Appendix 4E
Summary Financial Report
Results for Announcement to the Market
For the financial year ended 30 June 2018
Consolidated Group
Variance to prior year
2018
$’000
2017
$’000
$’000
%
Operating revenue
4,577
16,211
(11,634)
(72%)
Revenue – continuing operations
3,833
161
3,672
2288%
Revenue – discontinued operations
744
16,050
(15,306)
(95%)
Attributable (loss)/profit after tax
(5,168)
(4,336)
(832)
(19%)
Profit / (loss) from continuing operation after tax
(5,754)
(2,272)
(3,482)
(153%)
Profit / (loss) from discontinued operations
586
(2,064)
2,651
128%
Net margin (%)
(113%)
(27%)
-
(86%)
Basic (loss)/earnings per share (cents)
(2.2)
(2.0)
(0.2)
(11%)
Net operating cash inflows
(5,961)
(1,922)
(4,039)
210%
Dividends per share
Net tangible assets / (liabilities) per security (cents)
-
1.3
-
4.3
-
-
-
-
The consulting division was divested on 26 June 2017 that included the sale of each of the Group’s historical operating
subsidiaries and as such effectively all revenues and expenditures were accounted for in discontinued operations. The Group
only commenced operating through its current subsidiaries during the completion of the divestment transaction. For further
details, please refer to the Financial Statements and accompanying notes contained in the 2018 Annual Report.
Additional Appendix 4E disclosure requirements can be found in the notes to the 2018 Envirosuite Ltd Consolidated Financial
Statements included in the Annual Report.
This report is based on the consolidated financial statements that have been audited by PKF Hacketts Audit with the
Independent Auditor’s Report included in the financial statements.
1
(ASX: EVS)Envirosuite Limited Level 19, 240 Queen Street Brisbane QLD 4000ACN: 122 919 948 www.envirosuite.com
2018 Annual Report
“The 2018 financial year was a transformative
one for the company as we started to define and
demonstrate what it means for Envirosuite to be a
global environmental technology group.”
Peter White CEO
From CEO Report. Page 4
Envirosuite Limited Annual Report 2018
Contents
Page 102840490089218333783Chairman’s LetterAuditor’s ReportCEO ReportShareholder InformationDirectors ReportCorporate DirectoryCorporate Governance StatementFinancial StatementsNotes to the Financial StatementsDirectors’ Declaration Chairman's Letter
Chairman’s Letter
well-aligned to the Group’s growth strategy. After a 13-month
intermission through to July 2017, in which we completed the
sale of the consulting division, Peter quickly re-engaged with the
technology team that he had shaped under his previous tenure
and undertook a company-wide review to determine the go-
forward strategy.
Our review of Envirosuite initiated two broad steps: firstly, to
make the product easier to sell, and secondly, to engage sales
professionals to sell it. A comprehensive marketing analysis
was completed, led by an external specialist group. This project
delivered a new suite of marketing and sales materials and
processes with which to equip our sales team to attract and
procure new clients.
Following this, the second step involved appointing key region-
specific people with strong software sales experience and a
knowledge of our target industries and clients. Our sales team
grew substantially through to April 2018 and, following the
usual lead-in times for new salespeople, we have started to see
the results emerging from their efforts in the last quarter of the
financial year.
Moving into the 2019 financial year we have an effective and
engaged team that we will continue to optimise, and add to
incrementally, to ensure that we are capitalising on every market
opportunity.
Dear Shareholders,
I am very pleased to present the Annual Report for Envirosuite
Limited and its subsidiaries (the Group) for the 2018 Financial
Year. During the 2018 financial year, we have firmly positioned the
Group for the journey ahead. At the outset of the 2018 financial
year, we decided to invest the proceeds of the successful
divestment transaction that dominated the 2017 financial year
and reshape the business to provide a foundation from which
we could pursue sustained global growth as a new pure play
technology group.
Year in Review
Across the first three quarters, we concentrated on establishing
the strategy, human capital and selling tools that we believed we
needed to achieve our growth aspirations. We also successfully
completed the acquisition of Odotech, a strongly aligned
strategic move to bring in new clients, offices and people faster
and more cost-effectively than organic growth could otherwise
deliver. While all these non-sales activities were underway, it is
a great credit to the team that we were still able to hit our 100%
Annualised Recurring Revenue (ARR) growth target for the year.
As would be expected from a year of set-up, most of this growth
occurred in the tail end and has helped to set a trajectory that we
are targeting to maintain in the years to come.
In July 2017, we appointed Peter White as Director and Chief
Executive Officer. Peter’s career experience and achievements in
closing large software sales and leading their implementation are
Odotech acquisition
In November 2017, an opportunity arose to cost-effectively
acquire the assets of Odotech Inc., a Canadian based supplier of
equipment, services and software for odour management. The
board had been approached by the Odotech business on two
previous occasions and as such was able to move quickly on this
opportunity with the benefit of already having conducted partial
due diligence. A previous and continued policy of the board
in relation to acquisition opportunities is that merit is gauged
against the alternative measure of the time and cost of organic
growth to achieve the anticipated outcome. With over 100 sites
on their current and previous client lists, this was the nature of
the opportunity that the Odotech acquisition presented to us.
Although the total cost of the Odotech acquisition shortened
our cash runway, we believe that it has brought forward the
achievement of our growth objectives and forms part of our
consideration in asserting the 100% year on year ARR targets
provided to the market. It has also accelerated our regional and
sector growth and we believe it will continue to deliver multi-
layered benefits in the medium term.
Strategy
We have clearly identified our key regional markets and industry
verticals. We are currently active in five broad geographic regions
and are actively pursuing new subscriptions that include Europe,
the Middle East, Australia and New Zealand, North America and
Page 2 Chairman's Letter
Latin America. We are also working in other regions such as China,
Eastern Europe and Africa, however, our strategic expectation for
growth is that these and other regions will be partner led.
industry verticals
Our
include waste and wastewater
management, mining, heavy industry, ports and agriculture.
Although we see activity across the board, wastewater and
mining are the two leaders at this point, and each new sale stands
on the shoulders of the previous wins in those sectors, creating
positive referral loops and recognition by increasing numbers
of sector operators. This is starting to translate to shorter sales
cycles.
We are pursuing a separate approach to the regulatory sector. Our
key market is in the USA, where regulation is strong and complex,
and regulators very much set the standards for environmental
management. Our entry into the US market coincides with
substantial changes being driven by regulators. Envirosuite
is very well placed to participate in a new wave of innovation
centred on the Internet of Things (IoT) technologies and data
analytics. We aim to build on initial successes in this sector and
adapt to key specific needs of the regulatory agencies.
At a future point, we hope to see Envirosuite moving from
pioneering to business-as-usual as the majority of industry
participants are compelled by regulatory, community and
industry expectations to adopt a best-practice solution.
interest and support. I believe that our newer holders are
joining us at an exceptional time and I hope that the patience
of our longer-term holders is vindicated as we grow. We aim to
increase Envirosuite’s value in multiples through building strong,
sustainable and high margin revenue streams with a world-
leading offering that improves the management of air quality
and other environmental issues that are rising in the concerns of
communities and the conscience of industry.
investor-orientated demonstration of
With more activity internally we now have more to communicate
externally, and we are excited to be bringing regular sales
updates and sector reports to investors. We’re also developing
an
the Envirosuite
platform to give investors a deeper understanding of what we do
for our clients. In addition to our ASX disclosures, we also have
regular information content available through our website and
distributed to our email subscribers.
I have invested a significant amount personally in Envirosuite -
both on and off market - over the last two years and I join each
of the other directors who have meaningful personal stakes in
the Group. We believe in the future of Envirosuite and share a
passion for improving environmental management that we see
is becoming a rising mainstream concern globally. We’re looking
to grow alongside all of our shareholders and we will continue to
work tirelessly every day to do what is needed to maintain our
growth trajectory.
David Johnstone
Chairman
22 August 2018
Team
We have substantially expanded the team during the financial
year. I would like to here extend a welcome to all our new people
around the globe who have joined us in the past twelve months
and I congratulate and thank them for applying their efforts to
grow the Group at what is, without doubt, the most exciting time
in its history.
With the return of Peter White as CEO in July 2017, founder Robin
Ormerod moved from the Managing Director/CEO position he
held in Peter’s absence to the position of Chief Scientist while
remaining on the Board as an Executive Director.
The Chief Scientist role is an important one for the Group,
emphasising the fundamental role of scientific expertise in
the past and on-going development and credibility of the
Envirosuite platform. Robin coordinates the Company’s Research
and Development program, convenes the Solutions Roadmap
committee process in league with the product development team
and other parts of the business, and represents the scientific
interests of the Group in its communications both internally and
externally.
Register
We have had a significant turnover in the Group’s share register
during the year and I welcome our new shareholders, and as
always, thank our existing shareholders for their continued
Envirosuite Limited Annual Report 2018Page 3
CEO Report
CEO Report
Envirosuite’s first year as a pure play technology group
The 2018 financial year was a transformative
one for the company as we started to define and
demonstrate what it means for Envirosuite to be a
global environmental technology group.
the
The previous financial year finished with the
company-defining
30-year-old
sale of
environmental consulting business that accounted
for over 80% of the historical revenues, the majority
of the staff and the origination of the group. At
the commencement of the 2018 financial year,
Envirosuite was essentially re-formed as a pure play
technology company, and during the months that
followed our focus was turned to refining the group
strategy and resources in this new direction.
Envirosuite is a world leader in its field, though we
are not complacent, as competition always emerges
wherever a strong market opportunity exists. Our
consolidating strategy was based on a first-mover
“land-grab” theme to establish ourselves as quickly
as possible in the major global markets for our
chosen industry vertical sectors. The Envirosuite
platform has proven very “sticky” since inception,
with our track record proving that if we are able to
gain new clients and market share, we can retain it.
Following a comprehensive review of the group
in the first quarter of the financial year, a strategic
marketing initiative was launched. In the second
quarter, Envirosuite also implemented a Client
Relationship Management system (Salesforce CRM)
and marketing tools (Salesforce Pardot) across the
group.
The rate of wins accelerated in the latter half of
the financial year, due to both our newly hired
salespeople and the migration of clients acquired
through Odotech. We finished the year with some
very strong wins, including our biggest ever project:
a city-wide odour network for a Middle Eastern city-
state, and migrations of two Chilean agricultural
clients to the Envirosuite platform.
During the year, we doubled our Australian base of
approximately 30 people and we now boast offices
in six countries, and staff in eight time zones and
three different languages.
Against the backdrop of the formational activities
that dominated management’s focus throughout
the 2018 financial year, it is very pleasing that
the targeted result of doubling our Annualised
Recurring Revenue was delivered.
Page 4
CEO Report
Regional expansion
Annualised Recurring Revenue (ARR)
Following the engagement of salespeople in our target regions
and the acquisition of Odotech and associated support roles, our
team has more than doubled in the course of the financial year. The
increase was required to service the current market opportunities
and develop and drive new business in each of our target verticals.
The initial regional target markets were the USA and Europe, and we
began building the sales capacity in these regions.
Europe
Leveraging our success with Thames Water, our activities in Europe
were focused on the Wastewater sector in which we have been
successful in expanding our reach into other water utilities.
Once Envirosuite attracts a critical mass of operators, each new
operator has a higher degree of conviction in choosing our solution.
Community and regulator expectations adjust to the improved
environmental management practices and begin expecting it from
all operators. We feel that we are starting to see this future in the
wastewater sector where we now have three major UK Water utilities
subscribing to the Envirosuite platform. We have also seen high
activity in the Middle East market, where we have won a city-wide
odour monitoring system and are currently undertaking a city-wide
trial in another city.
USA
In the USA we focused on the regulatory sector where we have
won subscriptions with two major environmental bodies, the Bay
Area (San Francisco) and South Coast (Los Angeles) Air Quality
Management Districts. These two Districts are amongst the leaders
of governmental regulators in the USA, and we will be targeting
similar bodies in the coming year. The team secured multiple wins
in the wastewater sector, and are developing opportunities in the oil
and gas sector.
Australia & New Zealand
Even though during the year most of our focus was on establishing
our overseas offices, we had some encouraging project wins in
Australia and New Zealand (ANZ). These included South Australia’s
Governmental water enterprise SA Water and three clients in New
Zealand. During the coming year we will be focusing on re-invigorating
our domestic base with some of our newer solutions, and developing
larger-scale projects in the mining and government sectors.
Emerging Regions
During the financial year, we also added offices in Canada and Chile
through the acquisition of Odotech in December 2017. I have spent
some time in each of these regions and we are refining our strategy to
expand our activities in North America and Latin America from these
established bases.
We are also currently servicing clients in other regions including
the Middle-East and Eastern Europe and we’re progressing specific
opportunities in South Africa and China.
In accordance with the accepted norm for Software-as-a-Service
(SaaS) businesses, we have determined that our key measure of
performance is our ARR. We will be reporting on our progress in
growing the ARR in our quarterly sales updates to the market.
During the year, we achieved our goal of doubling the ARR from $1.5
million to $3.0 million. Our goal is to double this in FY19 to $6 million,
and then double it again in FY20 to $12 million.
In analysing the current ARR, it is seen that ANZ is still the biggest
region by revenue. This is expected to change during FY19 and FY20,
and we expect that North America and Europe, the Middle East and
Africa (EMEA) will be the biggest regions of our growth and that they
will become the regions for highest revenue.
In the vertical sectors, we see mining and waste & wastewater as
having the most potential. We expect this will continue with waste &
wastewater growing considerably as we migrate the Odotech clients
to the Envirosuite platform.
FY18 Annualised Recurring Revenue by Sector
Industrial
Mining
Ports
Regulatory
Waste & Wastewater
Agriculture
FY18 Annualised Recurring Revenue by Region
Australia &
New Zealand
North America
Latin America
Europe
Middle East
Asia
Envirosuite Limited Annual Report 2018Page 5 CEO Report
CEO Report
CEO Report
Strategic Wins
During the year Envirosuite was awarded some major projects. These wins were strategic due to their size or their relevance as reference sites
in a region, providing further credibility to Envirosuite as a market entrant.
Region
Strategic Wins
Vertical
Country/State
EMEA
New Thames Water sites
Welsh Water, Southern Water
Middle East City – odour
Middle East city – trial
Veolia Lyon
Barcelona
North America
Los Angeles Air District (SCAQMD)
San Francisco Air District (BAAQMD)
Latin America
ANZ
WWTP – 5 wins
Agrosuper
Sopraval
Cerrejon
Goldcorp
SA Water
West Coast Ports
WWTP
WWTP
Regulatory
Regulatory
WWTP
WWTP
Regulatory
Regulatory
WWTP
Agriculture
Agriculture
Mining/Ports
Mining
WWTP
Ports
UK
UK
ME
ME
France
Spain
USA
USA
USA/Canada
Chile
Chile
Colombia
Mexico
SA
WA
Acquisition of Odotech
Market Focus
In December we acquired a sector competitor, Odotech, and further
deepened our understanding of, and market reach in, the odour-
related sectors. With the acquisition we gained clients, and teams
and offices in Montreal and Santiago.
Odotech was a competitor of Envirosuite’s in the wastewater sector
and others that are affected by odour including landfills, composting,
and livestock intensive agriculture. The existing Odotech clients
utilised Odotech’s proprietary software platform, Odowatch, and
were paying annual maintenance fees. We will be maintaining the
Odowatch platform for a transitional period, and during the coming
year, we will be working through a process with each client to migrate
them to the Envirosuite platform. Each migration involves both a
technical and a commercial phase. Once a client is migrated, we will
count their software revenue in the reported ARR.
A percentage of the client base also had installed the proprietary
Odotech hardware known as “electronic noses” or ‘enoses’. Even
though we are not a hardware company we will continue to assemble
the enoses for clients that require them, as they have a degree of
market recognition that is proving to be a valuable indirect source of
new client leads for the Envirosuite platform.
The retained staff and offices from Odotech have been integrated into
the company and these subsidiaries will be renamed to Envirosuite
during this coming year. The acquisition has proven to be very
successful, from both client acquisition and financial perspectives.
Our regional strategic focus in FY19 is consolidating within the sectors
we consider to have the highest potential based on our experience
to date. Our salespeople are becoming specialised in particular
sectors, giving them a greater depth of expertise with which to serve
our clients and prospects. In most regions, we have also made initial
sales in new sectors and we expect to continue to develop these
sectors during FY19.
Research and Development
Our Australian-based product development team supports and
maintains the platform for our customers, and also evolves the
platform along the product roadmap. ‘World-leading’ is a dynamic
term and we are determined to ensure that our offering continues
to be the first choice for industry through product superiority and
industry orientated solutions.
Our R&D group drives the product roadmap and is headed by our
Chief Scientist and Founder, Robin Ormerod. Our R&D activities
include early-stage research, and, once an area is proven to be of
benefit, it is added to the Solution Roadmap. Other R&D activities
are in response to recognised market needs that deepen our current
capabilities.
Page 6
CEO Report
Envirosuite Limited Annual Report 2018
FY19 Sector Focus
Region
Wastewater
Mining
Regulatory
Ports
Oil & Gas
Agriculture
Australia & New Zealand
Europe
Middle East
North America
Latin America
Asia
Future prospects
Emerging opportunities
Initial Sales
Expanding Sales
Current focus areas in activities such as:
•
•
real-time emission source identification
city- and region-wide visualisation and analytic systems
• monitoring and prediction of corrosion in sewer systems
•
•
•
Double ARR from $3 million to $6 million
Secure a partnership with a multi-national supplier to the
Wastewater sector
Become established in at least two more major UK water utilities
•
emergency response management (real-time and predictive),
including wildfire and industrial hazards
• machine learning to improve analytics and forecasting.
Partners
We are continuing to refine our partnership approach with respect
to indirect distribution as we learn more about our target markets
and as we refine our own sales approach. We are gaining experience
with different types of partner groups and evaluating the results of
each partner engagement. We are looking to engage with sector-
based partners as well as complementary groups such as equipment
providers and systems integrators with which we can combine our
offerings and mutually benefit.
For the FY19 year we are planning to gain enough traction with our
indirect channels to provide 15% of this coming year’s ARR, moving
to 30% in FY20, and providing the bulk of our new ARR within three
to five years.
The Coming Year:
To complement our key goals of growing the business in the target
sectors by region and achieving our ARR goals, we have set strategic
goals by region as follows for the 2019 financial year:
• Win two major clients in the Oil and Gas sector
•
•
•
•
Extend our platform functionality in the US Regulatory sector
Gain traction in the Latin American mining sector
Secure further city-wide clients in the Middle East
Expand our existing client base in Australia and New Zealand
We have begun the 2019 financial year with the momentum,
foundation and focus that we believe will allow us to maintain our
ARR trajectory in the years to come.
Peter White
CEO
22 August 2018
Page 7 Directors' Report
Directors’ Report
Your directors present their report, together with the financial statements of the consolidated entity
(referred to hereafter as the Group) consisting of Envirosuite Limited (ABN: 42 122 919 948) (referred to
hereafter as the Company) and its controlled entities, for the financial year ended 30 June 2018.
Directors
Financial Position
The following persons were directors of the Company at any
time during, or since the end of, the financial year up to the date
of this report:
David Johnstone (Non-executive Chairman)
Robin Ormerod (Managing Director and Chief Scientist)
Adam Gallagher (Director and Company Secretary)
Peter White Peter White (Director and Chief Executive Officer,
Appointed 10 July 2017)
Directors have been in office since the start of the financial year
to the date of this report unless otherwise stated.
Particulars of each director’s experience and qualifications are
set out later in this report.
Principal activities and significant changes in nature of
activities
During the year the principal continuing activities of the Group
consisted of the development and sale of environmental
management technology solutions.
Dividends paid or recommended
No dividends were paid by the Company to members during the
financial year. No dividends were recommended or declared for
payment, but not paid, to members during the financial year.
Operating results and review of operations for the year
Operating Results
Total trading revenues for the group for the financial year ending
30 June 2018 were $3,152,592 (2017: $149,790). A comparison
with the previous year is not relevant to an understanding
of the 2018 performance as the group’s consulting business
that represented the majority of revenues and expenses was
divested on 26 June 2017, and all group revenues including
the technology-related subscription revenues were treated
as ‘discontinued’, due to the sale of the operating subsidiary
that received those revenues being sold in the divestment
transaction.
Net loss after tax from continuing operations was $5,754,656
(2017: $2,271,645). Significant expenditure items affecting
operating results for the 2018 financial year include costs
associated with the acquisition of the assets of Odotech Inc
and funding for working capital of the Odotech related entities,
advisor fees, redundancies and other one-off payments relating
to both the Odotech transaction and the consulting divestment
concluded 26 June 2017 that were realised in the 2018 financial
year, recruitment costs associated with the engagement of the
CEO, CFO and other senior management personnel, and the
recruitment and office establishment costs associated with
setting up the respective teams in the USA and Europe.
The net assets of the consolidated Group have decreased from
$13,853,235 at 30 June 2017 to $8,585,852 as at 30 June 2018.
The group recorded a cash balance of $3,648,000 (June 2017:
$11,471,000) as at 30 June 2018. However, due to current levels
of cash utilisation, management intend to raise further capital
in order to support the business during the current growth
phase of the group, as the group expands into new geographical
territories and new industry sectors and subsequently procures
new subscriptions for the Envirosuite platform.
Given the group’s budgeted revenue targets, planned
expenditures and the current capital raising undertakings,
the Directors are of the view that the group will continue to be
able to pay its debts as and when they fall due. Based on this
view, the Directors have prepared the financial report on a
going concern basis. Refer to Events after reporting period in
this Directors Report and note 1, for further information on the
capital raising.
Should the group not be able to successfully raise capital or
achieve budgeted numbers, the group may not be able to realise
its assets and extinguish its liabilities in the normal course of
business and at the amounts stated in the financial report.
Significant changes in the state of affairs
Significant changes in the state of affairs of the Group during the
financial year were as follows:
1. Acquisition of the assets of Odotech Inc in December 2017
2. Number of employees growing from 30 at 30 June 2017 to 55
at 30 June 2018.
3. Appointment of Peter White as Chief Executive Officer and
Director.
4.
New office opened in Madrid, Spain and offices added in
Montreal, Canada and Santiago, Chile through the Odotech
acquisition.
Events after the reporting period
On 16 August 2018 the company appointed Bell Potter Securities
Limited as Lead Manager and Baillieu Holst Limited as Co-
Manager for a two-tranche share placement of up to 133,333,334
ordinary shares to raise up to $10,000,000 at $0.075 per share.
In accordance with ASX Listing Rule 7.1 the Company intends to
issue 34,640,080 ordinary shares under its available placement
capacity (tranche 1) on or around 28 August 2018. The balance of
the placement, being 98,693,254 ordinary shares are intended
to be issued immediately following the 2018 Annual General
Meeting to be held on or around 28 September 2018, subject to
shareholder approval being given for the relevant resolution at
the meeting.
Page 8
Directors' Report
No other matters or circumstances have arisen since the
end of the financial year that significantly affected, or could
significantly affect, the operations of the consolidated Group,
the results of those operations, or the state of affairs of the
consolidated Group in future financial years.
Likely developments and expected results of operations
There are no likely developments in the operations of the Group
that were not finalised at the date of this report.
Additional comments on expected results of certain operations
of the Group are included in this annual report under the
Chairman’s Statement and CEO’s Report.
Environmental regulation
The Group is not subject to any significant environmental
regulation under a law of the Commonwealth or of a State or
Territory.
Information on Directors
David Johnstone
Chairman
Experience and expertise
David is an experienced executive and chairman who has been
actively involved in business for more than 35 years, successfully
starting, owning and operating a vast range of businesses. With
experience gained nationally and internationally in tech start
ups, selling, licensing, merging and acquiring businesses, having
also arranged funding for management buy outs along with the
successful placement/listing of companies on the London Stock
Exchange and the Australian Stock Exchange. David is a keen
investor, chairman and advisor to various technology companies
in the communications, finance, insurance, risk management
and sporting sectors, which are investing and advancing
technology to the forefront of their respective industries.
Having also gained executive experience in international
growth companies as CEO of Professional Investment Services
Ltd (ASX:CAF) and Bartercard Ltd,(ASX:BPS) Mr. Johnstone
brings immense knowledge and a commercial sensibility to any
business or board.
Other current directorships of listed companies
None
Robin Ormerod – B Sc (Hons)
Managing Director and Chief Scientist
Experience and expertise
Robin co-founded Pacific Air & Environment (PAE), the
foundation business of Envirosuite, in 1995 and helped lead
it to a successful and respected position among air quality
consultancies in Australia. He directed PAE’s research and
development activities, which created the precursor to
Envirosuite’s technology platform. He has developed a wide
national and international network of business and scientific
contacts over his 36 years doing business in the environmental
space. He was Envirosuite Limited’s Director of Innovation
and R&D and the company’s Air Quality & Meteorology
Practice Leader. He now leads the R&D group and is active in
promoting Envirosuite to businesses, government and research
organisations.
Robin is a Certified Consulting Meteorologist, accredited by
the American Meteorological Society, and is well known in his
profession. In 2004 he was presented with the Distinguished
Service Award and Life Membership by the Clean Air Society of
Australia & New Zealand for contributions over many years.
Robin, as Chief Scientist, guides the Research and Development
activities of the Group to ensure that the Envirosuite platform
both meets the needs of its clients, and maintains its leading
position in the environmental management solutions industry.
Other current directorships of listed companies
None
Former directorships of listed companies in last 3 years
None
Special responsibilities
None
Interest in shares
51,296,550 shares comprising:
(i) 23,909,342 held by R. Ormerod (both legally and beneficially);
(ii) 27,387,208 held by Zeise Ormerod Superannuation Fund
(registered holders: Robin Ormerod, K. Zeise) of which R.
Ormerod is beneficially entitled to 13,693,604.
Former directorships of listed companies in last 3 years
Interest in shares and options
None
Special responsibilities
Nil
Member of the Audit and Risk Management Committee
Chairman of the Remuneration and Nomination Committee
Interest in shares and options
1,844,118 ordinary shares held by an associated entity.
4,000,000 unlisted options held by an associated entity to
subscribe for ordinary shares in Envirosuite Limited.
Envirosuite Limited Annual Report 2018Page 9
Directors' Report
Adam Gallagher –B Econ, M Com, Grad Dip Info Sys, Grad Dip
Applied Corp Gov.
Director and Company Secretary
Experience and expertise
Adam has strong technology sector knowledge and experience
across corporate transactions, sales management, finance
and capital market operations through nearly twenty years of
commercial, IT and investment experience. Adam is a strategist
who is known for his corporate problem solving acumen, to
both resolve impediments to, and optimise opportunities for,
true shareholder value creation. His particular passion for
technology arises from a career interest in the convergence of
applied creative, commercial and scientific efforts that bring
about positive change. Adam has worked in corporate banking,
private equity, early stage technologies, stock exchanges,
digital media, communications and listed companies. For the
last ten years he has predominantly worked with expansion
stage technology businesses both listed and unlisted as an
officeholder, advisor and investor. In addition to his roles with
Envirosuite Limited, Adam is also a non-executive Director of
CCP Technologies Limited (ASX:CT1).
development and transition to a cloud-based SaaS offering of
the Company’s world-class Envirosuite platform.
Peter’s interest is in using technology to benefit businesses and
his specialty is in growing technology companies and teams,
using his deep experience in technology sales and operational
management. Over the past 30 years he has held executive and
sales management positions in global technology companies
including Hewlett Packard, Motorola, Siemens and Tandem
Computers. He has extensive global experience gained through
international business development roles in Asia, Europe and
the USA.
Peter has a particular skillset and experience in selling large,
innovative technology deals. This has included individual
projects worth hundreds of millions of dollars, as well as
application software deals to governments and some of the
world’s biggest banks and telecommunication carriers.
Other current directorships of listed companies
None
Former directorships of listed companies in last 3 years
Adam holds a Bachelor of Economics, Masters in Commerce,
Graduate Diploma in Information Systems and a Graduate
Diploma in Applied Corporate Governance.
None
Special responsibilities
Other current directorships of listed companies
None
Director of CCP Technologies Limited (ASX:CT1)
Interest in shares and options
Former directorships of listed companies in last 3 years
2,091,340 ordinary shares held by an associated entity.
7,000,000 unlisted options held by an associated entity to
subscribe for ordinary shares in Envirosuite Limited.
None
Special responsibilities
Chairman of the Audit and Risk Management Committee
Member of the Remuneration and Nomination Committee
Interest in shares and options
352,941 ordinary shares held by an associated entity.
8,500,000 unlisted options held by an associated entity to
subscribe for ordinary shares in Envirosuite Limited.
Company Secretary
Mr. Gallagher is the Company Secretary and held the position at
the end of the financial year.
Peter White –BA Mathematics.
Director and Chief Executive Officer
Experience and expertise
Peter formerly held the role of CEO from April 2012 to May
2016. In this time Peter consolidated the consulting group
and increased its scale through organic growth and several
successful acquisitions as well as leading the successful
Page 10 Directors' Report
Meetings of directors
The numbers of meetings of the Company’s Board of directors and committees of the Board held during the year ended 30 June 2018, and
the numbers of meetings attended by each director were:
Full Meetings of Directors
Audit and Risk
Management Committee (*)
Remuneration and
Nomination Committee (*)
A
13
13
13
13
B
13
13
13
13
A
2
-
2
-
B
2
-
2
-
A
2
-
2
-
B
2
-
2
-
David Johnstone
Robin Ormerod
Adam Gallagher
Peter White
A - Number of meetings attended. B - Number of meetings held during the time the director held office or was a member of the committee
during the year (number eligible to attend).
* - The committee charters provides for 2 meetings to be held each year per committee. In addition to formal meetings the members meet
informally on a regular basis and discuss matters within the charter. Each committee Chair provides a report to the board at each monthly
board meeting.
Shares under option
Unissued ordinary shares of Envirosuite Limited under option at the date of this report are as follows:
Grant date
Expiry date
Issue price of shares ($)
Number under option
12-Nov-12
17-Apr-12
05-Dec-14
01-Nov-13
17-Feb-15
17-Feb-15
01-Nov-13
17-Feb-15
31-Oct-13
09-Dec-15
01-Nov-13
01-Nov-13
16-Nov-15
09-Dec-15
01-Nov-13
31-Oct-18
12-Nov-18
09-Apr-20
12-Nov-19
31-Oct-18
14-Jul-20
01-Apr-20
31-Oct-18
31-Oct-18
03-Feb-21
31-Oct-18
09-Dec-19
31-Oct-18
31-Oct-18
10-Nov-20
09-Dec-19
31-Oct-18
0.03
0.055
0.07
0.08
0.09
0.09
0.10
0.10
0.11
0.12
0.12
0.15
0.16
0.16
0.18
0.20
5,000,000
2,000,000
2,000,000
1,000,000
600,000
1,000,000
1,000,000
1,000,000
1,250,000
1,500,000
3,000,000
1,500,000
2,000,000
333,333
3,000,000
2,000,000
No option holder has any right under the options to participate in any other share issue of the Company or any other related entity.
Shares issued on the exercise of options
No shares have been issued on the exercise of options during the financial year. No amounts are unpaid on any of the shares.
Total
27,183,333
Lapse of options post balance date
No options have lapsed post balance date.
Envirosuite Limited Annual Report 2018Page 11 Directors' Report
Indemnification and insurance of officers or auditor
A. Key management personnel covered in this report
During the financial year, Envirosuite Limited paid a premium of
$43,422 (2017: $43,752) to insure the directors and officers of the
Group.
The liabilities insured are legal costs that may be incurred in
defending civil or criminal proceedings that may be brought against
the officers in their capacity as officers of entities in the Group, and
any other payments arising from liabilities incurred by the officers
in connection with such proceedings. This does not include such
liabilities that arise from conduct involving a willful breach of duty by
the officers or the improper use by the officers of their position or of
information to gain advantage for themselves or someone else or to
cause detriment to the Company. It is not possible to apportion the
premium between amounts relating to the insurance against legal
costs and those relating to other liabilities.
No indemnities have been given or insurance premiums paid,
during or since the end of the financial year for the auditor of the
consolidated Group.
Proceedings on behalf of the Company
No proceedings have been brought or intervened in on behalf
of the company with leave of the Court under section 237 of the
Corporations Act 2001.
Non audit services
No non-audit services were provided by PKF Hacketts during the
financial year.
Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under
section 307C of the Corporations Act 2001 is set out on page 32.
Legislative Instrument 2016/191 - Rounding of amounts
The Company is an entity to which Legislative Instrument 2016/191
applies and accordingly amounts in the financial statements and
directors’ report have been rounded to the nearest thousand
dollars.
Remuneration report (audited)
The information provided in this remuneration report has been
audited as required by section 308(3C) of the Corporations Act 2001.
The report is structured as follows:
a. Key management personnel (KMP) covered in this report
b. Principles used to determine the nature and amount of
remuneration and link to performance
c. Details of remuneration
d. Service agreements
e.
f.
g.
h. Other transactions with key management personnel
Share based compensation
Shareholdings of management personnel
Loans to key management personnel
Non-executive and executive directors (see pages 9 to 10 for
details about each director)
David Johnstone
Robin Ormerod
Adam Gallagher
Peter White (appointed 10 July 2017)
Other key management personnel
Name
Position
Clinton Lander (appointed 15 May 2018)
Chief Financial Officer
B. Principles used to determine the nature and amount
of remuneration
The objective of the Group’s executive reward framework is to
ensure reward for performance is competitive and appropriate
for the results delivered. The framework aligns executive reward
with achievement of strategic objectives and the creation of value
for shareholders, and conforms to market practice for delivery of
reward.
The Board ensures that executive reward satisfies the following key
criteria for good reward governance practices:
•
•
•
•
•
competitiveness
shareholder alignment
performance
transparency and simplicity
capital management
The Group has structured an executive remuneration framework
that is market competitive and complementary to the objectives of
the organisation.
(i) Non-executive directors
Fees and payments to non-executive directors reflect the demands
which are made on, and the responsibilities of, the directors. Non-
executive directors’ fees and payments are reviewed annually by the
Board.
The directors have received incentive share options subject to
certain terms and conditions determined by the Board.
Non-executive director’s fees are determined within an aggregate
directors’ fee pool limit. The current pool limit is $400,000 per
annum. The following fees apply:
Base fees (net of GST)
Chair
$90,000
Other directors
$60,000
Page 12
Directors' Report
Directors appointed to chair a board committee are paid an
additional fee of $10,000 per committee. No additional fees are paid
to non-chair members of the committees.
A notice period of three months applies on termination.
(v) Chief Executive Officer
No fees as described above are paid to Directors who hold an
employee contract with the Company.
(ii) Retirement allowances for directors
There are no retirement allowances for directors of the Group.
(iii) Executive pay
The executive pay and reward framework generally has three
components:
Mr White earns a base salary of $279,951 plus statutory
superannuation entitlements. In addition, during the initial 24
months from commencement of his employment on 10 July 2017,
Mr White will receive 5% of the value of the first year of licence fee
revenues from new Envirosuite sales, with clawback provisions
should the licensee default.
A termination payment of 6 months applies in the event of change in
control.
A notice period of three months applies on termination.
base pay and benefits, including superannuation;
(vi) Company Secretary
•
•
•
short-term incentives linked to the attainment of performance
targets; and
long-term incentives through options to subscribe for ordinary
shares in the company.
The combination of these comprises an executive’s total
remuneration.
Base pay
Base pay is structured as a total remuneration package which may
be delivered as a combination of cash and prescribed non-financial
benefits at the executives’ discretion.
Executives are offered a competitive base pay that comprises the
fixed component of pay and rewards.
There are no guaranteed base pay increases included in any
executives’ contracts.
Superannuation
Retirement benefits are delivered under the Australian
superannuation legislation at 9.5% of base salary for the financial
year ended 30 June 2018, up to the maximum superannuation
contribution base.
Short-term incentives
Short-term incentives are provided to certain executives, where
payment is dependent on the satisfaction of performance
conditions.
Long-term incentives
Long-term incentives have been provided from time to time to
certain executives via various allotments of options to subscribe for
ordinary shares in the Company.
The CEO (appointed 10 July 2017) works with the Remuneration
Committee and the full board to develop appropriate terms for new
and re-contracting employees.
(iv) Managing Director’s remuneration
Mr Ormerod earns a base salary of $300,000.00 plus statutory
superannuation entitlements. He is not entitled to any additional
short-term or long-term incentives.
The Company Secretary fee is set at $7,500 per month on a contract
basis. The role includes a number of additional accountabilities
beyond what is generally expected from a Company Secretary
including managing corporate transactions together with the
Company’s advisors, investor relations, and undertaking various
other duties as required by the business that are within the
incumbent’s skill-set.
As a relatively small company the Directors believe that it is
beneficial to have a hard-working and multi-disciplined team of
officeholders to support and guide management.
(vii) Chief Financial Officer
Mr Lander was appointed Chief Financial Officer on 15 May 2018.
He earns a base salary of $220,000 plus statutory superannuation
entitlements.
Short Term Incentive (STI): For the 2019 and 2020 financial years,
Mr Lander is eligible for a STI of $20,000 per annum based on the
company’s performance against Annual Recurring Revenue.
C. Details of remuneration
(i) Amounts of remuneration
Details of the remuneration of the directors, the key management
personnel of the Group (as defined in AASB 124 Related Party
Disclosures) and specified executives of the Company and the Group
are set out in the following tables.
The key management personnel of the Group are the Directors and
Company Secretary of Envirosuite Limited.
(ii) Changes since the end of the reporting period
There have been no changes in the officeholders since the end of the
reporting period.
Envirosuite Limited Annual Report 2018Page 13
Directors' Report
(iii) Key management personnel of the Group and other executives of the Company and the Group
2018
Short-term employee benefits
Cash
Salary
and fees
$
Cash
bonus
$
Super-
annuation
$
Other
$
Long term
benefits
Long
service
Leave
$
Share-based payments
Shares
$
Options
$
Total
$
Directors
Peter White - CEO (appointed 10 July 2017)
274,568
41,729
David Johnstone
Managing director
Robin Ormerod
Director and company secretary
Adam Gallagher
Other key management personnel
100,000
300,000
160,000
Clinton Lander – CFO (appointed 15 May
2018)
16,923
-
-
-
-
-
-
-
-
20,015
-
20,049
-
1,608
Total key management personnel
compensation
851,491 41,729
-
41,672
-
-
-
-
-
-
2017
Short-term employee benefits
Cash
Salary
and fees
$
Cash
bonus
$
Super-
annuation
$
Other
$
Long term
benefits
Long
service
Leave
$
Directors
Murray d’Almeida
(resigned 1 September 2016)
David Johnstone
Managing director
Robin Ormerod
Director and company secretary
Adam Gallagher
Other key management personnel
Peter White*
15,000
93,337
200,000
143,333
-
-
-
-
-
-
Total key management personnel
compensation
451,670 -
-
-
-
-
-
-
-
-
13,077
-
-
13,077
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
336,312
100,000
320,049
160,000
18,531
934,892
Share-based payments
Shares
$
Options
$
Total
$
-
-
-
-
802
15,802
26,113
119,450
23,534
236,611
23,534
166,867
165,000
-
165,000
165,000
73,983
703,730
* Although Peter White was not employed by the Group during the year ended 30 June 2017, shares were issued to Peter during that year to finalise
the company’s contractual obligations to him.
No portion of remuneration for directors Mr Johnstone and Mr Gallagher was linked to performance during the financial year. Further
breakdown of the components of Mr Ormerod’s, Mr White’s and Mr Lander’s remuneration is detailed above in Section B (iv), (v) and (vii)
respectively of the Remuneration Report.
Page 14 Directors' Report
D. Service Agreements
On appointment to the Board, all directors enter into a service agreement with the Company in the form of a letter of appointment. The letter
summarises the Board policies and terms, including compensation, relevant at the time of their appointment to the office of director.
Remuneration and other terms of employment for other key management personnel are also formalised in service or employee agreements.
Each of these agreements provides for the provision of performance related cash bonuses, when eligible.
All current appointments for key management personnel are listed below. All service agreements are reviewed annually by the directors.
Name
Key management personnel
Commencement date
Annual base salary including
superannuation
Peter White – Chief Executive Officer & Executive Director
10 July 2017
$300,482
Robin Ormerod - Managing Director
1 November 2016
$320,531
Clinton Lander - Chief Financial Officer
15 May 2016
$240,531
E. Share based compensation
(i) Options
No options were issued during the 2018 financial year.
The options issued in prior financial years were designed to provide long-term incentives for employees to deliver value to shareholders by
aligning interests and conserving cash reserves. Option allotments were at the Board’s discretion and no individual had a contractual right to
receive options or to receive any guaranteed benefits.
All options granted, once converted to ordinary shares, carry standard dividend and voting rights available to ordinary shareholders.
Details of options over ordinary shares in the Company provided as remuneration to each director of Envirosuite Limited and each of the key
management personnel of the parent entity and the Group are set out below. When exercisable, each option is convertible into one ordinary
share in Envirosuite Limited. Further information on the options is set out in Note 31 to the financial statements.
2018
Balance
at start of
the year
Granted as
compensation Exercised
Forfeited/
Other
Balance at
end of the
year
Vested and
exercisable Unvested
Directors of Envirosuite Limited
Peter White (Appointed 10 July 2017)
7,050,000
David Johnstone
Robin Ormerod
Adam Gallagher
Directors of Envirosuite Limited
Clinton Lander (Appointed 15 May
2018)
4,000,000
2,000,000
6,500,000
-
-
-
-
-
-
-
-
-
-
-
50,000
7,000,000
7,000,000
-
4,000,000
4,000,000
(2,000,000) ^
-
-
2,000,000 ^
8,500,000
8,500,000
-
-
-
-
-
-
-
-
^ - includes off market transfer during the year. On 29 September 2017, Adam Gallagher purchased Robin Ormerod’s 2,000,000 unlisted options for $27,044,
based on an external Black & Scholes valuation – refer Appendix 3B lodged 29/09/2017.
Envirosuite Limited Annual Report 2018Page 15 Directors' Report
2017
Balance
at start of
the year
Granted as
compensation Exercised
Forfeited
Balance at
end of the
year
Vested and
exercisable Unvested
Directors of Envirosuite Limited
Murray d’Almeida (resigned 1 Sept 2016)
10,000,000
David Johnstone
Robin Ormerod
Adam Gallagher
4,000,000
2,000,000
6,500,000
-
-
-
-
-
-
-
-
5,500,000
10,000,000
4,500,000
-
-
-
4,000,000
4,000,000
2,000,000
2,000,000
6,500,000
6,500,000
-
-
-
-
The assessed fair value at grant date of options granted to the individuals is allocated equally over the period from grant date to vesting date,
and the amount is included in the remuneration tables above. Fair values at grant date are determined using a Black & Scholes option pricing
model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected
price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.
No options granted to key management personnel were exercised during the 2018 financial year.
(ii) Shares
No shares were granted to key management personnel during the year.
F. Shareholdings of Key Management Personnel
The numbers of shares in the Company held during the financial year by each director of Envirosuite Limited and other key management
personnel of the Group, including their personally related parties, are set out below.
2018
Directors of Envirosuite Limited
Peter White (appointed 10 July 2017)
David Johnstone
Robin Ormerod
Adam Gallagher
Other key management personnel
Clinton Lander (Appointed 15 May 2017)
Balance
at start of
the year
Granted as
compensation
Other
changes
during the
year
Balance at
end of the
year
1,988,399
1,250,000
56,683,589
250,000
-
-
-
-
-
-
*102,941
**594,118
2,091,340
1,844,118
*5,387,039
51,296,550
*102,941
352,941
-
-
*Changes arose during the year through off market transactions.
**Changes arose during the year from a combination of on-market and off-market transactions.
2017
Directors of Envirosuite Limited
Murray d’Almeida (resigned 1 Sept 2016)
David Johnstone
Robin Ormerod
Adam Gallagher
*Changes arose during the year through off market transactions.
Balance
at start of
the year
Granted as
compensation
Other
changes
during the
year
Balance at
end of the
year
-
-
40,489,947
-
-
-
-
-
-
-
*1,250,000
1,250,000
*16,193,642
56,683,589
*250,000
250,000
Page 16 Directors' Report
G. Loans to key management personnel
There were no loans to key management personnel during the reporting period
H. Other transactions with key management personnel
Mr David Johnstone is a Director and Chairman of the Company. His fees are paid to DOAK Pty Ltd, a related party.
Mr Adam Gallagher is a Director and the Company Secretary of the Company. His fees are paid to Famile Pty Ltd, a related party.
There were no transactions with key management personnel of Envirosuite Limited, other than those disclosed at Section C(iii) of this
Director’s report, during this reporting period.
Amounts
Related
ROKZair Pty Ltd
Famile Pty Ltd
Related Party
Robin Ormerod
Adam Gallagher
MC Consultancy Pty Ltd
Murray d’Almeida
Service Provided
Consultancy Services
Consultancy Services
Consultancy Services
2018
$
2017
$
-
-
-
-
133,332
16,000
30,000
413,748
This Director’s report, incorporating the Remuneration Report, is signed in accordance with a resolution of the Board of Directors.
*END OF REMUNERATION REPORT*
David Johnstone
Chairman
22 August 2018
Envirosuite Limited Annual Report 2018Page 17
Corporate Governance Statement
Corporate Governance Statement
ENVIROSUITE Limited (“EVS” or “the Company”) Approach to Corporate Governance and Responsibility
The EVS board of Directors is committed to the principles underpinning good corporate governance, applied in a manner which is most
suited to EVS, and to best addressing the directors’ accountability to security holders and other stakeholders. This is supported by a
commitment to the highest standards of legislative compliance and financial and ethical behaviour.
The Company continues to address directors’ accountability to stakeholders in a manner consistent with the Company’s individual
circumstances enhanced through the introduction of publicly available policies and procedures which are designed to foster a culture of
transparency in the way EVS is directed and managed.
As a measure of its stated commitment to good corporate governance principles, the board will continue to:
•
•
Review and continually improve its governance practices; and
Monitor developments in good corporate governance.
Report on Compliance with the ASX Corporate Governance Principles and Recommendations 3rd Edition
The ASX Listing Rules require listed companies to issue a statement disclosing the extent to which they have followed the ASX Corporate
Governance Principles and Recommendations 3rd Edition (“Recommendations”) which took effect for reporting periods commencing
on 1 July 2014.
The Company has elected to publish its Statement of Corporate Governance Practices in its Annual Report and will lodge the Appendix
4G that sets out a Key to Disclosures - Corporate Governance Council Principles and Recommendations. This will be lodged on the same
date as the Annual Report of the Company.
Listed companies must identify the recommendations that have not been followed and provide reasons for the Company’s decision.
Where a recommendation has been followed for only part of the period the company must state the period during which it had been
followed.
As detailed within this Statement of Corporate Governance Practices; EVS considers its governance practices comply with:
•
•
each of the ASX Corporate Governance Principles (“Principles”); and
the Recommendations, except for those detailed, and for the reasons outlined, in this Report.
For the reasons expressed within this statement, EVS has elected not to adopt Recommendations 2.2 and 2.4. Several
Recommendations have not been fully adopted and the reasons for that and the extent to which EVS does comply with the
Recommendations are also set out in this statement. EVS is a small company and accordingly the Directors consider that many of the
corporate governance guidelines intended to apply to larger companies are not practical.
This statement outlines the:
•
•
Principles and Recommendations identified by the ASX as underlying good corporate governance; and
The corporate governance practices of EVS during the financial year, except where stated otherwise.
Principle 1: Lay solid foundations for management and oversight.
Companies should establish and disclose the respective roles and responsibilities of board and management and how their
performance is monitored and evaluated.
Recommendation 1.1:
The Company should disclose:
•
•
the respective roles and responsibilities of the board and management; and
those matters expressly reserved to the board and those delegated to management.
Formalisation of board and management functions
The board has formalised its roles and responsibilities into a Charter. The board Charter clearly defines the matters that are reserved for
the board and those that the board has delegated to management.
Page 18 Corporate Governance Statement
•
•
•
•
•
•
oversight of the Company, including its control and accountability systems;
setting the Company’s major goals including the strategies and financial objectives to be implemented by management;
appointing, removing and managing the Chief Executive Officer;
ratifying the appointment and where appropriate the removal of the Chief Financial Officer and/or Company Secretary;
input into and final approval of management’s development of corporate strategy and performance objectives;
reviewing and ratifying systems of risk management and internal compliance and control, codes of conduct and legal compliance;
• monitoring senior management’s performance and implementation of strategy, and ensuring that appropriate resources are
available;
•
•
•
approving and monitoring the progress of major capital expenditure, capital management and acquisitions and divestitures;
approving and monitoring financial and other reporting; and
corporate governance.
The board has delegated responsibility to the Chief Executive Officer for:
•
developing and implementing corporate strategies and making recommendations on significant corporate strategic initiatives;
• maintaining an effective risk management framework and keeping the board and market fully informed about material risks;
•
developing the Group’s annual budget, recommending it to the board for approval and managing day to day operations within the
budget;
• managing day to day operations in accordance with standards for social and ethical practices which have been set by the board;
and
•
approval of capital expenditure and business transactions within predetermined limits set by the board.
Recommendation 1.2:
•
•
The Company should undertake appropriate checks before appointing a person or putting forward to security holders a
candidate for election as a director; and
provide all material information in its possession relevant to enabling security holders to make an informed decision on
whether or not to elect or re-elect a director.
Director’s appointment
EVS performs appropriate checks of any person to be appointed a director, either by the board or nominated by Security Holders.
A nominated person is required to disclose to the board any information sought regarding their overall character and ability to fulfil his
or her responsibilities as a Director.
Where a candidate is standing for election or re-election as a Director, the Company will provide information regarding their
qualifications, experience and skills they bring to the board together with details of any other material directorships currently held.
If standing for the first time the Company will also advise if there were any material adverse information revealed by the checks the
Company has performed about the candidate together with any interest, position, association or relationship that might influence, or
reasonably be perceived to influence, in a material respect his or her capacity to bring an independent judgement to bear on issues
before the board and to act in the best interests of the Company and its security holders generally; and a statement to the effect that
if the board considers that the candidate will, if elected, qualify as an independent director. Where a candidate seeks election or re-
election the board will issue a statement as to whether it supports the election or re-election of the candidate.
Procedure for selection and appointment of new directors
The process for appointing a director with EVS is that, when a vacancy exists, the board identifies candidates with the appropriate
expertise and experience, using external consultants as appropriate. The most suitable candidate is appointed but must stand for
election at the next annual general meeting following their appointment.
The process for re-election of a director is in accordance with the Company’s Constitution, which requires that each year, at least one-
third of the directors (excluding a managing director) retire from office at the Annual General Meeting. The retiring directors may be
eligible for re-election.
Envirosuite Limited Annual Report 2018Page 19 Corporate Governance Statement
Recommendation 1.3:
Companies should have a written agreement with each director and senior executive setting out the terms of their appointment.
Agreements with Directors and senior executives
EVS ensures that all Directors and senior executives enter into written agreements setting out the terms of their appointment to ensure
that they have a clear understanding of their roles and responsibilities and of the Company’s expectations of them. Material terms of
contracts with the Group are included in the remuneration report which is published in the Annual Report.
Recommendation 1.4:
The company secretary of a listed entity should be accountable directly to the board, through the chair, on all matters to do with
the proper functioning of the board.
Company Secretary
The Company Secretary is accountable directly to the Board. The Company Secretary advises the board on all governance matters,
ensures board policies and procedures are followed, despatches timely board papers, accurately records the minutes of meetings and
assists in the induction and professional development of directors. The appointment or removal of the Company Secretary is a matter
for the board.
Recommendation 1.5:
The Company should:
•
•
•
have a diversity policy which includes requirements for the board or a relevant committee of the board to set measurable
objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with the
Company’s diversity policy and its progress towards achieving them;
disclose that policy or a summary of it; and
disclose at the end of each reporting period the measurable objectives for achieving gender diversity set by the board or
the relevant committee of the board in accordance with the Company’s diversity policy and its progress towards achieving
them and the respective proportions of men and women on the board, in senior executive positions and across the whole
organisation.
Diversity
The board recognises the benefits of achieving an appropriate mix of diversity on its board and throughout the Company as a means of
enhancing the Company’s performance and organisational capabilities. The board is committed to ensuring adherence to diversity and
has adopted by a formal diversity policy that is set out and published in Section 5 of the Group’s Corporate Governance Structure. The
board and management has adopted a broad view of what constitutes meaningful diversity and is proud to employ a team of people
with a diverse mix of skills, experiences, perspectives, cultures, gender and age.
Measurement of diversity objectives
EVS aims to achieve an appropriate mix of diversity on its board, in senior management and throughout the organisation. The EVS
board has determined that no specific measurable objectives will be established until the number of employees and level of activities of
the Company increases to a level sufficient to enable meaningful and achievable objectives to be developed.
Women employees
EVS has four directors including the CEO, all of which are male. The Chief Financial Officer is also male. EVS has six female employees as
at the date of this report.
Recommendation 1.6:
The Company should:
•
•
have and disclose the process for periodically evaluating the performance of the board, its committees and individual
directors; and
disclose, in respect of each reporting period whether a performance evaluation was undertaken.
Board Performance Evaluation
The board has adopted an ongoing, self-evaluation process to measure its own performance, that of individual directors and the
performance of its committee functions during the reporting period.
Page 20 Corporate Governance Statement
The Chairman meets periodically with the individual directors to discuss the performance of the board and each director. The
Chairman’s performance is also evaluated by the directors. In addition, an evaluation is undertaken by the Chairman of the contribution
of directors retiring by rotation prior to the board endorsing their candidature.
The review process involves consideration of all of the board’s key areas of responsibility and accountability and is based on an
amalgamation of factors including capability skill levels, understanding of industry complexities, risks and challenges, and value adding
contribution to the overall management of the business.
A performance evaluation for the board, its committee functions and directors including the Chairman takes place during each annual
reporting period in accordance with the process detailed within this statement.
The outcomes of the self-assessment program are used to enhance the effectiveness of individual directors and the board collectively.
Recommendation 1.7:
A listed entity should:
•
•
have and disclose a process for periodically evaluating the performance of its senior executives; and
disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in
accordance with that process.
The Company has a formal process for evaluating the performance of all staff including the senior executives. The Chief Executive
Officer conducts formal periodical performance evaluations for his direct reports that include the Chief Financial Officer, Product
Manager, Channel Sales Manager and the General Managers for Europe and the Americas. The performance of each of the CEO’s direct
reports are considered against their contracted KPIs and the extent to which they have achieved the budgets for which they are directly
responsible.
The Board conducts an annual performance review of the Chief Executive Officer. The review considers the performance of the CEO
against their KPIs that includes assessing the performance of the business against company budgets and strategic objectives as well as
other measures designed to protect and grow shareholder value.
These reviews were conducted during the reporting period.
Principle 2: Structure the board to add value.
Companies should have a board of an appropriate size, composition, skills and commitment to enable it to discharge its duties
effectively.
Recommendation 2.1:
The board should have a nomination committee and structure that committee so that it:
•
•
has at least three (3) members and consists of a majority of independent directors; and
is chaired by an independent chair, who is not chair of the board;
and disclose:
•
•
•
the nomination committee charter;
the members of the committee;
at the end of each reporting period the number of times the committee met throughout the period and the individual
attendances of the members at those meetings;
Alternatively, if there is no nomination committee disclose that fact and the processes it employs to address board succession
issues and to ensure that the board has the appropriate balance of skills, knowledge, experience, independence and diversity to
enable it to effectively discharge its duties and responsibilities effectively.
Establishment of nomination committee
EVS has a formal Remuneration and Nomination committee which is a sub-committee of the board however for practical considerations
associated with the small size and scale of the Company, and the make-up of the board, the Company has elected not to adopt each of
the sub-recommendations set out in Recommendation 2.1.
The Committee consists of only two directors and the Chair of the Committee is also the Chair of the board. The Company believes
that the Committee members are the best qualified members of the Board to effectively perform the functions of the Committee in
accordance with the Charter which is published on the Company’s website. The number of meetings held in each financial year and the
attendance at those meetings is disclosed in the Company’s Annual Report.
Envirosuite Limited Annual Report 2018Page 21 Corporate Governance Statement
Recommendation 2.2:
The board should have and disclose a board skills matrix setting out the mix of skills and diversity that the board currently has or is
looking to achieve.
Skills matrix
EVS has identified the skills and competency of each board member.
EVS has elected not to adopt Recommendation 2.2 as it considers that its current practices of identifying skills and competency are an
efficient means of meeting the needs of the Company, particularly having regard to the fact that EVS is a relatively small publicly listed
company by comparison to other listed entities which is reflected by the size of its operations, board structure and composition.
Recommendation 2.3:
The Company should disclose:
•
•
the names of the directors considered by the board to be independent directors.
If a director has an interest, position, association or relationship which may influence or cast doubts about his or her
independence, but the board is of the opinion that it does not compromise the independence of the direct, the Company
should disclose the nature of the interest, position, association or relationship in question and the explanation of why the
board is of that opinion; and
•
the length of service of each director.
Independence
An EVS director will be considered independent where he or she is:
•
•
independent of management, that is a non-executive director; and
free from any business or other relationship that could materially interfere with, or could reasonably be perceived to materially
interfere with, the exercise of his or her unfettered and independent judgement.
Materiality is assessed on a case-by-case basis by reference to the director’s individual circumstances rather than general materiality
thresholds.
The EVS board has made its own assessment to determine the independence of each director on the board. It is the board’s view
that during the year that only the Chairman, Mr David Johnstone can be considered both non-executive and independent. Mr Adam
Gallagher by virtue of his role as Company Secretary cannot be considered non-executive and therefore not independent, and similarly
Mr Peter White and Mr Robin Ormerod cannot be considered non-executive nor independent, on account of their executive employment
contracts, as well as Mr Ormerod being a major shareholder.
In view of the size of the Company and the nature of its activities, the board considers that the current mix of skills, experience,
qualifications and experience on the board is consistent with the short to medium term interests of the Company. The board will
continue to evaluate the appropriate make-up of the board and monitor the requirements for independent directors in the context of
the Company’s communicated objectives.
The disclosure recommendations in Recommendation 2.3 are disclosed in the Director’s Report as part of each Annual Report.
Recommendation 2.4:
The majority of the board should be independent directors.
Composition of the board
The EVS board currently comprises three (3) executive directors and one (1) non-executive director. The one non-executive director is
also considered to be independent. The executive directors are not considered to be independent due to their contractual relationships
with the Company and the substantial shareholding in the Company of the Managing Director, Mr Robin Ormerod.
The desirable composition of the board is based on the following factors:
•
•
•
the Company’s constitution provides for the number of directors to be not less than three (3) and not more than ten (10) as
determined by directors from time to time;
the board is cognisant that the position of Chairman should where possible be held by a non-executive director.
Consistent with the Company’s objective that the board should encompass a broad range of relevant expertise, the present
board consists of directors with a collective of diverse skills, qualifications and experience and further details are provided in the
Director’s Report.
Page 22 Corporate Governance Statement
•
The board considers that the individual Directors draw on their professional expertise, experience and skill-sets to make measured,
considered and balanced decisions in the best interests of the Company.
There is no shareholding requirement imposed upon directors under the Company’s Constitution; however, all of the directors of EVS
hold shares or options either directly or indirectly in the Company.
Details of all holdings by directors in the Company are included within the Directors Report contained within the EVS Annual Report.
Recommendation 2.5:
The chair should be an independent director.
Chairman
The Chairman is selected by the board.
The current Chairman, Mr David Johnstone, was appointed as a non-executive director in February 2014 and elected Chairman in
September 2016.
The appointment of Mr David Johnstone as Chairman resulted in an independent non-executive director acting as Chair from 2
September 2016.
The board will continue to assess the requirements of this recommendation in the context of the Company’s individual circumstances
and its communicated long-term objectives.
Separation of roles of Chair and CEO
For the year ended 30 June 2018, the roles of Chairman and CEO were held by different people. Mr David Johnstone served as Chairman
for the entire reporting period and Mr Peter White was appointed CEO and director on 10 July 2017, prior to which Mr Robin Ormerod,
Managing Director, fulfilled the CEO duties.
Recommendation 2.6:
An entity should have a program for the induction of new directors and provide appropriate professional development
opportunities to all board members in order to develop and maintain the skills and knowledge needed to effectively perform their
duties as a director.
Induction program
Procedures for induction of new directors are in place to allow new directors to participate fully and actively in board decision making at
the earliest opportunity.
All directors are offered an induction program appropriate to their experience upon appointment so as to familiarise them with matters
relating to the business, strategy and any current issues under consideration by the board. This program consists of written background
material on the Company, its products, services and operations, scheduled meetings with the Chairman and CEO of the Company.
Director education
The board encourages directors to continue their education by participating in applicable workshops and seminars and attending site
visits and undertaking relevant external education.
The Company Secretary provides directors with on-going information on matters such as corporate governance, the Company’s
constitution and the law.
Board briefings and agendas
Board agendas are structured throughout the year in order to ensure that each of the significant responsibilities of the board is
addressed.
Prior to each meeting, Directors receive financial, operational and strategy reports from senior management who are available to
discuss reports with the board.
Access to information
All directors have access to company records and information, and receive regular detailed financial and operational reports from
senior management.
Envirosuite Limited Annual Report 2018Page 23 Corporate Governance Statement
The Company Secretary is available to all Directors and may be consulted on on-going issues of corporate governance, the Company
constitution and the law. In addition, the Chairman and other Directors consult with each other and the Chief Financial Officer, and may
confer and request additional information from any EVS employee or consultant. Management are available to discuss reports, and any
issue arising, with the board as required.
Term of office, skills, experience and expertise of each director
The qualifications, experience and expertise of the directors, and the respective terms of office held by individual directors, are set out
in the Directors Report contained within the Annual Report.
Independent professional advice
EVS has in place a procedure whereby, after appropriate consultation, directors are entitled to seek independent professional advice,
at the expense of EVS, to assist them to carry out their duties as directors. The policy of EVS provides that any such advice is made
available to all directors.
Principle 3: Promote ethical and responsible decision-making
The entity should act ethically and responsibly.
Recommendation 3.1:
The Company should:
•
•
Establish a code of conduct for its directors, senior executives and employee; and
disclose that code or a summary of it.
Code of conduct
EVS is committed to the operation of its business in a manner that meets or exceeds the ethical, legal, commercial and public
expectations that society has of the Company and the industry in which it operates.
The board has approved a Code of Conduct that applies to all directors, executives, management and employees without exception.
The Code of Conduct is designed to ensure that:
•
•
•
high standards of corporate and individual behaviour are observed by all EVS directors, executives, management and employees in
the context of their respective roles and the performance of their duties with EVS.
directors, executives, management and employees are aware of their responsibilities to EVS under the terms of their appointment
or contract of employment; and
all of the stakeholders of the Company can be guided by the stated values and policies of EVS.
In summary, the Code provides that all directors and senior executives must:
•
•
•
•
•
•
act honestly, in good faith and in the best interests of the company;
use due care, skill and diligence in fulfilling their duties;
use the power of their position for a proper purpose, in the interest of the company;
not make improper use of information acquired by virtue of their position;
not allow personal interest, or those of associates, to conflict with the interest of the company;
exercise independent judgement and actions;
• maintain the confidentiality of company information acquired by virtue of their position;
•
•
not engage in conduct likely to bring discredit to the company; and
comply at all times with both the spirit and the letter of the law, as well as, policies of the company.
Principle 4: Safeguard integrity of financial reporting.
Entities should have formal and rigorous processes that independently verify and safeguard the integrity of its corporate reporting.
Recommendation 4.1:
Page 24 Corporate Governance Statement
The board should have an audit committee and structure that committee so that it:
•
•
has at least three (3) members and consists of a majority of independent directors; and
is chaired by an independent chair, who is not chair of the board;
and disclose:
•
•
•
the audit committee charter;
the members of the committee and their experience and qualifications;
at the end of each reporting period the number of times the committee met throughout the period and the individual
attendances of the members at those meetings;
Alternatively, if there is no audit committee disclose that fact and the processes it employs that independently verify and safeguard
the integrity of its corporate reporting, including the processes for the appointment and removal of the external auditor and the
rotation of the audit engagement partner.
Establishment of audit committee
EVS has a formal Audit and Risk Management committee which is a sub-committee of the board however for practical considerations
associated with the small size and scale of the Company, and the make-up of the board, the Company has elected not to adopt each of
the sub-recommendations set out in Recommendation 4.1.
The Committee consists of only two directors and the Chair of the Committee is not the Chair of the board. The Company believes
that the Committee members are the best qualified members of the Board to effectively perform the functions of the Committee in
accordance with the Charter which is published on the Company’s website. The board considers that the technical skills, qualifications
and experience represented by the involvement of members Mr David Johnstone and Mr Adam Gallagher are most suited to the
effective discharge of these responsibilities.
The number of meetings held in each financial year and the attendance at those meetings is disclosed in the Annual Report.
The board will continue to monitor the requirements of this recommendation in the context of the Company’s prevailing position and
circumstances.
Audit committee – terms of reference
Notwithstanding, the EVS Audit and Risk Management Committee role and responsibilities, composition, structure and membership
requirements are detailed in a formalised Audit and Risk Management charter that is available on the Company’s website.
Reflecting the relative small size of the Company the Audit and Risk Management Committee is responsible for:
•
•
•
•
•
•
•
reviewing the annual and half year financial reporting carried out by EVS;
reviewing the accounting policies of EVS;
reviewing the scope and audit programmes of the external auditors and any material issues arising from these audits;
oversee the independence of external auditors and determining procedures for the rotation of audit partners; and
the sufficiency of, and compliance with, ethical guidelines and company policies affecting corporate governance, financial
reporting and corporate control together with compliance with laws and external regulations;
identification of the full range of actual or potential risk exposures which are material to EVS; and
the effectiveness of the group’s risk management systems and strategies.
Meetings
The members of the Audit and Risk Management committee meet informally on a monthly basis to review and manage risks and
reporting and report on those matters at each monthly board meeting. Formal meetings of the committee are held prior to the release
of the Half Year and Annual Reports and as required to fulfil its obligations.
Reporting
The committee members converse as and when required on matters relevant to the audit function.
Engagement and rotation of external auditor
The board is responsible for nominating the external auditor. If the board recommends a change in external auditor, the board’s
nomination of external auditors requires Security holder approval. The board approves the compensation of the external auditor.
Envirosuite Limited Annual Report 2018Page 25 Corporate Governance Statement
The board meets with the external auditor throughout the year to review the adequacy of the existing external audit arrangements with
particular emphasis on scope, quality and independence of the audit.
It has been determined by the board that the external auditor will not provide services to the Company where the auditor would:
•
•
•
•
have a mutual or conflicting interest with the Company;
be in a position where they audit their own work;
function as management of the Company; or
have their independence impaired or perceived to be impaired in any way.
Specifically, the external auditor will not normally provide the following types of services to the Company:
•
•
•
•
•
bookkeeping or other services relating to the accounting records of the Group;
financial information or information technology systems design or implementation;
appraisal and valuation services, fairness opinions or contributions in kind reports;
actuarial services;
internal audit outsourcing services;
• management functions, including temporary staff assignments or human resource services, including recruitment of senior
management;
•
•
broker or dealer services, investment advisor, corporate finance or investment banking services; and
legal and litigation support services.
Procedures are in place governing approval of any non-audit work before the commencement of any engagement.
The board has elected to adopt a policy which is consistent with the primary and secondary rotation obligations regarding auditors
such that:
•
•
the lead or review audit partner’s responsibilities may not be performed by the same person for longer than five (5) consecutive
years (“primary rotation obligation”); and
the lead or review audit partner’s responsibilities may not be performed by the same person for more than five (5) out of seven (7)
consecutive years (“secondary rotation obligation”).
In addition, the board requires a minimum of two (2) consecutive years “cooling off” period before an auditor undergoing rotation can
return to playing a significant role in the audit of the Company.
Mr Shaun Lindemann of PKF Hacketts Pty Ltd was the lead audit partner for EVS for the year ended 30 June 2018.
The lead signing and review External Audit Partner attends that part of board meetings pertaining to audit matters by standing
invitation.
Number of meetings and names of attendees
The details of the formal Audit and Risk Management committee meetings held during each financial year including the number of
meetings and the names of the attendees are disclosed in the Annual Report.
Recommendation 4.2:
The board should, before it approves the entity’s financial statements, receive from the Chief Executive Officer (or equivalent) and
the Chief Financial Officer (or equivalent) a declaration that the financial records of the entity have been properly maintained and
such declaration be provided in accordance with Section 295A of the Corporations Act and the declaration is founded on a sound
system of risk management and internal control and that the system is operating effectively in all material respects in relation to
financial reporting risks.
CEO and CFO assurance
The Chief Executive Officer and the Chief Financial Officer of EVS report in writing to the board that:
•
•
consolidated financial statements of EVS and its controlled entities for each half year and full financial year present a true and fair
view, in all material respects, of the Group’s financial condition and operational results and are in accordance with accounting
standards; and
declarations provided in accordance with Section 295A of the Corporations Act are founded on a sound system of risk management
and internal control, and that the system is operating effectively in all material respects in relation to financial reporting risks.
Page 26 Corporate Governance Statement
The board has received assurance from the Chief Executive Officer and the Chief Financial Officer under Recommendation 4.2 in respect
of each financial year. This assurance is provided in accordance with the process outlined in this Statement.
Recommendation 4.3:
The Company should ensure that its external auditor attends its AGM and is available to answer questions from security holders
pertaining to the audit.
External auditor attendance at AGM
EVS seeks to ensure that the lead audit partner or his representative attends the AGM in order to be available to answer questions from
security holders pertaining to the audit.
Principle 5: Make timely and balanced disclosure
Entities should make timely and balanced disclosure of all matters concerning it that a reasonable person would expect to have a
material effect on the price or value of its securities.
Recommendation 5.1:
Establish written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and to
ensure accountability at a senior level for that compliance and disclose those policies or a summary of those policies.
The EVS board is committed to keeping its security holders, and the market, fully informed of major developments having an impact on
the Company.
Comprehensive procedures are in place to identify matters that are likely to have a material effect on the price, or value of EVS securities
and to ensure those matters are notified to the ASX in accordance with ASX disclosure requirements.
The Chief Executive Officer and the board are responsible for scrutinising events and information to determine whether the disclosure
of the information is required in order to maintain the market integrity of the Company’s shares listed on the ASX.
The Company Secretary is responsible for lodging all communications with the ASX.
Principle 6: Respect the rights of security holders
The entity should respect the rights of security holders by providing them with appropriate information and facilities to allow them
to exercise those rights effectively.
Recommendation 6.1:
The Company should provide information about itself and its governance to investors via its website.
Security holder communication policy
EVS recognises the rights of security holders to be informed of matters, in addition to those prescribed by law, which affect their
investments in the Company.
EVS is committed to:
•
•
•
dealing fairly, transparently and openly with both current and prospective security holders;
the use of available channels and cost effective technologies to reach security holders who may be geographically dispersed and in
order to communicate with all security holders; and
facilitating participation in Security holder meetings and dealing promptly with Security holder enquiries.
EVS communicates information to security holders through:
•
•
•
•
•
•
the annual report;
disclosures to the ASX and ASIC;
notices and explanatory memorandum of annual general meetings and general meetings;
occasional letters from the Chief Executive Officer to inform security holders of key matters of interest;
the Company’s website; and
opt-in email notifications of ASX announcements and other news items relevant to their interest in the Company.
Envirosuite Limited Annual Report 2018Page 27 Corporate Governance Statement
Recommendation 6.2:
The Company should design and implement an investor relations program to facilitate effective two-way communication with
investors.
Investor relations program
EVS employs a communications manager whose role is to manage effective internal and external communications for clients,
shareholders, staff, industry and other stakeholders. In addition the group retains the services of an external Investor Relations advisor
and implements strategies and communication activities with the aim of encouraging and facilitating investor interest and engagement
with the Company.
The Directors and Chief Executive Officer meet regularly with and make themselves available to investors for the purpose of providing
effective two-way communication.
Recommendation 6.3:
The Company should disclose the policies and processes it has in place to facilitate and encourage participation at meeting of
security holders.
The board encourages active participation by security holders at each Annual General Meeting, or other general meetings, to ensure a
high level of accountability and understanding of EVS’s strategy, performance and goals.
Consistent with best practice, important issues are presented to security holders as single resolutions expressed in plain, unambiguous
language. Proceedings are held in a locality, and at a readily accessible venue, conducive to maximising the number of security holders
present, and able to participate, at the meeting. In addition to the formal aspects of the meeting, the CEO may present an overview of
the Company in a separate presentation or provide a demonstration of the Company’s software products. Security holders are provided
with opportunities of asking the board questions that they may have including those regarding the management of the Company.
Recommendation 6.4:
A listed entity should give security holders the option to receive communications from, and send communications to, the entity and
its security registry electronically.
Electronic communications from shareholders for the submission of queries, comments and voting including proxy forms, are
encouraged by both the Company and its security registry provider Boardroom Limited. On the each ASX announcement the Company
displays a dedicated email address for investors to contact. Documents including holding statements, Annual Reports and proxy forms
are mainly conveyed by email unless otherwise requested by the shareholder.
Principle 7: Recognise and manage risk.
Companies should establish a sound risk management framework and periodically review the effectiveness of that framework.
Recommendation 7.1:
The board should have a risk committee and structure that committee so that it:
•
•
has at least three (3) members and consists of a majority of independent directors; and
is chaired by an independent chair, who is not chair of the board;
and disclose:
•
•
•
the risk committee charter;
the members of the committee;
at the end of each reporting period the number of times the committee met throughout the period and the individual
attendances of the members at those meetings;
Alternatively, if there is no risk committee or the committee does not satisfy the recommend structure, disclose that fact and the
processes it employs for overseeing the entity’s risk management framework.
Risk committee
EVS has elected to combine and delegate the functions of primary Audit and Risk oversight to the Audit and Risk Management
Page 28 Corporate Governance Statement
Committee that are set out and governed by the Audit and Risk Management Charter that is available on the Company’s website.
Given the make-up of the board in regard to the mix of executive and non-executive members and their respective skill-sets, the audit
committee is made up of only two directors and the Chair of the committee is not the Chairman of the board however that Chair is not
regarded as an independent director. The names of the Committee members as well as the details of the Committee meetings are
disclosed in the Company’s Annual Report.
Although EVS has not fully adopted Recommendation 7.1, it considers that its existing practices, detailed within this Statement and
the Audit and Risk Management charter, are an efficient means of meeting the needs of the Company, particularly having regard to
the fact that EVS is a relatively small publicly listed company by comparison to other listed entities which is reflected by the size of its
operations, board structure and composition.
The board will however, continue to monitor the requirements of this recommendation in the context of the Company’s prevailing
position and circumstances.
Recommendation 7.2:
The board should:
•
•
review the risk management framework at least annually to satisfy itself that it continues to be sound; and
disclose, in relation to each reporting period, whether a review has taken place.
Oversight and management of material business risks
The board of EVS:
•
•
•
recognise that effective management of risk is an integral part of good management and vital to the continued growth and success
of EVS;
is responsible for the oversight of the Group’s risk management and control framework including the development of risk profiles
as part of the overall business and strategic planning process including budgeting, decision making (e.g. investment appraisal),
monitoring and reporting, project management and internal controls; and
has implemented a policy framework designed to ensure that the Group’s risks are identified, analysed, evaluated, monitored, and
communicated within the organisation on an ongoing basis, and that adequate controls are in place and functioning effectively.
The EVS risk management and control policy framework incorporates the maintenance of appropriate policies, procedures and
guidelines which address the Company’s unique operating environment and is utilised by the board as a means of identifying
opportunities and avoiding or mitigating losses in the context of its business.
During the reporting period, due to the change in scale and nature of the Company operations from the previous reporting periods, the
Company developed a new Risk Register in collaboration with an external Risk management specialist to facilitate the process. The
resulting Risk Register was subsequently approved and adopted by the board and a process reinstated whereby the management risk
oversight and reporting processes feed into the Audit and Risk Management committee and the board.
The Chief Executive Officer has ultimate responsibility for the control and management of operational risk and the implementation of
avoidance or mitigation measures within the Group and may delegate control of these risks to the appropriate level of management at
each location.
The Chief Executive Officer’s approach to management of risk as part of key business processes includes consideration, identifying,
managing and monitoring uncertainties and vulnerabilities that might impact on the achievement of our corporate goals and
reputation.
Recommendation 7.3:
The Company should disclose:
•
•
if it has an internal audit function, how that function is structured and what role it performs; or
if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving
the effectiveness of its risk management and internal control processes.
Internal audit function and review of risk management framework
Envirosuite Limited Annual Report 2018Page 29 Corporate Governance Statement
EVS is a relatively small publicly listed company by comparison to other listed entities which is reflected by the size of its operations,
board structure and composition. As such it is not practical to have an internal audit function.
Through the Risk register, the risk management processes undertaken by management and the Audit and Risk Management committee,
the board regularly monitors the operational and financial performance of the Company and the economic entity against budget and
other key performance measures. The board also receives and reviews advice on areas of operational and financial risk and develops
strategies, in conjunction with management, to mitigate those risks.
Management reports to the board on the effectiveness of the Company’s management of its material business risks in respect of each
financial year. This report was undertaken in accordance with the process outlined in this Statement.
Recommendation 7.4:
The company should disclose whether it has any material exposure to economic, environmental and social sustainability risks and,
if it does, how it manages or intends to manage those risks.
EVS is cognisant that the business community should address matters of economic, environmental and social sustainability and the
need to be transparent on these matters to enable investors to properly assess investment risk.
EVS is a relatively small publicly listed company by comparison to other listed entities which is reflected by the size of its operations,
board structure and composition. Given its size and operations the Company considers that it does not have specific material exposures
to economic, environmental or social sustainability risks.
Principle 8: Remunerate fairly and responsibly.
An entity should pay director remuneration sufficient to attract and retain high quality directors and design its executive
remuneration to attract, retain and motivate high quality senior executives and to align their interests with the creation of value for
security holders
Recommendation 8.1:
The board should establish a remuneration committee.
The remuneration committee should be structured so that it:
•
•
has at least three (3) members and consists of a majority of independent directors; and
is chaired by an independent chair, who is not chair of the board;
and disclose:
•
•
•
the remuneration committee charter;
the members of the committee;
at the end of each reporting period the number of times the committee met throughout the period and the individual
attendances of the members at those meetings;
Alternatively, if there is no remuneration committee or the committee does not satisfy the recommend structure, disclose that fact
and the processes it employs for setting the level and composition of remuneration for directors and senior executives and ensuring
that such remuneration is appropriate and not excessive.
Establishment of remuneration committee
EVS has a formal Remuneration and Nomination committee which is a sub-committee of the board however for practical considerations
associated with the small size and scale of the Company, and the make-up of the board, the Company has elected not to adopt each of
the sub-recommendations set out in Recommendation 2.1.
The committee consists of only two directors and the Chair of the committee is also the Chair of the board. The Company believes
that the committee members are the best qualified members of the Board to effectively perform the functions of the committee in
accordance with the Charter which is published on the Company’s website. The number of meetings held in each financial year and the
attendance at those meetings is disclosed in the Company’s Annual Report.
The details of the responsibilities and functions of the committee is set out in the charter and in summary the committee is responsible
for giving due consideration to the overall remuneration policies and strategies and strategies of the Company during the conduct
Page 30 Corporate Governance Statement
of its regular committee meetings and by appropriate recourse to relevant market data and, where applicable, to external executive
remuneration consultants.
Recommendation 8.2:
An entity should separately disclose its policies and practices regarding the remuneration of non-executive directors’ and the
remuneration of executive directors and other senior executives.
Executive director and non-executive director remuneration
TThe aggregate remuneration of non-executive directors is approved by security holders.
Individual directors’ remuneration is determined by the board, within the approved aggregate total. In determining the appropriate
level of director’s fees, data from surveys undertaken of other public companies similar in size or market section to EVS is taken into
account.
Non-executive directors of EVS are:
•
•
not entitled to participate in performance based remuneration practices unless approved by security holders.
currently remunerated by means of the payment of cash benefits in the form of directors’ fees or alternatively by issue of securities
in lieu of cash benefits provided it is approved by security holders.
EVS does not currently have in place a retirement benefit scheme or allowance for its non-executive directors, except for the payment of
superannuation, where applicable, currently equal to nine and one half per cent (9.5%) as required by law.
A review of the compensation arrangements for the Chief Executive Officer and Senior Executives is conducted by the Remuneration
and Nomination committee at formal and informal committee meetings. A formal review is performed at least annually and is based
upon criteria including individual performance, market rates paid for similar positions and the results of the Company during the
relevant period.
The broad remuneration policy objective of EVS is to ensure that the emoluments provided properly reflect the person’s duties and
responsibilities and is designed to attract, retain and motivate executives of the highest possible quality and standard to enable the
organisation to succeed.
The board ensures that any payments of equity based executive remuneration is made in accordance with the broad remuneration
policy objectives of the Company.
EVS is committed to making timely disclosure of all relevant information relating to its remuneration practices and policies.
Policy disclosure
The Company’s policies relating to the remuneration of Directors and Senior Executives and the level of their remuneration are detailed
annually in the Directors’ Report contained within the Annual Report and Notes to and forming part of the Financial Statements.
Recommendation 8.3:
An entity which has an equity-based remuneration scheme should:
•
•
have a policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or
otherwise) which limit the economic risk of participating in the scheme; and
disclose that policy or a summary of it.
Remuneration scheme
As at the reporting date the Company has not implemented a formal equity-based remuneration scheme. A small select number of key
executives have equity-based incentives set out in their individual contracts that involve potential equity payments at the Company’s
discretion in lieu of cash for performances bonuses and the issue of performance rights. The aggregate amounts of these incentives are
not material and there are no restrictions placed on the ordinary shares that may be issued under these arrangements.
Envirosuite Limited Annual Report 2018Page 31 Auditor's Independence Declaration
AUDITOR’S INDEPENDENCE DECLARATION
UNDER SECTION 307C OF THE CORPORATIONS ACT 2001
TO THE DIRECTORS OF
ENVIROSUITE LIMITED AND CONTROLLED ENTITIES
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2018, there
have been:
(a)
no contraventions of the auditor independence requirements of the Corporations Act 2001
in relation to the audit; and
(b)
no contraventions of any applicable code of professional conduct in relation to the audit.
PKF HACKETTS AUDIT
Shaun Lindemann
Partner
Brisbane, 22 August 2018
Page 32
Consolidated Statements
Consolidated Statement of Profit or Loss and Other Comprehensive Income
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2018
Consolidated Group
Notes
4
6
6
5
7
8
Continuing Operations
Trading Revenue
Other Revenue
Total operating revenue
Cost of revenue
Gross profit
Operating expenses
Sales and marketing
General and administration
Depreciation and amortisation
Due diligence and acquisition costs - Odotech
Total operating expenses
Foreign Currency (Losses) / Gains
Operating deficit
Net finance income
Net loss before tax
Income tax (expense) / benefit
Loss for the year from continuing operations
Discontinued Operations
Profit / (Loss) from discontinued operations
Net loss for the year
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations
Other comprehensive income for the year, net of tax
Total comprehensive income/(loss) for the year
Net (loss)/profit attributed to:
Equity holders of Envirosuite Limited
Total comprehensive (loss)/income attributable to:
Equity holders of Envirosuite Limited
(Loss)/earnings per share from continuing and discontinued operations
attributable to the ordinary equity holders of Envirosuite Limited
Basic (loss) / earnings per share from continuing and discontinued operations
Basic (loss) / earnings per share from continuing
Basic (loss) / earnings per share from discontinued operations
Diluted (loss) / earnings per share from continuing and discontinued operations
Diluted (loss) / earnings per share from continuing operations
Diluted (loss) / earnings per share from discontinued operations
The accompanying notes form part of these financial statements.
30
30
30
30
30
30
2018
$’000
3,152
681
3,833
(1,607)
2,226
(3,643)
(3,944)
(383)
(178)
2017
$’000
150
11
161
(85)
76
(679)
(1,803)
(11)
-
(8,148)
(2,493)
12
(2)
(5,910)
(2,420)
132
6
(5,778)
(2,414)
24
142
(5,754)
(2,272)
586
(5,168)
(2,064)
(4,336)
(61)
(61)
-
-
(5,229)
(4,336)
(5,229)
(4,336)
(5,229)
(4,336)
Cents
Cents
(2.24)
(2.49)
0.25
(2.21)
(2.46)
0.25
(2.01)
(1.05)
(0.89)
(2.01)
(1.05)
(0.89)
Envirosuite Limited Annual Report 2018Page 33
Consolidated Statements
Consolidated Statement of Financial Position
AS AT 30 JUNE 2018
Consolidated Group
Notes
2018
$’000
2017
$’000
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Other assets
Inventories
Total current assets
Non Current Assets
Property, plant and equipment
Deferred tax asset
Intangible assets
Total non-current assets
Total Assets
LIABILITIES
Current Liabilities
Trade and other payables
Revenue in advance
Provisions
Borrowings
Total current liabilities
Non-current Liabilities
Provisions
Borrowings
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Issued capital
Reserves
Retained losses
Total equity attributable to equity holders of Envirosuite Limited
The accompanying notes form part of these financial statements.
9
10
11
12
13
18
14
15
17
16
17
16
19
20
20
3,648
1,386
166
109
5,309
290
414
5,107
5,811
11,471
866
146
-
12,483
13
246
3,782
4,041
11,120
16,524
902
851
508
74
2,212
191
237
-
2,335
2,640
45
154
199
2,534
8,586
26,282
251
(17,947)
8,586
31
-
31
2,671
13,853
26,282
700
(13,129)
13,853
Page 34 Consolidated Statement of Changes in Equity
Consolidated Statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2018
Consolidated Group
At 1 July 2016
Comprehensive income
Loss for the period
Other comprehensive income for the period
Total comprehensive loss for the period
Transactions with owners, in their capacity as owners, and other transfers
Shares issued on partial conversion of convertible loan
Issue of shares (Institutional Placement)
Transaction costs of capital raising (inc. tax effect)
Shares issued / to be issued to employees
Employee share options – value of employee services
Total transactions with owners and other transfers
At 30 June 2017
At 1 July 2017
Comprehensive income
Loss for the period
Other comprehensive income for the period
Total comprehensive loss for the period
Transactions with owners, in their capacity as owners, and other transfers
Shares options expired
Total transactions with owners and other transfers
Ordinary
shares
$’000
Reserves
$’000
Retained
losses
$’000
Total
Equity
$’000
22,828
772
(8,793)
14,807
-
-
-
450
3,000
(162)
165
-
3,453
26,282
-
-
-
-
-
-
(165)
93
(72)
700
(4,334)
(4,334)
-
-
(4,334)
(4,334)
-
-
-
-
-
-
450
3,000
(162)
-
93
3,381
(13,127)
13,854
26,282
700
(13,127)
13,854
-
-
-
-
-
-
(61)
(61)
(388)
(388)
(5,168)
(5,168)
-
(61)
(5,168)
(5,230)
348
348
(39)
(39)
At 30 June 2018
26,282
251
(17,947)
8,586
The accompanying notes form part of these financial statements.
Envirosuite Limited Annual Report 2018Page 35
Consolidated Statements
Consolidated Statement of Cash Flows
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2018
Consolidated Group
Notes
2018
$’000
2017
$’000
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Other revenue
Interest received
Interest paid
Net cash (used in) operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for acquisition of business
Payments for intangible assets
Proceeds from sale of property, plant and equipment
Proceeds from sale of business
Payments for sale of business
3,060
17,865
(10,568)
(21,217)
(7,508)
1,425
129
(7)
(3,352)
1,570
11
(151)
(5,961)
(1,922)
(257)
(430)
(213)
(992)
(1,488)
(1,615)
-
375
(105)
18
15,000
(222)
29
27
Net cash (used in)/provided by investing activities
(1,905)
11,976
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Proceeds from issue of shares
Share issue transaction costs
Net cash provided by financing activities
144
(112)
-
-
32
-
(2,690)
3,000
(210)
100
Net (decrease)/increase in cash and cash equivalents
(7,835)
10,154
Decrease in cash from sale of business
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at the end of the period
9
-
12
11,471
3,648
(21)
-
1,338
11,471
The accompanying notes form part of these financial statements.
Page 36 Contents Page
Contents
38
52
55
56
56
57
58
59
60
60
61
61
62
63
65
65
66
(1.) Summary of significant accounting policies
(2.) Financial risk management
(3.) Segment information
(4.) Revenue
(5.) Net finance income
(6.) Expenses
(7.) Income tax expense
(8.) Discontinued operations
(9.) Cash and cash equivalents
(10.) Trade and other receivables
(11.) Other assets
(12.) Inventories
(13.) Property, plant and equipment
(14.) Intangible assets
(15.) Trade and other payables
(16.) Borrowings
(17.) Provisions
67
68
70
71
71
71
72
72
73
74
75
76
78
79
81
82
(18.) Tax
(19.) Issued Capital
(20.) Reserves and retained losses
(21.) Dividends
(22.) Key management personnel compensation
(23.) Remuneration of auditors
(24.) Contingencies
(25.) Commitments
(26.) Related party transactions
(27.) Business combinations
(28.) Interest in Subsidiaries
(29.) Cash flow statement reconciliation
(30.) Earnings / (losses) per share
(31.) Share based payments
(32.) Parent entity financial information
(33.) Subsequent events
Envirosuite Limited Annual Report 2018Page 37
Notes to the Financial Statements
Notes to Financial Statements
For the Financial Year Ended 30 June 2018
These consolidated financial statements and notes represent those of Envirosuite Limited and controlled entities (the “Consolidated Group”
or “Group”).
The separate financial statements of the parent entity, Envirosuite Limited, have not been presented within this financial report as permitted
by the Corporations Act 2001.
The financial statements were authorised for issue on 22 August 2018 by the directors of the company.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The consolidated financial statements are general purpose financial statements that have been prepared in accordance with Australian
Accounting Standards and Interpretations of the Australian Accounting Standards Board and the Corporations Act 2001. The Group is a for-
profit entity for financial reporting purposes under Australian Accounting Standards.
Australian Accounting Standards set out accounting policies that the Australian Accounting Standards Board has concluded would result in
financial statements containing relevant and reliable information about transactions, events and conditions. Material accounting policies
adopted in the preparation of these financial statements are presented below and have been consistently applied unless stated otherwise.
Except for cash flow information, the financial statements have been prepared on an accruals basis and are based on historical costs,
modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.
(a) Principles of consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of the parent (Envirosuite Limited) and all of the
subsidiaries. Subsidiaries are entities the parent controls. The parent controls an entity when it is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
A list of subsidiaries is contained in note 28 to the financial statements.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group from the date on which
control is obtained by the Group. The consolidation of a subsidiary is discontinued from the date that control ceases.
Intercompany transactions, balances and unrealised gains or losses on transactions between entities in the Consolidated Group are
eliminated in full on consolidation. Accounting policies of subsidiaries have been changed and adjustments made where necessary to
ensure consistency with the policies adopted by the Group.
Investments in subsidiaries are accounted for at cost in the individual financial statements of Envirosuite Limited.
1
Page 38 Notes to the Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(a) Principles of consolidation (continued)
Business Combinations
Business combinations occur where an acquirer obtains control over one or more businesses. The acquisition method of accounting is
used to account for all business combinations, unless it is a combination involving entities or businesses under common control. The
business combination will be accounted for from the date that control is attained, whereby the fair value of identifiable assets acquired and
liabilities (including contingent liabilities) assumed is recognised (subject to certain limited exemptions).
When measuring the consideration transferred in the business combination, any asset or liability resulting from a contingent consideration
arrangement is also included. Subsequent to initial recognition, contingent consideration classified as equity is not remeasured and its
subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability is remeasured in each
reporting period to fair value, with changes in fair value recognised in profit or loss, unless the change in fair value can be identified as
existing at acquisition date.
All transaction costs incurred in relation to business combinations, other than those associated with the issue of a financial instrument, are
recognised as expenses in the profit and loss when incurred. The acquisition of a business may result in the recognition of goodwill or a
gain from a bargain purchase.
Refer to note 27 for business combinations.
Goodwill
Goodwill is carried at cost less any accumulated impairment losses. Goodwill is calculated as the excess of the sum of:
•
•
•
the consideration transferred;
any non-controlling interests; and
the acquisition date fair value of any previously held equity interest; over the acquisition date fair value of net identifiable
assets acquired.
is tested for
Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill
impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less
accumulated impairment losses.
is not amortised. Instead, goodwill
Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash generating units for the purpose of impairment testing. The allocation is made to those cash-generating units
or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose.
Changes in the ownership interests in a subsidiary that do not result in a loss of control are accounted for as equity transactions and do not
affect the carrying amount of goodwill.
2
Envirosuite Limited Annual Report 2018Page 39 Notes to the Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(b) Segment reporting
(d) Government grants and rebates
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 Chief Executive Officer and the board of directors. Refer Note 3 for segment information.
The Group aggregates two or more operating segments when they have similar economic characteristics, and the segments are similar in
each of the following respects:
•
•
•
•
•
nature of the products and services;
nature of the production processes;
type or class of customer for the products and services;
methods used to distribute the products or provide the services; and if applicable
nature of the regulatory environment.
Operating segments that meet the quantitative criteria as prescribed by AASB 8 Operating Segments are reported separately. However, an
operating segment that does not meet the quantitative criteria is still reported separately where information about the segment would be
useful to users of the financial statements.
(c) Revenue recognition and revenue received in advance
tax losses.
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade
allowances, rebates and amounts collected on behalf of third parties.
The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow
to the entity and specific criteria have been met for each of the Group's activities as described below. The amount of revenue is not
considered to be reliably measurable until all contingencies relating to the sale have been resolved. The Group bases its estimates on
historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.
Revenue is recognised for the major business activities as follows:
Trading income
Where the subscription is required to be provided over multiple periods, the contract is prebilled and revenue is recognised on a monthly
basis over the term of the subscription.
Revenue recognition relating to the provision of services is determined with reference to the stage of completion of the transaction at the
end of the reporting period, where the outcome of the contract can be estimated reliably. Stage of completion is determined with reference
to the services performed to date as a percentage of total anticipated services to be performed. Where the outcome cannot be estimated
reliably, revenue is recognised only to the extent that related expenditure is recoverable.
Revenue received in advance is recognised when the company has received a greater amount of revenue from the customer than it is
entitled to recognise, in accordance with revenue recognition policies of the company.
Interest income
Interest income is recognised on a time proportion basis using the effective interest method.
Grants and rebates from the government are recognised at their fair value where there is a reasonable assurance that the grant or rebate
will be received and the Group will comply with all the attached conditions.
Government grants and rebates relating to costs are deferred and recognised as income over the period necessary to match them with the
costs that they are intended to compensate.
Government grants and rebates relating to the purchase of property, plant and equipment and the development of IT and software capital
costs are included in non-current liabilities as deferred income and are credited to income on a straight line basis over the expected lives of
the related assets.
(e) Income tax
The income tax expense/(income) for the year comprises current income tax expense/(income) and deferred tax expense/(income).
Current income tax expense charged to the profit or loss is the tax payable on taxable income. Current tax liabilities/(assets) are measured
at the amounts expected to be paid to/(recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as unused
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it
arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction
affects neither accounting nor taxable profit nor loss. Deferred income tax is determined using tax rates (and laws) that have been enacted
or substantially enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the
deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable
amounts will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when a legally enforceable right of set-off exists and when the deferred tax balances relate to
the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and
intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Envirosuite Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. As a
consequence, these entities are taxed as a single entity and the deferred tax assets and liabilities of these entities are set off in the
consolidated financial statements. In addition to its own current and deferred tax amounts, Envirosuite Limited also recognises the current
tax liabilities and the deferred tax amounts arising from unused tax losses and unused tax credits assumed from controlled entities in the
tax Consolidated Group.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
3
4
Page 40 Notes to the Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(d) Government grants and rebates
Grants and rebates from the government are recognised at their fair value where there is a reasonable assurance that the grant or rebate
will be received and the Group will comply with all the attached conditions.
Government grants and rebates relating to costs are deferred and recognised as income over the period necessary to match them with the
costs that they are intended to compensate.
Government grants and rebates relating to the purchase of property, plant and equipment and the development of IT and software capital
costs are included in non-current liabilities as deferred income and are credited to income on a straight line basis over the expected lives of
the related assets.
(e) Income tax
The income tax expense/(income) for the year comprises current income tax expense/(income) and deferred tax expense/(income).
Current income tax expense charged to the profit or loss is the tax payable on taxable income. Current tax liabilities/(assets) are measured
at the amounts expected to be paid to/(recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as unused
tax losses.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it
arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction
affects neither accounting nor taxable profit nor loss. Deferred income tax is determined using tax rates (and laws) that have been enacted
or substantially enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the
deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable
amounts will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when a legally enforceable right of set-off exists and when the deferred tax balances relate to
the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and
intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Envirosuite Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. As a
consequence, these entities are taxed as a single entity and the deferred tax assets and liabilities of these entities are set off in the
consolidated financial statements. In addition to its own current and deferred tax amounts, Envirosuite Limited also recognises the current
tax liabilities and the deferred tax amounts arising from unused tax losses and unused tax credits assumed from controlled entities in the
tax Consolidated Group.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
4
Envirosuite Limited Annual Report 2018Page 41 Notes to the Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(f) Leases
Leases of property, plant and equipment where the Group, as lessee, has substantially all the risks and rewards of ownership, are
classified as finance leases (note 16). Finance leases are capitalised at the lease's inception at the fair value of the leased property or, if
lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in
other short term and long term payables. Each lease payment is allocated between the liability and finance cost. The finance cost is
expensed over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each
period. The property, plant and equipment acquired under finance leases is depreciated over the asset's useful life or over the shorter of
the asset's useful life and the lease term if there is no reasonable certainty that the Group will obtain ownership at the end of the lease
term.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as
operating leases (note 25). Payments made under operating leases (net of any incentives received from the lessor) are expensed on a
straight line basis over the period of the lease.
(g) Impairment of assets
At the end of each reporting period, the Group assess whether there is any indication that an asset may be impaired. The assessment will
include the consideration of external and internal sources. If such an indication exists, an impairment test is carried out on the asset by
comparing the assets carrying value to its recoverable amount being the higher of an asset's fair value less costs to sell and value in use.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows
which are largely independent of the cash inflows from other assets or groups of assets (cash generating units).
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or
more frequently if events or changes in circumstances indicate that they might be impaired.
(h) Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short term, highly liquid investments
with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value.
(i) Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method,
less provision for impairment. Trade receivables are generally due for settlement within 30 - 90 days. They are presented as current assets
unless collection is not expected for more than 12 months after the reporting date.
(j) Inventories
Inventories are measured at the lower of cost and net realisable value.
(k) Investments and other financial assets
Loans and receivables
position.
Recognition and de-recognition
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
They are included in current assets, except for those with maturities greater than 12 months after the reporting date which are classified as
non-current assets. Loans and receivables are included in trade and other receivables (note 10) in the consolidated statement of financial
Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss.
Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the
statement of comprehensive income. Financial assets are derecognised when the rights to receive cash flows from the financial assets
have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.
Loans and receivables are carried at amortised cost using the effective interest method.
The Group assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is
Subsequent measurement
Impairment
impaired.
(l) Plant and equipment
Plant and equipment is measured on the cost basis and therefore carried at cost less accumulated depreciation and any accumulated
impairment. Cost includes expenditure that is directly attributable to the acquisition of the items. In the event the carrying amount of plant
and equipment is greater than the estimated recoverable amount, the carrying amount is written down immediately to the estimated
recoverable amount and impairment losses are recognised in profit or loss. A formal assessment of recoverable amount is made when
impairment indicators are present (refer Note 1(g) for details of impairment).
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying
amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are
recognised in the profit or loss during the financial period in which they are incurred.
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from
these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s
employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining
recoverable amounts.
5
6
Page 42 Notes to the Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(k) Investments and other financial assets
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
They are included in current assets, except for those with maturities greater than 12 months after the reporting date which are classified as
non-current assets. Loans and receivables are included in trade and other receivables (note 10) in the consolidated statement of financial
position.
Recognition and de-recognition
Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss.
Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the
statement of comprehensive income. Financial assets are derecognised when the rights to receive cash flows from the financial assets
have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.
Subsequent measurement
Loans and receivables are carried at amortised cost using the effective interest method.
Impairment
The Group assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is
impaired.
(l) Plant and equipment
Plant and equipment is measured on the cost basis and therefore carried at cost less accumulated depreciation and any accumulated
impairment. Cost includes expenditure that is directly attributable to the acquisition of the items. In the event the carrying amount of plant
and equipment is greater than the estimated recoverable amount, the carrying amount is written down immediately to the estimated
recoverable amount and impairment losses are recognised in profit or loss. A formal assessment of recoverable amount is made when
impairment indicators are present (refer Note 1(g) for details of impairment).
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying
amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are
recognised in the profit or loss during the financial period in which they are incurred.
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from
these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s
employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining
recoverable amounts.
6
Envirosuite Limited Annual Report 2018Page 43 Notes to the Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(l) Plant and equipment (continued)
Depreciation
Depreciation is calculated using the straight line method to allocate their cost or re-valued amounts, net of their residual values, over their
estimated useful lives or, in the case of leasehold improvements and certain leased plant and equipment, the shorter lease term as follows:
•
•
•
•
Vehicles
Furniture, fittings and equipment
Leased plant and equipment
Leasehold improvements
3 - 8 years
2 - 20 years
3 - 11 years
3 - 5 years
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its
estimated recoverable amount.
months after the reporting date.
(p) Provisions
(m) Intangible assets other than Goodwill
Software
Costs incurred in developing products or systems and costs incurred in acquiring software and licenses that will contribute to future period
financial benefits through revenue generation and/or cost reduction are capitalised to software and systems.
Costs capitalised include external direct costs of materials and service and direct payroll and payroll related costs of employees' time spent
on the project. Amortisation is calculated on a straight line basis over 10 years for each completed project module. Amortisation
commences on each module only when complete.
Research and development
Research expenditure is recognised as an expense as incurred. Costs incurred on development projects (relating to the design and testing
of new or improved products) are recognised as intangible assets when it is probable that the project will, after considering its commercial
and technical feasibility, be completed and generate future economic benefits and its costs can be measured reliably. The expenditure
capitalised comprises all directly attributable costs, including costs of materials, services, direct labour and an appropriate proportion of
overheads. Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs
previously recognised as an expense are not recognised as an asset in a subsequent period. Capitalised development costs are recorded
as intangible assets and amortised from the point at which the asset is ready for use on a straight line basis over its useful life, which is
currently 10 years.
(o) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised
cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the statement of
comprehensive income over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan
facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In
this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility
will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it
relates.
Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled or
expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and
the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in other income or finance costs.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12
Provisions for legal claims and make good obligations are recognised when the Group has a present legal or constructive obligation as a
result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably
estimated. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering
the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the
same class of obligations may be small.
Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at
the reporting date. The discount rate used to determine the present value reflects current market assessments of the time value of money
and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.
(q) Foreign Currency Transactions and Balances
Functional and presentation currency
The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which that
entity operates. The consolidated financial statements are presented in Australian dollars, which is the parent entity’s functional currency.
(n) Trade and other payables
Transactions and balances
These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. The
amounts are unsecured and are usually paid within 30 to 90 days of recognition. Trade and other payables are presented as current
liabilities unless payment is not due within 12 months from the reporting date. They are recognised initially at their fair value and
subsequently measured at amortised cost using the effective interest method.
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction.
Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to
be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate
at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in profit or loss, except where deferred in equity as a
qualifying cash flow or net investment hedge.
7
8
Page 44 Notes to the Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(o) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised
cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the statement of
comprehensive income over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan
facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In
this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility
will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it
relates.
Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled or
expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and
the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in other income or finance costs.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12
months after the reporting date.
(p) Provisions
Provisions for legal claims and make good obligations are recognised when the Group has a present legal or constructive obligation as a
result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably
estimated. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering
the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the
same class of obligations may be small.
Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at
the reporting date. The discount rate used to determine the present value reflects current market assessments of the time value of money
and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.
(q) Foreign Currency Transactions and Balances
Functional and presentation currency
The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which that
entity operates. The consolidated financial statements are presented in Australian dollars, which is the parent entity’s functional currency.
Transactions and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction.
Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to
be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate
at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in profit or loss, except where deferred in equity as a
qualifying cash flow or net investment hedge.
8
Envirosuite Limited Annual Report 2018Page 45 Notes to the Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(q) Foreign Currency Transactions and Balances (continued)
Group companies
The financial results and position of foreign operations, whose functional currency is different from the Group’s presentation currency, are
translated as follows:
•
•
•
assets and liabilities are translated at exchange rates prevailing at the end of the reporting period;
income and expenses are translated at average exchange rates for the period; and
retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations with functional currencies other than Australian dollars are recognised in
other comprehensive income and included in the foreign currency translation reserve in the statement of financial position. The cumulative
amount of these differences is reclassified into profit or loss in the period in which the operation is disposed of.
(r) Employee benefits
Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months after the end
of the period in which the employees render the related service are recognised in respect of employees' services up to the end of the
reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liability for annual leave is
recognised in the provision for employee benefits. All other short-term employee benefit obligations are presented as payables.
Other long-term employee benefit obligations
The liability for long service leave and annual leave which is not expected to be settled within 12 months after the end of the period in which
the employees render the related service is recognised in the provision for employee benefits and measured as the present value of
expected future payments to be made in respect of services provided by employees up to the end of the reporting period. Consideration is
given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are
discounted using market yields at the end of the reporting period on Australian Corporate bonds with terms to maturity and currency that
match, as closely as possible, the estimated future cash outflows.
Share based payments
Share based compensation benefits are provided to employees and directors via the Envirosuite Limited Employee Share Option Plan and
the Envirosuite Limited Employee Share Plan. Information relating to these schemes is set out in note 31.
The fair value of options granted under the Envirosuite Limited Employee Share Option Plan is recognised as an employee benefit expense
with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options
granted, which includes any market performance conditions but excludes the impact of any service and non-market performance vesting
conditions and the impact of any non-vesting conditions.
Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense is
recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of
each period, the entity revises its estimates of the number of options that are expected to vest based on the non-marketing vesting
conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
Under the Envirosuite Limited Employee Share Plan, shares issued to employees for no cash consideration vest immediately on grant date.
On this date, the market value of the shares issued is recognised as an employee benefits expense with a corresponding increase in
equity.
9
Page 46 Notes to the Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee accepts
voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to
either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or providing
termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after
reporting date are discounted to present value.
(s) Contributed equity
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 business are not included in
the cost of the acquisition as part of the purchase consideration.
If the entity reacquires its own equity instruments, for example as the result of a share buyback, those instruments are deducted from equity
and the associated shares are cancelled. No gain or loss is recognised in the profit or loss and the consideration paid including any directly
attributable incremental costs (net of income taxes) is recognised directly in equity.
(t) Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on
or before the end of the financial year but not distributed at balance date.
(u) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing:
the profit or loss attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary
shares.
by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in
ordinary shares issued during the year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and
the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all
dilutive potential ordinary shares.
(v) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the
taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or
payable to, the taxation authority is included with other receivables or payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are
recoverable from, or payable to the taxation authority, are presented as operating cash flows included in receipts from customers or
payments to suppliers.
Envirosuite Limited and its wholly owned Australian controlled entities except Envirosuite Holdings Pty Ltd are grouped for GST.
10
Envirosuite Limited Annual Report 2018Page 47 Notes to the Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(w) Rounding of amounts
The Company is of a kind referred to in legislative instrument 2016/191, issued by the Australian Securities and Investments Commission,
relating to the ''rounding off'' of amounts in the financial report. Amounts in the financial report have been rounded off in accordance with
that instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
(x) Critical accounting estimates and judgements
The directors evaluate estimates and judgements incorporated into the financial statements based on historical knowledge and best
available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic
data, obtained both externally and within the Group.
Key estimates
Impairment of goodwill and other intangible assets
The Group tests annually whether goodwill has suffered any impairment in accordance with the accounting policy stated in note 1(g). The
recoverable amounts of subsidiaries have been determined based on value in use calculations. These calculations require the use of
assumptions.
The group has also performed a valuation of intangible software assets to assist management with its assessment of impairment. Refer to
note 14 for the details of these assumptions.
Income taxes
The Group’s accounting policy for taxation requires management’s judgement as to the types of arrangements considered to be a tax on
income in contrast to an operating cost. Judgement is also required in assessing whether deferred tax assets and certain deferred tax
liabilities are recognised on the statement of financial position. Deferred tax assets, including those arising from un-recouped tax losses,
capital losses and temporary differences are recognised only where it is considered more likely than not that they will be recovered, which
is dependent on the generation of sufficient future taxable profits.
Assumptions about the generation of future taxable profits depend on management’s estimates of future cash flows. These depend on
estimates of future sales volumes, operating costs, capital expenditure, dividends and other capital management transactions. Judgements
are also required about the application of income tax legislation. These judgements and assumptions are subject to risk and uncertainty,
hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets and
deferred tax liabilities recognised on the statement of financial position and the amount of other tax losses and temporary differences not
yet recognised. In such circumstances, some or all of the carrying amounts of recognised deferred tax assets and liabilities may require
adjustment, resulting in a corresponding credit or charge to the statement of comprehensive income.
Key Judgements
Fair value of share options
In calculating the fair value of the director and employee share options, the Company has made a number of assumptions in determining
the inputs for the Black-Scholes option pricing module. Refer to note 31 for details of these assumptions.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences if management considers that it is probable that future taxable
profits will be available to utilise those temporary differences. Sufficient 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 the next two years
together with future tax planning strategies.
Provision for impairment of receivables
A provision for impairment of receivables of $40,612 was considered necessary as at the end of the 2018 reporting period (2017:nil). Refer
to note 10.
11
Page 48 Notes to the Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(y) New accounting standards for application in future periods
Accounting Standards and Interpretations issued by the AASB that are not yet mandatorily applicable to the Group, together with an
assessment of the potential impact of such pronouncements on the Group when adopted in future periods, are discussed below:
AASB 9 Financial Instruments
Nature of change
AASB 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities and introduces new rules
for hedge accounting. In December 2014, the AASB made further changes to the classification and measurement rules and also introduced
a new impairment model. These latest amendments now complete the new financial instruments standard.
Impact
The group does not expect any impact from the new classification, measurement and derecognition rules on the group’s financial assets
and financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through
profit or loss and the group does not have any such liabilities.
The group has determined that it will not be affected by the new rules.
Mandatory application date / date of adoption by group
Must be applied for financial years commencing on or after 1 January 2018.
AASB 15 Revenue from contracts with Customers
Nature of change
The AASB has issued a new standard for the recognition of revenue. This will replace AASB 118 which covers contracts for goods and
services.
The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer; so the
notion of control replaces the existing notion of risks and rewards.
Impact
Management has reviewed the impact of this standard on the revenue flows within the group and notes that the new standard does not
have any material impact on the group’s financial statements.
The standard permits a modified retrospective approach for the adoption. Under this approach entities will recognise transitional
adjustments in retained earnings on the date of initial application (e.g. 1 July 2018), i.e. without restating the comparative period. They will
only need to apply the new rules to contracts that are not completed as of the date of initial application.
Mandatory application date / date of adoption by group
Mandatory for financial years commencing on or after 1 January 2018.
Expected date of adoption by the group: 1 July 2018.
12
Envirosuite Limited Annual Report 2018Page 49 Notes to the Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(y) New accounting standards for application in future periods (continued)
AASB 16 Leases
Nature of change
The AASB has issued a new standard for the recognition of leases. This will replace AASB 117: Leases.
The new standard introduces a single lessee accounting model that no longer requires leases to be classified as operating or financing.
Other major changes include, the recognition of a right-to-use asset and liability, depreciation of right-to-use assets in line with AASB 116:
Property Plant and Equipment, variable lease payments that depend on an index or rate are included in the initial measurement of lease
liability, option for lessee to not separate non-lease components and account for all components as a lease, and additional disclosure
requirements.
Impact
The group has significant operating lease commitments as disclosed in Note 25, which are likely to be affected by the new standard. At this
stage, the group is not able to estimate the impact of the new rules on the group’s financial statements. The group will make more detailed
assessments of the impact over the next twelve months.
The transitional provisions of the standard allow a lessee to either retrospectively apply the standard to comparatives or recognize the
cumulative effect of retrospective application as an adjustment to opening equity on the date of initial application.
Mandatory application date / date of adoption by group
Must be applied for financial years commencing on or after 1 January 2019.
Expected date of adoption by the group: 1 July 2019.
(z) Parent entity financial information
The financial
consolidated financial statements, except as set out below.
information for the parent entity, Envirosuite Limited, disclosed in note 32 has been prepared on the same basis as the
Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries are accounted for at cost in the financial statements of Envirosuite Limited.
Tax consolidation legislation
Envirosuite Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation.
The head entity, Envirosuite Limited, accounts for tax of the consolidated group as if it was a single entity.
In addition to its own current and deferred tax amounts, Envirosuite Limited also recognises the current tax liabilities (or assets) and the
deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group.
All tax assets or liabilities arising under tax funding agreements with the tax consolidated entities are assumed by the parent entity. The
group does not allocate to each subsidiary its tax assets or liabilities.
13
Page 50 Notes to the Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(aa) Funding and liquidity
The group recorded a cash balance of $3,648,000 (June 2017: $11,471,000) as at 30 June 2018. However, due to current levels of cash
utilisation, management intend to raise further capital in order to support the business during this current growth phase of its lifecycle. The
need to raise further capital is due to the current growth phase of the group, as the group expands into new geographical territories and
new industry sectors and subsequently realises new contracts for revenue.
Given the group’s budgeted profit targets, as well as the current capital raising undertakings, the Directors are of the view that despite the
cash balance and cash utilisation, the group will continue to be able to pay its debts as and when they fall due.
It is on the basis of the group’s ability to achieve budgeted profit targets and ability to successfully raise capital, that the Directors have
prepared the financial report on a going concern basis. Refer to Events after reporting period in the Directors Report and Note 33
Subsequent Events for further information on the capital raising.
Should the group not be able to successfully raise capital or achieve budgeted profits, the group may not be able to realise its assets and
extinguish its liabilities in the normal course of business and at the amounts stated in the financial report.
14
Envirosuite Limited Annual Report 2018Page 51 Notes to the Financial Statements
2. FINANCIAL RISK MANAGEMENT
The Group’s financial instruments consist mainly of deposits with banks, accounts receivable and payable, loans to and from subsidiaries
and other related parties, and leases.
The totals for each category of financial
Measurement as detailed in the accounting policies to these financial statements, are as follows:
instruments, measured in accordance with AASB139 Financial Instruments: Recognition and
Financial assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
Financial liabilities
Trade and other payables
Borrowings (current and non-current)
Total financial liabilities
Financial risk management policies
Note
9
10
15
16
Consolidated Group
2017
$’000
2018
$’000
3,648 11,471
1,386 866
5,034 12,337
902 2,212
-
228
1,130 2,212
The Chief Executive Officer (CEO) and Chief Financial Officer (CFO) are responsible for managing financial risk exposures of the Group.
The board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange
risk, credit risk, and investment of excess liquidity.
Specific financial risk exposures and management
The Group's activities expose it to a variety of financial risks: market risk (including interest rate risk), credit risk and liquidity risk. The
Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the
case of interest rate risk and ageing analysis for credit risk and liquidity risk.
15
Page 52 Notes to the Financial Statements
2. FINANCIAL RISK MANAGEMENT (continued)
Market risk
Foreign exchange risk
As the Group expands internationally, there is an increasing exposure to foreign exchange risk through customer contracts denominated in
foreign currencies. This exposure is managed through periodic review of customer price lists, relative to the Group base product price list
denominated in Australian dollars and are adjusted accordingly to account for any material movements in foreign currency exchange rates.
Price risk
The Group is not exposed to equity securities price risk. The Group is not exposed to commodity price risk.
Cash flow and fair value interest rate risk
The Group has limited exposure to interest rate risk. With limited borrowings, the only remaining interest rate risk at reporting date arises
from bank deposits as follows:
2018
2017
Weighted
average
interest rate
Balance
Weighted
average
interest rate
Balance
%
$’000
%
$’000
Cash and cash equivalents
1.3% 3,648 2% 11,471
Net exposure to cash flow interest rate risk
3,648
11,471
The Group manages its interest rate risk by analysing ‘what if’ scenarios simulated where the Group calculates the impact on profit and loss
of a defined interest rate shift. The scenarios are run only for liabilities that represent the major interest bearing positions. The simulation is
done half yearly to verify that the maximum loss potential is within the limit given by management.
Group sensitivity
At 30 June 2018, if interest rates had decreased by 2% or increased by 2% from the year end rates with all other variables held constant,
post-tax profit or loss for the year would have been $72,953 higher / $72,953 lower (2017: changes of -2% / +2%: $86,719 higher / $86,719
lower), mainly as a result of higher / lower interest income from cash and cash equivalents.
16
Envirosuite Limited Annual Report 2018Page 53 Notes to the Financial Statements
2. FINANCIAL RISK MANAGEMENT (continued)
2. FINANCIAL RISK MANAGEMENT (continued)
Summarised sensitivity analysis
Liquidity risk
The following table summarises the sensitivity of the Group's financial assets and financial liabilities to interest rate risk:
Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of
committed credit facilities to meet obligations when due to close out market positions. The Group manages liquidity risk by continuously
Interest rate risk
monitoring forecast and actual cash flows.
At 30 June 2018
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Borrowings
Carrying
amount
$’000
-2%
Profit
$’000
Other
Equity
$’000
+2%
Profit
$’000
Other
Equity
$’000
3,648
(73)
1,386 -
- 73
- -
902
228
-
-
-
-
-
-
-
-
-
-
Total (increase) / decrease
(73) - 73 -
Credit risk
Credit risk is managed on a Group basis. Credit risk arises from credit exposures to customers, including outstanding receivables and
committed transactions. If customers are independently rated, these ratings are used. Otherwise, if there is no independent rating, credit
control assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. Currently
there are no individual credit limits set, however going forward this will be considered by the Audit and Risk Committee and the Board to
improve controls over credit risk.
The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets as summarised above. For some
trade receivables, given that the customers are generally without external credit ratings, the Group obtains comfort in the form of executed
proposal agreements and quotations detailing fees and billing schedules.
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to historical information about
payment history and any default rates.
Trade receivables
Counterparties without external credit rating
A customers (aged 0 – 30 days)
B customers (aged 31 – 60 days)
C customers (aged 61 – 120 days)
D customers (aged 120+ days)
Total trade receivables
Consolidated Group
2018
$’000
2017
$’000
487 98
136 92
343 1
-
-
966 191
Financial liability and financial asset maturity analysis
The table below analyses the Group's financial liabilities and assets into relevant maturity groupings based on the remaining period at the
reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
Consolidated Group
Within 1 Year
1 to 5 Years
Over 5 Years
2018
$’000
2017
$’000
2018
$’000
2017
$’000
2018
$’000
2017
$’000
Total
2018
$’000
2017
$’000
902
- - - - - 902
-
88
- 140
- - - 228
-
990
- 140
- - - 1,130
-
Financial liabilities due for payment
Trade and other
payables
Borrowings
Total expected outflows
Financial assets – cash flows realisable
Cash and cash
equivalents
Trade and other
receivables
3,648 11,471
1,386 866
-
-
-
-
-
-
- 3,648 11,471
- 1,386 866
Total anticipated inflows
5,034 12,337
- - - - 5,034 12,337
Net inflow/(outflow) on
financial instruments
4,044 12,337
(140)
- - - 3,904 12,337
Fair value measurements
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their
short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows
at the current market interest rate that is available to the Group for similar financial instruments.
3. SEGMENT INFORMATION
Historically the Group provided superior environmental consulting, advice, solutions and services to help clients comply with environmental
regulations, meet corporate responsibilities and improve operations and planning.
On 26 June 2017 the sale of the Group’s consulting practice was completed and the company currently operates in one segment being the
development and sale of its technology platform.
17
18
Page 54 Notes to the Financial Statements
2. FINANCIAL RISK MANAGEMENT (continued)
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of
committed credit facilities to meet obligations when due to close out market positions. The Group manages liquidity risk by continuously
monitoring forecast and actual cash flows.
Financial liability and financial asset maturity analysis
The table below analyses the Group's financial liabilities and assets into relevant maturity groupings based on the remaining period at the
reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
Consolidated Group
Within 1 Year
2018
$’000
2017
$’000
1 to 5 Years
2018
$’000
2017
$’000
Over 5 Years
2018
$’000
2017
$’000
Total
2018
$’000
2017
$’000
Financial liabilities due for payment
Trade and other
payables
902
- - - - - 902
-
Borrowings
88
- 140
- - - 228
-
Total expected outflows
990
- 140
- - - 1,130
-
Financial assets – cash flows realisable
Cash and cash
equivalents
Trade and other
receivables
1,386 866
3,648 11,471
-
-
-
-
-
-
- 3,648 11,471
- 1,386 866
Total anticipated inflows
5,034 12,337
- - - - 5,034 12,337
Net inflow/(outflow) on
financial instruments
4,044 12,337
(140)
- - - 3,904 12,337
Fair value measurements
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their
short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows
at the current market interest rate that is available to the Group for similar financial instruments.
3. SEGMENT INFORMATION
Historically the Group provided superior environmental consulting, advice, solutions and services to help clients comply with environmental
regulations, meet corporate responsibilities and improve operations and planning.
On 26 June 2017 the sale of the Group’s consulting practice was completed and the company currently operates in one segment being the
development and sale of its technology platform.
18
Envirosuite Limited Annual Report 2018Page 55 Notes to the Financial Statements
4. REVENUE
6. EXPENSES
From continuing operations
Trading revenue
Other revenue
Research and development tax incentives
Other revenue
Profit on sale of fixed assets
Notes
Consolidated Group
2017
$’000
2018
$’000
3,152 150
(Loss) / profit before income tax from continuing operations includes the following specific expenses:
-
562
111 11
8
-
Other revenue
681 11
Employee entitlements
Total revenue - continuing operations
3,833 161
From discontinued operations
Trading revenue
Other revenue
Government grants:
Research and development tax incentives
Total revenue - discontinuing operations
Research and Development Tax Incentives
8
8
- 16,050
744
-
744 16,050
Research and Development Tax Incentives included for the year ended 30 June 2018 are $1,305,944 (2017: $Nil) of which $743,850 is
attributable to discontinued operations.
the consultancy practice in June 2017,
Due to the sale of
the work to determine the 2017 Government rebate for research and
development was delayed and therefore a reasonable estimate could not be provided at the 30 June 2017 reporting date. Management
has determined to only include any Research & Development Tax Incentives after the income tax return has been lodged with the
Australian Taxation Office. As such, any R&D tax incentive applicable to activities undertaken by the company in the 30 June 2018 financial
year, will be included in the 2018-2019 financial statements.
5. NET FINANCE INCOME
From continuing operations
Notes
Consolidated Group
2017
$’000
2018
$’000
Interest income - cash and short-term deposits
132 6
19
20
Cost of revenue and operating expenses
Cost of revenue
Total operating expenses
Total cost of revenue and operating expenses
Total cost of revenue and operating expenses is comprised of:
Employee entitlements - share-based payments
Employee entitlements capitalised
Platform costs
Consultants and contractors - cost of sales
Consultants and contractors - sales and marketing
Partner costs
Equipment costs
Rental costs
Superannuation costs
Directors' fees
Auditors remuneration
Other operating expenses
Depreciation and amortisation
Relating to:
Amortisation of software development costs
Depreciation of property, plant and equipment
Total depreciation and amortisation
Total cost of revenue and operating expenses
Notes
Consolidated Group
2018
$’000
2017
$’000
(1,607)
(8,148)
(9,755)
(85)
(2,493)
(2,579)
(5,736)
-
1,488 318
(282)
-
(850)
(93)
(72)
(14)
(39)
(27)
(26)
(38)
(190)
(100)
(466)
(83)
(759)
(321)
(409)
(318)
(180)
(106)
(2,201)
(1,437)
(341)
(42)
(383)
(11)
-
(11)
(9,755)
(2,579)
Total cost of revenue and operating expenses excl. depreciation and amortisation
(9,372)
(2,568)
Page 56 Notes to the Financial Statements
6. EXPENSES
(Loss) / profit before income tax from continuing operations includes the following specific expenses:
Cost of revenue and operating expenses
Cost of revenue
Total operating expenses
Total cost of revenue and operating expenses
Total cost of revenue and operating expenses is comprised of:
Employee entitlements
Employee entitlements - share-based payments
Employee entitlements capitalised
Platform costs
Consultants and contractors - cost of sales
Consultants and contractors - sales and marketing
Partner costs
Equipment costs
Rental costs
Superannuation costs
Directors' fees
Auditors remuneration
Other operating expenses
Notes
Consolidated Group
2018
$’000
2017
$’000
(1,607)
(8,148)
(9,755)
(85)
(2,493)
(2,579)
(5,736)
-
(850)
(93)
1,488 318
(72)
(14)
(39)
(466)
(83)
(759)
(282)
(321)
(409)
(318)
(180)
(106)
(2,201)
-
(27)
(26)
(38)
(190)
(100)
(1,437)
Total cost of revenue and operating expenses excl. depreciation and amortisation
(9,372)
(2,568)
Depreciation and amortisation
Relating to:
Amortisation of software development costs
Depreciation of property, plant and equipment
Total depreciation and amortisation
Total cost of revenue and operating expenses
(341)
(42)
(383)
(11)
-
(11)
(9,755)
(2,579)
20
Envirosuite Limited Annual Report 2018Page 57 Notes to the Financial Statements
7. INCOME TAX EXPENSE
8. DISCONTINUED OPERATIONS
Income tax benefit/(expense) from continuing operations
Income tax benefit/(expense) from discontinued operations
Total
The components of Income tax benefit / (expense) comprise:
Current tax
Deferred tax
(Under) / over provision of prior year tax
Income tax benefit / (expense)
Consolidated Group
2018
$’000
24
131
2017
$’000
142
639
155 781
- -
168 723
(13) 58
155 781
2018
$’000
2017
$’000
Envirosuite Limited sold its 100% equity interests (the sale) in its subsidiaries, Pacific Environment Holdings Pty Ltd, Pacific Environment
Operations Pty Ltd and DLA Environmental Services Pty Ltd (collectively known as the consulting practice") for $15 million to
Environmental Resource Management (ERM). The sale of the consulting practice to ERM occurred on 26 June 2017 (the completion date)
in accordance with a Share Sale and Purchase Agreement (SPA).
The purchase price was subject to a net debt and working capital adjustment. The process to agree or determine the amount of the
adjustment has been completed. Further, there are various post completion steps and ongoing terms and conditions set out in the SPA and
related agreements that must be completed, observed or complied with by Envirosuite Limited after completion including, inter alia:-
the determination and release of amounts in escrow pending certain conditions / events; and
transfer of various contracts
The income and expenses incurred in the current period relating to the discontinued operation sold during the year ended 30 June 2018,
which is included in the profit / (loss) from discontinued operations per the statement of profit or loss and other comprehensive income is as
•
•
follows:
Numerical reconciliation of income tax expense to prima facie tax payable
Prima facie tax on profit from continuing operations before income tax is reconciled to income tax as follows:
Prima facie tax payable on profit / loss from continuing operations before income tax at 27.5% (2017:30%)
(1,437)
(724)
Add:
Tax effect of:
- non-allowable items (including R&D expenditure)
- share options expensed during the year
- (under) / over provision for income tax in prior year
- Change in tax rate to 27.5%
- Losses not recognised
Less:
Tax effect of:
- R&D income non-assessable
Income tax (benefit) / expense
958 92
44 28
(58)
41
17
581 492
-
(359) 28
(155)
(781)
Revenue & other income
Expenses
Profit / (loss) before income tax
Income tax benefit
Gain on sale before income tax
Income tax expense
Gain on sale after income tax
Profit / (loss) after tax attributable to the discontinued operation
Consolidated Group
2018
$’000
2017
$’000
744 16,050
(174)
(19,005)
570
(2,955)
131 179
701
(2,776)
(115) 1,219
-
(507)
(115) 712
2018
$’000
2017
$’000
-
(1,553)
(105) 136
- 100
Total Gain / (Loss) after tax attributable to the discontinued operation
586
(2,064)
The net cash flows of the discontinued operation, which have been incorporated into the statement of cash flows, are as follows:
Net cash outflow from operating activities
Net cash inflow / (outflow) from investing activities
Net cash inflow / (outflow) from financing activities
Net cash increase / (decrease) incurred by the discontinued operation
(105)
(1,317)
21
22
Page 58 Notes to the Financial Statements
8. DISCONTINUED OPERATIONS
Envirosuite Limited sold its 100% equity interests (the sale) in its subsidiaries, Pacific Environment Holdings Pty Ltd, Pacific Environment
Operations Pty Ltd and DLA Environmental Services Pty Ltd (collectively known as the consulting practice") for $15 million to
Environmental Resource Management (ERM). The sale of the consulting practice to ERM occurred on 26 June 2017 (the completion date)
in accordance with a Share Sale and Purchase Agreement (SPA).
The purchase price was subject to a net debt and working capital adjustment. The process to agree or determine the amount of the
adjustment has been completed. Further, there are various post completion steps and ongoing terms and conditions set out in the SPA and
related agreements that must be completed, observed or complied with by Envirosuite Limited after completion including, inter alia:-
•
•
the determination and release of amounts in escrow pending certain conditions / events; and
transfer of various contracts
The income and expenses incurred in the current period relating to the discontinued operation sold during the year ended 30 June 2018,
which is included in the profit / (loss) from discontinued operations per the statement of profit or loss and other comprehensive income is as
follows:
Revenue & other income
Expenses
Profit / (loss) before income tax
Income tax benefit
Profit / (loss) after tax attributable to the discontinued operation
Gain on sale before income tax
Income tax expense
Gain on sale after income tax
Consolidated Group
2018
$’000
2017
$’000
744 16,050
(19,005)
(174)
570
(2,955)
131 179
(2,776)
701
(115) 1,219
(507)
-
(115) 712
Total Gain / (Loss) after tax attributable to the discontinued operation
586
(2,064)
The net cash flows of the discontinued operation, which have been incorporated into the statement of cash flows, are as follows:
Net cash outflow from operating activities
Net cash inflow / (outflow) from investing activities
Net cash inflow / (outflow) from financing activities
-
(1,553)
(105) 136
- 100
Net cash increase / (decrease) incurred by the discontinued operation
(105)
(1,317)
2018
$’000
2017
$’000
22
Envirosuite Limited Annual Report 2018Page 59 Notes to the Financial Statements
These amounts are for rental bonds on leased properties, security deposits on hired equipment and working capital receivables.
Other receivables
Loans to related parties
No loans are outstanding to related parties.
Fair value and credit risk
The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivables mentioned above. The fair
value of securities held for certain trade receivable is insignificant as is the fair value of any collateral sold or re-pledged. Refer to note 2 for
more information on the risk management policy of the Group and the credit quality of the Group's trade receivables.
Financial assets classified as loans and receivables
9. CASH AND CASH EQUIVALENTS
10. TRADE AND OTHER RECEIVABLES (continued)
Cash at bank and in hand
Risk exposure
Consolidated Group
2018
$’000
2017
$’000
3,648 11,471
The Group’s exposure to interest rate risk is discussed in note 2. The maximum exposure to credit risk at the reporting date is the carrying
amount of each class of cash and cash equivalents mentioned above.
10. TRADE AND OTHER RECEIVABLES
Due to the short term nature of these receivables, the carrying amount is assumed to approximate their fair value.
Trade receivables
Provision for impairment of receivables
Research and development tax incentive receivable
Held in Escrow – Sale of consultancy practice
Working Capital receivable
Other receivables
Trade and other receivables
Impaired Trade Receivables
Note
2018
$’000
2017
$’000
966 191
(41)
-
925 191
- -
190 565
- 28
271 82
1,386 866
Total financial assets classified as loans and receivables
Past Due but Not Impaired
(Days Overdue)
Gross
Amount
Past Due
and
Impaired
< 30
31 – 60
61 – 90
> 90
Within Initial
Trade
Terms
$'000
$'000
$'000
$'000
$'000
$'000
$'000
2018
Trade & term receivables
Other receivables
966
461
(41) 289
-
-
136
-
3 340 198
- 461
-
Total
1,427
(41) 289
136
3 340 659
At net realisable value
2017
Trade & term receivables
Other receivables
191
675
- 98
-
-
92
-
1
-
-
-
- 675
Total
866
- 98
92
1
- 675
Work in progress
Finished goods
Total inventories
Trade and other receivables - current
11. OTHER ASSETS
Prepayments
12. INVENTORIES
Consolidated Group
2018
$’000
2017
$’000
Note
1,386 866
1,386 866
Consolidated Group
2018
$’000
2017
$’000
166 146
2018
$’000
2017
$’000
95
-
14
-
109
-
23
24
Page 60 Notes to the Financial Statements
10. TRADE AND OTHER RECEIVABLES (continued)
Other receivables
These amounts are for rental bonds on leased properties, security deposits on hired equipment and working capital receivables.
Loans to related parties
No loans are outstanding to related parties.
Fair value and credit risk
Due to the short term nature of these receivables, the carrying amount is assumed to approximate their fair value.
The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivables mentioned above. The fair
value of securities held for certain trade receivable is insignificant as is the fair value of any collateral sold or re-pledged. Refer to note 2 for
more information on the risk management policy of the Group and the credit quality of the Group's trade receivables.
Financial assets classified as loans and receivables
Trade and other receivables - current
Consolidated Group
2018
$’000
2017
$’000
Note
1,386 866
Total financial assets classified as loans and receivables
1,386 866
11. OTHER ASSETS
Prepayments
12. INVENTORIES
At net realisable value
Work in progress
Finished goods
Total inventories
Consolidated Group
2018
$’000
2017
$’000
166 146
2018
$’000
2017
$’000
95
14
-
-
109
-
24
Envirosuite Limited Annual Report 2018Page 61 Notes to the Financial Statements
13. PROPERTY, PLANT AND EQUIPMENT
Consolidated Group
Note
Motor
Vehicles
Furniture
fittings and
equipment
Leased
Assets
Total
$’000
$’000
$’000
$’000
Year ended 30 June 2017
Opening net book amount
Additions
Disposals
Disposals of assets on sale of subsidiary
Transfer between classes
Depreciation charge
Closing net book amount
At 30 June 2017
Cost or fair value
Accumulated depreciation
Net book amount
Year ended 30 June 2018
Opening net book amount
Additions
Additions via business acquisition
Disposals
Depreciation charge
Closing net book amount
At 30 June 2018
Cost or fair value
Accumulated depreciation
Net book amount
87 670 1,685 2,442
- 215
(136)
-
(1,896)
- 215
(131)
(606)
(5)
(42)
(1,248)
- - - -
(40)
(135)
(437)
(612)
- 13
- 13
-
-
14
(1)
- 14
(1)
-
- 13
- 13
27
-
-
-
-
-
- 14
14
61 203 264
- 56
56
(2)
(2)
-
(42)
(17)
(25)
- 112 178 290
- 129 203 332
(42)
-
(25)
(17)
- 112 178 290
Total impairment losses recognised in the statement of comprehensive income was nil (2017:nil).
Included in disposals for the year ended 30 June 2018 is nil (2017: nil) of accumulated impairment losses.
Non-current assets pledged as security
The Group has no non-current assets pledged as security.
25
26
14. INTANGIBLE ASSETS
Consolidated Group
Disposals of Assets on sale of subsidiary
Year ended 30 June 2017
Opening net book amount
Additions
Disposals
Transfer between classes
Amortisation charge
Closing net book amount
At 30 June 2017
Cost or fair value
Accumulated amortisation
Net book amount
Year ended 30 June 2018
Opening net book amount
Additions via business combination
Additions - capitalised
Disposals
Amortisation charge **
Closing net book amount
At 30 June 2018
Cost or fair value
Accumulated amortisation
Net book amount
Note
Goodwill
Intellectual
Property
Software
$’000
$’000
$’000
Total
$’000
- - 5,180 5,180
-
- 1,612 1,612
-
-
-
-
(226)
(2,453)
(226)
(2,453)
- -
(331)
(331)
- - 3,782 3,782
- 4,022 4,022
-
(240)
(240)
- - 3,782 3,782
-
-
-
-
-
-
- - 3,782 3,782
27
161
16
- 177
-
- 1,488 1,488
- - - -
-
-
(341)
(341)
161
16 4,930 5,107
161
16 5,510 5,687
-
-
(580)
(580)
161
16 4,930 5,107
* Software includes capitalised development costs being an internally generated intangible asset.
** Amortisation of $340,714 (2017: $11,000) is included in depreciation and amortisation expense in the consolidated statement of comprehensive income.
Page 62 14. INTANGIBLE ASSETS
Consolidated Group
Year ended 30 June 2017
Opening net book amount
Additions
Disposals
Disposals of Assets on sale of subsidiary
Transfer between classes
Amortisation charge
Closing net book amount
At 30 June 2017
Cost or fair value
Accumulated amortisation
Net book amount
Year ended 30 June 2018
Opening net book amount
Additions via business combination
Additions - capitalised
Disposals
Amortisation charge **
Closing net book amount
At 30 June 2018
Cost or fair value
Accumulated amortisation
Net book amount
Notes to the Financial Statements
Note
Goodwill
Intellectual
Property
Software
$’000
$’000
$’000
Total
$’000
- - 5,180 5,180
- 1,612 1,612
-
(226)
-
(2,453)
-
-
-
(226)
(2,453)
- -
-
-
-
-
(331)
(331)
- - 3,782 3,782
-
-
- 4,022 4,022
(240)
-
(240)
- - 3,782 3,782
27
161
16
- - 3,782 3,782
- 177
- 1,488 1,488
-
- - - -
-
-
(341)
(341)
161
16 4,930 5,107
161
-
16 5,510 5,687
(580)
(580)
-
161
16 4,930 5,107
* Software includes capitalised development costs being an internally generated intangible asset.
** Amortisation of $340,714 (2017: $11,000) is included in depreciation and amortisation expense in the consolidated statement of comprehensive income.
26
Envirosuite Limited Annual Report 2018Page 63 Notes to the Financial Statements
14. INTANGIBLE ASSETS (continued)
Impairment tests for goodwill
Goodwill was acquired as part of the Odotech acquisition. Refer to note 27.
Goodwill
Impairment
Impairment tests for software
2018
$’000
2017
$’000
161
-
- -
161
-
The recoverable amount of software is determined based on value-in-use calculations. These calculations use cash flow projections based
on financial budgets approved by management covering a five year period. Cash flows beyond the five year period are extrapolated using
estimated growth rates. Cash flows exclude future software development costs as it is expected these will be funded from other sources
including R&D tax incentive refunds.
Key assumptions used for value-in-use calculations
The Group engaged an external valuer to complete a valuation of the software intangible assets owned by Envirosuite Ltd. The valuer
concluded a fair value market value of $5,000,000 as at 30 June 2018. (2017: $3,850,000). This exceeds the current carrying value of
$4,930,000.
In arriving at their valuation conclusion, the valuer considered a number of commonly used methods: income, cash flow and balance sheet-
based valuation methodologies. Following discussions with management, it was considered that the Relief from-Royalty (value-in-use)
method, was the most appropriate approach to adopt for the valuation.
•
The Relief-from-Royalty method - This method is based on the theory that the intangible asset owner would be willing to pay
a reasonable royalty to use the intangible asset assuming that they did not already own the asset.
The value in use model used a 5 year discounted cash flow with terminal value and included the following significant observable inputs;
weighted average cost of capital 14.3%, royalty rate 7% and earnings growth rate of 5%.
Concluded Value of Intangible Assets - Software
Valuation Method
Value-in-use / Royalty Rate
Impairment charge
Weighted
Concluded
Value ($)
5,000,000
During the year ended 30 June 2018 and the year ended 30 June 2017 no impairment charges were made against cash generating units.
27
Page 64 Notes to the Financial Statements
15. TRADE AND OTHER PAYABLES
Trade payables
Working capital payable
Other payables
Risk exposure
Information about the Group's and the parent entity's exposure to foreign exchange risk is provided in note 2.
Consolidated Group
2018
$’000
2017
$’000
275 749
- 94
627 1,369
902 2,212
16. BORROWINGS
Current
Current
Lease liabilities - secured
Premium Funding - Insurance
Total current borrowings
Non-current
Lease liabilities - secured
Other payables
Total non-current borrowings
Total borrowings - current and non-current
Risk exposures
Notes
Consolidated Group
2017
$’000
2018
$’000
42
32
-
-
74
-
-
140
14
154
-
228
-
Details of the Group's exposure to risks arising from current and non-current borrowings are set out in note 2.
28
Envirosuite Limited Annual Report 2018Page 65
Notes to the Financial Statements
17. PROVISIONS
Current
Employee Benefits
Opening balance at 1 July
Additional provisions
Amounts used
Unused amounts reversed
Balance at 30 June 2018 - Current
Non-current
Employee Benefits
Opening balance at 1 July
Additional provisions
Amounts used
Unused amounts reversed
Balance at 30 June 2018 - Non-current
Amounts not expected to be settled within the next 12 months
2018
$’000
2017
$’000
237 851
517 237
(122)
(729)
(183)
(64)
508 237
2018
$’000
2017
$’000
31 139
17 55
(163)
-
(3)
-
45
31
The current provision for long service leave includes all unconditional entitlements where employees have completed ten years of service.
The entire amount is presented as current, since the Group does not have an unconditional right to defer settlement. However, based on
past experience, the Group does not expect all employees to take the full amount of accrued long service leave or require payment within
the next 12 months.
The following amounts reflect leave that is not to be expected to be taken or paid within the next 12 months.
Long service leave obligations expected to be settled after 12 months
2018
$’000
2017
$’000
45
31
18. TAX
Opening
Charged to
Balance
Income
$’000
$’000
Charged
directly to
Equity
$’000
Changes in
Exchange
Tax Rate
Differences
Closing
Balance
$’000
$’000
$’000
Deferred tax assets
Provisions
Transaction costs on equity issue
59
- 20
- - 79
Other
14
7
- - - 21
416
(270)
- - - 146
Balance at 30 June 2017
489
(263)
20
- - 246
Transaction costs on equity issues
79
- - - - 79
21
- - - - 21
146 154
- 18
(4) 314
Provisions
Other
Balance at 30 June 2018
246 154
- 18
(4) 414
The amount of unused tax losses for which no deferred tax assets have been brought to account:
Tax losses: operating losses $4,501,393 (2017: $2,798,104)
Tax losses: capital losses $Nil (2017: $961,807)
The benefits of the above unused tax losses will only be realised if the conditions for deductibility set out in Note 1(e) occur. These
amounts have no expiry date.
29
30
Page 66
Notes to the Financial Statements
18. TAX
Opening
Balance
Charged to
Income
$’000
$’000
Charged
directly to
Equity
$’000
Changes in
Tax Rate
Exchange
Differences
Closing
Balance
$’000
$’000
$’000
Deferred tax assets
Provisions
Transaction costs on equity issue
Other
416
59
14
(270)
- 20
7
- - - 146
- - 79
- - - 21
Balance at 30 June 2017
489
(263)
20
- - 246
Provisions
Transaction costs on equity issues
Other
146 154
79
21
(4) 314
- - - - 79
- - - - 21
- 18
Balance at 30 June 2018
246 154
- 18
(4) 414
The amount of unused tax losses for which no deferred tax assets have been brought to account:
Tax losses: operating losses $4,501,393 (2017: $2,798,104)
Tax losses: capital losses $Nil (2017: $961,807)
The benefits of the above unused tax losses will only be realised if the conditions for deductibility set out in Note 1(e) occur. These
amounts have no expiry date.
30
Envirosuite Limited Annual Report 2018Page 67 Notes to the Financial Statements
19. ISSUED CAPITAL
Share capital
Ordinary shares
Fully Paid
Other equity securities
2018
Shares
2017
Shares
2018
$’000
2017
$’000
19. ISSUED CAPITAL (continued)
Movements in ordinary shares (continued)
Options
230,933,875 230,933,875 26,144 26,144
There were no options issued to directors during the year ended 30 June 2018 (2017: Nil). There were no options issued to employees for
the year ended 30 June 2018 (2017: Nil). Information relating to the options, including details of options issued, exercised and lapsed
during the financial year and options outstanding at the end of the financial year, is set out in note 31.
Value of conversion rights, convertible loan
Value of conversion rights, convertible notes
- - 110 110
- - 28 28
Total consolidated contributed equity
230,933,875 230,933,875 26,282 26,282
Movements in ordinary shares
Date
Details
30-Jun-16
Balance
12-Sep-16
10-Oct-16
26-Oct-16
Shares issued to ex-employee
Final conversion of convertible notes
Institutional placement
Less: transaction costs of capital raising (inc. tax effect)
Number of
shares
182,259,474
1,987,952
13,353,115
33,333,334
Issue
price
$’000
22,691
0.08 165
0.03 450
0.09 3,000
(162)
Certain shares were issued for no cash consideration for the provision of services, details of which are shown in note 31.
The amount shown for other equity securities is the value of the conversion rights relating to historic convertible instruments.
Share based payments
Other equity securities
Capital risk management
The Group's objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to
shareholders, issue new shares or sell assets to reduce debt.
Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net cash held
divided by total capital. Net cash held is calculated as total cash held less borrowings (including 'borrowings' as shown in the statement of
financial position). Total capital is calculated as ‘total equity' as shown in the statement of financial position (including minority interest) plus
30-Jun-17
Balance
230,933,875
26,144
or minus net cash held.
30-Jun-18
Shares issued
- - -
The gearing ratios at 30 June 2018 and 30 June 2017 were as follows:
30-Jun-18
Balance
230,933,875
26,144
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of
and amounts paid on the shares held.
Every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to
one vote.
There were no shares issued during the year ending June 2018.
Cash and cash equivalents
Less: borrowings
Net cash held
Total equity
Total capital
Gearing Ratio
Note
9
16
Consolidated Group
2018
$’000
2017
$’000
3,648 11,471
(228)
-
3,420 11,471
8,586 13,853
5,166 2,383
66% 481%
31
32
Page 68 Notes to the Financial Statements
19. ISSUED CAPITAL (continued)
Movements in ordinary shares (continued)
Options
There were no options issued to directors during the year ended 30 June 2018 (2017: Nil). There were no options issued to employees for
the year ended 30 June 2018 (2017: Nil). Information relating to the options, including details of options issued, exercised and lapsed
during the financial year and options outstanding at the end of the financial year, is set out in note 31.
Share based payments
Certain shares were issued for no cash consideration for the provision of services, details of which are shown in note 31.
Other equity securities
The amount shown for other equity securities is the value of the conversion rights relating to historic convertible instruments.
Capital risk management
The Group's objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to
shareholders, issue new shares or sell assets to reduce debt.
Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net cash held
divided by total capital. Net cash held is calculated as total cash held less borrowings (including 'borrowings' as shown in the statement of
financial position). Total capital is calculated as ‘total equity' as shown in the statement of financial position (including minority interest) plus
or minus net cash held.
The gearing ratios at 30 June 2018 and 30 June 2017 were as follows:
Cash and cash equivalents
Less: borrowings
Net cash held
Total equity
Total capital
Gearing Ratio
Note
9
16
Consolidated Group
2017
$’000
2018
$’000
3,648 11,471
(228)
-
3,420 11,471
8,586 13,853
5,166 2,383
66% 481%
32
Envirosuite Limited Annual Report 2018Page 69 Notes to the Financial Statements
20. RESERVES AND RETAINED LOSSES
20. RESERVES AND RETAINED LOSSES (continued)
Reserves
Employee shares reserve
Movements
Balance 1 July
Recognition of employee shares to be issued
Transfer to equity
Employee share reserve - balance 30 June
Foreign exchange translation reserve
Movements
Balance 1 July
Effects of foreign exchange translation
Foreign exchange translation reserve - balance 30 June
Share-based payments reserve
Movements
Balance 1 July
Reallocation of prior year option payouts
Option expense
Transfer to retained losses
Share-based payments reserve - balance 30 June
Total of reserves
Retained losses
Movements
Opening retained losses
Transfer from employee shares reserve
Net profit / (loss) for the year
Balance 30 June
Consolidated Group
2017
’000
2018
$’000
Nature and purpose of reserves
Employee shares reserve
- -
Foreign currency translation reserve
The employee shares reserve is used to recognise the fair value of employee shares that are granted but not yet issued.
- 165
- -
-
(165)
- -
(61)
-
- -
-
(61)
(61)
-
Exchange differences arising on translation of foreign controlled entities are recognised in other comprehensive income and accumulated
in a separate reserve within equity. The cumulative amount is reclassified to profit or loss when the net investment is disposed of.
The share based payments reserve is used to recognise the grant date fair value of options issued to employees and directors but not
Share based payments reserve
exercised.
21. DIVIDENDS
The Group has not paid or declared any dividends during the period (2017: nil). Franking credits available for subsequent financial years
based on a tax rate of 27.5% amount to Nil (2017: nil).
22. KEY MANAGEMENT PERSONNEL COMPENSATION
Refer to the remuneration report contained in the directors’ report for details of the remuneration paid or payable to each member of the
Group’s key management personnel (KMP) for the year ended 30 June 2018.
(313)
(700)
The totals of remuneration paid to KMP of the company and the Group during the year are as follows:
700 607
(38)
-
- 93
(349)
-
313 700
252 700
2018
$’000
2017
$’000
(13,129)
349
(5,168)
(8,792)
-
(4,336)
(17,948)
(13,129)
Short-term employee benefits
Post-employment benefits
Other long term benefits
Share-based payments
Total KMP compensation
23. REMUNERATION OF AUDITORS
non-related audit firms:
WPIAS Pty Ltd (2017) & PKF Hacketts Audit (2018)
Audit and other assurance services
Audit and review of financial reports
- current year
- prior year *
Other assurance services
Other services
2018
$’000
2017
$’000
893 452
42 13
- -
- 74
935 539
2018
$
2017
$
71 100
35
-
- 3
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and
Other services provided by PKF network firm (PKF Attest Legal y Fiscal, S.L)
14
-
Total remuneration
120 103
* Prior year expense $35,000 relates to audit of the 2017 financial year conducted by WPIAS Pty Ltd.
33
34
Page 70 Notes to the Financial Statements
20. RESERVES AND RETAINED LOSSES (continued)
Nature and purpose of reserves
Employee shares reserve
The employee shares reserve is used to recognise the fair value of employee shares that are granted but not yet issued.
Foreign currency translation reserve
Exchange differences arising on translation of foreign controlled entities are recognised in other comprehensive income and accumulated
in a separate reserve within equity. The cumulative amount is reclassified to profit or loss when the net investment is disposed of.
Share based payments reserve
The share based payments reserve is used to recognise the grant date fair value of options issued to employees and directors but not
exercised.
21. DIVIDENDS
The Group has not paid or declared any dividends during the period (2017: nil). Franking credits available for subsequent financial years
based on a tax rate of 27.5% amount to Nil (2017: nil).
22. KEY MANAGEMENT PERSONNEL COMPENSATION
Refer to the remuneration report contained in the directors’ report for details of the remuneration paid or payable to each member of the
Group’s key management personnel (KMP) for the year ended 30 June 2018.
The totals of remuneration paid to KMP of the company and the Group during the year are as follows:
Short-term employee benefits
Post-employment benefits
Other long term benefits
Share-based payments
Total KMP compensation
23. REMUNERATION OF AUDITORS
2018
$’000
2017
$’000
893 452
42 13
- -
- 74
935 539
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and
non-related audit firms:
WPIAS Pty Ltd (2017) & PKF Hacketts Audit (2018)
Audit and other assurance services
Audit and review of financial reports
- current year
- prior year *
Other assurance services
Other services
Other services provided by PKF network firm (PKF Attest Legal y Fiscal, S.L)
Total remuneration
* Prior year expense $35,000 relates to audit of the 2017 financial year conducted by WPIAS Pty Ltd.
34
2018
$
2017
$
71 100
35
-
- 3
14
-
120 103
Envirosuite Limited Annual Report 2018Page 71 Notes to the Financial Statements
24. CONTINGENCIES
Contingent liabilities
The Group had contingent liabilities at 30 June 2018 in respect of:
Guarantees
The Group has potential exposure to guarantees it has issued to third parties in relation to the performance and obligation of controlled
entities with respect to property lease rentals amounting to $103,982 (2017: $84,000).
No liability has been recognised by the Group in relation to these financial guarantees as the guarantees are in the event of default on the
property leases’ terms and conditions.
Escrows
Pursuant to Envirosuite Limited’s sale of its 100% equity interest in its subsidiaries , Pacific Environment Holdings Pty Ltd, Pacific
Environment Operations Pty Ltd and DLA Environmental Services Pty Ltd (collectively known as “the consulting practice”) on 26 June 2017,
a portion of the proceeds from sale were held in escrow pending finalisation of net debt and working capital adjustments.
As at reporting date, an amount remains held in escrow pending transfer of two remaining contracts. Refer note 10.
The Directors are confident there are no known claims to or against Envirosuite Limited currently which could give rise to a contingent
liability and are confident the final settlement adjustment will not be significantly material to the financial statements. However, whether
there are outstanding sale matters that could affect the gain on sale of discontinued operations, the Group’s operations or the results of
those operations in future financial years or the Group’s state of affairs in future financial years, is uncertain.
Litigation
There are no litigation proceedings in process at the reporting date.
25. COMMITMENTS
Lease commitments:
Non-cancellable operating leases
The Group leases various offices under non-cancellable operating leases expiring within two to five years. The leases have varying terms,
escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated.
Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:
Within one year
Later than one year but not later than five years
296 179
336 353
633 532
2018
$’000
2017
$’000
35
Page 72 Notes to the Financial Statements
26. RELATED PARTY TRANSACTIONS
Parent entities
The parent entity within the Group is Envirosuite Limited
Subsidiaries
Interests in subsidiaries are set out in note 28.
Key management personnel
Disclosures relating to key management personnel are set out in note 22.
Transactions with other related parties
The following transactions occurred with other related parties:
Related Business
Related Party
Service Provided
ROKZair Pty Ltd
Famile Pty Ltd
MC Consultancy Pty Ltd
Soliton Creative
Ian Edgehill (3rd party Contractor)
Robin Ormerod
Adam Gallagher
Murray d’Almeida
Alex Ormerod
Ian Edgehill
Consultancy services
Consultancy services
Consultancy services
Creative design services
Marketing services
Other transactions
Interest paid on convertible loan – R Ormerod
Final conversion of convertible note
Consolidated Group
2017
$’000
2018
$’000
- 133
- 16
- 30
166 355
- 12
- 14
- 450
Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other
parties, unless otherwise stated.
Outstanding balances arising from transactions with other related parties
The following balances are outstanding at the reporting date in relation to transactions with other related parties:
Current payables
Purchase of services
Borrowings from related parties
Beginning of the year
Loans repaid
Other - interest
End of the year
2018
$’000
2017
$’000
- 63
2018
$’000
2017
$’000
- 433
(450)
-
- 17
- -
There is no allowance for impaired receivables in relation to any outstanding balances from related parties. During the year no expense
has been recognized in respect of impaired receivables due from related parties.
36
Envirosuite Limited Annual Report 2018Page 73 Notes to the Financial Statements
27. BUSINESS COMBINATIONS
On 19 December 2017, the group acquired the assets of Odotech Inc and 100% of the issued capital of Odotech spA, an environmental
technology company.
On 5 December 2017 the Group incorporated Odotech Canada which holds the assets acquired. The business and company offer a full
line of technological services and solutions for proactive management of environmental problems encountered by industries and municipal
The acquisition is part of the Group's overall strategy to expand globally its environmental software operations in the technology industry.
Through acquiring 100% of the issued capital of Odotech spA (Chile), the group has obtained control of the company.
The incorporation and acquisition of the Odotech Inc business (Chile and Canada) involved the purchase of the Odotech technology and
client base.
Odotech Inc and Odotech spA (Chile)
Purchase consideration:
Cash
Less: cash retained in Odotech spA (Chile)
Less:
Accounts receivable
Work in progress
Prepayments
Taxes
Inventory
Property, plant and equipment
Intellectual property
Deposits
Payables
Employee benefits
Accrued liabilities
Deferred revenues
Identifiable assets acquired and liabilities assumed
Goodwill
Purchase consideration settled in cash
Cash outflow on acquisition
Fair Value
$'000
442
(12)
430
435
186
14
39
57
63
16
6
(60)
(32)
(15)
(440)
269
161
430
(430)
Revenue of Odotech Canada and Chile included in the consolidated revenue of the Group since the acquisition date on 19 December 2017
amounted to $1,090,838. Loss of Odotech Canada and Chile included in the consolidated profit of the Group since acquisition date
amounted to $738,879.
Had the results relating to Odotech Canada and Chile been consolidated from 1 July, consolidated revenue of the consolidated group
would have been $5,963,857 and consolidated loss of the consolidated group would have been ($4,660,273) for the year ended 30 June
Included within the other expenses in the statement of profit or loss and other comprehensive income are acquisition related costs totalling
$178,299. The costs included legal fees and travel costs incurred during the due diligence period.
37
Page 74 Notes to the Financial Statements
28. INTEREST IN SUBSIDIARIES
Information about Controlled Entities
Controlled Entities Consolidated
Country of incorporation
Percentage Owned
2018
%
2017
%
Parent Entity
Envirosuite Limited
Subsidiaries of Envirosuite Limited
Envirosuite Operations Pty Ltd
Envirosuite Holdings Pty Ltd
Envirosuite Corp
Envirosuite Europe Sociedad Limitada
9370 - 3007 Quebec Inc*
Odotech spA**
Australia
100 100
Australia
Australia
United States of America
Spain
Canada
Chile
100 100
100 100
100 100
100
100
100
-
-
-
* also known as Odotech Canada
** also known as Odotech Chile
Subsidiary financial statements used in the preparation of these consolidated financial statements have also been prepared as at the same
reporting date as the Group’s financial statements.
Significant Restrictions
There are no significant restrictions over the Group’s ability to access or use assets, and settle liabilities of the Group other than those
imposed by the financier(s).
38
Envirosuite Limited Annual Report 2018Page 75 Notes to the Financial Statements
29. CASH FLOW STATEMENT RECONCILIATION
Reconciliation of net profit / (loss) after tax to net cash flows from operations
2018
$’000
2017
$’000
(5,168)
(4,334)
383 1,226
159 93
(4)
- 17
(3)
2
130
-
(3,818)
- 18
- 1,187
(12)
-
(479) 3,525
134 340
(6)
-
(1,384)
(199) 243
(114)
187 569
(147)
10
(722)
284
(5,961)
(1,921)
(Loss) / profit for the year
Depreciation and amortisation
Non cash employee benefits expense – share based payments
Accrued interest - receivable
Amortised interest on convertible note rights
Net loss on sale of non-current assets
Sale of business
Loan forgiveness
Due diligence costs sale of business - discontinued operations
Net effect of exchange rate changes
Changes in operating assets and liabilities
(Increase) / decrease in trade and other debtors
(Increase) / decrease in inventories & work in progress
(Increase) / decrease in other asset
(Increase) / decrease in deferred tax asset
Increase / (decrease) in trade creditors
Increase / (decrease) in other operating liabilities
Increase / (decrease) in provision for income taxes payable
Increase / (decrease) in other provisions
Net cash inflow from operating activities
39
Page 76 Notes to the Financial Statements
29. CASH FLOW STATEMENT RECONCILIATION (continued)
Net debt reconciliation
Net debt
Cash and cash equivalents
Borrowings - repayable within one year (incl overdraft)
Borrowings - repayable after one year
Net debt
Cash and cash equivalents
Gross debt - fixed interest rate
Gross debt - variable interest rate
Net debt
Net debt as at 30 June 2017
Cash flows
Foreign exchange adjustments
Other non-cash movements
2018
$’000
2017
$’000
3,648 11,471
(74)
(154)
-
-
3,420 11,471
3,648 11,471
(228)
-
- -
3,420 11,471
Liabilities from financing
activities
Borrowing
due within 1
year
$’000
Borrowing
due after 1
year
$’000
Cash / bank
overdraft
$’000
Total
$’000
11,471
- - 11,471
(7,835)
12
(74)
(8,063)
- - 12
(154)
- - - -
Net debt as at 30 June 2018
3,649
(74)
(154) 3,420
Non-cash financing and investing activities
Share issues
There were no shares issued during the year ending 30 June 2018.
Finance leases
During the year the Group did not acquire any plant and equipment by means of finance leases 2018:Nil (2017: Nil).
Credit standing arrangements with banks
Credit facility
Amount used
Undrawn facility
2018
$’000
2017
$’000
273 184
170 84
103 100
40
Envirosuite Limited Annual Report 2018Page 77 Notes to the Financial Statements
30. EARNINGS / (LOSSES) PER SHARE
Basic earnings / (losses) per share
Basic earnings / (losses) per share attributable to the ordinary equity holders of the Company
From continuing operations
From discontinued operations
Diluted earnings / (losses) per share
Diluted earnings / (losses) per share attributable to the ordinary equity holders of the Company
From continuing operations
From discontinued operations
Reconciliation of earnings used in calculating earnings / (losses) per share
2018
cents
2017
cents
(2.49) (1.05)
0.25 (0.89)
(2.46) (1.05)
0.25 (0.89)
2018
$’000
2017
$’000
Profits / (losses) attributable to the ordinary equity holders of the Company used in calculating basic earnings / (losses) per share
From continuing operations
From discontinued operations
Weighted average number of shares used as the denominator
(5,754)
586
(2,270)
(2,064)
2018
Number
2017
Number
Weighted average number of ordinary shares used as the denominator in calculating basic earnings / (losses)
per share
230,933,875 215,566,333
Weighted average number of ordinary shares used as the denominator in calculating diluted earnings /
(losses) per share
233,996,138 215,566,333
Information concerning the classification of securities
Options
Options granted to employees under the Envirosuite Limited Employee Share Option Plan are considered to be potential ordinary shares,
as including such securities in the calculation would result in a decreased earnings per share. The options have not been included in the
determination of basic earnings per share.
Convertible instruments
Convertible instruments issued are not considered to be potential ordinary shares, as including such securities in the calculation would
result in a decreased earnings per share. The instruments have not been included in the determination of basic earnings per share.
41
Page 78 Notes to the Financial Statements
31. SHARE BASED PAYMENTS
Employee share option plan
The establishment of the Employee Share Option Plan was approved by the Board prior to the IPO of Envirosuite Ltd (formerly: Pacific
Environment Limited). The plan is designed to provide long term incentives for employees and executive directors to deliver long term
shareholder returns. Participation in the plan is at the Board's discretion and no individual has a contractual right to participate in the plan or
to receive any guaranteed benefits.
The amount of options that will vest depends on the individual contracts agreed by Envirosuite Limited. Once vested, the options remain
exercisable for a period of up to seven years after the grant date. When exercisable, each option is convertible into one ordinary share on
the day of the next Board meeting or within 15 business days, whichever is earlier. The exercise price of options is pre-determined in the
individual option agreements.
Executive share option scheme
Options were issued to employees under the Envirosuite Limited Executive Share Option Scheme. Under this scheme, options granted
vest as specified under the individual option. The options are not forfeitable but lapse on the date specified in the individual option
agreement. If an employee ceases employment the options vest immediately and the employee has seven days to exercise the option at
the current market price or the original exercise price, whichever is greater. If the employee does not exercise the options, the options
lapse.
Set out on the following pages are summaries of options granted.
Employee share plan
Under the Envirosuite Limited Employee Share Plan, Shares issued to employees for no cash consideration vest immediately on grant
date. On this date, the market value of the shares issued is recognized as an employee benefits expense with a corresponding increase in
equity.
Options outstanding as at 1 July 2016
Granted
Forfeited
Exercised
Expired
Options outstanding as at 30 June 2017
Granted
Forfeited
Exercised
Expired
Options outstanding as at 30 June 2018
Options exercisable as at 30 June 2018
Options exercisable as at 30 June 2017
Number
Weighted
average
exercise
price
45,655,000 0.13
- -
- -
- -
5,800,000 0.13
39,855,000 0.13
- -
- -
- -
12,671,667 0.18
27,183,333 0.11
26,733,333 0.11
36,613,333 0.13
The weighted average remaining contractual life of share options outstanding at the end of the period was 1.45 years (2017: 2.21 years).
42
Envirosuite Limited Annual Report 2018Page 79 Notes to the Financial Statements
31. SHARE BASED PAYMENTS (continued)
Fair value of options granted
The assessed fair value at grant date of options granted is allocated equally over the period from the grant date to the vesting date. The fair
value at grant date is independently determined using a Black Scholes option pricing model that takes into account the exercise price, the
term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected
dividend yield and the risk free interest rate for the term of the option.
During financial year 2018, no options were issued to directors and no options were issued to employees. (2017: Nil)
Shares issued to employees - value of services
There were no shares issued in the year ending 30 June 2018.
Expenses arising from share based payment transactions
Total expenses arising from share based payment transactions recognised during the period as part of employee benefit expense were as
follows:
Options settled under employee share option plan
Shares issued to employees – value of services
Shares to be issued to employees – value of services
Total purchase consideration
Liabilities arising from share based payment transactions
Total payables at reporting date arising from share based payment transactions are as follows:
2018
$’000
2017
$’000
159 93
- -
- -
159 93
2018
$’000
2017
$’000
Shares to be issued to employees – value of services
- -
43
Page 80 Notes to the Financial Statements
32. PARENT ENTITY FINANCIAL INFORMATION
The following information has been extracted from the books and records of the parent entity and has been prepared in accordance with
Australian Accounting Standards.
Statement of financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Investment in subsidiaries
Issued capital
Reserves
Retained losses
Total equity
Statement of profit or loss and other comprehensive income
(Loss) / profit for the year
Total comprehensive (loss) / profit for the year
Guarantees entered into by the parent entity
2018
$’000
2017
$’000
226 634
14,679 15,464
14,905 16,098
134 1,618
- -
134 1,618
- -
26,282 26,282
313 700
(12,501)
(11,824)
14,770 14,480
2018
$’000
2017
$’000
328 657
328 657
The parent entity has potential exposure to guarantee it has issued to third parties in relation to its performance and obligations with
respect to property lease rentals amounting to $103,982. (2017: $84,000)
Contingent liabilities of the parent entity
The parent entity did not have any other contingent liabilities as at 30 June 2018 (2017:nil)
Contractual commitments
The parent entity did not have any other contractual commitments as at 30 June 2018 (2017:nil)
44
Envirosuite Limited Annual Report 2018Page 81 Notes to the Financial Statements
33. SUBSEQUENT EVENTS
On 16 August 2018 the company appointed Bell Potter Securities Limited as Lead Manager and Baillieu Holst Limited as Co-Manager for a
two-tranche share placement of up to 133,333,334 ordinary shares to raise up to $10,000,000 at $0.075 per share.
In accordance with ASX Listing Rule 7.1 the Company intends to issue 34,640,080 ordinary shares under its available placement capacity
(tranche 1) on or around 28 August 2018. The balance of the placement, being 98,693,254 ordinary shares are intended to be issued
immediately following the 2018 Annual General Meeting to be held on or around 28 September 2018, subject to shareholder approval
being given for the relevant resolution at the meeting.
No other matters or circumstances have arisen since the end of the financial year that significantly affected, or could significantly affect, the
operations of the consolidated Group, the results of those operations, or the state of affairs of the consolidated Group in future financial
years.
45
Page 82 Directors Declaration
DIRECTORS DECLARATION
For the Financial Year Ended 30 June 2018
In accordance with a resolution of the directors of Envirosuite Limited, the directors of the company declare that:
(a)
the financial statements and notes set out on pages 33 to 82 are in accordance with the Corporations Act 2001 , and:
(i)
(ii)
comply with Australian Accounting Standards,
reporting requirements; and
the Corporations Regulations 2001 and other mandatory professional
give a true and fair view of the financial position as at 30 June 2018 and of the performance for the year ended on that date
of the Consolidated Group; 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.
The directors have been given the declarations by the chief executive office and chief financial officer required by section
295A of the Corporations Act 2001
David Johnstone
Chairman
22 August 2018
46
Envirosuite Limited Annual Report 2018Page 83 Independent Auditor's Report
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF ENVIROSUITE LIMITED
Report on the Financial Report
Opinion
We have audited the accompanying financial report of Envirosuite Limited (the company), which comprises
the consolidated statement of financial position as at 30 June 2018, 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, notes comprising a summary of significant accounting
policies and other explanatory information, and the directors’ declaration of the company and the
consolidated entity comprising the company and the entities it controlled at the year’s end or from time to
time during the financial year.
In our opinion, the financial report of Envirosuite Limited is in accordance with the Corporations Act 2001,
including:
i)
Giving a true and fair view of the consolidated entity’s financial position as at 30 June 2018
and of its performance for the year ended on that date; and
ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Other Matter
The financial report of Envirosuite Limited for the year ended 30 June 2017 was audited by another auditor
who expressed a qualified opinion, due to limitation of scope, on that financial report on 31 August 2017.
As a result of procedures conducted and additional disclosures provided in the financial report, the matters
which resulted in the prior period qualified audit opinion have been satisfactorily addressed and accordingly,
are no longer relevant and material to the current period’s financial report.
Our opinion is not modified in respect of this matter.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we
comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to
obtain reasonable assurance about whether the financial report is free from material misstatement. Our
responsibilities under those standards are further described in the Auditor’s Responsibility section of our
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Page 84
Independent Auditor's Report
Independence
We are independent of the consolidated entity in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the code) that are relevant to our audit of the financial report in Australia. We
have also fulfilled our other ethical responsibilities in accordance with the Code.
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 was 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. For the matters below, our description of how our audit addressed these matters is
provided in that context.
1. Carrying amount of intangible assets - software
Why significant
How our audit addressed the key audit matter
As at 30 June 2018 the carrying value of intangibles -
software was $4,930,000
(2017:$3,782,000), as
disclosed in Note 14.
The consolidated entity’s accounting policy in respect of
intangible assets - software is outlined in Note 1.
The carrying amount of intangible assets - software is a
key audit matter due to:
•
•
the significance of the balance (being 44% of
total assets); and
the level of judgement applied in evaluating
management’s assessment of impairment.
As outlined in Notes 1 and 14, management assessed
the carrying amount of intangible assets - software
through impairment testing utilising a value in use model
in which significant judgements are applied in
determining key assumptions. The judgements made in
determining the underlying assumptions in the model
have a significant impact on the carrying amount of
intangible assets - software, and accordingly the amount
of any impairment charge, to be recorded in the current
financial year.
In assessing this key audit matter, we involved senior
audit team members who understand the industry.
Our audit procedures included, amongst others:
•
•
•
•
evaluating management’s methodology for
determining the carrying amount of intangible
assets by comparing the value in use model
with generally accepted valuation methodology
and accounting standard requirements;
conducting sensitivity analysis on key
assumptions such as weighted average cost of
capital (WACC) and growth rates, within
reasonable foreseeable ranges;
challenging the key assumptions used in the
expert report value in use model by:
- assessing growth rates used in comparison to
historical results
- evaluating the WACC rate used in
comparison to market and industry information
available
assessing the appropriateness of the related
disclosures in Note 14.
Envirosuite Limited Annual Report 2018Page 85
Independent Auditor's Report
2. Business combinations – including allocation of goodwill
Why significant
How our audit addressed the key audit matter
On 19 December 2017, the Group acquired the assets
of Quebec Inc (Odotech Canada) and 100% of the
issued capital of Odotech SpA (Odotech Chile). The
acquisition was deemed as one business combination.
As disclosed in Note 27, as part of the business
combination transactions, the Group recognised the
following total amounts of goodwill from the acquisition:
• Goodwill of $161,000
Business combinations – including allocation of goodwill
is a key audit matter due to:
• Significant audit effort was required to test the
group’s acquisitions during the year; and
the level of judgement applied in evaluating
management’s
goodwill
assessment
allocated in the purchase.
of
•
In assessing this key audit matter our work included, but
was not limited to, the following procedures:
• Review of purchase documentation including
contracts and business sale agreements;
• Obtaining a detailed understanding of the
acquired businesses;
• Assessing the appropriateness of the valuation
methodology of the assets acquired;
• Reviewing management’s fair value assessment
of the assets and liabilities acquired;
• Reviewing management’s assessment of the fair
value of the consideration paid and the
recognition of any deferred consideration upon
the acquisition date;
• Assessment of management’s goodwill
allocation as part of the acquisition; and
• Assessing the appropriateness of the
disclosures in relation to both the business
combination and intangible assets acquired
included in Notes 1, 14 & 27
3. Prior period audit report – qualified opinion
Why significant
How our audit addressed the key audit matter
The financial report of Envirosuite Limited for the year
ended 30 June 2017 was audited by another auditor
who expressed a qualified opinion.
In assessing this key audit matter our work included, but
was not limited to, the following procedures:
• Obtaining detailed understanding of prior
The qualified opinion was issued due to ‘limitation of
scope’ on that financial report on 31 August 2017.
period qualifications;
• Reviewing prior period auditor audit
The prior period audit – qualified opinion is a key audit
matter due to:
• Significant audit effort required
to obtain
sufficient appropriate audit evidence on
opening balances (as at, and for the year
ended 30 June 2017 in the financial report) to
determine whether materially misstated, and
to ensure
financial statement disclosures
referred to in that audit report had been
adequately supplemented.
engagement files;
• Discussion with management surrounding the
context and content of the qualifications;
• Obtaining sufficient appropriate audit evidence
to perform procedures on the specific matters
raised by the previous auditor to address the
qualifications outlined;
• Assessing the impact of prior period
qualifications on the current year report; and
• Assessing the appropriateness of the financial
statement disclosures updated by management
in relation to the prior period qualifications.
Page 86
Independent Auditor's Report
4. Disclosure of the group’s funding and liquidity position
Why significant
How our audit addressed the key audit matter
The financial report of Envirosuite Limited discloses
the group’s funding and liquidity position, which is an
event or condition that may cast doubt on the entity’s
ability to continue as a going concern.
As disclosed in Note 1, the event or condition was
noted as being a forecasted working capital shortfall
in the relevant period. Also disclosed are the reasons
why the Directors do not believe that this event or
condition leads to the conclusion that a material
uncertainty exists.
Disclosure of the funding and liquidity position of the
group is a key audit matter due to:
• Significant audit effort required to test the
appropriateness of the going concern basis
and evidence supporting this assumption.
In assessing this key audit matter our work included,
but was not limited to, the following procedures:
• Discussion with those charged with
governance on their assessment of going
concern and probability of the success of the
proposed share capital raise;
• Reviewing the cash flow forecasts provided
by management and challenging the
assumptions therein in to ensure consistency
with management’s stated business and
operational objectives, and checked the
calculation to ensure the accuracy of the
underlying financial data;
• Obtaining signed documentation surrounding
the proposed share capital raising; and
• Assessing the probability of receipt of
sufficient cash resources in order to working
capital for at least the relevant period of
assessment.
Other Information
Other information is financial and non-financial information in the annual report of the consolidated entity
which is provided in addition to the Financial Report and the Auditor’s Report. The directors are responsible
for Other Information in the annual report.
We have obtained all the other information prior to the date of this Auditor’s Report, which includes the letter
from the Managing Director, Directors’ Report, Corporate Governance Statement and Shareholder
Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, the auditor does
not and will not express an audit opinion or any form of assurance conclusion thereon, with the exception of
the Remuneration Report.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In
doing so, we 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.
We are required to report if we conclude that there is a material misstatement of this Other Information in the
Financial Report and based on the work we have performed on the Other Information that we obtained prior
the date of this Auditor’s Report we have nothing to report.
Directors’ Responsibilities 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 Note 1,
the Directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of
Financial Statements, that the financial report complies with International Financial Reporting Standards.
Envirosuite Limited Annual Report 2018Page 87
Independent Auditor's Report
In preparing the financial report, the Directors are responsible for assessing the consolidated entity’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using a going
concern basis of accounting unless the Directors either intend to liquidate the consolidated entity or to cease
operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our responsibility is to express an opinion on the financial report based on our audit. Our objectives are to
obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individual or in aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of this
financial report.
As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgement
and maintain professional scepticism throughout the audit.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report.
The procedures selected depend on the auditor’s judgement, including assessment of the risks of material
misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the
auditor considers internal control relevant to the entity’s preparation of the financial report that gives a true
and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity’s internal control.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial
report.
We conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the consolidated entity’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the
related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the consolidated entity to cease to continue as a going concern.
We evaluate the overall presentation, structure and content of the financial report, including the disclosures,
and whether the financial report represents the underlying transactions and events in a manner that achieves
fair presentation.
We obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the consolidated entity to express an opinion on the financial report. We are responsible for
the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
The Auditing Standards require that we comply with relevant ethical requirements relating to audit
engagements. We also provide the Directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
Page 88
Independent Auditor's Report
From the matters communicated with the Directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore key audit matters. We
describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in
our report because the adverse consequences of doing so would reasonably be expected to outweigh the
public interest benefits of such communication.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2018.
Opinion
In our opinion, the Remuneration Report of Envirosuite Limited for the year ended 30 June 2018, complies
with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
PKF HACKETTS AUDIT
SHAUN LINDEMANN
PARTNER
22 AUGUST 2018
BRISBANE, AUSTRALIA
Envirosuite Limited Annual Report 2018Page 89
Shareholder Information
SHAREHOLDER INFORMATION
The shareholder information set out below was applicable as at 20 August 2018
1. SHAREHOLDING
Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
Holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Class of equity
Ordinary shares
Shares
26
155
197
583
284
Options
-
-
-
-
10
1,245
10
The number of shareholdings held in less than marketable parcels
613,845
Substantial holders
Substantial holders in the Company are set out below:
Ordinary Shares
Robin Ormerod & Kristin Zeise
Robin Ormerod & Kristin Zeise
Voting Rights
Number held Percentage
27,387,208
23,909,342
11.86%
10.35%
The voting rights attaching to each class of equity securities are set out below
Ordinary shares
Every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.
Options
Options carry the standard voting rights available to ordinary shareholders when converted to ordinary shares.
1. SHAREHOLDING (continued)
Twenty largest quoted equity security holders
The names of the twenty largest holders of quoted equity securities are listed below:
Mrs Jean Ellen Vincent & Mr Anthony Alan Vincent
Name
Robin Ormerod & Kristin Zeise
Robin Ormerod
National Nominees Limited
HSBC Custody Nominees
Mrs Leora Shamgar
Radell Pty Ltd
Indcorp Consulting Group Pty
Honne Investments Pty Limited
Charlotte B Pty Ltd
Coterie Nominees Pty Ltd
Australian Executor Trustees
Fordholm Consultants Pty Ltd
Bungeeltap Pty Ltd
Robinson House Pty Ltd
Buduva Pty Ltd
Northstar Global Pty Ltd
Mr Ziou Fang
Karawatha Pty Ltd
Unquoted equity securities
Envirosuite Limited unlisted options
Mr Peter James White & Mrs Eva Maria White
Ordinary shares
Number held
Percentage
of issued
27,387,208
23,909,342
11.86%
10.35%
7,591,772
6,205,714
5,000,000
4,507,579
4,301,050
4,000,000
3,500,000
3,500,000
3,000,000
2,822,149
2,800,000
2,625,000
2,300,000
2,091,340
2,000,000
1,900,000
1,870,000
1,844,118
3.29%
2.69%
2.17%
1.95%
1.86%
1.73%
1.52%
1.52%
1.30%
1.22%
1.21%
1.14%
1.00%
0.91%
0.87%
0.82%
0.81%
0.80%
113,155,272
49.00%
Number held
27,183,333
47
48
Page 90
Shareholder Information
1. SHAREHOLDING (continued)
Twenty largest quoted equity security holders
The names of the twenty largest holders of quoted equity securities are listed below:
Name
Robin Ormerod & Kristin Zeise
Robin Ormerod
National Nominees Limited
HSBC Custody Nominees
Mrs Leora Shamgar
Radell Pty Ltd
Mrs Jean Ellen Vincent & Mr Anthony Alan Vincent
Indcorp Consulting Group Pty
Honne Investments Pty Limited
Charlotte B Pty Ltd
Coterie Nominees Pty Ltd
Australian Executor Trustees
Fordholm Consultants Pty Ltd
Bungeeltap Pty Ltd
Robinson House Pty Ltd
Mr Peter James White & Mrs Eva Maria White
Buduva Pty Ltd
Northstar Global Pty Ltd
Mr Ziou Fang
Karawatha Pty Ltd
Unquoted equity securities
Envirosuite Limited unlisted options
Ordinary shares
Number held
Percentage
of issued
27,387,208
23,909,342
7,591,772
6,205,714
5,000,000
4,507,579
4,301,050
4,000,000
3,500,000
3,500,000
3,000,000
2,822,149
2,800,000
2,625,000
2,300,000
2,091,340
2,000,000
1,900,000
1,870,000
1,844,118
11.86%
10.35%
3.29%
2.69%
2.17%
1.95%
1.86%
1.73%
1.52%
1.52%
1.30%
1.22%
1.21%
1.14%
1.00%
0.91%
0.87%
0.82%
0.81%
0.80%
113,155,272
49.00%
Number held
27,183,333
48
Envirosuite Limited Annual Report 2018Page 91
Shareholder Information
Corporate Directory
Envirosuite Limited
ABN: 42 122 919 948
Board of Directors
Peter White
David Johnstone
Chief Executive Officer and Executive Director
Chairman
Robin Ormerod
Adam Gallagher
Chief Scientist and Managing Director
Director
Company Secretary
Adam Gallagher
Registered office and
principal place of business
Level 19, 240 Queen Street,
Brisbane, Queensland 4000
Phone: 07 3004 6400
Share Registry
Boardroom Pty Limited
Level 12, 225 George Street
Sydney NSW 2000
Phone: 02 9290 9600
Auditor
PKF Hacketts Audit
Level 6, 10 Eagle St
Brisbane, QLD, 4000
Phone: 07 3839 9733
Stock Exchange Listing
Envirosuite Limited shares are listed on the
Australian Securities Exchange (Code EVS)
Website Address
www.envirosuite.com
Page 92