More annual reports from Integrated Research Limited:
2023 ReportIntegrated Research
Annual Report 2013
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Providing Business Insight™
Asia Pacifi c/Middle East/Africa
Americas - West Coast
Europe
Corporate HQ
Integrated Research Ltd
Level 9/100 Pacifi c Highway
North Sydney NSW 2060
Australia
+61 (2) 9966 1066
+61 (2) 9966 1042
info.ap@ir.com
3 Temasek Avenue
Level 21, Centennial Tower
Singapore 039190
+65 6549 7038
+65 6549 7011
info.ap@ir.com
Singapore
Americas ‑ East Coast
Germany
Integrated Research (Singapore) Pte Ltd
Integrated Research Inc.
Integrated Research UK Ltd
Integrated Research Inc.
8055 East Tuft s Avenue
Suite 950 Denver CO 80237
USA
+1 (303) 390 8700
+1 (303) 390 8777
info.usa@ir.com
1818 Library Street
Suite 500 Reston VA 20190
USA
+1 (703) 956 3016
+1 (303) 390 8777
info.usa@ir.com
Integrated Research UK Ltd
Orchard Lea, Drift Road
Winkfi eld, Windsor Berkshire SL4 4RP
United Kingdom
+44 (0) 1344 894 200
+44 (0) 1344 890 851
info.europe@ir.com
Münchner Büro der Integrated Research UK Ltd
Terminalstrasse Mitt e 18
85356 München, Germany
+49 (89) 97 007 132
info.germany@ir.com
Visit our website at www.ir.com or our community blog at www.realtime.ir.com
ABN 76 003 588 449
Corporate Directory
Directors
Steve Killelea
Mark Brayan
Managing Director and CEO
Solicitors
Ashurst
225 George Street
Sydney, NSW, 2000
Chairman and Non-Executi ve Director
Level 36, Grosvenor Place
Alan Baxter
Independent Non-Executi ve Director
Bankers
Westpac Banking Corporati on
Securities
Exchange Listing
Australian Securiti es Exchange
Code IRI
Country of
Incorporation
Integrated Research Limited,
incorporated and domiciled in Australia,
is a publicly listed company limited
Notice of Annual
General Meeting
The Annual General Meeti ng of
Integrated Research Limited will
be held at 3:00pm on Thursday,
14 November 2013, at the Museum
of Sydney, Corner of Phillip and
Bridge Streets, Sydney.
Registered Offi ce
by shares.
Garry Dinnie
Independent Non-Executi ve Director
Kate Costello
Independent Non-Executi ve Director
Peter Lloyd
Non-Executi ve Director
Clyde McConaghy
Non-Executi ve Director
Secretary
David Purdue
Level 9, 100 Pacifi c Highway
North Sydney, NSW, 2060
Phone: (+61 2) 9966 1066
Share Registry
Computershare
Auditors
Ernst & Young
Ernst & Young Centre
680 George Street
Sydney, NSW, 2000
Designed by RDA Creati ve www.rda.com.au
Access your Annual Report 2013 online.
Visit www.ir.com/annualreport2013
This report is printed on Impress paper
which is FSC‑certi fi ed.
Fibre is sourced from well‑managed forest
plantati ons and controlled sources.
Contents
2013 Highlights
Letter from the Chairman
Review of Operations and Activities
Directors
Senior Management
Directors’ Report
Remuneration Report
Corporate Governance Statement
Financial Statements
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Lead Auditor’s Independence Declaration
ASX Additional Information
Corporate Directory
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2013 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
Earnings per share (cents per share)
In millions of local currency
Year ended 30 June
Americas revenue (USD)
Europe revenue (UK Sterling)
Asia Pacific revenue (AUD)
2
2013
2012
% Change
26.6
48.9
9.1
30.0
14.8
34.4
6.9
7.5
5.4
2013
35.2
4.5
7.5
28.9
48.6
9.0
29.2
12.0
31.9
7.2
8.7
5.4
2012
33.1
4.7
8.7
↓ (8%)
↑ 1%
↑ 0%
↑ 3%
↑ 23%
↑ 8%
↓ (3%)
↓ (14%)
↓ (0%)
% Change
↑ 6%
↓ (4%)
↓ (14%)
Integrated Research and its controlled entities • Annual Report 2013
“With a healthy balance sheet, global reach and
strong partner relationships and alliances the Company
is positioned for solid growth.”
Revenue
(AUD millions)
Profit after tax
(AUD millions)
Revenue from licence fees
(AUD millions)
$48.6 $48.9
$44.6
$42.7
$37.4
$36.4
$38.2
$9.0
$9.1
$7.9
$7.5
$28.9
$26.6
$25.0
$21.7
$19.5 $19.6
$18.4
$5.8
$5.4
$5.4
2007 2008 2009 2010 2011 2012 2013
2007 2008 2009 2010 2011 2012 2013
2007 2008 2009 2010 2011 2012 2013
3
Integrated Research and its controlled entities • Annual Report 2013 Letter from
the Chairman
Dear fellow shareholders,
I’m pleased to report another solid
performance by Integrated Research
for the financial year to June 2013.
The Company achieved profit after
tax of $9.1 million on revenue of
$48.9 million. The Company continues
to produce world-class products
that manage the performance of its
customers’ Unified Communications,
Payments and IT infrastructure.
The Company achieved record second half profit
of $6.3 million representing growth of 16%
when compared to the equivalent prior period.
This turnaround reversed the first half decline
in profit to produce a marginally improved profit
result measured against the 2012 financial year.
Company revenues were up 1% to $48.9 million
with recurring maintenance revenue up 8% to
$17.7 million on the back of a strong customer
retention rate of 95%.
The Company’s Consulting services business grew for a
fourth consecutive year, with revenue increasing 35%
to $4.5 million as customers increasingly look to extend
their Prognosis solutions to provide greater insight
into their Unified Communications and Infrastructure
environments. Licence sales were down 8% to
$26.6 million as a consequence of Avaya’s re-evaluation
of their partner program. This was successfully
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Letter from the Chairman
“The Company’s pipeline is strong and the fundamentals
of its key markets are sound as it continues to expand
the scope of its markets by creating quality products that
embrace change and market direction.”
concluded in March 2013 with Avaya selecting
Prognosis for Unified Communications (UC)
for inclusion into the Avaya DevConnect Select
Product Program. This program gives Avaya clients
direct access to Prognosis through the Avaya price
book thereby lowering overheads, expanding reach
and reducing the time to purchase. Subsequent to this,
Integrated Research was selected as the 2013 Avaya
DevConnect Technology Partner of the Year, the only
Company to be awarded this title.
The high margin Infrastructure product line
(including HP NonStop) remained steady during the
year with revenue of $19.6 million. Revenue from
the Payments product line was down by 7% when
compared to the prior year to $3.0 million because of
the progression from a direct to an indirect sales model.
Both the Company and ACI are working closely together
to increase Prognosis sales through the ACI channel with
additional resources and focus.
The Americas had a solid year with revenue up 6%
compared to the prior year with nearly half of the
revenue being sourced from Unified Communications.
The Company’s European and Asia Pacific regions
were disappointing, with revenue down 4% and
14% respectively.
The Company’s pipeline remains strong and the
fundamentals of its key markets are sound as it
continues to expand the scope of its markets by
creating quality products that embrace change and
market direction. In this way the Company can deliver
profitable growth from existing markets, and create
innovative products to open new ones.
Cashflow from operations increased by 19% over
the preceding year to $17.5 million enabling the
Company to maintain a strong balance sheet and
facilitate consistency in dividend payments. The Board
is pleased to announce a final dividend of 3.0 cents
per share, franked to 40 per cent, bringing the
total dividend for the year to 5.0 cents per share
franked at 36%. This compares with total dividends
of 5.0 cents per share, of which 58% was franked,
for the prior financial year.
During the year we saw some changes on the
Board - John Brown retired after five and a half years
in December 2012. Mr. Brown has been a Director
of Integrated Research Limited since July 2007
and was appointed Chair of the Audit and Risk
Management Committee. Mr. Brown’s contribution to
Integrated Research, including his active participation
in Board Committees has been greatly appreciated.
In February 2013 the Company welcomed
Mr. Garry Dinnie to the Board and looks forward to
benefiting from his 25 years specialising in audit,
advisory and IT services experience and valuable
input to Integrated Research’s future prosperity.
I would especially like to thank you, our valued
shareholders, for your continued support.
Steve Killelea
Chairman
5
Directors and Senior ManagementDirectors’ ReportRemuneration ReportCorporate Governance StatementFinancial StatementsIndependent Audit ReportLetter from the ChairmanIntegrated Research and its controlled entities • Annual Report 2013 2013 marks IR’s 25th anniversary of
delivering award-winning products.
Who we are
What we do
Founded in 1988, Integrated Research is an
Australian company providing performance
monitoring and diagnostics software solutions for
business-critical computing environments worldwide.
Headquartered in Sydney, the Company has over
200 employees with offices in the US, UK, Germany,
Singapore and Australia serving over 1,000 customers in
more than 50 countries.
Prognosis provides availability and performance
management, diagnostics and insight for
business-critical systems. These include Unified
Communications, Payments and IT infrastructure.
These core systems must be managed in real time
and our customers rely on Prognosis to ensure high
systems availability and performance.
DENVER, CO
d
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UK
GERMANY
RESTON, VA
1988
1994
1995
1997
1998
1999
2000 2001
2003
1988
Steve Killelea founds IR
in Sydney, Australia.
< 10 employees.
3 R&D Staff.
1994
Denver, CO.
US office opens.
6 R&D Staff.
1995
Prognosis version
5 released.
First Windows Graphical
User Interface.
1997
UK office opens.
10 R&D Staff.
378,644 lines of
software code.
1998
IR wins IT exporter
of the year award.
1999
Prognosis version
7 released.
First Microsoft
Windows version.
2000
2001
IR wins Consensus
software award.
40 R&D Staff.
2003
IR wins ASOCIO ICT
Minister’s iAward.
IR wins Consensus
software award.
IR listed IRI:ASX.
Prognosis in
> 40 countries.
6,000 HP
NonStop licences.
Prognosis IPT Manager
launched for Cisco.
Windows/Unix/Linux
support launched.
31 products.
90% of IR’s 300
customers are global.
85 employees.
6
Integrated Research and its controlled entities • Annual Report 2013
As we celebrate 25 years of business we continue to grow
our customer base, launch new products and services and
add more talented people to our team.
Why we succeed
Why customers buy
Prognosis increases operational maturity, minimises
outages, optimises technology and ensures
user satisfaction. Our customers include 9 out of 10
US banks, 5 of the world’s largest companies, 4 of the
top 8 stock exchanges, 8 out of 10 telcos and 4 out of
5 oil and gas companies.
IR the company behind Prognosis is profitable
and debt-free and Prognosis is real-time,
scalable, extensible and flexible. We deliver the
competitive advantage of Prognosis through
world-class R&D capabilities to extend support
for an increasing number of business-critical
applications and platforms.
ASIA PACIFIC
SINGAPORE
2004
2005
2006
2009
2010
2011
2012
2013
2004
East Coast US
office opens.
ATM Incident
Manager launched.
Web applications
management launched.
50 R&D Staff.2005
Prognosis in
> 50 countries.
Steve Killelea
appointed Chairman.
2005
Prognosis in
> 50 countries.
Steve Killelea
appointed Chairman.
2006
German office opens.
IR wins Consensus
software award.
Multiple VoIP vendor
support launched.
130 employees.
2009
Agile software
development introduced.
Prognosis shipped with
every Avaya PBX.
2010
Premier’s NSW
Export Award - Highly
commended.
Prognosis for
UC launched.
Microsoft Lync
support launched.
ACI distribution
agreement signed.
2011
IR wins NSW State
iAward for Sustainability
and Green IT
2012
First Microsoft Qualified
Lync application.
Finalist Premier’s NSW
Export Award - Highly
commended.
2013
Prognosis in
> 50 countries.
IR is Avaya DevConnect
Technology Partner
of the Year.
Finalist Enterprise
Connect Orlando
“Best of Enterprise
Connect” Award.
1,000 customers.
200 employees (Global).
64 R&D Staff.
4,000,000 lines of
software code.
7
Integrated Research and its controlled entities • Annual Report 2013 Integrated Research:
Providing Business Insight™
Integrated Research (IR) is the creator of Prognosis
performance management software. Prognosis is
sold and supported through IR offices in the USA,
UK, Germany, Singapore and Australia and via our
international network of partnerships, strategic alliances,
resellers, systems integrators and service providers.
Some of the world’s best known brands, government departments,
finance, payments and ICT service providers rely on Prognosis for
high-availability, performance diagnostics and insight for their
business-critical systems.
Our customers
Located in more than 50 countries, IR’s more than 1,000 customers
feature prominently in the Fortune 500 and Global 1000 and include:
$
9 out of 10
US Banks
4 out of 5
Oil and Gas
Companies
5 of the
World’s Largest
Companies
8 out of 10
Telecommunications
Companies
4 out of the 8
Top Stock Exchanges
8
Integrated Research and its controlled entities • Annual Report 2013 Some of the world’s
best known brands,
government departments,
finance, payments and
ICT service providers
rely on Prognosis
for high‑availability,
performance diagnostics
and insight for their
business‑critical systems.
Enterprises and service providers alike incorporate
Prognosis real time performance monitoring as a
key component of their comprehensive portfolio of
products and services.
As well as building great software, our software
engineers have been working with our customers
to ensure we’re doing everything we can to deliver
valuable products and keep customer satisfaction as
high as possible.
Happy customers are
everyone’s responsibility.
Every day.
Most importantly, and not surprisingly, as customers
increase reliance on Prognosis, the harder it is
to replace. IR Consulting services can help them get
the very most out of their investment by customising
it to fit their needs exactly.
This leads to greater retention, happier customers and
more revenue over the longer term.
Our people
We know the importance of making employees
feel connected to the organisation’s goals, and
aligned with the business through performance
management and career development. IR employees
include technical champions, inspirational leaders,
customer advocates and are the instrumental forces
behind our new products.
In FY2013 we invested in programmes to better
understand our customers’ evolving business needs.
This enables IR employees to design, develop and sell
premium Prognosis solutions that meet customers’
needs today and into the future.
To help manage delivery and improve global
resource management, we’ve created a Project
Management Office that provides IR management
and the consulting teams with a consolidated view
of our projects.
9
Integrated Research and its controlled entities • Annual Report 2013 Our products
Prognosis 10
Prognosis for Payments & infrastructure
Worldwide Payments market growth fuelled by an
increasing number of smart devices, micropayments
and multiple-channel payment sources creates a strong
demand for performance management.
Additionally cross-border transactions across
developing economies require increased governance
and regulation, making transaction monitoring of
payments systems infrastructure critical.
Prognosis is ideally positioned to provide payments
systems providers with highly scalable transaction
insight monitoring and management. This enables them
to manage performance and availability in retail and
wholesale environments, and quickly identify and act to
resolve problems as they arise.
Suncorp Group’s Scott Fowler ‑
Team leader, Payments said
“Suncorp services more than
one million personal, agribusiness,
small business and commercial
banking customers.
“We use Prognosis to gain
insight into transaction volumes
and availability as well as deep
insight into the performance of
specific products. In this way we can
optimise performance, and track
usage and quality to create a great
experience for our customers.”
Prognosis for Unified Communications
Solving UC management dilemmas is not something
new to IR, with more than a decade’s ‘out-of the-box’
UC domain knowledge. Prognosis customers have
end-to-end visibility of their UC environments and
can effectively manage multi-vendor, single vendor
and hybrid legacy environments through a single
‘pane of glass’.
Prognosis multi-vendor capabilities enable organisations
to manage voice quality, UC applications and devices
across Avaya, Microsoft Lync, Cisco and others,
ensuring improved call quality, service reliability and
proactive issue resolution.
While increasing our customers’ use of Prognosis is
built on services and training, it’s also about usability.
The more intuitive a product, the more it gets used.
In 2013 IR announced Prognosis 10 with a completely
new intuitive user interface. It’s visually rich, easy to
navigate, fast and accessible on any mobile device.
Combined with new analytics and reporting,
technical and business users can extract all
the information they need to get value out of
their environments.
Our alliances and partners
Integrated Research has partnered with leading
enterprise software and solution providers to deliver
solutions tailored to our customers’ needs, and develop
innovative performance management solutions for
current and future technologies.
We formed a strategic alliance with ACI over three years
ago to provide an exclusive, joint offering for payment
service monitoring.
Since 2009 IR has been in partnership with Avaya and in
2013 was strategically chosen from among hundreds of
compliance-tested solutions for inclusion in the Avaya
DevConnect SPP as it expands into Europe following its
success in North America.
To round off IR’s successful partnership with Avaya
this year, we were chosen by Avaya as 2013 DevConnect
Technology Partner of the Year. This Avaya award
recognises DevConnect Technology Partners for
innovation and excellence.
IR also continues its relationship with Cisco as a
registered developer, which enables us to have our
software tested for interoperability with Cisco products.
IR continues its valued partnership with Stratus
Technologies offering customers the continuous
availability of Stratus® ftServer® systems, and the breadth,
depth and scalability of Prognosis proactive monitoring,
management and troubleshooting.
IR is an HP AllianceONE Partner and has worked
closely with HP for 25 years delivering Prognosis
solutions for HP NonStop and HP Integrity
NonStop server technology. IR was the first
HP NonStop Alliance Partner to be certified
‘Converged Infrastructure Ready’ validating that
Prognosis supports modern standards and can be
used in converged infrastructure environments.
Integrated Research is a long‑standing member of the
VMware Technology Alliance Program and continues to
build and enhance vSphere™ monitoring capabilities.
10
Integrated Research and its controlled entities • Annual Report 2013 Our achievements
Avaya DevConnect Technology Partner
of the Year 2013
‘Highly Commended’ 2012 Premier’s
NSW Export Awards
This Avaya award recognises DevConnect Technology
Partners who deliver innovation and excellence.
“The DevConnect Technology Partner of the
Year award formally recognises Integrated
Research for embracing all aspects of The Power
of We™,” said Eric Rossman, Vice President
Developer Relations, Avaya.
“By working together, we help our mutual customers
succeed in their operations. Prognosis software
complements the Avaya portfolio and increases
customer satisfaction by reducing UC and contact
center complexity. The Integrated Research team has
demonstrated exceptional commitments to Avaya
customers and the Avaya DevConnect partnership.”
First Microsoft Qualified Lync application
for health management and QoE
Microsoft selected Prognosis as the first application
to be approved in the Quality of Experience category.
Prognosis provides enhanced analysis and reporting
capabilities for core Lync real‑time functionality like
voice and video.
IR was one of four finalists in the 2012 Premier’s
NSW Export Awards in Sydney. The awards
recognise and celebrate companies that are taking
Australian products and services to the world.
IR continues to invest in NSW through its world
class software development capability and
graduate recruitment program.
Finalist Enterprise Connect Orlando’s
‘Best of Enterprise Connect’ Award
Enterprise Connect is the leading conference
and exhibition for enterprise IP telephony,
converged networks and Unified Communications
in North America.
IR was announced as one of six finalists for the
‘Best of Enterprise Connect’ Award. The award jury
included industry experts and veterans, and honours
exhibitors who lead the industry and continue to
present the latest in technological advancements.
11
Integrated Research and its controlled entities • Annual Report 2013 Review of operations and activities
Review of operations
and activities
Principal activities
Integrated Research Limited’s principal activities are
the design, development, implementation and sale
of systems and applications management computer
software for business-critical computing infrastructure
and Unified Communications and Payments networks.
Group overview
Integrated Research has a twenty-five 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, IT infrastructure,
Unified Communications (UC), and Payments environments and the business
applications that run on these platforms.
Integrated Research 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, Singapore and Australia, and via
a global, channel-driven distribution network. Integrated Research’s customer
base consists of many of the world’s largest organisations and includes major
stock exchanges, banks, credit card companies, telecommunications and
computer companies and hospitals.
The Company generates its revenue from licence fees, recurring maintenance
and consulting services. Revenue from the sale of licences where there is no
post-delivery obligations is recognised in profit at the date of the delivery of the
licence key. Revenue from maintenance contracts is recognised rateably over the
service agreement, which is typically one year. Revenue from consulting services
is recognised over the period the services are delivered.
12
Integrated Research and its controlled entities • Annual Report 2013 “The Company
achieved an annual
Profit After Tax result of
$9.1 million
‑ marginally up against
the prior year result of
$9.0 million.”
Integrated Research services customers in more than 50 countries
through direct sales offices in the USA, UK, Germany, Singapore and
Australia, and via a global, channel‑driven distribution network.
13
Letter from the ChairmanDirectors and Senior ManagementDirectors’ ReportRemuneration ReportCorporate Governance StatementFinancial StatementsIndependent Audit ReportIntegrated Research and its controlled entities • Annual Report 2013 Review of operations and activities
Review and results of operations
Overview
The Company achieved an annual Profit After Tax result of $9.1 million - marginally up against the prior year result of
$9.0 million. The Company’s overall financial performance was flat but contrasted by two distinct halves. Profitability in
the first half was down 23% as a result of the delay in key service provider licence contracts. The second half was much
stronger with profit growing 16% in this period as the key licence contracts were completed.
Over 95% of the Company’s revenues are derived outside of Australia. The Australian dollar remained high against
other currencies for most of the year with the exception of June. Using prior year exchange rates, the Company’s
results would not be materially different from the reported results. The Company should benefit from a lower exchange
rate in 2014, although this will be partially offset by forward exchange contracts in place at 30 June 2013 as disclosed
in Note 20.
Revenue
Revenue for the year was $48.9 million, an increase of 1% over 2012. Licence fees decreased by 8% to $26.6 million
due to a poor first half. Notwithstanding the decrease in licence sales, maintenance revenues grew 8% over the
previous corresponding year due in part to a strong retention rate of 95% and also due to the annualisation of
growth from the installed base of Unified Communications customers. Revenue from Consulting services grew by
35% to $4.5 million as a result of a strong backlog at the commencement of the year and improved utilisation of
consulting resources.
The following table presents Company revenues for each of the relevant product groups:
In thousands of AUD
Unified Communications
Infrastructure
Payments
Consulting services
Total revenue
2013
21,760
19,566
3,023
4,510
48,859
2012
21,448
20,558
3,261
3,341
48,608
% Change
1%
(5%)
(7%)
35%
1%
Unified Communications (UC) revenue rose 1% over the previous year as a consequence of lower licence sales offset
by an increase in maintenance revenue with strong customer retention and growth in the installer base. Licence sales
were down as a consequence of Avaya’s re-evaluation of their partner program. This was successfully concluded
in March 2013 with Avaya selecting Prognosis for UC for inclusion into the Avaya DevConnect Select Product Program.
This program gives Avaya clients direct access to Prognosis through the Avaya price book.
Infrastructure revenues declined by 5% over the previous year as a consequence of customers continuing to move
toward new and evolving technological platforms that are not as reliant on fault tolerant high end systems such
as HP NonStop.
Payments revenue was down 7% over the previous year because of the progression from a direct to an indirect
sales model. Both the Company and ACI are working closely together to increase Prognosis sales through the
ACI channel with additional resources and focus.
Consulting services showed strong growth for a fourth year in a row, with revenue increasing 35% to $4.5 million
as customers increasingly look to extend their Prognosis solution to provide greater insight into their Unified
Communications and Infrastructure environments.
14
Integrated Research and its controlled entities • Annual Report 2013 The following table presents Company revenues for each of the relevant geographic segments in underlying
natural currencies:
Americas (USD’000)
Europe (£’000)
Asia Pacific (A$’000)
2013
35,247
4,519
7,496
2012
33,137
4,687
8,668
% Change
6%
(4%)
(14%)
The Americas represents 70% of overall Company revenue. The Americas grew by 6% over the previous year with
nearly half of the revenue being sourced from Unified Communications. The region benefitted from a strong customer
retention rate of 97% and higher revenue from consulting services. Licence fees were down at the half year but
recovered in the second half.
Europe revenues were down 4% over the prior year as a result of a large licence sale deal slipping at the end
of the financial year. Recurring maintenance revenue is reasonably stable and the consulting services practice
continues to grow.
Asia Pacific revenue was down 14% to $7.5 million across each of the product lines. Investments in pipeline
development in FY14 are being made to turnaround the trend. Many of the licence contracts are denominated
in US dollars and consequentially should benefit from a lower Australian dollar going forward.
Expenditure
The Company continued to focus on expanding its capabilities and improving productivity. The number of staff at the
end of the current year was 200 (2012: 186). Total expenses were $38.3 million, up 2% against the prior year with a
higher investment in research and development. The following table presents the Company’s cost base compared to
the preceding year:
In thousands of AUD
Research and development expenses
Sales, consulting and marketing expenses
General and administration expenses
Total expenses
2013
10,777
23,279
4,280
38,336
2012
10,134
23,004
4,278
37,416
Research and development expenditure of $10.8 million was 22% of total revenue and slightly higher than historical averages.
The major development initiative that occurred during the 2013 financial year was on Prognosis 10 which is set to be released
during the first half of the 2014 financial year. The new release will deliver a powerful web-based, mobile user experience,
intelligent alerting, and business insight.
Net research and development expenses are represented as follows:
In thousands of AUD
Gross research and development spending
Capitalisation of development expenses
Amortisation of capitalised expenses
Net research and development expenses
2013
12,051
(7,880)
6,606
10,777
2012
10,215
(6,730)
6,649
10,134
Capitalisation of development costs are higher compared to the prior year due to the additional investment in
Prognosis 10. Amortisation levels are flat compared to the preceding year since the new development work is yet
to be commercialised.
Expenses in sales, marketing and administration remained relatively flat compared to the preceding year.
15
Letter from the ChairmanDirectors and Senior ManagementDirectors’ ReportRemuneration ReportCorporate Governance StatementFinancial StatementsIndependent Audit ReportIntegrated Research and its controlled entities • Annual Report 2013 Review of operations and activities
Shareholder returns
Returns to shareholders through the payment of partly franked dividends:
Net profit ($’000)
Basic EPS
Dividends per share
Return on equity
Financial position
The following table presents key balance sheet items:
In thousands of AUD
Assets:
Cash and cash equivalents (current)
Trade and other receivables (current and non-current)
Intangible assets (non-current)
Liabilities:
2013
$9,078
5.40¢
5.0¢
30%
2012
$9,035
5.41¢
5.0¢
31%
2011
$7,465
4.47¢
4.0¢
27%
2013
2012
14,827
23,564
15,040
12,038
21,381
13,849
Deferred revenue (current and non-current)
14,729
11,885
Equity
30,010
29,233
The Company’s balance sheet remains in a strong position with $14.8 million in cash and cash equivalents as a result
of continuing strong cashflow from operations. Cashflow from operations increased by 19% over the preceding year
to $17.5 million.
Trade and other receivables increased by 10% over the preceding year due to two main factors. Firstly, the Australian
dollar declined during the year resulting in a higher translated receivables balance (especially for receivables
denominated in US dollars). Secondly, an increase in deferred payment terms with key managed service providers who
have a need to match payments with underlying cashflows from their customers.
The increase in intangible assets is a result of the capitalisation of development costs primarily on Prognosis 10 as
referenced in preceding paragraphs.
The Balance Sheet presented at page 46 together with the accompanying notes provides further details.
16
Integrated Research and its controlled entities • Annual Report 2013 Outlook and Strategy for 2014
The Company provides performance management
solutions based on its Prognosis software for
business-critical computing environments.
Prognosis derives its competitive advantage from its
unique design which enables real time monitoring,
is extremely scalable, highly flexible and provides very
deep visibility into the systems and applications that
it manages. Prognosis is ideally suited to complex, high
transaction and high traffic environments.
Competition exists in each of the markets in
various forms. Firstly, some of the large telephony
and payment vendors provide their own performance
management software, although this is generally inferior
to the capability of Prognosis and does not solve the
problem where heterogeneous environments exist.
Secondly, some of the large solution software vendors
also provide performance management capabilities,
but this is typically not their core specialisation.
Lastly, the Company from time to time competes
with smaller, start-up niche vendors. The Company
remains focussed on sustaining its competitive
advantage through continuing innovation that comes
from its research and development program.
Through deep forensic analysis into the root cause of
problems and extensive reporting on service levels,
Prognosis enables proactive and rapid resolution
of issues, and capacity and operational planning.
This provides insight into potential issues before they
become business-critical. Prognosis helps users improve
their operational maturity by proactively minimising
expensive outages, improving user satisfaction and
optimising IT operations and resources.
The Company’s growth strategy is to create, sell and
support Prognosis‑based products and services that
deliver profitable growth from existing markets
and customers, as well as creating new products that
open new markets.
The Company currently focuses on three core markets:
Infrastructure, Unified Communications and Payments.
The Infrastructure market for Integrated Research
includes users of high-end computing systems
such as the HP NonStop platform for financial,
telecommunication, trading, manufacturing and other
high-volume, high-value transaction environments.
NonStop is an important part of HP’s server strategy
and remains at the operational core of many of the
world’s largest companies. The Company continues to
invest in Prognosis for Nonstop to be aligned with HP
and its customers. Prognosis for Distributed Systems
(Windows, Unix and Linux) is mostly sold alongside
the Company’s NonStop products as customers seek
a common monitoring interface for all platforms,
or convert applications from one platform to another.
The Unified Communications (UC) segment includes
users of IP Telephony and Unified Communications
applications such as video, messaging, mobility
and presence. The Company anticipates growth
in this segment through the ongoing shipment of
IP phones and endpoints as well as the increasing
value per endpoint through the use of UC applications.
UC networks are becoming more pervasive, more critical
and more complex and as such they require effective
performance management and Prognosis is strongly
positioned to benefit from this need. The Company
will continue to invest in R&D to expand the suite of
Prognosis for UC products to cover increased platforms,
vendors and applications, and by doing so increase the
Company’s addressable market and revenue potential.
The Company has expanded its suite of Payments
products by adding new products for additional platforms,
vendors and applications, including fraud management
and wholesale money transfer applications. This expands
the Company’s addressable market in the Payments
segment and increases revenue potential. The Company
will maintain this strategy in the Payments market.
Our strategic alliance with ACI, the world’s largest
payments software vendor, has delivered revenue in
FY2013 and continues to be an important channel to
market for the Company.
Consulting services provide Prognosis customers with
implementation, customisation and training services to
ensure that they get the most out of their investment
in Prognosis. Consulting services also help IR develop
unique and repeatable solutions that extend the use
and value of Prognosis. Consulting services achieved
profitability in FY2013 and the Company will continue
to invest in people and processes to grow Consulting
revenue and margin.
The Company continues to invest in its R&D capability
through the addition of resources and its use of the Agile
development methodology which has improved the rate
and quality of software production for the Company.
17
Letter from the ChairmanDirectors and Senior ManagementDirectors’ ReportRemuneration ReportCorporate Governance StatementFinancial StatementsIndependent Audit ReportIntegrated Research and its controlled entities • Annual Report 2013 Directors
The Directors of the Company at any time during or since
the end of the financial year are listed below:
“The Company
continued to focus
on expanding its
capabilities and
improving productivity.
The number of staff at
the end of the current
year was 200”
18
Steve Killelea
AM
Non‑Executive Director
and Chairman
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 is also
Chairman of the Institute for Economics
and Peace and The Charitable
Foundation and for activities involved
with these he has received a number
of international awards. He is also
active in the financial community
with investments in many high
tech companies. Steve’s current term
will expire no later than the close of the
2015 Annual General Meeting.
Listed company directorships held in
the past three years: None.
Age: 64 years.
Directors and Senior ManagementIntegrated Research and its controlled entities • Annual Report 2013 Kate Costello
LLB, FAICD
Independent
Non‑Executive Director
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, LBT Innovations Ltd,
and a number of other
private companies. Kate’s current
term will expire no later
than the close of the 2014
Annual General Meeting.
Listed company directorships held
in the past three years other than
listed above: None.
Age: 60 years.
Mark Brayan
MBA
Alan Baxter
BSc, Dip Ed
Managing Director and
Chief Executive Officer
Independent
Non‑Executive Director
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. Prior to
joining Integrated Research 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.
Listed company directorships held
in the past three years: None.
Age: 49 years.
Alan was appointed as a
Director in June 2009. Alan has
over forty years experience
in Information Technology
covering a broad range of the
industry’s activities. These include
many years in a variety of roles
with IBM Australia, CEO of DMR
Consulting in Australia and COO
of Fujitsu Consulting’s global
operations from London. He was
non-executive Chairman of Fujitsu
Australia & New Zealand, a director
of Mincom Ltd, non-executive
Chairman of Konekt Limited
and also of Innogence Limited.
He is a non-executive director
of CPT Global, a publicly listed
technology consulting company.
Alan’s current term will expire no
later than the close of the 2015
Annual General Meeting.
Listed company directorships held
in the past three years other than
listed above: None.
Age: 68 years.
Directors continued
19
Letter from the ChairmanDirectors’ ReportRemuneration ReportCorporate Governance StatementFinancial StatementsIndependent Audit ReportDirectors and Senior ManagementIntegrated Research and its controlled entities • Annual Report 2013 Directors (cont.)
Garry Dinnie
BCom, FCA, FAICD,
FAIM, MIIA(Aust)
Independent
Non‑Executive Director
Garry was appointed a Director
in February 2013. He is a
Director & Chair of the Audit
Committee of CareFlight Limited,
Inabox Group Limited and
a Director of a number of
private companies. He is also the
Chair or member of a number
of Audit & Risk Committees of
NSW public sector and private
sector entities. He was previously
a partner with Ernst & Young for
25 years specialising in audit,
advisory and IT services.
Garry’s current term will expire
no later than the close of the
2013 Annual General Meeting.
Listed company directorships held
in the past three years other than
listed above: None.
Age: 61 years.
Peter Lloyd
Non‑Executive Director
Peter was appointed a
Director in July 2010.
He has 39 years experience
in computing technology,
having worked for both
computer hardware and software
solution providers. For the
past 27 years Peter has
been specifically involved in
the provision of payments
solutions for banks and
financial institutions. He is also a
Director of The Grayrock Group
Pty Ltd and Limehouse Creative
Pty Ltd. Peter’s current term will
expire no later than the close of
the 2013 Annual General meeting.
Listed companies directorships held
in the past three years: None.
Age: 59 years.
Clyde McConaghy
B.Bus., MBA, MAICD,
MIOD ‑ UK
Non‑Executive Director
Clyde was appointed a Director
in December 2007. He has three
decades of international strategic
market development experience
in the technology, online and
media industries. Clyde was a
Board director of WMRC Plc
(now IHS Global Insight) on the
London Stock Exchange and
a director of the Economist
Intelligence Unit in London.
Clyde is Managing Director
of Optima Boards, a Board
advisory firm for companies
and not-for-profit entities.
Clyde’s current term will expire
no later than the close of the
2014 Annual General Meeting.
Listed company directorships held
in the past three years: None.
Age: 51 years.
20
Directors and Senior ManagementIntegrated Research and its controlled entities • Annual Report 2013 Resigning Director and
Retiring Secretary during
the year
John Brown
(resigned December 2012), B Com, FCA, MAICD
Independent Non‑Executive Director
John was a Director from July 2007 to December 2012.
He was a partner with KPMG for over 26 years and
since retiring in 2006 has been appointed to be
the chair or member of the audit committee of a
number of NSW and Federal public sector entities.
At his retirement from the Company’s Board in
December 2012, John was also a Director and Chair
of the Audit Committee of Sydney Water Corporation,
a member of the National Health and Research Medical
Council and a Director of The Gift Of Life Foundation.
Listed companies directorships held in the past
three years: None.
Age: 65 years.
David Leighton
(retired July 2012), MBA, FCPA, ACIS
David was Company Secretary from October 2000 up
to his retirement in July 2012.
Company
Secretary
David Purdue
BEc, MBA, Grad Dip CSP,
FCA, FCIS, FCSA, GAICD
David was appointed Company
Secretary in July 2012.
David is also the Company’s
Global Commercial Manager and
is responsible for the Company’s
global commercial business.
Prior to this, David spent three
years at Integrated Research’s
Colorado office to manage the
Americas finance operations.
David is a Chartered Accountant
and Chartered Secretary with
over 25 years experience in
both professional practice
and industry.
21
Letter from the ChairmanDirectors’ ReportRemuneration ReportCorporate Governance StatementFinancial StatementsIndependent Audit ReportDirectors and Senior ManagementIntegrated Research and its controlled entities • Annual Report 2013 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 Chartered Accountant with
over 25 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 and
global support activities. Alex has
over 25 years experience in
the development, creation and
management of high-technology
hardware and software products
for Honeywell and Siemens.
Before joining Integrated
Research he was responsible
for general management of the
Siemens Access Control product
line globally and for much of that
time was based in Germany.
Andre Cuenin
BSc, MBA
President Americas
Andre joined Integrated
Research in October 2008
and is responsible for all
business operations in the
Americas region. Andre has
over 20 years experience in
IT sales, most recently as VP of
Field Operations at Stratavia,
where he was responsible
for sales and professional
services marketing worldwide.
Prior to this he spent 15 years
with CA (previously known as
Computer Associates) in several
senior management positions
including VP of Worldwide
Sales Operations.
22
Directors and Senior ManagementIntegrated Research and its controlled entities • Annual Report 2013 John Dunne
B.InfTech, MBT
General Manager,
Products & Alliances
John is responsible for the
Company’s global product
strategy and alliances, ensuring
the delivery of high-quality
products aligned to customers’
strategic directions. He is an
expert in systems monitoring
and management with 15 years
experience in the ICT industry,
including seven years with
Integrated Research. His current
focus includes development of
enterprise-class IP telephony
management and reporting
solutions to deliver business
insight to global organisations
and service providers.
Melanie Newman
GDip HR
Jonathan Stern
B.Sc (Hons), M.Sc
General Manager,
Human Resources
Melanie is responsible for the
Human Resources function
at Integrated Research
which includes responsibility
for aligning Strategic HR
initiatives with the Business
Strategy to support a high
performance culture. Melanie has
over 15 years HR Management
experience mostly within global
organisations in the Information
Technology industry.
Vice President Asia Pacific
Jonathan is responsible for
Integrated Research’s business
across Asia Pacific. He joined
in April 2013 from Global Data
Integration / Data Quality software
vendor Informatica. During his
time there, Jonathan was MD
of the Australia / NZ business,
doubling revenues over a
3 year period. Prior to that,
Jonathan held a number
of Executive positions at
IBM Australia, including:
GM WebSphere Software,
GM Lotus Software and Channel
Business Executive for Tivoli
Software across Asia Pacific.
23
Letter from the ChairmanDirectors’ ReportRemuneration ReportCorporate Governance StatementFinancial StatementsIndependent Audit ReportDirectors and Senior ManagementIntegrated Research and its controlled entities • Annual Report 2013 Directors’ Report
The Directors present their report together with the Financial Statements of
Integrated Research Limited (“the consolidated entity”), being the Company and its
controlled entities, for the year ended 30 June 2013 and the Auditor’s Report thereon.
Results
The net profit of the consolidated entity for the 12 months ended 30 June 2013 after income tax expense was
$9.1 million.
Dividends
Dividends paid or declared by the Company since the end of the previous financial year were:
Final 2012 - Ordinary shares
Interim 2013 - Ordinary shares
Final 2013 - Ordinary shares
70% franked
30% franked
40% franked
3.0
2.0
3.0
5,045
3,368
5,053
14 Sep 2012
15 Mar 2013
13 Sep 2013
Cents per
share
Total amount
$’000
Date of
payment
Principal activities and review of operations
Detail of the principal activities and review of operations of the consolidated entity, which forms part of this
Directors’ Report, is set out on pages 12 to 17.
Events subsequent to reporting date
For dividends declared after 30 June 2013 see Note 19 in the financial statements. The financial effect of dividends
declared and paid after 30 June 2013 has not been brought to account in the financial statements for the year ended
30 June 2013 and will be recognised in subsequent financial statements.
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.
24
Directors’ ReportIntegrated Research and its controlled entities • Annual Report 2013 Directors and Company Secretary
Details of current Directors’ qualifications, experience, age and special responsibilities are set out on pages 18 to 20.
Details of the Company Secretary and his qualifications are set out on page 21.
Officers who were previously partners of the audit firm
No officers of the Company were partners of the current audit firm during the financial year.
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 2013, and the numbers of meetings attended by each director were:
Audit and Risk
Committee
Meetings
Nomination and
Remuneration
Committee
Meetings
Strategy
Committee
Meetings
Board Meetings
A
11
12
6
11
11
11
11
5
B
12
12
6
12
12
12
12
5
A
‑
‑
1
‑
‑
3
3
1
B
‑
‑
1
‑
‑
3
3
1
A
3
‑
‑
3
3
‑
‑
‑
B
3
‑
‑
3
3
‑
‑
‑
A
‑
4
‑
4
4
3
‑
‑
B
‑
4
‑
4
4
4
‑
‑
Alan Baxter
Mark Brayan
John Brown
Kate Costello
Steve Killelea
Peter Lloyd
Clyde McConaghy
Garry Dinnie
A: Number of meetings attended.
B: Number of meetings held during the time the Directors held office or was a member of the Board or 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.
25
Letter from the ChairmanDirectors and Senior ManagementRemuneration ReportCorporate Governance StatementFinancial StatementsIndependent Audit ReportDirectors’ ReportIntegrated Research and its controlled entities • Annual Report 2013 Directors’ interests
The relevant interest of each director in the shares, options or performance rights over ordinary shares issued by the
companies in the consolidated entity and other relevant bodies corporate, as notified by the Directors to the Australian
Securities Exchange in accordance with S205G(1) of the Corporations Act 2001, at the date of this report is as follows:
Ordinary shares in Integrated Research
Options
Performance
rights
Directly held
Beneficially
held
‑
‑
‑
‑
100,000
25,000
200,000
‑
Total
100,000
25,000
200,000
‑
94,497,339
337,612
94,834,951
‑
‑
‑
‑
‑
‑
Number of
options
Number of
rights
‑
‑
‑
‑
‑
‑
‑
‑
340,000
‑
‑
‑
‑
‑
Alan Baxter
Mark Brayan
Kate Costello
Garry Dinnie
Steve Killelea
Clyde McConaghy
Peter Lloyd
Share options and performance rights
Options and performance rights granted to Directors and senior executives
During or since the end of the financial year, the Company granted performance rights for no consideration over
unissued ordinary shares in Integrated Research Limited to the following named Directors and executive officers of the
consolidated entity as part of their remuneration:
Number of
performance
rights granted
Performance
hurdle
Exercise price
Expiry date
Directors
Mark Brayan
Executive Officers
Peter Adams
Alex Baburin
Andre Cuenin
John Dunne
Andrew Levido
David Purdue
Pim Van Der Poel
170,000
30,000
30,000
50,000
30,000
56,250
20,000
25,000
Yes
No
No
No
No
Yes
No
Yes
Nil
Sep 2015
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Sep 2015
Sep 2015
Sep 2015
Sep 2015
Sep 2015
Sep 2015
Sep 2015
The performance rights were granted under the Integrated Research Performance Rights and Option Plan
(established November 2011). The performance rights vest on 31 August 2015 subject to applicable
performance hurdles. The performance rights are automatically exercised upon vesting. The Company will issue
shares upon vesting conditions being met for Executive Officers. The Company will make an on-market purchase
for Mr Brayan upon his vesting conditions being satisfied.
26
Directors’ ReportIntegrated Research and its controlled entities • Annual Report 2013 Unissued shares under option and performance rights
Unissued ordinary shares of Integrated Research Limited under option or performance rights at the date of this report
are as follows:
Options
Performance rights
Expiry date
Exercise price Number of shares
Expiry date
Exercise price Number of shares
Oct 2013
May 2014
$0.31
$0.28
265,000
Sept 2014
507,000
Nov 2014
Sept 2015
Nil
Nil
Nil
Total options
772,000
Total performance rights
430,000
815,000
160,000
1,405,000
Options and performance rights 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
248,000
87,500
75,000
50,000
500,000
$0.28
$0.38
$0.31
$0.35
$0.42
Indemnification and insurance of officers and auditors
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 to insure the Directors and executive 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.
27
Letter from the ChairmanDirectors and Senior ManagementRemuneration ReportCorporate Governance StatementFinancial StatementsIndependent Audit ReportDirectors’ ReportIntegrated Research and its controlled entities • Annual Report 2013 Remuneration report
The Company’s Remuneration Report, which forms part of this Directors’ Report, is on pages 29 to 37.
Corporate governance
A statement describing the Company’s main corporate governance practices in place throughout the financial year is
on pages 38 to 42.
Non‑audit services
During the year Ernst and Young, 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 & Risk 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 & Risk 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 a 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 on page 81
and forms part of the Directors’ Report.
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 Statements 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 19th day of August 2013.
28
Directors’ ReportIntegrated Research and its controlled entities • Annual Report 2013 Remuneration report (audited)
Remuneration policies
Remuneration levels for key management personnel
and secretary 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 Nomination and 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 remuneration surveys provide periodic
analysis 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 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 either options or
performance rights over ordinary shares of Integrated
Research Limited under the rules of the share plans.
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
year’s 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.
29
Letter from the ChairmanDirectors and Senior ManagementDirectors’ ReportCorporate Governance StatementFinancial StatementsIndependent Audit ReportRemuneration ReportIntegrated Research and its controlled entities • Annual Report 2013 Long‑term incentive
Prior to the 2012 financial year, options were issued to executive Directors and other senior executives under the
Employee Share Option Plan. In November 2011, the Company established a new plan titled Integrated Research
Performance Rights and Options Plan (“IRPROP”). Performance rights are issued to executive Directors and other senior
executives under the IRPROP. The ability of executive Directors to exercise either options or performance rights 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:
New licences ($’000)
Net profit ($’000)
Dividends paid ($’000)
Closing share price
Change in share price
2013
26,632
9,078
8,413
$1.035
$0.37
2012
28,861
9,035
7,512
$0.665
$0.39
2011
25,005
7,465
4,171
$0.275
($0.125)
2010
18,413
5,401
7,506
$0.40
$0.125
2009
21,723
7,863
5,003
$0.275
($0.06)
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 licences.
The Nomination and Remuneration Committee considers that the above performance linked structure is generating the
desired outcomes.
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:
Directors (full year)
Steve Killelea ‑ Chairman
Directors (part year)
Garry Dinnie (appointed February 2013)
Mark Brayan ‑ Chief Executive Officer
John Brown (resigned December 2012)
Alan Baxter
Kate Costello
Peter Lloyd
Clyde McConaghy
Other key management personnel (full year)
Other key management personnel (part year)
Peter Adams ‑ Chief Financial Officer
David Leighton ‑ Company Secretary
Alex Baburin ‑ GM ‑ Research & Development
Jonathan Stern ‑ Vice President ‑ Asia Pacific
Andre Cuenin ‑ President Americas
Pierre Semaan ‑ Vice President ‑ Asia Pacific
John Dunne ‑ GM ‑ Products & Alliances
Pim Van Der Poel ‑ Vice President ‑ Europe
Andrew Levido ‑ GM ‑ Global Sales
David Purdue ‑ Company Secretary & Global
Commercial Manager
30
Remuneration ReportIntegrated Research and its controlled entities • Annual Report 2013 Service agreements
Service contracts for current executive Directors and
current 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 undertakings 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 undertakings 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 Alex Baburin, General Manager Research and
Development, has a contract of employment with
Integrated Research Limited dated 18 October 2006,
which provides for specific notice and severance
undertakings of up to one month’s compensation
depending on the particular circumstances. Mr Baburin
can terminate his employment by giving one month’s
prior notice in writing.
Mr Andre Cuenin, President Americas, has a contract
of employment with Integrated Research Inc dated
22 September 2008, which provides for specific
notice and severance undertakings of one month’s
compensation depending on the particular circumstances.
Mr Cuenin can terminate his employment by giving one
month’s prior notice in writing.
Mr John Dunne, General Manager Products and Alliances,
has a contract of employment with Integrated Research
Limited dated 29 August 2008, which provides for specific
notice and severance undertakings of one month’s
compensation depending on the particular circumstances.
Mr Dunne can terminate his employment by giving one
month’s prior notice in writing.
Mr Andrew Levido, General Manager Global Sales, had a
contract of employment with Integrated Research Limited
dated 7 May 2012, which provided for specific notice and
severance undertakings of three months compensation
depending on the particular circumstances. Mr Levido
terminated his employment in July 2013.
Mr David Purdue, Company Secretary and Global
Commercial Manager, has a contract of employment
with Integrated Research Limited dated 27 May 2008,
which provides for specific notice and severance
undertakings of one month’s compensation depending on
the particular circumstances. Mr Purdue can terminate his
employment by giving one month’s prior notice in writing.
Mr Jonathan Stern, Vice President Asia Pacific, has a
contract of employment with Integrated Research Limited
dated 03 April 2013, which provides for specific
notice and severance undertakings of one month’s
compensation depending on the particular circumstances.
Mr Stern can terminate his employment by giving one
month’s prior notice in writing.
Mr Pim Van Der Poel, Vice President Europe, had a
contract of employment with Integrated Research UK
Limited dated 11 July 2012, which provided for specific
notice and severance undertakings of one month’s
compensation depending on the particular circumstances.
Mr Van Der Poel terminated his employment at the end
of the 2013 financial year.
31
Letter from the ChairmanDirectors and Senior ManagementDirectors’ ReportCorporate Governance StatementFinancial StatementsIndependent Audit ReportRemuneration ReportIntegrated Research and its controlled entities • Annual Report 2013 Non‑executive Directors
Total remuneration for all non-executive
Directors last voted upon at the Annual General
Meeting in November 2012 is not to exceed
$750,000 per annum.
Director’s base fees from October 2012 were $70,000
per annum inclusive of compulsory superannuation
(prior to October 2012 was $54,500 inclusive of
compulsory superannuation). The chairman receives
the base fee by a multiple of two. 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 of the key management
personnel director of the Company and each of the
executives and relevant group key management
executives are reported below.
The estimated value of options and performance rights
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 and performance
rights granted during the year are set out below.
“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.
32
Remuneration ReportIntegrated Research and its controlled entities • Annual Report 2013 Short term
Salary &
fees
$
Non-cash
benefits
$
Bonus
$
Post-
employment
Superannu-
ation
contribution
$
Share-
based
payments
Other
compen-
sation
Value of
options
and rights
$
Termi-
nation
benefit
$
Proportion of
remuneration
Perfor-
mance
related
Total
$
Value of
options
and
rights
2013
In AUD
Directors
Non‑executive
Alan Baxter
60,665
John Brown
(Resigned 17 Dec
2012)
Kate Costello
Garry Dinnie
(Joined 17 Feb 2013)
Peter Lloyd
(also see Note 24)
Steve Killelea
(Chairman)
Clyde
McConaghy
Executive
26,274
60,665
26,758
60,665
121,330
60,665
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
5,460
2,365
5,460
2,408
5,460
10,920
5,460
‑
‑
‑
‑
‑
‑
‑
Mark Brayan
449,653
40,434
4,532
16,470
22,365
Executive officers (excluding Directors)
Peter Adams
264,510
39,381
4,532
Alex Baburin
241,789
28,290
Andre Cuenin
222,047
188,803
John Dunne
200,018
23,381
3,750
‑
16,470
21,761
6,661
16,470
8,429
6,730
3,012
8,078
338
‑
‑
‑
‑
‑
278,998
126,002
4,532
16,470
4,257
185,886
‑
2,644
16,470
4,433
140,364
46,195
2,266
8,235
45,851
22,927
147,930
79,218
‑
‑
‑
‑
2,475
‑
1,419
David Leighton
(retired July 2012)
Andrew Levido
(resigned July 2013)
David Purdue
(appointed Company
Secretary July 2012)
Pierre Semaan
(resigned Dec 12)
Jonathan Stern
(appointed April 13)
Pim Van Der Poel
(appointed Oct 2012
resigned July 2013)
Total
compensation:
key management
(consolidated,
including Directors)
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
66,125
28,639
66,125
29,166
66,125
132,250
66,125
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
533,454
8%
4%
333,322
298,570
420,523
247,947
12%
9%
45%
9%
4,088
‑
3%
2%
7%
3%
‑
430,259
29%
1%
209,433
‑
2%
197,060
23%
71,253
32%
‑
‑
228,567
35%
1%
2,597,818
594,631
18,506
159,353
58,723
3,429,031
33
Letter from the ChairmanDirectors and Senior ManagementDirectors’ ReportCorporate Governance StatementFinancial StatementsIndependent Audit ReportRemuneration ReportIntegrated Research and its controlled entities • Annual Report 2013 Short term
Post-
employment
Share-
based
payments
Other
compen-
sation
Proportion of
remuneration
Salary &
fees
$
Non-cash
benefits
$
Bonus
$
Superannu-
ation
contribution
$
Value of
options
and rights
$
Termina-
tion
benefit
$
Value of
options
and
rights
Perfor-
mance
related
Total
$
2012
In AUD
Directors
Non‑executive
Alan Baxter
John Brown
Kate Costello
Peter Lloyd
Steve Killelea
(Chairman)
Clyde
McConaghy
Executive
9,500
50,000
50,000
50,000
100,000
50,000
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
45,000
4,500
4,500
4,500
9,000
4,500
‑
‑
‑
‑
‑
‑
Mark Brayan
429,693
109,450
4,532
15,775
20,642
Executive officers (excluding Directors)
Peter Adams
252,693
50,226
4,532
Alex Baburin
231,193
37,762
Brian Bigley
175,603
68,804
‑
‑
Geoff Bryant
(resigned Nov 2011)
133,290
13,115
7,219
Andre Cuenin
206,250
200,549
John Dunne
189,908
36,314
David Leighton
45,000
Andrew Levido
(appointed
May 2012)
30,838
‑
‑
‑
‑
‑
378
Pierre Semaan
219,693
89,467
4,532
15,775
20,807
673
10,138
2,813
17,092
4,050
1,992
15,775
8,342
3,519
2,353
‑
8,748
4,073
‑
‑
4,725
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
54,500
54,500
54,500
54,500
109,000
54,500
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
580,092
19%
4%
331,568
293,281
247,433
163,762
418,360
247,387
49,050
33,208
15%
13%
28%
8%
48%
15%
‑
‑
3%
1%
1%
‑
2%
2%
‑
‑
334,192
27%
1%
Total
compensation:
key management
(consolidated,
including Directors)
2,223,661
605,687
21,193
176,890
52,402
3,079,833
34
Remuneration ReportIntegrated Research and its controlled entities • Annual Report 2013 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:
Directors
Mark Brayan
Executives
Peter Adams
Alex Baburin
Andre Cuenin
John Dunne
Andrew Levido
Pierre Semaan
Jonathan Stern
Pim Van Der Poel
Short term incentive bonuses
Included in
remuneration
$ (A)
% vested in
year
% forfeited in
year
(B)
40,434
39,381
28,290
188,803
23,381
126,002
46,195
22,927
79,218
18%
79%
71%
81%
58%
63%
33%
67%
51%
82%
21%
29%
19%
42%
37%
67%
33%
49%
(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 2013 financial year.
(B) The amounts forfeited are due to the performance or service criteria not being met in relation to the current
financial year.
35
Letter from the ChairmanDirectors and Senior ManagementDirectors’ ReportCorporate Governance StatementFinancial StatementsIndependent Audit ReportRemuneration ReportIntegrated Research and its controlled entities • Annual Report 2013 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
No options have been granted to named executives either during or since the end of the financial year.
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 performance hurdles.
Further details, including grant dates and exercise dates regarding options granted to executives under the ESOP are in
note 16 to the financial statements.
Exercise of options granted as compensation
During the reporting year the following shares were issued to executives on the exercise of options previously granted
as compensation.
Directors
Mark Brayan
Executives
Peter Adams
Andre Cuenin
Pierre Semaan
Fair value
of options
exercised
during the year
($)
Payment value
of options
exercised
during the
year ($)
Number of
shares issued
500,000
72,050
210,000
87,500
75,000
50,000
14,096
9,405
7,080
33,250
23,250
17,500
36
Remuneration ReportIntegrated Research and its controlled entities • Annual Report 2013
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
Value yet to vest ($)
Number
Date
Percent
vested in
year
Percent
forfeited
in year (A)
Financial
year in which
grant expires
Min
(B)
Max
(C)
Executives
Alex Baburin
Andre Cuenin
40,000
300,000
Oct‑08
Oct‑08
‑
‑
John Dunne
30,000
May-09
25%
25%
25%
‑
2014
2014
2014
nil
nil
nil
$1,254
nil
$887
Performance rights granted
Value yet to vest ($)
Percent
vested in
year
Percent
forfeited
in year
(A)
Financial
year in which
grant expires
Min
(B)
Max
(C)
Number
Date
Directors
Mark Brayan
Executives
170,000
170,000
Peter Adams
100,000
Alex Baburin
Andre Cuenin
John Dunne
Andrew Levido
David Purdue
Pim Van Der Poel
Pierre Semaan
30,000
75,000
30,000
75,000
50,000
75,000
30,000
56,250
14,500
20,000
25,000
65,000
Dec‑11
Oct-12
Dec‑11
Oct-12
Dec‑11
Oct-12
Dec‑11
Oct-12
Dec‑11
Oct-12
Oct-12
Dec‑11
Oct-12
Oct-12
Dec‑11
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
100%
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2016
2015
2016
2016
2015
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
65,212
150,280
38,360
26,520
28,770
26,520
28,770
44,200
28,770
26,520
49,725
5,562
17,680
22,100
nil
(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 performance rights for employee benefit expense purposes.
37
Letter from the ChairmanDirectors and Senior ManagementDirectors’ ReportCorporate Governance StatementFinancial StatementsIndependent Audit ReportRemuneration ReportIntegrated Research and its controlled entities • Annual Report 2013 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 evaluating and approving 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 assessing the integrity of internal
control and management information systems. It is also
responsible for approving and monitoring financial and
other reporting.
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 and Risk 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
Board-endorsed policies, 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 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 (CEO) and
Company Secretary. Standing items include strategic
matters for discussion, the CEO’s report, financial reports,
key performance indicator reports and presentations
by key executives and external industry experts.
Board papers are circulated in advance. Directors have
other opportunities, including visits to operations,
for contact with a wider group of employees.
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. In addition executives make regular
presentations to the Board to ensure its familiarity with
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 pages 18 to 21 of
this report.
The Company’s constitution provides for the Board
to consist of between three and twelve members.
At 30 June 2013 the Board members were comprised
as follows:
Mr Steve Killelea - Non Executive Director (Chairman)
Mr Alan Baxter - Independent Non Executive Director
Ms Kate Costello - Independent Non Executive Director
Mr Garry Dinnie - Independent Non Executive Director
Mr Peter Lloyd - Non Executive Director
Mr Clyde McConaghy - Non Executive Director
Mr Mark Brayan - Executive Director
(Chief Executive Officer)
38
Corporate Governance StatementIntegrated Research and its controlled entities • Annual Report 2013 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 is satisfied
that the Company benefits from Mr Killelea’s experience
and knowledge gained through his long involvement
with Integrated Research and his associations
throughout the information technology industry.
Mr Killelea founded Integrated Research in 1988 and
was the CEO and Managing Director of the Company
until his retirement in November 2004.
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 CEO
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, in conjunction with
the Board, determines the selection criteria for
the position based on the skills deemed necessary
for the Board to best carry out its responsibilities.
The Committee then selects a panel of candidates
and the Board appoints 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
Policies on employee incentive plans,
including equity incentive plans.
Superannuation arrangements.
The remuneration framework and policy for
non-executive Directors.
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 Directors’ 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:
The Committee reviews and makes recommendations to
the Board on:
Ms Kate Costello (Chairperson) - Independent
Non-Executive
The appointment, remuneration, performance
objectives and evaluation of the CEO.
The remuneration packages for senior executives.
The Company’s recruitment, retention and termination
policies and procedures for senior executives.
Executive remuneration and incentive policies.
Mr Alan Baxter - Independent Non-Executive
Mr Steve Killelea - Non-Executive
The Nomination and Remuneration Committee meets
at least twice a year and/or as required. The Committee
met three times during the year under review.
39
Letter from the ChairmanDirectors and Senior ManagementDirectors’ ReportRemuneration ReportFinancial StatementsIndependent Audit ReportCorporate Governance StatementIntegrated Research and its controlled entities • Annual Report 2013 Audit and Risk Committee
The Audit and Risk 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 risk management and
internal control of the consolidated entity.
The members of the Audit and Risk Committee during
the year were:
Mr John Brown (Chairman till December 2012) -
Independent Non-Executive (resigned December 2012)
Mr Garry Dinnie - Independent Non-Executive
(appointed February 2013)
Mr Peter Lloyd - Non-Executive
Mr Clyde McConaghy - Non-Executive
(became Interim Chairman in February 2013)
During the year, the Audit and Risk Committee
provided the Board with updates to the Company’s
risk management register (with the Board approving
this document).
The external auditor, CEO and Chief Financial Officer (CFO)
are invited to Audit and Risk 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 25.
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 CEO and the CFO declared in writing to the Board
that the Company’s financial reports for the year ended
30 June 2013 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 main responsibilities of the Audit and Risk
Committee include:
Serve as an independent party to monitor the financial
reporting process and internal control systems.
Review the performance and independence of the
external auditors and make recommendations to the
Board regarding the appointment or termination of
the auditors.
Review the scope and cost of the annual audit,
negotiating and recommending the fee for the
annual audit to the Board.
Review the external auditor’s management letter
and responses by management.
Provide an avenue of communication between
the auditors, management and the Board.
Monitor compliance with all financial statutory
requirements and regulations.
Review financial reports and other financial
information distributed to shareholders so that they
provide an accurate reflection of the financial health
of the Company.
Monitor corporate risk management and
assessment processes, and the identification and
management of strategic and operational risks.
Enquire of the auditors of any difficulties encountered
during the audit, including any restrictions on the
scope of their work, access to information or changes
to the planned scope of the audit.
The Audit and Risk 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.
Review the results and findings of the auditor,
the adequacy of accounting and financial controls,
and to monitor the implementation of any
recommendations made.
To finalise half-year and annual reporting:
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.
40
Corporate Governance StatementIntegrated Research and its controlled entities • Annual Report 2013 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 CEO.
The Board appoints a member of the committee
to be Chairman.
The members of the Strategy Committee during the
year were:
Mr Steve Killelea (Chairman) - Non-Executive
Mr Mark Brayan - Executive
Mr Peter Lloyd - Non-Executive
Ms Kate Costello - Independent Non-Executive
The Strategy Committee is responsible for:
Review and assist in defining current strategy.
Assess new strategic opportunities, including M&A
proposals and intellectual property developments
or acquisitions.
Stay close to the business challenges and monitor
operational implementation of strategic plans.
Endorse strategy and business cases for
consideration by the full Board.
The Committee met four times during the year
under review.
Risk management
Business transactions are properly authorised
and executed.
The CEO and the CFO 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.
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.
Under the Audit and Risk Charter, the Audit and Risk
Committee reviews the status of business risks to the
consolidated entity through integrated risk management
programs ensuring risks are identified, assessed and
appropriately managed and communicated to the Board.
Major business risks arise from such matters as actions
by competitors, government policy changes and the
impact of exchange rate movements.
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.
Comprehensive policies and procedures are established
such that:
Conflict of interest
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.
Each Director 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
consolidated entity are set out in Note 25.
41
Letter from the ChairmanDirectors and Senior ManagementDirectors’ ReportRemuneration ReportFinancial StatementsIndependent Audit ReportCorporate Governance StatementIntegrated Research and its controlled entities • Annual Report 2013 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.
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 CEO and the CFO 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.
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.
Equal Employment Opportunity
The Company has a policy on Equal Employment
Opportunity with the provision that commits to a
workplace that is free of discrimination of all types.
It is Company policy to hire, develop and promote
individuals solely on the basis of merit and their
ability to perform without prejudice to race, colour,
creed, national origin, religion, gender, age, disability,
sexual orientation, marital status, membership or non
membership of a trade union, status of employment
(whether full or part-time) or any other factors
prohibited by law. The Board is satisfied that the Equal
Employment Opportunity policy is sufficient without the
need to further establish a separate policy on gender
diversity as required by the ASX Corporate Governance
Council recommendation.
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.
42
Corporate Governance StatementIntegrated Research and its controlled entities • Annual Report 2013 Integrated Research
Financial Report 2013
Financial Statements
Contents
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the financial statements
1. Significant accounting policies
2. Segment reporting
3. Finance income
4. Expenditure
5. Auditors’ remuneration
6.
Income tax expense
7. Earnings per share
8. Cash and cash equivalents
9. Trade and other receivables
10. Other current assets
11. Other financial assets
12. Property, plant and equipment
13. Deferred tax assets and liabilities
14. Intangible assets
15. Trade and other payables
16. Employee benefits
17. Provisions
18. Other liabilities
19. Capital and reserves
20. Financial instruments
21. Operating leases
22. Consolidated entities
23. Reconciliation of cash flows from operating activities
24. Key management personnel disclosures
25. Related parties
26. Parent entity disclosures
27. Subsequent events
44
Page
45
46
47
48
49
49
55
56
56
56
57
58
58
59
60
60
60
61
62
63
63
65
66
66
68
71
72
72
73
77
77
77
Financial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Consolidated statement of comprehensive income
For the year ended 30 June 2013
In thousands of AUD
Revenue
Revenue from licence fees
Revenue from maintenance fees
Revenue from consulting services
Total revenue
Expenditure
Research and development expenses
Sales, consulting and marketing expenses
General and administration expenses
Total expenditure
Other gains and losses
Currency exchange gains/(losses)
Profit before finance income and tax
Finance income
Profit before tax
Income tax expense
Profit for the year
Other comprehensive income
Items that may be reclassified subsequently to profit
Loss on cash flow hedge taken to equity
Foreign exchange translation differences
Other comprehensive income
Total comprehensive income for the year
Profit attributable to:
Members of Integrated Research
Total comprehensive income attributable to:
Members of Integrated Research
Earnings per share attributable to members of Integrated Research:
Basic earnings per share (AUD cents)
Diluted earnings per share (AUD cents)
Consolidated
Notes
2013
2012
26,632
17,717
4,510
48,859
(10,777)
(23,279)
(4,280)
(38,336)
28,861
16,406
3,341
48,608
(10,134)
(23,004)
(4,278)
(37,416)
591
(133)
11,114
456
11,570
(2,492)
9,078
(777)
415
(362)
11,059
509
11,568
(2,533)
9,035
(147)
125
(22)
8,716
9,013
9,078
9,035
8,716
9,013
5.40
5.35
5.41
5.38
4
3
6
7
7
The consolidated statement of comprehensive income is to be read in conjunction with the notes to the financial
statements set out on pages 49 to 77.
45
Letter from the ChairmanDirectors and Senior ManagementDirectors’ ReportRemuneration ReportCorporate Governance StatementIndependent Audit ReportFinancial StatementsIntegrated Research and its controlled entities • Annual Report 2013
Consolidated statement of financial position
As at 30 June 2013
In thousands of AUD
Current assets
Cash and cash equivalents
Trade and other receivables
Current tax assets
Other current assets
Total current assets
Non-current assets
Trade and other receivables
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
Income tax liabilities
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
Notes
2013
2012
8
9
10
9
11
12
13
14
15
17
18
13
17
18
19
19
14,827
21,407
29
781
12,038
20,725
163
953
37,044
33,879
2,157
724
1,706
1,187
15,040
20,814
656
1,802
1,820
453
13,849
18,580
57,858
52,459
4,190
2,004
1,349
13,086
20,629
3,582
756
2,881
7,219
4,285
1,779
1,653
9,832
17,549
3,003
621
2,053
5,677
27,848
23,226
30,010
29,233
1,501
(1,721)
30,230
30,010
1,175
(1,507)
29,565
29,233
The consolidated statement of financial position is to be read in conjunction with the notes to the financial statements
set out on pages 49 to 77.
46
Financial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Consolidated statement of changes in equity
For the year ended 30 June 2013
In thousands of AUD
Balance at 1 July 2012
Profit for the year
Other comprehensive income
for the year (net of tax)
Total comprehensive income
for the year
Share based payments expense
Shares issued
Dividends to shareholders
Share
capital
1,175
‑
‑
‑
‑
326
‑
‑
‑
(777)
(777)
‑
‑
‑
Consolidated
Hedging
reserve
Translation
reserve
Employee
benefit
reserve
Retained
earnings
Total
(1,783)
276
29,565
29,233
‑
415
415
‑
‑
‑
‑
‑
‑
148
‑
‑
9,078
9,078
‑
(362)
9,078
8,716
‑
‑
(8,413)
30,230
148
326
(8,413)
30,010
Balance at 30 June 2013
1,501
(777)
(1,368)
424
Balance at 1 July 2011
845
Profit for the year
Other comprehensive income
for the year (net of tax)
Total comprehensive income
for the year
Lapsed employee options
Share based payments expense
Shares issued
Dividends to shareholders
Balance at 30 June 2012
‑
‑
‑
‑
‑
330
‑
1,175
147
‑
(147)
(147)
‑
‑
‑
‑
‑
(1,908)
266
28,007
27,357
‑
125
125
‑
‑
‑
‑
(1,783)
‑
‑
‑
(35)
127
(82)
‑
276
9,035
9,035
‑
(22)
9,035
9,013
35
‑
‑
‑
127
248
(7,512)
29,565
(7,512)
29,233
The consolidated statement of changes in equity is to be read in conjunction with the notes to the financial statements
set out on pages 49 to 77.
47
Letter from the ChairmanDirectors and Senior ManagementDirectors’ ReportRemuneration ReportCorporate Governance StatementIndependent Audit ReportFinancial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Consolidated statement of cash flows
For the year ended 30 June 2013
In thousands of AUD
Notes
2013
2012
Consolidated
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
23
Cash flows from investing activities
Payments for capitalised development
Payments for property, plant and equipment
Payments for intangible assets
Divestment of other non-current financial assets
Interest 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
19
8
50,658
(30,683)
19,975
(2,519)
17,456
45,565
(29,409)
16,156
(1,510)
14,646
(7,882)
(6,730)
(495)
(121)
1,093
456
(518)
(221)
‑
509
(6,949)
(6,960)
326
(8,413)
(8,087)
2,420
12,038
369
14,827
248
(7,512)
(7,264)
422
11,635
(19)
12,038
The consolidated statement of cash flows is to be read in conjunction with the notes to the financial statements set out
on pages 49 to 77.
48
Financial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Notes to the
Financial Statements
For the year ended 30 June 2013
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 2013
comprises the Company and its subsidiaries
(together referred to as the “consolidated entity”).
The financial report was authorised for issue by the
Directors on 19 August 2013.
Integrated Research is a for-profit Company limited by
ordinary shares.
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 (“IFRS”). Compliance with IFRS
ensures the financial statements of the consolidated
entity also comply with International Financial Reporting
Standards and interpretations adopted by the
International Accounting Standards Board.
b) Basis of Preparation
The financial statements are presented in Australian
dollars and are 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 financial statements 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.
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.
New accounting standards and Interpretations
Changes in accounting policy and disclosures:
The accounting policies adopted are consistent
with those of the previous financial year except as
noted below.
Standard/Interpretation
AASB2011-9 ‘Amendments to Australian
Accounting Standards - Presentation of Items of
Other Comprehensive Income [AASB 1, 5, 7, 101, 112,
120, 121, 132, 133, 134, 1039 & 1049].
This standard requires entities to group items presented
in other comprehensive income on the basis of whether
they might be reclassified subsequently to profit or loss
and those that will not.
49
Letter from the ChairmanDirectors and Senior ManagementDirectors’ ReportRemuneration ReportCorporate Governance StatementIndependent Audit ReportFinancial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Note 1: Significant accounting policies (cont.)
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 is not expected to materially affect any of the amounts recognised in
the financial statements, but may change the disclosures presently made in relation to the consolidated entity’s
financial statements:
Standard/Interpretation
AASB9 ‘Financial Instruments’
AASB 10 ‘Consolidated Financial Statements’
AASB13 ‘Fair Value Measurement’
AASB119 ‘Employee Benefits’
AASB2012-2 ‘Amendments to Australian Accounting Standards -
Disclosures - Offsetting Financial Assets and Financial Liabilities’
AASB2012-3 ‘Amendments to Australian Accounting Standards -
Offsetting Financial Assets and Financial Liabilities’
Effective for annual
reporting periods
beginning on or after
Expected to be
initially applied in the
financial year ending
1 July 2015
1 July 2013
1 July 2013
1 Jan 2013
30 June 2016
30 June 2014
30 June 2014
30 June 2014
1 Jan 2013
30 June 2014
1 Jan 2013
30 June 2014
The accounting policies set out below have been applied consistently to all periods presented in the consolidated
financial statements.
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.
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
In preparing the financial statements of the individual entities 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 year end date are translated to Australian dollars at the foreign exchange rate ruling at that date.
Foreign exchange differences arising on translation are recognised in profit or loss. 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.
On consolidation, 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 year end 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 other comprehensive income and accumulated in the translation reserve.
50
Financial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Note 1: Significant
accounting policies (cont.)
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.
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 year end date, being the
present value of the quoted forward price.
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 includes
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 in 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 profit
or loss 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 profit or loss.
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
Plant and equipment
6 to 10 years
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 profit
or loss 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 useful lives of the capitalised are assessed as finite.
51
Letter from the ChairmanDirectors and Senior ManagementDirectors’ ReportRemuneration ReportCorporate Governance StatementIndependent Audit ReportFinancial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Note 1: Significant
accounting policies (cont.)
The expenditure capitalised includes the cost
of materials, direct labour and an appropriate proportion
of overheads. Other development expenditure is
recognised in profit or loss 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 profit or loss on a
straight-line basis over the estimated useful life,
but no more than three years.
Intellectual property
Intellectual property acquired from third parties is
amortised over its estimated useful life, but no more
than three years.
Computer software
Computer software is stated at cost and depreciated on
a straight-line basis over a 2½ to 3 year period.
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.
Allowance 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.
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 year
end 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 profit or loss 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
profit or loss.
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 profit or loss
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 year end date
which have maturity dates approximating to the terms
of the consolidated entity’s obligations.
Share‑based payment transactions
The share option and performance rights programmes
allows the consolidated entity’s employees to acquire
shares of the Company. The fair value of options
and performance rights granted are 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
or the performance rights. The fair value of the
instrument 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 or
performance rights that are expected to vest.
52
Financial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Note 1: Significant
accounting policies (cont.)
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 the year
end date, calculated at undiscounted amounts based on
remuneration wage and salary rates that the consolidated
entity expects to pay as at the year end date.
m) Provisions
A provision is recognised in the statement of
financial position 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.
Employee benefits
Provisions for employee benefits include liabilities for
annual leave and long service leave and are measured
at the amounts expected to be paid when the liabilities
are settled.
Make good
The make good provision is for leases undertaken by
the Company. For each provision raised a corresponding
asset has been recognised and is amortised over the
shorter of the term of the lease or the useful life of
the asset.
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 generally
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 profit or loss 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.
p) Expenses
Operating lease payments
Payments made under operating leases are recognised
in profit or loss on a straight-line basis over the term
of the lease. Lease incentives received are recognised
in profit or loss as an integral part of the total lease
expense and spread over the lease term.
Financing income
Financing income comprises interest receivable on
funds invested.
q) Income tax
Income tax on the profit or loss for the periods
presented comprises current and deferred tax.
Income tax is recognised in profit or loss 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
substantively enacted at the year end date, and any
adjustment to tax payable in respect of previous years.
53
Letter from the ChairmanDirectors and Senior ManagementDirectors’ ReportRemuneration ReportCorporate Governance StatementIndependent Audit ReportFinancial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Note 1: Significant
accounting policies (cont.)
Deferred tax is recognised on 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 year end 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 dividend franking deficit tax that arises from
the distribution of dividends are recognised at the same
time as the liability to pay the related dividend.
r) 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
statement of financial position.
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.
s) 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
consolidated 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.
Receivables
The consolidated entity assesses impairment of
receivables based upon assessment of objective
evidence for significant receivables and 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 reporting date. This assessment includes
judgements and estimates of future outcomes the
actual results of which may differ from the estimates
at the reporting date.
54
Financial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Note 2. Segment reporting
The information reported to the CODM (being the Chief Executive Officer) for the purposes of resource allocation
and assessment of performance is focused on geographical performance. The principal geographical regions are
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 and Corporate Australia - includes revenue and
expenses for research and development and corporate head office functions of the Company.
Inter‑segment pricing is determined on an arm’s length basis.
Segment profit represents the profit earned by each segment without allocation of investment revenue and income
tax expense. This is the measure reported to the chief operating decision maker for the purposes of resource allocation
and assessment of segment performance.
Information regarding these segments is presented below. The accounting policies of the reportable segments are the
same as the Group’s accounting policies.
In thousands of AUD
Sales to customers
outside the
consolidated entity
Americas
Europe
Asia Pacific
Corporate
Australia1
Eliminations
Consolidated
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
34,432 31,890 6,939 7,183 7,496 8,668
(8)
867
‑
‑ 48,859 48,608
Inter‑segment sales
‑
‑
‑
‑
‑
‑ 27,675 26,594 (27,675)
(26,594)
‑
‑
Total segment revenue 34,432 31,890 6,939 7,183 7,496 8,668 27,667 27,461 (27,675)
(26,594) 48,859 48,608
Total revenue
Segment results
861
784
174
175
187
244
9,892
9,856
48,859 48,608
‑ 11,114 11,059
11,114 11,059
456
509
(2,492) (2,533)
9,078 9,035
‑
616
739
‑ 7,445 7,489
‑
‑
‑
Results from
operating activities
Financing income
(interest received)
Income tax expense
Profit for the year
Capital additions2
Depreciation and
amortisation
expenditure
76
203
25
32
96
67
27
128
20
108
‑
‑
515
504
7,320
7,402
‑
‑
‑
Non‑current assets
3,513 1,048
‑ 17,227 17,478
(54)
(54) 20,814 18,580
In local currency3
Sales to customers
outside the
consolidated entity
Americas
(USD)
Europe
(GBP)
2013
2012
2013
2012
35,247 33,137 4,519 4,687
Inter‑segment sales
‑
‑
‑
‑
Total segment revenue 35,247 33,137 4,519 4,687
Segment results
881
825
113
114
1 Corporate Australia includes both the research and development and corporate head office functions of the Integrated Research Limited.
2 Excludes internal development costs capitalised but includes third party assets acquired.
3 Segment results represented in local currencies as reviewed by the Chief Operating Decision Maker.
55
Letter from the ChairmanDirectors and Senior ManagementDirectors’ ReportRemuneration ReportCorporate Governance StatementIndependent Audit ReportFinancial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Note 3. Finance income
In thousands of AUD
Interest income
Note 4. Expenditure
Total expenditure includes:
In thousands of AUD
Employee benefits expense:
Defined contribution plans
Equity settled share-based payments
Other employee benefits
Depreciation and amortisation
Bad and doubtful debt expense
Operating lease rental expenses
Note 5. Auditors’ remuneration
2013 - Ernst and Young. 2012 - Deloitte Touche Tohmatsu.
In thousands of AUD
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
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:
Other auditors
56
Consolidated
2013
456
456
2012
509
509
Consolidated
2013
2012
1,513
148
27,507
29,168
7,445
182
1,221
1,382
127
25,316
26,825
7,489
875
1,207
Consolidated
2013
2012
162,740
‑
168,000
15,530
75,389
‑
‑
16,800
1,932
3,523
Financial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Consolidated
Note
2013
2012
Note 6. Income tax expense
Recognised in profit for the year
In thousands of AUD
Current tax expense:
Current year
Prior year adjustments
Deferred tax expense:
Origination and reversal of temporary differences
13
Total income tax expense in profit and loss
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
Other
Prior year adjustments
Income tax expense
2,430
(93)
2,337
155
2,492
Consolidated
2013
11,570
3,471
105
76
2,326
(24)
2,302
231
2,533
2012
11,568
3,470
79
105
(1,144)
(1,097)
77
(93)
2,492
‑
(24)
2,533
57
Letter from the ChairmanDirectors and Senior ManagementDirectors’ ReportRemuneration ReportCorporate Governance StatementIndependent Audit ReportFinancial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Note 7. Earnings per share
The calculation of basic and diluted earnings per share at 30 June 2013 was based on the profit attributable to
ordinary shareholders of $9,078,000 (2012: $9,035,000); a weighted number of ordinary shares outstanding during
the year ended 30 June 2013 of 168,226,574 (2012: 166,977,446); and a weighted number of ordinary shares (diluted)
outstanding during the year ended 30 June 2013 of 169,659,715 (2012: 168,086,211), 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 plans on issue
Number for diluted earnings per share
Basic earnings per share (AUD cents)
Diluted earnings per share (AUD cents)
Note 8. Cash and cash equivalents
In thousands of AUD
Cash at bank and on hand
Consolidated
2013
9,078
2012
9,035
Consolidated
2013
2012
168,226,574
166,977,446
1,433,141
1,108,765
169,659,715
168,086,211
5.40
5.35
5.41
5.38
Consolidated
2013
14,827
2012
12,038
58
Financial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Note 9. Trade and other receivables
In thousands of AUD
Current
Trade debtors
Less: Allowance for doubtful debts
GST receivable
Non-current
Trade debtors
Consolidated
2013
2012
22,451
(1,139)
21,312
95
21,407
21,878
(1,237)
20,641
84
20,725
2,157
656
The credit period on sales ranges from 30 to 90 days although in limited circumstances extended payment terms have
been offered. No interest is charged on trade debtors.
Ageing of past due but not impaired:
In thousands of AUD
Past due 90 days
Consolidated
2013
3,770
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 in provision
Balance end of year
Consolidated
2013
1,237
(280)
182
1,139
2012
3,772
2012
662
(300)
875
1,237
The consolidated entity has used the following criteria to assess the allowance loss for trade receivables and as a result
is unable to specifically allocate the allowance to the ageing categories shown above:
historical bad debt experience;
the general economic conditions;
an individual account by account specific risk assessment based on past credit history; and
any prior knowledge of debtor insolvency or other credit risk.
Included in the consolidated entity’s trade receivable balance are debtors with a carrying amount of $2,631,000
(2012: $2,535,000) which are 90 days past due at the reporting date which the consolidated entity has not provided for
as there has been no significant change in credit quality and the consolidated entity believes that the amounts are still
considered recoverable. The consolidated entity does not hold any collateral over these balances.
59
Letter from the ChairmanDirectors and Senior ManagementDirectors’ ReportRemuneration ReportCorporate Governance StatementIndependent Audit ReportFinancial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Note 10. Other current assets
In thousands of AUD
Other prepayments
Fair value of hedge asset - forward foreign exchange contracts
Note 11. Other financial assets
In thousands of AUD
Deposits
The carrying amount of other financial assets is a reasonable approximation of their fair value.
Note 12. Property, plant and equipment
In thousands of AUD
Plant and Equipment
At cost
Accumulated depreciation
Leasehold Improvements
At cost
Accumulated depreciation
Total property, plant and equipment
At cost
Accumulated depreciation
Total written down amount
Plant and Equipment
Carrying amount at start of year
Additions
Effects of foreign currency exchange
Depreciation expense
Carrying amount at end of year
Leasehold Improvements
Carrying amount at start of year
Additions
Effects of foreign currency exchange
Depreciation expense
Carrying amount at end of year
60
Consolidated
2013
781
‑
781
2012
676
277
953
Consolidated
2013
724
2012
1,802
Consolidated
2013
2012
4,899
(3,972)
927
2,021
(1,242)
779
6,920
(5,214)
1,706
863
482
11
(429)
927
957
13
9
(200)
779
4,321
(3,458)
863
2,068
(1,111)
957
6,389
(4,569)
1,820
792
445
6
(380)
863
1,083
73
(1)
(198)
957
Financial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Note 13. 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 gain
Assets
Liabilities
Net
2013
2012
2013
‑
‑
416
745
533
587
‑
‑
‑
468
772
364
‑
‑
2012
50
2013
‑
2012
(50)
‑
4,485
4,063
(4,485)
(4,063)
‑
‑
‑
‑
‑
‑
‑
‑
416
745
533
587
191
41
(191)
468
772
364
‑
(41)
Deferred tax assets/(liabilities)
2,281
1,604
4,676
4,154
(2,395)
(2,550)
Set off of deferred tax asset
(1,094)
(1,151)
(1,094)
(1,151)
‑
‑
Net deferred tax assets/(liabilities)
1,187
453
3,582
3,003
(2,395)
(2,550)
Movement in temporary differences during the year:
For year ended 30 June 2013
Consolidated
In thousands of AUD
Property, plant and equipment
Intangible assets
Trade and other payables
Employee benefits
Provisions
Other current liabilities
Unrealised foreign exchange gain
For year ended 30 June 2012
In thousands of AUD
Property, plant and equipment
Intangible assets
Trade and other payables
Employee benefits
Provisions
Unrealised foreign exchange gain
Unrealised foreign exchange loss
Balance
1 July 12
(50)
(4,063)
468
772
364
‑
(41)
(2,550)
Balance
1 July 11
‑
(4,021)
567
596
243
‑
296
(2,319)
Recognised
in income
Recognised
in equity
Balance
30 June 13
50
(422)
(52)
(27)
169
587
(150)
155
‑
‑
‑
‑
‑
‑
‑
‑
‑
(4,485)
416
745
533
587
(191)
(2,395)
Consolidated
Recognised
in income
Recognised
in equity
Balance
30 June 12
(50)
(42)
(99)
176
121
(41)
(296)
(231)
‑
‑
‑
‑
‑
‑
‑
‑
(50)
(4,063)
468
772
364
(41)
‑
(2,550)
61
Letter from the ChairmanDirectors and Senior ManagementDirectors’ ReportRemuneration ReportCorporate Governance StatementIndependent Audit ReportFinancial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Note 14. Intangible assets
The amortisation is recognised in the following line item in the statement of comprehensive income:
In thousands of AUD
Research and development expenses
In thousands of AUD
Cost
Balance at 1 July 2011
Fully amortised & offset
Effects of foreign currency exchange
Internally developed
Acquired
Balance at 30 June 2012
Balance at 1 July 2012
Fully amortised & offset
Effects of foreign currency exchange
Internally developed
Acquired
Balance at 30 June 2013
Amortisation
Balance at 1 July 2011
Fully amortised & offset
Effects of foreign currency exchange
Amortisation for year
Balance at 30 June 2012
Balance at 1 July 2012
Fully amortised & offset
Effects of foreign currency exchange
Amortisation for year
Balance at 30 June 2013
Carrying amounts
Balance at 30 June 2012
Balance at 30 June 2013
62
Consolidated
2013
6,816
6,816
Consolidated
Software
development
Third party
software
21,419
(7,242)
‑
6,730
57
20,964
20,964
(4,295)
‑
7,882
‑
24,551
8,015
(7,242)
‑
6,649
7,422
7,422
(4,295)
‑
6,607
9,734
13,542
14,817
1,483
‑
3
‑
164
1,650
1,650
‑
14
‑
121
1,785
1,079
‑
2
262
1,343
1,343
‑
10
209
1,562
307
223
2012
6,911
6,911
Total
22,902
(7,242)
3
6,730
221
22,614
22,614
(4,295)
14
7,882
121
26,336
9,094
(7,242)
2
6,911
8,765
8,765
(4,295)
10
6,816
11,296
13,849
15,040
Financial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Note 15. Trade and other payables
In thousands of AUD
Trade and other creditors
The average credit period on trade and other payables is 30 days.
Note 16. Employee benefits
In thousands of AUD
Current
Liability for annual leave
Liability for long service leave
Non-current
Liability for long service leave
Pension plans
Consolidated
2013
4,190
4,190
2012
4,285
4,285
Consolidated
2013
2012
1,549
455
2,004
1,314
465
1,779
374
242
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.
Share based payments
Performance Rights
On 21 November 2011, the consolidated entity established the Integrated Research Performance Rights and
Options Plan (IRPROP). The plan enables the Company to offer performance rights to eligible employees to obtain
shares in Integrated Research at no cost contingent upon performance conditions being met. The performance
conditions include either a service period with performance components or a service period with a net after tax
profit hurdle. The performance rights are automatically exercised into shares upon the performance conditions
being met. The following performance rights were granted during the period:
Grant date
8 October 2012
Number of rights
Vesting date
Expiry date
411,250
31 Aug 2015
30 Sep 2015
The fair value of the performance rights including assumptions used are as follows:
Grant date
Fair value at measurement date
Share price
Exercise price
Expected volatility
Contractual life (expressed in days)
Expected dividends
Risk-free interest rate (based on 3 year treasury bonds)
8 Oct 2012
$0.884
$1.10
nil
43.03%
1,057
7.5%
2.41%
63
Letter from the ChairmanDirectors and Senior ManagementDirectors’ ReportRemuneration ReportCorporate Governance StatementIndependent Audit ReportFinancial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Note 16. Employee benefits (cont.)
The fair values of services received in return for performance rights 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 a
Binomial option-pricing model.
During the year ended 30 June 2013, the consolidated entity recognised an expense through profit of $156,000 related
to the fair value of performance rights (2012: $83,000).
The following table provides the movement in performance rights during the year:
In thousands of performance rights
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)
Share Options
2013
1,535
(93)
‑
411
1,853
‑
2012
‑
(18)
‑
1,553
1,535
‑
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 2013 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
Oct 2008 (*)
May 2009
Exercise price
$0.31
$0.28
Number of
instruments
outstanding
265,000
607,000
64
Financial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Note 16. Employee benefits (cont.)
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 options
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)
2013
$0.36
$0.40
$0.38
$‑
$0.29
$0.28
2013
2,645
(912)
(861)
‑
872
467
2012
$0.37
$0.42
$0.38
$‑
$0.36
$0.35
2012
3,872
(572)
(655)
‑
2,645
1,289
The options outstanding at 30 June 2013 have a weighted average exercise price of $0.29 and a weighted average of
contractual life of five years from inception.
During the year ended 30 June 2013, 860,500 options were exercised (2012: 654,500).
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.
There were no options granted during the 2013 financial year (2012:nil).
Note 17. Provisions
In thousands of AUD
Current
Employee benefits
Non-current
Employee benefits
Lease make good
Consolidated
Note
2013
2012
16
16
2,004
2,004
374
382
756
1,779
1,779
242
379
621
65
Letter from the ChairmanDirectors and Senior ManagementDirectors’ ReportRemuneration ReportCorporate Governance StatementIndependent Audit ReportFinancial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Note 18. Other liabilities
In thousands of AUD
Current
Fair value of hedge liabilities - forward foreign exchange contracts
Deferred revenue
Non-Current
Deferred revenue
Note 19. Capital and reserves
Share capital
In thousands of shares
On issue 1 July
Issued against employee options exercised
On issue 30 June
Consolidated
2013
2012
1,238
11,848
13,086
102
9,730
9,832
2,881
2,053
Ordinary shares
2013
2012
167,507
166,852
860
655
168,367
167,507
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
consolidated entity, as well as from the translation of liabilities that hedge the consolidated entity’s net investment in a
foreign subsidiary.
Employee benefit reserve
The employee benefit reserve arises on the grant of either share options or performance rights to employees under
the Integrated Research Performance Rights and Option Plan (established November 2011) or the Employee Share
Option Plan (established October 2000). Refer to note 16 for further details.
66
Financial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Note 19. Capital and reserves (cont.)
Dividends
Dividends recognised in the current year by the Company are:
In thousands of AUD
Cents per share
Total amount
Franked/
unfranked
Date of
payment
2013
Final 2012
Interim 2013
Total amount
2012
Final 2011
Interim 2012
Total amount
3.0
2.0
2.5
2.0
5,045
3,368
8,413
4,172
3,340
7,512
70% franked
14 Sep 2012
30% franked
15 Mar 2013
75% franked
16 Sep 2011
40% franked
16 Mar 2012
After the end of the financial year, the following dividend was proposed by the Directors. The financial effect of this
dividend has not been brought to account in the financial statements for the year ended 30 June 2013 and will be
recognised in subsequent financial statements:
In thousands of AUD
Cents per share
Total amount
Franked/
unfranked
Date of
payment
Final 2013
3.0
5,053
40% franked
13 Sep 13
The final dividend declared of 3.0 cents together with the interim dividend paid in March 2013 of 2.0 cents takes total
dividends for the 2013 financial year to 5.0 cents.
Franking account disclosure:
In thousands of AUD
Adjusted franking account balance
Impact on franking account balance of dividends not recognised
Company
2013
944
(866)
2012
1,669
(1,510)
67
Letter from the ChairmanDirectors and Senior ManagementDirectors’ ReportRemuneration ReportCorporate Governance StatementIndependent Audit ReportFinancial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Note 20. Financial instruments
Capital risk management
The 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 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 8 and
19 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 consolidated entity’s
financial management framework. The Board has an established Audit and Risk 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 and Risk 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 risks arising from the consolidated entity’s financial instruments are currency risk, credit risk, liquidity risk
and cash flow interest rate risk.
The 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
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 consolidated entity does not enter into or trade
financial instruments, including derivative financial instruments, for speculative purposes.
Market risk
The consolidated entity’s activities expose it primarily to the financial risks of changes in foreign currency exchange
rates and cash flow interest rate risks. The 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.
68
Financial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Note 20. Financial instruments (cont.)
Foreign currency risk management
The 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 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 the functional currency of the
respective entities undertaking the transactions is as follows:
In thousands of AUD
US Dollar
Euro
UK Sterling
Foreign currency sensitivity
Consolidated
Liabilities
Assets
2013
325
‑
‑
2012
‑
‑
‑
2013
3,989
2,669
10
2012
3,400
2,507
9
At 30 June 2013, if the US Dollar, Euro 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
US Dollar Impact
Euro Impact
UK Sterling Impact
Change in currency (i) - 10% decrease
Consolidated
Net profit
Retained earnings
2013
407
297
1
2012
378
279
1
2013
407
297
1
2012
378
279
1
(i) This has been based on the change in the exchange rate against the Australian dollar in the financial years ended 30 June 2013 and 30 June 2012.
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.
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. As stated in
the 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 at the year end 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 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.
69
Letter from the ChairmanDirectors and Senior ManagementDirectors’ ReportRemuneration ReportCorporate Governance StatementIndependent Audit ReportFinancial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Note 20. Financial instruments (cont.)
Forward foreign exchange contracts
The 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 consolidated entity uses forward exchange contracts to hedge its foreign currency risk. The forward exchange
contracts have maturities of less than two years after the year end date.
The consolidated entity classifies its forward exchange contracts hedging forecasted transactions as cash flow hedges
and measures them at fair value. The following table details the forward foreign currency contracts outstanding as at
reporting date:
Outstanding
contracts
Consolidated
Sell US Dollar
Less than 3 months
3 to 6 months
6 to 9 months
9 to 12 months
Sell Euros
Less than 3 months
3 to 6 months
6 to 9 months
9 to 12 months
Average exchange rate
Foreign currency
Contract value
Fair value
2013
2012
2013
FC’000
2012
FC’000
2013
A$’000
2012
A$’000
2013
A$’000
2012
A$’000
1.01
1.01
1.00
1.00
0.78
0.76
0.75
0.75
1.01
1.01
1.01
‑
0.71
0.71
0.76
‑
3,600
2,400
2,550
2,000
750
200
200
100
3,500
2,250
3,250
‑
1,100
300
300
‑
3,564
2,376
2,561
2,013
966
262
266
134
3,468
2,228
3,205
‑
(357)
(257)
(255)
(209)
8
(11)
(51)
‑
1,540
(104)
168
424
395
‑
(26)
(20)
(10)
47
14
‑
(1,238)
175
These hedge assets are classified as a level 2 fair value measurement, being derived from inputs rather than quoted
prices that are observable for the asset either directly (ie as prices) or indirectly (ie derived from prices).
Interest rate risk management
The consolidated entity is exposed to interest rate risk on the cash held in bank deposits. Cash in bank and term
deposits of $15,551,000 were held by the consolidated entity at the reporting date, attracting an average interest
rate of 3.26% (2012: 4.12%). If interest rates had been 50 basis points higher or lower and all other variables were
held constant, the consolidated entity’s net profit would increase/(decrease) by $78,000 (2012: $69,000).
70
Financial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Note 20. Financial instruments (cont.)
Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to
the consolidated entity. The 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 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.
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 consolidated entity’s short, medium and long-term
funding and liquidity management requirements.
The 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 15 for both 2013 and 2012 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 consolidated entity is a reasonable approximation of
their fair value.
Note 21. 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
Consolidated
2013
1,197
2,250
‑
3,447
2012
1,140
3,303
‑
4,443
71
Letter from the ChairmanDirectors and Senior ManagementDirectors’ ReportRemuneration ReportCorporate Governance StatementIndependent Audit ReportFinancial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Note 22. Consolidated entities
Country of
incorporation
Ownership interest
2013
2012
Parent entity:
Integrated Research Limited
Subsidiaries:
Integrated Research, Inc
Integrated Research UK Limited
Australia
USA
UK
Integrated Research Singapore Pty Limited
Singapore
Note 23. Reconciliation of cash flows from
operating activities
100%
100%
100%
100%
100%
‑
Consolidated
In thousands of AUD
Profit for the year
Depreciation and amortisation
Provision for doubtful debts
Interest received
Share-based payments expense
Net exchange differences
Change in operating assets and liabilities:
(Increase)/decrease in trade debtors
(Increase)/decrease in future income tax benefit
(Increase)/decrease in other operating assets
Increase/(decrease) in trade and other payables
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
Net cash from operating activities
2013
9,078
7,445
(98)
(456)
148
(725)
(2,085)
(734)
261
(95)
4,082
(304)
579
360
2012
9,035
7,489
575
(509)
127
117
(6,880)
(167)
580
920
2,628
(11)
398
344
17,456
14,646
72
Financial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Note 24. 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:
Directors (full year)
Steve Killelea ‑ Chairman
Directors (part year)
Garry Dinnie (appointed February 2013)
Mark Brayan ‑ Chief Executive Officer
John Brown (resigned December 2012)
Alan Baxter
Kate Costello
Peter Lloyd
Clyde McConaghy
Other key management personnel (full year)
Other key management personnel (part year)
Peter Adams ‑ Chief Financial Officer
David Leighton ‑ Company Secretary
Alex Baburin ‑ GM ‑ Research & Development
Jonathan Stern ‑ Vice President ‑ Asia Pacific
Andre Cuenin ‑ President Americas
Pierre Semaan ‑ Vice President ‑ Asia Pacific
John Dunne ‑ GM ‑ Products & Alliances
Pim Van Der Poel ‑ Vice President ‑ Europe
Andrew Levido ‑ GM ‑ Global Sales
David Purdue ‑ Company Secretary & Global
Commercial Manager
Key management personnel compensation
The key management personnel compensation are as follows:
In AUD
Short-term benefits
Post-employment benefits
Equity compensation benefits
Consolidated
2013
2012
3,210,955
2,850,541
159,353
58,723
176,890
52,402
3,429,031
3,079,833
Individual Directors and executives compensation disclosures
Information regarding individual Directors and executives compensation is provided in the remuneration report on
pages 29 to 37.
Other Transactions with Key Management Personnel
The consolidated entity received consulting services from The Grayrock Group Pty Limited, a company in which
Peter Lloyd is a director. The total consulting services paid for the year ended 30 June 2013 was $125,940 and was on
commercial terms (2012: $nil).
Apart from the details disclosed in this note, no director has entered into a material contract with the consolidated
entity since the end of the previous financial year and there were no material contracts involving Directors’
interests existing at year-end.
73
Letter from the ChairmanDirectors and Senior ManagementDirectors’ ReportRemuneration ReportCorporate Governance StatementIndependent Audit ReportFinancial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Note 24. Key management personnel disclosures (cont.)
Key management personnel transactions with the consolidated entity
Information regarding individual key management personnel’s service contracts is provided in the remuneration report
on pages 29 to 37.
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).
All performance rights refer to performance rights over ordinary shares of Integrated Research Limited, which are
exercisable on a one-for-one basis under the Integrated Research Performance Rights and Option Plan (IRPROP).
Options 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:
Held at
1 July
2012
Granted as
compensation
Exercised
Other
changes*
Held at
30 June
2013
Vested
during the
year
Vested and
exercisable
at 30 June
2013
Current Year
Directors
Mark Brayan
1,000,000
Executives
Peter Adams
350,000
Alex Baburin
40,000
Andre Cuenin
300,000
Pierre Semaan
200,000
John Dunne
15,000
‑
‑
‑
‑
‑
‑
(500,000)
(500,000)
(87,500)
(262,500)
‑
(75,000)
‑
‑
‑
‑
‑
‑
‑
‑
40,000
10,000
10,000
225,000
‑
‑
‑
‑
(50,000)
(150,000)
‑
(7,500)
‑
7,500
7,500
7,500
Held at
1 July
2011
Granted as
compensation
Exercised
Other
changes*
Held at
30 June
2012
Vested
during the
year
Vested and
exercisable
at 30 June
2012
Prior Year
Directors
Mark Brayan
1,000,000
Executives
Peter Adams
Alex Baburin
Andre Cuenin
350,000
200,000
300,000
Pierre Semaan
200,000
John Dunne
50,000
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
(35,000)
‑
‑
1,000,000
250,000
500,000
350,000
(160,000)
40,000
‑
‑
300,000
200,000
15,000
87,500
10,000
75,000
50,000
7,500
87,500
10,000
75,000
50,000
7,500
* Other changes represent options that expired or were forfeited during the year.
There were no options granted as compensation during the current year.
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.
74
Financial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Note 24. Key management personnel disclosures (cont.)
Performance rights over equity instruments granted as compensation
The movement during the reporting year in the number of performance rights over 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
2012
Granted as
compensation
Exercised
Other
changes*
Held at
30 June
2013
Vested
during the
year
Vested and
exercisable
at 30 June
2013
Current Year
Directors
Mark Brayan
170,000
170,000
Executives
Peter Adams
100,000
Alex Baburin
Andre Cuenin
John Dunne
Andrew Levido
David Purdue
Pierre Semaan
75,000
75,000
75,000
‑
14,500
65,000
30,000
30,000
50,000
30,000
56,250
20,000
‑
Pim Van Der Poel
‑
25,000
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
340,000
130,000
105,000
125,000
105,000
56,250
34,500
(65,000)
‑
‑
25,000
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
Held at
1 July
2011
Granted as
compensation
Exercised
Other
changes*
Held at
30 June
2012
Vested
during the
year
Vested and
exercisable
at 30 June
2012
‑
‑
‑
‑
‑
‑
‑
170,000
100,000
75,000
65,000
75,000
65,000
75,000
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
170,000
100,000
75,000
65,000
75,000
65,000
75,000
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
Current Year
Directors
Mark Brayan
Executives
Peter Adams
Alex Baburin
Brian Bigley
Andre Cuenin
Pierre Semaan
John Dunne
* Other changes represent performance rights that expired or were forfeited during the year.
Performance rights expire on the earlier of their expiry date or termination of the individual’s employment.
No performance rights have been granted since the end of the financial year. The performance rights were provided at
no cost to the recipients.
75
Letter from the ChairmanDirectors and Senior ManagementDirectors’ ReportRemuneration ReportCorporate Governance StatementIndependent Audit ReportFinancial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Note 24. Key management personnel disclosures (cont.)
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:
Current Year
Directors
Non‑executive
Alan Baxter
John Brown
Kate Costello
Steve Killelea
Executive
Mark Brayan
Executive officers
(excluding Directors)
Peter Adams
John Dunne
Pierre Semaan
Andre Cuenin
David Purdue
Held at
1 July 2012
Purchases
Received on
exercise of
options
Other
changes*
Sales
Held at
30 June
2013
100,000
101,000
200,000
94,834,951
25,000
‑
‑
‑
‑
18,750
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
500,000
87,500
7,500
50,000
75,000
‑
‑
(101,000)
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
100,000
‑
200,000
94,834,951
(500,000)
25,000
(82,500)
(7,500)
(50,000)
(75,000)
5,000
‑
‑
‑
‑
18,750
* Other changes represent net movement from ceasing to hold office.
Held at
1 July 2011
Purchases
Received on
exercise of
options
Other
changes*
Sales
Held at
30 June
2012
Current Year
Directors
Non‑executive
Alan Baxter
John Brown
Kate Costello
Steve Killelea
Executive
Mark Brayan
100,000
101,000
200,000
94,834,951
25,000
Executive officers
(excluding Directors)
John Dunne
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
35,000
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
100,000
101,000
200,000
94,834,951
25,000
(35,000)
‑
Shareholdings at the date of the Directors’ Report for existing Key Management Personnel remain unchanged.
Other transactions with the consolidated entity
There were no other transactions between the key management personnel, or their personally-related entities, and the
consolidated entity.
76
Financial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Note 25. Related parties
The consolidated entity has a related party relationship with its key management personnel (see note 24).
At 30 June 2013 Mr Steve Killelea, the Chairman of the Company, owned either directly or indirectly 56.33% of
the Company (2012: 56.41%).
Note 26. Parent entity disclosures
In thousands of AUD
Financial Position
Assets
Current assets
Non‑current assets
Total Assets
Liabilities
Current Liabilities
Non-current liabilities
Total Liabilities
Net Assets
Equity
Issued Capital
Employee benefits Reserve
Hedging reserve
Retained Earnings
Total Equity
Financial Performance
Profit for the year
Other comprehensive income
Total comprehensive income
Parent entity
2013
2012
20,085
17,211
37,296
6,828
4,563
11,391
25,905
1,501
424
(777)
24,757
25,905
8,621
(777)
7,844
19,055
17,479
36,534
6,672
3,861
10,533
26,001
1,175
276
‑
24,550
26,001
8,470
(147)
8,323
Note 27. Subsequent events
For dividends declared after 30 June 2013 see Note 19 in the financial statements. The financial effect of dividends
declared and paid after 30 June 2013 have not been brought to account in the financial statements for the year ended
30 June 2013 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.
77
Letter from the ChairmanDirectors and Senior ManagementDirectors’ ReportRemuneration ReportCorporate Governance StatementIndependent Audit ReportFinancial StatementsIntegrated Research and its controlled entities • Annual Report 2013 Directors’ Declaration
Directors’ Declaration
In accordance with a resolution of the Directors of Integrated Research Limited, we state that:
1.
In the opinion of the Directors:
(a) the financial statements and notes of Integrated Research Limited for the financial year ended 30 June 2013
are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2013 and of its
performance for the year ended on that date; and
(ii) complying with Accounting Standards and the Corporations Regulations 2001;
(b) the financial statements and notes also comply with International Financial Reporting Standards as disclosed
in Note 1; and
(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
2. This declaration has been made after receiving the declarations required to be made to the Directors by the chief
executive officer and chief financial officer in accordance with section 295A of the Corporations Act 2001 for the
financial year ended 30 June 2013.
On behalf of the Board
Dated at North Sydney this 19th day of August 2013.
Steve Killelea
Chairman
Mark Brayan
Chief Executive Officer
78
Integrated Research and its controlled entities • Annual Report 2013 79
Letter from the ChairmanDirectors and Senior ManagementDirectors’ ReportRemuneration ReportCorporate Governance StatementFinancial StatementsIndependent Audit ReportIntegrated Research and its controlled entities • Annual Report 2013 80
Independent Audit ReportIntegrated Research and its controlled entities • Annual Report 2013 81
Letter from the ChairmanDirectors and Senior ManagementDirectors’ ReportRemuneration ReportCorporate Governance StatementFinancial StatementsIndependent Audit ReportIntegrated Research and its controlled entities • Annual Report 2013 ASX Additional Information
ASX Additional Information
Shareholder information
Analysis of numbers of equity security holders by size of holding as at 2 September 2013
1 ‑1,000
1,001 ‑ 5,000
5,001 ‑ 10,000
10,001 ‑ 100,000
100,001 and over
Class of equity security
Ordinary shares
Shares
Options
Performance
rights
535
1,961
1,007
1,237
70
4,810
‑
11
12
15
1
39
‑
31
48
37
2
118
82
Integrated Research and its controlled entities • Annual Report 2013 Equity security holders
Twenty largest quoted equity security holders
The names of twenty largest holders of quoted equity securities as at 2 September 2013 are listed below:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
MR STEPHEN JOHN KILLELEA
MR ANDREW RHYS RUTHERFORD
CITICORP NOMINEES PTY LIMITED
SPECTROK PTY LTD
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