2024 Annual report
2024 Annual Report
Contents
2
Financial Update
4
Chairman’s and CEO’s Letter
9
About IR
10 Directors’ Report
20 Remuneration Report (audited)
34 Corporate Governance Statement
41 Consolidated Statement of Comprehensive Income
42 Consolidated Statement of Financial Position
43 Consolidated Statement of Changes in Equity
44 Consolidated Statement of Cash Flows
45 Notes to the Financial Report
71 Consolidated Entity Disclosure Statement
72 Directors’ Declaration
73 Auditor’s Independence Declaration
74 Independent Auditor’s Report
79 Shareholder Information
81 Corporate Directory
1
Annual Report 2024
Financial Update (A$M)
Revenue
EBITDA
19%
942%
103%
5%
NPAT
(Excl impairment)*
Cash Receipts
from Customers
Jun-23
Jun-24
Jun-23
Jun-24
Jun-23
Jun-24
Jun-23
Jun-24
69.8
2.6
83.3
27.1
12.1
76.3
24.6
72.4
* Jun-23 NPAT excludes $31.8M impairment of goodwill and intangible assets.
2
Integrated Research Limited
6%
72%
Net Operating
Cashflow
Net Cash
Jun-23
Jun-24
Jun-23
Jun-24
13.8
18.6
13.0
31.9
3
Annual Report 2024
Dear Shareholders,
On behalf of the Board, we extend our sincere
appreciation for your continued support of
Integrated Research Ltd (IR).
Over the past year, our company has delivered
a significant turnaround, and we are embarking
on a fresh phase. We are excited to share the key
highlights and our direction for the future.
Chairman’s and
CEO’s Letter
John Ruthven
Peter Lloyd
4
Integrated Research Limited
Financial Performance Summary
We are pleased to report strong financial and
operational results for FY24, reflecting solid execution
across our business.
The Total Contract Value (TCV) signed during the period
reached $83.9 million, a 22% increase over the prior
corresponding period. Group revenue increased by 19%
to $83.3 million. Contributing to this result was a strong
renewals book, new business growth in the Americas,
improved sales discipline and good demand for our
Infrastructure and Transact solutions.
Total expenses were significantly reduced by 44% to
$58.0 million, primarily due to rightsizing operations,
and the absence of the $31.8 million impairment
charge recorded in the prior year.
Revenue growth and expense control resulted in
a substantial increase in net profit after tax, up to
$27.1 million, from a loss in the prior year.
Our financial position strengthened considerably,
with cash at bank increasing by 72% to $31.9 million
as of 30 June 2024, as a direct result of improved
operational efficiency, cost management, and
disciplined cash collections.
Looking through a product lens, Transact and
Infrastructure products had a very strong year, with
Infrastructure revenue rising 71% and Transact up
52%. This was on the back of strong renewals and
multi-year license deals ranging from an average of
three to five years. By contrast, Collaborate revenue
dropped 11% as the market continued its shift to
cloud and hybrid solutions, impacting demand for
on-premises tools. Notably, Collaborate net revenue
retention (NRR) in constant currency improved to 86%,
up from 79% in the prior year. This reflects efforts to
retain and win larger customers, operating complex
communications eco-systems.
Taking a regional view, the Americas delivered a
standout performance with US$39.1 million in revenue,
up 39% from last year, driven by large contract
renewals, new business and growth across all product
lines. Asia Pacific, revenue declined 8%, as growth
in Transact and Infrastructure was outweighed by
underperformance in Collaborate. Europe saw a
28% revenue drop, where strong performance in
Collaborate was offset by weaker results in Transact and
Infrastructure.
The Board has declared a final dividend of $0.02 per
share, fully franked, reflecting our commitment to
delivering value to our shareholders, whilst maintaining
a solid balance sheet to support our working capital
requirements and pursue current and future growth
opportunities.
Growth Strategy
Our improved financial position provides a platform to
face into some of the Company’s headwinds, as well as
take advantage of opportunities. Across our product
portfolio we make the following summary observations;
a. NonStop is a highly cash generative but mature
business
b. Transact is a small solid business in which we are yet
to fully leverage our position
c. Collaborate churn has slowed; however, we expect
it to continue
5
Annual Report 2024
Our growth strategy is product-led and focuses on
retention and expansion of our existing product lines,
and net new product development.
We are making modest investments in our existing
products for both retention and growth. This includes
features to retain NonStop customers, developments
to expand our Transact product line beyond card
payments and enhancements to our Collaborate
solutions to support customers’ cloud migration journey.
We are also investing in net new products to create
additional revenue streams, organically with IR Labs (an
internal incubation engine), and inorganically by looking
for M&A opportunities.
We have undertaken substantial organisational
changes to enable and support our product-led growth
strategy. This has included significant changes in
senior leadership - both our CEO and CFO; the launch
of IR Labs and streamlining to a single global sales
organisation under a globally experienced executive,
as well as changes to the board.
CEO Transition
On 7 August, the Board announced the appointment of
Ian Lowe as our new CEO, effective 1 October 2024. Ian
brings extensive experience across a range of sectors,
and a proven track record in leading high-growth,
product-led technology businesses. We sought a leader
outside our current product areas to help us find net
new sources of revenue growth. We are confident that
his leadership will be instrumental in guiding IR through
its next exciting phase.
John Ruthven, who has served as our CEO with
dedication and distinction, is continuing in his role
through the first quarter of FY25, ensuring a smooth
and orderly handover to Ian. We extend our deepest
gratitude to John for his significant contributions over
the past five years, particularly for the FY24 result and
positioning the Company for future success.
Capital Management
Our improved financial position gives us optionality
for capital deployment. We are developing a capital
management framework to guide our deployment
of capital across investments to retain and grow our
customer base, diversify organic revenue, pursue
targeted M&A opportunities, and deliver shareholder
returns.
We will discuss the framework in more detail at our
upcoming AGM.
Looking Ahead
Our strong financial position and growth strategy
underpins our excitement and optimism for the
company’s future. But our new initiatives will take time
to deliver and until then we are influenced by current
dynamics.
We anticipate a mixed outlook for FY25, with a softer
renewals book compared to the prior year, particularly
skewed towards the second half of the year and
modestly skewed to our Transact and Infrastructure
clients. We expect Collaborate churn to persist as some
clients migrate to a full SaaS environment.
To offset this, our new business and upsell pipeline
is strong, with a particular focus on targeting
larger enterprise customers across all products and
geographies which derive substantial value from our
products.
In closing, we are confident that the strategic initiatives
and leadership changes we have put in place will pave
the way for continued growth and success. We remain
committed to delivering positive outcomes for our
shareholders, customers, and employees.
Thank you for your ongoing support.
Peter Lloyd
John Ruthven
Chairman
Chief Executive Officer
6
Integrated Research Limited
create great when
it matters most
7
Annual Report 2024
connect the dots to
ensure technology
delivers on its promise
8
Integrated Research Limited
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 Prognosis platform, enabling a deeper level of insight to turn real-time data into
real-time intelligence.
These solutions enable performance management, analytics, and business
insights, and are used by many of the world’s largest organizations 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.
Our mission is to connect the dots to ensure technology delivers on its promise.
Collaborate
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.
Transact
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.
Infrastructure
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.
9
Annual Report 2024
Directors’ Report
10
Integrated Research Limited
The Directors present their report together with the Financial Report of Integrated Research Limited (“the consolidated
entity” or “Integrated Research”), being the Company and its controlled entities, for the year ended 30 June 2024 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 52 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 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. 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 ratably over the service agreement. Revenue from
professional services and testing solution services is recognised over the period the services are delivered.
Review and results of operations
Overview
The Company achieved an annual profit after tax of $27.1 million. This represents a significant increase on the prior
year as a result of a 19% increase in Revenue to $83.3 million, together with a 44% decrease in expenses, inclusive of
a non cash asset impairment expense in the prior year. This has also helped the Company increase its cash balance
by 72% and trade & other receivables by 16%. The improvement in revenue performance was the consequence
of a stronger renewal book and a higher win rate. The first and second halves of the financial year were relatively
consistent period for sales, with new business sales stronger in the second half, though lower than the preceding year.
Pleasingly our largest market in the Americas rebounded well and underpinned the revenue result, with 39% growth
on prior year, where Asia-Pacific and Europe were down, 8% and 28%, respectively. Demand generation and sales
execution risk continued to be a focus for management.
The Company incurred currency losses of $0.9 million (prior year gain of $0.9 million) and benefited from other income
of $0.1 million (prior year $0.5 million). These amounts are included in other gains and losses of the Consolidated
Statement of Comprehensive Income.
Revenue
The following table presents Company revenues for each of the relevant product groups:
In thousands of AUD
2024
2023
% Change
Collaborate
35,154
39,368
(11%)
Infrastructure
25,129
14,667
71%
Transact
18,434
12,127
52%
Professional services
4,575
3,666
25%
Total revenue
83,292
69,828
19%
Collaborate revenue of $35.2 million, decreased by 11% over the prior year. The Collaborate market continues to have
significant change with customers moving toward cloud and hybrid environments and reducing their footprint of on-
premise collaboration tools. This has increased the risk of churn on the Company’s on premise collaborate solution.
The constant currency net revenue retention rate for Collaborate was 86% (2023: 79%). Licence fees for Collaborate
were $21.6 million, down 12% over the prior year. SaaS revenues for Collaborate were $2.2 million, down 15% over the
prior year, noting that the revenue from cloud-based products is recognised over time.
Infrastructure revenue of $25.1 million, increased by 71% over the prior year. Transact revenue of $18.4 million,
increased by 52% over the prior year. Improvement in Infrastructure and Transact revenue performance was on
account of a stronger renewal book and a higher win rate. Licence transactions sold during the year were closed on a
multi-year term basis with maturities ranging from an average of three to five years.
The following table presents Company revenues for each of the relevant geographic segments in underlying
currencies:
2024
2023
% Change
Asia Pacific (A$’000)
15,830
17,219
(8%)
Americas (USD’000)
39,138
28,113
39%
Europe (£’000)
4,128
5,755
(28%)
Asia Pacific revenue of $15.8 million, was down 8% over the prior year. The region achieved growth across Transact
and Infrastructure however this was outweighed by underperformance in Collaborate. Asia Pacific added 10 new
customers over the course of the year, with 11 exiting.
Americas revenue of US$39.1 million, was up 39% over the prior year. The region experienced large contract
renewals and revenue improvement to prior year across all product lines, with Transact and Infrastructure strongly
outperforming and encouraging new wins in Collaborate. In FY24, the Americas added 12 new customers with 45
smaller-sized customers exiting.
Europe revenue of £4.1 million, was down 28% over the prior year with strong performance in Collaborate being
overshadowed by lower Transact and Infrastructure results. Europe added 1 new customer over the course of the year,
with 14 exiting.
The net customer churn was driven by Collaborate, consistent with the trend in recent years. This is a perpetuation of
the competitive environment and is one driver of the Company’s strategic focus on larger, diversified clients with an
ideal profile that resonates with the product offering.
11
Annual Report 2024
Expenses
The following table presents the Company’s cost base compared to the preceding year:
In thousands of AUD
2024
2023
% Change
Product and technology expenses
12,779
23,695
(46%)
Sales, professional services and marketing expenses
38,679
40,892
(5%)
General and administration expenses
6,493
6,312
3%
Impairment expenses
–
31,778
(100%)
Total expenses
57,951
102,677
(44%)
Total expenses were down 44% to $58.0 million. The significant reduction in expense was primarily a result of a large
reduction in product and technology expenses, reflecting a review and reset in the product development strategy
and a reduction in staff numbers, together with the $31.8m impairment expenses in the prior year of goodwill and
intangible assets as a result of a devaluing assessment of the Cash Generating Unit reflecting updated forecasts and
underlying business assumptions for new business, renewals and expenses. Total staff numbers finished the year at
142 (2023: 175).
Gross spending on product and technology expenditure represents 15% of total revenue (2023: 30%):
In thousands of AUD
2024
2023
% Change
Gross product and technology expenses
12,779
20,882
(39%)
Capitalisation of development expenses
–
(7,479)
(100%)
Amortisation of capitalised expenses
–
10,292
(100%)
Net product and technology expenses
12,779
23,695
(46%)
Gross spend as a % of revenue
15%
30%
Tax expense
Income tax was a net benefit of $0.42m for the year (2023: $0.07m) as tax expense was offset by current year and
brought forward R&D credits and recognition of previously un-recognised deferred taxes. As at 30 June 2024, the
Company has utilised all its R&D credits. Excluding brought forward R&D credits from prior years, the Company’s
effective tax rate would have been 22.2%.
Shareholder returns
Returns to shareholders were as follows:
2024
2023
2022
Net profit/(loss) ($’000)
27,130
(29,226)
1,545
Basic EPS (cents)
15.57
(16.90)
0.90
Dividends declared per share (cents)
2.00
Nil
Nil
Dividend franking percentage
100%
N/A
N/A
Return on equity
37%
(40%)
2%
Directors’ Report
12
Integrated Research Limited
Strategy and Priorities
IR progressed its turnaround in FY24 in response to the ongoing
evolution of our customer and competitive landscape.
We make the following observations
regarding the FY25 trading year:
–
Renewals book is softer to the prior
year and is weighted towards H2 FY25.
Renewals skewed modestly towards
Transact and Infrastructure clients;
–
Collaborate churn expected to persist as
clients migrate to a full SaaS environment;
–
Current new business & upsell pipeline
is up on pcp, weighted to Collaborate.
Increased focus on targeting larger
enterprise customers across all products
and geographies; and
–
The effective tax rate is expected to
normalise in FY25 given brought forward
R&D tax credits utilized in FY24.
The material risks to delivery on our
priorities continue to be:
–
Vendors enhancing their in-built tools to
narrow the competitive advantage of the
IR offer;
–
Changing customer requirements,
particularly a move to more homogeneous
environments;
–
Inflationary cost pressures both in the IR
supply chain (wages growth, supplier price
increases), and for customers resulting
in an increase in competitive pricing in
renewals and new business;
–
Sales capability given the tight labour
market, highly technical skillset and
time to productivity to effectively build
a pipeline of opportunities and convert
these to commercial deals; and
–
Product capability, given the tight labour
market, highly technical skillset and time
to productivity to ensure our product
offering and value proposition are relevant
in the market.
With core markets of Collaborate and
Transact continuing to reflect ongoing
structural market changes and our large
enterprise customers who are the core
of our customer base, making strategic
decisions around on-premise, hybrid and
SaaS infrastructure, it is clear that IR requires
product led growth and the pursuit of new
revenue streams, to drive longevity and
shareholder value.
A core focus in FY24 was the continued
stabilisation and consolidation of our key
business fundamentals. We focused on
maximising sales execution in a year of
strong renewals and particularly in the
Americas as our largest region, revitalised
our core product offering to customers via
a major software release, focused on market
and competitive landscape assessment and
innovating product strategy, built strong
working capital and made organisational
re-alignment and key hiring decisions to
drive product led growth of the business
forward in a sustainable way.
Our balance sheet has no debt and the
cash balance is strong, allowing us to pursue
opportunities for product led growth.
During FY25 our key priorities include:
–
Refocus go-to-market and customer
support on a narrow set of high-value,
ideal customers to optimize growth and
reduce churn;
–
Target product and engineering on fewer,
high-yield product extensions, for product-
led growth in existing markets;
–
Restructure the organization in support
of these priorities, and yield cash and
resources for growth; and
–
Implement capital management plan
to invest cash in innovation to diversify
organic revenue, targeted M&A for fresh
inorganic growth and shareholder returns.
13
Annual Report 2024
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
Peter was appointed Director in
July 2010 and elected Chairman
in March 2021. He has over 45
years’ experience in computing
technology, having worked for both
multinational computer hardware
and software providers. Peter’s
experience in global markets
includes executive management
roles leading the Asia Pacific
region as well as several stints in
the U.S. For 35 years, Peter was
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 2024 Annual General
Meeting.
John Ruthven
B.Ed, MAICD
Managing Director1 and
Chief Executive Officer
John joined IR in July 2019 as the
Company’s Chief Executive Officer
and was appointed as Managing
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
25 years’ experience working in the
technology industry with a proven
track record of leadership and
delivering strong profitable growth.
Prior to joining IR, Mr Ruthven was
the Operating Officer – Global
Sales at TechnologyOne (ASX:
TNE). Prior to that he was President
& Managing Director ANZ for SAP,
SVP International Sales at Zuora
Inc, and various senior positions at
CA Technologies and Computer
Associates Inc. John has extensive
international experience in the USA,
Europe and Asia Pacific regions.
1
Mr Ruthven resigned from the
Managing Director position after the
end of the financial year, with effect
from 17 July 2024.
Michael Hitz
BE Hons
Independent Non-Executive
Director
Michael was appointed a
Director in October 2023.
His career spans roles from
engineering communications
infrastructure in energy, mining and
telecommunications, to corporate
strategy, mergers and acquisitions
and investing. Over the past five
years Michael has worked with a
leading pan-Asian fund to invest in
public companies pursuing growth
in payments, telecommunications
and energy. Prior to this, Michael
was a Partner and Managing
Director for The Boston Consulting
Group, where he held roles including
leading the technology, media and
telecommunications business.
Michael is a Director of The Institute
for Economics and Peace Limited.
Michael’s current term will expire
no later than the close of the 2026
Annual General Meeting.
Michael is currently Chair of
the Company’s Technology &
Innovation Committee.
Directors’ Report
14
Integrated Research Limited
Mark Brayan
BSurv Hons, MBA
Independent Non-Executive
Director
Mark was elected a Director in
November 2023. Mark has had
an extensive career as a Chief
Executive Officer and Managing
Director. He has run several
Australian technology companies,
public and private, in various
domains including communications
and artificial intelligence. Mark
was previously the CEO of Soprano
Design Pty Ltd, CEO and Managing
Director of Appen Limited
(ASX:APX), CEO and Managing
Director of MineSite Technologies
Pty Limited, and CEO and Managing
Director of Integrated Research
Limited (ASX:IRI). Mark is currently
Chair and Non-Executive Director of
SenSen Networks Limited (ASX:SNS),
and Chair and Non-Executive
Director of Shorthand Pty Ltd.
Mark has a Masters of Business
Administration (MBA) from the
Australian Graduate School of
Management (AGSM) and a First
Class Honours Bachelor of Surveying
from the University of New South
Wales. Mark’s current term will
expire no later than the close of the
2026 Annual General Meeting.
Mark is currently Chair of the
Company’s Nomination &
Remuneration Committee.
Kate Greenhill
BEc, FCA, GAICD
Independent Non-Executive
Director
Kate was appointed a Director in
April 2024 and is a fellow of the
Institute of Chartered Accountants
in Australia and a Graduate of the
Australian Institute of Company
Directors. Kate has over 25
years’ experience in the financial
services industry with extensive
knowledge of finance and risk. As
a former Partner with PwC, Kate
has worked In both Australia and
the UK providing assurance and
advisory services to clients. She has
experience as Chair of Audit, Risk &
Compliance Committees.
Kate is currently a Director of
Australian Ethical Investment
Limited, an ASX Listed company.
Kate Is also a Director of Intersect
Australia Limited, Australian Ethical
Superannuation Pty Limited and
the Australian Ethical Foundation
Limited. Kate’s current term will
expire no later than the close of the
2024 Annual General Meeting.
Kate is currently Chair of the
Company’s Audit & Risk Committee.
15
Annual Report 2024
Directors’ Report
Officers of the Company
Will Witherow
B.A., J.D.
General Counsel and Company Secretary
Will joined IR in July 2017, based in the Company’s Denver, Colorado office. Mr.
Witherow was promoted to Head of Legal and Compliance in 2019 and subsequently
relocated to IR’s head office in Sydney, overseeing the provision of legal services for
the Company’s global operations and serving as IR’s Data Privacy Officer. Will was
appointed IR’s General Counsel and Company Secretary in April 2022. Will is a qualified
lawyer, holding a B.A. in Political Science and International Relations, and a J.D. in Law,
along with being a Certified Information Privacy Professional through the International
Association of Privacy Professionals. Prior to joining IR, Will gained experience in the
software industry with global organizations, including Oracle and Deloitte.
Christian Shaw
B.Bus CPA
Chief Financial Officer
Christian joined IR in January 2024 and assumed the role as Chief Financial Officer
on 1 March 2024. He is responsible for Group Financials, Finance Planning and
Analysis, People and Culture and Legal teams. He has three decades of listed and
private company experience as a senior finance and corporate services executive
from a range of industries, including technology, minerals processing, financial
services, telecommunications and biotechnology. Christian possesses a strong
operational, commercial and strategic focus and has been the former CFO at AJG
Australia, Multicom Resources, Unith Limited, Moko Social Media Limited and iCash
Payment Systems Limited. He graduated with a Bachelor of Business from the
University of Technology Sydney and is CPA qualified.
Resigning and Retiring Directors and Officers during the year
Cathy Aston B.Ec, M. Comm, SF Fin, GAICD
Independent Non-Executive Director
Cathy joined IR in April 2022 and retired as a Non-Executive Director and Chair of Audit & Risk Committees in March
2024.
Allan Brackin BAppSc
Independent Non-Executive Director
Alan joined IR in February 2021 and retired as a Non-Executive Director and Chair of the Nomination & Remuneration
Committee in September 2023.
Anne Myers MBA, FAICD
Independent Non-Executive Director
Anne joined IR in July 2018 and retired as a Non-Executive Director and Chair of the Technology and Innovation
Committee in November 2023.
James Scott BEng Hons, GAICD, FIEAust CPEng EngExec
Independent Non-Executive Director
James joined IR in May 2021 and retired as a Non-Executive Director in January 2024.
Matthew Walton B.Sc., MBA, CPA
Chief Financial Officer
Matthew joined IR in July 2022 as interim CFO and resigned in February 2024.
16
Integrated Research Limited
Results
Profit for the year was $27.1 million (2023: loss $29.2m).
Dividends
There were no dividends paid or declared by the Company during the year. On 20 August 2024, the Directors
declared a fully franked final dividend for the year ended 30 June 2024 of 2.0 cents per ordinary share and will be
paid on 15 October 2024 with a record date of 03 September 2024.
Events subsequent to reporting date
On 16 July 2024, IR announced plans for a CEO transition and that John Ruthven would step down. Additionally,
Mr. Ruthven resigned from the Managing Director position with effect from 17 July 2024. Subsequently, on 7 August
2024, IR announced the appointment of Ian Lowe, as CEO of IR with an effective date of 1 October 2024.
Other than Dividend and events disclosed above, there has been no other 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 14 to 15.
Details of the company secretary and his qualifications are set out on page 16.
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.
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 2024, and the numbers of meetings attended by each Director were:
Board Meetings
Audit & Risk
Committee Meetings
Nomination &
Remuneration
Committee Meetings
Technology &
Innovation Meetings
A
B
A
B
A
B
A
B
Peter Lloyd
20
21
4
4
5
5
1
1
John Ruthven
21
21
–
–
–
–
–
–
Cathy Aston (until March 2024)
17
17
3
3
–
–
–
–
Allan Brackin (until September 2023)
5
5
1
1
1
1
–
–
Anne Myers (until November 2023)
9
9
–
–
–
–
–
–
James Scott (until January 2024)
14
15
–
–
2
2
–
–
Michael Hitz (from October 2023)
13
13
1
1
–
–
1
1
Mark Brayan (from November 2023)
11
11
–
–
3
3
1
1
Kate Greenhill (from April 2024)
4
4
1
1
1
1
–
–
A.
Number of meetings attended.
B.
Number of meetings held during the time the Directors held office or was a member of the 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.
17
Annual Report 2024
Directors’ interests
The relevant interest of each Director in the shares, options or performance rights over ordinary shares issued by the
companies in the consolidated entity and other relevant bodies corporate, as notified by the Directors to the Australian
Securities Exchange in accordance with S205G(1) of the Corporations Act 2001, at the date of this report is as follows:
Ordinary shares in Integrated Research
Options
Performance
rights
Directly held
Beneficially
held
Total
Number of
options
Number of
rights
Peter Lloyd
–
51,263
51,263
–
–
John Ruthven
99,593
–
99,593
655,809
700,000
Cathy Aston (until Mar-24)1
37,500
–
37,500
–
–
Allan Brackin (until Sep-23)1
–
150,000
150,000
–
–
Anne Myers (until Nov-23)1
21,500
–
21,500
–
–
James Scott (until Jan-24)1
–
74,588
74,588
–
–
Mark Brayan
–
260,000
260,000
Kate Greenhill
–
–
–
–
–
Michael Hitz
–
–
–
–
–
1.
Total Values represents holding on last day as Director.
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:
Number of
performance
rights granted
Performance
hurdle
Exercise price
Expiry date
Executive Officers
Christian Shaw
256,410
Yes
Nil
Aug 2026
The performance rights were granted under the Integrated Research Limited Equity Plan Rules (established
April 2023). Apart from interest in performance rights disclosed above, Christian Shaw did not have any other interest
in shares, options or performance rights over ordinary shares issued by the companies in the consolidated entity and
other relevant bodies corporate at the date of this report.
Unissued shares under options and performance rights
Unissued ordinary shares of Integrated Research Limited under options and performance rights at the date of this
report are as follows:
Expiry date
Exercise price
Employee LTI
Executive LTI
Options
Total
Aug 2024
Nil
6,734
–
–
6,734
Sep 2024
Nil
166,225
–
–
166,225
Aug 2025
Nil
58,400
1,589,012
–
1,647,412
Sep 2025
Nil
2,348,661
–
–
2,348,661
Aug 2026
Nil
–
1,905,130
–
1,905,130
Sep 2026
Nil
4,779,169
–
–
4,779,169
Aug 2026
$1.98
–
–
1,147,332
1,147,332
Total performance rights and options
7,359,189
3,494,142
1,147,332
12,000,663
Performance rights and options do not entitle the holder to participate in any share issues of the Company.
Performance rights granted to the Company’s employees under the Integrated Research Equity Plan Rules have a
three year vesting period including a service and performance condition, the details of the performance conditions
for executive KMP are provided in the Remuneration Report. The performance conditions also apply to other
Company executives.
Directors’ Report
18
Integrated Research Limited
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, 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 20 to 33.
Corporate governance
A statement describing the Company’s main corporate governance practices in place throughout the financial year is
on pages 34 to 39.
Non-audit services
During the year Ernst & Young, the Company’s auditor, has not performed other services in addition to their statutory
duties as disclosed in Note 7.
A copy of the auditors’ independence declaration as required under Section 307C of the Corporations Act is on
page 73 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 Report and the Directors’ Report have been rounded off to the nearest thousand
dollars, unless otherwise stated.
This report is made in accordance with a resolution of the Directors.
Peter Lloyd
Chairman
Dated at North Sydney 20 August 2024
19
Annual Report 2024
Introduction from the Chair of the Nomination & Remuneration Committee
Dear Shareholder,
On behalf of the Board, I am pleased to present our Remuneration Report for FY24. This report describes our
remuneration principles and framework for Directors and executives. It sets out the links between our remuneration
framework and business strategy, performance and reward, and shareholder value creation.
Remuneration framework and objectives
Our remuneration framework is underpinned by our strategy. For FY24, this included:
–
Focusing on growing and consolidating our footprint in key geographical markets,
–
Building strong and lasting alliances, and
–
Targeting innovation and research and development activities.
The remuneration framework is based on industry benchmarks, designed to attract and retain suitably qualified
candidates, reward the achievement of strategic objectives, and motivate and reward shareholder value.
FY24’s objectives included a strong focus on Pro forma EBITDA and cash generation to build a platform for growth
investments in FY25 and beyond.
FY24 performance objectives and outcomes
The FY24 short-term incentive (STI) was subject to 100% achievement of financial performance measures including
Total Contract Value, Pro forma EBITDA and Cashflow. Targets were set for challenging full-year results combined with
a vesting scale that would appropriately reward for outperformance against objectives. All executive STI payments
were subject to achievement of an Expense Gate. Nil STI was payable if the Expense Gate was not achieved.
The long-term incentive (LTI) framework for executives in FY24 is consistent with the FY23 LTI framework, with vesting of
Performance Rights subject to challenging share price hurdles that are tested annually over a 3-year performance period.
FY24 performance included some notable improvements on FY23, including:
–
Total contract value growth of 22%
–
Increased average contract length to 3.1 years compared to 3 years in FY23
–
Revenue growth of 19%
–
EBITDA1 (excluding impairment) growth of 103%
–
Pro forma EBITDA1 reduction of 5%
–
Cash growth by 72%
1.
The definitions for EBITDA and Pro forma EBITDA are provided later in this report in section 3
In addition, we continue to retain a strong balance sheet with no borrowings and improved cash balances compared to FY23.
Further details of STI and LTI objectives are in the tables below.
CEO and MD remuneration
The fixed remuneration for the CEO and MD was reduced by 4% in FY24 to offset travel expenses incurred due to relocation.
The STI outcome for the CEO and MD was 87.5% of STI payment opportunity. This was based on achievement of the
Expense target, 99% achievement of the TCV target, 133% of the Pro forma EBITDA target and 155% of the Cashflow
target. Under the FY24 STI plan, no payment was due for the 99% TCV target achievement. However, the Board
exercised its discretion to reward the CEO, and senior executives, with a 75% payment given the small shortfall to
target and the high TCV growth on FY23 of 22%. Further details are in the tables below.
LTI granted to the CEO and MD had the following active plans during FY24:
–
Performance Rights under the Company’s FY21 LTI plan did not meet Total Shareholder Return (TSR) requirements. As a
result, such Performance Rights lapsed within FY24, and no Performance Rights vested in FY24 for the CEO and MD.
–
The third and final tranche of share Options granted to the CEO and MD under the Company’s FY22 LTI plan
vested, with a total of 655,809 Options being available for exercise with an exercise price of A$1.98 per Option.
The expiry date for all Options is 31 August 2026.
–
Performance Rights with annual share price hurdles granted to the CEO and MD in FY23 were tested against the
first-year share price hurdle of $0.80, and the hurdle was not met. However, such rights are available for re-testing
against share price hurdles in subsequent years, as provided in section 2.3 below.
On behalf of the Board, we recommend this report to you and welcome any feedback you may have.
Mark Brayan
Chair of the Nomination & Remuneration Committee
Remuneration Report (audited)
20
Integrated Research Limited
1.
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:
1.1. Executive KMP
As of the current year, the Nomination & Remuneration Committee (Committee) assessed the Executive KMP to include
the following executive roles.
Executive KMP
Role
Appointed
John Ruthven1
Chief Executive Officer and Managing
Director
July 2019 as Chief Executive Officer
September 2019 as Managing Director
Matthew Walton2
Chief Financial Officer
July 2022 (ceased 29 February 2024)
Christian Shaw3
Chief Financial Officer
March 2024
Notes
1.
Resigned as Managing Director effective 17 July 2024
2.
Interim Appointment of CFO
3.
Joined the company in January 2024 but assumed role of CFO March 2024
1.2. Independent Non‑Executive Directors
Directors
Role
Appointed
Peter Lloyd
Independent Non-Executive Director and
Chairman
Director from July 2010
Chairman from March 2021
Mark Brayan
Independent Non-Executive Director
November 2023
Kate Greenhill
Independent Non-Executive Director
April 2024
Michael Hitz
Independent Non-Executive Director
October 2023
Cathy Aston
Independent Non-Executive Director
April 2022 (ceased 31 March 2024)
Allan Brackin
Independent Non-Executive Director
February 2021 (ceased 30 September 2023)
Anne Myers
Independent Non-Executive Director
July 2018 (ceased 22 November 2023)
James Scott
Independent Non-Executive Director
May 2021 (ceased 30 January 2024)
2.
Executive remuneration
2.1. Remuneration framework
The remuneration framework set out below considers the capability and experience of the Executive KMP, their ability
to control business performance, and the Company’s performance.
Fixed remuneration
Short-term incentive (STI)
Long-term incentive (LTI)
Purpose
To ensure that fixed
remuneration is competitive in
the marketplace to attract and
retain executives.
To provide focus on annual
objectives and align
remuneration outcomes with
achievement of key priorities.
To provide focus on long
-term performance and align
remuneration outcomes with
the experience of shareholders.
Delivery
Base salary plus
superannuation and any fringe
benefits.
The STI is provided as an
annual award paid in cash.
Performance measures are
set and assessed through a
balanced scorecard that vary
with position. The target levels
of performance set by the
Board are challenging and
driven by the annual budget
and longer-term strategic plan.
The LTI is provided as either
options or performance rights
over ordinary shares of the
Company that vest over 3 years
subject to performance and
service conditions. LTI awards
are granted annually. The LTI
performance measures set
by the Board are aligned with
value creation for shareholders.
Performance
period
N/A
12 months
3 years
21
Annual Report 2024
2.2. FY24 Short‑term incentive (STI)
The FY24 STI framework is described below.
Feature
Description
Participants
Executive Leadership Team, including Executive KMP
Award basis
The Committee is responsible for setting performance measures for the CEO and MD,
and for approving the measures for the other executives who report to the CEO and
MD. The performance measures for executives generally include key metrics relating to
the Company and the individual, and include financial, people, customer and strategy.
The measures are chosen as they directly align the individual executive’s reward to
the key metrics of the Company and its strategy and performance. At the end of the
performance period the Committee assesses the actual performance against the
targets set at the beginning of the financial year. A percentage of the predetermined
target opportunity for each performance measure is awarded depending on results.
The Committee recommends the award to be paid for approval by the Board. STI
awards are paid in cash.
Performance measures
Performance measures are set and assessed through a balanced scorecard that vary
with the position. The target levels of performance set by the Board are challenging
and driven by the annual budget and longer-term strategic plan. Performance
measures may include financial and non-financial measures.
The performance measures in FY24 were:
–
Total Contract Value (TCV)
–
Pro forma EBITDA
–
Cashflow
Performance period
Performance is measured over the financial year. To provide executives additional
focus and attention to deliver on key priorities for FY24, the Committee set targets for
both half-year (H1) and full-year results for each performance measure.
Scorecard operation
Each performance measure in scorecards has a vesting scale with threshold
requirements, at which 100% of the target opportunity is attained. Outcomes below
threshold requirements result in nil payments. Outcomes above threshold are paid on
a pro-rata linear basis at an uncapped effective rate.
Gateway
The STI is subject to an expense gate. The expense gate requires total actual expense
(excluding commissions) to be less than or equal to the total budget expense (excluding
commissions). In the event the expense gate is not achieved the STI payout will be nil.
Payment timing
Awards are paid following assessment of the performance measures based on audited
full-year results.
Treatment on termination
Unvested STI awards are forfeited on termination of employment.
Remuneration Report (audited)
22
Integrated Research Limited
2.3. FY24 Long‑term incentive (LTI)
The FY24 LTI framework is described below.
Feature
Description
Participants
Executive Leadership Team, including Executive KMP and excluding the CEO and MD
as the LTI was not approved at the Company's 2023 AGM.
Payment vehicle
Performance Rights which are rights to acquire ordinary shares in the Company for nil
consideration subject to achievement of vesting conditions.
Award basis
The number of Performance Rights granted to participants is calculated by dividing
the face value of the LTI opportunity for FY24 by the Company’s 10-day VWAP after
release of FY23 full-year results, being $0.39. Performance Rights are granted in three
equal tranches.
Vesting period
Performance Rights vest on 31 August 2026 (Vesting Date) subject to achievement of
service conditions and performance conditions set out below. Performance Rights that
vest are automatically exercised for shares.
Performance conditions
Vesting of Performance Rights in each tranche is subject to achievement of share price
hurdles set out below.
Tranche 1
Testing in 2024: Where the Company’s share price, calculated using the closing share
price VWAP of the Company for the ten trading days following the release of the
Company’s FY24 Financial Report is equal to or greater than A$0.80, 100% of Tranche
1 Performance Rights will vest in August 2026 if the service condition is met.
Tranche 1 Performance Rights which do not meet the Performance Condition of A$0.80
on 31 August 2024 may be carried forward for retesting against (i) the Tranche 2
Performance Condition of A$1.20 on 31 August 2025, or (ii) the Tranche 3 Performance
Condition of A$1.60 on 31 August 2026.
There is no retesting of Performance Rights after the Vesting Date.
Tranche 2
Testing in 2025: Where the Company’s share price, calculated using the closing share
price VWAP of the Company for the ten trading days following the release of the
Company’s FY25 Financial Report is equal to or greater than A$1.20, 100% of Tranche 2
Performance Rights will vest in August 2026 if the service condition is met.
Tranche 2 Performance Rights which do not meet the Performance Condition of
A$1.20 on 31 August 2025 may be carried forward for retesting against the Tranche 3
Performance Condition of A$1.60 on 31 August 2026.
There is no retesting of Performance Rights after the Vesting Date.
Tranche 3
Testing in 2026: Where the Company’s share price, calculated using the closing share
price VWAP of the Company for the ten trading days following the release of the
Company’s FY26 Financial Report is equal to or greater than A$1.60, 100% of Tranche 3
Performance Rights will vest in August 2026 if the service condition is met.
Tranche 3 Performance Rights which do not meet the Performance Condition of A$1.60
on 31 August 2026 will lapse. Similarly, any Tranche 1 or Tranche 2 Performance Rights
which have been carried forward for retesting against the Tranche 3 Performance
Condition of A$1.60 on 31 August 2026 will also lapse.
There is no retesting of Performance Rights after the Vesting Date.
Treatment on termination
Unvested Performance Rights are forfeited on cessation of employment, unless
the Performance Rights have met the performance conditions and employment is
terminated due to death, disability, or redundancy.
Change of control
In the event of a takeover or other change of control, any unvested Performance
Rights will vest at the discretion of the Board.
Malus and clawback
The awards are subject to malus considerations by the Board and in relation to serious
and material matters may be subject to a reduction or adjustment prior to exercise or
clawback. In the event of fraud, dishonesty or breach of obligations (including legal and
statutory non-compliance), the Board may take any actions to ensure that no unfair
benefit is obtained.
23
Annual Report 2024
FY23 LTI
The FY23 LTI framework is described below.
Feature
Description
Participants
Executive Leadership Team, including Executive KMP
Payment vehicle
Performance Rights which are rights to acquire ordinary shares in the Company for nil
consideration subject to achievement of vesting conditions.
Award basis
The number of Performance Rights granted to participants is calculated by dividing
the face value of the LTI opportunity for FY23 by the Company’s 10-day VWAP to
31 August 2022. The 10-day VWAP on that date was $0.50. Performance Rights are
granted in three equal tranches.
Vesting period
Performance Rights vest on 31 August 2025 (Vesting Date) subject to achievement of
service conditions and performance conditions set out below. Performance Rights that
vest are automatically exercised for shares.
Performance conditions
Vesting of Performance Rights in each tranche is subject to achievement of share
price hurdles set out below.
Tranche 1
Testing in 2023: Where the 10-day VWAP immediately prior to and including 31 August
2023 is equal to or greater than A$0.80, 100% of Tranche 1 Performance Rights will
vest in August 2025 if the service condition is met.
Outcome: Tranche 1 failed to meet the A$0.80 share price hurdle.
Tranche 1 Performance Rights which did not meet the Performance Condition of
A$0.80 on 31 August 2023 may be carried forward for retesting against (i) the
Tranche 2 Performance Condition of A$1.20 on 31 August 2024, or (ii) the Tranche 3
Performance Condition of A$1.60 on 31 August 2025.
There is no retesting of Performance Rights after the Vesting Date.
Tranche 2
Testing in 2024: Where the 10-day VWAP immediately prior to and including 31 August
2024 is equal to or greater than A$1.20, 100% of Tranche 2 Performance Rights will
vest in August 2025 if the service condition is met.
Tranche 2 Performance Rights which do not meet the Performance Condition of
A$1.20 on 31 August 2024 may be carried forward for retesting against the Tranche 3
Performance Condition of A$1.60 on 31 August 2025.
There is no retesting of Performance Rights after the Vesting Date.
Tranche 3
Testing in 2025: Where the 10-day VWAP immediately prior to and including 31 August
2025 is equal to or greater than A$1.60, 100% of Tranche 3 Performance Rights will
vest in August 2025 if the service condition is met.
Tranche 3 Performance Rights which do not meet the Performance
Condition of A$1.60 on 31 August 2025 will lapse. Similarly, any Tranche 1 or Tranche 2
Performance Rights which have been carried forward for retesting against the Tranche
3 Performance Condition of A$1.60 on 31 August 2025 will also lapse.
There is no retesting of Performance Rights after the Vesting Date.
Treatment on termination
Unvested Performance Rights are forfeited on cessation of employment, unless
the Performance Rights have met the performance conditions and employment is
terminated due to death, disability, or redundancy.
Change of control
In the event of a takeover or other change of control, any unvested Performance
Rights will vest at the discretion of the Board.
Malus and clawback
The awards are subject to malus considerations by the Board and in relation to serious
and material matters may be subject to a reduction or adjustment prior to exercise or
clawback. In the event of fraud, dishonesty or breach of obligations (including legal
and statutory non-compliance), the Board may take any actions to ensure that no
unfair benefit is obtained.
Current Status:
Tranche 1 tested in FY24 failed to meet the A$0.80 share price hurdle.
Remuneration Report (audited)
24
Integrated Research Limited
FY22 LTI
The FY22 LTI framework is described below.
Feature
Description
Participants
Executive Leadership Team, including Executive KMP
Payment vehicle
Options which are rights to acquire ordinary shares in the Company at the exercise
price of A$1.98 per option if the service conditions are met.
Award basis
Quantity issued is a percentage of executive remuneration.
Vesting period
Options vest in three equal tranches over a three year period, with tranche 1 vesting in
August 2022. All Options have an expiry date of 31 August 2026. Any Options which
are not exercised by the Expiry date will automatically lapse.
Service conditions
Exercise of Options is subject to continuous employment.
Treatment on termination
Options are forfeited on cessation of employment, unless terminated due to death,
disability, or redundancy.
Change of control
In the event of a takeover or other change of control, any unexercised Options will
exercise at the discretion of the Board.
Malus and clawback
The awards are subject to malus considerations by the Board and in relation to serious
and material matters may be subject to a reduction or adjustment prior to exercise or
clawback. In the event of fraud, dishonesty or breach of obligations (including legal
and statutory non-compliance), the Board may take any actions to ensure that no
unfair benefit is obtained.
Current Status
The final tranche of Options vested on 31 August 2024
FY21 LTI
The FY21 LTI framework is described below.
Feature
Description
Participants
Executive Leadership Team, including Executive KMP
Payment vehicle
Performance Rights which are rights to acquire ordinary shares in the Company for nil
consideration subject to achievement of vesting conditions.
Award basis
The number of Performance Rights granted to participants is calculated by dividing
the face value of the LTI opportunity by the Company’s 10-day VWAP for the ten
trading days immediately prior to and including 30 June 2020.
Vesting period
Performance Rights vest on 31 August 2023 subject to achievement of service
conditions and performance conditions.
Performance conditions
Company's relative TSR performance compared to Australian technology companies
in the S&P/ASX All Technology Index at the end of each year.
Treatment on termination
Unvested Performance Rights are forfeited on cessation of employment, unless
the Performance Rights have met the performance conditions and employment is
terminated due to death, disability, or redundancy.
Change of control
In the event of a takeover or other change of control, any unexercised Options will
exercise at the discretion of the Board.
Malus and clawback
The awards are subject to malus considerations by the Board and in relation to serious
and material matters may be subject to a reduction or adjustment prior to exercise or
clawback. In the event of fraud, dishonesty or breach of obligations (including legal
and statutory non-compliance), the Board may take any actions to ensure that no
unfair benefit is obtained.
Current Status
Performance Rights failed to meet the performance conditions and lapsed upon the
vesting date.
25
Annual Report 2024
2.4. FY24 executive remuneration opportunity
(AUD)
CEO and Managing
Director
CFO
Interim CFO
Fixed remuneration
$558,0001
$350,000
$500,000
STI opportunity (at target)2
$265,000
$100,0003
–
LTI opportunity (face value)4
–
$100,000
–
Notes
1.
Effective 1 August 2023.
2.
The STI opportunity is uncapped for stretch outcomes above target.
3.
STI opportunity on full-year basis.
4.
The CEO and MD does not participate in the FY24 LTI as the grant was not approved at the Company’s 2023 AGM.
3.
Company performance and remuneration outcomes
In considering the Company’s performance and benefits for shareholder wealth, the Committee has regard to the
following indices in respect of the current financial year and the previous three financial years:
Three‑year selected financial indices of the Company
2024
2023
2022
Total contract value ($’000)
83,869
68,499
56,650
Net cashflow before financing activities ($’000)
15,280
7,162
7,191
Pro forma EBITDA ($’000)
16,733
17,575
24,494
Dividends paid ($’000)
–
–
–
Closing share price
$0.93
$0.39
$0.42
Pro forma EBITDA decline %
(5%)
(28%)
(8%)
Executive KMP remuneration ($'000)
1,430
1,847
1,618
1,000
1,100
1,200
1,300
1,400
1,500
1,600
1,700
1,800
1,900
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
2022
2023
2024
Total contract value vs Executive KMP
remuneration
Total contract value ($’000)
Executive KMP remuneration ($'000)
1,000
1,100
1,200
1,300
1,400
1,500
1,600
1,700
1,800
1,900
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
2022
2023
2024
Net cashflow before financial activities vs
Executive KMP remuneration
Net cashflow before financing activities ($’000)
Executive KMP remuneration ($'000)
Two of the financial indices shown in the tables above are Total Contract Value (TCV) and Cashflow. 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 not aligned with overall Company performance. The main contributing factors
to reduced KMP remuneration in FY24 include the following components of CEO remuneration: one-time bonus in
FY23, FY24 LTI not approved at the 2023 AGM, and changes to the LTI plan. These items led to a reduction in variable
remuneration and particularly the value of share-based payments, in 2024 versus 2023. Whilst the pro forma
EBITDA has declined, the rate of decline has moderated and Management achieved the FY24 target. The Committee
considers that the above performance-linked structure is generating the desired outcomes.
Remuneration Report (audited)
26
Integrated Research Limited
Reconciliation of Net profit after Tax (NPAT) to EBITDA & Pro forma EBITDA
2024
2023
Net Profit after Tax (NPAT)
27,130
(29,226)
Income tax benefit
(416)
(71)
Finance Income
(2,225)
(2,175)
Depreciation & Amortisation
112
11,787
EBITDA1
24,601
(19,685)
Impairment
–
31,778
Cost deferral related to over time revenue
671
(373)
Over-time revenue conversion
(8,539)
5,807
Pro forma EBITDA2
16,733
17,527
1.
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) is a non-IFRS measure used to evaluate the Company’s
operating performance by focusing on profit from core operations and excluding the effects of capital structure, tax rates, and
non‑cash accounting items like depreciation and amortisation.
2.
Pro forma EBITDA is an alternative non-IFRS measure calculated as pro forma revenue less expenses (variable compensation adjusted
in line with pro-forma revenue) and other gains excluding interest, tax, depreciation, amortization and Impairment expenses. Pro
forma revenue is calculated as pro forma subscription revenue plus other non-recurring revenue streams such as perpetual licence
fees, professional services, and one-time testing services. Pro forma subscription revenue provides a view of underlying performance
by restating term licence on a recurring subscription basis (i.e. over time) plus other recurring revenues such as maintenance fees and
cloud services.
3.1. STI outcomes
The executive KMP’s FY24 performance measures and outcomes are summarised below.
Performance measure
Weight
Target
Achieved % of target
Payment % of target
Total Contract Value
50%
$85M
99%
75%1
Pro forma EBITDA
25%
$12.6M
133%
100%
Cashflow
25%
$10M
155%
100%
Total
100%
1.
The Board exercised its discretion to reward the CEO, and senior executives, with a 75% payment given the small shortfall to target
and the high TCV growth on FY23 of 22%.
3.2. LTI outcomes
LTI granted to the CEO and MD had the following active plans during FY24:
–
Performance Rights under the Company’s FY21 LTI plan did not meet Total Shareholder Return (TSR) requirements.
As a result, such Performance Rights lapsed within FY24, and no Performance Rights vested in FY24 for the CEO
and MD.
–
The third and final tranche of share Options granted to the CEO and MD under the Company’s FY22 LTI plan
vested, with a total of 655,809 Options being available for exercise with an exercise price of A$1.98 per Option.
The expiry date for all Options is 31 August 2026.
–
Performance Rights with annual share price hurdles granted to the CEO and MD in FY23 were tested against the
first-year share price hurdle of $0.80, and the hurdle was not met. However, such rights are available for re-testing
against share price hurdles in subsequent years, as provided in section 2.3 above.
27
Annual Report 2024
3.3. Actual remuneration received in FY24
The table below reflects the actual remuneration received by the Executive KMP for the financial year ended 30 June
2024. The values presented below may differ from statutory remuneration. 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.
(AUD)
Fixed
remuneration
STI
LTI
Actual total
pay received
John Ruthven
$560,257
$231,875
–
$792,132
Matthew Walton1
$373,575
–
–
$373,575
Christian Shaw2
$127,145
$43,750
–
$170,895
Notes
1.
Ceased February 2024.
2.
Joined the company in January 2024 but assumed role of CFO March 2024.Remunueration only Includes term as CFO.
3.4. Executive service agreements
The main terms of service agreements for Executive KMP as at 30 June 2024 are set out below.
Basis of contract
CEO and Managing Director1
CFO
Interim CFO
Contract term
No specified end date
No specified end date
No specified end date
Notice period
6 months by either party
6 months by either party
1 month by either party
Termination payment in
lieu of notice
6 months fixed remuneration 6 months fixed
remuneration
Not applicable
Treatment of STI on
termination
Forfeited
Forfeited
Not applicable
Treatment of LTI on
termination
All unvested LTIs are forfeited All unvested LTIs are
forfeited
Not applicable
1.
John Ruthven resigned from the Managing Director position effective 17 July 2024 and from the CEO position with effect from 16
January 2025.
Remuneration Report (audited)
28
Integrated Research Limited
4.
Non‑Executive Director remuneration
4.1. Board and Committee Structure
The Board and Committees are structured as follows:
Director
Board
Audit & Risk
Committee
Nomination &
Remuneration
Committee
Technology
& Innovation
Committee
Non-Executive &
Independent Directors
Peter Lloyd
✔ (Chair)
✔
✔
✔
Kate Greenhill ✔
✔ (Chair)
✔
Mark Brayan
✔
✔ (Chair)
✔
Michael Hitz
✔
✔
✔ (Chair)
Executive Director
John Ruthven1 ✔
1.
Resigned as Managing/Executive Director effective 17 July 2024
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.
There were no changes to the level or structure of Non-Executive Director (NED) fees in FY24.
Non‑Executive Director fees
Board/Committee
Position
Per Position
Aggregate
Board
Fee for a Member
$90,000
$360,000
Board
Fee for role as Chair
$90,000
$90,000
Audit & Risk Committee
Fee for role as Chair
$10,000
$10,000
Nomination & Remuneration Committee
Fee for role as Chair
$10,000
$10,000
Technology & Innovation Committee
Fee for role as Chair
$10,000
$10,000
Total fees for Non‑Executive Directors
$480,000
29
Annual Report 2024
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
Long term
Share-based
payments
Other
compensation
Proportion of remuneration
For the year ended
30 June 2024
(in AUD)
Salary &
fees
$
Bonus
$
Non-cash
benefits
$
Superannuation
Contribution
$
Long
service
leave
$
Value of
instruments1
$
Termination
Benefit
$
Total
$
Performance-
related (STI)
Value of
rights (LTI)
Executive KMP
Christian Shaw
163,333
43,750
–
13,699
2,660
7,044
–
230,486
19%
3%
Matthew Walton
316,471
–
–
20,549
–
–
–
337,020
0%
0%
Directors
Executive
John Ruthven
532,858
231,875
–
27,399
8,836
61,814
–
862,782
27%
7%
Non‑Executive
Peter Lloyd
162,162
–
–
17,838
–
–
–
180,000
0%
0%
Cathy Aston2
67,568
–
–
7,432
–
–
–
75,000
0%
0%
Allan Brackin2
22,523
–
–
2,477
–
–
–
25,000
0%
0%
Anne Myers2
35,497
–
–
3,905
–
–
–
39,402
0%
0%
James Scott2
47,297
–
–
5,203
–
–
–
52,500
0%
0%
Michael Hitz3
60,743
–
–
6,682
–
–
–
67,425
0%
0%
Mark Brayan3
53,333
–
–
5,867
–
–
–
59,200
0%
0%
Kate Greenhill3
18,068
–
–
1,987
–
–
–
20,055
0%
0%
Total
compensation
1,479,853
275,625
–
113,038
11,496
68,858
– 1,948,870
Notes
1.
The estimated value of performance rights and options are calculated at the date of grant using the Black Scholes, Binomial or Monte
Carlo methodology.
2.
Remuneration received up to the date the role was held.
3.
Remuneration received from the date the role was held.
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
Long term
Share-based
payments
Other
compensation
Proportion of remuneration
For the year ended
30 June 2023
(in AUD)
Salary &
fees
$
Bonus
$
Non-cash
benefits
$
Superannuation
Contribution
$
Long
service
leave
$
Value of
instruments1
$
Termination
Benefit
$
Total
$
Performance-
related (STI)
Value of
rights (LTI)
Executive KMP
Matthew Walton
417,037
–
–
23,185
–
–
–
440,222
0%
0%
Peter Adams
56,618
–
–
5,945
–
123,566
–
186,129
0%
66%
Directors
Executive
John Ruthven
557,708 398,800
–
25,292
10,228
228,203
– 1,220,231
33%
19%
Non‑Executive
Peter Lloyd
162,896
–
–
17,104
–
–
–
180,000
0%
0%
Cathy Aston
90,498
–
–
9,502
–
–
– 100,000
0%
0%
Allan Brackin
90,498
–
–
9,502
–
–
– 100,000
0%
0%
Anne Myers
90,498
–
–
9,502
–
–
– 100,000
0%
0%
James Scott
81,448
–
–
8,552
–
–
–
90,000
0%
0%
Total
compensation
1,547,201 398,800
–
108,584
10,228
351,769
– 2,416,582
Notes
1.
The estimated value of performance rights and options are calculated at the date of grant using the Black Scholes, Binomial or Monte
Carlo methodology.
Remuneration Report (audited)
30
Integrated Research Limited
6.
Additional statutory disclosures
6.1. Equity Instruments
All options refer to options over ordinary shares of Integrated Research Limited, which are exercisable on a
one-for-one basis under the Employee Share Option Plan (ESOP). Performance rights and options granted as
compensation are listed in the table below.
6.2. Analysis of performance rights and options over equity instruments granted as compensation
Rights granted
Value yet to vest or value vested ($)
Number
Date
Fair value
per share ($)
Percent
vested in
year
Percent
lapsed in
year (A)
Financial
year in
which grant
expires
Min (B)
Max (C)
Performance Rights
John Ruthven
31,789
Nov-20
1.07
–
100%
2024
–
–
31,789
Nov-20
1.51
–
100%
2024
–
–
31,790
Nov-20
1.80
–
100%
2024
–
–
700,000
Oct-22 0.09 -0.06
–
–
2025
nil
52,033
Christian Shaw
85,470
Mar-24
0.10
–
–
2026
nil
8,376
85,470
Mar-24
0.09
–
–
2026
nil
7,692
85,470
Mar-24
0.07
–
–
2026
nil
6,325
Options
John Ruthven
665,809
Nov-21
0.37
33%
–
2026
nil
245,273
Notes:
(A)
The percentage lapsed in the year represents the reduction from the maximum number of performance rights or options available to
vest due to the performance hurdles not being achieved.
(B)
The minimum value of performance rights or options yet to vest is $nil as the executives may not achieve the required performance
hurdles or may terminate their employment prior to vesting.
(C)
The maximum values presented above are based on the values calculated using the Black Scholes, Binomial or Monte Carlo
methodology as applied in estimating the value of performance rights and options for employee benefit expense purposes.
6.3. Performance rights and options over equity instruments granted as compensation
The movement during the reporting year in the number of performance rights and options over 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 2024
Held at
1 July 2023
Granted as
compensation
Exercised
Other
changes1
Held at
30 June 2024
Vested during
the year
Vested and
exercised at
30 June 2024
Performance Rights
John Ruthven
795,368
–
–
(95,368)
700,000
–
–
Mathew Walton
–
–
–
–
–
–
–
Christian Shaw
–
256,410
–
–
256,410
–
–
Options
John Ruthven
655,809
–
–
–
655,809
218,603
–
Mathew Walton
–
–
–
–
–
–
–
Christian Shaw
–
–
–
–
–
–
–
1.
Other changes represent performance rights that expired or were lapsed during the year
31
Annual Report 2024
For the year ended
30 June 2023
Held at 1 July
2022
Granted as
compensation
Exercised
Other
changes1
Held at
30 June 2023
Vested during
the year
Vested and
exercised at
30 June 2023
Performance Rights
Peter Adams*
67,515
–
(48,732)
(18,783)
–
48,732
48,732
John Ruthven
247,806
700,000
(79,593)
(72,845)
795,368
79,593
79,593
Options
Peter Adams*
220,960
–
–
(220,960)
–
–
–
John Ruthven
655,809
–
–
–
655,809
218,603
–
1.
Other changes represent performance rights that expired, lapsed or were forfeited during the year
*
Resigned in August 2022. Performance rights and options expire on the earlier of their expiry date or termination of the individual’s
employment.
6.4. 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 2024
Held at
1 July 2023
Purchases
Received on
exercise of
performance
rights
Other
changes
Sales
Held at
30 June 2024
Executive KMP
Mathew Walton
–
–
–
–
–
–
Christian Shaw
–
–
–
–
–
–
Directors
Executive
John Ruthven
99,593
–
–
–
–
99,593
Non‑executive
Peter Lloyd
51,263
–
–
–
–
51,263
Mark Brayan
–
260,000
–
–
–
260,000
Kate Greenhill
–
–
–
–
–
–
Michael Hitz
–
–
–
–
–
–
Cathy Aston1
37,500
–
–
–
–
37,500
Allan Brackin1
150,000
–
–
–
–
150,000
Anne Myers1
21,500
–
–
–
–
21,500
James Scott1
74,588
–
–
–
–
74,588
1.
’Held at 30 June 2024’ value represents holding on last day as Key Management Personnel.
Remuneration Report (audited)
32
Integrated Research Limited
For the year ended
30 June 2023
Held at
1 July 2022
Purchases
Received on
exercise of
performance
rights
Other
changes
Sales
Held at
30 June 2023
Executive KMP
Peter Adams1
70,000
–
48,732
–
–
118,732
Directors
Executive
John Ruthven
20,000
–
79,593
–
–
99,593
Non‑executive
Peter Lloyd
51,263
–
–
–
–
51,263
Cathy Aston
–
37,500
–
–
–
37,500
Allan Brackin
150,000
–
–
–
–
150,000
Anne Myers
21,500
–
–
–
–
21,500
James Scott
24,588
50,000
–
–
–
74,588
1
‘Held at 30 June 2023’ value represents holding on last day as Key Management Personnel.
Shareholdings at the date of the Directors’ Report for existing Key Management Personnel remain unchanged.
6.5. Other Transactions with KMP
Non-Executive Director Mark Brayan, provided strategic advisory services to the Company through a consultancy
agreement during the reporting period. The total value of these services is estimated to be $75,000, with the services
commencing in June 2024 and anticipated to complete in August 2024. $31,250 was recognised as expenses In the
year ended 30 June 2024.
There were no other transactions between the KMP, or their personally related entities, and the Company.
7.
About this report
7.1. Basis for preparation of 2024 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.
7.2. 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.
33
Annual Report 2024
Corporate Governance Statement
This statement outlines the main corporate governance practices that were in place throughout the financial year,
which comply with the ASX Corporate Governance Council recommendations, unless otherwise stated.
Board of Directors and its Committees
Role of the Board
The Board’s primary role is the protection and enhancement of long-term shareholder value.
To fulfil this role, the Board is responsible for the overall corporate governance of the consolidated entity including
evaluating and approving its strategic direction, approving and monitoring capital expenditure, setting remuneration,
appointing, removing and creating succession policies for Directors and senior executives, establishing and monitoring
the achievement of management goals and assessing the integrity of internal control and management information
systems. It is also responsible for approving and monitoring financial and other reporting.
Board process
To assist in the execution of its responsibilities, the Board has established a number of Board committees including
a Nomination and Remuneration Committee, an Audit and Risk Committee and a Technology and Innovation
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 eleven 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 the 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.
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 14 to 15 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
2024 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 Michael Hitz – Independent Non-Executive Director (Appointed October 2023)
–
Mr Mark Brayan – Independent Non-Executive Director (Appointed November 2023)
–
Ms Kate Greenhill – Independent Non-Executive Director (Appointed April 2024)
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 and where the Board considers that it would benefit from the
services of a new Director with particular skills, the Nomination and Remuneration Committee, in conjunction with
the Board, determines the skills deemed necessary for the Board to best carry out its responsibilities. Any appointed
candidate 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.
34
Integrated Research Limited
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 CEO.
–
The remuneration packages for senior executives.
–
The Company’s recruitment, retention and termination policies and procedures for senior executives.
–
Executive remuneration and incentive policies.
–
Policies on employee incentive plans, including equity incentive plans.
–
Superannuation arrangements.
–
The remuneration framework and policy for Non-Executive Directors.
–
Remuneration levels are competitively set to attract and retain the most qualified and experienced Directors
and senior executives. The Remuneration Committee obtains independent advice on the appropriateness of
remuneration packages, given trends in comparative companies and industry surveys. Remuneration packages
include a mix of fixed remuneration, performance-based remuneration and equity-based remuneration.
Responsibilities Regarding Nomination
The Committee develops and makes recommendations to the Board on:
–
The CEO and senior executive succession planning.
–
The range of skills, experience and expertise needed on the Board and the identification of the particular skills,
experience and expertise that will best complement Board effectiveness.
–
A plan for identifying, reviewing, assessing and enhancing 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 CEO 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 CEO in the
reporting period.
The members of the Nomination and Remuneration Committee during the year were:
–
Mr Mark Brayan – Independent Non-Executive Director (Chair from December 2023)
–
Mr Allan Brackin – Independent Non-Executive Director (Chair to September 2023)
–
Mr Peter Lloyd – Independent Non-Executive Director (Interim Chair from October 2023 to December 2023,
Member)
–
Kate Greenhill – Independent Non-Executive Director (Member from April 2024)
–
Mr James Scott – Independent Non-Executive Director (Member to January 2024)
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 five
times during the year under review.
35
Annual Report 2024
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 Chair may not be the Chair 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:
–
Ms Kate Greenhill – Independent Non-Executive Director (Chair from April 2024)
–
Ms Cathy Aston – Independent Non-Executive Director (Chair to March 2024)
–
Mr Peter Lloyd – Independent Non-Executive Director
–
Mr Allan Brackin – Independent Non-Executive Director (Member to September 2023)
During the year, the Audit and Risk Committee provided the Board with updates to the Company’s risk management
register.
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 17.
The external auditor met with the Audit and Risk Committee/Board four times during the year, three 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 2024 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.
–
Provide an avenue of communication between the auditors, management and the Board.
–
Monitor compliance with all financial statutory requirements and regulations.
–
Review financial reports and other financial information distributed to shareholders so that they provide an accurate
reflection of the financial health of the Company.
–
Monitor corporate risk management and assessment processes, and the identification and management of
strategic and operational risks.
–
Enquire of the auditors of any difficulties encountered during the audit, including any restrictions on the scope of
their work, access to information or changes to the planned scope of the audit.
The Audit and Risk Committee reviews the performance of the external auditors on an annual basis and normally
meets with them during the year as follows:
–
To discuss the external audit plans, identifying any significant changes in structure, operations, internal controls or
accounting policies likely to impact the Financial Report and to review the fees proposed for the audit work to be
performed.
Prior to announcement of results:
–
To review the half-year and preliminary final report prior to lodgement with the ASX, and any significant adjustments
required as a result of the auditor’s findings.
–
To recommend the Board approval of these documents.
–
Review the results and findings of the auditor, the adequacy of accounting and financial controls, and to monitor
the implementation of any recommendations made.
To finalise half-year and annual reporting:
–
Review the draft financial report and recommend Board approval of the financial report.
–
As required, to organise, review and report on any special reviews or investigations deemed necessary by the Board.
Corporate Governance Statement
36
Integrated Research Limited
Technology and Innovation Committee
The Technology and Innovation 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 to Chair the committee.
The members of the Technology and Innovation Committee during the year were:
–
Mr Michael Hitz– Independent Non-Executive Director (Chair from December 2023)
–
Ms Anne Myers – Independent Non-Executive Director (Chair to November 2023)
–
Mr Peter Lloyd – Independent Non-Executive Director
–
Mr Mark Brayan – Independent Non-Executive Director (Member from April 2024)
–
Mr James Scott– Independent Non-Executive Director (Member to January 2024)
The Technology and Innovation Committee is responsible for:
–
Reviewing and assisting in defining current strategy.
–
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 once during the year under review. This was due to technology and innovation strategy being a
standing agenda item addressed by the Board during the financial year.
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 through internal and external audits, privacy assessments, insurances,
business continuity testing, and compliance reporting.
–
Business transactions are properly authorised and executed.
The Chief Executive Officer and the Chief Financial Officer have declared, in writing to the Board that the Company’s
financial reports are founded on a sound system of risk management and internal compliance and control which
implements the policies adopted by the Board.
Internal control framework
The Board is responsible for the overall internal control framework and 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.
37
Annual Report 2024
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. Additionally, the Company leverages external resources for ad
hoc reviews in relation to the Company’s 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
Report. There was no material exposure to environmental or social sustainability risks during the period.
Environmental, Social and Governance
In FY2023 the Company formed an Environmental, Social and Governance (ESG) Steering Committee comprised of
select members of the Company’s Management, along with adopting an ESG Committee Charter. The overarching
purpose of the ESG Committee is to assist the Company and the Board in fulfilling their oversight responsibilities with
regard to ESG matters, including but not limited to environmental, health and safety, corporate social responsibility,
energy and natural resources conservation, sustainability, corporate governance, diversity, equity and inclusion,
human rights and other ESG issues that are relevant and material to the Company.
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 pages 20 to 33.
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. Additionally, the Company has adopted a Diversity
Policy which may be viewed on the Company’s website: www.ir.com.
Corporate Governance Statement
38
Integrated Research Limited
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. Share trading is permitted in the following 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.
–
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 employee equity 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 or options.
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.
39
Annual Report 2024
Financial Report
41 Consolidated Statement of Comprehensive Income
42 Consolidated Statement of Financial Position
43 Consolidated Statement of Changes in Equity
44 Consolidated Statement of Cash Flows
45 Notes to the Financial Report
45 Note 1.
Material accounting policies
52 Note 2. Segment reporting
52 Note 3. Revenue from contracts with customers
53 Note 4. Expenditure
53 Note 5. Other (losses)/gains
53 Note 6. Finance income
53 Note 7.
Auditors’ remuneration
54 Note 8. Income tax
54 Note 9.
Earnings per share
55 Note 10. Cash and cash equivalents
55 Note 11. Trade and other receivables
56 Note 12. Other assets
56 Note 13. Other financial assets
57 Note 14. Property, plant and equipment
58 Note 15. Deferred tax assets and liabilities
59 Note 16. Intangible assets
60 Note 17. Goodwill and Impairment
60 Note 18. Trade and other payables
60 Note 19. Employee benefits
63 Note 20. Provisions
64 Note 21. Lease assets and liabilities
65 Note 22. Capital and reserves
65 Note 23. Financial instruments
68 Note 24. Consolidated entities
68 Note 25. Reconciliation of cash flows from operating activities
69 Note 26. Key management personnel disclosures
69 Note 27. Related parties
69 Note 28. Parent entity disclosures
70 Note 29. Subsequent events
71 Consolidated Entity Disclosure Statement
72 Directors’ Declaration
73 Auditor’s Independence Declaration
74 Independent Auditor’s Report
40
Integrated Research Limited
In thousands of AUD
Notes
Consolidated
2024
2023
Revenue from contracts with customers
Licence fees
59,132
45,559
Maintenance fees
14,304
14,737
Subscription fees
2,169
2,533
Testing solution services
3,112
3,333
Professional services
4,575
3,666
Total revenue
3
83,292
69,828
Expenditure
Product and technology expenses
(12,779)
(23,695)
Sales, professional services and marketing expenses
(38,679)
(40,892)
General and administration expenses
(6,493)
(6,312)
Impairment expenses
17
–
(31,778)
Total expenditure
4
(57,951)
(102,677)
Other (losses)/gains
5
(852)
1,377
Profit/(loss) before finance income and tax
24,489
(31,472)
Finance income
6
2,225
2,175
Profit/(loss) before tax
26,714
(29,297)
Income tax benefit
8
416
71
Profit/(loss) for the year
27,130
(29,226)
Other comprehensive income
Items that may be reclassified subsequently to profit
Foreign exchange translation differences
(199)
1,229
Other comprehensive income
(199)
1,229
Total comprehensive income for the year
26,931
(27,997)
Profit/(loss) attributable to:
Members of Integrated Research
27,130
(29,226)
Total comprehensive income attributable to:
Members of Integrated Research
26,931
(27,997)
Earnings per share attributable to members of Integrated Research:
Basic earnings/(loss) per share (cents)
9
15.57
(16.90)
Diluted earnings/(loss) per share (cents)
9
15.18
(16.90)
The consolidated statement of comprehensive income is to be read in conjunction with the notes to the Financial
Report set out on pages 45 to 70.
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2024
41
Annual Report 2024
In thousands of AUD
Notes
Consolidated
2024
2023
Current assets
Cash and cash equivalents
10
31,892
18,553
Trade and other receivables
11
41,647
40,913
Current tax assets
294
127
Other financial assets
13
1,110
–
Other current assets
12
2,959
3,457
Total current assets
77,902
63,050
Non-current assets
Trade and other receivables
11
31,897
22,540
Other financial assets
13
319
1,400
Property, plant and equipment
14
44
–
Right-of-use assets
21
241
–
Deferred tax assets
15
2,518
1,509
Other non-current assets
12
1,264
1,213
Total non-current assets
36,283
26,662
Total assets
114,185
89,712
Current liabilities
Trade and other payables
18
6,069
7,901
Provisions
20
3,348
3,453
Income tax liabilities
258
415
Deferred revenue
13,921
13,862
Lease liabilities
21
1,341
1,582
Total current liabilities
24,937
27,213
Non-current liabilities
Provisions
20
513
935
Deferred revenue
–
220
Lease liabilities
21
374
1,470
Total non-current liabilities
887
2,625
Total liabilities
25,824
29,838
Net assets
88,361
59,874
Equity
Share capital
22
1,667
1,667
Reserves
22
9,981
8,624
Retained earnings
76,713
49,583
Total equity
88,361
59,874
The consolidated statement of financial position is to be read in conjunction with the notes to the Financial Report set
out on pages 45 to 70.
Consolidated Statement of Financial Position
as at 30 June 2024
42
Integrated Research Limited
In thousands of AUD
Share capital
Translation
reserve
Employee
benefit
reserve
Retained
earnings
Total
Balance at 1 July 2023
1,667
1,870
6,754
49,583
59,874
Profit for the year
–
–
–
27,130
27,130
Other comprehensive income
–
(199)
–
–
(199)
Total comprehensive income
–
(199)
–
27,130
26,931
Share based payments expense
–
–
1,556
–
1,556
Balance at 30 June 2024
1,667
1,671
8,310
76,713
88,361
Balance at 1 July 2022
1,667
641
5,996
78,809
87,113
Loss for the year
–
–
–
(29,226)
(29,226)
Other comprehensive income
–
1,229
–
–
1,229
Total comprehensive income
–
1,229
–
(29,226)
(27,997)
Share based payments expense
–
–
758
–
758
Balance at 30 June 2023
1,667
1,870
6,754
49,583
59,874
The consolidated statement of changes in equity is to be read in conjunction with the notes to the Financial Report set
out on pages 45 to 70.
Consolidated Statement of Changes in Equity
for the year ended 30 June 2024
43
Annual Report 2024
In thousands of AUD
Notes
Consolidated
2024
2023
Cash flows from operating activities
Cash receipts from customers
72,389
76,258
Cash paid to suppliers and employees
(58,370)
(60,727)
Cash generated from operations
14,019
15,531
Income taxes paid
(975)
(1,713)
Net cash provided by operating activities
25
13,044
13,818
Cash flows from investing activities
Payments for capitalised development
–
(7,479)
Payments for property, plant and equipment
(48)
(311)
Payment for deposit
–
(1,110)
Interest received
2,321
2,244
Net cash used in investing activities
2,273
(6,656)
Cash flows from financing activities
Payment of principal portion of lease liabilities
(1,589)
(1,631)
Interest payments
(96)
(68)
Net cash used in financing activities
(1,685)
(1,699)
Net increase in cash and cash equivalents
13,632
5,463
Cash and cash equivalents at 1 July
18,553
12,329
Effects of exchange rate changes on cash
(293)
761
Cash and cash equivalents at 30 June
10
31,892
18,553
The consolidated statement of cash flows is to be read in conjunction with the notes to the Financial Report set out on
pages 45 to 70.
Consolidated Statement of Cash Flows
for the year ended 30 June 2024
44
Integrated Research Limited
Note 1.
Material 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 2024 comprises the Company and its subsidiaries (together referred to as the “consolidated
entity”).
The financial report was authorised for issue by the Directors on 20 August 2024.
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 Report 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 Report is presented in Australian dollars and are prepared on a going concern basis using historical cost.
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 Report in conformity with Australian Accounting Standards requires management to make
judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and
liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of
making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates. These accounting policies have been consistently applied by each entity in
the consolidated entity.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognized 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 2023 annual financial report.
The following new standards/interpretations are applicable for the first time in the current financial report:
Amendments to IAS 1: Classification of Liabilities as Current or Non-current
The amendment requires classification of liabilities as current if the entity has no right at the end of the reporting
period to defer settlement for at least 12 months after the reporting period. It Is assessed that the entity has no rights
to defer settlement for all current liabilities in the current or past periods. There was no material Impact on the financial
statements.
Definition of Accounting Estimates - Amendments to IAS 8
The amendments provide a new definition for accounting estimates to differentiate it from an accounting policy. The new
definition is that ‘Accounting estimates are monetary amounts in financial statements that are subject to measurement
uncertainty.’ There was no material impact on the financial statements.
Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2
The amendments to AASB 101 Presentation of Financial Statements require disclosure of material accounting policy
information, instead of significant accounting policies. This is updated in the financial statements.
Deferred Tax related to Assets and Liabilities arising from a Single Transaction - Amendments to IAS 12
The amendments in AASB12 changed the requirements to meet the criteria of the initial recognition exception. There was
no material impact on the financial statements.
Notes to the Financial Report
for the year ended 30 June 2024
45
Annual Report 2024
Note 1.
Material accounting policies (continued)
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 recognized in the
Financial Report, but may change the disclosures made in relation to the consolidated entity’s Financial Report. The
Company is still assessing the impact of AASB18 Presentation and Disclosure in Financial Statements on the Company’s
financial statements:
Standard/Interpretation
Effective for
annual reporting
periods beginning
on or after
Expected to be
initially applied
in the financial
year ending
AASB 2020-1 Amendments to AASs – Classification of Liabilities as
Current or Noncurrent
1 Jan 2024
30 June 2025
AASB 18 Presentation and Disclosure in Financial Statements
1 Jan 2027
30 June 2028
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 Report 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.
D.
Foreign currency
In preparing the Financial Report 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.
Notes to the Financial Report
for the year ended 30 June 2024
46
Integrated Research Limited
Note 1.
Material accounting policies (continued)
E.
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
F.
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.
G.
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.
47
Annual Report 2024
Note 1.
Material accounting policies (continued)
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 (J)).
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.
H.
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 Company 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.
I.
Cash and cash equivalents
Cash and cash equivalents comprises cash balances and call deposits with an original maturity of three months or
less.
J.
Impairment
The carrying amounts of the consolidated entity’s assets are reviewed at each reporting date to determine whether
there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated.
For intangible assets that are not yet available for use, the recoverable amount is estimated at each year end date.
An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its
recoverable amount. Impairment losses are recognised in profit or loss unless the asset has previously been revalued,
in which case the impairment loss is recognised as a reversal to the extent of that previous revaluation with any excess
recognised through profit or loss.
A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to
determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so
that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that
would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.
The recoverable amount of other assets is the greater of their fair value less costs to sell and value in use.
In assessing recoverable value, 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.
Notes to the Financial Report
for the year ended 30 June 2024
48
Integrated Research Limited
Note 1.
Material accounting policies (continued)
K. 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.
Share-based payment transactions
The performance rights and options programmes allow the consolidated entity’s employees to acquire shares of the
Company. The fair value of performance rights and options 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 or options. The fair value of the instrument
granted is measured using a Black-Scholes, Binomial or Monte-Carlo 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.
L.
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.
M. Trade and other payables
Trade and other payables are stated at their amortised cost.
N.
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.
49
Annual Report 2024
Note 1.
Material accounting policies (continued)
Testing solutions services revenues are recognised either ratably 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 ratably 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.
O.
Financing income
Financing income comprises interest receivable on funds invested and the financing component of the sale of
licences, less interest payable on borrowings.
P.
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.
Q.
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.
R.
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.
Notes to the Financial Report
for the year ended 30 June 2024
50
Integrated Research Limited
Note 1.
Material accounting policies (continued)
S.
Significant accounting judgements, estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of
future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the
carrying amounts of certain assets and liabilities within the next annual reporting period are:
Revenue Recognition - Multi-element contracts or agreements
Majority of the Company’s sales contracts involve multiple-element arrangements, for example a single software sales
transaction that combines the delivery of a software licence and rendering of maintenance and other professional
services.
Revenue recognition for multiple-element arrangements has inherent complexities due to the judgment required to
properly allocate the revenue amongst respective contracted activities.
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.
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.
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.
51
Annual Report 2024
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.
Information regarding these geographic regions is presented below.
In thousands of AUD
Americas
Europe
Asia Pacific
Corporate
Australia1
Eliminations
Consolidated
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
Sales to customers outside
the consolidated entity
59,545
42,205
7,917
10,404
15,830
17,219
–
–
–
–
83,292
69,828
Inter-region revenue
–
–
–
–
–
–
46,920
31,804
(46,920)
(31,804)
–
–
Total regional revenue
59,545
42,205
7,917
10,404
15,830
17,219
46,920
31,804
(46,920)
(31,804)
83,292
69,828
In thousands of local currency
Americas (USD)
Europe (GBP)
2024
2023
2024
2023
Sales to customers outside the consolidated entity
39,138
28,113
4,128
5,755
Inter-region sales
–
–
–
–
Total regional revenue
39,138
28,113
4,128
5,755
1.
Corporate Australia includes both the research and development and corporate head office functions of Integrated Research Limited.
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
Consolidated
2024
2023
Timing of Revenue Recognition:
At a point in time
59,132
45,559
Over time
24,160
24,269
Total Revenue from contracts with customers
83,292
69,828
Type of product Group
Collaborate
35,154
39,368
Infrastructure
25,129
14,667
Transact
18,434
12,127
Professional services
4,575
3,666
Total Revenue
83,292
69,828
The transaction price allocated to the remaining performance obligations (unsatisfied or partially unsatisfied), which
are not included above, is $19,089,000 (2023: $21,389,000) 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.
Notes to the Financial Report
for the year ended 30 June 2024
52
Integrated Research Limited
Note 4. Expenditure
Total expenditure includes:
In thousands of AUD
Note
Consolidated
2024
2023
Employee benefits expense:
Defined contribution plans
2,060
2,365
Equity settled share-based payments
1,556
773
Other employee benefits
39,367
43,954
42,983
47,093
Depreciation and amortization
112
11,787
Impairment
17
–
31,778
Expected credit loss provision expense
11
(182)
(621)
Note 5. Other (losses)/gains
In thousands of AUD
Note
Consolidated
2024
2023
Currency exchange (losses)/gains
(940)
850
Other income
88
527
(852)
1,377
Note 6. Finance income
In thousands of AUD
Consolidated
2024
2023
Interest income
2,321
2,243
Interest on lease liability
(96)
(68)
2,225
2,175
Note 7.
Auditors’ remuneration
In AUD
Consolidated
2024
2023
Fees to Ernst & Young (Australia)
Fees for auditing the consolidated financial report of the Company and
auditing the statutory financial reports of any controlled entities
323,450
412,325
Fees for other services
-
Tax compliance
–
18,375
Total fees to Ernst & Young (Australia)
323,450
430,700
Fees to other overseas member firms of Ernst & Young (Australia)
Fees for other services
-
iXBRL service and share register reporting
–
1,343
Total fees to overseas member firms of Ernst & Young (Australia)
–
1,343
Total auditor's remuneration
323,450
432,043
53
Annual Report 2024
Note 8. Income tax
Recognised in profit for the year
In thousands of AUD
Note
Consolidated
2024
2023
Current income tax:
Current income tax expense/(benefit)
855
(2,401)
Adjustments in respect of current income tax of previous year
(297)
(333)
558
(2,734)
Deferred tax:
Relating to origination and reversal of temporary differences
15
6,568
(8,462)
Losses and R&D credits available for offset against future taxable income
15
–
1,607
Recognition of previously unrecognised deferred taxes
15
(7,542)
–
De-recognition of deferred tax
15
–
9,518
Total income tax benefit in profit and loss
(416)
(71)
Numerical reconciliation between income tax benefit and profit before tax
In thousands of AUD
Consolidated
2024
2023
Profit/(loss) before tax
26,714
(29,297)
Income tax using the domestic corporate tax rate of 30%
8,014
(8,789)
Increase in income tax expense due to:
Non-deductible expenses
463
2,299
De-recognition of Deferred tax asset
–
9,518
Recognition of previously unrecognised deferred taxes
(7,542)
–
Effect of tax rates in foreign jurisdictions
(80)
70
Decrease in income tax expense due to:
R&D tax incentive
(974)
(2,836)
Over provision from prior year
(297)
(333)
Income tax benefit
(416)
(71)
Note 9. Earnings per share
The calculation of basic and diluted earnings per share at 30 June 2024 was based on the profit attributable to
ordinary shareholders of $27,130,000 (2023: loss $29,226,000); a weighted number of ordinary shares outstanding
during the year ended 30 June 2024 of 174,281,213 (2023: 172,902,324); and a weighted number of ordinary shares
(diluted) outstanding during the year ended 30 June 2024 of 178,761,286 (2023: 172,902,324), calculated as follows:
In thousands of AUD
Consolidated
2024
2023
Profit/(loss) for the year
27,130
(29,226)
Notes to the Financial Report
for the year ended 30 June 2024
54
Integrated Research Limited
Note 9. Earnings per share (continued)
Weighted average number of shares used as the denominator
Number
Consolidated
2024
2023
Number for basic earnings per share:
Ordinary shares
174,281,213
172,902,324
Effect of employee share plans on issue
4,480,073
–
Number for diluted earnings per share
178,761,286
172,902,324
Basic earnings/(loss) per share (cents)
15.57
(16.90)
Diluted earnings/(loss) per share (cents)
15.18
(16.90)
Note 10. Cash and cash equivalents
In thousands of AUD
Consolidated
2024
2023
Cash at bank and on hand
19,892
18,553
Short term deposits
12,000
–
31,892
18,553
Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for
varying periods of between one day and three months, depending on the immediate cash requirements of the Group,
and earn interest at the respective short-term deposit rates.
Note 11. Trade and other receivables
Current
In thousands of AUD
Consolidated
2024
2023
Trade receivables
41,377
41,005
Less: Allowance for expected credit losses
(58)
(301)
41,319
40,704
GST receivable
328
209
41,647
40,913
Non-current
In thousands of AUD
Consolidated
2024
2023
Trade receivables
31,897
22,540
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.
Ageing of past due but not impaired:
In thousands of AUD
Note
Consolidated
2024
2023
Past due 30 days
771
305
Past due 60 days
935
359
Past due 90 days
140
281
Total
23
1,846
945
55
Annual Report 2024
Note 11. Trade and other receivables (continued)
The movement in the allowance for expected credit losses in respect of trade receivables is detailed below:
In thousands of AUD
Consolidated
2024
2023
Balance at beginning of year
301
1,288
Amounts written back during the year
(61)
(366)
(Decrease)/Increase in provision
(182)
(621)
Balance end of year
58
301
The Company has used the following criteria to assess the allowance loss for expected credit losses shown above:
–
historical default experience. Loss rate for 2024 was 0.21% (2023: 0.52%);
–
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.
Note 12. Other assets
Current
In thousands of AUD
Consolidated
2024
2023
Prepayments
1,906
2,228
Contract assets
1,053
1,229
Total
2,959
3,457
Non-current
In thousands of AUD
Consolidated
2024
2023
Contract assets
1,264
1,213
Total
1,264
1,213
The Company pays sales commission to its employees for certain contracts, these costs are recognized as costs
incurred to obtain a contract and included as contract assets.
Note 13. Other financial assets
Current
In thousands of AUD
Consolidated
2024
2023
Deposits
1,110
–
Deposits include deposit for a cash backed bank guarantee for rental premises due to expire in February 2025.
Non-current
In thousands of AUD
Consolidated
2024
2023
Deposits
319
1,400
The carrying amount of other financial assets is a reasonable approximation of their fair value. Deposits include rental
deposits.
Notes to the Financial Report
for the year ended 30 June 2024
56
Integrated Research Limited
Note 14. Property, plant and equipment
Plant and equipment
In thousands of AUD
Consolidated
2024
2023
At cost
6,007
5,959
Accumulated depreciation and impairment
(5,963)
(5,753)
Impairment for the year (Note 17)
–
(206)
44
–
Leasehold improvements
In thousands of AUD
Consolidated
2024
2023
At cost
3,117
3,117
Accumulated depreciation and impairment
(3,117)
(2,854)
Impairment for the year (Note 17)
–
(263)
–
–
Total property, plant and equipment
In thousands of AUD
Consolidated
2024
2023
At cost
9,124
9,076
Accumulated depreciation and impairment
(9,080)
(8,607)
Impairment for the year (Note 17)
–
(469)
44
–
Plant and Equipment
In thousands of AUD
Consolidated
2024
2023
Carrying amount at start of year
–
427
Additions
48
58
Effects of foreign currency exchange
–
7
Depreciation expense
(4)
(286)
Impairment for the year (Note 17)
–
(206)
Carrying amount at end of year
44
–
Leasehold Improvements
In thousands of AUD
Consolidated
2024
2023
Carrying amount at start of year
–
317
Effects of foreign currency exchange
–
1
Depreciation expense
–
(55)
Impairment for the year (Note 17)
–
(263)
Carrying amount at end of year
–
–
57
Annual Report 2024
Note 15. Deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Consolidated
In thousands of AUD
Assets
Liabilities
Net
2024
2023
2024
2023
2024
2023
Property, plant and equipment
131
–
–
–
131
–
Trade and other payables
255
342
–
–
255
342
Employee benefits
1,102
941
–
–
1,102
941
Provisions
48
210
–
–
48
210
Other current liabilities
1,212
2,580
423
593
789
1,987
Unrealized foreign exchange gain
193
–
–
538
193
(538)
Losses and R&D credits available
for offset against future taxable
income
–
8,085
–
–
–
8,085
De-recognition of deferred tax
–
(9,518)
–
–
–
(9,518)
Deferred tax assets/(liabilities)
2,941
2,640
(423)
1,131
2,518
1,509
Set off of deferred tax liabilities
(423)
(1,131)
423
(1,131)
–
–
Net deferred tax assets/
(liabilities)
2,518
1,509
–
–
2,518
1,509
Movement in temporary differences during the year:
For year ended 30 June 2024
In thousands of AUD
Consolidated
Balance
1 July 23
Recognised
in income
Recognised
in equity
Balance
30 June 24
Intangible assets
–
131
–
131
Trade and other payables
342
(87)
–
255
Employee benefits
941
161
–
1,102
Provisions
210
(162)
–
48
Other current liabilities
1,987
(1,198)
–
789
Unrealized foreign exchange gain
(538)
731
–
193
Losses and R&D credits1 available for offset against future
taxable income
8,085
(8,085)
–
–
De-recognition of deferred tax2
(9,518)
9,518
–
–
1,509
1,009
–
2,518
1.
R&D Credits refer to tax incentive received for conduction eligible R&D activities under the Research and Development Tax Incentive
(R&DTI) scheme administered jointly by AusIndustry and Australian Taxation Office. These tax Incentives can be used by the company
to offset its future tax liability.
2.
As at 30 June 2024, the Company has no un-recognised deferred tax assets related to Australian R&D tax incentives (30 June 2023: $8.1
million) and no unrecognized deferred tax assets on temporary differences (30 June 2023: $1.4 million).
Notes to the Financial Report
for the year ended 30 June 2024
58
Integrated Research Limited
Note 15. Deferred tax assets and liabilities (continued)
For year ended 30 June 2023
In thousands of AUD
Consolidated
Balance
1 July 22
Recognised
in income
Recognised
in equity
Balance
30 June 23
Intangible assets
(8,206)
8,206
–
–
Trade and other payables
314
28
–
342
Employee benefits
1,025
(84)
–
941
Provisions
440
(230)
–
210
Other current liabilities
72
1,915
–
1,987
Unrealized foreign exchange gain
(1,277)
739
–
(538)
Losses and R&D credits1 available for offset against future
taxable income
6,478
1,607
–
8,085
De-recognition of deferred tax2
–
(9,518)
–
(9,518)
(1,154)
2,663
–
1,509
1.
R&D Credits refer to tax incentive received for conduction eligible R&D activities under the Research and Development Tax Incentive
(R&DTI) scheme administered jointly by AusIndustry and Australian Taxation Office. These tax Incentives can be used by the company
to offset its future tax liability.
2.
As at 30 June 2024, the Company has no un-recognised deferred tax assets related to Australian R&D tax incentives (30 June 2023: $8.1
million) and no unrecognized deferred tax assets on temporary differences (30 June 2023: $1.4 million).
Note 16. Intangible assets
The balance of capitalized intangible assets comprises:
Cost
In thousands of AUD
Software
development
Third party
software
Goodwill
Total
Balance at 1 July 2022
54,648
2,284
3,575
60,507
Acquired
–
21
–
21
Fully amortised & offset
–
(17)
–
(17)
Internally developed
7,479
–
–
7,479
Effects of foreign currency exchange
–
–
152
152
Balance at 30 June 2023
62,127
2,288
3,727
68,142
Balance at 1 July 2023
62,127
2,288
3,727
68,142
Fully amortised & offset
–
–
–
–
Effects of foreign currency exchange
–
–
–
–
Balance at 30 June 2024
62,127
2,288
3,727
68,142
59
Annual Report 2024
Note 16. Intangible assets (continued)
Amortisation
In thousands of AUD
Software
development
Third party
software
Goodwill
Total
Balance at 1 July 2022
26,952
2,246
–
29,198
Fully amortised & offset
–
(17)
–
(17)
Amortisation for year
10,293
22
–
10,315
Impairment (Note 17)
24,882
37
3,727
28,646
Balance at 30 June 2023
62,127
2,288
3,727
68,142
Balance at 1 July 2023
62,127
2,288
3,727
68,142
Fully amortised & offset
–
–
–
–
Amortisation for year
–
–
–
–
Impairment (Note 17)
–
–
–
–
Balance at 30 June 2024
62,127
2,288
3,727
68,142
Carrying amounts
In thousands of AUD
Software
development
Third party
software
Goodwill
Total
Balance at 30 June 2023
–
–
–
–
Balance at 30 June 2024
–
–
–
–
Note 17. Goodwill and Impairment
Management has identified the Group as one cash generating unit (the Prognosis CGU). The carrying value of
goodwill at 30 June 2024 is $Nil (2023: $Nil). As such, management has not performed impairment testing as at
30 June 2024.
For the year ended 30 June 2023, management recognized an impairment charge of $31,778,000 against Goodwill
of $3,727,000, Intangible Assets of $24,919,000, Right-of-use assets of $2,663,000 and Property, Plant and
equipment of $469,000. The impairment charge was recorded in the consolidated statement of comprehensive
income.
In the current year, as at 30 June 2024, the management has not identified any indicators which suggest reversal
of impairment from prior year. There has been no material change in the key assumptions used to determine the
recoverable amount of the Cash generating unit.
Note 18. Trade and other payables
In thousands of AUD
Consolidated
2024
2023
Trade and other payables
6,069
7,901
The average credit period on trade and other payables is 30 days.
Note 19. Employee benefits
Current
In thousands of AUD
Consolidated
2024
2023
Liability for annual leave
1,693
2,053
Liability for long service leave
955
1,013
2,648
3,066
Notes to the Financial Report
for the year ended 30 June 2024
60
Integrated Research Limited
Note 19. Employee benefits (continued)
Non-current
In thousands of AUD
Consolidated
2024
2023
Liability for long service leave
485
547
Pension plans
Employees of the consolidated entity accumulate pension benefits through statutory contributions by the entities in
the consolidated entity as required by the laws of the jurisdictions in which they operate, supplemented by individual
contributions.
Share based payments
Employee Equity Plan
In April 2023, the consolidated entity established the Integrated Research Limited Equity Plan Rules (Plan), which
replaced the prior plan rules adopted in 2011. The Plan enables the Company to offer eligible employees the right
to obtain shares in Integrated Research at no cost contingent upon performance conditions being met (otherwise
referred to as performance rights).
The annual long term incentive (LTI) equity allocations are broadly broken into two groups: grants to Company
staff with job grades three or above (Staff LTI), and grants to Company executives (Executive LTI). The performance
conditions include a service period with performance components. The performance rights are automatically
exercised into shares upon the service and performance conditions being met. Allocations for Staff LTI vest annually
over a three year period, so long as the recipient remains employed at the vesting date and receives a “meets
expectations” performance rating in the prior year. Executive LTI equity grants vest over a three year period with
annual performance hurdles tied to company performance, the details of the FY24 Executive LTI performance hurdles
are provided in the Remuneration Report.
During the year ended 30 June 2024, the consolidated entity recognised an expense through statement of
Comprehensive Income of $1,556,000 related to the fair value of rights and options (2023: $773,000).
There were no cancellations or modifications to the awards in 2024 or 2023.
Movements during the year
The following tables provides the movement in performance rights and options and weighted average exercise prices
(WAEP) during the year:
Performance Rights
2024
2023
Staff LTI
Executive LTI
Staff LTI
Executive LTI
In thousands of instruments
Outstanding at the beginning of the year
5,216
1,684
1,325
95
Granted during the year
5,432
1,905
5,132
1,954
Forfeited during the year
(1,761)
(95)
(649)
(365)
Vested during the year
(1,528)1
–
(592)2
–
Outstanding at the end of the year
7,359
3,494
5,216
1,684
Exercisable at the end of the year (vested)
–
–
–
–
1.
Weighted average share price of exercised performance rights for the period was $0.350
2.
Weighted average share price of exercised performance rights for the period was $0.436
The weighted average remaining contractual life for the performance rights outstanding as at 30 June 2024 was
1.69 years (2023: 2.10 years).
The weighted average fair value of performance rights granted during the year was $0.34 (2023: $0.46).
61
Annual Report 2024
Note 19. Employee benefits (continued)
The exercise price for the performance rights at the end of the year was nil (2023: nil).
Options
2024
2023
Number
WAEP
Number
WAEP
In thousands of instruments
Outstanding at the beginning of the year
1,147
$1.98
1,368
$1.98
Granted during the year
–
–
–
–
Forfeited during the year
–
–
(221)
$1.98
Exercised during the year
–
–
–
–
Outstanding at the end of the year
1,147
$1.98
1,147
$1.98
Exercisable at the end of the year (vested)
765
$1.98
382
$1.98
The weighted average remaining contractual life for the share options outstanding as at 30 June 2024 was 2.17 years
(2023: 3.17 years).
The weighted average fair value of options granted during the year was $0.065 (2023: $0.074).
The exercise price for options outstanding at the end of the year was $1.98 (2023: $1.98).
Inputs on instruments granted
The following tables list the inputs to the models use for the Employee Equity plans for the years ended 30 June 2024
and 2023:
For the year ended 30 June 2024
Staff LTI
Executive LTI
Weighted average fair values at measurement date
$0.34
$0.065
Expected dividends
0.0%
0.0%
Expected volatility
64.74%
64.74%
Risk-free interest rate
3.97%
3.97%
Contractual life (expressed in years)
2.84
2.71
Weighted average share price
$0.34
$0.31
Exercise price
Nil
Nil
Performance hurdles - IRI share price at testing date
N/A
$0.80 (T1),
$1.20 (T2),
$1.60 (T3)
Testing date
N/A
Aug-24 (T1),
Aug-25 (T2),
Aug-26 (T3)
Model Used
Black Scholes
Monte Carlo
Notes to the Financial Report
for the year ended 30 June 2024
62
Integrated Research Limited
Note 19. Employee benefits (continued)
For the year ended 30 June 2023
Staff LTI
Executive LTI
Weighted average fair values at measurement date
$0.46
$0.074
Expected dividends
0.0%
0.0%
Expected volatility
53.74%
53.74%
Risk-free interest rate
3.45%
3.45%
Contractual life (expressed in years)
2.75
2.81
Weighted average share price
$0.46
$0.38
Exercise price
Nil
Nil
Performance hurdles - IRI share price at testing date
N/A
$0.80 (T1),
$1.20 (T2),
$1.60 (T3)
Testing date
N/A
Aug-23 (T1),
Aug-24 (T2),
Aug-25 (T3)
Model Used
Black Scholes
Monte Carlo
The fair values of services received in return for performance rights and options granted to employees is measured by
reference to the fair value of rights granted.
Note 20. Provisions
Current
In thousands of AUD
Note
Consolidated
2024
2023
Employee benefits
19
2,648
3,066
Lease make good
700
–
Other provisions
–
387
3,348
3,453
Non-current
In thousands of AUD
Note
Consolidated
2024
2023
Employee benefits
19
485
547
Lease make good
28
388
513
935
63
Annual Report 2024
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 inception of the respective lease.
The incremental borrowing rates for the portfolio of leases were between 3% and 4%. Finance income decreased
by $96,000 (2023: $68,000) relating to the interest expense on lease liabilities recognised.
Right-of-use assets
Office premises
In thousands of AUD
Consolidated
2024
2023
At cost
8,329
7,982
Accumulated depreciation and impairment
(8,088)
(5,319)
Impairment for the year (Note 17)
–
(2,663)
241
–
Office premises
In thousands of AUD
Consolidated
2024
2023
Carrying amount at start of year
–
4,407
Additions
352
–
Changes during the year
–
(662)
Effects of foreign currency exchange
(3)
49
Depreciation expense
(108)
(1,131)
Impairment (Note 17)
–
(2,663)
Carrying amount at end of year
241
–
Current lease liabilities
In thousands of AUD
Consolidated
2024
2023
Lease liabilities
1,341
1,582
1,341
1,582
Non-current lease liabilities
In thousands of AUD
Consolidated
2024
2023
Lease liabilities
374
1,470
374
1,470
Contractual undiscounted cash outflows used to calculate lease liability
In thousands of AUD
Consolidated
2024
2023
Less than one year
1,379
1,643
Between one and five years
396
1,471
1,775
3,114
Notes to the Financial Report
for the year ended 30 June 2024
64
Integrated Research Limited
Note 22. Capital and reserves
Share capital
In thousands of shares
Ordinary shares
2024
2023
On issue 1 July
173,081
172,489
Issued against employee performance right exercised
1,528
592
On issue 30 June
174,609
173,081
The company does not have authorized 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.
Translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the Financial Report
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 Limited Equity Plan Rules (adopted in April 2023) or the Integrated Research Performance
Rights and Option Plan (adopted in November 2011). Refer to Note 16 for further details.
Dividends
There were no dividends paid or declared by the Company during the year. On 20 August 2024, the Directors
declared a fully franked final dividend for the year ended 30 June 2024 of 2.0 cents per ordinary share and will be
paid on 15 October 2024 with a record date of 03 September 2024. The financial effect of this dividend has not been
brought to account in the financial statements for the year ended 30 June 2024 and will be recognised in subsequent
financial statements:
In thousands of AUD
Cents per share
Total amount
Franked/
unfranked
Date of
payment
Final dividend declared on 20 August 2024
2.00
3,492
100% franked
15 Oct 2024
Franking account disclosure:
In thousands of AUD
Company
2024
2023
Adjusted franking account balance
7,807
7,766
Note 23. 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
22 respectively.
Bank Guarantee
At 30 June 2024, the total value of cash backed guarantee provided was $1,110,000 (2023: $1,110,000).
Material accounting policies
Details of the material accounting policies and methods adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are recognized, in respect of each class of financial asset,
financial liability and equity instrument are disclosed in Note 1 to the Financial Report.
65
Annual Report 2024
Note 23. Financial instruments (continued)
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.
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.
Foreign currency risk management
The consolidated entity undertakes certain transactions denominated in foreign currencies, hence exposures to
exchange rate fluctuations arise.
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
Consolidated
Liabilities
Assets
2024
2023
2024
2023
US Dollar
1,235
1,302
5,173
4,479
Sterling
–
–
116
1
Euro
–
–
1,819
1,179
Foreign currency sensitivity
At 30 June 2024, 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
Consolidated
Net (loss)/profit before tax
Equity
2024
2023
2024
2023
US Dollar
438
353
438
353
Sterling
13
–
13
–
Euro
202
131
202
131
Change in currency (i) – 10% decrease.
In thousands of AUD
Consolidated
Net (loss)/profit before tax
Equity
2024
2023
2024
2023
US Dollar
(358)
(289)
(358)
(289)
Sterling
(11)
–
(11)
–
Euro
(165)
(107)
(165)
(107)
Change in currency (i) – 10% increase.
Notes to the Financial Report
for the year ended 30 June 2024
66
Integrated Research Limited
Note 23. Financial instruments (continued)
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$35.1 million (2023: A$24.8 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 recorded through profit and loss. A 10%
decrease in the Australian dollar against the US dollar would result in a A$3.9 million (2023: A$2.8 million) increase to
net profit before tax and equity, whilst a 10% increase would result in a A$3.2 million (2023: A$2.3 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.
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
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 2024 was $1.3 million (2023: $2.7 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
2024 no debtors were sold (2023: nil).
The credit risk on liquid funds 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 trade and other payables shown in Note 18 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 7.5%. The carrying value of non-current trade receivables of the consolidated entity was a
reasonable approximation of their fair value.
67
Annual Report 2024
Note 24. Consolidated entities
Country of
incorporation
Ownership interest
2024
2023
Parent entity:
Integrated Research Limited
Australia
Subsidiaries of Integrated Research Limited:
Integrated Research Inc
USA
100%
100%
Integrated Research Singapore Pte Limited
Singapore
100%
100%
Integrated Research UK Limited
UK
100%
100%
Subsidiaries of Integrated Research UK Limited:
Integrated Research Germany GmbH
Germany
100%
100%
Note 25. Reconciliation of cash flows from operating activities
In thousands of AUD
Consolidated
2024
2023
Profit/(Loss) for the year
27,130
(29,226)
Depreciation and amortisation
112
11,787
Provision for expected credit loss
(243)
(987)
Interest received
(2,321)
(2,243)
Interest paid
96
68
Share-based payments expense
1,556
773
Impairment
–
31,778
Net exchange differences
(3)
2,059
Change in operating assets and liabilities:
(Increase)/decrease in trade debtors
(9,848)
6,341
(Increase)/decrease in future income tax benefit
(1,218)
261
(Increase)/decrease in other operating assets
418
(1,119)
Increase/(decrease) in trade and other payables
(1,832)
(2,230)
Increase/(decrease) in other operating liabilities
(161)
(1,203)
Increase/(decrease) in provision for income taxes payable
(115)
415
Increase/(decrease) in provision for deferred income taxes
–
(2,487)
Increase/(decrease) in other provisions
(527)
(169)
Net cash from operating activities
13,044
13,818
Notes to the Financial Report
for the year ended 30 June 2024
68
Integrated Research Limited
Note 26. Key management personnel disclosures
Key management personnel compensation
The key management personnel compensation are as follows:
In thousands of AUD
Consolidated
2024
2023
Short-term benefits
1,755,478
1,946,001
Post-employment benefits
113,038
108,584
Long term benefit
11,496
10,228
Equity compensation benefits
68,858
351,769
1,948,870
2,416,582
Refer to Note 27. Related parties for transactions between the company and key management personnel.
Note 27. Related parties
At 30 June 2024 Mr. Steve Killelea, the founder of IR, owned either directly or indirectly 29.91% of the Company
(2023: 29.97%). A related entity of Mr. Killelea no longer provided consulting services during the year ended 30 June
2024 (2023: $33,333). The payable balance as at 30 June 2024 is nil (2023: nil).
Non-Executive Director Mark Brayan provided strategic advisory services to the Company through a consultancy
agreement during the reporting period. The total value of these services is estimated to be $75,000, with the services
commencing in June 2024 and anticipated to complete in August 2024. Services provided during the year ended
30 June 2024 was estimated to be $31,250.
Apart from the details disclosed in this note, there were no other transactions between key management personnel, or
their personally related entities, and the Company.
Note 28. Parent entity disclosures
Financial Position
In thousands of AUD
Parent Entity
2024
2023
Assets
Current assets
70,916
50,026
Non-current assets
3,541
1,411
Total Assets
74,457
51,437
Liabilities
Current Liabilities
7,324
10,536
Non-current liabilities
1,217
907
Total Liabilities
8,541
11,443
Net Assets
65,916
39,994
Equity
Issued Capital
1,667
1,667
Employee benefits Reserve
8,310
6,754
Retained Earnings
55,939
31,573
Total Equity
65,916
39,994
69
Annual Report 2024
Note 28. Parent entity disclosures (continued)
Financial Performance
In thousands of AUD
Parent Entity
2024
2023
Profit/(Loss) for the year
24,366
(25,384)
Other comprehensive income
–
–
Total comprehensive income
24,366
(25,384)
Investments in subsidiaries are included at cost.
Note 29. Subsequent events
On 16th July 2024, IR announced plans for a CEO transition and that John Ruthven would step down. Subsequently,
on 5th August 2024, IR announced the appointment of Ian Lowe, as CEO of IR with an effective date of 1st October
2024.
Other than events disclosed above and Dividends in Note 22, there have 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.
Notes to the Financial Report
for the year ended 30 June 2024
70
Integrated Research Limited
Entity name
Entity type
Body
corporate
Country of
incorporation
Body
corporate
% of share
capital held
Country of
tax residence
Parent entity:
Integrated Research Limited
Body Corporate
Australia
Australia
Subsidiaries of Integrated Research Limited:
Integrated Research Inc
Body Corporate
USA
100%
Australia
Integrated Research Singapore Pte Limited
Body Corporate
Singapore
100%
Australia
Integrated Research UK Limited
Body Corporate
UK
100%
Australia
Subsidiaries of Integrated Research UK Limited:
Integrated Research Germany GmbH
Body Corporate
Germany
100%
Australia
Consolidated Entity Disclosure Statement
As at 30 June 2024
71
Annual Report 2024
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 Report and notes of Integrated Research Limited for the financial year ended 30 June 2024
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 2024 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 Report 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.
d)
the consolidated entity disclosure statement required by section 295(3A) of the Corporations Act is true and
correct;
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 2024.
This declaration is made in accordance with a resolution of the Directors.
Dated at North Sydney 20 August 2024.
Peter Lloyd
Chairman
72
Integrated Research Limited
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Auditor’s independence declaration to the Directors of Integrated Research
Limited
As lead auditor for the audit of the financial report of Integrated Research Limited for the financial
year ended 30 June 2024, I declare to the best of my knowledge and belief, there have been:
a.
No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit;
b.
No contraventions of any applicable code of professional conduct in relation to the audit; and
c.
No non-audit services provided that contravene any applicable code of professional conduct in
relation to the audit.
This declaration is in respect of Integrated Research Limited and the entities it controlled during the
financial year.
Ernst & Young
Julian M. O’Brien
Partner
20 August 2024
Auditor’s Independence Declaration
73
Annual Report 2024
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Independent auditor’s report to the members of Integrated Research
Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Integrated Research Limited (the Company) and its
subsidiaries (collectively the Group), which comprises the consolidated statement of financial position
as at 30 June 2024, the consolidated statement of comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year then ended, notes to the
financial statements, including material accounting policy information, the consolidated entity
disclosure statement and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
a.
Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2024
and of its consolidated financial performance for the year ended on that date; and
b.
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
Independent Auditor’s Report
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Integrated Research Limited
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 2
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
financial report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
Revenue recognition for multiple-element arrangements
Why significant
How our audit addressed the key audit matter
For the year ended 30 June 2024 the Group’s
revenue streams consist of Licence fees $59.1
million, Maintenance fees $14.3 million,
Subscription fees $2.2 million, Testing solution
services $3.1 million and Professional services
$4.6 million as presented in the consolidated
statement of comprehensive income, and
disclosed in Note 1 to the financial statements.
The majority of the Group’s sales contracts
involve multiple-element arrangements, for
example a single software sales transaction that
combines the delivery of a software license and
rendering of maintenance and other
professional services.
Revenue recognition for multiple-element
arrangements was considered to be a key audit
matter due to the complexity of the multi-
element contracts and the judgment required to
allocate the revenue amongst respective
contracted activities.
Our audit procedures included the following:
► Assessed the appropriateness of the Group’s
revenue recognition accounting policies
relating to multi-element arrangements in
accordance with the relevant requirements
of AASB15 Revenue from contracts with
customers.
► For a sample of contracts,
•
assessed the Group’s identification and
separation of each element and
assessed whether the allocation of total
contract revenue to each element in the
multiple-element arrangements is
correct based on the underlying
contract terms.
•
assessed whether the revenue
recognition criteria of each element in
the multiple-element arrangements had
been met in accordance with AASB 15,
which included the determination of
whether the control associated with the
relevant licensed software passed to the
customer in the reporting period.
► Assessed the adequacy and appropriateness
of the disclosures included in the Notes to
the financial report.
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Annual Report 2024
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 3
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the
information included in the Company’s 2024 annual report, but does not include the financial report
and our auditor’s report thereon. We obtained the directors’ report, the remuneration report and the
Corporate Governance Statement that are to be included in the annual report, prior to the date of this
auditor’s report, and we expect to obtain the remaining sections of the annual report after the date of
this auditor’s report.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of:
►
The financial report (other than the consolidated entity disclosure statement) that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001; and
►
The consolidated entity disclosure statement that is true and correct in accordance with the
Corporations Act 2001; and
for such internal control as the directors determine is necessary to enable the preparation of:
►
The financial report (other than the consolidated entity disclosure statement) that gives a true
and fair view and is free from material misstatement, whether due to fraud or error; and
►
The consolidated entity disclosure statement that is true and correct and is free of misstatement,
whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
Independent Auditor’s Report
76
Integrated Research Limited
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 4
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
►
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
►
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
►
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
►
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
►
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
►
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
77
Annual Report 2024
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 5
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 20 to 33 of the directors’ report for the
year ended 30 June 2024.
In our opinion, the Remuneration Report of Integrated Research Limited for the year ended 30 June
2024, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Ernst & Young
Julian M. O’Brien
Partner
Sydney
20 August 2024
Independent Auditor’s Report
78
Integrated Research Limited
Shareholder Information
Analysis of numbers of equity security holders by size of holding as at 25 September 2024
Class of equity security
Ordinary shares
Holdings Ranges
Shareholders
Options Holders
Performance
Rights Holders
1 -1,000
1,078
-
-
1,001 - 5,000
1,754
-
-
5,001 - 10,000
735
-
4
10,001 - 100,000
1,166
-
91
100,001 and over
154
2
6
4,887
2
101
Fully Paid Ordinary Shares (Total)
Twenty largest security holders of quoted equity securities as of 25 September 2024
Rank
Name
Units
% Units
1
STEPHEN JOHN KILLELEA
51,880,619
29.25
2
CITICORP NOMINEES PTY LIMITED
9,363,107
5.28
3
MR NICHOLAS BARRY DEBENHAM + MRS ANNETTE CECILIA DEBENHAM
6,389,520
3.60
4
B & R JAMES INVESTMENTS PTY LIMITED
5,630,000
3.17
5
SANTOS L HELPER PTY LTD
5,125,247
2.89
6
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
3,069,294
1.73
7
ANDREW RHYS RUTHERFORD
2,794,210
1.58
8
ANACACIA PTY LTD
1,686,898
0.95
9
BNP PARIBAS NOMINEES PTY LTD
1,560,780
0.88
10
MR NICHOLAS BARRY DEBENHAM
1,475,200
0.83
11
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
1,374,407
0.77
12
BNP PARIBAS NOMS (NZ) LTD
1,293,247
0.73
13
GARRETT SMYTHE LTD
1,219,053
0.69
14
GRAHAM NEWMAN PTY LTD
1,159,300
0.65
15
TEN TALENTS (2020) LIMITED
1,156,905
0.65
16
MR PARAMDEEP SINGH GHUMMAN
1,132,000
0.64
17
CUSTODIAL SERVICES LIMITED
1,027,572
0.58
18
MS KYLIE LYNETTE NUSKE + MR MATTHEW JAMES COOK
1,022,238
0.58
19
IOOF INVESTMENT SERVICES LIMITED
930,915
0.52
20
WAUCHOPE & KILGOUR PTY LTD
830,000
0.47
Totals: Top 20 holders of FULLY PAID ORDINARY SHARES (Total)
100,120,512
56.45
Total Remaining Holders Balance
77,232,196
43.55
Total Number of Ordinary Shares on Issue
177,352,708
100.00
79
Annual Report 2024
Shareholder Information
Unquoted equity securities
Number on issue
Number
of holders
Option issued under the Integrated Research Limited
Employee Option Plan to take up ordinary shares
876,769*
2
Performance Rights issued under the Integrated Research
Limited Performance Rights and Option Plan to take up ordinary shares
6,297,253**
101
*
Number of unissued ordinary shares under the Options.
**
Number of unissued ordinary shares under the Performance Rights.
On-market buy-back
There is no current on-market buy-back.
Substantial holders
Substantial holders in the Company are set below:
Number held
Percentage
Stephen John Killelea*
52,218,231
29.44
*
Includes direct and indirect holdings at 25 September 2024.
Voting rights
The voting rights attaching to each class of equity securities are set out below:
1.
Ordinary shares
On a show of hands every member present at a meeting in person or proxy shall have one vote and upon a poll each
share have one vote.
2. Options
No voting rights.
3. Performance rights
No voting rights.
Other information
Integrated Research Limited, incorporated and domiciled in Australia, is a publicly listed Company limited by shares.
80
Integrated Research Limited
Corporate Directory
Directors
Peter Lloyd
Independent Non-Executive Director and Chairman
John Ruthven
Managing Director and Chief Executive Officer
Michael Hitz
Independent Non-Executive Director
Mark Brayan
Independent Non-Executive Director
Kate Greenhill
Independent Non-Executive Director
Company Secretary
Will Witherow
ABN
76 003 588 449
Registered Office
Level 9, 100 Pacific Highway
North Sydney NSW 2060
T. +61 (2) 9966 1066
Share Registry
Computershare
Solicitors
Ashurst
Level 11, 5 Martin Place
Sydney NSW 2000
Bankers
HSBC Bank Australia
Westpac Banking Corporation
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 2024 Annual General Meeting of Integrated Research Limited will be held on 25 November 2024.
A formal Notice of Meeting will be released in October.
81
Annual Report 2024
Asia Pacific/Middle East/Africa
Integrated Research Limited
Level 9, 100 Pacific Highway
North Sydney NSW 2060
Australia
T: +61 (2) 9966 1066
E. info.ap@ir.com
Singapore
Integrated Research (Singapore)
Pte. Ltd.
Unit 14-03, Palais Renaissance
390 Orchard Road
Singapore 238871
T: +65 6813 0851
E. info.ap@ir.com
United Kingdom & Ireland
Integrated Research UK Ltd
4 Crown Place, London
EC2A 4BT
United Kingdom
T: +44 (0) 1895 817 800
E. info.europe@ir.com
Americas
Integrated Research, Inc.
4700 S. Syracuse Street, Suite 1000
Denver, CO 80237, USA
T: +1 (303) 390 8700
F: +1 (303) 390 8777
E. info.usa@ir.com
www.ir.com