2015 Annual Report
Annual Report for the financial year ended 31 December 2015
BuildingIQ, Inc.
ARSN 605 422 166
BuildingIQ, Inc.
Table of Contents
31 December 2015
Table of Contents
Message from the Chairman & CEO
Corporate Directory
Directors’ Report
Auditor’s Independence Declaration
General Information
Consolidated Statement of Profit or Loss and other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
Page 2
Page 4
Page 5
Page 19
Page 20
Page 21
Page 22
Page 23
Page 24
Page 25
Page 48
Page 49
Page 51
1
BuildingIQ, Inc.
Message from Chairman & CEO
31 December 2015
Dear Shareholders,
It gives us great pleasure to present the first Annual Report of BuildingIQ, Inc (“BuildingIQ”) since the company’s
successful listing on the Australian Securities Exchange (“ASX”) on 17 December 2015.
The Initial Public Offer (“IPO”) was successful in raising AUD$20 million and represented the culmination of the
first chapter of the business which commenced with incorporation of BuildingIQ Pty Ltd in 2009. In 2012,
BuildingIQ, Inc. was incorporated in Delaware and a series of funding rounds were undertaken and included
participation from Exto Partners (“Exto”), Siemens Venture Capital GMBH (“Siemens Venture Capital”) and
Paladin Capital Management LLC (“Paladin Capital”). Together with the management team and staff everyone
has contributed to the successful commercialisation of the technology developed by Australia’s Commonwealth
Scientific and Industrial Research Organisation (“CSIRO”).
This technology forms the basis of the company’s Predictive Energy Optimisation (“PEO”) offering and is the
bedrock of a software-as-a-service (“SaaS”) energy management platform which includes the following other
modules and capabilities:
• Daily forecasting of building energy performance;
• Measurement and verification via a transparent savings calculator;
•
Portfolio Management including portfolio control and insights for facilities managers;
• DemandResponseIQ: optimisation for demand response and utility smart grid interaction.
Throughout 2016, we will be focused on further expanding the capabilities within our existing product set to bring
to market a new, full-suite Energy Information Management Services (EIMS) platform. This new service will
enable us to provide the best integrated energy measurement, monitoring and analytics platform available in the
market today.
The financial highlights for 2015 (all AUD) were:
Achievement of $0.3m monthly recurring revenue run rate;
• Growth in revenue and other income of 163% from $3.2million to almost $5.2m;
•
• New contract bookings amounting to $8.2m for the year;
•
•
•
Future contracted revenue reaching $11.5m;
A further 64 buildings coming under contract in 2015; and,
Surpassing 35m square feet under contract.
Other exciting developments during the year included our appointment as the approved measurement &
verification platform provider for the Office of Environment & Heritage in NSW, Australia. In this role we have
been selected to validate the performance of sustainability projects on behalf of the state government.
The company also entered into an agreement with the New York State Energy Research and Development
Authority (“NYSERDA”) to provide incentives for the deployment of our services in up to 25 buildings.
The successful granting of patents in Australia, Japan and now China provides us with greater commercial
security over our unique intellectual property.
2
BuildingIQ, Inc.
Message from Chairman & CEO
31 December 2015
As foreshadowed in the prospectus, the proceeds from the IPO have been earmarked to provide the platform
for the continued and ongoing growth of the business. Firstly, we are commencing our expansion into Asia
through the establishment of an office and team in Singapore to contribute to our revenue growth from 2017.
Secondly, we will be investing in the executive leadership team and expect to bolster the skills and depth of
management in the first half of 2016. Finally, the evolution of our technology-enabled services offering will
continue and culminate in the release of version 5.0 of the BuildingIQ platform, which will include significant
improvements in functionality, architecture and user experience.
In respect to governance matters we look forward to your attendance at the company’s annual general meeting.
For holders of CHESS Depositary Interests (“CDIs”) we are focused on ensuring that there is clear
communication about the operations and rights of the holders of these instruments as owners of BuildingIQ, Inc.
The listing of BuildingIQ, Inc, an entity incorporated under, and subject to, Delaware law has brought with it
some nuances with the overlay of ASX and other Australian regulatory requirements which we will continue to
present and outline in the most transparent possible way.
Once again we would like to thank the energetic staff and executive leadership team of BuildingIQ for their
passion, dedication and commitment in making the business what it is today. The role and vision of our
cornerstone investors, Exto Partners, Siemens Venture Capital and Paladin Capital, has been integral to what
we have achieved to date. We look forward to building on the success of 2015 and to even more significant
growth in the year ahead.
Alan Cameron
Chair
Michael Nark
President & CEO
3
BuildingIQ, Inc.
Corporate Directory
31 December 2015
Directors
Alan Cameron
Tanya Cox
William Deane
Gerd Goette
Michael Nark
Ken Pentimonti
Company secretary
Rob Goss
Notice of annual general meeting
The details of the annual general meeting of BuildingIQ, Inc. are:
Level 4, 60 Carrington Street
(Offices of Computershare)
Sydney NSW 2000
11am on 18 May 2016
Registered office
Principal place of business
1065 East Hillsdale Blvd, Suite 310
Foster City CA 94404-1689 USA
1065 East Hillsdale Blvd, Suite 310
Foster City CA 94404-1689 USA
Share register
Auditor
Computershare Investor Services Pty Ltd
Level 4, 60 Carrington Street
Sydney NSW 2000
www.computershare.com
BDO East Coast Partnership
Level 11
1 Margaret Street
Sydney NSW 2000
Stock exchange listing
BuildingIQ, Inc. shares are listed on the Australian Securities Exchange (ASX code:
BIQ)
Website
www.BuildingIQ.com
4
BuildingIQ, Inc.
Directors’ Report
31 December 2015
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as
the 'consolidated entity' or ‘BuildingIQ’) consisting of BuildingIQ, Inc. (referred to hereafter as the 'company' or 'parent entity')
and the entities it controlled at the end of, or during, the year ended 31 December 2015.
Directors
The following persons were directors of the company during the whole of the financial year and up to the date of this report,
unless otherwise stated:
Alan Cameron (appointed 14 April 2015)
Tanya Cox (appointed 17 August 2015)
William Deane
Gerd Goette
Michael Nark
Ken Pentimonti
Principal activities
BuildingIQ is a leading provider of energy efficiency solutions for facilities throughout the United States and Australia.
BuildingIQ’s principal service is the development, design, engineering and installation of integrated software projects that
reduce the energy and operations and maintenance costs of customers’ facilities. These projects typically include a variety
of measures customized for each facility and are designed to improve the efficiency of major building systems, such as
heating, ventilation and air conditioning systems.
Dividends
No dividends were paid during or subsequent to the year.
Review of operations
Revenues consist primarily of software license fees, software implementation, hardware sales, project management services,
installation, consulting and post-sale maintenance support. BuildingIQ also receives grants and tax incentives in Australia.
Revenue and other income increased from last year by approximately 200%, from $1,418,646 to $4,272,887. The key
reasons for this increase were the success of BuildingIQ’s utility and government programs coupled with the continued
expansion of our direct sales force and upgrading of its business partner program. Other income also increased by $345,262
reflecting an increase in the grants and tax incentives receivable for 2015.
Operating expenses (which exclude Finance costs) increased from $6,362,969 to $8,836,406 primarily due to currency
headwinds in our US operations and non-recurring capital raising costs of $821,342. The overall result of these factors was
that the loss for the year decreased marginally from $5,345,132 to $5,273,890.
Changes in the state of affairs
On 17 December 2015 the company listed on the Australian Securities Exchange (ASX: BIQ). This process enabled the
Company to raise additional share capital of $20 million to fund continued expansion as well as ongoing operations. Apart
from this there were no other significant changes to the affairs of BuildingIQ, Inc.
Matters subsequent to the end of the financial year
There have not been any transactions or events of a material and unusual nature between the end of the reporting period
and the date of this report that will, in the opinion of the directors of the Company, significantly affect the operations of the
consolidated entity, the results of those operations, or state of affairs of the consolidated entity in future years.
5
BuildingIQ, Inc.
Directors’ Report
31 December 2015
Likely developments and expected results of operations
With the additional funds raised from the Initial Public Offer BuildingIQ will continue to increase its sales and marketing efforts
over the next twenty-four months in its key existing markets as well as open and staff with direct sales resources a new
Southeast Asian office. BuildingIQ’s expansion focus will also include the addition of business development resources who
will focus on extending our reach into markets which require a more indirect /partner sales model.
In conjunction with this expansion BuildingIQ will continue to develop and expand the capabilities of our technology and
services. BuildingIQ’s primary focus will be to further enhance the energy cost optimization function(s) of our platform to
incorporate seamless integration of renewable sources of energy which are being introduced to the utility grids across the
globe as an alternative energy source. BuildingIQ’s ability to incorporate renewables will further enable it to drive its global
expansion. Organic expansion plans may be supported by in-organic initiatives to achieve the strategic objectives described
above.
In addition to these initiatives BuildingIQ will be investing in operational support resources to manage and support our
customer needs on a global basis. These resources will be added in the key markets that BuildingIQ currently serves as
well as in Southeast Asia as its installed base of customers continues to grow.
Environmental regulation
The consolidated entity is not directly subject to any significant environmental regulation.
Corporate Governance
The company, as a Delaware incorporated company, seeks to achieve substantive compliance with the governance
recommendations set out in the ‘Corporate Governance Principles and Recommendations 3rd Edition’, published by the ASX
Corporate Governance Council (the ASX Principles). Upon listing on the Australian Securities Exchange the consolidated
entity adopted a Corporate Governance Charter and Corporate Governance Statement which may both be viewed
at www.buildingiq.com/the-company-and-product-story/investor-relations.
Company secretary
Rob Goss was appointed as Chief Financial Officer and Company Secretary of the consolidated entity on 17 December
2015. Prior to his appointment Will Deane was Company Secretary. Rob has held several senior finance roles, including
Chief Financial Officer of iProperty Group Limited (ASX: IPP) and Global Head of Accounting Policy & Governance at
Australia and New Zealand Banking Group (ASX: ANZ). In these role he has developed significant expertise in statutory
reporting, risk management and compliance & governance matters. He is also a member of the Institute of Chartered
Accountants Australia (ICAA).
6
BuildingIQ, Inc.
Directors’ Report
31 December 2015
Information on directors
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3
years):
Special responsibilities:
Interests in shares:
Interests in options:
Contractual rights to shares:
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3
years):
Special responsibilities:
Interests in shares:
Interests in options:
Contractual rights to shares:
Alan Cameron
Non-Executive Independent Chairman
BA, LLM (Syd)
Alan was a partner in a major law firm for 12 years before becoming Commonwealth
Ombudsman in 1991, and was chairman of the Australian Securities Commission (ASC)
and its successor, the Australian Securities and Investments Commission (ASIC), from
January 1993 to November 2000. Since leaving ASIC in 2000, Alan has been a company
director and a consultant on regulatory projects and governance reviews of various kinds.
He is currently chair of Property Exchange Australia Limited, Hastings Funds
Management Limited, and various companies in the BT Financial Group, including
Westpac's life, general and mortgage insurance companies. He was appointed as a
Member of the Order of Australia in 1997, and as an Officer in 2011. Alan joined the
Board of the company in April 2015 as Chairman.
Non-Executive Director of Property Exchange Australia Limited (since January 2010)
None
Chairman, Chair of Nomination Committee and member of the Audit & Risk Management
Committee and the Remuneration Committee
40,000
50,000
None
Tanya Cox
Non-Executive Independent Director
MBA, MAICD, FGIA, FCIS
Tanya has more than 20 years’ experience as an executive director and 10 years as a
non-executive director on boards as diverse as the Australian Paralympic Committee,
Cricket NSW Advisory Board and Music & Opera Singers Trust. As the chief operating
officer of $17.6 billion DEXUS Property Group for more than a decade, Tanya oversaw
corporate
risk management, marketing and
communications, corporate operations and governance, as well as company secretarial
practices. Tanya is currently the Chair of the Green Building Council of Australia and
Equiem Pty Ltd, a director of ASX listed OtherLevels Holdings and a member of the NSW
Climate Change Council. Tanya joined the Board of the company in August 2015
Non-Executive Director of Other Level Holdings (ASX:OLV)
None
responsibility and sustainability,
Chair of the Audit & Risk Management Committee and the Remuneration Committee and
member of the Nomination Committee
40,000
40,000
None
7
BuildingIQ, Inc.
Directors’ Report
31 December 2015
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3
years):
Special responsibilities:
Interests in shares:
Interests in options:
Contractual rights to shares:
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3
years):
Special responsibilities:
Interests in shares:
Interests in options:
Contractual rights to shares:
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3
years):
Special responsibilities:
Interests in shares:
Interests in options:
Contractual rights to shares:
William Deane
Non-Executive Director
LL.B., BA
William is a Managing Director of Exto Partners Pty Ltd, a private investment firm based
in Sydney. He has successfully managed IPOs, mergers and acquisitions for Exto’s
portfolio companies. Prior to joining Exto Partners, William was a corporate lawyer in
New York with Sidley Austin LLP and Skadden, Arp, Slate, Meagher and Flom LLP, and
in Australia with Ashursts (formerly Blake Dawson Waldron). Will joined the Board of the
company in October 2012 and was previously a director of BuildingIQ Pty Ltd from 2009.
Non-Executive Director of RedHill Education (ASX:RDH)
None
Member of the Audit & Risk Management Committee, the Remuneration Committee and
the Nomination Committee
1,598,782
None
None
Gerd Goette
Non-Executive Director
M.A. Engineering
Gerd is a Partner at Siemens Venture Capital (SVC) based in Silicon Valley, California.
He currently manages SVC’s investments in BuildingIQ, ChargePoint, QBotix, Sensys,
Sunverge, Tendril and Wirescan. Prior to joining SVC, Gerd was Vice President and Head
of CableTV Solutions in Siemens Information and Communication Networks. Gerd joined
the Board of the company in December 2012.
None
None
Member of the Remuneration Committee and the Nomination Committee
None
None
None
Michael Nark
Executive Director, President & CEO
B.S. Engineering
Michael brings over 25 years of experience in software and technology-enabled service
delivery businesses. He recently served as President and CEO of Power Analytics. He
has a proven track record of building successful, efficient organisations and experience
in leading companies to profitable growth. Michael was appointed President and CEO
and joined the Board of the company in October 2014.
None
None
President and CEO, member of the Nomination Committee
None
1,703,089
None
8
BuildingIQ, Inc.
Directors’ Report
31 December 2015
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3
years):
Special responsibilities:
Interests in shares:
Interests in options:
Contractual rights to shares:
Ken Pentimonti
Non-Executive Director
M.B.A, B.A. Economics and Political Science
Ken has been a Director of BuildingIQ since December 2012. Ken is a Principal at Paladin
Capital Group, a multi-stage private equity firm based in Washington, DC. Ken focuses
on sourcing, negotiating and monitoring investment opportunities in the renewable energy
and cleantech sectors. Prior to joining Paladin, Ken spent six years as an Investment
Banker with JPMorgan Chase (and the growth-focussed investment bank, Hambrecht &
Quist, which was acquired by JPMorgan Chase). While at JPMorgan, he led the
execution of over twenty equity offerings, ten M&A transactions, and various other public
and private capital raising transactions. Ken joined the Board of the company in
December 2012.
None
None
Member of the Nomination Committee
None
None
None
'Other current directorships' noted above are current directorships for listed entities only and excludes directorships of all
other types of entities.
'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes
directorships of all other types of entities, unless otherwise stated.
‘Interest in shares’ is in accordance with the Appendix 3X lodged with the ASX in respect of each of the directors. This
number differs to the amount set out in the table on page 15 of the Remuneration Report which includes shares held by
director related entities.
Meetings of directors
The number of meetings of the company's Board of Directors ('the Board') and of each Board committee held during the year
ended 31 December 2015, and the number of meetings attended by each director were:
Board
Remuneration
Nomination
Audit & Risk
Attended
Held
Attended
Held
Attended
Held
Attended
Held
Alan Cameron
Tanya Cox
William Deane
Gerd Goette
Michael Nark
Ken Pentimonti
9
8
13
12
13
13
10
8
13
13
13
13
1
1
1
1
-
-
1
1
1
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4
4
4
-
-
-
4
4
4
-
-
-
9
BuildingIQ, Inc.
Directors’ Report
31 December 2015
Remuneration Report - audited
This Remuneration Report outlines the overall remuneration strategy, framework and practices adopted by the consolidated
entity for Non-executive and Executive Directors, determined to be Key Management Personnel (“KMP”).
The Remuneration Report contains the following sections:
A
B
C
D
E
F
G
H
I
J
Key Management Personnel disclosed in this report
Remuneration governance
Executive remuneration policy and framework
Relationship between remuneration and the consolidated entity’s performance
Non-executive Director remuneration policy
Details of remuneration of Directors and Key Management Personnel
Service agreements
Share-based compensation
Equity instruments held by Key Management Personnel (options)
Additional information
The information provided in this Remuneration Report has been audited.
A
Key Management Personnel disclosed in this report
Key Management Personnel include those who have the authority and responsibility to plan, direct and control the major
activities of the consolidated entity.
Alan Cameron
Michael Nark
Tanya Cox
William Deane
Gerd Goette
Ken Pentimonti
Independent Chair (Non-executive)
Executive Director, President and Chief Executive Officer
Independent Director (Non-executive)
Director (Non-executive)
Director (Non-executive)
Director (Non-executive)
B
Remuneration governance
BuildingIQ Pty Ltd was founded in Sydney, Australia in 2009. BuildingIQ, Inc. a U.S based entity was formed in 2012 as a
Delaware Corporation, with headquarters based in Foster City CA. BuildingIQ Pty Ltd was acquired in the same year and
since that time has been operated as a fully owned subsidiary of Building IQ, Inc. As a consequence, BuildingIQ’s executive
remuneration framework is international in flavour and reflects the sales orientation of the business.
The Remuneration Committee’s objectives for BuildingIQ’s remuneration framework are for the framework to be:
•
•
•
•
competitive and reasonable, enabling BuildingIQ to attract and retain key talent in the jurisdictions in which it operates;
aligned to BuildingIQ’s strategic and business objectives and the creation of shareholder value;
transparent and easily understood, and
acceptable to shareholders
The objectives of BuildingIQ’s remuneration policies are to ensure that remuneration packages for executive KMP reflect
their duties, responsibilities and level of performance - as well as to ensure that all executive KMP are motivated to pursue
the long-term growth and success of the consolidated entity.
Fundamental to all remuneration arrangements is that executive KMP must contribute to the achievement of short and long-
term objectives, enhance shareholder value, avoid unnecessary or excessive risk taking and discourage behaviour that is
contrary to BuildingIQ’s values.
Details of the short and long-term incentive schemes are set out below in the “Executive remuneration policy and framework”
section C of the Remuneration Report.
Securities Trading Policy
The trading of CDIs & shares issued to eligible employees under any of BuildingIQ’s employee equity plans is subject to,
and conditional upon, compliance with BuildingIQ’s Securities Trading Policy. KMP must not use BuildingIQ securities in
connection with a margin loan or similar financing arrangement, nor are they permitted to engage in hedging activities, deal
in derivatives or enter into other arrangements that limit the economic risk associated with BuildingIQ securities.
10
BuildingIQ, Inc.
Directors’ Report
31 December 2015
C
Executive remuneration policy and framework
The Board reviews the remuneration packages for executive KMP annually by reference to performance against individual
objectives and the BuildingIQ’s consolidated results. The performance review of the President and Chief Executive Officer
is undertaken by the Board.
BuildingIQ aims to reward executive KMP with a level of remuneration commensurate with their responsibilities and position
within the consolidated entity, and their ability to influence shareholder value creation. The remuneration framework links
rewards with the strategic objectives and performance of the consolidated entity.
The executive KMP remuneration framework has three components:
•
•
•
fixed base pay and benefits, including superannuation (where applicable);
short-term incentives (STIs); and
long-term incentives (LTIs) through participation in the 2012 Equity Incentive Plan (EIP) and the Employee Share
Option Plan (ESOP), which have been approved by the Board and outlined in the prospectus dated 30 October 2015
and issued by the company in connection with the Initial Public Offering (the ‘Prospectus’)
The combination of these components comprise the total remuneration package of executive KMP.
Base pay
The base pay may be delivered as a combination of cash and prescribed non-financial benefits at the discretion of the KMP.
Executive KMP are offered a modest base pay that comprises cash salary, superannuation and non-monetary benefits. Base
pay for executive KMP is reviewed annually by the Remuneration Committee which takes into account capability, experience,
value to the organisation and performance of the individual.
Retirement benefits for KMP
There are no retirement benefits made available to KMP, other than as required by statute or by law.
Short-term incentives (STI)
To ensure that remuneration for executive KMP is aligned to BuildingIQ’s performance, a significant component of each
executive KMP’s remuneration package is performance based and, therefore, “at risk”.
Executive KMP have the opportunity to earn an annual STI if pre-defined targets are achieved. STI opportunities for executive
KMP vary depending on the role, responsibility and ability to influence the performance of the consolidated entity.
KPI’s for executive KMP to 31 December 2015 included:
KMP
Michael Nark
Key Performance Indicators
• 50% based on the consolidated entity's annual performance, including bookings,
revenue and EBITDA
• 50% based on individual KPIs linked to the consolidated entity’s strategic plan
The target remuneration mix for executive KMP to 31 December 2015 was:
KMP
Michael Nark
Fixed
66%
STI
33%
Total
100%
Details of the performance based remuneration awarded and forfeited during the period was:
KMP
Michael Nark
Target
US$125,000
Awarded
US$150,000
Forfeited
US$12,500
With respect to KPIs based on the consolidated entity’s annual performance the President and Chief Executive
Officer was awarded a bonus of US$50,000 out of a maximum US$62,500, the balance being forfeited.
With respect to KPIs based on BuildingIQ’s strategic plan the President and Chief Executive Officer was awarded
a bonus of US$100,000, which exceeded his contracted bonus potential of US$62,500. This bonus was awarded
in recognition of the President and Chief Executive Officers’ above expectations contribution to the successful Initial
Public Offer.
Performance based remuneration will be settled in a combination of cash and/or equity at the election of the
President and Chief Executive Officer.
11
BuildingIQ, Inc.
Directors’ Report
31 December 2015
C
Executive remuneration policy and framework (continued)
Long-term incentives (LTI)
The objective of the LTI scheme is to deliver long-term shareholder value by incentivising executive KMP to achieve sustained
financial performance. BuildingIQ granted directors and key employees options under its:
•
•
2012 Equity Incentive Plan (‘EIP’), and
Employee Share Option Plan (‘ESOP’)
as detailed in the Prospectus.
Since commencement the President and Chief Executive Officer has received three option grants; the initial grant amounting
to 5% of BuildingIQ’s capital as at 9 September 2013 (his commencement date), the second grant, issued in 2015, consistent
with the terms of the anti-dilution clause in his employment contract associated with completion of the Series B financing
arrangements and the third grant, issued in 2015 in lieu of cash compensation for 2014 performance. The options vest over
a four year period with the first 25% vesting on the one year anniversary and the balance vesting thereafter in equal monthly
increments with the exception of the third grant which vests monthly over a four year period.
D
Relationship between remuneration and the consolidated entity’s performance
The overall level of reward for executive KMP takes into account the performance of the consolidated entity, with 50% of STI
awarded based on consolidated entity performance against financial targets and 50% based on individual performance
against personal KPIs.
Of the total incentive payments awarded, 50% of the maximum bonus potential is funded within budget if the Company meets
its financial targets for the consolidated entity. The remaining 50% potential is funded out of incremental revenue in the
event of financial outperformance.
E
Non-executive Director remuneration policy
Non-executive Director’s fees are determined within an aggregate Directors’ fee pool limit, which was detailed in the
Prospectus. Non-executive Directors are eligible to participate in EIP and ESOP.
The maximum annual aggregate Directors’ fee pool limit is US$300,000 per annum. Aggregate total Directors’ fees for 2015
were A$140,000 per annum which was pro-rated in the current year.
Fees earned are based on responsibilities and vary for the Board’s Chair and for the Chair of each Board Committee. Fees
and payments to Non-executive Directors reflect the demands that are made on, and the responsibilities of, the Directors.
Base fees
Chair
Other Non-executive Directors
Committee fees
Audit and Risk Management Committee Chair
Audit and Risk Management Committee Member
Remuneration Committee Chair
Remuneration Committee Member
Nomination Committee Chair/Member
2015
A$40,000
A$20,000
A$10,000
NIL
A$10,000
NIL
NIL
For further information in relation to Directors’ remuneration, refer to pages 13 to 16.
Retirement allowance for Directors
There are no retirement allowances paid to Non-executive Directors.
12
BuildingIQ, Inc.
Directors’ Report
31 December 2015
F
Details of remuneration of Directors and Key Management Personnel
Amounts of remuneration
Non-executive Directors
Short-term benefits
Cash
bonus
$
Other
$
Salary
and fees
$
25,041
16,438
767
767
767
43,780
Alan Cameron*
Tanya Cox**
William Deane
Gerd Goette
Ken Pentimonti
Total
* Alan Cameron was appointed to BuildingIQ Pty Ltd effective 14 April 2015.
** Tanya Cox was appointed to BuildingIQ Pty Ltd effective 17 August 2015.
Fees for the longer serving directors commenced on listing date, being 17 December 2015.
2015
2015
2015
2015
2015
-
-
-
-
-
-
Post-
Benefits
Super
$
Employment Option-
based
payments
$
15,900
12,720
-
-
-
28,620
-
-
-
-
-
-
-
-
-
-
-
-
Total
$
40,941
29,158
767
767
767
72,400
Other Key Management
Personnel
Salary
and fees
$
Short-term benefits
Cash
bonus
$
Michael Nark
2015
345,734
207,440
Post-
Employment Option-
based
payments
$
Benefits
Super
$
Total
$
-
-
576,654
Other
$
23,390
The relative proportions of remuneration referred to in the preceding table that are fixed compared to performance linked are
detailed below.
Name
Michael Nark
G
Service agreements
Fixed remuneration (%)
2015
64%
At risk – STI (%)
2015
36%
Remuneration and other employment benefits for executive KMP are formalised in service agreements. Major provisions of
the agreements relating to remuneration are set out below.
Michael Nark
Annual base salary
Performance bonus
Options
Termination
US$250,000 plus health insurance
US$125,000
First Options – 5% of fully diluted capital of the Company as at the date
of hire
Accrued wage and leave entitlements are paid.
Unvested options lapse.
Consistent with US employment arrangements employment may be
terminated at any time, with or without cause and with or without notice
at the option of either the Company or the CEO. In either case a four
month severance obligation is payable on termination.
13
BuildingIQ, Inc.
Directors’ Report
31 December 2015
H
Share-based compensation
Options
Details of options over ordinary shares in the company provided as remuneration to Directors are set out below. Further
information on options and performance rights are set out in note 29 of the financial statements.
Non-executive Directors
Alan Cameron
Tanya Cox
Number of options granted
during the period
2015
Number of options vested
during the period
2015
50,000
40,000
50,000
40,000
The assessed fair value at the reporting date of options granted to the individuals is allocated over the period from grant date
to expiry date, and the amount for the current period is included in the remuneration table in this report. Fair values at grant
date are determined using a Black-Scholes pricing model that takes into account the exercise price, the term of the option,
the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend
yield, and the risk free interest rate for the term of the option.
14
BuildingIQ, Inc.
Directors’ Report
31 December 2015
I
Equity instruments held by Key Management Personnel (options)
The number of options over ordinary shares in the Company held during the period by each Director of BuildingIQ Inc. of the
company are set out below.
Non-executive Directors
Alan Cameron
Tanya Cox
William Deane
Gerd Goette
Ken Pentimonti
Balance at
start of
period
-
-
-
-
-
Other Key Management
Personnel
Michael Nark
Balance
at start of
period
312,811
Share holdings
Granted
as
compensat
ion
50,000
40,000
-
-
-
Granted
as
compens
ation
166,548
Exercised
-
-
-
-
-
Other
changes
-
-
-
-
-
Balance at
end of
period
Vested
and
exercisable
to date
50,000
40,000
-
-
-
50,000
40,000
-
-
-
Unvested
Nil
Nil
-
-
-
Exercised
Other
changes
Balance
at end of
period
- 1,223,730 1,703,089
Vested
and
exercisabl
e to date Unvested
666,618 1,036,471
The number of shares in the company held during the period by each director of BuildingIQ, Inc. including their personally
related parties, are set out below.
Balance at start of
the period
Non-executive Directors
-
Alan Cameron
-
Tanya Cox
450,000
William Deane1
1,868,531
Gerd Goette1
Ken Pentimonti1
1,868,515
1 Other changes during the period relate to conversion of notes to shares and a pre-IPO share split
Other changes
during the period
40,000
40,000
1,148,782
13,934,003
14,404,354
Received during
the period on
exercise of options
-
-
-
-
-
Balance at end of
the period
40,000
40,000
1,598,782
15,802,534
16,272,869
Other Key Management
Personnel
Michael Nark
Balance at start of
the period
-
Received during
the period on
exercise of options
-
Other changes
during the period
-
Balance at end of
the period
-
15
BuildingIQ, Inc.
Directors’ Report
31 December 2015
J
Additional information
Loans to Directors and Executives
There were no loans to Directors or other KMP during the period.
Shares under option
Unissued ordinary shares of BuildingIQ Holdings Inc. under option at the date of this report are as follows.
Grant date
December 2012
December 2012
December 2012
December 2012
March 2013
June 2013
October 2013
January 2014
August 2014
November 2014
June 2015
October 2015
December 2015
December 2015
Total
Expiry date
December 2017
December 2017
December 2017
December 2017
March 2023
June 2023
October 2023
January 2024
August 2024
November 2024
June 2025
October 2025
December 2018
December 2020
Fair value
US 5.1c
US 5.1c
US 2.8c
US 2.0c
US 10.1c
US 10.4c
US 10.4c
US 0.3c
US 0.3c
US 0.3c
US 0.3c
US 0.3c
AUD 31.8c
AUD 36.5c
Exercise
Price
AUD 81.0c
AUD 82.0c
AUD 161.0c
AUD 240.0c
AUD 26.2c
AUD 26.2c
AUD 26.2c
AUD 26.2c
AUD 26.2c
AUD 26.2c
AUD 26.2c
AUD 26.2c
AUD 100c
AUD 115c
2015
Share options
73,919
262,021
21,316
183,857
319,753
10,658
1,305,000
61,539
113,094
14,210
1,103,322
335,735
90,000
2,112,500
6,006,924
The earnings of the consolidated entity for the five years to 31 December 2015 are summarised below:
Sales revenue
Other income
EBITDA
EBIT
Loss after income tax
2015
$
2014
$
2013
$
2012
$
2011
$
4,272,887
893,401
(4,503,817)
(5,185,083)
(5,273,890)
1,418,646
548,139
(4,410,261)
(5,113,587)
(5,345,132)
875,507
715,611
(3,942,557)
(4,447,547)
(4,447,547)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
Share price at financial year end
Total dividends declared (cents per share)
Basic earnings per share (cents per share)
$1
-
8.4
N/A
-
19.8
N/A
-
N/A
N/A
-
N/A
N/A
-
N/A
2015
2014
2013
2012
2011
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the
company or of any other body corporate.
This concludes the remuneration report, which has been audited.
Shares issued on the exercise of options
No ordinary shares of the company were issued during the year ended 31 December 2015 and up to the date of this report
on the exercise of options granted.
16
BuildingIQ, Inc.
Directors’ Report
31 December 2015
Indemnity and insurance of officers
As permitted under Delaware law, the company has agreements whereby officers and directors are indemnified for certain
events or occurrences while the officer or director is, or was, serving at the company’s request in such capacity. The
maximum potential amount of future payments the company could be required to make under these indemnification
agreements is not limited; however, the company has directors’ and officers’ insurance coverage that reduces the exposure
and may enable the company to recover a portion of any future amounts paid. The company has determined that estimated
fair value of these indemnification agreements in excess of applicable insurance coverage is minimal.
During the financial year, the company paid a premium in respect of a contract to insure the directors and executives of the
company against a liability. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the
premium.
Indemnity and insurance of auditor
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 liability incurred by the auditor.
During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company
or any related entity.
Proceedings on behalf of the company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the company, or to intervene in any proceedings to which the company is a party for the purpose of taking responsibility
on behalf of the company for all or part of those proceedings.
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor
are outlined in note 23 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another
person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001.
The directors are of the opinion that the services as disclosed in note 23 to the financial statements do not compromise the
external auditor's independence requirements of the Corporations Act 2001 for the following reasons:
• all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity
of the auditor; and
• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including
reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the company,
acting as advocate for the company or jointly sharing economic risks and rewards.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on
the following page.
Auditor
BDO East Coast Partnership was appointed as auditor of the company on 7 December 2015. BDO East Coast Partnership
continues in office in accordance with section 327 of the Corporations Act 2001.
17
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret St
Sydney NSW 2000
Australia
DECLARATION OF INDEPENDENCE BY TIM SYDENHAM TO THE DIRECTORS OF BUILDINGIQ, INC.
As lead auditor of BuildingIQ, Inc. for the year ended 31 December 2015, I declare that, to the best of
my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of BuildingIQ, Inc. and the entities it controlled during the period.
Tim Sydenham
Partner
Sydney, 25 February 2016
BDO Services (East Coast) Pty Ltd ATF York Unit Trust ABN 44 581 253 026 is a member of a national association of independent entities which are all
members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Services (East Coast) Pty Ltd ATF York Unit Trust and
BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of
independent member firms. Liability limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of
financial services licensees.
BuildingIQ, Inc.
Contents
31 December 2015
General information
The financial statements cover BuildingIQ, Inc. as a consolidated entity consisting of BuildingIQ, Inc. and the entities it
controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is BuildingIQ,
Inc.'s presentation currency.
BuildingIQ, Inc. is incorporated in Delaware USA. Its registered office and principal place of business is:
1065 East Hillsdale Blvd, Suite 310
Foster City CA 94404-1689 USA
A description of the nature of the consolidated entity's operations and its principal activities are included in the directors'
report, which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 25 February 2016. The
directors have the power to amend and reissue the financial statements.
20
BuildingIQ, Inc.
Consolidated Statement of Profit or Loss and other Comprehensive Income
For the year ended 31 December 2015
Revenue from continuing operations
Other income
Revenue & other income
Cost of sales
Gross Profit
Interest income
Expenses
Sales and marketing
Research costs
Administrative expenses
Other expenses
Depreciation & amortisation
Capital raising costs
Finance costs
Loss before income tax expense from continuing operations
Income tax expense
Loss after income tax expense for the year
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income for the year, net of tax
Total comprehensive income for the year attributable to owners of
BuildingIQ, Inc.
Basic earnings per share
Diluted earnings per share
Consolidated
Note
2015
$
2014
$
4
5
4,272,887
893,401
5,166,288
1,418,646
548,139
1,966,785
(1,519,973)
3,646,315
(960,046)
1,006,739
5,008
11,098
(2,823,347)
(731,545)
(3,526,898)
(252,053)
(681,221)
(821,342)
(88,807)
(1,389,367)
(266,922)
(3,602,816)
(168,993)
(703,326)
-
(231,545)
(5,273,890)
(5,345,132)
-
-
(5,273,890)
(5,345,132)
2,890,570
270,652
2,890,570
270,652
(2,383,320)
(5,074,480)
6
7
Cents
Cents
31
31
(8.4)
(8.4)
(19.8)
(19.8)
21
BuildingIQ, Inc.
Consolidated Statement of Financial Position
As at 31 December 2015
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Other non-current assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Employee benefits
Deferred revenue
Other current liabilities
Total current liabilities
Non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Convertible notes
Reserves
Accumulated losses
Total equity
Consolidated
Note
2015
$
2014
$
8
9
10
11
12
13
14
15
16
20,982,621
3,264,226
255,405
24,502,252
579,766
2,039,517
53,448
2,672,731
92,103
887,255
93,454
1,072,812
81,185
1,007,031
89,442
1,177,658
25,575,064
3,850,389
588,798
436,750
102,213
462,415
1,590,176
319,954
306,957
67,965
592,455
1,287,331
-
-
1,590,176
1,287,331
23,984,888
2,563,058
17
17
18
19
41,288,540
-
4,194,603
13,651,233
4,716,222
419,968
(21,498,255) (16,224,365)
23,984,888
2,563,058
22
BuildingIQ, Inc.
Consolidated Statement of Changes in Equity
For the year ended 31 December 2015
Issued
capital
$
Convertible
notes
$
Reserves
$
Accumulated
losses
$
Total
Equity
$
Consolidated
Balance at 1 January 2014
13,651,803
-
-
-
-
81,697 (10,879,233)
2,854,267
-
(5,345,132)
(5,345,132)
270,652
-
270,652
270,652
(5,345,132)
(5,074,480)
Loss after income tax expense for the year
Other comprehensive income for the year, net of
tax
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Contributions of equity, net of transaction costs
(note 17)
Employee share schemes
(570)
-
4,716,222
-
-
67,619
-
-
4,715,652
67,619
Balance at 31 December 2014
13,651,233
4,716,222
419,968 (16,224,365)
2,563,058
Consolidated
Balance at 1 January 2015
13,651,233
4,716,222
419,968 (16,224,365)
2,563,058
Issued
capital
$
Convertible
notes
$
Reserves
$
Accumulated
losses
$
Total
equity
$
-
-
-
-
-
-
-
(5,273,890)
(5,273,890)
2,890,570
-
2,890,570
2,890,570
(5,273,890)
(2,383,320)
27,637,307
(4,716,222)
-
771,062
113,003
-
-
22,921,085
771,062
113,003
4,194,603 (21,498,255) 23,984,888
-
-
-
-
-
-
Loss after income tax expense for the year
Other comprehensive income for the year, net of
tax
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Contributions of equity, net of transaction costs
(note 17)
KTM share options
Employee share schemes
Balance at 31 December 2015
41,288,540
23
BuildingIQ, Inc.
Consolidated Statement of Cash flows
For the year ended 31 December 2015
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Interest and other finance costs paid
Capital raising costs paid
R&D tax refund received
Consolidated
Note
2015
$
2014
$
2,224,810
(7,654,232)
5,008
-
(437,970)
1,549,542
1,325,804
(6,322,830)
11,098
(1,598)
-
411,820
Net cash used in operating activities
29
(4,312,842)
(4,575,706)
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangible assets
Movements in security deposits
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issues of shares
Proceeds from issue of convertible notes (net of transaction costs)
Proceeds from borrowings
Repayment of borrowings
Capital raising costs (capitalised)
Net cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
(60,246)
(1,261,234)
-
(40,724)
(1,180,252)
14,406
(1,321,480)
(1,206,570)
27,577,560
-
3,600,000
(3,600,000)
(1,332,679)
-
4,716,222
-
-
-
26,244,881
4,716,222
20,610,559
579,766
(207,704)
(1,066,054)
1,415,771
230,049
Cash and cash equivalents at the end of the financial year
8
20,982,621
579,766
24
BuildingIQ, Inc.
Notes to the Financial Statements
31 December 2015
Note 1. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated.
New, revised or amending Accounting Standards and Interpretations adopted
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted.
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 ('AASB') and the Corporations Act 2001, as appropriate
for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards
(IFRSs) as issued by the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the
financial statements, are disclosed in note 2.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only.
Supplementary information about the parent entity is disclosed in note 26.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of BuildingIQ, Inc. ('company'
or 'parent entity') as at 31 December 2015 and the results of all subsidiaries for the year then ended. BuildingIQ, Inc. and its
subsidiaries together are referred to in these financial statements as the consolidated entity.
Subsidiaries are all those 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.
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset
transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the consolidated entity.
Foreign currency translation
The financial statements are presented in Australian dollars. BuildingIQ, Inc.'s functional currency is USD.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation
at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in
profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting
date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange
rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences
are recognised in other comprehensive income through the foreign currency reserve in equity. The foreign currency reserve
will be recognised in profit or loss when the foreign operation or net investment is disposed of.
25
BuildingIQ, Inc.
Notes to the Financial Statements
31 December 2015
Note 1. Significant accounting policies (continued)
Revenue recognition
Revenue is recognised when it is probable that the economic benefit will flow to the consolidated entity and the revenue can
be reliably measured. Revenue is measured at the fair value of the consideration received or receivable.
Revenues consist primarily of software licence fees, software implementation, hardware sales, project management
services, installation, consulting, and post-sale maintenance support. The majority of our revenue arrangements involve
multiple deliverables which the entity has determined it is unable to separate. As such, these revenues are recognised on a
straight line basis over the term of the arrangement.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate,
which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the
net carrying amount of the financial asset.
Government cooperative agreement
The consolidated entity receives government assistance (compensation) for discounts (cost relief) given to new customers in
order to expand the use of the technology owned by the consolidated entity. The consolidated entity recognises this assistance
as a separate component of sales revenue as cost relief is provided to new customers (i.e. a portion of the cooperative
agreement is recognised equal to the discount (cost relief) provided to the customer).
Government grants
Government grants and the ATO R&D tax incentive are recognised when there is reasonable assurance that the entity will
comply with the conditions attaching to them and the grants will be received. Government grants are recognised in profit or
loss on a systematic basis over the periods in which the entity recognises as expenses the related costs for which the grants
are intended to compensate.
The total R&D tax incentive receivable is apportioned between other income and the development asset based on the split
of expenditure in the claim.
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable
income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary
differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the
assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
● When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor
taxable profits; or
● When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the
timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable
future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax
assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the
carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable
that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against
current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on
either the same taxable entity or different taxable entities which intend to settle simultaneously.
26
BuildingIQ, Inc.
Notes to the Financial Statements
31 December 2015
Note 1. Significant accounting policies (continued)
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in normal
operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting
period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least
12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in normal operating cycle; it is held primarily for the
purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer
the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
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. For the statement of cash flows presentation purposes, cash
and cash equivalents also includes bank overdrafts, which are shown within borrowings in current liabilities on the statement
of financial position.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any provision for impairment. Trade receivables are generally due for settlement within 30 days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off
by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is objective
evidence that the consolidated entity will not be able to collect all amounts due according to the original terms of the
receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial
reorganisation and default or delinquency in payments (more than 60 days overdue) are considered indicators that the trade
receivable may be impaired. The amount of the impairment allowance is the difference between the asset's carrying amount
and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to
short-term receivables are not discounted if the effect of discounting is immaterial.
Other receivables are recognised at amortised cost, less any provision for impairment.
Property, plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment
(excluding land) over their expected useful lives as follows:
Leasehold improvements
Plant and equipment
3-10 years
3-7 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
Leasehold improvements and plant and equipment under lease are depreciated over the unexpired period of the lease or the
estimated useful life of the assets, whichever is shorter.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. Any
revaluation surplus reserve relating to the item disposed of is transferred directly to retained profits.
27
BuildingIQ, Inc.
Notes to the Financial Statements
31 December 2015
Note 1. Significant accounting policies (continued)
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and
requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets
and the arrangement conveys a right to use the asset.
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks
and benefits incidental to the ownership of leased assets, and operating leases, under which the lessor effectively retains
substantially all such risks and benefits.
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis
over the term of the lease.
Intangible assets
Intangible assets are initially recognised at cost. Finite life intangible assets are subsequently measured at cost less
amortisation and any impairment. The method and useful lives of finite life intangible assets are reviewed annually.
Research and development
Research costs are expensed in the period in which they are incurred. Development costs are capitalised when it is probable
that the project will be a success considering its commercial and technical feasibility; the consolidated entity is able to use or
sell the asset; the consolidated entity has sufficient resources; and intent to complete the development and its costs can be
measured reliably. Capitalised development costs are amortised on a straight-line basis over the period of their expected
benefit, being their finite life of 3 years.
Software
Significant costs associated with software are deferred and amortised on a straight-line basis over the period of their expected
benefit, being their finite life of 3 years.
Impairment of non-financial assets
Intangible assets are reviewed 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.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to
form a cash-generating unit.
Trade and other payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial
year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The
amounts are unsecured and are usually paid within 30 days of recognition.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the
period in which they are incurred.
Provisions
Provisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result of a past
event, it is probable the consolidated entity will be required to settle the obligation, and a reliable estimate can be made of the
amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the
present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time
value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the
provision resulting from the passage of time is recognised as a finance cost.
28
BuildingIQ, Inc.
Notes to the Financial Statements
31 December 2015
Note 1. Significant accounting policies (continued)
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled
within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are
measured as the present value of expected future payments to be made in respect of services provided by employees up to
the reporting date 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 reporting date on high quality corporate bonds with terms to maturity and currency that match, as closely as possible, the
estimated future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares that are provided to employees in exchange for the
rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash
is determined by reference to the share price.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using
either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option,
the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend
yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether
the consolidated entity receives the services that entitle the employees to receive payment. No account is taken of any other
vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting
period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate
of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit
or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous
periods.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions
are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are
satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An
additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of
the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is
treated as a cancellation. If the condition is not within the control of the consolidated entity or employee and is not satisfied
during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the
award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense
is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award
is treated as if they were a modification.
29
BuildingIQ, Inc.
Notes to the Financial Statements
31 December 2015
Note 1. Significant accounting policies (continued)
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair
value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date; and assumes that the transaction will take place either: in the principal market;
or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming
they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best
use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair
value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers
between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value
measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not
available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and
reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is
undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable,
with external sources of data.
Issued capital
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.
Convertible notes
Convertible notes are classified as equity as they have a fixed conversion ratio and no right to be redeemed for cash.
Where these note attract a non-discretionary interest component then the fair value of the expected payments is shown as a
financial liability.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the 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 tax authority is included in other receivables or other payables in the statement of financial
position.
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 tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
30
BuildingIQ, Inc.
Notes to the Financial Statements
31 December 2015
Note 1. Significant accounting policies (continued)
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory,
have not been early adopted by the consolidated entity for the annual reporting period ended 31 December 2015. The
consolidated entity's assessment of the impact of these new or amended Accounting Standards and Interpretations, most
relevant to the consolidated entity, are set out below.
AASB 9 Financial Instruments
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard replaces all
previous versions of AASB 9 and completes the project to replace IAS 39 'Financial Instruments: Recognition and
Measurement'. AASB 9 introduces new classification and measurement models for financial assets. The consolidated entity
is likely to adopt this standard from 1 July 2018 and the impact of its adoption is currently being considered by the consolidated
entity.
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard provides a single
standard for revenue recognition. The core principle of the standard is that an entity will recognise revenue to depict the
transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services. The consolidated entity is likely to adopt this standard from 1 July 2019
and the impact of its adoption is currently being considered by the consolidated entity.
Note 2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect
the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation
to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and
assumptions on historical experience and on other various factors, including expectations of future events, management
believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the
related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed
below.
Share-based payment transactions
The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value of the
equity instruments at the date at which they are granted. The fair value is determined by using either the Binomial or Black-
Scholes model taking into account the terms and conditions upon which the instruments were granted. The accounting
estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts
of assets and liabilities within the next annual reporting period but may impact profit or loss and equity.
Provision for impairment of receivables
The provision for impairment of receivables assessment requires a degree of estimation and judgement. The level of provision
is assessed by taking into account the recent sales experience, the ageing of receivables, historical collection rates and
specific knowledge of the individual debtors financial position.
Impairment of development asset
The consolidated entity reviews annually whether any external or internal indicators of impairment exist regarding its
development assets. Where such indicators exist an impairment test is performed to test the recoverable amount of the asset.
Further detail is set out in Note 12.
Revenue recognition
There are some instances where the consolidated entity enters into trial programs or other arrangements where billing does
not occur until the conclusion of a trial period where performance can be demonstrated and measured. The consolidated
recognises this revenue as the services are performed to the extent that it can be reliably measured. To the extent that
revenue is not reliably measureable then it is not recognised as income.
31
BuildingIQ, Inc.
Notes to the Financial Statements
31 December 2015
Note 3. Operating segments
Identification of reportable operating segments
The consolidated entity has only one reportable segment which is the development, design, engineering, sale and installation
of integrated software projects that reduce the energy, operations and maintenance costs of the customers’ facilities. There
is no aggregation of operating segments.
Major customers
The consolidated operates major agreements with the US Government Department of Energy and NV Energy Inc and the
revenue recognised from these projects was approximately $1.7m and $0.7m for the current year respectively.
Geographical information
Australia
USA
Note 4. Revenue from continuing operations
Sales revenue
Sale of goods and services
Government cooperative agreement
Revenue from continuing operations
Note 5. Other income
Government grants (R&D tax incentive)
Other income
Sales to external
customers
2015
$
2014
$
Geographical
non-current assets
2014
2015
$
$
365,302
3,907,585
244,223
1,174,423
958,220
114,592
1,097,046
80,611
4,272,887
1,418,646
1,072,812
1,177,657
Consolidated
2015
$
2014
$
2,615,701
1,657,186
1,274,147
144,499
4,272,887
1,418,646
Consolidated
2015
$
2014
$
893,401
548,139
893,401
548,139
32
BuildingIQ, Inc.
Notes to the Financial Statements
31 December 2015
Note 6. Expenses
Loss before income tax from continuing operations includes the following specific expenses:
Depreciation
Plant and equipment
Amortisation
Development
Salaries and wages
Salaries and wages
Net foreign exchange (gain)/loss
Net foreign exchange (gain)/loss
Rental expense relating to operating leases
Minimum lease payments
Superannuation expense
Defined contribution superannuation expense
Share-based payments
Share-based payments expense
Finance costs (8% interest on convertible notes)
Consolidated
2015
$
2014
$
54,688
53,404
626,543
649,422
6,171,446
4,771,648
(101,741)
208,919
356,521
324,054
226,623
180,095
113,003
67,618
88,807
231,545
33
BuildingIQ, Inc.
Notes to the Financial Statements
31 December 2015
Note 7. Income tax expense
Income tax expense
Current tax
Deferred tax - origination and reversal of temporary differences
Aggregate income tax expense
Tax losses
Unused tax losses for which no deferred tax asset has been recognised
USA – Federal
USA – Californian
Australian
Total unused tax losses
Consolidated
2015
$
2014
$
-
-
-
-
-
-
8,749,712
8,197,011
5,009,249
7,642,378
4,032,564
3,149,772
21,955,972 14,824,714
Tax losses – potential benefit
Unused tax losses * applicable tax rate for which no deferred tax asset has been recognised
USA – Federal (34%)
USA – Californian (8.84%)
Australian (30%)
Total potential benefit
2,974,902
724,615
1,502,775
5,202,292
2,598,409
356,479
944,932
3,899,820
USA Federal and Californian losses expire on various dates beginning 2031. Australian losses can be carried forward
indefinitely. The benefit will only be obtained if: a) the consolidated entity derives future foreseeable income to utilise the
losses; b) the consolidated entity continues to satisfy the conditions for deductibility imposed by law; and c) there are no
changes in tax legislation which adversely impact the consolidated entity’s ability to realise the benefit from the deduction for
the losses.
Individual items reconciling net loss before tax to taxable income and prima facie tax are not included within these accounts
as they are considered to be immaterial. The consolidated entity also has an immaterial amount of other deferred tax assets
and liabilities which are offset by tax losses not recognised above.
Note 8. Current assets - cash and cash equivalents
Cash at bank
Consolidated
2015
$
2014
$
20,982,621
579,766
20,982,621
579,766
34
BuildingIQ, Inc.
Notes to the Financial Statements
31 December 2015
Note 9. Current assets - trade and other receivables
Trade receivables
Less: Provision for impairment of receivables
Accrued income & other receivables
Government grant (R&D tax incentive) receivables
Consolidated
2015
$
2014
$
483,039
(191,819)
291,220
213,694
(82,905)
130,789
1,325,184
1,647,822
320,864
1,587,864
3,264,226
2,039,517
Impairment of receivables
The consolidated entity has recognised a loss of $119,028 (2014: $60,870) in profit or loss in respect of impairment of
receivables for the year ended 31 December 2015.
The ageing of the impaired receivables provided for above are as follows:
0 to 3 months overdue
3 to 6 months overdue
Over 6 months overdue
Movements in the provision for impairment of receivables are as follows:
Opening balance
Additional provisions recognised
Receivables written off during the year as uncollectable
Unused amounts reversed
Closing balance
Consolidated
2015
$
2014
$
-
-
191,819
15,105
44,789
23,011
191,819
82,905
Consolidated
2015
$
2014
$
82,905
108,914
-
-
15,778
67,127
-
-
191,819
82,905
35
BuildingIQ, Inc.
Notes to the Financial Statements
31 December 2015
Note 9. Current assets - trade and other receivables (continued)
Past due but not impaired
Customers with balances past due but without provision for impairment of receivables amount to $317,477 as at 31 December
2015 ($76,366 as at 31 December 2014).
The consolidated entity did not consider a credit risk on the aggregate balances after reviewing the credit terms of customers
based on recent collection practices.
The ageing of the past due but not impaired receivables are as follows:
0 to 3 months overdue
3 to 6 months overdue
Over 6 months overdue
Note 10. Current assets - other
Prepayments
GST receivable
Consolidated
2015
$
2014
$
26,840
146,935
143,702
67,268
9,098
-
317,477
76,366
Consolidated
2015
$
2014
$
196,726
58,679
53,448
-
255,405
53,448
36
BuildingIQ, Inc.
Notes to the Financial Statements
31 December 2015
Note 11. Non-current assets - property, plant and equipment
Leasehold improvements - at cost
Less: Accumulated depreciation
Plant and equipment - at cost
Less: Accumulated depreciation
Consolidated
Balance at 1 January 2014
Additions
Foreign exchange differences
Depreciation expense
Balance at 31 December 2014
Additions
Foreign exchange differences
Depreciation expense
Balance at 31 December 2015
Note 12. Non-current assets – intangible assets
Development (net of R&D incentive) - at cost
Less: Accumulated amortisation
Consolidated
2015
$
2014
$
19,990
(19,990)
-
19,990
(15,396)
4,594
702,705
(610,602)
92,103
635,592
(559,001)
76,591
92,103
81,185
Leasehold
improvements
$
Plant and
equipment
$
Total
$
11,166
-
-
(6,572)
79,089
40,724
4,110
(47,332)
90,255
40,724
4,110
(53,904)
4,594
76,591
81,185
-
-
(4,594)
60,246
5,340
(50,074)
60,246
5,340
(54,668)
-
92,103
92,103
Consolidated
2015
$
2014
$
2,848,998
(1,961,743)
2,342,231
(1,335,200)
887,255
1,007,031
The recoverable value of the consolidated entity’s development asset is determined based on a value in use calculation which
uses cash flow projections based on the financial budgets approved by the Board for 2016 financial year. The budget is then
extrapolated for a further four years at projected growth rates for both revenue and costs which management consider are
appropriate for the markets the consolidated entity operates in. Given the sensitivity of growth rates for both revenue and
expenses due to stage of where consolidated entity and the stage markets are at, a range of possible scenarios are modelled
to assess the carrying value of the development asset for impairment. Management modelled a range of discount rates based
on the risk free rate plus a risk margin appropriate for the markets the consolidated entity operates in. A range of likely
scenarios have been modelled to demonstrate that the development asset is not impaired at 31 December 2015.
37
BuildingIQ, Inc.
Notes to the Financial Statements
31 December 2015
Note 12. Non-current assets – intangible assets (continued)
Consolidated
Balance at 1 January 2014
Additions (net of R&D incentive)
Amortisation expense
Balance at 31 December 2014
Additions (net of R&D incentive)
Amortisation expense
Balance at 31 December 2015
Note 13. Non-current assets – other non-current assets
Security deposits
Note 14. Current liabilities - trade and other payables
Trade payables
Refer to note 20 for further information on financial instruments.
Note 15. Current liabilities - employee benefits
Employee benefits
Development
$
1,088,303
568,150
(649,422)
1,007,031
506,767
(626,543)
887,255
Consolidated
2015
$
2014
$
93,454
89,442
Consolidated
2015
$
2014
$
588,798
319,954
Consolidated
2015
$
2014
$
436,750
306,957
Amounts not expected to be settled within the next 12 months
The current provision for employee benefits includes all unconditional entitlements where employees have completed the
required period of service and also those where employees are entitled to pro-rata payments in certain circumstances. The
entire amount is presented as current, since the consolidated entity does not have an unconditional right to defer settlement.
The consolidated entity expects all employees to take the full amount of accrued leave or require payment within the next 12
months.
38
BuildingIQ, Inc.
Notes to the Financial Statements
31 December 2015
Note 16. Current liabilities – other current liabilities
Accrued expenses
Sales tax
Note 17. Equity - issued capital
Consolidated
2015
$
2014
$
454,183
8,232
586,325
6,130
462,415
592,455
Consolidated
2015
Shares
2014
Shares
2015
$
2014
$
Ordinary shares - fully paid
84,281,887
5,505,735
41,288,540
13,651,232
Movements in ordinary share capital
Details
Date
No of
shares
Issue
price
$
Balance
Share issue transaction costs, net of tax
1 January 2014
January 2014
5,505,735
-
13,651,802
(570)
Balance
31 December 2014
5,505,735
13,651,232
Issue of shares
Conversion of convertible notes (including interest)
Share split
Issue of shares
Issue of shares at IPO
Share issue transaction costs, net of tax
February 2015
February 2015
September 2015
September 2015
December 2015
174,422
2,979,333
51,122,397
4,500,000
20,000,000
-
645,100
4,798,558
-
3,600,000
20,000,000
(1,406,350)
Balance
31 December 2015
84,281,887
41,288,540
Convertible notes
During 2014 the company issued 1,534,904 convertible notes (at issue prices ranging between US $3.09 to US $3.27)
amounting to $4,716,222. In February 2015 these notes converted into shares, together with the outstanding accrued interest
which is reflected in the table above, which outlines movements in share capital. There are no convertible notes outstanding
at 31 December 2015. These notes described were converted into ordinary shares 1:1 and did not carry additional features
such as cash redemption or rights to guaranteed dividend payments.
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion
to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company
does not have a limited amount of authorised capital.
Capital risk management
The consolidated entity's objectives when managing capital is to safeguard its ability to continue as a going concern, so that
it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to
reduce the cost of capital.
In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The capital risk management policy remains unchanged from the prior year.
39
BuildingIQ, Inc.
Notes to the Financial Statements
31 December 2015
Note 18. Equity - reserves
Options reserve
Foreign currency reserve
Consolidated
2015
$
2014
$
1,082,016
3,112,587
197,951
222,017
4,194,063
419,968
Options reserve
The options reserve is used to recognise the fair value of options issued but not exercised.
Foreign currency reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign
operations to Australian dollars. It is also used to recognise gains and losses on hedges of the net investments in foreign
operations.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Balance at 1 January 2014
Employee share options
Foreign currency translation
Balance at 31 December 2014
Employee share options
KTM options
Foreign currency translation
Balance at 31 December 2015
Options
reserve
$
Foreign
Currency
$
Total
$
130,332
67,619
-
(48,635)
-
270,652
81,697
67,619
270,652
197,951
222,017
419,968
113,003
771,062
-
-
-
2,890,570
113,003
771,062
2,890,570
1,082,016
3,112,587
4,194,603
40
BuildingIQ, Inc.
Notes to the Financial Statements
31 December 2015
Note 19. Equity - accumulated losses
Accumulated losses at the beginning of the financial year
Loss after income tax expense for the year
Accumulated losses at the end of the financial year
Note 20. Financial instruments
Consolidated
2015
$
2014
$
(16,224,365) (10,879,233)
(5,345,132)
(5,273,890)
(21,498,255) (16,224,365)
Financial risk management objectives
The consolidated entity's activities expose it to a variety of financial risks: credit risk and liquidity risk. The consolidated
entity's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential
adverse effects on the financial performance of the consolidated entity.
Risk management is carried out by senior finance executives ('finance') under policies approved by the Board of Directors
('the Board').
Market risk
Foreign currency risk
The majority of the consolidated entity’s operations are denominated in USD, which are translated into the consolidated
entity’s presentation currency of Australian dollars. A 10% strengthening of the Australian dollar against USD would have
decreased revenue from continuing operations by approximately $355,235 and the loss after income tax expense by
$243,122. Conversely a 10% weakening of the Australian dollar against the USD would have increased revenue from
continuing operations by $434,176 and increased loss after income tax expense by $297,149.
Price risk
The consolidated entity is not exposed to any significant price risk.
Interest rate risk
The consolidated entity is not exposed to any significant interest rate risk.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
consolidated entity. The consolidated entity has a strict code of credit, including contracting payment in advance where
possible, obtaining agency credit information, confirming references and setting appropriate credit limits. The consolidated
entity obtains guarantees where appropriate to mitigate credit risk. The maximum exposure to credit risk at the reporting date
to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in
the statement of financial position and notes to the financial statements. The consolidated entity does not hold any collateral.
Liquidity risk
Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash and cash
equivalents) or available borrowing facilities to be able to pay debts as and when they become due and payable.
The consolidated entity manages liquidity risk by maintaining adequate cash reserves, continuously monitoring actual and
forecast cash flows and matching maturity profiles of financial assets and liabilities.
41
BuildingIQ, Inc.
Notes to the Financial Statements
31 December 2015
Note 20. Financial instruments (continued)
Remaining contractual maturities
The following tables detail the consolidated entity's remaining contractual maturity for its financial instrument liabilities. The
tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which
the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining
contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.
Consolidated - 2015
Non-derivatives
Non-interest bearing
Trade payables
Total non-derivatives
Consolidated - 2014
Non-derivatives
Non-interest bearing
Trade payables
Total non-derivatives
Weighted
average
interest rate
%
1 year
or less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5
years
$
Remaining
contractual
maturities
$
-%
588,798
588,798
-
-
-
-
-
-
588,798
588,798
Weighted
average
interest rate
%
1 year
or less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5
years
$
Remaining
contractual
maturities
$
-%
319,954
319,954
-
-
-
-
-
-
319,954
319,954
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Note 21. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the consolidated entity
is set out below.
In the prior year the executive leadership team who were considered key management personnel. Following a review by the
Remuneration Committee in the current financial year, it was determined that the only employee that remains a key
management personnel following the listing on the ASX and introduction of the Audit Committee and Remuneration
Committee is Michael Nark, President and Chief Executive Officer.
Short-term employee benefits
Post-employment benefits
Share-based payments
Consolidated
2015
$
2014
$
620,340
-
28,620
1,702,729
36,267
88,377
648,960
1,827,373
42
BuildingIQ, Inc.
Notes to the Financial Statements
31 December 2015
Note 22. Remuneration of auditors
During the previous financial year the auditors changed from BDO USA, LLP to BDO East Coast Partnership. The following
fees were paid or payable for services provided by the auditor of the company, its network firms and unrelated firms:
Audit services – BDO East Coast Partnership
Audit or review of the financial statements
Other services – BDO East Coast Partnership
Investigating Accountant services
IFRS and currency conversion work
Audit services – BDO USA, LLP
Audit or review of the financial statements
Other services - BDO USA, LLP
Preparation of tax returns
Transfer pricing review
Note 23. Contingent liabilities
There are no contingent liabilities at the reporting date (2014: $nil).
Note 24. Commitments
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
2015
$
2014
$
47,500
99,500
122,673
-
-
24,109
170,173
123,609
-
-
-
-
-
-
3,502
3,557
7,059
7,059
Consolidated
2015
$
2014
$
309,812
206,926
171,599
195,789
516,738
367,388
Operating lease commitments includes contracted amounts for various offices under non-cancellable operating leases
expiring within one to five years with, in some cases, options to extend. The leases have various escalation clauses. On
renewal, the terms of the leases are renegotiated.
Note 25. Related party transactions
Parent entity
BuildingIQ, Inc. is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 27.
Terms and conditions
The only related party transactions occurred between the parent entity and its subsidiary. All transactions were made on
normal commercial terms and conditions and at market rates and were fully eliminated on consolidation.
43
BuildingIQ, Inc.
Notes to the Financial Statements
31 December 2015
Note 26. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Convertible notes
Reserves
Accumulated losses
Total equity
Parent
2015
$
2014
$
(2,720,828)
(2,817,382)
(204,262)
(1,335,909)
Parent
2015
$
2014
$
18,815,425
947,785
27,037,016
3,050,177
1,139,476
924,326
1,139,476
924,326
41,288,540
-
7,147,848
(24,451,500)
13,739,675
4,716,222
2,190,811
(6,066,352)
23,984,888
2,125,850
Contingent liabilities
The parent entity had no contingent liabilities as at 31 December 2015 and 31 December 2014.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 31 December 2015 and 31 December
2014.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1, except
for the following:
● Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Note 27. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following wholly-owned subsidiaries
in accordance with the accounting policy described in note 1:
Name
Principal place of business /
Country of incorporation
Ownership interest
2014
2015
%
%
BuildingIQ, Pty. Ltd
Australia
100.00%
100.00%
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiary in accordance
with the accounting policy described in note 1.
44
BuildingIQ, Inc.
Notes to the Financial Statements
31 December 2015
Note 28. Events after the reporting period
There have been no transactions or events of a material and unusual nature between the end of the reporting period and the
date of this report that will, in the opinion of the directors of the Company, significantly affect the operations of the consolidated
entity, the results of those operations, or state of affairs of the consolidated entity in future years.
Note 29. Reconciliation of loss after income tax to net cash from operating activities
Loss after income tax expense for the year
Adjustments for:
Depreciation and amortisation
Share-based payments
Non-cash finance costs
Foreign exchange translation
Change in operating assets and liabilities:
Increase in trade and other receivables
(Decrease)/increase in deferred revenue
Increase in prepayments & other assets
Increase/(decrease) in trade and other payables
(Decrease)/increase in employee benefits
Movement in provisions
Net cash used in operating activities
2015
$
2014
$
(5,273,890)
(5,345,132)
681,208
113,013
88,807
1,201,841
702,826
67,618
-
677,958
(1,224,709)
34,248
(201,957)
268,844
129,793
(130,040)
(405,687)
(476,525)
(4,253)
148,096
(14,104)
73,497
(4,312,842)
(4,575,706)
45
BuildingIQ, Inc.
Notes to the Financial Statements
31 December 2015
Note 30. Share-based payments
2012 Equity Incentive Plan
Under the 2012 Equity Incentive Plan, (“2012 Plan”) the company’s Board of Directors, or a committee of the Board of
Directors, may grant incentive and nonqualified stock options to employees, officers, directors, consultants, independent
contractors, and advisors to the company, or to any parent, subsidiary, or affiliate of the company. The purpose of the 2012
Plan is to attract, retain, and motivate eligible persons whose present and potential contributions are important to BuildingIQ’s
success by offering them an opportunity to participate in the company’s future performance through equity awards of stock
options and stock bonuses. Under the terms of the 2012 Plan, the exercise price of stock options may not be less than 100%
of the fair market value on the date of grant.
AU Plan
Under the AU plan the company’s Board of Directors, or a committee of the Board of Directors, may grant incentive and
nonqualified stock options to employees, officers, directors, consultants, independent contractors, and advisors to the
company, or to any parent, subsidiary, or affiliate of the company. The purpose of the Plan is to attract, retain, and motivate
eligible persons whose present and potential contributions are important to BuildingIQ’s success by offering them an
opportunity to participate in the company’s future performance through equity awards of stock options and stock bonuses.
Under the terms of the Plan, the exercise price of stock options may not be less than 100% of the fair market value on the
date of grant.
Valuation of Stock-Based Awards
The fair value of each stock option granted under the Company’s equity incentive plans is based on independent valuations
and estimated on the date of grant using a Black-Scholes option-pricing model with the following weighted-average
assumptions as of December 31, 2015:
Expected life
Expected volatility
Risk-free interest rate
Expected dividends
2012 & 2013
grants
2014 & 2015
grants
4.95 years
58%
1.48%
- %
4.95 years
44.4%
1.48%
- %
Expected volatility is based on the average of the historical volatility of the issued shares of a peer group of public companies
as the company has limited stock price history for the period commensurate with the expected life of the option and the implied
volatility of traded options. The risk free interest rate is equal to the U.S. Treasury constant maturity rates for the period equal
to the expected life. The company does not currently pay cash dividends on the company’s issued shares and does not
anticipate doing so in the foreseeable future. Accordingly, the company’s expected dividend yield is zero.
In addition to the options described above the Company also issued options to certain directors and to KTM Capital Pty Ltd
as a part of the underwriting agreement for the initial public offering. The valuation of these options also used expected
volatility of 44.4%, a risk-free interest rate of 2% and no expected dividends. The expected life reflected the contractual
maturity of the options of 3 and 5 years respectively.
46
BuildingIQ, Inc.
Notes to the Financial Statements
31 December 2015
Note 30. Share-based payments (continued)
The table below sets out the details of the movements in options granted for the period ending 31 December 2015.
Consolidated
Balance at 1 January 2014
Options granted to employees
Options forfeited
Balance at 31 December 2014
Options granted to employees
Options forfeited
Options granted to directors
Options granted to KTM Capital
Balance at 31 December 2015
Unvested employee options
Vested options comprise:
-
-
-
employees options
Directors options
KTM options
Number of
Options
2,367,974
188,843
(191,450)
2,365,367
1,460,402
(21,345)
90,000
2,112,500
6,006,924
1,660,556
2,143,868
90,000
2,112,500
6,006,924
The majority of the outstanding employee options are exercisable at AUD 26.2 cents and vest over the next three years. The
options granted to Directors and to KTM Capital Pty Ltd vested immediately in December 2015 and are exercisable at AUD
$1.00 and AUD $1.15 respectively.
Note 31. Earnings per share
2015
$
2014
$
Loss attributable to the ordinary equity holders of the company used in basic and diluted
earnings per share
Loss after income tax attributable to the owners of BuildingIQ, Inc.
less Interest expense on convertible notes
5,273,890
(88,807)
5,345,132
(231,545)
Adjusted loss attributable to ordinary equity holders of the company
5,185,083
5,113,587
Weighted average number of ordinary shares used in calculating basic earnings per share
(adjusted for pre-IPO share split & conversion of convertible notes)
Adjustments for calculation of diluted earnings per share:
Options
Adjustment for options (anti-dilutive)
Number
Number
61,496,660
25,793,062
3,121,160
(3,121,160)
2,279,265
(2,279,265)
Weighted average number of ordinary shares used in calculating diluted earnings per share
61,496,660
25,793,062
Basic earnings per share
Diluted earnings per share
47
Cents
Cents
(8.4c)
(8.4c)
(19.8c)
(19.8c)
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret St
Sydney NSW 2000
Australia
INDEPENDENT AUDITOR’S REPORT
To the members of BuildingIQ, Inc.
Report on the Financial Report
We have audited the accompanying financial report of BuildingIQ, Inc., which comprises the
consolidated statement of financial position as at 31 December 2015, the consolidated statement of
profit or loss and other comprehensive income, the consolidated statement of changes in equity and
the consolidated statement of cash flows for the year then ended, notes comprising a summary of
significant accounting policies and other explanatory information, and the directors’ declaration of the
consolidated entity comprising the company and the entities it controlled at the year’s end or from
time to time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of the company 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 Note 1, the directors also state, in accordance with Accounting Standard AASB 101
Presentation of Financial Statements, that the financial statements comply with International
Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the company’s
preparation of the financial report that gives a true and fair view in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the directors, as
well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd,
a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved
under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which
has been given to the directors of BuildingIQ, Inc., would be in the same terms if given to the directors
as at the time of this auditor’s report.
Opinion
In our opinion:
(a) the financial report of BuildingIQ, Inc. is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 31 December
2015 and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in
Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 10 to 16 of the directors’ report for the
year ended 31 December 2015. The directors of the company 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.
Opinion
In our opinion, the Remuneration Report of BuildingIQ, Inc. for the year ended 31 December 2015
complies with section 300A of the Corporations Act 2001.
Tim Sydenham
Partner
Sydney, 25 February 2016
2
BuildingIQ, Inc.
Shareholder Information
31 December 2015
Additional securities exchange information as at 7 April 2016
Number of holders of equity securities
Ordinary share capital
84,281,887 fully paid ordinary shares are held by 313 individual shareholders. In addition there are 6,906,924 unlisted
options on issue.
All issued ordinary shares carry one vote per share.
The Company did not participate in any on-market share buy-back programs during 2015.
There are ASX escrow restrictions in place until 17 December 2017 in respect of 34,035,004 shares (and any CDIs held in
respect of those shares) and in respect of 3,905,589 options. In addition voluntary escrow restrictions are applicable to
9,419,349 shares (and any CDIs held in respect of those shares) until 17 December 2016, and a further 755,443 shares (and
any CDIs held with respect to those shares) until 17 December 2017.
Substantial shareholders as at date of last notice to the company
Ordinary shareholders
Number of equity securities
% Voting power
Welas Pty Ltd
Siemens Venture Capital GmbH
Paladin
19,994,060 CDIs
15,802,533 CDIs
16,272,885 Shares / CDIs
23.73%
18.75%
19.31%
Distribution of Share/CDI holders
Range
Number of
Share/CDI holders
as at 7 April 2016
1-1000
1,001 – 5,000
5,0001 – 10,000
10,0001 – 100,000
100,001 and over
Total number of holders
Holders of less than a marketable parcel
19
182
24
54
34
313
9
51
BuildingIQ, Inc.
Shareholder Information
31 December 2015
Twenty largest holders of quoted equity securities
Name
WELAS PTY LTD
SIEMENS VENTURE CAPITAL GMBH
PALADIN GLOBAL ALTERNATIVE ENERGY FUND LP
UBS NOMINEES PTY LTD
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ASTER CAPITAL PARTNERS SAS
EXTO PARTNERS AUSTRALIA PTY LTD
IFM PTY LTD
EQUITAS NOMINEES PTY LTD <3069550 A/C>
PALADIN III L.P.
PALADIN III (NY CITY) L.P.
AKHENATEN PTY LIMITED
NATIONAL NOMINEES LIMITED
PALADIN III (CAYMAN ISLANDS) LP
MCC VENTURE CAPITAL I HOLDINGS LIMITED
VIRTUS TRUST LIMITED
WELAS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 3
MR BENJAMIN PHILLIPE GRENIER
Total Top 20
Total Issued Capital
Equity Securities
Number
%
19,431,524
15,802,533
12,204,817
7,126,886
4,050,000
2,680,000
2,500,200
1,598,782
1,434,500
1,390,000
1,352,228
1,141,278
909,813
827,000
783,819
625,000
576,133
562,536
562,500
500,000
76,059,549
84,281,887
23.06%
18.75%
14.48%
8.46%
4.81%
3.18%
2.97%
1.90%
1.70%
1.65%
1.60%
1.35%
1.08%
0.98%
0.93%
0.74%
0.68%
0.67%
0.67%
0.59%
90.24%
52