SUPERIOR
PERFORMANCE
in retail finance
THINKSMART LIMITED
ANNUAL REPORT
2016
ABN 24 092 319 698
Annual Report 2016
ThinkSmart is a financial technology company and leader in digital,
paperless, retail point of sale finance in the UK, since 2003.
CONTENTS
Highlights
Executive Chairman Report
2016 Financial Report
Shareholder Information
Corporate Information
2
ThinkSmart United Kingdom Office:
7th Floor, Oakland House, Talbot Road
Manchester M16 0PQ, UK
Australian Registered Office:
Suite 5, 531 Hay Street Subiaco
Perth WESTERN AUSTRALIA 6008
www.thinksmartworld.com
Annual Report 2016
HIGHLIGHTS FOR THE FINANCIAL PERIOD ENDED
30 JUNE 2015
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$4.4m Group Operating NPAT (excluding non-operating strategic review and advisory expenses) for the
year up 27% on same period last year (with avg. FX rate of 1.95 AUD:GBP in H2)
$0.6m statutory Group NPAT for the year after $3.8m of non-operating strategic review and
advisory expenses
69% growth in Operating EPS – 4.62 cents earnings per share (excluding non-operating expenses) up
1.89 cents on last year
$8.7m Cash assets at 30 June 2016 with strong operating cash generation of $5.4m in the year
29% growth in UK Segment NPAT to $3.9m benefitting from reduced funding costs and improvements in
bad debt performance on prior year vintages
12% growth in UK revenue on a constant FX basis to $27.3m despite challenging second half volumes, with
unanticipated delays in the launch of some key initiatives and new products
$45.1m total assets under management and 57k active customers at 30 June 2016
Lease receivables grew by 67% to $7.8m as the lease book matures
Fully franked dividends of 3.5c and 1.1c per share were paid in September 2015 and March 2016
respectively. No further dividend payable for the 2016 financial year
(cid:120) As a result of the strategic review, ThinkSmart is planning to migrate its listing from ASX to the AIM market
of the London Stock Exchange by early November. The proposed transaction is subject to shareholder and
regulatory approvals to achieve the following:
o Placement of 20m shares to a fund managed by Henderson Global Investors at a price of
£0.25 per share (£5m)
o Off market tender buy-back of up to 10m shares at a price range of $0.38 to $0.55 per share
o Apply to be admitted to AIM and delist from ASX
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ThinkSmart has extended its contract with the market leading Dixons Carphone Group, which builds on
the 13-year mutually beneficial partnership. The agreement extends ThinkSmart’s B2B (SmartPlan) and
B2C (Upgrade Anytime) contract with Dixons Carphone, to at least January 2019
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(cid:120) A new exclusive 5 year agreement has been signed with Carphone Warehouse to launch a leasing
proposition on ‘Mobiles’ in Q4 2016. In excess of 50k and 90k new customers are targeted for years 1 and
2 respectively
The Multi-funder Platform is now fully operational. The £60m STB funding facility has now been extended
to July 2018 on improved terms from 1 July 2015, complementing the £10m funding facility signed with
Santander in 2014
ThinkSmart has now been approved by the Financial Conduct Authority to operate in the UK consumer
credit market, complementing its existing consumer leasing permissions
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(cid:120) A new multi-leasing customer account proposition has been developed. The account facilitates a credit
limit which enables the lease of multiple products over time, without additional applications. The new
account proposition was launched with Dixons in July 2016
Significant reinvestment to enhance unique sector leading software and processing IP together with
paperless transactions with online basket integration and mobile application is now available
Focussing on the release and distribution of leading integrated online basket and mobile finance solutions
for retailers. Basket integration with PC World Business is now live.
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(cid:120) Optimisation of credit scoring and decision engine capabilities to maximise volumes and manage risk
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The strategic focus of the business for 2016-17 is:
Significant growth in active customer base
o
o Maximise margins through efficient ‘on balance sheet’ funding and continued systemic bad
debt management
o
Improvements in operational leverage benefiting from scale reduction in per unit operating costs
o New mobile leasing product targeted to achieve immediate and significant volume growth, with
profit spread across the term of each contract through lease accounting, and increasing over time
through the high level of anticipated repeats
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Annual Report 2016
Annual Report 2016
EXECUTIVE CHAIRMAN REPORT
Welcome to all our shareholders reading our 2016 Annual Report.
The 2016 financial year has continued to be a successful period in shaping and executing the Group’s strategy
as reflected in our financial performance.
ThinkSmart is a leading financial technology company providing digital and paperless retail point of sale
finance products to both B2B and B2C customer segments via UK national retail distribution, pre-dominantly
with the Dixons Carphone Group through a 13-year relationship now extended to 2019. Dixons Carphone plc
is Europe’s leading specialist electrical and telecommunications retailer and services company, with over
2,300 stores in 9 countries, employing over 40,000 people.
During the year we have continued to invest significantly in our proprietary systems, people, and funding
platforms to further leverage our sector leading software and processing IP together with paperless
transactions, online basket integration and market innovative new customer account and mobile application
products and services. This investment combined with significantly improved and extended funding will help to
support the Group strategy of broadening distribution to new sectors, retailers and customers.
The new exclusive 5 year agreement signed with Carphone Warehouse to provide a mobile phone leasing
proposition from Q4 2016 will deliver significant volume growth through a new market sector. This will build
on the strength of the Dixons Carphone relationship and ensure long term profitability improving over time
through a high level of upgrades.
The investment by Henderson as a result of the strategic review is a vote of confidence in ThinkSmart’s future,
and the Board believes that the migration of ThinkSmart’s listing to the UK AIM will achieve the benefits of:
o more closely aligning ThinkSmart’s trading market and shareholder base with its operations in the UK;
o
o providing the potential to access UK equity capital markets for funding ThinkSmart’s future development
raising the profile of ThinkSmart from a commercial and capital markets perspective; and
To ensure we have a Board that reflects the UK focus of the business and the intended migration to AIM, the
Board has taken the opportunity to realign accordingly with the majority of Directors being UK based. This will
see David Griffiths retiring in August and David Adams joining the Board from October as a Non-Executive
Director and assuming the Chair of the Audit Committee.
On admission to AIM, Ned Montarello will become Non-Executive Chairman, Keith Jones will be Non-Executive
Director and Deputy Chairman, Gary Halton, existing CFO, will become Executive Director and a new UK based
Non-Executive Director will be appointed. Peter Gammell and Fernando de Vicente will continue in their
current roles
ThinkSmart remains focused on positioning the business for growth and profitability through the ongoing
development and execution of our strategy to build long-term value in the UK through our 3 Pillars of Growth:
1. Organic growth with current and new product with existing partners
2. Diversification
in product and market development by extending the model with new
3.
distribution, sectors and products, and
Investment in strategically aligned businesses with the opportunity to unlock value through
synergies and leveraging the platform through products and distribution
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Annual Report 2016
Annual Report 2016
We continue to look to build long term, distribution agreements and entrenched partnerships which deliver value
for retailers and their customers. Our products are executable throughout today’s complex retail channel,
creating additional revenue and enhanced margin performance for our retail partners both on and offline.
We strongly believe the UK is the place to be to grow our business. This is supported by Dixons Carphone who
have reported that there has been no evidence of a knock to consumer confidence after the UK vote to leave
the EU, echoing industry surveys which point to a robust mood among UK shoppers.
ThinkSmart has a strong long term relationship with Dixons, UK’s leading electrical retailer and the UK market
is nearly three times the size of Australia with 62 million consumers. ThinkSmart has secured access to many of
these consumers through its strong relationship with Dixons. ThinkSmart’s sector leading intellectual property
delivers capability for point of sale financing solutions and facilitates the rapid development of innovative
products into other retail sectors allowing us to create financing solutions with various partners at relatively
low cost and in rapid timeframes.
The strategic focus of the business for 2016-17 is:
Significant growth in active customer base
o
o Maximise margins through efficient ‘on balance sheet’ funding and continued systemic bad
debt management
o
Improvements in operational leverage benefiting from scale reduction in per unit operating costs
o New mobile leasing product targeted to achieve immediate and significant volume growth, with profit
spread across the term of each contract through lease accounting, and increasing over time through
the high level of anticipated repeats
Finally, on behalf of the Board of Directors, we would like to thank all of ThinkSmart’s customers, partners,
funders and shareholders for their continuing support. We especially want to thank the entire team at
ThinkSmart for their ongoing commitment and enthusiasm, and their hard work and contribution in
developing and delivering our plans. We look forward to implementing the initiatives ahead for the benefit of
all our stakeholders.
Ned Montarello
Executive Chairman
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THINKSMART LIMITED
DIRECTORS(cid:182)(cid:3) (cid:53)(cid:40)(cid:51)(cid:50)(cid:53)(cid:55)
Your Directors present their report on the consolidated entity (referred to hereafter as the (cid:179)Group(cid:180)) consisting of ThinkSmart
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DIRECTORS
The following persons were Directors of the Company during the financial year and until the date of this report.
Names, qualifications, experience and special responsibilities
Ned Montarello
Executive Chairman
Ned was appointed Executive Chairman on 22 May 2010 and stepped down as Chief Executive Officer on 31 January 2014. Ned has
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retailers, including JB Hi-Fi and Dick Smith. Ned also steered the expansion of the business into Europe, establishin g ag r eemen ts
with DSG International and a joint venture with HBOS to launch in the UK. In 2007 Ned successfully listed, via IPO, the bu s in e ss
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for the first time in the UK. Ned continued to drive the business to maintain its sector leading IP in point of s ale fin an ce wit h t h e
introduction of e-sign to its process ensuring that it maintained its relevance to the fast moving retail environment.
Fernando de Vicente B. Econ, MBA Bus
Chief Executive Officer
Fernando joined the Board on 7 April 2010 and the Audit and Risk Committee on 18 August 2013. Fernando was then subsequently
appointed group Chief Executive Officer from 1 January 2015. Fernando has a Degree in Economics (International Dev elo p ment )
from the University Complutense in Madrid, and an Executive MBA from IESE Business School in Madrid.
(cid:41)(cid:72)(cid:85)(cid:81)(cid:68)(cid:81)(cid:71)(cid:82)(cid:3)(cid:86)(cid:83)(cid:72)(cid:81)(cid:87)(cid:3)(cid:81)(cid:76)(cid:81)(cid:72)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:86)(cid:3)(cid:68)(cid:87)(cid:3)(cid:39)(cid:76)(cid:91)(cid:82)(cid:81)(cid:86)(cid:3)(cid:53)(cid:72)(cid:87)(cid:68)(cid:76)(cid:79)(cid:15)(cid:3)(cid:82)(cid:81)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:40)(cid:88)(cid:85)(cid:82)(cid:83)(cid:72)(cid:182)(cid:86)(cid:3)(cid:79)(cid:68)(cid:85)(cid:74)(cid:72)(cid:86)(cid:87) electrical retailers. His latest role in Dixons was In t ern at io nal
Managing Director, with responsibility for Dixons Central & Southern European operations, a A$3 billion business with 350 s t o res
across six countries. Fernando started his career with Dixons in 2001 as Finance Director for the Spanish subsidiary, and became the
MD of the subsidiary in 2003. In 2006 he was promoted to Regional Managing Director for South -East Europe based in Greece,
before assuming the role of International Managing Director in 2008.
(cid:44)(cid:81)(cid:3) (cid:48)(cid:68)(cid:85)(cid:70)(cid:75)(cid:3)(cid:21)(cid:19)(cid:20)(cid:19)(cid:15)(cid:3)(cid:41)(cid:72)(cid:85)(cid:81)(cid:68)(cid:81)(cid:71)(cid:82)(cid:3)(cid:79)(cid:72)(cid:73)(cid:87)(cid:3)(cid:39)(cid:76)(cid:91)(cid:82)(cid:81)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:69)(cid:72)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:38)(cid:75)(cid:68)(cid:76)(cid:85)(cid:80)(cid:68)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:37)(cid:82)(cid:71)(cid:92)(cid:37)(cid:72)(cid:79)(cid:79)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:15)(cid:3)(cid:82)(cid:81)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:54)(cid:83)(cid:68)(cid:76)(cid:81)(cid:182)(cid:86)(cid:3)(cid:79)(cid:68)(cid:85)(cid:74)(cid:72)(cid:86)(cid:87)(cid:3)(cid:86)(cid:83)(cid:72)(cid:70)(cid:76)(cid:68)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)
retailers. On 15 February 2012, Fernando was appointed Non-Executive Director of Levantina, a leading multinational compan y
dealing with natural stone products.
Keith Jones MBA Bus
Group Strategy and Development Director
Keith joined the Board on 24 May 2013 and was appointed Chief Executive Officer on 1 February 2014 through to 31 December
2014. Keith has since moved to the role of Group Strategy and Development Director from 1 January 2015 whilst at t h e s ame t ime
ensuring a smooth hand over with the current CEO, Fernando. Keith has 30 years of retail experience in Europe includ in g ro les as
Chief Executive Officer of JJB Sp(cid:82)(cid:85)(cid:87)(cid:86)(cid:3)(cid:83)(cid:79)(cid:70)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:3)(cid:53)(cid:72)(cid:87)(cid:68)(cid:76)(cid:79)(cid:3)(cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)(cid:39)(cid:76)(cid:91)(cid:82)(cid:81)(cid:86)(cid:3)(cid:53)(cid:72)(cid:87)(cid:68)(cid:76)(cid:79)(cid:3)(cid:83)(cid:79)(cid:70)(cid:15)(cid:3)(cid:82)(cid:81)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:40)(cid:88)(cid:85)(cid:82)(cid:83)(cid:72)(cid:182)(cid:86)(cid:3)(cid:79)(cid:68)(cid:85)(cid:74)(cid:72)(cid:86)(cid:87)(cid:3)(cid:72)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:87)(cid:68)(cid:76)(cid:79)(cid:72)(cid:85)(cid:86)(cid:17)(cid:3)
(cid:36)(cid:87)(cid:3)(cid:39)(cid:76)(cid:91)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3)(cid:46)(cid:72)(cid:76)(cid:87)(cid:75)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:68)(cid:3)(cid:80)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:87)(cid:72)(cid:72)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:85)(cid:72)(cid:86)(cid:83)(cid:82)(cid:81)(cid:86)(cid:76)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:68)(cid:79)(cid:79)(cid:3)(cid:56)(cid:46)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:44)(cid:85)(cid:72)(cid:79)(cid:68)(cid:81)(cid:71)(cid:3)(cid:73)(cid:68)(cid:86)(cid:70)(cid:76)(cid:68)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)PC
World and Currys. Previously he was Managing Director of PC World Stores Group with responsibility for stores in the UK, Sp ain ,
France, Italy and Nordics in addition to Group Service Operations. Keith has a MBA from the Manchester Business School.
6
THINKSMART LIMITED
DIRECTORS(cid:182)(cid:3) (cid:53)(cid:40)(cid:51)(cid:50)(cid:53)(cid:55)
David Griffiths B. Ec (Hons), M. Ec, D. Ec (Hon), FAICD
Non-Executive Director, Deputy Chairman
(cid:39)(cid:68)(cid:89)(cid:76)(cid:71)(cid:3)(cid:77)(cid:82)(cid:76)(cid:81)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:37)(cid:82)(cid:68)(cid:85)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:21)(cid:27)(cid:3)(cid:49)(cid:82)(cid:89)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:21)(cid:19)(cid:19)(cid:19)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:68)(cid:83)(cid:83)(cid:82)(cid:76)(cid:81)(cid:87)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:83)(cid:88)(cid:87)(cid:92)(cid:3)(cid:38)(cid:75)(cid:68)(cid:76)(cid:85)(cid:80)(cid:68)(cid:81)(cid:3)(cid:82)(cid:81)(cid:3)(cid:21)(cid:21)(cid:3)(cid:48)(cid:68)(cid:92)(cid:3)(cid:21)(cid:19)(cid:20)(cid:19)(cid:17)(cid:3)(cid:39)(cid:68)(cid:89)(cid:76)(cid:71)(cid:3)(cid:75)(cid:68)(cid:86)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:20)(cid:23)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:86)(cid:182)(cid:3)
experience in investment banking at Macquarie Bank Limited and previously as Executive Chairman of Porter Western Limited.
Prior to that he held a number of senior financial positions across a wide range of industries. He holds an Honours Degree in
Economics and an honorary Doctor of Economics from The University of Western Australia, a Masters Degree in Economics fro m
Australian National University and is a Fellow of the Australian Institute of Company Directors. David is a Director of the
Contemporary Dance Company of Western Australia. He is Chairman of Automotive Holdings Group Limited and Wellard Limited .
David is Chair of the Audit and Risk Committee of ThinkSmart.
Peter Gammell (appointed 23 May 2016)
Non-Executive Director
Mr Gammell is a non-executive Director of Seven West Media, was Managing Director and CEO of Seven Group Ho ld in g s (2010-
2013) and was previously Managing Director of Aus tralian Capital Equity Pty Ltd (1989-2010). Mr Gammell is also Chairman of
Octet Finance and former Chairman of Scottish Pacific Business Finance. Between 1984 and 1989 Peter was a director of Castle
Cairn (Financial Services) Ltd an investment management company based in Edinburgh, Scotland and a member of IMRO. Also
during this time he was a director of Cairn Energy Management Limited and Cairn Energy PLC. Peter is Chair of the Remunerat io n
and Nomination Committee of ThinkSmart.
COMPANY SECRETARY
Neil Hackett
B. Ec, FFin, GAICD (Merit)
Mr Neil Hackett joined ThinkSmart as Company Secretary in 2014. He holds a Bachelor of Economics from the University of
Western Australia, Post-graduate qualifications in Applied Finance and Investment, and is a Graduate (Ord er o f M erit ) wit h t h e
Australian Institute of Company Directors. Mr Hackett is an Affiliate of the Governance Institute of Australia and a Fello w o f t h e
Financial Services Institute of Australia. He is currently Non-executive Chairman of Australian Securities Exchang e lis t ed en tit y
Ardiden Ltd, Non-(cid:72)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)(cid:36)(cid:93)(cid:82)(cid:81)(cid:87)(cid:82)(cid:3)(cid:51)(cid:72)(cid:87)(cid:85)(cid:82)(cid:79)(cid:72)(cid:88)(cid:80)(cid:3)(cid:47)(cid:76)(cid:80)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:68)(cid:76)(cid:85)(cid:80)(cid:68)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:58)(cid:72)(cid:86)(cid:87)(cid:38)(cid:92)(cid:70)(cid:79)(cid:72)(cid:3)(cid:44)(cid:81)(cid:70)(cid:17)(cid:3)(cid:3)(cid:49)(cid:72)(cid:76)(cid:79)(cid:182)(cid:86)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:85)(cid:76)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88) (cid:71) (cid:72)(cid:86) (cid:3)(cid:20)(cid:19)(cid:3)
years in the funds management industry and regulatory experience with the ASIC.
PRINCIPAL ACTIVITIES
(cid:55)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:83)(cid:85)(cid:76)(cid:81)(cid:70)(cid:76)(cid:83)(cid:68)(cid:79)(cid:3)(cid:68)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:92)(cid:3)(cid:71)(cid:88)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)period was the provision of lease and rental financing services in the UK.
OPERATING AND FINANCIAL REVIEW
The Board presents its Operating and Financial Review for the 12 month financial period to 30 June 2016 and this information should
be read in conjunction with the financial statements and accompanying notes.
Business model
ThinkSmart is an (cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:15)(cid:3)(cid:70)(cid:85)(cid:72)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:71)(cid:76)(cid:73)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:87)(cid:76)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:72)(cid:87)(cid:76)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:68)(cid:71)(cid:89)(cid:68)(cid:81)(cid:87)(cid:68)(cid:74)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:181)(cid:83)(cid:82)(cid:76)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:86)(cid:68)(cid:79)(cid:72)(cid:182)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:72)(cid:17)(cid:3)(cid:44)(cid:87) (cid:3)(cid:75) (cid:68)(cid:86)
an exclusive distribution agreement and partnership with Dixons Carphone Group, (cid:82)(cid:81)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:56)(cid:46)(cid:182)(cid:86)(cid:3)(cid:79)(cid:72)(cid:68)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:72)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:68)(cid:79) ret ailers an d
their customers(cid:17)(cid:3)(cid:55)(cid:75)(cid:76)(cid:81)(cid:78)(cid:54)(cid:80)(cid:68)(cid:85)(cid:87)(cid:182)(cid:86) products leverage its sector leading software and processing IP for delivering fast finance solutio ns in
(cid:87)(cid:82)(cid:71)(cid:68)(cid:92)(cid:182)(cid:86)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:79)(cid:72)(cid:91)(cid:3)(cid:85)(cid:72)(cid:87)(cid:68)(cid:76)(cid:79)(cid:3)(cid:72)(cid:81)(cid:89)(cid:76)(cid:85)(cid:82)(cid:81)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:76)(cid:87)(cid:3)offers a compelling and profitable value proposition for retail partners, customers and
funders.
Since the sale of the Australian and New Zealand operations settled on 31 January 2014 the Group has focused o n t h e UK market .
The company continues to innovate within this growing market of 65.1 million consumers through new product and system
development and new distribution channels whilst further building on the strong relationship it has with Dixons Carphone Group.
7
THINKSMART LIMITED
DIRECTORS(cid:182)(cid:3) (cid:53)(cid:40)(cid:51)(cid:50)(cid:53)(cid:55)
Key financial data
For the year
ending
Total revenue
Indirect customer
acquisition costs
Operating expenses
Depreciation and
amortisation
Impairment losses
Profit / (loss) before tax and non-operating costs
Non-operating strategic review and advisory expenses
Income tax (expense) / benefit
Profit / (loss) after tax*
*NPAT excluding non-operating strategic review and advisory expenses is $4.4m
Summary of results
June
2016
June
2015
Variance
Variance
$000
$000
$000
27,323
24,957
2,366
(7,535)
(11,995)
(8,290)
(10,840)
(1,448)
(803)
5,542
(3,801)
(1,123)
618
(648)
(512)
4,667
-
(1,177)
3,490
755
(1,155)
(800)
(291)
875
(3,801)
54
(2,872)
%
+9%
+9%
-11%
-124%
-57%
+19%
+100%
+5%
-82%
(cid:882)
(cid:882)
(cid:882)
(cid:882)
(cid:882)
(cid:882)
(cid:882)
(cid:882)
Net profit after tax up 27% on prior financial year to $4.4m, excluding non-operating costs of $3.8m.
Total revenue of $27.3m, up 10% on prior financial year.
Total expenses of $21.8m, up 7% on prior financial year, excluding non-operating costs of $3.8m.
Operating expenses of $12m, up 11% on prior financial year.
Available cash assets of $8.5m, down 48% on 30 June 2015 position as a result of dividends paid and non-operating costs.
Earnings per share of 0.65 cents, compared to 2.73 cents for the prior year.
Earnings per share (excluding non-operating costs) of 4.62 cents, compared to 2.73 cents for the prior year.
Fully franked dividends at 3.5 cents per share and 1.1 cents per share, paid September 2015 and March 2016 respectively.
Review of operations
Continuing operations – UK
The UK business delivered a profit contribution before intercompany charges of $8.7m up 15% as a result of improved marg in fro m
reduced funding costs and improvements in bad debts combined with a currency translation benefit of a weaker A u s t ralian d o llar
during the financial year.
(cid:50)(cid:89)(cid:72)(cid:85)(cid:68)(cid:79)(cid:79)(cid:3)(cid:56)(cid:46)(cid:3)(cid:89)(cid:82)(cid:79)(cid:88)(cid:80)(cid:72)(cid:86)(cid:3)(cid:68)(cid:87)(cid:3)(cid:7)(cid:22)(cid:23)(cid:80)(cid:3)(cid:90)(cid:72)(cid:85)(cid:72)(cid:3)(cid:71)(cid:82)(cid:90)(cid:81)(cid:3)(cid:20)(cid:27)(cid:8)(cid:3)(cid:82)(cid:81)(cid:3)(cid:83)(cid:85)(cid:76)(cid:82)(cid:85)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:80)(cid:68)(cid:76)(cid:81)(cid:79)(cid:92)(cid:3)(cid:68)(cid:86)(cid:3)(cid:68)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:79)(cid:82)(cid:90)(cid:72)(cid:85)(cid:3)(cid:85)(cid:72)(cid:83)(cid:72)(cid:68)(cid:87)(cid:86)(cid:3)(cid:82)(cid:81)(cid:3)(cid:181)(cid:56)(cid:83)(cid:74)(cid:85)(cid:68)(cid:71)(cid:72)(cid:3)(cid:36)(cid:81)(cid:92)(cid:87)(cid:76)(cid:80)(cid:72)(cid:182)(cid:3)(cid:71)(cid:88)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)
(cid:79)(cid:82)(cid:90)(cid:72)(cid:85)(cid:3)(cid:44)(cid:81)(cid:73)(cid:76)(cid:81)(cid:76)(cid:87)(cid:92)(cid:3)(cid:89)(cid:82)(cid:79)(cid:88)(cid:80)(cid:72)(cid:86)(cid:3)(cid:90)(cid:85)(cid:76)(cid:87)(cid:87)(cid:72)(cid:81)(cid:3)(cid:87)(cid:90)(cid:82)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:86)(cid:3)(cid:83)(cid:85)(cid:72)(cid:89)(cid:76)(cid:82)(cid:88)(cid:86)(cid:79)(cid:92)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:181)(cid:54)(cid:80)(cid:68)(cid:85)(cid:87)(cid:51)(cid:79)(cid:68)(cid:81)(cid:182)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:79)(cid:72)(cid:68)(cid:86)(cid:72)(cid:3)(cid:83)(cid:85)(cid:82)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81), deliverin g a h ig h er marg in , h as
grown volumes by 4%.
(cid:56)(cid:46)(cid:3)(cid:68)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:87)(cid:85)(cid:68)(cid:81)(cid:86)(cid:68)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:86)(cid:3)(cid:11)(cid:36)(cid:55)(cid:57)(cid:182)(cid:86)(cid:12)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)increased to $1,614 up 11% on a constant currency basis against same period las t y ear
due to a higher proportion of SmartPlan leases. Assets under management (includes off balance sheet leases of $37.6m) have reduced
to $45.1m down 5% on a constant currency basis against same period last year.
During the year the £60m funding arrangement with STB was extended to July 2018 on improved terms and compliments the £10m 5
year revolving credit facility signed with Santander on 15 December 2014.
Continuing operations – Corporate
Corporate costs continue to fall being $3.1m for the 12 months to 30 June 2016 (down 7% on prior year).
8
THINKSMART LIMITED
DIRECTORS(cid:182)(cid:3) (cid:53)(cid:40)(cid:51)(cid:50)(cid:53)(cid:55)
Financial position
Summary financial position
As at
Cash and cash equivalents (unrestricted)
Cash and cash equivalents (restricted)
Other assets
Goodwill and intangibles
Total assets
Other liabilities
Total liabilities
Equity
30 June
2016
$000
8,537
210
19,591
17,189
30 June
2015
$000
16,396
436
17,508
17,431
45,527
51,771
13,355
12,262
13,355
32,172
12,262
39,509
Business strategies and prospects for future financial years
Distribution network
ThinkSmart has a 13 year partnership with Dixons, now extended to 2019, and there is a strong leadership focus o n t h e UK market
aimed at establishing additional relationships.
Operational capability and efficiency
With Mr Fernando de Vicente as Chief Executive Officer along with Mr Keith Jones as Executive Director Group Strategy and
Development on a part time basis, both with extensive retail experience, ThinkSmart plans to use its market leading IP cap ab ilit y t o
further develop its multi-channel operating model at an efficient and scalable level.
Asset quality
Our continued focus on consistent improvements in credit quality is expected to improve the cost of funding, as it will make
ThinkSmart a more attractive proposition to potential new funding partners.
Product diversification
(cid:55)(cid:75)(cid:76)(cid:81)(cid:78)(cid:54)(cid:80)(cid:68)(cid:85)(cid:87)(cid:182)(cid:86)(cid:3)(cid:56)(cid:46)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:75)(cid:68)(cid:86)(cid:3)(cid:68)(cid:74)(cid:85)(cid:72)(cid:72)(cid:71)(cid:3)(cid:68)(cid:3)(cid:24)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:72)(cid:91)(cid:70)(cid:79)(cid:88)(cid:86)(cid:76)(cid:89)(cid:72)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:68)(cid:70)(cid:87)(cid:3)(cid:87)(cid:82)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:3)(cid:38)(cid:68)(cid:85)(cid:83)(cid:75)(cid:82)(cid:81)(cid:72)(cid:3)(cid:58)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:88)(cid:86)(cid:72)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:80)(cid:88)(cid:79)(cid:87)(cid:76)-channel lease fin an ce
for mobile phones. The product offering is expected to be launched within Carphone Warehouse in th e UK, s u b ject t o meet in g a
number of conditions precedent, by end of 2016. This agreement builds upon the 13 year commercial relationship between
ThinkSmart and the Dixons Carphone Group.
Funding platform and cash resources
The group has a multi-funder model with a £10m 5 year revolving credit facility with Santander contracted to 2019 to fund the
(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:82)(cid:81)(cid:3)(cid:69)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:86)(cid:75)(cid:72)(cid:72)(cid:87)(cid:3)(cid:79)(cid:72)(cid:68)(cid:86)(cid:72)(cid:86)(cid:17) This compliments the current £60m facility with Secure Trust Bank contracted to July 2018, wh ich
funds off balance sheet leases.
Strategic Review
In August 2015 the Group appointed Canaccord Genuity as strategic advisor to the Board as part of a Strategic Rev iew p ro ces s t o
unlock value in the UK business for Shareholders. As disclosed in note 27, the culmination of this review, subject to Shareholder and
Regulatory approvals, is as follows:
(cid:131)
(cid:131)
(cid:131)
a placement of 20m shares at 25 pence per share to the Alphagen Volantis Catalyst Fund II Limited, a fund managed by
Alphagen Capital Limited (part of Henderson Global Investors);
the Company buying back up to 10m shares from existing shareholders by way o f an off-market tender b u y b ack at p rice
range of $0.38 to $0.55 per share; and
the Company is seeking to migrate its listing from the ASX to the AIM market of London Stock Exchange plc by early
November.
9
THINKSMART LIMITED
DIRECTORS(cid:182)(cid:3) (cid:53)(cid:40)(cid:51)(cid:50)(cid:53)(cid:55)
Risks
ThinkSmart accepts that risk is an inherent part of doing business and actively identifies, monitors and manages material risks.
Key material risks faced by the group are:
Credit risk
(cid:55)(cid:75)(cid:72)(cid:3)(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:84)(cid:88)(cid:68)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:82)(cid:73)(cid:3)(cid:68)(cid:70)(cid:70)(cid:72)(cid:83)(cid:87)(cid:72)(cid:71)(cid:3)(cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:83)(cid:82)(cid:79)(cid:76)(cid:70)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:70)(cid:72)(cid:71)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:80)(cid:76)(cid:87)(cid:76)(cid:74)(cid:68)(cid:87)(cid:72)(cid:3)(cid:83)(cid:68)(cid:92)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:71)(cid:72)(cid:73)(cid:68)(cid:88)(cid:79)(cid:87)(cid:86)(cid:3)has an impact o n t h e
(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:72)(cid:76)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:71)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:79)(cid:92)(cid:3)(cid:87)(cid:75)(cid:85)(cid:82)(cid:88)(cid:74)(cid:75)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:76)(cid:85)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:79)(cid:82)(cid:86)(cid:86)(cid:72)(cid:86)(cid:3)(cid:82)(cid:85)(cid:3)(cid:76)(cid:81)(cid:71)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:79)(cid:92)(cid:3)(cid:87)(cid:75)(cid:85)(cid:82)(cid:88)(cid:74)(cid:75)(cid:3)(cid:73)(cid:88)(cid:81)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87) s. Robust credit ch eckin g
and collections processes combined with continual development of our market leading IP capability in this area assis t in man ag in g
and mitigating this risk.
Achievement of Volume Growth
(cid:55)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:87)(cid:82)(cid:3)(cid:68)(cid:70)(cid:75)(cid:76)(cid:72)(cid:89)(cid:72)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:74)(cid:85)(cid:82)(cid:90)(cid:87)(cid:75)(cid:3)(cid:87)(cid:68)(cid:85)(cid:74)(cid:72)(cid:87)(cid:86)(cid:3)(cid:76)(cid:86)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)its retail partners(cid:182) own growth strategies, key relationships with those
partners, the ability to establis h new partnerships, regulatory risks or product lines, and the broader economic environment
particularly in the retail sector.
Funding
(cid:55)(cid:75)(cid:72)(cid:3)(cid:68)(cid:89)(cid:68)(cid:76)(cid:79)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:73)(cid:88)(cid:81)(cid:71)(cid:86)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:70)(cid:87)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:3)(cid:83)(cid:85)(cid:76)(cid:70)(cid:76)(cid:81)(cid:74)(cid:3)(cid:71)(cid:72)(cid:70)(cid:76)(cid:86)(cid:76)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:87)(cid:82)(cid:3)(cid:68)(cid:70)(cid:70)(cid:72)(cid:83)(cid:87)(cid:3)(cid:89)(cid:82)(cid:79)(cid:88)(cid:80)(cid:72)(cid:3)(cid:74)(cid:85)(cid:82)(cid:90)(cid:87)(cid:75)(cid:3)(cid:71) elivered b y it s
(cid:83)(cid:68)(cid:85)(cid:87)(cid:81)(cid:72)(cid:85)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:88)(cid:79)(cid:87)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:3)(cid:83)(cid:85)(cid:82)(cid:73)(cid:76)(cid:87)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:82)(cid:73)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:86)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:75)(cid:76)(cid:86)(cid:87)(cid:82)(cid:85)(cid:76)(cid:70)(cid:3)(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:84)(cid:88)(cid:68)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:82)(cid:73)(cid:3)(cid:55)(cid:75)(cid:76)(cid:81)(cid:78)(cid:54)(cid:80)(cid:68)(cid:85)(cid:87)(cid:182)(cid:86)(cid:3)(cid:79)(cid:72)(cid:81)(cid:71)(cid:76)(cid:81)(cid:74)(cid:15)(cid:3)(cid:80)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:72)(cid:87)(cid:76)(cid:87) ion for debt
and other macro-economic factors also impact this risk.
Concentration Risk
The vast majority of the (cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:81)(cid:72)(cid:90) business volumes are from its r(cid:72)(cid:87)(cid:68)(cid:76)(cid:79)(cid:3)(cid:83)(cid:68)(cid:85)(cid:87)(cid:81)(cid:72)(cid:85)(cid:15)(cid:3)(cid:39)(cid:76)(cid:91)(cid:82)(cid:81)(cid:86)(cid:3)(cid:38)(cid:68)(cid:85)(cid:83)(cid:75)(cid:82)(cid:81)(cid:72)(cid:15)(cid:3)(cid:40)(cid:88)(cid:85)(cid:82)(cid:83)(cid:72)(cid:182)(cid:86)(cid:3)(cid:79)(cid:72)(cid:68)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:86)(cid:83)(cid:72)(cid:70)(cid:76)(cid:68)(cid:79)(cid:76)(cid:86)(cid:87)(cid:3)
electrical and telecommunications retailer. The Group has a long term exclusive contract with Dixons which has recently been
extended to 2019 which is conditional on the group continuing to perform and develop the financial products it prov id es t o Dixo n s
just as it has done since 2003.
Currency Risk
(cid:55)(cid:75)(cid:72)(cid:3)(cid:80)(cid:68)(cid:77)(cid:82)(cid:85)(cid:76)(cid:87)(cid:92)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:56)(cid:46)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:85)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:71)(cid:72)(cid:81)(cid:82)(cid:80)(cid:76)(cid:81)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)GBP creating cu rren cy
(cid:85)(cid:76)(cid:86)(cid:78)(cid:3)(cid:90)(cid:75)(cid:72)(cid:81)(cid:3)(cid:87)(cid:85)(cid:68)(cid:81)(cid:86)(cid:79)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:82)(cid:3)(cid:36)(cid:56)(cid:39)(cid:17)(cid:3)(cid:3)(cid:55)(cid:75)(cid:76)(cid:86)(cid:3)(cid:85)(cid:76)(cid:86)(cid:78)(cid:3)(cid:76)(cid:86)(cid:3)(cid:80)(cid:76)(cid:87)(cid:76)(cid:74)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:72)(cid:81)(cid:86)(cid:88)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:80)(cid:68)(cid:77)(cid:82)(cid:85)(cid:76)(cid:87)(cid:92)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:79)iabilities are also
denominated in GBP however the currency translation risk remains on the net profit and net assets held in GBP.
10
THINKSMART LIMITED
DIRECTORS(cid:182)(cid:3) (cid:53)(cid:40)(cid:51)(cid:50)(cid:53)(cid:55)
DIVIDENDS
Dividends paid or declared by the Company to members since the end of the previous financial year were:
Declared and paid during the period
Ordinary dividend
Ordinary dividend
Cents per
share
Total amount
3.5 cents
$3,280,478
1.1 cents
$1,031,007
Franked/
unfranked
Franked
Franked
Date paid
9 September 2015
21 March 2016
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
As set out in the ASX announcement on 25 July 2016, the company has entered an agreement to undertake a placement of 20m shares
to a fund that is managed by Henderson Global Investors at a price of 25 pence per share (approximately 44 cents per share).
Following completion ThinkSmart will then seek to buy-back 10m shares by way of an off-market tender buy-back before requestin g
admission to AIM and formally applying to delist from the ASX.
A timetable for these events is laid out in the announcement , but the board, subject shareholder and regulatory approval is
anticipating the above transactions to be completed by early November 2016.
(cid:39)(cid:44)(cid:53)(cid:40)(cid:38)(cid:55)(cid:50)(cid:53)(cid:54)(cid:182)(cid:3) (cid:48)(cid:40)(cid:40)(cid:55)(cid:44)(cid:49)(cid:42)(cid:54)
(cid:55)(cid:75)(cid:72)(cid:3)(cid:73)(cid:82)(cid:79)(cid:79)(cid:82)(cid:90)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:82)(cid:88)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:81)(cid:88)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)(cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:182)(cid:3)(cid:80)(cid:72)(cid:72)(cid:87)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:75)(cid:72)(cid:79)(cid:71)(cid:3)(cid:71)(cid:88)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)period.
Director
Board Meetings
Audit and Risk
Committee Meetings
Nomination and
Remuneration
Committee Meetings
N Montarello
D Griffiths
P Gammell
F de Vicente
K Jones
A
2
2
1
2
2
B
2
2
1
2
2
A
2*
2
n/a
2*
2*
B
-
2
-
-
-
A
-
-
n/a
-
-
B
-
-
-
-
-
A (cid:177) Number of meetings attended
B (cid:177) Number of meetings held during the time the Director held office during the period
* (cid:177) Attendance by invitation from the Committee
During the financial period, in addition to the official board meetings, the board has held a considerable number of oper ational
meetings with executives pursuant to the Strategic Review announced at the November 2015 Annual General Meeting. Furth er t h e
board has implemented a number of corporate decisions by virtue of Circular Resolutions as required.
(cid:39)(cid:44)(cid:53)(cid:40)(cid:38)(cid:55)(cid:50)(cid:53)(cid:54)(cid:182)(cid:3) (cid:44)(cid:49)(cid:55)(cid:40)(cid:53)(cid:40)(cid:54)(cid:55)S
The relevant interests of each Director in ThinkSmart Limited shares and options at the date of this report are as follows:
N Montarello
D Griffiths
P Gammell
F de Vicente
K Jones
Number of ordinary shares
Options granted over
ordinary shares
30,311,036
2,592,001
10,687,572
678,000
341,000
-
-
-
2,000,000
2,000,000
11
THINKSMART LIMITED
DIRECTORS(cid:182)(cid:3) (cid:53)(cid:40)(cid:51)(cid:50)(cid:53)(cid:55)
Unissued Shares under Options
At the date of this report there were 4,833,333 unissued ordinary shares of the Company subject to option or p erfo rman ce rig h t s,
comprising:
Number of shares
under option
Exercise price of
options
Expiry date of
options
500,000
1,000,000
1,000,000
333,333
2,000,000
$0.2652
$0.3448
$0.4195
04 July 2018
10 June 2019
10 June 2019
$0.3471
11 December 2019
$0.4021
31 March 2020
(cid:36)(cid:79)(cid:79)(cid:3) (cid:82)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:72)(cid:91)(cid:83)(cid:76)(cid:85)(cid:72)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:68)(cid:85)(cid:79)(cid:76)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:76)(cid:85)(cid:3)(cid:72)(cid:91)(cid:83)(cid:76)(cid:85)(cid:92)(cid:3)(cid:71)(cid:68)(cid:87)(cid:72)(cid:3)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:87)(cid:72)(cid:85)(cid:80)(cid:76)(cid:81)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:82)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:182)(cid:86)(cid:3)(cid:72)(cid:80)(cid:83)(cid:79)(cid:82)(cid:92)(cid:80)(cid:72)(cid:81)(cid:87)(cid:17)(cid:3)(cid:41)(cid:88)(cid:85)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:71)(cid:72)(cid:87)(cid:68)(cid:76)(cid:79)(cid:86)(cid:3) are
included in the remuneration report on pages 7 to 17. These options do not entitle the holder to participate in any share iss ue o f t h e
Company or any other body corporate.
REMUNERATION REPORT - Audited
This Report details the remuneration arrangements for Key Management Personnel. Key Managemen t Pers onn el en co mp ass all
Directors and those Executives that have specific responsibility for planning, directing and controlling material activities of the
(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:17)(cid:3) (cid:44)(cid:81)(cid:3) (cid:87)(cid:75)(cid:76)(cid:86)(cid:3) (cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:15)(cid:3) (cid:179)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:86)(cid:180)(cid:3) (cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:86)(cid:3) (cid:87)(cid:82)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:46)(cid:72)(cid:92)(cid:3) (cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3) (cid:51)(cid:72)(cid:85)(cid:86)(cid:82)(cid:81)(cid:81)(cid:72)(cid:79)(cid:3) (cid:72)(cid:91)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:49)(cid:82)(cid:81) -Executive Directors. The
information provided in this Remuneration Report has been audited as required by Section 308(3C) of the Corporat io n s A ct 2001 .
This Report contains the following sections:
A: Principles of remuneration
B: Key Management Personnel remuneration
C: Service agreements
D: Share-based compensation (loan-funded shares and options)
E:
F: Bonus remuneration
G: Key Management Personnel transactions
Share-based compensation (shares)
A. Principles of Remuneration
Key Management Personnel have authority and responsibility for planning, directing and controlling the activities of the Co mp an y
and the Group and comprise for the 12 months ended 30 June 2016:
Executive Chairman
N Montarello
Executive Director and Chief Executive Officer
F de Vicente
Non-Executive Directors
D Griffiths (deputy Chairman)
P Gammell (appointed 23 May 2016)
Executive Director
K Jones (Group Strategy and Development Director)
Executives
G Halton (Chief Financial Officer)
D Twigg (Chief Operating Officer (Credit and Operations))
D Fletcher (Sales and Business Development Director) (appointed 7 December 2015)
12
THINKSMART LIMITED
DIRECTORS(cid:182)(cid:3) (cid:53)(cid:40)(cid:51)(cid:50)(cid:53)(cid:55)
(cid:55)(cid:75)(cid:72)(cid:3)(cid:37)(cid:82)(cid:68)(cid:85)(cid:71)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:74)(cid:81)(cid:76)(cid:86)(cid:72)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:71)(cid:72)(cid:83)(cid:72)(cid:81)(cid:71)(cid:86)(cid:3)(cid:88)(cid:83)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:84)(cid:88)(cid:68)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:82)(cid:73)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:86)(cid:87)(cid:68)(cid:73)(cid:73)(cid:17)(cid:3)(cid:55)(cid:82)(cid:3)(cid:68)(cid:70)(cid:75)(cid:76)(cid:72)(cid:89)(cid:72)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82) (cid:83) (cid:72)(cid:85)(cid:68) tin g
objectives, the Company must attract, motivate and retain highly skilled Directors and Executives. To this en d, t h e remu n eratio n
structure seeks to:
(cid:120) Provide competitive rewards to attract, retain and motivate talented Directors and Executives;
(cid:120) Align incentive rewards with the Company(cid:182)(cid:86)(cid:3) (cid:86)(cid:75)(cid:82)(cid:85)(cid:87)(cid:3) (cid:87)(cid:72)(cid:85)(cid:80)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:79)(cid:82)(cid:81)(cid:74)(cid:3) (cid:87)(cid:72)(cid:85)(cid:80)(cid:3) (cid:82)(cid:69)(cid:77)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:86)(cid:3) (cid:69)(cid:92)(cid:3) (cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3) (cid:68)(cid:3) (cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:82)(cid:73)(cid:3) (cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)
(cid:85)(cid:72)(cid:80)(cid:88)(cid:81)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:179)(cid:68)(cid:87)(cid:3)(cid:85)(cid:76)(cid:86)(cid:78)(cid:180)(cid:3)(cid:68)(cid:86)(cid:3)(cid:86)(cid:75)(cid:82)(cid:85)(cid:87)(cid:3)(cid:87)(cid:72)(cid:85)(cid:80)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:79)(cid:82)(cid:81)(cid:74)(cid:3)(cid:87)(cid:72)(cid:85)(cid:80)(cid:3)(cid:76)(cid:81)(cid:70)(cid:72)(cid:81)(cid:87)(cid:76)(cid:89)(cid:72)(cid:86)(cid:30)
(cid:120) (cid:54)(cid:72)(cid:87)(cid:3)(cid:71)(cid:72)(cid:80)(cid:68)(cid:81)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:75)(cid:88)(cid:85)(cid:71)(cid:79)(cid:72)(cid:86)(cid:3)(cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:70)(cid:79)(cid:72)(cid:68)(cid:85)(cid:79)(cid:92)(cid:3)(cid:79)(cid:76)(cid:81)(cid:78)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:68)(cid:81)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:182)(cid:86)(cid:3)(cid:85)(cid:72)(cid:80)(cid:88)(cid:81)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:30)(cid:3)(cid:68)(cid:81)(cid:71)
(cid:120) Structure remuneration (cid:68)(cid:87)(cid:3)(cid:68)(cid:3)(cid:79)(cid:72)(cid:89)(cid:72)(cid:79)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:85)(cid:72)(cid:73)(cid:79)(cid:72)(cid:70)(cid:87)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:182)(cid:86)(cid:3)(cid:71)(cid:88)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:85)(cid:72)(cid:86)(cid:83)(cid:82)(cid:81)(cid:86)(cid:76)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:76)(cid:86)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:72)(cid:87)(cid:76)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:86)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:17)
The remuneration structures take into account:
(cid:120)
(cid:120)
(cid:120)
the capability and experience of the individual;
(cid:87)(cid:75)(cid:72)(cid:3)(cid:76)(cid:81)(cid:71)(cid:76)(cid:89)(cid:76)(cid:71)(cid:88)(cid:68)(cid:79)(cid:182)(cid:86)(cid:3)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:87)(cid:82)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:79)(cid:72)(cid:89)(cid:68)(cid:81)(cid:87)(cid:3)(cid:86) (cid:72)(cid:74)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:81)(cid:70)(cid:72)(cid:30)(cid:3)(cid:68)(cid:81)(cid:71)
the performance of the Group.
The Nomination and Remuneration Committee may obtain independent advice on the appropriateness of remunerat io n p ackages,
trends in comparative companies and markets, both locally and internationally, (cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:82)(cid:69)(cid:77)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:85)(cid:72)(cid:80)(cid:88) (cid:81) (cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82) (cid:81)(cid:3)
strategy.
Remuneration packages include a mix of fixed and variable remuneration with a blend of short -term and long-term performance-
based incentives. The variable remuneration components are directly lin ked to both the performance of the Group and the
(cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:3)(cid:83)(cid:85)(cid:76)(cid:70)(cid:72)(cid:17)(cid:3)(cid:55)(cid:75)(cid:76)(cid:86)(cid:3)(cid:72)(cid:81)(cid:86)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:70)(cid:79)(cid:82)(cid:86)(cid:72)(cid:3)(cid:68)(cid:79)(cid:76)(cid:74)(cid:81)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:85)(cid:72)(cid:80)(cid:88)(cid:81)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)Key Management Pers o nnel an d t h e
creation of shareholder value.
Non-Executive Directors
Fees and payments to Non-Executive Directors reflect the demands which are made on and the responsibilities of the Non -Executive
Directors. Non-(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:182)(cid:3)(cid:73)(cid:72)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:83)(cid:68)(cid:92)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:85)(cid:72)(cid:89)(cid:76)(cid:72)(cid:90)(cid:72)(cid:71)(cid:3)(cid:68)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)(cid:69)(cid:92)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:37)(cid:82)(cid:68)(cid:85)(cid:71)(cid:17)(cid:3)(cid:49)(cid:82)(cid:81) -Executive Directors do not receive
share options or loan-funded shares.
Non-Executive Directors’ Fees
Non-(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:182)(cid:3)(cid:73)(cid:72)(cid:72)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:71)(cid:72)(cid:87)(cid:72)(cid:85)(cid:80)(cid:76)(cid:81)(cid:72)(cid:71)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:76)(cid:81)(cid:3)(cid:68)(cid:81)(cid:3)(cid:68)(cid:74)(cid:74)(cid:85)(cid:72)(cid:74)(cid:68)(cid:87)(cid:72)(cid:3)(cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:182)(cid:3)(cid:73)(cid:72)(cid:72)(cid:3)(cid:83)(cid:82)(cid:82)(cid:79)(cid:3)(cid:82)(cid:73)(cid:3)(cid:7)(cid:25)(cid:19)(cid:19)(cid:15)(cid:19)(cid:19)(cid:19) per annum and was approved b y
shareholders at a previous general meeting. The total fees paid in the financial perio d were $100,270. In addition to these fees,
Directors also receive superannuation contributions as required under government legislation. The Company also pays all reaso nable
expenses incurred by Directors attending meetings and carrying out their duties.
Executive Pay
(cid:55)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:72)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:85)(cid:72)(cid:80)(cid:88)(cid:81)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:86)(cid:87)(cid:85)(cid:88)(cid:70)(cid:87)(cid:88)(cid:85)(cid:72)(cid:3)(cid:75)(cid:68)(cid:86)(cid:3)(cid:73)(cid:82)(cid:88)(cid:85)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:82)(cid:81)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:85)(cid:76)(cid:86)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:182)(cid:86)(cid:3)(cid:87)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:80)(cid:88)(cid:81)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:29)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
base pay and benefits;
short-term performance incentives (STIs);
long-term incentives through participation in the ThinkSmart Long Term Incentive Plan (LTIs); and
other remuneration such as superannuation.
CEO
Other executives
85%
87%
9%
3%
6%
10%
Fixed remuneration
Short-term incentive
Long-term incentive
At risk
Base Pay – Fixed Compensation
Executives are offered a competitive salary that comprises the components of base pay and benefits. Bas e p ay fo r Execu t iv es i s
(cid:85)(cid:72)(cid:89)(cid:76)(cid:72)(cid:90)(cid:72)(cid:71)(cid:3)(cid:68)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)(cid:69)(cid:92)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:49)(cid:82)(cid:80)(cid:76)(cid:81)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:53)(cid:72)(cid:80)(cid:88)(cid:81)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:87)(cid:72)(cid:72)(cid:3)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:38)(cid:75)(cid:68)(cid:76)(cid:85)(cid:80)(cid:68)(cid:81)(cid:3)(cid:87)(cid:82)(cid:3)(cid:72)(cid:81)(cid:86)(cid:88)(cid:85)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:182)(cid:86)(cid:3)(cid:83)(cid:68)(cid:92)(cid:3)(cid:76)(cid:86)(cid:3)
competi(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:80)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:83)(cid:83)(cid:85)(cid:82)(cid:83)(cid:85)(cid:76)(cid:68)(cid:87)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:182)(cid:86)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:85)(cid:76)(cid:72)(cid:81)(cid:70)(cid:72)(cid:15)(cid:3)(cid:85)(cid:72)(cid:86)(cid:83)(cid:82)(cid:81)(cid:86)(cid:76)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:17)(cid:3)(cid:36)(cid:81)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:182)(cid:86)(cid:3)(cid:83) (cid:68)(cid:92)(cid:3)(cid:76)(cid:86) (cid:3)
also reviewed on promotion. Base pay for the Executive Chairman is reviewed periodically by the Nomination an d Remu n eratio n
Committee.
13
THINKSMART LIMITED
DIRECTORS(cid:182)(cid:3) (cid:53)(cid:40)(cid:51)(cid:50)(cid:53)(cid:55)
Short-Term Performance Incentive
Short-term performance incentives (STIs) vary according to individual contracts, however, for Executives they are broadly based as
follows:
(cid:120)
(cid:120)
a component of the STI is linked to the individual performance of the Executive (this is based on a number of factors, including
performance against budgets, achievement of key performance indicators (KPIs) and other personal objectives); and
a component of the STI is linked to the financial performance of the Group determin ed at the beginning of each financial year.
Using various performance targets and personal performance objectives the Group ensures variable reward is only paid when v al u e
has been created for shareholders. The performance measures include financial, such as Profit before Tax and the value of new
originations, and non-financial, including KPIs targeting high levels of customer service and new retail partner acquisition. The STI
bonus is delivered in the form of cash.
The short-term bonus payments may be adjusted up or down in line with under or over achievement against the target performan ce
levels. This is at the discretion of the Nomination and Remuneration Committee or the Executive Chairman. The STI targets are
reviewed annually. Information on the STI is detailed in section F of the Remuneration Report.
Long-Term Performance Incentive
Long-term performance incentives are awarded to Key Management Personnel and other Executives. Prior to 2012, incentives were
(cid:68)(cid:90)(cid:68)(cid:85)(cid:71)(cid:72)(cid:71)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:54)(cid:75)(cid:68)re Option Plan. In May 2012, shareholders approved a Long Term Incentive Plan
designed to increase the motivation of staff and to create a stronger link between increasing shareholder value and employee award .
The details of these schemes are set out on pages 10 to 11.
Consequences of Performance on Shareholder Wealth
(cid:44)(cid:81)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:76)(cid:71)(cid:72)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:69)(cid:72)(cid:81)(cid:72)(cid:73)(cid:76)(cid:87)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:3)(cid:90)(cid:72)(cid:68)(cid:79)(cid:87)(cid:75)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)Nomination and Remunerat io n co mmit t ee h av e
regard to the following indices in respect of the current financial period and the previous four financial years.
Profit/(loss) attributable to
owners of the company ($000s)
Basic EPS
Dividends paid
Dividend paid per share
Share price at year end
Change in share price
12 Months to
June 2016
12 Months
to June
2015
6 Months to
June 2014
12 Months
to Dec 2013
12 Months
to Dec 2012
$618
$3,490
$11,337
$2,309
($1,441)
0.65 cents
$4,311,485
4.6 cents
$0.38
$0.07
2.73 cents
$5,999,875
6 cents
$0.31
($0.06)
7.06 cents
$5,843,055
3.6 cents
$0.37
$0.01
1.45 cents
-
-
$0.36
$0.17
(0.95) cents
-
-
$0.19
($0.22)
14
THINKSMART LIMITED
DIRECTORS(cid:182)(cid:3) (cid:53)(cid:40)(cid:51)(cid:50)(cid:53)(cid:55)
During 2012, the Board implemented a new loan-funded share plan for Executives located in Australia, following shareholder
approval in May 2012. The limited recourse loans to acquire shares are issued to Executives and the ability to exercise the shares is
conditional on the Group achieving the pre-determined performance criteria. There were no loan-funded shares issued to Executives
in the financial year ended 30th June 2016, the table below sets out the details of the loan-funded share plan:
Instrument
Each loan-funded share represents an entitlement to one ordinary share.
Limited recourse loan
The company is providing interest-free, limited recourse loans to Executives to acquire s h ares.
The limited recourse loan means that if the shares do not vest for any reason or the valu e o f t h e
(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:86)(cid:3)(cid:76)(cid:86)(cid:3)(cid:79)(cid:72)(cid:86)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:82)(cid:88)(cid:87)(cid:86)(cid:87)(cid:68)(cid:81)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:79)(cid:82)(cid:68)(cid:81)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:90)(cid:75)(cid:72)(cid:81)(cid:3)(cid:76)(cid:87)(cid:3)(cid:76)(cid:86)(cid:3)(cid:85)(cid:72)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:69)(cid:72)(cid:3)(cid:85)(cid:72)(cid:83)(cid:68)(cid:76)(cid:71)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83) (cid:68)(cid:85)(cid:87) (cid:76)(cid:70)(cid:76)(cid:83) (cid:68)(cid:81)(cid:87) (cid:182)(cid:86)(cid:3)
liability is limited to the value of the shares.
Exercise price
Vesting conditions
2012 loan-funded share issue: $0.1923
2013 loan-funded share issue: $0.2652
2015 loan-funded share issue: $0.3620
Shares will vest at the end of the three years from the issue date if at any time during this perio d
the volume-(cid:90)(cid:72)(cid:76)(cid:74)(cid:75)(cid:87)(cid:72)(cid:71)(cid:3)(cid:68)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:83)(cid:85)(cid:76)(cid:70)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:86)(cid:3)(cid:82)(cid:81)(cid:3)ASX over any consecutive
30 trading days is, or is in excess of, the following performance conditions.
Loan-funded share issue
VWAP target
Percentage of shares
vesting
2012
Tranche 1
Tranche 2
Tranche 3
2013
Tranche 1
Tranche 2
Tranche 3
2015
Tranche 1
Tranche 2
Tranche 3
$0.35
$0.55
$0.75
$0.3802
$0.4889
$0.5975
$0.5537
$0.7119
$0.8701
25%
25%
50%
25%
25%
50%
25%
25%
50%
Vesting is subject to the Executive remaining an employee of the Group.
Why vesting conditions are
chosen
The vesting conditions were chosen to align the financial interests of participants wit h t h o se o f
shareholders.
Vesting date
Performance period
2012 loan-funded share issue: 10 August 2015
2013 loan-funded share issue: 04 July 2016
2015 loan-funded share issue: 18 September 2017
2012 loan-funded share issue: 10 August 2012 to 10 August 2015
2013 loan-funded share issue: 04 July 2013 to 04 March 2017*
2015 loan-funded share issue: 18 September 2014 to 18 September 2017
Exercise period
From vesting date until expiry date
Expiry date
2012 loan-funded share issue: 09 August 2017
2013 loan-funded share issue: 03 July 2018
2015 loan-funded share issue: 18 September 2019
*extended from 4 July 2016 subject to shareholder approval
(cid:3)
(cid:3)
15
THINKSMART LIMITED
DIRECTORS(cid:182)(cid:3) (cid:53)(cid:40)(cid:51)(cid:50)(cid:53)(cid:55)
The table below sets out the details of the performance options issued to Executives since 2012:
Instrument
Each option represents an entitlement to one ordinary share.
Exercise price
2013 performance option issue: $0.2652
2014 Series 1 performance option issue: $0.3448
2014 Series 2 performance option issue: $0.4195
2014 Series 3 performance option issue: $0.3471
2015 performance option issue: $0.4021
Vesting conditions
Options will vest at the end of the three years from the issue date if at any time during this period
the volume-(cid:90)(cid:72)(cid:76)(cid:74)(cid:75)(cid:87)(cid:72)(cid:71)(cid:3)(cid:68)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:83)(cid:85)(cid:76)(cid:70)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:86)(cid:3)(cid:82)(cid:81) the ASX over any con secut iv e
30 trading days is, or is in excess of, the following performance conditions.
Performance option
issue
VWAP target
Percentage of shares vesting
2013
Tranche 1
Tranche 2
Tranche 3
2014
Tranche 1
Tranche 2
Tranche 3
2015
Tranche 1
Tranche 2
Tranche 3
Series1
$0.4827
$0.6206
$0.7586
$0.3802
$0.4889
$0.5975
Series2
$0.5873
$0.7551
$0.9229
$0.4691
$0.6032
$0.7372
Series3
$0.5527
$0.7107
$0.8686
25%
25%
50%
25%
25%
50%
25%
25%
50%
Vesting is subject to the Executive remaining an employee of the Group.
Why vesting conditions are
chosen
The vesting conditions were chosen to align the financial interests of participants wit h t h o se o f
shareholders.
Vesting date
Performance period
2013 performance option issue: 04 July 2016
2014 (Series 1 and 2) performance option issue: 11 June 2017
2014 (Series 3) performance option issue: 12 December 2017
2015 performance option issue: 31 March 2018
2013 performance option issue: 04 July 2013 to 04 July 2016
2014 (Series 1 and 2) performance option issue: 11 June 2014 to 11 June 2017
2014 (Series 3) performance option issue: 12 December 2014 to 12 December 2017
2015 performance option issue: 31 March 2015 to 31 March 2018
Exercise period
From vesting date until expiry date
Expiry date
2013 performance option issue: 03 July 2018
2014 (Series 1 and 2) performance option issue: 11 June 2019
2014 (Series 3) performance option issue: 11 December 2019
2015 performance option issue: 31 March 2020
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17
THINKSMART LIMITED
DIRECTORS(cid:182)(cid:3) (cid:53)(cid:40)(cid:51)(cid:50)(cid:53)(cid:55)
C. Service Agreements
A service agreement can be used for the provision of short-term performance incentives, eligibility for the ThinkSmart LTI and
other benefits, including the use of a Company motor vehicle, tax advisory fees, payment of benefits forgone at a previous employer
and relocation expenses.
Remuneration and other terms of employment for the Chief Executive Officer are formalised in a service agreement. Fernan do d e
(cid:57)(cid:76)(cid:70)(cid:72)(cid:81)(cid:87)(cid:72)(cid:182)(cid:86) employment agreement, signed on 17 October 2014, is a rolling agreement which is unlimited in term but capable of
termination with six (cid:80)(cid:82)(cid:81)(cid:87)(cid:75)(cid:86)(cid:182)(cid:3) (cid:81)(cid:82)(cid:87)(cid:76)(cid:70)(cid:72) by either party. All other employment agreements are unlimited in term but capable of
termination with one to three (cid:80)(cid:82)(cid:81)(cid:87)(cid:75)(cid:86)(cid:182)(cid:3)(cid:81)(cid:82)(cid:87)(cid:76)(cid:70)(cid:72) by either the Company or the Executive. The Company can make a payment in lieu o f
notice of an amount equal to the monthly instalment of basic salary for any unexpired period of notice.
In the event of retrenchment, the Executives listed in the table on page 12 are entitled to the payment provided fo r in t h e s erv ice
agreement, where applicable. The employment of the Executives may be terminated by the Company without notice by payment in
lieu of notice. The service agreements also contain confidentiality and restraint of trad e clauses.
D. Share-Based Compensation (loan-funded shares and options)
Loan-Funded Shares and Options
No shares or options were granted to Key Management Personnel in the financial period ending 30th June 2016.
Details of vesting profiles of the options and loan-funded shares granted as remuneration to each Director of the Company and other
Key Management Personnel are detailed below:
Options and loan-funded shares granted
Instrument
Number
granted Grant Date
% vested
in period
Directors
N Montarello Loan funded shares
Loan funded shares
Loan funded shares
Share options
F de Vicente
1,000,000
1,000,000
500,000
2,000,000
10/08/2012
04/07/2013
18/09/2014
31/03/2015
Executives
K Jones
G Halton
D Twigg
Share options
Share options
Share options
Share options
Share options
1,000,000
1,000,000
100,000
250,000
333,333
11/06/2014
11/06/2014
10/08/2012
04/07/2013
12/12/2014
25%
-%
-%
-%
-%
-%
-%
-%
-%
% forfeited,
lapsed or
expired in
period (a)
Financial
year in
which grant
vests
75%
-%
-%
-%
-%
-%
100%
-%
-%
2016
2017
2018
2018
2017
2017
2016
2017
2018
(a) The % forfeited, lapsed or expired in the year represents the reduction from the maximum number of loan -funded shares o r
options available to vest due to either the performance conditions attached to the loan-funded shares or o p t ion s n ot b ein g
met or the departure of the Executive from the Group.
18
THINKSMART LIMITED
DIRECTORS(cid:182)(cid:3) (cid:53)(cid:40)(cid:51)(cid:50)(cid:53)(cid:55)
Analysis of Movement of Options and Loan-Funded Shares
The movement during the reporting period, by value, of options and loan-funded shares over ordinary shares in the Compan y h eld
by Directors and Key Management Personnel is detailed below:
Directors
N Montarello
Executives
G Halton
Granted in period (a)
$
Exercised in period (b)
$
-
-
-
-
-
-
Lapsed in
period
Number
750,000
100,000
850,000
Year(s) in which
lapsed options
granted
2016
2016
2016
(a) The value of loan-funded shares granted in the period is the fair value of the loan-funded shares calcu lated at g rant d at e
using a Monte-Carlo option-pricing model. This total amount is allocated to remuneration over the vesting period.
(b) The value of options exercised during the period is calculated as the market price of shares of the Company on the
Australian Securities Exchange as at close of trading on the date the options were exercised after deducting the price paid t o
exercise the option.
E.
Share-Based Compensation (shares)
There were no shares granted to Key Management Personnel during the reporting period.
No shares were granted since the end of the financial period.
19
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21
THINKSMART LIMITED
(cid:39)(cid:44)(cid:53)(cid:40)(cid:38)(cid:55)(cid:50)(cid:53)(cid:54)(cid:182)(cid:3) (cid:53)(cid:40)(cid:51)(cid:50)(cid:53)(cid:55)
F. Bonus Remuneration
Details of the vesting profile of the short-term incentive cash bonuses awarded as remuneration to the Director and Key
Management Personnel of the Company are detailed below:
Short term incentive bonus
Included in
remuneration (a)
$
Maximum
entitlement
$
% vested in
period
% forfeited in
period (b)
-
82,355
-
-
61,767
-
-
404,262
-
52,378
141,754
61,767
-%
20%
-%
-%
44%
-%
-%
80%
-%
100%
56%
100%
Directors
N Montarello
F de Vicente
K Jones
Executives
G Halton
D Twigg
D Fletcher
(a) Amounts included in remuneration for the financial period represent the amount that vested in the financial period based on
achievement of personal goals and satisfaction of specified performance criteria pertaining to the financial period ending 30
June 2016. No amounts vest in future financial years.
(b) The amounts forfeited are due to the performance or service criteria not being met in relation to the current financial period.
G. Key Management Personnel Transactions
Loans to Key Management Personnel and their related parties
There have been no loans provided to Key Management Personnel and their related parties as at 30 June 2016 (30 Ju n e 2015: n il),
with the exception of the limited recourse loans in relation to the loan -funded share scheme (refer to Note 19(b)(i) an d p ag e 10 o f
this Remuneration Report).
Other Key Management Personnel transactions
During the financial year there were no payments made to any other entities in which Key Management Personnel have sig nifican t
control or influence over.
Options and rights over equity instruments
Options over ordinary shares in ThinkSmart Ltd held have been issued to Key Management Personnel during the financial year an d
are detailed in Note 19(b)(i) and page 10 of this Remuneration Report.
22
THINKSMART LIMITED
(cid:39)(cid:44)(cid:53)(cid:40)(cid:38)(cid:55)(cid:50)(cid:53)(cid:54)(cid:182)(cid:3) (cid:53)(cid:40)(cid:51)(cid:50)(cid:53)(cid:55)
CORPORATE GOVERNANCE STATEMENT
The Board of Directors of ThinkSmart Limited is responsible for and committed to ensuring that the Company complies wit h t h e
ASX Corporate (cid:42)(cid:82)(cid:89)(cid:72)(cid:85)(cid:81)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3) (cid:38)(cid:82)(cid:88)(cid:81)(cid:70)(cid:76)(cid:79)(cid:182)(cid:86)(cid:3) (cid:42)(cid:88)(cid:76)(cid:71)(cid:72)(cid:3) (cid:179)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3) (cid:42)(cid:82)(cid:89)(cid:72)(cid:85)(cid:81)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3) (cid:51)(cid:85)(cid:76)(cid:81)(cid:70)(cid:76)(cid:83)(cid:79)(cid:72)(cid:86)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:53)(cid:72)(cid:70)(cid:82)(cid:80)(cid:80)(cid:72)(cid:81)(cid:71)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:180)(cid:17) A copy of the
(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:42)(cid:82)(cid:89)(cid:72)(cid:85)(cid:81)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:83)(cid:82)(cid:79)(cid:76)(cid:70)(cid:92)(cid:3)(cid:70)(cid:68)(cid:81)(cid:3)(cid:69)(cid:72)(cid:3)(cid:73)(cid:82)(cid:88)(cid:81)(cid:71)(cid:3)(cid:68)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:90)(cid:72)(cid:69)(cid:86)(cid:76)(cid:87)(cid:72)(cid:3)www.thinksmartworld.com.
Indemnification and Insurance
During the period ended 30 June 2016(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:83)(cid:68)(cid:76)(cid:71)(cid:3)(cid:76)(cid:81)(cid:86)(cid:88)(cid:85)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:83)(cid:85)(cid:72)(cid:80)(cid:76)(cid:88)(cid:80)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:85)(cid:72)(cid:86)(cid:83)(cid:72)(cid:70)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:68)(cid:3)(cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:182)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:50)(cid:73)(cid:73)(cid:76)(cid:70)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:47)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)
insurance contract. Disclosure of the total amount of the premium and the nature of the liabilities in respect of s u ch in su rance is
prohibited by the policy.
The Company has not otherwise, during or since the financial period, indemnified or agreed to indemnify an officer or au d it o r of
the Company or of any related body corporate against a liability incurred by such an officer or Director.
Environmental Regulation
(cid:55)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:81)(cid:82)(cid:87)(cid:3)(cid:86)(cid:88)(cid:69)(cid:77)(cid:72)(cid:70)(cid:87)(cid:3)(cid:87)(cid:82)(cid:3)(cid:68)(cid:81)(cid:92)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:72)(cid:81)(cid:89)(cid:76)(cid:85)(cid:82)(cid:81)(cid:80)(cid:72)(cid:81)(cid:87)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:74)(cid:88)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:69)(cid:82)(cid:87)(cid:75)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:82)(cid:81)(cid:90)(cid:72)(cid:68)(cid:79)(cid:87)(cid:75)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:3)(cid:79)(cid:72)(cid:74)(cid:76)(cid:86)(cid:79)(cid:68)(cid:87) ion
in relation to its activities.
NON-AUDIT SERVICES
During the period KPMG, the Company auditor, has performed certain other services in addition to their statutory duties.
The Board has considered the non-audit services provided during the period by the auditor is satisfied that the provisio n o f t hose
non-audit services during the year is compatible with, and did not compromise, the auditor independence requirements of the
Corporations Act 2001 for the following reasons:
(cid:120) All non-audit services are subject to the corporate governance procedures adopted by the Company and have been rev iewed
by the Audit and Risk Committee to ensure they do not impact the integrity and objectivity of the auditor; and
(cid:120) The non-audit services provided do not undermine the general principles relating to auditor independence as se t out in A PES
110 Code of Ethics for Professional Accountants(cid:15)(cid:3)(cid:68)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:92)(cid:3)(cid:71)(cid:76)(cid:71)(cid:3)(cid:81)(cid:82)(cid:87)(cid:3)(cid:76)(cid:81)(cid:89)(cid:82)(cid:79)(cid:89)(cid:72)(cid:3)(cid:85)(cid:72)(cid:89)(cid:76)(cid:72)(cid:90)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:85)(cid:3)(cid:68)(cid:88)(cid:71)(cid:76)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:88)(cid:71)(cid:76)(cid:87)(cid:82)(cid:85)(cid:182)(cid:86)(cid:3)(cid:82)(cid:90)(cid:81)(cid:3)(cid:90)(cid:82)(cid:85)(cid:78)(cid:15)(cid:3)(cid:68)(cid:70)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)
in a management or decision making capacity for the Company, acting as an advocate for the Company or jointly sharin g risks
and rewards.
Details of the amounts paid to the auditor of the Group, KPMG, and its related practices for audit and non -audit services pro v id ed
during the year are set out below.
Services other than audit and review of financial statements
Other services
Taxation compliance services
Advisory services
Transaction compliance and advisory services
Audit and review of financial statements
Total paid to KPMG
12 Months to
June 2016
$
105,685
18,422
782,301
906,408
225,766
1,132,174
23
THINKSMART LIMITED
(cid:39)(cid:44)(cid:53)(cid:40)(cid:38)(cid:55)(cid:50)(cid:53)(cid:54)(cid:182)(cid:3) (cid:53)(cid:40)(cid:51)(cid:50)(cid:53)(cid:55)
(cid:36)(cid:56)(cid:39)(cid:44)(cid:55)(cid:50)(cid:53)(cid:182)(cid:54)(cid:3) (cid:44)(cid:49)(cid:39)(cid:40)(cid:51)(cid:40)(cid:49)(cid:39)(cid:40)(cid:49)(cid:38)(cid:40)(cid:3) (cid:39)(cid:40)(cid:38)(cid:47)(cid:36)(cid:53)(cid:36)(cid:55)(cid:44)(cid:50)(cid:49)
(cid:55)(cid:75)(cid:72)(cid:3)(cid:68)(cid:88)(cid:71)(cid:76)(cid:87)(cid:82)(cid:85)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:71)(cid:72)(cid:83)(cid:72)(cid:81)(cid:71)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:71)(cid:72)(cid:70)(cid:79)(cid:68)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)which forms part of this report is included in page 20 of the financial report.
ROUNDING
ThinkSmart is a Group of the kind referred to in ASIC Class Order 2016/191 dated 24 March 2016. In accordance with the class
(cid:82)(cid:85)(cid:71)(cid:72)(cid:85)(cid:15)(cid:3)(cid:68)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:71)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:182)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:69)(cid:72)(cid:72)(cid:81)(cid:3)(cid:85)(cid:82)(cid:88)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:82)(cid:73)(cid:73)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:81)(cid:72)(cid:68)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:87)(cid:75)(cid:82)(cid:88)(cid:86)(cid:68)(cid:81)(cid:71)(cid:3)(cid:71) (cid:82)(cid:79)(cid:79)(cid:68)(cid:85)(cid:86) (cid:15)(cid:3)(cid:88) n less
otherwise indicated.
Signed in accordance with a resolution of the Directors made pursuant to s.298 (2) of the Corporations Act 2001.
On behalf of the Directors
______________________________
N Montarello
Chairman
Perth, Western Australia, 16 August 2016
24
(cid:11)(cid:18)(cid:14)(cid:17)(cid:36)(cid:7)(cid:35)(cid:17)(cid:22)(cid:31)(cid:26)(cid:28)(cid:1)(cid:30)(cid:36)(cid:10)(cid:24)(cid:17)(cid:18)(cid:27)(cid:18)(cid:24)(cid:17)(cid:18)(cid:24)(cid:16)(cid:18)(cid:36)(cid:9)(cid:18)(cid:16)(cid:23)(cid:14)(cid:28)(cid:14)(cid:31)(cid:22)(cid:26)(cid:24)(cid:36)(cid:35)(cid:24)(cid:17)(cid:18)(cid:28)(cid:36)(cid:13)(cid:18)(cid:16)(cid:33)(cid:22)(cid:26)(cid:24)(cid:36)(cid:5)(cid:2)(cid:6)(cid:8)(cid:36)(cid:26)(cid:20)(cid:36)(cid:31)(cid:21)(cid:18)(cid:36) (cid:8)(cid:26)(cid:28)(cid:27)(cid:26)(cid:28)(cid:14)(cid:34)(cid:26)(cid:24)(cid:30)(cid:36)(cid:7)(cid:16)(cid:31)(cid:36)(cid:4)(cid:2)(cid:2)(cid:3)(cid:36)
(cid:24)(cid:48)(cid:11)(cid:61)(cid:54)(cid:38)(cid:30)(cid:61)(cid:29)(cid:40)(cid:51)(cid:30)(cid:28)(cid:54)(cid:48)(cid:51)(cid:53)(cid:61)(cid:48)(cid:32)(cid:24)(cid:39)(cid:40)(cid:47)(cid:23)(cid:45)(cid:25)(cid:51)(cid:56)(cid:61)(cid:20)(cid:40)(cid:45)(cid:40)(cid:54)(cid:30)(cid:29)(cid:61)
(cid:17)(cid:61)(cid:29)(cid:30)(cid:28)(cid:42)(cid:25)(cid:51)(cid:30)(cid:61)(cid:54)(cid:38)(cid:25)(cid:54)(cid:3)(cid:61)(cid:54)(cid:48)(cid:61)(cid:54)(cid:38)(cid:30)(cid:61)(cid:27)(cid:30)(cid:53)(cid:54)(cid:61)(cid:48)(cid:32)(cid:61)(cid:45)(cid:60)(cid:61)(cid:41)(cid:46)(cid:48)(cid:59)(cid:42)(cid:30)(cid:29)(cid:37)(cid:30)(cid:61)(cid:25)(cid:46)(cid:29)(cid:61)(cid:27)(cid:30)(cid:42)(cid:40)(cid:30)(cid:33)(cid:4)(cid:61)(cid:40)(cid:46)(cid:61)(cid:51)(cid:30)(cid:42)(cid:25)(cid:54)(cid:40)(cid:48)(cid:46)(cid:61)(cid:54)(cid:48)(cid:61)(cid:54)(cid:38)(cid:30)(cid:61)(cid:25)(cid:57)(cid:29)(cid:40)(cid:54)(cid:61)(cid:36)(cid:51)(cid:61)(cid:54)(cid:38)(cid:30)(cid:61)(cid:35)(cid:46)(cid:25)(cid:46)(cid:28)(cid:40)(cid:25)(cid:42)(cid:61)
(cid:60)(cid:30)(cid:25)(cid:51)(cid:61)(cid:30)(cid:46)(cid:29)(cid:30)(cid:29)(cid:61)(cid:9)(cid:6)(cid:61)(cid:18)(cid:57)(cid:46)(cid:30)(cid:61)(cid:8)(cid:6)(cid:7)(cid:10)(cid:61)(cid:54)(cid:38)(cid:30)(cid:51)(cid:30)(cid:61)(cid:38)(cid:25)(cid:58)(cid:30)(cid:61)(cid:27)(cid:30)(cid:30)(cid:46)(cid:11)(cid:61)
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25
THINKSMART LIMITED
(cid:39)(cid:44)(cid:53)(cid:40)(cid:38)(cid:55)(cid:50)(cid:53)(cid:54)(cid:182) DECLARATION
1.
In the opinion of the Directors of ThinkSmart Limited:
(a)
The consolidated financial statements, notes and disclosures and the Remuneration Report in the (cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:182)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:15)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)
in accordance with the Corporations Act 2001, including:
i. (cid:42)(cid:76)(cid:89)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:3)(cid:87)(cid:85)(cid:88)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:73)(cid:68)(cid:76)(cid:85)(cid:3)(cid:89)(cid:76)(cid:72)(cid:90)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:86)(cid:3)(cid:68)(cid:87)(cid:3)30 June 2016 and of its performan ce fo r t h e
financial year ended on that date; and
ii. Complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001;
(b)
The financial report also complies with International Financial Reporting Standards as disclosed in Note 2(a); and
(c)
There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become d u e
and payable.
2. 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 30 June 2016.
Signed in accordance with a resolution of the Directors:
______________________________
N Montarello
Chairman
Perth, Western Australia, 16 August 2016
26
THINKSMART LIMITED
CONSOLIDATED STATEMENT OF PROFIT & LOSS AND OTHER COMPREHENSIVE INCOME
Consolidated Statement of Profit & Loss and Other Comprehensive Income
for the Financial Year Ended 30 June 2016
12 Months to
June 2016
$000
12 Months to
June 2015
$000
Continuing operations
Revenue
Other revenue
Total revenue
Customer acquisition cost
Cost of inertia assets sold
Other operating expenses
Depreciation and amortisation
Impairment losses
Non-operating strategic review and advisory expenses
Profit before tax
Income tax expense
Profit after tax (cid:177) attributable to owners of the Company
Other comprehensive (loss)/income
Items that may be reclassified subsequently to profit or loss, net of
income tax:
Foreign currency translation differences for foreign operations
Income tax benefit/(expense) on foreign currency translation
Total items that may be reclassified subsequently to profit or loss net of
income tax
Other comprehensive (loss)/income for the period, net of income tax
Total comprehensive (loss)/income for the period attributable to owners
of the Company
Notes
6(a)
6(b)
6(c)
6(d)
6(e)
8
7(a)
7(b)
24,319
3,004
27,323
(3,213)
(4,322)
(11,995)
(1,448)
(803)
(3,801)
1,741
(1,123)
618
(4,555)
693
(3,862)
(3,862)
(3,244)
Earnings per share
Basic (cents per share)
Diluted (cents per share)
28
28
0.65
0.65
The attached notes form an integral part of these consolidated financial statements
22,060
2,897
24,957
(3,180)
(5,110)
(10,840)
(648)
(512)
-
4,667
(1,177)
3,490
3,632
(494)
3,138
3,138
6,628
2.73
2.69
27
THINKSMART LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Consolidated Statement of Financial Position
as at 30 June 2016
Current assets
Cash and cash equivalents
Trade receivables
Loan and lease receivables
Other current assets
Total current assets
Non-current assets
Loan and lease receivables
Plant and equipment
Intangible assets
Goodwill
Deferred tax assets
Tax receivable
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Deferred service income
Other interest bearing liabilities
Tax payable
Provisions
Total current liabilities
Non-current liabilities
Deferred service income
Deferred tax liability
Other interest bearing liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated profits
Total equity
Notes
20(a)
9
10
9
12
13
15
7
7
11
16
17
18
7
16
17
7
18
19(a)
June 2016
$000
June 2015
$000
8,747
531
5,039
4,726
19,043
2,749
488
12,987
4,202
-
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5,963
26,484
45,527
3,095
2,338
3,932
-
346
9,711
1,474
25
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3,644
13,355
32,172
27,838
(2,010)
6,344
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16,832
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5,786
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2,361
506
12,658
4,773
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39,509
27,838
1,852
9,819
39,509
The attached notes form an integral part of these consolidated financial statements
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T
THINKSMART LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
Consolidated Statement of Cash Flows
for the Financial Year Ended 30 June 2016
12 Months to
June 2016
$000
12 Months to
June 2015
$000
Notes
Cash Flows from Operating Activities
Receipts from customers
Payments to suppliers and employees
Payments relating to strategic review and advisory expenses
Payments in respect of lease receivables
Proceeds from other interest bearing liabilities, inclusive of related costs
Interest received
Interest and finance charges
Income tax paid
Receipts from security guarantee
Net cash (used in)/from operating activities
20(b)
Cash Flows from Investing Activities
Payments for plant and equipment
Payment for intangible assets (cid:177) Software
Payment for intangible assets (cid:177) Contract rights
Net cash used in investing activities
Cash Flows from Financing Activities
Dividends paid
Share buyback, inclusive of transaction costs
Net cash used in financing activities
Net decrease in cash and cash equivalents
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents from continuing operations at beginning of the
financial year
Total cash and cash equivalents at the end of the financial period
Restricted cash and cash equivalents at the end of the financial period
20(a)
20(a)
Net available cash and cash equivalents at the end of the financial period
The attached notes form an integral part of these consolidated financial statements
27,914
(22,473)
(2,523)
(4,042)
3,201
301
(640)
(1,280)
1,571
2,029
(303)
(4,038)
(355)
(4,696)
(4,311)
-
(4,311)
(6,978)
(1,107)
16,832
8,747
(210)
8,537
25,329
(20,135)
-
(3,972)
3,776
758
(194)
(451)
(180)
4,931
(398)
(1,227)
(657)
(2,282)
(6,000)
(20,258)
(26,258)
(23,609)
1,371
39,070
16,832
(436)
16,396
30
THINKSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
1. General Information
(cid:55)(cid:75)(cid:76)(cid:81)(cid:78)(cid:54)(cid:80)(cid:68)(cid:85)(cid:87)(cid:3)(cid:47)(cid:76)(cid:80)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)(cid:11)(cid:87)(cid:75)(cid:72)(cid:3)(cid:179)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:180) (cid:82)(cid:85)(cid:3)(cid:179)(cid:55)(cid:75)(cid:76)(cid:81)(cid:78)(cid:54)(cid:80)(cid:68)(cid:85)(cid:87)(cid:180)) is a publicly listed company, incorporated and domiciled in Australia. The
consolidated financial statements of the Company as at and for the twelve months ended 30 June 2016 comprise of the Co mp an y
(cid:68)(cid:81)(cid:71)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:86)(cid:88)(cid:69)(cid:86)(cid:76)(cid:71)(cid:76)(cid:68)(cid:85)(cid:76)(cid:72)(cid:86)(cid:3)(cid:11)(cid:87)(cid:75)(cid:72)(cid:3)(cid:179)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:180)(cid:12)(cid:17)(cid:3)(cid:55)he Group is a for profit entity and its principal activity during the period was the provisio n o f
lease and rental financing services in the UK. (cid:55)(cid:75)(cid:72)(cid:3)(cid:68)(cid:71)(cid:71)(cid:85)(cid:72)(cid:86)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:72)(cid:85)ed office is Suite 5, 531 Hay Street, Subiaco ,
West Perth, WA 6008 and further information can be found at www.thinksmartworld.com.
2. Basis of Preparation
(a) Statement of compliance
The consolidated financial statements are general purpose financial statements which have been prepared in accordance wit h t h e
Australian Accounting Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB) and the Corporation s
Act 2001. The consolidated financial statements comply with International Financial Reporting Standards (IFRSs) and
interpretations adopted by the International Accounting Standards Board (IASB).
The consolidated financial statements were authorised for issue by the Board of Directors on 16 August 2016.
(b) Basis of measurement
The financial report has been prepared on the basis of historical cost, except for derivative financial instruments measured at fair
value. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in A u s tralian
Dollars unless otherwise noted.
(c) Functional and presentation currency
(cid:55)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:83)(cid:85)(cid:72)(cid:86)(cid:72)(cid:81)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:36)(cid:88)(cid:86)(cid:87)(cid:85)(cid:68)(cid:79)(cid:76)(cid:68)(cid:81)(cid:3)(cid:71)(cid:82)(cid:79)(cid:79)(cid:68)(cid:85)(cid:86)(cid:15)(cid:3)(cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:76)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:73)(cid:88)(cid:81)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70) urrency.
ThinkSmart is a Group of the kind referred to in ASIC Class Order 2016/191 dated 24 March 2016. In accordance with the clas s
order(cid:15)(cid:3)(cid:68)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:71)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:182)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:69)(cid:72)(cid:72)(cid:81)(cid:3)(cid:85)(cid:82)(cid:88)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:82)(cid:73)(cid:73)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:81)(cid:72)(cid:68)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:87)(cid:75)(cid:82)(cid:88)(cid:86)(cid:68)(cid:81)(cid:71)(cid:3)dollars, unless
otherwise indicated.
(d) Changes in accounting policies
The accounting policies applied by the consolidated entity in this financial report are consistent with those applied by the
consolidated entity in its consolidated financial report as at and for the period ended 30 June 2015.
(e) Accounting policies available for early adoption not yet adopted
A number of new standards and interpretations are effective for annual periods beginning after 1 July 2016 an d h av e n o t b een
applied in preparing this financial report. The Group does not plan to adopt these standards early and the extent of the impact h as
not been determined.
Reference
Title
Summary
AASB 9
Financial
Instruments
AASB 2014-7 Amendments to
Australian
Accounting
Standards arising
from AASB 9
AASB 2014-8
Amendments to
Australian
Accounting
AASB 9 includes revised guidance on the
classification and measurement of
financial assets, including a new expected
credit loss model for calculating
impairment, and supplements the new
general hedge accounting requirements
previously published.
(a) These amendments arise from the
issuance of AASB 9 Financial
Instruments that set out requirements for
the classification and measurement of
financial assets.
(b) This Standard shall be applied when
AASB 9 is applied.
The application of the existing versions of
AASB 9 (December 2009 and December
2010, including the hedging amendments
Impact on Group
financial report
Application
date of
standard
1-Jan-2018
Applicatio
n date for
Group
1-Jul-2018
1-Jul-2018
1-Jul-2018
The Group has not
yet determined the
extent of the
impacts of the
amendments, if
any.
1-Jul-2018
1-Jul-2018
31
THINKSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
AASB 15
Standards arising
from AASB 9
Revenue from
Contracts with
Customers
AASB 2014-5
Amendments to
Australian
Accounting
Standards arising
from AASB 15
AASB 2016-3 Amendments to
Australian
Accounting
Standards (cid:177)
Clarifications to
AASB 15
AASB 2016-5 Amendment to
Australian
Accounting
Standards (cid:177)
Classification and
measurement of
share-based
payment
transactions
Leases
AASB 16
AASB 2016-2 Amendments to
Australian
Accounting
Standards (cid:177)
Disclosure
Initiative:
Amendments to
AASB 107
made in December 2013) from 1 February
2015 is limited to entities that have
already early adopted them.
The standard contains a single model that
applies to contracts with customers and
two approaches to recognising revenue: at
a point in time or over time. The model
features a contract-based five-step
analysis of transactions to determine
whether, how much and when revenue is
recognised.
(a) These amendments arise from the
issuance of AASB 15 Revenue from
contracts with customers that set out
requirements for the classification and
measurement of financial assets.
(b) This Standard shall be applied when
AASB 15 is applied.
This standard clarifies the requirements
on identifying performance obligations,
principal v agent considerations and the
timing of recognising revenue from
granting a licence.
1-Jul-2018
1-Jul-2018
1-Jul-2018
1-Jul-2018
1-Jan-2018
1-Jul-2018
The Group has not
yet determined the
extent of the
impacts of the
amendments, if
any.
This Standard makes a number of
amendments to AASB 2.
1-Jan-2018
1-Jul-2018
This standard results in all leases being on
balance sheet with the front loading of
expenses.
This standard results in increased
disclosures for cash flows from financing
activities.
1-Jul-2018
1-Jul-2018
1-Jan-2017 The application of
1-Jul-2017
this standard will
result in an
additional
reconciliation being
disclosed for the
(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:81)(cid:74)(cid:3)
facilities.
32
THINKSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
3. Significant Accounting Policies
The accounting policies set out below have been applied consistently to all periods presented in t h es e co nsolid at ed fin an cial
statements, and have been applied consistently by Group entities .
(a) Basis of consolidation
(i) Subsidiaries
The consolidated financial statements incorporate the financial statements of the company and en t it ies co nt ro lled b y t he
company (its subsidiaries). The Group controls an entity when it 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 results of
subsidiaries acquired or disposed of during the period are included in the consolidated statement of profit and loss fro m t h e
effective date of acquisition or up to the effective date of disposal, as appropriate. The accounting policies o f s u bsid iarie s
have been changed when necessary to align them with the policies adopted by the Group.
(ii) Transactions eliminated on consolidation
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in lin e
with those by other members of the Group. All intra-group balances, transactions, income and expenses are elimin at ed in
full on consolidation.
(b) Business combinations
For every business combination, the Group identifies the acquirer, which is the combining entity that obtains control of t h e o t h er
combining entities or businesses. The acquisition date is the date on which control is transferred to the acquirer. Ju d g emen t is
applied in determining the acquisition date and determining whether control is transferred from one party to another.
Measuring goodwill
The Group measures goodwill as the fair value of consideration transferre d including the recognised amount of any non -
controlling interest in the acquiree, less the net recognised amount (generally fair value) of the identifiable as s et s acq uir ed an d
liabilities assumed, all measured as of the acquisition date. Consideration transferred includes the fair values of the asset
transferred, liabilities incurred by the Group to the previous owners of the acquiree, and equity int erests is sued b y t h e Gro u p .
Consideration transferred also includes the fair value of any contingent consideration and share-based p aymen t award s o f t h e
acquiree that are replaced mandatorily in the business combination.
(c) Cash and cash equivalents
Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investmen ts t h at are read ily
converted to known amounts of cash and which are subject to an insignificant risk of change in value. Restricted cash co mp ris es
amounts owed to funders in respect of customer lease payments.
(d) Plant and equipment
Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairmen t lo s s es.
Cost includes expenditure that is directly attributable to the acquisition of the asset. Purchased software t h at is in t eg ral t o t h e
functionality of the related equipment is capitalised as part of that equipment. When parts of an item of property, plant and
equipment have different useful lives they are accounted for as separate items (major components) of property, plant and
equipment. The gain or loss on disposal of an item of property, plant and equipment is determined by co mp arin g t h e p ro ceed s
from disposal with the carrying amount of the property, plant and equipment, and is recognised net wit h in o t her in co me/ o ther
expenses in profit or loss.
Depreciation
Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed and if
a component has a useful life that is different from the remainder of the asset, that component is d epreciated separately.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component of an item o f
property, plant and equipment. The following estimated useful lives are used in the calculation of depreciation:
Office furniture, fittings, equipment and computers
Leasehold improvements
-
-
Depreciation methods, useful lives and residual values are reviewed at each reporting date.
3 to 5 years
the lease term
33
THINKSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
(e) Trade and other payables
Trade payables are recognised when the consolidated entity becomes obliged to make future payments resulting from the purchase
of goods and services and measured at fair value.
(f) Financial instruments
(i) Non-derivative financial assets
The Group initially recognises loans and receivables and deposits on the date that they are originated. All other fin an cial as s ets
(including assets designated at fair value through profit or loss) are recognised initially on the trade date at which the Group
becomes a party to the contractual provisions of the instrument.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, o r it t ran s fers the
right to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and reward s o f
ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Gro u p
is recognised as a separate asset or liability. Financial assets and liabilities are offset and the net amount presented in the
statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either t o s et tle
on a net basis or to realise the asset and s ettle the liability simultaneously.
Investments
Investments are recognised and derecognised on trade date where purchase or sale of an investment is u n der a co n t ract wh o se
terms require delivery of the investment within the timeframe established by the market concerned, and are initially meas u re d at
fair value net of transaction costs. Subsequent to initial recognition, investments in subsidiaries are measured at cost in t he
company financial statements , net of accumulated impairment losses . Other financial assets are classified into the following
(cid:86)(cid:83)(cid:72)(cid:70)(cid:76)(cid:73)(cid:76)(cid:72)(cid:71)(cid:3)(cid:70)(cid:68)(cid:87)(cid:72)(cid:74)(cid:82)(cid:85)(cid:76)(cid:72)(cid:86)(cid:29)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:68)(cid:87)(cid:3)(cid:181)(cid:73)(cid:68)(cid:76)(cid:85)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:87)(cid:75)(cid:85)(cid:82)(cid:88)(cid:74)(cid:75)(cid:3)(cid:83)(cid:85)(cid:82)(cid:73)(cid:76)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:79)(cid:82)(cid:86)(cid:86)(cid:182)(cid:15)(cid:3)(cid:181)(cid:75)(cid:72)(cid:79)(cid:71) -to-(cid:80)(cid:68)(cid:87)(cid:88)(cid:85)(cid:76)(cid:87)(cid:92)(cid:182)(cid:3)(cid:76)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:15)(cid:3)(cid:181)(cid:68)(cid:89) (cid:68)(cid:76)(cid:79)(cid:68)(cid:69) (cid:79)(cid:72) -fo r-(cid:86)(cid:68)(cid:79)(cid:72)(cid:182)(cid:3)
(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:181)(cid:79)(cid:82)(cid:68)(cid:81)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:85)(cid:72)(cid:70)(cid:72)(cid:76)(cid:89)(cid:68)(cid:69)(cid:79)(cid:72)(cid:86)(cid:182)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:70)(cid:79)(cid:68)(cid:86)(cid:86)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:71)(cid:72)(cid:83)(cid:72)(cid:81)(cid:71)(cid:86)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)nature and purpose of the fin an cial as sets an d is
determined at the time of initial recognition.
Lease receivables
The Group has entered into financing transactions with customers and has classified its leases as finance leas es fo r acco unt i n g
purposes. Under a finance lease, substantially all the risks and benefits incidental to the ownership of the leased asset are
transferred by the lessor to the lessee. The Group recognises at the beginning of the lease term an asset at an amount equ al t o t h e
aggregate of the present value (discounted at the interest rate implicit in the lease) of the minimum lease payments and an estimate
of the value of any unguaranteed residual value expected to accrue to the benefit of the Group at the end of the leas e t erm. Th is
ass(cid:72)(cid:87)(cid:3)(cid:85)(cid:72)(cid:83)(cid:85)(cid:72)(cid:86)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:81)(cid:72)(cid:87)(cid:3)(cid:76)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:79)(cid:72)(cid:68)(cid:86)(cid:72)(cid:17)(cid:3)
Unearned interest
Unearned interest on leases and other receivables is brought to account over the life of the lease contract based on the int e rest
rate implicit in the lease using the effective interest rate method.
Initial direct transaction income and costs
Initial direct income/costs or directly attributable, incremental transaction income/costs incurred in the origination of leases are
included as part of receivables in the balance sheet and are amortised in the calculation of lease income and interest income.
Allowance for losses
The collectability of lease receivables is assessed on an ongoing basis. A provision is made for losses based on historical rat es
of arrears and the current delinquency position of the portfolio (refer note 3(f)(iii)).
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset and allocating interest inco me o v er
the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected
life of the financial asset or, where appropriate, a shorter period.
Insurance prepayment
In relation to business customers who do not already have insurance, a policy is set up through a third party insurance p ro vid er.
The Group pays for the insurance cover upfront and also recognises its income upfront which creates an insurance prepayment o n
the balance sheet. The Group subsequently collects the insurance premium from the customer on a monthly basis over t h e life o f
the rental agreement, which reduces the prepayment. Where a policy is cancelled, the unexpired premiums are refu n d ed t o t h e
Group.
34
THINKSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
(ii) Non-derivative financial liabilities
The Group initially recognises debt securities issued and subordinated liabilities on the date that they are originat ed. Th e Gro u p
derecognises a financial liability when its contractual obligations are discharged or cancelled or expire. Financial liabilities are
recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these fin an cial
liabilities are measured at amortised cost using the effective interest rate method. Transaction costs consist of legal and other costs
that are incurred in connection with the borrowing of funds. These costs are capitalised and then amortis ed o v er t h e life o f t he
loan.
Financial guarantee contracts
Financial guarantees issued by the Group are recognised as financial liabilities at the date the guarantee is issued. Liabilities
arising from financial guarantee contracts, are initially recognised at fair value and subsequently at the high er o f t h e amo u n t o f
projected future losses and the amount initially recognised less cumulative amortisation.
The fair value of the financial guarantee is determined by way of calculating the present value of the difference in net cas h flo ws
between the contractual payments under the debt instrument and the payments that would be require d without the guarantee, or the
estimated amount that would be payable to a third party for assuming the obligation. Any increase in the liability relating to
financial guarantees is recognised in profit and loss. Any liability remaining is derecognised in profit and loss when the guaran tee
is discharged, cancelled or expires.
(iii) Impairment of assets
Financial assets, including finance lease receivables and loan receivables
A financial asset is assessed at each reporting date to determine whether there is any objective ev id en ce t h at it is imp aired . A
financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negativ e effe ct o n
the estimated future cash flows of that asset.
In assessing collective impairment, the Group uses modelling of historical trends of the probability of defaults, timing of
recoveries and the amount of loss incurred. Impairment losses on assets carried at amortised cost are measured as t h e d iffere n ce
between the carrying amount of the financial assets and the present value of the estimated future cash flo ws d is coun ted at t h e
assets original effective interest rate.
Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are
assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in the profit an d
loss when an asset is either non recoverable or has suffered arrears of at least 91 days . An impairment loss is reversed if the
reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets meas ured at
amortised cost, the reversal is recognised in profit and loss.
Non-financial assets
The carrying amounts of (cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:81)(cid:82)(cid:81)-financial assets, other than inventories and deferred tax asset s, are rev iewed at each
(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:71)(cid:68)(cid:87)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:71)(cid:72)(cid:87)(cid:72)(cid:85)(cid:80)(cid:76)(cid:81)(cid:72)(cid:3)(cid:90)(cid:75)(cid:72)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:85)(cid:72)(cid:3)(cid:76)(cid:86)(cid:3)(cid:68)(cid:81)(cid:92)(cid:3)(cid:76)(cid:81)(cid:71)(cid:76)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:76)(cid:85)(cid:80)(cid:72)(cid:81)(cid:87)(cid:17)(cid:3)(cid:44)(cid:73)(cid:3)(cid:68)(cid:81)(cid:92)(cid:3)(cid:86)(cid:88)(cid:70)(cid:75)(cid:3)(cid:76)(cid:81)(cid:71)(cid:76)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:72)(cid:91)(cid:76)(cid:86)(cid:87)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:182)(cid:86)(cid:3)(cid:85)(cid:72)(cid:70) overable
amount is estimated. For goodwill and intangible assets that have indefinite lives or that are not yet available for use, the
recoverable amount is estimated at each reporting date.
The recoverable amount of an asset or cash-generating unit is the greater of its value in us e and its fair value less costs t o s ell. In
assessing value in use, the estimated future cash flows are discounted to their present value usin g a p re -t ax d is co u nt rat e t h at
reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose o f imp airmen t
testing, assets are grouped together into the smallest group of assets that generates cash inflo ws fro m co n t in u in g u se t hat a re
largely independent of the cash inflows of other assets or groups of assets (the (cid:179)(cid:70)(cid:68)(cid:86)(cid:75)-(cid:74)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:88)(cid:81)(cid:76)(cid:87)(cid:180)(cid:12)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:74)(cid:82)(cid:82)(cid:71)(cid:90)(cid:76)(cid:79)(cid:79)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81) (cid:3)(cid:68)(cid:3)
business combination, for the purpose of impairment testing, is allocated to cash-generating units that are expected to benefit fro m
the synergies of the combination.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its reco verable amo u n t.
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash -generating units are allo cat ed
first to reduce the carrying amount of the other assets in the unit (groups of units) on a pro rata basis. An impairment loss in
respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in the prior perio d s are as sess ed at
each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if th ere h as
been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to th e ext en t t h at
(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:182)(cid:86)(cid:3)(cid:70)(cid:68)(cid:85)(cid:85)(cid:92)(cid:76)(cid:81)(cid:74)(cid:3)amount does not exceed the carrying amount that would have been determined, net of depreciation or
amortisation, if no impairment loss had been recognised.
35
THINKSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
(g) Intangible assets
Intellectual property
Intellectual property is recorded at the cost of acquisition over the fair value of the identifiable net assets acquired, and is
amortised on a straight line basis over 20 years.
Inertia Contracts
The Group recognises an intangible asset arising if it has an unconditional contractual right to receive income arising from
equipment and rights to the hiring agreement at the end of term. This inertia contract is measured at fair value at the in cep t io n o f
the hiring agreement, and is based on discounted cash flows expected to be derived from the sale or hire of the assets at the end o f
the term. Subsequent to initial recognition the intangible asset is measured at cost. Amortisation is based on cost les s est imat ed
residual value. Individual intangible assets are as sessed at each reporting period for impairment. Impaired co n t ract s are o ffs et
against any unamortised deferred service income with the remainder recognised in profit and loss.
At the end of the hiring term the intangible asset is derecognised and the Group recognises the eq uip men t as in v en tory at t h e
corresponding value.
Contract Rights
The contractual rights obtained by the Group under financing agreements entered into with its fundin g p art ners an d o p erat in g
agreements with its retail partners constitute intangible assets with finite useful lives. These contract rights are recognised initially
at cost and amortised over their expected useful lives. In relation to funder contact rights, the expected useful life is the earlier o f
the initial contract term or expected period until facility limit is reached. At each reporting date a review for indicators of
impairment is conducted.
Software development
Software development costs are capitalised only up to the point when the software has been tested an d is r ead y fo r u s e in t h e
manner intended by management.
Software development expenditure is capitalised only if the development costs can be measured reliably, the pro du ct p ro cess i s
technically and commercially feasible, future economic benefits are probable , and the Group intends to and has sufficient
resources to complete development and to use or sell the asset. The expenditure capitalised includes the cost of direct lab o u r an d
overhead costs that are directly attributable to preparing the asset for its in tended use.
The intangible asset is amortised on a straight line basis over its estimated useful life, which is between 3 and 5 years. Ca pitalis ed
software development expenditure is measured at cost less accumulated amortisation and accumulated impairment losses.
(h) Goodwill
Goodwill acquired in a business combination is initially measured at its cost, being the excess of the cost of the business
(cid:70)(cid:82)(cid:80)(cid:69)(cid:76)(cid:81)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:82)(cid:89)(cid:72)(cid:85)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:85)(cid:182)(cid:86)(cid:3) (cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3) (cid:76)(cid:81)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:81)(cid:72)(cid:87)(cid:3) (cid:73)(cid:68)(cid:76)(cid:85)(cid:3) (cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3) (cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:76)(cid:73)(cid:76)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:15)(cid:3)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3) and contingent liabilities
recognised. Goodwill is subsequently measured at its cost less any impairment losses.
(cid:41)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:88)(cid:85)(cid:83)(cid:82)(cid:86)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:76)(cid:85)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:87)(cid:72)(cid:86)(cid:87)(cid:76)(cid:81)(cid:74)(cid:15)(cid:3)(cid:74)(cid:82)(cid:82)(cid:71)(cid:90)(cid:76)(cid:79)(cid:79)(cid:3)(cid:76)(cid:86)(cid:3)(cid:68)(cid:79)(cid:79)(cid:82)(cid:70)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:72)(cid:68)(cid:70)(cid:75)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:74)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:88)(cid:81)(cid:76)(cid:87) (cid:86)(cid:3)(cid:11)(cid:38)(cid:42)(cid:56)(cid:86) (cid:12)(cid:3)(cid:82) (cid:85)(cid:3)(cid:74) (cid:85)(cid:82) (cid:88) (cid:83) (cid:86)(cid:3)(cid:82) (cid:73)
CGUs, expected to benefit from the synergies of the business combination. CGUs (or groups of CGUs) to which goodwill has
been allocated are tested for impairment annually, or more frequently if events or changes in circumstances indicate that goo dwill
might be impaired.
If the recoverable amount of the CGU (or group of CGUs) is less than the carrying amount of the CGU (or group o f CGUs ), t h e
impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the CGU (or group of CGUs) and then
to the other assets of the CGU (or group of CGUs) pro-rata on the basis of the carrying amount of each asset in the CGU (or
CGUs). The impairment loss recognised for goodwill is recognised immediately in the profit or loss and is not reversed in the
subsequent period.
On disposal of an operation within a CGU, the attributable goodwill is included in the determination of the profit or loss of
disposal on the operation.
36
THINKSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
(i) Employee benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries and annual leave when it is p ro b ab le
that settlement will be required and they are capable of being measured reliably.
The G(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:81)(cid:72)(cid:87)(cid:3)(cid:82)(cid:69)(cid:79)(cid:76)(cid:74)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:76)(cid:81)(cid:3)(cid:85)(cid:72)(cid:86)(cid:83)(cid:72)(cid:70)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:79)(cid:82)(cid:81)(cid:74)(cid:3)(cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:3)(cid:79)(cid:72)(cid:68)(cid:89)(cid:72)(cid:3)(cid:76)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:73)(cid:88)(cid:87)(cid:88)(cid:85)(cid:72)(cid:3)(cid:69)(cid:72)(cid:81)(cid:72)(cid:73)(cid:76)(cid:87)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:72)(cid:80)(cid:83)(cid:79)(cid:82)(cid:92)(cid:72)(cid:72)(cid:86)(cid:3)(cid:72)(cid:68)(cid:85)(cid:81)(cid:72)d in return for their
service in the current and prior periods plus related on-costs; that benefit is discounted to determine its present value.
Liabilities recognised in respect of employee benefits, which are expected to be settled within 12 months, are meas u red at t h eir
nominal values, using the remuneration rate expected to apply at the time of settlement.
Liabilities recognised in respect of employee benefits, which are not expected to be settled within 12 months, are measured a t their
present value of the estimated future cash flows to be made by the Group.
The Group pays defined contributions for post-employment benefit into a separate entity. Obligations for contributions to defined
contribution pension plans are recognised as an employee benefit expense in profit or loss in the period during which services are
rendered by employees.
Termination benefits are recognised as an expense when the Group is committed, it is probable that settlement will b e req u ire d ,
and they are capable of being reliably measured. If benefits are payable more than 12 months after the reporting date, then they are
discounted to their present value.
Share-based payments
The grant date fair value of share-based payment awards granted to employees is recognised as an employee expense, with a
corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards. Th e amo u n t
recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market vesting
conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that
do meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-
vesting conditions, the grant date fair value of the share-based payment is measured to reflect such conditions and there is no true-
up for differences between expected and actual outcomes.
(j)
Inventories
Inventories are valued at the lower of cost and net realisable value. Net realisable value represents the estimated selling price les s
all estimated costs of completion and costs necessary to make ready for sale. Refer to note 3(g) in relation to inertia contracts
where, at the end of the hiring term, the intangible asset is derecognised and the Group recognises the equipment as in v en tory at
the corresponding value.
(k) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and is recognised to the extent that it is probab le
that the economic benefits will flow to the entity and the revenue can be reliably measured. The following s p ecific reco g n it i o n
criteria must also be met before revenue is recognised:
Finance lease income
Finance lease income is recognised on those leases originated by the Group where the Group , rather than a third party financier, is
the lessor. Finance lease income is recognised on the effective interest rate method at the constant rate of return which amo rtis es
over its economic life, the lease asset down to the estimate of any unguaranteed residual value that is expected to be accrue d to the
Group at the end of the lease.
Commission income
Commission receivable from funders is recognised at the time finance approval is g iven to the customer, adjusted for an allowance
for loans not expected to proceed to a contract by the funder.
37
THINKSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
Residual interest in equipment (inertia income)
(cid:120)
Secondary rental income
Rental income from extended rental assets is recognised when receivable usually on a monthly basis. No ongoing rental
income is recognised in respect of the unexpired rental contracts.
Income earned from sale of equipment
Proceeds from the sale of rental assets are recognised at the time of the sale to the extent not alread y reco gnis ed t h rou gh
Finance lease income.
(cid:120)
Insurance income
(cid:44)(cid:81)(cid:86)(cid:88)(cid:85)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:72)(cid:86)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:76)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:86)(cid:182)(cid:3)(cid:85)(cid:72)(cid:70)(cid:72)(cid:76)(cid:89)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:82)(cid:81)(cid:3)(cid:76)(cid:81)(cid:86)(cid:88)(cid:85)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:83)(cid:82)(cid:79)(cid:76)(cid:70)(cid:76)(cid:72)(cid:86)(cid:3)(cid:76)(cid:86)(cid:86)(cid:88)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:87)(cid:75)(cid:76)(cid:85)(cid:71)(cid:3)(cid:83)(cid:68)(cid:85)(cid:87)(cid:92)(cid:3)(cid:76)(cid:81)(cid:86)(cid:88)(cid:85)(cid:72)(cid:85)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:70)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:73)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)
damage of rental equipment. The insurance income is recognised at fair value of the future payments receivable as
substantially all of the services to earn that revenue are completed upfront.
Interest income and expense
Interest income and expense for all interest bearing financial instruments is recognised in the profit and lo s s acco unt u sin g t he
effective interest rates of the financial assets or liabilities to which they relate.
The effective interest rate is the rate that exactly discounts the estimated future cash payments or receipts through the expected life
of the financial asset or financial liability. When calculating the effective interest rate the Group includes all amounts paid or
received by the Group which are considered to be an integral p art of the effective interest rate, including merchant fe es receiv ed
and rebates paid.
Deferred service income
Income arising on recognition of any intangible inertia asset at the commencement of the lease is deferred and recognised ove r the
lease term on a straight line basis as the services are rendered.
(l) Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to issue of ordinary shares and s hare o pt io ns are
recognised as a deduction from equity, net of any tax effects.
(m) Income tax
Current tax
Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable pro fit o r t ax
loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by reportin g d at e.
Current tax payable for current and prior periods is recognised as a liability to the extent that it is unpaid. Carried forward tax
recoverable on tax losses is recognised as a deferred tax asset where it is pro bably that future taxable profit will b e av ailable t o
offset in future periods.
Deferred tax
Deferred tax is accounted for using the balance sheet method in respect of temporary differences arising from differences between
the carrying amount of assets and liabilities in the financial statements and the corresponding tax base of those items.
In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognis ed t o t h e
extent that it is probable that sufficient taxable amounts will be available against which deductible temporary differences or
unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if t h e t emp o rary
differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a business
combination) which affects neither taxable income nor accounting profit. Furthermore, a deferred tax liability is not recognised in
relation to taxable temporary differences arising from goodwill.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and join t v e n tu res
except where the Group is able to control the reversal of the temporary differences and it is probable that the temporary
differences will not reverse in the foreseeable future.
38
THINKSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
Deferred tax assets arising from deductible temporary differences associated with these investments and interests are only
recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise t h e b enefit s o f t h e
temporary differences and they are expected to reverse in the foreseeable future.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset and
liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or substantiv ely
enacted by reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that wo u ld fo llo w
from the manner in which the Consolidated Entity expects, at the reporting date, to recover or settle the carry in g amo u nt o f it s
assets and liabilities.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the
Company/Group intends to settle its current tax assets and liabilities on a net basis.
Current and deferred tax for the period
Current and deferred tax is recognised as an expense or income in the statement of profit and loss, except when it relates t o it ems
credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it ari s es fro m
the initial accounting for a business combination, in which case it is taken into account in the determination of goodwill or exces s
purchase consideration.
(n) Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST/VAT) except:
(i) where the amount of GST/VAT incurred is not recoverable from the taxation authority, it is recognised as part of the cost o f
acquisition of an asset or as part of an item of expense; and
receivables and payables which are recognised inclusive of GST/VAT.
(ii)
The net amount of GST/VAT recoverable from, or payable to, the taxation authority is included as part of receivables or payables.
Cash flows are included in the statement of cash flows on a gross basis. The GST/VAT component of cas h flo ws aris in g fro m
investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as o p eratin g cas h
flows.
(o) Foreign currency transactions
Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates
prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the rep ort i n g d at e
are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is
the difference between amortised cost in the functional currency at the beginning of the period, adjusted for effective interes t an d
payments during the period, and the amortised cost in foreign currency translated at the exchange rate at the end of the period.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the
functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign cu rren cy
that are measured at historical cost are translated using the exchange rate at the date of the transaction. Foreign currency
differences arising on retranslation are presented in profit or loss on a net basis, except for differences arising on the retranslat io n
of a financial liability designated as a hedge of the net investment in a foreign operation that is effective, which are reco gn ised in
other comprehensive income.
39
THINKSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are t ranslated
to the functional currency at exchange rates at the reporting date. The income and expenses of foreign operations are translated t o
Australian dollars at exchange rates at the dates of the transactions.
Foreign currency differences are recognised in other comprehensive income, and presented in the foreig n cu rren cy t ran slatio n
reserve in equity. However, if the operation is not a wholly-owned subsidiary, then the relevant proportionate share of the
translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of such that control,
significant influence or joint control is lost, the cumulative amount in the translation reserve related to that fo reig n o p eratio n is
reclassified to the profit or loss as part of the gain or loss on disposal. When the Group disposes of only part o f it s in t er est in a
subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is
reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate o r jo in t v en t ure
that includes a foreign operation while retaining significant influence or joint control, the relevant proportion o f t h e cu mu lat iv e
amount is classified to profit or loss.
(p) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company, excluding any co sts o f
servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the period.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into accou nt t he aft er
income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted a verage
number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
(q) Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be
estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligations. Provisions are
determined by discounting the expected future cash flows at a pre-tax rate that reflects current market as sessmen ts o f t h e t ime
value of money and the risks specific to the liability.
(r) Lease payments
Payments made under operating leases are recognised in profit or loss on a straight line basis over the t erm o f t h e leas e. Le as e
incentives received are recognised as an integral part of the total lease expense, over the term of the lease.
Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the
outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant period rat e
of interest on the remaining balance of the liability.
Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease wh en
the contingency no longer exists and the lease adjustments are known.
(s) Segment reporting
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and in cu r
expenses, including revenues and expenses that relate to transact(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:68)(cid:81)(cid:92)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:82) (cid:81)(cid:72)(cid:81)(cid:87) (cid:86)(cid:17)(cid:3)(cid:36) (cid:79)(cid:79)(cid:3)(cid:82) (cid:83) (cid:72)(cid:85)(cid:68)(cid:87) (cid:76)(cid:81) (cid:74)(cid:3)
(cid:86)(cid:72)(cid:74)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:182)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:85)(cid:72)(cid:74)(cid:88)(cid:79)(cid:68)(cid:85)(cid:79)(cid:92)(cid:3)(cid:85)(cid:72)(cid:89)(cid:76)(cid:72)(cid:90)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)Chief Executive Officer to make decisions about resources to be
allocated to the segment and assess its performance, and for which discrete financial information is available.
Segment results, assets and liabilities include items attributable to a segment as well as those that can be allocated on a reasonable
basis. Unallocated items compromise mainly loans and borrowings and related expenses, and corporate expenses, and inco me t ax
assets and liabilities.
Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, an d in t ang ible
assets other than goodwill.
40
THINKSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
(t) Measurement of fair values
(cid:36)(cid:3)(cid:81)(cid:88)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:83)(cid:82)(cid:79)(cid:76)(cid:70)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:79)(cid:82)(cid:86)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:85)(cid:72)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:80)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:73)(cid:68)(cid:76)(cid:85)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:86)(cid:15)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:69)(cid:82)(cid:87)(cid:75)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:81)(cid:82) n-
financial assets and liabilities. When measuring the fair value of an asset or a liability, the Group uses market obs ervable data
as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in t he
valuation techniques as follows:
(cid:120)
(cid:120)
(cid:120)
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in 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 (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair value
hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest
level input that is significant to the entire measurement.
The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the
change has occurred.
Further information about the assumptions made in measuring fair values is included in the following notes:
(cid:120) Note 13 (cid:177) Intangible inertia assets;
(cid:120) Note 19(b)(i) (cid:177) Share based payment transactions;
(cid:120) Note 25(b) (cid:177) Financial instruments.
4. Critical accounting estimates and judgements
The preparation of the consolidated financial statements in conforming to IFRS requires management to make judgements,
estimates and assumptions that affect the application of accounting policies and the reported amount of assets, liabilities , in co me
and expenses.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the
circumstances.
Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldo m
equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to t h e
carrying amount of assets and liabilities within the next financial period are discussed below:
(cid:120) Note 13 - fair value at inception of inertia intangible assets and recoverable amount;
(cid:120) Note 13 - measurement of deferred services income;
(cid:120) Note 15 - measurement of the recoverable amount of cash generating units containing goodwill;
(cid:120) Note 19(b)(i) - measurement of share-based payments, and
(cid:120) Note 24 - value of financial guarantee contract net of loss provision.
41
THINKSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
5. Financial Risk Management
Overview
The Group has exposure to the following risks from the use of financial instruments:
Credit risk
Liquidity risk
(cid:120)
(cid:120)
(cid:120) Market risk
(cid:120) Operational risk
(cid:55)(cid:75)(cid:76)(cid:86)(cid:3)(cid:81)(cid:82)(cid:87)(cid:72)(cid:3)(cid:83)(cid:85)(cid:72)(cid:86)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:76)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:69)(cid:82)(cid:88)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:72)(cid:91)(cid:83)(cid:82)(cid:86)(cid:88)(cid:85)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:72)(cid:68)(cid:70)(cid:75)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:69)(cid:82)(cid:89)(cid:72)(cid:3)(cid:85)(cid:76)(cid:86)(cid:78)(cid:86)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:82)(cid:69)(cid:77)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:86)(cid:15)(cid:3)(cid:83)(cid:82)(cid:79)(cid:76)(cid:70)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81) (cid:71) (cid:3)(cid:83) (cid:85)(cid:82) (cid:70)(cid:72)(cid:86)(cid:86)(cid:72)(cid:86)(cid:3) fo r
measuring and managing financial risks, and the management of capital. Further quantitative disclosures are included thro ug hou t
this financial report.
The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. The
Board has established the Audit and Risk Management Committee, which is responsible for developing and monitoring risk
management policies. The Committee reports to the Board of Directors on its activities.
Risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate limits and
controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflec t th e
(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:80)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:3)(cid:70)(cid:82)(cid:81)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:68)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:36)(cid:88)(cid:71)(cid:76)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:53)(cid:76)(cid:86)(cid:78)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:87)(cid:72)(cid:72)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:86)(cid:72)(cid:72)(cid:86)(cid:3)(cid:75)(cid:82) w management monitors
(cid:70)(cid:82)(cid:80)(cid:83)(cid:79)(cid:76)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3) (cid:90)(cid:76)(cid:87)(cid:75)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3) (cid:85)(cid:76)(cid:86)(cid:78)(cid:3) (cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3) (cid:83)(cid:82)(cid:79)(cid:76)(cid:70)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:70)(cid:72)(cid:71)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:85)(cid:72)(cid:89)(cid:76)(cid:72)(cid:90)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:71)(cid:72)(cid:84)(cid:88)(cid:68)(cid:70)(cid:92)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:76)(cid:86)(cid:78)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)
framework in relation to the risks faced by the Group.
Credit Risk
Credit risk refers to the risk that a counterparty or customer will default on its contractual obligations resulting in financial los s t o
the Group. The Group(cid:182)(cid:86)(cid:3)(cid:56)(cid:46)(cid:3)operations have adopted a policy of only dealing with credit worthy coun terpart ies as a mean s o f
mitigating the risk of financial loss from defaults. The Chief Financial Officer and Group Financial Controller have day to day
responsibility for managing credit risk within the risk appetite of the Board. Appropriate oversight occurs via monthly credit
performance reporting to management and the Board.
The UK operations have an obligation to meet the cost of future bad debts incurred by its funders. The funder deposits d is cussed
(cid:69)(cid:72)(cid:79)(cid:82)(cid:90)(cid:3) (cid:85)(cid:72)(cid:83)(cid:85)(cid:72)(cid:86)(cid:72)(cid:81)(cid:87)(cid:3) (cid:86)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:92)(cid:3) (cid:73)(cid:82)(cid:85)(cid:3) (cid:87)(cid:75)(cid:68)(cid:87)(cid:3) (cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3) (cid:72)(cid:91)(cid:83)(cid:82)(cid:86)(cid:88)(cid:85)(cid:72)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:68)(cid:85)(cid:72)(cid:3) (cid:85)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:72)(cid:71)(cid:3) (cid:81)(cid:72)(cid:87)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:72)(cid:86)(cid:87)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87) risk. Further
information is provided in Note 25.
To manage credit risk in relation to its customers, there is a sophisticated credit assessment and fraud minimisation process
delivered through (cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86) patented SmartCheck system. The credit underwriting system uses a combination of credit sco rin g
(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:69)(cid:88)(cid:85)(cid:72)(cid:68)(cid:88)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:86)(cid:3)(cid:68)(cid:86)(cid:3)(cid:90)(cid:72)(cid:79)(cid:79)(cid:3)(cid:68)(cid:86)(cid:3)(cid:72)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:82)(cid:81)(cid:76)(cid:70)(cid:3)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:76)(cid:87)(cid:92)(cid:3)(cid:89)(cid:72)(cid:85)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:3)(cid:85)(cid:72)(cid:89)(cid:76)(cid:72)(cid:90)(cid:3)(cid:82)(cid:73)(cid:3)(cid:68)(cid:81)(cid:3)(cid:68)(cid:83)(cid:83)(cid:79)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:71)(cid:72)(cid:87)(cid:68)(cid:76)(cid:79)(cid:86)(cid:3)(cid:68)(cid:74)(cid:68)(cid:76)(cid:81)(cid:86)(cid:87)(cid:3)(cid:68)(cid:3)(cid:73)(cid:85)(cid:68)(cid:88)(cid:71)(cid:3)database.
The credit policy is developed by the Head of Credit Risk and applied by the Credit Risk Committee with Bo ard ap p ro v al. Th e
Head of Credit Risk monitors ongoing credit performance on different cohorts of customer contracts. In ad d it io n t h ere exis t s a
specialist collections function to manage any delinquent accounts.
Credit risk exposure to funder deposits are more concentrated, however the counterparties are regulated banking instit u tio n s an d
the credit risk exposure is assessed as low. The Group closely monitors the credit risk associated with each funder deposit
counterparty.
Liquidity risk
(cid:47)(cid:76)(cid:84)(cid:88)(cid:76)(cid:71)(cid:76)(cid:87)(cid:92)(cid:3)(cid:85)(cid:76)(cid:86)(cid:78)(cid:3)(cid:76)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:76)(cid:86)(cid:78)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:3)(cid:90)(cid:76)(cid:79)(cid:79)(cid:3)(cid:81)(cid:82)(cid:87)(cid:3)(cid:69)(cid:72)(cid:3)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:80)(cid:72)(cid:72)(cid:87)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:82)(cid:69)(cid:79)(cid:76)(cid:74)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:68)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:92)(cid:3)(cid:73)(cid:68)(cid:79)(cid:79)(cid:3)(cid:71)(cid:88)(cid:72)(cid:17)(cid:3)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:68) pproach to
managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under
(cid:69)(cid:82)(cid:87)(cid:75)(cid:3)(cid:81)(cid:82)(cid:85)(cid:80)(cid:68)(cid:79)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:87)(cid:85)(cid:72)(cid:86)(cid:86)(cid:72)(cid:71)(cid:3)(cid:70)(cid:82)(cid:81)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:82)(cid:88)(cid:87)(cid:3)(cid:76)(cid:81)(cid:70)(cid:88)(cid:85)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:88)(cid:81)(cid:68)(cid:70)(cid:70)(cid:72)(cid:83)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:79)(cid:82)(cid:86)(cid:86)(cid:72)(cid:86)(cid:3)(cid:82)(cid:85)(cid:3)(cid:85)(cid:76)(cid:86)(cid:78)(cid:76)(cid:81)(cid:74)(cid:3)(cid:71)(cid:68)(cid:80)(cid:68)(cid:74)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:85)(cid:72)(cid:83)(cid:88)(cid:87)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:17)
The consolidated entity manages liquidity risk by maintaining adequate reserve facilities by continuously reviewing its facilit ies
and cash flows.
The Group ensures that it has sufficient cash on demand to meet expected operational expenses and financing subordination
requirements. In addition, the Group maintains the operational facilities which is shown in Note 18.
42
THINKSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect t h e
(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)holdings of financial instruments. The objective of market risk management is to man ag e an d
control market risk exposures within acceptable parameters, while optimising return.
Currency risk
The Group is exposed to currency risk on sales, purchases and bo rrowings that are denominated in a currency other than the
respective functional currencies of the Group entities, primarily the Australian dollar, Sterling and Euro.
Interest on borrowings is denominated in currencies that match the cash flows generated by t he u n derly in g o p eratio ns o f t h e
Group. This provides an economic hedge and no foreign currency derivatives are entered into.
Liabilities incurred in each respective geographical territory are paid for by the cash flows of the functional currency of t hat
territory. Exposures for singular transactions greater than $50,000 are considered for hedging by management, with forward
exchange contracts to mitigate exchange rate risk and are considered separately as they arise. Th e co n solid at ed en tit y h as n o
forward exchange contracts as at reporting date (2015: nil).
(cid:44)(cid:81)(cid:3)(cid:85)(cid:72)(cid:86)(cid:83)(cid:72)(cid:70)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:80)(cid:82)(cid:81)(cid:72)(cid:87)(cid:68)(cid:85)(cid:92)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:71)(cid:72)(cid:81)(cid:82)(cid:80)(cid:76)(cid:81)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:73)(cid:82)(cid:85)(cid:72)(cid:76)(cid:74)(cid:81)(cid:3)(cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:81)(cid:70)(cid:76)(cid:72)(cid:86)(cid:15)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:72)(cid:81)(cid:86)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:87) (cid:75) (cid:68)(cid:87)(cid:3)(cid:87) (cid:75) (cid:72)(cid:3)(cid:42)(cid:85)(cid:82) (cid:88) (cid:83) (cid:182)(cid:86) (cid:3)(cid:81) (cid:72) t
exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to ad dress t h e s hort
term imbalances (refer to Note 25 for further information).
Interest rate risk
The Group has $6.4m corporate borrowings as at 30 June 2016 (30 June 2015: $4.1m). Exposure to interest rate risk on any future
corporate borrowings will be assessed by the Board and where appropriate, the exposure to movement in in t erest rat es may b e
hedged by entering into interest rate swaps, when considered appropriate by the manag ement and the Board. As at 30 Ju n e 2016
there were $5.4m interest rate swaps in place with Santander UK plc to fix the future interest rate exposure on the Santander lo an
facility (see note 18). The mark to market value of these interest rate swaps as at 30 June 2016 was $27,260.
Operational risk
(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:85)(cid:76)(cid:86)(cid:78)(cid:3)(cid:76)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:76)(cid:86)(cid:78)(cid:3)(cid:82)(cid:73)(cid:3)(cid:71)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:3)(cid:82)(cid:85)(cid:3)(cid:76)(cid:81)(cid:71)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:3)(cid:79)(cid:82)(cid:86)(cid:86)(cid:3)(cid:68)(cid:85)(cid:76)(cid:86)(cid:76)(cid:81)(cid:74)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:68)(cid:3)(cid:90)(cid:76)(cid:71)(cid:72)(cid:3)(cid:89)(cid:68)(cid:85)(cid:76)(cid:72)(cid:87)(cid:92)(cid:3)(cid:82)(cid:73)(cid:3)(cid:70)(cid:68)(cid:88)(cid:86)(cid:72)(cid:86)(cid:3)(cid:68)(cid:86)(cid:86)(cid:82)(cid:70)(cid:76)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86) (cid:3)(cid:83) (cid:85)(cid:82) cesses,
personnel, technology and infrastructure, and from external factors other than credit, market and liquidity risks such as those
arising from legal and regulatory requirements and generally accepted standards of corporate behaviour. Operatio nal ris ks ari s e
(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:68)(cid:79)(cid:79)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17)
The primary responsibility for the development and implementation of controls to address operational risk is assig ned t o s enio r
management within each business unit. This responsibility is supported by the development of overall gro u p s tandards fo r t h e
management of operational risk in the following areas:
Requirements for appropriate segregation of duties, including the independent authorisation of transactions
Requirements for the reconciliation and monitoring of transactions
Compliance with regulatory and other legal requirements
(cid:120)
(cid:120)
(cid:120)
(cid:120) Documentation of controls and procedures
(cid:120)
Requirements for the periodic assessment of operational risks faced, and the adequacy of controls and procedures to address
the risks identified
Ethical and business standards
Risk mitigation, including insurance where this is effective
(cid:120)
(cid:120)
43
THINKSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
Capital management
(cid:55)(cid:75)(cid:72)(cid:3)(cid:37)(cid:82)(cid:68)(cid:85)(cid:71)(cid:182)(cid:86)(cid:3)(cid:83)(cid:82)(cid:79)(cid:76)(cid:70)(cid:92)(cid:3)(cid:76)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:80)(cid:68)(cid:76)(cid:81)(cid:87)(cid:68)(cid:76)(cid:81)(cid:3)(cid:68)(cid:3)(cid:86)(cid:87)(cid:85)(cid:82)(cid:81)(cid:74)(cid:3)(cid:70)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:69)(cid:68)(cid:86)(cid:72)(cid:3)(cid:86)(cid:82)(cid:3)(cid:68)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:80)(cid:68)(cid:76)(cid:81)(cid:87)(cid:68)(cid:76)(cid:81)(cid:3)(cid:76)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:82)(cid:85)(cid:15)(cid:3)(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:82)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:80)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:3)(cid:70)(cid:82)(cid:81)(cid:73)(cid:76)(cid:71)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:68)(cid:81) (cid:71) (cid:3)(cid:87) (cid:82) (cid:3)(cid:86) (cid:88)(cid:86) t ain
future development of the business. Management aims to maintain a capital structure that ensures the lowest cost of capital
available to the Group. Management constantly reviews the capital structure to ensure an increasing return on assets.
(cid:55)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:71)(cid:72)(cid:69)(cid:87)-to-adjusted capital ratio at the end of the reporting period was as follows:
Total liabilities
Less cash and cash equivalents
Net debt/(Net cash)
Total equity
Debt-to-adjusted capital ratio
June 2016
$000
June 2015
$000
June 2014
$000
13,355
(8,747)
4,608
32,172
0.14
12,262
(16,832)
(4,570)
39,509
-
8,555
(39,070)
(30,515)
58,947
-
For the purposes of capital management, capital consists of share capital, reserves and retained earnings.
The Board assesses the Group(cid:182)s ability to pay dividends from time to time. During the financial period to 30 June 2016, the Board
declared and paid an ordinary dividend fully franked at 3.5 cents per share paid on 9 September 2015 and an o rd in ary d iv id en d
fully franked at 1.1 cents per share paid on 21 March 2016 (refer to Note 19(c)).
44
THINKSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
6. Consolidated Statement of Profit and Loss
Profit/(loss) from continuing operations is arrived at after
crediting/(charging) the following items:
(a) Revenue
Finance lease income
Interest revenue (cid:177) other entities
Surplus unguaranteed residual income
Extended rental income
Other inertia income
Fee revenue (cid:177) customers
Commission income
(b) Other revenue
Services revenue (cid:177) insurance
Other revenue
(c) Other operating expenses
Employees benefits expense:
- Payments to employees
- Employee superannuation costs
- Share-based payment expense
- Provision for employee entitlements
Occupancy costs
Professional services
Finance charges
Other costs
(d) Depreciation and amortisation
Depreciation
Amortisation
(e)
Impairment losses
Impairment losses finance leases and receivables
Impairment losses on intangible assets (net)
Notes
30 June 2016
$000
30 June 2015
$000
17
1,871
300
2,386
6,366
4,054
253
9,089
24,319
2,973
31
3,004
7,375
540
221
45
8,181
633
1,004
419
1,758
11,995
279
1,169
1,448
302
501
803
269
758
3,183
7,597
4,502
286
5,465
22,060
2,789
108
2,897
6,612
426
190
-
7,228
549
1,591
216
1,256
10,840
168
480
648
42
470
512
45
THINKSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
7.
Income Tax
(a) Amounts recognised in profit and loss
The major components of income tax expense/(benefit) are:
Current income tax charge
Adjustment for prior period
Deferred income tax expense
Origination and reversal of temporary differences
Total income tax expense/(benefit)
Notes
30 June 2016
$000
30 June 2015
$000
1,232
(196)
87
1,123
1,105
-
72
1,177
A reconciliation between tax expense and the product of accounting profit before income tax from continuing operations
multiplied by the applicable income tax rate is as follows:
Accounting profit before tax
At the statutory income tax rate of 30%
Effect of tax rates in foreign jurisdictions
Non-deductible expenses
Overseas tax losses not recognised/(recognised)
Adjustments in respect of prior periods
Income tax expense from continuing operations
Deferred tax asset (cid:177) continuing operations
Accrued expenses
Employee entitlements
Equity raising costs
Borrowing costs
Intangible assets
Total
Deferred tax liability (cid:177) continuing operations
Plant & equipment
Intangible assets
Total
Net deferred tax (liability) for UK
Net deferred tax asset for Australia
Tax (receivable)/payable
Current
1,741
523
(477)
1,259
14
(196)
1,123
47
82
56
2
736
923
39
909
948
(206)
181
(95)
4,667
1,398
(381)
136
24
-
1,177
28
69
136
7
736
976
10
909
919
(182)
239
834
The current tax (asset)/liability is recognised for income tax payable in respect of all periods to date
(b) Amounts recognised in other comprehensive income
Foreign operations (cid:177) foreign currency translation differences
Income tax (benefit)/expense
(693)
494
46
THINKSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
8. Non-operating strategic review and advisory expenses
Non-operating strategic review and advisory expenses*
30 June
2016
$000
(3,801)
30 June
2015
$000
-
*As previously announced the ThinkSmart Board has initiated a strategic review to unlock valu e in t h e UK b u s in ess fo r
shareholders and this activity remains ongoing. The above costs are directly related to this activity.
9. Loan and lease receivables
Current
Rental receivables
Unguaranteed residuals
Unearned finance income
Net lease receivable
Allowance for losses
Non-current
Rental receivables
Unguaranteed residuals
Unearned finance income
Net lease receivable
Allowance for losses
Refer to note 25(c) for further information relating to credit risk.
10. Other Current Assets
Prepayments
Inventories
Sundry debtors
11. Other Non-Current Assets
Insurance prepayments
Deposits held by funders, net of provision (i)
30 June 2016
$000
30 June 2015
$000
5,158
414
(466)
5,106
(67)
5,039
2,813
226
(254)
2,785
(36)
2,749
2,519
41
(245)
2,315
(14)
2,301
2,667
44
(335)
2,376
(15)
2,361
30 June 2016
$000
30 June 2016
$000
3,532
897
297
4,726
2,002
3,961
5,963
3,380
1,567
839
5,786
2,177
3,306
5,483
(i) Deposits held by funders for the servicing and management of their portfolios in the event of d efau lt . Th e d epo sit s earn
interest at market rates of return for similar instruments. See note 24 for further information.
47
THINKSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
12. Plant and Equipment
Gross Carrying Amount
Cost or deemed cost
Balance at 1 July 2014
Effect of movement in exchange rate
Additions
Balance at 30 June 2015
Effect of movement in exchange rate
Additions
Balance at 30 June 2016
Accumulated Depreciation
Balance at 1 July 2014
Effect of movement in exchange rate
Depreciation expense
Balance at 30 June 2015
Effect of movement in exchange rate
Depreciation expense
Balance at 30 June 2016
Plant &
Equipment
$000
Lease
equipment &
software
$000
Notes
1,969
513
432
2,914
(564)
284
2,634
(1,733)
(507)
(168)
(2,408)
541
(279)
(2,146)
506
488
73
-
-
73
-
-
73
(73)
-
-
(73)
-
-
(73)
-
-
Contract
rights
$000
Software
$000
Distribution
network
$000
Intellectual
Property
$000
Inertia
Contracts
$000
1,715
196
-
201
2,112
303
-
(215)
2,200
186
1,333
-
18
1,537
3,516
-
(178)
4,875
489
-
-
65
554
-
-
(66)
488
642
-
-
-
642
-
-
-
642
12,595
4,292
(5,396)
1,571
13,062
3,047
(3,829)
(950)
11,330
Net Book Value
At 30 June 2015
At 30 June 2016
13. Intangible Assets
Gross carrying amount
At cost
Balance at 1 July 2014
Additions
Disposals/transfer to inventory
Effect of movement in
exchange rate
Balance at 30 June 2015
Additions
Disposals/transfer to inventory
Effect of movement in
exchange rate
Balance at 30 June 2016
48
Total
$000
2,042
513
432
2,987
(564)
284
2,707
(1,806)
(507)
(168)
(2,481)
541
(279)
(2,219)
506
488
Total
$000
15,627
5,821
(5,396)
1,855
17,907
6,866
(3,829)
(1,409)
19,535
THINKSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
13. Intangible Assets (continued)
Accumulated amortisation and
impairment
Balance at 1 July 2014
Amortisation expense
Effect of movement in
exchange rate
Impairment loss (i)
Balance at 30 June 2015
Amortisation expense
Effect of movement in
exchange rate
Impairment loss (i)
Balance at 30 June 2016
Net book value
At 30 June 2015
At 30 June 2016
Contract
rights
$000
Software
$000
Distribution
network
$000
Intellectual
Property
$000
Inertia
Contracts
$000
(1,149)
(306)
(148)
-
(1,603)
(386)
203
-
(1,786)
(55)
(141)
(13)
-
(209)
(751)
113
-
(847)
(488)
-
(66)
-
(554)
-
66
-
(488)
(449)
(33)
-
-
(482)
(32)
-
-
(514)
(1,486)
-
(445)
(470)
(2,401)
-
292
(804)
(2,913)
Total
$000
(3,627)
(480)
(672)
(470)
(5,249)
(1,169)
674
(804)
(6,548)
509
414
1,328
4,028
-
-
160
128
10,661
8,417
12,658
12,987
(i)
Impairment loss relates to the write off where the related contract has early terminated principally due to contract default.
Inertia contract assets acquired are measured at fair value based on the discounted cash flows expected to be derived from th e sale
or hire of the assets at the end of the term. This measurement inherently introduces estimation uncertainty. The Group continually
assesses current inertia proceeds and includes these in the estimation of inertia assets acquired. As such the fair value
measurement for inertia contract assets has been categorised as Level 3 fair value.
The following tables show the valuation techniques used in measuring Level 3 fair values, as well as the significant unobserv a ble
inputs used.
Valuation technique
Significant unobservable inputs
The fair value is based on current levels
of return (25%-30%) less an allowance
and
for
expected costs (5%-10%) of realization.
cancellations
(10%-30%)
The pre-tax discount rate applied to the
fair value is 13.21%.
if
it has
The Group recognises an intangible asset
arising
the unconditional
contractual right to receive income aris in g
from equipment and rights to the hiring
agreement (customer hire agreement for
goods) at the end of term. This inertia asset
is measured at fair value at the inception of
the hiring agreement, and is based on
discounted cash flows expected to be
derived from the sale or hire of the asset at
the end of the minimum term. Subsequent
to initial recognition the intangible asset is
measured at cost.
During the hiring term the valuation is
impaired for any assets that have been
written off.
At the end of the hiring term the intangible
asset is derecognised and the group
recognises the equipment as inventory at
the corresponding value.
Inter-relationship between key
unobservable inputs and fair value
measurement
In order of financial impact the
estimated fair value would increase
(decrease) if:
(cid:120) Expected sale value was higher
(lower)
(cid:120) Expected secondary hire term
was longer (shorter)
(cid:120) Expected cancellations/bad debts
were lower (higher)
(cid:120) Expected realization costs were
lower (higher)
(cid:120) Discount rate derived from group
cost of capital was lower (higher)(cid:3)
49
THINKSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
14. Interest in Subsidiaries
Interest in Subsidiaries
Country of Incorporation
RentSmart Limited
UK
ThinkSmart Insurance Services Administration Ltd UK
UK
ThinkSmart Financial Services Ltd
UK
ThinkSmart Europe Ltd
UK
ThinkSmart UK Ltd
UK
SmartCheck Ltd
Spain
SmartCheck Finance Spain SL
Spain
SmartPlan Spain SL
Italy
ThinkSmart Italy Srl
USA
ThinkSmart Inc
Australia
ThinkSmart Employee Share Trust
Australia
ThinkSmart LTI Pty Limited
15. Goodwill
Balance at beginning of financial period
Effect of movement in exchange rate
Balance at end of financial period
% of Equity
30 June 2016 30 June 2015
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
30 June 2016
$000
30 June 2015
$000
4,773
(571)
4,202
4,216
557
4,773
Impairment testing for cash-generating units containing goodwill
For the purpose of impairment testing, goodwill is allocated to the UK segment as disclosed in Note 22, which represents the
lowest level within the Group at which goodwill is monitored for internal management purposes. The goodwill arose on the
acquisition of RentSmart Limited.
The recoverable amount of the UK cash-generating unit was based on its value in use using b usin ess p lan assu mp tio ns an d a
discount rate approximating the weighted average cost of capital of the group and hence includes inherent estimation uncertain ty .
The recoverable amount of the unit was determined to be significantly higher than the carrying amount, therefore no imp airmen t
of goodwill is required, and no further sensitivity analysis is considered necessary.
Value in use is determined by discounting the future cash flows generated from the continuing use of the unit and was b ased o n
the following key assumptions:
(cid:120) Cash flows were projected based on the actual operating results for the 12 months to 30 June 2016 and management
estimates for 2017 to 2021.
(cid:120) A post tax discount rate of 8.46% (10.58% pre-tax) was applied in determining the recoverable amount of the unit.
50
30 June 2016
$000
30 June 2015
$000
936
159
2,000
3,095
116
157
73
346
1,037
231
1,106
2,374
81
148
1
230
Notes
30 June 2016
$000
30 June 2015
$000
13
6(a)
5,202
(80)
3,047
(303)
(4,054)
3,812
2,338
1,474
3,812
4,975
505
4,292
(68)
(4,502)
5,202
3,369
1,833
5,202
30 June 2016
$000
30 June 2015
$000
THINKSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
16. Trade and Other Payables, and Provisions
Trade and other payables
GST/VAT Payable
Other accrued expenses
Provisions
Annual leave
Long service leave
Other
17. Deferred Service Income
Balance at 1 July
Effect of movement in exchange rate
Intangible inertia assets acquired
Reversal due to intangible asset impairment
Recognised in Consolidated Statement of Profit and Loss
Deferred service income to be recognised within 12 months
Deferred service income to be recognised in greater than 12 months
18. Other interest bearing liabilities
Current
- Loan advances net of deferred costs of raising facility (i)
Non-current
- Loan advances net of deferred costs of raising facility (i)
Customer financing facilities
- Loan advances
- Amount used
- Amount unused
Total Facility (i)
(i) The loan is a £10m 5 year revolving credit facility provided by Santander UK PLC
dated 15 December 2014 to finance lease receivables.
Other finance facilities (business credit card):
-
-
amount used
amount unused
3,932
2,145
6,413
6,413
11,609
2,205
1,417
4,101
4,101
16,370
18,022
20,471
14
78
92
12
90
102
51
THINKSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
19. Issued Capital
(a)
Issued and paid up capital
30 June 2016
$000
30 June 2015
$000
95,477,922 Ordinary Shares fully paid (2015: 96,227,922)
27,838
27,838
Fully Paid Ordinary Shares
Balance at beginning of the financial period
Issue of new shares for employee loan-funded share plan
Cancellation of shares through buyback
Costs associated to buy-back
Cancellation employee loan-funded shares
Balance at end of the financial period
2016
Number
96,227,922
-
-
-
(750,000)
95,477,922
2016
$000
27,838
-
-
-
-
27,838
2015
Number
158,734,857
500,000
(63,006,935)
-
-
96,227,922
2015
$000
48,096
-
(19,715)
(543)
-
27,838
During the period no employee share options or loan-funded shares were exercised (2015: nil).
Ordinary Shares entitle the holder to participate in dividends and the proceeds on winding up the Company in p ro p ort io n t o t he
number of and amount paid on the Shares held.
On a show of hands, every holder of Ordinary Shares present in the meeting in person or by proxy is entitled to one vote, and upon
a poll each Share is entitled to one vote. The Company does not have authorised capital or par value in respect to its issued shares.
(b)(i) Share options (cid:177) employee options and loan-funded shares
The Company has an ownership-based remuneration scheme for Executives and senior employees. Each employee s hare o p tio n
converts to one ordinary share of ThinkSmart Limited on exercise and payment of the exercise price. Each employee loan-funded
share converts to one ordinary share of ThinkSmart Limited on exercise and repayment of the loan. The options carry neither
rights or dividends nor voting rights. The loan-funded shares carry voting and rights to dividends.
Options and loan-funded shares issued in previous periods:
(cid:120)
3,033,333 loan-funded shares were issued 10 August 2012 and exercisable at $0.1923, vesting and exercisable on 10 Augus t
2015 until 9 August 2017. The fair value of these options at grant date was $0.02-$0.06. Vesting of the loan-funded shares is
subject to achievement of the following performance conditions:
(cid:882) Tranche 1: 25% of loan-funded shares will vest if the share price hurdle of $0.35 is met in accordance with the
performance conditions;
(cid:882) Tranche 2: 25% of loan-funded shares will vest if the share price hurdle of $0.55 is met in accordance with the
performance conditions; and
(cid:882) Tranche 3: 50% of loan-funded shares will vest if the share price hurdle of $0.75 is met in accordance with the
performance conditions.
(cid:120)
750,000 options over ordinary shares were issued 4 July 2013 and exercisable at $0.2652, vesting and exercisable o n 4 Ju ly
2016 until 3 July 2018. The fair value of these options at grant date was $0.098-$0.118. Vesting of the options is subject t o
achievement of the following performance conditions:
(cid:882) Tranche 1: 25% of options will vest if the share price hurdle of $0.3802 is met in accordance with the performance
conditions;
(cid:882) Tranche 2: 25% of options will vest if the share price hurdle of $0.4889 is met in accordance with the performance
conditions; and
(cid:882) Tranche 3: 50% of loan options will vest if the share price hurdle of $0.5975 is met in accordance with the perfo rman ce
conditions.
52
THINKSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
Issued Capital (continued)
19.
(b)(i) Share options (cid:177) employee options and loan-funded shares (continued)
(cid:120)
3,243,333 loan-funded shares were issued 4 July 2013 and exercisable at $0.2652, vesting and exercisable on 4 March 2017
until 4 March 2019*. The fair value of these options at grant date was $0.098-$0.118. Vesting of the loan-fun d ed s hares is
subject to achievement of the following performance conditions:
(cid:882) Tranche 1: 25% of loan-funded shares will vest if the share price hurdle of $0.3802 is met in accordance with the
performance conditions;
(cid:882) Tranche 2: 25% of loan-funded shares will vest if the share price hurdle of $0.4889 is met in accordance with the
performance conditions; and
(cid:882) Tranche 3: 50% of loan-funded shares will vest if the share price hurdle of $0.5975 is met in accordance with the
performance conditions.
*extended from 4 July 2016 subject to shareholder approval
(cid:120)
1,000,000 (series 1) and 1,000,000 (series 2) options over ordinary shares were issued 11 June 2014 and exercisable at
$0.3448 and $0.4195 respectively, vesting and exercisable on 11 June 2017 until 11 June 2019. The fair value of these
options at grant date was $0.135-$0.158 for series 1 and $0.104-$0.131 for series 2. Vesting of the options is subject to
achievement of the following performance conditions:
Series 1
(cid:882) Tranche 1: 25% of loan-funded shares will vest if the share price hurdle of $0.4827 is met in accordance with the
performance conditions;
(cid:882) Tranche 2: 25% of loan-funded shares will vest if the share price hurdle of $0.6206 is met in accordance with the
performance conditions; and
(cid:882) Tranche 3: 50% of loan-funded shares will vest if the share price hurdle of $0.7586 is met in accordance with the
performance conditions.
Series 2
(cid:882) Tranche 1: 25% of loan-funded shares will vest if the share price hurdle of $0.5873 is met in accordance with the
performance conditions;
(cid:882) Tranche 2: 25% of loan-funded shares will vest if the share price hurdle of $0.7551 is met in accordance with the
performance conditions; and
(cid:882) Tranche 3: 50% of loan-funded shares will vest if the share price hurdle of $0.9229 is met in accordance with the
performance conditions.
(cid:120)
333,333 options over ordinary shares were issued 12 December 2014 and exercisable at $0.3471, vesting and exercisable o n
12 December 2017 until 11 December 2019. The fair value of these options at grant date was $0.053-$0.08. Vesting of the
options is subject to achievement of the following performance conditions:
Series 3
(cid:882) Tranche 1: 25% of options will vest if the share price hurdle of $0.5527 is met in accordance with the performance
conditions;
(cid:882) Tranche 2: 25% of options will vest if the s hare price hurdle of $0.7107 is met in accordance with the performance
conditions; and
(cid:882) Tranche 3: 50% of loan options will vest if the share price hurdle of $0.8686 is met in accordance with the perfo rman ce
conditions.
(cid:120)
2,000,000 options over ordinary shares were issued 31 March 2015 and exercisable at $0.4021, vesting and exercis ab le o n
31 March 2018 until 31 March 2020. The fair value of these options at grant date was $0.071-$0.096. Vesting of the options
is subject to achievement of the following performance conditions:
(cid:882) Tranche 1: 25% of options will vest if the share price hurdle of $0.4691 is met in accordance with the performance
conditions;
(cid:882) Tranche 2: 25% of options will vest if the share price hurdle of $0.6032 is met in accordance with the performance
conditions; and
(cid:882) Tranche 3: 50% of loan options will vest if the share price hurdle of $0.7372 is met in accordance with the perfo rman ce
conditions.
53
THINKSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
Issued Capital (continued)
19.
(b)(i) Share options (cid:177) employee options and loan-funded shares (continued)
(cid:120)
500,000 loan-funded shares were issued 18 September 2014 and exercisable at $0.3620, vesting and exercisable o n 22 M ay
2017 until 18 September 2019. The fair value of these options at grant date was $0.133-$0.17. Vesting of the loan-funded
shares is subject to achievement of the following performance conditions:
(cid:882) Tranche 1: 25% of options will vest if the share price hurdle of $0.5537 is met in accordance with the performance
conditions;
(cid:882) Tranche 2: 25% of options will vest if the share price hurdle of $0.7119 is met in accordance with the performance
conditions; and
(cid:882) Tranche 3: 50% of loan options will vest if the share price hurdle of $0.8701 is met in accordance with the perfo rman ce
conditions.
The value of these options and loan-funded shares will be expensed over the vesting period in accordance with AASB 2.
No options or loan-funded shares were issued in the current period.
Measurement of fair values
The fair value of employee share options is measured using a binomial model and loan -funded shares are measured using a Monte-
Carlo simulation model.
Other measurement inputs include share price on measurement date, exercise price of the instrument, weig hted average exp ect ed
life of the instruments (based on historical experience and general option holder behaviour), expected dividends, and the ris k-free
interest rate (based on government bonds). Service and non-market performance conditions attached to the transactio ns are n o t
taken into account in determining fair value.
Below are the inputs used to measure the fair value of the options and loan -funded shares:
Employee
options and
loan-funded
shares
Employee
options and
loan-funded
shares
Employee
options and
loan-funded
shares
Employee
options and
loan-funded
shares
30 June 2015 30 June 2015 30 June 2015 30 June 2014
31/03/2015
$0.071-
$0.096
$0.365
12/12/2014
$0.053-
$0.080
$0.315
$0.4021
45%
4 years
4.0%
1.76%
$0.3471
50%
4 years
4.7%
2.35%
22/5/2014
$0.133-
$0.170
$0.390
$0.3620
55%
4.2 years
1.6%
3.04%
11/06/2014
$0.104-
$0.158
$0.375
$0.3448/$0.41
95
55%
4 years
1.6%
3.1%
Employee
options and
loan-funded
shares
31 December
2013
4/07/2013
$0.098-
$0.118
$0.27
$0.2652
55%
4 years
0%
2.99%
Employee
options and
loan-funded
shares
31 December
2012
10/08/2012
$0.02-$0.06
$0.19
$0.1923
50%
4 years
2.14%
2.5%
Period ending
Grant date
Fair value at grant date
Grant date share price
Exercise price
Expected volatility
Option/loan share life
Dividend yield
Risk-free interest rate
54
THINKSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
19. Issued Capital (continued)
(b)(i) Share options (cid:177) employee options and loan-funded shares (continued)
The following reconciles the outstanding share options/loan-funded shares granted under the employee share option plan and loan-
funded shares at the beginning and end of the financial period:
Balance at beginning of the financial year
Granted during the financial period
Forfeited during the financial period
Expired during the financial period
Balance at the end of financial period
Exercisable at end of the financial period
Period ending 30 June 2016
Period ending 30 June 2015
Number of
options/loan
funded shares
7,533,333
-
(950,000)
-
6,583,333
250,000
Weighted
average
exercise price
$
$0.33
-
$0.19
-
$0.35
$0.19
Number of
options/loan
funded shares
5,050,000
2,833,333
(350,000)
-
7,533,333
-
Weighted
average
exercise price
$
$0.29
$0.39
$0.24
-
$0.33
-
The options and loan-funded shares outstanding at 30 June 2016 have an exercise price in the range of $0.1923 to $0.4195 (30
June 2015: $0.1923 to $0.4195) and a weighted average contractual life of 2.95 years (30 June 2015: 3.72 years).
The following is the total expense recognised for the period arising from share-based payment transactions:
Share options/loan-funded shares granted in 2013 (cid:177) equity settled
Share options/loan-funded shares granted in 2014 (cid:177) equity settled
Share options/loan-funded shares granted in 2015 (cid:177) equity settled
Total expense recognised as employee costs (note 6c)
(b)(ii) Share compensation (cid:177) employee shares
12 months to 30
June 2016
$000
49
118
54
221
12 months to 30
June 2015
$000
54
86
52
192
No shares of the Company were granted as remuneration and no share options vested during the reporting period.
(c) Dividends
Dividends paid or declared by the Company to members since the end of the previous financial period were.
Ordinary dividend
Ordinary dividend
(d) Franking credits
Cents per
share
Total amount
3.5 cents
$3,280,478
1.1 cents
$1,031,007
Franked/
unfranked
Franked
Franked
Date paid
9 September 2015
21 March 2016
Franking credit account balance as at the beginning of the financial p eriod at a tax
rate of 30% (2015: 30%)
Franking credits attached to the dividend paid during the financial period
Franking credits from the payment of income tax paid and payable as at the end of the
financial period
Franking credit account balance as at the end of the financial period at a tax rate of
30% (2015: 30%)
30 June 2016
$000
30 June 2015
$000
1,875
(1,894)
208
189
2,885
(881)
(129)
1,875
55
THINKSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
20.
Notes to the Cash Flow Statement
(a) For the purposes of the cash flow statement, cash and cash equivalents includes cash on hand and in banks and investmen t s
in money market instruments, net of outstanding bank overdrafts. Cash and cash equivalents at the end of the financial
period as shown in the cash flow statement is reconciled to the related items in the balance sheet as follows:
Reconciliation of cash and cash equivalents
Cash balance comprises:
- Available cash and cash equivalents
- Restricted cash
as at
30 June 2016
$000
as at
30 June 2015
$000
8,537
210
8,747
16,396
436
16,832
(cid:55)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:72)(cid:91)(cid:83)(cid:82)(cid:86)(cid:88)(cid:85)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:85)(cid:76)(cid:86)(cid:78)(cid:15)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:72)(cid:81)(cid:86)(cid:76)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:68)(cid:79)(cid:92)(cid:86)(cid:76)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)ded in
Note 25.
(b) Reconciliation of the profit/(loss) for the period to net cash flows from
12 months to
30 June 2016
$000
12 months to
30 June 2015
$000
operating activities:
Profit after tax
Add back non-cash and non-operating items:
Depreciation
Amortisation
Impairment losses on intangible assets
Impairment losses on finance lease receivables
Foreign currency loss/(gain) unrealised
Equity settled share-based payment
(Increase)/decrease in assets:
Trade receivables, deposits held with funders and other movements in lease
assets
Finance lease receivable
Deferred tax asset
Other assets
Rental asset inventory
Increase/(decrease) in liabilities:
Trade and other creditors
Deferred service revenue
Provisions
Provision for income tax
Other payables
Net cash (used in)/from operating activities
618
279
1,169
501
302
60
221
(172)
46
82
(265)
670
(101)
(1,390)
116
(929)
822
2,029
3,490
168
516
470
42
(17)
190
(404)
(223)
73
1,079
(180)
(700)
227
-
654
-
4,931
56
THINKSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
21. Leases and Hire Purchase Obligations
Operating leases (cid:177) leasing arrangements
Operating leases relate to office facilities with lease terms of up to 6 years. All operating lease contracts co ntain market rev iew
clauses in the event that the consolidated entity exercises its option to renew. The consolida ted entity does not have an o p tion t o
purchase the leased asset at the expiry of the lease period.
Non-cancellable operating lease payments:
No later than 1 year
Later than 1 year and not later than 5 years
More than 5 years
June 2016
$000
June 2015
$000
173
691
201
1,065
196
784
425
1,405
No provisions have been recognised in respect of non-cancellable operating leases.
22. Segment Information
The Group has one reportable segment which comprise the (cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)core business unit (UK). Head office and oth er u n allo cat ed
corporate functions are shown separately.
For the segment, the Board and the CEO review internal management reports on a monthly basis. The composition of the
reportable segment is as follows:
UK:
- ThinkSmart Europe Ltd
- RentSmart Ltd
- ThinkSmart Insurance Services Administration Ltd
- ThinkSmart Financial Services Ltd
Corporate and unallocated:
- ThinkSmart Limited
57
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C
THINKSMART LIMITED
NOTES TO THE FI NANCIAL STATEMENTS
22. Segment Information (continued)
Major customer
(cid:53)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:86)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:73)(cid:88)(cid:81)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:83)(cid:68)(cid:85)(cid:87)(cid:81)(cid:72)(cid:85)(cid:86)(cid:3)(cid:85)(cid:72)(cid:83)(cid:85)(cid:72)(cid:86)(cid:72)(cid:81)(cid:87)(cid:3)$7.6m (30 June 2015: $5.8m) of the (cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:87)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:17)
23. Remuneration of Auditor
Audit and review services:
Auditor of the Company:
Audit and review of financial reports (Australia)
Audit and review of financial reports (Overseas)
Services other than statutory audit:
Tax compliance and advisory services
Other regulatory services*
Advisory services
Transaction compliance and advisory services
*relates to statutory accounting requirements within Spain and Italy
The Group(cid:182)s auditors are KPMG.
24. Commitments and Contingent Liabilities
STB funded leases (off balance sheet)
STB financial guarantee contract
Less provision on credit support balance
12 Months to
June 2016
$
12 Months to
June 2015
$
52,762
173,004
50,000
158,649
225,766
208,649
112,633
36,791
26,297
782,301
958,022
10,542
59,581
8,461
-
78,584
12 Months to
June 2016
$,000
12 Months to
June 2015
$,000
37,662
52,182
6,174
(2,213)
3,961
8,575
(4,923)
3,652
Under the terms of the UK current funding agreement with Secure Trust Bank (STB), the group is obliged to purchase d elin q uen t
leases from the funder at the funded amount. The Group has entered into a financial guarantee contract wit h STB fo r wh ich t h e
Group has provided capital to support future delinquent leases and at the same time recognised a prov isio n ag ain st t h is d ep osit
being its estimate of the funded amount of these leases that are likely to become delinquent in the future. The Group estimat es t h is
amount based on historical loss experience for assets with similar characteristics.
(cid:55)(cid:75)(cid:72)(cid:3)(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:86)(cid:88)(cid:83)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:69)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:81)(cid:72)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:76)(cid:86)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:74)(cid:81)(cid:76)(cid:86)(cid:72)(cid:71)(cid:3)(cid:68)(cid:86)(cid:3)(cid:68)(cid:81)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:69)(cid:68)(cid:79)(cid:68)(cid:81) (cid:70)(cid:72)(cid:3)(cid:86) (cid:75) (cid:72)(cid:72)(cid:87)(cid:3)(cid:90)(cid:76)(cid:87) (cid:75) (cid:76)(cid:81) (cid:3)(cid:71) (cid:72)(cid:83)(cid:82) (cid:86)(cid:76)(cid:87) (cid:86)(cid:3)(cid:75) (cid:72)(cid:79)(cid:71) (cid:3)(cid:69) y
funders.
59
THINKSMART LIMITED
NOTES TO THE FI NANCIAL STATEMENTS
25. Financial Instruments
(a)
Interest rate risk
(cid:36)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:71)(cid:68)(cid:87)(cid:72)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:83)(cid:85)(cid:82)(cid:73)(cid:76)(cid:79)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87) bearing financial instruments were:
Variable rate instruments
Cash and cash equivalents (note 20a)
Deposits held by funder (note 24)
Other interest bearing liabilities
Net financial assets
Carrying amount
June 2016
$000
June 2015
$000
8,747
6,174
(6,413)
8,508
16,832
8,575
(4,101)
21,306
Sensitivity analysis
(cid:36)(cid:3)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:20)(cid:8)(cid:3)(cid:76)(cid:81)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:85)(cid:68)(cid:87)(cid:72)(cid:86)(cid:3)(cid:90)(cid:82)(cid:88)(cid:79)(cid:71)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:76)(cid:81)(cid:70)(cid:85)(cid:72)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:82)(cid:85)(cid:3)(cid:71)(cid:72)(cid:70)(cid:85)(cid:72)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:83)(cid:85)(cid:82)(cid:73)(cid:76)(cid:87) for continuing operatio n s b y t he amo u n ts
shown below (2015: 1% increase $0.213m, 1% decrease $0.213m). This analysis assumes that all other factors remain constant
including foreign currency rates.
Variable rate instruments
Net profit sensitivity
(b) Fair value of financial instruments
Profit or Loss
Increase
1%
$000
85
85
Decrease
1%
$000
(85)
(85)
The carrying amounts of financial assets and financial liabilities recorded in the financial statements are not materially differen t t o
their fair values.
Fair value hierarchy
The financial instruments carried at fair value have been classified by valuation method.
The different levels have been defined as follows:
(cid:120)
(cid:120)
(cid:120)
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 d irect ly
(i.e., as prices) or indirectly (i.e., derived from prices)
inputs for the asset or liability that are not based on observable market data (unobservable inputs)
Level 3:
Key assumptions in the valuation of the instruments were limited to interpolating interest rates for certain future periods where there
was no observable market data. The majority of financial assets and liabilities are measured at amortised cost. The o nly fin an cial
instrument measured at fair value is the interest rate swaps with Santander UK plc. This is a level 2 financial instrument with a fair
value of $27,260.
60
THINKSMART LIMITED
NOTES TO THE FI NANCIAL STATEMENTS
25. Financial Instruments (continued)
(c) Credit risk management
(cid:55)(cid:75)(cid:72)(cid:3)(cid:80)(cid:68)(cid:91)(cid:76)(cid:80)(cid:88)(cid:80)(cid:3)(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:85)(cid:76)(cid:86)(cid:78)(cid:3)(cid:72)(cid:91)(cid:83)(cid:82)(cid:86)(cid:88)(cid:85)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:3)(cid:76)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:86)(cid:88)(cid:80)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:85)(cid:85)(cid:92)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86) . The carrying
(cid:68)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:76)(cid:86)(cid:3)(cid:72)(cid:91)(cid:83)(cid:82)(cid:86)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:85)(cid:76)(cid:86)(cid:78)(cid:3)(cid:68)(cid:87) the reporting date is:
Cash and cash equivalents
Trade receivables
Loan and lease receivable (current)
Loan and lease receivable (non-current)
Prepayments (current)
Sundry debtors
Other non-current assets
Note
20(a)
9
9
10
11
June 2016
$000
8,747
605
5,106
2,785
2,433
297
5,963
25,936
June 2015
$000
16,832
1,108
2,315
2,376
2,507
839
5,483
31,460
(cid:55)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:85)(cid:85)(cid:92)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)are exposed to credit risk at the reporting date by geographic region is:
Australia
UK
Other
June 2016
$000
378
25,530
28
25,936
June 2015
$000
3,161
28,224
75
31,460
The carrying amount of the (cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:68)(cid:85)(cid:72) exposed to credit risk at the reporting date by types of counterparty is:
Banks (i)
Funders
Insurance partners (ii)
Retail customers
Others
June 2016
$000
8,747
3,961
4,435
7,890
903
25,936
June 2015
$000
16,832
3,306
4,684
4,691
1,947
31,460
(c) Cash and cash equivalents are held with banks with S&P ratings of A- and AA-.
(ii)
In the current financial reporting period, 100% (prior year: 100(cid:8)(cid:12)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:85)(cid:72)(cid:83)(cid:68)(cid:92)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:53)(cid:72)(cid:81)(cid:87)(cid:54)(cid:80)(cid:68)(cid:85)(cid:87)(cid:3)(cid:47)(cid:76)(cid:80)(cid:76)(cid:87)(cid:72)(cid:71)(cid:182)(cid:86)(cid:3)(UK)
upfront insurance premium payments to Allianz on behalf of the rental customer. The premiums are recovered from the
customer on a monthly basis. In the event the customer defaults, the policy is cancelled and Allianz refu n d s t h e u n exp ired
premium.
61
THINKSMART LIMITED
NOTES TO THE FI NANCIAL STATEMENTS
25. Financial Instruments (continued)
(c) Credit risk management (continued)
(cid:55)(cid:75)(cid:72)(cid:3)(cid:68)(cid:74)(cid:72)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:87)(cid:85)(cid:68)(cid:71)(cid:72)(cid:3)and lease receivables at the reporting date was:
Not past due
Past due 0-30 days
Past due 31-120 days
Past due 121-365 days
Gross
2016
$000
8,153
212
52
79
8,496
Impairment
2016
$000
38
25
71
44
178
Gross
2015
$000
5,031
635
47
86
5,799
Impairment
2015
$000
23
5
23
72
123
The movement in the allowance for impairment in respect of trade and lease receivables during the period was as follows:
Balance at 1 July
Impairment loss recognised
Bad debt written off
Effect of exchange rate movement
Balance at 30 June
June 2016
$000
June 2015
$000
123
357
(287)
(15)
178
59
226
(170)
8
123
Trade and lease receivables are reviewed and considered for impairment on a periodic basis, based on the number of days
outstanding and number of payments in arrears.
(d) Currency risk management
Exposure to currency risk
(cid:55)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:182)(cid:86)(cid:3)(cid:72)(cid:91)(cid:83)(cid:82)(cid:86)(cid:88)(cid:85)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:73)(cid:82)(cid:85)(cid:72)(cid:76)(cid:74)(cid:81)(cid:3)(cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:81)(cid:70)(cid:92)(cid:3)(cid:85)(cid:76)(cid:86)(cid:78)(cid:3)(cid:68)(cid:87)(cid:3)(cid:69)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:71)(cid:68)(cid:87)(cid:72)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:68)(cid:86)(cid:3)(cid:73)(cid:82)(cid:79)(cid:79)(cid:82)(cid:90)(cid:86)(cid:15)(cid:3)(cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:81)(cid:82)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:68)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)(cid:86)(cid:29)
30 June 2016
GBP
£000
4,629
459
4,322
(1,007)
8,403
EUR
(cid:188)(cid:19)(cid:19)(cid:19)
18
-
-
7
25
30 June 2015
GBP
£000
6,238
684
2,277
(1,197)
8,002
EUR
(cid:188)(cid:19)(cid:19)(cid:19)
51
-
-
(4)
47
USD
$000
-
-
-
(3)
(3)
USD
$000
-
-
-
(3)
(3)
Cash and cash equivalents
Trade receivables
Lease receivable
Trade and other payables
Net exposure
Cash and cash equivalents
Trade receivables
Lease receivable
Trade and other payables
Net exposure
62
THINKSMART LIMITED
NOTES TO THE FI NANCIAL STATEMENTS
25. Financial Instruments (continued)
(d) Currency risk management (continued)
The following significant exchange rates applied during the period:
AUD
EUR
GBP
USD
Average rate
2016
0.6561
0.4857
0.7283
2015
0.6963
0.5307
0.8382
Reporting date spot rate
2015
0.6866
0.4885
0.7680
2016
0.6699
0.5549
0.7426
Sensitivity analysis
A 10% strengthening of the Australian dollar against the following currencies at 30 June would have increased/ (decreased) eq uit y
and profit and loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rat es, remain
constant. The analysis is performed on the same basis for 2015:
30 June 2016
EUR
GBP
USD
30 June 2015
EUR
GBP
USD
Equity
$000
Profit or loss
$000
128
(941)
261
(7)
(1,151)
-
5
(96)
-
8
(489)
1
A 10% weakening of the Australian dollar against the above currencies at 30 June would have had an equal but opposite effect o n
the above currencies to the amounts shown above, on the basis that all other variables remain constant.
(e) Liquidity risk management
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the imp act
of netting agreements:
Non-derivatives
30 June 2016
Trade and other payables
Other interest bearing liabilities
30 June 2015
Trade and other payables
Other interest bearing liabilities
Carrying
Amount
$000
Contractual
cash flow
$000
Less than 1
year
$000
1-2 years
$000
2-5 years
$000
3,095
6,413
9,508
2,374
4,101
6,475
(3,095)
(6,744)
(9,508)
(2,374)
(4,352)
(6,726)
(3,095)
(4,406)
(7,244)
(2,374)
(2,173)
(4,547)
-
(2,338)
(2,264)
-
(2,179)
(2,179)
-
-
-
-
-
-
63
THINKSMART LIMITED
NOTES TO THE FI NANCIAL STATEMENTS
26. Related Party Disclosures
The following were Key Management Personnel of the Group at any time during the reporting period and unless otherwise
indicated were Key Management Personnel for the entire period:
Executive Chairman
N Montarello
Executive Directors
F de Vicente (Chief Executive Officer)
K Jones (Group Strategy and Development Director)
Non-Executive Directors
D Griffiths (deputy Chairman)
P Gammell (appointed 23 May 2016)
Executives
G Halton (Chief Financial Officer)
D Twigg (Chief Operating Officer (Credit and Operations))
D Fletcher (Sales and Business Development Director) appointed 7 December 2015
The Key Management Personnel remuneration (cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:181)(cid:72)(cid:80)(cid:83)(cid:79)(cid:82)(cid:92)(cid:72)(cid:72)(cid:3)(cid:69)(cid:72)(cid:81)(cid:72)(cid:73)(cid:76)(cid:87)(cid:86)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)(cid:182)(cid:3)(cid:76)(cid:81)(cid:3)Note 6(c) is as follows:
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Share-based payments
27. Subsequent Events
12 Months to
June 2016
$
12 Months to
June 2015
$
2,781,001
67,591
9,312
215,312
3,073,216
1,961,085
57,826
6,211
177,146
2,202,268
As set out in the ASX announcement on 25 July 2016, the company has entered an agreement to und ert ake a p lacemen t o f 20m
shares to a fund that is managed by Henderson Global Investors at a price of 25 pence per share (approximately 44 cents per s hare).
Following completion ThinkSmart will then seek to buy-back 10m shares by way of an off-market tender buy-back before
requesting admission to AIM and formally applying to delist from the ASX.
A timetable for these events is laid out in the announcement , but the board, subject shareholder and regulatory approval is
anticipating the above transactions to be completed by early November 2016.
64
THINKSMART LIMITED
NOTES TO THE FI NANCIAL STATEMENTS
28. Earnings per Share
Profit/(loss) after tax attributable to
ordinary shareholders
Weighted average number of ordinary
shares (basic)
Weighted average number of ordinary
shares (diluted)
Earnings per share
Basic earnings/(loss) per share (cents)
Diluted earnings/(loss) per share (cents)
12 months to
30 June 2016
$000
12 months to 30
June 2015
$000
618
30 June 2016
Number
3,490
30 June 2015
Number
95,560,114
127,672,035
95,685,114
129,555,185
30 June 2016
30 June 2015
0.65
0.65
2.73
2.69
At 30 June 2016 1,000,000 (30 June 2015:1,500,000) employee share options were excluded from the diluted weighted average
number of ordinary shares calculation as they do not currently meet their share price hurdle and thus would have been anti-dilu t ive
if included.
29.
Parent Entity Disclosures
As at, and throughout, the financial period ending 30 June 2016, the parent entity of the Group was ThinkSmart Limited.
Result of parent entity
(Loss)/profit for the period
Total comprehensive (loss)/profit for the period
Financial position of parent entity at period end
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of the parent entity comprising of:
Share capital
Retained earnings
Total equity
12 Months to
30 June 2016
$000
12 Months to
30 June 2015
$000
2,427
2,427
423
27,666
1,681
1,681
27,838
(1,853)
25,985
588
588
3,236
28,574
705
705
27,838
31
27,869
Parent entity contingencies
The parent entity continues to provide financial support to ThinkSmart Europe Ltd through an intercompany loan . Rep aymen t o f
this loan will not be requested until ThinkSmart Europe Ltd is in a financial position to make such a payment without affect ing it s
operational capabilities. The parent entity has provided an unlimited guarantee to Santander UK PLC in support o f t h e fin an cin g
facility provided to ThinkSmart Financial Services Ltd. The parent entity has issued an unlimited parental guarantee in favour of it s
UK clearing bank to guarantee the obligations of RentSmart Limited with respect to its Direct Debit and corporate credit card
facilities.
The Directors are of the opinion that provisions are not required in respect o f these matters, as it is not probable that a future
sacrifice of economic benefits will be required or the amount is not capable of reliable measurement .
65
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67
THINKSMART LIMITED
CORPORATE INFORMATION
ABN 24 092 319 698
Directors
N R Montarello (Executive Chairman)
D Griffiths (Deputy Chairman)
P Gammell (Non-Executive Director)
F de Vicente (Chief Executive Officer)
K Jones (Group Strategy and Development Director)
Company Secretary
Neil Hackett
Registered and Principal Office
Suite 5, 531 Hay Street
Subiaco
WA 6008
Australia
Phone: +61 8 9389 4403
Share Register
Computershare Investor Services Pty Limited
Level 11, 172 St Georges Terrace
Perth WA 6000
Australia
Phone: 1300 787 272
ThinkSmart Limited shares are listed on the Australian Securities Exchange (ASX code: TSM)
Solicitors
Herbert Smith Freehills
250 St Georges Terrace
Perth WA 6000
Australia
Auditors
KPMG
235 St Georges Terrace
Perth WA 6000
Australia
Bankers
Westpac Banking Corporation
109 St Georges Terrace
Perth WA 6000
Australia
68
Annual Report 2016
SHAREHOLDER INFORMATION
The shareholder information set out below was applicable as at 18 October 2016.
Distribution of Equity Security
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Number of
ordinary shares
Security holders
Options
100
520
291
588
70
-
-
-
-
2
There were 207 holders of less than a marketable parcel of Ordinary Shares
Equity Security Holders
Twenty largest quoted equity security holders
The names of the 20 largest holders of quoted equity securities are listed below:
Name
Units
% of Units
MR NATALE RONALD MONTARELLO
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
WULURA INVESTMENTS PTY LTD
THINKSMART LTI PTY LTD
DARJU PTY LTD
PHOENIX PROPERTIES INTERNATIONAL PTY LTD
WULURA INVESTMENTS PTY LTD
WULURA INVESTMENTS PTY LTD
MR NATALE RONALD MONTARELLO + MRS KIMBERLY MONTARELLO
RUDIE PTY LTD
MR FERNANDO VICENTE LOPEZ
WULURA INVESTMENTS PTY LTD
MR DANIEL EDWARD GAMMELL
MR ROBERT BAGNARA
WULURA INVESTMENTS PTY LTD
MR HONG KEONG CHIU + MS YOK KEE KHOO
NTH CITRUS PTY LTD
MR MILAN HERCEG
CUSTODIAN SJST PTY LTD
Total
27,021,956
24,977,407
8,350,448
5,537,740
2,500,000
2,107,239
2,000,000
1,636,118
1,566,948
1,535,000
926,091
803,000
764,144
605,000
600,000
577,622
572,077
484,762
430,000
23.25
21.49
7.18
4.76
2.15
1.81
1.72
1.41
1.35
1.32
0.80
0.69
0.66
0.52
0.52
0.50
0.49
0.42
0.37
415,000
83,410,552
0.36
71.76
69
Annual Report 2016
Unquoted Equity Securities
Options issued under the ESOP to take up ordinary shares
2,333,000
2
Number on Issue
Number of holders
The Company has no other unquoted equity securities.
Substantial Holders
Substantial holders in the Company are set out below:
Include those above 5%
MR NATALE RONALD MONTARELLO
HENDERSON GLOBAL INVESTORS LIMITED
PETER GAMMELL
Voting Rights
Number of
ordinary shares
Percentage
%
30,311,036
20,000,000
10,687,572
26.20
17.32
9.26
The voting rights attaching to equity securities are set out below:
a)
b)
c)
Ordinary Shares
On a show of hands, every holder of Ordinary Shares present in the meeting in person or by proxy
is entitled to one vote, and upon a poll each Share is entitles to one vote.
Loan-Funded Ordinary Shares issued under the Long-Term Incentive Plan
Shares under the plan rank equally in all respects with Ordinary Shares, Including voting rights.
Options
There are no voting rights attached to the options.
70
CORPORATE INFORMATION
ABN 24 092 319 698
Directors
N R Montarello (Executive Chairman)
F de Vicente (Chief Executive Officer)
K Jones (Group Strategy & Development Director)
P Gammell (Non-Executive Director)
Solicitors
Herbert Smith Freehills
250 St Georges Terrace
Perth WA 6000
Australia
Auditors
KPMG
235 St Georges Terrace
Perth WA 6000
Australia
Bankers
Westpac Banking Corporation
109 St Georges Terrace
Perth WA 6000
Australia
Company Secretary
Neil Hackett
ThinkSmart United Kingdom Office:
7th Floor, Oakland House,
Talbot Road, Old Trafford
Manchester M16 0PQ, UK
Phone: +44 161 333 2400
Registered and Principal Office
Suite 5, 531 Hay Street
Subiaco
Western Australia 6008
Phone: +61 8 9380 8333
Share Register
Computershare Investor Services Pty Limited
Level 11, 172 St Georges Terrace
Perth WA 6000
Australia
Phone: 1300 787 272
ThinkSmart Limited shares are listed on the
Australian Securities Exchange (ASX code: TSM)