Growth and
Diversification
Annual Report 2015
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IBC
Contents
Growth and Diversification
Results & Highlights
Chair’s Report
Managing Director’s Report
Our Businesses
Consumer Leasing
Consumer Finance
Commercial Finance
Receivables Management
Addressing Financial Exclusion
The Community
Our People
Financial Report
Corporate Directory
Notice of meeting
Notice is hereby given that the
Annual General Meeting will be held
at KPMG Auditorium, Ground Floor,
10 Shelley Street, Sydney NSW,
commencing at 11.00am on
Tuesday 18th August 2015.
Growth and
Diversification
From origins in 1937, Thorn has
become one of Australia’s leading
financial service providers, offering
a broad range of financial solutions
to meet a growing demand of niche
consumer and commercial markets.
Underlying this positioning is Thorn’s
commitment to giving customers
a ‘fair go’.
Thorn’s foundation business, Radio Rentals1 remains a leader
in consumer leasing with 90 outlets nationally and a unique
Rent-Try-$1Buy offering. Over the past few years, Thorn has
invested in diversification, establishing broader business
capability in consumer finance, commercial finance and
receivables management.
Thorn’s business strategy is to extend its range of financial
services, targeting a wider demographic and reaching out
to small businesses so it can meet the needs of many more
Australians. Benefits from this strategy are now becoming
apparent as Thorn records improved financial performance,
higher revenue, strong receivables growth, increased
shareholder value and a growing band of satisfied customers.
1 RR – Rentlo Reinvented in South Australia
Annual Report 2015
1
Results & Highlights
REVENUE
($m)
UNDERLYING CASH NPAT
($m)
GROSS RECEIVABLES
($m)
EPS
& DIVIDENDS
(cents)
300
250
200
150
100
50
0
293.8
35
30
25
20
15
10
5
0
34.20
400
350
300
250
200
150
100
50
0
368.7
25
20
15
10
5
0
’11
’12
’13
’14
’15
’11
’12
’13
’14
’15
’11
’12
’13
’14
’15
’11
’12
’13
’14
’15
Commercial Leasing
Consumer Leasing
Consumer Rentals
Basic Earnings Per Share
Dividends Paid Per Share
FINANCIAL HIGHLIGHTS
REVENUE
$293.8M
UP
25.1%
GROUP RECEIVABLES UP TO
68.1%
$368.7M
UNDERLYING CASH NPAT
UP
$34.2M
13.6%
ROE
RETURN ON EQUITY1
18.9%
REPORTED NPAT
$30.6M
UP
8.5%
FULL YEAR, FULLY
FRANKED DIVIDEND
11.75¢
PER SHARE
OPERATIONAL HIGHLIGHTS
• Record installations and earnings in consumer leasing
• Consumer finance building receivables strongly across all loan products
• Significant organic growth in commercial finance
• Strategic acquisition of cash resources australia
• Diversification strategy producing higher results and strong receivables growth
2 Thorn Group
1 ROE is calculated as Underlying Cash NPAT divided by the average of
opening and closing equity
Chair’s Report
In this my first year as Chair of Thorn, it is pleasing to report
a positive financial performance for financial year 2015. Group
revenue increased 25.1 per cent, growing from $234.9 million
(2014) to $293.8 million (2015) and underlying cash net profit
after tax was up 13.6 per cent from $30.1 million to $34.2
million. The reported net profit after tax (NPAT) increased
by 8.5 per cent from $28.2 million to $30.6 million with the
principal difference between underlying and reported NPAT
being one-off costs of $2.235 million relating to the acquisition
of the Cash Resources Australia business.
These results are the outcome of Thorn adopting a strategic
approach to its financial services markets. The group already
has a strong position in consumer markets, based on the
Radio Rentals business with origins nearly 80 years ago, and
over recent years continues to build an increasing share in the
commercial sector. This strategy has contributed to improved
financial performance, achieved from a combination of organic
growth and acquisition.
Dividend
Improved financial results enabled the board to increase
the final dividend to 6.75 cents a share, taking the 2015 full
financial year dividend to 11.75 cents a share fully franked
compared with 11 cents for financial year 2014. With reported
earnings per share at 20.34 cents, this dividend represents
a payout ratio of 58 per cent in line with Thorn’s policy of
allowing shareholders to participate in the benefits of growth.
Our dividend reinvestment plan will remain in place for this
dividend at the increased discount of 5 per cent.
Board
In Thorn’s market place developments in financial services
and technology globally, as well as locally, will impact on the
company. To ensure Thorn has expertise and appropriate
skills mix at board level to help forge a path through emerging
trends, two new appointments enhance our capability.
On 1 December 2014 David Foster joined the board after
a 25 year career in financial services, the last five years as
chief executive officer of Suncorp Bank, Australia’s fifth
largest listed bank and the country’s only “A+” rated regional
bank. During his 11 year career at Suncorp Bank, Mr Foster
had responsibility for developing the bank’s strategy and
business model, acquisitions, product development and
implementation of a significant technology platform.
On joining the board Mr Foster was appointed chair
of Thorn’s audit, risk and compliance committee.
On 1 June of this year Andrew Stevens was appointed a
director after 30 years’ experience in business and technology,
including regional markets. His 12 year career at IBM included
Managing Director of Australia and New Zealand for three
years, and Managing Partner, Global Business Services
and Growth Markets across the APAC region. As IBM ANZ
Managing Director, Mr Stevens was involved in transforming
the IBM business and client relationships for the Cloud-based
market era.
Corporate Governance
Thorn’s board is committed to ongoing creation of shareholder
value and meeting the expectations of Thorn’s stakeholders
while practising sound corporate governance. The financial
section of this annual report outlines all aspects of the
corporate governance and remuneration policies.
People
On behalf of the board, I would like to commend Thorn’s
Managing Director, James Marshall, on his first full year in
the position. He is committed and has recorded significant
achievements during a period of transformation for the
company and reinforced Thorn’s positioning for future growth
and financial success.
Thorn is very fortunate to have a strong group of senior
executives and staff who are passionate about the business
and dedicated to giving our customers positive experiences.
We acknowledge and thank our staff for their effort and
commitment which was a major factor in this year’s success.
I would also like to thank our shareholders for their support
and trust their investment will continue to be long term and
rewarding.
Joycelyn Morton
Chair
Annual Report 2015
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Managing Director’s Report
“ Thorn’s principal purpose is to give
consumers and SMEs a ‘fair go’ in
accessing goods and financial services.”
Since being appointed Managing Director in
April 2014, it has been very satisfying to see
the level of growth across our businesses and
evidence of our business strategy delivering
results. Essentially our strategy is to develop
our established business of consumer leasing
while diversifying within the financial services
sector to provide a broader base of earnings.
Thorn’s consumer leasing business has an enviable track
record, with Radio Rentals established nearly 80 years ago.
It is still an important component of our operations but it
is noteworthy that our other businesses are fast growing
and increasing their earnings contribution to the Group. This
trend will be more pronounced in coming years, especially
given the strong growth of our Commercial Finance business
and contribution from the recently acquired invoice
discounting business, Cash Resources Australia.
This performance trend illustrates the initiatives we are
implementing to support our diversification program – a
combination of organic growth and acquisitions which add
value and complement existing businesses.
Financial performance
The financial outcomes of our business strategy are
encouraging, as demonstrated by our key performance
numbers - revenue up 25 per cent, profit up 14 per cent,
return on equity strong at 19 per cent, receivables up
68 per cent with reasonable gearing of 39 per cent, and fully
franked dividends increasing to 11.75 cents for the full year.
Our vision
Thorn’s vision is to become a leading provider of financial
services to niche consumer and commercial markets.
The Group is well structured to implement this through
its ‘4 Pillar Strategy’, being the four business divisions of
its operations. These are Consumer Leasing, Consumer
Finance, Commercial Finance and Receivables Management.
The performance of these divisions in FY15, their potential
for growth and our intent to foster their expansion,
are indicators of how we are working towards achieving
our vision.
Our operating priorities
As Thorn grows and pursues its diversification strategy, we
also have a number of operating priorities through which we
seek to align our business objectives with the interests of
our customers and employees. These are intended to ensure
that we perform successfully as an enterprise, are governed
responsibly, give emphasis to the needs of people and also
leave space to contribute to the world around us through
our corporate social responsibility initiatives.
As a business, Thorn competes with many service providers
and, while banks dominate large parts of the market,
they have left gaps, especially in meeting the needs of
consumers and small to medium sized businesses. For these
groups, Thorn is well placed to offer a broad range of viable
alternatives, as it helps households gain access to the goods
and services people need and assists businesses which
require equipment and cash flow solutions to grow and
keep their own customers satisfied. As Thorn broadens its
product range and expands its reach, it also meets its other
goal of providing a growing return to its shareholders.
“ Thorn is well placed to offer a broad range of viable
alternatives, as it helps households gain access to
the goods and services people need ”
4 Thorn Group
As a service provider, Thorn’s principal purpose is to give consumers and SMEs a ‘fair go’ in
accessing goods and financial services. Many of Thorn’s retail and business customers find they
are excluded from mainstream finance sources. Some don’t have a credit rating or credit card,
banks are not able to meet their needs and some financing alternatives are just too expensive.
In these markets, Thorn exists to give people and businesses a ‘fair go’ while also exercising its
responsible lending policy. Based on this policy, Thorn has an Australian Credit Licence and was
one of the first to be licensed in Australia when the National Consumer Credit Protection Act
2009 was introduced.
Placing its customers as a priority, Thorn tracks retention, satisfaction and feedback and
in achieving high ratings in all these categories, Thorn gains reinforcement for the way it is
meeting the needs of a large demographic nationally.
“ Thorn recognises the importance of instilling a culture
among its people which is focused on treating customers,
in consumer and commercial markets, responsibly and fairly. ”
As an employer, Thorn recognises the importance of instilling a culture among its people which
is focused on treating customers, in consumer and commercial markets, responsibly and fairly.
From this there are not only positive outcomes for customers but it is also the basis for making
people feel good about the work they do. The culture applies to those on the front line having
face-to-face contact with customers and also to those who deal with customers online and
help to manage their accounts. Some customers experience hardship, some like innovative and
sympathetic solutions when they need guidance about products or business needs and all of
them appreciate a personal touch when they are making financial decisions. With responsibility
and fairness being Thorn’s core values, we are developing a committed team across all
our businesses.
The Way Forward
In pursuing its vision and strategy, Thorn seeks to combine sound business performance
with meeting the needs of customers and employees as well as connecting with its local
communities. In the year ahead, Thorn expects to maintain sustainable growth. Of possible
assistance to this may be recent federal government incentives being provided to small and
medium sized businesses. Thorn expects its growing base of diversified receivables will be
the driving factor in continued growth.
James Marshall
Managing Director
Annual Report 2015
5
Our Businesses
CONSUMER LEASING
Radio Rentals, which also operates as RR - Rentlo Reinvented in South Australia,
provides an extensive range of essential household living and home office needs through
consumer leasing products, principally under the Rent, Try, $1Buy® banner. Radio
Rentals operates over 90 outlets nationally and has been a market leader since 1937.
Rent, Try, $1Buy® has become an industry icon enabling customers to enjoy the benefits and flexibility of rental
along with the potential to obtain ownership. In line with the group’s “responsible rental policy”, Radio Rentals
ensures all customers are provided with products that suit their needs and budget and are not over committed.
This aligns with the group’s ’fair go’ ethic through which credit decisions are based on customers’ capacity to
pay, rather than their credit history. The outcome of this enables more Australians to gain access to everyday
living essentials.
Thorn’s market research among customers continues to show high levels of satisfaction and repeat business.
Again in FY15, nearly half of Radio Rentals customers on completion of a contract signed up to take out a new
contract for another product.
TM
STRATEGIC INTENT
From its market leading position, Thorn
is looking to reach a wider and expanding
demographic, through trialling of new
propositions and an evolution of the brand.
Thorn has empowered its rental teams to embrace
innovation. This has included the trial of new products and
propositions including interest free, broadband plans and
cash loans as well as the planned trial of a savings club.
Thorn’s intent for its consumer leasing business is to be a
leading provider of essential household goods and financial
services to consumers who might find themselves excluded
from mainstream finance sources.
In FY15, Radio Rentals2 posted record installations,
with furniture and household essentials the most popular
categories. The launch of 48-month agreements has
had considerable success, with more customers now
choosing profitable longer term contracts that provide
affordable weekly payments for larger products and
whole room packages.
The Thorn-branded product range is expanding and now
includes a range of televisions and fridges, including the
recent addition of a French door fridge, as well as a smart
phone and tablet. Our experience with Thorn-branded
products has been very positive over the years, with them
being very popular with our customers and having a positive
effect on margins, supporting the business.
Key initiatives in the consumer leasing business include
a potential rebranding of Radio Rentals to reach a wider
demographic, the development of new propositions and
a second rental brand to increase market penetration
and improve asset utilisation.
STRATEGY
Develop
products and services
offered through the rental
network to grow customers
Evolve
core brand and introduce
new propositions to reach
a wider demographic
Improve
acquisition channels through store
model conversions, second brand
expansion, and website evolution
2 RR – Rentlo Reinvented in South Australia
6 Thorn Group
RADIO RENTALS EVOLUTION
As Thorn looks to reach a wider and expanding demographic,
trials of new propositions and branding have been implemented
and will be reviewed during the year.
Brand Evolution Trial
In April 2015, a brand evolution trial to attract a broader
demographic and customer base was launched and will
be reviewed throughout the year. The pilot includes eight
locations which have been rebranded from either Radio
Rentals or Rentlo to RR. Transitioning from a 78-year old
brand to a new one enables Thorn to maintain heritage
and history while launching new propositions, such as
broadband plans and interest free.
The “new generation” store fit outs include tech bars,
privacy booths and information screens.
Second Rental Brand Trial
A pilot second rental brand offering a “no lock-in” contract
and flexible rental solutions was launched in Brisbane in
December 2014 under the name Rentlo and will be reviewed
during the year.
The second brand is designed to take on competitors, gain
market share and benefit from asset utilisation.
This proposition is completely differentiated from Radio
Rentals, with points of difference including ’no lock-in’
contracts, predominantly re-rent stock on offer, and flexible
rent-to-rent contracts.
Initial findings show Rentlo is attracting a broad range
of customers with a situational need for rental products.
Customers are based in a wider geographic catchment
area than first anticipated, covering most of the
Brisbane footprint.
Even though the trial was only launched in December, the
brand is meeting expectations and the plan is to review at
the end of financial year 2016 with a view to further expand.
Annual Report 2015
7
OUR CUSTOMERS
MARY,
TASMANIA
Mary is a single mum from Tasmania. She has
been a loyal customer of Radio Rentals for
over 18 years. Radio Rentals is now helping
her children get the products they need for
their new families.
“Yes, I’ve been using Radio Rentals for 18 years now. The
first thing I got was a fridge. I used to only have second
hand stuff because that’s all I could afford. Radio Rentals
gave me the chance to own new things for the first time
and I am very grateful.
I was a single mum, I couldn’t work and I couldn’t save money
to afford to buy things upfront. It made it very challenging.
I started out with one thing then I could afford to rent another
and so on, I added a dining table and then a cabinet.
“ Without Radio Rentals I really
would have struggled. ”
The thing that really stands out about Radio Rentals is the
staff. They are friendly, never look down on you and are
always there to help with anything you need. It’s the only
store in Hobart where I know the staff by name. I’ll head in
there occasionally just for a chat and a joke. Jodie and Kellie
are great. Whenever I call up they do whatever they can
to help me.
“ I was a single mum, I couldn’t
work and I couldn’t save money
to afford to buy things upfront. ”
Radio Rentals is more than just a company they are there to
help, they give me advice and never push me to spend too
much. My two eldest kids now use Radio Rentals themselves.
Without Radio Rentals I really would have struggled,
I probably wouldn’t have all the great things I do now because
I just wouldn’t have been able to afford it. They’re just
fantastic.”
8 Thorn Group
DAVID &
FLIC, TASMANIA
David and Flic are a young couple from
Devonport. With a young family, they
struggled financially. Now, thanks to Radio
Rentals they have a successful small business
that continues to grow.
“We’re photographers, we do weddings, portraits, maternity
shoots, and we have five kids now so we are very busy. We
have been customers of Radio Rentals for about 14 years,
it’s grown with our business, and it’s grown with those guys
down in Devonport.
“ We really did have nothing and
they gave us the chance to get
the things we wanted. ”
They have been fantastic since we opened the business,
organising the equipment we needed, making sure we knew
what was available before we made any decisions and when
we asked them to track something down, nothing was ever
too much trouble.
We have a personal relationship with the staff in-store, Megan
and Marty, Leila and Kim, they are all great, some of them
are clients of ours now! We love having that relationship,
personally buying online is so impersonal, it’s so much better
being able to give them a call or go in the store and get an
answer straight away. It’s not just with the business either.
Recently, one of our kids was very sick and we needed a new
bunk bed. Within the day it was delivered to our house while
we were still at the hospital, they are just always fantastic.
When we started out, we were very young with two kids,
we had absolutely nothing.
Radio Rentals gave us the chance to prove we could get the
things we needed by working within our budget. We really
did have nothing and they gave us the chance to get the things
we wanted.
We love them.”
“ We have a personal relationship
with the staff in-store, Megan
and Marty, Leila and Kim, they
are all great. ”
To preserve privacy we have not used real customer photos
Annual Report 2015
9
Our Businesses
CONSUMER FINANCE
Thorn’s consumer finance business, provides consumers with access
to a broad range of personal loans through Thorn Money, which offers
unsecured loans up to $15,000 and secured loans up to $25,000; and
Cashfirst, which provides unsecured loans of between $500 and $5,000.
Expansion of the consumer finance business reflects Thorn’s ongoing research which indicates
there is increasing demand for these types of loans as they are not being met comprehensively
by other, larger finance providers.
Thorn has the capability to offer a broader range of loan products, which revolves around
the group’s skills to assess credit worthiness and make decisions quickly. Technology, systems
and ongoing staff training enable fast processing and quick decision making within company
lending guidelines.
STRATEGIC INTENT
The consumer finance business aims to provide niche
credit products to consumer markets overlooked by
major lenders.
The consumer lending sector is undergoing significant change, with
a number of technology start-ups beginning to populate the local
market and offering a new range of finance products.
Thorn believes its consumer finance business is well placed
to compete in this market and some of the initiatives carried
out in the past year include expansion of product offerings to
reach broader customer segments, refinement of the customer
proposition, development of the Cashfirst offer in-store, and
redesign of the Cashfirst website to improve customer experience.
Thorn is currently developing a comprehensive range of innovative
consumer finance products to match customer needs and
transform the customer experience, both online and in-store.
This includes further expansion of the product offering, technology
enhancements, introduction of paperless contracts and same day
loan funding.
STRATEGY
Diversify
and expand distribution to
grow sales volumes
Develop
operational efficiency to
deliver simplicity and speed
Improve
customer engagement and
transactional experience
10 Thorn Group
OUR CUSTOMERS
LINDA, SYDNEY
Linda is a mother of one who dedicated her time
to help keep kids off the street. Cashfirst has
helped her keep that dream alive.
“I’m a normal mum, I work full-time but my real passion
is the kids group I support.
Our goal is to keep disadvantaged kids away from
alcohol and drugs, giving them something to do, getting
them to help the community, giving them something in
their lives, for their future. It’s self-funded because it’s
hard to get donations for our cause, we aren’t very big.
The kids come out with smiles on their faces and they
love it, contributing to the community feeling needed,
it’s great, you get so much joy from looking after and
helping these kids, it’s worth it.
Cashfirst has helped us time and time again. Whenever
I get behind on payments, I give them a call and they are
so helpful, they organise for the payment to be moved
or added over a few months or tacked onto the end
of my loan, whatever I can manage.
They aren’t just about the money either. They will
have a chat with you, ask you how you’re going,
they actually care.
They help me keep my dream alive and I am always
so appreciative of that.”
“ The kids come out with smiles
on their faces and they love it,
contributing to the community
feeling needed, it’s great.”
To preserve privacy we have not used real customer photos
Annual Report 2015
11
Our Businesses
COMMERCIAL FINANCE
Thorn’s Commercial Finance division includes,
Thorn Equipment Finance (TEF), which provides
equipment finance solutions for business and
government with small to medium enterprises
(SMEs) a key target market for supply of a
diversified range of products.
The recently acquired Cash Resources Australia (CRA) is
a debtor finance business that provides working and growth
capital solutions through invoice discounting and secured
commercial loans for SMEs.
The key target market for Commercial Finance is SMEs which
require funding for equipment under $100,000, an area Thorn
considers underserviced by the major financial institutions.
CRA’s core business activity involves working and growth
capital finance solutions for businesses that may have a
short term cash requirement to fund growth opportunities
or simply prefer the flexibility of dealing with an organisation
such as CRA, rather than set-up overdraft or other financing
facilities with a bank.
STRATEGIC INTENT
The commercial finance business is growing
at a rapid rate, both organically and through
acquisition. The strategic acquisition of CRA
this year enhances coverage of the commercial
sector and expands the group’s client base.
In FY15, the receivables book grew to just over $100 million
compared with $64 million a year ago. Even with this
growth, bad debts and arrears declined considerably due
to improved risk and receivables management.
The basis of the commercial finance offer is to provide
a cost effective way for companies to grow, by giving them
a way to protect cash flow while acquiring new assets
and providing working capital finance for different parts
of the business.
STRATEGY
The integration of CRA has allowed Thorn to broaden
its product suite and cross-sell between TEF and CRA,
offering both equipment finance and debt facilities to SMEs.
Often, businesses that need equipment finance also need
working capital finance. The ability to offer both has led
to development of stronger relationships with partners
and customers.
Key initiatives include the expansion of the product offering
through these partnerships across the commercial direct
channel, franchise finance channel and broker network.
Expand
product offering to create
cross-sell opportunities and
allow for organic growth
Continue
to develop acquisition and
partnership opportunities,
strategic alliances
Develop
synergies to create a scalable
and efficient business, better
service SMEs
12 Thorn Group
OUR CUSTOMERS
HYPERBARIC
HEALTH PTY LTD
Thorn helped a unique client this year,
providing equipment finance to its operation
in the Northern Territory
One of Thorn’s clients is Hyperbaric Health Pty Ltd, which
manufactures hyperbaric chambers and provides painless
and non-invasive treatment for leg wounds, ulcers and
radiotherapy injuries. They provide these services through
hospitals, and medical centres throughout Australasia.
Hyperbaric Health needs a finance partner which really
understands the nature of its business because of its
uniqueness. Taking into consideration their business model,
the specialist nature of the equipment and the location,
Thorn Equipment Finance was able to provide flexible
efficient financing over a Hyperbaric Chamber located
in Darwin Hospital.
Tim Snowden, CEO, Hyperbaric Health
Hyperbaric oxygen chambers create air pressure inside that
is about two and a half times higher than the normal pressure
in the atmosphere. This helps a patient’s blood carry more
oxygen to organs and tissues in the body and help wounds,
especially infected wounds, heal more quickly.
“ Hyperbaric Health needs a finance
partner which really understands
the nature of its business because
of its uniqueness.”
GUARDSPLUS AUSTRALIA
Ever since, I can call John in the morning and funds are in my
account within 2-3 hours. Everyone at CRA is very personable
and our relationship has gone from strength to strength.
I really recommend that business, they provide an exceptional
service. It is safe to say, our business would not have been
able to survive without CRA. It’s been fantastic to deal with
CRA and I will be using them for a very long time.”
David Millward, Owner/Operator of Guardsplus
CRA helped a security company which, despite
growing considerably, was experiencing
cashflow issues due to late invoice payments.
“Guardsplus is a security company based in Sydney, with
operations in Queensland and Victoria, supplying specialised
security services for individuals, small business and
multinational corporations.
As the business was growing, we started having issues with
clients paying on time, placing the business under extensive
cash flow pressure to meet existing overheads.
I contacted CRA about a year ago to explore invoice
discounting solutions and John was extremely helpful and
found a solution to our problem. As a result, the business has
no more finance issues.
“ Everyone at CRA is very personable
and our relationship has gone from
strength to strength. ”
To preserve privacy we have not used real customer photos
Annual Report 2015
13
Our Businesses
RECEIVABLES MANAGEMENT
National Credit Management Limited (NCML) is a provider of credit and
receivables management services throughout Australia. This involves
an in depth understanding of the credit lifecycle and offering a range
of products and services to help clients maximise their cash flow.
Since 1990, NCML has been partnering with Australia’s largest creditors within government,
banking and finance, insurance, utilities and telecommunications to provide comprehensive
commercial solutions, from pre-collection services to legal recovery and debt purchasing.
The new framework is attracting further clients in financial
services, which is helped by Thorn having the skills and
experience in this sector.
In contingent debt collection, NCML continues to
demonstrate a commitment to delivering leading recovery
rates for its clients. Where NCML is benchmarked on
panel arrangements against other providers, NCML now
outperforms more consistently across a number of key
relationships in banking and government sectors with
leadership positions being maintained.
NCML’s ongoing investment in its Quality and Compliance
framework and in the refinement and development of
hardship programs with recent software implementations,
reporting and policy alignments further evolves this element
of its operation. This framework not only reinforces a
commitment to business transformation, but also builds a
level of compliance that offers competitive advantage and
is intended to contribute to NCML being a highly compliant
and ethical leader in the debt collection industry.
STRATEGIC INTENT
After a strategic review of the business by
independent consultants, the business model
was simplified and streamlined to position
NCML better in a highly competitive market.
The business has narrowed its execution focus in order
to scale Purchased Debt (where debt is purchased from the
original credit issuer) and Contingent Debt (where the debt
is actioned, for a fee, on behalf of the credit issuer).
The strategic review resulted in the creation of two
“Centres of Excellence” and a transformation project
to consolidate smaller operations to create scale
and efficiencies.
In FY15 the business increased its investment in Purchased
Debt Ledgers (PDL) resulting in PDL receivables growth
of 62 per cent on prior year. New collections strategies
have recently been implemented and the development
of new targeted debt seller relationships continues. The
increase in Purchased Debt coupled with an improved
value proposition to debt sellers has better positioned
NCML to manage reputational impact for debt sellers while
ensuring customers are dealt with in a highly compliant
and ethical manner.
STRATEGY
Consolidate
operation to create scale,
necessary for competitive
advantage, market
positioning
Seek excellence
in execution discipline, by
creating greater focus and
clarity across business
Diversify
earnings and grow PDL revenues,
focus on and build targeted
relationships primarily across
banking and finance products
14 Thorn Group
OUR CUSTOMERS
TRANSURBAN
NCML was appointed following a rigorous
tender process to collect outstanding tolling
debt on behalf of Transurban and its tolling
asset stakeholders.
“NCML impressed with a deep understanding of our needs
and its impressive compliance framework which ensured our
brand was in safe hands. They presented strong credentials
to deliver leading recovery rates given a number of clients
in this sector. I’m delighted to say NCML continue to impress
and projects are well advanced to extend the relationship
into the more recently acquired Queensland Motorway assets
in Queensland.”
Arthur Tchetchenian, National Credit Manager, Transurban
COMMONWEALTH
BANK OF AUSTRALIA
NCML and CBA have partnered for
a number of years in working with
the bank’s customers to resolve
their outstanding debt obligations.
“The Bank is very mindful of who it works with in this area and we are
constantly reassured by NCML’s respect for the values of our brand
and the lengths they go to in effecting positive outcomes. We’re aware
NCML has invested significantly to drive performance through a range
of systems and processes to ensure a highly compliant and ethical
operation is delivered on our behalf, while continuing to deliver leading
recovery rates.”
Craig Worsely, Senior Manager, Outsourced Relationships, CBA
To preserve privacy we have not used real customer photos
Annual Report 2015
15
Addressing Financial Exclusion
Thorn received its Australian Credit Licence under the National Consumer Credit
Protection legislation in 2010, making it one of the first financial service providers
in Australia to be licensed. A key element of Thorn gaining its license was having
a Responsible Lending Policy under which Thorn seeks to ensure customers are
treated fairly and provided access to goods and services that meet their needs and
budget. Within Thorn’s policy are hardship provisions which are intended to help
customers cope with unforeseen circumstances.
A large component of Thorn’s consumer
customer base comprises Australians who are
excluded from the financial mainstream and it
has become increasingly apparent that this is
a substantial group:
• 16.9 per cent of the Australian population, or just over 3 million
people, are either fully or severely financially excluded
• 42.9 per cent of the Australian population, or 7.7 million people,
are marginally financially excluded
• 56.7 per cent of the Australian population, or over 10 million
people, do not have a credit card1
There are many reasons for financial exclusion but it is because
of this situation that Thorn has developed its “fair go” policy,
enabling people to have access to household goods when there
are few alternatives.
56.7%
of the Australian population
do not have a credit card1
16 Thorn Group
The ‘Mum Test’
A feature of how Thorn operates
when dealing with customers is to
apply what we call the ’Mum test’.
This means staff are encouraged to
treat customers ’as if they were your
mum’ and do whatever is reasonable
to assist them. We do this to ensure
customers get a ’fair go’, particularly
people who may have encountered
difficulties in their lives.
Hardship Policy
Centrepay
Thorn also has a hardship policy in place enabling customers
to extend the balance of their contract at a lower payment
without any charges or penalties. This was recently used for
one of our long standing customers in Victoria who was not
only battling health issues but had also lost her home due to
a fire. Under the hardship policy, Radio Rentals cleared her
account, replaced the items she had lost and ensured she
would no longer have to make any payments.
16.9%
of the Australian population,
or just over 3 million people,
are either fully or severely
financially excluded
Some of Thorn’s customers, who receive income from
government benefits, are eligible to meet their commitments
through Centrepay, an automated method of payment
managed by the Federal Government to enable people to pay
regular living expenses from their Centrelink payments.
Using this system is a choice by customers and because it
is free to them, it avoids costs associated with bank direct
debit systems.
In relation to Thorn’s consumer rental business, the operation
of Centrepay is merely as a payment mechanism nominated
by customers and since there are alternative automated
payment methods available, the operation of Centrepay is not
material to Thorn’s ongoing business model.
However, Thorn is also aware that consumer rental is an
important financing alternative for those Australians excluded
from the financial mainstream. Thorn’s customer research
indicates that consumer rental is a service many people need
at a time when they do not have alternatives and Thorn is
proud to have this sentiment underlining its work.
1 Connolly C, Measuring Financial Exclusion in Australia, Centre for Social Impact
(CSI) – University of New South Wales, 2014, for National Australia Bank.
2 Buduls A, Report of the Independent Review of Centrepay, June 2013, p 6
Annual Report 2015
17
The Community
Thorn believes community involvement is a component of good business
practice. Consequently, Thorn is committed to developing and maintaining
long term strategic partnerships with community organisations, networks,
and resources to create mutual benefit.
As part of Thorn’s commitment, staff are encouraged to participate in community activities along
with Thorn providing direct financial support, including matching staff donations dollar for dollar
for approved activities. Two of the major initiatives supported by Thorn are the Children’s Tumour
Foundation of Australia and Project New Dawn.
Children’s Tumour Foundation
of Australia (CTF)
The Children’s Tumour Foundation is a not-for-profit
organisation dedicated to providing information, support
services and finding effective treatments for people living
with neurofibromatosis (NF), a term for three distinct
disorders: NF1, NF2, and schwannomatosis.
NF affects one in every 3,000 people, more than cystic
fibrosis, Duchenne muscular dystrophy, and Huntington’s
disease combined.
CTF is dedicated to:
• Supporting children and adults diagnosed with
neurofibromatosis , their families and carers with
information, resources and practical support across
their NF journey; and
• Funding world-leading research into effective treatments
for NF and ultimately finding a cure
CTF is committed to ensuring those suffering with NF receive
adequate, multidisciplinary care throughout their lives.
CTF has strong links internationally to NF organisations
and researchers in the USA, Great Britain, Ireland, Canada
and Europe. We also work closely and provide funding to
world-class local researchers and clinicians at The Children’s
Hospital at Westmead, the Murdoch Children’s Research
Institute and Royal North Shore Hospital.
“It has been a challenging year for charities and fundraising
- together with the support of Thorn Group, its staff and
supplier network, I am so proud to report that CTF have
made a great deal of progress in our efforts to support
children and adults living with NF, in particular we
have achieved our major goal of establishing a National
Supportive Care Service to provide practical support,
information and guidance to families living with NF. Quite
simply, without the support of Thorn Group and the ongoing
commitment of your staff and suppliers, we would not have
achieved what we have over the last year. Your support
of CTF continues to be critical to our vision of conquering
NF. You have helped us achieve so much to date, and we
are so very grateful for everything you do, thank you.”
Lisa Cheng, CEO, Children’s Tumour Foundation
18 Thorn Group
Project New Dawn
Natural Disaster
When disaster strikes across Australia, such as the Victorian
Bushfires and Queensland Floods or there is a worthwhile
cause needing assistance, then there is a good chance that
someone from Thorn will be there to assist our customers
and the community in general. Over the years, assistance has
been provided in various forms, including the loan of bedding
and refrigerators for relief centres, substantial goodwill
credits on customer accounts and the donation of products
for fundraising.
Some of these initiatives include:
• Blue Mountains bushfires, household goods donations, special
considerations for any customers affected by the devastation
• Queensland floods, give-away of 100 re-rent TVs and
customer account credits
• Victoria bushfires, provision of beds etc for emergency shelters
• Victoria floods, provided equipment to support local
police operations
Radio Rentals is also proud to be a founding partner in Project
New Dawn which was created as an enterprise that could
offer both jobs and accommodation to the homeless.
The core partners are ACSO in Melbourne, The Salvation
Army in Brisbane and Perth, Mission Australia in Sydney
(accommodation management and personal coaching), Radio
Rentals (white goods and furniture), BP and Bunnings (rental
guarantee, training and employment opportunities). New
Partnerships were established with Indigenous Employment
Focus in July 2015, AFL SportsReady and Aboriginal housing
Victoria.
Participants selected for the project receive 12-18 months of
employment and housing. With a stable source of income,
participants pay their own rent and utilities which gives them
a suitable rental history acceptable to other landlords when
they graduate from the program.
The first house went live in 2008 in Melbourne and there are
now six houses across Australia – two in Melbourne and one
each in Newcastle, Adelaide, Perth and Brisbane.
Since 2008, 26 people have been recruited nationally and
roughly half of those selected have stayed on or graduated
from the program.
The project aims to have 30-40 properties Australia wide,
giving 60-80 homeless men and women the opportunity to
move from the street and into regular employment.
1
Providing a positive
work environment for
our people
Thorn
CSR Focus
2
Providing optimal
service for our
customers
5
Providing support
for the community
4
Health, Safety and
Environmental
Responsibility
3
Contributing
to legislative and
regulatory
improvement
Environment
As an importer of product under the Thorn brand,
the Company is heavily focused on integrating
environmental considerations into our purchasing
and supply strategies. Thorn is also a member
of the Australia New Zealand Recycling Platform
(ANZRP), which has responsibility for recycling
end of life televisions.
Health And Safety
Thorn recognises its responsibility to provide a safe
environment for our people, our customers and others
who come into contact with our business. Our Health
and Safety program is regularly reviewed and our
Regional Safety Teams provide two way feedback
on managing potential hazards and best practices.
Annual Report 2015
19
Our People
At Thorn, we have a culture of innovation, recognition, learning and development.
We believe in investing in our team members and actively seek to empower,
encourage and support all of our staff to fulfil their potential and express ideas
that not only drive the company forward but allow our people to take charge of
their careers across our multiple brands and divisions.
We have a number of programs and initiatives in
place that recognise the importance of our employees,
customers, shareholders and the wider community
which are key to driving a positive, fun and friendly
culture as well as providing a great place to work for
our valued employees.
This year we launched our own employee program
called LION.
LION stands for Leadership, Innovation, Ownership
and Nurturing, and includes a branded employee
program with the central vision being “making it
happen” which is at the core of what we do at Thorn,
for our customers, partners, investors and employees.
The program is about recognising the different
characteristics of our employees but also unifying the
brand, across its different divisions.
The LION branding is used across different initiatives
such as:
• One brand uniting all Thorn employees
• Social events, birthday emails to all employees
• Rewards and incentives
• Education and motivation
As part of reinforcing our culture among employees,
we encourage people to be involved in our fundraising
activity and give them a sense of feeling empowered
by giving back to the community.
An example of this was a fundraiser for the Children’s
Tumour Foundation we organised at last year’s annual
conference where teams had to complete a 180 km
Kayak challenge at Main Beach. There were 20 teams
and each team member took turns paddling to reach
the target. The teams raised $20,000 for CTF.
On a more regular basis, we organise lunches and
other events throughout the year for fundraising.
This year we also launched the nationwide Employee
Assistance Program, which provides up to six free
confidential counselling sessions for staff members
and their families. Led by not-for-profit organisation,
AccessEAP, these sessions can assist with any
personal, family or work related issues.
20 Thorn Group
Financial Report
30 June 2015
Directors’ Report
Corporate Governance Statement
Lead Auditor’s Independence Declaration
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
Corporate Directory
22
41
46
47
48
49
50
52
76
77
79
IBC
Annual Report 2015 21
Directors’ Report
The Directors present their report together with the financial
report of Thorn Group Limited (the ‘Company’) and its
controlled entities (together referred to as the ’consolidated
entity’) for the financial year ended 31 March 2015 and the
auditor’s report thereon.
Operating and Financial Review
The 2015 Operating and Financial Review is presented by
the Board to provide shareholders with an overview of the
Company’s operations, financial position and potential for
future years.
Thorn Group is a diversified financial services group providing
alternate financial solutions to consumers and businesses.
Activities are predominantly in leasing of household
products with increasing diversification into consumer loans,
commercial finance, invoice discounting and the provision of
receivables management services.
Apart from the acquisition of invoice discounting business
Cash Resources Australia, there were no other significant
changes in the nature of the activities of the consolidated
entity during the year.
Thorn operates through four core segments:
• Consumer Leasing of household products through Radio
Rentals and Rentlo;
Segment performance
Consumer Leasing:
Revenue for the Consumer Leasing segment grew 25.1%, from
$196.8m to $246.2m driven by both record originations during
the year and a significant shift in contract mix from operating
leases to finance leases. Originations increased 88.7% from
$51.5m to $97.2m from PCP. Finance leases represented 88%
of leases in 2015 compared to 45% in the PCP.
The growth in finance lease revenue was driven by the
continued adoption of the Rent Try $1 Buy® month contract
that was introduced in December 2013. Originations of finance
lease contracts during the year numbered 112,700 of which
76.3% or 86,000 were 48 month contracts. The introduction
of the longer term made larger products and whole room
packages more affordable.
Customer retention performance remains consistently
strong with 48% of customers completing a Rent Try $1 Buy®
agreement taking a subsequent agreement for another item
at a discounted rate.
Write-off performance remained consistent with prior year
however provisioning increased in-line with receivables
growth. Costs increased in the segment in-line with new
stores and additional resources required in the store network
to support the growth in units on rent.
• Consumer Finance provides personal loans through Cash
First and Thorn Money;
Other operating expenses for the Consumer Leasing segment
also increased in-line with the increased level of originations.
Reported segment earnings before interest, tax, depreciation
and amortisation (“EBITDA”) increased by 13.3% from $49.5m
to $56.1m.
Consumer Finance:
Consumer Finance revenue increased by 48.4% from $9.3m
to $13.8m. The revenue increase was driven from interest
through a 56.0% growth in receivables, from $28.4m to
$44.3m. Originations increase by 69.7% from $18.8m in the
PCP to $31.9m.
Net bad debts increased from 10.9% to 12.3% as a percentage
of average receivables. This increase in bad debts resulted in
a revision to the collections strategy of the segment in March
2015. Overheads were higher than PCP as a result of business
development initiatives and increased volumes. Segment
EBITDA increased by 16.7% from $1.2m to $1.4m.
• Commercial Finance including equipment financing and
invoice discounting for small and medium enterprises
through Thorn Equipment Finance and Cash Resources
Australia respectively; and
• Receivables Management, debt recovery, credit information
services, debt purchasing and other financial services
through NCML.
Financial performance
Revenue for the 2015 financial year increased 25.1% on the
previous corresponding period (“PCP”), growing from $234.9m
to $293.8m.
Underlying Cash NPAT increased by 13.6% from $30.1m
to $34.2m. Reported NPAT increased by 8.5% from $28.2m
to $30.6m.
There was significant organic growth in both consumer
leasing and commercial finance driven by strong originations.
Consumer Leasing in particular benefited from the increased
mix of finance leases from operating leases. The result also
included $0.8m after tax contribution from Cash Resources
Australia that was acquired on 1 December 2014.
The investment in people, processes and systems over the
previous three years has supported the increase in current
year Underlying Cash NPAT.
22 Thorn Group
Commercial Finance:
Commercial Finance consists of both equipment finance
through Thorn Equipment Finance (TEF) and invoice
discounting through Cash Resources Australia (CRA).
Revenue for TEF grew by 30.1% from $8.3m to $10.8m.
Originations in TEF increased from $32.3m to $61.5m during
the year, an increase of 90.4%. The revenue increase was
driven by the growth in gross receivables, which increased
from $63.5m to $104.8m, which in turn was driven by
strong originations.
Originations increased via both direct and strategic
partner channels.
Expenses increased in line with volumes as TEF continues
to achieve scale.
CRA contributed $4.3m in revenue and $1.2m EBITDA during
the four months it was part of the group. This was in-line with
acquisition metrics.
Overall like for like segment EBITDA increased by 93.3% from
$3.0m to $5.8m. Including CRA segment EBITDA increased
133.3% from $3.0m to $7.0m.
Receivables Management:
The Receivables Management division revenue decreased
by 6.8%, from $20.6m to $19.2m. This decline was driven
by a decrease in contingent collections as a result of lower
placements due to changing business practises in long
standing clients. It was however offset by an increase in
Purchased Debt Ledger (PDL) revenue where PDL receivables
increased 61.8% from $8.9m to $14.4m. PDL net additions
during the year were $12.5m compared to $5.9m in the
previous, an increase of 111.9%.
In thousands of AUD
Reported NPAT
Acquisition costs CRA
Amortisation of intangibles
Rent Drive Buy trial (revenue)/ costs
Debt sale
CEO termination/recruitment costs
Software
Tax effect
Underlying cash NPAT
Segment EBITDA decreased by 36.6% from $4.1m
to $2.6m.
The Receivables Management division was also impacted
with one off costs incurred as part of an operational
restructure that will create ‘Centres of Excellence’ for
contingent collections in Melbourne and PDL collections in
Adelaide. This restructure is expected to provide annualised
savings of $1.6m, and geographically centralise the divisions
functional expertise and infrastructure across two major
collection platforms.
Corporate expenses:
Corporate expenses were up 24.8% from $10.5m to $13.1m
primarily increasing in-line with business growth including
acquisition costs and recruitment. This included $2.2m relating
to the acquisition of CRA.
Net borrowing costs increased by 126% from $1.9m to $4.3m
driven by borrowings that have increased from $40.4m to
$144.0m as at 31 March 2015. The increase in borrowings
supported the acquisition of CRA and the increased level
of equipment finance originations within the Commercial
Finance segment.
Consolidated:
Underlying Cash NPAT increased 13.6%. from $30.1m to
$34.2m. Below is a reconciliation of reported to Underlying
Cash NPAT.
Consolidated profit before income tax increased by 9.0% from
$41.0m to $44.7m. Reported net profit after tax increased by
8.5% from $28.2 to $30.6m.
The variance between underlying performance of the group
and reported was predominantly the costs of acquisition of
CRA and the amortisation of intangibles as detailed in the
reconciliations below.
31-Mar-15
31-Mar-14
30,593
2,235
1,759
(363)
–
–
–
(25)
34,199
28,151
–
1,760
239
(810)
500
358
(87)
30,111
Annual Report 2015 23
Directors’ Report
Operating and Financial Review (continued)
Financial position and cash flows
Summarised financial position
($m)
Cash at Bank
Receivables
Investment in unrated notes
Other assets
Intangibles
Total Assets
Borrowings
Other liabilities
Total Liabilities
Total Equity
Net Gearing (ii)
Cash flows from operating activities
EPS Basic
EPS Diluted
ROE (iii)
Underlying Cash ROE (iv)
Mar-15
Mar-14
excl. Trust (i)
incl. Trust
excl. Trust (i)
incl. Trust
13.9
215.8
13.8
40.1
32.9
316.5
84.0
43.0
127.0
189.5
38.6%
102.9
n/a
n/a
16.9%
18.9%
13.9
289.6
–
40.1
32.9
376.5
144.0
43.0
187.0
189.5
n/a
102.9
20.3
20.3
16.9%
18.9%
2.4
126.8
6.2
60.3
31.7
227.4
15.5
40.3
55.8
171.6
8.4%
104.0
n/a
n/a
17.2%
18.4%
2.4
158.0
–
60.3
31.7
252.4
40.5
40.3
80.8
171.6
n/a
104.0
18.9
18.9
17.2%
18.4%
(i) Excludes the impact of receivables from TEF that are sold down to a warehouse funding facility.
(ii) Gearing is calculated as net debt (senior borrowings less free cash) divided by closing equity.
(iii) ROE is calculated as NPAT divided by the average of opening and closing equity.
(iv) Underlying Cash ROE is calculated as Underlying Cash NPAT divided by the average of opening and closing equity.
Receivables:
Net receivables increased by 83.3% to $289.6m during the
year. Gross consumer lease receivables grew by 75.2% to
$219.6m driven by both the movement to finance leases
from operating leases and increased originations since the
introduction of RTB 48 month contract. Gross consumer
finance receivables increased by 56.0% to $44.3m. Gross
equipment finance lease receivables within the commercial
finance segment increased by 65.0% to $104.8m.
Other assets:
The decrease in other assets is predominantly from the
decrease in rental assets by 36.9% from $52.6m to $33.2m.
This decrease has been driven by the move from operating
lease to finance lease.
Borrowings and gearing:
Total borrowings have increased from $40.5m in the PCP to
$144.0m. This increase has been driven predominantly by the
acquisition of CRA and the increase of TEF lease receivables.
Net gearing has increased from 8.4% PCP to 38.6%. This
increase is predominantly due to the funding of the CRA
acquisition and increase in consumer finance receivables from
senior debt. Senior debt increased from $15.5m PCP to $84.0m.
The consolidated entity continues to meet all debt covenants.
ROE:
The group has continued to achieve high returns underpinned
by growth in earnings and close management of capital.
Underlying Cash ROE increased from 18.4% to 18.9% whilst
ROE decreased from 17.2% to 16.9% predominantly due to the
acquisition costs of CRA.
EPS:
Earnings per share increased from 18.9 cents to 20.3 cents
during the year in line with increased NPAT supported by an
increase in lower cost debt funding.
Cash flows:
Net cash from operating activities decreased from $104.0m
to $102.9m. This was primarily attributable to the overall
lower average lease payment received due to the expansion
of the RTB 48 month contract, increased PDL acquisition and
increased Consumer Finance originations.
Cash flows from investing activities were an outflow of
$182.0m compared to the previous year’s outflow of $106.1m.
This was predominantly driven by the net cash outflows for
the acquisition of CRA ($43.3m) and the increased net cash
originations in Commercial Finance, up from $32.3m to $61.5m.
Cash flows from financing activities increased to a
$90.6m inflow from a $390k outflow in the PCP. This was
predominantly due to the increase in debt funding.
24 Thorn Group
Funding:
The group has the following debt facilities:
Facility
Senior
Warehouse
Total
2015
2014
Limit
Drawn
Limit
Drawn
$110.0m
$100.0m
$210.0m
$84.0m
$60.0m
$50.0m
$50.0m
$144.0m
$100.0m
$15.5m
$25.0m
$40.5m
The $110.0m senior facility is secured by a fixed and floating charge over the assets of the consolidated entity. Both the increase
in the facility and the drawings was driven predominantly by the acquisition of CRA during the period.
The warehouse facility was increased from $50.0m to $100.0m during the year to accommodate the strong growth in
receivables within the Commercial Finance segment. This facility is secured by rentals and payments receivable from the
underlying lease receivable contracts.
Dividends paid or recommended
Dividends paid by the Company to members during the financial year were:
2015
Final 2014
Interim 2015
Total amount
After balance date the following dividend was
proposed by the directors:
Cents
per share
Amount
$'000
Franked /
unfranked
Date of
payment
6.5
5.0
9,717
7,532
17,249
Franked
Franked
17-Jul-14
22-Jan-15
Final 2015
6.75
10,215
Franked
Strategic initiatives and prospects
Thorn Group will continue with its organic and acquisitive
growth strategy aimed at delivering sustained growth and
long term shareholder value. The group will continue to
focus on the growth of its Consumer Leasing business as
well as growing its other business segments to drive greater
diversification of returns and risk.
The following initiatives, which include the introduction
of new products and further expansion of each operating
segment, continues the consolidated entity’s strategy of
providing alternative financial solutions.
Consumer Leasing:
• A brand evolution pilot in order to attract a broader
demographic and expanded customer base leading to
increased volume and revenues;
• New propositions including mobile voice and data plans
and interest free purchases; and
• A pilot second consumer rental brand, utilising re-rent stock
and offering a “No lock-in contract” to meet market demand
for flexible rental solutions was launched in Brisbane in
December under the brand name Rentlo.
Consumer Finance:
• Consolidation of current multi branded consumer
loan offerings to a simpler and more comprehensive
consolidated proposition.
• Refinement of origination technology to support optimised
customer experience and process efficiency.
• Continued expansion of distribution footprint to grow sales
volumes.
Commercial Finance:
• Expanded product offerings to include residual value for
selected assets, vendor finance, trade finance and premium
funding;
• A ‘Commercial Direct’ pilot was launched in February to
improve access to suppliers and SME users of commercial
rental;
• A specialised ‘Franchise Finance’ strategic alliance has been
established to improve access to the franchise sector; and
• Continue the integration of CRA into the segment and
incentivise and promote cross selling opportunities.
Receivables Management:
• Continue the momentum in high quality PDL purchases; and
• Restructure into centres of excellence including contingent
collections in Melbourne and PDL collections in Adelaide.
Annual Report 2015 25
Directors’ Report
Operating and Financial Review (continued)
Risks
Credit risk is the most significant risk to the consolidated
entity. Credit risk grew in-line with the growth of the loan and
lease receivables in all segments, except TFS where bad debts
increased slightly as a percentage of the loan receivables.
Regulatory risk in relation to changes of law or regulations
that impact the operations or results of the groups activities
remains a key focus for the consumer segments.
Liquidity risk is managed through the adequate provision of
funding and effective capital management policies. Thorn will
continue to diversify its funding sources to further mitigate
this risk into the future.
The group is also subject to currency risk related to the direct
acquisition of rental assets from overseas suppliers. To mitigate
this risk the group operates a foreign exchange hedging policy.
Outlook
The strategic initiatives implemented in the current financial
year and into the future will ensure Thorn Group continues to
maximise shareholder value into the future while diversifying
returns and risk.
The Group will continue to review acquisition opportunities
in all its operating segments that are consistent with our
strategy and where we can extract value and add scale to our
existing platforms.
Thorn expects continued growth in receivables will be the
basis for growth of all parts of the business.
Directors Information
Joycelyn Morton
(Age 56)
Independent, Non-Executive
Appointed 1 October 2011
Qualifications
Bachelor of Economics
Experience
Joycelyn has more than 35 years experience in finance and
taxation having begun her career with Coopers & Lybrand
(now PwC), followed by senior management roles with
Woolworths Limited and global leadership roles in Australia
and internationally within the Shell Group of companies.
She is a Fellow of CPA Australia, Chartered Accountants
Australia and New Zealand, the National Institute of
Accountants, the Australian Institute of Company Directors
and the Governance Institute of Australia.
Other current directorships
Argo Investments Limited,
Snowy Hydro Limited
Former directorships
Crane Group Limited
Count Financial Limited
Noni B Limited
Interests in shares and options
62,018 ordinary shares
26 Thorn Group
James Marshall
(Age 43)
Managing Director
Appointed: 5 May 2014
Qualifications
Dip. Financial Services
Experience
James joined the company in 1993 and held several frontline
and senior management positions prior to joining the
Executive Team which took the company to public listing
in 2006.
James has extensive knowledge of the consumer leasing
and receivables management industries and has been
instrumental in driving the development and growth of
Thorn’s core business divisions and diversification strategy
since the IPO.
Other current directorships
Former directorships
Interests in shares and options
131,085 ordinary shares
Stephen Kulmar
(Age 62)
Independent, Non-Executive
Appointed: 15 April 2014
Qualifications
Experience
Stephen is the former Managing Director and Chairman of
IdeaWorks and is currently the Managing Director of Retail
Oasis, a boutique retail marketing services company.
Steve has over 30 years experience in advertising and has
extensive experience in retail strategy, brand strategy,
channel to market strategy, business re-engineering and
new retail business development.
Other current directorships
RCG Corporation Limited
Retail Oasis Pty Ltd
Former directorship
Charles Parsons Pty Ltd
Interests in shares and options
60,000 ordinary shares
Peter Henley
(Age 68)
Independent, Non-Executive
Appointed: 21 May 2007
Qualifications
David Carter
(Age 61)
Independent, Non-Executive
Appointed 3 November 2006
Retired 17 November 2014
Experience
Peter has had a long and distinguished career in financial
services generally and in consumer and commercial finance
in particular, having held Managing Director roles with AGC,
Nissan Finance and more recently GE Money.
Peter is a Fellow of the Australian Institute of
Management and a member of the Australian Institute
of Company Directors.
Other current directorships
AP Eagers Limited
MTA Insurances Limited until sold to Suncorp Insurances
August 2014.
Qualifications
Bachelor of Economics, Bachelor of Law (Hons), Masters
of Law, and a Bachelor of Civil Law
Experience
David passed away January 2015.
David was a lawyer and corporate advisor who was previously
a partner of a major international law firm. David ran his own
legal and corporate advisory practice. David had significant
experience in corporate governance, M&A, commercial and
international law. David was a Member of the Australian
Institute of Company Directors.
Other current directorships
Former directorship
GE Motor Solutions Australia
GE MoneySingapore and Malaysia
United Financial Services Limited
Interests in shares and options
71,499 ordinary shares
David Foster
(Age 46)
Independent, Non-Executive
Appointed: 1 December 2014
Qualifications
Bachelor of Applied Science
Master of Business Administration
Experience
David Foster has had an extensive career in Financial Services
spanning over 25 years.
His most recent executive role until December 2013 was
CEO of Suncorp Bank, a role he commenced in September
2008. Prior to his role as CEO of Suncorp Bank, David lead
Suncorp’s strategy function which included numerous merger
and acquisition activities including one of Australia’s largest
Financial Services transactions – Promina Limited.
Other current directorships
Former directorships
Interests in shares and options
21,490 ordinary shares
Former directorships
Azure Healthcare Limited
Victorian Energy Network Corporation
Interests in shares and options
John Hughes
(Age 63)
Executive
Appointed 3 November 2006
Retired 30 June 2014
Qualifications
Bachelor of Commerce
Experience
John has over 35 years experience as a senior executive in
a number of leading Australian and international companies
including Rural Holding Limited, Thorn EMI Rentals
Australasia, Sharp Corporation, Competitive Foods, and
Grace Bros.
John is a Fellow of the Australian Institute of
Company Directors.
Other current directorships
Former directorships
Interests in shares and options
Annual Report 2015 27
Directors’ Report
Company Secretary
Peter Eaton joined the Company in 1999 and has held the positions of Chief Financial Officer and Company Secretary since
August 2006. Peter holds a Bachelor of Commerce degree from the University of Western Sydney, is a member of CPA Australia
and has undertaken the Senior Executive programme at London Business School.
Directors’ Meetings
The number of directors’ meetings (including meetings of committees of directors) and number of meetings attended by each
of the directors of the Company during the financial year are detailed below.
Director
Joycelyn Morton
James Marshall
Stephen Kulmar
Peter Henley
David Foster
David Carter
John Hughes
Board Meetings
Audit, Risk and Compliance
Committee Meetings
Remuneration and Nomination
Committee Meetings
A
13
12
11
12
5
7
4
B
13
12
12
13
5
9
4
A
7
7
6
7
4
3
2
B
7
7
7
7
4
4
2
A
4
3
3
4
1
2
2
B
4
3
3
4
1
3
2
A – Number of meetings attended
B – Number of meetings held during the time the director held office during the year
(a) Mr James Marshall was appointed to the Board on 5 May 2014. He was not a member of the Audit Risk and Compliance
Committee or the Remuneration and Nomination Committee but attended the meetings by invitation.
(b) Mr John Hughes retired from the Board effective 30 June 2014. During his term as Chief Executive and Managing Director,
he was not a member of the Audit Risk and Compliance Committee or the Remuneration and Nomination Committee but
attended the meetings by invitation.
(c) Mr Stephen Kulmar was appointed as a non-executive director on 15 April 2014.
(d) Mr David Foster was appointed as a non-executive director on 1 December 2014.
(e) Mr David Carter retired from the Board effective 17 November 2014.
Remuneration Report – Audited
The directors are pleased to present the remuneration report setting out the remuneration information for key
management personnel (KMP), for the year ended 31 March 2015 and is prepared in accordance with section 300A of
the Corporations Act 2001.
The KMP of the Company and the consolidated entity for the year ended 31 March 2015 were:
Directors
Joycelyn Morton
Stephen Kulmar (appointed 15 April 2014)
Peter Henley
David Foster (appointed 1 December 2014)
David Carter (retired 17 November 2014)
Senior Executives
James Marshall
John Hughes
Peter Eaton
Derrick Hubble
Matt Ingram
Rob Price
Sean Jones
Richard Shepherd
28 Thorn Group
Chief Executive Officer (CEO)
Former Chief Executive Officer (retired 30 June 2014)
Chief Financial Officer (CFO)
General Manager Consumer Leasing
General Manager Commercial Finance
General Manager Consumer Finance
General Manager Receivables Management
Former General Manager Consumer Finance (resigned 30 January 2015)
2015 Remuneration highlights
Appointment of new CEO
• James Marshall, previously Chief Operating Officer was appointed to replace John Hughes
as Chief Executive Officer and Managing Director effective 1 June 2014.
• Mr Marshall’s annual remuneration was set at the time of his appointment and his current
remuneration is detailed on page 34.
Short term incentives (STI) reflect on
target performance for 2015
• 2015 financial performance was ahead of both the prior comparative period and budget.
• Performance in the Receivables Management division was below budget and impacted the
Group’s performance.
• Consequently the average short term incentive is at the bottom of the range.
Long term incentives (LTI)
• There were no performance rights due to vest during the 2015 year.
• LTI were granted to KMP and other Leadership team members during the 2015 year
(‘2014 LTI’).
• The details of the LTI is on pages 31 to 32.
Senior Executive retention payments • A retention payment of $100,000 was paid to James Marshall, CEO and Peter Eaton, CFO.
• This is explained on page 33.
2014 AGM remuneration vote
• The remuneration report was voted on via a poll.
• 91.58% of the votes cast were for the remuneration report.
Principles of remuneration
The remuneration framework is set out to ensure rewards are appropriate for results achieved and are aligned to corporate
strategic goals and shareholder wealth creation. The Board and Remuneration and Nomination Committee ensure sound
remuneration governance practice, that KMP remuneration is competitive and transparent, whilst aligning shareholder
interests through creation of sustainable growth and ensuring rewards reflect actual performance.
Remuneration levels for KMP are competitively set to attract and retain appropriately qualified and experienced directors and
executives. Independent advice is obtained on the appropriateness of remuneration packages, given trends in comparable
companies and the objectives of the Company’s remuneration strategy.
The remuneration structures explained below are designed to attract suitably qualified candidates, reward the achievement
of strategic objectives and achieve the creation of value for shareholders. The remuneration structures take into account:
• the capability and experience of the executive;
• the executive’s ability to influence the relevant performance; and
• the consolidated entity’s performance including:
– the consolidated entity’s earnings;
– the growth in share price and delivering constant returns on shareholder wealth; and
– the amount of incentives within each executive’s compensation.
Fixed remuneration
STI
LTI
• Includes base salary, superannuation
and fringe benefits
• Set with reference to the market,
internal relativities, qualifications,
skills, performance and experience
• Annual cash payment
• Eligibility for payment depends on
the Company achieving its budgeted
NPAT as well as achievement against
individual KPIs
• The LTI is a performance rights scheme
with a 3 to 5 year vesting period
• For the 2012 plan no LTI vests if a ROCE
gateway hurdle is not met
• For the 2014 plan no LTI vests if a ROE
• Reviewed annually1
• KPIs are set at the start of each
gateway hurdle is not met
financial year
• If the gateway hurdle is met, vesting
of the performance rights depends on the
Company’s TSR performance relative to a
peer group1.
1
Remuneration is reviewed annually against comparable ASX listed entities. A list of these entities is available on the Thorn website
(www.thorn.com.au)
The performance based STI and LTI components are described in more detail on pages 30 to 32.
Annual Report 2015 29
Directors’ Report
Principles of remuneration (continued)
i) Short Term Incentives
The STI is an annual cash incentive reviewed by the Board against operational and financial Key Performance Indicators (KPIs)
for the financial year. The following table outlines the major features of the 2015 STI:
Features
Description
Funding of the STI
• The STI pool is funded when the Company achieves 95% of its budgeted NPAT
• No STI is payable if the Company does not meet 95% of its budgeted NPAT
Minimum
requirements
• No amount of STI is paid if budgeted NPAT is not met
STI that can be earned • Below 95% of target performance – nil
• On 95% of target performance – 12.5 to 15 per cent of fixed base
• On target performance – 25 to 30 per cent of fixed base
• Maximum STI for stretch performance – 60 to 100 percent of fixed base
• A sliding scale is applied when performance is between 95% of “target” and “target” and again between
“target” and “stretch”
• Target performance is budgeted NPAT
• Stretch performance is when actual NPAT is equal to or greater than 110% of budgeted NPAT
What is target
performance?
What is stretch
performance?
KPIs
• Individual KPIs are set at the beginning of each financial year comprising financial and non-financial measures
Weighting of KPIs
What is the financial
KPI?
What are the non-
financial KPIs?
For C-level:
• 70 per cent relates to Group financial KPIs
• 30 per cent relates to non-financial KPIs
For GMs:
• 30 per cent relates to Group financial KPIs
• 30 per cent relates to Divisional financial KPIs
• 40 per cent relates to non-financial KPIs
• Budgeted NPAT for the Group and budgeted EBIT for the divisions
• The non-financial KPIs are agreed with the Board at the start of the financial year
• Vary with position and responsibility
• The KPIs relate to people, customer satisfaction, strategy, systems, risk and staff development
Performance period
• 1 April 2014 to 31 March 2015
Assessment &
Approval
• At the end of the financial year, the Remuneration and Nomination Committee assesses the actual
performance of the consolidated entity, and each individual’s performance against the KPIs to determine how
much of the bonus pool is payable
• The Board has the discretion to take into account unbudgeted extraordinary items approved by the Board
• The performance evaluation in respect of the year ended 31 March 2015 has taken place in accordance with
this process. The Remuneration and Nomination Committee recommends the cash incentive to be paid to the
individuals for approval by the Board
2015 performance
• The financial hurdle was met
• The amounts payable to KMP are detailed on page 37
Deferred component
• The Board has determined that it is not appropriate to introduce a deferral due to:
– The nature of the business is such that it is very difficult to shift profit between years;
– The profit budget is increased annually so that management is highly motivated to achieve those budgets
out of annual revenues; and
– The quality of earnings is high and the risk of deferral is low
• While the Board did not move to include a deferral of STI in 2015 and does not expect it will do so in 2016,
it has determined to keep the matter under review as it moves forward with an overall review of the
remuneration framework
Clawback provisions
• The Board has not yet adopted a clawback policy as the Long Term Incentive, which vests over 3, 4 and 5 years
provides the capacity to clawback a component of remuneration in the event of a matter of significant concern
30 Thorn Group
ii) Long Term Incentive (LTI)
The Company currently has two LTI schemes in operation. The 2012 plan was granted in December 2012 in the form of
performance rights. The 2014 plan was granted in July 2014 in the form of performance rights.
The grants are directly linked to the performance of the Company, the returns generated and relative increases in shareholder
wealth. This structure is used to ensure appropriate alignment to shareholder value over a specified timeframe.
Performance rights provide the right to receive shares only if and when a particular performance based hurdle and vesting
condition are met. The holders of the performance rights are entitled to receive one ordinary share per performance right.
The following table sets out the key features of the 2012 LTI plan:
Features
Description
Instrument
• Performance rights – zero exercise price options
Maximum LTI
award level
• LTI awards are capped at 50% of fixed remuneration at grant date using the face value of the shares at grant
date to calculate the number to be granted
Dividend treatment
• No dividends are paid on unvested awards
Share dilution limits
• No share dilution limits are in place given the quantum of the LTI
Gateway Hurdle
• The average Return on Capital Employed (ROCE) for the measurement period must be equal to or greater than 20%
• If ROCE < 20%: no performance rights vest
• If ROCE > 20%: performance rights are able to vest subject to the performance hurdles (see below) being met
Why ROCE was
chosen
Why was ROCE set
at 20%
Performance
Hurdles
Why TSR was
chosen
• It is a key indicator of the quality and efficiency of the returns the consolidated entity is achieving and is
aligned to shareholder wealth
• While the 20% ROCE hurdle is lower than the ROCE performance in the previous years, it appropriately
reflects the change in business model
• The Company’s strategy to be a diversified financial services organisation has seen lease and loan receivables
grow substantially but ahead of earnings performance
• The Company has expanded its services to grow but margins will be lower than when the business was
primarily Radio Rentals
• The Remuneration and Nomination Committee and the Board therefore consider that the 20% ROCE hurdle
is appropriate
• It is important to recognise that 20% ROCE has been set as a gateway. It opens the gate for testing against TSR
• The ROCE calculation will be audited
• The company’s TSR performance is measured against 30 comparable ASX listed securities (available at www.
thorn.com.au)
• Where the Company’s TSR performance is rated below the 50th percentile, no performance rights vest
• Proportionate vesting occurs if the Company is ranked at or above the 50th percentile until the 90th
percentile, when 100% of the rights vest
• It is widely accepted as an objective indicator of shareholder wealth criterion as it includes share price
growth, dividends and other capital adjustments
• TSR will be calculated by an independent expert
Performance period
• The performance period for the LTI is 5 years
Vesting Dates
Testing
• 1/3 of the grant vests at 3 years
• 1/3 of the grant vests at 4 years
• 1/3 of the grant vests at 5 years
• The LTI is currently structured to vest over 5 years to align with a shareholder’s long term perspective
• The Board believes it is appropriate to vest the LTI if the gateway hurdle and performance hurdle has been
met over the 5 year period notwithstanding that it may not have been met at 3 or 4 year test dates
• The current structure ensures the executive team remains focussed on improving shareholder returns over
a 5 year period
Termination
• In the event that a participant’s employment is terminated, any unvested performance rights will lapse
Clawback provisions
• There are no clawback provisions
• The LTI has an extended vesting period, vesting in 3, 4 and 5 years
• The extended vesting period provides the capacity to clawback a component of remuneration in the event
of a matter of significant concern
Annual Report 2015 31
Directors’ Report
Principles of remuneration (continued)
ii) Long Term Incentive (LTI) (continued)
The following table sets out the key features of the 2014 LTI plan:
Features
Description
Instrument
• Performance rights – zero exercise price options
Maximum LTI
award level
• LTI awards are capped at a maximum of 50% of fixed remuneration at grant date using the face value of the
shares at grant date to calculate the number to be granted
Dividend treatment
• No dividends are paid on unvested awards
Share dilution limits
• No share dilution limits are in place given the quantum of the LTI
Gateway Hurdle
Why ROE was
chosen
Why was ROE set
at 18.5%
• The average Return on Equity (ROE) for the measurement period must be equal to or greater than 18.5%
• If ROE < 18.5%: no performance rights vest
• If ROE > 18.5%: performance rights are able to vest subject to the performance hurdles (see below) being met
• It is a key indicator of the quality and efficiency of the returns the consolidated entity is achieving and
is aligned to shareholder wealth
• Alignment with financial services industry key benchmarks
• The change from ROCE to ROE for the 2014 plan was due to the evolution of the Group towards financial
services and to better align with organisations within that sector
• While the 18.5% ROE hurdle is lower than the ROE performance in the previous years, it appropriately reflects
the change in business model
• The Company’s strategy to be a diversified financial services organisation has seen lease and loan receivables
grow substantially but ahead of earnings performance
• The Company has expanded its services to grow but margins will be lower than when the business was
primarily Radio Rentals
• The Remuneration and Nomination Committee and the Board therefore consider that the 18.5% ROE hurdle
is appropriate
• It is important to recognise that 18.5% ROE has been set as a gateway. It opens the gate for testing
against TSR
• The ROE calculation will be audited
Performance
Hurdles
• The company’s TSR performance is measured against 28 comparable ASX listed securities
(available at www.thorn.com.au)
Why TSR was
chosen
• Where the Company’s TSR performance is rated below the 50th percentile, no performance rights vest
• Proportionate vesting occurs if the Company is ranked at or above the 50th percentile until the 90th
percentile, when 100% of the rights vest
• It is widely accepted as an objective indicator of shareholder wealth criterion as it includes share price
growth, dividends and other capital adjustments
• TSR will be calculated by an independent expert
Performance period
• The performance period for the LTI is 3 years (1 April 2014 to 31 March 2017)
Vesting Date
Testing
• 1 June 2017
• 100% of the grant vests at 3 years
• The LTI is structured to vest over 3 years to align with a shareholder’s long term perspective
• The LTI is not subject to re-testing
Termination
• In the event that a participant’s employment is terminated, any unvested performance rights will lapse
Clawback provisions
• There are no clawback provisions
32 Thorn Group
CEO and CFO retention payments
The Board recognised that the continuing arrangement with the former CEO John Hughes may be perceived to impact the
career paths of the current CEO James Marshall and CFO, both of whom the Board considered key to the ongoing success
of the Company.
The Board recognised that the LTI grant in December 2012 did not have a strong retention effect as there were no other LTI
amounts vesting before May 2015. In order to address this, the current CEO and CFO would receive retention payments.
In the 2015 financial year, the current CEO and CFO were paid an additional $100,000 each (2014 $50,000).
In the 2016 financial year, the CFO will be paid a further $100,000 should he remain with the Company until 31 May 2015.
This payment will be made in the form of equity.
Services from Remuneration Consultants
The Remuneration and Nomination Committee engaged Executive Research Services (ERS) as remuneration consultant to
the Board to review the amounts and elements of the KMP remuneration and provide recommendations in relation thereto.
ERS provided valuable market analysis in relation to the remuneration of the KMP, non-executive directors and other general
managers of the consolidated entity.
Consultant fees incurred for the financial year were $21,500. The Board is satisfied that the remuneration recommendations
made by ERS are free from undue influence by members of the KMP about whom the recommendations may relate as the
consultants were directly engaged by and reported to the Board.
Consequences of Performance on Shareholders’ Wealth
In considering the consolidated entity’s performance and benefits for shareholders’ wealth, the Board have regard to the
following indices in respect of the current financial year and the four previous financial years.
Profit attributable to owners
of the company
Basic EPS
Dividends paid
Dividends per share
Change in share price
Return on capital employed (i)
Return on equity (ii)
Return on equity (iii)
2015
2014
2013
2012
2011
$30,593,000
$28,151,000
$28,021,000
$27,849,000
$22,038,000
20.34¢
18.94¢
19.11¢
19.24¢
16.84¢
$17,249,000
$15,563,000
$14,656,000
$12,272,000
$9,464,000
11.50¢
0.52
18.48%
16.94%
18.90%
10.50¢
0.09
21.83%
17.22%
18.40%
10.00¢
0.49
24.78%
18.96%
18.96%
8.95¢
(0.62)
30.34%
23.68%
23.68%
7.30¢
1.07
35.02%
24.93%
24.93%
(i) Calculated as EBIT divided by average capital employed (net debt plus equity).
(ii) Calculated as NPAT divided by the average equity.
(iii) Calculated as Underlying Cash NPAT divided by the average equity.
Annual Report 2015 33
Directors’ Report
Principles of remuneration (continued)
Senior Executive Contract details
The remuneration details of the key management personnel from 1 April 2015 are:
Name
Title
Term / Notice
Details
James Marshall
Chief Executive Officer
and Managing Director
Ongoing
6 month notice period
• Annual base salary of $550,000 inclusive of
superannuation.
• No termination benefit is payable.
Peter Eaton
Chief Financial Officer
Ongoing
3 month notice period
• Annual base salary of $367,500 inclusive of
superannuation.
• A retention payment of $100,000 is payable at 31 May
2015 in the form of equity.
• No termination benefit is payable.
Derrick Hubble
GM – Consumer Leasing Ongoing
• Annual base salary of $290,286 inclusive of
Matt Ingram
GM – Business Finance
3 month notice period
superannuation.
• No termination benefit is payable.
Ongoing
3 month notice period
• Annual base salary of $267,597 inclusive of
superannuation.
• No termination benefit is payable.
Rob Price
GM – Consumer Finance Ongoing
• Annual base salary of $256,247 inclusive of
3 month notice period
superannuation.
• No termination benefit is payable.
Sean Jones
GM – Credit
Management
Ongoing
3 month notice period
• Annual base salary of $230,000 inclusive of
superannuation.
• No termination benefit is payable.
Non-Executive Directors
Total remuneration for all non-executive directors, last voted upon by shareholders at the 2013 AGM, is not to exceed $650,000
per annum and is set based on advice from external advisors with reference to fees paid to other non-executive directors
of comparable companies.
The following fee structure was applicable for the financial years:
Base fees per annum
Chair of the Board
Directors
Additional fees per annum
Chair of Audit, Risk and Compliance Committee
Chair of Remuneration and Nomination Committee
2015
2014
$170,980
$85,490
$166,000
$83,000
$15,000
$10,000
$15,000
$10,000
Notes to the Non-Executive Directors fees
• Non-executive directors do not receive performance-related remuneration and do not participate in employee share based
payment schemes.
• No Committee fees were paid in 2015 as they were incorporated into the base fees.
• The above fees do not include superannuation.
34 Thorn Group
Directors’ and Executive Officers’ Remuneration (Company and Consolidated – Audited)
Details of the nature and amount of each major element of remuneration of each director of the Company and other KMP of the
consolidated entity are:
2015
Name
Non-Executive Directors
Joycelyn Morton
Stephen Kulmar1
Peter Henley
David Foster2
David Carter3
Subtotal non-executive directors
Executive Directors
James Marshall
John Hughes4
Short-term
Salary &
fees
$
STI cash
bonus
$(A)
Other
benefits
$(B)
Post-
employ-
ment
Super-
annuation
benefits
$
Long-term
benefits
Long
Service
Leave
$
Retention
payment
$
Share-
based
payments
Options
and
rights
$(C)
140,729
89,933
84,226
32,852
86,831
434,571
–
–
–
–
–
–
–
–
–
–
–
–
13,313
8,501
7,954
3,121
8,153
41,042
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
$
154,042
98,434
92,180
35,973
94,984
475,613
435,796 152,505
1,439
18,551
93,946
50,000
103,369
855,606
180,830
–
300,000
4,824
1,261
37,500
–
524,415
Subtotal Executive directors
616,626 152,505
301,439
23,375
95,207
87,500
103,369 1,380,021
Total directors remuneration
1,051,197
152,505
301,439
64,417
95,207
87,500
103,369 1,855,634
Other Key Management Personnel
Peter Eaton
Derrick Hubble
Matt Ingram
Rob Price5
Sean Jones
Richard Shepherd6
Subtotal other Key Management
Personnel
Total Key Management Personnel
compensation (group)
331,217 104,030
–
18,551
17,937
133,333
92,165
697,233
230,000
65,957
7,213
20,648
229,224
63,336
50,000
18,551
38,923
8,903
12,500
182,745
27,607
213,666
–
–
–
3,179
16,930
15,661
–
–
–
–
–
–
–
–
–
–
10,744
334,562
10,658
371,769
–
63,505
8,595
235,877
–
229,327
1,225,775 269,833
69,713
93,520
17,937
133,333
122,161
1,932,272
2,276,972 422,338
371,152
157,937
113,144
220,833
225,530 3,787,906
The remuneration for Stephen Kulmar for 2015 reflects remuneration during the period from 15 April 2014, the date of his appointment
1
The remuneration for David Foster for 2015 reflects remuneration during the period from 1 December 2014, the date of his appointment
2
3
The remuneration of David Carter for 2015 reflects remuneration during the period to 17 November 2014, the date of his resignation
4 The remuneration of John Hughes for 2015 reflects remuneration during the period to 30 June 2014, the date of his retirement and
included in other benefits is his termination payment
The remuneration of Rob Price for 2015 reflects remuneration during the period from 27 January 2015, the date of his appointment
The remuneration of Richard Shepherd for 2015 reflects remuneration during the period to 30 January 2015, the date of his resignation.
5
6
Annual Report 2015 35
Directors’ Report
Directors’ and Executive Officers’ Remuneration (Company and Consolidated – Audited) (continued)
2014
Name
Non-Executive Directors
David Carter
Peter Henley
Joycelyn Morton
Paul Lahiff 1
Subtotal non-executive directors
Executive Directors
John Hughes
Short-term
Post-
employ-
ment
Long-term
benefits
Salary &
fees
$
STI cash
bonus
$(A)
Non-
monetary
benefits
$(B)
Super-
annuation
benefits
$
Long
Service
Leave
$
Retention
payment
$
Share-
based
payments
Options
and
rights
$(C)
166,000
83,000
98,000
33,200
380,200
–
–
–
–
–
–
–
–
–
–
15,259
7,630
9,008
3,023
34,920
–
–
–
–
–
–
–
–
–
–
590,526
208,916
3,379
17,474
8,510 150,000
Total
$
181,259
90,630
107,008
36,223
415,120
978,805
978,805
–
–
–
–
–
–
–
Subtotal Executive directors
590,526
208,916
3,379
17,474
8,510 150,000
Total directors remuneration
970,726
208,916
3,379
52,394
8,510 150,000
– 1,393,925
Other Key Management Personnel
James Marshall
Peter Eaton
Subtotal other Key Management
Personnel
Total Key Management Personnel
compensation (group)
261,178
104,627
275,853
104,627
11,414
8,289
17,474
17,474
16,904 100,000
63,700
575,297
4,846 100,000
63,700
574,789
537,031
209,254
19,703
34,948
21,749 200,000
127,400 1,150,085
1,507,757
418,170
23,082
87,342
30,259 350,000
127,400 2,544,010
1
The remuneration for Paul Lahiff for 2014 reflects remuneration during the period to 22 August 2013, the date of his retirement.
Notes in relation to the Table of Directors’ and Executive Remuneration
A. The short term incentive bonus for 2015 is for performance during the financial year.
B. Other benefits as disclosed in both tables includes cost of providing a motor vehicle, any fringe benefits tax attributable
thereto, sign on bonuses and termination payments.
C. The fair value of the performance rights is calculated at the date of grant using a Monte Carlo simulation model and
allocated to each reporting period evenly over the period from grant date to the expected vesting date. The value disclosed
is the portion of the fair value of the performance rights allocated to this reporting period. In valuing the performance
rights, market conditions have been taken into account.
The table below outlines the factors and assumptions were used in determining the fair value of performance rights at
grant date.
Grant date
Initial Test date
Expiry Date
Fair Value Per
Performance
Right
Exercise
Price
Price of
Shares on
Grant Date
Expected
Volatility
Risk Free
Interest Rate
Dividend
Yield
7 Dec 2012
7 Dec 2012
7 Dec 2012
1 July 2014
1 Jun 2015
31 Dec 2017
1 Jun 2016
31 Dec 2017
1 Jun 2017
31 Dec 2017
1 Jun 2017
31 Jul 2017
$1.40
$1.28
$1.15
$1.24
Nil
Nil
Nil
Nil
$1.91
$1.91
$1.91
$2.17
32.0%
32.0%
32.0%
28.0%
2.7%
2.7%
2.7%
2.7%
6.0%
6.0%
6.0%
5.0%
36 Thorn Group
The below table summarises KMP remuneration split by Fixed, Short Term and Long Term.
Name
James Marshall
Peter Eaton
Derrick Hubble
Matt Ingram
Rob Price
Sean Jones
Richard Shepherd
Fixed %
At Risk – STI %
At Risk – LTI %
Total %
2015
2014
2015
2014
2015
2015
2015
2015
2015
64
51
53
52
77
67
66
85
100
24
38
34
37
20
30
34
11
–
12
11
13
11
3
3
–
4
–
100
100
100
100
100
100
100
100
100
2015 STI outcomes – audited
The STI pool was funded as the Company achieved its NPAT target. KMP achieved their personal KPIs which related to new
systems, development of new offerings and further development of Company strategic objectives. No bonus payments were
forfeited in the period.
Directors
James Marshall
Executives
Peter Eaton
Derrick Hubble
Matt Ingram
Rob Price1
Sean Jones
Short Term Incentive
Salary
($)
Included in
Remuneration
($)
% Paid
490,000
31.12
152,505
350,000
268,783
247,775
248,783
200,000
29.72
24.54
25.56
3.58
13.80
104,030
65,957
63,336
8,903
27,607
1
The Short Term Incentive for Rob Price is a pro-rata calculation as he commenced with the Company during the measurement period.
Annual Report 2015 37
Directors’ Report
Equity Instruments
Performance rights granted as compensation in the year
Director
James Marshall
Executive
Peter Eaton
Derrick Hubble
Matt Ingram
Sean Jones
Performance Rights Granted
Financial Year in
Which Grants Vests
Values Yet to Vest $
Number
Date
Min (a)
Max (b)
66,556
1 July 2014
2018
34,425
34,425
34,150
27,540
1 July 2014
1 July 2014
1 July 2014
1 July 2014
2018
2018
2018
2018
Nil
Nil
Nil
Nil
Nil
N/A
N/A
N/A
N/A
N/A
Analysis of performance rights available for vesting
Details of the performance rights available for vesting to each director of the Company and other KMP are detailed below:
Director
James Marshall
Executive
Peter Eaton
Derrick Hubble
Matt Ingram
Sean Jones
Performance Rights Granted
Financial Year in
Which Grants Vests
Values Yet to Vest $
Number
Date
Min (a)
Max (b)
63,291
63,291
63,291
66,556
63,291
63,291
63,291
34,425
34,425
34,150
27,540
7 Dec 2012
2015 – 2018
7 Dec 2012
2016 – 2018
7 Dec 2012
2017 – 2018
1 July 2014
2018
7 Dec 2012
2015 – 2018
7 Dec 2012
2016 – 2018
7 Dec 2012
2017 – 2018
1 July 2014
1 July 2014
1 July 2014
1 July 2014
2018
2018
2018
2018
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
(a) The minimum value of the performance rights to vest is nil as the performance rights criteria may not be met and consequently the
performance rights may not vest.
(b) The maximum value of the performance rights yet to vest is not determinable as it depends on the market price of shares of the Company
on the Australian Securities Exchange at the date the performance rights are exercised.
(c) The performance rights that did not vest will be retested at the next vesting date.
38 Thorn Group
Analysis of Movements in Performance Rights
The movement during the reporting period, by value, of performance rights over ordinary shares in Thorn Group Limited held by
each Company director and KMP are detailed below:
Value of Performance Rights
James Marshall
Peter Eaton
Derrick Hubble
Matt Ingram
Sean Jones
Granted
in year (a)
$
82,529
42,687
42,687
42,346
34,150
244,399
Exercised
in year
$
Forfeited
in year
$
–
–
–
–
–
–
–
–
–
–
–
–
(a) The fair value of the performance rights is calculated at the date of the grant based upon the Monte Carlo simulation model.
Performance Rights Over Equity Instruments Granted
The movement during the year in the number of performance rights over ordinary shares in Thorn Group Limited held directly,
indirectly or beneficially, by each key management person, including their related parties is as follows:
Held at
1 April 2014
Granted as
Compensation
Exercised
Lapsed during
the year
Held at
31 March 2015
Vested during
the year
James Marshall
Peter Eaton
Derrick Hubble
Matt Ingram
Sean Jones
189,873
189,873
–
–
–
66,556
34,425
34,425
34,150
27,540
–
–
–
–
–
–
–
–
–
–
256,429
224,298
34,425
34,150
27,540
–
–
–
–
–
Events Subsequent To Reporting Date
There has not arisen in the interval between the end of the
financial year and the date of this report any item, transaction
or event of a material and unusual nature likely, in the opinion
of the directors of the Company, to affect significantly the
operations of the consolidated entity, the results of those
operations, or the state of affairs of the consolidated entity,
in future financial years.
Likely Developments
The consolidated entity will continue to pursue its policy of
increasing the profitability and market share of its major
business sectors during the next financial year.
For further information about likely developments in the
operations of the consolidated entity and the expected results
of those operations in future financial years, refer to the
Operating and Financial Review on page 22.
Performance rights
Performance rights granted to directors and officers
of the Company
During the financial year, the Company has granted
performance rights over unissued ordinary shares in the
Company to the key management personnel of the Company.
Page 38 – 39 provides the details of those performance rights
which have not vested at the date of the report.
Unissued shares under options
At the date of this report there are no unissued ordinary
shares of the Company under option.
Annual Report 2015 39
Rounding Off
The Company is of a kind referred to in ASIC Class Order
98/100 dated 10 July 1998 and in accordance with that Class
Order, amounts in the financial report and directors’ report
have been rounded off to the nearest thousand dollars, unless
otherwise stated.
Lead Auditor’s Independence Declaration
The Lead Auditor’s independence declaration is set out on
page 46 and forms part of the directors’ report for financial
year ended 31 March 2015.
This report is made in accordance with a resolution of the
directors:
Joycelyn Morton
Chair
Dated at Sydney
27 May 2015
Directors’ Report
Indemnification and Insurance of Officers and Auditors
Indemnification
The Company has agreed to indemnify the current, former
and subsequent directors and officers of the Company, against
all liabilities to another person (other than the Company or
a related body corporate) that may arise from their position
as directors or officers of the Company and its controlled
entities, except where the liability arises out of conduct
involving a lack of good faith. The agreement stipulates that
the Company will meet the full amount of any such liabilities,
including costs and expenses.
Insurance Premiums
During the financial year the Company has paid insurance
premiums of $44,187 in respect of directors’ and officers’
liability and legal expenses’ insurance contracts, for current
and former directors and officers, including senior executives
of the Company and directors, senior executives and
secretaries of its controlled entities. The insurance premiums
relate to:
• costs and expenses incurred by the relevant officers in
defending proceedings, whether civil or criminal and
whatever their outcome; and
• other liabilities that may arise from their position, with the
exception of conduct involving misconduct.
The insurance policies outlined above do not contain
details of the premiums paid in respect of individual officers
of the Company.
Non-Audit Services
During the year KPMG, the Company’s auditor, has performed
certain other services in addition to their statutory duties.
The Board has considered the non-audit services provided
during the year by the auditor and is satisfied that the
provision of those non-audit services during the year by the
auditor is compatible with, and did not compromise, the
auditor independence requirements of the Corporations Act
2001 for the following reasons:
• all non-audit services were subject to the corporate
governance procedures adopted by the Company and have
been reviewed by the Audit Risk and Compliance Committee
to ensure they do not impact the integrity and objectivity of
the auditor;
• the non-audit services provided do not undermine the
general principles relating to auditor independence; and
• as set out in APES110 Code of Ethics for Professional
Accountants, as they did not involve reviewing or auditing
the auditor’s own work, acting in a management or decision
making capacity for the Company, acting as an advocate for
the Company or jointly sharing risks and rewards.
Details of the amounts paid to the auditor of the consolidated
entity, KPMG, and its related practices for audit and non-audit
services provided during the year are set out in note 21.
40 Thorn Group
Corporate Governance Statement
This statement outlines the main corporate governance
practices in place throughout the financial year, which
comply with the ASX Corporate Governance Council
recommendations, unless otherwise stated.
Board of Directors
Role of the Board
The Board’s primary role is the protection and enhancement
of long-term shareholder value.
To fulfil this role, the Board is responsible for the overall
corporate governance of the Company including formulating
its strategic direction, approving and monitoring capital
expenditure, setting remuneration, appointing, removing
and creating succession policies for directors and senior
executives, establishing and monitoring the achievement
of management’s goals and ensuring the integrity of
risk management, internal control, legal compliance and
management information systems. It is also responsible for
approving and monitoring financial and other reporting.
In order to ensure that the Board functions and
responsibilities are clearly identified, the Company has
adopted a formal Board Charter.
A copy of the Board Charter is located on the Company’s
website (www.thorn.com.au).
The Board has delegated responsibility for operation and
administration of the Company to the Managing Director
and executive management. Responsibilities are delineated
by formal authority delegations.
Board Processes
To assist in the execution of its responsibilities, the Board
has established an Audit, Risk and Compliance Committee
and a Remuneration and Nomination Committee. These
committees have written mandates and operating procedures,
which are reviewed on a regular basis. The Board has also
established a framework for the management of the Company
including a system of internal control, a business risk
management process and the establishment of appropriate
ethical standards.
The full Board currently holds scheduled meetings each
year, 10-14 per annum, plus strategy meetings and any
extraordinary meetings at such other times as may be
necessary to address any specific significant matters that may
arise. The Board Charter requires the full Board to meet at
least once per year to review the performance of the directors,
committees, and senior executives, as well as, the relationship
between the Board and management and matters of general
corporate governance.
The agenda for Board meetings is prepared in conjunction
with the Chairperson, Managing Director and Company
Secretary. Standing items include the divisional report,
finance report, strategic matters, governance, compliance and
continuous disclosure. Submissions are circulated in advance.
Executives are regularly involved in Board discussions and
directors have other opportunities, including visits to business
operations, for contact with a wider group of employees.
Director and Executive Education
The Company has a formal process to educate new directors
about the nature of the business, current issues, the corporate
strategy, the culture and values of the Company, and the
expectations of the Company concerning performance of
directors. In addition, Directors are also educated regarding
meeting arrangements and director interaction with each
other, senior executives and other stakeholders. Directors
also have the opportunity to visit the Company’s facilities
and meet with management to gain a better understanding
of business operations. Directors are given access to
continuing education opportunities to update and enhance
their skills and knowledge.
The Company also has a formal process to educate new
senior executives upon taking such positions. The induction
program includes reviewing the Company structure, strategy,
operations, financial position and risk management policies.
It also familiarises the individual with the respective rights,
duties, responsibilities and roles of the individual and
the Board.
Independent Professional Advice and Access
to Company Information
Each director has the right of access to all relevant Company
information and to the Company’s executives and, subject
to prior consultation with the Chairperson, may seek
independent professional advice from a suitably qualified
adviser at the Company’s expense. The director must consult
with an advisor suitably qualified in the relevant field, and
obtain the Chairperson’s approval of the fee payable for the
advice before proceeding with consultation. A copy of the
advice received by the director is made available to all other
members of the Board.
Composition of the Board
The names of the directors of the Company in office at the
date of this report, specifying which are independent, are set
out on pages 26 to 27 of this report. The composition of the
Board is determined using the following principles:
• a minimum of three directors, with a broad range
of expertise both nationally and internationally;
• a majority of independent non-executive directors;
• a majority of directors having extensive knowledge of
the Company’s industries, and/or extensive expertise
in significant aspects of auditing and financial reporting,
or risk management of large companies;
• a non-executive independent director as Chairperson; and
• directors are subject to re-election every three years
(except for the Managing Director).
The Board considers the mix of skills and diversity of Board
members when assessing the composition of the Board.
The Board assesses existing and potential directors’ skills
to ensure they have appropriate industry expertise in the
Company’s operating segments.
Annual Report 2015 41
Corporate Governance Statement
The Board considers the diversity of existing and potential
directors to ensure they are in line with the geographical and
operational segments of the Company. The Board’s policy is
to seek a diverse range of directors who have a range of ages,
genders and ethnicity which mirrors the environment in which
the Company operates.
An independent director is a director who is not a member of
management (a non-executive director) and who:
1. holds less than five per cent of the voting shares of the
Company and is not an officer of, or otherwise associated,
directly or indirectly, with a shareholder of more than five
per cent of the voting shares of the Company;
2. has not within the last three years been employed in an
executive capacity by the Company or a related body
corporate or has become a director within three years of
ceasing to hold any such employment;
3. within the last three years has not been a principal of a
4.
material professional adviser or a material consultant
to the Company or another Company member or an
employee materially associated with the service provided;
is not a material supplier or customer of the Company or
another member of the consolidated entity, or an officer
of or otherwise associated, directly or indirectly, with a
material supplier or customer;
5. has no material contractual relationship with the
6.
Company or a related body corporate other than as a
director of the Company; and
is free from any interest and any business or other
relationship which could, or could reasonably be
perceived to, materially interfere with the director’s
ability to act in the best interests of the Company.
The Board considers, ‘material’, in this context, to be where
any director-related business relationship has represented,
or is likely in future to represent the lesser of at least ten
per cent of the relevant segment’s or the director-related
business’ revenue. The board considered the nature of the
relevant industries’ competition and the size and nature of
each director-related business relationship, in arriving at this
threshold (refer Note 20).
Applying these criteria, the Board is satisfied that Joycelyn
Morton, Stephen Kulmar, Peter Henley, and David Foster
are independent. In accordance with the ASX Corporate
Governance Guidelines, the Chairperson is an independent
director, and the positions of Managing Director and
Chairperson are held by different directors.
Remuneration and Nomination Committee
The Remuneration and Nomination Committee has a
documented charter, approved by the Board. All members are
non-executive directors with a majority being independent.
The Remuneration and Nomination Committee assists the
Board in its oversight responsibilities by monitoring and
advising on:
• remuneration packages of senior executives, non-executive
directors and executive directors;
• share option schemes and incentive performance packages;
42 Thorn Group
• executive contracts;
• recruitment, retention and termination policies relating
to the Board and senior executives; and
• monitoring the size and composition of the Board.
The members of the Remuneration and Nomination
Committee during the year were:
• Stephen Kulmar (Chairperson) – Independent, Non-
Executive (appointed 15 April 2014)
• Joycelyn Morton – Independent, Non-Executive
• Peter Henley – Independent, Non-Executive
• David Foster – Independent, Non-Executive
(appointed 1 December 2014)
• David Carter – Independent, Non-Executive
(retired 17 November 2014)
The Managing Director, James Marshall, is also invited to
Remuneration and Nomination Committee meetings, as
required, to discuss senior executives’ performance and
remuneration packages but does not attend meetings
involving matters pertaining to himself.
From time to time, the Committee takes advice from external
consultants to identify potential candidates for the Board.
The Committee makes recommendations to the Board on the
candidates, which votes on them. The Board then appoints the
most suitable candidates. Board candidates must stand for
election at the general meeting of shareholders immediately
following their appointment.
Korn Ferry was engaged during the financial year by the Board
to assist in the recruitment of a Non-Executive Director. Fees
of $80,000 were incurred.
The terms and conditions of the appointment and
retirement of non-executive directors are set out in a letter
of appointment, including expectations of attendance
and preparation for all Board meetings, minimum hourly
commitment, appointments to other boards, the procedures
for dealing with conflicts of interest and the availability of
independent professional advice.
The Remuneration and Nomination Committee meets at least
three times a year and as required. The Committee met four
times during the year and Committee members’ attendance
record is disclosed in the table of directors’ meetings on
page 28.
Audit, Risk and Compliance Committee
The Audit, Risk and Compliance Committee has a
documented charter, approved by the Board. The charter is
available on the Company’s website. All members are non-
executive directors with a majority being independent. The
Chairperson may not be the Chairperson of the Board. The
Audit, Risk and Compliance Committee advises the Board
on the establishment and maintenance of a framework of
internal control and appropriate ethical standards for the
management of the Company.
The members of the Audit, Risk and Compliance Committee
during the year were:
• David Foster (Chairperson) – Independent, Non-Executive
(appointed 1 December 2014)
• Joycelyn Morton (Chairperson) – Independent, Non-
Executive
• Peter Henley – Independent, Non-Executive
• Stephen Kulmar – Independent, Non-Executive
(appointed 15 April 2014)
• David Carter – Independent, Non-Executive
(retired 17 November 2014)
The Company Secretary, Peter Eaton, acts as Secretary
to the Committee.
The internal and external auditors, the Managing Director
and the Chief Financial Officer are invited to Audit, Risk and
Compliance Committee meetings at the discretion of the
Committee. The Committee is required to meet at least twice
during the year and committee members’ attendance record
is disclosed in the table of directors’ meetings on page 28.
The external auditor met with the Audit, Risk and Compliance
Committee six times during the year without management
being present.
The Managing Director and the Chief Financial Officer have
declared in writing to the Board that the financial records of
the Company and the consolidated entity for the financial
year have been properly maintained, the Company’s financial
reports for the financial year ended 31 March 2015 comply
with accounting standards and present a true and fair view
of the Company’s financial condition and operational results.
This statement is required annually.
The responsibilities of the Audit, Risk and Compliance
Committee include:
• reviewing the annual and half year financial reports and
other financial information distributed externally;
• assessing management processes supporting external
reporting;
• assessing corporate risk assessment processes;
• assessing the performance and objectivity of the internal
audit function;
• establishing procedures for selecting, appointing and if
necessary, removing the external auditor;
• assessing whether non-audit services provided by the
external auditor are consistent with maintaining the
external auditor’s independence. Each reporting period the
external auditor provides an independence declaration in
relation to the audit or review;
• providing advice to the Board in respect of whether the
provision of the non-audit services by the external auditor
is compatible with the general standard of independence of
auditors imposed by the Corporation Act 2001;
• assessing the adequacy of the internal control framework
and the Company’s code of ethical standards; and
• organising, reviewing and reporting on any special reviews
or investigations deemed necessary by the Board.
The Audit, Risk and Compliance Committee reviews the
performance of the external auditors on an annual basis and
meets with them during the year to:
• discuss the external audit, identifying any significant
changes in structure, operations, internal controls or
accounting policies likely to impact the financial statements
and to review the fees proposed for the audit work to be
performed;
• review the half-year and preliminary final report prior to
lodgement with the ASX, and any significant adjustments
required as a result of the auditor’s findings, and to
recommend Board approval of these documents, prior to
announcement of results;
• review the draft annual and half-year financial report, and
recommend Board approval of the financial report; and
• review the results and findings of the external audit, the
adequacy of accounting and financial controls, and to
monitor the implementation of any recommendations made.
Risk Management
Oversight of the Risk Management System
The Board oversees the establishment, implementation
and review of the Company’s Risk Management System.
Management has established and implemented the Risk
Management System for assessing, monitoring and
managing all risks, including material business risks, for
the consolidated entity (including sustainability risk). The
Managing Director and the Chief Financial Officer have
provided assurance, in writing to the Board, that the financial
reporting, risk management and associated compliance
and controls have been assessed and found to be operating
effectively. The operational and other risk management
compliance and controls have also been assessed and found
to be operating effectively.
Risk Profile
Management provide the risk profile on a six monthly
basis to the Audit, Risk and Compliance Committee that
outlines the material business risks to the Company. Risk
reporting includes the status of risks through integrated risk
management programs aimed at ensuring risks are identified,
assessed and appropriately managed. The Audit, Risk and
Compliance Committee reports the status of material business
risks to the Board on a regular basis.
Material business risks for the Company may arise from
such matters as actions by competitors, government policy
changes, the impact of exchange rate movements on the
price of products and sales, difficulties in sourcing supply of
products, environment, workplace health and safety, property,
financial reporting and the purchase, development and use of
information systems.
Risk Management, Compliance and Control
The Company strives to ensure that its products and services
are of the highest standard. The Board is responsible for the
overall internal control framework, but recognises that no
cost-effective internal control system will preclude errors
and irregularities. The Board’s policy on internal control is
comprehensive.
Annual Report 2015 43
Corporate Governance Statement
Comprehensive practices have been established to ensure:
• capital expenditure and revenue commitments above a
certain size obtain prior Board approval;
• financial exposures are controlled;
• workplace health and safety standards and management
systems are monitored and reviewed to achieve high
standards of performance and compliance with regulations;
• business transactions are properly authorised and executed;
• the quality and integrity of personnel;
• financial reporting accuracy and compliance with the
financial reporting regulatory framework; and
• environmental regulation compliance.
Quality and Integrity of Personnel
Formal appraisals are conducted at least annually for all
employees. Training and development and appropriate
remuneration and incentives with regular performance
reviews create an environment of cooperation and
constructive dialogue with employees and senior
management. A formal succession plan is in place to ensure
competent and knowledgeable employees fill senior positions
when retirements or resignations occur.
Financial Reporting
The Managing Director and the Chief Financial Officer
have provided assurance in writing to the Board that the
Company’s financial reports are founded on a sound system
of risk management and internal compliance and control
which implements the policies adopted by the Board.
Monthly actual results are reported against budgets approved
by the directors and revised forecasts for the year are
prepared regularly.
Environmental Legislation
The consolidated entity’s operations are not subject
to significant environmental regulations under either
Commonwealth or State legislation. The Directors are of the
belief that the consolidated entity has adequate systems in
place for the management of its environmental requirements
and is not aware of any of those environmental requirements
as they apply to the consolidated entity.
Internal Audit
The internal auditors assist the Board in ensuring compliance
with internal controls and risk management programs by
regularly reviewing the effectiveness of the above mentioned
compliance and control systems. The results of internal audits
are reported on a monthly basis to the Board.
44 Thorn Group
Ethical Standards
All directors, managers and employees are expected to act
with the utmost integrity and objectivity, striving at all times
to enhance the reputation and performance of the Company
and consolidated entity. In order to promote ethical and
responsible decision making, the Company has implemented a
Code of Conduct to guide the directors and senior executives.
Further, the Company has implemented a formal Securities
Trading policy in order to formalise the Company’s position
on employees trading in the Company’s securities. Every
employee has a nominated supervisor to whom they may
refer any issues arising from their employment. The Board
reviews the Code of Conduct and processes are in place to
promote and communicate these policies. Both of these
policies are available on the Company’s website.
Conflict of Interest
Directors must keep the Board advised, on an ongoing basis,
of any interest that could potentially conflict with those of
the Company. The Board has developed procedures to assist
directors to disclose potential conflicts of interest.
Where the Board believes that a significant conflict exists
for a director on a Board matter, the director concerned
does not receive the relevant Board papers and is not
present at the meeting whilst the item is considered. Details
of director-related entity transactions with the Company
and the consolidated entity are set out in note 20 to the
financial statements.
Code of Conduct
The Company’s Code of Conduct aims to maintain appropriate
core Company values and objectives. The Company has
advised each director, manager and employee that they must
comply with the Code of Conduct.
The Company’s Code of Conduct covers issues such as
delivering shareholder value, managing conflicts of interest,
confidentiality, fair and honest dealings, workplace health and
safety, equal opportunity and compliance with laws. The Code
encourages reporting of unethical behaviour. The Company
has a Whistleblower Policy and a confidential whistleblowing
service which provides its staff with an avenue to report
suspected unethical, illegal or improper behaviour.
Securities Trading Policy
The Company and the consolidated entity has a Securities
Trading policy, which sets out the circumstances under which
directors, senior executives, and employees of the Company
and the consolidated entity may deal in securities with the
objective that no director, senior executive or other employee
will contravene the requirements of the Corporations Act
2001 or the ASX Listing Rules.
The policy outlines the restricted trading periods for the
Company as the month immediately before the release of the
Company’s half yearly and yearly results.
The policy is reproduced in full on the Company’s website.
Diversity Policy
The Board is committed to having an appropriate blend of diversity on the Board and senior executive positions. The Board has
established a policy regarding gender, age, ethnic and cultural diversity.
The policy is reproduced in full on the Company’s website.
The consolidated entity’s diversity performance is as follows:
Gender Representation
Board Representation
Key Management Personnel Representation
Group Representation
2015 Male
2015 Female
2014 Male
2014 Female
83%
100%
53%
17%
–
47%
83%
100%
53%
17%
–
47%
Communication with Shareholders
The Board provides shareholders with information using a
comprehensive Continuous Disclosure Policy which includes
identifying matters that may have a material effect on the
price of the Company’s securities, notifying them to the ASX,
posting them on the Company’s website and issuing media
releases. The Continuous Disclosure Policy is available on the
Company’s website.
In summary, the Continuous Disclosure policy operates
as follows:
• the policy identifies information that needs to be disclosed;
• the Managing Director, the Chief Financial Officer and
the Company Secretary are responsible for interpreting
the Company’s policy and where necessary informing
the Board. The Company Secretary is responsible for all
communications with the ASX;
• the full annual report provided via the Company’s website
to all shareholders (unless a shareholder has specifically
requested to receive a physical copy or not to receive
the document), including relevant information about
the operations of the consolidated entity during the
year, changes in the state of affairs and details of future
developments;
• the half-yearly report contains summarised financial
information and a review of the operations of the
consolidated entity during the period. The half-year
reviewed financial report is lodged with the Australian
Securities and Investments Commission and the ASX;
• proposed major changes in the consolidated entity which
may impact the share ownership rights are submitted to a
vote of shareholders;
• all announcements made to the market, and related
information (including information provided to analysts or
the media during briefings), are placed on the Company’s
website after they are released to the ASX;
• the full texts of notices of meetings and associated
explanatory material are placed on the Company’s website;
and
• the external auditor attends the Annual General Meetings to
answer questions concerning the conduct of the audit, the
preparation and content of the auditor’s report, accounting
policies adopted by the Company and the independence of
the auditor in relation to the conduct of the audit.
The Company does not have a formal shareholder
communication policy, however it provides information to
shareholders via the Company’s website, which has links to
recent Company announcements and past annual reports,
results presentations and various ASX pages, including the
current share price.
The Board supports full participation of shareholders
at the Annual General Meeting, to ensure a high level of
accountability and identification with the Company’s strategy
and goals. Important issues are presented to the shareholders
as single resolutions.
The shareholders are requested to vote on the appointment
and aggregate remuneration of directors, the granting of
options and shares to directors, the Remuneration Report and
changes to the Constitution. Copies of the Constitution are
available to any shareholder who requests it.
Annual Report 2015 45
ABCD
Lead Auditor’s Independence Declaration
Independent auditor’s report to the members of SG Fleet Group Limited
Report on the financial report
We have audited the accompanying financial report of SG Fleet Group Limited (the Company),
Lead Auditors’s Independence Declaration under Section 307C of the Corporations Act 2001
which comprises the consolidated statement of financial position as at 30 June 2014, and
To: the directors of Thorn Group Limited
consolidated statement of profit and loss and comprehensive income, consolidated statement of
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 31 March 2015 there
changes in equity and consolidated statement of cash flows for the period ended on that date,
have been:
notes 1 to 39 comprising a summary of significant accounting policies and other explanatory
(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in realtion to the
information and the directors’ declaration of the Group comprising the company and the entities
it controlled at the period’s end or from time to time during the financial period.
(ii) no contraventions of any applicable code of professional conduct in relation to the audit.
Directors’ responsibility for the financial report
audit; and
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
KPMG
enable the preparation of the financial report that is free from material misstatement whether
due to fraud or error. In note 2, the directors also state, in accordance with Australian
Accounting Standard AASB 101 Presentation of Financial Statements, that the financial
statements of the Group comply with International Financial Reporting Standards.
Anthony Travers
Auditor’s responsibility
Partner
Our responsibility is to express an opinion on the financial report based on our audit. We
Sydney
conducted our audit in accordance with Australian Auditing Standards. These Auditing
27 May 2015
Standards require that we comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable assurance whether the
financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s judgement,
including the assessment of the risks of material misstatement of the financial report, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation of the financial report that gives a true and fair view 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 entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by the directors, as well as evaluating the overall presentation of the financial
report.
We performed the procedures to assess whether in all material respects the financial report
presents fairly, in accordance with the Corporations Act 2001 and Australian Accounting
Standards, a true and fair view which is consistent with our understanding of the Group’s
financial position and of its performance.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
KPMG, an Australian partnership and a member firm
of the KPMG network of independent member firms
affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity.
Liability limited by a scheme
approved under Professional
Standards Legislation.
46 Thorn Group
Statement of Comprehensive Income
For The Year Ended 31 March 2015
In thousands of AUD
Revenue
Finance lease cost of sales
Employee benefit expense
Depreciation & amortisation expense
Impairment losses on loans and receivables
Marketing expenses
Property expenses
Transport expenses
Communication & IT expenses
Finance expenses
Travel expenses
Acquisition Costs
Other expenses
Profit before income tax
Income tax expense
Profit for the period
Other comprehensive income – items that may be reclassified
subsequently to profit or loss
Movement in fair value of cash flow hedge
Total comprehensive income
Basic earnings per share (cents)
Diluted earnings per share(cents)
Note
2015
2014
3
19
9
14
14
293,846
234,855
(71,703)
(53,853)
(32,481)
(27,598)
(12,993)
(9,923)
(6,905)
(5,372)
(4,318)
(1,586)
(2,246)
(20,205)
44,663
(14,070)
(38,583)
(48,859)
(36,213)
(17,029)
(11,358)
(9,345)
(6,737)
(4,684)
(2,073)
(1,323)
–
(17,619)
41,032
(12,881)
30,593
28,151
(134)
30,459
20.34
20.34
–
28,151
18.94
18.94
The statement of comprehensive income is to be read in conjunction with the notes of the financial statements set out on
pages 52 to 75.
Annual Report 2015 47
Statement of Financial Position
As at 31 March 2015
In thousands of AUD
Assets
Cash and cash equivalents
Trade and other receivables
Income tax receivable
Total current assets
Trade and other receivables
Deferred tax assets
Property, plant and equipment
Rental Assets
Intangible assets
Total non-current assets
Total assets
Liabilities
Trade payables
Other payables
Loans and borrowings
Employee benefits
Income tax payable
Provisions
Total current liabilities
Loans and borrowings
Employee benefits
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
Note
2015
2014
4
4
10
6
8
12
12
13,856
129,113
1,379
144,348
160,518
1,503
3,957
33,215
32,926
232,119
376,467
19,291
14,582
19,778
7,058
–
719
61,428
124,195
395
961
125,551
186,979
189,488
103,446
2,989
83,053
189,488
2,393
68,981
–
71,374
89,015
3,260
4,423
52,644
31,734
181,076
252,450
16,003
9,900
9,099
5,621
7,039
498
48,160
31,397
248
1,025
32,670
80,830
171,620
99,060
2,851
69,709
171,620
The statement of financial position is to be read in conjunction with the notes of the financial statements set out on
pages 52 to 75.
48 Thorn Group
Statement of Changes in Equity
For The Year Ended 31 March 2015
In thousands of AUD
Share capital
Reserves Retained earnings
Total equity
Balance at 1 April 2013
Net profit for the period
Other comprehensive income
Issue of shares under dividend reinvestment plan
Share based payments transactions
Dividends to shareholders
Balance at 31 March 2014
Balance at 1 April 2014
Net profit for the period
Total comprehensive income
Issue of shares under dividend reinvestment plan
Share based payments transactions
Dividends to shareholders
Balance at 31 March 2015
95,483
2,769
–
–
3,577
–
–
99,060
99,060
–
–
4,386
–
–
–
–
–
82
–
2,851
2,851
–
(134)
–
272
–
103,446
2,989
57,121
28,151
–
–
–
(15,563)
69,709
69,709
30,593
–
–
–
(17,249)
83,053
155,373
28,151
–
3,577
82
(15,563)
171,620
171,620
30,593
(134)
4,386
272
(17,249)
189,488
The statement of financial position is to be read in conjunction with the notes of the financial statements set out on
pages 52 to 75.
Annual Report 2015 49
Statement of Cash Flows
For The Year Ended 31 March 2015
In thousands of AUD
Note
2015
2014
Cash flows from operating activities
Cash receipts from customers
Cash paid to suppliers and employees
Cash generated from operations
Net borrowing costs
Income tax paid
Net cash from operating activities
Cash flows from investing activities
Proceeds from sale of assets
Acquisition of rental assets
Commercial finance originations
Acquisition of property, plant and equipment and software
Acquisition of subsidiary
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Dividends paid
Net cash used in financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at April 1
Cash and cash equivalents at 31 March
395,411
(267,538)
127,873
(4,250)
(20,730)
255,109
(138,438)
116,671
(1,922)
(10,724)
102,893
104,025
3,437
(78,550)
(61,527)
(2,132)
(43,272)
1,655
(70,178)
(32,325)
(5,262)
–
(182,044)
(106,113)
128,239
(24,763)
(12,862)
90,614
11,463
2,393
13,856
24,996
(13,400)
(11,986)
(390)
(2,478)
4,871
2,393
18
The statement of financial position is to be read in conjunction with the notes of the financial statements set out on
pages 52 to 75.
50 Thorn Group
Statement of Cash Flows (continued)
For The Year Ended 31 March 2015
Cash and cash equivalents
In thousands of AUD
Bank balances
Call deposits
Cash and cash equivalents
2015
13,746
110
13,856
2014
2,283
110
2,393
Included in cash are amounts of $3,014,000 (2014: $1,340,000) which are held as part of the consolidated entity’s funding
arrangements that are not available to the consolidated entity. Free cash is $10,842,000 (2014: $1,053,000).
Reconciliation of cash flows from operating activities
In thousands of AUD
Cash flows from operating activities
Profit for the period
Adjustments for:
Depreciation and amortisation
Equity settled transactions
Acquisition Costs
Transfer of rental assets to/from finance leases
Business Finance settlements
Operating profit before changes in working capital and provisions
Changes in working capital and provisions, net of the effects of the Purchase of subsidiaries
(Increase) in trade and other receivables
(Increase) / Decrease in deferred tax assets
Increase / (Decrease) in income tax liability
Increase / (Decrease) in trade and other payables
Increase in provisions and employee benefits
Net cash from operating activities
2015
2014
30,593
28,151
32,481
272
2,246
67,075
61,527
194,194
36,213
82
–
36,759
32,325
133,530
(90,340)
(32,394)
1,757
(8,418)
4,785
915
(362)
2,519
(214)
946
102,893
104,025
Annual Report 2015 51
1. Significant Accounting Policies
Thorn Group Limited (the ‘Company’) is a company domiciled
in Australia. The address of the Company’s registered office
is Level 1, 62 Hume Highway, Chullora NSW 2190. The
consolidated financial statements of the Company as at
and for the financial year ended 31 March 2015 comprises
the Company and its subsidiaries (together referred to as
the ‘consolidated entity’). The principal activities of the
consolidated entity were the leasing of household products,
the provision of loans, commercial finance and the provision of
receivables management services.
(a) Statement of Compliance
The consolidated financial statements are general purpose
financial statements which have been prepared in accordance
with Australian Accounting Standards (‘AASBs’) adopted by
the Australian Accounting Standards Board (‘AASB’) and the
Corporations Act 2001. The consolidated financial statements
comply with International Financial Reporting Standards
(‘IFRSs’) adopted by the International Accounting Standards
Board (‘IASB’).
The consolidated financial statements were approved by the
Board of Directors on 27 May 2015.
In particular, information about significant areas of estimation,
uncertainties and critical judgements in applying accounting
policies that have the most significant effect on the amounts
recognised in the financial statements include the following:
Valuation of goodwill and other intangibles. See note 8.
(i)
(ii)
Impairment of goodwill. See note 8.
(iii) Rent Try$1 Buy asset depreciation. See note 6.
(iv) Impairment of receivables. See note 11.
(v) Purchased debt ledgers (PDL). See note 7.
The notes include information which is 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:
(i) The amount is significant because of its size or nature;
(ii)
It is important for understanding the results of the Group
or changes in the Group’s business; and
(iii) It relates to an aspect of the Group’s operations that is
important to its future operations.
Accounting policies have been included within the underlying
notes with which they relate where possible. The balance
of accounting policies are detailed below:
(b) Basis of Preparation
The consolidated financial statements are presented in
Australian dollars, which is the Company’s functional currency.
(c) Cost of Sales
Finance lease costs of sales comprise the cost of the item sold
less any accumulated depreciation.
The consolidated financial statements have been prepared on
the historical cost basis except where assets are carried at fair
value.
The Company is of a kind referred to in ASIC Class Order
98/100 dated 10 July 1998 and in accordance with that Class
Order, amounts in the financial report and directors’ report
have been rounded off to the nearest thousand dollars, unless
otherwise stated.
The preparation of the consolidated financial statements
in conformity with Australian Accounting Standards
requires management to make judgements, estimates and
assumptions that affect the application of accounting policies
and the reported amounts of assets, liabilities, income and
expenses. 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 the judgements
about carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ
from these estimates. These accounting policies have been
consistently applied by each entity in the consolidated entity.
The estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if
the revision affects only that period or in the period of the
revision and future periods if the revision affects both current
and future periods.
(d) Finance expenses
Finance expenses comprise interest expense on borrowings,
and the unwinding of the discount on provisions.
All borrowing costs are recognised in the profit or loss
using the effective interest rate method.
(e) Impairment
Non-Financial Assets
The carrying amounts of the consolidated entity’s assets,
other than deferred tax assets are reviewed at each
balance date to determine whether there is any indication
of impairment. If any such indication exists, the asset’s
recoverable amount is estimated. For goodwill the recoverable
amount is estimated at each balance date.
The recoverable amount of an asset or cash-generating unit
is the greater of its value in use and its fair value less costs
to sell. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset.
For the purpose of impairment testing, assets are grouped
together into the smallest group of assets that generates
cash inflows from continuing use that are largely independent
of the cash inflows of other assets or groups of assets (the
“cash-generating units”). The goodwill acquired in a business
combination, for the purpose of impairment testing, is
allocated to cash-generating units that are expected to benefit
from the synergies of the combination.
52 Thorn Group
Notes to the Consolidated Financial StatementsFor The Year Ended 31 March 2015 (g) Changes in Accounting Policy
All new Accounting Standards and Interpretations applicable
to annual reporting periods commencing on or before 1 April
2014 have been applied to the consolidated entity effective
from their required date of application. The initial application
of these Standards and Interpretations has not had a material
impact on the financial position or the financial results of the
consolidated entity.
There has been no other change in accounting policy during
the year.
(h) New Standards and Interpretations Not Yet Adopted
The following standards, amendments to standards and
interpretations have been identified as those which may
impact the consolidated entity in the period of initial
application. The consolidated entity will apply the standard
and amendments for the reporting periods beginning on the
operative dates set out below. An initial assessment of the
financial impact of the standards and amendments has been
undertaken and they are not expected to have a material
impact on the consolidated entity’s financial statements or
accounting policies. The consolidated entity does not plan to
adopt these standards early.
• AASB 2010-7 and AASB 2009-11 Amendments to AASB 9
introduce new requirements for the classification and
measurement of financial assets. The basis of classification
depends on the entity’s business model and the contractual
cash flow characteristics of the financial asset. AASB 9
introduces additions relating to financial liabilities. The
IASB currently has an active project that may result in
limited amendments to the classification and measurement
requirements of AASB 9 and add new requirements to
address the impairment of financial assets and hedge
accounting. The amendments, which become mandatory
for the consolidated entity’s 31 March 2016 financial
statements, are not expected to have a significant impact
on the financial statements.
• IFRS 15 Revenue from Contracts with Customers establishes
a comprehensive framework for determining whether, how
much and when revenue is recognised. It replaces existing
revenue recognition guidance, including IAS 18 Revenue,
and IFRIC 13 Customer Loyalty Programmes. IFRS 15 is
effective for annual reporting periods beginning on or after
1 January 2017, with early adoption permitted. The Group is
assessing the potential financial impact resulting from the
application of IFRS 15.
An impairment loss is recognised whenever the carrying
amount of an asset or its cash-generating unit exceeds its
recoverable amount. Impairment losses are recognised in the
profit or loss, unless an asset has previously been re-valued,
in which case the impairment loss is recognised as a reversal
to the extent of that previous revaluation with any excess
recognised through profit or loss.
Impairment losses recognised in respect of cash-generating
units are allocated first to reduce the carrying amount of any
goodwill allocated to cash-generating units (group of units)
and then, to reduce the carrying amount of the other assets in
the unit (group of units) on a pro rata basis.
Financial Assets
The recoverable amount of the consolidated entity’s
receivables carried at amortised cost is calculated as the
present value of estimated future cash flows, discounted at
the original effective interest rate (i.e. the effective interest
rate computed at initial recognition of these financial assets).
Impairment of receivables is not recognised until objective
evidence is available that a loss event has occurred. Significant
receivables are individually assessed for impairment.
Impairment testing of receivables that are not assessed
as impaired individually is performed by placing them
into portfolios with similar risk profiles and undertaking a
collective assessment of impairment, based on objective
evidence from historical experience adjusted for any effects of
conditions existing at each balance date.
Reversals of Impairment
Impairment losses, other than in respect of goodwill, are
reversed when there is an indication that the impairment
loss may no longer exist and there has been a change in the
estimate used to determine the recoverable amount.
An impairment loss in respect of goodwill is not reversed.
An impairment loss is reversed only to the extent that the
asset’s carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation or
amortisation, if no impairment loss had been recognised.
(f) Goods and Services Tax
Revenue, expenses and assets are recognised net of the
amount of goods and services tax (GST), except where the
amount of GST incurred is not recoverable from the taxation
authority. In these circumstances, the GST is recognised
as part of the cost of acquisition of the asset or as part of
the expense.
Receivables and payables are stated with the amount of GST
included. The net amount of GST recoverable from, or payable
to, the ATO is included as a current asset or liability in the
statement of financial position.
Cash flows are included in the statement of cash flows on a
gross basis. The GST components of cash flows arising from
investing and financing activities which are recoverable from,
or payable to, the ATO are classified as operating cash flows.
Annual Report 2015 53
2. Segment Reporting
The Board and CEO (the chief operating decision maker) monitor the operating results of four reportable segments, which
are the Consumer Leasing division, the Receivable Management division, the Commercial Finance division and the Consumer
Finance division for the purpose of making decisions about resource allocation and performance assessment.
The Consumer Leasing division conducts the business of leasing of household products.
The Receivable Management division is comprised of the NCML business. NCML provides receivables management, debt
recovery, credit information services, debt purchasing and other financial services.
Commercial Finance division provides financial products to small and medium enterprises including equipment leasing and
invoice discounting.
The Consumer Finance division provides personal loans.
Segment performance is evaluated based on operating profit or loss. Interest and income tax expense are not allocated to
operating segments, as this type of activity is managed on a group basis.
For the twelve months ended 31 March 2015 (i)
2015
In thousands of AUD
External revenues
Inter-segment revenue
Segment revenue
Operating expenses
Profit Before interest, tax,
depreciation and amortisation
Depreciation
Profit Before interest, tax and
amortisation
Capital Expenditure
Segment Assets
Segment Liabilities
Consumer
Leasing
Receivables
Management
Commercial
Finance
Consumer
Finance
Consolidated
246,169
–
246,169
(190,091)
56,078
(1,204)
54,874
80,635
190,954
(88,523)
18,803
425
19,228
(16,633)
2,595
(336)
2,259
47
26,824
(1,951)
15,046
–
15,046
(8,056)
6,990
(184)
6,806
61,527
119,122
(96,505)
13,760
293,778
–
13,760
(12,388)
1,372
(125)
1,247
–
39,567
–
425
294,203
(227,168)
67,035
(1,849)
65,186
142,209
376,467
(186,979)
(i) Segment classification has been adjusted from the previous year. Receivables Management was previously classified as Credit
Management. Commercial Finance was previously classified as Thorn Equipment Finance. Consumer Finance was previously classified as
Thorn Financial Services.
Commercial finance also includes the results of CRA since acquisition.
54 Thorn Group
Notes to the Consolidated Financial StatementsFor The Year Ended 31 March 2015 2014
In thousands of AUD
External revenues
Inter-segment revenue
Segment revenue
Operating expenses
Profit Before interest, tax,
depreciation and amortisation
Depreciation
Profit Before interest, tax and
amortisation
Capital Expenditure
Segment Assets
Segment Liabilities
Consumer
Leasing
Receivables
Management
Commercial
Finance
Consumer
Finance
Consolidated
196,800
–
196,800
(147,350)
49,450
(1,363)
48,087
75,105
151,041
(53,696)
20,241
370
20,611
(16,560)
4,051
(247)
3,804
308
26,427
(2,138)
8,317
–
8,317
(5,353)
2,964
(50)
2,914
32,325
49,977
(24,996)
9,346
–
9,346
(8,161)
1,185
(71)
1,114
30
25,005
–
234,704
370
235,074
(177,424)
57,650
(1,731)
55,919
107,768
252,450
(80,830)
Reconciliation of reportable segment profit or loss
In thousands of AUD
2015
2014
Profit before interest, tax and amortisation for reportable segments
65,186
55,919
Unallocated amounts:
Other corporate expenses
Amortisation
Net financing costs
Profit before tax
Income tax expense
Profit after tax
Reconciliation of reportable revenue
In thousands of AUD
Revenue for reportable segments
Other revenue
Elimination of inter-segment revenue
Revenue
(13,110)
(3,163)
(4,250)
44,663
(14,070)
30,593
(10,532)
(2,433)
(1,922)
41,032
(12,881)
28,151
2015
2014
294,203
235,074
68
(425)
151
(370)
293,846
234,855
Annual Report 2015 55
3. Revenue
In thousands of AUD
Operating leases
Finance lease sales
Interest
Collection revenue
PDL revenue
Other commercial revenue
Other income
2015
2014
95,012
97,173
77,159
14,737
4,492
4,289
984
108,041
51,507
54,343
17,474
3,136
–
354
293,846
234,855
Revenues are measured at the fair value of the consideration received or receivable net of the amount of goods and services tax
(GST) payable to the taxation authority. The major components of revenue are recognised as follows:
Operating lease rental revenue is recognised on a straight line basis over the lease term, net of discounts. Revenue also arises
from charges such as late fees, termination fees and damage liability reduction fees. These revenues are recognised when due
and payable.
Finance lease sales revenue is recognised at the time the rental contract is entered into based on the fair value of the leased
item, with interest income recognised over the life of the lease.
Interest revenue is calculated and charged on the average outstanding loan and lease balance and recognised on an accrual
basis using the effective interest method.
Revenue from collection services rendered is recognised upon delivery of the services to the customers.
Revenue from PDL’s represents income derived from the application of the effective interest method net of any changes in fair
value. The effective interest rate is the implicit interest rate based on forecast collections derived at the time of acquisition of an
individual PDL. Change in fair value is determined based on the present value of expected future cashflows.
Adjustments to the carrying amount of PDLs as a result of changes in estimated cash flows were immaterial during the year.
These have been included in PDL revenue above.
Other commercial revenue represents fees derived from invoice discounting transactions performed by the CRA business and is
recognised on an accrual basis.
56 Thorn Group
Notes to the Consolidated Financial StatementsFor The Year Ended 31 March 2015 4. Trade and Other Receivables
In thousands of AUD
Current
Trade receivables
Finance lease receivables
Other commercial receivables
Loan receivables
Purchased debt ledgers
Lease deposits
Other receivables and prepayments
Non-current
Finance lease receivables
Loan receivables
Purchased debt ledgers
2015
2014
2,985
45,111
36,532
24,020
8,557
554
11,354
129,113
137,630
17,036
5,852
160,518
4,062
37,316
–
15,583
3,581
564
7,875
68,981
74,033
9,689
5,293
89,015
Finance lease receivables are recognised at the present value of the minimum lease payments less impairment losses.
The present value is calculated by discounting the minimum lease payments due, at the interest rate implicit in the lease.
Trade receivables, other commercial receivables, loan receivables and other receivables and prepayments are stated at their
amortised cost less impairment losses, with the exception of PDL’s which are designated at fair value. Detailed information
on PDL’s is disclosed in Note 7.
The consolidated entity’s exposure to credit risk and impairment losses related to trade and other receivables are disclosed
in Note 11.
Annual Report 2015 57
5. Leases
Finance leases as lessor
The consolidated entity leases out its rental assets under finance lease, hire purchase and chattel mortgage contracts. The
consolidated entity classifies Rent Try $1 Buy® contracts as finance leases where the term of the contract is 24 months, 36
months or 48 months. The asset rented has an estimated useful life equal to the contract length. The future minimum lease
receipts under non-cancellable finance leases are as follows:
In thousands of AUD
Less than one year
Between one and five years
2015
128,015
197,492
325,507
2014
87,489
101,551
189,040
Unearned finance income in relation to finance leases as at 31 March 2015 was $123,032,000 (2014: $67,162,000).
Operating leases as lessor
The consolidated entity leases out its rental assets under operating leases. The future minimum lease receipts under non-
cancellable operating leases are as follows:
In thousands of AUD
Less than one year
Between one and five years
Operating leases as lessee
Non-cancellable operating lease rentals are payable as follows:
In thousands of AUD
Less than one year
Between one and five years
2015
2014
10,789
2,741
13,530
29,499
5,773
35,272
2015
2014
7,658
8,296
15,954
8,068
10,686
18,754
The consolidated entity leases all store and office premises under operating leases. The leases typically run for a period of
3 years, with an option to renew the lease after that date. The majority of the lease payments are increased every year to reflect
market rentals.
The consolidated entity also leases vehicles under operating leases. The lease term for these vehicles normally runs for a period
of 4 years. The lease payments are set at the commencement of the lease for the term of the lease. The lease agreements for
vehicles do not include contingent rentals.
Payments made under operating leases are recognised in the profit or loss on a straight-line basis over the term of the lease.
Lease incentives received are recognised in the profit or loss as an integral part of the total lease expense and spread over the
lease term.
58 Thorn Group
Notes to the Consolidated Financial StatementsFor The Year Ended 31 March 2015 6. Rental Assets
In thousands of AUD
Opening balance
Acquisitions
Disposals
Depreciation
Transfers to finance leases
Transfers from finance leases
Balance at 31 March
2015
2014
52,644
78,550
(4,380)
(27,469)
(72,330)
6,200
33,215
52,929
70,178
(3,184)
(32,049)
(36,759)
1,529
52,644
Recognition and Measurement
Rental assets are stated at cost less accumulated depreciation and accumulated impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset.
Depreciation is provided on rental assets and is calculated on a straight line basis so as to write-off the net cost of each asset
over its estimated useful life. Where assets are installed on Rent Try $1 Buy® operating leases and their estimated useful life
is greater than the period at which a similar item can be purchased for $1, an estimate of the number of assets expected to be
purchased for $1 is made and additional depreciation expensed based on the average cost of assets installed.
The estimated useful lives in the current and comparative periods are 2 to 6 years.
The residual value, the useful life and the depreciation method applied to an asset are reassessed at least annually.
Gains and losses on disposal of an item of rental assets are determined by comparing the proceeds from disposal with the
carrying amount of the asset and recognised net within revenue in the profit or loss.
7. Purchased Debt Ledgers
Purchased Debt Ledgers (PDL) are measured at fair value and are classified as level 3 under the hierarchy set out in AASB 7
Financial Instruments: Disclosure. The following table shows a reconciliation of the PDL balances:
In thousands of AUD
At the beginning of the year
Net additions
Collections
Revenue
Total
PDLs are classified as follows:
In thousands of AUD
Current
Non-current
Total
2015
2014
8,874
12,471
(11,428)
4,492
14,409
2015
8,557
5,852
14,409
8,295
5,879
(8,436)
3,136
8,874
2014
3,581
5,293
8,874
Annual Report 2015 59
7. Purchased Debt Ledgers (continued)
Fair values of PDLs are determined using a discounted cash flow valuation technique. Cash flow forecasts are based on the
estimated future cash flows of the portfolio based on experience on similar portfolios, observed collections to date, payment
arrangements and other known factors.
The following summarises the assumptions used in these calculations:
Input
Assumption and/or basis for assumption
Term which collections will be yielded
Maximum 72 months from start date of PDL acquisition
Effective interest rate
Forecast collections
Based on the effective interest rate for each PDL recognised at the time of acquisition
Forecasts are based on each PDL collections to date, the performance of equivalent PDL
and allowances for other known factors
A change of five percent in forecast collections at the reporting date would have increased or decreased the consolidated
entity’s equity and profit or loss by $383,000 (2014: $271,000).
Goodwill
Customer
Relationships
Software
Total
22,276
–
–
22,276
29,350
(7,074)
22,276
22,276
3,247
–
25,523
32,597
(7,074)
25,523
5,277
–
(1,760)
3,517
8,797
(5,280)
3,517
3,517
–
(1,759)
1,758
8,797
(7,039)
1,758
3,848
2,727
(634)
5,941
9,302
(3,361)
5,941
5,941
1,108
(1,404)
5,645
10,410
(4,765)
5,645
31,401
2,727
(2,394)
31,734
47,449
(15,715)
31,734
31,734
4,355
(3,163)
32,926
51,804
(18,878)
32,926
8. Intangible Assets
In thousands of AUD
Year ended 31 March 2014
Opening net carrying amount
Additions
Amortisation charge for the year
Closing net book amount
At 31 March 2014
Cost
Amortisation and Impairment Losses
Net book amount
Year ended 31 March 2015
Opening net book amount
Additions
Amortisation charge for the year
Closing net book amount
At 31 March 2015
Cost
Amortisation and Impairment Losses
Net book amount
60 Thorn Group
Notes to the Consolidated Financial StatementsFor The Year Ended 31 March 2015 Goodwill
All business combinations are accounted for by applying the
purchase method. Goodwill represents the difference between
the cost of the acquisition and the fair value of the identifiable
assets, liabilities and contingent liabilities of the acquiree.
Subsequent measurement
Goodwill is measured at cost less any accumulated
impairment losses. Goodwill is allocated to cash-generating
units and is tested annually for impairment.
Other Intangibles
Other intangibles acquired as part of a business combination
are recognised separately from goodwill. The assets are
measured at fair value at the date of acquisition.
Amortisation
Amortisation is provided on all intangible assets excluding
goodwill. Amortisation is calculated on a straight line basis
so as to write-off the cost of each intangible asset over its
estimated useful life. The estimated useful lives in the current
and comparative periods are as follows:
• Customer relationships 5 years
• Software 3 – 10 years
The residual value, the useful life and the amortisation method
applied to an intangible asset are reassessed at least annually.
Impairment tests for Cash Generating Units (CGU)
containing goodwill
Valuation of goodwill and other intangibles
Judgements are made with respect to identifying and valuing
intangible assets on acquisition of new businesses.
Impairment of goodwill
Information about the assumptions and their risk factors
relating to goodwill impairment is contained below. The
consolidated entity assesses whether goodwill is impaired at
least annually. The calculations include an estimation of the
recoverable amount of the cash generating unit to which the
goodwill is allocated.
The following units have significant carrying amounts
of goodwill:
In thousands of AUD
2015
2014
Consumer Leasing
Commercial Finance
Receivables Management
15,604
15,604
3,247
6,672
–
6,672
25,523
22,276
The recoverable amount of the above CGU’s are determined
based on a value-in-use calculation. Value-in-use is calculated
based on the present value of cash flow projections over a
5 year period and terminal value. The cash flow projections
have been approved by the Board.
Key assumptions used for value-in-use calculations
Consumer Leasing
During the forecast period, revenue is assumed to grow at an
average of 7% p.a. and the pre-tax discount rate is assumed at
10.54% (2014: 10.54%). A terminal value is calculated using the
cash flows for year 5 of the forecast period and a long-term
growth rate of 2%. The value in use calculation in 2015 was
determined on a similar basis to the 2014 calculation.
Receivables Management
During the forecast period, revenue is assumed to grow at an
average of 8.10% p.a. and the pre-tax discount rate is assumed
at 11.66% (2014: 11.66%). A terminal value is calculated using
the cash flows for year 5 of the forecast period and a long-
term growth rate of 2%. The value in use calculation in 2015
was determined on a similar basis to the 2014 calculation.
The recoverable amount of the CGU’s exceeds their carrying
value at 31 March 2015.
Management believes that any reasonable change in the key
assumptions on which the estimates and/or the discount rate
are based would not cause the carrying amount of the CGU to
exceed its recoverable amount.
Annual Report 2015 61
9. Income Tax Expense
Recognised in the Income Statement
In thousands of AUD
Current tax expense
Current year
Adjustment for prior years
Deferred tax expense
Origination and reversal of temporary differences
Total income tax expense in income statement
Numerical reconciliation between tax expense and pre-tax accounting profit
In thousands of AUD
Profit before tax
Prima facie income tax using the domestic corporation tax rate of 30% (2014: 30%)
Change in income tax expense due to:
Non-deductible expenses
(Over) / Under provided in prior years
2015
2014
12,334
(21)
1,757
14,070
2015
44,663
13,399
692
(21)
13,227
16
(362)
12,881
2014
41,032
12,310
555
16
Income tax expense on pre-tax accounting profit
14,070
12,881
10. Deferred Tax Assets and Liabilities
Recognised Deferred Tax Assets and Liabilities
Deferred Tax Assets and Liabilities are attributable to the following:
In thousands of AUD
2015
2014
2015
2014
2015
2014
Assets
Liabilities
Net
Rental assets
42,194
26,824
Property, plant and equipment
Trade, loan and other receivables
Finance lease receivables
Accruals
Provisions
PDL liability
310
1,721
–
2,421
1,664
156
338
1,240
–
–
–
–
–
–
42,194
26,824
310
1,721
338
1,240
–
(46,963)
(28,648)
(46,963)
(28,648)
1,965
1,241
300
–
–
–
–
–
–
2,421
1,664
156
1,503
1,965
1,241
300
3,260
Tax assets / (liabilities)
48,466
31,908
(46,963)
(28,648)
62 Thorn Group
Notes to the Consolidated Financial StatementsFor The Year Ended 31 March 2015 Income Tax
Income tax expense comprises current and deferred tax.
Income tax expense is recognised in the profit or loss except to
the extent that it relates to items recognised directly in equity,
in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantively enacted
at the reporting date, and any adjustment to tax payable in
respect of previous years.
Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used
for taxation purposes. Deferred tax is not recognised for
the following temporary differences: initial recognition of
goodwill, the initial recognition of assets or liabilities in a
transaction that is not a business combination and that
affects neither accounting nor taxable profit, and differences
relating to investments in subsidiaries to the extent that it is
probable that they will not reverse in the foreseeable future.
Deferred tax is measured at the tax rates that are expected to
be applied to the temporary differences when they reverse,
based on the laws that have been enacted or substantively
enacted by the reporting date.
A deferred tax asset is recognised to the extent that it is
probable that future taxable profits will be available against
which the temporary difference can be utilised. Deferred tax
assets are reviewed at each reporting date and are reduced
to the extent that it is no longer probable that the related tax
benefit will be realised.
Tax consolidation
Thorn Group Limited and its wholly-owned Australian resident
entities have formed a tax-consolidated group with effect
from 1 April 2003 and are therefore taxed as a single entity
from that date. The head entity within the tax-consolidated
group is Thorn Group Limited.
Current tax expense/income, deferred tax liabilities and
deferred tax assets arising from temporary differences of
the members of the tax consolidated group are recognised in
the separate financial statements of the members of the tax
consolidated group using the group allocation approach by
reference to the carrying amounts of assets and liabilities in
the separate financial statements of each entity and the tax
values applying under tax consolidation.
Any current tax liabilities (or assets) and deferred tax assets
arising from unused tax losses of the subsidiaries are assumed
by the head entity in the tax-consolidated group and are
recognised as amounts payable / (receivable) to / (from)
other entities in the tax-consolidated group in conjunction
with any tax funding arrangement amounts (refer below).
Any difference between these amounts is recognised by the
Company as an equity contribution or distribution.
Thorn Group Limited recognises deferred tax assets arising
from unused tax losses of the tax-consolidated group to the
extent that it is probable that future taxable profits of the tax-
consolidated group will be available against which the asset
can be utilised.
Any subsequent period adjustments to deferred tax
assets arising from unused tax losses as a result of revised
assessments of the probability of recoverability is recognised
by the head entity only.
Nature of Tax Funding Arrangements and Tax Sharing
Arrangements
The head entity, in conjunction with other members of
the tax-consolidated group, has entered into a tax funding
arrangement which sets out the funding obligations of
members of the tax-consolidated group in respect of tax
amounts. The tax funding arrangements require payments
to/from the head entity equal to the current tax liability
(asset) assumed by the head entity and any tax-loss deferred
tax asset assumed by the head entity, resulting in the head
entity recognising an inter-entity receivable (payable) equal
in amount to the tax liability (asset) assumed. The inter-
entity receivable (payable) are at call. Contributions to fund
the current tax liabilities are payable as per the tax funding
arrangement and reflect the timing of the head entity’s
obligation to make payments for tax liabilities to the relevant
tax authorities. The head entity in conjunction with other
members of the tax-consolidated group has also entered into
a tax sharing agreement. The tax sharing agreement provides
for the determination of the allocation of income tax liabilities
between the entities should the head entity default on its tax
payment obligations.
During the year the group acquired 100% of both Cash
Resources Australia Pty Limited and Cash Resources
Trust. These entities have been included within these
arrrangements.
11. Financial Risk Management
(a) Financial Risk Management Objectives and Policies
The consolidated entity is exposed to financial risks through
the normal course of its business operations. The key risks
arising are credit risk, liquidity risk and market risk.
The Board of Directors has overall responsibility for the
establishment and oversight of the risk management
framework. The Board has established the Audit, Risk and
Compliance Committee, which is responsible for developing
and monitoring risk management policies. The Committee
reports regularly to the Board of Directors on its activities.
Risk management policies are established to identify and
analyse the risks faced by the consolidated entity, to set
appropriate risk limits and controls, and to monitor risks and
adherence to limits. Risk management policies and systems
are reviewed regularly to reflect changes in market conditions
and the consolidated entity’s activities. The consolidated
entity, through training and management standards and
procedures, aims to develop a disciplined and constructive
control environment in which all employees understand their
roles and obligations.
The Audit, Risk and Compliance Committee oversees how
management monitors compliance with the consolidated
entity’s risk management policies and procedures and reviews
the adequacy of the risk management framework in relation
to the risks faced by the consolidated entity.
Annual Report 2015 63
11. Financial Risk Management (continued)
(a) Financial Risk Management Objectives and Policies (continued)
Credit risk
Credit risk is the risk of financial loss to the consolidated entity if a customer fails to meet its contractual obligation, and arises
principally from the consolidated entity’s trade, loan and finance lease receivables from customers and purchased debt ledgers.
To manage credit risk, the consolidated entity has formulated comprehensive credit policies covering credit assessments and
compliance with regulatory and statutory requirements. Credit underwriting includes the use of a scorecard system or credit
bureau report or a detailed internal risk profile for each application. The scorecard system is revised periodically and adjusted
for a number of factors including geographic location and market changes.
Credit risk for purchased debt ledgers is managed through a stringent process involving analysis of the target entity and its
customer history and with reference to the industry.
The carrying amount of the consolidated entity’s financial assets represents the maximum credit exposure. The consolidated
entity’s net exposure to credit risk at the reporting date was:
In thousands of AUD
Trade receivables
Consumer finance lease receivables
Commercial finance lease receivables
Other commercial receivables
Loan receivables
Purchased debt ledgers
Impairment losses
Trade receivables
2015
2014
2,985
100,151
82,590
36,532
41,056
14,409
277,723
4,062
61,372
49,977
–
25,272
8,874
149,557
The consolidated entity assesses the impairment of receivables monthly. The calculations include an assessment of the
expected rates of loss and for consumer lease receivables, an estimate of collateral.
The aging of the consolidated entity’s trade receivables at the reporting date was:
In thousands of AUD
Not past due
Past due 0 – 30 Days
Past due 31 – 180 Days
Gross
2015
965
1,761
1,457
4,183
Impairment
2015
–
134
1,064
1,198
Gross
2014
1,488
1,925
1,621
5,034
Impairment
2014
–
133
839
972
The net value of trade receivables as at 31 March 2015 was $2,985,000 (2014: $4,062,000)
The consolidated entity invoices its consumer rental customers in advance of the rental period. The revenue is not recognised
in the financial statements until the due date of the invoice.
64 Thorn Group
Notes to the Consolidated Financial StatementsFor The Year Ended 31 March 2015 Consumer finance lease receivables
Finance lease receivables that are past due are disclosed in the trade receivables above.
The provision for impairment losses as at 31 March 2015 is $17,325,000 (2014: $8,961,000). The provision reflects the risk to the
consolidated entity of the expected early return or loss of products throughout the life of the contract.
Collateral is held against the finance lease receivables in the form of the assets attached to the contract. In the event that the
asset is returned due to early termination of the contract, the asset is available for rental on other contracts or disposal via cash
sale. The value of this collateral as at 31 March 2015 is $70,359,000 (2014: $39,696,000).
Commercial finance lease receivables
The ageing of the consolidated entity’s commercial finance lease receivables at the reporting date was:
In thousands of AUD
Not past due
Past due 0 – 30 Days
Past due 31 – 180 Days
Gross
2015
Impairment
2015
84,363
124
511
84,998
1,773
124
511
2,408
Gross
2014
49,832
1,113
597
51,542
Impairment
2014
–
968
597
1,565
The net value of commercial finance lease receivables as at 31 March 2015 was $82,590,000 (2014: $49,977,000)
Other commercial receivables
The ageing of the consolidated entity’s other commercial receivables at the reporting date was:
In thousands of AUD
Not past due
Past due 0 – 30 Days
Past due 31 – 180 Days
Loan receivables
Gross
2015
33,856
782
2,394
37,032
Impairment
2015
Gross
2014
Impairment
2014
–
–
(500)
(500)
–
–
–
–
–
–
–
–
The ageing of the consolidated entity’s loan receivables at the reporting date was:
In thousands of AUD
Not past due
Past due 0 – 30 Days
Past due 31 – 180 Days
Gross
2015
Impairment
2015
40,785
2,391
2,607
45,783
1,881
239
2,607
4,727
Gross
2014
24,924
1,571
1,936
28,431
Impairment
2014
1,066
157
1,936
3,159
The net value of loan receivables as at 31 March 2015 was $41,056,000 (2014: $25,272,000)
Annual Report 2015 65
11. Financial Risk Management (continued)
(a) Financial Risk Management Objectives and Policies (continued)
Liquidity risk
Liquidity risk is the risk that the consolidated entity will not be able to meet its financial obligations as they fall due.
The consolidated entity’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet is liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses
or risking damage to the consolidated entity’s reputation.
The following are the contractual maturities of the consolidated entity’s financial liabilities including, where applicable, future
interest payments as at 31 March 2015.
31 March 2015
In thousands of AUD
Secured loan facilities
Trade and other payables
31 March 2014
In thousands of AUD
Secured loan facilities
Trade and other payables
Carrying
Amount
143,973
32,005
175,978
Carrying
Amount
40,496
23,390
63,886
Contractual
Cash Flows
158,612
32,005
190,617
Contractual
Cash Flows
46,966
23,390
70,356
1 year
or less
25,360
32,005
57,365
1 year
or less
11,468
23,390
34,858
2-5 years
133,252
–
133,252
2-5 years
35,498
–
35,498
5 years
or more
–
–
–
5 years
or more
–
–
–
The consolidated entity’s access to financing arrangements is disclosed in Note 12.
Market risk
Market risk is the risk that changes in market prices, such as interest rates and foreign currency that will affect the consolidated
entity’s income. The objective of market risk management is to manage and control market risk exposures within acceptable
parameters, while optimising returns. The consolidated entity has foreign currency risk on the purchase of rental assets directly
imported that are denominated in USD. The consolidated entity manages its exposure to foreign currency risk by utilising
forward exchange contracts where appropriate.
Interest Rate Risk
At the reporting date the interest rate profile of the consolidated entity’s interest bearing financial instruments was:
In thousands of AUD
Financial assets
Financial liabilities
2015
10,842
(143,973)
2014
1,136
(40,496)
A change of one percent in interest rates at the reporting date would have increased or decreased the consolidated entity’s
equity and profit or loss by $932,000 (2014: $276,000).
66 Thorn Group
Notes to the Consolidated Financial StatementsFor The Year Ended 31 March 2015 Capital management
The Board’s policy is to maintain a strong capital base so
as to maintain investor, creditor and market confidence
and to sustain future development of the business. The
Board of Directors monitors the return on equity, which the
consolidated entity defines as net profit after tax divided
by the average of opening and closing equity. The Board of
Directors also monitors the level of dividends to ordinary
shareholders. Refer to Note 14 for quantitative data.
Financial Instruments
Non-derivative financial instruments
Non-derivative financial instruments comprise trade and other
receivables, cash and cash equivalents, loans and borrowings,
and trade and other payables.
Non-derivative financial instruments excluding financial assets
at fair value through profit and loss are recognised initially
at fair value plus transaction costs. Subsequent to initial
recognition non-derivative financial instruments are measured
at amortised cost less impairment losses.
A financial instrument is recognised if the consolidated
entity becomes a party to the contractual provisions of
the instrument. Financial assets are derecognised if the
consolidated entity’s contractual rights to the cash flows
from the financial assets expire or if the consolidated entity
transfers the financial asset to another party without
retaining control or substantially all risks and rewards of the
asset. Financial liabilities are derecognised if the consolidated
entity’s obligation specified in the contract expire or are
discharged or cancelled.
Financial assets and liabilities are offset and the net amount
presented in the statement of financial position when, and
only when, the consolidated entity has a legal right to offset
the amounts and intends either to settle on a net basis or
realise the asset and settle the liability simultaneously.
The consolidated entity recognises its financial assets at either
amortised cost or fair value, depending on its business model
for managing the financial assets and the contractual cash
flow characteristics of the financial assets. The classification
of financial assets that the consolidated entity held at the date
of initial application was based on the facts and circumstances
of the business model in which the financial assets were held
at that date.
Financial assets recognised at amortised cost are
measured using the effective interest method, net of
any impairment loss.
Financial assets other than those classified as financial assets
recognised at amortised cost are measured at fair value with
any changes in fair value recognised in profit or loss. Financial
assets designated at fair value comprise purchased debt
ledgers.
(b) Fair Values
The fair values of the Company’s and consolidated entity’s
financial assets and liabilities as at the reporting date are
considered to approximate their carrying amounts.
(c) The Fair Value Hierarchy
Financial instruments carried at fair value require disclosure
of the valuation method according to the following hierarchy:
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)
Level 3 – Inputs for the asset or liability that are not based
on observable market data.
The consolidated entity’s financial instruments are measured
at fair value. The Group’s only Level 2 instruments are forward
foreign exchange contracts and an interest rate derivative.
Other financial instruments including purchase debt ledgers
are classified as Level 3.
Annual Report 2015 67
12. Loans and Borrowings
In thousands of AUD
Current liabilities
Secured loans
Non-current liabilities
Secured loans
2015
2014
19,778
9,099
124,195
143,973
31,397
40,496
Loans and borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition,
loans and borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in
the profit or loss over the period of the borrowings on an effective interest basis.
Financing Loan Facilities
In thousands of AUD
Secured loan facilities available
Secured loan facilities utilised at balance date
Secured loan facilities not utilised at reporting date
2015
2014
210,000
210,000
143,973
143,973
66,027
66,027
100,000
100,000
40,496
40,496
59,504
59,504
Thorn Australia Pty Limited has a loan facility of $110,000,000 secured by a fixed and floating charge over the assets of the
consolidated entity.
As at 31st March 2015 $84,000,000 was drawn.
The consolidated entity entered into a warehouse loan facility of $100,000,000 secured by rentals and payments receivable in
respect of the underlying lease receivable contracts during the financial year. The amounts due and payable on the warehouse
loan facility in the next 12 months are disclosed as current.
As at 31st March 2015 $59,973,000 was drawn.
For more information about the consolidated entity’s exposure to interest rate risk and liquidity risk see note 11.
13. Capital and Reserves
On issue at the beginning of year
Issue of new shares on vesting of performance rights
Issue of shares under dividend investment plan
On issue at the end of year
2015
2014
149,494,813
147,584,880
–
127,919
1,843,026
1,782,014
151,337,839
149,494,813
68 Thorn Group
Notes to the Consolidated Financial StatementsFor The Year Ended 31 March 2015 Ordinary shares are classified as equity. Incremental costs directly attributable to issue of ordinary shares and performance
rights are recognised as a deduction from equity net of any tax effects.
• Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per
share at shareholder’s meetings.
• In the event of the winding up of the Company ordinary shareholders rank after all other shareholders and creditors and are
fully entitled to any proceeds of liquidation.
• The Company does not have authorised capital or par value in respect of its issued shares.
Reserves
Equity Remuneration Reserve
The equity remuneration reserve represents the value of performance rights issued under the Company’s long-term
incentive plan.
Dividends
Dividends are recognised as a liability in the period in which they are declared.
Dividends recognised in the current year by the Company are:
2015
Final 2014
Interim 2015
Total amount
2014
Final 2013
Interim 2014
Total amount
Cents per
share
Amount
$’000s
Franked /
unfranked
Date of
payment
6.5
5.0
6.0
4.5
9,717
7,532
17,249
8,863
6,700
15,563
Franked
Franked
17-Jul-14
22-Jan-15
Franked
Franked
18-Jul-13
17-Jan-14
Franked dividends declared or paid during the year were franked at the tax rate of 30%.
After the balance sheet date, the following dividend was proposed by the directors.
Cents per
share
Total
amount
Franked/
unfranked
Expected date
of payment
Final ordinary
6.75
10,215,304
Franked
16 July 2015
The financial effect of this dividend has not yet been brought to account in the financial statements for the year ended 31 March
2015 and will be recognised in subsequent financial reports. The impact on the dividend franking account of dividends proposed
after the balance date but not recognised as a liability is to reduce franking credits by $4,377,987 (2014: $4,164,498).
Dividend franking account
In thousands of AUD
30% franking credits available to shareholders of Thorn Group Limited
for subsequent financial years
2015
2014
35,733
30,813
The above available amounts are based on the balance of the dividend franking account at year end adjusted for:
• franking credits that will arise from the payment of the current tax liabilities;
• franking debits that will arise from the payment of dividends recognised as a liability at the year end; and
• franking credits that the entity may be prevented from distributing in subsequent years.
The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends.
Annual Report 2015 69
13. Capital and Reserves (continued)
Dividend Reinvestment Plan (DRP)
The consolidated entity has operated a DRP during the financial year. An issue of shares under the dividend investment plan
results in an increase in issued capital. The DRP allows eligible shareholders to elect to invest dividends in ordinary shares
which rank equally with the Company’s ordinary shares. All holders of the Company ordinary shares are eligible to participate
in the plan.
The issue price for the shares acquired under the DRP will be a price derived from the arithmetic average of the daily volume
weighted average market price per Company shares during the five trading days commencing on the second trading day
following the Record Date for the relevant dividend, less any discount the directors may determine from time to time and
announce to the Australian Stock Exchange.
In accordance with the Company’s DRP, 1,843,026 new ordinary shares totalling $4,386,000 were issued.
14. Earnings Per Share
The consolidated entity presents basic and diluted earnings per share (EPS) data for its ordinary shares.
Basic earnings per share
Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted
average number of ordinary shares outstanding during the period.
The calculation of basic earnings per share at 31 March 2015 was based on profit attributable to ordinary shareholders of
$30,593,000 (2014: $28,151,000) and a weighted average number of ordinary shares during the year ended 31 March 2015 of
150,430,487 (2014: 148,640,899).
Diluted earnings per share
Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average
number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise performance
rights granted to employees.
The calculation of diluted earnings per share at 31 March 2015 was based on profit attributable to ordinary shareholders of
$30,593,000 (2014: $28,151,000) and a weighted average number of ordinary shares during the year ended 31 March 2015 of
150,430,487 (2014: 148,640,899), which includes performance rights granted.
Profit attributable to ordinary shareholders (basic)
In thousands of AUD
Profit attributable to ordinary shareholders (basic and diluted)
30,593
28,151
2015
2014
Weighted average number of ordinary shares (basic)
In thousands of shares
Issued ordinary shares at 1 April
Effect of shares issued
Weighted average number of ordinary shares at 31 March
Weighted average number of ordinary shares (diluted)
In thousands of shares
Issued ordinary shares at 1 April
Effect of shares issued
Weighted average number of ordinary shares (diluted) at 31 March
Earnings per share
Basic earnings per share (cents)
Diluted earnings per share (cents)
70 Thorn Group
149,495
936
150,430
149,495
936
150,430
20.34
20.34
147,584
1,057
148,641
147,584
1,057
148,641
18.94
18.94
Notes to the Consolidated Financial StatementsFor The Year Ended 31 March 2015 15. Consolidated Entities
Parent entity
Thorn Group Limited
Subsidiaries
Thorn Australia Pty Ltd
Eclipse Retail Rental Pty Ltd
Rent Try Buy Pty Ltd
CashFirst Pty Ltd
1st Cash Pty Ltd
Thorn Equipment Finance Pty Ltd
Thorn Finance Pty Ltd
Votraint No 1537 Pty Ltd
National Credit Management Limited
A.C.N 119211317 Pty Ltd
Hudson Legal Pty Ltd
Thorn ABS Warehouse Series No. 1
Cash Resources Australia Pty Ltd
Cash Resources Australia Trust
Country of
Incorporation
Ownership interest
2015
2014
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
n/a
n/a
Basis of Consolidation
Subsidiaries
Subsidiaries are entities (including special purpose entities) controlled by the consolidated entity. The consolidated entity
controls an entity when is exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in
the consolidated financial statements from the date that control commences until the date that control ceases. Intra-group
balances, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the
consolidated financial statements.
The consolidated entity has established a special purpose entity (SPE), Thorn ABS Warehouse Trust No.1, for the purpose of
securitising finance lease receivables acquired and other receivables it intends to originate. The SPE entity is wholly owned by
the consolidated entity and included in the consolidated financial statements, based on the evaluation of the substance of its
relationship with the consolidated entity and the SPE’s risks and rewards.
The following circumstances indicate a relationship in which the consolidated entity controls and subsequently consolidates
the SPE:
• The activities of the SPE are being conducted on behalf of the consolidated entity according to its specific business needs so
that the consolidated entity obtains benefits from the SPE’s operation
• The consolidated entity has the decision making powers to obtain the majority of the benefits of the activities of the SPE
• The consolidated entity retains the majority of the residual of ownership risks of the SPE or its asset in order to obtain
benefits from its activities.
Annual Report 2015 71
16. Deed of Cross Guarantee
Pursuant to ASIC Class Order 98/1418 (as amended) dated 13 August 1998 certain wholly owned subsidiaries are relieved from
the Corporations Act 2001 requirements for preparation, audit and lodgement of financial reports, and directors’ reports.
It is a condition of the Class Order that the Company and each of the subsidiaries enter into a Deed of Cross Guarantee.
The effect of this is that the Company guarantees to each creditor payment in full of any debt in the event of winding up of any
of the subsidiaries under certain provisions of the Corporations Act 2001. If a winding up occurs under other provisions of the
Act, the Company will only be liable in the event that after six months any creditor has not been paid in full. The subsidiaries
have also given similar guarantees in the event that the Company is wound up. The subsidiaries subject to the Deed are listed
in Note 15 (excluding Thorn ABS Warehouse Series No. 1).
The consolidated Statement of Comprehensive Income comprising of entities which are parties to the Deed, after eliminating all
transactions between parties to the Deed of Cross Guarantee, at 31 March 2015, is the same as the consolidated Statement of
Comprehensive Income in this financial report. The consolidated Statement of Financial Position in this financial report includes
the assets and liabilities of Thorn ABS Warehouse Series No. 1. Excluding the Thorn ABS Warehouse Series No. 1, cash and cash
equivalents would decrease by $3,014,000 and trade and other payables would decrease by $3,014,000.
During the year the group acquired 100% of both Cash Resources Australia Pty Limited and Cash Resources Trust. These entities
have been included within the Deed of Cross Guarantee.
17. Parent Entity Disclosures
As at, and throughout, the financial year ending 31 March 2015 the parent entity of the consolidated entity was
Thorn Group Limited.
In thousands of AUD
Result of Parent Entity
Profit for the period
Other comprehensive income
Total comprehensive income for the period
Financial position of the parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of the parent comprising of:
Share capital
Equity remuneration reserve
Total Equity
2015
2014
17,249
–
17,249
1,379
107,814
1,379
1,379
103,446
2,989
106,435
15,563
–
15,563
7,039
108,950
7,039
7,039
99,060
2,851
101,911
The parent entity has entered into a Deed of Cross Guarantee with the subsidiaries.
Further details of the Deed of Cross Guarantee and the subsidiaries subject to the deed are disclosed in Note 16.
72 Thorn Group
Notes to the Consolidated Financial StatementsFor The Year Ended 31 March 2015 18. Acquisition of subsidiary
The Group acquired the trade and assets of the following entities:
Date of acquisition
1 December 2014
1 December 2014
Entity Purchased
% Acquired
Cash Resources Australia Pty Ltd
Cash Resources Australia Trust
100% (i)
100% (i)
(i) Acquisition of business assets
Details of the fair value of the assets and liabilities acquired are as follows:
(a) Purchase consideration
Cash paid to date
Less cash acquired
Net cash payment
Less acquisition costs
Net purchase consideration
Fair value of net identifiable assets acquired (b)
Goodwill
(b) Assets and liabilities acquired
The assets and liabilities arising from the acquisition are as follows:
Trade and other receivables
Property, plant and equipment
Creditors and employee benefits provision
Fair value of net identifiable assets and liabilities acquired
$000’s
45,609
(2,337)
43,272
(2,246)
41,026
(37,779)
3,247
41,295
355
(3,871)
37,779
The fair value of identifiable assets and liabilities of CRA approximated their carrying values at the date of acquisition.
The accounting for the above acquisition is provisional as at 31 March 2015. The Group is working through valuations of
potential separately identifiable intangibles.
The acquired entity contributed $800,000 profit after tax and $4,300,000 revenue for the Group from the date of acquisition.
It is impractical to report the profit that would have been included within the results if the acquisition had occurred at the
beginning of the year due to cost and revenue synergies, funding and changes in management structures and operations.
19. Employment Benefits Expense
In thousands of AUD
Wages and salaries
Contributions to defined contribution superannuation funds
Termination benefits
Equity settled share-based payment transactions
2015
49,679
3,561
341
272
2014
44,966
3,173
638
82
53,853
48,859
Annual Report 2015 73
20. Related Parties
Key management personnel remuneration
In AUD
Short-term employee benefits
Post-employment benefits
Long-term employee benefits
Share based payments
2015
2014
3,070,462
1,949,009
157,937
333,977
225,530
87,342
380,259
127,400
3,787,906
2,544,010
Individual directors and executives compensation disclosures
Information regarding individual director’s and executive’s compensation and some equity instruments disclosures
as required by Corporations Regulation 2M.3.03 is provided in the remuneration report section of the directors’ report
on pages 28 to 39.
Stephen Kulmar is a Director of Retail Oasis and Creative Oasis. During the financial year the group retained these entities
in relation to brand and advertising work. The total benefit excluding GST was $401,258.
This work was undertaken and invoiced on an arms length basis and there were no balances outstanding as at year end.
This was reviewed by the Board and determined to be in accordance with the Company’s independence policy.
No other director has entered into a material contract with the company or the consolidated entity since the end of the
previous financial year and there were no material contracts involving directors’ interests existing at year end.
Movements in shares
The movement during the reporting period in the number of ordinary shares in Thorn Group Limited held, directly, indirectly,
or beneficially, by each key management person, including their related parties, is as follows:
Held at
1 April 2014
Purchases
Sales
Received upon
exercise of
performance rights
Held at
31 March 2015
39,000
–
60,278
–
126,887
367,435
Held at
1 April 2013
241,300
3,347,463
60,278
34,000
107,835
340,218
23,018
60,000
11,221
21,490
4,198
–
–
–
–
–
–
–
–
–
–
–
–
–
62,018
60,000
71,499
21,490
131,085
367,435
Purchases
Sales
Received upon
exercise of
performance rights
Held at
31 March 2014
11,429
60,000
–
–
5,000
–
–
–
–
–
–
–
–
81,650
–
–
19,052
27,217
192,729
3,429,113
60,278
39,000
126,887
367,435
Directors
Joycelyn Morton
Stephen Kulmar
Peter Henley
David Foster
Executives
James Marshall
Peter Eaton
Directors
David Carter
John Hughes
Peter Henley
Joycelyn Morton
Executives
James Marshall
Peter Eaton
74 Thorn Group
Notes to the Consolidated Financial StatementsFor The Year Ended 31 March 2015 21. Auditors’ Remuneration
In whole AUD
Audit services
KPMG Australia:
Audit and review of financial reports
Compliance assurance services
Acquisition related audit services
Other services
KPMG Australia:
Taxation services – compliance
Taxation services – advice
Transaction services
Other services
2015
2014
368,000
31,500
45,000
336,000
8,500
–
444,500
344,500
100,316
98,035
60,000
79,250
337,601
60,000
30,000
–
45,000
135,000
22. Contingencies
The industry in which the consolidated entity operates is highly regulated. Documentation, marketing and sales activities (both
written and verbal) must comply with strict rules provided in the National Consumer Credit Protection Act and other legislation
such as the Fair Trading and door to door sales legislation. Breach of these rules can result in fines or civil penalties or damages
or compensation or some combination of these.
The consolidated entity has no reason to believe that a breach of these rules will occur or is likely to result in a material effect
on the profitability of the consolidated entity. No provision exists for any potential exposure in connection with such a breach.
The consolidated entity is aware (via the “mystery shop” process, where a person presents as a customer but is not a real
customer) that some verbal statements may have been made to some customers inaccurately describing the customer’s rights
in relation to the acquisition of similar products to those rented under its Rent Try $1 Buy® contracts. Under the National
Consumer Credit Protection Act, the amount at risk in relation to any affected contract is part of any deemed “interest” payable
under that contract and/or any penalties which could be imposed. No customer complaints have been received in this regard.
The consolidated entity has no reason to believe that this matter is likely to result in a material effect on the profitability of the
consolidated entity and no provision exists for any potential exposure in connection with this matter.
Annual Report 2015 75
Directors’ Declaration
1 In the opinion of the directors of Thorn Group Limited (the ‘Company’):
(a)
the financial statements and notes that are set out on pages 47 to 75 and the remuneration disclosures that are
contained in the Remuneration Report in the Directors’ report are in accordance with the Corporations Act 2001,
including:
(i)
giving a true and fair view of the consolidated entity’s financial position as at 31 March 2015 and of their
performance, for the financial year ended on that date; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001;
(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1(a); and
(c)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
2 There are reasonable grounds to believe that the Company and the consolidated entities identified in Note 15 will be able
to meet any obligations or liabilities to which they are or may become subject to by virtue of the Deed of Cross Guarantee
between the Company and the consolidated entities pursuant to ASIC Class Order 98/1418.
3 The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Managing
Director and Chief Financial Officer for the financial year ended 31 March 2015.
Signed in accordance with a resolution of the directors:
Joycelyn Morton
Chairperson
Dated at Sydney
27 May 2015
James Marshall
Managing Director
76 Thorn Group
ABCD
Independent Auditor’s Report
Independent auditor’s report to the members of SG Fleet Group Limited
Report on the financial report
We have audited the accompanying financial report of SG Fleet Group Limited (the Company),
Independent Auditor’s Report to the members of Thorn Group Limited
which comprises the consolidated statement of financial position as at 30 June 2014, and
Report on the financial report
consolidated statement of profit and loss and comprehensive income, consolidated statement of
We have audited the accompanying financial report of Thorn Group Limited (the ‘Company’), which comprises the consolidated
statement of financial position as at 31 March 2015, and the consolidated statement of comprehensive income, consolidated
changes in equity and consolidated statement of cash flows for the period ended on that date,
statement of changes in equity and consolidated statement of cash flows for the year ended on that date, notes 1 to 22
notes 1 to 39 comprising a summary of significant accounting policies and other explanatory
comprising a summary of significant accounting policies and other explanatory information and the directors’ declaration of the
information and the directors’ declaration of the Group comprising the company and the entities
Group comprising the Company and the entities it controlled at the year’s end or from time to time during the financial year.
it controlled at the period’s end or from time to time during the financial period.
Directors’ responsibility for the financial report
Directors’ responsibility 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
The directors of the Company are responsible for the preparation of the financial report that
necessary to enable the preparation of the financial report that is free from material misstatement whether due to fraud or error.
gives a true and fair view in accordance with Australian Accounting Standards and the
In Note 1, the directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements,
Corporations Act 2001 and for such internal control as the directors determine is necessary to
that the financial statements of the consolidated entity comply with International Financial Reporting Standards.
enable the preparation of the financial report that is free from material misstatement whether
Auditor’s responsibility
due to fraud or error. In note 2, the directors also state, in accordance with Australian
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance
Accounting Standard AASB 101 Presentation of Financial Statements, that the financial
with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements
relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is
statements of the Group comply with International Financial Reporting Standards.
free from material misstatement.
Auditor’s responsibility
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report.
The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement
Our responsibility is to express an opinion on the financial report based on our audit. We
of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control
conducted our audit in accordance with Australian Auditing Standards. These Auditing
relevant to the entity’s preparation of the financial report that gives a true and fair view in order to design audit procedures
Standards require that we comply with relevant ethical requirements relating to audit
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s
engagements and plan and perform the audit to obtain reasonable assurance whether the
internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.
financial report is free from material misstatement.
We performed the procedures to assess whether in all material respects the financial report presents fairly, in accordance
An audit involves performing procedures to obtain audit evidence about the amounts and
with the Corporations Act 2001 and Australian Accounting Standards, a true and fair view which is consistent with our
disclosures in the financial report. The procedures selected depend on the auditor’s judgement,
understanding of the Group’s financial position and of its performance.
including the assessment of the risks of material misstatement of the financial report, whether
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation of the financial report that gives a true and fair view in order
Independence
to design audit procedures that are appropriate in the circumstances, but not for the purpose of
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
Auditor’s opinion
evaluating the appropriateness of accounting policies used and the reasonableness of accounting
In our opinion:
estimates made by the directors, as well as evaluating the overall presentation of the financial
(a) the financial report of the Group is in accordance with the Corporations Act 2001, including:
report.
(i)
giving a true and fair view of the Group’s financial position as at 31 March 2015 and of its performance for the year
ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
(ii)
the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
We performed the procedures to assess whether in all material respects the financial report
presents fairly, in accordance with the Corporations Act 2001 and Australian Accounting
(b)
Standards, a true and fair view which is consistent with our understanding of the Group’s
financial position and of its performance.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
KPMG, an Australian partnership and a member firm
of the KPMG network of independent member firms
affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity.
Liability limited by a scheme
approved under Professional
Standards Legislation.
Annual Report 2015 77
Independent Auditor’s Report (continued)
Report on the remuneration report
We have audited the Remuneration Report included in pages 28 to 39 of the directors’ report for the year ended 31 March 2015.
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 auditing standards.
Auditor’s opinion
In our opinion, the remuneration report of Thorn Group Limited for the year ended 31 March 2015, complies with Section 300A
of the Corporations Act 2001.
KPMG
Anthony Travers
Partner
Sydney
27 May 2015
78 Thorn Group
Shareholder Information
Distribution of shareholders
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 - 9,999,999,999
Rounding
Total
Unmarketable parcels
Minimum $ 500.00 parcel at $ 2.67 per unit
Fully Paid Ordinary Shares (Total) as of 31 Mar 2015
Total holders
Units % of Issued Capital
1,655
3,256
1,392
1,408
847,238
9,387,903
10,530,787
32,137,565
69
98,434,346
0.56
6.20
6.96
21.24
65.04
0
7,780
151,337,839
100.00
Minimum
Parcel Size
188
Holders
282
Units
7,258
The names of the substantial shareholders listed in the Company’s register as at 31 March 2015 are:
Rank Name
1
2
Kinetic Investment Partners Limited
Vinva Investment Management Limited
Voting Rights
The Company only has ordinary shares on issue.
% S/O
Mar-15
10,037,184
9,466,618
Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a meeting or by proxy has
one vote on a show of hands.
Annual Report 2015 79
Shareholder Information (continued)
20 largest shareholders – ordinary shares
Rank Name
1
2
3
4
5
6
7
8
J P Morgan Nominees Australia Limited
HSBC Custody Nominees (Australia) Limited
National Nominees Limited
RBC Investor Services Australia Nominees Pty Limited
Citicorp Nominees Pty Limited
BNP Paribas Noms Pty Ltd
Dove Nest Pty Ltd
Citicorp Nominees Pty Limited
9 Warbont Nominees Pty Ltd
10 Australian Executor Trustees Limited
11 HSBC Custody Nominees (Australia) Limited - A/C 2
12 Mr Jeffrey Douglas Pappin
13
Farjoy Pty Ltd
14 UBS Nominees Pty Ltd
15 Mr Peter Eaton
16 NCH Pty Ltd
17 UBS Nominees Pty Ltd
18 Romadak Pty Ltd
19 Mr Michael John Horn
20 Associated World Investments Pty Ltd
Number of ordinary
fully paid shares held
% held of issued
ordinary capital
24,709,614
15,156,362
14,278,080
9,367,245
9,174,986
7,871,740
2,000,000
1,844,761
1,305,675
701,928
642,488
605,000
437,500
401,306
367,435
356,429
341,881
338,696
301,775
290,000
16.33
10.01
9.43
6.19
6.06
5.20
1.32
1.22
0.86
0.46
0.42
0.40
0.29
0.27
0.24
0.24
0.23
0.22
0.20
0.19
80 Thorn Group
Corporate Directory
Directors
Joycelyn Morton
Chair
James Marshall
Managing Director
Peter Henley
Non-Executive Director
Stephen Kulmar
Non-Executive Director
David Foster
Non-Executive Director
Company secretary
Peter Eaton
Registered office
Thorn Group Limited
Level 1
62 Hume Highway
Chullora NSW 2200
www.thorn.com.au
Telephone: +61 2 9101 5000
Facsimile: +61 2 9101 5033
Auditor to Thorn Group Limited
KPMG
10 Shelley Street
Sydney NSW 2000
Registry
Computershare Investor Services Pty Limited
Level 3
60 Carrington Street
Sydney NSW 2000