ANNUAL REPORT 2018
CHAIRMAN AND CEO REPORT
Dear shareholders,
Thorn Group’s FY18 has been a challenging year. The Financial results have been disappointing and reflect
the impact of transforming the business over the past year. This includes dealing with a number of historical
issues and establishing a sound platform for the business going forward, particularly in the Group’s
consumer leasing operations.
The Board took decisive action in FY18 in refining Thorn towards a simpler business model comprising two
components – consumer leasing and business equipment finance – where the company has a distinct
competitive advantage. The Board also appointed Tim Luce, an experienced retail executive, as its new CEO
and Managing Director and new members of the management team to ensure the right skills are present to
take the Company forward.
The FY18 results contrasted another strong performance from equipment finance against a lower
contribution from consumer leasing.
Revenue from continuing operations was down 15% to $236.2 million due to tougher conditions in
consumer leasing. Revenue in consumer leasing was down 22% and equipment finance was up 50%. EBIT
was down 12% to $35.8 million.
On a continuing business basis, profit after tax and before the goodwill write down was $14.3 million
(FY17: $21.0m). The Board resolved to write off all the Company’s goodwill of $20.7 million during the year
and, adding back contributions from discontinued operations, the bottom line result for FY18 was a loss of
$3.6 million (FY17: profit of $25.3 million).
The underlying cash profit performance enabled an interim dividend of 1 cent a share fully franked to be
paid but the directors decided to withhold a final dividend in the interests of retaining cash for balance
sheet flexibility.
A significant FY18 achievement was debt management. While total borrowings increased 3% to
$284.3 million due to growth in the equipment finance book, corporate debt was reduced very significantly
and at 31 March 2018 Thorn was in compliance with all covenants.
Thorn is undertaking decisive action to improve the consumer leasing division’s performance. This project is
being led by Tim Luce, our newly appointed Managing Director who has a retail background. Initiatives
include new store concepts, a wider product range, more flexible pricing, an industry leading online credit
assessment system and more extensive promotion, along with commissioning an external review to guide
productivity and development.
These measures will have a positive effect on operations and improved performance over time but in the
short term, the FY19 challenge is to rebuild installation volumes in a tough business environment.
While equipment finance continues to perform strongly, this will only partially offset a reduced consumer
leasing performance and consequently in FY19 Thorn expects operating profit after tax to be in the range of
$7 million to $10 million.
Regarding other corporate issues, Thorn reached a settlement in January 2018 with ASIC, continues to
contest the class action, and operates within possible interest caps that may be imposed by impending
Federal Government legislation.
We are appreciative of the efforts of our people around the country and acknowledge the contribution of
Joycelyn Morton who has retired from the Board after seven years and as chair for three years, and also
Peter Forsberg who acted as CEO whilst the Board recruited Tim Luce.
DAVID FOSTER
Chairman and Non‐Executive Director
TIM LUCE
CEO and Managing Director
Annual
Financial Report
31 March 2018
ACN 072 507 147
CONTENTS
Directors’ Report
Lead Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
2
22
23
24
25
26
28
53
54
60
DIRECTORS’ REPORT
For the year ended 31 March 2018
The Directors present their report together with the financial report of Thorn Group Limited (the ‘Company’) and its controlled
entities (together referred to as ‘Thorn’, the ‘Group’ or the ’consolidated entity’) for the financial year ended 31 March 2018
and the auditor’s report thereon.
OPERATING AND FINANCIAL REVIEW
Thorn is a diversified financial services group providing financial solutions to consumers and businesses. Business activities are
the leasing of household products to consumers and the provision of leasing and other financial services to small and medium
size enterprises.
The Group also provided trade and debtor finance services and consumer loans during the year but those businesses were sold
during the year. Accordingly, those two divisions have been treated as discontinued businesses in the financial statements
where they are presented as a one line entry above profit after tax.
There were no other significant changes in the nature of the activities of the consolidated entity during the year.
Financial performance
Revenue from continuing operations decreased from $277.6m in the prior year to $236.2m this year, a reduction of $41.4m or
15%. Profit after tax fell from a profit of $25.3m in 2017 to a loss of $(3.6m) in 2018. The loss included a $20.7m charge to
write off goodwill and so the cash profit, defined as the profit excluding that write off, was $17.0m (2017: $25.3m).
The lower profit result reflects principally the difficult trading conditions experienced during the year by the Company’s
consumer leasing division, Radio Rentals.
Equipment Finance enjoyed another year of strong profit growth and the interest expense line rose as debt was used to fund a
portion of the growing receivables book.
Corporate expenses were elevated due to the legal and compliance costs of the ASIC and class action matters. The Company
examined the carrying value of its goodwill balance during the year in response to the declining cash flows and concluded the
balance should be written off in its entirety. The Company restructured its portfolio of business units and de-risked its capital
structure during the year with the sale of two Group businesses. These sales allowed the Company to meet the progressive
debt repayment obligations instituted by the Company’s lender.
The Board oversaw changes in its senior management team during the year most notably with the departure of its Chief
Executive Officer & Managing Director, its Chief Operating Officer and its General Manager Consumer Leasing. The Company’s
Chief Financial Officer, Peter Forsberg, stepped into the CEO role for ten months until the Company’s new CEO & Managing
Director, Tim Luce, could commence his employment on 15 February 2018.
Segment performance – continuing operations
A$m
Consumer Leasing
Equipment Finance
Corporate
Goodwill impairment
Sub-total
Net interest expense
Profit before tax
Tax expense
Segment revenue
2018
196.5
39.7
-
-
236.2
2017
251.2
26.4
-
-
277.6
(Loss)/profit after tax from continuing operations
Profit from discontinued businesses after tax
(Loss)/profit after tax
Segment EBIT to PAT
2018
26.4
24.2
(14.8)
(20.7)
15.1
(15.7)
(0.6)
(5.8)
(6.4)
2.8
(3.6)
2017
36.3
16.1
(11.6)
-
40.8
(9.5)
31.3
(10.3)
21.0
4.3
25.3
Annual Report 2018 I 2
DIRECTORS’ REPORT
For the year ended 31 March 2018
Consumer Leasing
The Company’s consumer Leasing division, Radio Rentals, continued to experience challenging trading conditions due to
adverse publicity, the deferral of returning customers caused by the launch of the four year contract three years ago, and
operational changes from the launch of its new online customer application and credit assessment system. These matters
combined to reduce customer enquiries and installation volumes such that volumes ended the year 33% lower than the
prior year.
The division responded to these challenges in recent months by increasing promotional activity, widening the product range,
and commencing a trial of reformatted store layouts and offers to spur sales activity. The activities to date have served to
stabilise sales and further work is underway to lift volumes. The division has also refunded substantially all the excess credit
balances held and developed a plain English contract to assist consumers in clearly understanding the contract they are
entering into.
Revenue for the 2018 financial year reduced by 22% to $196.5m (2017: $251.2m). Revenue is a combination of interest and
fee income from past written contracts and sales revenue from installations under new contracts. Installations fell 33% to
82,371 units (2017: 122,189 units) and the receivables book, which generates the interest income, fell $17.6m to $155.2m
(2017: $172.8m). Arrears in this book increased over the prior year and are a focus for the business.
The division’s costs reduced by 21% to $170.2m (2017: $214.8m) so the EBIT to Revenue percentage fell from 14.5% in the
prior year to 13.4% this year. The division continues to seek efficiencies in its operations including changes to its operating
model to redress this fall. EBIT was consequently down 27% to $26.4m (2017: $36.3m).
Equipment Finance
The Thorn Equipment Finance (‘TEF’) business continued its run of strong growth with $208.9m of originations in the year
which drove the net receivables book up 36% or $86.9m to $326.2m (2017: $239.3m). As pricing was kept fairly constant the
book growth translated into interest and fee revenue growth of 50% to $39.7m (2017: $26.4m).
Impairment losses as a percentage of average net receivables were 1.7% compared to the prior year’s 1.8%. Average arrears
delinquency over 30 days past due has remained in the 2.0% to 2.5% range. EBIT rose 50% to $24.2m (2017: $16.1m).
Corporate
Corporate Head Office expenses increased by $3.2m to $14.8m (2017: $11.6m). The increase was due to enhancement of the
credit, risk and legal teams and additional legal and advisory costs in administering to the regulatory and class action matters.
Finance expense
Net borrowing costs increased by 65% from $9.5m to $15.7m. Borrowings increased during the year as growth in the
Equipment Finance book was funded predominantly by debt but then reduced in the latter part of the year as proceeds from
the business sales were applied to reduce debt. Borrowings ended the year $7.8m or 2.8% up to $284.3m (2017: $276.5m) as
the TEF debt warehouse rose $91.3m and the corporate debt facility reduced by $83.5m. The finance expense rate rose as
credit spreads ticked up during the period and there were fees for the facility increases and extensions.
Tax expense
The Group generally pays corporation tax at or slightly above the 30% statutory rate as some expenses are not tax deductible.
In this financial year the goodwill impairment charge of $20.7m is a non-deductible expense so the tax rate adjusting for that
was 29%.
Profit after tax for continuing operations
The reported result after tax for continuing operations was a loss of $6.4m.
Discontinued operations
The Trade & Debtor Finance (“TDF”) business recorded a profit after tax of $0.7m prior to its sale on 26 February 2018. The
business was sold for $37.9m and the profit on sale was reduced by the costs of sale and provisioning to record a net loss after
tax on sale of $(0.4m).
The Consumer Finance business division (“TFS”) was closed in the previous financial year and sold on 1 November 2017 for
$13.3m. It recorded a profit after tax of $1.7m prior to its sale. The profit on sale was $0.6m.
The NCML Receivables Management business was sold to a third party in September 2016. During the year the group received
a further $0.2m following a completion audit.
3 I Thorn Group
DIRECTORS’ REPORT
For the year ended 31 March 2018
Financial position
The balance sheet is presented below and has two versions. The first version excludes the securitised warehouse trust for the
Equipment Finance receivables along with those associated receivables (which are non-recourse funding for the warehouse)
leaving only the corporate bank debt facility, and the second is as per the statutory accounts format with all debt included. The
Company’s lender views their covenants through the first version.
The balance sheet for the 2018 year also reflects the sale of the discontinued businesses and the associated reduction in the
Group’s debt position.
Summarised financial position
31 March 2018
31 March 2017
$m
Cash at bank (i)
Receivables
Investment in unrated notes
Rental and other assets
Intangible assets
Total Assets
Borrowings
Other liabilities
Total Liabilities
Total Equity
Gearing (net debt/equity) (ii)
EPS
Return on Equity (iii)
excl. Trust
incl. Trust
excl. Trust
incl. Trust
28.2
202.3
58.7
11.4
4.8
305.4
41.0
61.5
102.5
202.9
16.1%
28.2
504.3
-
11.4
4.8
548.7
284.3
61.5
345.8
202.9
135.9%
(2.3)
(1.8%)
14.7
305.8
35.2
17.6
24.3
397.6
124.5
62.9
187.4
210.2
56.1%
14.7
493.0
-
17.6
24.3
549.6
276.5
62.9
339.4
210.2
128.4%
16.2
12.4%
(i) Cash at bank consists of free cash of $8.4m (2017: $6.7m) and restricted cash $19.8m (2017: $8.0m) relating to the operation of the securitised warehouse SPV.
(ii) Gearing is calculated as closing net debt (i.e. debt less free cash) divided by closing equity
(iii) ROE is calculated as PAT divided by the average of opening and closing equity and annualised. With goodwill impairment excluded ROE would have been 7.8%
(2017:12.4%).
Receivables
Receivables increased by 2.3% or $11.3m to $504.3m during the year. This movement is affected by the sales of TDF and TFS as
their receivables balance was a combined $60m in 2017. Consumer leasing receivables fell by 10.2% or $17.6m to $155.2m as
the finance leases within it amortised off faster than new volumes could replace it. Equipment Finance lease receivables
increased by 36% to $326.2m due to continued strong originations.
Borrowings and gearing
Borrowings rose by $7.8m from $276.5m last year to $284.3m this year. The securitised warehouse funding TEF grew $91.3m
from $152.0m to $243.3m. The corporate facility was reduced by $83.5m from $124.5m to $41.0m as the sale proceeds from
the business sales were applied to meet the required progressive repayments.
Return on Equity
ROE fell from 12.4% to (1.8%) on a statutory accounts profit after tax level and to 7.8% at a cash profit level.
Annual Report 2018 I 4
DIRECTORS’ REPORT
For the year ended 31 March 2018
Funding
The Group has the following debt facility limits:
$m
Secured Corporate Loan Facilities A and B
Secured Loan Facility C
Securitised Warehouse Facility
2018
70.0
-
250.0
2017
110.0
65.0
180.0
The Group continues to be funded by one Australian major bank. That bank and the Company entered into a facility variation
agreement during the year which required the Company to undertake progressive debt repayments and meet new covenants.
These progressive repayments will reduce the facility limit to $50m by 30 September 2018.
The corporate facilities terminate on 30 November 2019 with the bank having the right to a scheduled review of the facility on
and from 30 September 2018 resulting from which they may issue a change notice for the conditions of the facility including its
cost, margin, limit or terms and conditions.
The corporate facilities are secured by a fixed and floating charge over the assets of the consolidated entity. The warehouse
facility is secured by the rentals and payments receivable from the underlying lease receivable contracts and is non-recourse to
the Group beyond Thorn’s subordinated notes in the warehouse.
Dividends paid or recommended
Dividends paid by the Company to members during the financial year were:
Cents per share
Amount $'000
Franking
Date of payment
2018
Final 2017
Interim 2018
Total amount
2017
Final 2016
Interim 2017
Total amount
2.5
1.0
6.0
5.5
3,956
1,593
5,549
9,268
8,612
17,880
100%
100%
100%
100%
18-Jul-17
19-Jan-18
18-Jul-16
20-Jan-17
Directors have resolved that no final dividend be declared. This decision was taken after considering the need to retain cash
to provide balance sheet flexibility for the Company following the changes to its bank financing arrangements and its loss for
the year.
Regulatory provision
Thorn’s consumer leasing division has been engaging with ASIC on matters pertaining to customer credit refunds and the
appropriate and necessary extent of verification of items of customer income and expenditure.
On 23 January 2018, Thorn advised that this long running investigation had concluded with the imposition of an Enforceable
Undertaking including the refunding of an estimated $6.1m to affected customers and a civil penalty of $2.0m which has since
been confirmed by the Court. These amounts are provided for in the financial statements. Refunds will commence under the
Enforceable Undertaking in coming weeks. Excess credits have been substantially refunded.
Contingent Liability
Class Action
The Thorn subsidiary running Radio Rentals was named on 29 March 2017 as the respondent to a class action proceeding that
has been commenced by one of its customers in the Federal Court of Australia. The allegations presently relate to misleading,
deceptive and unconscionable conduct, false representations and unfair contract terms.
The matter is being defended and no provision has been taken in these accounts. Legal fees are and will be incurred defending
the matter.
5 I Thorn Group
DIRECTORS’ REPORT
For the year ended 31 March 2018
FINANCING AND GOING CONCERN BASIS FOR THE FINANCIAL REPORT
At the half year ended 30 September 2017, the Company had breached two of its bank covenant financial ratios. The bank
formally waived the breach and instituted a facility variation deed which required the Company to undertake progressive debt
repayments and meet new covenants. The facility variation deed reduced the facility limit to $90m by 31 December 2017,
$70m by 30 June 2018, and $50m by 30 September 2018.
Directors were confident the company could meet these progressive repayments and indeed the corporate debt facility was
paid down to $41m in February 2018 utilising operational cash flows and proceeds from the sale of Thorn Financial Services and
Trade & Debtor Finance.
Subsequent to the financial year end, the bank has instituted a further facility variation deed which has removed one of the
previous tightening financial covenants and applied a replacement earnings based covenant. The facility variation deed entered
into at the half year provided for the facility termination date to be extended to 30th November 2019 with the bank having the
right to conduct an independent review of the facility on 30th September 2018 and to amend the facility terms. The directors
are confident the company has a number of alternative funding options available if required.
Accordingly, the directors are satisfied that the going concern basis should be adopted in preparing this financial report.
SUBSEQUENT EVENTS
ASIC
The Company attended a Federal Court hearing for the ASIC v Thorn Australia Pty Ltd regulatory matter on 16 May at which the
Court ordered Thorn to pay a pecuniary penalty of $2 million and reimburse ASIC’s agreed costs. This was as previously advised
to the ASX on 23 January 2018.
AASB 9
The Group will implement AASB 9 Financial Instruments in the new financial year commencing 1 April 2018. This standard
introduces a new impairment assessment model which has implications for the Group’s assessment of its provision for credit
losses. The Group has conducted a preliminary review of the anticipated impact and expects the provision for credit loss on its
finance lease and loans receivables book to increase from $26.1m to between $34.1m and $39.1m. After accounting for the tax
effect of these provision increases, net assets is expected to reduce by an amount between $5.6m to $9.1m. The net impact of
this increased provisioning will be processed through retained earnings in the 2019 financial statements.
OUTLOOK
The outlook for the Thorn Group will continue to be challenged as the difficulties facing the Radio Rentals division require time
to resolve and will not be balanced by the expected continuing strong performance from Equipment Finance.
The appointment of the Company’s new CEO, Tim Luce, is expected to deliver a positive impact to the business and the
consumer leasing division in particular but Mr Luce is taking over at a point where the significant impacts of the regulatory
matters and their flow on effects have reduced installation volumes in Radio Rentals and the size of the interest earning
receivables book. These will take time to redress.
The Equipment Finance division is growing strongly but this will be subject to the continuing availability of funding. The Group
also faces the ongoing publicity and costs from the class action and enforceable undertaking.
Consequently, as previously announced, the operating profit after tax for next year will be significantly down from this year’s
continuing business $14.2m cash profit after tax. It is expected to be in the range of $7m to $10m.
Annual Report 2018 I 6
DIRECTORS’ REPORT
For the year ended 31 March 2018
DIRECTORS' INFORMATION
David Foster
Independent, Non-Executive
Appointed 1 December 2014
Appointed Board Chairman 1 February 2018
Qualifications
Bachelor of Applied Science
MBA, GAICD, SFFIN
Experience
David is an experienced Independent Non-Executive Director
across a range of industries. He 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 ASX directorships
G8 Education Limited, MotorCycle Holdings Limited
Genworth Mortgage Insurance Australia Limited
Former ASX directorships
Kina Securities Limited
Interests in shares and options
60,270 ordinary shares
Joycelyn Morton
Independent, Non-Executive
Appointed 1 October 2011
Appointed Board Chairman 26 August 2014 until 1 Feb 2018
Qualifications
Bachelor of Economics FCA, FCPA, FIPA, FGIA, FAICD
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.
Joycelyn was National president of both CPA Australia and
Professions Australia, she has served on many committees
and councils in the private, government and not-for-profit
sectors.
Other ASX current directorships
Argo Investments Limited, Argo Global Listed Infrastructure
Limited, Beach Energy Limited
Former ASX directorships
InvoCare Limited, Crane Group Limited
Count Financial Limited, Noni B Limited
Interests in shares and options
95,119 ordinary shares
7 I Thorn Group
Stephen Kulmar
Independent, Non-Executive
Appointed 15 April 2014
Chairman of the Remuneration & Nomination Committee
Appointed 15 April 2014
Experience
Stephen is the former Managing Director and Chairman of
IdeaWorks and is currently the Managing Director of Retail
Oasis, retail marketing and business consultancy.
Stephen has over 40 years’ experience in advertising and has
extensive experience in retail strategy, brand strategy,
channel to market strategy, digital and social strategy,
business re-engineering and new retail business
development.
Other ASX current directorships
Accent Group Ltd
Former ASX directorship
None
Interests in shares and options
68,000 ordinary shares
Andrew Stevens
Independent, Non-Executive
Appointed 1 June 2015
Chairman of the Audit Committee
Appointed 1 February 2018
Qualifications
Master of Commerce
FCA, MAICD
Experience
Andrew began his career at Price Waterhouse (now PwC) and
was a Partner of that firm for 12 years. He also performed a
range of senior management and global leadership roles at
IBM Corporation, most recently serving as the Managing
Director of IBM Australia and New Zealand from 2011-2014.
Other ASX current directorships
MYOB Group Limited, Stockland Corporation Limited
Former ASX directorships
None
Interests in shares and options
15,720 ordinary shares
DIRECTORS’ REPORT
For the year ended 31 March 2018
Belinda Gibson
Independent, Non-Executive
Appointed 1 July 2016
Chairman of the Risk & Compliance Committee
Appointed 1 February 2018
Qualifications
Bachelor of Economics, LLB (Hons) (Sydney) and LLM (Hons)
(Cambridge), FAICD, FGIA
Experience
Belinda was a Commissioner and then Deputy Chairman of
the Australian Securities and Investments Commission (ASIC)
from 2007 until May 2013. From 1987 until joining ASIC she
was a corporate law partner at the law firm Mallesons
Stephen Jaques, specialising in transactional advice and also
corporate governance issues.
Other ASX current directorships
None
Former ASX directorships
None
Interests in shares and options
20,000 ordinary shares
James Marshall
Managing Director
Appointed 5 May 2014, Resigned 21 April 2017
Qualifications
Dip. Financial Services
MAICD, MFTA
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 consumer leasing,
receivables management and broader financial services
industries, and has been instrumental in driving the
development and growth of Thorn’s core business divisions
and diversification strategy since the IPO.
Other ASX current directorships
None
Former ASX directorships
None
Interests in shares and options
10,000 ordinary shares
Tim Luce
Managing Director
Appointed 15 February 2018
Qualifications
Bachelor of Commerce
Experience
Tim has extensive executive experience working with retail
brands in Australia and Asia and joins Thorn Group after
six years with Courts Asia Ltd, an SGX listed retailer with over
90 stores selling household, technology, furniture, services
and consumer finance products, headquartered in Singapore
where he was Chief Operating Officer with P&L responsibility
for Singapore, Malaysia and Indonesia. Prior to Courts, Tim
held General Manager roles for Lovisa and Goldmark
Jewellers.
Other current ASX directorships
None
Former ASX directorships
None
Interests in shares and options
1,197,606 performance rights over ordinary shares
awarded as a sign on bonus and held in escrow subject to
time based vesting.
Annual Report 2018 I 8
DIRECTORS’ REPORT
For the year ended 31 March 2018
COMPANY SECRETARIES
Peter Forsberg is the Group’s CFO having joined the company on 28 September 2015. He acted as the Group’s CEO from
24 April 2017 until 15 February 2018. Mr Forsberg BSc Hons, FCA, F Fin, GAICD, MFTA is an experienced and qualified CFO and
senior executive having worked in healthcare, manufacturing and distribution, FMCG, professional services, and in publicly
listed, private equity owned and charitable companies operating both in Australia and internationally.
David Lines is the Group’s General Counsel having joined the company on 1 June 2017. David is an experienced and qualified
solicitor with extensive legal and business experience having practiced in England, Bermuda and Australia. He was a partner
of an international law firm and advised clients in corporate law, corporate finance, corporate structuring and general
regulatory matters.
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
Board Meetings
Audit, Risk & Compliance
Committee Meetings**
Audit Committee
Meetings**
Risk & Compliance
Committee Meetings**
(Until 1 February 2018)
(From 1 February 2018)
(From 1 February 2018)
Remuneration &
Nomination Committee
Meetings
David Foster
Joycelyn Morton
Belinda Gibson
Andrew Stevens
Stephen Kulmar
Tim Luce
James Marshall*
A
9
9
9
9
9
2
-
B
9
9
9
9
9
2
-
A
4
4
4
4
4
n/a
-
B
4
4
4
4
4
n/a
-
A
1
1
1
1
1
n/a
-
B
1
1
1
1
1
n/a
-
A
1
1
1
1
1
n/a
-
B
1
1
1
1
1
n/a
-
A
5
5
5
5
5
n/a
-
B
5
5
5
5
5
n/a
-
A – Number of meetings attended
B – Number of meetings held during the time the director held office during the year
n/a – Mr Tim Luce, as an executive Director, attended Committee meetings but as an invitee only
Mr Marshall departed on the 21 April 2017 which was prior to any meetings being held in the year.
** The Audit, Risk & Compliance Committee was restructured from 1 February 2018 in to a separate Audit Committee and a
Risk & Compliance Committee.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
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 $220,421 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.
9 I Thorn Group
DIRECTORS’ REPORT
For the year ended 31 March 2018
REMUNERATION REPORT – AUDITED
The Board of Thorn Group Limited presents the remuneration report which outlines key aspects of the remuneration policy and
framework and the remuneration awarded this year.
The information provided in this report has been prepared based on the requirements of the Corporations Act 2001 and the
applicable accounting standards and has been audited by KPMG.
The report is structured as follows:
1. Remuneration governance
2. Non-Executive Directors and Key Management Personnel
3. Non-Executive Director remuneration
4. Key Management Personnel remuneration
5. Alignment between remuneration and performance
6. Service contracts for KMP
7. Other statutory disclosures
1. REMUNERATION GOVERNANCE
The Company aims to deliver sustainable and superior returns to shareholders. The remuneration framework is designed to
ensure rewards are appropriate for the results achieved and are aligned to the Company’s strategic goals and shareholder
wealth creation.
The Board provides guidance and oversight to the remuneration strategy and has established a Remuneration & Nomination
Committee to ensure the remuneration strategy attracts and retains quality directors and executives, fairly and responsibly
rewards them, is equitable and aligned to shareholders’ interests, and complies with the law and high standards of governance.
The Committee is made up of independent non-executive directors and its charter is available on the Company website. The
Committee makes recommendations to the Board for its consideration and approval. The Committee Chairman will be
available at the Annual General Meeting to answer any questions from shareholders on this report. At the 2017 AGM, the
Remuneration Report received a vote of approval of 97% of the votes received.
The Committee can draw on independent experts where appropriate to provide advice on remuneration levels, trends and
structures. Where this occurs the consultants are instructed by and report directly to the Chairman of the Committee and are
thereby free of any undue influence by any KMP to whom their recommendations may relate. The Committee took advice from
PwC in relation to Mr Luce’s employment arrangements during the year at a cost of $33,660.
Annual Report 2018 I 10
DIRECTORS’ REPORT
For the year ended 31 March 2018
2. NON-EXECUTIVE DIRECTORS AND KEY MANAGEMENT PERSONNEL - AUDITED
For the year ended 31 March 2018, the NEDs and KMP were:
Non-Executive Directors
Position
David Foster
Joycelyn Morton
Stephen Kulmar
Director
Board Chairman
Chairman of the Audit, Risk & Compliance Committee
Director
Board Chairman
Director
Chairman of the Remuneration & Nomination Committee
Andrew Stevens
Director
Chairman of Audit Committee
Belinda Gibson
Director
Director/Committee Chair
Term or Date
Full Year
From 1 February 2018
Until 1 February 2018
Full Year
Until 1 February 2018
Full Year
Full Year
Full Year
From 1 February 2018
Full Year
Chairman of Risk & Compliance Committee
From 1 February 2018
Executive KMP
Tim Luce
Peter Forsberg
Wendy Yip
David Lines
Matt Ingram
James Marshall
Position
CEO
Managing Director
Acting CEO
Chief Financial Officer
Company Secretary
Chief Risk Officer
General Counsel and Company Secretary
Chief Operating Officer
CEO and Managing Director
Term or Date
From 15 February 2018
From 19 February 2018
From 24 April 2017 to 15 February 2018
Full Year
Full Year
Full Year
From 1 June 2017
Until 5 March 2018
Until 21 April 2017
Changes to KMP during the year
Mr Marshall resigned from his position as CEO and Managing Director on 21 April 2017. Thorn’s Chief Financial Officer and
Company Secretary, Peter Forsberg, was appointed Acting CEO on 24 April 2017. Mr Lines was appointed as General Counsel
on 1 June 2017 and Company Secretary on 18 October 2017. Mr Luce was appointed as CEO and Managing Director on
15 February 2018 upon which Mr Forsberg returned to his CFO role. Mr Ingram left the company on 5 March 2018.
11 I Thorn Group
DIRECTORS’ REPORT
For the year ended 31 March 2018
3. NON-EXECUTIVE DIRECTOR REMUNERATION - AUDITED
Non-executive directors’ fees are determined within an aggregate directors’ fee pool as approved by shareholders from time to
time. Independent remuneration consultants are employed periodically to provide advice and, where an increase is
recommended, this is put to shareholders at the subsequent AGM. The current maximum aggregate fee pool is $650,000
inclusive of superannuation per annum and was last voted upon by shareholders at the 2013 AGM. Director’s individual fees
did not increase in 2018 and the Board does not intend to seek a change to the fee pool at the 2018 AGM.
The base annual fee for the Chairman is $187,223 per annum including superannuation. Base fees for other non-executive
directors are $93,611 per annum including superannuation. The Chair of the Audit, Risk & Compliance Committee was paid an
annual fee of $16,425 until the Committee was split at 1 February 2018. Following 1 February 2018, the Chairs of the Audit
Committee and the Risk & Compliance Committee will receive an annual fee of $10,950 inclusive of superannuation and the
annual fee for chairing the Remuneration & Nomination Committee will continue at $10,950 inclusive of superannuation.
Non-executive directors do not receive performance-related remuneration. The Chairman of the Audit, Risk & Compliance
Committee received an additional fee of $16,425 for the significant extra duties undertaken. Non-executive directors are not
entitled to any additional remuneration upon retirement. Out-of-pocket expenses are reimbursed to directors upon the
production of proper documentation.
Name
David Foster
Joycelyn Morton
Stephen Kulmar
Andrew Stevens
Belinda Gibson
Peter Henley
Total Non-Executive Director Remuneration
Year
Salary and fees
Superannuation
2018 (i)
2017
2018 (i)
2017
2018
2017
2018
2017
2018
2017(ii)
2018
2017(iii)
2018
2017
123,071
100,490
158,814
170,980
95,490
95,490
86,913
85,490
86,913
62,802
-
35,182
551,201
550,434
11,692
9,546
15,087
16,243
9,071
9,071
8,257
8,122
8,257
5,966
-
3,342
52,364
52,290
Total
134,763
110,036
173,901
187,223
104,561
104,561
95,170
93,612
95,170
68,768
-
38,524
603,565
602,724
(i) Ms Morton stepped down as Chairman and Mr Foster was elected Chairman on 1 February 2018.
(ii) Ms Gibson was appointed as a director on 1 July 2016.
(iii) Mr Henley retired on 23 August 2016.
Annual Report 2018 I 12
DIRECTORS’ REPORT
For the year ended 31 March 2018
4. EXECUTIVE KMP REMUNERATION - AUDITED
The Company’s approach to remuneration is framed by the strategy and operational demands of the business, the desire for
superior sustained shareholder returns, the complex and onerous regulatory environment and high standards of governance.
The remuneration structure has been designed to balance both shareholder and executive interests. It consists of a mix of fixed
and ‘at-risk’ pay where the at-risk element seeks to balance both short and long term performance.
The diagram below illustrates the link between the business’ objective and executive KMP remuneration.
The Company is committed to providing a ‘fair go’ for consumers and SMEs in a responsible manner while delivering shareholders sustainable and
increasing long term value.
Business objective
↓
Remuneration strategy objectives
1.
Align executive remuneration to Company performance and
results delivered to shareholders through the short and long term
incentive plans being ‘at-risk’ based on business profit after tax
performance and returns to shareholders.
2.
Attract, motivate and retain executive talent in a competitive
market through a competitive rewards program which attracts
quality executives and incorporates a significant at-risk incentive
component.
↓
Fixed
At-risk
Fixed remuneration
Short term incentive
Long term incentive
Base salary and benefits plus statutory
superannuation contributions
Annual cash payment with deferral mechanism
Rewards experience skills and capabilities
Rewards performance over a 12 month period
Performance rights granted annually at the
Board’s discretion
Rewards achievement of the Company’s
shareholder return targets over a three year
period
Fixed payment reviewed annually and any
increases applied from 1 April
At-risk wholly dependent upon achieving agreed
performance
(only paid if targets achieved)
At-risk wholly dependent upon achieving agreed
performance
(only vests if targets achieved)
Set with reference to comparable companies
(in terms of industry and size), the scope and
nature of the role, and the executive’s
qualifications, skills, and experience
Payment is determined by performance against
net profit after tax target and individual KPIs
Vesting is determined by performance against
targets which align to the Company’s long term
shareholder return objectives
13 I Thorn Group
DIRECTORS’ REPORT
For the year ended 31 March 2018
Summary of executive KMP remuneration outcomes on a statutory basis – audited
Name
Year
Salary
Termination
STI
Other
remuneration (a)
Superannuation
Long
Service
Leave
LTI(b)
Total
Executive KMP
Tim Luce
Peter Forsberg
Wendy Yip
David Lines
Former KMP’s
Matt Ingram
James Marshall
Peter Ryan
Total KMP
Remuneration
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2017
2018
2017
67,784
-
591,480
390,404
329,676
285,997
210,702
-
381,656
353,106
427,279
603,583
334,036
2,008,577
1,967,126
-
-
-
-
-
-
-
-
339,581
-
-
-
-
339,581
-
-
-
88,173
-
130,436
162,539
-
-
75,905
134,641
-
-
-
-
129,597
-
-
-
-
-
426,777
75,905
-
-
-
-
-
37,500
370,419
37,500
5,012
-
19,563
19,533
19,563
19,533
10,024
-
19,563
19,533
13,220
20,275
19,533
86,945
98,407
-
-
-
-
-
-
-
-
-
-
-
(19,089)
51,239
(20,353)
40,821
11,887
-
160,969
-
722,390
623,715
404,791
480,992
308,518
-
(77,419)
663,381
48,244
550,480
2,893
(223,775)
219,617
38,242
110,757
772,857
-
(15,869)
375,200
2,893
(328,749)
2,479,666
38,242
235,192
2,803,244
Please refer to the employment period in the KMP section for details of the period during which the executives were employed
and the roles they held (including acting positions).
Notes
a) Other incentives includes benefits attributed to Mr Luce for his sign on bonus of $1million of shares at the 5 day VWAP
before his joining date of 15 February 2018 in two tranches, one with a one year vesting period and one with a two year
vesting period, and retention payment accruals to the individuals set out below.
b) The LTI represents the accounting charge recognised in the Company’s profit and loss account in respect of the long term
incentive plan. The charge reflects the fair value of the performance rights calculated at the date of grant using a Monte
Carlo simulation model and allocated to each reporting period 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.
Where grants lapse due to the failure or anticipated failure to achieve non-market condition hurdles then the expense
previously recognised can be reversed and result in a negative entry in this column.
Retention payments
During the year, the board recognised that retaining the services of several of its key executives was essential to the ongoing
success of the Group and accordingly a retention offer was made to those executives. The offer rewards continued
employment to 1 September 2018 with shares to the value of $200,000 for Peter Forsberg and $120,000 each for Wendy Yip
and David Lines with the value of the shares having been fixed at the 5 day VWAP before 1 December 2017. The board retains
the right to award cash as an alternative payment mechanism. These proposed payments are being accrued over the time
period and are reflected in the remuneration table above. Further retention payment arrangements have been entered into
subsequent to the year end with Mr Forsberg, Ms Yip and Mr Lines amounting to a combined $230,000.
Annual Report 2018 I 14
DIRECTORS’ REPORT
For the year ended 31 March 2018
Remuneration mix
The table below represents the target remuneration mix for group executives in the current year:
KMP
Fixed remuneration
At risk
Fixed remuneration
Short term incentive
Long term incentive
50%
25%
25%
Fixed remuneration consists of a base salary and benefits plus statutory superannuation contributions. The fixed remuneration
is set with reference to the market, the scope and nature of the role, and the executive’s qualifications, skills, performance and
experience. In certain cases, the Board may determine that it is appropriate to stretch fixed annual compensation in order to
attract critical talent where necessary.
Fixed remuneration is reviewed annually and any increase applied from 1 April. The Board may also approve adjustments
during the year as recommended by the CEO such as those arising from promotion or the undertaking of additional duties.
The benchmark peer group against which the remuneration packages are compared consists of companies within the ASX300
with market characteristics of between 50% and 200% of that of Thorn Group. Independent expert advice may be sought by
the Remuneration & Nomination Committee to assist in that exercise.
Short term incentive
The short term incentive (“STI”) is an annual cash payment subject to achieving performance criteria based both on financial
and non-financial key performance indicators. There is a target level of payment with an additional stretch component
available for out-performance. The Board has 100% discretion in all matters.
Features
Purpose
Opportunity
Description
To motivate executives to achieve the short term performance targets.
KMP
50%
100%
Target (as % of Fixed)
Maximum (as % of Fixed)
Performance Period
12 months
Gateway and
performance metrics
The STI is subject to a Profit After Tax ‘PAT’ gateway below which no STI payments are made. The maximum STI that
can be earned is based on PAT against budget as follows:
Company PAT against budget
STI that can be earned
<85%
85%
100%
110%
0%
42.5%
50%
100%
Performance between these levels is rewarded on a straight line basis.
70% of the STI that can be earned (detailed in the table above) is eligible for payment as it is based upon the financial
performance against budgeted PAT with the remaining 30% dependent upon the individual’s performance against
their personal KPIs.
The personal KPIs are individual to the executive’s position and capacity to influence, pre-agreed with the Board, and
relate to strategically important initiatives and measures for customer satisfaction, systems, risk and staff
development.
Assessment, approval and
payment
At the end of the financial year, the Remuneration & Nomination Committee assesses actual financial performance
based on the Company’s audited financial statements, and each executive’s performance against their personal KPIs
to determine the value of each executive’s STI reward.
The Board has 100% discretion with the STI outcome including the exercising of judgement with regard to any matter,
both positive and negative, that may have occurred during the financial period and to adjust the levels of achievement
accordingly.
Once approved, the STI rewards are paid in the month following the release of the Company’s results to the ASX.
15 I Thorn Group
DIRECTORS’ REPORT
For the year ended 31 March 2018
Features
Deferral
Description
For the 2017 financial year a deferral mechanism was introduced whereby 15% of the awarded STI is deferred for one
year and subject to forfeiture under two conditions, first should a material misstatement or omission in the financial
statements become apparent, or second the executive acts in a manner unbecoming of the office held. This deferral
percentage will be 30% in the 2019 year.
The deferred portion is subject to an election by the KMP as to its method of payment. It can be paid in cash one year
later, subject to the restrictions stated, and will earn interest at a suitable deposit rate for that period, or it can be
converted into performance share rights at a VWAP for the 5 days prior to the payment date of the initial tranche and
receive an uplift by a dividend equivalent for any dividends declared during the deferral period. The performance
rights will then be converted to shares on the due date and awarded to the KMP.
STI OUTCOMES FOR 2018 - AUDITED
The Company reported a loss after tax of $(3.6)m and a cash profit (before goodwill impairment) of $17.0m. This level of profit
did not qualify as sufficient to pass the PAT gateway in the above table and accordingly no STI’s were awarded.
STI for 2017-18
Tim Luce
Peter Forsberg
Wendy Yip
David Lines
Total
Target $
41,610
322,500
175,000
175,000
714,110
Earned %
Earned $
Forfeited %
Forfeited $
0%
0%
0%
0%
0%
-
-
-
-
-
100%
100%
100%
100%
100%
41,610
322,500
175,000
175,000
714,110
Long Term Incentive (LTI)
The Long Term Incentive is an annual performance rights plan to which executive KMP are invited to participate at the Board’s
discretion.
The Company currently has three active LTI plans running which share the same method but differ slightly in their hurdles and
vesting criteria detailed in the table below. All of the plans were granted in the form of performance rights directly linked to the
performance of the Company, the returns generated, and relative increases in shareholder wealth. This structure was used to
ensure appropriate alignment to shareholder value over a specified timeframe.
The following table sets out the key features of the plans with specific references to each of the 2015, 2016 and 2017 plans
where they differ.
Features
Instrument
Purpose
Opportunity
Description
Performance rights being a right to receive a share subject to performance and vesting conditions.
To motivate executives to achieve the long term performance targets.
50% of fixed remuneration
The number of performance rights issued is determined by dividing the dollar opportunity by the prevailing
share price of the Company at the date of issue.
Dividends or share issues
No dividends are paid or accrued on unvested awards.
Gateway Hurdle
Gateway hurdles of the grants across relevant measurement periods are as follows:
Plan
April 2015
July 2016
July 2017
Gateway
16.0% Return on equity
No gateway hurdle
No gateway hurdle
Annual Report 2018 I 16
DIRECTORS’ REPORT
For the year ended 31 March 2018
Features
Description
The April 2015 plan uses a Relative Total Shareholder Return (“RTSR”) performance hurdle solely while the
July 2016 and July 2017 plans have two performance hurdles in equal tranches being the RTSR and an Earnings
Per Share (“EPS”) hurdle.
The company’s Relative Total Shareholder Return performance is measured against a comparator group of ASX
listed companies (available on the website at www.thorn.com.au).
RTSR was selected as an objective indicator of shareholder wealth criterion as it includes share price growth,
dividends and other capital adjustments.
Thorn Group Limited’s TSR Ranking
April 2015 Grant
< 50th percentile
50th percentile
50th to 90th percentile
90th percentile or greater
July 2016 and July 2017 Grants
< 50th percentile
50th percentile
50th to 75th percentile
75th percentile or greater
Thorn Group Limited’s EPS Hurdle
July 2016 and July 2017 Grants
< 5% compound annual growth rate
5% to 10%
= or > 10% CAGR
Percentage of Performance Rights
subject to TSR condition that
qualify for vesting
0%
50%
Assessed on a straight line basis
100%
Percentage of Performance Rights
subject to EPS condition that
qualify for vesting
0%
Assessed on straight line basis
100%
Performance period
and vesting dates
April 2015: 3 years (1 April 2015 to 31 March 2018). Vesting date is 1 June 2018.
July 2016: 3 years (1 July 2016 to 30 June 2019). Vesting date is 1 September 2019.
July 2017: 3 years (1 July 2017 to 30 June 2020). Vesting date is 1 September 2020.
Assessment, approval
and payment
At the end of each performance period, the Remuneration & Nomination Committee assesses the relevant
performance measures and determines the extent to which the awards should vest.
Change of control
Termination
Claw back provisions
Payment is made by the issuing or transfer of shares.
If a change of control occurs prior to the vesting of an award, then the Board may determine in its absolute
discretion whether all or some of a participant’s unvested award vest, lapse, is forfeited, or continues.
Unvested performance rights will lapse if performance conditions are not met. Performance rights will be
forfeited on cessation of employment unless the Board determines at its absolute discretion otherwise.
There are no specific provisions providing the capacity to clawback a component of remuneration in the event of
a matter of significant concern.
Calculation of the value of performance rights in the remuneration tables
The value of performance rights issued to executives and included in the remuneration tables is a mathematical model
calculation designed to show an intrinsic value. This is necessary to show the benefit attributable to the KMP in the year of
issue but before that benefit is actually received by the KMP.
The number of performance rights to be issued is derived from the relevant percentage of the executive’s fixed remuneration
at the time of the grant divided by the share price at that time. This number of performance rights is then input into a Monte
Carlo simulation model by an independent expert and which works out the intrinsic value of the performance rights using the
expected volatility of the shares, the time period to testing date, and a number of other monetary factors as set out in the table
below.
The end result is an intrinsic value for each of the performance rights which is recorded in the books of the Company by
allocating the expense to each reporting period evenly over the period from grant date to the vesting date.
The table below outlines the factors and assumptions used in determining the fair value of performance rights at grant date.
17 I Thorn Group
DIRECTORS’ REPORT
For the year ended 31 March 2018
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
31 October 2015
1 June 2018
31 July 2018
1 July 2016
1 July 2017
1 September 2019
31 October 2019
1 September 2020
31 October 2020
$0.81
$0.97
$1.00
Nil
Nil
Nil
$2.12
$1.45
$1.42
31.0%
33.0%
37.0%
1.8%
1.4%
1.9%
6.4%
5.9%
5.3%
Long term incentive outcomes for 2018
The LTI plans have been designed to align to shareholder outcomes for earnings and share price. As the performance of the
Company has fallen over the past three years, these plans have also fallen with the 2012 plan failing to meet its hurdles and all
performance rights lapsing.
Performance rights granted as compensation in the year
Performance Rights Granted
Tim Luce
Peter Forsberg
Wendy Yip
David Lines
Number
598,803
598,803
233,476
298,855
126,692
173,913
126,692
173,913
Date
15 February 2018
15 February 2018
1 July 2017
22 December 2017
1 July 2017
22 December 2017
1 July 2017
22 December 2017
Financial Year in which Grants Vest
(ended 31 March)
2019
2020
2020
2019
2021
2019
2021
2019
Values Yet to Vest $
Min (a)
Nil
Max (b)
-
Nil
Nil
Nil
Nil
Nil
Nil
Nil
-
-
-
-
-
-
-
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 accurately 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.
5. ALIGNMENT BETWEEN REMUNERATION AND PERFORMANCE – AUDITED
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.
Year ending 31 March
Profit After Tax (AUD millions)
Earnings per share (cents)
Dividends per share (cents)
Share price at year end ($)
Return on capital employed %
Return on equity %
2018
(3.6)
(2.3)
1.0
0.62
n/a
n/a
2017
25.3
16.2
8.0
1.31
11.0
12.4
2016
20.1
13.1
11.5
1.82
11.1
10.4
2015
30.6
20.3
11.75
2.67
18.5
16.9
2014
28.2
18.9
10.5
2.15
21.8
17.2
Return on capital employed is calculated as EBIT divided by average capital employed (net debt plus book equity). Return on
equity is calculated as NPAT divided by the average book equity.
Annual Report 2018 I 18
DIRECTORS’ REPORT
For the year ended 31 March 2018
6. SERVICE CONTRACTS FOR EXECUTIVE KMP - AUDITED
The present contractual arrangements with executive KMPs are:
Component
Contract duration
Notice by individual or company
CEO
Ongoing
6 months
Senior executives
Ongoing
Range between 3 and 6 months
Termination without cause
Entitlement to pro-rata STI for the year.
Termination with cause
STI is not awarded and all unvested LTI will lapse
Vested and exercised LTI can be exercised within a period of 30 days from termination
Unvested LTI is forfeited unless the board decide at its absolute discretion otherwise.
Board has discretion to award a greater or lesser amount.
7. OTHER STATUTORY DISCLOSURES - AUDITED
LTI and Other performance rights available for vesting
Details of the LTI and other performance rights available for vesting are detailed below:
Initial Grant
Type
Number
Date
Tim Luce
Sign-on
598,803
15 Feb 2018
Peter Forsberg
Wendy Yip
Sign-on
598,803
15 Feb 2018
LTI
LTI
LTI
72,257
31 Oct 2015
143,346
1 Jul2016
233,476
1 Jul 2017
Retention
298,855
1 Dec 2017
LTI
LTI
LTI
56,692
31 Oct 2015
115,180
1 Jul 2016
126,692
1 Jul 2017
Retention
173,913
1 Dec 2017
David Lines
LTI
126,692
1 Jul 2017
Retention
173,913
1 Dec 2017
Matt Ingram
James Marshall
LTI
LTI
LTI
LTI
LTI
LTI
LTI
LTI
LTI
34,150
1 Jul 2014
30,271
31 Oct 2015
130,430
1 Jul 2016
63,291
63,291
63,291
66,556
7 Dec 2012
7 Dec 2012
7 Dec 2012
1 Jul 2014
103,695
1 Jul 2015
218,410
1 Jul 2016
Financial Years
in Which Grant
Vests (ending
31 March)
Remaining
Unvested
Values Yet
to Vest $
2018 Movements
on original grant
Number
Min (a)
Max (b)
Vested
Forfeited Unvested
2019
2020
2019
2020
2021
2019
2019
2020
2021
2019
2021
2019
2018
2019
2020
2015-18
2016-18
2017-18
2018
2019
2020
598,803
598,803
Nil
143,346
233,476
298,855
Nil
115,180
126,692
173,913
126,692
173,913
-
-
-
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
-
-
Nil
-
-
-
Nil
-
-
-
-
-
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100%
-
-
-
100%
-
-
-
-
-
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
100%
100%
100%
-
100%
100%
100%
100%
100%
-
-
-
-
-
-
-
-
-
a.
b.
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.
The maximum value of the performance rights yet to vest is not accurately 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. However, for the purposes of this disclosure as
the value of the shares at vesting date is not known, the maximum has not been disclosed and shown as ‘-’.
19 I Thorn Group
DIRECTORS’ REPORT
For the year ended 31 March 2018
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:
Tim Luce
Peter Forsberg
Wendy Yip
David Lines
Matt Ingram
James Marshall
Held at
1 April 2017
Granted as
Compensation
Vested during
the year
Lapsed
Forfeited Held at 31 March
2018
-
1,197,606
215,603
171,872
-
194,851
538,661
532,331
300,605
300,605
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,197,606
(72,257)
(56,692)
-
(194,851)
(538,661)
675,677
415,785
300,605
-
-
Shareholdings of the directors and executive KMP
2018
Name
David Foster
Joycelyn Morton
Stephen Kulmar
Andrew Stevens
Belinda Gibson
Tim Luce
Peter Forsberg
Wendy Yip
David Lines
Matt Ingram
James Marshall
Balance at the
start of the year
Received on vesting
of incentives
Other changes
(bought and sold)
Balance at the
end of the year
26,970
91,994
68,000
15,720
-
-
10,000
-
-
-
181,543
-
-
-
-
-
-
-
-
-
-
-
33,300
3,125
-
-
20,000
-
25,000
10,000
-
-
60,270
95,119
68,000
15,720
20,000
-
35,000
10,000
-
-
(171,543)
10,000
Other transactions with Directors or Executive KMP
There were no loans made or outstanding to Directors or executive KMP during or at the end of the year.
A director, Stephen Kulmar, is the founder of the retail consultancy Retail Oasis, which has the Company as one of its clients.
During the year there were no engagements nor fees billed for services rendered but the Company reimbursed Retail Oasis
$8,860 for costs incurred on behalf of Thorn employees. Accordingly Mr Kulmar is considered an independent director.
LIKELY DEVELOPMENTS
For further information about likely developments in the operations of the consolidated entity and the expected results of
those operations in future financial years, please refer to the Operating and Financial Review.
UNISSUED SHARES UNDER OPTIONS
At the date of this report there are no unissued ordinary shares of the Company under option.
Annual Report 2018 I 20
DIRECTORS’ REPORT
For the year ended 31 March 2018
NON-AUDIT SERVICES
During the year KPMG, the Company’s auditor, 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 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 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, 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.
ROUNDING OF FINANCIAL AMOUNTS
The Company is of a kind referred to in ASIC Instrument 2016/191 issued by the Australian Securities and Investments
Commission and in accordance with that Instrument, amounts in the financial report and directors’ report have been rounded
off to the nearest thousand dollars, unless otherwise stated.
CORPORATE GOVERNANCE STATEMENT
This statement outlines the main corporate governance practices in place throughout the financial year and can be referred to
on Thorn Group website http://www.thorn.com.au/irm/content/corporate-governance.aspx?RID=303.
AUDITOR’S INDEPENDENCE DECLARATION
The Auditor’s independence declaration is set out on page 22 and forms part of the directors’ report for financial year ended
31 March 2018.
This report is made in accordance with a resolution of the directors:
David Foster
Chairman
Dated at Sydney
30 May 2018
21 I Thorn Group
LEAD AUDITOR’S INDEPENDENCE DECLARATION
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Thorn Group Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Thorn Group Limited for
the financial year ended 31 March 2018 there have been:
To the Directors of Thorn Group Limited
no contraventions of the auditor independence requirements as set out in the Corporations
Act 2001 in relation to the audit; and
i.
ii.
I declare that, to the best of my knowledge and belief, in relation to the audit of Thorn Group Limited for
the financial year ended 31 March 2018 there have been:
no contraventions of any applicable code of professional conduct in relation to the audit.
i.
ii.
no contraventions of the auditor independence requirements as set out in the Corporations
Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
KPMG
KPM_INI_01
Anthony Travers
Partner
Sydney
30 May 2018
Anthony Travers
Partner
Sydney
PAR_SIG_01
PAR_NAM_01
PAR_POS_01
PAR_DAT_01
PAR_CIT_01
30 May 2018
KPM_INI_01
PAR_SIG_01
PAR_NAM_01
PAR_POS_01
PAR_DAT_01
PAR_CIT_01
22
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.
22
Annual Report 2018 I 22
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.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2018
$’000 AUD
Continuing operations
Revenue
Finance lease cost of sales
Employee benefit expense
Impairment losses on loans and receivables
Marketing expenses
Property expenses
Transport expenses
Communication & IT expenses
Travel expenses
Printing, stationery and postage
Other expenses
Depreciation & amortisation
Impairment of intangibles
Total operating expenses
Earnings before interest and tax ("EBIT")
Finance expenses
Profit before income tax
Income tax
(Loss)/profit after tax from continuing operations*
Discontinued operations
Profit from discontinued operations, net of tax
(Loss)/profit after tax for the year
Other comprehensive income - items that may be reclassified
subsequently to profit or loss
Movement in fair value of cash flow hedges
Total comprehensive income
Earnings per share - continuing operations
Basic earnings per share (cents)
Diluted earnings per share (cents)
Earnings per share
Basic earnings per share (cents)
Diluted earnings per share (cents)
Notes
2018
2017
3
19
8
18
14
14
14
14
236,193
(55,635)
(50,062)
(30,695)
(11,226)
(10,566)
(5,611)
(6,080)
(1,450)
(2,272)
(17,524)
(9,422)
(20,658)
277,597
(84,013)
(54,678)
(24,650)
(13,228)
(9,706)
(5,856)
(5,774)
(1,779)
(2,675)
(19,770)
(14,666)
-
(221,201)
(236,795)
14,992
(15,681)
(689)
(5,774)
(6,463)
2,839
(3,624)
193
(3,431)
(4.06)
(4.06)
(2.28)
(2.28)
40,802
(9,478)
31,324
(10,312)
21,012
4,296
25,308
(546)
24,762
13.45
13.45
16.20
16.20
* Restated to redirect the results of discontinued businesses, into one line above (Loss)/profit after tax. For details see note 18.
The Consolidated Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with the accompanying notes.
23 I Thorn Group
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2018
$’000 AUD
Assets
Cash and cash equivalents
Trade and other receivables
Income tax receivable
Total current assets
Trade and other receivables
Property, plant and equipment
Rental assets
Intangible assets
Total non-current assets
Total assets
Liabilities
Trade payables
Income tax payable
Other payables
Loans and borrowings
Employee benefits
Provisions
Total current liabilities
Loans and borrowings
Deferred tax liabilities
Employee benefits
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
Note
2018
2017
4
4
6
7
12
11
12
9
11
28,227
14,681
173,257
185,578
-
5,916
201,484
206,175
330,978
307,397
4,386
5,058
6,979
6,651
4,779
24,322
347,122
343,428
548,606
549,603
10,377
12,011
3,099
-
23,202
23,121
77,348
46,904
5,050
5,414
7,459
9,037
126,535
96,487
206,960
229,559
11,265
12,163
481
309
487
847
219,193
242,878
345,728
339,365
202,878
210,238
117,102
115,340
3,030
2,979
82,746
91,919
202,878
210,238
The Consolidated Statement of Financial Position is to be read in conjunction with the accompanying notes.
Annual Report 2018 I 24
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2018
Issue of shares under dividend reinvestment plan
5,486
$’000 AUD
Balance at 1 April 2016
Net profit for the period
Other comprehensive income
Share based payments transactions
Dividends to shareholders
Balance at 31 March 2017
Balance at 1 April 2017
Net loss for the period
Share capital
Reserves
Retained earnings
Total Equity
109,854
-
-
-
-
3,188
-
(546)
-
337
-
84,491
25,308
-
-
-
(17,880)
197,533
25,308
(546)
5,486
337
(17,880)
115,340
2,979
91,919
210,238
115,340
2,979
91,919
210,238
-
-
(3,624)
(3,624)
Other comprehensive income
-
193
-
193
Issue of shares under dividend reinvestment plan
1,762
-
-
1,762
Share based payments transactions
-
(142)
-
(142)
Dividends to shareholders
Balance at 31 March 2018
-
-
(5,549)
(5,549)
117,102
3,030
82,746
202,878
The Consolidated Statement of Changes in Equity is to be read in conjunction with the accompanying notes.
25 I Thorn Group
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2018
$’000 AUD
Note
2018
2017*
Cash flows from operating activities
Cash receipts from customers
Cash paid to suppliers and employees
Acquisition of rental assets
Equipment finance originations
Cash generated from operations
Net borrowing costs
Income tax refund / (paid)
Net cash used in operating activities
Cash flows from investing activities
Proceeds from sale of assets
784,696
621,320
(544,664)
(425,366)
6
(54,194)
(81,889)
(208,827)
(178,462)
(22,989)
(64,397)
(15,681)
(9,478)
803
(9,118)
(37,867)
(82,993)
-
175
Acquisition of property, plant and equipment and software
(3,895)
(3,933)
Net cash received on sale of subsidiaries
18
51,249
21,185
Net cash from investing activities
47,354
17,427
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Dividends paid
Net cash from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at April 1
Cash and cash equivalents at 31 March
189,458
166,333
(181,612)
(87,743)
(3,787)
(12,392)
4,059
66,198
13,546
632
14,681
14,049
28,227
14,681
Presentation of the statement of cash flows
The Group has made a voluntary change in accounting policy and accordingly amended the presentation of the statement of cash flows to reclassify
acquisition of rental assets and equipment finance originations from investing activities to operating activities. This has also been reflected in the
comparative. Had this change not occurred the operating cash flow in 2018 would have been $225,154,000 and in 2017 $177,358,000. The investing
cash flow in 2018 would have been $(215,667,000) and in 2017 $(242,924,000). There has been no change in the fundamentals of the cash received
or paid other than disclosure.
The Consolidated Statement of Cash Flows is to be read in conjunction with the accompanying notes.
Annual Report 2018 I 26
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2018
Cash and cash equivalents
$’000 AUD
Bank balances
Call deposits
Cash and cash equivalents
2018
28,227
-
28,227
2017
14,681
-
14,681
Included in cash is an amount of $19,845,000 (2017: $8,043,000) held as part of the consolidated entity’s funding arrangements that are not available
to the consolidated entity. This cash is held within the funding warehouse trust and as such is under the control of the Trustee. Free cash is therefore
$8,382,000 (2017: $6,638,000).
Reconciliation of cash flows from operating activities
$’000 AUD
Profit after tax
Adjustments for:
Depreciation, amortisation and goodwill impairment
Equity settled transactions
(Profit)/loss before tax on sale of subsidiary
Loss on disposal of rental assets
Operating profit before changes in working capital and provisions
Changes in working capital and provisions, net of the effects of the sale of subsidiaries
(Increase) in trade and other receivables
(Increase) in rental assets
(Decrease)/increase in deferred tax liability
Decrease/(increase) in income tax receivables
(Decrease) in trade and other payables
(Decrease)/increase in provisions and employee benefits
Net cash from operating activities
The Consolidated Statement of Cash Flows is to be read in conjunction with the accompanying notes.
2018
2017
(3,624)
25,308
30,268
(142)
(512)
14,843
337
1,033
98
1,559
26,088
43,080
(49,449)
(136,773)
(4,050)
(1,222)
9,015
(5,688)
10,300
(553)
(16,122)
(2,167)
(2,127)
8,808
(37,867)
(82,993)
27 I Thorn Group
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2018
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 2018 comprise 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 30 May 2018.
(b) Basis of Preparation
The consolidated financial statements are presented in
Australian dollars, which is the Company’s functional
currency.
The consolidated financial statements have been prepared on
the historical cost.
The Company is of a kind referred to in ASIC Instrument
2016/191 issued by the Australian Securities and Investments
Commission and in accordance with that Instrument,
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.
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:
(i) Valuation of goodwill and other intangibles. See note 7.
(ii) Impairment of goodwill. See note 7.
(iii) Longer term Consumer Rental asset depreciation. See
note 6.
(iv) Impairment of receivables. See note 10.
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
Accounting policies have been included within the underlying
notes with which they relate where possible. The balance of
accounting policies are detailed below:
(c) Cost of Sales
Finance lease costs of sales comprise the cost of the item sold
less any accumulated depreciation.
(d) Finance expenses
Finance expenses comprise interest expense on borrowings,
interest rate hedge costs and the amortisation of deferred
borrowing costs. 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 was 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.
Annual Report 2018 I 28
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2018
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.
(g) Changes in Accounting Policy
All new Accounting Standards and Interpretations applicable
to annual reporting periods commencing on or before
1 April 2017 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.
Presentation of cashflow comparatives
The Group has made a voluntary change in accounting policy
and accordingly amended the presentation of the statement
of cash flows to reclassify acquisition of rental assets and
equipment finance originations from investing activities to
operating activities. This has also been reflected in the
comparative. Had this change not occurred the operating
cash flow in 2018 would have been $225,154,000 and in 2017
$177,358,000. The investing cash flow in 2018 would have
been $(215,667,000) and in 2017 $(242,924,000). There has
been no change in the fundamentals of the cash received or
paid other than disclosure.
(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.
AASB 9 and AASB 15 are effective 1 April 2018 and earlier
application is permitted; however, the consolidated entity
has not early adopted the new or amended standards in
preparing these consolidated financial statements.
The consolidated entity will apply the standard and
amendments for the reporting periods beginning on the
operative dates. The anticipated financial impact of applying
these new standards is detailed below. The consolidated
entity does not plan to adopt these standards early.
AASB 9 Financial Instruments
AASB 9 was issued in December 2014. When operative, this
standard will replace AASB 139 Financial Instruments:
Recognition and Measurement (AASB 139) and includes
requirements for impairment, classification and
measurement and general hedge accounting.
Impairment
AASB 9 replaces the incurred loss model under AASB139 with
a forward-looking expected loss model. This model will be
applied to financial assets measured at amortised cost, lease
receivables, and certain loan commitments and financial
guarantees. Under AASB 9, a three-stage approach is applied
to measuring expected credit losses (‘ECL’) based on credit
migration between the stages as follows:
Stage 1: At initial recognition, a provision equivalent to
12 months ECL is recognised.
29 I Thorn Group
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2018
Stage 2: Where there has been a significant increase in credit
risk since initial recognition, a provision equivalent to full
lifetime ECL is required.
Stage 3: Similar to the current AASB 139 requirements for
individual impairment provisions, lifetime ECL is recognised
for loans where there is objective evidence of impairment.
ECL are probability weighted and determined by evaluating a
range of possible outcomes, taking into account the time
value of money, past events, current conditions and forecasts
of future economic conditions.
Classification and measurement
There are three measurement classifications under AASB 9:
Amortised cost, fair value through profit or loss (‘FVTPL’) and,
for financial assets, fair value through other comprehensive
income (‘FVOCI’). Financial assets are classified into these
measurement classifications taking into account the business
model within which they are managed, and their contractual
cash flow characteristics.
The classification and measurement requirements for
financial liabilities under AASB 9 are largely consistent with
AASB 139 with the exception that for financial liabilities
designated as measured at fair value, gains or losses relating
to changes in the consolidated entity’s own credit risk are
included in other comprehensive income.
General hedge accounting
AASB 9 introduces general hedge accounting requirements
which more closely align with risk management activities
undertaken when hedging financial and non-financial risks.
Transition and impact
AASB 9 has a date of initial application for the consolidated
entity of 1 April 2018.
The classification and measurement, and impairment
requirements will be applied retrospectively by adjusting the
opening balance sheet at the date of initial application, with
no requirement to restate comparative periods. The
consolidated entity does not intend to restate comparatives.
AASB 9 provides an accounting policy choice to continue with
AASB 139 Hedge Accounting given the International
Accounting Standards Board’s ongoing project on macro
hedge accounting. The consolidated entity’s current
expectation is that it will continue to apply the hedge
accounting requirements of AASB 139.
The consolidated entity has assessed the estimated impact
that the initial application of IFRS 9 will have on its
consolidated financial statements. The impact is estimated to
be an increase in the expected credit loss provision of
between $8m to $13m which will be adjusted in opening
returned earnings on initial application. This estimate is based
on assessments undertaken to date, however, the
consolidated entity continues to refine its assessment during
the initial application period.
AASB 15 Revenue from Contracts with Customers
The new standard 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. AASB 15 is effective for annual
reporting periods beginning on or after 1 January 2018, with
early adoption permitted. The consolidated entity has not
early adopted AASB 15.
The consolidated entity has performed a review over its
existing revenue streams and, applying the framework has
not assessed any change in the quantum or timing of revenue
recognition. Consequently, there is not expected to be a
material impact on the consolidated entity’s financial
statements in the period of initial application as of
1 April 2018.
AASB 16 Leases
AASB 16 replaces existing leases guidance, including
IAS 17 Leases, IFRIC 4 Determining whether an Arrangement
contains a Lease, SIC-15 Operating Leases – Incentives and
SIC-27 Evaluating the Substance of Transactions Involving the
Legal Form of a Lease.
The standard is effective from 1 April 2019 and the
consolidated entity are not early adopting this standard.
AASB 16 Leases removes the lease classification test and
requires all leases (including operating leases) to be brought
onto the balance sheet. The definition of a lease is also
amended and is now the new on/off balance sheet test for
lessees. AASB 16 is effective for annual reporting periods
beginning on or after 1 January 2019. Early adoption will be
permitted for entities that also adopt AASB 15 Revenue from
contracts with customers. The Consolidated entity is
assessing the potential impact on its financial statements
resulting from the application of AASB 16.
Determining whether an arrangement contains a lease
The Consolidated entity has an arrangement that was not in
the legal form of a lease, for which it concluded that the
arrangement contains a lease of equipment under IFRIC 4, as
explained in Note 27(E) (i). On transition to AASB 16, the
Consolidated entity can choose whether to:
– apply the AASB 16 definition of a lease to all its contracts; or
– apply a practical expedient and not reassess whether a
contract is, or contains, a lease.
The Consolidated entity plans to apply the practical expedient
to grandfather the definition of a lease on transition. This
means that it will apply AASB 16 to all contracts entered into
before 1 January 2019 and identified as leases in accordance
with IAS 17 and IFRIC 4.
Annual Report 2018 I 30
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2018
Transition
As a lessee, the Consolidated entity can either apply the
standard using a:
– retrospective approach; or
– modified retrospective approach with optional practical
expedients.
The lessee applies the election consistently to all of its leases.
The Consolidated entity plans to apply AASB 16 initially on
1 April 2019, using the modified retrospective approach.
Therefore, the cumulative effect of adopting AASB 16 will be
recognised as an adjustment to the opening balance of
retained earnings at 1 April 2019, with no restatement of
comparative information.
When applying the modified retrospective approach to leases
previously classified as operating leases under IAS 17, the
lessee can elect, on a lease-by-lease basis, whether to apply a
number of practical expedients on transition. The
consolidated entity is assessing the potential impact of using
these practical expedients.
The Consolidated entity is not required to make any
adjustments for leases in which it is a lessor except where it is
an intermediate lessor in a sub-lease.
The Consolidated entity has completed an initial assessment
of the potential impact on its consolidated financial
statements but has not yet completed its detailed
assessment.
The actual impact of applying AASB 16 on the financial
statements in the period of initial application will depend on
future economic conditions, including the Consolidated
entity’s borrowing rate at 1 April 2019, the composition of
the Consolidated entity’s lease portfolio at that date, the
Consolidated entity’s latest assessment of whether it will
exercise any lease renewal options and the extent to which
the Consolidated entity chooses to use practical expedients
and recognition exemptions. So far, the most significant
impact identified is that the consolidated entity will recognise
new assets and liabilities for its operating leases of
warehouse and factory facilities. As at 31 March 2018, the
consolidated entity’s future minimum lease payments under
non-cancellable operating leases amounted to $22,777,000
on an undiscounted basis (see note 5).
In addition, the nature of expenses related to those leases
will now change as AASB 16 replaces the straight-line
operating lease expense with a depreciation charge for
right-of-use assets and interest expense on lease liabilities.
No significant impact is expected for the consolidated entity’s
finance leases.
31 I Thorn Group
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2018
2. SEGMENT REPORTING
The Board and CEO (the chief operating decision maker) monitor the operating results of the two reportable segments which
are the Consumer Leasing division which leases household products and the Equipment Finance division which provides
financial products to small and medium enterprises including equipment leasing.
Segment performance is evaluated based on operating profit or loss. Finance and income tax expense are not allocated to
operating segments, as this type of activity is managed on a group basis.
The Trade & Debtor Finance and Consumer Finance businesses were sold in 2018 and Receivables Management was sold in
2017. Comparatives for 2017 have been restated to show the impact of businesses sold in 2018 on the 2017 results.
2018
$’000 AUD
Consumer
Leasing
Equipment
Finance
Trade & Debtor
Finance
(Discontinued
operation)
Consumer
Finance
(Discontinued
operation)
Receivables
Management
(Discontinued
in 2017)
Segment revenue
196,517
39,676
Operating expenses
(162,885)
(15,278)
EBITDA
Depreciation, amortisation
and impairment
EBIT
Finance expense
Profit before tax
Segment assets
Segment liabilities
33,632
24,398
(7,278)
(242)
26,354
24,156
-
-
26,354
24,156
173,121
(61,420)
326,247
-
9,927
(8,655)
1,272
(188)
1,084
-
1,084
-
-
3,583
(1,123)
2,460
-
2,460
-
2,460
-
-
-
-
-
-
-
-
-
-
-
Corporate
Consolidated
-
249,703
(12,958)
(200,899)
(12,958)
48,804
(22,560)
(30,268)
(35,518)
(15,681)
18,536
(15,681)
(51,199)
2,855
49,238
548,606
(284,308)
(345,728)
2017
$’000 AUD
Consumer
Leasing
Equipment
Finance
Segment revenue
251,175
26,422
Operating expenses
(200,869)
(9,828)
EBITDA
Depreciation, amortisation
and impairment
EBIT
Finance Expense
Profit before tax
50,306
16,594
(13,964)
(480)
36,342
16,114
-
-
36,342
16,114
Segment assets
193,396
239,268
Segment liabilities
(61,693)
-
Trade & Debtor
Finance
(Discontinued in
2018)
Consumer
Finance
(Discontinued
in 2018)
Receivables
Management
(Discontinued
in 2017)
Corporate Consolidated
11,227
(8,790)
2,437
(110)
2,327
-
2,327
45,852
(1,209)
9,871
(5,900)
3,971
(21)
3,950
-
3,950
21,448
-
7,084
-
305,779
(6,112)
(11,432)
(242,931)
972
(11,432)
62,848
(97)
875
(222)
(14,894)
(11,654)
47,954
-
(9,478)
(9,478)
875
(21,132)
38,476
-
-
49,639
549,603
(276,463)
(339,365)
Annual Report 2018 I 32
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2018
Reconciliations of reportable segment to IFRS measures
$’000 AUD
Revenue
Total revenue for reportable segments
Elimination of discontinued operations
Consolidated Revenue
Profit before tax
Total profit before tax for reportable segments
Elimination of discontinued operations
Consolidated profit before tax from continuing operations
3. REVENUE
$’000 AUD
Operating leases
Finance lease sales
Interest
2018
2017
249,703
(13,510)
236,193
2,855
(3,544)
(689)
2018
22,760
79,476
133,957
236,193
305,779
(28,182)
277,597
38,476
(7,152)
31,324
2017
42,421
116,840
118,336
277,597
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.
4. TRADE AND OTHER RECEIVABLES
$’000 AUD
Current
Trade receivables
Finance lease receivables
Other commercial receivables
Loan receivables
Lease deposits
Other receivables and prepayments
Non-current
Finance lease receivables
Loan receivables
2018
2017*
7,740
128,346
-
6,614
108,462
33,873
25,834
22,272
170
11,167
617
13,740
173,257
185,578
276,444
54,534
279,994
27,403
330,978
307,397
An adjustment was made to reclassify $23.6m of lease receivables as loan receivables and which has been reflected as a
restatement of 2017 balances. This has resulted in a reduction of finance lease receivables net of impairment provisioning by
$23.6m to $388.5m and an increase of loan receivables net of impairment provisioning by $23.6m to $49.7m.
33 I Thorn Group
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2018
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. The other commercial receivables included amounts sold as part of the businesses sold
during the year as disclosed in note 18. The consolidated entity’s exposure to credit risk and impairment losses related to trade
and other receivables is disclosed in note 10.
5. LEASES
Finance leases as lessor
The consolidated entity has finance lease, hire purchase agreements and chattel mortgage contracts. The consolidated entity
classifies longer term Consumer Rental 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:
$’000 AUD
Lease receivables - less than one year
Lease receivables - between one and five years
Total Lease receivables
2018
2017*
251,504
241,137
353,726
370,742
605,230
611,879
Unearned interest income on finance leases - less than one year
(97,341)
(105,875)
Unearned interest income on finance leases - between one and five years
(78,015)
(91,110)
Total unearned interest income on finance leases
Impairment provisioning
Net Lease receivables
Certain 2017 balances have been restated. Refer to Note 4 for further details
(175,356)
(196,985)
(25,084)
(26,438)
404,790
388,456
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:
$’000 AUD
Less than one year
Between one and five years
Operating leases as lessee
Non-cancellable operating lease rentals are payable as follows:
$’000 AUD
Less than one year
Between one and five years
2018
2017
2,377
3,408
225
886
2,602
4,294
2018
8,968
13,809
2017
7,487
10,831
22,777
18,318
The consolidated entity leases all store and office premises under operating leases. The leases typically run for a period of
3-5 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.
Annual Report 2018 I 34
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2018
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.
Operating lease rental expenditure for the year ended 31 March 2018 was $11,302,000 (2017: $11,229,000).
6. RENTAL ASSETS
$’000 AUD
Opening balance
Acquisitions
Disposals
Depreciation
Transfers to finance leases
Transfers from finance leases
2018
2017
6,651
13,809
54,194
81,889
(98)
(1,559)
(6,240)
(11,740)
(55,362)
(85,237)
7,834
9,489
6,979
6,651
Recognition and measurement
Rental assets represent purchased consumer goods held in store or delivered to end customers and earning revenue via
operating lease arrangements. These 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. 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.
The procedure for purchasing rental assets involves making deposit payments to suppliers and settling balances when delivery
is complete.
7.
INTANGIBLE ASSETS
$’000 AUD
Year ended 31 March 2017
Opening net carrying amount
Additions
Goodwill
Software
Total
20,658
4,866
25,524
-
839
839
Amortisation and Impairment charges for the year
-
(2,041)
(2,041)
Closing net book amount
At 31 March 2017
Cost
Amortisation and Impairment
Net book amount
20,658
3,664
24,322
27,732
12,408
40,140
(7,074)
(8,744)
(15,818)
20,658
3,664
24,322
35 I Thorn Group
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2018
$’000 AUD
Year ended 31 March 2018
Opening net carrying amount
Additions
Amortisation and Impairment charges for the year
Closing net book amount
At 31 March 2018
Cost
Amortisation and Impairment
Net book amount
Goodwill
Goodwill
Software
Total
20,658
3,664
24,322
-
2,378
2,378
(20,658)
-
(1,263)
(21,921)
4,779
4,779
-
14,786
14,786
-
(10,007)
(10,007)
-
4,779
4,779
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 of the acquired business.
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 for software in the current
and comparative periods are 3 – 8 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:
Carrying amount
$’000 AUD
Consumer leasing
Business finance
Total
2018
2017
-
15,604
-
5,054
-
20,658
The recoverable amount of the above CGU’s are determined based on a fair value less cost of sale calculation. The fair value
measurement was categorised as a Level 3 fair value based on the inputs of the valuation techniques used. This is calculated
based on the present value of cash flow projections over a 5 year period plus a terminal value and includes certain future
strategic initiatives. The cash flow projections have been approved by the Board.
These cash flow projections are derived from budgets submitted and approved by the board. The budget cash flow projections
are based on empirical experience, industry trends and other specific expectations in the future.
The method of calculation has changed from the previous year end where we used value in use. The change occurred due to
the recoverable amount being deemed to be higher than the value in use.
Annual Report 2018 I 36
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2018
Key assumptions used for fair value less cost of sale calculations
Consumer Leasing
Testing using a fair value less cost of disposal revealed the carrying amount of the CGU exceeded its recoverable amount. An
impairment charge for the total value of the intangible of the CGU of $15.6m has been recognised in the income statement for
the year ended 31 March 2018. The impairment amount required the goodwill only to be written off with other assets
including rental assets still being carried at book value. The circumstances that led to this impairment included lower than
expected business performance since the previous year end which prompted a downgrade to the future outlook in terms of
both growth and cash flows.
The key assumptions used in the estimation of recoverable amount are set out as follows. Testing included a terminal value
calculated using the cash flows for year 5 of the forecast period and a long-term growth rate of 2.0%. During the forecast
period, revenue was assumed to grow at an average 0.7% which included installation growth of 13% between 2019 and 2022.
Volume related costs have increased according to the increased volume during the testing period. Other costs have been
either increased by CPI or contracted arrangements, or where reasonable kept flat with productivity savings assumption. The
pre-tax discount rate is assumed at 11.3%.
Following the impairment loss recognised in the Consumer Leasing CGU, the recoverable amount was equal to the carrying
amount. Therefore, any adverse movement in a key assumption could lead to further impairment.
Trade & Debtor Finance
Testing using a fair value less cost of disposal revealed the carrying amount of the CGU exceeded its recoverable amount. An
impairment charge for the total value of the intangible of the CGU of $5.1m has been recognised in the income statement for
the year ended 31 March 2018. The impairment amount required the goodwill only to be written off with other assets still
being carried at book value. The circumstances that led to this impairment included lower than expected business
performance since the previous year end which prompted a downgrade to the future outlook in terms of both growth and
cash flows.
The key assumptions used in the estimation of the recoverable amount are set out as follows. Testing included a terminal value
calculated using the cash flows for year 5 of the forecast period and a long-term growth rate of 2.0%. During the forecast
period, revenue was assumed to grow at an average of 0.9% on the assumption of no book growth during the testing period.
The pre-tax discount rate is assumed at 12.7%. Non-volume related costs were forecast flat during the testing period assuming
productivity savings offsetting CPI increases.
8.
INCOME TAX EXPENSE
Recognised in the Income Statement
$’000 AUD
Current tax expense
Current year
Adjustment for prior year
Deferred tax expense
Origination and reversal of temporary differences
Tax on discontinued operations
2018
2017
8,805
2,379
(542)
(42)
(1,272)
9,817
(1,217)
(1,842)
Total income tax expense in income statement
5,774
10,312
Numerical reconciliation between tax expense and pre-tax accounting profit
$’000 AUD
Profit before tax
Prima facie income tax using the domestic corporation tax rate of 30% (2017: 30%)
Change in income tax expense due to:
Non-deductible expenses
(Over) / Under provided in prior years
2018
2017
(689)
31,324
(207)
9,397
6,523
957
(542)
(42)
Income tax expense on pre-tax accounting profit
5,774
10,312
37 I Thorn Group
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2018
9.
DEFERRED TAX ASSETS & LIABILITIES
Recognised deferred tax assets and liabilities
$’000 AUD
Rental assets
Assets
Liabilities
Net
2018
2017
2018
2017
2018
2017
71,165
65,883
-
-
71,165
65,883
Property, plant and equipment
698
602
Trade, loan and other receivables
-
944
-
(617)
-
698
602
-
(617)
944
Finance lease receivables
-
-
(87,541)
(85,972)
(87,541)
(85,972)
Accruals
Provisions
3,613
5,000
-
-
3,613
5,000
1,417
1,380
-
-
1,417
1,380
Tax assets / (liabilities)
76,893
73,809
(88,158)
(85,972)
(11,265)
(12,163)
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.
Annual Report 2018 I 38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2018
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.
10. FINANCIAL RISK MANAGEMENT
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 & 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 & 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.
Credit risk
Credit risk is the risk of loss that arises when a customer or third party fails to pay an amount owing to the Company and is the
most significant risk to the group. The maximum exposure to credit risk is represented by the carrying amount receivables and
loans. The Group leases products to consumers (as well as consumer loans that are in run off) and provides business finance to
SME’s pursuant to policies and procedures that are intended to ensure that there is no concentration of credit risk with any
particular individual, company or other entity. The Group is subject to a higher level of credit risk due to the credit constrained
nature of many of the Company’s customers and in circumstances where its policies and procedures are not complied with.
The Group maintains a provision for receivable losses. The process for establishing the provision for losses is critical to the
Group’s results of operations and financial condition. It is determined by the Group using a calculation that considers the
relative maturity of the receivables and loans within the portfolio, the long term expected loss rates based on actual historical
performance and the long-term expected losses for a vintage of loans over their life based on actual historical performance. To
the extent that such historical data used to develop its allowance for loans losses is not representative or predictive of current
book performance, the Group could suffer increased loan losses beyond those provided for on its financial statements.
The Group cannot guarantee that delinquency and loss levels will correspond with the historical levels experienced and there is
a risk that delinquency and loss rates could increase significantly and have a material adverse effect on the financial results of
the Group.
Credit risk grew in-line with the growth of the loan and lease receivables in all segments, except Consumer Finance where bad
debt provisioning increased as a percentage of the loan receivables due to the proposed liquidation of the book.
39 I Thorn Group
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2018
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:
$’000 AUD
Trade receivables
Consumer finance lease receivables
Business finance lease receivables
Other commercial receivables
Loan receivables
Impairment losses
2018
2017
7,740
6,614
155,145
172,794
249,645
215,662
-
33,873
80,368
49,675
492,898
478,618
Trade receivables
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, also an estimate of collateral.
The ageing of the consolidated entity’s trade receivables at the reporting date was:
$’000 AUD
Not past due
Past due 0 - 30 days
Past due 31+ days
Gross 2018
Impairment 2018
Gross 2017
Impairment 2017
3,680
-
3,949
-
2,164
(544)
1,918
(384)
3,825
(1,385)
2,027
(896)
9,669
(1,929)
7,894
(1,280)
The net value of trade receivables as at 31 March 2018 was $7,740,000 (2017: $6,614,000)
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.
Consumer finance lease receivables
$’000 AUD
Not past due
Past due 0 - 30 days
Past due 31+ days
Gross 2018
Impairment 2018
Gross 2017
Impairment 2017
138,955
-
(8,715)
160,603
17,888
(11,092)
16,196
16,147
19,850
-
(11,898)
(9,995)
174,952
(19,807)
194,687
(21,893)
The net value of consumer finance lease receivables at 31 March 2018 was $155,145,000 (2017: $172,794,000). 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 book value of this collateral as at 31 March 2018 is $90,337,000 (2017: $106,581,000).
Annual Report 2018 I 40
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2018
Thorn Equipment finance lease receivables
The ageing of the consolidated entity’s commercial finance lease receivables at the reporting date was:
$’000 AUD
Not past due
Past due 0 - 30 days
Past due 31+ days
Gross
2018
238,284
9,232
Impairment 2018
Gross
2017*
Impairment 2017*
-
213,412
-
-
4,051
(2,326)
7,406
(5,277)
2,743
254,922
(5,277)
220,206
(2,218)
(4,544)
Certain 2017 balances have been restated. Refer to Note 4 for further details
The net value of commercial finance lease receivables as at 31 March 2018 was $249,645,000 (2017: $215,662,000).
Other commercial receivables
The ageing of the consolidated entity’s other commercial receivables at the reporting date was:
$’000 AUD
Not past due
Past due 0 - 30 days
Past due 31+ days
Gross
2018
-
-
-
Impairment 2018
-
-
-
Gross
2017
13,871
13,265
Impairment 2017
-
-
7,745
(1,008)
-
-
34,881
(1,008)
The net value of other commercial receivables as at 31 March 2018 was $nil (2017: $33,873,000).
Loan receivables (Thorn Equipment Finance and remaining consumer solar loans)
The ageing of the consolidated entity’s loan receivables at the reporting date was:
$’000 AUD
Not past due
Past due 0 - 30 days
Past due 31+ days
Gross
2018
75,060
4,705
Impairment 2018
Gross
2017*
Impairment 2017*
-
48,624
-
1,210
1,616
(1,013)
333
-
(162)
(330)
81,381
(1,013)
50,167
(492)
Certain 2017 balances have been restated. Refer to Note 4 for further details
The net value of loan receivables as at 31 March 2018 was $80,368,000 (2017: $49,675,000).
Liquidity risk
Liquidity risk is the risk that the Group’s financial condition is adversely affected by an inability to meet funding obligations and
support its business growth. The Company manages its capital to maintain its ability to continue as a going concern and to
provide adequate returns to shareholders by way of share appreciation and dividends.
The capital structure of the Group consists of external debt and shareholders’ equity. The Group manages its capital structure
and makes adjustments to it in light of economic conditions and the Group’s individual situation. The Group’s debt facilities
must be renewed on a periodic basis. These facilities contain restrictions on the Group’s ability to, among other things, pay
dividends, sell or transfer assets, incur additional debt, repay other debt, make certain investments or acquisitions, repurchase
or redeem shares and engage in alternate business activities. The facilities also contain a number of financial and non-financial
covenants. Failure to meet any of these covenants could result in an event of default under these facilities which could, in turn,
allow the lender to declare all amounts outstanding to be immediately due and payable or the inability to draw down further.
In such a case, the financial condition, liquidity and results of operations of the Group could materially suffer.
The Group has been successful in renewing and expanding its debt facilities in the past to meet the needs of its growing
equipment finance business. If the Group were unable to renew these facilities or unable to renew on acceptable terms when
they became due, there could be a material adverse effect on the Group’s financial condition, liquidity and results
of operations.
41 I Thorn Group
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2018
Liquidity risk is managed through the adequate provision of funding and effective capital management policies. Thorn will look
to diversify its funding sources to further mitigate this risk into the future.
The following are the contractual maturities of the consolidated entity’s financial liabilities including, where applicable, future
interest payments as at 31 March 2018.
31 March 2018
$’000 AUD
Secured loan facilities
Trade and other payables
31 March 2017
$’000 AUD
Secured loan facilities
Trade and other payables
Carrying
amount
Contractual
Cash flows
284,308
321,195
39,717
324,025
39,717
360,912
1 year or less
1-5 years
89,810
39,717
231,385
-
-
129,527
231,385
-
5 years
or more
-
Carrying
amount
276,463
Contractual
Cash flows
1 year or less
1-5 years
5 years
or more
298,300
57,162
241,138
-
43,232
43,232
43,232
-
-
319,695
341,532
100,394
241,138
-
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.
Foreign currency risk
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 risk policy. Group has historically been able to price its lease transactions to
compensate for the impact of foreign currency fluctuations on its purchases. However, in periods of rapid change in an
exchange rate, the Company may not be able to pass on such changes in the cost of purchased products to its customers which
may negatively impact the Company’s financial performance. The Company currently does not actively hedge foreign currency
risk and transacts in foreign currencies on a spot basis.
Interest rate risk
Interest rate risk is the risk the consolidated entity incurs financial loss due to adverse movement in interest rates. The
consolidated entity is subject to interest rate risk on both its senior debt facility and the securitised warehouse.
The consolidated entity purchases interest rate hedges to effectively fix the securitised warehouse liabilities which have a
known term and predictable cash flows on the established book. No interest rate hedges have been purchased on the
corporate senior debt facility.
At the reporting date the interest rate profile of the consolidated entity’s interest bearing financial instruments was:
$’000 AUD
Financial assets
Financial liabilities
2018
8,382
(284,308)
2017
6,638
(276,463)
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 $1,931,000 (2017: $1,889,000).
Annual Report 2018 I 42
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2018
Financial instruments
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 13 for quantitative data.
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.
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.
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.
43 I Thorn Group
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2018
11. PROVISIONS
2018
$’000 AUD
Opening balance
Provisions made during the year
Provisions used during the year
Provisions reversed during the year
Provisions reclassified to accruals
Current
Non-current
2017
$’000 AUD
Opening balance
Provisions made during the year
Provisions used during the year
Provisions reversed during the year
Current
Non-current
Regulatory
Regulatory
Make good
Total
8,100
450
-
-
(2,412)
6,138
6,138
-
1,784
596
9,884
1,046
(481)
(91)
-
1,808
1,321
487
(481)
(91)
(2,412)
7,946
7,459
487
6,138
1,808
7,946
Regulatory
Make good
-
8,100
-
-
1,700
299
(144)
(71)
Total
1,700
8,399
(144)
(71)
8,100
1,784
9,884
8,100
-
937
847
9,037
847
8,100
1,784
9,884
Regulatory provision represents amounts set aside for potential customer remediation, penalties and costs of engaging expert
advice. During the year $2,412,000 was reclassified to accruals and represents actual or specific amounts known to be payable
rather than estimated.
Make good – lease premises
Make good provision represent expected costs of returning lease premises to an appropriate condition upon termination of
rental contract.
12. LOANS AND BORROWINGS
$’000 AUD
Current liabilities
Secured loans
Non-Current liabilities
Secured loans
2018
2017
77,348
46,904
206,960
229,559
284,308
276,463
Borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, 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.
Annual Report 2018 I 44
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2018
Financing loan facilities
$’000 AUD
2018
2017
Secured corporate loan facility A & B (Maturity 30 November 2019)
70,000
110,000
Utilised
Available headroom
Secured corporate loan facility C
Utilised
Available headroom
Securitised warehouse facility
Utilised
Available headroom
Total loan facilities
Utilised
(41,000)
(94,400)
29,000
15,600
-
65,000
-
(30,000)
-
35,000
250,000
180,000
(243,308)
(152,063)
6,692
27,937
320,000
355,000
(284,308)
(276,463)
Secured loan facilities not utilised at reporting date
35,692
78,537
The Group continues to be funded by one Australian major bank. That bank and the Company entered into a facility variation
agreement during the year which required the Company to undertake progressive debt repayments and meet new covenants.
These progressive repayments will reduce the facility limit to $50m by 30 September 2018.
The corporate facilities terminate on 30 November 2019 with the bank having the right to a scheduled review of the facility on
and from 30 September 2018 resulting from which they may issue a change notice for the conditions of the facility including its
cost, margin, limit or terms and conditions.
The corporate facilities are secured by a fixed and floating charge over the assets of the consolidated entity.
The warehouse facility is secured by rentals and payments receivable from the underlying lease receivable contracts and is
non-recourse to the Group. The amounts due and payable on the warehouse loan facility in the next 12 months are disclosed
as current. At maturity no further leases are able to be sold down into the facility and the portfolio will amortise off for as long
as the underlying leases are payable. The warehouse facility has been extended from $180m to $250m and has an availability
period to 16 December 2018 and a final maturity date of 16 December 2021. For more information about the consolidated
entity’s exposure to interest rate risk and liquidity risk see note 10.
13. CAPITAL AND RESERVES
Number of shares
On issue at the beginning of year
2018
2017
158,246,851
154,466,886
Issue of new shares on vesting of performance rights
-
-
Issue of shares under dividend investment plan
1,682,731
3,779,965
159,929,582
158,246,851
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.
Equity remuneration reserve
The equity remuneration reserve represents the value of performance rights issued.
45 I Thorn Group
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2018
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:
2018
Final 2017
Interim 2018
Total amount
2017
Final 2016
Interim 2017
Total amount
Cents per
share
Amount
$’000 AUDs
Franking
%
Date of
payment
2.5
1
6
5.5
3,956
1,593
5,549
9,268
8,612
17,880
100%
100%
18 July 2017
19 January 2018
100%
100%
18 July 2016
20 January 2017
Franked dividends declared or paid during the year were franked at the tax rate of 30%.
There was no dividend declared after the balance date.
Dividend franking account
$’000 AUD
30% franking credits available to shareholders of Thorn Group Limited
2018
36,930
2017
31,559
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.
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 1,682,731 (2017: 3,779,965) new ordinary shares were issued during this financial year
to the value of $1,761,224 (2017: $5,486,179).
Annual Report 2018 I 46
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2018
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 2018 was based on the loss attributable to ordinary shareholders of
$3,624,000 (2017: profit $25,308,000) and a weighted average number of ordinary shares during the year ended
31 March 2018 of 159,094,096 (2017: 156,266,756).
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 2018 was based on the loss attributable to ordinary shareholders of
$3,624,000 (2017: profit $25,308,000) and a weighted average number of ordinary shares during the year ended
31 March 2018 of 159,094,096 (2017: 156,266,756) which includes performance rights granted.
$’000 AUD
Earnings per share
2018
2017
Profit attributable to ordinary shareholders (basic) $’000 AUD
Profit attributable to ordinary shareholders (basic and diluted) - continuing operations
Profit attributable to ordinary shareholders (basic and diluted)
(6,463)
(3,624)
21,012
25,308
158,247
847
159,094
158,247
847
159,094
(4.06)
(4.06)
(2.28)
(2.28)
154,467
1,800
156,267
154,467
1,800
156,267
13.45
13.45
16.20
16.20
Weighted average number of ordinary shares (basic) ‘000’s
Issued ordinary shares at 1 April
Effect of shares issued
Weighted average number of ordinary shares for the year
Weighted average number of ordinary shares (diluted) ‘000’s
Issued ordinary shares at 1 April
Effect of shares issued
Weighted average number of ordinary shares for the year
Earnings per share - continuing operations
Basic earnings per share (cents)
Diluted earnings per share (cents)
Earnings per share
Basic earnings per share (cents)
Diluted earnings per share (cents)
47 I Thorn Group
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2018
15. CONSOLIDATED ENTITIES
Parent entity
Thorn Group Limited
Subsidiaries
Thorn Australia Pty Ltd
Eclipse Retail Rental Pty Ltd
Rent Try Buy Pty Ltd
Thorn Personal Finance Pty Ltd
1st Cash Pty Ltd
Thorn Equipment Finance Pty Ltd
Thorn Finance Pty Ltd
Thorn ABS Warehouse Trust No. 1
Cash Resources Australia Pty Ltd
Cash Resources Australia Unit Trust
Basis of consolidation
Country of
Incorporation
Ownership Interest
2018
2017
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%
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 2018 I 48
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2018
16. DEED OF CROSS GUARANTEE
Pursuant to ASIC Corporations Instrument 2016/914 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 Corporates Instrument 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 Trust 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 2018, 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 Trust No. 1. Excluding the Thorn ABS Warehouse Trust No. 1, cash
and cash equivalents would decrease by $14,517,000 and trade and other payables would decrease by $14,517,000.
17. PARENT ENTITY DISCLOSURES
As at, and throughout, the financial year ending 31 March 2018 the parent entity of the consolidated entity was Thorn Group
Limited.
$’000 AUD
Result of Parent Entity
Profit for the period
Other comprehensive income
2018
2017
5,549
17,880
193
(546)
Total comprehensive income for the period
5,742
17,334
Financial position of the parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of the parent comprising
Share capital
Equity remuneration reserve
Total Equity
3,099
134,495
3,099
14,363
117,102
3,030
120,132
5,916
136,398
5,916
18,079
115,340
2,979
118,319
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 15 and note 16.
49 I Thorn Group
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2018
18. DISPOSAL OF SUBSIDIARY
With effect from 1 November 2017, the Thorn Financial Services business was sold to a third party. The Group received $13.3m
cash on settlement. With effect from 26 February 2018, the Thorn Debtor Finance business was sold to a third party. The
Group received $37.9m cash on settlement. The NCML Receivables Management business was sold in the prior year to a third
party in September 2016 and during this financial year the Group received a further $293,000 following a completion audit.
(a) A. Result of discontinued operations
$’000 AUD
Revenue
Expenses
Results from operating activities
Income tax
Results from operating activities, net of tax
Gain/(loss) on sale of discontinued operation
Income tax on sale of discontinued operation
2018
13,510
2017
28,182
(9,966)
(21,030)
3,544
7,152
(1,063)
(2,146)
2,481
5,006
512
(1,014)
(154)
304
Profit (loss) from discontinued operations, net of tax
2,839
4,296
(b) Cash flow from /(used in) discontinued operation
$’000 AUD
Net cash used in operating activities
Net cash from investing activities
Net cash flows for the year
(c) Effect of disposal on the financial position of the Group
$’000 AUD
Cash and cash equivalents
Trade and other receivables
Deferred tax asset
Property, plant and equipment
Trade and other payables
Employee benefits
Provisions
Net assets and liabilities
Consideration received, satisfied in cash
Cash and cash equivalents disposed of
Net cash inflows
2018
(463)
51,249
2017
(2,383)
(19)
50,786
(2,402)
2018
2017
-
(415)
(49,587)
(23,685)
(323)
(519)
(97)
(216)
255
1,341
38
801
(1,023)
60
(50,737)
(22,633)
51,249
21,600
-
(415)
51,249
21,185
Annual Report 2018 I 50
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2018
19. EMPLOYMENT BENEFITS EXPENSE
$’000 AUD
Wages and salaries
2018
2017
46,013
49,848
Contributions to defined contribution superannuation funds
3,697
3,775
Termination benefits
Equity settled share-based payment transactions
20. RELATED PARTIES
Key management personnel remuneration
$’000 AUD
Short-term employee benefits
Post-employment benefits
Long-term employee benefits
Share based payments
494
718
(142)
337
50,062
54,678
2018
2,930
479
3
(329)
3,083
2017
2,982
151
38
235
3,406
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.
There were no loans made or outstanding to Directors or executive KMP during or at the end of the year.
A director, Stephen Kulmar, is the founder of the retail consultancy Retail Oasis, which has the Company as one of its clients.
During the year there were no engagements nor fees billed for services rendered but the Company reimbursed Retail Oasis
$8,860 for costs incurred on behalf of Thorn employees. Accordingly Mr Kulmar is considered an independent director. 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.
21. AUDITORS’ REMUNERATION
In whole AUD
Audit services
KPMG Australia:
Audit and review of financial reports
Compliance assurance services
Disposal of subsidiary related audit services
Total Audit Services
Other services
KPMG Australia:
Taxation services – compliance and advice
Regulatory advisory*
Risk consulting services
Other services
Total Other Services
Total Auditor’s Remuneration
2018
2017
574,650
26,500
15,000
616,150
234,380
-
127,285
109,397
471,062
1,087,212
367,000
36,000
33,500
436,500
132,989
180,000
112,848
18,525
444,362
880,862
* In 2017 the regulatory advisory assignment was a one-off non-recurring item and KPMG were contracted as they were best placed for
that particular work.
51 I Thorn Group
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2018
22. CONTINGENT LIABILITY
Class action
The Thorn subsidiary running Radio Rentals was named on 29 March 2017 as the respondent to a class action proceeding that
has been commenced by one of its customers in the Federal Court of Australia. The statement of claim relates to misleading,
deceptive and unconscionable conduct, false representations and unfair contract terms.
The matter will be vigorously defended and is expected to take some time, possibly years, to resolve. No provision has
been taken in these accounts. Legal fees will be incurred defending the matter over the period of that defence should the
matter proceed.
23. FINANCING AND GOING CONCERN BASIS
At the half year ended 30 September 2017, the Company had breached two of its bank covenant financial ratios. The bank
formally waived the breach and instituted a facility variation deed which required the Company to undertake progressive debt
repayments and meet new covenants. The facility variation deed reduced the facility limit to $90m by 31 December 2017,
$70m by 30 June 2018, and $50m by 30 September 2018.
Directors were confident the company could meet these progressive repayments and indeed the corporate debt facility was
paid down to $41m in February 2018 utilising operational cash flows and proceeds from the sale of Thorn Financial Services and
Trade & Debtor Finance.
Subsequent to the financial year end, the bank has instituted a further facility variation deed which has removed one of the
previous tightening financial covenants and applied a replacement earnings based covenant. The facility variation deed entered
into at the half year provided for the facility termination date to be extended to 30th November 2019 with the bank having the
right to conduct an independent review of the facility on 30th September 2018 and to amend the facility terms. The directors
are confident the company has a number of alternative funding options available if required.
Accordingly, the directors are satisfied that the going concern basis should be adopted in preparing this financial report.
24. SUBSEQUENT EVENTS
ASIC
The Company attended a Federal Court hearing for the ASIC v Thorn Australia Pty Ltd regulatory matter on 16 May at which the
Court ordered Thorn to pay a pecuniary penalty of $2 million and reimburse ASIC’s agreed costs. This was as previously advised
to the ASX on 23 January 2018.
Annual Report 2018 I 52
DIRECTORS’ DECLARATION
For the year ended 31 March 2018
Directors’ declaration
In the opinion of the directors of Thorn Group Limited (the ‘Company’):
1.
(a)
the financial statements and notes that are set out on pages 23 to 52 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 2018 and of its
performance for the financial year ended on that date; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001;
(b)
(c)
the financial report also complies with International Financial Reporting Standards as disclosed in note 1(a); and
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 Corporations Instrument 2016/914.
3. The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief
Executive Officer and Chief Financial Officer for the financial year ended 31 March 2018.
Signed in accordance with a resolution of the directors.
David Foster
Chairman
Dated at Sydney
30 May 2018
53 I Thorn Group
Independent Auditor’s Report
To the shareholders of Thorn Group Limited,
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of Thorn
Group Limited (the Company).
In our opinion, the accompanying Financial Report
of the Company is in accordance with the
Corporations Act 2001, including:
(cid:120)
(cid:120)
giving a true and fair view of the Group’s
financial position as at 31 March 2018 and of
its financial performance for the year ended on
that date; and
complying with Australian Accounting
Standards and the Corporations Regulations
2001.
The Financial Report comprises the:
(cid:120) Consolidated statement of financial position as at 31
March 2018;
(cid:120) Consolidated statement of profit or loss and other
comprehensive income, consolidated statement of
changes in equity, and consolidated statement of cash
flows for the year then ended;
(cid:120) Notes including a summary of significant accounting
policies; and
(cid:120) Directors’ Declaration.
The Group consists of the Company and the entities it
controlled at the year end and from time to time during the
financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the
Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of
the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants
(the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical
responsibilities in accordance with the Code.
Key Audit Matters
The Key Audit Matters we identified are:
(cid:120) Going concern basis of accounting;
(cid:120) Finance lease receivables impairment
provision;
(cid:120) Valuation of goodwill; and
(cid:120) Regulatory provisions.
Key Audit Matters are those matters that, in our
professional judgment, were of most significance in our
audit of the Financial Report of the current period.
These matters were addressed in the context of our audit of
the Financial Report as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these
matters.
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
Profession Standards Legislation.
Annual Report 2018 I 54
Going concern basis of accounting
Refer to Note 23 to the Financial Report
The key audit matter
How the matter was addressed in our audit
Our procedures included:
(cid:120) We analysed the cash flow projections by:
-
-
Evaluating the underlying data used to generate the
projections. We specifically looked for their consistency
with those used by the Directors, and tested by us, as
set out in the valuation of goodwill key audit matter,
their consistency with the Group’s intentions, as
outlined in Director’s minutes and strategy documents,
and their comparability to past practices; and
Analysing the impact of reasonably possible changes in
projected results and their timing. Assessing the
resultant impact to the ability of the Group to comply
with the revised bank covenants. The specific areas we
focused on were informed from our test results of the
accuracy of previous Group results projections and
sensitivity analysis on key results projection
assumptions.
(cid:120) We assessed significant non-routine forecast cash
inflows for feasibility, quantum and timing, and their
impact to going concern and funding conditions. We
used our knowledge of the Group, its industry and status
to assess the level of associated uncertainty.
(cid:120) We read correspondence with existing and potential
financiers to understand and assess the options available
to the Group including renegotiation of existing debt
facilities, waivers related to financial loan covenants and
negotiation of additional or revised funding
arrangements.
(cid:120) We evaluated the Group’s going concern disclosures in
the financial report by comparing them to our
understanding of the matter, the events or conditions
incorporated into the cash flow projection assessment,
the Group’s plans to address those events or conditions,
and accounting standard requirements.
The Group’s use of the going concern basis of
accounting and the associated extent of
uncertainty is a key audit matter due to the high
level of judgement required by us in evaluating the
Group’s assessment of going concern and the
events or conditions that may cast significant
doubt on its ability to continue as a going concern.
These are outlined in Note 23.
The Directors have determined that the use of the
going concern basis of accounting is appropriate in
preparing the financial report. Their assessment of
going concern was based on cash flow
projections. The preparation of these projections
incorporated a number of assumptions and
significant judgements, and the Directors have
concluded that the range of possible outcomes
considered in arriving at this judgement does not
give rise to a material uncertainty casting
significant doubt on the Group’s ability to continue
as a going concern.
We critically assessed the level of uncertainty, as it
related to the Group’s ability to continue as a going
concern, within these assumptions and
judgements, focusing on the following:
(cid:120)
(cid:120)
(cid:120)
the Group’s planned levels of operational
revenue and expenditures, and the ability of
the Group to manage cash outflows within
available funding;
the Group’s ability to meet financing
commitments and loan covenants. This
included the nature of planned methods to
achieve this, their feasibility and progress of
those plans; and
the Group’s plans to undertake certain
corporate actions, as options for the projected
raising of cash. This included the feasibility,
projected timing and quantum of potential
proceeds.
In assessing this key audit matter, we involved
senior audit team members who understand the
Group’s business, industry and the economic
environment it operates in.
55 I Thorn Group
Finance lease and loan receivables impairment provision ($26,097,000)
Refer to Note 10 to the Financial Report
The key audit matter
How the matter was addressed in our audit
The Group estimate impaired finance lease and loan
receivables collectively, by categorising lease and loan
receivables into portfolios with similar risk profiles, and
using historical experience of actual-category
impairment losses adjusted for any effects of
conditions existing at the balance date.
We focused on this area as a key audit matter due to
the relative magnitude of both finance lease and loan
receivable impairment provisions recognised and
complexity of the Rent Try Buy 48 month (“RTB 48”)
impairment provision which necessitated significant
audit effort.
We focused on the following significant assumptions:
(cid:120)
(cid:120)
‘expected loss’ of products in the remaining life of
the contract. The expected loss reflects the risk of
non-recoverability of the receivable and the risk that
the customer has also absconded with an asset
after the cancellation of the contract.
(cid:120)
specifically for the RTB 48 portfolio of receivables,
the extended length of maturity, compared to other
categories, increases the risk of non-recoverability.
This portfolio contains lease contracts, with a
limited number that have gone to term, therefore,
there is a limited profile of historical impairment
losses with which to estimate the impairment
provision.
Our procedures included:
(cid:120)
Evaluation of the Group’s finance leasing accounting
process. We tested a sample of controls in this
process designed to limit the risk of impairment of
receivables including the approval of new customer
applications, authorisation to write off impaired
receivables and review of finance lease and loan
receivable impairment provisions.
(cid:120) We assessed the total impairment provision for all
receivables by:
(1) assessing the historical impairment losses,
compared to the prior year’s impairment provision;
and
(2) analysing actual impairment losses compared to
gross historical finance lease and loan receivable
balances and our experience.
Specifically for the RTB 48 portfolio of receivables, we
compared the RTB 48 month receivable life curve to
prior period life curves, for patterns such as loss of
products, length of maturity for expected loss, and
nature of products lost, to challenge the profile of the
current period RTB 48 month receivables life curve.
We checked these considerations in the Group’s
impairment provision at balance date. The life curve is
a graph showing the average proportion of receivables
for a group of RTB 48 month receivables recorded in
the same month since they were installed.
Annual Report 2018 I 56
Valuation of goodwill ($20,658,000)
Refer to Note 7 to the Financial Report
The key audit matter
How the matter was addressed in our audit
Our audit attention focused on the valuation of goodwill
as a key audit matter due to the level of significant
judgement required by us in evaluating the Group’s
assessment of impairment.
The assessment of impairment of goodwill is based on
a fair value less costs of disposal model, which includes
assumptions, including forecast cash flows, discount
rate applied, and the forecast growth and terminal
growth rates. Reasonably possible changes in these
assumptions have a significant impact on the valuation.
Estimating the cash flows requires the exercise of
judgement as to the likely impact of:
(cid:120)
(cid:120)
competitive pressures in the invoice discounting
sector; and
potential changes resulting from early adoption of
proposed regulatory changes to the consumer
leasing sector and lending practices.
In addition to the above, the Group recorded an
impairment charge of $20,658,000 against goodwill,
resulting from the challenging trading conditions and
significant reduction in installation volumes. This further
increased our audit effort in this key audit area.
The significant judgement involved in the annual
impairment testing necessitated specialist involvement
and experienced senior team member time.
Our procedures included:
(cid:120) We performed sensitivity analysis, for key
assumptions, including terminal growth rate and
forecast cash flows to further focus our procedures.
(cid:120) Working with our specialists we used our knowledge
of the client, and their industry to challenge the
Group’s fair value less costs of disposal models and
significant assumptions. This included:
(1) corroborating the Group’s growth rate
assumptions and discount rates for both the Thorn
Debtor Finance and Consumer Leasing CGUs to
known market trends and comparable entities; and
(2) evaluating forecast cashflows in light of recent
competitive market pressure and changes to
lending practices resulting from proposed
regulatory changes. This included comparing
revenue growth rates for the consumer leasing
and invoice discounting sector to the growth rates
incorporated in the Group’s fair value less costs of
disposal models.
(cid:120) Working with our valuation specialists we compared
the implied multiples from comparable market
transactions to the implied multiple from the Group’s
fair value less costs of disposal models.
(cid:120) We assessed the historical accuracy of previous Group
forecasts to inform our evaluation of forecasts
incorporated in the fair value less costs of disposal
models.
(cid:120) We recalculated the impairment charge against the
recorded amount disclosed.
(cid:120) We assessed the disclosures in the financial report
using our understanding of the issue obtained from our
testing and against the requirements of the accounting
standards.
57 I Thorn Group
Regulatory provision ($6,138,000)
Refer to Note 11 to the Financial Report
The key audit matter
How the matter was addressed in our audit
Our audit attention focused specifically on the
regulatory provision as a key audit matter due to the
level of judgement required by us in evaluating the
Group’s assessment of the provision. The provision
relates to matters arising from the Group’s
serviceability model and lending practice compliance
with the requirements of the National Consumer Credit
Protection Act.
The component of the provision estimation we
focussed on is the, compensation of customers, who
are required to be remediated.
ASIC’s investigation into the Group’s compliance with
responsible lending laws has been finalised. Our
judgement involved evaluating the Enfourceable
Undertaking and measuring any resulting obligations.
We used senior team members to assess these
judgements.
Our audit procedures included:
(cid:120)
Evaluating external information regarding the Group’s
estimates for claims relating to, their serviceability
model and responsible lending practices, as it relates
to the compensation of customers.
(cid:120) Obtaining the Group’s calculation of the provision
related to the compensation of customers and
checking on a sample basis the data used in the
calculation for consistency to the billing system, as
tested by us.
(cid:120) Assessing the parameters of the Group’s calculation of
the provision related to the compensation of
customers, against the parameters detailed within the
Enforceable Undertaking, in order to consider the
completeness of the provision. We specifically tested
the period in which the Group’s serviceability model
was in place, financial obligations, and arrears events
of the customer.
Other Information
Other Information is financial and non-financial information in Thorn Group Limited’s annual reporting which is
provided in addition to the Financial Report and the Auditor's Report. The Directors are responsible for the Other
Information.
The Other Information we obtained prior to the date of this Auditor’s Report was the Directors’s Report. The
anticipated 2018 Financial Overview, Chair’s Report, Managing Director’s Report, Board of Directors, Leadership
Team, Our Businesses, Community, and the Corporate Directory are expected to be made available to us after the
date of the Auditor's Report.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not and will not
express an audit opinion or any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we
consider whether the Other Information is materially inconsistent with the Financial Report or our knowledge obtained
in the audit, or otherwise appears to be materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information, and based on
the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we
have nothing to report.
Annual Report 2018 I 58
Responsibilities of Directors for the Financial Report
The Directors are responsible for:
(cid:120) preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting Standards
and the Corporations Act 2001;
(cid:120)
(cid:120)
implementing necessary internal control to enable the preparation of a Financial Report that gives a true and fair
view and is free from material misstatement, whether due to fraud or error; and
assessing the Group’s ability to continue as a going concern. This includes disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless they either intend to liquidate the
Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
(cid:120)
(cid:120)
to obtain reasonable assurance about whether the Financial Report as a whole is free from material misstatement,
whether due to fraud or error; and
to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of this Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and
Assurance Standards Board website at: http://www.auasb.gov.au/auditors_files/ar2.pdf. This description forms part of
our Auditor’s Report.
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report of Thorn
Group Limited for the year ended 31 March
2018, complies with Section 300A of the
Corporations Act 2001.
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 responsibilities
We have audited the Remuneration Report included in pages 10
to 20 of the Directors’ report for the year ended 31 March 2018.
Our responsibility is to express an opinion on the Remuneration
Report, based on our Audit conducted in accordance with
Australian Auditing Standards.
KPMG
59 I Thorn Group
Anthony Travers
Partner
Sydney
30 May 2018
SHAREHOLDER INFORMATION
DISTRIBUTION OF SHAREHOLDERS
1 ‐ 1,000
1,001 ‐ 5,000
5,001 ‐ 10,000
10,001 ‐ 100,000
100,001 ‐ and over
Rounding
Total
Fully Paid Ordinary Shares (Total) as at 30 June 2018
Total Holders
1,545
2,950
1,587
1,889
102
8,073
Shares
806,565
8,451,428
12,395,735
49,421,435
88,854,419
% issued capital
0.50
5.28
7.75
30.90
55.56
159,929,582
0.01
100.00
MARKETABLE PARCELS
Minimum $ 500.00 parcel at $ 0.60 per unit
Minimum Parcel Size
834
Holders
1129
Units
400,546
THE NAMES OF THE SUBSTANTIAL SHAREHOLDERS LISTED IN THE COMPANY’S
REGISTER AS AT 30 JUNE 2018
Rank
1
2
3
Top Investors
Investors Mutual Limited
Forager Funds Management Pty Ltd
Adam Smith Asset Management Pty Limited
VOTING RIGHTS
% Issued Capital
10.07%
9.26%
7.68%
16,110,353
14,809,429
12,280,578
The Company only has ordinary shares on issue. 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.
UNLISTED EMPLOYEE PERFORMANCE RIGHTS
On 1 July 2018, there were 5,743,171 unlisted Performance Rights on issue held by 13 different persons.
Of these Rights, 3,898,884 have no exercise price and vest between 1 September 2019 and 1 September 2021 subject to
the fulfilment of the relevant vesting conditions.
646,681 of these rights vest on 1 September 2018 subject to the holders being employed by Thorn Group at that time.
The balance of 1,197,606 Rights accrue to the Managing Director, Mr Tim Luce, and vest in two equal tranches, the first
on 15 February 2019 and the second on 15 February 2020. Vesting is dependent on Mr Luce being an employee of Thorn
Group at the time.
Annual Report 2018 I 60
SHAREHOLDER INFORMATION
20 LARGEST SHAREHOLDERS – ORDINARY SHARES
Rank
Top Investors
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
BOND STREET CUSTODIANS LIMITED
AUSTRALIAN EXECUTOR TRUSTEES LIMITED
BNP PARIBAS NOMS PTY LTD
MR HONGBIN CHEN
BNP PARIBAS NOMS (NZ) LTD
DRNEWNHAM SUPER PTY LTD
CVC LIMITED
BOND STREET CUSTODIANS LIMITED
BNP PARIBAS NOMINEES PTY LTD
LOUIS PIERRE LEDGER
DALELAN PTY LIMITED
MR MICHAEL JOHN HORN
MR FRANCIS MAXWELL HOOPER
CREATIVE LIVING (QLD) PTY LTD
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD DRP
WARBONT NOMINEES PTY LTD
Totals: Top 20 Holders Of Ordinary Fully Paid Shares (Total)
Total Remaining Holders Balance
% Issued Capital
17.73
15.33
4.52
1.47
1.26
1.19
1.13
0.43
0.43
0.41
0.40
0.38
0.38
0.37
0.35
0.28
0.25
0.25
0.23
0.23
47.03
52.97
28,363,458
24,521,853
7,228,893
2,355,755
2,009,135
1,898,510
1,813,965
689,273
680,000
653,000
635,000
610,000
600,174
590,761
563,471
454,500
400,171
400,000
374,931
370,388
75,213,238
84,716,344
There are 159,929,582 fully paid ordinary shares on issue, all of which are listed on the Australian Securities Exchange.
61 I Thorn Group
SHAREHOLDER INFORMATION
NON‐EXECUTIVE DIRECTORS
David Foster
Chairman, Non‐Executive Director
Belinda Gibson
Non‐Executive Director
Stephen Kulmar
Non‐Executive Director
Andrew Stevens
Non‐Executive Director
MANAGING DIRECTOR
Tim Luce
COMPANY SECRETARIES
David Lines
Peter Forsberg
REGISTERED OFFICE
Thorn Group Limited
Level 1
62 Hume Highway
Chullora, NSW 2190
www.thorn.com.au
Telephone: +61 2 9101 5000
Facsimile: +61 2 9101 5033
AUDITOR TO THORN GROUP LIMITED
KPMG
Level 38, Tower 3, International Towers Sydney
300 Barangaroo Avenue
Sydney, NSW 2000
REGISTRY
Computershare Investor Services Pty Limited
Level 4
60 Carrington Street
Sydney NSW 2000
Annual Report 2018 I 62