ANNUAL
REPORT
2017
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IN
THIS
REPORT
Highlights
1
Life at Objective
2
Our Business Model
4
Delivering Value to Customers
5
Product Innovation
6
Financial Performance
7
CEO’s Review
8
Business Line Review
10
Directors’ Report
12
Financial Statements
18
Notes to the Financial Statements
23
Directors’ Declaration
46
Independent Auditor’s Report
47
Auditor’s Independence Declaration 52
Shareholder Information
53
Corporate Directory
54
OUR
PURPOSE
Bringing governance and
efficiency to the organisations
our community depends on.
HIGHLIGHTS
REVENUE GROWTH
25%
$62.6M
EBITDA GROWTH
67%
$10.5M
RESEARCH &
DEVELOPMENT INVESTMENT
$12.9M
21% of revenue
TOTAL DIVIDENDS
5.0CPS
4.0CPS fully franked
EARNINGS PER SHARE
9.0CPS
55%
The 2017 financial year was transformational
for Objective Corporation with the launch of
outstanding software across the solution portfolio
and record financial performance.
Tony Walls
CEO, Objective Corporation
ANNUAL REPORT 2017
| 1
LIFE AT
OBJECTIVE
6 VALUES DEFINE US. DRIVE US. INSPIRE US.
WE GROW AND SUCCEED BY...
Behaving with integrity
Demonstrating expertise in everything we do
Championing great people and great teams
Fostering tenacity
Applying entrepreneurial spirit
Knowing results matter most
2
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
ANNUAL REPORT 2017
| 3
OUR BUSINESS
MODEL
CYCLE OF
INNOVATION
109.0
96.2
84.9
Cumulative R&D ($M)
74.0
64.3
54.9
45.8
36.5
27.1
17.4
8.7
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
INVESTMENT IN RESEARCH
& DEVELOPMENT
Leads to...
OUTSTANDING
PRODUCTS & SOLUTIONS
So that we can...
DELIVERING
OUTSTANDING
SOLUTIONS IS
CENTRAL TO
EVERYTHING
WE DO
Delivering...
FINANCIAL
PEFORMANCE
Resulting in...
THE BEST OUTCOMES
FOR OUR CUSTOMERS
Revenue ($M)
63
49
50
50
41
FY13
FY14
FY15
FY16
FY17
4
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
DELIVERING
VALUE TO
CUSTOMERS
98% ON TIME DELIVERY
OF MINISTERIALS
(increased from 0%)
NOW
4 DAYS
7891
7102
D
A
P
R
O
C
E
S
S
1
14 DAYS
VIOUSLY T O O K
E
P
R
80%REDUCTION IN
PAPER USAGE
YEARS OF
SUCCESS
GREAT
GOVERNANCE.
BETTER
BUSINESS.
46
HOURS PER DAY
OF MANUAL PROCESSES
ELIMINATED
Our product lines have been freed from
manual check processes.
Agata Jarbin
Executive General Manager and Project
Sponsor, State Trustees, Victoria
THE BEST OUTCOMES
FOR OUR CUSTOMERS
You can’t make the right decisions
unless you’ve got the right information
at your disposal.
Joseph Stablum
FAA Information Management Project,
Navy Fleet Air Arm
?
OBJECTIVE APPROVAL MECHANISM
BECOMES STANDARD
SIGNATURE METHOD
ALLOWING FOR DIGITAL APPROVAL
PRODUCTIVITY
36%
IN ONE YEAR
Trapeze has been phenomenal. It saves
the assessment team a huge amount
of time and effort.
Simone Plummer
Development Assessment Manager,
Sutherland Shire Council
ANNUAL REPORT 2017
| 5
PRODUCT
INNOVATION
INDUSTRY
SOLUTIONS
Solutions proven to add value for
specific industries.
We continue to develop solutions for specific,
repeatable scenarios faced by the public sector
and regulated industries.
These solutions meet known demand within
the key vertical markets that we operate, and
are brought to market built on proven software
together with deep domain knowledge and
experience in working with customers in
these industries.
The solutions combine multiple Objective core
products and process-specific technology. They
are proven to deliver value and are significantly
faster to implement than platform-only technology,
representing excellent value for customers.
6
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
PRODUCT
LAUNCHES
During FY2017, our commitment to developing
outstanding products resulted in major launches
across the portfolio. We’ve responded to existing
market demand while expanding addressable markets
with solutions that complement products we previously
competed against.
ECM 10 – major generational upgrade of our core solution
with a significantly enhanced user experience, passionately
embraced by customers.
Objective Insights – visual reporting dashboards and
analytics empowering managers to monitor and improve
information governance in their organisation.
Objective Perform – a stand-alone solution that automates
and streamlines content-driven processes, regardless of the
underlying information management repository.
Perform for HPE Content Manager – process automation
for HPE Content Manager customers that retains their
information governance and security models.
Objective Insights for Perform – visual reporting
dashboards and analytics that empower managers to
monitor and improve process governance throughout
their organisation.
Keystone 5 – accelerates the document production
process for customers with an updated and re-
designed user experience that is intuitive and appealing
to all content contributors.
Connect for SharePoint – secure external collaboration
for SharePoint customers globally, increasing our
addressable market.
Multi Workgroups – provides collaboration as a service
for clusters of agencies or multiple departments regardless
of their underlying information management platform;
Objective ECM, HPE Content Manager, Microsoft SharePoint.
Trapeze 10 – completely re-designed user experience that
simplifies users’ engagement with the solution trimming
assessment times while improving accuracy.
FINANCIAL
PERFORMANCE
CONTRACTED ANNUAL
RECURRING REVENUE
$38M
109.0
96.2
84.9
74.0
64.3
54.9
TOTAL REVENUE &
RECURRING REVENUE ($M)
Total revenue
Recurrent revenue
63
49
50
50
34
31
25
27
41
22
FY13
FY14
FY15
FY16
FY17
RESEARCH & DEVELOPMENT
INVESTMENT ($M)
Cumulative R&D
45.8
36.5
27.1
17.4
8.7
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
TOTAL DIVIDENDS (CPS)
EARNINGS PER SHARE (CPS)
5.00
9.0
4.00
3.75
3.50
3.00
6.0
5.8
5.0
3.9
FY13
FY14
FY15
FY16
FY17
FY13
FY14
FY15
FY16
FY17
ANNUAL REPORT 2017
| 7
CEO’S
REVIEW
Through constant innovation and
investment, we have built a globally
competitive software company
with millions of users in over
60 countries.
8
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
Dear fellow shareholders,
I am pleased to present Objective Corporation’s annual report
for the financial year ending 30 June 2017.
This year marks the 30th anniversary of the founding of Objective
Corporation. Through constant innovation and investment, we
have built a globally competitive software company with millions
of users in over 60 countries.
In creating outstanding software, we expect constant change;
we expect to respond to market forces, we expect to be pushed
by our customers and through investment in research and
development we compel ourselves to continually innovate; yet it
is refreshing to observe that our fundamental purpose; to bring
governance and efficiency to the organisations our community
depends on, remains core to all that we do here at Objective.
FY2017 was truly transformative for Objective Corporation
Overall, FY2017 was a significant year in proving our ability to
execute on our strategy. We delivered outstanding new products
across our portfolio, had great success with customers, grew
revenue and profits to record levels while establishing partner
relationships that open new markets for Objective.
The company’s performance over the year is the result of the
incredible effort made every day by our staff. We hire intelligent,
talented people; and their commitment over many years, to
deliver value to our customers is the foundation of our success.
I take this opportunity to thank each of them for their valued
contribution.
Group revenue grew by 25% to $62.6 million (FY2016: $50.2
million). Net profit after tax increased by 56% to $8.2 million
(FY2016: $5.3 million). Our cash balance at 30 June 2017 was
$16.9 million, an increase of $4.5 million over 30 June 2016.
Maintaining these high levels of growth while transitioning a
greater proportion of our revenue to annual subscription-based
contracts was a challenge we met. The annual recurring revenue
(ARR) balance at 30 June 2017 of $38 million, reflecting an
increase of 15% over 30 June 2016, increases the stability of
earnings and underpins our future financial performance.
REVENUE
GROWTH
25%
INCREASE
IN NPAT
56%
Our long-term investment philosophy in research and
development translated into major launches across our product
portfolio. Feedback from customers was extremely positive
and this is reflected in the record financial performance for the
year, where all business lines increased revenue and operating
margins.
During the year we invested $12.9 million in research and
development (R&D), up 14% on the previous year. The company
fully expenses R&D in the year that it is incurred. While this
is an increasingly unpopular trend in the sector, we believe
this conservative accounting treatment best represents true
profitability after factoring in all strategic investments.
This investment produced major new versions in all product
lines; Objective ECM 10, Objective Perform, Objective Keystone
Version 5, Objective Trapeze 10 and significant new functionality
within Objective Connect.
Whilst these product updates introduced enhanced functionality
to existing customers, they also increased the size of our
addressable market with new solutions designed to work with
other document and records repositories.
We launched Objective Perform for HPE Content Manager – a
process automation solution that utilises content stored in HPE
Content Manager, a solution which is used by more than 2,000
organisations around the globe.
We also launched Objective Connect for Microsoft SharePoint,
allowing 75,000 SharePoint customers to securely and quickly
collaborate with people external to their organisations.
Developing solutions that complement and enhance such widely
used technology creates significant growth opportunities for our
product portfolio.
We enter FY2018 with confidence. The outlook is very positive,
albeit with the historical skew to H2. We will continue to build on
the progress and successes of the past year to grow each of our
business lines.
Our loyal customers, staff and shareholders are the foundation
of our success. The Board and management of Objective
Corporation would like to thank each of them for their support.
We are excited by the position we are in at this time and we look
forward to sharing our future success with you.
Tony Walls
Chief Executive Officer
The company’s performance
over the year is the result of the
incredible effort made every day
by our staff. We hire intelligent,
talented people; and their
commitment over many years,
to deliver value to our customers
is the foundation of our success.
I take this opportunity to thank
each of them for their valued
contribution.
ANNUAL REPORT 2017
| 9
BUSINESS LINE
REVIEW
Leverage information and
processes across the enterprise
Secure external collaboration
SALES REVENUE
$52.0M
OPERATING PROFIT
$13.0M
35%
20%
SALES REVENUE
$1.5M
40%
OPERATING PROFIT
$(2.4)M
8%
Record financial performance
Growth in both perpetual and subscription licence revenue
drove a 20% increase in total revenue to $52 million, together
with an operating margin of 25% continued the strong financial
performance for this business line.
Research & Development – major product launches
Objective ECM 10 was released to unprecedented customer
demand, with more than half of our ECM customers now
upgraded to take advantage of its significantly enhanced user
experience and mobile capability.
Expanding our addressable market, Objective Perform was
launched. De-coupling Objective’s proven workflow technology
from Objective ECM and injecting a modern, redesigned user
experience, Objective Perform is a process automation solution
that works with other information or content repositories such as
the widely used HPE Content Manager and globally pervasive
Microsoft SharePoint. It allows customers to automate content
driven business processes whilst retaining their existing information
governance platform.
Cloud transition for customers
Objective Managed Services continued to grow. Evolving from
hybrid cloud and on-premise environments, several customers
transitioned to full ECM as a Service hosted in the Microsoft Azure
hyper-cloud. It is a significant step forward for this business and
evidence of a maturing trend we expect to continue.
Major contracts
Progress continued on the $10+ million contract with IBM
to deliver the End User Compute project at the Australian
Department of Defence. This contract cements the 10 year
plus relationship between Objective and Defence, transitioning
the organisation to Objective ECM 10, providing more than
85,000 users with access to our latest product innovations.
The Scottish Government extended its contract for a further
5 years, re-launching Objective ECM in the Browser to 8000
users across the government, for improved business process
automation and mobile access together with external collaboration
through Objective Connect.
New customers
New Objective ECM customers included the South Australian
Attorney-General’s Department, the Australian Electoral
Commission, Goulburn Murray Water and SA Water in Australia;
and Kent County, South Lanarkshire and West Lothian councils
in the UK.
10
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
Strong revenue growth, reduced operating losses
As customers increased the intensity and frequency of their use of
Objective Connect, revenue increased by 40% to $1.5 million. Annual
Recurring Revenue (ARR) at 30 June 2017, was $2.1 million, an
increase of 49% over 30 June 2016. Progress toward profitability
continues, as will investment in this business line to maximise the
opportunities it has created.
Research & Development – major product launches
Objective Connect for Microsoft SharePoint expands the addressable
market for this product. With seamless integration into Microsoft
SharePoint and rapid installation, Objective Connect is positioned to
move into new markets through a partner led global sales model.
Multi-Workgroup functionality delivers much larger contracts supporting
government agency clusters, multi-departmental use and large,
complex projects. For example, Glasgow City Council is using one
of its 20+ workgroups to bring multiple parties together to deliver the
2018 European Games.
Collaboration platform of choice for the public sector
Objective Connect has built an enviable reputation in the market,
consistently praised by customers for its ease of use and functionality.
It has become the collaboration solution of choice among public sector
customers providing the security they need to be able to work with
external parties along with the flexibility to work with any information
management repository they have in place. It is rapid to deploy, highly
scalable and optimised to operate on the Microsoft Azure platform,
squarely positioning it for growth.
Larger contracts
Evidence of larger sized contracts for Objective Connect came from
Western Australia following machinery of government changes in
the state. Objective Connect was contracted by the “Communities”
cluster, comprising: Department of Communities, Child Protection
and Family Support, Department of Housing and the Department
of Local Government.
Opportunity
At year end FY17, Objective Connect had 56,000 users in 65 countries
and a strong pipeline of opportunities for FY18. Organic growth is
expected to continue through the network effect created by increased
use of Objective Connect.
Expanding the partner sales model, new partners were added in
Australia, New Zealand and Europe. In FY18 we will add new partners
in North America.
Objective management continues to believe that the scale of the
opportunity for Objective Connect is significant.
Author, verify and publish
on-brand content, with ease
Digitally transform plan
approval collaboration
SALES REVENUE
$5.8M
38%
OPERATING PROFIT
$(0.4)M
67%
SALES REVENUE
$2.9M
$0.4M
OPERATING PROFIT
Improved financial performance
This business line produced strong growth in revenue in
FY17 and operating losses decreased by 67%. The 100%
subscription revenue model of this business delivers a substantial
base of contracted revenue for FY18 and there is a solid sales
pipeline of opportunities.
Strong market position in Financial Services & Insurance
FY17 was dedicated to establishing position in the Financial
Services and Insurance (FSI) vertical in Australia. Six out of
the top 10 financial services institutions and three out of the
top four banks are now Objective Keystone customers. As its
reputation is cemented within the wealth management units
of these institutions, the value Objective Keystone delivers is
generating demand beyond the production of disclosure and
offer documents.
Protected market share in Local Government
Several hundred local government customers around the world
continue to use Objective Keystone to accelerate complex
document production and engage stakeholders and their
communities. Customer retention remains strong and we continue
to add new customers, predominantly in the UK, Australia and
New Zealand.
Research & Development – major product launch
The release of Objective Keystone 5.1 delivered a vastly improved
user experience for all customers. It also added finance sector-
specific functionality such as Verification, Attestation and Legal
Comment management, illustrating Objective’s commitment to the
FSI market. In FY18, investment will be made to further enhance
the offering to both the FSI and local government markets.
Market position and opportunity
Objective Keystone is now a proven tool, to assist companies
comply with increasing regulation in the wealth management
sector. Similar regulatory and business imperatives exist in other
areas of the industry. From an established customer footprint,
focus in sales will move to exploring the opportunity in retail
banking, commercial banking and mortgage processing.
To address expanding markets, relationships with channel partners
were established throughout FY17 including; disclosure document
specialists, Mayflower Consulting and customer communication
management experts, Customer Centrics International.
Demand from Local Government continues. Newly released and
planned product features for this customer group, particularly in
the area of stakeholder engagement, will increase customers’ use
of the product and open new opportunities.
Financial performance
FY17 performance for Objective Trapeze was in line with
expectations, with revenue growing over FY16 and a strong profit
margin was maintained.
Business integration
During FY17 Objective Trapeze was fully integrated into Objective
Corporation following the acquisition of Onstream Systems the
previous year. Objective Corporation bolstered operations and
invested in the development lab in Palmerston North, New Zealand,
as well as corporate support in the form of product design, finance,
human resources and marketing. This resulted in an alignment of
strategy and culture culminating in the successful launch of a new
generation of Trapeze.
Research & Development – major product release
Objective Trapeze 10 was released to customer acclaim.
It features a completely redesigned user experience and powerful
new functionality to assist councils digitise plan assessments.
Built with the Objective Design Language (ODL) framework,
this version facilitates seamless integration of Trapeze into
other Objective products.
Market position and opportunity
With 76% market share in New Zealand and more than 300 UK
customers, Objective Trapeze is firmly established as market
leader in local government and proven to add value to council
planning processes. In partnership with Redman Solutions,
Australian customers grew 31% to 143 councils, representing
31% market share.
Opportunity
Opportunity for Objective Trapeze will come from expanding its
use within the existing customer base, by integrating it with other
Objective products to deliver broader industry-specific solutions
for end-to-end processing of Development Applications and
Building Consents.
New customers
Globally, Objective Trapeze added more than 45 new customers
during FY17. These included the Victorian Department of
Environment, Land, Water and Planning, Melbourne City Council,
Campbelltown City Council (South Australia), Mornington
Peninsula Shire Council, Southland District Council (New Zealand)
Bournemouth Council (United Kingdom) and Cambridgeshire
Council (United Kingdom).
ANNUAL REPORT 2017
| 11
DIRECTORS’
REPORT
Your Directors present their report on the consolidated entity consisting of Objective Corporation Limited and the entities it controlled at the end of,
or during, the year ended 30 June 2017. Throughout the report, the consolidated entity is referred to as the Group.
DIRECTORS
The following persons were Directors of Objective Corporation Limited during the whole of the financial year and up to the date of this report:
Mr Tony Walls
Mr Gary Fisher
Mr Leigh Warren
Mr Nick Kingsbury
INFORMATION ON DIRECTORS
L-R: Mr Tony Walls, Mr Gary Fisher, Mr Leigh Warren and Mr Nick Kingsbury
MR TONY WALLS
Chairman and Chief Executive Officer
Tony founded the business in 1987 and has extensive experience in the IT industry. Tony has a B.Math (Computing Science), a Grad.Dip in Applied
Finance (SIA) and is a Fellow of the Australian Institute of Company Directors.
MR GARY FISHER
Non-Executive Director
Gary was appointed a Director of Objective Corporation Limited in March 1991. In October 2007 Gary became a Non-Executive Director. Gary has an
extensive background in Finance, IT Management and global product software sales. Gary has a B.Economics and further tertiary education in Law
and Business Administration.
MR LEIGH WARREN
Independent Non-Executive Director
Leigh was appointed as a Non-Executive Director in August 2007 and is Chairman of the Audit Committee. Leigh has over 20 years’ experience
in the IT Industry and has held Executive roles for several multinational companies, including SAP where he was Chief Operating Officer for
North Asia, Oracle where he was the Managing Director for Australia and New Zealand, Ventyx where he was President for the EMEA region
and Bluecoat Systems where he was Vice President Asia Pacific Field Operations. Leigh also serves on the Board of ASX/NZX listed Gentrack
and Hong Kong based Solution Access.
MR NICK KINGSBURY
Independent Non-Executive Director
Nick was appointed as a Non-Executive Director in July 2008 and is a member of the Audit Committee. Nick is an experienced international software
entrepreneur, strategist and venture capitalist. Nick founded, led and then sold a leading UK Business Process Management company. Nick then
spent 7 years with the international venture capital company 3i, where he headed up the software sector. From October 2011 to June 2015 he chaired
a UK AIM listed cyber security company Accumuli, plc, which was successfully sold to NCC Group. As well as his role with Objective, he sits on the
boards of three early stage businesses Pushfor Limited, Loot Financial Services Limited and Tailored Media Ventures (UK) Limited, and is an advisor
to Growthpoint Technology Partners, a US investment bank.
MR BEN TREGONING
Company Secretary
Ben was appointed Company Secretary in July 2016. Ben has over 12 years’ experience in financial roles within Financial Services and corporate
finance businesses both in Australia and the UK. He is responsible for company secretarial and corporate governance support at Objective.
MR MARK KATZ
Company Secretary
Mark was appointed Company Secretary in August 2015. Mark has over 20 years’ experience in financial roles within the Financial Services and Travel
sectors in Australia and South Africa, most recently with American Express. Mark is a member of the Institute of Chartered Accountants, Australia &
New Zealand. Mark resigned as Company Secretary in July 2016.
12
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’
REPORT CONTINUED
PRINCIPAL ACTIVITIES
The principal activity of the Group during the year was the supply of information technology software and services. There was no significant change
in the nature of the Group’s activities during the year.
DIVIDENDS
An ordinary final fully franked dividend of $3,665,000 was paid on 14 September 2016.
Since the end of the financial year, the directors have recommended the payment of a final fully franked dividend of 4.0 cents per ordinary share and
a special unfranked dividend of 1.0 cent per ordinary share (2016: fully franked dividend of 4.0 cents per ordinary share). The aggregate amount of
the dividends expected to be paid by 14 September 2017 is $4,588,000 (2016: $3,665,000). There is no conduit foreign income attributed to the final
dividend declared.
REVIEW OF OPERATIONS AND FINANCIAL RESULTS
A review of the Group operations and the results for the year ended 30 June 2017 is set out on the inside front cover to page 46 of the annual report
and forms part of the Directors’ Report. This includes the summary of consolidated results as well as an overview of the Group’s strategy.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
There were no significant changes in the state of affairs of the Group during the financial year.
SHARE CAPITAL
As at 30 June 2017 the Company had 91,768,041 (2016: 91,165,169) fully paid ordinary shares on issue.
Voting rights are detailed in Note 16 to the financial statements.
UNISSUED SHARES UNDER OPTIONS
The number of options over the unissued ordinary shares of Objective Corporation Limited at the date of this report were:
Options on Issue at Balance Date
Number
Expiry Date
Number
Expiry Date
2017
2016
Employee options exercisable at $0.50
Employee options exercisable at $0.50
Employee options exercisable at $0.50
Employee options exercisable at $0.75
Employee options exercisable at $1.00
Employee options exercisable at $1.17
Employee options exercisable at $1.20
Employee options exercisable at $1.50
Employee options exercisable at $1.80
Total options on issue
–
–
–
–
204,000
01/09/2016
250,000
05/02/2024
200,000
07/10/2024
200,000
07/10/2024
125,000
24/03/2024
500,000
24/03/2024
80,000
07/10/2024
80,000
07/10/2024
150,000
24/02/2025
150,000
24/02/2025
675,000
05/03/2025
1,000,000
05/03/2025
250,000
29/07/2026
500,000
02/01/2027
–
–
1,980,000
2,384,000
–
–
Details of the options on issue are contained in Notes 16 and 25 to the financial statements. 750,000 new options were issued, 150,000 options expired
and 1,004,000 options were exercised during the financial year ended 30 June 2017.
The holders of these options do not have the right, by virtue of the option, to participate in any share issue or interest issue of the Company.
EXERCISE OF SHARE OPTIONS
In the period since 1 July 2016 to the date of this report, the following share options granted in prior years under the Employee Incentive Plan were
exercised during the financial year:
Issuing entity
Objective Corporation Limited
Objective Corporation Limited
Objective Corporation Limited
Total 1
Number of
shares issued
Class of shares
Amount paid
for shares
454,000
375,000
175,000
1,004,000
Ordinary shares
Ordinary shares
$227,000
$281,250
Ordinary shares
$210,000
$718,250
Amount
unpaid
on shares
–
–
–
–
1 Total proceeds from issue of shares represented by $185,000 received in cash and $102,000 funded by way of interest free limited recourse loans provided by
the issuing entity to employees under the terms of arrangement of the Employee Incentive Plan that is no longer in effect and $431,250 funded by way of interest
free limited recourse loans provided by the issuing entity to employees under the current Employee Incentive Plan. For accounting purposes, $431,250 in share
loans are treated as part of the options to purchase shares, until the loans are repaid or extinguished at which point the shares are recognised.
ANNUAL REPORT 2017
| 13
LIKELY DEVELOPMENTS
The Company produced strong financial and operational results for FY2017. We continued to invest in our product portfolio, expand our workforce
and develop new markets for our products.
The Directors have identified opportunities to continue to grow the business in FY2018 across all business lines and the Company will be pursuing these
whilst maintaining a focus on increasing profitability. Through product innovation we have expanded our addressable market in the regions which we are
well established and our globally competitive products provide an opportunity for us to expand our presence beyond our current geographic footprint.
ENVIRONMENTAL REGULATION
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.
EVENTS AFTER BALANCE SHEET DATE
The Directors have not become aware of any matter or circumstance not otherwise dealt with in the report or in the financial statements that has
significantly or may significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent
financial years.
INDEMNIFYING OFFICERS OR AUDITOR
During the financial year the Company has paid an insurance premium for a Directors’ and Officers’ insurance policy. The liabilities insured are legal
costs that may be incurred in defending civil or criminal proceedings that may be brought against the Directors or Company Secretary as a result of the
work performed in their capacity as officers of entities in the Group to the extent permitted by law. The Directors have not disclosed the amount of the
premium as such disclosure is prohibited under the terms of the contract.
The Company has not otherwise, during or since the financial year, indemnified or agreed to indemnify an officer or auditor of the Company or any
related body corporate against a liability incurred.
CORPORATE GOVERNANCE STATEMENT
The Company’s Directors and management are committed to conducting the Group’s business in an ethical manner and in accordance with the
highest standards of corporate governance. The Company has adopted and substantially complies with the ASX Corporate Governance Principles and
Recommendations, 3rd Edition (Recommendations), to the extent appropriate to the size and nature of the Group’s operations.
The Company has prepared a Corporate Governance Statement which sets out the corporate governance practices that were in operation throughout
the financial year for the Company, identifies any Recommendations that have not been followed, and provides reasons for not following such
Recommendations. The Company’s Corporate Governance Statement and policies will be approved at the same time as the Annual Report and will
be found on its website: http://www.objective.com/about/investors.
DIRECTORS’ INTEREST
Directors’ beneficial interest in shares and options at the date of this report were:
Director
Tony Walls
Gary Fisher
Nick Kingsbury
Leigh Warren
Total directors’ interest
Number of
ordinary
shares
62,000,000
9,000,000
320,000
335,443
71,655,443
Number of
options
–
–
–
–
–
MEETINGS OF DIRECTORS’
The number of Directors’ and Audit Committee meetings held during the financial year and the number of meetings attended by each of the Directors
are as follows:
Director
Tony Walls
Gary Fisher
Nick Kingsbury
Leigh Warren
Directors’ Meeting
Audit Committee Meetings
Number of
Meetings
Held
Number of
Meetings
Attended
Number of
Meetings
Held
Number of
Meetings
Attended
12
12
12
12
12
10
11
12
2
–
2
2
2
–
1
2
14
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’ REPORT CONTINUED AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration in relation to the financial year is included on page 52.
AUDITOR’S NON-AUDIT SERVICES
The Company has not engaged the Group auditor, Pitcher Partners, to provide non-audit services during the financial year.
ROUNDING OF AMOUNTS
The Company is an entity to which ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 applies and accordingly,
amounts in the financial statements and Directors’ Report have been rounded to the nearest thousand dollars, unless specifically stated to be otherwise.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company
is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. The Company was not a party to any
such proceedings during the year.
REMUNERATION REPORT
This remuneration report details the key management personnel (KMP) remuneration arrangements for the Group, in accordance with the requirements
of the Corporations Act 2001 and its Regulations.
Following the change in the Group’s segmental reporting of its financial results at the start of the financial year, the Group undertook a fresh
assessment of the definition of KMP as set out under the accounting standards, being those persons who have the authority and responsibility
for planning, directing and controlling the activities of the Company and the Group. As a result of this assessment, the Group’s Executive KMP
has changed since the FY2016 report and the new KMP structure detailed below aligns with the requirements of the accounting standards.
The table below lists the Executives of the Group for the year ended 30 June 2017 and whose remuneration details are outlined in this
Remuneration Report.
Directors
Tony Walls
Gary Fisher
Nick Kingsbury
Leigh Warren
Chairman and Chief Executive Officer
Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Executive Key Management Personnel
Ben Tregoning
Chief Financial Officer (appointed 29 July 2016)
Overview of remuneration approach and framework
The Board from time to time reviews the remuneration packages of all Directors and Executive Officers with due regard to performance and other
relevant factors. The remuneration policy generally is to ensure the remuneration package properly reflects the person’s duties and responsibilities
and that the remuneration is competitive to attract, retain and motivate employees of the highest calibre.
The remuneration of Directors and other KMP is not directly linked to the company’s performance.
The remuneration of Directors and the other KMP is fixed annually. Bonuses are structured to reward outstanding performance against agreed
Key Performance Indicators (KPIs) including financial and non-financial metrics. Ultimately, bonuses and discretionary payments to KMP are at the
discretion of the Board.
Non-Executive Directors’ retirement payments are limited to compulsory employer superannuation. There are no retirement and termination benefits for
Executive Directors or Executives apart from those that accrue from the relevant laws such as unpaid annual leave, superannuation, long service leave
and notice of termination. The Group may consider payments on termination even though legally not required, to protect its rights if it is commercially
beneficial to its interests.
Remuneration and other terms of employment of the Executive Director and the other KMP are formalised in employment agreements.
These agreements may be terminated by either party with between one and three months’ notice. In the event of termination of Mr Walls’ services,
Mr Walls is entitled to be paid six months’ salary.
Voting and comments made at the company’s 25 November 2016 Annual General Meeting (AGM)
At the 2016 AGM, 81.3% of the votes received supported the adoption of the remuneration report for the year ended 2016. The Company did not
receive any specific feedback at the AGM regarding its remuneration practices.
The Group did not engage a remuneration consultant to provide recommendations in respect of the remuneration of KMP.
ANNUAL REPORT 2017
| 15
DIRECTORS’ REPORT CONTINUED Actual remuneration received by Executive KMP is set out in the tables below.
Short-term
Share based
payments
Post
employment
Salary
and fees
$
Cash
bonus
$
Other
$
Options
$
Super-
annuation
$
Portion of
remuneration
performance
related
%
Value of
options as
proportion of
remuneration
%
Total
$
–
59,869
280,000
32,877
232,356
–
43,025
280,000
276,712
32,877
207,500
110,496
235,692
220,692
212,892
–
–
–
–
20,513
–
–
–
73,107
–
111,171
163,768
206,260
60,000
–
–
14,266
–
–
–
6,383
–
–
–
–
–
–
–
–
–
–
3,172
–
3,172
48,933
–
7,402
–
14,031
7,402
–
–
18,889
–
–
–
–
20,049
3,123
20,049
–
–
19,308
15,373
3,123
19,308
19,308
19,308
19,308
19,308
–
77,307
300,049
39,172
321,850
6,383
50,427
299,308
379,223
43,402
337,979
293,572
480,149
300,000
232,200
n/a
–
–
–
–
–
–
–
19.3
–
32.9
55.8
43.0
20.0
–
n/a
4.1%
–
8.1%
15.2%
–
14.7
–
3.7
17.1
–
–
3.9
–
–
2017
G Fisher
N Kingsbury
T Walls
L Warren
B Tregoning 1
2016
G Fisher
N Kingsbury
T Walls
S Mclntyre
L Warren
F Volckmar 3
S Bool 2
J Goddard
R Mills
A Rudman
1 B Tregoning appointed on 29 July 2016.
2 S Bool resigned on 28 August 2015.
3 F Volckmar appointed on 10 August 2015.
The bonuses in the above tables are short-term incentives fully vested to the Executive for that year. The bonuses were based on KPIs determined by
the Board. Bonuses are structured to reward outstanding performance against agreed KPIs including financial and non-financial metrics. Ultimately,
bonuses and discretionary payments to KMP are at the discretion of the Board.
The fair value of options has been determined using the Black-Scholes method, taking into account the exercise price, the term of the option, the
vesting criteria, the impact of dilution, the non-tradeable nature of the option, the price at grant date of the underlying share and the expected price
volatility of that share, the expected dividend yield and the risk free interest rate for the term of the option. The value of the option at grant date is then
amortised over the relevant vesting period. The value included in remuneration of KMP above relates to the amortised value of options granted that
have either vested in the current year or are yet to vest.
A summary of the movement, by value, of options over ordinary shares granted, exercised and lapsed for Directors and other KMP during
the year ended 30 June 2017 are set out below:
KMP
N Kingsbury
L Warren
B Tregoning
Value of
options
granted at
grant date 1
$
Value of
options
exercised
at the
exercise date 2
$
Value of
options
lapsed at the
lapse date
$
–
–
102,492
268,263
67,066
–
–
–
–
1 The value of options granted during the year is recognised in compensation over the vesting period of the grant, in accordance with Australian
Accounting Standards.
2 The value of options exercised during the year is calculated as the market price of the Company’s shares on the ASX as at the close of trading on the date the
options were exercised, after deducting any exercise price.
16
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’ REPORT CONTINUED Details of options over ordinary shares granted, vested and lapsed for Directors or other KMP during the year ended 30 June 2017
are set out below:
KMP
N Kingsbury
L Warren
B Tregoning
KMP
B Tregoning
Number of
options at
30 June 2016
200,000
50,000
Number
granted
Number
exercised
Number
lapsed
Number
vested and
available for
exercise at
30 June 2017
Number of
options at
30 June 2017
–
–
(200,000)
(50,000)
–
250,000
–
–
–
–
–
–
250,000
–
–
–
Number of
options
granted
during FY17
Grant date
Fair value
Exercise
price
Vesting date
Expiry date
250,000
29/07/2016
$0.41
$1.50
29/07/2016
29/07/2026
Details of options over ordinary shares granted, vested and lapsed for Directors or other KMP during the year ended 30 June 2016
are set out below:
KMP
N Kingsbury
L Warren
S Mclntyre
F Volckmar
R Mills
J Goddard
Number of
options at
30 June 2015
Number
granted
Number
exercised
Number
lapsed
Number of
options at
30 June 2016
Number
vested at
30 June 2016
200,000
100,000
200,000
500,000
300,000
500,000
–
–
–
–
–
–
–
(50,000)
–
–
–
–
–
–
–
–
–
–
200,000
50,000
200,000
500,000
300,000
500,000
150,000
–
100,000
500,000
300,000
500,000
Shareholdings of Key Management Personnel
KMP
T Walls
G Fisher
N Kingsbury
L Warren
Number of
shares at
30 June 2016
62,000,000
11,000,000
120,000
285,443
Share options
exercised
Purchase
of shares
Shares sold
Number of
shares at
30 June 2017
–
–
200,000
50,000
–
–
–
–
–
62,000,000
(2,000,000)
9,000,000
–
–
320,000
335,443
The 250,000 shares exercised during the financial year ended 30 June 2017 were issued at 50 cents each and were fully paid in cash.
KMP
T Walls
G Fisher
N Kingsbury
L Warren
S Bool
A Rudman
J Goddard
Signed in accordance with a resolution of the Board of Directors.
Tony Walls
Director
30 August 2017
Number of
shares at
30 June 2015
62,000,000
11,000,000
120,000
235,443
497,291
500,000
113,357
Share options
exercised
Purchase
of shares
Shares sold
–
–
–
50,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(497,291)
–
–
Number of
shares at
30 June 2016
62,000,000
11,000,000
120,000
285,443
–
500,000
113,357
ANNUAL REPORT 2017
| 17
DIRECTORS’ REPORT CONTINUED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED 30 JUNE 2017
Revenue
Cost of sales
Gross profit
Other gains and losses
Distribution expenses
Research and development expenses
Administration and other operating expenses
Profit before income tax
Income tax expense
Profit for the year attributable to shareholders of Objective Corporation Limited
Basic earnings per share
Diluted earnings per share
CONSOLIDATED
2017
$’000
62,599
(2,025)
60,574
(236)
(30,703)
(12,852)
(6,950)
9,833
(1,631)
8,202
2016
$’000
50,150
(1,403)
48,747
203
(24,697)
(11,259)
(6,929)
6,065
(802)
5,263
Cents
Cents
9.0
8.9
5.8
5.7
Notes
4
4
4
5
3
3
The above consolidated statement of profit or loss should be read in conjunction with the accompanying notes.
18
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2017
Profit for the year
Other comprehensive income/(expense)
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations
Other comprehensive income/(expense) for the year, net of tax
Total comprehensive income for the year
Total comprehensive income for the year attributable to shareholders of Objective Corporation Limited
Notes
18
CONSOLIDATED
2017
$’000
8,202
(909)
(909)
7,293
7,293
2016
$’000
5,263
122
122
5,385
5,385
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
ANNUAL REPORT 2017
| 19
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2017
Current assets
Cash and cash equivalents
Trade and other receivables
Current tax assets
Other assets
Total current assets
Non-current assets
Trade and other receivables
Property, plant and equipment
Deferred tax assets
Intangible assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Provisions
Deferred revenue
Other liabilities
Total current liabilities
Non-current liabilities
Provisions
Deferred revenue
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity
CONSOLIDATED
2017
$’000
2016
$’000
Notes
6
7
8
7
9
11
10
12
13
14
15
13
14
15
16
18
19
16,852
8,488
296
4,953
30,589
805
4,439
913
9,452
15,609
46,198
4,836
1,152
2,587
12,723
458
21,756
273
–
2,835
3,108
24,864
21,334
3,920
(11,075)
28,489
21,334
12,372
6,712
373
5,784
25,241
755
602
342
10,754
12,453
37,694
5,633
12
2,233
11,422
33
19,333
261
32
108
401
19,734
17,960
3,631
(9,623)
23,952
17,960
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
20
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2017
As at 1 July 2015
Profit for the period
Exchange differences on translation of foreign operations
Total comprehensive income for the period
Transactions with owners in their capacity as owners:
Share-based payments
Exercise of share options
Issue of ordinary shares
Buy-back of ordinary shares
Dividends provided for or paid
Total transactions with owners in their capacity as owners
As at 30 June 2016
Profit for the period
Exchange differences on translation of foreign operations
Total comprehensive income for the period
Transactions with owners in their capacity as owners:
Share-based payments
Exercise of share options
Buy-back of ordinary shares
Dividends provided for or paid
Total transactions with owners in their capacity as owners
As at 30 June 2017
CONSOLIDATED
Share
capital
$’000
Reserves
$’000
Retained
earnings
$’000
Notes
19
18
18
16
16
18
17
19
18
18
16
18
17
3,048
(9,524)
–
–
–
–
246
337
–
–
583
3,631
–
–
–
–
289
–
–
289
3,920
–
122
122
48
–
–
(269)
–
(221)
(9,623)
–
(909)
(909)
163
–
(706)
–
(543)
(11,075)
22,098
5,263
–
5,263
–
–
–
–
(3,409)
(3,409)
23,952
8,202
–
8,202
–
–
–
(3,665)
(3,665)
28,489
Total
$’000
15,622
5,263
122
5,385
48
246
337
(269)
(3,409)
(3,047)
17,960
8,202
(909)
7,293
163
289
(706)
(3,665)
(3,919)
21,334
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
ANNUAL REPORT 2017
| 21
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2017
CONSOLIDATED
2017
$’000
2016
$’000
Notes
69,311
(59,059)
313
(978)
9,587
–
55
(4,328)
3,268
(23)
(1,028)
53,125
(53,655)
403
(1,684)
(1,811)
(2,874)
180
(171)
–
–
(2,865)
(3,660)
(3,409)
185
(706)
(4,181)
4,378
12,372
102
16,852
245
(268)
(3,432)
(8,108)
20,245
235
12,372
6
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Income taxes paid, net
Net cash inflow/(outflow) from operating activities
20(a)
Cash flows from investing activities
Net cash outflow on acquisition of subsidiary
Repayment of loans by employees
Payments for property, plant and equipment
Lease incentive received from lessor in the form of reimbursement of fitout costs for new office
Payments for intangible assets
Net cash outflow from investing activities
Cash flows from financing activities
Dividends paid
Proceeds from issue of shares
Payments for shares bought back, net of transaction costs
Net cash outflow from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of the financial year
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
22
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Business combination
The Group applies the acquisition method
to account for business combinations. The
consideration transferred for the acquisition
of a subsidiary is the fair values of the assets
transferred, the liabilities incurred to the former
owners of the acquiree and the equity interests
issued by the Group. The consideration
transferred includes the fair value of any asset or
liability resulting from a contingent consideration
arrangement. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a
business combination are measured initially at
their fair values at the acquisition date.
Acquisition-related costs are expensed as
incurred.
Currency
Items included in the financial statements of
each of the Group’s entities are measured
using the currency of the primary economic
environment in which the entity operates (“the
functional currency”). The consolidated financial
statements are presented in Australian dollars,
which is Objective Corporation Limited’s
functional and presentation currency.
Rounding
In accordance with ASIC Corporations
(Rounding in Financial/Directors’ Reports)
Instrument 2016/191, amounts in the Directors’
Report and Financial Report have been
rounded off to the nearest thousand Australian
dollars unless otherwise indicated.
Comparative information
Where applicable, comparative information has
been reclassified in order to comply with current
period disclosure requirements, the impact of
which is not material to the financial report.
New or revised accounting standards
The Group has adopted all amendments to
Australian Accounting Standards which became
applicable from 1 July 2016. There have been
no new or revised accounting standards which
materially impacted the financial report. New
standards not yet applicable are discussed in
Note 30.
Critical accounting judgments and key
sources of estimation uncertainty
Critical judgments and key assumptions
that management has made in the process
of applying the Group’s accounting policies
and that have the most significant effect on
the amounts recognised in the consolidated
financial statements are detailed in the
notes below:
Note
Judgement/Estimation
7, 10
Asset impairment
11
Recoverability of deferred tax assets
9, 10
Useful life for depreciable assets
13
Employee benefits assumptions
NOTE 1. BASIS OF PREPARATION
This section sets out the basis upon which
the Group’s consolidated financial statements
are prepared as a whole. Significant and
other accounting policies that summarise the
measurement basis used and are relevant to
an understanding of the consolidated financial
statements are provided throughout the notes to
the consolidated financial statements. All other
accounting policies are outlined in Note 30.
Statement of compliance
Objective Corporation Limited is a limited
company incorporated in Australia whose
shares are publicly traded on the Australian
Securities Exchange.
This general purpose financial report is
prepared in accordance with the Corporations
Act 2001 and applicable Accounting Standards
and Interpretations, and complies with other
requirements of the law. Objective Corporation
Limited is a ‘for profit’ entity. The financial report
includes the consolidated financial statements
of Objective Corporation Limited and its
controlled entities (the “Group”).
Accounting Standards include Australian
Accounting Standards. Compliance with
Australian Accounting Standards ensures
that the financial statements and notes of the
Group comply with International Financial
Reporting Standards.
Basis of measurement
The financial report is based on historical cost,
except for certain financial assets which are
at fair value. In preparing this financial report,
the Group is required to make estimates and
assumptions about carrying values of assets and
liabilities. These estimates and assumptions are
based on historical experience and various other
factors that are believed to be reasonable under
the circumstances. Actual results may differ from
these estimates. The estimates and underlying
assumptions are reviewed on an ongoing basis.
The accounting policies adopted are consistent
with those of the previous year, unless
otherwise stated.
Basis of consolidation
The consolidated financial statements have
been prepared by aggregating the financial
statements of all the entities that comprise the
Group, being Objective Corporation Limited
and its controlled entities. In these consolidated
financial statements:
• results of each controlled entity are included
from the date Objective Corporation Limited
obtains control and until such time as it
ceases to control an entity; and
• all inter-entity balances and transactions
are eliminated.
Control is achieved where Objective
Corporation Limited is exposed to, or has rights
to, variable returns from its involvement with
an entity and has the ability to affect those
returns through its power to direct the activities
of the entity. Entities controlled by Objective
Corporation Limited are under no obligation
to accept responsibility for liabilities of other
common controlled entities except where such
an obligation has been specifically undertaken.
Estimates and judgements are continually
evaluated and are based on historical
experience and other factors, including
reasonable expectations of future events.
Notes to the financial report
The notes to the financial report are organised
into the following sections.
Financial performance overview: provides
a breakdown of individual line items in the
statement of financial performance, and other
information that is considered most relevant to
users of the annual report.
Balance sheet items: provides a breakdown of
individual line items in the statement of financial
position that are considered most relevant to
users of the annual report.
Capital structure and risk management:
provides information about the capital
management practices of the Group including
the Group’s exposure to various financial risks,
explains how these affect the Group’s financial
position and performance and what the Group
does to manage these risks.
Group structure: explains aspects of the Group
structure and the impact of this structure on the
financial position and performance of the Group.
Other: provides information on items which
require disclosure to comply with Australian
Accounting Standards and other regulatory
pronouncements.
NOTE 2. SEGMENT INFORMATION
Operating and reportable segments
The Group has identified its operating segments
based on the internal reports that are reviewed
and used by the board of directors in their role
as the chief operating decision makers (CODM)
in assessing performance and in determining
the allocation of resources. Operating segments
are identified by management and the board
of directors based on the nature of the core
products and services offered. Reportable
segments are based on operating segments
determined by the similarity of the products
produced and sold as these are the sources
of the Group’s major risks and have the most
effect on the rates of return. Each of the
business units disclosed below has been
determined as both an operating segment
and reportable segment.
ANNUAL REPORT 2017
| 23
NOTE 2. SEGMENT INFORMATION CONTINUED
Operating segment
Description
Objective ECM
Objective Keystone
Objective Connect
Objective Trapeze
Corporate
Includes results from the sale of Objective Enterprise Content Management related products which allow
customers to manage information and process governance across the enterprise.
Includes results from the sale of Objective Keystone products that improve efficiency and deliver governance in
the process of authoring, reviewing, engaging with and publishing documents.
Includes results from the sale of Objective Connect products which enable customers to extend their information
governance to the cloud.
Includes results from the sale of Objective Trapeze products which digitally transform development application
plan reviews and assessments.
This segment is not considered an operating group, includes head office and central service groups including
treasury function.
This represents a change from previous periods where management and the board of directors considered the financial performance of the business
from a geographical perspective. As such, comparative information has been restated to reflect the reportable segments identified in the current year.
Management and the board of directors continue to consider the financial position of the business from a geographical perspective and as such the
assets and liabilities of the Group are presented by geographical region for both the year ended 30 June 2017 and the comparative period.
Segment revenue represent invoiced sales subsequently adjusted for the deferred component which is recognised over the service period to arrive at
revenue. Revenue from segments comprise product or licence sales, subscription services, professional services, training service and interest income.
The CODM assesses the performance of individual segments on the basis of earnings before interest expense, tax expense, depreciation and
amortisation (EBITDA).
Allocation to segments
Segment revenues and expenses are those that are directly attributable to a segment and the relevant portion that can be allocated to the segment on
a reasonable basis.
Segment assets include all non-current assets and current assets with the exception of net deferred tax assets, current tax assets and other corporate
assets including intangible assets, goodwill and investments.
The following is an analysis of the Group’s revenue and results by reportable segment for the financial year. Prior financial year comparative information
has been reclassified to conform to current financial year presentation.
Year ended 30 June 2017
Revenue from external customers
Interest revenue
Total revenue
Segment expenses
EBITDA
Depreciation and amortisation
Profit before income tax expense
Income tax expense
Profit for the year
Year ended 30 June 2016*
Revenue from external customers
Interest revenue
Total revenue
Segment expenses
EBITDA
Depreciation and amortisation
Profit before income tax expense
Income tax expense
Profit for the year
Objective
ECM
$’000
Objective
Keystone
$’000
Objective
Connect
$’000
Objective
Trapeze
$’000
Corporate
$’000
52,019
–
52,019
(38,970)
13,049
5,842
–
5,842
(6,230)
(388)
1,512
–
1,512
(3,952)
(2,440)
2,882
–
2,882
(2,481)
401
79
265
344
(243)
101
Objective
ECM
$’000
Objective
Keystone
$’000
Objective
Connect
$’000
Objective
Trapeze
$’000
Corporate
$’000
43,356
–
43,356
(33,760)
9,596
4,248
–
4,248
(5,454)
(1,206)
1,077
–
1,077
(3,632)
(2,555)
970
–
970
(791)
179
–
499
499
265
764
Total
$’000
62,334
265
62,599
(51,876)
10,723
(890)
9,833
(1,631)
8,202
Total
$’000
49,651
499
50,150
(43,372)
6,778
(713)
6,065
(802)
5,263
* Comparative amounts have been restated for consistency with current year presentation.
24
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2017 NOTE 2. SEGMENT INFORMATION CONTINUED
Reconciliation of revenue by location
Revenue is recognised in a subsidiary based on where the services are performed for a particular project. In the majority of cases, revenue per
subsidiary will match the region in which the subsidiary operates.
Revenue by location
Australia
United Kingdom
New Zealand
Rest of world
Total revenue
Year ended 30 June 2017
Reportable segment assets
Reportable segment liabilities
Year ended 30 June 2016*
Reportable segment assets
Reportable segment liabilities
Reconciliation of reportable segment assets and liabilities
Assets
Reportable segment assets
Intangible assets
Current tax assets
Deferred tax assets
Consolidated total assets
Liabilities
Reportable segment liabilities
Current tax liabilities
Consolidated total liabilities
Asia Pacific
$’000
33,304
19,532
Asia Pacific
$’000
24,078
15,396
CONSOLIDATED
2017
$’000
2016
$’000
49,751
7,779
5,037
32
62,599
Europe
$’000
2,233
4,180
Europe
$’000
2,147
4,326
39,161
8,053
2,893
43
50,150
Total
$’000
35,537
23,712
Total
$’000
26,225
19,722
2017
$’000
2016*
$’000
35,537
9,452
296
913
26,225
10,754
373
342
46,198
37,694
23,712
1,152
24,864
19,722
12
19,734
Reconciliation of non-current assets
Non-current assets for this purpose consist of property, plant and equipment, intangible assets, deferred taxes and other receivables. Deferred taxes
are not allocated to a specific location as they are also managed on a group basis.
* Comparative amounts have been restated for consistency with current year presentation.
Non-current assets by location of assets
Australia
United Kingdom
New Zealand
Unallocated non-current assets
Total non-current assets
2017
$’000
5,066
5,940
3,690
913
2016*
$’000
1,242
7,324
3,545
342
15,609
12,453
ANNUAL REPORT 2017
| 25
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2017
NOTE 3. EARNINGS PER SHARE
Basic earnings per share – cents
Profit for the year attributable to shareholders of Objective Corporation Limited ($’000)
CONSOLIDATED
2017
9.0
8,202
2016
5.8
5,263
Weighted average number of ordinary shares used in the calculation of basic earnings per share
91,546,787
91,018,670
Diluted earnings per share – cents
Profit for the year attributable to shareholders of Objective Corporation Limited ($’000)
CONSOLIDATED
2017
8.9
8,202
2016
5.7
5,263
Weighted average number of ordinary shares used in the calculation of basic earnings per share1
92,214,400
92,186,125
1 Calculated by increasing the total weighted average number of shares used in calculating basic earnings per share by net outstanding options of 667,614.
Options granted under the Employee Incentive Plan are included in the determination of diluted earnings per share to the extent to which they are dilutive.
NOTE 4. MATERIAL PROFIT OR LOSS ITEMS
The Group has identified a number of items which are material due to the significance of their nature and/or amount. These are listed separately here
to provide a better understanding of the financial performance of the Group.
Product and service revenue
Other revenue:
Interest income
Sundry revenue
Total revenue
Expenses:
Depreciation expenses – property, plant and equipment
Amortisation expenses – intangible assets
Operating lease expenses
Employee benefits expenses
Superannuation expenses
Share based payment expenses
Research and development expenses
Other gains and losses:
Net foreign exchange gains/(losses)
Net loss on disposal of property, plant and equipment
CONSOLIDATED
2017
$’000
2016
$’000
62,255
49,651
265
79
499
–
62,599
50,150
(646)
(244)
(1,962)
(38,775)
(2,444)
(163)
(12,852)
(150)
(86)
(484)
(229)
(2,032)
(31,592)
(2,130)
(48)
(11,259)
203
–
Recognition and measurement
Revenue is measured at the fair value of the consideration receivable, and is recognised when each of the following conditions is met:
• persuasive evidence that an arrangement exists, which is usually in the form of a contractual arrangement;
• the seller’s price to the buyer is fixed or determinable;
• the significant risks and rewards of ownership of the goods have transferred from the Group to the buyer; and collectability is reasonably assured.
26
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2017 NOTE 4. MATERIAL PROFIT OR LOSS ITEMS CONTINUED
Product sales
Revenue from the sale of product or licence fees is recognised at the earliest of when the Group has passed control of the relevant product or granted
a right or licence for the use of the product to the buyer.
Subscription revenue
Income in respect of subscription licence, hosting and support services is deferred and released over the period of the contract with the customer.
Upgrade and support program (USP)/maintenance support
Revenue from USP and maintenance support is recognised over the period during which the relevant service is provided.
Rendering of services
Revenue from cost plus contracts is recognised by reference to the recoverable costs incurred during the period plus time spent on each contract.
Interest income
Interest income is earned from financial assets that are held for cash management purposes and recognised as it accrues, taking into account the
effective yield on the financial asset.
Operating lease expenses
Payments made under operating leases (net of any incentives received by the lessor) are expensed on a straight-line basis over the period of the lease
unless another systematic basis is more representative of the time pattern of the benefit.
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefits of
incentives are recognised as a reduction of rental expense on a straight-line basis over the term of the lease, except where another systematic basis is
more representative of the time pattern in which economic benefits from the leased asset are consumed.
Employee benefits expense
Employee benefits expense includes salaries, wages and other employment related entitlements.
Research and development expenses
Expenditure on research and development activities is recognised in the consolidated statement of profit or loss as an expense when incurred.
Finance costs
Finance costs relating to interest expenses are expensed in the period in which they are incurred.
Foreign currency transactions and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency
monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate
at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in profit or loss, except where deferred in equity as a qualifying cash
flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive income to the extent that the
underlying gain or loss is recognised in other comprehensive income; otherwise the exchange difference is recognised in profit or loss.
Gain/(loss) on disposal of property, plant and equipment
Gains or losses arising from the retirement or disposal of tangible assets are determined as the difference between the estimated net disposal
proceeds and the carrying amount of the assets and are recognised in profit or loss on the date of retirement or disposal.
ANNUAL REPORT 2017
| 27
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2017 NOTE 5. INCOME TAX EXPENSE
(a) Reconciliation of income tax expense to prima facie tax payable
Profit before income tax expense
Prima facie income tax expense calculated at the tax rate of 30%
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
Amortisation expenses – intangibles
Share based payment expenses
Other non-allowable deductions
Subtotal
Different tax rates of subsidiaries operating in other jurisdictions
Adjustments for current tax of prior periods
Research and development tax credit
Previously unrecognised deductible temporary differences now recognised as deferred tax assets
Unused tax losses not recognised as deferred tax assets
Previously unrecognised tax losses now recouped to reduce current tax expense
Income tax expense
(b) Components of income tax expense
Current tax expense on profits for the year
Deferred tax expense related to movements in deferred tax balances
Income tax (over)/under provided in prior years
Income tax expense
CONSOLIDATED
2017
$’000
9,833
2,950
73
49
64
3,136
15
(94)
(1,101)
(298)
58
(85)
1,631
2016
$’000
6,065
1,819
69
14
15
1,917
(10)
(160)
(786)
(159)
–
–
802
CONSOLIDATED
2017
$’000
2,297
(572)
(94)
1,631
2016
$’000
934
28
(160)
802
Recognition and measurement
Current and deferred tax is recognised as an expense or income in the consolidated statement of profit or loss, except when it relates to items credited
or debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises from the initial accounting for a
business combination, in which case it is taken into account in the determination of goodwill.
Current tax represents the amount expected to be paid in relation to taxable income for the financial year measured using tax rates and tax laws that
have been enacted or substantively enacted by the reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the
extent that it is unpaid (or refundable).
Deferred income tax is provided in full, using the balance sheet liability method, on temporary differences arising between the carrying amounts of
assets and liabilities for financial reporting and tax purposes. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply
to the period(s) when the asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted by reporting date.
28
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2017 BALANCE SHEET OVERVIEW
NOTE 6. CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the end of the financial year are reflected in the related items in the consolidated statement of financial position as follows:
Current assets
Cash at bank and in hand
Short term bank deposits
Total cash and cash equivalents 1
CONSOLIDATED
2017
$’000
5,476
11,376
16,852
2016
$’000
5,488
6,884
12,372
1 The cash and cash equivalents disclosed above and in the consolidated statement of cash flows include $1,040,000 (2016: $426,000) in short term bank
deposits which are restricted for use and held as security for rental guarantees.
Classification as cash equivalents
Cash and cash equivalents comprise cash, bank balances and short term deposits with an original maturity of 4 months or less from acquisition.
NOTE 7. TRADE AND OTHER RECEIVABLES
Trade receivables
Allowance for impairment
Other receivables
Loans to employees
Total trade and other receivables
CONSOLIDATED
2017
2016
Current
$’000
Non-current
$’000
Current
$’000
Non-current
$’000
7,542
–
7,542
946
–
8,488
–
–
–
–
805
805
5,317
–
5,317
1,395
–
6,712
–
–
–
–
755
755
Recognition and measurement
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost, less any allowance for impairment.
An allowance for impairment is raised based on a review of outstanding balances at balance date. Bad debts are written off against the allowance
for impairment account and any other change in the allowance for impairment account is recognised in the consolidated statement of profit or loss.
An allowance for impairment is established when there is objective evidence that the Group will not be able to collect all amounts due according to
the original terms of the receivables. Objective evidence that trade and other receivables are impaired includes default or delinquency by a debtor
or indications that a debtor will enter administration.
Classification as trade and other receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. Loans and other
receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. If collection of the amounts
is expected in one year or less they are classified as current assets. If not, they are presented as non-current assets. Trade receivables are generally
due for settlement within 30 days and therefore are all classified as current. Further information relating to loans to employees is set out in Note 25.
The ageing of the Group’s trade and other receivables at reporting date together with impairment and other accounting policies for trade and other
receivables are outlined in Note 21.
ANNUAL REPORT 2017
| 29
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2017 NOTE 8. OTHER ASSETS
Current assets
Accrued revenue
Prepayments
Rental deposits
Total other assets
CONSOLIDATED
2017
$’000
3,725
1,069
159
4,953
2016
$’000
4,218
1,413
153
5,784
Recognition and measurement
Revenue from cost plus contracts with customers is recognised by reference to the recoverable costs incurred during the period plus time spent on
each contract. Revenue accrual estimates are made to account for the unbilled period between the customer’s last billing date and the reporting date.
Prepayments are recognised for amounts paid whereby goods have not transferred ownership to the Group or where services have not yet been
provided. Upon receipt of goods or the service the corresponding asset is recognised in the consolidated statement of profit or loss.
Rental deposits are bond payments made to the lessor under a lease agreement and may be refunded in whole or in part at the end of the leasing
arrangement.
NOTE 9. PROPERTY, PLANT AND EQUIPMENT
At 30 June 2017
Gross carrying amount – cost
Accumulated depreciation
Total property, plant and equipment, net
Represented by:
Net carrying amount at 1 July 2016
Additions 1
Disposals
Depreciation expenses
Exchange differences
Net carrying amount at 30 June 2017
At 30 June 2016
Gross carrying amount – cost
Accumulated depreciation
Total property, plant and equipment, net
Represented by:
Net carrying amount at 1 July 2015
Additions
Acquisition of subsidiary (Note 23)
Disposals
Depreciation expenses
Exchange differences
Net carrying amount at 30 June 2016
CONSOLIDATED
Plant and
equipment
$’000
Leasehold
improvements
$’000
3,177
(2,197)
980
447
823
(57)
(231)
(2)
980
4,939
(4,492)
447
631
174
39
–
(387)
(10)
447
4,064
(605)
3,459
155
3,748
(29)
(415)
–
3,459
1,289
(1,134)
155
252
–
–
–
(97)
–
155
Total
$’000
7,241
(2,802)
4,439
602
4,571
(86)
(646)
(2)
4,439
6,228
(5,626)
602
883
174
39
–
(484)
(10)
602
1
The office move by the Company to 177 Pacific Highway in December 2016 resulted in the recognition of additions to leasehold improvements of
$3,268,000 and a corresponding lease incentive liability arising from lessor reimbursement for the costs incurred by the Company to complete fitout
works. Refer Note 15 for further details.
30
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2017 NOTE 9. PROPERTY, PLANT AND EQUIPMENT CONTINUED
Recognition and measurement
Property, plant and equipment are recorded at historical cost of acquisition less singular depreciation. Historical cost includes expenditure that is
directly attributable to the acquisition of items. Subsequent costs are included in an asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be
measured reliably. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred. The assets’
residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset’s carrying amount is written
down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.
Critical accounting estimates and judgements – depreciation methods and useful lives
Property, plant and equipment comprises of furniture and fittings, office equipment, computer equipment and leasehold improvements. Depreciation
is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated useful lives as follows:
Asset class
Plant and equipment
Leasehold improvements
Useful life
2 – 10 years
2 – 7 years or shorter of lease term
Estimates of remaining useful lives, residual values and depreciation methods require significant management judgement, are reviewed annually,
and where changes are made, their effects are accounted for on a prospective basis.
NOTE 10. INTANGIBLE ASSETS
30 June 2017
Gross carrying amount – cost
Accumulated amortisation
Total intangible assets, net
Represented by:
Net carrying amount at 1 July 2016
Additions
Amortisation expenses
Foreign exchange differences
Net carrying amount at 30 June 2017
30 June 2016
Gross carrying amount – cost
Accumulated amortisation
Total intangible assets, net
Represented by:
Net carrying amount at 1 July 2015
Acquisition of subsidiary (Note 23)
Amortisation expenses
Foreign exchange differences
Net carrying amount at 30 June 2016
CONSOLIDATED
Intellectual
property
$’000
Brand
names
$’000
Other
intangibles
$’000
Goodwill
$’000
Total
$’000
2,060
(1,690)
370
774
–
(206)
(198)
370
2,440
(1,666)
774
950
–
(229)
53
774
177
–
177
171
–
–
6
177
171
–
171
–
171
–
–
171
396
(38)
358
359
23
(38)
14
358
359
–
359
–
359
–
–
359
8,547
–
8,547
11,180
(1,728)
9,452
9,450
10,754
–
–
(903)
8,547
9,450
–
9,450
6,654
2,955
–
(159)
9,450
23
(244)
(1,081)
9,452
12,420
(1,666)
10,754
7,604
3,485
(229)
(106)
10,754
Recognition and measurement
Intangible assets acquired in a business combination is recognised at fair value at the acquisition date. Intangible assets with finite useful life is stated
at cost less accumulated amortisation and impairment losses.
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the share of the net identifiable assets acquired in a business
combination. Goodwill is not amortised, but tested annually for impairment.
Intellectual property
The intellectual property was obtained through acquiring Limehouse Software in April 2009 and amortised over its estimated useful life.
Other intangible assets
Includes customer relationship list arising from the acquisition of Onstream Systems Limited and measured at fair value at the date of acquisition and
patents. Brand names of $177,000 (2016: $171,000) that have an indefinite life are assessed for recoverability annually. Customer relationship lists that
have a defined useful life are amortised and subsequently carried net of accumulated amortisation. The carrying value of other intangible assets is
allocated to the Group’s cash generating units (CGU) identified as Onstream Systems Limited.
ANNUAL REPORT 2017
| 31
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2017 NOTE 10. INTANGIBLE ASSETS CONTINUED
Critical accounting estimates and judgements – amortisation methods and useful lives
Intangible assets with finite lives are amortised on a straight-line basis over their estimated useful lives. Useful lives are reassessed each period.
The useful lives of intangible assets have been assessed as follows:
Asset class
Intellectual property
Patents
Customer relationship list
Brand names
Useful life
10 years
10 years
10 years
Indefinite useful life
Assessments of useful lives and estimates of remaining useful lives require significant management judgement. Brand names are generally assessed
as having an indefinite useful life on the basis of brand strength, ongoing expected profitability and continuing support.
Critical accounting estimates and judgements – asset impairment
The Group tests property, plant and equipment and intangible assets for impairment to ensure they are not carried at above their recoverable amounts:
• at least annually for goodwill and intangible assets with indefinite lives; and
• where there is an indication that the assets may be impaired (which is assessed at least each reporting date).
These tests for impairment are performed by assessing the recoverable amount of each individual asset or, if this is not possible, then the recoverable
amount of the CGU to which the asset belongs. CGUs are the lowest levels at which assets are grouped and generate separately identifiable cash
flows. The recoverable amount is the higher of an asset or a CGU’s fair value less costs of disposal and value in use. The value in use calculations are
based on discounted cash flows expected to arise from the asset. Management judgment is required in these valuations to forecast future cash flows
and a suitable discount rate in order to calculate the present value of these future cash flows.
The carrying value of goodwill is allocated to the Group’s CGUs, identified as follows:
Limehouse Software Limited
Onstream Systems Limited
Total goodwill
2017
$’000
5,483
3,064
8,547
The recoverable amount of Limehouse Software Limited is determined based on value-in-use calculation. The calculation uses cash flow projections
based on a five-year financial budget approved by management, extrapolated perpetually with an estimated general long-term continuous annual
growth of not more than 15%. The discount rate used of approximately 15.5% is pre-tax and reflects specific risks related to the relevant operation.
The recoverable amount of Onstream Systems Limited is determined based on value in-use calculation. The calculation uses cash flow projections
based on a five-year financial budget approved by management, extrapolated perpetually with an estimated general long-term continuous annual
growth of not more than 10%. The discount rate used of approximately 15.5% is pre-tax and reflects specific risks related to the relevant operation.
The budgeted gross margin and net profit margin are determined by management for each individual CGU based on past performance and its
expectations for market development. Management believes that any reasonably foreseeable changes in any of the above key assumptions would
not cause the carrying amount of goodwill to exceed the recoverable amount.
NOTE 11. NET DEFERRED TAX ASSETS
(a) Deferred tax balances as disclosed in the consolidated statement of financial position:
Deferred tax assets arising on deductible temporary differences
Deferred tax liabilities arising on taxable temporary differences
Total net deferred tax assets
CONSOLIDATED
2017
$’000
925
(12)
913
2016
$’000
728
(386)
342
32
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2017 NOTE 11. NET DEFERRED TAX ASSETS CONTINUED
(b) Movement in deferred tax balances
30 June 2017
Property, plant and equipment
Unrealised foreign exchange
Employee benefits provision
Rent incentive provision
Other individually insignificant balances
Total net deferred assets
(c) Tax losses
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit
CONSOLIDATED
Opening
balance
$’000
Charged to
profit or loss
$’000
Exchange
difference
$’000
Closing
balance
$’000
(34)
(333)
696
32
(19)
342
22
342
139
6
63
572
–
–
(1)
–
–
(1)
(12)
9
834
38
44
913
CONSOLIDATED
2017
$’000
3,311
785
2016
$’000
3,669
889
Potential tax assets of approximately $785,000 (2016: $889,000) attributable to unused tax losses carried forward by foreign owned subsidiaries
have not been recognised as the availability of future taxable profits against which the assets can be utilised is not considered to be probable at
30 June 2017. The benefit for tax losses will only be obtained if the relevant member entities:
(i) derive future assessable income of a nature and amount sufficient to enable the benefit from the deductions for the losses to be realised; or
(ii) continue to comply with the conditions of deductibility imposed by tax legislation and no change in tax legislation adversely affects the relevant entities
in realising the benefit from the deductions for the losses.
Recognition and measurement
Deferred tax assets are recognised when temporary differences arise between the tax bases of assets and liabilities and their respective carrying
amounts which give rise to a future tax benefit, or when a benefit arises due to unused tax losses. In both cases, deferred tax assets are recognised
only to the extent that it is probable that future taxable amounts will be available to utilise those temporary differences or tax losses. Deferred tax
liabilities are recognised when such temporary differences will give rise to taxable amounts that are payable in future periods.
Deferred tax assets and liabilities are recognised at the tax rates expected to apply when the assets are recovered or the liabilities are settled under
enacted or substantively enacted tax law.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred
tax balances relate to the same taxation authority. Current tax assets and liabilities are offset when there is a legally enforceable right to offset and an
intention to either settle on a net basis, or realise the asset and settle the liability simultaneously. Current and deferred taxes attributable to amounts
recognised directly in equity are also recognised directly in equity.
Critical accounting estimates and judgements – recoverability of deferred tax assets
The Group exercises judgement in determining whether deferred tax assets, particularly in relation to tax losses, are probable of recovery. Factors
considered include the ability to offset tax losses within the groups of entities in different tax jurisdictions, the nature of the tax loss, the length of time
that tax losses are eligible for carry forward to offset against future taxable profits and whether future taxable profits are expected to be sufficient to
allow recovery of deferred tax assets.
The Group is subject to income taxes in Australia and jurisdictions where it has foreign operations. The tax expense and deferred tax balances assume
certain tax outcomes and values of assets in relation to the application of tax legislation as it applies to the Group’s entities. Judgement is required in
determining the provisions for income taxes and in assessing whether deferred tax balances are to be recognised in the statement of financial position.
Changes in tax legislation or the interpretation of tax laws by tax authorities may affect the amount of provision for income taxes and deferred tax
balances recognised.
ANNUAL REPORT 2017
| 33
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2017 NOTE 12. TRADE AND OTHER PAYABLES
Trade payables and accruals
Goods and services tax payable, net
Dividends payable
Total trade and other payables
CONSOLIDATED
2017
$’000
3,691
1,074
71
4,836
2016
$’000
3,354
2,212
67
5,633
Recognition and measurement
Trade and other payables are recognised when the Group becomes obliged to make future payments resulting from the purchase of goods and
services. Payables are stated at their amortised cost.
Accruals comprised largely of accruals for staff costs, advertising and promotion expenses and miscellaneous operating expenses. Other creditors and
accruals are expected to be settled or recognised as income within one year or are repayable on demand.
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred
is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of purchase of the asset or as part
of the expense.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from or payable to the taxation authority
is included as a current asset or liability. Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows
arising from investing and financing activities which are recoverable from or payable to the taxation authority are classified as operating cash flows.
NOTE 13. PROVISIONS
Current
Employee benefits
Total current provisions
Non-current
Employee benefits
Total non-current provisions
Total provisions
CONSOLIDATED
2016
$’000
Charged to
profit or loss
$’000
Settled
/paid
$’000
2,233
2,233
261
261
2,494
709
709
12
12
721
(355)
(355)
–
–
(355)
2017
$’000
2,587
2,587
273
273
2,860
Recognition and measurement
Provision is recognised when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow
of economic benefits will be required to settle the obligation, and a reliable estimate can be made as to the amount of the obligation. The amount
recognised is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and
uncertainties surrounding the obligation.
A provision is made for benefits accruing to employees in respect of annual leave and long service leave. Liabilities expected to be settled within
12 months are measured at their nominal values using the remuneration rate expected to apply at the time of settlement.
Liabilities which are not expected to be settled within 12 months are measured as the present value of the estimated future cash outflows to be made
by the Group in respect of services provided by employees up to the reporting date.
Critical accounting estimates and judgements – employee benefits assumptions
In estimating the value of employee benefits, consideration is given to expected future salary and wage levels (including on-cost rates), experience
of employee departures and periods of service. The assumptions are reviewed periodically and given the nature of the estimate, reasonably possible
changes in assumptions are not considered likely to have a material impact.
Where a provision is measured using the cash flows estimated to settle the obligation, the cash flows are discounted using a pre-tax rate that reflects
current market assessments of the time value of money and the risks specific to the liability. Discount rates are reviewed periodically and given the
nature of the estimate, reasonably possible changes are not considered likely to have a material impact.
34
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2017 NOTE 14. DEFERRED REVENUE
Deferred revenue
Total deferred revenue
CONSOLIDATED
2017
2016
Current
$’000
Non-current
$’000
Current
$’000
Non-current
$’000
12,723
12,723
–
–
11,422
11,422
32
32
Recognition and measurement
The Group recognises revenue for its subscription based products and services over the related service period. The Group generally invoices
customers in advance of the services either through upfront fees, fixed fees or through annual, quarterly or monthly instalments. Deferred revenue
represents the billed, receipted and unearned portion of existing fees which will be recorded as revenue in the consolidated statement of profit or loss
over the contract period or as the services are delivered.
NOTE 15. OTHER LIABILITIES
Lease incentives
Total other liabilities
CONSOLIDATED
2017
2016
Current
$’000
Non-current
$’000
Current
$’000
Non-current
$’000
458
458
2,835
2,835
33
33
108
108
Recognition and measurement
The provision for lease incentives represents the unamortised balance of incentives received to enter into an operating lease. The incentive received
is recognised as a reduction of rental expense on a straight-line basis over the term of the operating lease.
NOTE 16. ISSUED CAPITAL
Share capital
91,768,041 fully paid ordinary shares (2016: 91,165,169)
Movement:
Opening balance
Issue of shares 1
Acquisition of subsidiary (Note 23)
Share buy-backs 2
Closing balance
CONSOLIDATED
2017
2016
Number of
shares
$’000
Number of
shares
$’000
91,165,169
1,004,000
–
(401,128)
3,631
90,797,277
3,048
289
–
–
330,000
200,000
(162,108)
246
337
–
91,768,041
3,920
91,165,169
3,631
1 Represents issue of ordinary shares as a result of options exercised under the Group’s Employee Incentive Plan. Refer Note 25.
2 The payment for share buy backs are recognised in a share buy-back reserve within equity.
Share capital
Holders of ordinary shares are entitled to receive dividends as declared and are entitled to one vote per share at shareholders’ meetings. In the event
of winding up of the Company, ordinary shareholders rank after all other shareholders and creditors and are fully entitled to any proceeds of liquidation.
The ordinary shares have no par value and the Company does not have a limited amount of authorised capital. Capital raising costs are deducted from
contributed equity.
Options issued during the year under the Employee Incentive Plan
The Company issues employee share options pursuant to the Employee Incentive Plan. Under the terms and conditions of the current Employee Incentive
Plan, selected employees are granted the right to acquire shares at a nominated exercise price subject to agreed service and performance criteria (i.e.
vesting conditions) being satisfied. On satisfaction of the vesting conditions the shares are issued to the employee with the exercise price being financed
by a limited recourse loan. No amount is paid or payable by the employee on receipt of these shares. Dividends declared and paid on the issued shares
are for the benefit of the employee. The employee is not permitted to deal in the shares until the limited recourse loan has been repaid.
Specific terms of the option and loan agreement previously offered to employees, but no longer in effect result in loans to these employees being
recognised as a loan receivable until fully repaid and the value of the shares acquired included in share capital. Limited recourse loans issued under
the current terms of the Employee Incentive Plan are characterised as options for reporting purposes.
Each option entitles the holder to the right to acquire one ordinary share at the nominated exercise price during the period commencing on the vesting date
of the options.
ANNUAL REPORT 2017
| 35
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2017 NOTE 16. ISSUED CAPITAL CONTINUED
Options issued during the year under the Employee Incentive Plan continued
At 30 June 2017 a total of 1,980,000 (2016: 2,384,000) employee share options are outstanding.
2017
2016
Number
of options
outstanding
Expiry date
Exercise
price
Fair value
per option at
grant date
Number
of options
outstanding
1 September 2006
5 February 2014
7 October 2014
24 March 2014
7 October 2014
24 February 2015
5 March 2015
29 July 2016
2 January 2017
–
–
01/09/2016
05/02/2024
200,000
07/10/2024
125,000
24/03/2024
80,000
07/10/2024
150,000
24/02/2025
675,000
05/03/2025
250,000
29/07/2026
500,000
02/01/2027
$0.50
$0.50
$0.50
$0.75
$1.00
$1.17
$1.20
$1.50
$1.80
Total options on issue
1,980,000
$0.25
$0.25
$0.61
$0.18
$0.52
$0.43
$0.33
$0.41
$0.41
204,000
250,000
200,000
500,000
80,000
150,000
1,000,000
–
–
2,384,000
During the year 750,000 new options were granted (2016: nil) and 1,004,000 options were exercised into ordinary shares (2016: 330,000). The
weighted average exercise price for options exercised was $0.72 and the weighted average share price at the date of issue was $1.90. The weighted
average fair value of options issued in FY2017 was $0.41 per option. The weighted average exercise price on issue was $1.67 and the weighted average
share price at grant date was $1.69. The fair value was determined using Black-Scholes option pricing model using a 10-year time period to expiration.
Assumptions for expected volatility and dividend yield were based on historic data. Inputs for risk free rate and grant date share price was determined
by the prevailing prices on the day of issue.
NOTE 17. DIVIDENDS AND FRANKING CREDITS
(a) Dividends
Dividend type
2013 Final
2013 Special
2014 Final
2015 Final
2016 Final
2017 Final 1
2017 Special 1
Cents per
share
Franking
2.00
1.00
3.50
3.75
4.00
4.00
1.00
100%
Nil
100%
100%
100%
100%
Nil
Total
amount
$’000
2,015
1,008
3,089
3,409
3,665
3,671
Date paid/payable
13 September 2013
13 September 2013
15 September 2014
9 September 2015
14 September 2016
14 September 2017
918
14 September 2017
1 The final dividend and special dividend for the year ended 30 June 2017 has not been recognised in this financial report because it was resolved to be paid after
30 June 2017.
(b) Franking credits
The balance of franking credit account at balance date adjusted for the payment of provision for income tax
2017
$’000
278
2016
$’000
712
36
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2017 NOTE 18. RESERVES
30 June 2017
Opening balance
Share-based payment
Share buy-backs
Translation of foreign operations
Closing balance
30 June 2016
Opening balance
Share-based payments
Share buy-backs
Translation of foreign operations
Closing balance
CONSOLIDATED
Share-
based
payments
reserve
$’000
Foreign
currency
translation
reserve
$’000
Share
buy-back
reserve
$’000
Total
$’000
(9,569)
–
(706)
–
(10,275)
(9,300)
–
(269)
–
(9,569)
290
163
–
–
453
242
48
–
–
290
(344)
(9,623)
–
–
(909)
(1,253)
163
(706)
(909)
(11,075)
(466)
(9,524)
–
–
122
(344)
48
(269)
122
(9,623)
Nature and purpose of reserves
Share buy-back reserve
The share buy-back reserve represents the value of the Company’s shares which were purchased and subsequently cancelled. The cancellation of the
shares creates a non-distributable reserve. During the financial year, the Company bought back and cancelled 401,128 (2016: 162,108) of its ordinary
shares at a total cost of $706,000 (2016: $269,000).
Foreign currency translation reserve
Exchange differences arising on translation of the financial statements of the Group’s foreign controlled entities into Australian dollars are in other
comprehensive income and accumulated in a separate reserve within equity.
Share-based payments reserve
The share-based payments reserve is used to recognise the share based payments expense resulting from the value of share options issued to key
management personnel and employees under the Group’s Employee Incentive Plan. Further information about share-based payments to employees
is made in Note 25.
NOTE 19. RETAINED EARNINGS
(a) Summary of movement in consolidated retained earnings
Balance at 1 July
Profit for the year
Dividends paid for or provided (Note 17(a))
Balance at 30 June
CONSOLIDATED
2017
$’000
23,952
8,202
(3,665)
28,489
2016
$’000
22,098
5,263
(3,409)
23,952
ANNUAL REPORT 2017
| 37
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2017 NOTE 20. CASH FLOW INFORMATION
(a) Reconciliation of profit for the year to net cash inflow/(outflow) from operating activities
Profit for the year
Adjustments:
Depreciation and amortisation expenses
Non-cash employee benefits expense – share based payments
Net loss on disposal of property, plant and equipment
Net unrealised foreign exchange differences
Change in operating assets and liabilities:
(Increase)/decrease in trade and other receivables
Decrease/(increase) in other operating assets
(Decrease)/increase in trade and other payables
Increase/(decrease) in deferred revenue
Increase/(decrease) in current tax balances
(Increase)/decrease in deferred tax assets
Increase/(decrease) in provisions
(Decrease)/increase in other operating liabilities
Net cash inflow/(outflow) from operating activities
CONSOLIDATED
2017
$’000
8,202
890
163
86
63
(1,991)
843
(601)
1,269
1,225
(572)
367
(357)
9,587
2016
$’000
5,263
713
48
–
–
2,058
(3,544)
28
(5,130)
(776)
(13)
(136)
(322)
(1,811)
(b) Non-cash investing activities
During the current year, the Group entered into the following non-cash investing activities which are not reflected in the consolidated statement
of cash flows:
Recognition of non-cash lease incentives received from lessors
CONSOLIDATED
2017
$’000
243
2016
$’000
–
38
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2017 NOTE 21. FINANCIAL RISK MANAGEMENT AND FAIR VALUES
Exposure to credit, liquidity, interest rate and currency risks arises in the normal course of the Group’s business. The Group’s exposure to these risks
and the financial risk management policies and practices used by the Group to manage these risks are described below.
(a) Credit risk
Financial assets which potentially subject the Group to credit risk consist principally of cash, short-term deposits and trade debtors. The Group’s
deposits and cash are placed with major financial institutions with sound credit ratings. Trade debtors are presented net of the allowance for
impairment losses.
Credit risk with respect to trade debtors is limited due to the large number of customers comprising the Group’s customer base are government
organisations or their diverse dispersion across different industries and geographical areas. Accordingly, the Group has no significant concentration
of credit risk. The Group manages credit risks by monitoring credit ratings and limiting the aggregate risk to any individual counterparty.
The below table summarises the Group’s exposure to credit risk at the end of the reporting period:
Cash and cash equivalents
Trade and other receivables
Ageing analysis of trade and other receivables is as follows:
Fully performing debts
Past due more than 30 days 1
Past due more than 60 days 1
Past due more than 90 days 1
Total
CONSOLIDATED
2017
$’000
16,852
8,488
6,013
1,800
81
594
8,488
2016
$’000
12,372
6,712
6,338
134
99
141
6,712
1 The Group did not consider a credit risk on the aggregate balances after reviewing the credit terms of customers based on recent collection practices.
Trade receivables past due and not impaired at 30 June 2017 is $2,475,000.
(b) Currency risk
The Group is exposed to foreign currency risk primarily as a result of its global operations. The Group also has transactional currency exposures arising
from sales and purchases that are denominated in currencies other than the functional currency of the operations to which they relate. The currencies
giving rise to foreign currency risk are primarily denominated in Pounds Sterling (GBP), United Stated dollars (USD), New Zealand dollars (NZD) and
Singapore dollars (SGD).
Foreign currency risk is defined as the fair value of future cash flows of a financial instrument fluctuating because of changes in foreign exchange
rates. The sensitivity analysis provided does not include the currency risk of financial assets and liabilities of the controlled entities denominated in the
controlled entity’s functional currency or their conversion into the functional currency of Objective Corporation Limited on consolidation as outside the
scope of the definition. The conversion of these financial assets and liabilities on consolidation may result in a gain or loss to the consolidated entity.
The Group’s exposure is to the movement in foreign exchange rates is partly mitigated by a natural hedge arising from operations in these countries.
The Group regularly monitors its foreign currency exposure which includes considering the level of cash in foreign currency and cash flow forecasting.
Sensitivity analysis
The table below summarises the instantaneous change in the Group’s profit after tax and total equity that would arise had the Australian dollar
strengthened/weakened by 10% against the respective foreign currencies to which the Group has significant exposure at the end of the reporting
period, assuming all other risk variables remained constant. The 10% sensitivity is based on reasonably possible changes, over a financial year.
30 June 2017
New Zealand dollars
Total
New Zealand dollars
Total
30 June 2016
New Zealand dollars
Total
New Zealand dollars
Total
CONSOLIDATED
Movement in
exchange rate
%
Sensitivity
of profit
after tax
$’000
Sensitivity of
total equity
$’000
+10%
–10%
+10%
–10%
120
120
(147)
(147)
228
228
(228)
(228)
120
120
(147)
(147)
228
228
(228)
(228)
ANNUAL REPORT 2017
| 39
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2017 NOTE 21. FINANCIAL RISK MANAGEMENT AND FAIR VALUES CONTINUED
(c) Liquidity risk
Liquidity risk management requires maintaining sufficient cash by continuously monitoring forecast and actual cash flows and matching the maturity
profiles of financial assets and liabilities. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, without incurring unacceptable losses or risking damage to the Group’s reputation.
The Group continues to assess its liquidity risk as low. The below table summarises the exposure of the Group to liquidity risk for all financial assets
and liabilities of the Group at reporting date and which fall due within 12 months.
30 June 2017
Cash and cash equivalents
Receivables
Payables
Net financial assets
CONSOLIDATED
$’000
$’000
16,852
8,488
(4,836)
20,504
12,372
6,712
(5,633)
13,451
As the Group is in a net financial assets position, the Directors are of the opinion that the Group is in low risk and will be able to pay off its debts
as and when they are due and payable.
Capital management
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development
of business. The Board monitors the return on capital and the level of dividends to ordinary shareholders. There were no significant changes in the
Group’s approach to capital management during the year.
Fair values measurement of financial instruments
The fair values of trade debtors, deposits and cash and trade creditors and accruals approximate their carrying amounts due to the short-term
maturities of these assets and liabilities.
All financial instruments are carried at amounts not materially different from their fair values as at 30 June 2016 and 30 June 2017.
Financial instruments carried at fair value
The Group’s financial instruments are measured at fair value at the end of the reporting period on a recurring basis, categorised into three-level
fair value hierarchy as defined in IFRS 13, Fair Value Measurement. The level into which a fair value measurement is classified and determined with
reference to the observability and significance of the inputs used in the valuation technique as follows:
• Level 1 valuations: Fair values measured using only Level 1 inputs i.e. unadjusted quoted prices in active markets for identical assets or liabilities at the
measurement date
• Level 2 valuations: Fair values measured using Level 2 inputs i.e. observable inputs which fail to meet Level 1, and not using significant unobservable
inputs. Unobservable inputs are inputs for which market data are not available
• Level 3 valuations: Fair values measured using significant unobservable inputs
During the year ended 30 June 2017, there were no transfers between Level 1 and Level 2, or transfers into or out of Level 3 of the fair value
hierarchy classifications.
40
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2017 GROUP STRUCTURE
NOTE 22. SUBSIDIARIES
Details of the Company’s interest in all subsidiaries as at each reporting date are set out below:
Name of subsidiary
Country of Incorporation
Objective Corporation Solutions NZ Limited
Objective Corporation Singapore Pte Limited
Objective Corporation North America Inc
Objective Corporation USA Inc
Objective Corporation UK Limited
Limehouse Software Limited
Onstream Systems Limited
NOTE 23. BUSINESS COMBINATIONS
New Zealand
Singapore
United States of America
United States of America
United Kingdom
United Kingdom
New Zealand
Ownership
2017
100%
100%
100%
100%
100%
100%
100%
2016
100%
100%
100%
100%
100%
100%
100%
Acquisition of Onstream Systems Limited
On 26 February 2016, the Group acquired 100% of the shares in Onstream Systems Limited (Onstream), a New Zealand headquartered company
which specialises in the capture, collaboration and manipulation of large documents, complex drawings, maps and plans. The total cash consideration
was $2,873,911. The acquisition was strategic as it enhances the Group’s product offering.
Details of the net assets acquired and goodwill in respect of the acquisition of Onstream at acquisition date were:
Cash paid
Ordinary shares issued
Total consideration
Assets acquired and liabilities assumed
Trade receivables
Other receivables
Property, plant and equipment
Deferred tax assets
Trade and other payables
Provisions
Deferred revenue
Identifiable intangible assets 1
Fair value of net assets acquired
Goodwill arising on acquisition 1
$’000
2,874
337
3,211
393
76
39
156
(172)
(82)
(684)
530
256
2,955
1 On acquisition of the subsidiary, the company acquired identifiable intangible assets including brand names and customer relationship lists. At the date of
issue of the 30 June 2016 annual report, the necessary acquisition accounting calculations had not been finalised. Subsequently, the fair value of intangible
assets acquired have been determined as soon as practicable and within one year as required under AASB 3: Business Combinations. Details of this business
combination are reflected in this consolidated financial statements on a retrospective basis.
ANNUAL REPORT 2017
| 41
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2017 NOTE 23. BUSINESS COMBINATIONS CONTINUED
Acquisition-related costs
The Group incurred acquisition related costs of $34,000 related to legal fees and other costs on acquisition of Onstream Systems Limited. These
costs have been recorded as expenses as the costs were incurred except where the costs related to the issue of shares and have been recorded
as a reduction to equity.
Revenue and profit contribution
From the date of acquisition to 30 June 2016, Onstream contributed a total revenue of $968,035 and a net profit after tax of $193,850 to the Group.
Critical accounting estimates and judgements – purchase price allocation
For the business combinations undertaken by the Group, the Group allocates the costs of the acquisition to the assets acquired and the liabilities
assumed based on their estimated fair value on the date of acquisition. This process is commonly referred to as the purchase price allocation. As part
of the purchase price allocation, the Group is required to determine the fair value of any identifiable intangible assets acquired.
The determination of the fair value of the intangible assets acquired involves certain judgement and estimates. These judgements can include, but are
not limited to, the cash flows that an asset is expected to generate in the future.
The fair values of the identifiable intangible assets were determined by the Group with inputs from the independent appraisers using mainly the income
approach. Future cash flows are predominantly based on the historical pricing and expense levels, taking into consideration the relevant market size
and growth factors, and involves making a number of assumptions including growth rates, royalty rates and product life cycles. The resulting cash flows
are then discounted at a rate reflecting specific risks related to the relevant operation.
A change in the amount allocated to identifiable intangible assets would have an offsetting effect on the amount of goodwill recognised from the
acquisition and would change the amount of amortisation expense recognised related to those identifiable intangible assets.
NOTE 24. PARENT ENTITY DISCLOSURES
(a) Summary statement of financial position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Share capital
Reserves
Retained earnings
Total equity
(b) Summary statement of profit or loss and other comprehensive income
Profit for the year
Total comprehensive income for the year
2017
$’000
22,326
16,689
39,015
18,866
273
19,139
3,920
(9,822)
25,778
19,876
2017
$’000
7,895
7,895
2016
$’000
18,821
10,793
29,614
13,313
401
13,714
3,631
(9,279)
21,548
15,900
2016
$’000
4,727
4,727
(c) Contingent liabilities
The parent entity, Objective Corporation Limited (the Company) has entered into commercial property leases as Lessee. In the event the Company
ceases to be the Lessee under the lease or occupy the premises, whether by virtue of default and termination of the lease or otherwise, the Company
may be subject to claims for payment of liquidated damages based on a percentage of the lease incentives initially received under the lease.
Refer Note 28 for details.
Additionally, a performance guarantee has been provided by the Company to Objective Corporation UK Limited (subsidiary) with regards to the
provision of software support services on the signing of the new 5 year contract with the Scottish Government.
The Company continues to support its subsidiaries in their operations, by way of financial support.
(d) Company details
The registered office and principal place of business of the Company is:
Level 30, 177 Pacific Highway, North Sydney NSW 2060, Australia.
42
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2017 OTHER
NOTE 25. SHARE BASED PAYMENTS
Employee Incentive Plan
Objective Corporation Limited has an Employee
Incentive Plan (the Plan) which was approved
at the 2003 Annual General Meeting of the
Company. The Plan is described as follows:
Offers
Under the Plan the Board may offer to any
employee either options to acquire shares or
loans to acquire shares in the Company. Tony
Walls, Chief Executive Officer and Gary Fisher,
Non-Executive Director will not be participating
in the Plan.
The options expire ten years after the date
of grant and vest upon grant; however, they
are not exercisable until one year after grant
and released in four equal tranches on each
anniversary of grant date. If a participant
under the Plan ceases to be employed by
the Company, any unexercised option will be
forfeited immediately.
Price
The Board has discretion to grant options for
a fee and set the exercise price and term of
the options.
Quotation
Options issued under the Plan will not be
quoted on the ASX. Where the Company issues
options and the options are exercised, the
Company will apply to have the issued shares
quoted on the ASX.
Maximum number of shares or options
The Company must not issue shares or options
to any employee if to do so would contravene
applicable laws or result in any employee
holding an interest in more than 5% of the
shares in the Company.
Short-term employee benefits
Post-employment benefits
Share-based payments expense
Total remuneration paid or payable
Sales restrictions
Options issued under the Plan are not
transferable. Shares acquired under the Plan
are not transferable unless any loan to acquire
the shares has been repaid in full.
NOTE 26. RELATED PARTY DISCLOSURES
The parent entity in the Group is Objective
Corporation Limited. Details of transactions
between the Group and other related parties
are disclosed below.
(a) Loans to management personnel
Details of loan balances to management
personnel and loan repayments, if any, are
set out in Notes 7, 25 and the Remuneration
Report. Loans are provided interest free. There
have been no write downs or allowances for
impairment losses.
(b) Other transactions with directors or
other key management personnel
Other transactions entered into during the
financial year with directors of Objective
Corporation Limited and other key management
personnel of the Group and with their closely
related entities which are within normal
customer or employee relationships on terms
and conditions no more favourable than those
available to other customers, employees or
shareholders included:
• contracts of employment (refer Remuneration
Report) and reimbursement of expenses;
• equity holdings and acquisition of shares
in Objective Corporation Limited under the
employee share plans; and
• dividends from shares in Objective Corporation
Limited.
(c) Key management personnel
remuneration
Total remuneration paid or payable to directors
and key management personnel is set out below:
New shares
All shares issued on the exercise of options will
rank equally with all existing shares from the
date of issue.
Dividends
All shares acquired pursuant to the Plan rank
equal in all respects and will be entitled to
any dividends declared by the Company. Any
dividends paid on shares acquired under the
Plan will be offset against the loan balance
outstanding to acquire shares under the Plan.
Options issued under the Plan are not entitled
to dividends.
Restrictions
The Board may impose vesting and
performance conditions before which options
cannot be exercised or the shares sold. The
options issued pursuant to the Plan will usually
lapse and the loans to acquire shares will
usually become repayable if the holder ceases
to be an employee.
Participation in future issues
Under the Employee Option Plan’s rules,
the number of shares over which an option is
granted and/or the exercise price of the options
may be altered in the event of a reconstruction
of the Company’s share capital or a bonus or
rights issue of shares to shareholders. Shares
acquired under the Plan will rank equal in all
respects with existing shares.
Loans
The Board has discretion to provide a loan
for the acquisition of shares in the Company
under terms and conditions as set out in the
loan agreement.
CONSOLIDATED
2017
$
2016
$
639,879
2,240,575
43,221
55,277
134,344
47,724
738,377
2,422,643
Details of remuneration and the Objective Corporation Limited equity holdings of directors and other key management personnel are shown in the
Remuneration Report on pages 15 to 16.
(d) Other related parties
During the year the Group was provided management consulting services and was charged $39,966 (2016: $32,445) by Kingsbury Ventures
Limited, a company associated with Nick Kingsbury, a Non-Executive Director of the Company. These transactions were conducted on normal
commercial terms and conditions. At 30 June 2017 there were no amounts owing to Kingsbury Ventures Limited (2016: nil). No other material
amounts were receivable from, or payable to, other related parties as at 30 June 2017 (2016: nil), and no material transactions with other related
parties occurred during those years.
ANNUAL REPORT 2017
| 43
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2017 NOTE 27. COMMITMENTS
Commitments in relation to non-cancellable operating leases and capital expenditure contracted but not provided for in the consolidated financial
statements are payable as follows:
Capital expenditure commitments
Operating lease commitments:
Not later than one year
Later than one year and not later than five years
Later than 5 years
Total operating lease commitments
CONSOLIDATED
2017
$’000
–
2,513
7,739
3,430
13,682
2016
$’000
–
1,325
1,413
–
2,738
The Group pays rental on property as occupancy costs under operating leases. Leases generally provide the Group with rights of renewals at which
time all terms will be renegotiated.
NOTE 28. CONTINGENT LIABILITIES
Contingent liabilities, capable of estimation, arise in respect of the following categories:
Liquidated damages (Note 24)
Bank guarantees
Total contingent liabilities
CONSOLIDATED
2017
$’000
3,268
1,040
4,308
2016
$’000
–
426
426
Bank guarantees are issued to contract counterparties in the normal course of business as security for the performance by Group entities of various
contractual obligations.
Additionally, a performance guarantee has been provided by the Company to Objective Corporation UK Limited (subsidiary) with regards to the
provision of software support services on the signing of the new 5 year contract with the Scottish Government.
As at 30 June 2017, the Directors do not consider it is probable that a claim will be made against the Group under any of the guarantees
or liquidated damages.
NOTE 29. AUDITOR’S REMUNERATION
Pitcher Partners
Audit and review of financial statements
Total remuneration of Pitcher Partners
Non-Pitcher Partners
Audit and review of financial statements
Tax compliance services
Total remuneration of non-Pitcher Partners
44
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
CONSOLIDATED
2017
$
74,100
74,100
2016
$
72,000
72,000
CONSOLIDATED
2017
$
2016
$
24,064
10,486
34,550
35,000
11,000
46,000
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2017 NOTE 30. OTHER ACCOUNTING POLICIES
Foreign currency transactions
and balances
Foreign currency transactions are translated
into functional currency using the exchange
rates prevailing at the date of the transaction.
Foreign currency monetary items are translated
at the year-end exchange rate. Non-monetary
items measured at historical cost continue to be
carried at the exchange rate at the date of the
transaction. Non-monetary items measured at
fair value are reported at the exchange rate at
the date when fair values were determined.
Exchange differences arising on the translation
of monetary items are recognised in profit
or loss, except where deferred in equity as a
qualifying cash flow or net investment hedge.
Exchange differences arising on the translation
of non-monetary items are recognised directly in
other comprehensive income to the extent that
the underlying gain or loss is recognised in other
comprehensive income; otherwise the exchange
difference is recognised in profit or loss.
Accounting standards and interpretations
issued but not operative at 30 June 2017
Up to the date of issue of these financial
statements, a number of amendments, new
standards and interpretations have been
issued which are not yet effective for the
financial year ended 30 June 2017 and which
have not been adopted in these consolidated
financial statements.
Of these developments, the following
relate to matters that may be relevant to
the Group’s operations and consolidated
financial statements:
AASB 9: Financial Instruments and associated
Amending Standards (applicable to annual
reporting periods beginning on or after 1
January 2018). AASB 15: Revenue from
Contracts with Customers (applicable to annual
reporting periods commencing on or after 1
January 2018). AASB 16: Leases (applicable
to annual reporting periods commencing on or
after 1 January 2019).
AASB 9: Financial Instruments
This Standard will be applicable retrospectively
and includes revised requirements for the
classification and measurement of financial
instruments, revised recognition and
derecognition requirements for financial
instruments and simplified requirements for
hedge accounting.
AASB 15: Revenue from Contracts
with Customers
When effective, this Standard will replace the
current accounting requirements applicable
to revenue with a single, principles-based
model. Except for a limited number of
exceptions, including leases, the new revenue
model in AASB 15 will apply to all contracts
with customers as well as non-monetary
exchanges between entities in the same line
of business to facilitate sales to customers
and potential customers.
The core principle of this Standard is that
an entity will recognise revenue to depict
the transfer of promised goods or services
to customers in an amount that reflects the
consideration to which the entity expects to be
entitled in exchange for the goods or services.
To achieve this objective, AASB 15 provides the
following five-step process:
1. identify the contract(s) with a customer;
2. identify the performance obligations in the
contract(s);
3. determine the transaction price;
4. allocate the transaction price to the
performance obligations in the contract(s); and
5. recognise revenue when (or as) the
performance obligations are satisfied.
This Standard will become mandatory for the
Group’s 30 June 2019 consolidated financial
statements and will require retrospective
restatement, as well as enhanced disclosures
regarding revenue.
It is expected that AASB 15 will impact the
treatment and recognition of the Group’s
revenue. AASB 15 will also require an
alignment in the recognition of commissions
expense and contract revenue, which
will represent a change from the Group’s
current policy of expensing these costs
as incurred. The Group is currently in the
process of assessing the impact of AASB
15 and is not yet able to reasonably estimate
the overall impact on its consolidated
financial statements.
AASB 16: Leases
AASB 16: Leases will replace the current
standard AASB 117: Leases. The main changes
include:
• Recognition of a “right to use” asset and
liability for all leases, excluding leases less than
12 months of tenure and leases relating to low
value assets
The key changes that may affect the Group on
initial application include certain simplifications
to the classification of financial assets and
upfront accounting for expected credit loss.
• Depreciation of “right to use” assets in line with
AASB 116: Property, Plant and Equipment
and unwinding of the liability in principal and
interest components over the life of the lease
Although the Directors anticipate that the
adoption of AASB 9 may have an impact on the
Group’s financial instruments it is impracticable
at this stage to provide a reasonable estimate of
such impact.
• Variable lease payments that depend on
an index or a rate are included in the initial
measurement of the lease liability using
the index or rate at the commencement
of the lease
• A lessee is permitted to elect not to separate
non-lease components and instead account
for all components as a lease
• Additional disclosure requirements.
The transitional provisions of the standard allow
a lessee to either retrospectively apply the
standard or recognise the cumulative effect of
retrospective application as an adjustment to
opening equity on initial application.
This standard will become mandatory for the
Group’s 30 June 2020 consolidated financial
statements. The impact of this standard will be
that the majority of operating lease contracts
disclosed in Note 27 will be present valued
and recognised as a “right to use” asset, with
a corresponding liability also recognised. In
addition, the majority of the operating lease
expenses will no longer be recognised and will
be replaced with amortisation/interest expense.
NOTE 31. SUBSEQUENT EVENTS
With the exception of the items disclosed below,
there has not arisen in the interval between
30 June 2017 and the date of this report,
any other matter or circumstance that has
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
subsequent financial years.
Dividends
For dividends resolved to be paid after
30 June 2017, refer to Note 17.
NOTE 32. APPROVAL OF FINANCIAL
STATEMENTS
The financial statements were approved by the
board of directors and authorised for issue on
30 August 2017.
ANNUAL REPORT 2017
| 45
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2017 DIRECTORS’
DECLARATION
The Directors of the Company declare that:
1. The attached financial statements and notes set out on pages 18 to 45 are in accordance with the Corporations Act 2001; and
a) Comply with Accounting Standards in Australian and the Corporations Regulations 2001;
b) As stated in Note 1, the consolidated financial statements also comply with International Reporting Standards; and
c) Give a true and fair view of the financial position of the consolidated entity as at 30 June 2017 and its performance for the year ended on that date.
2. The Chief Executive Officer and Chief Financial Officer have each declared that:
a) The financial records of the company for the financial year have been properly maintained in accordance with section 286 of the
Corporations Act 2001;
b) The financial statements and notes for the financial year comply with the Accounting Standards; and
c) The financial statements and notes for the financial year give a true and fair view.
3. In the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay their debts as and when they become
due and payable.
This declaration is made in accordance with a resolution of Directors.
Tony Walls
Director
30 August 2017
46
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
INDEPENDENT
AUDITOR’S
REPORT
OBJECTIVE CORPORATION LIMITED
ABN 16 050 539 350
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF OBJECTIVE CORPORATION LIMITED
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Objective Corporation Limited “the Company” and its controlled entities
“the Group”, which comprises the consolidated statement of financial position as at 30 June 2017, the
consolidated statement of profit or loss, the consolidated statement of comprehensive income, the consolidated
statement of changes in equity and the consolidated cash flow statement for the year then ended, and notes to
the financial statements, including a summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
(a)
giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial
performance for the year then ended; and
(b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our
report. We are independent of the Group in accordance with the auditor independence requirements of 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 “the Code” that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
An independent New South Wales Partnership ABN 35 415 759 892
Level 22 MLC Centre, 19 Martin Place, Sydney NSW 2000
Liability limited by a scheme approved under Professional Standards Legislation
Pitcher Partners is an association of independent firms
Sydney | Melbourne | Perth | Adelaide | Brisbane| Newcastle
An independent member of Baker Tilly International
Page 59
ANNUAL REPORT 2017
| 47
INDEPENDENT
AUDITOR’S
REPORT
CONTINUED
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current year. 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.
Key Audit Matter
Revenue – Product and Service Revenue
Refer to Note 4 in the Notes to the Financial
Statements.
Product and service revenue is recognised in
accordance with contractual arrangements
and is recognised as the:
• significant risks and rewards of ownership
are transferred to the customer;
• milestones are achieved based on internal
measurement or acknowledgement by the
customer; or
• services are provided to the customer;
How our audit addressed the Key Audit Matter
Our procedures included, amongst others:
• Documenting and testing the design and operating
effectiveness of relevant controls over timing of revenue
recognition.
• Testing a sample of revenue transactions to customer
contracts, work
records, milestone
progress
acknowledgements and receipts from customer, where
applicable.
in
• Reviewing and analysing general journals that impact
depending on the nature of the product or
service.
revenue.
Impairment of Intangible Assets
Refer to Note 10 in the Notes to the Financial
Statements.
At 30 June 2017 the statement of financial
position of the Group
includes goodwill
amounting to $8.547 million.
In assessing impairment of intangible assets,
management have estimated value in use for
each cash generating unit (CGU) – Limehouse
Software Limited and Onstream Systems
Limited.
The value
impairment
in use model for
includes significant management judgement in
respect of assumptions and estimates
including discount rates, estimated future
cash flows and foreign currency rates.
Our procedures included, amongst others:
• Assessing management’s determination of CGUs based on
our understanding of the nature of the group’s business
and the economic environment.
• Reviewing and challenging judgements by management in
respect of the key assumptions and estimates used to
determine the recoverable value of the assets of each CGU
(value in use model).
• Testing the mathematical accuracy of the value in use
models.
• Assessing the historical accuracy of forecasting.
• Performing sensitivity analysis on key assumptions in the
value in use models including discount rates, future cash
flows and foreign currency rates.
• Considering
the adequacy of
the
financial
report
disclosures in Note 10.
48
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
Page 60
INDEPENDENT
AUDITOR’S
REPORT
CONTINUED
Key Audit Matter
Acquisition Accounting
Refer to Note 23 in the Notes to the Financial
Statements.
During the 2016 financial year, the Group
acquired Onstream Systems Limited and
finalised the acquisition accounting during the
2017 financial year as permitted by Australian
Accounting Standards.
The accounting for this business combination
resulted in the recognition of goodwill of
identifiable
$2.955 million
intangible assets of $0.530 million.
other
and
The final purchase price allocation includes a
degree of judgement in respect of growth
rates, attrition rates, EBIT margin, royalty rate
and discount rate.
The Group utilised an external expert
finalisation of the purchase price allocation.
in
How our audit addressed the Key Audit Matter
Our procedures included, amongst others:
• Examining the asset purchase agreements and the Group’s
assessment of the
intangible assets
acquired based on our understanding of the business
acquired.
identification of
• Assessing the competency of the external expert engaged
by the Group to assist with the purchase price allocation.
• Reviewing and challenging the significant judgements used
by the Group’s expert in the allocation of purchase price
based on our understanding of the acquired businesses
including input from our valuation specialist.
• Considering
the adequacy of
the
financial
report
disclosures in Note 23.
Other Information – The annual report is not complete at the date of the audit report.
The directors are responsible for the other information. The other information comprises the information
included in the Directors Report, which was obtained as at the date of our audit report, and any additional other
information included in the Company’s annual report for the year ended 30 June 2017, but does not include the
financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other
information and accordingly we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information above and,
in doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
When we read the other information not yet received as identified above, if we conclude that there is a material
misstatement therein, we are required to communicate the matter to the directors and use our professional
judgment to determine the appropriate action to take.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
Page 61
ANNUAL REPORT 2017
| 49
INDEPENDENT
AUDITOR’S
REPORT
CONTINUED
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and
whether the financial report represents the underlying transactions and events in a manner that achieves fair
presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the financial report. We are responsible for the
direction, supervision and performance of the Group audit. We remain solely responsible for our audit
opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, related safeguards.
50
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
Page 62
INDEPENDENT
AUDITOR’S
REPORT
CONTINUED
From the matters communicated with the directors, we determine those matters that were of most significance
in the audit of the financial report of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 14 to 17 of the directors’ report for the year ended
30 June 2017. In our opinion, the Remuneration Report of Objective Corporation Limited, for the year ended 30
June 2017, complies with section 300A of the Corporations Act 2001.
15
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
R M SHANLEY
Partner
30 August 2017
PITCHER PARTNERS SYDNEY
Sydney
Page 63
ANNUAL REPORT 2017
| 51
AUDITOR’S
INDEPENDENCE
DECLARATION
OBJECTIVE CORPORATION LIMITED
ABN 16 050 539 350
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF OBJECTIVE CORPORATION LIMITED
AUDITOR'S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF OBJECTIVE CORPORATION LIMITED
Report on the Audit of the Financial Report
Opinion
In relation to the independent audit for the year ended 30 June 2017, to the best of my
knowledge and belief there have been:
(i)
We have audited the financial report of Objective Corporation Limited “the Company” and its controlled entities
“the Group”, which comprises the consolidated statement of financial position as at 30 June 2017, the
consolidated statement of profit or loss, the consolidated statement of comprehensive income, the consolidated
statement of changes in equity and the consolidated cash flow statement for the year then ended, and notes to
the financial statements, including a summary of significant accounting policies, and the directors’ declaration.
no contraventions of the auditor independence requirements of the Corporations
Act 2001; and
no contraventions of any applicable code of professional conduct.
(ii)
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
(a)
giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial
performance for the year then ended; and
(b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
R M SHANLEY
Basis for Opinion
Partner
PITCHER PARTNERS
Sydney
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our
report. We are independent of the Group in accordance with the auditor independence requirements of 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 “the Code” that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
30 August 2017
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Page 59
An independent New South Wales Partnership ABN 35 415 759 892
Level 22 MLC Centre, 19 Martin Place, Sydney NSW 2000
An independent New South Wales Partnership. ABN 35 415 759 892
Liability limited by a scheme approved under Professional Standards Legislation
Level 22 MLC Centre, 19 Martin Place, Sydney NSW 2000
Liability limited by a scheme approved under Professional Standards Legislation
52
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
Pitcher Partners is an association of independent firms
Sydney | Melbourne | Perth | Adelaide | Brisbane| Newcastle
An independent member of Baker Tilly International
Pitcher Partners is an association of independent firms
Melbourne | Sydney | Perth | Adelaide | Brisbane| Newcastle
An independent member of Baker Tilly International
Page 58
SHAREHOLDER
INFORMATION
The shareholder information set out below was applicable on the 14th September 2017.
Additional information required by the Australian Stock Exchange Limited Listing Rules and not disclosed elsewhere in this report is set out below:
A) DISTRIBUTION OF EQUITY SECURITIES
Securities
Fully paid ordinary shares
Holdings ranges
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001+
Totals
No. of
Holders
154
252
103
150
34
693
Total
Ordinary
Shares
82,744
714,590
839,643
4,669,925
8,546,1139
91,768,041
There were 30 holders of less than a marketable parcel of ordinary shares.
B) VOTING RIGHTS
The voting rights attaching to ordinary shares are that every member in person or by proxy, attorney or representative shall have one vote on a show of
hangs and one vote for each share held on a poll. There are no voting rights attaching to options over unissued shares.
C) TWENTY LARGEST QUOTED EQUITY SECURITY HOLDERS
Ordinary shares
Name
TBW TRUSTEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ONE MANAGED INVESTMENT FUNDS LIMITED
MIRRABOOKA INVESTMENTS LIMITED
AMCIL LIMITED
SANDHURST TRUSTEES LTD
CLAPSY PTY LTD
ARRAS PTY LTD
MRS ELAINE WALLS & MS MICHELLE ROBYN WALLS
MR ADRIAN RUDMAN
AUST EXECUTOR TRUSTEES LTD
ANACACIA PTY LTD
MR DAVID GORDON
MR JEREMY JOHN GODDARD
POAL PTY LTD
AUST EXECUTOR TRUSTEES LTD
MOAT INVESTMENTS PTY LTD
MR MITCHELL JAMES HARRISON & DR ROSALIND FRANCES MENZIES
MAST FINANCIAL PTY LTD
MR ANDREW JAMES BOWEN
D) SUBSTANTIAL HOLDERS IN THE COMPANY
Ordinary shares
Name
TBW TRUSTEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
No. of
Ordinary
Shares Held
% of
Listed
Shares
62,000,000
9,008,000
2,168,807
2,100,000
1,394,513
1,067,423
724,546
543,832
535,000
500,000
448,467
431,000
400,000
375,000
360,849
273,391
272,355
237,609
235,000
224,000
83,299,792
67.6
9.8
2.4
2.3
1.5
1.2
0.8
0.6
0.6
0.5
0.5
0.5
0.4
0.4
0.4
0.3
0.3
0.3
0.3
0.2
90.8
Number of
Ordinary
Shares Held
62,000,000
9,008,000
%
of Listed
Shares
67.6
9.8
ANNUAL REPORT 2017
| 53
SHARE REGISTRY
Boardroom Pty Ltd
Grosvenor Place
Level 12, 225 George Street
Sydney NSW 2000
GPO Box 3993
Sydney NSW 2001
Tel: +61 (0)2 9290 9600
AUDITOR
Pitcher Partners
Level 22, MLC Centre
19 Martin Place
Sydney NSW 2000
WEBSITE
www.objective.com
EMAIL
enquiries@objective.com
CORPORATE DIRECTORY
REGISTERED OFFICE
Level 30
177 Pacific Highway
North Sydney NSW 2060
Australia
Tel: +61 2 9955 2288
ASX CODE
OCL
ABN
16 050 539 350
DIRECTORS
Tony Walls
Gary Fisher
Nick Kingsbury
Leigh Warren
COMPANY SECRETARY
Ben Tregoning
STOCK EXCHANGE LISTING
The Company’s shares are listed on
the Australian Securities Exchange (ASX).
ELECTRONIC ANNOUNCEMENTS
Shareholders who wish to receive a copy
of announcements made to the ASX are
invited to provide their email address to
the Company.
This can be done by emailing us at
enquiries@objective.com or writing to us
at our registered office.
54
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
INFORMATION GOVERNANCE AWARD:
Department of Planning, Lands and Heritage WA
Digitisation Project – Crown Land
COLLABORATION AWARD:
Primary Industries and Regions SA
Implementation of GDS21 and Ezescan integration with Objective ECM
PROCESS GOVERNANCE AWARD:
Barwon Water
Integrated web portal to manage inspection services
(Objective ECM, Objective Connect)
MICROSOFT AWARD FOR EXCELLENCE:
Department of Communities WA
Objective ECM upgrade and implementation of ECM for Browser,
Workflow, Applink and Objective Connect
CERTIFICATES OF MERIT
INFORMATION GOVERNANCE:
Primary Industries and Regions SA
PIRSA Intranet, Internet website and SharePoint document publishing initiatives
PROCESS GOVERNANCE:
Counties Manukau District Health Board NZ
Contracts Approval Process
MICROSOFT AWARD FOR EXCELLENCE:
Welsh Government
Microsoft Azure migration
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