CPT Global Limited and
Controlled Entities
ABN 16 083 090 895
Annual Report
for the year ended 30 June 2017
cptglobal.com
cptglobal.com
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities – Annual Report
Chairman’s Statement
Dear Fellow CPT Global Shareholder,
Despite early expectations of improved performance CPT Global again recorded a loss in the 2017 financial year.
A solid contribution from our Australian operations was more than offset by the weak performance from our
international business and in particular Europe.
The Australian business improved its performance and continued to establish and build strong customer
relationships which contributed to growth in both revenue and profitability. The Australian operations remain
the backbone of CPT and provides many of the skilled IT experts required to resource our international business.
Again, four of our five largest clients were based in Australia in 2017.
CPT’s international business, in particular Europe, experienced a further decline in revenue although overall
losses were reduced. Despite continuing business development efforts new business remained difficult to win but
margins improved.
The North American operations were profitable but both revenue and operating profit were lower than the prior
year. Margins in North America increased and despite ongoing delays a number of new projects are expected to
commence soon. Three of CPT’s ten largest clients are based in North America and delivered attractive margins.
Our European operations delivered a lower but still unacceptable loss as costs were further reduced. Going
forward the North American and European operations will be managed together with a focus on winning the most
prospective opportunities.
The continuing development of the global IT industry and the adoption of cloud, proliferation of data and the
growing need for advanced analytics and AI, presents exciting opportunities for us. CPT is committed to adapting
its business model in line with the market. CPT will continue to review our business model in order that we can
deliver returns commensurate with our strong reputation for delivering outcomes for our clients. Our near-term
focus will be on strengthening our core business, growing revenues, addressing our cost base and also developing
attractive new digitally oriented service offerings.
In 2017 our revenue fell by over 5% with increases in Australia more than offset by falls in Europe and North
America. CPT recorded a net loss after tax of $1.5m compared to a net loss after tax of $3.9m in 2016 and will
again not pay a dividend. CPT ended the financial year with cash of $1.7m.
Despite significant business development efforts CPT has made losses over the past three years. While the
opportunities, particularly in international markets, remain attractive the costs and delays in winning new
business have been prohibitive. In the months ahead CPT will be taking further action to optimise its business
development activities and reduce overheads in order to return to profitability. In closing I would thank my fellow
directors and all of CPT Global’s staff, under the leadership of our Managing Director, Gerry Tuddenham, for
their ongoing efforts.
Fred S. Grimwade
Chairman
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities – Annual Report
Managing Director’s Review
Fellow Shareholders,
In FY16 we commenced a process to review our strategy, our structure, our culture and our operations. To set a
clear direction for the next 3-5 years and to ensure we capitalise on market direction towards cloud, data
analytics, mobility and artificial intelligence, it was the right time to revisit our corporate charter.
We have made a lot of progress in embedding our new purpose, mission and vision into our customer and
consultant communications and training. Our roadmap and business strategy was refreshed in line with our new
charter.
The CPT vision statement encompasses the changes in direction we are making to align our strategy with how
digital transformation is dominating technology services demand in the market.
Our vision at CPT is to be an innovative digital and IT performance
solution leader, delivering consistent growth in revenues, dividends,
and share price, derived from 50 global enterprise clients, scalable
new revenue streams and partner alliances that capitalise on
opportunities from the shift to cloud, mobile and data driven
investments.
During the year we continued to implement changes to stabilise and reinvigorate the business and drive
performance. This included taking decisive action to reduce unnecessary expenses, leveraging cloud based
software to run our business faster and recruiting talent to drive our new business lines.
However, despite the many positive changes and progress made, CPT made a loss after income tax of $1.5million
in FY17 compared to a net loss after tax of $3.9m in FY16.
After returning to profitability for the 6 month period to 30 June 2016 with an EBITDA before one-off items* of
$0.34m, we were unable to sustain the improvement in performance throughout FY17 despite early expectations.
The EBITDA loss for the 2017 financial year is $1.2m which is marginally better than the EBITDA at 30 June 2016
of a loss of $1.3m and the EBITDA at 30 June 2015 of a loss of $1.49m.
*One-off items are: impairment of goodwill, payroll tax refund and write down and provision for WIP recognised as revenue
in prior periods.
Our Australian business continued to perform well with steady growth in revenue and margins but it was not
sufficient to make up for the disappointing results in North America and Europe. The second half of the year was
particularly disappointing with an EBITDA loss of $1.1m. The loss in the second half was a result of a significant
decline in revenue in North America and Europe in the last quarter.
We are under no illusion that three years of losses in a row is in any way acceptable to Shareholders and further
action has been taken to reduce costs and drive revenue growth across all regions:
the European region has been merged with the North American region. The New York office has taken
over responsibility for the European operations and is leading and managing the European sales team and
providing administration support;
merging Europe and North America has resulted in a further reduction in fixed costs. Leases in the UK
have either not been renewed or terminated and head count has been reduced. There were no material
costs to the business in implementing these changes. The fixed costs of the European region are now just
the costs of maintaining the corporate structure and compliance requirements in each country CPT has
a subsidiary;
variable costs in Europe are contractor time and travel costs. Variable costs cannot be incurred without
pre-approval;
these changes in Europe, as well as other actions taken in Europe during the last two years, are expected
to save $480k in operating costs in FY18 when compared to FY17, a 51% reduction; and
we have invested in business development in the regions in which we see the best opportunities for
growth in the short to medium term, Australia and North America. We have appointed a new sales
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Managing Director’s Review
manager in Australia to focus on driving key partnerships and the Sydney market and the COO has
transitioned to a sales focussed role in the Southern region. The COO role and responsibilities have been
allocated across existing employees. We have also appointed a sales manager in New York to drive growth
in new accounts in North America.
Highlights of the year
Despite the result, there were positive outcomes, events and developments during the year that are worth
highlighting:
revenue in the Australian region grew 4.3% with major contracts in the government, semi-government
and banking sectors renewing and 15 new clients across government, insurance, education and health
being won;
CPT entered into a partnership with Wipro Limited (Wipro), a leading global information technology
consulting and business process services company, to deliver IT testing services to one of Australia’s
largest financial institutions. The partnership has seen CPT increase the number of consultants at the
client;
The relationship with Wipro has extended to the Northern Hemisphere where CPT completed a mainframe
tuning and cost reduction project for Wipro;
the pipeline in North America is strong but the region suffered from delays in closing new contracts in
the second half of the financial year. However, the hard work and dedication of the North American
team has resulted in CPT closing a US$2m risk/reward contract in August 2017 with one of the world’s
largest financial institutions. The project will be delivered in FY18;
a large risk/reward contract was successfully completed in North America and the client is now providing
references to potential CPT clients. This is a testament to the expertise of our mainframe consultants
and the quality service they consistently deliver;
the signing of 3 further alliance agreements with vendors of world class software tools and services
squarely aimed at enhancing our digital solution capabilities; and
the digital consulting practice was established.
Operating and Financial Review
CPT made a loss after tax of $1.5m for the full financial year. The loss was driven by the decline in revenue in
Europe of 33.3% and North America of 18.5% from FY16 (see Table 1). While costs were reduced across the regions
this was not sufficient to counter the reduction in revenue, particularly in the last quarter of the financial year
when the reduction in revenue was most pronounced.
Revenue in North America was impacted by changes to key management personnel at our largest client in North
America. Revenue didn’t start to rebound at the client until June 2017.
Write downs in unrecoverable WIP of $0.3m in the second half of the financial year added to the impact of lower
revenue.
Cost cutting in Europe, North America and head office and growth in Australia were not sufficient to cover the
losses in Europe and North America in the last quarter.
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities – Annual Report
Managing Director’s Review
Table 1
$mil AUD
25
20
15
10
5
0
Europe
Revenue by Region - Year on Year
FY15
FY16
FY17
Australia
Europe
North America
The signs of improvement in the performance of the European region in late FY16 were not sustained beyond the
first quarter in FY17. There was no single factor that caused the halt in the improvement in performance but
the uncertainty in Europe that arose after Brexit and the concerns about the strength and stability of the Italian
banking sector made rebuilding the region more difficult, particularly in Italy where we had been successful in
winning work in the banking sector.
Table 2 shows the reliance Europe has on banking and the challenges experienced in FY15, FY16 and FY17.
Revenue by Sector - Europe
FY15
FY16
FY17
Table 2
$mil AUD
4
3.5
3
2.5
2
1.5
1
0.5
0
Banking & Finance
Europe
IT&C
Other
Insurance
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities – Annual Report
Managing Director’s Review
North America
The performance of the North American region in the first three quarters of the year was solid with some
exceptional results on individual projects. However, on completion of a risk reward project in March, monthly
revenue declined through the fourth quarter as new projects were not ready to come online.
Overall, revenue decreased by 18.5% in North America. Revenue in Canada declined 45.8% after a change in
senior management at our biggest client in North America. The revenue didn’t start to return to historic levels
until June 2017.
Revenue in the USA grew 10.8% on the back of a successful risk reward contract in the healthcare sector.
However, the growth in revenue and strong margins in USA were not sufficient to cover the reduction in revenue
in Canada.
Three of our top ten clients by revenue are based in North America.
Table 4 shows that revenue is concentrated in three sectors but the mix of revenue varies significantly year on
year.
Revenue by Sector - North America
FY15
FY16
FY17
Table 3
$mil AUD
7
6
5
4
3
2
1
0
Banking &
Finance
IT&C
Government &
Defence
Insurance
Healthcare
Other
Australia
North America
Revenue in Australia grew by 4.3% in the financial year. We grew revenue across our three major industry sectors
of banking & finance, government & defence and IT&C. The growth in the Australian business is profitable and
margins have been maintained despite the general pressure on margins in the industry. Revenue has grown by
24% in two years. Seven of our top 10 clients by revenue are based in Australia.
The Wipro partnership commenced during the financial year and has seen CPT increase the number of consultants
at the client. The five year term of this agreement provides us with some certainty and stability and allows us
to focus on growing the account.
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities – Annual Report
Managing Director’s Review
During the year we established digital consulting as a distinct practice, recruited a consultant to lead the practice
and increased the number of partnerships and alliances with world-class digital solutions providers to six. The
delivery of a robotic process automation project at a financial institution was a milestone for the company and
demonstrated the strength in combining CPT’s consulting services and skills with industry leading partners.
The addition of a new sales manager and the changes to the structure of the sales team are showing early positive
signs and the pipeline in Australia remains strong into FY18.
Revenue by Sector - Australia
FY15
FY16
FY17
Table 4
$mil AUD
12
10
8
6
4
2
0
Banking &
Finance
Government &
Defence
IT&C
Other
Insurance
Healthcare
Financial Results
Financial Performance
CPT Global’s revenue for the year ended 30 June 2017 was $27.2m, a 5.6% decrease on the previous year’s
revenue of $28.8m. CPT Global’s net loss after tax for the year ended 30 June 2017 was $1.5m, an improvement
of $2.4m on the 30 June 2016 result.
The improvement in performance is a result of:
profitable growth in the Australian region;
a significant reduction in the operating losses in Europe as costs were cut and margins improved on FY16
despite the reduction in revenue. Margins in FY16 were unusually low due to the early close out of a
risk/reward contract with an Italian bank which resulted in a breakeven result for CPT; and
$0.6m of goodwill was impaired in FY16.
Basic earnings per share amounted to -3.93 cents per share (diluted earnings -3.93 cents per share).
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities – Annual Report
Managing Director’s Review
Financial Position
CPT Global’s balance sheet reflected net tangible assets of $0.3m as at 30 June 2017 ($1.5m at 30 June 2016).
Unbilled revenue (WIP) has decreased by $1.1m. At 30 June 2016 $0.8m of WIP related to risk/reward
contracts. At 30 June 2017, the WIP relating to risk/reward contracts was $0.1m. The balance of the
decline is due to a decrease in the number of fixed price and milestone contracts in Australia as billing
at a major client moved to monthly time and materials.
The $0.8m increase in trade and other receivables is due to the delay in payments from two clients as
agreements went through change processes ($1.6m paid in July). Without the delay in payment trade
and other receivables decreased in line with the reduction in revenue in the last quarter in North
America and Europe;
Trade and other payables decreased by $1.6m as amounts owed to contractors for May and June 2017
were lower in comparison to FY16 with the reduction in revenue in the last quarter in North America
and Canada and the cost base of the Company was lower at the end of FY17 than in FY16; and
Borrowings at year end relate to the debtor funding provided by Scottish Pacific against the debtors of
the Australian business. The balance owing was high at 30 June 2017 due to the $1.6m of debtors
outstanding due to a delay in payment, as mentioned above. Approximately $1.2m of the debtor funding
related to these debtors.
Cash Flow
CPT had $1.7m in cash at 30 June 2017 ($3.0m 30 June 2016), a cash outflow of $1.7m in the financial year. We
also had access to $0.9m in additional funding in our debtor funding facility.
Our strong cash management processes, Australian debtor funding facility, early payment programs with clients
in North America, delays in finalising Canadian tax obligations with the Canadian tax authorities and the increase
in revenue in Australia all contributed to CPT being able to manage the cash flow challenges in FY17.
The decrease in cash at 30 June 2017 is due to the $1.5m after tax loss.
Capital Management
No dividends will be declared for FY17.
Our debtor funding facility has a limit of $5m of which $1.6m was outstanding at 30 June 2017 and $0.9m was
available to draw on.
During FY18 our focus will be on growing cash flow from operations to minimise the use of debtor facilities and
the associated costs so that we can rebuild our cash position and start paying dividends again.
Our People
Our employees and consultants have shown great loyalty and dedication to CPT and have adapted to the changes
being implemented whilst continuing to deliver the high levels of service to clients and the business we are
renowned for. To CPT’s people I thank you on behalf of the Board of directors and the executive team for the
professional way in which you have continued to deliver the high quality of service to our clients and to the
business during a difficult couple of years for CPT and a period of transition and transformation to becoming a
digital services leader.
Strategy
Our clients are operating in an environment in which innovation, disruption, digital transformation, speed to
market, quality assurance and cost control are driving strategic and operational decision making. Our digital
practice will become a core component of our services and drive new products, services and strategic alliances.
To enhance our offering to our clients we are leveraging our existing partnerships and investigating opportunities
to partner with world class software vendors and service providers.
The CEO Australia and Asia will continue running the Australian and Asian regions and drive the growth and
expansion of the digital practice. I will be focussed on the international business, as I was during FY17. My focus
is on closing business in North America and Europe and working with our partners to provide CPT with enhanced
sales capacity, enhanced reach as well as using our people to open doors with new clients and expand our
presence in existing clients. While mainframe has been the backbone of the international business, we will
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities – Annual Report
Managing Director’s Review
continue expanding our services into midrange, testing, digital and cloud.
The Outlook
We are optimistic that the momentum we have built in Australia will continue into FY18 and projects in the North
American business that have been in negotiation for many months will start to close in the first quarter, however,
we are also cognisant of the challenges that still lie ahead.
The Australian business is expected to continue to grow steadily, particularly within the banking and insurance
sectors and federal government departments and semi-government organisations. Our revenue and consultant
pipelines remain strong. We expect margin pressure to continue in some industry sectors with increases in volume
compensating for the lower margins. Contract renewals are due at two major clients and while we are confidant
of extending the contracts, there is always a risk that the scope of the contract could change or the contract
could not be extended.
We expect revenue in the North American business to grow in the first half of FY18 as revenue contracted for
the first quarter at our largest client in Canada has increased and a risk/reward contract worth up to US$2m was
signed in August and is due to commence in mid-September. Our priority is to continue to close risk/reward
contracts in the short term with two opportunities in the final stages of negotiation, convert risk/reward clients
to long term recurrent revenue and grow our other services at existing and new clients.
In Asia we will continue to use our partner model in the short term to identify and convert opportunities. The
pipeline in Asia is encouraging and projects will continue to be undertaken on an opportunistic basis in the short
term.
The outlook in the European region is uncertain. To minimise our exposure the European region has been merged
into the North American region to form a Northern Hemisphere region, our presence scaled back and fixed costs
have been cut to the minimum required to maintain the corporate structure and comply with relevant laws and
regulation. The cost cutting and structural changes will allow us to adjust our strategy quickly as the need arises.
Gerry Tuddenham
Managing Director
September 28, 2017
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities – Annual Report
Contents
Corporate Governance Statement
Directors’ Report
Auditors Independence Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Audit Report
Corporate Information
ASX Additional
Information
10
19
31
32
33
34
35
36
72
73
77
78
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities – Annual Report
Corporate Governance Statement
The Board of Directors of CPT Global is responsible for the corporate governance of the group. The Board
guides and monitors the business and affairs of CPT Global on behalf of the shareholders by whom they are
elected and to whom they are accountable.
The format of the Corporate Governance Statement is based on the Australian Stock Exchange Corporate
Governance Council's (the Council's) "Corporate Governance Principals and Recommendations" (the
Recommendations). In accordance with the Council's recommendations, the Corporate Governance Statement
must contain certain specific information and must disclose the extent to which the company has followed the
guidelines during the period. Where a recommendation has not been followed, that fact is disclosed, together
with the reasons for the departure.
CPT Global’s Corporate Governance Statement is structured with reference to the Corporate Governance
Council's principles and recommendations.
A summary of CPT Global’s corporate governance policies and practices can be
www.cptglobal.com/investor-centre/.
found at
Principle 1: Lay solid foundations for management and oversight
Functions reserved for the Board
The Board is responsible for governing the Company, providing leadership and monitoring CPT Global on behalf
of its shareholders. In addition, the Board is responsible, along with management, for identifying areas of
significant business risk and ensuring arrangements are in place to adequately manage those risks.
The Board has adopted a Charter that sets out, among other things, its specific powers and responsibilities and
the matters delegated to the CEO and management and those reserved to the Board. Information regarding the
Charter can be found at www.cptglobal.com/wp-content/uploads/2017/07/Board-Charter.pdf.
The senior executives of CPT Global are responsible for matters which are not specifically reserved for the
Board. Senior executives manage the Company in accordance with the direction and strategy adopted by the
Board.
Appointment and election of directors
Prior to the appointment of a new Director, CPT Global undertakes appropriate checks and internal
investigations on the suitability of nominated directors.
CPT Global’s Constitution requires that an election of directors takes place each year. In addition, directors
appointed during the year to fill a casual vacancy or as an addition to the existing directors during the year,
must retire from office at the next annual general meeting following their appointment but are eligible for re-
election by shareholders at that time.
The Notice of Meeting for an Annual General Meeting sets out the background, experience and skills of each
director seeking election or re-election to the Board along with a recommendation of the Board in relation to
the election or re-election. Security holders are provided with all material information in CPT Global’s
possession relevant to a decision on whether or not to elect or re-elect a director.
Director agreements
CPT Global has written agreements with each director and senior executive setting out the terms of their
appointment, including commencement and end date, terms of appointment, remuneration and obligations.
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Corporate Governance Statement
Company Secretary
The Company Secretary is charged with facilitating CPT Global’s corporate governance processes and so holds
primary responsibility for ensuring that the Board processes and procedures run efficiently and effectively. The
Company Secretary is accountable to the Board, through the Chairman, on all governance matters and reports
directly to the Chairman as the representative of the Board. The Company Secretary is appointed and dismissed
by the Board and all Directors have a right of access to the Company Secretary.
Diversity policy
CPT Global has a diversity policy which provides equal opportunity to all appropriately skilled individuals with
respect to their recruitment, remuneration, promotion, training and other employment practices. Diversity
includes, but is not limited to, gender, age, ethnicity and cultural background. CPT Global is committed to
diversity and recognises the benefits arising from employee and board diversity and the importance of
benefiting from all available talent.
The diversity policy is currently under review by the Board. During the 2017 financial year the Board did not
set measurable objectives to progress our diversity goals, however, gender balance is reported to the Board on
a monthly basis.
Our progress with gender balance can be measured below:
Women on the Board
Women in senior management roles
Women employees in the company
2017
No.
0
2
26
%
0
22
17
2016
No.
0
2
24
%
0
18
16
On 29 May 2017, CPT Global lodged its annual public report with the Workplace Gender Equality Agency pursuant
to the requirements of the Workplace Gender Equality Act 2012 (the Act). The Act is designed to put a focus
on promoting and improving gender equality and outcomes for both women and men in the workplace. All non-
public sector employers with more than 100 employees are required to report annually under the Act.
The Act requires companies to provide access to the report to employees and shareholders via the usual means
of communication with them.
A copy of the report is available on the Company’s website at www.cptglobal.com/investor-centre. Note that
this report reflects the employee numbers at a particular reporting date.
Evaluating the performance of the Board, its Committees, its directors and Senior Executives
The Board’s Charter states that the Board will conduct annual reviews of both individual Board members,
performance of the Board as a whole and the performance of Board Committees.
An annual performance evaluation of the Board and all Board members is conducted at the completion of each
financial year.
The Board developed a questionnaire for all Board members to provide feedback on the role, composition,
procedures and practices of the Board and its Committees. The results from the questionnaire are collated by
the Company Secretary and discussed by the Board.
The initial results of the evaluation of the performance of the Board were presented to the Board on 25
September 2017.
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Corporate Governance Statement
CPT Global undertakes an annual performance evaluation of its senior executives. This encompasses a review
of each senior executives’ achievement of their performance objectives and the establishment of future
objectives. The determination of appropriate remuneration for each executive follows the performance
evaluation.
The Remuneration Report includes more details on CPT Global’s remuneration practices. An annual
performance evaluation of the senior executive team was conducted following the completion of the financial
year.
Principle 2: Structure the Board to add value
Remuneration & Nomination Committee
The Board has a Remuneration and Nomination Committee which meets to ensure that the Board continues to
operate within the established guidelines, including when necessary, selecting candidates for the position of
director. The Committee is also responsible for ensuring that adequate resourcing levels are maintained, setting
and monitoring employment conditions, reviewing the performance of executive directors and senior
management and setting the scale of their remuneration. The Remuneration and Nomination Committee
comprises all of the non-executive directors. The Remuneration and Nomination Committee comprised the
following members throughout the year:
Alan Baxter (Chairman)
Fred Grimwade
The Board policy is that the Committee will only comprise independent non-executive directors. Due to the
number of independent directors on the Board, CPT Global has not complied with corporate governance best
practice, which recommends the Remuneration and Nomination Committee to have a minimum of three
members.
For details of directors' attendance at meetings of the Remuneration & Nomination Committee, refer to page
29 of the Directors' Report.
A summary of the Committee’s role and responsibilities can be found as an appendix to the Board Charter at
www.cptglobal.com/wp-content/uploads/2017/07/Board-Charter.pdf.
Board Skills Matrix
The Remuneration & Nomination Committee maintain, on behalf of the Board, a capabilities matrix. The Board
composition is reviewed at least annually against the matrix and the effect of a proposed new director on Board
composition and balance is also assessed against the matrix. Succession planning in order for the Board to
maintain appropriate experience, expertise and diversity is an important responsibility of the Remuneration &
Nomination Committee. While important, the capabilities matrix is only part of the process for assessing
proposed directors.
The Board has adopted the capabilities matrix, set out below, which sets out the mix of skills and diversity that
the Board is looking to achieve in its membership. The skills matrix highlights the key skills and experience of
the Board and the extent to which those skills are currently represented on the Board.
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Corporate Governance Statement
Skills/Experience
Total Number of Directors
Public Company Governance
Experience with listed and other organisations subject to robust governance frameworks with
an ability to assess the effectiveness of relevant governance processes
Executive Experience
Experience in senior positions at executive levels
Strategy & Planning
Ability to develop and implement successful strategy and deliver agreed strategic planning
goals
Accounting, Finance & Capital & Debt Management
Senior executive experience in financial accounting and reporting, capital management,
taxation, internal controls and corporate financing arrangements
Risk Management
Experience in the oversight and management of material business risk including membership
of risk committees
IT Industry Experience
Senior executive experience in the IT sector
Consulting & Technology Services Experience
Senior executive experience in consulting services, particularly in the IT sector
Mergers and acquisitions
Senior executive experience in successfully undertaking mergers & acquisitions
Marketing & Sales
Senior executive experience in selling IT consulting services and marketing
International market experience
Senior executive experience in managing operations and subsidiaries in multiple countries
Occupational Health & Safety
Experience in relation to workplace health and safety
Environment and Sustainability
Experience in relation to environmental and social responsibility and community
Legal & Regulatory
Experience in legal and regulatory matters
Human Resources
Experience in relation to remuneration and incentive practices, succession planning and
director appointment processes
4
3
4
4
1
3
3
3
4
2
4
1
1
2
2
Board skills and experience
The skills, experience and expertise relevant to the position of director held by each director in office at the
date of the annual report is included in the directors' report on pages 19 and 20.
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities – Annual Report
Corporate Governance Statement
Director independence
The following directors of CPT Global are considered to be independent:
Name
Fred Grimwade
Alan Baxter
Position
Non-executive Chairman
Non-executive Director
An independent director is a director who is not a member of management (a non-executive director) and who:
holds less than five percent of the voting shares of CPT Global and is not an officer of, or otherwise
associated, directly or indirectly, with a shareholder of more than five percent of the voting shares of CPT
Global;
within the past three years has not been employed in an executive capacity by CPT Global or another group
member, or been a director after ceasing to hold any such employment;
within the past three years has not been a principal or employee of a material professional adviser or a
material consultant to CPT Global or another group member;
is not a material supplier or customer of CPT Global or another group member, or an officer of or otherwise
associated, directly or indirectly, with a material supplier or customer;
has no material contractual relationship with CPT Global or another group member other than as a director
of CPT Global;
is free from any interest and any business or other relationship which could, or could reasonably be perceived
to, materially interfere with the director’s ability to act in the best interests of CPT Global; and
has not had their independence compromised by the length of their tenure preventing them from being able
to bring an independent judgement to bear on issues before the Board and to act in the best interests of
CPT Global and its security holders.
Materiality is considered from both the company and individual director perspective. The determination of
materiality requires consideration of both quantitative and qualitative elements. An item is presumed to be
quantitatively immaterial if it is equal or less than 5% of the appropriate base amount. It is presumed to be
material (unless there is qualitative evidence to the contrary) if it is equal to or greater than 10% of the
appropriate base amount. Qualitative factors considered include whether a relationship is strategically
important, the competitive landscape, the nature of the relationship and the contractual or other arrangements
governing it and other factors which point to the actual ability of the director in question to shape the direction
of the company's strategy.
There are procedures in place, agreed by the Board, to enable directors, in furtherance of their duties, to seek
independent professional advice at the company's expense.
The term in office held by each director in office at the date of this report is as follows:
Name
Fred Grimwade
Alan Baxter
Gerry Tuddenham
David Lynch
Term in office
15 years
7 years
19 years
11 months
The Board considers Fred Grimwade to be independent even though his tenure on the Board exceeds 10 years
as the Board expects the Chairman to have a deep understanding of CPT Global and its business and with an
interest in 2% of the shares of CPT Global, Mr Grimwade’s interests are aligned with the interests of CPTs
shareholders. After the appointment of David Lynch, there is no longer a majority of independent directors on
the Board. However, the independent chairman has a casting vote in the event of a deadlocked vote on a Board
resolution.
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Corporate Governance Statement
Director induction and professional development
CPT Global has a program for inducting new directors and provides appropriate professional development
opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as
directors effectively. For more information on Director induction and education, see the Board Charter at
www.cptglobal.com/wp-content/uploads/2017/07/Board-Charter.pdf.
Principle 3: Act ethically and responsibly
Code of conduct
The Board is committed to its core governance values of integrity, respect, trust and openness among and
between board members, management, employees, clients and suppliers. These values are enshrined in the
Board’s Code of Conduct which requires all directors, management and employees to at all times:
-
-
-
-
-
-
act honestly and in good faith;
exercise due care and diligence in fulfilling the functions of office;
avoid conflicts and make full disclosure of any possible conflict of interest;
comply with both the letter and spirit of the law;
encourage the reporting and investigation of unlawful and unethical behaviour; and
comply with the share trading policy outlined in the Code of conduct.
Directors are obliged to be independent in judgement and ensure all reasonable steps are taken to ensure that
the Board’s core governance values are not compromised in any decisions the Board makes.
CPT Global’s policy regarding directors and employees trading in its securities is set by the Finance and Audit
Committee. The policy restricts directors and employees from acting on material information until it has been
released to the market and adequate time has been given for this to be reflected in the securities price.
Information relating to the Code of Conduct and Trading Policy can be found at www.cptglobal.com/investor-
centre.
Principle 4: Safeguard integrity in corporate reporting
Finance and Audit Committee
The Board has a Finance and Audit Committee which operates under a charter approved by the Board. It is the
Board's responsibility to ensure that an effective internal control framework exists within the entity and ensure
compliance with ASX Listing Rule disclosure requirements. This includes internal controls to deal with both
the effectiveness and efficiency of significant business processes, the safeguarding of assets, the maintenance
of proper accounting records, external reporting and the reliability of financial information as well as
non-financial considerations such as the benchmarking of operational key performance indicators. The Board
has delegated the responsibility for the establishment and maintenance of a framework of internal control and
ethical standards for the management of the consolidated entity to the Finance and Audit Committee.
The Committee also provides the Board with additional assurance regarding the reliability of financial
information for inclusion in the financial reports. The Corporate Governance Principles recommend that all
Finance and Audit Committee members are non-executive. CPT Global only has two non-executive directors
therefore the managing director has also been appointed to the Finance and Audit Committee.
The members of the Finance and Audit Committee during the year were:
Fred Grimwade (Chairman)
Alan Baxter
Gerry Tuddenham
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Corporate Governance Statement
Due to the size of the company and the Board of directors, CPT Global has not complied with corporate
governance best practice, which recommends the Finance and Audit Committee have a different Chairman than
the Board.
For details of directors' experience and qualifications refer to pages 19 and 20 of the Directors’ Report. For
details of attendance at meetings of the Finance and Audit Committee, refer to page 29 of the Directors' Report.
A copy of the Committee’s Charter is included as an appendix to the Board Charter and can be found at
www.cptglobal.com/investor-centre.
CEO & CFO declarations
For the annual and half-year results, the CEO and CFO have provided a written declaration to the Board stating
that, in all material respects, the Company’s financial report gives a true and fair view of CPT Global’s financial
position and operational results and are in accordance with relevant accounting standards and the financial
records have been properly maintained in accordance with the Corporations Act 2001.
The declaration by the CEO and CFO states that it is founded on a sound system of risk management and internal
compliance and control system and that the risk management and internal compliance and control systems to,
the extent they relate to financial reporting, are operating effectively and efficiently in all material respects.
Auditors attendance at the AGM
The external auditor attends the Annual General Meeting to answer any questions concerning the conduct of
the audit, the preparation and content of the Auditor’s report, accounting policies adopted by the group and
the independence of the auditor in relation to the conduct of the audit.
Principle 5: Make timely and balanced disclosure
Continuous disclosure policy
CPT Global is subject to continuous disclosure obligations under the ASX Listing Rules and the Corporations Act
2001. Subject to limited exceptions, CPT Global must immediately notify the market, through the ASX, of any
information that a reasonable person would expect to have a material effect on the price or value of CPT
Global’s securities. CPT Global has a Continuous Disclosure Policy, a summary of which can be found at
www.cptglobal.com/investor-centre.
Principle 6: Respect the rights of security holders
Online information for security holders
CPT Global’s corporate website has a dedicated Investors section which provides information on the Company,
corporate governance and financial reports as well as providing access for security holders to contact the
Company and Company Secretary by email.
The Corporate Governance tab sets out CPT Global’s charters, policies, codes and ethical standards.
Promoting effective communication with security holders
The Board is committed to giving security holders and potential investors balanced and understandable
information about the Company and corporate proposals. The Company communicates with security holders via
the financial media for significant corporate events and meetings with security holders and potential investors
are held on request. The Company responds to questions and enquiries made by security holders in a timely
and transparent manner.
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Corporate Governance Statement
CPT Global has a Shareholder Communications Policy which can be found at www.cptglobal.com/investor-
centre. The policy explains how information will be communicated to security holders and lists the following
channels:
1. releases to the market via the ASX;
2. through the Company’s web site;
3. directly to shareholders; and
4. at general meetings of the Company.
CPT Global’s Shareholder Communications Policy works in tandem with Continuous Disclosure Policy
Security holders are entitled to vote on significant matters impacting on the business. The Board actively
encourages security holders to attend and participate in the Annual General Meeting of CPT Global, to lodge
inquiries and to be responded by the Board and or the CEO and can appoint proxies. The date of the AGM is
published well in advance in the financial report and in the Notice of Meeting sent to security holders.
At the AGM, the Chairman encourages security holders to ask questions on each item of business and, after the
formal business of the meeting, encourages security holders to ask general questions.
Communicating with security holders
Shareholders have the option to receive communications from and send communications to the Company and
its security registry electronically.
Furthermore, the Company website has a “Contact” section which allows investors and others to communicate
with and ask questions of the Company.
Principle 7: Recognise and manage risk
Policy for oversight and management of business risk
CPT Global believes that, given the size of the Board, it is crucial for all Board members to be a part of the risk
management process, and as such the Board has not established a separate risk management committee.
Instead sub-committees are convened as appropriate in response to issues and risks identified by the Board and
the sub-committee further examines the issue and reports back to the Board.
Design and implementation of risk management and internal control systems
CPT Global takes a proactive approach to risk management. The Board is responsible for ensuring that risks,
and opportunities, are identified on a timely basis and that the group's objectives and activities are aligned
with the risks and opportunities identified by the Board.
The main risks that could negatively impact on the performance of the Group’s business include:
the global economic environment;
the availability of professional IT resources;
the value of the Australian dollar;
Government policy, budget and spending levels.
The Finance and Audit Committee is responsible for establishing and maintain a framework of internal control.
The Board and the Audit Committee have a number of mechanisms in place to ensure that management's
objectives and activities are aligned with the risks identified by the Board. These include:
Board approval of a strategic plan, which encompasses the entity's vision, mission and strategy statements,
designed to meet stakeholders’ needs and manage business risk.
Implementation of Board approved operating plans and budgets and Board monitoring of progress against
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Corporate Governance Statement
these budgets, including the establishment and monitoring of Key Performance Indicators (KPI’s) of both a
financial and non-financial nature.
The establishment of committees to report on specific business risks, including for example, such matters
as the financial risks and concerns and occupational health and safety.
Due to the size of the company, CPT Global does not have an internal audit function.
In addition to their regular reporting on business risks, risk management and internal control systems, the CEO
and Chief Financial Officer also provide the Board with assurance that the directors declaration provided with
the annual report is founded on a sound system of risk management and internal control and that this system
is operating effectively in all material respects in relation to the financial reporting risks. This assurance is
provided prior to the meeting at which the directors are due to authorise and sign the company’s financial
statements.
The Board undertook a review of CPT Global’s risk management framework during the reporting period and
undertakes such reviews on an annual basis.
CPT Global does not have any material exposure to environmental and social sustainability risks.
Principle 8: Remunerate fairly and responsibly
The Remuneration Report (on pages 23 to 29 of this report) sets out details of CPT Global’s policy and practices
for remunerating directors and executives.
Information on the Remuneration & Nomination Committee is included under Principle 2 of this Corporate
Governance Statement.
CPT Global does not have a policy on whether participants are permitted to enter into transactions which limit
the economic risk of participating in the performance rights scheme.
Due to the number of independent directors on the Board, CPT Global has not complied with corporate
governance best practice, which recommends the Remuneration & Nomination Committee to have a minimum
of three members.
Information relating to the Remuneration & Nomination Committee and CPT Global’s policy on share trading in
relation to shares or equity-based products can be found at www.cptglobal.com/investor-centre.
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Directors’ Report
Your directors submit their report for the year ended 30 June 2017.
DIRECTORS
The names and details of the company's directors in office during the financial year and until the date of this
report are as follows. Directors were in office for this entire period unless otherwise stated.
Names, qualifications, experience and special responsibilities
Fred S Grimwade
(Non-executive
Chairman)
Gerry Tuddenham
(Managing Director)
Fred chairs CPT’s Finance and Audit Committee and is a member of the
Remuneration Committee. He is a director of specialist corporate advisory and
investment firm Fawkner Capital, and is a non-executive director of Select
Harvests Limited, XRF Scientific Limited and Australian United Investment
Company Limited. He is also a director of the Foundation for Rural and Regional
Renewal.
Fred was a commercial lawyer at Mallesons Stephen Jaques, and later worked with
Goldman, Sachs & Co. in New York and Sydney. He also served as Company
Secretary and General Manager of Shareholder Relations at Western Mining
Corporation. In 1996, he joined Colonial Mutual as Group Company Secretary and
General Manager for Legal Affairs and subsequently became Head of Private
Capital for Colonial First State Investments, one of Australia's largest fund
managers. He was Managing Director of the Colonial Agricultural Company from
1998 to 2006 and a non-executive director of AWB Limited from 2008 to 2010. Fred
is a senior fellow and life member of the Financial Services Institute of Australasia
(Finsia) and was its joint president from 2005 to 2006. He is also a Fellow of the
Australian Institute of Company Directors and a Fellow of Chartered Secretaries
Australia.
Gerry is the founder of and a major shareholder in CPT. He has more than 40 years
experience in IT consulting and is a hands-on technologist with a reputation for
delivering practical solutions. Gerry is widely known as a technical specialist in
performance tuning, capacity planning and testing in IBM mainframes, with
additional expertise in expert systems, transaction processors, middleware and
database management systems. Gerry was the lead developer of the Expetune and
Expetest utilities, which automate a number of intricate tuning and testing
activities. He has worked internationally in a broad range of industries, with a
focus on financial services and telecommunications. Gerry is a member of the
Australian Institute of Company Directors. Gerry is a member of the Finance and
Audit Committee.
Alan Baxter
(Non-executive
Director)
Alan is a member of CPT’s Finance and Audit Committee and also chairs the
Remuneration Committee. He has a strong record of leading profitable growth
initiatives, possessing a unique blend of business development skills, commercial
acumen and technology expertise. Alan has some 40 years experience across all
facets of the IT services industry and has held a number of senior executive roles
at IBM and Unisys before his appointment as Chief Executive Officer of DMR
Consulting (Asia Pacific). He subsequently moved to London where he became
Chief Operating Officer of Fujitsu Consulting (formerly DMR Consulting). On his
return to Australia he was appointed to several non-executive director roles. Alan
is not a director of any other ASX listed entities.
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Directors’ Report
David Lynch
Appointed
17 October 2017
(Executive
and Acting CEO)
Director
David is the CEO Australia & Asia and acting CEO. David was widely regarded as
one of the leading CIOs in the Asia Pacific region before he joined CPT Global in
April 2016. Most recently, he led the digital transformation strategy and execution
for DBS Bank in Hong Kong and Mainland China and established Hong Kong’s first
dedicated fintech startup accelerator in partnership with technology giants
Amazon, Microsoft and Samsung. He is a passionate technologist, innovator and
digital thought leader.
David lived and worked in Singapore, Shanghai and Hong Kong for 13 years prior to
relocating to Australia and held CIO roles in General Motors, Standard Chartered
and DBS Bank. David is an advisory board member for Kasisto, a New York / Silicon
Valley artificial intelligence startup. He is also an angel investor and has supported
multiple university alliances and talent programs over the course of his career.
In 2010, David was the inaugural winner of the Australia China Alumni award for
corporate achievement. In 2015, he was the winner of the Customer Experience in
Financial Services (CXFS) award.
COMPANY SECRETARY
Grant Sincock
Grant was appointed as Chief Financial Officer and Company Secretary in June
2015. Grant brings 20 years of experience as a finance professional to CPT Global
Limited, having been a partner at ShineWing Australia (formerly Moore Stephens
Melbourne) where he held many senior executive positions, including: member of
the Executive Board, Head of Corporate Finance and Head of Audit and Assurance.
He is a member of Chartered Accountants Australia and New Zealand.
INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY AND RELATED BODIES CORPORATE
As at the date of this report, the interests of the directors in the shares and performance rights of CPT Global
Limited were:
Alan Baxter
Fred S Grimwade
Gerry Tuddenham
David Lynch
EARNINGS PER SHARE
Basic earnings per share
Diluted earnings per share
Ordinary
Shares
Performance
Rights
-
718,200
12,231,925
417,458
50,000
50,000
200,000
-
Cents
(3.93)
(3.93)
DIVIDENDS
No dividends have been recommended by directors or paid for the 2017 financial year.
CORPORATE INFORMATION
Nature of operations and principal activities
The principal activities of the economic entity during the financial year were the provision of specialist IT
consultancy services.
There have been no significant changes in the nature of those activities during the year.
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Employees
The consolidated entity employed 151 employees and contractors as at 30 June 2017 (2016: 150 employees and
contractors).
OPERATING AND FINANCIAL REVIEW
The loss after income tax was $1.5m in in FY17 compared to a net loss after tax of $3.9m in FY16.
After returning to profitability for the 6-month period to 30 June 2016 with an EBITDA before one-off items* of
$0.34m, we were unable to sustain the improvement in performance throughout FY17 despite early expectations.
The EBITDA loss for the 2017 financial year is $1.2m which is marginally better than the EBITDA at 30 June 2016
of a loss of $1.3m and the EBITDA at 30 June 2015 of a loss of $1.49m.
*One-off items are: impairment of goodwill, payroll tax refund and write down and provision for WIP recognised
as revenue in prior periods.
The second half of the year was disappointing with an EBITDA loss of $1.1m. The loss in the second half was a
result of a significant decline in revenue in North America and Europe, particularly in the last quarter. The growth
in the Australian business was not sufficient to offset the decline in revenue in Europe and North America.
Financial Performance
CPT Global’s revenue for the year ended 30 June 2017 was $27.2m, a 5.6% decrease on the previous year’s
revenue of $28.8m. CPT Global’s net loss after tax for the year ended 30 June 2017 was $1.5m, an improvement
of $2.4m on the 30 June 2016 result.
The improvement in performance was a result of the Australian region growing profitably and a significant
reduction in operating losses in Europe. Furthermore, $0.6m of goodwill was impaired in FY16.
Basic earnings per share amounted to -3.93 cents per share (diluted earnings -3.93 cents per share).
Financial Position
CPT Global’s balance sheet reflected net tangible assets of $0.3m as at 30 June 2017 ($1.5m at 30 June 2016).
The decline in net tangible assets is a direct result of the losses incurred during the year and is reflected in:
a decrease in unbilled revenue (WIP) of $1.1m as risk/reward contracts at 30 June 2017 were at or near
completion with WIP $0.1m to be invoiced. There was also a decrease in the number of fixed price and
milestone contracts in Australia as billing at a major client moved to monthly time and materials; and
a decrease in trade and other payables of $1.6m as amounts owed to contractors for May and June 2017
were lower in comparison to FY16 in line with the reduction in revenue in the last quarter in North America
and Canada.
Trade debtors did not decline in line with revenue as two clients delayed payments as agreements went through
change processes ($1.6m paid in July). Without this delay trade and other receivables decreased in line with the
reduction in revenue in the last quarter.
Borrowings at year end relate to the debtor funding facility used in the Australian business. The balance owing
was high at 30 June 2017 due to the delay in receiving payment, as mentioned above. Approximately $1.2m of
the debtor funding related to these debtors.
Cash Flow
CPT had $1.7m in cash at 30 June 2017 ($3.0m 30 June 2016), a cash outflow of $1.7m in the financial year. We
also had access to $0.9m in additional funding in our debtor funding facility.
Our strong cash management processes, Australian debtor funding facility, early payment programs with clients
in North America, delays in finalising Canadian tax obligations with the Canadian tax authorities and the increase
in revenue in Australia all contributed to CPT being able to manage the cash flow challenges in FY17.
The decrease in cash at 30 June 2017 is due to the $1.5m after tax loss.
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Capital Management
No dividends will be declared for FY17.
Our debtor funding facility has a limit of $5m of which $1.6m was outstanding at 30 June 2017 and $0.9m was
available to draw on.
During FY18 our focus will be on growing cash flow from operations to minimise the use of debtor facilities and
the associated costs so that we can rebuild our cash position and start paying dividends again.
For additional discussion of the financial results for the year ended 30 June 2017 please refer to the Chairman’s
Statement and Managing Director’s Review on pages 1 and 2 respectively.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
No significant changes in the state of affairs of the company occurred during the financial year.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
On 28th August 2017 CPT Global Limited announced its intention to extend the on-market share buy back for a
further twelve months until 28th August 2018. A maximum of 3,000,000 shares may be bought back during the
buy-back period.
Except for the above, no other matters or circumstances have arisen since the end of the financial year which
significantly affected or may significantly affect the operations of the economic entity, the results of those
operations, or the state of affairs of the economic entity in future financial years.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
Likely developments, future prospects and business strategies of the operations of the consolidated entity are
detailed in the Chairman’s Statement and Managing Director’s Review on Pages 1 and 2 respectively.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The company's operations are not regulated by any significant environmental regulation under a law of the
Commonwealth or of a State or Territory.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The company has paid premiums to insure the current directors and officers against liabilities for costs and
expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the
capacity of director and officer of the company, other than conduct involving a wilful breach of duty in relation
to the company. The total premium paid was $41,717
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Directors’ Report
REMUNERATION REPORT
The Remuneration Report for the year ended 30 June 2017 outlines the Director and executive remuneration
arrangements of CPT Global in accordance with the requirements of the Corporations Act 2001 and its
regulations. For the purposes of this Report, key management personnel (KMP) of CPT Global are defined as
those persons having authority and responsibility for planning, directing and controlling the major activities of
CPT Global, directly or indirectly, including any Director of the parent company.
Persons to who the report applies
The remuneration disclosures in this Report cover the following persons:
Key Management Person
Fred S Grimwade
Alan Baxter
Gerry Tuddenham
David Lynch
Kevin Akom
Grant Sincock
Luke Tuddenham
Alan Mackenzie
Position
Non-executive Chairman
Non-executive Director
Managing Director
Chief Executive Officer Australia and Asia
Chief Operating Officer
Company Secretary and Chief Financial Officer
Vice President North America
Chief Technology Officer (resigned 27 May 2016)
From 1 July 2017 Kevin Akom has taken on the role of General Manager – Strategic Client Relationships within
the Australian region. This new role and its responsibilities do not meet the definition of Key Management Person
and Kevin will not be included in the Key Management Person disclosures from 1 July 2017.
Remuneration policy
The Remuneration and Nomination Committee of the Board of Directors is responsible for determining and
reviewing compensation arrangements for the directors, the managing director and the executive team. The
Remuneration and Nomination Committee assesses the appropriateness of the nature and amount of
remuneration of such officers on a periodic basis by reference to relevant employment market conditions with
the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and
executive team. The outcomes of the remuneration structure are expected to comply with Executive Share
and Option Scheme Guidelines. The payment of bonuses, stock options and other incentive payments are
reviewed by the Remuneration and Nomination Committee annually as part of the review of executive
remuneration and a recommendation is put to the Board for approval. All bonuses, options and incentives must
be linked to pre-determined performance criteria. The Board can exercise its discretion in relation to approving
the incentives, bonuses and options and can recommend changes to the Committee's recommendations. Any
changes must be justified by reference to measurable performance criteria. Details of such incentives awarded
during the year are detailed below. Further details on the remuneration of directors and executives are
provided in Note 27 to the financial statements.
To assist in achieving these objectives, the Remuneration and Nomination Committee links the nature and
amount of executive directors' and officers' remuneration to the company's financial and operational
performance and shareholders’ value. The committee acknowledges that the creation of shareholder value has
recently been inhibited by the global financial crisis and the tightening market conditions experienced within
the IT industry.
Performance-based remuneration
Executives have short-term ‘at risk’ cash bonuses, the payment of which depends on the executive meeting
their KPIs. Additional bonuses for exceptional performance in relation to the pre-agreed KPIs may be paid up
to a maximum of 3 times the target bonus. . The KPIs are set annually after consultation with the directors
and executives. The measures are specifically tailored to the areas where each executive has a level of control.
The KPIs target areas the Board believes hold the greatest potential for expansion and profit, covering financial
and non-financial goals, for both the short and long-term. They can include financial, people, client, strategy
and risk measures.
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The directors are issued performance rights with vesting conditions tied to the share price of the company and
the revenue growth of the international business.
Company performance, shareholder wealth and director and executive remuneration
The remuneration policy has been tailored to increase goal congruence between shareholders, directors and
executives. There have been two methods applied in achieving this aim, the first being annual salary reviews
based on key performance indicators, and the second being the issue of shares and options to selected directors
and executives to encourage the alignment of personal and shareholder interests. While losses have been
incurred during the last 3 years and the share price has declined, there have been no increases in annual salary
during annual reviews for executives and no options have vested as key performance indicators and performance
hurdles have not been met.
The following table shows the net profit and dividends for the last five years for the listed entity, as well as
the share price at the end of the respective financial years. The analysis reflects the losses made in the last 3
years and is matched by a reduced share price and no dividends being paid. This performance has been
attributed to the difficult trading conditions in Europe and the continued investment in overseas opportunities
in which delays have been encountered in reaching contract finalisation and tightening margins across the
business. There have been no increases in the compensation arrangements for directors and key management
personnel during the 2015, 2016 and 2017 financial years and performance bonuses reflect the results of the
Company. The board believes the remuneration policy is effective and can be linked to current years result.
Net profit/(loss)
Share price at year end
Dividends paid
2013
$0.3m
$0.37
0.0c
2014
$2.2m
$0.67
4.5c
2015
($5.1m)
$0.52
0.0c
2016
($3.9m)
$0.26
0.0c
2017
($1.5m)
$0.16
0.0c
During the year, no shares were purchased as part of the share buyback. The share price during the year ranged
from a low of $0.11 to a high of $0.28.
Remuneration of Non-executive Directors
Non-executive Directors are entitled to a fixed fee per annum for acting as a Director of CPT Global. No
additional fees are paid for membership of an active committee.
Under CPT Global’s Constitution, Non-executive Director’s fees cannot exceed the aggregate cap approved by
shareholders by an ordinary resolution. The current cap is $200,000 and was adopted at the 2006 AGM. The
aggregate fees paid to Non-Executive directors in the 2017 financial year do not exceed the cap.
There has been no change to the fees paid to individual Non-executive Directors during or subsequent to the
2017 financial year.
Remuneration of Senior Executives
Both executive directors and the executives specified in this remuneration report, have their employment
conditions formalised in contracts of employment. With the exception of Alan Mackenzie, who was considered
a contractor, all executive directors and specified executives are permanent employees of CPT Global Limited.
The employment contracts are generally for a fixed term of 1 to 2 years and contain the following common
features:
an annual review of the Base Salary which is dependent upon CPT Global’s performance, the individual’s
performance and market changes. Any increase has to be approved by the Managing Director and the
Remuneration and Nomination Committee;
short term performance incentive payments quarterly, dependent upon CPT Global achieving its objectives
and the individual achieving their KPIs;
at CPT Global’s discretion, allowances and adjustments to Base Salary may be paid when an Executive is
required to travel on CPT Global business. Any adjustments must be agreed in advance, documented in
writing and signed by the Executive and the Company;
post-employment restraints covering non-solicitation of employees, contractors and clients and non-
competition;
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CPT Global may at its discretion elect to make payment in lieu of notice when the contract is terminated
by the employee or the Company;
a contract can be terminated immediately without notice by CPT Global for serious misconduct; and
any options not vested as at the date of termination will lapse.
Specific details of each Senior Executive’s contract of employment which applied at the end of the financial
year ending 30 June 2017 are summarised in the tables on the following pages.
Summary of Contracts of Employment Applicable at 30 June 2017
Current Position
Gerry Tuddenham
Managing Director
David Lynch
CEO Australia & Asia
Managing Director
(Acting)
Grant Sincock
Chief Financial Officer &
Company Secretary
Fixed
Remuneration
Base Salary
$365,923
$400,000
$265,000
Superannuation
$25,000
Non-monetary
benefits
Mobile telephone, car
park, road tolls, petrol
and salary sacrifice
arrangements for motor
vehicle and
superannuation.
$35,000
Mobile telephone, car
park and salary sacrifice
arrangements for motor
vehicle and
superannuation.
$25,000
Mobile telephone, car
park, road tolls and
salary sacrifice
arrangements for motor
vehicle and
superannuation.
Performance Based
Remuneration
Annual
target
bonus
Nil
$50,000
$30,000
Other benefits
Post-employment
benefits
Post-employment
restraint
Termination
Termination
benefits
Nil
Nil
Nil
Nil
Nil
Nil
6 months
6 months
6 months
4 weeks notice
4 weeks notice
4 weeks notice
Nil
Nil
Nil
25
For personal use only
CPT Global Limited ABN 16 083 090 895 and Controlled Entities – Annual Report
Directors’ Report
Summary of Contracts of Employment Applicable at 30 June 2017 (cont.)
Kevin Akom
General Manager -
Strategic Client
Relationships
Luke Tuddenham
Vice President North
America
Current Position
Fixed
Remuneration
Base Salary
$275,000
US$190,000
Superannuation
$25,000
Non-monetary
benefits
Mobile telephone, car
park, road tolls and
salary sacrifice
arrangements for motor
vehicle and
superannuation.
US$18,050
Mobile telephone, car
park, road tolls and
salary sacrifice
arrangements for motor
vehicle and
superannuation. Mr
Tuddenham is also
entitled to additional
expatriate benefits for
himself and his family.
Performance Based
Remuneration
Annual
target
bonus
$30,000
US$100,000
Other benefits
Nil
Post-employment
benefits
Nil
Nil
Nil
Post-employment
restraint
Termination
Termination
benefits
6 months
6 months
4 weeks notice
4 weeks notice
Nil
Nil
26
For personal use only
CPT Global Limited ABN 16 083 090 895 and Controlled Entities – Annual Report
Directors’ Report
Details of remuneration for the year ended 30 June 2017
Details of the nature and amount of each element of the remuneration of each director of the company and
executive officers of the company and the group receiving the highest remuneration for the financial year are
as follows:
Benefits and
payments
Short-Term
Post
Emp’t
Long-Term
Total
Perform
-ance
related
Salary
Bonus
Other
Super
$
$
$
$
Long
Service
Leave
$
Share
Based
$
$
$
Directors
Alan Baxter
2017
2016
Fred Grimwade
2017
2016
Gerry
Tuddenham
2017
2016
David Lynch
50,459
50,459
77,982
77,982
398,241
400,580
2017
409,532
Total
Remuneration
2017
2016
936,214
529,021
-
-
-
-
-
-
-
-
-
-
-
-
-
4,707
4,707
7,408
7,408
-
-
-
-
89
-
89
-
55,255
55,166
85,479
85,390
0.2%
0.0%
0.1%
0.0%
10,370
11,739
25,000
36,506
9,068
1,455
4,233
5,274
446,911
455,554
1.0%
1.2%
9,633
27,468
2,552
-
449,186
0.0%
20,003
11,739
64,583
48,721
11,620
1,455
4,411
5,274
1,036,831
596,210
0.4%
0.9%
Executive Officers
Alan Mackenzie
2016
Kevin Akom
2017
2016
Grant Sincock
2017
2016
David Lynch
2016
Luke Tuddenham
2017
2016
Total
Remuneration
298,724
-
81,499
-
-
275,229
285,640
-
10,000
9,064
8,461
24,771
26,147
120
20,783
264,854
264,840
-
20,000
9,885
49,345
26,882
25,159
3,469
231
100,592
12,500
52,133
6,923
82
283,934
291,634
26,853 319,176
332,695
84,813
27,065
25,906
4,241
15,146
2017
2016
824,017
1,241,429 127,313
26,853 338,125
524,132
78,718
84,135
7,830
36,242
-
-
-
-
-
-
-
-
-
-
380,223
-
309,184
351,030
305,090
359,575
0.0%
2.9%
0.0%
5.6%
172,230
7.3%
661,268
750,194
4.1%
11.3%
1,275,542
2,013,252
2.1%
6.3%
27
For personal use only
CPT Global Limited ABN 16 083 090 895 and Controlled Entities – Annual Report
Directors’ Report
Details of remuneration for the year ended 30 June 2017 (cont.)
Notes
1. The elements of remuneration have been determined on the basis of the cost to the group.
2. Other Benefits for Mr Luke Tuddenham include expatriate costs.
3. CPT Global is in dispute with a company associated with Mr Mackenzie over fees charged to CPT Global
for the services of Mr Mackenzie. CPT Global believes an amount of $174,390 (excluding VAT) is owed
to CPT Global. The amounts in the above table have not been adjusted for any potential settlement of
CPT Global’s claim as the timing and extent of any receipt by CPT Global is uncertain.
4. During FY17 Mr David Lynch was appointed to the Board of CPT Global Limited, therefore his FY17
remuneration is disclosed as a director and his FY16 remuneration is disclosed as an executive officer.
Performance income as a proportion of total remuneration
Executive directors and executives are paid performance related bonuses based on set monetary figures, rather
than proportions of salary since these payments are discretionary. This has led to the proportions of
remuneration related to performance varying between individuals.
Performance Rights granted as remuneration
Terms and Conditions for Each Grant
Vested
No.
Granted
No.
Grant Date
Gerry Tuddenham
Alan Baxter
Fred Grimwade
Total
-
-
-
-
200,000
50,000
50,000
300,000
29/11/16
29/11/16
29/11/16
Value per
Share at
Grant Date
$
$0.22
$0.22
$0.22
Exercise
Price
$
Last
Exercise
Date
$0.00
$0.00
$0.00
29/11/19
29/11/19
29/11/19
Further details on the service and performance criteria attached to these rights can be found in note 22.
Balance
at
beginning
of Period
Granted
as
Remune
-ration
Rights
Exer-
cised
Rights
Lapsed
/Cancell
ed
Balance
at End
of
Period
Exer-
cisable
at End
of
Period
Vested
and
Unexer-
cised at
End of
Period
Gerry Tuddenham
Alan Baxter
Fred Grimwade
Total
300,000
75,000
75,000
450,000
200,000
50,000
50,000
300,000
-
-
-
-
300,000
75,000
75,000
200,000
50,000
50,000
450,000
300,000
-
-
-
-
-
-
-
-
28
For personal use only
CPT Global Limited ABN 16 083 090 895 and Controlled Entities – Annual Report
Directors’ Report
Shareholdings of Key Management Personnel
Shares held by key management personnel directly, indirectly or beneficially including their related parties:
Shares held in CPT Global
Limited
Balance 1
July 2016
Ord
Granted as
Remuneration
Ord
On Exercise
of Options
Ord
Net Change
Other
Ord
Fred S Grimwade
Alan Baxter
Gerry Tuddenham
David Lynch
Specified Executives
Kevin Akom
Grant Sincock
Luke Tuddenham
Total
Shares held in CPT Global
Limited
Fred S Grimwade
Alan Baxter
Gerry Tuddenham
Specified Executives
Kevin Akom
David Lynch
Grant Sincock
Luke Tuddenham
Total
718,200
-
11,338,970
363,110
565,013
185,671
842,955
14,063,919
Balance 1
July 2015
Ord
718,200
-
11,038,971
565,013
-
-
292,955
12,615,139
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
On Exercise
of Options
Ord
Net Change
Other
Ord
Granted as
Remuneration
Ord
-
-
-
-
232,089
185,671
-
417,760
-
-
-
-
-
-
-
-
Balance 30
June 2017
Ord
718,200
-
11,388,970
417,458
-
-
-
54,348
-
-
-
565,013
185,671
842,955
54,348
14,118,268
Balance 30
June 2016
Ord
718,200
-
11,388,970
565,013
363,110
185,671
842,955
-
-
349,999
-
131,021
-
550,000
1,031,020
14,063,919
DIRECTORS' MEETINGS
The number of meetings of directors (including meetings of committees of directors) held during the year and
the number of meetings attended by each director were as follows:
Directors’ Meetings
Finance and Audit
Committee Meetings
Number
eligible to
attend
Number
attended
Number
eligible to
attend
Number
attended
Remuneration and
Nomination Committee
Meetings
Number
eligible to
attend
Number
attended
Alan Baxter
Fred S Grimwade
Gerry Tuddenham
David Lynch
10
10
10
7
10
10
10
6
2
2
2
-
1
1
-
-
1
1
-
-
2
2
2
-
29
For personal use only
CPT Global Limited ABN 16 083 090 895 and Controlled Entities – Annual Report
Directors’ Report
Committee membership
As at the date of this report, the company had a Finance and Audit Committee and a Remuneration and
Nomination Committee of the Board of Directors.
Members acting on the committees of the Board during the year were:
Finance and Audit
Fred Grimwade (Chair)
Alan Baxter
Gerry Tuddenham
Remuneration and Nomination
Alan Baxter (Chair)
Fred Grimwade
PROCEEDINGS ON BEHALF OF COMPANY
No person has applied for leave of Court to bring proceedings on behalf of the company or 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 any part of those proceedings. The company was not a party to any such proceedings during the year.
NON-AUDIT SERVICES
The Board of Directors, in accordance with advice from the Finance and Audit Committee, is satisfied that the
provision of non-audit services during the year is compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001. The directors are satisfied that the services disclosed below did
not compromise the external auditor’s independence for the following reasons:
all non-audit services are reviewed and approved by the Finance and Audit Committee prior to
commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and
the nature of the services provided do not compromise the general principles relating to auditor
independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the
Accounting Professional & Ethical Standards Board.
The following fees for non-audit services were paid/payable to ShineWing Melbourne during the year ended 30
June 2017:
Taxation compliance and advice services $27,415
AUDITOR’S INDEPENDENCE DECLARATION
The lead auditor’s independence declaration for the year ended 30 June 2017 has been received and can be
found on page 31 of the directors’ report.
ROUNDING
The amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (where
rounding is applicable) under the option available to the company under ASIC Corporations (Rounding in
Financial/Directors’ Reports) Instrument 2016/191. The company is an entity to which the Class Order applies.
Signed in accordance with a resolution of the directors.
Fred Grimwade
Chairman
Melbourne, 28 September 2017
30
For personal use only
Auditor’s Independence Declaration under Section 307C of the Corporations Act
2001 to the directors of CPT Global Limited & Controlled Entities
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2017 there have been:
(i)
No contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation
to the audit, and
(ii)
No contraventions of any applicable code of professional conduct in relation to the audit.
ShineWing Australia
Chartered Accountants
Hayley Underwood
Partner
Melbourne, 28 September 2017
ShineWing Australia ABN 39 533 589 331. Liability limited by a scheme approved under Professional Standards Legislation. ShineWing Australia is an independent member of ShineWing
International Limited – members in principal cities throughout the world.
For personal use only CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
YEAR ENDED 30 JUNE 2017
Notes
Restated
Revenue
Other income
Salaries and employee benefits expense
Consultants benefits expense
Depreciation and amortisation expenses
Insurance expense
Finance costs
Occupancy expenses
Other expenses
Foreign currency (losses) gains
Goodwill Impairment
LOSS BEFORE INCOME TAX
INCOME TAX EXPENSE
LOSS AFTER INCOME TAX
Other Comprehensive Income:
Items that have been reclassified to profit or loss:
Exchange differences on translating foreign controlled entities
Total Other Comprehensive Income for the year, net of tax
3
3
4
4
4
5
2017
$'000
27,159
70
(3,308)
(21,066)
(66)
(274)
(244)
(971)
(2,433)
(194)
-
2016
$'000
28,750
326
(3,178)
(22,419)
(63)
(268)
(348)
(998)
(3,921)
(173)
(630)
(1,327)
(2,922)
(141)
(987)
(1,468)
(3,909)
184
184
317
317
TOTAL COMPREHENSIVE LOSS FOR THE YEAR
(1,284)
(3,587)
NET LOSS ATTRIBUTABLE TO MEMBERS OF CPT GLOBAL LIMITED
(1,468)
(3,909)
TOTAL COMPREHENSIVE LOSS ATTRIBUTABLE TO MEMBERS OF
CPT GLOBAL LIMITED
(1,284)
(3,587)
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
25
25
(3.93)
(3.93)
(10.51)
(10.43)
The Consolidated Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with the Notes
to the Financial Statements. Further details on the restatement of 2016 are disclosed in Note 1(z) on page 47.
32
For personal use only
CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Consolidated Statement of Financial Position
AT 30 JUNE 2017
Notes
Restated
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Unbilled revenue
Current tax asset
Other current assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Deferred tax assets
Property, plant and equipment
Intangible assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Borrowings
Current tax liabilities
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Deferred tax liability
Other long term provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Retained earnings
TOTAL EQUITY
2017
$'000
1,656
5,571
792
-
103
8,122
1,067
43
4,348
5,458
2016
$'000
3,034
4,815
1,925
18
214
10,006
1,400
63
4,394
5,857
13,580
15,863
6,007
1,640
2
982
8,631
233
91
324
8,955
4,625
7,666
905
-
908
9,479
437
71
508
9,987
5,876
12,228
1,439
(9,042)
4,625
12,195
1,254
(7,573)
5,876
7
8
9
16
10
16
12
13
14
15
16
17
16
17
18
19
The Consolidated Statement of Financial Position is to be read in conjunction with the Notes to the Financial Statements.
Further details on the restatement of 2016 are disclosed in Note 1(z) on page 47.
33
For personal use only
CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Consolidated Statement of Changes in Equity
YEAR ENDED 30 JUNE 2017
$'000
$'000
$'000
Issued
capital
Notes Ordinary
Retained
Earnings
Equity
Reserve
$'000
Foreign
Currency
Translation
Reserve
$'000
Total
19
Balance at 1 July
2015
Comprehensive income
Loss for the year
Other comprehensive loss
Total comprehensive income/(loss)
for the year
Transactions with owners, in their
capacity as owners
Share based payments
Issue of Shares
Total transactions with owners, in
their capacity as owners
Restated Balance as at 30 June
2016
Balance at 1 July
2016
Comprehensive income
Loss for the
year
Other comprehensive loss
19
Total comprehensive income/(loss)
for the year
Transactions with owners, in their
capacity as owners
Issue of Shares
Total transactions with owners, in
their capacity as owners
Balance as at 30 June
2017
12,105
(3,665)
1,705
(753)
9,392
-
-
-
-
90
90
(3,909)
-
(3,909)
-
-
-
-
-
-
(14)
-
(14)
-
317
317
-
-
-
(3,909)
317
(3,592)
(14)
90
76
12,195
(7,574)
1,691
(436)
5,876
12,195
(7,574)
1,691
(436)
5,876
-
-
-
33
33
(1,468)
-
(1,468)
-
-
-
-
-
-
-
-
184
184
-
-
(1,468)
184
(1,284)
33
33
Further details on the restatement of 2016 are disclosed in Note 1(z) on page 47.
12,228
(9,042)
1,691
(252)
4,625
34
For personal use only
CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Consolidated Statement of Cash Flows
YEAR ENDED 30 JUNE 2017
Notes
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Finance costs paid
Income tax paid
NET CASH FLOWS (USED IN) / FROM OPERATING ACTIVITIES
20
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
NET CASH FLOWS USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Issue of shares
Repayments of borrowings
Proceeds from borrowings
Payment of dividends on ordinary shares
NET CASH FLOWS FROM FINANCING ACTIVITIES
NET (DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS HELD
Add opening cash & cash equivalents brought forward
Effects of exchange rate changes on cash and cash equivalents
CLOSING CASH AND CASH EQUIVALENTS CARRIED FORWARD
7
2017
$'000
28,851
(31,039)
5
(166)
9
(2,340)
(2)
(2)
-
-
735
-
735
(1,607)
3,034
229
1,656
2016
$'000
32,270
(29,834)
6
(345)
(125)
1,972
(61)
(61)
-
(1,025)
1,059
-
34
1,945
458
631
3,034
The Statement of Cash Flows is to be read in conjunction with the Notes to the Financial Statements.
35
For personal use only
CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements comprise the financial statements of CPT Global Limited and its controlled entities
(collectively referred to as ‘the Group’ or ‘the Economic Entity’). The separate financial statements of the Parent Entity,
CPT Global Limited, have not been presented within this financial report as permitted by the Corporations Act 2001.
The principal activities of the group during the financial year were the provision of specialist IT consultancy services. The
registered address and principal place of business is level 1, 4 Riverside Quay, Southbank, Victoria.
The financial report was authorised for issue on 28 September 2017 by the Board of Directors.
Basis of Preparation
These general purpose financial statements have been prepared in accordance with the Corporations Act 2001, Australian
Accounting Standards and Interpretations of the Australian Accounting Standards Board and International Financial Reporting
Standards as issued by the International Accounting Standards Board. The Group is a for-profit entity for financial reporting
purposes under Australian Accounting Standards.
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report
containing relevant and reliable information about transactions, events and conditions. Compliance with Australian
Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting
Standards. Material accounting policies adopted in the preparation of this financial report are presented below and have been
consistently applied unless otherwise stated.
The financial report has been prepared on an accruals basis and is based on historical costs, modified, where applicable,
by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. All amounts are
in Australian dollars unless otherwise stated.
The Group has not adopted any new or amending Australian Accounting Standards and New Interpretations during the year.
Accounting Policies
(a) Principles of consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of the parent (CPT Global Limited)
and all of the subsidiaries (including any structured entities). Subsidiaries are entities the parent controls. The parent
controls an entity when it 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 over the entity. A list of the subsidiaries is provided in Note 11.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group from
the date on which control is obtained by the Group. Intercompany transactions, balances and unrealised gains or losses on
transactions between group entities are fully eliminated on consolidation. Accounting policies of subsidiaries have been
changed and adjustments made where necessary to ensure uniformity of the accounting policies adopted by the Group.
The financial statements of the subsidiaries used in the preparation of these consolidated financial statements have been
prepared as of the same reporting date as the parent.
36
For personal use only
CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Income Tax
The income tax expense/(revenue) for the year comprises current income tax expense/(benefit) and deferred tax
expense/(benefit).
Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable
income tax rates enacted, or substantially enacted, as at the end of the reporting period. Current tax liabilities/ (assets) are
therefore measured at the amounts expected to be paid to/(recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as
well as unused tax losses.
Current and deferred income tax expense/(income) is charged or credited directly to equity instead of the profit or loss when
the tax relates to items that are credited or charged directly to equity.
Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have
been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial
recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit
or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is
realised or the liability is settled, based on tax rates enacted or substantively enacted at the end of the reporting period.
Their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the
related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is
probable that future taxable profits will be available against which the benefits of the deferred tax asset can be utilised.
Deferred tax assets and liabilities are not recognised for temporary differences between the carrying amount and tax bases
of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary
differences, and it is probable that the differences will not reverse in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net
settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and
liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income
taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended
that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods
in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.
(c) Unbilled Revenue
Unbilled revenue is valued at cost plus profit recognised to date less any provision for anticipated future losses. Cost includes
both variable and fixed costs relating to specific contracts, and those costs that are attributable to the contract activity in
general and that can be allocated on a reasonable basis.
Profits are recognised on the stage of completion basis measured using the proportion of costs incurred to date as compared
to expected total costs. Where losses are anticipated they are provided for in full.
Revenue has been recognised on the basis of the terms of the contract adjusted for any variations or claims allowable under
the contract.
37
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(d) Property, Plant & Equipment
Each class of property, plant and equipment is carried at cost less accumulated depreciation and, where applicable
impairment losses.
Property, Plant and equipment
The carrying amount of property, plant and equipment is reviewed annually by directors to ensure it is not in excess of the
recoverable amount from these assets. When there are indications of any impairment, the recoverable amount is assessed on
the basis of the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The
expected net cash flows have been discounted to their present values in determining recoverable amounts. An asset’s
carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its
estimated recoverable amount.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it
is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be
measured reliably. All other repairs and maintenance are recognised in profit or loss during the financial period in which they
are incurred.
Depreciation
The depreciable amount of all fixed assets is depreciated on a straight line basis over the asset’s useful life to the Group
commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either
the unexpired period of the lease or the estimated useful lives of the improvements.
The depreciation rates used for each class of depreciable assets are:
Depreciation Rate
Class of Fixed Asset
Leasehold improvements
2 – 5 years
Fixtures Fittings and Equipment 33% to 50%
12% to 20%
Motor Vehicles
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
Gains and losses on disposals are determined by comparing net proceeds with the carrying amount. These gains and losses
are recognised in profit and loss.
(e) Operating Leases
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as
expenses in the periods in which they are incurred.
(f) Financial Instruments
Recognition and measurement
Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the
instrument. For financial assets, this is equivalent to the date that the company commits itself to either the purchase or sale
of the asset (i.e. trade date accounting is adopted).
Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified ‘at
fair value through profit or loss’, in which case transaction costs are expensed to profit or loss immediately.
Classification and subsequent measurement
Financial instruments are subsequently measured at fair value, amortised cost using the effective interest rate method, or
cost.
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(f) Financial Instruments (continued)
Amortised cost is the amount at which the financial asset or financial liability is measured at initial recognition less principal
repayments and any reduction for impairment, and adjusted for any cumulative amortisation of the difference between that
initial amount and the maturity amount calculated using the effective interest method.
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to
determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar
instruments and option pricing models.
The effective interest method is used to allocate interest income or interest expense over the relevant period and is
equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction costs
and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term)
of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future
net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense
in profit or loss.
The Group does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the
requirements of accounting standards specifically applicable to financial instruments.
(i)
Financial assets at fair value through profit or loss
Financial assets are classified at ‘fair value through profit or loss’ when they are either held for trading for the purpose of
short-term profit taking, or when they are designated as such to avoid an accounting mismatch or to enable performance
evaluation where a group of financial assets is managed on a fair value basis in accordance with a documented risk
management or investment strategy. Such assets are subsequently measured at fair value with changes in carrying value
being included in profit or loss.
(ii)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market and are subsequently measured at amortised cost.
(iii)
Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable
payments, and it is the Group’s intention to hold these investments to maturity. They are subsequently measured at amortised
cost.
(iv)
Financial liabilities
Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost.
Impairment of Financial Instruments
At the end of each reporting period, the Group assesses whether there is objective evidence that a financial instrument has
been impaired. In the case of available-for-sale financial instruments, a significant or prolonged decline in the value of the
instrument is considered to determine whether impairment has arisen. In the case of loans and receivables, impairment is
recognised when collectability is doubtful (refer to (g) for further details). Impairment losses are recognised in the profit and
loss.
Financial guarantees
Where material, financial guarantees issued, which require the issuer to make specified payments to reimburse the holder
for a loss it incurs because a specified debtor fails to make payment when due, are recognised as a financial liability at fair
value on initial recognition.
The guarantee is subsequently measured at the higher of the best estimate of the obligation and the amount initially
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(f) Financial Instruments (continued)
recognised less, when appropriate, cumulative amortisation in accordance with AASB 118: Revenue. Where the entity gives
guarantees in exchange for a fee, revenue is recognised under AASB 118.
The fair value of financial guarantee contracts has been assessed using a probability weighted discounted cash flow approach.
The probability has been based on:
the likelihood of the guaranteed party defaulting in a year period;
the proportion of the exposure that is not expected to be recovered due to the guaranteed party defaulting; and
the maximum loss exposed if the guaranteed party were to default.
Derecognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to
another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated
with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expired.
The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair
value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.
(g) Receivables
Trade receivables are a part of financial instruments (loans and receivables) and are initially recognised at fair value and are
subsequently measured at amortised cost less any provision for impairment. Trade receivables are generally due for
settlement within 30 days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off
by reducing the carrying amount directly. An allowance account (provision for impairment of trade receivables) is used 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 are considered indicators that the trade receivable is impaired. The
amount of the impairment allowance is the difference between the asset’s carrying amount and the recoverable amount.
The amount of the impairment loss is recognised in the profit or loss within other expenses. When a trade receivable for
which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against
the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the
profit or loss.
(h) Impairment of assets
At the end of each reporting period, the Group reviews the carrying values of its tangible and intangible assets to determine
whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of
the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying
value. Any excess of the asset’s carrying value over its recoverable amount is recognised as an expense in the profit and loss.
Impairment testing is performed annually for goodwill and other intangible assets with indefinite lives.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
Non-financial assets, other than goodwill that suffered impairment, are reviewed for possible reversals of the impairment at
the end of each reporting period.
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(i) Intangibles
Goodwill
Goodwill is initially recorded at the amount by which the purchase price for a business combination exceeds the fair value
attributed to the interest in the net fair value of identifiable assets, liabilities and contingent liabilities at the date of
acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisition of associates is
included in investments in associates. Goodwill is tested annually for impairment and carried at cost less accumulated
impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity
sold.
Intellectual Property
Intellectual property is recognised at the cost of acquisition and has an indefinite useful life. Intellectual property is tested
annually for impairment and carried at cost less accumulated impairment losses.
Computer Software
Computer software is recognised at the cost of acquisition. Computer software costs have a finite useful life and are carried
at cost less accumulated amortisation and any impairment losses. Computer software costs are amortised on a straight line
basis over their useful life. The amortisation rate used for software costs varies from 14% to 50%.
(j) Foreign Currency Transactions and Balances
Functional and presentation currency
The functional currency of each of the Group’s entities is the currency of the primary economic environment in which that
entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity’s
functional and presentation currency.
Transaction and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the
transaction. Foreign currency monetary items are re-translated at the year-end exchange rate. Non-monetary items measured
at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured
at fair value are reported at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in the profit or loss, except where deferred
in equity as a qualifying cash flow or net investment hedges. Exchange differences arising on the translation of non-monetary
items are recognised directly in equity to the extent that the underlying gain or loss is directly recognised in equity, otherwise
the exchange difference is recognised in the profit or loss.
Group companies
The financial results and position of foreign operations whose functional currency is different from the Group’s presentation
currency are translated as follows:
— assets and liabilities are translated at year-end exchange rates prevailing at the end of the reporting period;
—
income and expenses are translated at average exchange rates for the period;
and
— all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from translation of transactions considered to be net investment in foreign
operations are transferred directly to the Group’s foreign currency translation reserve in the statement of financial position.
These differences are recognised in the profit or loss in the period in which the operation is disposed.
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Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(k) Trade and other payables
Trade and other payables are a part of financial instruments (Non-derivative financial liabilities). These amounts represent
liabilities for goods and services provided to the Group prior to the end of the financial year which are unpaid. The amounts
are unsecured and are usually paid within 30 days of recognition.
(l) Employee Benefits
Provision is made for the Group’s liability for employee benefits arising from services rendered by employees to balance date.
Employee benefits that are expected to be wholly settled within one year have been measured at the amounts expected to
be paid when the liability is settled. Employee benefits payable later than one year have been measured at the present value
of the estimated future cash outflows to be made for those benefits. Those cashflows are discounted using market yields on
corporate bonds with terms to maturity that match the expected timing of cashflows.
Wages and salaries, annual leave and sick leave
(i)
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled wholly within 12
months of the end of the reporting period are recognised in other payables in respect of employees’ services up to the end
of the reporting period and are measured at the undiscounted amounts expected to be paid when the liabilities are settled.
When measuring sick leave entitlement, only the unutilised entitlement that is likely to be utilised over and above the leave
entitlement that continues to accrue in the future periods is taken into account.
Long service leave
(ii)
The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of
expected future payments to be made in respect of services provided by employees up to the end of the reporting period.
Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service.
Expected future payments are discounted using market yields at the end of the reporting period on corporate bonds with
terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
(iii)
Contributions to defined contributions superannuation funds are recognised as an expense as they become payable.
Retirement benefit obligations
Share based payments
(iv)
Share-based compensation benefits are provided to certain employees via the CPT Share and Option Incentive Plan and an
employee share scheme. Information relating to these schemes is set out in note 22.
The fair value of options granted under the CPT Share and Option Incentive Plan is recognised as an employee benefit expense
with a corresponding increase in equity in the period the options are granted. The fair value is measured at grant date and
recognised over the period during which the employees become unconditionally entitled to the options.
The fair value at grant date is independently determined using a Monte Carlo and American Binomial 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.
The fair value of the options granted is adjusted to reflect market vesting conditions, but excludes the impact of any non-
market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included
in assumptions about the number of options that are expected to become exercisable. At the end of each reporting period,
the entity revises its estimate of the number of options that are expected to become exercisable. The employee benefit
expense recognised each period takes into account the most recent estimate. The impact of the revision to the original
estimates, if any, is recognised in the profit and loss with a corresponding adjustment to equity.
(m) Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is
probable that an outflow of economic benefits will result and that outflow can be reliably measured. A provision for
dividends is not recognised as a liability unless the dividends are declared, determined or publicly recommended on or
before the end of the reporting period.
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(n) Issued Capital
Issued and paid up capital is recognised at the fair value of the consideration received by the Group.
Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share
proceeds received.
(o) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments
with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-term
borrowings in current liabilities on the statement of financial position.
(p) Revenue and Other Income
Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade discounts
and volume rebates allowed. Any consideration deferred is treated as the provision of finance and is discounted at a rate of
interest that is generally accepted in the market for similar arrangements. The difference between the amount initially
recognised and the amount ultimately received is interest revenue.
The following specific recognition criteria must also be met before revenue is recognised:
Sale of Goods
Significant risk and rewards of ownership of goods has passed to the buyer.
Rendering of Services
Where the contract outcome can be reliably measured, control of the right to be compensated for the services and the stage
of completion can be reliably measured. Stage of completion is measured by reference to the labour hours incurred to date
as a percentage of total estimated hours for each contract.
Where the contract outcome cannot be reliably measured, revenue is recognised only to the extent that costs have been
incurred.
Interest
Interest revenue is recognised on a proportional basis taking into account the effective interest rates applicable to the
financial assets.
All revenue is stated net of the amount of goods and services tax (GST).
(q) Borrowing Costs
All borrowing costs are expensed in the period in which they are incurred.
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(r) Earnings per share (“EPS”)
Basic EPS is calculated as net profit attributable to members, adjusted to exclude costs of servicing equity (other than
dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any
bonus element.
Diluted EPS is calculated as net profit attributable to members, adjusted for:
costs of servicing equity (other than dividends) and preference share dividends;
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been
recognised as expenses;
other non-discretionary changes in revenues or expenses during the period that would result from the dilution of
potential ordinary shares; and
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any
bonus element.
(s) Consumption Taxes (GST and VAT)
Revenues, expenses and assets are recognised net of the amount of GST and VAT, except where the amount of GST and VAT
incurred is not recoverable from the taxation authority. In these circumstances the GST and VAT is recognised as part of the
cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial
position are shown inclusive of GST and VAT.
Cash flows are presented in the statement of cash flows inclusive of GST and VAT.
(t) Government Grants
Government grants are recognised at fair value where there is reasonable assurance that the grant will be received and all
grant conditions will be met. Grants relating to expense items are recognised as income over the periods necessary to match
the grant to the costs they are compensating.
(u) Comparative Figures
When required by accounting standards, comparative figures have been restated to conform to changes in presentation for
the current financial year.
(v) Rounding of Amounts
The parent entity has applied the relief available to it under ASIC Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191 and accordingly, amounts in the financial report and directors’ report have been rounded off to the
nearest $1,000, or in certain cases the nearest dollar.
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(w) Critical Accounting Estimates & Judgements
The directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and
best available current information. Estimates assume a reasonable expectation of future events and are based on current
trends and economic data, obtained both externally and within the Group.
Key estimates
Impairment of Goodwill
(i)
Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units (CGU) to
which goodwill has been allocated. The value in use calculation requires the Group to estimate the future cash flows
expected to arise from the CGU and a suitable discount rate in order to calculate the present value.
Refer to Note 13 for details of the assumptions used in this calculation and the potential impact of changes to the
assumptions.
Key judgements
Provision for impairment of receivables
(i)
The Group assesses the recoverability of each individual trade receivable account to determine whether a provision for
impairment is required for any potentially non recoverable amounts. Management has considered that each trade receivable
amount recorded is fully recoverable, hence no provision for impairment has been made in respect of trade receivables.
Unbilled revenue
(ii)
The Group measures unbilled revenue based on information available at the time of recognition. This information includes
historical trends, data analysis, significant judgments from key management personnel as to the reasonable expectations
of future events and completion of projects in progress. Management has considered certain old amounts as fully
recoverable and therefore no provision for impairment was made. See Note 9 for further details.
(iii) Deferred taxes
In assessing whether future taxable amounts will be available to utilise temporary differences and losses, management
review the past performance of the relevant company, the budgets for the forthcoming financial year, forecasts and sales
pipelines.
(x) New Accounting Standards for Application in Future Period
Accounting Standards and Interpretations issued by the AASB that are not yet mandatorily applicable to the Group, together
with an assessment of the potential impact of such pronouncements on the Group when adopted in future periods, are
detailed below:
AASB 9: Financial Instruments and associated Amending Standards (applicable for annual reporting periods commencing on or
after 1 January 2017).
The Standard will be applicable retrospectively (subject to the comment on hedge accounting below) and includes revised
requirements for the classification and measurement of financial instruments, revised recognition and de-recognition
requirements for financial instruments and simplified requirements for hedge accounting. The key changes made to the
Standard that may affect the Group on initial application include certain simplifications to the classification of financial
assets, simplifications to the accounting of embedded derivatives, and the irrevocable election to recognise gains and losses
on investments in equity instruments that are not held for trading in other comprehensive income. AASB 9 also introduces a
new model for hedge accounting that will allow greater flexibility in the ability to hedge risk, particularly with respect to
hedges of non-financial items.
The Group is yet to undertake a detailed assessment of the impact of AASB 9. However, based on a preliminary assessment,
the standard is not expected to have a material impact on the balances and transactions of the Group on initial adoption.
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(x) New Accounting Standards for Application in Future Period (continued)
AASB 15: Revenue from Contracts with Customers (applicable for annual reporting periods commencing on or after 1 January
2017).
This Standard, when effective, will replace the current accounting requirements applicable to revenue with a single,
principles-based model. Except for a limited number of exceptions, including leases, the new revenue model in AASB 15 will
apply to all contracts with customers as well as non-monetary exchanges between entities in the same line of business to
facilitate sales to customers and potential customers. The core principle of AASB 15 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 the goods or services. To achieve this objective, AASB 15 provides the following
five-step model:
"
"
"
"
"
identify the contract(s) with a customer;
identify the performance obligations in the contract(s);
determine the transaction price;
allocate the transaction price to the performance obligations in the contract; and
recognise revenue when (or as) the performance obligation is satisfied.
AASB 15 also requires enhanced disclosures regarding revenues.
This Standard will require retrospective restatement and is available for early adoption.
The Group is yet to undertake a detailed assessment of the impact of AASB 15. Based on a preliminary assessment, the
standard is expected to have an impact on the recognition of revenue and unbilled revenue for some risk/reward contracts
where the performance obligations are only met when cost savings for the client are quantified and verified. The standard
is not expected to have a material impact on the balances and transactions of the Group on initial adoption as the
performance obligations on risk/reward contracts at 30 June 2017 had been satisfied.
AASB 16: Leases (applicable to annual reporting periods beginning on or after 1 January 2019).
When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117: Leases
and related Interpretations. AASB 16 introduces a single lessee accounting model that eliminates the requirement for leases
to be classified as operating or finance leases.
The main changes introduced by the new Standard include:
-
-
-
-
-
recognition of a right-to-use asset and liability for all leases (excluding short-term leases with less than 12 months of
tenure and leases relating to low-value assets);
depreciation of right-to-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss and unwinding
of the liability in principal and interest components;
variable lease payments that depend on an index or a rate are included in the initial measurement of the lease
liability using the index or rate at the commencement date;
by applying a practical expedient, a lessee is permitted to elect not to separate non-lease components and instead
account for all components as a lease; and
additional disclosure requirements.
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(x) New Accounting Standards for Application in Future Period (continued)
The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to comparatives in line
with AASB 108 or recognise the cumulative effect of retrospective application as an adjustment to opening equity on the
date of initial application.
The Group is yet to undertake a detailed assessment of the impact of AASB 16. However, based on a preliminary assessment,
it is not possible to determine the impact on balances and transactions of the Group on initial adoption as the operating
leases that would be impacted by AASB 16 expire before the standard takes effect.
(y) Working capital deficiency
The consolidated financial statements have been prepared on a going concern basis.
For the year ended 30 June 2017, the Group incurred a loss after tax of $1.468m (2016: $3.909m). In the same period the
Group had operating cash outflows of $2.304m (2016: inflows of $1.972m). A cash flow forecast for the next 12 months
prepared by management has indicated that the Group will have sufficient cash assets to be able to meet its debts as and
when they are due, however, the Group is dependent upon the continued availability of the debtor financing facility in order
to maintain positive working capital.
At the date of this report, the directors have no reason to believe that the Group will not be able to settle its liabilities or
realise its assets in the ordinary course of business.
(z) Prior period restatement
CPT Global Inc., a 100% subsidiary of CPT Global Limited registered in the USA, applied to the Internal Revenue Service in
the United States of America to change from a cash to an accrual basis of accounting when preparing its tax returns. This was
a voluntary change and gave rise to an Internal Revenue Code section 481(a) adjustment. In preparing the 30 June 2016
financial report, the recognition of the section 481(a) adjustment was assumed to occur when Form 3115 was lodged with
the Internal Revenue Service with the 30 June 2016 tax return. However, a Form 3115 had in fact been lodged with the
Internal Revenue Service in March 2016 in conjunction with the 2015 tax return.
The lodgment of Form 3115 in March 2016 should have resulted in CPT Global Inc recognising a reduction in the deferred tax
asset net of section 481 adjustments applied to the 2015 and 2016 tax returns. At 30 June 2016, the deferred tax asset should
have been $231k lower than reported with the corresponding impact on tax expense and foreign exchange gains.
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
PARENT INFORMATION
2.
The following information has been extracted from the books and records of the parent and has been prepared in
accordance with Accounting Standards.
STATEMENT OF FINANCIAL POSITION
ASSETS
Current Assets
Non-Current Assets
Total Assets
LIABILITIES
Current Liabilities
Non-Current Liabilities
Total Liabilities
EQUITY
Issued Capital
Reserves
Accumulated losses
Total Equity
STATEMENT OF COMPREHENSIVE INCOME
Total loss
Total comprehensive loss
2017
$'000
581
5,114
5,695
-
342
342
12,227
1,608
(8,482)
5,353
2016
$'000
5,533
4,467
10,000
1,810
315
2,125
12,195
1,608
(5,928)
7,875
2017
$'000
2016
$'000
(3,184)
(3,717)
(3,184)
(3,717)
Guarantees
CPT Global Limited has not entered into any guarantees, in the current or previous financial year, in relation to the
debts of its subsidiaries. Refer to Note 23 for details of bank guarantees in relation to leased offices.
3.
REVENUE
REVENUE
Services Revenue
Total Revenue
OTHER INCOME
Rent Income
Interest Income
Other Income
Total Other Income
2017
$'000
27,159
27,159
50
5
15
70
2016
$'000
28,750
28,750
45
6
275
326
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
4.
LOSS FOR THE YEAR
Profit or loss for the year also includes the following specific expense
items.
Finance costs:
Interest expense on borrowings
Total finance costs
Foreign currency translation losses (gains)
Occupancy expenses
Depreciation and amortisation of non-current assets
Defined superannuation contribution expense – Others
Defined superannuation contribution expense – KMP
5.
INCOME TAX (BENEFIT) / EXPENSE
Tax expense comprises:
Current tax
Deferred tax
Under/(over) provision of previous year
The prima facie tax on losses before income tax is reconciled to the
income tax as follows:
Prima facie tax on losses before income tax at 30% (2016:
30%)
Tax effect of
Goodwill
impairment
Foreign exchange differences arising on
consolidation
Tax on overseas income at a different rate
Other non-allowable items
Utilisation of prior year tax losses
Unrealised foreign currency exchange profit
Under / (over) provision of previous year
Current year tax losses not brought to account
Derecognition of Deferred Tax Asset relating to
losses
Income tax (benefit) / expense attributable to the entity
The applicable weighted average effective tax rates are as follows:
49
Note
2017
$'000
2016
$'000
244
244
194
971
66
213
153
2017
$'000
(43)
(123)
307
141
348
348
173
998
63
237
115
2016
$'000
373
118
496
987
(398)
(877)
-
9
22
(11)
-
135
78
306
-
141
11%
189
17
10
43
22
661
93
247
582
987
34%
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
6.
DIVIDENDS PAID OR PROVIDED FOR ON ORDINARY SHARES
(a) Dividends paid during the year
Current year interim
Franked dividends (0.0c per share) (2016: 0.0c per share)
Prior year final
Franked dividends (0.0c per share) (2016: 0.0c per share)
(b) Dividends proposed and not recognised as a liability
Franked dividends (0.0c per share) (2016: 0.0c per share)
(c) Franking credit balance
Balance of franking account at year end adjusted for franking credits
arising from:
Franking debits arising from payment of proposed dividends
7.
CASH AND CASH EQUIVALENTS
Cash at bank
Reconciliation of cash
Cash at the end of the financial year as shown in the statement of cash
flows is reconciled to items in the statement of financial position as
follows:
Cash and cash equivalents
2017
$'000
2016
$'000
-
-
-
-
-
-
-
-
2,427
2,427
2,478
2,478
2017
$'000
2016
$'000
1,656
3,034
1,656
1,656
3,034
3,034
50
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
8.
TRADE AND OTHER RECEIVABLES
CURRENT
Trade receivables
Other receivables
Notes
8(a)
2017
$'000
5,569
5,569
2
5,571
2016
$'000
4,797
4,797
18
4,815
(a) Trade receivables are non-interest bearing and generally on 30 day terms. The average credit period on rendering
of services is 72 days (2016: 59 days). Management has objective evidence that no receivable amounts arising
from the past sale of goods and rendering of services in the current year are impaired and therefore no provision
for impairment has been recognised (2016: $nil).
Before accepting new customers, the Group assesses the creditworthiness of the potential client using information
provided by independent rating agencies, publicly available information and its own trading record. The Group’s
client portfolio consists of leading blue chip companies, Fortune Global 500 companies and Government
departments within Australia. The profile of the trade receivable balance as at the reporting date is as follows:
Of the trade receivable balance at the end of the reporting period, $1,522,229 (2016: $926,370) and $227,188
(2016: $140,340) are due from two leading banking institutions in Australia. There is also $223,571 (2016:
$666,200) due from a large Australian telecommunications company, $nil (2016: $44,330) from a leading property
and infrastructure company in Australia, $1,447,122 (2016: $696,954) from an Australian government department,
$260,896 (2016: $456,829) from a large Canadian telecommunications company, $334,148 (2016: $458,551) from
another large financial organisation in North America, $334,746 (2016: $nil) from a large healthcare provider in
North America.
There are no other customers who represent more than 5% of the total balance of trade receivables.
Of the trade receivables balance at the end of the reporting period, a concentration of $4,068,870 (75%) (2016:
$3,516,917) (74%) relates to Australia. The remaining amounts are not individually significant.
Trade receivables that are past due but not impaired
Included in the trade receivable balance are debtors with a carrying amount of $130,240 (2016: $461,151) in the
group which are past due at the end of the reporting period but have not been provided for as there has not been
a significant change in credit quality and the amounts are still considered recoverable. Of the overdue balance,
$111,702 (2016: $421,055) relates to clients with whom the Group has traded with for more than one year with
no history of delinquency. The nature of the clients, namely a mix of large financial institutions,
telecommunications companies and government give further confidence that these past due balances are not
impaired. The Group does not hold any collateral over these balances. The ageing analysis of trade receivables
is:
1-3 months
Within initial trade terms
2017
$'000
130
5,439
5,569
2016
$'000
461
4,336
4,797
The carrying value of trade and other receivables approximates its fair value. Trade and other receivables are
recoverable within 12 months, hence the effects of discounting is immaterial.
51
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
9.
UNBILLED REVENUE (CURRENT)
Unbilled revenue
Provision for impairment
Total
2017
$'000
792
-
792
2016
$'000
2,238
(313)
1,925
Unbilled revenue represents amounts relating to revenue recognised in accordance with the accounting policies
detailed in Note 1(c) that had not been invoiced to the customer as at the end of the reporting period. Included in
the Group’s unbilled revenue balance is $nil (2016: $312,580) relating to revenue that was recognised more than 12
months prior to the end of the reporting period.
10. OTHER CURRENT ASSETS
Prepayments
Other current assets
11.
INTERESTS IN SUBSIDIARIES
Name
Country of incorporation
CPT Global Ltd
CPT Global GmbH
CPT Global Inc
CPT Global Consulting Corp
CPT Global France
CPT Global Australia Pty Ltd
CPT Global International Pty Ltd
CPT Global Pte Ltd
CPT Global SRL
CPT Consultoria Global Em Informalica
Ltda
United Kingdom
Germany
USA
Canada
France
Australia
Australia
Singapore
Italy
Brazil
There are no known restrictions on the transfer of cash or assets within the group.
* The percentage of voting power is proportional to ownership.
2017
$'000
103
-
103
2016
$'000
129
85
214
Percentage of equity
interest held by the
economic entity*
2017
%
2016
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
52
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
12.
PROPERTY, PLANT AND EQUIPMENT
Notes
Motor vehicles
At cost
Accumulated depreciation
Office equipment
At cost
Accumulated depreciation
Furniture, fixtures and fittings
At cost
Accumulated depreciation
Improvements
At cost
Accumulated depreciation
Leased plant and equipment
At cost
Accumulated depreciation
Total property, plant and equipment
(a) Reconciliations
Reconciliations of the carrying amounts of property, plant and
equipment at the beginning and end of the current financial year.
Motor vehicles
Cost at beginning of year
Purchases
Movements in exchange rate
Cost at end of year
Accumulated depreciation at beginning of year
Depreciation and effects of movements in
exchange rate
Accumulated depreciation at end of year
Carrying amount
53
2017
$'000
108
(75)
33
254
(244)
10
64
(64)
-
39
(39)
-
18
(18)
-
43
2016
$'000
116
(70)
46
253
(236)
17
64
(64)
-
39
(39)
-
18
(18)
-
63
2017
$'000
2016
$'000
116
-
(8)
108
(70)
(5)
(75)
33
74
44
(2)
116
(74)
4
(70)
46
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
PROPERTY, PLANT AND EQUIPMENT
12.
(continued)
Office Equipment
Cost at beginning of year
Effects of movements in exchange rate
Cost at end of year
Accumulated depreciation at beginning of year
Effects of movements in exchange rate
Accumulated depreciation at end of year
2017
$'000
253
1
254
(236)
(8)
(244)
2016
$'000
237
16
253
(219)
(17)
(236)
Carrying value
10
17
Furniture, fixtures and fittings
Cost at beginning of year
Effects of movements in exchange rate
Cost at end of year
Accumulated depreciation at beginning of year
Depreciation
Accumulated depreciation at end of year
Carrying amount
Improvements
Cost at beginning of year
Cost at end of year
Accumulated depreciation at beginning of year
Cost at end of year
Carrying amount
Leased plant and equipment
Cost at beginning of year
Cost at end of year
Accumulated depreciation at beginning of year
Accumulated depreciation at end of year
64
-
64
(64)
-
(64)
-
39
39
(39)
(39)
-
18
18
(18)
(18)
65
(1)
64
(65)
1
(64)
-
39
39
(39)
(39)
-
18
18
(18)
(18)
Carrying amount
-
-
54
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
13.
INTANGIBLE ASSETS
Goodwill at cost
Accumulated impairment losses
Total goodwill
Intellectual Property at cost
Software at cost
Accumulated amortisation
Total software
Total intangible assets
Year ended 30 June 2016
Balance at the beginning of the year
Impairment charge
Amortisation charge
Year ended 30 June 2017
Balance at the beginning of the year
Impairment charge
Amortisation charge
2017
$'000
9,659
(5,502)
4,157
75
818
(702)
116
4,348
2016
$'000
9,659
(5,502)
4,157
75
818
(656)
162
4,394
Goodwill
Intellectual
Property
Software
$'000
$'000
$'000
4,786
(629)
-
4,157
4,157
-
-
4,157
75
-
-
75
75
-
-
75
208
-
(47)
162
162
-
(46)
116
2016 Impairment
The impairment charge of $629k is against the goodwill allocated to the European cash generating unit. The key driver
of the impairment of goodwill was the losses in the 2015 and 2016 financial years and the uncertainty around the
revenue forecast. There was significant uncertainty in Europe after the combined impact of terrorist attacks, Brexit
and issues in the Italian banking sector.
Intangible assets other than goodwill and intellectual property have finite useful lives. The current amortisation
charges for intangible assets are included under depreciation and amortisation expense per the statement of
comprehensive income. Goodwill and intellectual property have indefinite useful lives. These have been assessed as
having indefinite useful lives because these intangible assets arose on the acquisition of businesses purchased as going
concerns. These businesses continue to be operated within the CPT Global Group and there are no plans to cease any
part of these operations.
Goodwill is allocated to cash-generating units, based on the Group’s reporting segment.
Australian Segment
2017
$’000
4,157
4,157
2016
$’000
4,157
4,157
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
13. INTANGIBLE ASSETS (continued)
The recoverable amount of the cash-generating units is determined based on value-in-use calculations. Value-in-
use is calculated based on the present value of the projected cash flows from that cash-generating unit over 5 years;
periods beyond 5 years have been extrapolated using the terminal value growth rate of 4.0% (2016: 7.5%).
Key Assumptions
The following key assumptions were used in determining the recoverable amount of goodwill:
Australian Segment
Discount rate
2017
20.0%
2016
16.0%
Gross Margin
2017
25.7%
2016
25.2%
Sales Growth
2017
9.1%
2016
9.7%
Corporate costs of $2.3m were allocated to the CGU (2016: $2.6m)
Management has based the value-in-use calculations on budgets and estimates for the CGU. The value-in-use is most
sensitive to the following assumptions:
- Discount rate;
- Gross profit margins;
- Sales growth rates;
- Terminal growth rates; and
- Corporate costs.
Discount rate – the discount rate is a pre-tax rate and reflects the risks associated with a particular segment.
Gross profit margins – values assigned reflect past experience, margins on existing contracts and analysis of the
market conditions.
Sales growth rates – reflects management’s expectations of revenue growth in the context of the Group’s Australian
market strategy.
Terminal growth rates – reflect the managements expectation of revenue and profit growth in the periods beyond
the 5 year forecast and are based on expected growth during the forecast period, long term historical growth,
operating leverage and level of fixed and variable costs.
Corporate costs – corporate costs are allocated to the CGU based upon the CGU’s proportional contribution to the
revenue of the Group.
14.
TRADE AND OTHER PAYABLES
CURRENT
Trade payables
Sundry payables and accrued expenses
Annual leave provision
Unearned revenue
2017
$'000
3,642
1,690
667
8
6,007
2016
$'000
4,515
2,466
667
18
7,666
Due to the short-term nature of these payables, their carrying value is assumed to approximate to their fair value.
There are no financial guarantees in place.
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
15.
BORROWINGS
CURRENT
Secured borrowings
Total borrowings
Unutilised financing facilities
Credit facility
Amount secured utilised
Note
15(a)
15(a)
2017
$'000
1,640
1,640
5,000
(1,640)
3,360
2016
$'000
905
905
5,000
(905)
4,095
(a) The parent entity has a debtors financing facility in place. The facility is secured by a first registered
company charge (mortgage debenture) over the carrying value of the total assets of the parent entity,
which totalled $5,485,200 at the end of the reporting period. Interest is charged at a 5.5% margin above
the 90 day Bank Bill Swap Rate. The maximum facility is $5m.
16.
TAX
LIABILITIES
Current
Current tax liability
Non Current
Deferred tax liabilities comprise:
Unrealised foreign exchange gain
Reconciliation of deferred tax liabilities
Opening balance
(Debited)/Credited to the statement of comprehensive
Income
Credited statement of comprehensive Income as current tax
Closing balance
ASSETS
Current
Current tax asset
Non Current
Deferred tax assets comprise:
Provisions, accrued employee entitlements and benefits and
accruals
Future income tax benefits attributable to tax losses
57
Notes
2017
$'000
2016
$'000
2
-
233
437
437
6
(210)
233
429
8
-
437
-
18
719
348
1,067
633
767
1,400
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`
CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
16. TAX (continued)
Reconciliation of deferred tax assets
Opening balance
(Debited)/Credited to the statement of comprehensive income
5
Closing balance
2017
$'000
1,400
(333)
1,067
2016
$'000
1,741
(341)
1,400
The future income tax benefit of the deferred tax assets will only be realised if the conditions of deductibility set out
in Note 1(b) occur. Deferred tax assets not brought to account for which the benefits will only be realised if the
conditions for deductibility set out in Note 1(b) occur amount to $944,811 (2016: $878,331). CPT Global’s tax losses
that have not been brought to account are generally not subject to restrictions except for the tax losses in US and
Canada which are available for up to seven years from the year the tax loss occurred. Of the losses not bought to
account 100% relate to the UK.
17.
PROVISIONS
Current
Employee benefits – Long Service Leave
Total Current Provisions
Non-Current
Employee benefits – Long Service Leave
Total Non-Current Provisions
Total Provision
2017
$'000
982
982
2016
$'000
908
908
91
91
71
71
1,073
979
A provision has been recognised for employee entitlements relating to long service leave. In calculating the present
value of future cash flows in respect of long service leave, the probability of long service leave is being taken is based
on historical data. The measurement and recognition criteria relating to employee benefits have been included in
Note 1(l) to these financial statements.
Analysis of Total Provisions
Long Service Leave
Total
Opening balance at 1 July 2016
Provided for during the year
Taken during the year
Balance at 30 June 2017
$'000
979
159
(65)
1,073
$'000
979
159
(65)
1,073
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
18.
ISSUED CAPITAL
(a) Issued and paid up capital
37,318,525 (2016: 37,177,220)
fully paid ordinary shares
(b) Movements in shares on issue
2017
2017
$’000
12,228
12,228
2016
$’000
12,195
12,195
2016
Beginning of the financial year
New shares issued
End of the financial year
Number of
shares
37,177,220
141,305
37,318,525
$’000’
12,195
33
12,228
Number of
shares
36,759,460
417,760
37,177,220
$’000
12,105
90
12,195
(i) Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to
the number of shares held. At shareholders’ meetings each ordinary share is entitled to one vote when a poll is
called, otherwise each shareholder has one vote on a show of hands. During the year ended 30th June 2017 no
ordinary shares were bought back under the on market buyback (2016: Nil). Ordinary shares have no par value.
(ii) The on market buyback commenced on the 27th August 2002 with 3,000,000 shares being the maximum to be
bought back of which 2,413,905 were outstanding as at 30 June 2017.
(c) Options
(i)
For information relating to the CPT Global Limited employee option plan, including details of options issued,
exercised and lapsed during the financial year and the options outstanding at year-end, refer to Note 22 Share
based payments.
(ii) For information relating to share options issued to key management personnel during the financial year, refer
to the Note 22 Share Based Payments.
(d) Capital Management
Management controls the capital of the group in order to maintain an appropriate debt to equity ratio, provide
shareholders with adequate returns and ensure that the group can fund its operations and continue as a going concern.
The Group does not currently have significant debt capital employed in the business as indicated in the following
table. Management effectively manages the group’s capital by assessing the group’s financial risks and adjusts its
capital structure in response to changes in these risks and in the market. These responses include the management
of debt levels, distributions to shareholders, share buy-backs and share issues.
There have been no changes in the strategy adopted by management to control the capital of the group since the
prior year. This strategy is to ensure that the group’s gearing ratio remains at an appropriate level between 0% and
50%.
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
ISSUED CAPITAL (Continued)
18.
The gearing ratios for the year ended 30 June 2017 and 30 June 2016 are as follows:
Total borrowings
Less cash and cash equivalents
Net debt
Total equity
Total capital employed
Gearing ratio
2017
$’000
1,640
(1,656)
(16)
4,625
4,625
0%
2016
$’000
905
(3,034)
(2,129)
5,876
5,876
0%
A bank guarantee provided by the Company’s banker in favour of the lessor of the Head Office is cash backed in the
amount of $191,000. The cash is not available for CPT Global to utilise until the bank guarantee is returned to our
Banker at the end of the lease. The lease expires in May 2018.
19.
RESERVES
(a) Foreign currency translation
The foreign currency translation reserve records exchange differences arising on translation of the financial
statements of foreign subsidiaries.
(b) Equity reserve
The equity reserve is a non-distributable reserve used to record share based payment expense.
(c) Analysis of items of other comprehensive income by each class of reserve
Foreign currency translation reserve
Exchange difference on translating foreign controlled entities
184
317
2017
$’000
2016
$’000
Movement in foreign currency translation reserve
Total other comprehensive income for the year
184
184
317
317
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
20.
CASH FLOW INFORMATION
(a) Reconciliation of the net loss after tax to the net cash flows
from operations
Net loss
Non-Cash Items
Depreciation and amortisation of non-current assets
Share based payment
Goodwill impairment
Changes in assets and liabilities
Increase in trade and term receivables
(Increase)/decrease in prepayments
Decrease in work in progress
Decrease in deferred tax asset
(Decrease)/Increase in trade payables and accruals
Increase in income taxes payable
Increase/(decrease) in deferred tax liabilities
Increase/(decrease) in employee entitlements
Net cash flow from operating activities
There were no acquisitions or disposals of subsidiaries in the 2017 financial year.
21.
EXPENDITURE COMMITMENTS
(a) Lease expenditure commitments
(i) Operating leases (non-cancellable):
Minimum lease payments
- not later than one year
- later than one year and not later than five years
2017
$'000
2016
$'000
(1,468)
(3,673)
66
-
-
63
76
629
(831)
(9)
1,134
103
(1,475)
21
26
93
(2,340)
(402)
17
2,250
340
2,389
507
(222)
(3)
1,972
2017
$'000
2016
$'000
259
-
259
349
80
429
Note:
The property lease is non-cancellable with a remaining term of 8 months. Rent is payable monthly in advance and
the amounts disclosed do not include GST. Contingent rental provisions within the leases require the minimum lease
payments to be increased by CPI on the anniversary of the lease agreement. No options exist to renew the leases.
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
22. SHARE-BASED PAYMENTS
The following share-based payment arrangements existed at 30 June 2017:
Directors
Performance
Rights
Issue
date
Expiry
date
Exercise
Price
As at 1 July
2016
Granted
(a)
18/11/13 18/11/16
$0.50
150,000
(b)
23/11/15 23/11/18
$0.00
300,000
-
-
Forfeited/
Exercised/
transferred/
expired
(150,000)
(300,000)
As at 30
June 2017
-
-
(c)
29/11/16 29/11/19
$0.00
-
300,000
-
300,000
450,000
300,000
(450,000)
300,000
(a) On 18 November 2016, this tranche of performance rights expired.
(b) On 29 November 2016, at CPT Global’s Annual General Meeting, this tranche of performances were rights were
cancelled.
(c) On 29 November 2016, at the Company’s Annual General Meeting, 300,000 performance rights were granted to
directors to take up ordinary shares at an exercise price of $0.00 per share. The fair value of these performance
rights at the date of grant was $22,356. The fair value has been calculated using a combination of the Monte Carlo
and American Binomial pricing methodologies for tranches using the following inputs:
Weighted average exercise price
Maximum life of right
Underlying share price
Expected share price volatility
Risk free interest rate
Dividend yield
$0.00
3 years
$0.22
30%
1.7%
0.0%
Share price volatility has been determined based on the historical volatility of CPT Global’s shares. As the exercise
price is $0.00, share price volatility does not have a material impact on the fair value of the performance rights.
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
22. SHARE-BASED PAYMENTS (cont.)
The issue of these performance shares in four tranches was contingent upon the following conditions being met:
No of Shares
to be Issued
100,000
50,000
100,000
50,000
Conditions to be Met
The highest quoted (buy) price for CPT Global shares reaching or exceeding $0.50 for 5 consecutive
business days during the period 29 November 2016 and 30 June 2017 (both dates inclusive)
The Company’s international revenue (as reported in the Company’s 2017 annual report) reaching or
exceeding $22m for the 2017 fiscal year
The highest quoted (buy) price for CPT Global shares reaching or exceeding $1.00 for 5 consecutive
business days during the period 1 July 2017 and 30 June 2018 (both dates inclusive)
The Company’s international revenue (as reported in the Company’s 2018 annual report) reaching or
exceeding $25.5m for the 2018 fiscal year
The performance rights hold no voting or dividend rights, are not transferrable and will lapse in the event of the
resignation of a director. At the date of this report, all directors in receipt of the performance options remain
employed by CPT.
An amount of $4,411 pertaining to these entitlements has been included in the statement of comprehensive income
for the period.
Information with respect to the number of performance rights granted is as follows:
2017
2016
Number of
options
Weighted
average
exercise price
Number of
options
Weighted
average
exercise price
450,000
300,000
-
-
300,000
150,000
300,000
$
0.17
0.00
-
-
0.00
0.17
0.00
450,000
300,000
-
-
300,000
-
450,000
$
0.17
0.00
-
-
0.00
-
0.17
Outstanding at the
beginning of the year
Granted
Forfeited
Exercised
Cancelled
Expired
Outstanding at year end
At 30 June 2017, there were NIL (2016: 150,000) performance rights vested but not exercised.
There are no other options or performance rights granted by CPT Global Limited to any other party. Options do not
confer on the holder any right to vote or participate in the dividends of the economic entity and are not transferable.
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Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
23.
CONTINGENT LIABILITIES
Guarantees
CPT Global Limited has provided a guarantee $191,000 (2016: $191,000) to third parties in relation to its
performance and obligations in respect of property lease rentals. The guarantee is secured against a term deposit
equal to the value of the guarantee. The guarantee is for the term of the lease. The guarantee for lease covers the
next 12 months.
24.
EVENTS AFTER THE REPORTING PERIOD
On 28th August 2017 CPT Global Limited announced its intention to extend the on-market share buy back for a
further twelve months until 28th August 2018. A maximum of 3,000,000 shares may be bought back during the
buyback period.
25.
EARNINGS PER SHARE
(a) The following reflects the income and share data used in the
calculations of basic and diluted earnings per
share:
Net (loss) / profit
Adjustments:
Earnings used in calculating basic and diluted earnings per share
Weighted average number of ordinary shares used in calculating
basic earnings per
share
Weighted average number of options outstanding
Adjusted weighted average number of ordinary shares used in
calculating diluted earnings per share
26.
AUDITORS' REMUNERATION
Amounts received or due and receivable by ShineWing Australia and
Mazars London for:
an audit or review of the financial report of the parent and any
other entity in the Group
other services in relation to the entity and any other entity in
the Group
- tax compliance
- other services
Other services relate to accounting and taxation services.
64
Restated
2016
$'000
2017
$'000
(1,468)
-
(1,468)
(3,909)
-
(3,909)
Number of
shares
Number of
shares
37,318,525
300,000
37,177,220
300,000
37,618,525
37,477,220
2017
$'000
2016
$'000
147
181
27
1
40
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
27.
KEY MANAGEMENT PERSONNEL COMPENSATION
(a) Names and positions held of economic entity key management personnel in office at any time during the
financial year are:
Key Management Person
Fred S Grimwade
Alan Baxter
Gerry Tuddenham
David Lynch
Kevin Akom
Grant Sincock
Luke Tuddenham
Position
Non-executive Chairman
Non-executive Director
Managing Director
Chief Executive Officer Australia and Asia
Chief Operating Officer
Company Secretary and Chief Financial Officer
Vice President North America
From 1 July 2017 Kevin Akom has taken on the role of General Manager – Strategic Client Relationships within the
Australian region. This new role and its responsibilities do not meet the definition of Key Management Person and
Kevin will not be included in the Key Management Person disclosures from 1 July 2017.
b) Key Management Personnel Compensation
Refer to the Remuneration Report contained in the Director’s Report for details of the remuneration paid to each
member of the Group’s key management personnel for the year ended 30 June 2017.
The totals of remuneration paid to key management personnel of the company and the Group during the year are as
follows:
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Share based payments
28.
RELATED PARTY DISCLOSURES
2017
$000
2,145
143
19
4
2016
$000
2,433
133
38
5
2,313
2,609
(a) Controlling Relationships
Interests in subsidiaries are set out in note 11. The parent entity and the ultimate controlling party of the group is
CPT Global Limited. All transactions within the group were done on an arm’s length basis.
(b) Key management personnel
Disclosures relating to key management personnel are set out in the Remuneration Report and note 27. Key
management personnel include the board of directors and key executives who are accountable and responsible for
the operational, management and strategic direction of the Group.
(c) Transactions with related parties
During the financial year there were no transactions with related parties.
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
29.
OPERATING SEGMENTS
Identification of Reportable Segments
CPT Global Limited has identified its operating segments based on the internal reports that are reviewed and used by
the Board of Directors (chief operating decision makers) in assessing the performance and determining the allocation
of resources. The reportable segments disclosed are based on a geographical basis.
Reportable segments disclosed are based on aggregating operating segments where the segments are considered to
have similar economic characteristics and are also similar with respect to the following:
-
-
-
services provided by the segment;
the type of customer for the services provided; and
external regulatory requirements
Types of Services by Segment
Below outlines the major lines of services provided to customers for each reportable segment:
Digital Consulting
Capacity Planning
Cost Reduction Sustainable
Australia
-
-
-
- Mainframe & Midrange performance
Project & Program management
-
Technical Support services
-
- Management IT (MIT)
- Management, Functional & Automation Testing
Europe
- Mainframe & Midrange performance
-
Technical Support services
North America
- Mainframe & Midrange performance
- Management, Functional & Automation Testing
Basis of accounting for purposes of reporting by reportable segments
Accounting policies adopted
Unless stated otherwise, all amounts reported to the Board of Directors with respect to operating segments are
determined in accordance with accounting policies that are consistent to those adopted in the annual financial
statements of CPT Global Limited.
Inter-segment transactions
Segment revenues, expenses and results exclude transfers between segments. The prices charged on
intersegment transactions are the same as those charged for similar services to parties outside of the Group on an
arm’s length basis. These transfers are eliminated on consolidation.
Segment Assets and Liabilities
Segment assets and liabilities reported are based on the internal reports reviewed by the Board of Directors.
Assets include trade debtors and unbilled revenue balances. Liabilities include trade creditors and accruals.
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
OPERATING SEGMENTS (continued)
29.
Unallocated items
The Board of Directors review segment performance to only the gross profit level. All other items of revenue and
expenses are not allocated to operating segments as they are not considered part of the core operations of any
segment. Liabilities are not reported by segment for internal reporting purposes for the Board of Directors and
therefore have been treated as unallocated items.
Segment Performance
REVENUE
External Sales
Total Group Revenue
Segment Gross Profit
before tax
Reconciliation of segment
result to group
profit/loss before tax
Goodwill impairment
Unallocated Items
-
Overheads
Profit/ (Loss) before tax
Segment Assets
Segment Assets
Segment asset increases
for the period:
-
Capital Expenditure
Reconciliation of segment
assets to group assets
Unallocated assets:
Goodwill
-
Property, plant &
-
equipment
Other Assets
-
Total Group Assets
Australia
Europe
North America
Consolidated
2017
$’000
2016
$’000
2017
$’000
2016
$’000
2017
$’000
2016
$’000
2017
$’000
2016
$’000
19,787
19,363
1,317
1,977
6,055
7,410
27,159
28,750
5,172
5,107
270
(237)
3,134
3,244
8,646
8,440
27,159
28,750
(629)
(629)
(9,973)
(10,733)
(1,327)
(2,922)
Australia
Europe
North America
Consolidated
2017
$’000
4,409
2016
$’000
4,481
2017
$’000
340
2016
$’000
2017
$’000
740
1,610
2016
$’000
1,520
2017
$’000
6,359
2016
$’000
6,741
-
-
4,409
4,481
-
340
-
740
-
-
-
-
1,610
1,520
6,359
6,741
4,232
4,232
-
-
4,232
159
4,232
225
2,830
4,435
13,580
15,633
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
29.
OPERATING SEGMENTS (Continued)
Segment Liabilities
Segment Liabilities
Segment liability increases
for the period:
-
Australia
Europe
North America
Consolidated
2017
$’000
4,435
2016
$’000
4,416
2017
$’000
746
2016
$’000
1,147
2017
$’000
1,802
2016
$’000
2,341
2017
$’000
6,982
2016
$’000
7,904
-
-
-
-
-
-
-
-
4,435
4,416
746
1,147
1,802
2,341
6,982
7,904
to
Reconciliation of segment
liabilities
group
liabilities
Unallocated liabilities:
-
-
Provisions
Other Liabilities
1,893
-
1,801
-
-
-
-
-
79
-
53
-
1,972
-
1,853
-
Total Group Liabilities
8,954
9,757
Major Customers
CPT Global Limited provides services to a range of clients in the financial services and telecommunications industries.
CPT’s top 10 clients account for 82% of the group’s global revenue (2016: 72%), totalling $21,844,988 (2016:
$20,595,101). Three of CPT’s client’s contributed more than 10% of the annual revenue (30% - a major Australian
bank, 18% an Australian government department and 12% - a major Australian telecommunications firm).
30.
FINANCIAL INSTRUMENTS
Financial Risk Management
The group’s financial instruments consist mainly of deposits with banks, accounts receivable and payable.
The main purpose of non-derivative financial instruments is to raise finance for group operations.
Derivatives may be used by the Group for hedging purposes. Such instruments include forward exchange and currency
option contracts. The Group does not speculate in the trading of derivative instruments.
The board of directors is responsible for monitoring and managing financial risk exposures of the Group. The board
reviews the effectiveness of internal controls relating to interest rate risk and foreign currency risk. The overall
risk management strategy seeks to assist the Group in meeting its financial targets, while minimising potential
adverse effects on financial performance in regard to financial and currency rate risk.
(i) Financial Risks
The main risks the group is exposed to through its financial instruments are interest rate risk, foreign currency risk,
liquidity risk and credit risk.
Interest rate risk
The Group’s exposure to interest rate risk, which is the risk that a financial instrument’s value and cash flows will
fluctuate as a result of changes in market interest rates and the effective weighted average interest rates on classes
of financial assets and financial liabilities, is as follows:
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
30.
FINANCIAL INSTRUMENTS (Continued)
Economic
Entity
Floating interest
rate
Fixed interest
rate maturing in
1 to 5 years
Non-interest
bearing
Total carrying
amount as per
statement of
financial position
Weighted
average
effective
interest rate
2017
$'000
2016
$'000
2017
$'000
2016
2017
2016
$'000 $'000 $'000
2017
$'000 $'000
2016 2017
%
2016
%
(i) Financial assets
Cash and cash
equivalents
Trade
receivables
Total financial
assets
(ii) Financial liabilities at
amortised cost
Bank overdrafts
Trade and sundry payables
Borrowings
Total financial
liabilities
1,656
3,034
-
-
-
-
-
-
-
1,656
3,034
0.25
0.33
- 5,571
4,815
5,571
4,815
1,656
3,034
-
- 5,571
4,815
7,227
7,819
-
-
1,640
1,640
-
-
905
905
-
-
-
-
-
-
-
-
-
- 6,322
-
-
7,666
-
6,322
1,640
7,666
905
9.0
10.0
- 6,322
7,666
7,962
8,571
Interest rate risk arises on cash and cash equivalents and bank overdrafts. Interest rate risk is managed by monitoring
and reviewing cash flow forecasts and the trade receivables balance of the Group.
Interest rate sensitivity analysis
The sensitivity analysis below has been determined based on the exposure to interest rates for cash and cash
equivalents as this is the only financial instrument materially exposed to floating interest rates. The analysis is
based on actual monthly borrowing amounts throughout the year, as reported to management, with the stipulated
change taking place at the beginning of the financial year and held constant throughout the reporting period. A 100
basis point increase or decrease has been used and represents management’s assessment of the possible changes in
interest rates. At the reporting date, if interest rates had been 100 basis points higher or lower and all other
variables were held constant, the Group’s profit before income tax would increase by $8,768 and decrease by $8,768
(2016: increase by $14,378 and decrease by $14,378).
Foreign currency risk
The group is exposed to fluctuations in foreign currencies arising from the sale and purchase of services in currencies
other than the group’s functional currency, and the translation of foreign subsidiary results on consolidation.
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
30.
FINANCIAL INSTRUMENTS (Continued)
The carrying amount of the Group’s foreign currency denominated monetary assets and monetary liabilities at the
end of the reporting period is as follows:
Economic Entity
Liabilities
Assets
Australian dollars
US dollars
Sterling
Euro
Canadian dollars
Singapore dollars
2017
$'000
-
159
-
36
-
-
2016
$'000
-
198
-
121
-
-
2017
$'000
-
175
-
117
-
-
2016
$'000
-
201
-
359
-
1
The amounts disclosed above in relation to Australian dollars relate to intercompany payables and receivables in
each of the foreign subsidiaries whose functional currency is not Australian dollars.
Foreign currency sensitivity analysis
The Group is mainly exposed to US dollars, Sterling, Euros and CAD.
The following table details the Group’s sensitivity to a 10% increase and decrease in the Australian dollar against
the relevant foreign currencies. 10% is the sensitivity rate used as it represents management’s assessment of the
possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency
denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency
rates. The sensitivity analysis includes external assets and liabilities as well as loans, receivables and payables
balances with foreign subsidiaries where the denomination of the balance is in a currency other than the functional
currency of the lender or borrower. A positive number indicates an increase in profit or loss and other equity where
the Australian dollar strengthens against the respective currency. For a weakening of the Australian dollar against
the respective currency there would be an equal and opposite impact on the profit and other equity, and the
balances below would be negative.
Economic Entity
USD Impact
Sterling Impact
Euro Impact
CAD Impact
Profit or loss
Other equity
2017
$'000
(52)
(259)
2016
$'000
(120)
(192)
2017
$'000
(31)
(174)
2016
$'000
(109)
(105)
2017
$'000
(19)
(85)
2016
$'000
(64)
(66)
2017
$'000
(28)
(5)
2016
$'000
(2)
24
The above impacts are mainly attributable to the exposure of intercompany payables, receivables and loan balances
at the end of the reporting period.
Liquidity risk
Liquidity risk is the risk the group will not be able to meet its financial obligations as they fall due.
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Notes to the Financial Statements
YEAR ENDED 30 JUNE 2017
30.
FINANCIAL INSTRUMENTS (Continued)
The group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate unutilised borrowing
facilities are maintained. Included in Note 15 is a listing of additional undrawn facilities that the Group has at its
disposal to further reduce liquidity risk. The borrowing facilities may be drawn at any time and may be terminated
by the financing provider with three months’ notice. All facilities are subject to annual review.
The table below analyses the Group’s financial liabilities. All such liabilities are classified as current and therefore
have contractual maturity within 12 months from the reporting date.
Trade payables
Sundry payables and accrued expenses
2017
$’000
3,642
1,690
5,332
2016
$’000
4,515
2,467
6,982
For details of expenditure commitments and maturity profile of the lease liability, refer to Note 21. The trade and
sundry payables listed above are due for payment within 3 months.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss
to the Group and essentially arises from holdings of cash and deposits and trade receivables as well as from the
parent’s potential obligations under the indemnity guarantee provided to banks. The risk is largely managed through
a policy of only dealing with creditworthy counterparties. Periodic assessments of debtor balances are undertaken
and provisions for impairment are recognised where appropriate.
The maximum credit risk exposure is the carrying value of cash and deposits and trade receivables as disclosed in
notes 7 and 8.
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Directors' Declaration
The directors of the company declare that:
1.
the financial statements and notes, as set out on pages 32 to 71, are in accordance with the Corporations Act
2001 and:
a.
b.
comply with Australian Accounting Standards, which, as stated in accounting policy Note 1 to the financial
statements, constitutes explicit and unreserved compliance with International Financial Reporting
Standards (IFRS); and
give a true and fair view of the financial position as at 30 June 2017 and of the performance for the year
ended on that date of the company and economic entity.
2.
the Chief Executive Officer and Chief Finance Officer have each declared that:
a.
b.
c.
the financial records of the company for the financial year have been properly maintained in accordance
with section 286 of the Corporations Act 2001;
the financial statements and notes for the financial year comply with Accounting Standards; and
the financial statements and notes for the financial year give a true and fair view.
3.
in the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts
as and when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors.
Fred Grimwade
Chairman
Melbourne, 28 September 2017
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INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF CPT GLOBAL LIMITED & CONTROLLED ENTITIES
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of CPT Global Limited (“the Company”) and its controlled entities (“the
Group”), which comprises the consolidated statement of financial position as at 30 June 2017, the consolidated
statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and
the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a
summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
a) giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial performance
for the year then ended; and
b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our
report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (“the Code”) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current period. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter
How the matter was addressed during the audit
Impairment of Goodwill
Our procedures included, amongst others;
Note 13
At 30 June 2017 the Group’s Statement of Financial
Position includes goodwill amounting to $4.157m
relating to the Australian CGU.
We have determined this is a key audit matter due
to the judgement required by management in
preparing a value in use model to satisfy the
impairment test as prescribed in AASB 136
Impairment of Assets, including the forecasting of
• Enquired with management on the basis of
assumptions applied in the value in use model to
obtain an understanding of the key variables impacting
on each CGU;
• Obtained and evaluated the assumptions and
methodology applied in management’s value in use
calculation including but not limited to revenue
forecasts, discount rates and the allocation and
recoverability of corporate overheads to subsidiaries;
ShineWing Australia ABN 39 533 589 331. Liability limited by a scheme approved under Professional Standards Legislation. ShineWing Australia is an independent member of ShineWing
International Limited – members in principal cities throughout the world.
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Key Audit Matter
How the matter was addressed during the audit
future cash flows and applying an appropriate
discount rate which inherently involved a high
degree of estimation and judgement by
management.
• Performed sensitivity analysis on the key assumptions
and variables to determine various outcomes of the
value in use model in assessing whether certain CGUs
are impaired;
• Engaged our internal valuation specialists to compare
several valuation assumptions including the discount
rate to external and industry benchmarks for
reasonableness; and
• Reviewed the adequacy of the Group’s disclosures
about these assumptions to which the outcome of the
impairment test is most sensitive, that is, those that
have the most significant effect on the determination of
the recoverable amount of assets.
Recognition and recoverability of Unbilled
Revenue
Note 9
At 30 June 2017 the Group’s Statement of Financial
Position includes $0.792m of unbilled revenue for
current projects.
Given the nature of the Group’s revenue there are
significant estimates and judgements incorporated
in management’s measurement of unbilled revenue
balances.
Our procedures included, amongst others;
• Reviewed unbilled revenue balances to ensure that
amounts taken up as revenue are reasonable and
could be supported by signed contracts, project status
reports and timesheets;
• Performed an ageing analysis of unbilled revenue
balances; and
• Reviewed post year-end subsequent billings and
collections.
Taxation
Notes 5 and 16
The group operates across a number of
jurisdictions and as such is required to prepare tax
returns to local tax authorities in those jurisdictions.
As there can be complexity in international tax
legislation and there has been an amendment in the
prior year relating to tax balances, this has been a
key area of focus during the audit.
Our procedures included, amongst others;
• Reviewed the tax workings prepared for the Group and
agreed the balances to underlying accounting records;
• Given the material tax balance in the United States we
engaged taxation experts in that jurisdiction to review
the tax reconciliations prepared by management to
ensure the assumptions used are consistent with the
local tax legislation; and
• Reviewed the disclosures in the financial statements to
ensure that they are correct.
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the information included in
the Group’s annual report for the year ended 30 June 2017, but does not include the financial report and our
auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
2
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In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true and
fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit.
We identify and assess the risks of material misstatement of the financial report, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud
is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
We obtain an understanding of internal control relevant to the audit 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
Group’s internal control.
We evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the directors.
We conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to
continue as a going concern.
We evaluate the overall presentation, structure and content of the financial report, including the disclosures, and
whether the financial report represents the underlying transactions and events in a manner that achieves fair
presentation.
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We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them, all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most significance in
the audit of the financial report of the current period and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 23 to 29 of the directors’ report for the year ended 30
June 2017.
In our opinion, the Remuneration Report of CPT Global Limited and controlled entities for the year ended 30 June
2017 complies with section 300A of the Corporations Act 2001.
Responsibilities
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.
ShineWing Australia
Chartered Accountants
Hayley Underwood
Partner
Melbourne, 28 September 2017
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities - Annual Report
Corporate Information
ACN 083 090 895
ABN 16 083 090 895
Directors
Auditors
Fred Grimwade
(Non-executive Chairman)
Gerard (Gerry) Tuddenham
(Managing Director)
Alan Baxter
(Non-executive Director)
David Lynch
(CEO Australia and Asia)
Company Secretary
Grant Sincock
Principal Registered Office
Level 1, 4 Riverside Quay
Southbank VIC 3006
Telephone:
Facsimile:
Internet:
+61 (0)3 9684 7900
+61 (0)3 9684 7999
www.CPTglobal.com
225
George
NSW
737
9290
(0)2
ShineWing Australia
Level 10, 530 Collins Street
Melbourne VIC 3000
Share Register
12,
Boardroom Pty Ltd
Level
Street
Sydney
2000
Telephone:
760
Facsimile:
9600
+61
1300
Solicitors
Ernst & Young
Bankers
ANZ Banking Group Limited
2017 Annual General Meeting
The Annual General Meeting of CPT Global Limited
members will be held on Monday 27th November 2017
at 11.30 am at Boardroom’s office at Level 7, 333
Collins Street, Melbourne, Victoria.
ASX Code
CGO
CPT Global on the Web
For an introduction to the company and access to
company announcements, descriptions of our core
business, services and careers, and our corporate
governance policies and procedures visit our website at
www.CPTglobal.com
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CPT Global Limited ABN 16 083 090 895 and Controlled Entities – Annual Report
ASX Additional Information
Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in this report is as follows.
The information is current as at 27th of September 2017.
(a) Distribution of equity securities
The number of shareholders, by size of holding, in each class of share are:
Ordinary shares
Preference shares
Number of holders Number of shares Number of holders Number of shares
1
1,001
5,001
10,001
100,001
- 1,000
- 5,000
- 10,000
- 100,000
and over
The number of shareholders holding
less than a marketable parcel of shares
are:
59
330
166
276
48
879
282
41,496
916,632
1,283,657
9,096,568
25,980,172
37,318,525
-
-
-
-
-
-
499,296
-
-
-
-
-
-
-
-
(b) Twenty largest shareholders
The names of the twenty largest holders of quoted shares are:
Listed ordinary shares
Number of shares
Percentage of ordinary shares
1
2
3
4
5
6
7
8
9
TUDDY SUPER PTY LTD
Sonda Fondo De Invesion Privado
GNP Nominees
CLAPSY PTY LTD
MR VICTOR JOHN PLUMMER
Mr Luke Tuddenham
MR PHILIP ADAM
MR FRED GRIMWADE
MR PAWEL REJ & MRS MIROSLAWA REJ
10 Mr Ben Tuddenham
11 MR KEVIN AKOM
12 STILETTO INVESTMENTS PTY LTD
13 PETHOL (VIC) PTY LTD
14 FIVE TALENTS LIMITED
15 BNP PARIBAS NOMINEES PTY LTD
16 MR DAVID LYNCH
17 MRS ALISON BOLGER
18 MR NEVILLE HASKETT & MRS VICKI HASKETT
19 MRS JULIE ANN CAREY
20 MR MICHAEL LAZORIK
8,582,356
2,664,993
2,159,089
1,070,006
900,000
842,955
752,782
718,200
665,317
643,526
565,013
552,000
500,000
482,369
458,518
417,458
362,550
355,000
326,000
300,000
23.0%
7.1%
5.8%
2.9%
2.4%
2.3%
2.0%
1.9%
1.8%
1.7%
1.5%
1.5%
1.3%
1.3%
1.2%
1.1%
1.0%
1.0%
0.9%
0.8%
23,318,132
62.5%
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ASX Additional Information
(c) Shares held in escrow
As at 27th September 2017, there were 504,717 fully paid ordinary shares held in voluntary escrow. The escrow period
ends on 19 November 2017.
(d) Substantial shareholders
The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations
Act 2001 are:
MR GERRY TUDDENHAM AND HIS ASSOCIATES (EXCLUDING HIS BENEFICIAL INTEREST IN THE
CPT TRUST)
GNP NOMINEES PTY LTD AS TRUSTEE FOR THE CPT TRUST
SONDA FONDO DE INVERSION PRIVADO
Number of Shares
8,586,356
2,159,089
2,664,993
(e) Voting rights
All ordinary shares (whether fully paid or not) carry one vote per share without restriction. Performance rights do not carry
voting rights.
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