10,341,913
8,633,613
Amortised cost
7
7
7
21
260
260
2,860
2,000
-
-
56,575
43,596
10,639,097
8,883,639
Financial liabilities
Trade and other payables
Interest-bearing liabilities
Amortised cost
11
25,294
43,572
Amortised cost
12
10,450,621
8,717,111
Present value of trail commission payable
Amortised cost
Derivative financial liabilities
FVTPL
13
21
22,901
27,848
1,565
549
The following assets and liabilities are measured at fair value by the Group for financial reporting purposes:
Financial assets
Listed shares - BNK Banking
Corporation Limited (ASX: BBC)
Unlisted shares - Athena
Interest rate swaps
Cross currency swaps
Financial liabilities
Interest rate swaps
Fair value
hierarchy
Level 1
Level 3
Level 2
Level 2
Valuation technique(s)
and key input(s)
Most recent traded price and other available
market information
Acquisition value within 12 months of
year end and other available information
Discounted cash flow
Forward interest rates, contract interest rates
Discounted cash flow
Forward interest rates, contract interest rates
FY19
$’000
2,860
2,000
2,775
FY18
$’000
-
-
598
53,800
42,998
Level 2
Discounted cash flow
Forward interest rates, contract interest rates
1,565
549
In the year to 30 June 2019 there has been no change
20.2. Financial assets and liabilities
in the fair value hierarchy or the valuation techniques
20.2.1. Recognition and initial measurement
applied to any of the balances above.
For further information on the use of derivatives refer to
Note 21 Financial risk management.
20.1.2. 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
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.
10,500,381
8,789,080
approximate their fair values.
20.1. Fair Values Measurements & Valuation Processes
20.1.1. 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).
RESIMAC GROUP LTD2019 ANNUAL REPORT 80
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81
81
Notes to the Consolidated Financial Statements
Risk (for the year ended 30 June 2019)
20.2.2. Classification & Subsequent Measurement
All financial assets not classified as measured at
In assessing whether the contractual cash
20.2.2.4. Financial Assets – Subsequent measurement
20.2.2.1. Financial assets – Policy applicable from 1 July
2018
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
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.
20.2.2.2 Financial assets – Business model assessment:
Policy applicable from 1 July 2018
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:
of the first reporting period following the change in the
§ how the performance of the financial assets held within
business model.
that business model are evaluated and reported to the
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.
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.
20.2.2.3. Financial assets – Assessment whether
contractual cash flows are solely payments of principal
and interest: Policy applicable from 1 July 2018
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
This election is made on an investment-by-investment
profit margin.
basis.
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 represent 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.
and gains and losses: Policy applicable from 1 July 2018
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 21.3
for derivative 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 calculated using the effective
interest method. Other net gains
and losses are recognised in OCI.
On derecognition, gains and losses
accumulated in OCI are classified 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.
RESIMAC GROUP LTD2019 ANNUAL REPORT 82
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RESIMAC GROUP LTD
83
Notes to the Consolidated Financial Statements
Risk (for the year ended 30 June 2019)
20.2.2.5. Financial assets – Policy applicable before 1 July
Financial liabilities at FVTPL
2018
Financial liabilities are classified as at FVTPL where the
The Group classified its financial assets into one of the
liability is either held for trading or it is designated as at
following categories:
§ FVTPL
§ held-to-maturity investments
§ available-for-sale (AFS) financial assets; and
§ loans and receivables
Financial Assets – Subsequent measurement and gains
and losses: Policy applicable before 1 July 2018
Financial
assets at
FVTPL
Held-to-
maturity
financial assets
Available-for-
sale financial
assets
Measured at fair value and changes
therein, including any interest or
dividend income, were recognised in
profit or loss. However, see Note 21.3
for derivative designated as hedging
instruments.
Measured at amortised cost using the
effective interest method.
Measured at fair value and changes
therein, other than impairment losses,
interest income and foreign currency
differences on debt instruments, were
recognised in OCI and accumulated
in the fair value reserve. When these
assets were derecognised, the gain
or loss accumulated in equity was
reclassified to profit or loss.
Loans and
receivables
Measured at amortised cost using the
effective interest method.
20.2.2.6. Financial liabilities – Classification, subsequent
measurement and gains and losses
The Group’s classification for financial liabilities have not
changed significantly under AASB 9. Financial liabilities
are classified as either financial liabilities at FVPTL or
other financial liabilities.
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
On derecognition of a financial liability, the
difference between the carrying amount
liability and of allocating interest expense over
extinguished and the consideration paid (including
the relevant period. The effective interest rate
any non-cash assets transferred or liabilities
is the rate that exactly discounts estimated
future cash payments (including all fees and
points paid or received that form an integral
assumed) is recognised in profit or loss.
20.2.4. Offsetting
part of the effective interest rate, transaction
Financial assets and financial liabilities are offset
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.
20.2.3. Derecognition
20.2.3.1. Financial assets
The Group derecognise 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.
20.2.3.2. 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.
and the net amount presented in the statement of
financial position when, and only when, the Group
currently has a legally enforceable right to set off
the amounts and it intends either to settle them
on a net basis or to realise the asset and settle the
liability simultaneously.
20.2.5. Impairment of financial assets
20.2.5.1. Impairment policy applicable from 1 July
2018
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.
RESIMAC GROUP LTD2019 ANNUAL REPORT 84
2019 ANNUAL REPORT
85
85
Notes to the Consolidated Financial Statements
Risk (for the year ended 30 June 2019)
Significant increase in credit risk
Measurement of ECLs
An asset moves to stage 2 when its credit risk has
ECLs are a probability-weighted estimate of credit
increased significantly since initial recognition.
losses. Credit losses are measured as the present
When determining whether the credit risk of a
value of all cash shortfalls (i.e. the difference
financial asset has increased significantly since
between the cash flows due to the entity in
the initial recognition and when estimating ECLs,
accordance with the contract and the cash flows that
the Group considers reasonable and supportable
the Group expects to receive). The key inputs used
information that is relevant and available without
in measuring ECL include:
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
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, and for financial assets for
which there has not been a significant increase in
credit risk (SICR) or for those financial assets for
which there has been an increase in credit risk but
for which the credit risk is considered to be low, ECL
is determined based on PD over the next 12 months,
adjusted for forward looking estimates (FLE).
delinquency in interest or principal payments; or
Stage 2: Lifetime ECL not credit impaired
§ it becoming probable that the borrower will enter
bankruptcy or financial re-organisation; or
Where there has been a SICR, the ECL is determined
with reference to the financial asset’s lifetime PD
§ 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
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 significant
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
The Group considers that default has occurred at 90
maturity of the financial asset.
days past due.
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.
20.2.5.2. Impairment policy applicable before 1 July 2018
Financial assets, other than those at FVTPL, are assessed for indicators of
impairment at the end of each reporting period. Financial assets are considered
to be impaired when there is objective evidence that, as a result of one or more
events that occurred after the initial recognition of the financial asset, the
estimated future cash flows of the investment have been affected.
For AFS equity instruments, a significant or prolonged decline in the fair
value of the security below its cost is considered to be objective evidence of
impairment.
For all other financial assets, objective evidence of impairment could include:
§ significant financial difficulty of the issuer or counterparty; or
§ breach of contract, such as a default or delinquency in interest or principal
payments; or
§ it becoming probable that the borrower will enter bankruptcy or financial re-
organisation; or
§ the disappearance of an active market for that financial asset because of
financial difficulties.
For a portfolio of receivables, objective evidence of impairment could include:
§ the Group’s past experience of collecting payments;
§ an increase in the number of delayed payments in the portfolio past the
average credit period; and
§ observable changes in national or local economic conditions that correlate
with default on receivables.
RESIMAC GROUP LTD2019 ANNUAL REPORT 86
86
RESIMAC GROUP LTD
87
Notes to the Consolidated Financial Statements
Risk (for the year ended 30 June 2019)
Financial assets measured at amortised cost
The amount of the impairment loss recognised is the difference between the asset’s
carrying amount and the present value of estimated future cash flows, discounted at the
financial asset’s original effective interest rate. The carrying amount of the financial asset
is reduced by the impairment loss directly for all financial assets with the exception of trade
receivables, where the carrying amount is reduced through the use of an allowance account.
In a subsequent period, the amount of the impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment was recognised, the previously
recognised impairment loss is reversed through profit or loss to the extent that the carrying
amount of the investment at the date the impairment is reversed does not exceed what the
amortised cost would have been had the impairment not been recognised.
The Group considered evidence of impairment for these assets at both an individual asset and
a collective level. For certain categories of financial asset, such as trade receivables, assets are
assessed for impairment on a collective basis even if they were assessed not to be impaired
individually.
Available-for-sale financial assets
When an AFS financial asset is considered to be impaired, cumulative gains or losses previously
recognised in other comprehensive income are reclassified to profit or loss in the period. If
the fair value of an impaired available-for-sale debt security subsequently increased and
the increase was related objectively to an event occurring after the impairment loss was
recognised, then the impairment loss was reversed through profit or loss. Impairment loss
recognised in profit or loss for an investment in equity security classified as available-for-sale
were not reversed through profit or loss. Any increase in fair value subsequent to an impairment
loss is recognised in other comprehensive income and accumulated under the heading of AFS
revaluation reserve.
21. Financial Risk Management
21.1. Financial Risk Management Objectives
The Group's Corporate Treasury function:
§ provides services to the business;
§ 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.
These risks include:
§ market risk (including currency risk and interest rate risk);
§ credit risk; and
§ liquidity risk.
21.2. Derivative Financial Instruments
§ credit risk;
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 and non-
derivative financial instruments; and
§ the investment of excess liquidity.
The use of financial derivatives is governed by the
Group's policies approved by the board of directors,
which provide written principles on:
§ foreign exchange risk;
§ interest rate risk;
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 purposes.
The table below summarises the Group’s exposure to financial risks and how these risks are managed.
Risk
Exposure arising from
Measurement
Management
Market risk -
currency
Recognised financial assets and liabilities not
denominated in Australian dollars
Cash flow
forecasting
Sensitivity analysis
Cross currency interest rate swaps
Cash flow management and
matching
Market risk -
interest rate
Market risk -
equity prices
Credit risk
Foreign currency denominated profit or losses
Mismatch in interest rates between assets and
liabilities
Sensitivity analysis
Interest rate swaps
Investments in equity securities
Sensitivity analysis
Equity investments not held for
trading
Cash and cash equivalents, trade receivables,
derivative financial assets, loans and advances
Credit risk analysis
Diversification, Strong collections/
portfolio management
Liquidity risk
Borrowings, derivative financial liabilities
Rolling cash flow
forecasts
Availability of committed credit
lines and borrowing facilities,
securitisation, 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.
RESIMAC GROUP LTD2019 ANNUAL REPORT 88
2019 ANNUAL REPORT
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89
Notes to the Consolidated Financial Statements
Risk (for the year ended 30 June 2019)
21.3. Hedge Accounting
Note 20.1 sets out the details of the fair values of the
21.4. Market Risk
The Group designates certain hedging instruments,
which includes derivatives in respect of foreign currency
risk, as cash flow hedges.
derivative instruments used for hedging purposes.
21.3.1. Cash Flow Hedges
The effective portion of changes in the fair value of
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.
At the inception of the hedge relationship the Group
derivatives that are designated and qualify as cash flow
21.4.1. Interest Rate Risk
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.
documents the relationship between the hedging
hedges is recognised in other comprehensive income
instrument and hedged item, along with its risk
and accumulated under the heading of cash flow hedging
management objectives and its strategy for undertaking
reserve. The gain or loss relating to the ineffective
various hedge transactions.
Furthermore, at the inception of the hedge and on
portion is recognised immediately in profit or loss and is
included in the other expenses or other income line item.
an ongoing basis, the Group documents whether the
Amounts previously recognised in other comprehensive
hedging instrument that is used in a hedging relationship
income and accumulated in equity are reclassified to
is effective in offsetting changes in fair values or cash
profit or loss, in the same line as the recognised hedged
flows of the hedged item attributable to the hedged risk,
item.
which is when the hedging relationships meet all of the
following hedge effectiveness requirements:
Hedge accounting is discontinued when:
§ there is an economic relationship between the hedged
§ the Group revokes the hedging relationship;
item and the hedging instrument;
§ the hedging instrument expires or is sold, terminated,
§ the effect of credit risk does not dominate the value
or exercised; or
changes that result from that economic relationship;
§ the Group no longer qualifies for hedge accounting.
and
§ the hedge ratio of the hedging relationship is the same
as that resulting from the quantity of the hedged item
that the Group actually hedges and the quantity of the
hedging instrument that the Group actually uses to
hedge that quantity of hedged item.
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.
21.3.2. Derivative Financial Assets & Liabilities
The carrying values are as follows:
Derivative financial assets
Cross currency swaps
Interest rate swaps
Derivative financial liabilities
Interest rate swaps
FY19
$’000
FY18
$’000
53,800
42,998
2,775
598
56,575
43,596
1,565
1,565
549
549
Interest rate risk is the risk that the Group will experience
deterioration in its financial position as interest rates
change over time.
Fair value liability
Derivative financial liabilities
FY19
$’000
1,565
FY18
$’000
549
Interest rate exposure is driven by interest rate
The following table details the notional principal amounts
mismatches between assets and liabilities (i.e. borrowing
outstanding at the end of the reporting period:
at floating interest rates and lending with fixed interest
rates).
Interest rate risk may be managed by entering into
interest rate swaps subject to the Group’s hedging and
derivatives policies.
21.4.2. Interest Rate Risk – Sensitivity Analysis
The majority of the Group’s liabilities are issued
through warehouse facilities and term securitisations
in special purpose 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:
10bps +/-
Borrowing costs
FY19
$’000
10,402
FY18
$’000
8,682
21.4.3. Interest Rate Swap Contracts
Notional principal value
Less than 1 year
1 to 2 years
2 to 5 years
FY19
$’000
633
33,096
FY18
$’000
19,333
55,417
390,498
252,907
424,227
327,657
The interest rate swaps settle and reset on a monthly
basis. The floating rate on the interest rate swaps is the
local interbank rate. The Group will settle the difference
between the fixed and floating interest rate on a net
basis.
All interest rate swap contracts exchanging floating
rate interest amounts for fixed rate interest amounts
are designated as cash flow hedges. The interest rate
swaps and the interest payments on the loan occur
simultaneously and the amount accumulated in equity
is reclassified to profit or loss over the period that the
floating interest rate payments on debt affect profit or
loss.
Under interest rate swap contracts, the Group agrees
Any impact on funding costs in the special purpose
to exchange the difference between fixed and floating
entities as a result of changes to interest rates would be
rate interest amounts calculated on agreed notional
offset by a corresponding +/- impact on interest revenue
principal amounts. Such contracts enable the Group to
proportionate to assets held.
mitigate the risk of changing interest rates on the cash
flow exposures on the issued variable rate debt. The fair
RESIMAC GROUP LTD2019 ANNUAL REPORT 90
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2019 ANNUAL REPORT
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91
Notes to the Consolidated Financial Statements
Risk (for the year ended 30 June 2019)
21.4.4. Corporate Interest – Sensitivity Analysis
21.6. Credit Risk Management
The remainder of the Group’s loan portfolio and liabilities are held in corporate entities. The impact of a potential +/-
The Group’s primary credit risk exposures relate
10bps change in interest rates on interest revenue and borrowing costs on balances held by the Group for the year is set
to its lending activities in its principally-funded
The Group’s approach to credit management
utilises a credit risk framework to ensure that the
following principals are adhered to:
out in the table below:
10bps +/-
Impact on corporate interest revenue
Interest rate + 10bps
Interest rate - 10bps
Impact on corporate funding costs
Interest rate + 10bps
Interest rate - 10bps
FY19
$’000
225
(225)
(30)
30
FY18
$’000
199
(199)
(24)
24
21.4.5. Equity Price Risk
21.5. Foreign Currency Risk
Equity investments in listed and unlisted shares are held
21.5.1. Accounting Translation
for strategic rather than trading purposes. The Group
does not actively trade these investments.
As at reporting date the Group held cash assets
denominated in New Zealand dollars (NZD).
21.4.6. Equity Price Risk – Sensitivity Analysis
Fluctuations in the NZD are not expected to have
If equity prices had been 10% higher / lower:
material impact on the consolidated statement of profit
§ Net profit for the year ended 30 June 2019 would
increase / decrease by $200,000 as a result of the
changes in fair value of the investments in unlisted
21.5.2. Market Risk – Foreign Exchange on Monetary
shares (FY18: nil); and
Items
§ Other comprehensive income would increase /
decrease by $286,000 as a result of the changes in fair
value of investments in listed shares (FY 18: nil).
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
FY19
$’000
FY18
$’000
USD liabilities (disclosed in AUD)
53,800
42,998
mortgage portfolio. The Group’s primary lending
§ independence from risk originators;
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 are responsible for
determining the Group’s overall appetite for credit
§ 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
risk and monitoring the quality and performance
§ credit exposures include such exposures arising
of the mortgage portfolio. The credit risk
from derivative transactions.
management operational framework and policy is
governed and managed by the Credit Committee.
Each of the divisions is responsible for managing
credit risks that arise in their own areas
The Group does not have any direct counterparty
with oversight from a centralised credit risk
credit exposure arising from its asset financing
management team. It is the policy of the Group to
and securitisation activities. Counterparty risk is
monitor the policies of all divisions to ensure that
governed, and mitigated where required, by ratings
the risk of the Group is monitored.
agency criteria within the bankruptcy-remote
funding SPVs and trusts including exposures to
21.6.2 Exposure to credit risk
banks, lender’s mortgage insurance providers and
Loans and advances and trade receivables consist
The Group has established lending policies and
financial condition of loans and advances and
procedures to manage the credit risk inherent
accounts receivable.
in lending. The dominant lending focus has been
in the housing market where standard lending
practice is that the borrowing facilities for each
client is mortgaged secured against residential
property and in addition via LMI on certain loans.
In addition, loan balances are monitored with the
result that the Group’s exposure to bad debts is
monitored and managed.
The Group’s broker division trades with
recognised, credit-worthy lending institutions in
Australia.
There is no significant concentration of risk to any
single counterparty.
The credit risk on liquid funds and derivative
financial instruments is limited because the
counterparties are banks with high credit-ratings
assigned by international credit-rating agencies.
or loss or the consolidated statement of comprehensive
income and equity of the Group.
21.6.1. Credit Risk in Lending
derivative counterparties.
of a large number of customers, spread across
diverse demographic and geographical areas.
Ongoing credit evaluation is performed on the
RESIMAC GROUP LTD2019 ANNUAL REPORT 92
2019 ANNUAL REPORT
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93
Notes to the Consolidated Financial Statements
Risk (for the year ended 30 June 2019)
21.6.3. Maximum Exposure to Credit Risk
21.6.5. Credit Risk Management
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s exposure to
The following table summarises the movement in expected credit loss for loans and advances for the reporting period:
Note
FY19
$’000
FY18
$’000
Maximum exposure to credit risk
4
224,790
198,905
Balance as at 30 June 2019
Stage 1 -
Collective
$'000
Stage 2 -
Collective
$'000
Stage 3 -
Collective
$'000
Stage 3 -
Impaired
$'000
Total
$’000
credit risk at the reporting date was:
Cash and cash equivalents
Trade and other receivables
Short-term investment
Derivative financial assets
5
10,699
7
260
7,265
260
21
56,575
43,596
292,324
250,026
Loans and advances at amortised cost – balances subject to credit risk
6
10,337,020
8,619,505
10,629,344
8,869,531
As at 30 June 2019, 100% of the Group’s cash and cash equivalents are held with banks or financial institutions with a
credit rating of AA- or better (FY18: 100%).
21.6.3.1. Residential Mortgage Borrowers
are enforced or an insurance claim has been paid and
The Group minimises credit risk by obtaining security
over residential mortgage property for each loan.
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
In monitoring the credit risk, mortgage securitisation
process.
customers are grouped according to their credit
characteristics using credit risk classification systems.
21.6.4. Financial guarantees
This includes the use of the Loan to Value Ratio (LVR) to
The Group is exposed to credit risk in relation to financial
assess its exposure to credit risk from loans originated
guarantees given to banks provided by the Group.
through the securitisation programme.
The Group's maximum exposure in this respect is the
For non-principally funded loans, some agreements
with lenders contain provisions requiring the Group to
pay instalments due from borrowers until securities
maximum amount the Group could have to pay if the
guarantee is called on. The Group does not have any
financial guarantees as at 30 June 2019 (FY18: $682,607)
which has been disclosed in Note 9.
Loans and advances
§ Mortgage lending
§ Commercial lending
Total
Balance as at 1 July 2018
Loans and advances
§ Mortgage lending
§ Commercial lending
Total
Expected credit loss
Balance as at 30 June 2019
Loans and advances
§ Mortgage lending
§ Commercial lending
Total
Balance as at 1 July 2018
Loans and advances
§ Mortgage lending
§ Commercial lending
Total
10,237,618
50,406
24,334
23,170
10,335,528
676
-
-
816
1,492
10,238,294
50,406
24,334
23,986
10,337,020
8,532,845
45,718
26,695
12,603
8,617,861
831
-
-
813
1,644
8,533,676
45,718
26,695
13,416
8,619,505
7,016
1,750
2,103
-
-
-
7,016
1,750
2,103
7,195
1,343
1,857
2
-
-
7,197
1,343
1,857
5,122
454
5,576
3,050
569
3,619
15,991
454
16,445
13,445
571
14,016
The majority of the Group’s exposure to loans and
and the cash collateral retained in the trust. The Trust’s
advances is limited, as they are legally owned by special
structures are designed such that losses are covered by
purpose vehicles (trusts) with no recourse to the Group.
excess spread generated from the assets within the trust
Losses on mortgage loans in these entities are therefore
before the investment notes are impaired.
limited to the Group’s investment in notes in these trusts
RESIMAC GROUP LTD2019 ANNUAL REPORT 94
94
RESIMAC GROUP LTD
95
Notes to the Consolidated Financial Statements
Risk (for the year ended 30 June 2019)
21.6.6. Credit Risk Concentrations
Collateral Held
An analysis of the Group’s credit risk concentrations on loans and advances is provided in the following table. The
The value of the collateral held as security for loans in
amounts in the table represent gross carrying amounts:
Loans and advances at amortised cost
Concentration by region
Queensland
New South Wales
Victoria
South Australia
Western Australia
Tasmania
Northern Territory
New Zealand
Total
FY19
$’000
FY18
$’000
1,669,597
1,420,071
3,995,742
3,460,733
2,854,342
2,239,659
455,629
337,944
775,892
704,333
74,682
64,072
40,030
37,184
471,106
355,509
10,337,020
8,619,505
21.6.7. Analysis of Loans & 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
stage 2 and stage 3 collective at 30 June 2019 is $102.4
million (The value of collateral held as security for loans
past due but not impaired at 30 Jun 2018: $94.9 million).
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, $10.23 billion at 30 June 2019 (FY18: $8.52
The value of the collateral held as security for loans in
billion), they have not all been included in the table below.
stage 3 specific loans at 30 June 2019 is $19.8 million
(The value of collateral held as security for impaired loans
at 30 Jun 2018: $13.1 million).
The Group manages liquidity risk by maintaining adequate
reserves, banking facilities and reserve borrowing
facilities, by continuously monitoring forecast and actual
Loans are secured by the Group by having the property
cash flows, and by matching the maturity profiles of
titles registered as a financial interest that provide the
financial assets and liabilities.
Group first priority over any proceeds becoming available
from the sale of the property. For Prime insured loans,
LMI policies exist to cover 100% of the principal amount
at default plus interest.
21.7. 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.
Note 21.7 below sets out details of additional undrawn
facilities that the Group has at its disposal to further
reduce liquidity risk.
21.7.1. 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
carrying amount of loans and advances by past due status that are over 30 days past due.
The Group’s funding platform currently comprises a mix
necessarily reconcile with the amounts disclosed in the
Loans and advances at amortised cost1
Concentration by region
0 days and less than 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 days and over
Total
1 Includes loans that are collectively and specifically provided for
FY19
$’000
FY18
$’000
10,242,482
8,538,202
39,805
32,052
11,995
13,753
14,151
15,430
6,538
3,983
6,662
2,970
18,066
10,436
10,337,020
8,619,505
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
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.
RESIMAC GROUP LTD2019 ANNUAL REPORT 96
2019 ANNUAL REPORT
97
97
Notes to the Consolidated Financial Statements
Risk (for the year ended 30 June 2019)
<6
months
or on
demand
$'000
6-12
months
$'000
1-3
years
$'000
3-5
years
$'000
>5
years
$'000
Total
cash
flows
$'000
Carrying
amount
$'000
Financial liabilities
FY19
Non-derivatives
Trade and other payables
25,294
-
-
-
-
-
-
-
186,051
-
-
-
-
-
25,294
25,294
30,086
30,000
186,051
186,051
2,400
2,400
86
30,000
-
-
-
2,400
Interest-bearing liabilities
§ Corporate debt facility
§ Issuance facilities
§ Loans from related parties
Present value of future trail
commissions payable
21.7.2. Financing Facilities
Secured corporate debt facility which may be extended by mutual agreement
§ Amount used
§ Amount unused
21.8. Other Risk
FY19
$’000
FY18
$’000
30,000
24,000
10,000
2,000
40,000
26,000
21.8.1. Run-off risk – Present value of future trail commissions receivable and payable
21.8.1.1 Exposure to run-off risk
The Group will incur financial (loss)/gain if a loan from a customer or counterparties is prepaid, redrawn or discharged
earlier or later than expected. A change in the pattern of the run-off rate will have an impact on the future trail
3,806
3,043
8,277
3,951
3,824
22,901
22,901
commissions receivable and payable.
29,186
35,443
8,277
190,002
3,824
266,732
266,646
21.8.1.2 Sensitivity analysis
Derivatives
1,565
-
-
-
-
1,565
1,565
Management engaged the use of actuaries for the purposes of reviewing the run-off rate of the loans under
30,751
35,443
8,277
190,002
3,824
268,297
268,211
management. Management does not expect the run-off rate to change in excess of 10% positive or 10% negative of the
rates revealed from the actuarial analysis.
FY181
Non-derivatives
Trade and other payables
43,572
-
Interest-bearing liabilities
§ Corporate debt facility
68
24,000
§ Issuance facilities
§ Loans from related parties
Lease liability
Present value of future trail
commissions payable
-
-
-
-
2,400
252
-
-
-
-
-
-
-
172,639
-
-
-
-
-
-
-
43,572
43,572
24,068
24,000
172,639
172,639
2,400
2,400
252
252
The change estimate is calculated based on historical movements of the run-off rate.
The effect from changes in run-off rates, with all other variables held constant, is as follows:
Impact on profit and equity
Run-off rate + 10%
Run-off rate - 10%
FY19
$’000
FY18
$’000
(2,541)
(2,640)
2,764
3,039
4,574
3,998
11,194
5,911
6,693
32,370
27,848
48,214
30,650
11,194
178,550
6,693
275,301
270,711
Derivatives
549
-
-
-
-
549
549
48,763
30,650
11,194
178,550
6,693
275,850
271,260
1 Consistent with FY19, the above FY18 table does not contain cashflows relating to debt securities on issue in SPVs and amount owing in warehouse
facilities as they are limited recourse and there is no corporate guarantee on these cashflows.
RESIMAC GROUP LTD2019 ANNUAL REPORT 98
98
RESIMAC GROUP LTD
Notes to the Consolidated
Financial Statements
Group Structure
for the year ended 30 June 2019
22. Subsidiaries
Details of the Group’s subsidiaries at the end of the reporting period are as follows.
Name of subsidiary
Controlled Companies
Access Network Management Pty Ltd
Auspack Financial Services Pty Ltd
Principal activity
Mortgage manager
Mortgage broker
Barnes Mortgage Management Pty Ltd
Mortgage originator and manager
Clarence Street Finance Pty Ltd
Holder of commission agreements
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
FAI First Mortgage Pty Ltd
Homeloans Pty Ltd1
Trust manager
Mortgage lender
Housing Financial Services Pty Ltd
Mortgage originator
Independent Mortgage Corporation Pty Ltd
Just Drive Pty Ltd2
Mortgage broker
Fleet provider
Place of
incorporation
and operation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Parnell Road Funding No.1 Limited3
Special purpose vehicle
New Zealand
Parnell Road Funding No.2 Limited3
Special purpose vehicle
New Zealand
Paywise Pty Ltd2
Salary packaging provider
Prime Insurance Group Limited
RESIMAC Capital Markets Pty Ltd
LMI captive insurer
Trust manager
Australia
Bermuda
Australia
Proportion of ownership
interest held and voting
power held by the Group
FY19
%
100
100
100
100
99.9
100
100
100
100
100
100
100
100
100
-
100
100
-
100
100
FY18
%
100
100
100
100
99.9
100
100
100
100
100
100
100
100
100
100
-
-
100
100
100
99
Proportion of ownership
interest held and voting
power held by the Group
Place of
incorporation
and operation
FY19
%
FY18
%
Name of subsidiary (continued)
Principal activity
Controlled Companies
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
New Zealand
RESIMAC Limited
Non-bank lender
Australia
100
100
100
100
100
100
100
100
RESIMAC NZ Home Loans Ltd
NZ Holding company
New Zealand
100
100
Resimac Premier Warehouse Trust No.1 Pty LTD4
Unit Holder
RHG Mortgage Corporation Ltd4
RHG Mortgage Securities Pty Ltd (RMS)4
The Servicing Company Pty Ltd
0508 Home Loans Ltd
0800 Home Loans Ltd
Access Home Loans Pty Ltd
Clarence St Funding No.5 Pty Ltd
Fiduciary Services Pty Ltd
HLL Pty Ltd
Loan Packaging Australia Pty Ltd
National Mutual Pty Ltd
RESIMAC Financial Securitisation Ltd
RESIMAC Financial Services Pty Ltd
RESIMAC Leasing Pty Ltd
RESIMAC (UK) Ltd
Controlled Trusts
Avoca Master Trust
Lender of record
Mortgage trustee
Trust servicer
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Australia
Australia
Australia
Australia
New Zealand
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
Australia
Dormant
United Kingdom
Issuer of RMBS
Australia
NZF Mortgages Warehouse A Trust
Warehouse mortgages
New Zealand
RESIMAC Bastille Master Trust
RESIMAC Triomphe Master Trust
Issuer of RMBS
Issuer of RMBS
Australia
Australia
RESIMAC Versailles Master Trust
Issuer of RMBS
New Zealand
RESIMAC Victoire Trust
Warehouse mortgages
New Zealand
RHG Mortgage Securities Trust
Issuer of RMBS
RMT Warehouse Trust No.2
Warehouse mortgages
RMT Securitisation Trust No.7
RESIMAC NIM Master Trust
Issuer of RMBS
Dormant
Australia
Australia
Australia
Australia
-
-
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
1 State Custodians Pty Ltd changed its company name to Homeloans Pty Ltd on 28 November 2018
4 Ownership interest is 0% but Board control.
2 Sold 24 May 2019
3 Incorporated 12 April 2019.
RESIMAC GROUP LTD2019 ANNUAL REPORT 100
2019 ANNUAL REPORT
101
101
Notes to the Consolidated Financial Statements
Group Structure (for the year ended 30 June 2019)
Details of the sale of Paywise Pty Ltd1
Consideration received or receivable:
Cash
Deferred payment2
Total disposal consideration
Less: carrying amount of net assets sold
Gain on sale before income tax
Income tax expense
Gain on sale after income tax
The carrying assets and liabilities of Paywise business as at the date of sale were:
Cash and cash equivalent
Trade and other receivables
Other assets
Plant and equipment
Intangible assets
Deferred tax assets
Trade and other payables
Current tax payable
Provisions
Net assets
$’000
12,000
2,000
14,000
(896)
13,104
(2,323)
10,781
9,994
899
1,609
164
132
210
(11,252)
(448)
(412)
896
The elements indicating control include, but are not
Recognition & Measurement
limited to, the below:
§ the Group has existing rights that gives it the ability to
direct relevant activities that significantly affect the
special purpose entities’ returns;
23.1. Investment in associates
The Group’s investments in its associates,
being entities in which the Group has
significant influence and are neither
§ the Group is exposed, and has rights, to variable
subsidiaries nor jointly controlled assets, are
returns from its involvement with the special purpose
accounted for using the equity method. Under
entities;
§ the Group has all the residual interest in the special
purpose entities;
§ fees received by the Group from the special purpose
entities vary on the performance, or non-performance
of the securitised assets; and
§ the Group has the ability to direct decision making
accompanied by the objective of obtaining benefits
from the special purpose entities’ activities.
The Group continues to retain control over the financial
assets, for which some but not substantially all the risks
and rewards have been transferred to the warehouse
facilities providers and the bondholders. The securitised
assets and the corresponding liabilities are recorded
in the statement of financial position and the interest
earned and paid recognised in the consolidated
statement of profit or loss.
this method, the investment in associates
is carried in the consolidated statement
of financial position at cost plus post-
acquisition changes in the Group’s share of
the associates’ net assets. Goodwill relating to
associates is included in the carrying amount
of the investment and is not amortised.
After application of the equity method, the
Group determines whether it is necessary
to recognise any additional impairment loss
with respect to the Group’s investment. The
Group’s income statement reflects the Group’s
share of the associate’s result.
Where there has been a change recognised
directly in the associate’s equity, the Group
recognises its share of any changes and
discloses this in the consolidated statement of
comprehensive income.
Where the reporting dates of the associates
and the Group vary, management accounts
of the associate for the period to the Group’s
balance sheet date are used for equity
accounting. The associates’ accounting
policies are consistent with those used by
the Group for like transactions and events in
similar circumstances.
Special purpose entities – securitised trusts and funding warehouses
23. Associates
Special purpose entities are those entities over which
§ conduct securitisation activities funded by short term
the group has no ownership interest but in effect the
warehouse facilities provided by reputable lenders; and
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:
§ hold securitised assets and issue Residential Mortgage
Investments in associates
Backed Securities.
The special purpose entities meet the criteria of being
controlled entities under AASB 10 – Consolidated
Financial Statements.
Gain on de-recognition of
investment in associate
Total comprehensive income
FY19
$’000
FY18
$’000
-
-
5,810
5,810
-
-
-
-
1 On 24 May 2019, the Group sold its 100% equity stake in its wholly owned subsidiary Paywise Pty Limited for total cash consideration of $14 million in a
management buyout agreement to Howjack Holdings Pty Ltd. Mr Michael Jefferies, an Independent Non-Executive Director of Resimac Group Ltd, holds
a 24% shareholding in Howjack Holdings Pty Ltd. Mr Jefferies was excluded from all board discussions pertaining to the sale of Paywise.
2 Two deferred payments of $1,000,000 will be settled in cash on 30 April 2020 and 30 April 2021 respectively.
RESIMAC GROUP LTD2019 ANNUAL REPORT 102
102
RESIMAC GROUP LTD
103
Notes to the Consolidated Financial Statements
Group Structure (for the year ended 30 June 2019)
23.2. Interests in Associates
Details of the Group’s joint venture and associates at the end of the reporting period is as follows:
Name
Associate
Principal
activity
Reporting
date
Place of
incorporation
FY19
%
FY18
%
Finsure Holding Pty Ltd
Mortgage brokerage
30 June
Australia
-
16.2
As at 30 June 2018, the Group recognised its 16.2%
using the equity method and a gain on de-recognition
interest in the Finsure Group as an investment in
of the investment in associate of $5,810,000 was
associate with a carrying amount of $nil.
recognised, equal to the value of the shares held in GMY
On 17 September 2018, Finsure Holding Pty Limited
merged with Goldfields Money Limited (ASX:GMY). The
On 20 March 2019, Goldfields Money Limited changed
merger resulted in the Company’s 16.24% interest in
its company name to BNK Banking Corporation Limited
Finsure Holding Pty Limited being converted to 5.05%
(ASX:BBC), trading under the name of BNK Bank.
on the day of the Finsure/Goldfields merger.
share in GMY, which is not an associate of the Group. At
this time, the investment ceased to be accounted for
Notes to the Consolidated
Financial Statements
Unrecognised Items
for the year ended 30 June 2019
24. Commitments & Contingencies
Group as lessee
Operating and finance lease commitments
Within one year
Greater than one year but not more than five years
Greater than five years
Group as lessor
Within one year
Greater than one year but not more than five years
FY19
$’000
2,155
6,991
1,134
FY18
$’000
2,711
7,939
3,154
10,280
13,804
622
725
1,347
455
508
963
Recognition & Measurement
24.1. Lease Payments
The determination of whether an arrangement is, or
contains, a lease is based on the substance of the
arrangement at inception date, whether fulfilment of the
arrangement is dependent on the use of a specific asset
or assets or the arrangement conveys a right to use the
asset, even if that right is not explicitly specified in an
arrangement.
the reduction of the outstanding liability. The finance
expense is allocated to each period during the lease term
so as to produce a constant periodic rate of interest on
the remaining balance of the liability.
24.2. Capital Commitments
The directors were not aware of any capital commitments
as at the end of the financial year or arising since balance
date.
Payments made under operating leases are recognised in
24.3. Contingent liabilities
the profit or loss on a straight line basis over the term of
Lease Guarantees
the lease. Lease incentives received are recognised as an
The Group has provided guarantees in respect of the
integral part of the total lease expense, over the term of
leases over its premises of $931,921 (FY18: $1,965,223).
the lease.
The directors were not aware of any other contingent
liabilities as at the end of the financial year or arising
Minimum lease payments made under finance leases
are apportioned between the finance expense and
since balance date.
RESIMAC GROUP LTD2019 ANNUAL REPORT 104
2019 ANNUAL REPORT
105
105
Notes to the Consolidated Financial Statements
Unrecognised Items (for the year ended 30 June 2019)
25. Subsequent Events
25.1. Final Dividend Declared
The Board of Resimac Group Ltd declared a fully-franked final
dividend of $0.01 per share and a fully-franked one off special
dividend of $0.005 per share. The Record Date is 6 September 2019.
The payment date will be 30 September 2019. The dividend has not
been provided for in this financial report.
Other than the above, there have been no circumstances arising
since 30 June 2019 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.
25.2. Positive Group Investment
On 3 July 2019, the Company invested $3m for a 15% stake in
Positive Group which specialises in asset finance solutions for
consumers, and small business. Resimac holds an option to acquire a
further 10%.
Notes to the Consolidated
Financial Statements
Other
for the year ended 30 June 2019
26. Auditor’s Remuneration
Fees of the auditors of the company for:
Deloitte Touche Tohmatsu
Audit or review of the financial statements
Non-assurance related services
Tax compliance
Other advisory services
RMBS issuance services
FY19
$
FY18
$
1,003,079
798,128
1,003,079
798,128
-
133,827
30,000
110,000
227,000
259,000
257,000
502,827
Total remuneration of Deloitte Touche Tohmatsu
1,260,079
1,300,955
KPMG Australia
Non-assurance related services
Tax compliance
Total remuneration of KPMG Australia
26.1. Non-Audit Services
265,200
265,200
-
-
The auditor of the Group is Deloitte Touche Tohmatsu
The total non-audit services fees of $257,000 represents
(Deloitte). It is the Group’s policy to employ Deloitte
20.4% of the total fees paid or payable to Deloitte and
on assignments additional to its statutory audit duties,
related practices for the year ended 30 June 2019.
in compliance with the Group’s independence policies,
where Deloitte’s expertise and experience with the Group
are important.
RESIMAC GROUP LTD2019 ANNUAL REPORT 106
106
RESIMAC GROUP LTD
107
Notes to the Consolidated Financial Statements
Other (for the year ended 30 June 2019)
27. Related Party Transactions
Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have
Amounts owed by related parties are secured
27.1. Compensation of KMP
been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other
and will be settled in cash. No guarantees
related parties are disclosed below.
Trading Transactions
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
During the year, Group entities entered into the following trading transactions with related parties that are not members
amount owed by related parties.
of the Group:
Amounts owed to related parties are debt
securities on issue, where the Group provides
a related party performance guarantee in
respect of timely payment of interest and
principal.
Disposal of fully owned subsidiary Paywise
On 24 May 2019, the Group sold its 100%
equity stake in its wholly owned subsidiary
Paywise Pty Limited for total cash
consideration of $14 million in a management
buyout agreement to Howjack Holdings Pty
Ltd. Mr Michael Jefferies, an Independent
Non-Executive Director of Resimac Group
Ltd, holds a 24% shareholding in Howjack
Holdings Pty Ltd. Mr Jefferies was excluded
from all board discussions pertaining to the
sale of Paywise.
Associates of Resimac Group Ltd1
Amounts incurred to Director's related entities2
Revenue received
Expenses paid
FY19
$'000
FY18
$'000
FY19
$'000
FY18
$'000
-
-
-
-
(2,836)
(12,404)
-
-
(267)
(376)
(3,103)
(12,780)
1 Broker commission and sponsorship fees paid to Finsure Group, who ceased as an associate of the Group effective 17 September 2018.
2 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:
Other related parties of Resimac Group Ltd1
Amounts owing to Director's related entities2
Amounts owed by
related parties
Amounts owed to
related parties
FY19
$'000
FY18
$'000
5,381
6,427
-
-
5,381
6,427
FY19
$'000
-
2,400
2,400
FY18
$'000
-
2,400
2,400
1 Includes residential mortgages to KMP or related parties lent in ordinary course of business at arm’s lengths.
2 Debt securities on issue to Bermuda Commercial Bank Limited. Terms on this instrument are market related.
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 22 to 33
of this financial report designated as audited and forming
part of the directors’ report.
The remuneration disclosures is for Resimac KMP only as
presented in the Remuneration report.
KMP compensation
FY19
$’000
FY18
$’000
Short-term benefits
1,749,279
1,519,339
Post-employment benefits
77,138
72,451
Long-term benefits
77,702
13,024
Termination benefits
302,058
213,350
Share-based payments
44,882
43,334
2,251,059
1,861,498
The remuneration of directors and KMP is determined
by the Remuneration and Nomination Committee having
regard to the performance of individuals and market
trends.
RESIMAC GROUP LTD2019 ANNUAL REPORT 108
2019 ANNUAL REPORT
109109
Notes to the Consolidated Financial Statements
Other (for the year ended 30 June 2019)
28. Parent Disclosures
29. Share-Based Payments
The parent company of the Group, as at and throughout the financial year ended 30 June 2019, was Resimac Group Ltd.
29.1. Employee Share Option Plan of the Company
The Company has a share option scheme (pursuant to the
Each employee share option converts into one ordinary
Resimac Group Employee Share Option and Rights Plan)
share of the Company on exercise. No amounts are paid
for senior employees of the Company. In accordance with
or payable by the recipient on receipt of the option.
the terms of the Plan, as approved by shareholders at the
The options carry neither rights to dividends nor voting
2017 Annual General Meeting, senior employees may be
rights. Options may be exercised at any time from the
granted options to purchase ordinary shares.
date of vesting to the date of their expiry.
The following share-based payment arrangements were in existence during the current year:
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
FY19
$’000
FY18
$’000
28,175
25,410
188,475
183,240
216,650
208,650
13,841
26,545
47,462
29,213
61,303
55,758
155,347
152,892
Grant date
Options granted (number)
Expiry date
§ Tranche 1
§ Tranche 2
§ Tranche 3
§ Tranche 1
§ Tranche 2
§ Tranche 3
180,545
177,338
Exercise price
88
539
Fair value at grant date
Accumulated losses
Attributable to members of the parent
Profit after tax
Total comprehensive income for the period
(25,286)
(24,985)
155,347
152,892
6,797
6,797
532
532
28.1. Guarantees, Contingent Liabilities & Contingent Assets
At 30 June 2019, there are no financial guarantees, contingent assets or contingent liabilities (FY18: nil).
28.2. 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.
The sole vesting condition of the options is that the employees remain employed with the Company to the respective
vesting date associated with each tranche.
All options vest within 12 months, 24 months and 36 months of respective grant date associated with each tranche. The
options expire within thirty six months (36) of their vesting, or one month after the resignation of the senior employee,
whichever is the earlier.
LTI Tenure
18 August 2017
1,800,000
30 June 2021
30 June 2022
30 June 2023
$0.55
$0.07
$0.08
$0.09
RESIMAC GROUP LTD2019 ANNUAL REPORT 110
110
RESIMAC GROUP LTD
111
Notes to the Consolidated Financial Statements
Other (for the year ended 30 June 2019)
29.2. Fair Value of Options
29.5. Detail of Share Options Held
The primary valuation approach we have considered for the valuations is the Black-Scholes method, which entails the
The following table details the share options held at 30 June 2019:
determination of the value of the options using comparable market equivalent information. In determining the fair value
of each of the share options, a number of statistical and probability based calculations have been considered.
The following table lists the inputs to the model used:
Inputs into the model
Grant date share price ($)
Exercise price
Term
Annual volatility
Risk-free interest rate
Dividend yield
Call option value
Issued options
2019 LTI
Tranche 1
Tranche 2
Tranche 3
$0.47
$0.55
3.9 years
30-35%
2.00%
3.23%
$0.47
$0.55
4.9 years
30-35%
2.15%
3.23%
$0.47
$0.55
5.9 years
30-35%
2.26%
3.23%
$0.06-$0.08
$0.07-$0.09
$0.08-$0.10
600,000
600,000
600,000
Number
of options
#
Grant
date
Vesting
date
Expiry
date
Exercise
price
$
Call
option
value
$
Share
price at
grant date
$
Type of plan
Tenure
McWilliam, Scott
300,000
18 August 2017
1 July 2018
30 June 2021
McWilliam, Scott
300,000
18 August 2017
1 July 2019
30 June 2022
McWilliam, Scott
300,000
18 August 2017
1 July 2020
30 June 2023
900,000
Ploughman, Mary
300,000
18 August 2017
1 July 2018
17 July 2020
Ploughman, Mary
300,000
18 August 2017
1 July 2019
17 July 2020
Ploughman, Mary
300,000
18 August 2017
Expired
Expired
0.55
0.55
0.55
0.55
0.55
0.55
0.07
0.08
0.09
0.07
0.08
0.09
0.47
0.47
0.47
0.47
0.47
0.47
900,000
Total options held
1,800,000
29.3. Movements in Share Options During the Year
The following reconciles the share options outstanding at the beginning and the end of the year:
On 17 July 2019, 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 have been revised to 17 July 2020 as the Board exercised Special Circumstances.
Balance at 1 July 2018
Vested during the year
Balance at 30 June 2019
29.4. Share Options Exercised During the Year
There were no shares exercised during the year.
Number of
options
#
Weighted average
fair value
$
1,800,000
(600,000)
1,200,000
0.08
0.07
0.09
30. Other Accounting Policies
30.1. Application of New & Revised Accounting Standards
a) New and amended standards adopted by the Group
The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting
Standards Board (the AASB) that are relevant to its operations and effective for an accounting period that begins on or
after 1 July 2018.
New and revised Standards and amendments thereof and Interpretations effective for the current year that are relevant
to the Group include:
§ AASB 9 Financial Instruments and related amending Standards
§ AASB 15 Revenue from Contracts with Customers and related amending Standards
RESIMAC GROUP LTD2019 ANNUAL REPORT 112
2019 ANNUAL REPORT
113113
Notes to the Consolidated Financial Statements
Other (for the year ended 30 June 2019)
(i) AASB 9 Financial Instruments
2) the contractual terms of the financial asset give rise
The Group has reviewed and assessed existing financial assets as at 1 July 2018 based on the facts and circumstances
on specified dates to cash flows that meet the SPPI
that existed at that date and concluded that the initial application does not have a significant effect on the Group’s
requirements.
financial assets as regards their classification and measurement:
AASB 9 contains three principal classification categories
for financial assets: measured at amortised cost, FVOCI
and FVTPL. AASB 9 eliminates the previous AASB 139
categories of held to maturity, loans and receivables and
available for sale.
Classification and Measurement of Financial Liabilities
AASB 9 largely retains the existing requirements in AASB
139 for the classification and measurement of financial
liabilities. One major change introduced by AASB 9 in the
classification and measurement of financial liabilities
relates to accounting for changes in the fair value of a
financial liability designated as at FVTPL attributable to
changes in the credit risk of the issuer.
Specifically, AASB 9 requires that the changes in the fair
value of the financial liability that is attributable to the
changes in the credit risk of that liability be presented
in other comprehensive income unless the recognition
of the effects of changes in the liability’s credit risk in
other comprehensive income would create or enlarge
an accounting mismatch in profit or loss. Changes in fair
value attributable to financial liability’s credit risk are not
In the current year, the Group has applied AASB 9
Financial Instruments (as amended) and the related
consequential amendments to other Accounting
Standards that are effective for an annual reporting
period that begins on or after 1 July 2018. The Group
has taken the exemption to not restate comparative
information for prior periods with respect to classification
and measurement (including impairment) requirements.
Differences in the carrying amounts of financial assets
and financial liabilities resulting from the adoption of
AASB 9 are recognised in retained earnings and reserves
as at 1 July 2018.
Additionally, the Group adopted consequential
amendments to AASB 7 Financial Instruments:
Disclosures that were applied to the disclosures about
the financial year ended 30 June 2019 and to the
comparative period.
AASB 9 introduced new requirement for:
§ The classification and measurement of financial assets
and liabilities
§ Impairment of financial assets, and
§ General hedge accounting.
Details of these new requirements as well as their impact
on the Group’s consolidated financial statements are
described below.
Classification and Measurement of Financial Assets
AASB 9 replaces the classification and measurement
model in AASB 139 with a new model that categories
financial assets based on:
1) the business model within which the assets are
managed; and
subsequently reclassified to profit or loss, but are instead
Trade and other receivables
transferred to retained earnings when the financial
liability is derecognised. Previously, under AASB 139,
the entire amount of the change in the fair value of the
financial liability designated as at FVTPL was presented in
profit or loss.
Short-term investment
Derivative financial assets
Total financial assets
Financial Liabilities
§ Financial assets classified as held-to-maturity and loans and receivables under AASB 139 that were measured at
amortised cost continue to be measured at amortised cost under AASB 9 as they are held within a business model
whose objective is to collect the contractual cash flows and they have contractual cash flows that are solely payments
of principal and interest on the principal amount outstanding
§ Present value of trail commission receivable was classified as loans and receivables under AASB 139 has been
accounted for as contract assets under AASB 15 until such time that the right to consideration is considered to be
unconditional.
§ Present value of trail commission payable is not affected by the adoption of AASB 15. This will continue to be measured
at amortised cost under AASB 9.
The table below shows the classification of each class of financial asset and liability under AASB 139 and AASB 9 as at 1
July 2018.
AT 1 JULY 2018
Financial Assets
Original
Classification
under AASB 139
New
Classification
under AASB 9
Original Carrying
Amount
under AASB 139
New Carrying
Amount
under AASB 9
Note
Carrying Amount $'000
Cash and cash equivalents
Loans and receivables
Amortised cost
198,905
198,905
Loans and advances
Present value of trail
commission receivable
(a)
(b)
(c)
(d)
(e)
Loans and receivables
Amortised cost
8,633,613
8,633,613
Loans and receivables
Contract asset
(expected value
method) under AASB 15
Loans and receivables
Amortised cost
Held to maturity
Amortised cost
Fair value - hedging
instrument
Fair value - hedging
instrument
57,160
57,160
7,265
260
43,596
7,265
260
43,596
8,940,799
8,940,799
Interest-bearing liabilities
(f) Other financial liabilities Other financial liabilities
8,717,111
8,717,111
Present value of trail
commission payable
(g) Other financial liabilities Other financial liabilities
27,848
27,848
Trade and other payables
(h) Other financial liabilities
Amortised cost
Derivative financial liabilities
(i)
Fair value - hedging
instrument
Fair value - hedging
instrument
43,572
549
43,572
549
Total financial liabilities
8,789,080
8,789,080
RESIMAC GROUP LTD2019 ANNUAL REPORT 114
114
RESIMAC GROUP LTD
Notes to the Consolidated Financial Statements
Other (for the year ended 30 June 2019)
a. Loans and advances are held under a business model
Impairment of Financial Assets
The result of the assessment and expected additional impairment allowance are as follows:
to collect the contractual cash flows, which consist
solely payments of principal and interest, and as such
will continue to be measured at amortised cost under
AASB 9
In relation to the impairment of financial assets, AASB 9
requires an expected credit loss model as opposed to an
incurred credit loss model under AASB 139. The expected
credit loss model requires the Group to account for
b. Refer to separate AASB 15 disclosure on page 116
expected credit losses and changes in those expected
onwards
c. Trade receivables that were classified as loans and
receivables under AASB 139 are held under a business
model to collect the contractual cash flows and as
such will continue to be measured at amortised cost
under AASB 9. Management do not believe that
AASB 9 adoption will impact on the trade receivables
credit losses at each reporting date to reflect changes in
credit risk since initial recognition of the financial assets.
In other words, it is no longer necessary for a credit event
to have occurred before credit losses are recognised.
The impairment requirements apply to financial assets
measured at amortised cost and FVTOCI, and amounts
receivable from contracts with customers as defined in
balance
AASB 15.
d. Term deposit measured at amortised cost with fixed
or determinable payments and fixed maturity date,
which the Group has the positive intent and ability to
hold to maturity. This deposit is held under a business
model to collect the contractual cash flows and as
such will continue to be measured at amortised cost
under AASB 9
e. Derivatives are initially measured at fair value.
Subsequent to initial recognition, changes in fair value
associated with the effective portion of a cash flow
hedge are recognised through other comprehensive
income
In particular, AASB 9 requires the Group to measure the
loss allowance for a financial instrument at an amount
equal to the lifetime expected credit loss (ECL) if the
credit risk on that financial instrument has increased
significantly since initial recognition, or if the financial
instrument is a purchased or originated credit-impaired
financial asset. However, 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 is required to
measure the loss allowance for that financial instrument
at an amount equal to 12-month ECL. AASB 9 also
f.
Interest bearing borrowings will continue to be
requires a simplified approach for measuring that loss
measured at amortised cost under AASB 9
allowance at an amount equal to lifetime ECL for trade
g. Trail commission payables will not be impacted by
receivables, contract assets and lease receivables in
AASB 9 and will remain a financial liability measured at
circumstances.
amortised cost
h. Trade payables that were classified as financial
liabilities under AASB 139 continue to be measured
at amortised cost. Management do not believe that
AASB 9 adoption will impact on the trade payables
balance
i.
Derivatives are initially measured at fair value.
Subsequent to initial recognition, changes in fair value
associated with the effective portion of a cash flow
hedge are recognised through other comprehensive
income. Management do not believe that AASB 9
adoption will impact on this balance.
The Group has reviewed and assessed the Group’s
existing financial assets for impairment in accordance
with the requirement of AASB 9 to determine the credit
risk of the respective item at the date they were initially
recognised, and compared that to the credit risk as at 1
July 2018.
115
$'000
6,594
-
-
7,422
-
-
-
14,016
Financial Assets that are Subject to Impairment Provisions of AASB 9
Credit Risk Attributes
Loss allowance at 30 June 2018 under AASB 139
Cash and cash equivalents
Restricted cash
Loans and advances
Present value of trail commission receivable
Trade and other receivables
Short-term investment
Loss allowance at 1 July 2018 under AASB 9
(a)
(a)
(b)
(c)
(d)
(a)
a. All bank balances and short-term investments are assessed to have low credit risk as at reporting date as they are
held with reputable banking institutions. The 12 month ECL has been assessed as immaterial and no provision has
been recognised
b. The Group has applied the three stage model based on the change in credit risk since initial recognition to determine
the loss allowances of loans and advances under AASB 9. The new standard uses “forward-looking” information to
recognise credit losses leading to an entity’s requirement to estimate “expected losses” considering a broader range
of information, including:
§ past events (such as experience of historical losses);
§ current conditions; and
§ reasonable and supportable forecasts that affect the expected collectability of the future cash flows.
c. The trail commission receivable is recognised as a contract asset under AASB 15. As the counterparties are reputable
financial institutions, the simplified method has been applied with insignificant expected credit losses
d. The Group applies the simplified approach and recognises lifetime ECL for these assets. Due to the short term nature
and credit risk of the counterparties, the ECL has been assessed as immaterial and no provision has been recognised.
As permitted by AASB 9, the Group has not restated its comparative financial statements and has recorded a transition
adjustment to its opening retained earnings as at 1 July 2018 with the following impact:
Opening balance: AASB 139 - 1 July 2018
Decrease in P&L from increase in collective provision before tax
Impact before tax effect
Tax effect of the above
Total impact
Opening balance: AASB 9 - 1 July 2018
Effect on Retained Earnings
$'000
49,937
(7,422)
(7,422)
2,209
(5,213)
44,724
Additional information about how the Group measures the allowance for impairment is described in Note 20.
RESIMAC GROUP LTD2019 ANNUAL REPORT 116
2019 ANNUAL REPORT
117
117
Notes to the Consolidated Financial Statements
Other (for the year ended 30 June 2019)
Hedging
accounting criteria under AASB 139. Hence there will be
The Group has adopted AASB 15 using the cumulative effective method (without practical expedients), with the effect
no impact on hedge accounting upon the application and
of initially applying this standard at the date of initial application (i.e. 1 July 2018). Accordingly, comparative periods have
adoption of AASB 9 on 1 July 2018.
not been restated.
(ii) AASB 15 Revenue from contracts with customers
The Group’s detailed revenue accounting policies are outlined in Note 1. The application of AASB 15 has not had a
The new general hedge accounting requirements
retain the three types of hedge accounting. However,
greater flexibility has been introduced to the types of
transactions eligible for hedge accounting, specifically
broadening the types of instruments that qualify for
hedging instruments and the types of risk components
of non-financial items that are eligible for hedge
accounting. In addition, the effectiveness test has
been overhauled and replaced with the principle of an
'economic relationship'. Retrospective assessment
of hedge effectiveness is also no longer required.
Enhanced disclosure requirements about the Group's risk
management activities have been introduced.
AASB 9 requires hedging gains and losses to be
recognised as an adjustment to the initial carrying
amount of non-financial hedged items (basis
adjustment). In addition, transfers from the hedging
reserve to the initial carrying amount of the hedged item
are not reclassification adjustments under AASB 101
Presentation of Financial Statements and hence they do
not affect other comprehensive income. Hedging gains
and losses subject to basis adjustments are categorised
as amounts that will not be subsequently reclassified
to profit or loss in other comprehensive income. This is
consistent with the Group’s practice prior to the adoption
of AASB 9.
In accordance with AASB 9’s transition provisions for
hedge accounting, the Group has applied the AASB 9
In the current year, the Group has applied AASB 15
Revenue from Contracts with Customers (as amended)
which is effective for an annual period that begins on or
after 1 July 2018. AASB 15 introduces a 5-step approach
to revenue recognition and more prescriptive guidance to
deal with specific scenarios.
AASB 15 replaces all the previous guidance on revenue
recognition from contracts with customers. It requires
the identification of performance obligations within a
customer contract and a transaction price allocated to
these obligations. Revenue is recognised upon satisfying
these performance obligations. The key judgements
in applying AASB 15 include the timing and amount of
receivable consideration to be recognised in relation to
commission from white label providers.
The Group recognises future trail commission payable
for consideration received in respect of unsatisfied
performance obligations and reports these amounts as
other liabilities in the statement of financial position.
Similarly, if the Group satisfies a performance obligation
before it receives the consideration, the Group
recognises either a contract asset or a receivable in its
statement of financial position, depending on whether
something other than the passage of time is required
hedge accounting requirements prospectively from the
before the consideration is due.
date of initial application on 1 July 2018. The Group’s
qualifying hedging relationships in place as at 1 July
2018 also qualified for hedge accounting in accordance
with AASB 9 and were therefore regarded as continuing
hedging relationships. No rebalancing of any of the
hedging relationships was necessary on 1 July 2018.
As the critical terms of the hedging instruments match
those of their corresponding hedged items, all hedging
relationships continue to be effective under AASB 9’s
effectiveness assessment requirements. The Group has
also not designated any hedging relationships under
AASB 9 that would not have met the qualifying hedge
The Group has assessed the revenue streams existing
at transition. Based on this assessment, the primary
impacts from the adoption of AASB 15 are:
§ Trail commissions: trail commission receivable will
be classified as a “contract asset”. The Group will
continue to recognise the NPV of expected future trail
commission revenue in line with the highly probable
test in AASB 15. These presentation changes will not
have a material impact on the Group’s net profit and
retained earnings.
significant impact on the financial statements of the Group. The following table summarise the impacts of adoption AASB
15 on the Group’s statement of financial position at the date of initial application (1 July 2018):
AASB 118 &
AASB 139
carrying amount
30 June 2018
$'000
AASB 15
Reclassification
$'000
AASB 15
Remeasurements
$'000
AASB 15
carrying amount
1 July 2018
($'000)
-
57,420
49,937
57,160
(57,160)
-
-
-
-
57,160
260
49,937
Assets
Contract assets (a)
Other financial assets(a)
Equity
Retained earnings
(a) The Group have changed the presentation of contract assets in relation to trail commission receivable in the statement of financial position to reflect
the requirements of AASB 15. This has no impact on the statement of comprehensive income.
b) 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 effective for the 30 June 2019
reporting period and have not been early adopted by the Group.
Standard/amendment
AASB 16 Leases
AASB 2017-6 Amendments to Australian Accounting Standards –
Prepayment Features with Negative Compensation
AASB 2018-1 Amendments to Australian Accounting Standards –
Annual Improvements 2015 – 2017 Cycle
AASB 2018-3 Amendments to Australian Accounting Standards –
Reduced Disclosure Requirement
AASB 2018-6 Amendments to Australian Accounting Standards –
Definition of a Business
AASB 2018-7 Amendments to Australian Accounting Standards –
Definition of Material
AASB 2019-1 Amendments to Australian Accounting Standards –
References to the Conceptual Framework
Interpretation 23 Uncertainty over Income Tax Treatments
Effective for annual reporting
periods beginning on or after
1 January 2019
1 January 2019
1 January 2019
1 January 2019
1 January 2020
1 January 2020
1 January 2020
1 January 2019
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2019 ANNUAL REPORT
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Notes to the Consolidated Financial Statements
Other (for the year ended 30 June 2019)
The Group’s assessment of the impact of these new standards and interpretations is set out below.
for the first-time application of AASB 16, the Group has
The Group has assessed the existing leases in
AASB 2018-1 Amendments to Australian
carried out the assessment which has shown that the
accordance with the requirements of AASB 16 and
Accounting standards – Annual Improvements
new definition in AASB 16 will not change significantly the
a preliminary assessment indicates the Group will
2015 – 2017 Cycle
scope of contracts that meet the definition of a lease for
recognise a right-of-use asset of AUD$8.4m and a
the Group.
Impact on Lessee Accounting
corresponding lease liability of AUD$8.8m in respect
of all these leases. The impact on profit or loss is to
decrease other expense by AUD$2.1m, to increase
The Annual Improvements include amendments to
following accounting standards that are applicable to
the Group:
AASB 16 will change how the Group accounts for leases
depreciation by AUD$1.8m and to increase interest
AASB 112 Income Taxes
previously classified as operating leases under AASB 117,
expense by AUD$0.5m.
AASB 16 Leases
General Impact of Application
AASB 16 provides a comprehensive model for the
identification of lease arrangements and their
treatment in the financial statements for both lessors
and lessees. AASB 16 will supersede the current lease
guidance including AASB 117 Leases and the related
Interpretations when it becomes effective for accounting
periods beginning on or after 1 January 2019. The date of
initial application of AASB 16 for the Group will be 1 July
2019.
The Group intends to apply the simplified transition
approach and will not restate comparative amounts for
the year prior to first adoption.
which were off-balance sheet.
On initial application of AASB 16, for all leases (except as
noted below), the Group will:
§ Recognise right-of-use assets and lease liabilities
in the consolidated statement of financial position,
initially measured at the present value of the future
In contrast to lessee accounting, AASB 16 substantially
lease payments;
carries forward the lessor accounting requirements in
AASB 117.
Impact of the New Definition of a Lease
The Group will make use of the practical expedient
available on transition to AASB 16 not to reassess
whether a contract is or contains a lease. Accordingly,
the definition of a lease in accordance with AASB 117 and
Interpretation 4 will continue to apply to those leases
entered or modified before 1 July 2019.
The change in definition of a lease mainly relates to the
concept of control. AASB 16 distinguishes between lease
and service contracts on the basis of whether the use of
an identified asset is controlled by the customer. Control
is considered to exist if the customer has:
§ Recognise depreciation of right-of-use assets
and interest on lease liabilities in the consolidated
statement of profit or loss;
§ Separate the total amount of cash paid into a principal
portion (presented within financing activities) and
interest (presented within operating activities) in the
consolidated cash flow statement.
Lease incentives (e.g. rent-free period) will be recognised
as part of the measurement of the right-of-use assets
and lease liabilities whereas under AASB 117 they
resulted in the recognition of a lease liability incentive,
amortised as a reduction of rental expenses on a
straight-line basis.
For short-term leases (lease term of 12 months or less)
§ The right to obtain substantially all of the economic
and leases of low-value assets, the Group will opt to
benefits from the use of an identified asset, and
recognise a lease expense on a straight-line basis as
§ The right to direct the use of that asset
permitted by AASB 16.
The Group will apply the definition of a lease and related
guidance set out in AASB 16 to all lease contracts entered
into or modified on or after 1 July 2019 (whether it is a
lessor or a lessee in the lease contract). In preparation
Under AASB 16, right-of-use assets will be tested for
impairment in accordance with AASB 136 Impairment
of Assets. This will replace the previous requirement to
recognise a provision for onerous lease contracts.
The amendment clarify that an entity should
recognise the income tax consequences of dividends
in profit or loss, other comprehensive income or
equity according to where the entity originally
recognised the transactions that generated the
distributable profits.
AASB 123 Borrowing Costs
The amendment clarify that if any specific borrowing
remains outstanding after the related asset is ready
for its intended use or sale, that borrowing becomes
part of the funds that an entity borrows generally
when calculating the capitalisation rate on general
borrowing.
All the amendments are effective for annual
reporting periods beginning on or after 1 July 2019
and generally require prospective application. Earlier
application is permitted.
The Group does not anticipate that the application
of the amendments in the future will have an impact
on the Group’s consolidated financial statements.
Under AASB 117, all lease payments on operating
leases are presented as part of cash flows from
operating activities. The impact of the changes
under AASB 16 would be to reduce the cash
generated by operating activities by AUD$1.4m and
to increase net cash in financing activities by the
same amount.
AASB 2017-6 Amendments to Australian
Accounting Standards - Prepayment Features with
Negative Compensation
The amendments to AASB 9 clarify that for the
purpose of assessing whether a prepayment feature
meets the SPPI condition, the party exercising the
option may pay or receive reasonable compensation
for the prepayment irrespective of the reason for
prepayment. In other words, prepayment features
with negative compensation do not automatically fail
SPPI.
The amendment applies to annual periods beginning
on or after 1 July 2019, with earlier application
permitted. There are specific transition provisions
depending on when the amendments are first
applied, relative to the initial application of AASB 9.
The application of Amendment to AASB 9 will
become mandatory for the Group’s financial
statements for the year ending 30 June 2020. The
impact of the new standard on the Group’s financial
statements has not yet been determined.
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121
Notes to the Consolidated Financial Statements
Other (for the year ended 30 June 2019)
AASB 2018-3 Amendments to Australian Accounting
This Standard applies to annual reporting periods on
Standards – Reduced Disclosure Requirements
or after 1 January 2020. The Group does not anticipate
Amends AASB 16 Leases and AASB 1058 Income for
Not-for-Profit Entities to establish Reduced Disclosure
Requirements for entities preparing general purpose
statements under Australian Accounting Standards –
Reduced Disclosure Requirements. The amendments
applied for annual periods beginning on or after 1 January
2019.
that the application of this Standard will have a material
impact on the Group’s consolidated financial statements,
but may have an impact on the assessment and
accounting for future acquisitions.
AASB 2018-7 Amendments to Australian Accounting
Standards – Definition of Material
Make amendments intended to address concerns that
As the Group’s financial statements are ‘Tier 1’ general
the wording in the definition of ‘material’ was different in
purpose financial statements, the Group does not
the Conceptual Framework for Financial Reporting, AASB
anticipate that the application of the amendments in the
101 Presentation of Financial Statements and AASB 108
future will have an impact on the Group’s consolidated
Accounting Policies, Changes in Accounting Estimates
financial statements.
and Errors.
AASB 2018-6 Amendments to Australian Accounting
The amendments address these concerns by:
Standards – Definition of a Business
§ Replacing the term ‘could influence’ with ‘could
Amends AASB 3 Business Combinations to clarify the
reasonably be expected to influence’
definition of a business, with the objective of assisting
entities to determine whether a transaction should be
accounted for as a business combination or as an asset
acquisition.
The amendments:
§ Clarify that to be considered a business, an acquired
set of activities and assets must include, at a minimum,
an input and a substantive process that together
significantly contribute to the ability to create outputs
§ Remove the assessment of whether market
participants are capable of replacing any missing
inputs or processes and continuing to produce outputs
§ Including the concept of ‘obscuring information’
alongside the concepts of ‘omitting’ and ‘misstating’
information in the definition of material
§ Clarifying that the users to which the definition refers
are the primary users of general purpose financial
statements referred to in the Conceptual Framework
§ Aligning the definition of material across Australian
Accounting Standards and other publications.
This Standard applies to annual reporting periods
beginning on or after 1 January 2020. The Group does not
anticipate that the application of this Standard will have
a material impact on the Group’s consolidated financial
§ Add guidance and illustrative examples to help entities
statements.
assess whether a substantive process has been
acquired
§ Narrow the definitions of a business and outputs by
focusing on goods and services provided to customers
and by removing the reference to an ability to reduce
costs
§ Add an optional concentration test that permits a
simplified assessment of whether an acquired set of
activities and assets is not a business
AASB 2019-1 Amendment to Australian Accounting
Standards – References to the Conceptual Framework
Makes amendments to various Accounting Standards to
reflect the issue of the revised Conceptual Framework for
Financial Reporting. This Standard updates references to,
or quotations from, previous versions of the Framework
contained in many Accounting Standards.
This amending Standard applies to for-profit sector
entities that have public accountability and are required
by legislation to comply with Australian Accounting
Standards and other for-profit entities that elect to apply
the Conceptual Framework, for annual reporting periods
beginning on or after 1 January 2020. The Group does not
anticipate that the application of this Standard will have
a material impact on the Group’s consolidated financial
statements.
Interpretation 23 Uncertainty over Income Tax
Treatments
Interpretation 23 sets out how to determine the
accounting tax position when there is uncertainty over
income tax treatments. The Interpretation requires an
entity to:
§ Determine whether uncertain tax positions are
assessed separately or as a group; and
§ Assess whether it is probable that a tax authority will
accept an uncertain tax treatment used, or proposed
to be used, by an entity in its income tax filings:
w If yes, the entity should determine its accounting
tax position consistently with the tax treatment
used or planned to be used in its income tax filings.
w If no, the entity should reflect the effect of
uncertainty in determining its accounting tax
position
The Interpretation is effective for annual periods
beginning on or after 1 July 2019. Entities can apply the
Interpretation with either full retrospective application or
modified retrospective application without restatement
of comparatives retrospectively or prospectively.
The Group does not anticipate that the application of
the amendments in the future will have an impact on the
Group’s consolidated financial statements.
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123
Notes to the Consolidated Financial Statements
Other (for the year ended 30 June 2019)
30.2. Goods & 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
Directors'
Declaration
Resimac Group Ltd and its Controlled Entities
§ receivables and payables which are stated with the amount of GST
The directors declare that:
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.
30.3. Reclassified FY18 comparative information
To align the policies of the consolidated group, the classification of a
number of items in the consolidated statement of profit or loss and other
comprehensive income, consolidated statement of financial position and
consolidated statement of cash flows; as presented in the FY18 comparative
period group accounts, has been amended.
These changes include:
30.3.1. Consolidated Statement of Profit or Loss and Other Comprehensive
Income
Borrowing fees (FY18), ($1,923,675)
Previously disclosed under other expense, has now been included within the
following lines.
§ Fee and commission expense, ($1,923,675)
As a result of the implementation of the new general ledger system in the
current year there were other certain re-allocation of accounts (apart from
the one described above) and the mapping thereof which resulted in FY
18 comparative figures being reclassified. Management deems the re-
allocations more appropriate and notes that these changes were immaterial.
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
Cholmondeley Darvall
Chairman and Non-Executive Director
Sydney
27 August 2019
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Independent Auditor's Declaration
Resimac Group Ltd and its Controlled Entities
Independent Auditor's Report
Resimac Group Ltd and its Controlled Entities
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Grosvenor Place
Sydney NSW 2000
225 George Street
PO Box N250 Grosvenor Place
Sydney NSW 2000
Sydney NSW 1220 Australia
PO Box N250 Grosvenor Place
Sydney NSW 1220 Australia
Tel: +61 2 9322 7000
Fax: +61 2 9322 7001
Tel: +61 2 9322 7000
www.deloitte.com.au
Fax: +61 2 9322 7001
www.deloitte.com.au
The Board of Directors
Resimac Group Limited
The Board of Directors
Level 9
Resimac Group Limited
45 Clarence Street
Level 9
SYDNEY NSW 2000
45 Clarence Street
SYDNEY NSW 2000
27 August 2019
27 August 2019
Dear Board Members
Dear Board Members
Auditor’s Independence Declaration to Resimac Group Limited
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
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the
controlled entities.
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 Group Limited for the
year ended 30 June 2019, I declare that to the best of my knowledge and belief, there have
As lead audit partner for the audit of the financial report of Resimac Group Limited for the
been no contraventions of:
year ended 30 June 2019, 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
(i) the auditor independence requirements of the Corporations Act 2001 in relation
(ii) any applicable code of professional conduct in relation to the audit.
to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours faithfully
Yours faithfully
DELOITTE TOUCHE TOHMATSU
DELOITTE TOUCHE TOHMATSU
Delarey Nell
Partner
Delarey Nell
Chartered Accountants
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 “Entity”) and its subsidiaries
(the “Group”) which comprises the consolidated statement of financial position as at 30 June 2019,
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
the directors’ declaration.
accounting policies and other explanatory
information, and
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 2019 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 and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. 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 Entity, would be in the same terms if given to the directors as at
the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report for the current period. These matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
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Independent Auditor's Report
Independent Auditor's Report
Key Audit Matter
How the scope of our audit responded to the
Key Audit Matter
Goodwill Impairment Assessment
Our procedures included, but were not limited to:
As at 30 June 2019, the group has a
goodwill balance of $21.8 million as
disclosed in note 10.
The Group is required to test goodwill
annually. This assessment requires the
exercise of significant judgement about
forecasting future revenues and
expenses, including discount rates
applied to cash flows.
Key judgements and estimates are used
in preparing a discounted cash flow
model (‘value in use’) which is used to
assess the recoverability of goodwill
including:
• Identification of Cash Generating
Units; (“CGU’s”)
• Future cash flows for the CGU’s;
• Discount Rates; and
• Terminal value & growth rates.
•
•
the
appropriateness
Evaluating
of
management’s identification of the Group’s
CGUs;
Evaluating management’s controls over the
impairment assessment process
for the
identification of indicators of impairment;
• Assessing the reasonableness of cash flow
projections and growth rates against external
economic and financial data and the Group’s
own historical performance;
Engaging our valuation specialists to assess
the key assumptions and methodology used
by management in the impairment model, in
particular the weighted average cost of capital
and the terminal growth rate;
Evaluating
determined by the Group against its market
capitalisation; and
Testing the mathematical accuracy of the
impairment model.
the value
•
•
•
in use estimates
We also assessed the appropriateness of the
disclosures in note 10 in the financial statements.
Future trailing commissions
Our procedures included, but were not limited to:
As at 30 June 2019, the net present
value of future trailing commission’s
receivable (contract asset) and payable
by the Group is $48.648 million and
$22.9 million respectively as disclosed in
Note 1 and 13.
The determination of the net present
value of trailing commissions required
management to exercise judgement with
regard to the selection of the discount
rate, run off rates and percentage of
commissions paid to brokers applied to
the model.
•
•
•
Evaluating the key controls relevant to the
approval and determination of the net present
value of future trail commissions;
the
reasonableness
• Challenging
of
applied,
assumptions
management’s
including discount rate and the run-off;
In determining the value of future trail
commissions we assessed the assumptions
by:
- Benchmarking
against
market peers and external market data,
and
assumptions
our
experts
- Assessing management’s assumptions
against industry and economic indicators
Engaging
to
internal
independently develop a model, using the
inputs
by
assumptions
management, to recalculate the valuation of
trail commission receivable and payable. This
was compared to management’s valuation, in
order to test the integrity and mathematical
accuracy of management’s model;
applied
and
• Confirming that the results from the different
models are booked and presented correctly at
the Group and company level;
• Assessing the accuracy and completeness of
disclosures of the NPV results, significant
areas of judgement, sensitivity of material
assumption and other required disclosures in
the annual report; and
•
Assessing the application of AASB 9 Financial
Assets (AASB 9) and AASB 15 Revenue from
Contracts with Customers (AASB 15) by
management to the trailing commission
asset, including impact on transition to the
new standards, classification as a contract
asset under AASB 15, and the application of
the impairment provisions of AASB 9 to the
amounts recognised.
We also assessed the appropriateness of the notes 1
and 13 of the financial statements
Our procedures in conjunction with our specialists
included, but were not limited to:
Assessing model adequacy:
We assessed adequacy of management’s internally
developed model in determining the impairment loss
provision. Our procedures included:
•
•
•
•
our
experts
internal
Assessing whether the model adequately
addresses the requirements of AASB 9;
Assessing, 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;
to
Engaging
independently develop a model, using inputs
and assumptions applied by management, to
assess the reasonableness of assumptions
driving probabilities of default (PD), Loss
Given Default (LGD) and Exposure at Default
(EAD); and
Assessing adequacy of management overlays
to the modelled collective provision by
recalculating the coverage provided by the
collective impairment provision (including
overlays) to loan book, taking into account
recent history and performance.
We also assessed the appropriateness of the
disclosures within notes 6 and 21 of the financial
statements.
Loan loss provisioning under AASB 9
Financial Instruments
As at 30 June 2019 the Group has
recognised provisions amounting to
$10.9m for impairment losses on loans
and advances held at amortised cost in
accordance with the Expected Credit
Loss (ECL) model as disclosed in Note 6
to the financial statements.
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 asst. If the credit
risk on a financial instrument has not
increased
initial
recognition (except for a purchased or
originated
financial
credit-impaired
asset), the Group measures the loss
allowance for that financial instrument at
an amount equal to a 12 month ECL for
stage 1 assets.
significantly
since
significant
This credit loss provision represents an
area of
judgment and
estimation for the Group given the level
of assumptions applied in the modelling
including, historic
rates and
recoverability.
loss
Other Information
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2019, 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
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Independent Auditor's Report
Independent Auditor's Report
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 Entity are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of
the financial report that gives a true and fair view and is free from material misstatement, whether
due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group
to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to liquidate the Group or to
cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as
intentional omissions,
involve collusion,
fraud may
misrepresentations, or the override of internal control.
forgery,
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial
report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.
•
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and
events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express an opinion on the financial report.
We are responsible for the direction, supervision and performance of the Group’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, related
safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the 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 22 of the Directors’ Report for
the year ended 30 June 2019.
In our opinion, the Remuneration Report of the Resimac Group Limited, for the year ended 30 June
2019, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Entity 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, 27 August 2019
RESIMAC GROUP LTD2019 ANNUAL REPORT
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2019 ANNUAL REPORT
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131
Corporate Social
Responsibility
Resimac Group ensures our Corporate Social Responsibility
activities support our organisational values and they are
focused on 3 key areas: our People, our Environment, and
contributing to the communities we operate in.
Our People
At Resimac we recognise that an engaged team supports
a successful business. We encourage work/life balance
and also offer a number of other benefits such as:
study support, a flexible day, “wellness” hours, and paid
Community Day allowing employees to assist in the
community with a charity of their choice.
Our Environment
We believe the efficient use of resources makes good
business sense and are committed to supporting the
environment. We do this by:
§ Reducing the number of printers, recycling and
continually reducing the need for paper
Resimac is proud
to be Carbon
Conscious,
planting a tree
for every Resimac
§ Participating in earth hour and installing sensor lights in
loan settled.
the office
§ Planting a tree for every loan settled with us
Our Society
The Station is a not-for-profit
drop-in centre established in
1979, 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.
Services offered include breakfast, lunch,
showers, laundry facilities, drug and alcohol
counselling, mental health counselling and
housing assistance.
A number of our employees volunteer to assist
with serving of lunches weekly, by rotation. In
addition, our employees coordinate a highly-
successful annual drive to collect contributions
of personal and hygiene products to assist those
who utilise the services at The Station.
Food Ladder
is the world’s
first not-for-
profit organisation to use hydroponics and
environmentally sustainable technologies
to create food and economic security for
communities otherwise reliant on aid and
affected by poverty. They use custom designed
systems to grow commercial quantities of
nutrient-rich product around the world; from
rural towns in India and Uganda to the most
remote parts of the Northern Territory in
Australia.
Resimac Group has been proudly involved with
Food Ladder since 2018, offering both financial
support and assistance promoting awareness for
the organisation with both our customers and
business partners.
thestationltd.org
foodladder.org
With over 70 staff in Manila, it is important to the Resimac business to support local charities and
communities. Our staff in Manila work with us to determine where money should be spent. The programs
we have invested in over the past few years include:
Operation Smile - a foundation that helps those born with a cleft palate. This charity sets up
screening and surgical procedures to correct the cleft. Early treatment allows children assistance
with their speech and spares them from bullying and rejection. Our support allowed for 2 missions
and 189 patients to be screened and treated this year.
Christmas Baskets - Aetas are one of the indigenous tribes in the Philippines living in mountainous
areas in the north. In 1991, the eruption of Mt . Pinatubo forced the Aetas to evacuate their
ancestral lands and move to resettlement areas in nearby provinces. In April this year they were
once again displaced as their area was hit by an earthquake. The farms, their main livelihood, were
covered by landslides and they continue to struggle with limited supplies of food and medicines.
Resimac and its staff are preparing Christmas baskets which contain rice, canned goods and
groceries so they have something to share with their families.
Gentle Hands & St Rita - Orphanages which address child and youth welfare. Our staff volunteer
their time on a weekend to visit the orphanages, purchase food on behalf of Resimac, prepare
lunches, provide educational materials, toiletries and organise activities with the children.
RESIMAC GROUP LTD2019 ANNUAL REPORT 132
132
RESIMAC GROUP LTD
133
Shareholder
Information
Additional information required by the ASX and not disclosed elsewhere in this report is set out below. The
information is current as at 24 September 2019.
a) Number of Holders of Equity Securities
Ordinary Share Capital: 405,790,153 paid ordinary shares are held by 851 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 & their Holdings
The number of equity securities by size of holding is set out below:
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
113
269
114
236
119
851
Units
58,650
718,638
883,877
8,451,921
395,677,067
405,790,153
Unmarketable Parcel
Minimum Parcel Size
Holders
Minimum $500.00 parcel at $0.9000 per unit
556
52
% Units
0.01
0.18
0.22
2.08
97.51
100.00
Units
3,941
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:
Size of Holdings
Somers Limited, ICM Limited, UIL Limited, Permanent Investments Limited,
Somers Isles Private Trustee Company Limited, and each other entity controlled
by Duncan Saville
No. of Shares
246,757,304
%
61.91
e) Twenty Largest Shareholders
The 20 largest shareholders of ordinary shares on the company’s register at 24 September 2019 were:
Size of Holdings
J P Morgan Nominees Australia Pty Limited
HSBC Custody Nominees (Australia) Limited
National Nominees Limited
Motrose Pty Ltd
Redbrook Nominees Pty Ltd
Warren John Mcleland
Aust Executor Trustees Ltd (GFFD)
Hartley Phillips Securities Pty Ltd (Hartley Phillips Inv Tst A/C)
Moat Investments Pty Ltd (Moat Investment A/C)
Tico Pty Ltd
Westpac Banking Corporation
Peterlyn Pty Ltd
JH Nominees Australia Pty Ltd (Harry Family Super Fund A/C)
Michael Jefferies + Julie Jefferies (The Jefferies Super Fund A/C)
Acres Holdings Pty Ltd
Torryburn Pty Ltd (Torryburn Super Fund A/C)
BNP Paribas Nominees Pty Ltd (IB AU NOMS Retailclient DRP)
RSJSDS Pty Ltd (Salmon Family S/F A/C)
High Pass Holdings Pty Ltd (High Pass HLDGS P/L Sup A/C)
Bond Street Custodians Limited (CPCPL - V73544 A/C)
No. of Shares
172,272,537
98,747,567
15,454,889
15,277,905
14,115,084
11,798,282
8,105,202
4,946,964
4,048,624
3,623,944
2,493,130
2,381,799
1,780,000
1,527,400
1,496,881
1,236,819
1,216,378
1,185,000
1,171,695
1,157,016
%
42.45
24.33
3.81
3.76
3.48
2.91
2.00
1.22
1.00
0.89
0.61
0.59
0.44
0.38
0.37
0.30
0.30
0.29
0.29
0.29
Total
364,037,116
89.71
RESIMAC GROUP LTD2019 ANNUAL REPORT 134
2019 ANNUAL REPORT
135135
Corporate
Information
Investor
Information
Registered Office & Corporate Office
Level 9, 45 Clarence Street
Share Registry
Computershare Investor Services Pty Limited
Managing Your Shareholding
The company’s share registry is managed by
Securityholder Reference Number (SRN) or Holder
Sydney NSW 2000
p
f
+61 2 9248 0300
+61 2 9248 2304
e
info@resimac.com.au
w
resimac.com.au
Customer enquiries: 13 38 39
Non-Executive Directors
Chum Darvall, Chairman
Susan Hansen
Michael Jefferies
Warren McLeland
Duncan Saville
Company Secretary
Peter Fitzpatrick
Address
Level 3, 60 Carrington Street
Sydney NSW 2000
p
f
+61 2 8234 5000
+61 2 8234 5050
e
web.queries@computershare.com.au
w
investorcentre.com.au
To view the 2019 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
Computershare Investor Services Pty Limited
Identification Number (HIN) as shown on your
(Computershare).
Issuer Sponsored / CHESS statements.
The Investor Centre website is the fastest, easiest
You can also contact Computershare by:
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 instructions;
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
Address
Level 3, 60 Carrington Street
Sydney NSW 2000
p
f
e
+61 2 8234 5000
+61 2 8234 5050
web.queries@computershare.com.au
w
investorcentre.com.au
Tax File Numbers
While it is not compulsory to provide a Tax File
Number (‘TFN’), if shareholders have not provided
a TFN and Resimac pays an unranked 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
Securities Exchange Listing
Up-to-date information on the company can be
The company’s shares are listed on the ASX and
obtained from the Company’s website:
the Home Exchange is Sydney. Ordinary shares are
resimac.com.au
traded under the code, RMC.
Share prices can be accessed from major Australian
newspapers, the Resimac Group website or at:
asx.com.au
RESIMAC GROUP LTD2019 ANNUAL REPORT Resimac Group Ltd
Level 9, 45 Clarence Street
Sydney NSW 2000
p
e
+61 2 9248 0300
info@resimac.com.au
w
resimac.com.au
ABN 55 095 034 003
Australian Credit Licence 247829