JCurve Solutions Limited
JCurve Solutions Limited
Annual Financial Report
For the year ended 30 June 2018
JCurve Solutions Limited
ABN 63 088 257 729
Level 8, 9 Help Street
Chatswood NSW 2067
[T] +61 2 9467 9200
1
Contents
CORPORATE INFORMATION
CHAIRMAN’S LETTER
DIRECTORS’ REPORT INCLUDING REMUNERATION REPORT
AUDITOR’S INDEPENDENCE DECLARATION
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
STATEMENT OF FINANCIAL POSITION
STATEMENT OF CASH FLOWS
STATEMENT OF CHANGES IN EQUITY
CONTENTS TO THE NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
SHAREHOLDER INFORMATION
JCurve Solutions Limited
3
4
6
21
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24
25
26
27
50
51
54
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 Ltd
Level 11, 172 St Georges Terrace
Perth WA 6000
Ph. (08) 9323 2000
Auditors
BDO East Coast Partnership
Level 11, 1 Margaret Street
Sydney NSW 2000
Australia
Securities Exchange Listings
Australian Securities Exchange
ASX Code: JCS
Website
www.jcurvesolutions.com
3
CHAIRMAN'S LETTER
JCurve Solutions Limited
The financial year ended 30 June 2018 was a year of accelerating growth for JCurve Solutions Limited as we built on the foundations
established over the past two years. We have increased our customer count, improved our financial profitability and financial stability
and diversified our market offerings. It was a period of transition for the Company with further investment in our people and internal
capabilities made to keep pace with the changing revenue profile of our growing ERP division where the mix of opportunities arising
is moving towards larger more complex solutions.
As I have previously stated, since July 2016, JCurve Solutions has embarked on a sustained period of business growth aiming to
increase revenues, diversify market offerings, expand geographical territories and invest in our people to increase the value provided
to customers and achieve an order of magnitude lift in long term shareholder value. The Company’s three core stated strategic
objectives (investing to grow the ERP Business, maximising value from the Telecommunications Expense Management
(TEMS) business and diversification) remained at the forefront of our operational and strategic initiatives in FY2018.
1)
Investing to grow the ERP business
Our ERP practice has expanded over the past 24 months to include additional products, namely MYOB Advanced and additional
editions of NetSuite as we looked to expand our market offerings and take advantage of the increasing awareness of ERP cloud
software solutions.
During the year ended 30 June 2018, the NetSuite ERP division grew by 26% after recognising $9.2 million of revenue, a substantial
increase on the $7.3 million recognised in FY2017. We are forecasting an even larger increase in new business sales in FY2019.
The $9.2 million in revenue generated in FY2018 helped the NetSuite ERP Division to generate an operating profit before tax of $1.8
million for the year. At 30 June 2018 we had over 600 ERP customers across our portfolio of solutions offered spread across both
Australia and New Zealand.
In FY2018 we recognised $0.05 million of MYOB revenue and generated a loss of $0.4 million from the MYOB Advanced division.
The combined 27% growth achieved from the NetSuite ERP and MYOB Advanced divisions was below our original forecast levels
with the Group unable to ramp up sales of MYOB Advanced at the pace we anticipated. The lower than expected MYOB Advanced
sale and project delivery results were offset by the growth achieved from selling the larger editions of NetSuite and continuing growth
of our exclusive JCERP small business edition offering. We were able to reduce ERP customer churn to 6.3% for FY2018 and a
number of our customers committed to longer term contracts.
2) Maximising value from the TEMS business
We have seen further stabilisation of TEMS customer churn with the customer profile of the TEMS division now comprised of fewer,
larger value customers. We continue to focus on customer retention rather than actively selling our TEMS proprietary owned solutions
to new business customers with our customer count remaining above 100 customers across Australia.
During the year ending 30 June 2018 we were able to recognise $2.7 million of revenue from TEMS solutions. While this was a 13%
decrease from the $3.1 million generated in FY2017, it was more favourable than we had expected. With cost restructures in the
previous financial years the division despite reduced revenue was able to generate a $1.6 million profit before tax and R&D net
expenditure in FY2018.
In FY2018 we continued to invest some of the profits earnt from the TEMS division back into research and development (R&D)
activities which were intended to minimise TEMS churn and capitalise on related expense management opportunities. $0.6 million of
R&D expenditure before R&D credits was incurred and expensed in the first eight months of FY2018. The expense management
opportunities have not been as large as forecast, and with the Riyo Business purchase arising, we are prioritising research and
development investment in the Riyo Platform business opportunity. JCurve Solutions remains committed to the ongoing maximisation
of value from our TEMS proprietary owned solutions which remains a profitable part of the Group.
3) Diversification by leveraging our core strengths and capabilities
The Management Team and Board have in FY2018 investigated a number of acquisition opportunities in both the Australasian and
Asian markets. In May 2018 the Group was successful in completing the purchase in Australia of the Riyo Platform for a purchase
price of $600,000 which was settled out of the Group’s existing cash reserves.
The Riyo solution which is a platform to provide on-demand or scheduled booking, dispatch and payment (BDP) is complementary to
our existing business and will provide a strong value-added sale opportunity to our existing ERP customers, as well as providing a
stand-alone solution to new customers. The purchase of the Riyo platform aligns with our existing business, enables us to become a
solution owner and further diversifies our market offerings.
Since completing the purchase of the Riyo Platform on the 31st of May 2018, the JCS team has focused on defining the go to market
plan for the Riyo solution offering, building a team to launch and support the solution and re-engaging with two pre-acquisition
enterprise trial customers.
4
JCurve Solutions Limited
Financial Commentary
With a strong balance sheet and solid operating fundamentals, JCS continues to assess acquisition opportunities both locally and in
Asia.
The statutory profit before tax generated by JCurve Solutions for the year ending 30 June 2018 was $0.9 million (2017: $0.7 million).
The normalised EBITDA increased from $0.8 million to $1.0 million in FY2018.
JCurve Solutions continues to be supported by strong financial foundations. In FY2018 the Group was $1.7 million operating cash
flow positive while remaining debt free and holding $4.5 million in cash reserves as at 30 June 2018. This financial stability ensures
we are well positioned to build capitalise on diversification and expansion opportunities as they arise.
Over the past year we have delivered short term shareholder value through an appreciation of our share price which rose from 1.1
cents to 3.1 cents as at 30 June 2018, a 282% increase during FY2018.
The JCurve Solutions team continues to pride itself on a very strong, high-performance corporate culture, with the Group winning
awards and being recognised as an Employer of Choice, all of which continues to raise the market profile of JCurve Solutions and
assists with our growth aspirations. The strong corporate culture has been critical in attracting the right talent as we expanded our
sales, marketing and professional services capabilities.
Once again I would like to thank our employees and shareholders for their continuing support over the past year. Your Directors look
forward to seeing increasing levels of growth from the investment made in FY2018 throughout FY2019.
Bruce Hatchman
Chairman
5
DIRECTORS’ REPORT
JCurve Solutions Limited
Your directors present the annual financial report of the consolidated entity (referred to hereafter as JCurve Solutions or the Group)
consisting of JCurve Solutions Limited and the entities it controlled at the end of, or during, the year ended 30 June 2018. In order to
comply with the provisions of the Corporations Act 2001, the Directors’ Report is as follows:
Directors and Company Secretary
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
Directorships of
other companies
Former
directorships of
other listed
companies
Special
responsibilities
Bruce Hatchman was appointed as the Chairman of JCurve Solutions on 27 November 2014. Bruce
Hatchman is an experienced and successful finance professional. As the former Chief Executive of Crowe
Horwath, Bruce Hatchman has 40 years’ experience in providing audit and assurance services to listed
companies and consulting services to large private enterprises. He is a qualified Chartered Accountant and
a member of the Australian Institute of Company Directors.
Bruce Hatchman is currently the Chairman and a Non-Executive Director of the following listed company’s:
Consolidated Operations Group Limited.
None.
Member of the Audit & Risk Management Committe and Chairman of the Remuneration Committee.
David Franks B.Ec, CA, F Fin, JP. (Non-Executive Director and Company Secretary)
Experience and
expertise
Directorships of
other companies
Former
directorships of
other listed
companies
Special
responsibilities
David Franks joined JCurve Solutions on 15 September 2014 as Company Secretary and a Non-Executive
Director. He is a Chartered Accountant, Fellow of the Financial Services Institute of Australia, Fellow of the
Governance Institute of Australia, Justice of the Peace, Registered Tax Agent and holds a Bachelor of
Economics (Finance and Accounting) from Macquarie University. With over 20 years in finance and
accounting, initially qualifying with Price Waterhouse in their Business Services and Corporate Finance
Divisions, David has been CFO, Company Secretary and/or Director for numerous ASX listed and unlisted
public and private companies, in a range of industries covering energy retailing, transport, financial services,
mineral exploration, technology, automotive, software development and healthcare. David Franks is
currently the Company Secretary for the following public entities: Elk Petroleum Limited, Noxapharm
Limited, Consolidated Operations Group Limited, White Energy Company Limited and White Energy
Technology Limited. David is also a Senior Executive of Automic Group Pty Ltd.
None.
None.
Chairman 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
Directorships of
other companies
Former
directorships of
other listed
companies
Special
responsibilities
Mark Jobling joined the company on 8 April 2015 as a Non-Executive Director. Mark Jobling is a substantial
shareholder of the Company and holds a Bachelor of Economics and Bachelor of Laws (Hons) from Monash
University. Mark 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. Mark
Jobling is the Chairman of Tomorrow Entertainment Holdings Pte Ltd.
None.
None.
Member of the Audit & Risk Management Committee and the Remuneration Committee.
6
DIRECTORS’ REPORT (continued)
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 Solutions were:
JCurve Solutions Limited
M Jobling
B Hatchman
D Franks
Ordinary Shares
51,204,301
3,500,000
4,206,174
58,910,475
Options over Ordinary
Shares
-
-
-
-
During the year ended 30 June 2018, 1,500,000 performance rights were granted to employees under the Equity Incentive Plan.
Details of performance rights issued under the Equity Incentive Plan are as follows:
JCurve Solutions Ltd
1,500,000
1,500,000
Nil
31 August 2019
Number of performance rights
KMP Holding
Exercise price
Vesting Date
In the prior year, 10,000,000 performance rights were granted to employees under the Equity Incentive Plan. Details of performance
rights issued under the Equity Incentive Plan are as follows:
JCurve Solutions Ltd
10,000,000
10,000,000
Nil
31 August 2019
Number of performance rights
KMP Holding
Exercise price
Vesting Date
Details of unissued ordinary shares under options as at 30 June 2018 are as follows:
JCurve Solutions Ltd
8,928,571
-
$0.000001
31 March 2019
Number of options
KMP option holdings
Exercise price
Expiry date
No ordinary shares were issued during the financial year as a result of the exercise of these options.
Options totalling 8,928,571 under this option scheme expired during the financial year.
Dividends and shareholder returns
No dividends were declared or paid during the financial year ended 30 June 2018.
Principal activities
The principal activities of JCurve Solutions during the year ended 30 June 2018 were:
1)
2)
3)
the sale of Enterprise Resource Planning (ERP) solutions, predominately the exclusively licensed JCurveERP and
associated implementation and consulting services as well as NetSuite and MYOB Advanced in addition to accompanying
associated implementation and consulting services;
the development and sale of proprietary Telecommunications Expense Management Solutions; and
the acquisition of the Riyo Business.
7
DIRECTORS’ REPORT (continued)
Operating financial review
Financial Results for the Year
JCurve Solutions Limited
The Group recognised a profit after tax of $0.8 million for year ended 30 June 2018 (2017 $0.5 million).
The ‘Normalised EBITDA’ for the full year ended 30 June 2018 was $1.0 million (2017 $0.8 million), which has been determined as
follows:
Consolidated ($)
2018
2017
Total comprehensive income for the year
847,267
454,286
Add Back: Non-cash expenses:
Depreciation / amortisation
Total non-cash expenses
Income tax expense
Interest income/finance costs
102,328
102,328
48,105
(17,769)
78,664
78,664
286,630
(17,660)
Normalised EBITDA
979,931
801,920
Normalised EBITDA is a financial measure which is not prescribed by Australian Accounting Standards (AAS) and represents the
profit under AAS 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 Group’s total revenue for the year ended 30 June 2018 was $11.9 million (2017: $10.4 million), which includes revenue from the
sale of JCurveERP/NetSuiteERP licenses and accompanying support and implementation revenue $9.2 million (2017: $7.3 million),
revenue from the sale of Telecommunications Expense Management Solutions $2.7 million (2017: $3.1 million) and revenue from the
sale of MYOB Advanced licenses and accompanying support and implementation revenue $0.05 million (2017: nil).
Total expenses for the full year ended 30 June 2018 were $11.3 million (2017: $9.9 million). The largest expense during the year
ended 30 June 2018 was amounts paid to employees with $6 million being paid or accrued (2017: $5.1 million).
Financial Position as at 30 June 2018
The Group had significant cash reserves as at 30 June 2018 totaling $4.5 million which increased by $1 million from $3.5 million as
at 30 June 2017 following strong fourth quarter sales by the ERP division and continuing improved debt collection processes by the
Group. The $1 million of cash flows generated for the year was after $0.6 million was paid to acquire the Riyo Platform in May 2018.
Having significant cash reserves while remaining debt free ensures that JCurve Solutions is well positioned to explore acquisition
opportunities, the exploration of which remains ongoing.
The increase in assets from $8.9 million as at 30 June 2017 to $11.3 million as at 30 June 2018, was achieved through strong quarter
four ERP Division sales which assisted the Group to be $1 million cash flow positive during the year as well as the inclusion of
capitalised costs following the acquisition of the Riyo Platform.
The liabilities balance increased from $4.9 million as at 30 June 2017 to $6.4 million as at 30 June 2018 with a large portion of the
$4.4 million in quarter four Group sales (2017: $3.5 million) recorded in deferred revenue as at 30 June 2018 with the projects still in
the process of being implemented at year end.
8
DIRECTORS’ REPORT (continued)
Risk management
JCurve Solutions Limited
The Group recognises the need to pro-actively manage the risks and opportunities associated with both day-to-day operations of the
Group 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 facilitated by an external broker;
2) A monthly risk register which is reviewed by the Executive Management Team and the Board;
3) Strategic and operational business plans; and
4) Annual budgeting and monthly reporting systems which enable the monitoring of performance against expected targets and
the evaluation of trends.
The Chief Executive Officer and Chief Financial Officer through monthly Board papers, report to the Board 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 Executive Management Team, the
Audit and Risk Committee and the Board and took place in accordance with the process disclosed above.
A copy of
content/uploads/2016/12/JCurve-Solutions-Risk-Management-Internal-Compliance-and-Control-Policy.pdf
the Risk Management Policy can be
found on
the Group’s website: http://www.jcurvesolutions.com/wp-
Significant changes in the state of affairs
Significant changes in the state of affairs of JCurve Solutions during the financial year were as follows:
1) Throughout FY2018 the Group has continued to see its sales/revenue mix changing towards fewer but larger priced NetSuite
contracts which take longer to implement and recognise revenue in line with our revenue recognition accounting policy. This
followed becoming a NetSuite Solution Provider (“SP”) Partner in August 2016.
2)
In May 2018 the Group purchased the Riyo Platform operated by Riyo Pty Ltd and Gojo Software Pty Ltd for $600,000. The
purchase price was paid from the Group’s existing cash reserves. Since completing the purchase, JCurve Solutions has
focused on defining the go to market plan for the Riyo solution offering, building a team to launch and support the solution
and re-engaging with two pre-acquisition enterprise trial customers. The Group did not generate any revenue from the
purchase of the Riyo Platform during the year ending 30 June 2018.
Events since the end of the financial year
No significant matters or circumstances have arisen since 30 June 2018 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.
Environmental legislation
The Group is not subject to any significant environmental legislation. The Group does not meet either the facility or the corporate
group threshold for registration under the National Greenhouse and Energy Reporting Act 2007.
During the financial year the Group continued to improve work practices in its pursuit of reducing paper usage as much as possible.
Over the past two years printing costs across the Group were reduced by 224% following an emphasis towards paperless practices.
9
JCurve Solutions Limited
DIRECTORS’ REPORT (continued)
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 Solutions 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
8
8
8
8
Retirement, election and continuation in office of Directors
4
2
8
8
8
4 (4)
4 (4)
4 (4)
2 (2)
2 (2)
2 (2)
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 Solutions 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 the JCurve Solutions 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 the JCurve Solutions 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:
2017: Bruce Hatchman;
2016: David Franks; and
2015: Bruce Hatchman and Mark Jobling.
Therefore, under Clause 13.4 of the Constitution, Mark Jobling is due for election at the Next Annual General Meeting under the noted
time period.
10
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
2018. 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.
The remuneration report outlines the key aspects of JCurve Solutions remuneration policy, framework and remuneration awarded for
JCurve Solutions directors and executives. The Executives for the purpose of this report are Key Management Personnel who are
not Non-Executive Directors.
JCurve Solutions Limited
The Remuneration Report is structured as follows:
1) Directors and other Key Management Personnel
2) Remuneration Governance
3) Remuneration Structure
4) Remuneration of key management personnel
5) Relationship between remuneration and JCurve Solutions performance
6) Voting and comments made at the Company’s 2017 Annual General Meeting
7) Details of share-based compensation
8) Shareholdings of Key Management Personnel
9) Transactions with Directors and Key Management Personnel
1) Directors and other Key Management Personnel
Non-Executive Directors
Bruce Hatchman
David Franks
Mark Jobling
Executive Management Team (Executives)
Stephen Canning
James Aulsebrook
Kate Massey
Katrina Doring
Peter Choo
Bill Beedie
Non-Executive Chairman – Independent
Non-Executive Director – Independent
Non-Executive Director – Not Independent
Chief Executive Officer
Chief Financial Officer
Chief Marketing Officer (change of title from 26 October 2017)
Chief Operating Officer (change of title from 26 October 2017)
Product Strategy Director (from 26 October 2017)
Sales Director (from 26 October 2017)
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). The Executive Management team are
responsible for preparing the Group’s 3 year Strategic Plan and evaluating the Company’s progress against that Strategic Plan.
2) Remuneration governance
Remuneration philosophy
The performance of the Company depends upon the quality of the directors and executives employed by JCurve Solutions. The
philosophy of the Company in determining remuneration levels is to:
(i) set competitive remuneration packages to attract and retain high calibre employees;
(ii)
(iii) establish appropriate performance hurdles for variable executive remuneration.
link executive rewards to shareholder value creation; and
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 composition of the Nomination and Remuneration Committee during the year ended 30 June 2018, comprised Bruce Hatchman
(Chairman), Mark Jobling and David Franks being three members, all non-executive directors, with an independent Chairman and
the majority of whom are independent. On this basis, the Nomination and Remuneration Committee is 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.
11
JCurve Solutions Limited
DIRECTORS’ REPORT (continued)
Remuneration report (Audited) (continued)
The Nomination and Remuneration Committee assesses the appropriateness of the nature and amount of remuneration which the
directors and executives receive 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.jcurvesolutions.com/corporate-governance, provides further information on the role of the Nomination and Remuneration
Committee and its composition and structure.
A copy of the Nomination and Remuneration Committee’s charter is included on the Company’s website.
3) Remuneration Structure
In accordance with best practice Corporate Governance, the structure of non-executive director and executive remuneration is
separate and distinct.
Non-executive director remuneration
The Board seeks to set aggregate remuneration at a level that provides JCurve Solutions with the ability to attract and retain directors
of the highest calibre, whilst incurring a cost that is acceptable to shareholders.
JCurve Solutions’ 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 a General Meeting.
There have been no changes to the constitution of JCurve Solutions since this date.
The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned amongst
directors is reviewed annually.
Non-executive directors are paid their director 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.
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 (2,000,000 in total) under the Employee Share Plan with payment via a non-recourse loan.
These shares were bought back by the Company on the 7th of December 2017 as the shares were out of the money against their
attaching non-recourse loans which were at a share price of 5 cents per share with the Directors electing not to repay their non-
recourse loans by the due date.
The remuneration of non-executive directors for the year ended 30 June 2018 and comparative year is detailed in Section 4, Table 1
of the Remuneration report.
Executive remuneration
The Company’s Executive remuneration structure consists of three components:
Fixed components
Variable ‘at-risk’ components
(i)
Base salary and benefits,
superannuation.
including
(ii)
Short-term incentives in the form of cash bonuses; and
(iii)
Long-term incentives, through participation in the JCurve Solutions
Equity Incentive Plan (EIP) and the Employee Share Plan.
(i)
Base salary and benefits
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.
Each executive’s remuneration is reviewed annually by the Nomination and Remuneration Committee. The process consists of a
review of relevant comparative remuneration in the market, internally and, where appropriate, external advice on policies and
practices. The Nomination and Remuneration committee has access to external, independent advice if required.
(ii)
Short-term incentive
The Short-term incentive (STI) scheme is designed to reward the Executive Management team for their contribution to the success
of JCurve Solutions in achieving its financial goals, as well as the individual contribution of each employee to business goals, as
determined by the Board.
12
JCurve Solutions Limited
DIRECTORS’ REPORT (continued)
Remuneration report (Audited) (continued)
For all members of the Executive Management Team except the Sales Director, the FY2018 KPI targets for the Short-term incentive
plan were determined by the Board based on a number of Key Result Areas (KRA’s) which the Board believes will affect the
performance of JCurve Solutions during the financial year. The KRA’s included a revenue metric, a profitability metric, various sales
metrics, leadership metrics while depending on the Executive team members position a business diversification metric, marketing or
project delivery metric. The metrics are determined with reference to JCurve Solutions strategic goals and objectives. The revenue,
profitability, sales, marketing and project delivery metrics are measured based on the audited statutory financial results. The
leadership metric is measured from independently collated feedback scores from employees and the Directors. The diversification
metric is determined with reference to the number of profitable acquisitions made by JCurve Solutions during the year. This short-
term incentive scheme takes the form of a cash bonus payable once the results for the year have been determined.
The Short-term incentive plan for the Sales Director is in the form of a commission scheme whereby actual ERP new business sales
results are compared against set targets on a monthly basis. The targets are set with reference to the Company’s annual ERP new
business budget. The Short-term incentive scheme for the Sales Director takes the form of cash which is paid as part of the pay-run
the month following the month of the ERP new business sale.
The potential value of the short-term incentive schemes as a proportion of each Executive’s base salary was as follows:
FY2018 STI Potential (*)
FY2017 STI Potential (*)
Executives
S Canning
J Aulsebrook
K Massey
K Doring
P Choo
B Beedie (**)
33%
29%
30%
30%
24%
28%
17%
14%
15%
16%
N/A
N/A
(*) STI bonus potential as a proportion of the Executive’s base contracted salary excluding superannuation and other benefits.
(**) On target earnings. Commission scheme was uncapped.
(iii)
Long-term incentive
The long-term incentive scheme implemented in the previous financial year have been designed to align a portion of Executive
Remuneration with long term shareholder value.
The Group had two long-term incentive schemes which impacted the FY2018 remuneration of the Executive Management Team.
Equity Incentive Plan (EIP)
The JCurve Solutions Equity Incentive Plan (EIP) was approved by shareholders at the Annual General Meeting held on 22 November
2016. On 27 June 2017 performance rights totalling 10,000,000 were issued employees under the EIP. On 9 October 2017
performance rights totalling 1,500,000 were issued to an employee under the EIP. The performance rights under both tranches are
subject to a performance condition and a service condition and vest on 31 August 2019.
11,500,000 of the performance rights issued were to Executive team members as follows:
Performance Rights Issued
Executives
S Canning
J Aulsebrook
K Massey
K Doring
P Choo
B Beedie (*)
(*) Issued 9 October 2017.
4,500,000
1,500,000
1,500,000
1,500,000
1,000,000
1,500,000
13
JCurve Solutions Limited
DIRECTORS’ REPORT (continued)
Remuneration report (Audited) (continued)
Employee Share Plan
The 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 Employee Share Plan concluded in FY2018 when the remaining 2,050,000 shares were bought back by the Company on the
13th of September 2017 as the shares were out of the money against their attaching non-recourse loans which were at a share price
of 5 cents per share with the Employees electing not to repay their non-recourse loans by the due date.
The remuneration of JCurve Solutions Executives for the year ended 30 June 2018 and comparative year is detailed in Section 4,
Table 2 of the Remuneration Report.
4) Remuneration of key management personnel
Table 1: Key Management Personnel remuneration for the year ended 30 June 2018: 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
$
$
$
$
$ (1)
$
% (1)
B Hatchman
2018
87,646
Chairman (non-executive)
2017
81,372
D Franks
2018
60,000
Director (non-executive)
2017
60,000
M Jobling
2018
60,000
Director (non-executive)
2017
60,000
Total Directors Fees
2018
207,646
Total Directors Fees
2017
201,372
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,000
1,791
99,437
16,274
4,086
101,732
5,700
1,791
67,491
5,700
4,086
69,786
-
-
-
-
60,000
60,000
15,700
3,582
226,928
21,974
8,172
231,518
2%
4%
3%
6%
-
-
2%
4%
(1) Expense recognised under the Employee Share Plan. Refer to section 3 for further details.
14
DIRECTORS’ REPORT (continued)
Remuneration report (Audited) (continued)
Table 2: Key Management Personnel remuneration for the year ended 30 June 2018: Executives
Short-term employee benefits
Long-term
Post-
employment
Equity
Total
JCurve Solutions Limited
Executives
Salary
$
Bonuses /
Commission
(9)
Other
short-
term
benefits
(7)
Long
service
leave
(8)
Super-
annuation
Shares/
Performance
Rights
Perfor
mance
Related
$
$
$
$
$
$
%
S Canning (1)
2018
300,000
35,000
25,677
1,012
20,531
12,101
394,321
12%
Chief Executive
Officer
2017
300,000
25,000
15,525
2,148
21,406
3,751
367,830
8%
J Aulsebrook (2)
2018
175,000
25,000
5,805
Chief Financial
Officer
2017
175,000
-
8,514
298
374
19,000
16,625
3,788
228,891
13%
21
200,534
0%
K Massey (3)
2018
166,000
15,000
13,586
14,674
17,195
4,213
230,668
Chief Marketing
Officer
2017
163,127
7,500
7,492
1,847
16,210
2,149
198,325
K Doring (4)
2018
166,000
15,000
10,909
156
17,195
3,788
213,048
2017
158,359
-
13,646
-
15,044
21
187,070
Chief Operating
Officer
P Choo (5)
Product Strategy
Director
2018
2017
109,494
2,131
5,480
323
10,551
2,525
130,504
-
-
-
-
-
-
-
-
-
B Beedie (6)
2018
109,128
16,186
11,262
Sales Director
2017
-
-
-
11,905
11,828
160,309
17%
-
-
-
-
Total Executive Rem.
2018
1,025,622
108,317
72,719
16,463
96,377
38,243
1,357,741
10%
Total Executive Rem.
2017
796,486
32,500
45,177
4,369
69,285
5,942
953,759
4%
(1) bonus of $35,000 based on performance related KRA under the Short Term Incentive Scheme for FY2018 and will be paid on 31 August
2018. This bonus has not been included in table 2.
(2) Bonus of $17,500 based on performance related KRA under the Short Term Incentive Scheme for FY2018 and will be paid on 31 August
2018. This bonus has not been included in table 2.
(3) Bonus of $15,000 based on performance related KRA under the Short Term Incentive Scheme for FY2018 and will be paid on 31 August
2018. This bonus has not been included in table 2.
(4) Bonus of $10,000 based on performance related KRA under the Short Term Incentive Scheme for FY2018 and will be paid on 31 August
2018. This bonus has not been included in table 2.
(5) became a Key Management Personal (KMP) from 26 October 2017. Information in table 2 for the period whilst a KMP, it excludes salaries
and commissions up until the time P Choo became a KMP. Bonus of $10,000 based on performance related KRA under the Short Term
Incentive Scheme for FY2018 and will be paid on 31 August 2018. This bonus has not been included in table 2.
(6) became a Key Management Personal (KMP) from 26 October 2017. Information in table 2 for the period whilst a KMP. It excludes salaries,
wages and consulting fees earnt up until the date B Beedie became a KMP.
(7) other short-term benefits include car parking expenses for S Canning, K Massey, K Doring, P Choo and B Beedie as well as annual leave
accrued for each Executive Team Member as per Corporations Regulation 2M.3.03(1) Item 6.
(8) other long-term benefits as per Corporations Regulation 2M.3.03(1) Item 8.
(9) The bonuses or commissions included in the above table are those which have been paid during the year.
15
8%
5%
9%
0%
4%
-
DIRECTORS’ REPORT (continued)
Remuneration report (Audited) (continued)
Table 3: Service Agreements
Remuneration and other terms of employment for the Executive Management Team are formalised in service agreements, in the form
of a contract of employment.
JCurve Solutions Limited
Executive
Arrangements relating to remuneration of the Company’s Executive Management Team currently in place are set out below:
Contractual
Term of agreement
termination benefits
(****)
Current base salary
excluding
superannuation (***)
Title
S Canning
Chief Executive Officer Commenced 12 January 2015 on
$309,000
J Aulsebrook Chief Financial Officer
K Massey
Chief Marketing Officer
K Doring
Chief Operating Officer
a rolling contract
Commenced 18 April 2016 on a
rolling contract
Commenced 1 September 2015
on a rolling contract
Commenced 5 July 2016 on a
rolling contract
P Choo (*)
Product Strategy
Director
Commenced 26 October 2017 on
a rolling contract
B Beedie (**)
Sales Director
Commenced 26 October 2017 on
a rolling contract
3 months and 1 week
base salary
$181,000
3 months base salary
$171,000
3 months base salary
$171,000
3 months and 1 week
base salary
$170,000
3 months base salary
$165,000
3 months base salary
(*) Information outlined as the date P Choo was promoted to the role of Product Strategy Director. Became a member of the Key
Management Personnel from 26 October 2017.
(**) Information outlined as the date B Beedie was promoted to the role of Sales Director. Became a member of the Key Management
Personnel from 26 October 2017.
(***) Current base salaries excluding superannuation are quoted for the year commencing 1 July 2018. They are reviewed annually
by the Remuneration Committee. The salaries recorded in Table 2 are for the years ending 30 June 2018 and 30 June 2017.
(****) As at the date the Remuneration Report is approved.
The service agreement contracts outlined above may be terminated in the following circumstances:
(i)
(ii)
Voluntary termination by the Company: the contractual termination benefit outlined in the table above as well as any
statutory entitlements accrued will be paid; or
Termination by the Company for cause without notice: no contractual termination benefits are payable. Only statutory
entitlements accrued will be paid.
5) Relationship between remuneration and JCurve Solutions performance
Performance in respect of the current year and the previous two years is detailed in the table below:
Total profit/(loss) for the year (*)
Normalised EBITDA
Share price at year end ($)
Increase/(decrease) in share price
Dividends paid
2018
$
847,267
979,931
0.031
282%
-
2017
$
454,286
801,920
0.011
83%
-
2016
$
(2,597,423)
131,517
0.006
(60%)
-
2015
$
(5,022,542)
568,361
0.015
(66%)
-
The remuneration of JCurve Solutions Executives outlined in Table 2 has consisted primarily of salaries and superannuation.
Performance related remuneration was 10% of the Key Management Personnel’s remuneration package reflecting the recent
performance levels of the Company outlined in the above table.
6) Voting and comments made at the Company’s 2017 Annual General Meeting
The JCurve Solutions 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 99% of proxy votes lodged
(lodged as for/against/open excluding all other votes) voted “yes” on the Remuneration Report for the 2017 financial year. Comments
raised by shareholders during the course of the Annual General Meeting were responded to by the Directors during the meeting.
16
DIRECTORS’ REPORT (continued)
Remuneration report (Audited) (continued)
7) Details of share-based compensation
JCurve Solutions Limited
Table 1: Performance rights issued to members of the Executive Management Team under the JCurve Solutions Equity
Incentive Plan on 27 June 2017
Performance Rights Issued
Executives
S Canning
J Aulsebrook
K Massey
K Doring
P Choo
4,500,000
1,500,000
1,500,000
1,500,000
1,000,000
Table 2: Performance rights issued to members of the Executive Management Team under the JCurve Solutions Equity
Incentive Plan on 9 October 2017
Performance Rights Issued
Executives
B Beedie
1,500,000
Table 3: 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
These shares were bought back by the Company on the 7th of December 2017 as the shares were out of the money against their
attaching non-recourse loans at a share price of 5 cents per share with the Directors electing not to repay their non-recourse loans
by the due date.
Table 4: Shares issued to members of the Executive Management Team under the employee share plan on 11 September
2015
Executives (*)
S Canning
Shares Issued
1,300,000
(*) K Massey was issued 750,000 shares as part of this allotment however was not a Key Management Personal as defined in the
Remuneration Report at the time of the shares being issued.
These shares were bought back by the Company on the 11th of September 2017 as the shares were out of the money against their
attaching non-recourse loans at a share price of 5 cents per share with the Employees electing not to repay their non-recourse loans
by the due date.
17
JCurve Solutions Limited
DIRECTORS’ REPORT (continued)
Remuneration report (Audited) (continued)
Table 5: Performance rights issued which formed part of remuneration during the year ended 30 June 2018
Value per
performance
right granted
$
Value of total
performance
rights granted
$
Value of
performance
rights lapsed
$
Total value of
performance
rights granted,
exercised and
lapsed
$
Value of performance
rights included in
remuneration for the
year
$
%
remuneration
consisting of
shares for the
year
Executives
S Canning
J Aulsebrook
K Massey
K Doring
P Choo
B Beedie
0.0055
0.0055
0.0055
0.0055
0.0055
24,750
8,250
8,250
8,250
8,250
0.02062
30,933
-
-
-
-
-
-
24,750
8,250
8,250
8,250
5,500
30,933
11,363
3,788
3,788
3,788
2,525
11,828
3%
2%
2%
2%
2%
7%
For further details on the Employee Share Plan, please refer to Notes 16 and 23.
Table 6: Shares issued under the employee share plan which formed part of remuneration during the year ended 30 June
2018
Value per
share
granted
$
Value of
total shares
granted
$
Value of
shares
exercised
$
Value of
shares
lapsed
$
Total value of
shares
cancelled/bought
back
$
Value of shares
included in
remuneration for
the year
$
%
remuneration
consisting of
shares for
the year
Directors
B Hatchman
0.00568
D Franks
0.00568
8,183
8,183
Executives
S Canning
0.00568
11,367
K Massey (*)
0.00568
4,263
-
-
-
-
-
-
-
-
8,183
8,183
11,367
4,263
1,791
1,791
738
426
2%
3%
0%
0%
For further details on the Employee Share Plan, please refer to Notes 15, 16 and 23.
(*) Granted while not a Key Management Personnel member.
Table 7: Shares issued under the employee share plan which formed part of remuneration during the year ended 30 June
2017
Value per
share
granted
$
Value of
total 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
0.00568
D Franks
0.00568
8,183
8,183
Executives
S Canning
0.00568
11,367
K Massey
0.00568
4,263
-
-
-
-
8,183
8,183
11,367
4,263
4,086
4,086
3,751
2,128
4%
6%
8%
5%
-
-
-
-
18
DIRECTORS’ REPORT (continued)
Remuneration report (Audited) (continued)
8) Shareholdings of Key Management Personnel
Ordinary shares held in JCurve Solutions Limited (number)
JCurve Solutions Limited
30 June 2018
Directors
B Hatchman
D Franks
M Jobling
Executives
S Canning
J Aulsebrook
K Massey
K Doring
P Choo (*)
B Beedie
Total
Balance
01 Jul 17
Granted as
remuneration
Bought back
under employee
share plan
Net Change
Other
Balance
30 Jun 18
4,500,000
5,206,174
51,204,301
4,533,418
-
1,415,000
1,975,534
455,000
-
69,289,427
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,000,000)
3,500,000
(1,000,000)
4,206,174
-
51,204,301
(1,300,000)
3,233,418
-
-
(750,000)
665,000
-
-
-
1,975,534
455,000
-
(4,050,000)
65,239,427
(*) Shares were held before P Choo became an Executive Team member on 26 October 2017.
30 June 2017
Directors
B Hatchman
D Franks
M Jobling
Executives
S Canning
J Aulsebrook
K Massey
K Doring
Total
Balance
01 Jul 16
Granted as
remuneration
Issued under
employee share
plan
Net Change
Other
Balance
30 Jun 17
1,000,000
2,867,000
51,204,301
4,533,418
-
1,415,000
-
61,019,719
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,500,000
4,500,000
2,339,174
5,206,174
-
-
-
-
51,204,301
4,533,418
-
1,415,000
1,975,534
1,975,534
7,814,708
68,834,427
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.
19
DIRECTORS’ REPORT (continued)
Remuneration report (Audited) (continued)
JCurve Solutions Limited
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.
9) Transactions with Directors and Key Management Personnel
The following table provides the total amount of transactions that were entered into with related parties for the relevant financial year.
Purchases from Related Parties
Franks & Associates Pty Ltd (*)
Company secretarial services (1)
Directors Fees (included in Table 1 and including Superannuation)
2018
$
50,121
65,700
115,821
2017
$
55,408
65,700
121,108
(1) 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 and Board documentation. Company secretarial service fees for the year ended 30 June 2018
amounted to $50,121 net of GST excluding out of pocket expenses (2017: $55,408) and were provided on commercial terms.
Franks and Associates invoices JCurve Solutions for David Franks’ Directors fees and superannuation, which has been included
in Section 4, Table 1 of the Remuneration Report.
(*) Franks and Associates became a member of Automic Group in June 2018.
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
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, BDO East Coast Partnership, 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 21 and forms part of this Directors’ Report for the year ended 30 June 2018.
Non-Audit Services
There was no non-audit related activities carried out by the Company’s auditors during the year ended 30 June 2018.
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 Solutions is conducted to maximise
shareholder wealth in a proper and ethical manner.
The Corporate Governance Statement and other corporate governance practices which outline the principal corporate governance
procedures of JCurve Solutions can be found on the company’s website at: http://www.jcurvesolutions.com/corporate-governance/.
Signed in accordance with a resolution of the directors.
Bruce Hatchman
Chairman
Dated at Sydney 21 August 2018
20
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret St
Sydney NSW 2000
Australia
DECLARATION OF INDEPENDENCE BY GARETH FEW TO THE DIRECTORS OF JCURVE SOLUTIONS
LIMITED
As lead auditor of JCurve Solutions Limited for the year ended 30 June 2018, I declare that, to the best
of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of JCurve Solutions Limited and the entities it controlled during the
period.
Gareth Few
Partner
BDO East Coast Partnership
Sydney, 21 August 2018
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd,
a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved
under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2018
JCurve Solutions Limited
Revenue
Cost of goods sold
Gross profit
Other income
Employee benefits expense
Other employee related expense
Communications expense
Advertising and marketing
Professional fees
Occupancy expense
Listing expense
Depreciation and amortisation expense
Finance income/(expense)
Loss on disposal of fixed asset
Other expenses
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Consolidated ($)
Notes
2018
2017
3
3
4
4
4
4
5
6
6
11,945,625
(2,036,936)
9,908,689
288,370
(5,997,005)
(1,040,342)
(111,966)
(149,788)
(855,199)
(480,668)
(42,323)
(102,328)
74
(5,187)
(516,955)
895,372
(48,105)
847,267
-
847,267
0.26
0.26
10,378,808
(2,327,229)
8,051,579
223,822
(5,062,916)
(796,021)
(71,300)
(274,509)
(500,434)
(399,604)
(46,628)
(78,664)
(548)
-
(303,861)
740,916
(286,630)
454,286
-
454,286
0.14
0.14
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
22
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2018
JCurve Solutions Limited
Assets
Current Assets
Cash and cash equivalents
Trade and other receivables
Current tax asset
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
Total Current Liabilities
Non-Current Liabilities
Deferred tax liabilities
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Share capital
Reserves
Accumulated losses
Total Equity
Consolidated ($)
Notes
2018
2017
7
8
9
11
12
10
5
13
14
5
14
15
16
4,487,536
2,190,485
162,937
699,682
7,540,640
86,139
2,892,857
-
737,252
3,716,248
11,256,888
4,962,790
263,791
5,226,581
1,076,287
55,017
1,131,304
6,357,885
4,899,003
3,495,899
1,586,347
189,333
606,221
5,877,800
121,929
2,302,857
19,078
614,701
3,058,565
8,936,365
3,607,848
219,172
3,827,020
1,033,854
65,581
1,099,435
4,926,455
4,009,910
17,588,248
1,803,880
17,588,248
1,762,054
(14,493,125)
(15,340,392)
4,899,003
4,009,910
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
23
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2018
JCurve Solutions Limited
Consolidated ($)
Inflows / (Outflows)
Notes
2018
2017
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Income tax received
Net cash provided by operating activities
7
Cash flows used in investing activities
Payments for property, plant and equipment
Purchase of intangible assets
Cash paid for the purchase of the Riyo Platform
Net cash used in investing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 July
Cash and cash equivalents at 30 June
7
12,890,984
(11,420,434)
17,769
165,043
1,653,362
(61,725)
-
(600,000)
(661,725)
991,637
3,495,899
4,487,536
10,743,643
(9,607,873)
17,660
518
1,153,948
(39,381)
(1,367)
-
(40,748)
1,113,200
2,382,699
3,495,899
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
24
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2018
JCurve Solutions Limited
Share Capital
Accumulated
Losses
Equity Benefits
Reserve
Total
Consolidated ($)
As at 1 July 2016
17,588,248
(15,794,678)
1,745,372
3,538,942
Total comprehensive income for
the year
Transactions with owners in
their capacity as owners:
Issued shares under employee
share plan
Issued rights under employee
incentive scheme
-
-
-
-
-
454,286
454,286
-
-
454,286
454,286
-
-
-
16,544
138
16,682
16,544
138
16,682
Balance at 30 June 2017
17,588,248
(15,340,392)
1,762,054
4,009,910
As at 1 July 2017
17,588,248
(15,340,392)
1,762,054
4,009,910
Total comprehensive income for
the year
Transactions with owners in their
capacity as owners:
Issued shares under employee
share plan
Issued rights under employee
incentive scheme
-
-
-
-
-
847,267
847,267
-
-
847,267
847,267
-
-
-
4,746
37,080
41,826
4,746
37,080
41,826
Balance at 30 June 2018
17,588,248
(14,493,125)
1,803,880
4,899,003
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
25
CONTENTS TO THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JCurve Solutions Limited
Note
Number
Note Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
Significant changes in the current reporting period
The financial statement numbers
Segment reporting
Revenue and other income
Expenses
Income tax
Earnings per share
Cash and cash equivalents
Trade and other receivables
Other current assets
Other financial assets
Plant and equipment
Intangible assets
Trade and other payables
Provisions
Share capital
Reserves
Risk
Critical judgements, estimates and assumptions
Financial instruments and risk management
Unrecognised items
Commitments
Contingencies
Events occurring after the reporting period
Other information
Statement of significant accounting policies
Share-based payment plans
Remuneration of auditors
Related party transactions
Parent entity financial information
26
Page
27
27
28
29
30
33
33
35
35
35
36
37
38
39
39
40
40
41
44
44
44
45
46
47
48
49
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1:
SIGNIFICANT CHANGES IN THE CURRENT REPORTING PERIOD
The financial position and performance of the group was particularly affected by the following factors, events and transactions during
the reporting period:
1)
the sale of Enterprise Resource Planning (ERP) solutions, predominately the exclusively licensed JCurveERP and
associated implementation and consulting services as well as NetSuite and MYOB Advanced in addition to accompanying
associated implementation and consulting services;
2) continuing investment in the TEMS research and development aimed at maximising the value from the TEMS business; and
3)
the acquisition of the Riyo Business.
A more detailed outline about the Group’s performance and financial position is outlined in the Directors Report operating and financial
review on page 8.
NOTE 2: SEGMENT REPORTING
(a) Accounting policy
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 and Executive Management Team of JCurve Solutions.
(b) Description of segments
AASB 8 Operating Segments requires operating segments to be identified on the basis of internal reports about the 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.
JCurve Solutions sells a portfolio of solutions and derives its revenues and profits from a variety of sources.
The Board and Executive Management Team for the year ended 30 June 2018, considered the business from a product perspective
and identified three reportable segments:
• NetSuite ERP - ERP cloud-based Business Management solutions and associated consulting services; and
• MYOB Advanced - ERP cloud-based Business Management solutions and associated consulting services; and
•
TEMS - The development and marketing of Telecommunications Expense Management Solutions (JTEL and Full Circle Group).
All other segments – the development business unit and group/head office are cost centres and are not reportable operating
segments. The results of these operations are included in ‘all other segments’.
The Group currently operates in one significant geographical segment being Australia and New Zealand with a very small presence
in Singapore which has not been separately disclosed.
The Group reports internally on the assets and liabilities of the Group on a consolidated basis.
No customers comprise more than 10% of the Group’s total revenue.
(c) Segment information provided to the chief operating decision maker
The segment information provided to the Board and the Executive Management Team for the reportable segments for the year ended
30 June 2018 (including the comparative period) is as follows:
Year ended 30 June 2018
NetSuite ERP
TEMS
MYOB Advanced
All other
segments
Consolidated ($)
Total revenue
Total cost of sales
Gross profit
Other income
9,191,633
2,704,307
(2,036,936)
-
7,154,697
2,704,307
49,685
-
49,685
-
-
-
-
-
-
288,370
Total
11,945,625
(2,036,936)
9,908,689
288,370
Total expenditure excluding cost of sales
(5,314,817)
(1,138,394)
(455,591)
(2,392,885)
(9,301,687)
Total profit/(loss) before tax
1,839,880
1,565,913
(405,906)
(2,104,515)
895,372
27
NOTES TO THE FINANCIAL STATEMENTS (continued)
JCurve Solutions Limited
Consolidated ($)
Year ended 30 June 2017
ERP
TEMS
All other segments
Total
Total revenue
Total cost of sales
Gross profit
Other income
7,271,122
(2,248,324)
5,022,798
-
3,107,686
(78,905)
3,028,781
-
Total expenditure excluding cost of sales
(3,982,849)
(1,245,635)
Total profit/(loss) before tax
1,039,949
1,783,146
-
-
-
223,822
(2,306,001)
(2,082,179)
10,378,808
(2,327,229)
8,051,579
223,822
(7,534,485)
740,916
NOTE 3:
REVENUES AND OTHER INCOME
Revenue
Enterprise Resource Planning (ERP) solutions – JCERP and NetSuite
Enterprise Resource Planning (ERP) solutions MYOB Advanced
Telecommunications expense management
Other Income
Research and Development incentive (i)
Interest income
Sundry Income
Consolidated ($)
2018
2017
9,191,633
49,685
2,704,307
11,945,625
266,871
17,695
3,804
288,370
7,271,122
-
3,107,686
10,378,808
189,333
18,208
16,281
223,822
(i) The research and development incentive has been reclassified from a credit to the tax expense to other income for the years
ended 30 June 2018 and 30 June 2017 to reflect the nature of the incentive being a government grant under AASB 120
Accounting for Government Grants and Disclosure of Government Assistance.
1) Accounting policy
Revenue recognition
The core principle of AASB 15 is that revenue is recognised on a basis that reflects the transfer of promised goods or services to
customers at an amount that reflects the consideration the Company expects to receive in exchange for those goods or services.
Revenue is recognised by applying a five-step process outlined in AASB 15 which is as follows:
Step 1: Identify the contract with a customer;
Step 2: Identify the performance obligations in the contract and determine at what point they are satisfied;
Step 3: Determine the transaction price;
Step 4: Allocate the transaction price to the performance obligations;
Step 5: Recognise revenue as the performance obligations are satisfied.
Following the adoption of AASB 15, on 1 July 2017, the Group’s revenue recognition accounting policy is that:
•
•
•
The performance obligation for the implemented ERP software is satisfied when the ERP software has been installed and is
operating materially as contractually required. Rather than recognising the contracted revenue evenly over the contract period
which ranges from 12 to 60 months in the case of license revenue or evenly over an implementation period for service revenue
(generally 2 to 3 months), under the new accounting policy, both license and implementation revenue for the contracted period
is recognised at the point in time when the ERP software has been installed and is operating materially as contractually required;
The performance obligation for providing ERP software customers with technical support is satisfied over the contracted period;
and
The performance obligation for providing Telecommunication Expense Management solutions is satisfied over the contracted
period.
28
NOTES TO THE FINANCIAL STATEMENTS (continued)
JCurve Solutions Limited
In addition to contracts with customers, the Group receives interest income from monies held in its bank accounts, Interest income
is recognised on an accruals basis based on the interest rate, deposited amount and time which lapses before the reporting period
end date.
The expected future Research and Development incentive, for past qualifying Research and Development expenditure is accrued
as other income when it is established that the conditions of the Research and Development incentive have been met and that the
expected amount of the incentive can be reliably measured.
2) Significant accounting judgments, estimates and assumptions: Revenue recognition
(i)
Identification of performance obligations
The Group has determined that for new ERP software sales, while licenses and implementation services are quoted as separate
line items and have separate list prices they are not distinct performance obligations as the customer is purchasing customisable
ERP software which requires not only the licenses to be provisioned but the software to be installed by a qualified JCurve Solutions
implementation consultant. As such a combined implemented ERP software performance obligation is presented.
Technical support which is purchased by ERP software customers to assist with their ongoing use of the ERP software and is
separate from the combined ERP software/implementation performance obligation.
(ii)
Satisfaction of performance obligations
The performance obligation for the implemented ERP software is satisfied at the point in time when the ERP software has been
installed and is operating materially as contractually required. It is when the customer has full access to and control of the ERP
software.
The performance obligation for providing ERP software customers with technical support remains throughout the contract period so
is satisfied over the contract period.
The performance obligation for providing Telecommunication Expense Management solutions remains throughout the contract
period so is satisfied over the contract period.
NOTE 4:
EXPENSES
Consolidated ($)
2018
2017
Other employee related expense - superannuation
Other employee related expense – excluding superannuation
Depreciation of non-current assets
Amortisation of intangibles
Operating lease rental expense: minimum lease payments
Other
Directors’ Fees (includes superannuation)
Consultancy Fees
Audit Fees
Company Secretarial Fees
29
517,831
522,511
1,040,342
91,586
10,742
102,328
437,608
43,060
480,668
226,928
505,575
72,576
50,120
855,199
424,003
372,018
796,021
75,833
2,831
78,664
357,869
41,735
399,604
231,518
158,021
55,487
55,408
500,434
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
(1) Accounting policy
• 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.
• 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.
(2) Significant accounting judgments, estimates and assumptions: Recognition of subscription costs of sales
The recognition of the license cost associated with each JCurveERP 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.
NOTE 5:
INCOME TAX
Income tax recognised in profit or loss
The major components of tax benefit/(expense) are:
Current tax benefit (i)
Origination and reversal of temporary differences
Under/(over) provision from prior years - current tax
Total tax benefit/(expense) (i)
Consolidated ($)
2018
2017
(103,934)
80,119
(24,290)
(48,105)
-
(371,831)
85,201
(286,630)
The prima facie income tax (benefit)/expense on pre-tax accounting profit from
continuing operations reconciles to the income tax (benefit)/expense in the
financial statements as follows:
Accounting profit before tax
Income tax expense calculated at 27.5% (2017: 30%)
895,372
(246,228)
740,916
(222,275)
Deferred tax expense relating to the origination and reversal of temporary
differences:
Permanent differences – (non assessable income)/non-deductible
expenses
Permanent differences - Research and development incentive calculated
at 27.5% (2017: 27.5%) (i)
Carried forward tax losses previously not brought to account now
recognised
Tax losses not brought to account
Reduction in deferred tax liabilities due to a change in the company income
tax rate
Under/(over) provision in prior years
Income tax benefit/(expense) reported in the Statement of Profit or Loss
and other Comprehensive Income (i)
(27,494)
(95,322)
310,300
-
34,929
(24,290)
(48,105)
(14,363)
(73,775)
-
(61,418)
-
85,201
(286,630)
(i)
The research and development incentive has been reclassified from a credit to the tax expense to other income for the
years ended 30 June 2018 and 30 June 2017 to reflect the nature of the incentive being a government grant under
AASB 120 Accounting for Government Grants and Disclosure of Government Assistance.
30
NOTES TO THE FINANCIAL STATEMENTS (continued)
Deferred Taxes (Non-Current)
Consolidated ($)
2018
2017
JCurve Solutions Limited
Analysis of deferred tax assets:
Deductible temporary differences available to offset against future taxable
income
Deferred expenditure
Accruals and provisions
Tax losses available to offset against future taxable income
Analysis of deferred tax liabilities:
Deferred license revenue
Other
Net Deferred Tax Liability
(1) Accounting policy
(i)
Income tax
269,174
422,046
46,032
737,252
990,450
85,837
1,076,287
339,035
356,918
257,783
-
614,701
1,015,578
18,276
1,033,854
419,153
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid
to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted
by the balance date.
Deferred income tax is provided on all temporary differences at the balance date between the tax bases of assets and liabilities and
their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
• when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that
is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or
loss; or
• when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures,
and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will
not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused
tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and
the carry-forward of unused tax credits and unused tax losses can be utilised, except:
• when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset
or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss; or
• when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint
ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference
will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to the extent that it has become
probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is
realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance
date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against
current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.
31
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
(ii) Tax Consolidation Legislation
JCurve Solutions 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.
(iii) Other taxes
Revenues, expenses and assets are recognised net of the amount of Goods and Services Tax (GST) except:
• when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the
GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
receivables and payables, which are stated with the amount of GST included.
•
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the
Statement of Financial Position.
Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing
and financing activities, which is recoverable from, or payable to the taxation authority are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
(2) Significant accounting judgments, estimates and assumptions: 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.
(3) Unrecognised deferred tax assets and deferred tax liabilities
The balance of carried forward tax losses that have not been recognised in the Financial Statements amount to $476,267 (2017:
$1,563,791 unrecognised). The deductible temporary differences and tax losses do not expire under current legislation. Deferred tax
assets totaling $130,973 (2017: $469,137) have not been recognised in respect of these items at this stage because it is not probable
that future tax profits will be available against which the Group can utilise the benefits thereof.
There are no unrecognised deferred tax liabilities.
(4) Tax Consolidation
JCurve Solutions 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 5(1)(ii).
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.
JCurve Solutions and its controlled entities have entered into a tax funding agreement under which the 100% owned Australian
resident subsidiaries compensate JCurve Solutions for all current tax payable assumed and are compensated by JCurve Solutions
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. 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,
which is issued as soon as practicable after the financial year end. JCurve Solutions 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.
32
NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 6:
EARNINGS PER SHARE
Earnings used for calculation of basic and diluted earnings per share
Profit from operations - basic earnings per share
Profit from operations - diluted earnings per share
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 earnings per share (cents per share)
Diluted earnings per share (cents per share)
(1) Accounting policy
JCurve Solutions Limited
Consolidated
2018
$
847,267
847,267
2017
$
454,286
454,286
No.
No.
329,343,064
332,264,434
Cents per share
Cents per share
0.26
0.26
0.14
0.14
Basic earning 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 earning 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.
NOTE 7:
CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Consolidated ($)
2018
2017
4,487,536
4,487,536
3,495,899
3,495,899
Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods
of between one day and three months, depending on the immediate cash requirements of the Group, and earn interest at the
respective short-term deposit rates.
At 30 June 2018, the Group has no committed borrowing facilities.
33
NOTES TO THE FINANCIAL STATEMENTS (continued)
JCurve Solutions Limited
Consolidated ($)
2018
2017
Reconciliation of profit for the year after tax to net cash flows from
operating activities
Profit for the year
847,267
454,286
Non-cash flows in operating profit:
Depreciation and amortisation from continuing operations
Impaired receivables
Loss on disposal of fixed assets
Equity settled share based payment
(Increase)/decrease in assets:
Trade and other receivables
Other current assets
Other financial assets
Current tax receivable
Deferred tax assets
Increase/(decrease) in liabilities:
Trade and other payables – Current
Provisions – Current
Provisions – Non-current
Deferred tax liabilities
Net cash used in operating activities
(1) Accounting policy
102,328
187,180
5,187
41,826
(791,318)
(93,461)
19,078
26,396
(122,552)
1,354,943
44,619
(10,565)
42,434
1,653,362
78,664
97,156
-
16,682
(643,348)
70,922
-
(189,333)
(173,030)
835,775
43,136
17,660
545,378
1,153,948
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.
34
NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 8:
TRADE AND OTHER RECEIVABLES
Current:
Trade receivables (i)
Allowance for doubtful debts (2)
Accrued revenue/commissions receivable
JCurve Solutions Limited
Consolidated ($)
2018
2017
1,491,841
(114,173)
812,817
2,190,485
1,240,106
(17,893)
364,134
1,586,347
(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 19 for ageing of receivables.
(1) Accounting policy
Trade receivables, which generally have 30 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.
(2) Allowance for doubtful debts reconciliation
At 30 June 2018, trade receivables of the Group with a nominal value of $114,173 (2017: $17,893) were impaired. The allowance for
doubtful debts was $114,173 (2017: 17,893). The movement in the allowance for doubtful debts is as follows:
At 1 July
Provision for impairment recognised during the year
Receivables written off during the year as uncollectable
Trade receivables provided for but collected
NOTE 9:
OTHER CURRENT ASSETS
Prepayments
Term deposit
Deferred expenditure
Sundry debtors
NOTE 10: OTHER FINANCIAL ASSETS
Security Deposits
35
Consolidated ($)
2018
2017
17,893
187,180
(90,900)
-
114,173
131,607
97,156
(110,991)
(99,879)
17,893
Consolidated ($)
2018
2017
207,366
217,665
166,566
108,085
699,682
161,987
170,186
262,408
11,640
606,221
Consolidated ($)
2018
2017
-
-
19,078
19,078
NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 11:
PLANT AND EQUIPMENT
JCurve Solutions Limited
Consolidated ($)
2018
2017
Plant and equipment, at cost
Less accumulated depreciation
Net carrying amount
Leasehold improvements, at cost
Less accumulated depreciation
Net carrying amount
Total net carrying amount
Reconciliations:
Movements:
Net carrying amounts as at 30 June 2016
Additions
Depreciation charges
Net carrying amounts as at 30 June 2017
Net carrying amounts as at 30 June 2017
Disposals
Additions
Depreciation write-back on disposals
Depreciation charges
Net carrying amounts as at 30 June 2018
(1) Accounting policy
(i) Cost
269,279
(184,304)
84,975
2,740
(1,576)
1,164
86,139
Consolidated ($)
Plant &
Equipment
Leasehold
Improvements
158,215
39,381
(75,833)
121,763
121,763
(57,062)
59,985
51,875
(91,586)
84,975
499
-
(333)
166
166
-
1,740
-
(742)
1,164
266,357
(144,594)
121,763
1,000
(834)
166
121,929
Total
158,714
39,381
(76,166)
121,929
121,929
(57,062)
61,725
51,875
(92,328)
86,139
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.
(ii) Depreciation
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.
36
NOTES TO THE FINANCIAL STATEMENTS (continued)
(iii) 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.
JCurve Solutions Limited
NOTE 12: INTANGIBLE ASSETS
Licences
Riyo Platform
Other intangible
assets
Total
Year ended 30 June 2017
At 1 July 2016, net of accumulated amortisation
and impairment
Additions
Amortisation
At 30 June 2017, net of accumulated
amortisation and impairment
2,302,857
-
-
2,302,857
Year ended 30 June 2018
At 1 July 2017, net of accumulated amortisation
and impairment
2,302,857
-
-
-
-
-
Additions
Amortisation
At 30 June 2018, net of accumulated
amortisation and impairment
(1) Purchase of the Riyo Platform
-
-
600,000
(10,000)
2,302,857
590,000
1,132
1,367
(2,499)
-
-
-
-
2,303,989
1,367
(2,499)
2,302,857
2,302,857
600,000
(10,000)
2,892,857
On 31 May 2018, JCurve Mobile Services Pty Ltd, a 100% owned subsidiary of JCurve Solutions Limited purchased the assets of the
Riyo Business, a software platform previously operated by Riyo Pty Ltd and Gojo Software Pty Ltd. The Riyo software is a platform
to provide on-demand or scheduled booking, dispatch and payment (BDP) services to businesses which has multiple potential
commercial applications.
The total cost of the purchase was $600,000 which was settled in cash on the 31st of May 2018. Purchase related costs of $17,221
were included in professional fees in the Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June
2018.
(2) Accounting policy
(i)
Intangible assets – Licenses and other intangible assets
Intangible assets acquired separately or in a business combination are initially measured at cost. The cost of an intangible asset
acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are
carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets,
excluding capitalised development costs, are not capitalised and expenditure is charged against profits in the year in which the
expenditure is incurred.
The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised over
the useful life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation
period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at each financial year-end.
Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are
accounted for by changing the amortisation period or method, as appropriate, which is a change in accounting estimate. The
amortisation expense on intangible assets with finite lives is recognised in profit or loss in the expense category consistent with the
function of the intangible asset.
37
NOTES TO THE FINANCIAL STATEMENTS (continued)
JCurve Solutions Limited
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.
(3) Significant accounting judgments, estimates and assumptions
(i)
Impairment of 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 18.
(ii)
Useful life of the Riyo Platform
The Group has determined that the useful life of the Riyo Platform is 5 years with the useful life to be amortised on a straight line
basis over the five year period.
(4) Impairment testing of intangible assets with indefinite lives
(i)
JCurve Business Software - ERP
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 with exclusive selling rights for the JCurve
ERP 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 Solutions would be assigned to NetSuite and NetSuite would be required to
pay JCurve Solutions 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% (2017:
6.25%). Based on these value in use calculations, there is no impairment for the year ended 30 June 2018 (2017: nil).
The carrying value of the NetSuite License remains $2,302,857.
If the discount rate applied was 10% higher the recoverable amount would decrease by $43,554 and if the discount rate applied was
10% lower the recoverable amount would increase by $43,855. If the license churn projections applied was 10% higher than the
amount forecast, the recoverable amount would decrease by $54,057 and if the license churn projections applied was 10% lower the
recoverable amount would increase by $54,548.
NOTE 13:
TRADE AND OTHER PAYABLES
Current:
Trade payables (*)
Other payables
Accrued expenses
Unearned Income
Consolidated ($)
2018
2017
704,432
701,102
836,398
2,720,858
4,962,790
362,889
534,448
521,216
2,189,295
3,607,848
(*) 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 18.
(1) Accounting policy
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.
38
NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 14:
PROVISIONS
Current:
Annual leave
Provision for long service leave
Non-current:
Provision for long service leave
(1) Accounting policy
JCurve Solutions Limited
Consolidated ($)
2018
231,120
32,671
263,791
55,017
318,808
2017
199,442
19,730
219,172
65,581
284,753
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable
that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be
made of the amount of the obligation. Provisions are not recognised for future operating losses.
When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement
is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is
presented in the Statement of Profit or Loss and Other Comprehensive Income net of any reimbursement.
Provisions are measured at the present value or management’s best estimate of the expenditure required to settle the present
obligation at the end of the reporting period.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks
specific to the liability. The current pre-tax rate used for discounting purposes is 12.5% (2017: 12.5%).
When discounting is used, the increase in the provision due to the passage of time is recognised as an interest expense.
NOTE 15:
SHARE CAPITAL
Ordinary shares issued and fully paid (i)
Unissued shares
Consolidated ($)
2018
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 2016
Share by back and cancellation (a)
At 30 June 2017
Share by back and cancellation (a)
At 30 June 2018
(1) Accounting policy
No.
332,656,900
(750,000)
331,906,900
(4,050,000)
327,856,900
2017
17,382,891
205,357
17,588,248
$
17,382,891
-
17,382,891
-
17,382,891
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.
(2) 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 23(ii) for further information.
(3) Share Option Plan - Acquisition of JCurve Business Software
JCurve Solutions Limited issued 35,714,284 options (valued at $1,572,144) as part consideration for the acquisition of JCurve
Solutions Pty Ltd by its’ subsidiary JCurve Business Software Pty Ltd in October 2013. Refer to Note 23(iii) for further information.
39
NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 16:
RESERVES
Equity Benefits Reserve
Balance at the start of the year
Issued shares under Employee Share Plan
Shares cancelled under Employee Share Plan
Issued rights under Employee Incentive Scheme
Balance at the end of the year
(1) Accounting policy
JCurve Solutions Limited
Consolidated ($)
2018
2017
1,762,054
1,745,372
-
4,608
37,218
13,990
2,554
138
1,803,880
1,762,054
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 23.
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 Profit or Loss and Other 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 6).
(2) Significant accounting judgments, estimates and assumptions: 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.
NOTE 17:
CRITICAL JUDGEMENTS, 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:
(1) Revenue recognition - Identification of performance obligations – refer to note 3;
(2) Revenue recognition – Satisfaction of performance obligations – refer to note 3;
(3) Impairment of intangibles with indefinite useful lives – refer to note 12;
(4) Useful life of the Riyo Platform - refer to note 12;
(5) Share-based payment transactions – refer to note 16;
(6) Recovery of deferred tax assets – refer to note 5; and
(7) Recognition of subscription costs of sales – refer to note 4
40
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 18:
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
(1) Capital risk management
Capital risk is managed and monitored by liaising with banks and communicating with shareholders. JCurve Solutions 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.
(i) Categories of financial instruments
Financial assets
Cash and cash equivalents
Receivables
Other current assets
Other financial assets
Financial liabilities
Payables
Consolidated ($)
2018
2017
4,487,536
2,190,485
217,665
-
3,495,899
1,586,347
170,186
19,078
2,241,932
1,418,553
The Group has no derivative instruments in designated hedging relationships.
(2) Financial Risk Management
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement
and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity
instrument are outlined above in the relevant note.
The Group’s principal financial liabilities are trade payables and unearned income which arise during the course of operations. The
Group has various financial assets such as trade receivables and cash and short-term deposits, which arise directly from its
operations.
The Group’s policy throughout 2018 has remained that no trading in derivatives shall be undertaken. The main risks arising from the
Group’s financial instruments are cash flow interest rate risk, liquidity risk, and credit risk. The Board of Directors reviews and agrees
on policies for managing each of these risks which are summarised on the following pages.
41
NOTES TO THE FINANCIAL STATEMENTS (continued)
(3) Interest Rate Risk
The following table sets out the carrying amount, by maturity, of the Group’s financial instruments including those exposed to interest
rate risk:
JCurve Solutions Limited
Consolidated ($)
Within 1 year
1 to 5 years
Total
Weighted
average
effective interest
rate
%
Year ended 30 June 2018
Financial assets
Non interest bearing:
Trade and other receivables
Floating rate:
Cash Assets
Other Current Assets
Financial liabilities
Payables
Year ended 30 June 2017
Financial assets
Non interest bearing:
Trade and other receivables
Floating rate:
Cash Assets
Other Current Assets
Financial liabilities
Payables
2,190,485
2,190,485
4,487,536
699,682
5,187,218
7,377,703
2,241,932
2,241,932
1,586,347
1,586,347
3,495,899
606,221
4,102,120
5,688,467
1,418,553
1,418,553
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,190,485
2,190,485
4,487,536
699,682
5,187,218
7,377,703
2,241,932
2,241,932
1,586,347
1,586,347
3,495,899
606,221
4,102,120
5,688,467
1,418,553
1,418,553
0.28%
2.13%
0.35%
2.60%
For all financial instruments, the net fair value approximates their carrying value.
No financial assets and financial liabilities are readily traded on organised markets in standardised forms.
Interest on financial instruments classified as floating rate is fixed at intervals of less than one year. The other financial instruments
of the Group that are not included in the above tables are non-interest bearing and are therefore not subject to interest rate risk.
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 $23,525 and decrease by $10,117 respectively (2017: increase by $17,149 and decrease by
$8,433). This is mainly attributable to the Group’s exposure to interest rates on its variable rate cash deposits.
42
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
(4) Price Risk – Equity and Commodity
The Group's exposure to commodity and equity securities price risk is minimal.
(5) Foreign Currency Risk
The Group has minimal exposure to foreign currency risk as the Group trades mainly within Australia. New Zealand customers settle
their outstanding invoices in Australian dollars.
(6) 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 2018, 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*
$
2018
2017
1,491,841 1,050,739
1,240,106
330,231
-
-
62,553
490,541
-
-
201,592
192,854
-
-
62,784 114,173
193,703
17,893
*
PDNI
- Past due not impaired
CI
- Considered impaired
The receivables which are past due but not considered impaired was $264,376 (2017: $386,558).
Other balances within trade and other receivables do not contain impaired assets and are not past due. It is expected that these other
balances will be received when due.
(7) Liquidity Risk Management
Ultimate responsibility for liquidity risk management rests with the board of directors, who have built an appropriate liquidity risk
management framework for the management of the Group’s short, medium and long-term funding and liquidity management
requirements. The Group manages liquidity risk by maintaining adequate reserves and banking facilities by continuously monitoring
forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.
43
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 19:
COMMITMENTS
(1) Remuneration Commitments
There are no commitments for the payment of salaries and other remuneration under long-term employment contracts in existence
at the reporting date.
(2) Operating Lease Commitments
The Group had the following operating lease commitments at balance date:
Within one year
After one year but not more than five years
Consolidated ($)
2018
2017
305,954
496,395
802,349
238,719
559,755
798,474
Operating lease commitments are in respect of the Chatswood office, St Kilda office as well as the serviced offices in Perth and
Singapore.
(i) Accounting policy - 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.
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.
NOTE 20:
CONTINGENCIES
(1) Contingent Liabilities
The Group does not have any contingent liabilities.
NOTE 21:
EVENTS OCCURRING AFTER THE REPORTING PERIOD
No matters or circumstances have arisen since 30 June 2018 that significantly affect, or may significantly affect:
(a)
(b)
(c)
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.
44
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 22:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(1) 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). JCurve Solutions Limited is a for-profit entity for the purposes of preparing the financial statements.
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.
(2) Changes to presentation
The research and development incentive has been reclassified from a credit to the tax expense to other income for the years ended
30 June 2018 and 30 June 2017 to reflect the nature of the incentive being a government grant under AASB 120 Accounting for
Government Grants and Disclosure of Government Assistance. The prior period comparative balance in the Statement of Profit or
Loss and Other Comprehensive Income has been updated to reflect this change.
(3) New accounting standards and interpretations not yet adopted
In the year ended 30 June 2018, 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
which are most relevant to the Group are set out below.
(i)
AASB 9 Financial Instruments, AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9
(December 2010), AASB 2014-1 Amendments to Australian Accounting Standards [Part E Financial Instruments] and
AASB 2014-7 Amendments to Australian Accounting Standards arising from AASB 9
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 the impact on the Group’s future financial reporting will be restricted to the new impairment model for
financial assets. AASB 9 replaces the incurred loss model in AASB 139 with an expected credit loss (ECL) model. The new impairment
model is applied to financial assets measured at amortised cost, contract assets and debt investments at FVOCI. Under AASB 9, loss
allowances are measured on either of the following bases:
(1) 12-month ECLs: these are ECLs that result from possible default events within the 12 months after the reporting date; and
(2) Lifetime ECLs: these are ECLs that result from all possible default events over the expected life of a financial instrument.
ECLs are a probability weighted estimate of credit losses which are discounted at the effective interest rate of the financial asset.
Credit losses are measured as the present value of all cash shortfalls. Based on the history of past bad debts written off the Group
has assessed that the impact of adopting AASB 9 will not have a material impact on the financial results. The Group does not currently
have any cash flow or interest rate hedges so the new hedge accounting rules under AASB 9 are not expected to have a material
impact on the financial results.
AASB 9 must be applied for financial years commencing on or after 1 January 2018. The Group will adopt the new standard from 1
July 2018.
(ii)
AASB 16 Leases
AASB 16 was issued to 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.
The new standard will have three possible main changes on the Group’s accounting for leases:
(1) Enhanced guidance on identifying whether a contract contains a lease;
(2) 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
(3) Enhanced financial statement disclosures.
45
NOTES TO THE FINANCIAL STATEMENTS (continued)
JCurve Solutions Limited
The new standard will result in almost all leases being recognised on the Statement of Financial Position. The current distinction
between operating and finance leases will be removed with an asset (the right to use the leased item) and a liability (rental payments)
being recognised.
Lessor accounting will not significantly change under AASB 16.
AASB 16 will impact the Group’s operating leases which are outlined in Note 19. As at 30 June 2018, the Group had non-cancellable
operating lease commitments of $802,349. At this stage, the Group has not made an estimate as to what the financial effect of adopting
AASB 16 will be on the Group’s financial statements apart from the requirement for additional disclosures and potential recognition of
right of use assets and the related liabilities for all leases. 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.
(4) Statement of Compliance
The financial report was authorised for issue on 21 August 2018.
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).
(5) 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.
NOTE 23:
SHARE-BASED PAYMENT PLANS
(i)
Shares issued under Equity Incentive Plan
The equity incentive plan was approved by shareholders at the Annual General Meeting held on 22 November 2016. On 27 June
2017, 10,000,000 performance rights (valued at $27,500) were issued to employees under the plan. These performance rights were
revalued to $54,862 following an increase in the JCurve Solutions Limited share price during the year. On 9 October 2017, 1,500,000
performance rights (valued at $30,933) were issued to employees under the plan. Each performance right has a nil exercise price
and convert into one fully paid ordinary share in JCurve Solutions Limited upon meeting the vesting conditions. The performance
rights vest on 31 August 2019. If the vesting conditions are not met the performance right lapses on 31 August 2019.
The share-based payment expense is recognised in the Statement of Profit or Loss and Other Comprehensive Income evenly over
the vesting period.
(ii)
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.
These shares were bought back by the Company on the 7th of December 2017 as the shares were out of the money against their
attaching non-recourse loans at a share price of 5 cents per share with the Directors electing not to repay their non-recourse loans
by the due date.
46
NOTES TO THE FINANCIAL STATEMENTS (continued)
JCurve Solutions Limited
The expense recognised in the Statement of Profit or Loss and Other Comprehensive Income in relation to share-based payments
is disclosed in Note 16.
4,050,000 of the shares issued under the Employee Share Plan (valued at $28,018) were bought back by the JCurve Solutions during
the year in accordance with the terms of the Employee Share Plan.
(iii)
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.
The following table illustrates the number (No.) and weighted average exercise prices of and movements in share options issued
during the year:
Outstanding at the beginning of the year
Expired during the year
Granted during the year
Outstanding at the end of the year
Exercisable at the end of the year
No.
17,857,142
(8,928,571)
-
8,928,571
8,928,571
2018
2017
Weighted
average
exercise price
$0.000001
-
-
$0.000001
No.
26,785,713
(8,928,571)
-
17,857,142
17,857,142
Weighted
average
exercise price
$0.000001
-
-
$0.000001
The weighted average remaining contractual life for the share options outstanding as at 30 June 2018 is under 1 year (2017: between
1 and 2 years).
The exercise price for options outstanding at the end of the year was $0.000001 (2017: $0.000001).
8,928,571 of options expired during the year.
The outstanding balance of share options as at 30 June 2018 is represented by:
•
8,928,571 options which automatically vest when the share price reaches 15.0c for a period of 10 consecutive trading days,
exercisable on or before 31 March 2019.
NOTE 24:
REMUNERATION OF AUDITORS
The auditor of JCurve Solutions Limited is BDO East Coast Partnership.
Amounts received or due and receivable by BDO East Coast Partnership for
an audit or review of the financial report of the entity and any other entity in the
consolidated group
Amounts received or due and receivable by HLB Mann Judd for an audit or
review of the financial report of the entity and any other entity in the
consolidated group
Consolidated ($)
2018
2017
72,576
70,095
-
72,576
(14,608)
55,487
47
JCurve Solutions Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 25:
RELATED PARTY TRANSACTIONS
(1) Subsidiaries
The consolidated financial statements include the financial statements of JCurve Solutions Limited and the subsidiaries listed in the
following table.
Name
Country of
Incorporation
JCurve Business Software Pty Ltd
Australia
Fleet Manager Pty Ltd
Phoneware Pty Ltd
Interfleet Pty Ltd
Australia
Australia
Australia
The Full Circle Group Pty Ltd
Australia
JCS Tech Solutions Pty Ltd
Australia
JCurve Solutions Asia Pte Ltd
Singapore
JCurve Mobile Services Pty Ltd
Australia
% Equity Interest
2017
100
100
100
100
100
100
100
-
2018
100
100
100
100
100
100
100
100
JCurve Solutions Limited is an Australian entity and the ultimate parent of the Group. JCurve Business Software Pty Ltd, Fleet
Manager Pty Ltd, Phoneware Pty Ltd, Interfleet Pty Ltd, The Full Circle Group Pty Ltd and JCS Tech Solutions Asia Pte Ltd are all
incorporated in Australia. JCurve Solutions Asia Pte Ltd was incorporated on the 22 December 2016 and is domiciled in Singapore.
JCurve Mobile Services Pty Ltd was incorporated on the 7th of May 2018 and is domiciled in Australia.
(2) Key Management Personnel Compensation
The aggregate compensation made to directors and other key management personnel of the Group is set out below:
Consolidated ($)
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Share-based payments
Total Compensation
2018
2017
1,414,304
112,077
16,463
41,825
1,584,669
1,075,534
91,259
4,369
14,114
1,185,276
48
NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 26:
PARENT ENTITY FINANCIAL INFORMATION
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
JCurve Solutions Limited
2018
$
2,841,559
2,625,282
5,466,841
1,043,704
62,423
1,106,127
2017
$
2,332,212
1,797,360
4,129,572
384,947
87,538
472,485
4,360,714
3,657,087
17,588,248
(15,031,414)
1,803,880
4,360,714
17,588,248
(15,693,215)
1,762,054
3,657,087
Year ended
30 June 2018
$
Year ended
30 June 2017
$
Net profit for the year
661,801
863,740
49
JCurve Solutions Limited
DIRECTORS’ DECLARATION
In the opinion of the directors:
(a)
the financial statements and notes set out on pages 22 to 49 are in accordance with the Corporations Act 2001, including:
(i)
(ii)
complying with the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements; and
giving a true and fair view of the Group’s financial position as at 30 June 2018 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 22(4) 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.
Bruce Hatchman
Chairman
Dated 21 August 2018
50
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret St
Sydney NSW 2000
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of JCurve Solutions Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of JCurve Solutions Limited (the Company) and its subsidiaries
(the Group), which comprises the statement of financial position as at 30 June 2018, the statement of
profit or loss and other comprehensive income, the statement of changes in equity and the statement
of cash flows for the year then ended, and notes to the financial report, including a summary of
significant accounting policies and the directors’ declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd,
a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved
under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.
Recognition of license and implementation revenue
Key audit matter
How the matter was addressed in our audit
As disclosed in Note 3, the
Our audit procedures to address the key audit matter included, but were
recognition of license and
not limited to, the following:
implementation revenue involves a
number of key estimates and
judgements such as the identification
of performance obligations and the
satisfaction of those performance
obligation.
Due to the nature of these key
estimates and judgements, and given
the financial significance of revenue
to the users of the financial report,
revenue recognition of license and
implementation revenue has been
determined as a key audit matter.
•
Performing testing, on a sample basis, of management’s
judgement in relation to application of “Go-live” date during
the year and subsequent to year end to ensure revenue was
recorded in the correct accounting period;
•
Review the operating effectiveness of internal controls in
relation to the judgements associated with the satisfaction of
identified performance obligations;
•
Reviewing a sample of deferred revenue balances at year end to
ensure that revenue was appropriately deferred in accordance
with the progress of individual projects;
•
Selecting a sample of projects during the year and agreeing
them to customer contracts to ensure that revenue and deferred
revenue were correctly calculated in accordance with AASB 15
and the Group’s revenue accounting policies.
Other information
The directors are responsible for the other information. The other information comprises the
Chairman’s letter, Directors Report (excluding the audited Remuneration Report) and Shareholders
Information the year ended 30 June 2018, but does not include the financial report and the auditor’s
report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June
2018.
In our opinion, the Remuneration Report of JCurve Solutions Limited, for the year ended 30 June 2018,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO East Coast Partnership
Gareth Few
Partner
Sydney, 21 August 2018
SHAREHOLDER INFORMATION
(a)
Distribution of shareholder and listed option holder numbers
JCurve Solutions Limited
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
65
10
45
242
221
583
6,336
29,529
394,027
11,744,011
315,682,997
327,856,900
-%
0.01%
0.12%
3.58%
96.29%
100.00%
There are 135 shareholders that hold less than a marketable parcel as at 27 July 2018.
(b)
Substantial shareholders
The names of the substantial shareholders listed in the Group’s register as at 30 June 2018 and 27 July 2018 are outlined below,
based on the shareholders last lodged Substantial Shareholder notice:
30 June 2018
27 July 2018
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
Mark Jobling
Philip Ewart
83,124,215
51,204,301
22,328,999
25.35
15.47
7.09
83,124,215
51,204,301
22,328,999
25.35
15.47
7.09
(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
54
SHAREHOLDER INFORMATION (continued)
(g)
Top 20 Registered Holders – Ordinary Shares as of 27 July 2018
Name
1
GRAMELL INVESTMENTS PTY LIMITED
4 MR GREGORY PETER WILSON
5
6
7
8
9
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
POTENTATE INVESTMENTS PTY LTD
SHANMAC PTY LTD
P EWART INVESTMENTS PTY LTD
JACANA GLEN PTY LTD
10 ROUND ETERNAL INVESTMENTS PTY LTD
11 VERSAILLES HOLDINGS PTY LTD
12
MR DAVID JAMES FRANKS + MR WALTER GEORGE FRANKS
13 MR CHARLES BYRON SMITH
14 BUFF HOLDINGS PTY LTD
15 MR JUAN CARLOS GONZALEZ
16 DR PHILIP GORDON WILSON EWART
17
MR TRENT ROSS WATSON + MS GAY MCCARTHY + MS ZANA BRODZELI
18 MR STEPHEN CANNING
19
MR PETER GRAHAM DORAN + MRS BARBARA LINDA DORAN
20 MR ANDREW JOHN PETTINELLA
JCurve Solutions Limited
Number of
Ordinary Shares
% of Ordinary
Shares Held
83,124,215
47,899,564
14,745,322
9,000,000
6,777,180
6,330,943
6,000,000
5,045,931
5,000,000
5,000,000
4,250,000
4,206,174
3,785,600
3,500,000
3,470,378
3,443,307
3,355,332
3,233,418
2,271,973
2,050,000
25.35
14.61
4.50
2.75
2.07
1.93
1.83
1.54
1.53
1.53
1.30
1.28
1.15
1.07
1.06
1.05
1.02
0.99
0.69
0.63
TOTAL HELD BY TOP 20 HOLDERS
TOTAL HELD BY REMAINING SHAREHOLDERS
222,489,337
105,367,563
67.86
32.14
(h)
Stock exchange listing– ordinary shares (as of 30 June 2018)
Quotation has been granted for all the ordinary shares of the Company on the Australian Securities Exchange.
(i)
Restricted securities
As at 30 June 2018 and 27 July 2018 there are no restricted security classes recorded in the Company’s share register.
(j)
Unquoted securities
The unquoted securities of the Company as at 27 July 2018 are:
8,928,571 Options are outlined below
Number of Options
Exercise Price
Expiry Date
Number of Holders
8,928,571
$0.000001
31 March 2019
1
11,500,000 Performance Rights are outlined below
Number of Performance Rights
Exercise Price
Expiry Date
Number of Holders
11,500,000
$Nil
31 August 2019
6
(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 Solutions is scheduled for 20 November
2018.
55