Class Limited
Appendix 4E
Preliminary final report
1. Company details
Name of entity:
ABN:
Reporting period:
Previous period:
Class Limited
70 116 802 058
For the year ended 30 June 2016
For the year ended 30 June 2015
2. Results for announcement to the market
Revenues from ordinary activities
$'000
up 44.9%
to 22,731
Net profit after tax from ordinary activities, before one-off IPO expenses,
attributable to the owners of Class Limited
up 71.1%
to 5,827
Profit from ordinary activities after tax attributable to the owners of Class Limited
up 53.0%
to 5,210
Profit for the year attributable to the owners of Class Limited
up 53.0%
to 5,210
Dividends
Franked
Amount per
security
Cents
amount per
security
Cents
Final dividend for the year ended 30 June 2015 paid on 19 August 2015
1st quarter interim dividend for the year ending 30 June 2016 paid on 9 October
2015
2nd quarter interim dividend for the year ending 30 June 2016 paid on 7 March
2016
3rd quarter interim dividend for the year ending 30 June 2016 paid on 13 May
2016
0.750
0.750
1.000
1.000
-
-
-
-
On 18 July 2016, the directors declared an unfranked final dividend for the year ending 30 June 2016 of 1 cent
per ordinary share with record date of 25 July 2016 and payment date of 12 August 2016.
Comments
Refer to Chairman's letter and CEO's report for further commentary on the results.
3. Net tangible assets
Net tangible assets per ordinary security
Reporting
period
Cents
Previous
period
Cents
12.77
5.17
The net tangible assets per ordinary share amount is calculated based on 116,820,283 ordinary shares on issue
as at 30 June 2016 and 106,774,764 ordinary shares as at 30 June 2015.
4. Audit qualification or review
Details of audit/review dispute or qualification (if any):
The financial statements have been audited and an unqualified opinion has been issued.
Class Limited
Appendix 4E
Preliminary final report
5. Attachments
Details of attachments (if any):
The Annual Report of Class Limited for the year ended 30 June 2016 is attached.
6. Signed
Signed ___________________________
Date: 16 August 2016
Barry Lambert
Chairman
Sydney
Annual
Report 2016
CLASS LIMITED
ACN 116 802 058
About Class
Class Limited was founded in 2005 when a group of administrators and
financial specialists came together to build a cloud-based software system
to improve the efficiency of self managed super fund (SMSF) administration.
The company has since focused on streamlining SMSF administration by
building a highly automated and cost-effective solution for accountants,
administrators and advisers.
Class Super was launched in 2009 after extensive development and testing. Instead of struggling with time-
consuming manual processes and desktop-based software tools, users were able to manage all their SMSF
administration and reporting needs from a single cloud based system. This included all steps from setting up a
client to generation of their financial reports and lodgements with the ATO.
Class Super quickly became Australia’s leading cloud-based SMSF administration and accounting software system,
serving customers that included both large and small accounting firms, professional SMSF administrators, financial
advisers and auditors. As of 30 June 2016, Class Super was used to administer more than 110,000 SMSFs and
accounted for more than 19% of the SMSF administration software market.
The strength of Class Limited lies in its award-winning level of innovation. Class’ software integrates real-time data
feeds and facilitates collaboration between SMSF trustees and their professional advisers. It allows accountants,
administrators, advisers and auditors to access a data system as their source of truth, where all functions regarding
an SMSF can be carried out and recorded. The automation of certain processes has saved users hours, and in some
cases days, of manual work.
In 2015, Class expanded in the wealth accounting market with the launch of Class Portfolio. Class Portfolio
streamlines the administration of investment portfolios held by non-super entities such as companies, trusts and
individuals.
In addition to providing software, Class has built an ecosystem of best-of-breed partners to automate the supply of
additional services relevant to SMSF administration and wealth management. This ecosystem includes audit,
actuarial, financial, legal and insurance products and service providers. Class’ software now integrates with more
than 40 partner product and service providers to supply streamlined services to SMSF and other portfolio
administrators.
Table of contents
Financial highlights
Chairman’s letter
CEO’s report
Financial report 2016
Shareholder information
Corporate directory
Class Annual Report 2016 1
2
4
6
11
59
63
2 Class Annual Report 2016
Financial highlights
Year ended 30 June 2016
$22.73m 45%
REVENUE GROWTH
IN 2016
+7.05m from $15.68m
$10.05m 69%
EBITDA*
GROWTH
IN 2016
+4.09m from $5.96m
* All references are before one-off expenses relating to the initial public offering. They are non-IFRS measures and are used internally by
management to assess the performance of the business and have been extracted or derived from the full year financial report.
Class Annual Report 2016 3
$8.6m
NPBT*
66%
+3.4m from $5.2m
$5.8m
NPAT*
71%
+2.4m from $3.4m
5.2c
EPS*
64%
+2.0c from 3.2c
3.75c
DIVIDEND
67%
+1.5c from 2.25c
* All references are before one-off expenses relating to the initial public offering. They are non-IFRS measures and are used internally by
management to assess the performance of the business and have been extracted or derived from the full year financial report.
4 Class Annual Report 2016
Chairman’s letter
On behalf of the Board of Directors, I am pleased to welcome you to Class Limited’s first annual report as a listed
company. In particular, I would like to welcome our new shareholders. I trust your long-term experience will be
very rewarding.
On 16 August 2016 we reported an increased net profit after tax (NPAT) of $5.8 million1 for the year ended 30 June
2016, up 71% on the prior year. Dividends for the period were 3.75 cents per share, which was up 67% on the prior
year.
Class was incorporated in 2005 and listed on the Australian Securities Exchange (ASX) on 18 December 2015. The
share price has risen steadily ever since, particularly after each market update, and more recently with the
commencement of analyst coverage. We will do our best to continue to develop and grow your business and
therefore, your profits and dividends.
Your directors understand the importance of balancing the interests of stakeholders – including our shareholders,
our professional customers and, of course, our wonderful staff. Your company’s success is due to all of these
stakeholders and, in particular, the confidence shown by our new and existing customers who choose to use Class.
Growth of Class Solutions
Class Super has continued to grow at a fast rate, as outlined in the chart below. We expect the growth of this
premium solution for the administration of self-managed super funds (SMSFs) will continue.
Billable Portfolios on Class – June 2014 to June 2016
s
o
i
l
o
f
t
r
o
P
e
b
a
l
l
l
i
B
120,000
110,000
100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
1,200
1,100
1,000
900
800
700
600
500
400
300
200
100
0
s
r
e
m
o
t
s
u
C
Jun
2014
Sep
Dec
March
Jun
2015
Sep
Dec
March
Class Super
Class Portfolio
Jun
2016
Customers
Class Portfolio is our recently released non-super product. Its growth has been steady and similar to that of Class
Super in the early period after its release.
Our CEO, Kevin Bungard, provides a more detailed report on the operations of the business in his report.
1 All references are before one-off expenses relating to the initial public offering. They are non-IFRS measures and are used internally by
management to assess the performance of the business and have been extracted or derived from the full year financial report.
Class Annual Report 2016 5
Profit and Dividend Outlook
While we expect both our earnings per share (EPS) and dividends will continue to grow in line with the growth of
our funds, we will continue with quarterly updates to the market. However we will not be making projections, as we
believe our factual quarterly market updates are better than conservative annual projections. We will of course
advise the market of any material changes as they occur.
Customers and Staff
The directors would like to thank our customers for the continuing and growing confidence they are showing in our
services, and of course the Class team for their outstanding performance. They are truly in a class of their own!
Annual General Meeting
I look forward to meeting many of you at our annual general meeting on Monday, 17 October 2016.
Barry Lambert
Chairman
6 Class Annual Report 2016
CEO’s report
A Milestone Year
I would like to echo the Chairman’s sentiments and welcome you to our first annual report.
It has been a year of milestones for Class. We celebrated our 10 year anniversary, passed 100,000 billable portfolios,
completed a successful initial public offering (IPO) and achieved a record result at year end. Congratulations must
go to all stakeholders and especially our staff.
Financial Results
The directors of Class are pleased to report a strong year to 30 June 2016. The Company recorded a 71% increase
in NPAT and a 69% increase in earnings before interest, tax, depreciation and amortisation (EBITDA) on the
previous financial year. These increases are before one-off costs in relation to the IPO. After IPO transaction costs
are taken into account, net profit after tax was $5.2 million, up 53%.
Total revenue grew by 45%. This was primarily driven by an increase in the number of billable portfolios, which
grew by a record 30,618 in the past 12 months. Annualised licence fees at 30 June 2016 were $24.5 million.
Expenses excluding amortisation, depreciation and one-off expenses relating to the IPO increased by $2.9 million.
This was driven by increased investment in the development of our new product, Class Portfolio, which is allowing
us to expand into the non-SMSF portfolio administration space.
Employee benefits accounted for $2.5 million of our increased expenses. This was due in large part to the
expansion of our client acquisition team, including the addition of implementation consultants and additional sales
staff. These additional resources are needed to drive sales and bring customers on board, especially given the
record number of portfolios brought onto Class during the year.
Billable Portfolios and Market Share
At 30 June 2016, Class had a total of 112,441 billable portfolios (30 June 2015: 81,823) including 110,614 billable
SMSFs on the Class Super product. Class Super’s share of the SMSF market at 30 June 2016 was 19.2% (out of an
estimated total market of 576,000 SMSFs).
In addition to strong growth in sales of Class Super, there has also been increasing interest in Class’ non-super solution.
This new Class Portfolio product has experienced steady growth since its official release in October 2015 and had close
to 2,000 billable portfolios as of 30 June 2016. While it is still early days, we expect Class Portfolio to continue to gain
momentum as we release additional features, and refine and ramp up our marketing and sales efforts.
Quarterly Net Portfolio Growth
12,000
10,000
8,000
6,000
4,000
2,000
0
September
December
March
June
FY12
FY13
FY14
FY15
FY16
Class Annual Report 2016 7
Operational Highlights
Class continues to be highly rated by accountants and advisers in our Customer Service and Satisfaction surveys.
Our products are also being recognised by the industry, with Class Super winning the 2016 Investment Trends
Overall User Satisfaction with SMSF Software award2 for the second year in a row.3
“Class Super continues to be the top rated SMSF software provider in terms of overall satisfaction, with
users’ recognition of recent enhancements and innovations from Class Super keeping it in the lead.
The continued expansion of data feeds and greater automation within the system has been well received
by accountants.
Users have also been enthusiastic about Class Super’s foreign asset support, expansion of actuarial
certificate providers and improved reporting functionality.”
Investment Trends3
Class Super scored above the industry average for all features in the Investment Trends study. These features
included the product’s level of automation, smartphone/tablet functionality, data feeds, integration with actuarial
and other document providers, timeliness of reporting, ease of generating tax returns, value for money, quality of
training for software, and technical support.
More Class Super users were able to cite new features, processes and innovations than users of any other SMSF
software provider. In the past 12 months, these improvements included a Member Console, better and more data
feeds, online training and partner integrations.
In addition to the 2016 Investment Trends award, Class also won the following awards in FY16:
SMSF Adviser 2016 SMSF Award –
SMSF Software Provider Winner (for the 3rd year running)
2015 BRW most Innovative Companies –
Class placed 5th
CoreData 2015 SMSF award
(SMSF Accounting Software category)
2 Source: Investment Trends February 2016 SMSF Accountant Report based on a survey of 1182 accountants in public practice.
3 Source: Investment Trends February 2016 SMSF Accountant Report based on a survey of 1182 accountants in public practice.
8 Class Annual Report 2016
CEO’s report continued
These high ratings are reflected in our client retention rate, which has remained about 99% in terms of billable
portfolios.4 With the exception of AMP, which is discussed below, our subscribers continue to choose Class and
this high retention rate underpins the strong recurring revenue stream of our business.
Retention of Billable Portfolios (%)
100%
99%
98%
97%
96%
95%
94%
93%
92%
91%
90%
s
e
t
a
R
n
o
i
t
n
e
t
e
R
98.9%
99.3%
99.8%
99.8%
96.9%
520
341
360
FY12
FY13
FY14
175
FY15
182
FY16
Portfolios Lost
Retention Rates
1000
900
800
700
600
500
400
300
200
100
0
t
s
o
L
s
o
i
l
o
f
t
r
o
P
As previously advised in our supplementary prospectus and the December 2015 interim report, AMP has provided
notice that one of its business groups will discontinue using Class Super. We expect AMP to transfer all of its
SMSFs onto its own SMSF platform by early November 2017.
As at 30 June 2016, the number of SMSF portfolios administered by AMP on Class by AMP has seen a 4% reduction
to 10,134. See the Significant Change of Affairs section of the Directors’ report (page 13) for further details.
Class onboarded a record number of SMSFs over the past 12 months. Since 1 July 2015, the total number of billable
portfolios on Class Super has grown by 36.8%. This growth was driven by the expansion in our sales team,
increased marketing efforts and a gradual but persistent increase in the rate of cloud adoption by accountants.
Percentage of Accountants likely to change systems in the coming 12 months
19%
21%
23%
16%
25
20
15
10
5
0
2013
2014
2015
2016
Likely System Change
4 The number of portfolios retained for billing at the end of the period as a percentage of the number of billable portfolios for the whole period
Class Annual Report 2016 9
The above chart shows the number of accountants who indicated they were likely to change their SMSF software
in the February 2016 SMSF Accountant Report by Investment Trends. Based on our own research, we estimate that
around one in four accountants who intended to change systems did so over the past year.5
When asked about their priorities in regard to selecting new systems, ‘cloud’ was rated second only to ‘ease of use’
in the Investment Trends report.6
“The proportion of accountants saying they are likely to begin using a new SMSF software provider over the
next 12 months reached the highest level observed (23%, up from 21% in 2015). Ease, having a cloud-based
solution, less manual processing and good reporting tools are key to attracting these accountants.”
Investment Trends6
Innovation
Class has been nominated as one of Australia’s most innovative companies by The Australian Financial Review for
the past two years. Innovation is central to how our business is structured, how we engage with our users and how
we coordinate and allocate resources across the organisation. Our broader strategy is to continue to innovate and
create a significant competitive gap between us and our competitors.
In addition to delivering an array of new data feeds, online training and document management capabilities, we
introduced an industry-first, well-received ‘one-click audit’ feature. A couple of examples of the many new features
added to Class Super during the year are:
Client View – mobile-optimised access that allows clients to view their investment data for SMSFs and other
investment portfolios administered on Class. Client View enables accountants and advisers to improve the service
and experience they provide to clients, which assists in retention.
Member Console – enables accountants to easily track their clients’ contribution caps and pension limits to ensure
those funds remain compliant. It enables accountants and advisers to have timely conversations with clients about
retirement planning.
To ensure that innovation is embedded as a key part of our culture, we launched our internal Change Champion
awards in 2014. These are awarded to staff in recognition of their contribution to innovation and change within
the business.
Outlook
As the Chairman has stated, we will not be making projections. However, we will continue to update the market
quarterly with our Shareholder Updates.
On behalf of the executive team I would like to thank our customers and shareholders who continue to reward our
work with their loyalty and support. To our staff, we thank you for your efforts in making Class Australia’s leading
cloud software for SMSF administration.
Kevin Bungard
Chief Executive Officer and Managing Director
5 We estimate that cloud solutions market share rose from 23% to 28% in the year ending June 2016 and therefore at least 5% of
accountants moved to a new cloud based system.
Investment Trends February 2016 SMSF Accountant Report based on a survey of 1182 accountants in public practice.
6
This page is left blank intentionally.
Financial
report 2016
12 Class Annual Report 2016
Class Limited
Directors' report
30 June 2016
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as
the 'Group') consisting of Class Limited (referred to hereafter as the 'Company' or 'parent entity') and the entities it
controlled at the end of, or during, the year ended 30 June 2016.
Directors
The following persons were directors of Class Limited during the whole of the financial year and up to the date of this
report, unless otherwise stated:
Barry Lambert - Chairman
Kevin Bungard
Roderick Kibble
Rajarshi Ray
Kathryn Foster (appointed 1 July 2015)
Matthew Quinn (appointed 1 July 2015)
Anthony Fenning (appointed 15 July 2015)
Principal activities
During the financial year the principal continuing activities of the Group were to develop and distribute cloud-based
accounting, investment reporting and administration software, namely Class Super and Class Portfolio.
Dividends
Dividends paid during the financial year were as follows:
Final dividend for the year ended 30 June 2015 of 0.75 cents per ordinary share (2014: 2.5
cents before share-split)
1st quarter interim dividend for the year ended 30 June 2016 of 0.75 cents per ordinary
share paid on 9 October 2015
2nd quarter interim dividend for the year ended 30 June 2016 of 1 cents per ordinary share
paid on 7 March 2016 (2015: 3 cents before share-split)
3rd quarter interim dividend for the year ended 30 June 2016 of 1 cents per ordinary share
paid on 13 May 2016 (2015: 3 cents before share-split)
Consolidated
2016
$'000
2015
$'000
835
835
1,168
1,168
694
-
832
832
4,006
2,358
On 18 July 2016, the directors declared an unfranked final dividend for the year ended 30 June 2016 of 1 cent per ordinary
share with payment date of 12 August 2016 to eligible shareholders on the register as at 25 July 2016. This equates to a
total distribution of $1,168,000, based on the number of ordinary shares on issue as at 30 June 2016. The financial effect
of dividends declared after the reporting date is not reflected in the 30 June 2016 financial statements and will be
recognised in subsequent financial reports.
Review of operations
Sales revenue
Cost of undertaking business
EBITDA*
Interest revenue
Depreciation and amortisation
Tax expense*
Net profit after tax*
One-off IPO expenses**
Statutory net profit after tax
2016
$'000
2015
$'000
Change
$'000
Change
%
22,563
(12,512)
10,051
168
(1,631)
(2,761)
5,827
(617)
5,210
15,598
(9,639)
5,959
86
(859)
(1,780)
3,406
-
3,406
6,965
(2,873)
4,092
82
(772)
(981)
2,421
(617)
1,804
45%
30%
69%
95%
90%
55%
71%
-
53%
Class Annual Report 2016 13
Class Limited
Directors' report
30 June 2016
*
**
All references are before one-off initial public offering ('IPO') expenses. They are non-IFRS measures and are used
internally by management to assess the performance of the business and have been extracted or derived from the
financial report.
One-off IPO expenses net of tax benefits.
Basic Earnings per share before one-off IPO expenses amounted to 5.19 cents (2015: 3.17 cents).
Basic Earnings per share after one-off IPO expenses amounted to 4.64 cents (2015: 3.17 cents).
Refer to Chairman's letter and CEO's report for further commentary on the results
Significant changes in the state of affairs
On 15 June 2015 the shareholders passed a resolution to change the Company from a private company to a public
company. On 18 September 2015 the Company obtained necessary approval from Australian Securities and Investments
Commission for the conversion. As a result the Company changed its name from Class Pty Ltd to Class Limited.
Initial Public Offering ('IPO') and capital raising
During the financial year, the Company successfully completed an IPO raising capital of $5,429,000 by issuing 5,469,603
new ordinary shares. The Company was admitted to the Official List of Australian Securities Exchange Limited ('ASX') on
16 December 2015 with the ASX code: CL1.
Termination of loan funded share plan ('LFSP")
On 8 December 2015, the LFSP was terminated. 4,575,916 unvested options issued pursuant to LFSP were treated as
fully vested in accordance with the IPO prospectus.
SuperIQ Pty Ltd
As advised in the Supplementary Prospectus dated 9 November 2015, AMP Ltd acquired SuperIQ Pty Ltd (‘SuperIQ’), a
customer of the Group, as well as a competing software solution to the Group during the IPO period.
Subsequently, SuperIQ terminated its reseller agreement with the Group by providing two years’ notice as required by
relevant contracts. As at 31 October 2015, AMP Ltd and its related bodies corporate, including SuperIQ ('AMP Entities')
administered approximately 10,550 Billable Portfolios using the Group's products, representing approximately 9.3% of total
licence fees.
Notwithstanding the termination notice, AMP Ltd has advised the Group that it does not plan to terminate any other
agreement between the AMP Entities and the Group. However, the Directors believe that there is a possibility that the AMP
Entities may, over time, do so and transfer these funds from the Class Super product to the competitor. As at 30 June
2016, AMP Entities billable portfolios on the Group's products remained steady. However, given the growth of the Group
their percentage contribution to overall licence fees has fallen to approximately 7.35%.
There were no other significant changes in the state of affairs of the Group during the financial year.
Matters subsequent to the end of the financial year
Apart from the dividend declared as discussed above, no other matter or circumstance has arisen since 30 June 2016 that
has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's
state of affairs in future financial years.
Likely developments and expected results of operations
Information on likely developments in the operations of the Group and the expected results of those operations are
contained in the Chairman's letter and CEO’s report.
Environmental regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.
14 Class Annual Report 2016
Class Limited
Directors' report
30 June 2016
Information on directors
Name:
Title:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years): None
Special responsibilities:
Interests in shares:
Name:
Title:
Experience and expertise:
Barry Lambert
Non-Executive Chairman
Barry Lambert was appointed Chairman of the Group in November 2008. Mr Lambert
is also the Chairman of ASX listed Countplus Limited. A former banker, in 1980 Mr
Lambert was the founder of ASX Listed Count Financial Limited, a financial services
group, which was taken over by the Commonwealth Bank of Australia (CBA) in 2011.
Mr. Lambert remained as Chairman of the CBA owned Count Financial Limited until
20 January 2014. Mr Lambert is also the founder and Chairman of the Count
Charitable Foundation.
Chairman of Countplus Limited
Chairman of the Board and member of the Nomination Remuneration and Human
Resources Committee
2,047,318
Kevin Bungard
Chief Executive Officer and Managing Director ('CEO')
Mr Bungard is a highly regarded industry expert in cloud technology systems, with
more than 30 years’ experience developing software solutions and applying
technology in the Australian financial services and superannuation administration
industries.
Mr Bungard joined the Group in 2008 as Chief Operating Officer and has overseen
the commercialisation, launch and rapid growth of Class Super. In April 2014, Mr
Bungard was appointed Chief Executive Officer and has continued to play an
instrumental role in driving and delivering key innovation and successes for the
Group. Mr Bungard also has responsibility, together with the Company Secretary, for
human resource issues within the Group.
Prior to joining the Group, Mr Bungard was a General Manager at the IQ Group
where he managed the delivery of technology and business process outsourcing
solutions to Australia’s largest superannuation funds and their administrators.
Significant projects included the development, sale and commercialisation of
enterprise software solutions to Bravura and Australian Unity. Prior to his role at IQ
Group, Mr Bungard was involved in major projects with Westfield, AMP, Macquarie
and many of Australia’s largest financial institutions.
Other current directorships:
None
Former directorships (last 3 years): None
Interests in shares:
Interests in options:
2,305,572
975,860
Experience and expertise:
Name:
Title:
Qualifications:
Roderick Kibble
Non-Executive Director
Bachelor of Commerce, University of New South Wales. Chartered Accountant and
Fellow of the Financial Services Institute of Australasia. He is also a graduate of the
Australian Institute of Company Directors.
Mr Kibble has over 20 years’ experience in bank assurance and investment markets,
having been a senior executive at Price Waterhouse, Jardine Fleming Ord Minnett
and J.P. Morgan Australia. Mr Kibble is a founding shareholder and Board member of
the Company, appointed in November 2005.
None
Other current directorships:
Former directorships (last 3 years): None
Interests in shares:
19,664,320
Class Annual Report 2016 15
Class Limited
Directors' report
30 June 2016
Experience and expertise:
Name:
Title:
Qualifications:
Rajarshi Ray
Non-Executive Director
Bachelor of Information Technology and Graduate Diploma in Accounting. Member of
Chartered Accountants Australia and New Zealand. Graduate Diploma from the
Financial Services Institute of Australia.
Mr. Ray has over 20 years’ experience in the Australian financial and information
technology (IT) sectors, having held IT and finance roles across a number of
companies. Most recently, for a decade at American Express, he held senior
management roles in Europe, Asia, North America and Australia, including Head of
Financial Planning and Funds Management, and Head of Small Business Services,
and led several cross-border financial and technology-based infrastructure projects.
Other current directorships:
None
Former directorships (last 3 years): None
Special responsibilities:
Interests in shares:
Chairman of the Audit and Risk Committee
1,450,740
Experience and expertise:
Name:
Title:
Qualifications:
Kathryn Foster
Non-Executive Director
Bachelor of Science (BSc) - International Marketing from Oregon State University,
Associate of Science (ASc) - Computer Science and Information Systems from
Shoreline Community University
Ms Foster has over 20 years’ experience creating and running large internet based
businesses. Prior to becoming a professional director, Ms Foster was Senior Director
of Microsoft Store online where she managed the sales and merchandising team for
Microsoft Store online across 232 geographies. As the Senior Director, she was
responsible for an annual revenue budget in the low billions of dollars. As Senior
Director of e-commerce strategy in Supply Chain, and prior to that, for the inception of
the Xbox Games Marketplace, Ms Foster set business vision, strategy and drove the
technical execution around digital and physical supply chain technology and
operations to enable Xbox’s billion-dollar business globally.
Other current directorships:
None
Former directorships (last 3 years): None
Special responsibilities:
Interests in shares:
Chairman of the Nomination Remuneration and Human Resources Committee
783,312
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years): None
Special responsibilities:
Interests in shares:
Matthew Quinn
Non-Executive Director
First Class Honours Degree in Chemistry & Management Science. Chartered
Accountant.
Mr Quinn was formerly managing director of Stockland, an ASX top 50 company,
from 2000 to 2013. He has an extensive background in commercial, retail, industrial
and residential property investment and development. He is now a Non-Executive
Director of CSR Limited and UrbanGrowth NSW, a state owned corporation and is
Chairman of Carbonxt Group Limited and mPort Pty Ltd. He was National President
of the Property Council of Australia from 2003 to 2005 and a director of the Business
Council of Australia in 2012. Mr Quinn is involved in a number of not-for-profits and is
on the boards of the Public Interest Advocacy Centre and the Australian Business
and Community Foundation.
Non-executive director CSR Limited (ASX: CSR)
Member of the Audit and Risk Committee and member of the Nomination
Remuneration and Human Resources Committee
50,000
16 Class Annual Report 2016
Class Limited
Directors' report
30 June 2016
Name:
Title:
Qualifications:
Experience and expertise:
Anthony Fenning
Non-Executive Director
Bachelor of Economics (BEc), Bachelor of Laws (LLB) and an MBA in Management
at the Australian Graduate School of Management.
Mr Fenning was appointed Chief Executive Officer of Shadforth Financial Group, a
leading financial and business advisory firm in 2006. He took on the role of Managing
Director of SFG Australia Ltd from 2011 to 2014, before the acquisition in 2014 of the
business by IOOF. Previously, he was the Chief Executive Officer at Tynan
Mackenzie and before that had a career in law and banking.
None
Other current directorships:
Former directorships (last 3 years): SFG Australia Ltd
Special responsibilities:
Interests in shares:
Member of the Audit and Risk Committee
None
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all
other types of entities, unless otherwise stated.
'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.
Chief financial officer and company secretary
Glenn Day joined the Group in September 2008. Mr Day holds a Bachelor of Business, majoring in Accounting and is a
member of CPA Australia.
Mr Day is responsible for the financial management of the Group, its corporate affairs and company secretarial matters. Mr
Day also has responsibility, with the Chief Executive Officer, for human resources issues within the Group. Prior to joining
the Group, Mr Day was the Head of Finance of an ASX-listed entity and has more than 15 years experience in the financial
services and superannuation industries.
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 30 June 2016, and the number of meetings attended by each director were:
Full Board
Audit and Risk Committee
Nomination Remuneration
and Human Resources
Committee ('NRHRC')
Attended
Held
Attended
Held
Attended
Held
Barry Lambert
Kevin Bungard
Roderick Kibble*
Rajarshi Ray
Kathryn Foster
Matthew Quinn**
Anthony Fenning***
14
14
14
14
13
11
12
14
14
14
14
14
14
14
-
-
1
3
-
3
1
-
-
1
3
-
3
2
5
-
5
-
4
-
-
5
-
5
-
5
-
-
Held: represents the number of meetings held during the time the director held office or was a member of the relevant
committee.
Roderick Kibble resigned as a member of Audit and Risk Committee on 6 October 2015 and NRHRC on 18 July 2016.
Matthew Quinn was appointed as a member of NRHRC on 18 July 2016.
*
**
*** Anthony Fenning was appointed as a member of Audit and Risk Committee on 6 October 2015.
Remuneration report (audited)
The remuneration report details the key management personnel ('KMP') remuneration arrangements for the Group, in
accordance with the requirements of the Corporations Act 2001 and its Regulations.
KMP are those persons having authority and responsibility for planning, directing and controlling the activities of the entit y,
directly or indirectly, including all directors.
Class Annual Report 2016 17
Class Limited
Directors' report
30 June 2016
The remuneration report is set out under the following main headings:
●
●
●
●
●
●
Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share-based compensation
Additional information
Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
The objective of the Group's executive reward framework is to ensure reward for performance is competitive and
appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives
and the creation of value for shareholders, and conforms to market best practice for the delivery of reward.
The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria for good reward
governance practices:
●
●
●
●
competitiveness and reasonableness
acceptability to shareholders
performance linkage / alignment of executive compensation
transparency
The Nomination, Remuneration and Human Resources Committee ('NRHRC') is responsible for determining and reviewing
remuneration arrangements for directors and executives. The performance of the Group depends on the quality of its
directors and executives. The remuneration philosophy is to attract, motivate and retain high performing and high quality
personnel.
The NRHRC has structured an executive remuneration framework that is market competitive and complementary to the
reward strategy of the Group.
The reward framework is designed to align executive reward to shareholders' interests. The Board have considered that it
should seek to enhance shareholders' interests by:
●
●
having economic profit as a core component of plan design
focusing on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and delivering
constant or increasing return on assets as well as focusing the executive on key non-financial drivers of value
attracting and retaining high calibre executives
●
Additionally, the reward framework should seek to enhance executives' interests by:
●
●
●
rewarding capability and experience
reflecting competitive reward for contribution to growth in shareholder wealth
providing a clear structure for earning rewards
In accordance with best practice corporate governance, the structure of non-executive director and executive director
remuneration is separate.
Non-executive directors' remuneration
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive
directors' fees and payments are reviewed annually by the NRHRC. The NRHRC may, from time to time, receive advice
from independent remuneration consultants to ensure non-executive directors' fees and payments are appropriate and in
line with the market. The chairman's fees are determined independently to the fees of other non-executive directors based
on comparative roles in the external market. The chairman is not present at any discussions relating to the determination of
his own remuneration. Non-executive directors do not receive share options or other incentives.
ASX listing rules require the aggregate non-executive directors' remuneration be determined periodically by a general
meeting. The most recent determination was at the Annual General Meeting held on 24 November 2014 where the
shareholders approved a maximum annual aggregate remuneration of $500,000.
Executive remuneration
The Group aims to reward executives with a level and mix of remuneration based on their position and responsibility, which
has both fixed and variable components.
18 Class Annual Report 2016
Class Limited
Directors' report
30 June 2016
The executive remuneration and reward framework has three components:
●
●
●
base pay and other remuneration such as superannuation, long service leave and non-monetary benefits
short-term performance incentives
long term performance incentives (share-based payments)
The combination of these comprises the executive's total remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, is reviewed annually by the
NRHRC and any proposed changes are recommended to the Board for approval. Remuneration is based on individual
performance and overall performance of the Group and is positioned at the market median against the appropriate index
for roles of comparative size, or relative to their counterparts in related industries.
There is no guaranteed base pay increase included in the executive contracts.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle
benefits) where it does not create any additional costs to the Group and provides additional value to the executive.
The short-term incentives ('STI') program is designed to align the targets of the business units with the targets of those
executives responsible for meeting those targets. STI payments are granted to executives based on specific annual targets
and key performance indicators ('KPI's') being achieved. KPI's include profit contribution, customer satisfaction, leadership
contribution and product development.
The long-term incentives ('LTI') comprise of share-based payments. The NRHRC reviewed the long-term equity-linked
performance incentives specifically for executives during the year ended 30 June 2016, resulting in the termination of the
Loan Funded Share Plan ('LFSP') and the establishment of an Employee Share Option Plan ('ESOP').
Options are granted to executives by the Board based on the recommendations of the NRHRC, having considered the
individual’s contribution to the Group’s performance. The Board may specify vesting conditions for any option granted and
may, at its discretion, waive or vary these conditions in regard to any option at any time.
The Board will determine the exercise price and vesting conditions.
Group performance and link to remuneration
STI payments are directly linked to the performance of the Group. A portion of cash bonus and incentive payments are
dependent on financial targets being met such as budgeted net profit after tax. The remaining portion of the cash bonus
and incentive payments are at the discretion of the NRHRC. Refer to the section 'Additional information' below for details of
the earnings and total shareholders return for the last two years.
The NRHRC is of the opinion that the continued improved results can be attributed in part to the adoption of performance
based compensation and is satisfied that this improvement will continue to increase shareholder wealth if maintained over
the coming years.
Use of remuneration consultants
During the financial year ended 30 June 2016, the Group did not use any remuneration consultants.
Details of remuneration
Amounts of remuneration
Details of the remuneration of KMP of the Group are set out in the following tables. In line with Regulation 2M.3.03 of
Corporation Regulations 2001, the Group has elected not to disclose comparatives.
The KMP of the Group consisted of the directors of Class Limited and the:
●
Chief Financial Officer
Class Annual Report 2016 19
Class Limited
Directors' report
30 June 2016
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based
payments
2016
Cash salary
and fees
$
Cash
bonus*
$
Non-
Super-
Long service Equity-settled
monetary
annuation
$
$
leave
$
options
$
Total
$
Non-Executive
Directors:
Barry Lambert
Roderick Kibble
Rajarshi Ray
Kathryn Foster
Matthew Quinn
Anthony Fenning
Executive
Directors:
Kevin Bungard
Other Key
Management
Personnel:
Glenn Day
90,000
60,000
60,000
60,000
60,000
60,000
-
-
-
-
-
-
-
-
-
-
-
-
8,550
5,700
5,700
5,700
5,700
5,700
-
-
-
-
-
-
-
-
-
-
-
-
98,550
65,700
65,700
65,700
65,700
65,700
261,863
15,000
-
27,639
8,509
93,044
406,055
206,158
858,021
25,000
40,000
-
-
21,410
86,099
7,936
16,445
79,215
172,259
339,719
1,172,824
*
Bonuses were awarded on 5 August 2016 and are in relation to performance for the year ended 30 June 2016.
Non-Executive Directors' salaries are 100% fixed. The fixed proportion and the proportion of remuneration linked to
performance of Executive Directors and KMP are as follows:
Name
Executive Directors:
Kevin Bungard
Other Key Management Personnel:
Glenn Day
Fixed
remuneration
2016
At risk - STI
2016
At risk - LTI
2016
73%
4%
23%
69%
8%
23%
Service agreements
Non-Executive Directors do not have fixed term contracts with the Group. On appointment to the Board, all Non-Executive
Directors enter into a service agreement with the Group in the form of a letter of appointment. The letter summarises the
Board policies and terms, including compensation. Non-Executive directors retire by whichever is the longer period: the
third annual general meeting following their appointment, or the third anniversary from the date of appointment, but may
then be eligible for re-election.
20 Class Annual Report 2016
Class Limited
Directors' report
30 June 2016
Remuneration and other terms of employment for Executives are formalised in service agreements. Details of these
agreements are as follows:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Kevin Bungard
Chief Executive Officer and Managing Director ('CEO')
8 October 2015
Ongoing
The terms of employment and remuneration of the CEO are detailed in a
tailored service agreement. The agreement is not of a fixed duration and may be
terminated by either party, providing an adequate notice period is given. Prior to the
first anniversary of the agreement, the required notice period is 6 months, decreasing
to 3 months if notice is given after the first anniversary. The agreement entitles the
individual to a base salary and superannuation contributions, as well as eligibility to
participate in the Executive Incentive Plan (EIP). The Board retains absolute
discretion relating to the EIP, it's continuance and whether any payments will be
made in any given year. Upon termination, the individual is bound by restraint clauses
spanning a period of up to 12 months and no less than 3 months, dependant on the
circumstances surrounding the termination.
Glenn Day
Chief Financial Officer and Company Secretary ('CFO')
8 October 2015
Ongoing
The terms of employment and remuneration of the CFO are detailed in a
tailored service agreement. The agreement is not of a fixed duration and may be
terminated by either party, providing a notice period of 3 months is given. The
agreement entitles the individual to a base salary and superannuation contributions,
as well as eligibility to participate in the EIP. The Board retains absolute discretion
relating to the EIP, it's continuance and whether any payments will be made in any
given year. Upon termination, the individual is bound by restraint clauses spanning a
period of up to 12 months and no less than 3 months, dependant on the
circumstances surrounding the termination.
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
Share-based compensation
Issue of shares
There were no shares issued to directors and other key management personnel as part of compensation during the year
ended 30 June 2016.
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key
management personnel in this financial year or future reporting years are as follows:
Fair value
per option
Grant date
Particulars
Expiry date
Exercise price at grant date
17/08/2015
17/08/2015
30/09/2015
30/09/2015
30/09/2015
30/09/2015
29/06/2016
29/06/2016
Kevin Bungard: 260,000 options
Glenn Day: 253,979 options
Kevin Bungard: 495,860 options
Glenn Day: 484,377 options
Kevin Bungard: 280,000 options
Glenn Day: 120,000 options
Kevin Bungard: 200,000 options
Glenn Day: 90,000 options
16/06/2017
16/06/2017
30/09/2019
30/09/2019
30/09/2020
30/09/2020
30/06/2021
30/06/2021
Options granted under ESOP carry no dividend or voting rights.
$0.69
$0.69
$1.10
$1.10
$1.33
$1.33
$3.81
$3.81
$0.053
$0.053
$0.197
$0.197
$0.168
$0.168
$0.661
$0.661
Class Annual Report 2016 21
Class Limited
Directors' report
30 June 2016
The number of options over ordinary shares granted to and vested in directors and other key management personnel as
part of compensation during the year ended 30 June 2016 are set out below:
Name
Kevin Bungard
Rajarshi Ray
Glenn Day
Number of
Number of
options
granted
options
vested
during the
during the
year
2016
year
2016
1,235,860
-
948,356
1,140,000
240,000
613,979
Additional information
The earnings of the Group for the two years to 30 June 2016 are summarised below:
Sales revenue
EBITDA
Profit after tax
Dividends paid
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
Share price at financial year end ($)
Basic earnings per share (cents per share)
Additional disclosures relating to key management personnel
2016
$'000
2015
$'000
22,563
10,051
5,210
4,006
15,598
5,959
3,406
2,358
2016
2015
3.30
4.64
-
3.17
Shareholding
The number of shares in the Company held during the financial year by each director and other members of key
management personnel of the Group, including their personally related parties, is set out below:
Balance at Received
as part of
the start of
the year
remuneration Additions*
Disposals/
other
Balance at
the end of
the year
Ordinary shares
Barry Lambert
Kevin Bungard
Roderick Kibble
Rajarshi Ray
Kathryn Foster
Matthew Quinn
Glenn Day
184,148
1,743,236
22,884,320
1,297,500
979,140
-
740,664
27,829,008
-
-
-
-
-
-
-
-
1,900,000
1,222,336
-
333,240
-
50,000
717,315
4,222,891
(36,830)
(660,000)
2,047,318
2,305,572
(3,220,000) 19,664,320
1,450,740
(180,000)
783,312
(195,828)
50,000
-
(1,055,479)
402,500
(5,348,137) 26,703,762
*
Additions include 1,993,979 ordinary shares issued on exercise of options pursuant to LFSP
22 Class Annual Report 2016
Class Limited
Directors' report
30 June 2016
Option holding
The number of options over ordinary shares in the Company held during the financial year by each director and other
members of key management personnel of the Group, including their personally related parties, is set out below:
Options over ordinary shares
Kevin Bungard
Rajarshi Ray*
Glenn Day
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
880,000
240,000
360,000
1,480,000
1,235,860
-
948,356
2,184,216
(1,140,000)
(240,000)
(613,979)
(1,993,979)
-
-
-
-
975,860
-
694,377
1,670,237
*
Options issued on 3 December 2013 when Mr. Ray was CEO of the Company.
This concludes the remuneration report, which has been audited.
Shares under option
Unissued ordinary shares of Class Limited under option at the date of this report are as follows:
Grant date
30/09/2015
30/09/2015
29/06/2016
Expiry date
30/09/2019
30/09/2020
30/06/2021
Exercise
price
Number
under option
$1.10
$1.33
$3.81
2,624,084
1,058,506
1,168,202
4,850,792
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.
Shares issued on the exercise of options
The following ordinary shares of Class Limited were issued during the year ended 30 June 2016 and up to the date of this
report on the exercise of options granted:
Date options granted
03/12/2013
28/04/2014
30/06/2014
17/08/2015
Exercise
price
Number of
shares issued
$0.61
$0.59
$0.75
$0.69
2,400,000
400,000
400,000
1,375,916
4,575,916
The exercise of options above were all issued under the LFSP prior to the IPO.
Indemnity and insurance of officers
The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as a
director or executive, for which they may be held personally liable, except where there is a lack of good faith.
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 to the extent permitted by the Corporations Act 2001. 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.
Class Annual Report 2016 23
Class Limited
Directors' report
30 June 2016
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 22 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 22 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.
●
Officers of the Company who are former partners of Grant Thornton
There are no officers of the Company who are former partners of Grant Thornton.
Rounding of amounts
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191, issued by the Australian Securities and Investments Commission, relating to 'rounding-off'. Amounts in this
report have been rounded off in accordance with that Corporations Instrument to the nearest thousand dollars, or in certain
cases, the nearest dollar.
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
immediately after this directors' report.
Auditor
Grant Thornton continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act
2001.
On behalf of the directors
___________________________
Barry Lambert
Chairman
16 August 2016
Sydney
___________________________
Kevin Bungard
Chief Executive Officer and Managing Director
24 Class Annual Report 2016
Level 17, 383 Kent Street
Sydney NSW 2000
Correspondence to:
Locked Bag Q800
QVB Post Office
Sydney NSW 1230
T +61 2 8297 2400
F +61 2 9299 4445
E info.nsw@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
To the Directors of Class Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead
auditor for the audit of Class Limited for the year ended 30 June 2016, I declare that, to the
best of my knowledge and belief, there have been:
a
b
no contraventions of the auditor independence requirements of the Corporations Act
2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the
audit.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
Matthew Leivesley
Partner - Audit & Assurance
Sydney, 16 August 2016
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current
scheme applies.
Class Limited
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2016
Revenue
Expenses
Employee benefits expense
Depreciation and amortisation expense
Selling and marketing expenses
Occupancy expenses
Technology costs
Transaction costs on initial public offering
Other expenses
Profit before income tax expense
Income tax expense
Class Annual Report 2016 25
Note
Consolidated
2016
$'000
2015
$'000
5
6
22,731
15,684
(9,813)
(1,631)
(834)
(309)
(407)
(882)
(1,149)
(7,347)
(859)
(705)
(215)
(464)
-
(908)
7,706
5,186
7
(2,496)
(1,780)
Profit after income tax expense for the year attributable to the owners of Class
Limited
Other comprehensive income for the year, net of tax
Total comprehensive income for the year attributable to the owners of Class
Limited
5,210
3,406
-
-
5,210
3,406
Cents
Cents
Basic earnings per share
Diluted earnings per share
29
29
4.64
4.59
3.17
3.17
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
26 Class Annual Report 2016
Class Limited
Statement of financial position
As at 30 June 2016
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other
Total current assets
Non-current assets
Property, plant and equipment
Intangibles
Deferred tax asset
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Income tax provision
Provisions
Total current liabilities
Non-current liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
Note
Consolidated
2016
$'000
2015
$'000
8
9
10
11
12
7
13
7
14
15
16
17
15,179
2,318
496
17,993
604
3,571
307
4,482
5,950
1,667
265
7,882
480
2,381
1,111
3,972
22,475
11,854
2,268
666
434
3,368
313
313
1,615
523
402
2,540
297
297
3,681
2,837
18,794
9,017
24,260
559
(6,025)
16,152
2,647
(9,782)
18,794
9,017
The above statement of financial position should be read in conjunction with the accompanying notes
Class Annual Report 2016 27
Class Limited
Statement of changes in equity
For the year ended 30 June 2016
Consolidated
Issued
capital
$'000
Profit
reserve
$'000
Other
reserves
$'000
Retained
earnings
$'000
Total
equity
$'000
Balance at 1 July 2014
16,866
1,593
(95)
(9,870)
8,494
Profit 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:
Share-based payments (note 30)
Treasury shares
Transfer to profit reserve
Application of dividends to loan
funded share plan
Dividends paid (note 18)
-
-
-
-
(714)
-
-
-
-
-
-
-
-
3,318
-
(2,358)
Balance at 30 June 2015
16,152
2,553
-
-
-
153
-
-
36
-
94
3,406
3,406
-
-
3,406
3,406
-
-
(3,318)
153
(714)
-
-
-
36
(2,358)
(9,782)
9,017
Consolidated
Issued
capital
$'000
Profit
reserve
$'000
Other
reserves
$'000
Retained
earnings
$'000
Total
equity
$'000
Balance at 1 July 2015
16,152
2,553
94
(9,782)
9,017
Profit 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 16)
Share-based payments (note 30)
Transfer from profit reserve
Dividends paid (note 18)
-
-
-
-
-
-
8,108
-
-
-
-
-
(2,553)
-
Balance at 30 June 2016
24,260
-
-
-
-
-
465
-
-
559
5,210
5,210
-
-
5,210
5,210
-
-
2,553
(4,006)
8,108
465
-
(4,006)
(6,025)
18,794
The above statement of changes in equity should be read in conjunction with the accompanying notes
28 Class Annual Report 2016
Class Limited
Statement of cash flows
For the year ended 30 June 2016
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Income taxes refunded/(paid)
Note
Consolidated
2016
$'000
2015
$'000
24,168
(14,661)
168
(1,549)
16,584
(10,216)
86
464
Net cash from operating activities
28
8,126
6,918
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangibles
Payments for term deposits
Proceeds from disposal of property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from treasury shares on vesting of loan funded share plan
Payments for share purchase by employee share trust - treasury shares
Share issue transaction costs
Dividends paid
18
Net cash from/(used in) financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
(318)
(2,627)
(54)
-
(168)
(1,853)
-
1
(2,999)
(2,020)
5,429
2,943
-
(264)
(4,006)
-
-
(714)
-
(2,358)
4,102
(3,072)
9,229
5,950
1,826
4,124
Cash and cash equivalents at the end of the financial year
8
15,179
5,950
The above statement of cash flows should be read in conjunction with the accompanying notes
Class Annual Report 2016 29
Class Limited
Notes to the financial statements
30 June 2016
Note 1. General information
These financial statements represent the consolidated financial statements of the Group consisting of Class Limited (the
Company) and its subsidiaries. The financial statements are presented in Australian dollars, which is the Company's
functional and presentation currency.
Class Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and
principal place of business is:
Class Limited
Level 3, 228 Pitt Street
Sydney, NSW 2000
A description of the nature of the Group'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 16 August 2016. The
directors have the power to amend and reissue the financial statements.
Note 2. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out either in the respective
notes or below. These policies have been consistently applied to all the years presented, unless otherwise stated.
New, revised or amending Accounting Standards and Interpretations adopted
The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. The adoption of these
Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of
the Group.
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 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 Group'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 3.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only.
Supplementary information about the parent entity is disclosed in note 26.
Rounding of amounts
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191, issued by the Australian Securities and Investments Commission, relating to 'rounding-off'. Amounts in this
report have been rounded off in accordance with that Corporations Instrument to the nearest thousand dollars, or in certain
cases, the nearest dollar.
30 Class Annual Report 2016
Class Limited
Notes to the financial statements
30 June 2016
Note 3. 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.
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 debtor's financial position.
Capitalised software development costs
Distinguishing the research and development phases of a new customised software project and determining whether the
recognition requirements for the capitalisation of development costs are met requires judgement. After capitalisation,
management monitors whether the recognition requirements continue to be met and whether there are any indicators that
capitalised costs may be impaired.
Estimation of useful lives of assets
The Group determines the estimated useful lives and related depreciation and amortisation charges for its property, plant
and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical
innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less
than previously estimated. Technically obsolete or non-strategic assets that have been abandoned or sold will be written
off or written down.
Impairment of non-financial assets
The Group assesses impairment of non-financial assets at each reporting date by evaluating conditions specific to the
Group and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of
the asset is determined. This involves fair value less costs of disposal or value-in-use calculations, which incorporate a
number of key estimates and assumptions.
Income tax
The Group is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in
determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary
course of business for which the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated tax
audit issues based on the Group's current understanding of the tax law. Where the final tax outcome of these matters is
different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in
which such determination is made.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences and losses only if the Group considers it is
probable that future taxable amounts will be available to utilise those temporary differences and losses.
Class Annual Report 2016 31
Class Limited
Notes to the financial statements
30 June 2016
Note 4. Operating segments
The Group's operating segments are based on the internal reports that are reviewed and used by the Board of Directors
(who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the
allocation of resources.
The Directors have determined that there is one operating segment identified and located in Australia. The information
reported to the CODM is the consolidated results of the Group.
The segment results are as shown in the statement of profit or loss and other comprehensive income. Refer to statement
of financial position for segment assets and liabilities.
Accounting policy for operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same
basis as the internal reports provided to the CODM. The CODM is responsible for the allocation of resources to operating
segments and assessing their performance.
Note 5. Revenue
Sales revenue
Software licence fees
Service fees
Commission and partner fees
Other revenue
Interest
Revenue
Consolidated
2016
$'000
2015
$'000
21,432
252
879
22,563
14,908
162
528
15,598
168
86
22,731
15,684
Accounting policy for revenue recognition
Revenue is recognised when it is probable that the economic benefit will flow to the Group and the revenue can be reliably
measured. Revenue is measured at the fair value of the consideration received or receivable.
Software licence fees
The Group recognises revenue pursuant to software licence agreements upon the provision of access to its customers of
the Group’s intellectual property as it exists at any given time during the period of the license. Revenue is recognised over
the duration of the agreement or for as long as the customer has been provided access, when persuasive evidence of an
arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is probable.
Service fees
Fees for the provision of services are recognised as revenue as the services are rendered, in accordance with the terms
and conditions of the service agreement.
Commission and partner fees
The Group recognises commission and partner fees pursuant to an agreement when it sells a third party’s products to
customers which provides these customers with access to products and services.
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.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
32 Class Annual Report 2016
Class Limited
Notes to the financial statements
30 June 2016
Note 6. Expenses
Profit before income tax includes the following specific expenses:
Depreciation
Leasehold improvements
Furniture and fittings
Computer equipment
Office equipment
Total depreciation
Amortisation
Website tools development
Software development
Computer software
Total amortisation
Total depreciation and amortisation
Rental expense relating to operating leases
Minimum lease payments
Superannuation expense
Defined contribution superannuation expense
Consolidated
2016
$'000
2015
$'000
32
12
139
11
194
52
1,360
25
1,437
1,631
54
8
86
13
161
36
640
22
698
859
282
196
1,058
867
Class Annual Report 2016 33
Class Limited
Notes to the financial statements
30 June 2016
Note 7. Income tax
Income tax expense
Current tax
Deferred tax - origination and reversal of temporary differences
Aggregate income tax expense
Deferred tax included in income tax expense comprises:
Decrease in deferred tax assets
Numerical reconciliation of income tax expense and tax at the statutory rate
Profit before income tax expense
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Entertainment expenses
Share-based payments
Non allowable deductions
Research and development uplift and investment allowance
Capital gain on tax consolidation
Income tax expense
Deferred tax asset
Deferred tax asset comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Tax losses
Accrued expenses
Software development - R & D
Deferred tax asset
Movements:
Opening balance
Charged to profit or loss
Closing balance
Provision for income tax
Provision for income tax
Consolidated
2016
$'000
2015
$'000
1,692
804
530
1,250
2,496
1,780
804
1,250
7,706
5,186
2,312
1,556
15
150
19
-
-
-
66
(82)
2,496
-
1,540
240
2,496
1,780
Consolidated
2016
$'000
2015
$'000
596
741
(1,030)
1,482
321
(692)
307
1,111
1,111
(804)
2,361
(1,250)
307
1,111
Consolidated
2016
$'000
2015
$'000
666
523
34 Class Annual Report 2016
Class Limited
Notes to the financial statements
30 June 2016
Note 7. Income tax (continued)
Accounting policy for 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.
Class Limited (the 'head entity') and its wholly-owned Australian subsidiaries have formed an income tax consolidated
group under the tax consolidation regime with effect from 1 July 2014. The head entity and each subsidiary in the tax
consolidated group continue to account for their own current and deferred tax amounts. The tax consolidated group has
applied the 'separate taxpayer within group' approach in determining the appropriate amount of taxes to allocate to
members of the tax consolidated group.
In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or assets)
and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary in the tax
consolidated group.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that the
intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in neither a
contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity.
Note 8. Current assets - cash and cash equivalents
Cash on hand and at bank
Consolidated
2016
$'000
2015
$'000
15,179
5,950
Accounting policy for 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.
Class Limited
Notes to the financial statements
30 June 2016
Note 9. Current assets - trade and other receivables
Trade receivables
Less: Provision for impairment of receivables
Accrued revenue
Class Annual Report 2016 35
Consolidated
2016
$'000
2015
$'000
2,307
(8)
2,299
1,645
(3)
1,642
19
25
2,318
1,667
Impairment of receivables
The Group has recognised a loss of $5,000 (2015: $3,000) in profit or loss in respect of impairment of receivables for the
year ended 30 June 2016.
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
Closing balance
Consolidated
2016
$'000
2015
$'000
4
4
-
8
Consolidated
2016
$'000
2015
$'000
3
5
8
-
1
2
3
-
3
3
Past due but not impaired
Customers with balances past due but without provision for impairment of receivables amount to $28,000 as at 30 June
2016 ($7,000 as at 30 June 2015).
The Group 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
Consolidated
2016
$'000
2015
$'000
28
7
36 Class Annual Report 2016
Class Limited
Notes to the financial statements
30 June 2016
Note 9. Current assets - trade and other receivables (continued)
Accounting policy for 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 and 90
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 Group 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 120 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.
Note 10. Current assets - other
Prepayments
Term deposits*
Consolidated
2016
$'000
2015
$'000
355
141
496
178
87
265
*Includes term deposit which is held as security for lease of office premises $141,000 (2015: $87,000).
Note 11. Non-current assets - property, plant and equipment
Leasehold improvements - at cost
Less: Accumulated depreciation
Furniture and fittings - at cost
Less: Accumulated depreciation
Computer equipment - at cost
Less: Accumulated depreciation
Office equipment - at cost
Less: Accumulated depreciation
Consolidated
2016
$'000
2015
$'000
156
(107)
49
133
(29)
104
722
(341)
381
105
(35)
70
604
156
(75)
81
117
(17)
100
435
(202)
233
90
(24)
66
480
Class Annual Report 2016 37
Class Limited
Notes to the financial statements
30 June 2016
Note 11. Non-current assets - property, plant and equipment (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2014
Additions
Disposals
Depreciation expense
Balance at 30 June 2015
Additions
Depreciation expense
Balance at 30 June 2016
Leasehold Furniture and
improvements
$'000
fittings
$'000
Computer
equipment
Office
equipment
$'000
$'000
118
17
-
(54)
81
-
(32)
49
95
13
-
(8)
100
16
(12)
104
188
136
(5)
(86)
233
287
(139)
381
76
3
-
(13)
66
15
(11)
70
Total
$'000
477
169
(5)
(161)
480
318
(194)
604
Accounting policy for 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
over their expected useful lives as follows:
Leasehold improvements
Furniture and fittings
Computer equipment
Office equipment
3-5 years
10-20 years
3-5 years
3-10 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting
date.
Leasehold improvements 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
Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
38 Class Annual Report 2016
Class Limited
Notes to the financial statements
30 June 2016
Note 12. Non-current assets - intangibles
Website tools development - at cost
Less: Accumulated amortisation
Trademarks and domain names - at cost
Software development - at cost
Less: Accumulated amortisation
Computer software - at cost
Less: Accumulated amortisation
Consolidated
2016
$'000
2015
$'000
157
(101)
56
36
12,185
(8,730)
3,455
76
(52)
24
155
(49)
106
36
9,570
(7,370)
2,200
68
(29)
39
3,571
2,381
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2014
Additions
Amortisation expense
Balance at 30 June 2015
Additions
Amortisation expense
Balance at 30 June 2016
Website tools
development
$'000
Trademarks
and domain
names
$'000
Software
development
$'000
Computer
software
$'000
Total
$'000
63
79
(36)
106
2
(52)
56
18
18
-
36
-
-
36
1,117
1,723
(640)
2,200
2,615
(1,360)
3,455
29
32
(22)
39
10
(25)
24
1,227
1,852
(698)
2,381
2,627
(1,437)
3,571
Accounting policy for intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value
at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible
assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are
subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss
arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the
carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually.
Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation
method or period.
Website tool and software 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 Group is able to use or
sell the asset; the Group has sufficient resources; and intent to complete the internal development: and the costs incurred
can be measured reliably. These capitalised costs are amortised commencing from the time the asset's development
reaches the condition necessary for it to be capable of operation in the manner intended by management. Amortisation is
on a straight-line basis over the period of their expected benefit, being their finite useful lives of three years.
Class Annual Report 2016 39
Class Limited
Notes to the financial statements
30 June 2016
Note 12. Non-current assets - intangibles (continued)
Trademarks and domain names
Significant costs associated with trademarks and domain names are capitalised. Such assets are not on the basis that they
are deemed to have an indefinite life. This assumption is reassessed every year. Instead, trademarks and domain names
are tested annually for impairment, or more frequently if events or changes in circumstances indicate that it might be
impaired. They are carried at cost less accumulated impairment losses.
Computer software
Software purchased from third parties are capitalised and amortised on a straight-line basis over the period of their
expected benefit of between three to five years.
Note 13. Current liabilities - trade and other payables
Trade payables
Accrued expenses
BAS payable
Consolidated
2016
$'000
2015
$'000
517
1,303
448
362
938
315
2,268
1,615
Refer to note 19 for further information on financial instruments.
Accounting policy for trade and other payables
These amounts represent liabilities for goods and services provided to the Group 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.
Note 14. Current liabilities - provisions
Annual leave
Deferred lease incentives
Consolidated
2016
$'000
2015
$'000
387
47
434
355
47
402
Deferred lease incentives
The provision represents operating lease incentives received. The incentives are allocated to profit or loss in such a
manner that the rent expense is recognised on a straight-line basis over the lease term.
Accounting policy for 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 wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities
are settled. The liability for annual leave not expected to be settled within 12 months of the reporting date but for which
employees have a current entitlement is 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 (refer to the
accounting policy in note 15 for further details). Such amounts are presented as current liabilities as the Group does not
have an unconditional right to defer settlement. However, based on past experience, the Group does not expect all
employees to take the full amount of accrued leave or require payment within the next 12 months.
40 Class Annual Report 2016
Class Limited
Notes to the financial statements
30 June 2016
Note 15. Non-current liabilities - provisions
Long service leave
Deferred lease incentives
Consolidated
2016
$'000
2015
$'000
285
28
313
222
75
297
Movements in provisions
Movements in each class of provision (current and non-current) during the current financial year, other than employee
benefits, are set out below:
Consolidated - 2016
Carrying amount at the start of the year
Amounts used
Carrying amount at the end of the year
Deferred
lease
incentives
$'000
122
(47)
75
Accounting policy for other long-term employee benefits
The liability for long service leave not expected to be settled within 12 months of the reporting date is 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. Pursuant to this method, consideration is given to expected future wage and
salary levels, past experience of employee departures and periods of service. Expected future payments are discounted
using market yields at the reporting date on corporate bonds with terms to maturity and currency that match, as closely as
possible, the estimated future cash outflows.
Note 16. Equity - issued capital
Consolidated
2016
Shares
2015
Shares
2016
$'000
2015
$'000
Ordinary shares - fully paid
Less: Treasury shares
116,820,283 111,350,680
(4,575,916)
-
24,260
-
18,715
(2,563)
116,820,283 106,774,764
24,260
16,152
Class Annual Report 2016 41
Class Limited
Notes to the financial statements
30 June 2016
Note 16. Equity - issued capital (continued)
Movements in ordinary share capital
Details
Date
Shares
$'000
Balance
Transfer of Class A shares into ordinary shares
Transfer of Class B shares into ordinary shares
Share split
1 July 2014
15 June 2015
15 June 2015
15 June 2015
-
1,500,000
26,337,670
83,513,010
-
16
18,699
-
Balance
Exercise price transferred on vesting of loan funded
share plan
Issuance of shares at $1.00 per share
Issuance of shares in the employee offer
Issuance of shares at $1.00 per share
Share issue transaction costs, net of tax
30 June 2015
111,350,680
18,715
8 December 2015
14 December 2015
14 December 2015
24 December 2015
-
5,318,603
41,000
110,000
-
380
5,319
-
110
(264)
Balance
30 June 2016
116,820,283
24,260
Movements in Treasury Shares
Details
Date
Shares
$'000
Balance
Shares purchase by employee share trust
Share split
1 July 2014
24 February 2015
15 June 2015
(860,000)
(283,979)
(3,431,937)
(1,849)
(714)
-
Balance
Termination of loan funded share plan due to vesting
of all unvested shares
30 June 2015
(4,575,916)
(2,563)
8 December 2015
4,575,916
2,563
Balance
30 June 2016
-
-
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.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Share buy-back
There is no current on-market share buy-back.
Conversion of Class A shares and Class B shares and subsequent share split (comparative period)
On 15 June 2015, each Class A and Class B share on issue was converted into one fully-paid ordinary share such that the
Company has only one class of ordinary share capital on issue. In addition, the share capital of the Company underwent a
share split of 4 new shares for each existing share on that date.
Termination of loan funded share plan ('LFSP")
The Company had an equity scheme pursuant to which certain employees accessed a loan funded share plan ('LFSP').
The acquisition of shares by an employee in the Company was fully funded by the Company through the granting of a full
recourse loan over a period of up to 42 months.
On 8 December 2015, the LFSP was terminated. 4,575,916 unvested options issued pursuant to LFSP were treated as
fully vested in accordance with the IPO prospectus. On vesting the employees fully repaid the loan amount including the
exercise price as per the LFSP.
42 Class Annual Report 2016
Class Limited
Notes to the financial statements
30 June 2016
Note 16. Equity - issued capital (continued)
Capital risk management
The Group'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 and
reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated
as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell assets to reduce debt.
The Group would look to raise capital when an opportunity to invest in a business or company was seen as value adding
relative to the current Company's share price at the time of the investment. The Group is not actively pursuing additional
investments in the short term as it continues to integrate and grow its existing businesses in order to maximise synergies.
The Group has complied with the capital requirements prescribed under its Australian Financial Service Licence.
The capital risk management policy remains unchanged from the 30 June 2015 Annual Report.
Accounting policy for 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.
Treasury shares
Shares issued as part of the Loan Funded Share Plan are held on trust and disclosed as treasury shares under issued
capital.
Note 17. Equity - reserves
Profit reserve
Share-based payments reserve
Acquisition reserve
Consolidated
2016
$'000
2015
$'000
-
612
(53)
559
2,553
147
(53)
2,647
Profit reserve
The reserve was previously used to transfer profits from retained earnings for the purpose of distributing dividends.
Dividends are now distributed out of retained earnings.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their
remuneration.
Acquisition reserve
The reserve resulted from the acquisition of non-controlling interests in a subsidiary. The acquisition of non-controlling
interests is not a business combination but is an equity transaction between owners. Accordingly, the difference between
consideration paid and fair value of identifiable net assets of the non-controlling interest has been accounted for in the
acquisition reserve.
Class Annual Report 2016 43
Class Limited
Notes to the financial statements
30 June 2016
Note 17. Equity - reserves (continued)
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2014
Transfer from retained earnings
Dividends paid
Share based payment
Application of dividends to loan funded share plan
Balance at 30 June 2015
Transfer to retained earnings
Share based payment
Balance at 30 June 2016
Note 18. Equity - dividends
Dividends
Dividends paid during the financial year were as follows:
Profit
reserve
$'000
Share-based
payment
reserve
$'000
Acquisition
reserve
$'000
Total
$'000
1,593
3,318
(2,358)
-
-
2,553
(2,553)
-
-
(42)
-
-
153
36
147
-
465
612
(53)
-
-
-
-
(53)
-
-
(53)
1,498
3,318
(2,358)
153
36
2,647
(2,553)
465
559
Final dividend for the year ended 30 June 2015 of 0.75 cents per ordinary share (2014: 2.5
cents before share-split)
1st quarter interim dividend for the year ended 30 June 2016 of 0.75 cents per ordinary
share paid on 9 October 2015
2nd quarter interim dividend for the year ended 30 June 2016 of 1 cents per ordinary share
paid on 7 March 2016 (2015: 3 cents before share-split)
3rd quarter interim dividend for the year ended 30 June 2016 of 1 cents per ordinary share
paid on 13 May 2016 (2015: 3 cents before share-split)
Consolidated
2016
$'000
2015
$'000
835
835
1,168
1,168
694
-
832
832
4,006
2,358
On 18 July 2016, the directors declared an unfranked final dividend for the year ended 30 June 2016 of 1 cent per ordinary
share with payment date of 12 August 2016 to eligible shareholders on the register as at 25 July 2016. This equates to a
total distribution of $1,168,000, based on the number of ordinary shares on issue as at 30 June 2016. The financial effect
of dividends declared after the reporting date is not reflected in the 30 June 2016 financial statements and will be
recognised in subsequent financial reports.
Franking credits
Franking credits available for subsequent financial years based on a tax rate of 30%
1,454
24
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
●
●
●
franking credits that will arise from the payment of the amount of the provision for income tax at the reporting date
franking debits that will arise from the payment of dividends recognised as a liability at the reporting date
franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date
Consolidated
2016
$'000
2015
$'000
44 Class Annual Report 2016
Class Limited
Notes to the financial statements
30 June 2016
Note 18. Equity - dividends (continued)
At 30 June 2016 there was a deferred franking liability of $Nil (2015: $151,000) resulting from refunds received in relation
to Research and Development Tax Incentive.
Accounting policy for dividends
Dividends are recognised when declared during the financial year and are no longer at the discretion of the Company.
Note 19. Financial instruments
Financial risk management objectives
The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and
interest rate risk), credit risk and liquidity risk. The Group'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
Group. The Group uses different methods to measure different types of risk to which it is exposed. These methods include
sensitivity analysis in the case of interest rate, foreign exchange and other price risks and ageing analysis for credit risk.
Risk management is carried out by senior finance executives ('finance') under policies approved by the Board of Directors
('the Board'). These policies include identification and analysis of the risk exposure of the Group and appropriate
procedures, controls and risk limits. Finance identifies, evaluates and hedges financial risks within the Group's operating
units.
Market risk
Foreign currency risk
The Group is not exposed to any significant foreign currency risk.
Price risk
The Group is not exposed to any significant price risk.
Interest rate risk
The Group's exposure to interest rate risk is limited to cash at bank and short term deposits.
An official increase/decrease in interest rates of 50 (2015: 50) basis points would have an adverse/favourable effect on
profit before tax of $77,000 (2015: $30,000) per annum. The percentage change is based on the expected volatility of
interest rates using market data and analysts' forecasts.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Group. The Group has a strict code of credit, including obtaining agency credit information, confirming references and
setting appropriate credit limits. The Group 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
Group does not hold any collateral.
Liquidity risk
Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash
equivalents) to be able to pay debts as and when they become due and payable.
The Group manages liquidity risk by maintaining adequate cash reserves by continuously monitoring actual and forecast
cash flows and matching the maturity profiles of financial assets and liabilities.
Class Annual Report 2016 45
Class Limited
Notes to the financial statements
30 June 2016
Note 19. Financial instruments (continued)
Remaining contractual maturities
The following tables detail the Group'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 - 2016
Non-derivatives
Non-interest bearing
Trade payables
Total non-derivatives
Consolidated - 2015
Non-derivatives
Non-interest bearing
Trade payables
Total non-derivatives
1 year or less
$'000
Between 1
and 2 years
$'000
Between 2
and 5 years
$'000
Over 5 years
$'000
Remaining
contractual
maturities
$'000
517
517
-
-
-
-
-
-
517
517
1 year or less
$'000
Between 1
and 2 years
$'000
Between 2
and 5 years
$'000
Over 5 years
$'000
Remaining
contractual
maturities
$'000
362
362
-
-
-
-
-
-
362
362
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Note 20. Fair value measurement
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value. The carrying amounts of
trade and other receivables and trade and other payables are assumed to approximate their fair values due to their short
term nature. The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the
current market interest rate that is available for similar financial liabilities.
Accounting policy for 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.
46 Class Annual Report 2016
Class Limited
Notes to the financial statements
30 June 2016
Note 21. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the Group is set out
below:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
Note 22. Remuneration of auditors
Consolidated
2016
$
2015
$
898,021
86,099
16,445
172,259
836,348
78,803
37,341
85,836
1,172,824
1,038,328
During the financial year the following fees were paid or payable for services provided by Grant Thornton, the auditor of the
Company:
Audit services - Grant Thornton
Audit or review of the financial statements
Other services - Grant Thornton
Due diligence
Tax compliance services
Taxation advisory services
Consolidated
2016
$
2015
$
67,950
44,915
40,000
15,750
108,775
-
25,500
-
164,525
25,500
232,475
70,415
Note 23. Contingent liabilities
The Group has given bank guarantees as at 30 June 2016 of $141,000 (2015: $87,000) to various landlords.
Note 24. Commitments
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
Consolidated
2016
$'000
2015
$'000
517
1,253
1,770
246
390
636
Operating lease commitments relate to leases of office premises under non-cancellable operating leases expiring within
two and four years with options to extend. The leases have various escalation clauses. On renewal, the terms of the leases
are renegotiated.
Class Annual Report 2016 47
Class Limited
Notes to the financial statements
30 June 2016
Note 25. Related party transactions
Parent entity
Class Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 27.
Key management personnel
Disclosures relating to key management personnel are set out in note 21 and the remuneration report included in the
directors' report.
Transactions with related parties
Rajarshi Ray, a director of the Company is also a director of Heffron Consulting Pty Ltd, a major customer of the Group.
Heffron Consulting Pty Ltd also provides actuarial certificates to the customers of the Group. Mr Ray is not a shareholder of
Heffron, is one of three directors and is not related to any of the other directors. Transactions between Heffron Consulting
Pty Ltd and the Group are at arm's length and on normal commercial terms.
Barry Lambert, a director of the Company is also a director of Countplus Limited, a major customer of the Group. Barry
Lambert is one of five Directors and is not related to any of the other directors. Transactions between Countplus Limited
and the Group are at arm's length and on normal commercial terms.
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and previous reporting date.
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
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
Profit after income tax
Total comprehensive income
Parent
2016
$'000
2015
$'000
4,442
2,022
4,442
2,022
48 Class Annual Report 2016
Class Limited
Notes to the financial statements
30 June 2016
Note 26. Parent entity information (continued)
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Profit reserve
Share-based payments reserve
Retained earnings
Total equity
Parent
2016
$'000
2015
$'000
12,849
4,705
23,526
14,986
2,987
3,472
3,300
3,769
24,260
-
612
(4,646)
16,152
1,256
147
(6,338)
20,226
11,217
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2016 and 30 June 2015.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2016 and 30 June 2015.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2016 and 30 June 2015.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2, except for the
following:
●
●
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Investments in associates are accounted for at cost, less any impairment, in the parent entity.
Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an
indicator of an impairment of the investment.
Note 27. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in note 2:
Name
Principal place of business /
Country of incorporation
Class Super Pty Limited
Class Investment Reporter Pty Ltd
Super IP Incentive Pty Ltd
Australia
Australia
Australia
Ownership interest
2015
2016
%
%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
Class Annual Report 2016 49
Class Limited
Notes to the financial statements
30 June 2016
Note 28. Reconciliation of profit after income tax to net cash from operating activities
Profit after income tax expense for the year
Adjustments for:
Depreciation and amortisation
Net loss on disposal of property, plant and equipment
Share-based payments
Change in operating assets and liabilities:
Increase in trade and other receivables
Decrease in income tax refund due
Decrease in deferred tax assets
Increase in prepayments
Increase in other operating assets
Increase in trade and other payables
Increase in provision for income tax
Increase in employee benefits
Decrease in other provisions
Net cash from operating activities
Note 29. Earnings per share
Consolidated
2016
$'000
2015
$'000
5,210
3,406
1,631
-
465
(651)
-
804
(177)
-
653
143
95
(47)
859
5
188
(575)
472
1,250
(79)
(1)
696
523
221
(47)
8,126
6,918
Consolidated
2016
$'000
2015
$'000
Profit after income tax attributable to the owners of Class Limited
5,210
3,406
Weighted average number of ordinary shares used in calculating basic earnings per share
Adjustments for calculation of diluted earnings per share:
112,336,128 107,515,443
Options over ordinary shares
1,114,769
-
Weighted average number of ordinary shares used in calculating diluted earnings per share 113,450,897 107,515,443
Number
Number
Basic earnings per share
Diluted earnings per share
Accounting policy for earnings per share
Cents
Cents
4.64
4.59
3.17
3.17
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Class Limited, excluding any costs
of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the
financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the
weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential
ordinary shares.
50 Class Annual Report 2016
Class Limited
Notes to the financial statements
30 June 2016
Note 30. Share-based payments
The Group has established the Class Limited Tax Exempt Employee Share Plan ('Tax Exempt ESP') to assist the Group in
rewarding employees by providing them with the opportunity to own shares in the Company. The Tax Exempt ESP enables
the Group to issue shares to qualifying employees on a non-discriminatory basis so as to permit the application of section
83A-35 of the Income Tax Assessment Act 1997.
The Group also has a long term incentive plan ('LTIP'), Class Limited Employee Share Option Plan ('ESOP') to assist the
Group in retaining and attracting current and future employees by providing them with the opportunity to allow them to
acquire options or rights as part of the remuneration for their services. The ESOP is by invitation of the Board (or a
committee of the Board).
During the financial year 6,281,708 (2015: Nil) options were granted. The share-based payment expense for the year was
$465,000 (2015: $153,000).
Loan Funded Share Plan ('LFSP') (comparative period)
The LFSP was a long term incentive for employees of the Group set up prior to the IPO. Under the plan, employees were
granted an allocation of loan-funded shares which were held on their behalf by an employee share trust. The shares were
issued at market value which was determined by the Board. 4,575,916 options granted under LFSP were fully exercised
during the year.
Set out below summary of the options granted under the plan:
2016
Grant date
Expiry date
price*
Exercise
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
03/12/2013
28/04/2014
30/06/2014
17/08/2015
30/09/2015
30/09/2015
29/06/2016
02/06/2017
26/10/2017
28/12/2017
16/06/2017
30/09/2019
30/09/2020
30/06/2021
$0.61
$0.59
$0.75
$0.69
$1.10
$1.33
$3.81
2,400,000
400,000
400,000
-
-
-
-
3,200,000
-
-
-
1,375,916
2,624,084
1,113,506
1,168,202
6,281,708
(2,400,000)
(400,000)
(400,000)
(1,375,916)
-
-
-
(4,575,916)
-
-
-
-
-
(55,000)
-
(55,000)
-
-
-
-
2,624,084
1,058,506
1,168,202
4,850,792
Weighted average exercise price
$0.62
$1.54
$0.64
$1.33
$1.78
*
Exercise price and balance at the start of the year has been adjusted for share-split.
2015
Grant date
Expiry date
price*
Exercise
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other**
Balance at
the end of
the year
03/12/2013
28/04/2014
30/06/2014
02/06/2017
26/10/2017
28/12/2017
$0.61
$0.59
$0.75
660,000
100,000
100,000
860,000
-
-
-
-
-
-
-
-
1,740,000
300,000
300,000
2,340,000
2,400,000
400,000
400,000
3,200,000
Weighted average exercise price
$0.62
$0.00
$0.00
$0.62
$0.62
*
**
Exercise price has been adjusted for share-split.
Other represents effect of share-split as detailed in note 16, adjusted for 60,000 options forfeited prior to share-split
The weighted average share price during the financial year was $2.29.
The weighted average remaining contractual life of options outstanding at the end of the financial year was 4 years (2015:
2 years).
Class Annual Report 2016 51
Class Limited
Notes to the financial statements
30 June 2016
Note 30. Share-based payments (continued)
None of the options outstanding as at 30 June 2016 were exercisable (30 June 2015: Nil).
For the options granted during the current financial year, the valuation model inputs used to determine the fair value at the
grant date, are as follows:
Grant date
Expiry date
17/08/2015
30/09/2015
30/09/2015
29/06/2016
16/06/2017
30/09/2019
30/09/2020
30/06/2021
Share price Exercise
at grant date
price
Expected
volatility
Dividend
Risk-free
Fair value
yield
interest rate at grant date
$0.69
$1.00
$1.00
$3.29
$0.69
$1.10
$1.33
$3.81
41.00%
33.64%
33.64%
33.64%
3.00%
3.00%
3.00%
3.00%
2.04%
1.99%
2.19%
1.67%
$0.053
$0.197
$0.168
$0.661
Accounting policy for share-based payments
Equity-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.
The cost of equity-settled transactions is measured at fair value on grant date. Fair value is 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 Group 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 is 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.
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 Group or employee, the failure to satisfy the condition is treated as a
cancellation. If the condition is not within the control of the Group 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.
Note 31. Events after the reporting period
Apart from the dividend declared as disclosed in note 18, no other matter or circumstance has arisen since 30 June 2016
that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the
Group's state of affairs in future financial years.
52 Class Annual Report 2016
Class Limited
Notes to the financial statements
30 June 2016
Note 32. Other accounting policies
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Class Limited ('Company'
or 'parent entity') as at 30 June 2016 and the results of all subsidiaries for the year then ended. Class Limited and its
subsidiaries together are referred to in these financial statements as the 'Group'.
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group 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 Group. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group 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 Group.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest,
without the loss of control, is accounted for as an equity transaction, where the difference between the consideration
transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity
attributable to the parent.
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-
controlling interests in the subsidiary together with any cumulative translation differences recognised in equity. The Group
recognises the fair value of the consideration received and the fair value of any investment retained together with any gain
or loss in profit or loss.
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 the
Group's 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 the Group's 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.
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.
Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower,
the present value of minimum lease payments. Lease payments are allocated between the principal component of the
lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's
useful life and the lease term if there is no reasonable certainty that the Group will obtain ownership at the end of the lease
term.
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.
Class Annual Report 2016 53
Class Limited
Notes to the financial statements
30 June 2016
Note 32. Other accounting policies (continued)
Impairment of non-financial assets
Other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for
impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-
financial 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.
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.
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 Group for the annual reporting period ended 30 June 2016. The Group's
assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the Group,
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. New hedge
accounting requirements are intended to more closely align the accounting treatment with the risk management activities of
the entity. New impairment requirements will use an ‘expected credit loss’ (‘ECL’) model to recognise an allowance. The
Group will adopt this standard from 1 July 2018 but the impact of its adoption is not expected to be material.
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. 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 Group expects to adopt this standard from 1 July 2018
but the impact of its adoption is yet to be assessed by the Group.
54 Class Annual Report 2016
Class Limited
Notes to the financial statements
30 June 2016
Note 32. Other accounting policies (continued)
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. For lessee accounting, the
standard eliminates the ‘operating lease’ and ‘finance lease’ classification required by AASB 117 ‘Leases’. Subject to
exceptions, a ‘right-of-use’ asset will be capitalised in the statement of financial position, measured as the present value of
the unavoidable future lease payments to be made over the lease term. The exceptions relate to short-term leases of 12
months or less and leases of low-value assets (such as personal computers and office furniture) where an accounting
policy choice exists whereby either a ‘right-of-use’ asset is recognised or lease payments are expensed to profit or loss as
incurred. A liability corresponding to the capitalised lease will also be recognised, adjusted for lease prepayments, lease
incentives received, initial direct costs incurred and an estimate of any future restoration, removal or dismantling costs.
Straight-line operating lease expense recognition will be replaced with a depreciation charge for the leased asset (included
in operating costs) and an interest expense on the recognised lease liability (included in finance costs). For classification
within the statement of cash flows, the lease payments will be separated into both a principal (financing activities) and
interest (either operating or financing activities) components. For lessor accounting, the standard does not substantially
change how a lessor accounts for leases. The Group will adopt this standard from 1 July 2019 but the impact of its
adoption is yet to be assessed by the Group.
Class Annual Report 2016 55
Class Limited
Directors' declaration
30 June 2016
In the directors' opinion:
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 2 to the financial statements;
the attached financial statements and notes give a true and fair view of the Group's financial position as at 30 June
2016 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Barry Lambert
Chairman
16 August 2016
Sydney
___________________________
Kevin Bungard
Chief Executive Officer and Managing Director
56 Class Annual Report 2016
Level 17, 383 Kent Street
Sydney NSW 2000
Correspondence to:
Locked Bag Q800
QVB Post Office
Sydney NSW 1230
T +61 2 8297 2400
F +61 2 9299 4445
E info.nsw@au.gt.com
W www.grantthornton.com.au
Independent Auditor’s Report
To the Members of Class Limited
We have audited the accompanying financial report of Class Limited (the “Company”),
which comprises the consolidated statement of financial position as at 30 June 2016, the
consolidated statement of profit or loss and other comprehensive income, consolidated
statement of changes in equity and 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. The Directors’ responsibility also includes 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. The Directors also state, in the notes to the financial report, in accordance with
Accounting Standard AASB 101 Presentation of Financial Statements, 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 us to comply with relevant ethical requirements relating to audit engagements and
plan and perform the audit to obtain reasonable assurance 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.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current
scheme applies.
Class Annual Report 2016 57
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.
Independence
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001.
Auditor’s opinion
In our opinion the financial report of Class Limited:
a
is in accordance with the Corporations Act 2001, including:
i
ii
giving a true and fair view of the consolidated entity’s financial position as at 30
June 2016 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations
Regulations 2001; and
b
complies with International Financial Reporting Standards as disclosed in the notes to
the financial statements.
Report on the remuneration report
We have audited the remuneration report included in pages 16 to 22 of the directors’ report
for the year ended 30 June 2016. 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.
Auditor’s opinion on the remuneration report
In our opinion, the remuneration report of Class Limited for the year ended 30 June 2016,
complies with section 300A of the Corporations Act 2001.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
Matthew Leivesley
Partner - Audit & Assurance
Sydney, 16 August 2016
This page is left blank intentionally.
Shareholder
information
60 Class Annual Report 2016
Class Limited
Shareholder information
30 June 2016
The shareholder information set out below was applicable as at 1 August 2016.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
Number
of holders
of options
Number
of holders
of ordinary ordinary
over
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Holding less than a marketable parcel
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
shares
shares
1,068
1,841
619
445
69
4,042
-
-
-
11
13
6
30
-
TRONCELL PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
RBC INVESTOR SERVICES AUSTRALIA PTY LIMITED
COUNTPLUS LIMITED
MR JOSEPH CHARLES CAMUGLIA & MRS KIRSTEN INGRET CAMUGLIA
ARMELEK PTY LTD
J P MORGAN NOMINEES AUSTRALIA LIMITED
ACN 154 462 334 PTY LIMITED
CANEMOON INVESTMENTS PTY LTD
MR KEITH FINKELDE & MRS ANNE FINKELDE & MR WAYNE FINKELDE
RICHARD GEORGE BARBER & ALICE ISABELLA KATHARINA KIRMEYER
RODERICK KIBBLE & MICHELLE KIBBLE
PETER DORIAN KIBBLE & LORRAINE LESTER
PROFITOUS PTY LTD
BNP PARIBAS NOMS PTY LTD
SMARTSUPER OPTIONS PTY LTD
MR KEVIN BUNGARD
MASSEY RECRUITMENT PTY LTD
MR SCOTT EDWARD LAWSON & MRS PATRICIA LAWSON
MR RAJARSHI MANU RAY
Unquoted equity securities
Options over ordinary shares
Ordinary shares
% of total
Number held
17,255,700
7,756,813
6,717,223
5,882,540
4,410,000
3,600,000
3,553,555
3,418,478
3,000,000
2,518,545
2,507,592
2,001,652
2,001,652
1,830,281
1,754,648
1,620,028
1,560,912
1,553,564
1,286,650
1,201,892
shares
issued
14.77
6.64
5.75
5.04
3.78
3.08
3.04
2.93
2.57
2.16
2.15
1.71
1.71
1.57
1.50
1.39
1.34
1.33
1.10
1.03
75,431,725
64.59
Number
on issue
Number
of holders
4,850,792
30
Class Limited
Shareholder information
30 June 2016
Substantial holders
Substantial holders in the Company are set out below:
TRONCELL PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
RBC INVESTOR SERVICES AUSTRALIA PTY LIMITED
COUNTPLUS LIMITED
Voting rights
The voting rights attached to ordinary shares are set out below:
Class Annual Report 2016 61
Ordinary shares
% of total
Number held
17,255,700
7,756,813
6,717,223
5,882,540
shares
issued
14.77
6.64
5.75
5.04
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
There are no other classes of equity securities.
Restricted securities
Class
Ordinary shares
Expiry date
Number
of shares
14 December 2018 or the day after the date on which
a participant ceases to be an Employee.
36,000
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Corporate
directory
64 Class Annual Report 2016
Corporate directory 30 June 2016
Auditor
Grant Thornton Audit Pty Ltd
Level 17
383 Kent Street
Sydney NSW 2000
Ph: 02 8297 2400
Solicitors
Addisons
Level 12
60 Carrington Street
Sydney NSW 2000
Ph: 02 8915 1000
Stock exchange listing
Class Limited shares are listed on the Australian
Securities Exchange (ASX code: CL1)
Website
www.class.com.au
Corporate Governance Statement
The Corporate Governance Statement which was
approved at the same time as the Annual Report
can be found at https://investors.class.com.au/Investors/
Directors
Barry Lambert
Roderick Kibble
Rajarshi Ray
Kevin Bungard
Matthew Quinn
Anthony Fenning
Kathryn Foster
Company Secretary
Glenn Day
Notice of Annual General Meeting
The details of the Annual General Meeting
of Class Limited are:
Level 17
383 Kent Street
Sydney NSW 2000
Monday 17 October 2016 at 10:00am
Registered office
Level 3
228 Pitt Street
Sydney NSW 2000
Ph: 1300 851 057
Principal place of business
Level 3
228 Pitt Street
Sydney NSW 2000
Ph: 1300 851 057
Share register
Link Market Services
Level 12
680 George Street
Sydney NSW 2000
Ph: 02 8280 7100
www.class.com.au