IMPORTANT NOTICE - Financial statements for the financial year ended 30 June 2019
These financial statements are historical financial statements for Nuix Limited ACN 117 140 235 (Nuix)
for the financial year ended 30 June 2019 (FY19).
These financial statements were prepared by Nuix as special purpose financial statements.
The financial statements for FY19 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 FY19 should do so with reference to the restated comparatives
for FY19 in the consolidated annual report of Nuix for FY20, including the notes and details explaining the
restatements.
L\337854023.1
nuix.com
NUIX PTY LTD AND CONTROLLED ENTITIES
ANNUAL REPORT
30 June 2019
ABN 80 117 140 235
nuix.com
FINDING TRUTH IN A DIGITAL WORLD
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 ...................................................................................... 14
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 ........................................................................... 36
Segment information ..................................................................................... 39
Profit for the year .......................................................................................... 39
Sales ............................................................................................................. 39
Other income ................................................................................................ 40
Income tax expense ...................................................................................... 40
Cash and cash equivalents........................................................................... 42
Trade and other receivables ......................................................................... 42
10. Other current assets ..................................................................................... 43
11. Property and equipment ............................................................................... 44
12.
Intangible assets ........................................................................................... 45
13. Trade and other payables ............................................................................. 46
14. Deferred revenue .......................................................................................... 46
15. Provisions ..................................................................................................... 47
16. Borrowings .................................................................................................... 47
17.
Issued capital ................................................................................................ 48
18. Equity ............................................................................................................ 48
19. Dividends ...................................................................................................... 49
20. Auditors’ remuneration .................................................................................. 50
21.
Leasing commitments ................................................................................... 50
22. Related party disclosures ............................................................................. 51
PAGE 3 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
23. Share-based payments ................................................................................. 53
24. Cash flow information ................................................................................... 56
25. Parent entity financial information ................................................................ 57
26. Business comibination .................................................................................. 58
27. Events after the reporting date ..................................................................... 59
Director’s Declaration ............................................................................... 60
Independent Auditor’s Report ................................................................... 61
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
Daniel Phillips – Non-Executive Director and Chairman, Non-Independent
David Standen – Non-Executive Director, Non-Independent
Roy Frank Grady – Non-Executive Director, Independent
Mark Warren de Ambrosis – Non-Executive Director, Non-Independent
Jeffrey Bleich – Non-Executive Director, Independent
Rod Vawdrey – Executive Director, Non-Independent
Anthony Castagna* – Non-Executive Director, Non-Independent
*re-appointed as Director last 8 August 2019
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
Stephen Doyle
Brian Krupczak
Auditors
Total comprehensivfor 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 (hereafter referred to as ‘Nuix’ or ‘Group’ or ‘Company’) is pleased to present the
Annual Report of the Company and its subsidiaries for the financial year ended 30 June 2019. This year, the
Group earned total sales of $150,120,898 (2018: $120,118,636), representing 25% growth. The Group
achieved a full-year profit after tax of $14,685,930 compared with $10,989,512 in the previous year.
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 Original Equipment
Manufacturer (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 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 2020 and beyond, we are focused on continuing to deliver strong year-on-year revenue growth.
On behalf of the Board, I would like to thank the entire talented, passionate and committed Nuix team for their
efforts during the year, as well as acknowledge and thank our shareholders for their ongoing support during the
last financial year. We look forward to the exciting next chapter in Nuix’s history.
SIGNED: __________________________________
Daniel Phillips
Chairman
Sydney, Australia
22 June 2020
PAGE 8 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
CEO’s Message
Nuix is a unique and dynamic business, with more than 2,000 customers across government, regulators,
advisories, law firms and enterprises in over 75 countries – directly and through our growing partner network.
Our patented Nuix Engine – a proprietary technology for supercharged data processing – enables our customers
to solve the world’s most complex risk, compliance and security challenges.
Nuix achieved solid growth again in 2019 with a strong contribution from the Ringtail legal review platform, which
we acquired from FTI Technology in September 2018.
To harness our expertise in eDiscovery and investigations, we have reinvented Ringtail as Nuix Discover and
Nuix Web Review & Analytics as Nuix Investigate. We are continuously enhancing our product strategy,
capturing innovation and empowering our people so we can remain a leader in our industry.
We have pushed into new geographic markets, specifically Germany, Japan and New Zealand. We have also
reinforced our organisation’s structure and operating models and continued to invest in our long-term vision.
A STRONG FOUNDATION FOR GROWTH
In FY19, Nuix achieved 25% year on year growth to AU$150 million. A highlight was significantly increasing
Nuix Discover (formerly Ringtail) revenue – a double-digit contribution to the FY19 total – in just nine months.
Now that we have completed the integration of Ringtail technology and resources, we anticipate Nuix Discover
will deliver significant growth in FY20.
As we exited the last financial year, Nuix formed a new Executive Committee and united the company under
refreshed vision, mission and strategic goals to embrace changing market opportunities and new use cases that
will drive growth in FY20 and beyond.
We continue to invest in improved processes and systems with the completed rollout of the Agile development
model; ongoing improvements to customer relationship management processes; and the first customer
implementations of our cloud licensing model.
We added more than 100 team members across development, distribution and supporting functions to help us
increase new customer and partner acquisition and strengthen our product development.
Our renewed vision and mission will signal a clear market position while guiding our strategic direction and
underpinning our decision-making.
Nuix Vision: Finding Truth in a Digital World.
Nuix Mission Statement: Nuix creates innovative software that empowers organizations to simply and quickly
find the truth from any data in a digital world. We are a passionate and talented team, delighting our customers
with software that transforms data into actionable intelligence.
FINDING TRUTH IN A DIGITAL WORLD
We are experiencing huge market appetite for solutions that address the constantly evolving risks and threats
of the modern data-driven world. Processing, storing and regulating data are constantly becoming more
complex, forcing corporations and governments to increase their investments in identifying risk and ensuring
data quality, governance and compliance.
This presents Nuix with growing opportunities to provide enterprise-wide solutions; address big data and
corporate hygiene issues across key highly regulated industries; and deepen our relationships with global
advisories, litigation support vendors, systems integrators and risk consulting firms.
PAGE 9 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
CEO’s Message (continued)
Just as our customers are converging their teams to manage risk, compliance and security, we are providing a
powerful, intuitive solution 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.
FY19 marked an important maturation in Nuix’s journey. Nuix is poised to continue our track record of growth,
with a well-defined product roadmap, vision and value proposition, which we continually reinforce to our
customers, partners, investors and our people. I am confident that we will continue to exceed our own high
standards of excellence.
SIGNED: __________________________________
Rod Vawdrey
Group CEO
Sydney, Australia
22 June 2020
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, Enigma Advisory Group, EPIQ, Ernst
& Young, FTI, Grant Thornton, KPMG, M&A Treuhand, PwC, RSM, Seclorum GmbH, and Venturecorp
Development 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 3B Data Security, Data Narro, Enhanced Litigation Management
Systems, Exiger, FRONTEO, H5, Incident Response Solutions, Innovative Discovery, Kroll Ontrack, Law In
Order, LDM Global Australia, Lighthouse eDiscovery, Lynaza, Rapu, Ricoh, and Sentre Consulting use Nuix
software primarily to process large volumes of digital evidence for the 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 Archer & Greiner, Arthur Cox, Baker & McKenzie, Bereskin & Parr, Egerton McAfee
Armistead & Davis, Fredrikson & Byron, Herbert Smith Freehills, KE-IP, Morgan Lewis & Bockius, Nelson
Mullins, Paul Weiss, Post & Schell, Rajah & Tann Singapore, Reed Smith, Stanley & Schmidtt, and Zerbe Miller
Fingeret Frank & Jadav 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), Competition Bureau Canada, Criminal
Investigation Bureau-National Police Agency, Czech Republic Ministry of Interior - Police Presidium, Direction
du Renseignement et de la Sécurité de la Défense, Dutch Police, Federal Bureau of Investigation, Gendarmerie
Nationale (France), Geneva Police, Guardia di Finanza (Italy), Hellenic Police, HM Revenue and Customs,
Indonesian State Intelligence Agency, Korea Defense Security Support Command, Landeskriminalamt (German
State Police), London Metropolitan Police, Ministry of Defence (Israel), Ministry of Defence (Pakistan), National
Cyber Crime Unit (UK), NATO Support and Procurement Agency (NSPA), New Jersey State Police, National
Security Agency, NSW Crime Commission, New York City Department of Investigation, Polizeipräsidium
Oberbayern Süd (Germany), Police Scotland, Saudi Ministry of Interior, Regional Prosecutor's Office in Warsaw
(Prokuratura Regionaln), Singapore Ministry of Home Affairs, Turkish National Police Intelligence, US Army -
513th MI Brigade, and US DOJ - National Security Division.
----------------------------------------------------------------------------------------------------------------------------- ---------------------
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 Attorney General’s Department, Agencia de
Defensa de la Competencia de Andalucía, Agency for the Protection of Competition of Montenegro, Audit Office
of New South Wales, Australian Bureau of Statistics, Australian Department of Health, Australian Department
of Foreign Affairs and Trade, Australian Department of Human Services, Australian Taxation Office, Chester
County District Attorney's Office, Department of Interior-US Fish & Wildlife Service, District of Columbia
Inspector General, Executive Office for US Attorneys, Executive Office of the President (USA), Idaho
Department of Transportation, Egypt Cert, Florida State Board of Administration, Gobierno Navarra,
Government Technology Agency of Singapore (GovTech), House- Committee on Natural Resources,
Independent Commissioner Against Corruption- Northern Territory, and the Ministry of Presidential Affairs UAE,
National Science Foundation OIG, New York City Law Department, NSW Department of Education and Training,
Office of the Registrar of Indigenous Corporations, Scottish Government, Social Security Administration OIG,
State of Massachusetts OIG, State of Wyoming - Dept of Environmental Quality, Telecommunications Authority-
Dubai, The Board of Audit and Inspection of Korea, Transport Canada, U.S Department of State: -Honduras-
American Embassy Tegucigalpa, US Department of State, US House-Committee on Transportation and
Infrastructure, US House-HPSCI, and 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, Canada Revenue Agency,
China Securities Regulatory Commission, Federal Trade Commission (US), Financial Conduct Authority (UK),
Federal Deposit Insurance Corporation, Hong Kong Securities and Futures Commission, Inland Revenue (New
Zealand), Internal Revenue Service (US), Income Tax Department-New Delhi, Internal Revenue Service, Korea
Fair Trade Commission, National Treasury SA, Oberfinanzdirektion Niedersachsen (Germany), Portuguese
Securities Market 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, NASDAQ, National Australia Bank, Prudential Travelers Insurance, QBE, 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, Telstra,
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.
PAGE 12 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Pharmaceuticals and healthcare providers including Abbott Laboratories, Allergan, Blue Cross Blue
Shield North Carolina, Bupa, Endo Pharmaceuticals, Humana, Pfizer, Nebraska Medicine, 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 3rd Eye Techno Solutions Pvt Ltd., Adidas, AGL, Amazon, Archer Daniels
Midland, Axxera, Betsson, Biogen Idec, Boston Globe, BPHA, CBS Corporation, Caterpillar, Chevron,
Cybershield, Duke Energy, Deutsche Post AG, Dollar Tree, Eskom, Future Com, General Motors, Hancock
Prospecting, Hochschule Wismar, Ingram Micro, Intel, Jaguar Land Rover, Landmark Group, Mediacom
Communications, MGM Resorts International, Microsoft, National Grid, NCR Global, Pact Group, Page Group,
Paycom Corporation, Peabody Energy, Petrobras, Petros, Procter & Gamble, Raytheon, Rio Tinto, Salesforce,
Samsung, Shell International, Shimuzi Corporation, Sony Pictures, Suncor Energy, Tabcorp, Tata Consultancy
Services, Tatweer Petroleum, TechnipFMC, The Document Group, Today Translations, Toyota, Universal
Entertainment, Vale BR, Valeo Spain, Walmart, Walt Disney, and Welsh Water. 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.
Non-commercial enterprises such as schools, universities, and non-government organisations include DC
Resources Inc., Harper Adams University, International Federation of Red Cross and Red Crescent Societies
(Switzerland), International Labour Organization, and Naif Arab University for Security Sciences.
PAGE 13 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Directors’ 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 2019.
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:
• Daniel Phillips (Non-Executive Director and Chairman)
• David Standen (Non-Executive Director)
• Roy Frank Grady (Non-Executive Director)
• Mark Warren de Ambrosis (Non-Executive Director)
•
Jeffrey Bleich (Non-Executive Director)
• Rod Vawdrey (Executive Director)
• Anthony Castagna (Non-Executive Director)
The company secretaries are Stephen Doyle and Brian Krupczak, who were appointed to the position of
company secretary in 2011 and 2015, respectively. Anthony Castagna was re-appointed as Director last 8
August 2019.
Operating results
The profit of the Group for the financial year after providing for income tax amounted to $14,685,930 (2018:
$10,989,512).
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
Working capital
2019
2018
150,120,898
120,118,636
40,795,419
25,366,979
14,685,930
10,989,512
18,474,290
21,561,928
50,709,440
30,179,463
Orders backlog
*EBITDA - Earnings before Interest, Tax, Depreciation and Amortisation
** NPAT - Net Profits after Tax
21,110,232
6,404,691
A five-year summary of financial performance is provided below:
2018-2019
MOVEMENT
25%
61%
34%
-14%
68%
230%
Summary
2015
2016
2017
2018
2019
Total Revenue
74,224,534
101,923,960 102,090,636 120,118,636
150,120,898
EBITDA
NPAT
19,672,764
25,050,009
22,604,344
25,366,979
40,795,419
13,449,635
14,025,129
8,544,585
10,989,512
14,685,930
PAGE 14 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Directors’ Report (continued)
The Group manages operating performance by reference to key operational metrics, a sample of which are
above disclosed.
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 Group’s liquidity and is 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
On 9th September 2018, Nuix North America, Inc acquired from FTI, Ringtail’s business assets for consideration
of USD $53,943,901. Ringtail eDiscovery software delivers a unique visual approach to many phases of
eDiscovery from early case assessments and investigations to document review and trial preparation. The
acquisition has increased the Group’s market share and boost revenue growth.
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
The COVID-19 coronavirus outbreak was declared a pandemic by the World Health Organisation on 11 March
2020. The outbreak and the response of governments in dealing with the pandemic is interfering with general
activity levels within the community and the economy. The scale and duration of these developments continue
to remain uncertain as at the date of this report. The Group does not consider it practicable to provide a
quantitative or qualitative estimate of the potential impact of the outbreak on the Group at this time however
does not believe it would be material or adverse.
No other matter or circumstance has arisen since 30 June 2019 that has significantly affected the Group’s
operations, results or state of affairs, or may do so in future 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 15 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Directors’ Report (continued)
Meetings of directors
The numbers of meetings of the company’s board of directors held during the fiscal year ended 30 June 2019,
and the numbers of meetings attended by each director were:
Daniel Phillips
David Standen
Roy Frank Grady
Mark Warren de Ambrosis
Jeffrey Bleich
Rod Vawdrey
Full meetings of
directors
A
7
7
7
7
7
7
B
7
7
7
7
7
7
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.
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.
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
22 June 2020
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 2019
Sales
Cost of goods sold
Gross profit
Sales and distribution
Research and development
General and administration
Other income
Other gains - net
Operating profit
Finance costs
Share based payments expense
Profit before income tax
Income tax expense
Profit for the year
Exchange differences on translation
of foreign operations
Total comprehensive income for the year
NOTES
5
6
4
4
4
7
18
18
2019
$
2018
$
150,120,898
120,118,636
(13,607,584)
(10,354,915)
136,513,314
109,763,721
(57,801,522)
(53,575,892)
(6,607,097)
(4,015,335)
(51,751,642)
(37,771,103)
960,035
763,149
1,023,487
407,340
22,336,575
15,571,880
(894,918)
(743,115)
(149,818)
(1,167,751)
21,291,839
13,661,014
(6,605,909)
(2,671,502)
14,685,930
10,989,512
1,776,047
375,955
16,461,977
11,365,467
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 2019
NOTES
2019
$
2018
$
Current assets
Cash and cash equivalents
Trade and other receivables
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
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
8
9
10
11
12
7
13
14
15
7
15
16
17
18
18
27,331,898
44,900,443
9,316,380
26,998,317
34,251,863
1,769,109
81,548,721
63,019,289
3,117,793
3,014,832
167,566,178
75,680,533
665,732
2,157,393
171,349,703
80,852,758
252,898,424
143,872,047
14,639,295
19,642,982
11,973,369
9,635,257
965,505
437,620
3,261,112
2,616,504
-
507,463
30,839,281
32,839,826
7,430,965
5,132,522
543,391
526,514
25,681,820
20,000,000
33,656,176
25,659,036
64,495,457
58,498,862
188,402,967
85,373,185
104,227,205
17,809,218
2,625,042
699,177
81,550,720
66,864,790
188,402,967
85,373,185
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 2019
ISSUED
CAPITAL
$
OPTION
BUY-BACK
RESERVE
$
SHARE
OPTION
RESERVE
$
FOREIGN
CURRENCY
TRANSLATION
RESERVE
$
RETAINED
EARNINGS
$
TOTAL
EQUITY
$
Balance at 1 July 2017
8,801,888
Profit for the year
Reserve option buy-back
Foreign currency reserve
-
-
-
Contributions of equity
9,007,330
Employee share options
-
-
-
(6,176,255)
-
-
-
3,511,320
1,811,947
55,875,278
70,000,433
-
-
8,459
-
1,167,751
-
-
375,955
-
-
10,989,512
10,989,512
-
-
-
-
(6,176,255)
384,414
9,007,330
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
Profit for the year
Foreign currency reserve
-
-
Contributions of equity
86,417,987
Employee share options
-
-
-
-
-
-
-
-
149,818
-
14,685,930
14,685,930
1,776,047
-
-
-
-
-
1,776,047
86,417,987
149,818
Balance at 30 June 2019
104,227,205
(6,176,255)
4,837,348
3,963,949
81,550,720 188,402,967
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 2019
Cash flows from operating activities
Receipts from customers (inclusive of GST and VAT)
135,920,234
111,138,416
NOTES
2019
$
2018
$
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 / acquisition of intangible assets
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issuance of shares
Proceeds from borrowings
Net cash provided by financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of
financial year
Exchange differences on cash and cash
equivalents
Cash and cash equivalents at end of financial year
(116,329,933)
(88,582,591)
69,750
2,024
(860,968)
(736,415)
(324,793)
(259,506)
18,474,290
21,561,928
(1,258,856)
(2,183,972)
(109,135,234)
(26,564,140)
(110,394,090)
(28,748,112)
19
24
11
12
86,417,987
9,007,330
16
5,681,820
5,000,000
92,099,807
14,007,330
180,007
6,821,146
8
26,998,317
20,341,298
153,574
(164,127)
27,331,898
26,998,317
The financial statements should be read in conjunction with the accompanying notes.
PAGE 20 of 63
nuix.com
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
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 22 June 2020.
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 2018.
(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(y).
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 2019 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.
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 2019
The acquisition method of accounting used to account for business combinations by the Group and is
disclosed in Note 1(e).
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 2019
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
liabilities incurred to the former owners of the acquired business
•
•
• equity interests issued by the group
•
•
fair value of any asset or liability resulting from a contingent consideration arrangement, and
fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired and liabilities assumed in a business combination are, with limited exceptions,
measured initially at their fair values at the acquisition date. The Group recognises any non-controlling
interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-
controlling interest’s proportionate share of the acquired entity’s net identifiable assets. Acquisition-related
costs are expensed as incurred.
The excess of the:
consideration transferred,
•
• amount of any non-controlling interest in the acquired entity, and
• acquisition-date fair value of any previous equity interest in the acquired entity
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 business acquired, 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.
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.
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 2019
The depreciation rates used for each class of depreciable assets are:
CLASS OF FIXED ASSET
Plant and computer equipment
Furniture and fixture
Leasehold improvement
DEPRECIATION RATE
33%
20%
20%
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.
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 2019
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.
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
AASB 9 introduced a new impairment model which is the new expected credit loss (ECL) model which
involves a three-stage approach whereby financial assets move through the three stages as their credit
quality changes. The stage dictates how an entity measures impairment loss and applies the effective
interest rate method. A simplified approach is permitted for financial assets that do not have a significant
financing component (eg trade receivables). On initial recognition, entities will record a day-1 loss equal
to the 12-month ECL (or lifetime ECL for trade receivables), unless the assets are considered credit
impaired.
The Group applies the simplified approach to measuring ECL which uses a lifetime expected loss
allowance for all trade receivables as the assets does not contain significant financing component. Current
trade and term receivables are non interest-bearing loans and generally on 30-45 days payment terms.
A provision for impairment is recognised before the credit loss is incurred based on the relevant loss rates
applied to outstanding balances of trade receivables. 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
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 2019
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.
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.
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are
tested annually for impairment, or more frequently if events or changes in circumstances indicate that
they might be impaired. Other assets are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the
purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of
assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are
reviewed for possible reversal of the impairment at the end of each reporting period.
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 (CGUs) 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.
(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.
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 2019
(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.
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
AMORTISATION 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 operations.
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.
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 2019
(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.
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.
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 2019
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.
(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.
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 2019
(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.
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
The financial reporting standard on revenue from contracts with customers establishes a new five-step
model to account for revenue arising from contracts with customers before revenue can be recognised.
Identify contracts with customers;
•
Identify the separate performance obligation;
•
• Determine the transaction price of the contract;
• Allocate the transaction price to each of the separate performance obligations, and;
• Recognise the revenue as each performance obligation is satisfied.
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 2019
Revenue is recognised at an amount that reflects the consideration to which the entity expects to be
entitled in exchange for transferring goods or services to a customer (which excludes estimates of variable
consideration that are subject to constraints, such as right of return exists, trade discounts, volume rebates
and changes to the transaction price arising from modifications), net of any related sales taxes and
excluding any amounts collected on behalf of third parties. An asset (goods or services) is transferred
when or as the customer obtains control of that asset.
A performance obligation is satisfied and revenue recognized when control of the promise good or service
is transferred to the customer. A customer obtains control of a good or service if it has the ability to direct
the use of and obtain substantially all the remaining benefits from the good or service.
The Group evaluates the transfer of control primarily from the customer’s perspective, which reduces the
risk that revenue is recognized for activities that do not transfer control of a good or service to the
customer.
The Group recognises revenue at the point in time that control of the license is transferred to the customer.
This occurs when a customer is able to use and benefit from the license but not before the beginning of
the stated license period.
One consideration in the recognition of revenue in the software industry is the use of temporary keys that
can be turned off by the licensor automatically if the license expires or the customer does not make
payments as required. The Company generally recognise revenue on the provision of a temporary key as
long as this is customary, and it is not used only for demonstration or trial purposes and the customer has
control of the software. The Company does make use of temporary keys; however, control passes to the
customer when they obtain the temporary key and therefore revenue is recognised at this point.
Temporary keys are used generally by the Company and not just for the provision of a trial or
demonstrations.
Revenue is recognised for the major business activities as follows:
(i) Software license 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.
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 End
User License Agreement (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.
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 2019
(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 control of the goods to the customer.
(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.
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
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 2019
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 the new and revised standars has resulted to the following changes Group’s accounting
policies:
(a) AASB 15 – Revenue from Contracts with Customers
The Group has adopted AASB 15 Revenue from Contracts with Customers from 1 July 2018 which
resulted in changes in accounting policies and revenue recognition process. Previous revenue
recognition policy states that 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 revenue streams. In the current revenue recognition policy, the Group now
applies the new five-step model to account for revenue arising from contracts with customers before
revenue can be recognised as disclosed in Note 1(r). This accounting policy change does not result to
changes in the amounts recognised and disclosed in the financial statements as the previous accounting
treatment for deferred revenue component of multi-year license contracts and the new revenue standard
is not materially different.
(b) AASB 9 – Financial Instruments
AASB 9 replaces the provisions of AASB 139 that relate to the recognition, classification and
measurement of financial assets and financial liabilities, derecognition of financial instruments, and
impairment of financial assets. The adoption of AASB 9 Financial Instruments from 1 July 2018 resulted
in changes in accounting policies and adjustments to the amounts recognised for the loss allowance in
the financial statements. The new accounting policies are set out in Note 1(h).
The Group was required to revise its impairment methodology under AASB 9 for trade receivables. The
Group applied the simplified approach to measuring ECL which uses a lifetime expected loss allowance
for all trade receivables as the assets does not contain significant financing component. This resulted in
the recognition of bad debts for trade receivables by $1,168,022 in the current period (Note 9).
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 2019
Certain new accounting standards and interpretations have been published that are not mandatory for 30
June 2019 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 16 - Leases
1 January 2019
30 June 2020
The Group’s assessment of the impact of this new standard and interpretation is set out below:
(i)
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 $12,769,839, see
Note 21. Of these commitments, approximately $35,000 relate to short-term leases and $4,400
to low value leases which will both be recognised on a straight-line basis as expense in profit or
loss. Some of the commitments may be covered by the exception for short-term and low-value
leases.
For the remaining lease commitments, the Group expects to recognise right-of-use assets of
approximately $10.3M on 1 July 2019, lease liabilities of $10.6M (after adjustments for
prepayments and accrued lease payments recognised as at 30 June 2019) and deferred tax
assets of $90,000. Overall net assets will be approximately $210,000 lower, and net current
assets will be $2.9M lower due to the presentation of a portion of the liability as a current liability.
The Group expects that net profit after tax will decrease by approximately $90,000 for FY2020 as
a result of adopting the new rules. Adjusted EBITDA is expected to increase by approximately
$3.8M, as the operating lease payments were included in EBITDA, but the amortisation of the
right-of-use assets and interest on the lease liability are excluded from this measure.
Operating cash flows will increase and financing cash flows decrease by approximately $3.5M as
repayment of the principal portion of the lease liabilities will be classified as cash flows from
financing activities.
x. Parent entity financial information
The financial information for the parent entity, Nuix Pty Ltd, disclosed in Note 25 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.
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 2019
(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
(2018: 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.
y. 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 35 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2019
(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 2019, the carrying amount of intangible assets was $167,566,178 (2018:
$75,680,533). The 30 June 2019 carrying amount is inclusive of intangible assets aquired from FTI’s
Ringtail assets (Note 26) amounting to $65,340,596 broken down as follows:
Intellectual property
Goodwill
Brand
Less: Accumulated amortisation
2018
$
65,045,044
5,004,098
712,276
(5,420,822)
65,340,596
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.
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 2019
The Group’s exposure to foreign currency risk at the end of the reporting period, expressed in Australian
dollars, was as follows:
2019
2018
USD
EURO
GBP
USD
EURO
GBP
Cash and cash
equivalents
21,663,337
2,742,221
2,095,050
8,405,412 3,675,672 3,291,501
Trade receivables
18,863,642
3,456,957
5,150,855 18,206,379 2,308,150 2,194,531
Trade payables
3,294,431
224,980
741,500
2,073,460
34,970
496,810
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 $366,700/
($366,700) for the fiscal year ended 30 June 2019 (2018: $348,642 / [$348,642])
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 2019, trade receivables of $4,444,617 (2018: $2,867,387) 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
2019
$
2,960,025
222,702
1,261,890
4,444,617
2018
$
2,103,303
521,004
243,080
2,867,387
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.
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 2019
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 $27,331,898
(2018: $26,998,317) 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 2019 Orders backlog was $21,110,232 (2018: $6,404,691).
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.
CONTRACTUAL MATURITIES OF
FINANCIAL LIABILITIES
LESS THAN
6 MONTHS
6-12
MONTHS
BETWEEN
1-3 YEARS
$
$
$
CARRYING
AMOUNT
LIABILITIES
At 30 June 2018
Trade payables
Borrowings
At 30 June 2019
Trade payables
Borrowings
3,800,099
-
3,800,099
5,519,328
-
-
-
-
-
-
-
3,800,099
20,000,000
20,000,000
20,000,000
23,800,099
-
5,519,328
25,681,820
25,681,820
5,519,328
-
25,681,820
31,201,148
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 9 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.
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 2019
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.
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
2019
$
2018
$
149,818
1,167,751
894,918
743,115
Realised and unrealised foreign exchange (gain)
(1,023,487)
(407,340)
Expenses (included in General and administration)
Bad Debt Expense
Rental expense on operating leases
Amortisation of intangible assets
Depreciation
5. SALES
Software
Services
Hardware
1,168,022
493,061
3,614,465
2,820,209
17,140,718
8,743,596
1,537,693
2,221,279
2019
$
2018
$
141,160,898
112,750,593
8,479,982
6,414,473
480,018
953,570
150,120,898
120,118,636
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 2019
6. OTHER INCOME
Government grant income
Bank interest
a. Government grants
NOTES
(a)
2019
$
2018
$
890,285
761,125
69,750 2,024
960,035
763,149
Government grants recognised as other income for the current financial year relates to research and
development activities.
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
2019
$
2018
$
10,396,013
2,523,030
10,396,013
2,523,030
(1,491,661)
(2,298,443)
(3,790,104)
300,253
(151,781)
148,472
6,605,909
2,671,502
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 2019
(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% (2018: 30%)
Tax effect of amounts which are not deductible (taxable) in
calculating taxable income:
Entertainment
Share-based payments
Interest expense
Foreign exchange gains and loss
Difference in overseas tax rates
Research and development
Other
Income tax expense
Deferred tax balances
(i) Deferred tax assets
The balance comprises temporary differences attributable to:
Employee benefits
Research and development
Others
Total deferred tax assets
(ii) Deferred tax liabilities
The balance comprises temporary differences attributable to:
Intellectual property
Research and development
Employee benefits
Deferred revenue
Other
Total deferred tax liabilities
2019
$
2018
$
21,291,839
13,661,014
6,387,552
4,098,304
94,064
80,143
38,392
350,325
65,254
184,264
(237,816)
(476,485)
(828,098)
(1,167,477)
1,284,863
(169,525)
(198,302)
(228,047)
6,605,909
2,671,502
2019
$
2018
$
386,937
309,854
404,955
1,913,376
(126,160)
(65,837)
665,732
2,157,393
2019
$
2018
$
28,197,664
22,640,833
(20,649,819)
(16,740,530)
(423,242)
(330,343)
(481,735)
(304,311)
788,097
(133,127)
7,430,965
5,132,522
All movements in the deferred tax assets and deferred tax liabilities were recognised in profit and loss.
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 2019
8. CASH AND CASH EQUIVALENTS
This account consists of cash in bank amounting to $27,331,898 (2018: $26,998,317). 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
2019
$
2018
$
Trade receivables
31,719,762
26,970,220
Provision for impairment of trade receivables
(a)
(456,202)
-
Unbilled revenue
Total trade and other receivables
13,636,883
7,281,643
44,900,443
34,251,863
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
AASB 9 introduced a new impairment model which is the new expected credit loss (ECL) model which
involves a three-stage approach whereby financial assets move through the three stages as their credit
quality changes. The stage dictates how an entity measures impairment loss and applies the effective
interest rate method. A simplified approach is permitted for financial assets that do not have a significant
financing component (eg trade receivables). On initial recognition, entities will record a day-1 loss equal
to the 12-month ECL (or lifetime ECL for trade receivables), unless the assets are considered credit
impaired.
The Group applied the simplified approach to measuring ECL which uses a lifetime expected loss
allowance for all trade receivables as the assets does not contain significant financing component. A
provision for impairment is recognised before the credit loss is incurred based on the relevant loss rates
applied to outstanding balances of trade receivables. These amounts have been included in the general
and administration expenses. The amount of the provision was $456,202 (2018: nil). The individually
impaired receivables mainly relate to smaller clients who experienced financial distress. During 30 June
2019, $711,820 (2018: $564,704) 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
2019
$
2018
$
29,545,024
26,206,136
630,180
1,544,558
521,004
243,080
31,719,762
26,970,220
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 2019
Movements in receivables provision:
As at 1 July
Provision for impairment recognised
Receivables written off as uncollectable
As at 30 June
2019
$
2018
$
-
71,643
1,168,022
493,061
(711,820)
(564,704)
456,202
-
Amounts charged to the allowance account are generally written off when there is no expectation of
recovering additional cash.
a. 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).
b. 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
2019
$
2018
$
(a)
9,064,528
1,583,882
251,852
185,227
9,316,380
1,769,109
(a) FY2019 balance is inclusive of Ringtail data centre amounting to US$7,450,000.
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 2019
11. PROPERTY AND EQUIPMENT
OFFICE &
COMPUTER
EQUIPMENT
FURNITURE
LEASEHOLD
& FIXTURE
IMPROVEMENT
TOTAL
At 1 July 2017
At cost
7,798,158
462,548
2,107,254
10,367,960
Accumulated depreciation
(5,595,689)
(233,059)
(1,498,933)
(7,327,681)
Net book amount
2,202,469
229,489
608,321
3,040,279
Year ended 30 June 2018
Opening net book amount
Forex difference – cost
Forex difference – accumulated
depreciation
Additions
Write off – cost
Write off – accumulated depreciation
2,202,469
229,489
608,321
3,040,279
259,608
14,804
46,466
320,878
(250,106)
1,018,232
-
-
(12,392)
558,555
(15,819)
11,073
(41,774)
607,185
(3,531)
3,531
(304,272)
2,183,972
(19,350)
14,604
Depreciation
(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
9,075,998
1,020,088
2,757,374
12,853,460
Accumulated depreciation
(7,472,785)
(364,801)
(2,001,042)
(9,838,628)
Net book amount
1,603,213
655,287
756,332
3,014,832
Year ended 30 June 2019
Opening net book amount
Forex difference – cost
Forex difference – accumulated
depreciation
Additions
Disposals
Depreciation
1,603,213
355,715
655,287
51,538
(318,901)
(19,175)
373,437
-
9,976
(2,579)
756,332
75,261
(52,729)
518,410
-
3,014,832
482,514
(390,805)
1,551,525
(2,579)
(1,123,730)
(205,905)
(208,059)
(1,537,694)
Closing net book amount
889,734
489,142
1,089,215
3,117,793
At 30 June 2019
At cost
9,805,150
1,079,023
3,351,045
14,884,920
Accumulated depreciation
(8,915,416)
(589,881)
(2,261,830)
(11,767,127)
Net book amount
889,734
489,142
1,089,215
3,117,793
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 2019
12. INTANGIBLE ASSETS
GOODWILL SOFTWARE
INTELLECTUAL
PROPERTY
BRAND
TOTAL
At 30 June 2018
At cost
Accumulated amortisation
Net book amount
Year ended 30 June 2019
Opening net book amount
Forex difference – cost
Forex difference – accumulated
amortisation & impairment
-
-
-
-
-
-
1,748,628
95,637,385
(1,573,346)
(20,132,134)
175,282
75,505,251
175,282
75,505,251
61,008
2,880
(59,248)
(113,511)
-
-
-
-
-
-
97,386,013
(21,705,480)
75,680,533
75,680,533
63,888
(172,759)
Additions
Amortisation
5,004,098
301,067
103,117,793
712,276
109,135,233
-
(251,160)
(16,889,559)
-
(17,140,718)
Closing net book amount
5,004,098
226,949
161,622,855
712,276
167,566,178
At 30 June 2019
At cost
Accumulated amortisation &
impairment
5,004,098
2,110,703
198,758,058
712,276
206,585,135
-
(1,883,754)
(37,135,203)
-
(39,018,957)
Net book amount
5,004,098
226,949
161,622,855
712,276
167,566,178
Impairment test for Goodwill and Brand (intangible assets with indefinite useful life)
The Group acquired Goodwill as part of the acquisition of Ringtail in September 2018 (see Note 26). The
Group tests whether goodwill has suffered any impairment this fiscal year ended June 30, 2019. The
recoverable amount of the CGU was determined based on value-in-use calculations which require the
use of assumptions. The calculations use cash flow projections based on financial budget approved by
management and extrapolated using the estimated growth rates stated below covering a five-year period.
These growth rates are a combination of historical data and forecast of the CGU.
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 2019
Assumptions used in determining the value in use:
Assumption
Approach used in determining values
Revenue growth rate
Operating expenditures rate
EBITDA margin
Net profit before tax
Depreciation and amortisation
Income tax expense
Working capital
Capital expenditures
Average annual growth rate over the five-year forecast period; based on past
performance and management’s expectations of market development.
Average percentage based on sales over the five-year forecast period; based
on past performance and management’s expectation of market development.
Historical average effective income tax rate
Average historical rates based on revenue and operating expenses
Expected cash costs in the CGU. This is based on the historical experience
of management, and the planned refurbishment expenditure. No incremental
revenue or cost savings are assumed in the value-in-use model as a result of
this expenditure.
13. TRADE AND OTHER PAYABLES
Sundry payables and accrued expenses
Trade payables
Payroll tax and other statutory liabilities
Total trade and other payables
2019
$
5,858,936
5,519,328
3,261,031
2018
$
5,060,809
3,800,099
10,782,074
14,639,295
19,642,982
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
2019
$
5,839,186
997,220
4,676,114
460,849
2018
$
5,722,660
191,009
3,302,383
419,205
11,973,369
9,635,257
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 2019
15. PROVISIONS
Current
Annual leave
Long service leave
Non-current
Long service leave
Make good obligation
2019
$
2018
$
3,093,508
167,604
3,261,112
241,525
301,866
543,391
2,476,241
140,263
2,616,504
230,255
296,259
526,514
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
2019
$
2018
$
(a)
25,681,820 20,000,000
Nuix Pty Ltd utilised the cash facility of $25,681,820 out of $30,000,000 ($20M AUD and $7.5M USD).
The financing is provided by Commonwealth Bank of Australia (CBA) 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 2019 was $4,000,000 USD (2018: $5,000,000 AUD).
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 2019
17. ISSUED CAPITAL
265,400,633 (2018: 217,390,649) fully paid
ordinary shares
(a)
104,227,205
17,809,218
NOTE
2019
$
2018
$
The issued shares do not carry a par value.
Movements in issued capital
Balance as at 1 July 2017
Shares issued during 2018
Balance as at 30 June 2018
Shares issued during 2019
Balance as at 30 June 2019
*weighted average price
NUMBER
#
ISSUE PRICE*
$
AMOUNT
$
212,389,650
5,000,999
217,390,649
48,009,984
265,400,633
1.80
1.80
8,801,888
9,007,330
17,809,218
86,417,987
104,227,205
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 48 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2019
b. Movement in reserves
Share option reserve
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 Reserves
c. Retained earnings
Retained earnings
Net profit for the year
Total retained earnings
19. DIVIDENDS
2019
$
2018
$
4,687,530
149,818
4,837,348
3,511,320
1,176,210
4,687,530
(6,176,255)
-
(6,176,255)
-
(6,176,255)
(6,176,255)
2,187,902
1,776,047
3,963,949
1,811,947
375,955
2,187,902
2,625,042
699,177
2019
$
2018
$
66,864,790
55,875,278
14,685,930
10,989,512
81,550,720
66,864,790
During the year the Directors did not declare an interim dividend (2018: Nil) and have not recommended
a final dividend be paid after 30 June 2019 (2018: Nil). Franking credits arising from the payment of
income tax, by the parent entity, Nuix Pty Ltd, during the years ended 30 June 2019 and 30 June 2018
are represented below.
Franking credits
Franking Credits Attributable To Parent Entity
Franking credits available for subsequent financial
years based on a tax rate of 30% (2018: 30%)
Parent Entity
2019
$
2018
$
668,772
668,772
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 2019
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 (2018: Nil), and,
franking credits that will arise from the receipt of dividends recognised as receivables at the
reporting date (2018: 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 North America Inc.
Nuix Technology UK Ltd
Nuix Philippines Regional Operating Headquarters
Nuix Ireland Ltd
20. AUDITORS’ REMUNERATION
PricewaterhouseCoopers Australia
Audit and other assurance
Other assurance
Total for audit and other assurance
Taxation services
Total for taxation services
Total for PricewaterhouseCoopers Australia
2019
$
2018
$
228,584
87,363
8,846
-
245,032
-
3,790
10,684
324,793
259,506
2019
$
2018
$
279,800
405,200
685,000
14,000
14,000
699,000
225,000
27,000
252,000
14,000
14,000
266,000
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. 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.
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 2019
Commitments in relation to finance leases are payable as indicated in the table below.
Within one year
Later than one year but not later than five years
Later than five years
Minimum lease payments
22. RELATED PARTY DISCLOSURES
a. Parent entity
2019
$
2018
$
3,697,060
2,689,960
5,624,911
5,929,130
3,447,868
3,826,660
12,769,839
12,445,750
The parent entity within the Group is Nuix Pty Ltd. The ultimate parent entity is Macquarie Group Limited.
b. Interests in other entities
Place of
business/
country of
incorporation
Ownership
interest held by
the Group
Ownership
interest held by
non-controlling
interests
Principal
activities
Name of entity
2019
2018
2019
2018
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
c. Transactions with other related parties
The parent entity enters into commercial arm’s length distribution and reseller agreements between the
Group subsidiaries and other Macquarie Group Limited’s related parties. These agreements are entered
into on normal and commercial terms.
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 2019
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 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
2019
$
2018
$
(1,060,061)
91,668
(2,458,958)
(1,194,437)
22,646
42,708
(3,496,373)
(1,060,061)
3,828,155
14,518,389
341,092
-
-
(11,041,276)
94,733
351,042
4,263,980
3,828,155
1,881,927
1,375,892
2,136,311
417,937
-
88,098
73,004
1,881,927
Loan to / (from) Nuix Regional Operating Headquarters to Parent
Balance at 1 July
Loans advanced
Interest charged
Balance as 30 June
Loan to / (from) Parent to Nuix USA**
Balance at 1 July
Loans advanced
Interest charged
Balance as 30 June
(75,203)
(102,981)
367,008
18,573
310,378
14,178
13,600
(75,203)
7,125,410
12,527,654
(12,440,596)
19,784,307
144,477
(218,301)
5,546,721
7,125,410
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 2019
d. Loans to / from related parties (continued)
2019
$
2018
$
(893,454)
(13,709,030)
-
12,546,897
(4,319,458)
90,718
268,679
(5,122,194)
(893,454)
144,404
237,191
(234,236)
8,116
(81,716)
-
2,144,557
3,761
2,148,318
(82,354)
10,433
144,404
-
-
-
-
Loan from Parent to Nuix Ireland Ltd
Balance at 1 July
Loans advanced
Payments received
Interest charged
Balance as 30 June
Loan (from) / to Nuix Singapore to Parent
Balance at 1 July
Loans advanced
Interest charged
Balance as 30 June
Loan from Parent to Nuix UK*
Balance at 1 July
Loans advanced
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)
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.
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
PAGE 53 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2019
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
2019
2018
$
#
$
#
0.81
2.40
-
-
1.46
1.33
0.01
42,597,100
0.72
52,591,250
20,936,900
2.30
1,530,000
-
-
(4,007,450)
59,526,550
0.12
(3,959,150)
-
-
0.80
(7,565,000)
0.81
42,597,100
15,368,900
0.01
15,368,900
PAGE 54 of 63
Nuix Pty Ltd and Controlled Entities Annual Report
Notes to the Consolidated Financial Statements
(continued)
For the year ended 30 June 2019
Share Options outstanding at the end of the year have the following expiry date and exercise prices
Grant Date
FYE 2006
FYE 2007
FYE 2008
FYE 2009
FYE 2010
FYE 2011
FYE 2012
FYE 2013
FYE 2014
FYE 2015
FYE 2016
FYE 2017
FYE 2018
FYE 2019
Total
Last Exercise
Date
Weighted Average
Exercise Price
Share Options
Share Options
(Post Split)
(Post Split)
30 June 2019
30 June 2018
LE
< APR15
< MAR16
< MAR17
LE
LE &