Nearmap Annual Report 2015

Plain-text annual report

2015 nearmap Limited Annual Report ABN 37 083 702 907 © nearmap ltd 2015 Salt Flats, San Francisco Bay Area, California, United States – September 2015Chairman’s Letter CEO’s Report Directors’ Report Auditor’s Declaration Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements Directors’ Declaration Independent Auditor’s Report Shareholder Information Corporate Information 6 9 30 48 52 53 54 55 56 82 83 85 87 Image (opposite page and cover): Salt Flats, San Francisco Bay Area, California, United States – September 2015 2015 Annual Report 2015 Annual Report 5 5 ContentsMr Ross Norgard Non-Executive Chairman Dear Shareholders, It is a pleasure to present the nearmap 2015 Annual Report. The 2015 ﬁ nancial year was another pivotal year for nearmap, underpinned by continued growth in the Australian business as well as signiﬁ cant progress with our international expansion into the United States. It is pleasing to note that the Australian business continued to grow in FY15 with revenue up 32% and gross proﬁ t up 36% from the prior year. Investment in the Australian business continues as we introduced our ﬁ rst ever marketing function, established a local management team and extended our sales capacity, all of which are driving growth in Australia. We continue to see high retention rates of customers and have laid the foundation for sustainable growth. nearmap announced its expansion into the United States in October 2014 and launched its nationwide US urban capture program, which was an exciting moment for the Company. The successful launch of the HyperCamera system, which was approved by the Federal Aviation Administration (FAA), allowed us to accelerate our offshore growth plans. The initial capture program aimed to capture 33% of the US population in FY15, more than 100M people. This target was subsequently increased to 150M people as the expansion tracked ahead of expectations due to efﬁ ciencies achieved by using the HyperCamera technology. In the latter half of FY15, we had our ﬁ rst commercial sales in the US which endorsed the validity of nearmap’s value add and competitive offering. I am pleased with the progress we have made to date on the expansion into the US. We have been able to build a new operation from the ground up and have established the foundation for growth which has included opening three ofﬁ ces across the US and hiring local sales, marketing and ﬂ ight operations teams. As a result, we have recorded thousands of registered users and generated our ﬁ rst sales ahead of guidance, which is a testament to the dedication of the team and strategic drive from management. Our balance sheet remains strong with no debt and a healthy cash balance of $17.2M as at year end. Our growth in Australia and effective management of our balance sheet has allowed us to fund the US expansion internally. We continue to invest in new technology and product development to further enhance our imagery and our offering to customers. In Australia, we increased market penetration in high value verticals and successfully launched nearmap Insurance and nearmap Construction. In FY16, we plan to launch the HyperCamera2 aerial camera system, which will add capability to capture multi-directional oblique views as well as high-resolution digital elevation models. This breakthrough technology is exciting and will further solidify our foothold in the market as a leader in high-resolution aerial imagery. 6 2015 Annual Report 2015 Annual Report 6 Chairman’s LetterDetails on our performance for the year, including the CEO's report and full set of ﬁ nancial results, can be found in the sections following and I encourage you to read them. In conclusion, I would like to thank our CEO, Simon Crowther, together with his executive team of Gerhard Beukes, Paul Lapstun and Paul Peterson and congratulate them on their success. It is not easy to take a start-up company to the next level and begin to build an international business and the team has worked tirelessly this year to deliver on strategic and operational goals. I would like to thank my fellow Directors and our staff for their contributions and commitment to nearmap. I look forward to the exciting year ahead. Ross Norgard Chairman Sydney 14 October 2015 2015 Annual Report 2015 Annual Report 7 7 Chairman’s LetterPentagon, Washington, DC, United States – April 2015“Over the last 12 months we have continued to invest ahead of the growth curve through strategic focus on creating unique patented technology, automated highly scalable systems and key talent. We embarked upon our international expansion in the United States signing our ﬁ rst customers ahead of schedule and continue to grow the proﬁ tability of our Australian business.” The market opportunity is to continue to advance up the value chain offering our customers analytics and data mining capabilities that fuse our unique PhotoMap capability with compelling data sets. We will offer unique insights about their business, customers, sector, industry and operating environment. We can demonstrate to customers the positive return on investment a nearmap subscription provides and embed ourselves intuitively within workﬂ ows and industry platforms. The step into the US market in October 2014 was undertaken after careful evaluation of the market opportunity. In parallel, we embarked upon the development of HyperCamera2 an entirely new aerial surveying system in order to unlock the potential of the US market long term. We also undertook signiﬁ cant updates to our platform to enable us to monetise our content effectively. These decisions were made in order to maximise shareholder value over the long term and position nearmap effectively for future international growth. Mr Simon Crowther Chief Executive Ofﬁ cer The 2015 ﬁ nancial year was again a pivotal year for nearmap. We increased the proﬁ tability of our Australian business, hired an entirely new management team in Australia and commenced our international expansion plans. The year reﬂ ected the tale of two regions – the continued growth of the Australian business and the set up of a completely new operation in the United States. The long-term strategy for the Company is underpinned by the continued investment in research and development, systems and people. The goal is to complete the evolution from aerial mapping operation using prototype ﬁ rst generation technology to become a visual analytics business utilising proprietary next generation capture capabilities. Image: Pentagon, Washington, DC, United States – April 2015 CEO’s Report CEO’s Report 9 9 CEO’s ReportIn Australia • Continued high retention of Australian customers leading to increased customer penetration and revenue. • Introduced marketing for the ﬁ rst time resulting in increasingly sophisticated market engagement. • New customers adopting nearmap daily. • Established a local management team to drive continued growth. • Designed and launched an entirely new, patented, next generation hardware system HyperCamera2 that is a signiﬁ cant progression from HyperPod both in terms of innovation and capability. Image: Avoca Beach, New South Wales, Australia – September 2015 10 CEO’s Report Key highlights during the year includeAvoca Beach, New South Wales, Australia – September 2015In the United States • Established an entirely new business operation, completed signiﬁ cant capture program resulting in 160m people coverage and closed our ﬁ rst paying customers within 12 months. • Opened 3 locations: San Francisco (CA), Salt Lake City (UT) and Fairfax (VI) and hired ﬂ ight operations, HR, sales and marketing teams. • Generated thousands of highly targeted registered users on us.nearmap.com. • Successfully rolled out next generation systems to support scalability, automation and ecommerce capability. Image: US Open, New York City, New York, United States – September 2015 12 CEO’s Report Key highlights during the year includeUS Open, New York City, New York, United States – September 2015Investment in people “Our people are the foundation of our business.” Working in a small growth business like nearmap can be very challenging at times, things do not always go to plan as we create markets and demand for our service. I would like to say thank you to all my teammates for their hard work and enthusiasm. My commitment to Human Resources and our people is absolute as is my commitment to never accepting average as the standard within nearmap. I am excited by the career growth opportunities we can increasingly offer our team as we grow our international presence. Start-up businesses require highly motivated, talented individuals with a high work ethic and domain expertise to be world class. Building an international business from scratch takes time, patience, resilience and the support of a core group of people and I would like to take this opportunity to say thank you to my Executive Team who have worked tirelessly over recent years to put the Company in the position to scale. We have moved out of the start-up phase and are ﬁ rmly focused on building a scalable business and attracting and retaining key talent. In order to achieve this we have established a Global Human Resources function supported by an Australian HR Director. These highly experienced HR professionals are tasked with building an inclusive and winning culture and ensuring over time all our colleagues feel rewarded and supported in their roles. 14 14 CEO’s Report CEO’s Report CEO’s Report 14 “ Achieving exceptional performance from a comparably small group of people is key to our future success.” CEO’s Report 15 nearmap Team 2015 nearmap Team 2015 16 16 CEO’s Report CEO’s Report nearmap Team 2015 16 CEO’s Report “We are focused on automating our systems for scalability and it is a critical part of our strategy to automate as many processes as possible.” During the year we commenced the development and implementation of our next generation systems known internally as ‘Global Customer Management’ (GCM). This is a key part of our strategy to operate automated and scalable systems using best of breed cloud based tools and applications such as Tableau, Zuora, HubSpot and Salesforce. The ﬁ rst phase of GCM was introduced successfully in the US during the year and will be implemented during the ﬁ rst half of FY15/16 in Australia. These new improved systems will provide our entire organisation with enhanced insight and reporting capabilities, automated marketing and lead nurturing all integrating seamlessly with our CRM and data visualisation systems. GCM has been developed and deployed in order to support our coordinated Go-To-Market activities. Image: Elizabeth Quay progress, Perth, Western Australia, Australia – September 2015 18 CEO’s Report Increased investment in scalable systemsElizabeth Quay progress, Perth, Western Australia, Australia – September 2015“Execution is key. We have established the Go-To-Market (GTM) function to co-ordinate 3 key pillars: Sales, Marketing and Product Marketing in each market so we achieve alignment and effective feedback loops.” Key to successful execution and scaling is the coordination of the commercial planning of the business. We have aspirations to be a multinational organisation, which involves both complex decision-making and rapid action. GTM facilitates this by coordinating sales, marketing and product marketing ensuring each team is aligned, understands the mission and focused on key priorities. GTM acts as both central coordinator and feedback loop to ensure we are constantly reviewing operations and improving products and commercial activity. Images from right: Facebook West Campus, Menlo Park, California, United States – September 2014, September 2015 Image: Karratha, WA – July 2014 20 CEO’s Report Go-To-Market 21 Facebook West Campus, Menlo Park, California, United States – September 2015“We are committed to continued investment in R&D. It’s in our DNA and we have a world-class team lead by CTO Paul Lapstun.” HyperCamera was the precursor and test pilot that underpinned HyperCamera2 which at the time of writing has completed successful testing. We will offer signiﬁ cantly enhanced outputs particularly oblique photography, elevation data and 3D modelling. HyperCamera2 is key to nearmap maintaining our competitive advantage, evolving toward being an analytics business, upgrading the functionality of our tools and applications such as nearmap Solar and productising new features and capabilities. During the year we made signiﬁ cant progress in terms of the development of our next generation surveying capability. Importantly we secured US Patents for HyperCamera and HyperCamera2 whilst demonstrating the scalability of our operations by establishing a ﬂ ight operations base in Fairfax Virginia US and capturing 160m people from scratch. We are focused on innovation and protecting our intellectual property. HyperCamera enabled us to scale into the US in a controlled and cost effective manner. This was an important step, primarily designing a sensor that operated inside the aircraft thereby minimising the need for Aviation compliance and broadening our access to different surveying aircraft. Images clockwise: Barangaroo Reserve progress, Sydney, New South Wales, Australia – September 2015, July 2014, December 2013 22 CEO’s Report Investment in technologyImages clockwise: Barangaroo Reserve progress, Sydney, New South Wales, Australia – September 2015, July 2014, December 2013We increased all the main operating margins for the business whilst making a focused investment in our start-up business in the US. In parallel, we successfully developed an entirely new hardware system to support our international growth, secured important US Patents and made strategic investments in our platform to support scalability and digital marketing. The team grew during this period and we increased the role of Human Resources inside the business resulting in achieving 85% employee satisfaction. The retention and churn of our employees remains comfortably within industry standards and we are committed to being an employee of choice as we mature as an organisation. S. Crowther Chief Executive Ofﬁ cer 14 October 2015 Image: Perth Stadium, Perth, Western Australia Australia – September 2015 24 CEO’s Report In summary – what a year!Perth Stadium, Perth, Western Australia, Australia – September 2015Apple Campus, Cupertino, California, United States – August 2015Apple Campus, Cupertino, California, United States – August 2015Apple Campus, Cupertino, California, United States – February 2015Apple Campus, Cupertino, California, United States – February 2015Apple Campus, Cupertino, California, United States – May 2015Apple Campus, Cupertino, California, United States – May 2015Apple Campus, Cupertino, California, United States – September 2015Apple Campus, Cupertino, California, United States – September 2015Directors’ Report Your Directors submit their report on the consolidated entity consisting of nearmap ltd and the entities it controlled at the end of, or during, the year ended 30 June 2015. Directors The names and details of the Company’s Directors in ofﬁ ce during the ﬁ nancial year and until the date of this report are as follows. Directors were in ofﬁ ce for this entire year unless otherwise stated. Names, qualiﬁ cations, experience, directorships and special responsibilities Ross is also Founding Chairman of Brockman Resources Limited, now Non-Executive Director of ASX and Hong Kong listed Brockman Mining Limited. Current Directorships Brockman Resources Limited (since 2004) – Founding Chairman, now Deputy Chairman nearmap ltd (since 1987) Former Directorships in the last 3 years Brockman Resources Limited (acquired by Wah Nam International Holdings Limited in June 2012) Special duties Member of the Nomination and Remuneration Committee Member of the Audit and Risk Management Committee Mr Ross Norgard (68) FCA Non-Executive Chairman In 1987, Ross became the founding Chairman of nearmap ltd (formerly ipernica ltd). Ross is a Fellow of the Institute of Chartered Accountants and former managing partner of Arthur Andersen and KMG Hungerfords and its successor ﬁ rms in Perth, Western Australia. For over 30 years he has worked extensively in the ﬁ elds of raising venture capital and the ﬁ nancial reorganisation of businesses. He has held numerous positions on industry committees including past Chairman of the Western Australian Professional Standards Committee of the Institute of Chartered Accountants. He is a current member of the National Disciplinary Committee, former Chairman of the Friends of the Duke of Edinburgh's Award Scheme and a former member of the University of Western Australia's Graduate School of management (MBA Program). Ross was appointed Western Australia’s Honorary Consul-General to Finland. Mr Simon Crowther (50) Chief Executive Ofﬁ cer Simon has a broad international digital and media background. In addition to being very commercially focused, Simon drives the strategic direction and international expansion for nearmap and the evolution from aerial surveying start-up to a visual analytics business. 30 Directors’ Report Directors’ Report 30 Directors’ Report Simon has extensive knowledge and experience managing diverse content and IP related businesses, including former Managing Director of Canada's largest communications agency and Director of Copyright Promotions Group (CPG), then Europe's largest entertainment and sports IP / rights management agency. He has overseen the commercial activities of major US ﬁ lm studios Marvel, Turner, Newline, Fox and Lucasﬁ lm, as well as major sports franchises such as English Cricket and England Rugby Union. Previously he was Head of Global Sales & Licensing for Granada Media (now ITV), the largest commercial TV broadcaster in the UK and one of Europe's largest content producers. He directed commercial activities including advertiser funded content, publishing, home entertainment and licensing activities, as well as commercial activities for Liverpool and Arsenal Soccer Club’s. Simon is a dual Canadian and British citizen and Australian permanent resident and a Member of the Australian Institute of Company Directors. Simon has a Bachelor Degree in Business from The University of Leeds (UK) and a Master Degree in Business from The University of Melbourne (Australia). Current Directorships nearmap ltd (since November 2011) Former directorships in the last 3 years None Dr Rob Newman (51) Non-Executive Director Rob has established a unique track record as a successful Australian high technology entrepreneur in both Australia and Silicon Valley. He has twice founded and built businesses based on Australian technology and both times successfully entered overseas markets. One of those companies, Atmosphere Networks, was established by Rob with US Venture Capital backing of US$34m and he ran it until it was acquired for US$123m. Rob is now a venture capitalist and is co-founder of Stone Ridge Ventures, and was previously an investment Director for Foundation Capital. As a venture capitalist, Rob has extensive experience in identifying and helping grow companies with signiﬁ cant commercial potential, especially those addressing overseas markets. In the 1980's, Rob was the inventor and co-founder of QPSX Communications Pty Ltd. After founding the company, Rob provided the technical leadership and product strategy. Rob was instrumental in establishing QPSX as a worldwide standard for Metropolitan Area Networks and the company successfully sold products to telecommunication carriers in Australia, Europe, Asia and the US. Rob’s formal qualiﬁ cations include a PHD and Bachelor of Electrical Engineering (1st class honours) from the University of Western Australia. He has been recognised with a number of awards including the Bicentennial BHP Pursuit of Excellence Award (Youth Category), Western Australian Young Achiever of the Year and University of Western Australia Innovation and Entrepreneurship Award. Current directorships nearmap ltd (since February 2011) Former directorships in the last 3 years None Special duties Chairman of the Audit and Risk Management Committee Member of the Nomination and Remuneration Committee Directors’ Report Directors’ Report 31 31 Directors’ Report Mr Cliff Rosenberg (51) B.Bus.Sci. , M.Sc. Management Non-Executive Director Clifford Rosenberg is the Managing Director for LinkedIn South East Asia, Australia and New Zealand. LinkedIn is the world’s largest professional network with over 380 million members around the globe of which over 7 million are in Australia. In this role, Cliff’s focus is driving awareness and uptake of LinkedIn’s products, including talent, marketing and sales solutions. Since January 2010, Cliff has set up ofﬁ ces in Sydney, Melbourne and Perth, growing the local team to more than 200 staff, including sales, marketing and public relations personnel. Cliff has a distinguished 20-year career in the digital space, both as an entrepreneur and executive. He was formerly the Managing Director of Yahoo! Australia and New Zealand where he was responsible for all aspects of the local operation for more than three years. He was, until recently, a Non-Executive Director of Australia’s leading online restaurant booking platform, dimmi. com.au, which was sold to Tripadvisor in early 2015. Cliff is also a Non- Executive Director of ASX listed company, Pureproﬁ le (ASX:PPL). Prior to joining Yahoo!, Cliff was the Founder and Managing Director of iTouch Australia and New Zealand, a leading wireless application service provider. He grew the Australian ofﬁ ce to one of the largest mobile content and application providers in Australia with key partnerships with companies such as Ninemsn, Yahoo!, Telstra and Vodafone. Previously, Cliff was head of corporate strategy for Vodafone Australasia and also served as an international management consultant with Gemini Consulting and Bain Consulting. He earned a Master of Science degree in management as well as Bachelor of Business Science in Economics and Marketing. Current directorships nearmap ltd (since July 2012) Pureproﬁ le Ltd Former directorships in the last 3 years Sound Alliance dimmi.com.au Special duties Chairman of the Nomination and Remuneration Committee Member of the Audit and Risk Management Committee 32 Directors’ Report Directors’ Report 32 Directors’ Report Interests in the shares and options of the Company As at the date of this report, the interests of the Directors in the shares and options of nearmap ltd were: R Norgard S Crowther1 R Newman C Rosenberg Ordinary shares Options over ordinary shares - 7,000,000 - - 50,076,295 10,000,000 4,000,0000 2,775,000 1 10,000,000 shares subject to holding lock pursuant to loan provisions of Company’s Employee Share Option Plan. nearmap’s strategy is to effectively monetise all of its content by providing convenient access to the content via desktop and mobile platforms, and through subscription models and value add products supported by e-commerce facilities. The pivotal features underpinning the success of the nearmap business model are: –the frequency with which this data is updated; –the clarity (resolution) of the photomaps; and –the availability of previous surveys on the same platform, allowing users to track changes of locations over time. Consolidated result The consolidated entity’s result after provision for income tax was a loss of $0.79m (2014: proﬁ t of $7.08m). Review and results of operations For the year ended 30 June 2015, the Group reported revenue of $23.6m, up 32% on corresponding prior year revenue of $17.8m, underpinned by continued customer retention and growth in the customer base. nearmap’s balance sheet remains strong with no debt and a healthy cash balance. During the year ended 30 June 2015, nearmap had negative cashﬂ ows of $6.5m as the Australian business funded the US expansion during the year and invested heavily in ﬁ xed assets and intangibles. However, our cash balance is still healthy at $17.2m at 30 June 2015. Cash receipts from customers for the year were $26.9m compared to $23.2m for the previous year, an increase of $3.7m (16%). Dividends No dividends have been paid or proposed in respect of the current year (2014: nil). Corporate structure nearmap ltd (formerly known as ipernica ltd) is a company limited by shares incorporated and domiciled in Australia. Nature of operations and principal activities The principal activity of the consolidated entity during the course of the ﬁ nancial year was online aerial photomapping via its 100% owned subsidiaries nearmap Australia Pty Ltd and nearmap US Inc. Business model nearmap is an innovative online PhotoMap content provider that creates high quality current and changing maps. The Company generates revenues through licensing its content to a broad range of customers such as government agencies, the commercial sector and small to medium sized enterprises. nearmap’s breakthrough technology has been designed to fully automate the process of creating a high deﬁ nition PhotoMap of large areas such as cities quickly and in a cost effective fashion. The technology enables PhotoMaps to be updated more frequently than other providers, which can be months, if not years out of date. Directors’ Report Directors’ Report 33 33 Indemniﬁ cation and insurance of Directors During the ﬁ nancial year, the Group paid premiums to insure the Directors and ofﬁ cers of the Group. The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the ofﬁ cers in their capacity as ofﬁ cers of entities in the Group, and any other payments arising from liabilities incurred by the ofﬁ cers in connection with such proceedings. This does not include such liabilities that arise from conduct involving a wilful breach of duty by the ofﬁ cers or the improper use by the ofﬁ cers of their position or of information to gain advantage for themselves or someone else or to cause detriment to the Company. It is not possible to apportion the premium between amounts relating to the insurance against legal costs and those relating to other liabilities. Directors’ Report Environmental regulation and performance The current activities of the Company and its subsidiary companies are not subject to any signiﬁ cant environmental regulation. However, the Board believes that the Company has adequate systems in place to manage its environmental obligations and is not aware of any breach of those environmental requirements as they apply to the Company. Signiﬁ cant changes in the state of affairs a) On 17 July 2014, nearmap launched a new FAA-approved aerial camera system, HyperCamera, which is optimal for vertical imagery and is compact enough to be deployed inside an aircraft. b) On 31 July 2014, nearmap launched nearmap Insurance, a visual analytics solution designed to give insurers a competitive advantage when assessing risk, improving responsiveness and managing claims. c) On 13 October 2014, nearmap announced its expansion into the US market, including the launch of our nationwide US urban capture program. d) During the ﬁ rst half of FY15, nearmap launched nearmap Construction, a construction planning solution with precise site information to map, measure and monitor progress of a build and also provides for volume estimation. e) On 20 May 2015, nearmap announced the ﬁ rst commercial sales in the US. Signiﬁ cant events subsequent to balance date There were no matters or circumstances speciﬁ c to the Company that have arisen since 30 June 2015 that have signiﬁ cantly affected or may signiﬁ cantly affect: –the Company’s operations in future ﬁ nancial years; or –the results of those operations in future ﬁ nancial years; or –the Company’s state of affairs in future ﬁ nancial years. Prospects for future years The Directors believe that the business strategies put in place will ensure that the Company continues on its growth trajectory in the foreseeable future. nearmap is primed to continue generating value for its shareholders in future years, subject to a stable macro-economic environment. The Company will continue to seek new opportunities to build scale and to broaden its customer base. The Company faces a number of risks including inability to achieve volume growth targets, availability and cost of funds and deterioration of credit quality / impairments which may impact on its ability to achieve its targets. 34 Directors’ Report Directors’ Report 34 Directors’ Report Share options As at 30 June 2015 there were 30,555,000 unissued ordinary shares under options. Refer to note 6 of the ﬁ nancial statements for further details of the employee options outstanding. Directors’ meetings The numbers of meetings of Directors (including meetings of committees of Directors) held during the ﬁ nancial year and the number of meetings attended by each Director was as follows: Full Board Meetings B 8 8 8 8 A 8 8 8 8 Audit and Risk Committee Meetings B 2 - 2 2 A 2 - 2 2 Nomination and Remuneration Committee Meetings B 2 - 2 2 A 2 - 2 2 R Norgard S Crowther R Newman C Rosenberg A Number of meetings held during the time the Director held ofﬁ ce and the Director was eligible to attend. B Number of meetings attended. Rounding of amounts The Company is of a kind referred to in Class Order 98/0100 issued by the Australian Securities and Investments Commission, relating to the ‘rounding off’ of amounts in the Directors’ Report and ﬁ nancial statements. Unless otherwise expressly stated, amounts referred to in this report have been rounded off to the nearest thousand dollars in accordance with that Class Order. Directors’ Report Directors’ Report 35 35 Directors’ Report Remuneration Report (Audited) This report outlines the remuneration arrangements in place for Directors and key management personnel of nearmap ltd (the Company) and the consolidated entity (the Group). The remuneration report is set out under the following main headings: A. Principles used to determine the nature and amount of remuneration B. Details of remuneration C. Employment contracts D. Share based compensation E. Transactions of key management personnel F. Additional information G. Shares under option The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001. A. Principles used to determine the nature and amount of remuneration Remuneration philosophy The performance of the Company depends upon the quality of its Directors and executives. To prosper, the Company must attract, motivate and retain highly skilled Directors and executives. To this end, the Company embodies the following principles in its remuneration framework: –Provide competitive rewards to attract high calibre executives; –Link executive rewards to shareholder value; and –Establish appropriate, demanding performance hurdles in relation to variable executive remuneration. Nomination and Remuneration Committee The Nomination and Remuneration Committee of the Board of Directors of the Company is responsible for determining and reviewing compensation arrangements for the Directors, the Chief Executive Ofﬁ cer and the senior management team and ensuring that the Board continues to operate within the established guidelines, including when necessary, selecting candidates for the position of Director. The Nomination and Remuneration Committee assesses the appropriateness of the nature and amount of remuneration of Directors and key management personnel on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder beneﬁ t from the retention of a high quality Board and executive team. The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned amongst Directors is reviewed annually. (i) Services from remuneration consultants The Board considers advice from external consultants as well as the fees paid to Non-Executive Directors of comparable companies when undertaking the annual review process. In FY15 the Nomination and Remuneration Committee engaged PricewaterhouseCoopers (PwC) as remuneration consultant to benchmark the remuneration of the Chief Executive Ofﬁ cer and his direct reports as well as the fees provided to nearmap’s Non-Executive Directors against comparable peers and provide recommendations. PwC was paid $32,640 for the remuneration benchmarking analysis and recommendations. A letter of engagement conﬁ rmed that any advice provided must be free from undue inﬂ uence by the member or members of the key management personnel to whom any recommendations relate and sets out the processes to be followed in requesting information from, and from providing reports to, the Company to ensure that these obligations are met. The Board is satisﬁ ed that the remuneration outcomes were free from undue inﬂ uence by any key management personnel on the basis that the processes described above were followed and were designed to ensure such an outcome. 36 Directors’ Report Directors’ Report 36 Fixed Remuneration Objective The level of ﬁ xed remuneration is set so as to provide a base level of remuneration which is both appropriate to the position and is competitive in the market. Fixed remuneration is reviewed annually by the Nomination and Remuneration Committee and the process consists of a review of individual performance, relevant comparative remuneration in the market and internal and, where appropriate, external advice on policies and practices. Increases were approved by the Nomination and Remuneration Committee for the Chief Executive Ofﬁ cer and all other key management personnel to receive an increase in base salaries effective 1 March 2015. Structure Senior executives are given the opportunity to receive their ﬁ xed (primary) remuneration in a variety of forms including cash and fringe beneﬁ ts such as motor vehicles and expense payment plans. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the Company. Directors’ Report Remuneration Report (Audited) A. Principles used to determine the nature and amount of remuneration (cont.) Remuneration structure In accordance with best practice corporate governance, the structure of Non-Executive Director and key management personnel remuneration is separate and distinct. Non-Executive Director remuneration Objective The Board seeks to set aggregate remuneration at a level which provides the Company with the ability to attract and retain Directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders. Structure The Constitution and the ASX Listing Rules specify that the aggregate remuneration of Non-Executive Directors shall be determined from time to time by a general meeting. An amount not exceeding the amount determined is then divided between the Directors as agreed. The latest determination was at the Annual General Meeting (AGM) held on 21 November 2008 when shareholders approved an aggregate remuneration of $300,000 per year. Increases were approved by the Nomination and Remuneration Committee for Rob Newman and Cliff Rosenberg to receive an increase in Non-Executive Director fees to $70,000 effective 1 March 2015. Voting and comments made at the Company’s 2014 Annual General Meeting The Company received only 4.76% “no” votes on its remuneration report for the 2014 ﬁ nancial year. The Company did not receive any speciﬁ c feedback at the AGM or throughout the year on its remuneration practices. Each Director receives a fee for being a Director of the Company. A further fee is paid where additional time commitment is required like that being required by the Chairman of the Company. Key management personnel and executive Director remuneration Objective The Company aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities within the Company and so as to: –Reward executives and individual performance against key performance indicators; –Align the interests of executives with those of shareholders; –Link reward with the strategic goals and performance of the Company; and –Ensure total remuneration is competitive by market standards. Structure Remuneration typically consists of the following key elements: –Fixed remuneration –Variable remuneration –Short term incentive (STI); and –Long term incentive (LTI). The proportion of ﬁ xed remuneration and variable remuneration (potential short term and long term incentives) is established for each key management personnel by the Nomination and Remuneration Committee. Directors’ Report Directors’ Report 37 37 Structure LTI grants to employees are delivered in the form of options and the amount is determined by the Nomination and Remuneration Committee having regard to: –the seniority of the relevant Eligible Person and the position the Eligible Person occupies within the Company; –the length of service of the Eligible Person with the Company; –the record of employment of the Eligible Person with the Company; –the potential contribution of the Eligible Person to the growth of the Company; –the extent (if any) of the existing participation of the Eligible Person (or any Permitted Nominee in relation to that Eligible Person) in the Plan; and –any other matters which the Board considers relevant. Directors’ Report Remuneration Report (Audited) A. Principles used to determine the nature and amount of remuneration (cont.) Variable Remuneration — Short Term Incentive (STI) Objective The objective of the STI program is to link the achievement of the Company’s operational targets with the remuneration received by the employees charged with meeting those targets. The total potential STI where available is set at a level so as to provide sufﬁ cient incentive to employees to achieve the operational targets and such that the cost to the Company is reasonable in the circumstances. Structure Actual STI payments granted to each employee depend on the extent to which speciﬁ c operating targets set are met. The operational targets consist of a number of Key Performance Indicators (KPIs) covering both ﬁ nancial and non-ﬁ nancial measures of performance. Typically included are measures such as contribution to net proﬁ t after tax, customer management and leadership/team contribution. On an annual basis, after consideration of performance against KPIs, an overall performance rating for the Company and each individual’s performance is made and is taken into account when determining the amount, if any, of the short term incentive pool to be allocated to each employee. The aggregate of annual STI payments available for employees across the Company is subject to the approval of the Nomination and Remuneration Committee. Payments made are usually delivered as a cash bonus. However, STI payments are subject to discretion by the Board based on performance at the end of the year. Variable Remuneration – Long Term Incentive (LTI) Objective The objective of the LTI plan is to reward employees in a manner which aligns this element of remuneration with the creation of shareholder wealth. Options are granted with a strike price of 143% of the share price prevailing at the time of the grant. Executives are therefore required to achieve a ﬁ xed increase in share price of more than 43% before any value attracts to the individual. The options have a 4 year term and a service vesting condition of 1 year for 50% of each tranche granted and 2 years for the second 50% tranche. There are no performance related vesting conditions. The Board believes that this is a challenging ﬁ xed target in share price over the option term and is therefore an appropriate mechanism to align company performance with that of the individual. An employee loan scheme arrangement exists should an employee elect to apply for a loan on exercise of options, which may be granted subject to Nomination and Remuneration Committee discretion. 38 Directors’ Report Directors’ Report 38 Directors’ Report Remuneration Report (Audited) A. Principles used to determine the nature and amount of remuneration (cont.) Group performance The overall level of executive reward takes into account the nature of the technology commercialisation business and realistic timeframes for generating proﬁ ts. In particular, executive rewards recognise the commercialisation of the nearmap business and future shareholder wealth contained therein and progress in unlocking the value created to date. Executive performance of the Group has been reviewed over the past 5 years taking into account future shareholder wealth and proﬁ t performance. In considering the Group’s performance and beneﬁ ts for shareholder wealth, the Nomination and Remuneration Committee has given regard to the following indices in respect of the current ﬁ nancial year over the last 5 ﬁ nancial years. Revenue EBIT (earnings before interest & tax) Change in share price 2015 $’000 $23,626 $627 $0.16 2014 $’000 $17,846 $3,515 $0.17 2013 $’000 $10,987 ($980) $0.22 2012 $’000 $5,687 ($10,400) ($0.03) 2011 $’000 $10,797 $1,703 ($0.01) The graph below shows nearmap’s closing share price since 1 July 2012 and the relative performance against the ASX All Ordinaries. NEA AORD $0.80 $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $0.04 $0.00 70,000 60,000 50,000 40,000 30,000 20,000 10,000 5,451 0 30/06/2012 31/12/2012 30/06/2013 31/12/2013 30/06/2014 31/12/2014 30/06/2015 Directors’ Report Directors’ Report 39 39 Directors’ Report Remuneration Report (Audited) B. Details of remuneration Directors The following persons were Directors of the Company during the ﬁ nancial year: R Norgard S Crowther R Newman C Rosenberg Non-Executive Chairman Chief Executive Ofﬁ cer Non-Executive Director Non-Executive Director Other key management personnel The following persons also had authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, during the ﬁ nancial year: G Beukes P Lapstun P Peterson Chief Financial Ofﬁ cer Chief Technology Ofﬁ cer Senior Vice President of Product and Engineering Details of the remuneration of the Directors and the key management personnel (as deﬁ ned in AASB 124 Related Party Disclosures): Short-term Long-term Non-Executive Directors R Norgard R Newman C Rosenberg Salary & Fees 91,324 91,525 56,668 50,000 51,750 45,763 Non Monetary2 - - - - - - 2015 2014 2015 2014 2015 2014 Cash Bonus - - - - - - Subtotal Non-Executive Directors Long Service Leave - - - - - - Post employment super- annuation 8,676 8,475 - - 4,916 4,237 Share- based Payment options1 - - 3,858 16,974 3,858 16,974 Total 100,000 100,000 60,526 66,974 60,524 66,974 2015 2014 199,742 187,288 - - - - - - 13,592 12,712 7,716 33,948 221,050 233,948 Executive Directors S Crowther 2015 2014 435,718 411,241 63,787 10,705 140,000 110,000 15,064 11,659 21,162 15,775 727,303 1,403,034 987,193 427,813 1 AASB 2 Share-based Payment accounting value determined at grant date, recognised over related vesting periods, plus any incremental beneﬁ t to key management personnel as the result of the grant of a limited recourse loan per the employee loan scheme as disclosed in note 6(i) per the ﬁ nancial statements. 2 Non-monetary beneﬁ ts include the cost to the Company of providing vehicle, living away from home beneﬁ ts, and accommodation. 40 Directors’ Report Directors’ Report 40 Directors’ Report Remuneration Report (Audited) B. Details of remuneration (cont.) Short-term Long-term Other key management personnel (Group) G Beukes P Lapstun P Peterson Salary & Fees 241,263 195,530 247,552 230,000 254,218 240,000 Non Monetary2 - - - - - - Cash Bonus 100,000 40,000 100,000 40,000 100,000 40,000 2015 2014 2015 2014 2015 2014 Sub total other key management personnel Long Service Leave 2,975 3,056 1,281 1,932 1,553 2,042 Post employment super- annuation Share- based Payment options1 22,267 562,380 611,351 17,675 417,346 22,425 17,775 341,518 22,583 365,440 17,775 220,524 Total 928,885 867,612 788,604 631,225 743,794 520,341 2015 2014 743,033 665,530 - - 300,000 120,000 5,809 7,030 67,275 1,345,166 2,461,283 53,225 1,173,393 2,019,178 Total Directors and key management personnel 2015 1,378,493 2014 1,264,059 63,787 10,705 440,000 230,000 20,873 18,689 102,029 2,080,185 4,085,367 81,712 1,635,154 3,240,319 1 AASB 2 Share-based Payment accounting value determined at grant date, recognised over related vesting periods, plus any incremental beneﬁ t to key management personnel as the result of the grant of a limited recourse loan per the employee loan scheme as disclosed in note 6(i) per the ﬁ nancial statements. 2 Non-monetary beneﬁ ts include the cost to the Company of providing vehicle, living away from home beneﬁ ts, and accommodation. The proportions of remuneration that are linked to performance and those that are ﬁ xed are shown below: Name Non-Executive Directors R Norgard R Newman C Rosenberg Executive Director S Crowther Other key management personnel G Beukes P Lapstun P Peterson Salaries and beneﬁ ts 2015 Fixed remuneration LTI1 2015 100.0% 93.6% 93.6% - 6.4% 6.4% At risk – STI 2015 - - - 38.1% 51.9% 10.0% 28.7% 34.4% 37.4% 60.5% 52.9% 49.1% 10.8% 12.7% 13.5% 1 LTI awards have service related vesting conditions only. The Directors consider the LTI grants are aligned with shareholders’ interests as the exercise price is set as a 43% premium to the prevailing market price at the time they are granted. Directors’ Report Directors’ Report 41 41 Directors’ Report Remuneration Report (Audited) C. Employment contracts All executive employees and key management personnel are employed under contract. All executives have ongoing contracts and as such only have commencement dates and no expiry dates. Details of key management personnel and executives contracts as at 30 June 2015 are: Name S Crowther G Beukes P Lapstun P Peterson Notice period for termination at will 6 months 4 months 4 months 4 months Notice period for termination at cause 6 months 4 months 4 months 4 months –On resignation any unvested options are forfeited. Limited recourse loans are only granted to key management personnel in respect of vested options, therefore the loans are not subject to cancellation on resignation. –The Company may terminate an employment agreement by providing the respective written notice period or provide payment in lieu of the notice period (based on the ﬁ xed component of remuneration). On such termination by the Company, any LTI options that have vested, or will vest during the notice period will be required to be exercised within 180 days from termination date (unless agreed otherwise by the Company) or their options expiry date if earlier. LTI options that have not yet vested will be forfeited. –The Company may terminate an employment contract at any time without notice if serious misconduct has occurred. Where termination with cause occurs, the employee is only entitled to that portion of remuneration which is ﬁ xed, and only up to the date of termination. On termination with cause any unvested options will immediately be forfeited. –If an employee ceases to be employed by the Company (including by way of resignation, retirement, dismissal, etc) and has an outstanding limited recourse loan, the employee may elect to have the Company sell the loan shares and apply the net proceeds of the sale in repayment of the loan or repay the outstanding amount on the loan. This determination must be made within 1 month of the date of ceased employment. –There are no formal contracts between the Company and Non-Executive Directors in relation to remuneration other than the letter of appointment that stipulates the remuneration as at the commencement date. 42 Directors’ Report Directors’ Report 42 Directors’ Report Remuneration Report (Audited) D. Share based compensation Options A share option incentive scheme has been established whereby Directors and certain employees of the Group may be issued with options over the ordinary shares of the Company. The options, which are usually issued for nil consideration at an exercise price calculated with reference to prevailing market prices and a 43% premium thereon are issued in accordance with performance guidelines established by the Directors of the Company. The options are issued for terms of up to 4 years and are exercisable on various dates (usually in 2 equal annual tranches when vested) within 4 years from the issue date. The options only vest under certain conditions, principally centred on the employee still being employed, or the Director still engaged, at the time of vesting (that is, once the service has been satisﬁ ed). The options cannot be transferred without the approval of the Company’s Board and are not quoted on the ASX. As a result plan participants may not enter into any transaction designed to remove the “at risk” aspect of an option before it is exercised. Options were issued during the year ended 30 June 2015, refer to the table below and note 6 per the ﬁ nancial statements for details. Limited recourse loans (LRL) nearmap’s Employee Share Option Plan includes an Employee Loan Scheme that permits nearmap to grant ﬁ nancial assistance to employees by way of limited recourse loans to enable them to exercise options and acquire shares. Interest on the loans is payable by key management personnel at loan maturity and accrues daily at the Australian Taxation Ofﬁ ce approved rate for the purposes of the fringe beneﬁ t tax provisions. Loans are repayable three years after the issue date subject to the total share value being greater that the loan’s principal plus accrued interest. Compensation options Each option entitles the holder to subscribe for one fully paid ordinary share in the entity at an exercise price determined at a 43% premium to the market price of the shares on the date of grant. When an individual is granted a LRL to exercise their option, the effect is to extend the life of the original option and exercise price (in that interest accrues over the term of the loan). Directors’ Report Directors’ Report 43 43 Directors’ Report Directors’ Report Remuneration Report (Audited) Remuneration Report (Audited) D. Share based compensation (cont.) D. Share based compensation (cont.) Compensation options (cont.) Compensation options (cont.) Granted Granted during the during the period period Number Number Vested Vested during the during the period period Exercised Unvested at balance during the period Exercised Unvested at balance during the date period date Cancelled or expired during the Cancelled or expired during the period Grant Date period Grant Date Exercise Price per share Value per (options)/ Option/ Value per Current Share at price Option/ per share Share at Grant Date2 (loans)3 Grant Date2 $ $ $ Exercise Price per share (options)/ Current price per share (loans)3 Vesting $ Date Value of exercised during the period4 $ Value of exercised during the Expiry period4 Date $ Vesting Date Expiry Date 5,000,000 5,000,000 2,500,000 2,500,000 2,500,000 2,500,000 1,000,000 1,000,000 1,000,000 1,000,000 5,000,000 5,000,000 5,000,000 5,000,000 - - - - - - 100% 100% 100% 100% 100% 100% - - 5,000,000 5,000,000 - - - - - - - - 100% 100% - - - 5,000,0001 - - - - - - - 5,000,0001 - - - - - - 100% 100% 100% 100% - - 100% 100% 100% 100% - - 1,000,000 1,000,000 - - 1,000,000 1,000,000 - - 1,000,000 1,000,000 1,000,000 1,000,000 - - 1,000,000 1,000,000 - 1,000,000 - 1,000,000 - - - - - - - - - - - - - - - - Nov 12 Nov 13 Nov 13 Nov 14 Nov 14 Dec 14 Nov 13 Nov 12 Nov 13 Nov 13 Nov 14 Nov 14 Dec 14 Nov 13 0.0185 0.2943 0.2943 0.2160 0.2160 - - 0.0185 0.075 0.2943 0.761 0.2943 0.761 0.2160 1.080 0.2160 1.080 - 0.0775 - 0.0805 0.075 0.761 0.761 1.080 1.080 0.0775 0.0805 Nov 14 Nov 15 Nov 16 Nov 16 Nov 17 Nov 14 Nov 13 Nov 14 Nov 15 Nov 16 Nov 16 Nov 17 Nov 14 Nov 13 Nov 16 Nov 17 Nov 17 Nov 18 Nov 18 Dec 17 Nov 16 2,950,000 - - - - - Nov 16 Nov 17 Nov 17 Nov 18 Nov 18 Dec 17 Nov 16 2,950,000 - - - - - - Nov 12 Nov 12 0.0185 0.0185 0.075 0.075 Nov 14 Nov 14 Nov 16 Nov 16 590,000 590,000 - Nov 12 Nov 12 0.0185 0.0185 0.075 0.075 Nov 14 Nov 14 Nov 16 Nov 16 590,000 590,000 30 June 2015 30 June 2015 Directors Directors S Crowther S Crowther - Options - Options - Options - Options - Options - Options - Options - Options - Options - Options - LRL - LRL - LRL - LRL R Newman R Newman - Options - Options C Rosenberg C Rosenberg - Options - Options 1,000,000 1,000,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000 1,250,000 1,250,000 1,250,000 1,250,000 500,000 500,000 500,000 500,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000 1,000,000 1,000,000 1,000,000 1,000,000 Other key management personnel Other key management personnel G Beukes G Beukes - Options - Options - Options - Options - Options - Options - Options - Options - Options - Options - Options - Options - Options - Options - Options - Options - Options - Options - LRL - LRL - LRL - LRL - LRL - LRL - LRL - LRL - LRL - LRL - LRL - LRL 1 The exercise of these options was funded through the grant of an LRL under the Employee Loan Scheme. 2 AASB 2 Share-based Payment accounting value determined at grant date as disclosed in note 6(i) per the ﬁ nancial statements. 1 The exercise of these options was funded through the grant of an LRL under the Employee Loan Scheme. 3 Current price of LRLs determined based on the loan principal plus accrued interest as at 30 June 2015 divided by the number of shares exercised. 2 AASB 2 Share-based Payment accounting value determined at grant date as disclosed in note 6(i) per the ﬁ nancial statements. 4 Value determined based on the share price at exercise date less exercise price. 3 Current price of LRLs determined based on the loan principal plus accrued interest as at 30 June 2015 divided by the number of shares exercised. 4 Value determined based on the share price at exercise date less exercise price. - 1,000,0001 - 1,000,0001 750,0001 - 750,0001 - 750,0001 - 750,0001 - 750,0001 - 750,0001 - 750,0001 - 750,0001 - - 100% - 100% - 100% - 100% - 100% - 100% - 100% 100% - - - - - - - - - - - - - - - - - - - - - - - - - 0.075 0.0248 0.0248 0.415 0.1513 0.1513 0.415 0.1513 0.1513 0.530 0.1994 0.1994 0.530 0.1994 0.1994 0.761 0.2943 0.2943 0.761 0.2943 0.2943 1.080 0.2160 0.2160 1.080 0.2160 0.2160 0.4197 0.0425 0.0425 0.4197 0.0425 0.0425 0.5359 0.0419 0.0419 0.5359 0.0419 0.0419 - 0.0761 - 0.0805 - - 1,000,000 1,000,000 - - - - - - 750,000 750,000 - - - - - - - - 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% - - - - - - - - - - - - - - - - 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% - - 0.075 0.415 0.415 0.530 0.530 0.761 0.761 1.080 1.080 0.4197 0.4197 0.5359 0.5359 0.0761 0.0805 Dec 12 Jun 13 Jun 13 Oct 13 Oct 13 Nov 13 Nov 13 Nov 14 Nov 14 Apr 15 Apr 15 Apr 15 Apr 15 Mar 15 Dec 12 Dec 12 Jun 13 Jun 13 Oct 13 Oct 13 Nov 13 Nov 13 Nov 14 Nov 14 Apr 15 Apr 15 Apr 15 Apr 15 Mar 15 Dec 12 Dec 14 Dec 13 Jun 14 Apr 14 Apr 15 Nov 15 Nov 16 Nov 16 Nov 17 Dec 13 Jun 14 Apr 14 Apr 15 Dec 14 Dec 13 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dec 16 Jun 17 Jun 17 Oct 17 Oct 17 Nov 17 Nov 17 Nov 18 Nov 18 Apr 18 Apr 18 Apr 18 Apr 18 Mar 18 Dec 16 Dec 14 Dec 13 Jun 14 Apr 14 Apr 15 Nov 15 Nov 16 Nov 16 Nov 17 Dec 13 Jun 14 Apr 14 Apr 15 Dec 14 Dec 13 480,000 108,750 108,750 22,500 22,500 - - - - - - - - - - Dec 16 Jun 17 Jun 17 Oct 17 Oct 17 Nov 17 Nov 17 Nov 18 Nov 18 Apr 18 Apr 18 Apr 18 Apr 18 Mar 18 Dec 16 480,000 108,750 108,750 22,500 22,500 - - - - - - - - - - 44 44 Directors’ Report Directors’ Report Directors’ Report 44 Directors’ Report Directors’ Report Remuneration Report (Audited) Remuneration Report (Audited) D. Share based compensation (cont.) D. Share based compensation (cont.) Compensation options (cont.) Compensation options (cont.) - - - - - - - - - - - - - - - - - - - - - Granted during the Granted period during the period Vested during the Vested period during the period Exercised Unvested at balance during the period Exercised Unvested date at balance during the period date Cancelled or expired during the Cancelled or expired during the period Grant Date period Grant Date Exercise Price per share Value per (options)/ Option/ Value per Current Share at price Option/ Grant Date2 Share at per share $ (loans)3 Grant Date2 $ $ Exercise Price per share (options)/ Current price per share (loans)3 $ Vesting Date Value of exercised during the period4 $ Value of exercised Expiry during the Date period4 $ Vesting Date Expiry Date - - - - - - 100% 100% 100% 100% 100% - - 100% 5,000,000 2,500,000 - - - - - - - - 100% - - 100% - 5,000,0001 - - - - - - - 2,500,0001 - - - - - - 100% 100% 100% 100% - - 100% 100% 100% 100% - - Nov 12 Nov 13 Nov 13 Nov 14 Nov 14 Dec 14 Nov 13 Mar 13 Nov 13 Nov 13 Nov 14 Nov 14 Mar 14 Mar 15 0.0185 0.2943 0.2943 0.2160 0.2160 - - 0.0550 0.2943 0.2943 0.2160 0.2160 - 0.0070 0.150 0.761 0.761 1.080 1.080 0.1611 0.1526 0.075 0.761 0.761 1.080 1.080 0.0775 0.0805 Mar 15 Nov 15 Nov 16 Nov 16 Nov 17 Mar 14 Mar 15 Nov 14 Nov 15 Nov 16 Nov 16 Nov 17 Nov 14 Nov 13 Mar 17 Nov 17 Nov 17 Nov 18 Nov 18 Mar 17 Mar 18 2,950,000 - - - - - Nov 16 Nov 17 Nov 17 Nov 18 Nov 18 Dec 17 Nov 16 912,500 - - - - - - Number Number 30 June 2015 30 June 2015 Directors Other key management personnel S Crowther P Lapstun - Options - Options - Options - Options - Options - Options - Options - Options - Options - Options - LRL - LRL - LRL - LRL 5,000,000 2,500,000 2,500,000 1,250,000 2,500,000 1,250,000 1,000,000 500,000 1,000,000 500,000 5,000,000 2,500,000 5,000,000 2,500,000 R Newman P Peterson - Options - Current C Rosenberg - Options 1,000,000 2,500,000 1,250,000 1,250,000 500,000 1,000,000 500,000 - - - - - 100% 100% 1,000,000 2,500,000 - - - - 1,000,000 - 100% 100% 100% 100% 1,000,000 - 2,500,000 - - - 1,000,000 - - Nov 12 0.0185 0.075 Nov 14 Nov 16 Nov 12 Nov 13 Nov 13 Nov 14 Nov 14 0.0220 0.2943 0.2943 0.2160 0.2160 0.075 0.761 0.761 1.080 1.080 Nov 14 Nov 15 Nov 16 Nov 16 Nov 17 Nov 16 Nov 17 Nov 17 Nov 18 Nov 18 1,475,000 - - - - Nov 12 0.0185 0.075 Nov 14 Nov 16 1,000,000 750,000 750,000 750,000 750,000 1,250,000 1,250,000 500,000 500,000 750,000 750,000 750,000 750,000 1,000,000 1,000,000 Other key management personnel 1 The exercise of these options was funded through the grant of a LRL under the Employee Loan Scheme. G Beukes 2 AASB 2 Share-based Payment accounting value determined at grant date as disclosed in note 6(i) per the ﬁ nancial statements. 3 Current price of LRLs determined based on the loan principal plus accrued interest as at 30 June 2015 divided by the number of shares exercised. - 1,000,0001 Dec 16 - Options 4 Value determined based on the share price at exercise date less exercise price. 750,0001 Jun 17 - - Options 750,0001 Jun 17 - - Options 750,0001 Oct 17 - Options - Modiﬁ cation of terms of share-based payment transactions 750,0001 Oct 17 - Options - A modiﬁ cation of terms of share-based payment transactions occurred when the Board accepted key management personnel’s loan request to - Options Nov 17 - 100% exercise fully vested options under the Employee Loan Scheme through a LRL in lieu of cash payment of the exercise price. See details below for Nov 17 - 100% - Options share-based payment transactions which have been modiﬁ ed in this way during the reporting period. Refer to Section E “Financial assistance under - Options Nov 18 - 100% the employee share option plan” for further details in respect of the terms of the loans granted to these key management personnel. Nov 18 - 100% - Options - Apr 18 - - LRL Terms prior to modiﬁ cation Apr 18 - - - LRL Apr 18 - - - LRL Exercise Market price of Apr 18 - - - LRL price per shares at date of Fair value difference1 option loan grant - LRL Mar 18 - - $ 30 June 2015 $ $ - LRL Dec 16 - - Directors S Crowther 1 The exercise of these options was funded through the grant of an LRL under the Employee Loan Scheme. 2 AASB 2 Share-based Payment accounting value determined at grant date as disclosed in note 6(i) per the ﬁ nancial statements. Other key management personnel 3 Current price of LRLs determined based on the loan principal plus accrued interest as at 30 June 2015 divided by the number of shares exercised. G Beukes 4 Value determined based on the share price at exercise date less exercise price. 0.0248 0.075 0.1513 0.415 0.1513 0.415 0.1994 0.530 0.1994 0.530 0.2943 0.761 0.2943 0.761 0.2160 1.080 0.2160 1.080 0.4197 0.0425 Terms of LRL subsequent to modiﬁ cation 0.0425 0.4197 Fair value 0.0419 0.5359 of LRL per 0.0419 0.5359 share at LRL grant date 0.0761 - $ - 0.0805 1,000,000 - - - 750,000 - - - - 100% 100% 100% 100% 100% - - - - - - - - - - - - - Time of - option to expiry - (years) - Dec 14 Dec 13 Jun 14 Apr 14 Apr 15 Nov 15 Nov 16 Nov 16 Nov 17 Dec 13 Jun 14 Apr 14 Apr 15 Time to expiry Dec 14 (years) Dec 13 Dec 12 Jun 13 Jun 13 Oct 13 Oct 13 Nov 13 Nov 13 Nov 14 Nov 14 Apr 15 Apr 15 Apr 15 Apr 15 Mar 15 Dec 12 - - - - - - - 100% 100% 100% 100% 100% 100% 100% - Fair value of option per share at LRL grant date $ Number of options exercised during the period Loan grant date 5,000,000 (26,503) Dec 14 0.599 0.593 0.665 0.075 1.98 3 1,000,000 750,000 750,000 750,000 750,000 2,500,000 Mar 15 Apr 15 Apr 15 Apr 15 Apr 15 Mar 15 0.555 0.560 0.560 0.560 0.560 0.515 0.075 0.415 0.415 0.530 0.530 0.150 1.70 2.18 2.18 2.47 2.47 2.00 0.487 0.256 0.256 0.221 0.221 0.372 0.484 0.298 0.298 0.263 0.263 0.379 3 3 3 3 3 3 (3,584) 31,890 31,890 31,424 31,424 17,503 P Lapstun 590,000 590,000 480,000 108,750 108,750 22,500 22,500 - - - - - - - - - - 1 Fair value difference determined at modiﬁ cation date (LRL grant date) as the fair value of the option per share less the fair value of the LRL per share multiplied by the number of options exercised. For accounting purposes, when this difference is positive, the amount is expensed immediately within the Group’s proﬁ t or loss. 44 Directors’ Report Directors’ Report Directors’ Report 45 45 Directors’ Report Remuneration Report (Audited) E. Transactions of key management personnel Shares held in the Company 30 June 2015 Directors R Norgard C Rosenberg R Newman Balance at 1 July 2014 Exercise of Options Net Other Change1 30 June 2015 Balance Balance held nominally 58,576,295 1,775,000 3,393,500 - 1,000,000 1,000,000 (8,500,000) - (393,500) 50,076,295 2,775,000 4,000,000 50,076,295 2,775,000 4,000,000 Other key management personnel P Peterson 1,641,341 2,500,000 (1,626,545) 2,514,796 2,514,796 30 June 2015 Directors S Crowther Balance at 1 July 2014 Exercise of LRL 5,000,000 5,000,000 Other key management personnel G Beukes P Lapstun 1,755,000 2,500,000 4,000,000 2,500,000 1 Includes expired options, cancellations and other acquisitions, transfers and disposals. Net Other Change1 30 June 2015 Balance Balance held nominally - - - 10,000,000 10,000,000 5,755,000 5,000,000 5,755,000 5,000,000 Financial assistance under the employee share option plan Limited recourse loans advanced to key management personnel during the year ended 30 June 2015 amounted to $3,067,500 (30 June 2014: $825,000). Interest on the loans during the period has been accrued at rates of between 5.95% and 6.45%. F. Additional information The Company has applied fair value measurement provisions of AASB 2 Share-based Payment for all options and LRLs granted to Directors and employees. The fair value of such grants is being amortised and disclosed as part of Director and employee remuneration on a straight-line basis over the vesting period. Options granted as part of Director and employee remuneration has been valued using the Black-Scholes Option Pricing Model, which takes account of factors including the option exercise price, the current level and volatility of the underlying share price, the risk-free interest rate, expected dividends on the underlying share, current market price of the underlying share and the expected life of the option. LRLs have also been valued using the Black-Scholes Option Pricing Model. Refer to note 6(i) per the ﬁ nancial statements for details of share based payments and all new options granted to all employees during the year ended 30 June 2015. This is the end of the audited Remuneration Report. 46 Directors’ Report Directors’ Report 46 Directors’ Report G. Shares under option Unissued ordinary shares of the Company under option at the date of this report are as follows: Date options granted 14 December 12 8 April 13 12 April 13 22 July 13 30 September 13 21 November 13 24 February 14 28 May 14 21 November 14 8 December 14 6 March 15 6 March 15 Expiry date 14 December 16 9 April 17 15 April 17 25 July 17 2 October 17 21 November 17 24 February 18 20 May 18 21 November 18 11 December 18 6 March 20 6 March 19 Issue price of shares $0.075 $0.172 $0.179 $0.444 $0.544 $0.761 $0.730 $0.690 $1.080 $0.850 $0.560 $0.790 Number under option 250,000 500,000 300,000 200,000 700,000 12,500,000 2,650,000 500,000 5,000,000 3,800,000 1,155,000 3,000,000 30,555,000 Lead Auditor’s Independence Declaration The Lead Auditor’s Independence Declaration is set out on page 48 and forms part of the Directors’ Report for the ﬁ nancial year ended 30 June 2015. Signed in accordance with a resolution of the Directors. On behalf of the Board S. Crowther Chief Executive Ofﬁ cer 24 August 2015 Directors’ Report Directors’ Report 47 47 Lead Auditor’s Independence Declarati on under Secti on 307C of the Corporati ons Act 2001 To: the Directors of nearmap Ltd I declare that, to the best of my knowledge and belief, in relation to the audit for the ﬁ nancial year ended 30 June 2015 there have been: (i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and (ii) no contraventions of any applicable code of professional conduct in relation to the audit. KPMG Trent Duvall Partner Sydney 24 August 2015 48 Directors’ Report 48 Image: Miami, Florida, United States – May 2015 Image: Manly Vale, NSW – October 2014 49 Miami, Florida, United States – May 201550 Image: Googleplex, Mountain View, California, United States – September 2015 50 Image: Googleplex, Mountain View, California, United States – September 2015 Consolidated Statement of Comprehensive Income for the year ended 30 June 2015 Revenue Other income Total revenue Expenses Employee beneﬁ ts expenses Amortisation and depreciation expense Net foreign exchange differences Other operational expenses Total expenses Proﬁ t before tax Income tax (expense)/beneﬁ t (Loss)/proﬁ t after tax Notes 4 4 6 5 Consolidated 2015 $’000 23,626 2,498 26,124 (15,357) (3,658) 398 (6,880) (25,497) 627 (1,416) (789) 2014 $’000 17,846 2,223 20,069 (9,548) (2,074) (7) (4,925) (16,554) 3,515 3,563 7,078 Total comprehensive (loss)/income attributable to members of the Company (789) 7,078 Earnings per share attributable to the ordinary equity holders of the Company: Basic earnings per share (cents per share) Diluted earnings per share (cents per share) 14 14 (0.24) (0.23) 2.17 2.03 The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes. 52 Financial Report Financial Report 52 Consolidated Statement of Financial Position as at 30 June 2015 Current assets Cash and cash equivalents Trade receivables Other current receivables Total current assets Non-current assets Plant and equipment Intangible assets Deferred tax asset Total non-current assets Total assets Current liabilities Trade and other payables Unearned income Employee beneﬁ ts Other current liabilities Total current liabilities Non-current liabilities Employee beneﬁ ts Total non-current liabilities Total liabilities Net assets Equity Contributed equity Reserves Proﬁ ts reserve Accumulated losses Total equity Notes 2015 2014 Consolidated 13 9 12 11 7 4 8 17,169 4,316 3,540 25,025 4,381 11,266 2,286 17,933 23,347 2,670 625 26,642 1,402 5,268 3,782 10,452 42,958 37,094 1,620 15,726 1,779 1,069 20,194 184 184 1,718 13,403 852 528 16,501 88 88 20,378 16,589 22,580 20,505 27,621 8,475 7,078 (20,594) 22,580 27,113 6,119 7,078 (19,805) 20,505 The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. Financial Report Financial Report 53 53 Consolidated Statement of Changes in Equity for the year ended 30 June 2015 Consolidated At 1 July 2014 Loss for the year Other comprehensive income: Changes in fair value of cash ﬂ ow hedges Exchange differences on translation of foreign operations Total comprehensive income for the year Transactions with owners of the Company: Share options exercised Share-based payment transactions At 30 June 2015 Consolidated At 1 July 2013 Proﬁ t for the year Transfer between reserves Transactions with owners of the Company: Issue of ordinary shares Share options exercised Share-based payment transactions At 30 June 2014 Contributed Accumulated Losses $’000 (19,805) (789) Equity $’000 27,113 - Proﬁ ts Reserve $’000 7,078 - Share Based Payment Other Reserve Reserves $’000 - - $’000 6,119 - Total Equity $’000 20,505 (789) - - - - (57) (57) - 27,113 - (20,594) 508 - 27,621 - - (20,594) 26,536 - - (19,805) 7,078 (7,078) 99 478 - 27,113 - - - (19,805) - 7,078 - - 7,078 - - 7,078 - - - 7,078 - 6,119 - 2,618 8,737 4,222 - - - - 1,897 6,119 (205) (262) - - (262) - - - - - - - (205) 19,454 508 2,618 22,580 10,953 7,078 - 99 478 1,897 20,505 The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. 54 Financial Report Financial Report 54 Consolidated Statement of Cash Flows for the year ended 30 June 2015 Cash ﬂ ows from operating activities Receipts from customers Payments to suppliers and employees1 Interest received Other receipts R&D refund received Income taxes paid Net cash from operating activities Cash ﬂ ows from investing activities Purchase of plant and equipment Payments for development costs Proceeds from sale of plant and equipment Net cash used in investing activities Cash ﬂ ows from ﬁ nancing activities Proceeds from exercise of share options Proceeds from exercise of loans share options Net cash from ﬁ nancing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of year Effect of movement in exchange rates on cash held Cash and cash equivalents at end of year Notes 13 13 Consolidated 2015 $’000 26,876 (26,947) 545 76 - (420) 130 (3,164) (3,935) 11 (7,088) 508 - 508 (6,450) 23,347 272 17,169 2014 $’000 23,243 (14,423) 512 - 1,711 - 11,043 (582) (976) 4 (1,554) 382 96 478 9,967 13,387 (7) 23,347 1 Includes capture costs in Australia and the US of $2,091k and $2,932k, respectively (2014:$840k, nil). The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. Financial Report Financial Report 55 55 Notes to the Consolidated Financial Statements for the year ended 30 June 2015 The notes include information which is required to understand the ﬁ nancial statements and is material and relevant to the operations, ﬁ nancial position and performance of the Group. The notes are organised into the following sections: A. Basis of preparation 1. Reporting entity 2. Signiﬁ cant accounting policies B. Key ﬁ nancial results 4. Segment results and revenue 5. Other operational expenses C. Capital structure and ﬁ nancial D. Investing risk management activities E. Other 8. Contributed equity 11. Intangibles 14. Earning per share 9. Financial instruments – fair value and risk management 12. Plant & Equipment 3. Other conﬁ rmations 6. Personnel expenses 10. Dividends 13. Cash ﬂ ow statement 7. Income tax 15. Expenditure commitments 16. Parent entity information 17. Group entities 18. Auditor’s remuneration A. Basis of preparation In this section: This section sets out the basis upon which the Group’s ﬁ nancial statements are prepared as a whole. Speciﬁ c accounting policies are described in their respective notes to the ﬁ nancial statements. This section also shows information on new accounting standards, amendments and interpretations, and whether they are effective in 2015 or later years. We explain how these changes are expected to impact the ﬁ nancial position and performance of the Group. 1. Reporting entity nearmap ltd is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian stock exchange. The Company’s registered ofﬁ ce is at Level 6, 6–8 Underwood Street, Sydney, NSW 2000. These consolidated ﬁ nancial statements as at 30 June 2015 comprise the Company and its subsidiaries (collectively referred as the ‘Group’ and individually ‘Group entities’). The Group is a for-proﬁ t entity and the nature of the operations and principal activities of the Group are described in the Directors’ report. The Group is primarily involved in the provision of online PhotoMap content via its 100% owned subsidiaries nearmap Australia Pty Ltd and nearmap US Inc. The consolidated ﬁ nancial statements for the year ended 30 June 2015 were authorised for issue in accordance with a resolution of the Directors on 24 August 2015. 2. Signiﬁ cant accounting policies Signiﬁ cant accounting policies have been moved next to the respective note disclosure. Other relevant policies are in this section. (a) Basis of accounting The consolidated ﬁ nancial statements are general purpose ﬁ nancial statements which have been prepared in accordance with Australian Accounting Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. 56 Financial Report Financial Report 56 Notes to the Consolidated Financial Statements for the year ended 30 June 2015 A. Basis of preparation 2. Signiﬁ cant accounting policies (cont.) (a) Basis of accounting (cont.) The consolidated ﬁ nancial statements also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The consolidated ﬁ nancial statements have been prepared in accordance with the historical cost convention. The ﬁ nancial statements are presented in Australian dollars. The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with the Class Order, amounts in consolidated ﬁ nancial statements have been rounded off to the nearest thousand dollars, unless otherwise stated. (b) Changes in accounting policies and new standards and interpretations not yet adopted The Group has adopted the following new and amended Australian Accounting Standards and AASB Interpretations as of 1 July 2014: AASB 2012-3 Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities AASB 2013-3 Amendments to AASB 136 – Recoverable Amount Disclosures for Non-ﬁ nancial Assets AASB 2013-4 Amendments to Australian Accounting Standards – Novation of Derivatives and Continuation of Hedge Accounting AASB 2013-5 Amendments to Australian Accounting Standards – Investment Entities IFRIC 21 - Levies AASB 2013-9 Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial Instruments AASB 2014-1 Amendments to Australian Accounting Standards – Part A: Annual Improvements 2010-2012 and 2011-2013 Cycles AASB 2014-1 Amendments to Australian Accounting Standards – Part B: Deﬁ ned Beneﬁ t Plans: Employee Contributions AASB 2014-1 Amendments to Australian Accounting Standards – Part C: Materiality ASX Corporate Governance Council Principles and Recommendations (Third Edition) Corporations Legislation Amendment (Deregulatory and Other Measures) Act 2015 There has been no material impact on the ﬁ nancial statements of the Group. A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 July 2015, and have not been applied in preparing these consolidated ﬁ nancial statements. None of these are expected to have a signiﬁ cant effect on the consolidated ﬁ nancial statements of the Group, except for AASB 9 Financial Instruments which becomes mandatory for the Group’s 2016 consolidated ﬁ nancial statements and could change the classiﬁ cation and measurement of ﬁ nancial instruments. The Group does not plan to adopt this standard early and the extent of the impact has not been determined. (c) Basis of consolidation The ﬁ nancial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. In preparing the consolidated ﬁ nancial statements, all intercompany balances and transactions, income and expenses and proﬁ t and losses resulting from intra-group transactions have been eliminated. Subsidiaries are entities controlled by the Company. The Company controls an entity when it 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 over the entity. The ﬁ nancial statements of subsidiaries are included in the consolidated ﬁ nancial statements from the date that control commences until the date that control ceases. When the Company ceases to have control, joint control or signiﬁ cant inﬂ uence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in proﬁ t or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, jointly controlled entity or ﬁ nancial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Company had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassiﬁ ed to proﬁ t or loss. Financial Report Financial Report 57 57 Notes to the Consolidated Financial Statements for the year ended 30 June 2015 Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Foreign currency differences are generally recognised in proﬁ t or loss. However, foreign currency differences arising from the translation of the following item is recognised in other comprehensive income: –qualifying cash ﬂ ow hedges to the extent that the hedges are effective. (ii) Foreign operations The assets and liabilities of foreign operations are translated into Australian dollars at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into Australian dollars at the exchange rates at the dates of the transactions. Foreign currency differences are recognised in other comprehensive income and accumulated in the translation reserve. 3. Other conﬁ rmations Contingent liabilities As at 30 June 2015, the Directors are not aware of any contingent liabilities in relation to the Company or the Group. Subsequent events There were no matters or circumstances speciﬁ c to the Company or the Group that have arisen since 30 June 2015 that have signiﬁ cantly affected or may signiﬁ cantly affect: –the Company or Group’s operations in future years; –the results of those operations in future ﬁ nancial years; or –the Company or Group’s state of affairs in future ﬁ nancial years. Related parties Other than the loans granted under the employee loan scheme as disclosed in note 6 per the ﬁ nancial statements, there have been no sales, purchases or other transactions with related parties during the year ended 30 June 2015 (year ended 30 June 2014: nil). A. Basis of preparation 2. Signiﬁ cant accounting policies (d) Signiﬁ cant accounting judgements, estimates and assumptions The carrying amount of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key judgments and estimates which are material to the ﬁ nancial report are found in the following notes: –Note 6(i): Share-based payments –Note 7: Income tax –Note 11: Intangibles (e) Foreign currencies (i) Foreign currency transactions Both the functional and presentation currency of the Company and its Australian subsidiaries is Australian dollars (A$). Each entity in the Group determines its own functional currency and items included in the ﬁ nancial statements of each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. 58 Financial Report Financial Report 58 Notes to the Consolidated Financial Statements for the year ended 30 June 2015 B. Key ﬁ nancial results In this section: This section explains the results and performance of nearmap ltd and provides additional information about those individual line items in the ﬁ nancial statements that the Directors consider most relevant in the context of the operations of the entity, including: (a) Accounting policies that are relevant for understanding the items recognised in the ﬁ nancial statements. (b) Analysis of the Group’s result for the year by reference to key areas, including: segment results and revenue, operational expenses, personnel costs including share-based payments and income tax. 4. Segment results and revenue This note provides results by operating segment for the year ended 30 June 2015. Operating segments are reported in a manner that is consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identiﬁ ed as the Chief Executive Ofﬁ cer who ultimately makes strategic decisions. This note also provides additional information on revenue, including types of revenue and the respective recognition criteria. Segment reporting During the year ended 30 June 2015, the Group changed its internal organisation and the composition of its reportable segments in light of the recent expansion into the United States. Accordingly, the Group has restated the operating segment information for the year ended 30 June 2014. The change in operating segments does not result in any change to the reported proﬁ t for the Group on prior periods. An overview of the new operating segments is provided below. Segment Australia United States Corporate Information Responsible for all sales and marketing efforts in Australia. Responsible for all sales and marketing efforts in the United States. Holds all the IP and product “know-how” which allows nearmap to deliver its product offering, being online aerial photomapping. The segment facilitates the day to day survey operations globally. Cost of revenue includes all the costs directly attributable to the ongoing delivery of the subscription product, including amortisation of capture costs and technology costs. Sales and marketing costs include direct in-country costs. General and administration for Corporate represent all operating expenses and product design and uncapitalised development expenses. Royalties for the Corporate segment are derived from the regions and are determined based on a percentage of subscription revenue. The royalty owed by the regions is offset by royalties derived from Corporate which are based on a percentage of capture costs. The assets and liabilities of the Group are reported and reviewed by the Chief Operating Decision Maker in total and not allocated by operating segment. Therefore, operating segment assets and liabilities are not disclosed. Financial Report Financial Report 59 59 Notes to the Consolidated Financial Statements for the year ended 30 June 2015 B. Key ﬁ nancial results 4. Segment results and revenue (cont.) Segment reporting (cont.) Year ended 30 June 2015 Subscription revenue On-demand revenue Other income Total revenue Cost of revenue Gross proﬁ t Sales & marketing General & administration EBIT Royalty Net segment contribution Income tax expense Loss after tax Year ended 30 June 2014 Subscription revenue On-demand revenue Other income Total revenue Cost of revenue Gross proﬁ t Sales & marketing General & administration EBIT Royalty Net segment contribution Income tax beneﬁ t Proﬁ t after tax Australia $’000 23,421 194 - 23,615 (2,891) 20,724 (5,875) - 14,849 (8,211) 6,638 - - Australia $’000 17,452 394 - 17,846 (2,632) 15,214 (2,813) - 12,401 (6,245) 6,156 - - United States $’000 11 - - 11 (1,322) (1,311) (3,219) - (4,530) 161 (4,369) - - United States $’000 - - - - - - - - - - - - - Corporate $’000 - - 2,498 2,498 - 2,498 - (12,190) (9,692) 8,050 (1,642) - - Corporate $’000 - - 2,223 2,223 - 2,223 - (11,109) (8,886) 6,245 (2,641) - - Total $’000 23,432 194 2,498 26,124 (4,213) 21,911 (9,094) (12,190) 627 - 627 (1,416) (789) Total $’000 17,452 394 2,223 20,069 (2,632) 17,437 (2,813) (11,109) 3,515 - 3,515 3,563 7,078 60 Financial Report Financial Report 60 Notes to the Consolidated Financial Statements for the year ended 30 June 2015 B. Key ﬁ nancial results 4. Segment results and revenue (cont.) Accounting policy – revenue recognition and measurement Revenue is recognised to the extent that it is probable that the economic beneﬁ ts will ﬂ ow to the Group and the revenue can be reliably measured. The following speciﬁ c revenue recognition criteria must also be met before revenue is recognised: Subscription revenue Subscription revenue is recognised over the life of the contract in line with when the signiﬁ cant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, and the amount of revenue can be measured reliably. The timing of the transfer of risks and rewards varies depending on the individual terms of the subscription agreement. On-demand revenue On-demand revenue is recognised in accordance with the percentage of completion method. The stage of completion is measured by reference to the percentage area captured to date as a percentage of the total estimated capture area for each contract. Other income Other income consists of interest income of $593k (2014: $512k) and R&D grant income of $1,829k (2014: $1,711k). At June 2015, other income also includes New South Wales payroll grant income of $76k (2014: nil). Interest income is recognised as interest accrues using the effective interest method. For additional information regarding the R&D tax incentive, see note 7: Income tax. Unearned revenue Prepaid amounts received from customers in advance are deferred to the relevant future subscription agreement periods. Unearned revenue comprises photo mapping subscription license service fees charged, the revenue for which is primarily recognised in the proﬁ t or loss over the subscription period. Unearned revenue at 30 June 2015 was $15,726k (2014: $13,403K). 5. Other operational expenses Servicing and processing costs Operating lease expenses Audit and consulting fees Travel and ofﬁ ce costs Legal and listing fees Insurance costs All other operating expenses 6. Personnel expenses Personnel disclosures include information on (i) share-based payments, (ii) employee beneﬁ ts expense and (iii) key management personnel. (i) Share-based payments An Employee Share Option Plan has been established whereby Directors and certain employees of the consolidated entity may be issued with options over the ordinary shares of the Company. Consolidated 2015 $’000 1,241 452 846 1,836 1,051 232 1,222 6,880 2014 $’000 809 173 1,245 612 644 130 1,312 4,925 Financial Report Financial Report 61 61 Notes to the Consolidated Financial Statements for the year ended 30 June 2015 B. Key ﬁ nancial results 6. Personnel expenses (cont.) (i) Share-based payments (cont.) The options, which are usually issued for nil consideration at an exercise price calculated with reference to prevailing market prices, are issued in accordance with terms established by the Directors of the Company. The options are generally issued for 4 years and are exercisable on various dates (usually in 2 equal annual tranches when vested) within 4 years from the issue date. The options cannot be transferred without the approval of the Company’s board and are not quoted on the ASX. nearmap’s Employee Share Option Plan also includes an Employee Loan Scheme that permits nearmap to grant ﬁ nancial assistance to employees by way of limited recourse loans to enable them to exercise options and acquire shares. Key estimates and judgments The Group estimates the fair value of equity-settled transactions (share options and limited recourse loans (LRL)) at the date at which they are granted. The fair value is determined using the Black-Scholes model and includes assumptions in the following areas: risk free rate, volatility and estimated service periods. The expected life of the options is based on historical data and not necessarily indicative of exercise patters than may occur. The expected volatility reﬂ ects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be actual outcome. No other features of options granted were incorporated into the measurement of fair value. There are no voting or dividend rights attached to the options. Accounting policy - recognition and measurement of share-based payments In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of the Company (‘market conditions’) if applicable. The fair value of equity-settled transactions is recognised, together with the corresponding increase in equity, over the period in which the performance conditions are fulﬁ lled, ending on the date on which the relevant employees become fully entitled to the award (‘vesting period’). The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reﬂ ects (i) the extent to which the vesting period has expired and (ii) the Group’s best estimate of the number of equity instruments that will ultimately vest. The proﬁ t or loss charge or credit for a period represents the movement in cumulative expense recognised at the beginning and end of that period. No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a market condition. A modiﬁ cation of terms of share-based payment transactions occurs when the Board accepts a loan request submitted by an employee of the Group to exercise fully vested options under the Employee Loan Scheme through a LRL in lieu of cash payment of the exercise price. Since the terms of an equity-settled award are modiﬁ ed, as a minimum an expense is recognised as if the terms had not been modiﬁ ed. In addition, an expense is recognised for any modiﬁ cation that increases the total fair value of the share-based payment arrangement, or is otherwise beneﬁ cial to the employee, as measured at the date of modiﬁ cation. If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modiﬁ cation of the original award, as described in the previous paragraph. The dilutive effect, if any, of outstanding options is reﬂ ected as additional share dilution in the computation of earnings per share. 62 Financial Report Financial Report 62 Notes to the Consolidated Financial Statements for the year ended 30 June 2015 B. Key ﬁ nancial results 6. Personnel expenses (cont.) (i) Share-based payments (cont.) Expenses arising from share-based payment transactions during the year was $2,618k (2014: $1,897k). The following table lists the options and LRLs granted and the inputs to the model used to measure their fair value for the years ended 30 June 2015 and 30 June 2014 to key management personnel: Model inputs to share option and LRL grants 30 June 2015 (Key Management Personnel) Grant date Expiry date Exercise price2 $ Number of options / LRLs granted Fair value at grant date $ Expected price volatility % Risk free interest rate % Expected life (years) 30 June 2014 3 Oct 13 21 Nov 13 30 June 2015 21 Nov 14 1 Dec 14 10 Mar 15 27 Mar 15 17 Apr 15 17 Apr 15 4 Oct 17 21 Nov 17 21 Nov 18 1 Dec 17 10 Mar 18 27 Mar 18 17 Apr 18 17 Apr 18 0.530 0.761 1.080 0.089 0.177 0.088 0.489 0.625 1,500,000 14,500,000 5,000,000 5,000,0001 2,500,0001 1,000,0001 1,500,0001 1,500,0001 0.1994 0.2943 0.2160 0.5934 0.3792 0.4839 0.2980 0.2628 80 80 60 75 75 75 75 75 3.35 3.46 2.77 2.35 1.96 1.78 1.79 1.79 3.50 3.50 2.75 3.00 3.00 3.00 3.00 3.00 1 These relate to grants of limited recourse loans (LRL) to KMP under the Employee Loan Scheme. 2 The exercise price of LRLs is determined based on the loan principal plus accrued interest over the term of the loan divided by the number of shares exercised. The following table lists the options and LRLs granted and the inputs to the model used to measure their fair value for the years ended 30 June 2015 and 30 June 2014 to other executives: Model inputs to share option and LRL grants 30 June 2015 (Other Executives) Grant date Expiry date Exercise price2 $ Number of options / LRLs granted Fair value at grant date $ Expected price volatility % Risk free interest rate % Expected life (years) 30 June 2014 22 Jul 13 30 Sep 13 24 Feb 14 28 May 14 30 June 2015 11 Dec 14 23 Dec 14 6 Mar 15 6 Mar 15 24 Jun 15 25 Jul 17 2 Oct 17 24 Feb 18 20 May 18 11 Dec 18 23 Dec 17 6 Mar 19 6 Mar 20 24 Jun 18 0.444 0.544 0.730 0.690 0.850 0.089 0.790 0.560 0.088 200,000 700,000 3,650,000 500,000 4,050,000 400,0001 3,000,000 2,710,000 200,0001 0.1654 0.2043 0.2736 0.1784 0.1608 0.5734 0.1453 0.2037 0.5435 80 80 80 80 57 75 56 56 75 3.09 3.33 3.41 3.20 2.77 2.25 1.98 1.98 2.06 3.50 3.50 3.50 3.50 2.75 3.00 2.75 2.75 3.00 1 These relate to grants of limited recourse loans (LRL) to other executives under the Employee Loan Scheme. 2 The exercise price of LRLs is determined based on the loan principal plus accrued interest over the term of the loan divided by the number of shares exercised. Financial Report Financial Report 63 63 Notes to the Consolidated Financial Statements for the year ended 30 June 2015 B. Key ﬁ nancial results 6. Personnel expenses (cont.) (i) Share-based payments (cont.) The following table lists the roll-forward in number of options for the years ended 30 June 2015 and 30 June 2014 for key management personnel and other executives combined: Reconciliation of options issued under Employee Share Option Plan 30 June 2015 30 June 2015 Balance at 1 July Granted Forfeited Exercised Balance 30 June Vested & exercisable Total number of options 35,750,000 14,760,000 (1,805,000) (18,150,000) 30,555,000 1,950,000 Weighted average price $ 0.37 0.86 0.60 0.14 0.79 0.32 30 June 2014 Total number of options 36,700,000 21,050,000 (8,000,000) (14,000,000) 35,750,000 1,200,000 Weighted average price $ 0.10 0.73 0.33 0.09 0.43 0.37 Limited recourse loans advanced to key management personnel Limited recourse loans advanced to key management personnel during the year ended 30 June 2015 amounted to $3,068k (30 June 2014: $825k). Loans are interest bearing and interest accrues daily at the Australian Taxation Ofﬁ ce approved rate for the purposes of the fringe beneﬁ t tax provisions. Interest on the loans during the period has been accrued at rates of between 5.95% and 6.45%. Loans are repayable three years after the issue date subject to the total share value being greater than the loan’s principal plus accrued interest. No loans to key management personnel were repaid during the year. Details in relation to key management personnel, including remuneration paid, are included in the Remuneration Report section of the Directors’ Report. Limited recourse loans advanced to other executives Limited recourse loans advanced to other executives during the year ended 30 June 2015 amounted to $45k (30 June 2014: $30k). Loans are interest bearing and interest accrues daily at the Australian Taxation Ofﬁ ce approved rate for the purposes of the fringe beneﬁ t tax provisions. Interest on the loans during the period has been accrued at rates of between 5.95% and 6.45%. Loans are repayable three years after the issue date subject to the total share value being greater than the loan’s principal plus accrued interest. No loans to other executives were repaid during the year. 64 Financial Report Financial Report 64 Notes to the Consolidated Financial Statements for the year ended 30 June 2015 B. Key ﬁ nancial results 6. Personnel expenses (cont.) (ii) Employee beneﬁ ts expense Share-based payments expense Deﬁ ned contribution plan expense Other employee beneﬁ t expenses Total (iii) Key management personnel disclosures Key management personnel compensation Short-term employee beneﬁ ts Short-term employee bonus Long-term employee beneﬁ ts Post-employment beneﬁ ts Share-based payments Total Consolidated 2015 $’000 2,618 779 11,960 15,357 1,447 440 21 102 2,080 4,090 2014 $’000 1,897 432 7,219 9,548 1,306 230 19 85 1,635 3,275 7. Income tax Key estimates and judgments Deferred tax Pursuant to AASB 112 Income Taxes, the Company has assessed its best estimate of the probability that future taxable proﬁ ts will be available against which the Group can utilise its unused tax losses and deductible temporary differences in future periods. Income tax Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date. Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for ﬁ nancial reporting purposes. Accounting policy - recognition and measurement of income tax Research and development tax incentive The Group accounts for the beneﬁ t of refundable research and development tax incentives as government grant income, which is recognised when there is reasonable assurance that the Group will comply with the conditions that attach to the incentive and that it will be received. The income is recognised in Other Income on a systematic basis over the periods in which the Group recognises the related research and development expense. The Group accounts for any non-refundable research and development tax credits as an income tax beneﬁ t. Financial Report Financial Report 65 65 Notes to the Consolidated Financial Statements for the year ended 30 June 2015 Tax consolidation The Company and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. The head entity, nearmap ltd, and the controlled entities in the tax consolidated Group account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated Group continues to be a standalone taxpayer in its own right. In addition to its own current and deferred tax amounts, the Company also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated Group. B. Key ﬁ nancial results 7. Income tax (cont.) Accounting policy - recognition and measurement of income tax (cont.) Deferred income tax liabilities are recognised for all taxable temporary differences: –except where the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting proﬁ t nor taxable proﬁ t or loss; and –in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable proﬁ t will be available against which the deductible temporary differences, and the carry- forward of unused tax assets and unused tax losses can be utilised: –except where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting proﬁ t nor taxable proﬁ t or loss; and –in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable proﬁ t will be available against which the temporary differences can be utilised. The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufﬁ cient taxable proﬁ t will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable proﬁ t will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. Income taxes relating to items recognised directly in equity are recognised in equity and not in the proﬁ t and loss. 66 Financial Report Financial Report 66 Notes to the Consolidated Financial Statements for the year ended 30 June 2015 B. Key ﬁ nancial results 7. Income tax (cont.) Income tax beneﬁ t/(expense) Income tax beneﬁ t/(expense) Current tax expense Deferred tax (expense)/beneﬁ t Consolidated 2015 $’000 $’000 (194) (1,222) (1,416) 2014 $’000 $’000 (1,266) 4,829 3,563 Numerical reconciliation of income tax expense to prima facie tax payable Proﬁ t before income tax Tax at the Australian tax rate of 30% (2014:30%) 627 (188) 3,515 (1,055) Tax effect of amounts which are not deductible/(taxable) in calculating taxable income: Non-assessable grant income from refundable R&D credit (prior year) Non-assessable grant income from refundable R&D credit (current year estimate) Effect of higher tax rate in the US Shared based payments expense Entertainment expenses Other non-deductible expenses Recognition of previously unrecognised tax losses Recognition of deferred tax balances not previously bought to account 549 406 347 (788) (5) (1,737) - - (1,416) 513 571 (569) (9) (7) 1,624 2,495 3,563 Financial Report Financial Report 67 67 Notes to the Consolidated Financial Statements for the year ended 30 June 2015 B. Key ﬁ nancial results 7. Income tax (cont.) Deferred tax balances 2015 Tax losses Unearned revenue Provisions and other accruals Plant and equipment Intangible assets Prepayments Derivative instruments Net tax assets/(liabilities) 2014 Tax losses Unearned revenue Provisions and other accruals Plant and equipment Intangible assets Prepayments Net tax assets/(liabilities) Recognised in the statement of proﬁ t or loss $’000 - - - - - - - - Balance 1 July $’000 - 4,020 285 (57) (464) (2) - 3,782 Change in recognised amount $’000 4,300 (3,981) 56 5 (1,895) 2 17 (1,496) - - - - - - - 1,624 3,022 275 (60) (657) - 4,204 (1,624) 998 10 3 193 (2) (422) Balance 30 June $’000 4,300 39 341 (52) (2,359) - 17 2,286 - 4,020 285 (57) (464) (2) 3,782 Assets $’000 4,300 39 341 - - - 17 4,697 - 4,020 285 - - - 4,305 Liabilities $’000 - - - (52) (2,359) - - (2,411) - - - (57) (464) (2) (523) 68 Financial Report Financial Report 68 Notes to the Consolidated Financial Statements for the year ended 30 June 2015 C. Capital structure and ﬁ nancial risk management In this section: This section outlines how nearmap manages its capital structure and discusses the Group’s exposure to various ﬁ nancial risks and how the Group manages these risks. Capital Risk Management The Group’s objective in managing capital is to safeguard its ability to continue as a going concern, so it can continue to commercialise intellectual property with the ultimate objective of providing returns to shareholders while maintaining an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure the Company may issue new shares, sell assets, consider joint ventures and may return capital in some form to shareholders. 8. Contributed equity Ordinary shares are classiﬁ ed 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. 2015 2014 Movement in shares on issue Balance at the beginning of the year Issue of shares during the year Issued from exercise of share options Issued from exercise of loan share options Balance at the end of the year Number of shares 337,346,101 - 6,050,000 12,100,000 355,496,101 $,000 27,113 - 508 - 27,621 Number of shares 323,056,101 290,000 5,100,000 8,900,000 337,346,101 $,000 26,536 99 478 - 27,113 Details in relation to share option movements and the share incentive scheme are contained in note 6. Terms and conditions of contributed equity Ordinary shares: Ordinary shares have the right to receive dividends as declared and in the event of winding up of the Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on the shares held. Financial Report Financial Report 69 69 Notes to the Consolidated Financial Statements for the year ended 30 June 2015 C. Capital structure and ﬁ nancial risk management 9. Financial instruments – fair value and risk management Accounting policy – derivative ﬁ nancial instruments and hedge accounting The Group holds derivative ﬁ nancial instruments to hedge its foreign currency risk exposures. These derivative instruments are designated as cash ﬂ ow hedging instruments. The effective portion of changes in the fair value of the derivative is recognised in OCI and accumulated in the hedging reserve. Any ineffective portion of changes in the fair value of the derivatives is immediately recognised in proﬁ t or loss. The amount accumulated in equity is retained in OCI and reclassiﬁ ed to proﬁ t or loss in the same period or periods during which the hedged item affects proﬁ t or loss. Accounting policy – ﬁ nancial instruments carried at fair value The fair value of ﬁ nancial assets and ﬁ nancial liabilities must be estimated for recognition and measurement or for disclosure purposes. The fair value of these instruments is categorised into different levels of the fair value hierarchy based on the inputs used in the valuation techniques as follows: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can assess at the measurement date. Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices). Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). The Group recognises transfers between levels of the fair value hierarchy as of the end of the reporting period which the transfer has occurred. The Group’s principal ﬁ nancial instruments comprise cash, short-term deposits and derivatives. The Group is primarily exposed to the following risks arising from ﬁ nancial instruments: –Market risk, particularly in relation to foreign currencies (see ii); –Credit risk (see iii). This note provides information about the Group’s exposure to the above risks and its objectives, policies and processes for measuring and managing those risks. (i) Risk management framework The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Board of Directors have established the Audit and Risk Management Committee which is responsible for developing and monitoring the Group’s risk management policies. The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies are reviewed regularly to reﬂ ect changes in the market and the Group’s activities. 70 Financial Report Financial Report 70 Notes to the Consolidated Financial Statements for the year ended 30 June 2015 C. Capital structure and ﬁ nancial risk management 9. Financial instruments – fair value and risk management (cont.) (ii) Market Risk Market risk is the risk that changes in market prices – such as foreign exchange rates and interest rates – will affect the Group’s income or the value of its holdings of ﬁ nancial instruments. The Group uses derivatives to manage market risk related to foreign currencies. All such transactions are carried out within the guidelines of the Group’s risk management policies. Currency risk The Group’s functional currency is the Australian dollar (AUD) and it is exposed to currency risk on payments denominated in the United States dollar (USD). The Group uses forward exchange contracts to hedge its currency risk, all of which have a maturity of less than six months from the reporting date. The currency risk relating to payments denominated in USD have been fully hedged, with the forward exchange contracts maturing on the same dates that the forecast payments are expected to occur. These contracts are designated as cash ﬂ ow hedges. In respect of other monetary assets and liabilities denominated in foreign currencies, the Group’s policy is to ensure the net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary. Exposure to currency risk The summary quantitative data about the Group’s exposure to currency risk is as follows: Cash and cash equivalents Receivables and other assets Payables and other liabilities Gross exposure Consolidated 2015 US$’000 2,110 344 980 3,434 2014 US$’000 1,130 - 95 1,225 The following signiﬁ cant exchange rates applied during the year: USD Average rate 2015 0.8382 2014 0.9187 Reporting date spot rate 2015 0.7680 2014 0.9420 Financial Report Financial Report 71 71 Notes to the Consolidated Financial Statements for the year ended 30 June 2015 C. Capital structure and ﬁ nancial risk management 9. Financial instruments – fair value and risk management (cont.) Sensitivity analysis A 10 percent strengthening or weakening of the Australian to US dollar exchange rate would have increased / (decreased) the net assets denominated in foreign currencies by the following amounts: +10% -10% Consolidated 2015 $’000 (174) 213 2014 $’000 (94) 115 Interest rate risk The Group is exposed to changes in interest rates as it relates to the Company’s short-term deposits. The Company monitors changes in interest rates regularly to ensure the best possible return on deposits. Changes to interest rates in this context are not considered a signiﬁ cant ﬁ nancial risk. (iii) Credit Risk Credit risk is the risk of ﬁ nancial loss to the Group if a customer or counterparty to a ﬁ nancial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers and forward exchange contracts. The Group trades primarily with recognised, creditworthy third parties. Trade and other receivables The Group’s exposure to credit risk is inﬂ uenced mainly by the individual characteristics of each customer. Receivable balances are monitored on an ongoing basis, with the result that the Group’s exposure to bad debts is not signiﬁ cant. Cash and cash equivalents The Group held cash and cash equivalents with bank and ﬁ nancial institution counterparties which are rated BBB or above. Derivatives The forward exchange contracts are entered into with bank institutions which are rated BBB or above and are authorised in accordance with our Foreign Exchange Risk Management Policy. The carrying amount of the Group’s ﬁ nancial assets represents maximum credit exposure and is as follows: Cash and cash equivalents Trade receivables Prepayments and other receivables Consolidated 2015 $’000 17,169 4,316 3,540 2014 $’000 23,347 2,670 625 72 Financial Report Financial Report 72 Notes to the Consolidated Financial Statements for the year ended 30 June 2015 C. Capital structure and ﬁ nancial risk management 9. Financial instruments – fair value and risk management (cont.) Accounting policy – trade and other receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Trade receivables are generally due for settlement within 7–60 days. The Group does not rely on any major customers. Debts which are known to be uncollectible are written off by reducing the carrying amount directly. An allowance account for impairment is used when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms (such as signiﬁ cant ﬁ nancial difﬁ culties of the debtor, probability of bankruptcy, etc). The amount of the impairment loss is recognised in proﬁ t or loss within other expenses. When a trade receivable for which an impairment allowance has been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the income statement. Liquidity risk Liquidity risk is the risk that the Group will encounter difﬁ culty in meeting the obligations associated with its ﬁ nancial liabilities that are settled by delivering cash or another ﬁ nancial asset. The Group’s objective is to maintain a balance between continuity of funding and ﬂ exibility through the use of its cash and funding requirements. The Group continually monitors forecast and actual cash ﬂ ows and the maturity proﬁ les of assets and liabilities to manage its liquidity risk. (iv) Fair values The fair values of ﬁ nancial assets and ﬁ nancial liabilities, together with the carrying amounts in the Consolidated Statement of Financial Position, at 30 June 2015 is detailed below. There were no ﬁ nancial assets or liabilities measured at fair value for the period ended 30 June 2014. Financial assets Forward exchange contracts used for hedging1 $’000 Carrying amount 57 $’000 Fair value 57 1 The forward exchange contracts are not quoted in active markets as they are not traded on a recognised exchange. Instead, the Group uses valuation techniques (present value techniques) which use both observable and unobservable market inputs. As these ﬁ nancial instruments use valuation techniques with unobservable inputs that are not signiﬁ cant to the overall valuation, these instruments are included in Level 2 of the fair value hierarchy. There were no transfers between levels of the fair value hierarchy during the year-ended 30 June 2015. The Group has not disclosed the fair values for ﬁ nancial instruments such as short-term trade receivables and payables because their carrying amounts are a reasonable approximation of fair values. 10. Dividends paid on ordinary shares No dividends were paid or proposed for the year ending 30 June 2015 (2014: nil). Franking credit balance The amount of franking credits available for the subsequent ﬁ nancial year are: Franking account balance as at the beginning of the ﬁ nancial year at 30% (2014: 30%) Franking credits utilised through the receipt of R&D credits as at the end of the ﬁ nancial year Consolidated 2015 $’000 - - - - 2014 $’000 - 907 (907) - Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the ﬁ nancial year but not distributed at the reporting date. Financial Report Financial Report 73 73 Notes to the Consolidated Financial Statements for the year ended 30 June 2015 D. Investing activities In this section: This section outlines nearmap’s investment in intangible assets and property, plant and equipment as well as a broader discussion on the entity’s cash ﬂ ows. 11. Intangibles Key estimates and judgments Capture costs Pursuant to AASB 138 Intangible Assets, the Company has assessed its best estimate of the probability that the expected future economic beneﬁ ts attributable to the Group’s digital imagery will ﬂ ow to the entity. As a result, capture costs directly attributable and necessary to create and upload digital imagery online have been recognised as an intangible asset. Capture costs capitalised are being amortised over a period of 5 years. Amortisation of capture costs has been included within ‘depreciation and amortisation expenses’ in the Statement of Comprehensive Income. Impairment of assets The Group assesses impairment at each reporting date by evaluation of conditions speciﬁ c to the Group that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Value-in-use calculations performed in assessing recoverable amounts incorporate a number of key estimates, including forecasting of proﬁ ts, cash ﬂ ows, and discount rates. Accounting policy - impairment of assets The Group assesses at each reporting period whether there is an indication that an asset (other than goodwill or intangibles with indeﬁ nite useful life) may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inﬂ ows that are largely independent of those from other assets or groups of assets and the assets value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash generating unit to which it belongs. When the carrying amount of an asset or cash generating unit exceeds its recoverable amount, the asset or cash generating unit is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash ﬂ ows are discounted to their present value using a pre-tax discount rate that reﬂ ects current market assessments of the time value of money and the risks speciﬁ c to the asset. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease). An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in estimate used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised in the asset in prior years. Such reversal is recognised in proﬁ t or loss unless the asset is carried at revalued amount, in which case the reversal is treated as revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life. 74 Financial Report Financial Report 74 Notes to the Consolidated Financial Statements for the year ended 30 June 2015 D. Investing activities 11. Intangibles (cont.) Accounting policy - recognition and measurement of intangibles Research and development costs Intangible assets acquired separately are capitalised at cost and those arising from a business combination are capitalised at fair value as at the date of acquisition. Following initial recognition, the cost model is applied to the class of intangible assets. The amortisation period and method for intangible assets are reviewed at least annually to determine if the useful lives should be changed. Where there is an expectation that the period or method does not match the consumption of the economic beneﬁ ts embedded within the asset, the useful life of the asset will be amended to reﬂ ect this change. Intangible assets are tested for impairment where an indicator of impairment exists, and in the case of intangibles under development impairment is tested annually or at each reporting period where an indicator exists, at the cash-generating unit level. Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the proﬁ t or loss when the asset is derecognised. Research costs and costs that do not meet the deﬁ nition of development costs for the purpose of the standard are expensed as incurred. An intangible asset arising from development expenditure on an internal project is recognised only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic beneﬁ ts, the availability of resources to complete the development and the ability to measure reliably the expenditure attributable to the intangible asset during its development. Following the initial recognition of the development expenditure, the cost model is applied requiring the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses. Any expenditure so capitalised is amortised over the period of expected beneﬁ t from the related project. The carrying value of an intangible asset arising from development expenditure is tested for impairment annually when the asset is not yet available for use or more frequently when an indication of impairment rises during the reporting period. A summary of the amortisation applied to the Group's intangible assets is as follows: Development costs, patents, capture costs and licences Useful lives Finite (generally for a period of 5–20 years). Amortisation method used Amortised over the period of expected future beneﬁ t. The expected useful life is reviewed annually. Internally generated or acquired Acquired and internally generated. Impairment testing Annually as at 30 June for assets not yet available for use and more frequently when an indication of impairment exists. The patents and licences have been granted or are expected to be granted for a minimum of 20 years by the relevant government agency with the option of renewal without signiﬁ cant cost at the end of this period provided that the Group meets certain predetermined targets. Accordingly, the patents and licences have been determined to have ﬁ nite useful lives. Financial Report Financial Report 75 75 Notes to the Consolidated Financial Statements for the year ended 30 June 2015 D. Investing activities 11. Intangibles (cont.) Goodwill Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business combination over the Group’s interest in the net fair value of the acquiree’s identiﬁ able assets, liabilities and contingent liabilities. Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate the carrying value may be impaired. All goodwill acquired through business combinations has been allocated to the nearmap.com cash generating unit. The recoverable amount of the nearmap.com cash generating unit has been determined based on a value-in-use calculation using cash ﬂ ow projections based on board approved budgets and a 4 year forecast period approved by senior management. No impairment was recognised at 30 June 2015 (2014: nil). Goodwill $’000 Development costs $’000 Capture costs $’000 Other $’000 Reconciliation of carrying amount as at 30 June 2015 Balance at the beginning of the year Additions Amortisation Closing balance at the end of the year At 30 June 2015 Cost Accumulated amortisation Closing net book amount Reconciliation of carrying amount as at 30 June 2014 Balance at the beginning of the year Additions Amortisation Closing balance at the end of the year At 30 June 2014 Cost Accumulated amortisation Closing net book amount 135 - - 135 135 - 135 135 - - 135 135 - 135 4,166 3,431 (2,239) 5,358 13,480 (8,122) 5,358 5,112 713 (1,659) 4,166 10,047 (5,881) 4,166 745 5,023 (643) 5,125 5,862 (737) 5,125 - 840 (95) 745 840 (95) 745 222 591 (165) 648 853 (205) 648 - 263 (41) 222 263 (41) 222 Total $’000 5,268 9,045 (3,047) 11,266 20,330 (9,064) 11,266 5,247 1,816 (1,795) 5,268 11,285 (6,017) 5,268 76 Financial Report Financial Report 76 Notes to the Consolidated Financial Statements for the year ended 30 June 2015 D. Investing activities 12. Plant and equipment Accounting policy – plant and equipment Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Such cost includes the cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred. Depreciation is calculated over the estimated useful life of the assets, between 2 and 10 years, on a straight line basis. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each ﬁ nancial year end. (i) De-recognition and disposal An item of plant and equipment is derecognised upon disposal or when no future economic beneﬁ ts are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in proﬁ t or loss in the year the asset is derecognised. Reconciliation of carrying amount as at 30 June 2015 Balance at the beginning of the year Additions Disposals Depreciation Closing balance at the end of the year At 30 June 2015 Cost Accumulated depreciation Closing net book amount Reconciliation of carrying amount as at 30 June 2014 Balance at the beginning of the year Additions Depreciation Closing balance at the end of the year At 30 June 2014 Cost Accumulated depreciation Closing net book amount Ofﬁ ce equipment & furniture $’000 Camera systems $’000 233 470 (10) (174) 519 922 (403) 519 96 212 (75) 233 520 (287) 233 1,169 3,129 - (436) 3,862 5,101 (1,239) 3,862 984 369 (184) 1,169 1,973 (804) 1,169 Total $’000 1,402 3,599 (10) (610) 4,381 6,023 (1,642) 4,381 1,080 581 (259) 1,402 2,493 (1,091) 1,402 Financial Report Financial Report 77 77 Notes to the Consolidated Financial Statements for the year ended 30 June 2015 D. Investing activities 13. Cash ﬂ ow statement Reconciliation of the net (loss)/proﬁ t to the net cash ﬂ ows from operations (Loss)/proﬁ t after tax Adjustment for non-cash items Amortisation and depreciation expense Capitalised amortisation and depreciation Net unrealised exchange differences Share based payment expense Gain on disposal of non-current assets Shares issued not for cash Changes in assets and liabilities Payables and other current liabilities Receivables Provision for employee beneﬁ ts Other non-current assets Income tax expense/beneﬁ t Net cash from operating activities Reconciliation of cash Cash equivalents comprises Cash at bank and on hand Short term deposits at call Consolidated 2015 $’000 (789) 3,658 (522) (480) 2,618 - - 2,710 (4,561) 1,023 (5,023) 1,496 130 4,665 12,504 17,169 2014 $’000 7,078 2,074 - 7 1,897 (4) 99 4,514 (316) 316 (840) (3,782) 11,043 3,582 19,765 23,347 Cash and short-term deposits in the statement of ﬁ nancial position comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less. For the purposes of the Statement of Cash Flow, cash and cash equivalents consist of cash and cash equivalents as deﬁ ned above, net of outstanding bank overdrafts. Cash at banks and short term deposits earn interest at ﬂ oating rates based on daily bank deposit rates. The Company had no ﬁ nancing facilities as of 30 June 2015 (2014: nil). 78 Financial Report Financial Report 78 Notes to the Consolidated Financial Statements for the year ended 30 June 2015 E. Other In this section: This section provides information on items which require disclosure to comply with Australian Accounting Standards and other regulatory pronouncements however are not considered critical in understanding the ﬁ nancial performance or position of the Group. 14. Earnings per share Basic earnings per share is calculated as net proﬁ t/loss attributable to shareholders, adjusted to exclude costs of servicing equity (other than dividends), divided by the weighted average number of ordinary shares, adjusted for any bonus element. Diluted earnings per share is calculated as net proﬁ t attributable to shareholders, adjusted for: –costs of servicing equity (other than dividends); –the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and –other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares, divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. Net (loss)/proﬁ t attributable to ordinary equity holders Net (loss)/proﬁ t used in calculating diluted earnings per share Weighted average number of ordinary shares on issue used in the calculation of basic proﬁ t per share Weighted average number of ordinary shares on issue used in the calculation of diluted proﬁ t per share Consolidated 2015 $’000 (789) (789) 2014 $’000 7,078 7,078 Number of shares Number of shares 330,667,744 326,561,717 348,935,624 347,968,745 Earnings per share attributable to the ordinary equity shareholders of the Company: Basic earnings per share (cents per share) Diluted earnings per share (cents per share) (0.24) (0.23) 2.17 2.03 There have been no other conversions to, calls of, or subscriptions for ordinary shares or issues of potential ordinary shares since the reporting date and before the completion of these ﬁ nancial statements. Financial Report Financial Report 79 79 Notes to the Consolidated Financial Statements for the year ended 30 June 2015 E. Other 15. Expenditure commitments Accounting policy – leases The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulﬁ lment of the arrangement is dependent on the use of a speciﬁ c asset or assets and the arrangement conveys a right to use the asset. Operating lease payments are recognised as an expense in the proﬁ t or loss on a straight line basis over the lease term. Lease incentives are recognised in the income statement as an integral part of the total lease expense. Expenditure commitments There were no capital expenditure commitments or hire purchase commitments contracted at 30 June 2015 (2014: nil). Operating lease commitments Minimum lease payments –Not later than one year –Later than one year and no later than ﬁ ve years Aggregate lease expenditure contracted for at reporting date 2015 $’000 330 67 397 2014 $’000 670 104 774 Operating lease commitments relate primarily to commercial ofﬁ ce premises and IT related leases. These leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated. 16. Parent entity information Financial position information relating to the Company Current assets Total assets Current liabilities Total liabilities Net assets Contributed equity Reserves Accumulated losses Total shareholder equity Loss and total comprehensive income of the parent entity 2015 $’000 21,057 21,271 (101) (101) 21,170 27,621 8,680 (15,131) 21,170 (2,844) 2014 $’000 20,762 20,975 (30) (30) 20,945 27,113 6,119 (12,287) 20,945 (2,457) 80 Financial Report Financial Report 80 Notes to the Consolidated Financial Statements for the year ended 30 June 2015 E. Other 16. Parent entity information (cont.) Information relating to the Company The parent entity has not entered into any guarantees with its subsidiaries. Details of the contingent liabilities of the Group are contained in note 3. There are no contingent liabilities of the parent entity. Details of the contractual commitments of the Group are contained in note 15. There are no contractual commitments of the parent entity. Wholly owned Group transactions Loans made by the Company to and from wholly-owned subsidiaries are repayable on demand and unsecured. No interest is charged on the loans (2014: nil). Loans to wholly-owned subsidiaries Beginning of the year Loans advanced Loan repayments End of the year 2015 $’000 961 7,770 (351) 8,380 2014 $’000 8,900 137 (8,076) 961 17. Group entities The consolidated ﬁ nancial statements incorporate the assets and liabilities of the following subsidiaries in accordance with the accounting policy described in note 2: Name of entity QPSX Communications Pty Ltd nearmap Australia Pty Ltd IPR 8 Pty Ltd ipernica ventures Pty Ltd ipernica holdings Pty Ltd nearmap USA Pty Ltd nearmap Aerospace Inc. nearmap US Inc. 18. Auditor remuneration Country of incorporation Australia Australia Australia Australia Australia Australia United States United States Amounts paid or payable to the Company’s auditor An audit or review of the ﬁ nancial statements of the entity -Non audit services in relation to the entity and any other entity in the consolidated Group Equity holding 2015 100 100 100 100 100 100 100 100 2014 100 100 100 100 100 100 100 100 Consolidated 2015 $’000 81,200 126,750 207,950 2014 $’000 80,400 21,500 101,900 Financial Report Financial Report 81 81 Directors’ Declaration In accordance with a resolution of the Directors of the Company, I state that: In the opinion of the Directors: (a) the ﬁ nancial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the consolidated entity’s ﬁ nancial position as at 30 June 2015 and of its performance for the year ended on that date; and (ii) complying with Accounting Standards and Corporations Regulations 2001 and other mandatory professional reporting standards; and (b) the Company has included in the notes to the ﬁ nancial statements an explicit and unreserved statement of compliance with International Financial Reporting Standards; (c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and (d) the remuneration disclosures set out in the Directors’ report (as part of audited Remuneration Report) for the year ended 30 June 2015, comply with section 300A of the Corporations Act 2001. This declaration has been made after receiving the declarations required to be made to the Directors in accordance with sections 295A of the Corporations Act 2001 for the ﬁ nancial period ending 30 June 2015. On behalf of the Board S Crowther Chief Executive Ofﬁ cer Sydney 24 August 2015 82 Financial Report Financial Report 82 Independent auditor’s report to the members of nearmap Ltd Report on the ﬁ nancial report We have audited the accompanying ﬁ nancial report of nearmap Ltd (the Company), which comprises the consolidated statement of ﬁ nancial position as at 30 June 2015, and consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash ﬂ ows for the year ended on that date, notes 1 to 18 comprising a summary of signiﬁ cant accounting policies and other explanatory information and the Directors’ declaration of the Group comprising the company and the entities it controlled at the year’s end or from time to time during the ﬁ nancial year. Directors’ responsibility for the ﬁ nancial report The Directors of the Company are responsible for the preparation of the ﬁ nancial 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 ﬁ nancial report that is free from material misstatement whether due to fraud or error. In note 2(a), the Directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements, that the ﬁ nancial statements of the Group comply with International Financial Reporting Standards. Auditor’s responsibility Our responsibility is to express an opinion on the ﬁ nancial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the ﬁ nancial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the ﬁ nancial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the ﬁ nancial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the ﬁ nancial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the ﬁ nancial report. We performed the procedures to assess whether in all material respects the ﬁ nancial report presents fairly, in accordance with the Corporations Act 2001 and Australian Accounting Standards, a true and fair view which is consistent with our understanding of the Group’s ﬁ nancial position and of their performance. We believe that the audit evidence we have obtained is sufﬁ cient and appropriate to provide a basis for our audit opinion. Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. Financial Report 83 83 Auditor’s opinion In our opinion: (a) the ﬁ nancial report of the Group is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Group’s ﬁ nancial position as at 30 June 2015 and of its performance for the year ended on that date; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001. (b) the ﬁ nancial report also complies with International Financial Reporting Standards as disclosed in note 2(a). Report on the remuneration report We have audited the Remuneration Report included in pages 36 to 46 of the Directors’ report for the year ended 30 June 2015. 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 auditing standards. Auditor’s opinion In our opinion, the Remuneration Report of nearmap ltd for the year ended 30 June 2015, complies with Section 300A of the Corporations Act 2001. KPMG Trent Duvall Partner Sydney 24 August 2015 84 84 Shareholder Information Additional information required by the Australian Securities Exchange and not shown elsewhere in this report is as follows. The information is current as at 4 September 2015. (a) Distribution of ordinary shares The number of shareholders, by size of holding, are: Range 1–1,000 1,001–5,000 5,001–10,000 10,001–100,000 100,001 and over Total Number of holders Number of shares 437,150 7,577,945 14,488,618 81,567,008 251,425,380 355,496,101 560 2,628 1,747 2,593 305 7,833 The number of shareholders holding less than a marketable parcel of ordinary shares is: 613 1,087 (b) Distribution of unquoted options ESOP options exercisable at a range of prices between $0.075 and $1.08 expiring on various dates between 14 December 2016 and 6 March 2020. Range 1–1,000 1,001–5,000 5,001–10,000 10,001–100,000 100,001 and over Total Number of holders Number of options - - - 600,000 30,455,000 31,055,000 - - - 6 24 30 Shareholder Information Shareholder Information 85 85 Shareholder Information (c) Twenty largest shareholders The names of the 20 largest holders of quoted ordinary shares are: JP Morgan Nominees Australia Limited Name 38,155,167 1 Longfellow Nominees Pty Ltd 28,535,190 2 National Nominees Limited 24,508,999 3 4 Longfellow Nominees Pty Ltd 11,881,128 5 Mr Simon Benedict Crowther & Ms Fiona Kyla Crowther 10,000,000 7,872,292 6 HSBC Custody Nominees (Australia) Limited 5,000,000 7 Oxidex Pty Ltd 4,256,787 8 Citicorp Nominees Pty Limited 3,730,512 9 Mr Graham Grifﬁ ths 10 BNP Paribas Noms Pty Ltd 3,631,500 11 HSBC Custody Nominees (Australia) Limited 3,209,106 3,145,000 12 Venture Skills Pty Ltd 3,046,065 13 RBC Investor Services Australia Nominees Pty Limited 2,775,000 14 HSBC Custody Nominees (Australia) Limited > 2,514,796 15 Mr Paul Arthur Peterson 2,500,019 16 Mrs Alison Farrelly 2,500,000 17 Australian Executor Trustees Limited 2,500,000 18 Johannes Gerhardus Beukes 2,500,000 19 Ms Maria Magdalena Van Wyk 1,900,000 20 Roan Industries Pty Limited 164,161,561 Total Number of shares Percentage of shares 10.73 8.03 6.89 3.34 2.81 2.21 1.41 1.20 1.05 1.02 0.90 0.88 0.86 0.78 0.71 0.70 0.70 0.70 0.70 0.53 46.18 (d) Substantial shareholders The names of substantial shareholders who have notiﬁ ed the Company in accordance with section 671B of the Corporations Act 2001 are: Name 1. Ross Norgard1 1 As provided to the Company on 29 December 2014. Number of shares Percentage of shares 14.38 50,076,295 (e) Voting rights All ordinary shares carry one vote per share without restriction. No voting rights are attached to options. (f) Securities Exchange Quotation The Company’s ordinary shares are listed on the Australian Securities Exchange (Code: NEA). The Home Exchange is Perth. (g) Corporate Governance Statement The Company’s Corporate Governance Statement for the 2015 ﬁ nancial year can be accessed at http://static.nearmap.com/investors/governance/statement/Corporate_Governance_Statement 86 Shareholder Information Shareholder Information 86 Corporate Information nearmap ltd ABN 37 083 702 907 Directors Ross Norgard (Non-Executive Chairman) Simon Crowther (Chief Executive Ofﬁ cer) Rob Newman (Non-Executive Director) Cliff Rosenberg (Non-Executive Director) Company Secretary Shannon Coates Registered Ofﬁ ce Level 6, 6–8 Underwood Street Sydney NSW 2000 Website www.nearmap.com Solicitors Kemp Strang Level 17, 175 Pitt Street Sydney NSW 2000 Bankers Commonwealth Bank of Australia Share Register Computershare Registry Services Pty Ltd Level 11, 172 St Georges’ Terrace Perth WA 6000 Auditors KPMG Australia 10 Shelley Street Sydney NSW 2000 87 87 This page intentionally left blank. This page intentionally left blank.

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