Communications Systems, Inc. Annual Report 2021

Plain-text annual report

JCURVE SOLUTIONS LIMITED ABN 63 088 257 729 Level 8, 9 Help St, Chatswood NSW 2067, Australia info@jcurvesolutions.com https://www.jcurvesolutions.com/ 14 October 2021 2021 Annual Report JCURVE SOLUTIONS LIMITED (ASX: JCS), the business transformation technology company, attaches its FY2021 Annual Report. This announcement has been authorised for release by the Board of JCURVE SOLUTIONS LIMITED. About Jcurve Jcurve works collaboratively with ambitious organisations to drive growth through the effective use of technology. Serving as a trusted guide in an on-demand world, Jcurve helps build growing and resilient organisations to withstand market disruption. From business management solutions and consulting services to field service management and digital marketing services – Jcurve is uniquely positioned to help organisations on their business transformation journey. For more information, please visit www.jcurvesolutions.com. "Jcurve works collaboratively with ambitious organisations to drive growth through the effective use of technology. Serving as a trusted guide in an on-demand world, we help build growing and resilient organisations to withstand market disruption." JCurve Solutions Limited C O N T E N T S Chairman and CEO Message Directors’ Report Including Remuneration Report 4 6 Independence Declaration Consolidated Statement of Proﬁt or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Cash Flows Consolidated Statement of Changes in Equity Contents to the Notes to the Consolidated Financial Statements Notes to the Financial Statements Directors’ Declaration Independent Auditor’s Report Shareholders Information Corporate Information 21 22 23 24 25 26 27 55 56 61 63 CHAIRMAN and CEO Message JCurve Solutions Limited 8 October 2021 Dear Fellow Shareholders, COVID-19 has challenged us all - as individuals, families, communities and as Executives overseeing your business. To the great credit of your management and employees, JCurve Solutions achieved a proﬁtable result in FY2021. Your agile, resilient business is ready to meet the challenges and to take opportunities in an ever-changing world. Financial Strength – positioning for growth JCurve Solutions returned to proﬁtability for the year ended 30 June 2021 (FY2021) by generating a statutory pre-tax proﬁt of $0.3 million and a normalised EBITDA of $1.2 million. This result reﬂects a signiﬁcant improvement in the statutory pre-tax loss of $0.2 million and normalised EBITDA of $0.7 million generated in the twelve months ended 30 June 2020 (FY2020). While our revenue levels were down, we implemented several cost-saving initiatives at the start of the COVID-19 pandemic to further strengthen the company’s ﬁnancial position in the face of uncertain economic times. JCurve Solutions achieved a cash ﬂow positive result for FY2021 with operating cash inﬂows of $1.8 million, which compares favourably to the $0.3 million of cash inﬂows generated in FY2020. The 30 June 2021 cash balance was $5.1 million, an increase from the reported $4.2 million as of 30 June 2020. Your company continues to be well-positioned for value opportunities with strong cash reserves and no debt. Strategic priorities – driving growth We remain resolute in our strategy of accelerating growth. With this in mind, our strategic priorities for the next twelve months are to: Proﬁtably grow JCurve Solutions in Asia Paciﬁc from our existing operations as well as through acquisition. Rapidly grow our Quicta (formerly Riyo) subscriber numbers and focus on product enhancements. Expand our Business Consulting and Advisory service (Vyzeri). Markedly increase shareholder value. 4 In early 2021, we saw changes at the Board level, as I, Mark Jobling, took on the role of Chairman and Martin Green joining the Board. Further, we bolstered our Executive team, appointing James Butler as Chief Marketing Officer and Arthur Fernandez to the new role of Chief Growth Officer. 4 CHAIRMAN and CEO Message (continued) JCurve Solutions Limited Rebranding - reﬂecting our growth On 4 October 2021, JCurve Solutions launched its new branding. This new branding includes a fresh, modern take on the JCurve logo, a refreshed colour scheme, alongside a new tagline of ‘Advancing Ambition’. The new tagline perfectly encapsulates the mission, which is to work collaboratively with ambitious organisations to drive growth through the effective use of technology. The solutions and services we offer as part of a diversiﬁed portfolio will be reported moving forward under their refreshed brands of Optyc, Quicta, Vyzeri and Dygiq. Outlook Assuming the economies of Southeast Asia and Australia recover quickly from the COVID-19 pandemic, we are forecasting strong growth from our existing business operations. We continue to focus on identifying and evaluating complementary technology business merger and acquisition opportunities. We have successfully purchased and integrated two smaller businesses, Creative Quest and Rapid E-Suite Thailand, over the past six months. Our focus is now on more signiﬁcant opportunities that will result in a step-change in our revenue and proﬁtability moving forward. Final Remarks Mark Jobling Chairman Thank you to our employees, customers and shareholders for their ongoing support. Despite the challenging times that COVID-19 has presented, JCurve Solutions has evolved into a full-service digital transformation partner for businesses seeking to meet the challenges of today’s business environment and assist in Advancing Ambition. Stephen Canning Chief Executive Officer 5 JCurve Solutions Limited DIRECTORS’ REPORT 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 2021. 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. Mr Mark Jobling Mr Bruce Hatchman Mr Graham Baillie Mr David Franks was a Non-Executive Director from the beginning of the ﬁnancial year until his resignation on 18 January 2021. Mr Martin Green was appointed as a Non-Executive Director on 18 January 2021 and continues in that position as at the date of this report. Names, qualiﬁcations, experience, and special responsibilities The following information is current as at the date of this report. Experience and expertise Mark Jobling joined the company on 8 April 2015 as a Non-Executive Director. Mark is a substantial shareholder of the Company and holds a Bachelor of Economics and Bachelor of Laws (Hons) from Monash University. Mark 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 Entertainment Holdings Pte Ltd. in Asia. Mark joint venture is the Chairman of Tomorrow Mark Jobling B. Eco, B Laws (Hons) (Non-Executive Chairman) Directorships of other listed companies None Former directorships of other listed companies None Special responsibilities Chairman of the Remuneration Committee. Experience and expertise Bruce Hatchman was appointed to the Board of JCurve Solutions on 27 November 2014 and acted as Chairman from 27 November 2014 until 8 January 2021. Bruce is an experienced and successful ﬁnance professional. As the former Chief Executive of Crowe Horwath, Bruce has over 40 years’ listed experience companies and other consulting services to large private enterprises. Bruce is a qualiﬁed Chartered Accountant and a member of the Australian Institute of Company Directors. in providing audit and assurance, and M&A services to Directorships of other listed companies None Former directorships of other listed companies Non-Executive Director of Consolidated Operations Group Limited (change of name post-resignation from the Company to COG Financial Services Limited). Special responsibilities Chairman of the Audit & Risk Management Committee and Member of the Remuneration Committee. 6 Bruce Hatchman FCA MAICD JP (Non-Executive Director) DIRECTORS’ REPORT (continued) Names, qualiﬁcations, experience, and special responsibilities Experience and expertise Graham Baillie rejoined the Group as a Non-Executive Director on 26 August 2019. Graham originally joined the Company in September 2007 as a Non-Executive Director and was appointed Chairman in May 2012, brieﬂy serving as Managing Director for period December 2013 to June 2014 before returning to position of Chairman in July 2014. During this time, he saw the listing of JCurve Solutions Limited through Stratatel Limited. Graham is JCS’s majority shareholder through shares held by his family’s superannuation fund. In 1994, Graham established Outsource Australia Pty Ltd (OSA) to provide “white collar” business process outsourcing (BPO) services to both the private and public market sectors in Australia. In his capacity as majority shareholder and Chief Executive Officer he developed the company nationally and internationally. Today OSA is known as Converga. Prior to this, Graham was with AUSDOC during its formative years through to its ultimate ASX listing in September 1993. In this time he was not only integral to the development of the company throughout Australia but was also involved in establishing similar business operations in New Zealand, USA and United Kingdom. Directorships of other listed companies None Former directorships of other listed companies None Special responsibilities Member of the Audit & Risk Management Committee. Experience and expertise Martin Green joined the Group on 18 January 2021 as a Non-Executive Director. He has a strong corporate background having played a signiﬁcant role in the private investment arm of Consolidated Press Holdings Pty Limited (CPH) for more than 10 years and subsequently Hong Kong where he set up CPH’s operations. After leaving CPH, Martin has assisted in building and monetising technology and other businesses in Asia through his extensive corporate network. Martin is based in Hong Kong and holds a BA (Hons) in Accounting and Finance. Directorships of other listed companies None Former directorships of other listed companies None. Special responsibilities Member of the Audit & Risk Management Committee and Member of the Remuneration Committee. Experience and expertise 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 is currently the Company Secretary for the following public entities: AUB Group Limited, Aumake International Limited, Noxopharm Limited, Nyrada Inc, Consolidated Operations Group Limited, White Energy Company Limited, White Energy Technology Limited and ZIP Co Limited. David is also a Director and Principal of Automic Group Pty Ltd. Directorships of other listed companies None Former directorships of other listed companies None. Special responsibilities Chairman of the Audit & Risk Management Committee and Member of the Remuneration Committee until his resignation. 7 JCurve Solutions Limited Graham Baillie FAICD (Non-Executive Director) Martin Green BA (Hons) in Accounting and Finance (Non-Executive Director) from 18 January 2021 David Franks B.Ec, CA, F Fin, FGIA, JP. (Non-Executive Director until his resignation on 18 January 2021 and Company Secretary) 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: Ordinary Shares Options over Ordinary Shares JCurve Solutions Limited Mark Jobling Bruce Hatchman Graham Baillie Martin Green 50,704,301 3,500,000 83,124,215 - 137,328,516 - - - - - A new equity incentive plan was approved by shareholders at the Annual General Meeting held on 19 November 2019. In accordance with that plan, on the 16th of March 2021, 4,100,000 performance rights were issued to employees under this plan. The Performance Rights under this plan vest in three tranches in January 2022, June 2022 and January 2023 and have both a performance and service condition before converting into shares. Dividends and shareholder returns No dividends were declared or paid during the ﬁnancial year ended 30 June 2021. Principal activities The principal activities of JCurve Solutions during the year ended 30 June 2021 consisted of: 1) the sale, implementation and support of Enterprise Resource Planning (ERP) solutions, which consisted of: (i) the exclusively licensed small business edition of Oracle NetSuite, JCurveERP (in Australia and New Zealand); (ii) the Oracle NetSuite mid-market and enterprise editions (in Australia, New Zealand and South East Asia); 2) the sale and support of proprietary Telecommunications Expense Management Solutions; 3) the continued development of Riyo, the Group’s proprietary owned Service Management Platform including the sale and support of the platform to paying customers; 4) the sale of digital marketing services. Review of Operations - Operating ﬁnancial review Financial Results for the Year The Group recognised a proﬁt after tax of $0.2 million for year ended 30 June 2021 (2020: $0.3 million loss). The ‘Normalised EBITDA’ for the full year ended 30 June 2021 was $1.2 million (2020: $0.7 million), which has been determined as follows: Total proﬁt/(loss) after tax for the year Add Back: Non-cash expenses: Depreciation / amortisation Total non-cash expenses Income tax expense Interest income/ﬁnance costs Normalised EBITDA Consolidated ($) 2020 (298,804) 817,201 817,201 153,585 (1,481) 670,501 2021 152,255 864,271 864,271 143,391 75,037 1,234,954 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 proﬁt/(loss) after tax and normalised EBITDA. The directors use normalised EBITDA to assess the performance of the Group. 8 DIRECTORS’ REPORT (continued) 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 has the following risk management controls embedded in the Group’s management and reporting system: JCurve Solutions Limited implementation revenue The Group’s total revenue for the year ended 30 June 2021 was $10.6 million (2020: $11.2 million), which includes revenue licenses and from the sale of JCurveERP/NetSuiteERP accompanying support and in Australia of $7.7 million (2020: $8.0 million), revenue from the sale of NetSuiteERP licenses and accompanying support and implementation revenue in Asia $1.0 million (2020: $1.0 million), revenue from the sale of Telecommunications Expense Management Solutions $1.6 million (2020: $2.1 million) and implementation of the Riyo revenue from the sale and solution $0.2 million (2020: $0.1 million). Total expenses including depreciation for the full year ended 30 June 2021 was $9.1 million (2020: $11.7 million). The largest expense during the year ended 30 June 2021 was amounts paid to employees with $5.5 million being paid or accrued (2020: $6.2 million). Financial Position as at 30 June 2021 The Group generated cash inﬂows for FY2021 of $1 million, with a 30 June 2021 cash balance of $5.1 million, which was an increase from the $4.2 million as at 30 June 2020, with $0.2 million paid during the year for the Creative Quest business acquisition. Despite the exceptionally challenging market conditions associated with the COVID-19 pandemic, JCurve Solutions remains in a strong ﬁnancial position, supported by annual recurring revenue streams exceeding $7 million, a cash balance of $5.1 million as at 30 June 2021 and no external debt. The increase in assets from $14.0 million as at 30 June 2020 to $14.4 million as at 30 June 2021, is primarily the result of the stronger ﬁnancial result achieved in FY2021. The liabilities balance increased from $9 million as at 30 June 2020 to $9.4 million as at 30 June 2021 which is primarily the result of the project delivery status of a large contract won in November 2020. The Group recognizes revenue in the Statement Income on completion of nominated of Comprehensive performance obligations at which point the liability for any pre-billed services work is recognized as revenue. Risk management The Group recognises the need to proactively manage the risks and opportunities associated with both day-to-day operations of the Group and objectives and has developed a risk management policy. its longer-term strategic 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. 9 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 reported to the Board; 3) Annual strategic and operational business plans; and 4) Annual budgeting and forecasting 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 the Executive Management Team, the Audit and Risk Committee and the Board and took place in accordance with the process disclosed above. A copy of the Risk Management Policy can be found on the Group’s website: https://www.jcurvesolutions.com/corporate-governance/ Signiﬁcant changes in the state of affairs There were no signiﬁcant changes in the state of affairs of JCurve Solutions during the ﬁnancial year. Events since the end of the ﬁnancial year Since the end of the ﬁnancial year, the following events have occurred which have impacted the operations of the Group: 1) Acquisition of the Thailand assets of Rapid E-Suite Pte Ltd On the 9th of July 2021, the Group completed the acquisition of the Thailand business assets of Rapid E-Suite Pte Ltd, an Oracle NetSuite Member Status Solution Provider with 20 existing customers and which for the year ended 30 April 2021, generated S$0.6 million of revenue and an EBITDA of S$0.1 million from its Thailand operations. The purchase price for the acquisition was S$250,000 cash paid on completion, S$50,000 cash payable on reaching an agreed non-sales milestone by 9 October 2021 and a further cash earnout component capped at S$500,000 dependent on the sales level for the Thailand operations in the 12 months immediately post-completion of the acquisition. 2) Lockdowns in key operating locations Lockdown restrictions ﬁrst announced on the 25th of June 2021, in New South Wales have been extended until the end of September 2021. Our office in Chatswood remains closed and the Group continues to operate under its business continuity plan in all locations which includes all employees lockdowns have been working announced in Queensland, Victoria, Singapore and the Philippines. from home. Shorter JCurve Solutions Limited DIRECTORS’ REPORT (continued) With the exception of the acquisition of the Thailand assets of Rapid E-Suite and the lockdowns outlined above, no other matters or circumstances have arisen since 30 June 2021 that signiﬁcantly affect, or may signiﬁcantly affect: (a) the Group’s operations in future ﬁnancial years, or (b) the results of those operations in future ﬁnancial years, or (c) the Group’s state of affairs in future ﬁnancial years. Retirement, election and continuation in office of Directors 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. Likely developments and expected results of operations The Group’s likely developments and expected results of operations are summarised through its four core strategic priorities for FY2022: • Proﬁtably Grow JCurve Solutions in Asia Paciﬁc; • Accelerate Riyo Go-To-Market; • Seize adjacent Digital Transformation Opportunities; • Increase Shareholder Value. The COVID-19 has accelerated business change and the Group is expecting that as the economies recover we will see increasing numbers of Companies further embracing Cloud Technology. Environmental regulation 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. The Group continues to improve work practices in its pursuit of reducing paper usage as much as possible and work electronically. Indemniﬁcation of Directors, Officers and Auditors 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. Meetings of Directors 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: 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. Martin Green was appointed during the year and must stand for election at the ﬁrst Annual General Meeting following his appointment under Clause 13.4 of the JCurve Solutions Constitution. 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. The current board was re-elected by shareholders at the following prior AGMs: 2020: Bruce Hatchman and Mark Jobling; 2019: David Franks and Graham Baillie; Therefore, under clause 13.4 of the JCurve Solutions Constitution, Graham Baillie and Martin Green are due for election at the Next Annual General Meeting. 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 Audit Pty Ltd, to provide the directors of the Company with an Independence Declaration in relation to the audit of the annual report. Directors’ Meetings Attended/(Eligible) Number of meetings: Mark Jobling Bruce Hatchman Graham Baillie Martin Green (from 18 January 2021) David Franks (until 18 January 2021) 7 (7) 7 (7) 7 (7) 4 (4) 3 (3) Audit & Risk Management Committee Attended/ Remuneration Committee Attended /(Eligible) (Eligible) 0 (0) 4 (4) 4 (4) 2 (2) 2 (2) 2 (2) 2 (2) 0 (0) 1 (1) 1 (1) 10 DIRECTORS’ REPORT (continued) This Independence Declaration is set out on page 21 and forms part of this Directors’ Report for the year ended 30 June 2021. Non-Audit Services There were no non-audit related activities carried out by the Company’s auditors during the year ended 30 June 2021. 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: https://www.jcurvesolutions.com/corporate-governance/ Remuneration report (Audited) The directors are pleased to present JCurve Solutions Limited’s (“the Company’s”) remuneration report for the year ended 30 June 2021. 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. JCurve Solutions Limited 1) Directors and other Key Management Personnel Non-Executive Directors Mark Jobling Non-Executive Director (Not Independent) until 17 January 2021 before transitioning to the Non-Executive Chairman role (Not Independent) from 18 January 2021 Bruce Hatchman Non-Executive Chairman (Independent) until 17 January 2021 before transitioning to a Non-Executive Director role (Independent) from 18 January 2021 David Franks Non-Executive Director – Independent (until 18 January 2021), resigned 18 January 2021 Graham Baillie Non-Executive Director – Not Independent Martin Green Non-Executive Director – Independent (appointed 18 January 2021) Executive Management Team (Executives) Stephen Canning Chief Executive Officer The remuneration report outlines the key aspects of JCurve Solutions remuneration policy, framework and remuneration awarded for JCurve Solutions directors and executives. The Executives Management Personnel who are not Non-Executive Directors. for the purpose of this report are Key James Aulsebrook Chief Financial Officer Kate Massey Chief Marketing Officer including Sales Director responsibilities until resignation effective from 4 September 2020 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 2020 Annual General Meeting 7) Details of share-based compensation 8) Shareholdings of Key Management Personnel 9) Transactions with Directors and Key Management Personnel Katrina Doring Chief Operating Officer Peter Choo Product Strategy Director until resignation effective from 26 January 2021 Arthur Fernandez General Manager – JCurve Solutions Asia and General Manager of Riyo James Butler Chief Marketing Officer (appointed 8 March 2021) 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. 11 DIRECTORS’ REPORT (continued) Remuneration report (Audited) (continued) 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) link executive rewards to shareholder value creation; and (iii)establish appropriate performance hurdles for variable executive remuneration. Nomination and Remuneration committee JCurve Solutions Limited (i) Ensuring maximum stakeholder beneﬁt from the retention of a high-quality Board and executive team; (ii) Aligned to the Company’s strategic business priorities which have been set to achieve shareholder value; (iii) Ensuring that the remuneration structure is transparent and easily understood; (iv) Acceptable to all shareholders. 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. The Nomination and Remuneration Committee responsible for determining and reviewing compensation arrangements for management team. the directors and the executive is 3) Remuneration Structure In accordance with best practice Corporate Governance, the structure of non-executive director and executive remunera- tion 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 share- holders 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. The current remuneration structure for the directors is as follows: (i) Chairman: $90,000 including superannuation per annum; (ii) Resident non-executive directors: $65,700 including compulsory superannuation per annum; (iii)Non-resident non-executive directors: $60,000 including superannuation per annum; (iv)Chair of the Audit Committee: $10,000 including compulsory superannuation per annum. The remuneration of non-executive directors for the year ended 30 June 2021 and comparative year is detailed in Section 4, Table 1 of the Remuneration report. The composition of the Nomination and Remuneration Committee during the year ended 30 June 2021 was as follows: (1) For the period 1 July 2020 until 17 January 2021 (i) Bruce Hatchman (Chairman) (Non Executive Director - Independent); (ii) Mark Jobling (Non Executive Director – Not Independent); and (iii) David Franks (Non Executive Director - Independent). In relation to the above, all are non-executive directors, with an independent Chairman and the majority of whom are independent. (2) For the period 18 January 2021 until 30 June 2021 (i) Mark Jobling (Chairman) (Non Executive Director – Not Independent); (ii) Bruce Hatchman (Non Executive Director - Independent); and (iii) Martin Green (Non Executive Director - Independent). In relation to the above, all are non-executive directors, the majority of members are Chairman is not independent. independent however the in compliance with the ASX Corporate Governance On this basis, the Nomination and Remuneration Committee is Principles and Recommendations until 17 January 2021, and partially compliant from 18 January 2021. Members of the Nomination and Remuneration Committee are appointed, removed and/or replaced by the Board. The Nomination and Remuneration Committee assesses the appropriateness of the nature and amount of remuneration which the directors and executives receive on a periodic basis by reference to relevant employment market conditions with overall objectives of: 12 DIRECTORS’ REPORT (continued) Remuneration report (Audited) (continued) Executive remuneration The Company’s Executive remuneration structure consists of three components: Fixed components (i) Base salary and beneﬁts, including superannuation. Variable ‘at-risk’ components (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). (i) Base salary and beneﬁts Executives are given the opportunity to receive their ﬁxed (primary) remuneration in a variety of forms including cash, superannuation 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. JCurve Solutions Limited The potential value of the short-term incentive schemes as a proportion of each Executive’s base salary was as follows: Executives Stephen Canning James Aulsebrook Kate Massey (***) Katrina Doring Peter Choo Arthur Fernandez James Butler FY2021 STI Potential (*) (**) FY2020 STI Potential (*) (**) 0% 0% 24% 0% 0% 0% 0% 32% 27% 55% 29% 29% 27% Not applicable (*) STI bonus potential as a proportion of the Executive’s base contracted salary excluding superannuation and other beneﬁts. (**) With the impact of the Covid-19 pandemic signiﬁcantly affecting the Company’s results in April 2021, all members of the Executive Management Team with the exception of commissions for the CMO, Kate Massey, elected to waive all eligible bonuses under the FY2020 and FY2021 short term incentive schemes. (***) Sales Director responsibilities from 5 February 2020 which included the commission scheme previously provided to the Sales Director on top of the STI as the Chief Marketing Officer. Commission scheme was uncapped. The FY2022 KPI targets for the Short-term incentive plan were determined by the Board based on Key Result Areas (KRA’s) which the Board believes will affect the performance of JCurve Solutions during the ﬁnancial year. The KRA for the year ended 30 June 2022 is a total revenue metric. The metric is determined with reference to JCurve Solutions strategic goals and objectives and is measured based on the audited statutory ﬁnancial results. This short-term incentive scheme takes the form of a cash bonus payable once the results for the year have been determined. 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 independent advice if required. to external, With the uncertainty associated with the impacts of the COVID-19 pandemic on the Company’s performance and position, the decision was made in June 2020 for Executive pay to be frozen for the year ended 30 June 2021. (iii) Long-term incentive The long-term equity incentive plan implemented in FY2021 has been designed to align a portion of Executive Remuneration with long term shareholder value. (ii) Short-term incentive the Executive Management The Short-term incentive (STI) scheme is designed to reward 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. team for their The JCurve Solutions Equity Incentive Plan (EIP) was approved by shareholders at the Annual General Meeting held on 22 November 2016 and reapproved on 19 November 2019. On 16 March 2021 performance rights totalling 4,100,000 performance rights were issued to employees under the EIP. The performance rights under all three tranches are subject to a performance condition and a service condition and vest on 31 January 2022, 30 June 2022 and 31 January 2023. For all members of the Executive Management Team, with the uncertainty associated with the impacts of the COVID-19 pandemic on the Company’s performance and position, the decision was made in June 2020 for the Executive teams entitlement to bonuses for the years ended 30 June 2020 and 30 June 2021 to be waived. The 4,100,000 of the performance rights issued were to Executive team members as follows: 13 JCurve Solutions Limited DIRECTORS’ REPORT (continued) Remuneration report (Audited) (continued) Vesting Date – 31 January 2022 Vesting Date – 30 June 2022 Vesting Date – 31 January 2023 Executives Stephen Canning James Aulsebrook Katrina Doring Arthur Fernandez James Butler Nil Nil Nil Nil 500,000 1,000,000 600,000 500,000 500,000 500,000 Nil Nil Nil Nil 500,000 As at 30 June 2021, the remaining performance rights issued to Executive team members from the tranches issued on 7 February 2020 are as follows: Vesting Date – 31 January 2022 Vesting Date – 31 January 2023 Executives Stephen Canning James Aulsebrook Katrina Doring Arthur Fernandez 1,000,000 600,000 500,000 500,000 1,000,000 600,000 500,000 500,000 4) Remuneration of key management personnel Table 1: Key Management Personnel remuneration for the year ended 30 June 2021: Directors Short-term employee beneﬁts Post-employment Equity Total Director’s Bonuses / short-term Other Directors Mark Jobling (1) Chairman/Director (non-executive) Bruce Hatchman (2) Chairman/Director (non-executive) David Franks (3) Director (non-executive) Graham Baillie Director (non-executive) Martin Green (4) Director (non-executive) Total Directors’ Fees Total Directors’ Fees 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 Fees $ 72,500 60,000 69,577 84,646 35,000 60,000 60,000 50,968 30,000 - 267,077 55,614 Commission beneﬁts Superannuation $ $ $ Shares Total Performance $ $ Related % - - - - - - - - - - - - - - - - - - - - - - - - - - 18,925 13,000 3,325 5,700 5,700 4,842 - - 27,950 23,542 - - - - - - - - - - - - 72,500 60,000 88,502 97,646 38,325 65,700 65,700 55,810 30,000 - 295,027 279,156 - - - - - - - - - - - - (1) Mark Jobling Chairman from 18 January 2021 and remains in this position as at the date of this report. (2) Bruce Hatchman Chairman from 1 July 2020 to 17 January 2021. Remains a non-executive director as at the date of this report. (3) Resigned effective 18 January 2021. (4) Appointed effective 18 January 2021. 14 JCurve Solutions Limited DIRECTORS’ REPORT (continued) Remuneration report (Audited) (continued) Table 2: Key Management Personnel remuneration for the year ended 30 June 2021: Executives Short-term employee beneﬁts Long-term Post- employment Other Equity Total Other Bonuses / short-term Salary Commission (7) beneﬁts (5) $ $ $ Long service leave (6) $ 2021 329,943 - 26,972 - 2020 333,453 50,768 17,195 (2,765) Superannuation Other Performance Shares/ or CPF $ (8) $ Total Performance $ Related % 363,478 404,727 2% 13% Executives Stephen Canning Chief Executive Officer James Aulsebrook Chief Financial Officer Kate Massey (1) Chief Marketing Officer Katrina Doring Chief Operating Officer Peter Choo (2) Product Strategy Director Arthur Fernandez (3) GM JCS Asia and GM Riyo James Butler (4) Chief Marketing Officer 2021 186,000 - 2020 186,000 19,375 2021 2020 31,859 175,000 4,935 25,428 2021 182,500 - 2020 175,000 10,000 2021 99,615 - 2020 175,000 19,375 12,182 6,926 3,216 6,687 8,807 11,983 (941) 5,016 2021 181,171 2020 199,246 - 3,015 14,982 (5,575) 2021 2020 55,565 - - - 5,315 - 132 2,643 17,670 19,511 6,842 19,041 17,337 17,575 6,230 1,319 (4,258) 6,709 1,577 993 (3,141) 1,287 9,463 18,466 - - - - 12,119 13,328 4,040 - - - - - 45,224 - - - - - - - - - Rights $ 6,431 3,433 3,858 1,553 (767) 1,400 225,940 234,684 87,051 234,265 3,215 1,400 213,436 216,951 (767) 1,189 104,229 220,333 3,215 767 211,487 210,781 3,234 68,154 - - 2% 9% 5% 11% 1% 5% -1% 9% 2% 2% 5% - 2% 9% Total Executive Rem. 2021 1,066,653 Total Executive Rem. 2020 1,243,699 4,935 127,961 70,533 42,232 408 7,543 67,603 90,564 45,224 18,419 1,273,775 - 9,742 1,521,741 (1) Resigned effective 4 September 2020. (2) Resigned effective 26 January 2021. (3) Appointed General Manager of Riyo – 1 October 2020. Change of Job Title from 1 July 2021 to Chief Growth Officer. (4) Appointed as a Key Management Personal (KMP) effective 8 March 2021. (5) Other short-term beneﬁts include car parking expenses for Stephen Canning, Kate Massey, Katrina Doring, Peter Choo as well as annual leave accrued for each Executive Team Member as per Corporations Regulation 2M.3.03(1) Item 6. (6) Other long-term beneﬁts as per Corporations Regulation 2M.3.03(1) Item 8. (7) The bonuses or commissions included in the above table are those which have been paid during the particular ﬁnancial year. (8) Other beneﬁts include termination beneﬁts paid to Kate Massey. 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. 15 JCurve Solutions Limited DIRECTORS’ REPORT (continued) Remuneration report (Audited) (continued) Arrangements relating to remuneration of the Company’s Executive Management Team currently in place are set out below: Executive Title Term of agreement Current base salary excluding superannuation (*) Contractual termination beneﬁts (***) Stephen Canning Chief Executive Officer James Aulsebrook Chief Financial Officer Katrina Doring Chief Operating Officer Arthur Fernandez Chief Growth Officer James Butler (**) Chief Marketing Officer Commenced 1 August 2019 on a rolling contract Commenced 18 April 2016 on a rolling contract Commenced 5 July 2016 on a rolling contract Commenced 18 December 2018 on a rolling contract Commenced 8 March 2021 on a rolling contract S$327,000 6 months base salary $200,000 $195,000 3 months base salary 3 months and 1 week base salary S$195,000 3 months base salary S$180,000 3 months base salary (*) Current base salaries excluding superannuation are quoted for the year commencing 1 July 2021 unless otherwise noted below. They are reviewed annually by the Remuneration Committee. There was a pay freeze for the year ended 30 June 2021 on all staff wages as a result of the Covid-19 pandemic. The salaries recorded in Table 2 are for the years ending 30 June 2021 and 30 June 2020. (**) Base salary increase to S$189,000 from 8 September 2021. (***) As at the date the Remuneration Report is approved. The service agreement contracts outlined above may be terminated in the following circumstances: (i) 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 (ii) 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: 2021 $ Total proﬁt/(loss) for the year Normalised EBITDA Share price at year end ($) Increase/(decrease) in share price Dividends paid 152,255 1,234,954 0.058 61% - 2020 $ (298,804) 670,501 0.036 6% - 2019 $ 338,114 852,589 0.034 10% - 2018 $ 847,267 979,931 0.031 282% - 2017 $ 454,286 801,920 0.011 83% - The remuneration of JCurve Solutions Executives outlined in Table 2 has consisted primarily of salaries and superannuation. Performance related remuneration was 2% 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 2020 Annual General Meeting The 2020 JCurve Solutions Remuneration Report resolution was carried by a poll, with the results of 89.70% in favour and therefore in excess of 75% in favour of the resolution. Comments raised by shareholders during the course of the Annual General Meeting were responded to by the Directors during the meeting. 7) Details of share-based compensation With the exception of the following performance rights outlined in tables 1 and 2 below, no other long term incentives have been issued to employees or Directors of the Company. 16 JCurve Solutions Limited DIRECTORS’ REPORT (continued) Remuneration report (Audited) (continued) 7) Details of share-based compensation (continued) Table 1: Performance rights issued to members of the Executive Management Team under the JCurve Solutions Equity Incentive Plan on 16 March 2021 Executives Stephen Canning James Aulsebrook Katrina Doring Arthur Fernandez James Butler Vesting Date – 31 January 2022 Vesting Date – 30 June 2022 Vesting Date – 31 January 2023 Nil Nil Nil Nil 500,000 1,000,000 600,000 500,000 500,000 500,000 Nil Nil Nil Nil 500,000 Table 2: Performance rights issued to members of the Executive Management Team under the JCurve Solutions Equity Incentive Plan on 7 February 2020 Vesting Date – 31 January 2022 Vesting Date – 30 June 2022 Vesting Date – 31 January 2023 Executives Stephen Canning James Aulsebrook Kate Massey Katrina Doring Peter Choo Arthur Fernandez 1,000,000 600,000 500,000 500,000 500,000 500,000 1,000,000 600,000 500,000 500,000 500,000 500,000 1,000,000 600,000 500,000 500,000 500,000 500,000 Table 3: Performance rights issued to members of the Executive Management Team under the JCurve Solutions Equity Incentive Plan on 7 February 2020 which expired during the year Executives Stephen Canning James Aulsebrook Kate Massey (1) Katrina Doring Peter Choo (2) Arthur Fernandez Table 4: Executives Stephen Canning James Aulsebrook Katrina Doring Arthur Fernandez James Butler Vesting Date – 31 January 2022 Vesting Date – 30 June 2022 Vesting Date – 31 January 2023 1,000,000 600,000 500,000 500,000 500,000 500,000 Nil Nil 500,000 Nil 500,000 Nil Nil Nil 500,000 Nil 500,000 Nil Performance rights issued which formed part of remuneration during the year ended 30 June 2021: 2021 Plan Value of total performance Value of performance rights granted $ 13,741 8,245 6,871 6,871 14,498 rights lapsed $ - - - - - Total value of performance Value of performance rights % rights granted, exercised and lapsed $ 13,741 8,245 6,871 6,871 14,498 included in remuneration remuneration consisting of for the year $ 3,093 1,856 1,546 3,234 1,546 shares for the year 0.9% 0.8% 0.7% 0.7% 4.8% (1) Forfeited 4 September 2020 as the performance condition accompanying the performance rights was not met. (2) Forfeited 26 January 2021 as the performance condition accompanying the performance rights was not met. 17 JCurve Solutions Limited DIRECTORS’ REPORT (continued) Remuneration report (Audited) (continued) 7) Details of share-based compensation (continued) The value of each performance right granted under each tranche of the equity incentive plan was as follows: (1) Tranche one: $0.0058 per performance right; (2) Tranche two: $0.0137 per performance right (3) Tranche three: $0.0095 per performance right For further details on the Employee Share Plan, please refer to Note 26. Table 5: Performance rights issued which formed part of remuneration during the year ended 30 June 2021: 2020 Plan Executives Stephen Canning James Aulsebrook Kate Massey Katrina Doring Peter Choo Arthur Fernandez Value of total performance Value of performance rights granted $ 7,625 4,575 3,812 3,812 3,812 3,812 rights lapsed $ - - - - - - Total value of performance Value of performance rights % rights granted, exercised and lapsed $ 7,625 4,575 3,812 3,812 3,812 3,812 included in remuneration remuneration consisting of for the year $ 3,338 2,003 (776) 1,669 (776) 1,669 shares for the year 0.9% 0.9% -0.1% 0.7% -0.1% 0.8% The value of each performance right granted under each tranche of the equity incentive plan was as follows: (1) Tranche one: $0.0013 per performance right; (2) Tranche two: $0.0026 per performance right (3) Tranche three: $0.0037 per performance right For further details on the Employee Share Plan, please refer to Note 26. Table 6: Performance rights issued which formed part of remuneration during the year ended 30 June 2020: 2020 Plan Executives Stephen Canning James Aulsebrook Kate Massey Katrina Doring Peter Choo Arthur Fernandez Value of total performance Value of performance rights granted $ 7,625 4,575 3,812 3,812 3,812 3,812 rights lapsed $ - - - - - - Total value of performance Value of performance rights % rights granted, exercised and lapsed $ 7,625 4,575 3,812 3,812 3,812 3,812 included in remuneration remuneration consisting of for the year $ 1,533 920 766 766 766 766 shares for the year 0.4% 0.4% 0.3% 0.4% 0.3% 0.4% For further details on the Employee Share Plan, please refer to Note 26. Table 7: Performance rights issued which formed part of remuneration during the year ended 30 June 2020: 2017 Plan Executives Stephen Canning James Aulsebrook Kate Massey Katrina Doring Peter Choo Value per performance right granted $ 0.0055 0.0055 0.0055 0.0055 0.0055 Value of total performance rights granted $ 24,750 8,250 8,250 8,250 8,250 Value of performance rights lapsed $ - - - - - Total value of performance rights granted,exercised and lapsed $ 24,750 8,250 8,250 8,250 5,500 Value of performance rights included in remuneration for the year % remuneration consisting of shares for the year $ 1,899 633 633 633 422 0.5% 0.3% 0.3% 0.3% 0.2% For further details on the Employee Share Plan, please refer to Note 26. 18 JCurve Solutions Limited DIRECTORS’ REPORT (continued) Remuneration report (Audited) (continued) 8) Shareholdings of Key Management Personnel Ordinary shares held in JCurve Solutions Limited (number) Balance 01 Jul 20 Granted as remuneration Bought back under employee share plan Net Change Other Balance 30 Jun 21 30 June 2021 Directors Bruce Hatchman Mark Jobling (1) Graham Baillie Martin Green David Franks (2) Executives Stephen Canning James Aulsebrook Katrina Doring Arthur Fernandez James Butler 30 June 2020 Directors Bruce Hatchman David Franks Mark Jobling Graham Baillie (3) Executives Stephen Canning James Aulsebrook Kate Massey Katrina Doring Peter Choo Arthur Fernandez 3,500,000 51,204,301 83,124,215 - 4,206,174 3,233,418 - 1,975,534 600,000 - 3,500,000 4,206,174 51,204,301 - 3,233,418 - 665,000 1,975,534 455,000 600,000 - - - - - - -- - - - - - - - - - - - - - - - - (500,000) - - (4,206,174) - - - 800,000 - 3,500,000 50,704,301 83,124,215 - - 3,233,418 - 1,975,534 1,400,000 - (3,906,174) 143,937,468 - - - - - -- - - - - - - - - - - - - - - - - - - - 83,124,215 - - - - - - 3,500,000 4,206,174 51,204,301 83,124,215 3,233,418 - 665,000 1,975,534 455,000 600,000 83,124,215 148,963,642 Total 147,843,642 Balance 01 Jul 19 Granted as remuneration Bought back under employee share plan Net Change Other (*) Balance 30 Jun 20 Total 65,839,427 (1) The 500,000 net change in shares for Mark Jobling was an allocation from the settlement of the Estate of Ian Jobling. (2) David Franks resigned as a Non Executive Director on 18 January 2021. The 4,206,174 shares outlined as a net change other is reﬂective of David Franks no longer being a Director of the Company. (3) Graham Baillie became a Non Executive Director on 26 August 2019. The 83,124,215 shares outlined above were held before Graham Baillie became a Non Executive Director. 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 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 Automic Company secretarial services (1) Directors Fees (included in Table 1 and including Superannuation) Share registry fees 2021 $ 26,200 38,325 4,153 68,678 2020 $ 54,201 65,700 7,091 126,992 (1) Company secretarial service fees, director fees and share registry fees for the period while David Franks was a Director (1 July 2020 to 18 January 2021) amounted to $68,678 net of GST excluding out of pocket expenses (2020: $126,992) and were provided on commercial terms. Automic Group invoices JCurve Solutions for David Franks’ Directors fees and superannuation, which has been included in Section 4, Table 1 of the Remuneration Report. The share registry fees were provided on commercial terms. Sales to Related Parties Tomorrow Entertainment (1) Customer purchases 2021 $ - - 2020 $ 35,419 35,419 (1) Tomorrow Entertainment Holdings Pte Ltd (Tomorrow Entertainment), a Company which Mark Jobling is a Director, was a customer of the Group until 27 July 2020. The Group did not invoice Tomorrow Entertainment in the year ended 30 June 2021 (2020: $35,419 invoiced during the year ended 30 June 2020). The services sold to Tomorrow Entertainment were at commercial rates and on commercial terms. Sales to and purchases from related parties are made in arm’s length transactions both at normal market prices and on normal commercial terms. Outstanding balances at year-end are unsecured, interest free and settlement occurs in cash. End of Remuneration Report This report is made in accordance with a resolution of the directors, pursuant to section 298(2)(a) of the Corporations Act 2001. Mark Jobling Chairman 24 August 2021 20 Tel: +61 2 9251 4100 Fax: +61 2 9240 9821 www.bdo.com.au Level 11, 1 Margaret St Sydney NSW 2000 Australia DECLARATION OF INDEPENDENCE BY GARETH FEW TO THE DIRECTORS OF JCURVE SOLUTIONS LIMITED As lead auditor of JCurve Solutions Limited for the year ended 30 June 2021, I declare that, to the best of my knowledge and belief, there have been: 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and 2. No contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of JCurve Solutions Limited and the entities it controlled during the period. Gareth Few Director BDO Audit Pty Ltd Sydney 24 August 2021 BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. JCurve Solutions Limited CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2021 Consolidated ($) Revenue Cost of goods sold Gross proﬁt Other income Employee beneﬁts expenses Other employee related expenses IT and communications expenses Advertising and marketing expenses Professional fees Occupancy expenses Travel expenses Depreciation and amortisation expenses Bad debt expenses Finance income/(expense) Due diligence costs Other expenses Proﬁt/(loss) before income tax Income tax expense Proﬁt/(loss) for the year Other comprehensive income (exchange differences on translation of foreign operations) Total comprehensive proﬁt/(loss) for the year Basic earnings per share (cents per share) Diluted earnings per share (cents per share) Notes 3 3 4 4 4 5 6 6 2021 10,635,680 (1,561,183) 9,074,497 339,805 (5,466,726) (484,945) (490,450) (96,039) (1,169,462) (111,407) (12,078) (864,271) (1,182) (81,997) (27,840) (312,259) 295,646 (143,391) 152,255 (53,812) 2020 11,213,413 (1,707,326) 9,506,087 385,907 (6,220,837) (558,685) (524,792) (56,849) (933,900) (85,342) (165,405) (817,201) (193,888) (44,349) (54,604) (381,361) (145,219) (153,585) (298,804) (2,806) 98,443 (301,610) 0.05 0.05 (0.09) (0.09) The above consolidated statement of proﬁt or loss and other comprehensive income should be read in conjunction with the accompanying notes. 22 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2021 JCurve Solutions Limited Consolidated ($) Notes 2021 2020 Assets Current Assets Cash and cash equivalents Trade and other receivables Other ﬁnancial assets Other current assets Total Current Assets Non-Current Assets Property, plant and equipment Intangible assets Right-of-use assets Deferred tax asset Total Non-Current Assets Total Assets Liabilities Current Liabilities Trade and other payables Unearned income Current tax liability Lease liabilities Provisions Total Current Liabilities Non-Current Liabilities Unearned income Deferred tax liabilities Lease liabilities Provisions Total Non-Current Liabilities Total Liabilities Net Assets Equity Share capital Reserves Accumulated losses Total Equity 7 8 10 9 11 12 13 5 14 15 16 17 15 5 16 17 18 19 5,101,831 1,930,098 26,760 909,717 7,968,406 133,942 3,057,735 1,719,227 1,568,848 6,479,752 14,448,158 2,318,443 2,682,868 502,422 524,391 445,877 6,474,001 136,027 1,373,385 1,253,181 137,138 2,899,731 9,373,732 5,074,426 17,586,326 1,689,266 (14,201,166) 5,074,426 4,152,349 2,265,193 10,460 866,441 7,294,443 38,988 3,129,266 1,977,341 1,510,368 6,655,963 13,950,406 2,245,754 2,076,493 270,383 468,913 437,219 5,498,762 220,443 1,646,765 1,533,509 91,443 3,492,160 8,990,922 4,959,484 17,588,248 1,825,051 (14,453,815) 4,959,484 The above consolidated statement of ﬁnancial position should be read in conjunction with the accompanying notes. 23 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2021 JCurve Solutions Limited Consolidated ($) Inﬂows / (Outﬂows) 2021 2020 Notes Cash ﬂows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Interest received Interest (paid)/refunded Income tax received/(paid) Net cash provided by operating activities 7 Cash ﬂows used in investing activities Payments for property, plant and equipment Cash paid for the purchase of the Creative Quest business and assets Cash paid for the purchase of the Spectrum business and assets Net cash used in investing activities Cash ﬂows used in ﬁnancing activities Repayment of principal of leases Net cash used in investing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at 1 July Effects of exchange rate changes on cash and cash equivalents 12,992,900 (10,866,805) 5,390 (4,137) (279,826) 1,847,522 12,806,601 (12,489,748) 7,051 (3,413) (39,914) 280,577 (92,697) (28,339) (243,969) - (336,666) (552,231) (552,231) 958,625 4,152,349 (9,143) - (352,383) (380,722) (512,845) (512,845) (612,990) 4,765,339 - Cash and cash equivalents at 30 June 7 5,101,831 4,152,349 The above consolidated statement of cash ﬂows should be read in conjunction with the accompanying notes. 24 JCurve Solutions Limited CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2021 Consolidated ($) Share Capital Accumulated Losses Equity Beneﬁts Reserve Total 17,588,248 - (14,155,011) (298,804) 1,818,117 - 5,251,354 (298,804) - - - - - (2,806) (2,806) (298,804) (2,806) (301,610) - - 9,741 9,741 9,741 9,741 As at 1 July 2019 Loss after tax for the year Other comprehensive income (exchange differences on translation of foreign operations) Transactions with owners in their capacity as owners: Issued rights under employee incentive scheme Balance at 30 June 2020 17,588,248 (14,453,815) 1,825,051 4,959,484 As at 1 July 2020 Total comprehensive proﬁt for the year Other comprehensive income (exchange differences on translation of foreign operations) Transactions with owners in their capacity as owners: Shares issued Issued rights under employee incentive scheme Reclassiﬁcation of expired options and performance rights 17,588,248 - (14,453,815) 152,255 1,825,051 - 4,959,484 152,255 - - - (53,812) (53,812) 152,255 (53,812) 98,443 (1,922) - - - - 18,421 - 100,394 (100,394) (1,922) 18,421 - (1,922) 100,394 (81,973) 16,499 Balance at 30 June 2021 17,586,326 (14,201,166) 1,689,266 5,074,426 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 Page 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 27 28 29 30 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 Right of use assets Trade and other payables Unearned income Lease liabilities Provisions Share capital Reserves Risk Critical judgements, estimates and assumptions Financial instruments and risk management Unrecognised items Contingencies Events occurring after the reporting period Other information Commitments Statement of signiﬁcant accounting policies Share-based payment plans Business combinations Renumeration of auditors Related party transactions Parent entity ﬁnancial information 26 27 27 28 30 31 34 34 36 36 37 37 38 40 41 41 42 42 43 44 45 45 49 49 49 50 51 52 53 53 54 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 expansion of territories into the Philippines for the sale of Enterprise Resource Planning (ERP) solutions; 2) Further development of the Riyo Service Management Platform and building up a recurring customer base; 3) The purchase of Creative Quest to provide digital marketing capabilities. 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 2021, considered the business from a product perspective and identiﬁed ﬁve reportable segments: • ERP – AU: ERP cloud-based Business Management solutions and associated consulting services sold to Australian and New Zealand customers; • ERP – Asia: ERP cloud-based Business Management solutions and associated consulting services sold to South East Asian customers; • TEMS - The development and marketing of Telecommunications Expense Management Solutions (JTEL and Full Circle Group) sold to Australian customers; • Riyo – The development and sale of service management and scheduling software; and • Creative Quest – Providing digital marketing services The group/head office is a cost centre and is not a reportable operating segments. The results of these operations are included in the unallocated column in the segment information below. The Group operates in two geographical segments being Australasia (Australia and New Zealand) along with South East Asia. 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 recognized revenue in FY2021. 27 JCurve Solutions Limited NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 2: SEGMENT REPORTING (continued) ( 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 2021 (including the comparative period) is as follows: Year ended 30 June 2021 Total revenue Total cost of sales Gross proﬁt Other income ERP - AU TEMS Riyo (*) ERP - Asia Creative Quest Unallocated Total 7,743,183 1,629,449 (1,226,511) - 6,516,672 1,629,449 - 311,259 153,940 (5,161) 148,779 1,402 1,002,403 106,705 (245,731) (83,780) 756,672 22,925 - - - 201 - 26,943 10,635,680 (1,561,183) 9,074,497 339,805 Total expenditure excluding (4,168,468) (869,676) (1,087,798) (1,188,632) (22,029) (1,782,053) (9,118,656) cost of sales Total proﬁt/(loss) before tax 2,348,204 1,071,032 (937,617) (431,759) 896 (1,755,110) 295,646 Year ended 30 June 2020 Total revenue Total cost of sales Gross proﬁt Other income ERP - AU TEMS Riyo (*) ERP - Asia 8,070,453 (1,375,892) 6,694,561 3,591 2,064,551 - 2,064,551 277,443 75,117 (11,116) 64,001 104,589 1,003,292 (320,318) 682,974 284 All other segments - - - - Total 11,213,413 (1,707,326) 9,506,087 385,907 Total expenditure excluding (5,210,941) (1,065,107) (928,680) (1,167,919) (1,664,566) (10,037,213) cost of sales Total proﬁt/(loss) before tax 1,487,211 1,276,887 (760,090) (484,661) (1,664,566) (145,219) (*) All costs associated with the Riyo development of the platform and solution have been expensed with a small portion eligible research and development, with research and development incentive income recognised for the year ended 30 June 2020. NOTE 3: REVENUE AND OTHER INCOME Revenue (*) Enterprise Resource Planning (ERP) solutions – JCurve ERP and NetSuite (Australasia) Enterprise Resource Planning (ERP) solutions – NetSuite (South East Asia) Enterprise Resource Planning (ERP) solutions - MYOB Advanced Telecommunications expense management solutions Riyo solutions Digital marketing services Other Income Research and Development incentive JobKeeper subsidy Interest income Sundry Income (*) Reﬂects revenue in accordance with AASB 15. 28 Consolidated ($) 2021 7,743,183 1,002,403 - 1,629,449 153,940 106,705 2020 8,015,698 1,003,292 54,755 2,064,551 75,117 - 10,635,680 11,213,413 - 304,500 6,960 28,345 104,589 273,000 8,062 256 339,805 385,907 JCurve Solutions Limited NOTES TO THE FINANCIAL STATEMENTS (continued) 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. 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; The performance obligation for providing Telecommunication Expense Management Solutions is satisﬁed over the contracted period; The performance obligation for the implemented Riyo software is satisﬁed when the Riyo software has been installed and is operating materially as contractually required; and The performance obligation for providing digital marketing services is satisﬁed as the services are delivered over the contracted period. 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. A separate performance obligation exists when a customer has purchased business consulting or initial process design advice in the form of a business requirements document. 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 business consulting is when the advice is delivered. The performance obligation for providing Telecommunication Expense Management solutions remains throughout the contract period so is satisﬁed over the contract period. The performance obligation for the implemented Riyo software is satisﬁed at the point in time when the Riyo software has been installed and is operating materially as contractually required. It is when the customer has full access to and control of the Riyo software. The performance obligation for providing digital marketing services is satisﬁed as the services are delivered. 29 JCurve Solutions Limited NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 4: EXPENSES Consolidated ($) 2021 315,055 169,890 484,945 51,278 532,851 280,142 864,271 295,027 723,659 92,263 58,513 1,169,462 2020 437,978 120,707 558,685 42,850 500,247 274,104 817,201 279,156 507,279 87,579 59,886 933,900 Other employee related expense – superannuation Other employee related expense – excluding superannuation Depreciation of plant and equipment Depreciation of right of use asset Amortisation of intangibles Directors’ Fees (includes superannuation) Consultancy Fees Audit Fees Company Secretarial Fees (includes fees paid to non-related parties overseas) 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. 30 NOTES TO THE FINANCIAL STATEMENTS (continued) JCurve Solutions Limited NOTE 5: INCOME TAX Income tax recognised in proﬁt or loss The major components of tax beneﬁt/(expense) are: Current tax beneﬁt/(expense) (i) Origination and reversal of temporary differences Under/(over) provision from prior years - current tax Total tax beneﬁt/(expense) (i) 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/(loss) before tax Income tax expense calculated at 26% (2020: 27.5%) Tax effect of amounts which are not taxable/(deductible) in calculating taxable income: Permanent differences Temporary differences Adjustments for current tax of prior periods Research and development incentive Differences in overseas tax rates Tax losses not recognised Carried forward capital losses previously not brought to account now recognised and realised on the sale of capital assets Carried forward tax losses previously not brought to account now recognised Reduction in net deferred tax liabilities due to change in company income tax rate (to 26% from 1 July 2020) Under/(over) provision in prior years Income tax beneﬁt/(expense) reported in the Statement of Proﬁt or Loss and other Comprehensive Income Deferred Taxes (Non-Current) Analysis of deferred tax assets: Deductible temporary differences available to offset against future taxable income Deferred expenditure Lease liabilities Accruals and provisions Tax losses available to offset against future taxable income Analysis of deferred tax liabilities: Plant and equipment Deferred license revenue Right-of-use asset Other Net Deferred Tax Asset/(Liability) 31 Consolidated ($) 2021 2020 (529,197) 331,860 53,946 (143,391) (374,969) 224,278 (2,894) (153,585) 295,646 (76,868) (12,027) (8,696) - (20,723) - (88,684) (5,036) - 25,633 10,705 11,582 (145,219) 39,935 (3,339) (17,936) - (21,275) (37,357) (90,361) - (125,556) 60,483 23,440 (2,894) (143,391) (153,585) Consolidated ($) 2021 2020 200,974 444,393 327,266 596,215 286,054 520,630 430,585 273,099 1,568,848 1,510,368 15,532 787,428 429,807 140,618 1,373,385 (195,463) 4,238 1,015,297 514,109 113,121 1,646,765 (136,397) JCurve Solutions Limited NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 5: INCOME TAX (continued) (1) Accounting policy (i) Income tax Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance date. Deferred income tax is provided on all temporary differences at the balance date between the tax bases of assets and liabilities and their carrying amounts for ﬁnancial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences except: when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting proﬁt nor taxable proﬁt or loss; or when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable proﬁt will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except: when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting proﬁt nor taxable proﬁt or loss; or 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. (ii) 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. 32 JCurve Solutions Limited NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 5: INCOME TAX (continued) (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 $413,556 (2020: $386,351 unrecognised). The deductible temporary differences and tax losses do not expire under current legislation. Deferred tax assets totaling $103,389 (2020: $106,247) 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 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. JCurve Solutions Asia Pte Ltd is a tax resident entity of Singapore and current and deferred tax amounts are accounted for the company based on JCurve Solutions Asia Pte Ltd as a taxpayer on its own in Singapore. JCurve Solutions Philippines Inc. is a tax resident entity of the Philippines and current and deferred tax amounts are accounted for the company based on JCurve Solutions Philippines Inc. as a taxpayer on its own in the Philippines. 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) and 5 (4). The Australian 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 Solutionsfor 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. 33 NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 6: EARNINGS PER SHARE Consolidated JCurve Solutions Limited Earnings used for calculation of basic and diluted earnings per share Proﬁt/(loss) from operations - basic earnings per share Proﬁt/(loss) from operations - diluted earnings per share Weighted average number of shares used for calculation of basic and diluted EPS Weighted average number of shares 2021 $ 152,255 152,255 2020 $ (298,804) (298,804) Number Number 328,094,174 327,856,900 Cents per share Cents per share 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) 0.05 0.05 (0.09) (0.09) (1) Accounting policy 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 ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. (4) Tax Consolidation 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. JCurve Solutions Asia Pte Ltd is a tax resident entity of Singapore and current and deferred tax amounts are accounted for the company based on JCurve Solutions Asia Pte Ltd as a taxpayer on its own in Singapore. JCurve Solutions Philippines Inc. is a tax resident entity of the Philippines and current and deferred tax amounts are accounted for the company based on JCurve Solutions Philippines Inc. as a taxpayer on its own in the Philippines. 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) and 5 (4). NOTE 7: CASH AND CASH EQUIVALENTS The Australian 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 Solutionsfor 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. Consolidated ($) 2020 2021 2020 Cash at bank and on hand 5,101,831 5,101,831 4,152,349 4,152,349 866,441 Cash at bank earns interest at ﬂoating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between one day and three months, depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates. At 30 June 2021, the Group has no committed borrowing facilities (2020: Nil). 34 NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 7: CASH AND CASH EQUIVALENTS (continued) JCurve Solutions Limited Reconciliation of proﬁt/(loss) for the year after tax to net cash ﬂows from operating activities Proﬁt/(loss) for the year Non-cash ﬂows in operating proﬁt: Depreciation and amortisation from continuing operations Equity settled share based payment (Increase)/decrease in assets: Trade and other receivables Other current assets Other ﬁnancial assets Current tax receivable/payable Deferred tax assets Increase/(decrease) in liabilities: Trade and other payables – Current Unearned income Provisions – Current Provisions – Non-current Deferred tax liabilities Net cash provided by or from operating activities (1) Accounting policy Consolidated ($) 2021 2020 152,255 (298,804) 864,271 18,421 335,096 (43,275) (16,300) 232,040 (58,480) 60,563 521,958 8,658 45,695 (273,380) 1,847,522 817,201 9,741 124,191 59,200 (7) 233,362 (792,975) (631,705) 82,852 105,793 3,032 568,696 280,577 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. 35 NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 8: TRADE AND OTHER RECEIVABLES JCurve Solutions Limited Current: Trade receivables (i) Allowance for doubtful debts (2) Accrued revenue/commissions receivable (ii) Consolidated ($) 2021 2020 1,135,335 (44,779) 839,542 1,347,273 (94,679) 1,012,599 1,930,098 2,265,193 (i) (ii) 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 21(6) for ageing of receivables. The recognition of a contract asset and contract liability on a large ERP customer contract which remains in its implementation stage has been netted off in accordance with AASB 15. The impact from netting off the contract asset is a reduction in accrued revenue of $368,533 and a reduction in unearned income of $368,533. (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. The Group’s accounting policy includes the recognition of credit losses in the allowance for doubtful debts under an expected credit loss (ECL) model. ECLs are a probability weighted estimates 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. (2) Allowance for doubtful debts reconciliation At 30 June 2021, trade receivables of the Group with a nominal value of $44,779 (2020: $94,679) were impaired. The allowance for doubtful debts was $44,779 (2020: $94,679). The movement in the allowance for doubtful debts is as follows: At 1 July Provision for impairment recognised during the year Receivables written of during the year as uncollectable Trade receivables provided for but collected Consolidated ($) 2021 94,679 69,613 (39,599) (79,914) 44,779 2020 71,952 164,512 (128,405) (13,380) 94,679 NOTE 9: OTHER CURRENT ASSETS Consolidated ($) Prepayments Term deposit Deferred expenditure Sundry debtors 2021 599,179 217,835 70,729 21,974 909,717 2020 437,640 217,276 81,284 130,241 866,441 36 JCurve Solutions Limited NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 10: OTHER FINANCIAL ASSETS Security Deposits Consolidated ($) 2021 2020 26,760 26,760 10,460 10,460 NOTE 11: PLANT AND EQUIPMENT Consolidated ($) Plant and equipment, at cost Less accumulated depreciation Net carrying amount Leasehold improvements, at cost Less accumulated depreciation Net carrying amount Make good assets, at cost Less accumulated depreciation Net carrying amount 2021 422,234 (316,265) 105,969 2,740 (2,740) - 55,462 (27,489) 27,973 2020 314,927 (278,975) 35,952 2,740 (2,728) 12 16,299 (13,275) 3,024 Total net carrying amount 133,942 38,988 Consolidated ($) Plant & Equipment Leasehold Improvements Make Good Assets Total 46,536 - 28,286 49 (38,919) 35,952 - 110,506 (3,438) (37,051) 105,970 588 - - - (576) 12 - - - (12) - 6,380 53,504 - - - (3,356) 3,024 - 39,163 - (14,214) 27,973 - 28,286 49 (42,851) 38,988 - 149,669 (3,438) (51,277) 133,942 Reconciliations: Movements: Net carrying amounts as at 30 June 2019 Disposals Additions Foreign currency revaluation Depreciation charges Net carrying amounts as at 30 June 2020 Disposals Additions Foreign currency revaluation Depreciation charges Net carrying amounts as at 30 June 2021 (1) Accounting policy (i) Cost 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. 37 JCurve Solutions Limited NOTES TO THE FINANCIAL STATEMENTS (continued) (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: 2 – 4 years Leasehold improvements: 1 – 6 years The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each ﬁnancial year end. (iii) De-recognition and disposal An item of property, plant and equipment is de-recognised 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 de-recognised. NOTE 12: INTANGIBLE ASSETS Licences (i) Riyo Platform Goodwill Customer relationships (ii) NetSuite customer contracts Pistachio connector Total 2,302,857 470,000 247,208 143,172 139,262 100,000 3,402,499 - - - - (120,000) - - - (1,645) - (68,408) 3,209 - (69,703) 3,314 - (20,000) - - (278,112) 4,879 Year ended 30 June 2020 At 1 July 2019, net of accumulated amortisation and impairment Additions Amortisation FX Revaluation At 30 June 2020, net of accumulated amortisation and impairment 2,302,857 350,000 245,563 77,973 72,873 80,000 3,129,266 Year ended 30 June 2021 At 1 July 2020, net of accumulated amortisation and impairment Additions (ii) Amortisation FX Revaluation At 30 June 2021, net of accumulated amortisation and impairment 2,302,857 350,000 245,563 - - - - (120,000) - - - (13,359) 77,973 226,159 (71,109) (2,263) 72,873 - (66,990) (3,969) 80,000 - (20,000) - 3,129,266 226,159 (278,099) (19,591) 2,302,857 230,000 232,204 230,760 1,914 60,000 3,057,735 (i) License intangible asset The licenses intangible asset reﬂects the carrying value of the unimpaired amount paid for the purchase of the exclusive reseller agreement with NetSuite for the JCurve ERP edition of the NetSuite software. This Agreement with NetSuite provides JCurve Solutions with the exclusive selling rights for the JCurve ERP edition of the NetSuite business software for an indeﬁnite period and was the basis on which Interﬂeet Pty Ltd immediately became a ﬁve-star NetSuite partner on becoming a NetSuite Solution Provider in August 2016. The agreement was the basis from which the Company has built its ERP practice. The NetSuite JCurve ERP reseller agreement provides that in the event of cancellation of the Agreement, the customers of JCurve would be assigned to NetSuite and NetSuite would be required to pay JCurve Solutions a royalty of 30% of the future revenue stream to NetSuite for a 3-year period which along with an increasing level of license commission and service revenue which is generated from the sale of NetSuite editions indicates that it is unlikely that there will be an impairment in future periods. 38 JCurve Solutions Limited NOTES TO THE FINANCIAL STATEMENTS (continued) (ii) Purchase of Creative Quest On 4 June 2021, JCurve Solutions Philippines Inc, a 100% owned subsidiary of JCurve Solutions Limited, purchased the whole of business and assets of Creative Quest Events and Marketing Services, a Philippines-registered company that provides digital marketing services. The purchase price was allocated to property, plant and equipment and customer relationships. The customer relationships intangible asset was assessed to have a useful life of 3 years, the period in which the intangible asset is being amortised on a straight-line basis. Refer to Note 27 for further details on the acquisition. (1) 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. 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. (2) 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. (ii) Useful life of the Riyo Platform The Group has determined that the useful life of the Riyo Platform is ﬁve years with the useful life to be amortised on a straight-line basis over the ﬁve-year period. (3) Impairment testing of intangible assets with indeﬁnite lives (i) Licenses – ERP Australia The licenses intangible asset reﬂects the carrying value of the ERP relationship with Oracle NetSuite. The recoverable amount of the Australian ERP Cash Generating Unit has been determined based on a value in use calculation using cash ﬂow projections covering a 5-year period. The discount rate applied to the value in use calculations was 11.5% (2020: 17%). A long-term growth rate of 7.5% has been assumed as has a terminal value. Based on these value in use calculations, there is no impairment for the year ended 30 June 2021 (2020: Nil). The carrying value of the NetSuite License remains $2,302,857. The carrying value of the ERP Cash Generating Unit includes the licenses intangible asset, the pistachio connector intangible asset and an allocation of group non-current assets. If the discount rate applied was 10% higher the recoverable amount would decrease by $3,215,169 and if the discount rate applied was 10% lower the recoverable amount would increase by $3,935,379. If the long-term growth rate projection applied was 10% lower than the amount forecast, the recoverable amount would decrease by $1,688,882 and if the long-term growth rate projection applied was 10% higher the recoverable amount would increase by $1,721,738. Based on the value in use calculations prepared, even in the instance of a higher discount rate or lower long-term growth rate, the recoverable amount of the Cash Generating Unit exceeds the carrying value. 39 JCurve Solutions Limited NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 12: INTANGIBLE ASSETS (continued) (ii) Goodwill The goodwill balance was recognised on the acquisition of the Spectrum business in December 2018. The recoverable amount of the Asia ERP Cash Generating Unit has been determined based on a value in use calculation using cash ﬂow projections covering a 5-year period. The discount rate applied to the value in use calculations was 12.5% (2020: 18%). A long-term growth rate of 20% has been assumed as has a terminal value. Based on these values in use calculations, there is no impairment for the year ended 30 June 2021 (2020: Nil). The carrying value of the Goodwill balance reduced to $234,398 after revaluation from exchange rate movements. The carrying value of the Asia ERP Cash Generating Unit includes goodwill, the NetSuite customer contracts intangible asset, the customer relationships intangible asset in addition to an allocation of group non-current assets. If the discount rate applied was 10% higher the recoverable amount would decrease by $1,136,720 and if the discount rate applied was 10% lower the recoverable amount would increase by $1,395,273. If the long-term growth rate projection applied was 10% lower than the amount forecast, the recoverable amount would decrease by $1,588,303 and if the long-term growth rate projection applied was 10% higher the recoverable amount would increase by $1,663,830. Based on the value in use calculations prepared, even in the instance of a higher discount rate or lower long-term growth rate, the recoverable amount of the Cash Generating Unit exceeds the carrying value. NOTE 13: RIGHT-OF-USE ASSETS Buildings, at cost Less accumulated depreciation Net carrying amount Office equipment, at cost Less accumulated depreciation Net carrying amount Total net carrying amount Reconciliations: Consolidated ($) 2021 2,648,414 (1,000,971) 1,647,443 88,981 (17,197) 71,784 2020 2,430,876 (470,124) 1,960,752 46,712 (30,123) 16,589 1,719,227 1,977,341 Movements: Buildings Office equipment Net carrying amounts as at 1 July 2019 2,430,876 Disposals Additions Depreciation charges Net carrying amounts as at 30 June 2020 Net carrying amounts as at 1 July 2020 Disposals Additions Depreciation charges Net carrying amounts as at 30 June 2021 - - (470,124) 1,960,752 1,960,752 - 217,538 (530,847) 1,647,443 40 46,712 - - (30,123) 16,589 16,589 - 64,929 (9,734) 71,784 Total 2,477,588 - - (500,247) 1,977,341 1,977,341 - 282,467 (540,581) 1,719,227 JCurve Solutions Limited NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 13: RIGHT-OF-USE ASSETS (continued) (1) Accounting policy A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset. Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is shorter. Where the Group expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any re-measurement of lease liabilities. The Group has elected not to recognise a right-of-use asset for all short-term leases with terms of 12 months or less and leases of low-value assets. Where applicable, lease payments on these assets are expensed to proﬁt or loss as incurred. NOTE 14: TRADE AND OTHER PAYABLES Current: Trade payables (*) Other payables Accrued expenses Consolidated ($) 2021 2020 1,268,183 272,421 777,839 2,318,443 962,809 279,033 1,003,912 2,245,754 (*) Trade payables are non-interest bearing and are normally settled on 30-day terms. Information regarding the effective interest rate and credit risk of current payables is set out in Note 21. (1) Accounting policy Trade payables and other payables are carried at amortised costs and represent liabilities for goods and services provided to the Group prior to the end of the ﬁnancial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. Trade and other payables are presented as current liabilities unless payment is not due within 12 months. NOTE 15: UNEARNED INCOME Current: Enterprise Resource Planning (ERP) solutions - JCurve ERP and NetSuite (Australasia) (1) Enterprise Resource Planning (ERP) solutions - NetSuite (South East Asia) Telecommunications Expense Management solutions (TEMs) Riyo solutions Non-Current: Enterprise Resource Planning (ERP) solutions - JCurve ERP and NetSuite (Australasia) Total Unearned Income Consolidated ($) 2021 2020 1,713,301 1,336,109 720,067 367,364 182,066 67,434 2,682,868 253,638 119,382 2,076,493 136,027 136,027 220,443 220,443 2,818,895 2,296,936 (i) The recognition of a contract asset and contract liability on a large ERP customer contract which remains in its implementation stage has been netted off in accordance with AASB 15. The impact from netting off the contract asset is a reduction in accrued revenue of $368,533 and a reduction in unearned income of $368,533. 41 JCurve Solutions Limited NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 15: UNEARNED INCOME (continued) (1) Accounting policy Unearned income is carried at amortised cost and represents amounts billed to customers in advance of the revenue being recognised in accordance with the revenue recognition policy outlined in Note 3. Unearned income is presented as a current liability unless the performance obligations associated with the revenue will be satisﬁed in greater than 12 months. NOTE 16: LEASE LIABILITIES Current: Lease liabilities Non-Current: Lease liabilities Total Lease Liabilities (1) Accounting policy Consolidated ($) 2021 524,391 2020 468,913 1,253,181 1,533,509 1,777,572 2,002,422 A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Lease payments comprise ﬁxed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred. Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of-use asset, or to proﬁt or loss if the carrying amount of the right-of-use asset is fully written down. The Group has elected not to recognise a lease liability for all short-term leases with terms of 12 months or less and leases of low-value assets. Where applicable, lease payments on these assets are expensed to proﬁt or loss as incurred. NOTE 17: PROVISIONS Current: Annual leave Long service leave Non-current: Long service leave Make good provision Total Provisions Consolidated ($) 2021 2020 425,480 20,397 347,235 89,984 445,877 437,219 60,564 76,574 137,138 583,015 64,350 27,093 91,443 528,662 42 JCurve Solutions Limited NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 17: PROVISIONS (continued) (1) Accounting policy Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outﬂow of resources embodying economic beneﬁts will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognised for future operating losses. When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the Statement of Proﬁt or Loss and Other Comprehensive Income net of any eimbursement. Provisions are measured at the present value or management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reﬂects the risks speciﬁc to the liability. The current pre-tax rate used for discounting purposes is 2.73% (2020: 2.73%). When discounting is used, the increase in the provision due to the passage of time is recognised as an interest expense. NOTE 18: SHARE CAPITAL Ordinary shares issued and fully paid (i) Unissued shares Consolidated ($) 2021 17,380,969 205,357 17,586,326 2020 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 2019 Movement At 30 June 2020 Movement At 30 June 2021 (1) Accounting policy Number 327,856,900 - 327,856,900 486,539 328,343,439 $ 17,382,891 - 17,382,891 (1,922) 17,380,969 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. 43 NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 19: RESERVES JCurve Solutions Limited (1) Accounting policy 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 eimbursement. 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. Equity Beneﬁts Reserve Balance at the start of the year Shares cancelled under Employee Share Plan Reclassiﬁcation of expired options and performance rights Issued rights under Employee Incentive Scheme Balance at the end of the year If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reﬂects the risks Foreign Currency Translation Reserve speciﬁc to the liability. The current pre-tax rate used for discounting purposes is 2.73% (2020: 2.73%). When discounting is used, the increase in the provision due to the passage of time is recognised as an interest expense. Balance at the start of the year Currency translation differences arising during the year Balance at the end of the year Total Reserves (1) Accounting policy Consolidated ($) 2021 1,828,928 - (100,394) 18,421 1,746,955 2020 1,819,187 - - 9,741 1,828,928 Consolidated ($) 2021 (3,877) (53,812) (57,689) 1,689,266 2020 (1,070) (2,807) (3,877) 1,825,051 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 26(i). 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. 44 (i) Fully paid ordinary shares carry one vote per share and carry the right to dividends. NOTE 18: SHARE CAPITAL Ordinary shares issued and fully paid (i) Unissued shares Movement in ordinary shares on issue At 1 July 2019 Movement At 30 June 2020 Movement At 30 June 2021 (1) Accounting policy 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. JCurve Solutions Limited NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 20: 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 19; and (6) Recovery of deferred tax assets – refer to Note 5. NOTE 21: 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 adjusts 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 Lease liabilities Consolidated 2021 5,101,831 1,930,098 217,835 26,760 2020 4,152,349 2,265,193 217,276 10,460 2,318,443 1,777,572 2,245,754 2,002,422 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 2021 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. 45 JCurve Solutions Limited NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 21: FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (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: Year ended 30 June 2021 Financial assets Non-interest bearing: Trade and other receivables Other Current Assets Floating rate: Cash Assets Other Current Assets Financial liabilities Payables Lease Liabilities Year ended 30 June 2020 Financial assets Non-interest bearing: Trade and other receivables Other Current Assets Floating rate: Cash Assets Other Current Assets Financial liabilities Payables Lease Liabilities Consolidated ($) Within 1 year 1 to 5 years Total Weighted average effective interest rate % 1,930,098 691,882 2,621,980 5,101,831 217,835 5,319,666 7,941,646 2,318,443 524,391 2,842,834 2,265,193 649,165 2,914,358 4,152,349 217,276 4,369,625 7,283,983 2,245,754 468,913 2,714,667 - - - - - - - - 1,253,181 1,253,181 - - - - - - - - 1,533,509 1,533,509 1,930,098 691,882 2,621,980 5,101,831 217,835 5,319,666 7,941,646 2,318,443 1,777,572 4,096,015 2,265,193 649,165 2,914,358 4,152,349 217,276 4,369,625 7,283,983 2,245,754 2,002,422 1,533,509 0.08% 0.95% 0.11% 1.52% 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. 46 JCurve Solutions Limited NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 21: FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued) Interest rate risk sensitivity analysis The sensitivity analysis below has been determined based on the exposure to interest rates for both derivative and non-derivative instruments at the reporting date and the stipulated change taking place at the beginning of the ﬁnancial year and held constant throughout the reporting period. A 50-basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the change in interest rates. At reporting date, if interest rates had been 50 basis points higher or lower and all other variables were held constant, the Group’s net proﬁt before tax would increase by $26,585 and decrease by $4,942 respectively (2020: increase by $21,847 and decrease by $5,657). This is mainly attributable to the Group’s exposure to interest rates on its variable rate cash deposits. (4) Price Risk – Equity and Commodity The Group’s exposure to commodity and equity securities price risk is minimal. (5) Foreign Currency Risk The Group is exposed to foreign currency risk from movements in the Australian dollar relative to the Singapore and US Dollar’s as well as the Philippine Peso. Foreign currency risk arises from future transactions and recognizing assets and liabilities denominated in a currency that is not the Group’s functional currency. The Group seeks to limit its exposure to foreign currency risk, by maintaining a bank account denominated in Singapore dollars and is in the process of setting up a Philippine bank account denominated in Philippine Peso so that income received from Asian customers is deposited and held in the overseas currency without the need to transact in multiple currencies. The Group’s exposure to foreign currency risk at the reporting date is as follows (in AUD-translated balances): Consolidated ($) Year ended Cash and cash equivalents Trade and other receivables Other ﬁnancial assets Other current assets Total Current Assets Property, plant and equipment Intangible assets Total Non-Current Assets Total Assets Trade and other payables Unearned income Provisions - current Total current liabilities Total Liabilities Net Assets 2021 255,486 591,239 27,064 76,009 949,798 76,028 488,270 564,298 2020 126,690 398,267 10,460 115,744 651,161 18,318 396,408 414,726 1,514,096 1,065,887 565,380 626,734 155,590 1,347,704 1,347,704 166,392 445,907 422,474 93,743 962,124 962,124 103,763 For the year ended 30 June 2021, if the average exchange rate for AUD:SGD had been 10% lower or higher and all other variables were held constant, the Group’s net proﬁt before tax would decrease by $78,945 and increase by $64,592 respectively (2020: decrease by $53,851 and increase by $44,060). For the year ended 30 June 2021, if the average exchange rate for AUD:PHP had been 10% lower or higher and all other variables were held constant, the Group’s net proﬁt before tax would decrease by $104,163 and increase by $85,224 respectively (2020: decrease by $65,819 and increase by $53,852). 47 JCurve Solutions Limited NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 21: FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued) (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, credit-worthy 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 2021, 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* $ 2021 2020 1,135,335 1,347,273 700,975 730,398 - 167,506 - 195,426 - - 69,138 139,337 61-90 days CI* $ - - +91 days PDNI* $ +91 days CI* $ 197,716 - 238,867 43,244 PDNI CI - Past due not impaired - Considered impaired The receivables which are past due but not considered impaired was $266,854 (2020: $378,205). The provision for doubtful debts as at 30 June 2021 is $44,779 (2020: $94,679). 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. The impact of the Covid-19 pandemic has seen an increasing level of focus on liquidity risk which has included adjustments to the Group’s ﬁnancial modelling and the monthly papers presented to the Board including a 12-month-going concern forecast. 48 JCurve Solutions Limited NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 22: CONTINGENCIES (1) Contingent Liabilities The Group does not have any contingent liabilities. NOTE 23: EVENTS OCCURRING AFTER THE REPORTING PERIOD Since the end of the ﬁnancial year, the following events have occurred which have impacted the operations of the Group: (1) Acquisition of the Thailand assets of Rapid E-Suite Pte Ltd On the 9th of July 2021, the Group completed the acquisition of the Thailand business assets of Rapid E-Suite Pte Ltd, an Oracle NetSuite Member Status Solution Provider with existing 20 customers and which for the year ended 30 April 2021, generated A$0.6m of revenue and an EBITDA of A$0.1m from its Thailand operations. The purchase price for the acquisition was S$250,000 cash paid on completion, S$50,000 cash payable on reaching an agreed non-sales milestone by 9 October 2021 and a further cash earnout component capped at S$500,000 dependent on the sales level for the Thailand operations in the 12 months immediately post- completion of the acquisition. (2) Lockdowns in key operating locations Lockdown restrictions ﬁrst announced on the 25th of June 2021 in New South Wales have been extended until the end of September 2021. Our office in Chatswood remains closed and the Group continues to operate under its business continuity plan in all locations which includes all employees working from home. Shorter lockdowns have been announced in Queensland and Victoria, Singapore and the Philippines. With the exception of the acquisition of the Thailand assets of Rapid E-Suite and the lockdowns outlined above, no other matters or circumstances have arisen since 30 June 2021 that signiﬁcantly affect, or may signiﬁcantly affect: (i) the Group’s operations in future ﬁnancial years, or (ii) the results of those operations in future ﬁnancial years, or (iii) the Group’s state of affairs in future ﬁnancial years. NOTE 24: 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) Lease Commitments Lease commitments are outlined in Note 16. 49 JCurve Solutions Limited NOTES TO THE FINANCIAL STATEMENTS (continued) (i) Accounting policy - Leases Right-of-use assets A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset. Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is shorter. Where the Group expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of-use assets are subject to impairment or adjusted for any remeasurement of lease liabilities. The Group has elected not to recognise a right-of-use asset and corresponding lease liability for all short-term leases with terms of 12 months or less and leases of low-value assets. Where applicable, lease payments on these assets are expensed to proﬁt or loss as incurred. Lease liabilities A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Lease payments comprise of ﬁxed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred. Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: (a) future lease payments arising from a change in an index or a rate used; (b) residual guarantee; (c) lease term; (d) certainty of a purchase option; and (e) termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of-use asset, or to proﬁt or loss if the carrying amount of the right-of-use asset is fully written down. NOTE 25: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (1) Basis of Preparation The ﬁnancial report is a general-purpose 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 classiﬁcation of some prior period comparatives have been adjusted to reﬂect an internal reporting change in the presentation of ﬁnancial statement line items which the Company believes will assist users with their understanding of the Annual Report. There was no net overall proﬁt or loss effect from the reclassiﬁcation. (3) Changes in accounting policies from new accounting standards and interpretations The Directors have reviewed all of the new and revised accounting standards and interpretations issued by the Australian Accounting Standards Board (AASB) for annual reporting periods beginning or after 1 July 2020. It has been determined that none of the new accounting standards and interpretations adopted have a material impact on the Group’s ﬁnancial performance, position or disclosure. (4) Statement of Compliance The ﬁnancial report was authorised for issue on 24 August 2021. 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). 50 JCurve Solutions Limited NOTES TO THE FINANCIAL STATEMENTS (continued) (5) Basis of Consolidation 1) Accounting policy 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 26: SHARE-BASED PAYMENT PLANS (i) Shares issued under Equity Incentive Plan Performance Rights issued during the year ended 30 June 2020 On 7 February 2020, 10,800,000 performance rights (valued at $27,449) were issued to employees under the equity incentive plan that was approved by shareholders at the Annual General Meeting held on 19 November 2019. 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 in three tranches as follows: (1) Tranche one: 3,600,000 performance rights vests of 31 January 2021; (2) Tranche two: 3,600,000 performance rights vests of 31 January 2022; (3) Tranche three: 3,600,000 performance rights vests of 31 January 2023. The Performance Rights under this plan have both a performance and service condition before converting into shares. If the vesting conditions are not met the performance right lapses on the vesting date. During the year ended 30 June 2021, 3,000,000 performance rights (valued at $7,625) were cancelled under the plan when the performance condition associated with the performance rights were not met. The share-based payment expense is recognised in the Statement of Proﬁt or Loss and Other Comprehensive Income evenly over the vesting period. Performance Rights issued during the year ended 30 June 2021 On 16 March 2021, 4,100,000 performance rights (valued at $50,226) were issued to employees under the equity incentive plan that was approved by shareholders at the Annual General Meeting held on 19 November 2019. 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 in three tranches as follows: (1) Tranche one: 500,000 performance rights vests of 31 January 2022; (2) Tranche two: 3,100,000 performance rights vests of 30 June 2022; and (3) Tranche three: 500,000 performance rights vests of 31 January 2023. The Performance Rights under this plan have both a performance and service condition before converting into shares. If the vesting conditions are not met the performance right lapses on the vesting date. The share-based payment expense is recognised in the Statement of Proﬁt or Loss and Other Comprehensive Income evenly over the vesting period. 51 JCurve Solutions Limited NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 27: BUSINESS COMBINATIONS Acquisition of the business and assets of Creative Quest On 4 June 2021, JCurve Solutions Philippines Inc., a 100%-owned subsidiary of the Group purchased the business assets of Creative Quest Events and Marketing Services (Creative Quest), a full-service digital marketing agency domiciled in the Philippines. The purchase price of PHP9,000,000 (A$243,969) was paid on completion (4 June 2021). There are annual vendor incentives in place for a period of three years for the owner of Creative Quest. The annual vendor incentives are contingent on the owner remaining an employee of JCurve Solutions at the anniversary date of completion of the acquisition. Acquisition-related costs of PHP117,500 (A$3,185) were included in due diligence costs in the Statement of Proﬁt or Loss and Other Comprehensive Income for the year ended 30 June 2021. The fair values of the identiﬁable assets acquired as part of the acquisition are as follows: Property, plant and equipment Customer relationships Fair value of identiﬁable net assets Goodwill arising on acquisition Consideration Fair value at acquisition date (PHP) Fair value at acquisition date (A$) 656,989 8,343,011 9,000,000 - 9,000,000 17,810 226,159 243,969 - 243,969 No liabilities were assumed as at the date of the acquisition. Net cash outﬂow arising on acquisition The cash outﬂow on acquisition was PHP9,000,000 (A$243,969). The acquisition of Creative Quest affected the year ended 30 June 2021 consolidated result as follows: Revenue Less costs of goods sold Less expenses Loss before tax 30 June 2021 A$ 106,705 (83,780) (16,665) 6,260 The Group has not disclosed the revenue or proﬁt or loss as though the acquisition date for business combination occurred at the start of the ﬁnancial year as such disclosure would not be reliable with the acquired entities’ ﬁnancial statements being unaudited. The useful life of the customer relationships intangible asset was assessed as 3 years, with the intangible asset being amortised from 4 June 2021 evenly over the 3 year period. 52 JCurve Solutions Limited NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 28: RENUMERATION OF AUDITORS The auditor of JCurve Solutions Limited (the Group) is BDO Audit Pty Ltd. Auditors of the Group – BDO and related network ﬁrms Audit and review of ﬁnancial statements Group (BDO Audit Pty Ltd) Controlled entities (related network ﬁrms) Total audit and review of ﬁnancial statements Total services provided by BDO and related network ﬁrms Other auditors and their related network ﬁrms Audit and review of ﬁnancial statements Controlled entities Total services provided by other auditors (excluding BDO) Consolidated ($) 2021 2020 82,000 2,610 84,610 84,610 6,970 6,970 76,000 2,491 78,491 78,491 7,113 7,113 During the year ended 30 June 2021, local auditors in Singapore and the Philippines were appointed to undertake the local subsidiary audits. NOTE 29: 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 Fleet Manager Pty Ltd Phoneware Pty Ltd Interﬂeet Pty Ltd The Full Circle Group Pty Ltd JCS Tech Solutions Pty Ltd JCurve Solutions Asia Pte Ltd JCurve Mobile Services Pty Ltd JCurve Solutions Philippines Inc Riyo Tech Solutions Pte Ltd Sumptuous Tech Holdings Pte Ltd Australia Australia Australia Australia Australia Australia Singapore Australia Philippines Singapore Singapore % Equity Interest 2021 2020 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 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, JCurve Mobile Services Pty Ltd and JCS Tech Solutions Asia Pte Ltd are all incorporated in Australia. JCurve Solutions Asia Pte Ltd was incorporated on the 22nd of December 2016 and is domiciled in Singapore. Riyo Tech Solutions Pte Ltd and Sumptuous Tech Holdings Pte Ltd were incorporated on the 10th of February and the 5th of February 2020 and are both domiciled in Singapore. 53 JCurve Solutions Limited NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 29: RELATED PARTY TRANSACTIONS (continued) (2) Director and Key Management Personnel Compensation The aggregate compensation made to directors and other key management personnel of the Group is set out below: Short-term employee beneﬁts Post-employment beneﬁts Other long-term beneﬁts Share-based payments Total Compensation Consolidated ($) 2021 1,409,197 140,778 408 18,419 2020 1,669,506 114,105 7,544 9,741 1,568,802 1,800,896 NOTE 30: 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 Net proﬁt for the year 2021 $ 3,365,175 2,632,688 5,997,863 502,391 19,591 521,982 2020 $ 4,529,898 2,412,626 6,942,524 1,968,378 14,662 1,983,040 5,475,881 4,959,484 17,586,326 (13,857,401) 1,746,956 5,475,881 17,588,248 (14,457,693) 1,828,929 4,959,484 Year ended 30 June 2021 $ Year ended 30 June 2020 $ 600,292 190,486 54 JCurve Solutions Limited DIRECTORS’ DECLARATION In the opinion of the directors: (a) the ﬁnancial statements and notes set out on pages 22 to 54 are in accordance with the Corporations Act 2001, including: (i) complying with the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and (ii) giving a true and fair view of the Group’s ﬁnancial position as at 30 June 2021 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 25(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. Mark Jobling Chairman Dated 24 August 2021 55 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 consolidated statement of financial position as at 30 June 2021, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial 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 2021 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 (including Independence Standards) (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. BDO Audit Pty Ltd ABN 33 134 022 870 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 Audit Pty Ltd 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. 56 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. Carrying Value of Intangible Assets Key audit matter How the matter was addressed in our audit At 30 June 2021, the carrying value of Intangible Assets Our audit procedures to address the key audit matter was $3,057,735 as disclosed in Note 12. included, but were not limited to, the following: The assessment of the carrying value of Intangible Assets requires management to make significant accounting judgements and estimates in producing the discounted cash flow models used to determine whether the assets are appropriately carried. An annual impairment test for Intangible Assets is required for indefinite life assets or where there are indicators of impairment under Australian Accounting Standard (AASB) 136 Impairment of Assets. Refer to Note 12 for the detailed disclosures, which include the related accounting policies and the critical accounting judgements and estimates. • • • • • • • Analysing management’s key assumptions used in the discounted cash flow models to determine their reasonableness; Challenging the appropriateness of management’s discount rates used in the discounted cash flow models; Challenging assumptions around timing of future cash flows; Checking the mathematical accuracy of the discounted cash flow model; Performing sensitivity analysis on key assumptions to determine if there would be a significant change to the carrying value of the asset; Assessed the adequacy of the Group’s disclosures in respect of Intangible Assets carrying values and impairment assessment assumptions as disclosed in Note 12 of the financial report; and Consider any additional impairment indicators as per AASB 136 Impairment of Assets and the effects of such on management’s assumptions. 57 Recognition of License and Implementation Revenue Key audit matter How the matter was addressed in our audit AASB 15 Contracts with Customers uses a five step Our audit procedures to address the key audit model to recognise revenue. A number of judgements matter included, but were not limited to, the and estimates are made in order to determine the following: point at which performance obligations are met and revenue can be recognised. 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. The disclosure in connection with the recognition of license and implementation revenue can be found in Note 3. • • • • Performing testing, on a sample basis, of management’s judgement in relation to application of “Go-live” dates 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; and 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. Acquisition Accounting Key audit matter How the matter was addressed in our audit As disclosed in Note 27 of the financial report, JCurve Our audit procedures to address the key audit Solutions Limited acquired the business and assets of matter included, but were not limited to, the the Creative Quest (an entity incorporated in the following: Philippines). AASB 3 Business Combinations requires a number of judgements to be made in the acquisition accounting The audit of the acquisition is a key audit matter due to the significant judgment and complexity involved in • • Reviewing the acquisition agreement to understand the key terms and conditions, and confirming our understanding of the transaction with management; Assessing the estimation of the contingent assessing the determination of the fair value of consideration by challenging the key identifiable intangible assets and the final purchase assumptions; price which included contingent deferred consideration. 58 Key audit matter How the matter was addressed in our audit • • • • Comparing the assets recognised on acquisition against the historical financial information of the acquired businesses; Obtaining the calculation of the fair value of net identifiable intangible assets acquired to critically assess the determination of the fair values; Reviewing the recoverability of the intangible assets recorded as part of the business combination to ensure they remain recoverable in light of performance following acquisition; and Auditing the disclosures associated with the acquisition to ensure they are complete and accurate and reflect the requirements of AASB 3. Other information The directors are responsible for the other information. The other information comprises the information in the Group’s annual report for the year ended 30 June 2021, 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. 59 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: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.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 2021. In our opinion, the Remuneration Report of JCurve Solutions Limited, for the year ended 30 June 2021, 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 Audit Pty Ltd Gareth Few Director Sydney, 24 August 2021 60 JCurve Solutions Limited SHAREHOLDER INFORMATION (a) Distribution of ordinary shareholder numbers Category Holders Total Units % Issued Share Capital 1 1,001 5,001 10,001 100,001 - 1,000 - 5,000 - 10,000 - 100,000 - and over 71 15 54 169 141 450 6,533 45,433 471,640 7,337,863 320,481,970 328,343,439 There are 154 shareholders that hold less than a marketable parcel as at 8 October 2021. (b) Substantial shareholders 0.00% 0.01% 0.14% 2.23% 97.61% 100.00% The names of the substantial shareholders listed in the Group’s register as at 30 June 2021 and 8 October 2021 are outlined below, based on the shareholders last lodged Substantial Shareholder notice: 30 June 2021 8 October 2021 Number of ordinary shares held % held of ordinary share capital Number of ordinary shares held % held of ordinary share capital 83,124,215 53,007,816 50,704,301 25.35% 16.14% 15.47% 83,124,215 53,007,816 50,704,301 25.35% 16.14% 15.47% Graham Baillie Philip Ewart Mark Jobling (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: c/- Automic Pty Ltd Deutsche Bank Building Level 5 126 Phillip Street Sydney NSW 2000 Ph. (02) 8072 1400 (f) Register of securities The registers of securities are held at the following address: Automic Registry Services Level 5/126 Phillip St, Sydney NSW 2000 1300 288 664 or +61 2 9698 5414 61 SHAREHOLDER INFORMATION (continued) (g) Top 20 Registered Holders – Ordinary Shares as of 8 October 2021 JCurve Solutions Limited Name Number of Ordinary Shares % of Ordinary Shares Held MR GRAHAM ALEXANDER BAILLIE & MRS DARRELL BAILLIE 83,124,215 25.32% 1 2 3 4 5 6 7 8 9 10 11 12 MR MARK CHRISTOPHER JOBLING DR PHILIP GORDON WILSON EWART & MRS KYLIE EWART JACANA GLEN PTY LTD P EWART INVESTMENTS PTY LTD MR GREGORY PETER WILSON BENGER SUPERANNUATION PTY LIMITED ROUND ETERNAL INVESTMENTS PTY LTD DR PHILIP GORDON WILSON EWART POTENTATE INVESTMENTS PTY LTD SHANMAC PTY LTD MR DAVID JAMES FRANKS & MR WALTER GEORGE FRANKS 13 MS KYLIE LYNETTE NUSKE & MR MATTHEW JAMES COOK 14 15 16 17 18 19 20 MR CHARLES BYRON SMITH BUFF HOLDINGS PTY LTD MR STEPHEN CANNING MR NEIL WILSON EWART INVIA CUSTODIAN PTY LIMITED BNP PARIBAS NOMINEES PTY LTD MR STEVEN GEORGE CARTER & MRS GAIL MAREE CARTER TOTAL HELD BY TOP 20 HOLDERS TOTAL HELD BY REMAINING SHAREHOLDERS 48,399,564 37,218,464 16,179,275 10,266,832 6,265,874 6,030,000 6,000,000 5,435,590 4,942,305 4,516,000 4,206,174 4,000,000 3,785,600 3,500,000 3,233,418 3,100,000 2,668,968 2,556,775 2,500,602 14.74% 11.34% 4.93% 3.13% 1.91% 1.84% 1.83% 1.66% 1.51% 1.38% 1.28% 1.22% 1.15% 1.07% 0.98% 0.94% 0.81% 0.78% 0.76% 257,929,656 70,413,783 78.55% 21.45% (h) Stock exchange listing– ordinary shares (as of 30 June 2021) Quotation has been granted for all the ordinary shares of the Company on the Australian Securities Exchange. (i) Restricted securities As at 30 June 2021 and 8 October 2021 there are no restricted security classes recorded in the Company’s share register. (j) Unquoted securities The unquoted securities of the Company as at 8 October 2021 are: 9,300,000 Performance Rights are outlined below: Number of Performance Rights Exercise Price Expiry Date Number of Holders 3,100,000 3,100,000 3,100,000 $Nil $Nil $Nil 31 January 2022 30 June 2022 31 January 2023 5 5 5 (k) Listing Rule 3.13.1 and 14.3 The Company advises that the Annual General Meeting (AGM) of the Company is scheduled for Tuesday, 16 November 2021 at 10.30am (AEDT). The location of the AGM is subject to COVID-19 restrictions, including regulatory requirements. Further details, including any hybrid or virtual meeting arrangements, will be conﬁrmed closer to the AGM. Further to Listing Rule 3.13.1, Listing Rule 14.3, nominations for election of directors at the AGM must be received not less than 30 Business Days before the meeting, being no later than Tuesday, 5 October 2021. 62 Auditor - For the year ended 30 June 2021 BDO Audit Pty Ltd Level 11, 1 Margaret Street Sydney NSW 2000 Australia Securities Exchange Listings Australian Securities Exchange ASX Code: JCS Website address www.jcurvesolutions.com Key Dates Annual General Meeting: 16 November 2021 JCURVE SOLUTIONS LIMITED CORPORATE INFORMATION ABN 63 088 257 729 Directors Mr Mark Jobling Mr Bruce Hatchman Mr Graham Baillie Mr Martin Green Company Secretary Mr David Franks (Automic Pty Ltd) Registered office c/- Automic Pty Ltd Deutsche Bank Building Level 5 126 Phillip Street Sydney NSW 2000 Ph. (02) 8072 1400 Principal place of business in Australia Level 8, 9 Help Street Chatswood New South Wales 2067 Share Register Automic Registry Services Deutsche Bank Building Level 5 126 Phillip Street Sydney NSW 2000 1300 288 664 or +61 2 9698 5414 https://www.automicgroup.com.au/contact-us/ www.jcurvesolutions.com

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