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ANNUAL REPORT 2018
#OUTSTANDINGSOFTWARE
#outstanding
software
At Objective, the overriding goal of everything
we do and everything we strive for is to
deliver outstanding software.
From our software engineers to recruiters,
our business analysts to technical support
consultants, from our project managers to
product managers, we keep this philosophy
front of mind, in everything we do.
We continually ask ourselves, is this
outstanding?
Outstanding software is not just a robust
application, or a secure architecture, or a sleek
user interface. Outstanding software must
deliver outstanding results for our customers.
Outstanding software must deliver outstanding
results to their customers.
We work hard to foster a culture of innovation,
collaboration and respect – contemporary
workspaces, agile development processes,
regular hackathons, company-wide events,
customer user groups and conferences –
and we like to have a little fun along the way
– inspiring good ideas, great design, excellent
execution and outstanding software.
18140_Objective_AR_Print_2018_EDS_v8.indd 4-6
17/10/2018 1:35 PM
ANNUAL REPORT 2018
| 1
Highlights
REVENUE
$63M
62% RECURRING
1%
ANNUAL RECURRING REVENUE
$40.5M
$34.4M AT 30 JUNE 2017
17%
EBITDA
$10.5M
FY2017 $10.5M
1%
RESEARCH & DEVELOPMENT
$13.1M
21% OF REVENUE
2%
EARNINGS PER SHARE
8.0CPS
$7.4M NPAT
CASH
$21.5M
$16.9M AT 30 JUNE 2017
28%
DIVIDEND
5.0CPS
100% FRANKED
Highlights
Our Mission
10%
Outstanding Customer Results
Product Strategy for Growth
Outstanding Innovation
1
2
3
6
7
8
10
12
17
22
44
45
CEO’s Report
Business Line Review
Directors’ Report
Financial Statements
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Auditor’s Independence Declaration 49
Shareholder Information
Corporate Directory
50
52
18140_Objective_AR_Print_2018_EDS_v8.indd 4-6
17/10/2018 1:35 PM
2
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
Our Mission
Bringing
governance and
efficiency to the
organisations
our community
depends on.
Outstanding
Customer
Results
LOCATION
Middlesbrough, England
Digital transformation for the benefit
of the entire community
Long-term Objective customer, Middlesbrough Council has
implemented all Objective products, laying a foundation of
governance throughout their operations and importantly creating
efficiencies that truly impact the lives of the council’s citizens.
Middlesbrough Council, the Cleveland Police and other child
protection agencies work together on care planning for vulnerable
children and youths. In the unfortunate cases where children go
missing, time is critical. This multi-agency group relies on Objective
Connect to securely share information, enabling the parties to react
in real time and collaborate efficiently until the child’s safe return.
In FY18, Middlesbrough Council’s contract for Objective ECM
was renewed for an additional three years, including an upgrade
to version 10.4, to deliver the latest user experience throughout the
2500 person enterprise. With Objective Perform, Middlesbrough is
investigating how to provide its citizens a better digital experience
when dealing with the council through integration into its
customer-facing CRM system.
Middlesbrough also use Objective Keystone to streamline the
process of authoring, publishing and capturing community feedback
on Council Plans, Objective Trapeze to efficiently assess planning
applications and Objective Redact to obscure sensitive information
prior to releasing to external agencies or the public.
18140_Objective_AR_Print_2018_EDS_v8.indd 2-3
17/10/2018 1:48 PM
ANNUAL REPORT 2018
| 3
Outstanding
Outstanding
Customer
Customer
Results
Results
LOCATION
LOCATION
Middlesbrough, England
Middlesbrough, England
Digital transformation for the benefit
Digital transformation for the benefit
of the entire community
of the entire community
Long-term Objective customer, Middlesbrough Council has
Long-term Objective customer, Middlesbrough Council has
implemented all Objective products, laying a foundation of
implemented all Objective products, laying a foundation of
governance throughout their operations and importantly creating
governance throughout their operations and importantly creating
efficiencies that truly impact the lives of the council’s citizens.
efficiencies that truly impact the lives of the council’s citizens.
Middlesbrough Council, the Cleveland Police and other child
Middlesbrough Council, the Cleveland Police and other child
protection agencies work together on care planning for vulnerable
protection agencies work together on care planning for vulnerable
children and youths. In the unfortunate cases where children go
children and youths. In the unfortunate cases where children go
missing, time is critical. This multi-agency group relies on Objective
missing, time is critical. This multi-agency group relies on Objective
Connect to securely share information, enabling the parties to react
Connect to securely share information, enabling the parties to react
in real time and collaborate efficiently until the child’s safe return.
in real time and collaborate efficiently until the child’s safe return.
In FY18, Middlesbrough Council’s contract for Objective ECM
In FY18, Middlesbrough Council’s contract for Objective ECM
was renewed for an additional three years, including an upgrade
was renewed for an additional three years, including an upgrade
to version 10.4, to deliver the latest user experience throughout the
to version 10.4, to deliver the latest user experience throughout the
2500 person enterprise. With Objective Perform, Middlesbrough is
2500 person enterprise. With Objective Perform, Middlesbrough is
investigating how to provide its citizens a better digital experience
investigating how to provide its citizens a better digital experience
when dealing with the council through integration into its
when dealing with the council through integration into its
customer-facing CRM system.
customer-facing CRM system.
Middlesbrough also use Objective Keystone to streamline the
Middlesbrough also use Objective Keystone to streamline the
process of authoring, publishing and capturing community feedback
process of authoring, publishing and capturing community feedback
on Council Plans, Objective Trapeze to efficiently assess planning
on Council Plans, Objective Trapeze to efficiently assess planning
applications and Objective Redact to obscure sensitive information
applications and Objective Redact to obscure sensitive information
prior to releasing to external agencies or the public.
prior to releasing to external agencies or the public.
18140_Objective_AR_Print_2018_EDS_v8.indd 2-3
17/10/2018 1:48 PM
4
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
OUTSTANDING
CUSTOMER
RESULTS CONTINUED
Pioneer in the transition to digital Planning Scheme
for the citizens of QLD
LOCATION
Queensland, Australia
A leader in the adoption of digital technologies, Moreton Bay Regional Council was a strong
advocate for publishing its Town Plan online-only.
In 2017, the council was awarded a grant from the Queensland government to help fund the
transition to a digital Planning Scheme using Objective Keystone to efficiently produce and publish
its Plan in a user-friendly experience for the community.1
Objective Keystone supports dozens of authors contributing to the Plan, ensures a transparent
and governed review and approval process, publishes and hosts the Plan in full for easy
community access, and presents it in chapters as PDFs within relevant sections of the
council’s website.
Not only is it easy access for the community, geo-tagging and integration with the council’s GIS
system means residents can easily find elements of the Plan, such as rules, policies and zonings
that are relevant to their specific property, for example flood zones, high-risk fire zones, building
height limits and much more.
The Plan is a live document and Objective Keystone is pivotal in ensuring the council can respond
to and manage ongoing changes, as determined by the council or amendments driven by state or
federal government legislation.
1 Innovation and Improvement Fund – Summary of approved project funding July 2017, Queensland Department of
Infrastructure, Local Government and Planning. https://dsdmipprd.blob.core.windows.net/general/innovation-and-
Improvement-fund-approved-funding-project-list-round1.pdf
Transforming the operations of the Youth Court with transparent
decision making and real-time co-ordination of services
LOCATION
Adelaide, South Australia
Since 2016, the Courts Administration Authority in South Australia has relied on Objective ECM to
manage the process of approving formal correspondence, ministerial briefings and submissions,
Freedom of Information requests, financial contracts and more.
In 2018, following three new legislative changes, Objective ECM became the pivotal tool
supporting massive change in practice in the Youth Court.
Youth Justice Coordinators regularly travel throughout the state of South Australia to conduct
Family Care and Family Conferencing Meetings. Electronic approvals have greatly reduced the
time taken to prepare vast quantities of administrative paperwork required prior to embarking on a
trip, provide real-time access to crucial information for staff on the road and empower supervisors
to approve documents via mobile devices at any time. This can save critical time when an
emergency arises enabling supervisors and staff to respond in real time, as and when needed.
The initiative has improved overall efficiency of the core services delivered by the Youth Court
to the community, initiating more than 1200 case files in the first six months of implementation.
It has virtually eliminated printing of documents, enables real transparency of documentation
and decision-making, which has improved communication within teams and beyond.
ANNUAL REPORT 2018
| 5
Driving digital change throughout the organisation
LOCATION
Sydney, Australia
In the first year of its Objective Trapeze implementation, Sutherland Shire Council determined 36%
more development applications than the previous year, at an average value three times more than
the past year, without any additional staff.
Objective Trapeze became the driver of change within the organisation, helping the planning
department assess and approve greater quantities of and increasingly more complex development
applications, handled digitally at every stage of the process.
An easier DA lodgement process and better communication with applicants improves the council’s
reputation with its community. Faster approval of larger, more complex projects increases its
appeal to investors and developers, delivering substantial economic benefits.
Improving legal and financial services to all Victorians
LOCATION
Melbourne, Australia
On a journey to digital maturity, State Trustees is injecting efficiency and far-reaching process
improvements to revolutionise the vital legal and financial services they provide to the people of Victoria.
The digital transformation has eliminated paper and manual handling of all incoming
correspondence, replacing it with efficient, consistent and automated processes to deliver a
significant uplift to its service delivery capability.
The industry-leading process improvements reduced 33 manual processes to three automated
processes, saving 46 hours per day. Its Customer Service Consultants now access complete
information whenever they need it, critical to helping clients in need and ultimately leading to better
client service delivery.
Borderless communication and co-ordinated care across
Glasgow’s health and social care ecosystem
LOCATION
Glasgow, Scotland
As jurisdictional reform mandated the consolidation of health and social care services across
Scotland, Glasgow City Council (GCC) was able to rapidly adapt, using Objective Connect to
on-board third-party provider the National Health Service (NHS Glasgow and Clyde) as they
formed the Glasgow City Health and Social Care Partnership (GCHSCP).
Nearly 4000 social workers and 3000 health staff from the different organisations collaborate
to deliver these services, relying on highly sensitive and personal information shared securely,
in a timely manner. Objective Connect provides a secure, flexible collaboration platform enabling
borderless communication and co-ordinated care for the city’s 600,000 residents.
In addition to health and social care services, Objective Connect is used as a strategic
enterprise-wide collaboration platform to deliver a range of community programs and government
initiatives. These include: Community Safety Glasgow with Police Scotland, the NHS Glasgow and
Clyde working to prevent violence against women; the European Championships Glasgow 2018,
co-ordinating broadcasters, media, recruitment, transport, medical resources, venues programming
and results; supporting the Electoral Registration Office, communicating with the 32 Scottish Local
Authorities on topics such as GDPR.
6
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
Product Strategy for Growth
Transition to Content Services
The Content Management market is
transitioning from the traditional picture of
a single, enterprise capability (Enterprise
Content Management) to a more modular,
service-based approach supporting
content from multiple sources, labelled
‘Content Services Platforms’, by industry
analysts Gartner.
For Objective ECM, this transition began
in FY2015. It is now a suite of integrated
components: Objective Inform for document
and records management, Objective
Perform for business process management
and Objective Connect for external
collaboration.
Repository Independence
The uncoupling of Objective ECM has
enabled our products to support additional
content sources such as Micro Focus
Content Manager (formerly HPE Content
Manager) and Microsoft Office 365,
extending the value to Micro Focus and
Microsoft customers.
This in turn, significantly multiplies the size of
our addressable market, in terms of number
of organisations, geographies and value.
Objective Design Language
Objective Design Language (ODL) is core
to the development of a consistent user
experience across all Objective products.
It provides a design foundation and guiding
principles to deliver a cohesive visual and
behavioural framework that all products
align to. As users develop familiarity with
one Objective product, they can move
seamlessly to others, accelerating adoption
of new products, becoming building blocks
for expanded solutions.
Objective Industry Solutions
Objective Industry Solutions take a user-
centric approach to digital transformation.
They are complete products that combine
Objective’s content services technology
with best-practices drawn from our vast
user community around the world. The
solutions automate common business
processes within the public sector and
regulated industries.
Processes are streamlined, reducing the
time and effort associated with daily tasks
while information governance is embedded
behind the scenes.
From the design of the interface to the
design of the process, users participate
through familiar business applications,
whenever and wherever they choose to work.
The solutions work with organisations’
existing information management systems,
extending the value of these platforms while
maximising their investment.
New modules can be added progressively
to extend digital transformation across
the business.
Objective recognised by Gartner as Visionary in 2018 Magic
Quadrant for Content Services Platforms
In 2017, industry analyst Gartner re-branded their Enterprise Content Management
Magic Quadrant to Content Services Platform, shifting its focus from storing content
for the enterprise, to consider how content is used by individuals and teams and
leveraged within business processes.
In 2018, Gartner evaluated 18 global software vendors in the Content Services
market and recognised Objective in the prestigious Visionary quadrant.
#outstandingsoftware
!"#$%&#"'$()"*#+!"#$%&',- ANNUAL REPORT 2018
| 7
Outstanding Innovation
Delivering a portfolio of differentiated products
Content Services – integrated suite of
services combining Objective Inform
delivering high grade document and
records management, and Objective
Perform delivering rich, business process
management capabilities.
ECM 10.4 – delivers an exceptional user
experience for business users providing
access to content and processes from
anywhere.
Microsoft Office 365 Integration –
comprehensive integration with Microsoft
Office, email, Microsoft Sharepoint and
Microsoft Teams brings powerful content
and process governance to Microsoft’s
market leading team collaboration tools.
ODL User Experience – a reimagined user
experience with more intuitive navigation;
easy content identification via thumbnails in
grid or list view; and preview for Microsoft
Office documents and image files.
Commitment to Security – the move into
Azure Australia Central (Canberra Data
Centre) provides all customers “Protected”
level status for their data.
Download as a Permission – customers
can share content but restrict end-users’
ability to download local copies, supporting
information governance and security
requirements.
ODL User Experience – a re-imagined user
experience to equip building compliance
and planning teams with advanced
assessment and approval tools.
Subscription Licensing – transition to tiered
subscription licensing including enhanced
assessment features for building and
development professionals.
Launched March 2018 – a re-engineered
version of RapidRedact (acquired from
Onstream Systems) offered as subscription-
only software through a fully automated
e-commerce platform, supported by a
targeted digital marketing campaign.
Content Verification – automated collection
of attestation evidence for financial services
due diligence processes, significantly
lowering the cost and risk of compliance.
Stakeholder Engagement – a re-imagined
platform to collect and manage community
and stakeholder feedback, and manage
regulatory reporting for transitioning Local
Governments to e-Planning.
Mobile Editing and Co-Authoring – leveraging
Microsoft Office 365 to deliver enhanced
mobile and online document editing
including co-authoring.
Dynamic Status – class leading user
experience for document management,
providing dynamic visibility of document
activity and status including external sharing
and co-authoring.
Advanced Forms Capability – allows business
tasks to be delivered and actioned by users
via email, online or mobile. Integration with
web forms supports end to end processing
for external facing processes.
Perform for Micro Focus Content Manager
– deep integration ensures single source
of governance and allows process
transformation without the need for costly
repository migrations.
MINISTERIALS
Objective Ministerials V3 Launched – delivers a
flexible application leveraging the ODL user
experience and enhanced forms features
to streamline and simplify processing of
Ministerial requests across the organisation
with full visibility and KPI reporting via
dynamic dashboards.
Welcome to Objective RedactFit to screenPage2of 10245%Auto-RedactionsClose 8
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
CEO’s Report
Dear fellow shareholders,
I am pleased to present Objective
Corporation’s annual report for the financial
year ended 30 June 2018 (FY2018).
We entered FY2018 with confidence,
buoyed by the successes of FY2017, but
were presented with isolated challenges
we did not expect to face. Accordingly, we
accept that this year’s result is less than
we are capable of.
However, we remain completely confident
in the fundamental drivers of customer
demand for our products and solutions.
Whilst historically a driver for purchasing
decisions in the public sector, compliance
and regulation are driving demand
from industries beyond government,
particularly in financial services. This year
we witnessed the topic move from back-
office conversations to headline articles
in mainstream news.
With more than twenty years’ experience
helping organisations meet regulatory
requirements, and the investment we’ve
made in developing solutions to ease the
burden of compliance processes, Objective
is positioned squarely in the midst of a very
active and growing market.
Our suite of solutions digitise and automate
common processes in the public sector
and financial services industries delivering
productivity and efficiency gains, while
ensuring governance happens in the
background. Compliance or regulation
is never treated as an after-thought, it is
embedded in the process, in the DNA of
all that we deliver to our customers, yet
it allows users to work naturally, in the
familiar business applications they use
every day.
We also worked diligently throughout
the year to more than double the size
of our addressable market. We released
process automation solutions that
work with customers’ existing information
management systems, unlocking a
segment of the market that was historically
closed to us. Our relationship with
Micro Focus has matured into active
co-marketing and co-selling Objective
solutions that extend the value of Content
Manager for their customers.
Financial Performance
Group revenue for FY2018 was
$63.1 million (FY2017: $62.6 million)
and EBITDA was $10.5 million (FY2017:
$10.5 million). Net profit after tax (NPAT)
decreased by 10% to $7.4 million (FY2017:
$8.2 million). Cash flow generation
remained strong, with cash flow from
operations increasing by 18% to
$11.3 million, which represented 107%
of EBITDA for the year. The cash balance
at 30 June 2018 lifted by 28% to
$21.5 million ($16.9 million at 30 June 2017).
During FY2018 a key contract within our
consulting services business was
terminated for convenience. The termination
was unrelated to Objective’s performance
under the engagement, however the
impact moderated our revenue, profitability
and operating cash flow. Notwithstanding
the immediate impact on revenue, we
maintained our commitment to employees
and contractors and undertook an orderly
wind down of the project team, which
further impacted profitability.
Isolated contract challenges did not
disrupt our focus on the long-term goals
of delivering outstanding software and
solutions to customers and transitioning
the business to a subscription-based
revenue model.
Recurring revenue grew by 13% over
FY2017 to 62% of total revenue in
FY2018. While the move away from up
front licence fees moderates reported
revenue growth in the year it is incurred,
it improves the stability of earnings over a
longer term. We begin FY2019 with Annual
Recurring Revenue (ARR) of $40.5 million
(at 30 June 2018), which grew by 17%
over the balance at 30 June 2017
($34.4 million).
GROUP REVENUE
$63.1M
62% RECURRING
1%
EBITDA
$10.5M
$10.5M FOR FY2017
1%
CASH FLOW FROM OPERATIONS
$11.3M
107% OF EBITDA
18%
ANNUAL REPORT 2018
| 9
We delivered significant ARR growth
across all core subscription software
products including: Objective ECM as
a Service (36% growth over FY2017);
Objective Keystone Financial Services
and Insurance (FSI) (29% growth over
FY2017); Objective Connect (48% growth
over FY2017), and our Managed Services
business (19% growth over FY2017).
On 12 September 2018, the Company paid
a fully franked dividend of 5.0 cents per
share. These dividends were declared by the
Directors in relation to the Financial Year 2018.
Investing in developing
outstanding software
A culture of constant innovation and
investment in the development of
outstanding software remains at the core
of our strategy and was demonstrated
by total research and development
(R&D) expenditure of $13.1m (FY2017:
$12.9 million), representing 21% of revenue.
R&D was directed towards further
development of repository-agnostic
workflow solutions, which allow customers
with existing document management
systems including Objective Inform and
Micro Focus Content Manager (formerly
HPE Content Manager / TRIM) to automate
high-value business processes and take
advantage of Objective’s suite of content
services solutions for government and
regulated industries.
We delivered numerous feature releases
across each of our products that
differentiate our products in their markets
and further enhance the value our
customers derive from Objective solutions.
During FY2018 we released new user
experience (UX) for all products to align
them to the Objective Design Language
(ODL). ODL is central to our R&D
program, providing a consistent visual and
behavioural framework designed to delight
customers, accelerate adoption of new
Objective products and deliver familiarity
to move seamlessly between each of them.
External validation for our product strategy
came in the publication of the 2018 Magic
Quadrant for Content Services Platforms
by industry analyst, Gartner. Objective
was named as a Visionary in this market,
reflecting feedback we’ve received
from customers and a testament to
the ongoing investment in innovation
we make each year.
As in previous years, the company fully
expensed all R&D expenditure as it was
incurred. Whilst this treatment became even
less common in the sector during FY2018,
we continue to believe that this conservative
accounting treatment best represents true
profitability after factoring in all strategic
investments.
Investing in modern
work environments
Providing modern, flexible and welcoming
workspaces for our valued employees,
lays the foundation for the innovative and
collaborative culture we strive to foster
here at Objective. Throughout our global
operations, we refreshed and renewed a
number of our offices; including our global
headquarters in North Sydney, European
head office in Reading and regional offices
in Perth, Adelaide and Wellington.
Business Line Review
To provide transparency of financial
performance, Objective Corporation reports
revenue and operating profit by line of
business, as detailed in the subsequent
pages of this report. This year we have
evolved the names of these business lines
to accommodate a growing portfolio of
solutions, however continued reporting
within the same lines as previous years.
Outlook
Our long-term investment in R&D has
positioned us with globally competitive
products which have demonstrated
attractive return on investment outcomes
for our customers. The continued pressure
for greater productivity and transparency
in the public sector, in addition to growing
regulation of information in the private
sector, will continue to drive further adoption
of the Objective portfolio of solutions
amongst new and existing customers.
We expect to further refine our go-to-
market strategy during FY2019 to leverage
full value from our partner relationships and
to position Objective solutions consistently
with target customers. This will allow us to
fully leverage the depth of our relationships
in the markets in which we currently
operate and to identify additional cross-sell
opportunities for our solutions within each
end-customer.
Prior year comparisons for the 1HY2019
will be impacted by the large consulting
services project discussed previously,
which contributed significantly to 1HY2017
and 1HY2018 financials. Over the full year
however, FY2019 should deliver significant
margin expansion as a result of product
enhancements delivered by our R&D
investment, the leverage in our operating
cost base and our ongoing transition to
Software as a Service (SaaS) licencing.
We are committed to delivering outstanding
solutions and services to our customers
and this would not be possible without the
dedication of our outstanding people.
The Board and management of Objective
would like to thank all of our loyal
customers, staff, and shareholders for their
ongoing contribution and commitment to
the Company.
Tony Walls
Chief Executive Officer
10
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
Business Line Review
Content Services
Financial performance
During FY2018 this business line maintained
steady performance and delivered an
operating profit margin of 26% (25% in
FY2017). Revenue and profitability did
not grow as expected from FY2017,
moderated by the impact of the termination
for convenience of a key consulting
services contract.
Transition to subscription licensing
The increasing penetration of Objective
Perform and Objective Industry Solutions has
increased the proportion of customers who
purchase software under a subscription
license. While we continue to offer existing
products under the revenue model that
provides our customers with choice, new
products brought to market will be offered
exclusively on a subscription basis.
Major contracts
Our largest customer, Australian
Department of Defence signed a new
6-year term agreement under our Upgrade
and Support Program (USP), once again,
demonstrating a long-term commitment
to the Objective platform.
Extending reach with repository agnostic
solutions
During FY18 we continued the separation
of Objective ECM into Objective Inform
and Perform. While Objective Inform
remains a modern and robust, standards-
compliant electronic document and
records management solution, Objective
Perform provides workflow technology to
assist organisations automate content-
driven processes, utilising their existing
information repository, avoiding the need
for costly migrations.
This approach substantially increases
the addressable market for our Content
Services products facilitating access
into specific market segments that due
to competitive products in place, have
historically been largely closed to us.
MINISTERIALS
CORRESPONDENCE
OPENGOV
Keystone
Financial performance
Objective Keystone moved into profitability
in the 2nd half of FY2018. This was driven
by strong performance in both target
segments: Financial Services and Insurance
(FSI) and Public Sector, overall revenue grew
by 13% to $6.6m ($5.8m in FY2017).
Target segment: Financial Services & Insurance
Successful customer acquisition throughout
FY2017 provided momentum to drive
revenue growth into FY2018, as customers
went live with their projects to deliver
regulatory compliant documentation with
Objective Keystone. A number of new,
high profile customers were welcomed in
FY2018, further expanding our customer
base amongst the largest financial
institutions in Australia.
Objective Keystone is now at the forefront
of the emerging Regulation Technology
(RegTech) sector in Australia. In a climate
of increasing regulation in the financial
services industry, Objective Keystone is well
placed to assist our customers to rapidly
deliver various forms of publication-ready
compliance documentation.
Target segment: Public Sector
Demand from this sector grew during
FY2018 throughout all targeted
geographies; Australia, New Zealand
and the UK, and performance improved
significantly as a result of new contract
wins and lower customer churn. This has
allowed us to invest further in product
features tailored to public sector use cases,
particularly for Stakeholder Engagement,
which we expect to continue to improve
our market position.
Opportunity
As other global financial services centres
face similar regulatory pressures, we will
leverage our demonstrated capabilities
in the Australian market to expand into
other geographies.
SALES REVENUE
$51.1M
OPERATING PROFIT
$13.1M
2%
1%
SALES REVENUE
$6.6M
OPERATING PROFIT
$(0.4)M
13%
7%
ANNUAL REPORT 2018
| 11
SALES REVENUE
$2.4M
OPERATING PROFIT
$(1.7)M
60%
32%
SALES REVENUE
$2.4M
OPERATING PROFIT
$(0.5)M
15%
LARGE
Connect
Financial performance
Objective Connect revenue grew to $2.4m
in FY2018, a growth over FY2017 of 60%,
continuing similarly high growth in FY2017
(40%). Annual recurring revenue was
$2.8m, and we will continue to invest
in the development and go to market
for this product.
Growth in user adoption
Growth in Objective Connect is measured
by Workspaces (the secure, online location
for collaboration) and Connections (the
number of people participating in a
workspace). By 30 June 2018, the average
number of new Workspaces created was
well over 100 per day and the total number
of Connections grew to over 4 million, an
increase of 85% over 30 June 2017. The
high level of engagement and increasing
intensity of use sustains a network effect
amongst existing customer organisations
and exposes Objective Connect to new
audiences, generating further opportunity.
Security accreditation
As a solution born in the cloud, the security
of customers’ data within Objective
Connect has always been at the centre
of product strategy. Demonstrating
commitment to security, in FY2018 all
customer data in the APAC region was
migrated to the Microsoft Azure Canberra
Data Centre, the first hyper cloud vendor
location to be granted “Protected” status
by the Australian Signals Directorate.
Opportunity
As Objective Connect increasingly becomes
the external collaboration system of choice
for government and security conscious
organisations, demand and the addressable
market continues to grow. Investment in
R&D for this product will continue at a similar
level to FY2018, to deliver further validation
of security credentials and integration with
additional document repository systems.
This investment will position Objective
Connect to capture the growing demand
in both existing and new geographies.
Trapeze
Financial performance
The Trapeze business was materially softer
than expected in FY2018, with revenue of
$2.4m representing a decline of 15% over
FY2017 ($2.9m). Profitability also decreased
from a profit of $0.4m in FY2017 to a loss
of $0.5m in FY2018. The go-to-market
model inherited from Onstream Systems,
of partners and OEM agreements has not
performed effectively. These arrangements
are currently under review and all Trapeze
products will be moved to a subscription-
only licensing model during FY2019.
Market position in local government
Despite the financial performance in
FY2018, the Objective Trapeze product
continues to deliver significant value to
our customers in the local government
market. We maintained levels of investment
in this product throughout FY2018 and
received positive reaction to Trapeze 10
as it was rolled out to the customer base.
The development roadmap includes new
features and product extensions that
augment the use case for Objective Trapeze
within local government, unlocking further
opportunity and supporting the move to a
SaaS model.
Launch of Objective Redact
The launch of Objective Redact was a
highlight of FY2018. This product, is a
re-engineered version of RapidRedact,
a product acquired with Trapeze as part
of Onstream Systems.
The new Objective Redact product
retained the powerful redaction features of
RapidRedact, delivered with an enhanced
user experience. Objective Redact is offered
as a subscription-only product sold through
a fully automated e-commerce platform,
supported by a digital marketing campaign.
Global opportunity
Demand for Objective Redact stems from
a global trend to allow individuals greater
access to data held by governments and
other institutions and the need to protect
specific data points prior to release. The
impact of new regulations such as the
General Data Protection Regulation (GDRP)
in the European Union and similar ‘right to
know’ legislation in other jurisdictions will
only expand this market sector.
The global opportunity for Objective Redact
is demonstrated by more than 90% of
purchases to date originating from outside
of the APAC region.
12
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
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 2018. Throughout the report, the consolidated entity is referred to as the Group.
L–R: Mr Tony Walls, Mr Gary Fisher, Mr Leigh Warren, Mr Nick Kingsbury and Mr Darc Rasmussen
DIRECTORS
The names and details of the Company’s
directors in office during the financial year and
until the date of this report are set out below.
Directors were in office for this entire period
unless otherwise stated:
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 DARC RASMUSSEN
Independent Non-Executive Director
Darc was appointed as a Non-Executive
Director in August 2018. Darc is a seasoned
enterprise software professional with over
25 years’ experience successfully building
and growing Software as a Service (SaaS)
and Cloud based businesses across global
markets. Darc spent time working and
living in Europe, the USA and Asia/Pacific
growing public and private companies
including Infor, SAP, IntraPower (Trusted
Cloud) and Integrated Research. Darc led
the SAP (NYSE:SAP) global CRM Line of
Business, building it from start-up to total
annual revenues of US$1.5 billion in 2007,
establishing SAP as the global leader in the
CRM market. He was CEO at Integrated
Research (ASX:IRI) and led the company
through a whole of business transformation
strategy that delivered 70%+ growth in
Revenue and Profits along with a tripling of
the company’s market capitalisation. During
Darc’s tenure IR was named a Gartner
“Cool Vendor” and became the global leader
in the Unified Communications Performance
Management market.
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. Ben has a B.Commerce and a
M.Commerce.
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
$4,588,000 was paid on 14 September 2017.
Post 30 June 2018, the directors have
recommended the payment of a final fully
franked dividend of 5.0 cents per ordinary
share (2017: fully franked dividend of 4.0 cents
per ordinary share and a special unfranked
dividend of 1.0 cent per ordinary share). The
aggregate amount of the dividends was
$4,622,000 (2017: $4,588,000). The dividend
was paid on 12 September 2018. 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 2018 is
set out on the inside front cover to page 44
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.
ANNUAL REPORT 2018
| 13
SHARE CAPITAL
As at 30 June 2018 the Company had 92,443,041 (2017: 91,768,041) fully paid ordinary shares on issue.
Voting rights are detailed in Note 16 to the financial statements.
SHARE OPTIONS
Unissued shares under options
As at the date of this report, there were 1,203,759 unissued ordinary shares under options (1,253,759 at the reporting date).
Options on Issue at Balance Date
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
Employee options exercisable at $3.00
Employee options exercisable at $2.75
Total options on issue
2018
2017
Number
Expiry Date
Number
Expiry Date
80,000
07/10/2024
80,000
07/10/2024
150,000
24/02/2025
150,000
24/02/2025
125,000
05/03/2025
675,000
05/03/2025
125,000
29/07/2026
250,000
29/07/2026
500,000
02/01/2027
500,000
02/01/2027
23,759
15/01/2028
200,000
29/07/2028
–
–
1,203,759
1,980,000
–
–
Details of the options on issue are contained in Notes 16 and 25 to the financial statements. 23,759 new options were issued, 75,000 options were
forfeited / cancelled and 675,000 options were exercised during the financial year ended 30 June 2018. Since the end of the financial year, a further
200,000 new options have been issued and an additional 250,000 options have been exercised. 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.
SHARE OPTIONS
Shares issued on exercise of options
During or since the end of the financial year, the Group issued ordinary shares of the Company as a result of the exercise of options under the Employee
Incentive Plan as follows:
Issuing entity
Objective Corporation Limited
Objective Corporation Limited
Objective Corporation Limited
Objective Corporation Limited
Total1
Number of
shares issued
Class of
shares
Amount paid
for shares
Amount unpaid
on shares
200,000 Ordinary shares
$100,000
125,000 Ordinary shares
$93,750
475,000 Ordinary shares
$570,000
125,000 Ordinary shares
$187,500
925,000
$951,250
–
–
–
–
–
1
Total proceeds from issue of shares represented by $445,000 received in cash and $506,250 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, these share loans are treated as part of the options to purchase shares, until the loans repaid
or extinguished at which point the shares are recognised.
LIKELY DEVELOPMENTS
The Company delivered a respectable financial and operational result for FY2018. We continued to invest in our product portfolio and our workforce,
as well as developing new markets for our products.
The Directors have identified opportunities to continue to grow the business in FY2019 across all business lines and the Company will be pursuing these
whilst maintaining a focus on increasing profitability. Through product innovation and the development of outstanding software, we have expanded our
addressable market in the regions in 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.
14
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’ REPORT
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: 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
Darc Rasmussen
Total directors’ interest
Number of
ordinary shares
Number of
options
62,000,000
9,000,000
320,000
335,443
21,230
71,676,673
–
–
–
–
200,000
200,000
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
10
10
10
10
10
8
10
10
2
n/a
2
2
2
n/a
2
2
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration in relation to the financial year is included on page 45.
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.
ANNUAL REPORT 2018
| 15
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 (Cth) and its Regulations.
The table below lists the Executives of the Group for the year ended 30 June 2018 and whose remuneration details are outlined in this Remuneration Report.
Directors
Tony Walls
Gary Fisher
Nick Kingsbury
Leigh Warren
Executive key management personnel
Ben Tregoning
Chairman and Chief Executive Officer
Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Chief Financial Officer
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 key management personnel is not directly linked to the company’s performance.
The remuneration of Directors and the other key management personnel 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 key
management personnel 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 key management personnel 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 29 November 2017 Annual General Meeting (AGM)
At the 2017 AGM, 99.7% of the votes received supported the adoption of the remuneration report for the year ended 2017. 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.
Actual remuneration received by Executive KMP is set out in the tables below:
Short-term
Cash
bonus
$
–
–
–
–
–
–
–
–
–
20,513
Salary
and fees
$
–
34,757
280,000
40,335
246,151
–
59,869
280,000
32,877
232,356
Share based
payments
Post employ-
ment
Other
$
Options
$
Super-
annuation
$
Portion of
remuneration
performance
related
%
Value of
options as
proportion of
remuneration
%
Total
$
–
28,021
–
–
–
–
14,266
–
–
–
–
–
–
–
43,894
–
3,172
–
3,172
48,933
–
–
20,409
3,832
20,049
–
–
20,049
3,123
20,049
–
n/a
62,778
300,409
44,167
310,094
–
–
–
–
–
n/a
77,307
300,049
39,172
321,850
–
–
–
–
n/a
–
–
–
14.2%
n/a
4.1%
–
8.1%
15.2%
2018
G Fisher
N Kingsbury
T Walls
L Warren
B Tregoning
2017
G Fisher
N Kingsbury
T Walls
L Warren
B Tregoning
16
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’ REPORT
REMUNERATION REPORT CONTINUED
Overview of remuneration approach and framework continued
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 key management personnel 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 key management personnel 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, vested and lapsed for Directors and other KMP during the year ended
30 June 2018 are set out below:
KMP
B Tregoning
Value of
options
granted at
grant date1
$
14,000
Value of
options
exercised at
the exercise
date2
$
Value of
options
lapsed at the
lapse date
$
–
–
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.
Details of options over ordinary shares granted, vested and lapsed for Directors or other KMP during the year ended 30 June 2018 are set out below:
KMP
B Tregoning
KMP
B Tregoning
Shareholdings of Key Management Personnel
KMP
T Walls
G Fisher
N Kingsbury
L Warren
Number of
options at
30 June 2017
250,000
Number of
options granted
during FY18
Number
granted
23,759
Grant
date
23,759
15/01/2018
Number of
shares at
30 June 2017
62,000,000
9,000,000
320,000
335,443
Number
lapsed
Number of
options at
30 June 2018
Number vested
and available
for exercise at
30 June 2018
–
273,759
–
Exercise
price per
share
Vesting
date
Expiry
date
$3.00
15/01/2018
15/01/2028
Purchase
of shares
Shares
sold
–
–
–
–
–
–
–
–
Number of
shares at
30 June 2018
62,000,000
9,000,000
320,000
335,443
Number
exercised
–
Fair
value
$0.58
Share
options
exercised
–
–
–
–
Signed in accordance with a resolution of the Board of Directors.
Tony Walls
Director
Date: 28 August 2018
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED 30 JUNE 2018
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
The above consolidated statement of profit or loss should be read in conjunction with the accompanying notes.
ANNUAL REPORT 2018
| 17
CONSOLIDATED
2018
$’000
63,110
(2,044)
61,066
(67)
(30,228)
(13,072)
(8,322)
9,377
(1,997)
7,380
Cents
8.0
8.0
2017
$’000
62,599
(2,025)
60,574
(236)
(30,703)
(12,852)
(6,950)
9,833
(1,631)
8,202
Cents
9.0
8.9
Notes
4
4
4
5
3
3
18
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2018
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 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
2018
$’000
7,380
(14)
(14)
7,366
2017
$’000
8,202
(909)
(909)
7,293
7,366
7,293
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2018
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
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity
ANNUAL REPORT 2018
| 19
CONSOLIDATED
2018
$’000
2017
$’000
Notes
6
7
8
7
9
11
10
12
13
14
15
13
15
16
18
19
21,490
16,852
8,986
263
7,519
8,488
296
4,953
38,258
30,589
657
5,725
1,076
9,378
16,836
55,094
6,112
48
2,653
18,256
654
27,723
284
2,359
2,643
30,366
24,728
4,389
(10,942)
31,281
24,728
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
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 2018
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
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
Dividends provided for or paid
Total transactions with owners in their capacity as owners
As at 30 June 2018
Notes
19
18
18
16
18
17
19
18
18
16
16
17
Share
capital
$’000
3,631
–
–
–
–
289
–
–
289
3,920
–
–
–
–
445
24
–
469
4,389
CONSOLIDATED
Reserves
$’000
(9,623)
–
(909)
(909)
163
–
(706)
–
(543)
(11,075)
–
(14)
(14)
147
–
–
–
147
(10,942)
Retained
earnings
$’000
23,952
8,202
–
8,202
–
–
–
(3,665)
(3,665)
28,489
7,380
–
7,380
–
–
–
(4,588)
(4,588)
31,281
Total
$’000
17,960
8,202
(909)
7,293
163
289
(706)
(3,665)
(3,919)
21,334
7,380
(14)
7,366
147
445
24
(4,588)
(3,972)
24,728
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2018
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Income taxes paid, net
Net cash inflow from operating activities
Cash flows from investing activities
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 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.
ANNUAL REPORT 2018
| 21
CONSOLIDATED
2018
$’000
2017
$’000
Notes
20(a)
72,361
(58,238)
388
(5)
(3,231)
11,275
80
(2,490)
–
–
(2,410)
69,311
(59,059)
313
–
(978)
9,587
55
(4,328)
3,268
(23)
(1,028)
(4,478)
(3,660)
445
–
185
(706)
(4,033)
(4,181)
4,832
16,852
(194)
21,490
4,378
12,372
102
16,852
6
22
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
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.
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.
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
(Cth) 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.
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.
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 2017. 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
7, 10
11
9, 10
13
Judgement / Estimation
Asset impairment
Recoverability of deferred tax assets
Useful life for depreciable assets
Employee benefits assumptions
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.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2018 ANNUAL REPORT 2018
| 23
Operating segment
Content Services
Keystone
Connect
Trapeze
Corporate
Description
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 collaborate with external
organisations with the security, information governance and auditability demanded by government.
Includes results from the sale of Objective Trapeze products which digitally transform development application plan
reviews and assessments, as well as Objective Redact products which allow users to irreversibly remove sensitive
information from any electronic document.
This segment is not considered an operating group, includes head office and central service groups including
treasury function.
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 2018 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.
Year ended 30 June 2018
Revenue from external customers
Segment expenses
EBITDA
Depreciation and amortisation
Interest revenue
Interest expense
Profit before income tax expense
Income tax expense
Profit for the year
Year ended 30 June 2017
Revenue from external customers
Segment expenses
EBITDA
Depreciation and amortisation
Interest revenue
Interest expense
Profit before income tax expense
Income tax expense
Profit for the year
Objective
ECM
$’000
51,104
(38,013)
13,091
Objective
Keystone
$’000
6,624
(7,038)
(414)
Objective
Connect
$’000
2,409
(4,069)
(1,660)
Objective
Trapeze
$’000
2,439
(2,914)
(475)
Corporate
$’000
159
(155)
4
Objective
ECM
$’000
52,019
(38,970)
13,049
Objective
Keystone
$’000
5,842
(6,230)
(388)
Objective
Connect
$’000
1,512
(3,952)
(2,440)
Objective
Trapeze
$’000
2,882
(2,481)
401
Corporate
$’000
79
(243)
(164)
Total
$’000
62,735
(52,189)
10,546
(1,539)
375
(5)
9,377
(1,997)
7,380
Total
$’000
62,334
(51,876)
10,458
(890)
265
–
9,833
(1,631)
8,202
24
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
NOTE 2. SEGMENT INFORMATION CONTINUED
Reconciliation of revenue by location
Revenue is recognised in a Group member entity based on where the services are performed for a particular project. In the majority of cases, revenue per
Group member entity will match the region in which the Group member entity operates.
Revenue by location:
Australia
United Kingdom
New Zealand
Rest of world
Total revenue
Year ended 30 June 2018
Reportable segment assets
Reportable segment liabilities
Year ended 30 June 2017
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
40,428
25,097
Asia Pacific
$’000
33,304
19,532
CONSOLIDATED
2018
$’000
50,558
8,318
4,200
34
2017
$’000
49,751
7,779
5,037
32
63,110
62,599
Europe
$’000
3,949
5,221
Europe
$’000
2,233
4,180
2018
$’000
44,377
9,378
263
1,076
Total
$’000
44,377
30,318
Total
$’000
35,537
23,712
2017
$’000
35,537
9,452
296
913
55,094
46,198
30,318
48
30,366
23,712
1,152
24,864
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.
Non-current assets by location of assets
Australia
United Kingdom
New Zealand
Unallocated non-current assets
Total non-current assets
2018
$’000
4,706
7,068
3,986
1,076
2017
$’000
5,066
5,940
3,690
913
16,836
15,609
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2018 NOTE 3. EARNINGS PER SHARE
Basic earnings per share – cents
Profit for the year attributable to shareholders of Objective Corporation Limited ($’000)
ANNUAL REPORT 2018
| 25
CONSOLIDATED
2018
8.0
7,380
2017
9.0
8,202
Weighted average number of ordinary shares used in the calculation of basic earnings per share
92,069,552
91,546,787
Diluted earnings per share – cents
Profit for the year attributable to shareholders of Objective Corporation Limited ($’000)
2018
8.0
7,380
2017
8.9
8,202
Weighted average number of ordinary shares used in the calculation of basic earnings per share1
92,663,172
92,214,400
1
Calculated by increasing the total weighted average number of shares used in calculating basic earnings per share by net outstanding options of 593,620. 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
Interest 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
2018
$’000
2017
$’000
62,576
62,255
375
159
265
79
63,110
62,599
(1,286)
(253)
(2,181)
(5)
(38,691)
(2,530)
(147)
(646)
(244)
(1,962)
–
(38,775)
(2,444)
(163)
(13,072)
(12,852)
(65)
(2)
(150)
(86)
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.
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.
26
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
NOTE 4. MATERIAL PROFIT OR LOSS
ITEMS CONTINUED
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.
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
CONSOLIDATED
2018
$’000
9,377
2,813
75
44
13
2017
$’000
9,833
2,950
73
49
64
2,945
3,136
(55)
79
(888)
(84)
–
–
15
(94)
(1,101)
(298)
58
(85)
1,997
1,631
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2018 (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 under / (over) provided in prior years
Income tax expense
ANNUAL REPORT 2018
| 27
CONSOLIDATED
2018
$’000
2,082
(164)
79
1,997
2017
$’000
2,297
(572)
(94)
1,631
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.
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 equivalents1
CONSOLIDATED
2018
$’000
2017
$’000
8,253
13,237
21,490
5,476
11,376
16,852
1
The cash and cash equivalents disclosed above and in the consolidated statement of cash flows include $1,190,000 (2017: $1,040,000) 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 (a)
Other receivables
Loans to employees
Total trade and other receivables
CONSOLIDATED
2018
2017
Current
$’000
8,523
–
8,523
463
–
8,986
Non-current
$’000
–
–
–
–
657
657
Current
$’000
7,542
–
7,542
946
–
8,488
Non-current
$’000
–
–
–
–
805
805
28
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
NOTE 7. TRADE AND OTHER RECEIVABLES CONTINUED
(a) Movement in allowance for impairment is as follows:
Balance at beginning of the year
Impairment charges during the year
Impairment losses written-off
Total allowance for impairment at 30 June
CONSOLIDATED
2018
$’000
–
120
(120)
–
2017
$’000
–
–
–
–
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.
NOTE 8. OTHER ASSETS
Current assets
Accrued revenue
Prepayments
Rental deposits
Total other assets
CONSOLIDATED
2018
$’000
6,059
1,401
59
7,519
2017
$’000
3,725
1,069
159
4,953
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.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2018 ANNUAL REPORT 2018
| 29
CONSOLIDATED
Plant and
equipment
$’000
Leasehold
improvements
$’000
Capital work
in progress
$’000
3,382
(1,142)
2,240
980
1,790
(2)
(544)
16
2,240
$’000
3,177
(2,197)
980
447
823
(57)
(231)
(2)
980
4,345
(1,270)
3,075
3,459
393
(34)
(742)
(1)
3,075
$’000
4,064
(605)
3,459
155
3,748
(29)
(415)
–
3,459
410
–
410
–
443
–
–
(33)
410
$’000
–
–
–
–
–
–
–
–
–
Total
$’000
8,137
(2,412)
5,725
4,439
2,626
(36)
(1,286)
(18)
5,725
$’000
7,241
(2,802)
4,439
602
4,571
(86)
(646)
(2)
4,439
NOTE 9. PROPERTY, PLANT AND EQUIPMENT
At 30 June 2018
Gross carrying amount – cost
Accumulated depreciation
Total property, plant and equipment, net
Represented by:
Net carrying amount at 1 July 2017
Additions
Disposals
Depreciation expenses
Exchange differences
Net carrying amount at 30 June 2018
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
Additions1
Disposals
Depreciation expenses
Exchange differences
Net carrying amount at 30 June 2017
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 in financial year ended
30 June 2017. Refer Note 15 for further details.
Recognition and measurement
Property, plant and equipment are recorded at historical cost of acquisition less depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of items. Subsequent costs are included in the 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.
30
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
NOTE 10. INTANGIBLE ASSETS
30 June 2018
Gross carrying amount – cost
Accumulated amortisation
Total intangible assets, net
Represented by:
Net carrying amount at 1 July 2017
Amortisation expenses
Foreign exchange differences
Net carrying amount at 30 June 2018
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
Intellectual
property
$’000
CONSOLIDATED
Brand
names
$’000
Other
intangibles
$’000
Goodwill
$’000
Total
$’000
2,173
(2,000)
173
370
(216)
19
173
2,060
(1,690)
370
774
–
(206)
(198)
370
170
–
170
177
–
(7)
170
177
–
177
171
–
–
6
177
379
(72)
307
358
(37)
(14)
307
396
(38)
358
359
23
(38)
14
358
8,728
–
8,728
8,547
–
181
8,728
8,547
–
8,547
11,450
(2,072)
9,378
9,452
(253)
179
9,378
11,180
(1,728)
9,452
9,450
10,754
–
–
(903)
8,547
23
(244)
(1,081)
9,452
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 Objective Keystone Limited 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 (2017: $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 unit (CGU) identified as Onstream Systems Limited.
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.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2018 ANNUAL REPORT 2018
| 31
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:
Objective Keystone Limited
Onstream Systems Limited
Total goodwill
2018
$’000
5,784
2,944
8,728
The recoverable amount of Objective Keystone 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 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
(b) Movement in deferred tax balances
30 June 2018
Property, plant and equipment
Unrealised foreign exchange
Employee benefits provision
Rent incentive provision
Other individually insignificant balances
Total net deferred assets
30 June 2017
Property, plant and equipment
Unrealised foreign exchange
Employee benefits provision
Rent incentive provision
Other individually insignificant balances
Total net deferred assets
CONSOLIDATED
2018
$’000
1,085
(9)
1,076
2017
$’000
925
(12)
913
CONSOLIDATED
Opening
balance
$’000
Charged to
profit or loss
$’000
Exchange
difference
$’000
Closing
balance
$’000
(12)
9
834
38
44
913
(34)
(333)
696
32
(19)
342
3
14
3
145
(1)
164
22
342
139
6
63
572
–
–
(1)
–
–
(1)
–
–
(1)
–
–
(1)
(9)
23
836
183
43
1,076
(12)
9
834
38
44
913
32
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
NOTE 11. NET DEFERRED TAX ASSETS CONTINUED
(c) Tax losses
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit
CONSOLIDATED
2018
$’000
6,668
1,349
2017
$’000
3,311
785
Potential tax assets of approximately $1,349,000 (2017: $785,000) 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 2018.
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.
NOTE 12. TRADE AND OTHER PAYABLES
Trade payables and accruals
Goods and services tax payable, net
Dividends payable
Total trade and other payables
CONSOLIDATED
2018
$’000
4,223
1,799
90
6,112
2017
$’000
3,691
1,074
71
4,836
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.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2018 ANNUAL REPORT 2018
| 33
NOTE 13. PROVISIONS
Current
Employee benefits
Total current provisions
Non-current
Employee benefits
Make-good provision
Total non-current provisions
Total provisions
Current
Employee benefits
Total current provisions
Non-current
Employee benefits
Total non-current provisions
Total provisions
2017
$’000
2,587
2,587
273
–
273
2,860
2016
$’000
2,233
2,233
261
261
2,494
CONSOLIDATED
Charged to
profit or loss
$’000
Settled / paid
$’000
479
479
29
87
116
595
(413)
(413)
(100)
(5)
(105)
(518)
CONSOLIDATED
Charged to
profit or loss
$’000
Settled / paid
$’000
709
709
12
12
721
(355)
(355)
–
–
(355)
2,860
2018
$’000
2,653
2,653
202
82
284
2,937
2017
$’000
2,587
2,587
273
273
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
NOTE 14. DEFERRED REVENUE
Deferred revenue
Total deferred revenue
CONSOLIDATED
2018
2017
Current
$’000
18,256
18,256
Non-current
$’000
–
–
Current
$’000
12,723
12,723
Non-current
$’000
–
–
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
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
2018
2017
Current
$’000
Non-current
$’000
Current
$’000
Non-current
$’000
654
654
2,359
2,359
458
458
2,835
2,835
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
92,443,041 fully paid ordinary shares (2017: 91,768,041)
Movement:
Opening balance
Issue of shares1
Share options exercised by employees
Share buy-backs2
Closing balance
CONSOLIDATED
2018
2017
Number
of shares
$’000
Number
of shares
$’000
91,768,041
3,920
91,165,169
675,000
445
1,004,000
–
–
24
–
–
(401,128)
3,631
289
–
–
92,443,041
4,389
91,768,041
3,920
1
2
Represents issue of ordinary shares as a result of options exercised under the Group’s Employee Incentive Plan. Refer Note 25.
Represents issue of ordinary shares as a result of options exercised under the Group’s current Employee Incentive Plan. Refer Note 25.
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.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2018 ANNUAL REPORT 2018
| 35
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.
At 30 June 2018 a total of 1,253,759 (2017: 1,980,000) employee share options are outstanding.
7 October 2014
24 March 2014
7 October 2014
24 February 2015
5 March 2015
29 July 2016
2 January 2017
15 January 2018
2018
Number
of options
outstanding
–
–
Expiry date
07/10/2024
24/03/2024
80,000
07/10/2024
150,000
24/02/2025
250,000
05/03/2025
250,000
29/07/2026
500,000
02/01/2027
23,759
15/01/2028
Exercise
price
Fair value
per option at
grant date
$0.50
$0.75
$1.00
$1.17
$1.20
$1.50
$1.80
$3.00
$0.61
$0.18
$0.52
$0.43
$0.33
$0.41
$0.41
$0.58
Total options on issue
1,253,759
2017
Number
of options
outstanding
200,000
125,000
80,000
150,000
675,000
250,000
500,000
–
1,980,000
During the year 23,759 new options were granted (2017: 750,000), 75,000 options were forfeited / cancelled and 675,000 options were exercised into
ordinary shares (2017: 1,004,000). The weighted average exercise price for options exercised was $1.01 and the weighted average share price at the date
of issue was $2.96. The weighted average fair value of options issued in FY2018 was $0.58 per option. The weighted average exercise price on issue was
$3.00 and the weighted average share price at grant date was $3.00. 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
2017 Special
2018 Final1
Cents per
share
Franking
Total amount
$’000
2.00
1.00
3.50
3.75
4.00
4.00
1.00
5.00
100%
Nil
100%
100%
100%
100%
Nil
100%
2,015
1,008
3,089
3,409
3,665
3,671
918
4,622
Date paid / payable
13 September 2013
13 September 2013
15 September 2014
9 September 2015
14 September 2016
14 September 2017
14 September 2017
12 September 2018
1 The final dividend for the year ended 30 June 2018 has not been recognised in this financial report because it was resolved to be paid after 30 June 2018.
(b) Franking credits
The balance of franking credit account at balance date adjusted for the payment of provision for income tax
2018
$’000
2,209
2017
$’000
278
36
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
NOTE 18. RESERVES
30 June 2018
Opening balance
Share-based payment
Share buy-backs
Translation of foreign operations
Closing balance
30 June 2017
Opening balance
Share-based payment
Share buy-backs
Translation of foreign operations
Closing balance
CONSOLIDATED
Share
buy-back
reserve
$’000
Share-based
payments
reserve
$’000
Foreign
currency
translation
reserve
$’000
Total
$’000
(10,275)
–
–
–
453
147
–
–
(1,253)
(11,075)
–
–
(14)
147
–
(14)
(10,275)
600
(1,267)
(10,942)
(9,569)
–
(706)
–
(10,275)
290
163
–
–
453
(344)
(9,623)
–
–
(909)
(1,253)
163
(706)
(909)
(11,075)
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 nil (2017: 401,128) of its ordinary shares at
a total cost of $nil (2017: $706,000).
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
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
2018
$’000
28,489
7,380
(4,588)
31,281
2017
$’000
23,952
8,202
(3,665)
28,489
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2018 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
Impairment loss – trade debtors
Change in operating assets and liabilities:
(Increase) / decrease in trade and other receivables
(Increase) / decrease in other operating assets
Increase / (decrease) in trade and other payables
Increase / (decrease) in deferred revenue
(Decrease) / increase in current tax balances
(Increase) / decrease in deferred tax assets
(Decrease) / increase in provisions
(Decrease) / increase in other operating liabilities
Net cash inflow from operating activities
ANNUAL REPORT 2018
| 37
CONSOLIDATED
2018
$’000
7,380
1,539
147
2
–
120
(619)
(2,568)
1,263
5,534
(1,072)
(163)
(10)
(278)
2017
$’000
8,202
890
163
86
63
–
(1,991)
843
(601)
1,269
1,225
(572)
367
(357)
11,275
9,587
(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
2018
$’000
–
2017
$’000
243
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.
38
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
NOTE 21. FINANCIAL RISK MANAGEMENT AND FAIR VALUES CONTINUED
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 days1
Past due more than 60 days1
Past due more than 90 days1
Total
CONSOLIDATED
2018
$’000
21,490
8,986
7,919
724
66
277
8,986
2017
$’000
16,852
8,488
6,013
1,800
81
594
8,488
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 2018 is $1,067,000 (2017: $2,475,000).
(b) Currency risk
The Group is exposed to foreign currency risk primarily as a result of operations in the Asia Pacific region, the United Kingdom, Singapore and the
United States of America. 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 2018
New Zealand dollars
Singapore dollars
Total
New Zealand dollars
Singapore dollars
Total
30 June 2017
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%
+10%
–10%
33
3
36
(41)
(4)
(45)
120
120
(147)
(147)
33
3
36
(41)
(4)
(45)
120
120
(147)
(147)
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2018 ANNUAL REPORT 2018
| 39
(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:
Cash and cash equivalents
Receivables
Payables
Net financial assets
CONSOLIDATED
2018
$’000
21,490
8,986
(6,112)
24,364
2017
$’000
16,852
8,488
(4,836)
20,504
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 2017 and 30 June 2018.
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, categorized 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 2018, 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 STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
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
Objective Corporation Solutions NZ Limited
Objective Corporation Singapore Pte Limited
Objective Corporation North America Inc
Objective Corporation USA Inc
Objective Corporation UK Limited
Objective Keystone Limited
Onstream Systems Limited
Country of Incorporation
New Zealand
Singapore
United States of America
United States of America
United Kingdom
United Kingdom
New Zealand
Ownership
2018
100%
100%
100%
100%
100%
100%
100%
2017
100%
100%
100%
100%
100%
100%
100%
NOTE 23. BUSINESS COMBINATIONS
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
2018
$’000
30,783
14,807
45,590
20,422
2,533
22,955
4,389
(9,675)
27,921
22,635
2018
$’000
6,731
6,731
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
(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 for customers.
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.
ANNUAL REPORT 2018
| 41
OTHER
NOTE 25. SHARE BASED PAYMENTS
Employee Incentive Plan
Objective Corporation Limited has an Employee
Incentive 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.
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.
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.
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:
Short-term employee benefits
Post-employment benefits
Share-based payments expense
Total remuneration paid or payable
CONSOLIDATED
2018
$
2017
$
629,264
639,879
44,289
43,894
43,221
55,277
717,447
738,377
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 $34,757 (2017: $39,966) 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 2018 there were no amounts owing to Kingsbury Ventures Limited (2017: nil). No other material amounts were receivable from,
or payable to, other related parties as at 30 June 2018 (2017: nil), and no material transactions with other related parties occurred during those years.
42
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
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
2018
$’000
–
2,222
9,953
4,303
2017
$’000
–
2,513
7,739
3,430
16,478
13,682
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
2018
$’000
2,778
1,190
3,968
2017
$’000
3,268
1,040
4,308
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 for customers.
As at 30 June 2018, 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
CONSOLIDATED
2018
$
2017
$
74,100
74,100
74,100
74,100
CONSOLIDATED
2018
$
2017
$
25,647
11,163
36,810
24,064
10,486
34,550
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2018 ANNUAL REPORT 2018
| 43
AASB 16: Leases
AASB 16: Leases will replace the current standard
AASB 117: Leases. The main changes include:
• Recognition of a “right of use” asset and
liability for all leases, excluding leases less than
12 months of tenure and leases relating to low
value assets
• 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
• 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. Management is currently assessing
the effects of the new standard on the Group’s
financial statements. AASB 16 will result in
higher assets and liabilities on the balance sheet.
Information on the undiscounted amount of the
Group’s non-cancellable lease commitments
defined under AASB 17 as at 30 June 2018 is
disclosed in Note 27. The present value of the
Group’s operating lease payments as defined
under the new standard will be recognised as
lease liabilities on the balance sheet and included
in net debt.
NOTE 31. SUBSEQUENT EVENTS
With the exception of the items disclosed below,
there has not arisen in the interval between
30 June 2018 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 2018, 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
28 August 2018.
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.
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 the 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 involve enhanced disclosures
regarding revenue. The Group will apply the
modified retrospective method in adopting
the new standard, resulting in the recognition
of transition adjustments on adoption.
Management has performed an assessment
of the impact of AASB 15 and does not expect
the recognition and measurement of revenue to
materially change under the new standard.
AASB 15 also requires the incremental costs of
obtaining a contract to be recognised as an asset
upon contract execution and the subsequent
release of this asset in line with the recognition
of revenue under that contract. The primary
cost of obtaining a contract for the Company
is the commissions paid to sales persons upon
successful execution. Current accounting
standards require that this expense is recognised
as an expense upon contract execution. The
Company expects this to result in a non-material
increase in assets in future periods.
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 2018
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 2018 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
The 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.
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.
The Group is continuing to assess any possible
impacts of adopting the Standard and at this
point does not expect a material transition
adjustment at 1 July 2018.
44
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’ DECLARATION
The Directors of the Company declare that:
1. The attached financial statements and notes set out on pages 17 to 43 are in accordance with the Corporations Act 2001 (Cth); 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 2018 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 (Cth);
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
Date: 28 August 2018
INDEPENDENT AUDITOR’S REPORT
ANNUAL REPORT 2018
| 45
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 2018, 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 2018 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
46
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
INDEPENDENT AUDITOR’S REPORT
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 2018 the statement of financial
position of the Group
includes goodwill
amounting to $8.728 million.
In assessing impairment of intangible assets,
management have estimated value in use for
each Cash Generating Unit (CGU) – Objective
Keystone Limited and Onstream Systems
Limited.
The value
impairment
in use models 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.
ANNUAL REPORT 2018
| 47
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 2018, 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.
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.
48
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
INDEPENDENT AUDITOR’S REPORT
• 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.
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 15 to 16 of the directors’ report for the year ended
30 June 2018. In our opinion, the Remuneration Report of Objective Corporation Limited, for the year ended 30
June 2018, complies with section 300A of the Corporations Act 2001.
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
28 August 2018
PITCHER PARTNERS SYDNEY
Sydney
AUDITOR’S INDEPENDENCE DECLARATION
ANNUAL REPORT 2018
| 49
AUDITOR'S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF OBJECTIVE CORPORATION LIMITED
In relation to the independent audit for the year ended 30 June 2018, to the best of my
knowledge and belief there have been:
(i)
no contraventions of the auditor independence requirements of the Corporations
Act 2001; and
(ii)
no contraventions of any applicable code of professional conduct.
R M SHANLEY
Partner
PITCHER PARTNERS
Sydney
28 August 2018
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
Melbourne | Sydney | Perth | Adelaide | Brisbane| Newcastle
An independent member of Baker Tilly International
50
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
SHAREHOLDER INFORMATION
The shareholder information set out below was applicable on the 14th September 2018.
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
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001+
Totals
No. of
Holders
162
256
92
146
35
691
Total
Ordinary
Shares
80,799
708,616
741,688
4,375,796
86,786,142
92,693,041
There were 38 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
hands 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
MIRRABOOKA INVESTMENTS LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
ANACACIA PTY LTD
AMCIL LIMITED
ARRAS PTY LTD
MRS ELAINE WALLS & MS MICHELLE ROBYN WALLS
MR ADRIAN RUDMAN
MR DAVID GORDON
MR JEREMY GODDARD
MR FRANK VOLCKMAR
AET CT PTY LIMITED
POAL PTY LTD
MR MITCHELL JAMES HARRISON & DR ROSALIND FRANCES MENZIES
MR ROB MILLS
EST MRS JOAN CAMERON FISHER
BNP PARIBAS NOMINEES PTY LTD
MAST FINANCIAL PTY LTD
JOHN HENRY PASCOE
LEIGH WARREN
MR NICK KINGSBURY
Total Securities of Top 20 Holdings
Total of Securities
No. of
Ordinary
Shares Held
62,000,000
11,179,222
2,100,000
1,833,638
1,474,566
1,394,513
543,832
535,000
500,000
400,000
400,000
375,000
308,467
280,000
237,609
225,000
219,000
212,460
209,500
200,000
200,000
200,000
% of
Listed
Shares
66.89%
12.06%
2.27%
1.98%
1.59%
1.50%
0.59%
0.58%
0.54%
0.43%
0.43%
0.40%
0.33%
0.30%
0.26%
0.24%
0.24%
0.23%
0.23%
0.22%
0.22%
0.22%
85,027,807
91.73%
92,693,041
SHAREHOLDER INFORMATION
D) SUBSTANTIAL HOLDERS IN THE COMPANY
Ordinary shares
Name
TBW TRUSTEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ANNUAL REPORT 2018
| 51
Number of
Ordinary
Shares Held
62,000,000
11,179,222
%
of Listed
Shares
66.89%
12.06%
52
| OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
CORPORATE DIRECTORY
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
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
Darc Rasmussen
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.
18140_Objective_AR_Print_2018_EDS_v8.indd 4-6
17/10/2018 1:35 PM
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