NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023
i
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 NUIX CREATES
INNOVATIVE SOFTWARE
THAT EMPOWERS
ORGANISATIONS TO
SIMPLY AND QUICKLY
FIND THE TRUTH
FROM DATA IN A
DIGITAL WORLD.
ii
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 NUIX IS A LEADING PROVIDER OF
INVESTIGATIVE ANALYTICS AND
INTELLIGENCE SOFTWARE, THAT
EMPOWERS CUSTOMERS TO BE
A FORCE FOR GOOD BY FINDING
TRUTH IN THE DIGITAL WORLD.
Our customers rely on Nuix software
to assist with challenges as diverse as
criminal investigations, data privacy,
eDiscovery, regulatory compliance
and insider threats.
CONTENTS
Performance Highlights
Vision and Values
Chairman’s Letter
CEO’s Review
Sustainability Report
Board of Directors
Directors’, Remuneration and Financial Reports
Directors’ Report
Auditor’s Independence Declaration
Remuneration Report – Audited
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
Corporate Directory
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8
10
12
14
26
28
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39
40
62
67
112
113
121
125
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NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 NUIX IN
NUMBERS
20+
YEARS OF
EXPERIENCE
1,000+
FILE TYPES THAT CAN BE PROCESSED
BY THE NUIX ENGINE
~1,000
CUSTOMERS
GLOBAL LEADERS
IN GOVERNMENT
AGENCIES, LAW FIRMS,
CORPORATES AND
ADVISORIES
100+
PARTNERS
WHO ENABLE OUR
TECHNOLOGIES
AND EXTEND
OUR REACH
EMPLOYEES 11 KEY LOCATIONS
400+
WE OPERATE GLOBALLY WITH OUR EXPERTS
ON THE GROUND ACROSS NORTH AMERICA,
EMEA AND ASIA PACIFIC
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F
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023
OUR UNPARALLELED ENGINE
FINDS THE
TRUTH IN DATA
WE HELP CUSTOMERS COLLECT, PROCESS AND REVIEW
MASSIVE AMOUNTS OF STRUCTURED AND UNSTRUCTURED
DATA, MAKING IT SEARCHABLE AND ACTIONABLE AT
SCALE AND SPEED, WITH FORENSIC ACCURACY
WE HELP OUR
CUSTOMERS ...
PROTECT
PERSONAL DATA
DETECT INSIDER
THREATS
ACHIEVE
COMPLIANCE
UNCOVER
FRAUD
MANAGE COMPLEX
LEGAL CASES
HUNT
CYBER-THREATS
CATCH
CRIMINALS
3
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 2023 FINANCIAL HIGHLIGHTS
A SIGNIFICANT
TRANSFORMATION IS
UNDERWAY AT NUIX, IN TERMS
OF OUR CUSTOMER OFFERING
AND OUR BUSINESS APPROACH.
– Jonathan Rubinsztein
Group CEO
4
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 ANNUALISED CONTRACT VALUE (ACV)
STATUTORY REVENUE
$185.5m
$182.5m
UP 14.5% ON FY22
UP 19.8% ON FY22
STATUTORY EBITDA
NET CASH
$34.9m
UP 189.2% ON FY22
$29.6m
DOWN FROM $46.8M IN FY22
CUSTOMER CHURN
5.3%
DOWN FROM 5.4% IN FY22
NET DOLLAR RETENTION (NDR)
109.2%
UP FROM 96.8% IN FY22
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NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 6
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 Held in Sydney, London and Washington DC, our XLR8/23 conferences
provided a valuable opportunity for us to reconnect post-pandemic with our
valued customers and partners and showcase our solutions and innovation.
The events included speakers from the government, corporates and leading law
firms and culminated with Awards dinners.
3
COUNTRIES
1,000
ATTENDEES
18
SPONSORS
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NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023
VISION + VALUES
TO BE A FORCE FOR GOOD BY FINDING
TRUTH IN THE DIGITAL WORLD
TAKE OWNERSHIP –
AND FOLLOW UP
RESILIENT –
WE LEARN FROM THE PAST AND ARE OPTIMISTIC
ABOUT TOMORROW
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NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023TRUTH WE HAVE FIVE CORE VALUES
THAT GUIDE US AT NUIX.
THEY’RE OUR TRUTH, AND
THEY UNDERPIN EVERYTHING
WE STAND FOR.
UNAFRAID –
TO DO THE
RIGHT THING, QUICKLY
TEAM NUIX –
FIRST AND
FOREMOST
HERO OUR CUSTOMERS –
AND INNOVATE
FOR THEM
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NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023TRUTH CHAIRMAN’S
LETTER
Nuix delivered momentum
in critical financial metrics
in FY23 along with
important development
milestones.
For more than two decades Nuix has been changing and adapting to
a rapidly evolving landscape. From its small beginnings in Canberra,
Australia, in the early 2000s, Nuix has become the global leader
in making structured and unstructured data sets searchable. The
company has expanded to having a global footprint, with around
85% of Annualised Contract Value (ACV) derived from jurisdictions
outside Australia. Over time, Nuix has built up an extraordinarily loyal
and diversified customer base, with almost 40% of customers by ACV
having a tenure of more than 10 years.
And yet even in the context of Nuix’s history of embracing development
and adaptation, FY23 was a particularly pronounced year for
change at Nuix. Across strategy, Board and leadership, research
and development and sustainability, the Company made meaningful
strides towards a broad range of goals.
Progress towards these goals was evident in the FY23
Financial Results.
Annualised Contract Value rose by 14.5% on the previous year, to
$185.5 million and Statutory Revenue rose by 19.8% to $182.5 million.
The increase in revenue and general cost containment led to a
significant increase in EBITDA, up 189.2% to $34.9 million.
Net Dollar Retention (NDR), an important indicator of how much we are
selling to existing customers, rose significantly to 109.2% compared to
96.8% in the prior period. Churn remained stable, at 5.3%, compared
to 5.4% in the prior year.
STRATEGY ENDORSEMENT AND LOOKING TO THE FUTURE
With our senior leadership team now fully in place, the strategy refresh
work being undertaken has developed further momentum, and has
been the impetus for tangible financial and non-financial outcomes.
The team made good progress on near-term initiatives and
enablers over the course of the year, putting in place more robust
and sophisticated business practices, driving financial benefits in
FY23 and providing the foundation for future growth.
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The continued research and development investment the Company
has made means that Nuix’s unified platform, Nuix Neo, is ready
for release in 1Q24, providing a fundamental shift in the way our
customers utilise our offering. The planned rollout of specific use-case
solutions in FY24 associated with Nuix Neo was made possible by work
done during FY23.
We saw tangible evidence of the excitement that Nuix’s development
program has generated across the customer base through the series of
XLR8 events in March and April of 2023. Held in Sydney, London and
Washington DC, these events gave Nuix an opportunity to reconnect
with customers and other important industry participants post-
pandemic. It was a pleasure to be able to experience first-hand some of
the excitement of the XLR8 events and also to have the opportunity to
speak with many of our customers directly about their experiences and
Nuix’s growth path.
LITIGATION UPDATE
In September 2022, Nuix notified shareholders that ASIC had
commenced civil proceedings in the Federal Court against Nuix and
its then Directors during the period 18 January 2021 to 21 April 2021.
ASIC alleges that aspects of the Company’s market disclosure in that
period contravened provisions of the Corporations Act and ASIC Act
and that the relevant Directors breached their duties in respect of that
disclosure.
Nuix denies the allegations made against it and the allegations made
against the Director respondents. Nuix has fully cooperated with ASIC
during the course of its investigation. The case is scheduled to be
heard in November 2023 and Nuix is defending the proceedings.
In February 2023, the Federal Court delivered its judgement in relation
to the proceedings brought by a former CEO, Mr Edward Sheehy.
Nuix successfully defended these proceedings, with the Federal Court
dismissing Mr Sheehy’s claims. In March, Mr Sheehy lodged a Notice
of Appeal in respect to certain aspects of that decision.
Subsequent to the year end, in August 2023, Nuix resolved
proceedings with Mr Sheehy on the basis that the appeal be dismissed,
Mr Sheehy’s share options in Nuix be cancelled, and that Mr Sheehy
would make a contribution towards Nuix’s legal costs associated with
the proceedings. The resolution reached brings this matter to a close.
OUR PEOPLE AND THE COMMUNITY
Nuix’s vision is to be a force for good by finding truth in the digital
world. In line with being a force for good, it is important that Nuix
continues to evolve as an organisation that grows in a responsible and
sustainable way. This responsibility extends to areas including our
environmental footprint, our governance and risk management, and
our talented people.
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 Across the organisation, we remain focused on minimising our
environmental footprint. During the year we undertook work to
measure our Scope 1 and 2 emissions for the first time, providing
a FY22 baseline to measure our progress.
Using this FY22 baseline, we then extended our measurement into
FY23. As a first step on our decarbonisation pathway, Nuix has fully
offset all Scope 1 and 2 emissions for FY23. Initiatives to reduce our
overall emissions levels are underway and we intend to continue to
report on our progress.
Separately, we will continue to prioritise working with suppliers such as
data centres that have strong environmental credentials.
Data privacy and security has rapidly become one of the most pressing
issues facing organisations – and given the nature of its operations, this
is a particularly important focus area for Nuix.
Nuix utilises sophisticated cyber security practices as part of its
technology. In 2023 Nuix’s Information Security Management program
underwent a broad ranging security reassessment process as part of
our commitment to the highest standards around data protection.
The Board remains committed to the highest standards of corporate
governance and we recognise that this is important to all our
stakeholders. The Board regularly reviews governance and risk
management frameworks to ensure that they promote sustainable,
ethical and socially responsible business practices.
The ability to deliver for our customers is underpinned by our highly
talented team. During the year, every employee was invited to put
forward ideas on how to refresh Nuix’s values and culture, culminating
in the development of our new values, called our TRUTH.
A critical factor in Nuix’s success is our commitment to diversity, equity
and inclusion. The Board is committed to increasing the diversity
of employees in our workforce, and pursues this through initiatives
including recruitment and onboarding practices, in addition to training
and development opportunities. We recognise the importance of the
health, wellbeing and development of our staff members, along with
flexibility and learning and development opportunities.
BOARD EVOLUTION
During the year the Nuix Board took further steps in its evolution.
As part of Nuix’s transition to the next chapter of its Board and
management team, Dan Phillips, a Macquarie Group nominee, stepped
down from the Nuix Board in August 2022, further facilitating the build
out of an independent Board.
In January 2023, we welcomed Alan Cameron AO and Sara Watts to
the Board.
Alan is a respected company Director and lawyer, with experience
across a broad range of legal, corporate and regulatory roles. On his
commencement with the Board, Alan joined the Remuneration and
Nominations Committee.
ROBERT
MACTIER
Sara is an experienced Non-Executive Director and Audit and Risk
Committee Chair with significant financial and operational acumen,
bringing an international perspective and technology transformation
experience. On joining the Board, Sara assumed the Chair of Nuix’s
Audit and Risk Committee.
The appointments of Alan and Sara are important steps in continuing to
strengthen the diversity of skills and experience across the Nuix Board.
At last year’s Annual General Meeting, Jeff Bleich announced that he
would rotate out of the Chairman role, while continuing to serve on the
Board as Deputy Chairman and a Non-Executive Director. I thank Jeff
for his unstinting devotion to the leadership of the Nuix Board during
the period since IPO and also for his continuing and valued contribution
as Deputy Chair. Jeff’s perspective and on-ground presence in our
largest market, the USA, is of great benefit to Nuix.
In February 2023, I was elected Chairman of the Nuix Board. When
I joined the Board in October 2021 I had a belief that underneath all
the noise there was an exciting world leading technology, an amazing
customer set and a very talented band of Nuix team members that
would deliver value for our shareholders. My conviction in these
attributes of Nuix is undiminished. As I’ve had a chance to settle into
the role, it’s been a privilege to become more involved with a range
of Nuix’s stakeholder groups, including investors and our talented
people. I look forward to playing an active role as Nuix continues on
its evolution pathway.
On behalf of the Board, I would like to thank all Nuix team members
for their hard work and resilience this year. Our people are critical in
delivering on our vision and objectives. The hard work of our people
has been reflected in the momentum in our financial results and
development progress.
I also extend my thanks to our loyal customer base and shareholders
for your continued support, as well as my fellow Board members.
Our commitment to Nuix’s strategic vision and the success of our
Company is unwavering. We look forward to continuing the momentum
and delivering for our stakeholders.
Robert Mactier
Non-Executive Chairman
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NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 CEO’S
REVIEW
Our people have risen to
the challenge, delivering
very significant projects
while at the same time
also driving a material
step change in our
financial results.
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FY23 was a year of change and growth. Important advancements were
made on the three horizon strategy that we articulated for the business
in the prior year, resulting in momentum in key metrics across the
business. As part of our approach, we continued to focus on driving a
strengthened corporate culture across our organisation, with meaningful
impacts for all our stakeholders, and in particular, our people.
LIVING OUR TRUTH
At the beginning of the year, we revisited the idea of what kind of
organisation we want Nuix to be. This dialogue culminated in the
development of our corporate values, which collectively became our
TRUTH . These values have helped to define and shape us over the
course of the year and have become an important part of the Nuix
identity. These values are in the process of being embedded into all
our people practices.
Feedback and dialogue across our business is critical in strengthening
our corporate culture. As part of driving change, we looked at ways to
improve two-way communication, resulting in new communication
channels, engagement surveys and staff forums. The ongoing feedback
we receive through these initiatives is incredibly valuable in helping to
mould our organisation.
We are already shaping and transforming our Nuix culture together.
This work will continue into the coming years. I am excited about the
initiatives proposed by our People and Culture team for FY24 and
beyond.
BUSINESS PERFORMANCE
Annualised Contract Value (ACV) at 30 June 2023 was $185.5 million,
up 14.5% on the same time a year earlier. ACV growth was
underpinned by stronger net upsell to existing customers, driven by
strategic initiatives implemented during the year. ACV growth was
also driven by New Business, with ACV from new customers rising to
$6.5 million in FY23, up from $5.4 million in the prior year. All three
operating regions, namely North America, EMEA and Asia Pacific,
recorded double digit ACV growth.
Subscription ACV, which is an important indicator of the recurring
proportion of our ACV, rose 14.4% on the previous corresponding
period, representing 92% of Total ACV. Other ACV, which is not
included in Subscription ACV, also rose because of stronger sales of
Perpetual licences to US Government.
As we’ve highlighted previously, Nuix’s Statutory Revenue can be
variable due to the accounting treatment of multi-year deals. Revenue
rose by 19.8% on the prior year, to $182.5 million. It is worth noting
that this strong uplift in revenue occurred despite the moderation of
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 JONATHAN
RUBINSZTEIN
multi-year deals, from 40% in the prior year, to 30% this year. A falling
multi-year deal experience is a headwind in a Statutory Revenue
framework, and importantly this year’s outcome was achieved
despite this headwind. Subscription Revenue, the generally recurring
component of our revenue stream, was 94% of total revenue.
Nuix’s Net Dollar Retention (NDR) is an important metric because
it provides an indicator of how much we’re selling to our existing
customer base. The NDR outcome for FY23, at 109.2%, was a marked
improvement from the same time 12 months earlier. Importantly, this
was achieved while churn remained stable, at 5.3% for the full year.
During the year we maintained our commitment to Research and
Development, with total investment up slightly on the prior year, to
$60.0 million. FY23 was an important year for the development of
Nuix Neo and related solutions, which is reflected in our overall spend.
EBITDA rose by 189.2%, to $34.9 million, on both revenue growth and
general cost containment.
In terms of free cash flow, we articulated an aim to be Underlying Cash
Flow Neutral for the year; that is, cash flow neutral excluding costs
associated with the Topos acquisition and non-operational legal costs.
Given the particular strength we saw come through in the second half,
we were able to exceed this target, with a positive underlying free cash
flow of $9.1 million, compared to -$2.5 million in the prior year.
STRATEGIC REFRESH DRIVING FINANCIAL RESULTS
The strategic refresh agenda that we initiated to drive growth was built
upon a greater focus on customer centricity and structured around
three horizons. I’m pleased to report that very significant progress was
made on projects across all three horizons during FY23.
As a quick reminder, Horizon 1 was the near-term focus, providing
momentum to restart growth and to provide a solid foundation for our
medium- and long-term growth strategies. We made a strategic decision to
focus heavily on renewals and our installed customer base over the course
of the year resulting in significant improvements in our financial metrics.
By the end of the financial year we had achieved our near-term
goals in relation to the new price book, improved renewal process,
organisational restructure and the build out of the marketing function.
In addition, we were close to completion on our projects involving sales
enablement optimisation and performance and reward alignment.
Further, we made important progress on putting the right structural
elements in place to support our strategic initiatives. We reworked
performance and reward alignment across the organisation and
advanced our Licence Modernisation project, which is simplifying and
modernising our licencing framework, to incorporate solution and data
velocity in conjunction with our Nuix Neo offerings.
Our Engineering team continued to refine its project prioritisation, while
the Fit for Growth program further embedded operational efficiency
discipline, yielding tangible cost optimisation and a pivot of spend
towards areas of growth.
An enormous amount of work took place over the last year to deliver on
these Horizon 1 initiatives, the outcomes of which are evident in Nuix’s
financial results. Importantly, these initiatives now provide us with the
foundation for further growth.
Separately, Horizon 2 was focused on building out our unified platform,
which culminated in the development and launch of Nuix Neo as a
commercial, go to market, and technology pivot for platform solutions.
Nuix Neo rollout will occur in FY24.
Horizon 3 incorporated high value repeatable use cases, and new
ways to use our technologies. This was captured through the Nuix Neo
solution roadmap, beginning with our Data Privacy solution, which was
launched in July 2023.
Nuix Neo and the associated solutions are the result of an enormous
amount of work by the Nuix Team over the year. Nuix Neo and use case
solutions are a material step change in our customer offering and will
provide a key foundation for growth in coming years.
THE NUIX TEAM
I’m very proud of what the Nuix Team achieved during the year.
A significant transformation is underway at Nuix, in terms of our
customer offering and our business approach. Our people have risen
to the challenge, delivering very significant projects while at the same
time also driving a material step change in our financial results. I thank
the Nuix team for your enormous contribution over the year and look
forward to continuing on the journey together.
I also take this opportunity to thank our customers, partners and
shareholders. We value our relationships with you and look forward
to growing and evolving our partnership with you.
Jonathan Rubinsztein
Group Chief Executive Officer
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NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 SUSTAINABILITY
REPORT
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NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 COMMITTED TO
OUR PLANET
OUR PEOPLE
OUR PRINCIPLES
15
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 ENVIRONMENTAL
RESPONSIBILITY
AS A FORCE FOR
GOOD, NUIX IS
TRACKING AND
SEEKING WAYS TO
REDUCE EMISSIONS.
ENERGY CONSUMPTION AND EMISSIONS
Nuix acknowledges the goal to limit global warming to below
1.5 degrees Celsius above pre-industrial levels in accordance with the
Paris Agreement targets. In keeping with Nuix’s vision of being a force
for good, we have taken the first steps in understanding our impact on
the climate, and our role in reducing this impact.
During the year, we completed work to measure our Scope 1 and 2
emissions baseline for FY22 of 294 tonnes of CO₂-e in accordance with
the Greenhouse Gas Protocol.
With the FY22 baseline in place, we then completed work to measure
our FY23 Scope 1 and 2 emissions inventory.
Nuix’s carbon emissions and associated environmental footprint
are largely attributable to the leased buildings we occupy. While
Nuix’s operations are not highly carbon intensive, we are committed
to monitoring and reducing environmental impacts to the lowest
amount possible, and offsetting remaining amounts to maintain
carbon neutrality.
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NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023INITIATIVES TO REDUCE OUR EMISSIONS ARE UNDERWAY SUSTAINABILITY
REPORT
FY23 Scope 1 and 2 Emissions – (tCO₂-e)
Scope 1 and 2 emissions – Total and per FTE
1%
0.62
294
0.64
288
Scope 1
Scope 2
99%
FY22 (base)
FY23
Scope 1 & 2 Emissions (tCO2-e)
Emissions/FTE
Nuix’s Scope 1 and 2 emissions for FY23 were 288 tonnes of CO₂-e,
a fall of 2% on our FY22 base. This relatively flat outcome was mostly
attributable to a slightly larger office footprint and increased energy
usage as employees returned to offices after the pandemic, but offset
by better energy efficiency at our Sydney location in particular. Average
emissions intensity per employee rose marginally due to staffing
movements over the course of the year.
For Nuix, Scope 1 emissions are related to refrigerants, while Scope 2
emissions are mostly due to electricity consumption at our office
locations.
As our main direct use of energy is from our office locations, Nuix actively
seeks out energy efficient buildings. Nuix’s Sydney Headquarters is based
in an office with a 5.0-star NABERS rating for both energy and water.
As a first step on our decarbonsation pathway, Nuix has fully offset all
Scope 1 and 2 emissions for FY23. We are committed to taking real
action to reduce our emissions. Nuix commenced a process during the
year to identify specific actions and pathways that we can take to abate
our emissions, including transitioning offices to renewable energy and
giving further consideration to the efficiency of our office locations.
Initiatives to reduce our overall emissions level are underway and we
intend to continue to report on our progress.
We recognise that our climate impact goes beyond our direct emissions
and extends upstream and downstream in our value chain. As such,
to provide a more holistic view of our impact, and broaden our climate
action, we are committed to looking beyond our Scope 1 and 2
emissions strategy by, in the first instance, expanding our emissions
inventory to reflect Scope 3 emissions. From here, we plan to identify
a net zero target and decarbonisation pathway that eliminates Nuix’s
emissions across all scopes, where possible.
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NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023288tCO₂-e ENVIRONMENTAL
RESPONSIBILITY
18
OFFSETTING OUR EMISSIONS
As a first step on our decarbonisation pathway, Nuix has fully offset all Scope
1 and 2 emissions for FY23. We have purchased offsets associated with
regeneration and reforestation projects in Costa Rica and Australia involved
specifically in carbon sequestration.
The reforestation project of BaumInvest in Costa Rica combines premium quality
standards of a recognised forest carbon offset project with multiple ecological and
socio-economic benefits for local communities and the environment.
Since the start of the project in 2007, an area of 2,115ha of pastureland,
previously used for extensive cattle ranching, has been under sustainable
management. 1,280ha has been successively reforested in near natural mixed
forest plantations with mainly native tree species. In total, more than one million
trees have been planted using a variety of 17 different tree species.
By constantly monitoring biodiversity, this project has discovered that 70 new
species of amphibians and reptiles have resettled on its land. The project provides
secure, long-term employment in a rural and underdeveloped area of northern
Costa Rica.
Located in the Great Southern region of Western Australia, the Environmental
Planting and Reforestation Project was designed to be planted in narrow belts
and small blocks expressly for the purpose of carbon abatement.
Reforestation has occurred primarily on light sandy patches of land or along
denuded stream banks. As the plantings mature and forest canopy is regenerated,
a range of biodiversity co-benefits is achieved.
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023100% OF SCOPE 1 AND 2 EMISSIONS OFFSET SUSTAINABILITY
REPORT
DATA CENTRES
Nuix works with several data centre providers to operate its business/
corporate and customer services. All customer services are run on
Amazon Web Services (AWS). AWS has a goal to power operations
with 100% renewable energy by 2025.
AWS manages its environmental footprint through end-to-end
efficiency across its facilities and water stewardship program.
Surveys conducted by 451 Research showed that AWS’s infrastructure
is 3.6 times more energy efficient than the median of US enterprise
data centres surveyed. In addition, 451 Research found that AWS can
lower customers’ workload carbon footprints by nearly 80% compared
to surveyed enterprise data centres, and up to 96% once AWS is
powered entirely by renewable energy in line with its 2025 goal.1
AWS employs a number of initiatives in relation to water stewardship,
including evaporative cooling, recycling water and on-site water
treatment, and community water programs.
Nuix also utilises QTS in Ashburton, Virginia, USA and Macquarie Cloud
Services in Sydney, Australia. QTS has set key environmental goals for
all its USA facilities, including:
• Procure 100% of power from renewable energy sources by 2025;
• Pursue green building certification in 90% of QTS facilities by 2025;
• Conserve at least 15 million gallons of water each year;
• Install electric vehicle (EV) charging stations at 75% of ATS facilities
by 2025; and
• Recycle 90% of operational waste by 2025.2
E-WASTE – HARDWARE RECYCLING
Nuix recycles all unwanted or used computer equipment, avoiding this
equipment contributing to landfill. Nuix has also commenced initial
work on a program to repurpose old laptops for reuse and resale after
the secure deletion of data.
1. Sustainability in the Cloud – Amazon Sustainability (aboutamazon.com).
2. https://www.qtsdatacenters.com/why-qts/corporate-sustainability.
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NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 DATA SECURITY
AND PRIVACY
NUIX UTILISES
SOPHISTICATED
CYBER SECURITY
PRACTICES
Cybersecurity and data privacy are of critical importance to
Nuix’s stakeholders and the success of our business.
The proliferation of SaaS (Software-as-a-Service) solutions
and remote work has presented new challenges, but Nuix has
responded by investing heavily in both cybersecurity and data
privacy programs.
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NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 SUSTAINABILITY
REPORT
PROTECTING CUSTOMER DATA
PLATFORM VULNERABILITY MANAGEMENT
Nuix utilises sophisticated cyber security practices as part of its
technology. Along with implementing security through the design of our
products, Nuix staff are trained to understand and protect customer
data and digital assets.
In 2023, Nuix’s Information Security Management program underwent
a security assurance reassessment process which included: Infosec
Registered Assessors Program (IRAP) PROTECTED level, ISO/IEC
27001:2013, ISO/IEC 27017, ISO/IEC 27018, and Australian Prudential
Regulation Authority (APRA) CPS234 for Information Security.
Nuix utilises multiple availability zones in AWS for our Software-as-a-
Service (SaaS) applications to support data sovereignty and resiliency,
including in Canada, Germany, Australia, the United Kingdom and the
United States.
Nuix has also added NDG (Nuix Discover for Government), a web-
based e-discovery document platform designed and implemented
as a secure Software-as-a-Service (SaaS) application. NDG is a cloud
solution that scales to support simultaneous, concurrent processing,
loading, analysis, review, and production operations primarily intended
for highly sensitive uses, such as in criminal justice. NDG has been
assessed by the US Federal Risk and Authorization Management
Program (FedRAMP) and has achieved FedRAMP Ready designation
at the High level.
Nuix understands that our global customer base operates within a
zero-trust security model; completing these security assessments
shows our customers and stakeholders they can rely on us to protect
their most sensitive data.
Vulnerability management at Nuix incorporates three distinct
elements: code vulnerabilities, SaaS infrastructure vulnerabilities
and corporate network vulnerabilities. Nuix utilises industry standard
code quality, dynamic and static code analysis platforms and follows
common vulnerability scoring system (CVSS) for remediation.
CONTINUOUS MONITORING
Nuix maintains a 24x7x365 Security Operations Centre (SOC),
managed by an external cyber security partner. Nuix has also deployed
application, network and administrative monitoring across the platform
to ensure that all administrative operations are logged. Nuix SaaS
provides customers with the ability to log the actions of their own users
and run usage reports as required.
PROTECTING OUR CORPORATE NETWORK
Like the SaaS solution, Nuix’s Corporate Network utilises a robust set
of controls to protect and defend the Company’s assets. Corporate
infrastructure is regularly tested and verified by independent
technology partners in collaboration with Nuix team.
Nuix recognises that this is a dynamic environment and works with
industry leading third-party cyber security organisations to review and
implement new processes and technology to continuously strengthen
its cyber security posture.
21
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 OUR PEOPLE
DURING THE YEAR,
WE GAVE EVERY
EMPLOYEE THE
OPPORTUNITY TO
PUT FORWARD
THEIR IDEAS ON
HOW TO REFRESH
OUR VALUES AND
CULTURE.
ATTRACTING AND LEADING A GLOBAL,
DIVERSE AND SKILLED WORKFORCE
Nuix is a global leader in investigative analytics with offices in North
America, Asia Pacific and Europe. We strive to attract talented
employees who aim for excellence and contribute to making the world
a better place through software that helps our customers be a force for
good, by finding truth in the digital world.
We understand that our ability to deliver on this promise to our
customers is underpinned by a world class culture and highly engaged
talent that deliver great outcomes.
At 30 June 2023, Nuix’s total headcount was 440, with team members
located across North America, EMEA and Asia Pacific. In addition, Nuix
works with a small number of individuals that are engaged through
labour hire firms or contractors.
22
OUR STAFF FOOTPRINT
55%
AMERICAS
45%
RESEARCH &
DEVELOPMENT
32%
APAC
36%
SALES &
DISTRIBUTION
13%
EMEA
19%
GENERAL &
ADMINISTRATION
GUIDED AND INSPIRED BY OUR VALUES
To attract global talent we are building a world class culture. During the
year, we gave every employee the opportunity to put forward their ideas
on how to refresh our values and culture. This feedback culminated in
the development of our new values, called our TRUTH. Through this
collaborative and employee-centric process, we established that our
culture would be underpinned by the following values:
OUR VALUES
Aligning with our core values and expected behaviours.
TAKE
OWNERSHIP –
AND FOLLOW
UP
RESILIENT –
WE LEARN
FROM THE
PAST AND ARE
OPTIMISTIC
ABOUT
TOMORROW
UNAFRAID –
TO DO THE
RIGHT THING,
QUICKLY
TEAM NUIX –
FIRST AND
FOREMOST
HERO OUR
CUSTOMERS –
AND INNOVATE
FOR THEM
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023TRUTH SUSTAINABILITY
REPORT
Nuix is committed to conducting business with integrity and in
accordance with our corporate values. Nuix’s Whistleblower Policy
provides a mechanism for current and former Directors, employees,
consultants, contractors and suppliers (as well as their relatives,
dependants or spouses) to raise concerns regarding misconduct or an
improper state of affairs. Reports received will be treated sensitively
and seriously, and concerns can be raised on a confidential basis.
Nuix’s Anti-Corruption and Anti-Bribery Policy outlines the Company’s
zero-tolerance approach to bribery and corruption, as well as
implementing and enforcing effective systems to counter such actions.
The Policy also reinforces Nuix’s commitment to acting professionally,
fairly and with integrity in business dealings and relationships.
In accordance with our Diversity Policy, all recruiting initiatives aim
for a diverse pool of qualified candidates using various advertising
strategies. Importantly, the recruitment and selection processes
are designed to reduce conscious and unconscious biases that
might influence unfair treatment. Our focus on merit and fairness
is embedded in our people practices where decisions surrounding
development, promotion, remuneration and flexible work arrangements
are made in accordance with our Diversity Policy.
Our people have a responsibility to foster and promote Nuix’s diversity
and inclusion culture every day. Our policy is clear that workplace
discrimination, harassment, vilification and victimisation are not
tolerated.
VALUING DIVERSITY
WELLBEING
Our people are our greatest asset and our ability to deliver on our
purpose and business objectives is enabled through the culture we are
building and a commitment to our values. At Nuix, we seek to create a
supportive and inclusive workplace that fosters high engagement and
satisfaction and encourages everyone to be the best they can be. We
believe that the wide array of perspectives that comes from diversity
sparks innovation and creativity that delivers great business outcomes.
Fostering this diversity makes us more agile, flexible and productive.
A factor in Nuix’s success is our commitment to Diversity, Equity
and Inclusion (DEI). This commitment is reflected in the talent Nuix
employs, communities in which it operates and the customers it serves.
The Board is committed to increasing the diversity of employees
and aims to achieve a continued increase in diversity through the
Company’s recruitment and onboarding practices in addition to
training and development opportunities. Our workforce is made up of
individuals with diverse skills, values, experiences, backgrounds and
attributes, which strengthens our organisation. We value the diversity of
our workforce and are committed to further increasing the diversity of
our employee base over time.
DIVERSITY INITIATIVES
As at 30 June 2023, females represented 28% of Nuix’s workforce.
Nuix is committed to improving diversity, and utilises various talent
acquisition strategies to reach a broad range of talented people who
can contribute to our success.
Nuix’s wellbeing program enables our staff to take time to focus on
health, wellbeing and development. The program includes an online
information portal, enabling our people to access a range of health
and wellbeing resources and activities, fitness initiatives and specific
interests.
FLEXIBILITY
At Nuix, our people have flexibility to perform their work through a
blend of in-office and at-home experiences. Providing our people
with flexibility in the way they work contributes to a more inclusive
work environment, along with increased engagement, retention
and wellbeing, while delivering our business outcomes. This flexible
approach continued throughout COVID-19, and will continue to be an
important element of Nuix’s approach to engagement and retention.
LEARNING AND DEVELOPMENT
Nuix is committed to professional development. Our Learning and
Development (L&D) team has developed a series of onboarding and
professional development courses that are offered through the Nuix
Academy, our dedicated Learning Management System. Through the
Nuix Academy, staff can undertake compliance and governance
training, as well as product, sales and soft skills courses like leadership,
time management, sales acumen and other self-guided learning.
Nuix team members have the opportunity to access the training
that Nuix provides our customers to receive Nuix accreditations and
become Nuix Masters.
23
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023IN FY24, WE WILL EMBED OUR VALUES INTO ALL OUR PEOPLE PROGRAMS AND PRACTICES.
GOVERNANCE +
RISK MANAGEMENT
GOVERNANCE APPROACH
The Board takes responsibility for the overall strategy, culture and
risk management of the Company. The Board provides leadership,
strategic guidance and oversight for the Executive Leadership Team
and the Group as a whole, to promote behaviours in keeping with
our Values and to support the Group’s long-term sustainable growth
and profitability.
The Board works collaboratively with the Executive Leadership
Team to set the strategy, risk appetite, compliance systems and risk
management framework for the Group. We also satisfy ourselves on
a regular basis that these are being implemented and that we are
reporting in an accurate and timely manner.
The Board is committed to the highest standards of corporate
governance. We recognise that this is important to all of our
stakeholders, and particularly to those regulators who are our
customers. The Board regularly reviews our governance and risk
management frameworks to ensure that they promote sustainable,
ethical and socially responsible business practices.
Nuix’s Corporate Governance Statement and investor website provide
full details of our corporate governance policies and charters.
INTELLECTUAL PROPERTY REGULATION
Nuix is subject to laws and regulations relating to intellectual property
in the jurisdictions in which it operates. Nuix’s primary intellectual
property assets are its patented processing technology, copyrights and
trademarks. The majority of Nuix’s material patents are located in the
United States. Nuix software is primarily developed in Australia and
the United States.
In the United States, patent, copyright, trademark and trade secret
rights contained in laws and regulations govern the ownership,
prosecution, maintenance, enforcement and infringement of
intellectual property. These laws and regulations include the Patent
Act of 1952, Copyright Act of 1976, Digital Millennium Copyright Act
of 1998, Lanham Act of 1946, Defend Trade Secrets Act of 2016 and
other Federal and State laws and regulations.
FIT FOR PURPOSE
AND EFFECTIVE RISK
MANAGEMENT
OVERVIEW
Risk recognition and management are integral to Nuix’s objectives
of creating and maintaining shareholder value, and to the successful
execution of the Company’s strategies. Good risk management seeks to
enable the pursuit of opportunities while managing risks and achieving
compliance with applicable laws, regulations, and contractual
obligations, while meeting or exceeding stakeholder expectations.
Nuix is committed to investing in and maintaining effective risk
management systems and a risk culture that provides employees with
opportunities to grow and improve risk management capabilities that
will support consistent and appropriate risk decisions. At the heart
of our risk strategy is a commitment to creating a culture where our
employees feel empowered and incentivised to have the right risk
conversations on an ongoing basis.
RISK MANAGEMENT FRAMEWORK
Nuix has a Risk Management Framework (RMF) which is aligned
to the ISO31000 Risk Management Standard and describes our
integrated approach to identifying and managing our strategic,
financial and non-financial risks and making risk-informed decisions
and choices within boundaries.
Nuix’s RMF represents the mechanisms through which we deliver
reliable products and service to our customers and retain the trust
of key stakeholders. We do this by maximising opportunities to
achieve our objectives and goals without exposing the organisation
to unnecessary risk.
24
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 SUSTAINABILITY
REPORT
RISK GOVERNANCE
PRINCIPAL RISKS
To bring the transparency, focus and independent judgement needed,
the Board has delegated oversight of the RMF to the Audit and Risk
Management Committee. The Committee has a Charter which is
aligned with Principle 7 of the ASX Corporate Governance Principles
and Recommendations. The Committee meets at least quarterly to
monitor management’s performance against the RMF and consider
risk reports and key risk matters.
The Committee is provided with regular and ad-hoc reporting and risk
data aligned with Nuix’s principal risks, which provides the Committee
with indicators and information that management is operating within
defined boundaries.
Accountability for managing risk is embedded into Nuix’s management
structures, with responsibility for each of our principal risks and our
key compliance obligations assigned to one or more members of the
Leadership Team.
Nuix’s primary focus is on the identification and management
of principal risks which could impact current or future business
performance. The Board and Leadership Team have invested time to
consider our changing circumstances and update the risk profile as
part of our annual risk review. Details of these risks and associated
mitigation strategies are set out in the Directors’ Report. Details on
Financial Risks can be found in the Financial Report. In relation to
Contingencies (ASIC investigation and Class Action Risk), detail is
provided in the Financial Report.
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023
25
MONITORING + REPORTINGCOMPLIANCE MANAGEMENTTRAINING + AWARENESSTHREE LINES OF DEFENCERISK MANAGEMENT STRATEGYRISK MANAGEMENT PROCESSPOLICIES + PROCEDURESRISK APPETITE + CULTURERISK MANAGEMENT FRAMEWORK BOARD OF
DIRECTORS
ROBERT MACTIER
NON-EXECUTIVE
CHAIRMAN
JONATHAN RUBINSZTEIN
EXECUTIVE DIRECTOR
AND GROUP CEO
JEFFREY BLEICH
NON-EXECUTIVE
DIRECTOR
AND DEPUTY
CHAIRMAN
ALAN CAMERON AO
NON-EXECUTIVE
DIRECTOR
JACQUELINE KORHONEN
NON-EXECUTIVE
DIRECTOR
SIR IAIN LOBBAN
NON-EXECUTIVE
DIRECTOR
SUE THOMAS
NON-EXECUTIVE
DIRECTOR
SARA WATTS
NON-EXECUTIVE
DIRECTOR
Robert Mactier
Non-Executive Chairman
Robert has been a Non-Executive
Director of Nuix since October
2021 and was appointed
Chairman in February 2023.
Robert is a Consultant to the
Advisory and Capital Markets
division of UBS Australia (since
June 2007). Robert is also a Non-
Executive Director of Kinetic IT Pty
Limited and was formerly a Non-
Executive Director and Chairman
of ASX-listed ALE Property
Group (ASX:LEP) from 2016 to
2021 and WPP AUNZ Limited
(ASX:WPP) from 2006 to 2021, as
well as Non-Executive Director of
NASDAQ-listed Melco Resorts and
Entertainment Limited.
Robert began his career at KPMG
and worked across their audit,
management consulting and
corporate finance practices. He
has extensive investment banking
experience in Australia having,
prior to his current role with UBS,
worked for Ord Minnett Securities
(now JP Morgan), E.L. & C. Baillieu
and Citigroup.
Robert holds a Bachelor’s degree
in Economics from The University
of Sydney. He has been a Member
of the Australian Institute of
Company Directors since 2007
and is formerly a member of the
Institute of Chartered Accountants
in Australia and New Zealand.
Jonathan Rubinsztein
Executive Director and Group
Chief Executive Officer
Jonathan is a seasoned CEO with a
track record of building world class
global technology companies and
leading high-performance teams
in the technology sector.
Jonathan is a Non-Executive
Director at Atturra (ASX:ATA) since
November 2021, and previously
was the Managing Director and
CEO of Infomedia, Ltd, (ASX:IFM)
an ASX-listed SaaS company, from
March 2016 to October 2021.
Prior to that role, Jonathan was
CEO and founding shareholder at
UXC Red Rock Consulting, where
he was instrumental in growing
the business from a start-up to
over 700 people across 13 offices
in Australia, New Zealand, India,
and Singapore. Jonathan was
also a Founder and Director of
RockSolid SQL, a company that
built monitoring and automated
data management software for
over 18,000 databases globally.
Jonathan holds a Bachelor of
Commerce from the University of
Cape Town and a Postgraduate
degree in Finance from Software &
Information Industry Association.
He also holds a Master of Business
Administration from University of
New South Wales and a Diploma
from the Australian Institute of
Company Directors.
26
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 Jeffrey Bleich
Non-Executive Director
and Deputy Chairman
Jeffrey has been a Non-Executive
Director of Nuix since 2017
and was appointed as Deputy
Chairman in February 2023,
after stepping down from the
role of Chairman. Jeffrey lives in
Piedmont, California, USA.
Jeffrey has over 30 years’
experience in the legal,
government and technology
sectors, and most recently served
as a Court-Appointed Special
Master and Mediator in the United
States District Court, before being
named the Chief Legal Officer of
Cruise LLC, a San Francisco-based
autonomous vehicle company.
After clerking for the Chief Justice
of the United States Supreme
Court, Jeffrey practised law as a
Partner at Munger, Tolles & Olson
LLP from 1992 to 2009 and 2014
to 2016, and as both CEO of
Dentons Diplomatic Solutions and
a Partner in the Public Policy and
Regulatory practice of Dentons
international law firm from
2016 to 2019. Jeffrey’s practice
focused on cyber security,
technology, complex international
disputes, as well as high profile
pro bono matters before the
US Supreme Court.
Jeffrey served four years as the
US Ambassador to Australia from
2009 to 2013 and as special
counsel to President Obama in
2009. He has served as Board
Chair of the San Francisco based
Pacific Gas & Electric Company,
Chair of the Fulbright Foreign
Scholarship Board, Chair of the
California State University Board
of Trustees, President of the
State Bar of California, and as a
Director of a number of charitable
and public policy organisations
including the Australian-American
Leadership Dialogue, RAND
Australia, Stanford University’s
Center for Advanced Study in the
Behavioral Sciences, Amherst
College, the American Security
Project, and Futures Without
Violence.
Jeffrey holds a Bachelor of
Political Science from Amherst
College, a Master in Public Policy
from Harvard University and Juris
Doctor from the University of
California Berkeley. He has also
received an honorary Doctorate
of Laws from San Francisco
State University and honorary
Doctorates from Griffith University
and Flinders University.
Alan Cameron AO
Non-Executive Director
Alan joined the Nuix Board in
January 2023.
Alan is a respected company
director and lawyer, with
experience across a range of legal,
corporate and regulatory roles.
Alan was Chairman of Property
Exchange Australia Limited (PEXA)
from its inception until shortly
before it listed in June 2021, and
completed his extended term as
Chair of the NSW Law Reform
Commission in May 2022. A
former partner of the firm now
called Ashurst Australia, he was
Commonwealth Ombudsman
and later Chair of the Australian
Securities Commission (ASC)
and Australian Securities and
Investments Commission (ASIC).
Alan is currently Chair of
.au Domain Administration
Limited and the Legal Services
Council. Alan graduated in Arts
(BA) and Law (LLM) from the
University of Sydney.
Jacqueline Korhonen
Non-Executive Director
Jacqueline has over 30 years’
experience in the Information
Technology, Telecommunications
and Financial Services sectors,
where she built her career around
transformation, P&L management,
complex negotiations,
project delivery, operations,
strategy development and risk
management.
She started her career as an
engineer in IBM where she spent
23 years living and working across
Australia, New Zealand, ASEAN,
India and China. After leaving
IBM, Jacqueline was appointed
CEO of Infosys Australia and
New Zealand, a position she
held for six years. In the later
years of her executive career,
Jacqueline was the CEO of SMS
Management & Technology, an
ASX-listed IT Services company
and subsequently returned to IBM
as the Vice President of Cognitive
Transformation Services across
the Asia Pacific Region.
Jacqueline was a Non-Executive
Director of NetComm Wireless
(ASX:NTC) from July 2018 until
August 2019. Jacqueline is
currently a Non-Executive Director
of MLC Insurance, Auswide Bank
(ASX:ABA) since April 2021 and
.au Domain Administration. In
addition, Jacqueline is a member
of the Board of Chief Executive
Women.
Jacqueline holds a Bachelor
of Science and Bachelor of
Engineering with Honours from
the University of Sydney and
is a Graduate of the Australian
Institute of Company Directors.
Sir Iain Lobban
Non-Executive Director
Iain has been an adviser to the
Board since October 2018 and
was appointed as a Non-Executive
Director of the Company in
November 2020. Iain lives in the
United Kingdom.
Iain has over 30 years’ experience
in the security and intelligence
sector, including having served
as the Director of the British
Intelligence Agency GCHQ from
2008 to 2014. Iain was one of
the five experts appointed by
Australia’s Prime Minister to
create Australia’s first National
Cyber Security Strategy in 2015.
He was subsequently one of
the senior three-person team
appointed by the Prime Minister
to conduct the 2017 Independent
Review of the Australian
Intelligence Community.
Iain’s advisory work for boards
now spans cyber security risk
management and financial crime
compliance.
Iain holds a Bachelor of Arts in
French and German from the
University of Leeds. Iain is a
Visiting Professor of King’s College
London and an Honorary Fellow
of the Judge Business School
at the University of Cambridge.
Iain was appointed a Companion
of the Bath in 2006 and Knight
Commander of St Michael and St
George in 2013.
Sue Thomas
Non-Executive Director
Sue has been a Non-Executive
Director of the Company since
November 2020.
Sue has over 30 years’ experience
in the financial services and
information technology sectors,
having founded and acted as
Managing Director of FlexiPlan
Australia Limited, which was
subsequently sold to MLC/NAB.
Sue lives in Perth, Australia.
Sue was a Non-Executive Director
of Temple and Webster Group
Limited (ASX:TPW) from February
2016 to November 2022, and is
currently a Non-Executive Director
of Cash Converters Limited
(ASX:CCV) since April 2022,
Maggie Beer Holdings Limited
(ASX:MBH) since July 2022 and
Fitzroy River Holdings Limited
(ASX:FZR) since 2012. Sue was
formerly a Director of Property
Exchange Australia Limited.
Sue holds a Bachelor of Law and
Bachelor of Commerce from the
University of New South Wales and
has received a diploma from the
Australian Institute of Company
Directors.
Sara Watts
Non-Executive Director
Sara joined the Nuix Board in
January 2023.
Sara Watts is a Non-Executive
Director and Audit Committee
Chair with experience across a
range of sectors. In addition to
Nuix, Sara currently serves on
the boards of Syrah Resources
(ASX:SYR) since June 2019, Trajan
Scientific and Medical (ASX:TRJ)
since March 2021, Uniting NSW.
ACT and the Sydney Opera House
Trust.
Before moving into her non-
executive career Sara was CFO
of IBM Australia/New Zealand
and Vice-Principal Operations at
the University of Sydney. These
roles gave her a solid grounding
in finance, risk, technology, and
international operations. She is a
Fellow of the Australian Institute of
Company Directors, and a Fellow
of CPA Australia.
27
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 DIRECTORS’
REMUNERATION
AND FINANCIAL
REPORTS
FOR THE YEAR ENDED 30 JUNE 2023
ABN 80 117 140 235
ACN 117 140 235
ASX CODE: NXL
CONTENTS
Directors’ Report
Auditor’s Independence Declaration
Remuneration Report
Financial Report
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report to the Shareholders
29
39
40
62
63
64
65
66
67
112
113
28
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 DIRECTORS’ REPORT
The Directors of Nuix Limited (Nuix) present their report for the consolidated entity comprising Nuix and its controlled entities (collectively referred
to as the Group) in respect of the financial year ended 30 June 2023.
1. DIRECTORS
The following persons were directors of Nuix Limited during the year and up to the date of this report unless otherwise stated:
• Robert Mactier
Chair and Non-Executive Director
• Jeffrey Bleich
Deputy Chair and Non-Executive Director
• Jonathan Rubinsztein
CEO and Executive Director
• Sir Iain Lobban
Non-Executive Director
• Susan Thomas
Non-Executive Director
• Jacqueline Korhonen
Non-Executive Director
• Alan Cameron
Non-Executive Director, appointed 3 January 2023
• Sara Watts
Non-Executive Director, appointed 3 January 2023
• Daniel Phillips
Non-Executive Director, resigned 31 August 2022
2. OPERATING AND FINANCIAL REVIEW
The Operating and financial review for the year ended 30 June 2023 has been designed to provide shareholders with a clear and concise overview
of the Group’s operations, financial position, business strategies and prospects. The review also discusses the impact of key transactions and
events that have taken place during the reporting period, to allow shareholders to make an informed assessment of the results.
The following commentary should be read with the consolidated financial statements and the related notes in the Financial Report.
Non-IFRS measures have been included, in particular Annualised Contract Value (ACV), as Nuix believes they provide information for readers
to assist in understanding the company’s financial performance. Non-IFRS financial measures should not be viewed in isolation or considered
as substitutes for measures reported in accordance with Australian equivalents to International Financial Reporting Standards, see definition of
Non-IFRS measures in section 2.4 of the Directors’ Report.
2.1 Principal activities
Nuix is a leading provider of investigative analytics and intelligence software which empowers organisations to simply and quickly find meaningful
insights from large amounts of unstructured data.
Nuix offers a software platform (Nuix platform) comprising a powerful proprietary data processing engine (Nuix Engine) and several software
applications. It has been developed in-house, shaped by feedback from long-standing government and private sector customers, and
assists customers in solving complex data challenges. The Nuix platform operates at a “forensic level”, providing users with a highly detailed,
contextualised and legally defensible way of viewing and interacting with data.
No significant change in the nature of these activities occurred during the year.
2.2 Significant changes in state of affairs
There were no significant changes to the state of affairs of the Group during the year.
2.3 Business strategies
During the financial year, Nuix continued work on key strategic initiatives to drive growth through a renewed focus on customer centricity.
The overarching strategy hinges on three key horizons of change:
• Horizon 1 – Build on our strengths: Immediate focus on driving competitiveness, commercial performance and customer relationships in
Nuix’s core business;
• Horizon 2 – Differentiate for large enterprise: Medium term growth from anticipating the needs of enterprise customers and building out
Nuix’s cross-solution platform; and
• Horizon 3 – Solve for the future: Longer-range investment and prioritisation of innovation pipeline for new ways to use Nuix technologies.
29
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 DIRECTORS’ REPORT
Horizon 1 initiatives were implemented to drive near term business momentum and provide Nuix with a solid foundation for future growth. By the
end of the financial year, almost all key Horizon 1 initiatives were at or near completion.
Nuix achieved near term goals in relation to a new price book, improved renewal processes, an organisational restructure and the build out of the
marketing function. In addition, Nuix was close to completion on initiatives relating to sales enablement optimisation and performance and reward
alignment.
The Company is investing in its service offerings, which will provide an opportunity to embed and refine upgraded service offerings as part of a
standardised process, and will be an important part of the Nuix Neo rollout.
These Horizon 1 initiatives are intended to not only drive near term revenue, profitability and operational efficiencies, but to also provide the
foundations for longer term growth across Horizons 2 and 3.
Nuix’s critical Horizon 2 project is the development of the Nuix Neo unified platform. Important work was undertaken in FY23 on the development
of the platform in preparation for launch in early FY24.
Work also continued on specific use case solutions – the Horizon 3 objective – underpinned by Nuix Neo. These use case solutions provide an
easy to use, templatised, repeatable approach to specific customer needs. The first use case solution, Data Privacy, was developed during FY23
for launch in early FY24.
2.4 Group performance
Statutory revenue for the year was $182,465,000, up 19.8% on the prior corresponding period. Statutory revenue displays a greater degree of
variability than Annualised Contract Value (ACV) due to the accounting impacts of multi-year deals. The rise in statutory revenue was despite a
moderation of the proportion of multi-year deals to 30%, from 40% in FY22.
Traditional module-style licences continue to drive the bulk of statutory revenue, with revenue from subscription licences substantially increasing
in FY23 compared to prior period.
Non-operational legal costs of $7,816,000 were lower during the year compared to the prior year amount of $13,796,000. This impact, along
with stronger revenue growth and general cost containment meant statutory EBITDA was materially higher than the prior corresponding period,
up 189.2% to $34,891,000.
Nuix maintained elevated levels of research and development spend during the year, with total spend flat year on year. Important progress was
made on critical projects including the development of Nuix Neo. As a proportion of revenue, research and development spend fell to 33%,
compared to 38% in FY22.
The Group reported a Net Loss After Tax of $5,589,000 for the financial year, compared to a Net Loss After Tax of $22,791,000 in the prior
corresponding period.
Annualised Contract Value (ACV)1
Annualised Contract Value (ACV) is a non-IFRS measure that gives an indication of the annualised “run rate” of Nuix’s contract value at a given
point in time, adjusting for the sometimes volatile impacts of multi-year deals on measures such as statutory revenue.
Annualised Contract Value (ACV) at 30 June 2023 was $185,500,000, up 14.5% compared to 30 June 2022, driven by stronger net upsell to
existing customers, continued low churn and foreign exchange tailwinds.
Subscription ACV is a component of Total ACV and is an important indicator of ACV that is generally recurring in nature. Subscription ACV grew
14.4% year on year to $169,844,000 comprising 92% of overall ACV.
“Other ACV”, comprising short-term (less than 12 month) and perpetual licences, and services ACV, rose 15.2% to $15,706,000.
1. Annualised Contract Value (ACV) is an adjusted, non-IFRS measure and does not represent Total Revenue in accordance with AAS or Nuix’s accounting policies or
cash receipts from customers. ACV is used by Nuix to assess the total contract value of its software contracts on an annualised basis (removing fluctuations from
Multi-Year Deal contracts in Nuix’s Total Revenue which results from its revenue recognition policies). The calculation of ACV at the end of the relevant financial
period adjusts Total Revenue to account for: A) Revenue generated from Subscription Licences with a term of 12 months or more, as well as Consumption Licences
which exist at the end of the relevant financial period as if those contracts’ revenues were generated (and recognised) in each financial year on a rateable basis over
the relevant contract period, expressed on an annualised basis; B) last 12 month contribution from short term Software Licences (including Perpetual Licences)
or other Software Licences with a term of less than 12 months, excluding Consumption Licences; and C) the last 12 month contribution of services and third party
software sales.
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NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 DIRECTORS’ REPORT
2.5 Group financial position
The Group has no debt and a closing cash balance of $29,588,000 at 30 June 2023, down from $46,846,000 from the previous financial year.
The decrease in cash and cash equivalents is primarily due to the milestone payment for the Topos acquisition and non-operational legal costs.
The increase in research and development spend and sales and marketing costs during the year was funded by underlying operational cash flow.
Nuix was cash flow positive in the year excluding Topos and non-operational legal costs and in the near term aims to be cash flow positive including
both existing M&A and non-operational legal spend.
2.6 Risk management
Our Risk Management Framework (RMF), implemented in 2021, continues to evolve and become embedded in our business processes, and ways
of working. The RMF has been designed to help the business set risk strategy, foster risk awareness, and enable risk informed decision making
within boundaries. We seek to maximise opportunities without exposing the organisation to unnecessary risk.
To support a broad view of risk, and to seek out best practice standards appropriate to the size and risk profile of Nuix, we continue our investment
across a range of areas enabling us to grow, support and protect our environment and our customers.
Nuix takes a structured approach to identifying and managing risks and opportunities. There are a variety of strategic, financial and non-financial
risks that could affect business activities, financial position or operating and financial performance, and these are assessed and managed.
Our material risks are presented below together with mitigations employed. Mitigation strategies are designed to reduce the likelihood of the risk
occurring and/or to minimise the adverse consequences of the risk should it happen. However, some risks are affected by factors external to and
beyond the control of the Group.
Detail on Financial Risks can be found in Section 7 of the notes to the Financial Report. In relation to Contingencies, detail is provided in Section
9.6 of the notes to the Financial Report.
The Group’s operations are not significantly impacted by environmental regulations under a law of the Commonwealth or of a state or any other
territories of Australia or territory in which it operates.
Risk and Potential Consequences
Mitigations Employed
Accreditations and Certifications
Nuix has accreditations and certifications which enable customer
sales. Loss of existing, or failure or delays to obtaining new,
accreditations or certifications may have a temporary or permanent
impact on financial performance.
9 Investment in our information security accreditations and
certifications
9 Internal auditing against certification security control standards
9 Annual independent certification audits
Attracting Talent and Retaining Key Persons
Nuix’s success is dependent on attracting talent, retaining key persons,
and fostering a high-performance and values driven culture.
9 Purpose led business strategy, vision and value statements
underpinned by our Code of Conduct
This risk is elevated by changes in employee working operating model
expectations, wage inflation, the competitive environment for talent
globally in the disciplines in which Nuix recruits and the ongoing media
coverage of Nuix.
9 Regular engagement surveys to better understand employee
experiences and views
9 A remuneration strategy to attract, motivate and retain individuals
with performance linked reward
9 Board and Committee oversight of people and culture strategies and
programs
9 Flexible work policies and hybrid work model
9 Communication with all staff to ensure that the strategy is understood
as well as the role that they play
9 Learning and development frameworks to support career growth
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NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 DIRECTORS’ REPORT
Risk and Potential Consequences
Mitigations Employed
Business Continuity, Third Parties and Resilience
Nuix’s operating model places high reliance on the availability
and reliability of third-party software, hardware, and information
technology, including data centers and global communication systems.
Failure or disruption may impact our customers’ use of our products or
the execution of enterprise critical business processes. Incidents could
result in financial penalties, customer churn or missed business critical
deadlines. Increases in third party service provider prices may also
increase costs.
Contractual Risk
9 Nuix SaaS architected for high-availability
9 Third party due diligence processes and external risk intelligence
software tool
9 External vendor for technology incident management and customer
support
9 Crisis and continuity plans, incident response and recovery playbooks
Nuix’s business is dependent on our ability to enter and comply with
legally binding agreements and allocate and manage contractual risks
and obligations.
Nuix may enter into agreements that are not legally enforceable, have
unintended consequences or create exposures which are not able to
be fully mitigated.
Nuix may inadvertently breach contractual obligations and be subject
to customer or vendor claims and disputes.
To win or retain business, Nuix may need to agree to higher
contractual liability caps which may exceed professional indemnity
insurance limits.
9 In-house Legal function which provides review and oversight of
agreements prior to execution
9 Delegations of authority setting out individuals who are authorised
to sign agreements
9 Standard contractual Terms and Conditions (T&Cs) inclusive of
liability caps
9 Contract review and approval processes and controls to manage
deviations from standard T&Cs
9 Professional indemnity insurance policy with limits informed by
risk profile
Cyber & Information Security
The risk that Nuix, our partners, third parties or customer base is
impacted by a cyber event which causes loss, harm, damage, or
disruption.
Use of our products involves the processing and, via Nuix Discover
SaaS, the cloud hosting and storage of customers’ data which can
include privileged, confidential, sensitive, proprietary and 3rd party
data and Personally Identifiable Information (PII).
There is a risk that a cyber event could result in a security breach which
compromises customer data. Such an event could result in litigation,
customer terminations and liability claims, regulatory enforcement
action, remediation costs and damage to Nuix’s reputation and brand.
A cyber incident could cause disruption to customer services and
critical Nuix business processes.
Actual or perceived failures in our technology security capability and
control environment could result in financial loss and impact our
reputation and brand.
Our information security costs may also increase if customer,
regulatory or accreditation minimum standards increase.
Whilst Nuix does not collect and store significant quantities of sensitive
and PII data, there is a risk that Nuix fails to adequately protect data
that it is directly responsible for. This could result in a breach of
privacy obligations.
9 Cyber risk and security plans and investment
9 In-house expertise supplemented by external vendors to identify,
manage and oversee information security risks
9 24x7 Security Operation Centre and continuous monitoring of critical
systems for signs of performance, intrusion, or interruption
9 Physical and logical separation of environments and duties across
SaaS and Corporate IT
9 Multi-factor authentication and least privileged access to SaaS
environment
9 High grade encryption of customer data
9 Regular network penetration testing
9 Market-leading third-party tools to protect and monitor the SaaS and
Corporate IT environments
9 Crisis, incident management and recovery playbooks and cyber
insurance policy
9 Good practice certifications for data security management
(ISO 27001:2013, ISO 27018:2019)
9 Privacy Policy, Privacy Officer and a Privacy Compliance plan
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NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 DIRECTORS’ REPORT
Risk and Potential Consequences
Mitigations Employed
Environmental, Social & Governance (ESG)
Nuix seeks to conduct business responsibly, ethically, and sustainably.
This includes ensuring that our technology is not used for unethical or
illegal purposes.
Failure to meet ESG commitments or expectations, or manage our ESG
risks, could harm our reputation, impact performance, limit access to
capital or impact our ability to attract and retain talent.
9 Clearly documented governance structures and accountabilities
9 ESG initiatives and reporting
9 Calculation of FY22 and FY23 enterprise scope 1 and 2 emissions
base and purchase of carbon credits to fully offset
9 Modern Slavery Statement and Policy. Periodic review of vendors for
country and modern slavery risk red flags.
9 High-Risk Countries Policy and supporting review and approvals
processes
Financial Risks
Nuix is exposed to a variety of financial risks including foreign
exchange, credit, software impairment and liquidity. If financial risk
management strategies are ineffective, financial performance may
be impacted. There is a risk of error in financial reporting due to
inadequate or ineffective financial processes and controls.
9 Software capitalisation models and annual impairment testing
9 Early engagement and consultation with external auditors/
professional firms on significant deals and key accounting policies
9 Budgeting, cash-flow forecasting and performance monitoring and
Funding & Refinancing
Nuix may seek to raise additional capital to support operations, fund
future growth or respond to opportunities. Nuix may not be able to
secure debt or equity financing on favourable terms or at all. Raising
additional funds by issuing equity securities may result in ownership
dilution for shareholders.
Nuix’s ability to meet objectives could be impacted if it is unable
to obtain necessary and adequate financing solutions or maintain
sufficient working capital.
Integrating Acquisitions
Nuix has completed strategic acquisitions in recent years, inclusive
of the Rampiva business. There is a risk that Nuix is delayed in
integrating acquisitions or that they do not deliver expected synergies
and benefits.
reporting processes
9 Strategic operating plan linked to Leadership Team Short-Term
incentives
9 Refer to Section 7.1 of the notes to the Financial Report for more
detail on how Nuix manages its financial risks
9 Board approved capital, funding, and liquidity management strategy
9 Maintain relationships with investors and banking partners.
9 Treasury Policy and working capital management thresholds,
processes and controls
9 Refer to Section 7.1 of the notes to the Financial Report for more
detail on how Nuix manages its financial risks
9 Board and senior management oversees integration strategy
and programs
9 New opportunity due diligence and approvals
9 Integration roadmaps and milestone planning linked to
financial reward
Intellectual Property
The value of Nuix’s business is, in part, dependent on Nuix’s ability to
protect its IP and rights – particularly its unique parallel-processing
approach for processing unstructured data.
Theft of, or inability to protect our IP could result in a loss of
competitive advantage. Infringement of third-party IP by Nuix could
also result in claims or litigation.
9 Engagement with external IP experts
9 Process for registering trademark, copyrights, and patents
9 Contractual safeguards (e.g., non-disclosure agreements) prior to any
proprietary disclosures
9 Corporate IT information security program
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NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 DIRECTORS’ REPORT
Risk and Potential Consequences
Mitigations Employed
Legal & Regulatory Compliance
Nuix is impacted by numerous laws and regulations globally, including
corporate, privacy, sanctions, employment, tax, and financial reporting.
Nuix’s activities, including past, current, or future activities, may
have contravened laws or regulations in one or more jurisdictions.
This could result in financial loss and damage to our reputation and
brand. Changes to laws and regulations may impact strategy, business
performance and may increase compliance costs.
9 Regular review of compliance risk areas by the Audit and Risk
Committee
9 Policies, supported by board and staff training, on key legal and
regulatory obligations and expected practices
9 External corporate law and professional services firms provide advice
on issues and specialist resourcing and compliance support
Litigation
There are currently proceedings on foot within Australia that pose
certain risks to the organisation if the outcomes to these proceedings
are adverse to Nuix. Such adverse outcomes may be costly and could
damage our reputation and brand, which in turn may impact our
capital structure. Litigation may also disrupt the execution of strategy
and impact business performance. There is a risk that Nuix may be
party to new litigation which may have a material impact on future
financial and operating performance.
9 Litigation, disputes, or investigations are managed in an effective and
efficient manner with a view to protecting the outcomes of Nuix’s
financial position and reputation
9 Engagement of specialised external legal counsel and internal
structure
9 Communications strategy to keep employees and stakeholders
informed
Market, Customer and Competition
Nuix’s future business prospects are dependent on protecting and
growing our share of the addressable market. Nuix may not be able
to compete successfully against competitors, some of whom have
significantly more financial and operational resources.
A decline in general economic conditions or a change in business and
government spending could adversely impact financial performance.
Nuix may not meet customer expectations or our sales enablement and
account growth strategies may be ineffective.
9 Multi-horizon customer centric strategy
9 Diversified customer base across industries and geographies
9 Sales enablement, opportunity pipeline and account management
processes
9 Proactive monitoring of market, industry, and competitor intelligence
to identify strategic opportunities
9 Strong and effective relationships with our customers and partners
Negative Publicity and Reputational Damage
Further negative publicity could impact Nuix’s image, reputation and
standing in the eyes of our customers, employees, investors, and
other stakeholders.
Examples of potential triggers for negative publicity may include
adverse litigation outcomes, behaviour and conduct matters, external
cyber-attacks or not meeting investor, customer and other stakeholder
expectations or our compliance obligations. For example, a cyber event
could impact customer trust in Nuix products or impact the perception
of the value of certain Nuix products such as our Data Privacy solution.
Negative publicity and the resulting reputational damage could
have wide ranging implications impacting the share price, customer
churn or downsell, software value, retention of key persons or make it
more difficult to raise capital or access alternative financing options
if required.
9 Value statements underpinned by our Code of Conduct
9 A remuneration framework, oversighted by the Board, which focuses
on leadership performance and behaviours
9 Investor Relations strategy and active investor relations management
and engagement with the investment community
9 Market disclosure policy and supporting approval processes
9 Cyber risk and security plans and investment
9 A media relations strategy which seeks to nurture media relationships
and help educate audiences about Nuix, our brand identity, purpose
and values
9 Customer account management to protect, nurture and grow
accounts
9 Executive Ethics and Social Committee to evaluate sales
opportunities classified as higher social risk
34
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 DIRECTORS’ REPORT
Risk and Potential Consequences
Mitigations Employed
Open-Source and Third-Party Software
Nuix uses third party and open-source software in our products.
This introduces Nuix to potential security, intellectual property,
reliability and licensing compliance risks which may impact our
customers, execution of our product roadmap or events which result
in financial loss.
There are also inherent uncertainties regarding the interpretation of
and compliance with open-source software which could result in 3rd
party claims, increased licence and product re-engineering costs or
the disclosure of Nuix proprietary software.
Partner Distribution Channel Performance
A key sales channel for Nuix is to sell with, and sell through, sales
partners. This channel may not achieve planned revenue volumes,
margins, or renewal targets.
This could be caused by inadequate sales partner performance,
competitor product and incentivisation offerings or competitor
M&A activity.
Product Functionality and Performance
Our customers include government agencies, regulators, corporations,
and professional service firms who often rely on our software to analyse
data in sensitive and high-profile investigations.
Our software and products may not function as intended, resulting in
adverse outcomes for customers. This could be caused by unintended
or undetected errors, defects, failures, or bugs in the platform.
Product Strategy and Technology Innovation
Our technology strategy and continued investment in product
innovation is a critical foundation for our future success.
There is a risk that research and development (R&D) investment may
be insufficient, not used effectively and efficiently, or may not meet
customer and market expectations. This could impact our ability
to retain, grow and win customer accounts or the carrying value of
our software.
There is a risk that technological advancement and innovation could
disrupt the industry and impact the value and profitability of our
product suite.
3. ENVIRONMENTAL REGULATION
9 Register of third party and open-source libraries and licences by
product
9 Tools to monitor and report on the security profile of open-source code
9 Vulnerability management and remediation tools and practices
9 Contracts in place with third party software providers
9 Partner program focused on strategic partnerships and mutually
beneficial relationships
9 Alliances and Partnerships strategy with dedicated leadership and
account management team
9 Relationship management processes
9 Partner portal, enablement, training, marketing development funds
and quarterly business reviews
9 Highly skilled engineers and product development employees
9 Software Development Life Cycle including review and testing of code
prior to release
9 Vulnerability management and remediation tools and practices
9 Customer service support system integrated with engineering
software development planning
9 Technology and product roadmap linked to strategy and informed by
customer feedback
9 R&D investment as a percentage of revenue benchmarked and
aligned to market
9 Highly skilled engineers and product development employees
9 Continuously evolving our technology stack to enable innovation and
drive efficiencies
The Group’s operations are not significantly impacted by environmental regulations under a law of the Commonwealth or of a state or any other
territories of Australia or territory in which it operates, however, in recognition of its importance, climate change risk is addressed separately in the
Group’s Sustainability Report that is to be included with the Group’s annual report.
4. DIVIDENDS PAID OR RECOMMENDED
The payment of dividends by the Company is at the complete discretion of the Directors, and the Directors do not provide any assurance of the
future level of dividends paid by the Company.
35
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 DIRECTORS’ REPORT
The ability to pay dividends will depend on a number of factors, many of which are beyond the control of the Company. In determining whether
to declare future dividends, the Directors will have regard to Nuix’s earnings, cash flows after development costs, overall financial condition and
capital requirements, taxation considerations (including the level of franking credits available), the general business environment, and any other
factors that the Directors may consider to be relevant.
There were no dividends paid or declared since the start of the financial year and up to the date of this report.
5. EVENTS SINCE THE END OF THE FINANCIAL YEAR
On 3 July 2023, the Group announced that it achieved financial close on the acquisition of Rampiva (Rampiva Global, LLC and Rampiva Technology,
Inc.), having previously announced on 23 May 2023 that it had entered into an agreement to acquire all the shares in Rampiva, a workflow
automation and job scheduling software provider. The control over Rampiva was obtained when financial close was completed. Rampiva is used
by customers where the cost, ease and administration of hyper-scale data processing is no longer sustainable manually. The initial cost of the
acquisition was USD $2.0 million in cash and USD $2.0 million in Nuix newly issued shares, which was paid on financial close. Up to a further USD
$3.0 million in Nuix shares will be issued if Rampiva achieves ACV growth and cost management milestones for the three years post-acquisition.
The transaction brings to the Group the Rampiva team, technological capabilities, and cross-sell and growth opportunities for both Nuix and
Rampiva customers. Management is in the process of finalising the accounting for the acquisition, including the determination of fair value of the
identified acquired assets and assumed liabilities, and the determination of the fair value of the consideration for the business combination, given
the timing of the acquisition relevant to the completion of these accounts.
On 22 August 2023, the Group announced it has resolved the proceedings with Mr Edward Sheehy, in reference to its announcements dated
7 February 2023 and 8 March 2023 in connection with the Federal Court of Australia proceedings commenced by Mr Sheehy. As identified in
those announcements, on 7 February 2023 the Federal Court dismissed Mr Sheehy’s claims. In March 2023, Mr Sheehy lodged a Notice of Appeal
in relation to aspects of that decision. The Appeal was scheduled to be heard on 23 August 2023. The Group can confirm that it has resolved the
proceedings with Mr Sheehy on the basis that the Appeal be dismissed, Mr Sheehy’s share options in NXL will be cancelled and that Mr Sheehy
make a contribution of $700,000 towards Nuix’s legal costs associated with the proceedings.
Except as disclosed above, no other matters or circumstances have arisen since the end of the financial year which significantly affected or may
significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial periods.
6. COMPANY SECRETARY
The details of the Company Secretary in office at the date of this report is set out below.
Ilona Meyer
LLM. LLB GradDipLegPrac. GIA(Cert). GAICD. AMIIA.
Ilona Meyer is the General Counsel and Company Secretary. Ilona joined Nuix in August 2022. Prior to that, Ilona was the Head of Legal &
Compliance (ANZ) and Company Secretary of Boehringer Ingelheim. Ilona has also held senior legal roles with private and public companies,
including ResMed, Ruralco, Medtronic, 3M, NTT and Computer Associations. Since joining Nuix, Ilona has engaged closely with the Nuix board and
its committees as a lawyer and company secretary.
7. DIRECTORS’ INTERESTS IN SECURITIES
At the date of this report, the Directors had the following relevant interests in the securities of the Company:
Name
Robert Mactier
Jeffrey Bleich
Sir Iain Lobban
Susan Thomas
Jacqueline Korhonen
Daniel Phillips
Alan Cameron
Sara Watts
Jonathan Rubinsztein
36
Ordinary Shares
175,000
135,000
–
315,300
–
–
23,800
–
642,348
Options
–
240,000
250,000
–
–
–
–
–
–
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 DIRECTORS’ REPORT
8. SHARE OPTIONS
Unissued shares under options
All options were granted in previous financial years. No options have been granted since the end of the previous financial year.
At the date of this report, subsequent to the resolution of the Sheehy litigation, unissued shares of the Group under option total 2,641,110, and
have an exercise price in the range of $2.00 to $5.79 and a weighted-average contractual life of 3.5 years.
Shares issued on exercise of options
The Group has not issued any ordinary shares of the Company as a result of the exercise of options during or since the end of the financial year.
9. MEETINGS OF DIRECTORS
The numbers of meetings of the Company’s Board of Directors and Board Committees held during the financial year ended 30 June 2023 and
each director’s attendance at those meetings is set out below.
Robert Mactier
Jeffrey Bleich
Sir Iain Lobban
Susan Thomas
Jacqueline Korhonen
Daniel Phillips
Alan Cameron
Sara Watts
Jonathan Rubinsztein
Full Board
Remuneration and
Nomination Committee
Audit and Risk Committee
Held1
Attended
Held1
Attended
Held1
Attended
14
14
14
14
14
3
6
6
14
14
13
13
13
14
3
6
6
13
–
7
–
4
7
3
2
–
–
–
7
–
4
7
3
2
–
–
7
–
4
6
–
–
–
2
–
7
–
4
6
–
–
–
2
–
1. Number of meetings held during the time the director held office or was a member of the committee during the year.
Details of current Directors, their experience, qualifications, Directorships of other listed entities and any special responsibilities, including Board
Committee memberships, are set out on pages 26 to 27.
10. INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Directors and Officers of Nuix are indemnified against liabilities pursuant to agreements with the Company. The Company insures the
Directors and Officers 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 Directors and
Officers in their capacity as officers of entities in the Group, and any other payments arising from liabilities incurred by them 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.
During the year, the Company paid a premium under a contract insuring each of the Directors and Officers of the Group against liability incurred
in that capacity. Disclosure of the nature of the liability and the amount of the premium is prohibited by the confidentiality clause of the contract
of insurance.
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NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 DIRECTORS’ REPORT
11. INDEMNIFICATION OF AUDITORS
Nuix has agreed to indemnify its auditors, KPMG, to the extent permitted by law, against any claim by a third party arising from Nuix’s breach of
their agreement. The indemnity stipulates that Nuix will meet the full amount of any such liabilities including a reasonable amount of legal costs.
12. AUDIT AND NON-AUDIT SERVICES
Details of the amounts paid or payable to the auditor (KPMG) for audit and non-audit services during the year are disclosed in Note 9.4 to the
Financial Statements.
The Company has decided to employ the auditor on non-audit services in additional to its statutory audit duties.
The Board of Directors, in accordance with advice provided by the Audit and Risk Management Committee, is satisfied that the provision of the
non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are
satisfied that the provision of non-audit services by the auditor did not compromise the auditor independence requirements of the Corporations
Act 2001 for the following reasons:
• all non-audit services have been reviewed by the Audit and Risk Management Committee to ensure they do not impact the impartiality and
objectivity of the auditor; and
• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional
Accountants, as they did not involve reviewing or auditing the auditors’ own work, acting in a management or decision-making capacity for the
Group, acting as an advocate for the Group or jointly sharing risks and rewards.
13. ROUNDING OF AMOUNTS
Nuix is a company of the kind referred to in Australian Securities Investments Commission’s ASIC Corporations (Rounding in Financial/Directors’
Reports) Instrument 2016/191. In accordance with that Instrument, all financial information presented has been rounded to the nearest thousand
dollars, unless otherwise stated.
14. AUDITOR’S INDEPENDENCE DECLARATION
The Directors have received the Lead Auditor’s Independence Declaration under section 307C of the Corporations Act 2001. The Lead Auditor’s
Independence Declaration is set out on page 39 and forms part of the Directors’ Report for the year ended 30 June 2023.
This report is signed in accordance with a resolution of the Board of Directors.
Robert Mactier
Chair
Sydney, Australia
8 September 2023
Jonathan Rubinsztein
Director
Sydney, Australia
8 September 2023
38
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023
AUDITOR’S INDEPENDENCE DECLARATION
39
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 To the Directors of Nuix Limited I declare that, to the best of my knowledge and belief, in relation to the audit of Nuix Limited for the financial year ended 30 June 2023 there have been: i. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and ii. no contraventions of any applicable code of professional conduct in relation to the audit. KPM_INI_01 KPMG Trent Duvall Partner Sydney 8 September 2023 PAR_SIG_01 PAR_NAM_01 PAR_POS_01 PAR_DAT_01 PAR_CIT_01 REMUNERATION REPORT
FOR THE YEAR ENDED 30 JUNE 2023
CONTENTS
Letter from Chair of Remuneration and Nomination Sub-Committee
Remuneration Report – audited
1. Who is covered by this report?
2. Our value proposition
3. FY23 – executive KMP remuneration at a glance
4. FY23 executive remuneration outcomes – in detail
4.1 Overview of Group performance
4.2 Linking remuneration to performance
4.3 Total fixed remuneration (TFR)
4.4 FY23 short-term incentive outcomes
4.5 FY23 long-term incentive awards – granted
4.6 One-off awards
4.7 Legacy option awards
4.8 Executive KMP remuneration statutory table
5. Non-executive director remuneration
5.1 Overview
5.2 Fee pool and schedule
5.3 Legacy options held by Non-Executive Directors
5.4 Non-Executive Directors – statutory remuneration
6. Remuneration governance
6.1 Responsibility for setting remuneration
6.2 Use of remuneration consultants
6.3 Details of Executive Service Agreements
6.4 Treatment of equity arrangements for former EVP Americas
7. Further information
7.1 Executive KMP and Director share ownership
7.2 Movement of securities
7.3 Other transactions and balances with KMP
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48
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53
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NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 REMUNERATION REPORT
LETTER FROM CHAIR OF REMUNERATION AND NOMINATION SUB-COMMITTEE
Dear Shareholders
On behalf of the Remuneration and Nomination Committee (RNC), I am pleased to present the Remuneration Report (Report) for Nuix Limited
(Nuix or the Group) for the year ended 30 June 2023 (FY23).
FY23 – a year of transformation
Led by our CEO, Jonathan Rubinsztein and his executive leadership team, FY23 has brought the transformation of Nuix to life. Despite a year of
external challenges and organisational change, the Nuix team has begun to successfully execute against its strategic plan.
This year, Nuix delivered $185.5 million of Annualised Contracted Value (ACV) 14.5% growth from the prior corresponding period (PCP)). Nuix
additionally delivered growth in other key financial metrics with $182.5 million of Statutory Revenue (up 19.8% from PCP), EBITDA of $34.9 million
(up 189.2% from PCP) and Underlying Free Cash Flow of $9.1 million (up 470.6% from PCP) excluding non-operating legal fees and M&A activity.
Board and executive renewal
In FY23, the Board completed its renewal of Nuix’s Executive Key Management Personnel (Executive KMP) to support the execution of the Group’s
strategy and delivery of value to our shareholders.
We were pleased to appoint Michael Smith to the role of Executive Vice-President, Americas in July 2022. Mr Smith is a seasoned technology sales
executive who brings extensive experience and a proven track record of delivering exceptional results. In November 2022 Warren Brugger joined
Nuix in the role of Executive Vice-President, APAC & Global Alliances, who has extensive sales and consulting leadership experience as well as
strategic alliances and channels with global technology companies.
In January 2023, the Board appointed Sara Watts as Non-Executive Director and Chair of the Audit & Risk Committee and Alan Cameron as a Non-
Executive Director to complement the skills, experience and capabilities of the Nuix Board. In February, the Company announced the election of
Robert Mactier to the role of Chairman, taking over from Jeffrey Bleich who stepped into the role of Deputy Chairman.
Executive remuneration at Nuix
At Nuix, our remuneration framework is designed to ensure that our Executives maintain a deliberate and continued focus on delivering strong
financial performance and creating value for our shareholders, as well as encouraging long-term sustainable decision-making in the interests of all
of our shareholders, customers and other key stakeholders.
Consistent with our approach in FY22, we adopted a balanced scorecard approach under the FY23 short-term incentive (STI) for the KMP in line
with market practice. Their STI was assessed against a mix of financial and non-financial measures.
An overview of our executive remuneration framework for our Executive KMP is outlined in section 3.
Remuneration changes made in FY23
In FY23, in recognition of the work required by Executive KMP and the broader Leadership Team in transforming the performance of the Company,
a one-off LTI program was implemented by the Board that provided for 100% performance testing against Annualised Contract Value (ACV) at the
end of FY23, with vesting in FY24 and FY25. The Board adopted this measure for consistency with the Company’s reporting to shareholders and
the market generally.
It was intended that this plan would be in place for 12 months and replaced with a longer dated LTI plan following a comprehensive review of our
executive remuneration framework.
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NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 REMUNERATION REPORT
Linking FY23 remuneration outcomes to performance
At Nuix, we are focused on ensuring our remuneration arrangements and outcomes for our Executive KMP are closely aligned with our
performance and the experience of our shareholders.
Nuix now has in place a revitalised leadership team to drive transformation and growth.
In FY23, having regard to the Group’s performance during the financial year:
• The FY23 STI outcomes are 96% of maximum for Executive KMP, reflecting the performance of the business, the progress on the
implementation of the strategy and the sales outcomes.
• There were no long-term incentive (LTI) awards that were eligible to vest for any KMP.
• Sign on equity awards vested to the following KMP:
• Jonathan Rubinsztein 142,348
• Chad Barton 42,026
Executive remuneration at Nuix – FY24 and beyond
The Board has conducted a comprehensive review of Nuix’s executive remuneration framework to ensure it is market competitive in the
jurisdictions in which it operates, is aligned to Nuix’s strategy and is fit for purpose.
As the Company continues its transformation journey, key concerns for the Board have been to ensure the remuneration framework:
• is structured to focus executives on the growth drivers that will create long-term shareholder value.
• provides remuneration in the highly competitive global technology sector that will attract, retain and motivate executives.
With these guiding principles and a review of market practices, the KMP long-term incentive structure for FY24 will comprise of:
• Long-term Incentive (LTI) plan contingent on achieving key financial and share-price based performance hurdles over three years. This is an
ongoing plan, intended to be granted on an annual basis.
• One-off Retention and Incentive plan contingent on achieving share-price based hurdles and continued employment over a three-year
period. This is a one-off plan to be granted in FY24 only and is designed to retain and motivate our executive team during this critical period of
transformation for the organisation and at a time where continues to be significant external pressures impacting the Company.
These long-term incentives will be delivered in equity as Performance Rights.
Details of these incentive programs are set out in the 2023 Notice of Annual General Meeting Resolutions for shareholder approval of equity to be
granted to the Chief Executive Officer & Executive Director.
Conclusion
The Board will continue to monitor Nuix’s executive remuneration framework and seek feedback from our shareholders to ensure that it provides
the right balance between attracting, motivating and retaining our executives to deliver on our strategy for our shareholders and our customers,
while meeting the expectations of the Group’s shareholders.
I invite you to read Nuix’s Remuneration Report and welcome your feedback on our remuneration practices and disclosures.
Jacqueline Korhonen
Chair of Remuneration and Nomination Sub-Committee
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NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 REMUNERATION REPORT
REMUNERATION REPORT – AUDITED
1. WHO IS COVERED BY THIS REPORT?
This Report outlines the remuneration arrangements in place for key management personnel (KMP) of the Group in FY23, which comprise all Non-
Executive Directors and senior executives who have authority and responsibility for planning, directing and controlling the activities of the Group.
The FY23 KMP are set out in the table below.
Table 1: Overview of FY23 KMP
KMP
Executive KMP
Current Position
Term as KMP
Jonathan Rubinsztein
CEO and Executive Director
Chad Barton
Warren Brugger
Jonathan Rees
Michael Smith
Ethan Treese
Non-Executive Directors
Robert Mactier
Jeffrey Bleich
Sir Iain Lobban
Sue Thomas
COO/CFO
Executive Vice President, APAC and
Global Alliances
Full year
Full year
Partial year from 14 November 2022
Executive Vice President, EMEA
Full year
Executive Vice President, Americas
Partial year from 25 July 2022
Executive Vice President, Americas
Ceased as KMP on 30 September 2022
Independent Chairman
Independent Deputy Chairman
Independent Deputy Chairman
Independent Chairman
Independent Non-Executive Director
Independent Non-Executive Director
Partial year from 20 February 2023
Partial year until 19 February 2023
Partial year from 20 February 2023
Partial year until 19 February 2023
Full year
Full year
Full year
Jacqueline Korhonen
Independent Non-Executive Director
Sara Watts
Alan Cameron
Daniel Phillips
Independent Non-Executive Director
Partial year from 3 January 2023
Independent Non-Executive Director
Partial year from 3 January 2023
Non-Executive Director
Ceased as Non-Executive Director on
31 August 2022
2. OUR VALUE PROPOSITION
At Nuix, we strive to cultivate the loyalty and passion of talented employees who aim for excellence and contribute to making the world a better
place through software that helps our customers be a force for good, by finding truth in the digital world.
We recognise that remuneration is only one of the reasons why our people come to work every day and our broader value proposition is key to
our ability to attract, retain and motivate world-class talent to deliver on our vision.
We seek to create a supportive and inclusive workplace that fosters high engagement and satisfaction and encourages everyone to be the best
they can be.
It is our fundamental belief that the behaviour and performance of all employees should not only drive business performance and meet the
expectations of our stakeholders and community but should do so in a way that aligns with our values (see Section 3).
In FY23, Nuix undertook a wholesale refresh of our values, involving our employees, and the new values, called TRUTH, were launched in late 2022.
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3. FY23 – EXECUTIVE KMP REMUNERATION AT A GLANCE
At Nuix our executive remuneration framework is set in line with our key remuneration principles which are designed to encourage behaviours
aligned with our core values and support our strategic priorities in the interests of our shareholders.
Our Values
Aligning with our core values and expected behaviours.
TAKE
OWNERSHIP –
AND FOLLOW UP
RESILIENT –
WE LEARN FROM
THE PAST AND ARE
OPTIMISTIC ABOUT
TOMORROW
UNAFRAID –
TO DO THE
RIGHT THING,
QUICKLY
TEAM NUIX –
FIRST AND
FOREMOST
HERO OUR
CUSTOMERS –
AND INNOVATE
FOR THEM
STRATEGIC PRIORITIES
Our vision of being a force for good by finding truth in the digital world, demonstrated by these strategic priorities:
Return to strong
top line growth
To fund the future
Develop sales
excellence
Drive sales
and partnering
enablement
Evolve
technology to
modular platform
Cross-solution
platform for large
enterprise
Remove
complexity
Simplify and
streamline
processes
Anticipate future
use cases
Identify and
monetize new use
cases enabled by
data processing
Enhance
commercial
capabilities
Improved
financial systems
and processes
REMUNERATION PRINCIPLES
Supporting our strategic priorities and business objectives, demonstrated by these remuneration principles:
Strategy led
Rewarding for
delivery on our
strategic priorities
Market
competitive
Attraction,
motivation and
retention of
key talent
Perform and
Innovate
Encouraging the
best from our
people
Acting like
owners
Shareholder
and customer
alignment
Right behaviours
Simplicity
Encouraging
behaviours
aligned with
our values
Simple and easy
to understand
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Our Framework
Our remuneration framework aligns with our values and strategy.
TOTAL FIXED REMUNERATION (TFR)
SHORT TERM INCENTIVE (STI)
LONG TERM INCENTIVE (LTI)
• Base salary and superannuation (or
• Performance period of 1 year
• LTI drives the delivery of Nuix’s longer
other equivalent pension arrangements)
• TFR is reviewed annually having regard
to the individual’s role, responsibilities,
skills, experience and performance,
as well as fixed remuneration levels
offered to comparable roles within
companies with which the Company
competes for talent
As part of its overarching discretion under
both STI and LTI Plans, the Board has the
ability to make downward adjustments for
any behaviour that is inconsistent with the
Company’s culture and values (as well as
any risk, regulatory or reputational issues).
• Assessed against a combination of
ACV growth (constant currency), cost
base and other non-financial Group
performance measures for the CEO
and COO/CFO and regional relevant
ACV growth (local currency) and cost
base and other non-financial Group
performance measures for the EVP
Americas, EVP EMEA and EVP APAC
and Alliances as set by the Board
• Delivered in cash (2/3) and share rights
(1/3) deferred for 12 months for the
CEO and COO/CFO and cash (75%)
and share rights (25%) deferred for
12 months for the other Executive KMP).
STI deferral in share rights, creates
further alignment with shareholder
interests and supports retention
• STI provides motivation for the
achievement of annual performance
goals
term objectives in a sustainable manner
FY23 LTI
• Delivered in performance rights and
assessed against ACV growth.
• Performance rights vest progressively
in two tranches, the first being 1 year
after achievement (ie August/September
2024) and the second 2 years after
achievement (ie August/September
2025) and are subject to remaining
employed
FY24 LTI and beyond
• Delivered in performance rights
• Long-term Incentive (LTI) plan
contingent on achieving key financial
and share-price based performance
hurdles over three years.
FY24 LTI (one-off)
• Retention & Incentive plan contingent
on achieving share-price based hurdles
and continued employment over a
three-year period. This is a one-off
plan to be granted in FY24 only and
is designed to retain and incentivise
our executive team during this critical
period of transformation for the
organisation.
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KMP Pay Mix
Pay mix for performance
A. The pay mix for the CEO and COO/CFO at target and maximum ensures a meaningful portion is weighted towards LTI to encourage a focus
on long term sustainable decision making in the interests of Nuix’s shareholders and other stakeholders.
B. The EVP, International and EVP, Americas and their remuneration arrangements are consistent with other senior non-KMP staff. In FY23,
they received fixed annual remuneration, STI and participation in the FY23 LTI plan.
CEO
COO/CFO
42%
33%
36%
40%
EVP Americas
21%
25%
EVP EMEA
15%
24%
EVP APAC
18%
41%
52%
58%
33%
24%
38%
TFR STI LTI
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4. FY23 EXECUTIVE REMUNERATION OUTCOMES – IN DETAIL
4.1 Overview of Group performance
As noted above, it is important to Nuix that the remuneration outcomes for our Executive KMP align with the Group’s performance. An overview of
Nuix’s FY2023 performance is set out below.
Annualised Contract Value (ACV)
$185.5m
▲ Up 14.5% on FY22
10.8% on constant currency basis
Statutory Revenue
$182.5m
▲ Up 19.8% on FY22
15.8% on constant currency basis
Net Dollar Retention (NDR)
109.2%
▲ Up from 96.8% in FY22
106.2% in constant currency
Earnings per share (basic)
$(0.02)
▲ Up from $(0.07) in FY22
Subscription ACV
$169.8m
▲ Up from 14.4% in FY22
10.8% on constant currency basis
Statutory EBITDA
$34.9m
▲ Up 189.2% on FY22
172.8% on constant currency basis
Customer Churn
5.3%
▼ Down from 5.4% in FY22
5.2% in constant currency
Share price at 30 June 2022
$0.85
▲ Up 11.8% on FY22
4.2 Linking remuneration to performance
A key underlying principle of the Company’s executive remuneration strategy is the link between company performance and executive reward.
Under the Company’s transformation strategy, Nuix has been successful in achieving its goals to date. Through strong ACV performance Nuix is
building momentum for sustainable and profitable growth in FY24 and beyond.
The following table summarises the Company’s performance and short term incentives awarded to executive KMP since listing.
Table 2. Company’s performance and incentives
Year
FY23
FY22
FY21
ACV
$m
185.5
162.0
165.9
Underlying
EBITDA
$m
Statutory
Revenue
$m
46.4
29.2
67.0
182.5
152.3
176.1
Net
Dollar
Retention
%
109.2%
96.8%
95.5%
Financial Performance
STI
Earnings
per Share
cents
Share Price
at 30 June
$
STI awarded to
Executive KMP
$m
(0.02)
(0.07)
(0.00)
0.85
0.76
2.21
1.8
0.7
0.3
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NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 REMUNERATION REPORT
4.3 Total fixed remuneration (TFR)
Table 2 below sets out the annualised TFR payable to the Executive KMP in FY23 based on their contractual values. Executive KMP TFR levels have
been set with regard to benchmarking data within the technology sector.
Table 3. Executive KMP fixed remuneration levels
Executive KMP
Jonathan Rubinsztein
Chad Barton
Warren Brugger
Jonathan Rees
Michael Smith
Ethan Treese (former)
1. Excludes mandatory and employer superannuation contribution.
4.4 FY23 short-term incentive outcomes
A. Overview
Total fixed
remuneration
(annualised)1
$
700,000
790,000
440,000
491,951
490,427
490,427
As noted above, Executive KMP participate in an STI program. The maximum STI awards that Executive KMP were eligible to receive in respect of
FY23 are set out in Table 4 below.
The Board determined that the former EVP Americas Ethan Treese was not eligible for an STI in FY23 (refer section 6.4 for further detail on his
exit arrangements).
Table 4. Executive KMP STI outcomes
Executive KMP
Jonathan Rubinsztein
Chad Barton
Warren Brugger
Jonathan Rees
Michael Smith
Maximum STI
opportunity1
$
Maximum STI
opportunity
(% TFR)
525,000
474,000
176,000
313,060
445,842
75%
60%
40%
64%
91%
Value
of STI
awarded
$
504,000
455,040
105,5422
300,537
399,7282
STI OUTCOMES (FY23)
% of
FY23 STI
awarded
% of
FY23 STI
award forfeited
96%
96%
96%
96%
96%
4%
4%
4%
4%
4%
1. Excludes mandatory and employer superannuation contribution, not prorated for period of appointment as a KMP.
2. Pro-rated for start date and represents their maximum STI opportunity relating the period of appointment as a KMP.
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B. FY23 STI – assessment of performance measures
An overview of performance against the FY23 STI measures are set out in the following tables. The CEO and COO/CFO were assessed against a
balanced scorecard of financial and non-financial Group measures. The EVP Americas, EVP EMEA, EVP APAC and Alliances were assessed against
performance of the respective businesses for financial performance in order to drive performance in the respective regions in which Nuix operates,
as well as non-financial Group measures.
Table 5. Performance against FY23 STI performance measures for CEO and CFO/COO
STI PERFORMANCE MEASURES
Measure
Weighting
Outcomes
Explanation
Financial metrics (CEO and COO/CFO only)
Group ACV
40%
Overachieved – 100% of STI was awarded against this measure.
Group ACV $185.5m (Up 14.5% PCP)
Up 10.8% on constant currency basis
Group cost base
20%
Overachieved – 100% of STI was awarded against this measure.
Cost base management
Actual $187.4m
8% under budget on constant currency
Non-financial metrics (for CEO, CFO/COO and EVPs)
Implementation of Group
strategy
10%
9 Progress against strategic
initiatives
Achieved – 100% of STI was awarded against this measure.
The transformation initiatives that underpin the Company’s Strategy
Refresh have progressed to plan, most notably Nuix NEO unified
platform, the launch of XLR8 to reset the Nuix messaging to increase
customer engagement and the Rampiva acquisition.
Customer focus
10%
Overachieved – 100% of STI was awarded against this measure.
9 Net Dollar Retention
9 Customer interaction and
feedback
Culture, leadership, and
engagement
9 Engagement score
9 Turnover
9 Key hires
Key
Net Dollar Retention (NDR) 109.2% (up from 96.8% in PCP)
106.2% in constant currency
Customer Churn 5.3%
Down from 5.4% in FY22
20%
Partially Achieved – 80% of STI was awarded against this measure.
There has been a steady increase in Nuix’s employee engagement score
(67% in the latest survey).
Voluntary Turnover Rate 15% (down from 20.9% PCP)
In FY23 we completed the formation of the go-forward Leadership Team
with key appointments made.
Above Target
Between threshold and target
Below Threshold
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Table 6. Performance against FY23 STI performance measures for EVP Americas, EVP EMEA and EVP APAC and Global Alliances
STI PERFORMANCE MEASURES
Measure
Weighting
Outcomes
Explanation
EVP Americas – Financial metrics
Regional ACV
40%
Overachieved – 100% of STI was awarded against this measure.
Regional cost base
20%
EVP EMEA – Financial metrics
Regional ACV $96.0m (up 15.0% PCP)
Up 9.1% on Constant Currency
Achieved
Americas managed the cost base (excluding non-BAU legal expenses) to
plan, therefore 100% of STI was awarded against this measure.
Regional ACV
40%
Overachieved – 100% of STI was awarded against this measure.
Regional cost base
20%
Regional ACV $50.1m (up 12.2% PCP)
Up 11.2% on Constant Currency
Achieved
EMEA managed the cost base (excluding non-BAU legal expenses)
however were between threshold and target in FY23 due to higher
partner reseller costs and employment costs. 100% of STI was awarded
against this measure.
EVP APAC and Alliances – Financial metrics
Regional ACV
40%
Overachieved – 100% of STI was awarded against this measure.
Regional cost base
20%
Regional ACV $39.4m (up 16.4% PCP)
Up 14.2% on Constant Currency
APAC and Alliances managed the cost base (excluding non-BAU
legal expenses) however were between threshold and target in FY23 due
to higher partner reseller costs and employment costs. 100% of STI was
awarded against this measure.
Above Target
Between threshold and target
Below Threshold
Key
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NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 REMUNERATION REPORT
C. FY23 STI terms – further detail
Key terms and conditions applying to the STI arrangements for the Executive KMP during FY23 are set out below.
Table 7. Description of key terms of FY23 Executive KMP STI
SHORT TERM INCENTIVE – KEY TERMS
Term
Further detail – CEO and COO/CFO
Further detail – EVP, EMEA, EVP, Americas & EVP,
APAC and Global Alliances
Performance period
STI awards are assessed over the 12-month financial year. Any STI award payments are made after performance is
tested at the end of the performance period.
Instrument
Once the total dollar value of the STI earned is
determined, 2/3 will be awarded in cash, the remaining
1/3 will be delivered in share rights to support the
alignment between the CEO and COO/CFO and Nuix’s
shareholders. Each share right will vest into one share
after 12 months subject to continuing employment.
Once the total dollar value of the STI earned is
determined, 75% will be awarded in cash, the remaining
25% will be delivered in share rights to support alignment
between the EVP’s and Nuix’s shareholders. Each share
right will vest into one share after 12 months subject to
continuing employment.
For the CEO, subject to shareholder approval, the number
of share rights granted will be calculated by dividing
the dollar value attributable to those share rights by the
closing Share price on the trading day immediately before
the date of the grant.
For the COO/CFO, the number of share rights granted will
be calculated by dividing the dollar value attributable to
those share rights by the 5-day VWAP immediately before
the date of the grant.
Performance Measures
The STI is assessed against multiple performance
measures being:
The STI is assessed against multiple performance
measures being:
9 Group-wide ACV (40% weighting)
9 Relevant region ACV (40% weighting)
9 Group-wide cost base (20% weighting)
9 Relevant region cost base (20% weighting)
9 Implementation of strategy (10% weighting)
9 Implementation of strategy (10% weighting)
9 Customer Focus (10% weighting)
9 Customer Focus (10% weighting)
9 Culture, Leadership and Engagement (20% weighting)
9 Culture, Leadership and Engagement (20% weighting)
It is considered that these metrics reflect not only
the key financial drivers of value in the business but
what is required to drive renewed growth. As part of its
overarching discretion, the Board also retains discretion
to adjust STI outcomes for behaviour that is inconsistent
with the Group’s values and culture (as well as any risk,
regulatory or reputational issues).
It is considered that these metrics reflect not only
the key financial drivers of value in the business but
what is required to drive renewed growth. As part of its
overarching discretion, the Board also retains discretion
to adjust STI outcomes for behaviour that is inconsistent
with the Group’s values and culture (as well as any risk,
regulatory or reputational issues).
Treatment on cessation
of employment
Where an Executive KMP ceases employment prior to the end of the performance period, the default position is that
the executive would not be eligible for an STI award for that financial year (unless the Board determines otherwise).
Change of control
Where there is a change of control event (for example, a takeover bid, scheme of arrangement, merger or any other
transaction or event that in the Board’s opinion is a change of control event), the Board has discretion in respect of the
treatment of the STI (subject to the ASX Listing Rules).
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4.5 FY23 long-term incentive awards – granted
A. Overview
All five Executive KMP were eligible to participate in an LTI award for FY23. The awards will be delivered in performance rights and vest in two equal
tranches upon the release of the Company’s financial results for each for FY24 and FY25.
Table 8. FY23 LTI awards to Executive KMP
Executive KMP
Jonathan Rubinsztein
Chad Barton
Warren Brugger1
Jonathan Rees
Michael Smith1
1. Pro-rated for service period.
B. FY23 LTI key terms – further detail
Maximum LTI
opportunity
$
Maximum LTI
opportunity
(% of TFR)
Value of LTI
awarded
$
% of FY23 LTI
awarded
% of FY23 LTI
award forfeited
875,000
711,000
83,233
102,600
230,596
125%
875,000
90%
30%
21%
52%
711,000
83,233
102,600
230,596
100%
100%
100%
100%
100%
0%
0%
0%
0%
0%
Table 9 below outlines the key terms attaching to the LTI awards granted to Executive KMP during FY23.
Table 9. Key terms of FY23 LTI awards granted to Executive KMP
LONG TERM INCENTIVE – KEY TERMS
Further detail
Entitlement
Subject to the satisfaction of the performance conditions, each LTI performance right entitles the holder to one fully
paid ordinary share in Nuix Limited (or a cash equivalent payment at the discretion of the Board).
Allocation methodology
The number of LTI performance rights to be granted is calculated by dividing the participant’s dollar value
LTI opportunity for FY23 (as outlined in table 7 above) by the market value of the underlying share determined based
on the 5-day VWAP following the release of the FY22 results (i.e., the start of the period that the LTI is tested against).
For example, the CEO was eligible to receive up to 1,286,764 Performance Rights which were calculated as the
LTI opportunity of $875,000 divided by the 5-day VWAP of $0.68. This was approved at the 2022 Nuix AGM.
Performance conditions
and vesting schedule
The FY23 LTI performance rights are subject to performance testing against ACV growth (constant currency) for
FY23. If the targets are met, 50% of the vested LTI performance rights will be available upon the release of the
Company’s financial results for each in FY24 and FY25.
The vesting schedule in respect of ACV is outlined below:
ACV growth
% payout of LTI
3%
30%
4%
40%
5%
50%
6%
60%
7%
70%
8%
80%
9%
90%
10%
100%
Treatment on cessation of
employment
Where an Executive KMP ceases employment prior to the expiry date noted above:
9 for cause or resignation, the default position is that any unvested LTI performance rights will lapse (unless the
Board determines otherwise); and
9 in all other circumstances, the LTI performance rights will remain on foot (unless the Board exercises its
discretion to treat them as lapsed).
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LONG TERM INCENTIVE – KEY TERMS
Further detail
Forfeiture and clawback
Under the Nuix Employee Share Plan, forfeiture and claw-back provisions apply to the LTI performance in a range
of circumstances including (but not limited to) where (1) a participant has acted fraudulently or dishonestly, or
breached his duties or obligations to the Group; (2) has done an act which brings the Group into disrepute; or
(3) there has been a material misstatement or omission in the Group’s financial statements or circumstances
which will require the financial statements of the Group to be restated.
Change of control
Where there is a change of control event (for example, a takeover bid, scheme of arrangement, merger or any other
transaction or event that in the Board’s opinion is a change of control event), the Board has discretion in respect of
the treatment of the awards (subject to the ASX Listing Rules).
4.6 One-off awards
A. Sign-on equity for new EVP Americas and EVP APAC and Alliances
Nuix appointed a new EVP Americas and EVP APAC and Alliances in FY23. In order to attract executives of this calibre and wealth of experience,
sign-on incentives were provided as summarised below:
• EVP Americas: In recognition of incentives forfeited with his previous employer, Nuix provided a sign on grant at a face value of $300,000.
The number of performance rights issued was 483,014, based on the 5-day VWAP being immediately preceding his start date (25 July 2022).
The grant will be issued as performance rights and will vest in five equal tranches in the first trading window following the first and subsequent
anniversary date of the start date. Each vesting is subject to a continued service hurdle.
• EVP APAC and Global Alliances: Nuix provided a sign on grant at a face value of $300,000. The number of performance rights issued was
519,930, based on the 5-day VWAP being immediately preceding the effective date of his contract (14 November 2022). The grant will be
issued as performance rights and will vest in five equal tranches in the first trading window following the first and subsequent anniversary dates
of the start date. Each vesting is subject to a continued service hurdle.
B. Termination payment for previous EVP Americas
In July 2022, Nuix appointed a new EVP Americas (Michael Smith) and as a result agreed the end of employment for the previous EVP Americas
(Ethan Treese). As a result of this decision, Nuix made an ex-gratia payment to him of $440,326 to ensure a smooth transition of leadership of our
largest sales region.
4.7 Legacy option awards
The EVP EMEA has options that remain on foot that were granted to them prior to the IPO. These options are subject to remaining employed at
vesting date. Refer to table 16 for the number of options held and in table 10, the share-based payments include the cost of these options for
this year.
The former CEO (Rod Vawdrey) and CFO (Stephen Doyle) retained LTI options on departure in 2021. These options were tested against the
FY23 Revenue and EBITDA performance in line with the contractual arrangements. The Board determined that 100% of the revenue target was
achieved and 100% of the EBITDA target was achieved and therefore 100% of the available options vested to them. The exercise price for these
options is $5.31.
53
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 REMUNERATION REPORT
4.8 Executive KMP remuneration statutory table
The table below sets out Executive KMP remuneration for FY23 in accordance with the requirements of the Accounting Standards and
Corporations Act 2001 (Cth). The table reflects the accounting value of remuneration attributable to KMP, derived from the various components
of their remuneration.
Table 10. Statutory remuneration table
Short-term benefits
Long-term
benefits
Post-em-
ployment
benefits
Share-
based
payments
Financial
year
Salary1
$
Non-
monetary
benefits2
$
Cash
bonus
$
Long
service
leave
$
Super-
annuation
$
Equity
Settled
$
Termination
benefits
$
Proportion of
remuneration
performance-
related
%
Total
$
Jonathan
Rubinsztein
Chad Barton
Warren Brugger
(from 4 November 2022)
Jonathan Rees
Michael Smith
(from 25 July 2022)
Ethan Treese (until
30 September 2022)
TOTAL
FY23
721,181 336,000
FY223
381,377 156,528
1,961
3,345
FY23
FY22
FY23
FY23
FY22
FY23
FY23
FY22
FY23
FY22
820,382 303,360
845,723 221,200
282,752
79,157
503,304 236,939
480,596
–
490,506 299,698
109,036
–
439,285 147,000
–
–
–
–
–
–
–
–
2,927,161 1,255,154
1,961
2,146,981 524,728
3,345
1.
Includes annual leave expenses recognised during FY23.
–
–
–
–
–
–
–
–
–
–
–
–
25,292
719,282
13,368
188,044
25,292
661,205
25,813
249,741
18,771
205,572
19,678
254,526
19,834
314,089
8,174
362,289
– 1,803,716
–
742,662
– 1,810,239
– 1,342,477
–
586,252
– 1,014,447
–
814,519
– 1,160,667
817 (150,158)4
440,326
400,021
15,466
303,207
–
904,958
98,024 2,052,716
440,326 6,775,342
74,481 1,055,081
– 3,804,616
49%
31%
49%
27%
24%
36%
39%
42%
0%
50%
2.
Includes benefits such as, but not limited to, the provision of car parking and fringe benefits tax (FBT). FBT included is in respect of the FBT year ended
30 June 2023.
3. Prior year only for part of the year that they were KMP.
4. Upon cessation of employment, a number of share-based payment arrangements were forfeited and accordingly a cumulative true-up has been recognised in the
financial statements under the accounting standards, which reverses previous profit and loss charges.
54
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 REMUNERATION REPORT
5. NON-EXECUTIVE DIRECTOR REMUNERATION
5.1 Overview
The Board sets the fees for its Non-Executive Directors in line with the key objectives of the Group’s Non-Executive Director remuneration policy
set out below.
Non-Executive Director remuneration is reviewed annually and the Remuneration and Nomination Sub-Committee makes recommendations to the
Board regarding the remuneration of Non-Executive Directors.
The Group does not make sign-on payments to new Non-Executive Directors nor provide for retirement allowances/benefits for Non-Executive
Directors (other than superannuation). Executive Directors of the Group are not entitled to be paid Non-Executive Directors’ fees.
Table 11. Non-Executive Director remuneration overview
ELEMENTS
DETAILS
Market competitive
9 The Board’s policy is to pay Non-Executive Directors at market competitive rates to attract and retain high
calibre Directors with the necessary skills, expertise and experience for the Nuix Board
9 In positioning fees, the Board has regards to fees payable by comparable companies (based on external
benchmarking data) as well as the time commitment and workloads of Non-Executive Directors
Independence and impartiality
9 No element of Non-Executive Director remuneration is “at risk” (i.e. subject to performance conditions)
in order to preserve the Directors’ independence and impartiality
9 Two Non-Executive Directors (Sir Iain Lobban & Jeffrey Bleich) held options over Nuix shares that were
granted to them pre-IPO. These options are not performance tested so as not to conflict with their obligation
to bring an independent judgement to matters before the Board. No options have been granted to Non-
Executive Directors since Listing
9 It is not intended to grant options or performance rights to Non-Executive Directors in the future
Shareholder alignment
9 Non-Executive Directors are encouraged to hold securities in the Company to create alignment between
interests of Directors and shareholders
5.2 Fee pool and schedule
Non-Executive Directors are paid from an aggregate annual fee pool of $1,100,000, as approved by the Group’s shareholders upon its listing in 2020.
Table 11 sets out the fees (inclusive of superannuation) payable to the Non-Executive Directors of the Group in respect of FY23.
The Chair and Deputy Chair do not receive separate fees for their participation in Board committees. Daniel Phillips was not paid fees for being
a Non-Executive Director, or for chairing or being a member of any Board Committee, during FY23.
Table 12. Non-Executive Director fees for FY23
Position
Chairman
Deputy Chairman
Directors
Committee chairman
Committee member
Fees for FY23
(Annualised)
$240,000
$160,000
$120,000
$20,000
$10,000
55
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 REMUNERATION REPORT
5.3 Legacy options held by Non-Executive Directors
As outlined in section 6.4.2.7 of Nuix’s Prospectus, Non-Executive Directors Jeffrey Bleich and Sir Iain Lobban (via Cyberswift Ltd) each held
625,000 options over Nuix shares prior to completion of the IPO. Upon completion of the IPO, 375,000 of those options were cancelled for cash
and 250,000 options remained on foot for each of them. Of these options (as outlined in table 16), 240,000 and 250,000 still remain on foot for
Mr Bleich and Sir Lobban at year end respectively.
The terms of the options remain the same and they will lapse on 30 September 2023. In accordance with best practice and the Group’s
Remuneration Policy, these options do not have performance conditions attached and are intended as a one-off arrangement.
5.4 Non-Executive Directors – statutory remuneration
The fees paid or payable to the Non-Executive Directors of the Group in respect of FY23 are set out in the table on the next page. No fees paid or
payable to the Non-Executive Directors of the Group were performance related.
Table 13. FY23 Non-Executive Directors statutory remuneration table
Short-term
benefits
Salary
and fees
$
171,041
100,151
211,607
240,000
126,306
130,000
129,035
136,364
126,697
91,332
60,599
58,378
–
–
883,663
697,847
Post-
employment
benefits
Super-
annuation
$
13,549
10,015
–
–
–
–
13,549
13,636
13,303
9,133
6,363
6,130
–
–
52,894
32,784
Share-based
payments
Options
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
$
184,590
110,166
211,607
240,000
126,306
130,000
142,584
150,000
140,000
100,465
66,962
64,508
–
–
936,557
730,631
Financial year
FY23
FY221
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY221
FY23
FY23
FY23
FY22
FY23
FY22
Non-Executive Director
remuneration
Robert Mactier
Jeffrey Bleich
Sir Iain Lobban
Sue Thomas
Jacqueline Korhonen
Sara Watts (from 3 January 2023)
Alan Cameron (from 3 January 2023)
Daniel Phillips (until 31 August 2022)
TOTAL
1. Prior year only for part of the year that they were KMP.
56
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023
REMUNERATION REPORT
6. REMUNERATION GOVERNANCE
6.1 Responsibility for setting remuneration
Nuix maintains a robust remuneration governance framework, which aims to ensure that the Group’s remuneration practices are fair and
reasonable, aligned with best practice and balance both financial and non-financial risk considerations.
Nuix’s remuneration governance framework
NUIX BOARD
The Board is responsible for the overall corporate governance, operation and stewardship of the Group and, in particular, for the long-term growth
and profitability, the strategies, values, policies and financial objectives.
The Board reviews, challenges, applies judgment and, as appropriate, approves the Remuneration and Nomination Committee’s recommendations.
It approves the remuneration of Executive KMP and of Non-Executive Directors and the polices and frameworks that govern both.
REMUNERATION AND NOMINATION COMMITTEE
The role of the Remuneration and Nomination Committee is to assist the Board by reviewing and making recommendations to the Board in
relation to:
9 the Group’s Remuneration Policy (including as it applies to Non-Executive Directors);
9 remuneration packages of senior executives equity-based incentive plans and other employee benefit programs;
9 the process by which the pool of Non-Executive Directors’ fees approved by shareholders is allocated to Directors, succession planning for the
Board and senior executives and the recruitment of new Non-Executive Directors and senior executives;
9 the appointment and re-election of people as members of the Board and its committees;
9 the Group’s recruitment, retention and termination policies;
9 the process for the evaluation of the performance of the Board, its Board committees and individual Non-Executive Directors; and
9 the size and composition of the Board and strategies to address Board diversity and the Group’s performance in respect of the Group’s
Diversity Policy.
MANAGEMENT
Management is responsible for preparing proposals to be considered
by the Remuneration and Nomination Committee on remuneration
arrangements and outcomes.
Management also oversees the implementation of approved
remuneration policies and processes.
EXTERNAL ADVICE
External advisers may be used from time-to-time to supplement the
Remuneration and Nomination Committees own information and insights
(as required) and to ensure the Committee is appropriately informed
when discharging its obligations.
57
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 REMUNERATION REPORT
6.2 Use of remuneration consultants
The Remuneration and Nomination Committee seeks external remuneration advice to assist the Committee with discharging its duties and ensure
that it is fully informed when making decisions (including on recent market trends and practices and other remuneration related matters).
Any advice from consultants is used as a reference point by the Remuneration and Nomination Committee and the Board only and does not serve
as a substitute for thorough consideration by Non-Executive Directors.
No remuneration recommendations (as defined in section 9B of the Corporations Act 2001) were obtained during the financial year ended
30 June 2023.
6.3 Details of Executive Service Agreements
Key terms of the service agreements of Executive KMP are summarised in Table 13 below.
Table 14. Key terms of Executive KMP contracts in FY23
EXECUTIVE SERVICE AGREEMENTS
Elements
Duration
Details
Ongoing term
Periods of notice required
to terminate
The Group or Executive KMP may terminate the contract by giving the following notice:
9 CEO, COO/CFO and EVP APAC and Alliances – 6 months’ written notice
9 EVP EMEA and EVP Americas – 90 days’ written notice
For all Executive KMP, the Group may terminate the service agreement immediately without notice in certain
circumstances, including (but not limited to) where the relevant Executive KMP engages in a serious breach of
agreement or serious misconduct.
Termination payments
Members of the Executive KMP may be entitled to termination payments in limited circumstances and subject to
local legislative requirements and practices (but not when the termination occurs for cause). A payment may be
made in lieu of notice at the discretion of the Board where termination occurs other than for cause.
Restraints
All Executive KMP are subject to post-employment restraints as follows:
9 CEO, EVP APAC and Alliances and EVP Americas: 12 months
9 COO/CFO, EVP EMEA: 6 months
6.4 Treatment of equity arrangements for former EVP Americas
As outlined in section 1, former EVP Americas Ethan Treese concluded his employment with the Group on 30 September 2022. As part of his
departure package no STI was awarded for his service for FY23 and only vested options remained on foot and all other options were cancelled
(as outlined in Table 15).
58
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 REMUNERATION REPORT
7. FURTHER INFORMATION
7.1 Executive KMP and Director share ownership
Tables 14 and 15 below set out the number of shares held directly, indirectly or beneficially by KMP.
Table 15. Movements in shareholdings not held under an employee share plan
Opening balance
Purchase of
shares
Disposal of
shares
Vesting of
performance
rights
Other changes
Balance
30 Jun 23
Non-Executive Directors
Robert Mactier
Jeffrey Bleich
Sir Iain Lobban
Sue Thomas
Jacqueline Korhonen
Sara Watts
Alan Cameron
Daniel Phillips (former)
Executive KMP
175,000
135,000
–
315,300
–
–
–
–
–
–
–
–
–
–
20,000
–
Jonathan Rubinsztein
150,000
350,000
Chad Barton
Warren Brugger
Jonathan Rees
Michael Smith
Ethan Treese (former)
–
–
4,610
–
–
–
–
–
–
–
1. Held prior to being appointed as a Non-Executive Director.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
142,348
42,016
–
–
–
–
–
–
–
–
–
–
175,000
135,000
–
315,300
–
–
3,8001
23,800
–
–
–
–
–
–
–
–
642,348
42,016
–
4,610
–
–
59
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023
Granted
Vested
Forfeited
Lapsed
Balance
30 Jun 23
Exercisable
30 Jun 23
REMUNERATION REPORT
Table 16. Movements in options and performance rights held under an employee share plan
Non-Executive Directors
Robert Mactier
Jeffrey Bleich
Sir Iain Lobban1
Sue Thomas
Instrument
Options
Options
Options
Options
Jacqueline Korhonen
Options
Sara Watts
Alan Cameron
Options
Options
Daniel Phillips (former) Options
Executive KMP
Jonathan Rubinsztein
Options
Opening
balance
–
240,000
250,000
–
–
–
–
–
–
Performance
Rights
2,348,3702
Chad Barton
Options
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
142,368
–
Performance
Rights
543,8713
1,184,563
42,016
Warren Brugger
Options
Performance
Rights
–
–
–
641,314
Jonathan Rees
Options
420,041
–
Performance
Rights
Michael Smith
Options
Performance
Rights
Ethan Treese (former)
Options
Performance
Rights
–
–
–
149,628
–
819,307
408,206
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
250,412
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
240,000
240,000
250,000
250,000
–
–
–
–
–
–
2,206,022
–
1,686,418
–
641,314
420,041
149,628
–
819,307
157,794
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1. Sir Iain Lobban holds options through Cyberswift Ltd, an entity incorporated in the United Kingdom.
2. Disclosure in the prior period closing balance excluded 1,308,424 Performance Rights as part of the FY22 STI and FY23 LTI, which for accounting purposes were
considered to be granted as of 30 June 2022, subject to shareholder approval at the 2022 Annual General Meeting. The total balance of Performance Rights
reflected in the table above for the opening balance comprises 110,230 Performance Rights FY22 STI (the equity settled component), 711,744 for the sign on
Performance Rights, 1,286,764 for the FY23 LTI Performance Rights, and 239,632 for the FY22 LTI Performance Rights.
3.
Disclosure in the prior period table closing balance included 207,895 Performance Rights as having been granted as part of the FY22 STI, however the amount of
Performance Rights granted for the FY22 STI in September 2022 was 147,666 which has been included in the Granted column above.
60
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023
REMUNERATION REPORT
7.2 Movement of securities
The only movement in options held by KMPs during the year was the forfeiture of 250,412 options held by Ethan Treese on the conclusion of his
employment with the Group.
7.3 Other transactions and balances with KMP
A. Loans to Executive KMP
No Executive KMP or their related parties received loans, guaranteed or secured, directly or indirectly from the Group during the year.
B. Other Executive KMP transactions
The Group did not engage in any transactions with Executive KMP or their related parties during the year.
C. Other transactions
There were no other transactions that occurred with the Executive KMP or their related parties during the year.
61
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 FINANCIAL
REPORT
FOR THE YEAR ENDED 30 JUNE 2023
Contents
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Directors’ Declaration
Independent Auditor’s Report to the Shareholders
63
64
65
66
67
112
113
62
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
Revenue
Cost of goods sold
Gross profit
Sales and distribution
Research and development
General and administration
Other income
Net realised and unrealised foreign exchange gains
Operating loss
Finance costs
Fair value gain on contingent consideration
Loss before income tax
Income tax (expense)/benefit
Loss for the year
Other comprehensive income/(loss)
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations
Other comprehensive income, net of tax
Total comprehensive loss for the year, net of tax
Earnings per share
Basic
Diluted
Notes
2.1
2.4
2.5
3.1
2.7
2.7
2023
$000
182,465
(22,949)
159,516
(65,039)
(58,382)
(43,214)
1,319
735
(5,065)
(1,220)
1,011
(5,274)
(315)
(5,589)
2022
$000
152,310
(18,440)
133,870
(60,022)
(47,811)
(50,787)
1,230
1,045
(22,475)
(1,630)
–
(24,105)
1,314
(22,791)
4,074
4,074
7,873
7,873
(1,515)
(14,918)
(0.02)
(0.02)
(0.07)
(0.07)
The consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
63
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS OF 30 JUNE 2023
Current assets
Cash and cash equivalents
Trade and other receivables (including contract assets)
Other current assets
Current tax assets
Total current assets
Non-current assets
Deferred tax assets
Intangible assets
Property and equipment
Right-of-use assets
Trade and other receivables (including contract assets)
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Deferred revenue
Provisions
Lease liabilities
Other current liabilities
Total current liabilities
Non-current liabilities
Deferred revenue
Provisions
Lease liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
Notes
4.1
4.2
4.3
3.4
3.3
5.1
5.2
5.3
4.2
4.4
4.5
4.6
5.3
9.1
4.5
4.6
5.3
9.1
8.1
8.2
2023
$000
29,588
68,534
7,323
1,441
2022
$000
46,846
50,813
8,098
1,918
106,886
107,675
3,958
244,567
2,944
8,647
12,566
272,682
379,568
28,655
38,998
3,000
3,028
9,839
83,520
15,947
1,171
8,088
–
25,206
108,726
270,842
370,696
(156,175)
56,321
270,842
3,326
237,125
3,040
11,189
11,762
266,442
374,117
23,742
32,544
2,898
2,802
7,528
69,514
16,741
1,017
10,848
6,930
35,536
105,050
269,067
370,696
(163,539)
61,910
269,067
The consolidated statement of financial position should be read in conjunction with the accompanying notes.
64
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
Issued
capital
$000
Share
option
reserve
$000
Foreign
currency
translation
reserve
$000
Treasury
share
reserve
$000
370,696
(171,641)
(2,681)
Balance at 1 July 2021
Profit for the year
Other comprehensive income
Total comprehensive income/(loss)
Transactions with owners
Share-based payments
–
–
–
–
–
–
–
2,910
Balance at 30 June 2022
370,696
(168,731)
Balance at 1 July 2022
370,696
(168,731)
Profit for the year
Other comprehensive income
Total comprehensive income/(loss)
Transactions with owners
Share-based payments
Treasury shares acquired
Treasury shares transferred to settle
share-based payment arrangement
–
–
–
–
–
–
–
–
–
3,466
–
(176)
–
7,873
7,873
–
5,192
5,192
–
4,074
4,074
–
–
–
Retained
earnings
$000
84,701
(22,791)
–
Total
equity
$000
281,075
(22,791)
7,873
(22,791)
(14,918)
–
2,910
61,910
61,910
(5,589)
–
269,067
269,067
(5,589)
4,074
(5,589)
(1,515)
–
–
–
3,466
(176)
–
–
–
–
–
–
–
–
–
–
–
–
(176)
176
Balance at 30 June 2023
370,696
(165,441)
9,266
–
56,321
270,842
The consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
65
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
Cash flows from operating activities
Receipts from customers
Payments to employees and suppliers
Interest received
Income tax paid
Net cash from operating activities
Cash flows from investing activities
Payments for software development costs1
Purchase of property and equipment
Acquisition of Topos Labs, LLC, net of cash acquired
Net cash used in investing activities
Cash flows from financing activities
Principal payments of lease
Interest paid2
Purchase of treasury shares
Net cash used in 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
Notes
2023
$000
2022
$000
165,188
(132,366)
19
(277)
171,544
(141,298)
1
(385)
32,564
29,862
(37,233)
(1,300)
(6,890)
(45,423)
(2,880)
(1,239)
(176)
(4,295)
(17,154)
46,846
(104)
29,588
(40,500)
(2,358)
(6,861)
(49,719)
(2,727)
(1,630)
–
(4,357)
(24,214)
70,865
195
46,846
3.5
2.6
5.2
9.1
4.1
4.1
1 Prior year comparatives have been adjusted removing non-cash additions (share-based payment and depreciation expenses capitalised) to intangible assets of
$1,888,000.
2
Interest paid has been reclassified as a financing activity as it relates primarily to leases recognised on balance sheet, and line fees for the CBA facility which was
terminated in September 2022.
The consolidated statement of cash flows should be read in conjunction with the accompanying notes.
66
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
The notes are grouped into 9 sections. Each section contains an introduction and general information, along with the relevant accounting policies
and key judgements.
The layout of these financial statements has been streamlined to present them in a way that is intuitive for readers to follow. This is achieved by
grouping disclosures, and focusing information in a manner which provides increased clarity and ease of understanding.
This section describes the key accounting principles and policies that we have adopted in preparing the financial statements for the Group as a whole.
This section also analyses the impact of any newly issued but not yet effective accounting standards which will be effective for Nuix in future years.
Certain reclassifications have been made to the prior year’s financial statements to enhance comparability with the current year’s financial
statements. Comparative figures have been adjusted to conform to the current year’s presentation.
1.1 Reporting entity
Nuix Limited (Nuix or the Company) is a company that is incorporated and domiciled in Australia. The Company’s registered address is Level 27,
1 Market Street, Sydney NSW Australia. Nuix is a leading provider of investigative analytics and intelligence software. These consolidated financial
statements comprise the Company and its subsidiaries (together referred to as the ‘Group’).
1.2 Basis of accounting
The consolidated financial statements are general purpose financial statements which have been prepared in accordance with Australian
Accounting Standards adopted by the Australian Accounting Standards Board, and the Corporations Act 2001. The consolidated financial
statements also comply with International Financial Reporting Standards and Interpretations (IFRICs) adopted by the International Accounting
Standards Board.
The financial statements were authorised for issue by the Board of Directors on 8 September 2023.
The consolidated financial statements are presented in Australian dollars, which is the reporting currency of the Company, and has been prepared
on the basis of historical cost except in accordance with relevant accounting policies where assets and liabilities are stated at their fair values.
Nuix is a company of the kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191. In accordance with
that instrument all financial information presented has been rounded to the nearest thousand dollars, unless otherwise stated.
1.3 Going concern
At 30 June 2023, the Group is in a net current asset position of $23,366,000. At 30 June 2023, the Group had $29,588,000 available cash and
cash equivalents (refer to Note 4.1). The financial statements have been prepared on a going concern basis.
In preparing these financial statements, the Group has prepared, and the Directors have considered cash flow forecasts, taking into account
information currently available regarding current conditions and those, at least but not limited to, twelve months from the end of the reporting
period. Important to these cash flows are the assumptions used regarding seeking to return to net cash inflows in FY24, the potential outcomes and
timings of the regulatory and litigation matters as discussed in Note 9.6, and access to other funding sources should they be required to achieve
the Group’s strategy. The uncertainties attached to funding sources, the unknown outcomes of the litigation matters together with the potential
business impacts of the ongoing litigation matters and their attendant reputational and financial impacts, gave rise to the Group concluding that
while there are uncertainties related to events or conditions that may, depending on the circumstances, cast doubt on the entity’s ability to realise
its assets and discharge its liabilities in the normal course of business, it remains appropriate that the financial statements be prepared on a going
concern basis.
In forming this conclusion, the Directors consider that the Group has a business plan which appropriately considers the following assumptions,
associated risks and mitigating factors:
• cash flow forecasts include the launch of new products and solutions, launch of new markets, growth in revenue supported by the continued
investment in sales capability and product development along with significant unusual matters such as the settlement of contingent
consideration for the Topos Labs acquisition, Rampiva acquisition, and ongoing legal fees;
• the Group outperformed its target in FY23 of being cash flow neutral, excluding the impact of non-operational legal fees and M&A activity, and is
seeking a return to net cash inflows in FY24. There are risks to achieving this given forecast economic headwinds, foreign currency impact and
broader business impacts of the litigation matters;
• recent results of operating activities undertaken aligned with the new Nuix strategy including price rises and an improving NDR% have been
taken into account when setting revenue forecasts used to derive forecast cash receipts;
67
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 • the potential timing and quantum of any adverse outcomes from the current litigation action by the regulator as detailed in Note 9.6. In applying
the assumptions and judgements, we have had regard to the penalty regime, views of our advisors and potential likelihood of outcomes;
• the litigation and claims underway, and the potential impact to the business should there be a significant adverse judgment in the cash forecast
period. The Directors also have had regard to the Group’s options to appeal any adverse judgement, should one arise, and associated usual
appeal hearing timeframes. With the exception of legal fees, the forecasts do not include cash outflows related to any claims; and
• the Directors continue to assess debt financing options to provide medium- and long-term support for the business strategy. The Group has no
current debt financing facilities and there is uncertainty of debt financing becoming available to the Group in the cash forecast period.
The outcomes of these indicate sufficient cash balances throughout the next 12 months with a targeted return to net cash inflows in the year
ended 30 June 2024.
Further, the Group has prepared, and the Directors have considered a cash flow forecast which examines a range of alternate scenarios, in
particular, as they relate to outcomes from the litigation matters.
Additional mitigants available include:
• the ability to reduce forecast operating expenditure to retain cash, aligning timing of reductions and preservation of cash to expected legal
milestones. Potential reductions are through ceasing recruitment of new staff, managing consulting spend, delaying the development of new
products, and/or other cost reduction measures. While the Directors have determined these can be implemented as required to scale back cash
outflows, they may impact the ability of the Group to achieve its strategy; and
• in the event that it is required, the ability to raise equity from existing and or new shareholders based on known levels of interest and support.
The Directors additionally have processes to monitor actual results closely such that mitigating actions can be taken at pace, in the amounts which
may be required should they be required in the relevant timeframes.
Based on the above, the Directors are satisfied that the Group will be able to continue to realise its assets and discharge its liabilities in the normal
course of business for a minimum of the next twelve months.
1.4 Basis of consolidation
The Group accounts for business combinations using the acquisition method when the acquired set of activities and assets meets the definition of
a business and control is transferred to the Group.
The Group has an option to apply a ‘concentration test’ that permits a simplified assessment of whether an acquired set of activities and assets
is not a business. The optional concentration test is met if substantially all of the fair value of the gross assets acquired is concentrated in a single
identifiable asset or group of similar identifiable assets.
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 in the acquisition is generally measured at fair value. The consideration transferred does not include amounts
related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss.
Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration that meets the
definition of a financial instrument is classified as equity, then it is not remeasured, and settlement is accounted for within equity. Otherwise,
other contingent consideration is remeasured at fair value at each reporting date and subsequent changes in the fair value of the contingent
consideration are recognised in profit or loss.
Identifiable assets and liabilities 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.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquired entity and the 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 and loss as a bargain
purchase. Any goodwill that arises is tested annually for impairment.
Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.
68
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS 1.4.1 Subsidiaries
Subsidiaries are entities controlled by the Group. The Group ‘controls’ an entity when it is exposed to or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are
included in the consolidated financial statements from the date on which control commences until the date on which control ceases.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
1.4.2 Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses (except for foreign currency transaction gains or losses) arising
from intra-group transactions, are eliminated.
1.5 Foreign currency transactions and balances
1.5.1 Functional and presentation currency
Transactions in foreign currencies are translated into the respective functional currencies of Group companies at the exchange rates at the dates
of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates at the dates
of the transactions. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional
currency at the exchange rate when the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign
currency are translated at the exchange rate at the date of the transaction. Foreign currency differences are generally recognised in profit or loss.
1.5.2 Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into Australian
dollars at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into Australian dollars at the
exchange rates at the dates of the transactions.
Foreign currency differences are recognised in other comprehensive income (OCI) and accumulated in the translation reserve, except to the extent
that the translation difference is allocated to non-controlling interests.
When a foreign operation is disposed of in its entirety or partially such that control, significant influence or joint control is lost, the cumulative
amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. If the Group
disposes part of its interest in a subsidiary but retains control, then the relevant proportion of the cumulative amount is reattributed to non-
controlling interests.
1.6 New standards, interpretations and amendments adopted by the Group
A number of new or amended standards and interpretations became applicable for the current reporting period effective from 1 July 2022.
The Group did not have to change its accounting policies or make retrospective adjustments to adopt these standards, as they did not have a
significant impact on the Group’s consolidated financial statements.
1.7 Impact of standards issued but not yet applied by the Group
A number of new or amended standards and interpretations have been published that are not mandatory for 30 June 2023 full year reporting
and have not been early adopted by the Group. When they are required to be adopted, they are not expected to have a significant impact on the
Group’s consolidated financial statements.
1.8 Use of judgements and estimates
In preparing these consolidated financial statements, management has made judgements and estimates that affect the application of accounting
policies and the reported amounts of assets and liabilities, income and expenses. 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 year in
which the estimate is revised if the revision affects only that year or in the year of the revision and future years if the revision affects both current
and future years.
69
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS Significant areas of estimation and critical judgements are described in the relevant note.
• Going concern basis of preparation – Note 1.3;
• Revenue recognition – Note 2.1;
• Recoverability of tax assets – Note 3;
• Capitalisation and useful life of intangible assets – Note 5.1;
• Impairment testing of goodwill – Note 5.4;
• Share-based payment expense – Note 6.2;
• Measurement of contingent consideration – Note 9.1; and
• Contingent liabilities – Note 9.6.
1.9 Significant events and transactions
During the year ended 30 June 2023, central banks including the Reserve Bank of Australia have lifted the risk-free rate of interest.
Notwithstanding this change in the macroeconomic environment, no impairment has been recognised against the intangible assets of the Group
(refer to Note 5.4).
For a detailed discussion about the Group’s performance and financial position, refer to the “Operating and financial review” included in the
Directors’ Report.
1.10 Financial instruments
1.10.1 Recognition and initial measurement
Trade receivables are initially recognised when customers are invoiced. All other financial assets and financial liabilities are initially recognised
when the Group becomes a party to the contractual obligations.
A financial asset (unless it is a trade receivable) or financial liability is initially measured at fair value plus transaction costs that are directly
attributable to its acquisition. Trade receivables without a significant financing component are initially measured at the transaction price.
1.10.2 Derecognition
Financial assets
The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights
to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are
transferred, or in which the Group neither transfers/ retains substantially all of the risks and rewards of ownership, and it does not retain control.
Financial liabilities
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expire. The Group also derecognises
a financial liability when its terms are modified and the cash flows of the modified financial liability are substantially different, in which case a
new financial liability based on the modified terms is recognised at fair value. On derecognition of a financial liability, the difference between the
carrying amount extinguished and the consideration paid is recognised in profit or loss.
1.10.3 Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the consolidated statement of financial position when, and only
when, the Group currently has the legally enforceable right to set off the amounts and it intends either to settle them net, or to realise the asset and
settle the liability simultaneously.
1.10.4 Impairment
The Group assesses on a forward-looking basis, the expected credit losses associated with its trade receivables and contract assets. Loss
allowances for trade receivables and contract assets are always measured at an amount equal to the expected lifetime losses. The expected
lifetime losses are those that result from all possible default events over the expected life of a financial instrument. Loss allowances for financial
assets measured at amortised cost, are deducted from the gross carrying amount of the assets.
70
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS 1.11 Goods and services tax
Revenues, expenses and assets are recognised net of the associated goods and services tax (GST), value-added tax (VAT), and sales tax unless
when the tax 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 tax recoverable
from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet. Cash flows are presented on a
gross basis.
The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority,
are presented as operating cash flows.
1.12 Employee share trust
The Group has formed a Trust to administer the Group’s employee share scheme. This Trust is consolidated, as the substance of the relationship
is that the trust is controlled by the Group. Shares held by the Nuix Limited Employee Share Trust are disclosed as treasury shares and included in
issued capital.
1.13 Classification of expenses
1.13.1 Presentation of results
The Group has presented the expense categories within the consolidated statement of profit or loss on a functional basis. The categories used
are cost of goods sold, research and development, sales and distribution and general and administration. The presentation style provides insight
into the Company’s business model and enables users to consider the results of the Group compared to other major software companies. The
methodology and the nature of costs within each category are further described below.
1.13.2 Cost of goods sold
Cost of goods sold consists of expenses directly associated with securely hosting the Group’s services and providing support to customers. Costs
include data centre costs, personnel and related costs directly associated with cloud infrastructure and customer consulting, implementation and
customer support, contracted third party costs, reseller channel costs and allocated overheads.
1.13.3 Research and development expenses
Research and development expenses consist primarily of personnel and related costs directly associated with the Company’s research and
development employees, as well as direct costs of research and development (including subscriptions) and allocated overheads. When future
economic benefits from development of an intangible asset are determined probable and the development activities are capable of being reliably
measured, the costs are capitalised as an intangible asset and then amortised to profit or loss over the estimated life of the asset created. The
development activities comprise the interface design, coding, documentation and testing of a chosen alternative for new or improved software
products, processes, systems and services. The amortisation of those costs capitalised is included as a research and development expense.
1.13.4 Sales and distribution expenses
Sales and distribution expenses consist of personnel costs directly associated with the sales and marketing teams’ activities to acquire new
customers and grow revenue from existing customers. Other costs included are external advertising, digital platforms, marketing and promotional
events as well as allocated overheads.
1.13.5 General and administration expenses
General and administration expenses consist of personnel and related costs for the Company’s executive, Board of Directors, finance, legal, human
resources, corporate strategy, and IT employees. They also include legal, accounting and other professional services fees, insurance premiums,
acquisition and integration costs associated with the Company’s ongoing acquisition strategy, other corporate expenses and allocated expenses.
1.13.6 Overhead allocation
The presentation of the consolidated statement of comprehensive income by function requires certain overhead costs to be allocated to functions.
These allocations require management to apply judgement. The costs associated with the Group’s facilities, internal information technology and
non-product related depreciation and amortisation are allocated to each function based on respective headcount.
71
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS 1.14 Fair value measurement
A number of the Group’s accounting policies require the measurement of fair values, for both financial and non-financial assets and liabilities.
The carrying amounts of cash and cash equivalents, trade and other receivables, and trade and other payables are assumed to approximate their
fair values due to their short-term nature. When measuring the fair value of an asset or liability, the Group uses market observable data as far as
possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs to the valuation techniques as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices); and
• Level 3: inputs for the asset or liability that are not based on market observable data (unobservable inputs).
If the inputs used to measure the fair value of an asset or liability might be categorised in different levels of the fair value hierarchy, then the fair
value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest input that is significant to the entire
measurement. The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change
has occurred.
The Group does not have any debt securities or derivative financial instruments which require measurement at fair value. As the inputs to the
valuation of contingent consideration are not based on observable market data, this is deemed a Level 3 measurement of fair value.
Refer to Note 9.1 for fair value disclosures related to contingent consideration.
2. OPERATING RESULTS AND FINANCIAL PERFORMANCE NOTES
This section focuses on the operating results and financial performance of the Group.
It includes disclosures related to revenue and its recognition during the period, breakdowns of selected costs, segment reporting, other income,
and a reconciliation of profit before tax to operating cash flows.
2.1 Revenue
Software (including related support and maintenance)
Services
Revenue from events (sponsorship and ticket sales)
Hardware
2023
$000
176,691
5,335
439
–
2022
$000
146,418
5,840
–
52
182,465
152,310
72
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS Disaggregation of revenue
The Group disaggregates revenue by categories shown in the tables below.
Revenue by type
Subscription licences
Perpetual licences
Consumption licences
Total licence revenues (including related support and maintenance)
Professional services
Revenue from events (sponsorship and ticket sales)
Hardware
Total other revenues
Total revenues
Timing of revenue recognition
Point in time
Over time
ACCOUNTING POLICIES
i. Revenue recognition
2023
$000
115,428
30,317
30,946
176,691
5,335
439
–
5,774
2022
$000
88,953
26,174
31,291
146,418
5,840
–
52
5,892
182,465
152,310
2023
$000
114,933
67,532
182,465
2022
$000
94,094
58,216
152,310
Revenue is recognised upon transfer of control of promised products or services to customers in an amount that reflects the consideration
expected to be received in exchange for those products or services. We enter into contracts that can include various combinations of products
and services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognised net of
allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities.
The timing of revenue recognition may differ from the timing of invoicing to our customers.
ii. Nature of products and services
Licences for on-premises software provide the customer with a right to use the software as it exists when made available to the customer.
Customers may purchase perpetual licences or subscribe to licences for on-premise software, which provide customers with the same functionality
and differ mainly in the duration over which the customer benefits from the software. Revenue from distinct on-premises licenses are recognised
upfront at the point in time when the software is made available to the customer, and in the case of renewals, when the original period ends and the
additional period has started on the basis that this is the date from which the customer can use and benefit from the renewal.
Subscription licencing agreements are generally combined with support and maintenance, which conveys rights to unspecified upgrades released
over the contract period and support and maintenance to help customers deploy and use products more efficiently. On-premises licenses are
considered distinct performance obligations when sold with support and maintenance.
Revenue allocated to support and maintenance is recognised rateably over the contract period as customers simultaneously consume and receive
the benefits, given that support and maintenance comprises distinct performance obligations that are satisfied over time.
73
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS For consumption licences, the customer is charged based on the volume of data processed or under management in each licence period.
Customers are charged on a tiered “cost per gigabyte” basis, typically with minimum annual volume/revenue commitments.
Where such consumption licences are for a right to use software, and there is a fixed minimum commitment, a portion of the contract value related
to the sale of the licence is recognised when the licence is made available to the customers, with the portion related to support and maintenance
recognised over time. Any overage charges are recognised when the usage occurs, as this corresponds directly with the value to the customer of
Nuix’s performance completed to date.
Where such consumption licences are for a right to access software, generally the case for consumption licences related to our software as a
service (SaaS) offering Discover SaaS, revenue is recognised over time as they are delivered. This is because the obligation to provide a SaaS
service is determined to be a series of distinct service periods, and allocation of the fees earned to each distinct service period based on the
customer’s usage each period would reasonably reflect the fees to which Nuix expect to be entitled for providing the SaaS during that period.
A licence is a right to access software where:
• the contract requires, or the customer reasonably expects, that the entity will undertake activities that significantly affect the IP to which the
customer has rights;
• the rights granted by the licence directly expose the customer to any positive or negative effects of the entity’s activities that significantly affect
the IP; and
• those activities do not result in the transfer of a good or a service to the customer as those activities occur.
iii. Support and maintenance revenue
Support and maintenance services are either bundled into licensing arrangements or sold separately to customers.
Where these services are bundled the Group allocates the transaction price to support and maintenance performance obligations based on their
relative standalone selling price. We determine standalone selling price by considering multiple factors including but not limited to prices we
charge for similar offerings and pricing practices. Priority is placed on observable pricing where available. Support and maintenance services are
provided over the contractual period and accordingly are recognised over time.
iv. Professional services revenue
Professional services revenue mainly consists of fees charged for consultancy and training service. Revenue from a contract to provide consulting
and training services is recognised over time as the consulting and training is performed.
v. Sale of goods
The Group on occasion will provide 3rd Party Software and Hardware to a customer. Revenue from the sale of these goods is recognised at the
point of delivery as this corresponds to the transfer of control of the goods to the customer.
vi. Costs of obtaining a customer contract
Incremental costs associated with acquiring a customer contract, such as sales commissions, are generally required to be recognised as an asset
and amortised over a period that corresponds with the period of benefit.
We recognise an asset for the incremental costs of obtaining a contract with a customer if the Group expect the benefit of those costs to be longer
than one year. The Group has determined that certain sales incentives meet the requirements to be capitalised.
The Group applies a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortisation period
would have been one year or less. These costs include our internal sales commission compensation program and reseller margin where it has been
determined that the reseller is acting as an agent for Nuix.
vii. Sales through partners
Where the Group uses partners, the Group must assess whether its customer is the partner or the end user. Where the end user is the customer,
revenue is recognised for the consideration paid by the end user with any commission retained by the partner recognised as commission expense
within costs of goods sold. Where the partner is the customer, revenue is recognised at the net (of commission) amount received.
viii. Contract balances and other receivables
Timing of revenue recognition may differ from the timing of invoicing to customers. The Group records an unbilled revenue when revenue is
recognised prior to invoicing, or deferred revenue when revenue is recognised subsequent to payment being received or due. For multi-year
74
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS agreements, the Group generally invoice customers annually at the beginning of each annual coverage period. The Group records a receivable
related to revenue recognised for multi-year on-premises licences as the Group has an unconditional right to invoice and receive payment in the
future related to those licences.
Deferred revenue comprises mainly unearned revenue related to support and maintenance obligations, cloud services (Nuix hosted SaaS
services), and revenues from subscription licences where Nuix presently have billed customers, but the customer can only begin to benefit from
the licence post balance date.
Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 60 days. In instances
where the timing of revenue recognition differs from the timing of invoicing, the Group have determined our contracts generally do not include
a significant financing component. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of
purchasing our products and services, not to receive financing from our customers or to provide customers with financing. An example of providing
such simplified and predictable ways of purchasing our product and services include multi-year on-premises licences that are invoiced annually,
with revenue recognised upfront.
Significant judgements and assumptions
Determination of contract term
For licences to use our software, determining the non-cancellable term of a contract with a customer can require significant judgement. Given a
substantial portion of our contracting is with governmental agencies, and the varied nature of our contracting with customers, interpretation of
termination clauses at the inception of the contract requires judgement. If a contract term is determined to be non-cancellable for a longer period,
a higher amount of revenue is likely to be recognised upfront; whereas a contract term that is determined to be non-cancellable for a shorter
period, a lower amount of revenue is likely to be recognised upfront.
Contracts with multiple performance obligations
The Group enters into contracts with its customers that can include promises to transfer multiple performance obligations. A promised good or
service must be distinct to be accounted for as a separate performance obligation. For software license contracts, there is a combination of goods
and services that include software licensing, software maintenance and support services which are generally treated as separate performance
obligations on the basis that the customers can benefit from them separately (or with other rights that they have), and they are separately
identifiable in the contract.
Judgement has been exercised in estimating the standalone selling price for software licences with bundled support and maintenance. To estimate
the standalone selling prices for the software licenses and bundled support and maintenance, Nuix considers available observable inputs, such as
the support and maintenance charges where there is no bundling, including adjustments to these observable inputs to reflect differences in the
licensing arrangements and pricing practices.
Recognition of revenue on sales made through partners
Where the Group transacts with customers through partners, the Group is required to assess whether the partner is:
• our customer – in which case, Nuix will recognise the net consideration receivable from the partner as revenue; or
• an agent, and the end customers are Nuix’s customers, in which case Nuix will recognise the gross consideration paid by the end customer as
revenue, with the partner’s fee usually recognised as a cost.
Nuix sells through partners which includes entities that are referred to by Nuix as resellers and distributors. Nuix’s partners help to extend
coverage and capacity of Nuix’s distribution network. The flagship program for Nuix partners is known as the Partner Connect Program, which
involves the tiering of partners to deliver a strategic focus by Nuix on high revenue generating partners and an efficient support framework for those
with less sales frequency and volume. A reseller is an intermediary that acts on behalf of Nuix and sells Nuix software to third parties. A distributor
also sells Nuix software to third parties, however the distributor may also appoint sub-distributors or agents to market and sell Nuix products on
their behalf. There are a number of other types of organisations that Nuix considers to be partners that do not support indirect sales in the same
way as a reseller or distributor. These partnerships include advisories and service providers, integrations partners, authorised training partners,
original equipment manufacturing (OEM) partners and transactional resellers.
Nuix has concluded that it is only through reseller partners, that the partners do not obtain control of the goods and services that are provided by
Nuix to end customers as part of that sales channel. In relation to sales of licences to Nuix software, resellers are required to provide Nuix with an
order from an end customer and Nuix has the unilateral ability to decline such an order form. On the basis that the licence to an end customer is
generated only on acceptance by Nuix of such an order form, and that the licence and associated support and maintenance is provided directly
75
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS to the end customer, Nuix has concluded that the end customer is its customer, and the reseller is acting as an agent in these arrangements.
In these instances, Nuix applies judgement to determine the consideration to which it is entitled using all relevant facts and circumstances that
are available.
For all other sales made through partners (e.g. advisories, distributors and original equipment manufacturing partners), Nuix has concluded that the
partners take control of the licence and related support and maintenance, and as a result those partners are Nuix’s customers in those arrangements.
2.2 Segment information
The Group manages its operations as a single business operation and there are no parts of the Group that qualify as operating segments under
AASB 8 Operating Segments. The CEO (Chief Operating Decision Maker or “CODM”) assesses the financial performance of the Group on an
integrated basis only and accordingly, the Group is managed on the basis of a single segment. Information presented to the CODM on a monthly
basis is categorised by type of revenue as provided below. Further, earnings before interest, tax and depreciation and amortisation (EBITDA) is
used to assess the performance of the business.
Segment performance
Software
Services
Revenue from events (sponsorship and ticket sales)
Hardware
Total revenue
2023
$000
176,691
5,335
439
–
2022
$000
146,418
5,840
–
52
182,465
152,310
In general, a large amount of revenue is generated by customers that are global, from transactions that cross multiple countries and where the
source of revenue can be unrelated to the location of the users accessing the software. Accordingly, the Group is managed as a single segment.
Key elements adjusted against statutory loss after tax to derive segment EBITDA are as follows:
Net loss after tax
Less: Income tax (expense)/benefit
Loss before income tax
Add: Depreciation and amortisation
Add: Interest expense
Less: Net foreign exchange (gains)/losses
Less: Fair value gain on contingent consideration
EBITDA
Geographic Information
Revenue generated by location of customer1
Asia Pacific
Americas
Europe, Middle East and Africa (EMEA)
2023
$000
(5,589)
(315)
(5,274)
40,691
1,220
(735)
(1,011)
34,891
2023
$000
41,698
91,740
49,027
2022
$000
(22,791)
1,314
(24,105)
35,584
1,630
(1,045)
–
12,064
2022
$000
34,479
82,708
35,123
1 The amounts for revenue by region in the following table are based on the invoicing location of the customer.
182,465
152,310
76
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS Non-current assets by geographic location
Asia Pacific
Americas
Europe, Middle East and Africa (EMEA)
2.3 Loss for the year
The loss for the year has been arrived at after charging the following items:
Notes
Expenses (included in general and administration)
Legal fees – operational
Legal fees – non-operational1
Bad debts expense
Low value/short term leases
Employee benefit expenses, inclusive of share-based payment expenses
(recognised across functions)
6.1
Sales and distribution
Research and development
General and administration
Depreciation and amortisation (recognised across functions)
Sales and distribution
Research and development
General and administration
Cost of goods sold
Interest expense
Fair value gain on contingent consideration
2.5
9.1
2023
$000
143,400
128,137
1,145
272,682
2023
$000
2,909
7,816
956
1,018
52,646
25,156
15,992
1,895
36,688
1,808
300
1,220
(1,011)
1 Relates to costs for Group’s defences to the actions brought as disclosed in Note 9.6, and legal advice for the acquisition of Topos Labs, LLC.
2.4 Other income
Government grant income
Other income
2023
$000
1,080
239
1,319
2022
$000
134,928
129,492
2,022
266,442
2022
$000
1,841
13,796
1,221
313
55,226
13,950
15,904
2,378
31,948
1,258
–
1,630
–
2022
$000
1,157
73
1,230
Government grants recognised as other income for the current financial year relates to benefits received under the Research and Development Tax
Incentive regime in excess of the statutory income tax rate.
77
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS ACCOUNTING POLICIES – GOVERNMENT GRANTS
Allowances under the Australian Research and Development Tax Incentive regime are accounted for as a tax credit, except for the incremental
benefit above the statutory income tax rate which is accounted for as a government grant.
Grants from the government are recognised where there is a reasonable assurance that the grant will be received and the Group will comply with
all attached conditions.
Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them with the costs that they
are intended to compensate.
Government grants relating to intangible assets are included in non-current liabilities as deferred income and they are credited to profit or loss on a
straight-line basis over the expected lives of the related assets.
2.5 Finance costs
Interest expense
2023
$000
1,220
1,220
2022
$000
1,630
1,630
ACCOUNTING POLICIES – FINANCE COSTS
Interest expense is recognised using the effective interest method. The ‘effective interest rate’ is the rate that exactly discounts estimated future
cash payments through the expected life of a financial liability to the amortised cost of the financial liability.
2.6 Reconciliation of cash flows from operating activities
Cash flows from operating activities
Loss for the year (before income tax)
Non-cash charges recognised in profit and loss:
Depreciation
Amortisation of intangible assets
Amortisation of capitalised borrowing costs
Bad debts expense
Share-based payment expense
Net exchange rate differences
Fair value gain on contingent consideration
Changes in assets and liabilities:
Decrease/(increase) in trade and other receivables
(Increase)/decrease in deferred tax asset
Increase in other current assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in deferred revenue
Increase in employee benefits provisions
Decrease in current tax liabilities
Increase in other liabilities
Increase in provision for make good
Net cash from operating activities
78
2023
$000
2022
$000
(5,274)
(24,105)
4,305
36,386
14
956
3,514
(34)
(1,011)
(19,584)
(156)
713
(2,585)
5,758
4,458
(316)
5,371
49
32,564
3,856
31,728
66
1,221
2,997
604
–
9,346
(257)
(2,717)
3,186
3,247
702
(543)
–
531
29,862
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS 2.7 Earnings per share
Loss for the year
2023
$000
(5,589)
2022
$000
(22,791)
Weighted average number of ordinary shares (basic)
317,375,912
317,314,794
Basic earnings per share (in dollars)
(0.02)
(0.07)
Loss for the year
Weighted average number of ordinary shares (basic)
Shares issuable in relation to equity-based compensation scheme
Effect of share options and performance rights
Diluted weighted average number of ordinary shares
Diluted earnings per share (in dollars)
(5,589)
(22,791)
317,375,912
317,314,794
9,595,8601
Antidilutive2
4,527,969
Antidilutive
326,971,772
321,842,763
(0.02)
(0.07)
1 Comprises potential ordinary shares issuable in relation to performance rights. Options are only considered in the calculation of diluted earnings per share when the
current share price exceeds the option exercise price (in the money options). Share options that remain on-foot and are fully vested have exercise prices higher than
the current share price, and therefore do not give rise to potential ordinary shares that are used in the calculation of diluted earnings per share.
2
In the year ended 30 June 2023, the conversion of the options and performance rights on issue would reduce the loss per share.
Potential ordinary shares are ‘antidilutive’ when their conversion to ordinary shares would decrease loss per share from continuing operations. The calculation
of diluted earnings per share does not assume conversion, exercise, or other issue of potential ordinary shares that would have an antidilutive effect on earnings
per share.
As a result, the effect of share options and performance rights on diluted earnings per share is considered to be ‘antidilutive’ in the year ended 30 June 2023
(30 June 2022: Antidilutive).
ACCOUNTING POLICIES – EARNINGS PER SHARE
Basic earnings per share is calculated by dividing:
• profit attributable to owners, excluding any costs of servicing equity other than ordinary shares
• by the weighted average number of ordinary shares outstanding during the financial year, excluding any treasury shares.
Diluted earnings per share adjusts amounts used to compute basic earnings per share to take into account:
• the after-tax effect of interest/financing costs associated with dilutive potential ordinary shares, and
• the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential
ordinary shares.
79
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS
3. TAXATION OF OUR GLOBAL OPERATIONS
This section focuses on the taxation of our global operations.
It includes disclosures related to the income tax expense recognised from both current and deferred taxes, a reconciliation of the effective tax rate
for the group, and breakdowns for the deferred tax assets and liabilities of the Group.
The note also includes disclosures of significant judgements and uncertainties related to our tax positions.
3.1 Income tax expense/(benefit)
Current tax expense
Current tax on profits for the year
Changes in estimates related to prior years
Total current tax expense
Deferred tax expense
Increase in deferred tax assets
Increase/(decrease) in deferred tax liabilities
Decrease in deferred tax assets (initially recognised directly in equity)
Changes in estimates related to prior years
Total deferred tax benefit
Income tax expense/(benefit)
2023
$000
1,430
(312)
1,118
(2,495)
1,075
7881
(171)
(803)
315
2022
$000
1,186
(45)
1,141
(1,619)
(7,370)
788
5,746
(2,455)
(1,314)
1. Section 40-880 deduction recognised and amortised over 5 years in respect to the IPO costs incurred in December 2020, for the portion that was recognised
directly in equity.
3.2 Reconciliation of effective tax rate
Loss before income tax expense
Tax at the Australian tax rate of 30% (2022: 30%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Entertainment
Share-based payments
Interest expense
Difference in overseas tax rates
Benefit of Australia R&D tax credit amortised to other income
Benefit of United States R&D tax credit recognised in income tax expense
Benefit of Australia R&D tax credit recognised in income tax expense
Non-deductible R&D expenditures
Recognition of permanent benefits on R&D at 8.5%
Changes in estimates related to prior years – Nuix Limited
Changes in estimates related to prior years – Nuix North America and other subsidiaries
Deferred tax assets not brought to account – Nuix Limited1
Others
Income tax expense/(benefit)
2023
$000
(5,274)
(1,582)
32
1,067
14
(861)
(324)
(968)
(1,221)
951
270
(183)
(130)
2,610
640
315
2022
$000
(24,105)
(7,232)
46
899
18
114
(347)
(924)
(3,058)
2,383
675
3,921
1,825
–
366
(1,314)
1. Deferred tax assets have not been brought to account for the realised tax losses in Nuix Limited to the extent that they are not covered by deferred tax liabilities as
the utilisation of the tax losses is not regarded as sufficiently probable at this stage.
80
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS 3.3 Deferred tax balances
Deferred tax assets
Research and development tax credit to carry forward
Employee benefits
Deferred revenue
Lease liabilities
Tax losses
s40-880 “black hole” deductions related to IPO costs
Others
Total deferred tax assets
Set-off deferred tax liabilities pursuant to set-off provisions
Net deferred tax assets
Deferred tax liabilities
Intellectual property
Right of use assets
Property and equipment
Total deferred tax liabilities
Set-off deferred tax assets pursuant to set-off provisions
Net deferred tax liabilities
3.4 Current tax assets/(liabilities)
Opening balance
Current income tax provision (net of tax credits)
Income tax payments
Changes in estimates related to prior years
Foreign exchange difference
Closing balance
2023
$000
18,413
2,088
6,990
2,562
16,384
6,048
92
52,577
(48,619)
3,958
2023
$000
45,233
1,975
1,411
48,619
(48,619)
–
2023
$000
1,918
(968)
277
154
60
1,4411
2022
$000
19,708
1,814
4,670
3,174
10,188
9,077
2,239
50,870
(47,544)
3,326
2022
$000
44,018
2,576
950
47,544
(47,544)
–
2022
$000
(571)
(287)
385
2,367
24
1,918
1. The current tax liability account is in a net refund position due to the application of the tax loss carry back rules for US tax purposes in relation to Nuix North America
Inc. Under the tax loss carry back rules for US tax purposes, Nuix North America Inc. is expected to amend the FY2015 to FY2019 tax returns to apply the tax losses
incurred in those years of approximately US$6.9m and is expected to result to a cash refund.
81
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS ACCOUNTING POLICIES – INCOME TAX
Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to a business
combination, or items recognised directly in equity or other comprehensive income.
i. Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or
receivable in respect of previous years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid
or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting
date. Current tax also includes any tax arising from dividends.
Current tax assets and liabilities are offset only if 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.
ii. Deferred tax
Deferred tax is recognised in respect of the temporary differences between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:
• Temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects
neither accounting nor taxable profit or loss;
• Temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Group is able to control
the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
• Taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable
that future taxable profits will be available against which they can be used. Future taxable profits are determined based on the reversal of relevant
taxable temporary differences. If the amount of taxable temporary differences is insufficient to recognise a deferred tax asset in full, then future
taxable profits, adjusted for reversals of existing temporary differences, are considered, based on the business plans for individual subsidiaries in
the Group. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax
benefit will be realised; such reductions are reversed when the probability of future taxable profits improves.
Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future
taxable profits will be available against which they can be used.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates that are
expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date, and
reflects an assessment of uncertain tax positions taken.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting
date, to recover or settle the carrying amount of its assets and liabilities. 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.
iii. Accounting for Investment Tax Credits
The accounting for an Investment Tax Credit (ITCs) is dependent upon whether the arrangement is more akin to a credit received for investment
in a certain area, or a rather reduction in an applicable tax rate. Where an ITC is the former, it is treated as a government grant (with the relevant
benefit amortised over the period necessary to match the benefits with the costs that they are intended to compensate), and where it is the latter,
it is treated as a part of current tax expense.
iv. Uncertainty over income tax treatments
The application of the tax law to a particular transaction or circumstances may be unclear and the acceptance of the treatment may not be known
until the relevant taxation authority undertakes an examination of the tax treatment adopted or, in the event of a dispute, when a court makes a
decision at a future time.
Where there is uncertainty over income tax treatments the recognition and measurement of current or deferred tax assets or liabilities is
determined applying Interpretation 23 – Uncertainty Over Income Tax Treatments.
Each uncertain tax treatment is considered separately unless consideration together with one or more other uncertain tax treatments gives rise to a
better prediction of the resolution of the uncertain treatments on examination by the relevant taxation authority.
82
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS Where it is considered probable (more likely than not) that the relevant taxation authority will accept the tax treatment used or planned to be used
in its income tax filings the tax treatment adopted is consistent with that used or planned treatment in the income tax filings.
In assessing such probability in the recognition and measurement of uncertain tax treatments it is assumed that the relevant taxation authority will
examine amounts it has the right to examine and have full knowledge of all related information when making those examinations and determining
whether or not to accept the tax treatment in the relevant income tax filings. In the event that the relevant taxation authority will not accept the tax
treatment, the uncertainty of each treatment is measured using either of the following methods:
• The most likely amount – the single most likely amount in a range of possible outcomes, particularly where the outcome is binary or
concentrated on one value; or
• The expected value – the sum of the probability weighted amounts in a range of possible outcomes.
In the event that an uncertain tax treatment affects both current and deferred tax the judgements made in relation to the uncertain tax treatment
are made consistently for current and deferred tax.
SIGNIFICANT JUDGEMENTS AND ASSUMPTIONS
Recoverability of tax assets
Evaluating the need for a provision for recoverability of deferred tax assets often requires significant judgement and extensive analysis of all the
evidence available to determine whether all or some portion of the deferred tax assets will not be realised. A recoverability provision must be
established for deferred tax assets when it is more-likely-than-not (a probability level of more than 50%) that they will not be realised.
Management have assessed all evidence available including historical utilisation patterns, anticipated timing of the reversal of deductible and
taxable temporary differences and forecast future assessable income, and have concluded that it is not sufficiently probable that the uncovered
deferred tax assets held by Nuix Limited will be utilised, and accordingly it has not been brought to account ($2,610,000).
3.5 Income tax paid by legal entity
Nuix North America Inc
Nuix Ireland Ltd
Nuix Limited
Nuix Holding Pty
Nuix Philippines Regional Operating Headquarters
Nuix Pte. Ltd.
3.6 Franking credits
2023
$000
243
1
4
17
8
4
277
Franking credits arising from the payments of income tax, by Nuix Limited in prior years until 30 June 2023 are represented below.
Franking credits attributable to the Company
Franking credits available for subsequent financial years based on a tax rate of 30% (2022: 30%)
2023
$000
669
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 (2022: Nil);
• franking debits that will arise from the payment of dividends recognised as a liability at the reporting date (2022: Nil); and
• franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date (2022: Nil).
2022
$000
140
89
63
59
29
5
385
2022
$000
669
Franking credits attributable to Nuix Limited as an ASX listed company only are represented above. Additional franking credits will be received if
the distributable profits of the subsidiaries were paid as dividends to Nuix Limited.
83
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS 4. WORKING CAPITAL
This section focuses on the working capital of the group as of balance date, how it has moved during the year, and how balances are anticipated to
be realised in forthcoming periods.
4.1 Cash and cash equivalents
Bank balances
Total cash and cash equivalents
ACCOUNTING POLICIES – CASH
2023
$000
29,588
29,588
2022
$000
46,846
46,846
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. Refer to Note 1.10 for accounting policies and disclosures
related to financial instruments.
4.2 Trade and other receivables (including contract assets)
2023
$000
41,634
(1,702)
40,422
746
81,100
2023
$000
68,534
12,566
81,100
2023
$000
6,918
1,234
736
8,888
2022
$000
29,309
(1,007)
34,273
–
62,575
2022
$000
50,813
11,762
62,575
2022
$000
3,212
365
1,232
4,809
Trade receivables
Provision for impairment of trade receivables and unbilled revenue
Unbilled revenue
Other non-current investment (cash backed bank guarantee)
Total trade and other receivables
Presentation of balances
Current
Non-current
Total trade and other receivables
Ageing of overdue receivables
1 – 3 months
4 – 6 months
Over 6 months
84
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS ACCOUNTING POLICIES – TRADE AND OTHER RECEIVABLES (INCLUDING CONTRACT ASSETS)
Trade receivables are recognised initially at the amount of consideration that is unconditional, unless they contain significant financing
components when they are recognised at fair value. They are subsequently measured at amortised cost using the effective interest method,
less loss allowance.
Nuix has contracts with certain customers, for purchases of a subscription licenses that cover a multiyear period. As the term of a license is
a characteristic of the license which is delivered to and controlled by the customer at a point-in-time, the portion of the consideration related to the
provision of the license is recognised as revenue when the license is delivered to the customer, the contractual term of the license period begins,
and the customer can benefit from having the license.
Refer to Note 1.10 for accounting policies and disclosures related to financial instruments.
4.3 Other current assets
Prepayments
Costs of obtaining contracts
Other receivables
Total other current assets
4.4 Trade and other payables
Sundry payables and accrued expenses
Trade payables
Customer deposits
Payroll tax and other statutory liabilities
Indirect taxes payable
Total trade and other payables
2023
$000
5,504
1,485
334
7,323
2023
$000
22,397
4,215
54
852
1,137
28,655
2022
$000
6,164
1,650
284
8,098
2022
$000
16,626
5,311
245
878
682
23,742
ACCOUNTING POLICIES – TRADE AND OTHER PAYABLES
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year, which are unpaid.
The amounts are unsecured and are usually paid in the normal course of business within 45 days of recognition or according to the payment
agreement. Trade and other payables are presented as current liabilities unless payment is not due within 12 months from the reporting date.
Refer to Note 1.10 for accounting policies and disclosures related to financial instruments.
85
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS 4.5 Deferred revenue
Customer-related (contract liabilities)
Support and maintenance on term licences
Term licences (billed) commencing post balance date
Support and maintenance on perpetual licences
Consumption income
Professional services income
Tax incentive-related
Research and development
Total deferred revenue
Movements during the year of tax incentive related deferred revenue
Opening balance
Other income recognised in the current year
Additional research and development incentive
Changes in estimates related to prior years
Closing balance
Presentation of balances
Current
Non-current
Total deferred revenue
2023
$000
20,669
3,890
16,077
7,510
3,060
51,206
3,739
54,945
2023
$000
4,916
(1,080)
269
(366)
3,739
2023
$000
38,998
15,947
54,945
2022
$000
15,026
3,370
14,862
8,189
2,922
44,369
4,916
49,285
2022
$000
5,395
(1,157)
678
–
4,916
2022
$000
32,544
16,741
49,285
Revenue recognised in the year included in the opening deferred revenue balance
Revenue recognised in the year that was included in the deferred revenue balance at the beginning of the year amounted to $30,211,000
(2022: $32,620,000).
Transaction price allocated to remaining performance obligations
Remaining performance obligations represents the total contractual commitments for which services will be performed. Remaining performance
obligations include deferred revenue, which primarily consists of billings, unbilled receivables or payments received in advance of revenue recognition.
The transaction price allocated to remaining performance obligations is $63,814,000. Approximately 73.9% of the remaining performance
obligations are expected to be recognised over the next 12 months with the remainder recognised thereafter.
86
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS 4.6 Provisions
Current
Annual leave
Long service leave
Non-current
Long service leave
Make good obligation
Movements in make good obligation during the year
Make good obligation
Opening balance
Charged to profit or loss
Closing balance
2023
$000
2,704
296
3,000
286
885
1,171
2023
$000
836
49
885
2022
$000
2,547
351
2,898
181
836
1,017
2022
$000
305
531
836
ACCOUNTING POLICIES – PROVISIONS
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 6.1.
Nuix is required to restore the leased office at 1 Market Street in Sydney, Foster Plaza Building 3 in Holiday Drive Suite 300 in Pittsburgh, and Unit
201 Alameda Del Prado in Novato 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 an interest expense.
87
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS 4.7 Borrowing facility
Secured liabilities
Nuix Limited had a Facility Agreement with the Commonwealth Bank of Australia (‘CBA’) which provided funding to the Company through a Cash
Advance Facility for the period to 11 September 2022.
Funding under the Cash Advance Facility was available under two tranches, being Tranche A for AUD $40,000,000 and Tranche B for
USD $7,500,000. Accordingly, the available funding under the facilities as denominated in Australian dollars fluctuated from period to period,
with $50,000,000 having been available under these facilities. The Company had not drawn on either of these facilities during the period up to
its termination on 11 September 2022. The Company will continue to assess its ongoing liquidity requirements.
The company had a CBA bank guarantee for the amount of $746,460 to support Nuix Limited’s obligation for a property lease for its headquarter
in Australia. This obligation is now cash backed by the Group. Nuix Limited’s obligations in respect to the bank guarantee are contingent only.
ACCOUNTING POLICIES – BORROWINGS
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost.
Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the consolidated statement of
comprehensive income over the period of the borrowing using the effective interest method. Fees paid on the establishment of loan facilities are
recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is
deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee
is capitalised and amortised over the period of the facility to which it relates.
5. NON-CURRENT ASSETS
This section focuses on the non-current assets of the Group including how management identify activities that are required to be capitalised,
how balances have moved during the period, and how the Group has assessed whether there has been any impairment of these assets.
Most of the non-current assets held by Nuix relate to the intellectual property embedded within the software platform that has been developed
(the Nuix platform). This software platform comprises a powerful, proprietary, data processing engine (called the Nuix Engine) and several software
applications. It has been developed in-house, shaped by feedback from long-standing government and private sector customers, and assists
customers in solving many of their complex data challenges.
The Nuix Engine is at the core of the Nuix platform and can be deployed at varying scales, for example, on a single laptop or across multiple servers
depending on the volume of data that require analysis or the speed at which that analysis is to be delivered. A key part of the processing performed
by the Nuix Engine is to “normalize data at its binary level.” The Nuix Engine uses parallel data processing technology to process, normalize,
index, enrich and analyse data at speed and scale. Currently, the Nuix Engine can process over 1,000 file types, and this capability is expected to
continue growing over time. Customers can also export data processed by the Nuix Engine to third party applications or further enrich that data,
for example by merging data processed by the Nuix Engine with an existing database, creating an enhanced data set from which more informed
decisions can be made. This is made possible through open application programming interfaces (or APIs) and connectors developed by Nuix.
In addition to the Nuix Engine, the Nuix platform comprises a suite of visualization, analytics and relationship-mapping software applications
(Nuix Workstation, Nuix Investigate, Nuix Endpoint and Nuix Discover) that use the outputs of the Nuix Engine to provide insights and intelligence
to customers in many different investigative and analytical situations. These applications have extended and continue to extend the number of use
cases for the Nuix platform and assist Nuix to grow into new and broader markets.
Nuix acquired Topos Labs, LLC during FY 2022, to further expand the capability of the Nuix Engine and related Nuix platform products in Natural
Language Processing. Activities to complete integration of the capability of this acquired Intellectual Property with Nuix platform products are
ongoing and anticipated to be completed in the short term, enabling Nuix to make available to customers of Nuix platform products occurred in
earnest throughout FY2022 and FY2023, culminating in the General Availability release of Nuix Neo in July 2023.
88
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS 5.1 Intangible assets
Reconciliation of carrying amount
Year ended 30 June 2022
Balance at 1 July 2021
Effect of movements in exchange rates – cost
Effect of movements in exchange rates – accumulated
amortisation and impairment
Acquisition via business combination1
Additions
Transfers from other asset classification
Amortisation
Balance at 30 June 2022
Carrying amount at 30 June 2022
At cost
Accumulated amortisation and impairment
Goodwill
$000
External
licenses
$000
Brand
$000
Intellectual
property
$000
Total
$000
4,145
384
–
13,872
–
–
–
18,401
111
140
(133)
–
–
1,275
(362)
1,031
666
62
(7)
95
–
–
192,493
197,415
8,993
9,579
(2,719)
(2,859)
7,088
42,388
–
21,055
42,388
1,275
(246)
(31,120)
(31,728)
570
217,123
237,125
18,401
–
3,786
(2,755)
823
(253)
336,222
359,232
(119,099)
(122,107)
Balance at 30 June 2022
18,401
1,031
570
217,123
237,125
Year ended 30 June 2023
Balance at 1 July 2022
Effect of movements in exchange rates – cost
Effect of movements in exchange rates – accumulated
amortisation and impairment
Additions
Amortisation
Balance at 30 June 2023
Carrying amount at 30 June 2023
At cost
Accumulated amortisation and impairment
Balance at 30 June 2023
18,401
711
–
–
–
19,112
19,112
–
19,112
1,031
65
(64)
–
(348)
684
570
32
(14)
–
(210)
217,123
237,125
4,821
5,629
(1,663)
(1,741)
39,940
(35,828)
39,940
(36,386)
378
224,393
244,567
3,851
(3,167)
855
(477)
380,983
404,801
(156,590)
(160,234)
684
378
224,393
244,567
1 Following the Topos Labs acquisition, the US Dollar denominated balances of the intangible assets acquired as a part of the business combination are: Goodwill: US
$9,536,000; Brand: US $65,000; Intellectual property: US $4,873,000.
89
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS ACCOUNTING POLICIES – INTANGIBLE ASSETS
i. Development costs recorded as Intellectual Property
Development costs are capitalised where future economic benefits from development of a chosen alternative for new or improved software
products, processes, systems or services are considered probable, and expenditure in relation to such activities is capable of reliable
measurement. Future economic benefits are considered probable where commercial benefit and technical feasibility have been established.
The expenditure includes all directly attributable costs, including external direct costs of materials, services, direct labour and overheads.
Other development expenditure that does not meet these criteria, which includes research activities and the expenditure on maintenance of
computer software, is expensed as incurred.
ii. Goodwill
Goodwill acquired in a business combination is measured at cost and subsequently at cost less any impairment losses. The cost represents the
excess of the cost of a business combination over the fair value of the identifiable assets and liabilities acquired.
iii. External software licenses
External software licenses are carried at historic cost or fair value at the date of acquisition less accumulated amortisation and impairment losses.
iv. Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates.
All other expenditure, including expenditure on internally generated goodwill, is recognised in profit or loss as it is incurred.
v. Amortisation
Amortisation is calculated to write off the cost of intangible assets less their estimated residual values using the straight-line method over their
estimated useful lives and is recognised in profit or loss. Goodwill is not amortised. Intangible assets, other than goodwill, have finite useful lives.
Goodwill has an indefinite useful life.
Class of intangible asset
External software
Brand
Intellectual Property
SIGNIFICANT JUDGEMENTS AND ASSUMPTIONS
Capitalisation and useful life of intangible assets
Depreciation rate (per year)
20% – 33%
25% – 100%
10% – 17%
Management has made judgements in respect of intangible assets when assessing whether an internal project in the development phase meets
the criteria to be capitalised, and on measuring the costs and economic life attributed to such projects. On acquisition, specific intangible assets
are identified and amortised over their estimated useful lives. The capitalisation of these assets and the related charges are based on judgements
about their value and economic life.
Management has also made judgements and assumptions when assessing the economic life of intangible assets and the pattern of consumption
of the economic benefits embodied in these assets. The economic lives for intangible assets are estimated at between three and ten years.
Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted, if appropriate.
90
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS 5.2 Property and equipment
Reconciliation of carrying amount
Year ended 30 June 2022
Balance at 1 July 2021
Effect of movements in exchange rates – cost
Effect of movements in exchange rates – accumulated depreciation
Additions
Disposals
Depreciation
Balance at 30 June 2022
Carrying amount at 30 June 2022
At cost
Accumulated depreciation
Balance at 30 June 2022
Year ended 30 June 2023
Balance at 1 July 2022
Effect of movements in exchange rates – cost
Effect of movements in exchange rates – accumulated depreciation
Additions
Disposals
Depreciation
Balance at 30 June 2023
Carrying amount at 30 June 2023
At cost
Accumulated depreciation
Balance at 30 June 2023
Office and
computer
equipment
$000
Furniture
and fixtures
$000
Leasehold
improvement
$000
Total
$000
2,018
870
(812)
2,358
–
(1,394)
1,100
614
(591)
1,030
–
(829)
1,324
175
82
(76)
625
–
(191)
615
743
174
(145)
703
–
(374)
1,101
3,040
12,665
(11,341)
1,734
(1,119)
4,750
(3,649)
19,149
(16,109)
1,324
615
1,101
3,040
1,324
454
(426)
1,073
–
(975)
1,450
615
66
(45)
100
–
(213)
523
1,101
146
(115)
127
–
(288)
971
3,040
666
(586)
1,300
–
(1,476)
2,944
14,192
(12,742)
1,900
(1,377)
5,023
(4,052)
21,115
(18,171)
1,450
523
971
2,944
ACCOUNTING POLICIES – PROPERTY AND EQUIPMENT
i. Recognition and measurement
Items of property and equipment are measured at cost, which includes capitalised borrowing costs, less accumulated depreciation and
impairment losses. If significant parts of property and equipment have different useful lives, then they are accounted for as separate items or
property and equipment. Any gain or loss on disposal of an item of property and equipment is recognised in profit and loss.
ii. Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable that future economic benefits will flow to the Group.
91
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS iii. Depreciation
The depreciable amount of all property and equipment is depreciated on a straight-line basis over the useful lives commencing from the time
that the assets are held ready for use. Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if
appropriate.
Depreciation rate (per year)
33%
20%
Consistent with lease term (10-33%)
Class of plant and equipment
Office and computer equipment
Furniture and fixtures
Leasehold improvements
5.3 Leases
Amounts recognised in the balance sheet
Right-of-use assets, net of depreciation
Lease liabilities
Current
Non-current
Lease liabilities
Right-of-use assets
Balance at 1 July
Additions
Depreciation expense
Exchange difference
Balance at 30 June
Amounts recognised in profit and loss
Depreciation charge of right-of-use assets
Interest expense (included in finance cost)
Expenses relating to short-term leases
Expenses relating to leases of low-value assets that are not shown above as short-term leases
Amounts recognised in statement of cash flows
Total cash outflow for leases
92
2023
$000
8,647
3,028
8,088
11,116
2023
$000
11,189
–
(2,829)
287
8,647
2023
$000
2,829
–
1,011
7
3,847
2023
$000
3,441
2022
$000
11,189
2,802
10,848
13,650
2022
$000
9,036
4,536
(2,462)
79
11,189
2022
$000
2,462
539
248
65
3,314
2022
$000
3,266
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS Extension options
Some property leases contain extension options exercisable by the Group to up to twelve months before the end of the non-cancellable contract
period. Where practicable, the Group seeks to include extension options in new leases to provide operational flexibility. The extension options held
are exercisable only by the Group and not by the lessors. The Group assesses at the lease commencement date whether it is reasonably certain
to exercise the extension options. The Group reassesses whether it is reasonably certain to exercise the options if there is a significant event or
significant changes in circumstances within its control.
The Group has estimated that the potential future lease payments, should it exercise the extension options across all leases where they are
available, would result in an increase in lease liability of $6,053,000.
ACCOUNTING POLICIES – LEASES
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys
the right to control the use of an identified asset for a period of time in exchange for consideration.
A. As lessee
At commencement or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each
lease component on the basis of its relative standalone prices. However, for the leases of property the Group has elected not to separate non-lease
components and account for the lease and non-lease components as a single lease component.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at
cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any
initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset, less any lease
incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term,
unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset
reflects that the Group will exercise a purchase option. In that case the right-of-use asset will be depreciated over the useful life of the underlying
asset, which is determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by
impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using
the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the Group
uses its incremental borrowing rate as the discount rate.
The Group determines its incremental borrowing rate by obtaining interest rates from various financing sources and makes certain adjustments
to reflect the terms of the lease and type of the asset leased.
Lease payments included in the measurement of the lease liability comprise the following:
• fixed payments, including in substance fixed payments;
• variable lease payments that depend on an index or a rate, initially measured using the index or rate at the commencement date;
• amounts expected to be payable under a residual value guarantee; and
• the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in any optional renewal period if the
Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain
not to terminate early.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease
payments arising from a change in an index or rate, if there is a change in the Group’s estimate of the amount expected to be payable under a
residual value guarantee, if the Group changes its assessment of whether it will exercise a residual value guarantee, if the Group changes its
assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment.
93
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is
recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to
produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and lease liabilities for leases of low-value assets and short-term leases, including
low-value IT equipment. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the
lease term.
5.4 Impairment testing of non-financial assets
Reassessment of identification of CGUs
Management had previously identified that on the acquisition of Topos Labs, LLC that the group would have two CGUs until the completion of the
integration of Topos Labs, LLC with the Nuix platform CGU. In May 2023, it was announced internally that the NLP team had formally joined their
respective functional streams within Product, Engineering and Solution Consulting. Additionally it is anticipated that Nuix Neo (which is the product
that embeds both the Nuix Engine and Nuix NLP functionality) will be available for General Availability in Q1 F24. As a consequence, management
have determined that the Topos Labs, LLC CGU no longer exists, and it has been subsumed into the Nuix platform CGU.
Goodwill allocated to Nuix platform CGU
Goodwill allocated to the Topos Labs CGU
2023
$000
19,112
–
19,112
2022
$000
16,873
1,528
18,401
Key assumptions in the Nuix platform CGU discounted cash flow model
A value-in-use discounted cash flow model has been used at 30 June 2023 to determine the recoverable amount of the Nuix platform CGU.
This model includes projected revenues, gross margins and expenses which have been determined with reference to historical company
experience, industry data and management’s expectation of the future over a five-year period, with a perpetuity growth rate beyond that.
In modelling forecast revenues, gross margins and expenses for the Group, management have used the FY2024 board-approved budget as
an input. The perpetuity growth rate was set consistent with consensus views on long term GDP growth rates.
The following inputs and assumptions have been adopted:
Post-tax discount rate per annum
Pre-tax discount rate per annum
Long-term perpetuity growth rate
Sensitivity analysis
2023
11.5%
16.4%
2.5%
2022
10.6%
15.1%
2.5%
The key estimates and assumptions used to determine the recoverable amount of a cash generating unit are based on management’s current
expectations after considering past experience, future plans and external information. They are considered to be reasonably achievable, however
significant changes in any of these key estimates or assumptions may result in a cash generating unit’s carrying value exceeding its recoverable
amount, requiring an impairment charge to be recognised.
For the Nuix platform CGU, although the recoverable amount exceeds the carrying amount by more than $100 million, impairment testing
is sensitive to changes in the discount rate. An increase in the post-tax discount rate above 16.7% would cause the carrying amount of the
Nuix platform CGU to exceed its recoverable amount. If NDR on renewals for term-based licenses was 105% rather than 110% (pre-churn)
as is the base case assumption this would cause the carrying amount of the Nuix platform CGU to exceed the recoverable amount. However,
given ACV performance in FY23, and the commission plan structure, having a Group-wide NDR on renewals of 105% is not considered to be
a likely scenario.
94
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS ACCOUNTING POLICIES – IMPAIRMENT TESTING OF NON-FINANCIAL ASSETS
At each reporting date, the Group reviews the carrying values of its non-financial assets (other than contract assets and deferred tax assets) to
determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill
is tested annually for impairment.
For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are
largely independent of the cash inflows from other assets or CGUs. Goodwill arising from a business combination is allocated to CGUs or groups
of CGUs that are expected to benefit from the synergies of the combination.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs of disposal. Value in use is based on the
estimated future cash flows, 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 or CGU.
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount.
Impairment losses are recognised in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU,
and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s
carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment
loss had been recognised.
SIGNIFICANT JUDGEMENTS AND ASSUMPTIONS
Impairment testing of goodwill
Determining whether goodwill is impaired requires judgement to allocate amounts of goodwill to CGUs and a combination of judgement and
assumptions to estimate recoverable amounts.
Management have concluded that previously whilst the Intellectual Property from the Topos Labs acquisition was yet to be fully integrated into
the Nuix platform until sales of an integrated solution are made to customers, the cash inflows from the Topos Labs acquisition are substantially
independent of those for the rest of the Nuix platform. Accordingly, from the date of the acquisition of Topos, management had identified that the
Group had two CGUs. Management have now determined that these integration activities have been completed; and accordingly the Topos Labs
CGU has been combined with the Nuix platform CGU.
Management have prepared a value-in-use model for the Nuix platform CGU which is based upon the financial plans approved by the Board for the
year ending 30 June 2024, the closing balance sheet for the year ended 30 June 2023, expectations around realisation of assets and settlements
of liabilities on balance sheet as of 30 June 2023, projected revenues, gross margins and expenses determined with reference to historical
company experience, industry data and management’s expectations for the future. This model determined a recoverable amount in excess of the
carrying amount of the Nuix platform CGU, and accordingly no impairment has been recognised.
6. REMUNERATION
This section focuses on the expenses recognised in relation to the remuneration of our people, which includes details of the employee benefit
expenses recognised across the profit and loss, judgements related to accounting for share-based payments, and summary information for
remuneration of Key Management Personnel (KMPs).
Nuix is committed to attracting and retaining the best people to work in the organisation, including Directors and senior management.
A key element in achieving that objective is to ensure that the Group is able to appropriately remunerate its key people. Nuix has adopted a
Remuneration Policy, the purpose of which is to establish a framework for remuneration that is designed to:
• ensure that coherent remuneration policies and practices are observed which enable the attraction and retention of Directors and management
who will create value for Shareholders;
• fairly and responsibly reward Directors and senior management having regard to the Company’s performance, the performance of senior
management and the general pay environment; and
• comply with all relevant legal and regulatory provisions.
Refer to the Remuneration Report for detailed information related to KMPs.
95
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS 6.1 Employee benefit expenses
Wages and salaries
Sales and distribution
Research and development1
General and administration
Share-based payment expenses
Sales and distribution
Research and development
General and administration
2023
$000
51,530
22,815
15,935
90,280
1,116
2,341
57
3,514
2022
$000
53,830
13,112
15,141
82,083
1,396
838
763
2,997
1. Wages and salaries expense disclosed for the research and development function presented above are net of amounts required to be capitalised as development
costs to intangible assets.
Wages and salaries capitalised as development costs to intangible assets totalled $33,672,000 during the year ended 30 June 2023 (2022: $33,094,000), with the
remaining amounts capitalised being directly attributable costs and incremental overheads of development activities.
ACCOUNTING POLICIES – EMPLOYEE BENEFIT EXPENSES
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. Defined contribution superannuation plans
All obligations for contributions in respect of employees’ defined contribution benefits are recognised as an expense as the related service
is provided.
iii. 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 high-quality corporate bond rates with terms to maturity and
currency that match, as closely as possible, the estimated cash flows.
iv. Share-based payments
Share-based compensation benefits are provided to employees via the Nuix Employee Incentive Plan. The fair values of options granted under the
plans are recognised as a share-based payments expense with a corresponding increase in equity. The total amount to be expensed is determined
by reference to the fair value of the options granted, which includes the impact of any market 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 estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the
impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
96
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS 6.2 Share-based payments
Instruments on issue
Options
Performance Rights
30 Jun 2023
30 Jun 2022
3,094,383
9,595,8601
4,527,969
1,024,6342
1. Includes performance rights related to FY24 minimum revenue, EBITDA, and ACV growth targets for CEO and COO/CFO, sign-on performance rights for KMP and
non-KMP executives granted upon sign-on in FY2023, and special performance rights for key staff members granted in FY23. Excludes contingently issuable shares
for Topos Retention Recipients, as the number of shares is determined with reference in part to the 5-Day VWAP prior to the date before an Earnout Payment is
made, should an earnout payment indeed be achieved, and hence remaining number of shares to be granted is undetermined at this point in time.
2.
Includes performance rights related to FY24 minimum revenue and EBITDA targets for CEO and COO/CFO, sign-on performance rights for COO/CFO and
performance rights for non-KMP executives granted upon sign-on in FY2022. Excludes performance rights which may be granted to CEO as part of their sign-on
incentives which remain subject to shareholder approval. Excludes contingently issuable shares for Topos Retention Recipients, as the number of shares is
determined with reference in part to the 5-Day VWAP prior to the date before an Earnout Payment is made, should an earnout payment indeed be achieved, and
hence remaining number of shares to be granted is undetermined at this point in time.
Details related to the performance rights are as follows:
Grant name/employees entitled
Performance rights with performance hurdles
Performance rights granted to KMP
Number of
instruments
Vesting
condition
Vesting
date
FY22 LTI performance rights granted to CEO and COO/CFO
573,419
FY23 LTI performance rights granted to executive KMP
2,930,966
Performance rights granted to non-KMP
FY23 LTI performance rights
March 2023 Special performance rights grant
Performance rights with no performance hurdles
FY22 STI performance rights granted to CEO and COO/CFO
Performance rights granted to KMP
Performance rights granted to non-KMP
Total performance rights on issue
773,922
2,931,206
257,896
1,740,408
388,043
9,595,860
31 Aug 2024
31 Aug 2025
31 Aug 2026
31 Aug 2023
31 Aug 2024
31 Aug 2025
31 Aug 2024
31 Aug 2025
31 Aug 2024
28 Feb 2025
Minimum revenue,
EBITDA targets and
employment
ACV growth and
employment
ACV growth and
employment
ACV growth and
employment
Employment
4 years service
from grant date
4 years service
from grant date
97
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS Reconciliation of the number of options and performance rights is provided below:
Opening balance (1 July)
Grant under ESOP
Cancellation
Forfeitures
Performance rights granted
Grant under LTIP
Exercised
1 Jul 2022 to
30 Jun 2023
4,527,969
–
–
Options
1 Jul 2021 to
30 Jun 2022
4,827,141
322,740
–
(1,433,586)
(621,912)
–
–
–
–
–
–
1 Jul 2022 to
30 Jun 2023
1,024,634
–
–
–
5,008,253
3,747,337
(184,364)
Performance Rights
1 Jul 2021 to
30 Jun 2022
643,273
1,024,634
–
(643,273)
–
–
–
Closing balance (30 June)
3,094,383
4,527,969
9,595,860
1,024,634
A. Employee Share Option Plan (ESOP)
The establishment of the Nuix 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 vesting conditions have 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.
Options are granted under the plan for no consideration and carry no dividend or voting rights and are non-statutory stock options. Option holders
cannot assign, transfer, sell or otherwise deal with the options granted under the Plan without Board of Directors approval.
The amount of Options that vest depends upon the vesting rules of the respective Plan rules (generally three to five years). The Options vest in
a series of successive equal monthly instalments beginning on the first anniversary of the vesting commencement date, subject to the option
holders’ continued employment.
Once vested, the options became 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. The exercise price of options is determined by a combination of internal and external valuation methodologies and presided over
by the Board.
B. Fair value of options granted
There were no options granted in FY2023. The fair value of each grant at grant date is independently determined using an adjusted form of the
Black-Scholes Model that takes into account the exercise price, the term of the option, the impact of dilution (where material), the share price
at grant date and expected price volatility of the underlying share, the expected dividend yield, the risk-free interest rate for the term of the
option and the correlations and volatilities of the peer group companies. Options are granted for no consideration and vest over different periods
depending on terms.
98
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS The model inputs for options granted during the year ended 30 June 2022 included:
Exercise price
Grant date
Expiry date
Share price fair value
Expected price volatility of the Company’s shares
Expected dividend yield
Risk-free interest rate
ESOP grants made in FY2022
Between $2.72 and $5.79
Between 4 November 2021 and 24 January 2022
7 years after grant date
Between $2.26 and $3.03
46.00% for each grant date
0.00%
Between 1.31% and 1.61%
The expected price volatility is based on the historic volatility of comparable listed companies (based on the remaining life of the options), adjusted
for any expected changes to future volatility due to publicly available information.
C. Fair value of performance rights granted
The assessed fair value at grant date of the performance rights granted during the year was determined with reference to the fair value of shares
on grant date, adjusted for any expected dividend included in the share price as of grant date. As there were no dividends expected to be paid
between grant date and vesting date no adjustment to the share price on grant date is required in determining the fair value of performance rights.
These performance rights issued to date with the exception of the Topos Retention Recipients do not have market-based performance hurdles,
which would necessitate a Monte Carlo simulation.
There were 7,891,164 performance rights granted during the year with a grant date fair value between $0.69 and $1.08 which are linked to service
requirements that conclude between release of the FY23 Group results and November 2027.
D. Reconciliation of outstanding share options
Reconciliation
Opening balance (1 July)
Granted during the year
Forfeitures during the year
Outstanding at 30 June
Exercisable at 30 June
1 Jul 2022 to 30 Jun 2023
1 Jul 2021 to 30 Jun 2022
Number of options
Weighted-average
exercise price
Number of options
Weighted-average
exercise price
4,527,969
–
(1,433,586)
3,094,383
1,103,721
$4.72
–
$5.30
$4.42
$5.08
4,827,141
322,740
(621,912)
4,527,969
128,778
$5.03
$4.34
$5.58
$4.721
$2.48
The options outstanding at 30 June 2023 had an exercise price in the range of $2.00 to $5.79 (2022: $2.00 to $5.79) and a weighted-average
contractual life of 3.5 years1 (2022: 4.8 years1).
1. Exercise price for the 453,273 options held by Mr Sheehy as of 30 June 2023 in the above disclosure is $2.00. Impact of options held by Mr Sheehy excluded from
assessment of weighted-average contractual life remaining. Subsequent to year end the 453,273 options which had been subject to the Sheehy litigation were
cancelled, refer Note 9.7.
SIGNIFICANT JUDGEMENTS AND ASSUMPTIONS – SHARE-BASED PAYMENT EXPENSE
The grant-date fair value of equity-settled share-based payment arrangements granted to employees is generally recognised as an expense, with a
corresponding increase in equity, over the vesting period of the awards. The amount recognised as an expense is adjusted to reflect the number of
awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised
is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. For share-based
payment awards with market vesting conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions and
there is no true-up for differences between expected and actual outcomes.
Nuix uses the Black-Scholes option pricing model to determine the grant-date fair value of share options. The determination of the grant-date fair
value of stock option awards using the Black-Scholes model is affected by assumptions regarding a number of complex and subjective variables.
These variables include the estimated number of years that management expect employees to hold their options, risk-free interest rates and
dividends to be paid on Nuix’s stock over that term.
99
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS If Nuix changes the terms of its employee share-based compensation programs, refines future assumptions or changes valuation models, the
stock-based compensation expense recorded in future periods for future grants may differ significantly from historical trends and could materially
affect the results of operations.
Management judgement is applied in determining the fair value of options issued under the employee option plan. For the options that were
granted pre-IPO, their grant-date fair values were determined with reference to the Company’s unlisted status at that time. There are inherent
difficulties in determining market volatility for an unlisted entity.
The expected price volatility used in pricing options is based on the historic volatility over a comparable period consistent with the remaining life of
the options, adjusted for any expected changes to future volatility due to publicly available information. For the options that were granted pre-IPO,
as the Company was privately held and had constant and consistent growth, finding a comparable cohort of companies to which management
could benchmark was difficult.
Nuix has assumed a constant volatility rate for all options granted during the three-year period leading up to the IPO in December 2020, and
updated this volatility rate to reflect the nature of the Company upon listing for all grants occurring at the time of the IPO, and continues to update
this input for all grants of options made subsequent to the IPO.
6.3 KMP Remuneration
Short-term employee benefits
Share-based payment expense
Termination benefits
Post-employment benefits
Long-term benefits
Total
2023
$
5,067,939
2,052,716
440,326
150,919
–
2022
$
3,698,177
1,186,934
350,000
119,0491
39,976
7,711,900
5,394,136
1.
In the prior corresponding period, an amount of $119,049 relating to superannuation contribution guarantee payments has been reclassified to from long-term
benefits to post-employment benefits.
Short-term employee benefits
These amounts include salaries, fees, cash bonuses and fringe benefits paid to Key Management Personnel including Executive and
Non-Executive Directors.
Share-based payment expense
Share-based payment expense represents the expensing over the vesting period at the fair value of share rights at grant date.
Post-employment benefits
These amounts include the cost of superannuation contributions made during the year.
Other long-term benefits
These amounts represent long service leave and long-term annual leave benefits accruing during the year.
100
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS 7. FINANCIAL RISKS
The Group has exposure to credit, liquidity and market risks relating to its use of debt and working capital. This section presents information about
the Group’s exposure to each of these risks, and its objectives, policies and processes for measuring and managing risk.
7.1 Financial risk management
The Group’s activities expose it to a variety of financial risks including:
• market risk (including currency 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 Services function under policies approved by the Board of Directors.
The Group has principles for overall risk management covering areas such as foreign exchange risk, credit risk and derivative financial instruments.
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.
The Group’s exposure to foreign currency risk at the end of the reporting period, expressed in thousands of Australian dollars, was as follows:
Cash and cash equivalents
Trade receivables
Trade payables
USD
5,368
2,605
485
EUR
786
702
97
2023
GBP
507
1,588
–
USD
4,561
3,870
919
EUR
11,705
240
137
2022
GBP
2,770
2,315
–
The Group’s exposure to other foreign exchange movements is not considered material.
Sensitivity
Although Nuix holds financial assets and financial liabilities denominated in many currencies, as the Group has foreign operations with different
functional currencies, the impact of a reasonably possible change in foreign exchange rates (+/- 10%) at the end of the reporting period on the
profit and loss of the Group is limited:
AUD $000’s
USD
GBP
EUR
B. Credit risk
Effect on equity
Effect on PBT Effect on equity
Effect on PBT
2023
2022
+/- 3,345
+/- 903
+/- 942
+/- 749
+/- 210
+/- 139
+/- 2,942
+/- 887
+/- 751
+/- 508
+/- 1,071
+/- 1,181
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, contract assets and committed transactions.
For all customers in all instances the Group retains title over the software. There are no significant concentrations of credit risk, whether through
exposure to individual customers, specific industry sectors and/or regions.
101
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS Trade receivables and contract assets
The Group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade
receivables and contract assets.
To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk characteristics
and the days past due. The contract assets relate to unbilled receivables and have substantially the same risk characteristics as the trade
receivables for the same types of contracts. The Group has therefore concluded that the expected loss rates for trade receivables are a reasonable
approximation of the loss rates for the contract assets.
The expected loss rates are based on the payment profiles of sales over time and the corresponding historical credit losses experienced within this
period. The historical loss rates are adjusted to reflect current and forward- looking information on macroeconomic factors affecting the ability of
the customers to settle the receivables.
On that basis, the loss allowance as at 30 June 2023 and 30 June 2022, expressed in thousands of Australian dollars was determined as follows for
both trade receivables and contract assets:
Current
30 days
60 days
90 days
Over 90 days
Specific provision1
Total
Unbilled receivables
Other non-current investment
(cash-backed bank guarantee)2
Total
2023
Expected
Loss Rate
0.6%
0.9%
3.9%
7.7%
9.5%
100.0%
0.6%
– %
Loss
Allowance
’000
199
42
54
47
88
1,039
1,469
233
–
2022
Expected
Loss Rate
0.8%
0.9%
3.0%
6.5%
25.8%
100.0%
0.5%
– %
Loss
Allowance
’000
208
12
25
70
384
121
820
187
–
Balance
’000
24,487
1,322
820
1,069
1,490
121
29,309
34,273
–
1,702
63,582
1,007
Balance
’000
32,746
4,911
1,394
613
931
1,039
41,634
40,422
746
82,802
1 As at 30 June 2023 there were $1,039,000 of specifically identified impaired debtors, that have been provided for but not written off (30 June 2022: $121,000).
2 Non-current deposits relating to bank guarantee that is cash-backed by the Group, and therefore not subject to expected credit loss.
The loss allowances for trade receivables and contract assets as at 30 June reconcile to the opening loss allowances as follows:
As at 1 July
Increase in loss allowance recognised in profit or loss during the year
Receivables written off during the year as uncollectible
Unused amount reversed
Foreign exchange difference
As at 30 June
2023
$000
1,007
1,389
(283)
(433)
22
1,702
2022
$000
1,565
1,369
(1,843)
(120)
36
1,007
Trade receivables and contract assets are written off where there is no reasonable expectation of recovery. Indicators that there is no reasonable
expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group, and a failure to make
contractual payments for a period of greater than 120 days past due. Impairment losses on trade receivables and contract assets are presented as
net impairment losses within operating profit. Subsequent recoveries of amounts previously written off are credited against the same line item.
102
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS C. Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash in conjunction with the availability of funding through 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 $29,588,000
(2022: $46,846,000).
Management monitors rolling forecasts of the Group’s liquidity reserve as discussed above and cash and cash equivalents (Note 4.1) on the
basis of forecasted cash flows. This is carried out at a Group level by Corporate Services. In addition, the Group’s liquidity management approach
involves projecting cash flows and considering the level of liquid assets necessary to meet obligations and ongoing monitoring of balance sheet
liquidity against internal requirements.
The cash flows disclosed in the table below are the contractual undiscounted cash flows.
Contractual maturities
of financial liabilities
At 30 June 2023
Trade and other payables
Lease liabilities
Other liabilities
At 30 June 2022
Trade and other payables
Lease liabilities
Other liabilities
Less than
6 months
$000
6-12
months
$000
Between
1-3 years
$000
More than
3 years
$000
Total
$000
28,655
11,827
10,089
Carrying
amount
$000
28,655
11,116
9,839
–
4,675
–
–
4,160
–
4,675
4,160
50,571
49,610
–
5,894
6,419
–
5,722
–
23,742
15,011
14,555
23,742
13,650
14,458
28,655
1,505
3,712
33,872
23,742
1,690
7,536
–
1,487
6,377
7,864
–
1,705
600
32,968
2,305
12,313
5,722
53,308
51,850
8. BUSINESS STRUCTURE
This section focuses on the structure of the Group, specifically movements in issued capital and reserves.
8.1 Issued capital
Movements in ordinary shares
Opening balance
2023
Shares
2022
Shares
2023
$000
2022
$000
317,314,794
317,314,794
370,696
370,696
Shares issued – Employee performance rights
184,364
–
–
–
Closing balance
317,499,158
317,314,794
370,696
370,696
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. The issued shares do not have a par value.
Management controls the capital of the Group in order to maintain an appropriate 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.
103
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS 8.2 Reserves
Foreign currency translation reserve
The foreign currency translation reserve comprises all foreign currency differences arising from the translation of the financial statements of
foreign operations.
Share option reserve
The share option reserve is used to recognise the value of equity-settled share-based payments provided to employees, including key management
personnel, as part of their remuneration.
Treasury share reserve
The reserve for the Company’s treasury shares comprises the cost of the Company’s shares acquired and transferred to settle share-based
payment arrangement.
Movements in reserves
Share option reserve
As at 1 July
Share-based payments arrangement
Settlement of share-based payments arrangement
As at 30 June
Foreign currency translation reserve
As at 1 July
Foreign currency translation reserve
As at 30 June
Treasury share reserve
As at 1 July
Treasury shares acquired
Less: Shares transferred to settle share-based payments arrangement
As at 30 June
Total Reserves
ACCOUNTING POLICIES – ISSUED CAPITAL
Ordinary shares
2023
$000
2022
$000
(168,731)
(171,641)
3,466
(176)
2,910
–
(165,441)
(168,731)
5,192
4,074
9,266
–
176
(176)
–
(2,681)
7,873
5,192
–
–
–
–
(156,175)
(163,539)
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown as equity as a
deduction, net of tax, from the proceeds.
Repurchase and reissue of ordinary shares (treasury shares)
When shares recognised as equity are repurchased, the amount of the consideration paid, which includes directly attributable costs, is recognised
as a deduction from equity. Repurchased shares are classified as treasury shares and are presented in the treasury share reserve. When treasury
shares are sold or reissued subsequently, the amount received is recognised as an increase in equity.
104
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS 9. OTHER
This section provides information that is not directly related to specific line items in the financial statements, including information about dividends,
related party transactions, auditor’s remuneration, events after the reporting date and other statutory information.
9.1 Other liabilities
Contingent consideration
Other payables
Other current liabilities
Contingent consideration
Other non-current liability
Other non-current liabilities
2023
$000
6,188
3,651
9,839
–
–
–
2022
$000
7,528
–
7,528
6,330
600
6,930
Information about the Group’s exposure to currency and liquidity risks is included in Note 7.
Other payables
Included in other payables is an amount of $3,051,000 in relation to reverse factoring arrangement that provides Nuix with predictable
monthly payments for insurance premiums covering the period December 2022 until December 2023. The arrangement does not significantly
extend the payment terms beyond normal terms agreed with other suppliers for insurance coverage that is received and used on a ratable basis.
Contingent consideration payable
The Group has recognised a liability measured at fair value as of 30 June 2023 in relation to contingent consideration arising out of the acquisition
of Topos Labs, LLC. The contingent consideration arising is deemed to be a Level 3 measurement of fair value, which will be paid over various
periods from the acquisition date. It has been discounted accordingly based on estimated time to complete a number of milestones including the
successful achievement of revenue, staff retention and product development milestones which include the integration of the acquired Intellectual
Property with the Nuix platform.
As part of the assessment at the reporting date, the Group has determined the fair value of contingent consideration considering a range of
reasonably possible changes regarding expected future performance and outcomes from activities being undertaken to progress the objectives of
the milestones. Changes in the fair value of contingent consideration after acquisition date are recognised in profit or loss.
A reconciliation of the movements in fair value measurements of contingent consideration is provided below.
Contingent consideration
Opening balance
Additions
Foreign exchange difference
Change in fair value estimate
Unwinding of interest
Cash payments
Closing balance
2023
$000
13,856
–
165
(1,011)
68
(6,890)
6,188
2022
$000
–
12,999
767
–
90
–
13,856
The effect on profit and loss for the year is due to unwinding of interest on the contingent consideration, and change in fair value estimates due to
reassessments of achievability of earnout milestones post-acquisition as indicated in the above reconciliation, which are recognised in finance costs.
105
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS During the year it was determined that certain milestones were achieved and in accordance with the Equity Purchase Agreement, an amount of
USD $6,250,000 was paid in January 2023, of which USD $4,797,000 was paid for the business acquisition (and formed part of the contingent
consideration for the acquisition) and USD $1,454,000 was paid in relation to post-combination employee benefits (recognised in profit and loss
post-acquisition in line with provision of services).
Sensitivity
The fair value measurements of the remaining milestones are sensitive to reasonably possible changes in unobservable inputs to their
measurement, including the time frame over which milestones may (or may not) be achieved; the successfulness of integration of the acquired
Intellectual Property with the Nuix platform; and the pace at which commercial activities in relation to the Nuix NLP product proceed.
The remaining milestones that are yet to be subject to final determination of completion percentages have a total value of USD $12,250,000
comprising of 6 milestones with amounts between USD $375,000 and USD $6,000,000.
It is noted that 76.75% of the milestone payments are consideration for the business combination and hence subject to fair value measurement
(and to the extent considered achievable included in the closing balance of the table above, net of interest to be unwound), and 23.25% of the
milestone payments are related to post acquisition employee benefit arrangements subject to recognition in profit and loss over time as services
are rendered to Nuix.
Delays in or non-achievement of remaining milestones may result in a decrease in the measurement of the contingent consideration, and
conversely early achievement of certain milestones may bear on future reassessments of the achievability of other milestones which could increase
the measurement of the contingent consideration.
9.2 Dividends
During the year the Directors did not declare an interim dividend (2022: Nil) and have not recommended a final dividend be paid after 30 June
2023 (2022: Nil).
9.3 Related party disclosures
A. Parent entity
The ultimate and parent entity within the Group is Nuix Limited.
B. Interests in other entities
Name of entity
Place of business/
country of
incorporation
Nuix North America, Inc
USA
Nuix Ireland Ltd
Nuix Pte Ltd
Nuix Holding Pty Ltd
Nuix SaleCo Limited
Nuix Limited Employee
Share Trust
Nuix USG Inc.
Nuix Technology UK Ltd
Ireland
Singapore
Australia
Australia
Australia
USA
UK
Nuix Philippines ROHQ
Philippines
Topos Labs, LLC
USA
Ownership interest held
by the Group
Ownership interest held
by non-controlling interests
Principal
activities
2023
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2022
100%
100%
100%
100%
100%
–
100%
100%
100%
100%
2023
2022
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Sale of Licences
Sale of Licences
Sale of Licences
Holding Company
Holding Company
Discretionary
Investment Trust
Sale of Licences
Sale of Licences
Business Support
Sale of Licences
106
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS C. Transactions with other related parties
Macquarie Corporate Holdings
Macquarie Corporate Holdings has an interest of 30% in Nuix (2022: 30%), which allows it to exercise significant influence over the Group. As a
result, Macquarie Corporate Holdings and by extension all related entities of Macquarie Group Limited, are related parties to Nuix.
Alliance agreement license
In December 2018, Nuix entered into an alliance agreement and software licence agreement (in support of the alliance agreement) with
Macquarie Group Services Pty Ltd (‘MGS’) relating to the unlimited use of certain Nuix software and related support and maintenance for a term
of ten (10) years, unless terminated prior by MGS. Both these agreements were entered into with the unanimous approval of non-Macquarie Group
nominee Board members and without shareholder approval prior to Nuix becoming a public company.
Under the agreements MGS pays Nuix an annual licence fee for a licence to use Nuix software, and the related support and maintenance services
for the licence.
In the prior year ended 30 June 2022, in accordance with the alliance agreement, the pricing for the arrangement for years four, five and six was
agreed at a total amount of $2,681,217.
Amounts recognised in revenue during the year ended 30 June 2022 under the agreements were as follows:
• $1,961,861 was recognised as revenue from the licence renewal in June 2022; and
• $186,579 was recognised as revenue from the provision of support and maintenance covering the last five months of the initial three-year
period, and the first seven months of the renewal period.
In the year ended 30 June 2023, a further $239,792 was recognised as revenue from the provision of support and maintenance during this
12-month portion of the 3-year extension.
As of 30 June 2023, $339,705 remains as deferred revenue in relation to the ongoing support and maintenance which will be recognised on a
rateable basis until 5 December 2024.
Legal fees claimed under indemnity
Macquarie Capital Australia Limited has claimed $1,791,910 in relation to legal fees under the indemnity provided by Nuix Limited to them under
the terms of the Underwriting Agreement. This amount has not been paid.
Sale and purchases of goods and services
Sale of license to related parties
Support and maintenance
Rendering of professional service
Other arrangements
Legal fees claimed under indemnity
1,791,910
1,791,910
–
2023
$
2022
$
Transaction
Outstanding
balance
Transaction
Outstanding
balance
50,311
834,936
1,961,861
1,802,201
239,792
8,360
–
–
186,579
4,703
–
–
–
107
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS 9.4 Auditor’s remuneration
Audit and review services
Auditors of the Group – KPMG
Audit and review of financial statements – Group
Audit and review of financial statements – controlled entities
2023
$
2022
$
754,000
82,050
836,050
495,000
78,000
573,000
Other auditors
Audit and review of financial statements – controlled entities
16,793
25,244
Assurance services
Auditors of the Group – KPMG
Other assurance services
Other services
Auditors of the Group – KPMG
Taxation advice and tax compliance services
Advisory services
Other auditors
42,000
–
–
92,000
8,000
188,616
Taxation advice and tax compliance services
4,001
32,654
It is the Group’s policy to engage KPMG on assignments in addition to their statutory audit duties where their expertise and experience with the
Group are relevant. Nuix engaged KPMG to perform advisory services prior to statutory audit engagement.
9.5 Parent or the Company financial information
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Share option reserve
Retained earnings
Total equity
Loss for the year
108
2023
$000
30,303
231,292
261,595
8,494
9,552
18,046
2022
$000
35,343
219,617
254,960
990
3,850
4,840
243,549
250,120
370,696
(165,433)
38,286
243,549
(10,036)
370,696
(168,722)
48,146
250,120
(20,609)
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS Determining the parent entity financial information
The financial information for the parent entity has been prepared on the same basis as the consolidated financial statements, except in so far as
investments in subsidiaries are recognised at cost.
9.6 Contingent Liabilities
On the basis that Group has determined the below matters to be contingent liabilities, no liabilities have been recognised in the financial
statements in relation to these matters.
ASIC proceedings
As previously disclosed to the market, ASIC conducted an investigation in relation to potential contraventions of the Corporations Act 2001 (Cth)
concerning Nuix. ASIC’s investigations relevantly concerned: 1) the financial statements of Nuix Limited for the period ending 30 June 2018, 2019
and 2020; 2) Nuix’s prospectus dated 18 November 2020; and 3) Nuix’s market disclosures in the period between 4 December 2020 to 31 May
2021 (Continuous Disclosure Conduct).
As advised to the market on 10 February 2022, ASIC notified Nuix that it had completed the aspects of its investigation relating to points 1) and 2)
above and had determined that it will not take any further action in relation to those matters.
In relation to the Continuous Disclosure Conduct, and as advised to the market on 29 September 2022, ASIC commenced civil proceedings in
the Federal Court against the Company and its directors during the period 18 January 2021 to 21 April 2021. ASIC alleges that aspects of the
Company’s market disclosure in that period contravened provisions of the Corporations Act and ASIC Act, and that the relevant directors breached
their duties in respect of that disclosure. In particular, ASIC claims that the Company’s disclosure of its Annualised Contract Value (ACV) and
statutory revenue performance as against forecasts were deficient. ASIC seeks declarations in respect of the alleged contraventions, pecuniary
penalties against Nuix and pecuniary penalties and disqualification orders against the relevant directors.
Nuix has fully cooperated with ASIC during the course of its investigation into these matters. Nuix denies the allegations made by ASIC and filed its
defence to the claim on 23 December 2022. The matter has been listed for a final hearing on liability from 20 November 2023 to 15 December 2023.
ASIC Investigation
As previously disclosed to the market, ASIC is conducting an investigation into the acquisition of Nuix shares by its CEO in early September 2022
and Nuix’s response to an ASX enquiry, relating to those circumstances released on 14 September 2022.
The CEO’s acquisition of Nuix shares took place with prior approval and during an approved trading window. Nuix has fully cooperated with ASIC
during the course of its investigation.
Class Action
On 22 November 2021, Nuix received a class action claim filed in the Supreme Court of Victoria by Shine Lawyers on behalf of Mr William Lay and
persons who acquired interests in Nuix shares in the period between 18 November 2020 and 30 May 2021. In essence, the claim alleged that
Nuix contravened provisions of the Corporations Act 2001 (Cth), the ASIC Act 2001 (Cth) and the Australian Consumer Law in connection with its
disclosures concerning its forecast FY21 revenue. The claim does not identify the amount of any damages sought.
On 23 November 2021, a second class action claim was filed in the Supreme Court of Victoria by Phi Finney McDonald on behalf of Mr Daniel
Joseph Batchelor and persons who acquired interests in Nuix shares by subscription in its IPO or in the period between 4 December 2020 and
29 June 2021. The claim related to information contained in Nuix’s Prospectus and Nuix’s disclosure concerning forecast FY21 revenue and
alleges that Nuix contravened provisions of the Corporations Act 2001 (Cth) and the ASIC Act 2001 (Cth). The claim covers similar subject matter
to the claim filed by Shine Lawyers which was announced on 22 November 2021 and does not identify the amount of any damages sought.
Mr Batchelor’s claim has also been commenced against Macquarie Capital (Australia) Limited and Macquarie Group Limited as co-defendants.
On 10 March 2022, Nuix became aware of a further overlapping class action claim filed against it in the Supreme Court of Victoria. This class
action claim was commenced by the Banton Group on behalf of Ms Stella Stefana Bahtiyar on behalf of persons who acquired shares in Nuix in the
period between 18 November 2020 and 31 May 2021. As with the other two class action claims which were filed, the Banton Group claim related
to information contained in Nuix’s Prospectus and Nuix’s disclosures concerning its forecast FY21 revenue and alleged that Nuix contravened
provisions of the Corporations Act 2001 (Cth), the ASIC Act 2001 (Cth) and the Australian Consumer Law. The claim did not identify the amount of
any damages sought. The claim also named some other parties associated with the initial public offering, including Directors during the relevant
period as co-defendants.
109
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS On 16 June 2022, a hearing was held in the Supreme Court of Victoria to seek to deal with the competing and overlapping claims made in the three
class actions so that Nuix would face, in effect, only one class action in relation to the relevant allegations.
On 23 August 2022, the Supreme Court of Victoria handed down a decision in relation to the three competing and overlapping claims filed against
Nuix. The Supreme Court of Victoria ordered that:
• the proceeding commenced by Banton Group (which had sought to join a number of Directors as co-defendants) be permanently stayed; and
• the proceeding commenced by Shine Lawyers and Phi Finney McDonald be consolidated.
Nuix denies the allegations contained in the consolidated claim and filed its defence on 4 November 2022. The Second and Third Defendants
(Macquarie Capital (Australia) Limited and Mr Daniel Phillips) have also filed defences denying the allegations contained in the consolidated claim.
The matter has not been set down for a hearing.
Bank guarantee
The Company had obtained a bank guarantee in the amount of $746,460 to secure certain obligations of the Company that arise under a
commercial property lease. Subsequent to the termination of the Facility Agreement with the Commonwealth Bank of Australia in September
2022, this obligation is now cash backed by the Group.
ACCOUNTING POLICIES – CONTINGENT LIABILITIES
A provision is recognised when:
• there is a legal or constructive obligation arising from past events or, in cases of doubt over the existence of an obligation (e.g. a court case),
when it is more likely than not that a legal or constructive obligation has arisen from a past event;
• it is more likely than not that there will be an outflow of benefits; and
• the amount can be estimated reliably.
In some cases, it may be disputed whether certain events have occurred or, particularly in the case of a legal claim, it may be disputed whether
there is an obligation even if it is clear that there is a past event. In such cases of uncertainty, a past event is deemed to give rise to a present
obligation if, after taking account of all available evidence, it is more likely than not that a present obligation exists at the reporting date. Otherwise,
such an obligation is a contingent liability.
Contingent liabilities are not recognised in the statement of financial position except for certain contingent liabilities that are assumed in a business
combination. Contingent liabilities are reviewed continuously to assess whether an outflow of resources has become probable. If the recognition
criteria are met, then a liability is recognised in the statement of financial position in the period in which the change in probability occurs.
If a present obligation relates to a past event, the possibility of an outflow is probable and a reliable estimate can be made, then the obligation is not
a contingent liability, but instead is a liability for which a provision is required to be recognised.
Contingent liabilities are disclosed unless the likelihood of an outflow of resources embodying economic benefits is remote.
SIGNIFICANT JUDGEMENTS AND ASSUMPTIONS
Assessing whether past events give rise to present obligations
In determining the accounting for matters where there is a potential outflow of benefits, the key judgements and assumptions required to be made
relate to whether an obligation has arisen.
Where on balance it has not been determined that it is more likely than not that a present obligation for an outflow of benefits exists at reporting
date, such a liability is a contingent liability.
As contingent liabilities are generally not recognised in the statement of financial position (except for those assumed in a business combination),
concluding that it is not more likely than not that a present obligation does exist, has the result that no accounting entries are booked and there is
no impact reported in profit or loss.
110
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS 9.7 Events after the reporting date
On 3 July 2023, the Group announced that it achieved financial close on the acquisition of Rampiva (Rampiva Global, LLC and Rampiva
Technology, Inc.), having previously announced on 23 May 2023 that it had entered into an agreement to acquire all the shares in Rampiva, a
workflow automation and job scheduling software provider. The control over Rampiva was obtained when financial close was completed. Rampiva
is used by customers where the cost, ease and administration of hyper-scale data processing is no longer sustainable manually. The initial cost
of the acquisition was USD $2.0 million in cash and USD $2.0 million in Nuix newly issued shares, which was paid on financial close. Up to a
further USD $3.0 million in Nuix shares will be issued if Rampiva achieves ACV growth and cost management milestones for the three years
post-acquisition. The transaction brings to the Group the Rampiva team, technological capabilities, and cross-sell and growth opportunities for
both Nuix and Rampiva customers. Management is in the process of finalising the accounting for the acquisition, including the determination of
fair value of the identified acquired assets and assumed liabilities, and the determination of the fair value of the consideration for the business
combination, given the timing of the acquisition relevant to the completion of these accounts.
On 22 August 2023, the Group announced it has resolved the proceedings with Mr Edward Sheehy, in reference to its announcements dated
7 February 2023 and 8 March 2023 in connection with the Federal Court of Australia proceedings commenced by Mr Sheehy. As identified in
those announcements, on 7 February 2023 the Federal Court dismissed Mr Sheehy’s claims. In March 2023 Mr Sheehy lodged a Notice of Appeal
in relation to aspects of that decision. The Appeal was scheduled to be heard on 23 August 2023. The Group can confirm that it has resolved the
proceedings with Mr Sheehy on the basis that the Appeal be dismissed, Mr Sheehy’s share options to acquire Nuix shares will be cancelled and
that Mr Sheehy make a contribution of $700,000 towards Nuix’s legal costs associated with the proceedings.
Except as disclosed above, no other matters or circumstances have arisen since the end of the financial year which significantly affected or may
significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial periods.
111
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS DIRECTORS’ DECLARATION
In accordance with a resolution of the Directors of Nuix Limited, we state that:
1. In the opinion of the Directors of Nuix Limited (the ‘Company’):
a) the consolidated financial statements and notes that are set out on pages 63 to 111 and the Remuneration Report on pages 40 to 61, are in
accordance with the Corporations Act 2001, including:
i)
giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its performance for the financial year ended on that
date; and
ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
2. The Directors have been given the declarations required by section 295A of the Corporations Act 2001 from the chief executive officer and chief
financial officer for the financial year ended 30 June 2023.
3. The Directors draw attention to Note 1.2 to the consolidated financial statements, which includes a statement of compliance with International
Financial Reporting Standards.
This declaration is made in accordance with a resolution of the Directors.
Robert Mactier
Chair
Sydney, Australia
8 September 2023
Jonathan Rubinsztein
Director
Sydney, Australia
8 September 2023
112
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023
INDEPENDENT AUDITOR’S REPORT
TO THE SHAREHOLDERS
113
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. Independent Auditor’s Report To the Shareholders of Nuix Limited Opinion We have audited the Financial Report of Nuix Limited (the Company). In our opinion, the accompanying Financial Report of the Company is in accordance with the Corporations Act 2001, including: • giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its financial performance for the year ended on that date; and • complying with Australian Accounting Standards and the Corporations Regulations 2001. The Financial Report comprises: • Consolidated statement of financial position as at 30 June 2023 • Consolidated statement of comprehensive income, Consolidated statement of changes in equity, and Consolidated statement of cash flows for the year then ended • Notes including a summary of significant accounting policies • Directors’ Declaration. The Group consists of the Company and the entities it controlled at the year-end or from time to time during the financial year. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with these requirements. INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS
114
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 . Key Audit Matters The Key Audit Matters we identified are: • Going concern basis of accounting • Valuation of intangible assets • Revenue recognition • Capitalisation of development costs as Intellectual Property Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Report of the current period. These matters were addressed in the context of our audit of the Financial Report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Going concern basis of accounting Refer to Note 1.3 to the financial report The key audit matter How the matter was addressed in our audit The Group’s use of the going concern basis of accounting and the associated extent of uncertainty is a key audit matter due to the high level of judgement required by us in evaluating the Group’s assessment of going concern and the events or conditions that may cast significant doubt on their ability to continue as a going concern. These are outlined in Note 1.3. The Directors have determined that the use of the going concern basis of accounting is appropriate in preparing the financial report. Their assessment of going concern was based on cash flow projections. The preparation of these projections incorporated a number of assumptions and significant judgements, and the Directors have concluded that there is not a material uncertainty casting significant doubt on the Group’s ability to continue as a going concern. We critically assessed the levels of uncertainty, as it related to the Group’s ability to continue as a going concern, within these assumptions and judgements, focusing on the following: • the Group’s key cash inflow assumptions particularly, the forecast growth rate in light of the Group’s historical results, customer retention rates, and pricing Our procedures included: • We analysed the cash flow projections by: – Evaluating the underlying data used to generate the forecasts for consistency with those tested by us as set out in the Valuation of Intangible Assets key audit matter, our understanding of the Group’s strategy as outlined in Board minutes and during Board and Audit & Risk Management Committee meetings we attended, and past results and practices; – Analysing the impact of reasonably possible changes in projected cash flows and their timing to the projected periodic cash positions. Assessing the resultant impact to the ability of the Group to pay debts as and when they fall due and continue as a going concern. The specific areas we focused on were informed from our test results of the accuracy of previous Group cash flow projections and sensitivity analysis on key cash flow assumptions; and – Assessing the significant assumptions and judgements in the operating cash inflows, in particular those related to growth in revenue and impacts of price rises for feasibility, timing, consistency of relationships and trends to the Group’s recent and historical results, growth rates in the industry, and our understanding of INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS
115
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 . expectations; • the Group’s planned levels of operational expenditures, in particular those relating to investment in sales capability and product development, and the contingent consideration of recent acquisitions and legal costs relating to the on going legal and regulatory matters. We focused on the ability of the Group to manage cash outflows within available resources, particularly in light of recent loss making operations; • the analysis and advice relating to the timing and range of outcomes of the legal and regulatory matters against the Group such as ASIC proceedings and Class Actions; In assessing this key audit matter, we involved senior audit team members who understand the Group’s business, industry and the economic environment it operates in and legal specialists. the business, industry and economic conditions impacting the Group. • Assessing the planned levels of operating and capital cash outflows and significant unusual items, in particular those related to investment in sales capability and product development, consideration in relation to acquisition of Rampiva, remaining contingent consideration in relation to the Topos Labs acquisition, and ongoing legal fees relating to the matters discussed in note 9.6 for feasibility, timing, consistency of relationships and trends to the Group’s historical results, particularly in light of recent loss making operations, results since year end, and our understanding of the business, industry and economic conditions impacting the Group. • We assessed significant forecast cash inflows and outflows identified in scenario analysis prepared by the Group, modelling alternates of growth shortfalls. We assessed the cost reductions and other mitigants in these alternate scenarios including legal options for feasibility, quantum and timing. We used our knowledge obtained from other procedures, past results, inquiries with the Group’s internal and external legal counsel, and our understanding of the current status of legal and regulatory matters, to assess the level of associated uncertainty. • We obtained the Group’s internal and external counsel opinions on the likely timing and probability of any cash outflows as result of the legal and regulatory matters discussed in Note 9.6 and together with our specialists assessed the probability and timing of any cash outflows as result of adverse outcomes of contingent liabilities. • We evaluated the Group’s going concern disclosures in the financial report by comparing them to our understanding of the matter, the events or conditions incorporated into the cash flow projection assessment, the Group’s plans to address those events or conditions, and accounting standard requirements. INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS
116
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 . Valuation of intangible assets ($244.5m) Refer to Note 5.4 to the financial report The key audit matter How the matter was addressed in our audit A key audit matter for us was the Group’s testing of intangible assets (including goodwill) for impairment, given the size of the balance (being 64% of total assets) and existence of impairment indicators. Certain conditions impacting the Group increased the judgement applied by us when evaluating the evidence available. We focused on the key forward-looking assumptions the Group applied in their value in use model, including: • forecast operating cash flows – the Group has incurred a loss during the year; • forecast growth rates – the Group’s models are sensitive to small changes in these assumptions, reducing available headroom. This drives additional audit effort specific to assessing their feasibility; and • discount rate - these are complicated in nature and vary according to the conditions and environment the specific Cash Generating Unit (CGU) is subject to from time to time. The Group uses complex models to perform their annual testing of goodwill and intangible assets for impairment. The models are largely manually developed, use adjusted historical performance, and a range of internal and external sources as inputs to the assumptions. Complex modelling, using forward-looking assumptions tend to be prone to greater risk for potential bias, error and inconsistent application. These conditions necessitate additional scrutiny by us, in particular to address the objectivity of sources used for assumptions, and their consistent application. We involved valuation specialists to supplement our senior audit team members in assessing this key audit matter. Working with our valuation specialists our procedures included: • We assessed the Group’s determination of CGU assets for consistency with the assumptions used in the forecast cash flows and the requirements of the accounting standards. • We considered the appropriateness of the value in use method applied by the Group to perform the test of intangible assets for impairment against the requirements of the accounting standards. • We assessed the integrity of the value in use model used, including the accuracy of the underlying calculation formulas. • We compared the forecast cash flows and key assumptions contained in the value in use model to Board approved Budgets. • We assessed the accuracy of previous Group cash and other key metric forecasts to inform our evaluation of forecasts incorporated in the model. • We challenged the Group’s significant forecast cash flow and growth assumptions. We compared forecast growth rates and terminal growth rates to published studies of industry trends and expectations, and considered differences for the Group’s operations. We did this using our knowledge of the Group, their past performance, business and customers, and our industry experience. • We checked the consistency of the growth rates to the Group’s stated plan and strategy, past performance of the Group, and our experience regarding the feasibility of these in the industry/economic environment in which they operate. • We independently developed a discount rate range considered comparable using publicly available market data for comparable entities adjusted by risk factors specific to the Group. INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS
117
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 . • We considered the sensitivity of the model by varying key assumptions, such as forecast growth rates, terminal growth rates and discount rates, within a reasonably possible range. We did this to identify those assumptions at higher risk of bias or inconsistency in application and to focus our further procedures. • We assessed the disclosures in the financial report using our understanding of the issue obtained from our testing and against the requirements of the accounting standards. Revenue recognition ($182.5 million) Refer to Note 2.1 to the financial report The key audit matter How the matter was addressed in our audit The Group’s revenue is mainly derived from licensing software products and from related support and maintenance and/or professional services contracts. The Group’s contracts with customers include commitments to transfer perpetual or term-based software licenses bundled with support and maintenance services. For multiple elements contracts, the Group determines software license to be a distinct performance obligation from support and maintenance. It is their policy that the corresponding revenues are recognised as the related performance obligations are satisfied. Revenue recognition was a key audit matter for us due to: • its significance to the financial performance; • the effort required to analyse the Group's revenue recognition policy, using judgemental criteria in AASB 15 Revenue from Contracts with Customers for contracts with both software product and related service and maintenance offering contracts, and; Our procedures included: • We assessed the appropriateness of the Group’s accounting policies related to revenue recognition against the requirements of the accounting standard and our understanding of the business and industry practice, in particular for bundled contracts. • We evaluated the Group's standalone selling price allocation methodology for software license contracts bundled with support and maintenance against the requirements of AASB 15. • We tested the key underlying assumptions and data, in the standalone selling price model using observable inputs, details of licensing arrangements and pricing practice. • We assessed the mathematical accuracy of the underlying calculations in the standalone selling price model used. • We tested a sample of revenue recognised through the year. This included assessing: – Existence of underlying arrangement to sources such as signed contracts with customers and sales orders; – The amounts invoiced to customers in accordance with the price and usage detailed in the underlying contract with the INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS
118
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023. •the significance of judgments andassumptions required by the Group in thedetermination of the relative standaloneselling prices for each performanceobligation in multiple element contracts.customer; and –We checked the accuracy of the revenuerecognised against the agreed terms andconditions of underlying contracts and theGroup’s revenue recognition policy.•We evaluated the adequacy of disclosures in thefinancial report using our understanding obtainedfrom our testing and against the requirements ofAustralian Accounting Standards.Capitalisation of development costs as Intellectual Property ($39.9 million) Refer to Note 5.1 to the financial report The key audit matter How the matter was addressed in our audit Capitalisation of software development costs is considered to be a key audit matter due to: •The significance of the amount ofdevelopment costs capitalised;•The judgement required by the Group indetermining whether the developmentactivities undertaken by them meets thecapitalisation criteria of the accountingstandards.We focused our effort on analysing the underlying sources used by the Group in applying these significant judgements, the potential for bias, and their consistency of application. Our procedures included: •We assessed the Group’s accounting policiesand methodology used to capitalise developmentcosts against the requirements of the accountingstandard and our understanding of the businessand industry practice.•We obtained an understanding of the Group’ssoftware development processes and howsoftware developers use their projectmanagement tool to record activities.•We evaluated the Group’s assessment ofdevelopment activities and development costscapitalised. This included:–Evaluating the Group’s assessment usingour knowledge of the business and projects,and through enquiries with variousstakeholders, including: Project Managers,the Chief Technology Officer and the ChiefProduct Officer;–We inspected a sample of informationrecorded in the project management tooland assessed the Group’s identification ofactivities they’ve attributed as constitutingdevelopment against the requirements ofthe accounting standards; and–We tested a sample of activities recordedand capitalised as development costs,checking the nature of respective activitiesbeing performed as one relating to an INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS
119
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 . intangible asset in development or an enhancement to an existing software product as opposed to research or maintenance as defined by the accounting standards. • We assessed the cost eligible for capitalisation by testing a sample of key inputs to underlying records including employees payroll information. We also assessed the Group’s allocation of directly attributable overhead costs against the criteria within the accounting standards. • We evaluated the adequacy of the disclosures included in the financial report against the requirements of the accounting standards. Other Information Other Information is financial and non-financial information in Nuix Limited’s annual reporting which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for the Other Information. Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express an audit opinion or any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion. In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report. Responsibilities of the Directors for the Financial Report The Directors are responsible for: • preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 • implementing necessary internal control to enable the preparation of a Financial Report that gives a true and fair view and is free from material misstatement, whether due to fraud or error • assessing the Group and Company’s ability to continue as a going concern and whether the use of the going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so. INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS
120
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 . Auditor’s responsibilities for the audit of the Financial Report Our objective is: • to obtain reasonable assurance about whether the Financial Report as a whole is free from material misstatement, whether due to fraud or error; and • to issue an Auditor’s Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the Financial Report. A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar2_2020.pdf This description forms part of our Auditor’s Report. Report on the Remuneration Report Opinion In our opinion, the Remuneration Report of Nuix Limited for the year ended 30 June 2023 complies with Section 300A of the Corporations Act 2001. Directors’ responsibilities The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with Section 300A of the Corporations Act 2001. Our responsibilities We have audited the Remuneration Report included in pages 43 to 61 of the Directors’ report for the year ended 30 June 2023. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. KPMG Trent Duvall Partner Sydney 8 September 2023 SHAREHOLDER INFORMATION
SHAREHOLDER INFORMATION
The shareholder information set out below is applicable at 5 September 2023.
NUMBER OF EQUITY SECURITY HOLDERS
Number of holders of Ordinary equity securities:
16,247
Number of holders of unquoted options:
Number of holders of unquoted performance rights:
47
80
VOTING RIGHTS
The voting rights attached to each class of equity securities are set out below:
Ordinary Shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.
Options
Holders of Options do not have any voting rights.
Performance Rights
Holders of Performance Rights do not have any voting rights.
DISTRIBUTION OF EQUITY SECURITIES
Analysis of number of holders of quoted Ordinary Shares by size of holding:
Range
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Securities
259,397,192
35,919,107
9,673,843
12,959,161
3,616,087
%
No. of holders
80.67
11.17
3.01
4.03
1.12
115
1,304
1,271
5,055
8,502
%
0.71
8.03
7.82
31.11
52.33
321,565,390
100.00
16,247
100.00
Analysis of number of holders of unquoted Options holders by size of holding:
Range
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
%
No. of holders
Securities
1,626,876
992,647
17,270
4,317
0
61.60
37.58
0.65
0.16
0.00
2,641,110
100.00
8
36
2
1
0
47
%
17.02
76.60
4.26
2.13
0.00
100.00
121
NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 %
No. of holders
Securities
6,828,674
2,771,123
0
9,111
0
71.07
28.84
0.00
0.09
0.00
9,608,908
100.00
16
61
0
3
0
80
Securities
95,654,262
27,860,999
25,952,731
%
20.00
76.25
0.00
3.75
0.00
100.00
%
29.75%
8.66%
8.07%
SHAREHOLDER INFORMATION
SHAREHOLDER INFORMATION
Analysis of number of holders of unquoted Performance Rights by size of holding:
Range
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
SUBSTANTIAL HOLDERS
Substantial holders as disclosed in substantial holding notices given to the company are:
Holder
Macquarie Group Limited
ECP Asset Management Pty Ltd
Australian Ethical Investment
MARKETABLE PARCELS
Number of holders holding less than a marketable parcel of Ordinary Shares: 3,983.
RESTRICTED SECURITIES OR SECURITIES SUBJECT TO VOLUNTARY ESCROW
Number of Shares
134,010
3,578,179
ON-MARKET BUY-BACK
There is no current on-market buy-back.
Date Period of Escrow Ends
06/03/24
02/07/24
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NUIX LTD (NXL, ASX) // ANNUAL REPORT 2023 SHAREHOLDER INFORMATION
LARGEST QUOTED EQUITY SECURITY HOLDERS
The twenty largest holders of quoted Ordinary Shares are:
Rank Name
A/C designation
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
MACQUARIE CORPORATE HOLDINGS PTY LTD
NATIONAL NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMS PTY LTD
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