integrated research
Integrated Research Limited > ABN 76 003 588 449
Annual Report 2008
Performance monitoring software for business-critical systems
Contents
2008 Highlights
Letter from the Chairman
Chief Executive Officer’s Report
Review of operations and activities
Directors and Senior Management
Directors’ Report
Remuneration Report
Corporate Governance Statement
Financial Report
Notes to the financial statements
Directors’ Declaration
Independent Audit Report
Lead Auditor’s independence declaration
ASX additional Information
Corporate Directory
This report is printed on Envirocare 100%
Recycled paper, which is made entirely from
waste paper (65% post consumer and 35%
pre consumer waste) with no virgin fibre used
reducing land fill and is Elemental Chlorine free.
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INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
2008
Highlights
Financial summary: In millions of AUD (except earnings per share)
Year ended 30 June
Revenue from licence fees
Total revenue
Net profit after tax
Net assets
Cash at balance date
Americas revenue
Europe revenue
Asia Pacific revenue
2008
19.6
37.4
5.8
23.8
11.1
23.1
6.4
7.4
Earnings per share (cents per share)
3.47¢
3.27¢
2007
% Change
19.5
36.4
5.4
24.2
11.7
21.7
7.0
7.2
1%
3%
6%
2%
5%
6%
9%
3%
6%
Total revenue
(Dollars in millons)
Net profit after tax
(Dollars in millons)
$37.4
$36.4
$34.5
$7.0
$5.8
$5.4
Revenue from licence fees
(Dollars in millons)
$19.5
$19.6
$18.6
2006
2007
2008
2006
2007
2008
2006
2007
2008
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
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Letter from
the chairman
Dear fellow shareholders,
I am pleased to report that, due mainly to a strong first half result, we experienced growth in both revenue
and profit in the 2008 financial year. This is despite tough market conditions created by the global liquidity
crisis. Profits after tax increased 6% over the previous financial year to $5.8 million. Total revenue for the
company increased 3% over the prior year to $37.4 million.
Growth in revenue and profit would have been substantially higher except for the relative strength of the
Australian dollar against both the US dollar and the UK Pound Sterling. The Company’s currency hedging efforts
during the course of the year partially offset the impact of the rising Australian dollar, however underlying
revenue growth would have increased by approximately $3.9 million and after tax profits by approximately $1.8
million after taking into account the impact of currency exchange rates over the prior year.
Our traditional HP NonStop management market remained buoyant this year, and the strategy of promoting our
other server management products into the existing HP NonStop customer base has proved successful, with
an increase in revenue of 90%. Revenues from these Windows, UNIX and Linux management products were
assisted by the decision of a major US credit card provider to standardize on PROGNOSIS. We will continue to
cross-sell from our HP NonStop base and expect to have continued success into the future.
The IP telephony sales performance remains fragmented. We are, however, committed to maintaining and
developing market leadership with our IP telephony products. The company achieved mixed success in the
2008 financial year: the IP telephony segment saw revenues grow in the US, but decline in Asia Pacific and
Europe. This left the overall result relatively flat in comparison to the prior year.
The addition of PROGNOSIS support for Avaya and Nortel IP telephony platforms provides us with a strong
base to grow our IP telephony revenues and market share in the 2009 financial year. Our support for the
three largest IP telephony vendors now allows us to position PROGNOSIS strongly as a holistic, multi-vendor
solution. As a result, we expect to engage more distribution partners, and to more effectively target large
enterprise IP telephony deployments to broaden our market penetration.
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INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
The addition of PROGNOSIS support for Avaya and Nortel IP telephony platforms
provides us with a strong base to grow our IP telephony revenues and market share in
the 2009 financial year.
During the 2008 financial year we invested heavily in R&D to promote innovation and drive new product
development and revenue growth. We will energetically seek to reap the reward from this investment and
continue well-targeted R&D investment in the coming years.
Despite adverse economic conditions, the underlying business and strategic direction of the company remain
robust. Our strong balance sheet leaves the company well positioned for the future. The Board is pleased to
announce a final dividend of 1.5 cents per share, unfranked, bringing the total unfranked dividend for the year
to 3.0 cents per share, which is unchanged from the prior year.
Thank you for your continued support.
Steve Killelea
Chairman
Our traditional HP NonStop management
market remained buoyant this year,
and the strategy of promoting our other
server management products into the
existing HP NonStop customer base has
proved successful, with an increase in
revenue of 90%.
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
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PROGNOSIS for
IP telephony
VoIP for big business...
how do you manage that?
By giving companies the specialised tools they
need to monitor and measure call quality, and
to identify and resolve problems within the
supporting computer-based infrastructure,
PROGNOSIS is helping big businesses eliminate
the risk of migrating to Voice over IP (VoIP).
“As more organisations adopt larger scale
deployments, the ability for PROGNOSIS
to manage highly distributed or very large
environments will position the company as
leading vendor for a variety of deployment sizes”
George Hamilton, Director, Yankee Group
Customers include >> AT&T > Accenture > Airbus > Alpha West/Optus
> ARUP > BAE Systems > BellSouth > Brigham Young University >
British Airways > British Telecom > Del Monte > Dimension Data
> Equant > Fannie Mae > France Telecom > General Motors > IBM >
HSBC > Intel > NASDAQ > NCR > Salesforce.com > Singapore
Polytechnic > Sprint > Standard Life > State of Arizona > TD Financial
Corp. > Tecnologico de Monterey > Thiess > Time Warner Cable >
Touchbase > Verizon > T-Systems
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INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
PROGNOSIS for
ATM/POS
Why do the world’s financial institutions
bank on PROGNOSIS?
From retail EFTPOS systems to automated teller
machine networks, PROGNOSIS gives IT support
teams the insight they need to identify and fix
transaction problems, to uncover the details of
cardholder issues in seconds, and to better
manage ATM maintenance processes.
“When cardholders present their cards for
payment, they expect them to work every
time. PROGNOSIS helps us deliver that level of
performance to our clients and their customers.”
Phillip Patrick, Director of Technical Support, TSYS
Customers include >> ANZ Bank > Arab National Bank > Bankserv
South Africa > BNI Bank Indonesia > Burgan Bank Kuwait > Citibank >
Emirates Bank UAE > Fiserv > Global Trust Bank India > HDFC Bank
> ICICI Bank India > Kmart > KNET Kuwait > Kotak Mahindra Bank >
Kuwait Finance House > Link UK > MasterCard > Qatar Central Bank
> Royal Bank of Canada > Standard Bank South Africa > Target >
Walgreens > Washington Mutual > Westpac Bank
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
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PROGNOSIS for
IT Infrastructure
Ensuring the health of critical computer systems...
it’s in our DNA
When computer systems perform poorly it can either be a
small inconvenience, a matter of life and death, or financial
ruin. PROGNOSIS offers hospitals and healthcare providers,
stock exchanges and insurers, power companies and telcos the
tools they need to monitor, diagnose and troubleshoot critical
computer systems that simply must keep running.
“The real benefit for us is the ability to deliver
services to our patients and physicians as promised...
even a short delay in returning test results to a
physician or availing prescribed medication to a
patient could have serious repercussions.”
Barbara Baldwin, CIO,
University of Virginia’s Medical Center
Customers include >> AstraZeneca > AT&T > BT Syntegra > Bank of
Tokyo > Bank Verlag > Charles Schwab > E-Funds > Exxon > France
Telecom > First Data International > GE Healthcare (IDX) > Henry Ford
Health Systems > Mayo Clinic > Mercy Health Plans > MasterCard >
NASDAQ > Royal Bank of Canada > Optus > Sabre Systems > South
Western Bell > SK Telecom > Sprint > Sungard > Toronto Stock
Exchange > University of Virginia Health > Verizon > Vodacom
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INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
PROGNOSIS for
Web Applications
How can travel agencies know if their
customers are able to book online?
While we’re all becoming more reliant on the internet for booking flights
and accommodation, for conducting internet banking, or for online
shopping, we’re quick to give up on a website that’s slow or simply
doesn’t work. By measuring the quality of user experience, PROGNOSIS
offers organisations unique insight into how well their revenue
generating web-based applications are functioning for their customers.
“This is an innovative approach to measuring
quality of service for online customers...another
fine example of this company’s ability to leverage
its expertise in business-critical technology.”
Senator Stephen Conroy, Australian Shadow Minister
for Communications and Information Technology
Customers include >> Duetsche Telecom > Swiss Federal Department
of Justice and Police > GE Healthcare (IDX) > Minneapolis Public
Housing Authority > Sungard Financial Services
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
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Chief Executive
Officer’s Report
Dear shareholders,
I am pleased to report a solid result for you in my first year as CEO of Integrated Research. It has been a year
characterised by change and challenge and one in which the resilience and innovative spirit of our business
was tested. Foremost amongst these challenges was the strength of the Australian dollar. With the majority
of our revenue being derived offshore in foreign currency, the strong Australian dollar reduced the value of
nearly every sale relative to last year.
Despite this however, we managed to increase revenue and profit – and deliver a strong profit margin – for a
number of reasons:
>
>
>
Our largest region, the Americas, grew sales by 21%.
44% of our revenue was derived from maintenance fees that continue to provide a strong recurring
revenue foundation.
Our products show clear differentiation and value against major competitors, evidenced by the number
of large, enterprise deals closed in the year.
Our wins against major competitors are particularly satisfying and demonstrate our advantage in our key
markets. This advantage continues to be the unique architecture of our product, PROGNOSIS, and its ability to
capture deeper, more meaningful data from mission critical systems and applications in real time.
The real time capabilities of PROGNOSIS address the growing need in businesses to operate constantly and
consistently for their customers. Companies that connect to their customers via the internet, that operate 24x7
and that rely on split-second operation, all rely on real-time performance management.
IP Telephony and Unified Communications are the ‘ultimate’ real-time computing applications. Voice and
video must operate in real time to be effective. Process and productivity demands are driving businesses to IP
Telephony – directly or with managed services vendors – and we are well positioned in both these segments to
benefit from this trend.
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INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Our wins against major competitors are particularly satisfying
and demonstrate our advantage in our key markets.
This market however continues to develop and our IPT sales this year were below our expectations. We are
confident in the market though, and are investing in sales coverage, channels and capability for growth in FY09.
Overall though, we only see an increasing need from businesses for real-time management of their critical
systems, so we will continue to invest in the development and sale of all of our products to benefit from this.
I am encouraged by the demand for our products and although we anticipate further turbulence in global
markets there is adequate opportunity for growth for Integrated Research.
I would like to thank our management team and hardworking staff for the results achieved in a difficult year
and pass on their thanks to you for your continued support.
Mark Brayan
CEO
The real time capabilities of
PROGNOSIS address the growing need
in businesses to operate constantly
and consistently for their customers.
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
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Review of
operations
and activities
Principal activities
The company’s principal activities during the year
were the design, development and sale of systems
and applications management computer software
for business-critical computing and IP telephony
networks. There were no significant changes in the
nature of these activities during the year.
Group overview
Integrated Research has a twenty-year heritage of
providing performance monitoring and diagnostics
software solutions for business-critical computing
environments.
Since its establishment in 1988, the company has
provided its core PROGNOSIS products to a cross
section of large organisations requiring high levels
of computing performance and reliability.
The PROGNOSIS product range is an integrated
suite of monitoring and management software,
designed to give an organisation’s technical
personnel operational insight into their HP NonStop,
Windows, UNIX and Linux servers, and the business
applications that run on these computers.
Typical business environments where PROGNOSIS
is used include automated teller machine (ATM)
and Point Of Sale (POS) transaction systems, web
applications such as online banking or online
shopping, hospital systems, emergency services,
stock trading applications, and telecommunications
systems. PROGNOSIS also offers a suite of IP
telephony performance monitoring products for
the emerging, high-growth enterprise Voice over IP
(VoIP) market.
The company has developed its PROGNOSIS
products around a fault-tolerant, highly distributed
software architecture, designed to achieve high
levels of functionality, scalability and reliability with
a low total cost of ownership.
Integrated Research services customers in more
than 50 countries through direct sales offices in
the USA, UK, Germany and Australia, and via a
global, channel-driven distribution network. The
company’s customer base consists of many of the
world’s largest organisations and includes major
stock exchanges, banks, credit card companies,
telecommunications companies, computer
companies and hospitals.
The company generates most of its revenue from
upfront licence fees, recurring maintenance and
recurring licence fees.
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INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Revenue in 2008 was impacted by a strong Australian dollar, particularly in the
second half of the financial year. In US dollar terms total revenue grew by 14%.
Review and results of operations
Revenue
The Company achieved a 6% increase in net profit
Revenue for the year was $37.4 million, an increase
after tax over the previous financial year to $5.8
of 3% over 2007. Licence fees made up 52% of
million. Total revenue for the Company increased
revenue, increased by 1% whilst maintenance fees
3% over the prior year to $37.4 million. The financial
increased by 3%.
performance of the Company was impaired by
a strong Australian dollar and difficult trading
conditions in the second half created by the global
liquidity crisis.
The Company continued its strong commitment
to research and development by increasing its
net expenditure by 37% to $8.7 million over the
Revenue in 2008 was impacted by a strong
Australian dollar. In US dollar terms total revenue
grew by 14%.
Both the Americas and Asia Pacific regions recorded
growth on the prior year of 6% and 3% respectively.
Revenue in Europe declined by 9% over the prior year.
equivalent prior year. New products were released
The Windows, Unix and Linux products performed
during the year and further innovative developments
strongly in 2008. The Company achieved 90%
are in the pipeline to respond to customer needs
growth over the equivalent prior year as key strategic
and market demands.
accounts were won against much larger competitors
on the quality and capabilities of PROGNOSIS and
proved the value of PROGNOSIS in high performance
environments.
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
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Review of operations and activities
Expenses
Total expenses for the year were $30.2 million, an increase of 3% over the prior year. Staff numbers increased
from 134 at 30 June 2007 to 147 at 30 June 2008.
Gross spending on research and development for the year ended 30 June 2008 was $10.1 million which
represents a 29% increase over the prior year. Amortisation expense increased by 47% to $5.9 million following
the release of new products toward the end of calendar year 2007.
Net research and development expenses were $8.7 million, representing 23% of revenue, and are made up of:
In thousands of AUD
Gross research and development spending
Capitalisation of development expenses
Amortisation of capitalised expenses
Net research and development expenses
2008
10,098
(7,255)
5,874
8,717
2007
7,831
(5,454)
3,992
6,369
Shareholder returns
Returns to shareholders increased through the payment of unfranked dividends:
Net profit
Basic EPS
Dividends per share
Return on equity
2008
2007
2006
$5,776,000
$5,433,000
$6,975,000
3.47¢
3.0¢
24.3%
3.27¢
3.0¢
22.5%
4.22¢
2.5¢
30.1%
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INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Financial position
The consolidated entity continues to hold a strong financial position being free of debt and with cash at 30 June
2008 of $11.1 million, compared to $11.7 million at the same time last year. Net cash flow provided by operating
activities was $5.9 million, compared to $7.6 million for the same period last year.
Net cash flow provided by operating activities
$5,946,000
$7,638,000
$5,085,000
Current ratio (current assets to current liabilities)
Net tangible asset backing per ordinary share
1.85
6.69¢
1.86
7.85¢
1.95
8.27¢
2008
2007
2006
Outlook and Strategy for 2009
The company’s products continue to deliver value for our customers by supporting the performance
management of their mission-critical, high availability computing environments.
Our traditional (HP NonStop) business remains healthy. Many of our customers continue buying and upgrading
their HP Servers for more processing capacity which in turn drives PROGNOSIS sales.
The Windows, Unix and Linux products performed strongly in 2008. The Company achieved 90% growth over
the equivalent prior year as key strategic accounts were won against much larger competitors on the quality
and capabilities of PROGNOSIS and proved the value of PROGNOSIS in high performance environments. We
will continue to focus our efforts in this market on similar opportunities and are planning for comparable sales
in 2009.
Our IP Telephony product’s growth profile continues in spurts due to the lumpiness of sales. Whilst current year
performance was relatively flat compared to the prior year, compound annual growth in new sales for the last
four years remains at a healthy 44%. We have increased our IPT product lines with the addition of support for
the Nortel platform and have other initiatives in the pipeline. IPT remains the growth opportunity for Integrated
Research and additional sales investment in 2009 will drive growth.
We will continue to improve our critical operational processes for sales and software development, the latter of
which drove greater innovation in 2008 than previous years.
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
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Directors
Steve Killelea
MAICD
Non-Executive Director
and Chairman
Mark Brayan
MBA
Managing Director and
Chief Executive Officer
Clyde McConaghy
B.Bus., MBA, MAICD,
MIOD - UK
Non-Executive Director
Steve founded Integrated
Research in August 1988 and
held the position of Managing
Director and Chief Executive
Officer until retiring from his
executive position in November
2004. He was appointed as
a Non-Executive Director in
November 2004 and elected
Chairman in July 2005. Steve’s
current term will expire no later
than the close of the 2010
Annual General Meeting. Former
listed companies directorships
held in the past three years:
None. Age 59 years.
Clyde was appointed a Director
in December 2007. He has
two decades of international
strategic market development
experience in the technology,
media and online industries. Mr
McConaghy is managing director
of Smarter Capital Pty Limited,
another company associated
with Mr Steve Killelea, Chairman
of Integrated Research. Clyde’s
current term will expire no
later than the close of the 2011
Annual General Meeting. Former
listed companies directorships
held in the past three years:
None. Age 46 years.
Mark Brayan joined Integrated
Research in September 2007
and is responsible for the overall
strategy and leadership of the
company. Mark has over twenty
years experience in the software
industry, most recently he was
COO of outsourcer Talent2 and
previously CEO of the listed
software company Concept
Systems before its merger with
Talent2. Mark has a strong
understanding of the systems
management market through
his time with BMC Software.
As Managing Director, Mark is
not required to seek re-election
to the Board. Former listed
companies directorships held in
the past three years: None.
Age 44 years.
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INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Kate Costello
LLB, FAICD
Independent Non-Executive
Director
John Brown
B Com, FCA, MAICD
Independent Non-Executive
Director
David Boyles
BA, MA, MBA,MAICD
Independent Non-Executive
Director and Deputy Chairman
David has been a Director since
July 2003 and was appointed
Deputy Chairman in September
2005. He has over twenty years
senior management experience
with US and Australian
multinational companies.
David’s current term will expire
no later than the close of the
2009 Annual General Meeting.
Former listed companies
directorships held in the past
three years: director of ERG
Group from December 2003 to
June 2005, and was appointed a
director of Infosys Technologies
in July 2005. Age 59 years.
David Leighton, MBA, FCPA, ACIS
David is a member of Chartered
Secretaries Australia. He has
been Company Secretary since
October 2000.
Kate was appointed as a
Director in August 2005. She is
a lawyer and has over twenty
years experience in corporate
governance and strategy
development. She is also a
Director of Governance Matters
Pty Ltd, listed company, LabTech
Systems Ltd, and a number of
other private companies. Kate’s
current term will expire no later
than the close of the 2008
Annual General Meeting. Former
listed companies directorships
held in the past three years:
None. Age 56 years.
Keith Andrews, BBM, FAICD
Managing Director and
Chief Executive Officer
(Resigned from office September
2007). Keith was appointed as
Managing Director and Chief
Executive Officer in November
2004. He has over twenty years
experience at senior levels in
the IT industry in Australia and
overseas, having previously held
senior corporate positions in
Asia and the US. Former listed
companies directorships held in
the past three years: None.
Age 48 years.
John was appointed a Director
in July 2007. John was a partner
with KPMG for over 26 years,
where previous roles included
Partner in charge of the
Information Risk Management
practice in Australia, Chairman
of the firm’s IT Committee, and
Australian firm’s representative
on KPMG’s International IT and
Information Risk Management
Committees. John is a Director
and Chair of the Audit
Committee of Sydney Water
Corporation. John’s current
term will expire no later than
the close of the 2010 Annual
General Meeting. Former listed
companies directorships held in
the past three years: None.
Age 60 years.
Alex Kennedy,
M.Mgt, Dip CM, FAICD
Independent Non-Executive
Director
(Resigned from office September
2007). Alex had been a director
since May 2003. He has nearly 35
years of specialist and executive
management experience across a
broad range of industries. Former
listed companies directorships
held in the past three years:
None. Age 60 years.
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
15
Senior
management
Peter Adams
B.Com, CA
Chief Financial Officer
Peter joined Integrated
Research in March 2008 and
is responsible for overseeing
the company’s finance and
administration, including
regulatory compliance and
investor relations. Peter is a
Qualified Chartered Accountant
with over 20 years experience.
He has held a number of senior
accounting and finance roles,
including seven years as CFO
with Infomedia (an ASX-listed
technology company), six years
with Renison Goldfields (ex ASX
top 100 Resources Company)
and two years with Transfield Pty
Ltd. Peter’s career began with
Arthur Andersen, where he was
responsible for managing large
audit clients.
Alex Baburin
B.App. Sc
General Manager
Research and Development
Alex Baburin joined Integrated
Research in November 2006 and
is responsible for the company’s
software development
activities, overseeing the core
development teams of more
than 50 personnel. Alex has
20 years experience in the
development, creation and
management of high-technology
hardware and software
products for Honeywell and
Siemens. For the past 6 years
he was responsible for general
management of the Siemens
Access Control product line
globally and for much of that
time was based in Germany.
Rick Ferguson
Vice President Asia Pacific
Rick joined Integrated Research
in April 2008 and is responsible
for all business operations in
the Asia Pacific region. Rick has
over 20 years experience in the
IT industry and has worked in
Europe, Africa, Asia Pacific and
Australia. Rick was previously
Vice President of Sales and
Marketing for Asia Pacific for
Wyse Technology. Prior to Wyse,
Rick held a number of senior
management positions for
Unisys and Cisco Systems. Rick
has a wealth of IP networking
experience, and has overseen
the deployment of VoIP and
IP Telephony solutions to
enterprises and SMBs across
the region.
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INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Kurt Roscow
BA, MBA
Vice President Americas
Based in the company’s
American headquarters in
Denver, Colorado, Kurt joined
the company in October 2003.
He is responsible for leading
and developing the business
operations in the Americas
and is President of Integrated
Research, Inc. Prior to joining
Integrated Research his roles
included senior sales and
channel management positions
with IBM, Oracle and JD Edwards.
Pierre Semaan
BEng, MBA
General Manager
Product Management
Pierre joined Integrated
Research in June 2008 and is
responsible for the management
and strategic direction of all
product lines. Pierre has over 15
years international experience
managing teams delivering
technology innovations. He was
most recently the Senior Vice
President of Technology for Sage
CRM solutions, which included
leading the ACT!, SalesLogix
and Mobility R&D organizations.
Prior to Sage, Pierre worked at
Citrix as the Chief of Operations
& Director of the CTO Office and
Advanced Products Group.
David Stark
BA, MBA
Vice President Europe
Based in the company’s
European headquarters in
Windsor, England, David
joined Integrated Research in
March 2008. He is responsible
for all business operations
across Europe and the UK.
David has previously held
senior management and sales
positions at NCR, ICL, AT&T,
QAD, PeopleSoft, Siebel and
Princeton Softech. He served as
the Vice President and Managing
Director of Siebel for the UK,
South Africa and Ireland and
Vice President for Northern
EMEA with Princeton Softech.
David has established and led
highly successful teams that
have achieved market-leading
revenue and profit growth.
Belinda York
Vice President Marketing
Belinda York joined Integrated Research in October 2002 and is responsible for
managing the company’s global marketing strategy. Belinda draws on more than
twenty years in the IT industry, including positions as Australian Managing Director
for Borland International, Avid Technology, Onyx Software and FairMarket. She was
responsible for launching and managing these subsidiary businesses and building
their position and opportunity in fast-growing markets.
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
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integrated
research
Proud developers of PROGNOSIS performance monitoring
software for business-critical computer systems
>
Founded in 1988
> Customers in 50+ countries
> Clients include 35% of Global 1000 companies
> Dominant share of HP NonStop performance
monitoring market
> Emerging as dominant performance monitoring
solution for large-scale VoIP deployments
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INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Financials
> Directors’ Report
>
>
Remuneration Report
Corporate Governance Statement
20
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INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
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Directors’
Report
The directors present their report together with the Financial Report of Integrated Research
Limited (“the company”) and of the consolidated entity, being the company and its
controlled entities, for the year ended 30 June 2008 and the Auditor’s Report thereon.
Results
The net profit of the consolidated entity for the 12 months ended 30 June 2008 after income tax expense was $5.8 million.
Dividends
Dividends paid or declared by the company since the end of the previous financial year were:
Final 2007 – Ordinary shares
Interim 2008 – Ordinary shares
Final 2008 – Ordinary shares
Unfranked
Unfranked
Unfranked
2.0
1.5
1.5
3,326
2,500
2,501
14 Sep 2007
7 Mar 2008
12 Sep 2008
Cents Per Share
Total Amount $’000
Date of Payment
Events subsequent to reporting date
For dividends declared after 30 June 2008 see Note 21 in the financial statements. The financial effect of dividends declared
and paid after 30 June 2008 has not been brought to account in the financial statements for the year ended 30 June 2008
and will be recognised in subsequent financial reports.
No other transaction or event of a material or unusual nature has arisen in the interval between the end of the financial
year and the date of this report which is likely, in the opinion of the directors of the company, to affect significantly the
operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity, in
future financial years.
Future developments
Likely developments in the operations of the consolidated entity in future financial years and the expected results of those
operations are referred to generally in the Review of Operations and Activities Report.
Further information on likely developments including expected results would in the Directors’ opinion, result in
unreasonable prejudice to the company and has therefore not been included in this Report.
20
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Directors and company secretary
Details of current directors’ qualifications, experience, age and special responsibilities are set out on page 14. Details of
the company secretary and his qualifications are set out on page 15.
Officers who were previously partners of the audit firm
No officers of the company during the financial year were previously partners of the current audit firm.
Directors’ meetings
The numbers of meetings of the company’s board of directors and of each board committee held during the year ended
30 June 2008, and the numbers of meetings attended by each director were:
Board
Meetings
Audit Committee
Meetings
Nomination and
Remuneration
Committee Meetings
Strategy
Committee
Meetings
Keith Andrews
David Boyles
Mark Brayan
Kate Costello
Alex Kennedy
Steve Killelea
Clyde McConaghy
John Brown
A
2
12
10
12
3
12
7
12
B
2
12
10
12
3
12
7
12
A
-
3
-
1
-
-
1
3
B
-
3
-
2
-
-
1
3
A
-
3
-
3
-
3
-
-
B
-
3
-
3
-
3
-
-
A
-
1
1
1
-
1
-
-
B
-
1
1
1
-
1
-
-
A: Number of meetings attended.
B: Number of meetings held during the time the directors held office or was a member of the committee during the year.
State of affairs
In the opinion of the directors there were no significant changes in the state of affairs of the consolidated entity that
occurred during the financial year under review.
Environmental regulation
The consolidated entity’s operations are not subject to significant environmental regulations under either Commonwealth
or State legislation.
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
21
Directors’ Report
Directors’ interests
The relevant interest of each director in the shares or options over such shares issued by the companies in the consolidated
entity and other relevant bodies corporate, as notified by the directors to the Australian Stock Exchange in accordance with
S205G(1) of the Corporations Act 2001, at the date of this report is as follows:
Ordinary shares
Options
Directly held
Beneficially held
Total
Number of Options
1,700,000
25,000
-
-
94,497,339
-
-
-
50,000
200,000
337,612
-
1,700,000
25,000
50,000
200,000
94,834,951
-
-
1,000,000
-
-
-
-
David Boyles
Mark Brayan
John Brown
Kate Costello
Steve Killelea
Clyde McConaghy
Share options
Options granted to directors and senior executives
During or since the end of the financial year, the company granted options for no consideration over unissued ordinary
shares in Integrated Research Limited to the following named executive officers of the consolidated entity as part of
their remuneration:
Peter Adams
Mark Brayan
Rick Ferguson
David Stark
Number of options granted
Exercise price
Expiry date
350,000
1,000,000
300,000
350,000
$0.38
$0.42
$0.38
$0.43
Feb 2013
Sep 2012
Apr 2013
Mar 2013
No options were granted to any non-executive directors of the consolidated entity during or since the end of the financial year.
The options were granted under the Integrated Research Limited Employee Share Option Plan. 25% of options vest and may
be exercised from each of the first to fourth anniversaries of the issue date. In addition, the ability to exercise options is
conditional on the consolidated entity achieving certain performance hurdles. Unexercised options expire five years after the
issue date or 3 months after termination of the employee’s employment.
22
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Unissued shares under option
Unissued ordinary shares of Integrated Research Limited under option at the date of this report are as follows:
Expiry
date
Aug 2008
Feb 2009
Apr 2009
May 2009
July 2009
Nov 2009
Feb 2010
Apr 2010
Sep 2010
Exercise
price
$0.22
$0.26
$0.46
$0.33
$0.40
$0.57
$0.52
$0.46
$0.54
Number
of shares
115,250
198,510
300,000
205,365
278,000
400,000
336,500
200,000
510,000
Expiry
date
May 2011
Aug 2011
Jan 2012
Jun 2012
Sep 2012
Feb 2013
Mar 2013
Apr 2013
Exercise
price
$0.41
$0.44
$0.50
$0.48
$0.42
$0.38
$0.43
$0.38
Number
of shares
654,000
170,000
160,000
848,000
1,000,000
350,000
350,000
300,000
Total unissued ordinary shares of Integrated Research Limited under option
6,375,625
Options do not entitle the holder to participate in any share issue of the company or any other body corporate.
Shares issued on the exercise of options
During or since the end of the financial year, the company issued ordinary shares as a result of the exercise of options as
follows (there were no amounts unpaid on the shares issued):
Number of shares
Amount paid on each share
192,855
131,125
117,250
65,750
20,625
5,000
0.24
0.12
0.22
0.26
0.33
0.40
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
23
Directors’ Report
Indemnification and insurance of officers
Indemnification
The company has agreed to indemnify the directors of the company on a full indemnity basis to the full extent permitted by
law, for all losses or liabilities incurred by the director as an officer of the company including, but not limited to, liability for
negligence or for reasonable costs and expenses incurred, except where the liability arises out of conduct involving a lack
of good faith.
Insurance
During the financial year Integrated Research Limited paid a premium of $24,728 to insure the directors and officers of the
consolidated entity and related bodies corporate.
The liabilities insured include costs and expenses that may be incurred in defending civil or criminal proceedings that may be
brought against officers in their capacity as officers of the consolidated entity.
The company has not otherwise, during or since the financial year, indemnified or agreed to indemnify an officer or auditor
of the company or any related body corporate against a liability incurred as such on officer or auditor.
Remuneration report
The company’s Remuneration Report, which forms part of this Directors’ Report, is on pages 26 to 34.
Corporate governance
A statement describing the company’s main corporate governance practices in place throughout the financial year is on
pages 35 to 43 of this Annual Report.
Non-audit services
During the year Deloitte Touche Tohmatsu, the company’s auditor, has performed certain other services in addition to their
statutory duties.
The board has considered the non-audit services provided during the year by the auditor and in accordance with written
advice provided by resolution of the audit committee, is satisfied that the provision of those non-audit services during
the year by the auditor is compatible with, and did not compromise, the auditor independence requirements of the
Corporations Act 2001 for the following reasons:
>
>
All non-audit services were subject to the corporate governance procedures adopted by the company and have been
reviewed by the audit committee to ensure they do not impact the integrity and objectivity of the auditor, and
The non-audit services provided do not undermine the general principles relating to auditor independence as set out
in Professional Statement F1 Professional independence, as they did not involve reviewing or auditing the auditor’s
own work, acting in management or decision making capacity for the company, acting as an advocate for the
company or jointly sharing risks and rewards.
A copy of the auditors’ independence declaration as required under Section 307C of the Corporations Act is attached on
page 88 of the annual report and forms part of the Directors’ Report.
24
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Rounding of amounts to nearest thousand dollars
The company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class order,
amounts in the Financial Report and the Directors’ Report have been rounded off to the nearest thousand dollars, unless
otherwise stated.
This report is made in accordance with a resolution of the directors.
Steve Killelea
Chairman
Mark Brayan
Chief Executive Officer
Dated at North Sydney this 22nd day of September 2008
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
25
Remuneration
report (Audited)
Remuneration policies
Remuneration levels for key management personnel and secretaries of the company, and relevant key management
personnel of the consolidated entity are competitively set to attract and retain appropriately qualified and experienced
directors and senior executives. The remuneration committee obtains independent advice on the appropriateness of
remuneration packages given trends in comparative companies both locally and internationally and the objectives of the
company’s remuneration strategy.
Key management personnel (including directors) have authority and responsibility for planning, directing and controlling
the activities of the company and the consolidated entity.
The remuneration structures explained below are designed to attract suitably qualified candidates, reward the achievement
of strategic objectives, and achieve the broader outcome of creation of value for shareholders. The remuneration structure
takes into account:
>
>
>
The capability and experience of the directors and senior executives
The directors and senior executives ability to control the relevant segment’s performance
The consolidated entity’s performance including:
-
-
The consolidated entity’s earnings
The growth in share price and returns on shareholder wealth
Remuneration packages include a mix of fixed and variable remuneration and short and long-term performance based incentives.
Fixed remuneration
Fixed remuneration consists of base remuneration (which is calculated on a total cost basis and includes any FBT charges
related to employee benefits including motor vehicles), as well as employer contributions to superannuation funds.
Remuneration levels are reviewed annually through a process that considers individual, segment and overall performance
of the consolidated entity. In addition, external consultants provide periodic analysis and advice to ensure the directors’
and senior executives’ remuneration is competitive in the market place. A senior executive’s remuneration is also reviewed
on promotion.
Performance-linked remuneration
Performance linked remuneration includes both short-term and long-term incentives and is designed to reward executive
directors and senior executives for exceeding their financial and personal objectives. The short-term incentive (STI) is an
“at risk” bonus provided in the form of cash, while the long-term incentive (LTI) is provided as options over ordinary shares
of Integrated Research Limited under the rules of the Employee Share Option Plan (ESOP).
26
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Short-term incentive bonus
The nomination and remuneration committee is responsible for setting the key performance indicators (KPI’s) for the
chief executive officer, and for approving the KPI’s for the senior executives who report to him. The KPI’s generally include
measures relating to the consolidated entity, the relevant segment, and the individual, and include financial, people,
customer, strategy and risk measures. The measures are chosen as they directly align the individual’s reward to the KPI’s of
the consolidated entity and to its strategy and performance.
The financial performance objectives vary with position and responsibility and are aligned with each respective years’
budget. The non-financial objectives vary with position and responsibility and include measures such as achieving strategic
outcomes and staff development.
At the end of the financial year the nomination and remuneration committee assesses the actual performance of the CEO
against the KPI’s set at the beginning of the financial year. A percentage of the predetermined maximum amounts for each
KPI is awarded depending on results. The committee recommends the cash incentive to be paid to the CEO for approval by
the board.
Long-term incentive
Options are issued to executive directors and other senior executives under the Employee Share Option Plan. The ability
of executive directors and other senior executives to exercise options is conditional on the consolidated entity achieving
certain profit after tax (PAT) performance hurdles over the vesting period. PAT was considered the most appropriate
performance hurdle given its intrinsic link to creating shareholder wealth.
Consequences of performance on shareholder wealth
In considering the consolidated entity’s performance and benefits for shareholder wealth, the nomination and
remuneration committee has regard to the following indices in respect of the current financial year and the previous four
financial years:
2008
2007
2006
2005
2004
New licences
Net profit
$19,623,000
$19,517,000
$18,633,000
$17,790,000
$15,842,000
$5,776,000
$5,433,000
$6,975,000
$6,238,000
$4,455,000
Dividends paid
$5,826,000
$4,152,000
$4,146,000
$3,310,000
$1,239,000
Change in share price
($0.23)
$0.185
($0.005)
$0.05
$0.23
Net profit and new licence sales are considered in setting the STI, as two of the financial performance targets are “profit
after tax” and “new sales”. Dividends and changes in share price are included in the TSR calculation for the LTI.
The nomination and remuneration committee considers that the above performance linked structure is generating the
desired outcomes.
Currently, the Board has no specific policy governing how key management personnel minimise their exposure to risk
associated with the share-based payments.
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
27
Remuneration report (Audited)
Key Management Personnel
The following were key management personnel of the consolidated entity at any time during the reporting period and unless
otherwise indicated were key management personnel for the entire period:
Non-executive directors
Steve Killelea (Chairman)
David Boyles
John Brown (appointed July 2007)
Kate Costello
Alex Kennedy (resigned July 2007)
Clyde McConaghy (appointed December 2007)
Executive directors
Keith Andrews (CEO, resigned September 2007)
Mark Brayan (CEO, appointed September 2007)
Other key management personnel (full year)
Other key management personnel (part year)
David Leighton (Company Secretary)
Peter Adams (CFO, appointed March 2008)
Kurt Roscow (VP, Americas)
Nathan Brumby (CTO, resigned November 2007)
Steve Douglas (VP, Europe, resigned December 2007)
Rick Ferguson (GM, AsiaPac, appointed March 2008)
Stephen Rorie (CFO, resigned November 2007)
David Stark, (VP, Europe, appointed March 2008)
David Taylor (GM AsiaPac, resigned October 2007)
Service agreements
Service contracts for executive directors and senior executives are unlimited in term but capable of termination by either
party according to a period specified in the employment contract and the consolidated entity retains the right to terminate
the contract immediately by payment in lieu of notice or a severance payment or an amount for redundancy equal to the
scale of payments prescribed in the NSW Employment Protection Act.
Mr Mark Brayan, Chief Executive Officer, has a contract of employment with Integrated Research Limited dated 29 August
2007, which provides for specific notice and severance understandings of up to four months compensation depending on
the particular circumstances. Mr Brayan can terminate his employment by giving four months prior notice in writing.
Mr Peter Adams, Chief Financial Officer, has a contract of employment with Integrated Research Limited dated 23 January
2008, which provides for specific notice and severance understandings of up to three months compensation depending on
the particular circumstances. Mr Adams can terminate his employment by giving three months prior notice in writing.
Mr Rick Ferguson, General Manager Asia Pacific, has a contract of employment with Integrated Research Limited dated
20 February 2008, which provides for specific notice and severance understandings of up to three months compensation
depending on the particular circumstances. Mr Ferguson can terminate his employment by giving three months prior notice
in writing.
28
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Mr David Stark, Vice President Europe, has a contract of employment with Integrated Research Limited dated 22 January
2008, which provides for specific notice and severance understandings of up to three months compensation depending on
the particular circumstances. Mr Stark can terminate his employment by giving three months prior notice in writing.
Non-executive directors
Total remuneration for all non-executive directors last voted upon at a special meeting of shareholders in October 2000 is
not to exceed $500,000 per annum.
Directors’ base fees are presently $45,000 per annum plus compulsory superannuation. The chairman receives the base
fee by a multiple of two and the deputy chairman receives the base fee by a multiple of 1.5. Directors’ fees cover all main
board activities and committee membership. Directors can elect to salary sacrifice their directors fees into superannuation.
Non-executive directors do not receive performance related compensation or retirement benefits.
Directors’ and executive officers’ remuneration
Details of the nature and amount of each major element of the remuneration of each director of the company and each of the
executives and relevant group executives receiving the highest remuneration are reported below.
The estimated value of options disclosed is calculated at the date of grant using the Binomial option pricing model,
adjusted to take into account the inability to exercise options during the vesting period. Further details of options granted
during the year are set out above under “Share options”.
“Executive officers” are officers who are involved in, or who take part in, the management of the affairs of Integrated
Research Limited and/or related bodies corporate. Remuneration for overseas-based employees has been translated to
Australian dollars at the average exchange rates for the year.
No director or executive appointed during the year received a payment as part of his or her consideration for agreeing to
hold the position.
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
29
Remuneration report (Audited)
Short Term
Salary
& fees
$
Non-cash
benefits
$
Bonus
$
In AUD
Post-
employment
Super-
annuation
contribution*
$
Share-
based
payments
Value of
options
(A)
$
Other
compen-
sation
Termina-
tion
benefit
$
Proportion of
remuneration
Perfor-
mance
related
Value
of
options
Total
$
Directors: Non-executive
David Boyles
2008
-
John Brown
(appointed
July 2007)
Kate Costello
Alex Kennedy
(resigned
September 2007)
2007
67,500
2008
42,676
2007
2008
2007
2008
2007
-
-
-
-
-
Steve Killelea
2008
90,000
Clyde McConaghy
(appointed
December 2007)
Ian Winlaw
(resigned
December 2006)
2007
90,000
2008
2007
2008
-
-
-
2007
22,500
2008
86,886
Directors: Executive
Keith Andrews
(resigned
September 2007)
Mark Brayan
(appointed
September 2007)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
73,575
6,075
3,841
-
49,050
49,050
9,997
49,050
8,100
8,100
28,613
-
-
2,025
12,136
5,444
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
73,575
73,575
46,517
-
49,050
49,050
9,997
49,050
98,100
98,100
28,613
-
-
24,525
250,000 354,466
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2007
369,565 50,000
58,541
32,662
2008 329,556 85,000
2,833
13,149
2007
-
-
-
-
7,500
6,216
-
-
-
-
518,268
11%
436,754
21%
-
-
1%
1%
-
* Superannuation contribution contain salary sacrifice.
30
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Short Term
Salary
& fees
$
Bonus
$
Non-cash
benefits
$
In AUD
Executive officers (excluding directors)
Post-
employment
Super-
annuation
contribution
$
Share-
based
payments
Value of
options
(A)
$
Other
compen-
sation
Termina-
tion
benefit
$
Proportion of
remuneration
Perfor-
mance
related
Value
of
options
Total
$
5,240
754
-
5,057
9,104
4,163
-
-
-
1,777
547
-
4,050
1,020
-
-
2,192
75,465
15%
1%
-
-
-
-
-
-
-
-
-
-
-
148,143
295,579
-
21%
25%
67,028
26%
-
107,570
33,750
169,333
313,347
-
-
-
12%
16%
-
5,287
11,629
4,090
13,646
-
-
-
-
-
-
-
50,000
122,765
9%
1,433
-
513
539
540
953
-
-
-
-
-
-
-
-
200,006
30%
176,716
34%
341,694
38%
305,283
38%
366,350
126,047
-
47%
27%
-
-
-
1%
1%
-
1%
-
-
1%
-
1%
-
-
-
-
-
-
David Leighton
2008
102,500
2007
33,750
-
-
-
2008
58,221
11,250
2007
-
-
-
-
2008
110,140
30,500
2,446
2007
209,944
74,754
2008
44,818
17,500
2007
-
2008
124,817
20,000
19,229
2007
219,732
48,750
31,044
2008
58,198
10,477
-
2007
121,127
59,712
4,088
Kurt Roscow
2008
187,881
116,863
2008
115,762
60,954
2007
210,488 130,693
2007
192,771
173,039
2008
91,386
33,708
2007
-
-
-
-
-
-
-
-
-
-
-
-
-
The Company
Peter Adams
(appointed
March 2008)
Nathan Brumby
(resigned
November 2007)
Rick Ferguson
(appointed
March 2008)
Stephen Rorie
(resigned
November 2007)
David Taylor
(resigned
October 2007)
Consolidated
Steve Douglas
(resigned
December 2007)
David Stark
(appointed
March 2008)
Total
compensation:
key management
(consolidated)
Total
compensation:
key management
(company)
2008 1,442,841
386,252
36,644
219,656
10,029
300,000
2,395,422
2007
1,537,377
536,948
93,673
181,341
13,955
-
2,363,294
2008 1,047,812
174,727
36,644
219,656
8,537
300,000
1,787,376
2007
1,134,118
233,216
93,673
181,341
12,902
-
1,655,250
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
31
Remuneration report (Audited)
Analysis of bonuses included in remuneration
Details of the vesting profile of the short-term incentive cash bonuses awarded as remuneration to each director of the
company and each of the named company executives and relevant group executives are detailed below:
Included in remuneration $ (A)
% vested in year
% forfeited in year (B)
Short term incentive bonuses
Directors
Mark Brayan
Executives
Peter Adams
Steve Douglas
Rick Ferguson
Stephen Rorie
Kurt Roscow
David Stark
David Taylor
85,000
11,250
60,954
17,500
20,000
116,863
33,708
10,477
43%
90%
62%
50%
80%
63%
63%
32%
57%
10%
38%
50%
20%
37%
37%
68%
(A)
Amounts included in remuneration for the financial year represents the amount that vested in the financial year
based on achievement of personal goals and satisfaction of specified performance criteria. No amounts vest in
future financial years in respect of the short-term incentive bonus scheme for the 2008 financial year.
(B)
The amounts forfeited are due to the performance or service criteria not being met in relation to the current financial
year.
Equity instruments
All options refer to options over ordinary shares of Integrated Research Limited, which are exercisable on a one-for-one
basis under the Employee Share Option Plan (ESOP).
Options and rights over equity instruments granted as compensation
Details of options over ordinary shares in the company that were granted as compensation to each key management person
during the reporting period and details on options that were vested during the reporting period are as follows:
Executives
Grant date
Number of
options granted
in 2008
Number of
options vested
during 2008
Fair value of
option at grant
date
Exercise price
per option
Expiry date
Peter Adams
350,000
Mar 2008
Mark Brayan
1,000,000
Sep 2007
Rick Ferguson
300,000
Apr 2008
David Stark
350,000
Mar 2008
-
-
-
-
$0.17
$0.14
$0.17
$0.17
$0.38
$0.42
$0.38
$0.43
Feb 2013
Sep 2012
Apr 2013
Mar 2013
No options have been granted to named executives since the end of the financial year. The above options were provided at
no cost to the recipients.
32
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
All options expire on the earlier of their expiry date or termination of the individual’s employment, except for termination
due to retirement. The options are exercisable on an annual basis on the first to fourth anniversaries of the grant date. In
addition to a continuing employment service condition, the ability of executives to exercise options is conditional on the
consolidated entity achieving certain profit after tax performance hurdles.
Further details, including grant dates and exercise dates regarding options granted to executives under the ESOP are in
note 18 to the financial statements.
Exercise of options granted as compensation
During the reporting year the following shares were issued on the exercise of options previously granted as compensation:
Executive
Steve Douglas
Number of shares
Amount paid per share
11,250
$0.26
There were no amounts unpaid on the shares issued as a result of the exercise of the options.
Analysis of movement in options
The movement during the reporting period, by value, of options over ordinary shares in the company held by each company
director and each of the named company executives and relevant group executives is detailed below:
In AUD
Directors
Mark Brayan
Executives
Peter Adams
Steve Douglas
Rick Ferguson
Kurt Roscow
David Stark
Granted in year (A) $
Exercised in year (B) $ Forfeited in year (C) $ Total options value in year (D) $
Value of options
140,000
59,500
-
51,000
-
59,500
310,000
-
-
2,925
-
-
-
2,925
-
-
-
-
-
-
-
6,216
754
-
547
13,648
953
22,118
(A)
The value of options granted in the year is the fair value of the options calculated at the grant date using a binomial
option-pricing model. The total value of the options granted is included in the table above. This amount is allocated
to remuneration over the vesting period, and is before adjusting the value for the probability the options will vest.
(B)
The value of options exercised during the year is calculated as the market price of shares of the company on the
Australian Stock Exchange as at the close of trading on the date the options were exercised after deducting the price
paid to exercise the option.
(C)
There were no options forfeited during the year, except for those held by executives whose employment was
terminated during the year. No value has been assigned to those options as either the exercise price exceeded the
market price of the company’s shares, or had not vested.
(D)
Total options value in year represents the fair value of options granted apportioned over the vesting period, adjusting
the value for the probability the options will vest.
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
33
Remuneration report (Audited)
Analysis of options and rights over equity instruments granted as compensation
Details of vesting profile of the options granted to each director of the company and each of the named executives are
detailed below:
Options granted
Number
Date % vested in year % Forfeited in
Directors
Mark Brayan
1,000,000
Sep 2007
Keith Andrews
1,000,000
Aug 2006
Executives
Peter Adams
350,000
Mar 2008
Stephen Rorie
300,000
Aug 2006
Rick Ferguson
300,000
Apr 2008
David Stark
350,000
Mar 2008
-
-
-
-
-
-
year (A)
-
100%
-
100%
-
-
Value yet to vest ($)
Min (B) Max (C)
Financial year in
which grant vests
2012
-
2013
-
2013
2013
nil
nil
nil
nil
nil
nil
$140,000
n/a
$59,500
n/a
$51,000
$59,500
(A)
The percentage forfeited in the year represents the reduction from the maximum number of options available to vest
due to the performance hurdles not being achieved or due to the resignation of the executive.
(B)
The minimum value of options yet to vest is $nil as the executives may not achieve the required performance hurdles
or may terminate their employment prior to vesting.
(C)
The maximum values presented above are based on the values calculated using the Binomial option pricing model as
applied in estimating the value of options for employee benefit expense purposes.
34
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Corporate
Governance
Statement
This statement outlines the main corporate governance practices that were in place
throughout the financial year, which comply with the ASX Corporate Governance Council
recommendations, unless otherwise stated.
Board of directors and its committees
Role of the board
The board’s primary role is the protection and enhancement of long-term shareholder value.
To fulfil this role, the board is responsible for the overall corporate governance of the consolidated entity including
formulating its strategic direction, approving and monitoring capital expenditure, setting remuneration, appointing,
removing and creating succession policies for directors and senior executives, establishing and monitoring the
achievement of management goals and ensuring the integrity of internal control and management information systems. It
is also responsible for approving and monitoring financial and other reporting. Details of the board’s charter are located on
the company’s website (www.ir.com).
Board process
To assist in the execution of its responsibilities, the Board has established a number of board committees including a
Nomination and Remuneration Committee, an Audit Committee and a Strategy Committee. These committees have written
mandates and operating procedures, which are reviewed on a regular basis. The board has also established a framework
for the management of the consolidated entity including a system of internal control, a business risk management process
and the establishment of appropriate ethical standards.
The full board currently holds twelve scheduled meetings each year, plus strategy and any extraordinary meetings at such
other times as may be necessary to address any specific matters that may arise.
The agenda for its meetings is prepared in conjunction with the chairman, chief executive officer and company secretary.
Standing items include the CEO’s report, financial reports, strategic matters, governance and compliance. Submissions
are circulated in advance. Executives are regularly involved in board discussions and directors have other opportunities,
including visits to operations, for contact with a wider group of employees.
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
35
Corporate Governance Statement
During the 2008 financial year the board undertook a formal performance evaluation of itself and of individual directors
and the Chairman to identify governance and performance strengths and areas for improvement. The Chairman discussed
individual director results with each director agreeing appropriate development actions, and tabled his own results for
discussion and agreement with the board. The board implemented changes to its governance practices as a consequence
of the evaluation. The board increased the scheduling of executive presentation sessions at board meetings to ensure
the board is continuously updated on operational and strategic issues and has the opportunity to meet and work with
management in Australia from the company’s overseas operations.
Director education
The consolidated entity follows an induction process to educate new directors about the nature of the business, current
issues, the corporate strategy and expectations of the consolidated entity concerning performance of directors. Directors
also have the opportunity to visit consolidated entity facilities and meet with management to gain a better understanding of
business operations. In addition executives make regular presentations to the board to ensure its familiarity of operational
matters. Directors are expected to access external continuing education opportunities to update and enhance their skills
and knowledge.
Independent advice and access to company information
Each director has the right of access to all relevant company information and to the company’s executives and, subject to
prior consultation with the chairman, may seek independent professional advice from a suitably qualified adviser at the
consolidated entity’s expense. A copy of the advice received by the director is made available to all other members of the
board.
Composition of the board
The names of the directors of the company in office at the date of this report are set out on page 14 of this report.
The company’s constitution provides for the board to consist of between three and twelve members. At 30 June 2008 the
board members were comprised as follows:
>
>
>
>
>
>
Mr Steve Killelea – non executive director (Chairman).
Mr David Boyles – independent non executive director (Deputy Chairman).
Mr John Brown – independent non executive director.
Ms Kate Costello – independent non executive director.
Mr Clyde McConaghy – non executive director.
Mr Mark Brayan – executive director (Chief Executive Officer).
Mr Alex Kennedy retired from his position as an independent non executive director in September 2007. Mr John Brown
was appointed as an independent non executive director in July 2007 and Mr Clyde McConaghy was appointed as a non
executive director in December 2007. Mr McConaghy is Managing Director of Smarter Capital Pty Limited, another company
associated with Mr Steve Killelea, Chairman of Integrated Research.
Mr Keith Andrews resigned from his position of executive director in September 2007 and Mr Mark Brayan was appointed
as an executive director in September 2007.
36
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Following the appointment of Mr McConaghy, the Board consists of three independent non executive directors, two non
executive directors who are not independent (Mr McConaghy and Mr Killelea) and one executive director (Mr Brayan).
This does not comply with the ASX Corporate Governance Council recommendation that the majority of directors be
independent. However, the board considers the appointment of Mr McConaghy who has two decades of international
strategic market development experience in the technology, media and online industries, to be beneficial to the company
and that he will exercise independent judgement as a non executive director.
The election of Mr Killelea, who holds a majority of the company’s issued shares, as non-executive chairman does not
comply with the ASX Corporate Governance Council recommendation that the chairman be an independent director.
However, the board considers the appointment of Mr Killelea to be beneficial to the company and will enable it to
continue to build on the experience and knowledge gained through his long involvement with Integrated Research and his
associations throughout the information industry. Mr Killelea founded Integrated Research in 1988 and was the CEO and
managing director of the company until his retirement in November 2004. The board recognises the need for directors to
exercise unfettered and independent judgement and in September 2005 appointed Mr David Boyles as deputy chairman.
In this role Mr Boyles acts as lead independent director.
At each Annual General Meeting one-third of directors, any director who has held office for three years and any director
appointed by directors in the preceding year must retire, then being eligible for re-election. The chief executive officer is not
required to retire by rotation.
The composition of the board is reviewed on a regular basis to ensure that the board has the appropriate mix of expertise
and experience. When a vacancy exists, through whatever cause, or where it is considered that the board would benefit
from the services of a new director with particular skills, the Nomination and Remuneration Committee will, in conjunction
with the board, determine the selection criteria for the position based on the skills deemed necessary for the board to best
carry out its responsibilities. The committee would then select a panel of candidates and the board would then appoint the
most suitable candidate who must stand for election at the next general meeting of shareholders.
Nomination and Remuneration Committee
The Nomination and Remuneration Committee is a committee of the board of directors and is empowered by the board to
assist it in fulfilling its duties to shareholders and other stakeholders. In general, the committee has responsibility to: 1)
ensure the company has appropriate remuneration policies designed to meet the needs of the company and to enhance
corporate and individual performance and 2) review board performance, select and recommend new directors to the board
and implement actions for the retirement and re-election of directors.
Responsibilities Regarding Remuneration
The Committee reviews and makes recommendations to the board on:
>
>
>
>
>
>
>
The appointment, remuneration, performance objectives and evaluation of the chief executive officer.
The remuneration packages for senior executives.
The company’s recruitment, retention and termination policies and procedures for senior executives.
Executive remuneration and incentive policies.
Policies on employee incentive plans, including equity incentive plans.
Superannuation arrangements.
The remuneration framework and policy for non-executive directors.
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
37
Corporate Governance Statement
>
Remuneration levels are competitively set to attract and retain the most qualified and experienced directors and
senior executives. The Remuneration Committee obtains independent advice on the appropriateness of remuneration
packages, given trends in comparative companies and industry surveys. Remuneration packages include a mix of
fixed remuneration, performance-based remuneration and equity-based remuneration.
Responsibilities Regarding Nomination
The Committee develops and makes recommendations to the board on:
>
>
>
>
>
>
>
>
The CEO and senior executive succession planning
The range of skills, experience and expertise needed on the board and the identification of the particular skills,
experience and expertise that will best complement board effectiveness.
A plan for identifying, reviewing, assessing and enhancing director competencies.
Board succession plans to maintain a balance of skills, experience and expertise on the board.
Evaluation of the board’s performance.
Appointment and removal of directors.
Appropriate composition of committees.
The terms and conditions of the appointment of non-executive directors are set out in a letter of appointment,
including expectations for attendance and preparation for all board meetings, expected time commitments,
procedures when dealing with conflicts of interest, and the availability of independent professional advice.
The members of the Nomination and Remuneration Committee during the year were:
>
>
>
Kate Costello (Chairperson) – Independent Non-Executive
David Boyles – Independent Non-Executive
Steve Killelea – Non-Executive
The Nomination and Remuneration Committee meets at least twice a year and as required. The Committee met five times
during the year under review.
Audit Committee
The Audit Committee has a documented charter, approved by the board. All members must be non-executive directors
with a majority being independent. The chairman may not be the chairman of the board. The committee advises on the
establishment and maintenance of a framework of internal control and appropriate ethical standards for the management
of the consolidated entity.
The members of the Audit Committee during the year were:
>
>
>
>
38
David Boyles (Chairman until February 2008) – Independent Non-Executive
John Brown (appointed in July 2007 and Chairman from February 2008) – Independent Non-Executive
Kate Costello – Independent Non-Executive (until April 2008)
Clyde McConnaghy (appointed April 2008)
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
The external auditor, chief executive officer and chief financial officer are invited to Audit Committee meetings at the
discretion of the committee. The committee met three times during the year and committee members’ attendance record is
disclosed in the table of directors’ meetings on page 21.
The external auditor met with the audit committee/board three times during the year, two of which included time without
the presence of executive management. The chief executive officer and the chief financial officer declared in writing to the
board that the company’s financial reports for the year ended 30 June 2008 comply with accounting standards and present
a true and fair view, in all material respects, of the company’s financial condition and operational results. This statement is
required annually.
The Audit Committee’s charter is available on the company’s website and includes information on procedures for selection
and appointment of the external auditor, and for rotation of external audit engagement partners.
The main responsibilities of the Audit Committee include:
>
>
>
>
>
>
>
Reviewing the annual and half-year financial reports and other financial information distributed externally, including
new accounting policies to ensure compliance with Australian Accounting Standards and generally accepted
accounting principles.
Assessing whether non-audit services provided by the external auditor are consistent with maintaining the external
auditor’s independence. Each reporting period the external auditor provides a declaration of independence.
Providing advice to the board in respect of whether provision of the non-audit services by the external auditor is
compatible with the general standards of independence of auditors imposed by the Corporations Act 2001.
Reviewing the nomination and performance of the external auditor.
Monitoring the establishment of an appropriate internal control framework, and appropriate ethical
standards.
Monitoring the procedures to ensure compliance with the Corporations Act 2001 and ASX Listing Rules and all other
regulatory requirements.
Addressing any matters outstanding with auditors, Australian Tax Office, overseas tax authorities, Australian
Securities and Investments Commission and financial institutions.
The Audit Committee reviews the performance of the external auditors on an annual basis and normally meets with them
during the year as follows:
>
To discuss the external audit plans, identifying any significant changes in structure, operations, internal controls or
accounting policies likely to impact the financial statements and to review the fees proposed for the audit work to be
performed.
>
Prior to announcement of results:
- To review the half-year and preliminary final report prior to lodgement with the ASX, and any significant
adjustments required as a result of the auditor’s findings.
- To recommend the Board approval of these documents.
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
39
Corporate Governance Statement
>
To finalise half-year and annual reporting:
- Review the results and findings of the auditor, the adequacy of accounting and financial controls, and
to monitor the implementation of any recommendations made.
- Review the draft financial report and recommend board approval of the financial report.
>
As required, to organise, review and report on any special reviews or investigations deemed necessary by the board.
The full board has retained responsibility for monitoring the corporate risk assessment processes and fraud control.
Strategy Committee
The Strategy Committee has a documented charter, approved by the board and is responsible for reviewing strategy and
recommending strategies to the board to enhance the company’s long-term performance. The committee is comprised of at
least three members, including the chairman of the board and the chief executive officer. The board appoints a member of
the committee to be chairman.
The members of the Strategy Committee during the year were:
>
>
>
>
>
Steve Killelea (Chairman) – Non-Executive
Keith Andrews (resigned September 2007) – Executive
Mark Brayan (appointed September 2007) – Executive
David Boyles – Independent Non-Executive
Kate Costello – Independent Non-Executive
The Strategy Committee is responsible for:
>
>
>
>
Working with management on the articulation of any strategic plan for recommendation to the board.
Assisting in identifying and assessing strategic opportunities including:
- Mergers and acquisitions proposals
-
Intellectual property developments or acquisitions
- Changes in business models
- Partnering arrangements
- Entry into new markets
Staying close to business challenges and risks
Recommending specific (eg product) strategies, including business cases and mechanisms to measure progress
results, to the board.
The Committee met once during the year under review.
40
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Risk management
The board reviews the status of business risks to the consolidated entity through integrated risk management programs
ensuring risks are identified, assessed and appropriately managed. Major business risks arise from such matters as actions by
competitors, government policy changes and the impact of exchange rate movements.
Comprehensive policies and procedures are established such that:
>
>
>
>
Capital expenditure above a certain size requires Board approval.
Financial exposures are controlled, including the use of forward exchange contracts.
Risks are identified and managed, including internal audit, privacy, insurances, business continuity and compliance.
Business transactions are properly authorised and executed.
The chief executive officer and the chief financial officer have declared, in writing to the board that the company’s financial
reports are founded on a sound system of risk management and internal compliance and control which implements the
policies adopted by the board.
Internal control framework
The board is responsible for the overall internal control framework, but recognises that no cost effective internal control
system will preclude all errors and irregularities. The board has instigated the following internal control framework:
>
>
>
>
>
Financial reporting – Monthly actual results are reported against budgets approved by the directors and revised
forecasts for the year are prepared monthly.
Continuous disclosure – Identify matters that may have a material effect on the price of the Company’s securities,
notify them to the ASX and post them to the Company’s website.
Quality and integrity of personnel – Formal appraisals are conducted at least annually for all employees.
Operating unit controls – Operating units are required to confirm compliance with financial controls and procedures
including information systems controls detailed in procedures manuals.
Investment appraisals – Guidelines for capital expenditure include annual budgets, detailed appraisal and review
procedures and levels of authority.
Internal Audit
The company does not have an internal audit function but utilises its financial resources as needed to assist the board in
ensuring compliance with internal controls.
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
41
Corporate Governance Statement
Ethical standards
All directors, managers and employees are expected to act with the utmost integrity and objectivity, striving at all times to
enhance the reputation and performance of the consolidated entity. Every employee has a nominated supervisor to whom
they may refer any issues arising from their employment.
Conflict of interest
Directors must keep the board advised, on an ongoing basis, of any interest that could potentially conflict with those of the
company. Where the board considers that a significant conflict exists the director concerned does not receive the relevant
board papers and is not present at the meeting whilst the item is considered. The board has developed procedures to
assist directors to disclose potential conflicts of interest. Details of director related entity transactions with the company
and consolidated entity are set out in Note 27.
Code of conduct
The consolidated entity has advised each director, manager and employee that they must comply with the code of conduct.
The code aligns behaviour of the board and management with the code of conduct by maintaining appropriate core values
and objectives. It may be reviewed on the company’s website and includes:
>
>
>
>
>
Responsibility to the community and fellow employees to act with honesty and integrity, and without prejudice.
Compliance with laws and regulations in all areas where the company operates, including employment opportunity,
occupational health and safety, trade practices, fair dealing, privacy, drugs and alcohol, and the environment.
Dealing honestly with customers, suppliers and consultants.
Ensuring reports and other information are accurate and timely.
Proper use of company resources, avoidance of conflicts of interest and use of confidential or proprietary information.
Trading in company securities by directors and employees
Directors and employees may acquire shares in the company, but are prohibited from dealing in company shares whilst
in possession of price sensitive information, and except in the periods:
>
>
From 24 hours to 28 days after the release of the company’s half-yearly results announcement or following the wide
dissemination of information on the status of the corporation and current results.
From 24 hours after the release of the company’s annual results announcement to a maximum of 28 days after the
annual general meeting.
Directors must obtain the approval of the chairman of the board and notify the company secretary before they buy or sell
shares in the company, subject to board veto. The company advises the ASX of any transactions conducted by directors in
shares in the company.
The consolidated entity’s trading policy may be reviewed on the company’s website.
42
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Communication with shareholders
The board provides shareholders with information using a comprehensive continuous disclosure policy which includes
identifying matters that may have a material effect on the price of the company’s securities, notifying them to the ASX,
posting them on the company’s website (www.ir.com), and issuing media releases. Disclosures under this policy are in
addition to the periodic and other disclosures required under the ASX Listing Rules and the Corporations Act. More details
of the policy are available on the company’s website.
The chief executive officer and the chief financial officer are responsible for interpreting the company’s policy and where
necessary informing the board. The company secretary is responsible for all communication with the ASX.
The board encourages full participation of shareholders at the Annual General Meeting to ensure a high level of
accountability and identification with the consolidated entity’s strategy and goals. Important issues are presented to the
shareholders as single resolutions. The external auditor is requested to attend the Annual General Meetings to answer any
questions concerning the audit and the content of the auditor’s report.
The shareholders are requested to vote on the appointment and aggregate remuneration of directors, the granting of
options and shares to directors, the Remuneration report and changes to the Constitution. Copies of the Constitution are
available to any shareholder who requests it.
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
43
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44
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Financial
Report
>
Income statements
> Statements of recognised income and expense
> Balance sheets
> Statements of cash flows
> Notes to the financial statements
1. Significant accounting policies
2. Segment reporting
3. Other income
4. Expenses
5. Personnel expenses
6. Auditors’ remuneration
7.
Income tax expense
8. Earnings per share
9. Cash and cash equivalents
10. Trade and other receivables
11. Other current assets
12. Investments
13. Other financial assets
14. Property, plant and equipment
15. Deferred tax assets and liabilities
16. Intangible assets
17. Trade and other payables
18. Employee benefits
19. Provisions
20. Other liabilities
21. Capital and reserves
22. Financial instruments
23. Operating leases
24. Consolidated entities
25. Reconciliation of cash flows from operating activities
26. Key management personnel disclosures
27. Related parties
28. Subsequent events
46
47
48
49
50
50
57
59
59
59
60
60
61
62
62
63
63
63
64
65
67
68
68
72
72
73
75
78
78
79
80
84
84
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
45
Financial Report
Income statements
For the year ended 30 June 2008
In thousands of AUD
Revenue
Revenue from licence fees
Revenue from maintenance fees
Consolidated
The Company
Notes
2008
2007
2008
2007
19,623
19,517
13,299
13,109
16,344
15,856
11,603
9,408
Revenue from consulting and other services
1,417
1,004
759
421
Total revenue
Research and development expenses
Sales and marketing expenses
General and administration expenses
Total expenses
Results from operating activities
Other income
Profit before tax
Income tax expense
Profit for the year
Basic earnings per share (AUD cents)
Diluted earnings per share (AUD cents)
37,384
36,377
25,661
22,938
8,717
17,114
4,345
6,369
18,923
8,717
7,874
4,103
2,958
6,369
8,145
2,693
30,176
29,395
19,549
17,207
6,112
1,613
7,725
1,362
6,363
5,731
280
6,011
1,319
4,692
7,208
462
7,670
1,894
5,776
3.47¢
3.47¢
6,982
471
7,453
2,020
5,433
3.27¢
3.24¢
3
7
8
8
The income statements are to be read in conjunction with the notes to the financial statements set out on pages 50 to 84.
46
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Statements of recognised income and expense
For the year ended 30 June 2008
Consolidated
The Company
In thousands of AUD
Notes
2008
Effective portion of changes in fair value of cash flow hedges
Foreign exchange translation differences
Net income recognised directly in equity
Profit for the year
Total recognised income and expense for the year
21
21
-
(520)
(520)
5,776
5,256
2007
12
(523)
(511)
5,433
4,922
2008
2007
-
-
-
12
-
12
6,363
6,363
4,692
4,704
Other movements in equity arising from transactions with owners as owners are set out in note 21.
The amounts recognised directly in equity are disclosed net of tax – see note 15 for tax effect.
The statements of recognised income and expense are to be read in conjunction with the notes to the financial statements
set out on pages 50 to 84.
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
47
Financial Report
Balance sheets
As at 30 June 2008
In thousands of AUD
Current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Total current assets
Non-current assets
Investments
Other financial assets
Property, plant and equipment
Deferred tax assets
Intangible assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Other current liabilities
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Provisions
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
Consolidated
The Company
Notes
2008
2007
2008
2007
9
10
11
12
13
14
15
16
17
19
20
15
19
20
21
21
21
11,148
10,157
1,926
11,704
11,300
2,014
23,231
25,018
5,279
5,045
10,833
10,954
1,204
17,316
1,605
17,604
-
1,765
2,405
284
12,641
17,095
40,326
2,448
1,139
8,995
12,582
-
1,670
2,893
249
11,365
16,177
41,195
2,165
983
10,279
13,427
54
1,690
2,208
-
12,631
16,583
54
1,583
2,454
-
11,323
15,414
33,899
33,018
1,669
938
5,534
8,141
1,255
741
6,384
8,380
3,141
2,656
3,141
2,656
514
298
3,953
16,535
23,791
497
462
3,615
17,042
24,153
490
105
3,736
11,877
473
232
3,361
11,741
22,022
21,277
794
(482)
680
(570)
794
509
680
415
23,479
24,043
20,719
20,182
23,791
24,153
22,022
21,277
The balance sheets are to be read in conjunction with the notes to the financial statements set out on pages 50 to 84.
48
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Statements of cash flows
For the year ended 30 June 2008
In thousands of AUD
Notes
2008
2007
2008
2007
Consolidated
The Company
Cash flows from operating activities
Cash receipts from customers
Cash paid to suppliers and employees
Cash generated from operations
Income taxes paid
Net cash provided by operating activities
25
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intellectual property purchases
Interest received
Dividends received
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issuing of shares
Payment of dividend
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 July
Effects of exchange rate changes on cash
Cash and cash equivalents at 30 June
38,420
40,073
23,541
24,733
(31,341)
(31,500)
(18,489)
(17,731)
7,079
(1,133)
5,946
(198)
(160)
462
-
104
8,573
(935)
7,638
(2,103)
(361)
471
-
(1,993)
5,052
(425)
4,627
(134)
(160)
231
1,382
1,319
7,002
(812)
6,190
(1,945)
(327)
280
-
(1,992)
114
85
114
85
21
(5,826)
(4,152)
(5,826)
(4,152)
(5,712)
(4,067)
(5,712)
(4,067)
338
1,578
234
11,704
10,736
5,045
131
4,914
-
(894)
11,148
(610)
11,704
9
-
5,279
5,045
The statements of cash flows are to be read in conjunction with the notes to the financial statements set out on 50 to 84.
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
49
Notes to the
Financial
Statements
For the year ended 30 June 2008
Note 1. Significant accounting policies
Integrated Research Limited (the “Company”) is a company domiciled in Australia. The financial report of the Company for
the year ended 30 June 2008 comprises the Company and its subsidiaries (together referred to as the “consolidated entity”).
The financial report was authorised for issue by the directors on 22nd September 2008.
a) Statement of Compliance
The financial report is a general purpose financial report which has been prepared in accordance with Australian
Accounting Standards, and Interpretations and the Corporations Act 2001. Accounting Standards include Australian
Equivalent to International Financial Reporting Standards (“AIFRS”). Compliance with AIFRS ensures the financial reports
of the consolidated entity and the company also comply with the measurement requirements of International Financial
Reporting Standards and interpretations adopted by the International Accounting Standards Board.
b) Basis of Preparation
The financial report is presented in Australian dollars and is prepared on the historical cost basis, with the exception of
cash flow hedges, which are at fair value.
The company is of a kind referred to in ASIC Class Order (CO) 98/100 dated 10 July 1998 (updated by CO 05/641 effective 28
July 2005 and CO 06/51 effective 31 January 2006) and in accordance with that Class Order, amounts in the financial report
and Directors’ Report have been rounded off to the nearest thousand dollars, unless otherwise stated.
The preparation of a financial report in conformity with Australian Accounting Standards requires management to make
judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and
liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of
making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates. These accounting policies have been consistently applied by each entity in
the consolidated entity.
50
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the
revision and future periods if the revision affects both current and future periods.
Standards and Interpretations issued not yet effective
At the date of authorisation of the financial report, a number of Standards and Interpretations were in issue but not yet
effective.
Initial application of the following Standards will not affect any of the amounts recognised in the financial report, but will
change the disclosures presently made in relation to the consolidated entity and the company’s financial report:
Standard
AASB 101 ‘Presentation of Financial Statements’ (revised
September 2007), AASB 2007-8 ‘Amendments to Australian
Accounting Standards arising from AASB 101’
AASB 8 ‘Operating Segments’, AASB 2007-3 ‘Amendments to
Australian Accounting Standards arising from AASB 8’
AASB 123 ‘Borrowing Costs’ (revised), AASB 2007-6 ‘Amendments
to Australian Accounting Standards arising from AASB 123’
AASB 3 ‘Business Combinations’ (2008), AASB 127 ‘Consolidated
and Separate Financial Statements’ and AASB 2008-3
‘Amendments to Australian Accounting Standards arising from
AASB 3 and AASB 127’
AASB 2008-1 ‘Amendments to Australian Accounting Standard -
Share-based Payments: Vesting Conditions and Cancellations’
AASB 2008-2 ‘Amendments to Australian Accounting Standards -
Puttable Financial Instruments and Obligations arising on
Liquidation’
AASB Interpretation 12 ‘Service Concession Arrangements’,
AASB Interpretation 4 ‘Determining whether an Arrangement
contains a Lease’ (revised), AASB Interpretation 129 ‘Service
Concession Arrangements: Disclosure’ (revised), AASB 2007-2
‘Amendments to Australian Accounting Standards arising from
AASB Interpretation 12’
Effective for annual
reporting periods
beginning on or after
Expected to be
initially applied in the
financial year ending
1 January 2009
30 June 2010
1 January 2009
30 June 2010
1 January 2009
30 June 2010
30 June 2010
AASB 3 (business
combinations occurring after
the beginning of annual
reporting periods beginning
1 July 2009), AASB 127 and
AASB 2008-3 (1 July 2009)
1 January 2009
30 June 2010
1 January 2009
30 June 2010
1 January 2008
30 June 2009
AASB Interpretation 13 ‘Customer Loyalty Programmes’
1 July 2008
AASB Interpretation 14 ‘AASB 119 - The Limit on a Defined Benefit
Asset, Minimum Funding Requirements and their Interaction’
1 January 2008
Improvements to IFRSs (2008)
Amendments to IFRS 1 ‘First-time Adoption of International
Financial Reporting Standards’ and IAS 27 ‘Consolidated and
Separate Financial Statements - Cost of an Investment in a
Subsidiary, Jointly Controlled Entity or Associate’
1 January 2009
1 January 2009
30 June 2009
30 June 2009
30 June 2010
30 June 2010
IFRIC 15 ‘Agreements for the Construction of Real Estate’
1 January 2009
IFRIC 16 ‘Hedges of a Net Investment in a Foreign Operation’
1 October 2008
30 June 2010
30 June 2010
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
51
Notes to the Financial Statements
The accounting policies set out below have been applied consistently to all periods presented in the consolidated financial
report. Where relevant, the accounting policies applied to the comparative period have been disclosed if they differ from
the current period policy.
c) Basis of consolidation
Subsidiaries are entities controlled by the company. Control exists when the company has the power, directly or indirectly,
to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control,
potential voting rights that presently are exercisable or convertible are taken into account. The financial statements of
subsidiaries are included in the consolidated financial report from the date that control commences until the date that
control ceases.
Investments in subsidiaries are carried at their cost of acquisition in the company’s financial statements.
Intragroup balances and any gains and losses or income and expenses arising from intragroup transactions, are eliminated
in preparing the consolidated financial statements.
d) Foreign currency
Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at the balance sheet date are translated to Australian dollars at
the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the
income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are
translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign
currencies that are stated at fair value are translated to Australian dollars at foreign exchange rates ruling at the dates the
fair value was determined.
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation are
translated to Australian dollars at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of
foreign operations, are translated to Australian dollars at rates approximating the foreign exchange rates ruling at the dates
of the transactions. Foreign exchange differences arising on retranslation are recognised directly in a separate component
of equity.
e) Derivative financial instruments
The consolidated entity uses derivative financial instruments to hedge its exposure to foreign exchange risks arising from
operational activities. In accordance with its treasury policy, the consolidated entity does not hold or issue derivative
financial instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for
as trading instruments.
Derivative financial instruments are recognised initially at cost. Subsequent to initial recognition, derivative financial
instruments are stated at fair value. The gain or loss on remeasurement to fair value is recognised immediately in profit
or loss. However, where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the
nature of the item being hedged.
The fair value of forward exchange contracts is their quoted market price at the balance sheet date, being the present value
of the quoted forward price.
52
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
f) Hedging
On entering into a hedging relationship, the consolidated entity normally designates and documents the hedge
relationship and risk management objective and strategy for undertaking the hedge. The documentation included
identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the
entity will assess the hedging instrument’s effectiveness in offsetting the exposure to changes in the item’s fair value or
cash flows attributable to the hedged risk. Such hedges are expected to be highly effective offsetting changes in fair value
or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout
the financial reporting periods for which they are designated.
For cash flow hedges, the associated cumulative gain or loss is removed from equity and recognised in the income
statement in the same period or periods during which the hedged forecast transaction affects profit or loss. The ineffective
part of any gain or loss is recognised immediately in the income statement.
g) Property, plant and equipment
Items of property, plant and equipment are stated at cost or deemed cost less accumulated depreciation and impairment
losses (see accounting policy (k)). The cost of acquired assets includes (i) the initial estimate at the time of installation
and during the period of use, when relevant, of the costs of dismantling and removing the items and restoring the site on
which they are located, and (ii) changes in the measurement of existing liabilities recognised for these costs resulting from
changes in the timing or outflow of resources required to settle the obligation or from changes in the discount rate.
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate
items of property, plant and equipment.
Depreciation is provided on property plant and equipment. Depreciation is calculated on a straight line basis so as to write
off the net cost of each asset over its expected useful life to its estimated residual value. Leasehold improvements are
depreciated over the period of the lease or estimated useful life, whichever is the shorter, using the straight line method.
The estimated useful lives, residual values and depreciation method are reviewed annually, with the effect of any changes
recognised on a prospective basis.
The following useful lives are used in the calculation of depreciation:
>
>
Leasehold improvements
6 to 10 years
Plant and equipment
4 to 8 years
h) Intangible Assets
Research and development
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and
understanding, is recognised in the income statement as an expense as incurred.
Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new
or substantially improved products and processes, is capitalised if the product or process is technically and commercially
feasible and the consolidated entity has sufficient resources to complete development.
The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads. Other
development expenditure is recognised in the income statement as an expense as incurred. Capitalised development
expenditure is stated at cost less accumulated amortisation and impairment losses (see accounting policy (k)).
Amortisation is charged to the income statement on a straight-line basis over the estimated useful life, but no more than
three years.
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
53
Notes to the Financial Statements
Intellectual property
Intellectual property acquired from third parties is amortised over its estimated useful life.
Computer software
Computer software is stated at cost and depreciation on a straight-line basis over 2½ years.
i) Trade and other receivables
Trade and other receivables are stated at their amortised cost less impairment losses. The carrying amount of uncollectible
trade receivables is reduced by an impairment loss through the use of an allowance account.
Provision for returns is offset against trade receivables for estimated warranty claims based upon historical experience.
j) Cash and cash equivalents
Cash and cash equivalents comprises cash balances and call deposits with an original maturity of three months or less.
Bank overdrafts that are repayable on demand and form an integral part of the consolidated entity’s cash management are
included as a component of cash and cash equivalents for the purpose of the statement of cash flows.
k) Impairment
The carrying amounts of the consolidated entity’s assets are reviewed at each reporting date to determine whether there is
any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated.
For intangible assets that are not yet available for use, the recoverable amount is estimated at each balance sheet date.
An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its
recoverable amount. Impairment losses are recognised in the income statement unless the asset has previously been
revalued, in which case the impairment loss is recognised as a reversal to the extent of that previous revaluation with any
excess recognised through the income statement.
Impairment of receivables is not recognised until objective evidence is available that a loss event has occurred. Significant
receivables are individually assessed for impairment. Impairment testing is performed by placing non-significant
receivables in portfolios of similar risk profiles, based on objective evidence from historical experience adjusted for any
effects of conditions existing at each balance date.
The recoverable amount of other assets is the greater of their fair value less costs to sell and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset. For an asset that does not
generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the
asset belongs.
l) Employee benefits
Superannuation
Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement
as incurred. There are no defined benefit plans in operation.
Long-term service benefits
The consolidated entity’s net obligation in respect of long-term service benefits, other than pension plans, is the amount
of future benefit that employees have earned in return for their service in the current and prior periods. The obligation is
calculated using expected future increases in wage and salary rates including related on-costs and expected settlement
dates, and is discounted using the rates attached to the Commonwealth Government bonds at the balance sheet date
which have maturity dates approximating to the terms of the consolidated entity’s obligations.
54
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Share-based payment transactions
The share option programme allows the company and the consolidated entity employees to acquire shares of the Company.
The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair
value is measured at grant date and spread over the period during which the employees become unconditionally entitled to
the options. The fair value of the options granted is measured using a binomial option pricing model, taking into account
the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to
reflect the actual number of share options that vest except where forfeiture is only due to share prices not achieving the
threshold for vesting.
Wages, salaries, annual leave, and non-monetary benefits
Liabilities for employee benefits for wages, salaries and annual leave represent present obligations resulting from
employees’ services provided to reporting date, calculated at undiscounted amounts based on remuneration wage and
salary rates that the consolidated entity expects to pay as at reporting date including related on-costs, such as, workers
compensation insurance and payroll tax.
m) Provisions
A provision is recognised in the balance sheet when the consolidated entity has a present legal or constructive obligation
as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation.
Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and, where appropriate, the risks specific to the liability.
n) Trade and other payables
Trade and other payables are stated at their amortised cost.
o) Revenue
The consolidated entity allocates revenue to each element in software arrangements involving multiple elements based
on the relative fair value of each element. The typical elements in the multiple element arrangement are licence and
maintenance fees. The company’s determination of fair value is based on the price charged when the same element is sold
separately.
Revenue from the sale of licences, where the consolidated entity has no post delivery obligations to perform is recognised
in the income statement at the date of delivery of the licence key.
Revenue from maintenance contracts is recognised rateably over the term of the service agreement, which is typically one
year. Maintenance contracts are typically priced based on a percentage of licence fees and have a one year term. Services
provided to customers under maintenance contracts include technical support and supply of software updates.
Revenue from multiple element software arrangements, where the fair value of an undelivered element cannot be reliably
measured are recognised over the period the undelivered services are provided.
Revenue from consulting services is recognised over the period the services are provided.
No revenue is recognised if there are significant uncertainties regarding the recovery of the consideration due, the costs
incurred or to be incurred cannot be measured reliably, there is a risk of return of goods or there is continuing management
involvement with the goods.
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
55
Notes to the Financial Statements
p) Expenses
Operating lease payments
Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the
lease. Lease incentives received are recognised in the income statement as an integral part of the total lease expense and
spread over the lease term.
Net financing costs
Net financing costs comprise interest payable on borrowings calculated using the effective interest method, interest
receivable on funds invested, dividend income, foreign exchange gains and losses, and gains and losses on hedging
instruments that are recognised in the income statement (see accounting policy 1(f)).
q) Segment reporting
A segment is a distinguishable component of the consolidated entity that is engaged in providing products or services
within a particular economic environment (geographical segment), which is subject to risks and rewards that are different
from those of other segments.
r) Income tax
Income tax on the income statement for the periods presented comprises current and deferred tax. Income tax is
recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case
it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted
at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount
of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against
which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related
tax benefit will be realised.
Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay
the related dividend.
s) Goods and Services Tax
Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), or similar taxes, except
where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is
recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable or payable is
included as a current asset or liability in the balance sheet.
Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from
investing and financing activities, which are recoverable or payable are classified as operating cash flows.
56
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
t) Significant accounting judgements, estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future
events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of certain assets and liabilities within the next annual reporting period are:
Intangible assets
An intangible asset arising from development expenditure on an internal project is recognised only when the economic
entity can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale,
its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the
availability of resources to complete the development and the ability to measure reliably the expenditure attributable to the
intangible asset during its development. Following the initial recognition of the development expenditure, the cost model
is applied requiring the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses.
Any expenditure so capitalised is amortised over the period of expected benefits from the related project commencing
from the commercial release of the project. The carrying value of an intangible asset arising from development expenditure
is tested for impairment annually when the asset is not yet available for use or more frequently when an indication of
impairment arises during the reporting period.
Share based payment transactions
The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value of
the equity instruments at the date at which they are granted. The fair value is determined by using a binomial option pricing
model and applying management determined probability factors relating to non-market vesting conditions.
Note 2. Segment reporting
The consolidated entity operates predominantly in a single business segment, being computer software products
business segment. Segment information is presented in respect of the consolidated entity’s geographic segments, which
are the primary basis of segment reporting. The geographic segment reporting format reflects the consolidated entity’s
management and internal reporting structure.
Inter-segment pricing is determined on an arm’s length basis.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Unallocated items comprise inter segment revenue less unallocated head office
expenses, corporate and inter segment assets and liabilities.
Segment capital expenditure is the total cost incurred during the year to acquire segment assets that are expected to be
used for more than one period.
The consolidated entity is managed on a worldwide basis, but operates in the following three geographical segments:
>
>
>
The Americas. Operating from the United States with responsibility for the countries in North, Central and
South America.
Europe. Operating from the United Kingdom with responsibility for the countries in Europe.
Asia Pacific. Operating from Australia with responsibility for the countries in the rest of the world, including Head
Office revenue and expenses.
In presenting information on the basis of geographical segments, segment revenue is based on the geographical location
of customers. Segment assets are based on the geographical location of the assets.
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
57
Notes to the Financial Statements
Geographic
segments
In thousands
of AUD
Sales to
customers
outside the
consolidated
entity
Inter-
segment
sales
Total
segment
revenue
Total revenue
Segment
results
Results from
operating
activities
Financing
income
Income tax
expense
Profit for
the period
Segment
assets
Total assets
Segment
liabilities
Total
liabilities
Capital
expenditure
Total capital
expenditure
Depreciation
and
amortisation
expenditure
Total
depreciation
and
amortisation
expenditure
Americas
Europe
Asia Pacific
Corporate
Australia*
Eliminations
Consolidated
2008
2007
2008
2007
2008
2007
2008
2007
2008
2007
2008
2007
23,050
21,672
6,428
6,975
7,358
7,198
548
259
-
273
37,384
36,377
-
-
-
-
-
-
17,555
15,481
(17,555)
(15,481)
-
-
23,050
21,672
6,428
6,975
7,358
7,198
18,103
15,740
(17,555)
(15,208)
37,384
36,377
37,384
36,377
918
774
202
204
796
326
5,292
5,405
-
273
7,208
6,982
7,208
6,982
462
471
(1,894)
(2,020)
5,776
5,433
15,981
15,351
4,302
5,126
5,473
4,742
28,426
28,276 (13,856)
(12,300)
40,326
41,195
40,326
41,195
15,121
13,363
3,393
4,207
5,747
4,550
6,130
7,192
(13,856)
(12,270)
16,535
17,042
52
53
12
139
29
24
265
2,248
133
154
54
40
51
40
6,436
4,526
16,535
17,042
358
2,464
358
2,464
6,674
4,760
-
-
-
-
6,674
4,760
* Corporate Australia includes both the corporate head office and development functions of the Company.
58
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Note 3. Other income
In thousands of AUD
Interest income
Dividends received
Note 4. Expenses
Total expenses include:
In thousands of AUD
Depreciation and amortisation
Operating lease rental expenses
Net foreign exchange (gain)/loss
Note 5. Personnel expenses
In thousands of AUD
Wages and salaries
Other associated personnel expenses
Superannuation contributions
Employee options and share grant
Increase in liability for annual leave
Increase in liability for long service leave
Consolidated
The Company
2008
2007
462
-
462
471
-
471
2008
231
1,382
1,613
2007
280
-
280
Consolidated
The Company
Notes
2008
2007
2008
2007
6,674
4,760
6,487
4,566
1,304
273
1,316
63
940
(32)
919
150
Consolidated
The Company
Notes
2008
2007
2008
2007
18
21,666
19,165
13,705
11,069
1,226
837
174
167
6
1,972
818
85
35
71
1,005
837
174
208
6
1,504
818
85
86
71
24,076
22,146
15,935
13,633
Personnel expenses are shown before the capitalisation of development costs.
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
59
Notes to the Financial Statements
Note 6. Auditors’ remuneration
2008 – Deloitte Touche Tohmatsu
2007 – DTT NSW
In thousands of AUD
Consolidated
The Company
2008
2007
2008
2007
Remuneration for audit and review of the financial reports of the Company or any entity in the consolidated entity:
Audit and review of financial reports:
Auditors of the company
Other auditors
129,335
129,000
86,654
87,000
25,521
-
-
-
Remuneration for other services by the auditors of the Company or any entity in the consolidated entity:
Taxation services:
Auditors of the company
Other auditors
Other services:
47,544
27,500
47,544
12,000
2,813
-
-
-
Auditors of the company (sundry accounting advice)
9,495
5,000
9,495
5,000
Note 7. Income tax expense
Recognised in the income statement
In thousands of AUD
Current tax expense:
Current year
Prior year adjustments
Deferred tax expense:
Origination and reversal of temporary differences
15
Total income tax expense in income statement
Consolidated
The Company
Note
2008
2007
2008
2007
1,388
56
1,444
450
1,894
1,071
353
1,424
596
2,020
806
71
877
485
1,362
768
156
924
395
1,319
60
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Note 7. Income tax expense (continued)
Numerical reconciliation between income tax expense and profit before tax
In thousands of AUD
Profit before tax
Income tax using the domestic corporate tax rate of 30%
Increase in income tax expense due to:
Non-deductible expenses
Effect of tax rates in foreign jurisdictions
Decrease in income tax expense due to:
R&D tax incentive
Foreign sourced income (net of expense)
Prior year adjustments
Income tax expense
Note 8. Earnings per share
Consolidated
The Company
2008
7,670
2,301
98
97
2007
7,453
2,236
84
29
(658)
(682)
-
56
-
353
2008
7,725
2,318
46
-
(658)
(415)
71
2007
6,011
1,804
41
-
(682)
-
156
1,894
2,020
1,362
1,319
The calculation of basic and diluted earnings per share at 30 June 2008 was based on the profit attributable to ordinary
shareholders of $5,776,000 (2007: $5,433,000); a weighted number of ordinary shares outstanding during the year ended
30 June 2008 of 166,504,416 (2007: 166,020,868); and a weighted number of ordinary shares (diluted) outstanding during
the year ended 30 June 2008 of 166,600,781(2007:167,401,517), calculated as follows:
In thousands of AUD
Profit for the year
Weighted average number of shares used as the denominator
(Number)
Number for basic earnings per share:
Ordinary shares
Effect of employee share options on issue
Number for diluted earnings per share
Basic earnings per share (AUD cents)
Diluted earnings per share (AUD cents)
Consolidated
2008
5,776
2007
5,433
Consolidated
2008
2007
166,504,416 166,020,868
96,365
1,380,649
166,600,781
167,401,517
3.47¢
3.47¢
3.27¢
3.24¢
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
61
Notes to the Financial Statements
Note 9. Cash and cash equivalents
In thousands of AUD
Cash at bank and on hand
Note 10. Trade and other receivables
In thousands of AUD
Trade debtors
Less: Allowance for doubtful debts
Less: Provision for returns
GST receivable
Receivable from controlled entities
Consolidated
The Company
2008
2007
11,148
11,704
2008
5,279
2007
5,045
Consolidated
The Company
2008
2007
10,576
11,606
(187)
(333)
-
(402)
2008
1,508
(80)
(41)
10,056
11,204
1,387
101
-
96
-
101
9,345
2007
3,628
-
(97)
3,531
96
7,327
10,157
11,300
10,833
10,954
The credit period on sales ranges from 30 to 90 days. No interest is charged on trade debtors.
Ageing of past due but not impaired:
In thousands of AUD
Past due 90 days
Consolidated
The Company
2008
2,047
2007
1,912
2008
87
2007
666
The movement in the allowance for doubtful debts in respect of trade receivables is detailed below:
In thousands of AUD
Balance at beginning of year
Amounts written off during the year
Increase/(decrease) in provision
Balance end of year
Consolidated
The Company
2008
2007
2008
2007
-
-
187
187
-
-
-
-
-
-
80
80
-
-
-
-
The allowance for doubtful debts has been estimated based upon specific debtor accounts where the estimated future
cashflow is less than the carrying amount. For all other accounts that are greater than 90 days past due, no further
provisioning has been made as a result of historical collection patterns.
62
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Note 11. Other current assets
In thousands of AUD
Franking deficit tax offset benefit
Income taxes receivable
Other prepayments
Note 12. Investments
In thousands of AUD
Consolidated
The Company
2008
292
1,006
628
1,926
2007
2008
2007
788
744
482
292
570
342
789
525
291
2,014
1,204
1,605
Consolidated
The Company
2008
2007
2008
2007
Shares in controlled entities at cost (refer Note 24)
-
-
54
54
Note 13. Other financial assets
In thousands of AUD
Deposits
Consolidated
The Company
2008
1,765
2007
1,670
2008
1,690
2007
1,583
Deposits are term deposits which are held to secure a bank guarantee on leased premises and a foreign exchange facility.
The carrying amount of other financial assets is a reasonable approximation of their fair value.
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
63
Notes to the Financial Statements
Note 14. Property, plant and equipment
Plant and Equipment
In thousands of AUD
Carrying amount at start of year
Additions
Depreciation expense
Carrying amount at end of year
Leasehold Improvements
In thousands of AUD
Carrying amount at start of year
Additions
Disposals
Depreciation expense
Carrying amount at end of year
Consolidated
The Company
2008
2007
2008
2007
835
193
(341)
687
869
453
(487)
835
682
129
(250)
561
624
369
(311)
682
Consolidated
The Company
2008
2,058
5
(151)
(194)
1,718
2007
268
2,017
(21)
(206)
2,058
2008
1,772
5
-
(130)
1,647
2007
48
1,945
(21)
(200)
1,772
Carrying amounts
In thousands of AUD
Consolidated
The Company
Plant and
Equipment
Leasehold
Improvements
Balance at 30 June 2007
Balance at 30 June 2008
835
687
2,058
1,718
Total
2,893
2,405
Plant and
Equipment
Leasehold
Improvements
682
561
1,772
1,647
Total
2,454
2,208
64
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Note 15. Deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Consolidated
In thousands of AUD
Property, plant and equipment
Intangible assets
Trade and other payables
Employee benefits
Provisions
Other current liabilities
Unrealised foreign exchange loss
Deferred tax assets/liabilities
Set off of deferred tax asset
Net deferred tax assets/liabilities
The Company
In thousands of AUD
Property, plant and equipment
Intangible assets
Trade and other payables
Employee benefits
Provisions
Other current liabilities
Unrealised foreign exchange loss
Deferred tax assets/liabilities
Set off of deferred tax asset
Net deferred tax assets/liabilities
Assets
Liabilities
Net
2008
2007
2008
2007
2008
2007
50
-
67
372
281
40
100
910
86
67
23
315
259
18
115
883
(626)
284
(634)
249
-
-
50
86
3,754
3,280
(3,754)
(3,214)
-
-
-
13
-
-
-
-
10
-
67
372
281
27
100
23
315
259
9
115
3,767
(626)
3,141
3,290
(634)
2,656
(2,857)
(2,407)
-
-
(2,857)
(2,407)
Assets
Liabilities
Net
2008
2007
2008
2007
2008
2007
37
-
26
318
145
-
100
626
29
66
23
256
145
-
115
634
(626)
(634)
-
-
-
-
37
29
3,754
3,280
(3,754)
(3,214)
-
-
-
13
-
-
-
-
10
-
26
318
145
(13)
100
23
256
145
(10)
115
3,767
(626)
3,141
3,290
(634)
2,656
(3,141)
(2,656)
-
-
(3,141)
(2,656)
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
65
Notes to the Financial Statements
Note 15. Deferred tax assets and liabilities (continued)
Movement in temporary differences during the year:
For year ended 30 June 2008
Consolidated
The Company
In thousands of AUD
Property, plant and
equipment
Intangible assets
Balance
1 Jul 07
Recognised
in income
Balance
30 Jun 08
Balance
1 Jul 07
Recognised
in income
Balance
30 Jun 08
86
(36)
50
29
8
37
(3,214)
(540)
(3,754)
(3,214)
(540)
(3,754)
Trade and other payables
Employee benefits
Provisions
Other current liabilities
Unrealised foreign exchange
loss
23
315
259
9
115
44
57
22
18
(15)
67
372
281
27
100
23
256
145
(10)
115
3
62
-
(3)
(15)
26
318
145
(13)
100
(2,407)
(450)
(2,857)
(2,656)
(485)
(3,141)
For year ended 30 June 2007
Consolidated
The Company
In thousands of AUD
Balance
1 Jul 06
Recognised
in income
Balance
30 Jun 07
Balance
1 Jul 06
Recognised
in income
Balance
30 Jun 07
Trade and other receivables
Property, plant and
equipment
Intangible assets
Trade and other payables
Employee benefits
Provisions
Other current liabilities
Unrealised foreign
exchange loss
4
56
(2,654)
257
370
105
51
-
(4)
30
(560)
(234)
(55)
154
(42)
115
-
86
4
-
(4)
29
-
29
(3,214)
(2,654)
(560)
(3,214)
23
315
259
9
115
-
272
96
21
-
23
(16)
49
(31)
115
23
256
145
(10)
115
(1,811)
(596)
(2,407)
(2,261)
(395)
(2,656)
There were no deferred tax adjustments recognised directly in equity (2007: $ nil).
66
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Note 16. Intangible assets
The amortisation and impairment charge is recognised in the following line item in the income statement:
In thousands of AUD
Research and development expenses
Consolidated
The Company
2008
6,138
6,138
2007
4,067
4,067
2008
6,107
6,107
2007
4,055
4,055
Cost
In thousands of AUD
Balance at 1 July 2006
Fully amortised & offset
Internally developed
Acquired
Balance at
30 June 2007
Balance at 1 July 2007
Internally developed
Acquired
13,916
(23)
5,454
16
19,363
19,363
7,255
-
Balance at 30 June 2008
26,618
Consolidated
The Company
Software
develop-
ment
Patents &
trade-
marks
Third
party
software
Total
Software
develop-
ment
Patents
& trade-
marks
Third
party
software
Total
33
546
14,495
13,916
-
-
-
33
33
-
-
33
-
-
395
941
(23)
(23)
5,454
5,454
411
16
20,337
19,363
941
20,337
19,363
-
160
7,255
160
7,255
-
1,101
27,752
26,618
-
-
-
-
-
-
-
-
-
484
14,400
-
-
350
834
(23)
5,454
366
20,197
834
20,197
-
160
994
7,255
160
27,612
Amortisation
In thousands of AUD
Consolidated
The Company
Software
develop-
ment
Patents &
trade-
marks
Third
party
software
Total
Software
develop-
ment
Patents
& trade-
marks
Third
party
software
Total
Balance at 1 July 2006
Fully amortised & offset
Amortisation for year
Balance at
30 June 2007
4,358
(23)
3,992
8,327
Balance at 1 July 2007
8,327
Fully amortised & offset
Amortisation for year
5,874
Balance at 30 June 2008
14,201
24
-
1
25
25
8
33
546
4,928
-
74
620
(23)
4,067
8,972
4,358
(23)
3,992
8,327
620
8,972
8,327
257
877
6,139
15,111
5,874
14,201
-
-
-
-
-
-
-
484
4,842
-
63
547
(23)
4,055
8,874
547
8,874
233
780
6,107
14,981
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
67
Notes to the Financial Statements
Note 16. Intangible assets (continued)
Carrying amounts
In thousands of AUD
Balance at 30 June 2007
Balance at 30 June 2008
Consolidated
The Company
Software
develop-
ment
11,036
12,417
Patents &
trade-
marks
Third
party
software
Total
Software
develop-
ment
Patents
& trade-
marks
Third
party
software
Total
8
-
321
224
11,365
12,641
11,036
12,417
-
-
287
214
11,323
12,631
Note 17. Trade and other payables
In thousands of AUD
Payable to controlled entities
Trade and other creditors
The average credit period on trade and other payables is 30 days.
Note 18. Employee benefits
Current
In thousands of AUD
Liability for untaken annual leave
Liability for long service leave
Non-current
In thousands of AUD
Liability for long service leave
Consolidated
The Company
2008
2007
2008
-
2,448
2,448
-
2,165
2,165
-
1,669
1,669
2007
68
1,187
1,255
Consolidated
The Company
2008
2007
2008
2007
983
156
1,139
816
167
983
782
156
938
574
167
741
Consolidated
The Company
2008
130
2007
113
2008
130
2007
113
68
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Pension plans
Employees of the consolidated entity accumulate pension benefits through statutory contributions by the entities in
the consolidated entity as required by the laws of the jurisdictions in which they operate, supplemented by individual
contributions. The consolidated entity does not provide any defined benefit pension plans.
Share based payments
On 4 October 2000, the consolidated entity established a share option programme that entitles employees to purchase
shares in the entity. In accordance with this programme, options are exercisable at the market price of the shares at the
date of grant.
The terms and conditions of the grants made and number outstanding at 30 June 2008 are as follows:
>
>
>
>
All options vest at the rate of 25% per annum, starting on the first anniversary of the grant date
The contractual life of each option is five years from the grant date
Exercises are settled by physical delivery of shares
Grants marked (*) include performance hurdles as conditions for vesting
Grant
date
Aug 2003
Feb 2004
Apr 2004 (*)
May 2004
Jul 2004
Nov 2004
Feb 2005
Apr 2005 (*)
Sep 2005
Exercise
Price
Number of
Instruments
Outstanding
Grant
date
Exercise
Price
Number of
Instruments
Outstanding
$0.22
$0.26
$0.46
$0.33
$0.40
$0.57
$0.52
$0.46
$0.54
115,250
198,510
May 2006
Aug 2006 (*)
300,000
Jan 2007 (*)
205,365
278,000
400,000
336,500
200,000
510,000
Jun 2007
Sep 2007 (*)
Mar 2008 (*)
Mar 2008 (*)
Apr 2008 (*)
$0.41
$0.44
$0.50
$0.48
$0.42
$0.38
$0.43
$0.38
654,000
170,000
160,000
848,000
1,000,000
350,000
350,000
300,000
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
69
Notes to the Financial Statements
Note 18. Employee benefits (continued)
The number and weighted average exercise prices of share options is as follows:
Weighted
Average
exercise price
Number of
options
Weighted
Average
exercise price
Number of
options
In thousands of AUD
Outstanding at the beginning of the year
Forfeited during the year
Exercised during the year
Granted during the year
Outstanding at the end of the year
Exercisable at the end of the year (vested)
2008
$0.44
$0.48
$0.21
$0.41
$0.44
$0.44
2008
7,280
(2,371)
(533)
2,000
6,376
2,607
2007
$0.45
$0.51
$0.28
$0.47
$0.44
$0.48
2007
7,824
(2,960)
(298)
2,714
7,280
3,349
The options outstanding at 30 June 2008 have an exercise price in the range of $0.22 to $0.57 and a weighted average
contractual life of five years.
During the year ended 30 June 2008, 532,605 options were exercised (2007: 298,020).
The fair values of services received in return for share options granted to employees is measured by reference to the fair
value of share options granted. The estimate of the fair value of the services received is measured based on the Binomial
option-pricing model. The contractual life of the option (five years) is used as an input into this formula. Expectations of
early exercise are incorporated into the Binomial formula.
Fair value of share options and assumptions
For year ended 30 June 2008
Grant date
Fair value at measurement date
Share price
Exercise price
Expected volatility (expressed as weighted average volatility used in the
modelling under the Binomial formula)
Option life (expressed as weighted average life used in the modelling
under the Binomial formula)
9 Sept 07
3 Mar 08
31 Mar 08 14 Apr 08
$0.14
$0.42
$0.42
65%
$0.16
$0.38
$0.38
64%
$0.13
$0.43
$0.43
64%
$0.16
$0.38
$0.38
64%
5 years
5 years
5 years
5 years
Expected dividends
5%
5%
5%
5%
Risk-free interest rate (based on national government bonds)
7.25%
7.25%
7.25%
7.25%
70
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Fair value of share options and assumptions
For year ended 30 June 2007
Grant date
7 Aug 2006
15 Aug 2006
1 Nov 2006
23 Jan 2007
23 Jan 2007
Fair value at measurement date
Share price
Exercise price
Expected volatility (expressed as weighted
average volatility used in the modelling
under the Binomial formula)
Option life (expressed as weighted average
life used in the modelling under the
Binomial formula)
Expected dividends
Risk-free interest rate (based on national
government bonds)
$0.14
$0.44
$0.44
47%
$0.16
$0.46
$0.46
47%
$0.19
$0.57
$0.57
46%
$0.18
$0.50
$0.50
46%
$0.17
$0.48
$0.48
46%
5 years
5 years
5 years
5 years
5 years
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
The expected volatility is based on the historic volatility (calculated based on the weighted average remaining life of the
share options), adjusted for any expected changes to future volatility due to publicly available information.
Share options are granted under a service condition and, for grants to key management personnel, a non-market
performance condition related to profitability of the consolidated entity. Such conditions are not taken into account in
the grant date fair value measurement of the services received. There are no market conditions associated with the share
option grants.
The fair value of the options at grant date is determined based on the Binomial formula using the above model inputs.
During the year ended 30 June 2008, the company and consolidated entity recognised expense of $174,000 related to the
fair value of options granted (2007: $85,000 in company and consolidated entity).
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
71
Notes to the Financial Statements
Note 19. Provisions
Current
In thousands of AUD
Employee benefits
Non-current
In thousands of AUD
Employee benefits
Lease make good
Other
Note 20. Other liabilities
Current
In thousands of AUD
Deferred revenue
Non-current
In thousands of AUD
Deferred revenue
Consolidated
The Company
2008
1,139
2007
983
2008
938
2007
741
Consolidated
The Company
2008
2007
2008
2007
130
360
24
514
113
360
24
497
130
360
-
490
113
360
-
473
Consolidated
The Company
2008
8,995
2007
10,279
2008
5,534
2007
6,384
Consolidated
The Company
2008
298
2007
462
2008
105
2007
232
72
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Note 21. Capital and reserves
Reconciliation of movement in capital and reserves attributed to equity holders in the parent:
Consolidated
In thousands of AUD
Share
capital
Hedging
reserve
Translation
reserve
Employee
benefit
reserve
Retained
earnings
Total
Balance at 1 July 2006
538
-
-
-
142
-
680
680
-
-
-
114
-
794
Total recognised income and
expense
Expensed employee options
Lapsed employee options
Shares issued
Dividends to shareholders
Balance at 30 June 2007
Balance at 1 July 2007
Total recognised
income and expense
Transfer from translation
reserve to retained earnings
Expensed employee options
Shares issued
Dividends to shareholders
Balance at 30 June 2008
The Company
In thousands of AUD
(12)
12
(462)
(523)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(985)
(985)
(520)
514
-
-
-
(991)
482
-
85
(100)
(52)
-
415
415
-
-
174
(80)
-
509
22,662
5,433
-
100
-
(4,152)
24,043
24,043
5,776
(514)
-
-
23,208
4,922
85
-
90
(4,152)
24,153
24,153
5,256
-
174
34
(5,826)
23,479
(5,826)
23,791
Share
capital
Hedging
reserve
Translation
reserve
Employee
benefit
reserve
Retained
earnings
Total
Balance at 1 July 2006
538
Total recognised income and
expense
Expensed employee options
Lapsed employee options
Shares issued
Dividends to shareholders
Balance at 30 June 2007
Balance at 1 July 2007
Total recognised income and
expense
Expensed employee options
Shares issued
Dividends to shareholders
Balance at 30 June 2008
-
-
-
142
-
680
680
-
-
114
-
794
(12)
12
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
482
-
85
(100)
(52)
-
415
415
-
174
(80)
-
509
19,542
4,692
20,550
4,704
-
100
-
85
-
90
(4,152)
20,182
(4,152)
21,277
20,182
6,363
-
-
(5,826)
20,719
21,277
6,363
174
34
(5,826)
22,022
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
73
Notes to the Financial Statements
Note 21. Capital and reserves (continued)
Share capital
In thousands of shares
On issue 1 July
Issued for cash against employee options exercised under ESOP
On issue 30 June
Ordinary shares
2008
2007
166,203
165,905
532
298
166,735
166,203
Effective 1 July 1998, the Company Law Reform Act abolished the concept of par value shares and the concept of authorised
capital. Accordingly, the company does not have authorised capital or par value in respect of its issued shares.
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote
per share at meetings of the Company. All shares rank equally with regard to the Company’s residual assets.
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging
instruments related to hedged transactions that have not yet occurred.
Translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of
foreign operations where their functional currency is different to the presentation currency of the reporting entity, as well as
from the translation of liabilities that hedge the Company’s net investment in a foreign subsidiary.
Employee benefit reserve
The employee benefit reserve arises on the grant of share options to employees under the consolidated entity’s Employee
Share Option Plan. Amounts are transferred out of the reserve and into share capital when the options are exercised. Refer
to note 18 for further detail.
Dividends
Dividends paid in the current year by the company are:
In thousands of AUD
Cents per share
Total amount
Franked/unfranked
Date of payment
2008
Final 2007
Interim 2008
Total amount
2007
Final 2006
Interim 2007
Total amount
2.0¢
1.5¢
1.5¢
1.0¢
3,326
2,500
5,826
2,490
1,662
4,152
Unfranked
Unfranked
14 Sep 07
7 Mar 08
Unfranked
Unfranked
15 Sep 06
16 Mar 07
74
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
After the balance sheet date, the following dividend was proposed by the directors. The declaration and subsequent
payment of dividends has no income tax consequences. The financial effect of this dividend has not been brought to
account in the financial statements for the year ended 30 June 2008 and will be recognised in subsequent financial reports:
In thousands of AUD
Cents per share
Total amount
Franked/ unfranked
Date of payment
Final 2008
1.5
2,501
Unfranked
12 Sep 08
Note 22. Financial instruments
Capital risk management
The company and consolidated entity manages its capital to ensure that controlled entities will be able to continue as a
going concern while maximising the return to stakeholders through the optimisation of treasury management.
The capital structure of the company and consolidated entity consists of cash and cash equivalents and equity attributable
to equity holders of the company, comprising issued capital, reserves, and retained earnings as disclosed in Notes 9 and
21 respectively.
Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset,
financial liability and equity instrument are disclosed in Note 1 to the financial statements.
Financial risk management objectives
The Board of Directors has overall responsibility for the establishment and oversight of the company and consolidated
entity’s financial management framework. The Board has an established Audit Committee, which is responsible for
developing and monitoring the consolidated entity’s financial management policies. The Committee provides regular
reports to the Board of Directors on its activities.
The Audit Committee oversees how Management monitors compliance with risk management policies and procedures and
reviews the adequacy of the risk management framework in relation to the risks. The main risk arising from the company
and consolidated entity’s financial instruments are currency risk, credit risk, liquidity risk and cash flow interest rate risk.
The company and consolidated entity seeks to minimise the effects of these risks, where deemed appropriate, by using
derivative financial instruments to hedge these risk exposures. The use of financial derivatives is governed by the company
and consolidated entity’s policies on foreign exchange risk, credit risk, the use of financial derivatives and non-derivative
financial instruments, and the investment of excess liquidity. The company and consolidated entity does not enter into or
trade financial instruments, including derivative financial instruments, for speculative purposes.
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
75
Notes to the Financial Statements
Note 22. Financial instruments (continued)
Market risk
The company and consolidated entity’s activities expose it primarily to the financial risks of changes in foreign currency
exchange rates. The company and consolidated entity enters into foreign exchange forward contracts to hedge the
exchange rate risk arising from transactions not recorded in an entity’s functional currency.
Foreign currency risk management
The company and consolidated entity undertakes certain transactions denominated in foreign currencies, hence exposures
to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilising
forward foreign exchange contracts.
The carrying amount of the company and the consolidated entity’s foreign currency denominated monetary assets and
monetary liabilities at the reporting date that are denominated in a currency that is different to its functional currency are
as follows:
In thousands of AUD
Consolidated
The Company
Liabilities
Assets
Liabilities
Assets
2008
2007
-
-
-
-
2008
1,201
-
2007
2,662
-
2008
2007
-
-
-
-
2008
9,108
1,437
2007
8,258
1,730
US Dollar
UK Sterling
(i) Foreign currency sensitivity
At 30 June 2008, if the US Dollar and UK sterling weakened against the Australian dollar by the percentage shown, with all
other variables held constant, net profit for the year would increase (decrease) by:
In thousands of AUD
USD Impact
UK Sterling Impact
Consolidated
The Company
Consolidated
The Company
2008
2007
133
133
295
295
2008
1,012
1,012
2007
2008
2007
2008
2007
918
918
158
158
193
193
158
158
193
193
Net profit
Retained earnings
Change in currency (i) – 10% decrease
(i) This has been based on the change in the exchange rate against the Australian dollar in the financial years ended 30 June
2008 and 30 June 2007.
The sensitivity analysis has been based on the sensitivity rates used when reporting foreign currency risk internally to key
management personnel and represents management’s assessment of the possible change in foreign exchange rates based
on historical volatility.
76
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
In management’s opinion, the sensitivity analysis is not fully representative of the inherent foreign exchange risk as the
year end exposure does not necessarily reflect the exposure during the course of the year. The consolidated entity includes
certain subsidiaries whose functional currencies are different to the consolidated entity presentation currency. The main
operating entities outside of Australia are based in the United States and the United Kingdom. These entities transact
primarily in their functional currency and do not have significant foreign currency exposures due to outstanding foreign
currency denominated items. As stated in the company and consolidated entity’s accounting policies per Note 1, on
consolidation the assets and liabilities of these entities are translated into Australian dollars at exchange rates prevailing
on the balance sheet date. The income and expenses of these entities is translated at the average exchange rates for the
year. Exchange differences arising are classified as equity and are transferred to a foreign exchange translation reserve.
The company and consolidated entity’s future reported profits could therefore be impacted by changes in rates of exchange
between the Australian Dollar and the United States Dollar and the Australian Dollar and the UK Sterling.
(ii) Forward foreign exchange contracts
The company and consolidated entity is exposed to foreign currency risk on sales and purchases that are denominated in a
currency other than the AUD. The currencies giving rise to this risk are primarily United States Dollar and UK Sterling.
The company and consolidated entity uses forward exchange contracts to hedge its foreign currency risk. The forward
exchange contracts have maturities of less than one year after the balance sheet date. Where necessary, the forward
exchange contracts are rolled over at maturity.
The company and consolidated entity classifies its forward exchange contracts hedging forecasted transactions as cash
flow hedges and measures them at fair value. The fair value of hedge contracts at 30 June 2008 is $nil (30 June 2007: fair
value: $Nil). The company and consolidated entity did not have any forward exchange contracts at either 30 June 2008 or
30 June 2007.
Interest rate risk management
The company and the consolidated entity are not exposed to interest rate risk due to the absence of interest bearing debt,
other than cash in bank.
Credit risk management
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to
the company and consolidated entity. The company and consolidated entity has adopted a policy of only dealing with
creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of
financial loss from defaults.
Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas.
Ongoing credit evaluation is performed on the financial condition of accounts.
The company and consolidated entity does not have any significant credit risk exposure to any single counterparty or any
consolidated entity of counterparties having similar characteristics. The credit risk on liquid funds and derivative financial
instruments is limited because the counterparties are banks with high credit ratings assigned by international credit-rating
agencies.
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
77
Notes to the Financial Statements
Note 22. Financial instruments (continued)
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the board of directors, who have built an appropriate
liquidity risk management framework for the management of the company and consolidated entity’s short, medium and
long-term funding and liquidity management requirements.
The company and consolidated entity manages liquidity risk by maintaining adequate reserves, by continuously monitoring
forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.
All creditor and other payables shown in note 17 for both 2008 and 2007 carry no interest obligation and have a maturity of
less than three months.
Fair value of financial instruments
The carrying value of financial assets and financial liabilities of the company and consolidated entity is a reasonable
approximation of their fair value.
Note 23. Operating leases
Non-cancellable operating lease rentals is for office space with payables as follows:
In thousands of AUD
Less than one year
Between one and five years
Greater than five years
Note 24. Consolidated entities
Parent entity:
Integrated Research Limited
Subsidiaries:
Integrated Research, Inc
Integrated Research UK Limited
Consolidated
The Company
2008
1,016
3,371
-
4,387
2007
1,120
4,072
542
5,374
2008
813
2,983
-
2007
813
3,254
542
3,796
4,609
Country of
incorporation
Ownership interest
2008
2007
Australia
USA
UK
100%
100%
100%
100%
In the financial statements of the company, investments in controlled entities are measured at cost.
78
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Note 25. Reconciliation of cash flows from operating activities
In thousands of AUD
Profit for the year
Depreciation and amortisation
Provision for doubtful debts
Allowance for returns
Interest received
Dividend received
Net exchange differences
Change in operating assets and liabilities:
(Increase)/decrease in trade debtors
(Increase)/decrease in future income tax benefit
Consolidated
The Company
2008
5,776
6,674
187
(69)
(462)
-
894
1,030
(35)
2007
5,433
4,760
112
-
(471)
-
(62)
4,308
395
2008
6,363
6,487
80
(56)
(231)
(1,382)
-
2007
4,692
4,566
59
-
(280)
-
(150)
2,120
2,977
-
-
(Increase)/decrease in other operating assets
(7,086)
(5,923)
(8,984)
(5,877)
Increase/(decrease) in trade creditors
Increase/(decrease) in other operating liabilities
Increase/(decrease) in provision for income taxes payable
Increase/(decrease) in provision for deferred income taxes
Increase/(decrease) in other provisions
Increase/(decrease) in reserves
Net cash from operating activities
253
(1,448)
-
485
173
(426)
5,946
(213)
436
(926)
201
72
(484)
7,638
414
(977)
-
485
214
94
426
492
(429)
(395)
70
39
4,627
6,190
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
79
Notes to the Financial Statements
Note 26. Key management personnel disclosures
The following were key management personnel of the consolidated entity at any time during the reporting period and
unless otherwise indicated were key management personnel for the entire period:
Non-executive directors
Steve Killelea (Chairman)
David Boyles
John Brown (appointed July 2007)
Kate Costello
Alex Kennedy (resigned July 2007)
Clyde McConaghy (appointed December 2007)
Executive directors
Keith Andrews (CEO, resigned September 2007)
Mark Brayan (CEO, appointed September 2007)
Other key management personnel (full year)
Other key management personnel (part year)
David Leighton (Company Secretary)
Peter Adams (CFO, appointed March 2008)
Kurt Roscow (VP, Americas)
Nathan Brumby (CTO, resigned November 2007)
Steve Douglas (VP, Europe, resigned December 2007)
Rick Ferguson (GM, AsiaPac, appointed March 2008)
Stephen Rorie (CFO, resigned November 2007)
David Stark, (VP, Europe, appointed March 2008)
David Taylor (GM AsiaPac, resigned October 2007)
Key management personnel compensation
The key management personnel compensation included in “personnel expenses” (see note 5) are as follows:
In AUD
Short-term benefits
Post-employment benefits
Termination benefits
Consolidated
The Company
2008
2007
2008
2007
1,865,737
2,167,998
1,259,183
1,461,007
219,656
300,000
181,341
-
219,656
300,000
181,341
-
Equity compensation benefits
10,029
13,955
8,537
12,902
2,395,422
2,363,294
1,787,376
1,655,250
Individual directors and executives compensation disclosures
Information regarding individual directors and executives compensation is provided in the remuneration report on pages
26 to 34.
Apart from the details disclosed in this note, no director has entered into a material contract with the company or the
consolidated entity since the end of the previous financial year and there were no material contracts involving directors’
interests existing at year-end.
80
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Key management personnel transactions with the company or its controlled entities
It is the consolidated entity’s policy that service contracts for executive directors and senior executives be unlimited
in term but capable of termination by either party on one month’s notice and that the consolidated entity retains the
right to terminate the contract immediately by payment in lieu of notice or a severance payment equal to three months
remuneration or up to an amount for redundancy equal to the scale of payments prescribed in the NSW Employment
Protection Act.
Information regarding individual key management personnel’s service contracts is provided in the remuneration report on
pages 26 to 34.
Equity instruments
All options refer to options over ordinary shares of Integrated Research Limited, which are exercisable on a one-for-one
basis under the Employee Share Option Plan (ESOP).
Options and rights over equity instruments granted as compensation
The movement during the reporting year in the number of options over ordinary shares in Integrated Research Limited held,
directly, indirectly or beneficially, by each key management person, including their related parties, is as follows:
Current Year
Held at
1 July 2007
Granted as
compensation
Exercised
Other
changes*
Held at
30 June
2008
Vested during
the year
Vested and
exercisable at
30 June 2008
Directors
Keith Andrews
1,000,000
Mark Brayan
Executives
Peter Adams
-
-
1,000,000
350,000
Nathan Brumby
200,000
Steve Douglas
300,000
-
-
Rick Ferguson
-
300,000
Stephen Rorie
300,000
Kurt Roscow
300,000
-
-
David Stark
-
350,000
David Taylor
200,000
-
-
-
-
-
(1,000,000)
-
-
-
(200,000)
1,000,000
350,000
-
-
(11,250)
(288,750)
-
-
-
-
-
-
300,000
(300,000)
-
-
-
300,000
350,000
(200,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
75,000
-
-
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
81
Notes to the Financial Statements
Note 26. Key management personnel disclosures (continued)
Prior Year
Directors
Held at
1 July 2006
Granted as
compensation
Exercised
Other
changes*
Held at
30 June
2007
Vested during
the year
Vested and
exercisable at
30 June 2007
Keith Andrews
1,000,000
1,000,000
Executives
Nathan Brumby
200,000
Steve Douglas
300,000
-
-
Stephen Rorie
-
300,000
Kurt Roscow
300,000
-
David Taylor
-
200,000
-
-
-
-
-
-
(1,000,000)
1,000,000
-
-
-
-
-
200,000
300,000
300,000
300,000
200,000
-
-
-
-
75,000
75,000
-
-
75,000
75,000
-
-
*
Other changes represent options that expired or were forfeited during the year
Options granted as compensation in the current year were:
Options
Granted
Grant Date
Expiration
Date
Expiration Date
Exercise Price
per Share $
Market Value
per Share $
Earliest
Exercise Date
Peter Adams
Mark Brayan
350,000
1,000,000
Rick Ferguson
300,000
David Stark
350,000
Mar 2008
Sep 2007
Apr 2008
Mar 2008
Feb 2013
Sep 2012
Apr 2013
Mar 2013
$0.38
$0.42
$0.38
$0.43
$0.38
$0.42
$0.38
$0.43
Mar 2009
Sep 2008
Apr 2009
Mar 2009
25% of options granted vest annually on the anniversary of the grant date, and may also be subject to the consolidated
entity achieving certain performance hurdles. Options expire on the earlier of their expiry date or termination of the
individual’s employment. No options have been granted since the end of the financial year. The options were provided at
no cost to the recipients.
No options held by key management personnel are vested but not exercisable.
Exercise of options and shares granted as compensation
During the reporting period no shares were issued granted as compensation.
There are no amounts unpaid on the shares issued as a result of the exercise of the options.
82
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Movements in shares
The movement during the reporting period in the number of ordinary shares in Integrated Research Limited held, directly,
indirectly or beneficially, by each key management person, including their related parties, is as follows:
Held at
1 July 2007
Purchases
Received on
exercise of options
Received as
compensation
Sales
Held at
30 June 2008
Current Year
Directors
Non-executive
David Boyles
1,700,000
-
John Brown
Kate Costello
Alex Kennedy
-
50,000
200,000
350,000
Steve Killelea
94,834,951
Clyde McConaghy
Executive
Mark Brayan
-
-
-
-
-
-
25,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,700,000
50,000
200,000
350,000
94,834,951
-
25,000
Held at
1 July 2006
Purchases
Received on
exercise of options
Received as
compensation
Sales
Held at
30 June 2007
Prior Year
Directors
Non-executive
David Boyles
1,600,000
100,000
Kate Costello
Alex Kennedy
200,000
350,000
Steve Killelea
94,834,951
Executive
Keith Andrews
145,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,700,000
200,000
350,000
94,834,951
145,000
Shareholdings at the date of the Directors’ Report remain unchanged.
Other transactions with the company or its controlled entities
There were no other transactions between the key management personnel, or their personally-related entities, and the
company or its controlled entities.
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
83
Notes to the Financial Statements
Note 27. Related parties
The company has a related party relationship with its subsidiaries (see note 24) and its key management personnel
(see note 26).
During the financial year ended 30 June 2008, subsidiaries purchased goods from the Company in the amount of
$17,555,000 (2007: $15,481,000) and at 30 June 2008 subsidiaries owed the consolidated entity $9,345,000 (2007:
$7,259,000) Refer notes 10 and 17. The net amounts owed are non interest bearing and repayable at call. Transactions with
subsidiaries are priced on an arm’s length basis.
At 30 June 2008 Mr Steve Killelea, the Chairman of the Company, owned either directly or indirectly 56.88% of the Company
(2007: 57.06%).
Note 28. Subsequent events
For dividends declared after 30 June 2008 see Note 21 in the financial statements. The financial effect of dividends
declared and paid after 30 June 2008 have not been brought to account in the financial statements for the year ended
30 June 2008 and will be recognised in subsequent financial reports.
No other transaction or event of a material or unusual nature has arisen in the interval between the end of the financial
year and the date of this report any item, likely, in the opinion of the directors of the company, to affect significantly the
operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity, in
future financial years.
84
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Directors’
declaration
In the opinion of the directors of Integrated Research Limited (“the Company”):
a)
the financial statements and notes, set out in pages 46 to 84, are in accordance with the Corporations Act 2001,
including:
(i) giving a true and fair view of the financial position of the Company and consolidated entity as at 30 June 2008
and of their performance, as represented by the results of their operations and their cash flows, for the year
ended on that date; and
(ii)
complying with Accounting Standards in Australia and the Corporations Regulations 2001; and
b)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
c)
The directors have been given the declarations required under Section 295(5) of the Corporations Act 2001 from the
chief executive officer and the chief financial officer for the financial year ended 30 June 2008.
Dated at North Sydney this 22nd day of September 2008.
Signed in accordance with a resolution of the directors:
Steve Killelea
Chairman
Mark Brayan
Chief Executive Officer
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
85
Independent
Auditor’s Report
Independent Auditor’s Report to the Members of Integrated Research Limited
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1219 Australia
DX 10307SSE
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
www.deloitte.com.au
Report on the Financial Report
We have audited the accompanying financial report of Integrated Research Limited which comprises the balance sheet as at 30
June 2008, and the income statement, cash flow statement and statement of recognised income and expense for the year ended on
that date, a summary of significant accounting policies, other explanatory notes and the directors’ declaration of the consolidated
entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year as set
out on pages 46 to 85.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance
with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001.
This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of
the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate
accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 1, the directors also state,
in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that compliance with the Australian
equivalents to International Financial Reporting Standards ensures that the financial report, comprising the financial statements
and notes, complies with International Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with
Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating
to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The
procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the
financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to
the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the
directors, as well as evaluating the overall presentation of the financial report.
Liability limited by a scheme approved under Professional Standards Legislation.
86
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Auditor’s Independence Declaration
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Auditor’s Opinion
In our opinion:
(a)
the financial report of Integrated Research Limited is in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the company and consolidated entity’s financial position as at 30 June 2008 and of their
performance for the year ended on that date; and
(ii)
complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001; and
(b)
the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 26 to 34 of the directors’ report for the year ended 30 June 2008.
The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with
section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our
audit conducted in accordance with Australian Auditing Standards.
Auditor’s Opinion
In our opinion the Remuneration Report of Integrated Research Limited for the year ended 30 June 2008, complies with section
300A of the Corporations Act 2001.
DELOITTE TOUCHE TOHMATSU
Michael Kaplan
Partner
Chartered Accountants
Sydney, 22 September 2008
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
87
Lead Auditor’s
Independence Declaration
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1219 Australia
DX 10307SSE
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
www.deloitte.com.au
The Board of Directors
Integrated Research Limited
Level 9, 100 Pacific Highway,
NORTH SYDNEY, NSW, 2000
22 September 2008
Dear Board Members
Integrated Research Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of
independence to the directors of Integrated Research Limited.
As lead audit partner for the audit of the financial statements of Integrated Research Limited for the financial year ended 30 June
2008, I declare that to the best of my knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
Michael Kaplan
Partner
Chartered Accountants
Sydney, 22 September 2008
Liability limited by a scheme approved under Professional Standards Legislation.
88
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
ASX Additional Information
Shareholder information
Analysis of numbers of equity security holders by size of holding at 31 August 2008
Class of equity security
Ordinary shares
Shares
Options
1
1,001
5,001
10,001
-
-
-
-
1,000
5,000
10,000
100,000
100,001 and over
86
873
516
772
70
2,317
-
2
13
51
13
79
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest holders of quoted equity securities as at 31 August 2008 are listed below:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
Stephen John Killelea
Andrew Rhys Rutherford
UBS Nominees Pty Ltd
JP Morgan Nominees Australia Limited
HSBC Custody Nominees
ANZ Nominees Limited
Vicki Maree Lewis and David William Lewis
B&R James Investments Pty Limited
David Leroy Boyles
Citicorp Nominees Pty Ltd
Five Talents Limited
Bell Potter Nominees Ltd
Howard Securities Pty Ltd
Ralph Chiarella
Richard Ewan Bromley Mews and Wee Khoon Mews
Belinda York and Hugh Webster
Forbar Custodians Limited
Sporran Lean Pty Ltd
Carlos Gil
20
Bipeta Pty Ltd
Ordinary Shares
Number held
Percentage of issued shares
94,497,339
56.66
5,486,589
4,983,327
4,082,412
2,813,500
2,284,833
2,265,000
2,235,162
1,700,000
658,139
595,000
500,000
500,000
492,563
463,460
404,594
381,500
366,641
364,261
337,612
3.29
2.99
2.45
1.69
1.37
1.36
1.34
1.02
0.39
0.36
0.30
0.30
0.30
0.28
0.24
0.23
0.22
0.22
0.20
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
89
ASX Additional Information
Unquoted equity securities
Options issued under the Integrated Re-
search Limited Employee Option Plan to
take up ordinary shares
Number on issue *
Number of holders
6,375,625
79
*Number of unissued ordinary shares under the options.
No person holds 20% or more of these securities.
On-market buy-back
There is no current on-market buy-back.
Substantial holders
Substantial holders in the Company are set out below:
Stephen John Killelea
94,497,339
56.66
Number held
Percentage
Voting rights
The voting rights attaching to each class of equity securities are set out below:
1.
Ordinary shares.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
2. Options.
No voting rights.
Other information
Integrated Research Limited, incorporated and domiciled in Australia, is a publicly listed company limited by shares.
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INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Corporate Directory
Directors
Steve Killelea
Chairman and Non-Executive Director
Mark Brayan
Managing Director and CEO
David Boyles
Independent Non-Executive Director and Deputy Chairman
John Brown
Independent Non-Executive Director
Kate Costello
Independent Non-Executive Director
Clyde McConaghy
Non-Executive Director
Secretary
David Leighton
Registered Office
Level 9, 100 Pacific Highway
North Sydney, NSW, 2060
Phone: (+61 2) 9966 1066
Share Registry
Computershare Investor Services Pty Limited
Auditors
Solicitors
Deloitte Touche Tohmatsu
225 George Street
Sydney, NSW, 2000
Dibbs Abbott Stillman
Level 8, Angel Place
123 Pitt Street
Sydney, NSW, 2000
Bankers
Westpac Banking Corporation
Stock Exchange Listing
Country of Incorporation
Australian Stock Exchange
Code IRI
Integrated Research Limited, incorporated and domiciled in Australia,
is a publicly listed company limited by shares.
Notice of Annual General Meeting
The Annual General Meeting of Integrated Research Limited will be
held at 3:00pm on Tuesday, 11th November 2008, at the Museum of
Sydney, Corner of Phillip and Bridge Streets, Sydney.
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INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
Office locations
Americas - Headquarters
Integrated Research Inc.
8055 East Tufts Avenue,
Suite 950
Denver, CO 80237
t: +1 (303) 390 8700
f: +1 (303) 390 8777
e: info.usa@prognosis.com
Americas - East Coast
Integrated Research Inc.
2325 Dulles Corner Bvd
Suite 500
Herndon, VA 20171
t: +1 (703) 788 6500
f: +1 (703) 788 6589
e: info.usa@prognosis.com
United Kingdom
Integrated Research UK Ltd
Orchard Lea, Winkfield Lane
Windsor Berkshire
SL4 4RU
t: +44 (0) 1344 894 200
f: +44 (0) 1344 890 851
e: info.europe@prognosis.com
www.prognosis.com
Germany
Integrated Research Ltd
Bockenheimer Landstr.
17-19
D-60325, Frankfurt
t: +49 (69) 710 455 255
f: +49 (69) 710 455 450
e: info.germany@prognosis.com
Asia Pacific/M.East/Africa
Integrated Research Ltd
Level 9, 100 Pacific Hwy
North Sydney NSW 2060
Australia
t: +61 (2) 9966 1066
f: +61 (2) 9966 1042
e: info.ap@prognosis.com
Singapore
Integrated Research Ltd - Asia HQ
Level 34, Centennial Tower
3 Temasek Avenue
Singapore 039190
t: +65 6549 7738
f: +65 6549 7011
e: info.ap@prognosis.com
INTEGRATED RESEARCH AND ITS CONTROLLED ENTITIES > ANNUAL REPORT 2008
For more information visit our website at www.prognosis.com or email info@prognosis.com