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1
Asia Pacifi c/Middle East/Africa
Asia Pacifi c/Middle East/Africa
Integrated Research Limited
Integrated Research Limited
Level 9, 100 Pacifi c Highway
Level 9, 100 Pacifi c Highway
North Sydney NSW 2060
North Sydney NSW 2060
Australia
Australia
T. +61 (2) 9966 1066
T. +61 (2) 9966 1066
E. info.ap@ir.com
E. info.ap@ir.com
United Kingdom & Ireland
United Kingdom & Ireland
Integrated Research UK Ltd
Integrated Research UK Ltd
The Atrium, Harefi eld Road
The Atrium, Harefi eld Road
Uxbridge, Middlesex
Uxbridge, Middlesex
UB8 1PH
UB8 1PH
United Kingdom
United Kingdom
T. +44 (0) 189 581 7800
T. +44 (0) 189 581 7800
E. info.europe@ir.com
E. info.europe@ir.com
Singapore
Singapore
Americas - West Coast
Americas - West Coast
Integrated Research (Singapore) Pte. Ltd.
Integrated Research (Singapore) Pte. Ltd.
Integrated Research, Inc.
Integrated Research, Inc.
Unit 14-03, Palais Renaissance
Unit 14-03, Palais Renaissance
4700 S. Syracuse Street, Suite 1000
4700 S. Syracuse Street, Suite 1000
390 Orchard Road
390 Orchard Road
Singapore 238871
Singapore 238871
T. +65 6813 0851
T. +65 6813 0851
E. info.ap@ir.com
E. info.ap@ir.com
Denver, CO 80237, USA
Denver, CO 80237, USA
T: +1 (303) 390 8700
T: +1 (303) 390 8700
F: +1 (303) 390 8777
F: +1 (303) 390 8777
E. info.usa@ir.com
E. info.usa@ir.com
ir.com
ir.com
Integrated Research
Annual Report 2021
Integrated Research
Annual Report 2021
ABN 76 003 588 449
ABN 76 003 588 449
Corporate
directory
Directors
Peter Lloyd
Independent Non-Executive Director
and Chairman
John Ruthven
Managing Director and
Chief Executive Offi cer
Allan Brackin
Independent Non-Executive Director
Independent Non-Executive Director
Garry Dinnie
Anne Myers
James Scott
Independent Non-Executive Director
Independent Non-Executive Director
Company Secretary
David Purdue
Registered Offi ce
Level 9, 100 Pacifi c Highway
North Sydney NSW 2060
T. +61 (2) 9966 1066
Share Registry
Computershare
Solicitors
Ashurst
Level 11, 5 Martin Place
Sydney NSW 2000
Bankers
National Australia Bank
Westpac Banking Corporation
HSBC Bank Australia
Securities Exchange Listing
Australian Securities Exchange
Code: IRI
Country of Incorporation
Integrated Research Limited,
incorporated and domiciled in
Australia, is a publicly listed
company limited by shares.
Notice of Annual General Meeting
The 2021 Annual General Meeting
of Integrated Research will be held
on Wednesday, 24 November 2021.
A formal Notice of Meeting will be
released in October.
This Annual Report is printed on Impress DM Matt. Impress DM is a FSC Certifi ed paper which is made from elemental
chlorine free pulp derived from well-managed forests. It is manufactured by an EMAS and ISO 14001 certifi ed mill.
5056 Designed and Produced by RDA Creative www.rda.com.au
Contents
CEO’s report
Chairman’s letter
Financial highlights
2
4
6
9
10 2021 in IR
13 Directors’ report
27 Remuneration report (audited)
About IR
39 Corporate governance statement
47 Financials
83 Directors’ declaration
84
90 Lead auditor’s independence declaration
91
93 Corporate directory
Independent auditor’s report
ASX additional information
1
Integrated Research and its controlled entities • Annual Report 2021 Financial highlights
$78.5M
Revenue
$7.9M
Profit
Total revenue
(AUD millions)
Net profit after tax
(AUD millions)
Revenue from licence sales
(AUD millions)
91.2
91.2 100.8 110.9
78.5
18.5
19.2
21.9
24.1
7.9
53.4
52.6
62.8
72.1
47.4
2017
2018
2019 2020 2021
2017
2018
2019 2020 2021
2017
2018
2019 2020 2021
2
2
Integrated Research and its controlled entities • Annual Report 2021
Integrated Research and its controlled entities • Annual Report 2021 R&D investment
10%
New products
4
New customers
27
IN MILLIONS OF AUD (EXCEPT EARNINGS PER SHARE)
Our customers
Year ended 30 June
2021
2020
% Change
Revenue from licence fees
47.4
72.1
-34%
Total revenue
Net profit after tax
Net assets
78.5
110.9
-29%
7.9
24.1
-67%
83.3
82.5
1%
Cash at balance date
12.1
9.7
25%
Americas revenue
Europe revenue
Asia Pacific revenue
54.5
75.8
-28%
12.2
17.5
-30%
11.8
17.7
-33%
Earnings per share (cents per share)
4.6
14.0
-67%
Year ended 30 June
2021
2020
% Change
Americas revenue (USD)
40.8
50.3
-19%
Asia Pacific revenue (AUD)
11.8
17.7
-33%
Europe revenue (UK Sterling)
6.7
9.2
-27%
8/10
Top US Banks
8/10
Biggest Telcos
7/10
Top Fin Services
Companies Globally
6/10
Top Automotive
Companies
Integrated Research and its controlled entities • Annual Report 2021
3
3
Integrated Research and its controlled entities • Annual Report 2021 Chairman’s letter
To my fellow shareholders,
On behalf of the Board, I would like to thank you for your continued support
and commitment to Integrated Research Ltd. It is certainly appreciated by
the board, management, and staff.
I am pleased to present to you the annual report for the financial year
ended 30 June 2021. A year of transformation and innovation in a time of
continued global uncertainty as the COVID epidemic disrupts our personal
and business lives.
FY21 Performance
There is no doubt FY21 was a difficult year. The Company
achieved revenue for the year of $78.5 million which was
a decrease of 29% over FY20 results. Licence sales for
the year decreased by 34% to $47.4 million. After a very
difficult and disappointing first half with revenues of
$34.1 million and near breakeven profit, we were able to
rebound in the second half to revenues of $44.4 million
and a profit after tax of $7.8 million, resulting in a NPAT
for the full year of $7.9 million, down by 67% on the
previous year.
Company performance was a result of an unpredictable
global landscape, contributing to significant disruption of
our customer buying patterns, and resulting in deferred
purchases, longer sales cycles, and shorter contract
terms especially in the first half. The strengthening of the
Australian to US dollar exchange rate also had a negative
impact on our results. Removing the effects of currency
revaluation and currency translation would result in a
revenue of $85.8 million and NPAT of $11.9 million for
the full year.
Our ability to react quickly to the changing business
environment resulted in the improved second half
performance. A renewed focus on customer-first
strategies, amplification of new SaaS products, and
execution of key strategic partnerships saw revenue
increase by 30% and NPAT by 210% over H1. This marked
improvement in second half performance is a
testament to the dedication, flexibility and agility of the
management and staff, and validation of the company’s
strategic roadmap for FY22 and beyond. Importantly,
moving forward we will transition to total contract value
(TCV) and free cash as two primary operating metrics.
New customers, New Products,
New Markets
FY21 saw major changes across the globe in how we
work, embracing work from home, collaborative work
technologies, and new operational paradigms. Cultural
changes around cashless payments and online shopping
have also influenced the market dynamics for our
Transact product line.
Key to our success is the ongoing development of
our technologies to address these market changes,
which will drive new customer growth, increase CLV
(Customer Lifetime Value), and allow us to expand into
new market segments.
New customer acquisition is important to the sustained
growth of any business, and critical to the success of
IR’s strategy. In FY21 27 new logos were added across the
Collaborate and Transact solution suites in key industry
verticals including telcos, manufacturing, healthcare,
banking, and logistics. We anticipate strong new customer
growth in FY22 as our SaaS offering matures and more
products are released.
Our commitment to innovation, both through
enhancements to our existing products and the
development of new products is evident in our continued
investment in R&D (Research & Development).
Net spending on R&D was up 10% to $19.1 million. We were
able to complete the next phase of Prognosis Cloud, our
cloud-based processing platform, that is to be the basis of
new SaaS based products and services. We were also able
to release a total of four new products on this platform
across Collaborate and Transact, with early sales wins and
market interest proving a positive sign for the future.
4
Integrated Research and its controlled entities • Annual Report 2021 “Our ability to react quickly to the
changing business environment
resulted in the improved second
half performance.”
New functionality and enhancements to our existing
on-premises solutions allow customers to choose a
flexible operational environment that aligns with their
own growth and digital transformation strategies.
FY22 will see a continuing emphasis on product
development as we build out our product roadmap to
provide additional products and services to better serve
our customers, and expand our market reach.
Additional investment is also planned in the field sales and
marketing divisions of the business to increase market
awareness and drive demand for our products and services.
Board
During FY21 we welcomed two new board members as
part of our board refresh program - Allan Brackin and
James Scott. Allan and James both bring a wealth of
leadership experience in the technology sector and a
fresh perspective to the Board. With strong backgrounds
in business strategy, process re-engineering, and change
management, their contributions will prove valuable as we
transition the business.
During FY22 we will be considering the addition of new
directors as part of the ongoing board refresh program
and succession planning strategy.
During the year, Paul Brandling resigned as Chair.
Paul had been Chair since mid-2019 after having spent
three years as an independent non-exec director.
And of course, I have the pleasure of stepping up to the
role of Chairman after spending the last eleven years as a
non-executive independent director at IR.
Dividend
The board did not declare a dividend for the full year,
opting to preserve cash. This will fund the initiatives that
support our company transition strategy for FY22, driving
growth and strengthening the Company’s future position.
Acknowledgements
On behalf of the board, I would like to acknowledge
the contribution of our team under the leadership of
John Ruthven. This past year has been difficult for all
employees, as they have transitioned to a work from
home model. The professionalism and dedication shown
by the whole team has been outstanding. The health and
safety of employees is a key priority for the Board, and our
commitment to providing a safe working environment for
all staff is ongoing.
Thanks to our customers for their continued support of IR.
We remain committed to continuous innovation, product
expansion, and providing industry leading solutions to
ensure the performance of their business-critical systems
both now and in the future.
Thank you also to my fellow Non-Executive Directors
Allan Brackin, Garry Dinnie, Anne Myers and James Scott.
Your experience, opinions, commitment, and counsel have
been invaluable over the past months. I would also like to
thank Paul Brandling our former Chair, for paving the way
and providing such a strong example to follow.
Once again, I would like to thank our valued shareholders
for your ongoing support. The Board remains confident
in IR’s prospects and looks forward to sharing in future
successes with you.
Peter Lloyd
Chairman
5
Integrated Research and its controlled entities • Annual Report 2021 CEO’s report
Dear Shareholders,
IR is a company in transformation. We are making good progress on our
customer and innovation led multi-year program and are confident this
growth strategy will result in higher quality subscription revenues. FY22 is an
important year in this evolution as we transition the business model to ARR
(annual recurring revenue) and reframe our primary operating metrics to
TCV (total contract value) and free cash.
Innovation, execution, and scale
FY21 was a year of innovation. We rebranded the
product lines to Collaborate, Transact and Infrastructure,
to simplify our message to market. We released a
number of new products on our SaaS platform, including
solutions for Microsoft Teams, Zoom and Webex under the
Collaborate product-line and Payment Analytics in the
Transact product-line. We expanded the capabilities of
the Prognosis platform, defining and developing three key
platform components - Prognosis Server, Prognosis Cloud
and Prognosis Edge - which will serve as the foundation for
future innovation. The platform investment has been both
significant and strategic, with over $12.0M in development
costs to date.
FY22 is a year focused on execution, in which we have
revamped our GTM (go-to-market) and sales coverage
model to support the change in our business model.
Key to this is the implementation of a ‘focus’ account
territory model, divided into new and existing customers,
and the introduction of a global customer success team.
This customer-led change is critical to improving retention
and maximizing satisfaction, with the objective of
achieving growth with existing customers and tripling
the TCV contribution from new customers.
As we move further out, FY23 and beyond is focused
on scale, leveraging the foundational achievements of
prior years. The business model will have transitioned
to ARR, and we expect momentum with new products
and new customers. Our ongoing innovation will provide
opportunity for expansion into new segments like
real-time and high-value payments, ‘rooms’ in the unified
communications space, and extension of Prognosis
Cloud and Prognosis Edge to support new and emerging
customer use cases.
Strategically we remain well-positioned for long-term
growth, benefiting from structural market changes
in remote working and cashless payments. We have
delivered a rich portfolio of new products into the market
and have a future product roadmap that positions us well
to expand our total addressable market (TAM).
FY21 in review
The past fiscal year has been one of the most challenging
in IR’s history. Externally, global social and economic factors
created a level of caution in customer buying behaviour.
Internally, our upfront revenue model came under pressure
with the shortening of contract terms, down from 4 years to
3 years. In addition, we had to adapt to the loss of direct or
F2F (face-to-face) customer engagement. The result of this
was a disappointing first half.
However, we were pleased to deliver a stronger second
half in FY21, demonstrating some recovery from the
first half disappointment. During the second half we
worked a 4-point plan to improve performance, focusing
on customer growth and retention, SaaS customer
acquisition, product innovation, and transitioning the
business model to subscription. The result was significant
improvement in reported revenue and NPAT, and solid
cash flow.
For the full year revenues declined by 29% to $78.5 million
driven by a shortfall in licence fees that are recognised
upfront. NPAT was $7.9 million, with virtually all the profit
coming in H2 after the near breakeven first half result.
The annual result was driven by the fall in revenue and
partly shielded by a reduction in operating expenses.
Our contracts with customers are non-cancellable
term-based agreements, which speaks to a fundamental
strength of our business model. Cash receipts from
customers was $78.8 million, down 18% with no debtor
factoring. Operating cashflow was $21.1 million and the
company remains in a positive net cash position.
6
Integrated Research and its controlled entities • Annual Report 2021 “Strategically we remain well-positioned
for long-term growth, benefiting from
structural market changes in remote
working and cashless payments. ”
Growth strategy
A stronger finish at the end of the FY21 provide a solid
foundation for the execution of IR’s growth strategy
in the year ahead.
IR’s TAM is $1.2B and is experiencing natural
organic growth.
The ongoing disruption of the payments market plays
well into IR’s position and value proposition for Transact
- monitoring and analytics of card transactions, with
expanding support for real-time and high-value payments.
The size of the market is significant, some 737 billion
payment transactions globally in calendar year 2020
and growing at 11.5% CAGR to 2023 (Capgemini,
World Payments Report).
The future of work is complex and continuing to evolve,
as organisations set their course for how and where their
workforces and customers will engage. Whatever an
organisation’s strategy, ‘hybrid work’ is here to stay,
and success will rely on their ability to support complex
UC and collaboration environments to provide a reliable
and rich user experience.
Gartner sizes the Unified Communications market as
550 million users of which 185 million are the higher value
more sophisticated conferencing users. This segment saw
significant growth in 2020 with solid mid to high single
digit growth projected out to 2025.
To capture these growing markets, we offer solutions that
deliver deep domain data, to a broad set of customers,
with increasing intelligence in the products. We think of it
across three vectors - deep, smart and wide.
• Deep is about domain data, leveraging our know-how
for extracting meaningful information from critical
systems and surfacing it, and extending our reach
using the Prognosis Intelligent Edge
• Smart is about evolving our platforms to leverage
newer technology like ML and AI, to solve higher value
problems and emerging complex use cases
• Wide is about extending the platform with an open API
interface, surfacing more data, and expanding beyond
traditional IT Operations. It opens up the platform to
democratize value creation in the medium term.
We are executing a plan to grow higher quality, SaaS
based subscription revenues. We take confidence from
the better FY21 second half results as well as a solid
balance sheet. Our innovation agenda is driving new
products and an extension of our value proposition,
that in turn expands our TAM. This is underpinned by the
long-term growth trends of remote working and cashless
payments, that further reinforces IR’s value proposition.
Thank you
In closing, I would like to call attention to the talented IR
team around the globe and highlight their hard work,
dedication and resilience that brought us through a
difficult year. The Company appreciates the ongoing
commitment from our customers and shareholders, and
we look forward to a strong FY22.
Regards
John Ruthven
CEO
7
Integrated Research and its controlled entities • Annual Report 2021 88
Integrated Research and its controlled entities • Annual Report 2021
Integrated Research and its controlled entities • Annual Report 2021 About IR
IR is the corporate brand name of Integrated
Research Limited, the leading global provider of
experience management solutions for business-critical
technology environments.
The modern world relies on a complex array of technologies to keep turning. IR’s aim is to
simplify that complexity and enable their customers to create great experiences, insights,
systems and connections, when it matters most.
IR offers three key solution suites - Collaborate, Transact and Infrastructure - powered by
the hybrid-cloud Prognosis platform.
These solutions enable performance management, analytics, and business insights, and
are used by many of the world’s largest organisations including major stock exchanges,
banks and telecommunication companies, to keep their critical technologies running as
they should.
Our purpose is to create great when it matters most.
collaborate
transact
infrastucture
Analyse transaction data,
deploy new technology
with confidence and
ensure a seamless
payments experience to
keep your card, high value
and real-time payments
business flowing.
IR Transact simplifies the
complexity of managing
modern payments
ecosystems, uncovering
unparalleled insights
and turning data into
intelligence to help you
optimize the commerce
that connects our
global economies.
Access real-time insight into
HPE Non-Stop environments
to help manage IT
performance, spot patterns
in data, proactively
prevent problems, and
build a solid foundation for
business-critical systems.
IR Infrastructure provides
the insight organizations
need to make informed
business decisions and
ensure systems are running
efficiently to optimize the
mission-critical environments
that connect our world.
IR Collaborate
offers enterprise
grade performance
management, testing
solutions and analytics
across voice, web,
video and collaboration
ecosystems.
Whether your environment
is on-premises, in the
cloud, or hybrid, IR
Collaborate simplifies the
complexity of modern
unified communication
and collaboration
environments, providing
the insight you need to
ensure your most essential
business systems, provide
a seamless experience and
optimize the collaboration
that connects your people.
9
Integrated Research and its controlled entities • Annual Report 2021 2021 in IR
crush it
own it
team up
Determination to succeed.
2021 was a year of product
innovation, with a significant
number of new products and
enhancements delivered.
We released support for three new
Collaborate platforms (Microsoft
Teams, Zoom, Cisco Webex), and
delivered several unique product
enhancements to differentiate IR
from competitors and vendor tools.
We released a beta version of the
Transact High Value Real-Time
Payments module, enhanced
Business Insights Analytics for card
payments, and support for new
payment switch formats to allow
us to further expand our reach.
We extended the capabilities of
the Prognosis platform, laying the
groundwork for future capabilities.
Ownership, responsibility,
and recognition.
The global events over the past
18 months have transformed the
world in ways none of us could
have imagined, fundamentally
and irreversibly changing the
markets in which we operate.
IR acknowledges that in order to
remain successful, organisations
must achieve a level of flexibility
that allows them to be agile.
To that end, IR has embarked on
a company-wide transformation
- TransformIR - transitioning
the business to be SaaS-ready,
accelerating new customer
acquisition and driving adoption.
To team up is to collaborate.
No man is an island, and neither is
any company! IR teamed up with
key strategic partners, building on
existing relationships to accelerate
innovation and expand reach.
BT selected IR to monitor and
manage user experience for Unified
Communications delivered to
multinational customers from BT’s
new digital services platform.
ACI Worldwide and IR also extended
their partnership, with ACI selecting
IR Transact’s payment analytics
capabilities to enrich the insights
available as part of the ACI
Omni-Commerce solution.
10
Integrated Research and its controlled entities • Annual Report 2021 be human
Have empathy, respect
and compassion.
While the global pandemic meant
it wasn’t always easy to get out in
the community, IR employees still
took advantage of opportunities to
participate in our Take2 volunteer
program and dedicate their time to
a range of deserving causes.
Employees around the globe used
their volunteer time to lend a helping
hand at charities such as the
Sargood Foundation, Eating Disorder
Genetics Initiative, Smith Family,
and a range of initiatives in their
communities through their local
churches, schools, and hospitals.
have a laugh
Find time to enjoy every day.
Enduring uncertainty can be
difficult to navigate. So, we made
it a priority to focus on positivity
in our workplace and find way to
bring everyone together.
We showcased the diversity of IR
by celebrating various significant
days including Lunar New Year,
Australia Day, Thanksgiving,
St Patrick’s Day, and Diwali. We made
space for fun and wellbeing, hosting
a variety of events like mental
health talks, exercise classes,
and trivia nights.
11
Integrated Research and its controlled entities • Annual Report 2021 1212
Integrated Research and its controlled entities • Annual Report 2021
Integrated Research and its controlled entities • Annual Report 2021 Directors’
report
Contents
14 Review of operations
18 Outlook and strategy for 2022
20 Directors
24 Directors’ interests
25 Share options and performance rights
27 Remuneration report (audited)
Integrated Research and its controlled entities • Annual Report 2021
13
13
Integrated Research and its controlled entities • Annual Report 2021 Directors’
report
Annual revenue 29%
Licence Fees 34%
Annual after tax profit 67%
$78.5M
$47.4M
$7.9M
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 2021 and the Auditor’s
Report thereon.
Review of
operations and
activities
Principal activities
Integrated Research Limited’s
(the “Company” or “IR”) principal
activities are the design,
development, implementation and
sale of systems and applications
management computer software for
business-critical computing, Unified
Communication networks and
Payment networks.
Group overview
Integrated Research has a long
heritage of providing performance
monitoring, diagnostics
and management software
solutions for business-critical
computing environments.
Since its establishment in 1988, the
Company has provided its Prognosis
products to a cross section of
large organisations requiring high
levels of computing performance
and reliability.
Prognosis is an integrated suite
of monitoring and management
software, designed to give an
organisation’s management and
technical personnel operational
insight into and optimise the
operation of their HP NonStop,
distributed system servers, Unified
Communications (“UC”), and
Payment 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 60 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
carriers, technology companies,
service providers and manufacturers.
The Company generates its
revenue from licence fees,
recurring maintenance, testing
solutions and professional services
(formerly referred to as consulting).
Revenue from the sale of licences
where there are no post-delivery
obligations is recognised at the
date of the delivery. Revenue from
maintenance contracts is recognised
rateably over the service agreement.
Revenue from professional services
and testing solution services is
recognised over the period the
services are delivered. The Company
has recently expanded its product
offering to Software as a Service
(“SaaS”) with the introduction of
cloud-based solutions. SaaS revenues
are classified as subscription fees
and are recognised rateably over
the delivery period.
14
Integrated Research and its controlled entities • Annual Report 2021Directors’ report Review and results of operations
Overview
The Company reported $7.9 million in profit after tax on revenue of $78.5 million. The Company achieved a positive
momentum shift in the second half of the financial year across all product lines but was insufficient to drive growth
over the prior year. The first half result was disappointing with revenue of $34.1 million and a near breakeven profit
result of $131,000. The second half, by contrast, delivered revenue of $44.4 million and profit after tax of $7.8 million.
The on-going global uncertainty around COVID-19 and other geo-political uncertainties saw typical sales cycles lengthen
and some customers deferring purchasing decisions. Whilst these uncertainties remain, the stronger second half results
would indicate they have lessened.
The strengthening Australian dollar during the year had a negative impact on the results in two ways. Firstly, the
revaluation of foreign currency denominated assets resulted in unrealised losses of $1.9 million for the year. Secondly,
the translation of offshore revenues at higher exchange rates lowering reported revenues. In constant currency, revenue
for the year would have been $85.8 million compared to the reported revenue of $78.5 million. Removing the effects
from both currency revaluation and currency translation would have seen profit after tax of $11.9 million compared to
the reported result of $7.9 million.
Revenue
Revenue for the year was $78.5 million, a decrease of 29% over 2020. Licence fees continue to be the largest revenue
contributor. Licence fees decreased by 34% to $47.4 million. There are several factors for the decline in revenue.
The pandemic had a significant impact on performance. The sales cadence was disrupted through limitations on travel,
cancellation of trade shows and limited face to face meetings. The Company improved sales in the second half and has
recently re-organised sales and marketing activities to better suit the changed landscape. Customer buying patterns
were restrained during the first half through budget constraints and reduction in commitment periods. The Company’s
maintenance retention rate for the year was 88% (2020: 93%). The number of new customers added over the 2021
financial year was 27 (2020: 38).
The following table presents Company revenues for each of the relevant product groups:
In thousands of AUD
Collaborate
Infrastructure
Transact
Professional services
Total revenue
2021
44,000
15,874
10,243
8,376
78,493
2020
59,818
28,657
13,808
8,630
110,913
% Change
(26%)
(45%)
(26%)
(3%)
(29%)
Collaborate revenue declined 26% over the prior year to $44.0 million. Work-from-home became a necessity as a result
of the pandemic and accelerated organisations take-up of cloud-based collaboration platforms whilst assessing their
on-premise environment. This led to shorter contract terms, less capacity sales and in some situations non-renewal
of IR’s on-premise solutions. The fast-tracked uptake of tools such as Microsoft Teams, Zoom, and Webex, in some
cases gave little consideration to managing the performance of those platforms. During the 2021 financial year,
the Company released cloud and hybrid solutions for each of these tools and have had some early wins, the largest with
BT (British Telecom). Past this initial phase of implementations organisations more readily understand the mission-critical
of collaboration solutions and the complexity of delivering a seamless user experience. Customers are now seeking to
optimise their cloud and hybrid environments and IR’s solutions are tailored to meet their needs.
Infrastructure revenues decreased by 45% to $15.9 million due to a cyclical downswing exacerbated by lower capacity
sales. Licence transactions sold during the year were closed on a multi-year term basis with maturities ranging from three
to five years.
Transact revenue decreased by 26% over the prior year to $10.2 million. Lower renewals and capacity sales were
the primary drivers for the decline. The Company executed a US$1.4 million agreement during the year for Payment
Analytics, a new SaaS based solution. The revenue will be recognised on a subscription basis in future periods.
15
Integrated Research and its controlled entities • Annual Report 2021 The following table presents Company revenues for each of the relevant geographic segments in underlying
natural currencies:
Americas (USD’000)
Asia Pacific (A$’000)
Europe (£’000)
2021
40,798
11,817
6,713
2020
% Change
50,258
17,651
9,243
(19%)
(33%)
(27%)
Regional performance was down globally for reasons outlined in previous paragraphs. Trading conditions were
particularly difficult in the first half of the financial year with some improvement experienced in the second half.
A combination of new products and re-organisation of sales and marketing activities is anticipated to drive growth
in underlying performance.
Expenses
The following table presents the Company’s cost base compared to the preceding year:
In thousands of AUD
Research and development expenses
Sales, professional services and marketing expenses
General and administration expenses
Total expenses
2021
19,101
43,378
6,235
68,714
2020
17,388
54,560
6,232
78,180
% Change
10%
(20%)
0%
(12%)
Total expenses were down 12% to $68.7 million reflective of tight cost control during the pandemic. Total staff numbers
finished the year at 240 (2020: 266). Gross spending on research and development expenditure represents 27% of total
revenue (2020: 20%):
2021
21,255
(11,985)
9,831
19,101
27%
2021
$7,935
4.61c
Nil
N/A
10%
2020
22,518
(13,962)
8,832
17,388
20%
2020
$24,054
14.00c
7.25c
100%
29%
% Change
(6%)
(14%)
11%
10%
2019
$21,851
12.72c
7.25c
100%
31%
In thousands of AUD
Gross research and development spending
Capitalisation of development expenses
Amortisation of capitalised expenses
Net research and development expenses
Gross spend as a % of revenue
Shareholder returns
Returns to shareholders were as follows:
Net profit ($’000)
Basic EPS
Dividends per share
Dividend franking percentage
Return on equity
16
Integrated Research and its controlled entities • Annual Report 2021Directors’ report Financial position
The following table presents key items from the consolidated statement of financial position:
In thousands of AUD
Assets
Cash and cash equivalents (current)
Trade and other receivables (current and non-current)
Intangible assets (non-current)
Liabilities
Borrowings (non-current)
Deferred Revenue
Equity
2021
2020
12,149
79,511
29,962
9,744
87,252
29,052
6,658
16,387
5,000
22,323
83,342
82,522
The Company’s end of year cash position was $12.1 million with $6.7 million of borrowings with the end of year net cash
position of $5.5 million (June 20: $4.7 million).
The decrease in trade receivables was the result of lower sales during the year and the translation of US dollar
denominated receivables at a higher exchange rate. The growth in intangible assets represents the investment in the
Company’s next generation Prognosis Cloud platform and related cloud-based products. The platform is being amortised
over a five-year period; the cloud-based products are being amortised over a three-year period.
The decrease in deferred revenue is driven by three factors: 1) lower volume in sales; 2) shorter contract duration;
and 3) translation of US dollar denominated receivables at a higher exchange rate.
The consolidated statement of financial position presented at page 49 together with the accompanying notes provides
further details.
17
Integrated Research and its controlled entities • Annual Report 2021 Outlook and
Strategy for 2022
The global events over the past 18 months have transformed the world in
ways none of us could have imagined. This prolonged, ongoing disruption
has fundamentally and irreversibly changed the markets in which we operate,
cementing new ways of working and living.
Workforces have become
increasingly disparate and remote,
migrating away from permanent
offices and toward a blended hybrid
working model. The shift to, and
growth of, cloud-based as-a-service
(UCaaS and CCaaS1) platforms has
accelerated. Services like Microsoft
Teams, Zoom, and Cisco Webex
continue to experience rapid,
exponential growth.
Transaction volumes have surged
with the growing movement to
cashless payments. New digital
payment methods have flooded
the market, driven by consumer
demand for choice and flexibility in
their purchasing options. Consumer
buying behaviour is in flux,
reflecting the enduring economic
uncertainty brought about by the
global pandemic.
The need for seamless collaboration
and transaction user experiences
is more critical than ever. Reliance
on these technologies around the
world has increased, as has user
expectation - these platforms and
services “just need to work”, there is
no margin for error.
IR understands that delivering that
seamless experience means the
complexity our customers must deal
with has grown exponentially. Our
goal has always been to simplify
complexity, by enabling mission
critical monitoring, troubleshooting
and business insights that our
customers need to succeed.
But more than that, IR aims to
deliver innovation and flexibility
as organisations around the world
are tasked with navigating these
uncertain times.
To remain successful, organisations
must achieve a level of flexibility that
allows them to be agile as market
dynamics shift in unpredictable
ways, and continue to deliver
great experiences, interactions
and connections.
With over 30 years of operation,
IR understands this all too well and is
well-positioned to help our customers
navigate their accelerated digital
transformations and simplify the
complexity that seems to grow
day-to-day.
IR has embarked on a company-wide
transformation, transitioning
the business to be SaaS-ready,
accelerating new customer
acquisition and driving adoption.
We see the transition as defined
by three key phases: innovation,
execution, and scale.
2021 was a year of product
innovation, with a significant
number of new products and
enhancements delivered.
Last year, we launched our
revolutionary hybrid cloud Prognosis
platform, built with state-of-the-art
data collection, analysis, and
visualization technologies, to facilitate
the delivery of more comprehensive
real-time insights from the vast
amount of data collected by mission
critical systems every day.
In 2021, we extended the capabilities
of the Prognosis Platform, porting
Prognosis Edge to the Windows OS to
enable us to support new payments
switch types, build Direct Routing
capabilities, and lay the groundwork
for future Platform capabilities
to be developed. We also added
new security enhancements to the
Prognosis Cloud and built a cloud
alerting framework.
In the Collaborate space, we
released support for three new
platforms (Microsoft Teams, Zoom,
Cisco Webex), and delivered several
unique product enhancements to
differentiate IR from competitors and
vendor tools, including EQ360 - a
unique visualization of user
experience, cloud alerting, Avaya SBC
and Avaya SIP Session Manager.
This innovation was a key factor in
the closure of a significant strategic
partnership with BT. IR was selected to
monitor and manage user experience
for Unified Communications delivered
to multinational customers from BT’s
new digital services platform, enabling
end-to-end proactive experience and
performance management.
These key strategic partnerships,
combined with significant product
innovation and a renewed
customer-centric focus saw IR bring
on 24 new logos in the Collaborate
space and build a strong new pipeline
of opportunities to carry into 2022.
In our Transact and Infrastructure
product line, there was a strong
18
Integrated Research and its controlled entities • Annual Report 2021Directors’ report focus on refining product strategy in
response to especially volatile market
conditions. We identified three key
areas with the biggest potential for
growth: card, real-time and high
value payments.
Aligned to these focus areas, we
released a number of product
innovations, including a beta
version of the High Value Real-Time
Payments module and enhanced
Business Insights Analytics for card
payments, as well as support for new
payment switch formats to allow us
to further expand our reach.
ACI Worldwide and IR also extended
their partnership, with ACI selecting
IR Transact’s payment analytics
capabilities to enrich the insights
available as part of the ACI
Omni-Commerce solution.
IR anticipates customers’ business
priorities evolving over the next
five years, with greater demand
for deep payments insights related
to a broader range of user types,
in addition to traditional system
monitoring products. We believe IR’s
focus on developing and promoting
analytics capabilities is the key to
unlocking future value and growth in
the payments space.
2022 will see further product
innovation, while also accelerating
the execution phase of our
transformation.
We will continue to develop our
Prognosis hybrid cloud platform.
We anticipate a rapid evolution
of solutions, by building on the
groundwork laid in 2021.
The coming year will see a focus
enabling machine learning
outcomes, as well as supporting
API level integrations and adding
new data sources for Transact and
Collaborate product portfolios.
The outlook for the Collaborate
solution suite is strong. In 2022 we
expand on the foundation we have
created. This product growth will
serve to increase Collaborate’s depth
of visibility, level of intelligence, and
breadth of ecosystem, with customer
focused added value.
In line with market demand,
Collaborate will focus on enhancing
support and insight for on-premise
telephony systems, PBXs and SBCs,
on-premise corporate networks along
with cloud UCaaS solutions, end users
devices, networks, and rooms, and
proactive testing and analysis to find
potential issues before they occur.
With the move to the cloud, IR has
access to large data pools and new
technologies that will be leveraged
to provide a deeper level of insight
than has previously been possible.
IR will explore integration options with
existing management tools, such as
ITSM solutions (such as ServiceNow),
and developing advanced analytics
to provide deeper insights into user
experience, adoption, and prediction
of issues.
The strategic importance of payments
within enterprises and banks has
elevated during the pandemic.
Payments insights now has a broader
application across a business, and this
is the key to unlocking future value
and growth for IR.
In the wider payments space
relating to High Value and Inter-bank
transactions, IR Transact continues
the focus on expanding capabilities.
The soon-to-be-released High Value
Payments solution will see IR’s
product offering moving from vendor
specific, to a generic standard,
which will open-up significant
market opportunities.
The rapid roll out of domestic
real-time payments schemes is
driving 24% annual market growth
in real-time payments volume to
20262.As transaction volumes on
these schemes grow, so does the
demand for transaction monitoring
and analytics tools that proactively
identify system issues and provide
real-time insights enabling corrective
action. IR is developing solutions for
the growing sectors of High Value
and Real-Time account to account
payments to capture opportunities
within these growing global markets.
A key part of the execution phase
of IR’s strategy for 2022 will be a
significant shift in our go to market
approach, as we transition to a
subscription-based pricing model.
This new approach emphasizes net
new customer growth, as well as
driving the adoption of our products.
New customer acquisition will be
driven by further investment in
Sales Development Representatives
(SDRs) and Business Development
Managers (BDMs) across regions,
taking a focused approach targeting
key accounts, and supported by
outbound marketing activities.
We are also expanding our Customer
Success Manager team, whose focus
is on driving the adoption of our
products and ensuring our customers
get value from our products, to
support renewals and maximize
customer lifetime value.
IR will also place greater investment in
growing relationships and extending
agreements with Managed Service
Providers (MSPs) which account
for close to 20% of the company’s
revenue, as well as channel partners.
But with more organisations turning
to these avenues to help them
manage the complexities of the
new working world, this represents
a significant opportunity for IR to
capture additional market share.
IR will increase investment in brand
awareness and strategic messaging
to amplify our voice and raise the
awareness of the IR brand.
To this end, we will be investing more
in support for these audiences. We will
also commit additional resources to
raising awareness, creating specific
content, and improving website
relevance, with the aim of helping
existing service providers and partners
sell IR’s solutions, as well as acquiring
new customers in this space.
Looking to the future and
supporting phase three of our
transformation - scale - IR will be
increasing investment in brand
awareness and strategic messaging
to position us as leaders in the
markets we operate in, amplify our
profile, and raise recognition of the
IR brand.
IR is well positioned to deliver on
the three phases of our strategic
outlook - Innovation, Execution and
Scale - by building on our innovation
agenda, continuing momentum of
product releases and enhances,
and transform our go to market
approach, to achieve our growth
targets and transform IR.
1 UCaaS - Unified Communications as a Service, CCaaS (Contact Center as a Service)
2 ACI/GlobalData’s Prime Time for Real-Time report (March 2021)
19
Integrated Research and its controlled entities • Annual Report 2021 Directors
The Directors of the Company at any time during or since the end of the financial year are listed below:
Peter Lloyd
MAICD
Independent Non‑Executive
Director and Chairman
John Ruthven
B.Ed
Managing Director and
Chief Executive Officer
Allan Brackin
BAppSc
Independent
Non‑Executive Director
Peter was appointed Director
in July 2010 and elected Chairman
in March 2021. He has over 40 years’
experience on computing technology,
having worked for both computer
hardware and software providers.
For the past 35 years, Peter has been
specifically involved in the provision
of payments solutions for banks and
financial institutions. He is currently
the proprietor of The Grayrock Group
Pty Ltd, a management consultancy
company focusing on the payments
industry. Peter is a Non-Executive
Director of privately held Taggle
Pty Ltd. Peter’s current term will
expire no later than the close of the
2022 Annual General Meeting.
Listed company Directorships held in
the past three years other than listed
above: FGO and ID8.
John joined IR in July 2019 as the
Company’s Chief Executive Officer
and was appointed as Director
in September 2019. Mr Ruthven is an
internationally experienced software
industry executive respected for his
strategic approach and operational
expertise across global enterprises.
Mr Ruthven has over 20 years’
experience working in the technology
industry with a proven track record
of leadership and delivering strong
profitable growth.
Most recently, Mr Ruthven was the
Operating Officer - Global Sales
at TechnologyOne. Prior to that he
was President & Managing Director
ANZ of SAP, SVP International
Sales at Zuora Inc, and held various
senior positions at CA Technologies
and Computer Associates Inc.
John has extensive international
experience in the USA, Europe and
Asia Pacific regions.
Listed company Directorships held in
the past three years other than listed
above: None.
Allan was appointed a Director
in February 2021. He is a seasoned
non-executive Director with
entrepreneurial flair and over
35 years’ experience in the
technology sector. He has a proven
track record as a business builder and
advisor, with experience in business
strategy, sales and marketing, process
re-engineering, change management,
financial management, M&A activity
and governance. Allan is the former
founder and CEO of AAG Technology
Services, CEO and Managing Director
of Volante Group Ltd, previously Chair
of RPM Global Ltd, Chair of Opticomm
Ltd, Chair of GBST Ltd, Chair of
Sensera Limited and is currently a
Non-Executive Director of ASX listed
Sovereign Cloud Holdings Limited
and 3P Learning Limited. Mr. Brackin
has also worked with companies
in the private sector and several
not-for-profits in the capacities of
Chair, Advisory Board member and/or
Non-Executive Director. Allan’s current
term will expire no later than the close
of the 2021 Annual General Meeting.
Allan is currently Chair of Integrated
Research’s Nomination &
Remuneration Committee.
Listed company Directorships held in
the past three years other than listed
above: None.
20
Integrated Research and its controlled entities • Annual Report 2021Directors’ report Garry Dinnie
BCom, FCA, FAICD, FAIM
Independent Non‑Executive
Director and Chairman
Anne Myers
MBA, FAICD
Independent
Non‑Executive Director
Garry was appointed a Director
in February 2013. He is a Director &
Chair of the Audit & Risk Committee
of CareFlight Limited, Australian
Settlements 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 2022 Annual
General Meeting.
Garry is currently Chair of Integrated
Research’s Audit & Risk Committee.
Listed company Directorships held in
the past three years other than listed
above: None.
Anne was appointed a Director
in July 2018. Ms. Myers has worked in
the finance and technology industry
for over 30 years with experience in
business strategy, technology, digital
innovation and operational functions.
Anne is the former Chief Operating
Officer and CIO of ING Direct Australia
and has also acted in executive
technology and business roles for QBE,
Macquarie Bank and St George Bank.
She is currently a Director of both
Defence Bank Limited and United Way
Australia Limited and has previously
been a Council Member of the
University of New England. Ms. Myers
has also worked in the not-for-profit
sector as CEO of United Way Australia,
and was a member of the Industry
Advisory Network for the University of
Technology. Anne’s current term will
expire no later than the close of the
2023 Annual General Meeting.
Anne is currently Chair of Integrated
Research’s Strategy Committee.
James Scott
BEng Hons, GAICD, FIEAust
CPEng EngExec
Independent Non‑Executive Director
James was appointed a Director
in May 2021. He is a seasoned
professional with over 26 years’
experience in media and technology
sector with industry and advisory
businesses at a local and
international level. Mr. Scott is
currently an operational advisor to
private equity firm, Liverpool Partners,
is Chair of iNC Digital & MerchantWise
a non-executive director of software
business Orbx and was previously
non-executive Chair of data &
analytics business, Skyfii (ASX: SKF).
James was previously Managing
Director of Accenture Digital,
a Partner in KPMG’s Advisory division
and was the Chief Operating Officer
of Seven Group Holdings (ASX:SVW).
Mr. Scott was a founder and director
of Imagine Broadband Limited and
was a Director of WesTrac and Coates
Hire during his time with Seven Group.
James’s current term will expire no
later than the close of the 2021
Annual General Meeting.
Listed company Directorships held in
the past three years: None.
Listed company Directorships held in
the past three years: None.
21
Integrated Research and its controlled entities • Annual Report 2021 Officers of the Company
Company Secretary
David Purdue
BEc, MBA, Grad Dip
CSP, FCA, FGIA, FCG,
GAICD
David was appointed Company Secretary in July 2012. David
was also the Company’s Global Commercial Manager until
his retirement in July 2016. 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 30 years experience in both
professional practice and industry.
Chief Financial Officer
Peter Adams
B.Com, CA
Peter joined IR 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.
Resigning & Retiring Directors during the year
Paul Brandling
BSc Hons, MAICD
Independent Non‑Executive Director and Chairman
Paul resigned as Chairman and as a Director in March 2021. Paul served as Chairman since November 2018 and was
a Director for six years. During various times of his Directorship, Paul served as Chair of the Strategy Committee, was a
member of the Audit & Risk Committee, and was a member of the Nomination & Remuneration Committee.
Nick Abrahams
B Comm, LLB (Hons), MFA
Independent Non‑Executive Director
Nick retired as a Director in November 2020. Nick served on the Board for seven years and was a member of the Audit & Risk
Committee during that time.
22
Integrated Research and its controlled entities • Annual Report 2021Directors’ report Results
The net profit of the consolidated entity for the 12 months ended 30 June 2021 after income tax expense was $7.9 million.
Dividends
Dividends paid or declared by the Company since the end of the previous financial year were:
Final 2020 - Ordinary shares
100% franked
3.75
6,447
15 Oct 2020
Cents Per
share
Total Amount
$’000
Date of
Payment
Events subsequent to reporting date
There has been no transaction or event of a material or unusual nature that 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 Company, the results of those operations, or the state of affairs of the Company,
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 be in the Directors’ opinion, result in
unreasonable prejudice to the Company and has therefore not been included in this Report.
Directors and Company Secretary
Details of current Directors’ qualifications, experience and special responsibilities are set out on pages 20 to 21. Details of
the company secretary and his qualifications are set out on page 22.
Officers who were partners of the audit firm during
the financial year
No officers of the Company were partners of the current audit firm during the financial year.
23
Integrated Research and its controlled entities • Annual Report 2021 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 2021, 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
24
23
8
24
24
5
16
8
B
24
23
11
24
24
5
16
8
A
2
-
-
4
4
-
-
1
B
3
-
-
4
4
-
-
1
A
-
-
2
8
7
1
6
-
B
-
-
2
8
7
1
6
-
A
3
-
-
-
3
1
2
-
B
3
-
-
-
3
1
2
-
Peter Lloyd
John Ruthven
Allan Brackin
(from February 2021)
Garry Dinnie
Anne Myers
James Scott
(from May 2021)
Paul Brandling
(until March 2021)
Nick Abrahams
(until November 2020)
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.
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
Directly held
Beneficially
held
-
27,000
20,000
-
-
17,000
-
-
50,000
14,000
-
-
Total
27,000
-
50,000
14,000
17,000
-
14,234
29,568
43,802
-
13,446
13,446
Options
Number of
options
-
-
-
-
-
-
-
-
Performance
rights
Number of
rights
-
247,806
-
-
-
-
-
-
Peter Lloyd
John Ruthven
Allan Brackin
Garry Dinnie
Anne Myers
James Scott
Paul Brandling
(until March 2021)1
Nick Abrahams
(until November 2020)1
1 Holding based on last day as Director
24
Integrated Research and its controlled entities • Annual Report 2021Directors’ report Share options and performance rights
Options and performance rights granted to Directors and key management personnel
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:
Directors
John Ruthven
Number of
performance
rights granted
Performance
hurdle
Exercise price
Expiry date
95,368
Yes
Nil
Aug 2023
The performance rights were granted under the Integrated Research Performance Rights and Option Plan
(established November 2011).
Unissued shares under performance rights
Unissued ordinary shares of Integrated Research Limited under performance rights at the date of this report are as follows:
Performance Rights
Expiry date
Aug 2021
Oct 2021
Feb 2022
Aug 2022
Aug 2023
Total performance rights
Exercise price
Number of
shares
Nil
Nil
Nil
Nil
Nil
83,000
110,750
67,988
333,894
209,867
805,499
Performance rights do not entitle the holder to participate in any share issue of the Company or any other body corporate.
25
Integrated Research and its controlled entities • Annual Report 2021 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.
To the extent permitted by law, the
Company has agreed to indemnify
its auditors, Ernst &Young Australia,
as part of the terms of its audit
engagement agreement against
claims by third parties arising from the
audit (for an unspecified amount). No
payment of this type has been made
to Ernst & Young during or since the
financial year.
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.
Remuneration
report
The Company’s Remuneration Report,
which forms part of this Directors’
Report, is on pages 27 to 37.
Corporate
governance
A statement describing the Company’s
main corporate governance practices
in place throughout the financial year
is on pages 39 to 45.
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 90 and forms part of the
Directors’ Report.
Rounding
of amounts
to nearest
thousand dollars
The Company is of a kind referred
to in ASIC Corporations Instrument
2016/191 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.
Peter Lloyd
Chairman
John Ruthven
Managing Director and
Chief Executive Officer
Dated at North Sydney this 19th day of August 2021
26
Integrated Research and its controlled entities • Annual Report 2021Directors’ report Remuneration Report
(audited)
1.
Strategic priorities and link to remuneration
objectives
The Company’s remuneration strategy and remuneration framework are aligned with the Company’s business strategy.
Our remuneration framework is underpinned by our strategy to:
• Drive innovation and research and development activities on new platforms, particularly cloud-related platforms;
•
Focus on growing and consolidating our footprint in key geographical markets; and
• Build strong and lasting alliances
The remuneration structures of the Company are designed to attract suitably qualified candidates, reward the
achievement of strategic objectives, and achieve the broader outcome of creating strong value and returns to
shareholders. These remuneration structures are competitively set based on the remuneration principles including:
• Attract and retain top talented Key Management Personnel (“KMP”)
• Alignment between remuneration reward with business strategy and driving shareholders’ value/return
• Structure that is flexible in adapting to a changing environment
•
Fair and equitable remuneration framework
1.
Relationship between remuneration and
Company performance
In considering the Company’s performance and benefits for shareholder wealth, the Nomination and Remuneration
Committee (the “Committee”) has regard to the following indices in respect of the current financial year and the previous
four financial years:
Three‑year selected financial indices of the Company
Licence fees ($’000)
Net profit after tax (NPAT) ($’000)
Dividends paid ($’000)
Closing share price
Change in share price
Reported NPAT growth %
Executive KMP remuneration1 growth
1 Excluding termination payments
2021
47,359
7,935
6,447
$1.95
($1.90)
(67%)
(19%)
2020
72,098
24,054
12,460
$3.85
$0.55
10%
0%
2019
62,774
21,851
12,027
$3.30
$0.19
14%
(38%)
27
Integrated Research and its controlled entities • Annual Report 2021
Licence Fees vs Executive KMP Remuneration
NPAT vs Executive KMP Remuneration
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
2,400
2,200
2,000
1,800
1,600
1,400
1,200
1,000
30,000
25,000
20,000
15,000
10,000
5,000
0
2,400
2,200
2,000
1,800
1,600
1,400
1,200
1,000
2019
2020
2021
2019
2020
2021
Licences ($’000)
Executive KMP remuneration ($'000)
Net profit ($’000)
Executive KMP remuneration ($'000)
Two of the financial indices shown in the table above are Licence Fees and NPAT. The Committee considers these
two financial performance metrics as Key Performance Indicators (KPIs) in setting the STI element of the KMP
remuneration package.
The above charts show that the Executive KMP’s remuneration framework has decreased in the current year which is
aligned with overall Company performance. The Committee considers that the above performance-linked structure is
generating the desired outcomes.
2. Persons included in the Remuneration Report
KMP, including Directors, have authority and responsibility for planning, directing and controlling the activities of the
Company and the consolidated entity. The following were KMP of the Company at any time during the reporting period,
and unless otherwise indicated were KMP for the entire period:
2.1. Executive KMP
As of the current year, the Committee assessed the Executive KMP to include the following executive roles.
Executive KMP
Role
Appointed
John Ruthven
Chief Executive Officer and Managing Director
July 2019 as Chief Executive Officer
September 2019 as Managing Director
Peter Adams
Chief Financial Officer
March 2008
Matt Glasner
Chief Commercial Officer
January 2019 (until 30 June 2021)
The Chief Commercial Officer (CCO) role was made redundant on 30 June 2021 following a re-organisation of the
Company leadership structure. The remuneration of the Chief Commercial Officer has been included in this report
together with the accrued termination payment associated with the restructure.
2.2.
Independent Non‑Executive Directors
Directors
Role
Appointed
Peter Lloyd
Independent Non-Executive Director and Chairman Director from July 2010
Chairman from March 2021
Garry Dinnie
Independent Non-Executive Director
Allan Brackin
Independent Non-Executive Director
Anne Myers
Independent Non-Executive Director
James Scott
Independent Non-Executive Director
February 2013
February 2021
July 2018
May 2021
Paul Brandling
Independent Non-Executive Director and Chairman Director from August 2015 (until March 2021)
Chairman from November 2018
Nick Abrahams
Independent Non-Executive Director
September 2014 (until November 2020)
28
Integrated Research and its controlled entities • Annual Report 2021Remuneration report (audited) 3. Executive remuneration
3.1. Remuneration framework
The remuneration framework set out below considers the capability and experience of the KMP, their ability to control
business performance, and the Company’s performance.
Fixed remuneration
Short‑term incentive (STI)
Long‑term incentive (LTI)
Description of
components
Base salary plus
superannuation and any
fringe benefits such as
motor vehicle parking.
The STI is an “at risk” bonus
provided in the form of cash.
Objectives
To ensure that
KMP remuneration
is competitive in
the marketplace.
The measures are chosen
as they directly align the
individual KMP’s reward to the
KPIs of the Company and to its
strategy and performance.
KPIs
N/A
The KPIs vary with position and
responsibility and are aligned
with each respective year’s
budget. Financial KPIs include:
• NPAT
• Licence revenue
• Total revenue
In addition to the above,
non-financial KPIs exist and vary
with the KMP position. Refer to
section 3.2 for further details.
The LTI is provided as either
options or performance rights
over ordinary shares of the
Company under the rules
of the Integrated Research
Performance Rights and Option
Plan ("IRPROP").
The IRPROP enables Company
to offer performance rights or
options to eligible employees
to obtain Company's shares at
no cost upon meeting certain
performance conditions that
reflect long-term performance of
the Company.
Total Shareholder Returns
("TSR") was considered the most
appropriate performance hurdle
given its intrinsic link to creating
shareholder wealth. Performance
hurdles are tested at each
vesting date.
Performance
period
Alignment to
strategy
N/A
Annual
3 years for performance rights
Fixed remuneration is
set to ensure the KMP's
remuneration is competitive
in the marketplace to
attract and retain KMP with
the necessary skills and
experience. Remuneration
levels are reviewed annually
through a process that
considers individual and
overall performance of
the Company.
Executive KMP are rewarded
for delivering the Company's
financial performance based
on NPAT, Licence fees or Total
revenue KPIs.
Executive KMP are also set
appropriate non-financial
KPIs with appropriate stretch
goals. KPIs are aligned to
strategic goals and creation of
shareholder value.
The ability of Executive KMP
to exercise either options or
performance rights is conditional
on the Company achieving
certain TSR performance hurdles
over the vesting period. This sets
a link between the long-term
performance of the Company
and shareholder value.
29
Integrated Research and its controlled entities • Annual Report 2021 3.2. Short‑term incentives
The Committee is responsible for setting the KPIs for the Chief Executive Officer (CEO), and for approving the KPIs for
the other Executive KMP who report to the CEO. The KPIs generally include measures relating to the Company and the
individual, and include financial, people, customer and strategy. The measures are chosen as they directly align the
individual KMP’s reward to the KPIs of the Company and its strategy and performance. At the end of the financial year,
the Committee assesses the actual performance of the CEO against the KPIs 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. The maximum stretch overperformance
for each KMP is limited to 125%. In order to achieve over-performance of a particular KPI, a minimum of 85% of the NPAT
target must be achieved.
CEO and Managing Director KPIs and 2021 performance outcome
Performance metrics
Payment eligibility criteria
Financial (60% weighting)
NPAT
Sliding scale based on meeting or exceeding certain target threshold
Licence revenue
Sliding scale based on meeting or exceeding certain target threshold
Total Revenue
Sliding scale based on meeting or exceeding certain target threshold
Financial goal achievement
Non‑financial (40% weighting)
Strategic growth
Activity driven performance measurement
Employee engagement
Sliding scale based on meeting or exceeding certain target threshold
Customer NPS
Sliding scale based on meeting or exceeding certain target threshold
Non-Financial goal
achievement
Total achievement
CFO KPIs and 2021 performance outcome
Performance metrics
Payment eligibility criteria
Financial (40% weighting)
2021 performance
outcome/payout
0%
37.5%
37.5%
2021 performance
outcome/payout
NPAT
Sliding scale based on meeting or exceeding certain target threshold
Licence revenue
Sliding scale based on meeting or exceeding certain target threshold
Financial goal achievement
Non‑Financial (60% weighting)
Strategic growth
Activity driven performance measurement
Employee engagement
Sliding scale based on meeting or exceeding certain target threshold
Cash flow management
Sliding scale based on meeting or exceeding certain target threshold
Risk management
Activity driven performance measurement
Non-Financial goal achievement
Total achievement
0%
60%
60%
30
Integrated Research and its controlled entities • Annual Report 2021Remuneration report (audited) CCO KPIs and 2021 performance outcome
Performance metrics
Payment eligibility criteria
Financial (75% weighting)
NPAT
Sliding scale based on meeting or exceeding certain target threshold
Licence Revenue
Sliding scale based on meeting or exceeding certain target threshold
Professional Services
Revenue
Sliding scale based on meeting or exceeding certain target threshold
Total Revenue
Sliding scale based on meeting or exceeding certain target threshold
Financial goal achievement
Non‑Financial (25% weighting)
Employee engagement
Sliding scale based on meeting or exceeding certain target threshold
Customer growth
Specified percentage per customer
Customer NPS
Sliding scale based on meeting or exceeding certain target threshold
Non-Financial goal
achievement
Total achievement
2021 performance
outcome/payout
0%
5%
5%
3.3. Long‑term incentive (LTI)
LTI remuneration at the Company is made up of Performance Rights under the IRPROP, which is made up of service
conditions and varying performance conditions by KMP.
Feature
Value
Entitlement
Performance
period
Description
The value of the LTIs issued each year is typically set at 15% to 30% of total remuneration. It is
determined each year in accordance with the IRPROP at the absolute discretion of the Board.
Each LTI entitles the performance rights to one Company share in the future, which will be
exercised within the period specified by the Board in the Invitation Letter, for no consideration.
The performance period of the LTIs is three years, starting from the grant date and extends for a
three-year period to a specific vesting date. Each KPI is assessed annually and at the end of the
three-year performance period.
Annual performance rights are offered with performance measures as referenced below. From
time to time performance rights are offered with a service only condition that may be required in
particular circumstances. Performance rights with service only conditions were offered to the CFO
upon his conclusion as Interim CEO. Performance rights with service only conditions were offered
to the CEO upon his commencement with the Company.
In relation to the CEO's LTI granted in 2021, their performance measures are presented below:
Performance measures
Performance period
Testing period
3 years
Annually
Company's relative TSR
performance compared
to Australian technology
companies in the S&P/ASX All
Technology Index (XTX) at the
end of each year
31
Integrated Research and its controlled entities • Annual Report 2021 3.4. Detail of executive remuneration and service conditions
Features
CEO and Managing Director CFO
Fixed Remuneration
$550,000
Short Term Incentive
$250,000
$350,000
$120,000
CCO
$475,000
$250,000
Contract term
No specified end date
No specified end date
No specified end date
Termination notice by
Individual/Company
6 months
3 months
3 months
Employment termination All unvested LTIs are forfeited All unvested LTIs are forfeited All unvested LTIs are forfeited
4. Non‑executive Director remuneration
Board and Committee Structure
4.1.
The Board and Committees are structured as follows:
Non-Executive & Independent
Directors
Executive Director
Director
Board
Audit & Risk
Committee
Nomination &
Remuneration
Committee
Peter Lloyd
(Chair)
Allan Brackin
Garry Dinnie
Anne Myers
James Scott
John Ruthven
(Chair)
(Chair)
Strategy
Committee
(Chair)
4.2. Non‑Executive Director fees
Directors’ fees cover all main Board activities and committee membership. Directors can elect to salary sacrifice their
fees into superannuation. Non-executive Directors do not receive performance-related compensation or retirement
benefits. The total remuneration pool for all Non-executive Directors is not to exceed $850,000 per annum, which the
Shareholders last voted upon at the Annual General Meeting in November 2020.
Non‑executive Director fees
Board/Committee
Board
Board
Audit & Risk Committee
Nomination and Remuneration Committee
Strategy Committee
Total fees for Non‑executive Directors
Position
Per Position
Aggregate
Fee for a Member
$90,000
$450,000
Fee for role as Chair
$90,000
$90,000
Fee for role as Chair
Fee for role as Chair
Fee for role as Chair
$10,000
$10,000
$10,000
$10,000
$10,000
$10,000
$570,000
32
Integrated Research and its controlled entities • Annual Report 2021Remuneration report (audited) 5. Statutory remuneration
5.1. Directors’ and Executive KMP’s remuneration
Details of the nature and amount of each major element of the remuneration of each of the KMP are reported below.
Short term
Post‑
employment
Share‑
based
payments
Long
term
Other
compensation
Proportion of
remuneration
Salary &
fees
$
Bonus
$
Non‑
cash
Benefits
$
Super‑
annuation
Contribution
$
Long
service
leave
$
Value of
rights1
$
Termination
Benefit
$
Total
$
Performance‑
related
Value
of
rights
For the
year ended
30 June 2021
(in AUD)
Executive KMP
Peter Adams
328,306 72,000
Matt Glasner
453,306
12,500
Directors
Executive
John Ruthven
528,306
93,750
Non‑executive
Peter Lloyd
127,469
Allan Brackin
Garry Dinnie
Anne Myers
James Scott
35,769
98,935
83,714
11,170
Paul Brandling
123,288
Nick Abrahams
33,055
-
-
-
-
-
-
-
Total
compensation
1,823,318 178,250
-
-
-
-
-
-
-
-
-
-
-
21,694
7,036
160,902
-
589,938
21,694 (7,986)
(56,506)
237,500 660,508
12% 27%
2% (9%)
21,694 10,733
187,095
12,110
3,398
9,399
7,953
1,061
11,712
3,140
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
841,578
11% 22%
139,579
39,167
108,334
91,667
12,231
135,000
36,195
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
113,855
9,783
291,491
237,500 2,654,197
1) The estimated value of performance rights is calculated at the date of grant using either the Black Scholes or Monte Carlo methodology.
2) Peter Lloyd received $17,117 for agreeing to be Chair of the Board in 2021 with a further $32,883 payable in 2022. No other Director appointed during the
year received a payment for agreeing to hold the position.
33
Integrated Research and its controlled entities • Annual Report 2021 Short term
Post‑
employment
Share‑
based
payments
Long
term
Other
compensation
Proportion of
remuneration
Salary &
fees
$
Bonus
$
Non‑
cash
Benefits
$
Super‑
annuation
Contribution
$
Long
service
leave
$
Value of
rights1
$
Termination
Benefit
$
Total
$
Performance‑
related
Value
of
rights
For the
year ended
30 June 2020
(in AUD)
Executive KMP
Peter Adams3
328,926 110,584
3,399
21,003
7,735
183,183
Matt Glasner
453,997 227,201
Directors
Executive
John Ruthven
518,825 215,952
Non‑executive
Paul Brandling
164,384
Nick Abrahams
82,192
Garry Dinnie
100,457
91,324
82,192
Peter Lloyd
Anne Myers
Total
compensation
-
-
-
-
-
-
-
-
-
-
-
-
21,003 11,708
49,121
21,003 12,601
96,250
15,616
7,808
9,543
8,676
7,808
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
654,830
763,030
17% 28%
30%
6%
864,631
25%
11%
180,000
90,000
110,000
100,000
90,000
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1,822,297 553,737
3,399
112,460 32,044 328,554
- 2,852,491
1) The estimated value of options and performance rights disclosed is calculated at the date of grant using the Black-Scholes methodology, adjusted to consider
the inability to exercise options during the vesting period.
2) No Director or executive appointed during the year received a payment as part of his or her consideration for agreeing to hold the position.
3) 'Salaries & fees' include remuneration for Interim CEO position held to 8 July 2019.
6. Actual remuneration received ‑ Executive KMP
The table below reflects the actual remuneration received by the Executive KMP for the financial year ended 30 June 2021.
The values presented below may differ from the statutory remuneration disclosed in section 5. The statutory disclosures are
prepared on an accruals basis, in accordance with the Australian Accounting Standards, including share-based payments
valuation and accounting, which may not always represent what the Executive KMP have received, as some share based
payments may not manifest if certain conditions are not met.
Short term
For the
year ended
30 June 2021
(in AUD)
Salary
& fees
$
Bonus1
$
Non‑
cash
Benefits
$
John Ruthven
528,421
93,750
Peter Adams
328,421
72,000
Matt Glasner
453,421
12,500
-
-
-
Notes
Post‑
employment
Super‑
annuation
Contribution
$
21,694
21,694
21,694
Long term
Other
compensation
LTI
Long
service
leave
$
Value of
Performance
rights2
$
Termination
Benefit
$
Total
$
-
-
-
-
154,812
- 643,865
-
576,927
-
237,500
725,115
1. Bonus received or receivable for the financial year ended 30 June 2021.
2. Value of the performance rights is calculated based on the fair value of the vested rights at the vesting date.
34
Integrated Research and its controlled entities • Annual Report 2021Remuneration report (audited)
7. Additional statutory disclosures
Equity Instruments
7.1.
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). No options have been granted to named executives either during or
since the end of the financial year. Performance rights granted as compensation are listed in the table below.
7.2. Analysis of rights over equity instruments granted as compensation
Performance rights granted
Number
Date
Fair value
per share
($)
Percent
vested in
year
Value yet to vest or
value vested ($)
Percent
forfeited
in year
(A)
Financial
year in
which
grant
expires
Min
(B)
Max
(C)
Executive KMP
John Ruthven
106,707
45,731
31,789
31,789
Nov-19
Nov-19
Nov-20
Nov-20
Peter Adams
31,790
Nov-20
20,000
22,000
67,988
40,000
40,000
27,515
Sep-17
Sep-18
Jan-19
Feb-19
Aug-19
Sep-19
Matt Glasner
22,000
44,811
Jan-19
Sep-19
Notes:
2.87
2.87
1.07
1.51
1.80
3.18
2.27
2.29
2.28
2.48
2.80
2.29
2.80
-
-
-
-
-
100%
-
-
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100%
100%
2023
2023
2024
2024
2024
2021
2022
2022
2021
2023
2023
2022
2023
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
305,715
131,019
33,982
47,874
57,222
63,558
49,823
155,418
91,352
99,200
77,097
-
-
(A) The percentage forfeited in the year represents the reduction from the maximum number of performance rights available to vest due to the
performance hurdles not being achieved or due to the resignation of the executive.
(B) The minimum value of performance rights 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 Black-Scholes methodology as applied in estimating the value of
performance rights for employee benefit expense purposes.
35
Integrated Research and its controlled entities • Annual Report 2021 7.3. Performance rights over equity instruments granted as compensation
The movement during the reporting year in the number of performance rights over ordinary shares in the Company held,
directly, indirectly or beneficially, by each KMP, including their related parties, is as follows:
Held at
30 June
2021
Vested
during the
year
Vested and
exercised
at 30 June
2021
157,503
60,000
60,000
Held at
1 July 2020
Granted as
compensation
Exercised
Other
changes
217,503
152,438
66,811
-
(60,000)
95,368
-
-
-
-
-
247,806
(66,811)
-
-
-
-
-
Held at
1 July 2019
Granted as
compensation
Exercised
Other
changes
Held at
30 June
2020
Vested
during the
year
Vested and
exercised
at 30 June
2020
For the
year ended
30 June 2021
Executive KMP
Peter Adams
John Ruthven
Matt Glasner
For the
year ended
30 June 2020
Executive KMP
Peter Adams
149,988
John Ruthven
-
Matt Glasner
22,000
67,515
152,438
44,811
-
-
-
-
-
-
217,503
152,438
66,811
-
-
-
-
-
-
Performance rights expire on the earlier of their expiry date or termination of the individual’s employment.
7.4. Movement in shares
The movement during the reporting period in the number of ordinary shares in the Company held, directly, indirectly or
beneficially, by each KMP, including their related parties, is as follows:
For the year ended
30 June 2021
Held at
1 July 2020
Purchases
Received on
exercise of
performance
rights
Other
changes
Sales
Held at
30 June
2021
Executive KMP
Peter Adams
Directors
Executive
John Ruthven
Non‑executive
Peter Lloyd
Allan Brackin
Garry Dinnie
Anne Myers
Paul Brandling1
Nick Abrahams1
10,000
14,900
60,000
-
20,000
27,000
-
-
50,000
9,000
9,000
39,338
13,446
5,000
8,000
4,464
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(69,900)
15,000
-
-
-
-
-
-
-
20,000
27,000
50,000
14,000
17,000
43,802
13,446
1 ‘Held 30 June 2021’ value represents holding on last day as Key Management Personnel
36
Integrated Research and its controlled entities • Annual Report 2021Remuneration report (audited) For the year ended
30 June 2020
Held at
1 July 2019
Purchases
Received on
exercise of
performance
rights
Other
changes
Sales
Executive KMP
Peter Adams
Directors
Non‑executive
Paul Brandling
Nick Abrahams
Garry Dinnie
Peter Lloyd
Anne Myers
10,000
-
35,306
13,446
9,000
27,000
4,032
-
-
-
-
9,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Held at
30 June
2020
10,000
39,338
13,446
9,000
27,000
9,000
Shareholdings at the date of the Directors’ Report for existing Key Management Personnel remain unchanged.
7.5. Other Transactions with KMP
Apart from the details disclosed in this note, no Director has entered into a material contract with the Company since the
end of the previous financial year and there were no material contracts involving Directors’ interests existing at year end.
There were no other transactions between the KMP, or their personally related entities, and the Company.
8. About this report
8.1. Basis for preparation of 2021 remuneration report
The information in this Remuneration Report has been prepared based on the requirements of the Corporations Act
2001 and applicable accounting standards. The Remuneration Report is designed to provide shareholders with a clear
and detailed understanding of the Company’s remuneration framework, and the link between our remuneration policies
and Company performance. The Remuneration Report details the remuneration framework for the Company’s KMP.
This report has been audited.
8.2. Remuneration Governance
The Committee is responsible for developing the remuneration framework for IR’s Executives and making
recommendations related to remuneration to the Board. The Committee develops the remuneration philosophy and
policies for Board approval.
The responsibilities of the Committee are outlined in their Charter, which is reviewed annually by the Board. The key
responsibilities of the Committee include:
• Advising the Board on IR’s policy for Executive and Director remuneration
• Making recommendations to the Board on the remuneration arrangements for Executives and Directors to ensure they
are aligned with IR’s vision and are set competitively to the market
• Approving KMP terms of employment
In making recommendations to the Board, the Committee reviews the appropriateness of the nature and amount of
remuneration to Executives and Non-executive Directors on an annual basis. In carrying out its duties, the Committee can
engage external advisors who are independent of management.
37
Integrated Research and its controlled entities • Annual Report 2021 3838
Integrated Research and its controlled entities • Annual Report 2021
Integrated Research and its controlled entities • Annual Report 2021Corporate governance statement Corporate
governance
statement
Contents
40 Board of Directors and its committees
43 Risk management
44 Ethical standards
45 Communication with shareholders
Integrated Research and its controlled entities • Annual Report 2021
39
39
Integrated Research and its controlled entities • Annual Report 2021 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
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 Company’s expense. A copy of
the advice received by the Director is
made available to all other members
of the board.
40
Integrated Research and its controlled entities • Annual Report 2021Corporate governance statement 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.
The Company Secretary is
accountable directly to the board,
through the chair, on all matters to
do with the proper functioning of
the board.
Nomination and
Remuneration
Committee
The Nomination and Remuneration
Committee has a documented
charter, approved by the board.
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. The Nomination and
Remuneration Committee Charter
may be viewed on the company’s
website: www.ir.com.
Responsibilities
Regarding Remuneration
The Committee reviews and makes
recommendations to the board on:
• The appointment, remuneration,
performance objectives
and evaluation of the chief
executive officer.
• The remuneration packages for
senior executives.
• The Company’s recruitment,
retention and termination
policies and procedures for
senior executives.
• Executive remuneration and
incentive policies.
• Policies on employee incentive
plans, including equity
incentive plans.
• Superannuation arrangements.
• The remuneration framework and
policy for non-executive Directors.
• 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.
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 20
to 21 of this report. Director profiles
are also provided on the company’s
website: www.ir.com.
The company’s constitution
provides for the board to consist of
between three and twelve members.
At 30 June 2021 the board members
were comprised as follows:
• Mr Peter Lloyd - Independent
Non-Executive Director (Chairman)
• Mr John Ruthven - Chief Executive
Officer and Managing Director
• Mr Allan Brackin - Independent
Non-Executive Director
• Mr Garry Dinnie - Independent
Non-Executive Director
• Ms Anne Myers - Independent
Non-Executive Director
• Mr James Scott - Independent
Non-Executive Director
At each Annual General Meeting
one-third of Directors, any Director
who has held office for three years
and any Director appointed by
Directors in the preceding year
must retire, then being eligible for
re-election. The 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
41
Integrated Research and its controlled entities • Annual Report 2021 Responsibilities
Regarding Nomination
The Committee develops and makes
recommendations to the board on:
• The CEO and senior executive
succession planning.
• The range of skills, experience
and expertise needed on the
board and the identification of
the particular skills, experience
and expertise that will best
complement board effectiveness.
• A plan for identifying, reviewing,
assessing and enhancing
Director competencies.
• Board succession plans to
maintain a balance of skills,
experience and expertise
on the board.
• Evaluation of the board’s
performance.
• Appointment and removal
of Directors.
• Appropriate composition
of committees.
The terms and conditions of the
appointment of non-executive
Directors are set out in a letter of
appointment, including expectations
for attendance and preparation for
all board meetings, expected time
commitments, procedures when
dealing with conflicts of interest,
and the availability of independent
professional advice.
The performance review of the
Chief Executive Officer and the
board was undertaken in the
reporting period identifying both
strengths and development actions.
The performance review of other
senior management was conducted
by the Chief Executive Officer in the
reporting period.
The members of the Nomination and
Remuneration Committee during the
year were:
• Mr Allan Brackin - Independent
Non-Executive Director (Chair
from 12 May 2021)
• Mr Garry Dinnie - Independent
Non-Executive Director (Chair to
12 May 2021)
• Mr James Scott - Independent
Non-Executive Director (member
from 13 May 2021)
• Mr Paul Brandling- Independent
Non-Executive Director (member
to 20 March 2021)
• Ms Anne Myers - Independent
Non-Executive Director (member
to 12 May 2021)
A matrix of skills and diversity
of the board as required by
the ASX corporate governance
recommendations is available on the
Company’s website at www.ir.com.
The Nomination and Remuneration
Committee meets at least twice a
year and as required. The Committee
met eight times during the year
under review.
Audit and Risk
Committee
The Audit and Risk Committee has
a documented charter, approved by
the board. The charter states that
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 Garry Dinnie - Independent
Non-Executive (Chair)
• Mr Peter Lloyd - Independent
Non-Executive Director (from
15 October 2020)
• Ms Anne Myers - Independent
Non-Executive Director
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, Chief Executive
Officer and Chief Financial
Officer are invited to Audit and
Risk Committee meetings at
the discretion of the committee.
The committee met four times during
the year and committee members’
attendance record is disclosed in
the table of Directors’ meetings
on page 24.
The external auditor met with the
Audit and Risk Committee/Board four
times during the year, two of which
included time without the presence
of executive management. The Chief
Executive Officer and the Chief
Financial Officer declared in writing
to the board that the company’s
financial reports for the year
ended 30 June 2021 comply with
accounting standards and present
a true and fair view, in all material
respects, of the company’s financial
condition and operational results.
The main responsibilities of the Audit
and Risk Committee as set out in the
charter 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.
• Mr Nick Abrahams - Independent
• Provide an avenue of
Non-Executive Director
(to 25 November 2020)
communication between the
auditors, management and
the board.
42
Integrated Research and its controlled entities • Annual Report 2021Corporate governance statement • 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 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.
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 Board
appoints a member of the committee
to be chairman.
The members of the Strategy
Committee during the year were:
• Ms Anne Myers - Independent
Non-Executive (Chair from
13 May 2021)
• Mr Peter Lloyd - Independent
Non-Executive (Chair to
12 May 2021)
• Mr James Scott- Independent
Non-Executive Director (from
13 May 2021)
• Mr Paul Brandling- Independent
Non-Executive Director (member
to 20 March 2021)
The Strategy Committee is
responsible for:
• Reviewing and assisting in defining
• To recommend the Board approval
current strategy.
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.
• Assessing new strategic
opportunities, including
M&A proposals and intellectual
property developments or
acquisitions.
• Staying close to the business
challenges and monitor
operational implementation of
strategic plans.
• Endorsing strategy and business
cases for consideration by the
full board.
The Committee met three times
during the year under review.
Risk
management
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. The risk
framework is reviewed annually to
ensure risks are managed within
the risk appetite set by the Board.
Major business risks arise from such
matters as actions by competitors,
government policy changes and the
impact of exchange rate movements.
The Audit and Risk Committee
Charter may be viewed on the
company’s website: www.ir.com.
Comprehensive policies and
procedures are established such that:
• Capital expenditure above
a certain threshold requires
board approval.
•
Financial exposures are
controlled, including the use of
derivative instruments.
• Risks are identified and managed,
including internal audit, privacy,
insurances, business continuity
and compliance.
• Business transactions are properly
authorised and executed.
The Chief Executive Officer and
the Chief Financial Officer have
declared, in writing to the board that
the Company’s financial reports are
founded on a sound system of risk
management and internal compliance
and control which implements the
policies adopted by the board.
43
Integrated Research and its controlled entities • Annual Report 2021 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.
Material Exposure
to economic,
environmental and social
sustainability risks
Exposure to economic, environment
and social sustainability risks for the
Company are routinely examined
through the risk management
framework, overseen by the Audit
and Risk Committee. The Company
considers risk in the conduct of its
operations and outlines exposure to
specific economics and operating
risk in the notes to the financial
statements. With the exception of
the current pandemic, there was no
material exposure to environmental
or social sustainability risks during
the period.
Ethical
standards
All Directors, managers and
employees are expected to act with
the utmost integrity and objectivity,
striving at all times to enhance the
reputation and performance of the
consolidated entity. Every employee
has a nominated supervisor to whom
they may refer any issues arising
from their employment.
Conflict of interest
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 Remuneration
report page 27 to 37.
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. The Code
of Conduct may be viewed 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.
44
Integrated Research and its controlled entities • Annual Report 2021Corporate governance statement 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 56 days after
the release of the company’s
half-yearly results announcement.
From 24 hours to 56 days after
release of the company’s annual
results announcement.
• Directors must obtain the approval
of the Chairman of the board and
notify the Company Secretary
before they buy or sell shares in
the company, subject to board
veto. The company advises
the ASX of any transactions
conducted by Directors in shares
in the company. The Company’s
Trading in Securities policy may be
viewed on the Company’s website:
www.ir.com.
Participants in the Company’s
Performance Rights program are
specifically prohibited to hedge the
exposure to the Integrated Research
share price during the vesting
period in respect of the unvested
performance rights. For the purposes
of this policy, hedging includes
the entry into any transaction,
arrangement or financial product
which operates to limit the economic
risk of a security holding In the
Company and includes financial
instruments such as equity swaps
and contracts for differences.
Communication
with shareholders
The board provides shareholders with
information using a comprehensive
continuous disclosure policy which
includes identifying matters that may
have a material effect on the price of
the company’s securities, notifying
them to the ASX, posting them on
the Company’s website (www.ir.com),
and issuing media releases.
Disclosures under this policy are in
addition to the periodic and other
disclosures required under the ASX
Listing Rules and the Corporations
Act. More details of the policy are
available on the Company’s website.
The Chief Executive Officer and the
Chief Financial Officer are responsible
for interpreting the Company’s policy
and where necessary informing the
board. The Company Secretary is
responsible for all communication
with the ASX.
The board encourages full
participation of shareholders at the
Annual General Meeting to ensure
a high level of accountability and
identification with the consolidated
entity’s strategy and goals.
Important issues are presented to the
shareholders as single resolutions.
The external auditor is requested to
attend the Annual General Meetings
to answer any questions concerning
the audit and the content of the
auditor’s report.
The shareholders are requested to vote
on the appointment and aggregate
remuneration of Directors, the granting
of options and shares to Directors,
the Remuneration Report and changes
to the Constitution. Copies of the
Constitution are available to any
shareholder who requests it.
45
Integrated Research and its controlled entities • Annual Report 2021 4646
Integrated Research and its controlled entities • Annual Report 2021
Integrated Research and its controlled entities • Annual Report 2021Financial statements Financials
Contents
48 Consolidated statement of comprehensive income
49 Consolidated statement of financial position
50 Consolidated statement of changes in equity
51 Consolidated statement of cash flows
52 Notes to the financial statements
52 Note 1: Significant accounting policies
60 Note 2: Segment reporting
61 Note 3: Revenue from contracts with customers
61 Note 4: Expenditure
62 Note 5: Other gains and (losses)
62 Note 6: Finance income
62 Note 7: Auditors’ remuneration
63 Note 8: Income tax
64 Note 9: Earnings per share
64 Note 10: Cash and cash equivalents
64 Note 11: Trade and other receivables
65 Note 12: Other assets
66 Note 13: Other financial assets
66 Note 14: Property, plant and equipment
67 Note 15: Deferred tax assets and liabilities
69 Note 16: Intangible assets
70 Note 17: Goodwill
70 Note 18: Trade and other payables
71 Note 19: Employee benefits
72 Note 20: Provisions
73 Note 21: Lease assets and liabilities
74 Note 22: Other financial liabilities
74 Note 23: Capital and reserves
76 Note 24: Financial instruments
80 Note 25: Consolidated entities
80 Note 26: Reconciliation of cash flows from operating activities
81 Note 27: Key management personnel disclosures
81 Note 28: Related parties
81 Note 29: Parent entity disclosures
82 Note 30: Subsequent events
Directors’ declaration
Independent auditor’s report
83
84
90 Lead auditor’s independence declaration
91
ASX additional information
Integrated Research and its controlled entities • Annual Report 2021
47
47
Integrated Research and its controlled entities • Annual Report 2021
Consolidated statement of comprehensive income
For the year ended 30 June 2021
In thousands of AUD
Revenue from contracts with customers
Licence fees
Maintenance fees
Subscription fees
Testing solution services
Professional services
Total revenue
Expenditure
Research and development expenses
Sales, professional services and marketing expenses
General and administration expenses
Total expenditure
Other gains and (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
Gain/(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
2021
2020
47,359
18,128
312
4,318
8,376
72,098
23,945
697
5,543
8,630
3
78,493
110,913
(19,101)
(17,388)
(43,378)
(54,560)
(6,235)
(6,232)
(68,714)
(78,180)
(1,310)
(1,868)
8,469
30,865
838
9,307
(1,372)
7,935
606
31,471
(7,417)
24,054
-
(1,496)
(1,496)
51
337
388
6,439
24,442
7,935
24,054
6,439
24,442
4.61
4.60
14.00
13.94
4
5
6
8
9
9
The consolidated statement of comprehensive income is to be read in conjunction with the notes to the financial
statements set out on pages 52 to 82.
48
Integrated Research and its controlled entities • Annual Report 2021Financial statements Consolidated statement of financial position
As at 30 June 2021
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
Right-of-use assets
Deferred tax assets
Intangible assets
Other non-current assets
Total non‑current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Income tax liabilities
Deferred revenue
Lease liabilities
Other financial liabilities
Total current liabilities
Non‑current liabilities
Borrowings
Deferred tax liabilities
Provisions
Deferred revenue
Lease liabilities
Other non-current financial liabilities
Total non‑current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
Consolidated
Notes
2021
2020
10
11
12
11
13
14
21
15
16
12
18
20
21
22
24
15
20
21
22
23
23
12,149
51,918
693
3,345
68,105
27,593
175
1,255
6,003
1,183
29,962
799
66,970
135,075
10,181
4,045
126
15,526
1,655
192
9,744
57,853
64
2,963
70,624
29,399
236
1,883
6,367
1,404
29,052
872
69,213
139,837
10,213
3,852
2,192
20,767
1,372
37
31,725
38,433
6,658
7,044
665
861
4,767
13
20,008
51,733
83,342
1,667
4,411
77,264
83,342
5,000
6,450
713
1,556
5,142
21
18,882
57,315
82,522
1,667
5,079
75,776
82,522
The consolidated statement of financial position is to be read in conjunction with the notes to the financial statements
set out on pages 52 to 82.
49
Integrated Research and its controlled entities • Annual Report 2021 Consolidated statement of changes in equity
For the year ended 30 June 2021
Consolidated
In thousands of AUD
Balance at 1 July 2020
Profit for the year
Other comprehensive income/
(loss) for the year
Total comprehensive income/(loss)
for the year
Share based payments expense
Dividends to shareholders
Share
capital
1,667
-
-
-
-
-
Balance at 30 June 2021
1,667
Consolidated
In thousands of AUD
Balance at 1 July 2019
Profit for the year
Other comprehensive income
for the year
Total comprehensive income
for the year
Share based payments expense
Dividends to shareholders
Share
capital
1,667
-
-
-
-
-
Balance at 30 June 2020
1,667
Hedging
reserve
Translation
reserve
Employee
benefit
reserve
4,249
-
-
-
828
-
Employee
benefit
reserve
3,536
-
-
-
713
-
Retained
earnings
75,776
7,935
Total
82,522
7,935
-
(1,496)
7,935
6,439
-
(6,447)
77,264
828
(6,447)
83,342
Retained
earnings
64,182
24,054
Total
69,827
24,054
-
388
24,054
24,442
-
713
(12,460)
(12,460)
830
-
(1,496)
(1,496)
-
-
493
-
337
337
-
-
830
4,249
75,776
82,522
-
-
-
-
-
-
‑
(51)
-
51
51
-
-
‑
(666)
5,077
Hedging
reserve
Translation
reserve
The consolidated statement of changes in equity is to be read in conjunction with the notes to the financial statements
set out on pages 52 to 82.
50
Integrated Research and its controlled entities • Annual Report 2021Financial statements Consolidated statement of cash flows
For the year ended 30 June 2021
Net cash provided by operating activities
26
In thousands of AUD
Cash flows from operating activities
Cash receipts from customers
Proceeds from government grants
Cash paid to suppliers and employees
Cash generated from operations
Income taxes paid
Cash flows from investing activities
Payments for capitalised development
Payments for property, plant and equipment
Payments for intangible asset
Interest received
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Payment of principal portion of lease liabilities
Interest payments
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 2021
Consolidated
Notes
2021
2020
78,807
96,369
626
-
(55,105)
(66,024)
24,328
(3,252)
21,076
30,345
(6,193)
24,152
(11,985)
(13,962)
(257)
-
1,440
(320)
(922)
992
(10,802)
(14,212)
24
24
14,450
14,000
(12,792)
(9,000)
(1,652)
(602)
(1,872)
(386)
23
(6,447)
(12,460)
(7,043)
(9,718)
3,231
9,744
(826)
12,149
222
9,316
206
9,744
10
The consolidated statement of cash flows is to be read in conjunction with the notes to the financial statements set out
on pages 52 to 82.
51
Integrated Research and its controlled entities • Annual Report 2021 Notes to the
financial
statements
For the year ended
30 June 2021
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 2021 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 2021.
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. Financial statements of
the consolidated entity 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 a going concern
basis using historical cost, with the
exception of derivatives, which are at
fair value.
The company is of a kind referred
to in ASIC Legislative Instrument
2016/191 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
The accounting policies and methods
of computation adopted in the
preparation of the financial report
are consistent with those adopted
and disclosed in Integrated Research
Limited’s 2020 annual financial
report, except for the adoption of
the following new standards for the
2021 financial year.
Standard/Interpretation
Conceptual Framework for
Financial Reporting
AASB 2019-1 Amendments
to AASs - References to the
Conceptual Framework
AASB 2018-7 Amendments to
AASs - Definition of Material
AASB 2019-5 Amendments to
AASs - Disclosure of the Effect of
New IFRS Standards Not Yet Issued
in Australia
52
Integrated Research and its controlled entities • Annual Report 2021Financial statements 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 made in relation to the consolidated entity’s financial statements:
Standard/Interpretation
AASB 2020-1 Amendments to AASs - Classification of Liabilities as Current or
Non-current
AASB 2020-3 Amendments to AASs - Annual Improvements 2018-2020 and
Other Amendments
Effective for
annual reporting
periods beginning
on or after
Expected to be
initially applied
in the financial
year ending
1 Jan 2022
30 June 2023
1 Jan 2022
30 June 2023
Reference to the Conceptual Framework - Amendments to IFRS 3
1 Jan 2022
30 June 2023
Property, Plant and Equipment: Proceeds before Intended Use - Amendments
to IAS 16
1 Jan 2022
30 June 2023
Onerous Contracts - Costs of Fulfilling a Contract - Amendments to IAS 37
1 Jan 2022
30 June 2023
IFRS 9 Financial Instruments - Fees in the ’10 per cent’ test for derecognition of
financial liabilities
1 Jan 2022
30 June 2023
C. Basis of consolidation
Subsidiaries are entities controlled by the Company. Control is achieved when the Company is exposed, or has rights,
to variable returns from its involvement with the investee and has the ability to affect those returns through its power
over the investee. Specifically, the Company controls an investee if and only if the Company has power over the investee
(i.e. existing rights that give it the current ability to direct the relevant activities of the investee). Exposure, or rights,
to variable returns from its involvement with the investee, and the ability to use its power over the investee to affect
its returns.
When the Company has less than a majority of the voting or similar rights of an investee, the Company considers
all relevant facts and circumstances in assessing whether it has power over an investee including: the contractual
arrangement with the other vote holders of the investee; rights arising from other contractual arrangements and the
Company’s voting rights and potential voting rights.
The Company re-assesses whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Company obtains
control over the subsidiary and ceases when the Company loses control of the subsidiary. Assets, liabilities, income and
expenses of a subsidiary acquired or disposed of during the year are included in the statement of comprehensive income
from the date the Company gains control until the date the Company ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the
parent of the Company and to the non-controlling interests, even if this results in the non-controlling interests having
a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their
accounting policies into line with the Company’s accounting policies. All intra-group assets and liabilities, equity,
income, expenses and cash flows relating to transactions between members of the Company are eliminated in full
on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.
If the Company loses control over a subsidiary, it: de-recognises the assets (including goodwill) and liabilities of the
subsidiary; de-recognises the carrying amount of any non-controlling interests; de-recognises the cumulative translation
differences recorded in equity; recognises the fair value of the consideration received; recognises the fair value of any
investment retained; recognises any surplus or deficit in profit or loss; reclassifies the parent’s share of components
previously recognised in OCI to profit or loss or retained earnings, as appropriate, as would be required if the Company
had directly disposed of the related assets or liabilities.
53
Integrated Research and its controlled entities • Annual Report 2021 Note 1: Significant
accounting policies (cont.)
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.
• Level 2 - Valuation techniques
for which the lowest level input
that is significant to the fair
value measurement is directly or
indirectly observable.
• Level 3 - Valuation techniques
for which the lowest level input
that is significant to the fair value
measurement is unobservable.
For assets and liabilities that
are recognised in the financial
statements at fair value on a
recurring basis, the Company
determines whether transfers
have occurred between levels
in the hierarchy by re-assessing
categorisation (based on the lowest
level input that is significant to the
fair value measurement as a whole)
at the end of each reporting period.
F. 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 fair value.
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.
E. Fair value
measurement
Fair value is the price that would
be received to sell an asset or paid
to transfer a liability in an orderly
transaction between market
participants at the measurement
date. The fair value measurement
is based on the presumption
that the transaction to sell the
asset or transfer the liability takes
place either:
i)
ii)
in the principal market for the
assets or liability; or
in the absence of a principal
market, in the most
advantageous market for the
asset or liability.
The principal or the most
advantageous market must be
accessible by the Company.
The fair value of an asset or a liability
is measured using the assumptions
that market participants would use
when pricing the asset or liability,
assuming that market participants
act in their economic best interest.
A fair value measurement of a
non-financial asset takes into
account a market participant’s
ability to generate economic benefits
by using the asset in its highest and
best use or by selling it to another
market participant that would use
the asset in its highest and best use.
The Company uses valuation
techniques that are appropriate in
the circumstances and for which
sufficient data are available to
measure fair value, maximising
the use of relevant observable
inputs and minimising the use of
unobservable inputs.
All assets and liabilities for which fair
value is measured or disclosed in the
financial statements are categorised
within the fair value hierarchy,
described as follows, based on the
lowest level input that is significant to
the fair value measurement as whole:
• Level 1 - Quoted (unadjusted)
market prices in active markets for
identical assets or liabilities
54
Integrated Research and its controlled entities • Annual Report 2021Financial statements Note 1: Significant
accounting policies (cont.)
G. 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.
Where financial instruments entered
into by the Company are not
designated as a hedging instrument
the gain or loss is recognised
immediately the profit and loss.
H. 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 (M)).
The cost of acquired assets includes
(i) the initial estimate at the time of
installation and during the period of
use, when relevant, of the costs of
dismantling and removing the items
and restoring the site on which they
are located, and (ii) changes in the
measurement of existing liabilities
recognised for these costs resulting
from changes in the timing or outflow
of resources required to settle the
obligation or from changes in the
discount rate.
Where parts of an item of property,
plant and equipment have different
useful lives, they are accounted for
as separate items of property, plant
and equipment.
Depreciation is provided on property,
plant and equipment. Depreciation
is calculated on a straight line
basis so as to write off the net cost
of each asset over its expected
useful life to its estimated residual
value. Leasehold improvements
are depreciated over the period
of the lease or estimated useful
life, whichever is the shorter,
using the straight line method.
The estimated useful lives, residual
values and depreciation method are
reviewed annually, with the effect
of any changes recognised on a
prospective basis.
The following useful lives are used in
the calculation of depreciation:
• Leasehold improvements
6 to 10 years
• Plant and equipment
4 to 8 years
I. Leases
The Company assesses at contract
inception whether a contract is, or
contains, a lease. The Company
applies a single recognition and
measurement approach for all
leases, except for short term leases
and low-value assets. The Company
recognises lease liabilities to make
lease payments and right-of-use
assets representing the right to use
the underlying asset.
Right‑of‑use assets
The right-of-use assets comprise
the initial measurement of the
corresponding lease liability, lease
payments made at or before the
commencement day, less any lease
incentives received and any initial
direct costs. They are subsequently
measured at cost less accumulated
depreciation and impairment losses.
Right-of-use assets are depreciated
on a straight-line basis over the
lease term.
Lease liabilities
At the commencement date of the
lease, the Company recognises lease
liabilities measured at the present
value of lease payments to be
made over the lease term. The lease
payments include fixed payments
(including in-substance fixed
payments) less any lease incentives
receivable, variable lease payments
that depend on an index or a rate,
and amounts expected to be paid
under residual value guarantees.
The lease payments also include the
exercise price of a purchase option
reasonably certain to be exercised
by the Company and payments of
penalties for terminating a lease, if
the lease term reflects the Company
exercising the option to terminate.
The variable lease payments that do
not depend on an index or a rate are
recognised as expense in the period
on which the event or condition that
triggers the payment occurs.
In calculating the present value of
lease payments, the Company uses
the incremental borrowing rate at
the lease commencement date if
the interest rate implicit in the lease
is not readily determinable. After the
commencement date, the amount of
lease liabilities is increased to reflect
the accretion of interest and reduced
for the lease payments made.
In addition, the carrying amount
of lease liabilities is remeasured if
there is a modification, a change
in the lease term, a change in the
in-substance fixed lease payments
or a change in the assessment to
purchase the underlying asset.
Short‑term leases and leases of
low‑value assets
The Company applies the short-term
lease recognition exemption to its
short-term leases (i.e., those leases
that have a lease term of 12 months
or less from the commencement
date and do not contain a purchase
option). It also applies the lease
of low-value assets recognition
exemption to leases of office
equipment that are considered
to be low value. Lease payments
on short-term leases and leases of
low-value assets are recognised as
expense on a straight-line basis over
the lease term.
55
Integrated Research and its controlled entities • Annual Report 2021 Note 1: Significant
accounting policies (cont.)
J. 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
assets are assessed as finite.
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 (M)).
Amortisation is charged to profit or
loss on a straight-line basis over the
estimated useful life, but no more
than three years, the exception being
for the Company’s next generation
Prognosis Cloud platform which is
amortised over five 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 amortised on a straight-line
basis over a two and a half to three
year period. SaaS arrangements
are service contracts providing the
Company with the right to access
the cloud provider’s application
software over the contract period.
Costs incurred to configure or
customise, and the ongoing fees to
obtain access to the cloud provider’s
application software, are recognised
as operating expenses when the
services are received.
Customer Relationships
Customer relationships are initially
measured at fair value and
amortised over the estimated useful
life, but no more than five years.
K. Trade and other
receivables
Trade and other receivables are
stated at their amortised cost less
expected credit losses. To measure
the expected credit losses the
utilises the simplified approach in
calculating the expected credit loss
and recognises a loss allowance
based on a lifetime expected credit
losses at each reporting date.
The Company has established a
provision matrix calculated based
on the group historical credit loss
experience adjusted for forward
looking factors.
Trade receivables are written
off when there is no reasonable
expectation of recovery.
For the trade receivables with
extended payment terms beyond
twelve months, the receivable is
initially recognised at fair value
less transaction costs calculated
by applying a discount to the
contracted cash flows. The discount
rate applied is based upon the
corporate borrowing rate that would
apply to the type of customer,
taking into account the customers’
credit worthiness based on its size
and jurisdiction.
L. Cash and cash
equivalents
Cash and cash equivalents comprises
cash balances and call deposits
with an original maturity of three
months or less.
M. 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.
Refer to Note 1 (U) for Goodwill
impairment considerations.
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 their risk 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.
N. 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 high quality corporate bond
rate at the year end date which
have maturity dates approximating
to the terms of the consolidated
entity’s obligations.
56
Integrated Research and its controlled entities • Annual Report 2021Financial statements Note 1: Significant
accounting policies (cont.)
Share‑based payment transactions
The performance rights programmes
allow the consolidated entity’s
employees to acquire shares of
the Company. The fair value of
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 performance rights. The fair
value of the instrument granted is
measured using a Black-Scholes
methodology, 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.
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.
O. 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.
P. Trade and other
payables
Trade and other payables are stated
at their amortised cost.
Q. Revenue
Revenue from contracts with
customers is recognised either at
a point in time (licence fees) or
over time (maintenance, SaaS,
testing solutions and professional
services fees), regardless of when
payment is received. Amounts
disclosed as revenue are net of
agency commissions and discounts.
Where the Company bundles
the products or services, the
transaction price is allocated to
each performance obligation based
on the proportionate stand-alone
selling prices.
Licence fees are recognised on
delivery of the licence key, where the
Company’s contracts with customers
provide the right to use the
Company’s intellectual property. As
such, the Company’s performance
obligation is satisfied at the point in
time which the customer receives the
licence key.
Maintenance fees are recognised
on a monthly basis over the term of
the service agreement, which may
range between one to five years.
Services provided to customers under
maintenance contracts include
technical support and supply of
software upgrades.
Subscription fees are recognised
on a monthly basis over the term
of the service agreement which
may range between one to five
years. The Company’s contracts
with customers provide a right of
access to the Company’s intellectual
property (hosted on the Company’s
cloud environment) for the duration
of the term of the contract.
Testing solutions services
revenues are recognised either
rateably over a service period or
as services are rendered. Testing
services relate to the provision of
services to performing testing of
customer environments.
Professional services are revenues
recognised as the services are
rendered, typically in accordance
with the achievement of contract
milestones or hours expended.
Professional services include
implementation and configuration
services for licenced software.
Unsatisfied performance obligations
are disclosed as deferred revenue
on the consolidated statement
of financial position. Where
the Company has a multiyear
non-cancellable contractual
commitment but does not expect to
satisfy the performance obligation
within twelve months, no deferred
revenue or trade receivable
is recognised.
The Company typically provides
multi-year payment terms to
customers ranging between one to
five years. For such contracts with
customers, the transaction price is
discounted using a rate that would
be reflected in a separate financing
transaction between the Company
and the customer. This amount
is recognised rateably as finance
income over the payment period.
Directly related contract costs in
obtaining the customer contracts are
expensed unless they are incremental
to obtaining the contract and the
Company expects to recover those
costs. These costs are recognised as
contract assets and amortised over
the life of the contract they relate to.
The incremental costs in obtaining
customer contracts for the Company
relate to specified commissions paid
to employees which meet the criteria
of directly related contract costs.
No revenue is recognised if there are
significant uncertainties regarding
the recovery of the transaction price,
the costs incurred or to be incurred
cannot be measured reliably or there
is a risk of return.
57
Integrated Research and its controlled entities • Annual Report 2021 Note 1: Significant
accounting policies (cont.)
R. Financing income
Financing income comprises interest
receivable on funds invested and
the financing component of the sale
of licences, less interest payable
on borrowings.
S. 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.
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.
T. 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.
U. Business Combination
and Goodwill
Business combinations are
accounted for using the acquisition
method. The cost of an acquisition
is measured as the aggregate of
the consideration transferred at
acquisition date measured at fair
value. Any contingent consideration
to be transferred by the acquirer
will be recognised at fair value at
the acquisition date. Changes in
the fair value of the contingent
consideration are recognised in the
Statement of Comprehensive Income.
Goodwill is initially measured at cost,
being the excess of the aggregate
of the consideration transferred over
the net identifiable assets acquired
and liabilities assumed. Goodwill
is tested annually for impairment.
Acquisition-related costs are
expensed as incurred and included in
administrative expenses.
V. Grant income
Government grants are recognised
where there is reasonable assurance
that the grant will be received and all
attached conditions will be complied
with. When the grant relates to
an expense item, it is recognised
as income on a systematic basis
over the periods that the related
costs, for which it is intended to
compensate, are expensed.
W. 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 ‑ Development
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
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.
58
Integrated Research and its controlled entities • Annual Report 2021Financial statements Income Tax
The Company regularly assesses the
adequacy of income tax provisions
having regard to the differing tax
rules and regulations applicable in
the various jurisdictions in which
the Company operates. Due to
the complexities of tax rules and
regulations in numerous jurisdictions,
matters such as the availability
and timing of tax deductions and
the application of the arm’s length
principle to cross-border transactions
often require significant judgements
and assumptions to be made.
Deferred tax assets are recognised
for deductible temporary differences
and tax losses to the extent that
it is probable that future taxable
profits will be available to utilise those
temporary differences and tax losses.
Significant judgement is required
by the Company to determine the
amount of deferred tax assets that
can be recognised, based upon the
likely timing and the level of future
taxable profits.
Note 1: Significant
accounting policies (cont.)
Intangible assets ‑ Goodwill
Goodwill acquired from business
acquisitions is initially measured at
cost. Goodwill is tested annually for
impairment or earlier if changes in
circumstances indicate a potential
impairment, the impairment
policy is explained in note 1(M).
The impairment testing requires
judgements over future cashflow
streams and assumptions used in
the calculations.
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
either a Black-Scholes or Monte
Carlo methodology and applying
management determined probability
factors relating to non-market
vesting conditions.
Provision for expected credit losses
of trade and other receivables
The Company uses a provision
matrix to calculate the expected
credit loss for trade and other
receivables. The provision rates are
based on the days overdue and
differ by geography. The provision
matrix is based on the historical
default experience for the Company
and adjusted for forward-looking
information and includes the use of
macroeconomic information where
appropriate. The determination of
the provision rates is considered a
significant estimate as it is sensitive
to change in circumstances and of
forecast of economic conditions.
The expected credit loss also may not
be representative of the customers’
actual default in the future.
59
Integrated Research and its controlled entities • Annual Report 2021 Note 2. Segment reporting
The Chief Operating Decision Maker (CODM), being the Chief Executive Officer, reviews a variety of information,
including profit, on the performance of Prognosis solution across the group for the purpose of resource allocation.
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 and Germany with
responsibility for the countries in Europe, Asia Pacific - operating from Australia and Singapore with responsibility for
the countries in the rest of the world, and Corporate Australia - with responsibility 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.
Information regarding these geographic segments is presented below. The accounting policies of the reportable
segments are the same as the Group’s accounting policies.
Americas
Europe
Asia Pacific
Corporate
Australia1
Eliminations
Consolidated
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
54,509 75,786
12,167
17,476
11,817
17,651
-
-
- 78,493 110,913
-
-
-
-
-
- 38,430 58,134 (38,430) (58,134)
-
-
54,509 75,786
12,167
17,476
11,817
17,651 38,430 58,134 (38,430) (58,134) 78,493 110,913
78,493 110,913
1,641
2,276
305
458
352
615
6,173 27,516
-
-
8,470 30,865
In thousands
of AUD
Sales to customers
outside the
consolidated entity
Inter-segment
revenue
Total segment
revenue
Total revenue
Segment results
(before finance
income and tax)
Results from
operating activities
Financing income
Income tax expense
Profit for the year
8,470 30,865
837
606
(1,372)
(7,417)
7,935 24,054
1,662
8,557
13,426 12,058
-
-
-
-
Capital additions2
1,580
675
4
619
3
149
75
7,114
Depreciation
and amortisation
expenditure
591
960
235
270
286
198 12,315 10,630
Americas (USD)
Europe (GBP)
In local currency3
2021
2020
Sales to customers
outside the
consolidated entity
Inter-segment sales
Total segment
revenue
40,798
50,258
-
-
40,798
50,258
Segment results
1,224
1,517
2021
6,713
-
6,713
168
2020
9,243
-
9,243
245
1 Corporate Australia includes both the research and development, hedging and corporate head office functions of Integrated Research Limited.
2 Excludes internal development costs capitalised but includes third party assets acquired. Additions also include right-of-use assets.
3 Segment results represented in local currencies.
60
Integrated Research and its controlled entities • Annual Report 2021Financial statements
Note 3. Revenue from contracts with customers
Information regarding the disaggregation of the Company’s revenues from contracts with customers is presented below.
In thousands of AUD
Timing of Revenue Recognition:
At a point in time
Over time
Total Revenue from contracts with customers
Type of product Group
Collaborate
Infrastructure
Transact
Professional services
Total Revenue
Consolidated
2021
2020
47,359
31,134
78,493
44,000
15,874
10,243
8,376
78,493
72,098
38,815
110,913
59,818
28,657
13,808
8,630
110,913
The transaction price allocated to the remaining performance obligations (unsatisfied or partially unsatisfied), which are
not included above, is $8,441,000 (2020: $15,169,000) as at 30 June and is expected to be recognised as revenue in
two to five years. This amount relates to contracts with customers where the Company has a multi-year non-cancellable
contractual commitment but does not expect to satisfy the performance obligation within twelve months, and no
deferred revenue or trade receivable is recognised.
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
Expected credit loss provision expense
Consolidated
2021
2020
2,880
824
50,442
54,146
13,427
277
2,974
671
56,823
60,468
12,058
899
61
Integrated Research and its controlled entities • Annual Report 2021 Note 5. Other gains and (losses)
In thousands of AUD
Loss on sale of financial assets
Currency exchange gains/(losses)
Grant income - JobKeeper
Note
24
Consolidated
2021
-
(1,936)
626
(1,310)
2020
(861)
(1,007)
-
(1,868)
The Company participated in the Australian Federal Government’s JobKeeper program during the 2021 Financial Year
recognising amounts received as grant income with $333,000 relating to capitalised development in the consolidated
statement of financial position. The purpose of this program was to assist businesses during the COVID-19 pandemic by
covering a proportion of employee salaries and wages based on defined eligibility criteria.
Note 6. Finance income
In thousands of AUD
Interest income
Interest on borrowings
Interest on lease liability
Note 7. Auditors’ remuneration
In AUD
Fees to Ernst & Young (Australia)
Consolidated
2021
1,440
(359)
(243)
838
2020
992
(176)
(210)
606
Consolidated
2021
2020
Fees for auditing the consolidated financial report of the Company and auditing
the statutory financial reports of any controlled entities
244,924
233,669
Fees for other services
- Tax compliance
- Other compliance
Total fees to Ernst & Young (Australia)
Fees to other overseas member firms of Ernst & Young (Australia)
Fees for other services
- Tax compliance
Total fees to overseas member firms of Ernst & Young (Australia)
Total auditor's remuneration
83,821
3,605
48,000
-
332,350
281,669
131,930
131,930
464,280
100,684
100,684
382,353
62
Integrated Research and its controlled entities • Annual Report 2021Financial statements Note 8. Income tax
Recognised in profit for the year
In thousands of AUD
Current income tax:
Current income tax charge
Adjustments in respect of current income tax of previous year
Deferred tax:
Relating to origination and reversal of temporary differences
15
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
Other
Decrease in income tax expense due to:
R&D tax incentive
Prior year adjustments
Income tax expense
Consolidated
Note
2021
2020
2,207
(20)
2,187
(815)
1,372
Consolidated
2021
9,307
2,791
204
30
-
(1,633)
(20)
1,372
8,222
(310)
7,912
(495)
7,417
2020
31,471
9,441
182
(261)
(213)
(1,422)
(310)
7,417
63
Integrated Research and its controlled entities • Annual Report 2021 Note 9. Earnings per share
The calculation of basic and diluted earnings per share at 30 June 2021 was based on the profit attributable to ordinary
shareholders of $7,935,000 (2020: $24,054,000); a weighted number of ordinary shares outstanding during the year
ended 30 June 2021 of 172,116,418 (2020: 171,860,753); and a weighted number of ordinary shares (diluted) outstanding
during the year ended 30 June 2021 of 172,603,668 (2020: 172,529,700), 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 10. Cash and cash equivalents
In thousands of AUD
Cash at bank and on hand
Note 11. Trade and other receivables
Current
In thousands of AUD
Trade debtors
Less: Allowance for expected credit losses
GST receivable
Non‑current
In thousands of AUD
Trade debtors
Consolidated
2021
7,935
2020
24,054
Consolidated
2021
2020
172,116,418
171,860,753
487,250
668,947
172,603,668
172,529,700
4.61
4.60
14.00
13.94
Consolidated
2021
12,149
2020
9,744
Consolidated
2021
53,082
(1,336)
51,746
172
51,918
Consolidated
2021
27,593
2020
59,898
(2,217)
57,681
172
57,853
2020
29,399
The Company provides customers of good credit worthiness extended payment plans over the committed term of the
licence contract ranging between one to five years. For customers not on extended payment plans the credit period on
sales range from 30 to 90 days.
64
Integrated Research and its controlled entities • Annual Report 2021Financial statements Note 11. Trade and other receivables (cont.)
Ageing of past due but not impaired:
In thousands of AUD
Past due 30 days
Past due 60 days
Past due 90 days
Total
Note
24
Consolidated
2021
1,422
830
3,357
5,609
The movement in the allowance for expected credit losses in respect of trade receivables is detailed below:
In thousands of AUD
Balance at beginning of year
Amounts written off during the year
(Decrease)/increase in provision
Balance end of year
Consolidated
2021
2,217
(1,158)
277
1,336
2020
1,584
1,851
5,995
9,430
2020
1,417
(99)
899
2,217
The Company has used the following criteria to assess the allowance loss for expected credit losses shown above:
• historical default experience;
• macroeconomic factors specific to the geography of the customer;
• 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 Company’s trade receivable balance are debtors which are 90 days past due at the reporting date which
the Company has not provided for as there has been no significant change in credit quality and the consolidated entity
believes that the amounts are still recoverable. The Company does not hold any collateral over these balances.
Note 12. Other assets
Current
In thousands of AUD
Other prepayments
Contract assets
Fair value of assets - forward foreign exchange contracts
Total
Non‑current
In thousands of AUD
Contract assets
Total
Consolidated
2021
2,299
799
247
3,345
Consolidated
2021
799
799
2020
1,821
941
201
2,963
2020
872
872
65
Integrated Research and its controlled entities • Annual Report 2021
Note 13. Other financial assets
In thousands of AUD
Deposits
Consolidated
2021
175
2020
236
The carrying amount of other financial assets is a reasonable approximation of their fair value.
Note 14. Property, plant and equipment
Plant and equipment
In thousands of AUD
At cost
Accumulated depreciation
Leasehold improvements
In thousands of AUD
At cost
Accumulated depreciation
Consolidated
2021
5,702
(4,880)
822
Consolidated
2021
3,299
(2,866)
433
Total property, plant and equipment
Consolidated
In thousands of AUD
At cost
Accumulated depreciation
Total written down amount
2021
9,001
(7,746)
1,255
2020
6,517
(5,147)
1,370
2020
3,464
(2,951)
513
2020
9,981
(8,098)
1,883
66
Integrated Research and its controlled entities • Annual Report 2021Financial statements Note 14. Property, plant and equipment (cont.)
Plant and Equipment
In thousands of AUD
Carrying amount at start of year
Additions
Disposals
Effects of foreign currency exchange
Depreciation expense
Carrying amount at end of year
Leasehold Improvements
In thousands of AUD
Carrying amount at start of year
Additions
Effects of foreign currency exchange
Depreciation expense
Carrying amount at end of year
Consolidated
2021
1,370
116
-
(29)
(635)
822
Consolidated
2021
513
58
(14)
(124)
433
2020
1,880
200
(9)
25
(726)
1,370
2020
751
21
3
(262)
513
Note 15. Deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Consolidated
In thousands of AUD
Intangible assets
Trade and other payables
Employee benefits
Provisions
Other current liabilities
Unrealised foreign exchange gain
Deferred tax assets/(liabilities)
Set off of deferred tax asset
Net deferred tax assets/(liabilities)
Assets
Liabilities
Net
2021
2020
-
435
1,082
431
646
142
2,736
(1,553)
1,183
130
391
1,018
790
403
62
2,794
(1,390)
1,404
2021
7,879
2020
7,338
2021
2020
(7,879)
(7,208)
-
-
-
718
-
8,597
(1,553)
7,044
-
-
-
502
-
7,840
(1,390)
6,450
435
1,082
431
(72)
142
391
1,018
790
(99)
62
(5,861)
(5,046)
-
-
(5,861)
(5,046)
67
Integrated Research and its controlled entities • Annual Report 2021 Note 15. Deferred tax assets and liabilities (cont.)
Movement in temporary differences during the year:
For year ended 30 June 2021
In thousands of AUD
Intangible assets
Trade and other payables
Employee benefits
Provisions
Other current liabilities
Unrealised foreign exchange gain
For year ended 30 June 2020
In thousands of AUD
Intangible assets
Trade and other payables
Employee benefits
Provisions
Other current liabilities
Unrealised foreign exchange gain
Balance
1 July 20
(7,208)
391
1,018
790
(99)
62
(5,046)
Balance
1 July 19
(5,799)
268
730
420
628
(798)
(4,551)
Consolidated
Recognised
in income
Recognised
in equity
Balance
30 June 21
(671)
44
64
(359)
27
80
(815)
-
-
-
-
-
-
‑
(7,879)
435
1,082
431
(72)
142
(5,861)
Consolidated
Recognised
in income
Recognised
in equity
Balance
30 June 20
(1,409)
123
288
370
(727)
860
(495)
-
-
-
-
-
-
‑
(7,208)
391
1,018
790
(99)
62
(5,046)
68
Integrated Research and its controlled entities • Annual Report 2021Financial statements Note 16. Intangible assets
The balance of capitalised intangible assets comprises:
Cost
Consolidated
Balance at 30 June 2020
46,206
2,408
Software
development
Third party
software
In thousands of AUD
Balance at 1 July 2019
Fully amortised & offset
Internally developed
Purchased
Effects of foreign currency exchange
In thousands of AUD
Balance at 1 July 2020
Fully amortised & offset
Internally developed
Purchased
Effects of foreign currency exchange
Amortisation
In thousands of AUD
Balance at 1 July 2019
Fully amortised & offset
Amortisation for year
Effects of foreign currency exchange
Software
development
Third party
software
Goodwill
Customer
Relationships
1,473
3,524
859
40,178
(7,934)
13,962
-
-
46,206
(5,587)
11,985
-
-
-
-
930
5
2,408
(118)
-
36
(42)
2,284
-
-
-
104
3,628
Goodwill
3,628
-
-
-
(338)
3,290
-
-
-
23
882
Customer
Relationships
882
(800)
-
-
(82)
‑
Software
development
Third party
software
Goodwill
Customer
Relationships
20,939
(7,934)
8,832
-
1,308
-
41
4
Balance at 30 June 2021
52,604
Balance at 30 June 2020
21,837
1,353
Balance at 1 July 2020
Fully amortised & offset
Amortisation for year
Effects of foreign currency exchange
Balance at 30 June 2021
21,837
(5,587)
9,738
-
25,988
1,353
(118)
1,034
(41)
2,228
-
-
-
-
‑
-
-
-
-
‑
686
-
178
18
882
882
(800)
-
(82)
‑
Carrying amounts
In thousands of AUD
Balance at 30 June 2020
Balance at 30 June 2021
Software
development
Third party
software
24,369
26,616
1,055
56
Goodwill
3,628
3,290
Customer
Relationship
-
‑
Total
46,034
(7,934)
13,962
930
132
53,124
Total
53,124
(6,505)
11,985
36
(462)
58,178
Total
22,933
(7,934)
9,051
22
24,072
24,072
(6,505)
10,772
(123)
28,216
Total
29,052
29,962
69
Integrated Research and its controlled entities • Annual Report 2021 Note 17. Goodwill
Goodwill arose on the acquisition of IQ Services business in the year ending 30 June 2016. Management has identified
the Group as the cash generating unit (the Prognosis CGU) to which goodwill is allocated for impairment testing.
Management performs its annual impairment testing at least annually. The carrying value of goodwill at 30 June 2021 is
$3,290,000 (2020: $3,628,000). A reconciliation of the movement in goodwill is included in Note 16.
The recoverable amount of the Prognosis CGU has been determined using a value in use approach. The value in use has
been based on the following key assumptions:
1. Cash flow forecasts
The cash flow forecasts are based upon a Board approved 2022 budget and management projections for the
subsequent four years of the Prognosis CGU.
2. Discount rate
Discount rate of 11% (2020: 11%) applied for value in use calculation is based on the post-tax weighted average cost of
capital applicable to the Prognosis CGU.
3. Terminal value
The terminal growth rate after the five-year projection period has been calculated using a growth rate of 3% (2020: 3%)
which is determined by Management based on their assessment of expected long term annual growth for the
software industry.
The value in use does not indicate any impairment is required at 30 June 2021.
Management believe that a reasonable change in any of the above key assumptions would not cause the carrying values
to exceed their recoverable amounts.
Note 18. Trade and other payables
In thousands of AUD
Trade and other creditors
The average credit period on trade and other payables is 30 days.
Consolidated
2021
10,181
2020
10,213
70
Integrated Research and its controlled entities • Annual Report 2021Financial statements Note 19. Employee benefits
Current
In thousands of AUD
Liability for annual leave
Liability for long service leave
Non‑current
In thousands of AUD
Liability for long service leave
Pension plans
Consolidated
2021
2,721
1,324
4,045
Consolidated
2021
199
2020
2,746
1,106
3,852
2020
190
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 either a net after tax profit hurdle or a total
shareholder return (TSR) 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
Number of Rights
Earliest Vesting Date
Sep-20
Nov-20
Nov-20
Nov-20
134,410
31,789
31,789
31,790
Jul 2023
Jul 2023
Jul 2023
Jul 2023
Expiry date
Aug 2023
Aug 2023
Aug 2023
Aug 2023
71
Integrated Research and its controlled entities • Annual Report 2021 Note 19. Employee benefits (cont.)
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)
Sep 2020
Nov 2020
Nov 2020
Nov 2020
$3.395
$3.60
nil
50%
1,070
2.00%
0.11%
$1.069
$3.62
nil
49%
1,009
2.00%
0.11%
$1.506
$3.62
nil
49%
1,009
2.00%
0.11%
$1.800
$3.62
nil
49%
1,009
2.00%
0.11%
Testing date
Model Used
N/A
June 2021
June 2022
June 2023
Black Scholes
Monte Carlo
Monte Carlo
Monte Carlo
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.
During the year ended 30 June 2021, the consolidated entity recognised an expense through profit of $824,000 related
to the fair value of performance rights (2020: $671,000).
The following table provides the movement in performance rights during the year:
2021
1,054
(124)
(354)
230
806
-
Consolidated
2021
4,045
Consolidated
2021
199
466
665
2020
791
(141)
-
404
1,054
-
2020
3,852
2020
190
523
713
Note
19
Note
19
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)
Note 20. Provisions
Current
In thousands of AUD
Employee benefits
Non‑current
In thousands of AUD
Employee benefits
Lease make good
72
Integrated Research and its controlled entities • Annual Report 2021Financial statements Note 21. Lease assets and liabilities
The Company has lease contracts for office space and equipment used In operations, with terms ranging from
1 to 5 years. The company’s obligations under Its leases are secured by the lessor’s title to the leased assets.
The lease liabilities were discounted at the incremental borrowing rates as at 1 July 2020. The incremental borrowing
rates for the portfolio of leases were between 3% and 4%. Finance income decreased by $242,000 (2020: $210,000)
relating to the interest expense on lease liabilities recognised.
Right‑of‑use assets
Office premises
In thousands of AUD
At cost
Accumulated depreciation
Office premises
In thousands of AUD
Carrying amount at start of year
On adoption of AASB 16
Addition during the year
Effects of foreign currency exchange
Depreciation expense
Carrying amount at end of year
Current lease liabilities
In thousands of AUD
Lease liabilities
Non‑current lease liabilities
In thousands of AUD
Lease liabilities
Consolidated
2021
8,705
(2,702)
6,003
Consolidated
2021
6,367
-
1,555
(23)
(1,896)
6,003
Consolidated
2021
1,655
1.655
Consolidated
2021
4,767
4,767
Contractual undiscounted cash outflows used to calculate lease liability
Consolidated
In thousands of AUD
Less than one year
Between one and five years
Greater than five years
2021
1,660
5,210
-
6,870
2020
8,386
(2,019)
6,367
2020
-
2,147
6,204
35
(2,019)
6,367
2020
1,372
1,372
2020
5,142
5,142
2020
1,579
5,460
-
7,039
73
Integrated Research and its controlled entities • Annual Report 2021 Note 22. Other financial liabilities
Current
In thousands of AUD
Fair value of hedge liabilities - forward foreign exchange contracts
Non‑Current
In thousands of AUD
Other creditors
Note 23. Capital and reserves
Share capital
In thousands of shares
On issue 1 July
Issued against employee performance right exercised
On issue 30 June
Consolidated
2021
192
192
2020
37
37
Consolidated
2021
2020
13
13
21
21
Ordinary shares
2021
171,861
354
172,215
2020
171,861
-
171,861
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 19 for further details.
74
Integrated Research and its controlled entities • Annual Report 2021Financial statements Note 23. 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
2021
Final 2020
Total amount
2020
Final 2019
Interim 2020
Total amount
3.75
6,447
100% franked
6,447
3.75
3.5
6,445
100% franked
15 Oct 2019
6,015
100% franked
17 Apr 2020
12,460
No dividends were declared for the 2021 financial year.
Franking account disclosure:
In thousands of AUD
Adjusted franking account balance
Impact on franking account balance of dividends not recognised
Company
2021
7,764
-
2020
8,503
(2,762)
75
Integrated Research and its controlled entities • Annual Report 2021 Note 24. 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 10 and
23 respectively.
Borrowings
The Company has a $20 million multicurrency revolving cash advance facility with an expiry date of 31 July 2023 at
which point all outstanding cash advances must be repaid. The primary purpose of the facility is to fund working capital
requirements. There was $5.3 million drawn under the facility at 30 June 2021 (2020: $5 million).
The facility is secured by a General Security Agreement with a deed of cross guarantee including the parent entity,
Integrated Research UK Limited, and Integrated Research Inc. The facility is also subject to certain debt covenants
including a leverage ratio, interest cover ratio and capitalisation ratio. The Company met all the covenant requirements
at 30 June 2021. Interest is variable, linked to Bank Bill Swap Bid Rate (BBSY), plus a margin.
During the 2021 financial year, the Company applied for and received US $1.0 million in borrowing as part of the US
Paycheck Protection Program (PPP). The proceeds of the loan are to be used for certain operational costs, namely payroll
and benefits, but can also be used towards rent and utilities. The intention of the loan program is for borrowers to use the
funds for the approved purposes and subsequently seek loan forgiveness, which can be sought when the loan proceeds
have been used. The U.S. Small Business Administration (SBA), the government agency in charge of administering the
loan program, will review the loan forgiveness application by the Company to determine if forgiveness will be fully or
partially granted. Factors that contribute to forgiveness include confirming funds were used for approved purposes and
that employee and compensation levels were maintained.
At 30 June 2021 the amount received as part of the PPP is recognised at fair value using Level 2 inputs as non-current
borrowings. The Company anticipates its loan forgiveness application to be determined during the 2022 financial year at
which point the amount received will be recognised as grant income. Any amount not forgiven will have a maturity date
of five years from initial receipt with interest charged at 1%.
Bank Guarantee Facility
The Company has a $1,200,000 bank guarantee facility. The primary purpose of the facility is to provide bank
guarantees to the Company’s landlord pursuant to contractual lease arrangements. At 30 June 2021, the total value of
bank guarantees provided was $1,110,000 (2020: $1,110,000). The facility terminates on 31 December 2026.
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.
76
Integrated Research and its controlled entities • Annual Report 2021Financial statements Note 24. Financial instruments (cont.)
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.
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
Sterling
Euro
Consolidated
Liabilities
Assets
2021
1,644
-
-
2020
1,788
-
-
2021
5,343
94
3,243
2020
9,973
14
3,085
Foreign currency sensitivity
At 30 June 2021, if the US Dollar, Sterling or Euro weakened or strengthened against the Australian dollar by the
percentage shown, with all other variables held constant, net profit for the year would increase (decrease) by the
following based on the change in the exchange rate against the Australian dollar.
In thousands of AUD
US Dollar
Sterling
Euro
Change in currency (i) - 10% decrease
In thousands of AUD
US Dollar
Sterling
Euro
Change in currency (i) - 10% increase
Consolidated
Net profit before tax
Equity
2021
411
10
360
2020
909
2
343
2021
411
10
360
Consolidated
Net profit before tax
Equity
2021
(336)
(9)
(295)
2020
(744)
(1)
(280)
2021
(336)
(9)
(295)
2020
909
2
343
2020
(744)
(1)
(280)
77
Integrated Research and its controlled entities • Annual Report 2021 Note 24. Financial instruments (cont.)
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 addition to the above, there is also an A$34.9 million (2021: A$38.6 million) intercompany receivable in the parent
entity at 30 June, denominated in US dollars, that eliminates on consolidation. The gain or loss on revaluation of the
intercompany balance to Australian dollars is not eliminated and is therefore carried through to the consolidated profit
and loss. A 10% decrease in the Australian dollar against the US dollar would result in a A$3.8 million (2021: A$4.3 million)
increase to net profit before tax and equity, whilst a 10% increase would result in a A$3.2 million (2020: A$3.5 million)
decrease to net profit before tax and equity.
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, the United Kingdom, Germany and
Singapore. 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 United
States Dollar, UK Sterling, Euro and Singapore Dollar each.
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, UK Sterling and the Euro.
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
Average
Exchange Rate
Foreign Currency
Contract Value
Fair Value
2021
2020
2021
FC’000
2020
FC’000
2021
A$’000
2020
A$’000
2021
A$’000
2020
A$’000
0.72
0.76
0.78
0.78
-
-
-
0.68
0.68
0.68
0.68
0.61
0.60
0.55
4,000
4,250
2,750
1,700
1,500
2,000
2,500
2,000
5,572
3,620
2,194
1,935
6,296
2,918
3,677
2,924
-
-
-
50
50
50
-
-
-
83
83
92
233
(50)
(75)
(68)
-
-
-
40
43
(24)
(1)
(19)
-
-
-
(1)
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
Sell Sterling
Less than 3 months
78
Integrated Research and its controlled entities • Annual Report 2021Financial statements
Note 24. Financial instruments (cont.)
These hedge assets and liabilities are classified as a level 2 fair value measurement, being derived from inputs provided
from financial institutions, rather than quoted prices that are observable for the asset either directly (i.e. as prices) or
indirectly (i.e. derived from prices). The fair value measurement of the over the counter forward contact would not qualify
as Level 1 as there is not a quoted price for the actual contract, even though data used to value the contract may be
derived entirely from active foreign-exchange and interest-rate market.
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.
The largest single counterparty balance with any one customer at 30 June 2021 was $8.0 million (2020: $12.1 million).
Ongoing credit evaluation is performed on the financial condition of accounts.
The Company has a program available to sell selected account receivable balances to a third party without recourse.
The purpose of the program is to manage credit risk and improve working capital. During the year ended 30 June 2021
no debtors were sold. During the previous financial year $8.5 million debtors were sold at a cost of $861,000.
The Company continues to bear maintenance support obligations to the end customers which are carried as a liability in
the deferred revenue account of the Company’s balance sheet of $1.4 million (2020: $2.6 million).
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 18 and Note 22 for both 2021 and 2020 carry no interest obligation.
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.
For non-current trade debtors Integrated Research has considered a discount rate to recognise the net present value
of the debtors. Level 3 inputs have been considered including corporate borrowing rates, size of the customer and
jurisdiction of the customer. A discounted cashflow model was used to derive the fair value. The range of discount rates
was between 3.5% to 5.5%. The carrying value of non-current trade debtors for 2020 and 2021 of the consolidated
entity was a reasonable approximation of their fair value.
79
Integrated Research and its controlled entities • Annual Report 2021 Note 25. Consolidated entities
Parent entity:
Integrated Research Limited
Subsidiaries of Integrated Research Limited:
Integrated Research Inc
Integrated Research Singapore Pte Limited
Integrated Research UK Limited
Subsidiaries of Integrated Research UK Limited:
Country of
incorporation
Ownership interest
2021
2020
Australia
USA
Singapore
UK
100%
100%
100%
100%
100%
100%
Integrated Research Germany GmbH
Germany
100%
100%
Note 26. Reconciliation of cash flows from operating activities
In thousands of AUD
Profit for the year
Depreciation and amortisation
Provision for expected credit loss
Interest received
Interest paid
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
Consolidated
2021
7,935
13,427
(881)
(1,440)
602
824
672
7,741
(408)
(248)
(32)
(5,789)
(2,066)
594
145
2020
24,054
12,058
800
(992)
386
671
(558)
(14,485)
40
(11,443)
416
11,393
554
613
645
21,076
24,152
80
Integrated Research and its controlled entities • Annual Report 2021Financial statements Note 27. Key management personnel disclosures
Key management personnel compensation
The key management personnel compensation are as follows:
In thousands of AUD
Short-term benefits
Post-employment benefits
Long term benefit
Equity compensation benefits
Termination benefits
Consolidated
2021
2020
2,001,568
2,379,433
9,783
113,855
291,491
237,500
112,460
32,044
328,554
-
2,654,197
2,852,491
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.
Note 28. Related parties
At 30 June 2021 Mr Steve Killelea, the founder of IR, owned either directly or indirectly 30.3% of the Company
(2020: 39.0%). A related entity of Mr Killelea provided consulting services totaling $100,000 in the year ended
30 June 2021 (2020: $100,000).
Note 29. Parent entity disclosures
Financial Position
In thousands of AUD
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
Parent Entity
2021
2020
61,103
31,785
92,888
15,777
12,218
27,995
64,893
1,667
5,073
-
58,153
64,893
64,391
30,424
94,815
19,383
11,498
30,881
63,934
1,667
4,249
-
58,018
63,934
81
Integrated Research and its controlled entities • Annual Report 2021
Note 29. Parent entity disclosures (cont.)
Financial Performance
In thousands of AUD
Profit for the year
Other comprehensive income
Total comprehensive income
Investments in subsidiaries are included at cost.
Parent Entity
2021
6,271
-
6,271
2020
21,251
51
21,302
Note 30. Subsequent events
There has been no transaction or event of a material or unusual nature that 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 Company, the results of those operations, or the state of affairs of the Company, in
future financial years.
82
Integrated Research and its controlled entities • Annual Report 2021Financial statements 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 2021
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 2021 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 2021.
This declaration is made in accordance with a resolution of the Directors.
Dated at North Sydney this 19th day of August 2021.
Peter Lloyd
Chairman
John Ruthven
Managing Director and
Chief Executive Officer
83
Integrated Research and its controlled entities • Annual Report 2021 84
Integrated Research and its controlled entities • Annual Report 2021 Integrated Research and its controlled entities • Annual Report 2021
85
86
Integrated Research and its controlled entities • Annual Report 2021
Integrated Research and its controlled entities • Annual Report 2021
87
88
Integrated Research and its controlled entities • Annual Report 2021
Integrated Research and its controlled entities • Annual Report 2021
89
90
Integrated Research and its controlled entities • Annual Report 2021
ASX additional information
Shareholder information
Analysis of numbers of equity security holders by size of holding as at September 2021
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
1,694
2,636
1,096
1,484
93
7,003
-
-
-
-
-
-
-
14
10
9
2
35
Fully Paid Ordinary Shares (Total)
Twenty largest security holders of quoted equity securities as of 10 September 2021.
Rank Name
1
2
3
4
5
6
7
8
9
10
11
STEPHEN JOHN KILLELEA
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NATIONAL NOMINEES LIMITED
ANDREW RHYS RUTHERFORD
BNP PARIBAS NOMINEES PTY LTD
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