intelliHR
Annual Report 2020

Plain-text annual report

2020 A R N E N P U O A R L T For personal use onlyTHIS PAGE LEFT INTENTIONALLY BLANK For personal use onlyC O N T E N T S CONTENTS 2020 HIGHLIGHTS 29 SHARES UNDER OPTION 74 DIRECTORS’ DECLARATION 4 5 6 CORPORATE DIRECTORY CHAIRMAN AND MANAGING DIRECTOR'S LETTER 8 DIRECTORS' REPORT 10 INFORMATION ON DIRECTORS 30 INSURANCE OF OFFICERS AND INDEMNITIES 31 NON-AUDIT SERVICES 32 DECLARATION OF INDEPENDENCE 75 79 INDEPENDENT AUDITOR’S REPORT REPORT ON THE REMUNERATION REPORT 80 SHAREHOLDER INFORMATION 33 CORPORATE GOVERNANCE 80 Distribution of equity securities 81 Equity security holders 82 Substantial holders 82 Voting rights 18 MEETINGS OF DIRECTORS STATEMENT 19 REMUNERATION REPORT (AUDITED) 19 Key management personnel covered in this report 20 Remuneration policy and link to performance 21 Elements of remuneration 22 Link between remuneration and performance 23 Remuneration expenses for executive KMP 24 Contractual arrangements with executive KMP 24 Non-executive Director arrangements 24 Additional statutory information 37 FINANCIAL REPORT 38 Consolidated statement of profit or loss and other comprehensive income for the year ended 30 June 2020 39 Consolidated balance sheet As at 30 June 2020 40 Consolidated statement of changes in equity For the year ended 30 June 2020 41 Consolidated statement of cash flows For the year ended 30 June 2020 42 NOTES TO THE FINANCIAL REPORT 42 Note 1 Summary of significant accounting policies 58 Note 10 Investments 66 Note 20 Cash flow information 58 Note 11 Trade and other 68 Note 21 Share-based payments 52 Note 2 Parent information receivables 53 Note 3 Revenue 59 Note 12 Plant and equipment 70 Note 22 Events after the reporting date 53 Note 4 Loss for the year 60 Note 13 Leases 71 Note 23 Related party transactions 54 Note 5 Income tax expense 60 Note 14 Intangible assets 72 Note 24 Contingent Assets 56 Note 6 Key Management Personnel Compensation 56 Note 7 Auditor’s Remuneration 57 Note 8 Earnings per share 58 Note 9 Cash and cash equivalents 62 Note 15 Trade and other payables 62 Note 16 Provisions 63 Note 17 Contributed equity 65 Note 18 Reserves 65 Note 19 Operating segments and liabilities 72 Note 25 Commitments 72 Note 26 Financial risk management 3 For personal use only2 0 2 0 H I G H L I G H T S (NON INTERNATIONAL FINANCIAL REPORTING STANDARDS MEASURES) C O N T R A C T E D S U B S C R I B E R S C O N T R A C T E D A R R 14,531 $1,955,000 M I L E S T O N E O F 2 0 , 0 0 0 A N N U A L R E C U R R I N G R E V E N U E N O W I N S I G H T E X C E E D E D  U P 5 3 . 7 % Y O Y  U P 6 2 . 3 % Y O Y C O N T R A C T E D C U S T O M E R S C A S H R E C I E P T S 109 O P E R A T I N G I N 1 5 G L O B A L C O U N T R I E S  U P 5 1 Y O Y $1,501,000 C A S H G E N E R A T E D F R O M C U S T O M E R S  U P 1 2 6 % Y O Y G L O B A L R E V E N U E A V E C O N T R A C T E D C U S T O M E R A R R 25.1% NEW ZEAL AND, US, CANADA, EUROPE, UK, THAIL AND, PHILIPPINES, INDIA AND SING APORE + MORE $17,938 A N N U A L R E C U R R I N G R E V E N U E T O T A L C U S T O M E R L I F E T I M E V A L U E N E T P R O M O T E R S C O R E $12,676,875 4 74 Annual Report2020For personal use only CORPORATE DIRECTORY C O R P O R AT E D I R E C T O R Y DIRECTORS G Baynton M.Econ St, MBA, B.Bus, P.G.Dip. Applied Fin & Inv. A Bellas B.Econ, DipEd, MBA, FAICD, FCPA, FAIM A Bignell B.Bus, MBA, CPA R Bromage B.Bus, CAHRI N Cook B.Arts, MBA, GAICD J Duffield MAICD D Slocomb B.Bus (Fin), LLB (Hons I), MFin SECRETARY S M Yeates CA, B.Bus PRINCIPAL PLACE OF BUSINESS REGISTERED OFFICE SHARE REGISTER AUDITOR SOLICITORS Level 28, 345 Queen Street, Brisbane QLD 4000 Level 28, 345 Queen Street, Brisbane QLD 4000 Link Market Services Limited Level 21, 10 Eagle Street Brisbane QLD 4000 www.linkmarketservices.com.au BDO Audit Pty Ltd Level 10, 12 Creek Street Brisbane QLD 4000 www.bdo.com.au Atkinson Corporate Lawyers Level 8 99 St Georges Tce Perth, WA, 6000 BANKERS Commonwealth Bank of Australia STOCK EXCHANGE LISTING intelliHR Limited shares are listed on the Australian Securities Exchange (ASX:IHR). WEBSITE ADDRESS www.intellihr.co 5 For personal use onlyCHAIRMAN AND MANAGING DIRECTOR'S LET TER CHAIRMAN AND MANAGING DIRECTOR'S LET TER It is our pleasure to present the Annual Report of intelliHR Limited for the year to 30 June 2020. Tony Bellas Rob Bromage Having commenced operations in 2014, intelliHR commercialised its product in 2016 and listed on the Australian Stock Exchange worldwide, signing up and supporting a further 49 organisations with thousands of their employees in a matter of weeks. in 2018. “Product Market Fit” was established in 2019 and today intelliHR is an exciting global scale up. intelliHR did not lose focus on its business plan, continuing with its growth agenda to deliver important scale opportunities. It FY 2020 presented unprecedented operating conditions with achieved significant business milestones including securing its the COVID-19 global pandemic gripping the world in a health crisis, simultaneously crippling economies worldwide due to significant disruption to organisations caused by lengthy lock down restrictions. Many organisations were forced to scale back their workforces and pause all planned investments as they moved into a state of conservation and survival. In large numbers, organisations also responded by quickly transitioning to distributed workforces creating a seismic shift in the way they work. This disruption served to increase the relevance of intelliHR as an essential tool to assist organisations in managing the engagement and effectiveness of their greatest asset, their people. intelliHR successfully navigated the impact of the pandemic, with decisive actions to protect both its team members and cash reserves. The business demonstrated agility and innovation to support its customers by creating a COVID-19 HR Essentials capability rolling it out late March 2020 to existing customers. It also proudly made the solution free for any organisation 100th paying customer, launch of three new products under a value based pricing model and the establishment of an embryonic sales force in North America, a key target market which is 15 times larger than the Australia-New Zealand market. In December 2019, a leading Australian mid-market private equity firm, Colinton Capital Partners, invested $2.74 Million to cornerstone intelliHR, becoming its largest investor recognising the global growth opportunity and differentiated product offering of customisability and analytical capabilities. Still an early stage technology business, intelliHR is in a very exciting growth phase having recorded its strongest 12 month period of customer cash receipts and revenue growth. The Company successfully grew revenue by 161%, almost tripling from $478,838 in FY2019 to $1,250,471 in FY2020 year. Cash receipts increased 126% to $1.5 Million. Revenue retention for the 12 months to June 2020 was also excellent at 113%, up from 111% as at June 2019. 6 Annual Report2020For personal use onlyCHAIRMAN AND MANAGING DIRECTOR'S LET TER Key drivers of performance have included the Company’s Slattery through the Slattery Family Trust. The investment of investment into growth of the sales pipeline and continued $2.5 million was made through a placement of shares at 7.5 cents optimisation to win new business faster in the mid-market per share. This placement formed the cornerstone for a 1 for through its direct sales channel and integration partners, including notable global brands such as Xero the global small 5 rights issue, also at 7.5 cents per share, to existing investors to raise a further $3.0 million. The rights issue was jointly business platform with intelliHR receiving certification of its underwritten by Colinton Capital Partners and Bevan Slattery. payroll on-boarding app. This capital raising has strengthened the company’s balance intelliHR has also honed its product and market focus upon sheet and will provide additional funds to: accelerate intelliHR’s People Management to better leverage the competitiveness of global expansion strategy; increase its marketing investment our Performance HR capabilities. A key competitive advantage in the North American market; and support ongoing R&D and is our SaaS technology which delivers our best-in-breed people product development. management systems, allowing organisations to maintain a real-time handle on performance, create a culture aligned with business strategy and contribute to strategic decision-making with data-driven insights. intelliHR continues to deliver results for our 153 high profile customers (109 paying) including lower costs, higher productivity and improved revenues. The value of intelliHR’s people management platform to its customers is reflected in its strong customer retention to date. intelliHR’s global relevance is also evidenced by the expansion of subscribers into 15 countries and 25% of revenue is now accounted for by our global subscriber base. In the year ahead, the Company’s growth strategy will be intensely focused on continuing to build scale and leverage the strong relationships being built with partners. It will continue to focus on high value integrations to support new customer lead generation opportunities and fast track the building of an ecosystem of integrated best in class HR tools, centred around intelliHR as the essential core people management platform for business. A significant post-balance day development has been the investment in intelliHR by Australian tech entrepreneur, Bevan In closing, we would like to thank the talented and energetic team at intelliHR for their efforts over the year. As well, we would like to thank our other Independent Directors, Greg Baynton, Alan Bignell, Jamie Duffield, Nicole Cook and David Slocomb for their diligence and support in guiding the Company through this exciting phase in its development. TONY BELLAS Chairman ROB BROMAGE Managing Director 7 For personal use onlyDIRECTORS' REPORT DIRECTORS' REPORT Your Directors present their report on the consolidated entity consisting of intelliHR Limited and the entities it controlled at the end of, or during, the year ended 30 June 2020. Throughout the report, the consolidated entity is referred to as the Group. DIRECTORS AND COMPANY SECRETARY to keep their staff connected and engaged during this period The following persons were Directors of intelliHR Limited during the whole of the financial year or from the date of appointment and up to the date of this report. of significant workplace disruption. The COVID-19 product functionality was added to existing customer platforms and was then subsequently made free to organisations globally. ˆ A Bellas ˆ R Bromage ˆ G Baynton ˆ J Duffield ˆ A Bignell ˆ D Slocomb ˆ N Cook REVIEW OF OPERATIONS The Company Secretary is Suzanne Yeates. Suzanne was appointed to the position of Company Secretary in 2016. She is a Chartered Accountant, Founder and Principal of Outsourced Accounting Solutions Pty Ltd. She holds similar positions with other public and private companies. PRINCIPAL ACTIVITIES The principal activities of the Group during the financial year were the development of an innovative, cloud-based people management platform. No significant change in the nature of these activities occurred during the period. DIVIDENDS FY2020 delivered continued levels of growth. Despite the broader impact of the COVID-19 pandemic, intelliHR executed its strongest 12 month period of customer cash receipts and revenue growth, efficiently leveraging capital to continue to execute a high growth strategy and position well for future scaling opportunities. Financial Performance ˆ 161% Revenue growth, an increase of $772,000 over FY2019 ˆ 126% Customer Cash Receipts growth, an increase of $835,863 over FY2019 ˆ 37% or $1,165,082 improvement in net cash outflow from operating activities reducing from ($3,177,654) in FY 2019 to ($2,012,572) in FY 2020 ˆ 35.5% or $621,006 improvement in net cash outflow from investing activities reducing from ($1,750,664) in FY 2019 to ($1,129,658) in FY 2020. The Directors do not recommend the payment of a dividend. Customer Growth No dividend was paid during the year. COVID 19 IMPACT intelliHR responded to the unprecedented conditions created by COVID-19 by taking measures to preserve its business, including reviewing its budgets, tightly controlling cash flow and successfully deploying measures to protect both its existing customer portfolio and sales pipeline. The business created a new “freemium” platform capability aimed at assisting businesses ˆ Global expansion with users now extending across 15 countries; 25% of revenue is accounted for by our Global Activities, and this is expected to continue rapidly expanding ˆ $1.96M Contracted ARR, 109 paying customers and 14,531 paying subscribers contracted as at 30 June 2020 with significant milestone of 100 paying customers contracted achieved in May 2020. ˆ 61% Annual Recurring Revenue (ARR) growth contracting $738,661 ARR over FY2020 ˆ Launch of Freemium COVID-19 HR Essentials platform signing up 49 customers in addition to the 109 paying customers on platform ˆ Increased traction was achieved across key established industries including Professional Services, Technology, Financial Services, 8 Annual Report2020For personal use onlyEngineering, Not For Profit and General Industry, whilst growing strongly in new sectors of Medical, Pharmacy, Pathology and Allied Health. Operational Performance ˆ Reorganisation of the product and engineering teams to achieve deeper innovation, product leadership and velocity ˆ Expansion of the public API - giving flexibility to connect intelliHR with other technologies used across business operations ˆ Continued R&D investment into Analytics & AI notably intelliHR’s beta insight generation capabilities were released to select customers for testing, together with a variety of key IP development initiatives being progressed ˆ Significant technology transformation projects were undertaken and completed to increase platform performance for enterprise data sets and improving user experience ˆ Continued expansion of the Partner Program to over 40 consulting service providers and technology vendors including notable certification by the Xero and admission into the Xero App Marketplace for intelliHR’s payroll onboarding app ˆ Successful repricing of Professional Services fees resulting in an increase in revenue from implementation services ˆ Growth of sales pipeline. As at 30 June 2020 the qualified sales pipeline had 376 active customer sales opportunities with potential total ARR estimated to be in excess of $16.4m. Strategic and Outlook ˆ In December 2019, leading Australian mid-market private equity firm Colinton Capital Partners invested $2.74 Million to cornerstone intelliHR, becoming intelliHR’s largest investor recognising the global growth opportunity and differentiated product offering of the business ˆ In March 2020, the introduction of a freemium product created community goodwill during the pandemic whilst demonstrating the configurability of the platform and adding a new lead generation source. An evergreen freemium product is currently in development ˆ In May 2020, launched a value-based pricing model offering three different plans to suit individual customer requirements and positioning the business to execute a genuine land- and-expand strategy. The greater level of sophistication in the way intelliHR packages its offering increases the range of customer size and complexity by targeting different audiences at different price points with different emergent problems to solve ˆ In June 2020, subsidiary intelliHR America’s Ltd was established, initially employing 2 sales people based in Toronto Canada to service North America expanding operating hours to 21 hours coverage. Market reach subsequently is now increased by a 15x multiple. Overall, intelliHR has achieved positive growth and momentum during unprecedented times. It has continued to invest DIRECTORS’ REPORT into efficiently scaling sales operations through a range of development initiatives including product refinement and market expansion with the establishment of the America's sales team. Our technology has demonstrated proven results for customers and continues to successfully compete with incumbent technologies, locally and globally. intelliHR’s business model is becoming more sophisticated and will continue to be developed with a healthy balance of disruptive innovation and customer feedback. We are very pleased with our progress over the year and excited by what we expect to achieve in 2021. As disclosed in the financial report, the Group achieved a net loss of $4,820,837 (2019: $5,432,113) and net operating cash outflows of $2,012,572 (2019: $3,177,654) for the year ended 30 June 2020. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS In December 2019, $2.74 million was raised through the placement of 36,500,000 shares. LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS Comments on likely developments and expected results of operations are included in the review of operations above. EVENTS SINCE THE END OF THE FINANCIAL YEAR Since the 30 June 2020, the Company has : a. Announced a $5.5 million capital raising, consisting of a $2.5 million placement (of which 2,731,956 fully paid ordinary shares were issued on 10 August 2020, the balance is subject to Shareholder approval) and a 1 for 5 fully underwritten non-renounceable rights issue which will raise $3 million. Shares under both the placement and the rights issue will be issued at $0.075 per share. b. c. Issued 4,181,888 fully paid ordinary shares on the exercise of options held by employees and Directors. Issued 1,375,758 fully paid ordinary shares on the vesting of performance rights. No other matters or circumstances have arisen since the end of the financial year which significantly affected or could significantly affect the operations of the company, the results of those operations or the state of affairs of the company in future financial years. 9 For personal use onlyINFORMATION ON DIRECTORS "intelliHR’squickresponse totheunprecedented challengesofCovid-19 hasassistedorganisations toreshapetheir workplaces." A BELLAS Chair – Non-executive EXPERIENCE AND EXPERTISE OTHER CURRENT DIRECTORSHIPS Mr Bellas brings over 30 years of experience in the public Chairman of NOVONIX Limited (ASX: NVX) and Director of State and private sectors. Tony was previously CEO of the Seymour Gas Limited (ASX: GAS). Group, one of Queensland’s largest private investment and development companies. Prior to joining the Seymour Group, Tony held the position of CEO of Ergon Energy, a Queensland Government- owned corporation involved in electricity distribution and retailing. Before that, he was CEO of CS Energy, also a Queensland Government-owned corporation and the State’s largest electricity generation company, operating over 3,500 MW of gas-fired and coal-fired plant at four locations. Tony had a long career with Queensland Treasury, achieving the position of Deputy Under Treasurer. Tony is a Director of the following unlisted companies: Loch Explorations Pty Ltd, Colonial Goldfields Pty Ltd, Burlington Mining Pty Ltd, Healthcare Logic Pty Ltd, West Bengal Resources (Australia) Pty Ltd and the Endeavour Foundation. He is also a director of the following FORMER LISTED DIRECTORSHIPS IN LAST 3 YEARS ˆ Corporate Travel Management Ltd (ASX: CTD) - Ceased March 2019 ˆ ERM Power Ltd (ASX: EPW) - Ceased February 2019 ˆ Shine Corporate Ltd (ASX: SHI) - Ceased June 2020. SPECIAL RESPONSIBILITIES ˆ Chairman of the Board ˆ Member of the Audit Committee ˆ Member of the Risk Committee INTERESTS IN SHARES AND OPTIONS listed companies: ˆ 4,131,288 ordinary shares 10 Annual Report2020For personal use onlyINFORMATION ON DIRECTORS "Respondingtothe uncertaintyof2020has beenoneofintelliHR's finesthours,witha ‘freemium’COVID-19 EssentialsHRproduct, whilegrowingits customerbase." G BAYNTON Non-Executive Director EXPERIENCE AND EXPERTISE OTHER CURRENT DIRECTORSHIPS Mr Baynton is Founder and Managing Director of ORBIT Non-executive Director of Superloop Limited (ASX: SLC). CAPITAL, an investment and advisory firm and holder of an Australian Financial Services Licence. He has been a Director of ASX-listed companies for over 20 years, in sectors including technology, infrastructure and resources. Mr Baynton has experience in investment banking, merchant banking, infrastructure investment, IPOs, public company directorships, Queensland Treasury and the Department of Mines and Energy. He holds a Bachelor of Business, a Postgraduate Diploma in Applied Finance and Investment, a Masters of Economic Studies, and a Masters of Business Administration. He is a Fellow of the Geological Society Executive Director of State Gas Limited (ASX: GAS) and NOVONIX Limited (ASX: NVX). FORMER LISTED DIRECTORSHIPS IN LAST 3 YEARS ˆ None SPECIAL RESPONSIBILITIES ˆ Chairman of the Audit Committee ˆ Member of the Risk Committee of London. INTERESTS IN SHARES AND OPTIONS ˆ 5,719,742 ordinary shares 11 For personal use onlyINFORMATION ON DIRECTORS "Inayearfullof unpredictablechallenges, intelliHRhasthrived duetothestrongand adaptablecommitment ofourpeople." A BIGNELL Non-Executive Director EXPERIENCE AND EXPERTISE OTHER CURRENT DIRECTORSHIPS Mr Bignell served as COO and CFO of simPRO Software ˆ None (an Australian SaaS software business) from 2012 to 2019 as it grew to become a successful global SaaS business. Mr Bignell has experience in operations management, finance, international capital raising, banking and finance. He holds a Masters of Business Administration and Bachelor of Business (Accountancy). FORMER LISTED DIRECTORSHIPS IN LAST 3 YEARS ˆ None SPECIAL RESPONSIBILITIES ˆ Member of the Audit Committee INTERESTS IN SHARES AND OPTIONS ˆ 206,630 ordinary shares 1 2 Annual Report2020For personal use onlyINFORMATION ON DIRECTORS "TheintelliHRleadership teamnavigated unprecedentedchallenging timesresultingina pivotalyearofgrowth andestablishingthe foundationsforthenext phaseofthebusiness." N COOK Non-Executive Director EXPERIENCE AND EXPERTISE OTHER CURRENT DIRECTORSHIPS Ms Cook is currently an independent advisor to growing scaleup and start-up businesses in Australia. Formerly the Managing Director of innovative global outsourced recruitment and HR firm PeopleScout, she oversaw the delivery and growth of their solutions in the APAC region ˆ Non-Executive Director, AMA Group Ltd (ASX: AMA) ˆ Chair, Advisory Board, Sydney School of Entrepreneurship FORMER LISTED DIRECTORSHIPS IN LAST 3 YEARS as well as the development of their recruitment platform, Springboard. Ms Cook has over 20 years of experience ˆ None growing SaaS based technology businesses, is a trusted management consultant and has deep domain expertise in human resources, energy efficiency, supply chain, fin tech and more. As the former CEO for Jobs for NSW, Ms Cook remains focused on driving innovation through growing Australian businesses in order to create the jobs and skills of the future . She holds a bachelor in French from the Catholic University of America, studied business at the School of European Business in Paris, France, completed a Senior Executive MBA at Melbourne Business School and is a graduate of the Australian Institute of Company Directors. SPECIAL RESPONSIBILITIES ˆ None INTERESTS IN SHARES AND OPTIONS Pursuant to a Call Option Deed with Colinton Capital Partners I (A) Pty Ltd (ACN 620 748 718) as Trustee for Colinton Capital Partners Fund I (A) Trust (CCP) dated 17 January 2020, Nicole Cook has an option to acquire 1,200,000 of the IHR ordinary shares (Cook Option Shares) held by CCP as the registered holder for an exercise price of $0.075, exercisable at any time before 17 January 2023, subject to certain vesting conditions. 13 For personal use onlyINFORMATION ON DIRECTORS "FY20wasastrongyearfor intelliHRwithrecordsales andaverystrongand happycustomerbase." J DUFFIELD Non-Executive Director EXPERIENCE AND EXPERTISE OTHER CURRENT DIRECTORSHIPS Mr Duffield has over 20 years of experience in the IT industry ˆ None and is the CEO and a Director of Revolution IT, a leading quality assurance consulting firm which he co-founded in 2004. He has strong risk, governance and commercial experience with expertise in driving growth through sales, marketing, mergers and acquisitions. Jamie is also a Director of www.crowdsprint.com and a graduate of the Australian Institute of Company Directors. FORMER LISTED DIRECTORSHIPS IN LAST 3 YEARS ˆ None SPECIAL RESPONSIBILITIES ˆ Chairman of the Risk Committee ˆ Member of the Audit Committee INTERESTS IN SHARES AND OPTIONS ˆ 3,462,986 ordinary shares 14 Annual Report2020For personal use onlyINFORMATION ON DIRECTORS "Iamsoproudofhow ourteamstoodupto supportourcustomersand communitythisyear. Wehavesuchahigh calibreandqualitygroup ofpeople." R BROMAGE Managing Director EXPERIENCE AND EXPERTISE OTHER CURRENT DIRECTORSHIPS Mr Bromage is a HR Professional with 22 years in the industry. ˆ None An experienced businessman his entrepreneurial flair and continuous, forward-thinking improvement is fueled by his passion for HR and high-performing business. His career has FORMER LISTED DIRECTORSHIPS IN LAST 3 YEARS centered around the field of building validated performance ˆ None prediction models, developing his expertise in human capital management analytics. He actively researches the future of SPECIAL RESPONSIBILITIES people management, which drives intelliHR’s evolution. ˆ Managing Director INTERESTS IN SHARES AND OPTIONS ˆ 22,563,978 ordinary shares ˆ 4,728,875 options over ordinary shares Career highlights include: ˆ Founder and current CEO of intelliHR – an Australian HR technology business developing and currently marketing a next-generation cloud-based people management Platform ˆ Founder of APRG - a Human Capital Management Consulting organisation focused on delivering leading consulting services to Australian businesses. Specialties: People and Culture Strategy Alignment, Performance Management Frameworks, HR Process Design, Attrition Reduction, HR Software Development, HR Technology Implementation, HR Metrics and Predictive Analytics. 15 For personal use onlyINFORMATION ON DIRECTORS "intelliHRdeliveredrobust growthinFY20despite COVID-19andiswell positionedtobenefitfrom thestructuralshiftto remoteworking." D SLOCOMB Non-Executive Director EXPERIENCE AND EXPERTISE OTHER CURRENT DIRECTORSHIPS Mr Slocomb is a Junior Partner/Managing Director at ˆ None Australian mid-market private equity firm, Colinton Capital. Mr Slocomb has significant prior experience in private equity and investment banking with former roles at global investment FORMER LISTED DIRECTORSHIPS IN LAST 3 YEARS firms The Carlyle Group, Oaktree Capital and Macquarie Group. He was also previously CFO at Guzman y Gomez. He ˆ None holds a Masters of Finance from INSEAD Business School and a SPECIAL RESPONSIBILITIES Bachelor of Business (Finance)/Bachelor of Laws (Hons I) from ˆ None the Queensland University of Technology. INTERESTS IN SHARES AND OPTIONS ˆ None 16 Annual Report2020For personal use onlyOur purpose is to have a meaningful and positive impact on people’s lives at work so they can do their best. Our vision is to be the # 1 people technology platform in the world, renowned for transforming workplaces for the better one at a time. Our mission is to be the most valuable, addictive and must-have technology for every person, leader and enterprise worldwide. 17 For personal use onlyDIRECTORS’ REPORT MEETINGS OF DIRECTORS The number of meetings of the Company’s Board of Directors and of each board committee held during the year ended 30 June 2020, and the number of meetings attended by each Director were: FULL MEETINGS OF DIRECTORS MEETINGS OF AUDIT COMMITTEE A Bellas G Baynton J Duffield A Bignell D Slocomb N Cook R Bromage A 6 7 6 4 3 3 7 B 7 7 7 4 3 3 7 A 2 2 2 N/A N/A N/A N/A B 2 2 2 N/A N/A N/A N/A A = Number of meetings attended B = Number of meetings held during the time the Director held office or was a member of the committee during the year 18 Annual Report2020For personal use only REMUNERATION REPORT REMUNER ATION REPORT (AUDITED) The Directors present the intelliHR Limited 2020 remuneration report, outlining key aspects of our remuneration policy and framework, and remuneration awarded this year. The report is structured as follows: (a) (b) (c) (d) Key management personnel (KMP) covered in this report Remuneration policy and link to performance Elements of remuneration Link between remuneration and performance (e) (f) (g) (h) Remuneration expenses for executive KMP Contractual arrangements for executive KMP Non-executive Director arrangements Additional statutory information (A) KEY MANAGEMENT PERSONNEL COVERED IN THIS REPORT NON-EXECUTIVE AND EXECUTIVE DIRECTORS, AND OTHER KEY MANAGEMENT PERSONNEL (See pages 10 to 16 for details about each Director) NON-EXECUTIVE DIRECTORS A Bellas (Non-executive Chairman) G Baynton (Non-executive Director) J Duffield (Non-executive Director) A Bignell (Non-executive Director) (Appointed 9 September 2019) D Slocomb (Non-executive Director) (Appointed 8 January 2020) N Cook (Non-executive Director) (Appointed 17 January 2020) EXECUTIVE DIRECTORS R Bromage (Managing Director) OTHER KEY MANAGEMENT PERSONNEL P Trappett (Chief Operating Officer) 19 For personal use onlyREMUNERATION REPORT (B) REMUNERATION POLICY AND LINK TO PERFORMANCE The role of a remuneration committee is performed by the full Board of Directors. The Board reviews and determines the remuneration policy and structure annually to ensure it remains aligned to business needs and conforms with our remuneration principles. In particular, the Board aims to ensure that remuneration practices are: ˆ competitive and reasonable, enabling the Group to attract and retain key talent ˆ aligned to the Group’s strategic and business objectives and the creation of shareholder  value ˆ transparent and easily understood, and ˆ align with shareholder interests and are acceptable to shareholders ELEMENT PURPOSE PERFORMANCE METRICS POTENTIAL VALUE CHANGES FOR FY 2020 Fixed remuneration (FR) Provide competitive market salary including superannuation and non-monetary benefits Nil Positioned at median market rate None STI LTI Reward for in-year performance Based on individual KPIs. 50% of TFR Introduction of STIs Alignment to long-term Performance vesting shareholder value conditions 50% of TFR Introduction of formal LTIs Long term incentives are assessed periodically and are designed to promote long-term stability in shareholder returns. Assessing performance The Board of Directors is responsible for assessing performance against KPIs and determining the LTI to be paid. 20 Annual Report2020For personal use onlyREMUNERATION REPORT (C) ELEMENTS OF REMUNERATION (i) Fixed annual remuneration (FR) Executives receive their fixed remuneration as cash. FR is reviewed annually and is benchmarked against market data for comparable roles in companies in a similar industry and with similar market capitalisation. The Board has the flexibility to take into account capability, experience, value to the organisation and performance of the individual. The  Group has not engaged an external remuneration consultant during FY2020. Superannuation is included in FR for executives. (ii) Short term incentives Short term incentives for all key management personnel (excluding non-executive Directors) have been implemented for FY2020. They are eligible to receive a cash bonus of up to 50% of their total fixed remuneration at the end of the financial year subject to the executive achieving the KPIs set for them during the financial year. The Group reserves the right to pay any STI in either cash, fully paid ordinary shares or performance rights at the Board of Director’s sole discretion. If an executive does not achieve each of the KPIs during the financial year, the Board shall determine the appropriate pro rate STI to be received by the Executive. The Board of Directors shall make this determination for both the Managing Director and the Chief Operating Officer. For the year ended 30 June 2020, key performance indicators were based on the Group objectives focusing on customer growth. Achievement against KPIs is reviewed annually by the Board of Directors. For each KMP eligible for short-term incentive, the percentage split of the available bonus awarded and forfeited is disclosed in the following table. NAME R Bromage P Trappett 2020 2019 AWARDED % 75%** 64%* FORFEITED % AWARDED % FORFEITED % 25% 36% 0% 54% 100% 46% * STI awarded for 2020 will be settled in shares. ** STI awarded to be settled in shares subject to shareholder approval. 2 1 For personal use onlyREMUNERATION REPORT (iii) Long-term incentives Executive KMP participate, at the Board’s discretion, in a performance based long term incentive program (LTI) with a maximum annual benefit of 50% of TFR, which is assessed over a three year period and is payable in shares or performance rights at the discretion of the Board. Performance is assessed against an earnings per share growth hurdle, unless otherwise agreed. Options There were no options granted to KMP during FY2020. (D) LINK BETWEEN REMUNERATION AND PERFORMANCE During the year, the Group has generated losses from its principal activity. As the Group is still growing the business, the link between remuneration, Group performance and shareholder wealth is difficult to define. Share prices are subject to the influence of fluctuation in the domestic and global economy, and as such, increases and decreases may occur independently of executive performance. Given the nature of the Group’s activities and the consequential operating results, no dividends have been paid. There have been no returns of capital in the current or previous financial periods. The details of market price movements are as follows: Year end 30 June 2020 Year end 30 June 2019 On admission to ASX - 23 January 2018 SHARE PRICE 5.2 cents 7.7 cents 30 cents 2 2 Annual Report2020For personal use only(E) REMUNERATION EXPENSES FOR EXECUTIVE KMP The following table shows details of the remuneration expense recognised for the Group’s executive key management personnel for the current and previous financial year measured in accordance with the requirements of the accounting standards. REMUNERATION REPORT FIXED REMUNERATION VARIABLE REMUNERATION CASH SALARY $ NON- MONETARY BENEFITS $ ANNUAL AND LONG SERVICE LEAVE** $ POST- EMPLOYMENT BENEFITS $ OPTIONS* $ STI $ TOTAL $ RELATED TO PERFORMANCE % NAME YEAR EXECUTIVE DIRECTORS R Bromage 2020 J Fong 2019 2020 2019 300,000 300,000 - 220,546 NON-EXECUTIVE DIRECTOR A Bellas 2020 2019 G Baynton 2020 2019 J Duffield 2020 A Bignell 2019 2020 2019 30,000 30,000 30,000 30,000 30,000 30,000 24,318 - D Slocomb 2020 15,793 N Cook 2019 2020 2019 - 13,615 - OTHER KEY MANAGEMENT PERSONNEL P Trappett 2020 2019 180,000 175,846 TOTAL KMP REMUNERATION EXPENSED 7,042 7,314 - - - - - - - - - - - - - - - - 16,843 23,360 - 28,500 28,500 - 69,693 - 27,846 112,500 (54,619) 16,442 (87,686) - - - - - - - - - - - - 2,850 2,850 2,850 2,850 2,850 2,850 2,310 - - - 1,293 - 7,685 53,969 7,631 53,686 7,685 53,969 - - - - - - 4,766 6,203 17,100 16,705 106,286 119,977 - - - - - - - - - - - - - - - - - 492,731 428,867 - 94,683 40,535 86,819 40,481 86,536 40,535 86,819 26,628 15,793 28.5% 16.3% - (92.6%) 19.0% 62.2% 18.9% 62.0% 19.0% 62.2% 0% - 0% - 14,908 0% - - 308,152 318,731 34.5% 37.6% - - 2020 2019 623,726 786,392 7,042 7,314 21,609 (25,056) 57,753 157,133 112,500 979,763 70,197 263,608 - 1,102,455 * ** Options/performance rights granted under the executive options or performance rights Incentive plan are expensed over the performance period, which includes the year in which the options / performance rights are granted and the subsequent vesting period. Other long-term benefits as per Corporations Regulation 2M.3.03(1) Item 8. The amounts disclosed in this column represent the movements in the associated provision. They may be negative where a KMP has taken more leave than accrued during the year. 23 For personal use onlyREMUNERATION REPORT (F) CONTRACTUAL ARRANGEMENTS WITH EXECUTIVE KMP COMPONENT Fixed remuneration Contract duration Notice by the individual / Company Termination benefits MD $328,500 Ongoing 6 months - COO $197,100 Ongoing 6 months - (G) NON-EXECUTIVE DIRECTOR ARRANGEMENTS All non-executive Directors receive fees of $30,000 per annum plus superannuation. Fees are reviewed annually by the Board taking into account comparable roles. The current base fees were reviewed with effect from 23 January 2018. The maximum annual aggregate non-executive Directors’ fee pool limit is $300,000 and was set out in the 2017 Prospectus. All non-executive Directors enter into a service agreement with the Group in the form of a letter of appointment. The letter summarises the Board policies and terms, including remuneration relevant to the office of Director. (H) ADDITIONAL STATUTORY INFORMATION (i) Performance based remuneration granted, exercised and  forfeited during the year The table below shows for each KMP the value of options that were granted, exercised and forfeited during FY2020. The number of options and percentages vested/forfeited for each grant are disclosed on page 25. LTI OPTIONS 2020 A Bellas G Baynton J Duffield A Bignell D Slocomb N Cooke R Bromage P Trappett VALUE GRANTED* $ VALUE EXERCISED** $ - - - - - - - - - - 90,174 - - - - - * ** The value at grant date calculated in accordance with AASB 2 Share-based Payment of options granted during the year as part of remuneration The value at the exercise date of options that were granted as part of remuneration and were exercised during the year has been determined as the intrinsic value of the options at that date. LTI PERFORMANCE RIGHTS 2020 P Trappett VALUE GRANTED* $ VALUE EXERCISED** $ 81,818 14,878 * ** The value at grant date calculated in accordance with AASB 2 Share-based Payment of options granted during the year as part of remuneration The value at the exercise date of performance rights that were granted as part of remuneration and were exercised during the year has been determined as the intrinsic value of the performance rights at that date. 24 Annual Report2020For personal use onlyREMUNERATION REPORT (ii) Terms and conditions of the share-based payment arrangements Options The terms and conditions of each grant of options affecting remuneration in the current or a future reporting period are as follows: GRANT DATE VESTING DATE EXPIRY DATE EXERCISE PRICE VALUE PER OPTION AT GRANT DATE PERFORMANCE ACHIEVED % VESTED 23/11/2016 23/11/2016 23/11/2016 23/11/2016 23/11/2016 23/11/2016 23/11/2016 23/11/2016 23/11/2016 23/11/2016 23/11/2016 23/11/2016 23/11/2016 23/11/2016 23/11/2016 23/11/2016 23/11/2016 23/11/2016 16/12/2016 16/12/2016 16/12/2016 16/12/2016 16/12/2016 16/12/2016 05/01/2017 05/01/2017 05/01/2017 05/01/2017 05/01/2017 05/01/2017 30/09/2018 31/12/2018 31/03/2019 30/06/2019 30/09/2019 31/12/2019 31/03/2020 30/06/2020 30/09/2020 30/09/2018 31/12/2018 31/03/2019 30/06/2019 30/09/2019 31/12/2019 31/03/2020 30/06/2020 30/09/2020 30/09/2018 31/12/2018 31/03/2019 30/06/2019 30/09/2019 31/12/2019 30/09/2018 31/12/2018 31/03/2019 30/06/2019 30/09/2019 31/12/2019 1/12/2021 1/12/2021 1/12/2021 1/12/2021 1/12/2021 1/12/2021 1/12/2021 1/12/2021 1/12/2021 1/12/2021 1/12/2021 1/12/2021 1/12/2021 1/12/2021 1/12/2021 1/12/2021 1/12/2021 1/12/2021 1/12/2021 1/12/2021 1/12/2021 1/12/2021 1/12/2021 1/12/2021 1/12/2021 1/12/2021 1/12/2021 1/12/2021 1/12/2021 1/12/2021 $0.01 $0.01 $0.01 $0.01 $0.01 $0.01 $0.01 $0.01 $0.01 $0.20 $0.20 $0.20 $0.20 $0.20 $0.20 $0.20 $0.20 $0.20 $0.01 $0.01 $0.01 $0.01 $0.01 $0.01 $0.04 $0.04 $0.04 $0.04 $0.04 $0.04 $0.1294 $0.1298 $0.1301 $0.1304 $0.1307 $0.1309 $0.1311 $0.1313 $0.1314 $0.1055 $0.1071 $0.1084 $0.1096 $0.1108 $0.1117 $0.1126 $0.1134 $0.1140 $0.1293 $0.1297 $0.1300 $0.1303 $0.1306 $0.1308 $0.1202 $0.1213 $0.1222 $0.1230 $0.1238 $0.1244 100% 100% 100% 100% 100% 100% 100% 100% - 100% 100% 100% 100% 100% 100% 100% 100% - 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% - 100% 100% 100% 100% 100% 100% 100% 100% - 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% The number of options over ordinary shares in the Company provided as remuneration to key management personnel is shown in the table on page 26. The options carry no dividend or voting rights. There are no other conditions that must be satisfied for the options to vest. When exercisable, each option is convertible into one ordinary share of intelliHR  Limited. 25 For personal use onlyREMUNERATION REPORT Performance Rights The terms and conditions of each grant of performance rights affecting remuneration in the current or a future reporting period are as follows: GRANT DATE VESTING DATE EXPIRY DATE EXERCISE PRICE VALUE PER PERFORMANCE RIGHT AT GRANT DATE PERFORMANCE ACHIEVED % VESTED 1/ 7/2018 1/9/2019 1/ 7/2021 1/ 7/2020 1/ 7/2022 1/9/2022 N/A N/A $0.20 $0.075 - 64% - 64% The number of performance rights over ordinary shares in the Company provided as remuneration to key management personnel is shown on page 27. The performance rights carry no dividend or voting rights. The performance rights vest as follows: a) 367,347 vest on 1 July 2021 if the relative total shareholder return is at or above the 3-year average of the S&P ASX small ordinaries Ex A-REIT Franking Credit Adjusted Annual Total Return Index Cap Index b) 1,090,909 vest on achievement of mutually agreed KPIs that relate to FY2020. When exercisable, each performance right is convertible into one ordinary share of intelliHR Limited. If an executive ceases employment before the rights vest, the rights will be forfeited, except in limited circumstances that are approved by the Board on a case-by-case basis. (iii) Reconciliation of options, performance rights and ordinary shares held by KMP The table below shows a reconciliation of options held by each KMP from the beginning to the end of FY2020. No options were forfeited during the year. 26 Annual Report2020For personal use onlyREMUNERATION REPORT Options 2020 NAME & GRANT DATES BALANCE AT THE START OF THE YEAR UNVESTED VESTED PLACEMENT BONUS OPTIONS GRANTED AS COMPENSATION VESTED EXERCISED VESTED AND EXERCISABLE % VESTED UNVESTED BALANCE AT THE END OF THE YEAR A BELLAS 16/12/2016 G BAYNTON 16/12/2016 05/01/2017 J DUFFIELD 16/12/2016 A BIGNELL - D SLOCOMB - N COOK - R BROMAGE 23/11/2016 P TRAPPETT 462,432 1,618,512 410,000 1,435,000 52,432 183,512 462,432 924,864 - - - - - - 1,217,362 2,678,181 833,332 - - - Performance Rights - - - - - - - - - - - - - - - - 462,432 410,000 52,432 - - - 2,080,944 100 1,845,000 235,944 100 100 - - - - - - - - 462,432 1,387,896 - - - 973,884 - - - - - - 4,485,397 95% 243,478 - - - The table below shows how many performance rights were granted and vested during the year. No performance rights were forfeited during the year: BALANCE AT THE START OF THE YEAR NAME & GRANT DATES UNVESTED VESTED VESTED DURING THE YEAR FORFEITED DURING THE YEAR GRANTED AS COMPENSATION BALANCE AT THE END OF THE YEAR UNVESTED VESTED MAXIMUM VALUE YET TO VEST* $ P TRAPPETT 2020 2019 734,694 - - - 198,367 (168,980) 1,090,909 1,458,256 - - 734,694 734,694 - - 24,534 49,002 * The maximum value of the performance rights yet to vest has been determined as the amount of the grant date fair value of the rights that are yet to be expensed. The minimum value of deferred shares yet to vest is nil, as the shares will be forfeited if the vesting conditions are not met. 27 For personal use onlyREMUNERATION REPORT Shareholdings 2020 NAME BALANCE AT THE START OF THE YEAR ISSUED ON EXERCISE OF OPTIONS OTHER CHANGES DURING THE YEAR BALANCE AT THE END OF THE YEAR ORDINARY SHARES A Bellas G Baynton J Duffield A Bignell D Slocomb N Cook R Bromage P Trappett 1,383,678 3,638,798 2,075,690 - - - 21,471,075 478,540 - - 1,387,296 - - - - 198,367 666,666** - - 206,630* - - 1,092,903*** 347,126** 2,050,344 3,638,798 3,462,986 206,630 - - 22,563,978 1,024,033 * Shareholding at date of appointment. ** Participation In August 2019 placement. *** 833,333 shares acquired In April 2019 placement and 259,570 acquired on market. (iv) Other transactions with key management personnel R Bromage, acting as trustee for The Bromage Family Investment Trust, loaned the Group $100,000 on the 2nd of May 2019. The loan was interest free and represents an advance on funds to acquire shares. The loan was repaid 3 days after the Extraordinary General Meeting held on the 5th August 2019 when shareholder approval was given to issue 833,333 fully paid ordinary shares with one attaching April Placement Option and one attaching April Placement Bonus Option for every 2 shares issued under the April Placement. END OF REMUNERATION REPORT (AUDITED) 28 Annual Report2020For personal use onlySHARES UNDER OPTION SHARES UNDER OPTION Unissued ordinary shares Unissued ordinary shares of intelliHR Limited under option at the date of this report are as follow: SECURITIES OPTIONS 23/11/2016 16/12/2016 05/01/2017 23/11/2016 01/04/2017 11/08/2017 27/02/2018 23/07/2018 PERFORMANCE RIGHTS 03/09/2018 09/11/2018 03/09/2019 EXPIRY DATE EXERCISE PRICE NUMBER UNDER OPTION 01/12/2021 01/12/2021 01/12/2021 01/12/2021 31/03/2022 11/08/2022 14/02/2023 30/06/2023 01/07/2022 01/11/2022 01/09/2022 $0.01 $0.01 $0.04 $0.20 $0.04 $0.02 $0.32 $0.30 N/A N/A N/A 377,778 5,313,240 298,838 3,895,543 32,000 693,000 294,000 370,000 367,347 250,000 1,878,788 Unissued ordinary shares of intelliHR Limited under performance right at the date of this report total 2,496,135. 1,458,256 of these performance rights are the performance rights granted as remuneration to Mr Trappett. The remaining 1,037,879 performance rights were granted to other employees during the prior financial year. Details of the performance rights granted to key management personnel are disclosed on page 27 above. No performance right holder or option holder has any right to participate in any other share issue of the Company or any other entity. No performance rights have been granted since the end of the financial year. 29 For personal use onlySHARES UNDER OPTION INSURANCE OF OFFICERS AND INDEMNITIES (a) Insurance of officers During the financial year, intelliHR Limited paid a premium of $96,134 to insure the Directors and Secretary of the Company. The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of entities in the Group, and any other payments arising from liabilities incurred by the officers in connection with such proceedings. This does not include such liabilities that arise from conduct involving a willful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else or to cause detriment to the Group. It is not possible to apportion the premium between amounts relating to the insurance against legal costs and those relating to other liabilities. (b) Indemnity of auditors intelliHR Limited has not agreed to indemnify their auditors. (c) Proceedings on behalf of the Company No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001. 30 Annual Report2020For personal use onlySHARES UNDER OPTION NON-AUDIT SERVICES The Group may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the Group are important. Details of the amounts paid or payable to the auditor (BDO) for audit and non-audit services provided during the year are set out below. The Board of Directors has considered the position and, in accordance with advice received from the audit committee, is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons: ˆ all non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and objectivity of the auditor ˆ none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants. During the year, the following fees were paid or payable for non-audit services provided by the auditor of the parent entity, its related practices and non-related audit firms: Taxation services BDO Qld Pty Ltd: Preparation of Tax and FBT Return, and R&D AusIndustry Return TOTAL REMUNERATION FOR NON-AUDIT SERVICES Auditor’s independence declaration CONSOLIDATED 2020 $ 29,725 29,725 2019 $ 44,844 44,844 A copy of the auditors independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 32. This report is made in accordance with a resolution of Directors. A Bellas Chairman Brisbane, 21 August 2020 31 For personal use onlyDECLARATION OF INDEPENDENCE 32 Annual Report2020Annual Report202032DECLARATION OF INDEPENDENCELevel 10, 12 Creek St Brisbane QLD 4000 GPO Box 457 Brisbane QLD 4001 Australia Tel: +61 7 3237 5999 Fax: +61 7 3221 9227 www.bdo.com.au DECLARATION OF INDEPENDENCE BY R M SWABY TO THE DIRECTORS OF INTELLIHR LIMITED As lead auditor of intelliHR Limited for the year ended 30 June 2020, I declare that, to the best of my knowledge and belief, there have been: 1.No contraventions of the auditor independence requirements of the Corporations Act 2001 inrelation to the audit; and2.No contraventions of any applicable code of professional conduct in relation to the audit.This declaration is in respect of intelliHR Limited and the entities it controlled during the year. R M Swaby Director BDO Audit Pty LtdBrisbane, 21 August 2020 BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. For personal use onlyCORPORATE GOVERNANCE STATEMENT Corporate governance statement intelliHR Limited and the Board are committed to achieving and demonstrating the highest standards of corporate governance. intelliHR Limited has reviewed its corporate governance practices against the Corporate Governance Principles and Recommendations (3rd edition) published by the ASX Corporate Governance Council. The 2020 corporate governance statement is dated as at 30 June 2020 and reflects the corporate governance practices in place throughout the 2020 financial year. The 2020 corporate governance statement was approved by the Board on 21 August 2020. A description of the Group’s current corporate governance practices is set out in the Group’s corporate governance statement which can be viewed at https://intellihr.com.au/investor-relations/#corporate-governance. 33 For personal use onlyTHIS PAGE LEFT INTENTIONALLY BLANK 34 Annual Report2020For personal use only2020 F I N A N C I A L R E P O R T 35 For personal use onlyFINANCIAL REPORT These financial statements are for intelliHR Limited. The financial statements are presented in the Australian currency. intelliHR Limited is a Company limited by shares, incorporated and domiciled in Australia. Its principal place of business is: intelliHR Limited Level 28, 345 Queen Street Brisbane QLD 4000 All press releases, financial reports and other information are available at our website: www.intellihr.co. 36 Annual Report2020For personal use onlyFINANCIAL REPORT ANNUAL REPORT 2020 FI N A N C I A L R E P O R T INTELLIHR LIMITED ACN 600 548 516 37 FINANCIAL REPORT 74 DIRECTORS’ DECLARATION 80 SHAREHOLDER INFORMATION 75 79 INDEPENDENT AUDITOR’S REPORT REPORT ON THE REMUNERATION REPORT 80 Distribution of equity securities 81 Equity security holders 82 Substantial holders 82 Voting rights 38 Consolidated statement of profit or loss and other comprehensive income for the year ended 30 June 2020 39 Consolidated balance sheet as at 30 June 2020 40 Consolidated statement of changes in equity for the year ended 30 June 2020 41 Consolidated statement of cash flows for the year ended 30 June 2020 42 NOTES TO THE FINANCIAL REPORT 42 Note 1 Summary of significant accounting policies 58 Note 10 Investments 66 Note 20 Cash flow information 58 Note 11 Trade and other 68 Note 21 Share-based payments 52 Note 2 Parent information receivables 53 Note 3 Revenue 59 Note 12 Plant and equipment 70 Note 22 Events after the reporting date 53 Note 4 Loss for the year 60 Note 13 Leases 71 Note 23 Related party transactions 54 Note 5 Income tax expense 60 Note 14 Intangible assets 72 Note 24 Contingent Assets 56 Note 6 Key Management Personnel Compensation 56 Note 7 Auditor’s Remuneration 57 Note 8 Earnings per share 58 Note 9 Cash and cash equivalents 62 Note 15 Trade and other payables 62 Note 16 Provisions 63 Note 17 Contributed equity 65 Note 18 Reserves 65 Note 19 Operating segments and liabilities 72 Note 25 Commitments 72 Note 26 Financial risk management 37 For personal use onlyFINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2020 Revenue Other income Employee benefits expense Directors remuneration Depreciation and amortisation expense Marketing expense Finance expense General and administrative expense Loss before income tax expense Income tax expense Other comprehensive income for the period, net of tax TOTAL COMPREHENSIVE INCOME FOR THE PERIOD Earnings per share for loss from continuing operations attributable to the ordinary equity holders of the Company: Basic earnings per share Diluted earnings per share CONSOLIDATED 2020 $ 1,250,471 256,876 (2,671,420) (676,258) (1,872,281) (363,581) (125,635) (619,009) (4,820,837) - 2019 $ 478,838 85,957 (2,043,754) (789,163) (1,583,302) (567,325) (75,094) (938,270) (5,432,113) - 38 - (4,820,799) (5,432,113) Cents (2.83) (2.83) Cents (5.08) (5.08) Notes 3 3 4 4 4 4 4 5 8 8 The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. 38 Annual Report2020For personal use onlyCONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2020 ASSETS Current assets Cash and cash equivalents Trade and other receivables Total current assets Non-current assets Investments Plant and equipment Right-of-use asset Intangible assets Total non-current assets TOTAL ASSETS LIABILITIES Current liabilities Trade and other payables Lease liability Loan from related party Total current liabilities Non-current liabilities Provisions Lease liability Total non-current liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Reserves Accumulates losses Total equity The above consolidated balance sheet should be read in conjunction with the accompanying notes FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 CONSOLIDATED Notes 2020 $ 2019 $ 9 11 10 12 13 14 15 13 23 16 13 17 18 2,790,577 319,037 3,109,614 416,838 6,150 2,388,249 2,135,128 4,946,365 1,956,906 316,171 2,273,077 466,838 25,972 2,821,917 2,288,025 5,602,752 8,055,979 7,875,829 1,468,586 404,308 - 1,872,894 7,906 2,240,885 2,248,791 823,820 378,319 100,000 1,302,139 - 2,519,820 2,519,820 4,121,685 3,821,959 3,934,294 4,053,870 18,671,536 2,737,601 (17,474,843) 3,934,294 14,341,235 2,366,641 (12,654,006) 4,053,870 39 For personal use onlyFINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2020 BALANCE AT 30 JUNE 2018 11,915,456 2,164,992 (7,221,893) 6,858,555 CONTRIBUTED EQUITY $ SHARE BASED PAYMENTS RESERVE $ FOREIGN CURRENCY TRANSLATION RESERVE $ ACCUMULATED LOSSES $ TOTAL $ Loss for the period Other comprehensive income TOTAL COMPREHENSIVE INCOME Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs Share-based payments STI settled in shares BALANCE AT 30 JUNE 2019 Loss for the period Other comprehensive income TOTAL COMPREHENSIVE INCOME Foreign Currency Translation Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs Share-based payments BALANCE AT 30 JUNE 2020 - - - 2,210,611 - 215,168 14,341,235 - - - - 4,330,301 - 18,671,536 - - - - 416,817 (215,168) 2,366,641 - - - - - 370,922 2,737,563 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. - - - - - - - - - - 38 - - 38 (5,432,113) (5,432,113) - (5,432,113) - (5,432,113) - - - (12,654,006) 2,210,611 416,817 - 4,053,870 (4,820,837) (4,820,837) - - (4,820,837) (4,820,837) - - - (17,474,843) 38 4,330,301 370,922 3,934,294 40 Annual Report2020For personal use onlyCONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2020 FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 CONSOLIDATED Notes 2020 $ 2019 $ Cash flows from operating activities Receipts from customers (GST inclusive) Payments to suppliers and employees (GST inclusive) Interest received Interest paid Income tax refund Government incentives Net cash outflow from operating activities 20(a) Cash flows from investing activities Payments for development Payments for plant and equipment Proceeds from sale of plant and equipment Research and development tax incentive refund Receipts/(Payments) for security deposits Net cash outflow from investing activities Cash flows from financing activities Proceeds on issue of shares Payment of capital raising costs and listing expenses Proceeds from loan from related entity Principal element of lease payments Net cash inflow from financing activities 1,500,941 (3,578,426) 22,594 (106,826) - 149,145 (2,012,572) (1,830,448) (6,288) 609 656,469 50,000 (1,129,658) 4,338,974 (108,674) - (254,247) 3,976,053 665,078 (3,823,193) 36,968 (57,351) 844 - (3,177,654) (2,143,144) (11,018) 500 819,836 (416,838) (1,750,664) 2,337,499 (126,888) 100,000 (138,747) 2,171,864 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 833,823 (2,756,454) Cash and cash equivalents at the beginning of the year Effects of exchange rate changes on cash and cash equivalents 1,956,906 (152) 4,713,360 - CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 20(b) 2,790,577 1,956,906 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. 41 For personal use onlyNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The consolidated financial statements of intelliHR Limited (the Company) as  at and for the year ended 30 June 2020 comprise the company and its controlled entities (the  Group). These general purpose financial statements have been prepared in accordance with the Corporations Act 2001, Australian Accounting Standards and Interpretations of the Australian Accounting Standards Board and International Financial Reporting Standards as issued by the International Accounting Standards Board. The Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards. Material accounting policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless stated otherwise. Except for cash flow information, the financial statements have been prepared on an accruals basis and are based on historical costs. Going Concern The financial report has been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the normal course of business. As disclosed in the financial report, the Group achieved a net loss of $4,820,837 (2019: $5,432,113) and net operating cash outflows of $2,012,572 (2019: $3,177,654 ) for the year ended 30 June 2020. As at 30 June 2020, the Group has cash of $2,790,577 (2019: $1,956,906). The ability of the Group to continue as a going concern is principally dependent upon one or more of the following: ˆ the ability of the Group to raise capital as and when necessary; ˆ the ability to complete successful development and commercialisation of the Group’s software platform. These conditions give rise to material uncertainty which may cast significant doubt over the Group’s ability to continue as a going concern. The Directors believe that the going concern basis of preparation is appropriate due to the proven ability of the Group to raise necessary funding via the issue of shares and also the increased revenues now being achieved through software sales, along with its growing sales pipeline. The ability of the Group to raise capital is evidenced by the announcement on 6 August 2020 of a $5,500,000 capital raising, consisting of a fully underwritten non-renounceable rights issue of $3,000,000 and a $2,500,000 placement (to strategic investor, Bevan Slattery). The rights issue has been underwritten by Bevan Slattery and Colinton Capital (intelliHR’s largest shareholder). $2,300,000 of the placement is subject to receipt of shareholder approval at the General Meeting of Shareholders scheduled for 10 September 2020 (refer Note 22). The Directors currently expect that there will be strong participation in the rights issue, given its pricing at $0.075 per share in the context of the prevailing share price at the time of issue of the Annual Report. The Director’s have considered the impact of Covid 19 and found that the pandemic has increased sales prospects due to the greater global need for businesses to manage employees remotely using HR platforms. In response to the onset of COVID-19, the Group has tightly controlled expenses immediately suspending all non-essential expenditure in March 2020. Savings have been made with the elimination of business travel, office running costs and the suspension of the establishment of an international office. The business deferred rent payments for the months April, May and June 2020 with a view to progressively repay in FY 2021. In addition, Covid 19 has not adversely impacted the collection of Trade Receivables and the Director’s do not expected increased credit losses. Should the Group be unable to continue as a going concern, it may be required to realise its assets and extinguish its liabilities other than in the ordinary course of business, and  at  amounts that differ from those stated in the financial report. 4 2 Annual Report2020For personal use onlyNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) This financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts or classification of liabilities and appropriate disclosures that may be necessary should the Group be unable to continue as a going concern. The financial statements were authorised for issue by the Directors on 21 August 2020. The Directors have the power to amend and reissue the financial statements. a. Principles of consolidation The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of intelliHR Limited (‘Company’ or ‘Parent Entity’) as at 30 June 2020 and the results of all subsidiaries for the year then ended. intelliHR Limited and its subsidiaries together are referred to in these financial statements as the ‘Group’. Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent. Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and other comprehensive income, statement of financial position and statement of changes in equity of the Group. Losses incurred by the Group are attributed to the non-controlling interest in full, even if that results in a deficit balance. Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non- controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss. 43 For personal use onlyNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) b. Income tax The income tax expense or benefit for the period is the tax payable on that period’s taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except  for: ˆ When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or ˆ When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset. Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously. c. Foreign Currency Transactions and Balances Functional and presentation currency The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars, which is the parent entity’s functional currency. Transactions and balances Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measure at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined. 4 4 Annual Report2020For personal use only NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Exchange differences arising on the translation of monetary items are recognised in profit or loss, except where deferred in equity as a qualifying cash flow or net investment hedge. Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive income to the extent that the underlying gain or loss is recognised in other comprehensive income; otherwise the exchange difference is recognised in profit or loss. Group companies The financial results and position of foreign operations, whose functional currency is different from the Group’s presentation currency, are translated as follows: ˆ Assets and liabilities are translated at exchange rates prevailing at the end of the reporting period; ˆ Income and expenses are translated at the average exchange rates for the period; and ˆ Accumulated losses are translated at the exchange rates prevailing at the date of the transaction. Exchange differences arising on translation of foreign operations with functional currencies other than Australian dollars are recognised in other comprehensive income and included in the foreign currency translation reserve in the balance sheet. The cumulative amount of these differences is reclassified into profit or loss in the period in which the operation is disposed of. d. Revenue from contracts with customers Measurement and recognition Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third parties. Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Service operating fees primarily consists of fees that give customers access to the intelliHR platform and to technical support. These revenues are recognised over time as they are delivered and consumed concurrently over the contractual term, beginning on the date the service is made available to the customer. Contracts typically have a term of 1 to 3 years in duration. Customers are invoiced monthly in advance for service operating fees. Service initiation fees charged to customers for implementation services are recognised over time and amortised over the life of these contracts, and costs directly attributable to the implementation services are capitalised and amortised over a period consistent with the term of revenue recognition. Consulting workshops are provided to customers to assist with redesigning HR processes. These are invoiced at the time of the delivery and are recognised at a point in time. Financing components The Group does not expect to have any contracts where the period between the transfer of the promised services to the customer and payment by the customer exceeds 1 year. As a consequence, the Group does not adjust any of the transaction prices for the time value of money. Payments from customers are generally collected in advance of provision of services. 4 5 For personal use only NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) In applying AASB 15 to contracts with customers, the Group has determined that there are no material rights offered by way of options for additional services to be provided at a discount within the contractual terms. Where the Group provides discounts or rebates to customers, these are factored into the transaction price and are recognised on a systematic basis in line with the revenue stream to which they relate. Interest Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. Grant revenue Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions. Other revenue Other revenue is recognised when it is received or when the right to receive payment is established. e. Impairment of non-financial assets At the end of each reporting period, the Group assesses whether there is any indication that an asset may be impaired. The assessment will include considering external sources of information and internal sources of information, including dividends received from subsidiaries, associates or joint ventures deemed to be out of pre-acquisition profits. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset’s fair value less costs of disposal and value in use, to the asset’s carrying amount. Any excess of the asset’s carrying amount over its recoverable amount is recognised immediately in profit or loss. Where it is not possible to estimate the recoverable amount of an individual asset, the  Group estimates the recoverable amount of the cash-generating unit to which the  asset belongs. f. Development costs Expenditure during the research phase of a project is recognised as an expense when incurred. Development costs are capitalised only when technical feasibility studies identify that the project will deliver future economic benefits and these benefits can be measured reliably. Capitalised development costs are amortised on a straight-line basis over three years, which given the constant and rapid development of the project, management considers to represent the useful life of the project. g. Plant and equipment Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items. 46 Annual Report2020For personal use only NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 Depreciation is calculated on a straight-line basis to write off the net cost of each item of plant and equipment over their expected useful lives as follows: Plant and equipment - 2 years The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date. An item of plant and equipment is derecognised upon disposal or when there is no future economic benefit to the Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. h. Right-of-use assets Right-of-use assets are measured at cost which includes the lease payments and direct costs incurred over the life of the lease, plus an estimate of a "make good" payment, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the shorter of the assets useful life and the lease term. The lease liability is measured at the present value of the lease payments discounted at the Group’s incremental borrowing rate. Lease payments include fixed payments, and variable lease payments. i. Employee benefits Short-term employee benefits Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled. Other long-term employee benefits The liability for long service leave not expected to be settled within 12 months of the reporting date are measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. Equity-settled share-based compensation benefits are provided to employees. Equity-settled transactions are awards of shares, options or performance rights over shares, that are provided to employees in exchange for the rendering of  services. 47 For personal use only NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The cost of equity-settled transactions are measured at fair value on grant date. Fair value is determined using various valuation methods including Black Scholes, Binomial and the Monte Carlo Simulation method that takes into account the exercise price, the term of the performance right, the impact of dilution, the share price at grant date and expect price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the performance right. The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods. Market conditions are taken into consideration in determining fair value. Therefore, any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied. If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification. If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited. If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification. j. Provisions Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. Provisions are measured at the best estimate of the amounts required to settle the obligation at the end of the reporting period. k. Cash and cash equivalents Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the consolidated statement of cash flows presentation purposes, cash and cash equivalents also includes fixed term deposits. 48 Annual Report2020For personal use onlyNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) l. Trade and other receivables Trade receivables include amounts due from customers for goods sold and services performed in the ordinary course of business and the Group has unconditional rights to payment. Receivables expected to be collected within 12 months of the end of the reporting period are classified as current assets. Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit losses. The Group has applied the simplified approach to measuring expected credit losses, which has a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue and assessed for recoverability based on historical payments received. Other receivables are recognised at amortised cost, less any allowance for expected credit losses. m. Trade and other payables These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition. n. Other receivables Other receivables are recognised at amortised cost, less any provision for  impairment. o. Current and non-current classification Assets and liabilities are presented in the balance sheet based on current and non-current classification. An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the  reporting period. All other assets are classified as non-current. A liability is classified as current when: it is either expected to be settled in normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current. Deferred tax assets and liabilities are always classified as non-current. p. Issued capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are  shown in equity as a deduction, net of tax, from the proceeds. 49 For personal use onlyNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) q. Earnings per share Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to the owners of intelliHR Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year. Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. r. Goods and Services Tax (‘GST’) and other similar taxes Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the  expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the balance sheet. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or  payable to the tax authority, are presented as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority. s. Critical accounting estimates and judgements Recognition of Development Costs For the purpose of measurement, AASB 138 allows costs incurred in the development stage to be capitalised if certain requirements are met, including: ˆ It is technically feasible that the intangible asset will be completed so that it will be available for use; ˆ It is the intention to complete the intangible asset and use it; ˆ It can be demonstrated that the it is probable that the intangible asset will generate future economic benefits; ˆ There are adequate resources to complete the development of the intangible asset; ˆ The expenditure attributable to the intangible asset during its development can be measured reliably. As the Group meets all of the above requirements, all costs directly attributable and necessary to create, produce and prepare the asset to be capable of operating in the manner intended, have been capitalised. All costs to maintain the development asset are expensed as incurred. 50 Annual Report2020For personal use onlyNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Share based payment transactions The Group 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 the binomial tree model and Hull White model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions, including share price volatility, interest rates and vesting periods would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact the profit or loss and equity. Covid 19 Impact on Expected Credit Losses Whilst there was some reduction in subscriber numbers invoiced as some customers were forced to downsize, this was offset by increased subscriber numbers through the continued onboarding of new paying customers. Several customers were granted extended payment terms during the months of April and May 2020 and these accounts were subsequently paid. As at the signing of the Annual Report, there were no outstanding receivables at risk of non payment. The Group’s expectation of Credit Losses has not been adversely impacted by Covid 19. t. New and Amended Accounting Policies Adopted by the Group Their were no new or amended policies adopted by the Group for the first time. 51 For personal use onlyNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 2 PARENT INFORMATION The following information has been extracted from the books and records of the parent and has been prepared in accordance with Australian Accounting Standards. BALANCE SHEET ASSETS Current assets Cash and cash equivalents Trade and other receivables Total current assets Non-current assets Plant and equipment Intangible assets Total non-current assets TOTAL ASSETS LIABILITIES Current liabilities Payables Total current liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Reserves Accumulates losses Total equity Statement of Profit or Loss and Other Comprehensive Income TOTAL LOSS AND TOTAL COMPREHENSIVE INCOME 2020 $ 2019 $ 2,686,260 90,623 2,776,883 6,150 1,231,574 1,237,724 1,816,242 190,854 2,007,096 25,972 2,288,025 2,313,997 4,014,607 4,321,093 80,313 80,313 80,313 267,223 267,223 267,223 3,934,294 4,053,870 18,671,536 2,737,564 (17,474,806) 3,934,294 14,341,235 2,366,641 (12,654,006) 4,053,870 (4,820,800) (5,659,690) Guarantees intelliHR Limited has not entered into any guarantees, in the current or previous reporting period, in relation to the debts of its subsidiaries. 52 Annual Report2020For personal use onlyNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 2 PARENT INFORMATION (CONTINUED) Contingent liabilities At 30 June 2020, intelliHR Limited did not have any contingent liabilities (2019: Nil). Contractual commitments At 30 June 2020, intelliHR Limited did not have any contractual commitments (2019: Nil). NOTE 3 REVENUE 2020 AUSTRALIA REST OF THE WORLD TOTAL AUSTRALIA 833,096 73,690 29,000 935,786 22,594 164,871 69,411 256,876 281,925 30,904 1,856 314,685 1,115,021 104,594 30,856 1,250,471 - - - - 22,594 164,871 69,411 256,876 416,105 37,940 4,500 458,545 36,968 - 48,989 85,957 2019 REST OF THE WORLD 18,038 2,255 - 20,293 - - - - TOTAL 434,143 40,195 4,500 478,838 36,968 - 48,989 85,957 Revenue from contracts with customers Over time (Service Operating Fees) Over time (Service Initiation Fees) At a point in time (Workshop Fees) Total revenue Other income Interest received Government grant income Other income Total other income NOTE 4 LOSS FOR THE YEAR Loss before income tax from continuing operations includes the following items that are unusual because of their nature, size or incidence: Amortisation of intangible assets Depreciation of property, plant and equipment Depreciation of right-of-use asset Total Included in employee benefits expense and Directors remuneration: Superannuation contributions Share based payments expense Loss on foreign exchange Interest paid on lease liabilities 2020 $ 1,411,203 26,110 434,968 1,872,281 241,054 355,398 10,250 106,826 2019 $ 1,307,257 61,076 214,969 1,583,302 195,876 442,850 1,449 57,351 53 For personal use onlyNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 5 INCOME TAX EXPENSE This note provides an analysis of the Group’s income tax expense, shows what amounts are recognised directly in equity and how the tax expense is affected by non-assessable and non-deductible items. It also explains significant estimates made in relation to the Group’s tax position. (a) Numerical reconciliation of income tax expense to prima facie tax payable Loss before income tax expense Tax at the Australian tax rate of 27.5% (2019: 27.5%) Tax effect of amounts which are not deductible (taxable) in calculating taxable income: Non-deductible items Adjustment to deferred tax assets and liabilities for tax losses and temporary differences not recognised 2020 $ 2019 $ (4,820,837) (5,432,113) (1,325,729) (1,493,831) 602,060 723,669 464,491 1,029,340 Income tax expense / (benefit) - - (b) Tax losses Unused tax losses for which no deferred tax asset has been recognised Potential tax benefit @ 27.5% (2019: 27.5%) 10,738,895 2,953,196 7,904,349 2,173,696 (c) Tax expense (income) recognised directly in equity Aggregate current and deferred tax arising in the reporting period and not recognised in net profit or loss or other comprehensive income but directly debited or credited to equity: Deferred tax: Share issue costs - 54 Annual Report2020For personal use onlyNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 5 INCOME TAX EXPENSE (CONTINUED) (d) Deferred tax assets The balance comprises temporary differences attributable to: Tax losses Employee entitlements Share issue costs Accrued expenses Rights of use asset TOTAL DEFERRED TAX ASSETS Set-off of deferred tax liabilities pursuant to set-off provisions Deferred tax assets not recognised Net deferred tax assets (e) Deferred tax liabilities The balance comprises temporary differences attributable to: Development assets Interest receivable Prepayments TOTAL DEFERRED TAX LIABILITIES 2020 $ 2,953,196 122,846 112,507 43,326 70,659 2019 $ 2,173,696 96,861 130,395 38,016 - 3,302,534 2,438,968 (62,062) (3,240,472) (60,708) (2,378,260) - 8,535 3,318 50,209 17,358 3,308 40,042 62,062 60,708 Set-off of deferred tax liabilities pursuant to set-off provisions (62,062) (60,708) NET DEFERRED TAX LIABILITIES - - Unused losses which have not been recognised as an asset, will only be obtained if: (i) the Group derives future assessable income of a nature and of an amount sufficient to enable the losses to be realised; (ii) the Group continues to comply with the conditions for deductibility imposed by the law; and (iii) no changes in tax legislation adversely affect the Group in realising the losses. 55 For personal use onlyNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 6 KEY MANAGEMENT PERSONNEL COMPENSATION Refer to the remuneration report contained in the Directors’ report for details of the remuneration paid or payable to each member of the Group’s key management personnel (KMP) for the year ended 30 June 2020. The totals of remuneration paid to KMP of the Group during the year are as follows: Short-term employee benefits Other long-term benefits Share-based compensation TOTAL KMP COMPENSATION 2020 $ 652,377 57,753 269,633 2019 $ 768,650 70,197 263,608 979,763 1,102,455 Short-term employee benefits These amounts include fees and benefits paid to the non-executive Directors as well as all salary, paid leave benefits and fringe benefits paid to Executive Directors and employees. Other long-term benefits These amounts are the current-year’s superannuation contributions made during the  year and the movement of long service leave liabilities. Share-based payments These amounts represent the expense related to the participation of KMP in equity-settled benefit schemes as measured by the fair value of the options, performance rights and shares granted on grant date. Further information in relation to KMP remuneration can be found in the Remuneration report. NOTE 7 AUDITOR’S REMUNERATION Remuneration of the auditor for: Auditing or reviewing the financial reports Remuneration for non-audit services Preparation of Tax and FBT Return, and R&D AusIndustry Return 2020 $ 82,774 29,725 2019 $ 73,385 44,844 TOTAL AUDITOR’S REMUNERATION 112,499 118,229 56 Annual Report2020For personal use onlyNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 8 EARNINGS PER SHARE (a) Basic earnings per share TOTAL BASIC EARNINGS PER SHARE ATTRIBUTABLE TO THE ORDINARY EQUITY HOLDERS OF THE COMPANY (b) Diluted earnings per share TOTAL DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO THE ORDINARY EQUITY HOLDERS OF THE COMPANY (c) Reconciliations of earnings used in calculating earnings per share BASIC EARNINGS PER SHARE 2020 Cents (2.83) 2019 Cents (5.08) (2.83) (5.08) 2020 $ 2019 $ (Loss) attributable to the ordinary equity holders of the Company used in calculating basic earnings per share (4,820,837) (5,432,113) DILUTED EARNINGS PER SHARE (Loss) attributable to the ordinary equity holders of the Company used in calculating diluted earnings per share (4,820,837) (5,432,113) (d) Weighted average number of shares used as the denominator Weighted average number of ordinary shares used as the denominator in calculating basic and diluted earnings per share (e) Information concerning the classification of securities (i) Options and rights 2020 Number 2019 Number 170,311,424 106,985,988 Options on issue during the year are not included in the calculation of diluted earnings per share because they are antidilutive for the year ended 30 June 2020. These options could potentially dilute basic earnings per share in the future. Details relating to options are set out in note 21. 57 For personal use only NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 9 CASH AND CASH EQUIVALENTS Cash at bank and on hand TOTAL CASH AND CASH EQUIVALENTS NOTE 10 INVESTMENTS Non-current fixed term cash deposits (restricted) (Deposits are Bank Guaranteed Security on the leased premises) TOTAL INVESTMENTS NOTE 11 TRADE AND OTHER RECEIVABLES Trade receivables Other receivables Prepayments 2020 $ 2019 $ 2,790,577 1,956,906 2,790,577 1,956,906 CONSOLIDATED 2020 $ 416,838 2019 $ 466,838 416,838 466,838 2020 $ 53,028 12,064 253,945 2019 $ 42,440 41,184 232,547 TOTAL CURRENT TRADE AND OTHER RECEIVABLES 319,037 316,171 Credit risk The Group has no significant concentration of credit risk with respect to any counterparties or on a geographical basis. From 1 July 2018 the Group now assess impairment on trade and receivables using the simplified approach of the expected credit loss (ECL) model under AASB 9. Due to the minimal history of bad debt write offs and strong credit approval processes, the Group have determined that the ECL model will not have a material effect on impairment as at 30 June 2020. The balance of receivables that remain within initial trade terms are considered to be of high credit quality. 58 Annual Report2020For personal use onlyNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 12 PLANT AND EQUIPMENT PLANT AND EQUIPMENT At cost Accumulated depreciation CONSOLIDATED 2020 $ 148,278 (142,128) 2019 $ 143,707 (117,735) TOTAL PROPERTY, PLANT AND EQUIPMENT 6,150 25,972 MOVEMENTS IN CARRYING AMOUNTS Plant and equipment Balance at 1 July Additions Disposals Depreciation expense BALANCE AT 30 JUNE 25,972 6,288 - (26,110) 6,150 76,031 11,017 - (61,076) 25,972 59 For personal use onlyNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 13 LEASES The Group is the lessee of an office premises and information about this lease is presented below: RIGHT-OF-USE ASSET Balance at Lease Inception Accumulated Depreciation Balance at 30 June 2020 LEASE LIABILITIES Maturity Analysis Less than one year One to five years More than five years Total Lease Liabilities at 30 June AMOUNTS RECOGNISED IN PROFIT OR LOSS Interest on lease liabilities Depreciation right-of-use-asset AMOUNTS RECOGNISED IN THE STATEMENT OF CASHFLOWS Cashflows from operating activities Interest paid Cash flows from financing activities Principal element of lease payments NOTE 14 INTANGIBLE ASSETS DEVELOPMENT COSTS Cost Accumulated amortisation TOTAL DEVELOPMENT COSTS MOVEMENTS IN CARRYING AMOUNTS Balance at 1 July Additions – internally developed Research and development tax incentive Amortisation charge BALANCE AT 30 JUNE 60 2020 $ 3,038,186 (649,937) 2,388,249 2020 $ 404,308 2,240,885 - 2,645,193 2020 $ 106,826 434,968 2020 $ 106,826 254,247 2019 $ 3,036,886 (214,969) 2,821,917 2019 $ 378,319 2,259,468 260,352 2,898,139 2019 $ 57,351 214,969 2019 $ 57,351 138,747 2020 $ 6,340,079 (4,204,951) 2019 $ 5,081,773 (2,793,748) 2,135,128 2,288,025 2,288,025 1,845,974 (587,668) (1,411,203) 2,249,518 2,117,111 (771,347) (1,307,257) 2,135,128 2,288,025 Annual Report2020For personal use onlyNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 14 INTANGIBLE ASSETS (CONTINUED) Impairment testing The recoverable amount of the Development Asset (Note 14) and the Right of Use Asset (Note 13) is determined based on value-in- use calculations. These calculations utilised cash flow projections for five years based on the FY2021 and FY2022 budget which has been risk adjusted and reviewed by management. On this basis, the Group determined that the recoverable amount of the Development asset of $2,135,128 (2019 $2,288,025) and the Right of Use Asset $2,388,249 (2019 $2,821,917) exceeded their combined carrying value and no impairment charge was required in this financial year (2019: Nil). The value-in-use calculations are sensitive to discount rates, revenue and cash flow forecasts. The Group has performed detailed sensitivity analysis as part of its impairment testing to ensure that the results of its testing are reasonable. Key assumptions used for value-in-use calculations Revenue projections are based on sales for the year ended 30 June 2020 and revenue projections for 2021 to 2022 based on the key drivers in the current business. Expenses are based on detailed knowledge of the business, historic activity, and projections for 2021 to 2022 based on the key drivers in the current business. These have been extrapolated in years 2023 to 2027 with a growth rate of 25% for FY2023 and 3% for FY2024 to FY2027. The discount rate applied to cash flow projections is 20% post-tax. Discount rate applied reflects management’s estimate of the time value of money and the consolidated entities weighted average cost of capital, the risk free rate and the volatility of the share price relative to market movements. A terminal rate of 2.4% was used in the value-in-use calculation. Sensitivity The directors have made judgements and estimates in respect of impairment testing of the Development asset and the Right of Use Asset. Should these judgements and estimates not occur, the resulting Development Asset and Right of Use Asset may vary in carrying value. The points noted below are sensitivities of these estimates: ˆ The discount rate would need to increase by more than 40% before the assets would be impaired, with all other assumptions remaining constant. ˆ Revenue growth would need to decrease by 26% annually over the FY2022 to FY2027 period before the assets would be impaired, with all other assumptions remaining constant. Management believes that any reasonable change in the key assumptions on which the recoverable amount is based would not cause the carrying value to exceed its recoverable amount. 61 For personal use onlyNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 15 TRADE AND OTHER PAYABLES UNSECURED LIABILITIES Trade payables Other payables Accrual for annual leave Accrual for long service leave 2020 $ 55,681 966,190 356,801 89,914 2019 $ 112,664 358,936 268,060 84,160 TOTAL TRADE AND OTHER PAYABLES 1,468,586 823,820 NOTE 16 PROVISIONS Provision for long service leave TOTAL PROVISIONS 2020 $ 7,906 7,906 2019 $ - - 62 Annual Report2020For personal use onlyNOTE 17 CONTRIBUTED EQUITY (a) Share capital FULLY PAID ORDINARY SHARES (b) Ordinary share capital NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 2020 Shares 193,407,826 2019 Shares 133,042,546 2020 $ 18,671,536 2019 $ 14,341,235 DATE DETAILS NOTE NUMBER OF SHARES ISSUE PRICE 1 JULY 2018 July 2018 BALANCE Exercise of options Exercise of options October 2018 Exercise of options April 2019 May 2019 June 2019 Exercise of options STI settled shares Exercise of options Exercise of options Exercise of options Placement shares Placement shares Placement shares Share issue costs 30 JUNE 2019 BALANCE August 2019 Placement shares Placement shares September 2019 STI shares issued January 2020 Exercise of options Exercise of options Placement shares February 2020 Exercise of options Share issue costs 30 JUNE 2020 BALANCE (e) (e) (e) (e) (f) (e) (e) (e) (d) (d) (c) (h) (i) (e) (e) (h) (e) 103,895,094 697,814 24,000 16,664 16,000 717,227 1,186,875 86,000 49,995 6,071,666 1,428,335 18,852,876 - 133,042,546 21,147,124 833,333 385,867 66,660 45,000 36,500,000 1,387,296 193,407,826 $0.01 $0.02 $0.01 $0.02 $0.30 $0.01 $0.02 $0.04 $0.12 $0.12 $0.075 $0.075 $0.12 $0.01 $0.02 $0.075 $0.01 $ 11,915,456 6,978 480 167 320 215,168 11,869 1,720 2,000 728,600 171,400 1,413,966 (126,889) 14,341,235 1,586,035 100,000 - 667 900 2,737,500 13,873 (108,674) 18,671,536 63 For personal use onlyNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 17 CONTRIBUTED EQUITY (CONTINUED) (c) Issue to sophisticated and institutional investors The issue of 18,852,876 fully paid ordinary shares to sophisticated and institutional investors at an issue price of $0.075 cash. (d) Issue to sophisticated investors The issue of 7,500,001 fully paid ordinary shares to sophisticated and institutional investors at an issue price of $0.12 cash. (e) Exercise of options The issue of fully paid ordinary shares on the exercise of options. (f) STI shares issued On 29 October 2018 following receipt of shareholder approval at the 2018 AGM, 717,227 shares were issued to R Bromage and J Fong as settlement of their FY2018 STI's. (g) Issued to sophisticated and institutional investors The issue of fully paid ordinary shares to sophisticated and institutional investors at an issue price of $0.075 cash. (h) Issued to sophisticated and Institutional Investors The Issue of 57,647,124 fully paid ordinary shares to sophisticated and Institutional Investors at an Issue price of $0.075 cash. (i) Capital Management The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can continue to provide returns for shareholders, benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of  capital. The capital structure of the Company includes equity attributable to equity holders, comprising of issued capital, reserves and accumulated losses. In order to maintain or adjust the capital structure, the Company may issue new shares, sell assets to reduce debt or adjust the level of activities undertaken by the company. The Group monitors capital on the basis of cash flow requirements for operational, and exploration and evaluation expenditure. The Group will continue to use capital market issues and joint venture participant funding contributions to satisfy anticipated funding  requirements. The Group has no externally imposed capital requirements. The Covid 19 pandemic has not impacted the Group’s ability to raise capital as evidenced by the announcement on the 6th August 2020 of a $5.5 million raising. (Refer Note 22). Based on this, the Group’s strategy for capital risk management is unchanged from prior years. 64 Annual Report2020For personal use onlyNOTE 18 RESERVES Share-based payment reserve Movements: Balance 1 July Share based payments expensed Share based payments capitalised STI’s settled in shares STI’s to be settled in shares BALANCE 30 JUNE 2020 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 2020 $ 2019 $ 2,737,563 2,366,641 2,366,641 242 898 15,524 - 112,500 2,164,992 442,850 (26,033) (215,168) - 2,737,563 2,366,641 The share-based payment reserve records items recognised as expenses on valuation of director, employee and contractor options. Foreign currency translation reserve 2020 $ 38 2019 $ - Exchange differences arising on translation of the foreign controlled entity are recognised in other comprehensive income as described in note 1c and accumulated in a seperate reserve within equity. The cumulative amount is reclassified to profit or loss when the net investment is disposed of. NOTE 19 OPERATING SEGMENTS The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors (Chief Operating Decision Makers) in assessing performance and determining the allocation of resources. The Group is managed primarily on a geographic basis that is the location where revenue is derived. Management currently identifies the Group as having only one operating segment, being the development and commercialisation of a cloud-based people management platform in Australasia. All assets and revenue are derived from the one geographical location, being Australia. All significant operating decisions are based upon analysis of the Group as one segment. The financial results from the segment are equivalent to the financial statements of the Group as a  whole. The Group has no customers from which it generates greater than 10% of its revenue. (2019 : One customer was $59,258). 65 For personal use onlyNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 20 CASH FLOW INFORMATION (a) Reconciliation of profit / (loss) after income tax to net cash inflow from operating activities PROFIT / (LOSS) FOR THE PERIOD Adjustments for: Share based payments Depreciation and amortisation Depreciation Right-of-use asset Profit on sale of plant and equipment Research and development tax incentive Change in operating assets and liabilities: (Increase)/decrease in trade and other receivables Decrease in other assets Increase in trade and other payables Increase in provisions 2020 $ 2019 $ (4,820,838) (5,432,113) 355,398 1,437,313 434,968 (609) (68,802) (10,588) 236,160 322,024 102,402 442,850 1,368,333 214,969 (500) (48,489) 14,603 131,546 99,472 31,675 NET CASH INFLOW (OUTFLOW) FROM OPERATING ACTIVITIES (2,012,572) (3,177,654) (b) Cash and cash equivalents shown in the statement of cashflows comprises the following: Cash and cash equivalents Note 9 TOTAL CASH AND CASH EQUIVALENTS (c) Non-cash financing and investing activities Share based payments capitalised Acquisition of Right of Use Asset by means of a lease STI settled in shares CONSOLIDATED 2020 $ 2019 $ 2,790,577 1,956,906 2,790,577 1,956,906 2020 $ 15,524 - - 2019 $ (26,033) 3,636,886 215,168 66 Annual Report2020For personal use only NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 20 CASH FLOW INFORMATION (CONTINUED) (d) Net debt reconciliation This section sets out an analysis of net debt, and the movements in net debt for each period presented. Cash and cash equivalents Borrowings – repayable within one year Borrowings – repayable after one year Net debt Cash and cash equivalents Gross debt – non-interest bearing Gross debt – fixed interest rates Gross debt – variable interest rates Net debt Net debt as at 30 June 2018 Cashflows Lease liability Loan from related party Other non-cash movements Net debt as at 30 June 2019 Cashflows Lease liability Loan from related party Other non-cash movements Net debt as at 30 June 2020 2020 $ 2,790,577 (404,308) (2,240,855) 145,414 2,790,577 - - (2,645,163) 145,414 LIABILITIES FROM FINANCING ACTIVITIES CASH/BANK OVERDRAFT $ BORROWINGS DUE WITHIN 1 YEAR $ BORROWING DUE AFTER 1 YEAR $ 4,713,360 (2,856,454) - 100,000 - 1,956,906 833,671 - - - 2,790,577 - 138,747 (321,911) (100,000) (195,155) (478,319) 361,072 25,367 100,000 (412,428) (404,308) - - (2,714,975) - 195,155 (2,519,820) - (133,463) - 412,428 (2,240,855) 2019 $ 1,956,906 (478,319) (2,519,820) (1,041,233) 1,956,906 (100,000) - (2,898,139) (1,041,233) TOTAL $ 4,713,360 (2,717,707) (3,036,886) - - (1,041,233) 1,194,743 (108,096) 100,000 - 145,414 67 For personal use only NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 21 SHARE-BASED PAYMENTS OPTIONS The intelliHR Limited Employee Option Plan is designed to provide long-term incentives for employees to deliver long-term shareholder returns. Under the plan, participants are granted options which only vest if certain performance standards are met. Participation in the plan is at the board’s discretion and no individual has a contractual right to participate in the plan or to receive any guaranteed benefits. Options are granted under the plan for no consideration and carry no dividend or voting rights. When exercisable, each option is convertible into one ordinary share. Set out below are summaries of options granted under the plan: OPTIONS OUTSTANDING AS AT 30 JUNE 2018 Granted Forfeited Exercised Expired OPTIONS OUTSTANDING AS AT 30 JUNE 2019 Granted Forfeited Exercised Expired WEIGHTED AVERAGE EXERCISE PRICE $0.07 $0.30 $0.06 $0.01 - $0.09 $0.15 $0.01 NUMBER 15,521,074 440,000 (2,818,327) (2,077,348) - 11,065,399 - (184,229) (1,498,956) - OPTIONS OUTSTANDING AS AT 30 JUNE 2020 9,382,214 $0.10 The weighted average share price on the exercise of options was $0.08 (2019: $0.18). No options expired during the periods covered by the above table. 68 Annual Report2020For personal use onlyNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 21 SHARE-BASED PAYMENTS (CONTINUED) Share options outstanding at the end of the year have the following expiry date and  exercise prices: DATE OPTIONS GRANTED EXPIRY DATE EXERCISE PRICE SHARE OPTIONS 30 JUNE 2020 23/11/2016 16/12/2016 05/01/2017 23/11/2016 01/04/2017 11/08/2017 27/02/2018 30/06/2018 01/12/2021 01/12/2021 01/12/2021 01/12/2021 31/03/2022 11/08/2022 14/02/2023 30/06/2023 $0.01 $0.01 $0.04 $0.20 $0.04 $0.02 $0.32 $0.30 TOTAL OF SHARE OPTIONS Weighted average remaining contractual life of options outstanding at end of period PERFORMANCE RIGHTS A summary of movements of all performance rights issued is as follows: PERFORMANCE RIGHTS OUTSTANDING AS AT 30 JUNE 2019 Granted Vested Forfeited Expired PERFORMANCE RIGHTS OUTSTANDING AS AT 30 JUNE 2020 288,889 3,925,944 298,838 3,895,543 32,000 517,000 200,000 224,000 9,382,214 1.5 years NUMBER 1,234,694 1,878,788 (385,867) (231,480) - 2,496,135 The weighted average remaining contractual life of performance rights outstanding at year end was 2.2 years (2019: 3.1 years). 1,878,788 performance rights were granted to executives on 1 September 2019 (details included in the table below). GRANT DATE NUMBER OF RIGHTS 01/09/2019 1,878,788 VESTING CONDITIONS VESTING DATE % VESTED EXPIRY DATE FAIR VALUE AT GRANT DATE PER RIGHT Achievement of mutually agreed KPI’s for FY 2020. 01/07/2020 0% 01/09/2022 $0.075 69 For personal use only NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 21 SHARE-BASED PAYMENTS (CONTINUED) On 1 September 2019, 1,878,788 performance rights were granted to an employee under the intelliHR Limited Performance Rights Plan to take up ordinary shares. All performance rights expire on 1 September 2022. 250,000 of the performance rights have been awarded under the Group's STI program and vest on achievement of mutually agreed KPI’s. The other 250,000 performance rights have been awarded under the Group's LTI program and will vest if the relative total shareholder return is measured at or above the 3-year average of the P&S ASX small ordinaries Ex A-REIT Franking Credit Adjusted Total Return Index Cap Index. The performance rights hold no voting or dividend rights and are not transferable. The fair value of these performance rights was $70,000. This value was calculated using a Monte Carlo Simulation option pricing model applying the following inputs: MONTE CARLO SIMULATION OPTION PRICING MODEL APPLYING THE FOLLOWING INPUTS: Number of performance rights Grant date Expiry date Volatility* Dividend yield Risk-free interest rate Fair value at grant date 1,878,788 01/09/2019 01/09/2022 108.37% 0% 0.69% Average of $0.075 * Volatility has been determined by looking at the historical volatility over the same period as the expected life of the option, long term average level of volatility, the length of time an entity’s shares have been publicly traded, and the appropriate interval for price observations. The company does not have a reasonable history of share transactions by which to gauge the company’s volatility. Due to this fact an average volatility of comparable companies share transactions over the same period of time have been used to calculate an appropriate volatility. NOTE 22 EVENTS AFTER THE REPORTING DATE Since the 30 June 2020, the Company has : a. b. c. Announced a $5.5 million capital raising, consisting of a $2.5 million placement (of which 2,731,956 fully paid ordinary shares were issued on 10 August 2020, the balance is subject to Shareholder approval) and a 1 for 5 fully underwritten non-renounceable rights issue which will raise $3 million. Shares under both the placement and the rights issue will be issued at $0.075 per share; Issued 4,181,888 fully paid ordinary shares on the exercise of options held by employees and Directors; Issued 1,375,758 fully paid ordinary shares on the vesting of performance rights. No other matters or circumstances have arisen since the end of the financial year which significantly affected or could significantly affect the operations of the company, the results of those operations or the state of affairs of the company in future financial years. 70 Annual Report2020For personal use only NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 23 RELATED PARTY TRANSACTIONS Related Parties The Group’s main related parties are as follows: a. Entities exercising control over the Group The company does not have an ultimate controlling entity. b. Key management personnel Any person(s) having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity is considered key management  personnel. For details of disclosures relating to remuneration of key management personnel, refer to Note 6. c. Other related parties Other related parties include close family members of key management personnel and entities that are controlled or jointly controlled by those key management personnel, individually or collectively with their close family members. d. Transactions with related parties Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. The following transactions occurred with related parties: OTHER RELATED PARTIES Purchase of goods and services: 2020 $ 2019 $ A company of which R Bromage is a director provided recruiting services during the year under normal commercial terms and conditions. 52,163 58,627 Sales of goods and services: The same company was a customer during the year under normal commercial terms and conditions. 6,670 12,154 LOAN FROM RELATED PARTY - 100,000 R Bromage, a director, acting as trustee for The Bromage Family Investment Trust, loaned the Group $100,000 on the 2nd of May 2019. The loan was repaid 3 days after the Extraordinary General Meeting held on the 5th August 2019 when shareholder approval was given to issue 833,333 fully paid ordinary shares with one attaching April Placement Option and one attaching April Placement Bonus Option for every 2 shares issued under the April Placement. Due to the short-term nature of the loan the carrying amount is not materially different to the fair value. 7 1 For personal use onlyNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 24 CONTINGENT ASSETS AND LIABILITIES The Group does not have any contingent assets or liabilities as at 30 June 2020. NOTE 25 COMMITMENTS The Group does not have any commitments as at 30 June 2020. NOTE 26 FINANCIAL RISK MANAGEMENT The Group’s financial instruments consist mainly of deposits with banks and accounts receivable and payable. The totals for each category of financial instruments, measured in accordance with AASB 9: Financial Instruments as detailed in the accounting policies to these financial statements, are as follows: Financial assets Cash and cash equivalents Trade and other receivables Cash deposits TOTAL FINANCIAL ASSETS Financial liabilities Trade and other payables Loan from a related party TOTAL FINANCIAL LIABILITIES Note 9 11 10 15 23 2020 $ 2,790,577 65,092 416,838 2019 $ 1,956,906 71,594 466,338 3,272,507 2,494,838 1,021,871 - 471,600 100,000 1,021,871 571,600 The Board has overall responsibility for the determination of the Group’s risk management objectives and policies. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group’s competitiveness and flexibility. Credit risk Credit risk is managed on a Group basis. Credit risk arises primarily from cash and cash  equivalents and deposits with banks and financial institutions. For bank and financial  institutions, only independently rated parties with a minimum rating of ‘AA’ are accepted. Refer to Note 11 for further details on credit risks associated with trade receivables. 72 Annual Report2020For personal use onlyNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 26 FINANCIAL RISK MANAGEMENT (CONTINUED) Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and marketable securities to meet obligations when due. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows. No finance facilities were available to the Group at the end of the reporting period. Most financial assets and financial liabilities mature within one year. Market risk Market risk is the risk that the change in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The Group is not exposed to market risks other than interest rate risk, and foreign exchange risk. The Group's exposure to foreign currency risk at the 30 June 2020, expressed in Australian dollars, was: Cash and cash equivalents – CA $ Trade receivables - US$ and NZ$ Trade Payables – US$ 2020 $ 4,578 20,378 29,128 2019 $ - 4,347 - Cash flow and fair value interest rate risk As the Group has interest-bearing cash assets, the Group’s income and operating cash flows are exposed to changes in market interest rates. The Group manages its exposure to  changes in interest rates by using fixed term deposits. At 30 June 2020, if interest rates had changed by -/+ 100 basis points from the year-end rates with all other variables held constant, post-tax profit / (loss) for the year would have been $27,406 (2019: $19,569) lower/higher, as a result of higher/lower interest income from cash and cash equivalents. Fair Value The carrying value of all financial assets and financial liabilities approximate their fair value, due to their short term nature. 73 For personal use onlyDIRECTORS’ DECLARATION DIRECTORS’ DECLAR ATION IN THE DIRECTORS’ OPINION: (a) the financial statements and notes set out on pages 35 to 73 are in accordance with the Corporations Act 2001, including: (i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements, and (ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2020 and of its performance for the financial year ended on that date, and (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. Note 1 confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. The Directors have been given the declarations by the Managing Director and Chief Financial Officer required by section 295A of the Corporations Act 2001. This declaration is made in accordance with a resolution of the Directors. A Bellas Chairman Brisbane, 21 August 2020 74 Annual Report2020For personal use onlyINDEPENDENT AUDITOR’S REPORT 7 5 75INDEPENDENT AUDITOR’S REPORT BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. INDEPENDENT AUDITOR'S REPORT To the members of intelliHR Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of intelliHR Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2020, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial report, including a summary of significant accounting policies and the directors’ declaration. In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act 2001, including: (i)Giving a true and fair view of the Group’s financial position as at 30 June 2020 and of itsfinancial performance for the year ended on that date; and(ii)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 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 confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Level 10, 12 Creek St Brisbane QLD 4000 GPO Box 457 Brisbane QLD 4001 Australia Tel: +61 7 3237 5999 Fax: +61 7 3221 9227 www.bdo.com.au For personal use onlyINDEPENDENT AUDITOR’S REPORT 76 Annual Report2020Annual Report202076INDEPENDENT AUDITOR’S REPORT BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. Material uncertainty related to going concern We draw attention to Note 1 in the financial report which describes the events and/or conditions which give rise to the existence of a material uncertainty that may cast significant doubt about the group’s ability to continue as a going concern and therefore the group may be unable to realise its assets and discharge its liabilities in the normal course of business. Our opinion is not modified in respect of this matter. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material uncertainty related to going concern section, we have determined the matters described below to be the key audit matters to be communicated in our report. Capitalisation of Development Costs Key audit matter How the matter was addressed in our audit The Group capitalises costs incurred in the development of its software, as disclosed in note 14. These costs are then amortised over the estimated useful life of the asset. The capitalisation of development costs was a key audit matter due to the significance of the balance and the judgement involved in assessing whether the criteria set out in AASB 138 Intangible Assets required for capitalisation of such costs have been met and the useful life of the asset is reasonable. The Group’s judgements include whether the costs capitalised, including payroll costs, were directly attributable to development projects, rather than related to research or maintenance operations. Our work on capitalised development costs was focused on the Group’s process in determining the projects which should be capitalised and the determination of the appropriate allocation of overhead and payroll costs to be capitalised in accordance with AASB 138. Our audit procedures included the following; •Assessed the nature of a sample of projects against therequirements of AASB 138 to determine if they were capital innature, including an assessment of whether capitalised costsrelated to the development phase of the project and thegeneration of probable future economic benefits.•On a sample basis, vouched the payroll costs capitalised tosupporting payroll records and assessed the procedures applied bythe Group to appropriately record and allocate staff costs tocapitalised development expenditure.•On a sample basis, vouched overhead costs capitalised tosupporting documentation and assessed the procedures applied bythe Group to appropriately allocate overhead costs to capitaliseddevelopment expenditure.•Assessing the adequacy of disclosures in the financial statements.For personal use onlyINDEPENDENT AUDITOR’S REPORT 7 7 77INDEPENDENT AUDITOR’S REPORT BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. Impairment of Capitalised Development Costs & Right of Use Asset Key audit matter How the matter was addressed in our audit The Right of Use Asset (note 13) and Development Costs (note 14) make up a significant portion of the Group’s assets. AASB 136 Impairment of Assets requires that finite intangible assets be tested for impairment whenever there is an indication that the intangible assets may be impaired and this assessment requires judgement. The assessment as to whether there are any indicators of impairment requires the consideration of both internal and external sources of information. Given the level of complexity and the judgement exercised by the Group in determining the recoverable amount of the assets, we considered this area to be significant for our audit. The assets are supported by a value in use calculation. Our audit procedures included, but were not limited to the following: •Obtaining an understanding of the 'Value in Use' modeland evaluating management's methodologies and theirkey assumptions•Assessing management’s allocation of assets andliabilities, including corporate assets to CGU's•Evaluating the inputs used in the value in use calculationincluding the growth rates, discount rates and theunderlying cash flows by comparing them to historicalresults, current contracts, economic and industryforecasts•We reviewed the adequacy of the disclosures related tothe impairment assessment by comparing thesedisclosures to our understanding of the matter and theapplicable accounting standards.Other information The directors are responsible for the other information. The other information comprises the information contained in the Group’s annual report for the year ended 30 June 2020, but does not include the financial report and our auditor’s report thereon, which we obtained prior to the date of this auditor’s report. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information identified above 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 that we 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. For personal use onlyINDEPENDENT AUDITOR’S REPORT 78 Annual Report2020Annual Report202078INDEPENDENT AUDITOR’S REPORT BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. Responsibilities of the directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the group to continue as a going concern, disclosing, as applicable, matters related 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 has 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 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. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf This description forms part of our auditor’s report. For personal use onlyREPORT ON THE REMUNERATION REPORT 79 79REPORT ON THE REMUNERATION REPORT BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 19 to 28 of the directors’ report for the year ended 30 June 2020. In our opinion, the Remuneration Report of IntelliHR Limited for the year ended 30 June 2020, 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. BDO Audit Pty Ltd R M Swaby Director Brisbane, 21 August 2020 For personal use onlySHAREHOLDER INFORMATION SHAREHOLDER INFORMATION The shareholder information set out below was applicable as at 17 August 2020. A DISTRIBUTION OF EQUITY SECURITIES Analysis of numbers of equity security holders by size of holding: 1 - 1,000 1,001 – 5,000 5,001 – 10,000 10,001 –50,000 50,001 –100,000 100,001 and over TOTAL DISTRIBUTION OF EQUITY SECURITIES There were 40 holders of less than a marketable parcel of ordinary shares. CLASS OF EQUITY SECURITY ORDINARY SHARES 14 141 111 344 100 224 934 80 Annual Report2020For personal use onlyB EQUITY SECURITY HOLDERS Twenty largest quoted equity security holders The names of the twenty largest holders of quoted equity securities are listed below: NAME Colinton Capital Partners Pty Ltd Mr Robert Jon Bromage Immanuel Developments Pty Ltd Intercontinental Pty Limited Altor Capital Management Pty Ltd AG & M Bellas Super Fund Pty Ltd Workforce Guardian Pty Ltd JD Investments Holding Pty Ltd K R Khatri (Dental) Pty Ltd Jodie Ann Slattery Mr Thomas George Hackett & Mrs Nerida Leith Hackett Mrs Lori Michele Lowther J J N A Super Pty Ltd Mr Adam Patrick Warbrooke Cassa Trading Pty Ltd Kokoris Superannuation Pty Chatterton Pty Ltd Colinton Capital Pty Limited Mrs Wendy Laura Hopsick Ms Marilyn Joan Bromage TOTAL Unquoted equity securities Options over ordinary shares Performance rights SHAREHOLDER INFORMATION ORDINARY SHARES NUMBER HELD % OF ISSUED SHARES 36,500,000 22,563,978 7,250,001 5,026,094 5,000,000 4,131,288 4,000,000 3,462,986 3,225,277 2,731,956 2,271,400 2,211,300 2,147,533 2,048,394 2,000,000 1,851,000 1,813,744 1,787,880 1,750,000 1,656,103 17.88 11.06 3.55 2.46 2.45 2.02 1.96 1.70 1.58 1.34 1.11 1.08 1.05 1.00 0.98 0.91 0.89 0.88 0.86 0.81 113,428,934 55.57 NUMBER OF ISSUE 11,095,996 617,347 NUMBER OF HOLDERS 48 2 81 For personal use onlySHAREHOLDER INFORMATION Holders of more than 20% of unquoted share options on issue Robert Bromage Holders of more than 20% of unquoted performance rights on issue Paul Trappett Glenn Donaldson C SUBSTANTIAL HOLDERS Substantial holders in the company are set out below: Ordinary shares Colinton Capital Partners Pty Ltd Robert Bromage D VOTING RIGHTS NUMBER HELD 4,728,875 % OF TOTAL ON ISSUE 42.62% NUMBER HELD 367,347 250,000 % OF TOTAL ON ISSUE 59.50% 40.50% NUMBER HELD PERCENTAGE 38,287,880 22,563,978 19.90% 11.06% The voting rights attaching to each class of equity securities are set out below: (a) Ordinary shares: On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. (b) (c) Performance rights: No voting rights Share options: No voting rights 82 Annual Report2020For personal use onlyTHIS PAGE LEFT INTENTIONALLY BLANK For personal use onlyintelligent people management. I N T E LLI H R .C O For personal use only

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