29 August 2014
Manager of Company Announcements
ASX Limited
Level 6, 20 Bridge Street
SYDNEY NSW 2000
By E-Lodgement
JCurve’s Annual Financial Results
Results for Announcement to the Market
The operating results for the year to 30 June 2014 are shown with comparisons to the previous
corresponding period, being the year ended 30 June 2013.
interest,
taxation,
Revenue from continuing operations
Earnings before
depreciation & amortisation (EBITDA)
Net loss after tax (from continuing
operations only)
Profit/(loss) from ordinary activities
after tax attributable to members
Net profit/(loss)
for
attributable to members
the period
Year ended
30 June
2014 $
Year ended
30 June 2013
$
11,637,193
10,139,950
(1,211,523)
(1,476,986)
(1,424,796)
(2,536,533)
(1,424,796)
(3,120,459)
(1,424,796)
(3,120,459)
Percentage increase /
(decrease) over
previous
corresponding period
13% increase
18% decrease
44% decrease
54% decrease
54% decrease
Dividends
No dividends were paid during the financial year. The Board advises that it does not intend to
declare a final dividend for the financial year, and it will consider reinstating the dividend policy
in the future.
Net Tangible Assets / Earnings Per Share
Net tangible assets per ordinary share for continuing
operations
Basic loss per ordinary share for continuing operations
30 June 2014
0.17 cents
30 June 2013
1.78 cents
(0.60) cents
(1.33) cents
Independent Audit Report
The information outlined above is presented in accordance with ASX Listing Rule 4.3A and the
Corporations Act 2001 (Corporations Act). The Appendix 4E is based on the audited Annual
Financial Report for the year ended 30 June 2014. The Independent Audit Report is included in
the Annual Financial Report attached.
Accounting Policies, Estimation Methods and Measurements
The accounting policies, estimation methods and measurement bases used in the Appendix 4E
is the same as those used in the previous annual report and half-year report.
Yours faithfully
Graham Baillie
Chairman
JCurve Solutions Limited
JCurve Solutions Limited
(formerly Stratatel Limited)
Annual Financial Report
For the year ended 30 June 2014
JCurve Solutions Limited
ABN 63 088 257 729
Level 4, 22 Atchison Street
Sydney NSW 2065
[T] +61 2 9467 9200 | [F] +61 2 9467 9201
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Contents
JCurve Solutions Limited
CORPORATE INFORMATION ...................................................................................................................................... 3
CHAIRMAN'S LETTER .................................................................................................................................................. 4
DIRECTORS’ REPORT ................................................................................................................................................. 5
CORPORATE GOVERNANCE STATEMENT ............................................................................................................. 16
AUDITOR’S INDEPENDENCE DECLARATION .......................................................................................................... 25
STATEMENT OF COMPREHENSIVE INCOME .......................................................................................................... 26
STATEMENT OF FINANCIAL POSITION .................................................................................................................... 27
STATEMENT OF CASH FLOWS ................................................................................................................................. 28
STATEMENT OF CHANGES IN EQUITY .................................................................................................................... 29
NOTES TO THE FINANCIAL STATEMENTS .............................................................................................................. 30
DIRECTORS’ DECLARATION ..................................................................................................................................... 65
INDEPENDENT AUDITOR’S REPORT ....................................................................................................................... 66
ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES ...................................................................... 68
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CORPORATE INFORMATION
ABN 63 088 257 729
Directors
Mr Graham Baillie
Mr Chris Gabriel
Mr John Bond
Company Secretary
Ms Sarah Smith
Registered office
50 Kings Park Road
West Perth
Western Australia 6005
Ph. (08) 9212 4000
Principal place of business
Level 4
22 Atchison Street
St Leonards
New South Wales 2065
Ph. (02) 9467 9200
Share Register
Computershare Investor Services Pty Ltd
Level 2 Reserve Bank Building
45 St George’s Terrace
Perth
Western Australia 6000
Ph. (08) 9323 2000
Solicitors
Steinepreis Paganin
Level 4, The Read Building
16 Milligan Street
Perth
Western Australia 6000
Auditors
HLB Mann Judd
Level 4, 130 Stirling Street
Perth
Western Australia 6000
Securities Exchange Listings
Australian Securities Exchange
ASX Code: JCS
Website
www.jcurvesolutions.com.au
JCurve Solutions Limited
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JCurve Solutions Limited
CHAIRMAN'S LETTER
Dear Shareholder
The Company has delivered an EBITDA of $1.2 million loss from continuing operations, compared to $1.5m loss for financial year
2013. This is considered quite a good result considering the impact during the year of $0.8m of non-recurring costs expended on
two acquisitions, including a capital raising and redundancies associated with a subsequent organisational restructure. In addition,
the Company was impacted by impairment charges of $0.5m.
The Company’s operations have been split into two divisions as a result of the acquisitions JTEL and JCurve, being
telecommunications and business software. Following an active year in rebranding the Company and acquiring additional
businesses, 2015 is to be a period of consolidation to generate the benefits of these and the resultant organisational restructure.
Under the leadership of two General Managers, each business unit is focused on increasing market share, revenues and enhanced
financial performance.
In the prevailing economic conditions the Company’s JTEL product has performed strongly in both Australia and the South African
joint venture. With the integration of the Full Circle Group acquisition now complete, this will further contribution positively to the
contribution from this division. Following the acquisition of JCurve Solutions Pty Ltd and further product development, its go to
market strategy, particularly to the accounting professional is ready to be launched in the first quarter of 2015.
The Company’s Professional Services division performed in line with budget and is preparing itself for increasing its activities in the
cloud computing phenomenon.
On behalf of the Board of Directors of JCurve Solutions Limited, I would like to thank all Shareholders for your continuing support of
the Company as it re-shapes itself with a vision of being a leading supplier of innovative cloud computing software products and
services.
Graham Baillie
Chairman
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JCurve Solutions Limited
DIRECTORS’ REPORT
Your directors submit the annual financial report of the consolidated entity for the financial year ended 30 June 2014. In order to
comply with the provisions of the Corporations Act, the directors report is as follows:
Directors
The names of directors who held office during or since the end of the 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
Graham Baillie FAICD (Executive Chairman)
Mr Baillie joined the Company in September 2007 as a non-executive Director and was appointed Chairman in May 2012, briefly
serving as Managing Director for period December 2013 to June 2014 before returning to position of Chairman in July 2014.
In 1994, Mr Baillie established Outsource Australia Pty Ltd (OSA) to provide outsourcing services to the Australian market. In his
capacity as majority shareholder and Chief Executive Officer he developed the company nationally and internationally. Today OSA
is known as Converga.
Prior to this, Mr Baillie was with AUSDOC during its formative years through to its ultimate ASX listing in September 1993. In this
time he was not only integral to the development of the company throughout Australia but was also involved in establishing similar
business operations in New Zealand, USA and United Kingdom.
Chris Gabriel MBA, LLB, B. Bus, CPA, FAICD, FGIA (Non-Executive Director) Appointed 17 December 2013
Mr Gabriel has received an impressive number of accolades and awards during his career across a number of chief executive and
senior directorial roles. His background includes a wealth of experience from senior leadership roles in the IT and
telecommunications sectors both within Australia and internationally, particularly in Africa and the
Middle East.
Mr Gabriel is an angel investor, Chairman of Alive Mobile Group, Chairman of Talent Rise Foundation, Non-Executive Director of
Talent International and Advisory Board Chairman of Clean Power Systems.
John Bond B.Com, B.Juris, B Laws, FAICD
Mr Bond has been a Director of Primewest Management Limited since 2000 and of other companies within the group since 1994.
Primewest is a commercial property syndication business with assets under management of $1.8 billion located in all mainland
states. His background spans law, investment banking as well as property investment and development. As a professional
property investor, he has over 20 years’ experience in negotiating acquisitions, overseeing the development of properties and asset
management.
He is a qualified solicitor and also holds a Bachelor of Commerce degree, is a Corporate Member of the Property Council and a
member of the Australian Institute of Company Directors. He is currently also Chairman of The Fathering Project and Director of
ASX listed Fleetwood Corporation since 18 March 2013.
Ian Alexander Macliver B.Comm., CA, F Fin, MAICD (Non-Executive Director) Resigned 31 October 2013
Mr Macliver joined the Company in July 2000 and resigned as Non-Executive Director 31 October 2013 following completion of the
JCurve acquisition.
Mr Macliver is the Managing Director of Grange Consulting Group Pty Ltd (Grange Consulting), a firm that provides specialist
corporate advisory services to both listed and unlisted companies. He is also Chairman of Grange’s securities arm, Grange Capital
Partners Pty Ltd, which specialises in capital raisings and corporate finance transactions.
In the three years immediately before the end of the financial year, Mr Macliver has also served as a Non-executive Director of the
following listed companies:
Feb 2011
Jan 2004
Sept 2010
Feb 2011
May 2006
Dec 1994
current
current
current
Nov 2011
Feb 2011
April 2012
Western Areas NL
Otto Energy Limited
Select Exploration Limited
Mount Gibson Iron
Smart Parking Limited (formerly Car Parking Technologies Limited)
Port Bouvard Limited
5 | P a g e
JCurve Solutions Limited
DIRECTORS’ REPORT (continued)
Michael James Fairclough MAICD (Non-Executive Director) Resigned 31 October 2013
Mr Fairclough founded the Company in 1997 and has been actively involved in the communications and technology industry
throughout Australia for over 15 years. Mr Fairclough was the founding Managing Director of the Company and served in a non-
executive director capacity. Mr Fairclough resigned as Non-Executive Director 31 October 2013 following completion of the JCurve
acquisition.
Nihal Gupta Appointed 31 October 2013, Resigned 21 July 2014.
Mr Gupta was appointed to the Board in October 2013. Mr Gupta is the Chair of NSW Multicultural Business Advisory Panel,
member of the NSW Export & Investment Advisory Board and Director on the Board of the SCG Trust.
Mr Gupta is Managing Director of Digital Electronics Corporation Australia Pty Ltd, which he established in 2005. Mr Gupta resigned
21 July 2014 to pursue other interests.
Company Secretary
Sarah Smith B.Com, CA
Ms Sarah Smith was appointed Company Secretary on 1 September 2011. Sarah provides corporate advisory and financial
management services to clients of Grange Consulting. Sarah is a Chartered Accountant with significant experience in accounting
and business services. Sarah specialises in corporate compliance, statutory reporting and financial accounting services for listed
companies.
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 options of JCurve were:
G Baillie
J Bond
C Gabriel
During the financial year no share options were granted as remuneration.
Director:
G Baillie
J Bond
C Gabriel
Total
Ordinary Shares
81,319,478
31,198,481
-
112,517,959
Options over Ordinary
Shares
35,714,284
-
-
-
Number of options
granted as
remuneration
Number of options
over ordinary shares
held at date of this
report
-
-
-
-
35,714,284
-
-
35,714,284
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DIRECTORS’ REPORT (continued)
Interests in the shares and options of the company and related bodies corporate (continued)
JCurve Solutions Limited
Details of unissued ordinary shares under options are as follows:
Number of options
KMP option holdings
Exercise price
Expiry date
JCurve Solutions Ltd
JCurve Solutions Ltd
JCurve Solutions Ltd
JCurve Solutions Ltd
Total
8,928,571
8,928,571
8,928,571
8,928,571
8,928,571
8,928,571
8,928,571
8,928,571
$0.000001
$0.000001
$0.000001
$0.000001
35,714,284
35,714,284
31 March 2016
31 March 2017
31 March 2018
31 March 2019
No ordinary shares were issued during the financial year as a result of the exercise of an option.
Dividends
No dividends were declared or paid during the Financial Year ended 30 June 2014.
Principal activities
The principal activities of the Company during the year were the development and marketing of Telecommunications Expense
Management Solutions (JTEL), Accounting & ERP Cloud Solutions (JCurve Business Software) and Professional Services
Consulting (JConnects), specifically dealing with IBM products and the emerging cloud computing platform.
Review of operations
In December 2013 Stratatel Limited was rebranded and renamed to JCurve Solutions Ltd.
This followed the acquisition of JCurve Solutions Pty Ltd by its’ subsidiary JCurve Business Software Pty Ltd. In June 2014, the
Company acquired The Full Circle Group Pty Ltd, which has subsequently been added to the suite of solutions offered by the JTEL
division.
The financial performance of the Company has improved during the financial year 2014, primarily due to the costs associated with
the two acquisitions and staff redundancies resulting from an organisational restructure of the business operations. In addition,
significant investment (non-recurring) was directed to product development and marketing activities around the rebranding of the
Company, to expedite its growth strategy.
The Company’s operations are structured into two divisions; telecommunications (JTEL/Full Circle) and business management
software (JCurve). Under the leadership of two General Managers, each business unit is focused on increasing market share,
revenues and enhanced financial performance over the next 12 months.
Operating results for the year
The financial performance of the company improved with EBITDA of $1.2 million loss from continuing operations for year ended 30
June 2014 being recorded compared to 2013 EBITDA which was $1.5m loss. The net loss before tax from continuing operations
was $1.3m ($1.4m net loss for the year after tax) for the 2014 financial year against a $2.4m net loss before tax from continuing
operations ($2.5m net loss for the year after tax) for the previous reporting period.
This financial result has been achieved during a period of substantial change being undertaken throughout the Company’s overall
activities and was affected by the impairment of some Company intangible assets, being $487,604 (2013: $2,551,047).
The Company’s Board of Directors are confident that the underlying business performance is solid and with the recent acquisitions
and restructure, very well placed strategically to deliver a strong, enhanced financial performance, in order to increase shareholder
value through its premium cloud computing product offerings.
7 | P a g e
JCurve Solutions Limited
DIRECTORS’ REPORT (continued)
Shareholder returns
No dividends have been paid to shareholders since the start of the financial year.
Risk management
The Board is committed to the identification and quantification of risk. Directors receive regular reports on areas where significant
business risk or exposure concentrations may exist and on the management of those risks.
Significant changes in the state of affairs
There have been no significant changes in the state of affairs of the consolidated entity to the date of this report.
Significant events after balance date
On 21 July 2014, Mr Nihal Gupta resigned as Non-Executive Chairman and Mr Graham Baillie was appointed to the position of
Executive Chairman (Refer to Note 20 for details). James Butchers, Chief Financial Officer ceased employment with JCurve
Solutions on 5 August 2014.
Likely developments and expected results
Disclosure of information regarding likely developments in the operations of the consolidated entity in future financial years and the
expected results of those operations is likely to result in unreasonable prejudice to the consolidated entity. Therefore, this
information has not been presented in this report.
Environmental legislation
The consolidated entity is not subject to any significant environmental legislation.
Indemnification and insurance of Directors and Officers
The Company has agreed to indemnify all the directors and officers for any breach of laws and regulations arising from their role as
directors and officers. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.
JCurve has not indemnified or agreed to indemnify an auditor of the Company or any related body corporate against liability
incurred as an auditor.
8 | P a g e
JCurve Solutions Limited
DIRECTORS’ REPORT (continued)
Remuneration report (Audited)
This report outlines the remuneration arrangements in place for directors and executives of JCurve Solutions Limited (the
“Company”).
Remuneration philosophy
The performance of the Company depends upon the quality of the directors and executives. The philosophy of the Company in
determining remuneration levels is to:
–
–
–
set competitive remuneration packages to attract and retain high calibre employees;
link executive rewards to shareholder value creation; and
establish appropriate performance hurdles for variable executive remuneration.
Remuneration committee
The Remuneration Committee role which is currently undertaken by the full Board of directors of the Company is responsible for
determining and reviewing compensation arrangements for the directors and the executive management team.
The Board assesses the appropriateness of the nature and amount of remuneration of directors and senior executives on a periodic
basis by reference to relevant employment market conditions with an overall objective of ensuring maximum stakeholder benefit
from the retention of a high quality Board and executive team.
Remuneration structure
In accordance with best practice Corporate Governance, the structure of non-executive director and executive remuneration is
separate and distinct.
Non-executive director remuneration
The Board seeks to set aggregate remuneration at a level that provides the Company with the ability to attract and retain directors
of the highest calibre, whilst incurring a cost that is acceptable to shareholders.
The Company’s constitution adopted at the AGM on 9 November 2010 specifies that the aggregate remuneration of non-executive
directors shall be a maximum of $400,000 per year, and can be varied by ordinary resolution of the shareholders in General
Meeting.
The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned amongst
directors is reviewed annually.
The remuneration of non-executive directors for the year ended 30 June 2014 is detailed in Table 1 of this report.
Senior executive and executive director remuneration
Remuneration consists of fixed remuneration comprising base pay and benefits including superannuation.
This is reviewed annually by the Board. The process consists of a review of relevant comparative remuneration in the market
internally and, where appropriate, external advice on policies and practices. The Board has access to external, independent advice
if required.
Executives are given the opportunity to receive their fixed (primary) remuneration in a variety of forms including cash and fringe
benefits. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the
Group.
The remuneration of key management personnel and company executives is detailed in Table 1 of this report.
Employment Contracts
Executive Chairman, Mr Graham Baillie, is employed under contract from 9 December 2013 and is paid on the basis of an annual
salary of $280,000 including superannuation for an initial term of 2 years.
9 | P a g e
DIRECTORS’ REPORT (continued)
Remuneration of key management personnel
Table1: Key Management Personnel remuneration for the year ended 30 June 2014: Directors
JCurve Solutions Limited
Short-term employee benefits
Post
employment
Equity
Total
Other short
term
benefits
Super-
annuation
Options
Perfor
mance
Related
$
$
$
%
Salary
$
Bonuses /
Commission
$
Directors
G Baillie @
2013
91,257
Executive Chairman
2014
238,915
M Fairclough #
2013
68,758
Director (non executive)
2014
20,000
I Macliver ^
2013
62,083
Director (non executive)
2014
20,000
J Bond
2013
55,000
Director (non executive)
2014
58,030
C Gabriel
2013
-
Director (non executive)
2014
47,102
N Gupta +
2013
-
Director (non executive)
2014
69,970
Total Directors Fees
2013
277,098
Total Directors Fees
2014
454,017
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
8,213
10,391
18,168
75,000(i)
37,500(i)
-
-
-
-
-
-
-
4,973
1,850
5,588
1,850
4,950
5,368
-
4,357
-
20,000
5,085
75,000
23,724
67,891
36,678
-
-
-
-
-
-
-
-
-
-
-
-
-
-
99,470
267,474
148,731
59,350
67,671
21,850
59,950
63,398
-
51,459
-
95,055
375,822
558,586
-
-
-
-
-
-
-
-
-
-
-
-
-
-
@ Mr Baillie served as Non-Executive Chairman from 1 July 2013 to 9 December 2013. He was appointed Managing Director from 9 December
2013 to 30 June 2014, before returning to position of Executive Chairman in July 2014
# resigned 31 October 2013
^ resigned 31 October 2013
+ Appointed 31 October 2013, Resigned 21 July 2014.
i The short term benefits are received through McKnight Holdings which is a trust trading as Gloucester Road Consulting whereby Michael
Fairclough provides corporate consulting services.
10 | P a g e
DIRECTORS’ REPORT (continued)
Remuneration of key management personnel (continued)
Table2: Key Management Personnel remuneration for the year ended 30 June 2014: Executives
JCurve Solutions Limited
Short-term employee benefits
Post
employment
Equity
Total
Bonuses /
Commission
Other short
term
benefits
Super-
annuation
Options
Perfor
mance
Related
$
$
$
$
$
%
Salary
$
Executives
J Butchers *
2013
249,054
35,000
Chief Financial Officer
2014
261,828
10,000
J Slaiman
2013
220,175
2,979
General Manager MTN
2014
229,346
10,000
A Simmons
2013
-
General Manager JTEL
2014
9,000
M Thompson
2013
-
General Manager JCBS
2014
51,885
J Williams <
2013
108,934
Development Manager
2014
-
-
-
-
-
-
-
3,531
3,531
-
-
-
-
-
-
-
-
Total Executive Rem.
2013
578,163
37,979
Total Executive Rem.
2014
552,059
20,000
3,531
3,531
* resigned 5 August 2014
< resigned 21 December 2012
22,415
17,775
19,816
17,775
-
833
-
4,799
6,300
-
48,531
-
-
-
-
-
-
-
-
-
-
-
310,000
11
293,134
242,970
257,121
-
9,833
-
56,684
115,234
-
668,204
4
1
4
-
-
-
-
-
-
6
3
41,182
-
616,772
Table3: Options granted as part of remuneration during the year ended 30 June 2014
Value of
options
granted
$
Value of
options
exercised
$
Value of
options lapsed
$
Total value of
options
granted,
exercised and
lapsed
$
Value of
options
included in
remuneration
for the year
$
%
remuneration
consisting of
options for the
year
J Butchers
J Slaiman
M Thompson
A Simmons
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
For further details on options currently on issue, please refer to Note 16. There were no alterations to the terms and conditions of
options granted as remuneration since their grant date.
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JCurve Solutions Limited
DIRECTORS’ REPORT (continued)
KEY MANAGEMENT PERSONNEL DISCLOSURES
(a)
Compensation options: Granted and vested during the year (Consolidated)
During the financial year no options were granted as equity compensation benefits under the long-term incentive plan to key
executives which expired on 12 November 2012. No share options have been granted to the non-executive members of the Board
of Directors under this scheme. For further details relating to the options, refer to Note 17.
(b)
Option holdings of Key Management Personnel (Consolidated)
Balance at
beginning of
period
Granted as
remune-
ration
Options
exercised
Net change
Other #
Balance at
end of
period
Exercisable
Not
Exercisable
Vested as at end of period
-
-
-
-
-
-
300,000
-
-
-
300,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
35,714,284
35,714,284
35,714,284
-
-
-
-
-
(300,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
35,414,284
35,714,284
35,714,284
30 June 2014
Directors
G Baillie
M Fairclough
I Macliver
J Bond
C Gabriel
N Gupta
Executives
J Butchers
J Slaiman
A Simmons
M Thompson
Total
#
Includes forfeitures, rights issue and balance on resignation
Balance at
beginning
of period
Granted as
remune-
ration
Options
exercised
Net change
Other #
Balance at
end of
period
Exercisable
Not
Exercisable
Vested as at end of period
-
-
-
-
800,000
500,000
500,000
1,800,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(500,000)
300,000
300,000
(500,000)
(500,000)
-
-
-
-
(1,500,000)
300,000
300,000
30 June 2013
Directors
G Baillie
M Fairclough
I Macliver
J Bond
Executives
J Butchers
J Slaiman
J Williams
Total
#
Includes forfeitures, rights issue and balance on resignation
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12 | P a g e
DIRECTORS’ REPORT (continued)
KEY MANAGEMENT PERSONNEL DISCLOSURES (Continued)
(c)
Shareholdings of Key Management Personnel (Consolidated)
Ordinary shares held in JCurve Solutions Limited (number)
JCurve Solutions Limited
30 June 2014
Directors
G Baillie
M Fairclough
I Macliver
J Bond
C Gabriel
N Gupta
Executives
J Butchers
J Slaiman
A Simmons
M Thompson
Total
30 June 2013
Directors
G Baillie
M Fairclough
I Macliver
J Bond
Executives
J Butchers
J Slaiman
J Williams
Total
Balance
01 Jul 13
Granted as
remuneration
On Exercise of
Options
Net Change
Other
Balance
30 Jun 14
9,890,907
14,048,877
6,064,020
31,198,481
-
-
197,698
100,333
-
-
61,500,316
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
71,428,571
81,319,478
(8,192,261)
5,856,616
(4,064,020)
2,000,000
-
-
31,198,481
-
4,064,020
4,064,020
-
-
197,698
100,333
6,380,943
6,380,943
-
-
69,617,253
131,117,569
Balance
01 Jul 12
Granted as
remuneration
On Exercise of
Options
Net Change
Other
Balance
30 Jun 13
9,890,907
14,048,877
6,064,020
31,198,481
197,698
100,333
60,548
61,560,864
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(60,548)
9,890,907
14,048,877
6,064,020
31,198,481
197,698
100,333
-
(60,548)
61,500,316
All equity transactions with key management personnel other than those arising from the exercise of remuneration options have
been entered into under terms and conditions no more favourable than those the company would have adopted if dealing at arm's
length.
13 | P a g e
DIRECTORS’ REPORT (continued)
KEY MANAGEMENT PERSONNEL DISCLOSURES (Continued)
Transactions with Directors
The following table provides the total amount of transactions that were entered into with related parties for the relevant financial
year.
JCurve Solutions Limited
Purchases from Related Parties
Grange Consulting Group Pty Ltd
Corporate Consultancy
Secretarial Services
Taos Creative Pty Ltd
Digital marketing & consulting
Alive Mobile Pty Ltd
Analysis & product development
2014
$
42,000
107,100
149,100
378,870
378,870
95,000
95,000
2013
$
5,000
107,100
112,100
-
-
-
-
JCurve Solutions Limited former Director Mr Ian Macliver is the Managing Director of Grange Consulting Group Pty Ltd, which
provided corporate advisory services to the consolidated entity amounting to $42,000 net of GST in 2014 (2013 $5,000).
The Company Secretary responsibilities are performed by Sarah Smith of Grange Consulting Group Pty Ltd. The company
secretarial services provided by Grange Consulting include providing guidance on corporate compliance requirements pursuant to
the Company’s constitution, ASX Listing Rules and Corporations Act, assistance in drafting notices of meeting and announcements;
Board documentation, and assistance with preparation of annual and half yearly financial reports. Company secretarial service fees
for the year ended 30 June 2014 amounted to $107,100 (2013 $107,100) net of GST.
Chairman Graham Baillie’s step-daughter Sam Brown is currently the majority shareholder and Director of Taos Creative Pty Ltd,
which specialise in digital marketing & consulting services for business. The JCurve Solutions Group for the 2013-2014 Financial
Year was provided with services from Taos Creative Pty Ltd amounting to $378,870 net of GST.
JCurve Solutions Limited Director Mr Chris Gabriel is the Chairman of Alive Mobile Group which provided analysis and re-design of
JTEL product amounting to $95,000 net of GST in 2014.
Sales to and purchases from related parties are made in arm's length transactions both at normal market prices and on normal
commercial terms.
Outstanding balances at year-end are unsecured, interest free and settlement occurs in cash.
14 | P a g e
DIRECTORS’ REPORT (continued)
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
(Eligible to attend)
Directors’ Meetings
(Attended)
Audit & Risk
Management Committee
JCurve Solutions Limited
Number of meetings held:
Number of meetings attended:
I Macliver
M Fairclough
G Baillie
J Bond
C Gabriel
N Gupta
Proceedings on behalf of the company
12
3
3
12
12
7
9
2
1
1
n/a
1
1
1
3
3
12
12
7
9
No person has applied for leave of the 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.
Auditor Independence and Non-Audit Services
Section 307C of the Corporations Act 2001 requires our auditors, HLB Mann Judd, to provide the directors of the Company with an
Independence Declaration in relation to the audit of the annual report. This Independence Declaration is set out on page 25 and
forms part of this Directors’ Report for the year ended 30 June 2014.
Non-Audit Services
There were no non-audit related activities carried out by the Company’s auditors during the year ended 30 June 2014.
Signed in accordance with a resolution of the directors.
G Baillie
Chairman
Dated at PERTH this 29th day of August 2014
15 | P a g e
CORPORATE GOVERNANCE STATEMENT
JCurve Solutions Limited
In fulfilling its obligations and responsibilities to its various stakeholders, the Board is a strong advocate of corporate governance.
This statement outlines the principal corporate governance procedures of JCurve Solutions Limited (JCurve). The Board supports a
system of corporate governance to ensure that the management of JCurve is conducted to maximise shareholder wealth in a
proper and ethical manner.
ASX Corporate Governance Council Recommendations
The Board has adopted corporate governance policies and practices consistent with the ASX Corporate Governance Council's
Corporate Governance Principles and Recommendations with 2010 Amendments ("Corporate Governance Recommendations")
where considered appropriate for a company of JCurve’s size and nature. Such policies include, but are not limited to the Board
Charter, Board Committee Charters, Code of Conduct, Security Trading, Continuous Disclosure, Shareholder Communication and
Risk Management Policies.
Further details in respect to the Company’s corporate governance practises are summarised below and copies of Company’s
corporate governance policies are available on the Company’s web site at www.jcurvesolutions.com.au.
All Corporate Governance Recommendations have been applied for the year ended 30 June 2014 unless set out below.
Board Charter
The Board considers that the essential responsibilities of the Directors are to oversee JCurve’s activities for the benefit of its
shareholders, employees and other stakeholders and to protect and enhance shareholder value.
The Board has established a charter, which clearly establishes the relationship between the Board and management and describes
their functions and responsibilities.
The key responsibilities of the Board include:
▪
▪
▪
▪
▪
▪
▪
Establishing the goals (short, medium and long term) and strategy for the Company.
Approving the annual strategic plan and major operating plans.
Approving the annual operating budget.
Reviewing and providing feedback on the performance of the Chief Executive Officer if appointed.
Reviewing the performance of the Board, the individual directors and any Board committees
Reviewing and approving the full-year financial statements and directors’ report.
Approving the annual report and notice of annual general meeting.
Board composition
The composition of the Board shall be determined in accordance with the following principles and guidelines:
▪
▪
▪
▪
The Board shall comprise at least 3 Directors, increasing where additional expertise is considered desirable in certain areas.
The Chairman should be non-executive, however, at the current time, the Board considers that the Company is not of
sufficient size, nor are its affairs of such complexity to require a non-executive Chairman.
The Board should comprise a majority of non-executive Directors.
Directors should bring characteristics which allow a mix of qualifications, skills and experience.
The composition of the Board is reviewed regularly to ensure the appropriate mix of skills and expertise is present to facilitate
successful strategic direction.
In appointing new members to the Board, consideration is given to the ability of the appointee to contribute to the ongoing
effectiveness of the Board, to exercise sound business judgement, to commit the necessary time to fulfil the requirements of the
role effectively and to contribute to the development of the strategic direction of the Company.
The independence of the Directors should be regularly assessed by the Board in light of the interests disclosed by them. Directors
are expected to bring their independent views and judgement to the Board and must declare immediately to the Board any potential
or active conflicts of interest.
The Board has established procedures for the selection and appointment of new Directors to the Board in line with the requirements
of the Board Charter to ensure there is a formal and transparent procedure that promotes confidence and understanding in the
process.
16 | P a g e
JCurve Solutions Limited
CORPORATE GOVERNANCE STATEMENT (continued)
Director Independence
A Director is only to be regarded as independent if the Director is independent of management and free of any business or other
relationship that could materially interfere with or could reasonably be perceived to materially interfere with the exercise of the
Director’s unfettered and independent judgement.
In considering whether a Director is independent, the Board considers guidance on independence set out in Corporate Governance
Recommendation 2 (Box 2.1) and other facts, information and circumstances that the Board considers material.
The Board assesses the independence of each director in light of interests disclosed by them.
The assessment of whether a Director is considered independent (both from the perspective of the Company and the Director) is
based on the following materiality thresholds:
▪
▪
payments made by the Company to the Director or any of his associated entities for the provision of goods and/or services
does not exceed 10% of the annual gross expenditure of the Company; or
payments received by the Director for the provision of goods and/or services to the Company does not exceed 25% of the
annual income or business turnover of the Director or his associated entities.
Having regard to the criteria impacting independence as outlined in Corporate Governance Recommendation 2 and the above
materiality thresholds the following directors are considered to be independent: Mr Christopher Gabriel and Mr John Bond.
Performance Evaluation Procedures
The Board has established formal processes to review its own performance and the performance of individual directors, the
committees of the Board and key executives, as necessary.
As part of the review of the performance of the Board, the appropriate size, composition and terms and conditions of appointment to
and retirement from the Board are considered. The level of remuneration for non-executive directors is considered with regard to
practices of other public companies, external professional advice (if considered necessary) and the aggregate amount of fees
approved by shareholders and otherwise in accordance with the remuneration policies established by the Board.
Other issues examined in the review include the Board’s interaction with management, the type of information provided to the Board
by management and management performance in helping the Board meet its objectives.
Corporate Code of Conduct
A formal code of conduct for the Company applies to all directors and employees. The purpose of this Code of Conduct is to
provide a framework for decisions and actions in relation to ethical conduct in employment. It underpins the Company’s
commitment to integrity and fair dealing in its business affairs and to a duty of care to all employees, clients and stakeholders. The
code sets out the principles covering appropriate conduct in a variety of contexts and outlines the minimum standard of behaviour
expected from employees.
The Directors, managers and employees are expected to act with the utmost integrity and objectivity, observe the highest standards
of behaviour and business ethics and strive at all times to enhance the good reputation and performance of the Group by acting in
the best interests of the Group, being responsible and accountable for their actions and observing the ethical principles of fairness,
honesty and truthfulness, including disclosure of potential conflicts.
The Company has developed an extensive code of conduct which is encapsulated in the corporate governance policies and the
Company’s terms and conditions of employment. Conduct guidelines apply to all employees which address the values and vision of
the Company, business ethics and protocol, policies and procedures, employee entitlements, responsibilities and expectations of
both the Group and employees and compliance with relevant legal, shareholder and stakeholder obligations.
All employees have position descriptions that reinforce their duties, rights and responsibilities and all are required to participate in
performance reviews to ensure the Company expectation is aligned with employee goals and key performance indicators. Actual
performance is reviewed annually and, if necessary, more frequently. The Company encourages regular feedback, review and
continuous improvement so as to maintain and enhance the desired corporate culture and standard of ethical behaviour.
17 | P a g e
JCurve Solutions Limited
CORPORATE GOVERNANCE STATEMENT (continued)
Policy for Trading In Company Securities
Trading in the Company’s securities by directors and employees is not permitted when they are in possession of unpublished price
sensitive information. Any transactions undertaken must be notified to the Chairman in advance for approval before dealing in the
Company’s securities.
Directors, officers and employees must not buy, sell or subscribe for securities if they are in possession of ‘inside information’
(information that is not generally available and, if the information were generally available, a reasonable person would expect it to
have a material effect on the price or value of securities). The Corporations Act 2001 provides that a reasonable person would be
taken to expect information to have a material effect on the price or value of securities if the information would, or would be likely to,
influence persons who commonly invest in securities in deciding whether or not to subscribe for, buy or sell the securities.
Subject to the insider trading restrictions above, it is the Board’s policy that Directors, officers and employees will not trade in the
securities during the period of preparation of the quarterly, half yearly and annual financial results for release to ASX; the period of
preparation of a disclosure document offering securities in the Company for release to ASX; and whilst in negotiations in respect to
material acquisitions.
The Board’s policy also reinforces the Directors’ and Company’s statutory obligations to notify the ASX of any dealing in the
securities which results in a change in the relevant interests of a Director in the securities. As contemplated in the ASX listing rules,
each Director provides notice of such dealings to the Company Secretary within three business days of any such dealing to enable
the Company to comply with its corresponding obligation to notify the ASX.
Audit Committee
The Board has established a separate audit committee to advise and support the Board in carrying out its duties. Matters
determined by the audit & risk management committee are submitted to the full Board as recommendations for Board
consideration.
The current members of the audit committee are Mr Christopher Gabriel and Mr John Bond with the Chief Financial Officer and
others invited to participate from time to time. The audit committee currently comprises 2 members. Both members of the audit
committee are independent non-executive directors.
Details of the qualifications of committee members and attendance at committee meetings are set out in the Directors’ Report.
The audit committee operates in accordance with a written charter. The audit committee oversees risk management, accounting
and reporting practices, and is also responsible for:
co-ordination and appraisal of the quality of the audits conducted by the Company’s external auditor;
determination of the independence and effectiveness of the external auditor;
assessment of whether non-audit services have the potential to impair the independence of the external auditor;
reviewing the adequacy of the reporting and accounting controls of the Company;
review the effectiveness of the compliance function in general; and
assessment of financial risks arising from the Company’s operations and considering the adequacy of measures taken to
moderate those risks.
Corporate reporting
The Chairman and Chief Financial Officer provide assurance to the Board that the declaration provided in accordance with
section 295A of the Corporations Act 2001 is founded on a sound system of risk management and internal control, and that the
system is operating effectively in all material respects in relation to financial reporting risks. In addition, reporting of the
management of the Company’s material business risks forms part of routine management reporting to the Board and review by the
audit committee.
18 | P a g e
JCurve Solutions Limited
CORPORATE GOVERNANCE STATEMENT (continued)
Continuous Disclosure and Shareholder Communication
The Company has a formal written policy for the continuous disclosure of any price sensitive information concerning the Company.
The Board has also adopted a formal written policy covering arrangements to promote communications with shareholders and to
encourage effective participation at general meetings.
The Chairman and the Company Secretary have been nominated as the Company’s primary disclosure officers. All information
released to the ASX is posted on the Company’s web-site immediately after it is disclosed to the ASX. When analysts are briefed
on aspects on the Company’s operations, the material used in the presentation is released to the ASX and posted on the
Company’s web-site.
JCurve is committed to providing shareholders and stakeholders with extensive, transparent, accessible and timely communications
on the Company’s activities, strategy and performance. In addition, the Company makes all market announcements, media
briefings, details of shareholders meetings, press releases and financial reports available on the Company’s website
www.JCurve.com.au.
Risk Management
The Company recognises the need to pro-actively manage the risks and opportunities associated with both day-to-day operations
of the organisation and its longer term strategic objectives and has developed a risk management policy. The risk management
policy outlines the roles and responsibilities of the Board and management in respect to risk oversight and management and the
Company’s process of risk management and internal compliance and controls.
The Board is responsible for the establishment, oversight and approval of the Company’s risk management strategy, internal
compliance and controls. The Board is also responsible for defining the “risk appetite” of the Company so that the strategic
direction of the Company can be aligned with its risk management policy.
The Company has the following risk management controls embedded in the company’s management and reporting system:
a comprehensive annual insurance program;
strategic and operational business plans; and
annual budgeting and monthly reporting systems which enable the monitoring of performance against expected targets and
the evaluation of trends.
Remuneration and Nomination
The Board has established a Remuneration and Nomination Committee Charter which outlines the overall strategies in respect to
director and executive remuneration and the processes surrounding new Board appointments to ensure an appropriate mix of skills
and experience to properly fulfil its responsibilities.
As outlined below, given the current structure of the Board, the role of the Remuneration and Nomination Committee is undertaken
by the full Board and includes reviewing and providing recommendations in respect to:
remuneration packages of key executives and directors;
incentive policies, incentive plans and other employee benefit programs;
recruitment, retention and termination policies;
procedures for senior management;
superannuation arrangements;
succession plans of key executives (other than executive directors) and ensuring the performance of key executives is
reviewed at least annually;
those aspects of the Company’s remuneration policies and packages, including equity-based incentives, which would be
subject to shareholder approval; and
nominations for potential director candidates.
19 | P a g e
JCurve Solutions Limited
CORPORATE GOVERNANCE STATEMENT (continued)
Remuneration and Nomination (continued)
In line with Corporate Governance Recommendations the Company distinguishes between the remuneration of non-executive
directors and senior executives. When determining non-executive director remuneration the Board will take into account
recommendations that:
Non-executive directors should normally be remunerated by way of fees, in the form of cash, non-cash benefits,
superannuation contributions or salary sacrifice into equity. They should not normally participate in schemes designed for
the remuneration of executives;
Non-executive directors should not receive options or bonus payments; and
Non-executive directors should not be provided with retirement benefits other than superannuation.
JCurve’s current remuneration practices are set to enable the company to attract and retain highly talented and motivated directors,
executive management, and employees. The Remuneration Report details and discloses the annual remuneration for key
management personnel and fees paid to non-executive directors. Non-executive directors are paid their fees in cash, including
statutory superannuation contributions. They do not receive any bonus payments nor are they entitled to any payment upon
retirement or resignation.
Corporate Governance Compliance Schedule
The table below identifies the ASX Corporate Governance Principles and Recommendations (Principles) and whether or not the
Company has complied with the recommendations during the reporting period:
Recommendation
Complied
Note
1.1
Establish the functions reserved to the board and those delegated to senior executives and
disclose those functions.
1.2 Disclose the process for evaluating the performance of senior executives.
1.3
Provide the information indicated in the Guide to reporting on Principle 1.
2.1
A majority of the board should be independent directors.
2.2
The chair should be an independent director.
2.3
The roles of chair and chief executive officer should not be exercised by the same
individual.
2.4
The board should establish a nomination committee.
2.5 Disclose the process for evaluating the performance of the board, its committees and
individual directors.
2.6
Provide information indicated in the Guide to reporting on Principle 2.
3.1 Establish a code of conduct and disclose the code or a summary of the code as to:
the practices necessary to maintain confidence in the company’s integrity;
the practices necessary to take into account their legal obligations and the reasonable
expectations of their stakeholders; and
the responsibility and accountability of individuals for reporting and investigating
reports of unethical practices.
3.2
Establish a policy concerning diversity and disclose the policy or a summary of that policy.
The policy should include requirements for the board to establish measureable objectives
for achieving gender diversity and for the board to assess annually both the objectives and
progress in achieving them.
3.3 Companies should disclose in each annual report the measurable objectives for achieving
gender diversity set by the board in accordance with the diversity policy and progress in
achieving them.
3.4 Companies should disclose in each annual report the proportion of women employees in
the whole organisation, women in senior executive positions and women on the board.
3.5
Provide information indicated in the Guide to reporting on Principle 3.
Note 1
Note 2
Note 3
Note 4
Note 4
Note 4
20 | P a g e
CORPORATE GOVERNANCE STATEMENT (continued)
Corporate Governance Compliance Schedule (continued)
JCurve Solutions Limited
Recommendation
Complied
Note
4.1
Establish an audit committee.
4.2
Structure the audit committee so that it:
consist only of non-executive directors;
consists of a majority of independent directors;
is chaired by an independent chair, who is not chair of the board; and
has at least three members.
4.3
The audit committee to have a formal charter.
4.4 Provide the information indicated in the Guide to reporting on Principle 4.
5.1
Establish written policies designed to ensure compliance with ASX Listing Rule disclosure
requirements and to ensure accountability at senior executive level for that compliance and
disclose those policies or a summary of those policies.
5.2
Provide the information indicated in the Guide to reporting on Principle 5.
6.1 Design a communications policy for promoting effective communication with shareholders
and encouraging their participation at general meetings and disclose the policy or a
summary of that policy.
6.2
Provide the information indicated in the Guide to reporting on Principle 6.
7.1
Establish policies for oversight and management of material business risks and disclose a
summary of those policies.
7.2 Require management to design and implement the risk management and internal control
system to manage the company’s material business risks and report to it on whether those
risks are being managed effectively. Disclose that management has reported to it as to the
effectiveness of the company’s management of its material business risks.
7.3 Disclose whether assurance has been received from the chief executive officer (or
equivalent) and the chief financial officer (or equivalent) that the declaration provided in
accordance with section 295A of the Corporations Act is founded on a sound system of risk
management and internal control and that the system is operating effectively in all material
respects in relation to financial reporting risks.
7.4
Provide information indicated in the Guide to reporting on Principle 7.
8.1
Establish a remuneration committee.
8.2 Clearly distinguish the structure of non-executive directors’ remuneration from that of
executive directors and senior executives.
8.3
Provide the information indicated in the Guide to reporting on Principle 8.
Note 5
Note 2
Note 6
21 | P a g e
JCurve Solutions Limited
CORPORATE GOVERNANCE STATEMENT (continued)
Corporate Governance Compliance Schedule (continued)
Note 1
Recommendation 2.2 – The chair should be an independent director.
Recommendation 2.3 of the Principles states the chair should be an independent director.
Notification of Departure: The Chair is an Executive Director
Explanation of Departure: Where practical, the chair should be a non-executive Director. For the financial period from 1
July 2013 to 30 June 2014, the chair was a non-executive Director. On 21 July 2014, the Managing Director assumed the
role of Executive Chairman following the sudden resignation of the non-executive Chairman. The Board considers that
the Company is not of sufficient size, nor are its affairs of such complexity to require an independent Chairman. This will
be reviewed as the Company develops.
Note 2 Recommendation 2.3 – Roles of chair and chief executive officer
Recommendation 2.3 of the Principles states that role of the chief executive officer and the chair should not be exercised
by the same person. Former Managing Director Mr Graham Baillie assumed the role of Executive Chairman on 21 July
2014 following the resignation of the non-executive Chairman. The Company has commenced the search for a chief
executive officer and intends to appoint a suitable replacement as soon as practicable.
Note 3:
Recommendation 2.4 – Nomination Committee
Recommendation 2.4 of the Principles states that the board should establish a nomination committee that should be
structured so that it:
consists of a majority of independent directors;
is chaired by an independent director; and
has at least three members.
The Board does not have a separate nomination committee. The Board, as a whole, serves as a nomination committee
and acts in accordance with the Nomination and Remuneration Committee Charter (Charter). The Board does not
believe any efficiency or other benefits would currently be gained by establishing a separate nomination committee.
The responsibility for the selection of potential directors lies with the full Board of the Company. A separate nomination
committee has not been constituted because the Board considers that the size of the current full Board permits it to act
as the nomination committee and to regularly review membership. This includes an assessment of the necessary and
desirable competencies of Board members, Board succession plans and an evaluation of the Board’s performance and
consideration of appointments and approvals.
When a Board vacancy occurs, the Board acting as the nomination committee identifies the particular skills, experience
and expertise that will best complement Board effectiveness, and then undertakes a process to identify candidates who
can meet those criteria.
Directors are not appointed for specific terms, as their periods in office are regularly reviewed as part of annual
performance evaluation processes and they are subject to re-election every three (3) years.
22 | P a g e
CORPORATE GOVERNANCE STATEMENT (continued)
Corporate Governance Compliance Schedule (continued)
JCurve Solutions Limited
Note 4: The Principles recommends that companies should actively promote ethical and responsible decision-making.
(a)
Recommendation 3.2 – Diversity Policy
Recommendation 3.2 states that companies should establish a policy concerning diversity and disclose the policy
or a summary of that policy. The policy should include requirements for the board to establish measureable
objectives for achieving gender diversity and for the board to assess annually both the objectives and progress in
achieving them.
The Company recognises that a talented and diverse workforce is a key competitive advantage and that an
important contributor to the Company’s success is the quality, diversity and skills of its people.
Under the Company's Code of Conduct, employees must not harass, discriminate or support others who harass
and discriminate against colleagues or members of the public on the grounds of sex, pregnancy, marital status,
age, race (including their colour, nationality, descent, ethnic or religious background), physical or intellectual
impairment, homosexuality or transgender. Such harassment or discrimination may constitute an offence under
legislation.
The Board does not consider that at this stage it is appropriate to specifically adopt a policy specifically
addressing diversity, but will consider adopting a policy as the company increases in size. Due to the small scale
of the Company's operations and the limited number of employees, the Company has not yet established a
Diversity Policy. However, as the Company develops the Board will consider adopting such a policy.
(b)
Recommendation 3.3 – Measurable Objectives for Achieving Gender Diversity
Recommendation 3.3 of the Principles states that the board should disclose in each annual report the measurable
objective for achieving gender diversity set by the board in accordance with the diversity policy and progress
towards achieving them.
Given the size of the Company, the Company has not yet set measurable objectives for achieving gender
diversity. In addition, the Board will review progress against any objectives identified on an annual basis.
(c)
Recommendation 3.4 – Annual Report Disclosure
Recommendation 3.4 of the Principles states that the board should disclose in each annual report:
the proportion of women employees in the whole organisation;
women in senior executive positions; and
women on the board.
Given the size of the Board and the Company, the Board considers that this function is efficiently achieved with
Ms Sarah Smith as the Company Secretary holding a senior position in the Company. The proportion of women
employees in the whole organisation is 18, representing 32.7% of total employees within the organisation, and
there are currently 2 women in senior executive positions within the Company.
23 | P a g e
CORPORATE GOVERNANCE STATEMENT (continued)
Corporate Governance Compliance Schedule (continued)
Note 5: Recommendation 4.1 – Audit Committee
JCurve Solutions Limited
The Corporate Governance Recommendations recommend that companies should have a structure to independently
verify and safeguard the integrity of their financial reporting. Recommendation 4.1 of the Principles states that the board
should establish an audit committee.
Recommendations 4.2 of the Principles states that the audit committee be structured so that it:
consists only of non-executive directors;
consists of a majority of independent directors;
is chaired by an independent chair, who is not chair of the board; and
has at least three members.
The Company has established an Audit Committee (“Committee”) which operates in accordance with a written charter. The
current members of the Committee are Mr Christopher Gabriel and Mr John Bond with other board members and the Chief
Financial Officer participating from time to time by invitation.
Due to the current structure of the Board, membership of the Committee does not meet all of the recommended guidelines
for composition of an audit committee. The Committee does not have at least 3 non-executive members.
Given the size of the Board and the Company, the Board considers that this function is efficiently achieved by a committee
of 2 non-executive, independent members reporting to the full Board. In circumstances where the size of the Board is
expanded as a result of the growth of the Company, the Board will reconsider the composition of the Committee to ensure
compliance with the Principles where possible.
Note 6: Recommendation 8.1 – Remuneration Committee
Recommendation 8.1 of the Principles states that the board should establish a remuneration committee that should be
structured so that it:
consists of a majority of independent directors;
is chaired by an independent director; and
has at least three members.
The directors consider that the current size of the Board of the Company does not warrant the establishment of a
separate remuneration committee. The Board considers that it is more appropriate that it set aside time at Board
meetings to address matters that would normally fall to the remuneration committee. The full Board will consider the
functions normally undertaken by a remuneration committee in accordance with the Charter. In addition all matters of
remuneration will continue to be determined in accordance with the Corporations Act requirements, especially in relation
to related party transactions. That is, no director will participate in any deliberations regarding their own remuneration or
related issues.
In circumstances where the size of the Board is expanded as a result of the growth or complexity of the Company, the
establishment of separate Board committees will be reconsidered.
24 | P a g e
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the consolidated financial report of JCurve Solutions Limited
for the year ended 30 June 2014, I declare that to the best of my knowledge and belief,
there have been no contraventions of:
a) the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
b) any applicable code of professional conduct in relation to the audit.
Perth, Western Australia
29 August 2014
N G Neill
Partner, HLB Mann Judd
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533.
Email: hlb@hlbwa.com.au. Website: http://www.hlb.com.au
Liability limited by a scheme approved under Professional Standards Legislation
HLB Mann Judd (WA Partnership) is a member of
International, a worldwide organisation of accounting firms and business advisers.
25 | P a g e
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2014
JCurve Solutions Limited
Revenue
Cost of goods sold
Gross profit
Employee benefits expense
Other employee related expense
Communications expense
Advertising and marketing
Professional fees
Occupation expense
Listing expense
Depreciation and amortisation expense
Impairment expense
Finance costs
Product development costs
Loss on disposal of fixed asset
Other expenses
Loss before income tax
Income tax benefit/(expense)
Net loss for the year
Loss after tax from discontinued operation
Net loss for the period
Other comprehensive income
Total comprehensive result for the year
Basic loss per share (cents per share)
Basic loss per share from continuing operations (cents per
share)
Diluted loss per share (cents per share)
Diluted loss per share from continuing operations (cents per
share)
The accompanying notes form part of these financial statements.
Notes
2
12
3
22
5
5
5
5
Consolidated ($)
2014
11,637,193
(3,936,476)
7,700,717
(4,380,889)
(609,718)
(114,612)
(336,737)
2013
10,139,950
(3,204,721)
6,935,229
(3,150,310)
(475,531)
(232,474)
(49,165)
(1,172,714)
(1,035,779)
(400,275)
(52,439)
(113,236)
(487,604)
(61,677)
(940,234)
(6,015)
(342,122)
(1,317,555)
(107,241)
(1,424,796)
-
(1,424,796)
-
(454,897)
(28,827)
(989,004)
(2,551,047)
(7,210)
-
-
(360,866)
(2,399,881)
(136,652)
(2,536,533)
(583,926)
(3,120,459)
-
(1,424,796)
(3,120,459)
(0.60)
(0.60)
(0.60)
(0.60)
(1.63)
(1.33)
(1.63)
(1.33)
26 | P a g e
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2014
JCurve Solutions Limited
Assets
Current Assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Total Current Assets
Non-Current Assets
Property, plant and equipment
Intangible assets
Other financial assets
Deferred tax asset
Total Non-Current Assets
Total Assets
Liabilities
Current Liabilities
Trade and other payables
Provisions
Current tax liabilities
Total Current Liabilities
Non-Current Liabilities
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Share capital
Reserves
Accumulated losses
Total Equity
The accompanying notes form part of these financial statements.
Notes
2014
2013
Consolidated ($)
6
7
8
10
11
9
3
13
14
14
15
15
2,765,265
2,719,797
628,071
6,113,133
115,694
10,570,897
31,856
217,612
10,936,059
17,049,192
5,677,604
41,781
21,237
5,740,622
172,021
172,021
5,912,643
11,136,549
17,588,248
1,723,014
(8,174,713)
11,136,549
3,606,727
2,118,135
48,260
5,773,122
91,618
875,000
99,123
334,956
1,400,697
7,173,819
2,749,502
42,543
10,008
2,802,053
91,528
91,528
2,893,581
4,280,238
10,879,285
150,870
(6,749,917)
4,280,238
27 | P a g e
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2014
JCurve Solutions Limited
Consolidated ($)
Inflows / (Outflows)
Notes
2014
2013
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Income tax received/(paid)
Net cash (used in)/provided by operating activities
6
Cash flows (used in)/from investing activities
Purchase of non-current assets
(Payment)/proceeds for other investments
Net (used in)/cash provided by investing activities
Cash flows from financing activities
Proceeds from issue of shares
Share issue costs paid
Net cash provided by financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at 1 July 2013
Cash and cash equivalents at 30 June 2014
The accompanying notes form part of these financial statements.
11,878,637
(12,315,856)
68,881
(61,677)
80,389
(349,626)
(60,040)
(2,753,760)
(2,813,800)
2,508,601
(186,637)
2,321,964
(841,462)
3,606,727
2,765,265
11,344,504
(10,550,209)
77,594
(7,210)
1,477
866,156
(56,959)
227,000
170,041
-
-
-
1,036,197
2,570,530
3,606,727
28 | P a g e
JCurve Solutions Limited
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2014
Consolidated
As at 1 July 2012
Loss for the year
Income tax benefit
Shares issued
Share issue costs
Share Capital
$
10,879,285
-
-
Accumulated
Losses
Equity Benefits
Reserve
$
(3,629,458)
(2,742,879)
(377,580)
$
150,870
-
-
10,879,285
(6,749,917)
150,870
-
-
-
-
-
-
Total
$
7,400,697
(2,742,879)
(377,580)
4,280,238
-
-
Balance at 30 June 2013
10,879,285
(6,749,917)
150,870
4,280,238
As at 1 July 2013
Loss for the year
Income tax expense
Recognition of equity based payment
10,879,285
-
-
-
(6,749,917)
(1,317,555)
(107,241)
-
10,879,285
(8,174,713)
Shares issued
Deferred consideration (unissued shares)
Share issue costs
6,635,386
205,357
(131,780)
-
-
150,870
-
-
1,572,144
1,723,014
-
-
4,280,238
(1,317,555)
(107,241)
1,572,144
4,427,586
6,635,386
205,357
(131,780)
Balance at 30 June 2014
17,588,248
(8,174,713)
1,723,014
11,136,549
The accompanying notes form part of these financial statements.
29 | P a g e
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(a)
Basis of Preparation
The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of
the Corporations Act 2001, Accounting Standards and Interpretations and complies with other requirements of the law. The
accounting policies detailed below have been consistently applied to all years unless otherwise stated. The financial
statements are for the consolidated entity consisting of JCurve Solutions Limited and its subsidiaries. The financial report
has also been prepared on a historical cost basis.
The financial report is presented in Australian dollars and all values are rounded to the nearest dollar.
The company is a listed public company, incorporated in Australia and also operating in South Africa.
(b)
Adoption of new and revised standards
In the year ended 30 June 2014, the directors have reviewed all of the new and revised Standards and Interpretations
issued by the AASB that are relevant to the Company and effective for the current annual reporting period.
The Directors have also reviewed all new Standards and Interpretations that have been issued but not yet effective for the
year ended 30 June 2014. As a result of this review, the Directors have determined that there is no material impact of the
new and revised Standards and Interpretations on the Group and, therefore, no change is necessary to Group accounting
policies.
(c)
Statement of Compliance
The financial report was authorised for issue on 29 August 2014.
The financial report complies with Australian Accounting Standards, which include Australian equivalents to International
Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report, comprising the financial
statements and notes thereto, complies with International Financial Reporting Standards (IFRS).
(d)
Basis of Consolidation
The consolidated financial statements comprise the financial statements of JCurve Solutions Limited and its subsidiaries
as at 30 June each year (the Group).
The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using
consistent accounting policies.
In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and
profit and losses resulting from intra-group transactions have been eliminated in full. Subsidiaries are fully consolidated
from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is
transferred out of the Group. Control exists where the company has the power to govern the financial and operating
policies of an entity so as to obtain benefits from its activities.
The acquisition of subsidiaries has been accounted for using the purchase method of accounting. The purchase method of
accounting involves allocating the cost of the business combination to the fair value of the assets acquired and the
liabilities and contingent liabilities assumed at the date of acquisition. Accordingly, the consolidated financial statements
include the results of subsidiaries for the period from their acquisition.
30 | P a g e
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(e)
Significant accounting judgments, estimates and assumptions
JCurve Solutions Limited
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future
events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of certain assets and liabilities within the next annual reporting period are:
(i)
Impairment of goodwill and intangibles with indefinite useful lives:
The Group determines whether goodwill and intangibles with indefinite useful lives are impaired at least on an annual
basis. This requires an estimation of the recoverable amount of the cash generating units to which the goodwill and
intangibles with indefinite useful lives are allocated. The assumptions used in this estimation of recoverable amount and
the carrying amount of goodwill and intangibles with indefinite useful lives are discussed in Note 13.
(ii)
Share-based payment transactions:
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by an external valuer using a Black -
Scholes model, using the assumptions as detailed in the notes.
(iii)
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences as management considers that it is probable that
sufficient future tax profits will be available to utilise those temporary differences. Significant management judgement is
required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level
of future taxable profits over future years together with future tax planning strategies.
(iv)
Identification of intangible assets on acquisition
On 31 October 2013, JCurve Business Software Pty Ltd, a subsidiary of JCurve Solutions Limited acquired the assets of
JCurve Solutions Pty Ltd.
The Netsuite licence which exclusively allows JCurve Solutions to sell the small business version of business software
from Netsuite Inc of USA (Netsuite) in the Australia New Zealand (ANZ) region was valued at $3,100,000 as per an
independent valuation report commissioned by the company. The JCurve Wizard product which allows potential customers
to trial the business software and then purchase online was valued at $500,000, based upon product development costs at
market rates.
For the calculation of the value of goodwill please refer to Note 23.
(f)
Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Board of Directors of JCurve Solutions Limited.
(g)
Revenue Recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue
can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:
(i)
Sale of goods
Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and the
costs incurred or to be incurred in respect of the transaction can be measured reliably. Risks and rewards of ownership
are considered passed to the buyer at the time of delivery of the goods to the customer.
(ii)
Subscription revenue
Subscription revenue comprises the recurring monthly fee from customers who subscribe to JCurve software services.
Customers are invoiced annually in advance, with a 12 month contractual term. Revenue is recognised as the services are
provided to the customer. Revenues that are not yet recognised at year end are recognised in the Statements of Financial
Position as unearned income and included within current liabilities.
31 | P a g e
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(g)
Revenue Recognition (continued)
(iii)
Rendering of services
Revenue from the rendering of services is recognised upon delivery of the service to the customer.
(iv)
Interest income
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial
asset.
(h)
Borrowing Costs
Borrowing costs are recognised as an expense when incurred except those that relate to the acquisition, construction or
production of qualifying assets where the borrowing cost is added to the cost of those assets until such time as the assets
are substantially ready for their intended use or sale.
(i)
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as operating leases.
Assets held under finance leases are initially recognised at their fair value or, if lower, the present value of the minimum
lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the
Statement of Financial Position as a finance lease obligation.
Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a
constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income,
unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the general
policy on borrowing costs - refer Note 1 (h).
Finance leased assets are depreciated on a straight line basis over the estimated useful life of the asset.
Operating lease payments are recognised as an expense on a straight line basis over the lease term, except where
another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are
consumed.
(j)
Cash and cash equivalents
Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid investments that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as
defined above, net of outstanding bank overdrafts.
(k)
Trade and other receivables
Trade receivables, which generally have 30-60 day terms, are recognised and carried at original invoice amount less an
allowance for any uncollectible amounts. An allowance for doubtful debts is made when there is objective evidence that
the Group will not be able to collect the debts. Bad debts are written off when identified.
32 | P a g e
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(l)
Income tax
JCurve Solutions Limited
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered
from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted
or substantively enacted by the balance date.
Deferred income tax is provided on all temporary differences at the balance date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a
transaction that is not a business combination and that, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; or
when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in
joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that
the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets
and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible
temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except:
when the deferred income tax asset relating to the deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable profit or loss; or
when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in
joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the
temporary difference will reverse in the foreseeable future and taxable profit will be available against which the
temporary difference can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be
utilised.
Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to the extent that it
has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the
asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively
enacted at the balance date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax
assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the
same taxation authority.
(m)
Other taxes
Revenues, expenses and assets are recognised net of the amount of Goods and Services Tax (GST) except:
when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in
which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as
applicable; and
receivables and payables, which are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or
payables in the Statement of Financial Position.
Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising
from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as
operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation
authority.
33 | P a g e
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(n)
Business Combinations
The acquisition method of accounting is used to account for all business combinations, including business combinations
involving entities or business under common control, regardless of whether equity instruments or other assets are
acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair value of the assets
transferred, the liabilities incurred and the equity interests issued by the group. The consideration transferred also includes
the fair value of any contingent consideration arrangement and the fair value of any pre-existing equity interest in the
subsidiary. Acquisition-related costs are expenses as incurred. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the
acquisition date. On an acquisition-by-acquisition basis, the group recognises any non-controlling interest in the acquiree
either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-
date fair value of any previous equity interest in the acquiree over the fair value of the group’s share of the net identifiable
assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the
subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit
or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their
present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate
at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.
Contingent consideration is classified as either equity or a financial liability. Amounts classified as a financial liability are
subsequently remeasured to fair value with changes in fair value recognised in profit or loss.
(o)
Property, plant & equipment and depreciation & amortisation
Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Such cost
includes the cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred.
Depreciation is calculated on a straight line basis over the estimated useful life of the assets.
Leasehold improvements are amortised over the period of the lease or the estimated useful life, whichever is the shorter,
using the straight-line method.
The following estimated useful lives are used in the calculation of depreciation and amortisation:
Plant and equipment
2 – 14 years
Leasehold improvements
1 – 6 years
The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each
financial year end.
(i) Impairment
The carrying values of plant and equipment are reviewed for impairment at each reporting date, with recoverable amount
being estimated when events or changes in circumstances indicate that the carrying value may be impaired.
The recoverable amount of plant and equipment is the higher of fair value less costs to sell and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset.
For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cash-
generating unit to which the asset belongs, unless the asset's value in use can be estimated to be close to its fair value.
An impairment exists when the carrying value of an asset or cash-generating units exceeds its estimated recoverable
amount. The asset or cash-generating unit is then written down to its recoverable amount.
For plant and equipment, impairment losses are recognised in the Statement of Comprehensive Income in the cost of
sales line item. However, because land and buildings are measured at revalued amounts, impairment losses on land and
buildings are treated as a revaluation decrement.
34 | P a g e
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(o)
Property, plant & equipment and depreciation & amortisation (continued)
(ii) De-recognition and disposal
An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are
expected from its use or disposal.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and
the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised.
(p)
Investments in associates and joint ventures
An associate is an entity over which the group has significant influence. Significant influence is the power to participate in
the financial and operating policy decisions of the investee but is not control or joint control over those policies.
A joint venture is an arrangement where the parties have joint control of the arrangement have rights to the net assets of
the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only
when decisions about the relevant activities require unanimous consent of the parties sharing control.
The results and assets and liabilities of associates and joint ventures are incorporated in these consolidated financial
statements using the equity method of accounting, except when the investment, or a portion thereof, is classified as held
for sale, in which case it is accounted for in accordance with AASB 5. Under the equity method, an investment in an
associate or a joint venture is initially recognised on the consolidated statement of financial position and adjusted
thereafter to recognised the Groups’ share of the profit or loss in other comprehensive income of the associate if joint
venture. When the Group’s share of losses of an associate or a joint venture exceeds the Group’s interest in that associate
or joint venture which includes any long-term interests that, in substance, form part of the Group’s net investment in
associate or joint venture, the Group discontinues to recognising its share of further losses. Additional losses are
recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of
the associate or joint venture.
An investment in associate or joint venture is accounted for using the equity method from the date on which the investee
becomes an associate or a joint venture. On acquisition of the investment in an associate or joint venture, any excess of
the cost of the investment over the Group’s share of the net fair value of the identifiable assets and liabilities is recognised
as goodwill, which is included within the carrying amount of the investment. Any excess of the Group’s share of net fair
value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognised
immediately in profit or loss in the period in which the investment is acquired.
The requirements of AASB 139 are applied to determine whether it is necessary to recognise any impairment loss with
respect to the Group’s investment in associate or joint venture. When necessary, the entire carrying amount if the
investment (including goodwill) is tested for impairment in accordance with AASB 136 ‘Impairment of Assets’ as a single
asset by comparing its recoverable amount (higher of value in use less costs to sell) with its carrying amount. Any
impairment loss recognised forms part of the carrying amount of the investment. Any reversal of that impairment loss is
recognised in accordance with AASB 136 to the extent that the recoverable amount of the investment subsequently
increases.
The Group discontinues the use of the equity method from the date when the investment ceased to be an associate or a
joint venture, or when the investment is classified as held for sale. When the group retains an interest in the former
associate or joint venture and the retained interest is a financial asset, the Group measures the retained interest at fair
value at that date and the fair value is regarded as its fair value on initial recognition in accordance with AASB 139. The
difference between the carrying amount of the associate or joint venture at the date the equity method was discontinued,
and the fair value of any retained interest and any proceeds from disposing of a part interest in the associate or joint
venture is included in the determination of the gain or loss on disposal of the associate or joint venture. In addition, the
Group accounts for all amounts previously recognised I other comprehensive income in relation to that associate or joint
venture on the same basis as would be required if that associate or joint venture had directly disposed of the related
assets or liabilities. Therefore, if a gain or loss recognised in other comprehensive income by that associate or joint
venture would be reclassified to profit or loss on the disposal of the related assets or liabilities., the Group reclassified the
gain or loss from equity to profit or loss (as a reclassification adjustment) when the equity method is discontinued.
The Group continues to use the equity method when an investment in an associate becomes an investment in a joint
venture or an investment in a joint venture becomes an investment in an associate. There is no remeasurement to fair
value upon such changes in ownership interests.
35 | P a g e
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(p)
Investments in associates and joint ventures (continued)
When the Group reduces its ownership interest in an associate or a joint venture but the Group continues to use the equity
method, the Group reclassified to profit and loss the proportion of the gain or loss that had previously been recognised in
other comprehensive income relating to that reduction in ownership interest if that gain or loss would be reclassified to
profit or loss on the disposal of the related assets or liabilities.
When a group entity transacts with an associate or a joint venture of the Group, profits and loss resulting from the
transactions with the associate or joint venture are recognised in the Group’s consolidated financial statements only to the
extent of interests in the associate or joint venture that are not related to the Group.
(q)
Interests in joint operations
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the
assets, and obligations for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of
control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the
parties sharing control.
When a group entity undertakes its activities under joint operations, the Group as a joint operator recognises in relation to
its interests a joint operation:
Its assets, including its share of any assets held jointly;
Its liabilities, including its share of any liabilities incurred jointly;
Its revenue from the sale of its share of the output arising from the joint operation;
Its share of the revenue from the sale of the output by the joint operation; and
Its expenses, including its share of any expenses incurred jointly.
The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in
accordance with AASBs applicable to the particular assets, liabilities, revenues and expenses.
When a group entity transacts with a joint operation in which a group entity is a joint operator (such as a sale or
contribution of assets), the Group is considered to be conducting the transaction with the other parties to the joint
operation, and gains and losses resulting from the transactions are recognised in the Group’s consolidated financial
statements only to the extent of other parties’ interests in the joint operation.
When a group entity transacts with a joint operation in which a group entity is a joint operator (such as a purchase of
assets), the Group does not recognise its share of the gains and losses until it resells those assets to a third party.
36 | P a g e
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(r)
Goodwill
Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business
combination over the Group’s interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent
liabilities.
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.
Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the
carrying value may be impaired.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated
to each of the Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from the
synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or
groups of units.
Each unit or group of units to which the goodwill is so allocated:
represents the lowest level within the Group at which the goodwill is monitored for internal management
purposes; and
is not larger than a segment based on either the Group’s primary or the Group’s secondary reporting format
determined in accordance with AASB 8 Operating Segments.
Impairment is determined by assessing the recoverable amount of the cash-generating unit (or group of cash-generating
units), to which the goodwill relates. When the recoverable amount of the cash-generating unit (group of cash-generating
units) is less than the carrying amount, an impairment loss is recognised. When goodwill forms part of a cash-generating
unit (group of cash-generating units) and an operation within that unit is disposed of, the goodwill associated with the
operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of
the operation. Goodwill disposed of in this manner is measured based on the relative values of the operation disposed of
and the portion of the cash-generating unit retained.
Impairment losses recognised for goodwill are not subsequently reversed.
(s)
Intangible assets
Intangible assets acquired separately or in a business combination are initially measured at cost. The cost of an intangible
asset acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition,
intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally
generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is charged
against profits in the year in which the expenditure is incurred.
The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are
amortised over the useful life and assessed for impairment whenever there is an indication that the intangible asset may
be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is
reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of
future economic benefits embodied in the asset are accounted for by changing the amortisation period or method, as
appropriate, which is a change in accounting estimate. The amortisation expense on intangible assets with finite lives is
recognised in profit or loss in the expense category consistent with the function of the intangible asset.
Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash-generating
unit level. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life is reviewed each
reporting period to determine whether indefinite life assessment continues to be supportable. If not, the change in the
useful life assessment from indefinite to finite is accounted for as a change in an accounting estimate and is thus
accounted for on a prospective basis.
37 | P a g e
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(t)
Intangible assets (continued)
Research and development costs
JCurve Solutions Limited
Research costs are expensed as incurred. An intangible asset arising from development expenditure on an internal project
is recognised only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it
will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate
future economic benefits, the availability of resources to complete the development and the ability to measure reliably the
expenditure attributable to the intangible asset during its development. Following the initial recognition of the development
expenditure, the cost model is applied requiring the asset to be carried at cost less any accumulated amortisation and
accumulated impairment losses. Any expenditure so capitalised is amortised over the period of expected benefits from the
related project.
The carrying value of an intangible asset arising from development expenditure is tested for impairment annually when the
asset is not yet available for use or more frequently when an indication of impairment arises during the reporting period.
A summary of the policies applied to the Group’s intangible assets follows. These policies are consistent with those of the
previous financial year unless otherwise stated.
Development Costs
Impairment testing
Impairment testing is conducted annually for assets not yet available for use and more frequently when an indication of
impairment exists. The amortisation method is reviewed at each financial year-end.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised.
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such
indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s
recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and
is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of
those from other assets or groups of assets and the asset's value in use cannot be estimated to be close to its fair value.
In such cases the asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying
amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is
considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment
losses relating to continuing operations are recognised in those expense categories consistent with the function of the
impaired asset unless the asset is carried at revalued amount (in which case the impairment loss is treated as a
revaluation decrease).
An assessment is also made at each reporting date as to whether there is any indication that previously recognised
impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is
estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to
determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying
amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount
that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.
Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal is
treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the
asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.
38 | P a g e
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(t)
Trade and other payables
Trade payables and other payables are carried at amortised costs and represent liabilities for goods and services
provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to
make future payments in respect of the purchase of these goods and services. Trade and other payables are presented
as current liabilities unless payment is not due within 12 months.
(u)
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. Provisions are not recognised for future operating losses.
When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the
reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense
relating to any provision is presented in the Statement of Comprehensive Income net of any reimbursement.
Provisions are measured at the present value or management’s best estimate of the expenditure required to settle the
present obligation at the end of the reporting period.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the
risks specific to the liability.
When discounting is used, the increase in the provision due to the passage of time is recognised as an interest expense.
(v)
Employee benefits
(i) Wages, salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to
be settled within 12 months of the reporting date are recognised in other payables in respect of employees’ services up to
the reporting date, They are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for
non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable.
(ii) Long service leave
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 reporting date using the
projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee
departures, and period of service. Expected future payments are discounted using market yields at the reporting date on
national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future
cash outflows.
(w)
Share-based transactions
(i) Equity settled transactions:
The Group provides benefits to employees (including senior executives) of the Group in the form of share-based
payments, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions).
The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by an external valuer using the Black-
Scholes model, further details of which are given in Note 17.
39 | P a g e
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(w)
Share-based transactions (continued)
JCurve Solutions Limited
In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to
the price of the shares of JCurve Solutions Limited (market conditions) if applicable.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in
which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become
fully entitled to the award (the vesting period).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the
extent to which the vesting period has expired and (ii) the Group’s best estimate of the number of equity instruments that
will ultimately vest. No adjustment is made for the likelihood of market performance conditions being met as the effect of
these conditions is included in the determination of fair value at grant date. The Statement of Comprehensive Income
charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of
that period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon
a market condition.
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been
modified. In addition, an expense is recognised for any modification that increases the total fair value of the share-based
payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet
recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and
designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were
a modification of the original award, as described in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per
share (see Note 5).
(x)
Issued Capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new
shares or options for the acquisition of a new business are not included in the cost of acquisition as part of the purchase
consideration.
(y)
Loss per share
Basic loss per share is calculated as net profit/loss attributable to members of the parent, adjusted to exclude any 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 loss per share is calculated as net profit/loss attributable to members of the parent, 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; and
other non-discretionary changes in revenues or expenses during the period that would result from the dilution of
potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential
ordinary shares, adjusted for any bonus element.
(z)
Foreign currency translation
Both the functional and presentation currency of JCurve Solutions Limited and its Australian subsidiaries is Australian
dollars. Each entity in the Group determines its own functional currency and items included in the financial statements of
each entity are measured using that functional currency.
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at
the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of
exchange ruling at the balance date.
40 | P a g e
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 2:
REVENUES AND EXPENSES FROM CONTINUING OPERATIONS
JCurve Solutions Limited
(a) Revenue
Telecommunications expense management
MTN South Africa
Training
IBM software licences – new sales
IBM software licences & maintenance renewals
Computer services & subscriptions
JCurve cloud software & solutions
Interest income
Other income
(b) Expenses
Interest expense
Depreciation of non-current assets
Operating lease rental expense: minimum lease payments
Amortisation of intangibles
Directors’ Fees
Consultancy Fees
Consolidated ($)
2014
2013
4,926,884
1,423,839
4,970
229,244
1,938,101
843,398
2,193,400
68,881
8,476
4,940,481
826,866
2,500
218,830
2,857,717
1,214,007
-
73,321
6,228
11,637,193
10,139,950
61,677
63,236
302,635
50,000
558,586
396,729
7,210
71,065
388,341
917,939
375,822
508,127
41 | P a g e
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 3:
INCOME TAX
Income tax recognised in profit or loss
The major components of tax expense are:
Current tax expense
Origination and reversal of temporary differences
Total tax (benefit)/expense
Attributable to:
Continuing operations
Discountinued operations
JCurve Solutions Limited
Consolidated ($)
2014
2013
-
107,241
107,241
107,241
-
-
377,580
377,580
136,652
240,928
The prima facie income tax (benefit)/expense on pre-tax accounting
tax
(loss)/profit from continuing operations reconciles
(benefit)/expense in the financial statements as follows:
to the income
Accounting loss before tax
Income tax benefit calculated at 30%
(1,317,555)
(395,266)
(2,399,881)
(719,965)
Deferred tax expense relating to the origination and reversal of temporary
differences
Goodwill impairment
Non-deductible expenses
Share issue expenses – deductible
Research and development tax incentive
Income
tax
Comprehensive Income
(benefit)/expense
reported
in
the Statement of
Net Deferred Tax Asset
Analysis of deferred tax assets:
Tax losses available to offset against future taxable income (i)
Accruals and provisions
Analysis of deferred tax liabilities:
Capitalised research and development
Prepayments
Net Deferred Tax Asset
439,386
146,281
25,610
(29,649)
(79,121)
107,241
5,922
211,690
217,612
-
-
-
217,612
94,652
765,314
15,329
(18,678)
-
136,652
215,173
120,672
335,845
-
(889)
(889)
334,956
(i)
The balance of unrecouped tax losses that have not been recognised in the Financial Statements amount to $1,969,334
(2013: $1,101,824).
42 | P a g e
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 4:
SEGMENT REPORTING
AASB 8 Operating Segments requires operating segments to be identified on the basis of internal reports about components of the
Group that are reviewed by the chief operating decision maker in order to allocate resources to the segment and assess its
performance. The Board of Directors of JCurve Solutions Limited reviews internal reports prepared as consolidated financial
statements and strategic decisions of the Group are determined upon analysis of these internal reports. The Group operates
predominantly in one business and geographical segment being the software development and software solutions industry
providing services for corporate and government clientele predominately throughout Australia. Accordingly, under the
‘management approach’ outlined only one operating segment has been identified and no further disclosure is required in the notes
to the consolidated financial statements.
NOTE 5:
LOSS PER SHARE
Basic loss per share
Basic loss per share from continuing operations
Diluted loss per share
Diluted loss per share from continuing operations
Basic loss from operations
Loss from continuing operations
Consolidated
2014
2013
Cents per share
Cents per share
(0.60)
(0.60)
(0.60)
(0.60)
(1.63)
(1.33)
(1.63)
(1.33)
$
$
(1,424,796)
(1,424,796)
(3,120,459)
(2,536,533)
No.
No.
Weighted average number of ordinary shares for the purposes of basic loss per
share
Weighted average number of ordinary shares for the purposes of diluted loss per
share:
237,460,160
191,077,728
237,460,160
191,077,728
43 | P a g e
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 6:
CASH AND CASH EQUIVALENTS
Cash at bank and on hand
JCurve Solutions Limited
Consolidated ($)
2014
2013
2,765,265
2,765,265
3,606,727
3,606,727
Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods
of between one day and three months, depending on the immediate cash requirements of the Group, and earn interest at the
respective short-term deposit rates
At 30 June 2014, the Group has no committed borrowing facilities.
Reconciliation of (loss)/profit for the year after tax to net cash flows
from operating activities
(Loss)/profit for the year
Non Cash flows in operating (loss)/profit:
Depreciation and amortisation from continuing operations
Depreciation and amortisation from discontinued operations
Impairment from continuing operations
Impairment from discontinued operations
Loss on disposal of fixed assets
Profit on disposal of Softlog
(Increase)/decrease in assets:
Current receivables
Current inventories
Non-current receivables
Other financial assets
Deferred tax assets
Increase/(decrease) in liabilities:
Current payables
Current tax provision
Provisions
Net cash from operating activities
NOTE 7:
TRADE AND OTHER RECEIVABLES
Current:
Trade receivables (i)
Allowance for doubtful debts
Accrued revenue
(1,424,796)
(3,120,459)
113,236
-
487,604
-
6,015
-
(318,870)
-
81,850
175,133
458,221
11,229
60,752
(349,626)
989,004
3,960
2,551,047
170,342
-
(111,913)
644,335
561
68,451
370,153
(642,373)
(39,059)
(17,893)
866,156
2,625,764
(27,575)
121,608
2,719,797
2,075,660
(22,985)
65,460
2,118,135
(i)
the average credit period on sales of goods and rendering of services is 30 days. An allowance has been made for
estimated irrecoverable trade receivable amounts arising from the past sale of goods and rendering of services,
determined by reference to past default experience. Refer to note 18 for ageing of receivables.
44 | P a g e
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 8:
OTHER CURRENT ASSETS
Prepayments
NOTE 9:
OTHER FINANCIAL ASSETS
Security Deposits
NOTE 10:
PLANT AND EQUIPMENT
Plant and equipment, at cost
Less accumulated depreciation
Net carrying amount
Leasehold improvements, at cost
Less accumulated depreciation
Net carrying amount
JCurve Solutions Limited
Consolidated ($)
2014
2013
628,071
628,071
31,856
31,856
785,058
(681,482)
103,576
68,104
(55,986)
12,118
48,260
48,260
99,123
99,123
693,657
(613,703)
79,954
58,923
(47,259)
11,664
Total net carrying amount
115,694
91,618
Reconciliations: Consolidated
Movements:
Net carrying amounts as at 30 June 2012
De-recognition of assets of Softlog Systems
Additions
Depreciation charges
Net carrying amounts as at 30 June 2013
Disposals
Additions
Depreciation charges
Net carrying amounts as at 30 June 2014
Plant &
Equipment
Leasehold
Improvements
$
$
142,703
(13,272)
23,479
(72,956)
79,954
(7,565)
85,696
(54,509)
103,576
3,797
-
13,804
(5,937)
11,664
-
9,181
(8,727)
12,118
Total
$
146,500
(13,272)
37,283
(78,893)
91,618
(7,565)
94,877
(63,236)
115,694
45 | P a g e
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 11:
INTANGIBLE ASSETS
Consolidated
Year ended 30 June 2013
At 1 July 2012, net of accumulated amortisation and impairment
Additions
Disposal of investment
Amortisation charge
Impairment charge
At 30 June 2013, net of accumulated amortisation and impairment
Year ended 30 June 2014
At 1 July 2013, net of accumulated amortisation and impairment
Additions
Impairment charge
At 30 June 2014, net of accumulated amortisation and impairment
JCurve Solutions Limited
Software
Development,
Licences & Other
Intangibles
Goodwill
Total
$
$
$
894,396
17,607
4,072,052
4,966,448
-
(646,005)
(912,003)
-
-
17,607
(646,005)
(912,003)
-
-
-
3,603,396
(50,000)
3,553,396
(2,551,047)
(2,551,047)
875,000
875,000
875,000
6,630,105
(487,604)
875,000
10,233,501
(537,604)
7,017,501
10,570,897
In-house developed software is expected to have an estimated useful life of ten years following commercialisation.
Goodwill is subject to annual impairment testing (see Note 12).
An impairment loss of $487,604 (2013: $2,551,047) was recognised for continuing operations in the 2014 financial year. The
impairment write off charge was for $387,604 Phoneware Goodwill due to Phoneware’s continued migration plan to move
customers to JTEL and $100,000 to write off the goodwill attached to the acquisition of FleetManager®.
46 | P a g e
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 12:
IMPAIRMENT TESTING OF GOODWILL AND INTANGIBLES WITH INDEFINITE LIVES
Goodwill acquired through business combinations has been allocated to 5 individual cash generating units (CGU) for impairment
testing as follows:
JCurve Solutions Limited
FleetManager®
Phoneware
Resource
JCurve Business Software
The Full Circle Group
FleetManager®
FleetManager®’s Goodwill has been impaired by $100,000 at 30 June 2014 with the acquisition of The Full Circle Group and the
planned merger of the FleetManager platform with the The Full Circle Group platform.
FleetManager®’s original capitalised research and development was commercialised as a 10 year project and with a useful life of
10 years. However this project has now finished and a new FleetManager® research and development project based on a
complete site rebuild commenced on 1 July 2013.
life of
the original FleetManager®’s
The
from
10 years to 7 years. Accelerated amortisation of $660,774 for the remaining 3 years was booked in the accounts for year ended
30 June 2013 in addition to $251,229 for amortisation for year 7 of the FleetManager® original research and development project.
Expenditure of development on this project for the 2013 year had been $17,607.
research and development has effectively been
reduced
Phoneware
The recoverable amount of the Phoneware unit has been determined based on a value in use calculation using cash flow
projections based on financial budgets approved by senior management covering a 4 year period.
The discount rate applied to cash flow projections, including a factor for risk, is 12.00% (2013: 12.25%). Phoneware has an
impairment of $387,604 (2013: $1,843,217) compared to the original goodwill of Phoneware of $2,618,217 based on the detailed
discounted cash flows for the next 2 years and Phoneware’s migration plan to move customers to FleetManager®. Phoneware’s
goodwill was written down to $387,396 as at 30 June 2014 (2013: $775,000).
Resource
The recoverable amount of the Resource unit is also determined based on a value in use calculation using cash flow projections
based on financial budgets approved by management covering a 2 year period.
The discount rate applied to the cash flow projections, including a factor for risk, is 12.00% (2013: 12.25%).
For the financial year ending 30 June 2013, Resource Systems original goodwill of $707,830 is impaired on the basis of detailed
discounted cash flow statements completed for the next 2 years and the softening of software sales, particularly in Western
Australia where the economy is slowing due to transition underway in the mining sector.
JCurve Business Software
The net assets include $3.1 million for Netsuite reseller agreement and $500k for installation Wizard which were both taken up at
fair value on acquisition. The JCurve Wizard will be amortised over its useful life of 5 years commencing 1 January 2014, with
amortisation charge of $50k for 2014 financial year. In addition to the identifiable assets previously mentioned, Goodwill of
$4,007,008 has been recognised in respect of the JCurve acquisition.
In accordance with AASB136, the Directors are not required to complete a full assessment of the Impairment of Goodwill until
December 2014, being 12 months from the date the asset was recorded. At balance date, the Directors have reviewed key
indicators which may indicate that the asset is impaired. On this basis the directors are satisfied that there is no reason to believe
that the Goodwill in respect of JCurve Business Software is impaired as at 30 June 2014.
The Full Circle Group
Goodwill of $2,623,097 was recorded on the acquisition of the Full Circle Group which occurred on 17 June 2014 Given this
acquisition occurred just prior to end of financial year there has been no opportunity for the economic benefits to arise and no
reason to consider that the intangibles acquired being Goodwill and Intellectual Property, are impaired.
47 | P a g e
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 12:
IMPAIRMENT TESTING OF GOODWILL AND INTANGIBLES WITH INDEFINITE LIVES (continued)
Carrying amount of intangibles allocated to each of the cash generating units
JCurve Solutions Limited
Consolidated ($)
FleetManager Phoneware Full Circle
JCurve
Business
Software
Resource
Total
-
-
-
387,396
2,623,097
4,007,008
-
3,396
3,550,000
-
-
7,017,501
3,553,396
387,396
2,626,493
7,557,008
- 10,570,897
At 30 June 2014
Carrying amount of goodwill
Carrying amount of developed
software, licences & other
intangibles
Total
At 30 June 2013
Carrying amount of goodwill
100,000
775,000
Carrying amount of developed
software
-
-
Total
100,000
775,000
-
-
-
-
-
-
-
-
-
875,000
-
875,000
Key assumptions used in value calculations for 30 June 2014 and 30 June 2013
The following describes each key assumption on which management has based its cash flow projections when determining the
value in use of all the cash generating units.
Budgeted gross margins
The basis used to determine the value assigned to the budgeted gross margins is the average
gross margins achieved in the year immediately before the budgeted year, increased for
expected efficiency improvements. Thus, values assigned to gross margins reflect past
experience, except for efficiency improvements.
Cash rate
Risk factor
a base rate of 2.50% (2013: 2.75%) as per the Reserve Bank of Australia has been used.
an additional amount of 9.5% has been factored for general business risk.
NOTE 13:
TRADE AND OTHER PAYABLES
Current:
Trade payables (i)
Other payables
Annual leave
Accrued expenses
Unearned Income
Consolidated ($)
2014
2013
1,331,321
424,806
212,083
750,291
2,959,103
5,677,604
1,404,350
199,705
124,615
292,130
728,702
2,749,502
(i)
interest rate and credit risk of current payables is set out in Note 17.
Trade payables are non-interest bearing and are normally settled on 30-day terms. Information regarding the effective
48 | P a g e
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 14:
PROVISIONS
Current:
Provision for long service leave
Non-current:
Provision for long service leave
NOTE 15:
SHARE CAPITAL AND RESERVES
Ordinary shares issued and fully paid (i)
Unissued shares (ii)
JCurve Solutions Limited
Consolidated ($)
2014
$
2013
$
41,781
42,543
172,021
213,802
91,528
134,071
17,382,891
205,357
17,588,248
10,879,285
-
10,879,285
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Movement in ordinary shares on issue
No.
$
At 1 July 2012
Shares issued
At 30 June 2013
Shares issued
Share issue costs
Related income tax
At 30 June 2014
(ii) Movement in unissued shares
At 1 July 2013
Deferred consideration
At 30 June 2014
Share options
191,077,728
10,879,285
-
191,077,728
136,779,172
-
-
327,856,900
-
10,879,285
6,635,386
(186,637)
54,857
17,382,891
-
4,464,285
4,464,285
-
205,357
205,357
JCurve Solutions Limited issued 35,714,284 options (valued at $1,572,144) as part consideration for the acquisition of JCurve
Solutions Pty Ltd by its’ subsidiary JCurve Business Software Pty Ltd. Refer Note 23.
Reserves
Balance 1 July 2013
Equity benefits reserve – options issued to director
Balance 30 June 2014
Nature and purpose of reserves
Employee Equity benefits reserve
2014
$
150,870
1,572,144
1,723,014
2013
$
150,870
-
150,870
This reserve is used to record the value of equity benefits provided to employees as part of their remuneration. Refer to Note 16 for
further details of the plan.
49 | P a g e
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 16:
SHARE BASED PAYMENT PLANS
Employee Share Option Plan
The Employee Share Option Scheme which expired on 12 November 2012 provided for employees and executives to receive
options over ordinary shares for no consideration. Each option is convertible to one ordinary share. There are no voting rights or
dividend rights attached to unissued ordinary shares.
JCurve Solutions Limited issued 35,714,284 options (valued at $1,572,144) as part consideration for the acquisition of JCurve
Solutions Pty Ltd by its’ subsidiary JCurve Business Software Pty Ltd. Refer Note 23.
The contractual life of each option granted is between 3 and 5 years. There are no cash settlement alternatives.
The expense recognised in the statement of comprehensive income in relation to share-based payments is disclosed in Note 16.
The following table illustrates the number (No.) and weighted average exercise prices of and movements in share
options issued during the year:
Outstanding at the beginning of the
year
Expired during the year
Granted during the year
Outstanding at the end of the year
Exercisable at the end of the year
2014
2013
No.
800,000
(800,000)
35,714,284
35,714,284
35,714,284
Weighted
average
exercise price
$0.11
$0.11
$0.000001
$0.000001
No.
4,100,000
(3,300,000)
-
800,000
800,000
Weighted
average
exercise price
$0.11
$0.11
-
$0.11
The weighted average remaining contractual life for the share options outstanding as at 30 June 2014 is between 3 and 5 years
(2013: 0 and 1 years).
The range of exercise prices for options outstanding at the end of the year was $0.000001 (2013: $0.10 - $0.15)
The average exercise price of options expired during the year was $0.11.
The outstanding balance as at 30 June 2014 is represented by:
8,928,571 options which automatically vest when the share price reaches 7.5c for a period of 10 consecutive trading
days, exercisable on or before 31 March 2016;
8,928,571 options which automatically vest when the share price reaches 10c for a period of 10 consecutive trading days,
exercisable on or before 31 March 2017;
8,928,571 options which automatically vest when the share price reaches 12.5c for a period of 10 consecutive trading
days, exercisable on or before 31 March 2018;
8,928,571 options which automatically vest when the share price reaches 15c for a period of 10 consecutive trading days,
exercisable on or before 31 March 2019
50 | P a g e
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 17:
FINANCIAL INSTRUMENTS
(a)
Capital risk management
Capital risk is managed and monitored by liaising with banks and communicating with shareholders. JCurve considers new
government legislation and monitors the market place by canvassing information from stockbrokers and investors.
When managing capital, management's objective is to ensure the entity continues as a going concern as well as to maintain optimal
returns to shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure that ensures the
lowest cost of capital available to the entity. Management adjust the capital structure as necessary to take advantage of favourable
costs of capital or high returns on assets. As the market is constantly changing, management may change the amount of dividends
to be paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
(b)
Categories of financial instruments
Financial assets
Receivables
Cash and cash equivalents
Other financial assets
Financial liabilities
Payables
Consolidated ($)
2014
2013
2,719,797
2,765,265
31,856
2,118,135
3,606,727
99,123
5,677,604
2,749,502
3,2
The Group has no derivative instruments in designated hedging relationships.
(c)
Financial Risk Management
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement
and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity
instrument are disclosed in Note 1 to the financial statements.
The Group’s principal financial liabilities are trade payables and unearned income. The main purpose of these financial liabilities is
to raise finance for the Group’s operations. The Group has various financial assets such as trade receivables and cash and short-
term deposits, which arise directly from its operations.
It is, and has been throughout 2013 and 2014, the Group’s policy that no trading in derivatives shall be undertaken. The main risks
arising from the Group’s financial instruments are cash flow interest rate risk, liquidity risk, and credit risk. The Board of Directors
reviews and agrees on policies for managing each of these risks which are summarised in following pages.
(d)
Price Risk – Equity and Commodity
The Group's exposure to commodity and equity securities price risk is minimal.
(e)
Foreign Currency Risk
The Group has minimal exposure to foreign currency risk as the Group trades mainly within Australia. The contract for Joint Venture
in South Africa stipulates that the service revenue will be billed in Australian dollars.
51 | P a g e
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 17:
FINANCIAL INSTRUMENTS (continued)
(f)
Interest Rate Risk
The following table sets out the carrying amount, by maturity, of the Group’s financial instruments including those exposed to
interest rate risk:
Consolidated
Within 1year
1 to 5 years
Total
Weighted
average
effective interest
rate
$
$
$
%
Year ended 30 June 2014
Financial assets
Trade and other receivables
Floating rate:
Cash Assets
Financial liabilities
Payables
Other payables
Year ended 30 June 2013
Financial assets
Trade and other receivables
Floating rate:
Cash Assets
Financial liabilities
Payables
Other payables
2,719,797
2,719,797
2,765,265
2,765,265
5,485,062
5,677,604
-
5,677,604
2,118,135
2,118,135
3,606,727
3,606,727
5,724,862
2,749,502
-
2,749,502
2,719,797
2,719,797
2,765,265
2,765,265
5,485,062
5,677,604
-
5,677,604
2,118,135
2,118,135
3,606,727
3,606,727
5,724,862
2,749,502
-
2,749,502
-
-
-
-
-
-
-
-
-
-
-
-
2.53
-
-
3.13
-
-
For all financial instruments, the net fair value approximates their carrying value.
No financial assets and financial liabilities are readily traded on organised markets in standardised forms.
Interest on financial instruments classified as floating rate is fixed at intervals of less than one year. The other financial instruments
of the Group that are not included in the above tables are non-interest bearing and are therefore not subject to interest rate risk.
52 | P a g e
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 17:
FINANCIAL INSTRUMENTS (continued)
Interest rate risk sensitivity analysis
The sensitivity analysis below has been determined based on the exposure to interest rates for both derivative and non-derivative
instruments at the reporting date and the stipulated change taking place at the beginning of the financial year and held constant
throughout the reporting period. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key
management personnel and represents management’s assessment of the change in interest rates.
At reporting date, if interest rates had been 50 basis points higher or lower and all other variables were held constant, the Group’s
net loss before tax would increase by $13,613 and decrease by $13,613 respectively (2013: $11,759). This is mainly attributable to
the Group’s exposure to interest rates on its variable rate cash deposits.
(g)
Credit Risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, trade and other receivables.
The Group's exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal to the
carrying amount of these instruments. Exposure at balance date is addressed in each applicable note.
The Group does not hold any credit derivatives to offset its credit exposure.
The Group trades only with recognised, creditworthy third parties, and as such collateral is not requested nor is it the Group's policy
to securitise its trade and other receivables.
It is the Group's policy that all customers who wish to trade on credit terms are subject to credit verification procedures including an
assessment of their independent credit rating, financial position, past experience and industry reputation. Risk limits are set for each
individual customer in accordance with parameters set by the board. These risk limits are regularly monitored.
Receivable balances are monitored on an ongoing basis with the result that the Group's exposure to bad debts is not significant.
Accounts Receivable and Provision
Trade Receivables – Past Due Not Impaired
At 30 June, the ageing analysis of trade receivables is as follows:
Consolidated
Total
2,625,764
2,075,660
0-30
days
31-60
days
2,341,786
1,822,696
114,545
74,982
61-90
days
PDNI*
85,288
91,350
61-90
days
CI*
-
-
+91
days
PDNI*
56,571
63,647
+91
days
CI*
27,574
22,985
2014
2013
*
PDNI
- Past due not impaired
CI
- Considered impaired
Receivables past due but not considered impaired are: Consolidated $141,859 (2013: $154,997).
Other balances within trade and other receivables do not contain impaired assets and are not past due. It is expected that these
other balances will be received when due.
53 | P a g e
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 17:
FINANCIAL INSTRUMENTS (continued)
(h)
Liquidity Risk Management
Ultimate responsibility for liquidity risk management rests with the board of directors, who have built an appropriate liquidity risk
management framework for the management of the Group’s short, medium and long-term funding and liquidity management
requirements. The Group manages liquidity risk by maintaining adequate reserves and banking facilities by continuously monitoring
forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.
NOTE 19:
COMMITMENTS AND CONTINGENCIES
Remuneration Commitments
There are no commitments for the payment of salaries and other remuneration under long-term employment contracts in existence
at the reporting date.
Operating Lease Commitments
The Group had the following operating lease commitment for office space at balance date:
Within one year
After one year but not more than five years
Contingent Liabilities
The company does not have any contingent liabilities.
NOTE 19:
EVENTS AFTER BALANCE DATE
Consolidated ($)
2014
72,029
17,111
2013
165,870
72,029
On 21 July 2014, Mr Nihal Gupta resigned as Non-Executive Chairman and Mr Graham Baillie was appointed to the position of
Executive Chairman (Refer to Note 19 for details). James Butchers, Chief Financial Officer ceased employment with JCurve
Solutions on 5 August 2014.
NOTE 20:
AUDITOR’S REMUNERATION
The auditor of JCurve Solutions Limited is HLB Mann Judd.
Amounts received or due and receivable by HLB Mann Judd for:
An audit or review of the financial report of the entity and any other entity in
the consolidated group
68,700
62,822
Consolidated ($)
2014
2013
54 | P a g e
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 21: INTEREST IN JOINT VENTURE
The Group has a 50% interest in the Webhouse Software joint venture, which is involved in providing telecommunications expense
management solutions in South Africa.
The share of the assets, liabilities, revenue and expenses of the jointly controlled operation, which are included in the consolidated
financial statements, are as follows:
JCurve Solutions Limited
Current assets
Trade and other receivables
Total current assets
Non-current assets
Total Non-current assets
Current liabilities
Trade and other payables
Total current liabilities
Non-current liabilities
Total Non-current liabilities
Operating Revenue
Interest Revenue
Administrative expenses
Communications expenses
Consultancy expenses
Travel expenses
Profit before income tax
Income tax expense
Net Profit
Consolidated ($)
2014
2013
481,343
481,343
312,581
312,581
-
-
296,053
296,053
195,935
195,935
-
-
1,423,839
826,866
222
(1,244)
(13,967)
(36,589)
(7,049)
142
(939)
(8,330)
(19,717)
-
1,365,212
798,022
-
-
1,365,212
798,022
There were no capital commitments and guarantees. There were no impairment losses in the jointly controlled operation.
NOTE 22: DISCONTINUED OPERATION
Softlog Systems Pty Ltd, a wholly owned subsidiary of JCurve Solutions Limited, initiated an active program to locate a buyer and
sell the Print Expense Management Division (PEMS). An agreement to sell the division was entered into on 21 December 2012
with effect from 2 January 2013 and the division disposed of has been reported in the financial statements for the year ended 30
June 2013 as a discontinued operation.
Consideration received or receivable
Disposal consideration
Less: net assets disposed of
Gain on disposal before income tax
Income tax expense
Gain on disposal after income tax
2013
$
227,000
(67,124)
159,876
(47,963)
111,913
55 | P a g e
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 22: DISCONTINUED OPERATION (continued)
Net assets at date of sale
The carrying amount of assets and liabilities disposed of were:
Prepayments
Inventory
Property, plant and equipment
Intangible assets
Employee benefits expense
Unearned income liability
Net assets
Net cash inflow on disposal
The cash inflow on disposal is receivable in the following instalments:
21 December 2012
2 January 2013
14 February 2013
Net cash inflow on disposal
Cash and cash equivalents consideration received or receivable
Net cash and cash equivalents disposed of
Net cash inflow on disposal
2013
$
1,440
22,103
13,272
475,663
512,478
(42,368)
(402,986)
67,124
$
100,000
100,000
27,000
227,000
$
227,000
-
227,000
Financial performance and cash flow information
The financial performance and cash flow information presented are for the 12 months ended 30 June 2013.
Financial performance from discontinued operation
Revenue
Expenses
Gross profit/(loss)
Loss recognised on the remeasurement to fair value
Loss before tax from discontinued operations
Income tax benefit/(expense)
Loss for the year from discontinued operations
Cash flows from discontinued operations
Net cash flows from operating activities
Net cash flows from investing activities
Net cash flows from financing activities
2014
2013
-
-
-
-
-
-
-
-
-
-
-
828,232
(1,171,230)
(342,998)
-
(342,998)
(240,928)
(583,926)
(280,669)
227,000
-
(53,669)
56 | P a g e
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 23: BUSINESS COMBINATIONS
Acquisition of JCurve Business Software
On 31 October 2013, JCurve Business Software Pty Ltd, a subsidiary of JCurve Solutions Limited acquired the assets and liabilities
of JCurve Solutions Pty Ltd, a leading cloud-based accounting and ERP software provider which exclusively promotes and sells the
small business version of business software from Netsuite Inc of USA (Netsuite) in the Australia and New Zealand region.
The total cost of the combination was $6,000,714 and comprised an issue of equity instruments, cash and options. The Company
issued 71,428,571 ordinary shares with a fair value of $0.048 each, based on the quoted price of the shares of JCurve Solutions
Limited at the date of control and 35,714,284 options (valued at $1,572,143). The incentive options were issued with the following
milestones all with an exercise price of $0.000001:
-
-
-
-
8,928,571 options which automatically vest when the share price reaches 7.5c for a period of 10 consecutive trading
days, exercisable on or before 31 March 2016;
8,928,571 options which automatically vest when the share price reaches 10c for a period of 10 consecutive trading
days, exercisable on or before 31 March 2017;
8,928,571 options which automatically vest when the share price reaches 12.5c for a period of 10 consecutive trading
days, exercisable on or before 31 March 2018;
8,928,571 options which automatically vest when the share price reaches 15c for a period of 10 consecutive trading
days, exercisable on or before 31 March 2019.
Consideration transferred
Acquisition date fair value of the consideration transferred:
Cash
Options issued
Shares issued at fair value
Total consideration
30 June 2014
$
1,000,000
1,572,143
3,428,571
6,000,714
Acquisition related costs of $195,655 are included in professional fees and other expenses in the statement of comprehensive
income. Directly attributable costs of raising equity have been included as a deduction from equity.
57 | P a g e
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 23: BUSINESS COMBINATIONS (continued)
Assets acquired and liabilities assumed at the date of acquisition
The Group has provisionally recognised the fair values of the identifiable assets and liabilities of JCurve Solutions Pty Ltd based
upon the best information available as of the reporting date. Provisional business combination accounting is as follows:
JCurve Solutions Limited
Trade receivables
Bonds
Property, plant and equipment
Netsuite licence agreement
Intangible assets – JCurve wizard
Prepayments
Deferred tax assets
Trade and other payables
Provisional fair value of identifiable net assets
Goodwill arising on acquisition
Total consideration
Fair value at
acquisition date
$
133,631
9,700
20,595
3,100,000
500,000
545,416
14,161
(2,329,797)
1,993,706
4,007,008
6,000,714
The initial accounting for the acquisition of the assets and liabilities of JCurve Solutions Pty Ltd has only been provisionally
determined at the end of the reporting period. At the date of finalisation of this financial report, the necessary market valuations and
other calculations had not been finalised and the fair value of the intangible assets, goodwill, consideration and associated deferred
tax liabilities above have therefore only been provisionally determined based on the directors’ best estimate of the likely fair value of
these assets and liabilities.
Net cash outflow arising on acquisition
The cash outflow on acquisition is as follows:
Cash paid
Less: net cash acquired with the subsidiary
Net cash outflow
30 June 2014
$
1,000,000
-
1,000,000
Impact of acquisition on the results of the Group
The acquisition of the assets and liabilities of JCurve Solutions Pty Ltd affected the consolidated result as follows:
Revenue
Less: expenses
Gross loss before tax
30 June 2014
$
2,197,229
(2,650,200)
(452,971)
58 | P a g e
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 23: BUSINESS COMBINATIONS (continued)
Impact of acquisition on the results of the Group
If the combination had taken place at the beginning of the year, the loss before tax of the Group would have been $1,576,749 and
revenue from continuing operations would have been $12,743,520.
In determining the pro-forma revenue and profit of the Group had JCurve Solutions Pty Ltd been acquired at the beginning of the
current reporting period, the Directors have:
-
-
calculated depreciation and amortisation of plant and equipment acquired on the basis of the fair values arising in the
initial accounting for the business combination rather than the carrying amounts recognised in the pre-acquisition
financial statements; and
based borrowing costs on the funding levels, credit ratings and debt/equity position of the Group after the business
combination.
Acquisition of The Full Circle Group Pty Ltd
On 17 June 2014 JCurve Solutions Limited acquired the shares of The Full Circle Group Pty Ltd, a leading cloud-based telecoms
management company, to be integrated into business operations effective 1 July 2014.
The total cost of the combination was $2,703,571 and comprised an issue of equity instruments and cash. The Company issued
15,178,571 ordinary shares with a fair value of $0.046 each, based on the quoted price of the shares of JCurve Solutions Limited at
the date of control. A further 4,464,285 ordinary shares with a fair value of $0.046 each, based on the quoted price of the shares of
JCurve Solutions Limited at the date of control, will be issued on an incentive basis on the achievement of financial and product
targets as agreed in the purchase of Full Circle.
Consideration transferred
Acquisition date fair value of the consideration transferred:
Cash
Shares issued at fair value
Deferred consideration
Total consideration
30 June 2014
$
1,800,000
698,214
205,357
2,703,571
Acquisition related costs of $122,548 are included in professional fees and other expenses in the statement of comprehensive
income. Directly attributable costs of raising equity have been included as a deduction from equity.
59 | P a g e
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 23: BUSINESS COMBINATIONS (continued)
Assets acquired and liabilities assumed at the date of acquisition
The Group has provisionally recognised the fair values of the identifiable assets and liabilities of The Full Circle Group Pty Ltd
based upon the best information available as of the reporting date. Provisional business combination accounting is as follows:
JCurve Solutions Limited
Cash
Trade receivables
Bonds
Property, plant and equipment
Patents & trademarks
Deferred tax assets
Trade and other payables
Provisions
Provisional fair value of identifiable net assets
Goodwill arising on acquisition
Total consideration
Fair value at
acquisition date
$
46,241
187,385
4,883
12,692
3,396
-
(153,298)
(20,825)
80,474
2,623,097
2,703,571
The initial accounting for the acquisition of the assets and liabilities of The Full Circle Group Pty Ltd has only been provisionally
determined at the end of the reporting period. At the date of finalisation of this financial report, the necessary market valuations and
other calculations had not been finalised and the fair value of the intangible assets, goodwill, consideration and associated deferred
tax liabilities above have therefore only been provisionally determined based on the directors’ best estimate of the likely fair value of
these assets and liabilities.
Net cash outflow arising on acquisition
The cash outflow on acquisition is as follows:
Cash paid
Less: net cash acquired with the subsidiary
Net cash outflow
30 June 2014
$
1,800,000
(46,241)
1,753,759
60 | P a g e
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 23: BUSINESS COMBINATION (continued)
Impact of acquisition on the results of the Group
The acquisition of the assets and liabilities of The Full Circle Group Pty Ltd affected the consolidated result as follows:
JCurve Solutions Limited
Revenue
Less: expenses
Gross loss before tax
30 June 2014
$
-
-
-
If the combination had taken place at the beginning of the year, the loss before tax of the Group would have been $1,396,301 and
revenue from continuing operations would have been $13,205,214.
In determining the pro-forma revenue and profit of the Group had The Full Circle Group Pty Ltd been acquired at the beginning of
the current reporting period, the Directors have:
-
-
calculated depreciation and amortisation of plant and equipment acquired on the basis of the fair values arising in the
initial accounting for the business combination rather than the carrying amounts recognised in the pre-acquisition
financial statements; and
based borrowing costs on the funding levels, credit ratings and debt/equity position of the Group after the business
combination.
NOTE 24:
RELATED PARTY DISCLOSURE
The consolidated financial statements include the financial statements of JCurve Solutions Limited and the subsidiaries listed in the
following table.
Name
Incorporation
2014
Country of
% Equity Interest
Vircom Pty Limited
JCurve Business Software Pty Ltd
Phoneware Pty Ltd
Resource Systems Pty Ltd
Interfleet Pty Ltd
The Full Circle Group Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
100
100
100
100
100
100
2013
100
100
100
100
100
-
JCurve Solutions Limited is an Australian entity and ultimate parent of the Group. Vircom Pty Limited, Phoneware Pty Ltd,
Resource Systems Pty Ltd, Interfleet Pty Ltd and The Full Circle Group are all incorporated in Australia. The Group has no plans
to dispose of any subsidiaries.
61 | P a g e
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 24:
RELATED PARTY DISCLOSURE (continued)
Transactions with Directors
The following table provides the total amount of transactions that were entered into with related parties for the relevant financial
year.
JCurve Solutions Limited
Purchases from Related Parties
Grange Consulting Group Pty Ltd
Corporate Consultancy
Secretarial Services
Taos Creative Pty Ltd
Digital marketing & consulting
Alive Mobile Pty Ltd
Analysis & product development
2014
$
42,000
107,100
149,100
378,870
378,870
95,000
95,000
2013
$
5,000
107,100
112,100
-
-
-
-
JCurve Solutions Limited former Director Mr Ian Macliver is the Managing Director of Grange Consulting Group Pty Ltd, which
provided corporate advisory services to the consolidated entity amounting to $42,000 net of GST in 2014 (2013 $5,000).
The Company Secretary responsibilities are performed by Sarah Smith of Grange Consulting Group Pty Ltd. The company
secretarial services provided by Grange Consulting include providing guidance on corporate compliance requirements pursuant to
the Company’s constitution, ASX Listing Rules and Corporations Act, assistance in drafting notices of meeting and announcements;
Board documentation, and assistance with preparation of annual and half yearly financial reports. Company secretarial service fees
for the year ended 30 June 2014 amounted to $107,100 (2013 $107,100) net of GST.
Chairman Graham Baillie’s step-daughter Sam Brown is currently the majority shareholder and Director of Taos Creative Pty Ltd,
which specialise in digital marketing & consulting services for business. The JCurve Solutions Group for the 2013-2014 Financial
Year was provided with services from Taos Creative Pty Ltd amounting to $378,870 net of GST.
JCurve Solutions Limited Director Mr Christopher Gabriel is the Chairman of Alive Mobile Group which provided analysis and re-
design of JTEL product amounting to $95,000 net of GST in 2014.
Sales to and purchases from related parties are made in arm's length transactions both at normal market prices and on normal
commercial terms.
Outstanding balances at year-end are unsecured, interest free and settlement occurs in cash.
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NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 25:
PARENT ENTITY DISCLOSURES
Financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Issued capital
Accumulated losses
Reserves
Share-based payments
Total equity
Financial performance
Net loss for the year
Other comprehensive income
Total comprehensive loss
JCurve Solutions Limited
30 June 2014
$
30 June 2013
$
3,213,517
2,962,886
6,176,403
1,670,955
134,998
1,805,953
4,015,551
465,309
4,480,860
859,981
79,720
939,701
17,588,248
(14,940,812)
10,879,285
(7,488,996)
1,723,014
4,370,450
150,870
3,541,159
Year ended
30 June 2014
$
Year ended
30 June 2013
$
(7,451,817)
(4,983,327)
-
-
(7,451,817)
(4,983,327)
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NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 26:
DIRECTORS AND EXECUTIVE DISCLOSURES
The aggregate compensation made to directors and other key management personnel of the Group is set out below:
JCurve Solutions Limited
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payments
Total assets
NOTE 27:
GOING CONCERN
30 June 2014
$
1,097,498
77,860
-
-
-
30 June 2013
$
971,771
72,255
-
-
-
1,175,358
1,044,026
The Group incurred a loss after tax of $1,424,796 (2013: $2,536,533). At balance date, the Group has cash assets of $2,765,265
and a positive working capital position of $372,511 (2013: $2,971,069). The working capital of $372,511 includes unearned revenue
of $2,959,103. Whilst the recognition of Unearned Revenue acknowledges there are future obligations in terms of services to be
provided this does not represent a future cash outlay. The Group has prepared cashflow forecasts based on expected future cash
inflows and expected future cash outlays and, on the basis of these cash forecasts, and with reference to the cashflow statement
incorporated into these Financial Statements, in the opinion of the Directors, the Group will be able to pay its debts as and when
they fall due.
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JCurve Solutions Limited
DIRECTORS’ DECLARATION
1.
In the opinion of the directors:
a.
the accompanying financial statements and notes are in accordance with the Corporations Act 2001 including:
i.
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2014 and of its
performance for the year then ended; and
ii.
complying with Accounting Standards and Corporations Regulations 2001.
b.
c.
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become
due and payable.
the financial statements and notes thereto are in accordance with International Financial Reporting Standards
issued by the International Accounting Standards Board.
2.
This declaration has been made after receiving the declarations required to be made to the directors in accordance with
Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2014.
This declaration is signed in accordance with a resolution of the Board of Directors.
G Baillie
Chairman
Dated this 29th day of August 2014
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INDEPENDENT AUDITOR’S REPORT
To the members of JCurve Solutions Limited
Report on the Financial Report
We have audited the accompanying financial report of JCurve Solutions Limited (“the company”),
which comprises the statement of financial position as at 30 June 2014, the statement of
comprehensive income, the statement of changes in equity and the statement of cash flows for the
year then ended, notes comprising a summary of significant accounting policies and other
explanatory information, and the directors’ declaration for the consolidated entity. The consolidated
entity comprises the company and the entities it controlled at the year’s end or from time to time
during the financial year.
Directors’ responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the directors determine is necessary to enable the preparation
of the financial report that is free from material misstatement, whether due to fraud or error.
In Note 1(c), the directors also state, in accordance with Accounting Standard AASB 101:
Presentation of Financial Statements, that the financial report complies with International Financial
Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. Those standards require that we comply
with relevant ethical requirements relating to audit engagements and plan and perform the audit to
obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the
company’s preparation and fair presentation of the financial report 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 internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the directors,
as well as evaluating the overall presentation of the financial report.
Our audit did not involve an analysis of the prudence of business decisions made by directors or
management.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001.
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533.
Email: hlb@hlbwa.com.au. Website: http://www.hlb.com.au
Liability limited by a scheme approved under Professional Standards Legislation
HLB Mann Judd (WA Partnership) is a member of
International, a worldwide organisation of accounting firms and business advisers.
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Auditor’s opinion
In our opinion:
(a) the financial report of JCurve Solutions Limited is in accordance with the Corporations Act
2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June
2014 and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations
2001; and
(b) the financial report also complies with International Financial Reporting Standards as
disclosed in Note 1(c).
Report on the Remuneration Report
We have audited the remuneration report included in the directors’ report for the year ended 30 June
2014. The directors of the company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance
with Australian Auditing Standards.
Auditor’s opinion
In our opinion the remuneration report of JCurve Solutions Limited for the year ended 30 June 2014
complies with section 300A of the Corporations Act 2001.
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
29 August 2014
N G Neill
Partner
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ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES
JCurve Solutions Limited
Shareholder information
(a)
Distribution of shareholder and listed option holder numbers
Category
Ordinary
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - and over
53
9
42
140
149
393
Units
2679
30,010
361,113
5,926,976
184,756,950
191,077,728
% of Issued Capital
0.00
0.02
0.19
3.10
96.69
100
There are 111 shareholders that hold less than a marketable parcel as at 26 August 2013.
(b)
Substantial shareholders
The names of the substantial shareholders listed in the company’s register as at 26 August 2013 are:
Shareholder
Mr Mark Jobling
Moutier Pty Ltd
Mr Michael Fairclough
(c)
Voting rights
Number of ordinary
shares held
% held of ordinary share
capital
34,841,305
16,542,111
10,316,369
18.23
8.66
5.40
At members’ meetings, each eligible voter (i.e. eligible member, proxy, attorney or representative of an eligible member) has one
vote on a show of hands; and one vote on a poll (except where a share has not been fully paid, that share will only confer that
fraction of one vote which has been paid, and if the total number of votes does not constitute a whole number, the fractional part of
that total will be disregarded). This is subject to the following:
Where any calls due and payable have not been paid;
Where there is a breach of a restriction agreement;
Where a member and their proxy or attorney are both present at the meeting, or if more than one proxy or attorney is present;
Where a vote on a particular resolution is prohibited by the Corporations Act 2001, Listing Rules, ASIC or order of a Court.
(d)
Company secretary
The name of the company secretary is Sarah Smith.
(e)
Registered office
The address of the principal registered office in Australia is:
Level 1, 1254 Hay Street
WEST PERTH
WA 6005
(f)
Register of securities
The registers of securities are held at the following address:
Computershare Ltd
Level 2, 45 St Georges Terrace
PERTH
WA 6000
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ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES (continued)
JCurve Solutions Limited
(g)
Top 20 Registered Holders – Ordinary Shares as of 26 August 2014
Name
MR MARK CHRISTOPHER JOBLING
MOUTIER PTY LTD
MR MICHAEL JAMES FAIRCLOUGH
TOPSFIELD PTY LTD
GRAMELL INVESTMENTS PTY LIMITED
T T NICHOLLS PTY LTD
MRS EMMA JANE GRACEY
CORNELA PTY LTD
MR MICHAEL FRANK MANFORD
1.
2.
3.
4.
5.
6.
7.
8.
9.
10. MR DAVID SCHWARTZ
11.
12.
13.
14.
15.
MR PETER GRAHAM DORAN + MRS BARBARA LINDA DORAN
FUTURE SUPER PTY LTD
BRECON INVESTMENTS PTY LTD
TOPSFIELD PTY LTD
PATEL FAMILY SUPERANNUATION PTY LTD
16. MAST FINANCIAL PTY LTD
17.
18.
19.
20.
DEPONENT SERVICES PTY LTD
JASPER HILL RESOURCES PTY LTD
TWO TOPS PTY LTD
GLEN ALPINE PTY LTD
TOTAL HELD BY TOP 20 HOLDERS
Number of
Ordinary Shares
34,841,305
% held of
Ordinary Shares
18.23
16,542,111
10,316,369
10,000,000
9,510,907
6,067,012
3,870,000
3,624,962
3,347,012
3,007,783
2,871,973
2,700,000
2,659,734
2,656,370
2,619,091
2,500,000
2,400,000
2,000,000
2,000,000
1,970,710
8.66
5.40
5.23
4.98
3.18
2.03
1.90
1.75
1.57
1.50
1.41
1.39
1.39
1.37
1.31
1.26
1.05
1.05
1.03
125,505,339
65.68
(h)
Stock exchange listing– ordinary shares (as of 26 August 2014)
Quotation has been granted for all the ordinary shares of the Company on the Australian Securities Exchange.
(i)
Restricted securities
As at 26 August 2014 there are no restricted security classes recorded in the Company’s share register.
(j)
Unquoted securities
The unquoted securities of the Company as at 26 August 2014 are 35,714,284 Options are outlined below
Number of Options
Exercise Price
Expiry Date
Number of Holders
8,928,571
8,928,571
8,928,571
8,928,571
$0.000001
$0.000001
$0.000001
$0.000001
31 March 2016
31 March 2017
31 March 2018
31 March 2019
1
1
1
1
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