OUR FUTURE IS CLEAR ANNUAL REPORT 2016 OzForex Group Limited ACN 165 602 273 CONTENTS 02 WE ARE OFX... 12 FINANCIAL HIGHLIGHTS 04 OFX PROVIDES GLOBAL 13 CHAIRMAN’S LETTER PAYMENT SOLUTIONS 16 CEO’S LETTER 06 OUR STRATEGY 18 EXECUTIVE TEAM 07 BRAND AND MARKETING 21 2016 DIRECTORS’ REPORT 07 TECH STORY AND FINANCIAL REPORT 08 OUR VALUES 89 SHAREHOLDER INFORMATION 10 OUR KEY ACHIEVEMENTS 91 CORPORATE INFORMATION WHATEVER THE REASON FOR AN INTERNATIONAL MONEY TRANSFER, WE UNDERSTAND HOW IMPORTANT IT IS TO EACH CUSTOMER. WE TREAT EVERY TRANSFER LIKE IT’S THE ONLY THING THAT MATTERS TO US. ANNUAL GENERAL MEETING 4PM ON WEDNESDAY 3 AUGUST 2016 OZFOREX GROUP LIMITED ACN 165 602 273 LEVEL 19, 60 MARGARET STREET SYDNEY NSW 2000 ANNUAL REPORT 2016 01 WE ARE OFX... ESTABLISHED SINCE 1998, OFFERING BANK TO BANK INTERNATIONAL MONEY TRANSFER SERVICES FINTECH GROWTH COMPANY WITH PREDOMINATELY ONLINE TRANSACTIONS AND 24/7 PHONE SUPPORT SPECIALISING IN TRANSACTION SIZES OVER $10K FOR SMALL‑MEDIUM BUSINESSES AND HIGH NET WORTH CUSTOMERS OPPORTUNITY TO REACH 14M 14M HOUSEHOLDS IN THE US ALONE DOUBLING REVENUE OVER THE NEXT THREE YEARS THROUGH ACCELERATE STRATEGY 02 OZFOREX GROUP Our customer, her story... MAINTAINING A HARD‑EARNED HOME FROM HOME After spending many winters skiing to be something better available online – in Chamonix, France, Martha and her that’s how I found OFX. husband decided to buy property there. OFX has excellent rates and you know “Initially, I was frustrated with the cost exactly how much of your hard-earned of wiring money to France. It took a long money will arrive at your bank account. time, the exchange rate was poor, and Plus, the wire fees are more than fair – the transfer fees were large. There had it’s a bargain.” ANNUAL REPORT 2016 03 OFX PROVIDES GLOBAL PAYMENT SOLUTIONS London San Francisco Toronto OFX London processing payments OFX Toronto processing payments PAYMENT PROCESSING OFX Sydney processing payments How OFX works as a business: The client is called by OFX, An electronic verification Transfer is booked and OFX covers foreign identified and their reason (EV) check is performed; currency is purchased by OFX exchange market exposure for transfer evaluated. if further ID is required, through a panel of wholesale via peer to peer netting and it is requested and vetted. foreign exchange providers. clears residual balances. 04 OZFOREX GROUP How OFX disrupts: Standard rate – the rate banks and other providers ordinarily give to customers. London Up to 85% saving on average. San Francisco Toronto OFX rate – the rate OFX provides customers, with a Hong Kong small margin taken. Average margin rate taken by OFX – 0.55%. Interbank rate – the rate banks give each other to swap currency. Sydney Auckland How OFX works as a business: Global payments made locally: A client registers and makes a They transfer funds from their OFX then transfers the funds from transfer through our online platform. bank account into a local OFX bank our local bank account within the account in that country. country they are sending money to. ANNUAL REPORT 2016 05 OUR STRATEGY In August 2015, we announced that we would double revenue within the next three years. In order to deliver our vision and achieve this goal, we have implemented the Accelerate Strategy, which has three core enablers at its heart: Brand and Marketing, Technology and People. 06 OZFOREX GROUP BRAND AND MARKETING We’re moving from seven • Brand differentiation – stand out versus our competitors independent brands to • Efficiency – team productivity, and ability to diversify media a single global brand, • More identifiable to customers moving markets OFX. We have already launched OFX in Australia and are rolling the brand out globally. TECH STORY We’re a disruptor in the Financial Services industry – the original Australian Fintech. We continue to successfully merge the finance and technology world to drive innovation, which is fundamental to deliver on customer expectations, and continue to disrupt. VELOCITY OF FEATURES DELIVERED number of features of number delivered Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY15 FY16 FY17 Technology and people are the key enablers for Our key technology investments involve moving our business. Over the last six months, we have production and product development to Amazon brought product and technology together with Web Services, enabling better business decisions dedicated product teams, and implemented a through big data, exploiting global cloud‑based technology restructure to ensure that we remain phone and call centre solutions and investments agile and deliver successfully on our vision. in our new websites. ANNUAL REPORT 2016 07 OUR VALUES OUR PEOPLE The People and Culture team helps to ensure that our more than 270 employees achieve their best self. New office space in Sydney, Toronto and Auckland has seen a dramatic increase in enjoyment and productivity, together with being a very attractive element of our overall employee value proposition. People and Culture initiatives such as Elevate, which focuses on wellness and overall OFX experience; the Good Vibes Committee, which delivers fun social occasions; and training, reward and recognition programs linked closely to our values ensure that OFX continues to attract and retain the highest calibre of employees. A large element of the OFX culture continues to be driven by diversity of gender (over 40% of our business is supported by women) and nationality (47 different nationalities ensure innovative thinking and customer empathy) alongside the values shared by everyone at OFX. 08 OZFOREX GROUP PUSH GSD BOUNDARIES WE ARE SELF STARTERS AND TEAM FINISHERS. THERE’S ALWAYS A SMARTER WAY. FIND IT. USE IT. WIN. ALWAYS KEEP WE’RE BETTER LEARNING TOGETHER GROW YOUR EXPERTISE. UNDERSTAND INTUITIVELY, SHARE IT FREELY. DEFINE ARTICULATELY AND SOLVE JOINTLY. INSPIRE CUSTOMER CONFIDENCE YOUR COMMITMENT TO THEM WILL EARN THEIR COMMITMENT TO US. ANNUAL REPORT 2016 09 OUR KEY ACHIEVEMENTS Launch of the Accelerate Strategy PEOPLE: Kirsten Pollard, Head of People and Culture. Maria Loyez, PEOPLE: Chief Marketing Officer. Richard Kimber, Adam Smith, Chief Executive Officer. Chief Operating Officer. TECHNOLOGY: Toronto network upgrade. April 2015 PEOPLE: TECHNOLOGY: Karin Visnick, Mobile app launch. Acting Head of North America. TECHNOLOGY: Xero integration. MARKETING: Web analytics integration with Google stack. OFX brand positioning and tone of voice. Programmatic display activity launched. Set up content and social team. 10 OZFOREX GROUP PEOPLE: Craige Pendleton‑Browne, PEOPLE: Chief Technology Officer. Ken Wills, Head of Canada. New offices, Sydney. TECHNOLOGY: MARKETING: Sydney network upgrade. TECHNOLOGY: Lower minimum OFX.com website launch. transaction spend. Big data Partner currency widgets. warehouse. OFX brand identity Corporate onboarding finalised. customer due diligence (CDD). OFX.com running on Amazon Web Services. October March 2015 2016 PEOPLE: MARKETING: Neville Lacey, Weekend trading. Head of UK and Europe. New offices, Toronto. TECHNOLOGY: Lifesize video conferencing. MARKETING: Proprietary quantitative study in field to determine market sizing and consumer need. Refreshed consumer focused public relations. Internal roll‑out of brand. Rebrand to OFX in Australia. ANNUAL REPORT 2016 11 FINANCIAL HIGHLIGHTS UNDERLYING EBITDA ($M) UNDERLYING NPAT ($M) NET OPERATING INCOME ($M) 2014 28.3 2014 20.1 2014 72.6 2015 34.5 2015 24.3 2015 90.1 2016 36.1 2016 23.9 2016 103.9 5% 2% 15% ACTIVE CLIENTS TRANSACTIONS TURNOVER ($B) 2014 120,500 2014 581,100 2014 13.6 2015 142,500 2015 702,800 2015 16.6 2016 150,900 2016 784,200 2016 19.6 6% 12% 18% Macquarie became a Annual international payments San Francisco office opened 51% shareholder. transaction turnover exceeded and USForex brand launched. $7 billion. Toronto office opened Established international 150,000 and CanadianForex Hong Kong office opened and payment solution with brand launched. ClearFX brand launched. Travelex in the UK. OFX brand Established first launched. international payments Funds associated solution with Macquarie. with Accel Partners Annual international and The Carlyle payments transaction Group became turnover exceeded shareholders. 100,000 $1 billion. OzForex Group Limited Launched Macquarie publicly listed on the International Money Australian Stock Exchange. Transfers service London office for Macquarie staff opened and UKForex and retail clients brand launched. in Australia. 50,000 International payments services 40% GROWTH offered 24 hours a IN ACTIVE CLIENTS SINCE ASX LISTING. day, 5 days a week. 150,900 ACTIVE CLIENTS HAVE TRUSTED US WITH THEIR INTERNATIONAL TRANSFERS IN THE PAST 12 MONTHS. Year Active clients 0 05 06 07 08 09 10 11 12 13 14 15 16 12 OZFOREX GROUP CHAIRMAN’S LETTER 2016 RESULTS The team was boosted with the appointment of Maria Loyez, Chief Marketing Officer, Adam Smith OFX is the leading international payments business joined as Chief Operating Officer to lead the global in Australia and New Zealand, and this position operations and Kirsten Pollard was appointed as was further cemented during the year. We have Head of People and Culture. demonstrated our ability to scale in this market, and the opportunity to penetrate this market further Craige Pendleton‑Browne was appointed as Chief remains significant. Our newest geography, the Technology Officer and brings a wealth of experience United States, is also experiencing growth, and in the technology sector, in particular in software we continue to expect that this market will be our development. He has rapidly transformed the largest future market opportunity. technology team, and it is pleasing to see the velocity of delivery already ramping up under Craige’s leadership. OFX passed a significant milestone in delivering net operating income of $103.9million, up 15% on the Most recently, Karin Visnick has moved from an previous year. We also grew active clients by 6% to acting role to being appointed Executive Vice PETER WARNE 150,900. OFX sent money to almost 200 countries on President – General Manager North America.