JOINT LEAD MANAGERS TO THE ISSUE Prospectus

Scottish Pacific GROUP LIMITED

ACN 164 013 110

FINANCIAL ADVISERS
Important Notices
Offer
The Offer contained in this Prospectus is an invitation
to acquire fully paid ordinary shares in the capital
of Scottish Pacific Group Limited (ACN 164 013 110)
(“Scottish Pacific” or the “Company”) (“Shares”). This
Prospectus is issued by Scottish Pacific and Scottish
Pacific SaleCo Pty Ltd (ACN 612 646 607) (“SaleCo”).
Lodgement and Listing
This Prospectus is dated 22 June, 2016 (“Prospectus
Date”) and was lodged with the Australian Securities
and Investments Commission (“ASIC”) on that date.
None of ASIC, ASX Limited (“ASX”) or their respective
officers take any responsibility for the contents of this
Prospectus or the merits of the investment to which
this Prospectus relates. The Company has applied to
the ASX for Listing of the Company and quotation of
the Shares on the ASX.
Expiry Date
This Prospectus expires on the date that is 13 months
after the date of the Prospectus. No Shares will be
issued or transferred on the basis of this Prospectus
after the expiry date.
Note to Applicants
The information contained in this Prospectus is not
personal financial product advice and does not take
into account the investment objectives, financial
situation and particular needs (including financial
and taxation issues) of any prospective investor.
It is important that you read this Prospectus carefully
and in full before deciding whether to invest in
the Company. In considering the prospects of the
Company, you should consider the risk factors that
could affect the financial performance of the Group.
You should carefully consider these factors in light of
your investment objectives, financial situation and
particular needs (including financial and taxation
issues) and seek professional advice from your
accountant, financial adviser, stockbroker, lawyer or
other professional adviser before deciding whether
to invest. Some of the risk factors that should be
considered by prospective investors are set out in
Section 5. There may be risk factors in addition to
these that should be considered in light of your
personal circumstances.
No person named in this Prospectus, nor any other
person, guarantees the performance of the Group,
the repayment of capital by the Company or the
payment of a return on the Shares.
No person is authorised to give any information or
make any representation in connection with the
Offer which is not contained in this Prospectus.
Any information or representation not so contained
may not be relied on as having been authorised by
the Company, SaleCo, the Directors, the SaleCo
Directors, the Joint Lead Managers or any other
person in connection with the Offer. You should rely
only on information in this Prospectus.
Exposure Period
The Corporations Act 2001 (Cth) (“Corporations Act”)
prohibits the Company and SaleCo from processing
applications to subscribe for Shares under this
Prospectus (“Applications”) in the seven day period
after the date of lodgement of this Prospectus with
ASIC (“Exposure Period”). The Exposure Period may
be extended by ASIC by up to a further seven days.
The Exposure Period is to enable this Prospectus
to be examined by market participants prior to the
raising of funds. The examination may result in the
identification of deficiencies in this Prospectus,
in which case any Application may need to be
dealt with in accordance with section 724 of the
Corporations Act.
Applications received during the Exposure Period will
not be processed until after the expiry of that period.
No interest will be paid on any Application Monies
received or refunded. No preference will be conferred
on Applications received during the Exposure Period.
Obtaining a Copy of this Prospectus
This Prospectus is available to Australian investors,
and certain eligible investors in other jurisdictions
as specifically set out in this Prospectus, in electronic
form at www.scottishpacific.com. The Offer
constituted by this Prospectus in electronic form at
www.scottishpacific.com is available only to persons
within Australia and certain eligible investors in other
jurisdictions as specifically set out in this Prospectus.
It is not available to persons in other jurisdictions
(including the United States) in which it would
not be lawful to make such an offer or invitation.
Persons having received a copy of this Prospectus
in its electronic form may, before the Closing Date,
obtain a paper copy of this Prospectus (free of
charge) by telephoning the Scottish Pacific Offer
Information Line on 1800 236 994 (within Australia)
or +61 1800 236 994 (outside Australia) from 8.30am
to 5.30pm Australian Eastern Standard Time (“AEST”)
Monday to Friday during the Offer Period. If you are
eligible to participate in the Offer and are calling from
outside Australia, you should call +61 1800 236 994.
Applications for Shares may only be made on an
Application Form attached to or accompanying this
Prospectus, or in its paper copy form which may be
downloaded in its entirety from www.scottishpacific.
com. Refer to Section 7 for further information.
Statements of Past Performance
This Prospectus includes information regarding the
past performance of the Group. Investors should be
aware that past performance should not be relied
upon as being indicative of future performance.
Financial Performance
Section 4 sets out in detail the financial information
referred to in this Prospectus. The basis of preparation
of the financial information is set out in Section 4.
All references to FY2013, FY2014, FY2015, FY2016F,
FY2017F and 1H2016 appearing in this Prospectus
are to the financial years ended on 30 June 2013,
30 June 2014, 30 June 2015, 30 June 2016, 30 June
2017 and the half year ended on 31 December
2015, respectively, unless otherwise indicated.
The Financial Information has been prepared in
accordance with the recognition and measurement
principles prescribed by the Australian Accounting
Standards (“AAS”). The Financial Information in this
Prospectus should be read in conjunction with,
and are qualified by reference to, the information
contained in Section 4.
All financial amounts contained in this Prospectus are
expressed in Australian currency, unless otherwise
stated. Any discrepancies between totals and sums
of components in tables and figures contained in this
Prospectus are due to rounding.
Forward-looking Statements
This Prospectus includes forward-looking statements.
These statements are based on present economic
and operating conditions, and on a number of
assumptions regarding future events and actions
that, as at the Prospectus Date, are expected to
take place (including the key assumptions set out in
Section 4). The basis of preparation and presentation
of the Forecast Financial Information, to the extent
applicable, is consistent with the basis of preparation
and presentation of the Pro Forma Historical Financial
Information. The Forecast Financial Information
presented in this Prospectus is unaudited.
This Prospectus contains forward-looking statements
which are identified by words such as “believes”,
“considers”, “could”, “estimates”, “expects”, “intends”,
“may”, and other similar words that involve risks and
uncertainties. The Forecast Financial Information is
an example of forward-looking statements.
Any forward-looking statements are subject to
various risk factors that could cause the Group’s
actual results to differ materially from the results
expressed or anticipated in these statements. Such
statements are not guarantees of future performance
and involve known and unknown risks, uncertainties,
assumptions and other important factors (including
the risks set out in Section 5), many of which are
beyond the control of the Group, SaleCo, the
Directors, the SaleCo Directors and Management.
Forward-looking statements should therefore
be read in conjunction with, and are qualified by
reference to, risk factors as set out in Section 5,
general assumptions as set out in Section 4.8.1,
specific assumptions as set out in Section 4.8.2,
the sensitivity analysis as set out in Section 4.10,
and other information in this Prospectus.
The Company and SaleCo cannot and do not give
any assurance that the results, performance or
achievements expressed or implied by the forward-
looking statements contained in this Prospectus
will actually occur and investors are cautioned not
to place undue reliance on these forward-looking
statements. The Company and SaleCo have no
intention of updating or revising forward-looking
statements, or publishing prospective financial
information in the future, regardless of whether
new information, future events or any other factors
affect the information, contained in this Prospectus,
except where required by law.
This Prospectus, including the overview of the
Company in Section 3, uses market data, industry
forecasts and projections. The Company and
SaleCo have based some of this information on
market research prepared by third parties. There is
no assurance that any of the forecasts contained
in the reports, surveys and any research of third
parties which are referred to in this Prospectus, will
be achieved. The Company and SaleCo have not
independently verified this information. Estimates
involve risks and uncertainties and are subject to
change based on various factors, including those
discussed in the risk factors set out in Section 5.
No Cooling Off Rights
Cooling off rights do not apply to an investment in
Shares issued or transferred under this Prospectus.
This means that, in most circumstances, you cannot
withdraw your Application.
Data, Photographs and Diagrams
Photographs and diagrams used in this Prospectus
that do not have descriptions are for illustration only
and should not be interpreted to mean that any
person shown in them endorses this Prospectus
or its contents or that the assets shown in them
are owned by the Group. Diagrams used in this
Prospectus are illustrative only and may not be drawn
to scale. Unless otherwise stated, all data contained
in this Prospectus and in charts, graphs and tables
is based on information at the Prospectus Date.
Company Website
Any references to documents included on the
Company’s website at www.scottishpacific.com are
for convenience only, and none of the documents
or other information available on the Company’s
website is incorporated herein by reference.
Defined Terms and Time
Defined terms and abbreviations have the meanings
given in the Glossary set out in Appendix B of this
Prospectus. Unless otherwise stated or implied,
references to times in this Prospectus are to the
Australian Eastern Standard Time (“AEST”).
References to the Group are to Scottish Pacific and its
subsidiaries, and in this Prospectus mean one or more
of those entities.
Disclaimers
Except as required by law, and only to the extent so
required, none of the Group, SaleCo, the Directors,
the SaleCo Directors, the Joint Lead Managers or
any other person in connection with the Offer
warrants or guarantees the future performance of
the Company, or any return on any investment made
pursuant to this Prospectus.
As set out in Section 7, it is expected that the Shares
will be quoted on the ASX initially on a deferred
settlement basis. The Group, SaleCo, the Directors,
the SaleCo Directors, the Joint Lead Managers, the
Group’s service provider Link Market Services Limited
(“Share Registry”), the Financial Adviser and the
Existing Shareholders disclaim all liability, whether
in negligence or otherwise, to persons who trade
Shares before receiving their holding statements.
Goldman Sachs and Citi have acted as Joint Lead
Managers to the Offer. Neither Goldman Sachs nor
Citi has authorised, permitted or caused the issue
or lodgement, submission, dispatch or provision
of this Prospectus and there is no statement in
this Prospectus which is based on any statement
made by either of them or by any of their affiliates,
officers or employees. To the maximum extent
permitted by law, each of Goldman Sachs and
Citi and each of their respective affiliates, officers,
employees and advisers expressly disclaim all
liabilities in respect of, and make no representations
regarding, and take no responsibility for, any part of
this Prospectus other than references to their name
and make no representation or warranty as to the
currency, accuracy, reliability or completeness of
this Prospectus.
Selling Restrictions
This Prospectus does not constitute an offer or
invitation in any place in which, or to any person to
whom, it would not be lawful to make such an offer
or invitation. No action has been taken to register
or qualify the Shares or the Offer, or to otherwise
permit a public offering of Shares, in any jurisdiction
outside Australia or New Zealand. The distribution
of this Prospectus outside Australia or New Zealand
may be restricted by law and persons who come
into possession of this Prospectus outside Australia
or New Zealand should seek advice on and observe
any such restrictions. Any failure to comply with such
restrictions may constitute a violation of applicable
securities laws.
In particular, the Shares have not been, and will not
be, registered under the United States Securities Act
of 1933 (as amended) (“US Securities Act”) or the
securities laws of any state of the United States and
may not be offered or sold in the United States unless
the Shares are registered under the US Securities Act,
or an exemption from the registration requirements
of the US Securities Act and applicable US state
securities laws is available.
See Section 9.7 for more detail on selling restrictions
that apply to the offer and sale of Shares in
jurisdictions outside Australia.
Privacy
By filling out the Application Form to apply for
Shares, you are providing personal information to the
Group and SaleCo through the Share Registry, which
is contracted by the Group to manage Applications.
The Group, SaleCo, the Joint Lead Managers and the
Share Registry, may collect, hold, use and disclose
that personal information to process and assess your
Application, service your needs as a Shareholder,
provide facilities and services that you need or
request and carry out appropriate administration.
If you do not provide the information requested in
the Application Form, the Group, SaleCo and the
Share Registry may not be able to process or accept
your Application. Your personal information may also
be used from time to time to inform you about other
products and services offered by the Group, which it
considers may be of interest to you.
Your personal information may also be provided to
the Group’s members, agents and service providers
on the basis that they deal with such information
in accordance with the Group’s privacy policy and
applicable laws. The members, agents and service
providers of the Group may be located outside
Australia where your personal information may not
receive the same level of protection as that afforded Financial Markets Authority, New Zealand (http://
under Australian law. The types of agents and service www.fma.govt.nz). The Australian and New Zealand
providers that may be provided with your personal regulators will work together to settle your complaint.
information and the circumstances in which your The taxation treatment of Australian financial
personal information may be shared are: products is not the same as for New Zealand
• The Share Registry for ongoing administration financial products.
of the register of Shareholders;
If you are uncertain about whether this investment
• Printers and other companies for the purpose is appropriate for you, you should seek the advice of
of preparation and distribution of statements and an appropriately qualified financial adviser.
for handling mail;
Currency exchange risk
• Market research companies for the purpose of The Offer may involve a currency exchange risk.
analysing the Shareholder base and for product The currency for the financial products is not New
development and planning; and Zealand dollars. The value of the financial products
• Legal and accounting firms, auditors, contractors, will go up or down according to changes in the
consultants and other advisers for the purpose exchange rate between that currency and New
of administering, and advising on, the Shares and Zealand dollars. These changes may be significant.
for associated actions. If you expect the financial products to pay any
If an Applicant becomes a Shareholder, the amounts in a currency that is not New Zealand
Corporations Act requires the Group to include dollars, you may incur significant fees in having
information about the Shareholder (including the funds credited to a bank account in New Zealand
name, address and details of the Shares held) in in New Zealand dollars.
its public register of members. The information
Trading on financial product market
contained in the Group’s register of members
must remain there even if that person ceases to If the financial products are able to be traded on a
be a Shareholder. Information contained in the financial product market and you wish to trade the
Group’s register of members is also used to facilitate financial products through that market, you will
have to make arrangements for a participant in that
dividend payments and corporate communications
market to sell the financial products on your behalf.
(including the Group’s financial results, annual reports
If the financial product market does not operate in
and other information that the Group may wish to
New Zealand, the way in which the market operates,
communicate to its Shareholders) and compliance
the regulation of participants in that market, and
by the Group with legal and regulatory requirements.
the information available to you about the financial
An Applicant has a right to gain access to their
products and trading may differ from financial
personal information that the Group, SaleCo and the
product markets that operate in New Zealand.
Share Registry hold about that person, subject to
certain exemptions under law. A fee may be charged Report on Directors’ Forecasts and
for access. Access requests must be made in writing Financial Services Guide
or by telephone call to the Group’s registered office The provider of the Investigating Accountant’s
or the Share Registry’s office, details of which are Report is required to provide Australian retail
disclosed in the Corporate Directory. Applicants can clients with a financial services guide in relation
obtain a copy of the Group’s privacy policy by visiting to the review under the Corporations Act.
the Group website (at www.scottishpacific.com). By
submitting an Application, you agree that the Group The financial services guide is provided in Section 8.
and the Share Registry may communicate with you
Questions
in electronic form or to contact you by telephone in
If you have any questions about how to apply
relation to the Offer.
for Shares, please call the Scottish Pacific Offer
Offer Management Information Line on 1800 236 994 (within Australia)
The Offer is being arranged, managed and or +61 1800 236 994 (outside Australia) from 8.30am
underwritten by Goldman Sachs and Citi (other than to 5.30pm (AEST) Monday to Friday during the Offer
the Employee Gift Offer, which is not underwritten). Period or contact your Broker. Instructions on how
to apply for Shares are set out in Section 7 of this
Investment by New Zealand investors Prospectus and on the back of the Application Form.
Warning statement If you have any questions about whether to invest
in the Group, you should seek professional advice
This offer to New Zealand investors is a regulated
offer made under Australian and New Zealand law. from your accountant, financial adviser, stockbroker,
In Australia, this is Chapter 8 of the Corporations lawyer or other professional adviser before deciding
Act 2001 (Aust) and regulations made under that whether to invest in the Group.
Act. In New Zealand, this is subpart 6 of Part 9 of
the Financial Markets Conduct Act 2013 and Part 9 of
the Financial Markets Conduct Regulations 2014.
This offer and the content of the offer document are
principally governed by Australian rather than New
Zealand law. In the main, the Corporations Act 2001
(Aust) and the regulations made under that Act set
out how the offer must be made.
There are differences in how financial products are
regulated under Australian law. For example, the
disclosure of fees for managed investment schemes
is different under the Australian regime.
The rights, remedies, and compensation
arrangements available to New Zealand investors
in Australian financial products may differ from the
rights, remedies, and compensation arrangements
for New Zealand financial products.
Both the Australian and New Zealand financial
markets regulators have enforcement responsibilities
in relation to this offer. If you need to make a
complaint about this offer, please contact the
 CONTENTS
KEY DATES 03

Key Offer Statistics 04

Letter from the Chairman 05

01. Investment Overview 06

02. Industry Overview 28

03. Company Overview 42

04. Financial Information 73

05. Key Risks 113

06. Key Individuals, Interests and Benefits 123

07. Details of the Offer 140

08. Investigating Accountant’s Report 156

09. Additional Information 164

Appendix A: Significant Accounting Policies 189

Appendix B: Glossary 195

Corporate Directory IBC

02
KEY DATES

Prospectus Date Wednesday 22 June, 2016

Broker Firm Offer, Priority Offer and Employee Gift Offer open Thursday 30 June, 2016

Broker Firm Offer, Priority Offer and Employee Gift Offer close Friday 8 July, 2016

Settlement of the Offer Tuesday 12 July, 2016

Expected commencement of trading of Shares on ASX on a deferred settlement basis Wednesday, 13 July 2016

Issue and transfer of Shares (Completion of the Offer) Wednesday 13 July, 2016

Expected despatch of holding statements Thursday, 14 July 2016

Expected commencement of trading of Shares on the ASX on a normal basis Friday, 15 July 2016

Dates may change

The dates above are indicative only and may be subject to change without notice.
The Company and SaleCo, in consultation with the Financial Adviser and the Joint Lead Managers, reserve the right to vary any or all
of these times and dates subject to the Corporations Act, the ASX Listing Rules and other applicable laws, including to close the Offer
early, extend the Offer, defer the Closing Date, accept late Applications either generally or in particular cases, allot Shares at different
times to investors, or withdraw the Offer, without prior notification. The quotation and commencement of trading of the Shares are
subject to confirmation from ASX. Applications received under the Offer are irrevocable and may not be varied or withdrawn except
as required by law.
Investors are encouraged to submit their Application Forms as early as possible after the Offer opens. Time stated throughout this
Prospectus refers to AEST.

How to invest
Applications for Shares can only be made by completing and lodging an Application Form.
Instructions on how to apply for Shares are set out in Section 7 and on the back of the Application Form.

Questions
Please call the Scottish Pacific Offer Information Line on 1800 236 994 (inside Australia) or +61 1800 236 994 (outside Australia) from
8.30am to 5.30pm Monday to Friday during the Offer Period. If you have any questions, contact your Broker. If you are unclear in
relation to any matter or are uncertain as to whether the Company is a suitable investment for you, you should seek professional
guidance from your solicitor, stockbroker, accountant or other independent and qualified professional adviser before deciding
whether to invest.

Scottish Pacific  Prospectus 03

 Key Offer Statistics


Offer Price $3.20

Total proceeds under the Offer ($m) 293.5

Total proceeds from the issue of New Shares under the Offer ($m) 77.3

Total proceeds from the sale of Existing Shares available under the Offer ($m) 216.2

Total number of New Shares available under the Offer (millions)1 24.2

Total number of Existing Shares to be sold under the Offer (millions) 67.6

Total number of Shares on issue at Completion of the Offer (millions)1 139.2

Market capitalisation at the Offer Price ($m)2 445.4

Enterprise value at the Offer Price ($m)3, 4 499.4

Target net corporate debt at Completion of the Offer ($m)4 54.0

Target net corporate debt at Completion of the Offer / FY2016F PBITDA (Annualised) (times)4, 5 1.3x

Enterprise value / Pro Forma FY2016F PBITDA (times)3, 6, 8 13.7x

Enterprise value / Pro Forma FY2017F PBITDA (times)3, 6, 8 9.6x

Offer Price / Pro Forma FY2016F NPATA per Share (times)6, 8 20.0x

Offer Price / Pro Forma FY2017F NPATA per Share (times)6, 8 14.0x

Implied indicative dividend yield for FY2017F at the Offer Price8, 9 5.0%

1. Includes 71,500 Shares relating to the Employee Gift Offer to be issued under the Offer.
2. Market capitalisation at the Offer Price is defined as the Offer Price multiplied by the total number of Shares on issue on Completion of the Offer.
3. Enterprise value is calculated as the sum of market capitalisation at the Offer Price and target net corporate debt.
4. Target net corporate debt reflects management’s target corporate debt less management’s target cash position at Completion of the Offer. For more detail see Section 4.5.1.
5. Annualised FY2016F PBITDA is calculated based on the FY2016F Pro Forma PBITDA $36.3m adjusted to annualise the contribution of the GE Portfolio Acquisition and Suncorp Portfolio
Acquisition. PBITDA refers to profit before interest, tax, depreciation and amortisation. The adjustment is required to ensure the debt position at Completion of the Offer and the earnings
profile reflected in the ratio are consistent. The adjustment does not reflect any future synergies from these portfolio acquisitions.
6. This ratio is a variant of what is commonly referred to as an ‘EV/EBITDA’ ratio. Please refer to Section 4 for further details in relation to the Pro Forma Financial Information. PBITDA refers to
profit before interest, tax, depreciation and amortisation. The EV/PBITDA ratio is calculated as the Enterprise Value based on the Offer Price divided by Pro Forma PBITDA.
7. This ratio is a variant of what is commonly referred to as a price to earnings, or ‘PE’ ratio. A PE ratio is a company’s share price divided by its earnings per share. NPATA is defined net profit after
tax excluding amortisation and impairment pertaining to acquired intangibles on a tax-effected basis. Management believes NPATA is an important measure of the underlying cash earnings
of the business due to the number of acquisitions during the historical period that have resulted in increased amortisation, which is a non-cash charge.
8. The Forecast Financial Information is based on assumptions and accounting policies set out in Section 4 and Appendix A, and is subject to the key risks set out in Section 5. There is no guarantee
that forecasts will be achieved.
9. The indicative dividend yield is calculated as the implied FY2017F dividend per Share divided by Offer Price per Share. The FY2017F dividend is based on the Pro Forma FY2017F forecast NPATA
and a 70% dividend payout ratio, being the mid-point of dividend policy of 60-80% of Pro Forma NPATA. For more information on the Company’s dividend policy, see Section 4.11.

04
Letter from the Chairman

22 June 2016

Dear Investor,
On behalf of the Board of Directors, it gives me great pleasure to invite you to become a shareholder of Scottish Pacific.
Scottish Pacific is the leading Independent Debtor Finance Provider in Australia by Turnover. It provides an important source of
funding and liquidity to many Australian small-to-medium size companies (“SMEs”) for everyday working capital purposes and to
support their growth. Scottish Pacific also has a presence in New Zealand, the United Kingdom, China and Hong Kong.
Scottish Pacific traces its origins back to 1988, and has grown its market position organically by leveraging its competitive advantages,
including its scale, lending expertise, product depth, established and broad distribution network and High Touch service model.
More recently, Scottish Pacific has also successfully completed a number of acquisitions. Of particular note, in late 2015 Scottish Pacific
acquired Bibby Financial Services Australia Pty Limited (“Bibby”), the then third largest Independent Debtor Finance Provider in
Australia by Turnover. Today, Scottish Pacific has an overall market share of approximately 20% in the Australian Debtor Finance industry.
Scottish Pacific’s performance through the economic cycle has been resilient. Scottish Pacific’s Standalone loss rates have averaged
0.44% of Average Exposure p.a. over the past 10 years.1 From FY2013 to FY2015, Scottish Pacific’s Pro Forma Average Exposure and
profit before interest and tax (“PBIT”) have grown at a compound annual growth rate (“CAGR”) of 22.5% and 17.0%, respectively. Over
the same period, Scottish Pacific’s Pro Forma loss rates have averaged 0.53% of Average Exposure. This strong credit performance is
underpinned by Scottish Pacific’s deep underwriting expertise, high quality credit Exposures to its underlying debtors (many of which
are Australia’s leading companies), conservative collateral positions and a highly diversified portfolio of Client and debtor Exposures
across industries and geographies.
The Board and Management expect Scottish Pacific’s strong performance to continue, with the Pro Forma annual Average Exposure
and PBIT of the Underlying Business forecast to grow at a CAGR of 13.3% and 17.5%, respectively, between FY2015 and FY2017F.
Scottish Pacific is focused on maximising the benefits of its recent acquisitions and the Company’s market position. This includes
capitalising on underlying market growth and driving improved awareness of Debtor Finance solutions among SMEs, as well as
continued market share gains by building its scale, product suite and long-term commitment to the sector, relative to competitors.
Scottish Pacific is also focused on generating growth by continuing to broaden its target Client universe and product offering. Given
its strong Management team, with over 150 years of collective Debtor Finance experience, and a diversified funding structure, Scottish
Pacific is strongly placed to take advantage of future opportunities to deliver sustainable growth.
Scottish Pacific’s Listing on the ASX will allow Existing Shareholders to realise a portion of their holding in the Company, strengthen its
balance sheet and provide the Company with access to equity capital markets as well as an opportunity for others to invest in shares
of Scottish Pacific.
Upon Listing, funds advised by Next Capital Pty Limited (“Next Capital Entities”) collectively with IFM Investors will continue to hold
29.0% of the Shares, and the senior executives (CEO and CFO and their associated entities) are expected to continue hold 2.6% of the
Shares. These Shares will be subject to voluntary escrow arrangements.
This Prospectus contains detailed information about the Offer and the financial and operating performance and outlook of Scottish
Pacific. As with all companies, Scottish Pacific is subject to a range of company specific and general risks including the ability to pass
on increases in funding costs, access to funding and potential Client failure and fraud events. The material risks associated with
investing in Scottish Pacific are detailed in Section 5. I encourage you to read this document carefully in its entirety before making
your investment decision.
I will be personally investing in the Offer and I look forward to welcoming you as a shareholder of the Company.
Yours sincerely,

Patrick Elliott
Chairman

1. Loss rate calculated based on Scottish Pacific’s Standalone unaudited management accounts.

Scottish Pacific  Prospectus 05

01.
Investment Overview
01. Investment Overview


1.1 Introduction

For More
Topic Summary Information

Who is Scottish Scottish Pacific is the leading Independent Debtor Finance Provider to SMEs in Section 3.1.1
Pacific? Australia with approximately 20% market share by Turnover.2
Scottish Pacific has over 250 employees serving over 1,600 Clients across Australia
and New Zealand.

What products does Debtor Finance is a form of financing in which SME Clients assign their receivables Section 3.1.5
Scottish Pacific offer to a Debtor Finance provider which in turn provides a cash advance to the Client
its Clients? to help the Client bridge the cash flow gap between:
• Incurring expenses in providing goods or services to its customers; and
• Receiving payment (from its customers) of invoices for those goods or services.
In many cases, the receivable for goods and services provided only becomes due
sometime after expenses are incurred by the Client. While advances from Scottish
Pacific predominantly fund a Client’s working capital, they can be used
for other purposes.
Scottish Pacific offers two key products:
• Invoice Discounting (“Discounting”) products; and
• Debtor Factoring (“Factoring”) products.
Both of these products involve Scottish Pacific’s Client assigning receivables
(amounts owed to that Client under invoices issued to its own customers) to
Scottish Pacific, against which Scottish Pacific may advance funding to the Client.
The major difference between Discounting and Factoring products is that:
• Discounting is typically not disclosed to the debtor (i.e. the customer who is
obliged to pay the invoice to the Client); and
• Factoring is typically disclosed to the debtor so that they are aware Scottish
Pacific has been assigned the receivable and there is a higher degree of contact
between Scottish Pacific and the debtor.
For additional detail on the Debtor Finance process, refer to Section 2.2.
• In addition to its core offerings, Scottish Pacific offers a variety of complementary
products including:
• International Trade Finance (including Tradeline, Import Finance and Export
Finance);
• Bad Debt Protected Facilities; and
• Asset Finance.

2. Scottish Pacific’s market share based upon FY2015 Turnover figures for Scottish Pacific and Bibby and management’s estimate of a full year contribution from the GE and Suncorp Client
Portfolios, as a percentage of total industry Turnover for the 12 months ended 30 June 2015. Industry data reported in Debtor and Invoice Finance Association of Australia and New Zealand
Inc., DIFA Update: DIFA Statistics December Quarter 2015 (8 February 2016) <http://difa.asn.au/wp-content/uploads/2015/09/Statistical_Update_Dec_2015.pdf>.

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What is Scottish Scottish Pacific traces its history in Debtor Finance to two predecessor businesses Section 3.1.2
Pacific’s history? that ultimately merged in 2007 to create the Scottish Pacific of today. The first
business, Hallmark Business Finance was divested from Mercantile Credits in 1988 to
operate as an Independent Debtor Finance Provider, specialising in Debtor Finance.
The second business, Benchmark Debtor Finance, was founded in 1988 by current
Scottish Pacific CEO, Peter Langham.
Both companies underwent control and name changes but retained their
specialised focus on Debtor Finance, before merging in 2007 to create Scottish
Pacific. By 2008, the companies were fully integrated and united under one brand.
A consortium of investors led by Next Capital and current Management acquired
Scottish Pacific in 2013.

What has changed In December 2015, Scottish Pacific acquired the Australian and New Zealand Section 3.1.3
in Scottish Pacific’s businesses of the United Kingdom based Bibby Financial Services, then its second
business in the last biggest independent competitor by Turnover in Australia.
12 months?
This was followed by the acquisition from a consortium led by Sankaty Advisors
of the customer relationships and accounts which comprised GE Capital Finance
Australasia Pty Limited’s (“GE”) Australian Debtor Finance business (the “GE Portfolio
Acquisition”) and the acquisition from Suncorp-Metway Limited (“Suncorp”) of the
customer relationships and accounts, which comprised Suncorp’s Debtor Finance
business in Australia, in May 2016 (the “Suncorp Portfolio Acquisition”).

Where does Scottish Scottish Pacific’s primary operations are in Australia and New Zealand with offices Section 3.1.6.3
Pacific operate? in Sydney, Melbourne, Brisbane, Adelaide, Perth and Auckland.
Scottish Pacific also serves Australian and international Clients with Trade Finance
solutions through offices in China and the United Kingdom.

1.2 Key Features of Scottish Pacific’s Business Model 

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Who are Scottish Scottish Pacific’s Clients are typically SMEs who want to unlock funds invested Sections 3.1.4
Pacific’s Clients? in working capital in order to facilitate growth or meet cash flow needs. Scottish and 3.2.2.4
Pacific’s Clients operate in the following key industries (percentages are based
on funding Exposure by sector as at 31 March 2016):
• Manufacturing (27%);
• Wholesale trade (27%);
• Staff hire (18%);
• Construction (8%); and
• Transport (6%).3

3. This data is based on unaudited data from Scottish Pacific’s accounting system.

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How does Scottish Pacific generates revenue from a range of sources. These include: Section 3.1.4.1
Scottish Pacific • Management Fees – Debtor Finance(67.5% of Net Revenue in FY2015): reflect
generate revenue? fees charged on Debtor Financing facilities and include administration fees,
expense recoveries from clients and all other fees not related to Trade Finance.
The cash flows from these fees flow through Scottish Pacific’s limited-recourse
Funding Vehicles;
• Management Fees – Trade Finance and Other(3.8% of Net Revenue in
FY2015): includes Trade Finance gross revenue. Cash flows from these fees do
not flow through Scottish Pacific’s limited-recourse Funding Vehicles; and
• Net Interest Income(28.7% of Net Revenue in FY2015): includes income earned
on the amount drawn down by Clients offset by senior and mezzanine funding
costs. This is calculated on a daily basis and includes the gross revenue charged
on Exposure, less interest paid, commissions and unused line fees. The cash
flows from this flow through Scottish Pacific’s limited recourse Funding Vehicles.

How does Scottish Scottish Pacific has a supportive and diversified funding model underpinned by Section 3.3
Pacific fund its longstanding funding relationships with major banks. Scottish Pacific’s funding
business operations? model is also supported by a Mezzanine Facility and Corporate Debt Facilities.
Business operations are primarily funded through three Senior Facilities with two
of Australia’s major banks and a major international bank:
• Senior Facility 1 with a total facility limit of $535m;
• Senior Facility 2 with a total facility limit of $250m; and
• Senior Facility 3 with a total facility limit of $300m.
The aggregate drawn balance of the Senior Facilities was $740.6m as at 31 May 2016.
These are supported by a $60m Mezzanine Facility ($45m drawn) and $70m in
Corporate Debt Facilities ($59m drawn) at the Completion of the Offer.

How is Scottish Pacific
different from a bank
which offers Debtor
Financing?
There are several key attributes of Scottish Pacific which differentiate it from banks. Sections
These key characteristics include: 3.1.4.2, 3.1.5
and 3.2
• Scottish Pacific operates a High Touch service model characterised by frequent
Client and debtor interaction and a relatively low number of Clients to
Operational Staff. By comparison, banks have a preference for Lower Touch,
lower service intensive business. The high quality nature of Scottish Pacific’s
Client service is reflected in a net promoter score of 82% vs. –16% for the
Australian major banks;4
• Scottish Pacific has a more complete Debtor Finance product suite and offers
both Factoring and Discounting facilities, whereas banks have a preference
for Discounting facilities which are typically extended to larger SMEs. Scottish
Pacific’s full product suite makes it well placed to address a broader spectrum
of the SME market; and
• Scottish Pacific is not regulated as an Authorised Deposit-taking Institution
(“ADI”). As such, it is not subject to bank regulatory capital requirements or
regulation by the Australian Prudential Regulatory Authority (“APRA”).

4. Engaged Marketing, ‘The 2014/15 Financial Institution Consumer Loyalty & Recommendation Study’ (2014), cited in Engaged Marketing, ‘Australians more likely to recommend ING Direct
than other banks’ (Media Release, 20 November 2014) <http://www.engagedmarketing.com.au/media-resources/australians-recommend-ing-direct/>. Scottish Pacific NPS data gathered
from internal surveys conducted by Scottish Pacific.

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What security Scottish Pacific’s primary source of security is the assignment of receivables to Sections 2.2
supports Scottish it from its Clients. Scottish Pacific receives assignment (i.e. transfer legal and/or and 3.2.2.2
Pacific’s advances? beneficial ownership) from its Clients of their receivables (i.e. the right the Client
has to be paid invoices issued by it to its own customers for goods or services
provided by it). In return, Scottish Pacific pays a cash advance to the Client to help
the Client bridge the cash flow gap between their expense cycles and the terms
of their receivables.
The assignment of receivables provides Scottish Pacific with a source of security to
support the cash advance it makes to SME Clients. In essence, the debtor invoices
are the primary source of repayment. Often, these invoices are payable by some
of the leading Australian companies such as Woolworths and Coles. Additionally,
Scottish Pacific is conservative, typically only advancing 57 cents to Clients for
every dollar of invoices assigned to Scottish Pacific, providing a significant cushion
against losses.
Finally, Scottish Pacific supports this with a range of other sources of security
(depending on the circumstances), such as security over the broader assets of
its Client.

What is the loss rate Scottish Pacific has demonstrated consistently low Standalone loss ratios which Section 3.2.7
on funding Exposure? have averaged 0.44% p.a. of Average Exposure over the past 10 years.5

How has Scottish Scottish Pacific has demonstrated resilient performance through the most recent Section 3.2.7
Pacific performed business/economic cycle. For example:
through the business/
• Scottish Pacific has successfully grown its Exposure at an 11.1% CAGR since 2006
economic cycle?
(excluding GE and Suncorp Clients);6
• Scottish Pacific’s Standalone losses have averaged 0.44% of Average Exposure
p.a. over the past 10 years; and
• There was no disruption to Scottish Pacific’s funding; Scottish Pacific has 10+ year
relationships with two of its funding providers.

1.3 Key Financial Metrics   

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What is Scottish A summary of Scottish Pacific’s Pro Forma Financial Information and Statutory Section 4
Pacific’s historical Financial Information is presented below and is a summary only and should be
and forecast financial read in conjunction with the more detailed discussion of the financial information
performance? set out in Section 4 as well as the key risks set out in Section 5.
While Pro Forma Financial Information set out below does not represent the
statutory results for the Company, Scottish Pacific believes it is useful information
as it permits investors to examine what it considers to be the underlying financial
performance of the business. Pro Forma Financial Information does not include
the consolidation of Scottish Pacific’s limited-recourse Funding Vehicles.

5. Under current management, the average number of losses is 7, based on the number of Client accounts in respect of which the amount advances to that Client is not fully recovered.
This means that over the last 10 years the Standalone Scottish Pacific business (which excludes Bibby and the GE and Suncorp Portfolio Acquisitions) has only written off 0.44% p.a. of
its annual Average Exposure. Average Exposure is the annual Exposure as an average of monthly closing Exposure balances. Exposure represents drawn funding by Clients.
6. Note the FY2006 Exposure figure is unaudited. Exposure from FY2006–FY2007 based on year-end balances due to availability of data. Exposure from FY2008–FY2015 based on average
monthly exposure.

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What is Scottish Selected Pro Forma Financial Information

Pacific’s historical Total Business
and forecast financial
performance? Pro Forma
continued Pro Forma Historical Forecast
$m FY2013 FY2014 FY2015 FY2016F FY2017F
Net Revenue1 66.9 77.6 85.0 93.7 109.1
PBITDA2 21.1 27.0 28.9 36.3 51.8
PBIT 20.5 26.2 28.1 33.1 44.9
NPAT 13.0 16.5 17.7 20.1 26.0
NPATA3 13.0 16.5 17.7 22.3 31.8
1. Net Revenue consists of revenue from Management Fees – Debtor Finance, Management Fees – Trade Finance and
Net Interest Income.
2. PBITDA refers to profit before interest, tax, depreciation and amortisation.
3. NPATA refers to net profit after tax excluding amortisation and impairment pertaining to acquired intangibles on
a tax-effected basis. Management believes NPATA is an important measure of the underlying cash earnings of the
business due to the number of acquisitions during the historical period that have resulted in increased amortisation,
which is a non-cash charge. For further detail see Section 4.

Selected Key Performance Indicators

Total Business

Pro Forma
Pro Forma Historical Forecast
$m FY2013 FY2014 FY2015 FY2016F FY2017F
Net Revenue n/a 15.9% 9.5% 10.3% 16.5%
growth1
PBIT margin2 30.6% 33.7% 33.0% 35.4% 41.1%
PBIT growth n/a 27.8% 7.2% 18.1% 35.4%
NPATA growth3 n/a 27.7% 7.2% 25.5% 42.7%
Underlying Business4
Net Revenue growth n/a 15.9% 9.5% 8.6% 8.9%
PBIT margin2 30.6% 33.7% 33.0% 34.8% 38.6%
PBIT growth n/a 27.8% 7.2% 14.4% 20.7%
1. Net Revenue growth indicates the growth in Net Revenue from the prior corresponding period. Net Revenue
consists of revenue from Management Fees – Debtor Finance, Management Fees – Trade Finance and Net
Interest Income.
2. The PBIT margin is a reflection of the businesses operating efficiency and profitability. A higher PBIT margin
reflects more efficient cost management or a more profitable business. The PBIT margin is calculated as
PBIT/Net Revenue.
3. NPATA refers to net profit after tax excluding amortisation and impairment pertaining to acquired intangibles
on a tax-effected basis. Management believes NPATA is an important measure of the underlying cash
earnings of the business due to the number of acquisitions during the historical period that have resulted
in increased amortisation, which is a non-cash charge.
4. Underlying Business consists of Scottish Pacific Standalone and Bibby including synergies, excluding the
impact of the GE Portfolio Acquisition and Suncorp Portfolio Acquisition.

A summary of the Statutory Financial Information is set out on the next page.
Statutory preparation excludes the results of Bibby prior to 1 January 2016 and
includes transaction and restructuring costs, certain other reporting reclassifications
and the consolidation of limited-recourse Funding Vehicles. For more detail on the
Pro Forma adjustments to the Statutory Financial Information see Section 4.3.3.

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What is Scottish Selected Statutory Financial Information Section 4

Pacific’s historical
and forecast financial Statutory
Statutory Historical Forecast
performance?
continued $m FY20133 FY2014 FY2015 FY2016F FY2017F
Net Revenue1 39.4 41.4 48.6 74.2 109.1
PBITDA2 13.9 9.8 14.8 9.5 42.1
PBIT 13.5 9.0 14.1 6.5 35.2
NPAT 12.2 6.2 9.8 (0.7) 19.1
1. Net Revenue consists of revenue from Management Fees – Debtor Finance, Management Fees – Trade Finance
and Net Interest Income.
2. PBITDA refers to profit before interest, tax, depreciation and amortisation.
3. The Historical Financial Information for FY2013 presented in this document has been derived from the consolidated
special purpose financial statements of Scottish Pacific Benchmark Holdings Pty Ltd, and restated using the accounting
policies adopted in the FY2014 and FY2015 financial statements and in accordance with Australian Accounting
Standards. The net profit after tax is extracted from the FY2013 consolidated special purpose financial statements
(audited by KPMG) and lodged with ASIC. The opinion was unmodified and included an emphasis of matter outlining
that the accounts were prepared on a special purpose basis adopting the accounting policies determined by the
Directors at the time.

Trading Update
As at the Prospectus Date, annual financial statements which include results for
the second half of FY2016F have not been prepared. Scottish Pacific intends to
announce its annual results to the market in August 2016.

What is Subject to business conditions, available profits and the financial position of Section 4.11
Scottish Pacific’s Scottish Pacific, it is the current intention of the Directors to pay dividends.
dividend policy?
Assuming that the FY2017F results are or are still expected to be consistent with
the Forecast Financial Information, during the period relating to the Forecast
Financial Information, it is the current intention of the Board to target a payout ratio
of between 60% and 80% of Pro Forma NPATA. Thereafter, the Directors currently
expect to target a payout ratio of between 60% and 80% of NPATA.
The actual payout ratio may vary between periods depending upon the Company’s
capital management plans at the time and any other factors the Directors consider
relevant. It is expected that dividends will be franked to the maximum extent
possible, which will depend on the amount of tax payable by the Company.
The Directors currently expect that the first dividend will be in respect of the period
from 1 July 2016 to 31 December 2016 and will be paid in March or April 2017.
No assurances can be given by any person, including the Directors, about
the payment of any dividend and the level of franking on any such dividend.
There may be periods in respect of which dividends are not paid. Please read the
Forecast Financial Information in conjunction with the assumptions underlying its
preparation as set out in Sections 4 and 9 and the risk factors set out in Section 5.

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1.4 Key Strengths

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Leading Independent Scottish Pacific is Australia’s leading Independent Debtor Finance Provider, with an Section 3.1.1
Debtor Finance approximate market share of 20% by Turnover.7
Provider
The Company has built significant scale, expertise, Client relationships and a broad
distribution network over 28 years in the Debtor Finance industry. The Company
has more Clients sourced from more Business Development Managers (“BDMs”)
than any other Independent Debtor Finance Provider in Australia.8
Furthermore, Scottish Pacific is well positioned against banks and other
Independent Debtor Finance Providers to fully address SME Debtor Finance needs
across all stages of an SME’s life cycle due to its complete product suite (across both
Discounting and Factoring), investment in personnel (e.g. BDMs and Operational
Staff) and significant management expertise.

Large and under- The Debtor Finance market in Australia has grown significantly over the last two Sections 2.2.5
penetrated market decades with industry Turnover increasing from $3.9 billion in 1996 to $64.4 billion and 2.2.6.2
in 2015.9
While both Scottish Pacific and the market have seen significant growth over
the past 20 years, the Australian Debtor Finance market remains relatively
underpenetrated compared to some other developed economies. By way of
example, Debtor Finance penetration in Australia is ~4% compared to ~16% in the
U.K.10 There are more than 60,000 SMEs in Australia which match the characteristics
of Core Debtor Finance users vs. only ~4,100 Clients industry-wide today.11
Scottish Pacific has scope to increase market awareness of Debtor Finance among
SMEs. The Company’s increased scale post consolidation of Bibby and the GE
Portfolio Acquisition and Suncorp Portfolio Acquisition allows Scottish Pacific to
increase marketing to build product awareness through both traditional and new
media channels. Scottish Pacific’s Listing on the ASX may also increase the profile
of the Debtor Finance industry due to coverage from the financial press or SME
owners learning about Scottish Pacific as a potential investment opportunity.
Even moderate gains in penetration can have a significant impact on market
growth. As an illustration, if the market penetration rate were to increase by 1%,
this would result in total Turnover growth for the entire Australian Debtor Finance
industry of 25% (to ~$81bn).

         

7. Scottish Pacific’s market share based upon FY2015 Turnover figures for Scottish Pacific and Bibby and management’s estimate of a full year contribution from the GE and Suncorp Client
Portfolios, as a percentage of total industry Turnover for the 12 months ended 30 June 2015. Industry data reported in Debtor and Invoice Finance Association of Australia and New Zealand
Inc., DIFA Update: DIFA Statistics December Quarter 2015 (8 February 2016) <http://difa.asn.au/wp-content/uploads/2015/09/Statistical_Update_Dec_2015.pdf>.
8. When compared to non-bank industry participants including CML Group, Classic Funding Group, AR Cash Flow, Key Factors, Moneytech, Asset Secure and The Invoice Market (TIM).
9. Debtor and Invoice Finance Association of Australia and New Zealand Inc., DIFA Update: DIFA Statistics December Quarter 2015 (8 February 2016) <http://difa.asn.au/wp-content/
uploads/2015/09/Statistical_Update_Dec_2015.pdf>.
10. Euromonitor International, ‘Economies and Consumers Quarterly Data’ (Passport Report, 14 March 2016). As measured by Turnover divided by national GDP.
11. Addressable market based on Dun and Bradstreet, ‘Scottish Pacific Figures’ (Independently Commissioned Report, Dun and Bradstreet, 11 April 2016). Calculated as number of Business
to Business (B2B) Australian companies with annual sales between $0.5m and $250m. Industry Clients as at 31 December 2015: Debtor and Invoice Finance Association of Australia and
New Zealand Inc., DIFA Update: DIFA Statistics December Quarter 2015 (8 February 2016) <http://difa.asn.au/wp-content/uploads/2015/09/Statistical_Update_Dec_2015.pdf>.

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Significant Scottish Pacific has a number of distinct competitive advantages that allow the Section 3
competitive Company to deliver an attractive value proposition for Clients and help differentiate
advantages it from competitors. These are characterised by:
• Strong expertise, product depth, established relationships with Clients and
introducers and access to robust and diversified funding;
• A difficult to replicate, well-diversified national distribution network built over
a long history and underpinned by strong personal referral relationships;
• High Client retention due to a High Touch servicing model, strong track record
of quality customer service and the flexibility to service a broad range of Clients;
and
• Robust risk assessment processes underpinned by a focus on understanding
of Client and debtor counterparties, and thorough assessment and
underwriting procedures.

Track record of
attractive returns and
low losses supported
by risk underwriting
expertise
Scottish Pacific has consistently generated attractive returns over the past 10 years. Section 3.2
These returns are supported by a rigorous and institutionalised approach to risk
management underpinned by a selective approval process, and experienced
management team with nuanced knowledge of Client industries and debtor
behaviour within those industries (i.e. willingness to pay).
• As Scottish Pacific’s primary Exposure is to the debtors of SMEs, frequently the
Company’s credit risk is to leading Australian companies such as Woolworths
and Coles.
• Scottish Pacific has a selective approach to choosing Clients and debtors with
strict Exposure limits. The portfolio of receivables to which Scottish Pacific
is exposed is highly diversified across more than 100,000 debtors and is well
diversified across industries and geographies.
• Three layers of funding protection contribute to strong collateral backing. From
FY2013 to FY2015, Scottish Pacific consistently achieved loan to value ratios (“LVRs”)
of ~57% at Origination, which is significantly lower when compared to the typical
LVR of other lending products.
• Robust systems and processes which have been continuously enhanced over the
past 10 years, help mitigate credit and operational risks including fraud risk both
before and after funding.
Taken together, these attributes have supported consistently low Standalone loss
ratios (an average of 0.44% of Average Exposure over the past 10 years)12 providing
a clear track record of achieving attractive risk-adjusted returns with resilient growth
through the most recent economic cycle.

12. Scottish Pacific Standalone from FY2006 to FY2015.

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Diversified funding The Company has a supportive and diversified funding base anchored by long-term Sections 3.3,
support to fuel revolving funding relationships with major Australian and global banks. 4.5.2 and 9.5.2
future growth
• Scottish Pacific has longstanding relationships with its funding providers, including
over 10 year relationships with two of Australia’s largest banks who remained
supportive of Scottish Pacific and Bibby through the global financial crisis (“GFC”).
• Scottish Pacific continued to originate business as usual through the GFC with no
changes to advance rates during this period.
• The Company’s Senior Facilities, including a new facility with a major international
bank, are scaled with headroom for growth and funding providers have
a demonstrated track record of increasing funding limits as Scottish Pacific
has grown.
• The Senior Facilities’ maturities are diversified and well staggered reducing
potential refinancing risk.
Scottish Pacific’s funding will be supplemented by $60m of limited-recourse
mezzanine financing (expected to be $15m undrawn),13 allowing the business to
optimise its capital structure and retain corporate debt capacity to support growth
by acquisition and liquidity management.

Low risk balance Scottish Pacific has a low risk balance sheet, funding Client receivables through Section 3.2
sheet limited-recourse Funding Vehicles secured over pools of high quality debtors:
• Strong collateral positions with an average LVR of 57% (FY2013 to FY2015);
• Secured over a pool of high quality debtors, many of which are Australia’s
leading companies;
• Short repayment periods, typically less than 60 days; and
• No residual value risk unlike vehicle financiers where the asset (i.e. car being
financed) needs to be remarketed at the end of the financing term (i.e. the lease
period) exposing the financier to potential loss on disposal.

13. Forecast as at Completion of the Offer.

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Attractive financial Strong financial track record, visible revenue drivers and a compelling Sections 3.4
profile and growth growth outlook: and 4
outlook
• High Pro Forma historical PBIT growth of 17.0% p.a. (CAGR FY2013 to FY2015);
• Solid Underlying Business growth is expected to continue with Pro Forma Net
Revenue and PBIT forecast to grow at a CAGR of 8.7% and 17.5%, respectively,
between FY2015 and FY2017F; and
• Highly visible revenue streams underpinned by Management Fees which are
charged on a regular basis irrespective of the funding advanced to Clients and
represent over 70% of FY2015 Pro Forma Net Revenue.
Strong organic growth in Turnover and Average Exposure, the key drivers of revenue:
• Historical Pro Forma Turnover and Average Exposure growth (CAGR of 23.5% p.a.
and 22.5% p.a. from FY2013 to FY2015 respectively);
• This was driven by the retention of high quality Clients, growth in Client numbers
(6.8% CAGR from FY13 to FY15) as well as growth in the average Turnover per Client
and Average Exposure per Client (11.9% and 11.1% CAGR respectively from FY2013
to FY2015);
• These key drivers are expected to continue to support Underlying Business
growth, with forecast Turnover and Average Exposure growth of 15.9% p.a. and
13.3% p.a. respectively from FY2015 to FY2017F as Scottish Pacific’s continues to
grow the number of larger Clients (Scottish Pacific FY2015 Average Exposure per
Client of approximately $396,000 vs. industry average of $963,000).
Organic growth supplemented by new growth initiatives and capabilities:
• Broadening of Scottish Pacific’s Client set due to increased scale and specialisation;
• Improved growth from direct originations;
• More referrals from new arrangements with major banks; and
• An expanded profit offering with enhanced cross selling opportunities.
Improving profit margins due to increased scale, larger Clients and operational
efficiencies:
• Scottish Pacific has increased its Pro Forma PBIT margin from 30.6% in FY2013
to 33.0% in FY2015 with further expansion expected. The Underlying Pro Forma
PBIT margin is forecast to increase to 38.6% in FY2017F, or 41.1% including the
impact of the GE Portfolio Acquisition and Suncorp Portfolio Acquisition.
In addition to strong growth, Limited-recourse funding provided via a diversified
set of Senior Facilities and a Mezzanine Facility will reduce capital requirements and
contribute to strong returns on equity.

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Experienced Scottish Pacific has one of the most experienced management teams in the sector Section 6.2
Management team with over 150 years’ collective Debtor Finance experience.
The Management team is led by Peter Langham (CEO) and Chris Hedge (CFO) who
have each been with Scottish Pacific for more than 15 years and have led Scottish
Pacific’s historical growth, as well as the creation and maintenance of Scottish
Pacific’s business model and competitive advantages.
The Management team is further enhanced by additional strong leaders with
significant expertise, including in roles as CEOs of other Debtor Finance businesses.
• Greg Charlwood (Head of Debtor Finance) has over 26 years of experience within
the Debtor Finance industry and was the Managing Director of Bibby 2002 to 2012.
• Paul Green (Head of Risk and Compliance) has over 17 years of experience within
the Debtor Finance industry and has been with Scottish Pacific since 2006.
• Craig Michie (Head of International Finance) has over 25 years of experience
within the Debtor Finance industry and was the founder of Taurus Trade Finance
(acquired by Suncorp in 2011).
• Wayne Smith (Head of Marketing and Product Development) has over 17 years
of experience within the Debtor Finance industry and led Scottish Pacific’s
rebranding in 2012.
• Steven Davies (Head of Specialist Products) has over 22 years of experience
within the Debtor Finance industry and was a founding director of Bibby’s
Australian operations.
• Nick McAvoy (Head of Information Technology) has over 11 years of experience
within the Debtor Finance industry (in Information Technology (“IT”)) and helped
to build the Debtor Finance IT systems for a UK bank.

1.5 Key Risks

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Overview Scottish Pacific and the Offer are subject to several key specific and general risks. Section 5.1
These risks are fully described within Section 5 and should be reviewed in their
entirety. Selected key specific risks are summarised in the table below.

Major fraud events Scottish Pacific is exposed to the risk that counterparties with which it deals, Section 5.2.1
including Clients and debtors, may act fraudulently. Potential fraudulent behaviour
could include Clients and/or debtors conspiring to induce Scottish Pacific to
advance funds against false invoices, advance funds to a non-existent or insolvent
entity, or advance funds against invoices that are owned by (or required to be
paid to) a third party. Scottish Pacific relies on its internal controls to detect fraud.
Any failure of these internal controls to detect fraud could result in credit losses,
damage to Scottish Pacific’s reputation and its ability to raise funding, which in turn
could materially adversely affect Scottish Pacific’s business, operations and financial
performance. Accumulated underwriting experience, knowledge of industry and
customer specific risks, continuously improving credit processes and a highly
diversified loan book help mitigate the risk of material loss.

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Debtors and Clients Scottish Pacific is exposed to the risk that its Clients and debtors do not meet their Section 5.2.2
unable to meet their financial obligations or become insolvent. A failure by Scottish Pacific to adequately
financial obligations assess and manage counterparty credit risk may result in credit losses, potentially
resulting in a material adverse effect on Scottish Pacific’s business, operating
and financial performance, including decreased operating cash flows, significant
impairment expenses, an increase in funding costs, and reduced access to funding.
Scottish Pacific’s primary recourse for funds advanced is against the debtor not the
Client, such that the failure of the Client becomes less material. An effective LVR of
57% against assigned receivables and strong underwriting standards also mitigate
the risk of material loss.

Current litigation Scottish Pacific Business Finance Pty Limited and Benchmark Debtor Finance Pty Section 5.2.3
Limited are currently defendants in proceedings in the Supreme Court of New
South Wales. The proceedings involve claims brought by the liquidator of a third
party seeking to recover an amount of approximately $3m in relation to a former
Client where the Client was placed in voluntary administration in September 2011
and subsequently into liquidation. The Group is defending the claim; however,
there is a risk that the Group may not be successful in that defence. In addition
to this, if the Group is unsuccessful, it may be required to pay legal fees to the
claimant. Although it is not possible to assess these with any certainty as at the
Prospectus Date, the Board considers based on information currently available to
it, that the Group’s likely exposure for legal fees and costs (both its own costs and
any third party costs) could be approximately $1m to $1.5m if it is unsuccessful
in the proceedings. There is also a risk that any decision made by a court in
these proceedings is appealed. This could materially increase the costs of the
proceedings. It is not possible to estimate the likelihood of any appeal or the costs
of any appeal as at the Prospectus Date. At present, it is uncertain how long the
proceedings could take to resolve; however, it is likely they will not be finalised
until sometime during FY2017F, and could possibly not be resolved until FY2018F.
In light of the above and given the uncertainty in relation to the proceedings, no
provision has been raised in respect of this matter on the Pro Forma Balance Sheet,
and no impacts are reflected in the Forecast Financial Information.
The Group is also currently a party to litigation which it has commenced to enforce
its contractual rights against various Clients and third party debtors. This forms
part of the Group’s usual operating procedures to recover amounts owed to it.
There is a risk in conducting litigation that the Group could be unsuccessful in that
litigation, which would expose the Group to claims from third parties for their legal
costs (in addition to the costs the Group incurs in conducting those proceedings).
In addition, enforcement proceedings could result in adverse publicity and
reputational damage if the Group is perceived to have acted unfairly or in a
heavy handed manner. This may adversely impact the willingness of parties
to do business with the Group in future.

18
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Topic Summary Information

Funding Scottish Pacific’s funding sources comprise a mix of Senior Facilities, a Mezzanine Section 5.2.5
Facility, Corporate Debt Facilities, and the use of Scottish Pacific’s own cash. Scottish
Pacific depends on each of these sources to provide Client Funding Amounts to
its Clients. As detailed below, a loss of, or adverse impact on or in relation to, one
or more of Scottish Pacific’s funding sources could limit Scottish Pacific’s ability
to continue to fund its existing business, to write new business or, without access
to alternative funding sources, to write new business on favourable terms. Each
of these outcomes could have an adverse effect on Scottish Pacific’s financial
performance. There is also a risk that, upon the occurrence of certain adverse
events, the Senior Facilities or the Mezzanine Facility could enter a ‘lock-up’ or
‘turbo’ amortisation scenario whereby residual income in respect of the relevant
Funding Vehicle or Funding Vehicles is diverted to the repayment of senior ranking
facilities, which may adversely impact the earnings of Scottish Pacific.
The interest payable under the majority of the Senior Facilities, the Mezzanine
Facility and the Corporate Debt Facilities are linked to the Bank Bill Swap Bid Rate
(“BBSY”) – a variable floating interest rate benchmark. It is possible that the interest
rate charged may increase in the future, impacting the availability or size of any
Net Revenue earned by Scottish Pacific on receivables funded through its Funding
Vehicles and Scottish Pacific’s cost of doing business. Scottish Pacific reserves the
right to pass on increased costs to its Clients. In the event that Scottish Pacific is
unable to pass on increased costs to its Clients, or do so in a timely manner, this
may adversely impact its operating performance.
As providers of “first loss” funding to the Funding Vehicles and the Mezzanine
Vehicle, members of the Group are first in line to lose their investment if there is a
loss experienced by, or other shortfall in funds available to, the Funding Vehicles or
the Mezzanine Vehicle. This may impact the availability or size of any Net Revenue
earned by Scottish Pacific on receivables funded through its Funding Vehicles and
Scottish Pacific’s cost of doing business. In the event that Scottish Pacific is unable
to pass on increased costs to its clients, or do so in a timely manner, this may
adversely impact its operating performance, as well as a decrease in the value of
the Group’s investments in notes and units issued by the Funding Vehicles and the
Mezzanine Vehicle.

Scottish Pacific may Scottish Pacific has various financial and non-financial covenants under its financing Section 5.2.6
not be able to comply facilities which could limit its future financial flexibility. Scottish Pacific estimates
with debt covenants that its Pro Forma net debt as at 31 December 2015 was $34.8m. If Scottish Pacific’s
operating results deteriorate, including incurring significant losses, Scottish Pacific
may be unable to meet the covenants governing its indebtedness, which may
require Scottish Pacific to seek amendments, waivers of covenant compliance or
alternative borrowing arrangements, or to reduce debt or raise additional equity.
If a breach of covenant were to occur, there is no assurance that Scottish Pacific’s
financiers would consent to an amendment or waiver, or that its financiers would
not exercise their enforcement rights, including requiring immediate repayment
and cancellation of the facility. Such events could limit Scottish Pacific’s flexibility
in planning for, or reacting to, downturns in its business or otherwise materially
adversely affect Scottish Pacific’s business, operating and financial performance,
and require new funding to be raised or a potential need to raise equity.

Scottish Pacific  Prospectus 19

01. Investment Overview continued


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Systems failure Scottish Pacific has established processes to ensure that it obtains ownership of Section 5.2.10
receivables assigned to it and priority over those receivables over other third parties
(including other creditors of Scottish Pacific and its Clients). These processes rely in
part on searches and information provided by third parties, and in part on Scottish
Pacific employees taking appropriate actions and following internal processes and
procedures (such as ensuring the Client enters into appropriate agreements and
registering Scottish Pacific’s interest in the assets of the Client). It is possible that
inaccurate information provided by third parties, human error by Scottish Pacific
staff, or failure to follow procedures by Scottish Pacific staff, may result in Scottish
Pacific not obtaining ownership of receivables that are purportedly assigned to
it, or losing priority to receivables to other third parties. This may expose Scottish
Pacific to financial loss if it is unable to recover from the Client (or debtors) the
amount paid to the Client in respect of those receivables.

Scottish Pacific may Over the past 12 months, Scottish Pacific has acquired Bibby, and portfolios of Section 5.2.11
not successfully Clients of the former Australian GE Debtor Finance business and from the Suncorp
integrate recent and Debtor Finance business. There is a risk that Scottish Pacific fails to successfully
future acquisitions integrate these acquisitions and any future acquisitions with its existing businesses,
experiences higher than anticipated integration costs, or realises lower than
anticipated synergies, or there is a significant delay in achieving the successful
integration of these acquisitions, which could have a material adverse effect on
Scottish Pacific’s earnings from the acquisitions.

Inability to retain Scottish Pacific’s contracts, including with key Clients, may be terminated without Section 5.2.12
Clients and attract cause, in some cases on a short notice period. On average Scottish Pacific loses
new Clients approximately 20% of its Clients in any one year. This could include a loss of key
Clients, including during the forecast period. A failure to replace those Clients
with new, equally profitable Clients, could materially impact on Scottish Pacific’s
earnings. This could occur due to a range of events including changes to Client
funding requirements, a deterioration in the level of service provided to the Client,
a weakening of Client relationships or disputes with Clients, Client insolvency or
a Client moving to a competitor.
In addition to the risk of losing Clients, Scottish Pacific is also at risk of existing Clients
reducing their use of Debtor Financing. This could occur because the Client chooses
to use other forms of financing, or because the Client’s volume of business reduces
(meaning it generates fewer and smaller invoices for which it seeks Debtor Financing).
Scottish Pacific provides its Clients with a range of products and services including
Factoring, Discounting, Trade Finance and Bad Debt Protected Facilities. Margins
vary considerably across the range of products and services that Scottish Pacific
provides and a change in the mix of products and services that Scottish Pacific sells
to its Clients, due to loss of Clients or changing Client preferences, could have a
material adverse impact on Scottish Pacific’s financial performance.
Any of these factors could materially adversely affect Scottish Pacific’s level
of business, the fees and Net Margin it earns, and therefore its operating and
financial performance.

20
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Topic Summary Information

Disruption to Scottish Pacific’s technology platform may be disrupted, become outdated or Section 5.2.13
technology platform cease to function efficiently for Scottish Pacific and its Clients and debtors. They
could also be exposed to damage or interruption from systems failures, computer
viruses, cyber-attacks or other events. This could have a material adverse impact on
Scottish Pacific’s business, operating and financial performance. Scottish Pacific’s
technology platform is critical to its operations and ability to manage collection
of receivables and the amount of funds it advances to Clients. It depends on the
uninterrupted operation of its IT systems to operate its business. Some of these
IT systems are bespoke and not easily replicated. Any major disruption of system
disruption to Scottish Pacific’s IT systems could materially affect its operations
and reputation. This would necessitate increased expenditure on technology
and could adversely affect future levels of business and Scottish Pacific’s
financial performance.
Scottish Pacific manages this risk by maintaining a disaster recovery site that
replicates all information and operating capabilities of the technology platform.

Disruption of Scottish Pacific relies on a broad referral network to source new Clients and Section 5.2.17
referral network business. The network is comprised of Commercial Finance Brokers, accountants,
Clients and banks, supported by formal and informal distribution agreements.
There is a risk that, if Scottish Pacific suffers reputational damage or its products
cease to be attractive to Clients or referrers, members of the Group’s referral
network may cease to refer business to Scottish Pacific. If sufficient numbers of
referrers did this, there could be a material impact on Scottish Pacific’s ability to
generate new business to make up for natural Client attrition (currently, Scottish
Pacific loses approximately 20% of its Clients annually). This could have a material
adverse impact on Scottish Pacific’s business, operating and financial performance.

1.6 Key Offer Statistics

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Topic Summary Information

What are the key Section 7

Offer Price $3.20
offer statistics?
Total proceeds under the Offer ($m) 293.5

Total proceeds from the issue of New Shares under the Offer ($m) 77.3

Total proceeds from the sale of Existing Shares under the Offer ($m) 216.2

Total number of New Shares available under the Offer (millions)1 24.2

Total number of Existing Shares to be sold under the Offer (millions) 67.6

Total number of Shares on issue at Completion of the Offer (millions)1 139.2

Market capitalisation at the Offer Price ($m)2 445.4

Enterprise value at the Offer Price ($m)3, 4 499.4

1. Includes 71,500 Shares relating to the Employee Gift Offer to be issued under the Offer.
2. Market capitalisation at the Offer Price is defined as the Offer Price multiplied by the total number of Shares on issue
on Completion of the Offer.
3. Enterprise value is calculated as the sum of market capitalisation at the Offer Price and target net corporate debt.
4. Target net corporate debt reflects management’s target corporate debt less management’s target cash position
at Completion of the Offer. For more detail see Section 4.5.1.

Scottish Pacific  Prospectus 21

01. Investment Overview continued


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Topic Summary Information

What are the key Section 4

Target net corporate debt at Completion of the Offer ($m)4 54.0
investment metrics?
Target net corporate debt at Completion of the Offer / FY2016F 1.3x
PBITDA (Annualised) (times)4, 5

Enterprise value / Pro Forma FY2016F PBITDA (times)3, 6, 8 13.7x

Enterprise value / Pro Forma FY2017F PBITDA (times)3, 6, 8 9.6x

Offer Price / Pro Forma FY2016F NPATA per Share (times)6, 8 20.0x

Offer Price / Pro Forma FY2017F NPATA per Share (times)6, 8 14.0x

Implied indicative dividend yield for FY2017F at the Offer Price8, 9 5.0%

5. Annualised FY2016F PBITDA is calculated based on the FY2016F Pro Forma PBITDA $36.3m adjusted to annualise
the contribution of the GE Portfolio Acquisition and Suncorp Portfolio Acquisition. PBITDA refers to profit before
interest, tax, depreciation and amortisation. The adjustment is required to ensure the debt position at Completion
of the Offer and the earnings profile reflected in the ratio are consistent. The adjustment does not reflect any future
synergies from these portfolio acquisitions.
6. This ratio is a variant of what is commonly referred to as an ‘EV/EBITDA’ ratio. Please refer to Section 4 for further
details in relation to the Pro Forma Financial Information. PBITDA refers to profit before interest, tax, depreciation
and amortisation. The EV/PBITDA ratio is calculated as the Enterprise Value based on the Offer Price divided by
Pro Forma PBITDA.
7. This ratio is a variant of what is commonly referred to as a price to earnings, or ‘PE’ ratio. A PE ratio is a company’s
share price divided by its earnings per share. NPATA is defined net profit after tax excluding amortisation and impairment
pertaining to acquired intangibles on a tax-effected basis. Management believes NPATA is an important measure of
the underlying cash earnings of the business due to the number of acquisitions during the historical period that have
resulted in increased amortisation, which is a non-cash charge.
8. The Forecast Financial Information is based on assumptions and accounting policies set out in Section 4 and
Appendix A, and is subject to the key risks set out in Section 5. There is no guarantee that forecasts will be achieved.
9. The indicative dividend yield is calculated as the implied FY2017F dividend per Share divided by Offer Price per Share.
The FY2017F dividend is based on the Pro Forma FY2017F forecast NPATA and a 70% dividend payout ratio, being
the mid-point of dividend policy of 60-80% of Pro Forma NPATA. For more information on the Company’s dividend
policy, see Section 4.11.

1.7 Directors and Senior Management

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Who are the Directors Section 6

Directors and Senior • Patrick Elliott (Non-Executive Chairman)
Management of
• Peter Langham (CEO and Executive Director)
Scottish Pacific?
• Peter Clare (Independent Non-Executive Director)
• Katrina Onishi (Independent Non-Executive Director)
• Andrew Love (Independent Non-Executive Director)

Senior Management
• Peter Langham (CEO and Executive Director)
• Chris Hedge (Chief Financial Officer)
• Greg Charlwood (Head of Debtor Finance)
• Paul Green (Head of Risk and Compliance)
• Craig Michie (Head of International Finance)
• Wayne Smith (Head of Marketing and Product Development)
• Steve Davies (Head of Specialist Products)
• Nick McAvoy (Head of IT)

22
1.8 Significant Interests of Key People and Related Party Transactions

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Topic Summary Information

Who are the Existing Section 7.1.6

Shares held Shares held
Shareholders and prior to following
what will their interest Completion Completion
in Scottish Pacific of the Offer of the Offer
be at Completion of (Shares in (Shares in
millions/%)1 millions/%)2
the Offer?
Next Capital Entities 46.3m/38.2% 23.1m/16.6%
IFM Investors 34.5m/28.5% 17.2m/12.4%
Other institutional Shareholders 26.7m/22.0% –
Non-Executive Director 0.4m/0.3% 0.5m/0.3%
Shareholders
Peter Langham 4.4m/3.7% 3.1m/2.2%
(and associated entities)
Chris Hedge 1.1m/0.9% 0.6m/0.4%
(and associated entities)
Other Management 4.6m/3.8% 2.4m/1.7%
Other existing Shareholders 3.2m/2.6% 0.7m/0.5%
New Shareholders3 – 91.6m/65.8%
Total4 121.2m/100% 139.2m/100%
1. Includes Management Options held under the Legacy LTI Scheme prior to exercise or cancellation
on an “as‑if‑converted” basis..
2. On Completion shares held includes shares issued pursuant to the exercise of options held under
the Legacy LTI Scheme and excludes 6.2m Legacy LTI options cancelled prior to Completion.
3. Excludes 0.2m Shares issued to Non-Executive Director Shareholders, which are reflected in the
Non-Executive Director Shareholders row.
4. The total number of Shares held on Completion includes 71,500 Shares which are to be issued
under the Employee Gift Offer.

What significant Section 6.3

Key people Interest or benefit
benefits and interests
are payable to Executive Directors Ownership of Shares
Directors and other Directors’ fees (including options)
persons connected Non-Executive Directors Ownership of Shares
with Scottish Pacific Directors’ fees
or the Offer and what Management Shareholders Ownership of Shares
significant interests Remuneration
do they hold?
Other members of Management Remuneration
Other Existing Shareholders Ownership of Shares
Advisers and other Fees for services
service providers

Scottish Pacific  Prospectus 23

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Will there be There will be no controlling interests in Scottish Pacific immediately after the Offer. Section 6.3
a controlling interest
in Scottish Pacific?

Are there any related The Group has an agency arrangement with a third party company which is owned Section 6.4.10
party transactions? by two members of Management. See Section 6.4.10.
Scottish Pacific provides a debtor financing facility to Trend Imports, a subsidiary
of Next Athleisure, a company of which Patrick Elliott is a director and which Next
Capital Pty Limited (“Next Capital”) is a majority shareholder. The Group is also
proposing to enter into a Debtor Financing facility with Steelforce Australia Ltd
(ACN 093 284 078).

Will any Shares be Shares held at Completion by the following Shareholders (“Escrowed Sections 7.10
subject to restrictions Shareholders”) (other than any Shares acquired by them under the Offer and 9.5.4
on disposal following at the Offer Price) will be subject to disposal restrictions:
Completion of
• Next Capital Entities
the Offer?
• IFM Investors
• Non-Executive Director Shareholders
• Management Shareholders
Subject to certain exceptions, the Escrowed Shareholders may not dispose of their
Escrowed Shares while they are subject to voluntary escrow arrangements or other
disposal restrictions.

1.9 Overview of the Offer

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Topic Summary Information

What is the Offer? The Offer is an initial public offering of 91.8m Shares that will in part be issued by Section 7
the Company and in part sold by SaleCo.
The Shares to be issued and sold as part of the Offer will represent 65.9% of the
Shares on issue after Completion of the Offer.

Who is SaleCo? SaleCo is a special purpose vehicle established to sell Shares acquired from certain Sections 7
Existing Shareholders. and 9

The Existing Shares that SaleCo acquires from the Existing Shareholders, along with
New Shares issued by the Company, will be acquired by Successful Applicants at
the Offer Price.

Who are the issuers The issuers of the Prospectus are Scottish Pacific Group Limited (ACN 164 013 110), Sections 7
of the Prospectus? a company registered in Victoria, Australia and Scottish Pacific SaleCo Pty Ltd and 9
(ACN 612 646 607) registered in Victoria, Australia.

24
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Topic Summary Information

Why is the Offer being The purpose of the Offer is to provide the Company with: Section 7
conducted?
• Access to the capital markets to improve capital management flexibility
and capacity to fund future growth initiatives; and
• A liquid market for its Shares and an opportunity for others to invest
in the Company.
The Offer also provides the opportunity for Existing Shareholders to realise all
or a portion of their investment in Scottish Pacific.

What is the proposed The proceeds of the Offer will be applied to: Section 7
use of proceeds from
• Payment to SaleCo (which will distribute payments to Existing Shareholders);
the Offer?
• Payment of the pre-IPO dividend to Existing Shareholders;
• Repayment of corporate debt;
• Cancellation payment for Legacy Options; and
• Payment of the transactions costs associated with the Offer.

Where will the Shares Scottish Pacific has applied to the ASX for admission to the Official List and Section 7
be listed? quotation of Shares on the ASX (which is expected to be under the code “SCO”).
It is anticipated that quotation will initially be on a deferred settlement basis.
Completion of the Offer is conditional on the ASX approving the application. If
approval is not given within three months after such application is made (or any
longer period permitted by law), the Offer will be withdrawn and all Application
Monies received will be refunded without interest as soon as practicable in
accordance with the requirements of the Corporations Act.

How is the Offer The Offer comprises: Section 7

structured?
• the Broker Firm Offer;
• the Priority Offer; which is open to selected employees and Investors in eligible
jurisdictions who have received a Priority Offer invitation;
• the Employee Gift Offer; and
• the Institutional Offer, which consists of an invitation to acquire Shares made
to Institutional Investors.

Is the Offer Yes. The Joint Lead Managers have fully underwritten the Offer (other than the Sections 7
underwritten? Employee Gift Offer) pursuant to the Underwriting Agreement. and 9

Scottish Pacific  Prospectus 25

01. Investment Overview continued


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Topic Summary Information

What is the The allocation of Shares between the Broker Firm Offer, the Priority Offer, the Section 7
allocation policy? Employee Gift Offer and the Institutional Offer will be determined by agreement
between the Joint Lead Managers and the Company, having regard to the
allocation policy outlined in Sections 7.3.4, 7.4.3, 7.5.3 and 7.6.2.
For Broker Firm Offer participants, the relevant Broker will decide how they allocate
Shares amongst their retail clients. The relevant Broker (and not Scottish Pacific.
Neither SaleCo nor the Joint Lead Managers) will be responsible for ensuring that
eligible retail clients who have received an allocation of Shares from the Broker
actually receive those Shares.
With respect to the Priority Offer, the allocation of Shares to invitees is at the
absolute discretion of Scottish Pacific, provided that those allocations (in aggregate)
do not exceed $4.5 million.
The Joint Lead Managers and Scottish Pacific have absolute discretion regarding
the allocation of Shares to Applicants under the Offer and may reject an
Application, or allocate a lesser number of Shares than applied for. The Joint Lead
Managers and Scottish Pacific also reserve the right to aggregate any applications
that they believe may be multiple Applications from the same person.
The Employee Gift Offer will be offered to Eligible Employees only who will
be offered the opportunity to apply for up to $1,000 worth of Shares at no
cost. The allocation of Shares under the Employee Gift Offer is guaranteed to
Eligible Employees.

Are there any No brokerage, commission or stamp duty should be payable by Applicants on Section 7
brokerage, acquisition of Shares under the Offer.
commission or stamp
See Section 6.3.5 for details of various fees payable by Scottish Pacific to the Joint
duty payable by
Lead Managers.
Applicants?

What are the tax Summaries of certain Australian tax consequences of participating in the Offer Section 9.2
implications of and investing in the Shares are set out in Section 9.2. The tax consequences of any
investing in Shares? investment in the Shares will depend upon an investor’s particular circumstances.
Applicants should obtain their own tax advice prior to deciding whether to invest.

When will I receive It is expected that initial holding statements will be dispatched to Successful Section 7
confirmation that my Applicants by standard post on or around Thursday 14 July 2016.
Application has been
Refunds (without interest) to Applicants who make an Application and receive
successful?
an allocation of Shares, the value of which is smaller than the amount of the
Application Monies, will be made as soon as practicable after Completion of
the Offer.

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What is the minimum The minimum Application under the Broker Firm Offer is $5,000 worth of Shares. Section 7
and maximum There is no maximum application size, unless directed by your Broker.
Application size under
Applications under the Priority Offer must be for a minimum of $5,000 worth
the Offer?
of Shares.
The Company, SaleCo and the Joint Lead Managers reserve the right to reject an
Application or to allocate a lesser number of Shares than that applied for, in their
absolute discretion.
Under the Employee Gift Offer, Eligible Employees will be offered the opportunity
to apply for up to $1,000 worth of Shares at no cost.

How can I apply? If you are an eligible investor who has received an invitation to apply for Shares Section 7
under the Broker Firm Offer or the Employee Gift Offer you may apply for Shares by
completing a valid Broker Firm Application Form.
Applicants under the Employee Gift Offer and Priority Offer may only apply for
Shares online at www.scottishpacific.com using the online Application Form.
Priority applicants must pay their Application Monies via BPAY (no physical
Application Form is needed when paying in this manner) or otherwise as agreed
between the Company and the Joint Lead Managers. There are instructions set out
on the online Application Form to help you complete it.
To the maximum extent permitted by law, an application under the Offer
is irrevocable.

Can the Offer The Company and SaleCo reserve the right not to proceed with the Offer at any Section 7
be withdrawn? time before the issue or transfer of Shares to Successful Applicants.
If the Offer does not proceed, Application Monies will be refunded by the Share
Registry, your Broker or the Company

Where can I find more All enquiries in relation to this Prospectus should be directed to the Scottish Pacific Key Offer
information about Information Line on 1800 236 994 (within Australia) or +61 1800 236 994 (outside Statistics and
this Prospectus or Australia) between 8.30am and 5.30pm (AEST), Monday to Friday. Important
the Offer? dates on pages
All enquiries in relation to the Broker Firm Offer should be directed to your Broker. 03 and 04
If you are unclear in relation to any matter or are uncertain as to whether Shares
are a suitable investment for you, you should seek professional guidance from
your stockbroker, solicitor, accountant, financial adviser or other independent
professional adviser before deciding whether to invest.

Scottish Pacific  Prospectus 27

02.
Industry Overview
02. Industry Overview


2.1 Introduction
Scottish Pacific operates in the Debtor Finance market, primarily in Australia with a presence in New Zealand, Hong Kong and the
United Kingdom. Industry participants (Debtor Financiers) provide financing predominantly to SMEs in order to bridge the cash flow
gap between their expense cycles and the terms of the collection date of their receivables. In many instances, the Debtor Financier
becomes the main working capital finance provider to the SME.
Section 2 provides an overview of key Debtor Finance products; their relevance and value proposition to SME Clients; the historical
growth and size of the industry; the key growth drivers of the industry; and the competitive landscape and the
regulatory environment.

2.2 Overview of Debtor Finance

2.2.1 What is Debtor Finance?

Debtor Finance is a form of financing, whereby (predominantly SME) Clients assign (i.e. transfer legal and/or beneficial ownership)
their receivables to a Debtor Financier which in turn provides a cash advance to the Client (as payment for the receivables) to help
the Client bridge the cash flow gap between their expense cycles and the terms of the collection date of their receivables. Debtor
Finance primarily consists of two key products, Discounting and Factoring:
• Discounting involves an entity (the Client) assigning, usually all of their trade receivables to a Debtor Financier, in return for
a finance facility. The Debtor Financier retains ownership over the assigned receivables. Under a Discounting arrangement, the
role of the Debtor Financier is not disclosed to the debtor and the Debtor Financier typically does not manage the receivables
or collections. Discounting is generally more suitable for larger businesses with more developed accounting and receivables
management systems and a proven track record; and
• Factoring is similar to Discounting except that the role of the Debtor Financier is disclosed to the Debtor and the Debtor Financier
is responsible for management of receivables and collections. In general, these facilities are more labour intensive and therefore
higher margin relative to Discounting facilities. Factoring facilities allow the Debtor Financier to maintain increased flexibility and
control over administration and collections and tend to be more suitable for smaller businesses with less sophisticated
accounting and receivables management practices.

Table 1: Comparison of Debtor Finance Products 

Discounting Factoring

Receivables assigned to financier ü ü

Debtor aware of assignment  ü

Financier collects and manages  ü

No property required as security ü ü

Credit exposure to debtors ü ü

Full recourse to Clients for amounts advanced ü ü

Servicing intensity Lower Higher

Margin Lower Higher

Proportion of Australian Industry Turnover14 92% 8%

14. Debtor and Invoice Finance Association of Australia and New Zealand Inc., DIFA Update: DIFA Statistics December Quarter 2015 (8 February 2016) <http://difa.asn.au/wp-content/
uploads/2015/09/Statistical_Update_Dec_2015.pdf>.

Scottish Pacific  Prospectus 29

02. Industry Overview continued


2.2.2 Users of Debtor Finance

Debtor Finance tends to be used more commonly by SMEs operating within specific industries, and is not suitable for all businesses.
Businesses most typically suited to Debtor Finance often:
• Sell tangible goods or services;
• Have relatively high sales growth;
• Trade profitably;
• Have a mismatch between expense cycles and the collection date of their invoices;
• Have limited property assets to provide as security; and
• Have a suitable credit history and defined credit terms with debtors.
Industries which represent a high proportion of Debtor Finance market Turnover (defined as the total value of receivables assigned
to a Debtor Finance provider) include wholesale trade, manufacturing, business services, labour hire, transport and storage15 and other
industries where goods are sold on defined credit terms, with low bad debt ratios and a relatively low risk of sales returns or disputes
Debtor Finance is generally unavailable to retailers and business sectors with a disproportionate level of trade disputes.

Figure 1: Debtor Finance Market Turnover by Sector16

Industry Discounting Turnover by Sector (%) Industry Factoring Turnover by Sector (%)
for the Quarter ended 31 December 2015 as for the Quarter ended 31 December 2015
8%
9%
1%
2%
3%
3%
3% 8%
37% 23%
8%
11%
9% 13%

10% 26%
19%
7%

Wholesale Trade Manufacturing Property & Business Service Labour Hire

Transport and Storage Construction Agriculture and Mining Retail Trade Other

15. Debtor and Invoice Finance Association of Australia and New Zealand Inc., DIFA Update: DIFA Statistics December Quarter 2015 (8 February 2016) <http://difa.asn.au/wp-content/
uploads/2015/09/Statistical_Update_Dec_2015.pdf>.
16. Ibid.

30
2.2.3 How Debtor Finance Works
Debtor Finance allows Clients to monetise their trade receivables immediately after issuing an invoice rather than waiting for a longer
period for payment of their invoice (often up to 90 days). Following a sale, a Client will invoice their customer and inform the Debtor
Financier of the invoice. The Debtor Financier takes an assignment of the receivable and will advance a proportion (usually ~80%) of
the value of approved invoices, less the Debtor Financier’s fees. The remaining proportion of the invoice is available to the Client when
the invoice is paid in full, less the Debtor Financier’s fees. The process of Debtor Finance is illustrated in Figure 2.

Figure 2: Illustrative Example of Debtor Cycles With and Without Debtor Finance

Debtor cycle without Debtor Finance Debtor cycle with Debtor Finance

0 days 90 days 0 days 1 day 90 days

SME SME

2 $801 4 $201
$100 $100
$100
sale on sale on
1 2 invoice 1 Debtor Finance provider
trade trade
is paid
credit credit
3 $100

Debtor Debtor

1. SME sells product to customer 1. SME sells product to customer

on 90-day trade credit terms on 90-day trade credit terms
2. Debtor pays invoice 90 days later 2. SME assigns the right to be paid under its invoice
(receivable) to the Debtor Financier
3. Debtor Financier advances up to 80% of the invoice
amount within 24 hours1
4. Debtor pays invoice 90 days later
5. SME receives remaining proportion
of the invoice once the invoice is paid in full1

 Without Debtor Finance, the SME must wait  With Debtor Finance, SME is able to monetise
up to 90 days before receiving payment a portion of the invoice immediately

1 Less Debtor FinancierFinancier fees.

Note: This example is illustrative only and an actual transaction may differ. For example, invoices may be repaid in less than or more than 90 days and the amount
advanced may be more or less than 80% of the invoice amount.

Scottish Pacific  Prospectus 31

02. Industry Overview continued


2.2.4 Overview of SME Lending

2.2.4.1 Overview of SMEs
As at 30 June 2015, there were over 2m SMEs in Australia.17 In 2014, SMEs represented 61% of total Australian pre-tax profit and employ
over 7.3m people, representing 68% of all Australian workers, also producing $577bn worth of GDP, representing 56% of private
sector economic output.18 While many of these businesses are smaller ‘micro-businesses’, Dun and Bradstreet estimates there are
approximately 60,000 B2B Australian companies operating in industries suitable for Debtor Finance19 with annual sales between $0.5m
and $250 million.20 These businesses are considered by Scottish Pacific to form the addressable Debtor Finance market in Australia.

2.2.4.2 Landscape of Lending Products Available to SMEs

SMEs typically require finance to meet their everyday working capital requirements and fund their growth. In a National Australia
Bank (“NAB”) survey of SMEs, over 30% cited cash flow problems as the most significant constraining factor to their growth.21 SMEs
commonly rely on traditional sources of funding including equipment finance, overdraft facilities, term loans, credit card facilities,
and friends and family. However, these traditional sources of funding are sometimes unsuitable, unavailable or inefficient for SME
borrowers. Some estimates point to 200,000 Australian SMEs encountering difficulty when seeking to access finance, with insufficient
collateral being a key constraint.22 Some SMEs fall outside of standard lender credit decision matrices due to the
following characteristics:
• Inadequate trading history;
• High debt to equity ratios;
• Low interest cover ratios;
• Lack of repayment cover; and
• Inadequate cash flow.
Traditional lenders commonly require security over real estate to alleviate these concerns. However, recent research conducted by
East & Partners found that 67.9% of SMEs were willing to pay a higher rate to obtain finance if it meant they did not need to provide
real estate security.23 Furthermore, between 1996 and 2014 the percentage of Australian households that own their home outright has
fallen from 43% to 31%,24 reducing the proportion of people that can use their personal real estate as collateral security for loans to fund
their business. Other research reveals that 37% of SME loan application denials are due to a lack of collateral security being provided.25
Debtor Finance allows SMEs to pledge their debtor receivables in lieu of more traditional real estate collateral in order to secure
funding, making it an attractive alternative for SME borrowers, particularly where property security is not available or willing to be
offered. This is facilitated by the Debtor Financier looking to recover their funds in the first instance from the debtor rather than from
the Client.

2.2.4.3 Value Proposition of Debtor Finance to SMEs

Debtor Finance is typically used by SMEs to bridge the cash flow gap between their expense cycles and the terms of the collection
date of their receivables. Some key advantages of Debtor Finance relative to more traditional forms of financing, such as property
secured bank loans and credit cards, include: accessibility, speed, and flexibility.

Accessibility
The Debtor Financier primarily recovers the amounts it advances an SME by collecting receivables assigned to it by the SME. When
assessing credit risk, the Debtor Financier will primarily examine the ability and willingness of the underlying debtor to pay (i.e. the
customer of the SME), rather than the Client (the SME itself). This means that businesses can be supported throughout their business
cycle, or when other forms of finance are inaccessible. Because Debtor Finance does not require Clients to pledge real estate as
collateral for advances, Clients without real estate or other significant physical assets, are able to obtain financing which may not

17. Australian Bureau of Statistics, Counts of Australian Businesses – Catalogue Number 8165.0 (26 February 2016) <http://www.abs.gov.au/AUSSTATS/abs@.nsf/
Lookup/8165.0Main+Features1Jun%202011%20to%20Jun%202015?OpenDocument>.
18. Ibid.
19. See Section 2.2.2 for more information on suitable industries.
20. Dun and Bradstreet, ‘Scottish Pacific Figures’ (Independently Commissioned Report, Dun and Bradstreet, 11 April 2016).
21. NAB Group Economics, NAB Quarterly SME Survey – June Quarter 2015 (30 July 2015) <http://business.nab.com.au/wp-content/uploads/2015/07/2015q2-NAB-SME-business-survey.pdf>.
22. NSW Business Chamber, Small Business Access to Finance (November 2013) <http://www.nswbusinesschamber.com.au/ NSWBCWebsite/media/Policy/Thinking%20Business%20Reports/
Small-Business-Access-to-Finance.pdf>.
23. East & Partners, ‘Scottish Pacific SME Growth Index’ (Report, March 2016).
24. Australian Bureau of Statistics, Household Income and Wealth – Catalogue Number 6523.0 (30 March 2016) <http://www.abs.gov.au /AUSSTATS/abs@.nsf/Lookup/6523.0Main+Features312013-
14?OpenDocument>. Over the same period the proportion of Australian households that own their own home either outright or with a mortgage has fallen from 71% to 67%
25. Morgan Stanley, ‘Global Marketplace Lending: Disruptive Innovation in Financials’ (Morgan Stanley Blue Paper, 19 May 2015).

32
otherwise be available. Recent research conducted by East & Partners found that the availability of unsecured credit, with no
requirement to mortgage the family home, is the most important factor for SMEs seeking funding to grow.26

Speed
Leading Debtor Financiers have streamlined approval processes that make applying for Debtor Finance a straightforward process that
is easy to use and understand. The initial verification process undertaken by the Debtor Financier is comprehensive; however, once
approved, Clients are able to convert sales into cash flow very quickly, often within 24 hours.

Flexibility
Unlike overdraft or term loan facilities, there are no bank style covenants that Clients must maintain and there are no amortising or
bullet repayments of capital. Such restrictions can weigh significantly on SMEs. In 2012, a Reserve Bank of Australia (“RBA”) roundtable
paper on small business finance found that stricter covenants on loans were the largest concern for SMEs that participated in the
roundtable discussion.27 Additionally, banks will often place restrictions on changes in ownership which are generally not required for
Debtor Finance.
Furthermore, funding is able to grow proportionally with SME sales growth. As business revenues increase, the Client will have a larger
pool of invoices available to assign to the Debtor Financier to fund working capital requirements, without the requirement to
continually apply for incremental facility limits which would be required for more traditional financing products. Conversely, if
business revenues decline, Debtor Finance provides the flexibility to reduce the drawn amount, lowering working capital costs.
Debtor Finance also provides Clients with operational flexibility by allowing Clients to offer extended payment terms to customers,
which may in turn enhance efficiencies for the Client, including larger order sizes and reduced distribution costs.

2.2.5 History of Growth in the Debtor Finance Industry

The Debtor Finance market in Australia is large and growing, with Debtor Finance growing from $3.9bn in Turnover in 1996 to $64.4bn
in Turnover for the 12 months ended 31 December 2015.28 The industry product mix between Factoring and Discounting has also
shifted during this period. In 1996, Factoring represented 31% of the Debtor Finance market by Turnover, while in the 12 months to
31 December 2015, Factoring represented just 8% of the market. This shift has largely been the result of most banks only offering
Discounting and increasing use of Discounting by larger and more sophisticated Clients who do not require the additional services
provided by Factoring. While Discounting has grown at a faster pace (CAGR 17.6%), Factoring remains an attractive and effective
financing tool (CAGR 8.1%).

Figure 3: Debtor Finance Market Turnover by Product Over Time27

7% 8%

31%
69% 93% 92%

$3.9bn $46.0bn $64.4bn

1996 2006 2015

Discounting Factorising

26. East & Partners, ‘Scottish Pacific SME Growth Index’ (Report, March 2016).
27. Reserve Bank of Australia, Small Business Finance Roundtable (22 May 2012) <http://www.rba.gov.au/publications/workshops/other/small-bus-fin-roundtable-2012/pdf/small-bus-fin-
roundtable.pdf>.
28. Debtor and Invoice Finance Association of Australia and New Zealand Inc., DIFA Update: DIFA Statistics December Quarter 2015 (8 February 2016) <http://difa.asn.au/wp-content/
uploads/2015/09/Statistical_Update_Dec_2015.pdf>.

Scottish Pacific  Prospectus 33

02. Industry Overview continued


The history of growth in Debtor Finance in Australia can be categorised broadly into three distinct periods:

High Growth from 1996 to 2008

The Australian Debtor Finance industry experienced significant growth between 1996 and 2008, with Turnover increasing at a 26.4%
CAGR over the period.29 Prior to 1996, market growth was predominantly through increased supply from Independent Debtor Finance
Providers, operating in niche market segments. However, growth accelerated in the mid-1990s to mid-2000s as major and regional
banks, along with international players, entered the market. These new entrants provided additional supply which helped to meet
SME demand for a cash-flow based lending product.

Industry Disruption from 2008 to 2014

Between 2008 and 2014, the industry contracted at a –0.6% CAGR over the period. A key driver over this period was the exit of certain
major bank providers and international players during the GFC (see Section 2.3.3.2). The exit of certain major bank providers drove
a reduction in Discounting Turnover from $62bn in 2008 to $57.5bn in 2014. However, Factoring, a product typically offered by
Independent Debtor Finance Providers and thus less affected by the exit of certain major banks continued to grow Turnover from
2008 to 2014 at a CAGR of 8.4%, consistent with its CAGR over the 1996 to 2015 period of 8.1%.
As a number of large players ceased offering Debtor Finance products, some Clients switched to other products, including overdrafts
and term loans. At the same time, new entrants and sub-scale operators struggled to generate enough volume to replace the funding
of the exiting major providers, constraining supply.
As a sign of reduced bank lending appetite to the SME market (particularly during the GFC), new revolving credit limits (mortgage
backed overdrafts, business credit cards, and business lines of credit) of $2m or larger (i.e. large limits for larger corporates) have
increased, while new lower limit facilities continue to decrease. Annual approvals of facilities of $2m or larger are up 30.5% vs. 2008
levels whilst there has been a 44.1% decline in annual approvals of smaller facilities with a limit of $2m or less over the same period.

Figure 4: New Revolving Credit Commitments to Australian Businesses (Indexed, 2008 = 100)30

160

140
+30.5%
120

100

80

60 10.7
8.9
-44.1%
40 7.4
5.0 5.8
20 3.9
3.1 3.4
0
2008 2009 2010 2011 2012 2013 2014 2015

Facility limit >$2m Facility limit <$2m

The reduced supply of SME financing over this period indicates there may be a large pool of unmet demand for SME loans. According
to some estimates, unmet demand for loans up to $0.5m could be as large as $70bn.31 Importantly, although the industry as a whole
contracted during this period, the total new business of incumbent Debtor Financiers increased.32

Accelerated Industry Consolidation from 2014 Onwards

The Debtor Finance industry has recently observed another phase of consolidation with Scottish Pacific acquiring Bibby and the GE
and Suncorp Debtor Finance portfolios. Over the 12 months ended 31 December 2015, the market Turnover grew by +2.8%.33

29. Turnover in 1996 was $3.9bn, Turnover in 2008 was $65.1bn. Debtor and Invoice Finance Association of Australia and New Zealand Inc., DIFA Update: DIFA Statistics December Quarter 2015
(8 February 2016) <http://difa.asn.au/wp-content/uploads/2015/09/Statistical_Update_Dec_2015.pdf>.
30. Reserve Bank of Australia, Bank Lending to Business – New Credit Approval by Size and by Purpose (2016) <http://www.rba.gov.au/statistics/tables/xls/d07ehist.xls>.
31. Macquarie Research, ‘Australia and NZ Essentials’ (11 March 2015).
32. Debtor and Invoice Finance Association of Australia and New Zealand Inc., Factoring and Discounting in Australia (8 February 2016) <http://difa.asn.au/wp-content/uploads/2014/05/
IndustryRevew.pdf>.
33. Debtor and Invoice Finance Association of Australia and New Zealand Inc., DIFA Update: DIFA Statistics December Quarter 2015 (8 February 2016) <http://difa.asn.au/wp-content/
uploads/2015/09/Statistical_Update_Dec_2015.pdf>.

34
A number of themes may support continued growth in the future including: growth in SME Total Income,34 increasing penetration
and awareness of Debtor Finance products as well as the reliance upon them as a source of SME funding, and increasing average
Turnover per Client. For further information on industry growth drivers see Section 2.2.6.

Figure 5: Historical Growth in the Australian Debtor Finance Industry35

High Growth Industry Disruption Industry

CAGR: 26.4% CAGR: -0.6% Consolidation
CAGR: 2.8%
70
65.1 64.4
63.0 63.3 63.3 62.7
61.4
60 58.7
54.9

50
46.0

40 37.3
31.4
30
23.2
20 17.7
13.5
11.0
($ in billions)

10 8.2
5.2 6.6
3.9
0 3.1 3.4 3.9 5.1 5.8 7.3 8.9
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Scottish Pacific Turnover Total Debtor Finance Industry Turnover

Note: Scottish Pacific Turnover includes Bibby on a Pro Forma basis from 2009 onwards. For the years from 2009 to 2012 Scottish Pacific Turnover data is based upon
unaudited management accounts of Scottish Pacific Standalone and Bibby.

2.2.6 Market Growth Drivers and Themes

Scottish Pacific believes there are three key drivers of growth in the Debtor Finance industry:
• Growth in SME Total Income;
• Increasing penetration and awareness of Debtor Finance products as well as the reliance upon them as a source of SME funding; and
• Increasing average Turnover per Client.

2.2.6.1 Growth in SME Total Income

Between June 2009 and June 2014, Australian SME Total Income growth averaged 3.5% p.a., and continues to represent a constant
proportion of total Australian business income.36 Scottish Pacific expects this to provide steady growth in line with historical
performance in the future.
The Australian Government (“the Government”) is seeking to implement a number of initiatives that it believes will support
a favourable environment for Australian SMEs to grow.37 In July 2015, it announced a $5.5bn small business package including tax
cuts for small companies, tax deductions for asset purchases and other measures designed to reduce compliance costs for small
businesses. Building on the small business package in the 2015 Federal Budget, Government support was expanded in the recent
Federal Budget released in May 2016 by announcing the proposed reduction in the company tax rate for small businesses (less than
$10m in Total Income) from 30% to 27.5% from July 2016.38 This reduction is proposed to expand over the next few years to larger
SMEs and ultimately all companies by 2024 (27.5% tax rate applicable to all companies with less than $100m in Total Income in 2020,
less than $250m by 2021, less than $500m in 2022, less than $1bn in 2023 and all companies in 2024). Ultimately, the company tax rate
is proposed to be reduced to 25% by 2027 for all companies, increasing available cash flows to fund growth. In addition, SMEs are
expected to be the main beneficiaries of the $840.0m youth employment program Jobs PaTH, aimed at improving the employability
of young people and transitioning them into full-time work.

34. Comprises sales and service income, interest income, funding from Government for operational costs and other income.
35. Debtor and Invoice Finance Association of Australia and New Zealand Inc., DIFA Update: DIFA Statistics December Quarter 2015 (8 February 2016) <http://difa.asn.au/wp-content/
uploads/2015/09/Statistical_Update_Dec_2015.pdf>.
36. Australian Bureau of Statistics, Australian Industry – Catalogue Number 8155.0 (27 May 2016) <http://www.abs.gov.au/ausstats/abs@.nsf/mf/8155.0>.
37. Commonwealth of Australia, Growing Jobs and Small Business: Budget 2015 (2015) <http://www.budget.gov.au/2015-16/content/glossy/sml_bus/download/Growing_Jobs_and_Small_
Business.pdf>.
38. This rate had already been cut to 28.5% for companies with Total Income less than $2m in the 2015 Federal Budget.

Scottish Pacific  Prospectus 35

02. Industry Overview continued


These Government initiatives are dependent on the federal Liberal Government being returned to parliament after at the federal
election on 2 July 2016 with sufficient majority to be able to implement the initiatives. It is possible the Liberal Government won’t be
returned to power, or won’t be returned to power with a sufficient majority to be able to implement these changes. However, should
these initiatives be implemented, they will provide continued support for SME growth into the future.

2.2.6.2 Market Underpenetration

Despite significant historical growth, the Australian Debtor Finance market has a relatively low penetration rate of only 3.9%,
compared to the UK with a penetration rate of 15.5%.39 Factors that may support a higher rate of market penetration of Debtor
Finance products include:
• Increased product awareness among SMEs (see Section 2.2.6.3);
• Long-term commitments by the leading commercial banks to promote Debtor Finance products;
• Reduced availability of traditional lending products to SMEs; and
• A greater reluctance to pledge personal property as security for bank lending products such as overdrafts and term loans.

Figure 6: Illustrative Australian Market Size Assuming Increased Penetration ($bn)

64 107 133 255

Current Germany Netherlands UK

Size Penetration Penetration Penetration
(3.9%) (6.5%) (8.1%) (15.5%)

Source: Factors Chain International Annual Review 2015, Euromonitor.

2.2.6.3 Increasing Awareness of Debtor Finance

Awareness of Debtor Finance products is relatively low amongst Australian SMEs. A 2013 report found that 54% of Australian SMEs
know little or nothing at all about Debtor Finance, when compared to more traditional financing alternatives.40 However, industry
bodies such as CPA Australia have acknowledged the importance of increasing awareness of alternative financing products and that
lending institutions, governments, industry associations and accountants as key business advisers all have a role to play in helping
small businesses better understand the different financing options and when such options are most appropriate.41 Scottish Pacific
believes that increased awareness through greater education regarding the benefits of Debtor Finance to SMEs, has the potential to
lead to greater penetration of Debtor Finance products in the SME market.

39. Factors Chain International, Annual Review 2015 <https://www.fci.nl/downloads/annual_review_2015.pdf>. Market penetration defined as annual Debtor Finance market Turnover
as a percentage of country GDP.
40. NSW Business Chamber, Small Business Access to Finance (November 2013) <http://www.nswbusinesschamber.com.au/ NSWBCWebsite/media/Policy/Thinking%20Business%20Reports/
Small-Business-Access-to-Finance.pdf>.
41. CPA Australia Limited, The CPA Australia Asia-Pacific Small Business Survey 2011 (2011) <http://www.cpaaustralia.com.au/documents/small-business-survey-2011.pdf>.

36
Figure 7: Awareness of SME Financing Products

100%
100% 100% 100% 100% 100% 2%
10% 8% 6% 6%

30% 28% 12% 12%

18% 26%
54%
28%
31%
24% 24%
34%

27% 28% 54%

54%
50%
39%

20% 21%

Debtor Finance Trade Finance Equipment Finance Term Loans Overdrafts Credit Card Facilities

Very Familiar Moderately Familiar A Little Not at All

Source: NSW Business Chamber, Small Business Access to Finance (November 2013) <http://www.nswbusinesschamber.com.au/ NSWBCWebsite/media/Policy/Thinking%20
Business%20Reports/Small-Business-Access-to-Finance.pdf>.

2.2.6.4 Increasing Turnover per Debtor Finance Client

Turnover per Debtor Finance Client in both Factoring and Discounting have grown over the last five years. Between 2010 and 2015,
Factoring Turnover per average Debtor Finance Client has grown at a CAGR of 11% whilst Discounting Turnover per average Debtor
Finance Client has grown at a CAGR of 6% over the same period.

Figure 8: Debtor Finance Average Client Turnover by Product42

Annual Average Factoring Turnover Annual Average Discounting Turnover

per Client ($m) per Client ($m)
3.9
13.9
3.6 3.6
12.6 12.7 12.8
3.3
11.6
3.0
10.4

2.3

2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015

42. Calculated as annual Turnover divided by average quarterly Client numbers. Source: Debtor and Invoice Finance Association of Australia and New Zealand Inc., DIFA Update: DIFA Statistics
December Quarter 2015 (8 February 2016) <http://difa.asn.au/wp-content/uploads/2015/09/Statistical_Update_Dec_2015.pdf>.

Scottish Pacific  Prospectus 37

02. Industry Overview continued


2.3 Competitive Landscape

The Australian Debtor Finance industry comprises a range of bank and Independent Debtor Finance Provider participants, with
varying scale and funding structures. Figure 9 summarises the competitive landscape in which Scottish Pacific operates. Scottish
Pacific is differentiated by having a leading position by Turnover in both the Factoring and Discounting segments of the market.

Figure 9: Overview of Australian Competitive Landscape

Higher Touch Lower Touch

(Factoring) (Discounting)

NAB

Westpac
Increasing Scale

Bendigo

HSBC

BOQ
CML Group
Asset Secure
AR Cash Flow Moneytech
Classic Funding Group
Key Factors
The Invoice Market (TIM)

Major Australian Banks Regional and International Banks

Independent Debtor Finance Providers Financial Technology (FinTech) Players

Note: Circle size and positioning represent Scottish Pacific’s estimate of the comparative financing exposure and product offering of its key competitors in the Debtor
Finance industry.

2.3.1 Overview of Australian Competitive Landscape

2.3.1.1 Australian Major Banks
Following the exits of the Commonwealth Bank of Australia (“CBA”) and Australia and New Zealand Banking Group (“ANZ”) from the
Debtor Finance industry, the Australian major bank participants in the Debtor Finance market are NAB and Westpac Banking
Corporation (“Westpac”). Major banks tend to operate in low touch lending classes and in Debtor Finance, operate solely in the
Discounting segment, which is typically less labour intensive than Factoring.

2.3.1.2 Regional and International Banks

The Australian regional banks and international banks have smaller scale relative to the major banks. A number of these players
provide both Discounting and Factoring products. Key participants include; Bendigo and Adelaide Bank, Bank of Queensland and
HSBC Bank Australia (Regional and International Banks in Figure 9).

38
2.3.1.3 Independent Debtor Finance Providers and Financial Technology Players
Independent Debtor Finance Providers are non-bank institutions that focus on providing Debtor Finance to SMEs. These participants
are generally funded by deposit-taking institutions and typically distribute their products directly. This category includes new financial
technology entrants that utilise technology and risk-based pricing to access non-traditional users. Besides Scottish Pacific, these
participants have significantly less scale than the major and regional banks. Furthermore, additional challenges facing start-up
independent participants include Funding Vehicle diversification requirements reducing the size of facilities that start-ups can offer
their Clients and thereby reducing their addressable market of SMEs. Other participants include: CML Group, Classic Funding Group,
AR Cash Flow, Key Factors, Moneytech, Asset Secure and The Invoice Market (TIM).

2.3.2 Overview of New Zealand Competitive Landscape

The Debtor Finance market in New Zealand is substantially smaller than in Australia but has comparable competitive dynamics.
The landscape is dominated by the Bank of New Zealand (a subsidiary of NAB) and Scottish Pacific. There are a number of small
Independent Debtor Finance Providers including Lock Finance, which offers both Factoring and Discounting, and Pacific Invoice
Finance which offers only Discounting. Marac, a wholly owned subsidiary of Heartland NZ, also offers Invoice Discounting.

2.3.3 Summary Discussion of Competitive Trends

2.3.3.1 Mergers and Acquisitions in the Debtor Finance Industry
The Australian Debtor Finance industry has undergone a period of significant consolidation in the last 10 years which has accelerated
in the last year.
In 2007, Allfinance acquired Scottish Pacific, with the merged entity renamed Scottish Pacific. In December 2015, Scottish Pacific, the
largest Independent Debtor Finance Provider by Turnover, acquired Bibby’s Australasian Debtor Finance business, the third largest
Independent Debtor Finance Provider by Turnover in the market. In 2016, Scottish Pacific acquired the GE Debtor Finance portfolio
and the Suncorp Debtor Finance portfolio.

2.3.3.2 Exits by the Banks and Global Players

Since 2008, a number of major banks, regional banks and international players have exited the Australian Debtor Finance market.
In 2008, Bankwest ceased providing Debtor Finance, followed by ANZ (2009), CBA (2011), Allianz (2013), GE (2016) and Suncorp (2016).
The following factors have been cited as the reasons for the above Debtor Financiers exiting the Australian Debtor Finance industry:
• Not aligned with business strategy: A number of the major banks are operating a strategy that can be characterised as low
touch and focus on areas that can benefit from broad investment. The Debtor Finance market is comparatively high touch and
requires ongoing investment in Debtor Finance specific technology and operational infrastructure. Debtor Finance is typically
of immaterial scale relative to the bank’s total balance sheet;
• Focus on property lending: Australian banks have a relatively high proportion of property lending exposures, relative to
international peers. A number of lenders have proactively chosen to re-direct capital previously allocated to Debtor Finance
to further growing their property exposures;
• Capital requirements: Given the credit profile of SME Clients, banks are required to hold substantial regulatory capital against
these Debtor Finance exposures. A more attractive alternative for a number of banks is to provide funding to Independent
Debtor Finance Providers via Senior Facilities to Funding Vehicles that fund assets such as SME receivables, which have a lower
regulatory capital requirement compared to direct SME lending; and
• Lack of specialist skills: Some competitors lacked the specialist skill set and deep industry knowledge required to avoid losses
in the Debtor Finance market.
– Management believes the market participants that have chosen to exit are unlikely to re-enter the market for several reasons
including: 1) significant required investment in personnel to build strong underwriting and risk management teams;
2) higher capital requirements to lend to SMEs directly vs. gaining exposure via Senior Facilities to Funding Vehicles; and
3) a relatively smaller opportunity relative to the profitability of Australian major banks.

Scottish Pacific  Prospectus 39

02. Industry Overview continued


2.4 Regulatory Environment

Scottish Pacific is required to have regard to a number of key laws in connection with its operations. Table 2 lists some of the most
material regulatory issues that Scottish Pacific has regard to.

Table 2: Key Relevant Legislation

Regulatory Area Overview

Corporations Act The Corporations Act sets out a number of key areas of law that the Group is required to adhere
to. These include:
• Australian financial services licensing: Many participants in the financial services industry
are required to hold an Australian financial services licence. This requires such participants
to comply with a range of obligations relating to disclosure that must be made to Clients,
dispute resolution processes, compliance arrangements etc. At present, the Group’s activities
do not require it to hold an Australian financial services licence;
• Financial product disclosure: The Corporations Act regulates what forms of disclosure
must be made when financial products are offered. At present, the Group’s activities do not
require it to prepare any formal prospectus, product disclosure statement or financial services
guide in connection with its ordinary business; and
• Australian credit licence: Certain kinds of credit contract require Australian credit licences
to be held. At present, the Group does not provide services of the kind that require an
Australian credit licence to be held by it.
Despite the above, in future, it is possible that the scope of the Group’s activities may change
or laws or regulations may change, which require the Group to hold an Australian financial
services licence or comply with other specific regulatory requirements.

Commercial Agents The CAPI Act regulates the licensing of persons carrying on a debt collection business. Under
and Private Inquiry the CAPI Act, a person must not carry on business in relation to debt collection unless he or she
Agents Act 2004 does so in accordance with a master licence for that activity.
(NSW) (“CAPI Act”)
As part of its business activities, Integral Collections Pty Limited holds a current debt collection
licence under the CAPI Act and is required to comply with various obligations as a result.

Financial services In New Zealand, the Group is required to adhere to certain financial services
legislation in legislation, including:
New Zealand
• Financial Services Registration: Entities in the business of providing a financial service in
New Zealand must be registered under the Financial Service Providers (Registration and
Dispute Resolution) Act 2008 (NZ) for each financial service they provide. Entities must also
be a member of an approved dispute resolution scheme when providing services to retail
clients. Scottish Pacific Business Finance Limited is registered as ‘a creditor under a credit
contract’ and is a member of an approved dispute resolution scheme.
• Financial Product Disclosure: The Financial Markets Conduct Act 2013 (NZ) regulates the
disclosure required in relation to ‘financial products’ (as defined in that Act). At present,
the Group’s activities do not require it to prepare any product disclosure statement in
connection with its ordinary business.
Despite the above, in future, it is possible that the scope of the Group’s activities may change or
laws or regulations may change, which require the Group (or certain members of the Group) to
be registered on the financial service providers register to provide certain financial services or
comply with other specific regulatory requirements.

40
Regulatory Area Overview

Personal Property The Australian PPSA and NZ PPSA regulates the registration of security interests in personal
Securities Act 2009 property and the priority afforded to creditors with competing interests in such property in
(Cth) (“Australian Australia and New Zealand, respectively. The Group is required to comply with the Australian
PPSA”) and Personal PPSA or NZ PPSA (as applicable) in registering its interests in receivables and other assets of its
Property Securities Clients to ensure it appropriately protects its interests.
Act 1999 (NZ) (“NZ
PPSA”)(“PPSA”)

Other Legislation The Group is also required to comply with a range of other laws and regulations as part of its
day to day operations in Australia and New Zealand. These include privacy laws, anti-money
laundering and counter terrorism financing legislation, industrial laws, workplace health and
safety laws, and (where applicable) consumer credit and consumer guarantees laws. The Group
has in place policies and procedures aimed at ensuring its compliance with these laws.

Scottish Pacific  Prospectus 41

03.
Company Overview
03. Company Overview


3.1 Overview of Scottish Pacific

3.1.1 Introduction
Established in 1988, Scottish Pacific is the leading Independent Debtor Finance Provider in Australia. The Company has over 1,600 SME
Clients with ~$8.9bn in annual Turnover across Australia and New Zealand, serviced by over 250 employees through offices in Sydney,
Melbourne, Brisbane, Adelaide, Perth and Auckland with additional overseas offices in the United Kingdom and China.
Scottish Pacific’s core business is Debtor Finance which is provided through two key products: Discounting and Factoring, which
are discussed further in Section 3.1.5. Scottish Pacific also offers Trade Finance and other related products; however, these currently
represent a relatively small proportion of Group revenue.
Scottish Pacific’s scale, history, expertise and strong market position provide a number of strategic advantages which are underpinned by:
• Large, diversified distribution network (Section 3.1.6): Scottish Pacific has an extensive and well-established referral network
comprised of Commercial Finance Brokers, accountants, Clients and banks, supported by formal and informal distribution
agreements. Scottish Pacific’s referral network, built over 28 years, comprises over 2,800 Commercial Finance Brokers and 2,000
accountant contacts and is Scottish Pacific’s primary source of new Client originations. The network represents a key competitive
advantage and a high barrier to entry, as replication is difficult to achieve. Over the medium term, Scottish Pacific is expected to
augment its referral network by increasing the proportion of new borrowers sourced from the direct distribution channel
(non-referral originations). As a result of increased focus and resources, the percentage of new business sourced from direct
marketing has doubled from 9% to 18% in the first nine months of FY2016F, as measured by deal volume;
• High Touch service model (Section 3.1.4.2): Scottish Pacific operates a High Touch service model characterised by frequent
Client and debtor interaction and a relatively low Client-to-relationship manager ratio, which differentiates it from its key competitors.
Scottish Pacific gathers information about its Clients and debtor counterparties through verification, monitoring and collection
processes, which greatly enhance its underwriting and assessment capabilities. Such insights enable Scottish Pacific to offer
a variety of flexible products, ideally suited to the requirements of a broad range of SME Clients, without the requirement for real
estate collateral or bank style lending covenants; and
• Underwriting and risk management (Section 3.2): Scottish Pacific employs robust and highly developed risk management
practices, which have supported its low levels of credit losses throughout the most recent economic cycle. Scottish Pacific has
invested in a specialised underwriting model characterised by a high degree of collateral, securing its funding exposures and low
loan loss ratios. Strict risk limits, separation of sales and credit risk functions with aligned incentives and proprietary monitoring
systems are all core tenets of Scottish Pacific’s underwriting and risk management process.
These aspects of the Scottish Pacific business model are supported by a diversified funding platform (Section 3.3), and a highly
experienced Management team (Section 6.2).
Collectively, these attributes have contributed to consistent historical growth, returns and low loss ratios and also provide several
opportunities for Scottish Pacific to further enhance its growth trajectory (Section 3.4).

3.1.2 Corporate History

Scottish Pacific traces its history to the divestment of Hallmark Business Finance from Mercantile Credits in 1988. In 1990, Bank of
Scotland purchased a majority holding in Hallmark Business Finance, renaming it Scottish Pacific Business Finance. In 1992, Scottish
Pacific Business Finance commenced operations in New Zealand.
In 1997, former management purchased the business from Bank of Scotland and ran it independently as a specialty Debtor Financier
until its acquisition by St. George Bank (“St. George”) in 2002.
Separately in 1998, another specialty Debtor Financier, Benchmark Debtor Finance, was established in Perth by current Scottish Pacific
CEO, Peter Langham. Benchmark Debtor Finance subsequently established operations in Melbourne and Sydney before being
acquired by Allfinance Benchmark Holding Trust in 2005.
In 2006, St. George restructured its Scottish Pacific Business Finance division, leaving only factoring Clients under the Scottish
Pacific brand.
In 2007, Scottish Pacific Business Finance was acquired by Allfinance Benchmark Holding Trust, with the merged entity renamed
Scottish Pacific. The combination of these businesses provided a broadened distribution network across Australia and New Zealand,
greater Client diversification, and a strong platform for future growth.

Scottish Pacific  Prospectus 43

03. Company Overview continued


Since 2010, Scottish Pacific has been jointly owned by Management and professional investors that have invested substantially to grow
the business. These include a fund advised by Lazard Australia Private Equity which acquired a controlling stake in Scottish Pacific in
2010, and a consortium of investors led by Next Capital which acquired Scottish Pacific in 2013, and which together with Management
are the owners of the Group today.
In the past year, Scottish Pacific has undertaken a number of strategically significant acquisitions. In December 2015, Scottish Pacific
acquired Bibby, the Australian and New Zealand operations of UK-based Bibby Financial Services Limited (“Bibby UK”), followed by the
acquisition of the Australian Client relationships and accounts forming part of GE’s Australian Debtor Finance Client portfolio and
Suncorp’s Debtor Finance Client portfolio in May 2016. More detail on these acquisitions is provided in Section 3.1.3.

Figure 10: Key Milestones in Scottish Pacific’s History

1988 1992 1998 2003 2006 2008 2013 2016

Hallmark Scottish Benchmark Benchmark St. George Hallmark Acquired by Acquisition
Business Pacific Debtor Finance Debtor restructured Business Next Capital of GE and
Finance Business founded in Finance Scottish Pacific Finance Suncorp
divested by Finance Perth by established Business divested by Debtor
Mercantile opened in current Scottish in Sydney Finance, Mercantile Finance
Credits New Zealand Pacific CEO, leaving Credits portfolio
Peter Langham factoring Clients
clients only

1990 1997 2002 2005 2007 2010 2015

Bank of Management Benchmark Allfinance Allfinance Acquired Acquisition
Scotland bought Debtor Benchmark Benchmark by Lazard of Bibby UK’s
purchased business Finance Holding Trust Holding Trust Australia Australasian
majority from Bank established in acquired acquires Private Debtor Finance
holding in of Scotland Melbourne Benchmark Scottish Pacific Equity and business
Hallmark and Scottish Business management
Business Finance Pacific Business Finance,
renamed to Finance renaming the
Scottish Pacific acquired by merged entity
Business Finance St. George Scottish Pacific
Bank

Under its current management, Scottish Pacific has grown Turnover at a 19.3% CAGR since FY2009. Given the enhanced competitive
positioning following the Company’s recent acquisitions, Scottish Pacific is well positioned to continue to capture additional market share.

Figure 11: Turnover over Time ($bn)

20%1

14%
12%
9%
8%
6% 6%
5%

10.6
8.9
7.3
5.1 5.8
3.9
3.1 3.4

FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016F

Scottish Pacific Standalone and Bibby Market Share

Source: Debtor and Invoice Finance Association of Australia and New Zealand Inc., DIFA Update: DIFA Statistics December Quarter 2015 (8 February 2016) <http://difa.asn.au/
wp-content/uploads/2015/09/Statistical_Update_Dec_2015.pdf> and management estimates. FY2009 to FY2015 market share calculated as Scottish Pacific Standalone and Bibby
Debtor Finance Turnover as a proportion of total Debtor Finance industry Turnover. FY2009 to FY2012 Turnover data is unaudited.
1. FY2016F market share based upon FY2015 Turnover figures for Scottish Pacific and Bibby plus management’s estimate of a full year contribution from the GE and
Suncorp Client Portfolios, as a percentage of total industry Turnover for the 12 months ended 30 June 2015.

44
3.1.3 Summary of Recent Acquisitions
3.1.3.1 Overview
Recent acquisitions of Bibby, the GE Portfolio Acquisition and Suncorp Portfolio Acquisition have further solidified Scottish Pacific’s
market position as a leading Independent Debtor Finance Provider in Australia. Furthermore, these transactions have helped to
broaden the Group’s addressable target market. Leveraging its increased scale and mix of new product capabilities, Scottish Pacific is
increasing its penetration into both lower and higher servicing intensity Client segments. In broadening its capabilities, the spectrum
of Clients it services and its suite of complementary products, Scottish Pacific has realised higher conversion rates from its referral and
direct distribution channels.

3.1.3.2 Bibby
In December 2015, Scottish Pacific acquired Bibby, previously the third largest Independent Debtor Finance Provider in Australia by
Turnover. Bibby operated a similar business to Scottish Pacific historically with a moderately higher concentration to Factoring Clients
that fully outsource their Debtor Finance capabilities and require more intensive servicing and supervision. The acquisition of Bibby
enables Clients of both businesses access to a broader range of funding and business solutions including Trade Finance, Asset Finance,
and Bad Debt Protected Facilities as well as increasing the scale of Scottish Pacific’s Factoring and Discounting businesses. Bibby’s
integration has expanded and improved Scottish Pacific’s already well-established distribution network through the introduction of
improved initiatives such as staff referrals and improved direct sourcing of Clients. Additionally, Scottish Pacific is positioned to benefit
from cross-selling inherited Bibby products such as Bad Debt Protected Facilities.
Material synergies are expected to be realised through the transaction. There are $5.1m of annual pre-tax cost synergies forecast
in FY2017F from the acquisition, primarily related to the elimination of duplicative shared services. These are expected to be fully
implemented by 31 July 2016.

3.1.3.3 GE Debtor Finance

On 3 May 2016, Scottish Pacific acquired the outstanding loans and arrangements with clients of the former GE Debtor Finance
business in Australia. The GE Debtor Finance portfolio was acquired by Scottish Pacific as part of a broader transaction between
GE and a consortium led by Sankaty Advisors. At the time of the acquisition, the GE Debtor Finance portfolio comprised 113 new
accounts and outstanding advances of ~$185m, primarily consisting of Discounting Clients. Prior to the acquisition, the GE Debtor
Finance portfolio was the second largest non-bank Debtor Finance portfolio in Australia by funding Exposure. The acquisition of the
portfolio increases Scottish Pacific’s funding Exposure to Discounting Clients which require a lower servicing intensity. The acquisition
represents a high quality credit book with high average Client and loan book size and low historical loss ratios.
The forecasts set out in Section 4 do not include any explicit synergy assumptions from this acquisition.

3.1.3.4 Suncorp’s Debtor Finance Business

On 27 May 2016, Scottish Pacific acquired the outstanding advances and arrangements with clients of Suncorp’s Debtor Finance
business. At the time of the acquisition, this represented 44 new accounts and outstanding loans of ~$30m, primarily consisting
of Discounting Clients. The acquisition of these Clients further enhances Scottish Pacific’s scale and competitive positioning.
The forecasts set out in Section 4 do not include any explicit synergy assumptions from this acquisition.

3.1.3.5 Major Bank Referral Agreements

Separately, Scottish Pacific has entered into referral agreements with two of Australia’s five largest banks.43 Under these agreements
the banks will refer their customers to Scottish Pacific for Debtor Finance products and services.

43. Based on gross loans and advances. Australian Prudential Regulation Authority, Monthly Banking Statistics: April 2016 (31 May 2016) <http://www.apra.gov.au/adi/Publications/Documents/
MBS-April-2016.pdf>.

Scottish Pacific  Prospectus 45

03. Company Overview continued


3.1.4 Overview of Scottish Pacific’s Business Model

Scottish Pacific sources its Clients through a broad distribution network and funds advances to these Clients, securing these funds
against account receivable invoices that are purchased from the Client. Scottish Pacific recovers the funds advanced to Clients from
the receivables, which are generally payable to Scottish Pacific within 90 days.
To safeguard against loss from non-payment of any individual invoice, Scottish Pacific takes a number of measures as part of its
standard business processes including the following:
• Scottish Pacific only makes advances on a portion of the face value of invoices assigned to it – for example, across the portfolio
Scottish Pacific’s average advance rate to Clients is ~$57 in exchange for being assigned an invoice of $100 (57%). This means if
any individual invoice is not paid, Scottish Pacific can retain any excess funds from other invoices assigned to it by the relevant
Client to recover the difference;
• In the event of the debtor defaulting, Scottish Pacific is also able to recover the outstanding amount of any amount advanced
to its Client from the Client itself, who remains contractually liable to repay the advance;
• Scottish Pacific may also take other security over the assets of the Client or require personal guarantees in certain instances; and
• Scottish Pacific employs disciplined underwriting procedures and ongoing operational monitoring and is able to adjust the
amount it advances to Clients to reflect any change in credit risk.
This model has resulted in consistently low historical Standalone losses for Scottish Pacific averaging 0.44% p.a. of Average Exposures
over the past 10 years.
Scottish Pacific is funded by diversified set of lenders as further described in Section 3.3.

Figure 12: Steps in the Scottish Pacific Business Process

Client relationship identified: Clients are sourced directly and from a broad referral network,
Step 1 including Commercial Finance Brokers, banks, accountants and other Clients.

Extensive credit assessment and approval: Clients are subject to an extensive credit assessment
Step 2 process prior to the establishment of any financing facility.

Funding facility established: All facility and legal documentation is executed. A separate Scottish Pacific controlled
Step 3 bank account is created for every Client for the collection of receivables and security interest is registered.

Invoices assigned to Scottish Pacific: Invoices assigned to Scottish Pacific are reviewed and verified.
Step 4 Typically, 80% of invoices assigned to Scottish Pacific are approved for potential funding.

Funds advanced to Client: Following verification and the establishment of debtor advancement limits,
Step 5 an average of ~57% of the total receivable owed is advanced to the Client.

Ongoing monitoring and collection: Breadth of procedures depends on facility but typically involves regular
Step 6 contact with Clients and disclosed debtors, review of Clients’ monthly accounts, site visits, and Client watch lists
for Clients perceived to be a risk.

Debtor payments to Scottish Pacific: Client debtors make payments into the separate bank account which
Step 7 is owned by Scottish Pacific. The level of involvement in collection depends on the facility type.

Excess debtor payments returned to Client: Any excess Client debtor collections, net of fees,
Step 8 are refunded to Clients. There is recourse to the Client for uncollected invoices.

46
Figure 13: Overview of Scottish Pacific’s Business Model44

>1,600 Clients1

Client 1 Client 2 Client 3 Client 4 Client 5

1 2 3 4 5 6 7 8 9 10 11 12

>100,000 Debtors

1 Includes Clients from GE and Suncorp Portfolio Acquisitions.

Scottish Pacific has more than 1,600 SME Clients; however, its underlying credit funding Exposure is secured over a diversified pool
of more than 100,000 debtors. A large proportion of these debtor Exposures are to some of Australia and New Zealand’s largest
companies including blue-chip names such as Woolworths and Coles.

3.1.4.1 How Scottish Pacific Generates Revenue

Scottish Pacific earns revenue by charging its Clients Management Fees and interest charges for the provision of financing facilities.
These Management Fees and interest charges compensate Scottish Pacific for borrowing costs incurred to fund the loans it provides
to Clients, operational costs associated with underwriting and servicing the loans, and potential credit losses. Scottish Pacific’s revenue
is made up of three key components:
• Management Fees – Debtor Finance (67.5% of Pro Forma Net Revenue in FY2015): reflect fees charged on invoices discounted and
include administration fees and all other fees not related to Trade Finance. The cash flows from these fees flow through Scottish
Pacific’s limited-recourse Funding Vehicles.
• Management Fees – Trade Finance and Other (3.8% of Pro Forma Net Revenue in FY2015): includes Trade Finance gross revenue.
Cash flows from these fees do not flow through Scottish Pacific’s limited-recourse Funding Vehicles.
• Net Interest Income (28.7% of Pro Forma Net Revenue in FY2015): includes income earned on the amount drawn down by Clients
offset by senior and mezzanine funding costs. This line item is calculated on a daily basis and includes the gross revenue charged
on Exposure, less interest paid, commissions and unused line fees. Cash flows from this line item pass through the limited-
recourse Funding Vehicles.

44. All logos and company names are trade marks of their respective holders, owners or registered proprietors (Trade Mark Owners). Except as otherwise expressed in this Prospectus, use of these
logos and company names in this Prospectus does not imply any affiliation with or endorsement by the relevant Trade Mark Owner. No Trade Mark Owner has authorised or caused the issue
of this Prospectus, nor has any Trade Mark Owner made any statement in this Prospectus. Accordingly, no Trade Mark Owner makes any representation regarding, nor takes any responsibility
for, any statements or material in, or omissions from, this Prospectus.

Scottish Pacific  Prospectus 47

03. Company Overview continued


Figure 14: FY2015 Pro Forma Net Revenue Composition ($m)

85.0
Management Fees
• Percentage based fee on face value of assigned invoices (turnover); or
• Fixed monthly fee ($ amount)
• Includes administration, application, termination, legal, export and other fees
71% • Includes fees from Trade Finance and other products

Net Interest Income

29% • Daily charge (base rate + margin) on drawn net funding Exposure
• Includes revenue from daily charge on Exposure, less interest paid for funding costs,
commissions and unused line fees
FY2015

3.1.4.2 High Touch Service Model

Scottish Pacific operates a High Touch service model characterised by frequent Client and debtor interactions and a relatively low
relationship manager-to-Client ratio, which differentiates it from its key competitors and leads to strong Client loyalty and retention.
As a specialist underwriter, Scottish Pacific gathers a significant amount of information regarding its Clients and debtors, which is
utilised to support credit and operational risk assessments and early detection of potential default risk across both its Factoring and
Discounting products. Under Factoring facility arrangements, Scottish Pacific typically benefits from enhanced visibility and oversight
due to its role in collection from the debtor.
Scottish Pacific’s High Touch service model and underwriting capabilities enable it to offer flexible products that are tailored to
address Client working capital requirements and are independent of a Client’s stage in its business growth cycle. As an Independent
Debtor Finance Provider, Scottish Pacific is a specialist that has the flexibility to convert Clients from confidential Discounting facilities
to disclosed Factoring facilities in instances where increased Client and debtor oversight is deemed appropriate. A Client may be
converted from a Discounting facility to a Factoring facility for a variety of reasons including the stage in the company’s life cycle,
industry-specific headwinds and other operational risk concerns. Other market participants that solely offer Discounting lack the
flexibility to convert Clients to Factoring arrangements, and may lose the Client to an Independent Debtor Finance Provider who has
the requisite specialisation, such as Scottish Pacific or may sustain losses.
Scottish Pacific’s experience and High Touch operating model have supported and enabled the development of a new bespoke
product called Selective Invoice Finance (“SIF”). SIF provides access to funding for Clients that do not wish to assign their entire
receivables book, and instead allows them to assign only selected invoices. A higher degree of oversight and monitoring is required
for products such as SIF, and Scottish Pacific is able to leverage its operational expertise to offer this financing solution for its Clients.

3.1.4.3 Client Retention

Scottish Pacific’s business model is characterised by a high degree of Client and debtor engagement and servicing, which is
supportive of its ~80% Client retention rate and five-year average Client tenure. As demonstrated in Section 3.4.1, Scottish Pacific has
increased its average Turnover per Client in the last three years, growing it at a rate of 11.9% p.a. whilst simultaneously maintaining
consistent growth in underlying Client numbers.
Referrals from existing and former Clients and prospects represent 15 to 20% of new deals each year, with the majority of such referrals
made in the absence of commission incentives. In a recently conducted survey, Scottish Pacific earned a net promoter score of 82%
vs. –16% for the Australian major banks,45 signalling a high degree of Client satisfaction and approval with regard to the quality of the
Company’s service levels.

45. Engaged Marketing, ‘The 2014/15 Financial Institution Consumer Loyalty & Recommendation Study’ (2014), cited in Engaged Marketing, ‘Australians more likely to recommend ING Direct
than other banks’ (Media Release, 20 November 2014) <http://www.engagedmarketing.com.au/media-resources/australians-recommend-ing-direct/>. Scottish Pacific NPS data gathered
from internal surveys conducted by Scottish Pacific.

48
3.1.5 Product Offering
3.1.5.1 Core Products
Scottish Pacific offers Debtor Finance and other related products to its Clients. Unlike many of its competitors, Scottish Pacific offers
both Discounting and Factoring products, allowing the Company to target a broader range of Clients and to retain them through the
business life cycle (due to the ability to move Clients from one facility to another).

Discounting Products
Lower margin and less service intensive Discounting products represent 48% of Scottish Pacific’s Core Debtor Finance Turnover in
Australia. Scottish Pacific has grown its Discounting Turnover by 40% CAGR over the last five years as it has made this market a point
of strategic emphasis as it has attained scale. Given its increased scale following recent acquisitions, Scottish Pacific is well positioned
to expand further in the Discounting market, particularly across Client segments where Scottish Pacific is currently under-represented.
Refer to Section 2.2 for a detailed description of how Discounting products operate.

Factoring Products
High Touch, higher margin Factoring products, represent 52% of Core Debtor Finance Turnover in Australia. Scottish Pacific offers
a variety of Factoring solutions to its Clients in order to match Clients’ needs with appropriate credit controls. The main variations
between solutions are the degree to which debtors are aware of Scottish Pacific’s involvement and the amount of collections work
undertaken by Scottish Pacific. For all factoring facilities, debtors make payments on invoices into a bank account owned by Scottish
Pacific, which maintains a full receivables book on behalf of the Client. Refer to Section 2.2 for a detailed description of how Factoring
products operate.
Under its Factoring products Scottish Pacific also operates the FactorONE brand, a differentiated brand which specifically targets
smaller SMEs with Turnover between $0.2m and $10m. Through this brand, Scottish Pacific is able to assume smaller levels of funding
Exposure for relatively higher fees, creating a lower quantum and higher margin business whilst servicing Clients that may not be
suitable for other funding arrangements.

Figure 15: Group TURNOVER by Core Debtor Finance Product (FY2015 excluding New Zealand
and Trade Finance)

48%
52%

$8.6bn

Factoring Discounting

Note: Scottish Pacific Standalone and Bibby. Excludes GE and Suncorp Debtor Finance portfolios as well as New Zealand and Trade Finance.

3.1.5.2 Trade Finance and Other Products

In addition to its core products, Scottish Pacific has been increasing its presence within the Debtor Financing market by targeting new
growth areas such as Trade Finance (Debtor Finance solutions for Clients that trade internationally) as well as Asset Finance (offered
only in certain circumstances) and Bad Debt Protected Facilities. This strategy is aimed at attracting a larger target market and
improving Scottish Pacific’s offering to current Clients. These products typically complement Scottish Pacific’s Core Debtor Financing
products and many require a Client to have an existing Debtor Financing agreement with Scottish Pacific. While the contributions
from these products to Group revenue are currently small, Scottish Pacific anticipates growth within these products as the Company’s
combined Client base is leveraged to cross sell these products to existing Clients.

Scottish Pacific  Prospectus 49

03. Company Overview continued


Trade Finance
Scottish Pacific provides Trade Finance facilities designed to assist with international trade enabling Clients who import or export
goods to bridge a larger funding gap (sometimes up to 150 days). It is offered through three products: Tradeline, Import Finance and
Export Financing.
Tradeline is a short term line of credit, similar to non-recourse Debtor Finance that is available to international traders whereby Scottish
Pacific purchases goods from the seller (overseas supplier) and provides credit terms to the buyer (importer). It is unsecured but each
facility is backed by insurance. This innovative working capital solution is provided by Scottish Pacific Trade Limited (“Scottish Pacific
Hong Kong”), a subsidiary of Scottish Pacific. Scottish Pacific Hong Kong is incorporated in Hong Kong and utilises the resources of
Scottish Pacific’s China office to liaise with suppliers in the region.
Import Finance is an extension product to existing Debtor Finance facilities. All Import Finance Clients are required to have an existing
Debtor Finance facility. Combined with their existing traditional Debtor Finance facility, Import Finance provides a complete supply
chain funding solution for importers, providing access to working capital from the time the orders are placed until the time that
payment is received from the importer’s customer.
Export Finance provides an avenue for Clients to have a portion of export debtors or domestic debtors in foreign currency eligible for
funding. It is usually provided on a disclosed basis.

Speciality Debtor Finance Products: Asset Finance and Bad Debt Protected Facilities
Asset Finance is available in special circumstances when assisting to win or retain Clients and Bad Debt Protected Facilities provide
Clients with the option (for a fee) of a Debtor Finance facility without having to account to the Group for the bulk of any bad debt
costs (this differs from other Debtor Finance facilities where the Debtor Financier has full recourse to the Client for bad debts). Unlike
Trade Finance, these products are reported as part of the Debtor Finance segment in Section 4.

3.1.6 Distribution Network

New Clients are sourced through a variety of channels but predominantly through Scottish Pacific’s broad referral network of
Commercial Finance Brokers, accountants and bank personnel. This network is constantly developed and maintained by 24 full-time
BDMs who are responsible for developing relationships in the industry and are incentivised according to both the number of new
Clients they originate and the profitability of new deals. Existing and former Client referral and direct channels also represent an
important source of new referrals.

Figure 16: New Deals by Distribution Channel (FY2015)46

6%

9%

37%
13%

5%

14%
17%

Clients, Former Clients

Commercial Finance Brokers Accountants Major Banks
and Former Prospects
Other Banks and
Internet Other
Financial Institutions

Note: Scottish Pacific Standalone only.

46. Percentages may not add to 100% due to rounding.

50
3.1.6.1 Referral Network Channel
Over the last 28 years, Scottish Pacific has built a highly diversified and broad referral distribution network. Scottish Pacific’s Clients are
primarily sourced through this referral network, which accounted for 91% of new deals in FY2015. Referrals are made via Commercial
Finance Brokers, Clients, former Clients and former prospects, accountants, major banks and other banks and financial institutions
across Australia and New Zealand. Scottish Pacific has an introducer database of over 7,500 contacts including over 2,800 brokers and
2,000 accountant contacts, with no broker accounting for more than 2% of Client originations. The referral network is geographically
diversified across all Australian states and New Zealand. The breadth of Scottish Pacific’s referral network is considered a key
competitive advantage and a barrier to entry for new entrants, given the time taken to build this network.
New referral initiatives have recently been implemented including arrangements with professional services firms, banks,
implementation of an established employee referral program and a partnership with the Australian Government’s export credit
agency (“Efic”). Scottish Pacific is the only non-bank lender to secure a partnership with Efic.
Some existing Clients who make referrals, are compensated for introducing new business to Scottish Pacific with commissions passed
on through facility pricing.

3.1.6.2 Direct Channel

In 2015, Scottish Pacific developed a national marketing strategy in order to complement the existing referral network and drive
growth in direct sales. The Company has invested significant resources in this initiative. Scottish Pacific now has seven direct sales and
marketing employees (6.8 full-time employees (“FTEs”). Management has implemented a range of direct distribution and marketing
initiatives including event sponsorship, television advertising and online (e.g. through the relaunch and improvement of its online
platform scottishpacific.com, and developing a presence on social media sites such as Twitter and Facebook). A dedicated direct sales
coordinator was hired in May 2015 to drive improved conversions of direct online enquiries. Bibby has had a direct sales coordinator in
place for over two years.
As a result of this new initiative, direct lead generation as measured by qualified leads in the first nine months of FY2016F has increased
by 130% compared to the prior period. As a result of increased focus and resources, the percentage of new business sourced from
direct marketing doubled from 9% in FY2015 to 18% in the first nine months of FY2016F, as measured by deal volume.
For additional detail on Scottish Pacific’s plans to grow its direct sales distribution, refer to Section 3.4.2.2.

Scottish Pacific  Prospectus 51

03. Company Overview continued


3.1.6.3 Geographic Footprint

Figure 17: Scottish Pacific’s Geographic Footprint

United Kingdom Australia

3 employees 237 employees

Northern
Ireland Territory
UK Queensland

London Western Brisbane

Australia 10 Eagle Street
South Brisbane
Australia
New South
China and Hong Kong Wales Sydney
4 employees1 20 Bond Street
Perth Sydney
88 Colin Street Adelaide
West Perth 185 Fullarton Road
Dulwich Australian
Victoria Capital Territory
Melbourne
333 Collins Street Auckland
Melbourne 32-34 Mahahu Crescent
Tasmania Auckland

New Zealand
Guangzhou
11 employees

1. Engaged through a third party agency.

Scottish Pacific has offices in Sydney, Melbourne, Brisbane, Adelaide, Perth and Auckland with additional overseas offices in London in
the UK and Guangzhou in China.

3.2 Underwriting and Risk Management

3.2.1 Overview
Scottish Pacific’s business model is underpinned by a strong focus on risk management, which is achieved through the separation of
sales and credit functions, an extensive and specialised credit assessment process, and diversification of Exposures across industries
and geographies. Ongoing monitoring and proprietary fraud risk detection measures coupled with continual improvement of debtor
management processes are supportive of Scottish Pacific’s low Standalone loss rates, which have averaged 0.44% p.a. of Average
Exposure over the past 10 years.

52
Figure 18: Divisional Structure of Scottish Pacific

Sales and Credit Separation (Scottish Pacific Standalone)

Executive Management

Divisional General Managers

Sales Operations

Business Development Managers Client Relationship Managers

Sales Staff Operational Staff

3.2.2 Credit Risk Management

3.2.2.1 Sales and Credit Separation
Scottish Pacific maintains a strict separation of sales and credit functions for its 255 employees. These functions are performed by two
separate divisions within the Company. Scottish Pacific’s sales division oversees the origination of new Clients via its referral network
and direct channels. All new Client credit submissions, ongoing Client management and monitoring processes are performed by the
operations side of the business. This separation of responsibilities is strictly enforced and is critical to the independence of Scottish
Pacific’s credit assessment processes.

Sales Staff
Scottish Pacific has 24 BDMs across Australia responsible for new Client origination and for developing and maintaining Scottish
Pacific’s referral network. BDMs have no lending approval authority and once approval is obtained, all new Clients are transferred
to a designated Client Relationship Manager (“CRM”). Working beneath BDMs, are a dedicated team of 10 sales support staff who
are responsible for assisting in the preparation of new Client credit applications prior to submission and general marketing support.
Indirectly assisting the sales team, Scottish Pacific also has a dedicated marketing team with seven staff.

Operational Staff
Scottish Pacific has 34 CRMs across Australia and New Zealand. CRMs are responsible for ongoing Client contact and management.
Each CRM has a portfolio of Clients to manage from both a credit and service perspective. Senior operational managers, divisional
general managers and Senior Management are the only employees authorised to approve new credit applications, with larger
facilities requiring authorisation by progressively more senior management. For more information on the approval process and levels
of authorisation, see Section 3.2.3.
Operational Staff oversee risk management of Client and debtor funding Exposures and are directly accountable for losses. All
Operational Staff are encouraged to build relationships with Client and debtor staff in order to develop a better understanding of
the business and identify potential risks, and decision makers are remunerated with long-term incentives to ensure the alignment of
objectives and ongoing business sustainability. The strength of Scottish Pacific’s Client service model is evidenced in its net promoter
score of 82% vs. –16% for the major banks.47

47. Engaged Marketing, ‘The 2014/15 Financial Institution Consumer Loyalty & Recommendation Study’ (2014), cited in Engaged Marketing, ‘Australians more likely to recommend ING Direct
than other banks’ (Media Release, 20 November 2014) <http://www.engagedmarketing.com.au/media-resources/australians-recommend-ing-direct/>. Scottish Pacific NPS data gathered
from internal surveys conducted by Scottish Pacific.

Scottish Pacific  Prospectus 53

03. Company Overview continued


3.2.2.2 Overcollateralisation
A key tenet of Scottish Pacific’s risk management approach is to retain recourse to a pool of receivables collateral over and above the
funding provided to Scottish Pacific’s Clients. This approach provides Scottish Pacific with excess collateral to absorb individual debtor
defaults or dilution (partial payments). Furthermore, Scottish Pacific employs a selective invoice approval process and conservative
advance rates, resulting in three layers of funding protection:
1. Funding only advanced against invoices approved by Scottish Pacific: Every invoice and debtor is assessed and must be
approved by authorised personnel before any funds are advanced. While funding is only advanced for approved invoices,
Scottish Pacific still retains recourse to all invoices that have been assigned by the Client, including non-approved invoices.
Typically ~84% of all total assigned invoices are approved;
2. Advances are only made to a percentage of approved debtors: Scottish Pacific typically only advances funds to Clients
equivalent to between approximately 70% and 80% of the face value of the approved invoices. This advance ratio is based
on the perceived risk of the debtor and the potential for partial repayment due to rebates or other factors; and
3. All debts are full recourse to Clients: If a debtor defaults on their payment, Scottish Pacific has full recourse to the Client
for the amount owed on all invoices, similar to traditional lending.48
Figure 20: Illustrative Collateral Backing
Figure 19: LVR at Origination over Time (%)49 of Typical Client Advance (%)

$100 $16
57% 58% 57%

$27

$57

FY13 FY14 FY15 Assigned Disapproved Conservative Finds Advanced

Receivables Receivables Advance Rates (Exposure)
 
As a result of this approval framework, a typical Client advance has a very high collateral backing relative to certain other lending
products. Scottish Pacific’s typical day one LVR is 57%.50 Compared to a typical new mortgage with a LVR of 70%-80% and a typical
auto loan LVR of 100% or higher, Scottish Pacific holds more collateral to protect its funds in the case of default.

48. Bad Debt Protected Facilities are largely non-recourse to the Client for bad debts. However, for these facilities Scottish Pacific obtains insurance to protect itself against debtor default risk.
49. Calculated as Average Exposure divided by gross receivables.
50. Illustratively, assuming $100 of receivables are assigned to Scottish Pacific, typically only $84 are approved (~84% invoice approval rate). From this $84 of approved invoices, on average only
~$57 is advanced to the Client due to advancement limits and Clients not seeking advances on the full value of their invoices ($84 (approved invoices) x (advance rate)). These figures are
based upon the Average Exposure over gross receivables from FY2013 to FY2015.

54
3.2.2.3 Credit Risk to Underlying Debtors with Recourse to Clients
Scottish Pacific’s primary credit risk is to the underlying debtors (the customers of Clients), and not to Scottish Pacific’s Client itself
although recourse to the Client is retained. Scottish Pacific accepts invoices from creditworthy businesses that operate in selected
industries such as wholesale trade, manufacturing, business services, labour hire and transport and storage. As a result, Scottish
Pacific’s primary credit funding Exposure is to many of Australia’s largest companies rather than to SMEs. Key debtors include
Woolworths, Coles, Telstra, the NSW Government, Coca-Cola, Myer, Bunnings, Healthscope, TOLL, Ramsay Health Care, BHP Billiton,
Rio Tinto and JB Hi-Fi. Through a rigorous selection process and deep industry experience, Scottish Pacific avoids funding unreliable
invoices or businesses which it considers to represent a significant credit risk. This process reduces Scottish Pacific’s direct credit
funding Exposure to relatively higher risk SME businesses.
In the case of default by an underlying debtor which fails to meet its payment obligations, Scottish Pacific has full recourse to the
Client for all approved and assigned invoices.51 Thus, Scottish Pacific also has some protection from the underlying credit risk of the
debtor. Conversely, should one of Scottish Pacific’s Clients enter administration, Scottish Pacific is typically able to enforce the debtor’s
obligation to pay the invoices and seek recovery of the invoices. Scottish Pacific’s low levels of historical losses demonstrate the
benefit of this dual recourse approach.

3.2.2.4 Portfolio Diversification

In addition to conservative advance rates, multiple layers of funding protection and credit funding Exposure to some of Australia’s
largest companies (see Sections 3.2.2.2 and 3.2.2.3), Scottish Pacific’s collateral pool benefits from high degrees of diversification. By
reducing funding Exposure to any one area, Scottish Pacific is able to mitigate its Exposure to any industry-specific disruption. Overall,
the portfolio is marked by low levels of Client concentration, industry and sub-sector diversification, and a national origination
footprint which helps limit the impact to any regional downturns.

Figure 21: Diversified Business Mix of Scottish Pacific by Funding Exposure (%).52

Funding Exposure by Client Funding Exposure by Client Geography

2% >1%

3%
31%

43% 13%

34%

15%

14%

31%

12%

Client 1-20 Client 21-50 NSW Victoria Queensland Western Australia

Client 51-100 Remaining Clients South Australia New Zealand Tasmania, NT and ACT

51. In the case of Bad Debt Protected Facilities, Scottish Pacific has limited-recourse to the Client for bad debts, but takes out insurance which means it has recourse to a third party insurer.
52. Clients ranked by Exposure size.

Scottish Pacific  Prospectus 55

03. Company Overview continued


Funding Exposure By Client Sector Funding Exposure by Client Sub-Sector

2% 4%
4% 27% 27%

3%
8%
8% 10%

27%
3% 15%
6% 1%
>1%
5% 2% 9%

2% 5%
18%
1%
27% 1%
5% 3%
9%

3% 4%

Wholesale Labour Transport Wholesale Trade Manufacturing Labour Hire

Manufacturing Construction
Trade Hire and Storage
Property and Medical Equipment Grocery Mining
Agriculture Mining Others
Business Services
Household Goods Metal Construction

Basic Materials Machinery Security

Grocery Publishing IT

Others Plastics Others

Wood and Paper

Other

3.2.3 Credit Approval Process

Comprehensive initial and ongoing Client and debtor assessments are core to Scottish Pacific’s business and have been fundamental
in maintaining low historical losses. Scottish Pacific maintains a rigorous and disciplined approach to credit approvals and will only
approve Clients which comply with its underwriting standards. Each individual facility is assessed manually by well-trained personnel,
which requires a significant investment. All supporting documents (e.g. historical financial records, debtor and creditor ledgers,
significant contracts, tax returns, bank statements, external verification searches) are reviewed and approved by authorised personnel.
Extensive credit management policies are maintained and applied to all facilities. The credit approval process is described in additional
detail below.
• BDM Client visit and industry screening: Initial Client contact is by BDMs and includes visiting the Client’s premises, meeting
management and gaining an understanding of the business and its funding requirements. The BDM assists with initial Client
vetting by determining whether the prospective Client’s industry is suitable for Debtor Finance. Scottish Pacific focuses on Clients
involved in manufacturing, wholesale trade, labour hire and other similar industries where goods are sold on defined credit terms,
with low loss ratios and a relatively low risk of sales returns or disputes. Scottish Pacific’s ability to selectively determine
acceptable Clients and receivables ensures Exposure to industries with stronger repayment credentials. At a minimum, all Clients
must be a legally registered business entity with a legal capacity to enter a facility agreement, have satisfactory sales ledger and
credit control procedures and suitable financial systems to provide timely financial information to Scottish Pacific.
• Application materials submission: Prospective Clients must submit a comprehensive set of information as part of an application.
This includes an aged receivables ledger and invoice audit trail samples from debtors, aged payables ledgers, finance
commitments, tax data and superannuation commitments from creditors alongside all key agreements and financials.
Additional external verification materials such as ASIC and Veda searches and default history must also be provided.
• Credit review: All submissions are reviewed and assessed by Scottish Pacific’s Operations Staff according to defined escalation
procedures to ensure requests are examined by personnel with requisite experience and expertise. Larger deals require a field
review by an independent qualified staff member, before approval by two authorised signatories. The largest facility requests or
debtor limits also require approval by Senior Management including the CEO. Senior operational managers can approve facilities
up to $500,000 for confidential facilities and up to $1m for disclosed facilities. Above this amount, deals need to be signed by
a general manager and facilities above $2m require sign-off by a member of the executive panel (Head of International Finance,
Head of Marketing, Head of Debtor Finance, CFO or CEO). Facilities above $5m require sign-off by the CEO.

56
• Facility structuring: Scottish Pacific’s credit policy requires that Factoring facilities are offered to all new Clients where possible,
due to Scottish Pacific’s increased flexibility and control over administration and collections. This enables direct contact with
debtors and closer monitoring of assigned invoices. Discounting facilities are only offered as Clients satisfy additional risk
assessment criteria and Scottish Pacific retains the right to transition Discounting Clients to Factoring facilities.
• Facility and legal documentation: Scottish Pacific’s policy is to hold as much security as possible. Prior to the establishment of
each facility, Scottish Pacific requires that facility agreements and security deeds be executed. Furthermore, where a prior security
deed exists, Scottish Pacific requires a full release of receivables and/or a deed of priority granting Scottish Pacific a senior
repayment position. Guarantees from all directors and shareholders (above 10%) are also required for all private companies.
• Relationship transfer to a CRM: The Client relationship is officially transferred to the CRM who is responsible for all ongoing
contact. Key performance indicators are set for monitoring purposes and visits to Client premises are scheduled with a minimum
expectation of one visit each year.
• Facility establishment: A separate Scottish Pacific controlled bank account is created for every Client for the collection of
receivables and a security interest is registered.
• Debtor ledger receipt and assessment:
– Bona fide assessment (against fraud risk): All of Scottish Pacific’s Client debtors that owe more than $1,000 are subject to
bona fide assessments prior to approval. These ensure that debtors are a legitimate entity and mitigate against fraud risk.
These are performed by Operational Staff and include cross-checking debtor names and ABNs with Government registers
and cross-checking supplied phone numbers with official sources.
– Verification assessments: These involve a verbal verification of debtors by Operational Staff. Before any new settlement,
a minimum of 50% of debtors by value are verified with exceptions approved by General Managers. Verification cannot be
achieved without speaking directly to debtors. All debtors need to be certified as bona fide before verification is undertaken.
– Concentration limits: Concentration limits minimise Exposure to any one industry, Client or debtor, and are constantly
monitored by Scottish Pacific’s bespoke technology platforms. Enforcement of concentration limits directly mitigates
Scottish Pacific’s Exposure to debtor failure. All debtors with a debtor ledger concentration exceeding 25% of the Client’s
debtor ledger are required to be registered with ASIC and to provide remittance advice for all payments.
• Ongoing invoice approval or disapproval: Following this comprehensive assessment process, individual invoices are either
approved or disapproved. Scottish Pacific only advances funds against approved invoices. Scottish Pacific has absolute discretion
over which invoices are approved and has no obligation to approve a minimum proportion of assigned receivables. Disapproved
invoices continue to be collected by Scottish Pacific even though no funding is provided against these invoices.
Policies and procedures are subject to ongoing review and improvement by Scottish Pacific’s risk and compliance department to
reflect market best practices and lessons learned from previous default experience. The risk and compliance department is supported
at various stages through the credit approval process by an engaged senior management team that has over 150 years of collective
Debtor Finance experience.

3.2.4 Fraud Risk

Scottish Pacific has a robust framework to manage fraud risk which is continuously refined based on lessons learned and experience.
These procedures are integrated as part of its credit approval process detailed in Section 3.2.3 and are elaborated here in further
detail. Scottish Pacific has a number of industry leading checks to minimise the risk of fraud. Importantly, risk controls are implemented
both prior to and post funding.
Pre-funding fraud controls are focused on a verification process based on verification calls to test whether invoices are genuine
(including whether goods supplied under the invoice were received by the debtor, quantity, price and other relevant confirmations).
Pre-funding fraud controls also include business and fraud surveys.
Post-funding fraud controls include obtaining and monitoring ledger reconciliations, Client month-end statements and Client internal
management reports, along with monitoring of intercompany transactions and debtor concentration limits and optional debtor
insurance. Internal audits are performed to ensure stipulated internal policies and procedures are followed. In addition, all Client losses
are followed up by internal loss investigations which are directed at understanding what Scottish Pacific could do differently to
improve its processes. As part of this process, policies and procedures are continually updated to reflect lessons learned.

Scottish Pacific  Prospectus 57

03. Company Overview continued


3.2.5 Debtor Collection and Information Systems

Scottish Pacific’s involvement in collections varies according to facility type. Full-service Factoring requires the highest involvement,
whilst Discounting facilities, due to their confidential nature, do not involve contact with the debtors directly by Scottish Pacific.
In these cases, the Client acts as agent to Scottish Pacific, with Scottish Pacific providing ‘hands-on’ oversight. Factoring collection
practices are described in more detail below.
Full-service Factoring involves debtor collection calls, allocating and reconciling cash to individual invoices, and distributing
statements and payment reminders to debtors. Responsibility for collections is with credit officers who are assisted by CRMs and the
risk and compliance team where necessary. These groups are coordinated through Scottish Pacific’s long established proprietary
operating platforms which are designed to provide Scottish Pacific with operational efficiency and enable it to provide high quality
customer service.
Scottish Pacific’s secure and sophisticated technology platform handles all the day-to-day operating functions of administering
Client accounts, charging fees, reporting, creditor control, disapproval of invoices, debtor limits, Client funding limits and exception
reporting. Legacy Bibby Clients and Suncorp Portfolio Clients are still serviced on a separate platform which underwent significant
diligence checks during the acquisition and is substantially similar to Scottish Pacific’s technology platform.

Figure 22: Scottish Pacific Information System Framework

Payments to Clients
Movement of Funds to Scottish Pacific Bank Account
Payments

Statements and
Reminders
Statement Payment
Debtors Formatted Clients
Portal Portal

Cash Flow
Smartphone
Refunds and Statements and Open Invoices App
Payments Reminder Files and Payment Invoices,
Information Credit Notes,
Drawdown
Requests
Payments
from Debtors
Banks Information Systems
Balance and
Payments to Clients Drawdown Requests
and Refunds to Debtors
Files Client and Debtor
Each Night Balances and
Movements

Risk
Finance
Factor

Scottish Pacific’s technology platform provides a profile of each debtor, including details on payment history, transaction history and
correspondence and enables prioritisation of collection activity by debtor value and aging profile. The platform also tracks telephone
calls made to debtors, recording key attributes such as the date, time, Scottish Pacific employee name, Client name and discussion
notes. Client payment promises are diarised and the systems prompts Credit Officers to re-call Clients if funds are not received as
scheduled. The platform is highly automated, creating efficiencies with statements automatically generated each month. Scottish
Pacific’s systems also automatically generate reminder letters to be sent to debtors with an overdue account. If appropriate, Scottish
Pacific also forwards letters of demand to debtors which have exceeded acceptable terms of payment. Lastly, the platform directly

58
improves the Client experience since Clients can directly access a portal which provides transparency on all collection activities
when they log in to the Client portal.
Scottish Pacific has several key strategies to maximise collections including frequent points of contact (Operational Staff are
specifically allocated to Clients, with regular calling when appropriate and automated reports generated daily, fortnightly and monthly
which help identify key risk areas). Scottish Pacific also has the operational flexibility to convert Discounting facilities to Factoring
facilities in scenarios where enhanced oversight is desired, which is a key differentiator compared to banks. Scottish Pacific also retains
the option to amend facility structures to reduce advance rates and increase its level of control and involvement in order to
reduce risk.

3.2.6 Monitoring
Scottish Pacific utilises a detailed, ‘hands-on’ approach to monitoring the performance of its Clients and underlying debtors. The
Company has invested significantly to build a high quality risk and compliance team and develop leading technology systems, which
enables Clients and debtors to be monitored by CRMs, Divisional General Managers and the risk and compliance team on a daily basis.
CRMs complete credit performance reports which are reviewed by the risk and compliance team and then circulated to senior
management. Key reports include large funding Exposure reports (monthly) for all Clients with funding Exposure of more than
$1.5m and watch lists (twice per month) for all Clients showing signs of increased liquidity pressure or potential to meet the Credit
Risk Report criteria within two months. Credit Risk Reports are generated twice per month for all Clients where failure is suspected
for any reason. Overdue Client Audit Reports are also compiled monthly for situations where scheduled audits are overdue.

Table 3: Minimum Facility Reporting Requirements (Scottish Pacific Standalone)

Disclosed facilities Disclosed facilities Confidential and

Requirements <$0.5m >$0.5m other facilities

Client audits CRM discretion 12 months 3 or 6 months

Bank statements Weekly (for 3 months), then Weekly (for 3 months), then Weekly (for 3 months), then
CRM discretion CRM discretion CRM discretion

Client debtor summary CRM discretion Monthly Monthly

Client creditor summary Quarterly Monthly Monthly

Reconciliation of Client CRM discretion CRM discretion Monthly

ledgers

Debtor name and address CRM discretion CRM discretion 3 months

listing

Management accounts 12 months 12 months Monthly or 3 months

ATO portal 12 months 6 months 3 months

ATO portal when in arrears Monthly Monthly Monthly

Source: Credit Management Policy

Note: In time, Scottish Pacific’s Standalone credit policies will apply to recent acquisitions, leading to consistent risk management and credit approval processes.

Scottish Pacific  Prospectus 59

03. Company Overview continued


3.2.7 Low Historical Credit Losses

The result of Scottish Pacific’s business model is consistently low loss rates with better risk-adjusted returns than other lending
products such as residential mortgages and auto loans. Scottish Pacific has demonstrated consistently low levels of historical losses,
including during recent periods of economic downturn. Under current management, the average annual number of losses is 753 and
the average loss percentage over past 10 years is less than 0.44% p.a. of Average Exposure (on a Scottish Pacific Standalone basis).54
FY2009 and FY2010 were impacted by abnormally large losses on two different Clients (represented as abnormal losses in Figure 23).
Both involved fraud, and involvement in industries and products that Scottish Pacific is no longer exposed to. If these two Clients were
excluded, the average Standalone loss ratio for the last 10 years would move from 0.44% to 0.22%.
Although not directly controlled by Scottish Pacific’s management or subject to Scottish Pacific’s underwriting procedures during
the following periods, the Bibby and GE Debtor Finance Client portfolios have also demonstrated low historical loss rates. Bibby
demonstrated low loss rates through the cycle with an average loss ratio of 0.64% of total year end Exposures between 2009 and 2015
(December year end).55 The GE Debtor Finance portfolio, predominantly made up of larger, more sophisticated Discounting Clients
had an average loss ratio of 0.06% p.a. of Average Exposure between 2013 and 2015,56 with only one bad debt write-off in the period.

Figure 23: Scottish Pacific’s Consistently Low Levels of Historical Losses Through the Cycle (%)57
(on a Standalone basis)

1.8%
0.9%
0.6%
0.3% 0.3% 0.1% 0.2% 0.2%
0.0% 0.0%

3.2

2.7
1.5

1.5
1.1
0.6 0.6 0.1 0.1 0.9
0.5 0.4 0.0 0.4
FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015

Scottish Pacific Standalone Losses ($m) Abnormal Losses ($m) Scottish Pacific Standalone Losses (% of Average Exposure)

Figure 24: Bibby’s Consistently Low Levels of Historical Losses through the Cycle (%) (December Year End)58

1.1%
0.6% 0.6% 0.6% 0.7%
0.4% 0.4%

2.0
1.5
0.8 1.0
0.5 0.4 0.6

FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015

Bibby Losses ($m) Bibby Losses (% of year end exposure)

53. Based on the number of Client accounts in respect of which the amount advanced to that Client is not fully recovered.
54. Loss rate calculated as annual losses over monthly average funding Exposure, based on Scottish Pacific’s unaudited management accounts.
55. Bibby portfolio data measured on a December year end basis and not available prior to 2009. Data based on Bibby’s unaudited management accounts.
56. GE Debtor Finance portfolio data measured on a December year end basis and not available prior to 2013. Data based on GE Debtor Finance unaudited management accounts.
57. Scottish Pacific Standalone losses only. End of year exposures used in FY2006 and FY2007 as Average Exposure figures are not available.
58. Bibby portfolio data measured on a December year end basis and not available prior to 2009. Data based on Bibby’s unaudited management accounts.

60
3.3 Funding Model

3.3.1 Overview
Debtor Finance is an important source of liquidity for Scottish Pacific’s SME Clients. Scottish Pacific has developed a reliable funding
mix that helps it support its Clients though all phases of the business cycle. This funding model and Scottish Pacific’s relationships
with its financiers are a key strength, allowing Scottish Pacific to successfully grow its business. An overview of the range of funding
sources is provided in Table 4.

Table 4: Overview of the Range of Funding Sources 

Type of funding Description

Senior Facilities Private bilateral securitisation facilities provide financing to limited-recourse

Funding Vehicles established by Scottish Pacific that are used to fund the purchase
of receivables. These facilities can be drawn and repaid on an ongoing basis up
to agreed facility limits and subject to conditions and eligibility criteria. Given the
bilateral nature of the agreements, the terms and structures vary.
This debt is asset-backed and has limited-recourse to Scottish Pacific.
Securitisation
– Asset Backed Mezzanine Facility The Mezzanine Facility’s purpose is to support the Senior Facilities by providing
Funding “first loss” capital to the Funding Vehicles.59
Financing for the Mezzanine Facility is sourced from investors in wholesale capital
markets (such as institutional funds and professional fixed income investors)
and from Scottish Pacific (as the purchaser of the Junior Notes issued by the
Mezzanine Vehicle).
This debt is asset-backed and has limited-recourse to Scottish Pacific.

Corporate Scottish Pacific has access to revolving Corporate Debt Facilities in order to
Debt Facilities periodically fund a range of general corporate expenses, including ongoing
working capital needs and the acquisition of new businesses.
This debt is guaranteed by, and has recourse to Scottish Pacific.

Cash Scottish Pacific is able to use its own surplus cash to fund business operations,
acquisitions and provide capital support to its Funding Vehicles (primarily through
the Mezzanine Facility).

Members of the Group have executed agreements to implement the Mezzanine Facility and Senior Facility 2 (“New Funding
Arrangements”) as described in this Prospectus. The New Funding Arrangements will partly be used to fully repay and discharge an
existing facility used in the Bibby business, partly repay the Corporate Debt Facilities, and then used for the ongoing operations of the
Group. The availability of funding under the New Funding Arrangements is subject to a limited number of conditions precedents. The
Company expects these conditions to be satisfied prior to Completion of the Offer and for the New Funding Arrangements to be fully
implemented by that time.

59. In some cases, Scottish Pacific may hold Junior Notes issued directly by a Funding Vehicle. The following sections focus on the typical model under which Junior Notes are issued by the
Funding Vehicles to the Mezzanine Vehicle, and direct note holdings by members of the Group are not necessarily described or shown.

Scottish Pacific  Prospectus 61

03. Company Overview continued


3.3.2 Asset Backed Funding

Funding for Debtor Finance products and Scottish Pacific’s other products is provided to members of the Group through the use
of securitisation structures. Under each securitisation structure, debtor receivables are originated by Scottish Pacific or assigned to
Scottish Pacific by the Company’s Clients and are then sold by Scottish Pacific to a special purpose vehicle (Funding Vehicle) on an
ongoing basis. Funds from the sale of the receivables to the Funding Vehicle are then paid by Scottish Pacific to its Clients (Client
Funding Amount).
• The Funding Vehicles fund the purchase of these receivables by issuing notes or borrowing from their funding sources. Senior
Notes are issued to, or loans are advanced by, the providers of the Senior Facilities, while Junior Notes are issued to a separate
special purpose vehicle (Mezzanine Vehicle) or to Scottish Pacific. These Junior Notes are “first loss” capital and are subordinated
to the Senior Notes or senior loans.
• The Mezzanine Vehicle raises funds via loans from financiers and issues Junior Notes to Scottish Pacific. The Junior Notes owned
by Scottish Pacific are subordinated to the loans made by third party Mezzanine Facility financiers.
An illustrative arrangement of how cash typically flows through this funding structure is in Figure 25.

Figure 25: Illustrative Example of Typical Cashflows through the Funding Structure

Funding
Client Funding Amount 85%-90%
Senior Facilities

Funding Up to 50% of
Remaining Funding
Funding Increasing
Client Mezzanine Facility
Vehicle Mezzanine Seniority
Assign Vehicle
Receivables
Scottish Pacific Funding
Receivables At least 50%
of Remaining Funding

An example of a typical funding process is depicted in Figure 26.

62
Figure 26: Funding Vehicle Funding Process

Scottish Pacific’s Client agrees to sell receivables (under invoices issued by it) to the Group.
Receivables
1 In return, the Group agrees to advance its clients a portion of the face value of the receivables
book assigned
(i.e. the Client Funding Amount).
to the Group

The Group in turn sells those receivables to the Funding Vehicle. Provided the receivables
Receivables
2 meet the relevant lending criteria for the Funding Vehicle, it will provide the Group the
sold to Funding
Client Funding Amount.
Vehicle

The Funding Vehicle draws down on its funding sources to fund the Client Funding Amount,
typically as follows:
• Senior Facilities: Senior secured debt instruments funded by bank lenders – these typically
provide up to 90% of the Client Funding Amount.
Funding Vehicle • Mezzanine Facility: A facility that may provide up to 50% of the remaining funding
3 draws down on requirement. The Mezzanine Facility is subordinated to the Senior Facilities and is only repaid
funding sources after the Senior Facilities.
• The Group contributes the remaining funds required (typically 5% – 10% of the Client Funding
Amount) from its equity or operating cash, typically by purchasing junior notes issued by the
Mezzanine Vehicle. Funds that the Group contributes are subordinated to the Senior Notes
and the Mezzanine Facility

When the debtor pays their invoices this money flows through the facilities. The Senior Facilities
Debtor repays
4 are repaid first, followed by the Mezzanine Facility with the Group receiving the residual income.
invoice to
Once the Client Funding Amount, interest and fees have been fully paid, all remaining funds are
Funding Vehicle
paid to the Client.

Importantly, the recourse of the creditors of the Funding Vehicles is limited to and secured over the assets of those Funding Vehicles
(primarily being the receivables sold to the Funding Vehicles). There are limited rights on the part of those creditors to seek recourse
against Scottish Pacific, as described more fully in Sections 4.5.2 and 9.5.2.
The recourse of the creditors of the Mezzanine Vehicle is limited to and secured over the assets of the Mezzanine Vehicle (primarily
being the Junior Notes issued to the Mezzanine Vehicle by the Funding Vehicles). There are limited rights on the part of those
creditors to seek recourse against Scottish Pacific, as described more fully in Sections 4.5.2 and 9.5.2.
The recourse of the financiers of the Corporate Debt Facilities is not limited, and those financiers may enforce their rights to payment
by Scottish Pacific in respect of the Corporate Debt Facilities against the assets of certain members of the Group. This is discussed in
more detail in Sections 4.5.3 and 9.5.3.

Scottish Pacific  Prospectus 63

03. Company Overview continued


An illustrative diagram of Scottish Pacific’s funding model is in Figure 27, below.

Figure 27: Scottish Pacific’s Funding Model

Receivables
Recourse Limited to Receivables

Funding Funding Funding

Vehicle 1 Vehicle 2 Vehicle 3

Senior Facilities
Senior Facility 1 Senior Facility 2 Senior Facility 3
Financiers

Mezzanine Facility
Mezzanine Vehicle Financiers

The Group
Scottish Pacific
Recourse to

Corporate Debt
Corporate Debt Facilities
Facilities Financiers

Note: Figure 27 provides an illustrative example of how Scottish Pacific typically finances Client Funding Amounts. It is simplified to represent the economic contributions
of the various sources of funding rather than the legal vehicles from which the funding is sourced.

64
Figure 28: Illustrative Example of Scottish Pacific Client Loan Financing ($)

16.0

27.0
2.85
Scottish
Pacific
100.0 2.85
Mezzanine
Facility

57.0 51.3
Senior
Facilities

Receivables Collateral Disapproved Receivables Conservative Advance Rates Advance Amount Funding Mix

As an example, if Scottish Pacific were to receive an assignment of $100 of receivables from a Client, the $100 of receivables would
then be assigned to the Funding Vehicle. An estimated $16 of receivables would be disapproved, and Scottish Pacific would advance
~60%-80% against the approved receivables based on advance limits and Clients not drawing down on their full facility limit. On
average, $57 is advanced to the Client. The $57 would be funded by a combination of the Senior Facilities ($51.30 or 90%), the Mezzanine
Facility ($2.85 or 5%) and Scottish Pacific ($2.85 or 5%). This creates an effective 51.3% LVR for the senior financier under a Senior Facility
and a 54.15% (51.3% + 2.85%) LVR for the financiers under the Mezzanine Facility providing each group of financiers with substantial
overcollateralisation.

3.3.2.1 Senior Facilities

Scottish Pacific relies on three limited-recourse Senior Facilities to fund Client Funding Amounts to its Clients via the Funding Vehicles.
Each Senior Facility has a limit on the amount of funding that it can provide at any one time. Scottish Pacific maintains a conservative
buffer between the funds it has provided and the limit of each Senior Facility so that it does not run out of funding capacity to
continue to fund the origination of receivables. An overview of the Senior Facilities is provided in Table 5, with more information
provided in Sections 4.5.2 and 9.5.2.

Table 5: Overview of the Senior Facilities

Aggregate Drawn
Total Line Balance as at Legal
History Commitment 31 MAY 2016¹ Maturity Date

Senior Facility 1 10+ years $535m August 2017

Senior Facility 2 10+ years $250m $740.6m June 2018

Senior Facility 3 New financier $300m May 2020

Two of the Senior Facilities are provided by two of Australia’s major banks, while the remaining facility is provided by a global
investment bank and some of its US commercial paper conduits.
The Senior Facilities are subject to a range of terms and conditions that can affect matters such as funding availability, repayments
and the liabilities of the Group, as described in more detail in Sections 4.5.2 and 9.5.2. The terms of the Senior Facilities range from
12 to 36 months. If the term of a Senior Facility expires (and is not renewed), amounts owing under that Senior Facility are required to
be repaid on the legal maturity date. In the case of one Senior Facility, the legal maturity date occurs at the end of the term (if the
facility is not renewed), whilst the others allow for a 12 month amortisation period after the end of the term before the legal maturity
date occurs.

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03. Company Overview continued


Scottish Pacific is periodically required to either seek approval from the financiers to extend the availability of these Senior Facilities, or
to refinance the Senior Facilities from other funding sources as they near their maturity dates. This also provides Scottish Pacific with
the opportunity to renegotiate the Senior Facilities as its receivables book grows. Scottish Pacific has a long history of not only
consistently rolling Senior Facilities forward, but also increasing commitment limits to support growth. Members of Scottish Pacific
have 10+ year relationships with certain financiers to the Senior Facilities, which have supported Scottish Pacific’s growth through
this period.
In the event that Scottish Pacific is not able to reach an agreement with a financier in relation to a Senior Facility prior to that facility
maturing, or if the terms of any extension offered are not deemed acceptable, Scottish Pacific may have to (or choose to) seek
alternative sources of funding in order to refinance the debt provided in connection with the Senior Facilities.

3.3.2.2 Mezzanine Facility

An overview of the Mezzanine is provided in Table 6 with more information provided in Sections 4.5.2 and 9.5.2.

Table 6: Overview of the Mezzanine Facility

EXPECTED Balance
Total Line AT COMPLETION OF Legal
History Commitment THE OFFER Maturity Date

Mezzanine Facility New financiers $60m ~$45m June 2019

The purpose of the Mezzanine Facility is to support the Senior Facilities by providing “first loss” capital to the Funding Vehicles. The
Mezzanine Vehicle raises funds via loans from third party financiers and also issues Junior Notes to Scottish Pacific. The Junior Notes
owned by Scottish Pacific are subordinated to the loans made to Mezzanine Facility financiers. Refer to Figure 25, Figure 26 and
Figure 27 for a visual representation of where this facility sits in the funding structure.
The Mezzanine Facility will be incrementally drawn as Scottish Pacific’s funding Exposure grows. The intention of this is to maintain
an optimum proportion of mezzanine funding within the overall capital structure as Scottish Pacific’s funding needs increase.
The Mezzanine Facility is subject to a range of terms and conditions that can affect matters such as funding availability, repayments
and the liabilities of the Group, as described in more detail in Sections 4.5.2 and 9.5.2. The term of the Mezzanine Facility is 36 months,
with immediate repayment required in the event the facility is not renewed.
Towards the end of this 36 month term, Scottish Pacific will be required to either seek approval from the financiers to extend the
availability of this Mezzanine Facility, or to refinance the Mezzanine Facility from other funding sources as it nears the maturity date.
This also provides Scottish Pacific with the opportunity to renegotiate the Mezzanine Facility as its receivables book grows.
In the event that Scottish Pacific is not able to reach an agreement with a financier of the Mezzanine Facility prior to the facility
maturing, or if the terms of any extension offered are not deemed acceptable, Scottish Pacific may have to (or choose to) seek
alternative sources of funding in order to refinance the debt provided to the Mezzanine Vehicle.

3.3.3 Corporate Debt Facilities

An overview of the Corporate Debt Facilities is provided in Table 7, with more information provided in Sections 4.5.3 and 9.5.3.

Table 7: Overview of the Corporate Debt Facilities

EXPECTED Balance
Total Line AT COMPLETION OF Legal
History Commitment THE OFFER Maturity Date

Corporate New financiers $70m ~$59m December 2018

Debt Facilities

66
As at the Completion of the Offer, Scottish Pacific will have $70m of Corporate Debt Facilities which are expected to be drawn to
~$59m with the proceeds primarily used to fund recent acquisitions and provide a source of contingent liquidity to the business.
The Corporate Debt Facilities are subject to a range of terms and conditions that can affect matters such as funding availability,
repayments and liabilities of the Group, as described in more detail in Sections 4.5.3 and 9.5.3. The term of the Corporate Debt
Facilities are 36 months, with immediate repayment required in the event the facilities are not renewed.
Scottish Pacific is periodically required to either seek approval from the financiers to extend the availability of these Corporate Debt
Facilities, or to refinance the Corporate Debt Facilities from other funding sources as they near the maturity date. This also provides
Scottish Pacific with the opportunity to renegotiate the Corporate Debt Facilities.
In the event that Scottish Pacific is not able to reach an agreement with a financier of the Corporate Debt Facilities prior to the facilities
maturing, or if the terms of any extension offered are not deemed acceptable, Scottish Pacific may have to (or choose to) seek
alternative sources of funding in order to refinance the debt.

3.4 Growth Strategy

3.4.1 Core Growth Drivers

Scottish Pacific’s Net Revenue has grown at a 12.7% CAGR between FY2013 and FY2015. This growth is primarily driven by the
factors below:

Table 8: Core Growth Drivers

Core Growth Drivers

Growth in Number • Scottish Pacific sources new Clients from its broad referral network and through direct channels
of Clients
• New Client originations coupled with a strong Client retention rate of ~80% have supported Client
growth of 6.8% p.a. between FY2013 and FY2015

Growth in Average • Scottish Pacific provides important working capital solutions to its Clients to support their growth
Client Turnover
• Average Turnover per Client has grown 11.9% p.a. between FY2013 and FY2015 while Average
and Exposure
Exposure per Client has grown 11.1% over this period

Figure 29: Detail on Scottish Pacific’s Drivers of Revenue Growth (Core Debtor Finance Only)

Growth in Number of Clients1 Growth in Average Turnover Per Client Growth in Average Exposure Per Client
($’000s) ($’000s)
CAGR: 6.8% 11.9% 11.1%
5,997
372
1,503 5,311
1,423
4,786 324
1,317
302

FY2013 FY2014 FY2015 FY2013 FY2014 FY2015 FY2013 FY2014 FY2015

Note: Average Turnover per Client and Average Exposure per Client are calculated based on each 12 month period’s average Client numbers.
1 Year end Client numbers.

Scottish Pacific  Prospectus 67

03. Company Overview continued


3.4.2 Additional Growth Drivers

Table 9: Additional Levers of Future Growth for Scottish Pacific

Additional Growth Drivers

Broadening Scottish • Scottish Pacific is ideally positioned to leverage its increased scale and leading products across
Pacific’s Client set broader Client segments
• Increased scale allows Scottish Pacific to better serve more sophisticated Clients with needs for larger
borrowing limits

Direct originations • Scottish Pacific is investing in direct distribution capabilities including a direct sales and marketing
growth team (seven employees) and an expanded marketing budget of $2m
• Strong early success with direct marketing sources accounting for 18% of new deals in the first nine
months of 2016 vs. 9% in FY2015

Growth from new • Scottish Pacific has entered into separate referral agreements with two of Australia’s five largest
referral agreements banks.60 Under these agreements the banks will refer their customers to Scottish Pacific for Debtor
Finance products and services
• A similar referral arrangement with one of these banks contributed significantly to GE’s Clients

Improved market • The combined resources of Scottish Pacific, Bibby and GE Debtor Finance are now dedicated to
awareness improving product awareness and growing the market
• Dedicated sales team of 24 BDMs and 10 support staff focused on new Client conversion
• 61% of new Clients to Scottish Pacific are new to Debtor Finance

Expanded product • Scottish Pacific continues to broaden its product suite and is well placed to cross-sell these products
offering to existing Clients as well as deploy them through new distribution channels including the direct
sales channel
• Developing products with a “quick and easy” application process such as SIF

3.4.2.1 Broadening Scottish Pacific’s Client Set

Following recent acquisitions, Scottish Pacific has the opportunity to target a broader spectrum of Clients due to its increased scale.
In particular, increased scale will enable the capture of higher quality, less service intensive Clients over time at minimal incremental
cost. Historically, many of these Clients would have required limit sizes in excess of Scottish Pacific’s funding capacity (due to
concentration considerations). As an example, the Average Exposure per Client for Scottish Pacific Standalone and Bibby is ~$0.3m to
$0.4m which is significantly smaller than GE’s core Clients (~$1.6m) and the industry broadly (~$1.0m).61 As Scottish Pacific has been able
to increase scale thereby improving its operating leverage and reducing its concentrations, it has been able to attract larger SMEs and
take market share. Scottish Pacific’s Average Exposure of new Clients acquired has increased at a CAGR of 20% from FY2013 to FY2015.

60. Based on gross loans and advances. Australian Prudential Regulation Authority, Monthly Banking Statistics: April 2016 (31 May 2016) <http://www.apra.gov.au/adi/Publications/Documents/
MBS-April-2016.pdf>.
61. Debtor and Invoice Finance Association of Australia and New Zealand Inc., DIFA Update: DIFA Statistics December Quarter 2015 (8 February 2016) <http://difa.asn.au/wp-content/
uploads/2015/09/Statistical_Update_Dec_2015.pdf>. Industry Exposure calculated by applying a typical 55% average rate to gross receivables.

68
Figure 30: Scottish Pacific’s Target Debtor Finance Clients (% of FY2017F Average Exposure)

Lower Client Higher Client

sophistication sophistication
Higher touch Lower touch
Higher yield Lower yield

GE and Suncorp Debtor

Bibby Portfolio Clients
Finance Portfolio Clients

• Minimal or no debtor • Moderately effective debtor • More resources with accounts

management capability
• Lower limits and advance rates,
increased frequently of audit,
compliance and performance analysis
• Very limited access to funding
collection policies and systems receivable capability
• Smaller businesses with limited • Longer operating histories
access to funding • Commonly larger operations
• Better access to bank funding

Figure 31: Average Exposure of New Scottish Figure 32: Average Exposure Per Client as at
Pacific Clients ($’000) 30 June 2015 ($’000)1

1,632
630 CAGR:
20.0%

494
437
963

760

396
332

FY13 FY14 FY15 Bibby Scottish Pacific Suncorp GE Industry

Source: Industry data from Debtor and Invoice Finance Association of Australia and New Zealand Inc., DIFA Update: DIFA Statistics December Quarter 2015 (8 February 2016)
<http://difa.asn.au/wp-content/uploads/2015/09/Statistical_Update_Dec_2015.pdf>. Industry Exposure calculated by applying a typical 55% average rate to gross receivables.
Suncorp and GE Debtor Finance portfolio’s based on year end Client and Exposure numbers. All others based on Average Exposure and average Client numbers.

Given that Scottish Pacific’s Average Exposure per Client is still well below the industry average, and Scottish Pacific’s increased scale
following recent acquisitions, management believes there is an opportunity for Scottish Pacific to continue to increase the average
size of its Client Exposure more in line with industry averages, which will in turn be supportive of market share gains and growth over
the medium term.

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03. Company Overview continued


3.4.2.2 Direct Originations Growth

As discussed in Section 3.1.6.2, Scottish Pacific has increased its focus and investment in direct sourcing of Clients. Scottish Pacific
anticipates significant improvements in this area, targeting 30% of all new Client originations to be achieved via direct sources.
As a sign of this investment, Scottish Pacific now has seven direct sales employees with approval over a significant advertising
and entertainment budget of $2m p.a., significantly in excess of Independent Debtor Finance Provider competitors.
The key elements to the strategy have been: (1) the launch of a new website (www.scottishpacific.com) with a broader working capital
focus; (2) to develop products aimed at the smaller end of the target market with a “quick and easy” application process, more suited
to a direct sales approach; (3) to appoint a dedicated resource responsible for the cultivation and processing of direct enquiries; and
(4) increased focus on direct targeted marketing campaigns (including both traditional forms such as a five week free to air TV
commercial pilot and social media).
While the sample size is small, successes in the first nine months of FY2016F are notable and include a 130% increase in direct lead
generation and a 110% increase in sales from direct sourcing. As a result of these gains, the percentage of new business sourced from
direct marketing has doubled from 9% in FY2015 to 18% in the first nine months of 2016 (target 30%).

3.4.2.3 Growth from New Referral Agreements

Scottish Pacific’s key source of new Clients continues to be its well-established and embedded referral network which contributed
91% of new Clients in FY2015. The referral network has been significantly enhanced in 2016 following the signing of referral
agreements with two of Australia’s five largest banks.62 Scottish Pacific is set to benefit from the depth of relationships within
these bank’s business banking divisions.
Outside of these key bank referral agreements, Scottish Pacific is also focused on increasing internal referrals including incorporating
the successful SOARS program established by Bibby to drive an increase in staff referrals.

3.4.2.4 Improved Market Awareness

As discussed in Section 2.2.6.2, the Australian Debtor Finance market remains underpenetrated (particularly compared to international
peers) in part due to limited SME product awareness. Scottish Pacific is keenly focused on increasing market awareness of Debtor
Finance and growing the market. The Company’s increased scale post consolidation of Bibby and the GE Portfolio Acquisition offers
two key advantages, (1) the Company has increased financial capacity to invest in direct marketing (see Section 3.4.2.2, (2) marketing
resources can be reallocated towards market education as opposed to competitive positioning through both traditional and new
media channels. Scottish Pacific’s Listing on the ASX may also increase the profile of the Debtor Finance industry resulting from
coverage from the financial press or SME owners learning about Scottish Pacific and its value proposition or as a potential
investment opportunity.

62. Based on gross loans and advances. Australian Prudential Regulation Authority, Monthly Banking Statistics: April 2016 (31 May 2016) <http://www.apra.gov.au/adi/Publications/Documents/
MBS-April-2016.pdf>.

70
3.4.2.5 Expanded Product Offering
Figure 33: Scottish Pacific’s Existing, New and Potential New Products

Greater deployment
via New Channels

Longer Term
Cross-Selling Factoring
Opportunities Reverse Invoice
Factoring Discounting

Current Core
Products
Trade
White Label
Finance
Potential New
Products

Newly
Non-Recourse Launched
Product Offering Products Cashline
Factoring

Inherited Bibby
Progress Products Selective
Claim Invoice
Financing
Finance
Bad Debt
Collection Protected
Services Financing Near Term
Cross-Selling
Opportunities

Scottish Pacific’s customer retention rate (~80%) positions the Company well for cross-selling new products to existing Clients.
Some of these products have been inherited from the recent acquisitions of Bibby, whilst others are innovative new products.
Some of the key opportunities include the cross-selling of Bibby’s Bad Debt Protected Facility product and Trade Finance solutions
as add-ons to existing Clients. Furthermore, the Group is developing innovative new products which are particularly well suited for
direct distribution through a “quick and easy” application process to drive additional growth. Specific focus products include:
Selective Invoice Discounting (SIF): SIF is a flexible Debtor Finance facility where funding is provided against individual invoices
or debtors rather than entire company ledgers. The product launched in June 2015 and opens a market to SMEs previously hesitant
to engage due to reluctance to assign a full sales ledger or sign-up for 12 months. In its first nine months, SIF has performed very
strongly, outperforming its budgeted Turnover by 129%. The product is relatively high margin while still being lower cost than
alternative SME funding options (such as peer-to-peer lending). SIF has similar characteristics to Invoice Trading,63 which also provides
funding against individual invoices rather than entire ledgers. The Invoice Trading market volume grew from less than US$1m in 2014
to US$105m in 2015.64 The product has a dedicated sales representative and Scottish Pacific is in the process of implementing product
enhancements. The product also has a high conversion rate from direct marketing (1:4).
Bad Debt Protected Facilities: A Debtor Finance facility where Scottish Pacific agrees not to recoup most of the cost of bad debts
from Clients for an agreed fee. This differs from a typical Debtor Finance Facility, where the Debtor Finance Provider can recover the
cost of any bad debts from its Clients. Scottish Pacific is itself insured by a third party insurance provider to protect Scottish Pacific
from the risk of debtor default. Historically, this product has not been offered by Scottish Pacific and was inherited from Bibby.
Management believes there are significant opportunities to increase penetration. Currently, this product has a 4% penetration with
the expanded product base and Scottish Pacific believes there is potential to grow this rapidly to 12% (given a 16% penetration rate
into the Bibby Client base before the acquisition). The product is capital light, with no required capital from Scottish Pacific as it is not
a lending product and management has increased staffing to facilitate growth.

63. Invoice Trading is where individuals or institutional funders purchase invoices or receivable notes at a discount.
64. Zhang, Bryan, et al, Harnessing Potential: The Asia-Pacific Alternative Finance Benchmarking Report (March 2016) <http://www.kpmg.com/CN/en/IssuesAndInsights/ArticlesPublications/
Documents/harnessing-potential-asia-pacific-alternative-finance-benchmarking-report-march-2016.pdf>.

Scottish Pacific  Prospectus 71

03. Company Overview continued


Cashline: This is a Debtor Finance facility targeting higher credit quality, Low Touch SMEs which launched in September 2015. The
product is suitable for SMEs with lending requirements of up to $0.5m and is structured similarly to a line of credit with invoices still
assigned but with lower administrative requirements for Clients. The product is relatively Lower Touch and lower margin, albeit at
a lower advance rate of 70% with recourse to the Client retained.
Tradeline: This is an unsecured import finance and buying facility, backed by insurance. The business was purchased in 2012 and
expanded to the UK in March 2015. Scottish Pacific has increased staffing to facilitate growth and is partnering with Factoring
companies in the UK. More recently, the business also expanded to China focusing on manufacturers.
White Labelling: White Labelling is another significant potential source of growth; Scottish Pacific has provided a facility to Suncorp
historically and is in ongoing dialogue with select banks to offer this process. A White Labelling arrangement provides additional
distribution for Scottish Pacific and allows a third party such as a bank, to be able to offer Debtor Finance with minimal or no risk and
investment. Discussions have been held with a number of Australian banks, both existing providers as well as those that do not offer
Debtor Finance.

72
04.
Financial Information
04. Financial Information


4.1 Introduction
Financial information for Scottish Pacific contained in this Section 4 is set out below for the historical financial years ended 30 June
2013 (FY2013), 30 June 2014 (FY2014) and 30 June 2015 (FY2015), the historical six month period ended 31 December 2015 (1H2016),
and for the forecast years ending 30 June 2016 (FY2016F) and 30 June 2017 (FY2017F).
This Section 4 contains a summary of:
• The historical financial information comprising:
– The historical consolidated statements of profit or loss of Scottish Pacific for the financial years FY2013, FY2014 and FY2015
and the half-year 1H2016 (the Statutory Historical Income Statements);
– The historical consolidated cash flows before corporate financing and tax of Scottish Pacific for the financial years FY2013,
FY2014 and FY2015 and the half year 1H2016 (the Statutory Historical Cash Flows); and
– The historical consolidated statement of financial position of Scottish Pacific as at 31 December 2015 (the Statutory Historical
Balance Sheet),
(together, the Statutory Historical Financial Information);
• The Pro Forma historical financial information comprising:
– The Pro Forma historical statements of profit or loss of Scottish Pacific for the financial years FY2013, FY2014 and FY2015
and the half year 1H2016 (the Pro Forma Historical Income Statements);
– The Pro Forma historical cash flows before corporate financing and tax of Scottish Pacific for the financial years FY2013,
FY2014 and FY2015 and the half year 1H2016 (the Pro Forma Historical Cash Flows); and
– The Pro Forma historical statement of financial position of Scottish Pacific as at 31 December 2015 (the Pro Forma Historical
Balance Sheet),
(together, the Pro Forma Historical Financial Information); and
• The forecast financial information comprising:
– The statutory forecast consolidated statements of profit or loss (the Statutory Forecast Income Statements) and the statutory
forecast consolidated net cash flows (the Statutory Forecast Cash Flows) of Scottish Pacific for the financial years FY2016F and
FY2017F (together, the Statutory Forecast Financial Information); and
– The Pro Forma forecast statement of profit or loss (the Pro Forma Forecast Income Statement) and the Pro Forma forecast net
cash flows (the Pro Forma Forecast Cash Flows) of Scottish Pacific for the financial years FY2016F and FY2017F (the Pro Forma
Forecast Financial Information)
(together, the Forecast Financial Information).
The Statutory Historical Financial Information, the Pro Forma Historical Financial Information and the Forecast Financial Information
are together the Financial Information.
The Financial Information has been reviewed in accordance with the Australian Standard on Assurance Engagements ASAE 3450
Assurance Engagements involving Fundraising and/or Prospective Financial Information, by Deloitte Corporate Finance Pty Limited whose
Investigating Accountant’s Report on the Financial Information is contained in Section 8.
Also summarised in this Section are:
• A summary of the basis of preparation and presentation of the Financial Information (see Section 4.2);
• A description of the Pro Forma adjustments to the Statutory Historical and Forecast Financial Information and reconciliations
between the Statutory Historical and Forecast Financial Information and the Pro Forma Historical and Forecast Financial
Information (see Section 4.3.3);
• A description of the key drivers affecting Scottish Pacific’s business including key financial and operating metrics set out in
Section 4.3.4 and Management’s discussion and analysis of the Pro Forma Historical Financial Information (see Section 4.7);
• A summary of Scottish Pacific’s capitalisation and indebtedness, debt facilities, liquidity and capital resources (see Section 4.5);
• The Directors’ best estimate assumptions specific to the Forecast Period (see Section 4.8.2). In addition to these specific
assumptions, the general assumptions adopted in preparing the Forecast Financial Information are detailed in Section 4.8.1;
• An analysis of the key sensitivities in respect of the Forecast Financial Information (see Section 4.10);
• A summary of Scottish Pacific’s proposed dividend policy (see Section 4.11); and
In addition, a description of Scottish Pacific’s significant accounting policies is included in Appendix A.

74
The information in this Section 4, should be read in conjunction with the risk factors set out in Section 5 and other information
contained in this Prospectus.
All amounts disclosed in the tables are presented in Australian dollars and, unless otherwise noted, are rounded to the nearest
$0.1m. Percentage movements have been calculated from underlying source information and hence may not reconcile with
rounded calculations.

4.2 Basis of Preparation and Presentation of the Financial Information

4.2.1 Overview
The Financial Information included in this Prospectus is intended to present potential investors with information to assist them in
understanding the underlying historical financial performance, cash flows and financial position of Scottish Pacific, together with
forecast financial performance and cash flows. The Directors are responsible for the preparation and presentation of the
Financial Information.
The Financial Information has been prepared and presented in accordance with the recognition and measurement principles of the
Australian Accounting Standards, which are consistent with the International Financial Reporting Standards (“IFRS”) and interpretations
issued by the International Accounting Standards Board, although it is presented in an abbreviated form insofar as it does not include
all the disclosures, statements or comparative information as required by the Australian Accounting Standards applicable to annual
financial reports prepared in accordance with the Corporations Act.
Scottish Pacific’s key accounting policies relevant to the Financial Information are set out in Appendix A. In preparing the Statutory
Historical Financial Information and the Statutory Forecast Financial Information, the accounting policies of Scottish Pacific have been
applied consistently throughout the periods presented.
As described in Section 4.4, Scottish Pacific has two reportable segments under Australian Accounting Standard AASB 8 Operating
Segments, which are Debtor Finance (inclusive of “Specialty Products”) and Trade Finance.

4.2.1.1 Treatment of Acquisitions in the Pro Forma Financial Information

Scottish Pacific completed the acquisition of Bibby on 31 December 2015. Commencing this date, Bibby became a fully consolidated
subsidiary of Scottish Pacific in accordance with AASB 10 Consolidated Financial Statements. Accordingly, the Statutory Balance Sheet
and the Pro Forma Balance Sheet derived from the reviewed half year financial statements for Scottish Pacific for the period ending
31 December 2015 reflect the consolidation of Bibby, and the Statutory Forecast Financial Information for FY2016F reflects six months
of trading for Bibby post-acquisition to 30 June 2016.
The Pro Forma Historical Income Statements and the Pro Forma Forecast Income Statements have been adjusted to include the actual
results of Bibby:
• for the 12 months ended 30 June 2013, 30 June 2014 and 30 June 2015 for the FY2013, FY2014 and FY2015 Pro Forma Income
Statements; and
• for the six month period from 1 July 2015 to 31 December 2015 (the date prior to the completion of the acquisition) in the 1H2016
and FY2016F Pro Forma Income Statements.
Scottish Pacific has also completed two additional acquisitions recently, being the GE and Suncorp Portfolio Acquisitions, completed
on 3 May 2016 and 27 May 2016, respectively. The Forecast Financial Information set out in Section 4.3 includes the forecast
performance of these businesses from the date of acquisition to 30 June 2016 and for the year ending 30 June 2017. As both these
acquisitions were portfolio acquisitions from previous large businesses, no historical Pro Forma adjustment has been proposed in
respect of these books due to the inability to create complete and reliable historical financials (particularly in respect of their historical
cost base).

4.2.1.2 Consolidation of Limited-Recourse Funding Vehicles

The Statutory Historical Financial Information and the Statutory Forecast Financial Information in this Prospectus have been prepared
on a consolidated basis in accordance with AASB 101 Presentation of Financial Statements and AASB 10 Consolidated Financial Statements.
The advances originated by Scottish Pacific are held on the balance sheet of Scottish Pacific Business Finance Pty Limited (Australian
entity) and Scottish Pacific Business Finance Limited (New Zealand entity) prior to being immediately transferred to a trust (Funding
Vehicle) set up for the purpose of funding these originations. Under the criteria specified within abovementioned standards,

Scottish Pacific  Prospectus 75

04. Financial Information continued


Scottish Pacific is deemed to control the Funding Vehicles for accounting purposes due to the combination of its subordinated
investment in the Funding Vehicles (exposure to variable interest) and its role as servicer of the Funding Vehicles (power over relevant
activities). As a result, Scottish Pacific consolidates the assets and liabilities, and income and expenses, pertaining to these
limited‑recourse Funding Vehicles in its Statutory Financial Statements.
Bibby’s historical business model closely reflected that of Scottish Pacific on a standalone basis, and whilst its funding of the Client
facilities was not structured via a separate legal trust entity in the same manner as Scottish Pacific, its funding agreement in substance
replicated the Scottish Pacific model. Following the acquisition, the business has undergone a restructure of all its corporate and
funding facilities with all funded receivables books (including Bibby) now financed via Funding Vehicles.

4.2.1.3 Pro Forma Financial Information

Scottish Pacific is unable to unilaterally sell the portfolios to realise value in the assets, nor to use its own cash to repay the liabilities to
the funding banks and Scottish Pacific’s interests in the limited-recourse Funding Vehicles are subordinated at all times to those of the
funding banks. Scottish Pacific’s financing of the Junior Notes in the Funding Vehicles, is a small minority of the total financing raised
and provided to Clients, and all the borrowings in the Funding Vehicles are limited-recourse to Scottish Pacific.
In addition, the way the business is reported for statutory purposes is inconsistent with the way the business is managed, the risk
profile attached to the income streams and the manner in which investors evaluate similar businesses. From a reporting perspective,
the presentation of Financial Information on a statutory consolidated basis does not reflect the legal separation of the Funding
Vehicles from Scottish Pacific. For instance, the financing expenses on the debt relating to the Funding Vehicles can only be funded
by interest and fee income generated within the funding vehicles and not by the wider Group, and therefore these revenue streams
are only available to drive operating growth after payment of interest expense.
The Directors believe that the most pertinent information for potential investors is the revenues and expenses that generate earnings
available for use in the business for reinvestment to generate capital growth or for distribution to investors. Accordingly, the Pro Forma
Historical Financial Information and the Pro Forma Forecast Financial Information are presented net of the assets and liabilities, and
income and expenses pertaining to the limited-recourse Funding Vehicles. This is also the expected approach to reporting operating
segments following Completion of the Offer, based on Management’s current reporting model.

4.2.2 Preparation of the Statutory Historical Financial Information and Pro Forma Historical
Financial Information

The Statutory Historical Financial Information has been extracted from the consolidated special purpose financial statements of
Scottish Pacific for FY2014 and FY2015 (audited by Deloitte Touche Tohmatsu). Unmodified audit opinions were issued by Deloitte
Touche Tohmatsu in respect of the FY2014 and FY2015 financial statements.
The Statutory Historical Financial Information for FY2013 presented in this document has been derived from the consolidated special
purpose financial statements of Scottish Pacific Benchmark Holdings Pty Ltd, and restated using the accounting policies adopted
in the FY2014 and FY2015 financial statements and in accordance with Australian Accounting Standards. The net profit after tax is
extracted from the FY2013 statutory consolidated financial statements (audited by KPMG) and lodged with ASIC. The opinion was
unmodified and included an emphasis of matter outlining that the accounts were prepared on a special purpose basis adopting the
accounting policies determined by the Directors at the time.
The half-year financial information for the six months ended 31 December 2015 has been extracted from the statutory half-year
consolidated financial statements (reviewed by Deloitte Touche Tohmatsu). Deloitte Touche Tohmatsu’s review conclusion on the
half-year report for the period ended 31 December 2015 was modified as the half-year report did not include comparative balances
for the 31 December 2014 half-year, and therefore did not comply with the disclosure requirements of AASB 134 Interim Financial
Reporting. Except for this matter, the review opinion was unmodified in all other respects.
Investors should note that the Statutory Historical Financial Information was prepared on a going concern basis as set out in the
Directors’ report for each period. The Pro Forma Historical Financial Information has been prepared for the purpose of this Prospectus
and has been derived from the Statutory Historical Financial Information to illustrate the net income, cash flows, assets and liabilities to
Scottish Pacific excluding (deconsolidating) the limited-recourse Funding Vehicles and adjusted for certain significant transactions and
Pro Forma adjustments.

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The Pro Forma adjustments are as described in Section 4.3.3 (reconciliation between the Statutory Historical Income Statements and
the Pro Forma Historical Income Statements) and Section 4.6.3 (reconciliation between the Statutory Historical Cash Flows and the
Pro Forma Historical Cash Flows). In particular, Pro Forma adjustments have been made to reflect the inclusion of Bibby with effect
from 1 July 2012 and the implementation of the new corporate and mezzanine funding structure reflected over the historical period.
Scottish Pacific’s activities are presented in this Prospectus as two distinct operating segments, namely Debtor Finance and Trade
Finance. These segments represent the manner in which Scottish Pacific intends to report in future periods in accordance with AASB 8
Operating Segments. Scottish Pacific has not been required to report segment information in its historical audited financial statements.
The Statutory Historical Balance Sheet as at 31 December 2015 reflects the consolidation of Scottish Pacific and all controlled entities.
In accordance with AASB 101 Presentation of Financial Statements, Scottish Pacific presents its balance sheet in the order of liquidity
of its assets and liabilities. This presentation is consistent with industry practice as this information is considered more reliable and
relevant for investors rather than separating current and non-current assets and liabilities.
Section 4.5 sets out a detailed disclosure in respect of the key asset Funding Vehicles. It includes a description of each facility and
the maturities of financial liabilities (Corporate Debt Facilities, Senior Facilities and the Mezzanine Facility) based on their remaining
contractual maturity.
The Pro Forma Historical Balance Sheet is based on the Statutory Historical Balance Sheet adjusted to de-consolidate the limited-
recourse Funding Vehicles (as discussed in Section 4.5) consistent with the Pro Forma Historical Income Statements. In addition,
the Pro Forma Historical Balance Sheet includes certain other Pro Forma adjustments to reflect:
• The impact of GE and Suncorp Portfolio Acquisitions;
• The impact of the Offer including Offer costs offset against equity; and
• The operating and capital structures that will be in place following Completion of the Offer as if they had occurred or were
in place as at 31 December 2015.
The Pro Forma Historical Balance Sheet is provided for illustrative purposes only and is not represented as being necessarily indicative
of Scottish Pacific’s view of its future financial position. Investors should note that past results are not a guarantee of
future performance.

4.2.3 Preparation of the Forecast Financial Information

The Forecast Financial Information has been prepared by Scottish Pacific based on an assessment of present economic and operating
conditions and on a number of assumptions, including the Directors’ best estimate specific assumptions and the general assumptions
set out in Section 4.8.
The Directors have prepared the Forecast Financial Information with due care and attention, and consider all best estimate
assumptions when taken as a whole to be reasonable at the time of preparing this Prospectus. However, this information is not fact
and investors are cautioned to not place undue reliance on the Forecast Financial Information.
This information is intended to assist investors in assessing the reasonableness and likelihood of the assumptions occurring, and is not
intended to be a representation that the assumptions will occur. Investors should be aware that the timing of actual events and the
magnitude of their impact might differ from that assumed in preparing the Forecast Financial Information, and that this may have
a material positive or negative effect on Scottish Pacific’s actual financial performance or financial position. Investors are advised to
review the assumptions set out in Section 4.8 in conjunction with the sensitivity analysis set out in Section 4.10, the risk factors set out
in Section 5 and other information set out in this Prospectus.
The forecast income statement and forecast cash flows of Scottish Pacific for FY2016F and FY2017F have been presented on both
a Pro Forma and a statutory consolidated basis. The Statutory Forecast Income Statements and the Statutory Forecast Cash Flows of
Scottish Pacific for FY2016F and FY2017F are representative of the financial performance and cash flows that the Directors expect to
report in Scottish Pacific’s financial statements in respect of the financial years ending 30 June 2016 and 30 June 2017. The statutory
forecast for FY2016F is based on the actual results for the nine month period to 31 March 2016 and the forecast results for the
remaining three months to 30 June 2016.

Scottish Pacific  Prospectus 77

04. Financial Information continued


The Pro Forma Forecast Income Statements and the Pro Forma Forecast Cash Flows of Scottish Pacific for FY2016F and FY2017F
are based on the Statutory Forecast Income Statement and Statutory Forecast Cash Flows, adjusted for the deconsolidation of the
limited-recourse Funding Vehicles, financial results for Bibby for the period in FY2016F prior to its acquisition by Scottish Pacific and
the full year effect of the operating and capital structure that will be in place upon Completion of the Offer, but exclude the costs
of the Offer, costs of refinancing and other items which are not expected to occur in the future. FY2016F includes two months of GE
Debtor Finance portfolio results and one month of Suncorp Debtor Finance portfolio results and FY2017F includes the full year of GE
and Suncorp Debtor Finance portfolio results. FY2016F excludes the full year run rate impact of synergies resulting from the Bibby
acquisition which are included in FY2017F.
Section 4.3.3 provides a reconciliation between the Statutory Forecast Income Statement for FY2016F and FY2017F and the Pro Forma
Forecast Income Statements of Scottish Pacific for FY2016F and FY2017F, and Section 4.6.3 provides a reconciliation between the
Statutory Forecast Cash Flows for FY2016F and FY2017F and the Pro Forma Forecast Cash Flows for FY2016F and FY2017F.
The basis of preparation and presentation of the Forecast Financial Information, to the extent relevant, is consistent with the basis of
preparation and presentation of the Pro Forma Historical Financial Information.
The Directors have no intention to update or revise the Forecast Financial Information or other forward-looking statements, or to
publish prospective financial information in the future, regardless of whether new information, future events or any other factors
affect the information contained in this Prospectus, except where required by law.

4.2.4 Explanation of Non-IFRS and Other Financial Measures

Scottish Pacific uses certain measures to manage and report on its business that are neither recognised by the Australian Accounting
Standards Board (“AASB”) or IFRS. These measures are collectively referred to as “non-IFRS financial measures”. These non-IFRS
financial measures do not have a prescribed definition under AAS or IFRS and therefore may not be directly comparable to similarly
titled measures presented by other entities, nor should they be construed as an indication of, or an alternative to, corresponding
financial measures determined in accordance with AAS or IFRS. Although Scottish Pacific believes these non-IFRS financial measures
provide useful information to users in measuring the financial performance and condition of the business, investors are cautioned
not to place undue reliance on any non-IFRS financial measures included in this Prospectus.
In the disclosures in this Prospectus, Scottish Pacific uses the following non-IFRS financial measures:
• Acquisition amortisation: Non-cash amortisation relating to finite life intangible assets (including customer relationships)
recognised as part of acquisitions undertaken by Scottish Pacific, but excluding any information technology assets or software
assets recognised;
• Capital expenditure: Includes investment in property and equipment, as well as software and licence assets;
• Equity investments in limited-recourse Funding Vehicles: Reflects the level of investment in the capital structure of Funding
Vehicles that hold the debtor receivables portfolios; these investments are typically in the Junior Notes of the Funding Vehicles;
• Exposure: Represents funding drawn by Clients;
• NPAT: Net profit after tax;
• NPATA: Net profit after tax excluding amortisation and impairment pertaining to acquired intangibles;
• Opex (excluding D&A): Relates to operating expenses including staff, office and administration, marketing and advertising
and bad debts expenses, but excluding any depreciation or amortisation expenses;
• PBIT: Profit before interest and tax;
• PBITDA: Profit before interest, tax, depreciation and amortisation;
• PBT: Profit before tax;
• Turnover: Represents the face value of assigned invoices; and
• Working capital: Prepayments, other debtors, accruals and provisions.

78
4.3 Historical and Forecast Income Statements

4.3.1 Pro Forma Historical, and Pro Forma and Statutory Forecast Income Statements

Table 10: Pro Forma Historical, and Pro Forma and Statutory Forecast Income Statements

Pro Forma Statutory

Pro Forma historical forecast forecast
$m No FY2013 FY2014 FY2015 1H2016 FY2016F FY2017F FY2016F (1) FY2017F
Management Fees – 2 48.2 54.5 57.4 30.7 59.8 70.0 44.3 70.0
Debtor Finance
Management Fees – 3 0.6 2.2 3.2 2.2 4.3 5.4 4.3 5.4
Trade Finance and Other
Net Interest Income 4 18.2 20.9 24.4 14.6 29.5 33.8 25.6 33.8
Interest income n/a n/a n/a n/a n/a n/a 48.7 76.7
Interest expense n/a n/a n/a n/a n/a n/a (23.1) (43.0)
Net Revenue 66.9 77.6 85.0 47.5 93.7 109.1 74.2 109.1
Staff expenses 5 (28.5) (30.9) (35.0) (18.5) (36.3) (36.2) (27.5) (36.2)
Office and administration 6 (13.9) (14.8) (15.5) (8.2) (16.1) (15.9) (33.6) (25.6)
expenses
Marketing and advertising (2.0) (1.9) (2.3) (1.0) (1.9) (2.0) (1.4) (2.0)
expenses
Bad debts expense 7 (1.4) (2.8) (3.3) (1.1) (2.9) (3.2) (2.3) (3.2)
Depreciation and 8 (0.7) (0.9) (0.9) (0.6) (3.2) (6.9) (3.0) (6.9)
amortisation
Total expenses (46.5) (51.4) (56.9) (29.3) (60.5) (64.2) (67.8) (73.9)
PBIT 20.5 26.2 28.1 18.2 33.1 44.9 6.5 35.2
Borrowing costs 9 (1.9) (2.5) (2.6) (1.6) (3.4) (5.3) (6.3) (5.3)
PBT 18.6 23.7 25.4 16.6 29.7 39.6 0.2 29.9
Income tax expense 10 (5.6) (7.1) (7.7) (4.9) (9.6) (13.6) (0.9) (10.9)
NPAT 13.0 16.5 17.7 11.8 20.1 26.0 (0.7) 19.1
Acquisition amortisation 11 – – – – 2.1 5.8 – –
NPATA 13.0 16.5 17.7 11.8 22.3 31.8 n/a n/a
Notes:
1. FY2016F statutory forecast includes the results of acquisitions from the date of Completion of the acquisitions. The Statutory forecast reflects six months of Bibby’s
results, two months of GE’s Debtor Finance portfolio results and one month of Suncorp’s Debtor Finance portfolio results.
2. Management Fees – Debtor Finance primarily consists of Scottish Pacific’s share of management fee income distributed from the limited-recourse Funding
Vehicles (being Funding Vehicle income) where Scottish Pacific holds the Junior Notes. This management fee income reflects fees charged on invoices Factored or
Discounted and other services provided by Scottish Pacific. It includes administration fees, liquidated damages and termination fees, application and commitment
fees and other sundry income. It also includes revenue associated with provision of Specialty Products (e.g. SIF, Bad Debt Protected Facilities, Asset Finance).
3. Management Fees – Trade Finance and Other consist of administration fees flowing from Tradeline, Export Finance and Import Finance.
4. Net Interest Income primarily consists of Scottish Pacific’s share of net interest income distributed from the limited-recourse Funding Vehicles (being Funding
Vehicle net interest income less trust related expenses) where Scottish Pacific holds the Junior Notes.
5. Staff expenses consist of wages, on-costs and bonuses paid to employees of Scottish Pacific.
6. Office and administration expenses consist of administration, accommodation and travel, occupancy, professional services and public company costs.
7. Bad debts expense consists of both a general provision and specific bad debts expense. The expense does not include revaluation of loans as part of the Purchase
Price Allocation exercise undertaken on the acquisition of Bibby, GE and Suncorp.
8. Depreciation and amortisation consists of depreciation of the Company’s fixed assets and amortisation of intangible assets, including the amortisation of finite life
customer relationship intangibles recognised upon acquisition of Bibby in December 2015 and the GE and Suncorp Portfolios in May 2016.

Scottish Pacific  Prospectus 79

04. Financial Information continued


9. Borrowing costs consists of the interest expense associated with the Corporate Debt Facilities provided by third party financiers. This does not reflect the cost of
borrowing in limited-recourse Funding Vehicles used to fund the Debtor Financing operations of Scottish Pacific.
10. The forecast income tax rate applicable to Scottish Pacific is approximately 30%, which is equivalent to the Australian corporate tax rate. This tax rate, as adjusted for
material permanent differences, has been applied to each of the historical and forecast periods to calculate income tax expense.
11. Acquisition amortisation consists of the amortisation of finite life customer relationship intangibles recognised upon the acquisition of Bibby in December 2015
and the GE and Suncorp Portfolio Acquisitions in May 2016.

4.3.2 Statutory Historical Income Statements

Table 11: Statutory Historical Income Statements

As discussed in Section 4.2.2, the Statutory Historical Financial Information has been extracted from the consolidated special purpose
financial statements of Scottish Pacific for FY2014 and FY2015 and the statutory half-year consolidated financial statements of Scottish
Pacific for the six months ended 31 December 2015. The Statutory Historical Financial Information for FY2013 presented in this document
has been derived from the consolidated special purpose financial statements of Scottish Pacific, and restated using the accounting
policies adopted in the FY2014 and FY2015 financial statements and in accordance with Australian Accounting Standards.
The Statutory Historical Income Statements presented below are in accordance with the format that Scottish Pacific expects to
report in its general purpose financial statements following the Completion of the Offer (and align with the reporting in the last set
of reviewed half-year accounts). However, the table below provides additional detail in line with Pro Forma Financial Information
presented in this Prospectus.

$m No FY2013 FY2014 FY2015 1H2016

Management Fees – Debtor Finance 25.4 27.9 30.7 15.2
Management Fees – Trade Finance and Other 0.6 2.2 3.2 2.2
Net Interest Income 1 13.4 11.3 14.7 9.8
Interest income 24.9 28.3 34.1 18.4
Interest expense (11.5) (17.0) (19.4) (8.6)
Net Revenue 39.4 41.4 48.6 27.2
Staff expenses (15.0) (16.2) (20.4) (10.2)
Office and administration expenses (9.4) (13.0) (11.1) (8.4)
Marketing and advertising expenses (0.8) (0.8) (1.1) (0.5)
Bad debts expense (0.4) (1.5) (1.2) (0.4)
Depreciation and amortisation (0.3) (0.8) (0.8) (0.4)
Total expenses (25.8) (32.3) (34.5) (19.8)
PBIT 13.5 9.0 14.1 7.4
Borrowing costs 2 – – – (2.2)
PBT 3 13.5 9.0 14.1 5.2
Income tax expense (1.3) (2.8) (4.3) (1.6)
NPAT 3 12.2 6.2 9.8 3.6
Notes:
1. Net Interest Income comprises Scottish Pacific’s share of net interest income distributed from the limited-recourse Funding Vehicles. This has been presented
on a gross basis in the Statutory Historical Income Statements to comply with the Australian Accounting Standards (refer to Section 4.2.1.2 for detailed
disclosure requirements).
2. Borrowing costs consist of the interest expense associated with the Corporate Debt Facilities provided by third party financiers. It does not reflect the cost of
borrowing in limited-recourse Funding Vehicles used to fund the Debtor Financing operations of Scottish Pacific. Consistent with the historical statutory reporting
presentation, borrowing costs in FY2014 and FY2015 have been included within the interest expense line (within Net interest income). In FY2013, there were no
borrowing costs.
3. In respect of the FY2013 Statutory Historical Financial Information, these specific line items have been extracted from the consolidated special purpose financial
statements of Scottish Pacific Benchmark Holdings Pty Ltd for FY2013 (audited by KPMG). An unmodified opinion was issued with an emphasis of matter in relation
to the basis of preparation being a special purpose set of financial statements adopting accounting policies determined by the Directors at the time. The remaining
line items of this financial information have been restated for this document using accounting policies adopted in the FY2014 and FY2015 financial statements.

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4.3.3 Pro Forma Adjustments to the Statutory Historical and Forecast Income Statements

Table 12: Statutory to Pro Forma Historical and Forecast Income Statements Reconciliation

$m No FY2013 FY2014 FY2015 1H2016 FY2016F FY2017F

Statutory revenue 39.4 41.4 48.6 27.2 74.2 109.1
Pro Forma adjustments
Bibby revenue contribution 1 31.5 36.9 38.0 21.4 21.4 –
Reporting reclassifications 2 (2.6) 0.9 0.4 – 0.4 –
New mezzanine funding 3 (1.3) (1.6) (2.0) (1.2) (2.4) –
Total adjustments 27.6 36.2 36.4 20.2 19.4 –
Pro Forma revenue 66.9 77.6 85.0 47.5 93.7 109.1
Statutory NPAT 12.2 6.2 9.8 3.6 (0.7) 19.1
Pro Forma adjustments
Bibby acquisition 1 9.7 13.3 11.9 9.6 9.6 –
New mezzanine funding 3 (1.3) (1.6) (2.0) (1.2) (2.4) –
Transaction and restructuring costs 4 – 2.3 – 3.6 19.9 –
Incremental public company costs 5 (1.4) (1.5) (1.5) (0.8) (1.5) –
Bonus adjustment 6 – – 1.0 (0.5) (1.0) –
Change in corporate debt structure 7 (1.9) 2.0 1.9 0.6 2.9 –
Offer costs 8 – – – – 2.1 9.7
Total adjustments 5.0 14.6 11.4 11.3 29.5 9.7
Tax effect of adjustments 9 (4.2) (4.4) (3.4) (3.2) (8.7) (2.8)
Pro Forma NPAT 13.0 16.5 17.7 11.8 20.1 26.0
Notes:
1. Bibby acquisition Scottish Pacific acquired Bibby from Bibby UK on 31 December 2015. The results of Bibby have been included on a Pro Forma basis from
1 July 2012. The Pro Forma adjustment for FY2016F reflects the trading of Bibby from 1 July 2015 to 30 December 2015 (prior to the acquisition by Scottish Pacific).
Investors should note that Bibby historically prepared its accounts using a 31 December financial year end. In order to present Bibby’s financial information based
on consistent accounting periods (30 June year end), consideration has been given to the timing of year end adjustments with some limited adjustments to reflect
consistent accounting policies under Scottish Pacific ownership. Bibby’s historical financial statements also included a management fee recharge from Bibby UK as
an allocation of the global head office which has been excluded under Scottish Pacific ownership.
2. Reporting reclassifications reflect the net adjustment for differences in the classification of items of revenue and expenses as presented for Pro Forma purposes
under general purpose financial reporting against what was previously presented under the historical special purpose financial statement requirements. Corporate
interest costs previously recognised within Net Interest Income are now recognised below PBIT as borrowing costs. Professional fees, legal and finance charges
(relating to bank charges and commissions) previously recognised in operating costs have now been recognised in Management Fees and Net Interest Income.
3. New mezzanine funding is being raised from certain wholesale investors in June 2016. The new mezzanine funding sits within the Mezzanine Vehicle which in
turn funds the Junior Notes issued by limited-recourse Funding Vehicles. The proceeds of the funding will be used to pay down the Junior Notes owned by Scottish
Pacific, which will in turn be used to pay down the corporate debt. The mezzanine funding has been included as a Pro Forma adjustment, as if the funding was
in place since July 2012. The sizing of the mezzanine funding over the historical period has been determined based on the Average Exposure of the Group.
4. Transaction and restructuring costs reflect acquisition costs pertaining to the historical business acquisitions including the acquisition by Next Capital of Scottish
Pacific in FY2014 and more recently the acquisitions of Bibby, and the GE and Suncorp Portfolio Acquisitions in May 2016. In respect of the acquisition of Bibby in
December 2015, the business incurred one-off costs in relation to restructuring and integration specifically relating to surplus leases, redundancy costs and
IT restructuring. As part of the integration of the recently acquired businesses, Scottish Pacific has undertaken a fundamental restructure of its funding platform.
One‑off costs in relation to this restructure are included in the adjustment.
5. Incremental public company costs have been reflected since 1 July 2012 to include Scottish Pacific’s estimate of the incremental annual costs that it will incur as
a listed public company. These costs include Directors’ remuneration, listing fees, share registry fees, directors’ and officers’ insurance premiums, annual general
meeting costs and other public company costs.
6. The bonus adjustment relates to an accrual incorrectly raised in FY2015 which was subsequently released in FY2016F. The adjustment reverses the release of the
bonus accrual to ensure it was reflected in the correct period.
7. Change in corporate debt structure the corporate debt funding of Scottish Pacific which is not related to the cost of borrowing in the limited-recourse Funding
Vehicles, have been finalised prior to the Completion of the Offer. Corporate Debt Facilities were established on 31 December 2015 for the primary purpose of
funding the following transactions and objectives:

Scottish Pacific  Prospectus 81

04. Financial Information continued


• The Bibby acquisition in December 2015;

• The GE Portfolio Acquisition in May 2016;
• The Suncorp Portfolio Acquisition in May 2016;
• The pay down of legacy debt arranged by Next Capital in FY2014; and
• The provision of working capital to Scottish Pacific to support the day-to-day operations of the business.
In order to size the impact of the Corporate Debt Facilities and the resulting interest expense over the historical period for Pro Forma purposes, the level of
corporate debt has been assumed to be proportionate to the level of PBITDA generated by the Group (which excluded the GE and Suncorp Portfolios prior to their
acquisition in May 2016). PBITDA has been determined to be the appropriate basis as the level of corporate debt within the business is underpinned by the earnings
and also drives covenant reporting.
8. Offer costs reflects the add back of amounts forecast to be expensed in FY2016F and FY2017F and represent the portion of Offer transaction costs (fees payable to
advisors, Joint Lead Managers, tax, accounting and legal fees) attributable to the sell-down of Existing Shares by the Existing Shareholders. Note that $6.8m of the
Offer costs (relating to the primary issue) are netted off against issued capital.
9. Tax effect of adjustments reflects the tax impact of the above Pro Forma adjustments, using the Australian corporate tax rate of 30%. In FY2013, a Pro Forma
adjustment has also been made to the income tax expense line to exclude the impact of the accounting recognition of tax losses which were previously transferred
to the head company of the tax consolidated group.

4.3.4 Key Financial and Operating Metrics

Underlying Business consists of Scottish Pacific and Bibby (including synergies forecast from the acquisition of Bibby), and excludes
the impact of the GE and Suncorp Portfolio Acquisitions which are included in the total business from their respective
acquisition dates.

Table 13: Key Performance Indicators

Key performance indicators – Underlying Business

Pro Forma Statutory

Pro Forma historical forecast forecast
$m No FY2013 FY2014 FY2015 1H2016 FY2016F FY2017F FY2016F FY2017F
Debtor Finance metrics 1
Turnover 5,835.5 7,346.2 8,897.1 5,342.4 10,636.2 11,944.4 10,636.2 11,944.4
Turnover growth n/a 25.9% 21.1% n/a 19.5% 12.3% 19.5% 12.3%
Average Exposure 368.0 448.5 552.2 627.1 634.0 709.4 634.0 709.4
Average Exposure n/a 21.9% 23.1% n/a 14.8% 11.9% 14.8% 11.9%
growth
Management Fees % 2 0.83% 0.74% 0.64% 0.58% 0.55% 0.54% 0.41% 0.54%
Net Interest Income/ 3 4.97% 4.68% 4.46% 4.70% 4.60% 4.33% 3.98% 4.33%
Average Exposure
Expense and profit metrics
Bad debts expense/ 4 0.39% 0.62% 0.59% 0.34% 0.44% 0.40% 0.35% 0.40%
Average Exposure
PBIT margin 30.6% 33.7% 33.0% 38.4% 34.8% 38.6% 7.4% 28.9%
PBIT growth n/a 27.8% 7.2% n/a 14.4% 20.7% (61.5%) 437.0%

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Key performance indicators – Total business

Pro Forma Statutory

Pro Forma historical forecast forecast
$m No FY2013 FY2014 FY2015 1H2016 FY2016F FY2017F FY2016F FY2017F
Debtor Finance metrics 1
Turnover 5,835.5 7,346.2 8,897.1 5,342.4 11,317.5 16,361.2 11,317.5 16,361.2
Turnover growth n/a 25.9% 21.1% n/a 27.2% 44.6% 27.2% 44.6%
Average Exposure 368.0 448.5 552.2 627.1 666.2 922.0 666.2 922.0
Average Exposure n/a 21.9% 23.1% n/a 20.6% 38.4% 20.6% 38.4%
growth
Gross receivable 743.0 890.4 1,133.7 n/a 1,619.3 1,742.7 1,619.3 1,742.7
Year end exposure/ 57.3% 58.1% 56.6% n/a 59.5% 59.5% 59.5% 59.5%
Gross receivable
Management Fees % 2 0.83% 0.74% 0.64% 0.58% 0.53% 0.43% 0.39% 0.43%
Net Interest Income/ 3 4.97% 4.68% 4.46% 4.70% 4.47% 3.68% 3.88% 3.68%
Average Exposure
Expense and profit metrics
Opex (Excl. D&A)/Net 68.4% 65.1% 66.0% 60.5% 61.2% 52.6% 87.2% 61.4%
Revenue
Staff expenses/Net 42.6% 39.9% 41.2% 39.0% 38.8% 33.2% 37.0% 33.2%
Revenue
Bad debts expense/ 4 0.39% 0.62% 0.59% 0.34% 0.43% 0.35% 0.34% 0.35%
Average Exposure
Net Revenue growth n/a 15.9% 9.5% n/a 10.3% 16.5% 52.8% 47.0%
PBIT margin 30.6% 33.7% 33.0% 38.4% 35.4% 41.1% 8.7% 32.3%
PBIT growth n/a 27.8% 7.2% n/a 18.1% 35.4% (54.0%) 444.5%
NPATA margin 19.4% 21.3% 20.9% 24.7% 23.8% 29.1% n/a n/a
NPATA growth n/a 27.7% 7.2% n/a 25.5% 42.7% n/a n/a
Notes:
1. Debtor Finance metrics relate to the Debtor Finance business and do not include the Trade Finance segment (refer to Section 4.4.4 for segment metrics relating to
Trade Finance). Turnover represents the face value of assigned invoices. Average Exposure represents drawn funding by Clients. Management Fees are based on
Turnover while Net Interest Income is based on Average Exposure.
2. Management Fees % is a calculation of Management Fees – Debtor Finance over Turnover.
3. Net Interest Income ⁄ Average Exposure 1H2016 KPIs have been annualised to account for Average Exposure.
4. Bad debts expense ⁄ Average Exposure 1H2016 KPIs have been annualised to account for Average Exposure.

4.4 Segment Information

Scottish Pacific intends to report the results of the business going forward by two operating segments, namely Debtor Finance and
Trade Finance, in accordance with AASB 8 Operating Segments. The operating segments are described below.

4.4.1 Debtor Finance

Debtor Finance division includes the revenues and direct expenses associated with the Factoring and Discounting business
conducted by Scottish Pacific and Bibby and includes the GE and Suncorp Portfolio Clients. It also includes the revenues and direct
expenses associated with Specialty Products (e.g. SIF, Bad Debt Protected Facilities, Asset Finance). GE and Suncorp Portfolios were
acquired in May 2016 and FY2017F includes the full year impact of these newly acquired Portfolios.

4.4.2 Trade Finance

Trade Finance division includes the revenues and direct expenses associated with the Tradeline, Export Finance and Import Finance
businesses conducted by Scottish Pacific.

Scottish Pacific  Prospectus 83

04. Financial Information continued


4.4.3 Pro Forma Historical and Forecast Income Statements by Segment

Table 14: Pro Forma Historical and Forecast Income Statements by Segment

$m No FY2013 FY2014 FY2015 FY2016F FY2017F

Debtor Finance
Management Fees 1 48.2 54.5 57.4 59.8 70.0
Net Interest Income 2 18.3 21.0 24.6 29.8 34.0
Net Revenue 66.4 75.5 82.0 89.6 103.9
Staff expenses (28.0) (30.2) (33.6) (34.4) (34.1)
Office and administration expenses (13.6) (14.4) (15.1) (15.2) (14.9)
Marketing and advertising expenses (2.0) (1.9) (2.3) (1.9) (2.0)
Bad debts expense (1.4) (2.6) (2.9) (2.8) (3.2)
Depreciation and amortisation (0.7) (0.9) (0.9) (3.2) (6.9)
Total expenses (45.6) (50.0) (54.8) (57.5) (61.1)
PBIT 20.8 25.6 27.2 32.1 42.8
Borrowing costs (1.9) (2.5) (2.6) (3.4) (5.3)
PBT 18.9 23.1 24.6 28.7 37.5
Income tax expense (5.6) (7.0) (7.4) (9.3) (13.0)
NPAT 13.2 16.1 17.1 19.4 24.5
Acquisition amortisation – – – 2.1 5.8
NPATA 13.2 16.1 17.1 21.5 30.3
Trade Finance
Management Fees 3 0.6 2.2 3.2 4.3 5.4
Net interest expense 4 (0.0) (0.1) (0.3) (0.2) (0.2)
Net Revenue 0.5 2.0 3.0 4.1 5.2
Staff expenses (0.5) (0.8) (1.3) (1.9) (2.1)
Office and administration expenses (0.3) (0.4) (0.4) (1.0) (1.0)
Marketing and advertising expenses – – – – –
Bad debts expense (0.0) (0.2) (0.4) (0.1) (0.0)
Depreciation and amortisation – – – – –
Total expenses (0.8) (1.4) (2.1) (3.0) (3.1)
PBIT (0.3) 0.6 0.9 1.1 2.1
Borrowing costs – – – – –
PBT (0.3) 0.6 0.9 1.1 2.1
Income tax expense 0.0 (0.2) (0.3) (0.3) (0.6)
NPAT (0.3) 0.4 0.6 0.7 1.4
Acquisition amortisation – – – – –
NPATA (0.3) 0.4 0.6 0.7 1.4
Total NPATA 13.0 16.5 17.7 22.3 31.8
Notes:
1. Debtor Finance Management Fees largely comprise administration fees which are calculated as a percentage of Turnover. This also includes application and
commitment fees, liquidated damages and termination fees.
2. Debtor Finance Net Interest Income includes interest income on Average Exposure net of interest expense costs, commissions and unused line fees.
3. Trade Finance Management Fees include administration fees, application and commitment fees and other income.
4. Trade Finance Net interest expense largely comprises interest expense and commissions.

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4.4.4 Historical and Forecast Key Segment Metrics
The table below provides a summary of Scottish Pacific’s key financial metrics for the historical years FY2013, FY2014 and FY2015 and
the forecast years FY2016F and FY2017F on a Pro Forma basis for the Debtor Finance and Trade Finance Divisions.
Table 15: Historical and Forecast Key Segment Metrics

$m FY2013 FY2014 FY2015 FY2016F FY2017F

Debtor Finance
Turnover 5,835.5 7,346.2 8,897.1 11,317.5 16,361.2
Turnover growth n/a 25.9% 21.1% 27.2% 44.6%
Average Exposure 368.0 448.5 552.2 666.2 922.0
Average Exposure growth n/a 21.9% 23.1% 20.6% 38.4%
Management Fees % 0.83% 0.74% 0.64% 0.53% 0.43%
Net Interest Income/Average Exposure 4.97% 4.68% 4.46% 4.47% 3.68%
Net Revenue growth n/a 13.7% 8.6% 9.3% 16.0%
PBIT margin 31.3% 33.8% 33.2% 35.8% 41.2%
PBIT growth n/a 22.9% 6.4% 17.9% 33.5%
Trade Finance
Turnover 0.0 13.1 11.1 31.2 35.1
Turnover growth n/a n/a (15.4%) 182.1% 12.5%
Average Exposure 0.9 4.7 6.6 6.2 7.3
Average Exposure growth n/a 438.0% 42.4% (7.1%) 17.6%
Management Fees % n/a 16.59% 29.12% 13.86% 15.42%
Net Interest Income/Average Exposure 5.19% 2.60% 3.80% 3.82% 2.83%
Net Revenue growth n/a 305.5% 45.0% 37.7% 27.3%
PBIT margin (63.1%) 30.0% 28.7% 26.0% 39.7%
PBIT growth n/a 292.9% 38.4% 24.9% 94.6%

4.5 Statutory and Pro Forma Historical Balance Sheet

The Statutory Historical Balance Sheet as at 31 December 2015 reflects the consolidation of Scottish Pacific and all its controlled
entities inclusive of limited-recourse Funding Vehicles.
The Pro Forma Historical Balance Sheet as at 31 December 2015 is based on the Statutory Historical Balance Sheet adjusted to
deconsolidate the limited-recourse Funding Vehicles in addition to certain other Pro Forma adjustments including the impact of the
Offer. These other adjustments reflect the impact of the operating and capital structures that will be in place following Completion
of the Offer as if they had occurred or were in place as at 31 December 2015.
The Pro Forma Historical Balance Sheet is provided for illustrative purposes only and is not represented as being necessarily indicative
of Scottish Pacific’s view on its future financial profile.

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04. Financial Information continued


Table 16: Statutory and Pro Forma Historical Balance Sheet

Statutory Impact of Pro Forma

(including excluding excluding GE/ Mezzanine
limited- limited- limited- Suncorp Finance/
recourse recourse recourse Portfolio Debt Impact
Funding Funding Funding Acqui­ Repay- of the
$m No Vehicles) Vehicles Vehicles (1) sitions(2) ment(3) Offer(4) Pro Forma
Assets
Cash and cash equivalents 5 80.2 (54.3) 25.9 (1.7) – – 24.3
Client receivables (net) 6 618.1 (616.6) 1.5 – – – 1.5
Other debtors and prepayments 8.1 – 8.1 – – – 8.1
Deferred tax assets (net) 2.6 – 2.6 (2.3) – 5.6 5.9
Investments 7 – 76.9 76.9 19.2 (45.0) – 51.1
Property, plant and equipment 1.3 – 1.3 – – – 1.3
Goodwill and Intangible assets 8 153.9 – 153.9 9.8 – – 163.7
Total Assets 864.2 (594.0) 270.2 25.0 (45.0) 5.6 255.8
Liabilities
Trade and other payables 25.2 – 25.2 – – – 25.2
Current tax payable 2.1 – 2.1 – – – 2.1
Loans and borrowings 9 691.3 (594.0) 97.3 12.5 (45.0) (10.0) 54.8
Total Liabilities 718.6 (594.0) 124.6 12.5 (45.0) (10.0) 82.2
Net Assets 145.6 – 145.6 12.5 – 15.6 173.7
Equity
Share capital 10 125.1 – 125.1 17.5 – 72.5 215.2
Reserves 11 1.2 – 1.2 – – (12.2) (11.0)
Retained earnings 12 19.3 – 19.3 (5.0) – (44.8) (30.5)
Total Equity 145.6 – 145.6 12.5 – 15.6 173.7
Notes:
1. Pro Forma balance sheet after removing the impact of the consolidation of the limited‑recourse Funding Vehicles from Scottish Pacific’s statutory consolidated
balance sheet. The adjustment includes removal of the cash and cash equivalents and Client receivables balances within the controlled limited‑recourse Funding
Vehicles and recognition of Scottish Pacific’s investment in these vehicles.
2. Pro Forma adjustment to reflect the GE and Suncorp Portfolio Acquisitions which completed on 3 May 2016 and 27 May 2016 respectively. The premium paid to
acquire these portfolios has been allocated to intangible assets as part of the Purchase Price Allocation exercise. The acquisitions were funded in part by loans and
borrowings, and in part by the issue of equity.
3. Pro Forma adjustment to reflect the impact of the Mezzanine Facility that will have settled by Completion of the Offer and be used to reduce the Corporate Debt
Facilities. The facility with a limit of $60m is intended to be drawn to $45m at the date of Completion of the Offer.
4. Pro Forma adjustment to account for the expected impacts of the Offer. The proceeds from the Offer ($77.3m) are applied towards payment of Offer costs ($18.6m),
pre‑IPO dividends to Existing Shareholders ($36.3m) and the acceleration and settlement of the Legacy LTI Scheme contemporaneously with the Offer ($12.4m).
Of the remaining proceeds, $10.0m is applied towards reduction of the Corporate Debt Facility.
5. Cash and cash equivalents under statutory presentation include cash held at the corporate level, as well as cash held in limited‑recourse Funding Vehicles as
collateral for Senior Facilities. This is adjusted on a Pro Forma basis to exclude cash that is held in limited‑recourse Funding Vehicles. Restricted cash of $4.2m relating
to guarantees provided for property leases is included in cash and cash equivalents.
6. Client receivables (net) primarily relates to customer receivables which are held in limited‑recourse Funding Vehicles. On a Pro Forma basis, all customer
receivables held within limited‑recourse Funding Vehicle levels are eliminated.
7. Investments on a Pro Forma basis represent Scottish Pacific’s investment in the controlled limited‑recourse Funding Vehicles. This is offset by the drawdown on the
Mezzanine Facility.
8. Goodwill and intangible assets primarily relate to goodwill and customer relationships acquired as part of the Scottish Pacific Standalone acquisition and the Bibby
acquisition, with adjustments for intangibles recognised as part of the subsequent GE and Suncorp Portfolio Acquisitions.

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9. Loans and borrowings primarily relate to drawn debt financing facilities. The portion of statutory borrowings classified as current at 31 December 2015 was $594.0m,
with the remainder considered non‑current. The Pro Forma presentation removes all borrowings held at the limited‑recourse Funding Vehicle level and therefore
reflects only the Corporate Debt Facilities. Section 4.5.2 sets out detailed disclosures in respect of the key debt facilities associated with the Funding Vehicles.
10. Share capital per the Statutory Balance Sheet at 31 December 2015 is adjusted to reflect the equity issued in relation to the GE and Suncorp Portfolio Acquisitions,
the proceeds of the Offer ($77.3m), offset by the portion of Offer costs incurred in relation to the issue of new shares ($4.8m on a tax‑effected basis).
11. Reserves The adjustment to the statutory balance reflects the settlement of the Legacy LTI Scheme.
12. Retained earnings has been adjusted for the payment of the pre‑IPO dividend to Existing Shareholders ($36.3m), payment of Offer Costs attributable to the sell‑down
by Existing Shareholders ($8.2m on a tax‑effected basis) and the payment of transaction costs in relation to the GE and Suncorp Portfolio Acquisitions ($5.0m).

4.5.1 Indebtedness
Scottish Pacific’s principal source of funding for the provision of Client Funding Amounts to its Clients are the Senior Facilities provided
to Scottish Pacific’s Funding Vehicles. The Mezzanine Facility is used to access third party funding to fund part of the “first loss” funding
requirements in respect of the Funding Vehicles, with the remaining portion funded by Scottish Pacific. Cash generated from
operations, cash balances and borrowings under the Corporate Debt Facilities are used as sources of funding for investing and for
general corporate expenses.
In December 2015 Corporate Debt Facilities of $100m were established. As at Completion of the Offer the Corporate Debt Facilities will
have a limit of $70m and are expected to be drawn to ~$59m.
As at 31 December 2015, Scottish Pacific had $594m of drawn Senior Facilities in order to fund Client Funding Amounts in Australia
and New Zealand. The Pro Forma 31 December 2015 unrestricted cash balance is $20.1m after adjusting for impact of the Acquisitions,
the new Mezzanine Facility and Completion of the Offer. Scottish Pacific expects cash to be $5.0m on Completion of the Offer.
Scottish Pacific expects to have sufficient cash flow, including access to the undrawn portion of its Corporate Debt Facilities after
the Completion of the Offer, to meet its operational needs during the Forecast Period. Table 17 depicts Scottish Pacific’s indebtedness
as at 31 December 2015 on a statutory basis (including the impact of limited-recourse Funding Vehicles) and on a Pro Forma basis
(excluding limited-recourse Funding Vehicles, adjusted for the impact of the GE and Suncorp Portfolio Acquisitions, the new
Mezzanine Facility and following the completion of the Offer).

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04. Financial Information continued


Table 17: Statutory and Pro Forma Indebtedness as at 31 December 2015, and target net debt at
Completion of the Offer
Since 31 December 2015, Scottish Pacific has also implemented a third Senior Facility and a Mezzanine Facility into its funding mix
– refer to Section 4.5.2.

Adjusted
Pro Forma
(reflecting
management
target
net debt
31 December position at
2015 Completion
(Statutory of the Offer)
$m No reviewed) Pro Forma (4)

Funding Vehicle debt

Limited re-course funding 1 594.0 – –
Restricted cash and cash equivalents in Funding Vehicles (54.3) – –
Net limited-recourse debt 539.7 – –
Corporate debt
Loans and borrowings 2 97.3 54.8 59.0
Less: unrestricted corporate cash and cash equivalents 3 (21.7) (20.1) (5.0)
Net Corporate Debt 75.6 34.8 54.0
Net debt 615.3 34.8 54.0
Balance sheet
Total Assets 864.2 255.8 255.8
Total Equity 145.6 173.7 173.7
Key metrics
Net debt/Total Assets 71.2% 13.6% 21.1%
Net corporate debt/Total Equity 51.9% 20.0% 31.1%

Pro Forma net debt at Dec-15/FY2016 Pro Forma PBITDA 1.0x

Pro Forma net debt at Dec-15/FY2017 Pro Forma PBITDA 0.7x
Target net corporate debt/FY2016F Pro Forma PBITDA (Annualised) 5 1.3x
Target net corporate debt/FY2017F Pro Forma PBITDA 6 1.0x
Notes:
1. Limited-recourse funding in the limited-recourse Funding Vehicles are deconsolidated on a Pro Forma basis.
2. Loans and borrowings comprise the Corporate Debt Facilities. The change from statutory loans and borrowings to Pro Forma loans and borrowings represent the
draw down of the Mezzanine Facility to repay Senior Facilities.
3. Unrestricted corporate cash and cash equivalent) are net of restricted cash of $4.2m relating to guarantees provided for property leases has been excluded.
4. Target net corporate debt ($59.0m) reflects the estimated drawn down amount of the Corporate Debt Facilities at Completion of the Offer and is grossed up for
any upfront debt establishment fees that have been offset against the loans and borrowings in the statutory accounts. Target cash of $5.0m reflects the expected
cash position at Completion of the Offer.
5. FY2016F Pro Forma PBITDA (Annualised) is calculated based on the FY2016F Pro Forma PBITDA ($36.3m) adjusted to annualise the contribution of the GE and
Suncorp Portfolio Acquisitions. The adjustment is required to ensure the debt position at Completion of the Offer and the earnings profile reflected in the ratio
are consistent. The adjustment does not reflect any future synergies from these portfolio acquisitions.
6. FY2017F Pro Forma PBITDA of $51.8m used the calculation of the Target net corporate debt/FY2017F Pro Forma PBITDA.

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4.5.2 Limited-Recourse financing
4.5.2.1 Senior Facilities
See Section 3.3.2 for a description of Scottish Pacific’s Senior Facilities funding arrangements and Section 9.5.2 for further details.

Table 18: Senior Funding Arrangements

Senior Facility 1 Senior Facility 2 Senior Facility 3

Limit: • $535m • $250m • $300m

Availability period • 1 year • 1 year • 3 years

Legal maturity • August 2017 • June 2018 • May 2020

Importance • Primary sources of funding Client Funding Amounts paid by Scottish Pacific to its Clients.

Commitment • Committed funding for two of the facilities currently provided by two of the four major Australian
banks. Drawing under the facilities is subject to certain conditions.
• Committed funding for one facility currently provided in AUD by a major international bank, with
the ability to fund its obligations by one or more US commercial paper conduits. Drawing under the
facility is subject to certain conditions.
• Scottish Pacific provides “first loss” funding to support the Senior Facilities primarily through the
Mezzanine Facility.

Funding Vehicle’s • Comprises the cost of establishing and managing the Funding Vehicle, plus the cost of the funding
costs provided to the Funding Vehicles which is made up of:
– A variable market reference rate as its base rate (e.g. the BBSY);
– A fixed margin (which may be renegotiated at the end of the Senior Facility’s term as part of the
process of renewing the funding limit and, in some cases, may increase to a predetermined limit if
the facility is not extended or certain other events occur (these are called amortisation events); and
– Certain fees payable to the financiers.

Hedging • In certain circumstances the conduit subscribers may be obliged to fix their cost of funds, with the
cost of any basis-fixing arrangements (and associated break costs in the event of an unwind) being
passed to the Funding Vehicle.

Capital support by • Scottish Pacific is required to hold, primarily through its participation in the Mezzanine Vehicle,
Scottish Pacific Exposure to at least 5.0% of the debt issued by the Funding Vehicles in the form of Junior Notes.
Further detail is provided in Sections 3.3 and 9.5.2. The Junior Notes will bear any losses incurred by
the Funding Vehicle first; providing credit support to the Senior Facility. If there is insufficient cash
in relation to the Funding Vehicle (including because of losses from underlying receivables), the
relevant Junior Notes may not be repaid in full or at all.

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Term of funding • Renewal of the committed funding limit and extension of the availability period of the relevant
Senior Facility is negotiated periodically.
• Funding limits and commitment of the senior financiers may or may not be renewed as part of this
process. If a funding limit or commitment is not renewed, new receivables may in some cases not be
able to be funded unless funding is available under alternative Senior Facilities.
• The requirement to repay the Senior Facilities in the event there is a failure to renew the availability
period varies by facility. For two of the Senior Facilities, a failure to extend requires gradual repayment
over a 12 month period. The other Senior Facility has an obligation to repay amounts outstanding on
the last day of that period, failing which, an event of default will occur.
• As part of the extension process the margin applicable to a Senior Facility may be increased (which
may in turn increase the overall cost of funds), or other changes may be made to the terms of the
facilities (such as changes to the amount of capital support required and the eligibility of new
receivables that may be funded), potentially constraining the ability to provide further Client Funding
Amounts.

Eligible Receivables • The characteristics of receivables that may be funded through the Senior Facilities are pre-agreed
with the financiers. Receivables funded within the Senior Facilities are also tested monthly (or, in
certain cases, more frequently) for compliance with certain parameters. For instance, Scottish Pacific’s
Senior Facilities have limits on Exposure to single large Clients which may constrain new receivables
funded through the Senior Facilities. Material parameters also include limits on the Exposures to the
underlying debtors as well as, in some cases, the geographic concentration of Clients.

Limited-recourse to • Financiers of Scottish Pacific’s Senior Facilities take credit risk on the receivables and have limited-
Scottish Pacific recourse back to Scottish Pacific.
• However, there are some exceptions to this, including:
– The capital Scottish Pacific provides by investing in Junior Notes including through the
participation in the Mezzanine Vehicle;
– During the period the Senior Facilities can fund receivables, Scottish Pacific may have obligations
or other incentives to provide additional capital support (by funding further Junior Notes,
including through the Mezzanine Vehicle) to cover certain losses experienced by the relevant
Funding Vehicle;
– Scottish Pacific’s exposure to the Funding Vehicles through the services it provides to the Funding
Vehicles (it acts as the servicer of the receivables for the Funding Vehicles by collecting payments
from and interfacing with its Clients); and
– Certain members of the Group and certain other participants in the funding arrangements provide
indemnities for a number of contingencies in relation to the Funding Vehicles, including certain
taxes, increased costs, parties undertaking enforcement action, claims arising from servicing of the
receivables and disputes of a debtor or Client in relation to the payment of a purchased receivable
or receivables finance agreement.

Residual income • Scottish Pacific receives the income generated (if any) in respect of the receivables funded by the
Senior Facilities less the cost of financing and establishment and operational costs described above,
less the costs in connection with the Mezzanine Facility and establishment and operational costs
described in Table 19, except to the extent that cash flow is used for other purposes including:
– Making up for losses where there are unrecoverable amounts from debtors; or
– Helping to repay the funding in the event a Senior Facility is not extended, or default or certain
other trigger events occur (refer to Section 9.5.2).
• Some or all of any income received by Scottish Pacific may be required to be used to make payments
in connection with the Corporate Debt Facilities.

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4.5.2.2 Mezzanine Facility
See Sections 3.3.2 for a description of the Mezzanine Facility funding arrangements and Section 9.5.2 for further details

Table 19: Mezzanine Funding Arrangements

Limit: • $60m. As at the Completion of the Offer, the Mezzanine Facility is anticipated to be drawn to ~$45m.

Availability period • 3 years (Expires June 2019)

and legal maturity:

Importance • An efficient funding source of providing “first loss” credit support to Senior Facilities.

Commitment • Committed funding provided in Australian dollars. Drawing under the facility is subject to certain
conditions.

Capital support by • Scottish Pacific is required to hold at least 50% of the debt issued by the Mezzanine Vehicle in the
Scottish Pacific form of Junior Notes subordinated to loans from the Mezzanine Facility financiers. Further detail
is provided in Section 3.3. The Junior Notes will bear any losses incurred by the relevant Funding
Vehicles and the Mezzanine Vehicle first; providing credit support to the external mezzanine
financiers and the Senior Facilities. If there is insufficient cash in relation to the relevant Funding
Vehicles and the Mezzanine Vehicle (including because of losses from underlying receivables),
the relevant Junior Notes held by Scottish Pacific may not be repaid in full or at all.

Mezzanine Vehicle’s • Costs of establishing and maintaining the Mezzanine Vehicle, plus the cost of the funding provided
cost of funding to the Mezzanine Vehicle, which is made up of:
– A variable market reference rate as its base rate (e.g. the BBSY);
– A fixed margin which may be renegotiated every three years; and
– Certain fees payable to the financiers.

Limited-recourse to • Same as indicated in Senior Facilities

Scottish Pacific
• The liabilities of the Mezzanine Vehicle are limited-recourse to the Junior Notes issued to the
Mezzanine Vehicle by the Funding Vehicles. The providers of the Mezzanine Facility have no direct
recourse to the receivables owned by the Funding Vehicles.

Residual income • Scottish Pacific receives the income (if any) in respect of the Junior Notes issued by the Funding
Vehicles that are held by the Mezzanine Vehicle less the cost of external Mezzanine Facility
described above and certain other costs, except to the extent that cash flow is used for other
purposes including:
– Making up for losses where there are unrecoverable amounts from the Funding Vehicles; or
– Default or certain other trigger events occur (refer to Section 9.5.2).

4.5.3 Description of Corporate Debt Facilities

See Section 3.3.3 for a description of Scottish Pacific’s Corporate Debt Facilities and funding arrangements and Section 9.5.3
for further details.

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04. Financial Information continued


Table 20: Corporate Debt Facilities

Aggregate limit of • The total aggregate limit under the Corporate Debt Facilities is $70 million.
all Corporate Debt
• As at the Completion of the Offer, the Corporate Debt Facilities are anticipated to be drawn to ~$59m.
Facilities

Availability Period • 3 years (expires 31 December 2018).

and legal maturity

Importance • Sources of funding for corporate expenses, including ongoing working capital needs and the
acquisition of new businesses.

Commitment • Committed funding in Australian dollars from four non-bank financiers by way of cash advances

Scottish Pacific’s costs • Comprises the cost of establishing and maintaining the Corporate Debt Facilities, plus the cost of the
funding provided under the Corporate Debt Facilities which is made up of:
– A variable market reference rate as its base rate (e.g. the BBSY);
– A fixed margin (which may be renegotiated as part of the process of renewing the funding limit);
and
– Certain fees payable to the financiers.

Hedging • There are currently no hedging arrangements in place.

Term of funding • Renewal of the committed funding limits and extension of the availability periods of the Corporate
Debt Facilities are negotiated periodically.
• Funding limits and commitment of the financiers may or may not be renewed as part of this process.
If a funding limit or commitment is not renewed, amounts owing under the Corporate Debt Facilities
may be required to be repaid at legal maturity.
• As part of the extension process, the margin applicable to a Corporate Debt Facility may be
increased (which may in turn increase the overall cost of funds), or other changes may be made to
the terms of the facilities.

Use of funds • Funds borrowed under the Corporate Debt Facilities may be used to periodically fund a range of
general corporate expenses, including ongoing working capital needs and the acquisition of new
businesses.

Guarantee, recourse • The Corporate Debt Facilities are guaranteed by Scottish Pacific and certain wholly owned
to Scottish Pacific and subsidiaries of Scottish Pacific.
security
• Subject to limited exceptions, each guarantor grants security over all of its assets in favour of
a security trustee to secure the Corporate Debt Facilities.
• The guarantees and security may also secure any hedging arrangements entered into between
Scottish Pacific and a lender (or its affiliate) in respect of the Corporate Debt Facilities.

4.6 Summary Pro Forma Historical and Forecast Cash Flows and Statutory
Forecast Cash Flows
Table 21 presents the Pro Forma Historical Cash Flows for FY2013, FY2014 and FY2015, the Pro Forma Forecast Cash Flows for FY2016F
and FY2017F and the Statutory Forecast Cash Flows for FY2016F and FY2017F.
The Pro Forma Forecast Cash Flows for FY2016F and FY2017F are based on the Statutory Forecast Cash Flows, adjusted for the Pro
Forma adjustments reflecting the full year effect of certain operating costs that will be in place on Completion of the Offer as if the
operating costs had been incurred from 1 July 2015. The Statutory Forecast Cash Flows for FY2016F and FY2017F are the best estimate
of the cash flows that the Directors expect to report in Scottish Pacific’s statutory financial statements for FY2016F and FY2017F.

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4.6.1 Pro Forma Historical Net Cash Flow before Financing and Taxation, and Pro Forma and
Statutory Forecast Net Cash Flow available for distribution

Table 21: Pro Forma Historical Net Cash Flow before Financing and Taxation, and Pro Forma and
Statutory Forecast Net Cash Flow available for distribution

Pro Forma Statutory

Pro Forma historical forecast forecast
$m No FY2013 FY2014 FY2015 1H2016 FY2016F FY2017F FY2016F FY2017F
PBT 18.6 23.7 25.4 16.6 29.7 39.6 0.2 29.9
Add back non-cash Items
Bad debts expense 1.5 2.7 3.4 1.0 2.9 3.2 2.3 3.2
Depreciation and 14 1.2 1.7 1.8 1.3 4.7 9.0 4.4 9.0
amortisation
Other 0.3 0.2 (0.0) – – – – –
Movement in working 1 2.5 (1.7) 1.6 4.2 3.3 (2.8) 5.5 (4.9)
capital
Operating cash flow 24.0 26.7 32.1 23.1 40.6 49.0 12.4 37.2
before financing and
taxation
Capital expenditure 2 (0.8) (0.7) (0.9) (0.4) (0.6) (1.3) (0.6) (1.3)
Equity investments in 3 (10.8) 5.7 (7.1) (6.7) (20.2) (12.0)
limited-recourse Funding
Vehicles
Net increases in client 4 – – – – – – (84.6) (65.5)
receivables
Proceeds from Senior 5 – – – – – – 102.1 53.4
Facilities and Mezzanine
Facility
Net cash flow before 12.4 31.7 24.1 16.0 19.8 35.7 29.3 23.9
corporate financing and
taxation
Income taxes paid (9.9) (8.3) (9.1) (8.3)
Acquisitions 6 – – (140.6) –
Proceeds from the Offer 7 – – – 77.3
Movement in Corporate 8 – – 45.0 (10.0)
Debt Facilities
Payment of borrowing 9 – – (6.5)
costs
Pre-IPO dividend 10 – – – (36.3)
Offer costs 11 – – – (6.8)
Proceeds from the issue of 12 – – 67.4 –
equity
Redemption of Legacy 13 – – – (12.4)
LTI Scheme
Net cash flow available 10.0 27.4 (14.4) 27.4
for distribution

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04. Financial Information continued


Notes:
1. Movement in working capital represents the timing of payments in relation to prepayments, other debtors, accruals and employee provisions.
2. Capital expenditure represents investment in property, plant and equipment, as well as software.
3. Equity investment in limited‑recourse Funding Vehicles reflects the movement in the level of investment in the limited‑recourse Funding Vehicles described
in Section 3.3.
4. Net increases in Client receivables represents the cash outflow from the increase in Client receivables.
5. Proceeds from Senior Facilities and Mezzanine Facility represents the cash inflows from the increase in the Senior Facilities ($57.1m) and Mezzanine Facility
($45.0m) to fund the increase in Client receivables in FY2016. In FY2017, the increase in Client receivables is assumed to be funded through the Senior Facilities.
6. Acquisitions represents the cash outflow to acquire Bibby which completed on 31 December 2015 and the Suncorp and GE Portfolio Acquisitions in May 2016.
7. Proceeds from the Offer are primarily used to pay the Offer costs, payment of the pre‑IPO dividend, settlement of the Legacy LTI Scheme with the remaining
applied towards a reduction of the Corporate Debt Facilities.
8. Movement in Corporate Debt Facilities reflects the increase in proceeds from borrowings ($90.0m) to fund the acquisitions of Bibby and the GE and Suncorp
Portfolios, offset by the mezzanine funding used to pay down corporate debt ($45.0m). The outflow of $10.0m in FY2017 reflects the reduction of Corporate Debt
facilities using proceeds of the Offer.
9. Payment of borrowing costs relates to the upfront costs associated with setting up the Corporate Debt Facilities and the Mezzanine Facility which have been
described in Sections 3.3 and 4.5.1. These have been capitalised in accordance with Accounting Standards and are amortised over the period of the facilities.
10. Pre‑IPO dividend represents the cash outflow to pay a dividend to Existing Shareholders.
11. Offer costs relate to costs incurred in respect of the Offer that are offset against equity on the balance sheet ($6.8m). The remaining Offer costs of ($11.8m)
are reflected in the Statutory Forecast Income Statement in FY2016F and FY2017F.
12. Proceeds from the issue of equity relates to equity issued to raise funds to acquire Bibby and the GE and Suncorp Portfolio Acquisitions.
13. The redemption of the Legacy LTI Scheme represents the cash paid to the participants in the Legacy LTI Scheme as described in Section 6.3.3.
14. The add‑back of Depreciation and amortisation includes the amortisation of upfront debt establishment charges.

4.6.2 Pro Forma Adjustments to the Statutory Historical Net Cash Flow before Financing
and Taxation
Statutory net cash flow before financing and taxation presented in the reconciliation below has been derived using the net cash from
operating activities (from the cash flow statements), and adjusted for the investing activities and the add-back of taxes paid. In respect
of FY2013, the Statutory Historical Financial Information has been derived from the consolidated special purpose financial statements
of Scottish Pacific, and restated using the accounting policies adopted in the FY2014 and FY2015 financial statements and in
accordance with Australian Accounting Standards.
Table 22: Pro Forma Adjustments to the Statutory Historical Net Cash Flow before Financing
and Taxation

$m No FY2013 FY2014 FY2015 1H2016

Statutory net cash flow before financing and taxation 1 (5.5) (282.8) (63.3) (29.2)
Bibby acquisition 2 10.6 10.9 7.7 9.6
Limited-recourse Funding Vehicle working capital movement 3 22.8 296.7 87.3 40.5
Net Equity investments in limited-recourse Funding Vehicles 4 (10.8) 5.7 (7.1) (6.7)
Transaction and restructuring costs 5 – 2.3 – 3.6
Bonus adjustment 6 – – 1.0 (0.5)
Change in corporate debt structure 7 (1.9) 2.0 1.9 0.6
New mezzanine funding 7 (1.3) (1.6) (2.0) (1.2)
Incremental public company costs 8 (1.4) (1.5) (1.5) (0.8)
Pro Forma net cash flow before corporate financing and taxation 12.4 31.7 24.1 16.0
Notes:
1. The movements in the statutory net cash flow before financing and tax and Limited-recourse funding vehicle working capital movement in FY2014 are due to the
incorporation of Tartan HoldCo Pty Ltd (now Scottish Pacific Group Limited) by Next Capital to facilitate the acquisition of the Scottish Pacific Standalone business.
Accordingly, no comparative balances were reported in the Statutory Financial Statements against which a movement could be calculated.
2. Bibby acquisition is an adjustment to reflect contributions from the Bibby acquisition as if it was made on 1 July 2012.
3. Limited-recourse Funding Vehicle working capital movement represents the movement in balance sheet accounts including third party Client receivables and
trade payables of the limited-recourse Funding Vehicles.
4. Net equity investment in limited-recourse Funding Vehicles represents investment of equity into and release of residual capital from Scottish Pacific limited-
recourse Funding Vehicles.
5. Transaction and restructuring costs reflect one-off acquisition costs pertaining to the historical business acquisitions including the acquisition by Next Capital
of Scottish Pacific in FY2014 and the Bibby acquisition.
6. Bonus adjustment relates to an accrual that was raised in FY2015 and released in FY2016F. This adjustment reverses the release of the bonus accrual to ensure
it was reflected in the correct period.

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7. Change in corporate debt structure and new mezzanine funding are as described in Table 23.
8. Incremental public company costs have been reflected to include Scottish Pacific’s estimate of the incremental annual costs that it will incur as a listed public company.

4.6.3 Pro Forma Adjustments to the Statutory Forecast Net Cash Flow available for distribution

Table 23: Pro Forma Forecast Net Cash Flow Reconciliation

$m No FY2016F FY2017F
Statutory consolidated net cash flow available for distribution (14.4) 27.4
Bibby acquisition 1 9.6 –
Transaction and restructuring costs 2 19.9 –
Incremental public company costs 3 (1.5) –
Bonus adjustment 4 (1.0) –
Change in corporate debt structure 5 2.9 –
New mezzanine funding 6 (40.1) –
Proceeds from the Offer – (77.3)
Offer costs 7 – 18.6
Acquisitions 8 140.6 –
Movement in Corporate Debt Facilities 9 (45.0) 10.0
Payment of borrowing costs 6.5 –
Proceeds from the issue of equity 10 (67.4) –
Pre-IPO dividend 11 – 36.3
Redemption of Legacy LTI scheme 12 – 12.4
Pro Forma net cash flow available for distribution 10.0 27.4
Notes:
1. Bibby Acquisition pro forma adjustment reflects the FY2016 Pro Forma results assuming Bibby was owned for the entire year. The adjustment reflects cash flows
generated by Bibby of $10.4m offset by $0.6m in relation to taxes paid for the first six months.
2. Transaction and restructuring costs reflect one-off acquisition costs pertaining to the acquisitions of Bibby and the GE and Suncorp Portfolio Acquisitions in
FY2016F. In respect of the acquisition of Bibby in FY2016F, the business is due to incur one-off costs in relation to restructuring and integration specifically relating to
surplus leases, redundancy costs and IT restructuring. Group restructuring costs primarily relate to implementing a diversified, scalable funding platform to support
Scottish Pacific’s growth objectives and suitable risk profile for a publicly-listed entity.
3. Incremental public company costs have been Pro Forma adjusted to include Scottish Pacific’s estimate of the incremental annual costs that it will incur as a listed
public company.
4. Bonus adjustment relates to an accrual that was raised in FY2015 and released in FY2016F. This Pro Forma adjustment reverses the release of the bonus accrual to
ensure it was reflected in the correct period.
5. Change in corporate debt structure the corporate debt funding of Scottish Pacific which is not related to the cost of borrowing in the limited-recourse Funding
Vehicles, will change prior to the Completion of the Offer. In order to size the impact of the Corporate Debt Facilities and the resulting interest expense over the
historical period for Pro Forma purposes, the level of corporate debt has been assumed to be in line with the level of PBITDA generated by the Group (which
excluded the GE and Suncorp Portfolios prior to their acquisition on 3 May 2016 and 27 May 2016, respectively). PBITDA is the appropriate basis as the level
of corporate debt within the business is underpinned by the earnings and also drives covenant reporting.
6. New mezzanine funding raised from certain wholesale investors prior to Completion of the Offer. The new mezzanine funding sits within Mezzanine Vehicle and
funds Junior Notes issued by the limited-recourse Funding Vehicles and, as at Completion of the Offer the proceeds of the funding will have been used to pay down
the Junior Notes owned by Scottish Pacific, which will subsequently have been used to pay down the corporate debt. The sizing of the mezzanine funding over the
historical period is expected to be equal to 5% of the Average Exposure of the Group. The adjustment reflects the drawdown on the Mezzanine Facility and as is
offset by the interest expense relating to the facility on a Pro Forma basis.
7. Offer costs of $18.6m are forecast to be paid out of the proceeds of the offer.
8. Acquisitions represents the cash outflow to acquire Bibby, and the GE and Suncorp Portfolio Acquisitions.
9. The movement in Corporate Debt Facilities represents an increase of funds to acquire Bibby and the GE and Suncorp Portfolio Acquisitions offset by the
mezzanine funding used to pay down corporate debt.
10. Proceeds from the issue of equity represents equity issued to partially fund the acquisition of Bibby and the GE and Suncorp Portfolio Acquisitions.
11. Pre-IPO dividend represents the cash outflow to pay a dividend to Existing Shareholders.
12. Redemption of the Legacy LTI Scheme represents the cash paid to the participants in the Legacy LTI Scheme as described in Section 6.3.3.

Scottish Pacific  Prospectus 95

04. Financial Information continued


4.7 Management Discussion and Analysis of the Pro Forma Historical Financial
Information

4.7.1 General Factors Affecting the Operating Results

Set out below is a discussion of the general factors that affected Scottish Pacific’s operations and relative financial performance in
FY2013, FY2014 and FY2015, and which the Directors expect may continue to affect its operating and financial performance in the
Forecast Period.
The discussion of these general factors is intended to provide a brief summary only and does not detail all factors that affected
Scottish Pacific’s historical operating and financial performance, nor everything that may affect Scottish Pacific’s operations and
financial performance in the future.

4.7.1.1 Net Revenue

The key drivers of Net Revenue include:
• The rate at which new Clients are acquired;
• The length of time that existing Clients remain with Scottish Pacific;
• The average Turnover of each Client;
• The average receivables balance of Clients;
• The level of Exposure that Scottish Pacific advances to Clients based on their underlying receivables balance;
• Agreed exposure levels of the Senior Facilities and Mezzanine Facility;
• The contracted rates under servicing and Funding Vehicle management contracts;
• The contracted rates of fee income including management fees, administration and other fees and daily charge rates with Clients; and
• The quantum of undrawn funds from Senior Facilities and Mezzanine Facility.
The components of Scottish Pacific’s Net Revenue are:
• Management Fees – Debtor Finance: Contracted income from Scottish Pacific’s Factoring and Discounting Clients that consists
of either a percentage fee based on the Turnover of the Client or a fixed monthly fee. It also captures additional charges to cover
supplementary costs incurred by Scottish Pacific including administrative, application, termination and legal costs amongst
others. Management fees differ based on a number of factors including whether the Client is a Factoring or Discounting Client
and the agreed rate which is determined on a Client-by-Client basis. Typically larger Clients have a reduced management fee as
a percentage of Turnover relative to smaller Clients, reflecting the lower administration levels required, as a consequence of more
sophisticated and larger operating resources within the Client. Similarly, Discounting Clients have a lower management fee
relative to Factoring Clients, reflecting the lower cost of servicing the Clients and its trade receivables and the lower credit risk
associated with size, outlined above. This account line also includes other Specialty Products such as Asset Finance and Bad Debt
Protected Facilities;
• Management Fees – Trade Finance and Other: Gross revenue from Scottish Pacific’s Trade Finance products that earn
management fees as a percentage of Turnover among other metrics specific to the services provided; and
• Net Interest Income: Contracted fee that includes a base and margin component charged on drawn funding Exposure, net of
Funding Vehicles’ contracted rates on Senior Facilities and the Mezzanine Facility on both drawn and undrawn amounts and
commissions paid to brokers who assist in sourcing new Clients. The base component is linked to BBSY or an equivalent, while
the margin component is determined on a Client by Client basis and reflects a number of factors including the size, quality and
risk profile of the Client and its underlying receivables security. Similar to Management Fees, larger Clients and Discounting Clients
generally receive lower fees. Contractually, Scottish Pacific maintains an ability to automatically pass on any change in its base
funding costs to its Clients, and changes in margins with appropriate notice.

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4.7.1.2 Operating Expenses
Key operating expenses include:
• Staff expenses: Represents salaries, wages and other employment related costs for sales and operational staff employed by
Scottish Pacific. Senior Management and sales staff have a portion of their total compensation that is linked to performance.
Staff expense is largely a factor of Scottish Pacific’s Exposure and the number of Clients it has and also its business mix weighting
between High Touch and Low Touch products. As Scottish Pacific’s business mix moves towards Lower Touch Discounting
Clients, there is typically a corresponding reduction in staff expenses on a per Client basis;
• Office and administrative expenses: Represents key support functions within the business and includes administration,
accommodation and travel, occupancy, professional services and public company costs. Public company costs include estimates
for a listed board and remuneration structures, listing fees and professional service fees. Office and administrative expenses are
typically considered fixed costs;
• Marketing and advertising expenses: Represents marketing and advertising initiatives undertaken by Scottish Pacific and costs
associated to support these;
• Bad debts expense: Consists of both general and specific bad debts. General bad debts are provisions estimated based on the
Exposure of the business and the underlying credit risk profile. Specific bad debts expense occurs when the business identifies
specific advances outstanding that are at risk of being unpaid and expenses some or all of the outstanding amount. The size of
general bad debts are relative to both the Exposure and perceived risk of the Clients. Relative to Scottish Pacific and Bibby, the
Clients of GE and Suncorp acquired in 2016 are considered lower risk and as such have a lower general bad debts. Specific bad
debts expense is a factor of the quality of the Clients and underlying receivables and the performance of Scottish Pacific’s risk
management; and
• Depreciation and amortisation: Represents the depreciation of fixed assets within the business and the amortisation of
purchased intangibles associated with acquisitions.

4.7.1.3 Working Capital

Working capital includes prepayments, other debtors, accruals and provisions and is generally driven by the level of business activity.

4.7.1.4 Capital Expenditure

Capital expenditure includes investments in office infrastructure, furnishings and equipment, software and licence assets. Information
technology infrastructure and software expenditure is an aspect of capital expenditure required to support Scottish
Pacific’s operations.

4.7.1.5 Equity Investments in Limited-Recourse Funding Vehicles

Equity investments in limited-recourse Funding Vehicles includes investments by Scottish Pacific of “first loss” equity or Junior Notes
within the Funding Vehicles. The level of investment required by Scottish Pacific is determined by the growth in receivables and the
underlying Exposure, and the requirements of senior funding sources including Senior Facilities and the Mezzanine Facility in the
Funding Vehicles. The typical requirement is for Scottish Pacific to fund an equal or greater portion of the funding requirement that
is funded by the Mezzanine Facility. The Senior Facilities require a minimum “first loss” equity (or “Junior Note”) investment of at least
10% of the net client receivables within that Funding Vehicle.
Further detail on Scottish Pacific’s funding structure can be found in Section 3.3.

Scottish Pacific  Prospectus 97

04. Financial Information continued


4.7.2 Pro Forma Historical Income Statements: FY2014 Compared to FY2013

Table 24: Pro Formal Historical Income Statements: FY2014 Compared to FY2013

Change
$m FY2013 FY2014 Change %
Management Fees – Debtor Finance 48.2 54.5 6.3 13.2%
Management Fees – Trade Finance and Other 0.6 2.2 1.6 294.4%
Net Interest Income 18.2 20.9 2.7 14.6%
Net Revenue 66.9 77.6 10.6 15.9%
Staff expenses (28.5) (30.9) (2.5) 8.6%
Office and administration expenses (13.9) (14.8) (0.9) 6.7%
Marketing and advertising expenses (2.0) (1.9) 0.0 (2.4%)
Bad debts expense (1.4) (2.8) (1.4) 96.5%
Depreciation and amortisation (0.7) (0.9) (0.2) 32.8%
Total expenses (46.5) (51.4) (4.9) 10.6%
PBIT 20.5 26.2 5.7 27.8%
Borrowing costs (1.9) (2.5) (0.6) 28.6%
PBT 18.6 23.7 5.1 27.7%
Income tax expense (5.6) (7.1) (1.6) 27.7%
NPAT 13.0 16.5 3.6 27.7%
Acquisition amortisation – – – –
NPATA 13.0 16.5 3.6 27.7%

4.7.2.1 Net Revenue

Net Revenue increased by $10.6m (15.9%) from $66.9m to $77.6m in FY2014 from FY2013 due to:
• Management Fees – Debtor Finance increasing by $6.3m (13.2%) from $48.2m to $54.5m as a result of:
– Turnover growing 25.9% from $5,836m to $7,346m as both Bibby and Scottish Pacific recorded organic Client and Turnover
per Client growth; and
– Average Management Fees declined from 0.83% to 0.74% as larger Clients were acquired at lower fees and a greater
proportion of lower fee Discounting products were offered;
• Management Fees – Trade Finance and Other increased by $1.6m (294.4%) from $0.6m to $2.2m due to strong organic growth
after the business was acquired in FY2013; and
• Net Interest Income increased by $2.7m (14.6%) from $18.2m to $20.9m as:
– Debtor Finance Exposure increased 21.9% from $368m to $449m due to both Client numbers and Client size growth;
– Debtor Finance Net Interest Income as a percentage of Average Exposure declined from 4.97% to 4.68% as business mix
changed to a greater proportion of Discounting and larger Clients where net interest margins are generally lower; and
– Trade Finance increased net interest expense by $0.1m in FY2014 relative to $0.0m in FY2013.

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4.7.2.2 Expenses
Total expenses increased by $4.9m (10.6%) from $46.5m to $51.4m in FY2014 from FY2013 driven by:
• Staff expenses increased 8.6% from $28.5m to $30.9m although there was a reduction in staff expense as a percentage of Net
Revenue from 42.6% to 39.9% as operating efficiencies from growing scale were realised, combined with the benefits of relative
growth in Discounting which has a lower staff to Client ratio;
• Office and administration expenses increased 6.7% from $13.9m to $14.8m due to Underlying Business growth;
• Bad debts expense increased 96.5% from $1.4m to $2.8m as bad debts expense as a percentage of Average Exposure increased
from 0.39% to 0.62% as Bibby, which has higher bad debts expense as a percentage of Exposure, contributed a greater proportion
of Exposure, and due an increase in specific bad debts primarily for Scottish Pacific in the case of two Clients and one Client for
Bibby; and
• Marketing and advertising and depreciation and amortisation were relatively flat over the period.
Overall, Scottish Pacific recorded a reduction in Opex (excluding D&A) as a percentage of Net Revenue from 68.4% in FY2013 to 65.1%
in FY2014 as a result of growing scale and realising benefits of operating leverage, and growth in both Client size and Discounting
reduced operating costs per Client.

4.7.2.3 PBIT
PBIT increased by $5.7m (27.8%) from $20.5m in FY2013 to $26.2m in FY2014 and PBIT margin over this period improved from 30.6%
to 33.7%. This was primarily a result of Scottish Pacific and Bibby both executing on strategies to grow Exposure into larger size and
lower risk Clients which resulted in lower operating costs per Client and a commensurate improvement in margins, further supported
by the benefits of operating leverage and increased scale. While reduced operating costs contributed to stronger margins overall,
administration fees and Net Interest Income as a percentage of Net Revenue declined as a result of the growth in larger Clients
which are typically lower margin and partially offset operating costs improvements.
Strong growth was also recorded in Management Fees – Trade Finance given this was a relatively nascent segment following its
acquisition in FY2013.

4.7.3 Pro Forma Historical of Cash Flows: FY2014 Compared to FY2013

Table 25: Pro Forma Historical Cash Flows: FY2014 Compared to FY2013

Change
$m FY2013 FY2014 Change %
PBT 18.6 23.7 5.1 27.5%
Add back non-cash Items
Bad debts expense 1.5 2.7 1.2 85.4%
Depreciation and amortisation 1.2 1.7 0.5 40.9%
Other 0.3 0.2 (0.1) (32.0%)
Movement in working capital 2.5 (1.7) (4.1) (168.3%)
Operating cash flow before financing and taxation 24.0 26.7 2.6 10.9%
Capital expenditure (0.8) (0.7) 0.2 (20.6%)
Equity investment in limited-recourse Funding Vehicles (10.8) 5.7 16.5 (153.1%)
Net cash flow before corporate financing and taxation 12.4 31.7 19.3 155.2%

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04. Financial Information continued


The conversion of PBT to net cash flow before corporate financing and taxation in FY2014 versus FY2013 was driven by a number
of factors including:
• Movement in working capital which reflected the timing of payments in relation to prepayments, other debtors, accruals and
employee provisions;
• Capital expenditure representing the payments to acquire property, plant and equipment; and
• Equity investments in limited-recourse Funding Vehicles changed from $10.8m cash outflow in FY2013 to $5.7m cash inflow
in FY2014 due to comparatively low utilisation of Senior Facilities in FY2013 changing markedly in FY2014 when the Senior
Facilities were used at much closer to their full capacity. This increased utilisation during FY2014 facilitated the payment of
a $16m dividend during FY2014.

4.7.4 Pro Forma Historical Income Statements: FY2015 Compared to FY2014

Table 26: Pro Forma Historical Income Statements: FY2015 Compared to FY2014

Change
$m FY2014 FY2015 Change %
Management Fees – Debtor Finance 54.5 57.4 2.9 5.3%
Management Fees – Trade Finance and Other 2.2 3.2 1.1 48.5%
Net Interest Income 20.9 24.4 3.5 16.6%
Net Revenue 77.6 85.0 7.4 9.5%
Staff expenses (30.9) (35.0) (4.0) 13.0%
Office and administration expenses (14.8) (15.5) (0.6) 4.3%
Marketing and advertising expenses (1.9) (2.3) (0.3) 17.3%
Bad debts expense (2.8) (3.3) (0.5) 18.7%
Depreciation and amortisation (0.9) (0.9) (0.0) 0.3%
Total expenses (51.4) (56.9) (5.5) 10.7%
PBIT 26.2 28.1 1.9 7.2%
Borrowing costs (2.5) (2.6) (0.2) 7.0%
PBT 23.7 25.4 1.7 7.2%
Income tax expense (7.1) (7.7) (0.5) 7.2%
NPAT 16.5 17.7 1.2 7.2%
Acquisition amortisation – – – –
NPATA 16.5 17.7 1.2 7.2%

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4.7.4.1 Net Revenue
Net Revenue increased by $7.4m (9.5%) from $77.6m to $85.0m in FY2015 from FY2014 due to:
• Management Fees – Debtor Finance increased $2.9m (5.3%) from $54.5m to $57.4m as a result of:
– Turnover growing 21.1% from $7,346m to $8,897m as a factor of both Client numbers and Client size growing as Scottish
Pacific and Bibby continued to grow Exposure into larger, lower risk Clients; and
– Average Management Fees as a percentage of Turnover declining from 0.74% to 0.64% as larger Clients were acquired
at lower fees and a greater proportion of lower fee Discounting products were offered;
• Management Fees – Trade Finance and Other grew by $1.1m (48.5%) from $2.2m to $3.2m as the business continued to exhibit
strong organic growth given its relative infancy and benefited from dedicated and continued focus by management; and
• Net Interest Income increased by $3.5m (16.6%) from $20.9m to $24.4m as a result of:
– Debtor Finance Average Exposure increasing by 23.1% from $449m to $552m as a result of organic Client and receivables
growth;
– Debtor Finance Net Interest Income as a percentage of Average Exposure declining from 4.68% to 4.46% as business mix
changed as Scottish Pacific and Bibby executed on strategies to increase the proportion of Discounting and larger Clients,
where net interest margins are generally lower, reflecting a lower risk profile; and
– Trade Finance net interest expense increased by $0.2m in FY2015 relative to $0.1m in FY2014.

4.7.4.2 Expenses
Total expenses increased $5.5m (10.7%) from $51.4m to $56.9m in FY2015 from FY2014 as a result of:
• Staff expenses increasing 13.0% from $30.9m to $35.0m primarily due to the Bibby Standalone business growing staff numbers
to support future expected growth. As a result, staff expense as a percentage of Net Revenue grew from 39.9% in the prior year
to 41.2%;
• Office and administration expenses increased 4.3% from $14.8m to $15.5m due to Underlying Business growth;
• Marketing and advertising expenses increased 17.3% from $1.9m to $2.3m as Scottish Pacific undertook a pilot direct marketing
campaign in addition to its usual marketing and advertising activities;
• Bad debts expense increased 18.7% from $2.8m to $3.3m due to underlying Exposure growth, and declined as a percentage
of Average Exposure from 0.62% to 0.59%; and
• Depreciation and amortisation expense remained relatively flat over the period.
During the period, Scottish Pacific’s Opex (excluding D&A) as a percentage of Net Revenue increased, moving from 65.1% to 66.0%
in FY2015, with the benefits of scale and lower cost business mix offset by increases in headcount at Bibby in preparation for expected
future growth, and due to a one-off increase in advertising to support future growth.

4.7.4.3 PBIT
PBIT increased by $1.9m (7.2%) from $26.2m to $28.1m in FY2015 from FY2014, while PBIT margin declined from 33.7% to 33.0%.
This growth in absolute PBIT was predominantly caused by continued growth in the size of Client and Clients numbers, with
a reduction in average Management Fees and Net Interest Income as a percentage of Net Revenue across Debtor Finance products
similar to that experienced in FY2014. Unlike in FY2014, PBIT margin declined despite strong Turnover growth largely due to
a meaningful increase in staff costs as Bibby Standalone brought on additional headcount to support forecast growth.

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04. Financial Information continued


4.7.5 Pro Forma Historical Cash Flows: FY2015 Compared to FY2014

Table 27: Pro Forma Historical Cash Flows: FY2015 Compared to FY2014

Change
$m FY2014 FY2015 Change %
PBT 23.7 25.4 1.7 7.2%
Add back non-cash Items
Bad debts expense 2.7 3.4 0.7 24.3%
Depreciation and amortisation 1.7 1.8 0.0 2.0%
Other 0.2 (0.0) (0.2) (108.3%)
Movement in working capital (1.7) 1.6 3.2 (193.3%)
Operating cash flow before financing and taxation 26.7 32.1 5.4 20.3%
Capital expenditure (0.7) (0.9) (0.2) 34.4%
Equity investment in limited-recourse Funding Vehicles 5.7 (7.1) (12.8) (223.5%)
Net cash flow before corporate financing and taxation 31.7 24.1 (7.6) (23.9%)

The conversion of PBT to net cash flow before corporate financing and taxation in FY2015 versus FY2014 was driven by a number
of factors including:
• Movement in working capital reflecting the timing of payments in relation to prepayments, other debtors, accruals and
employee provisions;
• Capital expenditure which represents payments to acquire property, plant and equipment; and
• Equity investments in limited-recourse Funding Vehicles changed from $5.7m cash inflow in FY2014 to $7.1m cash outflow
in FY2015 to fund Exposure growth.

4.8 Forecast Financial Information

The basis of preparation for the FY2016F and FY2017F Forecast Financial Information is detailed in Section 4.2.3. This Section 4.8
includes the Directors’ best estimate assumptions specific to the Forecast Period. In addition to these specific assumptions, the
general assumptions adopted in preparing the Forecast Financial Information are detailed in Section 4.8.1.

4.8.1 General Assumptions

The following general assumptions are relevant to the Forecast Financial Information:
• There is no material change in the competitive and operating environments in which Scottish Pacific operates;
• There is no change in applicable Australian Accounting Standards and IFRS that would have a material impact on Scottish Pacific’s
accounting policies, financial reporting or disclosure requirements;
• There is no significant deviation from current market expectations of the broader economic conditions relevant to the Australian
and New Zealand sectors in which Scottish Pacific and its key Clients operate;
• There is no material change in the legislative regimes (including taxation) and regulatory environment in which Scottish Pacific
and its Clients operate;
• There are no material losses of Clients;
• There is no material amendment to any material agreement relating to Scottish Pacific’s business other than as disclosed
in this Prospectus;
• There are no significant disruptions to the continuity of operations of Scottish Pacific and there are no other material changes
in Scottish Pacific’s business;
• Material acquisitions are completed;

102
• No material changes occur to Scottish Pacific’s corporate and funding structure other than as set out in, or contemplated by,
this Prospectus;
• There is no loss of key management personnel and Scottish Pacific will maintain the ongoing ability to recruit and retain
required personnel;
• There is no material litigation that will arise or be settled to the benefit or detriment of Scottish Pacific other than that disclosed;
• There are no contingent liabilities that will arise or be realised to the detriment of Scottish Pacific;
• The Offer proceeds are in accordance with the timetable set out on page 03 of this Prospectus; and
• None of the risks set out in Section 5 occur.

4.8.2 Directors’ Best Estimate Assumptions

The Forecast Financial Information has been prepared on the basis of the actual unaudited financial results for the nine months to
31 March 2016 and Scottish Pacific’s forecast for the three months ending 30 June 2016 and twelve months ending 30 June 2017.
Scottish Pacific’s forecasts for these periods also have regard to the current trading performance of Scottish Pacific up until the
Prospectus Date.
The Forecast Financial Information is based on various specific assumptions, of which the key assumptions are set out below.
The assumptions below are a summary only and do not represent all factors that will affect Scottish Pacific’s forecast financial
performance. This information is intended to assist investors in assessing the reasonableness and likelihood of the assumptions
occurring, and is not intended to be a representation that the assumptions will occur. It should be read in conjunction with the basis
of preparation of the Forecast Financial Information set out in Section 4.2.3, the general assumptions set out in Section 4.8.1 and the
risk factors set out in Section 5.

Management Fees – Debtor Finance

Scottish Pacific has forecast FY2016F and FY2017F on the following assumptions:
• Turnover growth of $2,420m (27.2%) in FY2016F and $5,044m (44.6%) in FY2017F due to:
– Underlying Turnover of the Scottish Pacific and Bibby businesses is forecast to grow by 19.5% in FY2016F and 12.3%
in FY2017F to $10,636m and $11,944m respectively, representing lower growth estimates relative to historic Turnover growth
in the core business; and
– The impact of the GE and Suncorp Portfolio Acquisitions contributed $681m to total Turnover in FY2016F from their
respective acquisition dates of 3 May 2016 and 27 May 2016. This is forecast to grow to $4,417m in FY2017F, but on an
annualised basis represents 8.1% growth from FY2016F; and
• Average Management Fees are forecast to decline to 0.53% in FY2016F and 0.43% in FY2017F due to:
– Forecast reduction in Management Fees for the Underlying Business from 0.64% in FY2015 to 0.55% in FY2016F, as average
Client size increases and business mix continues to move towards a greater proportion of Discounting Clients that have
lower fees given their lower risk profile, lower cost to service and improved debtor management capabilities. The average
Management Fee is forecast to remain relatively steady for the underlying debtor finance business in FY2017F at
approximately 0.55% as the ability for newer Clients to dilute average Management Fees lessens as Scottish Pacific’s scale
continues to grow; and
– Steady average Management Fees across the GE and Suncorp Portfolio Clients of 0.12% in both FY2016F and FY2017F.
This correlates with the lower risk and operating costs of these Clients given they are predominantly Discounting and of
significantly larger scale and higher quality, being more sophisticated and having longer operational histories.

Management Fees – Trade finance

• Turnover growth of $20.1m (182.1%) in FY2016F and $3.9m (12.5%) in FY2017F reflecting the growth phase of this business and the
opportunity to cross-sell these products across Scottish Pacific’s growing Debtor Finance Client base.

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04. Financial Information continued


Net Interest Income

• Debtor Finance Average Exposure growth of $114.0m (20.6%) in FY2016F and $255.8m (38.4%) in FY2017F due to:
– Underlying Average Exposure of the Scottish Pacific and Bibby businesses forecast to grow by 14.8% and 11.9% respectively
to $634.0m and $709.4m in FY2016F and FY2017F due to a combination of Client number and Client size growth; and
– Average Exposure of the GE and Suncorp Portfolio Clients is forecast to contribute $32.2m of Average Exposure in FY2016F
from the respective acquisition dates of 3 May 2016 and 27 May 2016. This is forecast to grow to $212.6m in FY2017F, which
is in line with FY2016F on an annualised basis.
• Debtor Finance Net Interest Income as a percentage of Average Exposure is forecast to remain relatively flat at 4.47% in FY2016F
compared to 4.46% in FY2015, and to decline in FY2017F to 3.68% as:
– Underlying Net Interest Income as a percentage of Average Exposure of Scottish Pacific and Bibby is forecast to increase from
4.46% in FY2015 to 4.60% in FY2016F as Scottish Pacific benefits from a full year’s impact of reduced wholesale funding costs; and
– Net Interest Income as a percentage of Average Exposure for the GE and Suncorp Portfolio Clients is forecast to decline from
1.93% in FY2016F to 1.53% in FY2017F, having a greater impact on Net Interest Income as a percentage of Average Exposure
in FY2017F when a full year’s contribution impacts Net Revenue. GE and Suncorp Portfolio Clients have a materially lower
Net Interest Income as a percentage of Average Exposure largely due to the low cost and low risk nature of these Clients;
• Net Interest Income also includes the net interest expense on Trade Finance which is forecast to remain flat at $0.2m in both
FY2016F and FY2017F.

Operating expenses
• Total Opex (excluding D&A) is forecast to remain flat between FY2016F and FY2017F reflecting forecast cost synergies through
restructuring initiatives as a result of the Bibby acquisition. On a pre-synergies basis as a percentage of Net Revenue, operating
expenses are are forecast to decline from 62.7% in FY2016F to 57.3% in FY2017F, impacted by the low cost Clients acquired as part
of the GE and Suncorp Portfolio Acquisitions. This is additionally supported by Scottish Pacific’s growing scale and operating
leverage improving operating efficiencies, and a continued shift in business mix towards Lower Touch and lower risk
Discounting Clients;
• Staff expenses which represent the majority of operating expenses within the Group are forecast to remain flat between FY2016F
and FY2017F at $36.3m reflecting the impact of synergy realisation in FY2016F and FY2017F. Synergy contribution is weighted
towards FY2017F when a full years’ benefit impacting staff expense, whereas in FY2016F synergies are only realised progressively
between January 2016 and June 2016. Additionally the GE and Suncorp Portfolio Acquisitions are forecast to have a significant
positive impact on the operating expense profile of the Group, with Average Exposure per FTE in FY2017F totalling $14.2m for the
GE and Suncorp Debtor Finance portfolios, compared to Scottish Pacific Standalone and Bibby at $2.9m and $2.3m respectively.
This has driven the decline in staff costs as a percentage of Net Revenue pre-synergies from 39.9% in FY2016F to 36.5% in FY2017F
reflecting both the Low Touch and large size of these Clients, as well as the additional benefit of easily being able to introduce
these Clients onto the existing Scottish Pacific systems without the need for significant additional staff;
• Bad debts expense is forecast to increase by 10.7% to $3.2m between FY2016F and FY2017F. As a percentage of Average Exposure,
it is forecast to decrease from 0.43% to 0.35% between FY2016F and FY2017F, impacted by GE and Suncorp Portfolios, which
exhibit a lower loss profile when compared to Bibby and Scottish Pacific. Excluding the impact of the GE and Suncorp
Acquisitions, bad debts expense as a percentage of Average Exposure declines from 0.59% in FY2015 to 0.44% and 0.40% in
FY2016F and FY2017F respectively. This reflects the benefit of Scottish Pacific’s core business mix changing towards lower risk
Client as the proportion of larger Clients and Discounting Clients grows; and
• Other expenses pre-synergies are increasing consistent with the growth in the business and in line with inflation of 3%.

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Synergies

Table 28: Summary of Forecast Synergies

$m No FY2016F FY2017F
Staff 1.0 3.6
Marketing 0.2 0.7
Travel – 0.4
Office and administration 1 0.2 0.4
Total operating expenses 1.4 5.1
Note:
1. Office and administration comprises office and administration, occupancy and professional services synergies.

• Scottish Pacific has forecast cost synergies totalling $1.4m in FY2016F and $5.1m in FY2017F relating to the Bibby acquisition. These
primarily relate to staff synergies totalling $1.0m and $3.6m in FY2016 and FY2017F respectively, due to duplicate roles within the
combined business. At 3Q2016, the business has realised $0.4m in synergies, primarily relating to staff synergies of $0.3m, and is
forecast to achieve an additional $1.0m of synergies in 4Q2016, with $0.7m relating to staff synergies. Staff synergies are net of
new roles arising from the restructuring associated with combining the two businesses.
• Marketing synergies account for 14.6% of total synergies in FY2017F. In FY2015, Scottish Pacific and Bibby incurred $2.3m of
aggregated marketing and advertising expenses. This is forecast to reduce to $1.9m in FY2016F and $2.0m in FY2017F net of
$0.2m and $0.7m in synergies, respectively. The savings are driven by the fact that Bibby and Scottish Pacific historically competed
against each other, which resulted in direct marketing campaigns against each other. Excluding synergies, there is an increase in
advertising and marketing and advertising spend as Scottish Pacific grows product and brand awareness to support growth.

GE and Suncorp Portfolio Acquisitions

Table 29: GE and Suncorp Portfolio Acquisitions

$m FY2016F FY2017F
Net Revenue 1.4 8.7
PBIT 1.1 6.1

• GE and Suncorp Portfolio Acquisitions were completed in May 2016 and are forecast to contribute approximately two and one
month(s) of earnings respectively in FY2016F.
• As these are predominantly Client acquisitions the acquired cost base is marginal when compared to the cost base of Scottish
Pacific and does not include office and administration, marketing or other Group related costs. It is expected that 15 additional
FTEs will be employed as a result of the acquisitions and these costs are reflected in the above PBIT contribution.

Scottish Pacific  Prospectus 105

04. Financial Information continued


4.9 Management Discussion and Analysis of the Forecast Financial Information

4.9.1 Pro Forma Historical and Forecast Income Statements: FY2016F Compared to FY2015

Table 30: Pro Forma Historical and Forecast Income Statements: FY2016F Compared to FY2015

Change
$m FY2015 1H2016 FY2016F Change %
Management Fees – Debtor Finance 57.4 30.7 59.8 2.4 4.2%
Management Fees – Trade Finance and Other 3.2 2.2 4.3 1.1 34.3%
Net Interest Income 24.4 14.6 29.5 5.2 21.3%
Net Revenue 85.0 47.5 93.7 8.7 10.3%
Staff expenses (35.0) (18.5) (36.3) (1.4) 4.0%
Office and administration expenses (15.5) (8.2) (16.1) (0.7) 4.3%
Marketing and advertising expenses (2.3) (1.0) (1.9) 0.3 (14.2%)
Bad debts expense (3.3) (1.1) (2.9) 0.4 (12.5%)
Depreciation and amortisation (0.9) (0.6) (3.2) (2.3) 265.9%
Total expenses (56.9) (29.3) (60.5) (3.6) 6.4%
PBIT 28.1 18.2 33.1 5.1 18.1%
Borrowing costs (2.6) (1.6) (3.4) (0.8) 28.5%
PBT 25.4 16.6 29.7 4.3 17.1%
Income tax expense (7.7) (4.9) (9.6) (1.9) 25.4%
NPAT 17.7 11.8 20.1 2.4 13.5%
Acquisition amortisation – – 2.1 2.1 –
NPATA 17.7 11.8 22.3 4.5 25.5%

4.9.1.1 Net Revenue

Net Revenue is forecast to increase by $8.7m (10.3%) from $85.0m in FY2015 to $93.7m in FY2016F due to:
• Management Fees – Debtor Finance is forecast to increase by $2.4m (4.2%) from $57.4m to $59.8m as a result of:
– Turnover is forecast to increase by 27.2% from $8,897m to $11,318m due to both organic growth and the GE and Suncorp
Portfolio Acquisitions. Turnover growth for the Underlying Business is forecast to be $1,739m (19.5%), with the GE and Suncorp
Portfolio Acquisitions adding $681m to FY2016F from their respective acquisition dates until period end; and
– Average Management Fees are forecast to decline from 0.64% to 0.53% due to both organic and inorganic growth into
higher Exposure Clients on more competitive terms. Average Management fees in the Underlying Business are forecast
to decline from 0.64% in FY2015 to 0.55% in FY2016F;
• Management Fees – Trade Finance and Other are forecast to increase by $1.1m (34.3%) from $3.2m to $4.3m in FY2016F as the
business continues to develop organically and record strong Client number growth and utilises cross sell opportunities across
the growing Scottish Pacific Client base;

106
• Net Interest Income is forecast to increase by $5.2m (21.3%) from $24.4m to $29.5m due to:
– Debtor Finance Average Exposure is forecast to increase by 20.6% from $552.2m to $666.2m due to both Client and
receivables growth, and due to partial contribution from the GE and Suncorp Acquisitions which added $32.2m to Average
Exposure. Excluding the impact of GE and Suncorp Portfolio Acquisitions, Average Exposure growth is forecast at 14.8%;
– Debtor Finance Net Interest Income as a percentage of Average Exposure is forecast to be relatively stable increasing from
4.46% to 4.47% largely due to renegotiating funding costs with one of the Senior Facilities in 1Q2016, somewhat negated by
lower margins of new Clients particularly the GE and Suncorp Portfolios who have a lower Net Interest Income. Excluding the
impact of the GE and Suncorp Portfolio Acquisitions, Net Interest Income as a percentage of Average Exposure for Scottish
Pacific is forecast to increase to 4.60% in FY2016F from 4.46% in FY2015; and
– Trade Finance Net interest expense is forecast at $0.2m in FY2016F relative to $0.3m in FY2015; and
• Net Revenue contribution from GE and Suncorp Portfolio Acquisitions is forecast to be $0.8m from Management Fees – Debtor
Finance and $0.6m from Net Interest Income in FY2016F.

4.9.1.2 Expenses
Total expenses are forecast to increase $3.6m (6.4%) from $56.9m in FY2015 to $60.5m in FY2016F due to:
• Staff expenses are forecast to increase $1.4m (4.0%) from $35.0m to $36.3m due to Underlying Business growth, offset by
realisation of Bibby synergies which are predominantly realised from April 2016. As a percentage of Net Revenue, staff expenses
forecast to decline from 41.2% to 38.8% as result of Scottish Pacific’s operating leverage, growth into larger and lower cost Clients
and due to the contribution of the GE and Suncorp Portfolio Acquisitions which have materially lower headcount requirements.
This includes forecast staff synergies of $1.0m;
• Office and administration expenses are forecast to increase $0.7m (4.3%) from $15.5m to $16.1m reflecting stable growth below
that of the Underlying Business and the partial year’s benefit of expected synergies with Bibby predominantly associated with
occupancy costs. This includes forecast office and administration synergies of $0.2m;
• Marketing and advertising expenses are forecast to decrease by $0.3m (14.2%) from $2.3m to $1.9m. Excluding synergies of $0.2m,
which are the result of combining marketing resources with Bibby and no longer supporting the Bibby brand, marketing spend
is more comparable to FY2015 reflecting spending to grow both product awareness and Scottish Pacific’s market share;
• Bad debts expense are forecast to decline $0.4m (12.5%) from $3.3m to $2.9m and fall as a percentage of Average Exposure from
0.59% to 0.43% primarily due to continued improvement in Client mix including the partial year’s benefit of the GE and Suncorp
portfolio Clients, which have lower bad debts expense as a percentage of Exposure. Excluding the impact of the GE and Suncorp
Portfolio Acquisitions, the Underlying Business bad debts expense as a percentage of Average Exposure is forecast to decline
from 0.59% to 0.44% evidencing the benefit of the lower risk profile of new Clients in the Underlying Business; and
• Depreciation and amortisation forecast to increase by $2.3m (265.9%) from $0.9m to $3.2m predominantly due to the impact of
amortisation of acquired intangibles in relation to the Bibby acquisition and the GE and Suncorp Portfolio Acquisitions and costs
associated with implementing the Corporate Debt Facilities and Mezzanine Facility. Amortisation for each acquisition has been
applied from the date of acquisition and so reflects the pro rata impact for Bibby (31 December 2015) and GE and Suncorp
Portfolio Acquisitions (May 2016) and contributed $2.1m to total depreciation and amortisation in FY2016F.
As a percentage of Net Revenue, Opex (excluding D&A) is forecast to fall from 66.0% to 61.2% reflecting the benefits of growing scale,
changing business mix towards lower cost Clients and partial realisation of the synergies associated with the Bibby acquisition. Total
synergies captured in the above are $1.4m, predominantly linked to staff expenses as headcount is reduced in 3Q2016 and 4Q2016F.

4.9.1.3 PBIT
PBIT is forecast to grow by $5.1m (18.1%) to $33.1m in FY2016F from $28.1m in FY2015 due to the reasons indicated above, with PBIT
margin growing from 33.0% to 35.4%. This is largely a result of the benefits of growing scale and changing business mix towards lower
cost Clients, and the partial realisation of Bibby synergies. To some extent this is offset by an increase in amortisation of intangibles
associated with the acquisitions of Bibby, and the GE and Suncorp Portfolio Acquisitions.
Excluding the impact of the GE and Suncorp Portfolio Acquisitions, Underlying Business PBIT is forecast to increase by $4.0m (14.4%)
from $28.1m in FY2015 to $32.1m in FY2016F. This implies an improvement in the Underlying Business PBIT margin from 33.0% in
FY2015, to 34.8% in FY2016F.

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04. Financial Information continued


4.9.1.4 1H2016
Scottish Pacific’s revenue and expense cycles have demonstrated minimal seasonality throughout FY2016.
In respect of Net Revenue, 1H2016 is marginally higher than 2H2016 due to the impact of the Christmas period which results in
December being a peak month of Turnover and resulting Management Fees, this is off-set by the general growth in the business
which has supported 2H2016 Net Revenue levels. Average Exposure which drives Net Interest Income has generally increased in line
with the general growth of the business between 1H2016 and 2H2016.
In respect of expenses, these are consistent between 1H2016 and 2H2016, with the impact of the Bibby acquisition in 1H2016 resulting
in an increase in amortisation of purchased intangibles which is off-set by cost synergies achieved as a result of the acquisition. Other
variances between the half periods include the one-off impact of specific provisioning events, with an increase in 2H2016 compared
to 1H2016.

4.9.2 Pro Forma Historical and Forecast Cash Flows: FY2016F Compared to FY2015

Table 31: Pro Forma Historical and Forecast Cash Flows: FY2016F Compared to FY2015

Change
$m FY2015 1H2016 FY2016F Change %
PBT 25.4 16.6 29.7 4.3 16.9%
Add back non-cash Items
Bad debts expense 3.4 1.0 2.9 (0.5) (13.6%)
Depreciation and amortisation 1.8 1.3 4.7 2.9 165.5%
Other (0.0) – – 0.0 (100.0%)
Movement in working capital 1.6 4.2 3.3 1.7 108.1%
Operating cash flow before financing and taxation 32.1 23.1 40.6 8.5 26.4%
Capital expenditure (0.9) (0.4) (0.6) 0.3 (34.8%)
Equity investments in limited-recourse Funding Vehicles (7.1) (6.7) (20.2) (13.1) 185.5%
Net cash flow before corporate financing and taxation 24.1 16.0 19.8 (4.3) (17.8%)

The conversion of PBT to net cash flow before corporate financing and taxation in FY2016F versus FY2015 is forecast to be driven
by a number of factors including:
• Movement in working capital represents timing of payments in relation to prepayments, other debtors, accruals and
employee provisions;
• Capital expenditure represents payments to acquire property, plant and equipment; and
• Equity investments in limited-recourse Funding Vehicles are forecast to increase from a $7.1m cash outflow in FY2015 to
a $20.2m cash outflow in FY2016F driven by an increase in the underlying Client receivables due to the GE and Suncorp
Portfolio Acquisitions.

108
4.9.3 Pro Forma Forecast Income Statements: FY2017F Compared to FY2016F

Table 32: Pro Forma Forecast Income Statements: FY2017F Compared to FY2016F

Change
$m FY2016F FY2017F Change %
Management Fees – Debtor Finance 59.8 70.0 10.2 17.0%
Management Fees – Trade Finance and Other 4.3 5.4 1.1 25.2%
Net Interest Income 29.5 33.8 4.2 14.3%
Net Revenue 93.7 109.1 15.5 16.5%
Staff expenses (36.3) (36.2) 0.1 (0.3%)
Office and administration expenses (16.1) (15.9) 0.2 (1.3%)
Marketing and advertising expenses (1.9) (2.0) (0.1) 3.3%
Bad debts expense (2.9) (3.2) (0.3) 10.7%
Depreciation and amortisation (3.2) (6.9) (3.7) 115.2%
Total expenses (60.5) (64.2) (3.7) 6.1%
PBIT 33.1 44.9 11.7 35.4%
Borrowing costs (3.4) (5.3) (1.9) 55.5%
PBT 29.7 39.6 9.9 33.2%
Income tax expense (9.6) (13.6) (4.0) 41.7%
NPAT 20.1 26.0 5.9 29.1%
Acquisition amortisation 2.1 5.8 3.6 170.7%
NPATA 22.3 31.8 9.5 42.7%

4.9.3.1 Net Revenue

Net Revenue is forecast to increase by $15.5m (16.5%) from $93.7m in FY2016F to $109.1m in FY2017F due to:
• Management Fees – Debtor Finance is forecast to grow by $10.2m (17.0%) from $59.8m to $70.0m as a result of:
– Turnover is forecast to increase by 44.6% to $16,361m from $11,318m reflecting a full year’s impact of GE and Suncorp
Portfolio Acquisitions. Excluding the full years’ impact of the GE and Suncorp Portfolio Acquisitions, Underlying Business
Turnover growth is expected at 12.3%, with the GE and Suncorp Portfolio Acquisitions contributing $4,417m to FY2017F
Turnover; and
– Average Management Fees are forecast to fall as a percentage of Turnover from 0.53% to 0.43% reflecting primarily the full
year’s impact of the acquisition of the GE and Suncorp Portfolios, whose Clients have a forecast fee of 0.12% as a percentage
of Turnover, reflecting the lower risk and lower cost nature of the acquired Clients. Excluding GE and Suncorp Portfolios,
the Management Fee is expected to be relatively flat on prior year at 0.54% relative to 0.55% in FY2016F, consistent with
Management’s expectation of stable pricing in FY2017F, while the impact of lower cost larger new Clients is decreasing
given the existing size of Scottish Pacific’s Turnover.
• Management Fees – Trade Finance and Other are forecast to increase by $1.1m (25.2%) from $4.3m to $5.4m due to expansion
of relationships with manufacturers in China and selling Tradeline to their end Clients in Australia, the UK and New Zealand;
• Net Interest Income is forecast to increase by $4.2m (14.3%) from $29.5m to $33.8m driven by:
– Debtor Finance Average Exposure is forecast to increase by 38.4% to $922.0m from $666.2m reflecting the full year’s impact
of the GE and Suncorp Portfolio Acquisitions and continuing organic growth of larger Exposure Clients. The GE and Suncorp
Portfolio Acquisitions are forecast to contribute $212.6m to Average Exposure in FY2017F, and excluding the contribution
from the GE and Suncorp Portfolio Acquisitions, growth in Debtor Finance Average Exposure is forecast to be 11.9%;

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04. Financial Information continued


– Debtor Finance Net Interest Income as a percentage of Average Exposure is forecast to decline from 4.47% to 3.68% primarily
due to a full year’s contribution from the GE and Suncorp Portfolio Acquisitions, whose Clients are forecast to have a lower
Net Interest Income as a percentage of Average Exposure than other members of the Group. As a result of changing Scottish
Pacific’s business mix towards Discounting relative to Factoring and larger Exposure Clients which generally have lower
interest charges, Scottish Pacific’s Underlying Business, is forecast to reduce its Net Interest Income as a percentage of
Average Exposure from 4.60% in FY2016F to 4.33% in FY2017F; and
– Trade Finance Net interest expense is forecast flat at $0.2m in FY2017F; and
• Net Revenue contribution from the GE and Suncorp Portfolio Acquisitions is forecast to be $5.4m to Management Fees – Debtor
Finance and $3.3m to Net Interest Income.

4.9.3.2 Expenses
Total expenses are forecast to increase by $3.7m (6.1%) from $60.5m in FY2016F to $64.2m in FY2017F due to:
• Staff expenses forecast to decrease by of $0.1m (0.3%) from $36.3m to 36.2m as a result of changes in business mix to higher
quality and lower risk Clients facilitating reducing employees per Client, and the benefits of a full year’s synergy contribution from
Bibby. Additionally the full year’s impact of the GE and Suncorp Portfolio Acquisitions has a material impact on operating costs
given materially lower headcount requirement to service the portfolio as a result of it being predominantly Discounting Clients
with Low Touch requirements. As a percentage of Net Revenue, staff expenses are forecast to decline from 38.8% in FY2016F to
33.2% in FY2017F. This includes forecast staff synergies of $3.6m;
• Office and administration expenses forecast to decline by $0.2m (1.3%) from $16.1m to $15.9m largely as a result of the full year’s
synergies from the Bibby acquisition largely associated with reduced occupancy costs amounting to $0.2m;
• Marketing and advertising expenses are forecast to increase by $0.1m (3.3%) from $1.9m to $2.0m which captures increased
marketing spend as Scottish Pacific grows product and brand awareness, offset by the benefits of no longer supporting the
Bibby brand and the full year’s benefit of combining marketing resources with Bibby, resulting in synergies of $0.7m;
• Bad debts expense is forecast to increase by $0.3m (10.7%) from $2.9m to $3.2m, but forecast to drop as a percentage of Average
Exposure from 0.43% to 0.35%. This was primarily due to the full year’s contribution of GE and Suncorp Portfolio Acquisitions
which have higher Exposure and lower risk Clients and as a result a lower forecast bad debts expense as a percentage of
Exposure. Excluding the contribution of the GE and Suncorp Portfolio Acquisitions, bad debts expense as a percentage of
Average Exposure slightly down on the previous year at 0.40% in FY2017F compared to 0.44% in FY2016F; and
• Depreciation and amortisation are forecast to increase $3.7m (115.2%) to $6.9m from $3.2m capturing a full year’s impact
of the amortisation of intangibles associated with the acquisitions of Bibby, and the GE and Suncorp Portfolio Acquisitions.
As a percentage of Net Revenue, Opex (excluding D&A) falls from 61.2% to 52.6% reflecting the benefits of growing scale, changing
business mix towards lower cost Clients and the full realisation of the synergies associated with the Bibby acquisition. Total synergies
captured in the above are $5.1m, predominantly linked to staff expenses.
FY2017F also includes a full year’s contribution from the GE and Suncorp Portfolio Acquisitions, which reduces operating expenses
relative to Net Revenue given the Low Touch nature of the Client base.

4.9.3.3 PBIT
PBIT is forecast to increase by $11.7m (35.4%) from $33.1m to $44.9m in FY2017F from FY2016F due to the reasons indicated above,
with PBIT margin growing from 35.4% to 41.1%. This is largely a result of realising a full year’s benefit of the GE and Suncorp Portfolio
Acquisitions and the Bibby synergies, supported by continued organic growth and change in business mix towards lower cost Clients
reducing operating expenses. This is offset to an extent by an increase in amortisation of intangibles associated with the acquisition
of Bibby, and the GE and Suncorp Portfolio Acquisitions.
Excluding the full year impact of the GE and Suncorp Portfolio Acquisitions, Underlying Business PBIT is forecast to increase
by $6.7m (20.7%) from $32.1m in FY2016F to $38.7m in FY2017F. This implies an improvement in the Underlying Business PBIT
margin from 34.8% in FY2016F to 38.6% in FY2017F.

110
4.9.4 Pro Forma Forecast Cash Flows: FY2017F Compared to FY2016F

Table 33: Pro Forma Forecast Cash Flows: FY2017F Compared to FY2016F

Change
$m FY2016F FY2017F Change %
PBT 29.7 39.6 9.9 33.3%
Add back non-cash Items
Bad debts expense 2.9 3.2 0.3 10.3%
Depreciation and amortisation 4.7 9.0 4.3 90.0%
Other – – – –
Movement in working capital 3.3 (2.8) (6.0) (184.7%)
Operating cash flow before financing and taxation 40.6 49.0 8.4 20.8%
Capital expenditure (0.6) (1.3) (0.7) 121.7%
Equity investments in limited-recourse Funding Vehicles (20.2) (12.0) 8.1 (40.3%)
Net cash flow before corporate financing and taxation 19.8 35.7 15.9 79.9%

The conversion of PBT to net cash flow before corporate financing and taxation in FY2017F versus FY2016F is forecast to be driven by
a number of factors including:
• Movement in working capital represents timing of payments in relation to prepayments, other debtors, accruals and employee
provisions;
• Capital expenditure represents payments to acquire property, plant and equipment; and
• Equity investments in limited-recourse Funding Vehicle are forecast to decrease from a $20.2m cash outflow in FY2016F to
a $12.0m cash outflow in FY2017F as FY2016F included the acquisition of the GE and Suncorp Debtor Finance Clients. Scottish
Pacific is able to fund Junior Notes with free cash flow, cash on the balance sheet, drawdown of unused Mezzanine Facility and/or
the drawdown of the unused Corporate Debt Facilities.

4.10 Sensitivity Analysis

The Forecast Financial Information is based on a number of estimates and assumptions that are subject to business, economic and
competitive uncertainties and contingencies, many of which are beyond the control of Scottish Pacific and its Directors and
Management, and upon assumptions with respect to future business developments, which are subject to change.
Investors should be aware that future events cannot be predicted with certainty and as a result, deviations from the figures forecast in
this Prospectus are to be expected. To assist investors in assessing the impact of these assumptions on the forecasts, set out below is
a summary of the sensitivity of certain Forecast Financial Information to changes in a number of key variables. The changes in the key
variables as set out in the sensitivity analysis are not intended to be indicative of the complete range of variations that may be
experienced. For the purposes of the analysis below, the effect of the changes in key assumptions on the FY2017F Pro Forma forecast
PBT is presented.
It is important to note that the sensitivity analysis calculations assume changes in a variable are not impacted by changes in other
variables. The sensitivity analysis is intended as a guide only and variations in actual performance could exceed the ranges shown.

Scottish Pacific  Prospectus 111

04. Financial Information continued


Table 34: Sensitivity Analysis on the Pro Forma Forecast PBT for FY2017F

FY2017F
Assumption No Variance PBT Impact ($m) +/–
Net Revenue (Underlying Business) 1
Management Fee (Admin fee %) for Debtor Finance 2 +/– 1 basis point 1.2 (1.2)
Turnover growth rate 3 +/– 2.5% 1.5 (1.5)
Average Exposure growth 4 +/– 1.0% 0.3 (0.3)
Net Interest Income (margin on funding) 5 +/– 10 basis points 0.7 (0.7)
Operating costs
Operating expenses as percentage of net revenue 6 +/– 1.0% 1.1 (1.1)
Loan loss/bad debt provision rates 7 +/– 5 basis points 0.4 (0.4)
New acquisitions
Forecast margin for GE and Suncorp 8 GE and Suncorp PBT 0.6 (0.6)
Notes:
1. The sensitivities pertaining to Net Revenue set out above are based on the Underlying Business only, consistent with the key financial and operating metrics
discussed in Section 4.3.4. A separate sensitivity has been set out in respect of the GE and Suncorp Portfolio Acquisitions.
2. Impact of increase or decrease in the average Management Fee received from Clients of the Underlying Business. The Management Fee is driven by the level
of Turnover.
3. Impact of an increase or decrease in the Turnover growth rate forecast for FY2017F. Refer to the key financial and operating metrics set out in Section 4.3.4
for the Turnover growth rate assumption in the forecast relative to historical trends.
4. Impact of an increase or decrease in the growth rate assumed for the Average Exposure (Client receivables) forecast for FY2017F. Refer to the key financial and
operating metrics set out in Section 4.3.4 for the Average Exposure growth rate assumption in the forecast relative to historical trends.
5. Impact of an increase or a decrease in the Net Interest Income by 10 basis points. Net Interest Income is expressed as a percentage of Average Exposure (Client
receivables) and represents the interest margin earned on the funding provided to Clients i.e. difference between interest income and the interest expense on
Senior Facilities and the Mezzanine Facility (including commissions and debt establishment fees).
6. Impact of an increase or decrease in total Operating Expenses expressed as percentage of Net Revenue. Operating expenses primarily include staff expenses,
office and administration, marketing and bad debts.
7. Impact of an increase or decrease in the bad debts expense as percentage of Average Exposure, relating to the Scottish Pacific and Bibby businesses. The credit
quality of the GE and Suncorp Portfolios is typically better and these are therefore presented separately in the key financial and operating metrics discussed in
Section 4.3.4.
8. Impact of the increase or decrease in the forecast FY2017F earnings relating to the newly acquired GE and Suncorp Portfolios. The sensitivity highlights the impact
of a decline in performance relative to that forecast based on a limited track record under the new ownership. The sensitivity has been calculated based on 10%
of the forecast PBT in FY2017F.

4.11 Dividend Policy

Subject to business conditions and available profits and the financial position of Scottish Pacific, it is current intention of the Directors
to pay dividends.
Assuming that the FY2017F results are or are still expected to be consistent with the Forecast Financial Information, during the period
relating to the Forecast Financial Information, it is the current intention of the Board to target a payout ratio of between 60% and 80%
of Pro Forma NPATA. Thereafter, the Directors currently expect to target a payout ratio of between 60% and 80% of NPATA.
The actual payout ratio may vary between periods depending upon the Company’s capital management plans at the time and any
other factors the Directors consider relevant. It is expected that dividends will be franked to the maximum extent possible, which will
depend on the amount of tax payable by the Company.
The Directors currently expect that the first dividend will be in respect of the period from 1 July 2016 to 31 December 2016 and will be
paid in March or April 2017.
No assurances can be given by any person, including the Directors, about the payment of any dividend and the level of franking on
any such dividend. There may be periods in respect of which dividends are not paid. Please read the Forecast Financial Information in
conjunction with the assumptions underlying its preparation as set out in Sections 4 and 9 and the risk factors set out in Section 5.

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05.
Key Risks
05. Key Risks


5.1 Introduction
Scottish Pacific is subject to risk factors that are both specific to its business activities and others that are of a more general nature. Any
single risk or a combination of these risks may have a material adverse impact on Scottish Pacific’s business, financial performance and
operations. Section 5 outlines some of the potential risks associated with Scottish Pacific’s business and an investment in its Shares;
however it does not purport to list every risk that may be associated with an investment in Shares now or in the future. While Scottish
Pacific seeks to manage risks to prevent adverse outcomes, many of these risks are outside the control of Scottish Pacific, the Directors
and Management team.
The selection of risks has been based on an assessment of a combination of the likelihood of the risk occurring and the impact of the
risk if it did occur. This assessment is based on knowledge of Directors as at the Prospectus Date. There is no guarantee or assurance
that the importance of different risks will not change, other risks will not emerge, or the risk mitigating activities undertaken by
Scottish Pacific would be effective in reducing risks.
There can be no guarantee that Scottish Pacific will deliver on its business strategy, or that the forecasts or any forward-looking
statement contained in this Prospectus will be achieved or realised. You should note that past performance is not a reliable indicator
of future performance.
Before applying for Shares, you should satisfy yourself that you have a sufficient understanding of these matters and should consider
whether Shares are a suitable investment for you, having regard to your own investment objectives, financial circumstances and
taxation position. If you do not understand any part of this Prospectus or are in any doubt as to whether to invest in Shares, you
should seek professional guidance from your solicitor, stockbroker, accountant or other independent and qualified professional adviser
before deciding whether to invest.

5.2 Specific Risks of an Investment in Scottish Pacific

5.2.1 Major Fraud Events

Scottish Pacific is exposed to the risk that counterparties with which it deals, including Clients and debtors, may act fraudulently.
Potential fraudulent behaviour could include Clients and/or debtors conspiring to induce Scottish Pacific to advance funds against
false invoices, advance funds to a non-existent or insolvent entity, or advance funds against invoices that are owned by (or required
to be paid to) a third party. Scottish Pacific relies on its internal controls to detect fraud. Any failure of these internal controls to detect
fraud could result in credit losses, damage to Scottish Pacific’s reputation and its ability to raise funding, which in turn could materially
adversely affect Scottish Pacific’s business, operations and financial performance. For example, in 2009 and 2010 Scottish Pacific was
impacted by large losses on two different Clients which saw Scottish Pacific’s Standalone losses reach $3.2m in FY2009 and $1.5m in
FY2010 respectively. Accumulated underwriting experience, knowledge of industry and customer specific risks, continuously
improving credit processes and a highly diversified loan book mitigate risk of material loss. Further detail of Scottish Pacific’s historical
losses is set out in Section 3.2.7.

5.2.2 Debtors and Clients Unable to Meet their Financial Obligations

Scottish Pacific is exposed to the risk that its Clients and debtors do not meet their financial obligations or become insolvent. A failure
by Scottish Pacific to adequately assess and manage counterparty credit risk may result in credit losses, potentially resulting in
a material adverse effect on Scottish Pacific’s business, operating and financial performance, including decreased operating cash
flows, significant impairment expenses, an increase in funding costs, and reduced access to funding. Primary recourse is against the
debtor not the Client, such that the failure of the Client becomes less material. An effective LVR of 57% against assigned receivables
and strong underwriting standards mitigate the risk of material loss.

5.2.3 Current Litigation

Scottish Pacific Business Finance Pty Limited and Benchmark Debtor Finance Pty Limited are currently defendants in proceedings in
the Supreme Court of New South Wales. The proceedings involve claims brought by the liquidator of a third party seeking to recover
an amount of approximately $3.0m in relation to a former Client where the Client was placed in voluntary administration in September
2011 and subsequently into liquidation. The Group is defending the claim; however, there is a risk that the Group may not be
successful in that defence. In addition to this, if the Group is unsuccessful, it may be required to pay legal fees to the claimant.
Although it is not possible to assess these with any certainty as at the Prospectus Date, the Board considers based on information
currently available to it, that the Group’s likely exposure for legal fees and costs (both its own costs and any third party costs) could
be as much as $1.0m to $1.5m if it is unsuccessful in the proceedings. There is also a risk that any decision made by a court in these
proceedings is appealed. This could materially increase the costs of the proceedings. It is not possible to estimate the likelihood of any

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appeal or the costs of any appeal as at the Prospectus Date. At present, it is uncertain how long the proceedings could take to resolve;
however, it is likely they will not be finalised until sometime during FY2017, and could possibly not be resolved until FY2018F.
The Group is also currently a party to litigation which it has commenced to enforce its contractual rights against various Clients and
third party debtors. This forms part of the Group’s usual operating procedures to recover amounts owed to it. There is a risk in
conducting litigation that the Group could be unsuccessful in that litigation, which would expose the Group to claims from third
parties for their legal costs (in addition to the costs the Group incurs in conducting those proceedings). In addition, enforcement
proceedings could result in adverse publicity and reputational damage if the Group is perceived to have acted unfairly or in a heavy
handed manner. This may adversely impact the willingness of parties to do business with the Group in future.

5.2.4 Litigation, Claims and Disputes

Scottish Pacific may be subject to litigation and other claims and disputes in the course of its business, including employment
disputes, contractual disputes, indemnity claims and occupational and personal claims. Such litigation, claims and disputes, including
the costs of settling claims and operational impacts, could materially adversely affect Scottish Pacific’s business, operating and
financial performance.

5.2.5 Funding
Scottish Pacific’s funding platform comprises a mix of Senior Facilities, a Mezzanine Facility, Corporate Debt Facilities, and the use
of Scottish Pacific’s own cash. Scottish Pacific depends on each of these sources to provide Client Funding Amounts to its Clients.
As detailed below, a loss of, or adverse impact on or in relation to, one or more of Scottish Pacific’s funding sources could limit
Scottish Pacific’s ability to continue to fund its existing business, to write new business or, without access to alternative funding
sources, to write new business on favourable terms. Each of these outcomes could have an adverse effect on Scottish Pacific’s financial
performance. There is also a risk that, upon the occurrence of certain adverse events, the Senior Facilities or the Mezzanine Facility
could enter a ‘lock-up’ or ‘turbo’ amortisation scenario whereby residual income in respect of the relevant Funding Vehicle or Funding
Vehicles is diverted to the repayment of senior ranking facilities, which may adversely impact the earnings of Scottish Pacific.
The interest payable under the majority of the Senior Facilities, the Mezzanine Facility and the Corporate Debt Facilities are linked
to the BBSY – a variable floating interest rate benchmark. It is possible that the interest rate charged may increase in the future,
impacting the availability or size of any Net Margin earned by Scottish Pacific on receivables funded through its Funding Vehicles
and Scottish Pacific’s cost of doing business. In the event that Scottish Pacific is unable to pass on increased costs to its Clients,
or do so in a timely manner, this may adversely impact its operating performance.
Scottish Pacific reserves the right to pass on increased costs to its Clients. In the event that Scottish Pacific is unable to pass on
increased costs, or do so in a timely manner, this may adversely impact its operating performance.

Senior Facilities
There is a risk that a deterioration in the credit quality of the receivables portfolio sold to a Funding Vehicle could potentially trigger
a restriction on funding under the relevant Senior Facility. This may restrict or prevent Scottish Pacific from accessing funds from the
relevant Funding Vehicle to provide funds to its Clients. A ‘lock-up’ or ‘turbo’ amortisation scenario may also restrict Scottish Pacific’s
ability to access residual income from a Funding Vehicle or the Mezzanine Vehicle and this may adversely impact its earnings.
The occurrence of a default and enforcement of the relevant security arrangements in respect of one or more Funding Vehicles may
enable the secured creditors of those Funding Vehicles to direct the sale of the receivables portfolio to facilitate repayment of their
funding. Scottish Pacific has the right to direct certain Funding Vehicles to dispose of receivables to cure an adverse event (or to avoid
the occurrence of an adverse event) in respect of those Funding Vehicles. Scottish Pacific does not have this right in respect of all
Senior Facilities or all circumstances, and may not be in a position to exercise this right (including because it may not have the funds
available to fund a purchase of receivables from a Funding Vehicle, particularly if there is a credit deterioration across a significant part
of the relevant receivables portfolio). The secured creditors of the Funding Vehicles also have a right to remove Scottish Pacific and its
related entities as the ‘servicers’ of the Funding Vehicles under certain circumstances, including where those entities do not comply
with certain of their obligations. If a receivables portfolio was sold, Scottish Pacific would:
• Lose the fees associated with servicing the portfolio and the right to any Net Margin generated by the receivables portfolio; and
• Likely suffer substantial damage to its Client relationships – this is a particular risk in a sale scenario given it is likely that Clients and
debtors which owe on invoices would be notified of the sale, in turn undermining confidence in Scottish Pacific’s business.

Scottish Pacific  Prospectus 115

05. Key Risks continued


This would also apply, other than the loss of its Net Margin, where a member of Scottish Pacific is removed as servicer. These events
may also result in Clients and debtors being given notice of the Funding Vehicle’s ownership of receivables, which may have an
adverse impact on Scottish Pacific’s relationship with its Clients and detrimentally affect its ongoing business.
There is a risk that Scottish Pacific may not be able to renew its Senior Facilities or the Mezzanine Facility when they fall due for
renewal. This could materially impact Scottish Pacific’s ability to continue to fund its existing business, to fund new business or,
without access to alternative funding sources, to write new business on favourable terms, potentially materially adversely affecting
Scottish Pacific’s financial performance.
Scottish Pacific’s ability to receive funds from the sale of receivables to Funding Vehicles is subject to conditions. Failure to meet these
conditions could limit Scottish Pacific’s ability to provide Client Funding Amounts to new and existing Clients. Some of the conditions
could be breached by action taken by Scottish Pacific (e.g. breach of its obligations under the Senior Facilities) or could be caused by
events outside of Scottish Pacific’s control, such as a change in the policy of a financier under a Senior Facility, a deterioration in the
credit quality of the receivables sold to a Funding Vehicle or a disruption to, or deterioration in, general credit markets.
There is a risk that general market conditions may restrict Scottish Pacific from expanding its funding capability if it cannot negotiate
increased limits to existing Senior Facilities and the Mezzanine Facility or secure new senior facilities or mezzanine facilities.
Certain events may impact the availability or size of any Net Margin earned by Scottish Pacific on receivables funded through its
Funding Vehicles. The Net Margin otherwise payable to Scottish Pacific may instead be used to repay certain amounts in connection
with the Senior Facilities or the Mezzanine Facility in the event that the term of a Senior Facility or the Mezzanine Facility is not
extended, or an event of default or certain other trigger events occur (refer to Section 9.5.2).
The financiers under the Senior Facilities have the ability in certain circumstances to require changes to the terms of the Senior
Facilities prior to contractual maturity or in connection with the periodic renewal process. This may include higher funding costs, the
implementation of lower funding advance rates (i.e. reducing the amount they will advance in respect of any given receivable) and
the requirement for additional capital to be provided by Scottish Pacific, or new limitations on the types of receivables that may be
funded under the Senior Facilities. Any such changes may constrain Scottish Pacific’s ability to write new business and service existing
Clients and hence adversely affect its financial performance.

Mezzanine Facility
Scottish Pacific has a Mezzanine Facility which supports the Senior Facilities by providing “first loss” capital to the Funding Vehicles.
There is a risk that a deterioration in credit quality of receivables sold to the Funding Vehicles could potentially trigger an event of
default or other adverse event in connection with the Mezzanine Facilities, which may restrict or prevent Scottish Pacific from
accessing any Net Margin otherwise payable to it by the Mezzanine Vehicle. This may adversely impact Scottish Pacific’s earnings.
There is a risk that a deterioration in the credit quality of the receivables portfolio sold to a Funding Vehicle could potentially trigger
a restriction on funding under the Mezzanine Facility. This may restrict or prevent Scottish Pacific from accessing funds from the
Mezzanine Vehicle. A ‘lock-up’ or ‘turbo’ amortisation scenario may also restrict Scottish Pacific’s ability to access Net Margin from the
Mezzanine Vehicle and this may adversely impact its earnings.
The occurrence of an event of default in respect of the Mezzanine Facility may result in the external financiers under the Mezzanine
Facility demanding repayment of, and cancelling, the facility. The repayment of the Mezzanine Facility is limited to amounts that are
available from the assets of the Mezzanine Vehicle (primarily being the Junior Notes issued to the Mezzanine Vehicle by the Funding
Vehicles). If amounts are not repaid following a demand, secured creditors of the Mezzanine Vehicle may direct the sale of the Junior
Notes issued by certain Funding Vehicles (which are held by the Mezzanine Vehicle) to facilitate repayment of their funding. This may
mean that Scottish Pacific (through its holding of Junior Notes issued by the Mezzanine Vehicle) loses any rights in respect of any Net
Margin payable in respect of the Junior Notes issued to the Mezzanine Vehicle by the Funding Vehicles.
On maturity of the Mezzanine Facility, unless it is extended, the financiers under the Mezzanine Facility may demand repayment of,
and cancel, the Mezzanine Facility, limit the amount of funding they provide or negotiate to change the terms of the Mezzanine
Facility. As a result, Scottish Pacific is subject to a risk that it is unable to refinance the drawn balance of the Mezzanine Facility upon
acceleration or maturity, or if it is able to do so, it may face greater funding costs or be unable to obtain sufficient funds to finance its
ongoing business or growth activities which could affect its operating and financial performance.

Corporate Debt Facilities

The occurrence of an event of default (including the breach of a financial covenant), review event or similar in respect of one or more
of the Corporate Debt Facilities may result in the financiers under those Corporate Debt Facilities demanding repayment of, and

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cancelling, the relevant Corporate Debt Facilities. On maturity of the Corporate Debt Facilities, unless they are extended, the financiers
under the Corporate Debt Facilities may demand repayment of, and cancel, the Corporate Debt Facilities, limit the amount of funding
they provide or negotiate to change the terms of the Corporate Debt Facilities. As a result, Scottish Pacific is subject to a risk that it is
unable to refinance the drawn balance of the Corporate Debt Facilities upon acceleration or maturity, or if it is able to do so, it may
face greater funding costs or be unable to obtain sufficient funds to fund its growth activities which could affect its operating and
financial performance.

Scottish Pacific’s Obligations to Provide “First Loss” Capital

Whilst the Senior Facilities and the Mezzanine Facility are limited recourse to the Scottish Pacific group, the terms of the Senior Facilities
and the Mezzanine Facility may require members of the Scottish Pacific Group to expend cash in relation to the Senior Facilities and
the Mezzanine Facility on an ongoing basis. These requirements include the obligation to subscribe for additional junior notes in
circumstances such as where a Funding Vehicles or the Mezzanine Vehicle incurs losses. This may require members of the Scottish
Pacific group to incur further expenditure and may affect its operating and financial performance.
As providers of “first loss” funding to the Funding Vehicles and the Mezzanine Vehicle, members of the Scottish Pacific group are first
in line to lose their investment if there is a loss experienced by, or other shortfall in funds available to, the Funding Vehicles or the
Mezzanine Vehicle. This may impact the availability or size of any Net Revenue earned by Scottish Pacific on receivables funded
through its Funding Vehicles and Scottish Pacific’s cost of doing business. In the event that Scottish Pacific is unable to pass on
increased costs to its clients, or do so in a timely manner, this may adversely impact its operating performance, as well as a decrease
in the value of the Group’s investments in notes and units issued by the Funding Vehicles and the Mezzanine Vehicle.

5.2.6 Scottish Pacific May Not be Able to Comply with Debt Covenants
Scottish Pacific has various financial and non-financial covenants under its Corporate Debt Facilities which could limit its future
financial flexibility. Scottish Pacific estimates that its Pro Forma net debt as at 31 December 2015 was $34.8m. If Scottish Pacific’s
operating results deteriorate, including incurring significant losses, Scottish Pacific may be unable to meet the covenants governing
its indebtedness, which may require Scottish Pacific to seek amendments, waivers of covenant compliance or alternative borrowing
arrangements, or to reduce debt or raise additional equity. If a breach of covenant were to occur, there is no assurance that the
financiers in respect of the Corporate Debt Facilities would consent to an amendment or waiver, or that those financiers would not
exercise their enforcement rights, including requiring immediate repayment and cancellation of the Corporate Debt Facilities. Such
events could limit Scottish Pacific’s flexibility in planning for, or reacting to, downturns in its business or otherwise materially adversely
affect Scottish Pacific’s business, operating and financial performance, and require new funding to be raised or a potential need to
raise equity. Such events may also have an impact on some of the Senior Facilities, including allowing the financiers under some
Senior Facilities to demand early repayment.

5.2.7 Regulatory Changes for Financiers

Parties which advance funding that Scottish Pacific relies upon to operate its business may be subject to regulatory changes in
Australia or elsewhere which affect their ability to advance funding, increase the cost of funding, or increase the amount of capital
they need to hold to advance that funding. As an example, APS 120 is the Australian regulatory standard that governs capital
requirements for securitisation (Funding Vehicle) lending for Australian banks. The regulator (APRA) is contemplating changes to the
standard which have the potential to increase risk-weights on facilities (including facilities similar to the Senior Facilities) provided by
Australian banks and reduce their appetite to provide funding to the subordinated tranches of these Funding Vehicles. Similar
changes are being contemplated in other jurisdictions. If certain contemplated changes occur, they could adversely affect Scottish
Pacific’s business, by increasing its cost of funding or the availability of funding, which, if Scottish Pacific is unable to pass on increasing
funding costs, may adversely impact Scottish Pacific’s cost of doing business and its ability to provide Client Funding Amounts to
its Clients.

5.2.8 Liabilities in relation to Funding Vehicles and Mezzanine Vehicle

There is a risk that Scottish Pacific may be required to repurchase receivables from, or to contribute collateral equal to the amount of
receivables into, its Funding Vehicles as a consequence of breaching certain representations or obligations relating to those
receivables, including with respect to eligibility of the receivables to be sold to the relevant Funding Vehicle. Scottish Pacific also
provides indemnities to the trustees of its Funding Vehicles and certain other parties in respect of losses arising from its negligence or
breach of certain of its obligations. Should any such obligation or liability emerge, they may materially adversely affect Scottish
Pacific’s profitability and financial position and prospects.

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05. Key Risks continued


5.2.9 Performance of Receivables

Scottish Pacific generates income from, among other things, the ownership of residual income units and Junior Notes in its Funding
Vehicles and the Mezzanine Vehicle, where income is distributed net of credit losses on the underlying pool of receivables. An increase
in credit losses on the underlying receivables caused by a failure of debtors or Clients to pay amounts owed under the receivables
will reduce the income available to the Funding Vehicles and the Mezzanine Vehicle to pay expenses, interest costs and, finally and last
in order of priority, Net Margin available for distribution to Scottish Pacific. Scottish Pacific’s rights to receive income from a Funding
Vehicle is subordinated to the rights to income of senior financiers and also to rights to income in connection with the Mezzanine
Vehicle. As a result, Scottish Pacific’s income from the Funding Vehicle, will decrease as a result of credit losses experienced.
As described above, there is also a risk that receivables sold to the Funding Vehicles experience losses at a level which result in a loss of
the “first loss” capital contributed by Scottish Pacific to those Funding Vehicles, which may also require Scottish Pacific to contribute
additional “first loss” capital.
Accordingly, Scottish Pacific is exposed to the performance of the relevant portfolios of receivables which are in turn affected by
a range of events outside Scottish Pacific’s control which may include the general deterioration of economic conditions.

5.2.10 Systems Failure

Scottish Pacific has established processes to ensure that it obtains ownership of receivables assigned to it and priority over those
receivables over other third parties (including other creditors of Scottish Pacific and its Clients). These processes rely in part on
searches and information provided by third parties, and in part on Scottish Pacific employees taking appropriate actions and following
internal processes and procedures (such as ensuring the Client enters into appropriate agreements and registering Scottish Pacific’s
interest in the assets of the Client). It is possible that inaccurate information provided by third parties, human error by Scottish Pacific
staff, or failure to follow procedures by Scottish Pacific staff, may result in Scottish Pacific not obtaining ownership of receivables that
are purportedly assigned to it, or losing priority to receivables to other third parties. This may expose Scottish Pacific to financial loss
if it is unable to recover from the Client (or debtors) the amount paid to the Client in respect of those receivables.

5.2.11 Scottish Pacific May Not Successfully Integrate Recent and Future Acquisitions
Over the past 12 months, Scottish Pacific has acquired Bibby, and portfolios of Clients of the former Australian GE Debtor Finance
business and from the Suncorp Debtor Finance business. There is a risk that Scottish Pacific fails to successfully integrate these
acquisitions and any future acquisitions with its existing businesses, experiences higher than anticipated integration costs, or realises
lower than anticipated synergies, or there is a significant delay in achieving the successful integration of these acquisitions, which
could have a material adverse effect on Scottish Pacific’s earnings from the acquisitions.

5.2.12 Inability to Retain Clients and Attract New Clients

Scottish Pacific’s contracts, including with key Clients, may be terminated without cause, in some cases on a short notice period. On
average, Scottish Pacific loses 20% of its Clients in any one year. This could include a loss of key Clients, including during the forecast
period. A failure to replace those Clients with new, equally profitable Clients, could materially impact on Scottish Pacific’s earnings. This
could occur due to a range of events including changes to Client funding requirements, a deterioration in the level of service provided
to the Client, a weakening of Client relationships or disputes with Clients, Client insolvency or a Client moving to a competitor.
In addition to the risk of losing Clients, Scottish Pacific is also at risk of existing Clients reducing their use of Debtor Financing.
This could occur because the Client chooses to use other forms of financing, or because the Client’s volume of business reduces
(meaning it generates less and smaller invoices for which it seeks Debtor Financing).
Scottish Pacific provides its Clients with a range of products and services including Factoring, Discounting, Trade Finance and Bad
Debt Protected Facilities. Margins vary considerably across the range of products and services that Scottish Pacific provides. Therefore,
a change in the mix of products and services that Scottish Pacific sells to its Clients could have a material adverse impact on Scottish
Pacific’s financial performance.
Any of these factors could materially adversely affect Scottish Pacific’s level of business, and the fees and Net Margin it earns, and
therefore its operating and financial performance.

5.2.13 Disruption to Technology Platform

Scottish Pacific’s technology platform may be disrupted, become outdated or cease to function efficiently for Scottish Pacific and its
Clients and debtors. They could also be exposed to damage or interruption from systems failures, computer viruses, cyber-attacks or

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other events. This could have a material adverse impact on Scottish Pacific’s business, operating and financial performance. Scottish
Pacific’s technology platform is critical to its operations and ability to manage collection of receivables and the amount of funds it
advances to Clients. It depends on the uninterrupted operation of its IT systems to operate its business. Some of these IT systems are
bespoke and not easily replicated. Any major disruption of system disruption to Scottish Pacific’s IT systems could materially affect its
operations and reputation. This would necessitate increased expenditure on technology and could adversely affect future levels of
business and Scottish Pacific’s financial performance.
Scottish Pacific manages this risk by maintaining a disaster recovery site that replicates all information and operating capabilities
of the technology platform.

5.2.14 Counterparties Not Honouring Warranty and Indemnity Obligations

The Group has recently undertaken a number of major acquisitions, being the acquisition of Bibby, the acquisition of the customer
relationships and accounts which comprised GE’s Australian Debtor Finance business, and the acquisition from Suncorp of the
customer relationships and accounts which comprised Suncorp’s Debtor Finance business in Australia. As part of these acquisitions,
the Group has relied on certain indemnities and warranties provided by the sellers (e.g. warranties as to full and correct payment of tax
and compliance with law, that the seller has taken appropriate steps to protect its ownership of receivables etc.). The Group may have
claims under these warranties and indemnities and has relied upon its ability to enforce those claims. To the extent a claim arises
under these warranties and indemnities, the Group is exposed to the risk that the seller:
• Disputes that warranty or indemnity claim;
• Fails to make payment in accordance with that warranty or indemnity claim; or
• Is unable to make payment for that claim.
If a seller fails to honour a warranty or indemnity claim, the Group could suffer material expenses in enforcing that claim, or a material
loss if it is unable to recover the full amount of its claim.

5.2.15 Business Continuity

Scottish Pacific is dependent on the provision of data by third parties, such as the banks with which it does business and its Clients. Its
business requires it to process a large number of transactions on a daily basis, the data for which is provided by such third parties. Any
failure in third party information and data systems may impact on Scottish Pacific’s ability to operate its business, including requiring it
to cease its operating business during the period of interruption, or making erroneous assumptions when advancing funding or
recovering receivables. This may result in financial loss to Scottish Pacific.

5.2.16 Employee Recruitment and Retention

The success of Scottish Pacific depends to a significant extent on the ability and performance of its key personnel, in particular, its
senior management team. The loss of key personnel, sustained underperformance by key personnel or an inability to recruit or retain
suitable replacements or additional personnel may impact Scottish Pacific’s ability to develop and implement its growth strategies
which may have an adverse effect on its future financial performance.
The success of Scottish Pacific is highly dependent on its ability to attract and retain experienced and high performing employees
with specialist skills, including BDMs, CRMs, other Operational Staff as well as senior management. There is a risk that any measures put
in place by Scottish Pacific to recruit and retain such employees may not be effective, or may result in material expenditure being
required to recruit new, experienced and high performing employees, which may have a material adverse effect on Scottish Pacific’s
business, operating and financial performance.

5.2.17 Disruption of Referral Network

Scottish Pacific relies on a broad referral network to source new Clients and business. The network is comprised of Commercial
Finance Brokers, accountants, Clients and banks, supported by formal and informal distribution agreements. There is a risk that, if
Scottish Pacific suffers reputational damage or its products cease to be attractive to Clients or referrers, members of the Group’s
referral network may cease to refer business to Scottish Pacific. If sufficient numbers of referrers did this, there could be a material
impact on Scottish Pacific’s ability to generate new business to make up for natural Client churn (currently, Scottish Pacific loses
approximately 20% of its Clients annually). This could have a material adverse impact on Scottish Pacific’s business, operating and
financial performance.

Scottish Pacific  Prospectus 119

05. Key Risks continued


5.2.18 Increases in Competition

The markets in which Scottish Pacific operate are competitive. Competitors may engage in more aggressive marketing, invest in
improved Client services or technology offerings, undertake consolidation activities, or adopt more aggressive pricing strategies
to gain scale and improve their market share. Scottish Pacific may also be exposed to heightened competition resulting from the
re-entrance of large financial institutions such as major Australian banks to the industry and new entrants, including
technology-enabled players.
As a result of these competitive dynamics, Scottish Pacific’s market position may worsen and it may not be able to retain and attract
new key Clients, unless it reduces margins and fees or extends facilities on less secure terms. A potential reduction in volumes and/or
revenues or increased loss rates may adversely affect Scottish Pacific’s financial performance.

5.2.19 Scottish Pacific May Not Successfully Implement its Business Initiatives or Growth Strategy
There is no guarantee that any of Scottish Pacific’s growth initiatives will be successfully implemented, deliver expected returns and
market share gains or ultimately be profitable. Scottish Pacific may also fail to adopt and execute the business initiatives that will
enable it to successfully maintain or improve its service and product offering to its Clients and meet their requirements. Failure to do
so could result in Clients choosing to utilise Scottish Pacific’s competitors to meet their funding requirements, potentially leading to
a worsening of Scottish Pacific’s market position and financial performance.

5.2.20 Scottish Pacific May Suffer Damage to its Reputation and Brand
Scottish Pacific’s reputation and brand are important in winning and retaining contracts, maintaining its relationships with Clients and
debtors, maintaining its funding sources, and attracting employees. Reputational damage could arise due to a number of
circumstances, including inadequate or deteriorating service, improper conduct or adverse media coverage. Any factors that damage
the reputation of Scottish Pacific may potentially result in failure to win new Clients and impinge on Scottish Pacific’s ability to
maintain relationships with existing Clients and debtors and impede its ability to compete successfully in the Debtor Finance market
as well as affect its ability to attract key employees. If any of these events occur, this could materially adversely affect Scottish Pacific’s
business, operating and financial performance.

5.2.21 Exposure to Adverse Economic Conditions

Scottish Pacific’s business is exposed to changes in general economic conditions in Australia and internationally. For example, the
Debtor Finance industry is affected by macroeconomic conditions such as economic recessions, downturns or extended periods of
uncertainty or volatility, which may influence demand for Debtor Finance services. Historically, Scottish Pacific has grown throughout
the economic cycle. Adverse economic conditions may disrupt SME growth or reduce the demand for working capital solutions
provided by Scottish Pacific. These factors may materially adversely affect Scottish Pacific’s business, operating and financial
performance, including potentially higher loss rates.

5.2.22 Political, Legislative or Regulatory Matters May Negatively Affect Scottish Pacific
Scottish Pacific is required to comply with a range of laws and regulations that relate to its business, such as financial services laws,
credit laws, the Corporations Act, privacy, work health and safety, and employment. At present, given the nature of the products that
Scottish Pacific makes available to its Clients, Scottish Pacific is not required to comply with laws and regulations that are as stringent
as those which apply to other kinds of financial institutions, such as banks. However, this could change in future with any change in
regulatory policy. Future changes to laws and regulations in any of these areas may increase the costs of operation or adversely affect
Scottish Pacific’s ability to conduct its operations. A failure by Scottish Pacific to comply with applicable laws and regulations may
subject Scottish Pacific to significant penalties, including payment of compensation, and may also result in the termination of, or
failure to renew, material contracts.

120
5.2.23 Exchange Rate Risk for Overseas Operations and Export Financing, Import Finance
and Tradeline Products
Scottish Pacific’s financial reports are prepared in Australian dollars. However, revenue, expenditure and cash flows, and assets and
liabilities, from Scottish Pacific’s New Zealand operations are denominated in New Zealand dollars. Additionally, Scottish Pacific
conducts business in three approved currencies (Australian dollars, US dollars and New Zealand dollars) for its Export Financing
products and four approved currencies (Australian dollars, US dollars, British pounds and euros) for its Tradeline business. Scottish
Pacific’s Import Finance business also conducts some operations in foreign currency. Scottish Pacific’s offices in China and the United
Kingdom also conduct business in Chinese yuan and British pounds respectively. Scottish Pacific is exposed to the risk of fluctuations
in the value of the Australian dollar against those currencies, as fluctuations in exchange rates impact on the translation of account
balances to Australian dollars. As a result, movements in foreign exchange rates could affect Scottish Pacific’s business, operating and
financial performance. Scottish Pacific manages foreign exchange risk by using forward exchange contracts but not all foreign
exchange risk is covered by these foreign exchange contracts.

5.3 General Risks of an Investment in Scottish Pacific

5.3.1 Price of Shares May Fluctuate

The price at which Shares are quoted on the ASX may increase or decrease due to a number of factors, many of which are outside
of Scottish Pacific’s control. These factors may cause the Shares to trade at prices below the Offer Price. There is no assurance that
the price of the Shares will increase following their quotation on the ASX, even if Scottish Pacific’s earnings increase.
Some of the factors which may affect the price of the Shares include fluctuations in the domestic and international market for listed
stocks, general economic conditions, including interest rates, inflation rates, exchange rates, commodity and oil prices, changes to
government fiscal, monetary or regulatory policies, legislation or regulation, inclusion in or removal from market indices, the nature
of the markets in which Scottish Pacific operates and general operational and business risks.
Other factors which may negatively affect investor sentiment and influence Scottish Pacific specifically or the stock market more
generally include acts of terrorism, an outbreak of international hostilities, fires, floods, earthquakes, labour strikes, civil wars and other
natural disasters.

5.3.2 The Trading in Shares May Not be Liquid

Prior to the Offer, there has been no public market in the Shares. Once the Shares are quoted on the ASX, there can be no guarantee
that an active trading market for the Shares will develop or that the price of the Shares will increase. There may be relatively few
potential buyers or sellers of the Shares on the ASX at any time. This may increase the volatility of the market price of the Shares. It may
also affect the prevailing market price at which Shareholders are able to sell their Shares. This may result in Shareholders receiving
a market price for their Shares that is less than the price that Shareholders paid.
Following Completion of the Offer, all of the Shares held by Next Capital Entities, IFM Investors, Non-Executive Director Shareholders
and Management Shareholders (other than any Shares acquired by them under the Offer at the Offer Price) will either be subject to
voluntary escrow arrangements until, Scottish Pacific’s full year results for FY2017F are provided to the ASX for release to the market,
or will be subject to vesting and other restriction conditions. In each case, the escrow restrictions are subject to certain exceptions
such as a limited early release as set out in more detail in Section 9.5.4. The absence of any sale of Escrowed Shares by the Escrowed
Shareholders during their Escrowed Period may cause, or at least contribute to, limited liquidity in the market for the Shares. This could
affect the prevailing market price at which Shareholders are able to sell their Shares. Following the end of the relevant Escrow Period,
a significant sale of Shares by the Escrowed Shareholders, or the perception that such a sale might occur, could adversely affect the
market price of the Shares.

5.3.3 There Is a Risk of Shareholder Dilution

In the future, Scottish Pacific may elect to issue Shares (or securities convertible into Shares) including in connection with fundraisings
for acquisitions that it may elect to undertake. While Scottish Pacific will be subject to the constraints of the ASX Listing Rules
regarding the percentage of its capital it is able to issue within a 12 month period (other than where exceptions apply), Shareholders
may be diluted as a result of such issues of Shares or other securities.

Scottish Pacific  Prospectus 121

05. Key Risks continued


5.3.4 Taxation Changes May Occur

Changes in tax law (including transfer pricing, Goods and Services Tax (“GST”), stamp duties and employment taxes), or changes in the
way tax laws are interpreted, may impact the tax liabilities of Scottish Pacific, Shareholder returns, the level of dividend imputation or
franking, or the tax treatment of a Shareholder’s investment. In particular, both the level and basis of taxation may change.
The tax information provided in this Prospectus is based on current taxation law as at the Prospectus Date. Tax law is frequently being
changed, both prospectively and retrospectively. Furthermore, the status of some key tax reforms remains unclear at this stage.
In addition, tax authorities may review the tax treatment of transactions entered into by Scottish Pacific. Any actual or alleged failure
to comply with, or any change in the application or interpretation of, tax rules applied in respect of such transactions, may increase
Scottish Pacific’s tax liabilities or expose it to legal, regulatory or other actions.
An investment in the Shares involves tax considerations which may differ for each Shareholder. Each prospective Shareholder is
encouraged to seek professional tax advice in connection with any investment in Scottish Pacific.

5.3.5 Australian Accounting Standards May Change

Australian Accounting Standards are set by the AASB and are outside the control of either Scottish Pacific or its Directors. The AASB
has introduced new or refined Australian Accounting Standards during the period to 2018, which may affect future measurement
and recognition of key income statement and balance sheet items, including revenue and receivables. There is also a risk that
interpretations of existing Australian Accounting Standards, including those relating to the measurement and recognition of key
income statement and balance sheet items, including revenue and receivables, may differ. Changes to Australian Accounting
Standards issued by the AASB or changes to the commonly held views on the application of those standards could materially
adversely affect the financial performance and position reported in Scottish Pacific’s consolidated financial statements.

5.3.6 Force Majeure Events May Occur

Events may occur within or outside Australia, New Zealand, China, Hong Kong or the United Kingdom that could impact upon these
economies, the operations of Scottish Pacific and the price of the Shares. The events include but are not limited to acts of terrorism, an
outbreak of international hostilities, fires, floods, earthquakes, labour strikes, civil wars, natural disasters, outbreaks of disease or other
natural or man-made events or occurrences that can have an adverse effect on the demand for Scottish Pacific’s services and its ability
to conduct business. Scottish Pacific has only a limited ability to insure against some of these risks.

5.3.7 General Economic and Financial Market Conditions

General economic conditions (both domestically and internationally) may adversely impact the price of Shares as well as Scottish
Pacific’s ability to pay dividends. This includes increases in unemployment rates, negative consumer and business sentiment and an
increase in interest rates amongst other factors. As a result of the above-mentioned factors, Scottish Pacific is unable to forecast the
market price for Shares and they may trade on the ASX at a price that is below their Offer Price.

122
06.
Key Individuals, Interests and Benefits
06. Key Individuals, Interests and Benefits


6.1 Board of Directors

The Board of Directors has been appointed to ensure that a highly experienced and complementary skill set exists for the benefit of
Scottish Pacific. The Directors bring to the Board extensive, relevant experience and skills, including industry and business knowledge,
financial management and public company experience.
The Board comprises a Non-Executive Chairman, one Executive Director and three independent Non-Executive Directors.
Further details regarding the Board, its charter, the composition of Board committees and details of key corporate governance policies
are set out in Section 6.4.

Table 35: Board of Directors

Director Biography

Patrick is a founding Partner of private equity firm Next Capital where he is a Director of a number of
portfolio companies.
Prior to founding Next Capital, Patrick was an Executive Director of Macquarie Bank having joined the
private equity division in 1997, with experience in a broad range of sectors including retail, industrial
and consumer products and services. Patrick was Chairman of JB Hi-Fi Limited from 2000 to 2012 and
Chairman of the Australian Venture Capital Association Limited (AVCAL) in 2004.
Patrick holds a Master of Business Administration (Hons) from IMD (Switzerland) and a Bachelor of
Patrick Elliott Commerce/Law from The University of New South Wales.
Non-Executive
Chairman

Peter has over 32 years of experience in the Debtor Finance industry with experience in audit and credit,
international factoring, client management and sales.
In 1988, Peter joined Bank of Scotland Debtor Finance business in a sales role and was appointed as Head
of Sales for England and Wales in 1991.
In 1993, Peter joined Scottish Pacific (then owned by Bank of Scotland) and in 1997 Peter joined AGC, the
Debtor Finance arm of Westpac, before establishing Benchmark Debtor Finance Pty Limited in 1998.
In 2005, the founding shareholders of Benchmark Debtor Finance sold their interests to BA Ventures
Peter Langham
Limited and Benchmark continued on a growth path which culminated in the acquisition of Scottish
Chief Executive Officer
and Executive Director Pacific Business Finance in 2007. Peter has remained CEO and a shareholder of Scottish Pacific throughout.

Peter is the former CEO of Westpac New Zealand and prior to that, held numerous senior roles within
Westpac and St. George.
Peter is also the Chairman of the board of Reffind Limited and ChimpChange LLC.
Peter holds a Master of Business Administration from Macquarie University and a Bachelor of Commerce
from The University of New South Wales.
He is a member of the Australian Institute of Company Directors and the Governance Institute of Australia
and a fellow of CPA Australia and the Financial Services Institute of Australasia (“Finsia”).
Peter Clare
Independent Non-
Executive Director

124
Director Biography

Katrina is a Director and an advisor to several not for profit organisations.

Until 2010, Katrina was an Executive Director of Concord Capital Limited, a boutique funds management
business that she co-founded in 2000.
Prior to co-founding Concord, Katrina held several funds management roles both in Australia
and overseas.
Katrina is also a Non-Executive Director and Chairman of the Audit Committee of Vitaco Holdings Limited.
Katrina Onishi Katrina holds a Bachelor of Arts (Hons) from The University of Sydney and is a Chartered Financial Analyst.
Independent Non- Katrina is a member of the CFA Institute, a graduate member of the Australian Institute of Company
Executive Director Directors and a fellow of Finsia.

Andrew has over 35 years’ experience in restructuring and corporate insolvency, with a particular focus on
the mining sector.
Andrew is currently the Non-Executive Chairman of Gateway Lifestyle Group and a Non-Executive
Director of Champion Iron Limited and has served on a number of boards including Roc Oil, Riversdale
Mining and Charter Hall Office Trust.
Andrew was a partner at Ferrier Hodgson Chartered Accountants for over 25 years until 2008, when as
a Senior Partner he retired and remains as Consultant.
Andrew Love
Andrew is a member of both the Chartered Accountants Australia and New Zealand and the Australian
Independent Non-
Executive Director Institute of Company Directors.
Andrew holds a Bachelor of Commerce from The University of New South Wales.

6.1.1 Director Disclosures

Section 6.1.1 sets out information about:
• Any company that entered into a form of external administration because of insolvency during the time a Director was an officer
of that company (or within a 12 month period afterwards); or
• Any legal or disciplinary actions against a Director (or against companies that the Director was a director of at the relevant time)
that are less than 10 years old.
Patrick Elliott was a Non-Executive Director of RPG Holdings Pty Limited (ACN 126 006 157) to which a Voluntary Administrator was
appointed in October 2012.
The other Directors do not believe that the above matter is material to, or indicative of, the future performance of Patrick Elliott of his
duties as Director of the Company or the future performance or prospects of Scottish Pacific.

Scottish Pacific  Prospectus 125

06. Key Individuals, Interests and Benefits continued


6.2 Senior Management

Table 36: Senior Management

Executive Biography

Refer to Section 6.1.

Peter Langham
Chief Executive Officer

Chris has over 19 years of experience in the Debtor Finance industry and 11 years working with SME
clients in the accounting profession and related financial services.
Chris’ Debtor Finance career commenced with Scottish Pacific in 1992 in a client management and credit
role. From 1996 to 1999, Chris worked in a pure new business role with NAB before moving to AGC (now
part of Westpac) to lead their Debtor Finance business unit.
In 2003, Chris founded the Benchmark Debtor Finance office in Sydney. Chris became General Manager –
NSW/ACT of Scottish Pacific Benchmark following the acquisition of Scottish Pacific and merger with the
Chris Hedge Benchmark business in September 2007.
Chief Financial Officer
In 2013, Chris was appointed to the executive role, Head of Debtor Finance and took over the CFO role for
Scottish Pacific in 2015.

Greg has over 28 years’ experience in the Debtor Finance industry having started his career at Scottish
Pacific in 1987, holding numerous roles including Head of Operations.
In 1997, Greg left Scottish Pacific and joined ORIX Australia Corporation Limited as the General Manager
of Cashflow Finance.
In 2002, Greg founded Bibby, where he held several senior roles including Managing Director Australia
and New Zealand, CEO Asia Pacific and several directorships.
Greg rejoined Scottish Pacific in 2014 as General Manager, FactorONE. In 2015, Greg was appointed to the
Greg Charlwood
Head of Debtor Finance role.
Head of Debtor Finance
Greg has also served as Chairman of the Institute for Factors and Discounters of Australia and
New Zealand as well as being a previous Director of the Turnaround Management Association.

Paul has over 30 years of experience in cash flow lending, with the last 19 years in the Debtor
Finance industry.
Paul worked in various branch roles after joining CBA in 1978. In 1985, Paul was seconded to the
Commonwealth Development Bank where he held a number of senior positions including Head of
a Marketing Team and Senior Loans Manager.
From 1997, Paul performed a number of roles in AGC, the Debtor Finance arm of Westpac, including
business analysis, audit and sales in their factoring operation before AGC was merged into Westpac
Paul Green where he took on a senior sales position.
Head of Risk and
Compliance Paul joined Benchmark in 2006 as Head of Risk and Compliance.

126
Executive Biography

Craig commenced his career in Debtor Finance with Scottish Pacific in 1987 before moving to AGC in
1989, where he held a number of senior roles including National Manager of Cash Flow Finance.
In 1999, he moved to St. George where he worked on the acquisition of Scottish Pacific before leaving
to start his own business in 2001.
In 2006, Craig founded Taurus Trade Finance Pty Limited, a predominantly Debtor Finance business. In
early 2011, Taurus was acquired by Suncorp Bank and Craig became Head of Working Capital Solutions
for Suncorp.
Craig Michie
Craig rejoined Scottish Pacific in July 2012 and was appointed as Head of Trade Finance.
Head of International
Finance

Wayne has over 25 years of experience in commercial finance, the last 17 years of which have been
dedicated to a variety of roles in the Debtor Finance industry, incorporating risk, sales and operations
both in Australia and the UK.
Wayne joined Euro Sales Finance Plc as a Client Manager in 1999, followed by a number of other senior
roles. In 2007, Wayne assumed the position of General Manager, Cashflow Finance Australia.
In 2010, Wayne joined Scottish Pacific as the Queensland General Manager. In 2013, Wayne was appointed
to the newly created executive position, Head of Marketing and Product Development.
Wayne Smith
Head of Marketing and
Product Development

Steven started his professional career working for several well-known chartered accountancy firms
such as PKF and Duesburys (now Deloitte) in fields such as audit and insolvency and reconstruction.
He then first joined Scottish Pacific Business Finance in 1994 to set up the Operations department in
Western Australia.
Steven took up an opportunity with ORIX Australia in 1998 to set up a national Factoring operations team.
In 2002, Steven was one of three founding directors of Bibby. Steven held several senior roles including
Operations Director, Commercial Director and Director of Integral Collections during his 13 years at Bibby,
Steven Davies and was a member of the Board.
Head of Specialist
Products In 2016 Steven joined Scottish Pacific and was appointed to the executive position, Head of
Specialist Products.

Nick has over 21 years IT experience across multiple sectors, with the last 11 years in the financial services
sector in both the United Kingdom and Australia. Nick also has an extensive project management
background, holding a Prince2 certification in Project Management, a diploma in Project Management as
well as accreditations in Change Management and ITIL.
Nick has extensive experience in IT Infrastructure design and implementation combined with application
design, development and implementation. Nick has worked on a number of merger and acquisition
processes both in the UK and Australia, where he successfully combined different business applications
and infrastructure, consolidated and integrated various platforms, and implemented robust disaster
Nick McAvoy
Head of IT recovery processes for such businesses.
In 2011, Nick immigrated to Australia where he was the Technical Consultant/BDM for Dancerace PLC,
a Debtor Finance software platform provider, then joined Scottish Pacific in November 2012.

Scottish Pacific  Prospectus 127

06. Key Individuals, Interests and Benefits continued


6.3 Interests and Benefits

Section 6.3 sets out the nature and extent of the interests and fees of certain persons involved in the Offer. Other than as set out
below or elsewhere in this Prospectus, no:
• Director or proposed Director of the Company;
• Person named in this Prospectus and who has performed a function in a professional, advisory or other capacity in connection
with the preparation or distribution of this Prospectus;
• Promoter of the Company; or
• An Underwriter (but not a sub-underwriter) to the Offer or a financial services licensee named in the Prospectus as a financial
services licensee involved in the Offer;
holds at the Prospectus Date, or has held in the two years before the Prospectus Date, an interest in:
• The formation or promotion of the Company;
• Property acquired or proposed to be acquired by the Company in connection with its formation or promotion, or in connection
with the Offer; or
• The Offer,
and no amount (whether in cash, shares or otherwise) has been paid or agreed to be paid, nor has any benefit been given or agreed
to be given, to any such persons for services in connection with the formation or promotion of the Company or the Offer or to any
Director or proposed Director to induce them to become, or qualify them as, a Director.

6.3.1 Directors’ Interests and Remuneration

6.3.1.1 Chief Executive Officer
Peter Langham is employed in the position of CEO. See Section 6.3.2 for further details.

6.3.1.2 Non-Executive Director Remuneration

Under the Constitution, the Company in general meeting may determine the maximum aggregate remuneration to be provided to
or for the benefit of the Directors as remuneration for their services as a Director (“Directors’ Remuneration”). Further, under the ASX
Listing Rules, the total amount paid to all Non-Executive Directors for their services must not exceed in aggregate in any financial year
the amount fixed by the Company’s members in general meeting.
Initially, and until a different amount is determined, the Constitution provides that the maximum aggregate Directors’ Remuneration
is $750,000 per annum. This amount excludes, among other things, amounts payable to any executive Director under any executive
services agreement with the Group or any special remuneration which the Board may grant to the Directors for special exertions or
additional services performed by a Director for or at the request of the Company, which may be made in addition to or in substitution
for the Director’s fees.
The annual Directors’ fees currently agreed to be paid by the Company are $175,000 to the Chairman of the Board and $100,000
to each of the other non-executive Directors. In addition, the following annual fees are payable to Directors for their involvement
in Board committees:

Table 37: Board Committee Fees

Committee Chairman fee Member fee

Audit and Risk Committee $15,000 $7,500
Remuneration and Nomination Committee $15,000 $7,500

Superannuation payments are included in Directors’ fees and Committee fees.

In addition, a one-off fee of $40,000 will be paid to each of Katrina Onishi, Andrew Love and Peter Clare for services provided by each
of them in connection with the Offer. Katrina Onishi has elected to receive this fee in the form of Shares on Completion of the Offer.
See Section 6.3.1.4 for details of the Directors’ holdings of the Shares on Completion of the Offer.

128
6.3.1.3 Deeds of Access, Indemnity and Insurance for Directors
The Company has entered into a deed of access, indemnity and insurance with each Director (“Deed”) which gives each Director the
right to access certain books and records of the Company and Board papers for a seven year period after the Director ceases to hold
office as a Director of the Company or a related body corporate.
Under the Deed and the Constitution, the Company agrees to indemnify each Director against any liability (including all legal costs)
incurred by the Director as an officer of the Company or a related body corporate, except any liability which the Company is
precluded by law from indemnifying the Director.
Under the Deed, to the maximum extent permitted by law, the Company must maintain a directors and officers insurance policy
insuring each Director (among others) against liability as a director and officer of the Company and its related bodies corporate for
a period of seven years after the Director ceases to hold office as a Director of the Company or a related body corporate (or the date
any relevant proceedings commenced during the seven year period have been finally resolved).

6.3.1.4 Directors’ Shareholdings

Directors are not required under the Constitution to hold any Shares. Set out below are details of Directors’ relevant interests in Shares
immediately following Completion of the Offer.

Table 38: Directors’ Shareholdings1

Percentage of total
Director Number of Shares Shares issued
Patrick Elliott 156,250 0.1%
Peter Langham (including associated entities) 3,098,609 2.2%
Peter Clare 240,000 0.2%
Katrina Onishi 31,250 0.0%
Andrew Love 31,250 0.0%
Total 3,557,359 2.6%
1. Includes Shares acquired under the Offer.

All of the Shares held by Directors on Completion of the Offer (other than any Shares acquired by them under the Offer at the Offer
Price) will be subject to voluntary escrow arrangements, as detailed in Section 9.5.4.

6.3.2 Executive Remuneration

6.3.2.1 Chief Executive Offer
Peter Langham is employed by Scottish Pacific in the position of Chief Executive Officer. Under the terms of his employment contract,
Peter will be entitled to receive annual fixed remuneration of $450,000 (inclusive of base salary, non-monetary benefits and
superannuation). Peter will also be entitled to short-term incentives, payable in cash, which provide him with an annual target
opportunity of 40% ($180,000) of annual fixed remuneration, subject to qualitative and quantitative performance conditions.
The Company may also provide additional benefits to Peter in its absolute discretion.
Peter is eligible to participate in the Company’s long-term incentive scheme (“LTI Scheme”) under which he may be eligible to receive
awards, including Options, at the Board’s discretion. Peter is expected to receive an annual long-term incentive (“LTI”) grant of up to
60% ($270,000) of fixed remuneration (based on the Offer Price). Further details on the LTI Scheme are set out in Section 6.3.3,
including the key terms and conditions (such as the performance period and vesting conditions) applicable to the grant of awards
to Peter.

Scottish Pacific  Prospectus 129

06. Key Individuals, Interests and Benefits continued


6.3.2.2 Chief Financial Officer

Chris Hedge is employed by Scottish Pacific in the position of Chief Financial Officer. Under the terms of his employment contract,
Chris will be entitled to receive annual fixed remuneration of $325,000 (inclusive of base salary, non-monetary benefits and
superannuation). Chris will also be entitled to short-term incentives, payable in cash, which provide him with an annual target
opportunity of 40% ($130,000) of annual fixed remuneration, subject to qualitative and quantitative performance conditions.
The Company may also provide additional benefits to Chris in its absolute discretion.
Chris is eligible to participate in the LTI Scheme under which he may be eligible to receive awards, including Options, at the Board’s
discretion. Chris is expected to receive an annual LTI grant of up to 60% ($195,000) of fixed annual remuneration (based on the Offer
Price). Further details on the LTI Scheme are set out in Section 6.3.3, including the key terms and conditions (such as the performance
period and vesting conditions) applicable to the grant of awards to Chris.

6.3.3 Incentive Schemes

6.3.3.1 LTI Scheme
The Company has established the LTI Scheme to assist in the motivation, reward and retention of Executive Directors and other
selected employees. The LTI Scheme is designed to align participants’ interests with the interests of Shareholders by providing
participants an opportunity to receive Shares through the granting of Options (as described below).
The Options granted under the LTI Scheme will only vest where the conditions (if any) determined by the Board, and advised to the
participant, have been satisfied or otherwise waived by the Board at its discretion. Vesting conditions may include the participant
remaining employed by a member of the Group at a particular point in time (i.e. the vesting date) or for a particular period, the
applicable performance conditions being met (i.e. earnings per share (“EPS”) meeting a specific hurdle).
The key terms of the LTI Scheme are set out below. Further details of the initial grants of Options to be made under the LTI on or
around Completion are set out in Section 6.3.3.2. Following the initial grant of LTI Options, the Board may determine to offer additional
awards under the LTI Scheme on similar or different terms and/or operate different equity incentive schemes for employees over time.

Table 39: Key Terms of the LTI Scheme

Term Description

Eligibility • Executive Directors and other selected employees of the Group may participate in the LTI
Scheme. Non-Executive Directors are not permitted to participate in the LTI Scheme.
• Eligibility to participate in the LTI Scheme and the number of Options offered to each
participant will be determined by the Board.

Grants • Under the rules of the LTI Scheme, Options may be offered to eligible participants from time
to time.
• The Company intends to make offers of Options to the CEO, CFO and other members of
Management simultaneously with Completion of the Offer. Details of offers of Options to the
CEO and CFO are set out in Section 6.3.3. The Company intends that the maximum notional
value of the Options offered to the CEO and CFO will be 60% of their total fixed remuneration
and to other members of Management will be between 10% and 30% of their total fixed
remuneration depending on the member of Management.

130
Term Description

Terms and conditions • The Board has the absolute discretion to determine the terms and conditions applicable to an
offer under the LTI Scheme, including:
– Any conditions required to be satisfied before an Option will be granted;
– Any vesting, performance or other conditions required to be satisfied before Options vest and
may be exercised;
– Any period during which the relevant vesting conditions must be satisfied before Options
vest;
– The exercise period during which Options may be exercised, subject to the terms of the LTI
Scheme and the offer;
– Any applicable issue price and/or exercise price;
– Any disposal restrictions on Shares to be issued or transferred upon the exercise of Options;
– Whether vested Options can be cash settled as well as equity settled (if both options are
available, the actual method of settlement will be determined by the Company); and
– Any other specific terms and conditions applicable to the offer.
• The specific terms and conditions applicable of an offer must be set out in the offer invitation.

Options • Each Option confers on its holder the entitlement to receive one or more Shares (by way of
issue or transfer, as determined by the Company) at the exercise price (if any) upon exercise of
the Option.
• Options will not be quoted on the ASX. Subject to the ASX Listing Rules, the Company will
apply to the ASX for the quotation of any Shares issued to participants for the purpose of the LTI
Scheme.

Ranking of Shares • Shares issued upon vesting and exercise of Options under the LTI Scheme will rank equally in all
respects with existing Shares.

Rights attaching to • The Options do not carry rights to dividends or voting rights prior to exercise.
Options

Restrictions on Options • Except as permitted by the Board, a participant must not sell, transfer, encumber, hedge or
otherwise deal with Options.
• Once Options are exercised and Shares are issued in their place, generally no disposal restrictions
apply to Shares, other than the restrictions that apply under the Company’s Securities Trading
Policy. However the Board may determine to apply disposal restrictions to those Shares on a
case by case basis at the time of granting Options.

Vesting and exercise • If Options are offered subject to vesting conditions, the Company must give the participant
of Options a vesting notice upon such conditions having been satisfied or waived by the Company.
• Subject to any vesting conditions having been satisfied or waived by the Company in its
discretion, an Option may be exercised in accordance with the relevant participant’s invitation
and by the participant paying the exercise price (if any).

Scottish Pacific  Prospectus 131

06. Key Individuals, Interests and Benefits continued


Term Description

Lapse of Options • Unless otherwise specified in a participant’s invitation or otherwise determined by the Board, an
Option will lapse on the earliest of:
– If any vesting condition applicable to the Option has not been satisfied or waived in
accordance with its terms or is not capable of being satisfied;
– The expiry of the exercise period (if any);
– In certain circumstances if the participant’s employment is terminated; and
– In other circumstances specified in the LTI Scheme rules (e.g. where the Board determines
that the participant has committed an act of fraud or gross misconduct in relation to the
affairs of the Group).

Cessation of employment • The LTI Scheme contains provisions concerning the treatment of unvested and vested Options
of holders of Options in the event a participant ceases employment.

Change of control • In the event of a change of control, the Board may, in its absolute discretion, determine the
manner in which any or all of the participant’s Options will be dealt with. This may include
determining that all or some of a participant’s Options are vested and may be exercised.

Capital restructure • In the event of a capital restructure, subject to the ASX Listing Rules, the Board may make such
adjustments (including to matters such as exercise price, number of Options held or number of
Shares received on exercise) as the Board deems appropriate but all times in accordance with
the ASX Listing Rules.
• A participant holding an Option is not entitled to participate in any new issue of securities with
respect to the Option.

Employee share trust • The Company may establish, on such terms and conditions as determined by the Board in
its discretion, an employee share trust to assist with operation of the LTI Scheme, including
facilitating the provision of Shares to participants when Options are exercised.

Expiry of Options • Options will expire on a date fixed in the offer letter to the particular employee. This may vary
from employee to employee or between different grants.
• On the expiry date for an Option, the Option will lapse (unless it has been validly exercised).

Amendments • Subject to the ASX Listing Rules, the Board may, in its absolute discretion, amend the LTI
Scheme rules, or waive or modify the application of the LTI Scheme rules in relation to
a participant, provided that (except in specified circumstances) if such amendment would
adversely affect the rights of participants in respect of any Options already held by them, the
Board must obtain the consent of that participant before that amendment applies to that
participant’s existing Options.

132
6.3.3.2 Grants under the LTI Scheme
The Company intends to make an LTI grant of Options to the CEO, CFO and other members of Management, following Completion
(“Initial Grant”). Please see Table 40 below for details:

Table 40: Key Terms of the Initial Grant

Feature Initial Grant

Size of grant • Options over an amount of up to 2,251,340 Shares will be granted under the Initial Grant.
• The value of the Options granted will vary between the initial participants.
– Peter Langham will be granted 456,081 Options.
– Chris Hedge will be granted 329,391 Options.
– Other Senior Management will be collectively granted 1,465,868 Options.

Issue price • The Options will be issued for nil consideration.

Exercise price • Each Option has an exercise price equal to the price of the Shares under the Offer.

Performance period • Five years following the date of grant of the Options to the relevant participant.

Vesting conditions • The Options will vest subject to an EPS hurdle over the performance period. The EPS vesting
percentages will correspond to the Company’s annual compounding EPS growth over the
performance period (adjusted to take into account one-off items associated with the Offer,
if necessary), and are as follows:
– Annual compounding EPS less than 8%: 0% of the Options will vest;
– Annual compounding EPS between 8% and 15%: the Options will vest on a straight line pro
rata basis between 30% and 100%; and
– Annual compounding EPS greater than 15%: 100% of the Options will vest.
For the purposes of calculating annual compounding EPS growth for the Initial Grant, the Board
has determined to use a base EPS figure which is equal to 90% of FY2017F EPS (i.e., this number
will form the base number from which EPS growth is calculated for the Initial Grant).
• None of the Options will vest during the first two years of the five year performance period.
During the third, fourth and fifth year of the performance period, the Options will vest as follows:
– 1⁄3 of the Options will vest (in the manner set out above) if the Company has achieved the
relevant EPS target at the end of the third year of the performance period;
– 1⁄3 of the Options will vest (in the manner set out above) if the Company has achieved the
relevant EPS target at the end of the fourth year of the performance period; and
– 1⁄3 of the Options will vest (in the manner set out above) if the Company has achieved the
relevant EPS target at the end of the fifth year of the performance period.
• To the extent that any Options which vest in years 3 and 4 do not vest due to the Company
not achieving the relevant EPS target, those Options will be subject to retesting based on the
Company’s annual compounding EPS performance until the Option expires (i.e. in years 4 or 5
(as applicable)).
• In addition to the EPS performance condition, it is a vesting condition of each of a participant’s
tranche of Options that the participant has been continuously employed by a member of the
Group (and has not resigned or been terminated) at all times up to (and including) the relevant
vesting date.

Scottish Pacific  Prospectus 133

06. Key Individuals, Interests and Benefits continued


6.3.3.3 Short-Term Incentive

The Board has determined that the Group’s current remuneration policy for its eligible employees includes an annual incentive
program, payments under which are subject to satisfaction of performance criteria set by the Board each year. Payment of short-term
incentives in any given year is conditional upon achievement of:
• Performance criteria tailored to each respective role (if any); and
• The Group’s financial performance against criteria set by the Board.
The Board has determined that the short-term incentives for the CEO and CFO will be calculated by reference to the Group’s NPAT
in that year. In the event that the Group’s NPAT:
• Is 95% of its forecast NPAT each of the CEO, CFO and other selected members of the Management team will be entitled to
a bonus equivalent to 10% of their maximum short term incentive;
• Is the same as the forecast NPAT, each of the CEO, CFO and other selected members of the Management team will be entitled to
60% of their maximum short term incentive pro rata on a straight line basis having regard to the amount by which the Group’s
NPAT exceeds 95% of its target.
• Exceeds the forecast NPAT by 10%, each of the CEO, CFO and other selected members of the Management team will be entitled
to 100% of their maximum short term incentive pro rata on a straight line basis having regard to the amount by which the
Group’s NPAT exceeds the target NPAT.
The Board has also determined that the short term incentives for other selected members of the Management team will either be
entirely calculated by reference to the Group’s NPAT (as described above), or 50% of their short term incentive calculated by reference
to the Group’s NPAT and the remaining 50% calculated by reference to performance criteria tailed for each respective role.
The Board has determined that in respect of FY2017F, no short term incentives will be payable in the event that forecast pro forma
NPAT for FY2017F as set out in this Prospectus is not met.

6.3.3.4 Employee Gift Offer

The Company also has established an Employee Gift Offer. Further details on Employee Gift Offer are set out in Section 7.5.

6.3.4 Legacy LTI Scheme

The Group implemented a long term incentive scheme in 2013 after funds advised by Next Capital acquired the Group. This scheme
consisted of the grant of options over shares in the Company (Exercised Legacy Options) which are subject to certain vesting
requirements which are expected to be met on Completion. The holders of Legacy Options have irrevocably offered to exercise
a portion of the Legacy Options, and accept the cancellation of a portion of their Legacy Options in return for a cash payment
(Redeemed Legacy Options).
The Board currently intends to resolve to accept this offer, which would result in the following payments being made and Shares
being issued. This will occur shortly before Completion of the Offer.

Table 41: Legacy LTI Participants

Exercise Price
Payable to Shares to
Participant GROSS Payment the Company Be Issued on
(includes entities associated for Redeemed for Exercised Exercise of
with the participant) Legacy Options Legacy Options Legacy Options
Peter Langham $3,341,183 $1,100,996 1,100,996
Chris Hedge $1,432,215 $306,487 230,487
Other management1 $10,195,961 $1,390,622 1,232,259
Peter Clare $319,560 $80,000 40,000
1. Includes former management.

134
6.3.5 Interests of Advisers
The Company has engaged the following professional advisers:
• Reunion Capital Partners Pty Ltd has acted as financial adviser in relation to the Offer. The Company has agreed to pay Reunion
Capital Partners Pty Ltd a fee of up to $2,227,152 (excluding disbursements and GST) subject to Completion;
• Grant Samuel Securities Pty Limited has acted as financial adviser in relation to the Offer. The Company has agreed to pay Grant
Samuel Securities Pty Limited a fee of up to $1,500,000 (excluding disbursements and GST) subject to Completion;
• Goldman Sachs and Citi have acted as Joint Lead Managers to the Offer. The Company has paid, or agreed to pay, the Joint Lead
Managers the fees described in Section 9.5.1 for these services;
• PricewaterhouseCoopers has acted as Australian legal adviser in relation to the Offer. The Company has paid, or agreed to pay,
$285,000 (excluding disbursements and GST) for these services up until the Prospectus Date;
• Deloitte Corporate Finance has acted as Investigating Accountant and has prepared the Investigating Accountant’s Report and
has performed work in relation to due diligence enquiries. The Company has paid, or agreed to pay, approximately $1,298,151
in total (excluding disbursements and GST) for the above services up until the Prospectus Date;
• Ernst and Young has acted as Taxation Due Diligence Adviser. The Company has paid, or agreed to pay, approximately $550,000
in total (excluding disbursements and GST) for the above services up until the Prospectus Date.
In addition, Bell Potter Securities Limited and Commonwealth Securities Limited have been engaged as Co-Managers to the Offer and
they will each be paid a fee of 1.50% (inclusive of GST) of their allocation, payable by the Joint Lead Managers out of the fees payable
to the Joint Lead Managers by the Company.

6.4 Corporate Governance

Section 6.4 explains how the Board will oversee the management of the Company’s business. The Board is responsible for the overall
corporate governance of the Company. The Board monitors the operational and financial position and performance of the Company
and oversees its business strategy, including approving the strategic goals of the Company and considering and approving an annual
business plan, including a budget.
The Board is committed to implementing the highest possible standards of corporate governance and maximising performance,
generating appropriate levels of Shareholder value and financial return, and sustaining the growth and success of the Company. In
conducting business with these objectives, the Board seeks to ensure that the Company is properly managed to protect and enhance
Shareholder interests, and that the Company and, its Directors, Officers and personnel operate in an appropriate environment of
corporate governance. The Board believes that sound governance is fundamental to the ongoing success and growth of the
Company in the markets in which it participates.
Accordingly, the Board has created a framework for managing the Company, including adopting relevant internal controls, risk
management processes and corporate governance policies and practices which it believes are appropriate for the Company’s
business and which are designed to promote the responsible management and conduct of the Company.

6.4.1 ASX Recommendations

The Company is seeking a listing on the ASX. The ASX Corporate Governance Council has developed and released corporate
governance recommendations for Australian listed entities in order to promote investor confidence and to assist companies to meet
stakeholder expectations (“ASX Recommendations”). The ASX Recommendations are not prescriptions, but guidelines. However,
under the ASX Listing Rules, the Company will be required to provide a statement in its annual report disclosing the extent to which
it has followed the ASX Recommendations in the reporting period. Where the Company does not follow a recommendation, it must
identify the recommendation that is not being followed and give reasons for not following it.
The Company intends to comply with all of the ASX Recommendations from the time of Listing, with the exception of the
following matters:
• ASX Recommendation 2.5 provides that the Chairman of the Company should be an independent Non-Executive Director.
The Non-Executive Chairman, Patrick Elliott, is not considered by the Board to be an “independent” Director (for the purpose of
assessing the independence of directors under the ASX Recommendations) given that he is a partner of Next Capital. Despite
this, the Board believes that Mr Elliott is the most appropriate person to lead the Board as its non-executive Chairman given his
expertise as a professional investor with experience in investing in various sectors, including the finance sector and experience in

Scottish Pacific  Prospectus 135

06. Key Individuals, Interests and Benefits continued


various roles across these investments. The Board considers that Mr Elliott adds significant value to its deliberations and expects
that he will continue to bring objective and independent judgement to the Board’s deliberations.
• The Company will not meet ASX Recommendations in respect of the composition of its Remuneration and Nomination
Committee (ASX Recommendations 2.1 and 8.1). ASX Recommendations 2.1 and 8.1 provide, respectively (and among other
matters), that the nomination and remuneration committees of the Board should have at least three members, a majority of
whom are “independent” directors (as determined by the Board having regard to the ASX Recommendations), and that the
chair of those committees should be an independent director. The Remuneration and Nomination Committee comprises two
members, one of which is the non-executive Chairman, Patrick Elliott. Further, Mr Elliott is proposed to chair the Remuneration
and Nomination Committee. The Board considers that its proposed Remuneration and Nomination Committee composition is
appropriate in light of the Company’s operations and size, and the size of the Board. All of the Directors believe that they will able
to, individually and collectively, analyse the issues before them objectively in the best interests of all Shareholders and in
accordance with their duties as Directors. The Board further considers that Mr Elliott is the most appropriate person to chair the
Remuneration and Nomination Committee given his heavy involvement in the remuneration structure of Scottish Pacific since
Next Capital’s investment in 2013.

6.4.2 Board of Directors

The Board of Directors comprises five Directors, being a Non-Executive Chairman, one Executive Director and three Independent
Non-Executive Directors. Detailed biographies of the Directors are provided in Section 6.1. The Board considers Directors to be
independent (for the purpose of the ASX Recommendations) where they are not members of Management (a Non-Executive
Director) and are free of any business or other relationship that could materially interfere with, or could reasonably be perceived
to interfere with, the exercise of their unfettered and independent judgement.
The Board will consider the materiality of any given relationship on a case-by-case basis and has adopted materiality guidelines to
assist it in this regard. The Board regularly reviews the independence of each Director in light of information disclosed by each Director
to the Board. The Board considers that each of Peter Clare, Katrina Onishi and Andrew Love is free from any business or any other
relationship that could materially interfere with, or reasonably be perceived to interfere with, the independent exercise of their
judgement and is able to fulfil the role of an independent Director for the purpose of the ASX Recommendations.
Peter Langham and Patrick Elliott are currently considered by the Board not to be independent for the purpose of the
ASX Recommendations.
Peter Langham is currently the Chief Executive Officer of the Company and therefore is not considered independent. Patrick Elliott
is currently a Partner at Next Capital. Next Capital advises funds which will collectively hold 16.6% of the Shares upon Completion of
the Offer. Accordingly, Patrick Elliott is not considered by the Board to be independent for the purpose of the ASX Recommendations.
Although Peter Langham and Patrick Elliott are not considered to be independent (for the purpose of the ASX Recommendations),
the Board considers that they both add significant value to deliberations with their considerable experience and skills. Furthermore,
all Directors have the right to seek independent professional advice, subject to necessary approvals, as and when required.
The Directors believe that they are able to objectively analyse the issues before them in the best interests of all Shareholders and in
accordance with their duties as Directors.

6.4.3 Board Charter

The Board has adopted a written charter to provide a framework for the effective operation of the Board, which sets out:
• The roles and responsibilities of the Board, including to provide overall strategic guidance for Scottish Pacific, oversight of risk
management and reporting, effective oversight of management, monitoring of Board and management performance and
oversight of governance;
• The roles and responsibilities of the Chairman and Company Secretary;
• The membership of the Board, including in relation to the Board’s composition and size and the process of selection and
re-election of Directors, terms of appointment of Directors, independence of Directors and conduct of individual Directors;
• The delegations of authority of the Board to both committees of the Board and to the Chief Executive Officer and other
Management of the Company; and
• Board process, including how the Board meets.

136
The management function is conducted by, or under the supervision of, the Chief Executive Officer as directed by the Board (and by
officers to whom the management function is properly delegated by the Chief Executive Officer).
The Board collectively, and individual Directors, may seek independent professional advice at Scottish Pacific’s expense, subject to the
approval of the Chairman or the Board as a whole.

6.4.4 Board Committees

The Board may from time to time establish appropriate committees to assist in the discharge of its responsibilities. The Board has
established an Audit and Risk Committee and a Remuneration and Nomination Committee. Other committees may be established by
the Board as and when required. Membership of Board committees will be based on the needs of the Company, relevant legislative
and other requirements and the skills and experience of individual Directors.

6.4.4.1 Audit and Risk Committee

The Audit and Risk Committee’s role is to assist the Board in carrying out its accounting, auditing and financial reporting
responsibilities, including:
• Overseeing the Company’s relationship with the external auditor and the external audit function generally;
• Overseeing the Company’s relationship with the internal auditor and the internal audit function generally (if any);
• Overseeing the preparation of the financial statements and reports;
• Overseeing the Company’s financial controls and systems; and
• Managing the process of identification and management of business and financial risk.
The Audit and Risk Committee’s charter provides that the Committee must comprise only Non-Executive Directors, a majority of
independent Directors, an Independent Chair who is not the chair of the Board and a minimum of three Directors. On Completion, the
Audit and Risk Committee will comprise:
• Andrew Love (Chair);
• Katrina Onishi; and
• Patrick Elliott.

6.4.4.2 Remuneration and Nomination Committee

The Remuneration and Nomination Committee is responsible for final approval of matters relating to succession planning, nomination
of Directors and Chief Executive Officer and remuneration of the Directors, Chief Executive Officer and Executives reporting to them.
The Remuneration and Nomination Committee’s role is to:
• Review and recommend to the Board the size and composition of the Board, including review of Board succession plans and the
succession of the Chairman and CEO, having regard to the objective that the Board comprise Directors with a broad range of
skills, expertise and experience from a broad range of backgrounds, including gender;
• Review and recommend to the Board the criteria for Board membership, including the necessary and desirable competencies
of Board members and the time expected to be devoted by Non-Executive Directors in relation to the Company’s affairs;
• Review and recommend to the Board membership of the Board, including making recommendations for the re-election of
Directors, subject to the principle that a Committee member must not be involved in making recommendations to the Board in
respect of themselves and assisting the Board as required to identify individuals who are qualified to become Board members
(including in respect of Executive Directors), in accordance with the policy outlined in Section 7 of the charter;
• Assist the Board as required in relation to the performance evaluation of the Board, its committees and individual Directors,
and in developing and implementing plans for identifying, assessing and enhancing Director competencies; and
• Ensure that an effective induction process is in place and regularly review its effectiveness on an annual basis.
On Completion, the Remuneration and Nomination Committee will comprise:
• Patrick Elliott (Chair); and
• Peter Clare.

Scottish Pacific  Prospectus 137

06. Key Individuals, Interests and Benefits continued


6.4.5 Diversity Policy

The Board has adopted a Diversity Policy in order to ensure a work environment where people are treated fairly and with respect
notwithstanding their gender, ethnicity, disability, age or educational experience. The Board will include in the annual report each year
a summary of the Company’s progress towards achieving the measurable objectives set under this Policy for the year to which the
annual report relates and details of the measurable objectives set under this Policy for the subsequent financial year.
The policy will be made available on the Company’s website at www.scottishpacific.com.

6.4.6 Continuous Disclosure Policy

The Company places a high priority on communication with Shareholders and is aware of the obligations it will have, once listed on
the ASX, under the ASX Listing Rules and the Corporations Act, to keep the market fully informed of any information the Company
becomes aware of concerning itself which is generally not available and which a reasonable person would expect to have a material
effect on the price or value of Shares.
The Company has adopted a Continuous Disclosure Policy which establishes procedures to ensure that Directors and other
employees are aware of and fulfil their obligations in relation to the timely disclosure of material price-sensitive information.
The Company is committed to observing its disclosure obligations under the ASX Listing Rules and the Corporations Act.
The Company has established a Disclosure Committee, which will comprise:
• Patrick Elliott;
• Peter Langham; and
• Chris Hedge.

6.4.7 Securities Trading Policy

The Company has adopted a Securities Trading Policy which will apply to the Company and its Directors, Senior Management, Officers
and all employees of the Group, including those persons having authority and responsibility for planning, directing and controlling
the activities of the Company or the Group, whether directly or indirectly.
The Policy is intended to explain the types of conduct in relation to dealings in Shares that is permitted or prohibited under the
Corporations Act and establish procedures in relation to Directors or all employees of the Group dealing in the Shares. The Policy
defines certain ‘trading windows’ during which trading in Shares by Directors and all employees is permitted. The Policy also defines
the exceptional circumstances that permit Directors and all employees to deal with the Shares outside these trading windows as well
as circumstances where Directors or employees of the Group are prohibited from dealing with the Shares during the trading windows.
The policy will be made available on the Company’s website at www.scottishpacific.com.

6.4.8 Code of Conduct

The Board is committed to a high level of integrity and ethical standards in all business practices. Accordingly, the Board has adopted
a formal Code of Conduct which outlines how the Company expects its representatives to behave and conduct business in the
workplace and includes legal compliance and guidelines on appropriate ethical standards. All employees of the Company (including
temporary employees, contractors and the Directors) must comply with the Code of Conduct.
The policy will be made available on the Company’s website at www.scottishpacific.com.

138
6.4.9 Communication Strategy
The Board’s aim is to ensure that Shareholders are kept informed of all major developments affecting the state of affairs of the
Company. In addition to the Company’s continuous disclosure obligations, the Company has a policy of seeking to keep
Shareholders informed.
All ASX announcements made to the market, including annual and half year financial results, will be posted on the Company’s website
at www.scottishpacific.com as soon as practicable following their release by the ASX. Copies of all investor presentations made to
analysts and media briefings will also be posted on the Company’s website.

6.4.10 Related Party Transactions

6.4.10.1 SP Tradeline (International) Limited
SP Tradeline (UK) Limited (“Scottish Pacific UK”) and Scottish Pacific Hong Kong have entered into a paying and collecting agency
agreement with SP Tradeline (International) Limited (“Scottish Pacific International”). The directors and shareholders of Scottish
Pacific International are Craig Michie and Ed Bracey, being the directors of Scottish Pacific Hong Kong and Scottish Pacific UK
respectively, and employees of the Group.
Under the agency agreement, Scottish Pacific Tradeline (International) Limited has been appointed as the agent of Scottish Pacific
Hong Kong and Scottish Pacific UK to maintain and manage the UK bank accounts of Scottish Pacific Hong Kong and Scottish Pacific
UK (the Trust Accounts). All monies in each Trust Account are held on trust for Scottish Pacific Hong Kong and Scottish Pacific UK.
Scottish Pacific International is paid £1,000 per year to act as agent for Scottish Pacific Hong Kong and Scottish Pacific UK.
Scottish Pacific International may terminate its obligations under the Agency Agreement by giving 30 days’ notice to each of Scottish
Pacific Hong Kong and Scottish Pacific UK. Upon termination of this agreement, the balance of each Trust Account must be transferred
to Scottish Pacific Hong Kong and Scottish Pacific UK.

6.4.10.2 Next Athleisure Facility with Scottish Pacific

Scottish Pacific provides a debtor financing facility to Trend Imports Pty Ltd (Trend Imports). Trend Imports is a subsidiary of Next
Athleisure Pty Ltd, which is a company of which Patrick Elliott is a director and Next Capital is a majority shareholder. The facility is
on standard terms that would ordinarily apply to Clients of Scottish Pacific. Neither Patrick Elliott nor Next Capital have any direct
involvement in matters concerning that facility for either Trend Imports or Scottish Pacific.

6.4.10.3 Steelforce Australia Facility with Scottish Pacific

Scottish Pacific is also proposing to enter into a Debtor Finance facility with Steelforce Australia Limited. Steelforce Australia is a
company of which Patrick Elliott is a director and Next Capital is a majority shareholder. The facility will be on standard terms that
would ordinarily apply to Clients of Scottish Pacific. Neither Patrick Elliott nor Next Capital will have any direct involvement in matters
concerning that facility for either Steelforce Australia Limited or Scottish Pacific.

Scottish Pacific  Prospectus 139

07.
Details of the Offer
07. Details of the Offer


7.1 Description of the Offer

This Prospectus relates to an IPO of approximately 24.2m New Shares by Scottish Pacific and the sale of 67.6m existing Shares held by
SaleCo at an Offer Price of $3.20 per Share (“Offer Price”). The Shares offered under this Prospectus will represent approximately 65.9%
of the Shares on issue on Completion of the Offer. The total number of Shares on issue at Completion will be 139.2m and all Shares on
issue will rank equally with each other.
At the Offer Price, the Offer is expected to raise a minimum of $293.5 million, comprising $77.3m from the issue of New Shares by the
Company and $216.2m for the sale of Existing Shares by SaleCo.
A summary of the rights attaching to the Shares is set out in Section 7.13.
The Offer is made on the terms, and is subject to the conditions, set out in this Prospectus.

7.1.1 Structure of the Offer

The Offer comprises:
• The Retail Offer, which consists of the:
– Broker Firm Offer: which is open to Australian resident retail Clients of Brokers and New Zealand Exempt Broker Clients
who have received a firm allocation from their Broker;
– Priority Offer: which is open to selected employees and investors in eligible jurisdictions who have received a Priority Offer
invitation;
– Employee Gift Offer: which is open only to Eligible Employees; and
• The Institutional Offer, which consists of an offer to Institutional Investors in Australia and certain other jurisdictions, made under
this Prospectus.
No general public offer of Shares will be made under the Offer.
Details of the Broker Firm Offer and the allocation policy under it are described in Section 7.3. Details of the Priority Offer and the
allocation policy under it are described in Section 7.4. Details of the Employee Gift Offer and the allocation policy under it are
described in Section 7.5. Details of the Institutional Offer and the allocation policy under it are described in Section 7.6.
The allocation of Shares between the Broker Firm Offer, the Priority Offer, the Employee Gift Offer and the Institutional Offer was
determined by the Joint Lead Managers in agreement with Scottish Pacific, having regard to the allocation polices outlined in
Section 7.
The Offer (with the exception of the Employee Gift Offer) has been fully underwritten by the Joint Lead Managers. A summary
of the Underwriting Agreement, including the events which would entitle the Joint Lead Managers to terminate the Underwriting
Agreement, is set out in Section 9.5.1.

Scottish Pacific  Prospectus 141

07. Details of the Offer continued


7.1.2 Purpose of the Offer and Use of Proceeds

The purpose of the Offer is to provide the Company with:
• Access to the capital markets to improve capital management flexibility; and
• A liquid market for its Shares and an opportunity for others to invest in the Company.
The Offer also provides the opportunity for Existing Shareholders to realise all or a portion of their investment in Scottish Pacific.
The proceeds of the Offer will be applied to:
• Payment to SaleCo (which will distribute payments to Existing Shareholders);
• Payment of the pre-IPO dividend to Existing Shareholders;
• Repayment of corporate debt;
• Cancellation payment for Legacy Incentive Scheme Options; and
• Payment of the transactions costs associated with the Offer.

7.1.3 Sources and Uses of Funds

The Offer is expected to raise gross proceeds of approximately $293.5m, which is calculated as the sum of the number of Shares issued
by Scottish Pacific and transferred by SaleCo (under the Institutional Offer and Retail Offer) multiplied by the Offer Price.
The following table details the Company’s sources of funds (including the Offer) and the uses of those amounts, assuming Completion
of the Offer occurs on Wednesday, 13 July 2016.

Table 42: Sources and Uses of Funds

Sources $m % Uses $m %
Cash proceeds received from sale of 216.2 73.7% Payment of proceeds to SaleCo 216.2 73.7%
Existing Shares
Cash proceeds received from issue of 77.3 26.3% Payment of Pre-IPO Dividend 36.3 12.4%
New Shares
Repayment of corporate debt 10.0 3.4%
Cancellation payment for Legacy 12.4 4.2%
Incentive Scheme Options
Payment of costs of the Offer65 18.6 6.3%
Total 293.5 100.0% Total 293.5 100.0%

7.1.4 Pro Forma Historical Balance Sheet

The Company’s Pro Forma historical balance sheet following Completion of the Offer, including details of the Pro Forma adjustments,
is set out in Section 4.5.

7.1.5 Capital Structure

The Group’s capitalisation and indebtedness as at 31 December 2015, both before and adjusted to reflect Completion of the Offer,
are set out in Section 4.5.1.

65. The costs of the Offer include the fees payable to advisers as referred to in Section 6.3.5, as well as other costs such as registry fees, certain costs of financing, listing fees, insurance costs and
other adviser fees.

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7.1.6 Shareholding Structure
Details of the ownership of Shares as at the Prospectus Date and following Completion of the Offer are set out as below:

Table 43: Shareholding Structure

Shares held Shares issued/ Shares held

pre-Completion1 acquired/(sold)2 on Completion3
Shareholder millions % millions millions %
Next Capital Entities 46.3 38.2% (23.1) 23.1 16.6%
IFM Investors 34.5 28.5% (17.2) 17.2 12.4%
Other institutional Shareholders 26.7 22.0% (26.7) – –
Non-Executive Director Shareholders 0.4 0.3% 0.2 0.5 0.3%
Peter Langham (and associated entities) 4.4 3.7% – 3.1 2.2%
Chris Hedge (and associated entities) 1.1 0.9% – 0.6 0.4%
Other Management 4.6 3.8% – 2.4 1.7%
Other existing Shareholders 3.2 2.6% (0.5) 0.7 0.5%
New Shareholders4 – – 91.6 91.6 65.8%
Total5 121.2 100.0% 24.2 139.2 100.0%
1. Includes Management options held under the Legacy LTI Scheme prior to exercise or cancellation on an “as‑if‑converted” basis.
2. Excludes 6.2m Legacy LTI options cancelled prior to Completion.
3. On Completion shares held includes shares issued pursuant to the exercise of options held under the Legacy LTI Schemes and excludes 6.2m of Legacy LTI options
cancelled prior to Completion.
4. Excludes 0.2m Shares issued to Non-Executive Director Shareholders, which are reflected in the Non-Executive Director Shareholders row.
5. The total number of Shares held on Completion includes 71,500 Shares which are to be issued under the Employee Gift Offer.

A number of Existing Shareholders have provided a commitment to sell 67.6m Shares into the Offer via SaleCo (see Section 9.4 for
further details).
SaleCo is a special purpose vehicle that has been established to provide a facility for Existing Shareholders to realise all or a portion
of their investment. Each Existing Shareholder was offered the opportunity to nominate a number of Shares it wished to sell into the
Offer via SaleCo. See Section 9.4 for further details.
All of the Shares held by Director and Management Shareholders, as well as the Shares held by Next Capital Entities and IFM Investors,
(other than any Shares acquired by them under the Offer at the Offer Price), are subject to escrow arrangements under which they
agree not to dispose or otherwise deal with the Shares until Scottish Pacific has released its financial results for the year ended 30 June
2017. A portion of the Escrowed Shares as set out in Section 9.5.4 will be released from escrow 10 Business Days after the volume
weighted average price of the Shares on the ASX for any consecutive 10 trading day period is 20% or more above the Offer Price
following the date that the Company’s half year results for FY2017 are released to the market.
Further details of the escrow arrangements are set out in Section 9.5.4.

7.1.7 Control Implications of the Offer

The Directors do not expect that any Shareholder will control (as defined by section 50AA of the Corporations Act) Scottish Pacific.
On Completion of the Offer, it is expected that approximately 33.5% of Shares will be subject to the voluntary escrow arrangements
described in Sections 7.10 and 9.5.4.

7.1.8 Potential Effect of the Fundraising on the Future of the Company

The Directors believe that on Completion of the Offer, Scottish Pacific will have sufficient funds available from the proceeds of the
Offer and its operations to fulfil the purposes of the Offer and meet the Company’s stated business objectives.

7.1.9 Working Capital

The Board is of the opinion that, following Completion of the Offer, the Company will have sufficient working capital to carry out its
stated business objectives.

Scottish Pacific  Prospectus 143

07. Details of the Offer continued


7.1.10 Brokerage, Commission and Stamp Duty

No brokerage, commission or stamp duty should be payable by Applicants who apply for Shares using an Application Form.
Investors who buy or sell Shares on the ASX may be subject to brokerage and other transaction costs. Under current legislation, there
should be no stamp duty payable on the sale or purchase of Shares on the ASX.

7.2 Terms and Conditions of the Offer

Table 44: Terms and Conditions of the Offer

Topic Summary

What is the type Shares (being fully paid ordinary shares in Scottish Pacific).
of security being
offered?

What are the A description of the Shares, including the rights and liabilities attaching to them, is set out in Section 7.13.
rights and
liabilities attached
to the security
being offered?

What is the Successful Applicants under the Offer will pay the Offer Price, being $3.20 per Share.
consideration payable
for each security
being offered?

What is the The Broker Firm Offer and Priority Offer open at 9.00am (AEST) on Thursday, 30 June 2016. The Broker
Offer Period? Firm Offer and Priority Offer close at 5.00pm (AEST) on Friday, 8 July 2016.
The key dates, including details of the Offer Period, are set out on page 03. This timetable is indicative
only and may change. Unless otherwise indicated, all times are stated in AEST. The Company and
SaleCo, in consultation with the Joint Lead Managers, reserve the right to vary both of the above times
and dates without notice (including, subject to the ASX Listing Rules and the Corporations Act, to close
the Offer early, to extend the Closing Date, to accept late Applications or bids, either generally or in
particular cases, or to cancel or withdraw the Offer before settlement, in each case without notifying
any recipient of this Prospectus or any Applicants). If the Offer is cancelled or withdrawn before the
allocation of Shares, all Application Monies will be refunded in full (without interest) as soon as possible
in accordance with the requirements of the Corporations Act. Investors are encouraged to submit their
Applications as soon as possible after the Offer opens.
No securities will be issued on the basis of this Prospectus later than the expiry date of 13 months after
the Prospectus Date.

What are the cash Approximately $293.5m will be raised if the Offer proceeds (comprising $77.3m from the issue of
proceeds to be raised? New Shares by Scottish Pacific and $216.2m for the sale of Existing Shares by SaleCo on behalf of
Existing Shareholders).

Is the Offer Yes. The Joint Lead Managers have fully underwritten the Offer (other than the Employee Gift Offer)
underwritten? pursuant to the Underwriting Agreement. Details are provided in Section 9.5.1.

What is the minimum The minimum Application under the Broker Firm Offer is $5,000 of Shares. There is no maximum
and maximum Application size, unless directed by your Broker.
Application size under
the Broker Firm Offer?

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Topic Summary

What is the minimum Applications under the Priority Offer must be for a minimum of $5,000 of Shares.
and maximum
The Company, SaleCo and the Joint Lead Managers reserve the right to reject any Application
Application size under
or to allocate a lesser number of Shares than that applied for, in their absolute discretion.
the Priority Offer?

What is the minimum Under the Employee Gift Offer, Eligible Employees will be offered the opportunity to apply for
and maximum up to $1,000 of Shares at no cost.
Application size
under the Employee
Gift Offer?

What is the The allocation of Shares between the Broker Firm Offer, the Priority Offer, the Employee Gift Offer and
allocation policy? the Institutional Offer will be determined by agreement between the Joint Lead Managers and the
Company, having regard to the allocation policies outlined in Section 7.
For Broker Firm Offer participants, the relevant Broker will decide how they allocate Shares amongst
their retail clients. The relevant Broker (and not Scottish Pacific. SaleCo nor the Joint Lead Managers) will
be responsible for ensuring that eligible retail clients who have received an allocation of Shares from
the Broker actually receive those Shares.
With respect to the Priority Offer, the allocation of Shares to invitees is at the absolute discretion of
Scottish Pacific, provided that those allocations (in aggregate) do not exceed $4.5 million.
The Joint Lead Managers and Scottish Pacific have absolute discretion regarding the allocation of
Shares to Applicants under the Offer and may reject an Application, or allocate a lesser number
of Shares than applied for. The Joint Lead Managers and Scottish Pacific also reserve the right to
aggregate any Applications that they believe may be multiple Applications from the same person.
The Employee Gift Offer will be offered to Eligible Employees only who will be offered the opportunity
to apply for up to $1,000 of Shares at no cost. The allocation of Shares under the Employee Gift Offer is
guaranteed to Eligible Employees.
For further information on the:
• Broker Firm Offer, see Section 7.3;
• Priority Offer, see Section 7.4;
• Employee Gift Offer, see Section 7.5; and
• Institutional Offer, see Section 7.6.

When will I receive It is expected that initial holding statements will be dispatched to Successful Applicants by standard
confirmation that post on or around Thursday 14 July 2016.
my Application has
Refunds (without interest) to Applicants who make an Application and receive an allocation of Shares,
been successful?
the value of which is smaller than the amount of the Application Monies, will be made as soon as
practicable after Completion of the Offer.

Scottish Pacific  Prospectus 145

07. Details of the Offer continued


Topic Summary

Will the Shares Scottish Pacific will apply to the ASX for its admission to the Official List and quotation of Shares on
be listed? the ASX (which is expected to be under the code “SCO”). Completion of the Offer is conditional on the
ASX approving the application. If approval is not given within three months after such application is
made (or any longer period permitted by law), the Offer will be withdrawn and all Application Monies
received will be refunded without interest as soon as practicable in accordance with the requirements
of the Corporations Act.
The Company will be required to comply with the ASX Listing Rules, subject to any waivers obtained by
the Company from time to time.
The ASX takes no responsibility for this Prospectus or the investment to which it relates. The fact that
the ASX may admit the Company to the Official List is not to be taken as an indication of the merits of
the Company or the Shares offered for subscription.

When are the It is expected that the Shares will commence trading on the ASX on a deferred settlement basis on or
Shares expected to about Wednesday, 13 July 2016, the dispatch of holding statements will occur on or about Thursday,
commence trading? 14 July 2016 and that the Shares will commence trading on the ASX on a normal settlement basis on
or about Friday, 15 July 2016.
It is the responsibility of each Applicant to confirm their holding before trading in Shares.
Applicants who sell Shares before they receive an initial holding statement do so at their own
risk. To the maximum extent permitted by law, the Company, SaleCo, the Directors, the SaleCo
Directors, the Joint Lead Managers, the Share Registry, the Financial Adviser and the Existing
Shareholders disclaim all liability, whether in negligence or otherwise, to persons who sell Shares
before receiving their initial holding statement, whether on the basis of a confirmation of allocation
provided by any of them, by the Scottish Pacific Information Line, by a Broker or otherwise.

Are there any escrow Yes. Details are provided in Section 9.5.4.
arrangements?

Has an ASIC relief Yes. Details are provided in Section 7.11.

or ASX waiver
been obtained or
relied upon?

Are there any taxation Summaries of certain Australian tax consequences of participating in the Offer and investing in the
considerations? Shares are set out in Section 9.2. The tax consequences of any investment in the Shares will depend
upon an investor’s particular circumstances. Applicants should obtain their own tax advice prior to
deciding whether to invest.

Is there any No brokerage, commission or stamp duty should be payable by Applicants on acquisition of Shares
brokerage, under the Offer.
commission or stamp
See Section 6.3.5 for details of various fees payable by Scottish Pacific to the Joint Lead Managers.
duty considerations?

Where can I find out All enquiries in relation to this Prospectus should be directed to the Scottish Pacific Information Line on
more information 1800 236 994 (within Australia) or +61 1800 236 994 (outside Australia) between 8.30am and 5.30pm
about this Prospectus (AEST), Monday to Friday.
or the Offer?
All enquiries in relation to the Broker Firm Offer should be directed to your Broker.
If you are unclear in relation to any matter or are uncertain as to whether Shares are a suitable
investment for you, you should seek professional guidance from your stockbroker, solicitor, accountant,
financial adviser or other independent professional adviser before deciding whether to invest.

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7.3 Broker Firm Offer

7.3.1 Who May Apply

The Broker Firm Offer is open to Australian resident retail Clients of Brokers and New Zealand Exempt Broker clients who have received
a firm allocation from their Broker. If you have received a firm allocation of Shares from your Broker, you will be treated as a Broker Firm
Offer Applicant in respect of that allocation. You should contact your Broker to determine whether you can receive an allocation of
Shares from them under the Broker Firm Offer. The Broker Firm Offer is not open to persons in the United States.

7.3.2 How to Apply

Applications for Shares may only be made on an Application Form attached to or accompanying this Prospectus or any
supplementary or replacement prospectus. If you are an investor applying under the Broker Firm Offer, you should complete and
lodge your Application Form with the Broker from whom you received your firm allocation. Application Forms for the Broker Firm
Offer must be completed in accordance with the instructions given to you by your Broker and the instructions set out on the reverse
of the Application Form.
By making an Application, you declare that you were given access to this Prospectus, together with an Application Form.
The Corporations Act prohibits any person from passing an Application Form to another person unless it is attached to,
or accompanied by, a hard copy of this Prospectus or the complete and unaltered electronic version of this Prospectus.
If you apply in the Broker Firm Offer, you must apply for a minimum of $5,000 of Shares and in multiples of $1,000 of Shares thereafter.
There is no maximum number or value of Shares that may be applied for under the Broker Firm Offer; however, Scottish Pacific and
the Joint Lead Managers reserve the right to reject or scale back any Applications in the Broker Firm Offer for any reason. If your
Application is scaled back, you agree to be allocated and accept the lesser number of Shares that is allocated to you.
Scottish Pacific and the Joint Lead Managers also reserve the right to aggregate any applications which they believe may be
multiple Applications from the same person. Scottish Pacific may determine a person to be eligible to participate in the Broker Firm
Offer, and may amend or waive the Broker Firm Offer application procedures or requirements, in its discretion in compliance with
applicable laws.
Applicants under the Broker Firm Offer must lodge their Application Form and Application Monies with the relevant Broker in
accordance with the relevant Broker’s directions, in order to receive their firm allocation. Your Broker will act as your agent and it
is your Broker’s responsibility to ensure that your Application Form and Application Monies are received before 5.00pm (AEST) on
Friday, 8 July 2016 or any earlier Closing Date as determined by your Broker. Applicants under the Broker Firm Offer must not send
their Application Forms to the Share Registry.
The Broker Firm Offer opens at 9.00am (AEST) on the Opening Date and is expected to close at 5.00pm (AEST) on the Closing Date.
Scottish Pacific and the Joint Lead Managers may elect to close the Offer or any part of it early, extend the Offer or any part of it, or
accept late Applications either generally or in particular cases. The Offer or any part of it may be closed at any earlier date and time,
without further notice. Your Broker may also impose an earlier closing date. Applicants are therefore encouraged to submit their
Applications as early as possible. Please contact your Broker for instructions.
Scottish Pacific, the Selling Shareholders, the Joint Lead Managers and the Share Registry take no responsibility for any acts or
omissions committed by your Broker in connection with your Application.

7.3.3 Payment Methods

Applicants under the Broker Firm Offer must pay their Application Monies to their Broker in accordance with instructions provided by
that Broker.

7.3.4 Allocation Policy Under the Broker Firm Offer

Shares which have been allocated to Brokers for allocation to their Australian or New Zealand resident retail clients will be issued to the
Applicants nominated by those Brokers (subject to the right of the Joint Lead Managers and Scottish Pacific to reject or scale back
Applications). It will be a matter for the Brokers how they allocate Shares among their retail clients, and they (and not Scottish Pacific,
SaleCo or the Joint Lead Managers) will be responsible for ensuring that retail clients who have received a firm allocation from them
receive the relevant Shares.

Scottish Pacific  Prospectus 147

07. Details of the Offer continued


7.3.5 Acceptance of Applications

Applications in the Broker Firm Offer is an offer by the Applicant to subscribe for and purchase Shares for all or any of the Application
Monies specified in the Application Form at the Offer Price on the terms and conditions set out in this Prospectus including any
supplementary or replacement prospectus and the Application Form. To the maximum extent permitted by law an Application by an
Applicant under the Offer is irrevocable and acceptance of an Application will give rise to a binding contract on allocation of Shares to
Successful Applicants.

7.3.6 Application Monies

Application Monies received under the Broker Firm Offer will be held in a special purpose account until Shares are issued or
transferred to Successful Applicants.
Applicants under the Broker Firm Offer whose Applications are not accepted, or who are allocated a lesser number of Shares than the
amount applied for, will be provided a refund (without interest) of all or part of their Application Monies, as applicable. No refunds
pursuant solely to rounding will be provided. Interest will not be paid on any monies refunded and any interest earned on Application
Monies pending the allocation of Shares or refund will be retained by Scottish Pacific.

7.3.7 Announcement of Final Allocation Policy in the Broker Firm Offer

Scottish Pacific expects to determine the final allocation policy under the Broker Firm Offer on or about Tuesday, 12 July 2016. If
required by the ASX, this information will be advertised in The Sydney Morning Herald, The Age (Melbourne), The Australian and The
Australian Financial Review. Applicants in the Broker Firm Offer should confirm their firm allocation with the Broker from whom they
received their allocation.
You may also call the Scottish Pacific Information Line on 1800 236 994 (within Australia) or +1800 236 994 (outside Australia) between
8.30am and 5.30pm (AEST), Monday to Friday to confirm your allocations. If you sell Shares before receiving a holding statement, you
do so at your own risk, even if you have confirmed your firm allocation with your Broker or obtained details of your holding from the
Scottish Pacific Offer Information Line.

7.4 Priority Offer

7.4.1 Who May Apply

The Priority Offer is open to selected Australian resident employees and investors nominated by Scottish Pacific. If you are a Priority
Offer Applicant, you should have received a personalised invitation to apply for Shares in the Priority Offer. The Priority Offer is not
open to persons in the United States.

7.4.2 How to Apply

If you have received a personalised invitation to apply for Shares under the Priority Offer and you wish to apply for Shares, you should
follow the instructions on your personalised invitation.
The Priority Offer opens at 9.00am (AEST) on 30 June 2016 and is expected to close at 5.00pm (AEST) on 8 July 2016.
Applications under the Priority Offer must be for a minimum of $5,000 of Shares and in multiples of $1,000 of Shares thereafter.
There is no maximum value of Shares that may be applied for under the Priority Offer; however, the maximum size of the Priority Offer
is $4.5m. The Company reserves the right to scale back Applications under the Priority Offer in its absolute discretion.
Any amount applied for in excess of the amount allocated to you will be refunded in full (without interest). If the amount of your BPAY®
payment for Application Monies (or the amount for which those BPAY® payments clear in time for allocation) is insufficient to pay for
the amount you have applied for in your Application Form, you may be taken to have applied for such lower amount as your cleared
Application Monies will pay for (and to have specified that amount in your Application Form) or your Application may be rejected.
Priority Offer Applicants may apply for Shares by visiting www.scottishpacific.com, completing the online Application Form and
paying the Application Monies via BPAY® (no physical Application Form is required when paying by BPAY®). There are instructions
available on the online Application Form to assist with its completion. It is the responsibility of the Applicant to ensure payments are
received by the Share Registry by no later than the Closing Date, being 5.00pm (AEST) on 8 July 2016. If you make a BPAY® payment,
your bank, credit union or building society may impose a limit on the amount that you can transact on BPAY® and policies with

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respect to timing for processing BPAY® transactions, which may vary between bank, credit union or building society. None of the
Company, SaleCo or the Joint Lead Managers takes any responsibility for any failure to receive Application Monies or payment
by BPAY® before the Priority Offer closes arising as a result of, among other things, delays in processing of payments by
financial institutions.

BPAY® Payments
When completing the BPAY® payment, Priority Offer Applicants must use the specific biller code and unique Customer Reference
Number (CRN) generated by the online application.
Priority Offer Applicants who have completed the online application but do not make a BPAY® payment will render the online
application incomplete and will therefore not be accepted into the Priority Offer.
Applications for Shares may be made on an Application Form attached to or accompanying this Prospectus or in its paper copy form
which may be downloaded in its entirety from Scottish Pacific’s website, www.scottishpacific.com. Application forms must be
completed in accordance with the instructions set out in the Application Form. Applicants may also apply for Shares via cheques,
bank drafts or money orders.
By making an application, you declare that you were given access to this Prospectus (or any supplementary or replacement
Prospectus), together with an Application Form. The Corporations Act prohibits any person from passing an Application Form to
another person unless it is attached to, or accompanied by, a hard copy of this Prospectus or the complete and unaltered electronic
version of this Prospectus.

7.4.3 Allocation Policy Under the Priority Offer

Allocations under the Priority Offer will be at the absolute discretion of the Company, provided that those allocations (in aggregate)
do not exceed $4.5m.

7.5 Employee Gift Offer

7.5.1 Who May Apply?

All Eligible Employees are entitled to participate in the Employee Gift Offer.
A separate offer letter, together with this Prospectus, will be provided to Eligible Employees, detailing the terms of the Employee Gift
Offer. Eligible Employees should read the separate offer letter and this Prospectus carefully and in their entirety before deciding to
apply under the Employee Gift Offer. If you are unclear in relation to any matter or are uncertain as to whether Shares are a suitable
investment for you, you should seek professional guidance from your accountant, financial adviser, tax adviser, stockbroker, lawyer or
other professional adviser before deciding whether to invest.

7.5.2 How to Apply?

A separate offer invitation, together with this Prospectus, will be provided to Eligible Employees, detailing the terms of the Employee
Gift Offer.
No payment is required for the Employee Gift Offer.

7.5.3 Allocation Policy Under the Employee Gift Offer

Applicants will receive a guaranteed allocation of up to $1,000 of Shares (rounded down to the nearest whole Share based on the
Offer Price).

7.5.4 Further Information About the Employee Gift Offer

The Shares offered under the Employee Gift Offer will be issued to participants at or shortly after Completion.
A participant in the Employee Gift Offer must not sell, assign, transfer or otherwise deal with, or grant a security interest over, a Share
acquired under the Employee Gift Offer before the earlier of:
• The end of the period of three years after the issue of the Shares to the participant; and
• The time when the participant is not or no longer employed by the Company or any other member of the Group.

Scottish Pacific  Prospectus 149

07. Details of the Offer continued


Shares acquired by a participant in the Employee Gift Offer will be held under a trading lock until the end of the disposal period
referred to above. At the end of the disposal period, participants will, subject to the Company’s Securities Trading Policy, be free to
deal with the Shares.
Employee Gift Offer Shares are not subject to forfeiture. The Employee Gift Offer Shares carry the same rights and entitlements of
Shares, including dividend and voting rights. The Company may issue Shares, or acquire Shares on or off market, to allocate to
a participant in the Employee Gift Offer.
Not all participants in the Employee Gift Offer will be able to take advantage of the taxation concession under the Australian tax
legislation to acquire the Shares income tax-free. See Section 9.2 for an overview of the potential taxation implications of participating
in the Employee Gift Offer.

7.6 Institutional Offer

7.6.1 Invitations to Bid

The Institutional Offer consisted of an invitation to certain Institutional Investors in Australia and certain other jurisdictions to apply
for Shares. The Joint Lead Managers separately advised Institutional Investors of the application procedures for the Institutional Offer.

7.6.2 Allocation Policy Under the Institutional Offer

The allocation of Shares among bidders in the Institutional Offer was determined by Scottish Pacific and the Joint Lead Managers.
The Joint Lead Managers and Scottish Pacific had absolute discretion regarding the basis of allocation of Shares among Institutional
Investors. Participants in the Institutional Offer have been advised of their allocation of Shares, if any, by the Joint Lead Managers. The
allocation policy was influenced, but not constrained, by the following factors:
• Number of Shares bid for by particular bidders;
• The timeliness of the bid by particular bidders;
• Scottish Pacific’s desire for an informed and active trading market following Listing on the ASX;
• Scottish Pacific’s desire to establish a wide spread of institutional Shareholders;
• Overall level of demand under the Broker Firm Offer, Priority Offer and Institutional Offer;
• The size and type of funds under management of particular bidders;
• The likelihood that particular bidders will be long-term shareholders; and
• Any other factors that Scottish Pacific and the Joint Lead Managers considered appropriate.

7.7 Restrictions on Distribution

No action has been taken to register or qualify this Prospectus, the Shares or the Offer or otherwise to permit a public offering of the
Shares outside Australia and certain other international jurisdictions.
This Prospectus does not constitute an offer or invitation to subscribe for Shares in any jurisdiction in which, or to any person to
whom, it would not be lawful to make such an offer or invitation or issue under this Prospectus.
This Prospectus may not be released or distributed in the United States, and may only be distributed to persons to whom the Offer
may lawfully be made in accordance with the laws of any applicable jurisdiction.
This document does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States. The Shares have
not been, and will not be, registered under the US Securities Act or the securities laws of any state of the United States and may not be
offered or sold in the United States except in accordance with an exemption from, or in a transaction not subject to, the registration
requirements of the US Securities Act laws and any other applicable securities laws.
Each Applicant in the Broker Firm Offer and the Priority Offer, and each person to whom the Institutional Offer is made under this
Prospectus, will be taken to have represented, warranted and agreed as follows:
• it understands that the Shares have not been, and will not be, registered under the US Securities Act or the securities laws of any
state of the United States and may not be offered, sold or resold in the United States, except in a transaction exempt from, or not
subject to, registration under the US Securities Act and any other applicable securities laws;

150
• it is not in the United States;
• it has not and will not send the Prospectus or any other material relating to the Offer to any person in the United States; and
• it will not offer or sell the Shares in the United States or in any other jurisdiction outside Australia except in transactions exempt
from, or not subject to, registration under the US Securities Act and in compliance with all applicable laws in the jurisdiction in
which Shares are offered and sold.
Each Applicant under the Institutional Offer will be required to make additional certain additional representations, warranties and
covenants set out in the confirmation of allocation letter distributed to it.

7.8 Underwriting Arrangements

The Offer (other than the Employee Gift Offer) is fully underwritten by the Joint Lead Managers. The Joint Lead Managers, SaleCo and
the Company have entered into an Underwriting Agreement under which the Joint Lead Managers have been appointed as arrangers,
managers and underwriters of the Offer. The Joint Lead Managers agree, subject to certain conditions and termination events, to
underwrite applications for all Shares under the Offer (other than the Employee Gift Offer). The Underwriting Agreement sets out
a number of circumstances under which the Joint Lead Managers may terminate the agreement and the underwriting obligations.
A summary of certain terms of the agreement and underwriting arrangements, including the termination provisions, is provided in
Section 9.5.1.

7.9 Discretion Regarding the Offer

Scottish Pacific may withdraw the Offer at any time before the issue of New Shares or transfer of Existing Shares to Successful
Applicants under the Broker Firm Offer, Priority Offer, Employee Gift Offer and Institutional Offer. If the Offer, or any part of it, does not
proceed, all relevant Application Monies will be refunded (without interest).
Scottish Pacific, in consultation with the Joint Lead Managers reserves the right to extend the Offer or any part of it, accept late
Applications or bids either generally or in particular cases, reject any Application or bid, or allocate to any Applicant fewer Shares than
the amount applied or bid for.

7.10 Voluntary Escrow Arrangements

Upon Completion of the Offer, Next Capital Entities, IFM Investors, Non‑Executive Director Shareholders and Management
Shareholders will be subject to voluntary escrow arrangements (other than any Shares acquired by them, or entities related to them,
under the Offer at the Offer Price). The Escrowed Shareholders have entered into voluntary escrow arrangements which prevent them
from disposing of their Escrowed Shares during the relevant escrow period (subject to limited exceptions).
See Section 9.5.4 for a summary of the terms of the escrow arrangements and the limited exceptions that permit dealing in the
Escrowed Shares during the relevant escrow period.

7.11 ASX and ASIC

7.11.1 ASX Waiver and Confirmation

The Company has applied to ASX for the following ASX Listing Rule waiver and confirmation:
• A waiver from ASX Listing Rule 10.14 in connection with the proposed employee incentive schemes to be put in place by the
Company, as described in Section 6.3.3; and
• Confirmation that the Company may undertake deferred settlement basis trading of the Shares.

7.11.2 ASIC exemptions, modifications and relief

The Company has applied to ASIC for relief so that the takeover provisions of the Corporations Act will not apply to certain relevant
interests that the Company would otherwise acquire in the Escrowed Shareholders’ Escrowed Shares by reason of the voluntary
escrow arrangements in relation to those Shares, as described in Section 9.5.4.

Scottish Pacific  Prospectus 151

07. Details of the Offer continued


7.12 ASX Listing, Registers and Holding Statements and Deferred Settlement Trading

7.12.1 Application to the ASX for the Listing of the Company and Quotation of Shares
The Company has applied for admission to the Official List of the ASX and quotation of the Shares on the ASX. The Company’s ASX
code is expected to be “SCO”.
The ASX takes no responsibility for this Prospectus or the investment to which it relates. The fact that the ASX may admit the Company
to the Official List is not to be taken as an indication of the merits of the Company or the Shares offered for subscription.
If permission is not granted for the official quotation of the Shares on the ASX within three months after the Prospectus Date (or any
later date permitted by law), all Application Monies received by the Company will be refunded without interest as soon as practicable
in accordance with the requirements of the Corporations Act.
The Company will be required to comply with the ASX Listing Rules, subject to any waivers obtained by the Company from time
to time.

7.12.2 CHESS and Issuer Sponsored Holdings

The Company has applied to participate in the ASX’s Clearing House Electronic Subregister System (CHESS) and will comply with the
ASX Listing Rules and the ASX Settlement Operating Rules. CHESS is an electronic transfer and settlement system for transactions in
securities quoted on the ASX under which transfers are effected in an electronic form.
When the Shares become approved financial products (as defined in ASX Settlement Operating Rules), holdings will be registered in
one of two subregisters, being an electronic CHESS subregister or an issuer sponsored subregister.
For all Successful Applicants, the Shares of a Shareholder who is a participant in CHESS or a Shareholder sponsored by a participant in
CHESS will be registered on the CHESS subregister. All other Shares will be registered on the issuer sponsored subregister.
Following Completion of the Offer, Shareholders will be sent a holding statement that sets out the number of Shares that have been
allocated to them. This statement will also provide details of a Shareholder’s Holder Identification Number (“HIN”) for CHESS holders or,
where applicable, the Securityholder Reference Number (“SRN”) of issuer sponsored holders. Shareholders will subsequently receive
statements showing any changes to their shareholding. Certificates will not be issued.
Shareholders will receive subsequent statements during the first week of the following month if there has been a change to their
holding on the register and as otherwise required under the ASX Listing Rules and the Corporations Act. Additional statements may
be requested at any other time either directly through the Shareholder’s sponsoring broker in the case of a holding on the CHESS
subregister or through the Share Registry in the case of a holding on the issuer sponsored subregister. The Company and the Share
Registry may charge a fee for these additional issuer sponsored statements.

7.12.3 Deferred Settlement Trading and Selling Shares on-Market

It is expected that trading of the Shares on the ASX will commence on or about Wednesday, 13 July 2016, initially on a deferred
settlement basis.
Trading will continue on a deferred settlement basis until Scottish Pacific has advised the ASX that holding statements have been
dispatched to Shareholders (which is expected to occur on or about Thursday, 14 July 2016).
Normal settlement trading (i.e. trading on a T+2 settlement basis) is expected to commence on or about Friday, 15 July 2016.
It is the responsibility of each Applicant to confirm their holding before trading in Shares. Applicants who sell Shares before they
receive an initial holding statement do so at their own risk. To the maximum extent permitted by law, the Company, SaleCo, the
Directors, the SaleCo Directors, the Joint Lead Managers, the Share Registry, the Financial Adviser and the Existing Shareholders
disclaim all liability, whether in negligence or otherwise, to persons who sell Shares before receiving their initial holding statement,
whether on the basis of a confirmation of allocation provided by any of them, by the Scottish Pacific Information Line, by a Broker
or otherwise.

152
7.13 Summary of Rights and Liabilities Attaching to Shares and Other Material
Provisions of the Constitution

7.13.1 General
The Shares to be issued under this Prospectus will rank equally with the issued fully paid ordinary Shares in the Company. The rights
attaching to Shares are:
• set out in the Constitution; and
• in certain circumstances, regulated by the Corporations Act, ASX Listing Rules, ASX Settlement Operating Rules and the
general law.
A summary of the significant rights attaching to the Shares on offer pursuant to this Prospectus and a description of other material
provisions of the Constitution is set out below. This summary is not exhaustive nor does it constitute a definitive statement of the
rights and liabilities of Shareholders. The summary assumes that the Company is admitted to the official list of the ASX.

7.13.1.1 Voting at a General Meeting

Subject to any rights or restrictions for the time being attached to any class or classes of shares in the Company (at present, there is
only one class of shares), whether by the terms of their issue, the Constitution, the Corporations Act or the ASX Listing Rules, at
a general meeting of the Company, every Shareholder present in person or by proxy, representative or attorney or whom the
Directors have determined can notify the Company of their vote in accordance with the Constitution has one vote on a show of hands
and, on a poll, one vote for each Share held (or a fraction of a vote for each partly paid share).

7.13.1.2 Meetings of Members

Each Shareholder is entitled to receive notice of, and to attend and vote at, general meetings of the Company and to receive all
notices, accounts and other documents required to be sent to Shareholders under the Constitution, Corporations Act or ASX
Listing Rules.

7.13.1.3 Dividends
The Board may from time to time resolve to pay dividends to Shareholders and fix the amount of the dividend, the time for
determining entitlements to the dividend and the timing and method of payment.

7.13.1.4 Transfer of Shares

Subject to the Constitution and to any restrictions attached to a member’s Shares, Shares may be transferred by a proper transfer
affected in accordance with the ASX Settlement Operating Rules, by a written instrument of transfer which complies with the
Constitution or by any other method permitted by the Corporations Act, ASX Listing Rules or ASX Settlement Operating Rules.
The Board may refuse to register a transfer of Shares or ask ASX Settlement to apply a holding lock in a number of situations including:
• if the registration of the transfer would create a new holding of an unmarketable parcel;
• where the transfer is not in registrable form; and
• if the Corporations Act, the ASX Listing Rules or the ASX Operating Rules forbid registration or permit the refusal of registration,
but only if that refusal would not contravene the ASX Listing Rules or the ASX Operating Rules.
If the Board refuses to register a transfer or asks ASX Settlement to apply a holding lock, the Company must, within five business days
after the date on which the transfer was delivered to it or it asked for the holding lock (as applicable), give the lodging party notice of
the refusal or holding lock and the reasons for it.

7.13.1.5 Issue of Further Shares

Subject to the Corporations Act, ASX Listing Rules and ASX Settlement Operating Rules and any rights and restrictions attached to
a class of shares, the Board may, on behalf of the Company, issue, grant options over or otherwise dispose of unissued shares to any
person on the terms, with the rights, and at the times that, the Board decides.

Scottish Pacific  Prospectus 153

07. Details of the Offer continued


7.13.1.6 Preference Shares

The Company may issue preference shares, including preference shares which are, or which at the option of the Company or holder
may be, liable to be redeemed or converted into ordinary shares. The rights attaching to the preference shares are those set out in the
Constitution unless other rights have been approved by special resolution of the Company.

7.13.1.7 Unmarketable Parcels

Subject to the Corporations Act, ASX Listing Rules and ASX Settlement Operating Rules, the Company may sell the Shares of
a Shareholder who holds less than a marketable parcel of Shares unless such Shareholder gives written notice to the Company that it
wishes to retain its Shares.

7.13.1.8 Share Buy-Backs

Subject to the Corporations Act, ASX Listing Rules and ASX Settlement Operating Rules, the Company may buy back Shares in itself.

7.13.1.9 Dividend Reinvestment Plans

The Constitution contains a provision allowing Directors to implement a dividend reinvestment plan. It is not currently intended that
a dividend reinvestment plan will be implemented.

7.13.1.10 Directors – Appointment and Removal

Under the Constitution, the minimum number of Directors that may comprise the Board is three.
Directors are elected by ordinary resolution of the Company.
Retirement will occur on a rotational basis so that no Director (excluding any Managing Director) holds office without re-election:
(i) beyond the third annual general meeting following the meeting at which the Director was last elected or re-elected; or (ii) for no
more than three years, whichever is longer.

7.13.1.11 Powers and Duties of Directors

The business and affairs of the Company are to be managed by or under the direction of the Board, which (in addition to the powers
and authorities conferred on it by the Constitution) may exercise all powers and do all things that are within the Company’s power,
provided that such powers are not required by law or by the Constitution to be exercised by the Company in general meeting.

7.13.1.12 Directors – Voting

Questions arising at a meeting of the Board will be decided by a majority of votes of the Directors present and entitled to vote on the
resolution. In the case of an equality of votes on a resolution, the Chair of the meeting will have a second or casting vote, unless there
are only two Directors present who are able to vote on the question at issue.

7.13.1.13 Directors – Remuneration

The Constitution provides that Non-Executive Directors are entitled to such remuneration which must not exceed in aggregate the
maximum amount determined by Shareholders at a general meeting. Until a different amount is determined, the maximum amount
will be $750,000 per annum.

7.13.1.14 Variation of the Constitution

The Constitution can only be amended by special resolution passed by at least 75% of Shareholders.

7.13.1.15 Variation of Class Rights

At present, the Company’s only class of shares on issue is ordinary shares. Subject to the Corporations Act and the terms of issue of
a class of shares, the rights attaching to any class of shares may be varied or cancelled:
• With the written consent of the holders of at least 75% of the issued shares of the affected class; or
• By a special resolution passed at a separate meeting of the holders of the issued shares of the affected class.

154
7.13.1.16 Winding Up
If the Company is wound up, subject to any rights or restrictions attached to a class of shares, any surplus assets of the Company
remaining after payments of debts must be divided amongst shareholders in proportion to the amount paid up on shares held
by them.

7.13.1.17 Indemnities
The Company, to the extent permitted by the Corporations Act, indemnifies each Director against any liability incurred by that person
as an officer of the Company or as an officer of another company at the request of the Company, unless the liability arises out of
conduct involving a lack of good faith.
The Company, subject to the Corporations Act and the Constitution, may pay premiums on a contract insuring a Director against any
liability incurred by that person as an officer of the Company or as an officer of another company at the request of the Company.

Scottish Pacific  Prospectus 155

08.
Investigating Accountant’s Report
08. Investigating Accountant’s Report


Deloitte Corporate Finance Pty Limited

ACN 003 833 127
AFSL 241457

Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1220 Australia
The Directors
Scottish Pacific Group Limited DX: 10307SSE
Tel: +61 (0) 2 9322 7000
Level 5, 20 Bond Street
Fax: +61 (0) 2 9322 7001
Sydney NSW 2000 www.deloitte.com.au

The Directors
Scottish Pacific SaleCo Pty Ltd
Level 5, 20 Bond Street
Sydney NSW 2000

22 June 2016

Dear Directors

INVESTIGATING ACCOUNTANT’S REPORT AND FINANCIAL SERVICES GUIDE

Introduction

This report has been prepared at the request of the directors of Scottish Pacific Group Limited ACN 164 013 110
(the Company) and of Scottish Pacific SaleCo Pty Ltd ACN 612 646 607 (SaleCo) (the Directors) for inclusion in
the prospectus to be issued by the Company and SaleCo (the Prospectus) in respect of the initial public offering of
fully paid ordinary shares in the Company (the Offer) and the listing of the Company on the Australian Securities
Exchange.

Deloitte Corporate Finance Pty Limited is wholly owned by Deloitte Touche Tohmatsu and holds the appropriate
Australian Financial Services licence under the Corporations Act 2001 for the issue of this report.

Capitalised terms used in this report have the same meaning as defined in the glossary of the Prospectus.

Scope

Historical Financial Information

Deloitte Corporate Finance Pty Limited has been engaged by the Directors of the Company and SaleCo to review
the:

 Historical consolidated statements of profit or loss for the financial years ended 30 June 2013, 30 June 2014 and
30 June 2015 and the six month period ended 31 December 2015;
 Historical consolidated statement of financial position as at 31 December 2015; and
 Historical consolidated cash flows before corporate financing and taxation for the financial years ended 30 June
2013, 30 June 2014 and 30 June 2015 and the six month period ended 31 December 2015,

as set out in Tables 11, 16 and 22 respectively of the Prospectus (together, the Historical Financial Information).

The Historical Financial Information has been prepared in accordance with the stated basis of preparation, being the
recognition and measurement principles contained in Australian Accounting Standards and the Company’s adopted
accounting policies.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms,
each of which is a legally separate and independent entity. Please see www.deloitte.com/au/about for a detailed description of the legal structure
of Deloitte Touche Tohmatsu Limited and its member firms.

Member of Deloitte Touche Tohmatsu Limited

Scottish Pacific  Prospectus 157

08. Investigating Accountant’s Report continued


Page 2
22 June 2016

The Historical Financial Information has been extracted from the annual financial reports of the Company for the
financial years ended 30 June 2013, 30 June 2014 and 30 June 2015 and the half-year report for the six month period
ended 31 December 2015, which were audited or reviewed (as applicable) by Deloitte Touche Tohmatsu in
accordance with the Australian Auditing Standards. Deloitte Touche Tohmatsu issued an unmodified audit opinion
on the annual financial reports.

Deloitte Touche Tohmatsu’s review conclusion on the half-year report for the period ended 31 December 2015 was
modified as the half-year report did not include comparative balances for the 31 December 2014 half-year, and
therefore did not comply with the disclosure requirements of AASB 134 Interim Financial Reporting. Except for this
matter, the review opinion was unmodified in all other respects.

The Historical Financial Information is presented in the Prospectus in an abbreviated form, insofar as it does not
include all of the presentation and disclosures required by Australian Accounting Standards and other mandatory
professional reporting requirements applicable to general purpose financial reports prepared in accordance with the
Corporations Act 2001.

Pro forma Historical Financial Information

Deloitte Corporate Finance Pty Limited has been engaged by the Directors of the Company and SaleCo to review
the:

 Pro forma historical statements of profit or loss for the financial years ended 30 June 2013, 30 June 2014 and 30
June 2015 and the six month period ended 31 December 2015;
 Pro forma historical statement of financial position as at 31 December 2015; and
 Pro forma historical cash flows before corporate financing and taxation for the years ended 30 June 2013, 30
June 2014 and 30 June 2015 and the six month period ended 31 December 2015,
as set out in Tables 10, 16 and 21 respectively of the Prospectus (together, the Pro forma Historical Financial
Information).

The Pro forma Historical Financial Information has been derived from the Historical Financial Information, after
adjusting for the effects of pro forma adjustments described in Tables 12, 16 and 22 of the Prospectus (the Pro forma
Adjustments).

The stated basis of preparation is the recognition and measurement principles contained in Australian Accounting
Standards applied to the Historical Financial Information and the events or transactions to which the Pro forma
Adjustments relate, as if those events or transactions had occurred as at the date of the Historical Financial
Information. Due to its nature, the Pro forma Historical Financial Information does not represent the Company’s
actual or prospective financial position, financial performance, or cash flows.

Forecast Financial Information

Deloitte Corporate Finance Pty Limited has been engaged by the Directors of the Company and SaleCo to review
the:

 Forecast consolidated statements of profit or loss and the Forecast consolidated net cash flow (available for
distribution) of the Company for the financial years ending 30 June 2016 and 30 June 2017 as set out in Table
10 and Table 21 of the Prospectus (the Statutory Forecast Financial Information). The Directors’ best estimate
assumptions underlying the Statutory Forecast Financial Information are described in Section 4.8 of the
Prospectus. The stated basis of preparation used in the preparation of the Statutory Forecast Financial
Information is the recognition and measurement principles contained in Australian Accounting Standards and
the Company’s adopted accounting policies; and
 Pro forma forecast statements of profit or loss and the Pro forma forecast net cash flow (available for
distribution) of the Company for the years ending 30 June 2016 and 30 June 2017 as set out in Table 10 and

158
 Page 3
22 June 2016

Table 21 of the Prospectus (the Pro forma Forecast Financial Information). The Pro forma Forecast Financial
Information has been derived from the Statutory Forecast Financial Information, after adjusting for the effects of
the Pro forma Adjustments described in Table 12 and Table 23 of the Prospectus. An audit/review has not been
conducted on the source from which the unadjusted financial information was prepared. The stated basis of
preparation used in the preparation of the Pro forma Forecast Financial Information is the recognition and
measurement principles contained in Australian Accounting Standards applied to the Statutory Forecast
Financial Information and the events or transactions to which the Pro forma Adjustments relate, as if those
events or transactions had occurred prior to 1 July 2015. Due to its nature the Pro forma Forecast Financial
Information does not represent the Company’s actual prospective financial performance and/ or cash flows for
the financial years ending 30 June 2016 and 30 June 2017,
(together, the Forecast Financial Information).

The Forecast Financial Information has been prepared by management and adopted by the Directors in order to
provide prospective investors with a guide to the potential financial performance of the Company for the financial
years ending 30 June 2016 and 30 June 2017. There is a considerable degree of subjective judgement involved in
preparing forecasts since they relate to events and transactions that have not yet occurred and may not occur. Actual
results are likely to be different from the Forecast Financial Information since anticipated events or transactions
frequently do not occur as expected and the variations may be material.

The Directors’ best estimate assumptions on which the Forecast Financial Information is based relate to future events
and/or transactions that management expect to occur and actions that management expect to take and are also subject
to uncertainties and contingencies, which are often outside the control of the Company. Evidence may be available
to support the assumptions on which the Forecast Financial Information is based, however such evidence is generally
future orientated and therefore speculative in nature. We are therefore not in a position to express a reasonable
assurance conclusion on those best estimate assumptions, and accordingly, provide a lesser level of assurance on the
reasonableness of the Directors’ best estimate assumptions. We do not express any opinion on the achievability of
the results. The limited assurance conclusion expressed in this report has been formed on the above basis.

Prospective investors should be aware of the material risks and uncertainties relating to an investment in the
Company, which are detailed in the Prospectus, and the inherent uncertainty relating to the prospective financial
information. Accordingly prospective investors should have regard to the investment risks and sensitivities set out in
Section 4.10 of the Prospectus.

The sensitivity analysis set out in Section 4.10 of the Prospectus demonstrates the impacts on the Forecast Financial
Information of changes in key assumptions. The Forecast Financial Information is therefore only indicative of the
financial performance which may be achievable. We express no opinion as to whether the Forecast Financial
Information will be achieved.

We have assumed, and relied on representations from certain members of management of the Company, that all
material information concerning the prospects and proposed operations of the Company has been disclosed to us and
that the information provided to us for the purpose of our work is true, complete and accurate in all respects. We
have no reason to believe that those representations are false.

Directors’ Responsibility

The Directors are responsible for:

 the preparation and presentation of the Historical Financial Information and the Pro forma Historical Financial
Information, including the selection and determination of the Pro forma Adjustments made to the Historical
Financial Information and included in the Pro forma Historical Financial Information;
 the preparation of the Forecast Financial Information, including the best estimate assumptions underlying the
Forecast Financial Information and the selection and determination of the pro forma adjustments made to the
Statutory Forecast Financial Information and included in the Pro forma Forecast Financial Information; and

Scottish Pacific  Prospectus 159

08. Investigating Accountant’s Report continued


Page 4
22 June 2016

 the information contained within the Prospectus.

This responsibility includes for the operation of such internal controls as the Directors determine are necessary to
enable the preparation of the Historical Financial Information, the Pro forma Historical Financial Information and
the Forecast Financial Information that are free from material misstatement, whether due to fraud or error.

Our Responsibility

Our responsibility is to express a limited assurance conclusion on the Historical Financial Information, the Pro forma
Historical Information, the Statutory Forecast Financial Information and the Pro Forma Forecast Financial
Information based on the procedures performed and the evidence we have obtained. We have conducted our
engagement in accordance with the Australian Standard on Assurance Engagements (ASAE) 3450 Assurance
Engagements involving Corporate Fundraisings and/or Prospective Financial Information.

A review consists of making enquiries, primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in
accordance with Australian Auditing Standards and consequently does not enable us to obtain reasonable assurance
that we would become aware of all significant matters that might be identified in a reasonable assurance
engagement. Accordingly we will not express an audit opinion.

Our engagement did not involve updating or re-issuing any previously issued audit or review report on any financial
information used as a source of the financial information.
We have performed the following procedures as we, in our professional judgement, considered reasonable in the
circumstances:

Historical Financial Information

 a review of the extraction of Historical Financial Information from the audited financial statements of the
Company for the financial years ended 30 June 2013, 30 June 2014 and 30 June 2015 and the reviewed financial
statements for the six month period ended 31 December 2015;
 analytical procedures on the Historical Financial Information;
 a consistency check of the application of the stated basis of preparation, as described in the Prospectus, to the
Historical Financial Information;
 a review of the work papers, accounting records and other documents of the Company and its auditors; and
 enquiry of Directors, management and others in relation to the Historical Financial Information.

Pro forma Historical Financial Information

 consideration of work papers, accounting records and other documents, including those dealing with the
extraction of Historical Financial Information from the audited financial statements of the Company for the
financial years ended 30 June 2013, 30 June 2014 and 30 June 2015 and the reviewed financial statements for
the six month period ended 31 December 2015;
 consideration of the appropriateness of the Pro forma Adjustments described in Section 4.3.3, Section 4.5, and
Section 4.6.2 of the Prospectus;
 consideration of work papers, accounting records and other documents, including those dealing with the
extraction of financial information relating to Scottish Pacific (BFS) Pty Ltd (formerly Bibby Financial Services
Australia Pty Ltd) (‘Bibby Australia’) from the audited financial statements of Bibby Australia for the financial
years ended 31 December 2012, 31 December 2013, 31 December 2014 and 31 December 2015 and the
accompanying management accounts;
 enquiry of Directors, management, personnel and advisors of the Company;
 the performance of analytical procedures applied to the Pro forma Historical Financial Information;

160
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22 June 2016

 a review of work papers, accounting records and other documents of the Company and its auditors; and
 a review of the accounting policies adopted and used by the Company over the period for consistency of
application.

Forecast Financial Information

 enquiries, including discussions with management and Directors of the factors considered in determining the
assumptions;
 analytical and other review procedures we considered necessary including examination, on a test basis, of
evidence supporting the assumptions, amounts and other disclosures in the Forecast Financial Information;
 review of the accounting policies adopted and used in the preparation of the Forecast Financial Information; and
 consideration of the Pro forma Adjustments applied to the Statutory Forecast Financial Information in preparing
the Pro forma Forecast Financial Information.

Conclusions

Historical Financial Information

Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that the
Historical Financial Information is not presented fairly, in all material respects, in accordance with the stated basis of
preparation, as described in Section 4.2 of the Prospectus.

Pro forma Historical Financial Information

Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that the Pro
forma Historical Financial Information is not presented fairly in all material respects, in accordance with the stated
basis of preparation as described in Section 4.2 of the Prospectus.

Statutory Forecast Financial Information

Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that:

(i) the Directors’ best estimate assumptions used in the preparation of the Statutory Forecast Financial Information
do not provide reasonable grounds for the Statutory Forecast Financial Information;
(ii) in all material respects, the Statutory Forecast Financial Information:
a. is not prepared on the basis of the Directors’ best estimate assumptions as described in Section 4.8 of
the Prospectus;
b. is not presented fairly in accordance with the stated basis of preparation, being the accounting policies
adopted and used by the Company and the recognition and measurement principles contained in
Australian Accounting Standards; and
(iii) the Statutory Forecast Financial Information itself is unreasonable.

Pro forma Forecast Financial Information

Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that:

(i) the Directors’ best estimate assumptions used in the preparation of the Pro forma Forecast Financial Information
do not provide reasonable grounds for the Pro forma Forecast Financial Information;
(ii) in all material respects, the Pro forma Forecast Financial Information:

Scottish Pacific  Prospectus 161

08. Investigating Accountant’s Report continued


Page 6
22 June 2016

a. is not prepared on the basis of the Directors’ best estimate assumptions as described in Section 4.8 of
the Prospectus;
b. is not presented fairly in accordance with the stated basis of preparation, being the accounting policies
adopted and used by the Company and the recognition and measurement principles contained in
Australian Accounting Standards, applied to the Statutory Forecast Financial Information and the Pro
forma Adjustments as if those adjustments had occurred prior to 1 July 2015; and
(iii) the Pro forma Forecast Financial Information itself is unreasonable.

Restrictions on Use

Without modifying our conclusions, we draw attention to the ‘Important Notices’ page and to Section 4.2 of the
Prospectus, which describes the purpose of the Financial Information, being for inclusion in the Prospectus. As a
result, the Investigating Accountant’s Report may not be suitable for use for another purpose.

Consent

Deloitte Corporate Finance Pty Limited has consented to the inclusion of this limited assurance report in the
Prospectus in the form and context in which it is included.

Disclosure of Interest

Deloitte Corporate Finance Pty Limited does not have any interest in the outcome of this Offer other than the
preparation of this report and participation in the due diligence procedures for which normal professional fees will be
received.

Deloitte Touche Tohmatsu is the auditor of the Company.

Yours sincerely

DELOITTE CORPORATE FINANCE PTY LIMITED

Ian Turner Tapan Verma

Authorised Representative of Authorised Representative of
Deloitte Corporate Finance Pty Limited Deloitte Corporate Finance Pty Limited
(AFSL Number 241457) (AFSL Number 241457)
AR Number 461016 AR Number 1009181

162
Financial Services Guide
What is a Financial Services Guide?
This Financial Services Guide (FSG) provides
important information to assist you in deciding
whether to use our services. This FSG includes details
of how we are remunerated and deal with complaints.
Where you have engaged us, we act on your behalf when
providing financial services. Where you have not
engaged us, we act on behalf of our client when providing
these financial services, and are required to give you an
FSG because you have received a report or other financial
services from us. The person who provides the advice is
an Authorised Representative (AR) of Deloitte Corporate
Finance Pty Limited (DCF), which authorises the AR to
distribute this FSG. Their AR number is included in the
report which accompanies this FSG.
What financial services are we licensed
to provide?
We are authorised to provide financial product advice and to
arrange for another person to deal in financial products in
relation to securities, interests in managed investment
schemes, government debentures, stocks or bonds to retail
and wholesale clients. We are also authorised to provide
personal and general financial product advice and deal by
arranging in derivatives and regulated emissions units to
wholesale clients, and general financial product advice
relating to derivatives to retail clients.
Our general financial product advice
Where we have issued a report, our report contains only
general advice. This advice does not take into account
your personal objectives, financial situation or needs. You
should consider whether our advice is appropriate for you,
having regard to your own personal objectives, financial
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If our advice is provided to you in connection with the
acquisition of a financial product you should read the
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Our fees are usually determined on a fixed fee or time
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may request particulars of our remuneration within a
reasonable time after being given this FSG.
Other than our fees, we, our directors and officers, any
related bodies corporate, affiliates or associates and their
July 2014
Deloitte Corporate Finance Pty Limited, ABN 19 003 883 127, AFSL 241457 of Level 1 Grosvenor Place, 225 George Street, Sydney NSW 2000
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms,
each of which is a legally separate and independent entity. Please see www.deloitte.com/au/about for a detailed description of the legal structure of
Deloitte Touche Tohmatsu Limited and its member firms.
Member of Deloitte Touche Tohmatsu Limited
directors and officers, do not receive any commissions or
other benefits.
All employees receive a salary and while eligible for
annual salary increases and bonuses based on overall
performance they do not receive any commissions or
other benefits as a result of the services provided to you.
The remuneration paid to our directors reflects their
individual contribution to the organisation and covers all
aspects of performance.
We do not pay commissions or provide other benefits to
anyone who refers prospective clients to us.
Associations and relationships
We are ultimately controlled by the Deloitte member firm in
Australia (Deloitte Touche Tohmatsu). Please see
www.deloitte.com/au/about for a detailed description of the
legal structure of Deloitte Touche Tohmatsu. We and other
entities related to Deloitte Touche Tohmatsu:
 do not have any formal associations or
relationships with any entities that are issuers of
financial products
 may provide professional services to issuers of
financial products in the ordinary course of
business.
What should you do if you have a
complaint?
If you have any concerns regarding our report or service,
please contact us. Our complaint handling process is
designed to respond to your concerns promptly and
equitably. All complaints must be in writing to the
address below.
If you are not satisfied with how we respond to your
complaint, you may contact the Financial Ombudsman
Service (FOS). FOS provides free advice and assistance to
consumers to help them resolve complaints relating to the
financial services industry. FOS’ contact details are also
set out below.
The Complaints Officer Financial Ombudsman Service
PO Box N250 GPO Box 3
Grosvenor Place Melbourne VIC 3001
Sydney NSW 1220 info@fos.org.au
complaints@deloitte.com.au www.fos.org.au
Fax: +61 2 9255 8434 Tel: 1300 780 808
Fax: +61 3 9613 6399
What compensation arrangements do we
have?
Deloitte Australia holds professional indemnity insurance
that covers the financial services provided by us. This
insurance satisfies the compensation requirements of the
Corporations Act 2001 (Cth).
Scottish Pacific  Prospectus 163
09.
Additional Information
09. Additional Information


9.1 Registration
The Company was registered in Victoria, Australia on 29 May 2013 as a private company and was converted to a public company
limited by shares on 10 June 2016. As at the Prospectus Date, the Company has 112.4m Shares on issue (each fully paid) currently
held by the Shareholders set out in Section 7.1.6.
SaleCo was incorporated in Victoria, Australia on 26 May 2016 as a private company limited by shares. The sole shareholder of SaleCo
is Peter Clare. The SaleCo Directors are Patrick Elliott, Peter Clare, Peter Langham, Andrew Love and Katrina Onishi.

9.2 Taxation Considerations

9.2.1 Company Tax Jurisdiction and Financial Year

The Company will be taxed in Australia at the corporate tax rate. The Company’s financial year for taxation purposes ends on 30 June.

9.2.2 Taxation Considerations

This section does not constitute financial product advice as defined in the Corporations Act and is confined to taxation issues and is
only one of the matters you need to consider when making a decision about your investments. You should consider taking advice
from a licensed adviser, before making a decision about your investments.
The following tax comments are based on the tax law in Australia in force as at the Prospectus Date. Australian tax laws are complex.
This summary is general in nature and is not intended to be an authoritative or complete statement of all potential tax implications for
each investor or relied upon as tax advice. During the period of ownership of the Shares by investors, the taxation laws of Australia,
or their interpretation, may change. The precise implications of ownership or disposal will depend upon each investor’s specific
circumstances. Investors should seek their own professional advice on the taxation implications of holding or disposing of the Shares,
taking into account their specific circumstances.
The following information is a general summary of the Australian income tax implications for Australian tax resident individuals,
complying superannuation entities, trusts, partnerships and corporate investors. These comments do not apply to non-tax resident
investors, investors that hold Shares on revenue account or as trading stock, investors who are exempt from Australian income tax or
investors subject to the Taxation of Financial Arrangements regime in Division 230 of the Income Tax Assessment Act 1997 (Cth) which
have made certain elections (i.e. to apply the fair value or reliance on financial reports methodologies).

9.2.3 Dividends Paid on Shares

9.2.3.1 Individuals and Complying Superannuation Entities
Dividends paid by the Company on a Share will constitute assessable income of an Australian tax resident investor. Australian tax
resident investors who are individuals or complying superannuation entities should include the dividend in their assessable income
in the year the dividend is paid, together with any franking credit attached to that dividend.
Such investors should be entitled to a tax offset equal to the franking credit attached to the dividend. The tax offset can be applied
to reduce the tax payable on the investor’s taxable income. Where the tax offset exceeds the tax payable on the investor’s taxable
income, the investor should be entitled to a tax refund equal to the excess.
To the extent that the dividend is unfranked, the investor will generally be taxed at his or her prevailing marginal rate on the dividend
received (with no tax offset).

9.2.3.2 Corporate Investors

Corporate investors are also required to include both the dividend and the associated franking credit in their assessable income.
Corporate investors are then entitled to a tax offset up to the amount of the franking credit attached to the dividend.
An Australian tax resident corporate investor should be entitled to a credit in its own franking account to the extent of the franking
credits attached to the distribution received. This will allow the corporate investor to pass on the franking credits to its investor(s)
on the subsequent payment of franked dividends.
Excess franking credits received by corporate investors will not give rise to a refund entitlement for a company, but can be converted
into carry forward tax losses instead.

Scottish Pacific  Prospectus 165

09. Additional Information continued


9.2.3.3 Trusts and Partnerships

Investors who are trustees (other than trustees of complying superannuation entities) or partnerships should include the franking
credit in determining the net income of the trust or partnership. The relevant beneficiary or partner may be entitled to a tax offset
equal to the beneficiary’s or partner’s share of the net income of the trust or partnership.

9.2.3.4 Shares Held at Risk

The benefit of franking credits can be denied where an investor is not a ‘qualified person’, in which case the investor will not need to
include the amount of the franking credits in their assessable income and will not be entitled to a tax offset.
Broadly, to be a ‘qualified person’, two tests must be satisfied, namely the holding period rule and the related payment rule.
Under the holding period rule, an investor is required to hold Shares at risk for more than 45 days continuously (which is measured
as the period commencing the day after the Shares were acquired and ending on the 45th day after the Shares become ex-dividend)
in order to qualify for franking benefits, including franking credits. This holding period rule is subject to certain exceptions, including
where the total franking offsets of an individual in a year of income do not exceed $5,000.
Under the related payment rule, a different testing period applies where the investor has made, or is under an obligation to make,
a related payment in relation to the dividend. The related payment rule requires the investor to have held the Shares at risk for the
continuous 45 day period as above but within the period commencing on the 45th day before, and ending on the 45th day after the
day, the Shares become ex-dividend.
Investors should seek professional advice to determine if these requirements, as they apply to them, have been satisfied.
There are specific integrity rules that prevent taxpayers from obtaining a tax benefit from additional franking credits where dividends
are received as a result of ‘dividend washing’ arrangements. Shareholders should consider the impact of these rules given their own
personal circumstances.

9.2.4 Disposal of Shares

Most Australian resident investors will be subject to Australian capital gains tax (“CGT”) on the disposal of their Shares. Some investors
may hold their Shares on revenue account as trading stock, or be subject to the Taxation of Financial Arrangements regime. These
investors should seek their own professional advice in respect of the consequences of a disposal of Shares.
An investor will derive a capital gain on the disposal of Shares where the capital proceeds received on disposal exceeds the CGT
cost base of the Shares. The CGT cost base of the Shares is broadly the amount paid to acquire the Shares plus any transaction/
incidental costs.
A CGT discount may be available on the capital gain for individual investors, trustee investors and investors that are complying
superannuation entities provided the particular Shares are held for at least 12 months prior to sale. Any current year or carry forward
capital losses should offset the capital gain first before the CGT discount can be applied.
The CGT discount for individuals and trusts is 50% and for complying superannuation entities is 331⁄3%. In relation to trusts, the CGT
discount rules are complex, but the discount may flow through to presently entitled beneficiaries of the trust.
An investor will incur a capital loss on the disposal of their particular Shares to the extent that the capital proceeds on disposal are less
than the CGT reduced cost base of the Shares.
If an investor derives a net capital gain in a year, this amount is, subject to the other parts of this section, included in the investor’s
assessable income. If an investor incurs a net capital loss in a year, this amount is carried forward and is available to offset against
capital gains derived in subsequent years, subject in some cases to the investor satisfying certain rules relating to the recoupment
of carried forward losses.

9.2.5 Tax File Numbers

An investor is not required to quote their tax file number (“TFN”) to the Company. However, if a TFN (or certain exemption details) is
not provided, Australian tax may be required to be deducted by the Company from dividends at the maximum marginal tax rate plus
the Medicare levy and temporary budget repair levy.
An investor who holds Shares as part of an enterprise may quote its Australian Business Number instead of its TFN.

166
9.2.6 Stamp Duty
No stamp duty should be payable by investors on the acquisition of Shares.
Investors should seek their own tax advice as to the impact of stamp duty in their own particular circumstances.

9.2.7 Australian GST

The acquisition, redemption or disposal of the Shares by an Australian resident (registered for GST) will be an input taxed financial
supply, and therefore is not subject to GST.
No GST should be payable in respect of dividends paid to investors.
An Australian resident investor registered for GST may not be entitled to claim full input tax credits in respect of GST on expenses
incurred relating to the acquisition, redemption or disposal of the Shares (e.g. lawyers’ and accountants’ fees).
Investors should seek their own tax advice on the impact of GST in their own particular circumstances.

9.3 Corporate Structure

Figure 34: Corporate Structure of the Group66

Scottish Pacific
Group Limited
(ACN 164 013 110)

100%

Tartan Bidco
Pty Ltd
(ACN 164 086 524)

100%

Scottish Pacific
Holdings
Pty Limited
(ACN 140 306 467)

100% 100% 100% 100% 100% 100% 100%

Scottish Pacific Scottish Pacific Scottish Pacific
SP Tradeline Scottish Pacific Benchmark Debtor Scottish Pacific
Trade Limited Business Finance Business Finance
(UK) Limited Trade Pty Limited Finance Pty Ltd (BFS) Pty Ltd
(Hong Kong Limited Pty Limited
(UK Company) (ACN 139 301 009) (ACN 082 607 654) (ACN 101 657 041)
Company) (NZ Company) (ACN 008 636 388 )

100% 100%
Scottish Pacific Integral
Business Finance Collections Pty
Administration
Limited Limited
(NZ Company) (ACN 143 757 117)

9.4 Role of SaleCo

SaleCo has been established to facilitate the sale of some of the Existing Shares held by certain Existing Shareholders.
As at the Prospectus Date, certain Existing Shareholders have executed a deed poll (“Sale Deed Poll”) in favour of SaleCo under which
they offer to sell some of their Existing Shares free from encumbrances and third-party rights. The total number of Shares which the
Existing Shareholders have offered to sell is 67.6m.

66. Note: This diagram reflects the corporate structure of the Group. It does not depict the ownership or structure of the Funding Vehicles. For information on the Funding Vehicles see Sections
3.3.2, 4.5.2 and 9.5.2.

Scottish Pacific  Prospectus 167

09. Additional Information continued


The Existing Shares that SaleCo acquires from the Existing Shareholders will be transferred to Successful Applicants under the Offer
at the Offer Price. The aggregate price payable by SaleCo to Existing Shareholders for these Shares is the Offer Price multiplied by the
number of Existing Shares that SaleCo acquires from Existing Shareholders. The Company will separately issue New Shares to
Successful Applicants under the Offer.
SaleCo has no material assets, liabilities or operations other than its interests in and obligations under the Underwriting Agreement and
the Sale Deed Poll and deed of indemnity described below. The SaleCo Directors are the same as those on the Board of Directors.
Pursuant to a deed of indemnity between the Company and SaleCo, the Company has indemnified SaleCo, its officers and
shareholders for any loss that SaleCo may incur as a consequence of the Offer.

Figure 35: Offer Structure

Successful Applicants under the Offer

Transfer
of Shares

SaleCo Issue of
Shares
Transfer
of Shares

Existing Shareholders selling Shares Company

9.5 Material Contracts

The Directors consider that there are a number of contracts which are significant or material to the Group, or that are of a nature that
an investor may wish to have details of them when making an assessment of whether to apply for Shares. Summaries for the material
contracts set out below are not complete and are qualified by the text of the contracts themselves.

9.5.1 Underwriting Agreement

The Company, SaleCo and the Joint Lead Managers have entered into an underwriting agreement dated 22 June, 2016 (“Underwriting
Agreement”) pursuant to which the Joint Lead Managers agree to arrange and manage the Offer and to underwrite subscriptions for
and the sale of the number of Shares under the:
• Broker Firm Offer;
• Priority Offer; and
• Institutional Offer,
for which valid applications are not received, at the Offer Price. The Joint Lead Managers do not underwrite the Employee Gift Offer.
For the purpose of this section, Offer Documents means the documents issued or published by or on behalf of the Company and
SaleCo and with their prior approval in respect of the Offer and in a form approved by the Joint Lead Managers including:
• The pathfinder version of this Prospectus and any document which supplements or replaces the pathfinder version of this
Prospectus (including any addendum to it);
• This Prospectus, any Application Form and any supplementary or replacement prospectus;
• Any cover email, including an appropriate cautionary legend, sent to eligible Institutional Investors in Australia and New Zealand
and other agreed foreign jurisdictions with a link to or attaching this version of this Prospectus in connection with the
Institutional Offer and bookbuild; and

168
• Any investor presentation, roadshow presentation or marketing presentation and/or ASX announcement used in connection with
the Institutional Offer or the Broker Firm Offer (including any addendum to those presentations and any draft of such documents
used for roadshow purposes prior to the lodgement date).

9.5.1.1 Fees, Costs and Expenses

The Company and SaleCo have agreed to pay the Joint Lead Managers in their respective proportions (as determined under the
Underwriting Agreement) an underwriting fee equal to 1.75% of the funds raised under the Offer and a selling and management fee
equal to 0.75% of the funds raised under the Offer (excluding from the Employee Gift Offer), payable by the Company and SaleCo on
the date of settlement of the Offer.
In addition, an incentive fee of up to 0.75% of the funds raised under the Offer (excluding from the Employee Gift Offer) may also be
payable to the Joint Lead Managers at the absolute discretion of the Company and SaleCo and may be split between the Joint Lead
Managers in the absolute discretion of the Company and SaleCo, including by allocating the full incentive fee to either of the Joint
Lead Managers.
The Company must also pay or reimburse the Joint Lead Managers for certain other agreed reasonable costs, charges and expenses
incurred by the Joint Lead Managers in relation to or incidental to the Offer. All such amounts are payable on the date of settlement
of the Offer, unless the Underwriting Agreement is terminated in which case such amounts must be paid as soon as reasonably
practicable after termination (and in any case within seven days after termination).

9.5.1.2 Representations, Warranties and Undertakings

The Underwriting Agreement contains customary representations, warranties and undertakings provided by the Company and SaleCo
(as applicable) to the Joint Lead Managers including, but not limited to, matters such as the conduct of the Company and SaleCo,
powers and authorisations, information provided by the Company and SaleCo, Financial Information, disclosure in any Offer Document
and other public information, the conduct of the Offer and compliance with laws, compliance with the Corporations Act, NZ Securities
Laws, ASX Listing Rules and other legally binding requirements, anti-money laundering and bribery, and that the Offer qualifies for the
benefit of the NZ Mutual Recognition Regulations.
The Company and SaleCo also provide additional representations and warranties in connection with matters including, but not
limited to, their licences, closing certificates, the Shares, encumbrances, the accounts, future matters, material contracts, the business
of the Group, litigation, non-disposal of Escrowed Shares, entitlements of third parties, tax, insurance, authorisations, eligibility for
Listing and internal accounting controls.
The Company’s undertakings includes that it will not, during the period following the date of the Underwriting Agreement until
180 days after the Shares have been issued or transferred under the Offer:
• Issue, or agree to issue, or indicate in any way that it may or will issue, or agree to issue, any shares or other securities or certain
other arrangements without the prior written consent of the Joint Lead Managers subject to certain limited exceptions, including
an issue of securities pursuant to an employee share or option plan as described in the pathfinder version of this Prospectus;
• Alter the capital structure of the Company or amend the Company’s constitution, except with the prior written consent of the
Joint Lead Managers; and
• Dispose of the Company’s business or property in whole or substantial part, except with the prior written consent of the Joint
Lead Managers.

9.5.1.3 Indemnity
Subject to certain exceptions, the Company and SaleCo on a joint and several basis indemnify the Joint Lead Managers and their
respective representatives from and against certain losses and liabilities incurred directly or indirectly as a result of or in connection
with the Offer.

9.5.1.4 Termination Events Not Limited to Materiality

A Joint Lead Manager may terminate the Underwriting Agreement at any time after the date of the Underwriting Agreement until
4.00pm on the date of settlement of the Offer (without any cost or liability by notice to the Company and the other Joint Lead
Manager), if any of the following events occur:

Scottish Pacific  Prospectus 169

09. Additional Information continued


• Disclosures: in the relevant Joint Lead Manager’s reasonable opinion, a statement in any of the Offer Documents or the
information released to the public is or becomes misleading or deceptive or is likely to mislead or deceive, or a matter required
to be included is omitted from an Offer Document (including, without limitation, having regard to the provisions of Part 6D.2
of the Corporations Act and Part 2 of the NZFMCA);
• New circumstances: there occurs a new circumstance that arises after this Prospectus is lodged that would have been required
to be included in this Prospectus if it had arisen before this Prospectus was lodged;
• Form of supplementary prospectus: the Company and SaleCo lodge a supplementary or replacement prospectus with ASIC
in a form that has not been approved by the Joint Lead Managers;
• Supplementary prospectus: the Company and SaleCo issue or, in the reasonable opinion of the Joint Lead Managers,
are required to issue, a supplementary or replacement prospectus to comply with section 719 of the Corporations Act;
• Market fall: the S&P/ASX 200 Index falls to a level that is 90% or less of the level as at the close of trading on the date of the
Institutional Offer bookbuild and is at or below that level at the close of trading:
– For three consecutive business days during any time after the date of the Underwriting Agreement; or
– On the business day immediately prior to, either the date of settlement or the allotment date;
• Escrow Deeds: any of the Escrow Deeds are withdrawn, terminated, rescinded, breached or failed to be complied with.
• Sale Shares: a sale deed poll is withdrawn, varied, terminated, rescinded, altered or amended, breached or failed to be
complied with.
• Forecast Financial Information: in the reasonable opinion of the terminating Joint Lead Manager:
– There are not, or there ceases to be, reasonable grounds, for any statement or estimate in any Offer Document which relates
to a future matter; or
– Any statement or estimate in the Offer Documents which relates to a future matter is unlikely to be met in the projected
timeframe (including in each case financial forecasts);
• Fraud: the Company, SaleCo or any of their respective directors or officers (as those terms are defined in the Corporations Act)
engage, or have engaged since the date of the Underwriting Agreement, in any fraudulent conduct or activity, whether or not
in connection with the Offer;
• Listing and quotation: approval is refused or not granted, or approval is granted subject to conditions other than customary
conditions, to:
– The Company’s admission to the Official List of the ASX on or before the Listing approval date as set out in the Underwriting
Agreement; or
– The quotation of all of the Company’s ordinary shares, including the New Shares, on the ASX or for the Company’s ordinary
shares, including the New Shares, to be traded through CHESS on or before the quotation date as set out in the Underwriting
Agreement;
or if granted, the approval is subsequently withdrawn, qualified (other than by customary conditions) or withheld;
• NZ mutual recognition: the Company fails to comply with the requirements of the NZ Mutual Recognition Regulations to enable
the Offer to proceed on the basis of the Prospectus, under those regulations;
• Notifications: any of the following notifications are made:
– ASIC issues an order (including an interim order) under section 739 of the Corporations Act;
– ASIC holds a hearing under section 739(2) of the Corporations Act;
– An application is made by ASIC for an order under Part 9.5 of the Corporations Act in relation to the Offer or an Offer
Document or ASIC commences any investigation or hearing under Part 3 of the Australian Securities and Investments
Commission Act 2001 (Cth) in relation to the Offer or an Offer Document;
– Any person (other than the Joint Lead Managers) who has previously consented to the inclusion of its name in an Offer
Document withdraws that consent;
– Any person (other than the Joint Lead Managers) gives a notice under section 730 of the Corporations Act in relation
to the Prospectus;
– The New Zealand Registrar or the New Zealand Financial Markets Authority contacts or gives any notice to the Company
in terms of regulation 258(2) of the NZFMCR;
• Certificate: the Company or SaleCo does not provide a closing certificate as and when required by the Underwriting Agreement;

170
• Material contracts: any of the obligations of the relevant parties under any of the contracts that are material to the business of
the Group or any of the material contracts are not capable of being performed in accordance with their terms (in the reasonable
opinion of the terminating Joint Lead Manager) or all or any part of any such contracts:
– Is amended or varied without the consent of the Joint Lead Managers;
– Is terminated;
– Ceases to have effect, otherwise than in accordance with its terms; or
– Is or becomes void, voidable, illegal, invalid or unenforceable (other than by reason only of a party waiving any of its rights)
or capable of being terminated, rescinded or avoided or of limited force and effect, or its performance is or becomes illegal;
• Withdrawal: the Company or SaleCo withdraws an Offer Document or the Offer or indicates that it does not intend to proceed
with the Offer or any part of the Offer;
• Insolvency events: any member of the Group becomes insolvent or there is an act or omission which is likely to result in
a member of the Group becoming insolvent;
• Timetable: an event specified in the timetable up to and including the settlement date is delayed by more than 1 business day;
• Unable to issue or transfer shares: the Company is prevented from allotting and issuing (as applicable) New Shares, or SaleCo is
prevented from transferring the Existing Shares, within the time required by the timetable for the Offer, the Offer Documents, the
ASX Listing Rules, applicable laws, an order of a court of competent jurisdiction or a governmental authority;
• Change to Company: the Company:
– alters the issued capital of the Company or another member of the Group; or
– disposes or attempts to dispose of a substantial part of the business or property of the Company or another member
of the Group,
without the prior written consent of the Joint Lead Managers;
• Regulatory approvals: a regulatory body withdraws or revokes any regulatory approvals required for the Company or SaleCo to
perform their obligations under the Underwriting Agreement or to carry out the transactions contemplated by the Offer Documents;
• Force majeure: there is an event or occurrence, including any statute, order, rule, regulation, directive or request (including one
compliance with which is in accordance with the general practice of persons to whom the directive or request is addressed) of
any governmental agency which makes it illegal for the Joint Lead Managers to satisfy an obligation under the Underwriting
Agreement, or to market, promote or settle the Offer;
• Change in management: a change in CEO, CFO, Head of Debtor Finance or Head of Risk and Compliance occurs, or there
is a change in the board of directors of the Company or SaleCo;
• Vacancy in office: The Chairman, CEO, CFO, Head of Debtor Finance or Head of Risk and Compliance of the Company vacates
his or her office;
• Prosecution: any of the following occur:
– a director or proposed director named in the pathfinder version of this Prospectus or this Prospectus of the Company or
SaleCo is charged with an indictable offence;
– any governmental agency commences any public action against the Company or SaleCo or any of their respective directors
in their capacity as a director of the Company or SaleCo (as applicable), or announces that it intends to take action; or
– any director or proposed director named in the pathfinder version of this Prospectus or this Prospectus of the Company or
SaleCo is disqualified from managing a corporation under Part 2D.6 of the Corporations Act;
• Constitution: the Company varies any term of its constitution (other than a variation that was approved by the Joint Lead
Managers prior to the date of the Underwriting Agreement); or
• Legal proceedings: any regulatory body commences any enquiry or public action against a member of the Group, which relates
to the Offer or Offer Documents.

9.5.1.5 Termination Events Limited to Materiality

A Joint Lead Manager may terminate the Underwriting Agreement at any time after the date of the Underwriting Agreement until
4.00pm AEST on the date of settlement of the Offer (without any cost or liability by notice to the Company, SaleCo and the other Joint
Lead Manager), if any of the following events occur and the Joint Lead Manager has reasonable grounds to believe the event: (i) has or
is likely to have a material adverse effect on the success, settlement or marketing of the Offer, or on the ability of the Joint Lead

Scottish Pacific  Prospectus 171

09. Additional Information continued


Manager to market, promote or settle the Offer, or on the likely price at which the Shares will trade on the ASX or the willingness of
investors to subscribe for Shares, or (ii) will, or is likely to, give rise to a liability of the Joint Lead Manager under, or give rise to, or result
in, a contravention by the Joint Lead Manager or its affiliates or the Joint Lead Manager or its affiliates being involved in
a contravention of, any applicable law:
• Material contracts: any of the obligations of the relevant parties under any of the contracts that are material to the business of
the Group or any of the material contracts are not capable of being performed in accordance with their terms (in the reasonable
opinion of the terminating Joint Lead Manager) or all or any part of any such contracts is breached;
• Regulatory approvals: a regulatory body amends any regulatory approvals required for the Company or SaleCo to perform their
obligations under the Underwriting Agreement or to carry out the transactions contemplated by the Offer Documents;
• Legal proceedings: the commencement of legal proceedings against the Company, SaleCo or any other member of the Group
or against any director of the Company, SaleCo or any other member of the Group in that capacity or any regulatory body
commences any enquiry or public action against a member of the Group (other than an enquiry or public action which relates
to the Offer or Offer Documents);
• Disclosures in due diligence report: the due diligence report or verification material or any other information supplied by or on
behalf of the Company or SaleCo to the Joint Lead Managers in relation to the Group or the Offer is (or is likely to), or becomes
(or becomes likely to be), misleading or deceptive, including by way of omission;
• Adverse change: any adverse change occurs in the assets, liabilities, financial position or performance, profits, losses or prospects
of the Company and the Group (insofar as the position in relation to an entity in the Group affects the overall position of the
Company), including any adverse change in the assets, liabilities, financial position or performance, profits, losses or prospects of
the Company or the Group from those respectively disclosed in any Offer Document or the public information;
• Change of law: there is introduced, or there is a public announcement of a proposal to introduce, into the Parliament of Australia
or New Zealand or any State or Territory of Australia, a new law, or the Reserve Bank of Australia or the Reserve Bank of
New Zealand, or any Commonwealth or State authority, including ASIC adopts or announces a proposal to adopt a new policy
(other than a law or policy which has been announced before the date of the Underwriting Agreement);
• Breach of laws: there is a contravention by the Company, SaleCo or any other member of the Group of the Corporations Act, the
Competition and Consumer Act 2010 (Cth), the Australian Securities and Investments Commission Act 2001 (Cth) (or any regulations
under those acts), the NZ Companies Act, the Commerce Act 1986 of New Zealand, the Fair Trading Act 1986 of New Zealand, the
NZ Securities Laws, its constitution or any of the ASX Listing Rules;
• Compliance with law: any of the Offer Document or any aspect of the Offer does not comply with the Corporations Act, the
Companies Act and the NZ Securities Laws, its Constitution, the ASX Listing Rules or any other applicable law or regulation;
• Representations and warranties: a representation, warranty, undertaking or obligation contained in the Underwriting Agreement
on the part of the Company or SaleCo (whether severally or jointly) is breached, becomes not true or correct or is not performed;
• Breach: the Company or Sale Co defaults on one or more of its obligations under the Underwriting Agreement;
• Escrow Deeds: any of the Escrow Deeds are varied, altered or amended;
• Information supplied: any information supplied (including any information supplied prior to the date of the Underwriting
Agreement) by or on behalf of a member of the Group to the Joint Lead Managers in respect of the Offer or the Group is, or is
found to be, misleading or deceptive, or likely to mislead or deceive (including by omission;
• Hostilities: hostilities not presently existing commence (whether war has been declared or not) or an escalation in existing
hostilities occurs (whether war has been declared or not) involving any one or more of Australia, New Zealand, the United States,
the United Kingdom, the People’s Republic of China, Singapore, or any member state of the European Union, or a major terrorist
act is perpetrated on any of those countries or any diplomatic, military, commercial or political establishment of any of those
countries;
• Certificate incorrect: a statement in any closing certificate is false, misleading, inaccurate or untrue or incorrect; or
• Disruption in financial markets: any of the following occur:
– A general moratorium on commercial banking activities in Australia, the United States, the United Kingdom, New Zealand,
Japan, Hong Kong, a member state of the European Union or New York is declared by the relevant central banking authority
in those countries, or there is a material disruption in commercial banking or security settlement or clearance services in any
of those countries;

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 – Any adverse effect on the financial markets in Australia, Hong Kong, Japan, the United States, New Zealand, a member state
of the European Union or the United Kingdom, or in foreign exchange rates or any development involving a prospective
change in political, financial or economic conditions in any of those countries; or
– Trading in all securities quoted or listed on the ASX, the New York Stock Exchange, the London Stock Exchange, the Hong
Kong Stock Exchange or the Tokyo Stock Exchange is suspended or limited in a material respect for one day (or a substantial
part of one day) on which that exchange is open for trading.

9.5.2 Funding Vehicles and facilities

9.5.2.1 Overview
As at the Completion of the Offer, Scottish Pacific will have three Funding Vehicles established in Australia (Scottish Pacific Benchmark
Master Finance Trust in respect of the Scottish Pacific Receivables Series, Scottish Pacific (Paringa) Warehouse Trust and Scottish Pacific
(BFS) Warehouse Trust) and one Funding Vehicle established in New Zealand (Scottish Pacific New Zealand Trust), to which the three
Senior Facilities provide financing, funding Client Funding Amounts provided by Scottish Pacific to its Clients.
Details of Scottish Pacific’s current Funding Vehicles and the facilities provided to those vehicles in Australia and New Zealand are set
out here and in Sections 3.3 and 4.5.2.

Table 45: Funding Vehicles

Facility Receivables Class

Scottish Pacific Benchmark Master Finance Trust in Trade receivables, Trade Finance receivables and FactorONE receivables
respect of the Scottish Pacific Receivables Series

Scottish Pacific New Zealand Trust Trade receivables

Scottish Pacific (Paringa) Warehouse Trust Trade receivables

Scottish Pacific (BFS) Warehouse Trust Trade receivables

Further Funding Vehicles may be established, and further facilities may be entered into from time to time, in each case under the
material contracts referred to in this section or other new, similar arrangements.

9.5.2.2 Framework for Australian and New Zealand Funding Vehicle Arrangements

The Australian Funding Vehicles are governed by a range of master documents, including:

• Master trust deeds: these documents provide for the creation of special purpose trusts as Funding Vehicles, which are
established to enter into the applicable facility arrangements. The trustee of each Funding Vehicle is a professional trustee
company independent of Scottish Pacific. Scottish Pacific or its related entities are the sole unitholders of these Funding Vehicles
and these documents provide the terms of Scottish Pacific’s entitlements as unitholders; and
• Master management documents: these documents govern the terms and conditions under which a manager unrelated to the
Group is appointed to manage and direct the trustee in carrying on the day-to-day business of the Funding Vehicle. The manager
receives fees in exchange for the provision of those services (see Section 9.5.2.4 for more detail).
The New Zealand Funding Vehicle was established and certain of its operations are governed by the following material contracts:
• Trust deed: this document provides for the creation of the special purpose trust as a Funding Vehicle, which was established to
enter into the New Zealand facility arrangements. The trustee of the Funding Vehicle is a professional trustee company
independent of Scottish Pacific. Scottish Pacific or its related entities are the sole unitholders of the Funding Vehicle and this
document provides the terms of Scottish Pacific’s entitlements as unitholder. In addition, the trust deed sets out some of the
terms applicable to the notes issued by the Funding Vehicle (including conditions precedent to funding, events of default, cash
flow allocation methodology and certain matters of an administrative nature in relation to the notes), which are supplemented
by additional facility-specific agreements described below; and

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• Management deed: this document governs the terms and conditions under which a manager unrelated to the Group is
appointed to manage and direct the trustee in carrying on the day-to-day business of the Funding Vehicle. The manager receives
a fee in exchange for the provision of those services (see Section 9.5.2.4 for more detail).
In addition to the documents noted above, both the Australian and New Zealand Funding Vehicles and associated funding
arrangements are governed by the following documents:
• Receivables acquisition and servicing documents: these documents govern the terms and conditions under which certain
members of the Group sell receivables to a Funding Vehicle. These documents also govern the terms and conditions under which
certain members of the Group are appointed to service the receivables by interfacing with customers and collecting payments
under the receivables, and when a backup or replacement servicer may be appointed in respect of receivables. In certain
circumstances, members of the Group are entitled to receive fees in exchange for the provision of those services (see Section
9.5.2.3 for more detail);
• Note deed poll: notes issued by certain Funding Vehicles are issued under terms set out in a deed poll. This document sets out
certain of the terms applicable to the notes (including creating the notes, provisions governing the terms of interest and principal
payments, events of default and certain matters of an administrative nature in relation to the notes). The terms of the notes issued
by certain other Funding Vehicles are governed by the facility-specific documents (see immediately below and Section 9.5.2.5 for
more detail) or, in the case of the New Zealand arrangements, the trust deed (mentioned in this section), and there is no separate
note deed poll in respect of these Funding Vehicles;
• Facility-specific agreements: these documents contain the terms, conditions and other arrangements specific to the relevant
Funding Vehicle, including funding facility documents entered into with financiers for the relevant Funding Vehicle or note
issuance and subscription documents and, in some cases, arrangements under which an overdraft facility is made available
to a Funding Vehicle (see Section 9.5.2.5 for more detail); and
• Security documents: these documents establish the security over the relevant receivables pools and establish a security trust
for the benefit of the Funding Vehicle’s creditors.
“First loss” capital will be provided to the Funding Vehicles in the form of Junior Notes issued to the Mezzanine Vehicle, which offers
credit support to the Senior Facilities by absorbing the losses in respect of the receivables first. The level of such credit support depends
on the requirements of financiers, which in turn is a function of the risk associated with the underlying receivables. In turn, Scottish
Pacific is required to contribute amounts of “first loss” capital to the Mezzanine Vehicle (see Section 9.5.2.7 for more detail). The credit
support provided by Scottish Pacific to the Mezzanine Vehicle absorbs the losses experienced by the Mezzanine Vehicle (which will
relate to losses experienced by the Funding Vehicles) ahead of funding provided by external financiers to the Mezzanine Vehicle.

9.5.2.3 Receivables Acquisition and Servicing Documents

(a) Receivables Acquisition
The receivables acquisition and servicing documents establish the terms on which Scottish Pacific may sell receivables to a particular
Funding Vehicle.
Typically, the relevant Group company, as the seller, will give representations and warranties under the receivables acquisition and
servicing documents (or in some cases under other transaction documents) in respect of the sale of the relevant receivables to the
relevant Funding Vehicle. This typically includes representations and warranties as to whether the receivables comply with the eligibility
criteria applicable to the relevant Funding Vehicle and are enforceable and in compliance with law, and also in relation to the status of
certain receivables finance documents.
A breach of these requirements may result in one or all sellers to a Funding Vehicle being prevented from selling new receivables to
that Funding Vehicle, from accessing funds in respect of receivables sold or other adverse consequences including an event of default.

(b) Receivables Servicing

The terms of the receivables acquisition and servicing documents also set out the obligations of certain members of the Group as
servicers of certain receivables sold to the relevant Funding Vehicle.
The terms set out the circumstances or defaults following the occurrence of which the relevant member of the Group may be
required to cease acting as the servicer of the relevant receivables of the Funding Vehicle (subject to any applicable grace period).
These typically include circumstances where:
• The relevant member of the Group becomes insolvent;

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• It becomes unlawful for the relevant member of the Group to perform its material obligations;
• The relevant member of the Group ceases to carry on business or to maintain a required authorisation; or
• Certain breaches of obligations and representations of the relevant member of the Group under the applicable transaction
documents.
In addition to replacement of the relevant member of the Group as a servicer following default, the occurrence of such events (and
any applicable grace period) would typically have other consequences under the transaction documentation which may include,
depending on the terms of the relevant Funding Vehicle, a funding restriction event, an amortisation event or an event of default.
Where there is more than one member of the Group appointed as servicer in respect of a Funding Vehicle and the appointment of
one of those servicers is terminated, certain other members of the Group may in certain circumstances be appointed as “alternate
servicers” in respect of the receivables previously serviced by the terminated servicer.
Third party service providers have entered into arrangements with the Funding Vehicles to act as back-up servicer and step into the
role in the event of the removal of members of the Group as servicer(s). The back-up servicer or any replacement servicer appointed
will be entitled to fees for performing that role.

9.5.2.4 Funding Vehicle and Mezzanine Vehicle Management

The terms of the master management documents and, in the case of the New Zealand Funding Vehicle, the management deed,
set out the manager’s obligations as manager of the relevant Funding Vehicles and the Mezzanine Vehicle.
In the case of one Australian Funding Vehicle and the New Zealand Funding Vehicle, a related entity of the senior financier has been
appointed as the manager of the relevant Funding Vehicle. For those Funding Vehicles arrangements, the manager may exercise its
discretion in managing the trust.
In the case of the majority of the Australian Funding Vehicles and the Mezzanine Vehicle, a third party manager has been appointed as
manager of those vehicles. The terms of the master management documents in respect of those vehicles permit the manager to carry
on the administrative day-to-day business of the Funding Vehicle or the Mezzanine Vehicle in its discretion. However, the manager is
required to consult with Scottish Pacific in relation to a range of rights, duties, functions and discretions that the manager has under
the relevant documents. This covers a range of matters relating to the financial business of the trust, including (but not limited to) the
making of investments, issuing notes or units and requesting funding from financial investors. In a range of other designated
situations relating to the general business of the trust, the manager may not act without a direction from Scottish Pacific.
Under the management documents, the manager gives certain indemnities which cover amounts including losses arising from
breaches of its obligations or negligence as manager and in respect of certain other matters including any information it has provided
in connection with the relevant Funding Vehicle or the Mezzanine Vehicle. However, in the case of the majority of the Australian
Funding Vehicles and the Mezzanine Vehicle, the manager is not liable for any losses that arise out of the exercise of rights or
discretion in respect of a consultation or direction activity.
The manager of each Funding Vehicle and the Mezzanine Vehicle is entitled to a fee for the performance of its obligations in respect
of that Funding Vehicle or Mezzanine Vehicle

9.5.2.5 Funding Terms of the Funding Vehicles

The Senior Facilities include a range of representations, warranties, indemnities, covenants and triggers under the funding documents.
These triggers, representations, warranties, indemnities and covenants vary by facility but include:
• Representations and warranties by Scottish Pacific and certain other participants in funding arrangements, including in relation to
corporate status and ongoing solvency, compliance of receivables with certain criteria, compliance with law, and that certain
adverse events have not occurred;
• Indemnities made by Scottish Pacific and certain other participants in funding arrangements, including in respect of losses arising
from breaches of certain obligations or negligence, including in respect of any losses arising from its negligence, breaches of its
obligations as servicer or seller and in respect of certain other matters including certain costs, losses or liabilities that may be
incurred by some other parties;
• Covenants made by Scottish Pacific and certain other participants in funding arrangements, including in relation to the provision
of information, compliance with internal policies and procedures, maintenance of systems and, to the extent that it is within their
control, to ensure adequate “first loss” capital is provided; and

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• Triggers that measure metrics such as default ratios, write-offs, delinquency, loss provisions and days sales outstanding of the
underlying receivables.
The terms of the facilities also include provisions in relation to interest and repayment terms, eligibility criteria and certain performance
triggers. A breach of these triggers or criteria, or of the representations, warranties, indemnities and covenants discussed above, may
lead to an event of default, amortisation event, or other consequence (such as the replacement of members of the Group as
servicer(s), changes to distributions and/or the enforcement of the security over the receivables). The nature of the triggers,
representations, warranties, indemnities and covenants (and the consequences of breach thereof) vary between the Senior Facilities,
depending partly on the nature of the receivables to be sold to the relevant Funding Vehicle, the requirements of the relevant senior
financiers and the commercially-negotiated positions.
In addition, the transaction documents for the Senior Facilities contain a number of terms dealing with the availability of those
facilities to fund new receivables on an ongoing basis. In particular, the availability of funding under a Senior Facility to fund the
origination or acquisition of new receivables is subject to a number of conditions precedent. The material conditions precedent
typically include the following, some of which may be outside the control of the Group:
• Compliance by Scottish Pacific and certain other participants in funding arrangements, with their obligations and representations
under the applicable transaction documents;
• Required credit support levels being maintained; and
• The absence of certain events, including amortisation events or events of default under or in connection with the relevant Senior
Facilities and the relevant Funding Vehicles.
The Senior Facilities have tenors that range from 12 to 36 months following the date of signing or the first drawdown of the facility.
In some cases, there is a 12 month amortisation period in the event the facility is not renewed, and in some cases, amounts will
become repayable immediately upon expiry of the revolving period.
The facilities are subject to termination, funding restriction, amortisation, default and title perfection provisions. The consequences of
these provisions vary from Funding Vehicle to Funding Vehicle, but typically will have an impact on funding and on how distributions
by the Funding Vehicle are made and may result in amounts owing being declared due and payable on demand, removal of members
of the Group as servicers, and/or the enforcement of the security over the receivables pool. This action may also result in Clients and
debtors being given notice of the Funding Vehicle’s ownership of receivables. In addition, some facilities include concepts of “funding
restriction events”. If a funding restriction event occurs, certain principal diversions will apply and credit protection percentages in
respect of new originations will be increased.

9.5.2.6 Overview of the Mezzanine Facility

As at Completion of the Offer, Scottish Pacific will have one Mezzanine Vehicle established in Australia. Details of the expected
balances of the Mezzanine Facility that funds the Mezzanine Vehicle as at Completion of the Offer are set out below:

Table 46: Mezzanine Funding

Total Total Available Current

commitment outstanding limit maturity Asset class
Scottish Pacific (Mezzanine) $60,000,000 $45,000,000 $15,000,000 3 years Notes
Funding Trust

9.5.2.7 Framework of Mezzanine Facility arrangements

The Mezzanine Facility arrangements are governed by a number of material contracts including:
• Master documents: the Mezzanine Vehicle is established under the same set of master trust documents as the majority of the
Australian Funding Vehicles described above, and is managed under the same master management documents as those Funding
Vehicles (see Section 9.5.2.4). As with the Australian Funding Vehicles, Scottish Pacific is the sole unitholder of the Mezzanine Vehicle;
• Mezzanine-specific agreements: these documents contain the terms, conditions and other arrangements specific to the
relevant Mezzanine Vehicle, including funding facility documents entered into with financiers for that vehicle and note issuance
by that vehicle (see Section 9.5.2.8 for more detail); and

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• Security documents: these documents establish the security over the asset pool and establish a security trust for the benefit of
the Mezzanine Vehicle’s creditors.
The Mezzanine Facility is required to contribute “first loss” capital to the Funding Vehicles (see Section 9.5.2.2 for more detail). In turn,
Scottish Pacific is required to contribute to the Mezzanine Vehicle and continue to hold a percentage of “first loss” capital in the form
of Junior Notes issued by that vehicle, which offers credit support to the senior financiers by absorbing the losses of the collateral first.

9.5.2.8 Funding Terms of the Mezzanine Vehicle

The Mezzanine Facility includes a range of triggers, representations, warranties, indemnities and covenants under the funding
documents. These triggers, representations, warranties, indemnities and covenants include:
• Representations and warranties by the Group and certain other participants in funding arrangements, including in relation to
corporate status and ongoing solvency, compliance with law, and that certain adverse events have not occurred;
• Indemnities made by the Group and certain other participants in funding arrangements, including in respect of losses arising
from breaches of certain obligations or negligence, including in respect of any losses arising from its negligence and in respect
of matters including certain costs, losses or liabilities that may be incurred by some other parties;
• Covenants made by the Group and certain other participants in funding arrangements, including in relation to the provision of
information, the exercise of certain rights of the Group in relation to the Senior Facilities and Funding Vehicles and, to the extent
that it is within their control, to ensure adequate “first loss” capital is provided; and
• Triggers that measure metrics such as interest coverage ratios in respect of the Mezzanine Vehicle’s funding costs.
The terms of the Mezzanine Facility also include provisions in relation to interest and repayment terms, the nature of notes issued by
Funding Vehicles which may be purchased by the Mezzanine Vehicle and certain performance triggers. A breach of these triggers or
criteria, or of the representations, warranties, indemnities and covenants discussed above, may lead to an event of default or other
consequence (such changes to distributions and/or the enforcement of the security over the assets of the Mezzanine Vehicle).
In addition, the transaction documents for the Mezzanine Facility contain a number of terms dealing with the availability of that
facility to fund the purchase of new Junior Notes issued by Funding Vehicles, as well as the provision of funding to Funding Vehicles
on an ongoing basis. In particular, the availability of funding under the Mezzanine Facility is subject to a number of conditions
precedent, including the following (some of which may be outside the control of Scottish Pacific):
• Compliance by certain members of the Group and certain other participants in funding arrangements with their obligations
under the applicable transaction documents;
• Required credit support levels being maintained; and
• The absence of certain events, including amortisation events or events of default under or in connection with the Mezzanine
Vehicle and the relevant Funding Vehicles.
The Mezzanine Facility has a tenor of 36 months following the date of the first drawdown. In the event the facility is not renewed,
amounts will become repayable immediately upon expiry of the revolving period.
The Mezzanine Facility is subject to termination and default and provisions. The consequences of these provisions may result in
amounts owing being declared due and payable on demand and/or the enforcement of the security over the assets of the
Mezzanine Vehicle.

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9.5.3 Corporate Debt Facilities

9.5.3.1 Overview
On 23 December 2015, Scottish Pacific entered into agreements in relation to the Corporate Debt Facilities with four non-bank
financiers. Details of the Corporate Debt Facilities as at the Completion of the Offer are set out below:

Table 47: Corporate Debt Facilities

Type Commitment Amount drawn Available Limit

Facility 1 Revolving $35,000,000 $29,500,000 $5,500,000

Facility 2 Revolving/term $4,200,000 $3,540,000 $660,000

Facility 3 Revolving/term $10,500,000 $8,850,000 $1,650,000

Facility 4 Revolving/term $20,300,000 $17,110,000 $3,190,000

Total $70,000,000 $59,000,000 $11,000,000

See Section 3.3.3 for a more detailed overview of the Corporate Debt Facilities.

9.5.3.2 Framework for Corporate Debt Arrangements

The Corporate Debt Facilities are governed by a number of material contracts including:
• Common terms deed: the common terms deed governs the terms and conditions common to all financiers under which,
together with the bilateral facility agreements (which incorporate the common terms by reference), the financiers agree to
provide the Corporate Debt Facilities to Scottish Pacific. The common terms deed contains a range of covenants that are
customary for facilities of this nature, including:
– Financial covenants (see Section 9.5.3.3 for more detail);
– Information and other general undertakings;
– Representations, warranties and indemnities (see Section 9.5.3.3 for more detail);
– Events of default, amortisation events and review events (see Sections 4.5.1 and 9.5.3.3 for more detail);
– Mandatory prepayment provisions (see Section 9.5.3.3 for more detail); and
– Provisions dealing with taxes, costs, indemnities, confidentiality and other matters.
In addition, the common terms deed governs the terms on which certain members of the Group guarantee the Corporate Debt
Facilities (see Section 9.5.3.2 for more detail);
• Facility agreements: These bilateral agreements between the obligors and each financier (individually) set out specific terms
and conditions specific to each financier. The facility agreements deal with matters such as pricing, fees, conditions precedent
(see Section 9.5.3.3 for more detail) and certain other commercial aspects of the financing that are separately negotiated
between Scottish Pacific (the borrower) and each individual financier on a bilateral basis;
• Security documents: These documents establish security over all assets (other than certain “Restricted Property”, as that term
is defined in the security documents (which term includes receivables that may be sold to Funding Vehicles)) of certain members
of the Group to secure the payment of the secured money owing in connection with the Corporate Debt Facilities. These
documents also establish a security trust for the benefit of the finance parties while the facilities are outstanding (see Section
9.5.2.7 for more detail);

9.5.3.3 Funding Terms of the Corporate Debt Facilities

The Common terms deed and facility agreements for the Corporate Debt Facilities contain a number of material terms, including:
• Financial covenants: in addition to other more general representations, warranties, covenants and undertakings required to be
made and given by Scottish Pacific, Scottish Pacific’s Corporate Debt Facilities are subject to certain financial covenants that apply
to the Group (excluding amounts attributable to certain Excluded Subsidiaries (as defined in the Corporate Debt Facilities)).
These financial covenants are tested semi-annually as at each 30 June and 31 December, with the first test being carried out as
at 30 June 2016.

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Scottish Pacific was in compliance with these financial covenants for the 31 December 2015 reporting date and expects to be in
compliance with these financial covenants for the Forecast Period.
The key components of these financial covenants are summarised below:

Table 48: Key components of financial covenants

Covenant name Definition Calculation

Interest cover ratio • The ratio of PBITDA (after adding back, to the extent included, Net Must be greater
Interest Expense for the preceding 12 month period) to Net Interest than 3.00
Expense for the preceding 12 month period where:
– PBITDA is the statutory NPAT for the preceding 12 months adjusted
for one-off expenses (for implementation of business acquisitions,
disposals, share issues, company reorganisations or funding facilities),
depreciation expenses and amortisation / impairment of intangibles,
for each member of the Group (subject to certain conditions)
before Net Interest Expense (defined below), tax, depreciation and
amortisation and any amount that would have been added back when
calculating cash NPAT but for the tax shield adjusted basis of the add
back for the preceding 12 months, as derived from the latest financial
statements. PBITDA is calculated on a pro forma basis for entities
acquired during the preceding 12 months for integration efficiencies
and normalisations in capital and operating cost structure; and
– Net Interest Expense is the accrued interest expense on each facility,
less accrued interest on “available cash” (as defined in the Corporate
Debt Facilities) as included in the Group’s latest financial statements.
• The ratio is measured less interest expense attributable to certain
Excluded Subsidiaries (as defined in the Corporate Debt Facilities)

Leverage ratio • The ratio of Net Debt to PBITDA, for the preceding 12 month period Must be less than 2.50:1
where:
– Net Debt is the aggregate of the principal of all interest bearing
liabilities, disclosed in the Group’s latest financial statements, less
amounts attributable to certain Excluded Subsidiaries or “core business
funding arrangements” (as defined in the Corporate Debt Facilities),
less available cash (other than the available cash of an “excluded
subsidiary”); and
– PBITDA has the same meaning as described above in respect to the
interest cover ratio.

Net asset cover ratio • The ratio of Tangible Equity to Net Debt where: Must be greater
– Tangible equity is equity less intangibles plus the Present Value of the than 1.25:1
Cash Flows Represented by the Existing Client Base;
– Net Debt has the same meaning as described above in respect to the
leverage ratio; and
Present Value of the Cash Flows Represented by the Existing Client Base
means the net cash flows from the Group’s existing Client base discounted
at a “discount rate” (as defined in the Corporate Debt Facilities) and
reflecting certain assumptions determined by an independent expert.

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09. Additional Information continued


Covenant name Definition Calculation

Senior secured • The ratio of Senior Secured Debt to Tangible Equity plus Net Debt, Must be less than or
debt ratio expressed as a percentage, where: equal to 65%
– Tangible Equity has the same meaning as described above in respect
to the net asset cover ratio; and
– Senior Secured Debt, as it relates to the Corporate Debt Facilities
means all financial indebtedness secured under the Corporate Debt
Facilities; and
• Net Debt has the same meaning as described above in respect to the
leverage ratio.

• Mandatory repayments: if the interest cover ratio is less than or equal to 5.00:1, the leverage ratio is greater than or equal to 1.75:1
or the Net Asset Coverage Ratio is less than or equal to 1.75:1 (each a Corporate Debt Facilities amortisation event), then Scottish
Pacific will be required to repay the amount outstanding under the Corporate Debt Facilities by a pre-agreed amount. This
amount will vary depending on the level of the financial ratios at the time and at previous testing;
• Conditions Precedent: the Corporate Debt Facilities contain conditions precedent that need to be satisfied for ongoing
utilisation. These include no Corporate Debt Facility amortisation events (new utilisations only as opposed to the rolling of
existing debt/loans), no events of default or potential events of default and representations and warranties being correct in all
material respects. The Corporate Debt Facilities may not be drawn if the conditions precedent to ongoing utilisation are not
satisfied;
• Review Events: the Corporate Debt Facilities are subject to a review event that will be triggered if:
– Broadly, a person or group of people acting together acquires, directly or indirectly, control (as defined in Section 50AA of
the Corporations Act) of Scottish Pacific;
– Any member of the Group which has made a public offering of its shares (or similar equity or convertible securities) through
an IPO is delisted or otherwise removed from the official list of ASX or any other applicable securities exchange, or any class
of securities in such member of the Group is suspended from trading on ASX or any other applicable securities exchange for
a continuous period of 10 Business Days or longer; or
– The lenders are not satisfied with the cure plan or any progress reports applicable to curing certain events in respect of the
Mezzanine Vehicle and certain capitalisation triggers in respect of the Mezzanine Vehicle are not met;
Upon the occurrence of a review event, there will be a 30 or 15 day negotiation period (depending on the event giving rise to the
review event) and, failing agreement, a lender may require the repayment in full of all amounts outstanding under the relevant
Corporate Debt Facilities within 90 or 10 days (again, depending on the event giving rise to the review event);
• Distributions: the only restrictions under the Corporate Debt Facilities on declaring dividends and other distributions are where
an event of default or review event is subsisting or would result from doing so, where a Corporate Debt Facility amortisation
event is subsisting or would result (calculated on a forward looking basis for the next 12 month period) from doing so, or where it
is not permitted under the Corporations Act;
• Indemnities: the Corporate Debt Facilities contain indemnities given by the Group in respect of (amongst other things) tax and
stamp duty and costs and losses incurred by the finance parties as a result of events of default, borrowers requesting utilisations
but failing to meet conditions precedent to utilisations, illegality or impossibility, early prepayment/repayment and enquiries,
investigations, subpoenas or third party litigation in connection with the transaction documents for the Corporate Debt Facilities;
and

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• Other: each Corporate Debt Facility is subject to representations and warranties, undertakings, events of default and other terms
and conditions. An event of default includes non-payment, a breach of financial or other covenant, non-compliance with
obligations, incorrect representations, warranties or statements, cross default, material adverse change, cessation of business, and
events related to solvency or which may be indicative of difficulties relating to solvency. Upon an event of default occurring,
a lender can cancel its commitment under that Corporate Debt Facility and declare that all or part of amounts owing under the
Corporate Debt Facility (including amounts under any hedging agreement) are due and payable immediately or on demand.
Enforcement of the security (or any other enforcement action) can only occur:
– Where the event of default is a payment default (other than payment of an “accelerated” amount arising due to an event
of default that was not a payment default), on the instructions of any lender that has not received such payment;
– Where the event of default is a payment default of an “accelerated” amount arising due to an event of default that was not
a payment default, on the instructions of any lender that has not received such payment but only after the expiration of
seven days from the date of “acceleration” of the amount owing; or
– In all other circumstances, with the consent of or on the instructions of a lender or lenders whose exposures aggregate more
than two thirds of the total exposures.

9.5.4 Escrow Arrangements

The following Existing Shareholders and Non-Executive Director Shareholders are subject to voluntary escrow arrangements:

Table 49: Escrowed Shareholders

Number of
Escrowed Shares
Number of eligible for
Shareholder Escrowed Shares Escrow Period early release
Next Capital Entities 23,128,226 Until the release of 5,782,057
FY2017F results1
IFM Investors 17,244,318 Until the release of 4,311,080
FY2017F results1
Non-Executive Director Shareholders 240,000 Until the release of –
FY2017F results
Management Shareholders 6,055,872 Until the release of –
FY2017F results
Note:
1. 25% of the Escrowed Shares owned by Next Capital Entities and IFM Investors may be subject to early release as set out in Section 9.5.4.1.

Each Escrowed Shareholder has agreed to enter into an escrow deed in respect of their shareholding on Completion of the Offer
(other than Shares acquired under the Offer), which prevents them from disposing of their respective Escrowed Shares for the
applicable escrow period as described above.
The restriction on disposing is broadly defined in the voluntary Escrow Deeds outlined in this Section 9.5.4. It restricts the Escrowed
Shareholder from, among other things, selling, assigning, transferring or otherwise disposing of any legal, beneficial or economic
interest in the Escrowed Shares, creating or agreeing to create a security interest over the Escrowed Shares, doing, or omitting to do,
any act if the act or omission would have the effect of transferring effective ownership or control of any of the Escrowed Shares or
agreeing to do any those things.

9.5.4.1 Early Release

25% of the Escrowed Shares held by Next Capital Entities and IFM Investors will be released from escrow 10 Business Days after the
volume weighted average price of the Shares on the ASX for any consecutive 10 trading day period is 20% or more above the Offer
Price following the date that half year results for FY2017F are provided to the ASX for release to the market.

Scottish Pacific  Prospectus 181

09. Additional Information continued


In addition, the Escrowed Shares of each Escrowed Shareholder are eligible for early release:
• To enable the Escrowed Shareholder to accept an offer under a takeover bid in relation to its Escrowed Shares if holders of at least
half of the Shares the subject of the bid that are not held by the Escrowed Shareholders have accepted the takeover bid.
However, the escrow obligations will continue to apply to any Escrowed Shares which are not unconditionally bought by the
bidder under the takeover bid;
• To enable the Escrowed Shares to be transferred or cancelled as part of a merger by scheme of arrangement under Part 5.1 of the
Corporations Act. However, the escrow obligations will continue to apply to the Escrowed Shares if the merger does not take
effect; or
• To enable the Escrowed Shareholders to participate in an equal access buy-back or equal return of capital or other similar pro rata
reorganisation. However, the escrow obligations will continue to apply to any Escrowed Shares that are not bought back or
cancelled as part of the reorganisation.

9.5.4.2 Restrictions on Transfers

During the Escrow Period, Escrowed Shareholders whose Shares remain subject to escrow may dispose of any of their Escrowed
Shares to the extent the disposal is:
• Required by an order of a court of competent jurisdiction; or
• A transfer by the personal representative of the Escrowed Shareholder to whom the Escrowed Shares have been bequeathed; or
• To the Escrowed Shareholder’s spouse or a company or entity under the full and effective control of the Escrowed Shareholder,
where the transferee also enters into an escrow arrangement with the Company on substantially the same terms.

9.5.5 MACCA Agreements

The Company uses a bespoke software development system for the day-to-day operating functions of administering Client accounts,
charging fees, reporting, creditor control, disapproval and approval of invoices, debtor limits, Client funding limits and exception
reporting (“MACCA System”). A key feature of the MACCA System is the Client interface which gives Clients direct access, through the
internet, to the customer database allowing them to see real time information about their account and directly submit invoices and
payment requests for consideration by the Company.
All Scottish Pacific Standalone Clients and GE Clients are located on the MACCA System. Bibby Clients are located on the iFactor
System. Details of the iFactor System are set out in Section 9.5.6. Suncorp Clients are also located on their own legacy system.
The MACCA System consists of two components: the software program and the source code. The owner of both components
(“MACCA Owner”), has expressly authorised a third party (“MACCA Supplier”) to grant licences of the software and leases of source
code in favour of the Licensees and the Lessees for the use of the MACCA System.

9.5.5.1 MACCA Licence

The MACCA Owner and MACCA Supplier (collectively for the purpose of this Section 9.5.5, “Licensors”) granted a licence in favour of
Benchmark Debtor Finance Pty Limited, Scottish Pacific Business Finance Pty Limited and Scottish Pacific Debtor Finance Limited
(collectively for the purpose of this Section 9.5.5, “Licensees”) in relation to the software program forming part of the MACCA System
on 1 August 2008, subsequently extended by way of an agreement commencing on 1 August 2013 (“MACCA Licence”). The MACCA
Licence is due to expire on 31 July 2018.
The MACCA Licence grants the Licensees a non-exclusive and non-transferable right to use the software program for its own business
purposes. The Licensors warrant that the software program is owned solely by the MACCA Owner, that the MACCA Supplier has the
unencumbered right to grant the MACCA Licence and that the development and use of the software by the Licensees do not infringe
on the intellectual property rights of any person.
The Licensors make no warranty as to the suitability of the software program for the Licensees’ intended purpose. The joint and
several liability of the Licensors in relation to any claim by the Licensees as a result of the software program and the source code is
limited to the licence fee paid by the Licensees in the aggregate).
The MACCA Licence may be terminated by the Licensors if the Licensees commit a breach of the MACCA Licence and fail to rectify the
breach within 20 business days after receipt of a request in writing from the Licensors to do so. The Licensors may also terminate if an
insolvency event occurs in respect of the Licensees.

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9.5.5.2 MACCA Lease

The MACCA Owner and MACCA Supplier (collectively for the purpose of this Section 9.5.5, the “Lessors”) granted a lease in favour of
Benchmark Debtor Finance Pty Limited, Scottish Pacific Business Finance Pty Limited and Scottish Pacific Debtor Finance Limited (for
the purpose of this Section 9.5.5, the “Lessees”) in relation to the source code forming part of the MACCA System on 1 August 2008,
subsequently extended by way of an agreement commencing on 1 August 2013 (the “MACCA Lease”). The MACCA Lease is due to
expire on 31 July 2018.
In exchange for an annual rent, the MACCA Lease grants the Lessees the right to use the source code without interruption, and to
make improvements to the source code and incorporate the source code as part of new software products (though the ownership
of the intellectual property rights relating to any such improvement or new products will be the property of the MACCA Owner).
The Lessors make no warranty as to the suitability of the source code for the Lessee’s intended purpose, and are not liable to the
Lessees for any indirect or consequential damage suffered by the Lessees as a result of the use of the source code (though see
Section 9.5.5.1 above in relation to the liability of the Licensors under the terms of the MACCA Licence).
The MACCA Lease may be terminated by the Lessors if the Lessees commit a breach of the MACCA Lease and fail to rectify the
breach within 10 business days after receipt of a request in writing from the Lessors to do so. The Lessors may also terminate if
an insolvency event occurs in respect of the Lessees.

9.5.6 iFactor System Arrangements

The Company’s Bibby Clients are located on the iFactor System. The iFactor System offers a similar style of interface arrangement and
serves as a similar platform for the day-to-day operating functions as the MACCA System summarised in Section 9.5.5 above.
Following the acquisition of Bibby by the Group the Company continued to use the iFactor System for legacy Bibby Clients’ matters
so as to avoid disruption to business. Bibby UK and the Company entered into a Transitional Services Agreement for this purpose,
under the terms of which Bibby UK would provide services (including software asset management, core desktop/ network support
and other software support) during the transition period following the Company’s acquisition of BFS.
With effect from 1 July 2016, HPD Service Centre Limited (the “iFactor Supplier”) has granted a non-exclusive licence to BFS to the use
of the iFactor System after the expiry of the existing transitional services under the Transitional Services Agreement.

9.5.6.1 iFactor Licence

The iFactor Supplier granted a licence in favour of Scottish Pacific (BFS) Pty Ltd (for the purpose of this Section 9.5.6, the “Licensee”)
in relation to the Licensee’s continued use of the iFactor System on 10 June 2016 (the “iFactor Licence”). The iFactor Licence will
commence on 1 July 2016 and is for an initial period of one year (1 July 2018), Thereafter, the iFactor Licence will continue on a rolling
month to month basis unless the Licensee gives the iFactor Supplier one month’s prior written notice of its intention not to continue
iFactor Licence or the iFactor Supplier gives the Licensee 12 months’ written notice of its intention not to continue the iFactor Licence.
In exchange for a monthly fee, the iFactor Licence grants the Licensee the non-exclusive right to use the iFactor System and to read,
use and possess the software and service documentation used for the iFactor System. The iFactor Supplier will be responsible for
maintaining the iFactor System and will promptly restore the system in the event of a system failure or breakdown (though makes
no guarantee or warranty as to its 24 hour availability).
The iFactor Supplier makes no warranty as to the ability of the iFactor System to meet the Licensee’s requirements, and will not
be liable for any failure of the iFactor System to provide any facility or function not specified in the iFactor System’s software or
accompanying service documentation The iFactor Supplier’s liability is also limited in each contract year to the greater of £2,000,000
pounds sterling and the total of the previous year’s charges paid or payable by the Licensee (deemed to be £200,000 pounds sterling
for the first year). The Licensee’s liability is limited to the sums paid under the terms of the iFactor Licence. Neither party will be liable
for any indirect or consequential loss or damage.

Scottish Pacific  Prospectus 183

09. Additional Information continued


The iFactor Licence may be terminated by either party if the other party commit fails to pay any sum payable within 30 days of the
payment being due and have failed to remedy such breach within 30 days of receipt of formal demand for such payment. Either party
may also terminate the iFactor Licence in the event of a material breach and the other party having failed to rectify the breach within
60 days of receipt of a request in writing from the other party to do so. Finally, either party may terminate if an insolvency event occurs
in respect of the other.
The Licensee is entitled to terminate for convenience on providing 30 days’ notice to the iFactor Supplier.

9.6 Consents to Be Named and Inclusion of Statement and Disclaimers

of Responsibility
Each of the parties referred to below, to the maximum extent permitted by law, expressly disclaims all liabilities in respect of, makes no
representations regarding and takes no responsibility for any statements in or omissions from this Prospectus, other than the reference
to its name in the form and context in which it is named and a statement or report included in this Prospectus with its consent as
specified below.
Written consents to the issue of this Prospectus have been given and, at the time of lodgement of this Prospectus with ASIC, had not
been withdrawn by the following parties:
• Reunion Capital Partners Pty Ltd has given, and has not withdrawn prior to the lodgement of this Prospectus with ASIC, its written
consent to be named in this Prospectus as financial adviser in relation to the Offer in the form and context in which it is named;
• Grant Samuel Securities Pty Limited has given, and has not withdrawn prior to the lodgement of this Prospectus with ASIC, its
written consent to be named in this Prospectus as financial adviser in relation to the Offer in the form and context in which it
is named;
• Each of Goldman Sachs and of Citi has given, and has not withdrawn prior to the lodgement of this Prospectus with ASIC, its
written consent to be named in this Prospectus as a Joint Lead Manager to the Offer in the form and context in which it is named;
• PricewaterhouseCoopers has given, and has not withdrawn prior to the lodgement of this Prospectus with ASIC, its written
consent to be named in this Prospectus as Australian legal adviser (other than in respect of taxation, stamp duty and funding
matters) to the Company and SaleCo in relation to the Offer in the form and context in which it is named;
• Deloitte Corporate Finance has given, and has not withdrawn prior to the lodgement of this Prospectus with ASIC, its written
consent to be named in this Prospectus as Investigating Accountant to the Company and SaleCo in the form and context in
which it is named and has given and not withdrawn its consent to the inclusion in this Prospectus of its Investigating
Accountant’s Report and the statements specifically attributed to it in the text of, or by a footnote in, this Prospectus, in the form
and context in which it is included (and all other references to the Investigating Accountant’s Report and those statements) in
this Prospectus;
• Deloitte Touche Tohmatsu has given, and has not withdrawn prior to the lodgement of this Prospectus with ASIC, its written
consent to be named in this Prospectus as the auditor of the Company in the form and context in which it is named;
• KPMG has given, and has not withdrawn prior to the lodgement of this Prospectus with ASIC, its written consent to be named in
this Prospectus as the auditor of the Company in the form and context in which it is named;
• Ernst and Young has given, and has not withdrawn prior to the lodgement of this Prospectus with ASIC, its written consent to be
named in this Prospectus as the taxation adviser to the Company and SaleCo in the form and context in which it is named;
• Link Market Services Limited has given, and has not withdrawn prior to the lodgement of this Prospectus with ASIC, its written
consent to be named in this Prospectus as the Share Registry in the form and context in which it is named. Link Market Services has
had no involvement in the preparation of any part of this Prospectus other than being named as Share Registry to the Company;
• Each of Bell Potter Securities Limited and Commonwealth Securities Limited has given, and has not withdrawn prior to the
lodgement of this Prospectus with ASIC, its written consent to be named in this Prospectus as a Co-Manager to the offer in the
form and context in which it is named.
No entity or person referred to in this section has made any statement that is included in this Prospectus or any statement on which
a statement made in this Prospectus is based, except as stated above. Each of the persons and entities referred to in this section has
not authorised or caused the issue of this Prospectus and does not make any offer of Shares.

184
9.7 Selling restrictions

9.7.1 International offer restrictions

This document does not constitute an offer of new Shares in any jurisdiction in which it would be unlawful. In particular, this
document may not be distributed to any person, and the Shares may not be offered or sold, in any country outside Australia except
to the extent permitted below.

9.7.2 Germany
The information in this document has been prepared on the basis that all offers of Shares will be made pursuant to an exemption
under the Directive 2003/71/EC (Prospectus Directive), as amended and implemented in Member States of the European Economic
Area (Relevant Member State), from the requirement to produce a prospectus for offers of securities.
An offer to the public of Shares has not been made, and may not be made, in a Relevant Member State except pursuant to one of the
following exemptions under the Prospectus Directive as implemented in that Relevant Member State:
• To any legal entity that is authorised or regulated to operate in the financial markets or whose main business is to invest in
financial instruments;
• To any legal entity that satisfies two of the following three criteria: (i) balance sheet total of at least €20,000,000, (ii) annual net
turnover of at least €40,000,000, and (iii) own funds of at least €2,000,000 (as shown on its last annual unconsolidated or
consolidated financial statements);
• To any person or entity who has requested to be treated as a professional client in accordance with the EU Markets in Financial
Instruments Directive (Directive 2004/39/EC, MiFID); or
• To any person or entity who is recognised as an eligible counterparty in accordance with Article 24 of the MiFID.

9.7.3 Netherlands

The information in this document has been prepared on the basis that all offers of Shares will be made pursuant to an exemption
under the Prospectus Directive from the requirement to produce a prospectus for offers of securities.
An offer of Shares to the public has not been made, and may not be made, in a Member State of the European Economic Area which
has implemented the Prospectus Directive (each, a Relevant Member State) except pursuant to one of the following exemptions
under the Prospectus Directive as implemented in that Relevant Member State:
a) At any time to any legal entity which is a qualified investor as defined in the Prospectus Directive;
b) At any time to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive); or
c) At any time in any other circumstances falling within Article 3(2) of the Prospectus Directive,
provided that no such offer of Shares referred to in (a) to (c) above shall require the Company to publish a prospectus pursuant to
Article 3 of the Prospectus Directive, or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.
For the purposes of this provision:
• The expression an “offer of Shares to the public” in any Relevant Member State means the communication in any form and by any
means of sufficient information on the terms of the offer and the Shares to be offered so as to enable an investor to decide to
purchase or subscribe the Shares, as the same may be varied in that Member State by any measure implementing the Prospectus
Directive in that Member State; and
• The expression Prospectus Directive means Directive 2003/71/EC (and amended, including by Directive 2010/73/EU), and
includes any relevant implementing measure in each Relevant Member State.

Scottish Pacific  Prospectus 185

09. Additional Information continued


9.7.4 France
This document is not being distributed in the context of a public offering of financial securities (offre au public de titres financiers) in
France within the meaning of Article L.411-1 of the French Monetary and Financial Code (Code monétaire et financier) and Articles 211-1 et
seq. of the General Regulation of the French Autorité des marchés financiers (AMF). The Shares have not been offered or sold and will
not be offered or sold, directly or indirectly, to the public in France.
This document and any other offering material relating to the Shares have not been, and will not be, submitted to the AMF for
approval in France and, accordingly, may not be distributed (directly or indirectly) to the public in France. Such offers, sales and
distributions have been and shall only be made in France to qualified investors (investisseurs qualifiés) acting for their own account, as
defined in and in accordance with Articles L.411-2-II-2, D.411-1, L.533-16, L.533-20, D.533-11, D.533-13, D.744-1, D.754-1 and D.764-1 of the
French Monetary and Financial Code and any implementing regulation, unless the qualified investors, at their own initiative or per
their client’s request, shall opt to be treated as non-professionals (client non professionnel) pursuant to Articles D.533-12 and D.533-14 of
the French Monetary and Financial Code.
Pursuant to Article 211-3 of the General Regulation of the AMF, investors in France are informed that the Shares cannot be distributed
(directly or indirectly) to the public by the investors otherwise than in accordance with Articles L.411-1, L.411-2, L.412-1 and L.621-8 to
L.621-8-3 of the French Monetary and Financial Code.

9.7.5 Hong Kong

WARNING: This document has not been, and will not be, registered as a prospectus under the Companies (Winding Up and
Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong, nor has it been authorised by the Securities and Futures
Commission in Hong Kong pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (SFO). No action
has been taken in Hong Kong to authorise or register this document or to permit the distribution of this document or any documents
issued in connection with it. Accordingly, the Shares have not been and will not be offered or sold in Hong Kong other than to
“professional investors” (as defined in section 1 of Part 1 of Schedule 1 to the SFO (including professional investors falling within
paragraph (j) of the definition of professional investor in that section)).
No advertisement, invitation or document relating to the Shares has been or will be issued, or has been or will be in the possession of
any person for the purpose of issue, in Hong Kong or elsewhere that is directed at, or the contents of which are likely to be accessed
or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to
Shares that are or are intended to be disposed of only to persons outside Hong Kong or only to professional investors (as defined in
the SFO and any rules made under that ordinance). No person allotted Shares may sell, or offer to sell, such securities in circumstances
that amount to an offer to the public in Hong Kong within six months following the date of issue of such securities.
The contents of this document have not been reviewed by any Hong Kong regulatory authority. You are advised to exercise caution in
relation to the offer. If you are in doubt about any contents of this document, you should obtain independent professional advice.

9.7.6 Norway
This document has not been approved by, or registered with, any Norwegian securities regulator under the Norwegian Securities
Trading Act of 29 June 2007. Accordingly, this document shall not be deemed to constitute an offer to the public in Norway within the
meaning of the Norwegian Securities Trading Act of 2007.
The Shares may not be offered or sold, directly or indirectly, in Norway except to “professional clients” (as defined in Norwegian Securities
Regulation of 29 June 2007 no. 876, including to non-professional clients having met the criteria for being deemed to be professional
and for which an investment firm offering the Shares has accepted such client’s request for waiver of the protection applicable to
non-professional clients in accordance with the procedures and requirements set forth in the aforementioned regulation).

9.7.7 Singapore
Consent has not been obtained for the circulation of this document as a public offer within the Republic of Singapore under the
Securities and Futures Act (Chap 289) of Singapore (the SFA). This document and any other materials relating to the Shares have not
been, and will not be, lodged or registered as a prospectus in Singapore with the Monetary Authority of Singapore. Accordingly, this
document and any other document or materials in connection with the offer or sale, or invitation for subscription or purchase, of
Shares, may not be issued, circulated or distributed, nor may the Shares be offered or sold, or be made the subject of an invitation
for subscription or purchase, whether directly or indirectly, to persons in Singapore except pursuant to and in accordance with
exemptions in Subdivision (4) Division 1, Part XIII of the SFA, or as otherwise pursuant to, and in accordance with the conditions
of any other applicable provisions of the SFA.

186
This document has been given to you on the basis that you are (i) an existing holder of the Company’s shares, (ii) an “institutional
investor” (as defined in the SFA) or (iii) a “relevant person” (as defined in section 275(2) of the SFA). In the event that you are not an
investor falling within any of the categories set out above, please return this document immediately. You may not forward or circulate
this document to any other person in Singapore.
Any offer is not made to you with a view to the Shares being subsequently offered for sale to any other party. There are on-sale
restrictions in Singapore that may be applicable to investors who acquire Shares. As such, investors are advised to acquaint themselves
with the SFA provisions relating to resale restrictions in Singapore and comply accordingly. By accepting this document, the recipient
hereof represents and warrants that he is entitled to receive it in accordance with the on-sale restrictions and agrees to be bound by
the limitations contained herein. Any failure to comply with these limitations may constitute a violation of law.

9.7.8 Switzerland
The Shares may not be publicly offered, distributed or redistributed in Switzerland and will not be listed on the SIX Swiss Exchange
(SIX) or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to
the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure
standards for listing prospectuses under the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading
facility in Switzerland. Neither this document nor any other offering or marketing material relating to the Shares may be publicly
distributed or otherwise made publicly available in Switzerland in any way that could constitute a public offering within the meaning
of art. 652a or art. 1156 of the Swiss Code of Obligations. The Shares will only be offered to qualified investors being regulated financial
intermediaries such as banks, securities dealers, insurance institutions and fund management companies as well as institutional
investors with professional treasury operations.
Neither this document nor any other offering or marketing material relating to the Shares has been or will be filed with or approved by
any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of Shares will not be supervised by, the
Swiss Financial Market Supervisory Authority (FINMA).
This document is personal to the recipient only and not for general circulation in Switzerland. It may not be copied, reproduced,
distributed or passed on to others without the Company’s prior written consent.

9.7.9 United Arab Emirates

Neither this document nor the Shares have been approved, disapproved or passed on in any way by the Central Bank of the United
Arab Emirates, the Emirates Securities and Commodities Authority or any other governmental authority in the United Arab Emirates,
nor has the Company received authorisation or licensing from the Central Bank of the United Arab Emirates, the Emirates Securities
and Commodities Authority or any other governmental authority in the United Arab Emirates to market or sell the Shares within the
United Arab Emirates. No marketing of any financial products or services may be made from within the United Arab Emirates and no
subscription to any financial products or services may be consummated within the United Arab Emirates. This document does not
constitute and may not be used for the purpose of an offer or invitation. No services relating to the Shares, including the receipt of
Applications and/or the allotment or redemption of Shares, may be rendered within the United Arab Emirates by the Company.
No offer or invitation to subscribe for Shares is valid in, or permitted from any person in, the Dubai International Financial Centre.

9.7.10 United Kingdom

Neither the information in this document nor any other document relating to the offer has been delivered for approval to the
Financial Conduct Authority in the United Kingdom and no prospectus (within the meaning of section 85 of the Financial Services and
Markets Act 2000, as amended (FSMA)) has been published or is intended to be published in respect of the Shares. This document is
issued on a confidential basis to “qualified investors” (within the meaning of section 86(7) of the FSMA) in the United Kingdom, and the
Shares may not be offered or sold in the United Kingdom by means of this document, any accompanying letter or any other document,
except in circumstances which do not require the publication of a prospectus pursuant to section 86(1) of the FSMA. This document
should not be distributed, published or reproduced, in whole or in part, nor may its contents be disclosed by recipients to any other
person in the United Kingdom.

Scottish Pacific  Prospectus 187

09. Additional Information continued


Any invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) received in connection
with the issue or sale of the Shares has only been communicated or caused to be communicated and will only be communicated or
caused to be communicated in the United Kingdom in circumstances in which section 21(1) of the FSMA does not apply to the Company.
In the United Kingdom, this document is being distributed only to, and is directed at, persons (i) who have professional experience in
matters relating to investments falling within Article 19(5) (investment professionals) of the Financial Services and Markets Act 2000
(Financial Promotions) Order 2005 (FPO), (ii) who fall within the categories of persons referred to in Article 49(2)(a) to (d) (high net
worth companies, unincorporated associations, etc.) of the FPO or (iii) to whom it may otherwise be lawfully communicated (together,
relevant persons). The investments to which this document relates are available only to, and any invitation, offer or agreement to
purchase will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this
document or any of its contents.

9.8 Governing law

This Prospectus and the contracts that arise from the acceptance of the Applications and bids under this Prospectus are governed by
the laws applicable in New South Wales and each Applicant and bidder under this Prospectus submits to the exclusive jurisdiction of
the courts of New South Wales.

9.9 Incorporation by reference

The Group has lodged statutory accounts for the years ended 30 June 2013, 30 June 2014 and 30 June 2015 with ASIC,
and the information in each set of accounts is incorporated by reference into this Prospectus. The FY2014 and FY2015 accounts can be
obtained from www.scottishpacific.com and the FY2013 accounts will be obtained for you by the Company free of charge from ASIC
on request. Please contact the Scottish Pacific Offer Information Line for more information.

9.10 Statement of directors

The issue of this Prospectus has been authorised by each Director and each SaleCo Director. Each Director and each SaleCo Director
has consented to lodgement of this Prospectus with ASIC and the issue of this Prospectus and has not withdrawn that consent.

188
Appendix A:
Significant Accounting Policies
Appendix A: Significant Accounting Policies


The accounting policies set out below have been applied consistently by Group entities.

A.1 Basis of Measurement

The consolidated financial statements have been prepared on the historical cost basis, except for certain financial instruments that are
measured at revalued amounts or fair values at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair values of the consideration given in exchange for goods and services. All amounts are
presented in Australian dollars, unless otherwise noted.

A.2 Basis of Consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities (including structured entities)
controlled by the Company and its subsidiaries. Control is achieved when the Company:
• Has power over the investee;
• Is exposed, or has rights, to variable returns from its involvement with the investee; and
• Has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or
more of the three elements of control listed above.

A.3 Functional and Presentation Currency

These financial statements are presented in Australian dollars, which are the Company’s functional currency and the functional
currency of the majority of the Group.

A.4 Business Combinations

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is
measured at fair value which is calculated as the sum of the acquisition-date fair values of assets transferred by the Group, liabilities
incurred by the Group to the former owners of the acquiree and the equity instruments issued by the Group in exchange for control
of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value, except that:
• Deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements are recognised and measured in
accordance with AASB 112 ‘Income Taxes’ and AASB 119 ‘Employee Benefits’ respectively; and
• Liabilities or equity instruments related to share-based payment arrangements of the acquirer or share-based payment
arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in
accordance with AASB 2 ‘Share-based Payment’ at the acquisition date.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the
acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date
amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts
of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any
non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is
recognised immediately in profit or loss as a bargain purchase gain.

A.5 Foreign Currency

The individual financial statements of each Group entity are presented in the currency of the primary economic environment in which
the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position
of each Group entity are expressed in Australian dollars, which is the functional currency of the Company and the presentation
currency for the consolidated financial statements.
The assets and liabilities of foreign operations are translated to Australian Dollars at exchange rates at the reporting date. The
income and expenses of foreign operations are translated to Australian dollars at exchange rates at the dates of the transactions.

190
Foreign currency differences are recognised in other comprehensive income, and presented in the foreign currency translation reserve
in equity.

A.6 Financial Instruments

Financial assets and financial liabilities are recognised when a Group entity becomes a party to the contractual provisions of
the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the
acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through
profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial
recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit
or loss are recognised immediately in profit or loss.

A.6.1 Financial Assets

Financial assets include cash and cash equivalents, Client receivables, other receivables and investments in subsidiaries.

A.6.2 Client Receivables

Client receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are
recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition Client receivables are
measured at amortised cost using the effective interest method, less any impairment losses.
Client receivables comprise of loans made to Clients, which are secured on trade and other receivables including Factored receivables.
Factored receivables represent invoices and debit notes assigned to the Group by factoring Clients.

A.6.3 Cash and Cash Equivalents

Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or less. Cash that is
restricted for certain purposes is separately recognised as restricted cash.

A.6.4 Impairment of Financial Assets

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at the end of each
reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more
events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have
been affected.
For Client receivables, objective evidence of impairment could include:
• Significant financial difficulty of the issuer or counterparty;
• Breach of contract, such as a default or delinquency in interest payments or principal repayments;
• It becoming probable that the borrower will enter bankruptcy or financial reorganisation; or
• The disappearance of an active market for that financial asset because of financial difficulties.
For certain categories of financial assets, such as Client receivables, assets are assessed for impairment on a collective basis even if they
were assessed not to be impaired individually.
Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an
increase in the number of delayed payments in the portfolio past the average credit period of 60 days, as well as observable changes
in national or local economic conditions that correlate with default on receivables.
For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset’s
carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of Client
receivables, where the carrying amount is reduced through the use of an allowance account. When a Client receivable is considered
uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited
against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

Scottish Pacific  Prospectus 191

Appendix A: Significant Accounting Policies continued


For financial assets measured at amortised cost, if, in a subsequent period, the amount of the impairment loss decreases and the
decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment
loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed
does not exceed what the amortised cost would have been had the impairment not been recognised.

A.6.5 Derecognition of Financial Assets

The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights
to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership
of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as
a separate asset or liability.

A.6.6 Financial Liabilities

Financial liabilities, including loans and borrowings and trade and other payables, are initially measured at fair value, net of
transaction costs.
Financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised
on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense
over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the
expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

A.6.7 Derecognition of Financial Liabilities

The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged or cancelled or they expire.
The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is
recognised in profit or loss.

A.6.8 Share Capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as
a deduction from equity, net of any tax effects.

A.7 Goodwill and Intangible Assets

A.7.1 Goodwill
Goodwill arising on an acquisition of a business is carried at cost as established at the date of the acquisition of the business less
accumulated impairment losses, if any. For the purpose of impairment testing, goodwill is allocated to the relevant cash-generating
unit (“CGU”) that is expected to benefit from the synergies of the combination.

A.7.2 Intangible Assets

Intangible assets that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortisation and
accumulated impairment losses.
Other intangible assets are amortised on a straight-line basis in profit or loss over their estimated useful lives, from the date that they
are available for use. For Scottish Pacific, the identified intangible assets and their associated amortisation periods are:
• Customer relationships: 3 years.

A.7.3 Impairment of Intangible Assets

Impairment of intangible assets is tested on an annual basis, or when indicators of potential impairment are identified. Goodwill is
assessed for impairment at the cash-generating unit (CGU) level, and identified intangible assets are tested for impairment at the asset
level. The recoverable amount of an asset or CGU is the greater of its value in use, and its fair value less costs to sell. In assessing value
in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot

192
be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are
largely independent of the cash inflows of other assets or CGUs.
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the
carrying amount of any goodwill allocated to the CGU (group of CGUs), and then to reduce the carrying amounts of the other assets
allocated to the CGU (group of CGUs) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the
asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation,
if no impairment loss had been recognised.

A.8 Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that
the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of
the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using
the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (where the
effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable
is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be
measured reliably.

A.9 Employee Benefits

Other Long-Term Employee Benefits
The Group’s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in
return for their service in the current and prior periods plus related on-costs. That benefit is discounted to determine its present value,
and the fair value of any related assets is deducted. The discount rate is the yield at the reporting date on Government and high quality
corporate bonds that have maturity dates approximating the terms of the Group’s obligations and that are denominated in the same
currency in which the benefits are expected to be paid.

Short-Term Employee Benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.
A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has
a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation
can be estimated reliably.

A.10 Share-based Payments

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity
instruments at the grant date.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the
vesting period, based on the Group’s estimate of equity instruments that will eventually vest, with a corresponding increase in equity.
At the end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest. The impact
of the revision of the original estimates, if any, is recognised in profit or loss, such that the cumulative expense reflects the revised
estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.

Scottish Pacific  Prospectus 193

Appendix A: Significant Accounting Policies continued


A.11 Revenue

A.11.1 Fee Income

Fee income includes administration fees, expense recoveries from Clients and other sundry income. Administration fees cover the cost
of assessing and processing Factoring applications.
Fee income is recognised in the period in which it is earned. Administration fees relating to the cost of assessing and processing
Factoring facility applications for new borrowers are recognised upon granting of the facility. To the extent that these fees represent
a recovery of cost or a charge for services, they are recognised within income when charged.

A.11.2 Interest Income

Interest income relating to the factoring of receivables is recognised on an accruals basis using the effective interest method. This is
a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the
effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial
asset to the net carrying amount of the financial asset. The effective interest rate is determined taking into account commissions paid
to brokers and any other contractual amounts that affect estimated future cash receipts, but not future credit losses, and all other
premiums or discounts.
Interest income from cash deposits is recognised as it accrues in profit or loss, using the effective interest method.

A.12 Finance Costs

Finance costs comprise interest expense on borrowings, and unwinding of any discounts on provisions. Interest expense is recognised
in profit or loss, using the effective interest method.

A.13 Taxation

A.13.1 Income Tax

Income tax expense comprises current and deferred tax. Current and deferred tax is recognised in profit or loss except to the extent
that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the period, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous periods.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary
differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither
accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and associates and jointly controlled
entities to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognised
for taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the
laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is
a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority
on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their
tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is
probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

194
Appendix
Glossary
B:
Appendix B: Glossary


Term Meaning

AASB Australian Accounting Standards Board.

Acquisition Non-cash amortisation relating to finite life intangible assets (including customer relationships)
Amortisation recognised as part of acquisitions undertaken by Scottish Pacific, but excluding any information
technology assets or software assets recognised.

ADI Authorised Deposit-taking Institutions authorised under the Banking Act 1959 (Cth).

AEST Australian Eastern Standard Time.

ANZ Australia and New Zealand Banking Group Limited (ABN 11 005 537 522).

Applicant A person who submits an Application.

Application An application to subscribe for Shares offered under this Prospectus.

Application Amount The amount accompanying an Application Form submitted by an Applicant.

or Application Monies

Application Form The application form attached to or accompanying this Prospectus (including the electronic form
provided by an online application facility).

APRA Australian Prudential Regulation Authority.

APS 120 Australian Prudential Standard APS 120 Securitisations, issued by APRA.

ASIC Australian Securities and Investments Commission.

Asset Finance A loan for the purchase of a non-trade receivables asset, whereby the funds advanced are secured over
the asset itself.

ASX ASX Limited (ACN 008 624 691) or the Australian Securities Exchange that it operates, as the
context requires.

ASX Listing Rules The listing rules of the ASX.

ASX The ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations
Recommendations (3rd Edition).

ASX Settlement The operating rules of ASX Settlement Pty Limited (ACN 008 504 532) and, to the extent that they are
Operating Rules applicable, the operating rules of each of ASX and ASX Clear Pty Limited (ACN 001 314 503).

ATO Australian Taxation Office.

Australian Accounting Australian Accounting Standards and other authoritative pronouncements issued by the AASB.
Standards or AAS

Australian PPSA Personal Property Securities Act 2009 (Cth).

Average Exposure The annual Exposure expressed as an average of month end closing balance of the aggregated Client
current accounts for all Clients.

196
Term Meaning

B2B Business to business refers to a type of commerce transaction that exists between businesses, such as
those involving a manufacturer and wholesaler, or a wholesaler and a retailer.

Bad Debt Protected Debtor Finance facilities where the Client does not have to account to the Group for the bulk of any
Facilities bad debt costs (i.e., the Group does not have recourse to the Client for bulk of bad debts assigned to it).

BBSY Bank Bill Swap Rate.

BDM Business Development Manager. A Sales Staff member in charge of sourcing new business. At Scottish
Pacific, BDMs spend significant time developing and maintaining Scottish Pacific’s referral network.

Benchmark Debtor Some of the subsidiaries of Scottish Pacific. See the corporate structure diagram in Section 9.3
Finance Pty Limited, for more detail.
Scottish Pacific
Business Finance Pty
Limited and Scottish
Pacific Debtor Finance
Limited

Bibby Scottish Pacific (BFS) Pty Limited (formerly Bibby Financial Services Australia Pty Limited) and its subsidiaries.

Board or Board of The board of directors of the Company.

Directors

Broker Any ASX participating organisation selected by the Joint Lead Managers or financial advisers to act as
a broker to the Offer.

Broker Firm Offer The offer of Shares under this Prospectus to Australian or New Zealand resident clients of Brokers who
have received an invitation to participate from their Broker, as defined in Section 7.3.

CAGR Compound annual growth rate. The mean annual growth rate of an investment over a specified period
of time.

Cashline Cashline is a Debtor Finance facility targeting higher credit quality, Low Touch SMEs. The product
is suitable for SMEs with lending requirements of up to $0.5m and is structured similarly to a line of
credit with invoices still assigned but with lower administrative requirements for Clients. The product
is relatively Lower Touch and lower margin albeit at a lower advance rate of 70% with recourse to the
Client retained.

CEO Chief Executive Officer.

CFO Chief Financial Officer.

CGT Australian capital gains tax.

CGUs Cash-generating units.

CHESS Clearing House Electronic Sub-register System operated in accordance with the ASX Listing Rules and
the ASX Settlement Operating Rules.

Citi Citigroup Global Markets Australia Pty Limited (ACN 003 114 832).

Scottish Pacific  Prospectus 197

Appendix B: Glossary continued


Term Meaning

Client A client of the Group or the Debtor Financier (i.e. a third party with which the Group or Debtor
Financier has entered into a Debtor Finance or Trade Finance arrangement).

Client Funding Funds from the sale of the receivables to the Funding Vehicle used by Scottish Pacific to pay its Clients.
Amount These funds are paid by Scottish Pacific to its Clients in respect of approved invoices assigned by the
Clients to Scottish Pacific.

Closing Date The date on which the Offer is expected to close, being Friday, 8 July 2016 in respect of the Broker Firm
Offer, the Employee Gift Offer and the Priority Offer. This date may be varied without prior notice.

Commercial Finance A distributor that refers Clients seeking funding and advice to lenders that match their needs, such as
Broker Scottish Pacific.

Company or Scottish Pacific Group Limited (ACN 164 013 110) and its subsidiaries, including Bibby. Former Clients of
Scottish Pacific the GE and Suncorp Debtor Finance portfolios are included from the date of their acquisition.

Completion or The Completion of the Offer, being the date on which Shares are issued or transferred to successful
Completion of the Applicants in accordance with the terms of the Offer.
Offer

Constitution The constitution of the Company.

Core Debtor Finance Core debtor finance products excluding Trade Finance.

Corporate Debt The financing provided to the Group by external financiers to fund a range of general corporate
Facilities or Corporate purposes. See Section 3.3.3 and, for more detail, Section 4.5.3.
Debt Facility

Corporations Act Corporations Act 2001 (Cth).

COO Chief Operational Officer.

Credit Risk Report An internal report prepared by Scottish Pacific that reports on all Clients where failure is suspected for
any reason. Generated twice per month for these Clients.

CRM Client Relationship Manager. An Operational Staff manager responsible for ongoing Client contact and
management. Each CRM manages a portfolio of Clients from both a credit and service perspective.

Debtor Finance or The funding of a business, whereby the funds advanced to the business are secured over
Debtor Financing its receivables.

Debtor Financier A business providing Debtor Finance.

Deloitte Corporate Deloitte Corporate Finance Pty Limited (ACN 003 833 127).
Finance

DIFA Debtor and Invoice Finance Association of Australia and New Zealand Inc.

Director A member of the Board.

Directors’ As defined in Section 6.3.1.

Remuneration

198
Term Meaning

Discounting Discounting is the sale by a business (the Client) and the purchase by the Debtor Financier of trade
debts on a continuing basis. The Client retains the sales accounting functions and is responsible for
collection of the debts. The debtors are usually unaware of the involvement of the Debtor Financier For
further information see Section 2.2.

Eligible Employees Australian and New Zealand Employees of the Group that were employed by the Group on 22 June
2016 and who remain employed at Completion of the Offer.

Employee Gift Offer The offer made under this Prospectus under which Eligible Employees who have received an offer
from the Company may acquire, at no cost, the nearest number of whole Shares (rounded down) up to
a value of $1,000 as described in Section 7.5.

EPS Earnings per share.

Equity investments Reflects the level of investment in the capital structure of Funding Vehicles that hold the debtor
in limited-recourse receivables portfolios; these investments are typically in the Junior Notes of the Funding Vehicles.
Funding Vehicles

Escrow Deeds The escrow deeds entered into between the Company and the Escrowed Shareholders as described in
Section 9.5.4.

Escrow Period The period from Completion of the Offer to 4.15pm AEST on the day that full year financial results for
FY2017F are submitted to the ASX for release to the market. This period is subject to certain exceptions
as outlined in Section 9.5.4.1.

Escrowed Share Each of the Shares held by the Escrowed Shareholders at Completion of the Offer (other than any
Shares issued in connection with the Employee Gift Offer).

Escrowed Shareholder Each of Next Capital Entities, IFM Investors, Non-Executive Director Shareholders and
Management Shareholders.

Excluded Subsidiaries This term has the meaning given to that term under the Corporate Debt Facilities, and includes certain
special purpose vehicles and special purpose trusts (including Funding Vehicles and the Mezzanine
Vehicle) in respect of which, amongst other things, debt obligations are limited recourse to certain
members of the Group.

Existing Shareholders Being the Shareholders owning Shares prior to Completion of the Offer as set out in Section 1.8.

Existing Shares Shares held by all Existing Shareholders immediately prior to Completion (prior to the transfer of Shares
to SaleCo).

Export Finance An avenue for Clients to have a portion of export debtors or domestic debtors in foreign currency
eligible for funding. It is usually provided on a disclosed basis.

Exposure Represents drawn funding by Clients.

Exposure Period The period specified in section 727(3) of the Corporations Act, being a minimum period of seven days
after the Prospectus Date, during which an Application must not be accepted. ASIC may extend this
period to no more than 14 days after the Prospectus Date.

Scottish Pacific  Prospectus 199

Appendix B: Glossary continued


Term Meaning

Factoring Factoring is the sale by a business (the Client) and the purchase by the Debtor Financier of trade debts
on a continuing basis. The Debtor Financier will carry out some part of the sales accounting function, as
agreed between the Client and the Debtor Financier. The debtors are aware that the debts have been
assigned to the Debtor Financier and that payment must be made to the Debtor Financier to discharge
the debt. For further information see Section 2.2.

Financial Information The financial information described as Financial Information in Section 4.

Financial Year or FY The financial year ended or ending 30 June.

Finsia Financial Services Institute of Australasia.

Forecast Financial The forecast financial information described as Forecast Financial Information in Section 4.1.
Information

Forecast Period The Financial Year ending 30 June 2017.

FTE Full-time employee.

Funding Vehicles Special purpose trusts established by the Group to fund Client Funding Amounts, primarily using funds
raised under the Senior Facilities. See Section 3.3.

GE GE Capital Finance Australasia Pty Ltd (ACN 007 396 020).

GE Clients Clients whose accounts were transferred to Scottish Pacific as part of the GE Portfolio Acquisition.

GE Portfolio The acquisition of the customer relationships and accounts which comprised GE’s Australian Debtor
Acquisition Finance business in May 2016.

GFC Global financial crisis. The period of global economic disruption following the collapse of Lehman
Brothers in September 2008.

Goldman Sachs Goldman Sachs Australia Pty Ltd (ACN 006 797 897).

Government Commonwealth Government of Australia.

Group Scottish Pacific and its subsidiaries, and in this Prospectus means one or more of those entities.

GST Goods and Services Tax as defined in A New Tax System (Goods and Services Tax) Act 1999 (Cth).

High Touch A more service intensive model characterised by a focus on customer service, frequent Client to Debtor
Financier and debtor to Debtor Financier (Factoring only) interactions, higher Operational Staff to Client
ratios and a higher level of monitoring of the Client’s trading and operating performance.

HIN Holder Identification Number.

IFM Investors Lentesco Packaging Pty Ltd (ACN 136 351 249) as trustee for the IFM Business Services Trust, an
investment vehicle owned by funds advised by IFM Investors Pty Limited.

IFRS International Financial Reporting Standards.

200
Term Meaning

Import Finance Combined with a traditional Debtor Finance facility, Import Finance provides a complete supply chain
funding solution for importers, providing access to working capital from the time the orders are placed
until the time that payment is received from the importer’s customer. All Import Finance Clients are
required to have a Debtor Finance facility.

Independent Debtor Non-bank Debtor Finance provider whose main business is the provision of Debtor Finance.
Finance Provider

Independent Director Each of Peter Clare, Katrina Onishi and Andrew Love.

Institutional Investor An investor who has been invited to participate in the Institutional Offer and is:
• A person in Australia who is a wholesale client under section 761G of the Corporations Act and
either a “professional investor” or “sophisticated investor” under sections 708(11) and 708(8) of the
Corporations Act; or
• An institutional investor in certain other jurisdictions, as agreed between the Company, SaleCo and
the Joint Lead Managers
to whom offers of Shares may lawfully be made without the need for a lodged or registered
prospectus or other form of disclosure document or filing with, or approval by, any government agency
(except one with which the Company is willing in its discretion to comply), and provided that in each
case such investors are not in the United States.

Institutional Offer The invitation to Institutional Investors under this Prospectus to acquire Shares as described in Section 7.6.

Investigating Deloitte Corporate Finance.

Accountant

Investigating The report provided by the Investigating Accountant set out in Section 8.
Accountant’s Report

Invoice Trading Where individuals or institutional funders purchase invoices or receivable notes at a discount.

IPO Initial public offering.

IT Information Technology.

Joint Lead Managers Each of Goldman Sachs and Citi.

Junior Notes Investment interests in the Funding Vehicles (primarily issued to the Mezzanine Vehicle) or the
Mezzanine Vehicle (issued to the Group) that have a lower priority for payment of interest and
repayment of principal than investments held, or loans made, by other financiers (including the Senior
Notes and Senior Loans).

Legacy LTI Scheme The long-term incentive scheme established in 2013 when funds advised by Next Capital acquired
Scottish Pacific. The Legacy LTI Scheme is expected to be wound up by Completion as described in
Section 6.3.4.

Legacy Options As defined in Section 6.3.4.

Listing Admission of the Company to the official list of ASX.

Scottish Pacific  Prospectus 201

Appendix B: Glossary continued


Term Meaning

Low Touch A less service intensive and more hands-off service model, with less monitoring and less interaction
with Clients than under a High Touch model. Typically only suitable for larger, more sophisticated
Discounting Clients.

LTI Scheme As defined in Section 6.3.3.1.

LVR Loan to value ratio, refers to the value of funds advanced to Scottish Pacific Clients relative to the value
of collateral assigned to Scottish Pacific.

Management Certain current senior management employees of the Company, including those named in Section 6.2.

Management Fees All management fees including Management Fees – Debtor Finance and Management Fees – Trade
Finance and Other.

Management Fees – This management fee income reflects fees charged on invoices from Factoring and Discounting products
Debtor Finance provided by Scottish Pacific. It includes administration fees, liquidated damages and termination fees,
application and commitment fees and other sundry income (bank fees and legal fees are recovered
from Clients and have a nil impact). It also includes revenue associated with provision of Specialty
Products (e.g. SIF, Bad Debt Protected Facilities, Asset Finance).

Management Fees Consist of administration fees flowing from Tradeline (short-term lines of credit), Import Finance and
– Trade Finance and Export Finance.
Other

Management Current Management and their closely related parties who hold Shares immediately prior to
Shareholders Completion (prior to the transfer of Shares to SaleCo).

Mezzanine Facility The financing provided to the Mezzanine Vehicle by external financiers and the Group. See
Section 3.3.2.2 and, for more detail, Section 4.5.2.2.

Mezzanine Vehicle The special purpose trust established by the Group to purchase Junior Notes from the Funding Vehicles
and provide “first loss” capital support to the Senior Facilities. See Section 3.3.

NAB National Australia Bank Ltd (ACN 004 044 937).

Net Interest Income The revenue item including income earned on the amount drawn down by Clients offset by Senior
Facility and Mezzanine Facility funding costs. This is calculated on a daily basis and includes gross
revenue charged daily on drawn funding Exposure, less interest paid, commissions and unused
line fees.

Net Margin The residual funds available for distribution to Scottish Pacific after the relevant fees and debts to the
Senior Notes and higher ranked Junior Notes have been repaid.

Net Revenue Consists of Management Fees – Debtor Finance, Management Fees – Trade Finance and Other and Net
Interest Income.

New Zealand Registrar of Financial Service Providers established under the New Zealand Financial Service Providers
Registrar (Registration and Dispute Resolution) Act 2008 or any other person established by law to replace
the Registrar.

New Shares The new Shares to be issued by the Company under the Offer.

202
Term Meaning

Next Capital Next Capital Pty Limited (ACN 111 963 583).

Next Capital Entities Next Capital as trustee for the Scottish Pacific Group Co-Investment Trust, Next Capital (Services A) Pty
Limited (ACN 115 384 300) as trustee for Next Capital Fund IIA and Next Capital (Services B) Pty Limited
(ACN 117 017 853) as trustee for Next Capital Fund IIB.

Non-Executive Patrick Elliott, being the chairman of the Board not occupying a Management position.
Chairman

Non-Executive A member of the Board of Directors who does not form part of Management. Scottish Pacific’s
Director Non‑Executive Directors are Patrick Elliott, Peter Clare, Katrina Onishi and Andrew Love.

Non-Executive Current Non-Executive Directors who hold Shares immediately prior to Completion (prior to the
Director Shareholders transfer of Shares to SaleCo).

non-IFRS financial Measures used by Scottish Pacific to manage and report on its business that are neither recognised by
measures the AASB or IFRS.

NPAT Net profit after tax.

NPATA Net profit after tax excluding amortisation and impairment pertaining to acquired intangibles on
a tax-effected basis.

NZ Companies Act Companies Act 1993 of New Zealand.

NZFMCA New Zealand Financial Markets Conduct Act 2013.

NZFMCR New Zealand Financial Markets Conduct Regulations 2014.

NZ Mutual The recognition regime in subparts 1 and 2 of part 9 of the NZFMCR.

Recognition
Regulations

NZ PPSA Personal Property Securities Act 1999 (NZ).

NZ Securities Laws The NZFMCA and the NZFMCR, in each case as modified by the operation of the NZ Mutual
Recognition Regulations.

Offer The offer of Shares under this Prospectus.

Offer Period The period from Thursday, 30 June 2016 to Friday, 8 July 2016.

Offer Price $3.20 per Share.

Official List The official list of entities that the ASX has admitted to and not removed from listing.

Operational Staff Operational Staff oversee risk management of Client funding Exposures and are directly accountable
for losses. Operational Staff include CRMs who manage a portfolio of Clients from both a credit and
service perspective.

Option An option over a Share.

Scottish Pacific  Prospectus 203

Appendix B: Glossary continued


Term Meaning

Origination The time at which funding is first advanced to a Client.

Overdue Client Audit Monthly generated reports for all Clients where scheduled audits are overdue.
Reports

PBIT Profit before interest and tax.

PBITDA Profit before interest, tax, depreciation and amortisation.

PBT Profit before tax.

Priority Offer The offer of Shares to selected Australian resident and overseas retail investors as agreed between
the Company and the Joint Lead Managers as described in Section 7.4.

Pro Forma Subject to the Pro Forma adjustments explained in Section 4.3.3.

Pro Forma Financial The Pro Forma Historical Financial Information and the Pro Forma Forecast Financial Information
Information as defined in Section 4.1.

Prospectus This document (including the electronic form of this Prospectus) and any supplementary or
replacement prospectus in relation to this document.

Prospectus Date The date on which a copy of this Prospectus was lodged with ASIC, being Wed, 22 June, 2016.

SaleCo Scottish Pacific SaleCo Pty Ltd (ACN 612 646 607).

SaleCo Directors The directors of SaleCo.

Sales Staff Sales Staff oversee the sourcing of new business and the development and maintenance of Scottish
Pacific’s extensive referral network.

Senior Facilities The senior financing provided to the Funding Vehicles by external financiers to fund Client Funding
Amounts. See Section 3.3 and, for more detail, Section 4.5.1.

Senior Loans Loans made to Funding Vehicles (by financiers under some Senior Facilities) or the Mezzanine Vehicle
(by the external financiers under the Mezzanine Facility) that have a higher priority for payment of
interest and repayment of principal than investments held by other providers of funding.

Senior Management Includes all members profiled in Section 6.2.

or Senior Manager

Senior Notes Investment interests in the Funding Vehicles (issued to the financiers under some Senior Facilities) that
have a higher priority for payment of interest and repayment of principal than investments held by
other providers of funding.

Scottish Pacific Scottish Pacific Group Limited (ACN 164 013 110) and its subsidiaries, including Bibby. Former Clients
or Company of the GE and Suncorp Debtor Finance portfolios are included from the date of their acquisition.

Scottish Pacific Scottish Pacific Trade Limited (incorporated in Hong Kong).

Hong Kong

204
Term Meaning

Scottish Pacific SP Tradeline (International) Limited (incorporated in the United Kingdom).

International

Scottish Pacific Scottish Pacific excluding Bibby and the impacts of the GE Portfolio Acquisition and Suncorp Portfolio
Standalone or Acquisition.
Standalone

Scottish Pacific UK SP Tradeline (UK) Limited (incorporated in the United Kingdom).

Share A fully paid ordinary share in the capital of the Company.

Shareholder A holder of a Share.

Share Registry Link Market Services Limited (ACN 083 214 537).

SIF Selective Invoice Finance is a flexible Debtor Finance facility where funding is provided against
individual invoices or debtors rather than entire company ledgers (as is the case for traditional Debtor
Finance products).

SME Small and medium-sized enterprise.

Specialty Products SIF, Bad Debt Protected Facilities, Asset Finance and other specialist Scottish Pacific Debtor Finance
products. Excludes Trade Finance.

SRN Security Holder Reference Number; refer to Section 7.12.2.

St. George St. George Bank – A Division of Westpac Banking Corporation (ACN 007 457 141).

Statutory Financial The Statutory Historical Financial Information and the Statutory Forecast Financial Information as
Information defined in Section 4.1.

Successful Applicant An Applicant or Institutional Investor who is issued or transferred Shares under the Offer.

Suncorp Suncorp-Metway Limited (ACN 010 831 722).

Suncorp Clients Clients whose accounts were transferred to Scottish Pacific as part of the Suncorp Portfolio Acquisition.

Suncorp Portfolio The acquisition of the customer relationships and accounts which comprised Suncorp’s Australian
Acquisition Debtor Finance business in May 2016.

TFN Tax file number.

Total Income Comprises sales and service income, interest income, funding from government for operational costs
and other income.

Trade Finance Tradeline, Export Financing and Import Finance.

Tradeline An unsecured import finance and buying facility, backed by insurance. Similar to non-recourse Debtor
Finance, available to international traders whereby Scottish Pacific purchases goods from the seller
(overseas supplier) and provides credit terms to the buyer (importer).

Scottish Pacific  Prospectus 205

Appendix B: Glossary continued


Term Meaning

Turnover The face value of assigned invoices (i.e. invoices which are assigned under a Debtor Finance or Trade
Finance arrangement).

Underlying Business Scottish Pacific Standalone and Bibby including synergies, excluding the impact of the GE Portfolio
Acquisition and Suncorp Portfolio Acquisition.

Underwriting The underwriting agreement between the Company, SaleCo and the Joint Lead Managers in relation
Agreement to the Offer, as described in Section 9.5.1.

WBC Westpac Banking Corporation (ACN 007 457 141).

White Labelling Scottish Pacific provides an unbranded product or service for the originator to sell and distribute
the product.

206
 Broker Code Adviser Code
Broker Code Adviser Code

Scottish Pacific Group Limited Scottish Pacific Group Limited

ACN 164
Scottish 013 110Group Limited
Pacific ACN 164 013 110
ACN 164 013 110

Broker Firm Offer Application Form Broker

This
This is an Application
Broker
is an
Form for Shares
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Application
in Scottish
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Pacific Group Limited under
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for Shares. carefullyrelevant to a decisionbeforeto invest in Shares and you should read
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for Sh
Prospectus carefully before applying for Shares.
Shares applied for Shares applied Price per
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PLEASE COMPLETE YOUR DETAILS BELOW
PLEASE COMPLETE YOUR
(refer overleaf for correct forms DETAILS BELOW
of registrable names)
PLEASE COMPLETE YOUR DETAILS BELOW (refer overleaf for correct forms of registrable names)
Applicant #1 – Surname/Company
Applicant Name #1 – Surname/Company Name
Applicant #1 – Surname/Company Name
CC C
Title
Title First
First Name
Title
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Middle NameName

Joint
Joint Applicant
Applicant #2 #2 – Surname
Joint Applicant #2 – Surname
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Designated
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TFN/ABN/Exemption Code
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Email address (only for purpose of electronic communication of shareholder information)

Email address (only for
Email
purpose of electronic
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purpose of electronic co

CHESS HIN (if you want to add this holding to a specific CHESS holder, write the number here)
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Cheques or bank drafts should be drawn up according to the instructions given by your Broker.
Cheques
Cheques or bank drafts or bank
should be drawn up according drafts
to the instructions given byshould
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Cheque or Bank Draft Number BSB Account Number
H Cheque or Bank Draft Cheque
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Total Amount A$ , , .
LODGEMENT INSTRUCTIONS Total Amount A$ , , .
You must return your
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INSTRUCTIONS
LODGEMENT so it is received by your Broker by the deadline set out in their offer to you.
INSTRUCTIONS SCO BRO001
You must return yourYou
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return
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by the deadline
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Your Guide to the Application Form
Your
YourGuide Guidetotothe theApplication
ApplicationForm Form
Please complete all relevant white sections of the Application Form in BLOCK LETTERS, using black or blue ink. These instructions are cross-referenced
Please
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the form.
The Shares to which this Application Form relates are Scottish Pacific Group Limited (“Scottish Pacific”) Shares. Further details about the Shares are contained
The
in theShares
TheProspectus
Shares to which
to dated
which thisthis
Application
22 June 2016Form
Application issued
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send issued
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document and after
in the Prospectus dated 22 June 2016 issued by Scottish Pacific. The Prospectus will expire 13 months after the date of the Prospectus. While the Prospectus the the date
Application of theForm,Prospectus.
free of While
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important information
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C Write the fullofname your cheque
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the register of Shares. This details given on this
issuer sponsored form, your Shares will be issued to Scottish Pacific’s
subregister.
This G issuer issuer sponsoredsubregister.subregister.
C CWrite
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Up This
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enter your telephone number(s), area code and contact name in
jointmust
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correct
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of your B.
in section cheque or bank draft should
cheque or bank draft should agree with the agree with the
enterprises
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enter their
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Australian
TFN or ABN Business
Business
for each Number
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amount shown
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section B.
B. of Shares from your Broker make your
(ABN). Where applicable, please enter If you receive allocation
(ABN).
Applicant. Where applicable,
Collection please
of TFN(s) andenter thethe
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your
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Collection of of TFN(s)
TFN(s) and and ABN(s)
ABN(s) is is authorised
authorised by by taxation
taxation cheque payable to your Broker in accordance with their instructions.
laws. Quotation of TFN(s) and ABN(s) is not compulsory and will not cheque payable to your Broker in accordance with their instructions.
laws.laws. Quotation of TFN(s) andand ABN(s) is not compulsory andand willwill
notnot
affect Quotation
your Application. of TFN(s) However, ABN(s) if theseis not arecompulsory
not provided, Scottish
affect your Application. However, if these are not provided, Scottish
affect
Pacificyour will beApplication.
required toHowever, deduct taxif at these are notmarginal
the highest provided,rate Scottish
of tax
Pacific will be required to deduct tax at the highest marginal rate of tax
Pacific
(including willthe
be Medicare
required toLevy) deductfrom taxpayments.
at the highest marginal rate of tax
(including the Medicare Levy) from payments.
(including the Medicare Levy) from payments.

CORRECT FORMS OF REGISTRABLE NAMES

CORRECT FORMS OF REGISTRABLE NAMES
CORRECT
NoteNote FORMS
thatthat
ONLY OF
legallegalREGISTRABLE
entities areare
allowed NAMES
to hold Shares. Applications must bebe
in in
thethename(s)
ONLY entities allowed to hold Shares. Applications must name(s)ofofnatural
naturalpersons
personsororcompanies.
companies.AtAtleast
leastone
onefull
fullgiven
given name
name
Note thatsurname
and and
the ONLY legal entitiesfor
areeach
allowed to hold Shares. Applications must be in the name(s) ofnon-registrable
natural personsname
or companies. At leastbyone fullofgiven name
the surname is required for each natural person. The name of the beneficiary or any other non-registrable name may be included by way ofan
is required natural person. The name of the beneficiary or any other may be included way an account
account
and the surname
designation
designation
is required
if completed
if completed
for each
exactly
exactly
natural person.
as described
as describedin the The nameofofof
examples
in the examples
the beneficiary
correct forms
correct
or any other non-registrable name may be included by way of an account
below.
forms below.
designation if completed exactly as described in the examples of correct forms below.
TypeType
of Investor
of Investor Correct
Correct Form
Form ofofRegistration
Registration Incorrect
IncorrectFormFormofofRegistration
Registration
Type of Investor Correct Form of Registration Incorrect Form of Registration
Individual
Individual
Use givengiven
Individual
Use namesnamesin full, not initials
in full, not initials MrsMrs
Katherine
Katherine Clare
ClareEdwards
Edwards KKCCEdwards
Edwards
Use given
Company
Company names in full, not initials Mrs Katherine Clare Edwards K C Edwards
Use Company’s
Company
Use Company’sfull title, not abbreviations
full title, not abbreviations LizLiz
BizBiz
PtyPty
LtdLtd Liz
LizBiz
BizP/L
P/LororLiz
LizBiz
BizCo.
Co.
Use Company’s
JointJoint
Holdings full
Holdings title, not abbreviations Liz
Mr Biz
PeterPty Ltd
Paul Tranche
Mr Peter Paul Tranche & & Liz
PeterBiz P/L
Paul
Peter Paul & or
& Liz Biz Co.
Use Use
Jointfull and
Holdings complete
full and complete names names MsMs
Mr Mary
Peter
MaryOrlando
Paul Tranche
Tranche
Orlando &
Tranche Mary
MaryTranche
Peter Paul &
Tranche
Use full and complete names
Trusts
Trusts Ms Mary
MrsMrs OrlandoHerbert
Alessandra
Alessandra Tranche
HerbertSmith
Smith Mary Tranche
Alessandra
Alessandra Smith
Smith
Use Use
the trustee(s)
Trusts personal
the trustee(s) personalname(s)
name(s) <Alessandra
Mrs Alessandra
<Alessandra Smith A/C>
Herbert
Smith Smith
A/C> Family
FamilyTrust
Alessandra TrustSmith
Use the trustee(s)
Deceased
Deceased Estates personal name(s)
Estates <Alessandra
MsMsSophia
Sophia Smith
Garnet
Garnet A/C>
Post
Post& & Family
Estate Trust
Estateofoflate
lateHarold
HaroldPost
Post
Use the executor(s)
Use
Deceased theEstates personal
executor(s) personalname(s)
name(s) Mr
MsMrAlexander
Alexander
Sophia Traverse
Garnet PostPost
Traverse &Post oror of late Harold Post
Estate
Use the executor(s) personal name(s) <Est
Mr Harold
<Est Harold
Alexander Post
PostA/C>
Traverse A/C>Post Harold
orHaroldPost
PostDeceased
Deceased
Minor (a person
Minor (a personunder underthe the
ageage of 18
of years)
18 years) <Est
MrsMrsHarold
Sally Post A/C>
Hamilton
Sally Hamilton Harold
MasterPost
Master Henry
Henry Deceased
Hamilton
Hamilton
Use Use
Minorthe(aname
the
personof aunder
name responsible
of the ageadult
a responsible with
ofadult
18 an appropriate
with
years) designation
an appropriate designation <Henry
Mrs SallyHamilton>
<Henry Hamilton>
Hamilton Master Henry Hamilton
Use the name of a responsible adult with an appropriate designation <Henry Hamilton>
Partnerships
Partnerships MrMrFrederick
Frederick Samuel
SamuelSmith Smith& & Fred
FredSmith
Smith&&Son Son
Use Use the partners’
the partners’
Partnerships personal
personal namesnames MrMr Samuel
Samuel
Frederick Lawrence
Lawrence
Samuel Smith
Smith
Smith & Fred Smith & Son
Use the partners’ personal names Mr <Fred
<Fred
Samuel Smith
Smith && Son
LawrenceSon A/C>
A/C>
Smith
LongLong
Names Names <Fred
MrMrHughSmith
Hugh & Son
Adrian
Adrian John A/C>
John Smith-Jones
Smith-Jones MrMrHugh
HughAAJJSmith
SmithJones
Jones
Long Names
Clubs/Unincorporated Bodies/Business
Clubs/Unincorporated Bodies/Business Names Names Mr Hugh
Mr Adrian
Alistair John
Edward
Mr Alistair Edward Lilley Smith-Jones
Lilley Mr Hugh
Vintage A J
Wine
Vintage Wine ClubSmith
Club Jones
Use Use
officeoffice bearer(s)
bearer(s)
Clubs/Unincorporated personal
personal name(s) Names
name(s)
Bodies/Business <Vintage
<Vintage
Mr Wine
AlistairWine
Edward Club
Club A/C>
A/C>
Lilley Vintage Wine Club
Use Superannuation
office bearer(s)
Superannuation Funds name(s)
personal
Funds XYZPtyPty
<Vintage
XYZ Ltd Club A/C>
Wine
Ltd XYZPty
XYZ PtyLtd
Ltd
Use Use
the the
name name
of
Superannuation Funds of
the the
trusteetrustee
of of
the the
fundfund <Super
<Super Fund
Fund
XYZ Pty Ltd A/C>
A/C> Superannuation
Superannuation
XYZ Pty Ltd Fund
Fund
Use the name of the trustee of the fund <Super Fund A/C> Superannuation Fund
Put name(s)
Put the the name(s) of anyof any
jointjoint Applicant(s)
Applicant(s) and/or
and/or account
account description
description using
using < ><as
> as indicated
indicated above
above in in designatedspaces
designated spacesatatsection
sectionCCononthetheApplication
ApplicationForm.
Form.
Put the name(s) of any joint Applicant(s) and/or account description using < > as indicated above in designated spaces at section C on the Application Form.
 Broker Code Adviser Code
Broker Code Adviser Code

Scottish Pacific Group Limited Scot tish Pacific Group Limi

ACN 164
Scottish 013 110Group Limited
Pacific ACN 16 4 013 110
ACN 164 013 110

Broker Firm Offer Application Form Brok

This
This is an Application Form
Broker
for Sharesis
Firm
anPacific
in Scottish
Offer
Application
Application Form
Group Limited under the Broker
Form
Firm Offer for Shares
on the terms in
set out in the Prospec
This is an
dated 22Application
June 2016.Form for Shares this
dated
By completing in Scottish
22Pacific
Application June Group
Form, youLimited under the
2016.
acknowledge thatBroker
By
the Firmcompleting
terms Offer
and on the terms
conditions set in
set out out
thein Prospectus
thethis
Prospectus
andApter
dated 22 June
notified 2016.
to you by By completing
your notified
Broker this Application
apply. You mayto Form, for
apply youaacknowledge
you minimum by of that the terms
your
A$5,000 worthand conditions
ofBroker
Shares and setmultiples
out in apply.
the of
Prospectus
A$1,000 and terms
You
worth of Sha
notified to youThis
thereafter. by your Broker apply.and
thereaf
Application Form Youyour
maycheque
apply for
ter. or abank
minimum
This of A$5,000
draft must Applicationworth by
be received of Shares and multiples
your Broker byForm of A$1,000
the deadline setand worth
out of Shares
in their you
offer to y
thereafter.
To meet This Application To
the requirements Form and
of the your cheque Act,
meet
Corporations orthe
bank
this draft must beForm
Application
requirementsreceived
mustbynot
your
beBroker by the
distributed ofdeadline
unless the set outin,
included in or
their
Corporat offer to you.by,
accompanied
ToProspectus.
meet the requirements of
By completing the
thisCorporations
Prospectus. Act, this
Application Form, youApplication
agreeBy thatForm must received
not be distributed
youcompleting
have a copy ofunless included in,
the Prospectus
this or this
with accompanied
Applicatio Application by,Form.
the
Prospectus. By completing this Application Form, you agree that you have received a copy of the Prospectus with this Application Form.
If you are in doubt as If to how you to deal withare this Application
in doubt Form, please contactasyour to accountant,
how lawyer, to stockbroker
deal or ot
If professional
you are in doubt as toThe
adviser. how to deal with
Prospectus
professional this Application
contains information Form, please
relevant
adviser. to acontact
decision your
to
Theaccountant,
invest lawyer,
in Shares
Prospectusandstockbroker
you should read or other
the ent
c
professional
Prospectusadviser. The
carefully Prospectus
before applying
Prospectus contains information carefully
for Shares. relevant to a decision to investbeforein Shares and you should read the entire fo
applying
Prospectus carefully before applying for Shares.
Shares applied for Shares applied Price per Sharefor Application Monies
Shares applied for Price per Share Application Monies
, B
AA ,, A, , , at A$3.20 A$ , , , .
(minimum A$5,000 worth(minimum
at A$3.20
A$5,000
of Shares, thereafter in multiples of A$1,000 worth ofwor
A$ B
Shares) th of Shares, there
, .
(minimum A$5,000 worth of Shares, thereafter in multiples of A$1,000 worth of Shares)
PLEASE COMPLETE YOUR DETAILS BELOW (refer
PLEASE COMPLETE YOUR
overleaf for correct forms of registrable names) DETAILS B
PLEASE COMPLETE YOUR DETAILS BELOW (refer overleaf for correct forms of registrable names)
Applicant #1 – Surname/Company
Applicant Name #1 – Surname/Company Name
Applicant #1 – Surname/Company Name
CC C
Title
Title First
First Name
Name Title Middle
First
Middle NameName
Name

Joint
Joint Applicant
Applicant #2 #2 – Surname
Joint Applicant #2 – Surname
– Surname

Title
Title First
First Name
Name Title First
Middle
Middle NameName
Name

Designated
Designated account
account e.g.e.g.Designated
<Super
<Super Fund>
Fund> (or Joint
(or Joint Applicant
Applicant #3)account
#3) e.g. <Super Fund> (o

TFN/ABN/Exemption Code
TFN/ABN/Exemption –TFN/ABN/Exemption
CodeFirst Applicant
– First Applicant JointJoint
Applicant #2 #2
Applicant Joint –
Code Applicant
JointFirst#3
Applicant #3 Applica
DD D
TFN/ABN type
TFN/ABN – if–NOT
type an an
if NOT individual,
TFN/ABN please
individual, mark
please the appropriate
mark type
the box –
appropriate box ifCompany
NOT Partnership
Company an Trust Trust Superplea
individual,
Partnership Fund Fu
Super
PLEASE
PLEASECOMPLETE
COMPLETEADDRESS
ADDRESS
PLEASE DETAILS
DETAILS COMPLETE ADDRESS DETAIL
POPO
Box/RMB/Locked Bag/Care
Box/RMB/Locked of (c/-)/Property
Bag/Care
PO Boxname/Building
of (c/-)/Property
/RMB/Locked name
name/Building (if applicable)
name (if applicable) Bag/Care of (c/-)/Pr
EE E
Unit
UnitNumber/Level
Number/Level Street Number
Street
Unit Number Street Name
Number/Level
Street Name Street Number

Suburb/City or Town State Postcode

Suburb/City or Town Suburb/City or Town State Postcode

Email address (only for purpose of electronic communication of shareholder information)

Email address (only for purpose
Email of electronic
address
communication of shareholder
(only information)
for purpose of electro

CHESS HIN (if you want to add this holding to a specific CHESS holder, write the number here)
CHESS HIN (if you want CHESS
to add this holding to aHIN
specific CHESS
(ifholder,
you write the
want
number here)
to add this holdin
FF X
X F X
Please note: that if you supply a CHESS HIN but the name and address details on your Application Form do not correspond exactly with the
Please note:
registration thatheld
details if you Please
supply
at CHESS, a your
CHESS HINnote:
butwill
Application thebename that
and
deemed address
to if
be made you
details onthe
without your supply
Application
CHESS Form
HIN and anydo a
Shares CHESS
not correspond
issued as aexactly with
result of
theregistration details
Offer will be held
held on registration
theat CHESS,
issuer your Application
sponsored sub-register. details
will be held
deemed to be made without theat
CHESS CHESS, your
HIN and any Shares issued A
as a resul
the Offer will be held on the the Of fer
issuer sponsored will be held on the issuer sponso
sub-register.
Telephone Number where you can be contacted during Business Hours Contact Name (PRINT)

G ( )G
Telephone Number whereT you
elephone
can be contacted during Business
Number Hours Contact
where Name (PRINT)you can be conta

G ( ) ( )
Cheques or bank drafts should be drawn up according to the instructions given by your Broker.
Cheques
Cheques or bank drafts should or
be drawn up according bank
to the instructions draf ts
given by your should be drawn u
Broker.
Cheque or Bank Draft Number BSB Account Number
H Cheque or Bank Draft Number
Cheque or Bank BSB Draf t Number
- Account Number
H H -
Total Amount A$ , , .
LODGEMENT INSTRUCTIONS Total Amount A$ , , .
You must return your
LODGEMENT application
INSTRUCTIONS so it is received by your Broker by theINSTRUCTIONS
LODGEMENT deadline set out in their offer to you. SCO BRO001
You must return your application
You so itmust
is received byreturn
your Broker by the
your
deadline setapplication
out in their offer to you. soSCO BRO00
it is re
Your Guide to the Application Form
Your
YourGuide Guidetotothe theApplication
ApplicationForm Form
Please complete all relevant white sections of the Application Form in BLOCK LETTERS, using black or blue ink. These instructions are cross-referenced
Please
to each complete
Pleasesection
completeofalltherelevant
allform.
relevant white
whitesections
sections of the
of theApplication
Application FormForm in in
BLOCK
BLOCK LETTERS,
LETTERS,using usingblackblackororblue blueink.ink.These
Theseinstructions
instructionsare arecross-referenced
cross-referenced
to each
to section
each sectionof theof form.
the form.
The Shares to which this Application Form relates are Scottish Pacific Group Limited (“Scottish Pacific”) Shares. Further details about the Shares are contained
The
in theShares
TheProspectus
Shares to which
to dated
which thisthis
Application
22 June 2016Form
Application issued
Form relates areare
by Scottish
relates Scottish Pacific
Pacific.
Scottish TheGroup
Pacific Limited
Prospectus
Group will(“Scottish
Limited expire 13Pacific”)
(“Scottish Pacific”)Shares.
months after
Shares. theFurther
date
Further of details
the about
aboutthe
Prospectus.
details Shares
theWhile
Shares the are contained
Prospectus
are contained
in
is the Prospectus
current, Scottish dated
Pacific 22 June
will 2016
send issued
paper by
copies Scottish
of the Pacific.
Prospectus,The Prospectus
any will
supplementary expire 13 months
document and after
in the Prospectus dated 22 June 2016 issued by Scottish Pacific. The Prospectus will expire 13 months after the date of the Prospectus. While the Prospectus the the date
Application of theForm,Prospectus.
free of While
charge the
on Prospectus
request.
is
Thecurrent, Scottish
isAustralian
current, Scottish Pacific
Securities will will
Pacific
and send paper
send
Investments paper copies
copies
Commission of the
of theProspectus, thatany
Prospectus,
requires a anysupplementary
supplementary
person who provides document
accessand
document and
to an the theApplication
Application
electronic Form,
Form,free
application free
formofofcharge
charge on
onrequest.
must provide request.
access,
The
by the Australian
The same
Australian Securities
means and atand
Securities Investments
theandsame time, to
Investments Commission
the relevantrequires
Commission that
Prospectus.
requires aThis
that person who
Application
a person who provides
Form is
provides access totoan
included
access inanelectronic
the Prospectus.
electronic application
applicationform formmustmustprovide
provide access,
access,
by
Thethe
by same
the same
Prospectus meansmeans andand
contains atimportant
the same
at the sametime, to the
time,
information relevant
to about
the relevant Prospectus.
investingProspectus. This
in the Shares. Application
This Application
You should Form
Form
readis isthe
included
included
Prospectusininthe
theProspectus.
Prospectus.
before applying for Shares.
TheThe Prospectus
Prospectus contains
contains important
important information
information about
about investing
investingin the
in theShares.
Shares. You
Youshould
shouldreadreadthe theProspectus
Prospectusbefore beforeapplying
applyingfor forShares.
Shares.
A Insert the number of Shares you wish to apply for. The Application must E Please enter your postal address for all correspondence. All communications
A AInsert
be for athe
Insert number
the
minimum number ofofA$5,000
Shares
of Shares you wish
you
worth to apply
ofwish to apply
Shares for.for.
and TheTheApplication
thereafterApplication
in multiples must E E Please
must toPlease enter
you fromenter your
yourpostal
Scottish postal address andforfor
address
Pacific theallallShare
correspondence.
correspondence.
Registry will All communications
Allbecommunications
mailed to the
be beafor
for
of A$1,000 a worth
minimum
minimum of A$5,000
A$5,000
of Shares. worth
You worth
may of beof issued
Shares
Shares and and
all of thereafter
thereafter
the Shares inapplied
multiples
in multiples to to youfrom
you
person(s) from
and Scottish
Scottish
address Pacific
Pacific
as shown.andthe
and the Share
ForShare Registrywill
Registry
joint Applicants, will
onlybemailed
be mailed
one to the
to
address the
of of aA$1,000
forA$1,000
or worth
lesser worth of Shares.
of Shares.
number. YouYou maymay be be issued
issued all all of the
of the Shares
Shares applied
applied person(s)
person(s)
can and
be entered. andaddress
addressasasshown. shown.For ForjointjointApplicants,
Applicants,only onlyone oneaddress
address
forathe
for or
B Insert orlesser
a relevant
lesser
number.number.
amount of Application Monies. To calculate your F can If can
youbebe entered.
entered.
are already a CHESS participant or sponsored by a CHESS
B BInsert Insert
Applicationthe the relevant
relevant
Monies, amountamount
multiply ofnumber
Application
oftheApplication Monies.
ofMonies.
Shares To To calculate
calculate
applied for byyour your F F Ifparticipant,
the Ifyou
youarearealready
already
write youra aCHESS
CHESSIdentification
Holder participantororNumber
participant sponsored
sponsored (HIN)by byhere.
aa CHESS
CHESS
If the
issueApplication
Application Monies,
price. Amounts Monies, multiply
multiply
should theinthe
be numbernumber
Australian of
of SharesShares
dollars. applied
applied
Please forfor
make by
thethe
bysure participant,
participant,
name or address writeyour
write yourHolder
recorded Holder Identification
onIdentification
CHESS for this Number
Number (HIN)
(HIN)
HIN is here.toIfIf the
here.
different the
issueissue
price.
the amount price.
Amounts
of Amounts
your should
cheque should beAustralian
orbebank
in indraft
Australian
equals dollars.
dollars. Please
Please
this amount. make
make sure
sure nameor
name
details oraddress
given address recorded
on thisrecorded
form, your onon CHESS
CHESS
Shares for
willfor
bethisthisHIN
issued HIN
toisis different
different
Scottish to the
to
Pacific’s the
the
the amount amount of your cheque or bank draft equals this amount. details given on this form, your Shares will be issued to Scottish Pacific’s
C Write the fullofname your cheque
you wishortobank appear drafton equals this amount.
the register of Shares. This details given on this
issuer sponsored form, your Shares will be issued to Scottish Pacific’s
subregister.
This G issuer issuer sponsoredsubregister.subregister.
C CWrite
mustWrite
be the
full full
theeither name name
your ownyou
you wish wish
name to ortothe
appearappear on on
name ofthe
the register
register
a company. of of Shares.
Shares.
Up This
to three Pleasesponsored
enter your telephone number(s), area code and contact name in
jointmust
must be either
be either
Applicants your
may your
own own
register.namename
You or the
or should
the name name
refer oftoaofthe
a company.
company. UpUp
table below to
tofor three G G Please
three
the Please
case enteryour
weenter
need your
to telephone
telephone
contact innumber(s),
younumber(s),
relation area toareayour code
code andcontact
and contactname
Application. name in in
jointjoint Applicants
Applicants may
maytitle. register. You should refer to the
register. You should refer to the table below for the table below for the case we need to contact you in relation to your Application.
correct
correct
registrable
registrable title.
H casePlease wecomplete
need to contact
the details youofinyour relation
cheque to youror bank Application.
draft in this section.
D correct
Enter your registrable
Tax Filetitle. Number (TFN) or exemption category. Business H H Please
ThePlease complete
complete
total amountthe ofthedetails
details
your ofofyour
cheque your cheque
orcheque
bank draftororbank
bank draftagree
draft
should ininthis
thiswith
section.
section.the
D
D Enter Enter your
your Tax
enterprises Tax
mayFile File Number
Number (TFN)
alternatively (TFN)
quote their or exemption
or exemption
Australiancategory.category.
BusinessBusiness Business
Number TheThe
amount total
totalshown amount
amount of your
of your B.
in section cheque or bank draft should
cheque or bank draft should agree with the agree with the
enterprises
enterprises
(ABN). Where may
mayapplicable, alternatively
alternatively quote
please quote
enter their
theirthe Australian
Australian
TFN or ABN Business
Business
for each Number
Number joint amount
amount shown
shownainfirm in section
section B.
B. of Shares from your Broker make your
(ABN). Where applicable, please enter If you receive allocation
(ABN).
Applicant. Where applicable,
Collection please
of TFN(s) andenter thethe
ABN(s) TFN TFN or or
ABN
is authorised
ABN for
forbyeacheach joint
joint
taxation If Ifyou
youreceive
receivea afirm firmallocation
allocationofofShares
cheque payable to your Broker in accordance
Sharesfrom fromyour yourBroker
Broker make
with their
make your
instructions.
your
Applicant.
Applicant. Collection
Collection of of TFN(s)
TFN(s) and and ABN(s)
ABN(s) is is authorised
authorised by by taxation
taxation cheque payable to your Broker in accordance with their instructions.
laws. Quotation of TFN(s) and ABN(s) is not compulsory and will not cheque payable to your Broker in accordance with their instructions.
laws.laws. Quotation of TFN(s) andand ABN(s) is not compulsory andand willwill
notnot
affect Quotation
your Application. of TFN(s) However, ABN(s) if theseis not arecompulsory
not provided, Scottish
affect your Application. However, if these are not provided, Scottish
affect
Pacificyour will beApplication.
required toHowever, deduct taxif at these are notmarginal
the highest provided,rate Scottish
of tax
Pacific will be required to deduct tax at the highest marginal rate of tax
Pacific
(including willthe
be Medicare
required toLevy) deductfrom taxpayments.
at the highest marginal rate of tax
(including the Medicare Levy) from payments.
(including the Medicare Levy) from payments.

CORRECT FORMS OF REGISTRABLE NAMES

CORRECT FORMS OF REGISTRABLE NAMES
CORRECT
NoteNote FORMS
thatthat
ONLY OF
legallegalREGISTRABLE
entities areare
allowed NAMES
to hold Shares. Applications must bebe
in in
thethename(s)
ONLY entities allowed to hold Shares. Applications must name(s)ofofnatural
naturalpersons
personsororcompanies.
companies.AtAtleast
leastone
onefull
fullgiven
given name
name
Note thatsurname
and and
the ONLY legal entitiesfor
areeach
allowed to hold Shares. Applications must be in the name(s) ofnon-registrable
natural personsname
or companies. At leastbyone fullofgiven name
the surname is required for each natural person. The name of the beneficiary or any other non-registrable name may be included by way ofan
is required natural person. The name of the beneficiary or any other may be included way an account
account
and the surname
designation
designation
is required
if completed
if completed
for each
exactly
exactly
natural person.
as described
as describedin the The nameofofof
examples
in the examples
the beneficiary
correct forms
correct
or any other non-registrable name may be included by way of an account
below.
forms below.
designation if completed exactly as described in the examples of correct forms below.
TypeType
of Investor
of Investor Correct
Correct Form
Form ofofRegistration
Registration Incorrect
IncorrectFormFormofofRegistration
Registration
Type of Investor Correct Form of Registration Incorrect Form of Registration
Individual
Individual
Use givengiven
Individual
Use namesnamesin full, not initials
in full, not initials MrsMrs
Katherine
Katherine Clare
ClareEdwards
Edwards KKCCEdwards
Edwards
Use given
Company
Company names in full, not initials Mrs Katherine Clare Edwards K C Edwards
Use Company’s
Company
Use Company’sfull title, not abbreviations
full title, not abbreviations LizLiz
BizBiz
PtyPty
LtdLtd Liz
LizBiz
BizP/L
P/LororLiz
LizBiz
BizCo.
Co.
Use Company’s
JointJoint
Holdings full
Holdings title, not abbreviations Liz
Mr Biz
PeterPty Ltd
Paul Tranche
Mr Peter Paul Tranche & & Liz
PeterBiz P/L
Paul
Peter Paul & or
& Liz Biz Co.
Use Use
Jointfull and
Holdings complete
full and complete names names MsMs
Mr Mary
Peter
MaryOrlando
Paul Tranche
Tranche
Orlando &
Tranche Mary
MaryTranche
Peter Paul &
Tranche
Use full and complete names
Trusts
Trusts Ms Mary
MrsMrs OrlandoHerbert
Alessandra
Alessandra Tranche
HerbertSmith
Smith Mary Tranche
Alessandra
Alessandra Smith
Smith
Use Use
the trustee(s)
Trusts personal
the trustee(s) personalname(s)
name(s) <Alessandra
Mrs Alessandra
<Alessandra Smith A/C>
Herbert
Smith Smith
A/C> Family
FamilyTrust
Alessandra TrustSmith
Use the trustee(s)
Deceased
Deceased Estates personal name(s)
Estates <Alessandra
MsMsSophia
Sophia Smith
Garnet
Garnet A/C>
Post
Post& & Family
Estate Trust
Estateofoflate
lateHarold
HaroldPost
Post
Use the executor(s)
Use
Deceased theEstates personal
executor(s) personalname(s)
name(s) Mr
MsMrAlexander
Alexander
Sophia Traverse
Garnet PostPost
Traverse &Post oror of late Harold Post
Estate
Use the executor(s) personal name(s) <Est
Mr Harold
<Est Harold
Alexander Post
PostA/C>
Traverse A/C>Post Harold
orHaroldPost
PostDeceased
Deceased
Minor (a person
Minor (a personunder underthe the
ageage of 18
of years)
18 years) <Est
MrsMrsHarold
Sally Post A/C>
Hamilton
Sally Hamilton Harold
MasterPost
Master Henry
Henry Deceased
Hamilton
Hamilton
Use Use
Minorthe(aname
the
personof aunder
name responsible
of the ageadult
a responsible with
ofadult
18 an appropriate
with
years) designation
an appropriate designation <Henry
Mrs SallyHamilton>
<Henry Hamilton>
Hamilton Master Henry Hamilton
Use the name of a responsible adult with an appropriate designation <Henry Hamilton>
Partnerships
Partnerships MrMrFrederick
Frederick Samuel
SamuelSmith Smith& & Fred
FredSmith
Smith&&Son Son
Use Use the partners’
the partners’
Partnerships personal
personal namesnames MrMr Samuel
Samuel
Frederick Lawrence
Lawrence
Samuel Smith
Smith
Smith & Fred Smith & Son
Use the partners’ personal names Mr <Fred
<Fred
Samuel Smith
Smith && Son
LawrenceSon A/C>
A/C>
Smith
LongLong
Names Names <Fred
MrMrHughSmith
Hugh & Son
Adrian
Adrian John A/C>
John Smith-Jones
Smith-Jones MrMrHugh
HughAAJJSmith
SmithJones
Jones
Long Names
Clubs/Unincorporated Bodies/Business
Clubs/Unincorporated Bodies/Business Names Names Mr Hugh
Mr Adrian
Alistair John
Edward
Mr Alistair Edward Lilley Smith-Jones
Lilley Mr Hugh
Vintage A J
Wine
Vintage Wine ClubSmith
Club Jones
Use Use
officeoffice bearer(s)
bearer(s)
Clubs/Unincorporated personal
personal name(s) Names
name(s)
Bodies/Business <Vintage
<Vintage
Mr Wine
AlistairWine
Edward Club
Club A/C>
A/C>
Lilley Vintage Wine Club
Use Superannuation
office bearer(s)
Superannuation Funds name(s)
personal
Funds XYZPtyPty
<Vintage
XYZ Ltd Club A/C>
Wine
Ltd XYZPty
XYZ PtyLtd
Ltd
Use Use
the the
name name
of
Superannuation Funds of
the the
trusteetrustee
of of
the the
fundfund <Super
<Super Fund
Fund
XYZ Pty Ltd A/C>
A/C> Superannuation
Superannuation
XYZ Pty Ltd Fund
Fund
Use the name of the trustee of the fund <Super Fund A/C> Superannuation Fund
Put name(s)
Put the the name(s) of anyof any
jointjoint Applicant(s)
Applicant(s) and/or
and/or account
account description
description using
using < ><as
> as indicated
indicated above
above in in designatedspaces
designated spacesatatsection
sectionCCononthetheApplication
ApplicationForm.
Form.
Put the name(s) of any joint Applicant(s) and/or account description using < > as indicated above in designated spaces at section C on the Application Form.
Corporate Directory

Issuer’s Registered Office Investigating Accountant

Scottish Pacific Group Limited Deloitte Corporate Finance Pty Limited
Level 5, 20 Bond Street Grosvenor Place, 225 George Street
Sydney NSW 2000 Sydney NSW 2000

Financial Advisers Tax Due Diligence Adviser

Reunion Capital Partners Pty Ltd Ernst and Young
Level 10, 56 Pitt Street Level 33, Ernst and Young Centre, 680 George Street
Sydney NSW 2000 Sydney NSW 2000
Grant Samuel Securities Pty Limited
Level 19, Governor Macquarie Tower, 1 Farrer Place Share Registry
Sydney NSW 2000 Link Market Services Limited
Level 12, 680 George Street
Joint Lead Managers Sydney NSW 2000
Goldman Sachs Australia Pty Ltd
Level 46, Governor Phillip Tower, 1 Farrer Place Co-Managers
Sydney NSW 2000 Commonwealth Securities Limited
Ground Floor, Tower 1, 201 Sussex Street
Citigroup Global Markets Australia Pty Ltd
Sydney NSW 2000
2 Park Street
Sydney NSW 2000 Bell Potter Securities Limited
Level 38, Aurora Place, 88 Phillip Street
Australian Legal Advisers Sydney NSW 2000
PricewaterhouseCoopers
Freshwater Place Scottish Pacific Offer Information Line
Level 19, 2 Southbank Boulevard Inside Australia: 1800 236 994
Southbank VIC 3006 Outside Australia: +61 1800 236 994

Auditor Offer Website

Deloitte Touche Tohmatsu www.scottishpacific.com
Grosvenor Place, 225 George Street
Sydney NSW 2000 Corporate Website
www.scottishpacific.com

www.colliercreative.com.au  #SC0001