A WORLD OF
OPPORTUNITIES
Annual Report
2019
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CONTENTS
2
6
Chairperson and Chief
Executive Officer Joint Report
Information on Directors
and Company Secretary
8
Directors’ Report
16
Remuneration Report
32
Auditor’s Independence
Declaration
33 Financial Report
34
Statement of Comprehensive
Income
35 Statement of Financial Position
36 Statement of Changes in Equity
37
Consolidated Statement of
Cash Flows
38 Notes to the Financial Statements
85 Directors’ Declaration
86
Independent Auditor’s Report
90
Australian Securities Exchange
(ASX) Shareholder Information
92 Corporate Directory
1,500+ STAFF
SPREAD ACROSS
36 OFFICES TO
SUPPORT OUR
CUSTOMERS.
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Dale
Sønderborg
London
Cwmbran
Rotterdam
Hamburg
Zürich
Toronto
New York
New York
Bethlehem
Hazleton
Bethlehem
Columbia
Columbia
Atlanta
Houston
Houston
Lillehammer
Hamar
Oslo
Pune
Tokyo
Shanghai
Hong Kong
Hyderabad
Ho Chi Minh City
Jakarta
São Paulo
Buenos Aires
Buenos Aires
Johannesburg
Melbourne
Auckland
Notice of Annual General Meeting
Annual General Meeting of the Company
to be held on Thursday 21 November 2019
at 11am, Manningham Civic Centre, 699
Doncaster Road, Doncaster, Victoria.
Hansen Technologies Ltd Annual Report 2019
OPERATIONS
CUSTOMERS SERVED
Offices
Regions
COMPANY
PROFILE
With over 40 years’ experience, Hansen Technologies (ASX: HSN) is a
leading global provider of billing and customer care technologies for
energy, water, pay-TV operators, and telcos. Employing over 1,500
experts, Hansen’s proven and scalable solutions, as well as its innovative
and flexible offerings, enable our global customer base to deliver cost-
effective end-to-end business initiatives to improve their customers’
experience. Headquartered in Australia, Hansen Technologies has offices
in North and South America, South Africa, Europe and the Asia Pacific
region servicing customers in over 90 countries around the world.
Espoo
Stockholm
Jyväskylä
Trondheim
Kista
Kuopio
Førde
Dale
Sønderborg
London
Cwmbran
Rotterdam
Hamburg
Zürich
Lillehammer
Hamar
Oslo
Carlsbad
Carlsbad
Pune
Tokyo
Shanghai
Hong Kong
Hyderabad
Ho Chi Minh City
Jakarta
São Paulo
Buenos Aires
Buenos Aires
Johannesburg
Melbourne
Auckland
01
Toronto
New York
Bethlehem
New York
Hazleton
Bethlehem
Columbia
Columbia
Atlanta
Houston
Houston
Hansen Technologies Ltd Annual Report 2019 CHAIRPERSON AND CHIEF EXECUTIVE OFFICER
JOINT REPORT
We are pleased to present
the Annual Report for Hansen
Technologies Limited for
financial year ended
30 June 2019 (FY19).
SIGMA SYSTEMS
ACQUISITION
$163.8M
Based Toronto, Canada
ENORO
ACQUISITION
Acquired in July 2017, continued
to perform strongly in FY19 and
has now been fully integrated
into the broader Hansen Group
2019 has been a very exciting year with
continued change being experienced
across the globe in the market segments
Hansen focuses on, being Utilities and
Communications.
Hansen’s recent acquisition of Sigma Systems
specifically provides a solution to address a
provider’s ability to expand its offering and
deliver competitive solutions quickly into
the evolving market.
In the Utilities sector, the production
of green energy continues to rapidly
evolve, with increased awareness and
demand for the product, with advances
in technology lowering the cost of
production, improving grid integration and
increasing retail demand for the product.
Hansen has continued to ensure that
product development is addressing our
customers’ ability to add new products to
their customer offering and addressing the
emerging billing complexity.
In the Communications market, technology
churn continues to accelerate with the
world’s reliance on smart devices and
our desire to interact with the world
increasing the demand for a broader
range of innovative offerings. In recent
years, this has manifested itself in various
entertainment options being delivered to
us on our mobile devices together with an
explosion in the number of apps allowing
us to interact with each other on a level
never seen before. This is set to continue
as faster platforms like 5G provide us with
connection speeds enabling higher levels
of connectivity and complexity. These
developments continue to increase the
level of bundling offered by our customers
and have increased the level of complexity
required to be addressed by the customer
care and billing system provided by Hansen.
OPERATIONAL HIGHLIGHTS
In FY19, the business achieved a significant
number of operational highlights:
• A major contract win to deliver our
second billing system in Finland, following
the go-live of the first system earlier in
the year.
• A major contract win to deliver the next
generation Meter Data Management
(MDM) solution in Sweden.
• As the existing MDM solution provider
for a large Australian energy distributor,
we were chosen to deliver a new network
billing solution that unified metering and
billing functionalities in a single system.
• We expanded our Vietnam Development
Centre and now have 100 employees
(2018: nine employees) supporting
Hansen products in the Nordic, Americas
and the Asia-Pacific regions.
• The commencement of eight client
upgrades to the new version of our
US municipalities billing system.
• Developed our new analytics software-as-
a-service (SaaS) product for the Utilities
sector in the Nordic region, which is
continuing to gain momentum with some
20 customers now using the product.
Financials
A$ Million
Operating revenue
Underlying EBITDA1, 3
Underlying NPAT3
Underlying NPATA2, 3
Basic EPS based on underlying NPATA (cents)2
FY19
231.3
55.8
24.0
33.7
17.1
FY18
230.8
60.0
29.5
38.7
19.8
Variance
%
0.2%
(7.0%)
(18.7%)
(12.9%)
(13.6%)
1. EBITDA is a non-IFRS term, defined as earnings before interest, tax, depreciation and amortisation, and excluding net foreign exchange gains (losses).
2. NPATA is a non-IFRS term, defined as net profit after tax, excluding tax-effected amortisation of acquired intangibles. This is used to determine EPSa as disclosed
here and in the audited Remuneration Report.
3. Underlying EBITDA, underlying NPAT and underlying NPATA exclude separately disclosed items, which represent the transaction and other restructuring costs
associated with the Sigma acquisition (2018: Enoro acquisition) and the exiting of a premises lease in the Americas. Further details of the separately disclosed items
are outlined in Note 4 to the Financial Report.
02
Hansen Technologies Ltd Annual Report 2019 COMPANY
HIGHLIGHTS
$231.3M
OPERATING REVENUE
$55.8M
UNDERLYING EBITDA
Operating revenue for FY19 was
$231.3 million, $0.5 million up on FY18.
With Sigma contributing $5.0 million of
revenue in June (the first month since
acquisition), revenues for the remainder of
Hansen excluding Sigma were $4.5 million
lower. This decline was a result of lower
non-recurring revenues, due primarily
to both lower one-off licence fees and
reduced project work following the large
body of work completed in the first half of
FY18 associated with implementing Power
of Choice in Australia. Conversely, recurring
revenues grew to represent 63% of total
operating revenue.
Underlying EBITDA for the year was
$55.8 million, 7.0% down on the
$60.0 million in FY18. This resulted in
an underlying EBITDA margin decline
to 24.1% from 26.0% in FY18. Sigma
only contributed a modest $0.1 million
of EBITDA in June, which we do not see
as representative of the business going
forward. Excluding Sigma, the underlying
EBITDA margin was 24.6%. This reduced
margin was the direct result of the lower
non-recurring revenue, as we were able
to maintain operating expenses at the same
level as FY18, even after the investment
in the Vietnam Development Centre.
ACQUISITIONS
Enoro, which was acquired in July 2017,
continued to perform strongly in FY19
and has now been fully integrated into
the broader Hansen Group. With a number
of major contract wins during the year,
combined with the opportunities provided
by the dynamic Nordic energy market, the
business is well placed to continue that
growth in FY20.
Effective 1 June 2019, we acquired Sigma
Systems based out of Toronto, Canada, for
$163.8 million, comfortably making it our
largest acquisition to date.
Founded in 1996, Sigma is a leading global
provider of catalogue-driven software
products for telecommunications, media,
and technology companies.
03
Hansen Technologies Ltd Annual Report 2019 04
Hansen Technologies Ltd Annual Report 2019 $24.0M
UNDERLYING NET PROFIT
AFTER TAX
17.1¢
EARNINGS PER SHARE
OUR FUTURE
The recent additions of Enoro and
Sigma have added significant breadth
and depth to our global platform, with
both businesses expanding the Hansen
footprint into exciting and dynamic market
segments. We believe Enoro and Sigma will
drive future revenue growth.
Now, with more than 1,500 employees
we truly have the platform to leverage
our Global Experience. We would like
to take this opportunity to thank all
the dedicated Hansen team members
worldwide who have once again put in a
fantastic effort during the year. The quality
and commitment of our people are the
foundation of our business and we are
fortunate to have such a large number of
industry experts dedicated to the success
of our business.
With the Utilities and Communications
markets increasing in complexity, creating
higher demand for more sophisticated
customer management and billing systems,
we believe Hansen is well placed for
future growth.
The software products streamline complex
product and service offerings and provide a
faster path to creating, selling and delivering
new digital and traditional products and
services – particularly relevant given the
proliferation of new communications
products and services in today’s world,
which will further be the case as 5G gains
momentum. The company has more than
70 customers and 500 employees, 280 of
whom are located in Pune, India.
The combined offering of Hansen and
Sigma enables us to address a larger part
of our customers’ needs: from product
innovation and creation, customer quoting
and ordering, right through to revenue
management and customer care. Cross-
sell opportunities also exist with Hansen’s
large utilities customer base, driven by
the transformation occurring within the
Utilities sector – which includes changes
in energy pricing structures and an
expansion of product offerings to
encompass new energy solutions and
services such as solar power, electric
car charging and battery storage.
Sigma was funded from a new $225 million
loan facility, which was strongly supported
by a syndicate of local and international
banks. At balance date, $35 million of the
facility was unused and net debt stood at
$148.3 million. While this represents the
highest level of debt the Group has ever
had, given the strength of the Group’s cash
generation, we are well placed to service
this debt over coming years.
With the inclusion of Sigma into the
broader Hansen portfolio, we are now very
well balanced between our two primary
verticals: Utilities and Communications.
05
Hansen Technologies Ltd Annual Report 2019 INFORMATION ON DIRECTORS AND
COMPANY SECRETARY
The qualifications, experience and special responsibilities of
each person who has been a Director of Hansen Technologies
Limited at any time during or since the end of the financial
year are provided below, together with details of the Company
Secretary as at the year end.
Mr David Trude
Mr Andrew Hansen
Mr Bruce Adams
Ms Sarah Morgan
Non-Executive Director
Managing Director and CEO
Non-Executive Director
Non-Executive Director
Chairman since 2011
Managing Director since 2000
Director since 2000
Director since 2014
Director since 2011
Age 59
Age 71
Member of the Remuneration
Committee
Chair of the Audit
and Risk Committee
Age 59
David has extensive experience
in a variety of financial services
roles within the banking and
securities industries. He holds
a degree in commerce from
the University of Queensland
and is a member of many
professional associations
including the Stockbrokers and
Financial Advisers Association
of Australia and the Australian
Institute of Company Directors.
David is also Non-Executive
Chairman of E.L & C. Baillieu
Limited, a Non-Executive
Director of Chi-X Australia
Limited and Non-Executive
Director of ASX listed Acorn
Capital Investment Fund
Limited.
Andrew has over 35 years’
experience in the IT industry,
joining Hansen in 1990. Prior
to Hansen, he held senior
management positions with
Amfac-Chemdata, a software
provider in the health industry.
Andrew led Hansen from its
listing on the ASX in 2000 to
today being a global business
with a strong history of
decades of strong profitability
and growth.
Andrew is responsible for
implementing the Group’s
strategic direction and
overseeing the everyday
affairs of the Hansen Group.
Bruce has over 30 years’
experience as a commercial
lawyer. He has practised
extensively in the areas of
information technology law
and mergers and acquisitions
and has considerable
experience advising listed
public companies. From
2002 until 2019, after more
than 10 years as a partner
of two Melbourne law firms,
Bruce held the position as
general counsel of Club
Assist Corporation Pty Ltd,
a worldwide motoring club
service provider. Bruce holds
degrees in Law and Economics
from Monash University.
Member of the Remuneration
Committee
Age 49
Sarah has extensive
experience in the finance
industry, primarily as part of
independent corporate advisory
firm Grant Samuel. Sarah has
been involved in public and
private company mergers and
acquisitions, as well as equity
and debt capital raisings. Sarah
holds a degree in Engineering
and a Masters of Business
Administration from the
University of Melbourne and
is a Graduate of AICD.
Sarah is also Non-Executive
Director of Intrepid Group,
Whispir Limited, Adslot Limited,
Future Generation Global
Investment Company Limited,
and the National Gallery of
Victoria Foundation.
06
Hansen Technologies Ltd Annual Report 2019 Mr David Osborne
Ms Jennifer Douglas
Mr David Howell
Ms Julia Chand
Non-Executive Director
Non-Executive Director
Non-Executive Director
Director since 2006
Director since 2017
Director since 2018
Member of the Audit
and Risk Committee
Chair of the Remuneration
Committee
Member of the Audit
and Risk Committee
General Counsel and
Company Secretary
Company Secretary since 2014
Age 49
Age 70
Member of the Audit
and Risk Committee
Chair of the Remuneration
Committee
Age 52
Age 61
David is a Fellow of the
Institute of Chartered
Accountants, and a Fellow
of the Australian Institute
of Company Directors, with
over 50 years of financial
management, taxation
and accounting experience
in public practice. David’s
experience includes having
been the Audit Partner of his
accounting practice and a
Registered Company Auditor
for over 25 years. He also
has experience in the various
aspects of risk management.
David has a long-standing
association with Hansen,
having been a Board member
for some years prior to the
Company’s listing on the ASX
in June 2000.
Jennifer has over 25 years’
experience in the technology
and media industries. Jennifer
started as a lawyer before
holding senior executive roles
including Executive Director
of Telstra’s Customer Office,
with responsibility for Telstra’s
$3 billion Fixed Voice business,
and the establishment of
technology support business
Platinum. Jennifer holds
degrees in Science and Law
from Monash University, a
Masters of Law and Masters of
Business Administration from
Melbourne University and is a
Graduate of AICD. Jennifer is
also a Non-Executive Director
of Essential Energy, OptiComm
Limited, the St Kilda Football
Club and the Peter MacCallum
Cancer Foundation.
David is a highly accomplished
executive having worked
across a number of industries
including financial services,
retail, oil marketing and social
media. David has had roles
as Managing Director, Board
Director and Board Adviser
across large corporates, SMEs
and early stage businesses,
including private equity.
David is also Non-Executive
Chairman of Littlepay (an
Australian fintech company)
and a Non-Executive Director
of Tiger Pistol Pty Ltd (a social
media advertising technology
business).
Julia joined Hansen
Technologies in 2007 and
plays a strategic role as
General Counsel as well as
Company Secretary. Julia has
significant legal experience in
IT, financial services and retail
organisations. As Company
Secretary she is responsible for
the Company’s corporate and
ASX obligations.
Unless stated, no Directors of Hansen Technologies Limited held any other Directorships of listed companies at any time
during the three years prior to 30 June 2019.
07
Hansen Technologies Ltd Annual Report 2019 DIRECTORS’ REPORT
The Directors present their report together with the Financial Report
of the consolidated entity (the Group), being Hansen Technologies
Limited (the Company) and the entities it controlled for the financial
year ended 30 June 2019, and Auditor’s Report thereon. This
Financial Report has been prepared in accordance with Australian
Accounting Standards.
PRINCIPAL ACTIVITIES
The principal activities of the Group during the financial year were the development, integration and support of billing systems software
for the utilities, energy, pay-TV and telecommunications sectors. Other activities undertaken by the Group include IT outsourcing services
and the development of other specific software applications.
OPERATING AND FINANCIAL REVIEW
Review of operations
The Group’s operating performance for the fiscal year compared to last year is as follows:
Operating revenue
EBITDA1
NPAT
NPATA1
Basic earnings per share (EPS) (cents)
Basic EPSa1 (cents)
2019
A$ Million
231.3
2018
A$ Million
230.8
53.0
21.5
31.2
10.9
15.8
59.3
28.9
38.0
14.8
19.4
Variance %
0.2%
(10.6%)
(25.6%)
(17.9%)
(26.4%)
(18.6%)
1. The Directors believe the information additional to IFRS measures included in the report is relevant and useful in measuring the financial performance of the Group.
These include: EBITDA, NPATA and EPSa. These measures have been defined in the Chairperson and Chief Executive Officer’s Joint Report on page 2.
In 2019 the business continued to deliver strong results after the record 2018 year. Revenues and EBITDA were in line with guidance.
Further details on the Group’s results are outlined in the Chairperson and Chief Executive Officer’s Joint Report on page 2.
On 1 June 2019, Hansen acquired the Sigma Systems business (Sigma) and one month of these results are included in the FY19 result.
Also included in the results are the transaction and other restructuring costs related to the acquisition, which we have identified as
separately disclosed items in our results.
This acquisition has also resulted in the re-balancing of the Group’s market portfolio which, post the acquisition of Enoro in FY18,
was initially weighted towards the Utilities sector. With Sigma’s revenues concentrated in the Communications sector, the Group’s
revenue portfolio is now re-balanced to ensure greater diversification across multiple industries, regions and clients.
The Group has generated operating cash flows of $39.7 million, which has been used to retire external debt and fund dividends of
$12.6 million during the financial year. With the introduction of a higher level of debt in June 2019 to fund the Sigma acquisition,
the Group has, for the first time, used the strength of the Group’s balance sheet to fund 100% of an acquisition. With the Group’s
strong cash generation, Hansen is well placed to service and retire the debt over the coming years.
08
Hansen Technologies Ltd Annual Report 2019 Billing segment
The Billing segment represents a major part of the Group’s business operations, delivering $218.4 million of revenue in 2019 (2018:
$217.3 million), which translates into a 0.5% increase. Segment profit before tax was $36.7 million in 2019 (2018: $40.2 million),
representing an 8.7% decrease. Sigma’s revenues relating to the month of June 2019 are also included in this segment.
Other activities
Last year, the Group separated its Customer Care call centre services in the United States from the Billing segment and aggregated these
services with its existing data hosting business to form an 'other' segment. This change allowed our segment results to more closely align
with our core Billing Solutions business.
Segment revenues from other activities was $12.9 million in 2019 (2018: $13.6 million), representing a 5.1% decrease for the year. This
5.1% decrease in revenues resulted from expected reduction in business activity associated with the Customer Care call centre. Segment
profit before tax was $1.6 million for 2019 (2018: $1.4 million).
Significant changes in the state of affairs
There have been no significant changes in the Group’s state of affairs during the financial year.
Events after balance sheet date
No matters have arisen between the end of the financial year and the date of this report that have significantly affected or may
significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group in future years.
Opportunities and business risks
The business remains committed to increasing shareholder value and the recent acquisition of Sigma is aligned with this objective.
We believe the opportunities to grow the Group’s organic revenues and win new clients are enhanced with this acquisition.
The Energy and Communications markets are undergoing further change and are increasing in complexity. Regulation and other changes
such as solar provisioning, smart metering, energy market settlements and the introduction of next-generation 5G network technology put
greater demands for highly complex and sophisticated billing systems and enhanced functionality that can keep abreast of market changes.
Organic and strategic growth opportunities within the business for above-trend performance include, but are not limited to:
• A higher than expected demand for services from customers from changing business needs;
• Significant new customers due to increased marketing efforts and product innovation;
• Greater take-up of product upgrades from existing customers; and
• A higher than expected conversion rate associated with targeted acquisitions.
To ensure our goals are achieved, the Group continues to refer to the robust risk framework that is continually monitored, managed
and responded to. As the Group continues to grow, we continue to identify, control, plan and co-ordinate effective responses to
a wide array of risks, which include, but are not limited to the following:
• Security or data incidents: As a technology-focused business, managing security and taking care of customer data are essential.
To manage the risk of damaging security incidents, we have appropriate data management, security and compliance policies,
procedures and practices in place.
• Loss of customers: While loss of customers due to market competition is a risk to the business, we manage this risk by ensuring we
are focused on meeting our customers’ expectations for system performance and service delivery, and by having a globally diverse
customer base across various industry sectors.
• Decline in international market conditions: As a business with international operations, we have exposure to currency fluctuations,
which we monitor and manage.
• Investment opportunities: The Group has an active M&A program. Potential investments may carry execution and integration
risks, and this is managed via maintaining a highly experienced M&A team with a proven track record of business integration
and value generation.
We manage risks by monitoring our market place and global conditions.
09
Hansen Technologies Ltd Annual Report 2019 DIRECTORS’ REPORT CONTINUED
Outlook and likely developments for FY20
Hansen will continue to pursue its operating strategy of providing billing and related data management solutions to our targeted
segments while assessing appropriate acquisitions to enhance shareholder value.
Items of specific focus for 2020 include:
• Successfully completing the integration of the Sigma business into the broader Hansen platform;
• Investigate and develop cross-selling opportunities into the Utilities market and leverage our investment in Sigma’s intellectual property; and
• Leverage the Group’s network of low-cost development centres to improve both customer delivery and Hansen margins.
Environmental regulations and climate change
The Group’s operations are not subject to any significant environmental Commonwealth or State regulations or laws. The Group is aware
of the general risks associated with climate change and continues to be committed to operating sustainably. However, the Group’s
operations are not significantly impacted by any environmental factors.
Corporate Governance Statement
Hansen and the Board are committed to achieving and demonstrating the highest standards of corporate governance. Hansen has
reviewed its corporate governance practices against the Corporate Governance Principles and Recommendations (3rd edition) published by
the ASX Corporate Governance Council.
A description of the Group's current corporate governance practices is set out in the Group's corporate governance statement,
which can be viewed at https://hansencx.com/about/investor-relations.
Dividends paid, recommended and declared
A final dividend of 3 cents per share has been declared, partially franked to 2.6 cents, representing a 3 cents per share regular dividend.
The final dividend was announced to the market on 23 August 2019 with payment to be made on 26 September 2019.
The amount declared has not been recognised as a liability in the accounts of the Company as at 30 June 2019.
Dividends paid during the year, excluding dividends reinvested as part of the Company’s Dividend Reinvestment Program (DRP):
• 3 cents per share fully franked interim dividend paid 29 March 2019, totalling $5,317,531; and
• 4 cents per share fully franked final dividend paid 27 September 2018, totalling $7,318,821 (representing 3 cents ordinary dividend
and a 1 cent special dividend).
This is consistent with the Board’s capital management policy that balances growth through acquisitions against the payment of dividends.
10
Hansen Technologies Ltd Annual Report 2019 Share options and performance rights
Options and performance rights over shares may be issued to Key Management Personnel (KMP) as an incentive for motivating and
rewarding performance as well as encouraging longevity of employment. The issuing of options and performance rights is intended
to enhance the alignment of KMP with the primary shareholder objective of increasing shareholder value.
Performance rights over unissued ordinary shares granted by the Company during the end of the financial year to the KMP as part
of their remuneration for the year ended 30 June 2019 are as follows:
Grant Date
Executives
A Hansen
C Hunter
D Meade
G Taylor
N Fernando
Total
Number of Rights Granted1
2 July 2018
148,459
32,775
32,935
31,563
31,238
276,970
1. The number of rights granted that will vest is conditional on achievement of targets under the LTI Plan. Refer to the Remuneration Report for further details.
There were no rights or options over unissued ordinary shares granted by the Company since the end of the financial year to the KMP
as part of their remuneration.
All grants of options and rights are subject to the achievement of performance measurements. Further details regarding options and
rights granted as remuneration are provided in the Remuneration Report.
11
Hansen Technologies Ltd Annual Report 2019 DIRECTORS’ REPORT CONTINUED
Shares under options and performance rights
Unissued ordinary shares of the Company under options and rights at the date of this report are as follows:
Vesting Date
Expiry Date
Exercise Price
Instrument
Options
Options
Options
Rights
Rights
Grant Date
2 July 2014
2 July 2015
2 July 2017
2 July 2018
2 July 2019
2 July 2020
22 Dec 2016
31 August 20191
22 Dec 2021
2 July 2017
2 July 2018
31 August 20201
31 August 20211
-
-
Number of
Options/Rights
-
925,000
-2
355,318
530,652
$1.30
$2.67
$3.59
Nil
Nil
1. The vesting date for options granted 22 December 2016, rights granted on 2 July 2017 and 2 July 2018 is the date on which the Board notifies the executive that
the options and rights have vested, after the outcomes for the measurement period have been determined and satisfaction of performance conditions have been
assessed. This is likely to be the dates as stated in the table.
2. Options issued on 22 December 2016 did not meet the required performance measurement hurdles for these options to vest and/or be exercisable.
If the Company makes a bonus issue of securities to ordinary shareholders, each unexercised option or performance right will, on exercise,
entitle its holder to receive the bonus securities as if the option or performance right had been exercised before the record date for the
bonus issue.
Option and performance rights holders do not have any right, by virtue of the option or performance right held, to participate in any
share issue of the Company. Options and performance rights will not give any right to participate in dividends or any voting rights until
shares are issued upon the exercise of vested options or performance rights.
Shares issued on exercise of options and performance rights
The following ordinary shares of the Company were issued during or since the end of the financial year as a result of the exercise
of an option:
Date Issued
3 September 2018
26 September 2018
19 October 2018
30 April 2019
28 June 2019
1 July 2019
Total
Number of Ordinary Shares Issued
Amount Paid Per Share
100,000
75,000
75,000
30,000
75,000
265,000
620,000
1.30
0.92
2.67
1.30
1.30
1.30
There are no amounts unpaid on shares issued on exercise of options. No shares were issued during or since the end of the financial year
on exercise of performance rights.
12
Hansen Technologies Ltd Annual Report 2019 Indemnification and insurance of Directors, officers and auditors
Indemnification
The Company has agreed to indemnify all of the current and former Directors and officers of the Company and its controlled entities
against all liabilities to another person (other than the Company or a related body corporate) that may arise from their position as
Directors and officers of the Company and its controlled entities, except where the liability arises out of conduct involving a lack of
good faith. The agreement stipulates that the Company will meet the full amount of any such liabilities, including costs and expenses.
The Group has not entered into any agreement to indemnify its auditors against any claims that might be made by third parties arising
from their report on the annual Financial Report.
Insurance
Since the end of the previous financial year, the Company has paid insurance premiums in respect of Directors’ and officers’ liability
and legal expenses and insurance policies for current and former Directors and officers, including executive officers of the Company
and Directors, executive officers and secretaries of its controlled entities. The Directors have not included details of the nature of the
liabilities covered or the amount of the premium paid in respect of the Directors’ and officers’ liability and legal expenses insurance
contracts as such disclosures are prohibited under the terms of the contract.
No insurance premium is paid in relation to the auditors.
Rounding of amounts
In accordance with ASIC Corporations (Rounding in Financial/ Directors’ Reports) Instrument 2016/191, the amounts in the Directors’
Report and in the Financial Report have been rounded to the nearest one thousand dollars, or in certain cases, to the nearest dollar
(where indicated).
Directors’ meetings
The number of meetings of the Board of Directors and of each Board Committee held during the financial year and the numbers
of meetings attended by each Director were:
Director
Mr David Trude
Mr Bruce Adams
Mr Andrew Hansen
Ms Sarah Morgan
Mr David Osborne
Ms Jennifer Douglas
Mr David Howell
Board Meetings
Audit and Risk
Committee Meetings
Remuneration
Committee Meetings
Eligible
Attended
Eligible
Attended
Eligible
Attended
12
12
12
12
12
12
12
12
12
12
12
11
12
12
-
-
-
8
8
8
8
-
-
-
8
8
8
8
-
7
-
7
-
7
1
-
7
-
7
-
7
1
13
Hansen Technologies Ltd Annual Report 2019 DIRECTORS’ REPORT CONTINUED
Directors’ interests in shares or options
Directors’ relevant interests in shares of the Company or options/rights over shares in the Company as at the date of this report are
detailed below:
Directors’ Relevant Interests in:
Ordinary Shares
of the Company
Options/Rights Over
Shares in the Company
Mr David Trude
Mr Bruce Adams1, 2
Mr Andrew Hansen1
Ms Sarah Morgan
Mr David Osborne1, 2
Ms Jennifer Douglas
Mr David Howell
102,613
34,891,417
34,963,449
21,351
35,125,448
16,000
26,218
-
-
265,431
-
-
-
-
1. Each of these named persons has a joint interest in a single parcel of 34,739,113 shares as at the date of this report.
2. For further details, please refer to the substantial shareholding notice lodged with the ASX dated 16 August 2019.
Proceedings on behalf of the Company
No person applied for leave of Court to bring proceedings on behalf of the Company or any of its subsidiaries.
Directors’ interests in contracts
Directors’ interests in contracts with the Company are limited to the provision of leased premises on arm’s length terms and are disclosed
in Note 25 to the financial statements.
Auditor’s Independence Declaration
A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 in relation to the audit
for the financial year is provided with this report.
14
Hansen Technologies Ltd Annual Report 2019 Non-audit services
Non-audit services were provided by the auditors of the Group during the year, namely RSM Australia Partners, network firms of RSM
and other non-related audit firms as detailed below. The Directors are satisfied that the provision of the non-audit services during the
year by the auditors is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.
The nature and scope of each type of non-audit service provided means that auditor independence was not compromised.
Amounts paid and payable to RSM Australia Partners for non-audit services:
– taxation services
– compliance services
Amounts paid and payable to network firms of RSM Australia Partners for non-audit services:
– taxation services
– compliance services
Amounts paid and payable to non-related auditors of Group entities for non-audit services:
– taxation services
– compliance services
Total auditors’ remuneration for non-audit services
2019
$
2018
$
-
-
-
52,349
14,709
67,058
-
-
-
67,058
-
-
-
13,493
3,034
16,527
-
8,302
8,302
24,829
15
Hansen Technologies Ltd Annual Report 2019
REMUNERATION REPORT
Dear Shareholder,
On behalf of the Board of Directors, I am pleased to present the Remuneration Report of the Group, consisting of Hansen Technologies
Limited (the Company) and its controlled entities for the 2019 financial year.
This year’s overall performance reflects a message of continued success, with the Group achieving its revenue and profit performance
targets. This was achieved despite a challenging year in the market coupled with deliberate investment to ensure we are positioned
well for future growth. Based on the Group’s performance, most of our target Short-Term Incentive (STI) payments were awarded to
our KMPs against financial and non-financial KPIs set for the year. However, the options granted under the 2016 Long-Term Incentive
(LTI) plan did not vest as the required performance hurdles were not met. These outcomes are detailed in this Remuneration Report.
In accordance with its responsibilities, this year the Remuneration Committee initiated an independent review of its Remuneration
Framework. The Committee appointed an external consultant to assess whether the current framework remains fit for purpose
in retaining executive talent, allowing us to execute our business strategy and deliver shareholder value.
The review determined that the current framework largely continues to be appropriate and aligns the executives with delivering
shareholder value. However, based on consideration of the advice from the external consultant and detailed consideration of all
relevant issues, some improvements have been identified and are being adopted by the Board.
A summary of these improvements are as follows:
• For existing and future executive Long-Term Incentive (LTI) plans, retain the existing LTI measurements of Earnings per Share (EPS)
growth and the Company’s performance against industry peers through assessing relative Total Shareholder Return (rTSR) but redefine
the earnings calculation used to calculate EPS to be based on net profit after tax, adjusted for non-cash tax-effected amortisation of
intangibles (NPATA). This provides the incentive for executives to pursue acquisitions going forward, which is central to the Company’s
continuing growth strategy and aligns to shareholders’ best interests.
• For future executive remuneration plans:
›
›
›
›
A new deferred equity component will be introduced to the Short-Term Incentive (STI) plan, where 25% of all future awards under
the STI plan will be awarded as equity, subject to a two-year deferral period, within which recipients must remain employed with
the Company. This facilitates quicker equity participation for executives encouraging ‘owner like’ behaviours in the business.
Some changes to both the STI and the LTI opportunity as a fixed percentage of Total Fixed Remuneration (TFR) will be made to
balance the new equity element introduced to the STI plan. This rebalancing will ensure that the recipient will not be ‘worse off’
from a cash flow perspective.
Formalising an existing STI requirement, by introducing a ‘gateway’, whereby the Board will seek confirmation that the STI recipient
has not behaved in a way contrary to the Company’s expected values/behaviours.
Malus and clawback provisions will be introduced for all equity awards, allowing the Board to adjust awards for risks which
crystallise during and after the vesting periods.
• Introduction of Committee membership fees for Non-Executive Directors and other minor adjustments.
The Board believes that the adoption of this revised plan sets the Group up well for the next stage of its growth journey.
The Board remains committed to the ongoing review and improvement of the Group’s Remuneration Framework to ensure it achieves
its objectives of incentivising and rewarding performance that optimises business and shareholder value and ensuring the Company
is well placed to attract, retain and motivate a talented executive team.
Yours sincerely,
David Howell
Chair of the Remuneration Committee
16
Hansen Technologies Ltd Annual Report 2019
Our detailed remuneration report (Audited)
The Remuneration Report for the year ended 30 June 2019 outlines key aspects of our remuneration framework and has been prepared
and audited in accordance with the Corporations Act 2001.
Our Remuneration Report contains the following sections:
1. Persons to whom this report covers
2. Our remuneration framework
3. How reward was linked to performance
4. Remuneration details: executive KMP
5. Contractual arrangements with executive KMP
6. Remuneration details: non-executive KMP
7. Share-based remuneration disclosures
8. Other transactions with KMP
1. PERSONS TO WHOM THIS REPORT COVERS
The remuneration disclosures in the report cover the following persons who were classified as the Key Management Personnel (KMP)
of the Group during the 2019 financial year. KMP are those persons who, directly or indirectly, have authority and responsibility for
planning, directing and controlling the major activities of the Group:
Executives1
Andrew Hansen
Cameron Hunter
Darren Meade
Graeme Taylor
Niv Fernando
Non-Executive Directors
David Trude
Bruce Adams
Jennifer Douglas
David Howell
Sarah Morgan
David Osborne
Managing Director and Chief Executive Officer (CEO)
Chief Operating Officer
Group Head of Delivery
Chief Financial Officer
Chief Strategy & Commercial Officer
Chairperson and Independent Non-Executive Director
Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Non-Executive Director
1. These executives of the Group were classified as KMP during the 2019 financial year and unless stated otherwise were KMP for the entire year.
At the most recent Annual General Meeting (AGM), a resolution to adopt the prior year Remuneration Report was put to the vote and
at least 75% of ‘yes’ votes were cast for adoption of that report. No comments were made on the Remuneration Report considered
at the AGM.
17
Hansen Technologies Ltd Annual Report 2019 REMUNERATION REPORT CONTINUED
2. OUR REMUNERATION FRAMEWORK
People are at the heart of the Group’s success, enabling us to deliver on our vision and long-term goals. Our remuneration framework
focuses on providing competitive fixed pay and variable pay that rewards achievement of the Group’s annual objectives and long-term
growth in shareholder value.
Remuneration outcomes are aligned with both individual and Group performance, ensuring that employees are rewarded for overall
Group achievement as well as their individual contribution to the Group’s success. This aligns remuneration to both individual
performance and value creation for shareholders.
a. Remuneration governance
The Board annually reviews the Group’s remuneration principles, practices, strategy and approach to ensure they support the Group’s
long-term business strategy and are appropriate for a listed company of our size and nature.
The Board has delegated to the Remuneration Committee the responsibility for reviewing and making recommendations to the Board
regarding compensation arrangements for the Directors, executive KMP and the balance of the CEO’s direct reports. As at 30 June 2019,
the Remuneration Committee was made up of four Non-Executive Directors: David Howell (Chair of the Remuneration Committee1),
Jennifer Douglas, Bruce Adams and Sarah Morgan, the majority of whom are independent.
The CEO and other Directors attend meetings as required at the invitation of the Committee Chair.
The Remuneration Committee assesses the appropriateness of both the nature and amount of the remuneration of the executive and
non-executive KMPs on an annual basis by reference to market conditions and current remuneration practices, with the overall objective
of ensuring maximum Company performance and shareholder benefit including from the retention of a quality Board and executive
team. The Committee also engages professional support as required to ensure remuneration practices remain in step with the market
as well as the size and nature of the business.
(i) Executive KMP remuneration review process
CEO
REMUNERATION COMMITTEE
BOARD
Assesses each senior executive’s current
year performance based on actual
outcomes relative to agreed targets,
general performance and market
conditions.
Provides appropriate recommendations
to the Remuneration Committee on
incentive payments for the current year.
Provides appropriate recommendations
to the Remuneration Committee of
the amount of fixed remuneration,
appropriate STI targets and STI
payments for the future measurement
period.
Reviews the CEO’s recommendations
with respect to the senior executive
team and provides appropriate
recommendations to the Board.
Assesses CEO’s current year
performance and remuneration
outcomes against agreed targets,
formulating a recommendation to
the Board.
Provides appropriate recommendations
to the Board of the amount of the CEO’s
fixed remuneration, and appropriate
STI and LTI targets for the future
measurement period, considering
general performance, market conditions
and other external factors.
Reviews the Remuneration Committee’s
recommendations.
Approves current year STI and LTI
payments.
Approves the remuneration and
remuneration structure for the future
measurement period, including STI
and LTI targets.
(ii) Non-Executive Directors remuneration review process
Non-Executive Directors’ remuneration is governed by resolutions passed at a General Meeting of the Shareholders. During the most
recent AGM held on 22 November 2018, shareholders approved an increase to the Non-Executive Directors’ maximum remuneration
payable from $430,000 to $520,000. Shareholder approval will be sought again in this year’s AGM to increase the remuneration
payable, principally to allow for the appointment of one additional Director.
Non-executive Directors are excluded from participation in the Company’s equity incentive plans.
1. David Howell was formally appointed as a member and Chair of the Remuneration Committee on 27 June 2019. Prior to this date, Jennifer Douglas was the
Chair of the Remuneration Committee.
18
Hansen Technologies Ltd Annual Report 2019 (iii) Independent advice
To support the review of the remuneration framework during the 2019 financial year, the Committee sought independent information,
observations and advice from PricewaterhouseCoopers (PwC) in relation to remuneration strategy, structure and market practice.
Potential conflicts of interest were considered by the Committee, and both the Committee and the Board are satisfied that the advice
provided by PwC was free from undue influence. Any advice provided by PwC was used as a guide only and was not a substitute for
detailed consideration of all the relevant issues by the Committee. No remuneration recommendations, as defined by the Corporations
Act 2001, were provided during the year.
b. Remuneration structure (FY19 Plan)
OBJECTIVE
COMPONENT AND FORM
ASSESSMENT
Attract and retain employees
with the skills and experience
associated with the role
Total Fixed
Remuneration (TFR)
Incentivise and reward
achievement of annual
performance objectives
and business outcomes
Align motivations
with shareholder
interests and creation
of long-term value
Cash +
non-cash
benefits
Short-Term
Incentives (STI)
Long-Term
Incentive (LTI)
Performance rights
to shares
Fixed
Market data,
individual experience
and performance
Variable
(‘at-risk’)
Annual performance
based on financial and
non-financial targets
Continuous
employment, relative
Total Shareholder
Returns (TSR) and
adjusted earnings
per share
(i) Total Fixed Remuneration (TFR)
TFR typically includes base salary and superannuation contributions and may include, at the discretion of the Board, other benefits
such as a motor vehicle (aggregated with associated fringe benefits tax to represent the total employment cost to the Group). TFR
is determined with reference to available market data, the scope of an individual’s role and the qualifications and experience of the
individual, as well as geographic location. TFR is reviewed annually to account for market movements and individual performance
outcomes. See page 29 for a summary of executive KMP contracts.
19
Hansen Technologies Ltd Annual Report 2019 REMUNERATION REPORT CONTINUED
(ii) FY19 Short-Term Incentive (STI) Plan
Objective
To incentivise and align the rewards attainable by executive KMPs with the achievement of specific
annual objectives of the Group and the creation of shareholder value.
How is it paid?
Annual cash entitlement on achievement of specific annual financial and non-financial KPIs.
How much can
executives earn?
Target STI benefit is set at 40% of TFR for the CEO and 25% of TFR for other executive KMPs.
These are subject to the following minimum and target performance thresholds:
How is performance
measured?
Financial KPIs
(70% total STI)
% STI awarded
(financial component)
150%
125%
100%
75%
50%
25%
0%
(93-97% achievement)
0-100% of financial
STI awarded on linear bases
(0-93% achievement)
No award
(97-103% achievement)
100% of financial
STI awarded
(103% to a maximum
110% achievement)
100-150% of
financial STI awarded
on linear bases
< 80%
85%
90%
95%
100%
105%
110%
115%
120%
Financial KPI achievement
Non-financial KPIs
(30% total STI)
Non-financial KPIs outcome is assessed and awarded up to a maximum of
100% based on outcomes.
Performance measures (KPIs) selected reflect financial, strategic and operational objectives relevant
to the level and function of the role that are central to achievement of the business plan and strategy
and building shareholder value. Financial measures selected are measures against which management
and the Board assess the short-term financial performance of the Group. Strategic and operational
objectives are assigned to each individual to drive specific outcomes considered to be of strategic
importance to the Group within that individual’s level of responsibility. These objectives are determined
by the CEO and the Board in accordance with the process set out on page 18.
The weightings for each performance measure that comprise the total STI opportunity are set out below:
The selection of non-financial
KPIs varies depending on each
KMP’s roles and responsibilities
within the Group. These may
include achievement of specific
strategic projects that drive
longer-term shareholder value.
Each KMP may have a number
of separate non-financial KPIs.
Achievement of each individual’s
non-financial KPIs is determined
by reference to an assigned
performance rating determined
by the CEO and the Board at
the end of the financial year in
accordance with the process
described on page 18.
30%
70%
Financial KPIs
(budgeted revenues and EBITDA)
Non-financial KPIs
Achievement of financial KPIs
is determined by reference to
the Group’s audited accounts
for the year in question. No
payment is made in respect
of financial KPIs to any KMP
if the target amount is not met
for the Group (set at 93% of
budgeted revenue and EBITDA).
The Board retains final discretion over STI payments to ensure outcomes appropriately reflect
performance and achieve objectives of the STI scheme.
Changes from the
FY18 STI Plan
There were no changes to the STI Plan framework from the prior year.
20
Hansen Technologies Ltd Annual Report 2019 (iii) FY19 Long-Term Incentive (LTI) – Executive Performance Rights Plan
Objective
To align the rewards attainable by executive KMPs with the achievement of particular long-term
objectives of the Group and achievement of increasing shareholder value. Eligibility to participate
in the LTI scheme is determined by the Board and is targeted at senior executives whose role
contributes significantly to the performance of the Group.
How much can
executives earn?
Performance rights are subject to the service and performance conditions. The target LTI benefit
is set as follows:
• CEO LTI: 50% of TFR delivered as performance rights subject to vesting conditions; and
• KMP LTI: 25% of TFR delivered as performance rights subject to vesting conditions.
The number of performance rights issued is based on each executive’s target LTI benefit divided by
the market value of the rights. The market value of rights granted is based on the volume-weighted
average price of the Company’s shares during the five-day period before grant date.
LTI benefits of up to 150% of target LTI is payable where performance criteria are exceeded.
How is it paid?
LTIs are awarded as performance rights on achievement of certain thresholds reflective of shareholder
value delivered.
Each performance right entitles the eligible executive to be issued with a share.
How is performance
measured?
Vesting of the LTI awards are subject to the following criteria:
1. Three years of continuous employment with the Group from 1 July 2018 to 30 June 2021.
2. Achievement of the thresholds over the same three-year period as set out below:
50%
Relative Total Shareholder
Return (rTSR)
The percentage change in a
company’s share price, plus the
effect of any dividends paid,
over the measurement period,
relative on a ranked percentile
basis to a comparative group
(S&P/ASX Small Ordinaries
Industrials Index).
Relative TSR is a measure widely
understood and accepted by
shareholders, as it directly
measures shareholder value
creation.
Adjusted Earnings
per Share (EPSa)
Based on the basic EPS
compound average growth rate
(CAGR) over the measurement
period, adjusted to exclude non-
cash tax-effected amortisation
of acquired intangibles.
EPSa growth is selected as it is
considered a relevant indicator
linking financial performance
with shareholder value.
The Board may also determine
to 'normalise' EPSa to exclude
one-off amounts and therefore
derive an underlying EPSa for
the basis of the calculation.
50%
21
Hansen Technologies Ltd Annual Report 2019 REMUNERATION REPORT CONTINUED
The proportion of rights that may vest based on relative TSR performance is determined based on the
following vesting schedule:
Relative TSR performance
< 50th percentile
Percentage of performance rights
that will vest
None
Between 50th to 75th percentile
100% to 150% on a linear basis
> 75th percentile
150%
The proportion of rights that may vest based on EPSa CAGR is determined based on the following
vesting schedule:
EPSa CAGR
< 6%
Percentage of performance rights
that will vest
None
Between 6% to 10%
100% to 150% on a pro-rata basis
> 10%
150%
The Board has discretion to increase or reduce the amount awarded if the Board considers the outcome
to be misaligned given the circumstances that prevailed over the relevant measurement period and the
experience of shareholders.
Performance rights will be forfeited if performance conditions are not met.
If an eligible executive ceases employment with the Group during the performance period other
than by way of dismissal or resignation (e.g. death, total and permanent disablement, redundancy,
retrenchment or retirement with prior written consent of the Board) then the unvested performance
rights will vest on a pro-rata basis according to the eligible period of time served up until the
termination date.
Where termination occurs by way of dismissal or resignation prior to the vesting of the performance
rights, unvested rights may vest on a pro-rata basis according to the eligible period of time served
up until the termination date at the Board’s discretion.
If termination of employment occurs for serious misconduct, all vested and unvested rights will be
forfeited and will lapse.
What happens if an
executive leaves?
What are the performance
rights entitlements?
Performance rights issued to executives are not able to be traded on the ASX. They do not qualify for
receipt of dividends or have any voting rights until they have been exercised immediately on vesting
date and converted to shares by the employee.
Are there any restrictions
attached to the
performance rights?
The Group prohibits executive KMP from entering into arrangements to protect the value of unvested
equity awards. The prohibition includes entering into contracts to hedge their exposure to any awards
as part of their remuneration package.
Performance rights cannot be transferred to, or vest in, any person or body corporate other than
the executive KMP.
Changes from the FY18
LTI Plan
The Board has redefined the definition of EPS to EPSa (as defined above). In previous LTI plans, this was
assumed to be based on statutory EPS. Furthermore, the number of performance rights to be granted
under previous LTI plans was based on the accounting fair value of rights at grant date, rather than
the underlying market value of the Company’s shares.
22
Hansen Technologies Ltd Annual Report 2019 3. HOW REWARD WAS LINKED TO PERFORMANCE
a. Performance against STI outcomes
A summary of key measurement criteria of the Group’s financial performance for the financial years ended over the last six years
is below. This year’s earnings performance was impacted by one-off transaction costs related to the Sigma Systems acquisition:
Operating Revenue ($m)
Earnings (EBITDA*) ($m)
250
200
150
100
50
0
5 year CAGR: 22%
230.8
231.3
174.7
149
106.3
86
2014
2015
2016
2017
2018
2019
70
60
50
40
30
20
10
0
5 year CAGR: 17% (EBITDA)
59.3
52.5
45.4
45.1
31.1
24.1
2014
2015
2016
2017
2018
2019
* EBITDA is a non-IFRS term that relates to Earnings Before Interest, Tax, Depreciation and Amortisation.
For FY19, budget targets were established for Group revenue and EBITDA, and the STI financial payment gate was set with respect to
these targets. Both the Group’s revenue and EBITDA were within the budget thresholds this year and most non-financial goals were
met for the STIs to be awarded. Refer to the operational and financial review section of the Directors’ Report for further information
about the Group’s FY19 performance.
FY19
FY18
Total
Opportunity $
Awarded 70%
Financial
Awarded
30% KPIs
Total
Opportunity $
Awarded
70% Financial
Awarded
30% KPIs
Andrew Hansen1
Cameron Hunter
Darren Meade
Graeme Taylor1
Niv Fernando1
364,140
100,488
100,979
96,772
95,776
100%
100%
100%
100%
100%
100%
50%
100%
100%
100%
357,000
98,517
95,977
94,875
93,899
100%
100%
100%
100%
100%
75%
50%
100%
100%
100%
1. During FY19, the Board exercised its discretion to award these KMPs an additional STI amount of $35,000 each for their role in successfully completing the Sigma
Systems transaction, which was in addition to their agreed KPI outcomes.
23
Hansen Technologies Ltd Annual Report 2019 REMUNERATION REPORT CONTINUED
b. Performance against LTI outcomes
Our legacy LTI plans will continue to be measured and reported through until the Group’s FY21 Remuneration Report. As a consequence
of legacy LTI plans and the current LTI framework, in FY19 we have three different years of awards that will be tested and subsequently
vested or lapsed based on their differing terms and vesting conditions.
The following table sets out the different legacy awards that are currently in place as at the end of FY19, each with their specific grant
details and performance measures:
Grant Date
Security Performance Measure/s
Sect. 3 ref.
Status
2 Jul 2014
Option
2 Jul 2015
Option
1st year revenue and EBITDA,
3-yr cont. employment
1st year revenue and EBITDA,
3-yr cont. employment
(b)(i)
(b)(i)
22 Dec 2016
Option
EPSa, rTSR, 3-yr cont. employment
(b)(ii)
2 Jul 2017
Right
EPSa, rTSR, 3-yr cont. employment
(b)(ii)
2 Jul 2018
Right
EPSa, rTSR, 3-yr cont. employment
(b)(ii)
Measurement period
Fully vested
Yet to vest
Fail to vest
2016
2017
2018
2019
2020
2021
For the Group’s legacy LTI Plans where options will be awarded, once an option has vested, if the employee wishes to convert the options
to shares, the employee must pay in cash to the Company the exercise price multiplied by the number of options received e.g. for 100,000
options with an exercise price of $3.00 per share, the employee will be required to pay $300,000 to convert the options to shares.
(i) Performance against LTI Plan measures (2014 and 2015 LTI Plans)
All KMPs eligible for the legacy LTI Plans remained with the Company during the measurement period and continue to be in office
at the end of FY19.
(ii) Performance against LTI Plan measures (2016 LTI Plans and onwards)
A summary of key measurement criteria of the Group’s performance relevant for assessing shareholder value creation over the last five
financial years is shown below:
Adjusted EPS (EPSa) (cents)
Dividends Paid* (cents per share)
25
20
15
10
5
0
14.7
19.4
16.6
15.6
15.8
11.9
2015
2016
2017
2018
2019
8
6
4
2
0
7
7
6
6
6
2015
2016
2017
2018
2019
* Amount of dividends paid represents the return on shareholder value. However, the amount of dividends paid is not in itself a performance measure included
in the FY18 LTI Plan, but is included as part of the calculation of relative TSR.
24
Hansen Technologies Ltd Annual Report 2019
Share price performance relative to the S&P/ASX Small Ordinaries Index for the previous five years:
400%
350%
300%
250%
200%
150%
100%
0%
July 2014
July 2015
July 2016
July 2017
July 2018
July 2019
S&P/ASX Small Ords
HSN.AX
Performance outcomes against 2016 LTI Plan measures
Options under the 2016 LTI Plan did not meet the required performance measurement hurdles for the options to vest and/or be
exercisable. The below table set outs the LTI performance targets and outcomes under the 2016 LTI Plan framework:
Measure
Minimum
Target
Maximum
Target
Actual
Outcome
Relative TSR1
50th percentile
75th percentile
46th percentile
EPSa CAGR
6% CAGR
10% CAGR
(1.3%) CAGR
Total options
Options
Granted
492,000
492,001
984,001
Options
Vested
-
-
-
Options
Forfeited
-
492,001
492,001
1. These 492,000 options will vest on 31 August 2019 in accordance with accounting standards. However, because the minimum target was not met, these options
will be restricted and unexercisable.
The below table sets out the value of options under legacy LTI Plans that were exercised during FY19 and FY18:
Andrew Hansen
Cameron Hunter
Darren Meade
Graeme Taylor
Niv Fernando
FY19
Value Exercised*
$
FY18
Value Exercised*
$
-
-
-
-
225,000
-
256,000
153,000
189,750
-
* Represents the intrinsic value of options that were exercised during the financial years 2019 and 2018, which is the net dollar value of shares realised from the
exercise of profitable options. Intrinsic value is calculated as the difference between the exercise price and the underlying share price at the date of exercise.
For example, an option with an exercise price of $2.00 exercised when the underlying share price is $5.00 has an intrinsic value of $3.00.
If the Company makes a bonus issue of securities to ordinary shareholders, each unexercised option will, on exercise, entitle its holder
to receive the bonus securities as if the option had been exercised before the record date for the bonus issue.
25
Hansen Technologies Ltd Annual Report 2019
REMUNERATION REPORT CONTINUED
Performance outcomes against 2017 and 2018 LTI Plan measures
Performance rights granted in FY18 (2017 plan) and FY19 (2018 plan) have performance conditions attached that will be measured
over three years. Assessment and vesting (where conditions are satisfied) will happen after the completion of FY20 for the 2017 plan
and FY21 for the 2018 plan. See section 4 for a summary of performance rights granted during FY18.
The below table sets out the value of LTI performance rights granted in FY19 and FY18 (there were no forfeitures of LTIs in FY19
and FY18):
Andrew Hansen
Cameron Hunter
Darren Meade
Graeme Taylor
Niv Fernando
FY19
Value Exercised*
$
FY18
Value Exercised*
$
446,862
98,653
99,134
95,005
94,026
446,250
98,517
95,974
94,875
93,899
* Represents the value of performance rights at grant date, calculated in accordance with AASB 2 Share-based Payment, granted during the year as part
of remuneration under the terms of the FY19 and FY18 LTI Plans.
c. Total remuneration mix
The following diagrams set out the proportional mix of remuneration for the CEO and each KMP at both the target amount and the
actual remuneration achieved for FY19:
TARGET
ACTUAL1
26%
53%
25%
52%
CEO
21%
17%
KMPs
16%
Total Fixed Remuneration
Short-Term Incentive
Long-Term Incentive
23%
16%
Total Fixed Remuneration
Short-Term Incentive
19%
Long-Term Incentive
67%
65%
1. Target and actual remuneration mix is calculated based on the combination of each CEO and KMP’s total fixed remuneration for FY19, total value of STIs awarded
in relation to actual performance outcomes for FY19, and the value of LTIs granted in FY19 under the terms of the FY19 LTI Plan. The proportional mix of
remuneration for KMP is based on an average amount.
26
Hansen Technologies Ltd Annual Report 2019 4. REMUNERATION DETAILS: EXECUTIVE KMPs
a. Statutory remuneration details
Details of executive KMP remuneration for the 2018 and 2019 financial years are set out in the table below:
Fixed Remuneration
Variable
Remuneration
Total
Executive
KMP
Andrew
Hansen
Cameron
Hunter
Darren
Meade
Graeme
Taylor
Niv
Fernando
Cash
Salary
$
843,240
826,005
383,359
370,320
387,237
360,496
370,321
354,500
366,253
354,126
Super
$
24,999
24,999
25,000
25,000
25,000
25,000
25,000
25,000
25,000
25,000
Year
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
Non-
monetary
Benefits
$
31,157
27,588
Annual
& Long
Service
Leave
$
STI1
Awarded
$
Total
$
LTI2
Fair
Value
$
Perfor-
Mance
related
%
Total
$
62,497
961,893
399,140
242,346 1,603,379
94,130
972,722
330,225
361,249 1,664,196
13,796
59,525
481,680
85,415
53,143
620,238
14,730
45,381
455,431
83,739
96,092
635,262
-
-
-
-
-
-
17,777
430,014
100,979
53,130
584,123
6,538
392,034
95,978
92,655
580,667
21,083
416,404
131,772
52,059
600,235
25,676
405,176
94,875
89,710
589,761
9,672
400,925
130,776
52,039
583,740
9,230
388,356
93,899
86,958
569,213
Total
2019
2,350,410
124,999
44,953
170,554 2,690,916
848,082
452,717
3,991,715
2018
2,265,447
124,999
42,318
180,955
2,613,719
698,716
726,664
4,039,099
1. Represents STI awarded and accrued in relation to actual performance during the 2019 and 2018 financial years. This includes the additional STIs awarded
to Andrew Hansen, Graeme Taylor and Niv Fernando during the 2019 financial year due to the circumstances described in section 3(a).
2 Options and performance rights granted as remuneration are valued at grant date in accordance with AASB 2 Share-based Payment and amortised over
vesting period.
40%
42%
22%
28%
26%
32%
31%
31%
31%
32%
33%
35%
b. Options awarded, vested and lapsed during the year
The terms and conditions of each grant of options affecting the remuneration in the current or future reporting period are as follows.
Grant Date
Vesting Date
Expiry Date
30 Jul 2019
2 Jul 2015
2 Jul 2017
2 Jul 2018
2 Jul 2019
2 Jul 2020
22 Dec 2016
31 Aug 20191
22 Dec 2021
Exercise
Price
$1.30
$2.67
$3.59
Value per
Option at
Grant Date
$0.20
$0.56
$1.19
Performance
Achieved % Vested
Number of
Options on Issue
at 30/6/2019
100%
100%
0%1
100%
100%
0%1
-
400,000
984,001
1. The vesting date for options granted on 22 December 2016 is the date on which the Board notifies the executive that the options have vested, after the outcomes
for the measurement period have been determined and satisfaction of performance conditions have been assessed. However, based on the measurement period
for the three years ended 30 June 2019, options dependent on the EPSa hurdle will not vest on 31 August 2019, and options dependent on the relative TSR hurdle
will vest on 31 August 2019, but will be restricted and will not be exercisable.
The number of options over unissued ordinary shares in the Company provided as remuneration to executive KMPs is shown in the table
on the following page. The options carry no dividend or voting rights.
27
Hansen Technologies Ltd Annual Report 2019 REMUNERATION REPORT CONTINUED
Options granted to executive KMP which remain unvested at 30 June 2019 and outstanding are detailed below:
Balance 30/6/2018
During Year Ended 30/6/2019
Balance 30/6/2019
Name and
Grant Date
Opening
Balance
Exercise
Price
Vested
Forfeited
Exercised
Vested and
Exercisable
Vested
and Un-
exercisable
Andrew Hansen
22 Dec 20161
Total
Cameron Hunter
22 Dec 20161
2 Jul 2015
Total
Darren Meade
22 Dec 20161
2 Jul 2015
Total
Graeme Taylor
22 Dec 20161
2 Jul 2015
Total
Niv Fernando
22 Dec 20161
2 Jul 2015
2 Jul 2014
Total
535,714
535,714
121,746
100,000
221,746
115,220
100,000
215,220
108,718
100,000
208,718
102,603
100,000
100,000
302,603
Grand total
1,484,001
$3.59
$3.59
$2.67
$3.59
$2.67
$3.59
$2.67
$3.59
$2.67
$1.30
-
-
-
100,000
100,000
-
100,000
100,000
-
100,000
100,000
-
100,000
-
100,000
400,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(100,000)
(100,000)
-
-
-
100,000
100,000
-
100,000
100,000
-
100,000
100,000
-
100,000
-
100,000
(100,000)
400,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Unvested
535,714
535,714
121,746
-
121,746
115,220
-
115,220
108,718
-
108,718
102,603
-
-
102,603
984,001
1. Based on the measurement period for the three years ended 30 June 2019, these options that are dependent on the EPSa hurdle will not vest on 31 August 2019,
and these options that are dependent on the relative TSR hurdle will vest on 31 August 2019, but will be restricted and will not be exercisable.
28
Hansen Technologies Ltd Annual Report 2019 c. Performance rights awarded, vested and lapsed during the year
Performance rights issued under the Group’s 2018 LTI Plan during the year are subject to the service and performance criteria as
described on pages 20 to 21.
The following table sets out details of performance rights granted to executives during the financial year:
Executive KMP
Andrew Hansen*
Cameron Hunter
Darren Meade
Graeme Taylor
Niv Fernando
Grant
Date
2 Jul 2018
2 Jul 2018
2 Jul 2018
2 Jul 2018
2 Jul 2018
Rights
Granted
148,459
32,775
32,935
31,563
31,238
Balance
30/6/20191
148,459
32,775
32,935
31,563
31,238
Fair Value
per Right2
$3.01
$3.01
$3.01
$3.01
$3.01
Vesting
Date3
31 Aug 2021
31 Aug 2021
31 Aug 2021
31 Aug 2021
31 Aug 2021
$ Value of
Rights at
Grant Date1
446,862
98,653
99,134
95,005
94,026
* The Board has resolved to issue 148,459 rights to Andrew Hansen, the Chief Executive Officer, as part of the 2018 LTI Plan issued in FY19. The issue of these
rights was approved by shareholders at the Company’s Annual General Meeting on 22 November 2018. Any differences in the fair value of the performance
rights between the original grant date by the Board and the date of shareholder approval is not material to remuneration awarded.
1. No performance rights were vested or forfeited during the year. Rights do not expire as shares are issued to KMPs upon vesting.
2. The fair value of the rights at grant date has been determined by an independent external valuation expert in accordance with Australian Accounting Standards.
Note 15 to the Group’s financial statements outlines the valuation methodology and key inputs and assumptions to the valuation in greater detail.
3. The vesting date for rights granted on 2 July 2018 is the date on which the Board notifies the executive that the rights have vested, after the outcomes
for the measurement period have been determined and satisfaction of performance conditions have been assessed. This is likely to be 31 August 2021.
5. CONTRACTUAL ARRANGEMENTS WITH EXECUTIVE KMP
Remuneration and other conditions of employment are set out in each executive’s employment contract. The key elements of these
employment contracts are summarised below:
Component
Total Fixed Remuneration
Contract duration
Notice by individual/Company
Termination of employment
(without cause)
Approach for CEO
Approach for Other Executive KMP
$910,350
Ongoing
6 months
Range between $380,000 and $410,000
Ongoing
1 month
The Board has discretion to allow some or all STI entitlements to be paid out on a pro-
rata basis aligned to time, where termination occurs by way of resignation or dismissal.
In other without cause terminations, the STI will be reduced proportionately to reflect
the portion of the measurement period, but there is no other impact to the
executive’s entitlement.
The Board has discretion to allow unvested LTIs to vest on a pro-rate basis aligned to
time. Where this discretion is not exercised, such unvested options or rights will lapse.
Termination of employment
(with cause)
STI is forfeited.
All unvested LTIs and vested but unexercised LTIs are forfeited.
6. REMUNERATION DETAILS: NON-EXECUTIVE KMPs
Non-Executive Directors enter into service agreements through a letter of appointment. Non-Executive Director fees are determined
with reference to market levels and the need to attract high-quality Directors.
Non-Executive Directors do not receive any variable or performance-based remuneration.
The Non-Executive Director fee pool currently has a maximum value of $520,000 per annum, as approved by shareholders at the 2018 AGM.
29
Hansen Technologies Ltd Annual Report 2019 REMUNERATION REPORT CONTINUED
The annual fees provided to Non-Executive Directors, inclusive of superannuation, are shown below:
Board fees
Chairman
Other Non-Executive Directors
Committee fees
Audit and Risk Committee – Chair
Remuneration Committee – Chair
Non-Executive
Director
David Trude
Bruce Adams
Jennifer Douglas
Sarah Morgan
David Osborne
David Howell1
Total
Year
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
Salary
and Fees
104,868
102,116
63,950
62,402
68,592
66,208
68,592
66,208
63,950
62,402
91,347
6,693
461,299
366,029
Fixed Remuneration
Super
9,962
9,701
6,075
5,928
6,516
6,290
6,516
6,290
6,075
5,928
8,678
636
43,822
34,773
FY19
114,830
70,025
5,083
5,083
Non-monetary
Benefits
-
-
-
-
-
-
-
-
-
-
-
-
-
-
FY18
111,817
68,330
4,168
4,168
Total
114,830
111,817
70,025
68,330
75,108
72,498
75,108
72,498
70,025
68,330
100,025
7,329
505,121
400,802
1. During the year, David Howell was paid an extra $30,000 for consulting services performed for the Company.
7. SHARE-BASED REMUNERATION DISCLOSURES
a. Shareholdings of KMP
The number of shares in the Company held by each Non-Executive Director and executive KMP during the year, including their related
parties, is summarised below:
Received
During
the Year on
Exercise
of Options
Other Changes
During the Year
Balance
30 June 2019
-
-
-
-
-
-
(8,504)
-
8,000
-
-
1,218
102,113
152,304
16,000
21,351
386,335
26,218
Balance
30 June 2018
110,617
152,304
8,000
21,351
386,335
25,000
Non-Executive Directors
David Trude
Bruce Adams
Jennifer Douglas
Sarah Morgan
David Osborne
David Howell
30
Hansen Technologies Ltd Annual Report 2019 Executive KMP
Andrew Hansen
Cameron Hunter
Darren Meade
Graeme Taylor
Niv Fernando
Total
Received
During
the Year on
Exercise
of Options
-
-
-
-
100,000
100,000
Other Changes
During the Year
Balance
30 June 2019
4,642
34,963,449
-
268
2,749
(32,876)
(24,503)
1,105,882
79,783
132,841
76,079
37,062,355
Balance
30 June 2018
34,958,807
1,105,882
79,515
130,092
8,955
36,986,858
b. Shares issued on exercise of options and performance rights
Person
Niv Fernando
Total
Number of Ordinary Shares Issued
Amount Paid Per Share
100,000
100,000
1.30
There are no amounts unpaid on shares issued on exercise of options or performance rights.
8. OTHER TRANSACTIONS WITH KMP
Rental agreements with the CEO
The Group leases its Melbourne head office and its York Street (South Melbourne) office from an entity in which the CEO is a Director.
The terms and conditions of the lease and other property arrangements are no more favourable than those available, or which might
reasonably be expected to be available, from others on an arm’s length basis. In addition, the Group rents an apartment in New York
City, USA, on an as-required basis at a rate favourable to the Group. The apartment is owned by the CEO.
The total lease and rental payments during the 2019 financial year related to these arrangements were $1,633,450.
Subsequent to 30 June 2019, both Bruce Adams and David Osborne now have a joint indirect interest in the entity that is lessor to the
Melbourne and South Melbourne arrangements as described above. The terms and conditions of the lease arrangements continue to
be the same as at 30 June 2019.
Signed in accordance with a resolution of the Directors.
David Trude
Director
Melbourne
23 August 2019
Andrew Hansen
Director
31
Hansen Technologies Ltd Annual Report 2019
AUDITOR’S INDEPENDENCE DECLARATION
32
Hansen Technologies Ltd Annual Report 2019 36 Section A: Basis of Preparation
FINANCIAL REPORT
34 Consolidated Statement of Comprehensive Income
35 Consolidated Statement of Financial Position
36 Consolidated Statement of Changes in Equity
37 Consolidated Statement of Cash Flows
38 Notes to the Financial Statements
38 Section A: Basis of preparation
38 1. Basis of preparation
40 Section B: Performance
40 2. Segment information
44 3. Revenue and other income
48 4. Separately disclosed items
49 5. Profit from continuing operations
50 6. Income tax
53 7. Earnings per share
54 Section C: Working capital and operating assets
54 8. Cash and cash equivalents
55 9. Receivables
56 10. Other current assets
56 11. Plant, equipment and leasehold improvements
57 12. Intangible assets
60 13. Payables
60 14. Other operating provisions
61 Section D: People
61 15. Employee benefits
63 16. Share-based payments
66 Section E: Capital and financial risk management
66 17. Financial risk management
69 18. Borrowings
71 19. Contributed capital
72 20. Dividends
72 21. Reserves and retained earnings
73 22. Commitments and contingencies
75 Section F: Group structure
75 23. Parent entity information
76 24. Business combinations
78 Section G: Other disclosures
78 25. Related party disclosures
80 26. Auditor’s remuneration
81 27. Deed of cross guarantee
83 28. New and amended accounting standards and interpretations
84 29. Subsequent events
Hansen Technologies Ltd Annual Report 2019
33
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended 30 June 2019
Operating revenue
Other income
Total revenue and other income
Employee benefit expenses
Depreciation expense
Amortisation expense
Property and operating rental expenses
Contractor and consultant expenses
Software licence expenses
Hardware and software expenses
Travel expenses
Communication expenses
Professional expenses
Finance costs
Other expenses
Total expenses
Profit before income tax expense
Income tax expense
Net profit after tax
Other comprehensive income
Items that may be reclassified subsequently to profit and loss
Net gain/(loss) on hedges of net investments
Exchange differences on translation of foreign entities, net of tax
Other comprehensive income for the year
Total comprehensive income for the year
Basic earnings (cents) per share attributable to ordinary equity
holders of the Company
Diluted earnings (cents) per share attributable to ordinary equity
holders of the Company
Note
3
3
5
5
5
5
5
6(a)
21(a)
21(a)
7
7
2019
$’000
231,324
1,634
232,958
(128,027)
(3,806)
(18,950)
(10,394)
(5,339)
(2,108)
(11,352)
(5,773)
(3,805)
(1,891)
(2,067)
(11,669)
(205,181)
27,777
(6,312)
2018
$’000
230,816
1,957
232,773
(124,133)
(3,908)
(16,483)
(9,995)
(8,022)
(2,440)
(9,006)
(5,926)
(3,524)
(2,418)
(2,085)
(7,851)
(195,791)
36,982
(8,132)
21,465
28,850
43
6,558
6,601
(934)
9,477
8,543
28,066
37,393
10.9
10.8
14.8
14.7
The consolidated statement of comprehensive income is to be read in conjunction with the notes to the financial statements set out
on pages 38 to 84.
34
Hansen Technologies Ltd Annual Report 2019 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2019
Current assets
Cash and cash equivalents
Receivables
Accrued revenue
Other current assets
Total current assets
Non-current assets
Plant, equipment and leasehold improvements
Intangible assets
Deferred tax assets
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Payables
Borrowings
Current tax payable
Provisions
Unearned revenue
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Borrowings
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Foreign currency translation reserve
Share-based payments reserve
Retained earnings
Total equity
Note
8
9
3(a)(iii)
10
11
12
6(b)
13
18
14, 15
3(a)(iii)
6(b)
18
15
19
21(a)
21(b)
21(c)
2019
$’000
38,288
49,475
27,817
7,920
123,500
10,986
402,782
4,601
3,123
2018
$’000
23,245
37,254
5,824
4,959
71,282
10,554
243,440
4,061
433
421,492
258,488
544,992
329,770
21,195
226
1,756
15,070
27,069
65,316
44,290
186,327
189
230,806
16,492
112
3,196
13,181
22,914
55,895
16,156
27,121
675
43,952
296,122
99,847
248,870
229,923
138,746
23,340
3,931
82,853
248,870
136,896
16,739
3,102
73,186
229,923
The consolidated statement of financial position is to be read in conjunction with the notes to the financial statements set out on pages
38 to 84.
35
Hansen Technologies Ltd Annual Report 2019 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the Year Ended 30 June 2019
Balance as at 1 July 2018
Effect of adoption of new accounting standards
Balance as at 1 July 2018 (restated)
Profit for the year
Net gain on hedges of net investments
Exchange differences on translation of foreign
entities, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity
as owners:
Shares issued under employee share plan
Employee share options exercised
Share-based payment expense – performance rights
Share-based payment expense – share options
Equity issued under dividend reinvestment plan
Dividends declared
Total transactions with owners in their capacity
as owners
Note
3(a)
21(a)
21(a)
19(b)
19(b)
16(e)
16(e)
19(b)
21(c)
Balance as at 30 June 2019
19, 21
Balance as at 1 July 2017
Profit for the year
Net loss on hedges of net investments
Exchange differences on translation of foreign
entities, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity
as owners:
Shares issued under employee share plan
Employee share options exercised
Share-based payment expense – performance rights
Share-based payment expense – share options
Equity issued under dividend reinvestment plan
Shares issued from institutional placement
Share purchase plan offer
Dividends declared
Note
21(a)
21(a)
19(b)
19(b)
16(e)
16(e)
19(b)
19(b)
19(b)
21(c)
Total transactions with owners in their capacity
as owners
Balance as at 30 June 2018
19, 21
Contributed
Equity
$’000
136,896
-
Reserves
$’000
19,841
-
136,896
19,841
-
-
-
-
170
535
-
-
1,145
-
-
43
6,558
6,601
-
-
965
(137)
-
-
1,850
138,746
829
27,271
Contributed
Equity
$’000
85,350
-
-
-
-
180
766
-
-
1,370
38,959
10,271
-
51,546
136,896
Reserves
$’000
10,168
-
(934)
9,477
8,543
-
-
452
678
-
-
-
-
1,130
19,841
Retained
Earnings
$’000
73,186
1,984
75,170
21,465
-
-
21,465
-
-
-
-
-
(13,782)
(13,782)
82,853
Retained
Earnings
$’000
56,098
28,850
-
-
28,850
-
-
-
-
-
-
-
(11,762)
(11,762)
73,186
Total Equity
$’000
229,923
1,984
231,907
21,465
43
6,558
28,066
170
535
965
(137)
1,145
(13,782)
(11,103)
248,870
Total Equity
$’000
151,616
28,850
(934)
9,477
37,393
180
766
452
678
1,370
38,959
10,271
(11,762)
40,914
229,923
The consolidated statement of changes in equity is to be read in conjunction with the notes to the financial statements set out
on pages 38 to 84.
36
Hansen Technologies Ltd Annual Report 2019 CONSOLIDATED STATEMENT OF CASH FLOWS
For the Year Ended 30 June 2019
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Finance costs
Transaction costs relating to the acquisition of a subsidiary
Payments for deferred remuneration
Income tax paid
Net cash provided by operating activities
Cash flows from investing activities
Proceeds from sale of plant and equipment
Payment for acquisition of business net of cash assumed
Payments for plant and equipment
Payments for capitalised development costs
Net cash used in investing activities
Cash flows from financing activities
Proceeds from share issue
Proceeds from options exercised
Proceeds from borrowings
Repayment of borrowings
Payment of finance lease liabilities
Dividends paid, net of dividend re-investment
Net cash provided by financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Note
2019
$’000
2018
$’000
3
5
24
24
8(a)
24
11
12
19(b)
19(b)
18
18
18
20
248,646
(196,021)
84
(2,067)
(2,063)
(2,235)
(6,694)
39,650
4
(159,391)
(2,980)
(10,892)
(173,259)
-
535
188,398
(27,455)
(110)
(12,637)
148,731
263,217
(201,700)
127
(2,085)
(678)
-
(6,776)
52,105
120
(64,992)
(2,843)
(10,027)
(77,742)
49,274
766
46,361
(50,775)
(89)
(10,392)
35,145
15,122
9,508
23,245
15,013
Effects of exchange rate changes on cash and cash equivalents
(79)
(1,276)
Cash and cash equivalents at end of the year
8
38,288
23,245
The consolidated statement of cash flows is to be read in conjunction with the notes to the financial statements set out on pages
38 to 84.
37
Hansen Technologies Ltd Annual Report 2019 NOTES TO THE FINANCIAL STATEMENTS
30 June 2019
Section A: Basis of preparation
This section describes the basis in which the Group’s financial statements are prepared. Specific
accounting policies are described in the note to which they relate. The accounting policies have
been consistently applied, unless otherwise stated.
1. BASIS OF PREPARATION
a. Basis of preparation of the Financial Report
This Financial Report is a general purpose Financial Report that has been prepared in accordance with Australian Accounting Standards,
Interpretations and other applicable authoritative pronouncements of the Australian Accounting Standards Board and the
Corporations Act 2001.
The Financial Report covers the Group, being Hansen Technologies Limited (the Company) and its controlled entities as a consolidated
entity. The Company is a company limited by shares, incorporated and domiciled in Australia. The address of the Company’s registered
office and principal place of business is 2 Frederick St, Doncaster Victoria 3108 Australia. The Company is a for-profit entity for the
purposes of preparing the Group’s financial statements.
This Financial Report was authorised for issue by the Directors on 23 August 2019.
The Group’s financial statements have been presented in a streamlined manner to simplify the information disclosed and to make it
more relevant for users. Similar notes have been grouped into sections with relevant accounting policies and judgements and estimate
disclosures incorporated within the notes to which they relate.
Compliance with IFRS
The Group’s consolidated financial statements also comply with the International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB).
Historical cost convention
The Financial Report has been prepared under the historical cost convention, as modified by revaluations to fair value for certain classes
of assets and liabilities as described in the accounting policies.
Significant accounting estimates and judgements
The preparation of the Financial Report requires the use of certain estimates and judgements in applying the Group’s accounting policies.
The Group makes certain estimates and assumptions concerning the future which, by definition, will seldom represent actual results.
Estimates and assumptions based on future events have a significant inherent risk and where future events are not as anticipated, there
could be a material impact on the carrying amounts of the assets and liabilities discussed in each of the affected notes.
Those estimates and judgements significant to the Financial Report are disclosed in the following notes:
Significant Accounting Estimate and Judgement
Capitalisation of research and development costs
Impairment of goodwill
Impairment of non-financial assets other than goodwill
Share-based payments
Business combinations
Note Page Reference
12
12
12
16
24
58
59
59
65
77
38
Hansen Technologies Ltd Annual Report 2019 b. Principles of consolidation
The consolidated financial statements are those of the consolidated Group, comprising the financial statements of the parent Company,
and of all entities which the parent controls. The Group controls an entity when it is exposed, 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.
The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting
policies. Adjustments are made to bring into line any dissimilar accounting policies which may exist.
All inter-company balances and transactions, including any unrealised profits or losses, have been eliminated on consolidation.
Subsidiaries are consolidated from the date that control is established.
c. Comparatives
Where necessary, comparative information has been reclassified and repositioned for consistency with current year disclosures.
d. Rounding amounts
The parent Company and the consolidated Group have applied the relief available under ASIC Corporations (Rounding in Financial/
Directors’ Reports) Instrument 2016/191 and, accordingly the amounts in the consolidated financial statements and in the Directors’
Report have been rounded to the nearest thousand dollars, or in certain cases to the nearest dollar.
e. Going concern
The Financial Report has been prepared on a going concern basis.
39
Hansen Technologies Ltd Annual Report 2019 NOTES TO THE FINANCIAL STATEMENTS CONTINUED
30 June 2019
Section B: Performance
This section explains the operating results of the Group for the year and provides insights into the Group’s
results, including results by operating segment, separately disclosed items during the year that affected
the Group’s results, components of income and expenses, income tax and earnings per share.
2. SEGMENT INFORMATION
a. Description of segments
Management has determined the Group’s operating segments based on the reports reviewed by the CEO (the Chief Operating
Decision Maker).
The operating segments are identified based on the types of services provided to the Group’s customers. Discrete financial information
about each of these operating businesses is reported to the executive management team on at least a monthly basis.
Where operating segments meet the aggregation criteria, these are aggregated into reported segments. Operating segments are
aggregated based on similar products and services provided to the same type of customers using the same distribution method.
Segment profits, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on
a reasonable basis. Inter-segment pricing is determined on an arm’s length basis and is eliminated on consolidation. There are
no significant transactions between segments.
The Group has identified only one reportable segment as described in the table below. The 'other' category includes business units
that do not qualify as an operating segment, as well as the operating segments which do not meet the disclosure requirements
of a reportable segment, including IT Outsourcing and Customer Care services.
Reportable Segment
Description of Segment
Billing
Sale of billing applications and the provision of consulting services related to billing systems.
Billing
$’000
218,383
218,383
36,697
36,697
1,227
19,091
484,922
13,871
104,580
Other
$’000
12,941
12,941
1,607
1,607
200
11
18,785
-
4,846
Total
$’000
231,324
231,324
38,304
38,304
1,427
19,102
503,707
13,871
109,426
b. Segment information
2019
Segment revenue
Total segment revenue
Revenue from external customers
Segment profit
Total segment profit
Segment profit from core operations
Items included within the segment profit:
Depreciation expense
Amortisation expense
Total segment assets
Additions to non-current assets
Total segment liabilities
40
Hansen Technologies Ltd Annual Report 2019 2018
Segment revenue
Total segment revenue
Revenue from external customers
Segment profit
Total segment profit
Segment profit from core operations
Items included within the segment profit:
Depreciation expense
Amortisation expense
Total segment assets
Additions to non-current assets
Total segment liabilities
Billing
$’000
217,250
217,250
40,197
40,197
2,326
16,990
283,781
6,388
66,251
Other
$’000
13,566
13,566
1,441
1,441
198
16
20,466
-
5,121
Total
$’000
230,816
230,816
41,638
41,638
2,524
17,006
304,247
6,388
71,372
(i) Reconciliation of segment revenue to the consolidated statement of comprehensive income
Segment revenue
Total operating revenue
Geographical segments
2019
$’000
231,324
231,324
2018
$’000
230,816
230,816
In presenting information based on geographical segments, segment revenue is based on the geographical location of customers.
Segment assets are based on the geographical location of the assets.
The Group’s business segments operate geographically as follows:
Geographical Segment
Regions Covered
APAC
Americas
EMEA
Product segments
Australia, New Zealand and Asia
North America, Central America and Latin America
Europe, Middle East and Africa
In presenting information based on product segments, the Group’s business segments provide the following types of products
and services as follows:
Product
Description of Product
Licence, support and maintenance Recurring billing application licence, support and maintenance services delivered as part
Services
of a total billing system solution.
Provision of various professional services in relation to customer billing systems and IT
outsourced services covering facilities management, systems and operations support,
network services and business continuity support.
Hardware and software sales
Provision of other third-party hardware and software licences to customers of the Group’s
billing system solutions.
Other
Includes reimbursed expenses incurred for servicing the customer contract.
41
Hansen Technologies Ltd Annual Report 2019 NOTES TO THE FINANCIAL STATEMENTS CONTINUED
30 June 2019
2. SEGMENT INFORMATION continued
(ii) Disaggregation of revenue from contracts with customers by segment
Set out below is the disaggregation of the Group’s revenue from contracts with customers:
2019
Products
Licence, support and maintenance
Services
Hardware and software sales
Other revenue
Total revenue from contracts with customers
Revenue by market vertical
Utilities
Communications
Other
Total revenue from contracts with customers
Revenue by geographic segment
APAC
Americas
EMEA
Total revenue from contracts with customers
Timing of revenue recognition
Goods and services transferred at a point in time
Services transferred over time
Total revenue from contracts with customers
2018*
Products
Licence, support and maintenance
Services
Hardware and software sales
Other revenue
Total revenue from contracts with customers
Revenue by market vertical
Utilities
Communications
Other
Total revenue from contracts with customers
Revenue by geographic segment
APAC
Americas
EMEA
Total revenue from contracts with customers
Timing of revenue recognition
Goods and services transferred at a point in time
Services transferred over time
Total revenue from contracts with customers
Billing
$’000
138,202
78,042
1,038
1,101
218,383
144,816
73,567
-
218,383
42,723
50,213
125,447
218,383
2,530
215,853
218,383
Billing
$’000
123,678
90,439
1,874
1,259
217,250
144,286
72,964
-
217,250
44,025
47,667
125,558
217,250
19,422
197,828
217,250
Other
$’000
6,884
5,799
-
258
Total
$’000
145,086
83,841
1,038
1,359
12,941
231,324
5,898
-
7,043
12,941
7,043
5,898
-
12,941
258
12,683
12,941
Other
$’000
5,653
7,913
-
-
150,714
73,567
7,043
231,324
49,766
56,111
125,447
231,324
2,788
228,536
231,324
Total
$’000
129,331
98,352
1,874
1,259
13,566
230,816
7,714
-
5,852
13,566
5,852
7,714
-
13,566
-
13,566
13,566
152,000
72,964
5,852
230,816
49,877
55,381
125,558
230,816
19,422
211,394
230,816
* As described in Note 3(a)(i), comparative amounts for the prior period have not been adjusted under the modified retrospective method.
42
Hansen Technologies Ltd Annual Report 2019 (iii) Reconciliation of segment profit from core operations to the consolidated statement of comprehensive income
Segment profit from core operations
Interest revenue
Finance costs
Unallocated depreciation and amortisation
Separately disclosed items impacting profit
Other expense
Profit before income tax
Note
3
5
4
(iv) Reconciliation of segment assets to the consolidated statement of financial position
Segment assets
Unallocated assets
– Cash
– Other
Total unallocated assets
Total assets
2019
$’000
38,304
84
(2,067)
(2,227)
(2,794)
(3,523)
27,777
2018
$’000
41,638
127
(2,085)
(757)
(677)
(1,264)
36,982
2019
$’000
2018
$’000
503,707
304,247
38,288
2,997
41,285
544,992
23,245
2,278
25,523
329,770
Total non-current assets attributed to individual geographies is detailed as follows. Unallocated assets include deferred tax assets,
which are not allocated to a specific location as they are managed on a group basis:
APAC
Americas
EMEA
Unallocated assets
Total non-current assets
(v) Reconciliation of segment liabilities to the consolidated statement of financial position
Segment liabilities
Unallocated liabilities
– Bank loan
– Other
Total unallocated liabilities
Total liabilities
2019
$’000
38,839
224,997
153,055
4,601
421,492
2019
$’000
109,426
186,327
369
186,696
296,122
2018
$’000
37,404
59,020
158,002
4,062
258,488
2018
$’000
71,372
27,233
1,242
28,475
99,847
43
Hansen Technologies Ltd Annual Report 2019 NOTES TO THE FINANCIAL STATEMENTS CONTINUED
30 June 2019
3. REVENUE AND OTHER INCOME
Operating revenue
Revenue from contracts with customers
Total operating revenue
Other income
From operating activities
Interest income
Other income
Total other income
Note
2
2019
$’000
231,324
231,324
84
1,550
1,634
2018
$’000
230,816
230,816
127
1,830
1,957
Total revenue and other income
232,958
232,773
a. AASB 15 Revenue from Contracts with Customers
AASB 15 supersedes all previous revenue recognition requirements under Australian Accounting Standards. The core principle of
AASB 15 is that an entity recognises revenue when control of the promised goods or services transfer to the customer at an amount
that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
(i) Impact on adoption
The Group adopted AASB 15 using the modified retrospective method of adoption, where the cumulative effect of initially applying the
standard is recognised as an adjustment to the opening balance of retained earnings on 1 July 2018. Therefore, comparative figures for
prior reporting periods are not restated. The Group also elected to apply AASB 15 only to contracts that are not completed at 1 July 2018.
The effect of adopting AASB 15 is as follows:
1 July 2018
Transition
Adjustment
$’000
Assets
Other current assets
Total assets impact
Liabilities
Unearned revenue
Total liabilities impact
Net assets impact
Equity
Retained earnings
Total equity impact
Had AASB 15 not applied and the financial statements were still produced under previous guidance and accounting standards,
the Financial Report for the year ended 30 June 2019 would have been impacted as follows:
Statement of comprehensive income
Revenue
Impact on statement of comprehensive income for the year ended 30 June 2019
Statement of financial position
Other current assets
Unearned revenue
Impact on net assets in the statement of financial position as at 30 June 2019
Impact on equity in the statement of financial position as at 30 June 2019
44
1,733
1,733
(251)
(251)
1,984
1,984
1,984
$’000
(186)
(186)
(278)
92
(186)
(186)
Hansen Technologies Ltd Annual Report 2019 (ii) Performance obligations
The transaction price allocated to remaining performance obligations represents contracted revenue that has not yet been recognised.
They include amounts recognised as unearned revenue and amounts that are contracted but not yet billed or performed.
The transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as at 30 June 2019, is
$121,449,000. This amount mostly comprises obligations in our long-term contracts to provide software or 'software-as-a-service'
(SaaS) support and maintenance, open long-term professional services contracts as well as licences contracted but not yet earned
as the licence has not yet been deployed. Most of this amount is expected to be recognised as revenue beyond the next 12 months
following the respective balance sheet date. This estimation is judgemental, as it needs to consider estimates of possible future contract
modifications. The amount of transaction price allocated to the remaining performance obligations, and changes in this amount over
time, are impacted by, among others, currency fluctuations and the remaining contract period of our billing solution agreements
(which, in some cases, are contracted until 5 years after balance sheet date).
Revenue recognised in the current reporting period aligned to performance obligations satisfied in earlier periods was $14,059,000,
mainly resulting from the increased usage of software licences already delivered during the reporting period.
(iii) Contract balances
Accrued revenue
Unearned revenue
2019
$’000
27,817
27,069
2018
$’000
5,824
22,914
Increases in the balance of accrued and unearned revenue during the year relate to the acquisition of Sigma Systems (refer to Note 24).
Additionally, the increase in accrued revenue was a result of software licences deployed on contract inception but have yet to be billed
to the customer.
Revenues recognised in the current reporting period that was included in deferred revenue at the beginning of the reporting period
was $22,251,000, representing support and maintenance performed during the period.
b. Government grants
Included in other income during the financial year is $309,000 (2018: $593,000) related to government grants receivable to compensate
for eligible employee expenditure related to research activities performed in Norway. There are no unfulfilled conditions or contingencies
attached to these grants.
SIGNIFICANT ACCOUNTING POLICIES
Revenue
The Group derives revenues from customer contracts associated with the provision of billing solutions. A typical contract may
include various deliverables in consideration for fees. Such deliverables in our contracts include, but are not limited to, the provision
of a software licence, support and maintenance services, as well as professional implementation and customisation services.
The nature of fee structures within the contracts varies by customer. The timing and frequency of invoicing depends on the
terms and conditions of each contract. Invoices are billed to the customer either in advance or in arrears on normal commercial
terms. Where the contract requires invoicing in advance, revenue is initially deferred as unearned revenue until the Group fulfils
its performance obligations. Where the contract requires invoicing in arrears, revenue recognised on fulfilment of a performance
obligation is brought to account as accrued revenue, until the Group’s right to consideration becomes unconditional and the
accrued revenue is then presented as a receivable.
The Group’s accounting policies with respect to each of the individual deliverables in the Group’s customer contracts are outlined
in sub-sections (i) onwards.
(i) Licence, support and maintenance revenue
The Group’s contracts for billing solutions regularly include software licences associated with the relevant billing solution provided
to the customer. The nature of the licence varies by customer and billing solution. As part of the licence agreement, various support
and maintenance services are available to support the customer’s use of the billing solution. This includes the provision of various
bug fixes, updates and helpdesk support.
45
Hansen Technologies Ltd Annual Report 2019 NOTES TO THE FINANCIAL STATEMENTS CONTINUED
30 June 2019
3. REVENUE AND OTHER INCOME continued
SIGNIFICANT ACCOUNTING POLICIES continued
(i) Licence, support and maintenance revenue continued
Generally, the provision of the software licence is a distinct performance obligation. However, where there are associated
implementation, customisation or other professional services in the contract that significantly modify, customise or are highly
interrelated with the licence, the software licence and implementation services are combined into a single performance obligation.
The determination of whether the licence should be combined with the services is a matter of judgement, depending on the
nature of the implementation of the services provided and the licence specifications in the customer contract.
How the licence performance obligation is fulfilled depends on the nature of the licence and how the Group provides the licence
to the customer, irrespective of whether the licence is provided in perpetuity or for a specified contractual term:
• Where the licence is installed and delivered on customer premises, the customer can derive substantial benefits from the licence
on its own. Therefore, the performance obligation is fulfilled (and revenue recognised) at the point in time the licence goes live,
typically when customer acceptance has been obtained and the licence meets the agreed-upon specifications.
• Where the licence is hosted by the Group (for example, in some of our SaaS applications), the customer is dependent on
our continual hosting of the licence platform in order to derive and receive substantial benefits from the licence. Therefore,
the performance obligation is fulfilled (and revenue recognised) over time, which is typically evenly over the contracted period
in which access to the licence is made available to the customer.
Licence fees in some pay-TV and telecommunications contracts are dependent on the subsequent usage of the licence by
the customer, which is determined by customer-defined metrics such as subscriber counts or end-user numbers. For these
contracts, the Group uses the sales/usage-based royalty exception and recognises revenue when the subsequent usage
is known, which is typically at the end of each billing period.
Support and maintenance services are generally considered a distinct single performance obligation, separately identifiable to the
software licence, as all the individual activities that comprise of support and maintenance are highly interrelated with each other.
Revenue related to the provision of support and maintenance is recognised evenly over the contracted term in which the customer
is entitled to receive support and maintenance.
(ii) Services revenue
The Group provides various configuration, implementation, customisation and other professional services that the customer is
contracted to receive. This may be a part of the overall billing solution, or discrete projects separately agreed with the customer.
The various individual activities that form the professional services provided to the customer are highly interrelated with each
other and therefore are treated as a single performance obligation. Revenue from these professional services is recognised
over time by reference to the stage of completion of the contracts. Stage of completion is measured by reference to labour
hours incurred to date as a percentage of total estimated labour hours for each contract, and by reference to any contracted
milestones achieved such as customer acceptance of the final specification.
As described above in 'Licence, support and maintenance revenue' certain professional services might be combined with
the provision of the software licence depending on the nature of the licence and the professional services provided.
(iii) Hardware/software sales revenue
Some of the Group’s subsidiaries on-sells certain third-party hardware and software products. Revenue is recognised when control
over the software has transferred to the customer. Determination of when control has passed depends on whether the customer
has legal title over the products, whether the customer has obtained possession of the products or whether the Group has present
right to payment.
The Group is considered principal in the sales transaction as the Group has procured the products from its various vendors
and the Group bears the risk and responsibility for selling those products to the customer.
46
Hansen Technologies Ltd Annual Report 2019 (iv) Other revenue
Other revenue consists of reimbursed expenses incurred for servicing the customer contract. Revenue is recognised when the Group
has legal enforceability under the contract to have the relevant expenses reimbursed from the customer.
(v) Financing components
The Group does not expect to have any contracts where the period between the transfer of the promised goods or services to the
customer represents a financing component. Therefore, the Group does not adjust any of the transaction prices for the time value
of money.
(vi) Presentation and disclosure
In Note 2(b) of the financial statements, the Group has disaggregated revenue recognised from contracts with customers into
the following categories:
• the types of goods and services we provide our customers in our contracts;
• the primary market vertical that our customers operate in. ‘Utilities’ includes our electricity, gas and water customers,
while ‘Communications’ includes our telecommunications and pay-TV customers; and
• the key geographic regions where our customers are located, which is consistent with the geographic segments identified
for our segment reporting.
We believe these categories best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected
by economic factors.
AASB 15 uses the terms 'contract asset' and 'contract liability'. To maintain consistency in presentation with prior periods,
the Group has retained the use of 'accrued revenue' and 'unearned revenue' respectively.
In disclosing the amount of the transaction price allocated to unsatisfied or partially satisfied performance obligations, the Group
has elected to use the practical expedient available in AASB 15 and disclose only the amounts allocated to performance obligations
expected to be satisfied after the next 12 months.
Other income
Interest income is recognised when it becomes receivable on a proportional basis, taking into account the interest rates applicable
to the financial assets.
Sales tax (including GST and VAT)
Revenues, expenses and assets are recognised net of the amount of sales tax, except where the amount of sales tax incurred
is not recoverable from the Tax Office. In these circumstances, the sales tax is recognised as part of the acquisition of the asset
or as part of an item of the expense. Receivables and payables in the consolidated statement of financial position are shown
inclusive of sales tax.
Cash flows are presented in the consolidated statement of cash flows on a gross basis, except for the sales tax component
of investing and financing activities, which are disclosed as operating cash flows.
Government grants
Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received, and all
attached conditions will be complied with. Government grants relating to costs are deferred and recognised in the statement of
comprehensive income over the period necessary to match them with the costs that they are intended to compensate. Government
grants received for which there are no future related costs are recognised in the statement of comprehensive income immediately.
47
Hansen Technologies Ltd Annual Report 2019 NOTES TO THE FINANCIAL STATEMENTS CONTINUED
30 June 2019
4. SEPARATELY DISCLOSED ITEMS
The Group has disclosed underlying EBITDA1 and underlying profit after tax, referring to the Group’s trading results adjusted for
certain transactions during the year that are not representative of the Group’s regular business activities. The Group considers that
these transactions are of such significance to understanding the ongoing results of the Group that the Group has elected to separately
identify these transactions to determine an ongoing result to enable a 'like-for-like' comparison. These items are described as 'separately
disclosed items' throughout this Financial Report.
Decrease to profit before tax
Transaction costs related to the acquisition of Sigma Systems
(2018: acquisition of Enoro)
Onerous lease provision
Restructuring costs incurred in Sigma Systems
Total separately disclosed items
Note
24
14
2019
$’000
(2,063)
(659)
(72)
(2,794)
2018
$’000
(677)
-
-
(677)
Transaction costs related to the acquisition of Sigma Systems (2018: acquisition of Enoro)
Transaction costs of $2,063,000 were incurred in relation to the acquisition of the Sigma Systems group of entities (Sigma). These
include costs associated with vendor due diligence, legal and other administrative matters, as well as related travel costs incurred to
meet representatives of Sigma’s management. These costs are included with 'Travel Expenses' and 'Other Expenses' in the Group’s
consolidated statement of comprehensive income.
Further details of the acquisition of Sigma are described in Note 24.
In the prior year, transaction costs of $677,000 were incurred in relation to the acquisition of Enoro Holdings AS (subsequently renamed
to Hansen Technologies Holdings AS during FY19) and its controlled subsidiaries. These costs were included with 'Other Expenses' in the
Group’s consolidated statement of comprehensive income in the prior year.
Onerous lease provision
The Group recognised a provision on future lease payments for one of our offices in the Americas, as the non-cancellable future
payments in the lease contract are expected to exceed the benefits from keeping the office over the remainder of the lease term.
The Group has separately identified these costs because it is not in the normal course of business activities. These costs are included
with 'Property and Operating Rental Expenses' in the Group’s consolidated statement of comprehensive income.
Restructuring costs incurred in Sigma Systems
Included in Sigma’s results for June are $72,000 of restructuring costs related to certain redundancy payments post-acquisition.
These costs are included with 'Employee Benefit Expenses' in the Group’s consolidated statement of comprehensive income.
a. Reconciliation with Group statutory measures
Underlying EBITDA
Less separately disclosed items
EBITDA1
Underlying profit after tax
Less separately disclosed items
Tax effect of separately disclosed items
Net profit after tax
2019
$’000
55,837
(2,794)
53,043
24,011
(2,794)
248
21,465
2018
$’000
59,961
(677)
59,284
29,527
(677)
-
28,850
1. EBITDA is a non-IFRS term, defined as earnings before interest, tax, depreciation and amortisation, and excluding net foreign exchange gains (losses).
48
Hansen Technologies Ltd Annual Report 2019 5. PROFIT FROM CONTINUING OPERATIONS
Profit from continuing operations before income tax has been determined after the following specific expenses:
Employee benefit expenses
Wages and salaries
Superannuation costs
Share-based payments and employee share plan expensed
Total employee benefit expenses
Depreciation expense
Plant, equipment and leasehold improvements
Total depreciation of non-current assets
Amortisation of non-current assets
Technology and other intangibles
Software development costs
Total amortisation of non-current assets
Property and operating rental expenses
Minimum lease payments recognised as an operating lease expense
Other property-related expenses
Total property and operating rental expenses
Finance charges
Finance costs
Total finance costs
Note
8(a)
8(a), 11
8(a), 12
8(a), 12
2019
$’000
2018
$’000
118,052
113,929
9,006
969
8,939
1,265
128,027
124,133
3,806
3,806
12,054
6,896
18,950
7,214
3,180
10,394
2,067
2,067
3,908
3,908
11,419
5,064
16,483
6,746
3,249
9,995
2,085
2,085
Net foreign exchange losses/(gains) included in other expenses
8(a)
527
(47)
49
Hansen Technologies Ltd Annual Report 2019 NOTES TO THE FINANCIAL STATEMENTS CONTINUED
30 June 2019
6. INCOME TAX
a. Components of income tax expense
Current tax expense
Deferred tax expense/(income)
Over provision in prior years
Total income tax expense
The prima facie tax payable on profit before income tax reconciled
to the income tax expense is as follows:
Prima facie income tax payable on profit before income tax at 30%
Add/(less) tax effect of:
Impact of tax rates on foreign subsidiaries
Research and development allowances
Non-deductible share-based payments
Over provision in prior years
Utilisation of prior year tax losses not brought to account
Effect of tax rate change during the year in the United States
Amortisation of acquired intangibles
Other non-allowable items
Income tax expense attributable to profit
b. Deferred tax
Deferred tax asset
Deferred tax liability
Net deferred tax
(i) Deferred tax asset
The deferred tax asset balance comprises of the following items:
Difference in depreciation and amortisation of plant and equipment
for accounting and income tax purposes
Other payables
Employee benefits
Accruals
50
2019
$’000
6,238
841
(767)
6,312
2018
$’000
8,535
(284)
(119)
8,132
8,333
11,095
(1,506)
(86)
151
(767)
(474)
-
(2,076)
2,737
6,312
2019
$’000
4,601
(44,290)
(39,689)
2019
$’000
1,208
-
2,378
1,015
4,601
(271)
(611)
206
(119)
-
(1,164)
(3,055)
2,051
8,132
2018
$’000
4,061
(16,156)
(12,095)
2018
$’000
950
156
1,957
998
4,061
Hansen Technologies Ltd Annual Report 2019 (ii) Deferred tax liability
The deferred tax liability balance comprises of the following items:
Research and development expenditure
Difference in depreciation and amortisation of plant, equipment and intangibles for accounting
and income tax purposes
Other payables
Other income not yet assessable
Temporary differences relating to revenue recognition (adoption of AASB 15)
(iii) Reconciliation of net deferred tax balances
Opening balance – net deferred tax liability
Deferred tax (expense)/income recognised in profit or loss
Increase due to acquisition
Closing balance – net deferred tax liability
(iv) Deferred tax assets not brought to account (available tax losses)
Note
24
Gross capital losses
Gross operating losses
2019
$’000
(5,540)
2018
$’000
(4,737)
(35,503)
(11,370)
(947)
-
(2,300)
(44,290)
2019
$’000
(12,095)
(841)
(26,753)
(39,689)
2019
$’000
847
1,430
2,277
-
(49)
-
(16,156)
2018
$’000
(1,886)
284
(10,493)
(12,095)
2018
$’000
847
1,984
2,831
Deferred tax assets have not been recognised in respect of these losses. Realisation of the unrecognised tax losses, temporary differences
and offsets is dependent on the future production of sufficient taxable profits in the relevant jurisdictions as well as continued compliance
with regulatory requirements for availability.
51
Hansen Technologies Ltd Annual Report 2019 NOTES TO THE FINANCIAL STATEMENTS CONTINUED
30 June 2019
6. INCOME TAX continued
SIGNIFICANT ACCOUNTING POLICIES
Income tax
Current income tax expense is the tax payable on the current period’s taxable income based on the applicable income tax rate
adjusted by changes in deferred tax assets and liabilities. The tax rates and tax laws used to compute the amount are those that
are enacted or substantively enacted at the reporting date.
Deferred tax balances
Deferred tax assets and liabilities are recognised for temporary differences at the applicable tax rates when the assets are expected
to be recovered or liabilities settled. No deferred tax asset or liability is recognised in relation to temporary differences if they arose
in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or
taxable profit or loss.
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.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised
deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future
taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against
current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Tax consolidation
The Group is subject to income taxes in Australia and jurisdictions in which it has foreign operations. In some of these jurisdictions,
namely Australia and the United States, the immediate parent entity and entities it controls have formed local income tax
consolidated groups that are taxed as a single entity in their relevant jurisdiction. The head entity of the Australian tax consolidated
group is Hansen Technologies Limited. Each tax consolidated group has entered a tax funding agreement whereby each entity in
the tax consolidated group recognises the assets, liabilities, expenses and revenues in relation to its own transactions, events and
balances only. This means that:
• the parent entity recognises all current and deferred tax amounts relating to its own transactions, events and balances only;
• the subsidiaries recognise current or deferred tax amounts arising in respect of their own transactions, events and balances; and
• the current tax liabilities and deferred tax assets arising in respect of tax losses are transferred from the subsidiary to the head
entity as inter-company payables or receivables.
Each tax consolidated group also has a tax sharing agreement in place to limit the liability of subsidiaries in the tax consolidated
group arising under the joint and several liability requirements of the tax consolidation system, in the event of default by the
parent entity to meet its payment obligations. This means that under the tax sharing agreement, the subsidiaries are legally
liable to the income tax payable in proportion to their contribution to the net profit before tax of the tax consolidated group.
52
Hansen Technologies Ltd Annual Report 2019 7. EARNINGS PER SHARE
Reconciliation of earnings used in calculating earnings per share:
Basic earnings – ordinary shares
Diluted earnings – ordinary shares
Weighted average number of ordinary shares used in calculating earnings per share:
Number for basic earnings per share – ordinary shares
Number for diluted earnings per share – ordinary shares
Basic earnings (cents) per share
Diluted earnings (cents) per share
2019
$’000
21,465
21,465
2018
$’000
28,850
28,850
2019
No. of Shares
2018
No. of Shares
197,017,215
195,541,345
198,632,621
196,581,097
2019
Cents Per Share
2018
Cents Per Share
10.9
10.8
14.8
14.7
Classification of securities as potential ordinary shares
The securities that have been classified as potential ordinary shares and included in diluted earnings per share are only options and rights
outstanding under the Employee Performance Rights Plan and the Employee Share Option Plan.
SIGNIFICANT ACCOUNTING POLICIES
Earnings per share (EPS)
Basic EPS is calculated by dividing the profit for the year attributable to ordinary equity holders of the Company by the weighted
average number of ordinary shares outstanding during the year.
Diluted EPS is calculated by dividing the profit attributable to ordinary equity holders of the Company by the weighted average
number of ordinary shares outstanding during the year, plus the weighted average number of ordinary shares that would be
issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
53
Hansen Technologies Ltd Annual Report 2019 NOTES TO THE FINANCIAL STATEMENTS CONTINUED
30 June 2019
Section C: Working capital and operating assets
This section describes the different components of our working capital supporting the operating liquidity of
the Group, as well as the long-term tangible and intangible assets supporting the Group’s performance.
8. CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Interest bearing deposits
Total cash and cash equivalents
a. Reconciliation of the net profit after tax to net cash flows from operations
Note
5
5, 16(e)
5
5
Net profit after tax
Add/(less) items classified as investing/financing activities:
Net loss/(profit) on sale of non-current assets
Add/(less) non-cash items:
Depreciation and amortisation
Share-based payments expense
Unrealised foreign exchange
Expected credit loss recovered from bad debts
Reclassification to intangibles from deferred tax
Employee share plan expense
Net cash provided by operating activities before change
in assets and liabilities
Changes in assets and liabilities adjusted for effects of purchase
of controlled entities during the year:
Decrease in trade receivables
Increase in sundry debtors and other assets
Increase/(decrease) in trade payables
Decrease in other creditors and accruals
Increase in employee benefits provision
Decrease/(increase) in deferred taxes
(Decrease)/increase in income tax payable
Net cash provided by operating activities
2019
$’000
36,677
1,611
38,288
2019
$’000
21,465
2018
$’000
22,772
473
23,245
2018
$’000
28,850
17
(14)
22,756
829
527
(62)
-
140
20,391
1,130
(47)
(38)
(241)
135
45,672
50,166
3,745
(7,436)
4,592
(7,944)
1,403
841
(1,223)
39,650
9,131
(2,021)
(2,035)
(7,547)
3,055
(285)
1,641
52,105
SIGNIFICANT ACCOUNTING POLICIES
Cash and cash equivalents
Cash and cash equivalents include cash on hand and at banks, short-term deposits with an original maturity of six months or less
held at call with financial institutions and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the
statement of financial position.
54
Hansen Technologies Ltd Annual Report 2019
9. RECEIVABLES
Current
Trade receivables
Less: provision for impairment
Sundry receivables
Total trade and other receivables
2019
$’000
47,510
(221)
47,289
2,186
49,475
2018
$’000
36,741
(82)
36,659
595
37,254
As at 30 June 2019, trade receivables of $15,273,000 (2018: $9,497,000) were past due but not impaired. These relate to a number of
independent customers for whom there is no recent history of default. The ageing analysis of the trade receivables is as follows:
Trade receivables ageing analysis at 30 June:
Not past due
Past due 1– 30 days
Past due 31– 60 days
Past due more than 61 days
Gross
2019
$’000
32,016
4,425
4,086
6,983
47,510
Provided
2019
$’000
-
-
(23)
(198)
(221)
Gross
2018
$’000
27,178
3,199
2,052
4,312
36,741
Provided
2018
$’000
(15)
(7)
(7)
(53)
(82)
The sundry receivables do not contain impaired assets and are not past due. Based on the credit history of these receivables, it is expected
that these amounts will be received when due and thus, no provision for impairment has been recorded. The Group does not hold any
collateral in relation to these receivables.
Movements in the provision for impairment were:
Opening balance at 1 July
Acquisition of Sigma Systems
Other movements for the year
Amounts written off
Closing balance at 30 June
2019
$’000
2018
$’000
82
169
52
(82)
221
-
-
82
-
82
SIGNIFICANT ACCOUNTING POLICIES
Trade receivables
Trade receivables represent amounts owed by our customers and are recognised initially at the amount of consideration where the
right to payment is conditional only on the passage of time. The Group holds the trade receivables with the objective of collecting
contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method, less an
allowance for impairment. Trade receivables are generally due for settlement between 30 and 60 days.
The Group recognises a provision for impairment by calculating lifetime expected credit losses (ECLs). In determining the
appropriate amount of lifetime ECLs, the Group has established a provision matrix that is based on its historical credit loss
experience, adjusted for forward-looking factors specific to the debtors and the economic environment.
Individual debts that are known to be uncollectible are written-off by reducing the carrying amount directly. Expected credit losses
are recognised in the Statement of Comprehensive Income within impairment expenses. When a trade receivable for
which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written-off against
the allowance account.
55
Hansen Technologies Ltd Annual Report 2019 NOTES TO THE FINANCIAL STATEMENTS CONTINUED
30 June 2019
10. OTHER CURRENT ASSETS
Prepayments – current
Other assets
Total other current assets
11. PLANT, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Plant, equipment and leasehold improvements at cost
Accumulated depreciation
Total plant, equipment and leasehold improvements
2019
$’000
7,813
107
7,920
2019
$’000
45,511
(34,525)
10,986
2018
$’000
4,892
67
4,959
2018
$’000
40,308
(29,754)
10,554
Movements in cost and accumulated depreciation during the year are inclusive of any net foreign currency movements arising from
foreign operations.
Reconciliation of the carrying amounts of plant, equipment and leasehold improvements at the beginning and end of the current
financial year is shown below:
Plant, equipment and leasehold improvements at cost
Carrying amount at 1 July
Additions
Increase due to acquisition of subsidiary
Disposals
Depreciation expense
Net foreign currency movements arising from foreign operations
Carrying amount at 30 June
SIGNIFICANT ACCOUNTING POLICIES
Plant, equipment and leasehold improvements
Cost and valuation
Note
5
2019
$’000
10,554
2,980
970
(22)
(3,806)
310
10,986
2018
$’000
8,912
2,843
2,533
(106)
(3,908)
280
10,554
All classes of plant, equipment and leasehold improvements are stated at cost less depreciation and any accumulated
impairment losses.
Depreciation
The depreciable amounts of all fixed assets are depreciated on a straight-line basis over their estimated useful lives commencing
from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired
period of the lease or the estimated useful lives of the improvements.
The useful lives for each class of assets are:
2019
2018
Plant, equipment and leasehold improvements
3 to 15 years
3 to 15 years
Leased plant and equipment
3 to 15 years
3 to 15 years
An item of property, plant and equipment initially recognised is derecognised upon disposal. Any gain or loss arising on
derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset)
is included in profit or loss when the asset is derecognised.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year
end and adjusted prospectively, if appropriate.
56
Hansen Technologies Ltd Annual Report 2019 12. INTANGIBLE ASSETS
Goodwill at cost
Accumulated impairment
Net book amount of goodwill
Technology and other intangibles at cost
Accumulated amortisation and impairment
Net book amount of technology and other intangibles
Software development at cost
Accumulated amortisation and impairment
Net book amount of software development
Total intangible assets
Reconciliation of goodwill at cost
Carrying amount at 1 July
Increase due to acquisition of subsidiary
Reclassification to intangibles from deferred tax
Net foreign currency movements arising from foreign operations
Carrying amount at 30 June
Accumulated impairment at beginning of year
Net foreign currency movements arising from foreign operations
Accumulated impairment at end of year
Reconciliation of technology and other intangibles at cost
Carrying amount at 1 July
Increase due to acquisition of subsidiary
Net foreign currency movements arising from foreign operations
Carrying amount at 30 June
Accumulated amortisation and impairment at beginning of year
Amortisation of technology and other intangibles
Net foreign currency movements arising from foreign operations
Accumulated amortisation and impairment at end of year
Reconciliation of software development at cost
Carrying amount at 1 July
Expenditure capitalised in current period
Net foreign currency movements arising from foreign operations
Carrying amount at 30 June
Accumulated amortisation at beginning of year
Current year amortisation charge
Net foreign currency movements arising from foreign operations
Accumulated amortisation at end of year
2019
$’000
223,547
(1,595)
221,952
196,264
(41,466)
154,798
65,583
(39,551)
26,032
402,782
2019
$’000
152,565
66,662
-
4,320
223,547
(1,573)
(22)
(1,595)
99,415
93,188
3,661
196,264
(28,196)
(12,054)
(1,216)
(41,466)
53,382
10,892
1,309
65,583
(32,153)
(6,896)
(502)
(39,551)
2018
$’000
152,565
(1,573)
150,992
99,415
(28,196)
71,219
53,382
(32,153)
21,229
243,440
2018
$’000
89,058
57,270
241
5,996
152,565
(1,562)
(11)
(1,573)
38,729
55,571
5,115
99,415
(16,391)
(11,419)
(386)
(28,196)
42,568
10,027
787
53,382
(26,923)
(5,064)
(166)
(32,153)
57
Note
24
24
5
5
Hansen Technologies Ltd Annual Report 2019 NOTES TO THE FINANCIAL STATEMENTS CONTINUED
30 June 2019
12. INTANGIBLE ASSETS continued
SIGNIFICANT ACCOUNTING POLICIES
Goodwill
Goodwill represents the future economic benefits arising from other assets acquired in a business combination that are not
individually identifiable or separately recognised. Refer to Note 24 for a description of how goodwill arising from a business
combination is initially measured.
Technology and other intangibles
Other intangibles consist of trademarks, brand names, customer relationships and non-compete clauses.
Technology and other intangibles are recognised at cost and are amortised over their estimated useful lives, which is generally the
term of the contract for customer contracts and 5-10 years for technology and other intangibles. Technology and other intangibles
are carried at cost less accumulated amortisation and any impairment losses.
Research and development
Expenditure on research activities is recognised as an expense when incurred.
Development costs are capitalised when the entity can demonstrate all of the following: the technical feasibility of completing the
asset so that it will be available for use or sale; the intention to complete the asset and use or sell it; the ability to use or sell the
asset; how the asset will generate probable future economic benefits; the availability of adequate technical, financial and other
resources to complete the development and to use or sell the asset; and the ability to measure reliably the expenditure attributable
to the asset during its development.
Capitalised development expenditure is carried at cost less any accumulated amortisation and any accumulated impairment losses.
Amortisation is calculated using a straight-line method to allocate the cost of the intangible asset over its estimated useful life,
which is generally five years. Amortisation commences when the intangible asset is available for use.
Other development expenditure is recognised as an expense when incurred.
Impairment of non-financial assets
Assets with an indefinite useful life are not amortised but are tested at least annually for impairment in accordance with AASB
136 Impairment of Assets. Assets subject to annual depreciation or amortisation are reviewed for impairment whenever events or
circumstances arise that indicate that the carrying amount of the asset may be impaired. An impairment loss is recognised where
the carrying amount of the asset exceeds its recoverable amount. The recoverable amount of an asset is defined as the higher of
its fair value less costs of disposal and value in use.
CRITICAL ACCOUNTING ESTIMATE AND JUDGEMENT
Capitalisation of research and development costs
Development costs incurred are assessed for each research and development project and a percentage of the expenditure is
capitalised when technical feasibility studies demonstrate that the project will deliver future economic benefits and those benefits
can be measured reliably.
There has been investment in research and development expenditure incurred in relation to the various billing software platforms
in the 2019 financial year. Returns are expected to be derived from this investment over the coming year(s).
The assets’ residual values, useful lives and amortisation methods are reviewed and adjusted if appropriate at each financial year
end. The estimation of useful lives of assets has been based on historical experience and expected product lifecycle, which could
change significantly as a result of technological innovation.
58
Hansen Technologies Ltd Annual Report 2019 a. Impairment test for goodwill
For impairment testing, the Group views that its past business combinations giving rise to goodwill on acquisition relate to synergistic
opportunities for its billing solutions. Therefore, goodwill is allocated entirely to the Billing CGU, which is also an operating and
reportable segment.
The recoverable amount of the Billing CGU has been determined based on a value-in-use calculation using cash flow projections over
a five-year period. Cash flows beyond the five-year forecast period are extrapolated using the estimated terminal growth rates.
Key assumptions used for value-in-use calculations
The key assumptions for the Billing CGU supporting the disclosed recoverable value are as follows:
• profit before tax for the first year based on financial budgets approved by senior management;
• beyond the first year, profit before tax annual growth rate of 1.8% (2018: 1.8%);
• a post-tax discount rate of 7.2% (2018: 6.8%); and
• terminal growth rate of 1.8% (2018: 1.8%) at the end of the forecast period.
Both the profit before tax growth rate beyond FY19 and the terminal growth rate ranges are derived from management’s best estimate
of revenue and operating expenditure growth, taking into account changes in the industry, customer market prospects, future product
developments and technological innovation. Profit before tax is then adjusted for amounts related to tax.
The discount rate is based on the Group’s weighted average cost of capital.
Results of impairment testing and sensitivity to changes in assumptions
Based on the Group’s impairment testing for 2019, there was no requirement to impair goodwill as the recoverable amount of the Billing
CGU exceeds its carrying amount.
The Group has considered changes in key assumptions that it believes to be reasonably possible. For the Billing CGU, the recoverable
amount exceeds the carrying amount when testing the sensitivity of reasonably possible changes in key assumptions and there is no
reasonably possible change in a key assumption that would result in impairment.
CRITICAL ACCOUNTING ESTIMATE AND JUDGEMENT
Impairment of goodwill
The Group tests whether goodwill has been impaired on an annual basis. Management judgement is applied to identify the cash
generating units (CGU). The recoverable amount of a CGU is determined based on value-in-use calculations, which require the use
of assumptions and discounting of future cash flows. These assumptions are based on best estimates at the time of performing
the valuation. Cash flow projections do not include restructuring activities that the Group is not yet committed to or significant
future investments that will enhance the performance of the assets of the CGU being tested.
Goodwill is monitored by management at the level of operating segments identified in Note 2.
Impairment of non-financial assets other than goodwill
All assets are assessed for impairment at each reporting date by evaluating whether indicators of impairment exist in relation
to the continued use of the asset by the consolidated entity. Impairment triggers include declining product or manufacturing
performance, technology changes, adverse changes in the economic or political environment or future product expectations.
If an indicator of impairment exists, the recoverable amount of the asset is determined.
59
Hansen Technologies Ltd Annual Report 2019 NOTES TO THE FINANCIAL STATEMENTS CONTINUED
30 June 2019
13. PAYABLES
Trade payables
Other payables
Total payables
2019
$’000
10,349
10,846
21,195
2018
$’000
3,409
13,083
16,492
SIGNIFICANT ACCOUNTING POLICIES
Trade payables
Trade payables are initially recognised at their fair value and subsequently carried at amortised cost and are not discounted.
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 paid in accordance with vendor terms, which are usually within 30 to 60 days
of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after
the reporting period.
14. OTHER OPERATING PROVISIONS
Current
Lease and rental provisions
Other
Reconciliation of other operating provisions
Carrying amount at beginning of year
Net provisions/(payments) made during the year
Carrying amount at end of year
2019
$’000
1,051
160
1,211
471
740
1,211
2018
$’000
358
113
471
504
(33)
471
The movement in operating provisions during the year was largely driven by an onerous lease provision of $659,000. This provision has
been classified as a separately disclosed item in understanding the Group’s results. Refer to Note 4 for further information.
SIGNIFICANT ACCOUNTING POLICIES
Provisions
Provisions are recognised when the consolidated entity has a legal or constructive obligation as a result of past events,
for which it is probable that an outflow of economic benefits will result, and that outflow can be reliably measured.
60
Hansen Technologies Ltd Annual Report 2019 Section D: People
This section provides information about our employee benefit obligations, including annual leave,
long service leave and post-employment benefits. It also includes details about our share plans and the
compensation paid to Key Management Personnel.
15. EMPLOYEE BENEFITS
Current employee benefits1
Non-current employee benefits2
Total employee benefits liability
1. Included within current provisions in the statement of financial position.
2. Included within non-current provisions in the statement of financial position.
Employee benefits liability
2019
$’000
13,859
189
14,048
2018
$’000
12,710
675
13,385
Employee benefits liability represents amounts provided for annual leave and long service leave. The current portion for this provision
includes the total amount accrued for annual leave entitlements and the amounts accrued for long service leave entitlements that have
vested due to employees having completed the required period of service.
Based on past experience, the Group does not expect the full amount of annual leave or long service leave balances classified as current
liabilities to be settled within the next 12 months. These amounts are presented as current liabilities since the Group does not have an
unconditional right to defer the settlement of these amounts in the event employees wish to use their leave entitlement.
The following amounts reflect leave that is not expected to be taken or paid within the next 12 months:
Current leave obligations expected to be settled after 12 months
2019
$’000
2,074
2018
$’000
1,615
In calculating the present value of future cash flows in respect of long service leave, the probability of long service leave being taken is
based on historical data.
a. Directors’ and executives’ compensation
Short-term employment benefits
Post-employment benefits
Share-based payments
Detailed remuneration disclosures are provided in the Remuneration Report on pages 16 to 31.
2019
$
2018
$
3,875,298
3,553,465
168,821
452,717
159,772
726,664
4,496,836
4,439,901
61
Hansen Technologies Ltd Annual Report 2019 NOTES TO THE FINANCIAL STATEMENTS CONTINUED
30 June 2019
15. EMPLOYEE BENEFITS continued
SIGNIFICANT ACCOUNTING POLICIES
Short-term employee benefit obligations
Liabilities arising in respect of wages and salaries, annual leave, long service leave and any other employee benefits expected to be
settled within 12 months of the reporting date are measured at the amounts based on remuneration rates that are expected to be
paid when the liability is settled. The expected cost of short-term employee benefits in the form of compensated absences such
as annual leave and long service 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 provision for other long-term employee benefits, including obligations for long service leave and annual leave, which are not
expected to be settled wholly before 12 months after the end of the reporting period, are measured at the present value of the
estimated future cash outflow to be made in respect of the services provided by employees up to the reporting date. Expected
further payments incorporate anticipated future wage and salary levels, durations of service and employee turnover, and are
discounted at rates determined by reference to market yields at the end of the reporting period on high-quality corporate bonds
that have maturity dates that approximate the terms of the obligations. Any re-measurements for changes in assumptions of
obligations for other long-term employee benefits are recognised in profit or loss in the periods in which the change occurs.
Other long-term employee benefit obligations are presented as current liabilities in the balance sheet if the entity does not have an
unconditional right to defer settlement for at least 12 months after the reporting date, regardless of when the actual settlement
is expected to occur. All other long-term employee benefit obligations are presented as non-current liabilities in the consolidated
statement of financial position.
Retirement benefit obligations
The consolidated entity makes superannuation and pension contributions to the employee’s defined contribution plan of choice in
respect of employee services rendered during the year. These contributions are recognised as an expense in the same period when
the related employee services are received. The Group’s obligation with respect to employee’s defined contributions entitlements is
limited to its obligation for any unpaid superannuation and pension guarantee contributions at the end of the reporting period. All
obligations for unpaid superannuation and pension guarantee contributions are measured at the (undiscounted) amounts expected
to be paid when the obligation is settled and are presented as current liabilities in the consolidated statement of financial position.
Bonus plan
The consolidated entity recognises a provision when a bonus is payable in accordance with the employee’s contract of employment
or review letter and the amount can be reliably measured.
Termination benefits
The Group recognises an obligation and expense for termination benefits at the earlier of: (a) the date when the Group can no
longer withdraw the offer for termination benefits; and (b) when the Group recognises costs for restructuring and the costs
include termination benefits. In either case, the obligation and expense for termination benefits are measured on the basis of the
best estimate of the number of employees expected to be affected. Termination benefits that are expected to be settled wholly
before 12 months after the annual reporting period in which the benefits are recognised are measured at the (undiscounted)
amounts expected to be paid and are presented as current liabilities in the consolidated statement of financial position. All other
termination benefits are accounted for on the same basis as other long-term employee benefits and are presented as non-current
liabilities in the consolidated statement of financial position.
62
Hansen Technologies Ltd Annual Report 2019 16. SHARE-BASED PAYMENTS
a. Employee Share Plan
The Employee Share Plan (ESP) is available to all eligible employees each year to acquire ordinary shares in the Company from future
remuneration (before tax). Shares to be issued or transferred under the ESP will be valued at the volume-weighted average price of the
Company’s shares traded on the Australian Securities Exchange during the five business days immediately preceding the day the shares
are issued or transferred. Shares issued under the ESP are not allowed to be sold, transferred or otherwise disposed until the earlier of
the end of an initial three-year period, or the participant ceasing continuing employment with the Company.
Details of the movement in employee shares under the ESP are as follows:
Number of shares at beginning of year
Number of shares distributed to employees
Number of shares transferred to main share registry and/or disposed of
Number of shares at year end
2019
No. of Shares
2018
No. of Shares
114,758
45,560
(44,526)
115,792
137,227
42,480
(64,949)
114,758
The consideration for the shares issued on 22 May 2019 was $3.72 (7 May 2018: $4.24).
The value of shares issued under the ESP that was recognised during the year, and any amounts of consideration provided by eligible
participants at balance sheet date were:
Issued ordinary share capital
2019
$’000
170
2018
$’000
180
The market value of the Company’s ordinary shares closed at $3.93 on 30 June 2019 ($3.15 on 30 June 2018).
b. Employee Performance Rights Plan
The Employee Performance Rights Plan (the Rights Plan) was approved by shareholders at the Company’s AGM on 23 November 2017.
Under the Rights Plan, awards are made to eligible executives and other management personnel who have an impact on the Group’s
performance. Rights Plan awards are granted in the form of performance rights over shares, which vest over a period of three years
subject to meeting performance measures and continuous employment with the Company. Each performance right is to subscribe for
one ordinary share upon vesting and, when issued, the shares will rank equally with other shares.
Performance rights issued under the Employee Performance Rights Plan are valued on the same basis as those issued to KMP, which
is described in Note 16(d).
Performance rights issued and outstanding at 30 June 2019
Grant Date
2 Jul 2017
2 Jul 2018
Total
Vesting Date1
31 Aug 2020
31 Aug 2021
Fair Value
per Right $
Rights
Granted
No. of Rights
at 30/6/2019
3.815
3.01
355,316
530,652
885,968
355,316
530,652
885,968
1. The vesting date for rights granted on 2 July 2017 and 2 July 2018 is the date on which the Board notifies the executive that the rights have vested, after the
outcomes for the measurement period have been determined and satisfaction of performance conditions have been assessed. This is likely to be 31 August 2020
and 31 August 2021 respectively.
No performance rights vested or lapsed during the financial year. The number of performance rights issued and outstanding
at 30 June 2018 was 355,316, consisting solely of the performance rights granted on 2 July 2017.
The weighted average contractual life of outstanding performance rights at the end of the financial year is 1.77 years (2018: 2.17 years).
63
Hansen Technologies Ltd Annual Report 2019 NOTES TO THE FINANCIAL STATEMENTS CONTINUED
30 June 2019
16. SHARE-BASED PAYMENTS continued
c. Employee Share Option Plan
The Employee Share Option Plan (the Option Plan) was approved by shareholders at the Company’s AGM on 9 November 2001 and
reaffirmed at the AGM on 24 November 2011. Under the Option Plan, awards are made to eligible executives and other management
personnel who have an impact on the Group’s performance. Option Plan awards are delivered in the form of options over shares, which
vest over a period of three years subject to meeting performance measures and continuous employment with the Company. Each option
is to subscribe for one ordinary share when the option is exercised and, when issued, the shares will rank equally with other shares.
Unless the terms on which an option was offered specified otherwise, an option may be exercised at any time after the vesting date
on satisfaction of the relevant performance criteria.
Options issued under the Employee Share Option Plan are valued on the same basis as those issued to KMP, which is described
in Note 16(d).
There were no new options issued under the Option Plan during the 30 June 2019 and 30 June 2018 financial years, as the Option Plan
was replaced with the Rights Plan as described in Note 16(b).
Movement of options during the year ended 30 June 2019:
Grant Date
Vesting Date
Expiry Date
2 Jul 2013
2 Jul 2014
2 Jul 2015
2 Jul 2016
2 Jul 2017
2 Jul 2018
30 Sept 20181
2 Jul 2019
2 Jul 2020
22 Dec 2016
31 Aug 20192
22 Dec2021
Total
Weighted average exercise price
Exercise
Price
$
No. of
Options at
Beg. of Year
0.92
1.30
2.67
3.59
75,000
470,000
1,000,000
1,323,730
2,868,730
Options
Exercised
or Lapsed
(75,000)
(205,000)
(75,000)
-
(355,000)
$1.51
No. of Options
at End of Year
-
265,000
925,000
1,323,730
2,513,730
$3.01
1. The original expiry date for this tranche of options was 2 July 2018. However, due to extraordinary circumstances, the remaining 75,000 options could not be
exercised during the prior financial year. Therefore, the Board had exercised its discretion during the year to extend the expiry date for the remaining options
to 30 September 2018.
2. Options associated with an EPS hurdle are not expected to vest on 31 August 2019 as the minimum performance target will not be met. Options associated
with a TSR hurdle will vest on 31 August 2019 in accordance with accounting standards. However, because the minimum target was not met, these options will
be restricted and unexercisable. Refer to Section 3b) of the audited Remuneration Report for further details.
Movement of options during the year ended 30 June 2018:
Grant Date
Exercise Date
Expiry Date
2 Jul 2012
2 Jul 2013
2 Jul 2014
2 Jul 2015
2 Jul 2015
2 Jul 2016
2 Jul 2017
2 Jul 2018
2 Jul 2017
30 Sept 20181
2 Jul 2019
2 Jul 2020
22 Dec 2016
31 Aug 2019
22 Dec 2021
Total
Weighted average exercise price
Exercise
Price
$
No. of
Options at
Beg. of Year
0.92
0.92
1.30
2.67
3.59
40,000
295,000
875,000
1,000,000
1,323,730
3,533,730
Options
Exercised
or Lapsed
(40,000)
(220,000)
(405,000)
-
-
(665,000)
$1.15
No. of Options
at End of Year
-
75,000
470,000
1,000,000
1,323,730
2,868,730
$2.82
The weighted average fair value of options granted during the year was nil (2018: nil) as there were none issued during the year.
The weighted average share price for share options exercised during the period was $3.57 (2018: $3.90).
The weighted average remaining contractual life for share options outstanding at the end of the period was 1.68 years (2018: 2.47 years).
64
Hansen Technologies Ltd Annual Report 2019 d. Fair value of performance rights granted
The fair value of Total Shareholder Return (TSR) performance rights at grant date is independently determined using an adjusted form
of the Black Scholes Model, which includes a Monte Carlo simulation model that takes into account the term of the performance
rights, the impact of dilution (where material), the share price at grant date and expected price volatility of the underlying share,
the expected dividend yield, the risk-free interest rate for the term of the performance rights and the correlations and volatilities
of the peer group companies.
The fair value of earnings per share (EPS) performance rights at grant date is independently determined using a conventional Black
Scholes Model.
Details of the assessed fair value of the performance rights as well as the model inputs for rights granted, during the year ended
30 June 2019 and for the prior year 30 June 2018, are presented below:
Grant date
Expected vesting date
Measurement period
Fair value of performance rights granted – EPS rights
Fair value of performance rights granted – TSR rights
Share price at grant date
Expected price volatility of the Company’s shares
Expected dividend yield
Risk-free interest rate
2019
2 July 2018
2018
2 July 2017
31 August 2021
31 August 2020
1 July 2018 to 30 June 2021
1 July 2017 to 30 June 2020
$2.99
$3.03
$3.15
35%
1.75%
2.06%
$3.83
$3.80
$4.04
30%
1.75%
1.91%
The expected price volatility is based on the historic volatility (based on the life of the performance rights), adjusted for any expected
changes to future volatility due to publicly available information.
e. Expenses arising from share-based payment transactions
Options issued under Employee option Plan FY16
Options issued under Employee option Plan FY171
Rights issued under Employee Performance Rights Plan FY18
Rights issued under Employee Performance Rights Plan FY19
Note
8(a)
2019
$’000
-
(136,785)
451,844
513,524
828,583
2018
$’000
152,597
525,079
451,844
-
1,129,520
1. Options associated with an EPS hurdle are not expected to vest on 31 August 2019 as the minimum performance target will not be met. Under accounting
standards, profit must be adjusted to account for the cumulative value of options expensed that will not vest.
SIGNIFICANT ACCOUNTING POLICIES
Share-based payments
The Group operates equity-settled share-based payment employee share, options and rights schemes. The fair value of the equity
to which employees become entitled is measured at grant date and recognised as an expense over the vesting period, with
a corresponding increase to an equity account, ending on the date on which the relevant employees become fully entitled to
the award (the vesting date). The fair value of shares is measured at the market bid price at grant date. In respect of share-based
payments that are dependent on the satisfaction of performance conditions, the number of shares, options and rights expected
to vest is reviewed and adjusted at each reporting date. The amount recognised for services received as consideration for these
equity instruments granted is adjusted to reflect the best estimate of the number of equity instruments that eventually vest.
CRITICAL ACCOUNTING ESTIMATE AND JUDGEMENT
Share-based payments
The fair value of options and rights is estimated on the grant date using an adjusted form of the Black Scholes Model. Estimating
fair value for share-based payments requires significant assumptions such as determining the most appropriate inputs to the
valuation model, including the expected life of the share option or performance right, volatility in the share price and dividend yield.
65
Hansen Technologies Ltd Annual Report 2019 NOTES TO THE FINANCIAL STATEMENTS CONTINUED
30 June 2019
Section E: Capital and financial risk management
This section explains our policies and procedures applied to manage our financing and capital structure,
and the associated risks that we are exposed to. The Group manages its financial and capital structure
to maximise shareholder return, maintain an optimal cost of capital and provide flexibility for
strategic investments.
17. FINANCIAL RISK MANAGEMENT
The Group is exposed to a variety of financial risks, principally related to credit, liquidity, interest rate and foreign currency risk.
The Group’s risk management framework is aligned with best practices and designed to reduce volatility on our financial performance
and to support the delivery of our business objectives. The Board has overall responsibility for identifying and monitoring operational
and financial risks.
a. Credit risk
Nature of risk
The risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet
its contractual obligations. Credit risk arises principally from the Group’s receivables from customers and
our investments in debt securities.
Exposure to
the risk
The Group’s maximum exposure to credit risk at balance date is the carrying amount of financial assets,
net of any provisions for impairment and excluding the value of any collateral or other security.
The gross trade receivables balance at 30 June 2019 was $47,510,000 (2018: $36,741,000). The ageing
analysis of trade and other receivables is provided in Note 9. As the Group undertakes transactions with a large
number of customers and regularly monitors payment in accordance with credit terms, the financial assets that
are past due but not impaired are expected to be received.
The Group’s exposure to credit risk is affected by the regions and industries our customers operate in. Charts
set out below show the concentration of our trade receivables balances by the industry they operate in.
At 30 June 2019, the acquisition of Sigma Systems substantially increased our share of customers in the
Telecommunications industry compared to the prior financial year:
FY19
3%
FY18
3%
16%
40%
17%
Utilities
Telecommunications
Pay-TV
Other
18%
41%
62%
How is the risk
managed?
Receivables are managed on an ongoing basis. The Group does not have any material credit risk exposure
to any single debtor or group of debtors. Ageing analysis and ongoing collectability reviews are performed
and, where appropriate, an expected credit loss provision is raised. Historically, the Group has not had any
significant write-offs in our trade receivables.
The Group minimises concentrations of credit risk in relation to trade receivables by undertaking transactions
with a large number of customers. Credit quality of a customer is assessed based on a variety of factors,
including their credit ratings and financial position.
66
Hansen Technologies Ltd Annual Report 2019 b. Liquidity risk
Nature of risk
The risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.
Exposure to
the risk
The table below categorises the Group’s financial liabilities into their relevant contractual maturities.
Amounts included represent undiscounted cash flows.
Note 18 provides additional details on the Group’s borrowing arrangements.
How is the risk
managed?
The Group’s approach is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities
when they are due, under both normal and stressed conditions, without incurring unacceptable losses or
risking damage to the Group’s reputation.
The Group reviews its minimum levels of cash and cash equivalents on an ongoing basis, and closely monitors
rolling cash flow forecasts based on its view on the nature and timing of expected receipts and payments.
The Group has historically been able to generate and retain strong positive cash flows. Additionally, multi-
currency borrowing facilities have been arranged with the Group’s financiers to provide increased capacity
for strategic growth objectives.
Contractual maturities of financial liabilities:
Contractual Cash Flows $’000
Less Than
6 Months
6-12
Months
1-2
Years
2-3
Years
21,195
-
92
-
21,287
16,492
55
-
16,547
-
134
-
-
134
-
57
-
57
-
-
-
-
-
-
90
27,031
27,121
-
-
-
186,327
186,327
-
-
-
-
Note
13
18
18, 22
18
13
18, 22
18
Total
Carrying
Amount
21,195
134
92
186,327
207,748
16,492
202
27,031
43,725
Financial Liabilities
2019
Trade and other payables
Bank overdraft
Lease liabilities
Secured borrowings
2018
Trade and other payables
Lease liabilities
Secured borrowings
c. Interest rate risk
Nature of risk
The risk that the fair value or the future cash flows of a financial instrument will fluctuate as a result
of changes in market interest rates.
Exposure to the
riskw
The Group’s main exposure to interest rate risk arises from its borrowings and cash and cash equivalents.
No other financial assets or liabilities are expected to be exposed to interest rate risk.
The weighted average variable interest rate across all our borrowings at 30 June 2019 is 4.52% (2018:
2.51%). If the interest rate were to increase or decrease by 1%, with all other variables held constant, the
impact to pre-tax profit is $354,000 (2018: $408,000) and the impact to post-tax equity1 is $251,000 (2018:
$285,000). This impact is based on a lower level of borrowings and lower average interest rates during most of
this financial year compared to the prior year, notwithstanding the significantly higher debt since 1 May 2019
that will increase our interest rate risk exposure for FY20.
1. For FY19, this is calculated net of the blended effective tax rate on pre-tax profit based on where the interest bearing debt is
located (i.e. Australia and Canada) and the prevailing corporate tax rate in each of those jurisdictions (i.e. 30% and 26.5%
respectively). For FY18, this is calculated net of the Australian corporate tax rate of 30% on pre-tax profit as most
of our interest bearing assets and liabilities are held in Australia.
How is the risk
managed?
The Group ensures it has access to diverse sources of funding, including access to foreign currency debt. The
Group closely monitors its debt ratios to reduce its risk exposure to uncertainty in the global markets if interest
rates will fall or rise. Management is comfortable with the risk associated with using variable interest rates due
to the current level of borrowings.
67
Hansen Technologies Ltd Annual Report 2019 NOTES TO THE FINANCIAL STATEMENTS CONTINUED
30 June 2019
17. FINANCIAL RISK MANAGEMENT continued
d. Foreign currency risk
Nature of risk
Exposure to
the risk
How is the risk
managed?
The risk that the fair value or future cash flows of a financial instrument or forecasted transaction will fluctuate
because of changes in foreign exchange rates.
The Group operates internationally and as such has exposure to foreign currency movements. The Group has
expanded its international operations substantially in recent years to the extent that in excess of 78% of its
revenue is now earned in foreign currency designated transactions. The Group has a number of offices located
internationally and more than 82% of its work force is located overseas and paid in foreign currencies.
Changes in foreign currency exchange rates would be limited to the revaluation of foreign currency
denominated borrowings, intercompany financing arrangements denominated in foreign currencies, and
foreign currency bank balances in the Group at market rates at balance sheet date.
The Group’s primary foreign currency exposure is to the movement in US Dollar (USD), British Pound (GBP)
and Canadian Dollar (CAD) exchange rates. At the reporting date, cash and cash equivalents included
$34.3 million (2018: $18.7 million) denominated in foreign currencies.
If the foreign currency exchange rate for our primary foreign currencies (being USD, GBP and CAD) were to
move by 10%, with all other variables held constant, the impact to our foreign currency translation reserves
(classified as equity in the statement of financial position) on translation of our foreign currency-denominated
cash and cash equivalents is as follows:
USD
2019
1,141
(1,141)
2018
639
(639)
Increase/(decrease)
$’000
GBP
2019
339
(339)
2018
379
(379)
CAD
2019
78
(78)
2018
-
-
+10%
-10%
The Group’s exposure to foreign currency changes for all other currencies and other financial statement items
is not material, as the Group has natural hedging and designated hedging relationships in place (refer to
'How is the risk managed?' for further discussion).
The Group manages its foreign currency risk by evaluating its exposure to fluctuations on an ongoing basis.
The Group’s overseas subsidiaries transact in different functional currencies. The effects of any exchange
rate movements in respect to the net assets of our foreign subsidiaries are recognised in the foreign currency
translation reserve in equity. Accordingly, the Group has an in-built natural hedge against major currency
fluctuations and, except for significant sudden change, is protected in part by its corporate structure against
currency movements so that the impact is largely limited to the margin.
In addition, the Group holds foreign currency borrowings as part of the syndicated facility agreement as
disclosed in Note 18, which have been designated as hedging instruments of the net assets of some of the
Group’s principal overseas subsidiaries in order to offset our risk exposure arising from the translation of these
subsidiaries into Australian dollars. There is no impact to the profit or loss on the translation of the Group’s
overseas subsidiaries or foreign currency borrowings to the Australian dollar.
The Group’s subsidiaries also enter into various financing and transactional arrangements with each other in
accordance with local regulatory requirements. The Group regularly reviews these arrangements to minimise
its exposure on the translation of outstanding foreign currency-denominated intercompany balances to the
Australian dollar, which impact profit.
68
Hansen Technologies Ltd Annual Report 2019 SIGNIFICANT ACCOUNTING POLICIES
Functional and presentation currency
The financial statements of each entity within the consolidated Group are measured using the currency of the primary economic
environment in which that entity operates. The consolidated financial statements of the Group are presented in Australian dollars,
which is the Group’s functional and presentation currency.
Foreign currency transactions and balances
Transactions in foreign currencies of entities within the consolidated Group are translated into its functional currency at the rate of
exchange ruling at the date of the transaction.
Foreign currency monetary items that are outstanding at the reporting date (other than monetary items arising under foreign
currency contracts where the exchange rate for that monetary item is fixed in the contract) are translated using the spot rate at
the end of the financial year.
All resulting exchange differences arising on settlement or re-statement are recognised in profit or loss and presented in the
Statement of Comprehensive Income for the financial year.
e. Fair value measurements
Due to their short-term nature, the fair value of receivables and payables approximates their carrying amounts as disclosed in the
consolidated statement of financial position and notes to the consolidated financial statements. At 30 June 2019 and 30 June 2018,
there are no assets or liabilities carried at fair value on a recurring basis.
18. BORROWINGS
Current
Secured
Lease liability
Bank overdraft
Non-current
Secured
Term facility – gross borrowings
Term facility – prepaid borrowing costs
Lease liability
The lease liability relates to IT equipment due for repayment in full by January 2020.
a. Loan facilities
Loan facility
Amount utilised
Unused loan facility
Note
22
22
2019
$’000
2018
$’000
92
134
226
112
-
112
189,543
(3,216)
-
27,031
-
90
186,327
27,121
2019
$’000
225,000
(189,543)
35,457
2018
$’000
105,000
(27,031)
77,969
On 1 May 2019, the Company entered into a secured A$225,000,000 syndicated multi-currency facility with its external financiers to fund
the acquisition of Sigma Systems (refer Note 24) and to provide additional funding for general corporate and working capital purposes.
This facility expires on 30 April 2022 and will be subject to renewal upon negotiation with its external financiers. This facility replaces the
Company’s previous multi-currency facility of A$105,000,000. The facility is secured by 75% of Group assets. As at 30 June 2019, the
remaining unutilised portion of the facility is A$35,457,000.
69
Hansen Technologies Ltd Annual Report 2019 NOTES TO THE FINANCIAL STATEMENTS CONTINUED
30 June 2019
18. BORROWINGS continued
b. Changes in liabilities arising from financing activities
Opening balance at 1 July
Cash flows from financing activities
Net proceeds from/(repayment of) borrowings
Cash flows from non-financing activities
Acquisition of subsidiary’s borrowings1
Prepaid borrowing costs
Draw-down of overdraft facility
Non-cash changes
Effect of foreign exchange
Closing balance at 30 June2
2019
$’000
27,233
2018
$’000
291
160,833
(4,503)
-
(3,216)
134
1,569
186,553
29,703
-
-
1,742
27,233
1. This was repaid in full during the previous financial year. The repayment is included in the net repayment of borrowings amount.
2. Represents long-term facility borrowings of $186,327,000 (2018: $27,031,000), bank overdraft facility of $134,000 (2018: nil) and finance lease liabilities
of $92,000 (2018: $202,000).
c. Hedge of net investments in foreign operations
Included in borrowings at 30 June 2019 are two borrowings of US$12,000,000 and GBP £13,000,000 drawn down as part of the
A$225,000,000 syndicated multi-currency facility. Included in borrowings at 30 June 2018 are two borrowings of US$7,000,000
and GBP £12,500,000 drawn down as part of the A$105,000,000 multi-currency facility.
Both these foreign-currency denominated borrowings have been designated as a hedge of the net investments in the Group’s
subsidiaries in the United States and the United Kingdom. The borrowings are being used to hedge the Group’s exposure to the
US$ and GBP foreign exchange risk on these investments. Gains or losses on the retranslation of the borrowings are transferred
to other comprehensive income to offset any gains or losses on translation of the net investments in the subsidiaries.
As a result of the Group replacing its previous facility with the new syndicated facility, the Group reset the hedging relationship
for its foreign-currency denominated borrowings.
The effects of the foreign-currency related hedging instruments on the Group’s financial position and performance are as follows:
Previous $105m Debt
Facility ‘000
$225m Syndicated Debt
Facility ‘000
USD
Loan
GBP
Loan
USD
Loan
GBP
Loan
Total
Carrying amount of the loan
– 30 June 2019 (AUD)
Carrying amount of the loan
– 30 June 2019 (nominated currency)
Hedge ratio1
Change in the carrying amount of loan
as a result of foreign currency movements
since 1 July 2018, recognised in OCI ($)
Change in the value of the hedged item
used to determine hedge effectiveness ($)
Average hedged rate for the year
(local currency:1 AUD)
17,073
23,542
40,615
-
-
1:1
(11)
11
-
-
1:1
435
(435)
12,000
1:1
13,000
1:1
(161)
161
(305)
305
0.742
0.552
0.695
0.548
(43)
43
40,615
1. The draw-down loans under the previous $105 million and current syndicated $225 million debt facilities are denominated in the same currency and critical terms
as the value of the net investment in the foreign subsidiaries that are being hedged. Therefore, the hedge ratio this year is 1:1 (2018: 1:1).
70
Hansen Technologies Ltd Annual Report 2019 For the current syndicated debt facility, there were no repayments made to 30 June 2019. Therefore, the nominal amount of the hedging
instrument equals its carrying amount at 30 June 2019.
The impact to the foreign currency translation reserve on translation of the Group’s net investment in foreign subsidiaries that are being
hedged by the Group’s borrowings was $43,000 (2018: $934,000). Borrowing repayments made during the year have significantly
reduced the translation impact compared to the prior year. The hedging gain recognised in OCI before tax is equal to the change in fair
value used for measuring effectiveness. There is no ineffectiveness in the years ended 30 June 2019 and 2018.
SIGNIFICANT ACCOUNTING POLICIES
Loans and borrowings
Interest bearing loans and borrowings are initially recognised as financial liabilities at fair value net of directly attributable transaction
costs. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the
effective interest rate (EIR) method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well
as through the EIR amortisation process.
Borrowings are classified as non-current liabilities except for those that mature in less than 12 months from the reporting date,
which are classified as current liabilities.
Borrowing costs
Borrowing costs can include interest expense calculated using the effective interest method and finance charges in respect
of finance leases. Borrowing costs are expensed as incurred except for borrowing costs incurred as part of the construction
of a qualifying asset, in which case the costs are capitalised until the asset is ready for its intended use or sale.
19. CONTRIBUTED CAPITAL
a. Issued and paid up capital
Ordinary shares, fully paid
2019
$’000
2018
$’000
138,746
136,896
The ordinary shares have no par value in accordance with the Corporations Act 2001.
b. Movements in shares on issue
2019
No. of Shares
2019
$’000
2018
No. of Shares
Balance at beginning of the financial year
196,648,230
136,896
181,960,344
Shares issued under the dividend reinvestment program
Shares issued under the Employee Share Plan
Options exercised under the Executive LTI Plan
Shares issued from institutional placement
Share purchase plan offer
350,863
45,560
355,000
-
-
1,145
170
535
-
-
373,802
42,480
665,000
10,810,810
2,795,794
Balance at end of the financial year
197,399,653
138,746
196,648,230
2018
$’000
85,350
1,370
180
766
38,959
10,271
136,896
c. Rights of each type of share
Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held.
At shareholders meetings, each ordinary share is entitled to one vote when a poll is called.
d. Capital risk management
The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue
to provide returns for shareholders and benefits for other stakeholders and 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, increase debt, sell assets to reduce debt or a combination of these activities.
71
Hansen Technologies Ltd Annual Report 2019 NOTES TO THE FINANCIAL STATEMENTS CONTINUED
30 June 2019
20. DIVIDENDS
A regular dividend of 3 cents per share has been declared. This final dividend of 3 cents per share, partially franked to 2.6 cents per
share, was announced to the market on 23 August 2019. The amount declared has not been recognised as a liability in the accounts
of Hansen Technologies Ltd as at 30 June 2019.
Dividends paid during the year (net of dividend re-investment)
4 cent per share final dividend paid 27 September 2018 – fully franked1
3 cent per share final dividend paid 30 September 2017 – fully franked
3 cent per share interim dividend paid 29 March 2019 – fully franked
3 cent per share interim dividend paid 29 March 2018 – fully franked
2019
$’000
7,319
5,318
12,637
2018
$’000
5,175
5,217
10,392
Proposed dividend not recognised at the end of the year
5,922
7,865
Dividends franking account
30% franking credits, on a tax paid basis, are available to shareholders
of Hansen Technologies Ltd for subsequent financial years
1,586
3,125
1. The final dividend paid of 4 cents per share, franked to 4 cents, comprised of an ordinary dividend of 3 cents per share, together with a special dividend
of 1 cent per share.
The above available amounts are based on the balance of the dividend franking account at year end adjusted for:
• franking credits that will arise from the payment of any current tax liability;
• franking debits that will arise from the payment of any dividends recognised as a liability at year end;
• franking credits that will arise from the receipt of any dividends recognised as receivables at year end; and
• franking credits that the entity may be prevented from distributing in subsequent years.
21. RESERVES AND RETAINED EARNINGS
Foreign currency translation reserve
Share-based payments reserve
Retained earnings
Note
21(a)
21(b)
21(c)
a. Foreign currency translation reserve
This reserve is used to record the exchange differences arising on translation of a foreign entity.
Movements in reserve
Balance at beginning of year
Net gain/(loss) on hedges of a net investment
Exchange differences on translation of foreign operations
Balance at end of year
Note
18(c)
2019
$’000
23,340
3,931
82,853
2019
$’000
16,739
43
6,558
23,340
2018
$’000
16,739
3,102
73,186
2018
$’000
8,196
(934)
9,477
16,739
72
Hansen Technologies Ltd Annual Report 2019 b. Share-based payments reserve
This reserve is used to record the fair value of options and performance rights issued to employees as part of their remuneration.
Movements in reserve
Balance at beginning of year
Share-based payments expensed during the year
Balance at end of year
c. Retained earnings
Movements in retained earnings
Balance at beginning of year
Effect of adoption of new accounting standards
Dividends declared during the year (before dividend re-investment)
Net profit attributable to members of Hansen Technologies Ltd
Balance at end of year
22. COMMITMENTS AND CONTINGENCIES
Operating leases (non-cancellable):
Not later than one year
Later than one year and not later than five years
Later than five years
Future minimum rentals payable at reporting date
Finance lease commitments
Not later than one year
Later than one year and not later than five years
Total minimum lease payments
Less: Future finance charges
Present value of minimum lease payments
Lease liabilities provided for in the financial statements:
Current
Non-current
Total lease liabilities
Operating leases (non-cancellable)
2019
$’000
3,102
829
3,931
2019
$’000
73,186
1,984
(13,782)
21,465
82,853
2019
$’000
6,977
18,061
1,420
26,458
95
-
95
(3)
92
92
-
92
2018
$’000
1,972
1130
3,102
2018
$’000
56,098
-
(11,762)
28,850
73,186
2018
$’000
5,451
13,228
1,163
19,842
121
92
213
(11)
202
112
90
202
Note
3(a)(i)
Note
18
18
The Group leases property, vehicles and IT equipment under non-cancellable operating leases expiring from one to five years. Leases
generally provide the consolidated entity with a right of renewal at which time all terms are renegotiated. Contingent rental provisions
within the property lease agreements require the minimum lease payments to be increased by CPI per annum.
Finance lease commitments
The Group leases certain IT equipment under a finance lease expiring in less than a year. At the end of the lease term, the Group has
the option to return the assets to the lessor or to renew the lease agreements.
Contingent assets and liabilities
The Group does not have any contingent assets or liabilities as at 30 June 2019 nor at 30 June 2018.
73
Hansen Technologies Ltd Annual Report 2019 NOTES TO THE FINANCIAL STATEMENTS CONTINUED
30 June 2019
22. COMMITMENTS AND CONTINGENCIES continued
SIGNIFICANT ACCOUNTING POLICIES
Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the
inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use
of a specific asset or assets and the arrangement conveys a right to use the asset (or assets), even if that asset is (or those
assets are) not explicitly specified in an arrangement.
Leases are classified at their inception as either operating or finance leases based on the economic substance of the agreement
to reflect the risks and benefits incidental to ownership.
Finance leases
Leases of fixed assets, where substantially all of the risks and benefits incidental to ownership of the asset but not the legal
ownership are transferred to the consolidated entity, are classified as finance leases. Finance leases are capitalised, recording
an asset and liability equal to the present value of the minimum lease payments, including any guaranteed residual values.
The interest expense is calculated using the interest rate implicit in the lease and is included in finance costs in the consolidated
statement of comprehensive income.
Leased assets are depreciated on a straight-line basis over their estimated useful lives where it is likely the consolidated entity
will obtain ownership of the asset, or over the term of the lease. Lease payments are allocated between the reduction of the
lease liability and the lease interest expense for the period.
Operating leases
Lease payments for operating leases are recognised as an expense on a straight-line basis over the term of the lease.
74
Hansen Technologies Ltd Annual Report 2019 Section F: Group structure
This section provides information about our structure and how this impacts the Group’s results as a
whole, including parent entity information and any business acquisitions that impacted the Group’s
financial position and performance.
23. PARENT ENTITY INFORMATION
Presented below are the summary financial statements of the parent Company, Hansen Technologies Limited:
a. Summarised statement of financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Accumulated profits
Share-based payments reserve
Foreign currency translation reserve
Total equity
b. Summarised statement of comprehensive income
Profit for the year
Total comprehensive income for the year
Parent Entity
2019
$’000
2018
$’000
1,028
243,841
244,869
2,350
77,796
80,146
740
175,748
176,488
1,532
27,065
28,597
164,723
147,891
138,746
22,962
3,931
(916)
136,894
9,175
2,812
(990)
164,723
147,891
Parent Entity
2019
$’000
27,464
27,538
2018
$’000
12,753
11,763
Dividends of $29,000,000 (2018: $14,000,000) were paid from Hansen Corporation Pty Limited to Hansen Technologies Limited during
the financial year.
c. Parent entity guarantees
Hansen Technologies Limited, being the parent entity, has entered into a syndicated debt facility (refer Note 18) of which Hansen
Corporation Pty Limited and other subsidiaries of the Company are joint guarantors to that facility agreement. In addition, there are
cross guarantees given by Hansen Technologies Limited and Hansen Corporation Pty Limited as described in Note 27. No deficiencies
of assets exist in any of these companies.
SIGNIFICANT ACCOUNTING POLICIES
The financial information for the parent Company has been prepared on the same basis as the Group consolidated financial
statements, except as set out below:
Investments in subsidiaries
Investments in subsidiaries are accounted at cost. Dividends received from subsidiaries are recognised in the parent entity’s income
statement when its right to receive the dividend is established.
Where the parent Company has provided financial guarantees in relation to loans and payables of subsidiaries for no compensation,
the fair value of these guarantees is accounted for as contributions and recognised as part of the cost of the investment.
75
Hansen Technologies Ltd Annual Report 2019 NOTES TO THE FINANCIAL STATEMENTS CONTINUED
30 June 2019
24. BUSINESS COMBINATIONS
Acquisition of Sigma Systems
On 1 June 2019, the Company’s subsidiary, Hansen Technologies Canada Inc., acquired 100% of the partnership units of Sigma Systems
GP and the shares of Sigma Systems Canada Inc., both of which wholly own and control the partnership units of Sigma Systems LP
and its controlled entities (collectively known as ‘Sigma’). Sigma is a leading global provider of catalogue-driven software products
for telecommunications, media and technology companies. Sigma is based in Toronto, Canada, but has customers operating across all
regions of the world. The acquisition significantly expands the Group’s scale and scope in the telecommunications sector, builds on the
Group’s global presence and provides opportunities for cross-selling products into the Group’s existing market verticals.
Details of the purchase consideration
Cash paid
Total purchase consideration
$’000
163,830
163,830
As at 30 June 2019, the fair values of the identifiable assets and liabilities acquired as at the date of acquisition are still provisional in
light of the timing of the transaction. The acquisition accounting will be finalised within 12 months of the acquisition date, in line with
accounting standards. Provisional identifiable net assets and liabilities acquired are detailed below:
Assets acquired:
Receivables
Accrued revenue
Prepayments and other current assets
Plant and equipment
Current tax receivable
Total assets acquired
Liabilities acquired:
Payables
Accruals and provisions
Unearned revenue
Deferred tax liability
Total liabilities acquired
Net identifiable assets acquired
Add:
Customer contracts
Technology
Brand name
Deferred tax liability
Goodwill arising on acquisition
Total purchase consideration, net of cash acquired
Provisional
Fair Value
$’000
13,163
19,137
5,294
970
741
39,305
2,377
3,121
7,516
2,057
15,071
24,234
65,898
17,727
9,563
(24,693)
66,662
159,391
Goodwill arose on the acquisition of Sigma due to the combination of the consideration paid for the business and the net assets
acquired, less values attributed to other intangibles in the form of customer contracts, trade names and technology. The value
of goodwill represents the strong positioning of Sigma in the telecommunications market, and includes the future benefit arising
from the expected future earnings, synergies with the Group’s products and operations and personnel assumed via the acquisition.
None of the goodwill is expected to be deductible for tax purposes.
The fair value of trade receivables approximates the gross contractual amount of trade receivables, due to the short-term nature and
maturity of the trade receivables.
76
Hansen Technologies Ltd Annual Report 2019 Transaction costs
Transaction costs of $2,063,000 were incurred in relation to the acquisition. These costs are identified as a separately disclosed item
for this year’s results. Refer to Note 4 for further information.
Contribution since acquisition
Since the acquisition date of 1 June 2019, Sigma has contributed total revenue of $4,968,000 and a loss before tax of $1,073,000,
which is included within the Group’s consolidated results. However, it is important to note that viewing this single month’s performance
in isolation is not reflective of the ongoing performance of the acquired business.
Deferred remuneration
Separate to the business combination in accordance with accounting standards, an additional $2,235,000 has been paid and held in
escrow as deferred remuneration for certain executives of Sigma. Release of the amounts from escrow are contingent on continuous
employment with the combined Group. This is included as part of 'Other non-current assets' in the Group’s consolidated statement
of financial position as the deferred remuneration is not expected to be realised within 12 months of the balance sheet date.
Analysis of cash flows on acquisition
Outflow of cash to acquire subsidiary, net of cash acquired
Cash consideration
Less: Cash balance acquired
Net cash outflow – investing activities
SIGNIFICANT ACCOUNTING POLICIES
$’000
163,830
(4,439)
159,391
Business combinations
A business combination is a transaction or other event in which an acquirer obtains control of one or more businesses and results in
the consolidation of the assets and liabilities acquired. Business combinations are accounted for by applying the acquisition method.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued,
or liabilities incurred by the acquirer to former owners of the acquiree. Deferred consideration payable is measured at its
acquisition date fair value. At each reporting date subsequent to the acquisition, contingent consideration payable is measured
at its fair value with any changes in the fair value recognised in profit or loss unless the contingent consideration is classified
as equity, in which case the contingent consideration is carried at the acquisition-date fair value.
Goodwill is recognised initially at the excess of: (a) the aggregate of the consideration transferred, the fair value of the non-
controlling interests and the acquisition date fair value of the acquirers previously held equity interest; over (b) the net fair value
of the identifiable assets acquired and liabilities assumed.
Acquisition-related costs are expensed as incurred.
CRITICAL ACCOUNTING ESTIMATE AND JUDGEMENT
Business combinations
The Group is required to determine the acquisition date and fair value of the identifiable net assets acquired, including intangible
assets such as brands, customer relationships, software and liabilities assumed. The estimated useful lives of the acquired amortisable
assets, the identification of intangibles and the determination of the indefinite or finite useful lives of intangible assets acquired
are assessed based on management judgement. The Group reassesses the fair value of net assets acquired a year after the
acquisition date and judgement is required to ensure that any adjustments made reflect new information obtained about facts
and circumstances that existed as of the acquisition date. The adjustments made to fair value of net assets are retrospective
in nature and have an impact on goodwill recognised on acquisition.
77
Hansen Technologies Ltd Annual Report 2019 NOTES TO THE FINANCIAL STATEMENTS CONTINUED
30 June 2019
Section G: Other disclosures
This section includes other disclosures not included in the other sections, for example the Group’s
auditor’s remuneration, related parties, impact of new accounting standards not yet effective and
subsequent events.
25. RELATED PARTY DISCLOSURES
a. List of controlled entities
The Group’s consolidated financial statements include the financial statements of Hansen Technologies Limited and the controlled
entities below:
Note
Country of
Incorporation
Ordinary Share
Entity Interest
2019
%
2018
%
Name
Parent entity
Hansen Technologies Limited
Subsidiaries of Hansen Technologies Limited
Hansen Corporation Pty Limited
Hansen Corporation Investments Pty Limited
Hansen Holdings (Asia) Pty Limited
Utilisoft Pty Limited
Hansen Technologies (Shanghai) Company Limited
Hansen Technologies Denmark A/S
Hansen Technologies CIS Finland Oy (fka. Enoro CIS Finland Oy)
Hansen Technologies Finland Oy (fka. Enoro Oy)
PEP Finland Oy
Enercube Oy Finland Filial
Hansen Customer Support India Private Limited
Enoro B.V.
Hansen New Zealand Limited
Hansen Technologies Holdings AS (fka. Enoro Holding AS)
Hansen Technologies Norway AS (fka. Enoro AS)
Australia
Australia
Australia
Australia
Australia
China
Denmark
Finland
Finland
Finland
Finland
India
Netherlands
New Zealand
Norway
Norway
Hantech Singapore Pte Limited
1
Singapore
Hansen Technologies Sweden AB (fka. Enoro AB)
Enoro AG
Hansen Corporation Europe Limited
Hansen Holdings Europe Limited
Hansen Billing Solutions Limited
Hansen Solutions LLC
Hansen Technologies North America, Inc.
Hansen ICC, LLC
Hansen Banner, LLC
Peace Software Inc.
Hansen Technologies Vietnam LLC
Hansen Technologies Canada, Inc.
Sigma Systems Canada Inc.
Sigma Systems Canada LP
78
Sweden
Switzerland
United Kingdom
United Kingdom
United Kingdom
United States
United States
United States
United States
United States
2
Vietnam
Canada
Canada
Canada
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
-
Hansen Technologies Ltd Annual Report 2019 Name
Subsidiaries of Hansen Technologies Limited
Sigma Canada Holdings Inc.
Sigma Systems GP Inc.
Sigma OSS Systems India Private Limited
Sigma Systems Japan K.K.
Sigma Systems (U.K.) Limited
Sigma Systems (Wales) Limited
Sigma Systems Group (USA) Inc.
Note
Country of
Incorporation
Canada
Canada
India
Japan
United Kingdom
United Kingdom
United States
Ordinary Share
Entity Interest
2019
%
100
100
100
100
100
100
100
2018
%
-
-
-
-
-
-
-
1. Notice has been provided on 30 April 2019 to voluntarily deregister and liquidate Hantech Singapore Pte Limited. At 30 June 2019, this company has not yet been
formally liquidated; however, it is expected that the liquidation process will be completed after 30 June 2019.
2. Established and registered on 17 April 2019 as a wholly-owned subsidiary of the Group.
SIGNIFICANT ACCOUNTING POLICIES
Foreign subsidiaries
Subsidiaries that have a functional currency different to the presentation currency of the Group are translated as follows:
• assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;
• income and expenses are translated at actual exchange rates or average exchange rates for the period, where appropriate; and
• all resulting exchange differences arising on translation of foreign operations are transferred directly to the Group’s foreign
currency translation reserve as a separate component of equity in the balance sheet.
Exchange differences arising on the reduction of a foreign subsidiary’s equity continues to be recognised in the Group’s foreign
currency translation reserve until such time that the foreign subsidiary is disposed of.
b. Transactions with Key Management Personnel of the entity or its parent and their personally
related entities
The terms and conditions of the transactions with Directors and their Director-related entities were no more favourable than those
available, or which might reasonably be expected to be available, on similar transactions to non-Director-related entities on an arm’s
length basis.
The following table provides the total amount of transactions that were entered into with related parties in respect of leased premises
for the relevant financial year:
A related party to Andrew Hansen – lease rental payments
2019
$’000
2018
$’000
1,633,450
1,373,421
79
Hansen Technologies Ltd Annual Report 2019 NOTES TO THE FINANCIAL STATEMENTS CONTINUED
30 June 2019
26. AUDITOR’S REMUNERATION
The auditor of the Group for the year ended 30 June 2019 is RSM Australia Partners.
(a) Amounts paid and payable to RSM Australia Partners for:
(i) Audit and other assurance services
– an audit and/or review of the Financial Report of the entity and any other entity
in the consolidated entity
(ii) Other non-audit services
– taxation services
– compliance services
2019
$
2018
$
279,000
303,430
-
-
-
-
-
-
Total remuneration of RSM Australia Partners
279,000
303,430
(b) Amounts paid and payable to related practices of RSM Australia Partners for:
(i) Audit and other assurance services
– an audit and/or review of the Financial Report of the overseas entities in the
consolidated entity
(ii) Other non-audit services
– taxation services
– compliance services
Total remuneration of network firms of the auditor
(c) Amounts paid and payable to non-related auditors for:
(i) Audit and other assurance services
– an audit and/or review of the Financial Report of the entity and any other entities
in the consolidated entity
(ii) Other non-audit services
– taxation services
– compliance services
Total remuneration of non-related auditors
Total auditors’ remuneration
365,023
202,317
52,349
14,709
67,058
13,493
3,034
16,527
432,081
218,844
-
-
-
-
-
711,081
284,148
-
8,302
8,302
292,450
814,724
80
Hansen Technologies Ltd Annual Report 2019
27. DEED OF CROSS GUARANTEE
Hansen Technologies Limited and Hansen Corporation Pty Limited are parties to a deed of cross guarantee under which each company
guarantees the debts of the other. By entering into the deed, the wholly-owned entities have been relieved from the requirement to
prepare a financial report and directors’ report under ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 issued
by the Australian Securities and Investments Commission.
The above companies represent a ‘closed group’ for the purposes of the Class Order, and as there are no other parties to the deed
of cross guarantee that are controlled by Hansen Technologies Ltd, they also represent the ‘extended closed group’.
a. Consolidated statement of comprehensive income
Set out below is a consolidated statement of comprehensive income for the year ended 30 June 2019 of the closed group consisting
of Hansen Technologies Limited and Hansen Corporation Pty Limited ('the Closed Group').
Revenue
Other income
Total revenue and other income
Employee benefit expenses
Depreciation expense
Amortisation expense
Property and operating rental expenses
Contractor and consultant expenses
Software licence expenses
Hardware and software expenses
Travel expenses
Communication expenses
Professional expenses
Finance cost
Other expenses
Total expenses
Profit before income tax
Income tax expense
Profit after income tax
Other comprehensive income/(expense)
Items that may be reclassified subsequently to profit and loss
Net gain/(loss) on hedges of net investments
Other comprehensive income/(expense) for the year
2019
$’000
49,380
17,951
67,331
2018
$’000
48,734
19,354
68,088
(27,429)
(27,374)
(1,219)
(2,691)
(2,698)
(142)
(1,216)
(3,916)
(1,187)
(618)
(370)
(1,677)
(2,608)
(45,771)
21,560
(3,631)
17,929
(1,305)
(2,808)
(2,871)
(1,037)
(1,902)
(1,688)
(1,199)
(684)
(919)
(772)
(567)
(43,126)
24,962
(4,167)
20,795
63
63
(1,015)
(1,015)
Total comprehensive income for the year
17,992
19,780
81
Hansen Technologies Ltd Annual Report 2019 NOTES TO THE FINANCIAL STATEMENTS CONTINUED
30 June 2019
27. DEED OF CROSS GUARANTEE continued
b. Consolidated statement of financial position
Set out below is a consolidated statement of financial position as at 30 June 2019 of the Closed Group:
Current assets
Cash and cash equivalents
Receivables
Accrued revenue
Other current assets
Total current assets
Non-current assets
Plant, equipment and leasehold improvements
Intangible assets
Other non-current assets
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Payables
Current tax payable
Provisions
Unearned income
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Borrowings
Other non-current liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity
c. Summary of movements in consolidated retained earnings of the Closed Group
Retained earnings at the beginning of the year
Profit for the year
Dividends declared
Retained earnings at the end of the year
Note
27(a)
21(c)
82
2019
$’000
5,371
7,913
1,956
1,154
2018
$’000
4,577
6,659
966
1,857
16,394
14,059
2,858
23,871
221,904
2,968
253,377
269,771
6,401
130
6,067
4,469
3,371
22,503
180,623
2,953
209,450
223,509
3,809
73
5,739
6,158
17,067
15,779
3,011
77,399
2,377
189
82,976
100,043
169,728
138,746
(498)
31,480
169,728
2019
$’000
27,333
17,929
(13,782)
31,480
2,555
27,031
15,131
173
44,890
60,669
162,840
136,895
(1,388)
27,333
162,840
2018
$’000
21,055
20,795
(14,517)
27,333
Hansen Technologies Ltd Annual Report 2019 28. NEW AND AMENDED ACCOUNTING STANDARDS AND INTERPRETATIONS
a. Adoption of new and amended accounting standards that are first operative at 30 June 2019
The Group has adopted the following new and amended accounting standards, applicable and effective for the financial year beginning
1 July 2018:
• AASB 9 Financial Instruments
• AASB 15 Revenue from Contracts with Customers
• AASB 2016-5 Classification and Measurement of Share-based Payment Transactions
• AASB 2017-1 Annual Improvements 2014-2016 Cycle and Other Amendments
• AASB Interpretation 22 Foreign Currency Transactions and Advance Consideration
Note 3(a) discloses and describes the impact from the adoption of AASB 15.
As previously disclosed in the Group’s 30 June 2018 Financial Report, there were no material impacts arising from the Group’s adoption
of AASB 9. The Group’s significant accounting policies and disclosures have been updated to reflect changes arising from the application
of AASB 9.
Other amendments did not have any material impact on the Group’s financial results or financial position.
b. Accounting standards and interpretations issued but not operative at 30 June 2019
The following new and revised accounting standards and interpretations have been issued by the Australian Accounting Standards Board
at the reporting date, which are considered relevant to the Group but are not yet effective. The Directors’ assessment of the impact of
these standards and interpretations is set out below:
(i) AASB 16 Leases
The new leases standard replaces AASB 117 and Interpretation 4 and will result in almost all leases being recognised on the balance
sheet, as the distinction between operating and finance leases is removed. The new standard requires the recognition of an asset (the
right to use the leased item) and a financial liability reflecting future lease payments. The only exceptions are short-term and low-value
leases. A lessee measures right-of-use assets similarly to other non-financial assets and lease liabilities similar to other financial liabilities.
Group’s assessment performed to date
As at 30 June 2019, the Group has non-cancellable operating lease commitments of $26.6 million (refer to Note 22). Under AASB
16, the present value of these commitments would potentially be shown as a liability on the balance sheet together with an asset
representing its right-of-use. Ongoing lease payments currently presented as an operating expense will be split between depreciation
and interest expense.
The Group has identified a number of leases that are expected to be impacted by AASB 16. These are predominantly our long-term
non-cancellable property leases for our office buildings, but also include several equipment rental and IT service arrangements, some of
which did not previously qualify as a lease under AASB 117 and Interpretation 4. Work to date has focused on reviewing these contracts
to understand the areas that are expected to have the greatest potential risk of impact and to identify any resulting differences from
existing Group accounting policies. The Group is currently in the process of updating accounting policies, internal and regulatory reporting
requirements, and associated business processes and controls to support compliance with the new lease standard across the Group.
The Group anticipates that some of our lease arrangements will be covered by the short-term lease exemption, as well as the low-value
lease exemption.
The Group will first apply AASB 16 on 1 July 2019 and will first report under the new standard for the 30 June 2020 financial year.
The Group will adopt the modified retrospective approach on transition, where the cumulative effect of initially applying the standard
will be recognised as an adjustment to the opening balance of retained earnings on 1 July 2019, with no restatement of comparative
information.
The Group will adopt the various practical expedients available on transition, one of which is to grandfather existing lease classifications
to the new lease standard and recognise a right-of-use asset equal to the lease liability at 1 July 2019.
As a result of the Group’s assessment to date, considering the various practical expedients available on transition, the Group’s current
estimate is that:
• Total assets and total liabilities will increase by approximately $27 million to $28 million, representing the present value of lease
payments over the non-cancellable lease term, as well as any estimates the Group has applied over the likelihood of exercise of
renewal options and early termination options.
• Reported net profit before tax will decrease by approximately $0.5 million for the first year, representing a reduction in operating
rental expense, partially offset by increases to interest expense on the lease liability and depreciation of the right-of-use asset.
However, over the life of the lease term, there will not be a material impact to net profit before tax.
There will also be a change to the presentation of cash flows, where it is expected there will be a corresponding increase to our
operating cash flows, offset partially by a decrease to our financing cash flows.
83
Hansen Technologies Ltd Annual Report 2019 NOTES TO THE FINANCIAL STATEMENTS CONTINUED
30 June 2019
28. NEW AND AMENDED ACCOUNTING STANDARDS AND INTERPRETATIONS continued
(ii) AASB Interpretation 23 Uncertainty over Income Tax Treatments
The Interpretation clarifies the application of the recognition and measurement criteria in AASB 112 Income Taxes when there is
uncertainty over income tax treatment. The Interpretation requires the Group to assess its provisions for uncertain tax positions based
on either a probability-weighted average approach for tax issues in which there are a wide range of possible outcomes, or the most
likely amount approach for tax issues in which there is a binary outcome.
Group’s assessment performed to date
The Group has performed a preliminary assessment of the requirements of this Interpretation. Whilst the Group operates in multiple tax
jurisdictions globally, its impact will not be material. The Group will first apply AASB Interpretation 23 on 1 July 2019.
(iii) AASB 2018-6 Amendments to Australian Accounting Standards: Definition of a Business
This amendment amends the definition of a business in AASB 3 Business Combinations. The amendments clarify the minimum
requirements for a business, remove the assessment of whether market participants are capable of replacing missing elements,
add guidance to help entities assess whether an acquired process is substantive, narrow the definitions of a business and of outputs,
and introduce an optional fair value concentration test.
Group’s assessment performed to date
The Group notes that it is not required to revisit business combinations that occurred in prior periods to determine whether these satisfy
the new definition of a business. Accordingly, the Group does not believe that its impact will be material. The Group will first apply the
revised definition of a business in AASB 3 on 1 July 2020.
(iv) Amendments to the Conceptual Framework
The IASB has issued amendments to the Conceptual Framework to apply the new definition and recognition criteria to assets
and liabilities, and introduces new concepts regarding the measurement, presentation and disclosure and derecognition of assets
and liabilities.
The AASB is currently working through the application issues for Australian entities, specifically the implications of the revised
Conceptual Framework on the Australian-specific reporting entity concept. However, initial application is planned for publicly
accountable for-profit entities with annual periods commencing after 1 January 2020, in line with the IASB’s effective date.
Group’s assessment performed to date
The Group has not commenced assessment of the impact of the amendments to the Conceptual Framework. A preliminary assessment
will be performed before the proposed effective date of 1 July 2020 for the Group.
(v) Other pronouncements and accounting standards
Other recently issued standards and interpretations have been issued at the reporting date but are not yet effective. The Group has not
yet completed the assessment of the impact of these standards and interpretations. However, the Group does not expect other recently
issued accounting standards and interpretations to have a material impact on the Group’s consolidated results, financial position or cash
flows upon adoption.
29. SUBSEQUENT EVENTS
Please refer to Note 20 for the final dividend recommended by the Directors, to be paid on 26 September 2019.
There has been no other matter or circumstance, that has arisen since 30 June 2019 that has significantly affected or may
significantly affect:
(i)
the operations, in financial years subsequent to 30 June 2019, of the Group; or
(ii)
the results of those operations; or
(iii) the state of affairs, in financial years subsequent to 30 June 2019, of the Group.
84
Hansen Technologies Ltd Annual Report 2019 DIRECTORS’ DECLARATION
The Directors declare that the financial statements and notes set out on pages 34 to 84, in accordance with the Corporations Act 2001:
(a) comply with Accounting Standards and the Corporations Regulations 2001, and other mandatory professional
reporting requirements;
(b) as stated in Note 1(a), the consolidated financial statements of the Group also comply with International Financial
Reporting Standards; and
(c) give a true and fair view of the financial position of the consolidated entity as at 30 June 2019 and of its performance
for the year ended on that date.
In the Directors’ opinion there are reasonable grounds to believe that Hansen Technologies Limited will be able to pay its debts
as and when they become due and payable.
At the date of this declaration, there are reasonable grounds to believe that the members of the extended closed group identified
in Note 27 will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross
guarantee described in Note 27.
This declaration has been made after receiving the declarations required to be made by the Chief Executive Officer and Chief Financial
Officer to the Directors in accordance with sections 295A of the Corporations Act 2001 for the financial year ended 30 June 2019.
This declaration is made in accordance with a resolution of the Directors.
David Trude
Director
Melbourne
23 August 2019
Andrew Hansen
Director
85
Hansen Technologies Ltd Annual Report 2019
INDEPENDENT AUDITOR’S REPORT
To the Members of Hansen Technologies Ltd
86
Hansen Technologies Ltd Annual Report 2019 87
Hansen Technologies Ltd Annual Report 2019 INDEPENDENT AUDITOR’S REPORT CONTINUED
To the Members of Hansen Technologies Ltd
88
Hansen Technologies Ltd Annual Report 2019 89
Hansen Technologies Ltd Annual Report 2019 AUSTRALIAN SECURITIES EXCHANGE (ASX)
SHAREHOLDER INFORMATION
The shareholder information set out below was applicable as at 24 September 2019, disclosed pursuant to ASX official listing requirements.
Distribution of shares
The following table summarises the distribution of our listed shares as at 24 September 2019:
Size of Holding (Range)
100,001 and over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Number of
Holders
Number of
Shares Held
% of Issued
Capital
63
143,686,816
1,390
1,381
3,499
2,529
8,862
33,317,985
10,149,756
9,265,889
1,244,207
197,664,653
100.00
72.69
16.86
5.13
4.69
0.63
The number of shareholders holding less than a marketable parcel of ordinary shares is 435 holding 21,025 shares (as at the closing
market price on 24 September 2019).
Twenty largest shareholders
The following table sets out the top 20 holders of our shares:
Rank Name of Shareholder
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
OTHONNA PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
MR CAMERON HUNTER
MR JAMES LUCAS & MS LESLEY DORMER
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD DRP
BNP PARIBAS NOMS PTY LTD
SIX OF US PTY LTD
BNP PARIBAS NOMINEES PTY LTD
SCOTT WEIR
MR DAVID JOHN OSBORNE & MRS LEONE CATHERINE OSBORNE
LAYUTI PTY LTD
NAVIGATOR AUSTRALIA LTD
WILGAMERE INVESTMENTS PTY LTD
DECARATS PTY LTD
NULIS NOMINEES (AUSTRALIA) LIMITED
ECAPITAL NOMINEES PTY LIMITED
Total
Total other investors
Grand total
90
Number of
Shares Held
% of Issued
Capital
61,956,097
34,739,113
23,154,614
5,839,644
2,260,227
1,306,000
1,103,691
800,940
746,361
688,782
546,953
533,878
463,341
386,335
377,418
355,073
307,743
300,000
296,612
287,661
136,450,483
61,214,170
197,664,653
31.34
17.57
11.71
2.95
1.14
0.66
0.56
0.41
0.38
0.35
0.28
0.27
0.23
0.20
0.19
0.18
0.16
0.15
0.15
0.15
69.03
30.97
100.00
Hansen Technologies Ltd Annual Report 2019 Substantial shareholdings
The following table shows holdings of 5% of more of voting rights in the Company’s shares as notified to the Company under the
Corporations Act 2001 as at 24 September 2019:
Holder
Mr David Osborne*
Mr Andrew Hansen*
Mr Bruce Adams*
Fidelity Management & Research
Mawer Investment Management
Number of
Shares Held
% of Total
Voting Rights
35,125,448
34,963,449
34,891,417
17,786,704
14,874,122
17.77
17.69
17.65
9.00
7.52
* Each of these named persons has a joint interest in a single parcel of 34,739,113 shares as at the date of this report. For further details, please refer to the
substantial shareholding notices lodged with the ASX dated 16 August 2019.
Voting rights
Refer to Note 19(c) of the financial statements.
Unquoted equity securities
Unquoted equity securities issued pursuant to the Hansen Technologies Limited Employee Performance Rights Plan and Employee Share Option plan:
Unquoted Equity Securities
Options over ordinary shares exercisable at various prices
Performance rights
Number of
Employees
Participating
15
30
Number of
Securities
2,248,730
885,968
91
Hansen Technologies Ltd Annual Report 2019 CORPORATE DIRECTORY
DIRECTORS
David Trude, Chairman
Andrew Hansen, Managing Director and CEO
Bruce Adams, Non-Executive
Jennifer Douglas, Non-Executive
Sarah Morgan, Non-Executive
David Osborne, Non-Executive
David Howell, Non-Executive
COMPANY SECRETARY
Julia Chand
PRINCIPAL REGISTERED OFFICE
2 Frederick Street, Doncaster Victoria 3108
T (03) 9840 3000
F (03) 9840 3099
SHARE REGISTRY
Link Market Services Limited
Tower 4
727 Collins Street
Melbourne Victoria 3008
T 1300 554 474
F (02) 9287 0309 – Proxy forms
F (02) 9287 0303 – General
STOCK EXCHANGE
The Company is listed on the Australian Stock Exchange
ASX code: HSN
AUDITORS
RSM Australia Partners
Level 21, 55 Collins Street
Melbourne Victoria 3000
SOLICITORS
GrilloHiggins
Level 20, 31 Queen Street
Melbourne Victoria 3000
OTHER INFORMATION
Hansen Technologies Ltd ABN 90 090 996 455,
incorporated and domiciled in Australia,
is a publicly listed company limited by shares.
92
Hansen Technologies Ltd Annual Report 2019 H
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