21
22 ANNUAL
REPORT
Resimac
Group Ltd
ABN 55 095 034 003
Australian Credit Licence 247829
ASX: RMC
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Who we are
Chairman's message
CEO's message
Board of Director's
Resimac sustainability report
Director's report
Remuneration report
Financial statements
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Notes to the consolidated financial statements
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10 Directors' declaration
11 Independent auditor's declaration
12 Independent auditor's report
13 Shareholder information
14 Managing your shareholding
15 Corporate information
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ORIG INATION
Wholesale, 3rd Party,
Direct & White Label
distribution channels
SERVICING
Underwriting, loan
management, arrears
management
FUNDING
Global capital markets
programme
OUR BRAND AMBASSADOR
Adam Gilchrist is the face of our broker and direct to
consumer brands, Resimac and homeloans.com.au
When partnering with an
organisation I look for
credibility, the approach
that the business takes to
supporting its customers
and how it conducts itself in
the community.
- Adam Gilchrist
homeloans.com.au brand ambassador
Who
we are
Resimac Group Ltd ('Resimac Group') is a leading
non-bank lender and multi-channel distribution
business.
Its fully integrated business model comprises
originating, servicing and funding prime, non-
conforming residential mortgages and asset finance
products in Australia and New Zealand.
With a history dating back to 1985, Resimac Group
has a proven track record of growth and stability.
We are pleased to service over 55,000 customers
with a portfolio of home loans on balance sheet
of over $15 billion, a $400 million asset finance
portfolio, and total assets under management of
over $16 billion.
As a pioneer of the Residential Mortgage-Backed
Securities ('RMBS') industry we have one of
Australia’s most respected securitisation programs,
having issued in excess of $41 billion in domestic
and global markets since 1987.
Resimac Group has access to a diversified funding
platform with multiple warehouse lines provided by
domestic and offshore banks for short-term funding
in addition to a global securitisation program to fund
its assets longer term.
Thanks to our flexible global capital markets
programme, we provide solutions to a wide range
of customers including the self-employed and
contractors, as well as customers with previous
credit impairments through our network of over
12,000 broker partners. Customers with a Resimac
Group loan are entitled to an exclusive customer
benefits program offering discounts on a vast
array of products and services in Australia and New
Zealand.
Resimac Group is a profitable organisation with
diverse income streams - net interest margin on
principally funded loans, annuity trail income on
non-principally funded loans and other fee income.
We operate a proprietary servicing platform and
have been issued a Standard & Poor's ('S&P')
"STRONG" Servicer Ranking, which was reaffirmed
in April 2021.
OVER
$16b
ASSETS UNDER
MANAGEMENT
ISSUED IN
EXCESS OF
$41b
RMBS IN DOMESTIC
& GLOBAL MARKETS
HOME LOAN
SETTLEMENTS
$6.3b
INCREASED BY 30%
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RESIMAC GROUP LTD
ANNUAL REPORT 2022
5
| MESSAGE FROM OUR CHAIRMAN
| MESSAGE FROM OUR CHAIRMAN
Message
from our Chairman
Warren McLeland
Resimac Group Limited produced another year of
outstanding financial results for FY22. Our statutory net
profit after tax was $102.3 million (normalised $104.4
million). We announced a fully franked dividend to all
shareholders of 8 cents for the year, a 25% increase over
FY21.
This very positive financial result was essentially flat to
slightly lower (5%) than the corresponding numbers for
FY21. Yet Resimac’s growth in assets under management
grew by 11% to $15.3 billion. Even higher impressive
growth rates were recorded in our higher risk mortgage
books (for example our specialist loans and small business
lending assets).
So, what was happening to our business? We were showing
superb growth in physical assets on one hand but flat to
negative growth in financial results. In reality, emerging
FY22 was to prove to be a vastly different year than what all
of us had lived with for the previous three years. It proved
to be a year when macroeconomic, financial and political
issues would dominate our operations. And worse, the
corporate sector generally had no influence on, let alone
control over, the developments.
For starters, Australians remained locked down in our
homes due to COVID continuing its plague-like penetration
across the country, with newer strains of COVID (such as
Omicron) spreading rapidly. That is, nationally, the dreaded
virus continued to rein supreme. In July 2021, 81% of
Australians were just commencing to receive their second
jab, followed by their third jab in December at the close of
the first half of FY22. By the end of FY22, Australians were
receiving their first booster jab.
From first quarter FY22, state governments commenced
reopening borders and encouraging the National
Government to reopen Australia’s national borders.
Gradually, Australians also began returning to work in
offices and schools reopened to students.
we had experienced since 2012 were overblown, and more
importantly, overpriced. This was manifest in increasing
volatility in core market short term interest rates (such as
BBSW). As a consequence, higher yields becoming more
prevalent. That is, Resimac’s cost of funds was slowly but
surely increasing, which resulted in our net interest margins
being squeezed from 2.07% in FY21 to 1.81% in FY22.
The second half of FY22 (1 January to 30 June 2022) has
been extraordinary in terms of the unpredictability. The
manifestation of the invasion by Russian forces on Ukraine
on all economies of Europe has been massive and fast. Of
most importance has been major price increases in energy
(oil and gas in particular), agricultural products and other
raw materials, trade and supply chain shortage.
Stock and bond markets have plunged and property
worldwide has also experienced price reductions for retail
housing of 10% to 25% depending on the country, the
regions, and the market price segments.
The summation of these developments has been most
apparent with increases in price rises (inflation) across not
just Europe but the entire world.
Worldwide inflation is now the single biggest issue
dominating national concerns across the globe. All central
banks have introduced interest rate increases in an effort to
slow down the growth rate in consumer prices as a number
one priority. To date the results have been mixed at best.
Inflation is therefore anticipated to remain enemy number
one for all western democracies, as well as China as the
largest centrally planned economy in the world.
Australia is of course not immune from such international
developments. The RBA has already increased the cash
rate from 10 basis points in May 2022, to 2.35% in August.
Further increases in the official cash rate are expected
imminently with the next meeting taking place on 4
October.
We have always
been a highly
conservative
company when it
comes to credit
quality and aiming
to achieve growth
objectives.
The present state of flux we are living within in Australia is
so complex and serious that it is impossible to speculate
on the impact on Resimac’s operating and financial
performance for FY23.
What we do know and can clearly state is that your
company remains in a very strong position operationally
and financially. We have always been a highly conservative
company when it comes to credit quality and aiming to
achieve growth objectives. Nothing has changed in our
management philosophy, nor your Board’s stewardship
in acting with utmost responsibility for the benefit of all
shareholders and stakeholders.
Our medium-term business strategy that we have
discussed previously remains unchanged, except for minor
adjustments as we adapt to constant change. We have
extended the time horizon for its completion by up to 18
months to provide implementation flexibility. This provides
for the prevailing turbulence of the macroenvironment
permeating through the Australian economy, which we
predict will continue into the final quarter of FY23.
We have excellent high-quality banks supporting us, a
balanced portfolio of banks by geography, domicile and
experience. Some of our relationships extend over 25 years
in duration. This results in diversified funding lines from a
selection of the world’s highest ranked banks as assessed
by the international credit rating agencies. Our long-
standing priority emphasis on funding provides confidence
that we will be able to continue lending to our preferred
customers even if funding conditions tighten further from
prevailing conditions.
For shareholders, investors and all stakeholders liquidity is
not an issue for Resimac.
On behalf of my Director colleagues, I congratulate once
again, our CEO, his senior executive leadership team and
our loyal and committed employees for their invaluable
contribution to Resimac Group throughout FY22. The
stability we have sustained has been a great credit to their
teamwork and they can be so proud of the results the
company has produced.
Worldwide, economic growth was waning, and equity and
bond markets started to get nervous that the huge booms
We expect the Australian cash rate to be increased to circa
3.25% by December 2022.
Warren J McLeland
Chairman
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RESIMAC GROUP LTD
ANNUAL REPORT 2022
7
| MESSAGE FROM OUR CEO
| MESSAGE FROM OUR CEO
Home Loan AUM
$15.3b
11%
Asset Finance Settlements
$405m
212%
FY22 Dividend Fully Franked
8.0c
25%
Moving forward, we will continue to focus on
providing customers with our broad range
of products supported by our strong credit
discipline and global funding program.
Message
from our CEO
Scott McWilliam
Reflecting on the year that was, it was a tale of two very
different halves. The first half was characterised by the
economic hangover of the pandemic and a record low cash
rate driving fierce competition – particularly in the fixed-rate
market. The second half saw the pendulum swing to a rapid
monetary tightening cycle fueled by inflationary concerns.
Despite these macroeconomic challenges, I’m pleased to
report a strong result for the year ended 30 June 2022. Our
home loan portfolio increased to over $15 billion for the first
time, driven by a 30 per cent increase in settlements. This
increase has come from our specialist portfolio, where assets
under management have grown by 55 per cent, resulting in
an overall home loan AUM growth of 11 per cent.
Moving forward, we will continue to focus on providing
customers with our broad range of products supported by
our strong credit discipline and global funding program. For
residential mortgages, this will likely require a continued
focus on specialist lending solutions, particularly for self-
employed customers who are currently under-served by
the major banks. This is a strong AUM and margin growth
opportunity for Resimac, and we will work closely with our
broker partners to provide a compelling product and service
proposition to self-employed and SME borrowers.
Asset finance is another under-served market where we
see a logical and adjacent opportunity for the business. By
offering new, higher-margin products to new and existing
audiences, we can leverage off our existing funding and
distribution platforms, as well as leverage synergies with our
residential mortgage operations. This business is growing
faster than we originally anticipated, and we expect growth
to materially increase when we implement a new originations
platform in 1H23.
Technology is a major driver that helps us to increase
scalability and achieve a lower cost operating model.
The investments into overhauling our originations and
core banking platforms are tracking well, with several key
milestones achieved in FY22 across Australia and New
Zealand, and more to come in FY23. The benefits of these
technology upgrades will increase as we better optimise the
technology, including market-leading turnaround times to
brokers and customers. Improving the customer and broker
experience is the driving force for many of the changes we’ve
made and continue to make to the front- and back-end of the
business.
We are aware some homeowners are experiencing household
budget pressure from rate rises and the higher cost-of-living
from inflation. That said, we remain confident our portfolio
can absorb further rate increases. The unemployment rate
remains at a record low, and our portfolio has significant
prepayment buffers, conservative credit assessments and
low LVRs.
There has been strong investor appetite for our wholesale
funding program. The program continues to perform strongly
in domestic and international capital markets. Throughout
FY22, we issued close to $6 billion of over-subscribed prime
and non-conforming RMBS in Australia and New Zealand,
providing us with sufficient funding capacity in FY23 and
beyond. This is complemented by the support of our
onshore and offshore banking partners, who provide us with
warehouse facilities that enable us to remain strategic on
issuance RMBS timing.
I am deeply thankful for the support of the executive
leadership team and general management group, whose
leadership and expertise have been instrumental in our
success. A big thanks to our people throughout Australia,
New Zealand and the Philippines, as well as to our brokers,
aggregators and wholesale distribution partners, for
continuing to be on this journey with us as we deliver better
and more accessible lending solutions to Australians and New
Zealanders. I would also like to extend my sincere thanks to
our board for their invaluable service and guidance.
Scott McWilliam
CEO
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RESIMAC GROUP LTD
ANNUAL REPORT 2022
9
| BOARD OF DIRECTORS
| BOARD OF DIRECTORS
Board of
Directors
Resimac Group Ltd
Warren
McLeland
Susan
Hansen
Wayne
Spanner
Duncan
Saville
Caroline
Waldron
Peter
Fitzpatrick
Chairman
Independent
Independent
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive
Director
Independent
Non-Executive Director
Company
Secretary
Warren is a former stockbroker and
investment banker with over 35
years of experience in domestic and
international financial services. In
addition, Warren acts as an adviser
in funds management and business
strategy to companies operating
in the Asia Pacific region. Warren is
the former Executive Chairman of
Resimac Limited.
Susan is a Chartered Accountant
and holds a Bachelor of Commerce
degree and an MBA from the
University of Cape Town. Susan has
35 years of experience including
a Big Four Accounting firm and an
investment bank (financial analysis
and risk assessment). Susan is
a Principal of a financial training
organisation based in New Zealand.
Wayne is currently the Global Chief
Strategic Alignment, Innovation
and People Officer of Norton Rose
Fulbright. He was previously the
Managing Partner for the Australian
firm from 2012 to 2020. Wayne has
extensive experience in executive
management and corporate
governance at Board level.
Duncan is a Chartered Accountant
and an experienced non-executive
director and currently chairman
of ICM Limited, an international
fund manager. He is a fellow of the
Institute of Chartered Accountants
Australia and New Zealand, the
Australian Institute of Company
Directors and the Financial Services
Institute of Australasia.
Caroline is a Non-Executive
Director and cross border advisor
with over 30+ years’ experience
in regulated consumer sectors
such as technology, retail and
health. Caroline brings to Resimac
commercial and governance
experience in many areas including
technology rollouts and complex
transactions. Caroline holds an
LLB Hons (London), and has been
admitted to the Bars of England and
Wales, Malaysia, Australia and New
Zealand.
Peter is a Chartered Accountant who
worked for a chartered accounting
firm and oil explorer prior to joining
Resimac Limited in 1987. Peter is
responsible for the Group’s company
secretariat function. He is a member
of the Governance Institute of
Australia and the Financial Services
Institute of Australasia. Australia and
New Zealand.
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RESIMAC GROUP LTD
ANNUAL REPORT 2022
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| SUSTAINABILITY REPORT
| SUSTAINABILITY REPORT
Resimac
sustainability
report
This report should be read in
conjunction with the Corporate
Governance Statement located on
Resimac’s website resimac.com.au and
the Remuneration Report set out on
pages 28 to 41 in this Annual Report.
In 2021, Resimac established a
people-run Environmental, Social and
Governance Committee that reports
into the CEO and the Resimac Board.
It is important that our people have
joint ownership for driving our ESG
initiatives.
Resimac’s overarching Environmental,
Social and Governance (ESG) purpose
is:
Passion: As an organisation we
recognise the need to address
sustainability for our people,
customers, business partners,
investors, shareholders, the
community and the world we live in.
Inclusion: Everyone must play their
part to achieve meaningful change as
part of a global network.
Acountability: It is our responsibility
to help ensure that the services we
deliver are sustainable.
ENVIRONMENT & ENERGY
Net zero carbon
Responsible offsets
Green / recyclable housing incentives
SOCIAL CONTRIBUTION
Food Ladder roll out
Affordable housing
Social bonds
CUSTOMERS
Financial education (Youth & At Risk)
Performance incentives
Green refurb, recycle & build incentives
EMPLOYEES
DE&I performance transparency
Recruiting for future profiles
Community engagement
BROKERS & PARTNERS
Sustainable values
Customer education
Networking
INVESTORS & SHAREHOLDERS
Investor relations
Industry change leadership
Green funding opportunities
Our ESG strategy supports the sustainable
achievement of our business strategy.
ESG
STRATEGY
1
2
3
6
4
5
1 Offerings
Delivering lending solutions that are flexible and
technology-enabled, with a superior service
experience to customers and brokers who are
strong advocates of our brand.
2 People
Via our people who have a sense of purpose in
delivering better outcomes for customers and for
each other.
3 Channels
The United Nations has adopted 17 sustainable
development goals (SGDs). Resimac supports all of
these goals and will be working towards initiatives to
benefit the global network.
The Resimac Board and management in line with the
ESG Committee’s recommendations have agreed our
primary focus will be on:
Good Health and Well-Being
We have partnered with a
long-term employee Rodney
Cottam*, who has launched
Run Rocket Run, an initiative
that educates on mental
and physical resilience.
runrocketrun.com
Quality Education
*Rodney Cottam
We believe there is a gap within schools for educating
on financial literacy, understanding saving and the
journey for preparation of committing to a loan. We
also consider vulnerable customers, disadvantage
communities and youth as part of our program for
quality education.
Using efficient and effective distribution to chosen
segments, at scale.
Climate Action
4 Operating model
Supporting by a fit-for-purpose and technology-
enabled operating model/s.
5 Capital
With access to sufficient, diversified and efficient
funding and capital base.
6 Stakeholder value
Ultimately producing superior, sustainable returns
with a 'capital ight' model.
Resimac has recently entered into a partnership
with Plant Trees Australia and will continue our
contribution with nature-based solutions to climate
change. As part of the settlements process, our
customers will have an opportunity to select a
community tree-planting project they would like to
support, and we will contribute to those projects on
their behalf. The planting of trees and plants have
a number of benefits to our environment. These
include providing shelter, food and habitat for native
flora and fauna, reducing soil erosion, increasing
biodiversity, filtering pollution and reducing wind
erosion.
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RESIMAC GROUP LTD
ANNUAL REPORT 2022
13
| SUSTAINABILITY REPORT
Environmental
As a leading non-bank lender, we understand the
importance of supporting the environment. We
are committed to this by:
Being carbon conscious. For every loan
settled, Resimac facilitates the planting
of a Mallee Eucalypt tree in the Australian
Wheatbelt region of Western Australia.
Since 2010 Resimac has planted over 46,000
trees, which is calculated to offset 5,000
tonnes of harmful CO2 emissions from the
Earth’s atmosphere, as well as play a role
in increasing the available habitat for local
fauna. This initiative will soon be replaced by
our Plant Trees Australia partnership.
Continually reducing the need for paper
and printable matter, both through our
Social
end-to-end digital loan origination process
for customers and by reducing the number
of printers in our offices. Additionally, all
printers have a built-in power saving function
to turn off after a short interval.
In 2021, we launched a new Green Loan
product. With an ultra-low interest rate,
the loan makes credit more accessible to
encourage customers to join the movement
towards a cleaner and more sustainable
future. The Green Loan can be used to
purchase and install energy-efficient items
for household improvements such as battery
packs and storage, electrical energy storage,
hot water heat pump or solar hot water
system, insulation and/or double-glazed
windows and solar panels.
Our social responsibilities extend across a range
of groups, including our employees, customers,
investors and the community.
its ESG financing capabilities to include green
and sustainable funding initiatives and satisfy
investor demand.
It is paramount to the future of our business
that our employees conduct themselves in a
way that enables us to deliver great service to
our customers and business partners, while
displaying our values of quality, passion, agility,
respect, accountability, professionalism and
integrity.
The Group’s ESG funding strategy during FY22
saw the inaugural issuance of a social bond
backed by a pool of ‘affordability’ mortgage
products. The Group will continue to develop
At Resimac, we recognise that an engaged team
supports a successful business. We encourage
work/life balance and offer a number of benefits
such as: study support, a flexible day, “wellness”
hours, an employee assistance program, salary
continuance insurance, purchased leave and a
paid community day that enables employees
to participate in community activities with a
charity of their choice. In 2020, flexible working
arrangements were implemented, allowing our
people to work from home two days a week.
ANNUAL REPORT 2022
15
In late 2021 we
launched our first
co-branded Food
Ladder greenhouse
in a primary school
in Brisbane. We
currently have
two additional
greenhouses under
construction with
Western NSW and
Perth.
| SUSTAINABILITY REPORT
THE STATION LTD
PHILIPPINES
The station is a not-for-profit drop-in centre
established in 1978, located in the heart of
the Sydney CBD. Its mission is to provide a
range of services to adults having difficulty
obtaining and sustaining accommodation as
well as providing food. Resimac has a team
of volunteers who help with food service
regularly, and we have a highly successful
annual collection of personal and hygiene
products. We have also supplied both dryers
and washing machines. This winter we
supplied beanies, scarves and tracksuits to
locals who are experiencing homelessness.
Each year, we partner with our staff in Manila
to choose the organisation/charity that they
wish to support within the community. In the
leadup to Christmas 2021, our team wanted
to give something back to the essential
workers who have been tirelessly keeping
their economy running in the background.
The Manila staff were able to purchase a
collection of goodies that we put together
into 100 care packages - a little token of
appreciation that would go a long way towards
adding joy to the lives of these workers and
their families this Christmas.
The packs included pasta, cheese, fruit cake,
crackers, coffee and canned goods, which
we surprised essential workers with (such
as road sweepers, security guards, cleaning
personnel, taxi/truck/jeepney drivers, food
delivery riders and construction workers) in
BGC Taguig in the Philippines.
As an entity that holds seven credit and
an Australian financial services licence,
we must ensure we comply with the
responsible lending conduct obligations,
which we do through our credit
committee, board, risk and compliance
committee, compliance program, and
quality assurance.
FOOD LADDER
Resimac is proud to support Food
Ladder, a not-for-profit and global
pioneer in the use of environmentally
sustainable technologies to create
food and economic security for
remote communities. Food Ladder
not only addresses food security,
but it also creates employment and
training opportunities for adults and
education outcomes for children.
Food ladder systems have benefited
31,500 individuals, with 6,000 getting a
consistent, significant part of their diet
from Food Ladder. Furthermore, it has
created 600 jobs.
Resimac offers both financial support
and assistance with promoting
awareness for the organisation.
Additionally, the charity ambassador
program we launched last year, whereby
two employees have been working
closely with Food Ladder to raise
awareness and engagement internally
and throughout the broader community,
has been highly successful. In late
2021 we launched our first co-branded
Food Ladder greenhouse in a primary
school in Brisbane. We currently have
two additional greenhouses under
construction in Sydney and Perth.
| SUSTAINABILITY REPORT
| SUSTAINABILITY REPORT
Governance
Resimac has a strong governance framework
in place to ensure all regulatory obligations
are adhered to in line with our Australian
Financial Services and our Australian Credit
Licence requirements and our position as an
ASX Listed entity.
There are several committees, policies, and
procedures in place to complement this
framework. These committees include the:
Risk & Compliance Committee;
Audit Committee;
Remuneration & Nominations Committee;
Asset & Liability Committee;
Credit Committee;
Technology,
Digital & Innovation Committee; and
Diversity, Equity & Inclusion Committee.
Our policies that all our people are to comply
with include but are not limited to:
Code of Ethics;
Modern Slavery Statement;
Conflicts of Interest;
Securities Trading Policy;
Breach & Incident Policy & Reporting;
Anti-Bribery & Corruption Policy; and
Anti-Money Laundering Program.
Our people undergo regular compliance, risk
and technology security training.
G
S
E
We are committed
to reducing our
carbon footprint,
which is why we
are encouraging
shareholders
to change their
preferred method
of correspondence
to email. Not only
is it the quickest
and most secure
way to receive
communications,
it is better for the
environment.
L
A
T
N
E
M
N
O
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V
N
E
I
I
L
A
C
O
S
E
C
N
A
N
R
E
V
O
G
Our influence for good
We seek to make a difference through
education and support of environmentally
healthy homes.
Our energy and safety
Achieving a carbon neutral footprint through
monitoring and acting. We ensure chemicals
are stored, used and disposed of in full
compliance with an we minimise our use of
paper and office consumables.
Our footprint
Recycling our own footprint will become
our way. We will engage our workforce and
partners in our practice. We will aspire,
monitor and achieve.
Relationships
Our people will relate with our custoemrs
(complex, astute, youth and vulnerable) and
our channel partners in a collaborative spirit
that acknowledges all parties. We recruit our
people for our culture and share our way with
our brokers.
Community
We will continue to offer care (shelter,
clothing, food) to our greater community
through Food Ladder and our other outreach
programs. These acts shape who we are.
Education
Investing in our future. We will take an active
role in shaping financial literacy in our existing
and future customer base. This supports
our vulnerable customers to shape better
futures. We will curate a learning experience
through touchpoints online and in networks.
Trusted partner
We will be known as highly ethical with
full transparency and disclosure for all
stakeholers and regulators. We will release
quarterly performance achievements.
Investors and Shareholders
We are the sustainable choice. Offering true
impact with managed risk profiles. We make
our investors feel good. This will be achieved
through Green Funding and Social Bonds.
Industry leader
We will stand up as leaders in our industry
to build a trusted brand and a standard for a
sustainable future. This will be through peak
body initiatives and collaboration with like
minded partners.
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RESIMAC GROUP LTD
ANNUAL REPORT 2022
19
| DIRECTORS' REPORT
| DIRECTORS' REPORT
Directors'
report
Resimac Group Ltd
and its controlled entities
The Directors of Resimac Group Ltd (“Resimac” or “the Company”) and its controlled entities (“the Group”) submit herewith the
financial report for the financial year ended 30 June 2022. In order to comply with the provisions of the Corporations Act 2001,
the Directors’ Report is as follows:
Information about the Directors
Names and particulars of the Directors of the Company during or since the end of the financial year are:
Mr Warren McLeland
Chairman since February 2020
Non-Executive Director
Mrs Susan Hansen
Independent Non-Executive Director
since October 2016
Warren is a former stockbroker and investment banker with
over 35 years of experience in domestic and international
financial services. In addition, Warren acts as an adviser in
funds management and business strategy to companies
operating in the Asia Pacific region. Warren is the former
Executive Chairman of Resimac Limited.
Susan is a Chartered Accountant and holds a Bachelor of
Commerce degree and an MBA from University of Cape
Town. Susan has 40 years of experience including a Big Four
Accounting firm and an investment bank (financial analysis
and risk assessment). Susan is a Principal of a financial
training organisation based in New Zealand.
Other listed directorships (last three years):
Other listed directorships (last three years):
Chairman of Thorn Group Limited (since October 2019,
Non-Executive Director of Utilico Emerging Markets
Director since August 2019)
Limited (since September 2013)
Former Chairman of Somers Limited incorporated in
Non-Executive Director of Go2 People Limited
Bermuda (resigned February 2021)
(resigned July 2022)
Former non-executive Director of UIL Limited (resigned
September 2019)
Special responsibilities:
Chairman of Resimac Group Ltd (since February 2020)
Chairman of the Risk and Compliance Committee (since
Special responsibilities:
Chair of the Audit Committee (since November 2016)
Member of the Remuneration and Nomination
Committee (since November 2016)
Member of the Risk and Compliance Committee (since
February 2017)
November 2016)
Member of the Remuneration and Nomination
Member of the Technology, Digital and Innovation
Committee (since November 2016)
Committee (appointed April 2021)
Member of the Audit Committee (since August 2017)
Chair of Resimac NZ Home Loans Limited (since May
2012)
Mr Wayne Spanner
Independent Non-Executive Director
since February 2020
Wayne holds a Bachelor of Commerce and Law degree from
University of Cape Town and a Masters of Science degree
from Oxford University. Wayne is currently the Global
Chief Strategic Alignment, Innovation and People Officer
of Norton Rose Fulbright. He was previously the Managing
Partner of the Australian firm from 2012 to 2020. Wayne
has extensive experience in executive management and
corporate governance at Board level.
Other listed directorships (last three years):
Nil
Special responsibilities:
Chair of the Remuneration and Nomination Committee
(since February 2020)
Member of the Risk and Compliance Committee (since
July 2020)
Member of the Audit Committee (since July 2020)
Mr Duncan Saville
Non-Executive Director
since November 2017
Duncan is a Chartered Accountant and an experienced
non-executive Director. He is chairman of ICM Limited,
an international fund manager. Duncan is a fellow of the
Institute of Chartered Accountants Australia and New
Zealand, the Australian Institute of Company Directors and
the Financial Services Institute of Australasia.
Other listed directorships (last three years):
Non-Executive Director of West Hamilton Holdings
Limited (since 2012)
Special responsibilities:
Member of the Technology Digital and Innovation
Committee (since April 2021)
Mrs Caroline Waldron
Independent Non-Executive Director
since November 2020
Caroline is a non-executive Director and cross border
advisor with over 30+ years’ experience in regulated
consumer sectors such as technology, retail and health.
Caroline brings to Resimac commercial and governance
experience in many areas including technology rollouts
and complex transactions. Caroline holds an LLB Hons
(London), and has been admitted to the Bars of England and
Wales, Malaysia, Australia and New Zealand.
Other listed directorships (last three years):
Non-Executive Director of AMA Group Limited
(appointed 1 March 2022)
Non-Executive Director of Genetic Signatures Limited
(appointed 13 May 2022)
Special responsibilities:
Chair of the Technology, Digital and Innovation
Committee (since April 2021)
Member of the Remuneration and Nomination
Committee (since January 2021)
Member of the Risk and Compliance Committee (since
February 2022)
Company Secretary
Mr Peter Fitzpatrick
since November 2016
Peter is a Chartered Accountant who worked for a
chartered accounting firm and oil explorer prior to joining
Resimac Limited in 1987. Peter is responsible for the
Group’s company secretarial function. He is a member
of the Governance Institute of Australia and the Financial
Services Institute of Australasia.
The abovenamed Directors held office during the financial
year and since the end of the previous financial year.
Directors’ shareholdings
The following table sets out each Director’s relevant
interest in shares and rights of the company or in a related
body corporate as at 30 June 2022:
Directors
Fully paid
ordinary shares
Number of
rights over
ordinary shares
Warren McLeland
12,130,165
Susan Hansen
212,738
Wayne Spanner
15,732
Duncan Saville
254,586,353
Caroline Waldron
Nil
Nil
Nil
Nil
Nil
Nil
20
RESIMAC GROUP LTD
ANNUAL REPORT 2022
21
| DIRECTORS' REPORT
| DIRECTORS' REPORT
Remuneration of Key Management Personnel
Results and dividends
Information about the remuneration of Key Management Personnel (KMP) is set out in the Remuneration Report section of
this Directors’ Report. The term ‘KMP’ refers to those persons having authority and responsibility for planning, directing and
controlling the activities of the Company and its controlled entities or indirectly, including any Director whether executive or
otherwise of the consolidated entity.
Share options or rights granted to Directors and employees
An aggregate of 399,560 shares were granted/exercised:
99,560 shares granted under the Employee Share Plan on 22 October 2021;
The information appearing on pages 23 to 26 forms part of the Directors’ Report for the financial year ended 30 June 2022 and is
to be read in conjunction with the following information:
PROFIT
FY22
$'000
FY21
$'000
Profit attributable to ordinary equity holders of the parent
102,147
107,557
300,000 options exercised by Scott McWilliam on 16 September 2021 in relation to the FY18 Long Term Incentive Plan.
DIVIDENDS
Further details included in the Remuneration report.
Directors’ meetings
The following dividends have been paid by the Company or declared by the Directors since
the commencement of the financial year ended 30 June 2022:
The following table sets out the number of Directors’ meetings (including meetings of committees of Directors) held during the
financial year and the number of meetings attended by each Director (while they were a Director or committee member).
(a) out of the profits for the year ended 30 June 2021 and retained earnings on the fully-paid
ordinary shares:
Board meetings
Audit
COMMITTEES
Risk and
compliance
Remuneration
and nomination
Technology,
digital and
innovation
fully-franked final dividend of 4.00 cents (FY20: 1.80 cents) per share paid on 21
September 2021.
16,336
7,334
(b) out of the profits for the half-year ended 31 December 2021 and retained earnings on the
fully-paid ordinary shares:
(A)
(B)
(A)
(B)
(A)
(B)
(A)
(B)
fully-franked interim dividend of 4.00 cents (HY21: 2.40 cents) per share paid on 24
16,343
9,786
DIRECTOR
Warren McLeland
Susan Hansen
Wayne Spanner
Duncan Saville
Caroline Waldron
(A)
14
14
14
14
14
(B)
14
14
13
13
14
(A) Number of meetings eligible to attend.
(B) Number of meetings attended.
3
3
3
-
-
3
3
3
-
-
5
5
5
-
3
5
5
5
-
3
6
6
6
-
6
6
6
6
-
5
-
5
-
5
5
-
5
-
5
5
March 2022.
(c) out of the profits for the full year ended 30 June 2022 and retained earnings on the fully-
paid ordinary shares:
fully-franked final dividend of 4.00 cents (FY21: 4.00 cents) per share declared on 25
August 2022.
16,277
16,336
Operating and Financial review
Principal activities
The Group is a residential mortgage and asset finance
lending business, distributing Prime and Specialist products
across multiple channels. The Group operates in Australia
and New Zealand, originating and servicing a high quality
loan portfolio, and operating a global funding program.
The Group’s core capabilities include:
Lending products: The Group applies its detailed
knowledge of the Australian and New Zealand markets
to offer products to address consumer and SME
customer demand, with attractive risk and return
profiles;
Distribution: Distributing loans in Australia and New
Zealand through relationships with accredited brokers,
wholesale partners and a direct-to-consumer channel;
Treasury and funding expertise: The Group possesses
strong long-term relationships with onshore and
offshore banking and funding partners, with extensive
experience issuing in the global and domestic term
securitisation markets; and
Risk management: Operating a holistic enterprise risk
management and governance framework utilising the
three lines of defence model.
Debt funding
The Group maintains access to a diversified funding
platform supported by established funding relationships
and the Board approved funding strategy.
22
RESIMAC GROUP LTD
ANNUAL REPORT 2022
23
| DIRECTORS' REPORT
| DIRECTORS' REPORT
The following funding channels are used to support the
Group’s lending activities:
Corporate debt facility and NIM bond: Utilised for
investment in business growth;
Term securitisations: Loans that are initially funded
via a warehouse facility, are pooled and refinanced by
being sold to new funding vehicles that issue limited-
recourse independently rated asset-backed securities
to institutional investors in multiple jurisdictions;
Warehouse facilities: Third-party funders provide
limited-recourse financing to special purpose vehicles
established by the Group. At 30 June 2022, the Group
had three onshore and five offshore warehouse
funders.
Principal risks
The Group’s key risks include but are not limited to:
Funding risk: The funding platform currently comprises
a mix of warehouse facilities, term securitisations and
corporate debt. The Group depends on these sources
to fund mortgage originations;
Capital and liquidity requirements: The Group is
required to maintain sufficient liquidity levels under
Australian Financial Services Licence requirements.
A risk exists that the Group could be required to
contribute additional ‘first loss’ equity capital to support
the credit position of senior ranking note holders in the
warehouse facilities and term securitisations which
could impact the Group’s profitability, ability to grow
and/or could force it to raise additional capital;
Regulatory and licence compliance: The Group
is subject to extensive regulation in each of the
jurisdictions in which it conducts business. Changes
in laws or regulations in a market in which the Group
operates could impact the business;
The Group is licensed and/or registered to operate a
number of its services across a range of jurisdictions.
The Group holds seven Australian Credit Licences.
Changes to these licensing regimes, the revocation
of existing licences, an inability to renew or receive
necessary licences or a change in capital requirements
could have a material adverse effect on the Group’s
business, operating and financial performance;
Macroeconomic environment: A material economic
downturn driving an increase in unemployment and/
or a sustained period of high inflation in a rising rate
environment could reduce the ability of our customers
to service their debt (credit risk);
to previous years. At 30 June 2022, the Group
continued to support 55 customers who remain
impacted by pandemic related issues.
The Group supports the end of border lockdowns and
work from home mandates. The Group’s employees
operate a hybrid office/work from home model
maintaining productivity whilst offering a flexible work
environment for our employees.
Availability of skilled staff: The closed international
borders during COVID and subsequent reduced
migration continue to place strain on the Australian and
New Zealand labour market, with fierce competition
evident in financial services for experienced talent. The
Group’s focus on providing employees with a positive
results driven culture has ensured the Group can attract
the talent and skills required to fulfil strategic growth
ambitions, including asset finance diversification. The
Group’s FTE in Australia and New Zealand increased
from 226 at 30 June 2021 to 275 at 30 June 2022.
Climate and extreme weather events: Over the last
24 months, the east coast of Australia has endured
a number of extreme weather events in particular
bushfires and floods. The Group remains committed to
assisting customers who are impacted by these events
where requested. At 30 June 2022, 4 customers were
under an active hardship arrangement as a result of
floods during FY22. The Group is committed to its ESG
strategy and supports the new Federal Government’s
increased policy focus on climate change.
Interest rate environment: Recent interest rate
rises have materially increased borrowing costs,
with further increases forecasted over the next 12
months. These increases are likely to have the largest
impact on borrowers who have taken out home loans
in the last 12 months at higher LVR’s. The Group’s
conservative approach to credit including assessing
loan serviceability at least 3% higher than customers’
interest rate at origination, in addition to a large
number of customers being ahead on their repayments,
provides the Group with confidence the rise in interest
rates can be absorbed by our customer base.
Business strategy
The Group is focused on a number of growth strategies to
continue to drive revenue and profitability.
1. Organic lending growth
The Group is well-positioned to continue strong volume
growth driven by:
Customers favourably viewing the Group as an
alternative to the major lenders;
COVID-19: The impact of COVID-19 on the Group
remains a risk, albeit significantly diminished compared
Opportunity to grow volume in the Specialist and Prime
segments of the residential mortgages market;
Opportunity to grow volume in the asset finance
segment under the Resimac Asset Finance brand;
Targeting Prime self serve customers via our direct to
consumer brand homeloans.com.au;
Launch of the new digital customer banking
environment;
Further investment in the Group’s brand positioning;
and
Pursuing diversification opportunities in Australia and
New Zealand.
2. Growth through acquisition
Management has demonstrated an ability to identify
and execute profit accretive acquisitions in targeted
markets consistent with the Group’s strategy;
On 17 June 2022 Resimac entered into an agreement
to acquire the residential loan book of Volt Bank, an
Australian consumer neobank which announced closure
of its business in June 2022. The portfolio is a broker
originated Prime portfolio, with a weighted average LVR
at origination of 61.6%.
The Group continues to evaluate M&A opportunities
in both the home loan and asset finance segments in
Australia and New Zealand.
Review of operations
The Group generated a net profit after tax (NPAT) of
$102,147,000 for the year ended 30 June 2022. To reflect
the Group’s normalised earnings the NPAT has been
adjusted to separate one-off items. Management believe
the disclosure of the normalised NPAT provides additional
insight into the underlying performance for the year, by
excluding one off, non-recurring items.
The following table reconciles the unaudited normalised
earnings to the statutory NPAT for the year in accordance
with International Financial Reporting Standards (IFRS).
FY22
UNAUDITED NON-IFRS INFORMATION
$'000
Statutory NPAT
102,147
Historical discharge fee refund
Dividend income from listed equity
investment
Tax effect of normalised items
3,940
(748)
(958)
Normalised NPAT
104,381
Net interest income of $238,078,000 decreased 2% on
prior year driven by lower home loan margins partly offset
by higher asset finance income and higher home loan AUM.
Operating expenses of $79,435,000 increased 12% on prior
year driven by average FTE increasing from 211 to 251, and
higher marketing costs.
Loan impairment expense increased to $11,446,000 driven
by higher Collective Provision to increase coverage for
potential macroeconomic headwinds and growth in assets
under management.
Total home loan settlements across the Group’s direct and
third party distribution channels were $6.3 billion, up 30%
on prior year.
The Group’s assets under management at 30 June 2022
comprise:
On balance sheet home loans and advances to
customers of $15.3 billion, up 11% compared to 30
June 2021;
On balance sheet asset finance loans of $0.4 billion;
White label portfolio of $1.2 billion, down 42%
compared to 30 June 2021 in line with the Group’s
strategy to cease originating white label loans; and
Combined these make up the total assets under
management of $16.9 billion.
Political Donations
In the year ended 30 June 2022, the Group’s political
contributions were Nil (FY21 $10,000 - Liberal National
Party of Australia).
Funding programmes
During the year ended 30 June 2022, the following new
Residential Mortgage Backed Securities (RMBS) and
Medium Term Notes (MTNS) were issued to facilitate
assets under management growth, optimise term duration
and funding costs:
The RESIMAC Triomphe Trust - Premier Series 2021-2
transaction was settled on 2 September 2021 and is a
domestic prime issue with a total issuance size of $1
billion;
The RESIMAC Prime Series 2021-1 transaction was
settled on 16 September 2021 and is a New Zealand
prime issue with a total issuance size of NZD$300
million;
The RESIMAC Bastille Series 2021-2NC transaction
was settled on 28 October 2021 and is a multi-currency
non-conforming issue with a total issuance of $1.5
billion equivalent;
24
RESIMAC GROUP LTD
ANNUAL REPORT 2022
25
Non-audit services
Details of amounts paid or payable to the auditor for non-
audit services provided during the year by the auditor are
outlined in Note 28 to the financial report.
The Directors are satisfied that the provision of non-audit
services during the year, by the auditor is compatible with
the general standard of independence for auditors imposed
by the Corporations Act 2001.
The Directors are of the opinion that the services as
disclosed in Note 28 to the financial report do not
compromise the external auditor’s independence, based
on advice received from the Audit Committee, for the
following reasons:
All non-audit services have been reviewed and
approved to ensure that they do not impact the
integrity and objectivity of the auditors; and
None of the services undermine the general principles
as set out in APES Code of Ethics for Professional
Accountants issued by the Accounting Professional and
Ethical Standards Board, including reviewing or auditing
the auditor’s own work, acting in a management or
decision making capacity for the Company, acting as
advocate for the Company or jointly sharing economic
risks and rewards.
Auditor’s independence declaration
The auditor’s independence declaration is included on page
125 of this financial report.
Rounding off amounts
Unless otherwise indicated, the Company has rounded off
amounts in this Directors’ Report and the accompanying
financial statements to the nearest thousand dollars in
accordance with ASIC Corporations Instrument 2016/191.
| DIRECTORS' REPORT
The RESIMAC Triomphe Trust - Premier Series 2021-3
transaction was settled on 16 December 2021 and is a
multi-currency prime issue with a total issuance size of
$1 billion equivalent;
The RESIMAC Bastille Trust – Warehouse Series No.3
was settled on 23 December 2021 and is a domestic
non-conforming warehouse with a facility limit of $750
million;
The RESIMAC Triomphe Trust - Premier Series 2022-
1 transaction was settled on 17 March 2022 and is a
domestic prime issue with a total issuance size of $1
billion; and
The RESIMAC Bastille Series 2022-1NC transaction
was settled 19 May 2022 and is a multi-currency non-
conforming issue with a total issuance of $1 billion
equivalent.
Indemnification of officers and auditors
During the financial year, the Company paid a premium
in respect of a contract insuring the Directors of the
Company, the Company Secretary and all executive
officers of the Company against a liability incurred as such
a Director, Secretary or executive officer to the extent
permitted by the Corporations Act 2001. The contract of
insurance prohibits disclosure of the nature of the liability
and the amount of the premium.
The Company has not otherwise, during or since the
financial year, except to the extent permitted by law,
indemnified or agreed to indemnify an officer or auditor of
the Company against a liability incurred.
Subsequent events
Final dividend declared
The Board of Resimac Group Ltd has declared a fully
franked final dividend of $0.04 per share. The record date
will be 9 September 2022. The payment date will be 23
September 2022. The dividend has not been provided for in
this financial report.
Investment in 23 Degrees Capital Partners Pty Ltd
On 1 August 2022, Resimac exercised the option to acquire
a controlling stake in 23 Degrees Capital Partners Pty
Ltd (operating as Sonder) for a purchase consideration
of $900k. Sonder is an asset finance broker providing
commercial lending solutions to SME’s. Resimac’s interest
in 23 Degrees Capital Partners Pty Ltd is now 51%.
26
RESIMAC GROUP LTD
Total home loan
settlements
across the
Group's direct
and third party
distribution
channels were
$6.3 billion, up
30% on prior year.
| REMUNERATION REPORT
| REMUNERATION REPORT
Remuneration
report
2022
(Audited)
KMP remuneration policy (excl. Non-Executive Directors)
Remuneration objectives, strategy and principles
Remuneration and cultural activities
Summary
Key management personnel
S 1
T
2
N
E
3
T
4
N
O
5
C
6
7
8
9
10 Other remuneration information
Statutory remuneration
FY22 outcomes
Non-Executive Director remuneration
Long-term and short-term incentive plans
29
29
29
30
30
32
34
35
36
38
1. Summary
This Remuneration Report provides shareholders with an
overview of Resimac Group’s (the Group) remuneration
strategy and framework that applies to the Group’s
Directors, Key Management Personnel (KMP), Executive
Management and employees (referred to collectively as
Employees) for the year ended 30 June 2022.
Resimac’s mission is to be a customer obsessed
organisation, leveraging technology and data analytics
coupled with expansion of our sustainability and
Environment, Social and Governance (ESG) footprint.
This mission is facilitated by promoting a culture of
transparency, innovation and empowerment and
establishment of a remuneration framework that provides
positive outcomes for our customers, shareholders and
employees while providing fair and equitable benefits.
2. Remuneration objectives,
strategy and principles
The Group’s objective is to reward its employees with a
level of remuneration and benefits that is commensurate
with their individual responsibilities and position within the
business.
The Board’s remuneration strategy is aligned to the
following objectives:
To attract, motivate and retain high calibre employees
to drive outcomes;
To provide fair and equitable remuneration to all
employees in line with the Group’s Diversity, Equity &
Inclusion Policy;
Total remuneration for KMP is achieved by a balance of
fixed and variable components;
Key Performance measures for Resimac management
are linked to both financial and non-financial
measures, and designed to be in the best interest of all
stakeholders including customers and shareholders;
Fixed and variable remuneration for KMP are periodically
benchmarked to ensure remuneration is in line with the
external market;
Pay parity is paramount. Fair and equitable
remuneration is applied to all employees regardless
of gender, sexual identity, age, religion, ethnicity or
disability.
3. Remuneration and cultural activities
Continuous review and assessment of our remuneration
and benefits continued throughout FY22 with a number of
initiatives being included as part of the Remuneration and
Cultural Activities plan.
These activities included:
Employee engagement survey;
Employee Diversity, Equity & Inclusion survey;
WGEA Reporting which includes pay parity reporting;
Introduction of formalised hybrid working
arrangements, enabling employees to work 5 days a
fortnight from home;
Introduction of ‘Staying Connected Policy’ which
enables employees to work remotely within Australia or
overseas for a period of up to 4 weeks to reconnect with
friends and family after COVID;
To promote and reward behaviours within the business
Establishment of an Environmental, Social &
that are in the interest of all stakeholders which
includes customers and shareholders;
Governance (ESG) committee;
Establishment of a Diversity, Equity & Inclusion
Align effective risk management and demonstration of
committee.
R
U
O
S
E
U
L
A
V
QUALITY
PASSION
RESPECT
AGILITY
skills development;
appropriate behaviours, values and ethics;
To reinforce a culture of continual employee growth and
PROFESSIONALISM & INTEGRITY
ACCOUNTABILITY
To ensure the Group’s Governance framework operates
within and above industry best practice
The following principles provide the basis of the
remuneration framework at Resimac:
Resimac remunerates its employees in a manner that
is market competitive whilst being acceptable to its
shareholders;
Virtual fitness classes during lockdown
Expansion of existing Wellbeing Program including
wellness hours, mindfulness program, professional
online exercise classes and senior leadership health
assessments;
Opportunities for individual leadership and coaching
programs;
Secondment and on the job learning opportunities.
ANNUAL REPORT 2022
29
| REMUNERATION REPORT
| REMUNERATION REPORT
4. Key Management Personnel
The KMP are the people who have the authority and responsibility for planning, directing, implementing and controlling the
activities of the Resimac business. The KMP are:
The KMP remuneration arrangements are as follows:
5.3. Long-term incentive (LTI)
Position
Term as KMP
5.1. Fixed remuneration
Name
CURRENT
Scott McWilliam
Jason Azzopardi
Andrew Marsden
Chief Executive Officer (CEO)
Chief Financial Officer (CFO)
Chief Treasury Officer (CTO)
Danielle Corcoran
Chief Operating Officer (COO)
Majid Muhammad
Chief Information Officer (CIO)
Full term
Full term
Full term
Full term
Full term
The Directors classified as KMP and required to be disclosed as part of this report are:
Name
CURRENT
Position
Term as KMP
Warren McLeland
Chairman, Non-Executive Director
Susan Hansen
Duncan Saville
Independent Non-Executive Director
Non-Executive Director
Wayne Spanner
Independent Non-Executive Director
Caroline Waldron
Independent Non-Executive Director
Full term
Full term
Full term
Full term
Full term
5. KMP remuneration policy (excl. Non-Executive Directors)
Resimac’s remuneration strategy for KMP focuses on both financial and non-financial measures and the Board’s Remuneration
& Nomination Committee assist with reviewing and recommending remuneration arrangements for KMP that is both consistent
and competitive within the market. The total remuneration of the KMP comprise a fixed component and an at-risk variable
component. The at-risk variable component is comprised of a short-term and long-term incentive.
Remuneration is based on the:
role in which the person is performing (i.e. accountability, responsibility, qualifications, skills and experience required);
market benchmarking;
performance against set Key Performance Indicators (KPIs); and
achievement of performance hurdles which includes tenure.
The fixed component includes base salary and
superannuation and is known as Total Fixed
Remuneration (TFR). Annually the TFR for the role in
which the KMPs are performing is considered by the
Remuneration and Nomination Committee.
5.2. Short-term incentive (STI)
Each KMP is eligible to receive an annual Short-Term
Incentive (STI). The Remuneration & Nominations
Committee approves any STI awarded, at the end of
each performance period (i.e. 1 July to 30 June). The
Committee measures KMP performance against set
KPI objectives. The amount of an STI award will depend
on whether and to what extent those objectives are
achieved. The STI assessment is undertaken in July of
each year and any award is payable in September of the
same year. However, in some cases a component of the
STI awarded will be deferred for a specified period.
KPIs include:
Corporate strategy iniatives
Financial metrics including NPAT growth, cost to
income ratio and demonstrated innovative cost
initiatives;
Innovation and technology initiatives and
enhancements to allow for simplification, scale and
digitalisation;
Operational efficiency and effectiveness to allow
scale;
People, strategic leadership and culture;
Environmental, Social and Governance (ESG); and
Governance through Resimac’s Risk and Compliance
frameworks which focuses on adherence to
obligations, reduction of customer complaints,
incidents and breaches.
The LTI is a combination of an equity arrangement of
options over ordinary shares and a cash component
(pursuant to the Resimac Group Ltd Employee Share
Option and Rights Plan Rules). The grant of options
relies on the satisfaction of service and performance
conditions over a 3 year period.
The aim of the LTI is:
to retain key talent;
to link performance measures that align with
sustainable long-term growth;
to align long-term company performance with
shareholders expectations; and
to ensure continual regulatory and compliance
adherence.
The graphs below set out the relative mix of TFR, STI
and LTI for:
Scott McWilliam, CEO
Other KMP
12%
CEO
53%
34%
10%
25%
OTHER
KMP
65%
TFR
STI
LTI
TFR
STI
LTI
30
RESIMAC GROUP LTD
ANNUAL REPORT 2022
31
6. Long-term and short-term incentive plans
6.1. Long-term incentive plan (LTIP)
FY18 LTI Plan: CEO
The CEO, Scott McWilliam, was offered a LTI in
FY18. The details of the offer were:
Granted 900,000 Options pursuant to the
Resimac Group Employee Share Options and
Rights Plan;
Grant Date 18 August 2017;
Exercise price of $0.55 per option;
Options vest in equal tranches of 300,000 on
each anniversary of the Grant Date:
First tranche of 300,000 vested on 1 July
2018 and was exercised on 26 April 2021,
Second tranche of 300,000 vested on 1 July
2019 and was exercised on 16 September
2021,
Third tranche of 300,000 vested on 1 July
2020 and is exercisable.
Exercise period was 3 years for every tranche
vesting; and
Vesting condition was 100% tenure.
FY20 LTI Plan: KMPs and Executives
In 2019 the Board established a Long-Term
Incentive Plan (LTIP) for the CEO, KMPs and eligible
executives pursuant to the Resimac Group Ltd
Employee Share Option & Rights Plan Rules. The
CEO, KMPs and eligible executives were offered
options over ordinary shares, and a combined total
cash component of up to $2.4m. 3,900,000 options
were granted on 15 August 2019 (900,000 allocated
to the CEO and 375,000 for each eligible Executive).
The vesting date for all options is 31 August 2022,
subject to the Group achieving:
Net Profit After Tax (NPAT) growth hurdles;
Digital transformation;
Compliance hurdles; and
Participant remaining employed with the Group
until the vesting date.
| REMUNERATION REPORT
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ANNUAL REPORT 2022
33
| REMUNERATION REPORT
| REMUNERATION REPORT
6.2. Short-term incentive plan (STIP)
KMPs participate in the annual STIP whereby they have an opportunity to earn up to a capped percentage of their TFR.
CEO, Scott McWilliam is eligible for a STI up to a cap of 100% of his TFR. Mr McWilliam’s performance is assessed against
predetermined KPIs by the Remuneration and Nomination Committee at the end of each performance period. Any STI awarded
is paid in cash; 66.7% at the end of the performance period with the remaining 33.3% in cash deferred for 12 months subject to a
look back being undertaken by the Remuneration and Nominations Committee.
The performance of KMPs is measured against predetermined KPIs assessed by the CEO at the end of each performance period
and the Remuneration and Nomination Committee are responsible for reviewing and approving any awarded STI which will be
paid 100% in cash at the end of the performance period.
KPIs and relevant measurements will be set at the commencement of the performance period.
7. FY22 outcomes
In July 2022, the Remuneration & Nominations Committee resolved to recommend to the Board that the KMPs (including the
CEO) be eligible for a remuneration review, resulting in an increased fixed remuneration for KMPs for FY23.
7.1. Overview of company performance
The table below summarises details of Resimac’s performance for key financial measures over the past four financial years. Note
the Group undertook a buyback programme and cancelled 2,482,741 shares in FY22.
FY22
FY21
FY20
FY19
FINANCIAL YEAR ENDED 30 JUNE
NPAT ($'000)1
102,147
107,557
55,908
47,185
Total dividends per share (cents)
Dividend payout ratio (%)
4.00
31.9
4.00
24.3
2.70
19.6
1.90
16.1
Basic earnings per share (cents)
25.05
26.37
13.75
11.75
Return on equity (ROE) (%)2
Return on assets (%)3
Share price at 30 June ($)
29.9
6.1
1.15
36.9
7.3
2.46
25.5
4.3
1.01
17.3
4.4
0.64
1 NPAT excludes non-controlling interest (FY22: Nil, FY21: $249k)
2 ROE based on normalised NPAT and average shareholders’ equity per consolidated statement of financial position.
3 ROA based on statutory NPAT and total assets. As a result of the requirement under AASB 10 - Consolidated Financial Statements, the parent
company exercises control over the Special Purpose Vehicles (SPVs) and securitisation trusts, therefore significant assets have been added to the
consolidated statement of financial position without any appreciable increase in net profit.
34
RESIMAC GROUP LTD
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4
ANNUAL REPORT 2022
35
| REMUNERATION REPORT
| REMUNERATION REPORT
9. Non-Executive Director remuneration
9.1. Overview of Non-Executive Directors’ remuneration
arrangements
9.1.1. Policy objectives
To be market competitive: aim to set Directors’
fees competitive with Non-Executive Directors in
comparable businesses with respect to product
mix, market capitalisation, geographical market and
employee size;
To ensure complementary skills: aim to ensure that the
mix of Directors at any one time is diverse and adequate
to carry out the objectives of the business; and
To safeguard independence: to exclude any
performance related element in order to preserve the
independence of the Non-Executive Directors.
9.1.2. Aggregate fees approved by shareholders
At the Annual General Meeting (AGM) of shareholders
held on 16 November 2021, the shareholders approved an
increase to the maximum aggregate fee pool per annum for
non-executives to $800,000.
9.1.3. Regular reviews of Directors’ fees
The Board reviews the level of Directors’ fees annually to
ensure the fees are in line with market and are suitable
for the level of skill and expertise required to carry out the
duties of Directors in a listed environment in conjunction
with holding an Australian Financial Services Licence and
several Australian Credit Licences.
The agreed fee structure is that a fee is paid to reflect the
Chairman’s responsibilities. Each Director receives a base
fee and if a Director chairs a Board committee, an additional
fee is applied. Superannuation is payable in addition to the
base fee where a Director is paid via the Resimac employee
payroll system. No fee is paid for committee membership.
The Remuneration & Nominations Committee met in June
2022 to review the Directors fees and resolved to not
increase fees in FY23.
The FY22 fee levels inclusive of superannuation where
applicable were as follows:
Position
Maximum
fee ($)
NAME
Warren
McLeland
Susan
Hansen
Wayne
Spanner
Duncan
Saville1
Caroline
Waldron
Chairman and Risk &
Compliance Chair
Independent Non-
Executive Director, Audit
Chair and New Zealand
Chair
Independent Non-
Executive Director,
Remuneration &
Nomination Chair
140,664 p.a.
140,409 p.a.
93,500 p.a.
Non-Executive Director
74,975 p.a.
111,711 p.a.
Independent Non-
Executive Director,
Technology, Digital &
Innovation Chair
1 Exclusive of superannuation.
9.1.4. Board skills and behaviours
A key objective for Resimac is to ensure that we have a
Board of Directors that is balanced (i.e. independence),
diverse, with a complementary mix of skills and behaviours.
The Board undertakes an assessment of the skills that each
Director holds biennially which is then summarised in a
skills matrix.
Although it is not expected that all Directors will have the
same skills and behaviours, the purpose of the matrix is
to ensure there is a balance within the Board to ensure we
have diversity of thought. The matrix skills and behaviours
include:
Strategy, planning, monitoring and policy development
Governance
Risk and compliance
Relevant technical and industry knowledge
Stakeholder relations
Finance and audit
Commitment and contribution
Leadership
Ethics and integrity
Technology, digital and innovation
The assessment of skills and behaviours ties into Board
succession and selection of Directors.
9.1.5. Board evaluation reporting
The Board is committed to transparency in determining Board membership and in assessing the performance of Directors.
The Board undertook performance reviews in 2018 and 2020. At the conclusion of the last full evaluation in 2020 the Board
determined to undertake more frequent assessments which resulted in an assessment at the conclusion of each Board
meeting. By rotation a Director is responsible for collation of the feedback and change recommendations. In addition, the Board
carries out an evaluation on their effectiveness at the conclusion of each Board meeting. The purpose of this is to assess the
performance of the Board as a whole with respect to time keeping, relevance, preparation and outcomes.
The performance of Directors are assessed against a range of criteria including contribution at meetings, understanding the
major risks affecting the Group, contributing to the development of the strategy, committing the time required to fulfill the
role and perform their responsibilities effectively, listening and respecting the ideas of fellow Directors and management and
consistently taking the perspective of creating shareholder value.
The Board with the assistance of the Remuneration and Nominations Committee conducts a review of the performance of each
Director seeking re-election at the Annual General Meeting.
9.1.6. Non-Executive Director remuneration
The fees paid or payable to the Non-Executive Directors in relation to FY22 are set out below:
SHORT-TERM
BENEFITS
POST-EMPLOYMENT
BENEFITS
Fees
($)
Superannuation1
($)
127,876
120,000
131,334
126,880
85,000
75,000
74,975
70,000
103,211
46,635
522,396
438,515
12,788
11,400
9,075
8,075
8,500
7,125
-
-
8,500
4,430
38,863
31,030
Total
($)
140,664
131,400
140,409
134,955
93,500
82,125
74,975
70,000
111,711
51,065
561,259
469,545
CURRENT
Warren McLelend
FY22
FY21
Susan Hansen2
FY22
FY21
Wayne Spanner
FY22
FY21
Duncan Saville
FY22
FY21
Caroline Waldron2, 3
FY22
FY21
TOTAL REMUNERATION
FY22
FY21
1 Australian superannuation is paid where applicable. New Zealand Kiwisaver is not paid.
2 A portion of remuneration is paid in NZD.
3 Appointed Independent Non-Executive Director on 17 November 2020.
36
RESIMAC GROUP LTD
ANNUAL REPORT 2022
37
| REMUNERATION REPORT
| REMUNERATION REPORT
10. Other remuneration information
10.1. Remuneration governance
10.1.1. Remuneration governance and responsibility
10.1.2. Remuneration and nomination committee
10.1.4. KMP share ownership
The Resimac Board of Directors has responsibility for
setting and overseeing the Company’s remuneration
policies, practices and structure. The Board considers
recommendations made by the Remuneration and
Nomination Committee.
The remuneration framework and matters considered
by the Remuneration and Nomination Committee and
the Board include:
Review of Board size and composition (mix of skills,
qualifications, experience, independence, diversity
and other competencies);
Identification and recommendation of candidates to
the Board for nomination as members of the Board
or its Committees;
Development and implementation process for
induction and orientation of new Directors;
Review and approval of Company objectives and
appropriate KPIs relevant to the KMP annual short-
term incentive arrangement, and evaluate KMP
performance in light of those KPIs;
Review and approval of the remuneration of KMP,
Directors and senior management (including total
fixed remuneration, short-term incentives and long-
term incentives);
Approval of executive recruitment practices;
Succession planning and talent management; and
Diversity, equity and inclusion in the workplace.
The Board has established a Remuneration and
Nomination Committee. This Committee has a formal
charter and is available on the Company’s website www.
resimac.com.au.
The Remuneration and Nomination Committee
members are:
Wayne Spanner - Chair; and
Susan Hansen
Warren McLeland
Caroline Waldron
The Remuneration and Nomination Committee
reviews and makes recommendations to the Board
on remuneration governance, policies, practices
and structure which will apply to the KMP, senior
management and the non-executive Directors. The
Committee also makes recommendations to the Board
on the Company’s overall remuneration framework. The
Remuneration and Nomination Committee receives
regular reports from Human Resources and ensures it is
abreast of all regulatory change. The Committee meets
at least 4 times per year.
10.1.3. Services from remuneration consultants
The Company engaged Godfrey Remuneration Group
and Colvin Consulting Group in FY22 to provide advice
on a revised equity plan and Long Term Variable
Remuneration (LTVR) design. This service had not been
completed at 30 June 2022. Fees payable were $20,000
excluding GST.
The table below sets out the number of shares held directly, indirectly or beneficially by the current and former KMP (including
their related parties):
NON-EXECUTIVE DIRECTORS
Warren McLeland
Susan Hansen
Wayne Spanner
Duncan Saville
Caroline Waldron
SENIOR EXECUTIVES
Scott McWilliam
Jason Azzopardi
Andrew Marsden
Danielle Corcoran
Majid Muhammad
TOTAL
Held at
1 July
2021
12,126,338
203,730
15,732
Net
change
Held at
30 June 2022
3,827
9,008
-
12,130,165
212,738
15,732
254,468,487
117,866
254,586,353
-
-
-
266,814,287
130,701
266,944,988
1,301,600
80,000
-
92,642
-
148,400
(30,000)
-
4,096
-
1,450,000
50,000
-
96,738
-
1,474,242
122,496
1,596,738
268,288,529
253,197
268,541,726
38
RESIMAC GROUP LTD
ANNUAL REPORT 2022
39
| REMUNERATION REPORT
| REMUNERATION REPORT
10.1.5. Share trading restrictions
Resimac Securities Trading Policy reflects the Corporations
Act 2001 prohibition on KMP and their closely related
parties entering into any arrangement that would have
the effect of limiting the KMP’s exposure to risk relating to
an element of their remuneration that remains subject to
restrictions on disposal.
Resimac Directors, management team, and members of
their immediate family and controlled entities are also
required to obtain written consent and clearance for
security trading during trading windows from the Chairman.
All other employees must adhere to the Securities Trading
Policy and are restricted from trading within the blackout
periods.
The policy is available on the Corporate Governance
section of the Company’s website at www.resimac.com.
au. Breaches of the policy are subject to disciplinary action,
which may include termination of employment.
10.1.6. Further information on remuneration
10.1.6.1. Service agreements
Each KMP has entered into an employment contract with
the Company (Resimac Limited). These contracts have
unlimited duration however may be terminated with
relevant notice as set out below unless in the case of
serious misconduct in which the KMP may be terminated
immediately.
All KMPs are entitled to receive payment in lieu of notice
of any accrued statutory entitlement (i.e. annual and long
service leave) on cessation of their employment.
Notice period /
termination payment
NAME
Scott McWilliam
Six months' notice (or
payment in lieu)
May be terminated
immediately for serious
misconduct
Jason Azzopardi
Three months' notice (or
payment in lieu)
May be terminated
immediately for serious
misconduct
Andrew Marsden
Three months' notice (or
payment in lieu)
May be terminated
immediately for serious
misconduct
Details regarding loans outstanding at the reporting date to KMP and their related parties during the reporting period, are
outlined below.
Balance
1 July 2021
Balance
30 June 2022
Interest payable
for the year1
Highest balance
during the year
NON-EXECUTIVE DIRECTORS
($)
($)
($)
($)
Duncan Saville
9,322,631
15,449,316
358,370
15,720,878
SENIOR EXECUTIVES
Scott McWilliam
Jason Azzopardi
Danielle Corcoran
1 Interest is charged on an arm’s-length
basis.
1,928,311
2,000,000
1,620,914
-
370,080
356,412
41,338
29,806
10,795
2,092,615
2,003,839
370,983
13,239,166
17,805,728
440,309
20,188,315
Danielle Corcoran
Three months' notice (or
10.1.7.1. Other transactions and balances with KMP
payment in lieu)
May be terminated
immediately for serious
misconduct
Majid Muhammad
Three months' notice (or
payment in lieu)
May be terminated
immediately for serious
misconduct
10.1.7. Related party transactions
Loans to KMP and their related parties are secured
residential mortgage loans provided in the ordinary course
of the Group’s mortgage lending business. All loans have
normal commercial terms. No amounts have been written
down or recorded as specific provisions as the balances are
considered fully collectable.
From time to time, Directors of the Company or its controlled entities, or their Director-related entities may obtain loans or ad
hoc services from the Group, on the same terms and conditions as those entered into by other group employees or customers.
No such loans and ad hoc services were provided during FY22 (FY21: Nil).
This Directors’ report, including the remuneration report, is signed in accordance with a resolution of the Directors made
pursuant to s.298 (2) of the Corporations Act 2001.
On behalf of the Directors of Resimac Group Ltd.
Warren McLeland
Chairman
Sydney
25 August 2022
40
RESIMAC GROUP LTD
ANNUAL REPORT 2022
41
| CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 30 JUNE 2022
| CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2022
Financial
statements
Consolidated statements
for the year ended 30 June 2022
Note
FY22
$'000
FY21
$'000
PROFIT AFTER TAX
102,147
107,806
Other comprehensive income, net of income tax
Items that will not be reclassified subsequently to profit or loss:
Fair value movement on equity investment in listed companies through
OCI, net of tax
(1,683)
126
Interest income
Interest expense
Net interest income
Fee and commission income
Fee and commission expense
Other income
Employee benefits expense
Other expenses
Loan impairment expense
Profit before tax
Income tax expense
PROFIT AFTER TAX
Attributable to:
Owners of the parent
Non-controlling interest
1
2
1
2
1
2
2
2
3
Note
FY22
$'000
FY21
$'000
Items that may be reclassified subsequently to profit or loss:
Changes in fair value of cash flow hedges
490,695
467,637
Tax effect
(252,617)
(224,893)
Currency translation differences
238,078
242,744
Other comprehensive income, net of tax
(3,877)
(6,294)
1,163
(1,236)
1,888
(204)
(5,633)
(4,484)
8,178
9,856
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
96,514
103,322
(40,477)
(35,193)
Attributable to:
28,562
8,022
(45,267)
(37,489)
(34,168)
(33,188)
(11,446)
(2,676)
143,460
152,076
(41,313)
(44,270)
102,147
107,806
102,147
107,557
-
249
102,147
107,806
Owners of the parent
Non-controlling interest
Earnings per share
Basic
Diluted
96,514
103,072
-
250
96,514
103,322
FY22
cents per
share
FY21
cents per
share
21
21
25.05
24.90
26.37
26.21
42
RESIMAC GROUP LTD
ANNUAL REPORT 2022
43
Notes to the consolidated financial statements are included on pages 48 to 123.
| CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2022
| CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2022
ASSETS
Cash and cash equivalents
Trade and other receivables
Loans and advances
Contract assets
Other financial assets
Derivative financial assets
Right-of-use assets
Plant and equipment
Other assets
Deferred tax assets
Goodwill and intangible assets
LIABILITIES
Trade and other payables
12
Current tax payable
Interest-bearing liabilities
Lease liabilities
Other financial liabilities
Derivative financial liabilities
Other liabilities
Provisions
Deferred tax liabilities
NET ASSETS
EQUITY
Share capital
Reverse acquisition reserve
Total issued capital
Reserves
Retained earnings
Equity attributable to owners of the parent
Non-controlling interest
Notes to the consolidated financial statements are included on pages 48 to 123.
3
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$'000
FY21
$'000
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44
RESIMAC GROUP LTD
ANNUAL REPORT 2022
45
| CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2022
| CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2022
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CASH FLOWS FROM INVESTING ACTIVITIES
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CASH FLOWS FROM FINANCING ACTIVITIES
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46
RESIMAC GROUP LTD
ANNUAL REPORT 2022
47
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
ABOUT THIS REPORT
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
ABOUT THIS REPORT
Notes to the consolidated
financial statements
About this report
for the year ended 30 June 2022
About this report
Resimac Group Ltd (“Resimac” or “the Company”) is a
for-profit company limited by shares incorporated and
domiciled in Australia whose shares are publicly traded
on the Australian Securities Exchange. The nature of the
operations and principal activities of Resimac and entities
that it controls (referred to as “the Group”) are described in
the segment information.
The consolidated general purpose financial report of the
Group for the year ended 30 June 2022 was authorised for
issue in accordance with a resolution of the Directors on 25
August 2022. The Directors have the power to amend and
reissue the financial report.
The financial report is a general purpose financial report
which:
has been prepared in accordance with the
requirements of the Corporations Act 2001,
Australian Accounting Standards (AAS) and other
authoritative pronouncements of the Australian
Accounting Standards Board (AASB) and International
Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB);
has been prepared on a historical cost basis, and
with certain financial instruments measured at fair
value. The carrying values of recognised assets and
liabilities that are the hedged items in fair value hedge
relationships, which are otherwise carried at amortised
cost, are adjusted to record changes in the fair values
attributable to the risks that are being hedged;
is presented in Australian dollars with all values
rounded to the nearest thousand dollars ($’000)
unless otherwise stated, in accordance with ASIC
Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191;
certain comparative amounts have been reclassified
in order to comply with the method of presentation
adopted in the current year. In particular, the Group has
reclassified cash collections owed to trusts of $11.1
million from trade and other payables to gross loans and
advances, as this amount represents the cash collected
but not yet allocated against individual loans; and
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 2021. Refer to Note 32 for further
details.
Key judgements and estimates
In the application of the Group’s accounting policies, the
Directors are required to make judgements, estimates
and assumptions about the carrying value of assets and
liabilities that are not readily apparent from other sources.
The estimates and associated assumptions are based on
historical experience and various other factors that are
believed to be reasonable under the circumstances, the
results of which form the basis of making judgements.
Actual results may differ from these estimates.
Judgements and estimates which are material to the
financial report are found in the following notes:
Relates to
NOTE
1
1 & 15
7
11
Recognition of revenue from contracts with
customers
Net present value (NPV) of future trail
commission: recognition of future
commissions receivable and payable
Impairment of other financial assets
Goodwill impairment
22 & 23
Impairment of financial assets
Basis of consolidation
The consolidated financial statements comprise the
financial statements of the Group. A list of controlled
entities (subsidiaries) at year end is contained in Note 24.
The financial statements of subsidiaries are prepared for
the same reporting period as the parent company, using
consistent accounting policies. Adjustments are made to
bring into line any dissimilar accounting policies that may
exist.
Subsidiaries are consolidated from the date on which
control is obtained to the date on which control is disposed.
The Group controls an investee if and only if the Group has:
power over the investee (i.e. existing rights that give it
the current ability to direct the relevant activities of the
investee);
exposure, or rights, to variable returns from its
involvement with the investee; and
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.
Refer to Note 24 for detail on the consolidation of special
purpose vehicles.
COVID-19 impact
COVID-19 has significantly impacted equity, debt,
commodity markets and the overall global economy. The
Group has considered the impact of COVID-19 and other
market volatility in preparing its financial statements.
The Group’s process to determine the impact of COVID-19
for these financial statements is consistent with the
process disclosed and applied in its 30 June 2021 and 31
December 2021 financial statements. While the specific
areas of judgement as noted on the previous page remain
unchanged, COVID-19 resulted in the application of further
judgement within those identified areas. Expected credit
losses (Note 23) and the assessment of the impairment
of other financial assets (Note 7) required continued
judgement as a result of the impact of COVID-19.
Given the uncertainty associated with these assumptions
and estimates, actual outcomes may differ to those
forecasted which may impact the accounting estimates
included in these financial statements. Other than adjusting
events that provide evidence of conditions that existed at
the end of the reporting period, the impact of events that
arise after the reporting period will be accounted for in
future reporting periods. The impact of COVID-19 has been
discussed further in each of the related notes.
48
RESIMAC GROUP LTD
ANNUAL REPORT 2022
49
Resimac’s mission
is to be a customer
focused organisation,
leveraging technology
and data analytics
coupled with
expansion of our
sustainability and
Environment, Social
and Governance (ESG)
footprint.
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
ABOUT THIS REPORT
Foreign currency
As at the reporting date, assets and liabilities of
overseas subsidiaries are translated into Australian
dollars at the rate of exchange at the balance sheet
date and the income statements are translated at
the average exchange rate for the year. The exchange
differences arising on the retranslation are taken
directly to a separate component of equity.
Transactions in foreign currencies are initially recorded
in the functional currency at the exchange rates
ruling at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies are
translated at the rate of exchange ruling at the balance
sheet date. Exchange differences arising from the
application of these procedures are taken to the income
statement, with the exception of differences on foreign
currency borrowings that provide a hedge against a net
investment in a foreign entity, which are taken directly to
equity until the disposal of the net investment, and then
recognised in the income statement. Tax charges and
credits attributable to exchange differences on those
borrowings are also recognised in equity.
Other accounting policies
Significant and other accounting policies that
summarise the measurement basis relevant to an
understanding of the financial statements are provided
throughout the notes to the financial statements.
The notes to the financial statements
The notes include information required to understand
the financial statements and is material and relevant
to the operations, financial position and performance
of the Group. Information is considered material and
relevant if, for example:
the amount in question is significant because of its
size or nature;
50
RESIMAC GROUP LTD
it is important for understanding the results of the
Group;
it helps to explain the impact of significant changes
in the Group’s business – for example, acquisitions
and impairment write-downs; or
it relates to an aspect of the Group’s operations that
is important to its future performance.
The notes are organised into the following sections:
Key numbers: provides a breakdown of individual line
items in the financial statements that the Directors
consider most relevant and summarises the accounting
policies, judgements and estimates relevant to
understanding these line items;
Capital: provides information about the capital
management practices of the Group and shareholder
returns for the year;
Risk: details the Group’s exposure to various financial
risks, explains how these affect the Group’s financial
position and performance, and what the Group does to
manage these risks;
Group structure: explains the Group structure and
how changes have affected the financial position and
performance of the Group;
Unrecognised items: provides information regarding
items not recognised in the financial statements but
could potentially have an impact on the Group’s financial
position and performance; and
Other: provides information on items which require
disclosure to comply with AAS and other regulatory
pronouncements, however, are not considered critical in
understanding the financial performance or position of
the Group.
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEGMENT INFORMATION
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEGMENT INFORMATION
Notes to the consolidated
financial statements
Segment information
for the year ended 30 June 2022
Segment Information
The Group has identified two reportable segments based on the nature of the products and services provided, the type of
customers for those products and services, the geographies where the business operates and the existence of discrete and
separate reporting and management teams. The internal reports of the reportable segments are regularly reviewed by the
Board and executive management team (KMP) in order to allocate resources to the segment and to assess its performance.
The Group’s reportable segments under AASB 8 Operating Segments are therefore as follows:
1. Australian Lending business
2. New Zealand Lending business
Represents the distribution and lending businesses
currently captured under the Resimac, Resimac Asset
Finance and homeloans.com.au brands.
The segment contains the bulk of the Australian based
income and expense. It incorporates the new business
settled through the Australian distribution channels, the
margin net of funding costs of the on balance sheet home
loan portfolios, and the trail commission from funders on
the non-principally funded loans (white label portfolio).
The Group’s fully owned subsidiary Resimac Asset
Finance (RAF) specialises in both Australian based secured
commercial and consumer lending. Management have
assessed the impact of the RAF business on its Group
results as not material, and therefore does not represent
a reportable segment for the year ended 30 June 2022,
notwithstanding RAF is considered a separate operating
segment by Management.
Whilst the nature of the customers and products are similar
to the Australian Lending segment, given the different
jurisdiction and market conditions, management believe it
is appropriate to distinguish the result of New Zealand from
Australia.
Separating the Australian and New Zealand trading
business is supported by the operation of a dedicated
NZ Board, NZ segment monthly management reporting,
separate regulatory requirements/oversight, and staff
solely accountable for the NZ business including a locally
based Head of NZ.
Loan impairment
Finance costs
The following is an analysis of the Group’s revenue and results by reportable operating segments:
AUSTRALIAN LENDING
NEW ZEALAND LENDING
CONSOLIDATED
FY22
$'000
FY21
$'000
FY22
$'000
FY21
$'000
FY22
$'000
FY21
$'000
Revenue from external customers
489,688
456,616
37,747
28,899
527,435
485,515
Total segment revenue
489,688
456,616
37,747
28,899
527,435
485,515
Segment results before tax,
depreciation, amortisation,
finance costs and impairment
160,543
164,391
10,916
8,400
171,459
172,791
Depreciation and amortisation
(2,374)
(3,009)
(11,426)
(2,750)
(86)
(20)
(85)
74
(2,460)
(3,094)
(11,446)
(2,676)
(13,318)
(14,377)
(775)
(568)
(14,093)
(14,945)
Segment results before income tax
133,425
144,255
10,035
7,821
143,460
152,076
Income tax expense1
PROFIT AFTER TAX
(41,313)
(44,270)
102,147
107,806
The following is an analysis of the Group’s assets and liabilities by reportable operating segment:
AUSTRALIAN LENDING
NEW ZEALAND LENDING
CONSOLIDATED
FY22
$'000
FY21
$'000
FY22
$'000
FY21
$'000
FY22
$'000
FY21
$'000
Segment assets
15,889,429
13,857,991
847,743
786,693
16,737,172
14,633,552
15,889,429
13,857,991
847,743
786,693
16,737,172
14,633,552
Segment liabilities excl. tax
(15,548,901)
(13,547,634)
(806,623)
(755,564)
(16,355,524)
(14,292,066)
Net assets excl. tax
340,528
310,357
41,120
31,129
381,648
341,486
Tax assets2
Tax liabilities2
NET ASSETS
-
482
(3,580)
(20,829)
378,068
321,139
1 Income tax expense is disclosed on a consolidated basis, not by reportable operating segment.
2 Tax assets and liabilities are disclosed on a consolidated basis, not by reportable operating segment.
52
RESIMAC GROUP LTD
ANNUAL REPORT 2022
53
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS & POLICIES
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS & POLICIES
Notes to the consolidated
financial statements
Key numbers and policies
for the year ended 30 June 2022
1. Revenue
1.1. Revenue streams
The Group generates revenue primarily from net interest income, annuity trail commission income on white label loans and
other fee income. Net interest income is derived from the difference between interest income on originating residential and
asset finance loans, and interest expense incurred on RMBS and warehouse facilities.
Interest income
Loans and advances
Bank deposits
Discount unwind on NPV of trail commission
FY22
$'000
FY21
$'000
488,570
464,787
450
1,675
592
2,258
490,695
467,637
Fee and commission income (Revenue from contracts with customers)
8,178
9,856
Other income
Fair value gains on financial assets (Athena)
Fair value gains on interest rate swaps
Fair value gains on overnight index swaps
Other
-
25,749
333
2,480
28,562
5,110
1,721
-
1,191
8,022
TOTAL REVENUE
527,435
485,515
RECOGNITION & MEASUREMENT
Interest income - loans and advances
Loans and advances are initially recognised at fair value.
Subsequent to initial recognition, the loans are measured
at amortised cost using the effective interest method
over the estimated actual (but not contractual) life of the
mortgage, taking into account all income and expenditure
directly attributable to the loan.
Interest income on loans and advances is recognised
as it accrues using the effective interest rate method.
The rate at which revenue is recognised is referred to as
the effective interest rate and is equivalent to the rate
that effectively discounts estimated future cash flows
throughout the estimated life.
Acquisition costs representing mortgage insurance
premiums and upfront broker commissions related to
originating loans and advances are capitalised on the
statement of financial position of the Group. These costs
are amortised to the statement of profit or loss across the
expected life of the loan in interest income as part of the
effective interest rate.
CLASSIFICATION & MEASUREMENT OF REVENUE
Loans and advances in arrears or hardship at 30 June 2022
continue to accrue interest income. Consideration for
potential future credit losses on loans in arrears or hardship
is reflected in Note 23.
Interest income - bank deposits
This comprises interest income on cash held with
Australian ADIs. Interest income is recognised as it accrues,
using the effective interest method.
Fee and commission income
Revenue is based on the consideration specified in a
contract with a customer. The Group recognises revenue
when it transfers control over a good or service to a
customer. Fee and commission income include fees other
than those that are an integral part of loans and advances
measured using effective interest rate method, and which
are accounted for in accordance with AASB 15 Revenue
from contracts with customers.
The following table provides information about the nature
and timing of the satisfaction of performance obligations
in contracts with customers, and the related revenue
recognition policies.
Nature, timing of satisfaction of
performance obligations
Revenue recognition policy
under AASB 15
Timing
Type of service
At a point
in time
Mortgage
origination
revenue
Commission from originating white label
loans.
The performance obligations are satisfied
at the point in time the loan is settled.
Non-ongoing performance conditions are
attached to the upfront fee.
At a point
in time
Loan
management
revenue
Trail commission income on white label loans,
based on the individual monthly loan balance
outstanding each month. Trail ceases once
the loan is discharged.
At a point
in time
Lending fee
income
The contracts with the funders include
performance obligations which must be
satisfied in order to be paid trail commission
(e.g. the loan not being in arrears).
Loan fees paid by the borrower such as
application, discharge, settlement fees etc.
The performance obligation for these fees is
met at a point in time (settlement, discharge
etc) when the fee is charged to the borrower.
Once the Group has referred a successful loan
application to the lender, its performance obligations
have been met. As such, revenue is recognised at the
point in time the loan is settled. The expected value is
estimated based on historic experience.
Provisions for clawback of the upfront fee are
recognised within a period of time post-settlement and
is a variable consideration.
Revenue is recognised at the point in time the loan is
being settled and performance obligations are satisfied
according to the contracts with the funders.
The present value of the trailing commission receivable
is recognised as a contract asset and measured using
the expected value method with variable consideration
at a point in time.
Revenue is recognised when the transaction is
completed and the performance obligations are met.
54
RESIMAC GROUP LTD
ANNUAL REPORT 2022
55
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS & POLICIES
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS & POLICIES
Fair value gains on interest rate swaps
The Group’s funding structures contractually require the
Group to enter into interest rate swaps on the origination
of fixed rate loans to customers, to ensure the Group’s
special purpose vehicles maintain sufficient cash flows by
eliminating interest rate risk exposure.
At 30 June 2022, the fair value of future cash flows of
each swap was determined in line with AASB 9 Financial
Instruments. During the year, the 2-3 year curve
steepened resulting in a material increase in the fair value
of the Group’s portfolio of interest rate swaps. These fair
value gains are expected to unwind in future reporting
periods.
Other income
Other income includes various items including but not
limited to payments received under operating leases as
income on a straight-line basis over the lease (office sub-
lease.
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 commission receivable
Current
Non-current
FY22
$'000
FY21
$'000
7,763
16,314
24,077
9,093
24,206
33,299
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 52).
AUSTRALIAN LENDING
NEW ZEALAND LENDING
CONSOLIDATED
FY22
$'000
FY21
$'000
FY22
$'000
FY21
$'000
FY22
$'000
FY21
$'000
Major service lines
Mortgage origination
Loan management
Lending fee income
1,564
78
5,380
7,022
2,375
2,243
4,310
8,928
-
-
1,156
1,156
Timing of revenue recognition
Service transferred at a point in time
7,022
8,928
1,156
Revenue from contracts with
customers
7,022
8,928
1,156
-
-
928
928
928
928
1,564
78
6,536
8,178
2,375
2,243
5,238
9,856
8,178
9,856
8,178
9,856
Interest income
Other income
External revenue as reported in
segment information
462,442
442,483
28,253
25,154
490,695
467,637
20,224
5,205
8,338
2,817
28,562
8,022
489,688
456,616
37,747
28,899
527,435
485,515
RECOGNITION & MEASUREMENT
Contract assets - present value of future trail
commission receivable
The contract assets primarily relate to the Group’s
rights to receive trail commissions from lenders on white
label settled loans, over the life of the loan based on the
monthly loan balance outstanding. The contract assets
are transferred to receivables when the rights become
unconditional. White label loans ceased origination in FY19,
and the portfolio ($1.3 billion) is in runoff.
Initial recognition
Expected value of future trail commission receivable were
recognised on the origination of white label settlements.
This represents the NPV of the expected future trail
commission receivable under the origination and
management agreement, less ongoing servicing costs not
covered by transaction fees.
The initial expected value of trail commission receivable
is determined by using the discounted cash flow valuation
technique.
Subsequent measurement
Subsequent to initial recognition, the future trail
commission receivable is measured at expected value.
The carrying amounts of the trail commissions receivable
are adjusted to reflect actual and revised estimated cash
flows by computing the present value of estimated future
cash flows at the effective interest rates. The resulting
adjustment is recognised as income or expense in the
statement of comprehensive income.
A remeasurement of the underlying cash flows relating to
the trail commission receivable occurs at each reporting
date.
Key estimates and assumptions
The key estimates and assumptions underlying the
remeasurement of the estimated future cash flows include
the:
FY22
FY21
Annualised run-off
22.9% 22.2%
Prepayment rate (run-off buffer)
25%
25%
Annualised run-off
Run-off is a combination of discharges, prepayments and
scheduled loan repayments. A three year rolling average is
used in the valuation as the Group’s best estimate of future
run-off to avoid potential year-on-year volatility in run-off.
Prepayment rate
In order to manage both volatility of rates over time and the
uncertainty associated with this modelling, a conservative
run-off buffer of 25% is included in the valuation by
management, and remains unchanged compared with
FY21.
56
RESIMAC GROUP LTD
ANNUAL REPORT 2022
57
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS & POLICIES
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS & POLICIES
2. Expenses
INTEREST
Bond and warehouse facilities
Amortisation – bond issue costs
Discount unwind on NPV of trail commission
Corporate facility
Interest on lease liabilities
FEE & COMMISSION
Mortgage origination
Loan management
Borrowing costs
RMBS financing costs
Discharge fee refund provision1
EMPLOYEE BENEFITS
Remuneration, superannuation and on-costs
Share-based payments
OTHER
Marketing
Technology expenses2
Audit and other professional fees
Rent and occupancy costs
Insurance
Depreciation and amortisation
Depreciation of right-of-use assets
Other
Loan impairment expense
1 See Note 17 for details of the discharge fee refund provision.
2 Includes core banking IT project costs (FY22: $5.1 million; FY21: $7.8 million).
FY22
$'000
FY21
$'000
237,975
213,675
11,524
826
1,832
460
9,154
1,098
440
526
252,617
224,893
444
279
22,460
20,495
5,184
8,449
3,940
7,144
7,275
-
40,477
35,193
44,477
36,697
790
792
45,267
37,489
6,477
14,629
2,500
961
2,291
791
1,669
4,850
4,805
15,722
2,399
1,294
1,801
1,199
1,895
4,073
34,168
33,188
11,446
2,676
383,975
333,439
RECOGNITION & MEASUREMENT
Borrowing costs
2.1. Interest
Bond and warehouse facilities
Recognised in the profit or loss as its accrues
using the effective interest rate method. Bond and
warehouse facilities interest expense include coupon
payments on notes issued, and interest paid on non-
securitised funding facilities.
Amortisation – bond issue costs
Transaction costs incurred by the Group incremental
to the issue of debt securities by the special purpose
vehicles, are capitalised on the statement of financial
position of the parent entity as bond issue costs.
These costs are amortised to the statement of profit
or loss over the average expected life of the debt
securities using the effective interest rate method.
2.2. Fee and commission
Mortgage origination
Upfront commission payments for white label home
loans to mortgage originators, are recognised
at settlement as the services performed by the
originator are principally performed upfront.
Loan management
Includes monthly trail commission payments
to brokers for originating on balance sheet and
white label loans based on individual loan balances
outstanding.
Commitment fees directly related to the Group’s
global funding program.
RMBS financing costs
Other financing costs include trustee and servicer
fees, liquidity fees, rating agency fees, and other fees
related to the ongoing operation of the bond and
warehouse facilities.
2.3. Employee benefits
Employee benefits expense includes fixed and variable
remuneration, superannuation, and associated on-
costs.
The policy relating to share-based payments is set out
in Note 31.
2.4. Other
This mainly comprises unrecoverable GST, bank fees
and general administration expenses. These items are
expensed when incurred.
2.5. Loan impairment
Loan impairment expenses relates to the movement
in the:
specific and collective provisions;
direct loan write-offs recognised during the year;
and
recoveries of previously impaired loans.
See Note 6 for detail on impairment of loans and
advances.
58
RESIMAC GROUP LTD
ANNUAL REPORT 2022
59
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS & POLICIES
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS & POLICIES
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
FY22
$'000
FY21
$'000
38,033
45,156
(9)
-
822
12
38,024
45,990
4,333
(1,044)
3,289
290
(2,010)
(1,720)
Total income tax expense recognised in the current year
41,313
44,270
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% (FY21: 30%)
Effect of expenses that are not deductible in determining taxable profit
Effect of different tax rates of subsidiaries operating in other jurisdictions
Employee share scheme
Other items
143,460
152,076
43,038
45,623
28
(144)
(342)
(214)
41
(120)
(584)
498
42,366
45,458
Adjustments recognised in the current year in relation to the deferred tax of prior years
(1,044)
(2,010)
Adjustments recognised in the current year in relation to the current tax of prior years
(9)
822
Income tax expense recognised in profit or loss
41,313
44,270
The tax rate used for FY22 and FY21 reconciliations above is the corporate tax rate of 30% payable by corporate entities in
Australia and 28% in New Zealand on taxable profits respectively.
RECOGNITION & MEASUREMENT
Income tax expense represents the sum of the tax currently payable and deferred tax.
3.2. Current tax assets and liabilities
CURRENT TAX
Current tax payable
FY22
$'000
FY21
$'000
(1,464)
(1,464)
(20,437)
(20,437)
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:
FY22
$'000
FY21
$'000
Deferred tax assets
Deferred tax liabilities
Net deferred tax (liabilities)/assets
-
(2,116)
(2,116)
Opening
balance
Current year
recognised in
profit or loss
Previously
unrecognised in
profit or loss
Recognised
directly in equity
FY22
Deferred tax assets / (liabilities)
Doubtful debts
Plant, equipment and software
Deferred mortgage insurance
Employee entitlements
Net provision for lease make good
Provision for discharge fee refund
Other accrued expenses
Blackhole expenditure
Trail commission payable
Lease liability
Financial assets
Shares
Share-based payments
Accrued income and other
$’000
9,903
3,351
163
1,268
59
-
2,165
8
4,897
516
-
(1,627)
1,802
70
$’000
2,598
(113)
(72)
387
-
1,182
1,253
(7)
(1,284)
76
(680)
-
(626)
(70)
Capitalised incentive commission
(13,483)
(2,861)
Loans and advances
Deferred bond issue cost
Derivatives
Trail commission receivable
1,206
(3,786)
3,574
(9,996)
90
(730)
(802)
(5,351)
2,767
(4,333)
$’000
-
(2)
-
(5)
-
-
(8)
(1)
-
-
1,060
-
-
-
-
-
-
-
-
1,044
$’000
(13)
-
-
(1)
-
-
-
-
-
-
-
1,188
(1,287)
-
25
-
8
1,163
-
1,083
482
(392)
90
Closing
balance
$’000
12,488
3,236
91
1,649
59
1,182
3,410
-
3,613
592
380
(439)
(111)
-
(16,319)
476
(4,580)
(614)
(7,229)
(2,116)
60
RESIMAC GROUP LTD
ANNUAL REPORT 2022
61
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS & POLICIES
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS & POLICIES
Opening
balance
Current year
recognised in
profit or loss
Previously
unrecognised in
profit or loss
Recognised
directly in equity
Closing
balance
RECOGNITION & MEASUREMENT
Income tax expense represents the sum of the tax currently payable and deferred tax.
FY21
Deferred tax assets / (liabilities)
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
$’000
9,582
2
252
1,180
60
1,982
234
(1)
416
$’000
324
2,543
(89)
88
(1)
235
(178)
-
(414)
Trail commission payable
6,317
(1,418)
Lease liability
Shares
Share-based payments
Lease incentives
Accrued income and other
319
323
343
30
(741)
Capitalised incentive commission
(12,441)
Loans and advances
Deferred bond issue cost
Derivatives
Trail commission receivable
2,476
(2,617)
1,337
(12,593)
(3,540)
73
(1,533)
174
-
444
(1,042)
(1,270)
(1,172)
349
2,597
(290)
$’000
-
806
-
-
-
(52)
(47)
1
(2)
(1)
124
842
-
(30)
367
-
-
2
-
-
2,010
$’000
(3)
-
-
-
-
-
(1)
-
-
(1)
-
(1,259)
1,285
-
-
-
-
1
1,888
-
1,910
$’000
9,903
3,351
163
1,268
59
2,165
8
-
-
4,897
516
(1,627)
1,802
-
70
(13,483)
1,206
(3,786)
3,574
(9,996)
90
3.4. Current tax
Tax payable is based on taxable profit for the year. Taxable
profit differs from ‘profit before tax’ as reported in
the consolidated statement of profit or loss and other
comprehensive income due to a mix of timing and non-
assessable items. The Group's current tax is calculated
using tax rates that have been enacted or substantively
enacted by the end of the reporting period.
3.5. Deferred tax
Deferred tax is recognised on temporary differences
between the carrying amounts of assets and liabilities
in the consolidated financial statements and the
corresponding tax base used in the computation of taxable
profit.
Deferred tax liabilities (DTLs) are generally recognised for
all taxable temporary differences.
Deferred tax assets (DTAs) are generally recognised for all
deductible temporary differences to the extent that it is
probable that taxable profits will be available against which
those deductible temporary differences can be utilised.
Such DTAs and DTLs are not recognised if the temporary
difference arises from the initial recognition (other than
in a business combination) of assets and liabilities in a
transaction that affects neither the taxable profit nor the
accounting profit.
In addition, DTLs are not recognised if the temporary
difference arises from the initial recognition of goodwill.
DTLs are recognised for taxable temporary differences
associated with investments in subsidiaries and associates,
and interests in joint ventures, except where the Group is
able to control the reversal of the temporary difference and
it is probable that the temporary difference will not reverse
in the foreseeable future.
DTAs arising from deductible temporary differences
associated with such investments and interests are only
recognised to the extent that it is probable that there
will be sufficient taxable profits against which to utilise
the benefits of the temporary differences and they are
expected to reverse in the foreseeable future.
The carrying amount of DTAs is reviewed at the end of
each reporting period and reduced to the extent that it is
no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
DTLs and DTAs are measured at the tax rates that are
expected to apply in the period in which the liability is
settled or the asset realised, based on tax rates (and tax
laws) that have been enacted or substantively enacted by
the end of the reporting period.
The measurement of DTLs and DTAs reflects the tax
consequences that would follow from the manner in which
the Group expects, at the end of the reporting period, to
recover or settle the carrying amount of its assets and
liabilities.
3.6. Current and deferred tax for the year
Current and deferred tax are recognised in the statement
of comprehensive income, except when they relate to
items that are recognised in other comprehensive income
or directly in equity, in which case, the current and deferred
tax are also recognised in other comprehensive income
or directly in equity respectively. Where current tax or
deferred tax arises from the initial accounting for a business
combination, the tax effect is included in the accounting for
the business combination.
3.7. Tax consolidation
On 1 February 2021, Resimac Asset Finance (RAF) joined
the Resimac tax consolidated group.
The assets of RAF were taken to have been acquired by
Resimac Group and the tax cost base of these assets were
reset under the Allocable Cost Amount tax consolidation
rules at this date.
62
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63
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS & POLICIES
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS & POLICIES
3.8. Tax effect accounting by members of the tax
consolidated group
Resimac Group Ltd and its wholly-owned Australian
controlled entities have implemented the tax
consolidation legislation. The head entity Resimac
Group Ltd, and the controlled entities in the tax
consolidated group continue to account for their own
current and deferred tax amounts. The Group has
applied the group allocation approach in determining
the appropriate amount of current taxes and
deferred taxes to allocate to members of the tax
consolidated group. The current and deferred tax
amounts are measured in a systematic manner that
is consistent with the broad principles in AASB 112
Income Taxes.
In addition to its own current and deferred tax
amounts, the head entity also recognised current
tax liabilities (or assets) and the deferred tax assets
arising from unused tax losses and unused tax
credits assumed from controlled entities in the
Resimac tax consolidated group.
3.9. Nature of the tax funding agreement
Members of the Group have entered into a tax
funding agreement. 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.
4. Cash and cash equivalents
Cash at bank and on hand
Cash collections accounts1
Restricted cash2
Reconciliation of profit after tax to the net cash flows from operating activities
Profit after tax
Adjustments for
Depreciation and amortisation
Depreciation charge of right-of-use assets
Amortisation of bond issue costs
Fair value gain on financial assets
Fair value movement on swaps
Loan impairment expense
Net (profit)/loss on disposal of non-current assets
Present value of future trail commission income
Present value of future trail commission expense
Share-based payments expense
Discount on mortgage
Dividend income from listed equity investments
(Increase) / decrease in assets
Trade and other receivables
Loans and advances
Other assets
Impairment allowance account
Increase / (decrease) in liabilities
Trade and other payables
Current tax payable
Interest-bearing liabilities
Provisions
Deferred tax liabilities
Note
FY22
$'000
FY21
$'000
18,996
50,622
912,283
567,687
1,502
1,500
22
932,781
619,809
2
2
2
1
2
2
102,147
107,806
791
1,669
11,524
1,199
1,895
9,154
-
(5,110)
(22,593)
11,446
(272)
7,949
780
2,676
944
8,655
(4,039)
(5,008)
790
(232)
(800)
792
(550)
-
(1,112)
(358)
(1,682,234)
(1,559,645)
(3)
60
(1,970)
(1,809)
6,658
(12,693)
8,646
(3,615)
(4,343)
(12,244)
4,853
(2,970)
212
(1,941)
Net cash flows used in operating activities
(1,585,434)
(1,447,461)
1 Cash collections account includes monies in the Special Purpose Vehicles and securitisation trusts on behalf of members in those trusts and various clearing
accounts. These funds are not available for operational use.
2 Cash held in trust as collateral.
64
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65
RECOGNITION & MEASUREMENT
All receivables are derived from the normal course of
business. No maturity dates are specified as they are
normally settled within twelve months. There are no long
term outstanding receivables as at the reporting date and
no material impairment recognised. Trade receivables are
recognised initially at fair value and subsequently measured
at amortised cost using the effective interest method,
less an allowance for impairment. The credit risk of trade
receivables is considered limited as they are due from
Australian financial institutions with high credit ratings.
Fee and commission receivable
Comprises trail commission receivables on settlement
terms of 30 days. This is initially recognised at the fair value
of the consideration receivable.
Sundry receivable
This includes receivables from Volt Bank for amounts
collected on behalf of the Group and mortgage insurance
claims recoverables. The Group has assessed these
receivables as fully recoverable at balance date.
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS & POLICIES
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS & POLICIES
Reconciliation of liabilities arising from financing activities
Issued capital
Share-based
payment
reserve
Interest-
bearing
liabilities
Lease liabilities
$'000
$'000
$'000
$'000
Total
$'000
Balance at 1 July 2021
181,675
2,201
14,701,651
12,482
14,367,009
Operating cashflows
Financing cashflows
-
-
(4,343)
-
(4,343)
(6,132)
165
2,034,839
(1,629)
2,027,243
Non-cash movements
933
(1,872)
87,308
244
86,613
BALANCE AT 30 JUNE 2022
176,476
494
16,288,455
11,097
16,476,522
Balance at 1 July 2020
181,895
490
12,685,616
13,622
12,881,623
6. Loans and advances
GROSS LOANS & ADVANCES
Loans and advances
Operating cashflows
Financing cashflows
-
(220)
-
-
(12,244)
-
(12,244)
1,591,599
(1,679)
1,589,700
Capitalised upfront commissions
Non-cash movements
-
1,711
(94,320)
539
(92,070)
BALANCE AT 30 JUNE 2021
181,675
2,201
14,170,651
12,482
14,367,009
RECOGNITION & MEASUREMENT
Cash comprises cash deposits and cash equivalents that
are short-term, liquid investments readily convertible to
known amounts of cash, not subject to significant risk of
changes in value, and have a maturity of three months or
less.
Cash at bank earns interest at floating rates based on
daily bank deposit rates. Short-term deposits are made
for varying periods of between one day and three months,
depending on the immediate cash requirements of the
Group, and earn interest at the respective short-term
deposit rates.
5. Trade and other receivables
CURRENT
Fee and commission receivable
Prepayments
GST receivable
Sundry receivable
FY22
$'000
FY21
$'000
604
2,531
960
1,566
5,661
843
2,371
743
624
4,581
Deferred mortgage fee
Collections owed to trusts
Less: allowance for impairment
Current
Non-current
IMPAIRMENT ALLOWANCES
Collective allowance
Specific allowance
MOVEMENT IN IMPAIRMENT ALLOWANCES
Balance at 1 July
Provided for during the year
Specific
Collective
Write-offs
BALANCE AT 30 JUNE
Note
FY22
$'000
FY21
$'000
15,684,500
13,934,440
54,564
45,125
(10,107)
(16,240)
(12,056)
(11,132)
15,716,901
13,952,193
(47,041)
(37,565)
22
15,669,860
13,914,628
4,557,901
3,627,570
11,159,000
10,324,623
15,716,901
13,952,193
42,692
4,349
47,041
32,126
5,439
37,565
37,565
36,698
842
10,604
(1,970)
47,041
1,096
1,580
(1,809)
37,565
66
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| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS & POLICIES
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS & POLICIES
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 rate method.
The effective interest rate is the rate that discounts
estimated future cash receipts (including all fees paid
or received that form an integral part of the effective
interest rate, transaction costs and other premiums
or discounts) excluding expected credit losses,
through the expected life of the loans and advances.
Gains and losses are recognised in the statement of
comprehensive income when the loans and advances
are derecognised or impaired.
Collections owed to trusts
Relates to loan repayments received from borrowers
that reside in clearing accounts not yet allocated to a
trust at balance date.
Impairment and provisioning
AASB 9 requires an Expected Credit Loss model (ECL)
at each reporting date to reflect changes in credit risk
since initial recognition of the loans and advances.
Impairment policy of loans and advances are included
in Note 22.
Security properties repossessed
As at 30 June 2022, the Group had exercised their
right to foreclose on 13 residential properties (FY21:
16) being the security for loans and advances.
These loans and advances are security for the
funding provided by warehouse facilities and RMBS
(securitised loans). The Group intends to sell these
properties with the proceeds to go towards clearing
the outstanding balance of the underlying loans.
Mortgages in possession are held as part of loans and
advances, until sold.
7. Other financial assets
Equity in ASX Listed Companies
Equity in Unlisted Companies
Short-term investment
Current
Non-current
Note
FY22
$'000
FY21
$'000
22
22
22
15,963
4,713
7,260
10,110
260
260
23,483
15,083
260
260
23,223
14,823
23,483
15,083
Equity in ASX Listed Companies
Equity investments in ASX listed companies are
investments the Group intends to hold for long term
strategic purposes. As permitted by AASB 9, the Group
designated these investments at the date of initial
application as measured at fair value through other
comprehensive income. The accumulated fair value reserve
related to these investments will not be reclassified to
profit or loss. Dividends will be recognised in profit or loss
as other income when the Group’s right to receive payment
is established.
Equity in Unlisted Companies
Investments that are not traded in an active market,
however classified as fair value through profit or loss
(FVTPL) are disclosed at fair value at the end of each
reporting period. The fair value assessment conducted
on the unlisted shares, included assessing the impact of
COVID-19 and other market conditions on the current
and future operating models. The fair value assessments
include comparisons against forecasted operating
performance at time of investment. The valuation
methodology for these investments is disclosed in Note 22.
Short-term investment
Term deposit with fixed or determinable payments and
fixed maturity date which the Group has the intent and
ability to hold to maturity.
68
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69
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS & POLICIES
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS & POLICIES
8. Right-of-use assets
9. Plant and equipment
Lease - buildings
Balance at 1 July
Additions
Depreciation
Foreign exchange
Balance at 30 June
Lease - buildings
Right-of-use assets at cost
Less: accumulated depreciation
TOTAL RIGHT-OF-USE ASSETS
FY22
$'000
FY21
$'000
10,638
12,279
-
256
(1,669)
(1,895)
(10)
(2)
8,959
10,638
14,234
14,510
(5,275)
(3,872)
8,959
10,638
Right-of-use assets
The Group lease offices with lease terms between 3 to 8
years. Right-of-use assets are initially measured at cost
and comprise the following:
the amount of the initial measurement of lease liability;
any lease payments made at or before the
commencement date less any lease incentives received
any initial direct costs; and
restoration costs.
The right-of-use asset is subsequently depreciated using
the straight-line method from the commencement date
to the end of the lease term, unless the lease transfers
ownership of the underlying asset to the Group by the lease
term or the cost of the right-of-use asset reflects that
the Group will exercise a purchase option. In that case the
right-of-use asset will be depreciated over the useful life
of the underlying asset, which is determined on the same
basis as those of property and equipment. In addition, the
right-of-use asset is periodically reduced by impairment
losses, if any, and adjusted for certain remeasurements
of the lease liability. Depreciation of right-of-use asset is
recognised in the consolidated statement of profit or loss.
Carrying amounts of:
$’000
$’000
$’000
$’000
Computer
equipment
Office
furniture
Operating
lease
equipment
Leasehold
improvement
Balance at 1 July 2021
Additions
Disposals
Depreciation expense
Foreign exchange
BALANCE AT 30 JUNE 2022
Balance at 1 July 2020
Additions
Disposals
Depreciation expense
Foreign exchange
BALANCE AT 30 JUNE 2021
457
543
(15)
(267)
(3)
715
541
176
(10)
(249)
(1)
457
122
2
(30)
(17)
-
77
123
24
(4)
(21)
-
122
359
251
-
981
-
(20)
(175)
(260)
-
435
283
296
(3)
-
701
-
-
(217)
(264)
-
359
-
981
Total
$’000
1,919
796
(65)
(719)
(3)
1,928
496
(17)
(751)
(1)
1,919
1,245
2,192
RECOGNITION & MEASUREMENT
Plant and equipment stated at cost less accumulated depreciation and impairment losses.
Depreciation and amortisation
Depreciation is recognised to write off the cost or valuation of assets less their residual values over their useful lives, using
the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each
reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
70
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| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS & POLICIES
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS & POLICIES
The following useful lives are used in the calculation of depreciation:
11. Goodwill and intangible assets
Computer equipment
Office furniture
Operating lease equipment
Years
3-4
10
3-7
Leasehold improvement
For life of the lease
Derecognition
Impairment
An item of plant and equipment is derecognised upon
disposal or when no future economic benefits are expected
to arise from the continued use of the asset. Any gain or
loss arising on the disposal or retirement of an item of plant
and equipment is determined as the difference between
the sale proceeds and the carrying amount of the asset and
is recognised in profit or loss.
At each reporting date, the Group reviews the carrying
amounts of plant and equipment to determine whether
there is any indication that those assets have suffered
an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated to determine
the extent of the impairment loss (if any).
10. Other assets
Reinsurance claim receivable
Other
Current
Non-current
FY22
$'000
FY21
$'000
3,476
231
3,707
231
3,476
3,707
3,545
228
3,773
228
3,545
3,773
Reinsurance claim receivable
Prime Insurance Group Limited was purchased as part of the RHG Mortgage Corporation Limited (RHG) acquisition in 2014. Its
sole purpose is to provide insurance service and re-insurance facilities for the RHG mortgage assets and process any shortfall
claims received.
The reinsurance claim receivable is available to utilise against the reinsurance claim reserve amount in Note 16.
Goodwill
Balance at 1 July
Movement in the current year
BALANCE AT 30 JUNE
Other intangible assets
Balance at 1 July 2021
Amortisation for the year
Write-offs
BALANCE AT 30 JUNE 2022
Balance at 1 July 2020
Amortisation for the year
Write-offs
BALANCE AT 30 JUNE 2021
FY22
$'000
FY21
$'000
27,430
27,430
-
-
27,430
27,430
Software
Brand name
$'000
$'000
110
(44)
-
66
1,386
(397)
(879)
110
26
(26)
-
-
77
(51)
-
26
Total
$'000
136
(70)
-
66
1,463
(448)
(879)
136
11.1. Goodwill
Goodwill arising on an acquisition of a business is carried
at cost as established at the date of acquisition of the
business (less accumulated impairment losses, if any).
Impairment testing
At 30 June 2022, the Group has performed the impairment
testing, which included consideration of the impact of
COVID-19. Goodwill of $21.7 million has been allocated
for impairment assessment purposes to the Australian
Lending Business segment. This segment is considered
to be the group of cash-generating units (CGU) that are
expected to benefit from the synergies of the business
combination to which that goodwill relates. The RAF
goodwill of $5.7 million is considered a separate CGU, and
the associated goodwill has been separately assessed for
impairment testing.
A CGU to which goodwill has been allocated is tested for
impairment annually, or more frequently when there is an
indication that the unit may be impaired. If the recoverable
amount of the CGU is less than its carrying amount, the
impairment loss is allocated first to reduce the carrying
amount of any goodwill allocated to the unit and then to
the other assets of the unit pro rata based on the carrying
amount of each asset in the unit. Any impairment loss
for goodwill is recognised directly in profit or loss. An
impairment loss recognised for goodwill is not reversed in
subsequent periods.
72
RESIMAC GROUP LTD
ANNUAL REPORT 2022
73
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS & POLICIES
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS & POLICIES
Recoverable amount of the asset
Impairment assessment
The recoverable amount is equal to the greater of:
fair value less costs to sell; and
value in use (‘VIU’).
It is not always necessary to determine both the fair
value less cost to sell and its VIU. If either of these
amounts exceed the carrying amount of the CGU, there
is no impairment of the goodwill and it is not necessary
to estimate the other amount.
As a result, the VIU methodology is considered to be
most appropriate as there is no readily available market
outside specific business sales of an equivalent sized
business to the Australian Lending business segment.
The VIU calculation requires management to estimate
future cash flows expected to arrive from the CGU and
a suitable discount rate in order to calculate present
value. For RAF, management have determined that
the fair value less cost to sell (FV) is considered most
appropriate, as the controlling interest was purchased at
arms-length in FY21 and the acquisition price has been
determined to still be strong evidence of fair value.
Indicators of impairment
The minimum indicators of impairment have been
considered by management. These include both internal
and external sources of information such as:
significant changes (historical and future) in
the market, economic, legal or technological
environment which would have an adverse impact on
the Group;
interest rate changes which impact the discount rate
used in modelling;
evidence of a worsening financial position;
plans to discontinue operations; and
macro economic conditions as a result of COVID-19
pandemic.
Management have assessed that there are no such
indicators which would impair the goodwill balance as at
30 June 2022.
Inputs to impairment calculations
Cash flow projections
For VIU calculations, cash flow projections are based
on corporate plans and business forecasts prepared
by management and approved by the Board. Cash flow
projections are for four years and a terminal growth rate
beyond this has been applied.
In assessing VIU, the estimated future cash flows are
discounted to their present value using a discount rate
that reflects current market assessments of the time
value of money and the risks specific to the CGU.
Furthermore, each unit or group of units to which the
goodwill is allocated shall:
represent the lowest level at which the goodwill is
monitored for internal management purposes; and
not exceed the operating segments.
The allocation of goodwill to these CGU’s is considered
appropriate.
Key judgements and assumptions
The key assumptions used for assessing the recoverable
amount of the Australian Lending Business CGU are as
below:
FY22
FY21
Growth rate for 4-year
forecast period (p.a.)
2.5%
2.5%
Discount rate (post-tax)
11.5%
11.0%
Terminal growth rate
2.0%
2.0%
The post-tax discount rate of 11.5% has been
determined by estimating the cost of equity that
applies to the Australian lending segment. The terminal
growth rate of 2% does not reflect the expected growth
trajectory of the Group, it is management’s conservative
growth assumption for goodwill impairment testing only.
Management conducted the following when testing the
impairment of goodwill:
revised budgets, forecasts and other assumptions
from previous impairment testing to reflect the
economic conditions at the balance date, especially
to address increased risk and uncertainty; and
considered the macroeconomic impact of COVID-19
pandemic and considered outcomes where future
cash flows are reduced or operating costs increase.
In assessing the VIU for goodwill impairment assessment,
the potential impact of COVID-19 pandemic including
rising interest rates and inflation on cash flows and profit
growth have been considered under different scenarios:
1) Base case: Current management view of
macroeconomic environment:
Loan volume: Growth trajectory in line with post
COVID-19 growth.
Margins: Conservative view declining to flat margin
scenario.
Costs: Growth based on CPI assumptions and
investments required to support organic growth of the
business.
2) Stress scenario: Assumes severe macroeconomic
downturn resulting in a sustained downturn in Resimac
profitability of -5% CAGR over a 4 year period. The
stress scenario indicated sufficient headroom remains
for goodwill impairment purposes.
The volatility in the current financial markets due
to COVID-19 pandemic and the current economic
environment introduces challenges to impairment testing.
A second layer of stress testing was added with discount
rates ranging from 10-20% which were applied to the
base case and stress scenarios. Management tested the
stress scenario and applied a discount rate of 20%, the
recoverable amount of the CGU exceeded the recorded
carrying value for the Australian Lending Business. The full
sensitivity range is outlined as follows:
Headroom ($m)
Discount rate
Base Case
Stress Test Case
10%
777
453
11%
652
368
12%
552
301
20%
157
32
The recoverable amount of the CGU would not be less than
its carrying value in any scenario. Resimac management
do not believe there are any other assumptions based on
internal or external sources whereby the quantum of the
change will eliminate the available headroom.
For RAF CGU, using the Calibration methodology within the
FV concept, management believe there are no indicators of
impairment mainly due to the following:
RAF CGU has outperformed initial NPAT expectations;
and
robust portfolio management and cost controls are
embedded to protect the business in the current post
COVID-19 macroeconomic environment.
Impairment charge
Management believe potential impacts of COVID-19 and
the change in economic environment have been adequately
considered for goodwill impairment testing purposes at 30
June 2022. Based upon the impairment testing performed,
there is no impairment charge for FY22 (FY21: Nil).
11.2. Other intangible assets
Intangible assets with finite useful lives that are
acquired separately are carried at cost less accumulated
amortisation and accumulated impairment losses.
Amortisation is recognised on a straight-line basis over
their estimated useful lives.
The estimated useful life and amortisation method are
reviewed at the end of each reporting period, with the
effect of any changes in estimate being accounted for on a
prospective basis. Intangible assets with indefinite useful
lives that are acquired separately are carried at cost less
accumulated impairment losses.
Intellectual property
Software
Brand name
Useful life
7 years
3-5 years
2 years
ANNUAL REPORT 2022
75
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS & POLICIES
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS & POLICIES
Recognise as an operating expense as the service is
received
13. Interest-bearing liabilities
Software-as-a-Service (SaaS) arrangements
SaaS arrangements are service contracts providing
the Group with the right to access the cloud provider’s
application software over the contract period. As such, the
Group does not receive a software intangible asset at the
contract commencement date.
The following outlines the accounting treatment of costs
incurred in relation to SaaS arrangements:
Recognise as an operating expense over the term of the
service contract
Fee for use of application software
12. Trade and other payables
Current
Revenue collected in advance
Commissions payable
Accruals
Other creditors
Customisation costs
Configuration costs
Data conversion and migration costs
Testing costs
Training costs
Costs incurred for the development of software code that
enhances or modifies, or creates additional capability, to
existing on-premise systems and meets the definition
of and recognition criteria for an intangible asset are
recognised as intangible software assets.
Note
FY22
$'000
FY21
$'000
1,179
5,267
436
5,315
13,433
13,064
10,183
4,590
22
30,062
23,405
RECOGNITION & MEASUREMENT
Trade creditors and other payables are generally settled
within 30 day terms and are unsecured. Trade creditors and
other payables are carried at amortised cost and represent
liabilities for goods and services provided to the Group
prior to the end of the financial year, are unpaid, and arise
when the Group becomes obliged to make future payments
in respect of the purchase of these goods and services.
Commissions payable
Relates to upfront and trail commission payable to
aggregators and brokers.
Accruals and other creditors
Accruals and other creditors are accrued fees and expenses
and unsecured payables relating to expenses arising in the
ordinary course of business.
Debt securities on issue
Corporate debt facilities
Issuance facilities
Current
Non-current
Note
FY22
$'000
FY21
$'000
15,840,773
13,780,348
70,000
-
377,682
390,303
22
16,288,455
14,170,651
4,723,652
3,684,369
11,564,803
10,486,282
16,288,455
14,170,651
RECOGNITION & MEASUREMENT
All borrowings are initially recognised at fair value of
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 profit or
loss when the liabilities are derecognised.
For further detail on the amortised cost basis of accounting
see Note 1 and 2. Details of the Group’s interest-bearing
liabilities are set out in Note 22.
13.1. Debt securities on issue
Warehouse facilities
The SPVs facilities provide the initial duration financing
of loans and advances to customers. Refer to Note 24 for
the consolidation of the SPVs. The security for advances
under these facilities is a combination of fixed and floating
charges over all assets of the warehouse SPVs, including
the mortgage security. 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.
The total capacity for the 13 warehouse facilities at 30 June
2022 was AUD 8.2 billion (equivalent) (FY21: AUD 6.9 billion
(equivalent)).
During the financial year there were no material breaches
to the warehouse agreements. All warehouse facilities were
renewed, on or before their maturity date.
Bonds
RMBS provide duration funding for loans and advances
(securitised assets) originated by the Group. The RMBS
notes generally have a legal final maturity of 31 years from
issue, and a call option of up to 5 years.
The RMBS bond holders 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 2022, AUD 5.8 billion
(equivalent) of new RMBS and MTNS were issued (FY21:
AUD 5.5 billion (equivalent)). These RMBS issuance paid
down warehouse facilities creating capacity to fund
new mortgages. During the financial year, there were no
breaches to the terms of the RMBS.
76
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ANNUAL REPORT 2022
77
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS & POLICIES
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS & POLICIES
13.2. Corporate debt facility
As at 30 June 2022, the Company had a $30 million
corporate facility maturing in September 2023. The Group
had an undrawn balance of $10 million at 30 June 2022
(FY21: $30 million). In accordance with the terms of the
Group’s corporate debt facilities, the Group is required to
comply with certain covenants. During the entire year and
as at 30 June 2022, the Group was compliant with these
covenants.
During the year, the Group issued $50 million in corporate
debt securities (Secured Capital Note) with a 3 year tenor.
The $50 million liability is disclosed under corporate debt
facilities. Proceeds will be used to fund growth in our home
loan and asset finance portfolios.
The corporate debt facilities are secured by a first-ranking
charge over the trust assets (beneficiary rights over the
trust’s residual income) of the Group. See Note 23.7 for
further detail.
13.3. Issuance facilities
The Group maintains a series of subsidiary SPV’s for the
purpose of raising financing for its RMBS-related credit
risk retention (“CRR”) obligations. CRR is a mandatory
requirement for the Group’s RMBS issuance activities in the
U.S., European, Japanese and U.K. jurisdictions where, in
general, the Group is required to hold an economic interest
of at least 5% in value of an RMBS issuance. The subsidiary
SPV’s hold a 5% vertical strip of bonds of an individual
RMBS issuance and raises secured financing from banks
and credit investors.
14. Lease liabilities
Lease liabilities included in the Statement of Financial Position
Balance at 1 July
Addition
Interest incurred
Payment of lease liabilities
Foreign exchange
BALANCE AT 30 JUNE
Current
Non-current
Amounts recognised in Statement of Comprehensive Income
Depreciation charge of right-of-use assets
Interest expense on lease liabilities
Amounts recognised in Statement of Cash Flows
Interest paid
Payment of lease liabilties
FY22
$'000
FY21
$'000
12,482
13,622
251
460
541
526
(2,089)
(2,205)
(7)
(2)
11,097
12,482
1,700
9,397
1,520
10,962
11,097
12,482
1,669
460
1,895
526
(1,629)
(1,679)
(460)
(526)
14.1. Leases
The Group assesses whether a contract is or contains
a lease, at inception of the contract. The Group
recognises a right-of-use asset and a corresponding
lease liability with respect to all lease arrangements
in which it is the lessee, except for short-term leases
(defined as leases with a lease term of 12 months or
less) and leases of low value assets. For these leases,
the Group recognises the lease payments as an
operating expense on a straight-line basis over the term
of the lease unless another systematic basis is more
representative of the time pattern in which economic
benefits from the leased assets are consumed.
The lease liability is initially measured at the present
value of the lease payments that are not paid at the
commencement date, discounted by using the rate
implicit in the lease. If the rate cannot be readily
determined, the lessee uses its incremental borrowing
rate.
Lease payments included in the measurement of the
lease liability comprise:
Fixed lease payments (including in-substance fixed
payments), less any lease incentives receivable;
Variable lease payments that depend on an index or
rate, initially measured using the index or rate at the
commencement date;
The amount expected to be payable by the lessee
under residual value guarantees;
The exercise price of purchase options, if the lessee
is reasonably certain to exercise the options; and
Payments to penalties for terminating the lease, if
the lease term reflects the exercise of an option to
terminate the lease.
The lease liability is presented as a separate line in the
consolidated statement of financial position.
The lease liability is subsequently measured by
increasing the carrying amount to reflect interest on
the lease liability (using the effective interest method)
and by reducing the carrying amount to reflect the lease
payments made.
The Group remeasures the lease liability and makes a
corresponding adjustment to the related right-of-use
asset whenever:
The lease term has changed or there is a significant
event or change in circumstances resulting in a
change in the assessment of exercise of a purchase
option, in which case the lease liability is remeasured
by discounting the revised lease payments using a
revised discount rate.
The lease payments change due to changes in an
index or rate or a change in expected payment under
a guaranteed residual value, in which cases the lease
liability is remeasured by discounting the revised
lease payments using an unchanged discount rate.
A lease contract is modified and the lease
modification is not accounted for as a separate
lease, in which case the lease liability is remeasured
based on the lease term of the modified lease by
discounting the revised lease payments using a
revised discount rate at the effective date of the
modification.
The Group did not make any such adjustments during
the year presented.
Variable rents that do not depend on an index or rate are
not included in the measurement of the lease liability
and the right-of-use asset. The related payments are
recognised as an expense in the period in which the
event or condition that triggers those payments occurs
and are included in “Other expenses” in profit or loss
(see note 2).
The Group has applied judgement to determine the
lease term for some lease contracts in which it is a
lessee that include renewal options. The assessment
of whether the Group is reasonably certain to exercise
such options impacts the lease term, which significantly
affects the amount of lease liabilities and right-of-use
assets recognised.
78
RESIMAC GROUP LTD
ANNUAL REPORT 2022
79
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS & POLICIES
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY NUMBERS & POLICIES
Employee benefits
Make good
Discharge fee refund
Balance at 1 July 2021
Additional provisions recognised
Provision utilised
BALANCE AT 30 JUNE 2022
$'000
4,760
2,674
(1,372)
6,062
$'000
458
-
(11)
447
$'000
-
3,940
-
3,940
Total
$'000
5,218
6,614
(1,383)
10,449
15. Other financial liabilities
16. Other liabilities
Note
FY22
$'000
FY21
$'000
FY22
$'000
FY21
$'000
Non-current
Present value of future
trail commission payable
11,750
15,789
Reinsurance claim reserve
3,476
3,545
22
11,750
15,789
3,476
3,545
Current
3,847
4,528
Non-current
7,903
11,261
11,750
15,789
The reinsurance claim reserve offsets with the
reinsurance claim receivable amount in Note 10.
RECOGNITION & MEASUREMENT
17. Provisions
FY22
$'000
FY21
$'000
The Group makes trail commission payments to
mortgage originators based on monthly loan balances
outstanding.
Initial recognition
Fair value of future trail commission payable is
recognised on the origination of white label loans.
This represents the NPV of the expected future
trail commission payable under the origination and
management agreement, less ongoing servicing costs
not covered by transaction fees.
Subsequent payment
Subsequent to initial recognition, the future trail
commission payable is measured at amortised cost.
The carrying amounts of the trail commissions payable
are adjusted to reflect actual and revised estimated
cash flows by calculating the present value of estimated
future cash flows at the effective interest rates at
each reporting date. The resulting adjustment is
recognised as income or expense in the statement of
comprehensive income.
Key estimates and assumptions
Refer to Note 1 for the key estimates and judgements
underlying the remeasurement of the estimated future
cash flows.
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
Employee benefits
6,062
4,760
a reliable estimate can be made of the amount of the
Make good
Discharge fee refund
447
3,940
458
-
10,449
5,218
Current
9,493
4,401
Non-current
956
817
10,449
5,218
obligation.
The amount recognised as a provision is the best estimate
of the consideration required to settle the present
obligation at the end of the reporting period, taking
into account the risks and uncertainties surrounding
the obligation. When a provision is measured using the
cash flows estimated to settle the present obligation, its
carrying amount is the present value of those cash flows
(when the effect of the time value of money is material).
17.1. Employee benefits
A liability is recognised for benefits accruing to employees
where the liability can be measured reliably and payment is
probable, in respect of:
wages and salaries;
annual leave;
long service leave; and
on-costs relating to the above.
Liabilities recognised in respect of employee benefits
expected to be settled within 12 months, are measured at
their nominal values using the remuneration rate expected
to apply at the time of settlement.
Liabilities recognised in respect of employee benefits which
are not expected to settle within 12 months are measured
at the present value of the estimated future cash outflows
to be made by the Group in respect of services provided by
employees up to the reporting date.
The liability for long service leave is recognised in the
provision for employee benefits. It is measured as the
present value of expected future payments for the services
provided by employees up to the reporting date.
Expected future payments are discounted using market
yields at the reporting date on high quality corporate bonds
with terms to maturity that match, as closely as possible,
the estimated future cash outflows.
17.2. Make good
Where a condition of the Group’s lease premises is to
return the property in its original condition at the end of a
lease term. The Group recognises a provision for the make
good as the expected cost of the refurbishment at the end
of the lease.
17.3. Discharge fee refund
The Group conducted a governance review of loan
agreements during the year, where the Group identified
it had potentially overcharged a segment of customers
discharge fees from 2006 to 2017. A liability is recognised
for the likely economic outflow to refund these discharge
fees, accrued interest and associated cost involved in
processing the refunds to the affected customers.
80
RESIMAC GROUP LTD
ANNUAL REPORT 2022
81
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAPITAL
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAPITAL
Notes to the consolidated
financial statements
Capital
for the year ended 30 June 2022
18. Capital management
The Group’s capital management objectives
The Group manages its capital to ensure that entities
in the Group will be able to continue as a going concern
while maximising the return to stakeholders through the
optimisation of the debt and equity balance.
The Group operates a warehouse to securitisation
funding model for its lending business and as such makes
decisions on the amount of capital invested in the notes or
warehouses based on alternate sources of funding and the
expected return on amounts invested and with regard to
the company's cost of capital.
EQUITY
Issued capital
Reserves
Retained earnings
The Group manages its capital through various means, including:
adjusting the amount of ordinary dividends paid to shareholders;
dividend reinvestment plan, offered to shareholders at various times to reinvest cash dividends in new ordinary shares of the
Group on the dividend payment date;
raising or repaying capital; and
reinvesting profits.
19. Dividends
Declared and paid during the period (fully-franked at 30 percent)
Final dividend for FY21: $0.04 (FY20: $0.018)
16,336
7,334
Interim dividend for FY22: $0.04 (Interim FY21: $0.024)
16,343
9,786
FY22
$'000
FY21
$'000
The capital structure of the Group consists of net debt
(borrowings as detailed in Note 13 offset by cash and bank
balances) and equity of the Group (comprising issued
capital, reserves, retained earnings and non-controlling
interests as detailed in Note 20).
The Group is not subject to any externally imposed capital
requirements.
The Board is responsible for monitoring and approving the
capital management framework within which management
operates. The purpose of the framework is to prudently
manage capital whilst optimising the debt and equity
structure.
Note
FY22
$'000
FY21
$'000
Proposed and unrecognised as a liability (fully-franked at 30 percent)
Final dividend for FY22: $0.04 (FY21: $0.04)
20
20
20
114,935
120,134
(25,466)
(18,126)
288,599
219,131
378,068
321,139
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.
32,679
17,120
16,277
16,336
16,277
16,336
95,073
57,198
(6,976)
(7,001)
82
RESIMAC GROUP LTD
ANNUAL REPORT 2022
83
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAPITAL
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAPITAL
20. Issued capital and reserves
Issued capital
Treasury shares
Share capital
Reverse acquisition reserve1
FY22
$'000
FY21
$'000
180,998
183,011
(4,522)
(1,336)
176,476
181,675
(61,541)
(61,541)
114,935
120,134
Issued capital as at 30 June 2022 was $180,998,155 (406,912,503 ordinary shares).
During the period, movements in issued capital include:
Issuance of 990,783 shares for $1,793,603 in respect of the Resimac Dividend Reinvestment Plan (DRP), and
Acquisition of 2,482,741 shares for $3,806,645 (average price of $1.53 per share) under the Group’s on market share
buyback scheme. These shares were cancelled prior to 30 June 2022.
1 As a result of reverse acquisition accounting in the Resimac/Homeloans merger, an account was created as a component of equity. This account called ‘Reverse
acquisition reserve’ is similar in nature to share capital. The Reverse acquisition reserve is not available for distribution.
20.2. Treasury shares
Treasury shares held in Resimac Group Ltd by Resimac EST Pty Ltd as Trustee for the Resimac Group Limited Employee Share
Trust, are for the benefit of eligible employees of the Resimac Group Employee Share Option and Rights Plan. Shares issued to
employees are recognised on a first-in-first-out basis.
Balance at 1 July 2020
Subscription of shares by the Trust (average price: $2.13 per share)
Allocation of shares under LTI#1 (Tranche 1)
Acquisition of shares (average price: $2.47 per share)
BALANCE AT 30 JUNE 2021
Allocation of shares under LTI#1 (Tranche 2)
Allocation of shares under Employee Share Plan
Acquisition of shares (average price: $1.48 per share)
BALANCE AT 30 JUNE 2022
No. of shares -
thousands
$'000
300
(300)
540
540
(300)
(100)
2,785
2,925
639
(639)
1,336
1,336
(740)
(192)
4,118
4,522
20.1. Issued capital
Balance at 1 July 2020
Issue of shares under the DRP:
FY20 Dividend on 25 September 2020
HY21 Dividend on 31 March 2021
Exercise of options – proceeds received
Employee shares
BALANCE AT 30 JUNE 2021
Issue of shares under the DRP:
FY21 Dividend on 21 September 2021
HY22 Dividend on 24 March 2022
No. of shares -
thousands
$'000
407,449
181,895
312
256
300
87
398
553
165
-
408,404
183,011
388
603
837
957
Share buyback cancelled shares (average price: $1.53 per share)
(2,483)
(3,807)
BALANCE AT 30 JUNE 2022
406,912
180,998
Fully paid ordinary shares, which have no par value, carry one vote per share and carry a right to dividends.
84
RESIMAC GROUP LTD
ANNUAL REPORT 2022
85
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAPITAL
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAPITAL
20.3. Reserves (net of income tax) and retained earnings
RESERVES
Cash flow
hedge
reserve
Foreign
currency
translation
reserve
Retained
earnings
Fair value
reserve
Share-
based
payment
reserve
Other
reserve
Non-
controlling
interest
$'000
$'000
$'000
$'000
$'000
$'000
$'000
194
249
(7,982)
(444)
Balance at 1 July 2020
128,694
(5,511)
152
(2,499)
490
(188)
Profit after tax
107,557
Acquisition of non-controlling interest
without a change in control
Option to acquire shares of subsidiary
Changes in fair value of cash flow hedges,
net of tax
Currency translation differences
Fair value movement on investment
through OCI, net of tax
-
-
-
-
-
Equity dividends
Share-based payments
(17,120)
-
-
-
-
(4,406)
-
-
-
-
-
(2)
-
-
(205)
-
-
-
-
-
-
-
-
126
-
-
-
-
-
-
-
-
-
1,711
-
188
-
-
-
-
-
BALANCE AT 30 JUNE 2021
219,131
(9,917)
(55)
(2,373)
2,201
(7,982)
Balance at 1 July 2021
219,131
(9,917)
(55)
(2,373)
2,201
(7,982)
Profit after tax
102,147
-
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
-
-
-
(32,679)
-
(2,714)
-
-
-
-
-
-
(1,236)
-
-
-
-
-
-
(1,683)
-
-
-
-
-
-
-
(1,707)
-
-
-
-
-
-
BALANCE AT 30 JUNE 2022
288,599
(12,631)
(1,291)
(4,056)
494
(7,982)
-
-
1
-
-
-
-
-
-
-
-
-
-
-
-
20.4. Nature and purpose of reserves
Cash flow hedge reserve
The cash flow hedging reserve represents the cumulative
effective portion of gains or losses arising on changes in
fair value of hedging instruments entered into for cash flow
hedges. The cumulative gain or loss arising on changes in
fair value of the hedging instruments will be reclassified
to profit or loss only when the hedged transaction affects
the profit or loss, or included as a basis adjustment to the
non-financial hedged item, consistent with the Group’s
accounting policy.
Foreign currency translation reserve
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
currency translation reserve.
Share-based payment reserve
The share-based payments reserve is used to recognise
the value of equity-settled share-based payments provided
to employees, including KMP, as part of their remuneration.
Refer to Note 31 for further details of these plans.
Other reserve
Other reserves represent the recognition made directly
in equity for difference between the amount by which the
Non-Controlling Interest (NCI) was adjusted and the fair
value of consideration paid on Resimac’s acquisition of the
remaining 40% shares of RAF on 1 February 2021.
21. Earnings per share
FY22
$'000
FY21
$'000
Profit attributable to ordinary equity holders of the parent ($'000)
102,147
107,557
WANOS1 used in the calculation of basic EPS (shares, thousands)
407,743
407,824
Dilutive effect of share options
2,498
2,592
WANOS1 used in the calculation of diluted EPS (shares, thousands)
410,241
410,416
EARNINGS PER SHARE
Basic (cents per share)
Diluted (cents per share)
1 Weighted average number of shares
Calculation of earnings per share
21.1. Basic earnings per share
Basic earnings per share is calculated as net profit
attributable to the ordinary equity holders of the parent,
adjusted to exclude any costs of servicing equity (other
than dividends), divided by the WANOS adjusted for any
bonus element.
25.05
24.90
26.37
26.21
21.2. Diluted earnings per share
Diluted earnings per share is calculated by:
dividing the net profit attributable to ordinary equity
holders of the parent; by the
WANOS outstanding during the year; plus
the WANOS that would be issued on the conversion of
all the dilutive potential ordinary options or rights into
ordinary shares.
86
RESIMAC GROUP LTD
ANNUAL REPORT 2022
87
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
RISK
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
RISK
Notes to the consolidated
financial statements
Risk
for the year ended 30 June 2022
22. Financial assets and financial liabilities
The Group holds the following financial instruments:
Basis of
measurement
Note
FY22
$'000
FY21
$'000
Financial assets
Cash and cash equivalents
Amortised cost
Trade and other receivables (excl. prepayments)
Amortised cost
Loans and advances
Short-term investment
Equity in ASX Listed Companies
Equity in Unlisted Companies
Derivative financial assets - Cross currency swaps
Derivative financial assets - Others
Financial liabilities
Trade and other payables
Interest-bearing liabilities
Lease liabilities
Amortised cost
Amortised cost
FVOCI
FVTPL
FVOCI
FVTPL
Amortised cost
Amortised cost
Amortised cost
Present value of trail commission payable
Amortised cost
Derivative financial liabilities - Cross currency
swaps
Derivative financial Liabilities - Others
FVOCI
FVTPL
4
5
6
7
7
7
23
23
12
13
14
15
23
23
932,781
619,809
3,130
2,210
15,669,860
13,914,628
260
15,963
7,260
11,400
27,820
260
4,713
10,110
-
2,256
30,062
23,405
16,288,455
14,170,651
11,097
11,750
-
235
12,482
15,789
60,504
472
16,341,599
14,283,303
22.1. Fair values measurements and valuation processes
22.1.1. Fair value hierarchy
The different levels have been defined as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e.
as prices) or indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The following assets and liabilities are measured at fair value by the Group for financial reporting purposes:
Fair value
hierarchy
Valuation technique(s)
and key input(s)
FY22
$'000
FY21
$'000
Financial assets
Equity in ASX Listed
Companies
Equity in Unlisted
Companies
Level 1
Level 3
Interest rate swaps
Level 2
Cross currency swaps
Level 2
Overnight index swaps
Level 2
Financial liabilities
Interest rate swaps
Level 2
Most recent traded price and other available
market information.
Acquisition value, financial performance since
acquisition.
Subsequent capital raise since acquisition
adjusted for changes in market and
macroeconomic factors.
Discounted cash flow.
Forward interest rates, contract interest rates.
Discounted cash flow.
Forward interest rates, contract interest rates.
Discounted cash flow.
Forward interest rates, contract interest rates.
15,963
4,713
7,260
10,110
27,252
2,256
11,400
568
-
-
Discounted cash flow.
Forward interest rates, contract interest rates.
Discounted cash flow.
Forward interest rates, contract interest rates.
Discounted cash flow.
Forward interest rates, contract interest rates.
-
-
472
60,504
235
-
In the year to 30 June 2022 there has been no change in the fair value hierarchy or the valuation techniques applied to any of the
balances above.
For further information on the use of derivatives refer to Note 23 Financial risk management.
22.1.2. Fair value of financial assets and liabilities that are not measured at fair value (but fair value disclosures are required)
With the exception of the future trail commission payable that is initially recognised at fair value and subsequently carried
at amortised cost, management consider that the carrying amounts of financial assets and liabilities recognised in the
consolidated financial statements approximate their fair values.
16,668,474
14,553,986
Cross currency swaps
Level 2
Overnight index swaps
Level 2
88
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| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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22.2. Financial assets and liabilities
22.2.1. Recognition and initial measurement
All financial assets and financial liabilities are initially
recognised when the Group becomes a party to the
contractual provisions of the instrument.
A financial asset (unless it is a trade receivable without
a significant financing component) or finance liability
is initially measured at fair value plus, for an item not at
FVTPL, transaction costs that are directly attributable
to its acquisition or issue. A trade receivable without a
significant financing component is initially measured at
the transaction price.
22.2.2. Classification and subsequent measurement
22.2.2.1. Financial assets
On initial recognition, a financial asset is classified as
measured at:
amortised cost
fair value through other comprehensive income
(FVOCI) – debt instrument
fair value through other comprehensive income
(FVOCI) – equity instrument
fair value through profit or loss (FVTPL)
Financial assets are not reclassified subsequent to their
initial recognition unless the Group changes its business
model for managing financial assets, in which case all
affected financial assets are reclassified on the first day
of the first reporting period following the change in the
business model.
A financial asset is measured at amortised cost if it
meets both of the following conditions and is not
designated as at FVTPL:
it is held within a business model whose objective is to
hold assets to collect contractual cash flows; and
its contractual terms give rise on specified dates to
cash flows that are solely payments of principal and
interest on the principal amount outstanding.
A debt investment is measured at FVOCI if it meets both
of the following conditions and is not designated as at
FVTPL:
is held within a business model whose objective is
achieved by both collecting contractual cash flows and
selling financial assets; and
its contractual terms give rise on specified dates to
cash flows that are solely payments of principal and
interest on the principal amount outstanding.
On initial recognition of an equity investment that is
not held for trading, the Group may irrevocably elect to
present subsequent changes in the investment’s fair
value in OCI. This election is made on an investment-by-
investment basis.
All financial assets not classified as measured at
amortised cost or FVOCI as described above are
measured as FVTPL. This includes interest rate swaps
and overnight index swaps derivative financial assets
and investment securities. On initial recognition, the
Group may irrevocably designate a financial asset that
otherwise meets the requirements to be measured
at amortised cost or at FVOCI as at FVTPL if doing so
eliminates or subsequently reduces an accounting
mismatch that would otherwise arise.
22.2.2.2. Financial assets - Business model
assessment
The Group determines the business model at the
level that reflects how groups of financial assets are
managed. In determining the business model, all
relevant evidence that is available at date of assessment
is used including:
how the performance of the financial assets held
within that business model are evaluated and
reported to the Group’s KMP;
the risks that affect the performance of the business
model (and the financial assets held within that
business model) and, in particular, the way in which
those risks are managed; and
how managers of the business are compensated (for
example, whether compensation is based on the fair
value of the assets managed or on the contractual
cash flows collected).
Financial assets that are held for trading or are managed
and whose performance is evaluated on a fair value basis
are measured at FVTPL.
22.2.2.3. Financial assets - Assessment whether
contractual cash flows are solely payments of principal
and interest
For the purpose of this assessment, ‘principal’ is
defined as the fair value of the financial asset on initial
recognition. ‘Interest’ is defined as consideration for the
time value of money and for the credit risk associated
with the principal amount outstanding during a
particular period of time and for other basic lending risks
and costs (e.g. liquidity risk and administrative costs), as
well as a profit margin.
In assessing whether the contractual cash flows are
solely payments of principal and interest, the Group
considers the contractual terms of the instrument. This
includes assessing whether the financial asset contains
a contractual term that could change the timing or
amounts of contractual cash flows such that it would
not meet this condition. In making this assessment, the
Group considers:
contingent events that would change the amount or
timing of cash flows;
terms that may adjust the contractual coupon rate,
including variable-rate features;
prepayment and extension features; and
terms that limit the Group’s claim to cash flows from
specified assets (e.g. non-recourse features).
A prepayment feature is consistent with the solely
payments of principal and interest criterion if the
prepayment amount substantially represents unpaid
amounts of principal and interest on the principal
amount outstanding, which may include reasonable
additional compensation for early termination of the
contract. Additionally, for a financial asset acquired at
a discount or premium to its contractual par amount,
a feature that permits or requires prepayment at an
amount that substantially represents the contractual
par amount plus accrued (but unpaid) contractual
interest (which may also include reasonable additional
compensation for early termination) is treated as
consistent with this criterion if the fair value of the
prepayment feature is insignificant at initial recognition.
22.2.2.4. Financial Assets - Subsequent measurement
and gains and losses
Financial
assets at
FVTPL
Financial
assets at
amortised
cost
Debt
investments
at FVOCI
Equity
investments
at FVOCI
These assets are subsequently
measured at fair value. Net gains
and losses, including any interest or
dividend income, are recognised in
profit or loss. However, see Note 23.3
for derivatives designated as hedging
instruments.
These assets are subsequently
measured at amortised cost using
the effective interest method.
The amortised cost is reduced by
impairment loss. Interest income,
foreign exchange gains and losses
and impairment are recognised in
profit or loss. Any gain or loss on
derecognition is recognised in profit
or loss.
These assets are subsequently
measured at fair value. Interest
income is calculated using the
effective interest method. Other
net gains and losses are recognised
in OCI. On derecognition, gains
and losses accumulated in OCI are
reclassified to profit or loss.
These assets are subsequently
measured at fair value. Dividends
are recognised as income in profit
or loss unless the dividend clearly
represents a recovery of part of
the cost of the investment. Other
net gains and losses are recognised
in OCI and are never reclassified
to profit or loss. In disposal or
derecognition of investment the
cumulative gain or loss is not
reclassified to profit or loss, instead it
is transferred to retained earnings.
90
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22.2.2.5. Financial liabilities – Classification, subsequent
measurement and gains and losses
Financial liabilities are classified as either financial liabilities
at FVPTL or other financial liabilities.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL where the
liability is either held for trading or designated at fair value
through profit or loss.
A financial liability is held for trading if:
it has been incurred principally for the purpose of
repurchasing it in the near term; or
on initial recognition it is a part of a portfolio of
identified financial instruments that the Group manages
together and has a recent actual pattern of short-term
profit-taking; or
it is a derivative that is not designated and effective as a
hedging instrument.
A financial liability other than a financial liability held
for trading may be designated as at FVTPL upon initial
recognition if:
such designation eliminates or significantly reduces a
measurement or recognition inconsistency that would
otherwise arise; or
the financial liability forms part of a group of financial
assets or financial liabilities or both, which is managed
and its performance evaluated on a fair value basis,
in accordance with the Group’s documented risk
management or investment strategy, and information
about the grouping is provided internally on that basis;
or
it forms part of a contract containing one or more
embedded derivatives, and AASB 9 permits the entire
combined contract to be designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value with
any gains or losses arising on remeasurement recognised
in profit or loss. The net gain or loss recognised in profit or
loss incorporates any interest paid on the financial liability
and is included in the ‘other gains and losses' line item.
Other financial liabilities
Other financial liabilities (including borrowings and trade
and other payables) are subsequently measured at
amortised cost using the effective interest method.
The effective interest method is a method of calculating
the amortised cost of a financial liability and of allocating
interest expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated
future cash payments (including all fees and points paid or
received that form an integral part of the effective interest
rate, transaction costs and other premiums or discounts)
through the expected life of the financial liability, or (where
appropriate) a shorter period, to the net carrying amount
on initial recognition.
22.2.3. Derecognition
22.2.3.1. Financial assets
The Group derecognises a financial asset when the
contractual rights to the cash flows from the financial asset
expire, or it transfers the rights to receive the contractual
cash flows in a transaction in which substantively all of
the risks and rewards of ownership of the financial asset
are transferred or in which the Group neither transfers
nor retains substantially all of the risks and rewards of
ownership and it does not retain control of the financial
asset.
The Group enters into transactions whereby it transfers
assets recognised in its statement of financial position, but
retains either all or substantially all of the risks and rewards
of the transferred assets. In these cases, the transferred
assets are not derecognised.
22.2.3.2. Financial liabilities
The Group derecognises a financial liability when its
contractual obligations are discharged or cancelled, or
expire. The Group also derecognises a financial liability
when its terms are modified and the cash flows of the
modified liability are substantially different, in which case
a new financial liability based on the modified terms is
recognised at fair value.
On derecognition of a financial liability, the difference
between the carrying amount extinguished and the
consideration paid (including any non-cash assets
transferred or liabilities assumed) is recognised in profit or
loss.
22.2.4. Modification of financial instruments
A financial instrument is modified when its original
contractual cash flows are renegotiated or modified.
A financial asset that is renegotiated is derecognised
if the rights to receive cash flows from the existing
agreement have expired, either through replacement
by a new agreement or the existing terms are modified
to that effect. A financial liability that is renegotiated
is derecognised if the existing agreement is cancelled
and a new agreement is made on substantially different
terms or if that existing terms are modified such that
the renegotiated financial instrument is a substantially
different financial instrument.
Where the modification results in derecognition of the
original financial instrument, the new financial instrument
is recorded initially at its fair value and the resulting
difference is recognised in profit or loss in accordance with
the nature of the financial instrument as described in the
derecognition of financial assets and liabilities policy.
For financial instruments measured at amortised cost,
and for debt financial assets measured at FVOCI, when
modification does not result in derecognition, a gain or
loss is recognised in profit or loss in accordance with the
nature of the financial instrument as described in the
derecognition of financial assets and liabilities policy. The
gain or loss is measured as the adjustment of the gross
carrying amount to reflect the renegotiated or modified
contractual cash flows, discounted at the instrument’s
original effective interest rate.
22.2.5. Impairment of financial assets
The Group recognises loss allowances for expected credit
loss (ECL) on:
Trade and other receivables;
Loans and advances measured at amortised cost;
Contract assets; and
Lease receivable
The Group applies the following approach for measuring
credit provisions:
Specific Provisions (Stage 3);
ECL modelled Collective Provision in line with AASB 9
requirements; and
Post model overlays including macroeconomic, model
and management overlays.
ECL’s are monitored regularly in conjunction with monthly
hardship and arrears metrics provided to the Group’s
Asset and Liabilities Committee (ALCO). The Group takes
a tailored loan by loan approach to managing credit risk
where customers fall into arrears.
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses.
Credit losses are measured as the present value of all cash
shortfalls (i.e. the difference between the cash flows due
to the entity in accordance with the contract and the cash
flows that the Group expects to receive). The key inputs
used in measuring ECL include:
(a) probability of default: the PD is the likelihood of
default, applied to each underlying exposure.
(b) loss given default: the LGD is the magnitude of the
expected credit loss in the event of default, taking into
consideration the mitigating effect of collateral assets
and time value of money.
(c) exposure at default: the EAD represents the estimated
exposure in the event of a default.
(d) significant increase in credit risk: An asset moves to
stage 2 when its credit risk has increased significantly
since initial recognition. A significant increase in credit
risk is identified before the exposure has defaulted and
at the latest when exposure becomes 30 days past
due. When determining whether the credit risk of a
financial asset has increased significantly since the
initial recognition and when estimating ECLs, the Group
considers reasonable and supportable information that
is relevant and available without undue cost effort. This
includes both quantitative and qualitative information
and analysis, based on the Group’s historical experience
and informed credit assessment and including forward-
looking information. As part of the forward-looking
assessment, the Group has considered factors
including macro-economic forecast and outlook,
housing price index, GDP growth, unemployment rates
and interest rates.
(e) post model overlays: Management apply various
overlays to ensure the Group has sufficient Balance
Sheet coverage for known and potential credit risk
factors that are not modelled in the above assumptions
including:
Model risk overlay - applied by management to the
base ECL model for potential errors in development
and implementation of any of the quantitative elements
underpinning the model.
Macroeconomic overlay - applied by management
to the base ECL model to provide for future potential
macroeconomic shocks on the loan portfolio (e.g. rising
unemployment, house price decline, low wage growth).
To develop the Macroeconomic overlay, we
consider three key macroeconomic assumptions
(unemployment, property prices, Australian GDP) and
stress the portfolio under three different scenarios.
Management overlay - applied by management where
ECL model and overlays are deemed insufficient
Balance Sheet coverage.
92
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| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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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 (stage 2) or are credit impaired (stage 3), or
if the financial instrument is a purchased or originated
credit-impaired financial asset (stage 3). 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.
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 observable data about the following
events:
significant financial difficulty of the borrower; or
breach of contract, such us a default or delinquency in
interest or principal payments; or
becoming apparent that the borrower will enter
bankruptcy or financial re-organisation; or
past experience of collecting payments; or
an increase in the number of delayed payments in the
portfolio past the average credit period; or
observable changes in national or local economic
conditions that correlate with default on receivables.
See Note 23.6 for further details on credit-impaired
financial assets.
Definition of default
The Group considers that default has occurred at 90
days past due.
The Group aligns its approach to credit risk in line
with the segmentation of AASB 9. As such, the ECL
for financial assets measured at amortised cost is
determined with reference to the following stages:
Stage 1: 12 month ECL
At initial recognition, for financial assets without a
significant increase in credit risk (SICR), or for financial
assets where an increase in credit risk is considered to
be low, ECL is determined based on PD over the next
12 months and the LGD, adjusted for forward looking
estimates (FLE).
Stage 2: Lifetime ECL not credit impaired
Where there has been a SICR, the ECL is determined
with reference to the financial asset’s lifetime PD,
the lifetime losses associated with that PD and LGD,
adjusted for FLE. The Group assesses whether there has
been a SICR since initial recognition based on qualitative,
quantitative, and reasonable and supportable FLE
that includes management judgement. Use of more
alternative criteria could result in significant changes to
the timing and amount of ECL to be recognised. Lifetime
ECL is generally determined based on the average
maturity of the financial asset. The Group also classifies
certain loans that have a resolved hardship status as
stage 2 for an observation period after the cessation of
the hardship arrangement.
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.
Stage 3: Impaired assets (specific)
Outside of the ECL, where assets are more than 90 days
past due and a shortfall between the loan balance and
the underlying security has been identified, a specific
provision is raised for the shortfall.
23. Financial risk management
23.1. Financial risk management objectives
23.2. Derivative financial instruments
The Group's Corporate Treasury function:
implements and executes treasury and funding
strategy;
co-ordinates access to domestic and international
financial markets; and
monitors and manages the financial risks relating to the
operations of the Group through internal monitoring
tools which analyse exposures by degree and
magnitude of risks.
These risks include:
market risk (including currency risk and interest rate
risk);
economic risk;
interest rate risk;
credit risk; and
liquidity 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 is governed by the Group's
Interest Rate Risk Management Policy approved by the
Board of Directors, which provide written principles on:
foreign exchange risk;
interest rate risk;
credit risk;
the use of financial derivatives and non-derivative
financial instruments; and
the investment of excess liquidity.
Compliance with policies and exposure limits is reviewed by
the Board on a continuous basis. The Group does not enter
into or trade financial instruments, including derivative
financial instruments, for speculative or proprietary
purposes.
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.
Foreign currency denominated profit or losses.
Cash flow
forecasting
Sensitivity analysis
Cross currency interest rate swaps
Cash flow management and
matching.
Market risk -
interest rate
Mismatch in interest rates between
assets and liabilities.
Sensitivity analysis
Interest rate swaps and overnight
index swaps.
Market risk -
equity
investment
valuation
Investments in equity securities.
Sensitivity analysis
Equity investments not held for
trading.
Credit risk
Mortgage portfolio and warehouse facilities
and RMBS exposures, counterparty risk.
Credit risk analysis
Rating agency
criteria and
analyses
Diversification, adaptive capital
structures, strong collections/
portfolio management, rating
agency provisions in transactions
documents.
Liquidity risk
Borrowings, derivative financial liabilities.
Rolling cash flow
forecasts
Availability of committed credit
lines and borrowing facilities,
securitisation, capital relief
transactions, structuring terms
of obligations, diversification of
funders.
94
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RECOGNITION & MEASUREMENT
Derivatives are initially recognised at fair value at the
date the derivative contracts are entered into and are
subsequently remeasured to their fair value at each
reporting period.
The resulting gain or loss is recognised in profit or loss
immediately unless the derivative is designated and
effective as a hedging instrument, in which event the
timing of the recognition in profit or loss depends on the
nature of the hedge relationship.
23.3. Hedge accounting
The Group designates certain hedging instruments,
which includes derivatives in respect of foreign currency
risk, as cash flow hedges.
At the inception of the hedge relationship the Group
documents the relationship between the hedging
instrument and hedged item, along with its risk
management objectives and its strategy for undertaking
various hedge transactions.
Furthermore, at the inception of the hedge and on
an ongoing basis, the Group documents whether the
hedging instrument that is used in a hedging relationship
is effective in offsetting changes in fair values or cash
flows of the hedged item attributable to the hedged risk,
which is when the hedging relationships meet all of the
following hedge effectiveness requirements:
there is an economic relationship between the
hedged item and the hedging instrument;
the effect of credit risk does not dominate the value
changes that result from that economic relationship;
and
the hedge value is largely reflective of the hedged
item.
23.3.1. Cash flow hedges
The effective portion of changes in the fair value of
derivatives that are designated and qualify as cash
flow hedges is recognised in other comprehensive
income and accumulated under the heading of cash
flow hedging reserve. The gain or loss relating to the
ineffective portion is recognised immediately in profit
or loss and is included in the other expenses or other
income line item.
Amounts previously recognised in other comprehensive
income and accumulated in equity are reclassified to
profit or loss, in the same line as the recognised hedged
item.
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
RISK
Hedge accounting is discontinued when:
the Group revokes the hedging relationship;
the hedging instrument expires or is sold, terminated, or
exercised; or
the Group no longer qualifies for hedge accounting.
Any cumulative gain or loss recognised in other
comprehensive income and accumulated in equity at
that time remains in equity and is recognised when the
forecast transaction is ultimately recognised in profit or
loss. When a forecast transaction is no longer expected to
occur, the gain or loss accumulated in equity is recognised
immediately in profit or loss.
The following table details the amounts relating to items designated as cash flow hedges:
30 June 2022 (Disclosed in AUD)
Notional amount
USD
CCS
JPY
CCS
TOTAL
$'000
$'000
$'000
1,794,825
450,000
2,244,825
Average fixed contract rate (FX rate per AUD)
0.73
77.22
Carrying amount of the hedging instrument
Assets
Liabilities
99,369
-
99,369
-
(87,969)
(87,969)
Total carrying amount of the hedging instrument
Change in value of hedging instrument
99,369
(87,969)
145,107
(73,202)
11,400
71,905
Change in value of hedged item
(131,617)
55,835
(75,782)
Change in value of hedging instrument recognised in cash flow hedge
reserve1
13,490
(17,367)
(3,877)
30 June 2021 (Disclosed in AUD)
Notional amount
1,771,479
250,000
2,021,479
Average fixed contract rate (FX rate per AUD)
0.66
75.00
Carrying amount of the hedging instrument
Assets
Liabilities
-
-
-
(45,738)
(14,766)
(60,504)
Total carrying amount of the hedging instrument
(45,738)
(14,766)
(60,504)
Change in value of hedging instrument
(95,001)
(14,766)
(109,767)
Change in value of hedged item
79,186
24,287
103,473
Change in value of hedging instrument recognised in cash flow hedge
reserve1
(15,815)
9,521
(6,294)
1 Amounts disclosed net of FX spot translation on the hedged risk, which is recognised in profit or loss to offset the hedged item FX translation (unrealised).
ANNUAL REPORT 2022
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| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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23.3.2. Derivative financial assets and liabilities
The carrying values are as follows:
FY22
$'000
FY21
$'000
Derivative financial assets
Cross currency swaps
11,400
-
Interest rate swaps
27,252
2,256
Overnight index swaps
568
-
39,220
2,256
Derivative financial liabilities
Cross currency swaps
Interest rate swaps
Overnight index swaps
-
-
235
235
60,504
472
-
60,976
The Group seeks to minimise the effects of foreign
currency and some interest rate exposures by using
derivative instruments to hedge these positions.
Derivatives are initially recognised at fair value at the date
derivative contracts are entered into, and subsequently
measured at their fair value at each reporting period.
During the period, currency movements drove changes
in valuation of the Groups’ cross currency swaps hedged
to the Group’s US RMBS bonds. These movements in
the derivative balances are matched with the USD bond
liabilities, with the profit/(loss) on swaps recognised in
Other Comprehensive Income.
23.4. Market risk
Market risk is the risk of an adverse impact on the Group’s
earnings resulting from changes in market factors, such as
interest rates, equity prices and foreign exchange rates.
23.4.1. Interest rate risk
Interest rate risk is the risk that the Group will experience
deterioration in its financial position as interest rates
change over time.
Interest rate exposure is driven by interest rate
mismatches between assets and liabilities (i.e. borrowing at
floating interest rates and lending with fixed interest rates).
Interest rate risk is managed by entering into interest rate
and overnight index swaps subject to the Group’s hedging
and derivatives policies.
23.4.2. Interest rate risk - Sensitivity analysis
The majority of the Group’s liabilities are issued through
warehouse facilities and RMBS in special purpose and
bankruptcy-remote entities. Under such arrangements,
the repayment profile of the RMBS 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:
FY22
$'000
FY21
$'000
10bps +/-
Borrowing costs
16,190
14,158
23.4.3. Interest rate swap contracts
Under interest rate swap contracts, the Group agrees to
exchange the difference between fixed and floating rate
interest amounts calculated on agreed notional principal
amounts. Such contracts enable the Group to mitigate the
risk of changing interest rates on the cash flow exposures
on the issued variable rate debt. The fair value of interest
rate swaps at the end of the reporting period is determined
by discounting the future cash flows using the curves at the
end of the reporting period and the credit risk inherent in
the contract and is disclosed below.
FY22
$'000
FY21
$'000
Fair value asset
Derivative financial assets
27,252
2,256
Fair value liability
Derivative financial liabilities
-
472
The following table details the notional principal amounts
outstanding at the end of the reporting period:
The following table details the notional principal amounts
outstanding at the end of the reporting period:
FY22
$'000
FY21
$'000
FY22
$'000
FY21
$'000
Notional principal value
Notional principal value
Less than 1 year
114,574
6,935
Less than 1 year
1,000,000
1 to 2 years
2 to 5 years
237,079
152,722
1 to 2 years
2,000,000
788,335
694,900
2 to 5 years
1,139,988
854,557
-
3,000,000
-
-
-
-
The interest rate swaps settle and reset on a monthly
basis. The floating rate on the interest rate swaps is the
Bank Bill Swap Rate (BBSW) local interbank rate. The Group
will settle the difference between the fixed and floating
interest rate on a net basis.
23.4.4. Overnight index swap contracts
Under overnight index swap contracts, the Group agrees
to exchange the difference between the overnight cash
rate plus a margin and 1 month BBSW on agreed notional
principal amounts. Such contracts enable the Group to
mitigate the exposure of basis differentials in an increasing
rates environment, of its loan and funding book. The fair
value of overnight index 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.
FY22
$'000
FY21
$'000
Fair value asset
Derivative financial assets
568
Fair value liabilities
Derivative financial liabilities
235
-
-
23.4.5. Corporate interest - Sensitivity analysis
The remainder of the Group’s loan portfolio and liabilities
are held in corporate entities. The impact of a potential
+/- 10bps change in interest rates on interest revenue and
borrowing costs on balances held by the Group for the year
is set out in the table below:
FY22
$'000
FY21
$'000
Impact on corporate interest revenue
Interest rate + 10bps
933
620
Interest rate - 10bps
(933)
(620)
Impact on corporate funding costs1
Interest rate + 10bps
Interest rate - 10bps
(70)
70
-
-
1 As at 30 June 2021, the corporate debt facilities balance was Nil.
23.4.6. Equity price risk
Equity investments in listed and unlisted shares are held for
strategic rather than trading purposes. The Group does not
actively trade these investments.
98
RESIMAC GROUP LTD
ANNUAL REPORT 2022
99
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
RISK
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
RISK
23.4.7. Equity investment valuation risk – sensitivity
analysis
If equity prices on listed shares had been 10% higher /
lower:
Other comprehensive income would increase/
decrease by $1,596,000 as a result of the changes
in fair value of investments in listed shares (FY21:
$471,000).
If fair value assessments on unlisted shares had been
10% higher / lower:
Net profit for the year ended 30 June 2022 would
increase/decrease by $726,000 as a result of the
changes in fair value of the investments in unlisted
shares (FY21: $1,011,000).
23.5. Foreign currency risk
23.5.1. Accounting translation
As at reporting date the Group held cash assets and
loans denominated in New Zealand dollars (NZD).
Fluctuations in the NZD are not expected to have
material impact on the consolidated statement
of profit or loss or the consolidated statement of
comprehensive income and equity of the Group.
23.5.2. Market risk - foreign exchange on monetary
items
The Group obtains funding denominated in foreign
currencies, consequently, exposures to exchange rate
fluctuations arise. These currencies include USD and
JPY. 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 and notional
principal amounts outstanding at the end of the
reporting period are set out in Note 23.3.1.
23.6. Credit risk management
Credit risk is the risk that a counterparty will fail
to complete its contractual obligations when they
fall due. The consequential loss is the amount of
the financial obligation not paid back, or the loss
incurred in replicating a trading contract with a new
counterparty.
The Group’s primary credit risk exposures relate to
its lending activities in its principally funded mortgage
portfolio and asset finance portfolio.
The Group’s primary lending activities are
concentrated in the Australian and New Zealand
market. The underlying credit risk in the Group’s
lending activities is commensurate with a
geographically-diverse residential mortgage portfolio
and asset finance portfolio.
The Board of Directors is responsible for determining
the Group’s overall appetite for credit risk and
monitoring the quality and performance of the
mortgage portfolio. The credit risk management
operational framework and policy is governed and
managed by the Credit Committee.
The Group does not have any direct counterparty
credit exposure arising from its financing and
securitisation activities. Counterparty risk is
governed, and mitigated where required, by ratings
agency criteria within the bankruptcy-remote
funding SPVs and trusts including exposures to banks,
lender’s mortgage insurance providers and derivative
counterparties.
23.6.1. Credit risk in lending
The Group has established lending policies and
procedures to manage the credit risk inherent in
lending. The extent of credit risk in the Group’s lending
activities is managed within its origination and funding
programmes. The Group maintains separate credit
policies for each programme and regularly reviews and
amends policies in line with economic, operating and
funding conditions.
The Group’s approach to credit management utilises
a credit risk framework to ensure that the following
principles are adhered to:
independence from brokers;
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 up-to-date credit procedures;
and
credit exposures include such exposures arising
from derivative transactions.
Each of the divisions are responsible for managing
credit risks that arise in their own areas with oversight
from a centralised credit risk management team. It
is the policy of the Group to monitor the policies of
all divisions to ensure that the risk of the Group is
monitored.
23.6.2. Exposure to credit risk
Loans and advances consist of a large number of customers, spread across diverse demographic and geographical areas.
Ongoing credit evaluation is performed on the financial condition of loans and advances, accounts receivable and other financial
assets.
There is no significant concentration of risk to any single counterparty.
The credit risk on derivative financial instruments is limited because the counterparties are banks with high credit-ratings
assigned by international credit-rating agencies.
23.6.3. Maximum exposure to credit risk
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s exposure to credit
risk at the reporting date was:
Cash and cash equivalents
Trade and other receivables (excl. prepayments)
Contract assets
Short-term investment
Derivative financial assets
Loans and advances at amortised cost
Note
FY22
$'000
FY21
$'000
4
5
1
7
23
6
932,781
619,809
3,130
2,210
24,077
33,299
260
39,220
260
2,256
999,468
657,834
15,684,500
13,934,440
16,683,968
14,592,274
As at 30 June 2022, 100% of the Group’s cash and cash
equivalents are held with banks or financial institutions with
a credit rating of AA- or better (FY21: 100%).
systems. This includes the use of the Loan to Value Ratio
(LVR) to assess its exposure to credit risk from loans
originated through the securitisation programme.
23.6.3.1 Residential mortgage borrowers
The Group manages credit risk by obtaining security over
residential mortgage property and mortgage insurance for
each loan.
In monitoring the credit risk, loans are grouped according
to their credit characteristics using credit risk classification
23.6.4. Financial guarantees
The Group is exposed to credit risk in relation to financial
guarantees given to banks. The Group's maximum
exposure in this respect is the maximum amount the Group
could have to pay if the guarantees are called on. Refer to
Note 26.2 for the guarantees in respect of the leases.
ANNUAL REPORT 2022
101
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
RISK
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
RISK
23.6.5. Credit risk management
The following table summarises the loans and advances and the expected credit loss by stage and risk category:
Maximum exposure to credit risk
$'000
$'000
$'000
Stage 1
Collective
Stage 2
Collective
Stage 3
Collective
Stage 3
Specific
$'000
Total
$'000
Balance as at 30 June 2022
Loans and advances
Mortgage lending
Asset finance lending
Commercial lending
14,923,300
318,070
39,547
6,000
15,286,917
395,159
556
1,435
-
129
-
303
-
397,027
556
TOTAL
15,319,015
319,505
39,676
6,304
15,684,500
Balance as at 30 June 2021
Loans and advances
Mortgage lending
Asset finance lending
Commercial lending
13,330,389
430,138
36,915
12,194
13,809,636
122,855
598
1,319
-
32
-
-
-
124,206
598
TOTAL
13,453,842
431,457
36,947
12,194
13,934,440
Expected credit loss
Balance as at 30 June 2022
Mortgage lending
Asset finance lending
Commercial lending
23,023
1,969
1
12,720
4,844
4,171
81
-
55
-
178
-
44,757
2,283
1
TOTAL
24,992
12,801
4,899
4,349
47,041
Balance as at 30 June 2021
Mortgage lending
Asset finance lending
Commercial lending
13,472
13,990
4,307
5,537
37,206
327
1
26
-
3
-
2
-
358
1
TOTAL
13,800
14,016
4,310
5,439
37,565
The majority of the Group’s exposure to loans and
advances is limited, as they are legally owned by special
purpose vehicles (trusts) with limited recourse to the
Group. Losses on mortgage loans in these entities are
therefore limited to the Group’s investment in notes in
these trusts and the residual income rights of trusts. The
trust structures are designed such that losses are covered
by the income generated from the assets within the trust
before the investment notes are impaired.
Collateral held
The value of the collateral held as security for loans in stage
2 and stage 3 collective at 30 June 2022 is $522.8 million
(30 June 2021: $689.6 million).
The value of the collateral held as security for loans in stage
3 specific loans at 30 June 2022 is $2.2 million (30 June
2021: $8.1 million).
Loans are secured by the Group by having the property
titles registered as a financial interest that provide the
Group first priority over any proceeds becoming available
from the sale of the property. For Prime insured loans, LMI
policies exist to cover 100% of the principal amount at
default plus interest.
23.6.6. Credit risk concentrations
An analysis of the Group’s credit risk concentrations on
loans and advances is provided in the following table. The
amounts in the table represent gross carrying amounts:
Loans and advances at amortised cost
FY22
FY21
Concentration by region
$'000
%
$'000
%
New South Wales
Victoria
Queensland
Western Australia
South Australia
Tasmania
Northern Territory
New Zealand
TOTAL
Expected credit loss
Concentration by region
New South Wales
Victoria
Queensland
Western Australia
South Australia
Tasmania
Northern Territory
New Zealand
TOTAL
5,781,932
4,069,813
2,844,067
1,101,971
948,254
103,147
61,760
773,556
37%
26%
18%
7%
6%
1%
0%
5%
5,132,426
3,693,253
2,471,432
1,012,975
752,651
100,442
56,811
714,450
37%
27%
18%
7%
5%
1%
0%
5%
15,684,500
100%
13,934,440
100%
15,173
11,202
9,728
5,811
2,856
243
1,410
618
32%
24%
21%
12%
6%
1%
3%
1%
14,961
9,926
5,144
4,694
1,263
184
1,004
389
40%
26%
14%
12%
3%
0%
3%
1%
47,041
100%
37,565
100%
102
RESIMAC GROUP LTD
ANNUAL REPORT 2022
103
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
RISK
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
RISK
23.6.7. Analysis of loans and advances by past due status
23.6.8. Movement in credit exposures
Under the Group’s monitoring procedures, a significant increase in credit risk is identified at the latest when exposure becomes
30 days past due. The table below provides an analysis of the gross carrying amount of loans and advances by past due status
that are over 30 days past due.
Loans and advances at amortised cost1
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 and over
TOTAL
1 Includes loans that are collectively and specifically provided for.
Expected credit loss
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 and over
TOTAL
FY22
$'000
FY21
$'000
15,592,251
13,458,212
41,460
395,691
9,024
36,677
23,364
23,188
6,885
4,081
7,435
6,278
2,753
11,641
Provision for impairment losses
$'000
$'000
$'000
$'000
Stage 1
Collective
Stage 2
Collective
Stage 3
Collective
Stage 3
Specific
Total
$'000
Balance as at 1 July 2021
13,800
14,016
Net transfer between stages
5,783
(4,188)
Stage 1 - Collective
Stage 2 - Collective
Stage 3 - Collective
Stage 3 - Impaired
Net re-measurement of opening
balance net of transfers
Impact of transfers between stages
and re-measurement
-
(4,414)
4,414
441
927
-
178
48
(7,822)
2,608
4,310
(371)
(441)
(178)
-
248
688
5,439
37,565
(1,224)
-
(927)
(48)
(248)
-
-
(5,782)
4,188
371
1,223
(4,526)
11,761
12,436
4,627
4,215
33,039
15,684,500
13,934,440
Net Financial Assets Originated
12,698
363
273
131
13,465
Movements in existing individually
assessed provisions and write-backs
Write-offs
Discharges/Other
-
-
533
-
-
2
-
-
(1)
1,815
1,815
(1,970)
(1,970)
158
692
Balance as at 30 June 2022
24,992
12,801
4,899
4,349
47,041
Credit exposure
Balance as at 1 July 2021
13,453,842
431,457
36,947
12,194
13,934,440
Net transfers between stages and
financial assets originated
1,865,173
(111,952)
2,729
(5,890)
1,750,060
Write-offs
-
-
-
(1,970)
(1,970)
Balance as at 30 June 2022
15,319,015
319,505
39,676
6,304
15,684,500
FY22
$'000
FY21
$'000
39,206
15,430
1,101
11,549
558
3,041
802
501
1,832
2,732
2,800
1,091
328
3,635
47,041
37,565
104
RESIMAC GROUP LTD
ANNUAL REPORT 2022
105
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
RISK
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
RISK
Provision for impairment losses
$'000
$'000
$'000
$'000
Stage 1
Collective
Stage 2
Collective
Stage 3
Collective
Stage 3
Specific
Total
$'000
Balance as at 1 July 2020
25,865
2,441
2,335
6,057
36,698
Net transfer between stages
Stage 1 - Collective
Stage 2 - Collective
Stage 3 - Collective
Stage 3 - Impaired
Net re-measurement of opening
balance net of transfers
Impact of transfers between stages
and re-measurement
523
-
279
417
-
(49)
(1,025)
(279)
-
298
(279)
(417)
(298)
-
(417)
(14,038)
11,301
3,286
551
174
68
309
174
967
(13,515)
11,252
2,261
1,518
Net Financial Assets Originated
2,790
365
Movements in existing individually
assessed provisions and write-backs
Write-offs
-
-
-
-
Discharges/Other
(1,340)
(42)
Balance as at 30 June 2021
13,800
14,016
39
-
-
(325)
4,310
-
(301)
(1,809)
(1,809)
(26)
(1,733)
5,439
37,565
-
(523)
49
1,025
(523)
1,516
1,516
3,194
(301)
Credit exposure
Balance as at 1 July 2020
12,433,749
45,248
22,826
16,571
12,518,394
Net transfers between stages and
financial assets originated
1,020,093
386,209
14,121
(2,568)
1,417,855
Write-offs
-
-
-
(1,809)
(1,809)
Balance as at 30 June 2021
13,453,842
431,457
36,947
12,194
13,934,440
23.7. Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has established an appropriate
liquidity risk management framework for the management of the Group's short, medium and long-term funding and liquidity
management requirements.
106
RESIMAC GROUP LTD
The Group’s funding platform currently comprises a
mix of:
warehouse facilities;
RMBS
secured corporate debt facility; and
cash.
The majority of the Group’s liabilities represent bonds
issued by special purpose trusts through warehouse
facilities and term securitisation transactions. Under
such arrangements, bondholder recourse is limited
to the assets of the relevant special purpose trust to
which the liability relates and the repayment profile
of the bonds is matched to the repayments collected
from the loan assets. Given the limited recourse
nature of these borrowings, $15.83 billion at 30 June
2022 (FY21: $13.78 billion), they have not all been
included in the table below.
The Group manages liquidity risk by maintaining
adequate reserves, banking facilities and reserve
borrowing facilities, by continuously monitoring
forecast and actual cash flows, and by matching the
maturity profiles of financial assets and liabilities.
Note 23.7.2 below sets out details of additional
undrawn facilities that the Group has at its disposal to
further reduce liquidity risk.
23.7.1. Liquidity risk tables
The following table shows the Group's remaining
expected maturity for its non-derivative financial
liabilities with agreed repayment periods. The tables
have been drawn up based on the undiscounted
cash flows of financial liabilities based on the earliest
date on which the Group can be required to pay and
hence will not necessarily reconcile with the amounts
disclosed in the statement of financial position.
The tables include both interest and principal cash
flows. To the extent that interest flows are floating
rate, the undiscounted amount is derived from
interest rate curves at the end of the reporting period.
The contractual maturity is based on the earliest date
on which the Group may be required to pay.
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
RISK
FINANCIAL LIABILITIES
FY22
Non-derivatives
<6 months
or on
demand
6-12
months
$'000
$'000
1-3
years
$'000
3-5
years
$'000
>5
years
$'000
Total cash
flows
Carrying
amount
$'000
$'000
Trade and other payables
30,062
-
-
-
Interest-bearing liabilities
Issuance facilities
9,466
26,216
93,728
248,272
Corporate debt facilities
-
-
70,000
-
-
-
-
30,062
30,062
377,682
377,682
70,000
70,000
Present value of future trail
commissions payable
2,126
1,721
4,240
1,917
1,746
11,750
11,750
Lease liabilities
1,083
1,105
4,326
4,665
1,535
12,714
11,097
42,737
29,042
172,294
254,854
3,281
502,208
500,591
Derivatives
235
-
-
-
-
235
235
42,972
29,042
172,294
254,854
3,281
502,443
500,826
FY21
Non-derivatives
Trade and other payables
23,405
-
-
-
Interest-bearing liabilities
Issuance facilities
12,203
20,164
96,734
261,202
-
-
23,405
23,405
390,303
390,303
Present value of future trail
commissions payable
2,462
2,066
5,462
2,810
2,989
15,789
15,789
Lease liabilities
1,052
1,049
4,247
4,382
3,677
14,407
12,482
39,122
23,279
106,443
268,394
6,666
443,904
453,111
Derivatives
60,976
-
-
-
-
60,976
60,976
100,098
23,279
106,443
268,394
6,666
504,880
514,087
23.7.2. Financing facilities
Secured corporate debt facility which may be extended by mutual agreement
Amount used
Amount unused
108
RESIMAC GROUP LTD
FY22
$'000
FY21
$'000
20,000
10,000
30,000
-
30,000
30,000
The Group manages
liquidity risk by
maintaining adequate
reserves, banking
facilities and reserve
borrowing facilities,
by continuously
monitoring forecast
and actual cash flows,
and by matching the
maturity profiles of
financials assets and
liabilities.
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
GROUP STRUCTURE
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
GROUP STRUCTURE
Notes to the consolidated
financial statements
Group structure
for the year ended 30 June 2022
24. Subsidiaries
Details of the Group’s subsidiaries at the end of the reporting period are as follows:
NAME OF SUBSIDIARY
Controlled companies
PROPORTION OF OWNERSHIP
INTEREST HELD & VOTING
POWER HELD BY THE GROUP
Principal activity
Place of
incorporation
and operation
FY22
%
FY21
%
Access Network Management Pty Ltd
Auspak Financial Services Pty Ltd
Mortgage manager
Mortgage broker
Australia
Australia
Barnes Mortgage Management Pty Ltd1
Mortgage originator and manager
Australia
Clarence Street Finance Pty Ltd
Holder of commission agreements
Australia
Clarence Street Funding No.1 Pty Ltd
Special purpose vehicle
Clarence Street Funding No.2 Pty Ltd
Participation unit holder
Clarence Street Funding No.3 Pty Ltd
Special purpose vehicle
Clarence Street Funding No.4 Pty Ltd
Special purpose vehicle
Clarence Street Funding No.6 Pty Ltd
Special purpose vehicle
Clarence Street Funding No.7 Pty Ltd
Special purpose vehicle
Clarence Street Funding No.8 Pty Ltd
Special purpose vehicle
Clarence Street Funding No.9 Pty Ltd
Special purpose vehicle
Clarence Street Funding No.10 Pty Ltd
Special purpose vehicle
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
FAI First Mortgage Pty Ltd
Trust manager and servicer
Australia
Homeloans.com.au Pty Ltd2
Housing Financial Services Pty Ltd
Mortgage lender
Mortgage originator
Australia
Australia
1 Deregistered on 11 May 2022.
2 Homeloans Pty Ltd changed its company name to Homeloans.com.au Pty Ltd on 15 August 2020.
100
100
-
100
99.9
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
99.9
100
100
100
100
100
100
100
100
100
100
100
NAME OF SUBSIDIARY (cont'd)
Principal activity
Controlled companies
PROPORTION OF OWNERSHIP
INTEREST HELD & VOTING
POWER HELD BY THE GROUP
Place of
incorporation
and operation
FY22
%
FY21
%
Independent Mortgage Corporation Pty Ltd
Mortgage broker
Resimac Asset Finance Investments Pty Limited3
Holding company
Resimac Asset Finance Holdings Pty Limited3
Holding company
Resimac Asset Finance Pty Limited4
Asset finance originator and
manager
Evergreen Finance Company Pty Limited
Lender of record
Australia
Australia
Australia
Australia
Australia
RAF Structured Finance Pty Limited5
Consumer and commercial lending
Australia
SF Mortgage Pty Ltd
Lender of record
Australia
Parnell Road Funding No.1 Limited
Special purpose vehicle
New Zealand
Parnell Road Funding No.2 Limited
Special purpose vehicle
New Zealand
Prime Insurance Group Limited
RESIMAC Capital Markets Pty Ltd
LMI captive insurer
Trust manager
Bermuda
Australia
RESIMAC Financial Services Limited
NZ Holding company
New Zealand
RESIMAC Financial Securities Limited
NZ Trust manager and servicer
New Zealand
RESIMAC Home Loans Ltd
NZ Lender of record and trustee
New Zealand
RESIMAC Limited
Non-bank lender
Australia
RESIMAC NZ Home Loans Ltd
NZ Holding company
New Zealand
RESIMAC Premier Warehouse No.1 Pty LTD6
Unit Holder
RMC Fiduciary Services Pty Ltd7
RHG Mortgage Corporation Pty Ltd6
RHG Mortgage Securities Pty Ltd6
Mortgage trustee
Lender of record
Mortgage trustee
RHG Home Loan Pty Ltd
Mortgage Originator
The Servicing Company Pty Ltd
RESIMAC EST PTY LTD
0508 Home Loans Ltd
0800 Home Loans Ltd
Access Home Loans Pty Ltd8
Trust servicer
Initial Trustee
Dormant
Dormant
Dormant
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
New Zealand
Australia
100
-
-
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
-
-
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
-
-
100
100
100
100
100
100
3 Deregistered on 22 June 2022.
4 International Acceptance Pty Limited changed its company name to Resimac Asset Finance Pty Limited on 5 February 2021.
5 IA Structured Finance Pty Limited changed its company name to RAF Structured Finance Pty Limited on 6 February 2021.
6 Ownership interest is 0% however the Group have Board control.
7 Incorporated on 8 June 2022. Ownership interest is 0% however the Group have Board control.
8 Deregistered on 10 February 2022.
110
RESIMAC GROUP LTD
ANNUAL REPORT 2022
111
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
GROUP STRUCTURE
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
GROUP STRUCTURE
NAME OF SUBSIDIARY (cont'd)
Principal activity
PROPORTION OF OWNERSHIP
INTEREST HELD & VOTING
POWER HELD BY THE GROUP
Place of
incorporation
and operation
FY22
%
FY21
%
Controlled companies
Clarence St Funding No.5 Pty Ltd
Fiduciary Services Pty Ltd
National Mutual Pty Ltd
RESIMAC Financial Securitisation Ltd
RESIMAC Financial Services Pty Ltd
RESIMAC Leasing Pty Ltd
Homeloans Pty Ltd
Controlled trusts
Avoca Master Trust
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Australia
Australia
Australia
New Zealand
Australia
Australia
Australia
Issuer of RMBS
Australia
NZF Mortgages Warehouse A Trust
Warehouse mortgages
New Zealand
RESIMAC Bastille Master Trust9
RESIMAC Triomphe Master Trust9
Issuer of RMBS
Issuer of RMBS
Australia
Australia
RESIMAC Versailles Master Trust
Issuer of RMBS
New Zealand
RESIMAC Victoire Trust
Warehouse mortgages
New Zealand
RESIMAC Premier Series 2021-2
Issuer of RMBS
New Zealand
RMT Warehouse Trust No.29
Warehouse mortgages
RMT Securitisation Trust No.79
Issuer of RMBS
Australia
Australia
RMC Enhanced Income Fund10
Managed Investment Trust
Australia
RAF Trust11
Consumer and commercial lending
Australia
International Acceptance Trust
Consumer and commercial lending
Australia
The Trustee for the Resimac Group Limited Employee
Share Trust12
Employee share trust
Australia
99.9
99.9
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
100
-
Special purpose entities – securitised trusts and funding warehouses
Special purpose entities are those entities over which the group has no ownership interest but in effect the substance of the
relationship is such that the Group controls the entity so as to obtain the majority of the benefits from its operation.
The Group has established special purpose entities to support the specific funding needs of the Group’s securitisation
programme with the aim to:
conduct securitisation activities funded by short term warehouse facilities provided by reputable lenders; and
hold securitised assets and issue Residential Mortgage Backed Securities.
The special purpose entities meet the criteria of being controlled entities under AASB 10 – Consolidated Financial Statements.
25. Non-Controlling Interest (NCI)
NCI are measured initially at their proportionate share of the acquiree’s identifiable net assets at the date of acquisition.
Changes in the Group’s interest in subsidiary that do not result in a loss of control are accounted for as equity transactions.
In FY21, Resimac exercised the option to acquire the remaining 40% interest in RAF. Post this acquisition there were no
subsidiaries in the Group with any non-controlling interests.
9 This does not represent holding in capital units, percentage ownership represents control of these Trusts.
10 Incorporated on 30 March 2022
11 Incorporated on 8 June 2022.
12 Ownership interest is 0% however the Group have Board control.
112
RESIMAC GROUP LTD
ANNUAL REPORT 2022
113
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
UNRECOGNISED ITEMS
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OTHER
Notes to the consolidated
financial statements
Unrecognised items
for the year ended 30 June 2022
26. Commitments and contingencies
26.1. Capital commitments
The Directors were not aware of any capital commitments as at the end of the financial year or arising since balance date
26.2. Contingent liabilities
Lease guarantees
The Group has provided guarantees in respect of the leases over its premises of $992,600 (FY21: $992,600). The Directors were
not aware of any other contingent liabilities as at the end of the financial year or arising since balance date.
27. Subsequent events
27.1. Final dividend declared
The Board of Resimac Group Ltd declared a fully-franked final dividend of $0.04 per share. The record date will be 9 September
2022. The payment date will be 23 September 2022. The dividend has not been provided for in this financial report.
27.2. Investment in 23 Degrees Capital Partners Pty Ltd
On 1 August 2022, Resimac exercised the option to acquire a controlling stake in 23 Degrees Capital Partners Pty Ltd (operating
as Sonder) for a purchase consideration of $0.9 million, increasing Resimac’s interest in 23 Degrees Capital Partners Pty Ltd to
51%.
Other than the above, there have been no circumstances arising since 30 June 2022 that have significantly affected or may
significantly affect:
(a) The operations
(b) The results of those operations, or
(c) The state of affairs of Group in future financial years.
Other
for the year ended 30 June 2022
28. Auditor’s remuneration
Deloitte Touche Tohmatsu
Audit or review of financial reports
Group
Subsidiaries
FY22
$
FY21
$
307,757
347,000
705,219
600,899
1,012,976
947,899
Statutory assurance services required by legislation to be provided by the auditor
95,120
64,000
Other assurance and agreed-upon procedures under other legislation or contractual
arrangements
218,246
226,000
Other services
Tax consulting services
Other consulting services
3,990
-
3,990
38,850
9,550
48,400
TOTAL REMUNERATION OF DELOITTE TOUCHE TOHMATSU
1,330,332
1,286,299
Non Deloitte Touche Tohmatsu audit firms
Audit or review of financial reports
Subsidiaries
Statutory assurance services required by legislation to be provided by the auditor
Other services
Tax compliance services
Tax consulting services
-
-
14,000
6,000
172,452
173,344
44,246
62,531
TOTAL REMUNERATION OF NON DELOITTE TOUCHE TOHMATSU AUDIT FIRMS
216,698
255,875
114
RESIMAC GROUP LTD
ANNUAL REPORT 2022
115
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OTHER
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OTHER
28.1. Non-audit services
The auditor of the Group is Deloitte Touche Tohmatsu (Deloitte). It is the Group’s policy to employ Deloitte on assignments
additional to its statutory audit duties, in compliance with the Group’s independence policies, where Deloitte’s expertise and
experience with the Group are important.
Amounts owed by related parties are secured and will be settled in cash. No guarantees have been given or received. No
expense has been recognised in the current or prior years for bad or doubtful debts in respect of the amount owed by related
parties.
The total non-audit services fees of $222,236 represents 16.7% of the total fees paid or payable to Deloitte and related
practices for the year ended 30 June 2022 (FY21: $274,400).
Compensation of KMP
The remuneration disclosures of Directors and other members of KMP during the year are provided in sections 1 to 9 of the
remuneration report on pages 28 to 41 of this financial report designated as audited and forming part of the Directors’ report.
The remuneration disclosures are for Resimac KMP only as presented in the Remuneration report.
KMP Compensation
Short-term benefits
Post-employment benefits
Long-term benefits
Share-based payments
FY22
$
FY21
$
3,248,560
2,984,062
137,500
125,000
71,614
32,208
413,239
413,239
3,870,913
3,554,509
The remuneration of Directors and KMP is determined by the Remuneration and Nomination Committee having regard to the
performance of individuals and market trends.
29. Related party transactions
Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been
eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related
parties are disclosed below.
During the year, the Group entered into the following transaction with a related party that is not a member of the Group:
REVENUE RECEIVED
EXPENSES PAID
FY22
$'000
FY21
$'000
FY22
$'000
FY21
$'000
Director’s related entity 1
-
-
-
-
2,000
2,000
1 Professional Indemnity and Directors & Officers Liability insurance premiums paid to General Provincial Insurance Ltd.. This insurance policy was entered into at
commercial arms length terms.
Sales to related parties occur at arm’s length on commercial terms in the ordinary course of business in accordance with the
terms and conditions outlined in the relevant commercial agreements with each party.
The following balances were outstanding at the end of the reporting period:
AMOUNTS OWED BY
RELATED PARTIES
AMOUNTS OWED TO
RELATED PARTIES
FY22
$'000
FY21
$'000
FY22
$'000
FY21
$'000
Other related parties of Resimac Group Ltd1
17,806
17,806
13,421
13,421
-
-
1 Includes residential mortgages to KMP or related parties lent in ordinary course of business at arm’s lengths.
-
-
-
-
116
RESIMAC GROUP LTD
ANNUAL REPORT 2022
117
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OTHER
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OTHER
30. Parent disclosures
The parent company of the Group, as at and throughout the financial year ended 30 June 2022, was Resimac Group Ltd.
Presented below is supplementary information about the parent entity.
STATEMENT OF FINANCIAL POSITION
FY22
$'000
FY21
$'000
Assets
Current
Non-current
Liabilities
Current
Non-current
NET ASSETS
Equity
Issued capital
Reserves
Accumulated losses
Attributable to members of the parent:
Profit after tax
Total comprehensive income for the period
14,837
37,127
456,856
311,635
471,693
348,762
9,027
37,309
46,336
27,602
46,047
73,649
425,357
275,113
185,646
183,853
1,347
876
238,364
90,384
425,357
275,113
180,658
149,753
180,658
149,753
30.1. Guarantees, contingent liabilities and contingent assets
At 30 June 2022, there are no financial guarantees, contingent assets or contingent liabilities with respect to the parent
company. (FY21: Nil).
30.2. Accounting policies
The accounting policies of the parent entity, which have been applied in determining the financial information shown above, are
the same as those applied in the consolidated financial statements.
31. Share-based payments
31.1. Employee share option plan of the Company
The Company has a share option scheme (pursuant to
the Resimac Group Ltd Employee Share Option and
Rights Plan) for senior employees of the Company. In
accordance with the terms of the Plan, as approved
by shareholders at the 2017 Annual General Meeting,
senior employees may be granted options to purchase
ordinary shares.
Each employee share option converts into one ordinary
share of the Company on exercise. No amounts are paid
or payable by the recipient on receipt of the option.
The options carry neither rights to dividends nor voting
rights. Options may be exercised at any time from the
date of vesting to the date of their expiry.
Long-Term Incentive (LTI#1) Share Options - CEOs
Resimac offered the joint CEOs Scott McWilliam and
Mary Ploughman (ceased employment on 17 July 2019)
the opportunity to purchase 1,800,000 share options
vesting in three equal tranches on each anniversary of
the grant date. The options were granted on 18 August
2017 and all options vest within 12 months, 24 months
and 36 months of respective grant date associated with
each tranche. The options expire within 36 months of
their vesting, or one month after resignation, whichever
is the earlier. The sole vesting condition of the options is
to remain employed with the Company to the respective
vesting date associated with each tranche.
The tranche 3 shares for Mary Ploughman expired due
to her cessation of employment on 17 July 2019. The
expiry dates of her tranche 1 and 2 were revised to 17
July 2020 by the Board.
Long-Term Incentive (LTI#2) Share Options – CEO and
General Managers (GMs)
Under the Group’s LTI share options and rights plan, the
CEO and GMs receive options over ordinary shares and
a potential cash component of $2.4 million. The options
were granted on 15 August 2019 and the vesting date
for all options is 31 August 2022, subject to the Group
achieving Net Profit After Tax (NPAT) growth hurdles,
digital transformation hurdles, compliance hurdles and
remaining employed with the Group until the vesting
date.
The LTI#1 and LTI#2 are administered by The Trustee
for the Resimac Group Limited Employee Share Trust.
The trust is consolidated in accordance with Note 24.
The trustee subscribes for the shares issued by the
Group and allocates to the employees on exercise of
options.
Shares held by the trust and not yet allocated to
employees at the end of the reporting period are shown
as treasury shares in the financial statements.
During the financial year ended 30 June 2022, 2,784,560
(FY21: 540,000) Resimac shares were purchased on-
market at an average price of $1.48 per share (FY21:
$2.47), for a total consideration of $4,118,335 (FY21:
$1,336,233), to satisfy employee entitlements pursuant
to the LTI#1, LTI#2 and ESP.
The fair value of share options under LTI#1 and LTI#2
is recognised as an employee benefits expense with a
corresponding increase in equity. The total expense is
recognised over the vesting period, which is the period
over which all of the specified vesting conditions are
to be satisfied. At the end of each period, the Group
revises its estimates of the number of options that are
expected to vest based on the non-market vesting
and service conditions. It recognises the impact of the
revision to original estimates, if any, in the consolidated
statement of profit or loss with a corresponding
adjustment to equity.
The fair value of the amounts payable to CEO and
GMs in respect of cash component is recognised as
an expense with a corresponding increase in liabilities,
over the vesting period. The liabilities are remeasured
to fair value at each reporting date and are presented
as employee benefit obligations in the consolidated
statement of financial position.
Employee Share Plan (ESP)
The Group commenced the Resimac Group Employee
Share Scheme (ESS) in March 2021 whereby each
financial year eligible employees are offered up to
$1,000 worth of fully paid Resimac ordinary shares for no
cash consideration.
Shares allocated under the ESS cannot be sold until the
earlier of three years after allocation or the time when
the participant is no longer employed by the Group. The
first offer under the ESS was made on 12 April 2021.
The second offer under the ESS was made during the
current financial year on 22 October 2021. A total of
190 (FY21: 191) staff participated in this offer. The
participants were each allocated 524 (FY21: 458) fully
allocated shares based on the offer amount of $1,000
and the 5 day volume weighted average price (VWAP)
of $1.9065 (FY21: $2.18), resulting in a total of 99,560
(FY21: 87,478) shares being allocated. The shares
were allocated to staff for no cash consideration. For
the financial year ended 30 June 2022, share-based
payment expense relating to the ESS totalled $183,190
(FY21: $187,203).
118
RESIMAC GROUP LTD
ANNUAL REPORT 2022
119
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OTHER
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OTHER
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120
RESIMAC GROUP LTD
ANNUAL REPORT 2022
121
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OTHER
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OTHER
31.3. Movements in share options during the period
The following reconciles the share options outstanding at the beginning and the end of the period:
Number of
LTI options
LTI#1
Number of
LTI options
LTI#2
Number
of ESP
options
Number
of options
Total
Weighted
average
fair value $
LTI#1
Weighted
average
fair value $
LTI#2
Weighted
average fair
value $
ESP
Unvested options at 1 July 2021
-
3,525,000
Vested options at 1 July 2021
600,000
-
OPTIONS HELD AT 1 JULY 2021
600,000
3,525,000
-
-
-
600,000
4,125,000
0.09
0.09
3,525,000
-
0.20
Granted during the year
-
Exercised during the year
(300,000)
-
-
99,560
99,560
-
(99,560)
(399,560)
0.55
Unvested options at 30 June 2022
-
3,525,000
Vested options at 30 June 2022
300,000
-
OPTIONS HELD AT 30 JUNE 2022
300,000
3,525,000
-
-
-
3,525,000
-
0.20
300,000
0.09
-
3,825,000
0.09
0.20
-
0.20
-
-
-
-
-
1.84
1.84
-
-
-
31.4. Share options exercised during the period
The Trustee for the Resimac Group Limited Employee Share Trust acquired 300,000 and 99,560 fully paid ordinary shares on-
market at an average price of $2.47 per share and $1.93 per share, respectively. The 300,000 shares acquired by the trustee
were allocated to Scott McWilliam on his exercise of LTI#1 tranche 2 share options on 16 September 2021 and the 99,560
shares are held in the Trust on behalf of the employees under the ESP.
32. Other accounting policies
32.1. Application of new and revised accounting
standards
The Group has applied the required amendments to
Standards and Interpretations that are relevant to its
operations and effective for the current reporting period
for the first time for the financial year commencing 1 July
2021.
IBOR Benchmark Reform: Transition from inter-bank
offered rates (IBOR) to alternative reference rates (ARRs)
The UK Financial Conduct Authority announced that all
LIBOR settings will either cease to be published by any
administrator or will no longer be representative at a
specified future date. Specifically, 1-month USD LIBOR
will cease to be published after 30 June 2023, and all USD
LIBOR-linked contracts must transition to replacement
risk-free rates.
The Alternative Reference Rates Committee (“ARRC”) of
the Federal Reserve Bank of New York has selected SOFR
as the replacement for LIBOR. Resimac has adopted the
ARRC-recommended LIBOR fallback language in USD
transactions completed since 2019.
In line with pronouncements from regulators and its recent
USD transactions, Resimac amended all outstanding USD
transactions completed prior to 2019 by incorporating the
ARRC-recommended LIBOR fallback language in the USD
note conditions.
ARRC-recommended LIBOR fallback language
Under the ARRC fallback language adopted by Resimac:
USD LIBOR will be replaced as the benchmark for USD
Notes using Term SOFR, which is expected to be a
similar forward-looking term rate to USD LIBOR.
RMBS and Derivative Amendments
Based on discussions with US dealers, Resimac
understands that incorporating the ARRC
recommended LIBOR fallback language is consistent
with the requirements of US RMBS investors. Resimac
is therefore of the view that the amendments are
desirable and not materially prejudicial to the Class A1
Noteholders and US RMBS investors and have made
modifications to the benchmark language in its RMBS
transactions and any associated derivative contract.
AASB 2020-8 Amendment to Australian Accounting
Standards
The Group has adopted AASB 2020-8 Amendments
to Australian Accounting Standards – Interest Rate
Benchmark Reform – Phase 2 which came into effect
for financial reporting period beginning on or after 1
January 2021and made amendments to standards
including AASB 9 Financial Instruments and AASB 16
Leases to address accounting issues following the
transition to ARRC. The amendment provides practical
expedients to account for changes in the basis for
determining contractual cash flows as a result of IBOR
reform under AASB 9 and AASB 16. It provides additional
temporary reliefs from applying specific hedge
accounting requirements to hedging relationships
that are directly affected by IBOR reform and require
additional quantitative and qualitative disclosures.
Based on management’s assessment as above, the
impact of adopting the amendments were materially
consistent with how the Group accounts for financial
instruments which have qualified for hedge accounting.
Other amendments made to existing standards
Other amendments made to existing standards that
were mandatorily effective for the financial year
commencing 1 July 2021 did not have any material
impact on the disclosures or on the amounts recognised
in the consolidated financial statements.
32.2. New and revised accounting standards and
interpretations on issue but not yet effective
Certain new accounting standards and interpretations
have been published that are not mandatory for 30
June 2022 reporting periods and have not been early
adopted by the Group. The Group’s assessment of the
impact of these new standards and interpretations is set
out below. These standards are not expected to have
a material impact on the financial statements of the
Group in future periods.
Effective
for annual
reporting
periods
beginning on
or after
1 July 2022
1 July 2023
1 July 2023
1 July 2023
Standard / Amendment
AASB 2020-3 Amendments to
Australian Accounting Standards –
Annual Improvements 2018-2020
and Other Amendments AASB
AASB 2020-1 Amendments to
Australian Accounting Standards
– Classification of Liabilities as
Current or Non-current
AASB 2021-2 Amendments to
Australian Accounting Standards –
Disclosure of Accounting Policies
and Definition of Accounting
Estimates
AASB 2021-5 Amendments to
Australian Accounting Standards
– Deferred Tax related to Assets
and Liabilities arising from a Single
Transaction
The standards and interpretations listed above are not
expected to have a material impact on financial results
or financial position on adoption.
32.3. Goods and services tax (GST)
Revenues, expenses and assets are recognised net of
the amount of GST except:
where the GST incurred on a purchase of goods
and services is not recoverable from the taxation
authority, in which case the GST is recognised as part
of the costs of acquisition of the asset or as part of
the expense item as applicable; and
receivables and payables which are stated with the
amount of GST included.
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables
or payables in the statement of financial position.
Cash flows are included in the statement of cash flows
on a gross basis and the GST component of cash flows
arising from investing and financing activities, which is
recoverable from, or payable to, the taxation authority is
classified as operating cash flows.
Commitments and contingencies are disclosed net of
the amount of GST recoverable from, or payable to, the
taxation authority.
122
RESIMAC GROUP LTD
ANNUAL REPORT 2022
123
| DIRECTORS' DECLARATION
| INDEPENDENT AUDITOR'S DECLARATION
RESIMAC GROUP LTD & ITS CONTROLLED ENTITIES
Directors'
declaration
Resimac Group Ltd
and its controlled entities
The Directors declare that:
a.
in the Directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when
they become due and payable;
b.
in the Directors’ opinion, the attached financial statements are in compliance with Australian Accounting Standards as
stated in the financial statements;
c.
in the Directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations
Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and
performance of the consolidated entity and the company; and
d.
the Directors have been given the declarations required by s295.A of the Corporations Act 2001.
Signed in accordance with a resolution of the Directors pursuant to s295(5) of the Corporations Act 2001.
On behalf of the Directors
Warren McLeland
Chairman
Sydney
25 August 2022
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1220 Australia
Tel: +61 2 9322 7000
Fax: +61 2 9322 7001
www.deloitte.com.au
The Board of Directors
Heather Baister
Partner
Chartered Accountants
25 August 2022
Dear Board Members,
Auditor’s Independence Declaration to Resimac Group Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the
following declaration of independence to the directors of Resimac Group Limited and its
controlled entities.
As lead audit partner for the audit of the financial report of Resimac for the year ended 30
June 2022, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation
to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
Heather Baister
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
124
RESIMAC GROUP LTD
ANNUAL REPORT 2022
125
| INDEPENDENT AUDITOR'S REPORT
RESIMAC GROUP LTD & ITS CONTROLLED ENTITIES
| INDEPENDENT AUDITOR'S REPORT
RESIMAC GROUP LTD & ITS CONTROLLED ENTITIES
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1220 Australia
Tel: +61 2 9322 7000
Fax: +61 2 9322 7001
www.deloitte.com.au
IInnddeeppeennddeenntt AAuuddiittoorr’’ss RReeppoorrtt ttoo tthhee MMeemmbbeerrss ooff RReessiimmaacc GGrroouupp LLiimmiitteedd
RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
Opinion
We have audited the financial report of Resimac Group Limited (the “Company”) and its subsidiaries (the
“Group”) which comprises the consolidated statement of financial position as at 30 June 2022, the consolidated
statement of profit or loss, the consolidated statement of comprehensive income, the consolidated statement of
changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the
financial statements, including a summary of significant accounting policies and other explanatory information,
and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
• Giving a true and fair view of the Group’s financial position as at 30 June 2022 and of their financial
performance for the year then ended; and
• Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of
our report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are
relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report for the current period. These matters were addressed in the context of our audit of the
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
KKeeyy AAuuddiitt MMaatttteerr
HHooww tthhee ssccooppee ooff oouurr aauuddiitt rreessppoonnddeedd ttoo tthhee KKeeyy AAuuddiitt
MMaatttteerr
IImmppaaiirrmmeenntt ooff llooaannss aanndd aaddvvaanncceess
Our procedures
included, but were not limited to:
in conjunction with our specialists
As at 30 June 2022, the Group has recognised
provisions amounting to $47.0m for impairment
losses on loans and advances held at amortised
cost in accordance with the Expected Credit Loss
(ECL) approach required under AASB 9 Financial
Instruments as disclosed in Note 6, 22 and 23.
Loans and advances subject to provisioning using
the ECL model include the residential lending
loans
portfolio, asset finance portfolio and
approved but not yet advanced.
Significant management
judgement was
necessary in determining expected credit losses,
including:
•
•
The application of the requirements of
AASB 9 as reflected in the Group’s ECL
model particularly in light of the current
economic environment and the impacts
on the mortgage industry subsequent to
COVID-19;
The identification of exposures with a
significant movement in credit quality to
determine whether 12-month or lifetime
ECL should be recognised; and
the
financial condition of
• Assumptions used in the ECL model such
as
the
counterparty, repayment capacity and
forward-looking macroeconomic factors
as disclosed in Note 6, 22 and 23
Testing the design and
controls over the impairment provision including:
implementation of relevant
-
-
-
in the ECL
inputs used
The accuracy of data
calculation;
The selection and application of assumptions used in
the model; and
The ongoing monitoring and identification of loans
displaying indicators of impairment and whether they
are migrating on a timely basis to appropriate stages
in accordance with AASB 9.
AAsssseessssiinngg iimmppaaiirrmmeenntt mmooddeell aaddeeqquuaaccyy
We assessed the adequacy and completeness of
management’s internally developed model in
determining the impairment loss provision. Our
procedures included, but were not limited to:
• Assessing whether management’s model
•
•
adequately addresses the requirements of the
relevant accounting standard;
Evaluating management’s assessment of the
impact of COVID-19 and the changing economic
environment on the loan portfolio and as a
result, the ECL;
Testing on a sample basis, individual exposures
to assess if they are classified into appropriate
default stages and aging buckets for the
purpose of determining the impairment loss
provision;
• Assessing reasonableness of assumptions
driving Probabilities of Default (PD), Loss Given
Default (LGD) and Exposure at Default (EAD);
and
• Assessing reasonableness of management
overlays to the modelled collective provision by
recalculating the coverage provided by the
collective impairment provision (including
overlays) to the loan book, taking into account
recent history, performance and a range of
economic factors that could impact the relevant
portfolios.
We also assessed appropriateness of the disclosures in
Note 6, 22 and 23 to the financial statements.
126
RESIMAC GROUP LTD
ANNUAL REPORT 2022
127
| INDEPENDENT AUDITOR'S REPORT
RESIMAC GROUP LTD & ITS CONTROLLED ENTITIES
| INDEPENDENT AUDITOR'S REPORT
RESIMAC GROUP LTD & ITS CONTROLLED ENTITIES
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 2022 but does not include the financial report and our
auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not
express any form of assurance conclusion thereon. In connection with our audit of the financial report, our
responsibility is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial report, or our knowledge obtained in the audit, or otherwise appears to
be materially misstated. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report in this
regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the
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 aud it
and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards
applied.
From the matters communicated with the directors, we determine those matters that were of most significance
in the audit of the financial report of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 28 to 41 of the Directors’ Report for the year ended
30 June 2022.
In our opinion, the Remuneration Report of Resimac Group Limited, for the year ended 30 June 2022, complies
with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
DELOITTE TOUCHE TOHMATSU
Heather Baister
Partner
Chartered Accountants
Sydney, 25 August 2022
128
RESIMAC GROUP LTD
ANNUAL REPORT 2022
129
| SHAREHOLDER INFORMATION
| SHAREHOLDER INFORMATION
Shareholder
information
d. Substantial shareholders
The names of the substantial shareholders of the Company and the number of equity securities in which they have a relevant
interest as disclosed in substantial shareholding notices given to the Company are set out below:
SHAREHOLDER
Somers Limited, ICM Limited, UIL Limited, Permanent Investments Limited,
Somers Isles Private Trustee Company Limited, and each other entity controlled
by Duncan Saville
254,468,487
62.48
No. of shares
%
Additional information required by the ASX and not disclosed elsewhere in this report is set out below. The information is
current as at 23 September 2022.
Opting in for electronic communication: Only 40% of our shareholders have opted in to receive electronic communications.
Consistent with our Carbon Conscious initiative and our commitment to reduce paper consumption, we encourage more
shareholders to opt-in for electronic communications.
e. Twenty largest shareholders
The 20 largest shareholders of ordinary shares on the Company's register at 23 September 2022 were:
a. Number of holders of equity securities
Ordinary Share Capital: 405,746,979 paid ordinary shares are held by 2,815 individual shareholders.
b. Voting rights
All issued ordinary shares carry one vote for each member present at the meeting on a show of hands and on a poll each
member is entitled to one vote for every ordinary share held.
c. Distribution of members and their holdings
The number of equity securities by size of holding is set out below:
SHAREHOLDER
JP Morgan Nominees Australia Pty Limited
HSBC Custody Nominees (Australia) Limited
Redbrook Nominees Pty Ltd
Motrose Pty Ltd
Warren John McLeland
National Nominees Limited
Total holders
Units
% Units
Moat Investments Pty Ltd (Moat Investment A/C)
Hartley Phillips Securities Pty Ltd (Hartley Phillips Inv Tst A/C)
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
764
983
358
595
115
388,268
2,608,932
2,758,109
18,965,342
381,026,328
2,815
405,746,979
0.10
0.64
0.68
4.67
93.91
100.00
UNMARKETABLE PARCELS
Minimum $500.00 parcel at $0.9850 per unit
508
450
128,086
Minimum parcel size
Holders
Units
Citicorp Nominees Pty Limited
Westpac Banking Corporation
Resimac EST Pty Ltd (Resimac Group EST A/C)
Acres Holdings Pty Ltd
Mr Scott Bruce Charles McWilliam
RSJSDS Pty Ltd (Salmon Super Fund A/C)
High Pass Holdings Pty Ltd (High Pass Hldgs P/L Sup A/C)
Ralph Lauren 57 Pty Ltd (John James No 2 A/C)
Mast Financial Pty Ltd (A to Z Investment A/C)
Alady Super Pty Ltd (Alady Super Fund A/C)
Esselmont Pty Ltd (The Esselmont A/C)
Gliocas Investments Pty Ltd (Gliocas Growth Fund A/C)
No. of shares
%
186,498,454
86,363,543
15,704,430
14,500,000
11,920,138
9,851,597
5,031,373
4,308,571
2,892,943
2,493,130
2,140,000
1,496,881
1,450,000
1,350,000
1,191,687
1,073,600
1,068,558
1,067,631
989,749
987,550
45.96
21.29
3.87
3.57
2.94
2.43
1.24
1.06
0.71
0.61
0.53
0.37
0.36
0.33
0.29
0.26
0.26
0.26
0.24
0.24
130
RESIMAC GROUP LTD
ANNUAL REPORT 2022
131
TOTAL
352,379,835
86.82
| MANAGING YOUR SHAREHOLDING
| CORPORATE INFORMATION
Corporate
information
Registered office and Corporate office
Level 9, 45 Clarence Street, Sydney NSW 2000
p +61 2 9248 0300
e info@resimac.com.au
w resimac.com.au
Customer enquiries: 13 38 39
Non-Executive Directors
Warren McLeland, Chairman
Susan Hansen
Duncan Saville
Wayne Spanner
Caroline Waldron
Company Secretary
Peter Fitzpatrick
Share registry
Computershare Investor Services Pty Limited
Managing your
shareholding
The Company’s share registry is managed by
Computershare Investor Services Pty Limited
(Computershare).
The Investor Centre website is the fastest, easiest
and most convenient way to view and manage your
shareholding. Investor Centre enables a shareholder to:
view the Company share price;
change your banking details;
change your address (for non-CHESS sponsored
holdings);
update your dividend instruction;
update your Tax File Number (TFN), Australian Business
Number (ABN) or exemption;
select your email and communication preferences; and
view your transaction history.
When communicating with Computershare or accessing
your holding online you will need your Securityholder
Reference Number (SRN) or Holder Identification Number
(HIN) as shown on your Issuer Sponsored / CHESS
statements.
You can also contact Computershare by:
Address
Level 3, 60 Carrington Street, Sydney NSW 2000
p 1300 850 505
e web.queries@computershare.com.au
w investorcentre.com.au
Tax file number
While it is not compulsory to provide a Tax File Number
(‘TFN’), if shareholders have not provided a TFN and
Resimac pays an unfranked or partly franked dividend, the
Company will be required to deduct tax from the unfranked
portion of the dividend at the top marginal rate plus the
Medicare Levy.
Information on Resimac Group
Resimac Group website
Up-to-date information on the Company can be obtained from the Company's website: resimac.com.au
Securities exchange listing
The Company’s shares are listed on the Australian Securities Exchange (ASX) and the Home Exchange is Sydney. Ordinary
shares are traded under the code, ASX: RMC.
Share prices can be accessed from major Australian newspapers, the Resimac Group website or at: asx.com.au
132
RESIMAC GROUP LTD
ABN 55 095 034 003
Australian Credit Licence 247829
ASX: RMC
To view the 2022 Annual Report, Shareholder
and Company information, new announcements,
background information on Resimac Group
businesses and historical information, visit the
Resimac website at resimac.com.au
Resimac Group Ltd
Level 9, 45 Clarence Street
Sydney NSW 2000
p
e
w
+61 2 9248 0300
info@resimac.com.au
resimac.com.au
ABN 55 095 034 003
Australian Credit Licence 247829
ASX: RMC