ANNUAL REPORT 2020
Acumentis Group Limited (ASX: ACU)
(Formerly LandMark White Limited)
ABN 50 102 320 329
Acumentis 2020
Annual Review.
Reporting on our financial and operational
performance for the financial year, 1 July
2019 – 30 June 2020.
Acumentis is one of Australia’s largest and most
highly skilled independent property valuation
and advisory firms and is publicly listed on the
Australian Securities Exchange.
For Acumentis, our Annual Report is a journey
toward more meaningful corporate reporting
and is a process of continuous improvement,
one that we believe will provide great benefit to
both our business and our stakeholders.
1.
Introduction
01 ... Annual Report
01 ... About Acumentis
04 ... Chairman’s Report
06 ... CEO’s Report
2.
Financial Statements
12 ... Directors’ Report
26 ... Statement of Profit or Loss and
other Comprehensive income
27 ... Statement of Financial Position
28 ... Statement of changes in Equity
29 ... Statement of Cash Flows
3.
Notes to Consolidated
Financial Statements
31 ... How the Numbers are Calculated
31 ... Revenue
32 ... Material Profit or Loss Items
33 ... Other Income and Expense Items
34 ... Income Tax Expense
35 ... Financial Assets and Liabilities
37 ... Secured Liability
38 ... Non Financial Assets and Liabilities
51 ... Equity
53 ... Cash Flow Information
4.
Risk
7.
Other Information
54 ... Significant Estimates & Judgments
68 ... Related Party Transactions
54 ... Financial Risk Management
68 ... Share-based Payments
58 ... Capital Management
70 ... Remuneration of Auditors
70 ... Earning Per Share
71 ... Parent Entity Financial Information
72 ... Summary of Significant Accounting Policies
85 ... Changes to Accounting Policies
5.
Group Structure
60 ... Business Combinations
61 ... Interests in Other Entities
8.
Director’s Declaration
89 ... Independent Auditors’ Report
94 ... ASX Additional Information
6.
Unrecognised Items
65 ... Contingent Liabilities
65 ... Commitments
65 ... Guarantees
66 ... Events Occurring After the
Reporting Period
66 ... Growing Concerns
ACUMENTIS 2020 ANNUAL REVIEW
Acumentis is the new face of LMW, Taylor Byrne and MVS National, combining the long and proud heritage
and combined experience of over 100 years in the provision of property valuations, research and advice to
financial institutions, other companies, all levels of government and individuals across Australia.
With a broad national footprint across more than 40 metropolitan and regional locations, Acumentis offers
the expertise of over 300 property professionals.
“Acumentis has emerged from recent unprecedented and challenging
times as a stronger business with a committed national team. Our
business is transforming - growing in capability, diversifying services,
expanding our geographical reach and enhancing our systems.”
OUR SERVICES AND CLIENTS
At Acumentis we offer specialist services across all property sectors including a range of property valuation,
insurance valuation, advisory and buyers advocacy services. We strive to deliver service excellence and
risk management outcomes to our clients including financial institutions, corporates, Governments and
individuals.
We understand the importance of the role we play in our client’s lives. That’s why we don’t just supply raw
data reports – we provide unique intelligence.
Our team are committed to adding enormous value by enhancing our data and expertise with accurate and
insightful analysis, delivered via easy-to-use, secure platforms.
Our clients trust our people and have confidence in the quality of our information, analysis and attitude to
service. As a result, they know they can confidently make informed decisions without hesitation.
Pg 1
Acumentis Annual Report 2020 OUR PURPOSE
At Acumentis our purpose is to provide;
• Decision certainty for our clients
• Career certainty for our people
•
Investment certainty for our shareholders
40 LOCATIONS
Australia wide
100+
years of combined
experience
network
of over
Australia’s only independent property
valuation and advisory services firm listed
on the ASX
300
TRAINED
PROPERTY
PROFESSIONALS
LUED
A
V
$500
million
Y
T
R
E
P
O
R
P
T
S
E
HIGH
OPERATION
we proudly help
THOUSANDS
of clients
every
year
Our Guiding Principles
Our values system acts like our compass, guiding us in the right direction and navigating us in times of
uncertainty. Our team use our Guiding Principles in their daily interactions and decision making.
Pg 2
Acumentis Annual Report 2020
Never Quit: As individuals and a team, we continue to grow, improve
and innovate. We consider all available options before committing to a
decision, then go the extra mile to ensure we have decision certainty. We
are resilient, and dependable, no matter how tough the problem.
Walk the Talk: We do what we say we are going to
do. We act with integrity and are accountable for
our actions and decisions. We behave professionally
whenever and wherever we conduct business.
Embrace Equality: We strive to make available
opportunities accessible equally by all.
Support our People: Our decisions are always made with our
people and clients at front-of-mind, to create a positive and
lasting impact. We all benefit and succeed.
Our Guiding Principle Launched August 2020
Pg 3
Acumentis Annual Report 2020 CHAIRMAN’S REPORT
Dear Shareholders,
It is with pleasure that I present my Chairman’s Report for the year ended 30
June 2020.
Growth from a Position of Renewed Strength
This has been a very significant year for the company with the continued recovery from the cyber-attacks
in 2019, a very successful rebrand to Acumentis and now the impacts of COVID-19.
Despite the immense challenges the company has faced over the last 18 months, with the support of
our shareholders, clients, banking partners and our very loyal, talented and hardworking workforce, our
business is now in a position of renewed strength. We have laid a very solid base that the company can
now grow from. This has allowed us to focus on our growth and diversification strategies. I believe these
strategies will finally place Acumentis in the position to become Australia’s pre-eminent, valuation based
property business.
Importantly, while the business grows, we are also working towards being in a position to provide
appropriate returns to our shareholders who stood by the company and invested in its future via the
capital raise in August 2019.
New Brand
Part of setting that very solid foundation for the company is driving a new culture through the business.
A culture that encourages innovation, respect and care, and above all a culture that recognises we are
one company focussed on the future. We are very proud of the new brand “Acumentis” and with it our
renewed focus on delivering incredible value to our clients, providing great careers for our employees and
supporting the communities within which we operate.
Along with the new brand, we have also recently launched and fully embraced the Acumentis Guiding
Principles of:
• Never Quit;
•
•
• Walk the Talk
Embrace Equality;
Support our People; and
These provide a fresh alternative to the regular corporate vision and values and give everyone within our
business a clear set of principles to guide us to even greater success into the future.
Board Renewal
The board of Acumentis was expanded during the year with the appointment of Andrea Staines OAM on
26 September 2019 and endorsed by shareholders at the 2019 AGM.
Andrea brings a wealth of experience to the board and has taken up the role of Chair of the Nominations
and Remuneration Committee.
Pg 4
Acumentis Annual Report 2020 I would like to thank the Acumentis Board members who have showed great diligence and acumen to
guide the company through challenging and also better times to the position of strength we are now in.
I also want to thank and praise all our staff. Whilst I would like to name each and every one it is not
practical in this report, but our valuers, our support staff right through to the leaders of our Government,
Residential, Commercial, Regional and Rural sections have done an amazing job and remained incredibly
loyal to Acumentis. Our IT section has also had remarkable achievements over this past year. John Wise
has provided exceptional guidance and forecasting as our CFO and company secretary. Tim Rabbit has
also provided exceptional leadership to the business since taking on the CEO position, firstly as acting and
then as our permanent CEO. To Tim and all your staff I thank you very much for your tremendous effort
over the past year.
To my Board, all staff, and loyal shareholders I can assure you it has been a great priviledge to be your
Chairman and I look forward to sharing with you the many successes that will come in the future for
Acumentis.
Keith Perrett
Chairman
Pg 5
Acumentis Annual Report 2020 CEO’S REPORT
Dear Shareholders
Last year I presented my first CEO’s Report as Acting CEO and, following
confirmation of my ongoing role as CEO, I am pleased to present my 2020 CEO’s
Report to shareholders at a time of continued challenges in the economy but, I believe,
at a time that presents some great opportunities for Acumentis.
New Brand
In December 2019 we launched our new brand “Acumentis” bringing together the LMW, Taylor Byrne and
MVS businesses under a single, new and fresh brand.
Our tagline of “decision certainty” articulates the key benefit our advice provides to our clients and
emphasises the quality of services provided by Acumentis.
The brand has already provided the business and its employees with renewed energy and focus and
has been very well accepted by our existing and prospective clients, our staff and the wider business
community.
We are very proud of the new brand and continued focus on delivering great value for our clients, returns
for our shareholders, career paths for our staff and support for the communities in which we play an
integral part.
Continued Investment in IT
Throughout FY20, we continued our very strong investment in the best and most secure IT systems used
by property professional services firms in Australia.
Our systems are certified to ISO27001 (international standard relating to Information Security) and have
provisional certification under IRAP (the Information Security Registered Assessors Program).
Innovation is at the core of our business and our continued investment in IT enables Acumentis to deliver
greater value to our clients in an efficient and effective way whilst ensuring that our staff have the best
tools available to assist them in their existing and future roles with Acumentis.
Our People
Acumentis has arguably the best and certainly some of the most resilient employees in the industry. They
have certainly demonstrated our “Never Quit” guiding principle over the last 18 months and this same
determination to succeed is one of the reasons our clients continue to engage Acumentis to provide the
advice they require to make decisions with certainty in an ongoing uncertain economic climate.
Diversification
Acumentis has refocussed on its core strategies of diversification of both services within the property
sector and its client base. We have recently launched depreciation schedule services and a new and
innovative approach to providing valuations and advice to self-managed superannuation funds.
Pg 6
Acumentis Annual Report 2020 Expansion of Coverage
We continue to look at opportunities to build on our existing geographical coverage strength with the
recent opening of an office in Gippsland, VIC and plans for the Southern NSW and Tasmania in the near
term.
FY20 Performance
When reviewing the FY20 performance and comparing it to FY19, the results are heavily influenced by one
off factors:
FY19 v FY20 Actual PBT
(2,000)
(4,000)
(6,000)
(8,000)
(10,000)
(12,000)
(14,000)
(16,000)
(18,000)
(15.617)
FY 1 9 P B T
C O VID-1 9 govern m ent subsidies
Prior year im pair m ent expense
R eduction in revenues due to cyber0attacks
R eduction in e m ployee expenses
A d ditional cyber-response costs
R eduction in franchise fees
Increase in other expenses
R edundancies due to cyber-attacks
I m pair m ent of right of use assets
Prior year one off acquisition costs
FY 2 0 P B T
Pg 7
Acumentis Annual Report 2020 It is particularly pleasing to see an operating profit recorded for the second half of FY20 on the back of
significantly improved revenues (126% of those recorded in the first half of FY20):
Revenue
23,844
19,151
42,995
16,832
1st Half
$’000
2nd Half
$’000
FY2019
$’000
1st Half
$’000
2nd Half
$’000
-
23,844
522
-
-
-
-
-
19,151
(2,574)
(528)
-
42,995
(2,052)
(528)
(753)
(753)
(12,284)
(12,284)
-
-
522
(16,139)
(15,617)
469
(15,148)
Government grant income
Operating profit / (loss)
Acquisition costs expensed
Impairment charges
- Investment in Associates
- Intangible assets
- Right of use assets
Profit before tax
Tax benefit
Net profit after tax
Market Outlook
-
16,832
(4,247)
-
-
-
21,138
1,315
22,453
1,715
-
-
-
(182)
(4,429)
(315)
1,401
FY2020
$’000
37,970
1,315
39,285
(2,532)
-
-
-
(497)
(3,029)
474
(2,555)
The ongoing impacts and recovery from COVID-19 will be major drivers in the market outlook for FY21
and beyond.
We have already seen an increase in refinancing of loans and anticipate that the stimulus provided by
State and Federal Governments to deliver a construction led recovery will drive increased demand for our
services in the future.
The availability of bank credit and how securities are managed by the banks will also influence future
demand for our services.
Overall, whilst we need to remain alert to the challenges of operating in an environment that continues to
be impacted by the global pandemic, we are optimistic about the ability of Acumentis to deliver growth
and improved profits in the medium term.
FY21 Forecast
We anticipate continued improvement in our revenues and profitability throughout the coming year.
Timothy Rabbitt
CEO
Pg 8
Acumentis Annual Report 2020
Pg 9
Acumentis Annual Report 2020 FINANCIAL STATEMENTS
Pg 10
Acumentis Annual Report 2020 TABLE OF CONTENTS
Directors’ report ....................................................................................................................................12
Remuneration Report – audited ............................................................................................................17
Auditors independence declaration ......................................................................................................25
Consolidated statement of profit or loss and other comprehensive income .......................................26
Consolidated statement of financial position .......................................................................................27
Consolidated statement of changes in equity ......................................................................................28
Consolidated statement of cash flows ..................................................................................................29
Notes to the consolidated financial statements ...................................................................................30
How numbers are calculated ................................................................................................................31
Risk.........................................................................................................................................................54
Group structure .....................................................................................................................................60
Unrecognised items ...............................................................................................................................65
Other information ..................................................................................................................................68
Directors declaration .............................................................................................................................88
Independent auditors report to the members .....................................................................................89
ASX additional information ...................................................................................................................94
Pg 11
Acumentis Annual Report 2020 DIRECTORS’ REPORT
The Directors present their report together with the financial report of the Consolidated Entity, being
Acumentis Group Limited (“the Company”) and its controlled entities, for the year ended 30 June 2020
and the auditor’s report thereon.
Directors
The Directors of the Company in office at any time during or since the end of the financial year are:
Keith Perrett brings to the board strong experience in strategy development,
government relations, stakeholder engagement and business development.
He also has a strong business and government network, particularly within
New South Wales & Queensland.
He is currently Non-Executive Chairman of Silver Mines Ltd (ASX:SVL) and
has previously held positions as the Chairman of the Grains Research and
Development Corporation (GRDC), the National Rural Advisory Council
(NRAC), the Wheat Research Foundation (WRF), and President of the Grains
Council of Australia.
Stephen Maitland OAM RFD has over 45 years’ experience in the banking
and finance industries, and as a non-executive director of several listed and
unlisted companies.
He is the principal of Delphin Associates, a business consultancy firm
specialising in strategic planning, risk management, corporate governance
and business transition.
Stephen has a degree in Economics and Masters’ degrees in Business and
Law. He is a Fellow of the Australian Institute of Company Directors, CPA
Australia; the Governance Institute of Australia; and a Senior Fellow of the
Financial Services Institute of Australia.
Keith Perrett
Independent Director
Chair of the Board
25/05/18 – current
Non-Executive director
01/02/18 - current
Audit & Risk Committee
22/02/18 – 21/11/19
Nominations & Remuneration
Committee 22/02/18 –
21/11/19
Chair of Nominations &
Remuneration Committee
25/05/18 – 21/11/19
Stephen Maitland
Independent Director
Non-Executive director
01/02/18 - current
Audit & Risk Committee
22/02/18 – current
Chair of Audit & Risk
Committee
25/05/18 - current
Nominations & Remuneration
Committee
22/02/18 - current
Pg 12
Acumentis Annual Report 2020 Andrea Staines
Independent Director
Non-Executive director
26/09/19 - current
Chair of Nominations &
Remuneration Committee
21/11/19 – current
Audit & Risk Committee
21/11/19 – current
Bradley Piltz
Executive Director
26/09/02 – 30/04/14
Non-Executive Director
01/05/14 – current
Nominations & Remuneration
Committee 26/09/02 – current
Audit & Risk Committee
26/09/02 - 25/5/18
12/03/19 - current
Andrea Staines OAM has been a professional Non-Executive Director for over
a decade, and is currently on the boards of ASX-listed SeaLink Travel, NZX-
listed Freightways, UnitingCare and Australia Post.
Her former Board roles include NDIA (the NDIS Agency), Tourism Australia,
QIC, ASX-listed Aurizon, Australian Rail Track Corporation (ARTC), Gladstone
Ports, North Queensland Airports, Goodstart Early Learning and ASX-listed
Early Learning Services.
Andrea is a former CEO of Australian Airlines (mark II), a Qantas subsidiary
flying between Asia and Australia, which she co-launched. During this time,
she was also a member of the Qantas Executive Leadership Team. Prior
to this, Andrea ran Qantas Revenue Management, leading a 150-strong
team employing operations research algorithms and human intervention to
optimize passenger revenue.
Before joining Qantas, Andrea worked in various financial and strategy roles
with American Airlines at their Dallas headquarters.
Andrea has an MBA focused on finance from the University of Michigan, a
Bachelor of Economics from the University of Queensland, and completed
high school on full scholarship at the United World College in Singapore.
Andrea is a Fellow of the Australian Institute of Company Directors (AICD)
and a Member of Chief Executive Women (CEW).
Brad has been involved in financial and property markets since 1975 and was
a co-founder of Acumentis Group.
In addition to extensive experience with the Commonwealth Bank, Brad has
acted for major corporations and government instrumentalities providing
advice from portfolio analysis to property acquisition, disposal and tenancy
requirements.
Brad has acted in court as an expert witness; is highly experienced in rental
determinations; prepared educational valuation materials;
in
valuation; and appeared on Sydney radio and television providing property
market commentary.
lectured
He is a fellow of the Australian Property Institute and a member of the
Australian Institute of Company Directors.
During the past 3 years, he has not acted as a director of any other Australian
listed public company.
Pg 13
Acumentis Annual Report 2020 Directors Meetings
The number of directors’ meetings held, and the number of meetings attended by each of the directors
(when a director) of the Company during the financial year were as follows:
Director
Keith Perrett
Stephen Maitland
Brad Piltz
Andrea Staines
Board
Audit & Risk Committee
Nominations & Remuneration
Committee
Held
Attended
Held
Attended
Held
Attended
30
30
30
16
30
27
30
13
1
2
2
1
1
2
2
1
1
2
2
1
1
2
2
1
Company particulars
Acumentis Group Limited is incorporated in Australia.
The address of the registered office is Level 7, 283 Clarence Street, Sydney, NSW 2000.
The company changed its name from LandMark White Limited to Acumentis Group Limited on 31 January
2020.
Corporate Governance Statement
Acumentis Group Limited and the board are committed to achieving and demonstrating the highest
standards of corporate governance. Acumentis Group Limited has reviewed its corporate governance
practices against the Corporate Governance Principles and Recommendations (4th edition) published by
the ASX Corporate Governance Council.
The 2020 Corporate Governance Statement is dated as at 30 June 2020 and reflects the corporate
governance practices in place at the end of the 2020 financial year. The 2020 Corporate Governance
Statement was approved by the board on 27 August 2020 and can be viewed at https://www.acumentis.
com.au/media/2013/acumentis-corporate-governance-statement.pdf
Principal activities
The principal activity of the Consolidated Entity during the course of the financial year was property
valuation. There were no significant changes in the nature of the activities of the Consolidated Entity
during the year.
Review of operations
The results for the year ended 30 June 2020 reflect the impacts of the 2019 criminal cyber-attacks which
continued to impact revenues in the second half of calendar 2019 and then the impact of COVID-19 in the
second quarter of calendar 2020 which also resulted in a downturn in revenue in May 2020. The Company
qualified for and secured the Federal JobKeeper subsidy from 1 May 2020.
Pg 14
Acumentis Annual Report 2020 Through the financial year, the business continued to invest heavily in its IT security achieving ISO27001
certification and provisional IRAP certification. This provided the necessary confidence for the majority of
clients to recommence utilising Acumentis’ services.
In August 2019, the Company undertook a 4 for 5 non-renounceable entitlement offer at $0.08 per share
which was fully subscribed resulting in the issue of 68,045,819 shares on 23 August 2020 and raising
$5,184,016 of capital (net of offer and placement costs).
The result for the year ended 30 June 2020 includes the following significant items:
Income
Government grants (JobKeeper & Cashflow Boost)
Insurance receipts
Licence termination fee
Expenses
Redundancy costs
Cyber-attack one off response costs
Impairment of right of use assets
1,315,128
1,095,000
150,000
270,876
791,004
497,149
Business Overview
Despite the adverse impacts of the criminal cyber-attacks and COVID-19, the business has recovered to
a relatively strong financial position and is now returning to its medium-term strategies of diversifying its
property services offerings and client base.
Following the termination of commercial valuation franchises in July 2019, the business has quickly
established a wholly owned commercial valuation division in Sydney and has also grown its Melbourne
division. The Company sees strong opportunities to continue to grow the commercial valuation business
in the coming years.
The strong regional business acquired in October 2018 has been fully integrated and the Company is now
embarking on strengthening the network of offices with a focus on Southern NSW and Victoria. This will
enable the business to cement itself as the pre-eminent property professional service provider to regional
and rural clients.
The business has invested significantly in its IT systems, particularly its valuation management system.
This has enabled the business to enhance its ability to service its major banking, Government and private
clients and provide industry leading service throughout the Eastern States and the ACT and, via its
associate in WA, throughout WA, SA and NT.
Outlook
The Company expects to continue its geographic expansion in Southern NSW and regional Victoria and to
expand its valuation and property professional service offerings to existing and new clients.
As the economy recovers from COVID-19, the Company is in a strong position to benefit from the expected
increased requirement for property professional services.
The Company expects to maintain positive cashflows going forward.
Pg 15
Acumentis Annual Report 2020
Dividends
The Board has not declared any dividends with respect to FY20 (FY19: none)
No dividends were paid by the Company since the end of the previous financial year.
The Board of the Company will consider resumption of dividends following the expected delivery of profits
during the year ended 30 June 2021.
Events subsequent to the end of the reporting period
There were no significant events subsequent to the end of the reporting period.
State of affairs
Other than the impacts of the criminal cyber-attacks in 2019 and COVID-19 in 2020, there have been no
significant changes in the state of affairs of the Consolidated Entity that occurred during the year under
review.
Likely Developments
Refer to the Outlook included in this Directors Report above.
Environmental regulation
The operations of the Consolidated Entity are not subject to any significant environmental regulation
under a law of the Commonwealth or of a State or Territory.
Pg 16
Acumentis Annual Report 2020 REMUNERATION REPORT – AUDITED
Nominations & Remuneration Committee
A major role of the Nominations & Remuneration Committee is to ensure that the remuneration policies
and outcomes achieve an appropriate balance between the interests of Acumentis Group shareholders
and rewarding and motivating executives and employees in order to achieve their long-term commitment
to the Consolidated Entity. The committee meets as required but generally at least twice per year. The
members of the Nominations & Remuneration Committee during the year were:
Name
Past members
Keith Perrett (Member & Chair until 21 November 2019)
Current members
Andrea Staines (Member & Chair from 21 November 2019
Stephen Maitland
Brad Piltz
Independent
Non-executive
Y
Y
Y
N
Y
Y
Y
Y
Remuneration policies
Remuneration levels are competitively set to attract and retain appropriately qualified and experienced
directors and senior executives.
The remuneration of the Consolidated Entity’s senior executives includes a mix of fixed and performance-
based incentives. The fixed component consists of base remuneration, allowances and superannuation.
The performance-based component is a cash bonus based on the performance of the Consolidated
Entity and the individual performance of the executives. The board considers that the performance-
linked incentive is appropriate as it directly aligns the individuals reward with the Consolidated Entity’s
performance.
In considering the Consolidated Entity’s performance, the board has regard to the following indices in
respect of the current financial year and previous years.
Services revenue
39,285
42,995
43,157
25,068
22,849
2020
$000
2019
2018
2017
2016
Net (loss) / profit to equity
holders of the Company
The factors that are considered
to affect total shareholders
return are summarised below:
(2,555)
(15,148)
4,140
1,626
1,659
Dividends declared (per share)
-
-
$0.046
$0.045
$0.045
Share price at the end of the
period
$0.080
$0.180
$0.555
$0.625
$0.52
Pg 17
Acumentis Annual Report 2020
Non-executive directors are paid an annual fee for their service on the board and committees which is
determined by the Nominations & Remuneration Committee. Aggregate remuneration for all non-executive
directors is not to exceed $400,000 per annum as approved by the shareholders. Non-executive directors’
aggregate salary & fees for the year were $296,750. These fees include statutory superannuation. Non-
executive directors do not receive bonuses nor are they entitled to be issued with options or performance
rights on securities in the Consolidated Entity. Non-executive directors do not receive any retirement
benefits other than statutory superannuation payments. Non-executive directors do not receive separate
fees for committee memberships.
The Consolidated Entity has a policy that prohibits those that are granted share-based payments as part
of their remuneration from being compensated for changes in value of the underlying securities.
Directors’ and senior executive officers’ remuneration
Details of the nature and amount of each major element of the remuneration of each member of key
management personnel are:
Short term
Post-employment
Long term
Total $
Name
Year
Salary &
Fees $
Bonus
(b) $
Super-
annuation
benefits $
Termi-
nation
benefits $
Movement
in long term
benefits $
Share based
payment
settled $
Perfor-
mance
related
%
Share
based
%
Non-executive directors
K Perrett
2020
120,000
2019 120,000
S Maitland
2020
65,000
2019
65,000
B Piltz
2020
58,219
2019
59,361
A Staines1
2020
43,836
G White2
2019
2020
-
-
2019
41,552
F Hardiman2
2020
-
2019
35,230
Executive directors
C Coonan3
2020
-
2019
189,701
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Other key management personnel
T Rabbitt4
2020
360,139
55,773
21,003
2019
92,308
-
J Wise
2020
241,103
45,662
2019
205,602
-
5,333
23,820
18,761
-
-
-
-
5,531
5,639
4,164
-
-
3,948
-
3,347
-
-
-
-
-
-
-
-
-
-
-
-
10,501
196,794
-
-
-
-
-
-
-
-
-
-
-
-
-
15,431
-
-
-
-
-
16,019
22,381
1,552
1,313
1,331
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
120,000
120,000
65,000
65,000
63,750
65,000
48,000
-
-
45,500
-
38,577
207,295
221,151
-
-
-
-
-
-
-
-
-
-
-
-
-
-
459,296
12%
99,193
-
311,898
15%
225,694
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1. Appointed 26 September 2019
2. Resigned 12 March 2019
3. Resigned 12 March 2019 however termination benefits paid 18 October 2019
4. Appointed CEO 12 March 2019
Pg 18
Acumentis Annual Report 2020
Notes in relation to the table of directors’ and executive officers’ remuneration
(a)
Analysis of options & performance rights included in remuneration
Option & Performance Rights – Share Based Payments
The directors at their discretion allocate share options or performance rights that entitle key management
personnel and senior employees to be issued shares in the entity. The terms of the options including
vesting conditions and performance criteria vary depending upon the incentive arrangements appropriate
for key management personnel and senior employees and are a part of an approved Employee Share
Acquisition Scheme, which was approved by shareholders at the 2018 Annual General Meeting.
Options
There were no options outstanding at the dated of this report (2019: nil).
Performance Rights
Performance rights may be granted under the Acumentis Group Performance Rights and Option Plan which
was approved by shareholders at the 2018 Annual General Meeting. The Plan allows the Company to
grant options or rights to selected key employees to acquire ordinary shares in the Company. Participants
are required to satisfy performance and service conditions at the time of the offer. The exercise price for
performance rights is nil. Rights cannot be transferred and are not quoted on the ASX.
No performance rights were granted during the year and no performance rights exist as at 30 June 2020
(2019: nil).
Vesting and exercise of performance rights issued during prior years
There were no performance rights held as at 30 June 2019 and accordingly none vesting or exercised
during the year ended 30 June 2020.
(b)
Analysis of bonuses included in remuneration
Short-term incentive cash bonuses were awarded to the CEO Timothy Rabbitt and CFO John Wise.
The performance-based component for the CEO is a cash bonus based on both financial and non-financial
KPI’s and qualitative assessment of performance.
The performance-based component for the CFO is a cash bonus based on non-financial KPI’s and
qualitative assessment of performance.
Director / Key Management
Personnel
Timothy Rabbitt
John Wise
Vesting date
30 June 2020
30 June 2020
Cash Bonus
Paid / Payable
Cash Bonus
Forfeited
Financial Year the cash
bonus was paid / is payable
90%
90%
10%
10%
2021
2021
Pg 19
Acumentis Annual Report 2020 Contracted Commitment
Timothy Rabbitt (CEO) and John Wise (CFO) are employed by the Company under ongoing employment
contracts. The notice periods and termination payments provided for under these contracts are as follows:
Director / Key Management Personnel
Notice Period Months
Termination Payment
Timothy Rabbitt
John Wise
6
3
200,000
68,750
The termination payments are not provided for in the financial statements.
Pg 20
Acumentis Annual Report 2020 BENEFICIAL INTEREST OF DIRECTORS IN SHARES & OPTIONS
Movement in shareholdings
The movement during the reporting period in the number of ordinary shares in the Company held directly,
indirectly, or beneficially by each key management personnel including their personally related entities is
as follows:
2020
Directors
Brad Piltz
Stephen Maitland
Keith Perrett
Andrea Staines
Key Management Personnel
Timothy Rabbitt
John Wise
2019
Directors
Brad Piltz
Stephen Maitland
Keith Perrett
Glen White
Frank Hardiman
Chris Coonan
Key Management Personnel
Timothy Rabbitt
John Wise
Held at
1 July 2019
Purchases
Sales
Retirement
from Board
Held at
30 June 2020
4,501,284
1,528,489
91,298
73,039
-
-
-
-
735,883
-
768,707
125,000
Held at
1 July 2018
Promotion to Key
Management
Position
-
-
-
-
-
-
-
-
-
-
-
-
6,029,773
164,337
-
-
1,504,590
125,000
Sales
Retirement
from Board
Held at
30 June 2019
4,501,284
91,298
-
10,870,134
374,949
325,000
-
-
-
-
-
-
-
-
-
-
-
(160,731)
-
-
-
(10,870,134)
(374,949)
(164,269)
4,501,284
91,298
-
-
-
-
-
-
735,883
-
-
-
-
-
735,883
-
The executive officers named are those who are directly accountable and responsible for the strategic
direction and operational management of the Consolidated Entity. The Directors are of the opinion that
only the executive officers detailed above meet the definition of key management personnel as set out in
AASB 124 Related Party Disclosures.
Director Related Entity
The Consolidated Entity did not enter into any transactions with a director-related entities except for
payment of some non-executive directors’ fees in either of the years ended 30 June 2019 or 30 June
2020.
END OF REMUNERATION REPORT
Pg 21
Acumentis Annual Report 2020
PROCEEDINGS ON BEHALF OF THE CONSOLIDATED ENTITY
During the financial year and in the interval between the end of the financial year and the date of this
report the Consolidated Entity has made no application for leave under Section 237 of the Corporations
Act 2001.
No person has applied for leave of court to bring proceedings on behalf of the Consolidated Entity or intervene
in any proceeding to which the Consolidated Entity is a party for the purpose of taking responsibility on
behalf of the Consolidated Entity for all or any part of these proceedings. The Consolidated Entity was not
a party to any such proceedings during the year.
Directors’ Interests
The relevant interest of each director in the shares issued by the Company as notified by the Directors to
the Australian Securities Exchange in accordance with S205G(1) of the Corporations Act 2001, at the date
of this report is as follows:
Brad Piltz
Stephen Maitland
Keith Perrett
Andrea Staines
Share Options
Shares under option
Ordinary Shares
6,029,773
164,337
-
-
There were 2,500,000 unissued ordinary shares of Acumentis Group Limited under option at the date of
the report (2019: Nil). Refer to note 7 for further details.
Shares issued on exercise of options
There were no options exercised during the year (2019: Nil).
Indemnification and Insurance of officers and auditors
Officers
The Consolidated Entity has agreed to indemnify all current Directors of Acumentis Group Limited to the
maximum extent permitted by law against any liability incurred by them by virtue of their holding office as
an officer of the Consolidated Entity other than:
a liability owed to the Consolidated Entity or a related body corporate of the Company;
a liability for a pecuniary penalty order under section 1317G of the Law or a compensation order
under section 1317H of the Law; or
a liability owed to a person other than the Consolidated Entity that did not arise out of conduct in good
faith.
•
•
•
Pg 22
Acumentis Annual Report 2020
Since the end of the previous financial year, the Consolidated Entity has paid premiums in respect of
Directors and Officers liability insurance, for all past, present, or future directors, secretaries, officers
or employees of the Consolidated Entity. Conditions of the Insurance policy restrict disclosure of the
premium amount.
The insurance premiums relate to:
•
•
costs and expenses incurred by the relevant officers in defending proceedings, whether civil or
criminal and whatever their outcome
other liabilities that may arise from their position, with the exception of conduct involving a wilful
breach of duty or improper use of information or position to gain a personal advantage.
Further details of insurance policies have not been disclosed as the policies prohibit such disclosure.
Auditors
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the
auditor of the Company or any related entity against a third-party liability incurred by the auditor.
During the year, the Company has not paid a premium in respect of a contract to insure the auditor of the
Company or any related entity.
Rounding of Amounts
The Consolidated Entity has applied the relief available under ASIC Instrument 2016/191 and accordingly,
amounts in the financial statements and directors’ report have been rounded to the nearest thousand
dollars, or in certain cases, to the nearest dollar.
Auditors Independence Declaration under Section 307C of the Corporations Act 2001
The auditor’s independence declaration is set out on page 25 and forms part of the Directors’ Report for
the financial year ended 30 June 2020.
Non-audit services
During the year, William Buck, the Company’s auditor, has performed certain other services in addition to
their statutory duties.
The board has considered the non-audit services provided during the year by the auditor and in accordance
with written advice provided by resolution of the Audit & Risk Committee, is satisfied that the provision of
those non-audit services during the year by the auditor is compatible with, and did not compromise, the
auditor independence requirements of the Corporations Act 2001 for the following reasons:
•
•
all non-audit services were subject to the corporate governance procedures adopted by the
Consolidated Entity and have been reviewed by the Audit & Risk Committee to ensure that they do not
impact the integrity and objectivity of the auditors; and
the non-audit services provided do not undermine the general principles relating to auditor
independence as set out in APES 110 Code of Ethics for Professional Accountants (including
Independence Standards), as they did not involve reviewing or auditing the auditor’s own work, acting
in a management or decision-making capacity for the Consolidated Entity, acting as an advocate for
the Consolidated Entity or jointly sharing risks and rewards.
Pg 23
Acumentis Annual Report 2020 Details of the amounts paid to the auditors of the Consolidated Entity, William Buck, and its related
practices for audit and non-audit services provided during the year are set out below:
Statutory and other audit services
Full year audit
Half year review
Service other than statutory audit
Restructuring advice
Preparation & lodgement of taxation returns
Tax advice:
• Employee share plan
• Continuity of ownership for tax losses
• JobKeeper eligibility
2020
2019
155,000
41,000
196,000
97,609
4,000
-
6,000
4,000
143,500
46,500
190,000
300,000
11,100
13,000
-
-
111,609
324,100
This report is made in accordance with a resolution of the directors.
Keith Perrett
Director
Dated at Sydney this 27th day of August 2020
Pg 24
Acumentis Annual Report 2020
AUDITORS INDEPENDENCE DECLARATION
Acumentis Group Limited
Acumentis Group Limited
Acumentis Group Limited
Auditor’s independence declaration under section 307c of
Auditor’s independence declaration under section 307c of
Auditor’s independence declaration under section 307c of
the Corporations Act 2001
the Corporations Act 2001
the Corporations Act 2001
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2020
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2020
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2020
there have been:
there have been:
there have been:
— No contraventions of the auditor independence requirements as set out in the
— No contraventions of the auditor independence requirements as set out in the
— No contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
Corporations Act 2001 in relation to the audit; and
Corporations Act 2001 in relation to the audit; and
— No contraventions of any applicable code of professional conduct in relation to the
— No contraventions of any applicable code of professional conduct in relation to the
— No contraventions of any applicable code of professional conduct in relation to the
audit.
audit.
audit.
William Buck
William Buck
William Buck
Accountants & Advisors
Accountants & Advisors
Accountants & Advisors
ABN: 16 021 300 521
ABN: 16 021 300 521
ABN: 16 021 300 521
L E. Tutt
L E. Tutt
L E. Tutt
Partner
Partner
Partner
Sydney, 27 August 2020
Sydney, 27 August 2020
Sydney, 27 August 2020
ACCOUNTANTS & ADVISORS
ACCOUNTANTS & ADVISORS
ACCOUNTANTS & ADVISORS
Sydney Office
Sydney Office
Sydney Office
Level 29, 66 Goulburn Street
Level 29, 66 Goulburn Street
Level 29, 66 Goulburn Street
Sydney NSW 2000
Sydney NSW 2000
Sydney NSW 2000
Parramatta Office
Parramatta Office
Parramatta Office
Level 7, 3 Horwood Place
Level 7, 3 Horwood Place
Level 7, 3 Horwood Place
Parramatta NSW 2150
Parramatta NSW 2150
Parramatta NSW 2150
Telephone: +61 2 8263 4000
Telephone: +61 2 8263 4000
Telephone: +61 2 8263 4000
williambuck.com
williambuck.com
williambuck.com
William Buck is an association of firms, each trading under the name of William Buck across Australia
William Buck is an association of firms, each trading under the name of William Buck across Australia
William Buck is an association of firms, each trading under the name of William Buck across Australia
and New Zealand with affiliated offices worldwide.
and New Zealand with affiliated offices worldwide.
and New Zealand with affiliated offices worldwide.
Liability limited by a scheme approved under Professional Standards Legislation.
Liability limited by a scheme approved under Professional Standards Legislation.
Liability limited by a scheme approved under Professional Standards Legislation.
(WB013_2007)
(WB013_2007)
(WB013_2007)
13
13
13
Pg 25
Acumentis Annual Report 2020 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
Revenue from rendering of services
Other income
Expenses from operating activities:
Employee expenses
Software, printing & stationary expenses
Marketing expenses
Communications expenses
Insurance expenses
Administration expenses
Occupancy expenses
Depreciation and amortisation expenses
Impairment of right of use assets
Impairment of investment in associated entity
Impairment of intangible assets
Other expenses from operating activities
Results from operating activities
Finance income
Finance expense
Share of net loss of associates accounted for using the equity method
Loss before tax
Income tax benefit
Loss for the year attributable to owners of the parent
Notes
1
3(a)
13(b)
6(d)
3(b)
3(b)
2020
$000
36,666
2,619
39,285
2019
$000
41,493
1,502
42,995
29,122
2,694
33,376
2,576
374
710
2,271
1,418
771
2,078
497
-
-
1,817
41,752
514
663
1,716
1,533
2,053
808
-
753
12,284
2,147
58,423
(2,467)
(15,428)
18
(494)
(476)
(86)
44
(204)
(160)
(29)
(3,029)
(15,617)
4
474
469
(2,555)
(15,148)
Total other comprehensive income (net of tax)
Total comprehensive loss for the year attributable to owners of the parent
-
-
(2,555)
(15,148)
Basic earnings per share
Diluted earnings per share
22(a)
22(b)
(1.76 cents)
(1.73 cents)
($18.36)
($18.36)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
Pg 26
Acumentis Annual Report 2020
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Assets
Cash and cash equivalents
Term deposits
Trade and other receivables
Income tax receivable
Other current assets
Total current assets
Deferred tax assets
Term deposits
Plant and equipment
Right of use assets
Intangible assets
Investments accounted for using the equity method
Total non-current assets
Total assets
Liabilities
Trade and other payables
Borrowings
Lease liabilities
Current tax liabilities
Employee benefits
Total current liabilities
Borrowings
Lease liabilities
Deferred tax liabilities
Employee benefits
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
(Accumulated deficit) / Retained earnings
Total equity
Notes
5(a)
5(b)
5(c)
6(a)
6(g)
6(f)
5(b)
6(b)
6(c)
6(d)
13(b)
5(d)
5(e)
5(f)
6(e)
6(h)
5(e)
5(f)
6(f)
6(h)
6(i)
2020
$000
1,830
25
4,673
-
895
7,423
2,818
795
800
2,580
25,562
1,114
33,668
2019
$000
1,816
72
3,832
480
1,019
7,219
2,172
846
880
-
25,173
571
29,642
41,091
36,861
2,196
1,300
1,158
-
4,255
8,909
2,600
2,364
-
471
182
5,617
2,568
1,999
56
46
3,939
8,608
3,250
-
7
517
192
3,966
14,526
26,565
12,574
24,287
7
44,477
39,293
(17,912)
(15,006)
26,565
24,287
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Pg 27
Acumentis Annual Report 2020
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Balance at 1 July 2018
Change in accounting policy
Total comprehensive loss attributable to members of the parent
entity
Shares issued
Dividends to shareholders
Balance at 30 June 2019
Balance at 1 July 2019
Change in accounting policy (note)
Total comprehensive loss attributable to members of the parent
entity
Shares issued
Balance at 30 June 2020
25
7
Retained
Earnings /
(Accumulat-
ed Deficit)
$000
1,732
(68)
Total
Equity
$000
35,625
(68)
(15,148)
(15,148)
Notes
Share Capital
$000
33,893
-
-
5,400
-
-
(1,522)
39,293
(15,006)
39,293
(15,006)
(351)
-
-
5,400
(1,522)
24,287
24,287
(351)
(2,555)
(2,555)
5,184
-
44,477
(17,912)
5,184
26,565
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Pg 28
Acumentis Annual Report 2020 CONSOLIDATED STATEMENT OF CASH FLOWS
Cash flows from operating activities
Cash receipts in the course of operations
Government grants received
Cash payments in the course of operations
Interest received
Interest paid
Dividends received
Decrease in security deposits
Income tax refunded / (paid)
Net cash (used in) / provided by operating activities
Cash flows from investing activities
Payments for plant and equipment
Payments for intangible assets
Purchase of investments
- Acquisition of controlled entity
- Acquisition of unincorporated businesses
- Acquisition of associated entity
Net cash used in investing activities
Cash flows from financing activities
Shares issued net of costs
Borrowings received
Repayment of borrowings
Repayment of lease liabilities
Dividends paid
Notes
2020
$000
41,483
629
2019
$000
51,166
-
(42,826)
(50,309)
18
(495)
-
98
498
(595)
(324)
(870)
-
-
(628)
(1,822)
5,010
2,120
(3,469)
(1,230)
-
44
(204)
64
64
(769)
56
(260)
(679)
(3,695)
(42)
-
-
7,152
(1,903)
(63)
(1,522)
8(a)
6(b)
6(d)
12(a)
7(a)
Net cash provided from financing activities
Net increase / (decrease) in cash and cash equivalents held
Cash and cash equivalents at beginning of the year
2,431
3,664
14
(956)
1,816
2,772
Cash and cash equivalents at the end of the year
5(a)
1,830
1,816
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Pg 29
Acumentis Annual Report 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
How numbers are calculate .................................................................................................. 31
1
2
3
4
5
6
7
8
Revenue ............................................................................................................................31
Material profit or loss items..............................................................................................32
Other income and expense items ....................................................................................33
Income tax expense .........................................................................................................34
Financial assets and financial liabilities ...........................................................................35
Non-financial assets and liabilities ..................................................................................38
Equity ................................................................................................................................52
Cash flow information .......................................................................................................53
Risk ..................................................................................................................................... 54
9
10
11
Significant estimates & judgements ................................................................................54
Financial risk management ..............................................................................................54
Capital management ........................................................................................................58
Group structure ................................................................................................................... 60
12
13
Business combinations.....................................................................................................60
Interests in other entities .................................................................................................61
Unrecognised items .............................................................................................................. 65
14
15
16
17
18
Contingent liabilities .........................................................................................................65
Commitments ...................................................................................................................65
Guarantees .......................................................................................................................65
Events occurring after the reporting period .....................................................................66
Going Concern ..................................................................................................................66
Other information ................................................................................................................ 68
19
20
21
22
23
24
25
Related party transactions ...............................................................................................68
Share-based payments ....................................................................................................68
Remuneration of auditors .................................................................................................70
Earnings per share ............................................................................................................70
Parent entity financial information ...................................................................................71
Summary of significant accounting policies ....................................................................72
Changes to accounting policies ........................................................................................84
Pg 30
Acumentis Annual Report 2020
HOW NUMBERS ARE CALCULATED
This section provides additional information about those individual line items in the financial statements
that the directors consider most relevant in the context of the operations of the entity, including:
a)
Accounting policies that are relevant for an understanding of the items recognised in the financial
statements. These cover situations where the accounting standards either allow a choice or do not deal
with a particular type of transaction;
b)
c)
Analysis and sub-totals, including segment information; and
Information about estimates and judgements made in relation to particular items.
1
Revenue
Revenue from rendering of services
Recovery of disbursements
Recharge of shared services to licensees
2020
$000
36,539
57
70
36,666
2019
$000
40,899
100
494
41,493
(a)
Revenue from rendering of services
Revenue from the rendering of services to clients is recognised when the individual performance obligation
under the applicable contract is satisfied and at the price agreed in the contract. For the large majority
of contracts, there is a single performance obligation at the completion of the service and revenue is
recognised at this point.
(b)
Recovery of disbursements
Where the contract with the client allows the recovery of disbursements incurred in delivering the
services, these are billed to the client at the time the performance obligation in the contract is satisfied or
in accordance with an agreed billing schedule as appropriate.
(c)
Recharge of shared services to licensees
Revenue relating to the provision of shared services to licensees is billed and recognised on a monthly
basis over the term of the agreement relating to the provision of such services.
Further information on the measurement and timing of recognition of revenues may be found in note
24(e).
Pg 31
Acumentis Annual Report 2020
2
Material profit or loss items
The Consolidated Entity has identified a number of items which are material due to the significance of
their nature and/or amount. These are listed separately here to provide a better understanding of the
financial performance of the Consolidated Entity.
Income
Insurance proceeds
Government grants received
Licence termination fee
Expenses
Impairment of intangible assets
Impairment of investment in associated entity
Impairment of right of use assets
Consultant costs associated with criminal cyber-attack
Redundancy and termination costs
(a)
Impairment of intangible assets
2019
Notes
3(a)
3(a)
3(a)
2(a)
2(b)
2(c)
2020
$000
1,095
1,315
150
-
-
497
791
271
2019
$000
995
-
-
12,284
753
-
402
245
As a result of the reduction in revenues, profits and cashflows from the business units that rely upon bank
lender valuation instructions following the criminal cyber-attacks in February and May 2019, as well as
reduced revenues received by the Statutory Services business units, the carrying value of goodwill in the
residential, commercial and regional business units was tested at 30 June 2019.
Based upon the estimated recoverable amounts of the cash generating units detailed above, an impairment
charge of $12,284,000 was recognised through the Statement of Profit or Loss and Other Comprehensive
Income.
(b)
Impairment of investment in associated entity
2019
As a result of the reduction in revenues, profits and cashflows following the criminal cyber-attacks in
February and May 2019, the carrying value of Acumentis’ investment in its associate, was tested at 30
June 2019.
Based upon the estimated recoverable amounts of the associate an impairment charge of $753,000 was
recognised through the Statement of Profit or Loss and Other Comprehensive Income.
(c)
Impairment of right of use assets
2020
The impairment charge relates to the right of use assets comprising office leases that are no longer used
by the business. There are two such leases, one of which has already been sub-let and other is expected
to be assigned within the next 6 months.
For the sub-lease, the impairment charge represents the difference between the net book value of the
assets and the net present value of future expected sub-lease income.
Pg 32
Acumentis Annual Report 2020
For the assignment, the impairment charge represents the difference between the net book value of the
right of use asset and the net present value of incentives expected to be provided to the assignee in order
to exit the lease, less future liabilities that will be avoided via the assignment.
3
Other income and expense items
This note provides a breakdown of the items included in ‘other income’ and ‘finance income and expenses’.
Information about specific profit and loss items (such as gains and losses in relation to the sale of plant &
equipment) is disclosed in the related statement of financial position notes.
(a)
Other income
Government grants received
Insurance proceeds
Licence fee income
Licence termination fee
Sundry income
2020
$000
1,315
1,095
9
150
50
2,619
2019
$000
-
995
466
-
41
1,502
Government grant income represents Cashflow Boost and JobKeeper support provided by the Federal
Government in response to the COVID-19 pandemic. Government grants are recognised when the
Consolidated Entity has reasonable assurance that the eligibility conditions have been complied with and
that the grant will be received.
Insurance proceeds represents the net benefit received as a result of insurance claims made following the
criminal cyber-attacks in February and May 2019. Insurance proceeds are recognised when the applicable
insurer has confirmed cover and the benefit payable under that cover.
Licence fee income represented fees charged to non-controlled entities which had been licenced to
use the LMW brand and systems. Licence fees were charged as a percentage of revenue earned by the
licensee. Licence fee income was recognised when the right to receive the income has been established.
The Company ceased licencing arrangements on 31 July 2019.
(b)
Finance income and expenses
Finance income
Finance expenses
2020
$000
18
(494)
(476)
2019
$000
44
(204)
(160)
Pg 33
Acumentis Annual Report 2020
Finance income comprises interest income on funds invested. Interest income is recognised using the
effective interest rate method, which, for floating rate financial assets, is the rate inherent in the instrument.
Interest income is recognised as it accrues in the Statement of Profit & Loss and Other Comprehensive
Income, using the effective interest method.
Finance expenses comprise interest expense on borrowings and unwinding of the discount on financial
assets. All borrowing costs are recognised in the Statement of Profit & Loss and Other Comprehensive
Income using the effective interest method.
4
Income tax expense
This note provides an analysis of the Consolidated Entity’s income tax expense, shows what amounts are
recognised directly in equity and how the tax expense is affected by non-assessable and non-deductible
items. It also explains significant estimates made in relation to the Consolidated Entity’s tax position.
(a)
Income tax benefit
Current tax
Current year tax loss carried forward
Adjustments for prior years
Total current tax benefit
Deferred income tax
Decrease in deferred tax assets (note 6(f))
(Decrease) / increase in deferred tax liabilities (note 6(f))
Total deferred tax expense
Income tax benefit
2020
$000
(764)
179
(585)
118
(7)
111
2019
$000
(705)
87
(618)
142
7
149
(474)
(469)
Pg 34
Acumentis Annual Report 2020
(b)
Reconciliation of income tax benefit to prima facie tax payable
Loss from continuing operations before tax
2020
$000
2019
$000
(3,029)
(15,617)
Prima facie income tax benefit calculated at 27.5% on profit (2019: 30%)
(833)
(4,685)
Increase/(decrease) in income tax expense due to:
Non-assessable income (Federal Government Cashflow Boost)
(14)
-
Non-deductible expenses
- Intangible asset impairment
- Investment impairment
- Acquisition costs
- Entertainment
- Other expenses
Non-assessable share of loss of associate
Adjustments for prior years
Restatement of future tax benefit from 27.5% to 26.0%1
Income tax benefit
-
-
-
6
1
24
(816)
179
163
(474)
3,685
226
158
22
30
8
(556)
87
-
(469)
1.
The Consolidated Entity is subject to the lower company tax rate for entities with an aggregated turnover of less than $50M. This tax rate reduces from
27.5% to 26% effective 1 July 2020 and accordingly the balance on the future income tax benefit account has been restated from 27.5% to 26.0%.
5
Financial assets and financial liabilities
This note provides information about the Consolidated Entity’s financial instruments, including:
• An overview of all financial instruments held by the Consolidated Entity;
•
Specific information about each type of financial instrument;
• Accounting policies; and
•
Information about determining the fair value of the instruments, including judgements and estimation
uncertainty involved.
The Consolidated Entity holds the following financial instruments:
Financial assets at amortised cost
Cash and cash equivalents
Term deposits
Trade and other receivables
Financial liabilities at amortised cost
Trade and other payables
Borrowings
Lease liabilities
Note
5(a)
5(b)
5(c)
5(d)
5(e)
5(f)
2020
$000
1,830
820
4,673
7,232
2,197
3,900
3,522
9,619
2019
$000
1,816
918
3,832
6,566
2,568
5,249
56
7,873
Pg 35
Acumentis Annual Report 2020
(a)
Cash and cash equivalents
Financial assets at amortised cost
Cash at bank and on hand
Cash and cash equivalents in the Statement of Cash Flows
Access was available at the reporting date to the following lines of credit:
Available
Bank bill facility
Bank overdraft
Unused at reporting date
Bank bill facility
Bank overdraft
2020
$000
1,830
1,830
2019
$000
1,816
1,816
2020
$000
3,900
1,200
5,100
-
1,200
1,200
2019
$000
5,000
1,200
6,200
-
1,200
1,200
The bank overdraft facility may be drawn at any time and may be terminated by the bank without notice.
The bank bill and overdraft facilities are secured via fixed and floating charges over the assets and business
of the Consolidated Entity.
As at 30 June 2020, the Consolidated Entity has satisfied all covenants in relation to the bill facility.
The facilities are subject to annual review with the next review in October 2020.
(b)
Term deposits
Term deposits that have a maturity of three months or less from the date of acquisition, which do not
provide security for long term commitments (for example property lease guarantees) and are repayable
with 24 hours’ notice with no loss of interest are included in cash and cash equivalents.
Term deposits that do not satisfy these requirements are recorded as separate financial assets.
(c)
Trade and other receivables
Current
Trade receivables
Less: provision for expected credit losses
Other receivables
Pg 36
2020
$000
4,568
(82)
187
4,673
2019
$000
3,919
(250)
163
3,832
Acumentis Annual Report 2020
(i)
Classification as trade and other receivables
Trade receivables are amounts due from customers for services performed in the
ordinary course of business. Other receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active market. If collection
of the amounts is expected in one year or less they are classified as current assets. If
not, they are presented as non-current assets. Trade receivables are generally due for
settlement within 30 days and therefore are all classified as current. The Consolidated
Entity’s impairment and other accounting policies for trade and other receivables are
outlined in notes 10(a) and 24(k) respectively.
(ii)
Fair values of trade and other receivables
Due to the short-term nature of the current receivables, their carrying amount is
considered to be the same as their fair value.
(iii)
Impairment and risk exposure
Information about the impairment of trade and other receivables, their credit quality and
the Consolidated Entity’s exposure to credit risk, foreign currency risk and interest rate
risk can be found in note 10.
(d)
Trade and other payables
Current
Trade payables
Other payables and accrued expenses
2020
$000
994
1,202
2,196
2019
$000
1,407
1,161
2,568
Trade payables are unsecured and are usually paid within 30 days of recognition. The carrying amounts of
trade and other payables are considered to be the same as their fair values, due to their short-term nature.
(e)
Borrowings
Current
Short term loan
Commercial bank bills
Non-Current
Commercial bank bills
Total
2020
$000
-
1,300
1,300
2019
$000
249
1,750
1,999
2,600
3,250
3,900
5,249
Pg 37
Acumentis Annual Report 2020
Secured liabilities
The commercial bank bills are secured via fixed and floating charges over the assets and business of the
Consolidated Entity.
(f)
Lease liabilities
Current
Lease liabilities – right of use assets
Lease liabilities – finance leases
Non-Current
Lease liabilities – right of use assets
Total
Payable as follows
Within one year
One year or later and no later than five years
Later than five years
Future finance charges
Recognised as a liabilit
Secured liabilities
2020
$000
1,158
-
1,158
2,364
3,522
1,386
2,505
-
3,891
(369)
3,522
2019
$000
-
56
56
-
56
62
-
-
62
(6)
56
Lease liabilities are effectively secured as the interests in the right of use assets recognised in the financial
statements revert to the lessor in the event of default.
6
Non-financial assets and liabilities
This note provides information about the Consolidated Entity’s non-financial assets and liabilities,
including:
•
Specific information about each type of non-financial asset and non-financial liability:
- Income tax receivable (note 6(a))
- Deferred tax balances (note 6(f))
- Plant and equipment (note 6(b))
- Other current assets (note 6(g))
- Right of use assets (note 6(c))
- Employee benefit obligations (note 6(h))
- Intangible assets (note 6(d))
- Provisions (note 6(i))
- Current tax liabilities (note 6(e))
• Accounting policies; and
•
Information about determining the fair value of the assets and liabilities, including judgements and
estimation uncertainty involved.
Pg 38
Acumentis Annual Report 2020
(a)
Income tax receivable
Current
Income tax receivable
2020
$000
-
2019
$000
480
As a large taxpayer, Acumentis ordinarily remits monthly income tax instalments to the Australian Taxation
Office based on the revenues recorded each month. The 2019 balance represented overpayment of
income tax instalment amounts which was refunded in July 2019.
(b)
Plant & equipment
Cost
Balance at 1 July 2018
Acquisition of controlled entities
Additions – cash
Disposals
Balance at 30 June 2019
Balance at 1 July 2019
Additions – cash
Additions – non cash
Disposals
Balance at 30 June 2020
Accumulated Depreciation
Balance at 1 July 2018
Acquisition of controlled entities
Depreciation charge for the year
Disposals
Balance at 30 June 2019
Balance at 1 July 2019
Depreciation charge for the year
Disposals
Balance at 30 June 2020
Carrying Amounts
1 July 2018
30 June 2019
1 July 2019
30 June 2020
Office Equipment
$000
Furniture and Fittings
$000
Leasehold
Improvements
$000
868
1,359
203
(447)
1,983
1,983
156
-
-
2,139
483
1,225
278
(447)
1,539
1,539
267
-
1,806
385
444
444
333
58
523
44
(10)
615
615
9
-
(3)
621
24
308
65
(10)
387
387
83
(3)
467
34
228
228
154
550
218
13
(348)
433
433
159
54
(84)
562
276
154
84
(289)
225
225
108
(84)
249
274
208
208
313
Total
$000
1,476
2,100
260
(805)
3,031
3,031
324
54
(87)
3,322
783
1,687
427
(746)
2,151
2,151
458
(87)
2,522
693
880
880
800
Pg 39
Acumentis Annual Report 2020
(i)
Recognition and measurement
Items of plant and equipment are stated at cost less accumulated depreciation (see below) and
impairment losses (see accounting policy Note 24(m)).
When parts of an item of plant and equipment have different useful lives, they are accounted for
as separate items (major components) of plant and equipment.
Gains and losses on disposal of an item of plant and equipment are determined by comparing the
proceeds from disposal with the carrying amount of plant and equipment and are recognised net
within “other income” in the Statement of Profit & Loss and Other Comprehensive Income.
(ii)
Depreciation
Depreciation is charged to the Statement of Profit & Loss and Other Comprehensive Income on a
straight-line basis over the estimated useful lives of each part of an item of plant and equipment.
Leased assets are depreciated over the shorter of the lease term and their useful lives, unless it is
reasonably certain that the Consolidated Entity will obtain ownership by the end of the lease term.
The estimated useful lives in the current and comparative periods are as follows:
•
•
•
•
Office equipment
Furniture and fittings
2-5 years
4-5 years
Leasehold improvements
lesser of life of the lease or 10 years
Right of use assets
life of the underling lease
The residual value, the useful life and the depreciation method applied to an asset are reassessed
at least annually.
(iii)
Leased assets
As at 30 June 2019, office equipment and furniture and fittings included the following amounts
where the Consolidated Entity was a lessee under finance leases:
Leased equipment
Cost
Accumulated depreciation
Net book value
2020
$000
-
-
-
2019
$000
274
(223)
51
From 1 July 2019, leased assets are separately disclosed as “right of use assets” within property, plant &
equipment in the balance sheet. Refer note 25 for details about the changes in accounting policy.
Pg 40
Acumentis Annual Report 2020
(c)
Right of use assets
(i)
Amounts recognised in the balance sheet.
Cost
Balance at 1 July 2018
Additions
Disposals
Balance at 30 June 2019
Balance at 1 July 2019
Change of accounting policy (note 25)
Additions
Disposals
Balance at 30 June 2020
Accumulated Depreciation
Balance at 1 July 2018
Depreciation charge for the year
Disposals
Balance at 30 June 2019
Balance at 1 July 2019
Change of accounting policy (note 25)
Depreciation charge for the year
Impairment charge
Disposals
Balance at 30 June 2020
Carrying Amounts
1 July 2018
30 June 2019
1 July 2019
30 June 2020
Lease liabilities
Current
Non-current
Buildings
$000
Office Equipment
$000
-
-
-
-
-
6,794
62
(402)
6,454
-
-
-
-
-
2,719
1,091
497
(400)
3,907
-
-
-
2,547
-
-
-
-
-
142
-
-
142
-
-
-
-
-
61
48
-
-
109
-
-
-
33
2020
$000
1,158
2,364
3,522
Total
$000
-
-
-
-
-
6,936
62
(402)
6,596
-
-
-
-
-
2,780
1,139
497
(400)
4,016
-
-
-
2,580
1 July
2019 *
$000
1,345
3,289
4,634
•
In the previous year, the Consolidated Entity recognised leased assets and lease liabilities in relation to
leases that were classified as “finance leases” under AASAB 117 Leases. For adjustments recognised
on adoption of AASB 16 on 1 July 2019 refer to note 25
Pg 41
Acumentis Annual Report 2020
(ii)
Amounts recognised in the statement of profit or loss
The statement of profit or loss shows the following amounts relating to leases:
Depreciation and impairment charge of right of use assets
Buildings
Office equipment
Interest expenses (included in finance cost)
Expenses relating to short term leases (included in software, printing &
stationery expenses and occupancy expenses)
Expenses relating to low value assets that are not shown above as short
term leases (included in Software, printing & stationery expenses)
The total cash outflow for leases in 2020 was $2,518,000.
2020
$000
1,588
48
1,636
219
379
911
2019
$000
-
-
-
-
-
-
(iii)
The Consolidated Entities leasing activities and how these are accounted for
The Consolidated Entity leases offices, equipment and software. Contracts are typically for fixed
periods of up to 7 years but may include extension options.
Contracts may contain both lease and non-lease components. The Consolidated Entity allocates the
consideration in the contract to the lease and non-lease components based on their relative stand
alone prices, however for leases of real estate for which the Consolidated Entity is the lessee, it has
elected not to separate lease and non-lease components and instead accounts for these as a single
lease component
Lease terms are negotiated on an individual basis and contain a wide range of different terms and
conditions. These agreements do not impose covenants other than the security interests in the
leased assets that are held by the lessor. Leased assets may not be used as security for borrowing
purposes.
Until the 2019 financial year, leases of property, plant and equipment were classified as either
finance or operating leases. From 1 July 2019, leases are recognised as a right of use asset and a
corresponding liability at the date at which the leased asset is available for use by the Consolidated
Entity.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease
liabilities include the net present value of the following lease payments:
• fixed payments, less incentives receivable;
• variable payments that are based on an index or rate, initially measured using the index or
rate as at the commencement date; and
• amounts expected to be payable under residual value guarantees
Lease payments to be made under reasonably certain extension options are also included in the
measurement of liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be
determined, the lessee’s incremental borrowing rate is used.
Pg 42
Acumentis Annual Report 2020 Lease payments are allocated between principal and finance cost with the finance cost charged to
the profit and loss over the lease period so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period.
Right of use assets are measured at cost comprising the following:
• the amount of the initial measurement of the lease liability;
• any lease payments made at or before the commencement date less any lease incentives received;
• any initial direct costs; and
• restoration costs.
Right of use assets are generally depreciated over the shorter of the assets useful life and the lease
term on a straight line basis.
Payments associated with short term leases (with a term of 12 months or less) or low value assets
are recognised on a straight line basis as an expense in the profit or loss.
(iv)
Impairment charge
The impairment charge relates to the right of use assets comprising office leases that are no longer
used by the business. There are two such leases, one of which has already been sub-let and other is
expected to be assigned within the next 6 months.
For the sub-lease, the impairment charge represents the difference between the net book value of
the assets and the net present value of future expected sub-lease income.
For the assignment, the impairment charge represents the difference between the net book value of
the right of use asset and the net present value of incentives expected to be provided to the assignee
in order to exit the lease less future liabilities that will be avoided via the assignment.
(d)
Intangible assets
Goodwill
Customer relationships
Computer software
Trademarks
Notes
(i) – (iv)
(i) – (iv)
(v)
(vi)
2020
$000
13,884
10,000
1,436
242
25,562
2019
$000
13,884
10,000
1,247
42
25,173
Customer relationships relate to an assessment of the value of contractual and other relationships within
acquired businesses. These assets have an indefinite useful life as it is not possible to forecast if, or when,
these relationships will end. Accordingly, the value of customer relationships is not amortised, however it
is tested for impairment annually.
Pg 43
Acumentis Annual Report 2020 (i)
Goodwill & customer relationships
The acquisition method of accounting is used to account for all business combinations, regardless
of whether equity instruments or other assets are acquired. The consideration transferred for the
acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred
and the equity interests issued by the Consolidated Entity.
Where the acquired subsidiary has significant long-term contracts or other customer relationships
the future value of these relationships is assessed and is included as an asset in the fair value above
of assets transferred.
Goodwill on the acquisition of subsidiaries is included in intangible assets. Goodwill is not amortised
but it is tested for impairment annually or more frequently if events or changes in circumstances
indicate that it might be impaired, and is carried at cost less accumulated impairment losses.
Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the
entity sold. Goodwill is allocated to cash generating units for the purpose of impairment testing.
The allocation is made to those cash generating units or groups of cash generating units that are
expected to benefit from the business combination in which the goodwill arose.
(ii)
Subsequent expenditure
Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the
future economic benefits embodied in the specific asset to which it relates. All other expenditure is
expensed as incurred.
(iii)
Impairment tests for goodwill & customer relationships
Goodwill & customer relationships have indefinite useful lives and are not amortised. The goodwill
& customer relationships amounts are tested for impairment annually by estimating the recoverable
amount of the cash generating units based on value in use.
The following cash generating units have significant carrying amounts for goodwill & customer
relationships:
Pg 44
Acumentis Annual Report 2020 Goodwill
Residential valuations
Regional valuations
Government Services
Customer relationships
Government Services
Movement in Goodwill
Balance at 1 July
Acquisition of controlled entity
Impairment charge
Balance at 30 June
Movement in customer relationships
Balance at 1 July
Balance at 30 June
2020
$000
3,016
8,963
1,905
13,884
10,000
10,000
13,884
-
-
13,884
10,000
10,000
2019
$000
3,016
8,963
1,905
13,884
10,000
10,000
17,205
8,963
(12,284)
13,884
10,000
10,000
(iv)
Impairment review and charge
2020
The carrying value of goodwill and customer relationships was tested as at 30 June 2020 and no
impairment was required.
The key assumptions and the approach to determining the value in use when estimating the recoverable
amount of a cash generating unit were:
Assumption How determined
Cash flows
The forecast 5-year cash flows were based on forecast results for the year ended 30
June 2021. The 2021 forecast forms the basis of cash flows in subsequent financial
years adjusted based on the following assumptions determined on management’s past
experience:
• Reduction in revenues in the first year and a 3%-5% increase in the years after
reflecting the rebuilding of the Acumentis business following the criminal cyber-
attacks and impacts of COVID-19;
• Overheads maintained a current levels and a 3% increase in the years after;
• Increase in employment expenses calculated as 50%-60% of the increase in
revenue in the years after; and
• Terminal value at the end of year 5 based on year 5 cash flows.
Discount rate The discount rate adopted was a pre-tax rate of 13% and was based on the current risk-
free interest rate, industry and business specific risk factors, market borrowing rates and
investor expected returns.
Pg 45
Acumentis Annual Report 2020 On forecast 5-year cash flows, further impairments would have been necessary in:
• Residential if the discount rate was increased to 17%,
• Regional if the discount rate was increased to 22%,
• Statutory Services if the discount rate was increased to 22% and all other variables
remained unchanged.
Government services contract
The goodwill and customer relationships relating to the government services cash generating unit are
predominantly supported by a large contract that expires in December 2020 and is currently subject to
a re-tender process within which the Consolidated Entity has submitted a tender. The directors of the
Consolidated Entity are confident that the Consolidated Entity will retain the contract and accordingly
the cashflows supporting the recoverable amounts have been extended beyond December 2020. If the
Consolidated Entity is unsuccessful in retaining this contract, then the goodwill and customer relationship
intangible assets will become impaired and will likely be written down to nil value.
2019
As a result of the reduction in revenues, profits and cashflows from the business units that rely upon
bank lender valuation instructions following the data disclosure arising from the criminal cyber-attacks in
February and May 2019 as well as reduced revenues received by the Statutory Services business units,
the carrying value of goodwill in the Residential, Commercial and Statutory Services business units was
tested at 30 June 2019.
Based upon the estimated recoverable amounts of the cash generating units detailed above an impairment
charge of $12,284,000 was recognised through the Statement of Profit or Loss and Other Comprehensive
Income. This comprises $4,057,000 for Residential, $1,833,000 for Commercial and $6,394,000 for
Statutory Services cash generating units respectively.
The key assumptions and the approach to determining the value in use when estimating the recoverable
amount of a cash generating unit were:
Assumption How determined
Cash flows
The forecast 5-year cash flows were based on forecast results for the year ended 30
June 2019. The 2020 forecast forms the basis of cash flows in subsequent financial
years adjusted based on the following assumptions determined on management’s past
experience:
• Reduction in revenues in the first year and a 3%-10% increase in the years after
reflecting the rebuilding of the Acumentis business following the criminal cyber-
attacks;
• Reduction in overheads expenses in the first year and 3% increase in the years
after;
• Reduction in employment expenses in the first year and an increase in employee
expense calculated as 50%-60% of the increase in revenue in the years after; and
• Terminal value at the end of year 5 based on year 5 cash flows.
Discount rate The discount rate adopted was a pre-tax rate of 13% and was based on the current risk-
free interest rate, industry and business specific risk factors, market borrowing rates and
Pg 46
Acumentis Annual Report 2020 investor expected returns.
On forecast 5-year cash flows, further impairments would have been necessary in Residential and
Statutory Services if the discount rate was increased beyond 13% and all other variables remained
unchanged.
There would not be any impairment for Regional until the discount rate reached 17% with all other
variables are unchanged.
(v)
Computer software
Movement in computer software
Balance at 1 July
Additions
Amortisation
Balance at 30 June
2020
$000
1,247
617
(428)
1,436
2019
$000
973
679
(405)
1,247
Costs incurred in developing products or systems and costs incurred in acquiring software and
licences that will contribute to future period financial benefits through revenue generation and/or
cost reduction are capitalised to software and systems. Costs capitalised include external direct
costs of materials and service and direct payroll and payroll related costs of employees’ time spent
on the project.
Amortisation is calculated on a straight-line basis over periods generally ranging from 3 to 5 years.
IT development costs include only those costs directly attributable to the development phase and
are only recognised following completion of technical feasibility and where the entity has an intention
and ability to use the asset.
(vi)
Trademarks
Movement in trademarks
Balance at 1 July
Additions
Disposals
Balance at 30 June
2020
$000
42
242
(42)
242
2019
$000
42
-
-
42
Pg 47
Acumentis Annual Report 2020
(e)
Current tax liabilities
Current
Tax liability
2020
$000
-
2019
$000
46
The current tax liability for the Consolidated Entity of $Nil (2019: $46,000) represents the amount of
income taxes payable in respect of current and prior financial periods. In accordance with the tax
consolidation legislation, Acumentis Group Limited as the head entity of the Australian tax-consolidated
group has assumed responsibility for the current tax asset/liability initially recognised by the members in
the tax-consolidated group.
Income tax on the Statement of Profit & Loss and Other Comprehensive Income for the year comprises
current and deferred tax. Income tax is recognised in the Statement of Profit & Loss and Other
Comprehensive Income except to the extent that it relates to items recognised directly in equity, in which
case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the end of the reporting period, and any adjustment to tax payable in respect of
previous years.
The Company and its wholly-owned Australian resident entities have formed a tax-consolidated group
with effect from 1 July 2003 and are therefore taxed as a single entity from that date. Newly acquired
wholly-owned entities are immediately added to the tax-consolidation group. The head entity within the
tax-consolidated group is Acumentis Group Limited.
(i)
Tax consolidation
Current tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary
differences of the members of the tax-consolidated group are recognised in the separate financial
statements of the members of the tax-consolidated group using the group allocation approach by
reference to the carrying amounts of assets and liabilities in the separate financial statements of
each entity and the tax values applying under tax consolidation.
Any current tax liabilities (or assets) and deferred tax assets arising from unused tax losses of the
subsidiaries are assumed by the head entity in the tax-consolidated group and are recognised as
amounts payable (receivable) to (from) other entities in the tax-consolidated group in conjunction
with any tax funding arrangement amounts (refer below). Any difference between these amounts
is recognised by the Company as an equity contribution or distribution.
The Company recognises deferred tax assets arising from unused tax losses of the tax-consolidated
group to the extent that it is probable that future taxable profits of the tax-consolidated group will
be available against which the tax losses can be utilised.
Any subsequent period adjustments to deferred tax assets arising from unused tax losses as a
result of revised assessments of the probability of recoverability are recognised by the head entity
only.
Pg 48
Acumentis Annual Report 2020 (ii)
Nature of tax funding arrangements and tax sharing arrangements
The head entity, in conjunction with other members of the tax-consolidated group, has entered into a
tax funding arrangement which sets out the funding obligations of members of the tax-consolidated
group in respect of tax amounts. The tax funding arrangements require payments to/from the
head entity equal to the current tax liability (asset) assumed by the head entity and any tax-loss
deferred tax asset assumed by the head entity, resulting in the head entity recognising an inter-
entity receivable (payable) equal in amount to the tax liability (asset) assumed. Any such inter-entity
receivables (payables) are at call.
Contributions to fund the current tax liabilities are payable as per the tax funding arrangement and
reflect the timing of the head entity’s obligation to make payments for tax liabilities to the relevant
tax authorities.
The head entity in conjunction with other members of the tax-consolidated group has also entered
into a tax sharing agreement. The tax sharing agreement provides for the determination of the
allocation of income tax liabilities between the entities should the head entity default on its tax
payment obligations. No amounts have been recognised in the financial statements in respect of this
agreement as payment of any such amounts under the tax sharing agreement is considered remote.
(f)
Deferred tax balances
Deferred tax assets and liabilities are attributable to the following:
Recognised deferred tax assets
Right of use assets
Employee provisions
Provision for expected credit losses
Accruals
Operating lease provisions
Make good provisions
s40-880 ITAA 1936 “black hole” expenditure
Income tax losses carried forward
Other
Recognised deferred tax liabilities
Right of use assets
2020
$000
245
1,000
22
35
-
47
131
1,337
1
2,818
-
-
2019
$000
-
1,063
75
97
19
38
172
705
3
2,172
(7)
(7)
Pg 49
Acumentis Annual Report 2020
Movement in temporary differences during the year
Balance
1 July 19
$000
-
1,063
75
97
19
38
172
705
3
Change in
Accounting
Policy
$000
Recognised
in Profit &
Loss
$000
Recognised
in Retained
Earnings
$000
Change in
Tax Rate
$000
Balance
30 June 20
$000
88
-
-
-
(19)
-
-
-
-
171
(6)
(52)
(60)
-
12
(207)
709
(1)
566
-
-
-
-
-
-
174
-
-
174
(14)
(57)
(1)
(2)
-
(3)
(8)
(77)
(1)
(163)
245
1,000
22
35
-
47
131
1,337
1
2,818
2,172
69
(7)
-
7
-
-
-
Balance
1 July 18
$000
Change in
Accounting
Policy
$000
Recognised
in Profit &
Loss
$000
Recognised
in Retained
Earnings
$000
Acquisitions
$000
606
34
30
25
26
259
-
4
984
-
(29)
(29)
-
-
-
-
-
-
-
-
-
-
-
-
(115)
(5)
44
(6)
12
(87)
705
4
552
(7)
-
(7)
-
-
-
-
-
-
-
-
-
-
29
29
572
46
23
-
-
-
-
(5)
636
-
-
-
Balance
30 June 19
$000
1,063
75
97
19
38
172
705
3
2,172
(7)
-
(7)
2020
$000
895
2019
$000
1,019
Deferred tax assets
Right of use assets
Employee provisions
Doubtful debts
Accruals
Operating lease provisions
Make good provisions
S40-880 “black hole” expenditure
Income tax losses carried forward
Other
Deferred tax liabilities
Right of use assets
Deferred tax assets
Employee provisions
Doubtful debts
Accruals
Operating lease provisions
Make good provisions
S40-880 “black hole” expenditure
Provision for restructuring
Other
Deferred tax liabilities
Right of use assets
Work in progress
(g)
Other current assets
Prepaid expenses
Pg 50
Acumentis Annual Report 2020
(h)
Employee benefit obligations
Current
Annual leave
Long service leave
Performance pay
Non-Current
Long service leave
(i)
Provisions
Non-Current
Operating lease
Make Good
Movement in provisions
Balance at 1 July 2018
Reversal during year
Increase during year
Balance at 30 June 2019
Balance at 1 July 2019
Change in accounting policy
Utilised during year
Increase during year
Balance at 30 June 2020
2020
$000
1,747
1,628
880
4,255
471
2020
$000
-
182
182
Operating
Lease
$000
Notes
84
(20)
-
64
64
(64)
-
-
-
25
Make
Good
$000
88
-
40
128
128
-
(8)
62
182
2019
$000
1,351
1,676
912
3,939
517
2019
$000
64
128
192
Total
$000
172
(20)
40
192
192
(64)
(8)
62
182
(i)
Operating lease
Prior to adoption of new accounting standard AASB16 – Leases on 1 July 2019, provisions were
made in order to straight line the minimum lease payments for the rental of office space over the
total lease periods.
(ii)
Make good
The provision has not been discounted to its present value as the effect is not material. It is expected
that the expense will be incurred in a 5-year period.
Pg 51
Acumentis Annual Report 2020
7
(a)
Equity
Ordinary shares
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are
entitled to one vote per share on a poll at meetings of the Company. On a show of hands, every shareholder
present at a meeting or by proxy is entitled to one vote. There are currently 155,679,930 ordinary fully
paid shares on issue (2019: 85,134,111). Shares have no par value, and the Company does not have a
limited amount of capital.
Share capital
Balance as 30 June 2018
Net proceeds from issue of shares in relation to acquisition
Balance at 30 June 2019
Balance at 1 July 2019
Net proceeds from issue of shares via partially underwritten entitlements offer
(proceeds of $5,644,000 less costs of $634,000)
Future income tax benefit related to issue costs
Balance at 30 June 2020
Number
76,109,944
9,024,167
85,134,111
85,134,111
70,545,819
-
155,679,930
$000
33,893
5,400
39,293
39,293
5,010
174
44,477
On 23 August 2019, the company undertook a partially underwritten, 4 for 5 entitlements issue at 8 cents
a share which was fully subscribed and resulted in the issue of 68,045,819 ordinary shares and proceeds
(net of offer and placement costs) of $5,184,016. A further 2,500,000 ordinary shares were issued to the
underwriter and lead manager of the share offer in part consideration of the services provided.
(b)
Options to acquire ordinary shares
The holders of options are not entitled to receive dividends nor are they entitled to vote at meetings of the
Company.
Options
Balance as 30 June 2018
Balance at 30 June 2019
Balance at 1 July 2019
Issued to underwriter of partially underwritten entitlements offer
Balance at 30 June 2020
Number
-
-
-
2,500,000
2,500,000
On 23 August 2019, 2,500,000 options were issued to the underwriter and lead manager of the share
offer in part consideration of the services provided. These options have an exercise price of $0.12 and an
expiry date of 23 August 2023.
Pg 52
Acumentis Annual Report 2020
8
(a)
Cash flow information
Reconciliation of (loss) / profit after income tax to net cash inflow from operating activities
Loss for the period after tax
Adjustments for the period
Depreciation & amortisation
Write off of trademarks
Impairment of intangible assets
Impairment of investment in associated entity
Impairment of right of use assets
Share of losses of associates not received as dividends
Expected credit losses
Credit posted directly to retained earnings
Loss on disposal of fixed assets
Changes in assets & liabilities during the period net of amounts
relating to acquisition of controlled entities
(Increase)/decrease in security deposits
(Increase)/decrease in receivables
(Increase)/decrease in work in progress
(Increase)/decrease in deferred tax assets
(Increase)/decrease in other assets
Increase/(decrease) in payables
Increase/(decrease) in provision for income tax
Increase/(decrease) in deferred tax liabilities
Increase/(decrease) in employee provisions
Increase/(decrease) in other provisions
Net cash from operating activities
Notes
2020
$000
2019
$000
(2,555)
(15,148)
2,036
42
-
-
497
86
21
-
2
129
98
(862)
-
(403)
124
(372)
434
(7)
270
(6)
595
832
-
12,284
753
-
93
28
(68)
99
(1,127)
64
3,894
97
(552)
(304)
(769)
(693)
(22)
(512)
(20)
56
Pg 53
Acumentis Annual Report 2020 RISK
This section of the notes discusses the Consolidated Entity’s exposure to various risks and shows how
these could affect the Consolidated Entity’s financial position and performance.
9
Significant estimates & judgements
The preparation of financial statements requires the use of accounting estimates which, by definition,
will seldom equal the actual results. Management also needs to exercise judgement in applying the
Consolidated Entity’s accounting policies.
This note provides an overview of the areas that involved a higher degree of judgement or complexity,
and of items which are more likely to be materially adjusted due to estimates and assumptions turning
out to be wrong. Detailed information about each of these estimates and judgements is included in notes
1 to 7 together with information about the basis of calculation for each affected line item in the financial
statements.
The areas involving significant estimates or judgements are:
•
Impairment of goodwill (note 6(d))
• Provisions (note 6(i))
• Recognition of revenue (note 1)
10
Financial risk management
This note explains the Consolidated Entity’s exposure to financial risks and how these risks could affect
the Consolidated Entity’s future financial performance. Current year profit and loss information has been
included where relevant to add further context.
Risk
Exposure arising from
Measurement
Management
Credit risk
Cash and cash equivalents, trade
receivables and debt investments and
contract assets
Ageing analysis
Credit ratings
Diversification of bank
deposits
Credit limits
Liquidity risk
Borrowings and other liabilities
Rolling cash flow
forecasts
Availability of borrowing
facilities
Interest rate risk
Long-term borrowings at variable rates
Sensitivity analysis
Interest rate swaps
The Board of Directors has overall responsibility for the establishment and oversight of the risk management
framework. The Chief Executive Officer and Chief Financial Officer are responsible for developing and
monitoring risk management policies.
Risk management policies are established to identify and analyse the risks faced by the Consolidated
Entity, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk
management policies and systems are reviewed regularly to reflect changes in market conditions and
the Consolidated Entity’s activities. The Consolidated Entity, through their training and management
standards and procedures, aim to develop a disciplined and constructive control environment in which all
Pg 54
Acumentis Annual Report 2020 employees understand their roles and obligations.
The Consolidated Entity’s Audit Committee oversees how management monitors compliance with the
Consolidated Entity’s risk management policies and procedures and reviews the adequacy of the risk
management framework in relation to the risks faced by the Consolidated Entity.
(a)
Credit Risk
Credit risk is the risk of financial loss to the Consolidated Entity if a customer or counterparty to a financial
instrument fails to meet its contractual obligations and arises principally from the Consolidated Entity’s
receivables from wholesale and retail clients.
Trade and other receivables
The Consolidated Entity’s exposure to credit risk is influenced mainly by the individual characteristics
of each customer. The demographics of the Consolidated Entity’s customer base, including the default
risk of the industry and country, in which clients operate, has less of an influence on credit risk. However,
geographically there is no concentration of credit risk within Australia.
The Consolidated Entity has established a credit policy under which each new customer is analysed
individually for creditworthiness before the Consolidated Entity’s standard payment and delivery terms
and conditions are offered. Credit limits are established for each customer, these limits are reviewed
regularly. Clients which fail to meet the Consolidated Entity’s benchmark creditworthiness are placed on a
restricted customer list and may transact with the Consolidated Entity only on a prepayment basis.
In monitoring customer credit risk, clients are grouped according to their credit characteristics, including
whether they are an individual or legal entity, whether they are a wholesale, retail or end-user customer,
geographic location, industry, ageing profile, maturity and existence of previous financial difficulties. The
Consolidated Entity’s trade and other receivables relate mainly to the Consolidated Entity’s retail clients.
The Consolidated Entity does not require collateral in respect of trade and other receivables.
The Consolidated Entity has established an allowance for credit losses that represents their estimate of
expected credit losses in respect of trade and other receivables and investments.
Exposure to credit risk
The carrying amount of the Consolidated Entity’s financial assets represents the maximum credit risk
exposure.
The Consolidated Entity’s maximum exposure to credit risk at the end of the reporting period was:
Pg 55
Acumentis Annual Report 2020 Trade and other receivables
Cash and cash equivalents
Term deposits & other
The Consolidated Entity’s maximum exposure to credit risk for trade and other
receivables before impairment losses at the end of the reporting period by type of
customer was:
Financial clients
Non-financial clients
Government non-financial clients
The Consolidated Entity’s most significant clients included the following amounts
within trade and other receivables carrying amounts:
An Australian financial client
An Australian Government non-financial client
2020
$000
4,673
1,830
820
7,323
2,114
833
1,808
4,755
82
1,506
2019
$000
3,832
1,816
918
6,566
1,283
1,183
1,453
3,919
205
1,036
Impairment Losses
The aging of the Consolidated Entity’s trade and other receivables at the end of the reporting period was:
Not past due
Past due 0-30 days
Past due 31-120 days
Past due 121 days or more
Gross
2020
$000
4,092
442
113
108
4,755
Impairment
2020
$000
2
3
2
75
82
Gross
2019
$000
3,194
326
225
337
4,082
Impairment
2019
$000
-
-
-
250
250
The movement in the allowance for impairment in respect of trade receivables during the year was as
follows:
Balance at 1 July
Acquisition of controlled entities
Decrease in provision
Balance at 30 June
Pg 56
2020
$000
250
-
(168)
82
2019
$000
113
154
(17)
250
Acumentis Annual Report 2020
The Consolidated entity applies the AASB 9 simplified approach to measuring expected credit losses
which uses a lifetime expected loss allowances for all trade receivables. To measure the expected credit
losses, trade receivables have been grouped based on shared credit risk characteristics and the days past
due.
The expected loss rates are based on payment profiles of sales over a 3 year period ended 30 June 2019
and the corresponding historical credit losses experienced over this period and to 30 June 2020 (for
invoices raised prior to 30 June 2019). The historical loss rates are adjusted to reflect current and forward-
looking macro-economic factors that might impact the ability of customers to settle the receivables.
Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that
there is no reasonable expectation of recovery include, amongst others, the failure of the debtors to
engage in a repayment plan and the failure to make contractual payments for a period of greater than 120
days past due.
Impairment losses on trade receivables are presented as net impairment losses within operating profit.
Subsequent recoveries of amounts written off are credited against the same line item.
(b)
Liquidity risk
Liquidity risk is the risk that the Consolidated Entity will not be able to meet its financial obligations as they
fall due. The Consolidated Entity’s approach to managing liquidity is to ensure, as far as possible, that it will
always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the Consolidated Entity’s reputation.
Typically, the Consolidated Entity ensures that it has sufficient cash on demand to meet expected
operational expenses for a period of 45 to 60 days, including the servicing of financial obligations; this
excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as
natural disasters.
The following are the contractual maturities of financial liabilities, including estimated interest payments
and excluding the impact of netting arrangements:
Non-derivative financial liabilities
Note
Carrying
Amount
$000
Contractual
cash flows
$000
Payable
6 months
or less
$000
Payable
between
6 and 12
months
$000
Payable after
12 months
$000
30 June 2020
Trade and other payables
Short and long term loans
Lease liabilities
30 June 2019
Trade and other payables
Short and long term loans
Lease liabilities
5(d)
5(e)
5(f)
5(d)
5(e)
5(f)
2,197
3,900
3,522
9,619
2,568
5,249
56
7,873
2,197
3,900
3,522
9,619
2,568
5,249
56
7,873
2,197
650
555
3,402
2,568
249
29
2,846
-
650
603
1,253
-
1,750
27
1,777
-
2,600
2,364
4,964
-
3,250
-
3,250
Pg 57
Acumentis Annual Report 2020
(c)
Interest risk
Interest rate risk is the risk that changes in interest rates will affect the Consolidated Entity’s income
and expenses or the value of its holdings of financial instruments and financial liabilities. The objective
of interest rate risk management is to manage and control interest rate risk exposures within acceptable
parameters, while optimising the return.
Interest rate risk is managed by seeking to maximise the yield achieved on cash held at bank and minimise
the interest rates incurred on borrowings.
At the end of the reporting period the interest rate profile of the Consolidated Entity’s interest-bearing
financial instruments and borrowings was:
Variable rate instruments
Cash and cash equivalents
Current borrowings
Non-current borrowings
Fixed rate instruments
Current lease liabilities
Non-current lease liabilities
2020
$000
1,830
1,300
2,600
1,158
2,364
2019
$000
1,816
1,750
3,250
56
-
(d)
Cash flow sensitivity analysis for rate instruments
The impact of interest rate changes on the profitability of the Consolidated Entity is likely to be immaterial.
(e)
Fair values
The Directors consider that the fair value of financial assets and financial liabilities of the Consolidated
Entity approximate their carrying amount.
11
Capital management
The board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market
confidence and to sustain future development of the business. The Board of Directors monitors the return
on capital, which the Consolidated Entity defines as net operating income divided by total shareholders’
equity. The board compares this to general relevant returns that would be available to alternate use of
funds such as property and general stock market returns available at the time but does not specifically
benchmark them. The Board of Directors also monitors the dividend yield to ordinary shareholders and
compares them to general ASX listed returns at the time but does not specifically benchmark them.
There were no changes in the Consolidated Entity’s approach to capital management during the year.
The Consolidated Entity is not subject to externally imposed capital requirements given the absence of
borrowings.
Pg 58
Acumentis Annual Report 2020
(a)
Dividends
(i)
Ordinary shares
Dividends recognised in the current and prior years by the Company are:
2020
No dividends declared
2019
No dividends declared
Cents per
share
Total amount
$000
Franked/
unfranked
Date of
Payment
-
-
-
-
-
-
-
-
(ii)
Franked dividends
Dividends declared or paid during the year were fully franked at the tax rate of 27.5%. (2019:
27.5%)
After the end of the reporting period, the directors have not declared a final dividend.
Dividend franking account
27.5% franking credits available to shareholders of Acumentis Group Limited for
subsequent financial years
Company
2020
$000
Company
2019
$000
1,453
1,402
The above available amounts are based on the balance of the dividend franking account at the end
of the reporting period adjusted for:
a.
b.
Franking credits that will arise from the payment of the current tax liabilities;
Franking debits that will arise from the payment of dividends recognised as a liability at
the year-end; and
c. Franking credits that will arise from the receipt of dividends recognised as receivables by
the tax consolidated group at the year-end.
The ability to utilise the franking credits is dependent upon there being sufficient available profits
to declare dividends. As there is no dividend declared for 2020, there is no impact on the dividend
franking account for dividends proposed after the end of the reporting period but not recognised
as a liability (2019: nil).
Pg 59
Acumentis Annual Report 2020 GROUP STRUCTURE
This section provides information which will help users understand how the group structure affects the financial
position and performance of the Consolidated Entity as a whole. In particular, there is information about:
• Changes to the structure that occurred during the year as a result of business combinations and the
disposal of a discontinued operation;
Transactions with non-controlling interests; and
Interests in joint operations.
•
•
A list of significant subsidiaries is provided in note 13(a). This note also discloses details about the
Consolidated Entity’s equity accounted investments.
12
Business combinations
(a)
Summary of acquisition
On 15 October 2018 the parent entity acquired 100% of the issued share capital of Taylor Byrne (Holdings)
Pty Ltd (“Taylor Byrne”). The terms of the sale and purchase agreement provided for the effective date
of transfer of economic benefit to be 1 October 2018 and accordingly the completion balance sheet was
prepared at 30 September 2018 and results consolidated from 1 October 2018.
Details of the purchase consideration, the net assets acquired, and goodwill were as follows:
Purchase consideration:
Cash paid – initial consideration
Ordinary shares issued
Additional amount paid in respect of working capital position on completion
The assets and liabilities recognised as a result of the acquisition were as follows:
Cash and cash equivalents
Term deposits
Trade and other receivables
Other current assets
Deferred tax assets
Plant and equipment
Trade and other payables
Employee benefits
Tax liability
Net identifiable assets acquired
Goodwill
Net cash outflow from acquisition
Cash paid – initial consideration
Additional amount paid in respect of working capital position on completion
Cash and cash equivalents acquired
Pg 60
2019
$000
5,150
5,150
10,300
2,235
12,535
3,690
266
2,448
159
636
413
(1,641)
(2,208)
(149)
3,614
8,921
12,535
(5,150)
(2,235)
3,690
(3,695)
Acumentis Annual Report 2020 The goodwill is attributable to the workforce and the high profitability of the acquired business. It will not
be deductible for tax purposes.
13
Interests in other entities
(a)
Subsidiaries
The Consolidated Entity’s subsidiaries at 30 June 2020 are set out below. Unless otherwise stated, they
have share capital consisting solely of ordinary shares that are held directly by the Consolidated Entity,
and the proportion of ownership interests held equals the voting rights held by the Consolidated Entity. All
entities are incorporated and operate in Australia only.
Ownership interest
held by the
Consolidated Entity
Ownership interest
held by non-
controlling interests
2020
%
2019
%
2020
%
2019
%
100
100
100
100
100
100
100
100
50
100
50
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
100
50
100
100
100
100
100
100
-
-
-
-
-
-
-
-
50
-
50
-
-
-
-
-
-
Principal activities
Valuations
Commercial valuations
Commercial valuations
Commercial valuations
Government valuations
Non-trading
Regional valuations
Property advisory services
National valuation contracting
entity
Franchisor
-
-
-
-
-
-
-
-
50
-
50 Holder of intellectual property
-
-
-
-
-
-
Group employer
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Name of entity
Acumentis Pty Ltd (formerly LMW
(Residential) Pty Ltd)
Acumentis Brisbane Pty Ltd (formerly LMW
(Brisbane) Pty Ltd)
Acumentis Gold Coast Pty Ltd (formerly LMW
(Gold Coast) Pty Ltd)
Acumentis Melbourne Pty Ltd (formerly LMW
(Melbourne) Pty Ltd)
Acumentis Statutory Services Pty Ltd
(formerly LMW (Statutory Services) Pty Ltd)
Taylor Byrne Holdings Pty Ltd
Acumentis Regional Pty Ltd (formerly Taylor
Byrne Pty Ltd)
Lane Infrastructure Pty Ltd
Acumentis Australia Pty Ltd (formerly LMW
Australia Pty Ltd
LMW Group Pty Ltd
Acumentis Joint Venture Pty Ltd (formerly
LMW Hegney Pty Ltd)
Acumentis Management Pty Ltd (formerly
LMW (Management) Pty Ltd)
Acumentis Pty Ltd (formerly LMW (Employee
Benefits) Pty Ltd
Acumentis Advisory Pty Ltd (formerly LMW
Advisory Pty Ltd)
MVS National Pty Ltd
Cosgrave & Eastoe Pty Ltd
Hoolihan Valuations Pty Ltd
(b)
Interests in associates
The Consolidated Entity’s interests in associates at 30 June 2020 are set out below. Unless otherwise
stated, they have share capital consisting solely of ordinary shares that are held directly by the Consolidated
Entity, and the proportion of ownership interests held equals the voting rights held by the Consolidated
Entity. All entities are incorporated and operate in Australia only.
Pg 61
Acumentis Annual Report 2020
Name of entity
Acumentis (WA) Holdings Pty Ltd
(formerly LMW (WA) Holdings Pty Ltd)
2020
%
2019
%
2020
$000
2019
$000
Principal activities
42.2
25.0
1,114
571
WA valuations
On 23 August 2019 Acumentis Group Limited acquired a further 8.4% investment via the acquisition of
existing shares for cash consideration of $221,058.
On 13 September 2019 Acumentis Group Limited increased its investment from 33.4% to 42.2% via
Acumentis (WA) Pty Ltd issuing new shares for cash consideration of $407,254.
(i)
Summarised financial information for associates
The tables below provide summarised consolidated financial information for Acumentis (WA)
Holdings Pty Ltd and its wholly owned group. The information disclosed reflects the amounts
presented in its financial statements and not Acumentis Group Limited’s share of these amounts.
They have been amended to reflect adjustments made by the entity when using the equity method
including fair value adjustments and modifications for differences in accounting policy.
30 Jun 2020
$000
30 Jun 2019
$000
878
548
1,426
4,597
107
760
867
123
120
243
445
1,022
1,467
4,566
74
874
948
148
159
307
4,913
4,778
Summarised balance sheet
Current assets
Cash and cash equivalents
Other current assets
Total current assets
Non-current assets
Current liabilities
Financial liabilities (excluding trade payables)
Other current liabilities
Total current liabilities
Non-current liabilities
Financial liabilities (excluding trade payables)
Other non-current liabilities
Total non-current liabilities
Net assets
Pg 62
Acumentis Annual Report 2020
Reconciliation to carrying amounts
Opening net assets 1 July
Issue of new equity to Acumentis Group Limited
Loss for the period
Other comprehensive income
Dividends paid
Closing net assets 30 June
Consolidated Entity’s share of closing net assets in %
Consolidated Entity’s share of closing net assets in $
Unrecognised (discount) / goodwill included in the carrying amount
Impairment of investment
Carrying amount of interest in associate
Carrying amount of interest in associate
As at 1 July
Additional investment
Share of comprehensive loss
Dividends received
Impairment of investment
As at 30 June
Summarised statement of comprehensive income
Revenue
Interest income
Depreciation and amortisation
Interest expense
Other expenses
Loss from continuing operations before tax
Income tax benefit / (expense)
Loss from continuing operations after tax
Other comprehensive loss
Total comprehensive loss
Dividends received from associates
(ii)
Impairment charge
2020
30 Jun 2020
$000
30 Jun 2019
$000
4,778
407
(272)
-
-
4,913
42.2%
2,073
(206)
(753)
1,114
571
628
(85)
-
-
1,114
5,149
-
(114)
-
(257)
4,778
25.0%
1,194
130
(753)
571
1,417
-
(29)
(64)
(753)
571
30 Jun 2020
$000
30 Jun 2019
$000
4,622
-
(78)
(17)
-
(347)
75
(272)
-
(272)
-
7,086
3
(99)
(10)
(7,089)
(109)
(5)
(114)
-
(114)
64
The carrying value of Acumentis Group Limited’s interest in Acumentis (WA) Holdings Pty Ltd (formerly
LMW (WA) Holdings Pty Ltd) was tested as at 30 June 2020 and no impairment was required.
The key assumptions and the approach to determining the value in use when estimating the recoverable
amount of a cash generating unit are:
Pg 63
Acumentis Annual Report 2020 Assumption
How determined
Cash flows
The forecast 5-year cash flows are based on forecast results for the year ended 30
June 2021. The 2021 forecast forms the basis of cash flows in subsequent financial
years adjusted based on the following assumptions determined on management’s
past experience:
•
•
•
•
3% annual increase in revenues reflecting the rebuilding of the business
following the criminal cyber-attacks;
3% annual increase overheads;
Employment expenses increasing at 60% of the increase in revenue in the years
after; and
Terminal value at the end of year 5 based on year 5 cash flows.
Discount rate
The discount rate adopted was a pre-tax rate of 13% and was based on the current
risk-free interest rate, industry and business specific risk factors, market borrowing
rates and investor expected returns.
On forecast 5-year cash flows, further impairments would be necessary if the
discount rate was increased to 65% and all other variables remained unchanged.
2019
As a result of the reduction in revenues, profits and cashflows within Acumentis (WA) Holdings Pty Ltd
(formerly LMW (WA) Holdings Pty Ltd) following the criminal cyber-attacks in February and May 2019, the
carrying value of Acumentis Group Limited’s interest in Acumentis (WA) Holdings Pty Ltd was tested at 30
June 2019.
Based upon the estimated recoverable amounts an impairment charge of $753,000 was recognised
through the Statement of Profit or Loss and Other Comprehensive Income.
The key assumptions and the approach to determining the value in use when estimating the recoverable
amount of a cash generating unit were:
Assumption
How determined
Cash flows
The forecast 5-year cash flows were based on forecast results for the year ended 30
June 2020. The 2020 forecast formed the basis of cash flows in subsequent financial
years adjusted based on the following assumptions determined on management’s
past experience:
• Reduction in revenues in the first year and a 3% increase in the years after
reflecting the rebuilding of the business following the data disclosure incidents;
• Reduction in overheads expenses in the first year and 3% increase in the years
after;
• Reduction in employment expenses in the first year and an increase in employee
expense calculated as 60% of the increase in revenue in the years after; and
Terminal value at the end of year 5 based on year 5 cash flows.
•
Discount rate
The discount rate adopted was a pre-tax rate of 13% and was based on the current
risk-free interest rate, industry and business specific risk factors, market borrowing
rates and investor expected returns.
On forecast 5-year cash flows, further impairments would be necessary if the discount
rate was increased to 65% and all other variables remained unchanged.
Pg 64
Acumentis Annual Report 2020
UNRECOGNISED ITEMS
This section of the notes provides information about items that are not recognised in the financial
statements as they do not (yet) satisfy the recognition criteria.
14
Contingent liabilities
The Consolidated Entity, from time to time, is involved in matters of litigation in the normal course of
business in undertaking valuation services. At 30 June 2020 there are no open litigated claims that are
expected to have a material impact on the results of the Consolidated Entity. The Consolidated Entity has
professional indemnity insurance, and under the terms of the insurance policy, each claim has an excess
which is required to be paid by the Consolidated Entity. It was not practical to estimate the maximum
contingent liability arising from litigation; however, in a worst-case situation there could be a material
adverse effect on the Consolidated Entity’s financial position. In the directors’ opinion, disclosures of any
further information in relation to litigation would be prejudicial to the interests of the Consolidated Entity.
15
Commitments
Capital expenditure
The Consolidated Entity does not have any capital expenditure commitments at the end of the reporting
period.
Operating lease commitments
Within one year
One year or later and no later than five years
Later than five years
2020
$000
1,664
3
-
1,667
2019
$000
3,022
5,804
593
9,419
Under accounting standard AASB16 – Leases which was adopted by the Consolidated Entity with effect
1 July 2019 (refer note 25), except for leases with terms of 12 months or less or where the value of the
leased asset does not exceed $5,000, commitments under leases are now recorded on the statement of
financial position.
Where the Consolidated Entity leases property and equipment under non-cancellable operating leases
with lease terms less than or equal to 12 months or with asset values less than or equal to $5,000 the
leases continue to be accounted for off balance sheet with operating lease commitments disclosed in the
above table.
16
Guarantees
Acumentis Group Limited has not entered into any guarantees, in the current or previous financial year, in
relation to the debts of its subsidiaries.
Pg 65
Acumentis Annual Report 2020
17
Events occurring after the reporting period
There were no significant events occurring after the end of the reporting period.
18
Going Concern
The Company has been the subject of two cyber-attacks in the first half of calendar 2019 which resulted
in a number of clients suspending utilisation of Acumentis’ services with a resulting reduction in revenues
and cashflows which prima facie may impact the ability of the Company to pay its debts as and when they
fall due.
Despite the COVID-19 pandemic impacting the Australian economy from late February 2020, the
Company saw its March and April revenues remain steady, however in May 2020, the Company saw a drop
in revenues attributed to the impact of COVID-19 and qualified for JobKeeper government grants which it
will continue to receive until September 2020.
As a result of the reduction in revenues, the Company incurred a net loss of $2.55M for the year ended 30
June 2020.
The directors have prepared the financial information contained within this report on a going concern
basis for the following reasons:
•
•
•
The Company was trading profitability prior to the cyber-attacks and impacts of COVID-19.
The cyber-attacks were the result of criminal activity and are not ongoing. NSW Cyber Police
successfully investigated the attacks resulting in an arrest in October 2019.
The Company has substantially enhanced its cyber security measures to minimise the chance of
recurrence.
• Whilst many mortgage lending clients temporarily suspended trading with the Company, the majority
have since recommenced trading with the Company.
•
•
•
•
•
•
•
The Company secured additional short-term overdraft facilities from its corporate banker which
allowed it to trade through the period whilst its cashflows returned.
In August 2019, the Company has concluded a successful capital raising of $5.64M that allowed it to
restructure its business and continue profitable and cashflow positive trading into the future.
The Company traded profitably since March 2020.
The Company expects its revenues, profitability and operating cashflows to continue to improve and
reach levels that will allow it to provide appropriate returns to shareholders in the year ended 30 June
2021 and beyond.
The Company does not expect to be severely impacted by ongoing disruption or reduced revenues due
to COVID-19 as a result of State and Federal Government stimulus packages targeting a construction
led recovery together with the likely requirement for lenders to review their loan security and investors
their property carrying values.
The Company’s forecasts indicate that it will be in a position to maintain its existing workforce and
operate profitability after JobKeeper entitlements terminate in September 2020.
The Company has prepared detailed cashflow forecasts through to June 2024 which confirm its ability
to continue to pay its debts as and when they fall due.
Pg 66
Acumentis Annual Report 2020 The directors are satisfied that the going concern basis of preparation is appropriate and therefore the
financial information does not include any adjustments relating to the recoverability or classification of
recorded asset amounts or to the amounts or classification of liabilities that might be necessary should
the company not be able to continue as a going concern.
Pg 67
Acumentis Annual Report 2020 OTHER INFORMATION
This section of the notes includes other information that must be disclosed to comply with the accounting
standards and other pronouncements, but that is not immediately related to individual line items in the
financial statements.
19
Related party transactions
(a)
Subsidiaries
Interests in subsidiaries are set out in note 13(a).
(b)
Key management personnel compensation
Executive directors and other key management personnel
Short term employee benefits
Post-employment benefits
Long-term benefits
2020
$
702,677
252,118
23,694
978,489
2019
$
487,611
39,525
18,902
546,038
Detailed remuneration disclosures are provided in the remuneration report on pages 18 to 21.
(c)
Transactions with other related parties
The following transactions occurred with related parties:
Dividends received from associate
Group management fee income from associates & franchisees
20
Share-based payments
2020
$000
-
70
2019
$000
131
494
(a)
Employee option & performance rights plans
The directors at their discretion allocate share options or performance rights that entitle key management
personnel and senior employees to purchase shares in the entity. The terms of the options including
vesting conditions and performance criteria vary depending upon the incentive arrangements appropriate
for key management personnel and senior employees and are a part of an approved Employee Share
Acquisition Scheme, which was approved by shareholders at the 2018 Annual General Meeting.
Pg 68
Acumentis Annual Report 2020 Movements in options during the period were as follows:
As at 1 July
Exercised during the year
As at 30 June
2020
Average
Exercise Price
2020
Number of
Options
2019
Average
Exercise Price
2019
Number of
Options
-
-
-
-
-
-
-
-
-
-
-
-
Performance rights were granted under the Acumentis Group Performance Rights and Option Plan which
was approved by shareholders at the 2018 Annual General Meeting. The Plan allows the Company to
grant options or rights to selected key employees to acquire ordinary shares in the Company. Participants
are required to satisfy performance and service conditions at the time of the offer. The exercise price for
performance rights is nil. Rights cannot be transferred and are not quoted on the ASX.
Movements in performance rights during the period were as follows:
As at 1 July
Vested and exercised during the year
As at 30 June
Number of
rights
2020
Number of
rights
2019
-
-
-
-
-
-
(b)
Issue of shares to underwriter of the capital raise
2,500,000 shares with a market value of $200,000 were issued to the underwriter of the capital raise
(note 7(a)). This was debited directly to equity.
(c)
Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period as part of
employee benefit expense were as follows:
Options
Performance rights
2020
$000
-
-
-
2019
$000
-
-
-
Pg 69
Acumentis Annual Report 2020
21
Remuneration of auditors
Audit services
Auditor of the Consolidated Entity – William Buck
Audit and review of the financial reports
Other services
Other William Buck related entities
Restructuring advice
Taxation and other services
Total services
22
Earnings per share
(a)
Basic earnings per share
2020
$000
2019
$000
196
190
98
14
308
300
24
514
The calculation of basic earnings per share at 30 June 2020 was based on the loss attributable to ordinary
shareholders of $2,555,000 (2019: loss $15,148,000) and the weighted average number of ordinary
shares outstanding during the financial year ended 30 June 2020 of 144,884,867 (2019: 82,513,394)
calculated as follows:
(Loss) / profit attributable to ordinary shareholders
2020
$000
(2,555)
2019
$000
(15,148)
Weighted average number of shares used as the denominator
Number
Number
Issued Ordinary Shares at 1 July
Shares issued during year
Issued Ordinary Shares at 30 June
85,134,111
75,930,855
70,545,819
9,203,256
155,679,930
85,134,111
Weighted average number of ordinary shares at 30 June
145,271,530
82,513,394
(b)
Diluted earnings per share
The calculation of diluted earnings per share at 30 June 2020 was based on the loss attributable to ordinary
shareholders of $2,555,000 (2019: loss $15,148,000) and the weighted average number of ordinary
shares outstanding during the financial year ended 30 June 2020 of 147,384,867 (2019: 82,513,394)
calculated as follows:
Pg 70
Acumentis Annual Report 2020
(Loss) / profit attributable to ordinary shareholders
2020
$000
(2,555)
2019
$000
(15,148)
Weighted average number of ordinary shares and potential ordinary shares used as
the denominator
Number
Number
Issued Ordinary Shares at 1 July
Shares issued during year
Issued Ordinary Shares at 30 June
Weighted average number of ordinary shares at 30 June
Options on issue at 30 June (note 7(b))
85,134,111
75,930,855
70,545,819
9,203,256
155,679,930
85,134,111
145,271,530
82,513,394
2,500,000
-
Weighted average number of ordinary shares and potential ordinary shares at 30 June
147,771,530
82,513,394
As at the date of this report there are 2,500,000 options over ordinary shares in the Company.
23
Parent entity financial information
The following information has been extracted from the books and records of the parent and has been
prepared in accordance with the accounting standards.
(a)
Statement of financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Retained earnings
Total equity
2020
$000
41,949
47,503
89,452
44,925
2,728
47,652
2019
$000
20,314
45,250
65,564
26,104
3,320
29,424
41,800
36,140
44,478
(2,678)
41,800
39,293
(3,153)
36,140
Pg 71
Acumentis Annual Report 2020
(b)
Statement of profit & loss and other comprehensive income
Total profit / (loss)
Total comprehensive income / (loss)
2020
$000
551
551
2019
$000
(2,964)
(2,964)
24
Summary of significant accounting policies
This note provides a list of the significant accounting policies adopted in the preparation of these
consolidated financial statements to the extent they have not already been disclosed in the other notes
above. These policies have been consistently applied to all the years presented, unless otherwise stated.
The financial statements are for the Consolidated Entity consisting of Acumentis Group Limited and its
subsidiaries.
(a)
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting
Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations
Act 2001. Acumentis Group Limited is a for-profit entity for the purpose of preparing the financial
statements.
(i)
Compliance with IFRS
The consolidated financial statements also comply with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
(ii)
Historical cost convention
The financial statements have been prepared on a historical cost basis.
(iii)
New and amended standards adopted by the Consolidated Entity
During the current year, the Consolidated Entity adopted all of the new and revised Australian
Accounting Standards and Interpretations applicable to its operations which became mandatory.
AASB 16 Leases (applicable for annual reporting periods commencing on or after 1 January
2019)
AASB 16 introduced a single lessee accounting model that requires all leases to be accounted
for on balance sheet. A lessee is required to recognise an asset representing the right to use
the underlying asset during the lease term (i.e. right-of-use asset) and a liability to make lease
payments (i.e. lease liability). Two exemptions are available for leases with a term less than 12
months or if the underlying asset is of low value.
The lessor accounting requirements are substantially the same as in AASB 117. Lessors will
therefore continue to classify leases as either operating or finance leases.
AASB 16 replaced AASB 117 Leases, Interpretation 4 Determining Whether an Arrangement
Pg 72
Acumentis Annual Report 2020 contains a Lease, Interpretation 115 Operating Leases – Incentives and Interpretation 127 Evaluating
the substance of Transactions Involving the Legal Form of a Lease.
Details of the impact of adopting AASB 16 are included in note 25.
(iv)
New standards and interpretations not yet adopted
The AASB has issued new and amended accounting standards and interpretations that have
mandatory application dates for future reporting periods and which the Consolidated Entity has
decided not to early adopt. These standards are not expected to have a material impact on the
Consolidated Entity in the current or future reporting periods and on foreseeable future transactions.
(b)
Principles of consolidation and equity accounting
(i)
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Consolidated Entity has
control. The Consolidated Entity controls an entity when the Consolidated Entity is exposed to, or
has rights to, variable returns from its involvement with the entity and has the ability to affect those
returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from
the date on which control is transferred to the Consolidated Entity. They are deconsolidated from the
date that control ceases.
The acquisition method of accounting is used to account for business combinations by the
Consolidated Entity (refer to note 24(h)).
Intercompany transactions, balances and unrealised gains on transactions between companies
within the Consolidated Entity are eliminated. Unrealised losses are also eliminated unless the
transaction provides evidence of an impairment of the transferred asset. Accounting policies of
subsidiaries have been changed where necessary to ensure consistency with the policies adopted
by the Consolidated Entity.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the
consolidated statement of profit or loss, statement of comprehensive income, statement of changes
in equity and balance sheet respectively.
(ii)
Associates
Associates are all entities over which the Consolidated Entity has significant influence but not control
or joint control. This is generally the case where the Consolidated Entity holds between 20% and
50% of the voting rights. Investments in associates are accounted for using the equity method of
accounting (see (iii) below), after initially being recognised at cost.
(iii)
Equity method
Under the equity method of accounting, the investments are initially recognised at cost and adjusted
thereafter to recognise the Consolidated Entity’s share of the post-acquisition profits or losses of the
investee in profit or loss, and the Consolidated Entity’s share of movements in other comprehensive
income of the investee in other comprehensive income. Dividends received or receivable from
associates and joint ventures are recognised as a reduction in the carrying amount of the investment.
When the Consolidated Entity’s share of losses in an equity-accounted investment equals or exceeds
Pg 73
Acumentis Annual Report 2020 its interest in the entity, including any other unsecured long-term receivables, the Consolidated
Entity does not recognise further losses, unless it has incurred obligations or made payments on
behalf of the other entity.
Unrealised gains on transactions between the Consolidated Entity and its associates and joint
ventures are eliminated to the extent of the Consolidated Entity’s interest in these entities.
Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of
the asset transferred. Accounting policies of equity accounted investees have been changed where
necessary to ensure consistency with the policies adopted by the Consolidated Entity.
The carrying amount of equity-accounted investments is tested for impairment in accordance with
the policy described in note 24(l).
(iv)
Changes in ownership interests
The Consolidated Entity treats transactions with non-controlling interests that do not result in a
loss of control as transactions with equity owners of the Consolidated Entity. A change in ownership
interest results in an adjustment between the carrying amounts of the controlling and non-
controlling interests to reflect their relative interests in the subsidiary. Any difference between the
amount of the adjustment to non-controlling interests and any consideration paid or received is
recognised in a separate reserve within equity attributable to owners of Acumentis Group Limited.
When the Consolidated Entity ceases to consolidate or equity account for an investment because
of a loss of control, joint control or significant influence, any retained interest in the entity is
remeasured to its fair value with the change in carrying amount recognised in profit or loss. This
fair value becomes the initial carrying amount for the purposes of subsequently accounting for
the retained interest as an associate, joint venture or financial asset. In addition, any amounts
previously recognised in other comprehensive income in respect of that entity are accounted for as
if the Consolidated Entity had directly disposed of the related assets or liabilities. This may mean
that amounts previously recognised in other comprehensive income are reclassified to profit or
loss.
If the ownership interest in an associate is reduced but joint control or significant influence is
retained, only a proportionate share of the amounts previously recognised in other comprehensive
income are reclassified to profit or loss where appropriate.
(c)
Functional and presentation currency
These consolidated financial statements are presented in Australian dollars which is the Company’s
functional currency and the functional currency of all entities within the Consolidated Entity.
(d)
Segment reporting
The Consolidated Entity’s operations and clients are located entirely in Australia.
The Consolidated Entity’s operating segments have been identified based on the segments analysed
within management reports. Based on these criteria, it has been determined that the Consolidated Entity
only operates in the Valuation segment, which provides valuation, research and advice services in relation
to property and businesses.
Accordingly, no separate segment reporting is required.
Pg 74
Acumentis Annual Report 2020 (e)
Revenue recognition
Revenue is recognised at an amount that reflects the consideration to which the Consolidated Entity is
expected to be entitled to receive for the provision of services to clients.
For each contract with a client, the Consolidated Entity identifies the contract, the performance obligations
in the contract and the total price for the services. The total price is then allocated to the separate
performance obligations under the contract and each part of the total price is recognised as revenue when
the associated performance obligation is satisfied.
For the large majority of contracts with clients, the Consolidated Entity has a single performance obligation
being the delivery of the service and so the revenue is recognised at this point in time.
The specific accounting policies for the Consolidated Entity’s main types of revenue are explained in
note 1.
(f)
Income tax
The income tax expense or credit for the period is the tax payable on the current period’s taxable income
based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted
at the end of the reporting period. Management periodically evaluates positions taken in tax returns
with respect to situations in which applicable tax regulation is subject to interpretation. It establishes
provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial
statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition
of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset
or liability in a transaction other than a business combination that at the time of the transaction affects
neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws)
that have been enacted or substantially enacted by the end of the reporting period and are expected to
apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to
utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current
tax assets and liabilities. Current tax assets and tax liabilities are offset where the entity has a legally
enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the
liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items
recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in
other comprehensive income or directly in equity, respectively.
(g)
Leases
Accounting standard AASB16 – Leases is applicable for reporting periods commencing on or after 1
January 2019 and accordingly was adopted by the Consolidated Entity with effect 1 July 2019.
AASB 16 introduces a single lessee accounting model that requires all leases to be accounted for on
balance sheet. A lessee is required to recognise an asset representing the right to use the underlying asset
during the lease term (i.e. right-of-use asset) and a liability to make lease payments (i.e. lease liability).
Pg 75
Acumentis Annual Report 2020 Two exemptions are available for leases with a term less than 12 months or if the underlying asset is of
low value.
The lessor accounting requirements are substantially the same as in AASB 117. Lessors continue to
classify leases as either operating or finance leases.
AASB 16 replaces AASB 117 Leases, Interpretation 4 Determining Whether an Arrangement contains a
Lease, Interpretation 115 Operating Leases – Incentives and Interpretation 127 Evaluating the substance
of Transactions Involving the Legal Form of a Lease.
When a new lease is entered into, the net present value of the contracted rental payments is calculated
using the interest rate implicit in the lease, or if this is not able to be reliably estimated, the Consolidated
Entity’s incremental borrowing rate. This amount is capitalised as a right of use asset and depreciated on
a straight line basis over the term of the lease. An offsetting lease liability is recorded. Over the term of
the lease, interest costs are expensed and added to the lease liability and lease payments are deducted
from the liability.
Refer to note 25 for details of the impacts of the change in accounting policy.
(h)
Business combinations
The acquisition method of accounting is used to account for all business combinations, regardless of
whether equity instruments or other assets are acquired. The consideration transferred for the acquisition
of a subsidiary comprises the:
•
•
•
•
•
Fair values of the assets transferred;
Liabilities incurred to the former owners of the acquired business;
Equity interests issued by the Consolidated Entity;
Fair value of any asset or liability resulting from a contingent consideration arrangement; and
Fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination
are, with limited exceptions, measured initially at their fair values at the acquisition date. The Consolidated
Entity recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis
either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net
identifiable assets.
Acquisition-related costs are expensed as incurred.
The excess of the consideration transferred plus the amount of any non-controlling interest in the acquired
entity and the acquisition-date fair value of any previous equity interest in the acquired entity over the fair
value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair
value of the net identifiable assets of the business acquired, the difference is recognised directly in profit
or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are
discounted to their present value as at the date of exchange. The discount rate used is the entity’s
incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an
independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a
financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit
or loss.
Pg 76
Acumentis Annual Report 2020 If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s
previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains
or losses arising from such re-measurement are recognised in profit or loss.
(i)
Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are
tested annually for impairment, or more frequently if events or changes in circumstances indicate that they
might be impaired. Other assets are tested for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the
amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount
is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash
inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-
generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for
possible reversal of the impairment at the end of each reporting period.
(j)
Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash
on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with
original maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are
shown within borrowings in current liabilities in the balance sheet.
(k)
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost
using the effective interest method, less provision for impairment. See note 5(c) for further information
about the Consolidated Entity’s accounting for trade receivables and note 10(a) for a description of the
Consolidated Entity’s impairment policies.
(l)
(i)
Investments and other financial assets
Classification
The Consolidated Entity classifies its financial assets in the following categories:
• Those to be measured subsequently at fair value; and
• Those to be measured at amortised cost.
The classification depends on the business model for managing the financial assets and the
contractual terms of the cash flows. See note 5 for details about each type of financial asset.
(ii)
Recognition and derecognition
Investments and other financial assets are initially measured at fair value. Transaction costs are
included as part of the initial measurement, except for financial assets at fair value through profit
or loss. Such assets are subsequently measured at either amortised cost or fair value depending
on their classification. Classification is determined based on both the business model within which
Pg 77
Acumentis Annual Report 2020 such assets are held and the contractual cash flow characteristics of the financial asset unless, an
accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been
transferred and the consolidated entity has transferred substantially all the risks and rewards of
ownership. When there is no reasonable expectation of recovering part or all of a financial asset,
it’s carrying value is written off.
(iii)
Financial assets at fair value through profit and loss
Financial assets not measured at amortised cost or at fair value through other comprehensive
income are classified as financial assets at fair value through profit or loss.
Typically, such financial assets will be either:
(i)
held for trading, where they are acquired for the purpose of selling in the
short-term with an intention of making a profit; or
(ii) designated as such upon initial recognition where permitted.
Fair value movements are recognised in profit or loss.
(iv)
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income include equity investments
which the consolidated entity intends to hold for the foreseeable future and has irrevocably elected
to classify them as such upon initial recognition.
Details on how the fair value of financial instruments is determined are disclosed in note 5(ii).
(v)
Impairment
The Consolidated entity applies the AASB 9 simplified approach to measuring expected credit losses
which uses a lifetime expected loss allowances for all trade receivables. To measure the expected
credit losses, trade receivables have been grouped based on shared credit risk characteristics and
the days past due.
The expected loss rates are based on payment profiles of sales over a 3 year period ended 30 June
2019 and the corresponding historical credit losses experienced over this period and to 30 June
2020 (for invoices raised prior to 30 June 2019). The historical loss rates are adjusted to reflect
current and forward-looking macro-economic factors that might impact the ability of customers to
settle the receivables.
Trade receivables are written off when there is no reasonable expectation of recovery. Indicators
that there is no reasonable expectation of recovery include, amongst others, the failure of the
debtors to engage in a repayment plan and the failure to make contractual payments for a period
of greater than 120 days past due.
Impairment losses on trade receivables are presented as net impairment losses within operating
profit. Subsequent recoveries of amounts written off are credited against the same line item.
Pg 78
Acumentis Annual Report 2020
(vi)
Income recognition
Interest income
Interest income is recognised using the effective interest method. When a receivable is impaired,
the Consolidated Entity reduces the carrying amount to its recoverable amount, being the estimated
future cash flow discounted at the original effective interest rate of the instrument, and continues
unwinding the discount as interest income. Interest income on impaired loans is recognised using
the original effective interest rate.
Dividends
Dividends are recognised as revenue when the right to receive payment is established. This applies
even if they are paid out of pre-acquisition profits. However, the investment may need to be tested
for impairment as a consequence, refer note 24(l)(v).
(m)
Plant and equipment
Plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure
that is directly attributable to the acquisition of the items. Cost may also include transfers from equity of
any gains or losses on qualifying cash flow hedges of foreign currency purchases of plant and equipment.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow
to the Consolidated Entity and the cost of the item can be measured reliably. The carrying amount of
any component accounted for as a separate asset is derecognised when replaced. All other repairs and
maintenance are charged to profit or loss during the reporting period in which they are incurred.
The depreciation methods and periods used by the Consolidated Entity are disclosed in note 6(ii).
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each
reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are
included in profit or loss. When revalued assets are sold, it is Consolidated Entity policy to transfer any
amounts included in other reserves in respect of those assets to retained earnings.
(n)
Intangible assets
(i)
Goodwill
Goodwill is measured as described in note 6(d). Goodwill on acquisitions of subsidiaries is included
in intangible assets. Goodwill is not amortised but it is tested for impairment annually, or more
frequently if events or changes in circumstances indicate that it might be impaired, and is carried at
cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the
carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is
made to those cash-generating units or groups of cash-generating units that are expected to benefit
from the business combination in which the goodwill arose. The units or groups of units are identified
at the lowest level at which goodwill is monitored for internal management purposes.
Pg 79
Acumentis Annual Report 2020 (ii)
Trademarks, licences and customer contracts
Separately acquired trademarks and licences are shown at historical cost. Trademarks, licenses
and customer contracts acquired in a business combination are recognised at fair value at the
acquisition date. Where they are assessed as having a finite useful life they are subsequently
carried at cost less accumulated amortisation and impairment losses.
(iii)
Software
Costs associated with maintaining software programmes are recognised as an expense as incurred.
Development costs that are directly attributable to the design and testing of identifiable and unique
software products controlled by the Consolidated Entity are recognised as intangible assets when
the following criteria are met:
• It is technically feasible to complete the software so that it will be available for use;
• Management intends to complete the software and use or sell it;
• There is an ability to use or sell the software;
• It can be demonstrated how the software will generate probable future economic benefits;
• Adequate technical, financial and other resources to complete the development and to use
or sell the software are available; and
• The expenditure attributable to the software during its development can be reliably
measured.
Directly attributable costs that are capitalised as part of the software include employee costs and
an appropriate portion of relevant overheads.
Capitalised development costs are recorded as intangible assets and amortised from the point at
which the asset is ready for use.
(iv)
Amortisation methods and periods
Refer to note 6(d) for details about amortisation methods and periods used by the Consolidated
Entity for intangible assets.
(o)
Trade and other payables
These amounts represent liabilities for goods and services provided to the Consolidated Entity prior to the
end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of
recognition. Trade and other payables are presented as current liabilities unless payment is not due within
12 months after the reporting period. They are recognised initially at their fair value and subsequently
measured at amortised cost using the effective interest method.
(p)
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are
subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs)
and the redemption amount is recognised in profit or loss over the period of the borrowings using the
effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction
Pg 80
Acumentis Annual Report 2020 costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this
case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable
that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity
services and amortised over the period of the facility to which it relates.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged,
cancelled or expired. The difference between the carrying amount of a financial liability that has been
extinguished or transferred to another party and the consideration paid, including any non-cash assets
transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.
Borrowings are classified as current liabilities unless the Consolidated Entity has an unconditional right to
defer settlement of the liability for at least 12 months after the reporting period.
(q)
Borrowing costs
Borrowing costs are expensed in the period in which they are incurred.
(r)
Provisions
Provisions for legal claims and make good obligations are recognised when the Consolidated Entity
has a present legal or constructive obligation as a result of past events, it is probable that an outflow of
resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are
not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in
settlement is determined by considering the class of obligations as a whole. A provision is recognised
even if the likelihood of an outflow with respect to any one item included in the same class of obligations
may be small.
Provisions are measured at the present value of management’s best estimate of the expenditure required
to settle the present obligation at the end of the reporting period. The discount rate used to determine the
present value is a pre-tax rate that reflects current market assessments of the time value of money and
the risks specific to the liability. The increase in the provision due to the passage of time is recognised as
interest expense.
(s)
Employee benefits
(i)
Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits, that are expected to be settled
wholly within 12 months after the end of the period in which the employees render the related
service are recognised in respect of employees’ services up to the end of the reporting period and
are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are
presented as current employee benefit obligations in the balance sheet.
(ii)
Other long-term employee benefit obligations
The liabilities for long service leave and annual leave are not expected to be settled wholly within
Pg 81
Acumentis Annual Report 2020 12 months after the end of the period in which the employees render the related service. They are
therefore measured as the present value of expected future payments to be made in respect of
services provided by employees up to the end of the reporting period using the projected unit credit
method. Consideration is given to expected future wage and salary levels, experience of employee
departures and periods of service. Expected future payments are discounted using market yields
at the end of the reporting period of high-quality corporate bonds with terms and currencies that
match, as closely as possible, the estimated future cash outflows. Re-measurements as a result
of experience adjustments and changes in actuarial assumptions are recognised in profit or loss.
The obligations are presented as current liabilities in the balance sheet if the entity does not have
an unconditional right to defer settlement for at least twelve months after the reporting period,
regardless of when the actual settlement is expected to occur.
(iii)
Post-employment obligations
The Consolidated Entity operates various defined contribution pension plans.
Pension obligations
For defined contribution plans, the Consolidated Entity pays contributions to publicly or privately
administered pension insurance plans on a mandatory, contractual or voluntary basis. The
Consolidated Entity has no further payment obligations once the contributions have been paid. The
contributions are recognised as employee benefit expense when they are due. Prepaid contributions
are recognised as an asset to the extent that a cash refund or a reduction in the future payments is
available.
(iv)
Share-based payments
Share-based compensation benefits are provided to employees via the Acumentis Group Employee
Option & Performance Rights Plan and an employee share scheme. Information relating to these
schemes is set out in note 20.
Employee options and performance rights
The fair value of options and performance rights granted under the Acumentis Group Limited
Employee Option and Performance Rights Plan is recognised as an employee benefits expense with
a corresponding increase in equity. The total amount to be expensed is determined by reference to
the fair value of the options and performance rights granted:
• Including any market performance conditions (eg the entity’s share price);
• Excluding the impact of any service and non-market performance vesting conditions (eg
profitability, sales growth targets and remaining an employee of the entity over a specified
time period); and
• Excluding the impact of any non-vesting conditions (eg the requirement for employees to
save or holdings shares for a specific period of time).
The total expense is recognised over the vesting period, which is the period over which all of the
specified vesting conditions are to be satisfied. At the end of each period, the entity revises its
estimates of the number of options and performance rights that are expected to vest based on
the non-market vesting and service conditions. It recognises the impact of the revision to original
estimates, if any, in profit or loss, with a corresponding adjustment to equity.
Pg 82
Acumentis Annual Report 2020 Social security contributions payable in connection with an option or performance rights grant
are considered an integral part of the grant itself and the charges are treated as cash-settled
transactions.
The Employee Option and Performance Rights Plan is administered by the Acumentis Employee
Share Trust, which is not consolidated. When the options or performance rights are exercised, the
trust transfers the appropriate number of shares to the employee. The proceeds received net of any
directly attributable transaction costs are credited directly to equity.
(v)
Profit-sharing and bonus plans
The Consolidated Entity recognises a liability and an expense for bonuses and profit-sharing based
on a formula that takes into consideration the profit attributable to the company’s shareholders after
certain adjustments. The Consolidated Entity recognises a provision where contractually obliged or
where there is a past practice that has created a constructive obligation.
(vi)
Termination benefits
Termination benefits are payable when employment is terminated by the Consolidated Entity before
the normal retirement date, or when an employee accepts voluntary redundancy in exchange
for these benefits. The Consolidated Entity recognises termination benefits at the earlier of the
following dates: (a) when the Consolidated Entity can no longer withdraw the offer of those benefits;
and (b) when the entity recognises costs for a restructuring that is within the scope of AASB 137 and
involves the payment of terminations benefits. In the case of an offer made to encourage voluntary
redundancy, the termination benefits are measured based on the number of employees expected
to accept the offer. Benefits falling due more than 12 months after the end of the reporting period
are discounted to present value.
(t)
Contributed equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
(u)
Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer
at the discretion of the entity, on or before the end of the reporting period but not distributed at the end
of the reporting period.
(v)
Earnings per share
(i)
Basic earnings per share
Basic earnings per share is calculated by dividing:
• The profit attributable to owners of the Company, excluding any costs of servicing equity
other than ordinary shares; and
Pg 83
Acumentis Annual Report 2020 • By the weighted average number of ordinary shares outstanding during the financial year,
adjusted for bonus elements in ordinary shares issued during the year.
(ii)
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per
share to take into account:
• The after income tax effect of interest and other financing costs associated with dilutive
potential ordinary shares; and
• The weighted average number of additional ordinary shares that would have been
outstanding assuming the conversion of all dilutive potential ordinary shares.
(w)
Rounding of amounts
The company is of a kind referred to in ASIC Legislative Instrument 2016/191, relating to the ‘rounding
off’ of amounts in the financial statements. Amounts in the financial statements have been rounded off
in accordance with the instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
(x)
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST
incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of
acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount
of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables
in the balance sheet.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or
financing activities which are recoverable from, or payable to the taxation authority, are presented as
operating cash flows.
25
Changes to accounting policies
Effective 1 July 2019, the Consolidated Entity adopted the new accounting standard AASB16 – Leases.
Impact of adoption
AASB 16 was adopted using the modified retrospective approach and as such comparatives have not been
restated.
The impact of adoption of AASB 16 on opening retained profits as at 1 July 2019 was as follows:
Pg 84
Acumentis Annual Report 2020 Deferred tax assets
Property, plant & equipment (right of use assets) – cost
Property, plant & equipment (right of use assets) – accumulated depreciation
Lease liabilities – current
Lease liabilities – non-current
De-recognise operating lease provision
Reduction in retained earnings
1 Jul 19
$000
69
6,936
(2,780)
(1,345)
(3,289)
58
(351)
When measuring lease liabilities for leases that were classified as operating leases, the Consolidated
Entity discounted lease payments using its incremental borrowing rate at 1 July 2019. The weighted
average rate was 6.3%.
The impact on lease commitments disclosed in the 30 June 2019 financial statements was as follows
Operating lease commitments at 30 June 2019 as disclosed under AASB 117 in the Consolidated
Entity’s financial statements
Discounted using the incremental borrowing rate as at 1 July 2019
Finance leases liabilities recognised at 30 June 2019
Recognition exemption for:
- Low value assets
- Leases with less than 12 months of term at transition
Lease liabilities recognised at 1 July 2019
Finance leases liabilities recognised at 30 June 2019
Lease liabilities recognised on adoption of AASB 16
1 Jul 19
$000
9,419
8,034
56
(1,804)
(1,596)
4,690
56
4,634
4,690
Pg 85
Acumentis Annual Report 2020
AASB 16 results in expenses associated with leasing office space and equipment being recorded as
depreciation and amortisation expenses and finance expenses rather than occupancy and administration
expenses as in previous years. Additionally, the 2020 impairment charge recorded would have been
disclosed as an expense relating to onerous operating leases under the previous accounting policy.
To assist the reader in comparing the 2020 expenses with those reported in 2019, the following table
shows the 2020 expenses including and excluding the AASB 16 impacts:
Administration expenses
Occupancy expenses
Depreciation and amortisation expenses
Impairment of right of use assets
Provision for onerous lease
Finance expense
30 June 20
Under AASB 16
$000
Reverse
AASB 16 Impact
$’000
30 June 20 Prior
to AASB 16
$’000
30 June 19
$’000
1,418
771
2,079
4,268
497
-
494
5,259
44
1,164
(1,140)
88
(497)
497
(220)
(132)
1,482
1,935
939
4,356
-
497
274
5,127
1,533
2,053
808
4,394
-
-
204
4,598
Pg 86
Acumentis Annual Report 2020
THIS PAGE IS AN INTENTIONALLY BLANK PAGE
Pg 87
Acumentis Annual Report 2020 DIRECTORS DECLARATION
1
In the opinion of the directors of Acumentis Group Limited (‘the Company’):
(a)
the financial statements and notes set out on pages 26 to 86 and the remuneration disclosures
of the Remuneration report in the Directors’ report, set out on pages 17 to 21, are in
accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the financial position of the Company and the Consolidated Entity
as at 30 June 2020 and of its performance, for the financial year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001;
(b)
the financial report also complies with International Financial Reporting Standards as
discussed in Note 24(a);
(c)
there are reasonable grounds to believe that the Company will be able to pay its debts as and
when they become due and payable
2
The directors have been given the declarations required by Section 295A of the Corporations Act
2001 from the Chief Executive Officer and Chief Financial Officer for the financial year ended 30 June
2020.
Dated at Sydney this 27th day of August 2020
Signed in accordance with a resolution of the directors:
Keith Perrett
Director
Pg 88
Acumentis Annual Report 2020
INDEPENDENT AUDITORS REPORT TO THE MEMBERS
Acumentis Group Limited
Independent auditor’s report to members
Acumentis Group Limited
Report on the Audit of the Financial Report
Independent auditor’s report to members
Acumentis Group Limited
Independent auditor’s report to members
Report on the Audit of the Financial Report
Acumentis Group Limited
Independent auditor’s report to members
Report on the Audit of the Financial Report
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Acumentis Group Limited (the Company) and its
subsidiaries (the Consolidated Entity), which comprises the consolidated statement of
financial position as at 30 June 2020, the consolidated statement of profit and loss and
Opinion
other comprehensive income, the consolidated statement of changes in equity and the
We have audited the financial report of Acumentis Group Limited (the Company) and its
consolidated statement of cash flows for the year then ended, and notes to the financial
subsidiaries (the Consolidated Entity), which comprises the consolidated statement of
statements, including a summary of significant accounting policies and other explanatory
financial position as at 30 June 2020, the consolidated statement of profit and loss and
information, and the directors’ declaration.
other comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies and other explanatory
In our opinion, the accompanying financial report of the Consolidated Entity, is in
information, and the directors’ declaration.
accordance with the Corporations Act 2001, including:
Opinion
We have audited the financial report of Acumentis Group Limited (the Company) and its
subsidiaries (the Consolidated Entity), which comprises the consolidated statement of
financial position as at 30 June 2020, the consolidated statement of profit and loss and
other comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies and other explanatory
information, and the directors’ declaration.
Opinion
We have audited the financial report of Acumentis Group Limited (the Company) and its
subsidiaries (the Consolidated Entity), which comprises the consolidated statement of
financial position as at 30 June 2020, the consolidated statement of profit and loss and
Giving a true and fair view of the Consolidated Entity’s financial position as at 30
other comprehensive income, the consolidated statement of changes in equity and the
June 2020 and of its financial performance for the year ended on that date; and
consolidated statement of cash flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies and other explanatory
Complying with Australian Accounting Standards and the Corporations Regulations
information, and the directors’ declaration.
2001.
In our opinion, the accompanying financial report of the Consolidated Entity, is in
accordance with the Corporations Act 2001, including:
In our opinion, the accompanying financial report of the Consolidated Entity, is in
accordance with the Corporations Act 2001, including:
Giving a true and fair view of the Consolidated Entity’s financial position as at 30
June 2020 and of its financial performance for the year ended on that date; and
Giving a true and fair view of the Consolidated Entity’s financial position as at 30
June 2020 and of its financial performance for the year ended on that date; and
Complying with Australian Accounting Standards and the Corporations Regulations
2001.
(ii)
(ii)
(i)
(i)
(i)
(i)
(ii)
(ii)
In our opinion, the accompanying financial report of the Consolidated Entity, is in
accordance with the Corporations Act 2001, including:
Complying with Australian Accounting Standards and the Corporations Regulations
2001.
Giving a true and fair view of the Consolidated Entity’s financial position as at 30
June 2020 and of its financial performance for the year ended on that date; and
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our
responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Consolidated Entity in accordance with the auditor independence
requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit
of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our
responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the Financial Report section of our report. We are
Basis for Opinion
independent of the Consolidated Entity in accordance with the auditor independence
We conducted our audit in accordance with Australian Auditing Standards. Our
requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
responsibilities under those standards are further described in the Auditor’s
Complying with Australian Accounting Standards and the Corporations Regulations
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Responsibilities for the Audit of the Financial Report section of our report. We are
2001.
Accountants (including Independence Standards) (the Code) that are relevant to our audit
independent of the Consolidated Entity in accordance with the auditor independence
requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
Basis for Opinion
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
accordance with the Code.
We conducted our audit in accordance with Australian Auditing Standards. Our
Accountants (including Independence Standards) (the Code) that are relevant to our audit
responsibilities under those standards are further described in the Auditor’s
of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
We confirm that the independence declaration required by the Corporations Act 2001,
We confirm that the independence declaration required by the Corporations Act 2001,
Responsibilities for the Audit of the Financial Report section of our report. We are
accordance with the Code.
which has been given to the directors of the Consolidated Entity, would be in the same
which has been given to the directors of the Consolidated Entity, would be in the same
independent of the Consolidated Entity in accordance with the auditor independence
terms if given to the directors as at the time of this auditor’s report.
terms if given to the directors as at the time of this auditor’s report.
requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
We confirm that the independence declaration required by the Corporations Act 2001,
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
which has been given to the directors of the Consolidated Entity, would be in the same
Accountants (including Independence Standards) (the Code) that are relevant to our audit
terms if given to the directors as at the time of this auditor’s report.
of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
We believe that the audit evidence we have obtained is sufficient and appropriate to
Key Audit Matters
Key Audit Matters
provide a basis for our opinion.
Key audit matters are those matters that, in our professional judgement, were of most
Key audit matters are those matters that, in our professional judgement, were of most
We confirm that the independence declaration required by the Corporations Act 2001,
significance in our audit of the financial report of the current period. These matters were
significance in our audit of the financial report of the current period. These matters were
which has been given to the directors of the Consolidated Entity, would be in the same
Key Audit Matters
addressed in the context of our audit of the financial report as a whole, and in forming our
addressed in the context of our audit of the financial report as a whole, and in forming our
Key audit matters are those matters that, in our professional judgement, were of most
terms if given to the directors as at the time of this auditor’s report.
opinion thereon, and we do not provide a separate opinion on these matters.
opinion thereon, and we do not provide a separate opinion on these matters.
significance in our audit of the financial report of the current period. These matters were
addressed in the context of our audit of the financial report as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
ACCOUNTANTS & ADVISORS
ACCOUNTANTS & ADVISORS
Sydney Office
Level 29, 66 Goulburn Street
Sydney NSW 2000
Sydney Office
Level 29, 66 Goulburn Street
Sydney NSW 2000
ACCOUNTANTS & ADVISORS
Sydney Office
Parramatta Office
Level 29, 66 Goulburn Street
Level 7, 3 Horwood Place
Sydney NSW 2000
Parramatta NSW 2150
Parramatta Office
Level 7, 3 Horwood Place
Parramatta NSW 2150
Telephone: +61 2 8263 4000
williambuck.com
williambuck.com
Parramatta Office
Telephone: +61 2 8263 4000
Level 7, 3 Horwood Place
Parramatta NSW 2150
ACCOUNTANTS & ADVISORS
Telephone: +61 2 8263 4000
Sydney Office
williambuck.com
Level 29, 66 Goulburn Street
Sydney NSW 2000
Parramatta Office
Level 7, 3 Horwood Place
Parramatta NSW 2150
Telephone: +61 2 8263 4000
Key Audit Matters
William Buck is an association of firms, each trading under the name of William Buck across Australia
William Buck is an association of firms, each trading under the name of William Buck across Australia
and New Zealand with affiliated offices worldwide.
and New Zealand with affiliated offices worldwide.
Key audit matters are those matters that, in our professional judgement, were of most
Liability limited by a scheme approved under Professional Standards Legislation.
Liability limited by a scheme approved under Professional Standards Legislation.
significance in our audit of the financial report of the current period. These matters were
William Buck is an association of firms, each trading under the name of William Buck across Australia
(WB013_2007)
(WB013_2007)
addressed in the context of our audit of the financial report as a whole, and in forming our
and New Zealand with affiliated offices worldwide.
Liability limited by a scheme approved under Professional Standards Legislation.
opinion thereon, and we do not provide a separate opinion on these matters.
(WB013_2007)
William Buck is an association of firms, each trading under the name of William Buck across Australia
and New Zealand with affiliated offices worldwide.
Liability limited by a scheme approved under Professional Standards Legislation.
(WB013_2007)
williambuck.com
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Acumentis Annual Report 2020 Valuation of the carrying value of goodwill and customer relationship intangible asset
Area of focus
Refer also to notes 2 (a), 6 (d) and 24 (o)
How our audit addressed it
The Consolidated Entity’s net assets include a
significant amount of Goodwill and Customer
Relationship intangible assets. 2020: $23.9
million (2019: $23.9 million).
We have performed procedures to respond to the risk
of misstatement of Goodwill and Customer
Relationship, specifically the valuation of the Intangible
Assets. These procedures included:
In accordance with accounting standards,
goodwill and customer relationships are subject
to annual impairment testing, and for these
purposes they are allocated to the appropriate
cash generating units (‘CGU’). There is a risk
that if the CGUs do not trade in line with
expectations and forecasts, their carrying value
could exceed their recoverable amount and
therefore require impairment.
The recoverable amount attributable to the
CGUs which existed at 30 June 2020, has been
calculated based on value-in-use.
— Obtaining a detailed understanding of the
budgeting procedures put in place to prepare the
FY2021 budget;
— Evaluation of the director’s assertion that the
customer relationship intangible had an indefinite
useful life at 30 June 2020;
— Testing the accuracy of the calculation derived
from the budget and Discounted Cash Flow (DCF)
as well as assessing the key inputs in the
calculations such as revenue growth, director
approved forecasts and our own views;
These recoverable amounts use discounted
cash flow forecasts in which the directors make
judgements over certain key inputs, for example
but not limited to, revenue growth, discount rates
applied, long term growth rates and inflation
rates.
— Engaging our own valuation specialists when
considering the appropriateness of the discount
rates and the long-term growth rates;
— Reviewing the historical accuracy of forecasts by
comparing actual results with the original
forecasts;
— Testing the sensitivity of the DCF model to
variations in the underlying assumptions; and
— Assessing whether disclosure in the financial
report is appropriate.
Carrying value of the shares in Associated Company – ACU WA
Area of focus
Refer also to notes 2 (b) and 13 (b)
How our audit addressed it
The Consolidated Entity’s net assets include an
investment in an associated company valued at
2020: $1.1mil (2019: $571k).
In accordance with accounting standards,
interests in associates are subject to annual
impairment testing, and for these purposes they
are allocated to the appropriate cash generating
units (‘CGU’). There is a risk that if the CGUs do
not trade in line with expectations and forecasts,
their carrying value could exceed their
recoverable amount and therefore require
impairment.
We have performed procedures to respond to the risk
of overstatement of the shares in the Associate
Company – ACU WA. These procedures included:
— Obtaining a detailed understanding of the
budgeting procedures put in place to prepare the
FY2021 budget of ACU WA;
— Testing the accuracy of the calculation derived
from the ACU WA budget and Discounted Cash
Flow (DCF) as well as assessing the key inputs in
the calculations such as revenue growth, director
approved forecasts and our own views;
— Engaging our own valuation specialists when
considering the appropriateness of the discount
rates and the long-term growth rates;
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70
Acumentis Annual Report 2020 The recoverable amount attributable to the
CGUs which existed at 30 June 2020, has been
calculated based on value-in-use. These
recoverable amounts use discounted cash flow
forecasts in which the directors make
judgements over certain key inputs, for example
but not limited to, revenue growth, discount
rates applied, long term growth rates and
inflation rates.
Compliance with loan facility covenants
Area of focus
Refer also to notes 5 (a), 5(e) and 10
The Consolidated Entity has certain
requirements to comply with under its loan
facility agreement, including (amongst others):
• Consolidated EBITDA,
• Consolidated Revenue, and
• Equity ratio.
Non-compliance with loan facility covenants may
result in the facility being ended and additional
charges incurred, which may be detrimental to
the going concern ability of the Consolidated
Entity.
As at 30 June 2020, ACU satisfied its
requirements under the facility agreement.
— Reviewing the historical accuracy of ACU WA
forecasts by comparing actual results with the
original forecasts;
— Testing the sensitivity of the DCF model to
variations in the underlying assumptions; and
— Assessing whether disclosure in the financial
report is appropriate.
How our audit addressed it
We have performed procedures to assess compliance
the loan facility covenants and the consequences if the
covenants were breached and called upon. These
procedures included:
— Assessing whether ACU can satisfy the
requirements and terms under the facility
agreement;
— Assessing whether debt has been correctly
included, properly classified, described and
disclosed in the financial statements;
— Assessing whether debt representing the amount
due to the lenders under an enforceable facility
agreement has been recorded in the financial
statements; and
— Assessing whether debt has been recorded at
accurate amounts and reflects all events and
circumstances that affect its underlying valuation.
— Assessing whether disclosure in the financial
report is appropriate.
Other Information
The directors are responsible for the other information. The other information comprises the information in
the Consolidated Entity’s annual report for the year ended 30 June 2020 but does not include the financial
report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
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71
Acumentis Annual Report 2020 Material Uncertainty Relating to Going Concern
We draw attention to note 18 in the financial report, which indicates that the Consolidated Entity incurred a
net loss of $2,555,000 during the year ended 30 June 2020 (2019: loss $15,148,000 as of that date, the
Consolidated Entity’s net asset of $26,565,000 (2019: $24,287,000). As stated in Note 18, these events or
conditions, indicate that a material uncertainty exists that may cast significant doubt on the Company’s
ability to continue as a going concern. Our opinion is not modified in respect of this matter and therefore,
the consolidated entity may be unable to realise its assets and extinguish its liabilities in the normal course
of business and at the amounts stated in the financial report.
Responsibilities of the Directors for the Financial Report
The directors of the Consolidated Entity are responsible for the preparation of the financial report that gives
a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and
for such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Consolidated
Entity to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted
in accordance with the Australian Auditing Standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of this financial report.
A further description of our responsibilities for the audit of these financial statements is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf.
This description forms part of our independent auditor’s report.
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72
Acumentis Annual Report 2020 Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 17 to 21 of the directors’ report for the year
ended 30 June 2020.
In our opinion, the Remuneration Report of Acumentis Group Limited, for the year ended 30 June 2020,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Consolidated Entity are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to
express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
Your faithfully,
William Buck
Accountants & Advisors
ABN: 16 021 300 521
L E. Tutt
Partner
Sydney, 27 August 2020
Pg 93
73
Acumentis Annual Report 2020 ASX ADDITIONAL INFORMATION
Additional information required by the Australian Stock Exchange Limited Listing Rules and not disclosed
elsewhere in this report is set out below.
The Company was admitted to the Australian Stock Exchange under rule 1.3.2(b).
Shareholdings
Shareholding details are as at 6th August 2020.
Substantial shareholders
The number of shares held by substantial shareholders and their associates are set out below:
Shareholder
Redbrook Nominees Pty Ltd
Newport Shipping Company Pty Limited
White Valuations Pty Ltd
Number of Ordinary Shares
Percentage
29,017,713
13,840,755
9,990,134
18.6%
8.9%
6.4%
Voting rights
Ordinary shares
Holders of ordinary shares are entitled to one vote per share at shareholder meetings.
Options
There are no voting rights attached to options
Distribution of equity security holders
Category
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 50,000
50,001 – 100,000
100,001 and over
Total
Number of Shareholders
Number of shares
59
246
164
320
93
151
1,033
21,970
865,868
1,274,829
7,911,865
6,694,100
138,911,298
155,679,930
On-market buy back
There is no current on-market buy back.
Unmarketable Parcels
The number of shareholders holding less than a marketable parcel of 4,762 shares (based on closing
price of $0.105 on 6 August 2020) is 279 and they hold 758,267 securities.
Pg 94
Acumentis Annual Report 2020
Twenty largest shareholders
Name
Newport Shipping Company Pty Limited
Redbrook Nominees Pty Ltd
White Valuations Pty Ltd
Acres Holdings Pty Ltd
Bnp Paribas Nominees Pty Ltd
Kiut Investments Pty Ltd
Mr Noel Edward Kagi & Mrs Michelle Leonie Kagi
Enable Investment Manager Pty Ltd
Ms Lynette Jane Ellis & Mr Jeffrey George Keane
Gogorm Super Pty Ltd
Mr Tony Gandel & Mrs Helen Gandel
Continuum Property Consultancy Pty Ltd
Arkmist Pty Ltd
Ventura Resources Pty Ltd
Ian D Bolewski Pty Ltd
Raptis Property Consultants Pty Ltd
Kevin King Pty Ltd
Kamala Holdings Pty Ltd
Nickson Pty Ltd
Mr Hamid Roboubi & Mrs Jillian Anne Roboubi
Number of Ordinary Shares
Percentage
13,840,755
13,794,651
9,990,134
7,736,625
5,493,888
4,206,071
4,596,437
3,721,000
3,558,334
3,182,494
3,174,105
3,033,212
2,845,712
2,832,548
2,433,212
2,433,212
1,707,498
1,650,000
1,600,000
1,382,246
8.9%
8.9%
6.4%
5.0%
3.5%
2.7%
3.0%
2.4%
2.3%
2.0%
2.0%
1.9%
1.8%
1.8%
1.6%
1.6%
1.1%
1.1%
1.0%
0.9%
93,212,134
59.9%
Pg 95
Acumentis Annual Report 2020 ANNUAL REPORT CONTACT INFORMATION
Company secretary
John Wise
Principal registered office
Level 7, 283 Clarence Street
Telephone
Facsimile
Website
Sydney NSW 2000
02 8823 6300
02 8823 6399
www.acumentis.com.au
Location of share registry
Automic Registry Services
PO Box 2226
Strawberry Hills NSW 2012
Telephone 1300 288 664 (toll free within Australia)
+61 2 9698 5414 (outside Australia)
Email hello@automic.com.au
Stock exchange
The company is listed on the Australian Stock Exchange (“ACU”)
Other information
Acumentis Group Limited, incorporated and domiciled in Australia, is a publicly listed
company limited by shares.
Pg 96
Acumentis Annual Report 2020
Pg 97
Acumentis Annual Report 2020 www.acumentis.com.au
Liability limited by a scheme approved under Professional Standards Legislation.