IMPORTANT NOTICE - Financial statements for the financial year ended 30 June 2018
These financial statements are historical financial statements for Nuix Limited ACN 117 140 235 (Nuix)
for the financial year ended 30 June 2018 (FY18).
These financial statements were prepared by Nuix as special purpose financial statements.
The financial statements for FY18 were subsequently restated by Nuix. The restated amounts are
presented as comparatives in the consolidated annual report of Nuix for the financial year ended 30 June
2020 (FY20).
All readers of the financial statements for FY18 should do so with reference to the restated comparatives
for FY18 in the consolidated annual report of Nuix for FY20, including the notes and details explaining the
restatements.
L\337836948.2
Nuix Pty Ltd and Controlled Entities
ANNUAL REPORT
30 June 2018
ABN 80 117 140 235
nuix.com
Nuix Pty Ltd and Controlled Entities Annual Report
Contents
Nuix Technology Target Markets ............................................................... 5
Corporate Directory .................................................................................... 6
Chairman’s Report ..................................................................................... 7
CEO’s Message ......................................................................................... 9
Business Overview ................................................................................... 11
Director’s Report ...................................................................................... 13
Income Statement .................................................................................... 17
Balance Sheet .......................................................................................... 18
Change in Equity ...................................................................................... 19
Cash Flow ................................................................................................ 20
Notes to the Consolidated Financial Statements ...................................... 21
1.
2.
3.
4.
5.
6.
7.
8.
9.
Statement of significant accounting policies ................................................. 21
Financial risk management ........................................................................... 35
Segment information ..................................................................................... 37
Profit for the year .......................................................................................... 38
Sales ............................................................................................................. 38
Other income ................................................................................................ 38
Income tax expense ...................................................................................... 39
Cash and cash equivalents........................................................................... 40
Trade and other receivables ......................................................................... 40
10. Other current assets ..................................................................................... 42
11. Property and equipment ............................................................................... 42
12.
Intangible assets ........................................................................................... 43
13. Trade and other payables ............................................................................. 44
14. Deferred revenue .......................................................................................... 44
15. Provisions ..................................................................................................... 45
16. Borrowings .................................................................................................... 45
17.
Issued capital ................................................................................................ 46
18. Equity ............................................................................................................ 46
19. Dividends ...................................................................................................... 47
20. Auditors’ remuneration .................................................................................. 48
21.
Leasing commitments ................................................................................... 49
22. Related party disclosures ............................................................................. 49
PAGE 3 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
23. Share based payment ................................................................................... 51
24. Cash flow information ................................................................................... 54
25. Earnings per share (EPS) ............................................................................. 55
26. Parent entity financial information ................................................................ 55
27. Events after the reporting date ..................................................................... 56
Director’s Declaration ............................................................................... 58
Independent Auditor’s Report ................................................................... 59
Shareholder Information ........................................................................... 62
PAGE 4 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Nuix Technology Target Markets
PAGE 5 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Corporate Directory
Directors
Rod Vawdrey – Executive Director, Non-Independent
David Standen – Non-Executive Director, Non-Independent
Roy Frank Grady – Non-Executive Director, Independent
Daniel Phillips – Non-Executive Director and Chairman, Non-Independent
Mark Warren de Ambrosis – Non-Executive Director, Non-Independent
Jeffrey Bleich – Non-Executive Director, Independent
Group Chief Executive Officer
Rod Vawdrey
Chief Financial Officer
Stephen Doyle
Registered Office and Share
Registry
Nuix Pty Ltd
Level 27
1 Market Street
SYDNEY, NSW 2000
Telephone: +61 2 9280 0699
Facsimile: +61 2 9212 6902
Company Secretaries
Brian Krupczak
Stephen Doyle (jointly held)
Auditors
Total comprehensive income
for the year
Legal Advisors
Bankers
Financiers
PricewaterhouseCoopers
One International Towers
Watermans Quay, Barangaroo
SYDNEY NSW 2000
DLA Piper Australia
140 William Street
Melbourne VIC 3000
PO Box 4301
Australia
Commonwealth Bank of Australia
Business Banking
Level 8, 201 Sussex Street
SYDNEY NSW 2000
Commonwealth Bank of Australia
Business Banking
Level 8, 201 Sussex Street
SYDNEY NSW 2000
Website Address
www.nuix.com
PAGE 6 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Chairman’s Report
Dear Shareholder,
The Board of Nuix Pty Ltd is pleased to present the Annual Report of the Company and its subsidiaries (hereafter
referred to as ‘Nuix’ or ‘Group’ or ‘Company’) for the financial year ended 30 June 2018. This year, the Group
earned total sales of $120,118,636 (2017: $102,090,636), representing 18% growth. The Group achieved a full-
year profit after tax of $10,989,512 compared with $8,544,585 in the previous year. Our 2018 growth rates are
consistent with board expectations and reflect our ontrack execution of our growth and investment strategy.
OUR ASSETS AND CAPABILITIES
Nuix's key assets are:
•
its range of software applications that enable organisations to make fact-based decisions from human-
generated data; and
•
the extensive knowledge of its global team of industry experts.
Our software, built around the patented Nuix Engine, enables users to search, correlate, analyse and report on
data at massive scale and in hundreds of formats.
BUSINESS AND INDUSTRY OVERVIEW
Organisations are finding themselves unprepared to investigate, manage, secure, de-risk and utilise the massive
amounts of human-generated data they hold. This poses commercial, competitive and legal risks. Nuix
technology is uniquely positioned to help organisations:
• manage the data;
•
comply with legal and regulatory obligations;
• minimise the losses that result from external and insider data breaches; and
• exploit the data to create value.
OUR GROWTH STRATEGY
We plan to make our software a ubiquitously available platform for solving essential risk, compliance and security
challenges. The key elements of our strategy are briefly outlined below:
Extend our technological capabilities
We intend to continue to invest heavily in our product development efforts to deliver additional features
and solutions that address existing customer needs and new end-markets. We focus on attracting and
retaining thought leaders and engineering talent who can expand the Nuix core engine into adjacent
product and technology areas that enable organisations to further investigate, secure and unlock the value
of their data.
Drive incremental revenue from existing customers
We will continue to cultivate incremental sales from our existing customers through increased use of our
software. This will be achieved by additional deployments and new use cases in processing, investigation
and analysis of data.
PAGE 7 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Chairman’s Report (continued)
Develop products that enable organisations in adjacent markets to use our software in
different ways
We believe there is a significant opportunity to leverage our core engine into new solutions that help
organisations investigate, manage, secure and unlock the value of their data in specific markets and use
cases. Training and certification services (across our range of solutions) and consulting services (notably
in cybersecurity and insider threat management) are growing opportunities.
Grow our user and partner ecosystem to target new use cases, drive operational
leverage and deliver more targeted, higher value solutions
Our user community, includes advisory firms, litigation support vendors, corporations, government and
law enforcement agencies. We believe this ecosystem can provide significant operating leverage to
extend our software’s functionality to new use cases. We will continue to invest in OEM and strategic
relationships that enable new channels to market and extend our integration with third-party products. In
addition, we expect that OEM vendors and managed service providers will invest in and create customised
application functionality based on our core engine.
Acquire and productise knowledge to deliver repeat engagements
Through our thought leadership and partner ecosystem, we will deliver targeted solutions to early adopters
who solve the most complex unstructured data problems and to create products and solutions to be resold
to industry verticals.
Deliver world-class customer service
We are determined to continue to delight our customers with our passionate can-do customer service
culture.
OUR PLANS
Looking towards 2019 and beyond, we are confident that we will continue to deliver year-on-year revenue growth
rates.
I would like to thank the shareholders for their support during the last financial year. The Board particularly
acknowledges with thanks the entire talented, passionate and committed Nuix team. We look forward to the
exciting next chapter in Nuix’s history.
SIGNED: __________________________________
Daniel Phillips
Chairman
Sydney, Australia
19 October 2018
PAGE 8 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
CEO’s Message
After a period of transition and consolidation in FY17, Nuix achieved an excellent FY18 revenue growth result
at 18% over prior year. We expanded our markets geographically; refined our vision for the Group and
sharpened our focus across development, product management and support business functions; and continued
to reinvest our returns into the business.
A RETURN TO STRONG GROWTH
It was a record-breaking financial year in which we signed nine renewals over AU$1 million with our advisory
and service provider partners and five seven-figure deals with new corporate and government customers.
Average order size grew 20% year over year and we added 173 new customers and six new countries to bring
us to well over 2,000 customers across 75 countries.
While we expanded sales of our traditional eDiscovery and Investigation products, FY18 also saw promising
uptake of our Security & Intelligence product line, including a strategically significant deal with the United States
Department of Defense.
GLOBAL EXPANSION CONTINUES
We expanded geographically with a combination of feet on the ground and a revamped channel strategy with
an eye to cultivating high-quality partners in new markets.
These initiatives saw a significant influx of new customers in Asia-Pacific across Indonesia, the Philippines,
Singapore and Taiwan, and in the EMEA region with multiple wins in Germany, Israel, Saudi Arabia, Switzerland,
Turkey and the United Arab Emirates.
STRATEGIC VISION: THE CONVERGENCE OF SECURITY, RISK AND COMPLIANCE
Our strategic focus reflects three major challenges common across all organisations that handle large volumes
of data: security, risk and compliance.
The view across our customer base, as well as from industry analysts such as Gartner, is that these three
challenges are converging. As a result, many forward-thinking organisations are bringing together traditionally
siloed areas such as compliance, legal, governance and information security into a single team focused on
managing risk. Some of them are appointing an executive head of risk to oversee this converged discipline.
This presents a unique opportunity for Nuix, given that our technology already provides solutions for many of
these challenges in areas such as investigation; legal and regulatory discovery; data risk management;
regulatory compliance – especially with privacy legislation; and cybersecurity incident response. We can also
apply our strengths to new use cases including intellectual property theft, insider threats, intelligence analysis
and behavioural analytics.
Just as customers are converging their teams to manage security, risk and compliance, we’re bringing many
capabilities together into an always-on platform that gives them a ‘single pane of glass’ view of all their data and
an always-on platform to solve a wide variety of business problems.
PAGE 9 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
CEO’s Message (continued)
BRINGING THE VISION TO LIFE
During FY18 we held a global summit of our development teams to help them align around this vision and
determine the ‘swim lanes’ and projects necessary to bring it to fruition. We appointed new global heads of
engineering, product and solution consulting, and support to spearhead the transformation of these business
units so they can deliver the world-class products, services and support our customers expect.
We also embarked on a company-wide effort, working with a global marketing agency, to refine our message
and to communicate our vision and value proposition to new and existing customers, current and potential
investors, and to ourselves. The initial results of this project have been well received and investors can expect
to see a lot more from this initiative in the year to come.
We have a well-defined product strategy for FY19 and beyond. This will focus firstly on customer retention; then
on core offerings and updates to support revenue; and then to position us as an extensible platform that provides
a single pane of glass across all manner of investigations and data analytics.
I am confident Nuix is positioned for further growth in FY19 and we will continue to add new customers across
all segments. We have the best people in the industry focused helping Nuix reach new heights of achievement
and truly making a difference in all the markets we serve.
SIGNED: __________________________________
Rod Vawdrey
Group CEO
Sydney, Australia
19 October 2018
PAGE 10 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Business Overview
Nuix has more than 2,000 customers worldwide across the private and public sectors. These customers rely on
Nuix solutions to solve their complex data problems including law enforcement and enterprise investigation,
governance and compliance, hyperscale data processing and cybersecurity.
CUSTOMERS
Advisory firms such as Accenture, BDO International, Consilio, Deloitte, EPIQ, Ernst & Young, FTI, Grant
Thornton, KPMG, PwC and RSM use Nuix software to deal with massive volumes of digital evidence and
numerous digital exhibits. These firms use Nuix solutions to deliver efficient and cost-effective services such as
investigation, legal discovery and information governance to their clients.
Litigation support vendors such as FRONTEO, H5, Kroll Ontrack, Law In Order, Lighthouse eDiscovery
and Ricoh use Nuix software primarily to process large volumes of digital evidence for their clients such as law
firms and enterprises, and make it available for early case assessment. Nuix software makes it possible for
internal and external legal teams to collaborate on a single case and divide up stages of large, complex
processes. Using Nuix Web Review & Analytics, they can make evidence available to clients, wherever they
are, earlier in the data processing workflow than competing legal discovery technologies.
Law firms including Arthur Cox, Baker & McKenzie, Herbert Smith Freehills, Morgan Lewis & Bockius, Nelson
Mullins and Paul Weiss use Nuix eDiscovery in similar ways to litigation support vendors, processing data for
early case assessment and legal review. Nuix software allows them to handle a wider variety of data formats at
a much larger scale than competing technologies. Nuix also helps law firms to gain control of highly sensitive
client data and minimise the risk of data breaches.
International, national, state and local law enforcement agencies around the world face increasing
pressure in the digital era. They must handle large-scale, highly complex investigations with data stored in large
numbers of computers, mobile devices and cloud data sources. Nuix law enforcement customers include
Australian Federal Police, Bundeskriminalamt (German Federal Police), Dutch Police, Geneva Police, HM
Revenue and Customs, Indonesian State Intelligence Agency, Landeskriminalamt (German State Police),
London Metropolitan Police, National Cyber Crime Unit (UK), NSW Crime Commission, New York City
Department of Investigation, Police Scotland, Saudi Ministry of Interior, Singapore Ministry of Home Affairs and
Turkish National Police Intelligence.
----------------------------------------------------------------------------------------------------------------------------- ---------------------
According to an OECD report, the average regulatory enforcement case takes 7.3 years. An Australian Federal
Police officer commented “Shaving just two years off this results in a huge return on investment on much-needed
resourcing – including storage of data and investigation team churn.”
PAGE 11 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Business Overview (continued)
Federal, state, and local government agencies including Australian Department of Health, Australian
Department of Foreign Affairs and Trade, Australian Department of Human Services, Australian Taxation Office,
District of Columbia Inspector General, Executive Office for US Attorneys, Executive Office of the President
(USA), Idaho Department of Transportation and the Welsh Government use Nuix software to find evidence of
fraud by extracting and comparing information from multiple internal sources such as email and file shares, as
well as public intelligence sources such as social media.
Financial regulators such as Australian Securities and Investments Commission, China Securities
Regulatory Commission, Federal Trade Commission (US), Financial Conduct Authority (UK), Hong Kong
Securities and Futures Commission, Inland Revenue (New Zealand), Internal Revenue Service (US), Korea Fair
Trade Commission, Securities and Exchange Surveillance Commission (Japan) and U.S. Securities and
Exchange Commission face challenges with rapidly changing technology; it is hard to establish connections
between vital facts among massive data volumes, noise, disparate systems and multiple suspects. Nuix software
helps them by processing and managing incoming information, finding the specific data necessary to complete
investigations and uncovering patterns within and across cases.
Banking, financial services and insurance companies including AIG, American Express, Citigroup,
Commonwealth Bank of Australia, Credit Suisse, Danske Bank, Deutsche Bank, Dun & Bradstreet, HSBC,
Macquarie, Morgan Stanley, National Australia Bank, Prudential, Travelers Insurance, UniCredit Bank AG,
Western Union and Westpac use Nuix software to detect and prevent fraud and corruption, identify and block
insider threats and comply with privacy regulations. The financial services industry is already heavily regulated
and this burden is increasing with the tightening of privacy regulations around the world, for example the
European Union General Data Protection Regulation and the Australian Notifiable Data Breaches Act. Nuix
software helps to reduce investigation times, resulting in decreased regulatory liability and more effective
program management.
Telecommunication providers such as Bell Canada, Comcast, O2 UK, Optus, Saudi Telecom, Verizon and
Vodafone hold large volumes of highly sensitive information about their customers, which is a tempting target
for external data breaches and insider threats. In the context of privacy regulations, telcos need to minimise the
threats of data breaches and respond quickly and effectively when they happen. Nuix uniquely assists this
process by providing transparency into a wide variety of data sources including email systems, file shares,
archives, databases and other high-risk locations. This enables telcos to locate high-value and high-risk
information, conduct regular sweeps for sensitive data, and reduce the gap between security incidents and their
detection and remediation.
Pharmaceuticals and healthcare providers including Abbott Laboratories, Allergan, Blue Cross Blue
Shield North Carolina, Humana, Pfizer and UnitedHealth Group use Nuix software to scan and index their email
servers and other storage systems, identify intellectual property and ensure these high-value materials are not
being stolen, for example in the emails of departing employees.
Commercial customers from industries such as energy, information technology, manufacturing, media and
entertainment, and utilities include Adidas, AGL, CBS Corporation, Duke Energy, Eskom, General Motors,
Microsoft, National Grid, Petrobras, Procter & Gamble, Raytheon, Salesforce, Sony Pictures, Suncor Energy,
Tabcorp, Tata Consultancy Services, Toyota, Universal Entertainment and Walt Disney. These companies use
Nuix software for enterprise investigations, detecting fraud and corruption, collecting evidence for legal and
regulatory matters, data migration and protecting data from breaches.
PAGE 12 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Director’s Report
The directors present their report on the consolidated entity (hereafter referred to as ‘Nuix’ or ‘Group’ or
‘Company’) consisting of Nuix Pty Ltd and the entities it controlled at the end of, or during, the year ended 30
June 2018.
Directors and company secretary
The following persons were directors of Nuix Pty Ltd during the year and up to the date of this report unless
otherwise stated:
• Rod Vawdrey (Executive Director)
• David Standen (Non-Executive Director)
• Roy Frank Grady (Non-Executive Director)
• Daniel Phillips (Non-Executive Director and Chairman)
• Mark Warren de Ambrosis (Non-Executive Director)
•
Jeffrey Bleich (Non-Executive Director)
• Anthony Castagna (Non-Executive Director)
Anthony Castagna resigned as Director and Chairman on 18 April 2018.
The company secretaries are Stephen Doyle and Brian Krupczak. Doyle and Krupczak were appointed to the
position of company secretary in 2011 and 2015, respectively.
Operating results
The profit of the Group for the financial year after providing for income tax amounted to $10,989,512 (2017:
$8,544,585).
Review of operations
A review of the operations of the Group during the financial year and the results of those operations follows:
Sales
EBITDA
NPAT
Operating cash flow
Revenue per employee
Working capital
Orders backlog
2018
2017
2017-2018
MOVEMENT
120,118,636
102,090,636
25,366,979
22,604,344
10,989,512
8,544,585
18%
12%
29%
21,561,928
25,423,930
-15%
267,525
279,700
30,179,463
27,660,139
6,404,691
6,880,836
-4%
9%
-7%
PAGE 13 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Director’s Report (continued)
A five-year summary of financial performance is provided below:
Summary
2014
2015
2016
2017
2018
Total Revenue
45,831,966
74,224,534
101,923,960 102,090,636
120,118,636
EBITDA
NPAT
11,702,285
19,672,764
25,050,009
22,604,344
25,366,979
7,886,560
13,449,635
14,025,129
8,544,585
10,989,512
The Company manages operating performance by reference to key operational metrics, a sample of which are
above disclosed.
Annual revenue per employee is calculated by reference to the fiscal year end number of all Nuix employees
during the period.
Total current assets are disclosed throughout the financial statements however management also reviews these
balances in conjunction with ‘Orders backlog’ which it considers an important operating metric. Orders backlog
represents future committed “sales orders”, that have not been booked as revenue nor debtors. This is
considered when analysing the Company’s liquidity and also the litmus test for customer sentiment
demonstrating the willingness of customers to enter into long-term contractual relationships with Nuix.
Significant changes in state of affairs
No significant changes in the Group’s state of affairs occurred during the financial year and up to date of this
report.
Principal activities
The principal continuing activities of the Group during the financial year were the development, sales, marketing
and distribution of software. No significant change in the nature of these activities occurred during the year.
Events since the end of the financial year
No other matter or circumstance has arisen since 30 June 2018 that has significantly affected, or may
significantly affect:
(a) the Group's operations in future financial years, or
(b) the results of those operations in future financial years, or
(c) the Group's state of affairs in future financial years.
Likely developments and expected results of operations
Likely developments in the operations of the Group and the expected results of those operations in future
financial years are not included in this report.
Environmental regulation
The Group’s operations are not regulated by any significant environmental regulations under a law of the
Commonwealth or of a state or any other territories of Australia or territory in which it operates.
PAGE 14 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Director’s Report (continued)
Meetings of directors
The numbers of meetings of the company’s board of directors held during the fiscal year ended 30 June 2018,
and the numbers of meetings attended by each director were:
David Standen
Roy Frank Grady
Daniel Phillips
Mark Warren de Ambrosis
Jeffrey Bleich
Rod Vawdrey
Anthony Castagna (resigned April 18, 2018)
Full meetings of
directors
A
5
5
5
5
4
5
3
B
5
5
5
5
5
5
4
A = Number of meetings attended
B = Number of meetings held during the time the director held office or was a member of the committee during the year
Dividends paid or recommended
There were no dividends paid or declared since the start of the financial year and up to the date of this report.
Shares issued on the exercise of options
During the fiscal year ended June 30, 2018 Nuix Pty Ltd issued nil shares (2017: 11,666,350) with weighted
average issue price of $nil (2017: $0.12) per share on the exercise of options granted under Nuix Employee
Option Plans.
Insurance of officers
Nuix Pty Ltd insure the directors and secretaries of the company and its Australian-based controlled entities,
and the general managers of each of the divisions 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 officers in their capacity
as officers of entities in the Group, and any other payments arising from liabilities incurred by the officers in
connection with such proceedings. This does not include such liabilities that arise from conduct involving a wilful
breach of duty by the officers or the improper use by the officers of their position or of information to gain
advantage for themselves or someone else or to cause detriment to the company. It is not possible to apportion
the premium between amounts relating to the insurance against legal costs and those relating to other liabilities.
PAGE 15 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Director’s Report (continued)
Indemnifying officers or auditor
No indemnities have been given or insurance premiums paid, during or since the end of the financial year, for
any person who is or has been an auditor of the Group.
This report is signed in accordance with a resolution of the Board of directors.
SIGNED: __________________________________
Daniel Phillips
Chairman
Sydney, Australia
19 October 2018
PAGE 16 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Income Statement
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2018
Sales
Cost of goods sold
Gross profit
Sales and distribution
Research and development
General and administration
Other income
Other gains / (losses) - net
Operating profit
Finance costs
Share based payment expense
Profit before income tax
Income tax expense
Profit for the year
Exchange differences on translation
of foreign operation
Total comprehensive income for the year
Earnings per share
Basic earnings per share
Diluted earnings per share
NOTES
2018
$
2017
$
5
120,118,636
102,090,636
(10,354,915)
(5,401,123)
109,763,721
96,689,513
(53,575,892)
(45,587,754)
(4,015,335)
(3,653,059)
(37,771,103)
(31,887,842)
763,149
717,151
407,340
(1,568,917)
15,571,880
14,709,092
(743,115)
(721,725)
(1,167,751)
(757,827)
13,661,014
13,229,540
(2,671,502)
(4,684,955)
10,989,512
8,544,585
375,955
(147,697)
11,365,467
8,396,888
0.05
0.04
0.04
0.03
6
4
4
4
7
18
18
25
25
The financial statements should be read in conjunction with the accompanying notes.
PAGE 17 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Balance Sheet
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 30 June 2018
Current assets
Cash and cash equivalents
Trade and other receivables
Current tax assets
Other current assets
Total current assets
Non-current assets
Property and equipment
Intangible assets
Deferred tax asset
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Deferred revenue
Current tax liabilities
Provisions
Other liability
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Provisions
Borrowings
Other long-term liability
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
NOTES
2018
$
2017
$
8
9
10
11
12
7
13
14
15
7
15
16
17
18
18
26,998,317
34,251,863
-
1,769,109
20,341,298
29,710,419
357,292
1,865,570
63,019,289
52,274,579
3,014,832
3,040,279
75,680,533
57,857,327
2,157,393
2,457,646
80,852,758
63,355,252
143,872,047
115,629,831
19,642,982
9,237,235
9,635,257
13,206,694
437,620
186,611
2,616,504
1,983,900
507,463
-
32,839,826
24,614,440
5,132,522
5,284,303
526,514
453,625
20,000,000
15,000,000
-
277,030
25,659,036
21,014,958
58,498,862
45,629,398
85,373,185
70,000,433
17,809,218
8,801,888
699,177
5,323,267
66,864,790
55,875,278
85,373,185
70,000,433
The financial statements should be read in conjunction with the accompanying notes.
PAGE 18 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Change in Equity
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2018
OPTION
BUY-BACK
RESERVE
$
SHARE
OPTION
RESERVES
$
FOREIGN
CURRENCY
TRANSLATION
RESERVE
$
ISSUED
CAPITAL
$
RETAINED
EARNINGS
$
TOTAL
EQUITY
$
Balance at 1 July 2016
7,424,512
Profit for the year
Foreign currency reserve
-
-
Contributions of equity
1,377,376
Employee share options
-
Balance at 30 June 2017
8,801,888
Profit for the year
Foreign currency reserve
-
-
Contributions of equity
9,007,330
Buy-back of options
Employee share options
-
-
-
-
-
-
-
-
-
-
-
(6,176,255)
2,753,493
1,959,644
47,330,693
59,468,342
-
-
-
757,827
-
8,544,585
8,544,585
(147,697)
-
-
-
-
-
(147,697)
1,377,376
757,827
3,511,320
1,811,947
55,875,278
70,000,433
-
8,459
-
-
-
1,167,751
-
10,989,512
10,989,512
375,955
-
-
-
-
-
-
-
384,414
9,007,330
(6,176,255)
1,167,751
Balance at 30 June 2018
17,809,218
(6,176,255)
4,687,530
2,187,902
66,864,790
85,373,185
The financial statements should be read in conjunction with the accompanying notes.
PAGE 19 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Cash Flow
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2018
Cash flows from operating activities
Receipts from customers (inclusive of GST and VAT)
111,138,416
106,511,951
NOTES
2018
$
2017
$
Payments to employees and suppliers
Interest received
Interest paid
Income tax paid
Net cash provided by operating activities
Cash flows from investing activities
Purchase of plant and equipment
Payments for intangible assets
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issuance of shares
Proceeds from borrowings
(88,582,591)
(79,246,783)
2,024
17,883
(736,415)
(725,515)
(259,506)
(1,133,606)
21,561,928
25,423,930
(2,183,972)
(1,474,138)
(26,564,140)
(22,142,664)
(28,748,112)
(23,616,802)
19
24
11
12
9,007,330
1,377,376
16
5,000,000
-
Net cash provided by financing activities
14,007,330
1,377,376
Net change in cash and cash equivalents
6,821,146
3,184,504
Cash and cash equivalents at beginning of
financial year
Exchange differences on cash and cash
equivalents
8
20,341,298
18,191,237
(164,127)
(1,034,443)
Cash and cash equivalents at end of financial year
26,998,317
20,341,298
The financial statements should be read in conjunction with the accompanying notes.
PAGE 20 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of these consolidated financial statements
are set out below. These policies have been consistently applied to all the years presented, unless
otherwise stated. The financial statements are for the consolidated entity consisting of Nuix Pty Ltd and
its subsidiaries.
These special purpose financial statements have been prepared in accordance with Australian
Accounting Standards and Interpretations issued by the Australian Accounting Standards Board. The
Company is a for-profit entity for the purpose of preparing the financial statements.
The financial report has been prepared in accordance with the accounting policies disclosed below which
the directors have determined are appropriate to meet the needs of members. Such accounting policies
are consistent with the previous period unless otherwise stated.
Nuix Pty Ltd is a company limited by shares, incorporated and domiciled in Australia.
The financial statements were authorised for issue by the Board of directors on 19 October 2018.
a. Basis of preparation
The financial report has been prepared on an accrual basis and is based on historical costs.
(i) Early adoption of standards
The Group has not elected to apply any pronouncements before their operative date in the annual
reporting period beginning 1 July 2017.
(ii) Historical cost convention
These financial statements have been prepared under the historical cost convention.
(iii) Critical accounting estimates
The preparation of financial statements requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of applying the Group’s accounting
policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions
and estimates are significant to the financial statements are disclosed in Note 1(z).
b. Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Nuix Pty
Ltd (‘Nuix’ or ‘Group’ or ‘Company’) as at 30 June 2018 and the results of all subsidiaries for the year then
ended. Nuix Pty Ltd and its subsidiaries together are referred to in this financial report as the Group or
the consolidated entity.
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group
controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power to direct the activities of the
entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are
deconsolidated from the date that control ceases.
The acquisition method of accounting used to account for business combinations by the Group and is
disclosed in Note 1(e).
PAGE 21 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
Intercompany balances on transactions between Group companies are eliminated. Accounting policies of
subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the
Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated
statement of comprehensive income, statement of changes in equity and balance sheet respectively.
c. Segment report
As the Group has prepared special purpose financial statements, disclosure of segment information is not
required.
d. Income tax
The income tax expense or benefit for the period is the tax payable or receivable on the current period’s
taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in
deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
(i) Current tax
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted
at the end of the reporting period in the countries where the company’s subsidiaries and associates
operate and generate taxable income.
(ii) Deferred tax
Deferred income tax is provided in full, using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial
statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of
goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or
liability in a transaction other than a business combination that at the time of the transaction affects neither
accounting, nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that
have been enacted or substantially enacted by the end of the reporting period and are expected to apply
when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it
is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying
amount and tax bases of investments in foreign operations where the Group is able to control the timing
of the reversal of the temporary differences and it is probable that the differences will not reverse in the
foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets and liabilities and when the deferred tax balances relate to the same taxation authority.
Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset
and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
PAGE 22 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items
recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised
in other comprehensive income or directly in equity, respectively.
e. Business combinations
The acquisition method of accounting is used to account for all business combinations, regardless of
whether equity instruments or other assets are acquired. The consideration transferred for the acquisition
of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity
interests issued by the Group. The consideration transferred also includes the fair value of any asset or
liability resulting from a contingent consideration arrangement and the fair value of any pre-existing equity
interest in the subsidiary. Acquisition-related costs are expensed as incurred. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions,
measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the
Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling
interest's proportionate share of the acquiree’s net identifiable assets.
The excess of the consideration transferred and the amount of any non-controlling interest in the acquiree
over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are
less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of
all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain
purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are
discounted to their present value as at the date of exchange. The discount rate used is the entity’s
incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an
independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a
financial liability are subsequently re-measured to fair value with changes in fair value recognised in profit
or loss.
f. Plant and equipment
Each class of plant and equipment is carried at historical cost less accumulated depreciation and
impairment losses.
The depreciable amount of all fixed assets is depreciated on a straight-line basis over their useful lives
commencing from the time the asset is held ready for use. Leased assets are depreciated over the shorter
of either the unexpired period of the lease or the estimated useful lives of the assets.
The depreciation rates used for each class of depreciable assets are:
CLASS OF FIXED ASSET
Plant and computer equipment
Furniture and fixture
Leasehold improvement
Vehicle
DEPRECIATION RATE
33%
20%
20%
20%
PAGE 23 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting
period date. An asset’s carrying amount is written down immediately to its recoverable amount if the
asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals
are determined by comparing proceeds with the carrying amount. These gains or losses are included in
the statement of comprehensive income.
g. Leases
Leases of plant and equipment where the Group, as lessee, has substantially all the risks and rewards of
ownership are classified as finance leases. Finance leases are capitalised by recording an asset and a
liability at the lower of the amounts equal to the fair value of the leased property or the present value of
the minimum lease payments, including any guaranteed residual values. Lease payments are allocated
between the reduction of the lease liability and the lease interest expense for the period.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the
Group as lessee are classified as operating leases (Note 21). Payments made under operating leases
(net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over
the period of the lease.
h. Financial instruments
Classification
The Group classifies its financial assets in the following categories: financial assets at fair value through
profit or loss and loans and receivables. The classification depends on the purpose for which the
investments were acquired. Management determines the classification of its investments at initial
recognition and, in the case of assets classified as held-to-maturity, re-evaluates this designation at the
end of each reporting date.
(i) Financial assets at fair value through profit and loss
Financial assets are classified at fair value through profit or loss when they are held for trading for the
purpose of short term profit taking, where they are derivatives not held for hedging purposes, or
designated as such to avoid an accounting mismatch or to enable performance evaluation where a group
of financial assets is managed by key management personnel on a fair value basis in accordance with a
documented risk management or investment strategy. Realised and unrealised gains and losses arising
from changes in fair value are included in profit or loss in the period in which they arise.
(ii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market and are stated at amortised cost using the effective interest rate method.
Initial recognition and measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial
asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition
of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are
expensed in profit or loss. Loans and receivables are subsequently carried at amortised cost using the
effective interest method.
PAGE 24 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
Financial assets at fair value through profit or loss are subsequently carried at fair value. Gains or losses
arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category
are presented in profit or loss within other income or other expenses in the period in which they arise.
Dividend income from financial assets at fair value through profit or loss is recognised in profit or loss as
part of revenue from continuing operations when the Group's right to receive payments is established.
Interest income from these financial assets is included in the net gains/ (losses).
Changes in the fair value of monetary securities denominated in a foreign currency and classified as
available-for-sale are analysed between translation differences resulting from changes in amortised cost
of the security and other changes in the carrying amount of the security. The translation differences
related to changes in the amortised cost are recognised in profit or loss, and other changes in carrying
amounts are recognised in other comprehensive income.
Derecognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the
asset is transferred to another party whereby the entity no longer has any significant continuing
involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised
where the related obligations are either discharged, cancelled or expire. The difference between the
carrying value of the financial liability extinguished or transferred to another party and the fair value of
consideration paid, including the transfer of non-cash assets or liabilities assumed is recognised in profit
or loss.
Impairment
The Group assesses at the end of each reporting period whether there is objective evidence that a
financial asset or Group of financial assets is impaired. A financial asset or a Group of financial assets is
impaired and impairment losses are incurred only if there is objective evidence of impairment as a result
of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss
event (or events) has an impact on the estimated future cash flows of the financial asset or Group of
financial assets that can be reliably estimated.
For loans and receivables, the amount of the loss is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows (excluding future credit losses that
have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying
amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If a loan has a
variable interest rate, the discount rate for measuring any impairment loss is the current effective interest
rate determined under the contract. As a practical expedient, the Group may measure impairment on the
basis of an instrument’s fair value using an observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised (such as an improvement in the
debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in profit or
loss. Impairment testing of trade receivables is described in Note 1(q) and Note 9(a).
i. Impairment of non-financial assets
At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to
determine whether there is any indication that those assets have been impaired. If such an indication
exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell
and value in use, is compared to the asset’s carrying value.
PAGE 25 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
In assessing value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset for which the estimates of future cash flows have not been adjusted.
Any excess of the asset’s carrying value over its recoverable amount is expensed to the statement of
comprehensive income.
Impairment testing is performed at each reporting date for intangible assets with indefinite lives and
intangible assets not yet available for use. Where it is not possible to estimate the recoverable amount
of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which
the asset belongs.
j. Intangibles assets
(i) Goodwill
Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is not amortized but is
tested for impairment annually or more frequently if events or changes in circumstances indicate that it
might be impaired and is carried at cost less accumulated impairment losses. Gains and losses on the
disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is
made to those cash-generating units or Groups of cash-generating units that are expected to benefit from
the business combination in which the goodwill arose, identified according to operating segments.
The Group does not have goodwill included in intangible assets.
(ii) Customer contracts
Customer contracts acquired as part of a business combination are recognised separately from goodwill.
The customer contracts are carried at their fair value at the date of acquisition less accumulated
amortisation and impairment losses. Amortisation is calculated based on the timing of projected cash
flows of the contracts over their estimated useful lives. At present, there are no customer contracts
recorded within the financial statements.
(iii) Software
Software comprises computer software purchased from third parties which are capitalised on the basis of
the costs incurred to acquire and bring into use the specific software. Costs associated with maintaining
computer software programs are recognised as an expense when as incurred.
(iv) Intellectual property
Costs incurred on development projects (relating to the design and testing of new or improved products)
are recognised as intangible assets classified as “intellectual property” when it is probable that the project
will, after considering its commercial and technical feasibility, be completed and generate future economic
benefits and its costs can be measured reliably.
The expenditure capitalised comprises all directly attributable costs, including costs of materials, services,
direct labour and an appropriate proportion of overheads. Other development expenditures that do not
meet these criteria are recognised as an expense as incurred. Research expenditure is recognised as
an expense as incurred.
PAGE 26 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
Development costs previously recognised as expenses are not recognised as an asset in a subsequent
period. Capitalised development costs are recorded as intangible assets and amortised from the point at
which the asset is ready for use on a straight-line basis over its useful life.
The amortisation rates used for each class of assets are:
CLASS OF FIXED ASSET
Software
Intellectual Property
DEPRECIATION RATE
33%
10%
k. Foreign currency transactions and balances
(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency
of the primary economic environment in which the entity operates (‘the functional currency’). The
consolidated financial statements are presented in Australian dollars, which is Nuix Pty Ltd’s functional
and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year-end exchange rates of monetary assets
and liabilities denominated in foreign currencies are recognised in profit or loss, except when they are
deferred in equity as qualifying cash flow hedges and qualifying net investment hedges or are attributable
to part of the net investment in a foreign operation.
Foreign exchange gains and losses that relate to borrowings are presented in the income statement,
within finance costs. All other foreign exchange gains and losses are presented in the income statement
on a net basis within other income or other expenses.
Non-monetary items that are measured at fair value in a foreign currency are translated using the
exchange rates at the date when the fair value was determined. Translation differences on assets and
liabilities carried at fair value are reported as part of the fair value gain or loss.
(iii) Group companies
The results and financial position of foreign operations (none of which has the currency of a
hyperinflationary economy) that have a functional currency different from the presentation currency are
translated into the presentation currency as follows:
▪ Assets and liabilities for each balance sheet presented are translated at the closing rate at the
date of that balance sheet,
▪
Income and expenses for each income statement and statement of comprehensive income are
translated at average exchange rates (unless this is not a reasonable approximation of the
cumulative effect of the rates prevailing on the transaction dates, in which case income and
expenses are translated at the dates of the transactions), and
▪ all resulting exchange differences are recognised in other comprehensive income.
PAGE 27 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
On consolidation, exchange differences arising from the translation of any net investment in foreign
entities, and of borrowings and other financial instruments designated as hedges of such investments,
are recognised in other comprehensive income.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets
and liabilities of the foreign operation and translated at the closing rate.
l. Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of
financial year, which are unpaid. The amounts are unsecured and are usually paid within 45 days of
recognition. Trade and other payables are presented as current liabilities unless payment is not due within
12 months from the reporting date. They are recognised initially at their fair value and subsequently
measured at amortised cost using the effective interest method.
m. Borrowings
Interest bearing bank loans are recognised when issued at fair value, less transaction costs, using the
amortised cost method. Any difference between the cost and principal value is recognised in the
consolidated income statement over the period of the interest bearing liability on an effective interest
basis.
n. Provision
Make good obligations are recognised when the Group has a present legal or constructive obligation as
a result of past events, it is probable that an outflow of resources will be required to settle the obligation
and the amount has been reliably estimated. Provisions are measured using the best estimate of amounts
required to settle the obligation at the end of each reporting period.
The fair value of financial guarantees is determined as the present value of the difference in net cash
flows between the contractual payments under the debt instrument and the payments that would be
required without the guarantee, or the estimated amount that would be payable to a third party for
assuming the obligations.
The discount rate used to determine the present value is a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the liability. The increase in the provision
due to the passage of time is recognised as interest expense.
o. Employee benefits
(i) Short term obligations
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be
settled within 12 months after the end of the period in which the employees render the related service are
recognised in respect of employees’ services up to the end of the reporting period and are measured at
the amounts expected to be paid when the liabilities are settled.
The liability for annual leave is recognised in the provision for employee benefits. All other short-term
employee benefit obligations are presented as payables.
PAGE 28 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
(ii) Other long-term employee benefits obligations
The liability for long service leave and annual leave which is not expected to be settled within 12 months
after the end of the period in which the employees render the related service is recognised in the provision
for employee benefits and measured as the present value of expected future payments to be made in
respect of services provided by employees up to the end of the reporting period using the projected unit
credit method. Consideration is given to expected future wage and salary levels, experience of employee
departures and periods of service. Expected future payments are discounted using market yields at the
end of the reporting period on national government bonds with terms to maturity and currency that match,
as closely as possible, the estimated future cash outflows.
(iii) Retirement benefit obligations
Employees of the Group are entitled to benefits from the Group’s superannuation plan on retirement,
health insurance plan and 401K. The Group’s superannuation plan has a defined contribution section.
The defined benefit section provides defined lump sum benefits based on years of service and final
average salary. The defined contribution section receives fixed contributions from Group companies and
the Group’s legal or constructive obligation is limited to these contributions.
(iv) Share-based payments
Share-based compensation benefits are provided to employees via the Nuix Employee Option Plans and
employee share schemes. The fair values of options granted under the Employee Option Plans are
recognised as share-based payments expense with a corresponding increase in equity reserves. The
total amount to be expensed is determined by reference to the fair value of the options granted, which
includes any market performance conditions and the impact of any non-vesting conditions but excludes
the impact of any service and non-market performance vesting conditions.
Non-market vesting conditions are included in assumptions about the number of options that are expected
to vest. The total expense is recognised over the vesting period, which is the period over which all of the
specified vesting conditions are to be satisfied. At the end of each reporting period, the Company revises
its estimates of the number of options that are expected to vest based on the non-marketing vesting
conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a
corresponding adjustment to equity.
The Nuix Employee Option Plans are administered by the Nuix Compensation Committee. When the
options are exercised, the Committee transfers the appropriate amount of shares to the Option Holder.
The proceeds received, net of any directly attributable transaction costs, are credited directly to equity.
(v) Bonus plans
The Group recognises a liability and an expense for bonuses by way of a provision where contractually
obliged or where there is a past practice that has created a constructive obligation.
(vi) Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement date, or
when an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises
termination benefits as an expense.
PAGE 29 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
p. Cash and cash equivalents
Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid
investments that are readily convertible to known amounts of cash and which are subject to insignificant
risk of changes in value.
q. Trade 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 30 – 45 days. They are presented as current assets unless collection is not expected
for more than 12 months after the reporting date.
Collectability of trade receivables is reviewed on an on-going basis. Debts, which are known to be
uncollectible, are written off by reducing the carrying amount directly. An allowance account (provision
for impairment of trade receivables) is used when there is objective evidence that the Group will not be
able to collect all amounts due according to the original terms of the receivables. Significant financial
difficulties of the debtor, probability that the debtor will enter bankruptcy, financial reorganisation, default
or delinquency in payments (more than 120 days overdue) are considered indicators that the trade
receivable is impaired.
The amount of the impairment allowance is the difference between the asset's carrying amount and the
present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows
relating to short-term receivables are not discounted if the effect of discounting is immaterial.
The amount of the impairment loss is recognised in profit or loss within general and administration
expenses. When a trade receivable for which an impairment allowance had 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 profit or loss.
r. Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as
revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third parties.
The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that
future economic benefits will flow to the entity and specific criteria have been met for each of the Group's
activities as described below. The Group bases its estimates on historical results, taking into
consideration the type of customer, the type of transaction and specifics of each arrangement.
Revenue is recognised for the major business activities as follows:
(i) Software licence fee and software usage revenue
Revenue is recognised when a performance obligation is satisfied and when control of the promised
goods or services is transferred to the customer. When considering the performance obligation in relation
to the provision of software, it can be either a right to access (revenue recognised over time) or a right to
use (revenue recognised when software transferred). Software will be recognised as a right to access
when it meets the below three criteria:
1) There is an expectation (contracted or otherwise) that significant activities will be undertaken to affect
the IP of the software;
2) The license holder is exposed to the positive or negative effects of the changes made under point 1;
3) The activities do not result in the transfer of a good or service to the license holder as the activities.
PAGE 30 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
In Nuix’s case, the software provided is updated on an ongoing basis, however the key functionality of
the software is not changed. The software could be held stable and still provide the same benefit to the
customers who have purchased licenses. There is also no contractual obligation under the EULA to
update customers with the new substantial functionality of the software. As a result, it is appropriate that
recognition of annual license sales as a right to use (upfront recognition) is appropriate.
(ii) Maintenance and support revenue
Deferred revenue is recognised over time as it is earned. However, to the extent that Nuix has fulfilled all
its obligations under the contract, the income is recognised as being earned at the time when all Nuix’s
obligations under the contract have been fulfilled.
(iii) Services and training revenue
Revenue from a contract to provide consulting and training services is recognised by reference to the
percentage of completion of the contract. The percentage of completion of the contract is determined by
reference to the proportion of work performed (costs incurred to date) to estimated total work performed
(total contract costs). When the percentage of completion cannot be estimated reliably, contract revenue
is only permitted to be recognised to the maximum extent of the contract costs incurred, which is likely to
be recovered. An expected loss on a contract is recognised immediately in the Consolidated Statement
of Comprehensive Income at inception.
(iv) Sale of goods
Revenue from the sale of goods (hardware) is recognised at the point of delivery as this corresponds to
the transfer of significant risks and rewards of ownership of the goods and the cessation of all involvement
in those goods.
(v) Interest income
Interest income is recognised using the effective interest method. When a receivable is impaired, the
Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow
discounted at the original effective interest rate of the instrument, and continues unwinding the discount
as interest income. Interest income on impaired loans is recognised using the original effective interest
rate.
(vi) Recognition of government grant approach for the R&D incentive scheme
The Group applies the Government Grant Approach to recognise incentives from R&D. This approach
recognises the benefit relating to R&D costs recorded in the income statement in the year it is incurred
as Government Grant Income with the benefit relating to R&D costs capitalised into intangibles recorded
as Deferred Income in the balance sheet with this amount then unwound to Government Grant Income in
line with the amortisation period of the intangible.
s. Government grants
Grants from the government are recognised in Other Income at their fair value where there is a reasonable
assurance that the grant will be received and the Group will comply with all attached conditions.
t. Issued capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares
are shown in equity as a deduction, net of tax, from the proceeds.
PAGE 31 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
u. Goods and services tax
Revenues, expenses and assets are recognised net of the associated goods and services tax (GST),
unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as
part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated
inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or
payable to, the taxation authority is included with other receivables or payables in the balance sheet.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing
or financing activities which are recoverable from, or payable to the taxation authority, are presented as
operating cash flows.
v. Comparative figures
When required by Australian Accounting Standards, comparative figures have been adjusted to conform
to changes in presentation for the current financial year.
w. New accounting standards and interpretation
In the current year, the Group has adopted all of the measurement and recognition requirements of the
new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the
AASB) that are relevant to its operations and effective for the current annual reporting period. The
adoption of these new and revised Standards and Interpretations has not resulted in changes to the
Group’s accounting policies.
Certain new accounting standards and interpretations have been published that are not mandatory for 30
June 2018 reporting periods and have not been early adopted by the Group as follows:
Standard / Interpretation
Effective for annual
reporting periods on
or after
Expected to be initially
applied in the financial year
ended
AASB 15 – Revenue from Contracts with
Customers
AASB 9 – Financial Instruments
AASB 16 - Leases
1 January 2018
1 January 2018
1 January 2019
30 June 2019
30 June 2019
30 June 2020
The Group’s assessment of the impact of these new standards and interpretations is set out below:
(i)
AASB 15 – Revenue from Contracts with Customers: The AASB has issued a new standard for
the recognition of revenue. This will replace AASB 118 which covers revenue arising from the
sale of goods and the rendering of services and AASB 111 which covers construction contracts.
The new standard is based on the principle that revenue is recognised when control of a good or
service transfers to a customer. The standard permits either a full retrospective or a modified
retrospective approach for the adoption.
Management has assessed the impact under the new accounting standard on the recognition of
deferred revenue component of multi-year license contracts and concluded the current revenue
accounting treatment is consistent with the new revenue standard.
PAGE 32 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
(ii)
AASB 9 – Financial Instruments: AASB 9 introduces new requirements for the classification and
measurement of financial assets. Under AASB 9, financial assets are classified and measured
based on the business model in which they are held and the characteristics of their contractual
cash flows. AASB 9 introduces additional changes relating to financial liabilities. The IASB
currently has an active project to make limited amendments to the classification and measurement
requirements of AASB 9 and add new requirements to address the impairment of financial assets.
Management has assessed that the new standard will have no material impact on the
classification and measurement requirements surrounding financial assets and liabilities and
there would be no material impact on the recognition of expected losses on contract inception.
(iii)
AASB 16 – Leases: AASB 16 was issued in February 2016. It will result in almost all leases being
recognised on the balance sheet, as the distinction between operating and finance leases is
removed. Under the new standard, an asset (the right to use the leased item) and a financial
liability to pay rentals are recognised. The only exceptions are short-term and low-value leases.
The accounting for lessors will not significantly change.
The standard will affect primarily the accounting for the Group’s operating leases. As at the
reporting date, the Group has non-cancellable operating lease commitments of $12,445,750, see
Note 21. However, the Group has not yet determined to what extent these commitments will result
in the recognition of an asset and a liability for future payments and how this will affect the Group’s
profit and classification of cash flows.
Some of the commitments may be covered by the exception for short-term and low-value leases.
x. Parent entity financial information
The financial information for the parent entity, Nuix Pty Ltd, disclosed in Note 26 has been prepared on
the same basis as the consolidated financial statements, except as set out below.
(i) Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the financial
statements of Nuix Pty Ltd.
(ii) Financial guarantees
Where the parent entity has provided financial guarantees in relation to loans and payables of subsidiaries
for no compensation, the fair values of these guarantees are accounted for as contributions and
recognised as part of the cost of the investment. There were no financial guarantees during the year
(2017: Nil).
(iii) Share-based payment expense
The grant by the Company of options over its equity instruments to the employees of subsidiary
undertakings in the Group is treated as an inter-Group charge to that subsidiary undertaking. The fair
value of employee services received, measured by reference to the grant date fair value, is recognised
over the vesting period as an expense in the subsidiary undertakings, with a corresponding credit to
equity.
PAGE 33 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
y. Earnings per share (EPS)
(i) Basic earnings per share
Basic earnings per share is calculated by dividing:
•
the profit attributable to owners of the company, excluding any costs of servicing equity other
than ordinary shares
• by the weighted average number of ordinary shares outstanding during the financial year,
adjusted for bonus elements in ordinary shares issued during the year and excluding treasury
shares, if any
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share
to take into account:
•
•
the after income tax effect of interest and other financing costs associated with dilutive
potential ordinary shares, and
the weighted average number of additional ordinary shares that would have been outstanding
assuming the conversion of all dilutive potential ordinary shares.
z. Critical accounting estimates and assumptions
The Directors evaluate estimates and judgments incorporated into the financial statements based on
historical knowledge and best available current information. Estimates assume a reasonable expectation
of future events and are based on current trends and economic data, obtained both externally and within
the Group. Actual results may differ from these estimates. The estimates and underlying assumptions are
reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which
the estimate is revised if the revision affects only that period or in the period of the revision and future
periods if the revision affects both current and future periods.
(i) Revenue recognition
The Group offers certain arrangements whereby a customer can purchase the right to use a software
licence, together with 1 to 5 years maintenance and support. When such multiple element arrangements
exist, the amount recognised as revenue upon the sale of the right to use a software licence is the fair
value of the licence in relation to the fair value of the arrangement taken as a whole.
The revenue relating to the maintenance and support element, which represents the fair value of the
servicing arrangement in relation to the fair value of the arrangement as a whole, is recognised over the
service period. The fair values of each element are determined based on the current market price of each
of the elements when sold separately. To the extent that there is a discount on the arrangement, such
discount is allocated between the elements of the contract in such a manner as to reflect the fair value of
the elements. Infrequently, third party hardware and software is on-sold to customers and in such
instances the amount recognised as revenue is the actual cost paid to the third party plus mark-up.
(ii) Share based payment expense
Management judgment is applied in determining the fair value of options issued under the employee
option plan. There are inherent difficulties is determining market volatility for an unlisted entity.
Furthermore, the vesting of options under the plan occurs over a period that does not always coincide
with the reporting period. In order to avoid complexities surrounding the proration and reporting of options
vested and exercisable at the end of year. Management has reported options vested and exercisable
only where the vesting end date has completed in full.
PAGE 34 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
(iii) Useful life of intangible assets
The Group capitalises development time as an intangible asset on a monthly basis and amortises it
immediately over an estimated useful life of 10 years. The Group estimates the useful life of the intangible
asset to be at least 10 years based on the expected enhancements and technical obsolescence of such
assets. As at 30 June 2018, the carrying amount of the intangible asset was $75,680,533 (2017:
57,857,327).
2. FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of financial risks including:
▪ market risk (including currency risk, interest rate risk and price risk),
▪
▪
credit risk, and
liquidity risk
The Group’s overall risk management program focuses on the unpredictability of financial markets and
seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses
different methods to measure different types of risk to which it is exposed. These methods include
sensitivity analysis in the case of interest rate, foreign exchange and other price risks and ageing analysis
for credit risk to determine market risk. Risk management is carried out by the corporate finance
department under policies approved by the Board of Directors. The Board provides written principles for
overall risk management, as well as policies covering specific areas, such as foreign exchange risk,
interest rate risk, credit risk, and use of derivative financial instruments, non-derivative financial
instruments and investment of excess liquidity.
a. Market risk
(i) Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency
exposures, primarily with respect to the United States dollar, British Pound and European Euro. Foreign
exchange risk arises from future commercial transactions and recognised assets and liabilities
denominated in a currency that is not the entity’s functional currency. The risk is measured using
sensitivity analysis and cash flow forecasting. Management has set up a policy requiring Group
companies to manage their foreign exchange risk against their functional currency.
The Group’s exposure to foreign currency risk at the end of the reporting period, expressed in Australian
dollars, was as follows:
2018
2017
USD
EURO
GBP
USD
EURO
GBP
Trade receivables
18,206,379 2,308,150 2,194,531 10,002,537
1,899,273
3,475,723
Trade payables
2,073,460
34,970
496,810
887,260
62,561
804,083
Cash and cash
equivalents
8,405,412 3,675,672 3,291,501 14,142,772
2,984,414
1,766,244
PAGE 35 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
The Group’s exposure to other foreign exchange movements is not considered material.
Sensitivity
As shown in the table above, the Group is primarily exposed to changes in USD exchange rates. The
sensitivity of profit or loss to changes in the exchange rates arises mainly from US-dollar. Impact on
profit after tax of +/- 10% change of USD against AUD will result to an increase / (decrease) of $348,642
/ ($348,642) for the fiscal year ended 30 June 2018 (2017: $359,983 / [$359,983])
b. Credit risk
Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents, deposits
with banks and financial institutions and outstanding receivables and committed transactions.
For all customers in all instances the Group retains title over the software. A permanent licence key to
use the software is not issued until full payment is received, thus reducing risk of impairment to accounts
receivable. Compliance with credit limits for wholesale customers are regularly monitored by Corporate
Finance. Sales to retail customers are required to be settled by using major credit cards, mitigating credit
risk. There are no significant concentrations of credit risk, whether through exposure to individual
customers, specific industry sectors and/or regions.
(i) Trade receivables past due but not impaired
As at 30 June 2018, trade receivables of $2,867,387 (2017: $3,086,623) were past due but not
impaired. These relate to a number of smaller clients for whom there is no recent history of default. The
ageing analysis of these trade receivables is as follows:
1 – 3 months
4 – 6 months
Over 6 months
2018
$
2017
$
2,103,303
1,644,673
521,004
766,787
243,080
675,163
2,867,387
3,086,623
The other classes within trade and other receivables do not contain impaired assets and are not past due.
Based on the credit history of these other classes, it is expected that these amounts will be received when
due.
c. Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the
availability of funding through adequate committed credit facilities to meet financial obligations as and
when they fall due. At the end of the reporting period the Group held deposits at call of $26,998,317
(2017: $20,341,298) that are expected to expeditiously generate cash inflows for managing liquidity risk.
The Company manages operating performance by reference to key operational metrics including ‘Orders
backlog’. Orders backlog represents future committed “sales orders”, namely not booked as revenue,
unbilled revenue nor debtors.
As at 30 June 2018 Orders backlog was $6,404,691 (2017: $6,880,836).
PAGE 36 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
Management monitors rolling forecasts of the Group’s liquidity reserve as discussed above and cash and
cash equivalents (Note 8) on the basis of forecasted cash flows. This is generally carried out at a Group
level by Corporate Finance. In addition, the Group’s liquidity management policy involves projecting cash
flows in major currencies and considering the level of liquid assets necessary to meet these and
monitoring balance sheet liquidity ratios against internal requirements.
The below page analyses the Group’s financial liabilities into relevant maturity groupings based on their
contractual maturities for all non-derivative financial liabilities. The amounts disclosed in the table are the
contractual undiscounted cash flows.
Balances due within 12 months equal their carrying balances as the impact of discounting is not
considered material.
LESS THAN
6 MONTHS
6-12
MONTHS
BETWEEN
1-3 YEARS
CONTRACTUAL MATURITIES OF
FINANCIAL LIABILITIES
At 30 June 2017
Trade payables
Borrowings
At 30 June 2018
Trade payables
Borrowings
$
1,996,287
-
1,996,287
3,800,099
-
3,800,099
$
-
-
-
-
-
-
CARRYING
AMOUNT
LIABILITIES
1,996,287
$
-
15,000,000
15,000,000
15,000,000
16,996,287
-
3,800,099
20,000,000
20,000,000
20,000,000
23,800,099
d. Fair value measurements
The fair value of financial assets and financial liabilities must be estimated for recognition and
measurement or for disclosure purposes in accordance with AASB 7 Financial Instruments. The carrying
amounts of trade receivables and payables are assumed to approximate their fair values due to their
short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting
the future contractual cash flows at the current market interest rate that is available to the Group for similar
financial instruments. The fair value of current borrowings approximates the carrying amount, as the
impact of discounting is not significant.
3. SEGMENT INFORMATION
Description of segments and principal activities
The group’s strategic steering committee, consisting of the chief executive officer and the chief financial
officer that examines the group’s performance both from a product and geographic perspective and has
identified that the group is considered as one reportable segment as a whole. The business activities and
products that each geographic division have are the same and operating results are regularly reviewed
by the entity’s chief operating decision maker as a whole and not by geographic division.
PAGE 37 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
4. PROFIT FOR THE YEAR
The profit for the year has been arrived at after charging the following items:
Share based payments expense costs
Employee option expense
Finance costs
Interest expense
Other (gains) / losses - net
2018
$
2017
$
1,167,751
757,827
743,115
721,725
Realised and unrealised foreign exchange gain
(2,175,046)
(272,207)
Realised and unrealised foreign exchange loss
1,767,706
1,841,124
Expenses (included in General and administration)
Bad Debt Expense
Rental expense on operating leases
Amortisation of intangible assets
Depreciation
5. SALES
Software
Services
Hardware
6. OTHER INCOME
Bank interest
Government grant income
Miscellaneous income
a. Government grants
(407,340)
1,568,917
493,061
2,820,209
8,743,596
2,221,279
899,974
2,870,372
5,993,643
2,671,968
2018
$
2017
$
112,750,593
95,447,956
6,414,473
5,883,039
953,570
759,641
120,118,636
102,090,636
NOTES
2018
$
2017
$
2,024
12,533
(a)
761,125
703,287
-
1,331
763,149
717,151
Government grants recognized as other income for the current financial year relates to research and
development activities.
PAGE 38 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
7. INCOME TAX EXPENSE
(a) Income tax expense
Current tax
Current tax on profits for the year
Total current tax expense
Deferred income tax
Increase in deferred tax assets
Increase in deferred tax liabilities
Total deferred tax expense
Income tax expense
2018
$
2017
$
2,523,030
2,523,030
2,847,238
2,847,238
300,253
(151,781)
148,472
2,671,502
(700,804)
2,538,521
1,837,717
4,684,955
(b) The numerical reconciliation of income tax expense to prima facie tax payable:
Profit before income tax expense
Tax at the Australian tax rate of 30% (2017: 30%)
Tax effect of amounts which are not deductible (taxable) in
calculating taxable income:
Entertainment
Share-based payments - Australian
Share options - USA
Interest expense
Foreign exchange gains and loss
Difference in overseas tax rates
Research and development
Other
Income tax expense
2018
$
2017
$
13,661,014
13,229,540
4,098,304
3,968,862
80,143
350,325
65,925
227,348
-
(702,903)
184,264
(476,485)
(1,167,477)
(169,525)
191,225
552,336
(572,283)
1,097,438
(228,047)
(142,993)
2,671,502
4,684,955
PAGE 39 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
Deferred tax balances
(i) Deferred tax assets
The balance comprises temporary differences attributable to:
Employee benefits
R&D
Others
Total deferred tax assets
(ii) Deferred tax liabilities
The balance comprises temporary differences attributable to:
Intellectual property
R&D
Employee benefits
Deferred revenue
Other
Total deferred tax liabilities
2018
$
2017
$
309,854
226,343
1,913,376
2,283,337
(65,837)
(52,034)
2,157,393
2,457,646
2018
$
2017
$
22,640,833
17,161,971
(16,740,530)
(11,292,701)
(330,343)
(304,311)
(133,127)
(259,778)
(301,387)
(23,802)
5,132,522
5,284,303
All movements in the deferred tax assets and deferred tax liabilities were recognised in profit and loss.
8. CASH AND CASH EQUIVALENTS
This account consists of cash in bank amounting to $26,998,317 (2017: $20,341,298). The maximum
exposure to credit risk at the end of the reporting period is the carrying amount of each class of cash and
cash equivalents aforementioned.
9. TRADE AND OTHER RECEIVABLES
NOTE
2018
$
2017
$
Trade receivables
26,970,220
22,229,554
Provision for impairment of trade receivables
(a)
-
(71,643)
Unbilled revenue
Total trade and other receivables
7,281,643
7,552,508
34,251,863
29,710,419
PAGE 40 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
The carrying value of trade receivables is considered a reasonable approximation of fair value due to the
short-term nature of the balances.
a. Provision for impairment of receivables
Current trade and term receivables are non-interest bearing loans and generally on 30-45 day terms.
Term receivables are assessed for recoverability based on the underlying terms of the contract. A
provision for impairment is recognised when there is objective evidence that an individual trade or term
receivable is impaired. These amounts have been included in the general and administration expenses.
The amount of the provision was $nil (2017: $71,643). The individually impaired receivables mainly relate
to smaller clients who experienced financial distress. During 30 June 2018 $564,704 (2017: $986,722)
was written off as uncollectable. As a percentage of total Group revenue, the provision for impairment
recognised during the year is negligible.
The ageing of receivables is as follows:
1 – 3 months
4 – 6 months
Over 6 months
Movements in receivables provision:
As at 1 July
Provision for impairment recognised
Receivables written off as uncollectable
As at 30 June
2018
$
2017
$
26,206,136
20,787,604
521,004
766,787
243,080
675,163
26,970,220
22,229,554
2018
$
71,643
493,061
(564,704)
-
2017
$
21,174
1,037,191
(986,722)
71,643
The creation and release of the provision for impaired receivables has been included in general and
administration expenses. Amounts charged to the allowance account are generally written off when there
is no expectation of recovering additional cash.
b. Foreign exchange and interest rate risk
Information about the Group’s exposure to foreign currency risk and interest rate risk in relation to trade
and other receivables is provided in Note 2(a)(i).
PAGE 41 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
c. Fair value and credit risk
Due to the short-term nature of these receivables, their carrying amount is assumed to approximate their
fair value. The maximum exposure to credit risk at the end of the reporting period is the carrying amount
of each class of receivables outlined above. Refer to Note 2 for more information on the risk management
policy of the Group and the credit quality of the entity’s trade and other receivables.
10. OTHER CURRENT ASSETS
Prepayments
Other receivables
Total other current assets
11. PROPERTY AND EQUIPMENT
2018
$
2017
$
1,583,882
1,101,765
185,227
763,805
1,769,109
1,865,570
OFFICE &
COMPUTER
EQUIPMENT
FURNITURE
LEASEHOLD
& FIXTURE
IMPROVEMENT
VEHICLE
TOTAL
At 1 July 2016
At cost
Accumulated
Depreciation
6,836,707
463,746
1,782,908
39,968
9,123,329
(3,940,886)
(145,236)
(754,832)
(13,990)
(4,854,944)
Net book amount
2,895,821
318,510
1,028,076
25,978
4,268,385
Year ended 30 June 2017
Opening net book
amount
2,895,821
318,510
1,028,076
25,978
4,268,385
Forex difference – cost
(195,707)
(11,194)
(21,364)
(1,242)
(229,507)
-
199,231
-
1,535,844
Forex difference – A/D
169,348
9,960
19,923
Additions
Disposals
1,180,138
(22,980)
9,996
-
345,710
-
(38,726)
(61,706)
Depreciation charge
(1,824,151)
(97,783)
(764,024)
13,990
(2,671,968)
Closing net book amount
2,202,469
229,489
608,321
-
3,040,279
At 30 June 2017
At cost
Accumulated
Depreciation
7,798,158
462,548
2,107,254
- 10,367,960
(5,595,689)
(233,059)
(1,498,933)
- (7,327,681)
Net book amount
2,202,469
229,489
608,321
-
3,040,279
PAGE 42 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
11. PROPERTY AND EQUIPMENT (CONTINUED)
OFFICE &
COMPUTER
EQUIPMENT
FURNITURE
LEASEHOLD
& FIXTURE
IMPROVEMENT
VEHICLE
TOTAL
Year ended 30 June 2018
Opening net book
amount
2,202,469
229,489
608,321
-
3,040,279
Forex difference – cost
259,608
14,804
Forex difference – A/D
(250,106)
(12,392)
Additions
Write off – cost
Write off – A/D
1,018,232
558,555
-
-
(15,819)
11,073
46,466
(41,774)
607,185
(3,531)
3,531
-
-
320,878
(304,272)
-
2,183,972
-
-
(19,350)
14,604
Depreciation charge
(1,626,990)
(130,423)
(463,866)
- (2,221,279)
Closing net book amount
1,603,213
655,287
756,332
-
3,014,832
At 30 June 2018
At cost
Accumulated
Depreciation
9,075,998
1,020,088
2,757,374
(7,472,785)
(364,801)
(2,001,042)
Net book amount
1,603,213
655,287
756,332
-
-
-
12,853,460
(9,838,628)
3,014,832
12. INTANGIBLE ASSETS
At 30 June 2017
At cost
SOFTWARE
INTELLECTUAL
PROPERTY
TOTAL
1,703,207
69,083,944
70,787,151
Accumulated amortisation
(1,092,122)
(11,837,702)
(12,929,824)
Net book amount
611,085
57,246,242
57,857,327
Year ended 30 June 2018
Opening net book amount
Forex difference – cost
Forex difference – accumulated amortization
Additions
Amortisation charge
Closing net book amount
611,085
57,246,242
57,857,327
32,759
(31,349)
1,963
(711)
34,722
(32,060)
12,662
26,551,478
26,564,140
(449,875)
(8,293,721)
(8,743,596)
175,282
75,505,251
75,680,533
PAGE 43 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
12. INTANGIBLE ASSETS (CONTINUED)
At 30 June 2018
At cost
Accumulated amortisation
Net book amount
13. TRADE AND OTHER PAYABLES
Trade payables
Payroll tax and other statutory liabilities
Sundry payables and accrued expenses
Total trade and other payables
SOFTWARE
INTELLECTUAL
PROPERTY
TOTAL
1,748,628
95,637,385
97,386,013
(1,573,346)
(20,132,134)
(21,705,480)
175,282
75,505,251
75,680,533
2018
$
2017
$
3,800,099
1,996,287
10,782,074
3,566,866
5,060,809
3,674,082
19,642,982
9,237,235
All amounts are short term and the carrying values are considered to be a reasonable approximation of
fair value. Information about the Group’s exposure to foreign exchange risk is provided in Note 2(a)(i).
14. DEFERRED REVENUE
Deferred revenue is recognised over the period during which the service is provided.
Reseach and development
Annual license and maintenance
Maintenance
Professional service
Total deferred revenue
2018
$
5,722,660
191,009
3,302,383
419,205
2017
$
4,807,568
6,420,692
1,508,330
470,104
9,635,257
13,206,694
PAGE 44 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
15. PROVISIONS
Current
Annual leave
Long service leave
Non-current
Long service leave
Make good obligation
2018
$
2017
$
2,476,241
1,893,687
140,263
90,213
2,616,504
1,983,900
230,255
160,670
296,259
292,955
526,514
453,625
The current portion of these liabilities represents the Group’s obligations to which the employee has a
current legal entitlement. These liabilities arise mainly from accrued annual leave entitlements at the
reporting date. A provision has been recognised for employee benefits relating to long service leave for
employees. In calculating the present value of future cash outflows in respect of long service leave, the
probability of long service leave being taken is based upon historical data. The measurement and
recognition criteria for employee benefits have been included in Note 1(o).
Nuix is required to restore the leased office at 1 Market Street in Sydney and Unit 17C in Cork Airport
Business Park in Cork to the original condition at the end of the respective leases. A provision has been
recognised for the present value of the estimated expenditure required to remove any leasehold
improvements. These costs have been capitalised as part of the cost of leasehold improvements and are
amortised over the shorter of the term of the lease or the useful life of the assets. The discount rate used
to determine the present value is a pre-tax rate that reflects current market assessments of the time value
of money and the risks specific to the liability. The increase in the provision due to the passage of time
is recognised as interest expense.
16. BORROWINGS
Non-current
Bank Loans
(a) Secured liabilities
NOTE
2018
$
2017
$
(a)
20,000,000 15,000,000
Nuix Pty Ltd utilised the cash facility of $20,000,000 out of $30,000,000 ($20M AUD and $7.5M USD).
The financing is provided by Commonwealth Bank of Australia with interest repayable on a quarterly
basis over the term of the loan. The facility is secured over the Group’s assets.
Drawdown made during 2018 was $5,000,000 (2017: nil).
PAGE 45 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
17. ISSUED CAPITAL
217,390,649 (2017: 212,389,650) fully paid
ordinary shares
(a)
17,809,218
8,801,888
NOTE
2018
$
2017
$
The issued shares do not carry a par value.
Movements in issued capital
Balance as at 1 July 2016
Shares issued during 2017
Balance as at 30 June 2017
Shares issued during 2018
Balance as at 30 June 2018
*weighted average price
NUMBER
#
ISSUE PRICE*
$
AMOUNT
$
200,723,300
11,666,350
0.12
212,389,650
5,000,999
1.80
217,390,649
7,424,512
1,377,376
8,801,888
9,007,330
17,809,218
Ordinary shares participate in dividends and the proceeds upon winding up of the Company,
proportionately to the shareholding. At the shareholders’ meetings each ordinary share is entitled to one
vote when a poll is called, otherwise each shareholder has one vote on a show of hands.
a. Capital risk management
Management controls the capital of the Group in order to maintain a good debt to equity ratio, provide the
shareholders with returns and ensure that the Group can fund its operations and continue as a going
concern. The Group’s debt and capital includes ordinary share capital and financial liabilities, supported
by financial assets. There are no externally imposed capital requirements aside from debt covenants.
Management effectively manages the Group’s capital by assessing the Group’s financial risks and
adjusting its capital structure in response to changes in these risks and in the market. These responses
include the management of debt levels, distributions to shareholders and share issues.
18. EQUITY
a. Share-based payments
The share-based payments reserve is used to recognise:
•
•
•
the grant date fair value of options issued to employees but not exercised,
the grant date fair value of shares issued to employees, and
the grant date fair value of shares issued to shareholders.
PAGE 46 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
b. Movement in reserves
Share option reserves
As at 1 July
Share based payment costs
As at 30 June
Option buy-back reserve
As at 1 July
Buy-back of options
As at 30 June
Foreign currency translation reserve
As at 1 July
Foreign currency translation reserve
As at 30 June
Total Reserve
c. Retained earnings
Retained earnings
Net profit for the year
Total retained earnings
19. DIVIDENDS
2018
$
2017
$
3,511,320
2,753,493
1,176,210
757,827
4,687,530
3,511,320
-
(6,176,255)
(6,176,255)
-
-
-
1,811,947
375,955
2,187,902
1,959,644
(147,697)
1,811,947
699,177
5,323,267
2018
$
2017
$
55,875,278
47,330,693
10,989,512
8,544,585
66,864,790
55,875,278
During the year the Directors did not declare an interim dividend (2017: Nil) and have not recommended
a final dividend be paid after 30 June 2018 (2017: Nil). Franking credits arising from the payment of
income tax, by the parent entity, Nuix Pty Ltd, during the years ended 30 June 2018 and 30 June 2017
are represented below.
PAGE 47 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
Franking credits
Franking Credits Attributable To Parent Entity
Franking credits available for subsequent financial
years based on a tax rate of 30% (2017: 30%)
Parent Entity
2018
$
2017
$
668,772
668,772
The amounts represent the balance of the franking account as at the end of the reporting period,
adjusted for:
•
•
•
franking credits that will arise from the payment of the amount of the provision for income tax,
franking debits that will arise from the payment of dividends recognised as a liability at the
reporting date (2017: Nil), and,
franking credits that will arise from the receipt of dividends recognised as receivables at the
reporting date (2017: Nil).
Franking credits attributable to the parent entity only are represented above. If the distributable profits of
the subsidiaries were paid as dividends the consolidated amounts would include franking credits.
The jurisdictional income tax paid by the subsidiaries is set out below:
Nuix Ireland Ltd
Nuix North America Inc.
Nuix Technology UK Ltd
Nuix Philippines Regional Operating Headquarters
20. AUDITORS’ REMUNERATION
PricewaterhouseCoopers Australia
Audit and other assurance
Other assurance
Total for audit and other assurance
Taxation services
Total for taxation services
2018
$
10,684
245,032
2017
$
760,848
263,711
-
109,047
3,790
-
259,506
1,133,606
2018
$
2017
$
225,000
27,000
252,000
14,000
14,000
187,000
22,000
209,000
14,000
14,000
Total for PricewaterhouseCoopers Australia
266,000
223,000
It is the Group’s policy to engage PricewaterhouseCoopers Australia on assignments in addition to their
statutory audit duties where their expertise and experience with the Group are important.
PAGE 48 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
These assignments are principally tax advice. It is the Group’s policy to seek competitive tenders for all
major consulting projects.
21. LEASING COMMITMENTS
Lease commitments: Non-cancellable operating leases: Group as lessee
The Group leases various offices under non-cancellable operating leases expiring within one to three
years. The leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of
the leases are renegotiated.
Commitments in relation to finance leases are payable as indicated in the table below.
Within one year
2,689,960
2,452,663
Later than one year but not later than five years
5,929,130
2,641,214
Later than five years
Minimum lease payments
3,826,660
-
12,445,750
5,093,877
2018
$
2017
$
22. RELATED PARTY DISCLOSURES
a. Parent entity
The parent entity within the Group is Nuix Pty Ltd. The ultimate parent entity is also Nuix Pty Ltd.
b. Interests in other entities
Name of entity
Place of
business/
country of
incorporation
Ownership
interest held by
the Group
Ownership
interest held
by non-
controlling
interests
2018
2017
2018
2017
Principal
activities
Nuix North America, Inc
USA
100%
100%
Nuix Ireland Ltd
Ireland
100%
100%
Nuix Pte Ltd
Singapore
100%
100%
Nuix Holding Pty Ltd
Australia
100%
100%
Nuix USG Inc.
Nuix Technology UK Ltd
USA
UK
100%
100%
100%
100%
Nuix Philippines ROHQ
Philippines
100%
100%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Sale of Software
Sale of Software
Sale of Software
Holding Company
Sale of Software
Sale of Software
Business Support
PAGE 49 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
c. Transactions with other related parties
The parent entity enters into commercial arm’s length distribution and reseller agreements between the
Group subsidiaries. These agreements are entered into on normal and commercial terms.
d. Loans to / from related parties
Loan (from) / to Nuix Ireland Ltd to Nuix UK*
Balance at 1 July
Payments received
Interest charged
Balance as 30 June
Loan from Nuix Ireland Ltd to Nuix Pte. Ltd.
Balance at 1 July
Payments received
Interest charged
Balance as 30 June
Loan to Nuix Ireland Ltd to Nuix USA**
Balance at 1 July
Loans advanced
Payments received
Interest charged
Balance as 30 June
Loan to Nuix USA** to Nuix USG
Balance at 1 July
Loans advanced
Interest charged
Balance as 30 June
Loan from Nuix Regional Operating Headquarters to Parent
Balance at 1 July
Loans advanced
Payments received
Interest charged
Balance as 30 June
2018
$
2017
$
91,668
(1,194,437)
42,708
(1,060,061)
209,634
(183,196)
65,230
91,668
-
240,223
-
(261,778)
-
21,555
-
-
14,518,389
12,722,627
-
1,344,260
(11,041,276)
-
351,042
451,502
3,828,155
14,518,389
1,375,892
670,040
417,937
668,647
88,098
37,205
1,881,927
1,375,892
(102,981)
14,178
857
-
-
(104,546)
13,600
708
(75,203)
(102,981)
PAGE 50 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
d. Loans to / from related parties (continued)
Loan to / (from) Parent to Nuix USA**
Balance at 1 July
Loans advanced
Payments received
Interest charged
Balance as 30 June
Loan from Parent to Nuix Ireland Ltd
Balance at 1 July
Loans advanced
Interest charged
Balance as 30 June
Loan to Parent to Nuix Singapore
Balance at 1 July
Loans advanced
Payments received
Interest charged
Balance as 30 June
*Nuix UK is an abbreviation for Nuix Technology UK Ltd
**Nuix USA is an abbreviation for Nuix North America Inc.
23. SHARE-BASED PAYMENTS
a. Employee Share Option Plan (ESOP)
2018
$
2017
$
(12,440,596)
(1,315,627)
19,784,307
-
-
(11,017,304)
(218,301)
(107,665)
7,125,410
(12,440,596)
(13,709,030)
(13,462,555)
12,546,897
268,679
170,291
(416,766)
(893,454)
(13,709,030)
237,191
(82,354)
-
(10,433)
144,404
-
-
228,726
8,465
237,191
The establishment of the Nuix Pty Limited ESOP was approved by the Board of Directors on or around
fiscal year 2012. The ESOP is designed to align the interests of eligible employees more closely with
shareholders and provide greater motivation and incentive for them to focus on the Company's longer-
term goals. Under the plan, participants are granted Options which may only be exercised if the Relevant
Requirement has been met.
PAGE 51 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
Participation in the plan is at the Board’s discretion and no individual has a contractual right to participate
in the plan or to receive any guaranteed benefits. To be eligible to receive an Option Invitation, an
Employee must have at least six months continuous employment with the Company at the time
invitations are issued, not be on a Performance Improvement Plan and not be employed as an Intern.
Options are granted under the plan for no consideration and carry no dividend or voting rights and are
Non-statutory Stock Options. Option holders cannot assign, transfer, sell or otherwise deal with the
Options granted under the Plan without Board of Directors’ approval.
The amount of Options that vest depends upon the vesting rules of the respective Plan rules (generally
three to five years). The Options vest in a series of successive equal monthly instalments beginning on
the first anniversary of the Vesting Commencement Date, subject to the Optionholder’s continued
employment with the Company.
Once vested, the Options become exercisable following the consummation of a Corporate Transaction
/ Liquidity Event (as defined in the Plan rules) or a date determined by the Board. However, under some
earlier Plan rules, Options are exercisable for a period of three years once they become fully vested.
Following the exercise of the Options, a vested Option is converted into one ordinary share within a
certain number of business days as determined by the Plan rules (generally ten to fifteen business
days). The exercise price of options is determined by a combination of internal and external valuation
methodologies and presided over by the Board of Directors.
Set out below are summaries of options granted under the plan:
Average Exercise Price Per Number
of Share Options
As at 1 July
Granted during the year
Exercised during the year
Sold
Forfeited during the year
As at 30 June
Vested and exercisable at 30 June
2018
2017
$
#
$
#
0.72
2.30
0.12
-
0.80
0.81
0.01
52,591,250
0.27
86,301,250
1,530,000
1.97
9,465,000
(3,959,150)
0.04
(6,210,000)
-
0.10
(9,476,350)
(7,565,000)
42,597,100
0.12
(27,488,650)
0.72
52,591,250
15,368,900
0.03
16,610,000
PAGE 52 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2018
Share Options outstanding at the end of the year have the following expiry date and exercise prices
Share Options
Share Options
Weighted Average
Exercise Price
(Post Split)
(Post Split)
30 June 2018
30 June 2017
$0.0002
15,000,000
15,000,000
Last Exercise
Date
(Led)
LE
< APR15
< MAR16
< MAR17
LE
LE &