JCurve Solutions Limited
JCurve Solutions Limited
Annual Financial Report
For the year ended 30 June 2016
JCurve Solutions Limited
ABN 63 088 257 729
Level 8, 9 Help Street
Chatswood NSW 2065
[T] +61 2 9467 9200 | [F] +61 2 9467 9201
1
Contents
JCurve Solutions Limited
CORPORATE INFORMATION .......................................................................................................................................... 3
CHAIRMAN'S LETTER ...................................................................................................................................................... 4
DIRECTORS’ REPORT ..................................................................................................................................................... 5
AUDITOR’S INDEPENDENCE DECLARATION ............................................................................................................. 18
STATEMENT OF COMPREHENSIVE INCOME ............................................................................................................. 19
STATEMENT OF FINANCIAL POSITION ....................................................................................................................... 20
STATEMENT OF CASH FLOWS .................................................................................................................................... 21
STATEMENT OF CHANGES IN EQUITY ....................................................................................................................... 22
NOTES TO THE FINANCIAL STATEMENTS ................................................................................................................. 23
DIRECTORS’ DECLARATION ........................................................................................................................................ 49
INDEPENDENT AUDITOR’S REPORT .......................................................................................................................... 50
ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES .....................................................................52
2
CORPORATE INFORMATION
JCurve Solutions Limited
ABN 63 088 257 729
Directors
Mr Bruce Hatchman
Mr Mark Jobling
Mr David Franks
Company Secretary
Mr David Franks
Registered office
Level 8, 9 Help Street
Chatswood
New South Wales 2067
Ph. (02) 9467 9200
Principal place of business
Level 8, 9 Help Street
Chatswood
New South Wales 2067
Ph. (02) 9467 9200
Share Register
Computershare Investor Services Pty Limited
Level 11, 172 St Georges Terrace
Perth WA 6000
Ph. (08) 9323 2000
Auditors - For the year ended 30 June 2016
HLB Mann Judd
Level 4, 130 Stirling Street
Perth WA 6000
Ph. (08) 9227 7500
Securities Exchange Listings
Australian Securities Exchange
ASX Code: JCS
Website
http://www.jcurve.com.au/
3
JCurve Solutions Limited
CHAIRMAN'S LETTER
Dear Shareholder,
The past 12 months has been a time of continued consolidation and the start of forecast growth for JCurve Solutions Limited
(JCurve). As I outlined at our Annual General Meeting in November 2015, your Company’s strategic objectives have been to focus
on the following initiatives:
1) Maximising value from the TEMS business;
2)
Investing to grow the JCurve business; and
3) Leveraging our core strengths and capabilities to diversify our product range and reinvest for further growth in the
long term.
I am pleased to report that solid progress has been made by JCurve over the past year in relation to each of these strategic
objectives.
The Company continues to ride the long-tail of the Telecommunications Expense Management (TEMS) industry and was able to
recognise $4.3 million of revenue from its TEMS solutions which while this was a 23% decrease from the $5.7 million recognised in
FY2015 it was offset by a 21% decrease in operating expenses excluding impairment charges following a reduction to headcount in
the TEMS product division. The TEMS product division continues to invest in customer relationships and consider opportunities for
the TEMS solutions owned by JCurve.
The JCurve software ERP product division experienced impressive growth of 24% in FY2016 with the revenue recognised
increasing from $4.1 million in FY2015 to $5.1 million in FY2016. Pleasingly, JCurve’s annuity revenue streams continue to
increase year on year which has set JCurve up well for a successful FY2017 with the closing June 2016 deferred revenue balance
of $3 million expected to be recognised in FY2017.
With diversification and reinvestment in mind, the Board has commenced its review of a variety of opportunities in both the
Australian and Asian markets that will support the ongoing growth of JCurve and complement our current offerings.
On an overall Company basis JCurve’s statutory net loss after tax for the year ending 30 June 2016 was $2.8 million (2015: $5.6m
loss). The statutory net loss after tax included a $3.0 million impairment charge in respect of a write down of the carrying value of
the Full Circle and Phoneware Intangible Assets recognised in the half year ended 31 December 2015.
Excluding the impact of non-cash items, pleasingly JCurve’s normalised EBITDA loss as outlined in the Directors Report for the full
year ended 30 June 2016 was $0.1 million which marks a substantial improvement from the $0.9 million recognised in 2015. The
performance for FY2016 exceeded market guidance which was a $0.5 million loss - $0.2 million loss. FY2016 was the first year
since JCurve purchased JCurve Business Software Pty Ltd that the overall Group has effectively broken even at an EBITDA level
further emphasising the consolidation and growth activities undertaken by the Group over the past year.
Furthermore, the Group’s June 2016 cash position increased by $0.4 million over the past 12 months which places JCurve in a very
strong position for the start of the new financial year. Importantly, as we forecast a period of strong growth and investigate
diversification opportunities, being debt free at this stage will assist with the investigation of a number of opportunities.
The JCurve management team has developed a very strong corporate culture and identity over the past year which is delivering
outcomes for our customers which will assist with continued growth in both markets and products. This culminated in the recent
North Eastern Sydney NSW Regional Business Chamber Awards where JCurve’s CEO, Stephen Canning, was announced the
Business Leader of the Year while JCurve was a finalist in the Employer of Choice category. JCurve has also recently been
announced as an Employer of Choice in the Australian Business awards.
The Board remains committed to increasing value to its shareholders, leveraging off the Company’s strong cash position and
guiding management’s focused review of value creating opportunities and complementary products. A strong base has now been
established from which forecast strong growth can be achieved.
I would like to thank management and shareholders for their continued support through this period of consolidation and look forward
to a successful year ahead.
Bruce Hatchman
Chairman
4
DIRECTORS’ REPORT
JCurve Solutions Limited
Your directors present the annual financial report of the consolidated entity (referred to hereafter as JCurve or the Group) consisting
of JCurve Solutions Limited and the entities it controlled at the end of, or during, the year ended 30 June 2016. In order to comply
with the provisions of the Corporations Act 2001, 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 the entire year unless otherwise stated.
Names, qualifications, experience and special responsibilities
Bruce Hatchman FCA MAICD JP (Non-Executive Chairman)
Experience and
expertise
Mr Hatchman was appointed as the Chairman of JCurve 27 November 2014. Mr Hatchman is an
experienced and successful finance professional. As the former Chief Executive of Crowe Horwath,
Mr Hatchman has 40 years’ experience in providing audit and assurance services to listed companies and
large private enterprises. He is a qualified Chartered Accountant and a member of the Australian Institute of
Company Directors.
Directorships
of other
companies
Former
directorships of
other listed
companies
Special
responsibilities
Mr Hatchman is currently the Chairman of Armidale Investment Corporation Limited, Darwin Clean Fuels
Limited, Suters Holdings Pty Ltd, and Independent Advisory Board Chairman of the law firm Hunt & Hunt.
None.
Member of the Audit & Risk Management Committee and the Chair of the Remuneration Committee.
David Franks B.Ec, CA, F Fin, JP. (Non-Executive Director and Company Secretary)
Experience and
expertise
Mr Franks joined JCurve on 15 September 2014 as Company Secretary and a Non-Executive Director.
With over 20 years' experience in finance and accounting, Mr Franks has been CFO, Company Secretary
and/or Director for numerous ASX listed and unlisted companies. Mr Franks is a Chartered Accountant,
Fellow of the Financial Services Institute of Australia, Justice of Peace, Registered Tax Agent and holds a
Bachelor of Economics (Finance and Accounting) from Macquarie University.
Directorships
of other
companies
Former
directorships of
other listed
companies
Special
responsibilities
None.
None.
Chair of the Audit & Risk Management Committee and Member of the Remuneration Committee.
Mark Jobling B. Eco, B Laws (Hons) (Non-Executive Director)
Experience and
expertise
Mr Jobling joined the company on 8 April 2015 as a Non-Executive Director. Mr Jobling is a substantial
shareholder of the Company and holds a Bachelor of Economics and Bachelor of Laws (Hons) from
Monash University. Mr Jobling manages investments in a diverse range of industries including power
technology and angel investing in Asian start-up companies and is currently based in Hong Kong.
He began his career as a commercial lawyer with Mallesons Stephen Jaques in Australia and went on to
hold senior executive roles in multi-billion dollar companies, including Managing Director of South East Asia
and Taiwan for CLP Holdings Limited, and CEO of OneEnergy Limited, a CLP/Mitsubishi Corporation joint
venture in Asia.
Directorships
of other
companies
Former
directorships of
other listed
companies
Special
responsibilities
None.
None.
Member of the Audit & Risk Management Committee and the Remuneration Committee.
5
DIRECTORS’ REPORT (continued)
Graham Baillie FAICD (Non-Executive Director until 17 November 2015)
JCurve Solutions Limited
Experience and
expertise
Mr Baillie joined the Company in September 2007 as a Non-Executive Director and held the appointments of
Chairman from May 2012 until December 2013, Managing Director from December 2013 until 21 July 2014
and Executive Chairman from 21 July 2014 until 27th November 2014 when he moved to a Non-Executive
Director role until 17 November 2015. Mr Baillie remains a substantial shareholder of JCurve.
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.
Directorships
of other
companies
Former
directorships of
other listed
companies
Special
responsibilities
None.
None.
Member of the Remuneration Committee until 17 November 2015.
Interests in the shares and options of the Group and related bodies corporate
As at the date of this report, the interests of the directors in the shares and options of JCurve were:
M Jobling
B Hatchman
D Franks
Ordinary Shares
51,204,301
1,000,000 (*)
2,867,000 (*)
55,071,301
Options over Ordinary
Shares
-
-
-
-
* 1,000,000 of which were issued under the Employee Share Plan.
During the financial year no share options were granted as remuneration.
Details of shares issued to employees and directors under the Employee Share Plan are as follows:
Number of shares
Allotment share price
Escrow Date
JCurve Solutions Ltd
JCurve Solutions Ltd
Total
4,800,000
2,000,000
6,800,000
$0.05
$0.05
11 September 2017
7 December 2017
During the financial year 2,000,000 of the shares issued under the Employee Share Plan were bought back by the JCurve in
accordance with the terms of the Employee Share Plan.
Details of unissued ordinary shares under options as at 30 June 2016 are as follows:
Number of options
KMP option holdings (1)
Exercise price
Expiry date
JCurve Solutions Ltd
JCurve Solutions Ltd
JCurve Solutions Ltd
Total
8,928,571
8,928,571
8,928,571
26,785,713
-
-
-
$0.000001
31 March 2017
$0.000001
31 March 2018
$0.000001
31 March 2019
(1) As held by the Group’s Key Management Personnel as at 30 June 2016.
No ordinary shares were issued during the financial year as a result of the exercise of these options.
Options totalling 8,928,571 expired during the financial year.
6
JCurve Solutions Limited
DIRECTORS’ REPORT (continued)
Dividends and shareholder returns
No dividends were declared or paid during the financial year ended 30 June 2016.
Principal activities
The principal activities of the Group continued to be a combination of:
1)
the sale of a cloud-based Business Management solution targeted at the small business market in Australia and
New Zealand, together with associated consulting services (JCurve Business Software); and
2)
the development and marketing of Telecommunications Expense Management Solutions (JTEL and Full Circle Group).
Operating financial review
Financial Results for the Year
The Group recognised a net loss after tax of $2.8 million for year ended 30 June 2016 (2015: $5.6 million loss). The EBITDA loss
generated for the year ending 30 June 2016 was $3.1 million (2015: $6.1 million).
The major impact on the financial results for the year was the assessment by the Board of the need to write down the carrying value
of the Full Circle and Phoneware intangible assets by a combined $3.0 million in the half year ended 31 December 2015. Further
details on the impairment expense is included in Note 11 to the Financial Report. The main reason for this impairment is that the
Board has taken a more conservative view of the future cash flows from these assets. Following the acquisition of the Full Circle
Group Pty Limited in 2014, the acquisition has been fully integrated into the overall JCurve business structure however it has not
produced the desired returns to date which resulted in the significant impairment expense which significantly impacted the results of
the Group for the year ending 30 June 2016.
The ‘Normalised EBITDA’ loss for the full year ended 30 June 2016 was $0.1 million (2015: $0.9 million), which has been
determined as follows:
2016
$
2015
$
Statutory loss after income tax for the year
(2,781,707)
(5,622,893)
Add Back: Non-cash expenses:
Depreciation / amortisation
Impairment expense
Total non-cash expenses
Income tax benefit
Interest Income
Finance cost
Normalised EBITDA
50,563
2,980,493
3,031,056
(363,207)
(17,940)
52
188,297
5,167,008
5,355,305
(626,396)
(22,182)
487
(131,747)
(915,679)
Normalised EBITDA is a financial measure which is not prescribed by Australian Accounting Standards (AAS) and represents the
profit under AIFRS adjusted for specific significant items. The table above summarises key items between the statutory loss after
tax and normalised EBITDA. The directors use normalised EBITDA to assess the performance of the Group.
Normalised EBITDA has not been subject to any specific review procedures by our auditor but has been extracted from the
accompanying audited financial report.
The normalised EBITDA result outlined above pleasingly exceeded the $0.5 million loss - $0.2 million loss (excluding impairments)
market guidance provided by the Group in February 2016.
7
DIRECTORS’ REPORT (continued)
The Group’s total revenue for the year ended 30 June 2016 was $9.5 million (2015: $11.3 million), which predominately includes
revenue from the sale of JCurve licenses and accompanying support and implementation fees $5.1 million (2015: $4.1 million) and
revenue from the sale of Telecommunications Expense Management Solutions $4.3 million (2015: $5.7 million).
Total expenses for the full year ended 30 June 2016 was $12.6 million (2015: $17.6 million). The largest expense during the year
ended 30 June 2016 was the impairment expense recognised $3 million (2015: $5.2 million).
JCurve Solutions Limited
Financial Position as at 30 June 2016
The Group had significant cash reserves as at 30 June 2016 ($2.4 million) increasing from $2.0 million as at 30 June 2015 following
a strong emphasis from management on debt collection in the June 2016 quarter. Having this level of cash reserves while
remaining debt free places the Group in a strong position for the start of the new financial year.
The decrease in assets from $10.2 million as at 30 June 2015 to $7.4 million as at 30 June 2016, was the result of the impairment
expense recognised in respect of the Full Circle Group and Phoneware operating units ($3.0 million).
The liabilities balance remained consistent at $4.6 million between the balance as at 30 June 2015 and as at 30 June 2016.
Risk management
The Group 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 Board is responsible for the establishment, oversight and approval of the Group’s risk management strategy, internal
compliance and controls. The Board is also responsible for defining the “risk appetite” of the Group so that the strategic direction of
the Group can be aligned with its risk management policy.
The Group has the following risk management controls embedded in the Group’s management and reporting system:
1) A comprehensive annual insurance program;
2) Strategic and operational business plans; and
3) Annual budgeting and monthly reporting systems which enable the monitoring of performance against expected targets
and the evaluation of trends.
The Chief Executive Officer reports to the Board on a monthly basis as to whether all identified material risks are being managed
effectively across the Group.
During the year, ongoing monitoring, mitigation and reporting on material risks was conducted by senior executives, the Audit and
Risk Committee and the Board took place in accordance with the process disclosed above.
A copy of the Risk Management Policy can be found on the Group’s website.
Significant changes in the state of affairs
There have been no significant changes in the state of affairs of the Group to the date of this report.
Events since the end of the financial year
No significant matters or circumstances have arisen since 30 June 2016 that have significantly affected, or may significantly affect:
1)
2)
3)
the Group’s operations in future financial years, or
the results of those operations in future financial years, or
the Group’s state of affairs in future financial years.
Likely developments and expected results of operations
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.
8
JCurve Solutions Limited
DIRECTORS’ REPORT (continued)
Environmental legislation
The Group is not subject to any significant environmental legislation.
Indemnification and insurance of Directors and Officers
The Group has agreed to indemnify all the directors and officers for any breach of laws and regulations arising from their role as a
director and officer. 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 Group or any related body corporate against liability incurred as
an auditor.
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
Attended/(Eligible)
Remuneration
Committee
Attended /(Eligible)
Number of meetings held:
Number of meetings attended:
B Hatchman
D Franks
M Jobling
G Baillie (retired 17 November 2015)
11
11
11
11
5
Retirement, election and continuation in office of Directors
2
1
11
11
11
5
2 (2)
2 (2)
2 (2)
N/A
1 (1)
0 (0)
1 (1)
1 (1)
It is the Board’s policy to consider the appointment and retirement of Non-Executive Directors on a case-by-case basis. In doing so, the
Board must take into account the requirements of the Australian Securities Exchange Listing Rules and the Corporations Act 2001.
Clause 13.4 of the JCurve’s Constitution allows the Directors to at any time appoint a person to be a Director, either to fill a casual
vacancy or as an addition to the existing Directors, but so that the total number of Directors does not at any time exceed the
maximum number specified by JCurve’s Constitution. Any Director so appointed holds office only until the next following annual
general meeting and is then eligible for re-election but shall not be taken into account in determining the Directors who are to retire
by rotation (if any) at that meeting. There have been no such appointments during the year.
Clause 13.2 of JCurve’s Constitution requires that no director who is not the Chief Executive Officer may hold office without
re-election beyond the third AGM following the meeting at which the director was last elected or re-elected.
Noting that Stephen Canning as Chief Executive Officer is not subject to Clause 13.2 of the Constitution, the current board was
re-elected by shareholders at the following prior AGMs:
2015: Bruce Hatchman and Mark Jobling;
2014: David Franks.
Therefore, under Clause 13.4 of the Constitution, no director is due for election under the noted time period.
However, ASX Listing Rule 14.5 states that an entity which has directors must hold an election of directors each year while Clause
13.2 of the Constitution states that an election of Directors shall take place each year and that the Directors to retire at an annual
general meeting are those who have been longest in office since their last election. In accordance with Clause 13.2 of the
Constitution, David Franks will retire and seeks re-election in accordance with Clause 13.2 of JCurve’s Constitution, having
voluntarily offered to stand for re-election.
9
JCurve Solutions Limited
DIRECTORS’ REPORT (continued)
Remuneration report (Audited)
The Directors are pleased to present JCurve Solution Limited’s (“the Company’s”) remuneration report for the year ended
30 June 2016. The remuneration report is prepared in accordance with section 300A of the Corporations Act 2001 and has been
audited as required by section 308(3C) of the Corporations Act 2001.
This report sets out remuneration information for JCurve’s Directors and Executives. Executives for the purpose of this report are
Key Management Personnel who are not Non-Executive Directors.
1) Directors and other Key Management Personnel
Non-Executive Directors
Bruce Hatchman
David Franks
Mark Jobling
Graham Baillie
Executives
Stephen Canning
Brian Doughty
James Aulsebrook
Non-Executive Chairman – Independent
Non-Executive Director – Independent
Non-Executive Director – Not Independent
Non-Executive Director – Not Independent (until 17 November 2015)
Chief Executive Officer
Chief Financial Officer (until 31 May 2016)
Chief Financial Officer (from 18 April 2016)
Key Management Personnel are defined as those persons having the authority and responsibility for planning, directing and
controlling the activities of the Company directly or indirectly (and include the Directors of the Company).
2) Remuneration governance
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.
Nomination and Remuneration committee
The Nomination and Remuneration Committee is responsible for determining and reviewing compensation arrangements for the
directors and the executive management team.
The Nomination and Remuneration Committee to 17 November 2015 comprised of Bruce Hatchman (Chair), Mark Jobling and
Graham Baillie (until his resignation on 17 November 2015). The Nomination and Remuneration Committee for this period did not
comprise a majority of independent Directors so was not in compliance with the ASX Corporate Governance Principles and
Recommendations.
From 18 November 2015, the composition of the Nomination and Remuneration Committee comprised Bruce Hatchman (Chair),
Mark Jobling and David Franks (appointed 17 November 2015), being three members, all non-executive directors, with an
independent Chairman and the majority of whom are not independent. The Nomination and Remuneration Committee from this
period was in compliance with the ASX Corporate Governance Principles and Recommendations.
Members of the Nomination and Remuneration Committee are appointed, removed and/or replaced by the Board.
The Nomination and Remuneration Committee 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.
The Company’s Corporate Governance Statement which can be found on the Company’s website:
http://www.jcurve.com.au/about/corporate-governance/, provides
Remuneration Committee and its composition and structure.
information on
further
the role of
the Nomination and
A copy of the Nomination and Remuneration Committee’s charter is included on the Company’s website.
10
DIRECTORS’ REPORT (continued)
Remuneration report (Audited)
3) Remuneration Structure
JCurve Solutions Limited
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 JCurve with the ability to attract and retain directors of the
highest calibre, whilst incurring a cost that is acceptable to shareholders.
JCurve’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.
An Employee Share Plan was approved by shareholders at the Annual General Meeting held on 31 October 2013. Following
approval by shareholders at the Annual General Meeting held on 17 November 2015, on 7 December 2015, 1,000,000 shares were
issued to both Bruce Hatchman and David Franks under the Employee Share Plan with payment via a non-recourse loan.
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.
The remuneration of non-executive directors for the year ended 30 June 2016 and comparative year is detailed in Table 1 of this
report.
Executive remuneration
The Company’s Executive remuneration structure consists of three components:
Fixed components
Variable ‘at-risk’ components
Base salary and benefits, including
superannuation.
(i) Short-term incentives in the form of cash bonuses; and
(ii) Long-term incentives, through participation in the Employee Share Plan.
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 executive remuneration 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.
An Employee Share Plan was approved by shareholders at the Annual General Meeting held on 31 October 2013.
On 11 September 2015, 4,800,000 shares were issued to employees under the employee share plan with payment via a
non-recourse loan.
The remuneration of JCurve’s executives for the year ended 30 June 2016 and comparative year is detailed in Table 2 of
this report.
11
DIRECTORS’ REPORT (continued)
Remuneration report (Audited)
4) Remuneration of key management personnel
JCurve Solutions Limited
Table 1: Key Management Personnel remuneration for the year ended 30 June 2016: Directors
Short-term employee benefits
Post-
employment
Equity
Total
Director’s
Fees
Bonuses /
Commission
Other short
term
benefits
Super-
annuation
Shares
Total
Perfor
mance
Related
Directors
$
$
$
$
$
$
%
B Hatchman (1)
2016
82,040
Chairman (non-executive)
2015
52,039
D Franks (2)
2016
60,000
Director (non-executive)
2015
47,071
M Jobling (3)
2016
60,000
Director (non-executive)
2015
15,000
G Baillie (4)
2016
20,565
Chairman (executive) /
Director (non-executive)
2015
130,523
J Bond (5)
2016
-
Director (non-executive)
2015
24,385
C Gabriel (6)
2016
-
Director (non-executive)
2015
15,000
N Gupta (7)
2016
-
Director (non-executive)
2015
39,239
Total Directors Fees
2016
222,605
Total Directors Fees
2015
323,257
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15,606
2,306
99,952
2%
4,944
-
56,983
-
5,700
2,306
68,006
3%
4,942
-
-
1,954
11,862
-
2,317
-
1,425
-
2,728
-
-
-
-
-
-
-
-
-
-
-
52,013
60,000
15,000
22,519
142,385
-
26,702
-
16,425
-
41,967
-
-
-
-
-
-
-
-
-
-
-
23,260
4,612
250,477
2%
28,218
-
351,475
-
(1) Appointed 27 November 2014 as Non-Executive Chairman
(2) Appointed 15 September 2014 as a Non-Executive Director
(3) Appointed 8 April 2015 as a Non-Executive Director
(4) Mr Baillie served as non-executive Chairman from 1 July 2013 to 9 December 2013, Managing Director from 9 December 2013 to 21 July 2014,
Executive Chairman from 21 July 2014 and Non-Executive Director from 27th November 2014 to 17 November 2015. The Directors fees and
accompanying superannuation of $22,519 were paid to Millenium International Pty Ltd, a company owned by Mr Baillie.
(5) Resigned 27 November 2014 as a Non-Executive Director
(6) Resigned 15 September 2014 as a Non-Executive Director
(7) Resigned 21 July 2014 as a Non-Executive Director
12
DIRECTORS’ REPORT (continued)
4) Remuneration of key management personnel (continued)
Table 2: Key Management Personnel remuneration for the year ended 30 June 2016: Executives
JCurve Solutions Limited
Short-term employee benefits
Post-
employment
Equity
Total
Bonuses /
Commission
Other short
term
benefits (8)
Super-
annuation
Shares
Perfor
mance
Related
$
$
$
$
$
%
Salary
$
Executives
4,961
3,425
20,461
4,556
334,978
9%
9,392
-
142,213
-
15,319
5,684
187,039
3%
S Canning (1)
2016
280,000
25,000
Chief Executive Officer
2015
132,821
B Doughty (2)
2016
166,036
Chief Financial Officer
2015
151,250
J Aulsebrook (3)
2016
35,897
Chief Financial Officer
2015
J Butchers (4)
2016
-
-
Chief Financial Officer
2015
37,539
J Slaiman (5)
2016
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14,369
3,410
-
-
126,702
6,478
-
-
General Manager MTN
2015
189,512
32,500
55,522
17,937
A Simmons (6)
2016
-
General Manager JTEL
2015
209,152
M Thompson (7)
2016
-
General Manager JCBS
2015
117,083
-
-
-
-
-
223
-
-
-
14,664
-
10,774
-
-
-
-
-
-
-
-
-
-
-
165,619
39,307
-
-
170,719
-
-
-
-
-
-
-
295,471
11%
-
224,039
-
127,857
-
-
-
-
6%
3%
Total Executive Rem.
2016
481,933
25,000
4,961
39,190
10,240
561,324
Total Executive Rem.
2015
837,357
32,500
185,872
73,614
-
1,129,343
(1) appointed 12 January 2015, bonus of $25,000 was paid in August 2016 based on performance related KPIs
(2) appointed 1st August 2014 and resigned 31st May 2016
(3) appointed 18 April 2016
(4)
resigned 5 August 2014
(5) ceased employment on 31 March 2015
(6)
(7)
(8) other short term benefits include car parking expenses
(9) Prior year comparatives have been adjusted to correct an error from the non-inclusion of other short term benefits paid to executives, totalling $3,425.
resigned 8 April 2015
resigned 30 January 2015
5) Relationship between remuneration and JCurve’s performance
Performance in respect of the current year and the previous four years is detailed in the table below:
Total profit/(loss) for the year
Normalised EBITDA
Share price at year end ($)
Increase/(decrease) in share price
Dividends paid
2016
$
2015
$
2014
$
2013
$
2012
$
(2,781,707)
(5,622,893)
(1,424,796)
(3,120,459)
(2,009,123)
(131,747)
(915,679)
(723,919)
490,133
0.006
(60%)
-
0.015
(66%)
-
0.044
83%
-
0.024
26%
-
10,170
0.019
(44%)
-
The remuneration of JCurve’s executives outlined in Table 2 has consisted primarily of salaries and superannuation reflecting the
recent performance levels of the Company outlined in the above table.
13
DIRECTORS’ REPORT (continued)
6) Voting and comments made at the Company’s 2015 Annual General Meeting
JCurve Solutions Limited
The JCurve Remuneration Report resolution was carried by a show of hands, with the results of both the show of hands and proxy
position in excess of 75% in favour of the resolution. Of valid proxies received, more than 94% of proxies lodged voted “yes” on the
Remuneration Report for the 2015 financial year. Comments raised by shareholders during the course of the Annual General
Meeting were responded to by the Directors during the meeting.
7) Details of share-based compensation
Table 1: Shares issued to Directors under the employee share plan on 7 December 2015
Directors
B Hatchman
D Franks
Shares Issued
1,000,000
1,000,000
Table 2: Shares issued to Executives under the employee share plan on 11 September 2015
Executives
S Canning
B Doughty
Shares Issued
1,300,000
1,000,000
Table 3: Shares granted as part of remuneration during the year ended 30 June 2016
Value of
shares
granted
$
Value of
shares
exercised
$
Value of
shares lapsed
$
Total value of
shares granted,
exercised and
lapsed
$
Value of shares
included in
remuneration for the
year
$
%
remuneration
consisting of
shares for the
year
Directors
B Hatchman
D Franks
Executives
S Canning
B Doughty
8,183
8,183
11,367
5,684
-
-
-
-
-
-
-
(5,684)
8,183
8,183
11,367
-
2,306
2,306
4,556
5,684
2%
3%
1%
3%
For further details on the Employee Share Plan, please refer to Notes 15 and 16.
8) Equity instruments held by Key Management Personnel
Table 1: 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 (#)
35,714,284
Balance at
beginning of
period
Granted as
remune-
ration
35,714,284
-
-
-
8,928,571
26,785,713
-
26,785,713
Options
exercised
Net change
Other #
Balance at
end of
period
Exercisable
Not
Exercisable
Vested as at end of period
-
-
35,714,284
-
35,714,284
30 June 2016
Directors
G Baillie
30 June 2015
Directors
G Baillie
# Includes forfeitures, rights issue and balance on resignation. Graham Bailie retired on 17 November 2015 and the information
outlined in the above tables is at the date of Graham Baillie’s resignation.
14
DIRECTORS’ REPORT (continued)
9) Shareholdings of Key Management Personnel (Consolidated)
Ordinary shares held in JCurve Solutions Limited (number)
JCurve Solutions Limited
30 June 2016
Directors
G Baillie (1)
B Hatchman
D Franks
M Jobling
Executives
S Canning
B Doughty (1)
J Aulsebrook
Total
Balance
01 Jul 15
Granted as
remuneration
Issued under
employee share
plan
Net Change
Other (1)
Balance
30 Jun 16
83,124,215
-
-
51,204,301
2,000,000
1,571,320
-
137,899,836
-
-
-
-
-
-
-
-
-
(83,124,215)
-
1,000,000
1,000,000
-
1,300,000
1,000,000
-
-
1,000,000
1,867,000
2,867,000
-
51,204,301
1,233,418
4,533,418
(2,571,320)
-
-
-
4,300,000
(82,595,117)
59,604,719
(1) Includes the purchase and disposal of shares as well as number of shares held at the date of resignation or retirement.
G Baillie retired as a Non-Executive Director on 17 November 2015. The information shown for G Baillie was at his
retirement date as per the Appendix 3Z, being he held 83,124,215 shares on the date he retired as a director. B Doughty
resigned effective 31 May 2016.
30 June 2015
Directors
G Baillie
J Bond
N Gupta
M Jobling
Executives
J Butchers
J Slaiman
A Simmons
S Canning
B Doughty
Total
Balance
01 Jul 14
Granted as
remuneration
On Exercise of
Options
Net Change
Other (1)
Balance
30 Jun 15
81,319,478
31,198,481
4,064,020
-
197,698
100,333
6,380,943
-
-
123,260,953
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,804,737
83,124,215
(31,198,481)
(4,064,020)
-
-
51,204,301
51,204,301
(197,698)
(100,333)
(6,380,943)
-
-
-
2,000,000
2,000,000
1,571,320
1,571,320
14,638,883
137,899,836
(1) Includes disposal of shares as well as number of shares held at the date of resignation or retirement.
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.
15
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
Taos Creative Pty Ltd
Digital marketing & consulting (1)
Franks & Associates Pty Ltd
Company secretarial services (2)
Directors Fees (included in Table 1)
Millennium International Pty Ltd
Corporate Consultancy (3)
Directors Fees (included in Table 1)
Outserve Australia Pty Ltd
Professional Services (4)
2016
$
2,277
2,277
65,460
65,700
133,466
-
22,519
22,519
112,400
112,400
2015
$
240,500
240,500
74,011
52,013
126,024
45,000
43,452
88,452
131,781
131,781
(1) Former Chairman and current Non-Executive Director Graham Baillie’s step-daughter Sam Brown was a majority shareholder
and Director of Taos Creative Pty Ltd, which specialise in digital marketing & consulting services for business. In 2016 JCurve
was provided with services on commercial terms from Taos Creative Pty Ltd amounting to $2,277 net of GST (2015: $240,500)
while Graham Bailie was a Director.
(2) David Franks was appointed as Company Secretary on 15 September 2014 and was also appointed as a Non-Executive
Director on that date. David is the Proprietor of Franks and Associates, a firm that has provided 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 2016 amounted to $65,460 net of GST
and out of pocket expenses (2015: $74,011) and were provided on commercial terms. Franks and Associates invoices JCurve
for Mr Franks’ Directors fees and superannuation, which has been included in Table 1.
(3) Millenium International is a company fully owned by former Chairman and Non-Executive Director Graham Baillie. Millenium
International invoices JCurve for Mr Baillie’s Directors fees, which has been included in Table 1, and also was engaged to
provide consultancy services amounting to $45,000 in 2015.
(4) Former Chairman and former current Non-Executive Director Graham Baillie’s son-in-law Stephen John Nankervis is a Director
of Outserve Australia Pty Limited who have been engaged to provide professional services on commercial terms. The services
provided by Outserve up until the date Mr Baillie retired as a Non-Executive Director amounted to $112,400 net of GST for the
year ended 30 June 2016 (2015: $131,781).
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.
End of Remuneration Report
16
JCurve Solutions Limited
DIRECTORS’ REPORT (continued)
Proceedings on behalf of the company
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 18 and
forms part of this Directors’ Report for the year ended 30 June 2016.
Non-Audit Services
There was no non-audit related activities carried out by the Company’s auditors during the year ended 30 June 2016.
Corporate Governance Statement
In fulfilling its obligations and responsibilities to its various stakeholders, the Board is a strong advocate of corporate governance.
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.
The Corporate Governance Statement which outlines the principal corporate governance procedures of JCurve can be found on the
company’s website at:
http://www.jcurve.com.au/about/corporate-governance/
Signed in accordance with a resolution of the directors.
B Hatchman
Chairman
Dated at Sydney 23 August 2016
17
AUDITORS INDEPENDENCE DECLARATION
JCurve Solutions Limited
18
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2016
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 expense
Product development expense
Loss on disposal of fixed asset
Other expenses
Loss before income tax
Income tax benefit/(expense)
Net loss for the period
Other comprehensive income
Total comprehensive loss for the year
Basic loss per share (cents per share)
Basic loss per share from continuing operations
(cents per share)
JCurve Solutions Limited
Consolidated ($)
2016
9,472,993
(2,012,082)
7,460,911
(4,692,055)
(764,531)
(102,304)
(537,645)
(601,431)
(398,781)
(45,508)
(50,563)
2015
11,343,889
(2,502,466)
8,841,423
(6,372,768)
(836,192)
(189,833)
(408,920)
(1,001,397)
(384,054)
(52,330)
(188,297)
(2,980,493)
(5,167,008)
(52)
(4,313)
(46,440)
(381,709)
(3,144,914)
363,207
(2,781,707)
-
(487)
(15,899)
-
(473,527)
(6,249,289)
626,396
(5,622,893)
-
(2,781,707)
(5,622,893)
(0.84)
(0.84)
(1.72)
(1.72)
Notes
2
2
11
2
3
5
5
The accompanying notes form part of these financial statements.
19
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2016
JCurve Solutions Limited
Notes
2016
2015
Consolidated ($)
Assets
Current Assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Total Current Assets
Non-Current Assets
Property, plant and equipment
Intangible assets
Other financial assets
Deferred tax asset
Total Non-Current Assets
Total Assets
Liabilities
Current Liabilities
Trade and other payables
Provisions
Current tax liabilities
Total Current Liabilities
Non-Current Liabilities
Trade and other payables
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Share capital
Reserves
Accumulated losses
Total Equity
6
7
8
10
11
9
3
13
14
13
14
15
15
2,382,699
1,040,155
1,184,487
4,607,341
158,714
2,303,989
19,078
289,467
2,771,248
7,378,589
4,387,192
176,036
-
4,563,228
13,133
47,921
61,054
4,624,282
2,754,307
2,049,069
1,405,712
1,060,375
4,515,156
91,418
5,286,746
19,078
245,009
5,642,251
10,157,407
4,246,624
195,876
93,562
4,536,062
-
107,689
107,689
4,643,751
5,513,656
17,588,248
1,745,372
(16,579,313)
2,754,307
17,588,248
1,723,014
(13,797,606)
5,513,656
The accompanying notes form part of these financial statements.
20
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2016
JCurve Solutions Limited
Consolidated ($)
Inflows / (Outflows)
Notes
2016
2015
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Income tax received
Net cash provided by/(used in) operating activities
6
Cash flows (used in)/from investing activities
Purchase of non-current assets
Net cash used in investing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at 1 July 2015
Cash and cash equivalents at 30 June 2016
6
The accompanying notes form part of these financial statements.
10,086,596
(10,241,416)
17,940
(52)
632,597
495,665
(162,035)
(162,035)
333,630
2,049,069
2,382,699
12,321,905
(13,350,925)
22,182
(487)
338,007
(669,318)
(46,878)
(46,878)
(716,196)
2,765,265
2,049,069
21
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2016
JCurve Solutions Limited
Total
$
11,136,549
(6,249,289)
626,396
5,513,656
5,513,656
(3,144,914)
363,207
22,358
2,754,307
Consolidated
As at 1 July 2014
Loss for the year
Income tax expense
Share Capital
$
17,588,248
-
-
Accumulated
Losses
Equity Benefits
Reserve
$
(8,174,713)
(6,249,289)
626,396
$
1,723,014
-
-
Balance at 30 June 2015
17,588,248
(13,797,606)
1,723,014
As at 1 July 2015
Loss for the year
Income tax benefit
Issued shares under employee share plan
17,588,248
(13,797,606)
1,723,014
-
-
-
(3,144,914)
363,207
-
-
-
22,358
1,745,372
Balance at 30 June 2016
17,588,248
(16,579,313)
The accompanying notes form part of these financial statements.
22
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
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
financial report also complies with International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB).
The accounting policies detailed below have been consistently applied to all years unless otherwise stated. The financial
report is 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.
JCurve is a listed public company, incorporated in Australia and also operating in South Africa until 30 June 2016.
(b) New and amended standards adopted by the Group
(i)
Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to AASB 116 and AASB 138)
The AASB has clarified that the use of revenue- based methods to calculate the depreciation of an asset is not appropriate.
The clarification has had no impact on the Group’s depreciation accounting policies.
(c)
New accounting standards and interpretations not yet adopted
In the year ended 30 June 2016, 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 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.
Certain new accounting standards and interpretations have been published that are not mandatory for the 30 June
reporting period and have not been early adopted by the Group. The Group’s assessment of the impact of these new
standards and interpretations is set out below.
(i)
AASB 9 Financial Instruments
AASB 9 addresses the classification, measurement and de-recognition of financial assets and financial liabilities,
introduces new rules for hedge accounting and a new impairment model for financial assets.
The Group has assessed that there will be no impact on the Group’s future financial reporting.
AASB 9 must be applied for financial years commencing on or after 1 January 2018. The Group does not expect to adopt
the new standard before 1 July 2018.
(ii)
AASB 15 Revenue from Contracts with Customers
The AASB has issued a new standard for the recognition of revenue. This will replace AASB 118 which covers revenue
arising from the sale of goods and the rendering of services and AASB 111 which covers construction contracts. The new
standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer.
The standard permits either a full retrospective or a modified retrospective approach for the adoption.
Management is currently assessing the effects of applying the new standard on the Group’s financial statements. At this
stage, the Group is not able to estimate the effect of the new rules on the Group’s financial statements. The Group will
make more detailed assessments of the effect over the next twelve months. AASB 15 must be applied for financial years
commencing on or after 1 January 2018. The Group does not expect to adopt the new standard before 1 July 2018.
(iii)
AASB 16 Leases
The AASB has issued AASB 16 which will replace AASB 117 Leases and a number of interpretations. AASB 16 will
provide a comprehensive model for the identification of lease arrangements and their treatment in the financial statements
of both lessees and lessors.
23
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(c) New accounting standards and interpretations not yet adopted (continued)
(iii)
AASB 16 Leases (continued)
JCurve Solutions Limited
The new standard will have three possible main changes on the Group’s accounting for leases:
• Enhanced guidance on identifying whether a contract contains a lease;
• A completely new leases accounting model for lessees that require lessees to recognise all leases on balance
sheet except for short-term leases and leases of low value assets; and
• Enhanced financial statement disclosures.
Lessor accounting will not significantly change under AASB 16.
Management is currently assessing the effects of applying the new standard on the Group’s financial statements.
There may be an impact on the Group’s current property leases. At this stage, the Group is not able to estimate what the
effect on the Group’s financial statements apart from there being a requirement for additional disclosures. The Group will
make more detailed assessments of the effect over the next twelve months. AASB 16 must be applied for financial years
commencing on or after 1 January 2019. The Group does not expect to adopt the new standard before 1 July 2019.
(d) Statement of Compliance
The financial report was authorised for issue on 23 August 2016.
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).
(e)
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.
(f)
Significant accounting judgments, estimates and assumptions
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 12.
(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 to the financial statements.
24
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(f) Significant accounting judgments, estimates and assumptions (continued)
(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)
Recognition of subscription costs of sales
The recognition of the license cost associated with each JCurve software subscription is estimated on a gross margins
basis and is amortised over the life of the contract in a manner consistent with the method for recognising the revenue.
(v)
Identification of intangible assets on acquisition
The definition of an intangible asset requires an intangible asset to be identifiable to distinguish it from goodwill. Goodwill
recognised in a business combination is an asset representing the future economic benefits arising from other assets
acquired in a business combination that are not individually identified and separately recognised. The future economic
benefits may result from synergy between the identifiable assets acquired or from assets that, individually, do not qualify
for recognition in the financial statements.
An asset is identifiable if it either:
•
•
is separable, i.e. is capable of being separated or divided from the entity and sold, transferred, licensed, rented or
exchanged, either individually or together with a related contract, identifiable asset or liability, regardless of
whether the entity intends to do so; or
arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from
the entity or from other rights and obligations.
(g)
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.
(h)
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. The contract term is generally 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 or non-current liabilities
depending on the contractual term.
(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.
25
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(i)
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.
(j)
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 (i).
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.
Cash and cash equivalents
(k)
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.
(l)
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.
(m)
Income tax
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
26
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(m)
Income tax (continued)
• 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.
Tax Consolidation Legislation
JCurve Solutions Limited and its 100% owned Australian resident subsidiaries have implemented the tax consolidation
legislation. Current and deferred tax amounts are accounted for in each individual entity as if each entity continued to act
as a taxpayer on its own.
JCurve Solutions Limited recognises its own current and deferred tax amounts and those current tax liabilities, current tax
assets and deferred tax assets arising from unused tax credits and unused tax losses which it has assumed from its
controlled entities within the tax consolidated Group.
Assets or Liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts
payable or receivable from or payable to other entities in the Group. Any difference between the amounts receivable or
payable under the tax funding agreement are recognised as a contribution to (or distribution from) controlled entities in the
tax consolidated Group.
Other taxes
(n)
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.
(o)
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.
27
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(o)
Business Combinations (continued)
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.
(p)
Property, plant & equipment and depreciation and 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
Leasehold improvements
2 – 14 years
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.
(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 de-recognition 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.
(q)
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.
28
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(q)
Investments in associates and joint ventures (continued)
JCurve Solutions Limited
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 re-measurement to fair
value upon such changes in ownership interests.
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 losses 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.
(r)
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.
29
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(r)
Interests in joint operations (continued)
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.
(s)
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.
(t)
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.
30
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(t)
Intangible assets (continued)
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.
(u)
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.
(v)
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.
(w)
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.
(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.
31
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2016
(y)
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 16.
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).
(z)
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.
(aa)
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.
32
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 2:
REVENUES AND EXPENSES
JCurve Solutions Limited
Consolidated ($)
2016
2015
(a) Revenue
Telecommunications expense management – Australia
4,344,714
Telecommunications expense management – South Africa
IBM software licences & maintenance renewals
Computer services & subscriptions
JCurve cloud software & solutions
Gain on sale of Resources System
Interest income
Other income
-
-
-
5,075,453
-
17,940
34,886
5,664,618
704,165
405,343
372,170
4,137,078
36,027
22,182
2,306
(b) Expenses
Interest expense
Depreciation of non-current assets
Operating lease rental expense: minimum lease payments
Amortisation of intangibles
Directors’ Fees (includes superannuation)
Consultancy Fees
9,472,993
11,343,889
Consolidated ($)
2016
2015
52
48,299
346,269
2,264
245,865
77,200
487
71,154
308,345
117,143
363,969
389,115
33
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 3:
INCOME TAX
Income tax recognised in profit or loss
The major components of tax expense are:
Current tax benefit
Origination and reversal of temporary differences
Under/(over) provision from prior years - current tax
Total tax (benefit)/expense
Attributable to:
Continuing operations
JCurve Solutions Limited
Consolidated ($)
2016
2015
(49,404)
64,418
(378,221)
(363,207)
(507,793)
(243,321)
124,718
(626,396)
(363,207)
(626,396)
The prima facie income tax (benefit)/expense on pre-tax accounting
(loss)/profit from continuing operations reconciles to the income tax
(benefit)/expense in the financial statements as follows:
Accounting loss before tax
Income tax benefit calculated at 30%
(3,144,914)
(943,474)
(6,249,289)
(1,874,787)
Deferred tax expense relating to the origination and reversal of temporary
differences:
Permanent differences - non assessable income
Impairment of goodwill and intangibles
Non-deductible expenses
Research and development tax incentive (1)
Tax losses not brought to account
Under/(over) provision in prior years
Income tax benefit reported in the Statement of Comprehensive Income
Net Deferred Tax Asset
Analysis of deferred tax assets:
Tax losses recognised and available to offset against future taxable
income (2)
Accruals and provisions
Analysis of deferred tax liabilities:
Capitalised research and development
Prepayments
14,936
894,148
-
-
49,404
(378,221)
(363,207)
-
289,467
289,467
-
-
-
(10,438)
1,550,102
88,710
(723,495)
218,794
124,718
(626,396)
-
245,009
245,009
-
-
-
Net Deferred Tax Asset
289,467
245,009
(1) An estimate for the R&D tax incentive has not been accrued for the year ending 30 June 2016.
(2) The balance of recouped tax losses that have not been recognised in the Financial Statements amount to $1,548,398
(2015: $1,383,718 after adjusting for the prior year over provision). The deductible temporary differences and tax losses do
not expire under current legislation. Deferred tax assets have not been recognised in respect of these items because it is
not probable that future tax profits will be available against which the Group can utilise the benefits thereof.
Tax Consolidation
JCurve Solutions Limited and its 100% owned Australian resident subsidiaries implemented the tax consolidation legislation from 1
January 2014. The accounting policy for the implementation of the tax consolidation legislation is set out in note 1 (m).
34
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 3:
INCOME TAX (continued)
The entities in the tax consolidated group have entered into a tax sharing agreement on adoption of the tax consolidation legislation
which, in the opinion of the directors, limits the joint and several liability of the controlled entities in the case of a default by the head
entity, JCurve Solutions Limited.
JCurve Solutions Limited and its controlled entities have entered into a tax funding agreement under which the 100% owned
Australian resident subsidiaries compensate JCurve Solutions Limited for all current tax payable assumed and are compensated by
JCurve Solutions Limited for any current tax receivable and deferred tax assets which relate to unused tax credits or unused tax
losses that, under the tax consolidation legislation, are transferred to JCurve Solutions Limited. These amounts are determined by
reference to the amounts which are recognised in the financial statements of each entity in the tax consolidated group.
The amounts receivable/ payable under the tax funding agreement are due on receipt of the funding advice from JCurve Solutions
Limited, which is issued as soon as practicable after the financial year end. JCurve Solutions Limited may also require payment of
interim funding amounts to assist with obligations to pay tax instalments. These amounts are recognised as current intercompany
receivables or payables.
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
Earnings used for calculation of basic and diluted earnings per share
Loss from operations
Weighted average number of shares used for calculation of basic and diluted EPS
Weighted average number of shares
Earnings used for calculation of basic and diluted earnings per share
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
Consolidated
2016
$
2015
$
(2,781,707)
(5,622,893)
No.
No.
332,207,720
327,856,900
Cents per share
Cents per share
(0.84)
(0.84)
(1.72)
(1.72)
35
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 6:
CASH AND CASH EQUIVALENTS
JCurve Solutions Limited
Consolidated ($)
2016
2015
Cash at bank and on hand
2,382,699
2,049,069
Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods
of between one day and three months, depending on the immediate cash requirements of the Group, and earn interest at the
respective short-term deposit rates.
At 30 June 2016, the Group has no committed borrowing facilities.
Reconciliation of (loss)/profit for the year after tax to net cash flows
from operating activities
(Loss)/profit for the year
(2,781,707)
(5,622,893)
Non cash flows in operating (loss)/profit:
Depreciation and amortisation from continuing operations
Impairment from continuing operations
Loss on disposal of fixed assets
Equity settled share based payment
Gain on sale of investment – Resources Systems
(Increase)/decrease in assets:
Trade and other receivables
Other current assets
Other financial assets
Deferred tax assets
Increase/(decrease) in liabilities:
Trade and other payables – Current
Provisions – Current
Current tax liabilities
Trade and other payables – Non-current
Provisions – Non-current
Net cash used in operating activities
NOTE 7:
TRADE AND OTHER RECEIVABLES
Current:
Trade receivables (i)
Allowance for doubtful debts
Accrued revenue
50,563
2,980,493
46,440
22,358
-
365,557
(124,112)
-
(44,458)
140,568
(19,840)
(93,562)
13,133
(59,768)
495,665
188,297
5,167,008
-
-
(36,027)
1,350,112
(432,304)
12,778
(27,397)
(1,228,859)
-
82,287
-
(122,320)
(669,318)
Consolidated ($)
2016
2015
1,171,762
(131,607)
-
1,040,155
1,531,139
(135,058)
9,631
1,405,712
(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 17 for ageing of receivables.
36
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 8:
OTHER CURRENT ASSETS
JCurve Solutions Limited
Prepayments
Term deposit
Research and development rebate
Deferred expenditure
Sundry debtors
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
Consolidated ($)
2016
78,309
170,907
-
899,514
35,757
1,184,487
2015
61,925
-
333,317
637,996
27,137
1,060,375
Consolidated ($)
2016
2015
19,078
19,078
Consolidated ($)
2016
2015
226,976
(68,761)
158,215
1,000
(501)
499
679,618
(589,033)
90,585
44,120
(43,287)
833
Total net carrying amount
158,714
91,418
Reconciliations: Consolidated
Movements:
Net carrying amounts as at 30 June 2014
Disposals
Additions
Depreciation write-back on disposals
Depreciation charges
Net carrying amounts as at 30 June 2015
Disposals
Additions
Depreciation write-back on disposals
Depreciation charges
Net carrying amounts as at 30 June 2016
Plant &
Equipment
Leasehold
Improvements
$
$
103,576
(151,318)
45,878
151,311
(58,862)
90,585
12,118
(24,985)
1,000
24,986
(12,286)
833
Total
$
115,694
(176,303)
46,878
176,297
(71,148)
91,418
(614,677)
(43,120)
(657,797)
162,035
568,237
(47,965)
158,215
-
43,120
(334)
499
162,035
611,357
(48,299)
158,714
37
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2016
JCurve Solutions Limited
NOTE 11:
INTANGIBLE ASSETS
Consolidated
Year ended 30 June 2015
Licences & Other
Intangibles
Goodwill
Total
$
$
$
At 1 July 2014, net of accumulated amortisation and impairment
3,553,396
7,017,501
10,570,897
Additions
Amortisation
Impairment charge
-
(117,143)
-
-
-
(117,143)
(1,160,000)
(4,007,008)
(5,167,008)
At 30 June 2015, net of accumulated amortisation and impairment
2,276,253
3,010,493
5,286,746
Year ended 30 June 2016
At 1 July 2015, net of accumulated amortisation and impairment
2,276,253
3,010,493
5,286,746
Additions
Transfers
Amortisation
Impairment charge
-
30,000
(2,264)
-
(30,000)
-
-
-
(2,264)
-
(2,980,493)
(2,980,493)
At 30 June 2016, net of accumulated amortisation and impairment
2,303,989
-
2,303,989
Goodwill is subject to annual impairment testing (see Note 12).
An impairment loss of $2,980,493 (2015: $5,167,008) was recognised for the Group’s continuing operations in the 2016 financial
year. The net assets as at 30 June 2015 included goodwill for The Full Circle Group Pty Ltd $2,623,097 and Phoneware Pty Ltd
$357,396. These assets are now fully impaired and have a carrying value of $nil as at 30 June 2016, due to reduced future cash
inflows as a result of changes in market forces. Further explanation of the factors that lead to the impairment charge are noted in
Note 12.
NOTE 12:
IMPAIRMENT TESTING OF GOODWILL AND INTANGIBLES WITH INDEFINITE LIVES
Goodwill acquired through business combinations has been allocated to 3 individual cash generating units (CGU) for impairment
testing as follows:
• Phoneware;
• JCurve Business Software;
• The Full Circle Group.
Phoneware
The recoverable amount of the Phoneware product division was determined based on a value in use calculation using cash flow
projections covering a 5-year period. The discount rate applied to cash flow projections is 12% (2015: 12%). Based on these
value in use calculations, the remaining Phoneware Goodwill balance of $357,396 was assessed as being fully impaired and an
impairment charge of $357,396 was recognised (2015: nil).
38
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 12:
IMPAIRMENT TESTING OF GOODWILL AND INTANGIBLES WITH INDEFINITE LIVES (continued)
JCurve Business Software
The JCurve Business Software intangible asset balance relates to the recoverable amount of the amount paid for the purchase of
the exclusive reseller agreement with NetSuite. This Agreement provides JCurve Solutions Limited with exclusive selling rights for
the JCurve edition of the NetSuite business software for an indefinite period. The NetSuite agreement provides that in the event of
cancellation of the Agreement, the customers of JCurve would be assigned to NetSuite and NetSuite would be required to pay
JCurve a royalty of 30% of the future revenue stream to NetSuite for a 3-year period. On the basis of current trends, JCurve
Business Software revenue is increasing year on year, and should this trend continue, it is unlikely that there will be impairment in
future periods.
The recoverable amount of any royalty payment from NetSuite has been determined based on a value in use calculation using
cash flow projections covering a 3-year period. The discount rate applied to the contractual royalty cash flow projections is 6.25%
(2015: 6.25%). Based on these value in use calculations, there is no impairment for the year ended 30 June 2016 (2015:
$5,167,008 which was applied to Goodwill $4,007,008, the NetSuite License $797,142 and the implementation wizard $362,858).
The carrying value of the NetSuite License remains $2,303,989.
If the discount rate applied was 10% higher the recoverable amount would decrease by $28,178 and if the discount rate applied
was 10% lower the recoverable amount would increase by $28,321. If the royalty cash flow projections applied was 10% higher the
recoverable amount would increase by $351,071 and if the royalty cash flow projections applied was 10% lower the recoverable
amount would decrease by $351,071.
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. The
recoverable amount of The Full Circle Group Goodwill has been determined based on a value in use calculation using cash flow
projections covering a 5-year period. The discount rate applied to cash flow projections is 12% (2015: 12%). Based on these
value in use calculations, the remaining Full Circle Group Goodwill balance of $2,623,097 was assessed as being fully impaired
and an impairment charge of $2,623,097 was recognised (2015: nil).
Carrying amount of intangibles allocated to each of the cash generating units
At 30 June 2015
Carrying amount of goodwill
Carrying amount of licences &
other intangibles
Consolidated ($)
Phoneware Full Circle
JCurve
Business
Software
Total
387,396
2,623,097
-
3,010,493
-
3,396
2,272,857
2,276,253
Total
387,396
2,626,493
2,272,857
5,286,746
At 30 June 2016
Carrying amount of goodwill
Carrying amount of licences &
other intangibles
Total
-
-
-
-
-
-
1,132
2,302,857
2,303,989
1,132
2,302,857
2,303,989
39
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 13:
TRADE AND OTHER PAYABLES
Current:
Trade payables (i)
Other payables
Accrued expenses
Unearned Income
Non-current:
Unearned Income
JCurve Solutions Limited
Consolidated ($)
2016
2015
356,777
373,240
634,090
3,023,085
4,387,192
13,133
13,133
364,097
483,213
638,230
2,761,084
4,246,624
-
-
(i) Trade payables are non-interest bearing and are normally settled on 30-day terms. Information regarding the effective interest
rate and credit risk of current payables is set out in Note 17.
NOTE 14:
PROVISIONS
Current:
Annual leave
Non-current:
Provision for long service leave
NOTE 15:
SHARE CAPITAL AND RESERVES
Ordinary shares issued and fully paid (i)
Unissued shares (ii)
Consolidated ($)
2016
2015
176,036
176,036
47,921
47,921
195,876
195,876
107,689
107,689
17,382,891
205,357
17,588,248
17,382,891
205,357
17,588,248
(i) Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Movement in ordinary shares on issue
At 1 July 2014
Shares issued
At 30 June 2015
Shares issued (a)
Share by back and cancellation (a)
At 30 June 2016
No.
$
327,856,900
17,382,891
-
327,856,900
6,800,000
(2,000,000)
332,656,900
-
17,382,891
-
-
17,382,891
(a) Shares issued and bought back under the Employee Share Plan. Refer to Note 16(a) for further information.
(ii) Movement in unissued shares
At 1 July 2014
Deferred consideration (a)
At 30 June 2015
Deferred consideration
At 30 June 2016
-
4,464,285
4,464,285
-
4,464,285
-
205,357
205,357
-
205,357
(a) Unissued shares in respect of the Full Circle acquisition to which the earn out levels were not achieved.
40
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 15:
SHARE CAPITAL AND RESERVES (continued)
Shares issued under Employee Share Plan – in escrow
JCurve Solutions Limited issued a total of 6,800,000 shares to employees (4,800,000) and Directors (2,000,000) during the year
ending 30 June 2016 under an Employee Share Plan. Refer to Note 16(a) for further information.
Share Option Plan - Acquisition of JCurve Business Software
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 in October 2013. Refer to Note 16(b) for further information.
Reserves
Balance at the start of the year
Issued shares under Employee Share Plan
Shares cancelled under Employee Share Plan
Balance at the end of the year
Nature and purpose of reserves
Employee Equity benefits reserve
2016
$
1,723,014
15,547
6,811
1,745,372
2015
$
1,723,014
-
-
1,723,014
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.
NOTE 16:
SHARE BASED PAYMENT PLANS
(a)
Shares issued under Employee Share Plan
An employee share plan was approved by shareholders at the Annual General Meeting held on 31 October 2013.
On 11 September 2015, 4,800,000 shares (valued at $27,281) were issued to employees under the employee share plan with
payment via a non-recourse loan.
Following approval by shareholders at the Annual General Meeting held on 17 November 2015, on 7 December 2015, 1,000,000
shares were issued to both Bruce Hatchman and David Franks (2,000,000 in total valued at $16,367) under the Employee Share
Plan with payment via a non-recourse loan.
The shares remain in escrow until 11 September 2017 and 7 December 2017.
The expense recognised in the statement of comprehensive income in relation to share-based payments is disclosed in Note 15.
2,000,000 of the shares issued under the Employee Share Plan (valued at $15,914) were bought back by the JCurve during the
year in accordance with the terms of the Employee Share Plan.
(b)
Share Option Plan – Acquisition of JCurve Business Software
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.
The contractual life of each option granted is between 3 and 5 years. There are no cash settlement alternatives.
41
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 16:
SHARE BASED PAYMENT PLANS (continued)
(b)
Share Option Plan - Acquisition of JCurve Business Software (continued)
JCurve Solutions Limited
The following table illustrates the number (No.) and weighted average exercise prices of and movements in share options issued
during the year:
2016
2015
Weighted
average
exercise price
Weighted
average
exercise price
No.
No.
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
35,714,284
$0.000001
35,714,284
$0.000001
(8,928,571)
-
26,785,713
26,785,713
-
-
$0.000001
-
-
35,714,284
35,714,284
-
-
$0.000001
The weighted average remaining contractual life for the share options outstanding as at 30 June 2016 is between 1 and 3 years
(2015: 1 and 4 years).
The range of exercise prices for options outstanding at the end of the year was $0.000001 (2015: $0.000001).
8,928,571 of options expired during the year.
The outstanding balance of share options as at 30 June 2016 is represented by:
•
•
•
8,928,571 options which automatically vest when the share price reaches 10.0c for a period of 10 consecutive trading
days, exercisable on or before 31 March 2017;
8,928,571 options which automatically vest when the share price reaches 12.5c for a period of 10 consecutive trading
days, exercisable on or before 31 March 2018;
8,928,571 options which automatically vest when the share price reaches 15.0c for a period of 10 consecutive trading
days, exercisable on or before 31 March 2019
NOTE 17:
FINANCIAL INSTRUMENTS
(a)
Capital risk management
Capital risk is managed and monitored by liaising with banks and communicating with shareholders. JCurve considers new
government legislation and monitors the market place by canvassing information from stockbrokers and investors.
When managing capital, management's objective is to ensure the entity continues as a going concern as well as to maintain optimal
returns to shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure that ensures the
lowest cost of capital available to the entity. Management adjust the capital structure as necessary to take advantage of favourable
costs of capital or high returns on assets. As the market is constantly changing, management may change the amount of dividends
to be paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
(b)
Categories of financial instruments
Financial assets
Cash and cash equivalents
Receivables
Other current assets
Other financial assets
Financial liabilities
Payables
The Group has no derivative instruments in designated hedging relationships.
42
Consolidated ($)
2016
2015
2,382,699
1,040,155
170,907
19,078
2,049,069
1,405,712
-
19,078
4,400,325
4,246,624
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 17:
FINANCIAL INSTRUMENTS (continued)
(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 which arise during the course of operations.
The Group has various financial assets such as trade receivables and cash and short-term deposits, which arise directly from its
operations.
The Group’s policy throughout 2016 has remained 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)
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 1 year
1 to 5 years
Total
Weighted
average
effective interest
rate
$
$
$
%
Year ended 30 June 2016
Financial assets
Trade and other receivables
Floating rate:
Cash Assets
Other Current Assets
Financial liabilities
Payables
Year ended 30 June 2015
Financial assets
Trade and other receivables
Floating rate:
Cash Assets
Financial liabilities
Payables
1,040,155
1,040,155
2,382,699
170,907
2,553,606
3,593,761
4,387,192
4,387,192
1,405,712
1,405,712
2,049,069
2,049,069
3,454,781
4,246,624
4,246,624
-
-
-
-
-
-
13,133
13,133
-
-
-
-
-
-
-
1,040,155
1,040,155
2,382,699
170,907
2,553,606
3,593,761
4,400,325
4,400,325
1,405,712
1,405,712
2,049,069
2,049,069
3,454,781
4,246,624
4,246,624
0.95%
3.03%
2.33%
-
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.
43
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 17:
FINANCIAL INSTRUMENTS (continued)
(d)
Interest Rate Risk (continued)
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.
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 $12,768 and decrease by $8,864 respectively (2015: increase by $4,757 and decrease by
$4,757). This is mainly attributable to the Group’s exposure to interest rates on its variable rate cash deposits.
(e)
Price Risk – Equity and Commodity
The Group's exposure to commodity and equity securities price risk is minimal.
(f)
Foreign Currency Risk
The Group has minimal exposure to foreign currency risk as the Group trades mainly within Australia. The Joint Venture contract for
in South Africa stipulates that the service revenue will be billed in Australian dollars.
(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.
At 30 June 2016, the ageing analysis of trade receivables is as follows:
Consolidated
Total
$
0-30
days
$
0-30
days
CI*
$
31-60
days
$
31-60
days
CI*
$
61-90
Days
PDNI*
$
61-90
Days
CI*
$
+91
days
PDNI*
$
+91
days
CI*
$
2016
2015
1,171,762
359,337
1,028
355,942 4,125
104,897
12,084
242,219
92,130
1,531,139
765,893
-
273,253
-
136,259
-
220,677
135,057
* PDNI - Past due not impaired
* CI
- Considered impaired
The receivables which are past due but not considered impaired was $347,116 (2015: $356,936).
Other balances within trade and other receivables do not contain impaired assets and are not past due. It is expected that these
other balances will be received when due.
44
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 17:
FINANCIAL INSTRUMENTS (continued)
(h)
Liquidity Risk Management
Ultimate responsibility for liquidity risk management rests with the board of directors, who have built an appropriate liquidity risk
management framework for the management of the Group’s short, medium and long-term funding and liquidity management
requirements. The Group manages liquidity risk by maintaining adequate reserves and banking facilities by continuously monitoring
forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.
NOTE 18:
COMMITMENTS AND CONTINGENCIES
Remuneration Commitments
There are no commitments for the payment of salaries and other remuneration under long-term employment contracts in existence
at the reporting date.
Operating Lease Commitments
The Group had the following operating lease commitments at balance date:
Consolidated ($)
2016
272,515
798,474
1,070,989
2015
53,457
79,239
132,696
Within one year
After one year but not more than five years
Contingent Liabilities
The Group does not have any contingent liabilities.
NOTE 19:
EVENTS AFTER BALANCE DATE
No matters or circumstances have arisen since 30 June 2016 that significantly affect, or may significantly affect:
(a) the Group’s operations in future financial years, or
(b) the results of those operations in future financial years, or
(c) the Group’s state of affairs in future financial years.
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
84,177
82,500
Consolidated ($)
2016
2015
45
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 21:
INTEREST IN JOINT OPERATION
The Group’s 50% interest in the Webhouse Software joint venture, which was involved in providing telecommunications expense
management solutions in South Africa was sold on the 30 June 2016. The entity was deconsolidated as at 30 June 2016 and
shares in the joint venture were sold to the joint venture partner for consideration of $1.
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:
2016
2015
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
-
-
-
-
-
-
89,567
89,567
-
-
-
-
Year ended
30 June 2016
Year ended
30 June 2015
$
-
-
-
-
-
-
-
-
-
$
704,165
809
(1,713)
-
(19,491)
-
683,770
-
683,770
There were no capital commitments and guarantees. There were no impairment losses in the jointly controlled operation.
46
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 22:
RELATED PARTY DISCLOSURE
The consolidated financial statements include the financial statements of JCurve Solutions Limited and the subsidiaries listed in the
following table.
Country of
% Equity Interest
Name
Incorporation
JCurve Services Pty Ltd
Australia
JCurve Business Software Pty Ltd
Australia
Mobile Fleet Pty Ltd
Fleet Manager Pty Ltd
Phoneware Pty Ltd
Interfleet Pty Ltd
Australia
Australia
Australia
Australia
The Full Circle Group Pty Ltd
Australia
2016
-
100
-
100
100
100
100
2015
100
100
100
100
100
100
100
JCurve Solutions Limited is an Australian entity and ultimate parent of the Group. JCurve Business Software Pty Ltd, Fleet
Manager Pty Ltd, Phoneware Pty Ltd, Interfleet Pty Ltd and The Full Circle Group Pty Ltd are all incorporated in Australia.
JCurve Services Pty Ltd and Mobile Fleet Pty Ltd which were no longer trading entities as at 30 June 2015 were deregistered on
19 August 2015.
NOTE 23:
PARENT ENTITY DISCLOSURES
Financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net Assets
Equity
Issued capital
Accumulated losses
Reserves
Total equity
Financial Performance
30 June 2016
$
30 June 2015
$
2,422,630
1,107,113
3,529,743
670,458
104,978
775,436
2,331,247
2,863,480
5,194,727
1,182,421
89,267
1,271,688
2,754,307
3,923,039
17,588,248
(16,556,955)
1,723,014
2,754,307
17,588,248
(15,388,223)
1,723,014
3,923,039
Year ended
30 June 2016
$
Year ended
30 June 2015
$
Net profit/(loss) for the year
(1,168,732)
(447,411)
47
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 24:
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 Compensation
NOTE 25: GOING CONCERN
30 June 2016
$
734,499
62,450
-
-
14,852
811,801
30 June 2015
$
1,378,986
101,832
-
-
-
1,480,818
The Group incurred a loss after tax of $2,781,707 (2015: $5,622,893), which included an impairment charge of $2,980,493 (2015:
$5,167,008). At balance date, the Group has cash assets of $2,382,699 (2015: $2,049,069) and a working capital position of
$44,113 (2015: negative working capital position of $20,906). The working capital position of $44,113 includes unearned revenue of
$3,036,218 (2015: $2,761,084).
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 cash flow 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 cash flow 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.
48
JCurve Solutions Limited
DIRECTORS’ DECLARATION
1.
In the opinion of the directors:
(a) the financial statements and notes set out on pages 19 to 48 are in accordance with the Corporations Act 2001, including:
(i) complying with the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
(ii) giving a true and fair view of the Group’s financial position as at 30 June 2016 and of its performance for the financial year
ended on that date; and
(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and
payable.
Note 1(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board.
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by Section 295A
of the Corporations Act 2001.
This declaration is signed in accordance with a resolution of the Board of Directors.
B Hatchman
Chairman
Dated 23 August 2016
49
INDEPENDENT AUDITORS REPORT
JCurve Solutions Limited
50
INDEPENDENT AUDITORS REPORT (continued)
JCurve Solutions Limited
51
JCurve Solutions Limited
ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES
Shareholder information
(a)
Distribution of shareholder and listed option holder numbers
Category
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - and over
Ordinary
Units
% of Issued Capital
57
10
47
311
335
760
2,932
33,728
408,329
16,080,401
316,131,510
332,656,900
0.00%
0.01%
0.12%
4.83%
95.04%
100.00%
There are 175 shareholders that hold less than a marketable parcel as at 19 September 2016.
(b)
Substantial shareholders
The names of the substantial shareholders listed in the Group’s register as at 30 June 2016 and 19 September 2016 are:
30 June 2016
19 September 2016
Shareholder
Number of ordinary
shares held
% held of ordinary
share capital
Number of ordinary
shares held
% held of ordinary
share capital
Gramell Investments Pty Limited
Mr Mark Jobling
Two Tops Pty Ltd
83,124,215
51,204,301
31,198,481
24.99
15.62
9.52
83,124,215
51,204,301
-
24.99
15.62
-
(c)
Voting rights
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 David Franks.
(e)
Registered office
The address of the principal registered office in Australia is:
Level 8, 9 Help Street
Chatswood NSW 2067
(f)
Register of securities
The registers of securities are held at the following address:
Computershare Investor Services Pty Ltd
Level 11, 172 St Georges Terrace
Perth WA 6000
Ph. (08) 9323 2000
52
ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES (continued)
JCurve Solutions Limited
(g)
Top 20 Registered Holders – Ordinary Shares as of 19 September 2016
Name
1 GRAMELL INVESTMENTS PTY LIMITED
15 MR BRIAN ROBERTS
16
ATTENBOROUGH SUPERANNUATION MANAGERS PTY LTD
17 CORNELA PTY LTD
18
PATEL FAMILY SUPERANNUATION PTY LTD
19 MR MICHAEL STARR
20 GLEN ALPINE PTY LTD
TOTAL HELD BY TOP 20 HOLDERS
TOTAL HELD BY REMAINING SHAREHOLDERS
(h)
Stock exchange listing– ordinary shares (as of 30 June 2016)
Number of Ordinary
Shares
% of
Ordinary
Shares
Held
83,124,215
47,899,564
24.99
14.40
7,500,000
6,330,943
4,834,270
4,000,000
3,288,519
3,233,418
3,007,783
3,000,000
2,951,875
2,800,000
2,768,964
2,271,973
2,246,160
2,000,000
2,000,000
2,000,000
2,000,000
1,970,710
2.25
1.90
1.45
1.20
0.99
0.97
0.90
0.90
0.89
0.84
0.84
0.69
0.68
0.60
0.60
0.60
0.60
0.59
189,228,394
143,428,506
56.88
43.12
Quotation has been granted for all the ordinary shares of the Company on the Australian Securities Exchange.
(i)
Restricted securities
As at 30 June 2016 and 19 September 2016 there are no restricted security classes recorded in the Company’s share register.
(j)
Unquoted securities
The unquoted securities of the Company as at 19 September 2016 are 26,785,713 Options are outlined below
Number of Options
Exercise Price
Expiry Date
Number of Holders
8,928,571
8,928,571
8,928,571
$0.000001
$0.000001
$0.000001
31 March 2017
31 March 2018
31 March 2019
1
1
1
(k)
Listing Rule 3.13.1 and 14.3
Further to Listing Rule 3.13.1 and Listing Rule 14.3, the Annual General Meeting of JCurve is scheduled for 22 November 2016.
53
JCurve Solutions Limited
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