R.A.C.V. Finance Limited

Transcription

1 R.A.C.V. Finance Limited Prospectus No. 35 R.A.C.V. Finance Limited ABN

2 Important Information Prospectus This Prospectus relates to the offer by R.A.C.V. Finance Limited ABN (referred to throughout this Prospectus as the Company, we, us or our ) of Notes (Offer). This Prospectus is dated 7 October 2016 and a copy of this Prospectus was lodged with the Australian Securities and Investments Commission (ASIC) on that date. ASIC takes no responsibility for the content of this Prospectus or the merits of the offer to which this Prospectus relates. This Prospectus expires on the date which is 13 months after 7 October 2016 (Expiry Date) and no Notes will be issued on the basis of this Prospectus after the Expiry Date. RACV Finance will not offer Notes under this Prospectus once $45 million is raised. This Prospectus is only relevant for investors and potential investors in Notes and should not be used for any other purpose. Exposure period The Corporations Act prohibits us from processing Applications to subscribe for Notes under this Prospectus in the seven day period after the date of lodgement of this Prospectus (Exposure Period). This period may be extended by ASIC by up to a further seven days. This 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 certain 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 preference will be conferred on Applications received during the Exposure Period. Offer Period The Offer Period will run from 15 October 2016 (Opening Date) to 7 November 2017 (Closing Date) unless varied by the Company. The key dates for the Offer are indicative only and subject to change without notice. We may vary the timetable, including to close the Offer early, extend the Closing Date or to withdraw the Offer at any time. If any of the dates are changed, subsequent dates may also change. Status of Notes Notes can be described as secured notes for the purposes of the Corporations Act (as modified by ASIC Class Order [CO 12/1482]). Notes are not guaranteed by the Company or RACV. If you choose to invest in Notes, you will be lending money to the Company and will be exposed to the risk that the Company may be unable to repay that money at the Maturity Date or on any earlier redemption date. Investment products, such as the Notes, are subject to risks which could affect their performance. Information about the key risks of investing in Notes is detailed in section 5 of this Prospectus. No representations other than in this Prospectus No person is authorised to provide any information or to make any representation in connection with the Offer that is not contained in this Prospectus or the Trust Deed. Any information or representation not contained in this Prospectus or the Trust Deed may not be relied upon as having been authorised by the Company. Except as required by law, and only to the extent so required, neither the Company nor any other person warrants or guarantees the future performance of the Company, or any return on any investment made pursuant to this Prospectus. Responsibility Statement of RACV and the Trustee This Prospectus and the Notes issued under it are issued by the Company and not RACV. RACV: does not guarantee the obligations of the Company; has given and has not, before the lodgement of this Prospectus with ASIC, withdrawn its written consent to be named in this Prospectus in the form and context in which it is named; has not made any statement in this Prospectus or any statement on which a statement made in this Prospectus is based; has not caused or authorised the issue of the Prospectus; and to the maximum extent permitted by law, expressly disclaims all liability in respect of, and takes no responsibility for, any statements in or omissions from this Prospectus. The Trustee, The Trust Company (Australia) Limited: has given and has not, before the lodgement of this Prospectus with ASIC, withdrawn its written consent to be named in this Prospectus in the form and context in which it is named; has not made any statement in this Prospectus or any statement on which a statement made in this Prospectus is based; has not caused or authorised the issue of the Prospectus; and to the maximum extent permitted by law, expressly disclaims all liability in respect of, and takes no responsibility for, any statements in or omissions from this Prospectus. Prospectus does not provide investment advice The information provided in this Prospectus is not investment advice and has been prepared without taking into account your investment objectives, financial situation or particular needs (including financial and taxation issues). It is important that you read and consider the information in this Prospectus in full before deciding to invest in Notes and consider the risks that could affect the performance of Notes. If you have any questions, you should seek advice from your financial adviser or other professional adviser before deciding to invest in Notes. Obtaining a Prospectus and Application Form Paper copies of this Prospectus and an Application Form can be obtained free of charge during the Offer Period by calling us on (03) or (Monday to Friday 9:00am 5:00pm, Melbourne time) during the Offer Period. This Prospectus (and, during the Offer Period, the Application Form) can also be obtained electronically from Electronic access to the Prospectus This Prospectus is available to Australian investors within Australia in electronic form at The Offer constituted by this Prospectus in electronic form is available only to persons accessing and downloading or printing the electronic copy of the Prospectus within Australia and is not available to persons in any other jurisdictions (including the United States) without our prior approval. Persons in Australia having received a copy of this Prospectus in its electronic form may, before the Closing Date of the Offer, obtain a paper copy of this Prospectus (free of charge) by telephoning the Company on (03) or (Monday to Friday 9:00am 5:00pm, Melbourne time). Applications for Notes may only be made on an Application Form that is attached to or accompanying this Prospectus following the opening of the Offer. A printable version of this Prospectus may be downloaded in its entirety from If you access an electronic copy of this Prospectus, then you should read Electronic access to Prospectus in section 8.8 for further information. Restrictions on foreign jurisdictions The distribution of this Prospectus, and the offer or sale of Notes, may be restricted by law in certain jurisdictions. Persons who receive this Prospectus outside Australia must inform themselves about and observe all such restrictions. Nothing in this Prospectus is to be construed as authorising its distribution, or the offer or sale of Notes, in any jurisdiction other than Australia without the prior express approval of the Company and the Company does not accept any liability in that regard. Further, Notes may not be offered or sold, directly or indirectly, and neither this Prospectus nor any other offering material may be distributed or published, in any jurisdiction except under circumstances that will result in compliance with any applicable law or regulations. The Company reserves the right to offer Notes under the Offer to investors outside Australia where to do so without a prospectus or other formal document being prepared would not be in breach of the securities law requirements of the relevant jurisdiction. Financial information and forward looking statements Section 7 sets out in detail the financial information referred to in this Prospectus. All financial amounts contained in this Prospectus are expressed in Australian dollars unless otherwise stated. Any discrepancies between totals and sums of components in tables contained in this Prospectus are due to rounding. This Prospectus contains forward looking statements which are identified by words such as may, could, believes, estimates, expects, intends and other similar words that involve risks and uncertainties. Any forward looking statements are subject to various risk factors that could cause the Company s actual results to differ materially from the results expressed or anticipated in these statements. Forward looking statements should be read in conjunction with risk factors as set out in section 5, and other information in this Prospectus. Defined words and expressions Some words and expressions used in this Prospectus have defined meanings. These words and expressions are capitalised and are defined in the Glossary in section 9. A reference to $ or cents in this Prospectus is a reference to Australian currency. A reference to time in this Prospectus is a reference to Melbourne, Victoria, Australia time. If you have any questions about Notes or the Offer, you should seek advice from your financial adviser or other professional adviser. You can also call us on (03) or (Monday to Friday 9:00am 5:00pm, Melbourne time) during the Offer Period. 1

3 Contents 1. Investment overview Information key to a decision to invest 2. ASIC benchmarks Information about whether we comply with the ASIC benchmarks 3. Key features of the Notes Information about the investment 4. Company, directors and key management Information about us and our business model, directors and key management (and their interests and the benefits they may receive) 5. Key risks Information about risks associated with the investment and us 6. Details of the Offer Further information about the Offer including how to apply 7. Financial information Financial information about us 8. Additional information Information about a number of other matters not covered elsewhere in this Prospectus 9. Glossary Glossary of key terms used throughout this Prospectus and the Application Form 2

4 1. Investment Overview Information key to an investment decision Topic Summary For more information ASIC Benchmarks Benchmark 1: An issuer should maintain a minimum equity ratio (calculated as: total equity / (total liabilities + total equity)) of 8% where only a minor part of its activity is property development or lending funds directly or indirectly for property development. Benchmark 2: An issuer should have cash flow estimates for the next three months and ensure that at all times it has cash or cash equivalents sufficient to meet its projected cash needs over the next three months. Benchmark 3: An issuer should clearly disclose its approach to rollovers, including what process is followed at the end of the investment term and how it informs those rolling over or making further investments of any current prospectus and continuous disclosure announcements. Benchmark 4: An issuer should disclose an analysis of the maturity profile of interest-bearing liabilities (including any notes on issue) by term and value, and the interest rates, or average interest rates, applicable to its debts. Benchmark 5: An issuer who directly on-lends funds or indirectly on-lends funds through a related party, should disclose the current nature of its (or the related party s) loan portfolio in relation to a range of specified aspects. Benchmark 6: An issuer who on-lends funds should disclose its approach to related party transactions, including how many loans the issuer has made to related parties, the value of those loans, the value of those loans as a percentage of total assets, the assessment and approval process the issuer follows with related party loans when loans are advanced, varied or extended and any policy the issuer has regarding related party lending. We comply with Benchmark 1 Section 2.1 We comply with Benchmark 2 Section 2.2 We comply with Benchmark 3 Section 2.3 We comply with Benchmark 4 Section 2.4 We comply with Benchmark 5 Section 2.5 We comply with Benchmark 6 Section 2.6 3

5 1. Investment Overview Benchmark 7: If an issuer is involved in or (directly or indirectly) lends money for property-related activities, the issuer should take a specified approach to obtaining and relying on valuations. Benchmark 8: If an issuer (directly or indirectly) on-lends money in relation to property related activities, the issuer should maintain the following loan-to-valuation ratios: a) where the loan relates to property development - 70% on the basis of the latest complying valuation; and (b) in all other cases - 80% on the basis of the latest complying valuation. Key features of Notes We do not comply with Benchmark 7. We do not lend funds for property development or to property developers, nor do we lend funds for use as part of an integrated property business or mortgage financing. We provide loans relating to home renovations but these are of minimal value. We therefore do not seek external valuations for home renovation purposes. We do not comply with Benchmark 8. We provide loans relating to home renovations but these are of minimal value. We therefore do not seek external valuations for home renovation purposes. Section 2.7 Section 2.8 What securities are offered? What is the relevant Interest Rate? What is the applicable term? Secured notes at an Issue Price of $1.00 per Note. The Interest Rate is set out in the Application Form and may vary from time to time. The Interest Rate applicable to your Notes will be as stated in the latest Application Form lodged with ASIC as at the date of receipt of your Application Monies (a copy of which will be provided to any person who requests a copy during the Offer) and will be fixed for the term of the Notes. Interest will be calculated on a simple basis (as opposed to a compound basis), and the calculation of interest payable is truncated to two digits after the decimal point, rather than being rounded up or down. For further information on the Interest Rate, you can call us on (03) or (Monday to Friday 9.00am 5.00pm, Melbourne time) during the Offer Period or visit our website, You may choose the term of Notes from the options provided in the latest Application Form. Section 3.1 Section 3.2 Section 3.2 4

6 1. Investment Overview When is Interest paid? You may choose to have Interest paid quarterly or annually for Notes with a term of 1 or more years. For Notes with a term of 6 months, Interest will be paid on Maturity Date. Section 3.3 What will happen at the end of the term of Notes? How are Notes redeemed by you? Can the Notes be redeemed by you prior to the Maturity Date? Are the Notes transferable? How are Notes secured and what is the ranking of Notes? On the last day of the term of a Note, its Maturity Date, Notes will be rolled-over unless we receive a request from you before that date that those Notes be redeemed on their Maturity Date. You may redeem Notes on their Maturity Date by giving us valid notice in writing which is received by us before that date. No, except in limited circumstances at our complete discretion. Yes, but we reserve the right to refuse a transfer. The repayment of Notes has been secured by the registration of a first ranking security interest under the Personal Property Securities Act in favour of the Trustee over our assets, tangible and intangible (including goodwill, undertaking, uncalled capital and called but unpaid capital) in accordance with the Trust Deed. In the event of a winding up of the Company, Notes issued under the Trust Deed will rank: behind all obligations of the Company mandatorily preferred by law (such as employee entitlements); equally amongst themselves and other notes issued from time to time under the Trust Deed which also have the benefit of the first ranking security; and ahead of all unsecured creditors and holders of ordinary shares of the Company. In the event the Company is wound up, Noteholders will be entitled to receive repayment of the face value applicable to each Note held by Noteholders, and any accrued unpaid Interest, only after any debts of the Company that are mandatorily preferred by law are paid in full. The Notes are not bank deposits and we do not guarantee repayment of your investment or Interest. Section 3.4 Section 3.4 Section 3.5 Section 3.6 Section 3.7 Section 3.8 Company, directors and key management What is the nature of the Company's business and business model? We operate a finance business that provides loans and leases principally to facilitate the purchase of motor vehicles by consumers and businesses. We provide finance to borrowers from funds raised from the offer of notes under prospectuses (including the Notes). Funding for lending is also sourced externally using a wholesale facility in place with a major Australian bank. Section 4.1 5

7 1. Investment Overview Summary of director and key management details Graeme Douglas Willis was appointed a non-executive director of the Company in 2012 and is the current Chairman of the Board. Kevin William White was appointed a non-executive director of the Company in Mr White is President and Chairman of RACV. Patricia Maree Kelly was appointed a non-executive director of the Company in Neil Taylor was appointed an executive director of the Company in He is the Managing Director and Chief Executive Officer of RACV. Philip Charles Turnbull was appointed an executive director of the Company in He has over 27 years of senior management experience, predominately in the financial services industry and has been an Executive General Manager for RACV with management responsibility encompassing R.A.C.V. Finance Limited since June Gordon Douglas Oakley joined the Company in September 2016 as General Manager and prior to this had over 25 years of senior management experience including ten years in financial services. Sections 4.2 (a) & (b) Summary of interests of directors All directors receive compensation for any services to the Company from RACV (not from the Company directly), including reimbursement for any travelling or other expenses incurred by the directors. As such, no additional fees are paid to the directors by the Company. Directors have no interests in any shares in the Company. Directors may invest in notes in the Company including Notes under this Prospectus. To the extent permitted by law, RACV has indemnified each director, secretary and officer against a liability arising from their role as directors and officers, by paying premiums on an insurance contract. This insurance contract prohibits disclosure of the premium paid. No liabilities have arisen under these indemnities as at the date of this Prospectus. Section 4.2 (d) Summary of related party transactions Fees and charges resulting from transactions within the RACV Group include: Fee paid for distribution, marketing and corporate services to RACV Sales & Marketing Pty Ltd; Fee paid for IT, telecommunication and administrative services to RACV Group Services Pty Ltd; Property rental fee paid to RACV Property Investments Pty Ltd; and Commission paid for business referrals to RACV Salary Solutions Pty Ltd. Section 4.2 (e) 6

8 1. Investment Overview Key risks Risk of non-repayment Interest Rate Top up risk Liquidity risk (associated with Notes) Fraud risk Licences and other approvals Regulation and changes to regulation Operational risks We do not guarantee repayment of your investment or Interest. Our investments are not bank deposits and there is a risk that you may lose some or all of the money you invest in Notes and any Interest that has accrued but remains unpaid. The Interest Rate is fixed at the time of Issue. Over the term of the Notes, there is a risk that the return on the Notes may become less attractive compared to returns on other investments, including investments which carry fixed interest rates. On the Maturity Date, you may choose to have your Notes repaid or rolled over. We will contact you in writing at least 14 days prior to the Maturity Date, setting out the options you have on maturity of your Notes and seeking your instructions in this regard. The Interest Rate is fixed at the time of Issue and may be less than the indicative Interest Rate set out in the Maturity Letter. There is no official secondary market for the Notes. There is no guarantee you will be able to transfer Notes at an acceptable price or at all. We are not required to redeem the Notes prior to the Maturity Date, although we may consider early redemption in special circumstances. Generally, we will not consider any partial redemption of Notes prior to the Maturity Date. While we have procedures in place which are designed to minimise the potential for unauthorised redemptions of your Notes, we cannot guarantee that these procedures will protect your investment from fraud. The provision of consumer finance by us in Australia is governed by regulations and through the conditions of an Australian credit licence granted by ASIC. The Company must comply with relevant regulations and the conditions of its licence. Any non-conformance could lead to a range of disciplinary actions including cancellation of our credit licence. The regulation of finance activities is primarily the responsibility of Federal Government. Regulation is subject to change and the Company has no control over regulations that apply to its current or proposed activities. We may encounter failures in internal processes, human or system error, or other adverse outcomes due to external events. Section 5.1 (a) Section 5.1(b) Section 5.1 (c) Section 5.1 (d) Section 5.1 (e) Section 5.2(a) Section 5.2(b) Section 5.2 (c) 7

9 1. Investment Overview Credit risk We have provided and will continue to provide loans to eligible entities. There is a risk that these entities will fail to repay the outstanding principal and/or interest owing and the security (if any) provided by these entities may be insufficient to repay outstanding principal and/or interest payments owing to us. Section 5.2 (d) Distribution Channel risk Interest rate risk Liquidity risk (associated with the Company) Risks associated with economic conditions Legal/ regulatory and reputational risk Risks associated with access to funding and capital There is a risk that our sister automotive clubs may terminate arrangements whereby the Company distributes loans on their behalf. There is a re-pricing risk due to the mismatch between the interest rate on our borrowings to that of our lending. A mismatch occurs when the margin between the income from the loans portfolios and the cost of funding from the Notes and Banking Facility varies from what is originally planned. There is a risk that we may not have sufficient cash to meet our cash needs in future. We may be adversely affected by any deterioration in the general economic conditions in the local, state, national and international economy. We may in the future encounter legal, regulatory or other issues that may negatively impact on the Company (e.g. potential conflicts of interest, legal and regulatory requirements, issues of ethics, money laundering laws, privacy, information security policies, sales and trading practices and conduct of other companies within the RACV Group). We are required to maintain sufficient cash and available funding through an adequate amount of committed credit facilities. If we fail to appropriately manage our liquidity position, or if markets are not available generally or to us specifically, at the time of any financing or refinancing that we require, there is a risk that our business, prospects and financial flexibility may be adversely affected. Section 5.2 (e) Section 5.2 (f) Section 5.2 (g) Section 5.2 (h) Section 5.2 (i) Section 5.2 (j) Details of the Offer What is the Offer? What is the purpose of the Offer? How will funds raised under the Offer be used by the Company? This Prospectus relates to the offer of Notes to be issued by the Company. The Issue Price for each Note is $1.00. The net proceeds of the Offer will be used to fund our lending portfolio. Section 6.1 Section 6.2 8

10 1. Investment Overview What are the borrowing limitations under the Trust Deed? What are the tax implications of investing in Notes? Is there any brokerage, commission or stamp duty payable? Can the Offer be withdrawn? Where can I find out more information about this Prospectus or the Offer? How can I apply? What are the minimum and maximum subscriptions under the Offer? The borrowing limitations are: - secured liabilities (which includes Prospectus investments) to not exceed 85% of the amount of the tangible assets of the Company and any guarantor bodies (Total Tangible Assets) (there are presently no guarantor bodies); - prior secured liabilities (which excludes Prospectus investments) to not exceed 10% of Total Tangible Assets; and - external liabilities (which includes Prospectus investments) to not exceed 93.75% of Total Tangible Assets. You should seek professional tax advice that takes into account your particular circumstances before deciding whether to invest in Notes. No brokerage, commission or stamp duty is payable by you on your application for Notes. Yes, we may withdraw the Offer at any time prior to the Issue of Notes without prior notice to you. If you have any questions about Notes or the Offer, you should seek advice from your financial adviser or other professional adviser. You can also call us on (03) or (Monday to Friday 9.00am 5.00pm, Melbourne time) during the Offer Period or visit our website, To apply for Notes, you must complete an Application Form attached to the Prospectus and lodge your Application and accompanying cheque, money order or cash with us. Cash will only be accepted at an RACV retail shop. Applications will be accepted with a minimum subscription of $5,000 and a maximum subscription of $5,000,000 per investor. Section 6.3 Section 6.4 Section 6.5 Section 6.6 Section 6.7 Section 6.8 Section 6.8 Key financial information Dividend It is currently anticipated (as at the date of this Prospectus) that the Company will not pay a dividend to its parent company, RACV Holdings Pty Ltd in the financial year Section 7 After tax operating profit During the half year ended 30 June 2016, we reported an after tax operating profit of $4.0 million compared to $4.7 million for the previous period, 1 year earlier. Section 7 Summary of abbreviated balance sheet During the one month ended 31 July 2016, we have retained a strong financial position with additional profit of $354k. Our loan and lease receivables, our member investments and our bank debt have all increased. Section 7 9

11 1. Investment Overview Unused credit facilities As at 31 July 2016 we had $7.6m worth of unused credit facilities on a limit of $100m. Section 7 Capital raising The Company monitors its financial position to ensure that it continues to comply with its debt covenants under both the Trust Deed and Banking Facility. The Company may require additional Group funding to comply with such covenants, which may be by way of an unsecured, interest free loan of up to $5 million, payable to the Company by RACV as and when required and as approved by the RACV Board. Any amounts paid to the Company by RACV pursuant to the loan arrangements are repayable on demand. The repayment of Notes issued under the Trust Deed (and any other repayments due to other secured creditors) will rank ahead of RACV (in its capacity as an unsecured creditor and in respect of the loan amount) in the event of a winding up of the Company. Section 7 10

12 2. ASIC Benchmarks Information about whether the Company complies with ASIC benchmarks. ASIC Regulatory Guide 69 sets out eight benchmarks that issuers of notes need to address in a prospectus. Compliance with the benchmarks is not mandatory, however an issuer is required to disclose whether the benchmarks are satisfied in its particular circumstances and if not, why not, so as to assist you in understanding the risks and rewards being offered prior to making an investment decision. 2.1 Benchmark 1 Equity ratio An issuer should maintain a minimum equity ratio (calculated as: total equity / (total liabilities + total equity)) of 8% where only a minor part of its activity is property development or lending funds directly or indirectly for property development. We satisfy Benchmark 1. Only a minor part of our activity is property development or lending funds directly or indirectly for property development. As at 31 July 2016 our equity ratio was 15.13%, compared with 16.95% as at 31 July Benchmark 2 Liquidity An issuer should have cash flow estimates for the next three months and ensure that at all times it has cash or cash equivalents sufficient to meet its projected cash needs over the next three months. We satisfy Benchmark 2. We maintain cash flow estimates on a rolling three month basis and ensure that at all times we have on hand cash or cash equivalents sufficient to meet our projected cash needs over the next three months. We do not have a policy of directly matching investments and loan maturities. However, over the past two years greater than 71.5% of funds invested in notes have been invested for up to a two year term and the majority of loans lent to borrowers over the past two years have been repaid within two years and nine months. In estimating cash flows, we take into account a reasonable estimate of rollovers based on our previous experience over the past financial year. Material assumptions underlying cash flow projections include analysis of recent actual investment and loan movements and consideration of budget projections, but exclude new fundraising and new lending business. Cash flows for the three months to 31 October 2016 are estimated to be as follows: Assuming a 85% retention rate for maturing investments (i.e. notes) Inflows $86M Outflows $51M Excess cash $35M We periodically stress test our liquidity assumptions. For example, if we assume that the retention rate of our maturing investments is 50% rather than the more usual 85%: Stress test Inflows $70M Outflows $51M Excess cash $19M To ensure that at all times we have cash on hand or cash equivalents sufficient to meet our projected cash needs over the next three months, a Banking Facility is available to draw down as required. 11

13 2. ASIC Benchmarks 2.3 Benchmark 3 Rollovers An issuer should clearly disclose its approach to rollovers, including what process is followed at the end of the investment term and how it informs those rolling over or making further investments of any current prospectus and continuous disclosure announcements. We satisfy Benchmark 3. On the Maturity Date, you may choose to have your Notes repaid or rolled over. We will contact you in writing at least 14 days prior to the Maturity Date, setting out your options on maturity of your Notes and seeking your instructions. If you do not provide instructions by the Maturity Date, the Notes will be automatically rolled-over on the same terms and conditions as the maturing investment at the then current interest rate. We update our website, with current continuous disclosure announcements, including any new or supplementary prospectus. 2.4 Benchmark 4 Debt maturity An issuer should disclose an analysis of the maturity profile of interest-bearing liabilities (including any notes on issue) by term and value, and the interest rates, or average interest rates, applicable to its debts. We satisfy Benchmark 4. A maturity analysis of our interest-bearing liabilities as at 31 July 2016 is set out below: interest bearing liabilities $000 s Up to 1 month 19,488 Longer than 1 & no longer than 3 months 120,821 Longer than 3 & no longer than 12 months 82,055 Longer than 1 year & no longer than 5 years 58,536 Total 280,900 Average rate 3.27% 12

14 2. ASIC Benchmarks 2.5 Benchmark 5 Loan portfolio An issuer who directly on-lends funds or indirectly on-lends funds through a related party, should disclose the current nature of its (or the related party s) loan portfolio in relation to a range of specified aspects. We satisfy Benchmark 5. A summary of the nature of our loan portfolio as at 31 July 2016 is set out below: loans (by number and value) Categories Numbers Value # $000 s Consumer loans Secured ,697 Unsecured Interest Free 7 8 Total Consumer Loans 14, ,271 Business loans Novated Leases 3, ,058 Business Goods Mortgage ,029 Commercial Hire Purchase Total Business Loans 4, ,275 Total loans 19, ,546 Note: Business loans are quoted inclusive of deferred income and GST. loans maturity analysis (by term and value) Loan receivables $000 s Up to 1 month 5,872 Longer than 1 & no longer than 3 months 11,739 Longer than 3 & no longer than 12 months 51,069 Longer than 1 year & no longer than 5 years 153,179 Longer than 5 years 5,515 Total 227,374 Average rate 8.75% Note: The values of loan receivables in the table above are consistent with the benchmark requirements but do not match values in the balance sheet as they indicate actual amounts owed by debtors and do not include accounting entries such as provisions and amortisation or accrued interest. Lease receivables $000 s Less than 1 year 45,736 Longer than 1 year & no longer than 5 years 82,320 Total 128,056 Average rate 7.12% Note: Lease receivables are quoted inclusive of deferred income and GST. 13

15 2. ASIC Benchmarks loans by class of activity and geographic region (by number and value) Our business is predominantly the providing of loans to consumers in Victoria. Below is a breakdown of loans by class of activity and geographic region. State Consumer loans Business Loans & Leases $000 s # % value $000 s # % value Victoria 92,110 6, ,062 1, Queensland 63,857 4, , New South Wales 45,888 2, , Other States and Territories 15, ,429 1, TOTAL 217,042 14,624 = 100% 138,260 4,500 = 100% Note: Business loans by geographic region are quoted inclusive of deferred income and GST. proportion of loans in default or arrears (by number and value) Total loans in arrears greater than 30 days are targeted to not exceed 2% of total value of loans. Loans greater than 30 days in arrears Numbers Amount # $000 s Consumer loans days days days Business loans days days days Total Arrears 119 1,331 Proportion of total loans 0.62% 0.37% proportion of renegotiated loans within the past 3 months that were greater than 30 days in default/arrears (by number, value and percentage) Numbers % of total Nbr $000 s % of total value Total renegotiated , proportion of loans subject to legal proceedings (by number, value and percentage) Numbers % of total Nbr $000 s % of total value Total loans subject to legal proceedings proportion of the total loan monies lent on a secured basis and nature of the security (by number and value) The proportion of loans that are secured is: Numbers % of total Nbr $000 s % of total value Total secured 19, , Nature of security The secured asset for all loans remains the property of the Company until the final payment is made. All loans secured by a tangible asset identifiable by a serial number will be subject to a security which is recorded in the Personal Property Securities Register (PPSR). 14

16 2. ASIC Benchmarks proportion of the total loan monies lent to its largest borrower (by number and value) The largest single borrower holds three novated lease agreements with an outstanding balance of $198,000 representing 0.06% of the total loan portfolio and 0.02% of the total number of borrowers. proportion of the total loan monies lent to its 10 largest borrowers (by number and value) Our 10 largest borrowers hold 16 loans with balances totalling $1.5 million representing 0.40% of the total loan portfolio and 0.08% of the total number of borrowers. Company s approach to taking security in relation to its lending Security is taken over an asset where possible. Secured loans are for motor vehicles where security is taken over the vehicle in the form of a security which is recorded in the PPSR. Our interest on the PPSR is not usually released until the final payment is made. Where there may be a shortfall in security held over the motor vehicle, a caveat may be placed over real estate property of the borrower or treated as unsecured. Company s approach to loan portfolio diversification We minimise concentrations of credit risk in relation to all categories of loans by diversification. This is achieved by undertaking transactions with a large number of customers over many sectors and industries. In addition, security is taken over an asset where possible. policy of how and when the Company will lend funds We have a lending policy based on critical factors in lending assessment. The critical factors in assessing loan applications are credit history of the borrower, the borrower s capacity to repay and collateral for securing the amount borrowed. Our loan policy assists in reducing bad debts by minimising loans to high risk borrowers to no more than 3% of the total loan portfolio. This portion of the portfolio stands at 0.81% as at 31 July Company s approach to loans in default All loans past due are managed on an individual basis to ensure recovery action is prompt and on a timely basis. Currently, past due loans are issued a default notice if a payment is 60 days overdue. The default notice states that if the overdue payment is not made within 35 days of the notice, steps will be taken to repossess the vehicle or other asset secured. Although various steps are taken to repossess a vehicle or other secured asset within the specified time frame, recovery of assets or monies owed is not always achieved within the target 90 day period due to various procedural hurdles. In certain cases, we will seek to enter into alternative arrangements whereby a borrower has a longer period of time to repay moneys owed if it is likely that we stand a greater chance of minimising losses, or such arrangements are in line with our broader business plans. 15

17 2. ASIC Benchmarks 2.6 Benchmark 6 Related party transactions An issuer who on-lends funds should disclose its approach to related party transactions, including how many loans the issuer has made to related parties, the value of those loans, the value of those loans as a percentage of total assets, the assessment and approval process the issuer follows with related party loans when loans are advanced, varied or extended and any policy the issuer has regarding related party lending. We satisfy Benchmark 6. As at 31 July 2016, we had no loans to related parties (other than in relation to 6 loans with an aggregate value of $262,406 to staff of the Company and RACV on the same terms as any other borrower. These loans represent 0.07% of our total assets). Loans to related parties are not part of our business strategy. Our policy in relation to related party lending is that any such transactions are conducted on a commercial basis on conditions no more favourable than those available to members or employees. Related party loans are not subject to the approval of the Trustee. 2.7 Benchmark 7 Valuations If an issuer is involved in or (directly or indirectly) lends money for property-related activities, the issuer should take a specified approach to obtaining and relying on valuations. We do not satisfy Benchmark 7. Of our total loan portfolio, less than 0.96% represents propertyrelated activities, which are primarily loans provided for home renovations. We do not lend funds for property development or to property developers, nor do we lend funds for use as part of an integrated property business or mortgage financing. Given that the value of loans relating to home renovations as at 31 July 2016 is $3.4 million on a total portfolio of $356 million, we do not seek external valuations for home renovation purposes. Accordingly, we do not satisfy Benchmark 7 in relation to loans provided for home renovations (being property-related activities). 2.8 Benchmark 8 Lending principles Loan-to-valuations ratios If an issuer (directly or indirectly) on-lends money in relation to property-related activities, the issuer should maintain the following loan-to-valuation ratios: (a) where the loan relates to property development - 70% on the basis of the latest complying valuation; and (b) in all other cases - 80% on the basis of the latest complying valuation. As with Benchmark 7, given that the value of loans relating to home renovations as at 31 July 2016 is $3.4 million on a total portfolio of $356 million, we do not seek external valuations for home renovation purposes. Accordingly, we do not satisfy Benchmark 8 in relation to loans provided for home renovations (being property-related activities). 16

18 3. Key features of the Notes Information about the Notes 3.1 What is being offered? This Prospectus relates to the offer of secured notes to be issued by the Company (Notes). An investment in the Notes is a loan to us which pays Interest in arrears on the principal amount. The Issue Price for each Note is $1.00. Each Note is issued on and subject to the provisions of the Trust Deed. 3.2 What is the relevant Interest Rate and term? The applicable Interest Rates and terms available for Notes are set out in the Application Form (pursuant to ASIC Corporations (Debenture Prospectuses) Instrument 2016/75). The applicable Interest Rate varies depending on the investment option that you choose. The Interest Rates may change from time to time during the term of this Prospectus. The effective Interest Rates from time to time will be as set out in the most recent Application Form lodged with ASIC. You should confirm the applicable Interest Rates and terms with us before completing the Application Form by either checking the website at or telephoning us on (03) or (Monday to Friday 9:00am 5:00pm, Melbourne time). If we accept your application for Notes, the applicable Interest Rate will be fixed for the relevant term of the Notes and will not be affected by any subsequent changes to Interest Rates offered. Interest will be calculated on a simple basis. If the Application Form completed by you specifies an incorrect Interest Rate or term or both, you will be notified of the error and we will advise you of the correct Interest Rate and term and issue you with the Notes. Following receipt of such notice, you will have one month from the date of the notice to: withdraw your Application and be repaid; or request a different term at the correct Interest Rate. If you do not withdraw your Application or request a different term for your investment within one month of the date of such notice, we will invest the Application Monies provided by you in Notes at the correct Interest Rate and term set out in the notice. In addition, if an Application Form completed by you specifies an incorrect Interest Rate or term or both, we may treat your Application and Application Monies in such other ways as may be permitted by law. We may offer different Interest Rates and terms to you from time to time. 3.3 When is Interest paid? (a) Calculation of Interest The Interest Rate is set out in the Application Form and may vary from time to time. The Interest Rate applicable to your Notes will be as stated in the latest Application Form (as at the date of receipt of your Application Monies) and will be fixed for the term of the Notes. Interest will be calculated on a simple basis (as opposed to a compound basis), and the calculation of interest payable is truncated to the two digits after the decimal point, rather than being rounded up or down. (b) Payment of Interest Interest is paid in accordance with the investment option you choose when completing the Application Form. You may choose to have Interest paid quarterly, six monthly or annually. The first Interest period in respect of a Note runs from the date of receipt of your Application Monies until (but excluding) the first Interest payment date. Subsequent Interest periods run from the preceding Interest payment until (but excluding) the next Interest payment date, or Maturity Date whichever occurs sooner. Term of one or more years: Interest Paid Quarterly If you elect to have Interest paid quarterly, Interest will be paid by us on the last business day of February, May, August and November of each year and on the Maturity Date or the next business day. If your Application Form is received within seven days before the end of a quarter, the Interest for the remaining days in that quarter will be added to the amount due on the next succeeding quarterly Interest date. Term of one or more years: Interest Paid Annually If you elect to have Interest paid annually, Interest will be paid by us annually on or about the anniversary of the investment, or at the Maturity Date if occurring sooner. Term of six months If you elect to acquire Notes with a term of six months, Interest will be paid on the Maturity Date. Method of Interest payment Interest payments can be made to your bank, credit union or building society if you complete the relevant details on the Application Form. Otherwise, a cheque will be posted to your mailing address. Nominating a bank account may enable you to receive your Interest more quickly. - Annual Interest statement By the end of August each year, we will send you a statement of Interest earned on the Notes during the previous taxation year (that is, the taxation year ending on the previous 30 June). 17

19 3. Key features of the Notes 3.4 How are Notes redeemed? On the Maturity Date, you may choose to have your Notes repaid or rolled over. We will contact you in writing at least 14 days prior to the Maturity Date, setting out the options you have on maturity of your Notes and seeking your instructions in this regard. If we do not receive instructions from you before the Maturity Date (for whatever reason), the Notes will be automatically rolled-over on the same terms and conditions as the maturing Notes (including as to term) at the then current Interest Rate applicable to the relevant term. If you do elect to have your Notes redeemed on the Maturity Date, we will pay to you: the principal amount of the Notes due for redemption; plus any outstanding Interest. Where a Note term matures on a day that is not a Business Day (for example a weekend or public holiday), payment will be made on the next Business Day. 3.5 Can the Notes be redeemed prior to the Maturity Date? Notes will only be redeemed prior to the Maturity Date, without an Interest adjustment, to executors or administrators of deceased estates. In addition, we may consider sympathetically a written request by you to redeem the whole of your Notes prior to the Maturity Date for any other reason. Generally, we will not consider any request for partial redemption of Notes prior to the Maturity Date. An early redemption fee no greater than $50 may be charged at our discretion if your request for early redemption is approved. We are not obliged to agree to any such request. 3.6 Are the Notes transferable? Notes may be transferred to another party by lodging a completed transfer form with us signed by you or your authorised third party and the transferee. We reserve the right to refuse to register any transfer to a person who does not have a registered address in Australia or to any other person in our absolute discretion. 3.7 How are Notes secured and what is the ranking of Notes? The repayment of Notes has been secured by the registration of a first ranking security interest under the Personal Property Securities Act in favour of the Trustee over our assets, tangible and intangible (including goodwill, undertaking, uncalled capital and called but unpaid capital) in accordance with the Trust Deed. Notes may be described as secured notes for the purposes of the Corporations Act (as modified by ASIC Class Order [CO 12/1482]) because: (a) the repayment of all money has been secured by a first ranking security interest in favour of the Trustee over the whole or any part of the property of the borrower; and (b) the property that constitutes the security for the security interest is sufficient and is reasonably likely to be sufficient to meet the liability for the repayment of all such money and all other liabilities that: (i) have been or may be incurred; and (ii) rank in priority to, or equally with, that liability. In the event of a winding up of the Company, Notes issued under the Trust Deed will rank: behind all obligations of the Company mandatorily preferred by law (such as employee entitlements); equally amongst themselves and other notes issued from time to time under the Trust Deed which also have the benefit of the first ranking security; and ahead of all unsecured creditors and holders of ordinary shares of the Company. In the event of a winding up of the Company, Noteholders will be entitled to receive repayment of the face value applicable to each Note, and any accrued but unpaid Interest, only after any debts of the Company that are mandatorily preferred by law are paid in full. The Company may incur more debt than it currently has or issue further notes on similar or different terms to the Notes which rank equally with the Notes. The Company may grant security over its assets, wherever situated, in respect of existing or any future obligations at its absolute discretion. 3.8 Not bank deposits The Notes are not bank deposits and we do not guarantee repayment of your investment or Interest. Further, we are not authorised under the Banking Act nor supervised by APRA. Your investment will not be covered by the depositor protection provisions in section 13A of the Banking Act. 18

20 4. Company, directors and key management Information about the Company, its business model, directors and key management (and their interests and the benefits they may receive) 4.1 Company profile The Company was established as an unlisted public company and wholly owned subsidiary of RACV in 1984 with a focus on the provision of finance for the acquisition of new and used motor vehicles and personal loans to members of RACV. Prior to this date, we had been distributing motor and personal loans to members in an agency relationship with Commercial and General Acceptance Ltd for twenty years. We continue to operate a finance business that has three main lending products (being consumer loans, business loans and leasing) all predominantly related to the purchase of motor vehicles by borrowers. We provide finance to borrowers from funds raised from the offer of notes under a prospectus (including the Notes). Funding for lending is also sourced externally using a Banking Facility in place with a major Australian bank. Loans provided by us are predominantly secured loans. We take security over the motor vehicle acquired by the borrower or security over another asset of the borrower, including real property. We also provide borrowers with leasing options to finance motor vehicles. Whilst the majority of the Company s lending is to borrowers and members of RACV purchasing motor vehicles in Victoria, this geographic concentration is slowly changing with the provision of finance through distribution channels in the other Australian States particularly Queensland and New South Wales. Novated leases from RACV Salary Solutions, will enhance the diversification of loans within States other than Victoria. The Company will continue to explore new distribution channels. The main competition to the Company is predominantly with the major banking and financial institutions in Australia which provide finance for the purchase of motor vehicles. We are a borrowing corporation under the Corporations Act. We report quarterly to the Trustee and ASIC in accordance with section 283BF of the Corporations Act. We also successfully applied for an Australian credit licence (No ) which was granted on 10 February A licence is required by a credit provider in offering consumer credit products to borrowers under the National Consumer Credit Protection Act 2009 [Cth] (NCCP Act). ASIC is responsible for supervision of compliance with the NCCP Act. Our objectives when managing capital are to safeguard our ability to continue as a going concern and to comply with externally imposed capital requirements. The Trust Deed imposes borrowing limitations on us as discussed in section 6.3. Detailed budgeting is performed to ensure we comply with the Trust Deed requirements. We have a commitment from RACV for an increase in our capital base by $10 million should the secured liabilities to tangible assets ratio reach 83.5% to assist us not to breach the borrowing limitations imposed under the Trust Deed. Under a subscription agreement with a major Australian bank, we have a financial undertaking (which assists us) to ensure that our gearing ratio is less than or equal to 0.85 times. This ratio is calculated as interest bearing liabilities divided by interest bearing liabilities plus equity. The gearing ratio as at 31 July 2016 was 0.84 (31 July 2015: 0.83). We were in compliance with our capital requirements throughout the financial year. 19

21 4. Company, directors and key management 4.2 Directors and key management (a) Board of directors Our directors bring to the Board relevant expertise and skills, including corporate and financial experience. Director Position Experience, qualifications and expertise Graeme Douglas Willis Chairman Graeme Willis was appointed a director of the Company in 2012 and is the current Chairman of the Board. He is a Senior Fellow of the Financial Services Institute of Australasia, Fellow of the Australian Institute of Company Directors and The Chartered Institute of Bankers in Scotland. He attended the Harvard Business School Management Development Program. Mr Willis is currently managing partner of HSW Capital Pty Ltd and former Chief Operating Officer and Group Head of Enterprise Risk with two major European banks and State Corporate Manager and Chief Credit Officer for a major Australian bank. Currently, Mr Willis is also a non-executive director of Victorian Teachers Mutual Bank. Kevin William White Patricia Maree Kelly Neil Taylor Philip Charles Turnbull Nonexecutive director Nonexecutive director Executive director Executive director Kevin William White was appointed a director of the Company in 2014 and is the current President and Chairman of RACV. He is currently Executive Chairman of Easton Investments Limited, a financial services company listed on the Australian Stock Exchange. He was formerly a non-executive director and Deputy Chairman of Insurance Manufacturers of Australia Pty Ltd, Managing Director of WHK Group Limited and a non-executive director of IOOF Holdings Limited. Patricia Maree Kelly was appointed a director of the Company in Over 35 years experience in the Financial Services Industry. Former Executive General Manager Strategy and Business Development Personal Insurance at Suncorp, General Manager at AAMI and previously Director and Executive Life and Superannuation at Norwich Union. Past President and Honorary Life Member of the Insurance Institute of Victoria and a former director of the Australian and New Zealand Institute of Insurance and Finance. Currently, Ms Kelly is also a non-executive director of Ansvar Ltd and the Legal Practitioners Liability Committee. Neil Taylor was appointed a director of the Company in March He holds the qualifications of a BA in Geography from Leeds University, UK, and has completed courses at both Wharton and Harvard Business Schools in the US. Mr Taylor is Managing Director and Chief Executive Officer of RACV. Neil has over 25 years experience in the corporate sector in Australia and overseas, and was previously at Greyhound Australia as Chief Executive Officer. His current directorships include Intelematics Australia Pty Ltd, and Insurance Manufacturers of Australia Pty Ltd. Philip Charles Turnbull was appointed a director of the Company in He has over 27 years of senior management experience, predominately in the financial services industry. He holds the qualifications of Bachelor of Science with majors in pure mathematics and statistics. He is the Executive General Manager, Motoring & Mobility for RACV and has had management responsibility encompassing RACV Finance since June He is currently an alternate director for Australian Motoring Services Pty Ltd and Insurance Manufacturers of Australia Pty Ltd. He is also an executive director of various RACV subsidiaries. He was previously a director of Club Assist Corporation Pty Ltd, a worldwide battery service company. 20

22 4. Company, directors and key management As at the date of this Prospectus, each director above has confirmed to us that he anticipates being available to perform his duties as a director of the Company without constraint from other commitments. As at the date of this Prospectus, the Board considers that each of Graeme Douglas Willis, Kevin William White, Patricia Maree Kelly, Neil Taylor and Philip Charles Turnbull are free from any business or any other relationship that could materially interfere with, or reasonably be perceived to interfere with, the independent exercise of the director s judgement. (b) Key management Key management personnel are executives of the Company having authority and responsibility for planning, directing and controlling the activities of the Company. The Company s key management personnel are listed below. The key management personnel closely involve themselves in the critical areas of our activities by attending Board and committee meetings in order to discharge their responsibilities to us and to the RACV Group. Name Title Years with R.A.C.V. Finance Limited Background Philip Charles Turnbull Executive General Manager 16 years (commenced June 2000) Phil Turnbull has over 27 years of senior management experience, predominately in the financial services industry. He holds the qualifications of Bachelor of Science with majors in pure mathematics and statistics. He is the Executive General Manager, Motoring & Mobility for RACV and has had management responsibility encompassing RACV Finance since June He is currently a director of several RACV subsidiary companies. Gordon Douglas Oakley General Manager Motoring Commenced September 2016 Gordon Oakley has more than 25 years of senior management experience, with more than 10 years in financial services. He holds an MBA, Bachelor of Science, Diploma in Education and a Diploma in Computing. Mr Turnbull and Mr Oakley are employed by another entity within the RACV Group and they receive compensation for their services from this entity. As such, no compensation is paid to Mr Turnbull or Mr Oakley by the Company directly. 21

23 4. Company, directors and key management (c) Disciplinary action and insolvent companies There are no legal or disciplinary actions to be disclosed in respect of any directors or key management (or against companies that the person was a director of at the relevant time) that are less than 10 years old and are relevant to the role to be undertaken or to an investment decision in Notes. (d) Directors interests, remuneration and consent Other than as set out below or elsewhere in this Prospectus, no director or proposed director of the Company holds at the time of lodgement of this Prospectus with ASIC, or has held in the two years before lodgement of this Prospectus with ASIC, 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 has been paid or agreed to be paid, nor has any benefit been given or agreed to be given to, any director 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 as, a director of the Company. All directors receive compensation for any services to the Company from RACV (not from the Company directly), including reimbursement for any travelling or other expenses incurred by the directors. As such, no additional fees are paid to the directors by the Company. Directors have no interests in any shares in the Company. Directors may invest in notes in the Company including Notes under this Prospectus. To the extent permitted by law, RACV has indemnified each director, secretary and officer against a liability arising from their role as directors and officers, by paying premiums on an insurance contract. This insurance contract prohibits disclosure of the premium paid. No liabilities have arisen under these indemnities as at the date of this Prospectus. Each director has given their written consent to the issue of this Prospectus and all references in it to the directors being included in the form and context in which they are included, and have not withdrawn their consent prior to lodgement of this Prospectus with ASIC. 22

24 4. Company, directors and key management (e) Related party transactions The following fees and charges have resulted from transactions within the RACV Group: 2016* 2016 $ $ Fee paid for distribution, marketing and 64, ,248 corporate services: RACV Sales & Marketing Pty Ltd Fee paid for IT, telecommunication and administrative services: 98,534 1,235,191 RACV Group Services Pty Ltd Property rental fee paid: RACV Property Investments Pty Ltd 38, ,955 Commission paid for business referrals: EPAC Salary Solutions Pty Ltd 33, , ,302 2,817,272 *One month actual to 31 July 2016, (these fees were paid directly to RACV). As disclosed in section 7 of this Prospectus, the Company may also require additional funding to comply with its debt covenants under the Trust Deed and Banking Facility. The Board of RACV has approved the payment of up to $5 million by way of an unsecured, interest free loan to RACV Finance. The Company believes these transactions are on arm s length commercial terms and conditions. The risk however with related party transactions is that they might not be made with the same rigour and independence as transactions on an arm s length commercial basis. Therefore there may be a greater risk of fees and charges being greater than that available from third parties leading to an increase in expenses which may have a negative impact on the financial performance of the Company. (f) Corporate governance The Board is responsible for our overall corporate governance. It monitors our operational and financial position and performance and oversees our business strategy including approving our strategic goals. The Board is committed to maximising performance and sustaining our growth and success. In conducting business with these objectives, the Board is concerned to ensure that the Company, its directors, officers and employees operate in an appropriate environment of corporate governance. 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. The Audit & Risk Management Committee of RACV provides advice to the Board that the key risks in the Company have been appropriately identified, addressed, managed and reported. It reviews the activities of the internal and external auditor and ensures the risk management policies and framework of the Company are recommended to the Board for approval. It assists the Board to discharge its responsibilities to exercise due care, diligence and skill in relation to RACV s reporting of financial information, application of accounting policies, financial management, internal control and risk management, protection of the Company s assets and compliance with applicable laws, regulations, standards and best practice guidelines. 23

25 5. Key risks Information about risks associated with Notes and the Company By investing in Notes you will be lending money to us and may be exposed to a number of risks which can be broadly classified as risks associated with the Notes and the Company. This section describes potential risks associated with our business and risks associated with the Notes. It does not purport to list every risk that may be associated with the Notes now or in the future, and the occurrence or consequences of some of the risks described in this section of the Prospectus are partially or completely outside the control of the Company, its directors and senior management team. The selection of risks has been based on an assessment of a range of factors, including a combination of the probability of the risk occurring and impact of the risk if it did occur. This assessment is based on the knowledge of the directors as at the date of this Prospectus but there is no guarantee or assurance that the severity of different risks will not change or other risks emerge. There can be no guarantee that the Company will achieve its stated objective, that it will meet trading performance or financial results guidance, or that any forward looking statements contained in this Prospectus will be realised or otherwise eventuate. Investors should note that past performance is not a reliable indicator of future performance. Before applying for Notes, you should satisfy yourself that you have a sufficient understanding of these matters and should consider whether Notes 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 or not, it is recommended that you seek professional guidance from your stockbroker, solicitor, accountant or other independent and qualified professional adviser before deciding whether to invest. 5.1 Risks associated with Notes (a) Risk of non-repayment Although we consider that the property that constitutes the security for the Notes is sufficient (and reasonably likely to be sufficient) to meet the liability for the repayment of the Notes and all other equally or priority ranking liabilities that have been or may be incurred, there is still a risk that some or all of your principal investment will not be repaid. The Notes are not bank deposits and we do not guarantee repayment of your investment or Interest. Further, we are not authorised under the Banking Act nor supervised by APRA. Your investment will not be covered by the depositor protection provisions in section 13A of the Banking Act. Notes do not have a current credit rating from a recognised credit agency. This means that no independent assessment has been made about the risk of you losing all or part of your principal investment in the Notes. (b) Interest Rate is fixed The Interest Rate is fixed at the time of Issue. Over the term of the Notes, there is a risk that the return on the Notes may become less attractive compared to the returns on other investments, including investments which carry fixed interest rates. (c) Top up risk On the Maturity Date, you may choose to have your Notes repaid or rolled over. We will contact you in writing at least 14 days prior to the Maturity Date, setting out the options you have on maturity of your Notes and seeking your instructions in this regard. The Interest Rate is fixed at the time of Issue and may be less than the indicative Interest Rate set out in the Maturity Letter. In these circumstances, Investors have two weeks from the Issue Date to withdraw their Application and be repaid. Investors should confirm with us the effective Interest Rates and terms set out in the Application Form before completing an Application, by telephone (03) or Monday to Friday 9:00am 5:00pm Melbourne time. (d) Liquidity risk Although the Notes are transferable (refer to section 3.6), there is no official secondary market for the Notes. In addition, we are not required to redeem the Notes prior to the Maturity Date, although we may consider early redemption in special circumstances as set out in section 3.5. Generally, we will not consider any partial redemption of Notes prior to the Maturity Date. There is no guarantee you will be able to transfer Notes at an acceptable price or at all. (e) Fraud risk While we have procedures in place to minimise the potential for unauthorised redemptions of your Notes (which includes segregation of duties and delegations of authority), we cannot guarantee that these procedures will protect your investment from fraud. Where an event of fraud is detected by us, in the ordinary course of protecting you, we will contact the police and provide them with relevant information relating to the fraud. 24

26 5. Key risks 5.2 Risks associated with the Company (a) Licences and other approvals The provision of consumer finance by us in Australia is governed by regulations and through the conditions of Australian credit licence No (ACL) granted by ASIC to the Company on 10 February The Company must comply with relevant regulations and the conditions of its ACL. Any noncompliance could lead to a range of disciplinary actions, including fines, amended or additional licence terms or, ultimately, the suspension or cancellation of its ACL. In the event that the ACL was cancelled, the Company would not be permitted to operate its consumer finance business. Consequently, the Company would be unable to operate the core part of its business (being the provision of consumer finance), which would negatively impact its profitability, which could in turn jeopardise its ability to repay the principal investment and/or Interest owing to Noteholders. (b) Regulation and changes to regulation The regulation of finance activities, including the provision of consumer and business loans and leasing, is primarily the responsibility of Federal Government. Regulation is subject to change and the Company has no control over the regulations that apply to its current or proposed activities. Future changes in legislation, regulation or government policy and decisions by courts and/or governments concernng the interpretation of such legislation, regulation of government policy may result in the imposition of additional taxes or other financial or operational imposts on the Company s businesses or impact the way the Company conducts its business. Such changes may reduce the Company s margins, turnover, or both. (c) Operational risks We may encounter failures in internal processes, human or system error, or other adverse outcomes due to external events. These operational risks may result in reputational harm, occurrence of fraudulent activity, disclosure of customer s personal information, inability to provide certain services and other outcomes that may negatively impact our financial performance. We seek to manage operational risk through the application of continuously evolving internal control standards supported by the training, supervision and development of staff and we have internal control standards which are audited periodically in accordance with the annual internal audit plan. Nevertheless these procedures may not be effective in preventing operational failures in internal process. (d) Distribution channel risk We currently rely on RACQ in Queensland and NRMA in New South Wales to distribute loan products. The termination of these arrangements would have an adverse impact on the Company s lending volumes and profitability. These agreements are all due for renewal in (e) Credit risk We have provided and will continue to provide loans to eligible entities. There is a risk that: these entities will fail to repay the outstanding principal and/or interest owing; and the security (if any) provided by these entities may be insufficient to repay outstanding principal and/or interest payments owing to us. For further information on our exposure to credit risk, including disclosures on loan numbers, loan arrears, geographic location and security taken, refer to section 2.5, Benchmark 5. (f) Interest rate risk Our interest rate risk exposure results primarily from re-pricing risk or differences in the repricing characteristics of our financial assets and liabilities. An instrument s re-pricing period is a term used to describe how an interest rate sensitive instrument responds to changes in interest rates. It refers to the time it takes an instrument s interest rate to reflect a change in market interest rates. For fixed-rate instruments, the re-pricing period is equal to the maturity of the instrument s principal, because the principal is considered to re-price only when reinvested in a new instrument. Our financial assets consist primarily of fixed rate loan receivables with maturities ranging from 6 to 84 months and fixed rate lease receivables with maturities ranging from 12 to 60 months. The financial liabilities funding these receivables consist primarily of fixed rate notes with maturities ranging from 6 to 48 months and fixed rate borrowings on the subscription agreement with maturities up to 180 days that renew automatically at our option during the terms of the subscription agreement. Due to the mismatch in the maturities of our receivables and the financial liabilities funding these receivables, we are exposed to re-pricing risk. If there is a mismatch, this may result in a loss of revenues which may have a negative impact on the financial performance of the Company. 25

27 5. Key risks (g) Liquidity risk There is a risk that we may not have sufficient cash to meet our cash needs in future. Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities and on using the most cost effective means of finance. We seek to manage liquidity risk by continuous monitoring of budgeted and actual cash flows and we have in place a treasury policy which includes processes for ongoing monitoring of bank balances, cash flows and interest rates to endeavour to ensure that we maintain sufficient liquidity to meet a broad range of potential cash outflows in a stressed environment. Nevertheless if we fail to have sufficient cash to meet our cash needs in the future then we may need to reduce or suspend lending which would result in a loss of revenues which may have a negative impact on the financial performance of the Company. Our current Banking Facility expires in September There is a risk that we may not be able to negotiate another credit facility, although this is considered to be highly unlikely. For further information on how we manage liquidity risk, refer to section 2.2, Benchmark 2. (h) Risks associated with economic conditions We may be adversely affected by any deterioration in the general economic conditions in the local, state, national and international economy. Our performance depends to a large extent on economic factors in Australia such as economic growth, interest rates, inflation, taxation and consumer and business sentiment. There can be no guarantee that the current economic environment will remain the same and there is a risk that material adverse changes to general economic conditions may have a material adverse impact on our financial performance. For example, if interest rates rise, there is an increased likelihood of default by existing borrowers and an increased likelihood that fewer new customers will borrow from us leading to a loss of revenues which may have a negative impact on the financial performance of the Company. (i) Legal, regulatory and reputational risk We may in the future encounter legal or regulatory issues that may negatively impact our valued reputation and our business dealings and prospects more generally (for instance, legal or regulatory action may lead to fines or penalties). These issues may include appropriately dealing with potential conflicts of interest, legal and regulatory requirements, issues of ethics, money laundering laws, privacy, information security policies, sales and trading practices and conduct by other companies within the RACV Group. Occasionally, entities in the RACV Group may be subject to legal or regulatory action (which in some cases may be substantial) that may have an impact on us as a member of the RACV Group, notwithstanding that we may have had no involvement in the matters that are the subject of the action and regardless of any financial exposure we may have. (j) Risks associated with access to funding and capital To meet our financial obligations, we are required to maintain sufficient cash and available funding through an adequate amount of committed credit facilities. If we fail to appropriately manage our liquidity position, or if markets are not available generally or to us specifically, at the time of any financing or refinancing that we require, there is a risk that our business, prospects and financial flexibility may be adversely affected because we would need to reduce or suspend lending which would result in a loss of revenues which may have a negative impact on the financial performance of the Company. 26

28 6. Details of the Offer Further information about the Offer including how to apply 6.1 What is the Offer? This Prospectus relates to the offer of secured notes to be issued by the Company (Notes). The Issue Price for each Note is $ Purpose of the Offer The proceeds of the Offer will be used to fund our operations, in particular the funding of our lending portfolio. 6.3 Borrowing limitations The Trust Deed limits the amount we may borrow by requiring: (a) secured liabilities (which includes Prospectus investments) to not exceed 85% of the amount of the tangible assets of the Company and any guarantor bodies (Total Tangible Assets) (there are presently no guarantor bodies); (b) prior secured liabilities (which excludes Prospectus investments) to not exceed 10% of Total Tangible Assets; and (c) external liabilities (which includes Prospectus investments) to not exceed 93.75% of Total Tangible Assets. As at 31 July 2016 these percentages were 82.44%, 0% and 85.08% respectively. 6.4 Taxation We are required to deduct tax from Interest paid to you if you have not supplied an Australian Tax File Number or exemption details, or otherwise as required by law. We may pass on any government transaction taxes or duties in connection with your investment in Notes. 6.5 Brokerage, commission and stamp duty No brokerage, commission or stamp duty is payable by you on acquisition of Notes under the Offer. 6.6 Withdrawal of the Offer We reserve the right to vary the Offer, including to close the Offer early, extend the Offer or accept late applications, either generally or in particular cases, without prior notification to you. If in the event you will not be issued with Notes for any reason, you will have your Application Monies returned (without interest) as soon as practicable. 6.7 Further information For further information about the Offer please telephone the Investment Officer on (03) or (Monday to Friday 9:00am 5:00pm, Melbourne time) or refer to the website at Applications To apply for Notes, you must complete an Application Form. Applications will be accepted with a minimum subscription of $5,000 and a maximum subscription of $5,000,000 per investor subject to the following sub limits. Term Limit per investor 6 months $250k 1 year $250k 2 years $251k-$1m 3 years $5m 4 years $5m If your Application does not meet the minimum or maximum subscription or exceeds the sub limits set out above, we may determine not to accept the application and return your Application Monies as soon as practicable following the receipt of the Application. Application Monies must be paid by cheque, money order or cash (note: do not post cash, this will only be accepted at an RACV retail shop). Your cheque must be in Australian dollars drawn on an Australian branch of a financial institution. It should be made payable to R.A.C.V. Finance Limited, crossed Not Negotiable and attached to your Application Form. Your completed Application Form and Application Monies must be delivered to the Company: By Post: The Investment Officer, R.A.C.V. Finance Ltd 550 Princes Highway, Noble Park North VIC 3174 By Hand: at any RACV retail shop We have the sole discretion whether to accept or decline your Application, or to issue a lesser number of Notes than that applied for. To the extent that Applications are unsuccessful, Application Monies will be returned to you without interest as soon as practicable following the receipt of your Application. If your Application is accepted, you will be sent a certificate for the Notes registered in your name as soon as practicable after issue of the Notes. 27

29 7. Financial information ($000 s) Financial information about the Company During the financial year ended 30 June 2016, we reported an after tax operating profit of $3.9 million compared to $4.7 million for the previous period, 1 year earlier. The abbreviated balance sheet below is based on 30 June 2016 statutory accounts (available at no charge upon request). Statutory accounts are audited by external auditors and filed with ASIC. Management accounts are not audited by external auditors and are not filed with ASIC. Abbreviated balance sheet 30 June 2016 $000 s 31 July 2016 $000 s Assets Cash & cash equivalents 2,320 2,869 Loan receivables 225, ,292 Lease receivables 106, ,322 Other assets 1, Plant & equipment 2 1 Intangible assets Deferred tax assets - - Total assets 335, ,551 Liabilities Payables & other liabilities 2,673 2,720 Interest bearing liabilities 278, ,899 Employee benefits 1,061 1,082 Deferred tax liabilities 2,466 2,618 Total liabilities 284, ,319 Net assets 50,878 51,232 Equity Contributed equity 5,000 5,000 Retained profits 45,878 46,232 Total equity 50,878 51,232 Please refer to Section 7 for further details. As at 31 July 2016 we had $7.6m worth of unused credit facilities. Dividend It is currently anticipated (as at the date of this Prospectus) that the Company will not pay any dividend to its parent company, RACV Holdings Pty Ltd in the financial year

30 7. Financial information ($000 s) Financial Highlights 30Jun Jun Jun Jul 2016 $000 s Total assets 286, , , ,551* Total equity 56,415 51,090 50,878 51,232* Loan receivables 195, , , ,292* Lease receivables 89,761 91, , ,322* Value of new loans written 113, , ,687* Average value of new loans * Value of new leases written 41,033 41,229 55,542 4,669 Average value of new leases Trust Deed investments 223, , , ,899* Operating revenue 28,247 27,939 27,210 2,312* Net operating profit after tax 5,340 4,675 3, * Dividends 10,000 4, Interest expense 10,030 10,185 9, * Bad and doubtful debts expense * Numbers New loans written 5,690 5, * New leases written , * Ratios Loan arrears > 30 days 0.87% 0.50% 0.38% 0.39% Bad debts/average loans 0.29% 0.33% 0.33% 0.27% Gearing (liabilities/shareholders equity) 4.08:1 4.9:1 5.59:1 5.61:1* Net interest cover (earnings before interest and tax/interest expense) * * For the 1 month ended 31 July 2016 You should note that past performance is not a guide to future performance. Capital The Company monitors its financial position to ensure that it continues to comply with its debt covenants under both the Trust Deed and Banking Facility. The Company may require additional Group funding to comply with such covenants, which may be by way of an unsecured, interest free loan of up to $5 million, payable to the Company by RACV as and when required and as approved by the RACV Board. Any amounts paid to the Company by RACV pursuant to the loan arrangements are repayable on demand. The repayment of Notes issued under the Trust Deed (and any other repayments due to other secured creditors) will rank ahead of RACV (in its capacity as an unsecured creditor and in respect of the loan amount) in the event of a winding up of the Company. 29

31 8. Additional information Information about a number of other matters not covered elsewhere in this Prospectus 8.1 Trust Deed Your investment in Notes is issued under a supplemental and consolidated Trust Deed dated 4 May 2000 (as amended) between the Company and The Trust Company (Australia) Limited as Trustee, which may be amended from time to time in the specified manner. You can obtain a copy of the Trust Deed by contacting us by telephone on (03) or (Monday to Friday 9:00am 5:00pm, Melbourne time), by fax (03) or by writing to us at 550 Princes Highway, Noble Park North VIC The role of the Trustee is governed by the Corporations Act and the transaction documents to which it is a party. Other than as required by the Corporations Act or as expressly provided in the transaction documents to which it is a party, the Trustee: is not required to take any action or exercise any right, power or discretion in connection with any transaction document or the Company or any other related matter, fact or circumstance; is not in any way involved in the day to day running, management or decision making process of the Company; and has no duty, obligation or liability to investors or the Company. The Trustee is not responsible for monitoring compliance by us with our respective covenants and obligations under the Trust Deed or any of our other activities or our status except as required by law. In this regard, the Trustee is subject to certain statutory duties imposed on it under Chapter 2L of the Corporations Act including to: exercise reasonable diligence to ascertain whether: - the property of the Company that is or should be available will be sufficient to repay the amounts lent by noteholders in respect of the notes; and - the Company has breached the terms of the Trust Deed or the provisions of Chapter 2L of the Corporations Act and unless the Trustee is satisfied the breach is not material, it must do everything in its power to ensure the Company remedies such a breach. The following is a summary only of the principal provisions of the Trust Deed. (a) Priority of the Trustee All moneys received by the Trustee under the Trust Deed will be applied: firstly in payment of any amounts properly incurred by the Trustee in acting in connection with the Trust Deed and any interest payable thereon; secondly in payment with equal step of all principal owing in respect of the notes; and thirdly in payment with equal step of all Interest owing in respect of the notes (whether the same principal and interest has or has not then become payable). The balance (if any) of the money remaining after those payments will be returned to the Company. (b) Appointment of Trustee and declaration The Trustee holds on trust for noteholders: the right to enforce the Company s duty to repay under the notes; the right to enforce the Company s obligation to pay all other amounts payable under the notes; the right to enforce any other duty or obligation that the Company or any Guarantor has under the terms, the Trust Deed or Chapter 2L of the Corporations Act; and any other property held by the Trustee on trust under the Trust Deed (including, without limitation, the benefit of any covenants, undertakings, representations, warranties, rights, powers, benefits or remedies in favour of the Trustee under the Trust Deed). 30

32 8. Additional information (c) Company undertakings The Company has undertaken to the Trustee that it will, among other things: duly perform and observe the obligations imposed on it under the Trust Deed; strive to carry on and conduct its business in a proper and efficient manner and keep proper books of account and enter full particulars of all dealings and transactions in relation to the business; pay on demand by the Trustee all moneys which the Company may from time to time become liable to pay to it under any provisions of the Trust Deed; and comply with all statutory requirements applicable to the Company provided that noncompliance shall not give rise to a default hereunder unless the Trustee determines that such non-compliance has a significant and material adverse effect on the interests of noteholders. (d) Trustee limitation of liability The Trustee is not liable to the Company, the noteholders or any other person in any capacity other than as Trustee of the Trust Deed, except where the Trustee acts fraudulently, negligently or wilfully defaults under the Trust Deed. (e) Action by Trustee The Trustee is required at all times to act in accordance with its obligations under the Trust Deed, the Corporations Act and applicable law. Subject to the Trust Deed, the Trustee will take all steps and do all such things as it is empowered to do, to cause the Company to remedy any breach of the provisions of the Trust Deed and, if the Company fails when so required by the Trustee to remedy a breach of the provisions of the Trust Deed, the Trustee may: place the matter of the failure to remedy the breach before a meeting of noteholders; submit such proposals for the protection of the notes as the Trustee considers necessary or appropriate; and obtain the directions of the noteholders in relation to the matter. (f) Direct action by noteholders No noteholder is entitled to sue for the performance and observance of the provisions of the Trust Deed in respect of any Notes, unless the Trustee, being bound so to do, fails to sue for the performance and observance of the provisions of the Trust Deed. (g) Fees and expenses The Trustee is entitled to receive an annual fee as agreed from time to time with us. We will pay this remuneration by equal half-yearly payments in arrears on the last day of June and December in every year. Remuneration to be paid to the Trustee during is anticipated to be two half-yearly payments of approximately $32,500 each. We must also pay to the Trustee all costs and expenses incurred by the Trustee in connection with the Trustee carrying out its duties or powers under the Trust Deed including in connection with a breach of the Trust Deed by us and in connection with the convening and holding of any meeting of noteholders. 31

33 8. Additional information (h) Retirement and removal The Trustee may retire by giving written notice to us provided that the appointment of a new trustee is effective. The Trustee may be removed by the Company if, among other things: the Trustee cannot be a trustee under section 283AC of the Corporations Act; the Trustee has acted fraudulently, negligently or is in wilful default, or is in breach of trust or in breach of section 283DA of the Corporations Act, and where such breach is capable of rectification, the Trustee has not rectified the breach within seven Business Days of receiving a notice from the Company of its occurrence; any licence, consent, authorisation or similar thing the Trustee is required to hold to carry out its obligations under the Trust Deed is revoked or not renewed; the Company is requested to do so by a meeting of noteholders called under the Trust Deed; or the Trustee becomes subject to an insolvency event under the Trust Deed. The Company must appoint a new trustee following the retirement or removal of the Trustee. (i) Meetings The noteholders may by Extraordinary Resolution, approve the release of the Trustee from liability for anything done or omitted to be done by the Trustee. Each noteholder is entitled to one vote on a show of hands. On a poll, each noteholder is entitled to one vote for each note that the person holds. (j) Alteration Subject to applicable laws, the Trust Deed may be amended: pursuant to an Extraordinary Resolution of noteholders; or in the following circumstances, without the consent of noteholders, if the Trustee is of the opinion that such amendment is: i) of a formal or technical nature; or ii) does not materially prejudice any noteholder or, any prejudice to any noteholder is at least counter balanced by any benefit that may accrue to such noteholder; or iii) for the purpose of obtaining stock exchange listing for the notes or otherwise complying stock exchange listing requirements so long as in either case, in the opinion of the Trustee, no noteholder is materially prejudiced. 8.2 Details About the Banking Facility The Company entered into a subscription agreement dated 4 May 2011 (Subscription Agreement) with a major Australian bank for that bank to provide to the Company a debt finance facility for the amount of $45 million. The term of the Subscription Agreement was extended for a further 3 years by an amending deed on or about 8 March 2014 and the amount was increased to $100m. In September 2016 the term of the Subscription Agreement was extended for a further period of 2 years and the amount was increased to $130 million (Banking Facility). The following is a summary of the relevant key terms and conditions of the Banking Facility: the Banking Facility is for a term of two years and expires on or around 16 September 2018; the interest rate under the Banking Facility is a variable rate based on the Bank Bill Swap Rate (BBSY) plus a fixed margin as set out in the Subscription Agreement; the Banking Facility is supported by the issue of Notes from the Company for each funding portion advanced by the bank to the Company whereby the bank ranks in equal step with other Noteholders ensuring that all investors are ranked and treated equally; and the agreement for the Banking Facility contains representations, warranties and undertakings typical for facilities of this nature including affirmative and negative covenants, reporting covenants, indemnification provisions and events of default. The undertakings include financial undertakings which will be tested at financial year end and quarterly based on the preceding 12 month period: a gearing ratio that is less than or equal to 0.85 times, being the ratio of Interest Bearing Liabilities to Interest Bearing Liabilities and Equity (as defined under the Subscription Agreement); an interest cover ratio that is not less than 1.15 times, being the ratio of EBIT to Interest Expense (as defined under the Subscription Agreement); receivables arrears less than 5% of receivables, being the value all receivables of the Company which have been outstanding for a period of greater than or equal to 30 days after their due date; and minimum total equity not less than $40 million. 32

34 8. Additional information Events of default, as defined under the Subscription Agreement, include where: the Company fails to pay or repay amounts owed by it under the Subscription Agreement when due and payable and this is not remedied within 2 business days; the Company breaches any of the financial undertakings (see further detail below); the Company fails to perform any other undertakings or obligations under the Subscription Agreement, the Trust Deed or security documentation (Transaction Document) (noting that the Company may be granted 10 business days to remedy the failure if the failure is remediable in the bank s opinion); any encumbrance is enforced, or becomes capable of being enforced, against an asset of the Company or RACV; a material judgement is obtained against the Company or RACV; a distress, attachment, execution or other process of a government agency (Government Process) is issued against, levied or entered upon an asset of the Company or RACV for a material amount, with such Government Process not set aside or satisfied within 10 business days; any insolvency related event occurs in relation to the Company or RACV (e.g. the appointment of an administrator or a winding up); the Company or RACV undertake a reorganisation (e.g. a merger or demerger) or there is a change in control in relation to the Company; the Company or RACV cease to carry on business; a Transaction Document becomes illegal, void, voidable or unenforceable; or any other event occurs which, in the opinion of the bank, has or is likely to have a material adverse effect on: - the ability of the Company or RACV to perform any of their obligations under a Transaction Document; - the enforceability of a Transaction Document; or - the assets, business or operations of the Company or RACV. The Company expects to remain in compliance with these undertakings. In the event that any of these undertakings are breached or another event of default occurs, the bank may, by notice to the Company, declare that the amounts owing under the Subscription Agreement are immediately due and payable. While the rights of the bank under the Subscription Agreement to demand repayment are independent of the Trustee, the Banking Facility is supported by the issue of Notes (see above). To the extent that an amount under the Subscription Agreement is due but has not been paid within 10 business days (whether or not the bank has demanded repayment), the Trustee may enforce a first charge over the assets of the Company within Victoria (as granted under the Trust Deed) and take action to recover the outstanding money on behalf of the bank (given the bank s position as a Noteholder). 8.3 Trustee s interests and consent The Trustee will be paid the fees described in section 8.1(g) of this Prospectus to act as Trustee in respect of the Notes. Other than as disclosed in this Prospectus, the Trustee does not hold at the date of this Prospectus and has not held in the two years before that date, an interest in: - the Offer; - the formation or promotion of the Company; or - property acquired or proposed to be acquired by the Company in connection with its formation or promotion or the Offer. Other than as disclosed in this Prospectus, the Trustee has not been paid or agreed to be paid any amount, nor has any benefit been given or agreed to be given to the Trustee, for services provided by the Trustee in connection with the formation or promotion of the Company or the Offer. The Trustee: has given and has not, before the lodgement of this Prospectus with ASIC, withdrawn its written consent to be named in this Prospectus in the form and context in which it is named; has not made any statement in this Prospectus or any statement on which a statement made in this Prospectus is based; and does not cause or authorise the issue of the Prospectus, and to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any statements in or omissions from this Prospectus. 33

35 8. Additional information 8.4 RACV s interests and consent Other than as disclosed above or elsewhere in this Prospectus, RACV does not hold at the date of this Prospectus and has not held in the two years before that date, an interest in: - the Offer; - the formation or promotion of the Company; or - property acquired or proposed to be acquired by the Company in connection with its formation or promotion of the Offer. Other than as disclosed in this Prospectus, RACV has not been paid or agreed to be paid any amount, nor has any benefit been given or agreed to be given to RACV, for services provided by RACV in connection with the formation or promotion of the Company or the Offer. RACV: has given and has not, before the lodgement of this Prospectus with ASIC, withdrawn its written consent to be named in this Prospectus in the form and context in which it is named; has not made any statement in this Prospectus or any statement on which a statement made in this Prospectus is based (other than set out above); and has not caused or authorised the issue of the Prospectus, and to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any statements in or omissions from the Prospectus. 8.5 Expenses of the Offer The total estimated expenses of the Offer (excluding GST) include legal, production, ASIC and accounting fees are expected to be approximately $30, Privacy Once you have become a Noteholder, the Corporations Act requires information about you (including your name, address and the number of Notes you hold) to be included in the Company s Noteholder register. We collect personal information from the Application Form to allow us to process and administer your Notes. It is important to understand that if this personal information is not provided by you, RACV Finance will be unable to process your application for Notes and your application will not proceed. RACV Finance may use and disclose information about you to your agents (such as your financial adviser, stockbroker or authorised representatives), your or our legal advisers and to or from government authorities as required or by law, e.g. Australian Taxation Office. RACV Finance does not offer investments to investors overseas and will not in the normal course of our business disclose your personal information overseas. However RACV Finance uses a system service provider located in New Zealand and as such all RACV Finance systemrecorded information is hosted and stored in an operational hub in that country. We have satisfied ourselves that our system provider complies with the New Zealand Privacy Act which treats personal information in accordance with the privacy standards in Australia. Unless you tell us otherwise, we may also use your information to tell you about useful products, discounts, special offers, competitions and invitations to special events. If you do not wish us to use your personal information for this purpose, please contact us on You may request access to, or correction of, the information held by us by contacting contact us by phone on (03) or (Monday to Friday 9.00am 5.00pm, Melbourne time), by fax (03) or by writing to us at 550 Princes Highway, Noble Park North VIC Information on how RACV Finance generally handles personal information including how you may: access and correct the personal information we hold about you; and complain about a breach of the Australian Privacy Principles by us and how we deal with such a complaint, is contained in the RACV Finance Privacy and Credit Reporting Policy which is available from RACV Finance, RACV retail shops and 34

36 8. Additional information 8.7 Ongoing disclosure We will meet our continuous disclosure obligations by publishing on our website, any material information more recent than that contained in our last issued prospectus. Information disclosed will be that which we consider necessary or appropriate to help you make investment decisions based on timely information. Examples of items that will be disclosed include: (a) Copies of the Company s quarterly report to the Trustee regarding various matters including compliance with benchmarks contained in ASIC Regulatory Guide 69. (b) Copies of the Company s audited full year and half year financial statements as lodged with ASIC. (c) Interest rate sheet in respect of the current Interest Rates being offered for Notes pursuant to this Prospectus. (d) Any material changes to the Company s assets. 8.8 Electronic access to the Prospectus This Prospectus is available to Australian investors in electronic form at The following conditions apply if this Prospectus is accessed electronically: - you must download the entire Prospectus; - your Application will only be considered where you have applied on an Application Form that was attached to or accompanied by a copy of the Prospectus; and - the Prospectus is available electronically to you only if you are accessing and downloading or printing the electronic copy of the Prospectus in Australia. During the Offer Period, you can also request a free paper copy of this Prospectus and an Application Form by calling the Company on (03) or (Monday to Friday 9.00am 5.00pm, Melbourne time). The Corporations Act prohibits any person from passing the Application Form on to another person unless it is attached to, or accompanied by, a printed copy of this Prospectus or the complete and unaltered electronic version of this Prospectus. Your Application will only be considered where you have applied pursuant to an Application Form (that was attached to, or accompanied by, a copy of the Prospectus) and have provided your Application Monies. 8.9 Governing law This Prospectus and the contracts that arise from acceptance of the Applications under this Prospectus are governed by the laws applicable in Victoria, Australia and each Applicant for Notes under this Prospectus submits to the exclusive jurisdiction of the courts of Victoria, Australia Statement of directors This Prospectus is authorised by each director of R.A.C.V. Finance Limited who consents to its lodgement with ASIC and its issue RACV membership When you invest in RACV Finance you also receive RACV membership. As a member of RACV you are automatically entitled to a wide range of RACV member benefits. These include discounts on RACV products and services as well as special offers from a variety of shops and businesses in Australia and overseas through the Show Your Card and Save program. R.A.C.V. Finance Limited ABN Princes Highway Noble Park North Victoria 3174 Australia Finance: call , visit racv.com.au/finance or an RACV retail shop. 35

37 9. Glossary Term Definition ACL Australian credit licence No Applicant Application Application Form Application Monies APRA ASIC ASIC Regulatory Guide 69 Banking Act Banking Facility Board Business Day Closing Date Company, RACV Finance, us or we Corporations Act A person who lodges an Application Form in accordance with this Prospectus A valid application for Notes made through a completed Application Form in accordance with this Prospectus The application form attached to, or accompanying, this Prospectus upon which an Application for Notes may be made The amount payable on each Application, being the Issue Price multiplied by the number of Notes applied for Australian Prudential Regulation Authority Australian Securities and Investments Commission ASIC Regulatory Guide 69 Debentures and notes: Improving disclosure for retail investors Banking Act 1959 (Cth) The banking facility described at Section 8.2 of the Prospectus The board of directors of the Company A day that is not a Saturday, Sunday or public holiday and on which banks are open for business generally in Melbourne, Victoria, Australia The closing date for the Offer which is expected to be 7 November 2017 R.A.C.V. Finance Limited ABN Corporations Act 2001 (Cth) Dividend Has the meaning given on page 9 of this Prospectus Extraordinary Resolution Financial Information FY or Financial Year GST Interest Interest Rate Issue Issue Price A resolution of investors passed by a majority consisting of the holders of not less than 75% of the nominal value of the issued instruments for the time being who are present in person or represented and vote on such resolution. The pro forma financial information of the Company comprising the pro forma income statements and the pro forma balance sheet The 12 months commencing as 1 July and ending on the following 30 June Goods and Services Tax Interest payable on each Note at the Interest Rate The applicable interest rates (as varied from time to time) set out in the latest Application Form lodged with ASIC. The interest rate will be fixed for the term of the Note at the applicable interest rate on the date of issue of the Note. Interest will be calculated on a simple basis. The process of issuing Notes to Noteholders. Issue and Issued have corresponding meanings $1.00 per Note Issuer R.A.C.V. Finance Limited ABN

38 9. Glossary This section provides a glossary of key terms used throughout this Prospectus and the Application Form. Term Maturity Date Noteholder Notes Offer Offer Period Definition For each Note with a term of one or more years, the relevant anniversary of the issue of the Note. For example the Maturity Date for Notes with a term of 1, 2 and 3 years will be the first, second and third anniversary respectively of the date of issue of the relevant Notes. For a Note with a term of 6 months, the Maturity Date will be the sixth month anniversary of the issue of the Note. If a Note is redeemed before its scheduled Maturity Date, the date of redemption will become the Maturity date for that Note. If any date referred to previously is not a Business Day, the relevant Maturity Date will be the next Business Day. A registered holder of Notes Secured notes to be issued by the Company in accordance with this Prospectus The offer of Notes made through this Prospectus by the Company The period from the Opening Date to the Closing Date Opening Date The opening date of the Offer which is 15 October 2016 Personal Property Securities Act Personal Property Securities Act 2009 (Cth) Prospectus This prospectus which was lodged with ASIC on 7 October 2016 RACV Royal Automobile Club of Victoria (RACV) Ltd ABN RACV Group RACV Salary Solutions Subsidiary RACV and each of its Subsidiaries A trading name of RACV Has the meaning given to that term in Part 1.2 of Division 6 of the Corporations Act Trust Deed Supplemental and Consolidated Trust Deed dated 4 May 2000 (as amended) between the Company and the Trustee Trustee The Trust Company (Australia) Limited ABN of Angel Place, Level 12, 123 Pitt Street, Sydney NSW

39 R.A.C.V. Finance Limited ABN Princes Highway Noble Park North Victoria 3174 Australia Finance: call , visit racv.com.au/finance or an RACV retail shop.