ANNUAL REPORT
2017
For personal use only
CONTENTS
Chairman’s Report ……………………………………………………………………………………………………………………..
Managing Director’s Report ……………………………………………………………………………………….………………
Directors' Report …………………………………………………………………………………………..…………………..…….…
Auditor’s Independence Declaration………………………………………………………..………………………………….
Consolidated Statement of Comprehensive Income …………………………………..……………………...………
Consolidated Statement of Financial Position ………………………………………………………………….…………
Consolidated Statement of Changes in Equity ……………………………………………………………...……………
Consolidated Statement of Cashflows …………………………………………………………………..……………………
Notes on the Financial Statements …..………………………………………………………………………………………..
Directors’ Declaration …………………………………………………………………………………..…..…..…………………..
Independent Auditor's Report …………………………………………………………………….…………………..…………
Corporate Governance Statement ……………………………………………………..……….…………………..…..……
Shareholder Information ……………………………………………………………………………………………………………
Corporate Directory ……………………………………………………………………………………………….…………….….…
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CHAIRMAN’S REPORT
Dear Fellow Shareholders,
The past twelve months has seen commodity
prices strengthen right across the board.
Mining companies that have been able to
reduce their cost structure over the last four
years are reporting healthy profits and
speaking with confidence about their future
financial performance.
The majority of mining companies have spent
the last year repairing their balance sheets by
decreasing their debt and debt gearing ratios.
In the current reporting period we have seen a
marked increase in dividend payouts by the
major mining companies which suggests they
the current
foresee a continuation of
improvement in cash generation out of their
operations.
While early days, there have been a few
brownfield expansion announcements from
the majors which would indicate that they
have turned their minds to replenishing their
depleted reserves which should see an
increase in capital spending over the next four
or five years.
While we expect the focus to remain firmly on
keeping a lid on operational costs, it is likely
that there will be more opportunities for
mining services companies to support their
customers through the provision of products
and services.
For the first time in five years our Advisory and
GeoGAS businesses have started to grow
again. Those two divisions have latent capacity
to grow on their current cost bases, so we
expect to see continued improvements in their
financial contributions in FY2018.
investment by RPM
FY2017 was another year of above industry
in software
average
development. This investment delivered three
new software products during the period
(Open Cut Coal, Stratigraphic Metals and
Operations Manager) as well as significant
enhancements to RPM’s Financial, Simulation,
Scheduling, Execution and Maintenance suites
of products.
We are not aware of any other technical
mining software provider investing in software
development to the level that we are. It is clear
to us that the company’s strategic move from
providing desktop applications to enterprise
systems has the support of the world’s major
mining companies.
The breadth and depth of our software
offering along with the innovative nature of
the functionality within these solutions has
seen us become more competitive in the
market place. The sizeable investment in
Research and Development made by the
company during the mining downturn has
positioned us well
respond once
competitive software tenders begin to filter
out from the major mining companies.
to
It is clear that the next wave of productivity
improvements will come through software
innovation and integration between the major
system providers to the mining industry. We
have positioned ourselves to be at the
forefront of this endeavour which has in turn
facilitated the company holding a number of
strategic conversations with the executive and
senior management representatives of our
customers.
It has been interesting to see how quickly
mining companies have turned their attention
towards better understanding the projected
cost of maintenance across the lifecycle of
their mobile mining fleet and the potential
strategies to reduce that cost. RPM’s market
leading AMT software products are finding real
favour in this space which is certainly pleasing
given how recently RPM acquired these
products.
At the start of the year RPM acquired the AMT
solutions through its acquisition of iSolutions,
an enterprise asset maintenance software
business headquartered in Sydney Australia.
Consideration for this acquisition was made up
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
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CHAIRMAN’S REPORT
of $8 million in cash, earn-out payments
estimated to total $7.1 million over three years
and 9.16m company shares. These shares were
issued to the outgoing shareholders of
iSolutions and were held in voluntary escrow
for 12 months before being released on 1 July
2017. The earn-out payment is based on a
combination of successful collections and
ongoing retention and growth in sales of
software and annuity revenue from the
software products which came with the
business.
In September 2016 the company concluded a
successful placement of 28.9 million ordinary
shares at an issue price of 45 cents per share to
investors,
institutional and
raising $13 million before costs. This
placement was significantly oversubscribed.
sophisticated
In October 2016 the company provided its
retail investors with the ability to acquire up to
$15,000 of the company’s shares at the same
price at which they were issued under the
institutional placement (45 cents per share) via
a Share Purchase Plan (SPP). The SPP was
capped at $1.5 million. However, because of
the demand the Board chose to close the SPP
early to remove the arbitrage risk given that at
the time the company’s stock was trading at an
average 20% premium to the SPP offer price
during the SPP period. The SPP raised $1.72
million through the
issue of 3.82 million
ordinary shares at 45 cents per share.
At the time of the capital raise, the company
confirmed that these funds would provide
RPM with the capacity to continue to expand
the business through further investments in
our planning suite of software products,
including being able to fund potential strategic
acquisition opportunities to accelerate the
delivery of these solutions for our customers.
Consistent with that objective, the capital
raised has enabled the company to achieve the
following strategic objectives during the
period:
In December 2016 the company acquired
a copy of the source code and intellectual
property rights of the Fewzion Short
Interval Control (SIC) and Work
Management software product. Fewzion
is an Australian company headquartered
in Newcastle and under the terms of this
acquisition RPM acquired the non-
exclusive right to rebrand, commercialise
and further develop the Fewzion
software. This product subsequently
became RPM’s Operations Manager
solution.
In May 2017 RPM announced it had
entered into a Software License and
Distribution Agreement with Alford
Mining Systems (AMS) to enable RPM to
rebrand, bundle, market and distribute
the AMS Stope Optimisation software
(StopeOpt) within RPM’s Underground
software solutions.
During June 2017 the company reported
that it had entered into a Software
Integration Agreement with Chasm
Consulting Pty Ltd (Chasm) which would
see RPM and Chasm develop an
integration between the industry leading
Chasm mine ventilation software
Ventsim™ and RPM’s Underground
software solutions.
In early August 2017 RPM announced the
company had entered into a Share
Purchase Agreement to acquire 100% of
the issued share capital of MineOptima, a
leading global private company with more
than 20 years’ experience developing
software applications which design the
optimal equipment access layouts for
underground mines.
The company held an Extraordinary General
meeting on 27 March 2017, where
shareholders overwhelmingly voted to change
the company’s name from
RungePincockMinarco Limited to RPMGlobal
Holdings Limited (RPM).
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CHAIRMAN’S REPORT
On 31 May 2017, the company announced it
was going to conduct an unmarketable parcel
(minimum holding) buy-back which was
concluded on 18 July. A total of 14,811
ordinary shares ($8,590.38) were acquired
from 57 registered shareholders under the
Buy-Back at a price of 58 cents per share
which have since been cancelled.
RPM maintains a strong balance sheet with
over $20 million of cash in the bank (as at 30
June 2017) and no debt. During FY2017 the
company paid out the post completion
payments for the iSolutions acquisition due
during that period. The company also paid
both the upfront and the five-year guaranteed
earn-out cash consideration components
associated with the purchase of the Fewzion
short interval control and work management
software product.
The Board has resolved not to pay a dividend
this financial year.
I would again like to acknowledge the effort
and commitment of our staff who continue to
is
perform especially well.
particularly pleased on the ability of our
management and staff to execute on a clearly
defined strategy that we believe will result in
increased value for our shareholders.
The Board
The Board thanks its shareholders for their
ongoing support of the company’s software
strategy and remains firmly of the opinion that
the investments made by the company in both
internal software development and in strategic
software acquisitions will provide the growth
engine for the business in 2018 and beyond.
Allan Brackin
Chairman
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MANAGING DIRECTOR’S REPORT
Software Division
Our Software business now represents 67% of
the company’s annual Total Revenue (up from
59% in FY2016).
FY2017 again saw the company continue to
invest heavily in its software business with
$12.8 million invested on internal software
development all of which was expensed. This
represents a 23% ($2.4 million) increase on the
previous year’s investment of $10.4 million.
This investment directly contributed to the
company’s 101% increase in Software License
Revenue in FY2017 and has established the
foundation for continued Software Revenue
growth in FY2018.
On 17 May 2016 the company announced it
had agreed to acquire the iSolutions business
with completion to occur on 1 July 2016. The
transaction closed as planned, however as can
often occur during an acquisition,
the
transaction had the effect of distracting the
prior iSolutions management team during May
and June of 2016 away from closing new sales.
As a result, very little AMT software was sold in
the last few months of their 2016 financial year
which resulted in little to no consulting backlog
coming across with the business on the 1st of
July. As a result, revenue from the AMT
software products (Software License Revenue
and Consulting Revenue) got off to a slow start
in the first half of FY2017.
There were also two large non-core AMT
development commitments which were made
by the outgoing iSolutions management team
prior to closing which, whilst considered by
RPM to be non-strategic, were honoured but in
the process almost 10 months of strategic AMT
development time was lost.
The acquisition of iSolutions was built on the
simple premise that our sales team (who
understand enterprise asset management very
well) would be able to sell more AMT software
than the previous owners. In addition, due to
operational
relationship
the
between
maintenance and production activities in the
mine, and our view that mining companies
would turn their attention to maintenance
budgeting and costing once the industry picked
up again, we also believed that the AMT
product would help us sell more of our other
software products.
This is exactly what happened in the second
half of FY2017. As our sales team started to
better understand the AMT value proposition
and the value it added to our scheduling and
budgeting systems the size and strategic value
of our deals increased. We are really pleased
with the momentum that the AMT products
have provided to our software division and
look forward to their continuing upward
trajectory in FY2018.
Just before year-end we released our latest
Scheduling Solution - Underground Metals.
This is an important product for us as it fills
what was a large gap in our product offering.
As with all of our new products it has been built
with an innovative user experience in mind.
The first installation of this product is currently
underway in Kazakhstan with positive results
reported so far. Given the new user experience
inherent within this product, we expect it to
become very competitive in the second half of
FY2018 once (as Allan referred to in his
Chairman Report) the product includes the
Stope Optimisation, Ventilation and Decline
Optimisation functionality.
is also undergoing
Our Ultra Short Term Scheduling product
XECUTE
its final user
acceptance testing in the Oil Sands region of
Canada. We remain really excited about the
potential disruption this product could make in
the market and are expecting it to have a big
year in FY2018.
We have been pleased with the market
acceptance of our relaunched Open Cut Coal
Solution and have committed to significant
enhancements to our Underground Coal
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MANAGING DIRECTOR’S REPORT
Solution and development of a Steeply Dipping
Coal Solution this financial year.
Advisory Division
Demand for our mining Advisory services
stabilised during FY2017 after four years of
revenue decline. Management firmly believe
that our mining Advisory market share again
increased during FY2017, particularly in the
areas
Acquisitions,
Independent Expert Advice and Asset
Valuations. The Advisory team were again
engaged to provide advice on the industry’s
largest Merger and Acquisition activities most
of which came out of North Asia.
of Mergers
and
judgement
received by
During the year we continued to maintain our
vigilance over collections for historical work
undertaken in the advisory division which for
the most part has been a successful exercise.
However, as has been previously highlighted, it
has not been without pain – specifically the
unexpected
the
company in Russia stemming from an attempt
to recover payment in that region. By way of
reminder, back in June 2015, we took legal
action against a Russian company for unpaid
invoices (US$955.5k) relating to advisory
services which we had completed in relation to
a coal mine in Russia under a contract originally
entered into in February 2014. The case
travelled through the Russian legal system
until
received an
unexpected adverse court judgement from the
Arbitration Court of Moscow which saw the
court award against RPM. This resulted in RPM
fully providing for this debt in the 2016
financial year while at the same time appealing
the finding that the contract should be
terminated due to fault on the part of RPM to
the appellate courts in Moscow. As highlighted
in our half year report on 21 February, RPM
was ultimately unsuccessful in this appeal
process. On 9 August 2017, RPM received
advice from its Russian counsel that upon
completion of the appeal process the trial
judge had quantified that RPM would be
required to pay approximately $0.8 million in
July 2016 when we
refund of
interest and
damages,
fees
previously paid to RPM by the Russian
company. RPM’s Russian based legal counsel
have recommended that RPM again appeal
this judgement to the appellate courts which
we will.
We expect demand for our Advisory services to
rise in FY2018 as mining companies begin
investigating new projects with a view to
growing or replacing their resources and
reserves base.
As the industry shifts to an “efficiency regime”
post the downturn we are more and more
involved in operations whereby utilising RPM’s
technology we are able to work with our clients
on assessing multiple planning scenarios to a
high level of confidence to assist them in re-
setting their mine plans from survival to
sustainable long term growth.
The increasing number of companies planning
to raise finance through equity markets is
driving activity to our Advisory division and is
an area where we maintain an industry leading
position as demonstrated by some of the
large transactions filed for China
recent
Molybdenum and Yancoal on the Hong Kong
Exchange. Of course if a sudden drop in
commodity prices occurs this activity will
quickly be put on hold again.
GeoGAS Division
reduced
The substantial increase in price for both
thermal coal and coking coal during the year
has seen a real pickup in coal exploration. For
at least the past four years, miners have
their development
consistently
expenditure which has in turn reduced the
longwall float (time between development and
production) in their underground coal mines.
The only two ways to increase the longwall
float are (a) do more development work
(exploration) or (b) stop production - which
given the current prices is unlikely to happen.
Therefore, as you would expect, the miners
have ramped up exploration which in turn has
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MANAGING DIRECTOR’S REPORT
Future Outlook
The last 12 months have seen us invest $12.8
million in internal software development, fully
integrate the iSolutions business, acquire the
intellectual property rights to a Short Internal
Control system, sign integration agreements
with the industry’s leading Stope Optimisation
venders and
and Ventilation
announce the acquisition of the industry’s
leading provider of software for equipment
access layout for underground mines. All of
which provide us with a much more complete
and richer set of software products than we
had this time last year.
software
While we see little change in the demand for
desktop
remain
software products, we
enthusiastic about the potential growth in our
enterprise, simulation, asset management and
in
ultra-short
FY2018.
term scheduling products
Richard Mathews
Managing Director and Chief Executive Officer
seen a significant increase in coal gas testing
undertaken by our two laboratories in Mackay
(Queensland) and Wollongong (New South
Wales).
While coal prices stay strong we expect the
laboratories to remain busy.
Company Expenses
The company’s costs (excluding development
costs and incentives) for the full year were
$44.2 million, 1% lower than FY2016 ($44.4
million). This amount includes the costs of the
iSolutions business which came onto our books
at the start of the year with a cost base of $4.8
million.
The development costs
incurred by the
company in FY2017 increased by $2.4 million
to $12.8 million (FY2016: $10.4 million). Based
on our current product strategy we expect
development costs to rise by 10% in FY2018
but then start to drop back to be more aligned
with the industry average.
Due to the doubling of software
license
revenue, $3.0 million in once-off management
sales manager
software
incentives and
commissions were earned during the period.
incurred $0.8 million
in
The company
redundancy costs during the period as it
continued to streamline
its management
structures. The annual employment cost
savings associated with this expenditure was
$2.8 million. Whilst we will continue to
carefully review the shape of our business, we
are not expecting to see further headcount
reductions in FY2018.
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DIRECTORS’ REPORT
Your Directors present their report on RPMGlobal Holdings Limited (the “Company”) and its subsidiaries (referred
to hereafter as the “Group”) for the year ended 30 June 2017.
1.
Directors
The Directors of RPMGlobal Holdings Limited at any time during or since the end of the period were:
Non-executive
Allan Brackin – Chairman
Dr Ian Runge
Ross Walker
Executive
Richard Mathews – CEO and Managing Director
2.
Principal Activities
The Group’s principal activities during the financial year consisted of:
a)
b)
c)
Software licensing, consulting, implementation and support;
Technical, advisory and training services to the resources industry; and
Laboratory gas testing.
There were no significant changes in the nature of the Group’s principal activities during the financial year.
3.
Dividends
No dividends were paid or declared during the financial year.
4.
Review and Results of Operations
Gross revenue in the 2017 financial year grew by 31% to $74.8 million (2016: $57.1 million). Software revenue
increased by $16.8 million (50.3%) on the previous year driven by higher licence sales as well as from the
maintenance and consulting revenue from the acquired iSolutions business.
Software
Licence Sales
-
- Maintenance
-
Consulting
Total Software
Advisory
GeoGAS
Other Revenue
Total Revenue
Direct Costs
Net Revenue
2017
$m
23.7
17.5
9.0
50.2
20.4
3.2
1.0
74.8
(8.0)
66.8
2016
$m
11.8
15.0
6.6
33.4
20.3
3.2
0.2
57.1
(4.5)
52.6
Change
%
100.8%
16.7%
36.4%
50.3%
0.5%
-
450.0%
31.0%
77.8%
27.0%
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DIRECTORS’ REPORT
Review and Results of Operations (Continued)
4.
Reconciliation between IFRS and non-IFRS financial performance items used in the Directors Report is presented
below:
Net Revenue
Operating Expenses
EBITDA1
Depreciation and Amortisation
Redundancy – staff
Acquisition Costs and Restructure
Goodwill impairment costs
Net Finance (costs)/income
Profit/(Loss) before income tax
Income tax benefit/(expense)
Profit/(Loss)
Earnings Per Share (cents per share)
2017
$m
66.8
(62.2)
4.6
(2.8)
(0.8)
(0.4)
-
0.2
0.8
(0.8)
-
0.02
2016
$m
52.6
(55.9)
(3.2)
(1.9)
(0.4)
-
(4.0)
0.3
(9.2)
-
(9.2)
(5.3)
Change
%
27.0%
11.3%
-
47.4%
100.0%
-
-
-33.3%
-
-
-94.6%
-
1 Earnings before Interest, Tax, Depreciation, Amortisation, Impairment and Redundancies
Software field costs increased by $4.8 million in FY2017 to $22.5 million (2016 $17.7 million). This increase was due
to (a) the annual cost structure of the iSolutions business which RPM acquired on the 1st of July 2017 was $4.8
million when it came into the business and (b) because of the over 100% increase in software license sales $2.6
million in once-off management incentives were earned.
The Company increased its investment in Research and Development by 23%, with software development costs
(which are all expensed) finishing the year at $12.8 million (2016: $10.4 million).
Advisory operating costs dropped by 6% on the prior year to finish at $15.3 million (2016: $16.2 million).
GeoGAS operating costs reduced to $2.0 million a decrease of 17% on the prior year (2016: $2.4 million).
Redundancy costs in this financial year were $0.8 million (2016: $0.4 million) and will provide $3.3 million in
annual savings.
The 101% growth in software licence revenue was the key driver for a $7.8 million improvement in EBITDA (Earnings
before Interest, Tax, Depreciation, Amortisation, Redundancies and Impairment) from a loss of $3.2 million in
FY2016 to a profit of $4.6 million in FY2017.
During the year the Company raised $14.7 million from institutional and retail investors at $0.45 cents per share.
The Group had cash of $20.3 million (2015: $18.1 million) and no bank debt at the end of the financial year.
The Company’s name was changed from RungePincockMinarco Limited to RPMGlobal Holdings Limited on 31
March 2017 following shareholder approval at the Extraordinary General Meeting on 27 March 2017.
Software Division
The Software division provides mine scheduling, financial costing/budgeting, simulation and asset management
software solutions to the mining industry. It also provides software consulting, implementation, training and
support for these products.
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DIRECTORS’ REPORT
4.
Review and Results of Operations (Continued)
Software Division (Continued)
The Group increased its investment in R&D to $12.8 million (2016: $10.4 million). This investment enabled the
Group to fast-track three new products to market.
The Software division contributed 67% of annual revenue in FY2017, up from 59% last year. Licence revenue
increased by more than 100% to $23.7 million, the highest result ever achieved by the Group.
On 1 July 2016 the Company acquired the iSolutions business which directly contributed $7.2 million to the Group’s
revenue in AMT licences, maintenance and consulting revenue. When the actual direct revenue result from this
acquisition is compared against what the Company was projecting to achieve in the first year post acquisition, both
the license and maintenance revenue from these software products finished pretty much in line with expectations.
However, the consulting revenue fell well short of initial projections. Given the cost base of this business was
reduced markedly during the year and the fact that the iSolutions software products facilitated considerably more
RPM software product sales then we could have envisaged in the first year of operating this business, the
Company’s first year expectations from a contribution perspective will have been achieved.
Software licence sales in the fourth quarter of the year increased to $9.1 million (2016: $4.4 million) and included
$3.5 million of a total $6.3 million license deal which was concluded in June.
Software consulting revenue increased by 36% to $9.0 million (2016: $6.6 million).
Direct costs increased by $2.0 million as the Company now engages more third party agents and partners to sell,
support and implement its software products particularly in Russia.
Recurring revenue for software maintenance and support continued its growth with a 17% increase to $17.5 million
in FY2017 (2016: $15.0 million).
Advisory Division
The Advisory division provides independent consulting and advisory services which cover technical and economic
analysis and assessment of mining activities and resources on behalf of mining companies, financial institutions,
government agencies and suppliers to mining projects. The market for Advisory services is heavily reliant on
expansion, development, financing and transacting of mining assets and projects.
Revenue from Advisory services for the year was $20.4 million (2016: $20.3 million) with revenue for the year
halting the decline that has occurred since 2012.
The division increased its contribution by 83% to $1.1 million (2016: $0.6 million).
GeoGAS
The GeoGAS business provides mine gas consulting and laboratory testing services to the coal industry on the East
Coast of Australia.
Revenue from the GeoGAS business has also stabilised, remaining at $3.2 million (2016: $3.2 million), however, the
contribution from this division improved to $1.1 million (2016: $0.7 million).
Operating Expenses
Total Operating expenses increased by 11% ($6.3 million) to $62.2 million during the year (2016: $55.9 million).
Development costs came in at $12.8 million a $2.4 million (23%) increase on the previous year (2015: $10.4 million).
The Group also reported $5.2 million in once-off commissions and management incentives which was $4.1 million
up on FY2016 ($1.1 million).
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DIRECTORS’ REPORT
5.
Likely Future Developments - Business Strategies and Prospects for Future Financial Years
Software Division
Our Software business now makes up 67% of the Total Revenue of our Company (up from 59% in FY2016).
As a Board and management team we remain fully invested in growing our enterprise, simulation, financial and
new asset management products and to further harnessing existing and new global framework agreements to
expand RPM’s solution offerings within the global miners.
Continuing to build on the strong foundations of the past four years, which have seen us deliver innovative
enterprise, financial, simulation and commodity based scheduling solutions, we look forward to further extending
our commodity based scheduling footprint during FY2018 to include Steeply Dipping Coal and a major upgrade to
Underground Coal – whilst at the same time building on the iSolutions acquisition to deliver the first fully integrated
production and maintenance system to the mining industry.
Advisory and GeoGAS
As with previous years, the near term outlook for these businesses remains tough; however we are confident that
our internationally respected Advisory team is well placed to benefit from its increased market share and to
continue to assist mining companies as they focus on productivity improvements and any associated acquisition
and divestiture activity.
With respect to our GeoGAS business, at some stage we expect coal companies on the east coast of Australia will
need to invest in exploration activities and once they do this should result in a slow and steady contribution
improvement from the GeoGAS business.
The operating costs of both of these businesses were reduced during the 2017 financial year and therefore both
businesses carry less downside risk and more upside potential.
6.
Legal Proceedings on Behalf of the Group
No person has applied for leave of Court to bring proceedings on behalf of the Group or intervene in any
proceedings to which the Group is a party for the purpose of taking responsibility on behalf of the Group for all or
any part of those proceedings.
7.
Significant Changes in the State of Affairs
There was no matter or circumstance during the financial year that has significantly affected the state of affairs of
the Group not otherwise disclosed.
8.
Matters Subsequent to the End of the Financial Year
Since 30 June 2017 the Group has agreed to acquire 100% of the issued shares in MineOptima Holdings Limited
and MineOptima Operations Limited (MineOptima).
On 9 August 2017, RPM received advice from its external Russian legal counsel that the Russian company had been
awarded approximately $0.8 million in damages, interest and refund of fees previously paid to RPM (see note 26).
No other matter or circumstance has arisen since 30 June 2017 that has significantly affected the Group’s
operations, results or state of affairs, or may do so in future years.
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DIRECTORS’ REPORT
9.
Information on Current Directors and Company Secretary
Directors
Allan
Brackin
Dr Ian
Runge
Ross
Walker
Experience
Chairman, Non-executive Director. Joined the Board in November 2011.
Allan has been involved in the technology industry for over 30 years at both
executive and non- executive level. Allan was formerly Director and Chief
Executive Officer of Volante Group Limited from 2000-2004. From 1986 –
2000 Allan cofounded a number of IT companies which all became part of
the Volante Group.
Qualifications: Bachelor of Applied Science.
Other listed company directorships in last three years: Chairman of GBST
Holdings Limited since 2005
Non-executive Director, company founder. Director since December 1986.
Qualifications: M.E.(Mining Engineering), Ph D. (Economics), FAusIMM,
FAICD
Other listed company directorships in last three years: None
Non–executive Director. Joined the Board in March 2007.
Joined Pitcher Partners Brisbane (previously Johnston Rorke) in 1985,
Managing Partner in 1992 – 2008 and again from 2014 to 2017.
Predominantly involved in corporate finance, auditing, valuations, capital
raisings and mergers and acquisitions for the past 20 years.
Qualifications: Bachelor of Commerce, FCA
Other listed company directorships in last three years: None
Richard
Mathews
Appointed Managing Director 28 August 2012.
Richard’s previous roles includes Senior Vice President, International at J D
Edwards, CEO of Mincom Ltd, Chief Executive Officer and then Non-
Executive Chairman of eServGlobal Limited.
Qualifications: Bachelor of Commerce, Bachelor of Science, ACA
Other listed company directorships in last three years: Non-executive
chairman and director of eServGlobal Ltd in 2009 - 2014. Richard also
previously sat on the Board of METS Ignited and has recently accepted a role
on the newly created Telstra Health Advisory Panel.
Special
responsibilities
Chairman
Member and
Chairman – HR and
Remuneration
Committee
Member -Audit
and Risk
Committee
Non-executive
Director
Member – Audit
and Risk
Committee
Non-executive
Director
Member and
Chairman – Audit
and Risk
Committee
Member – HR and
Remuneration
Committee
Executive
Managing Director
Member – HR and
Remuneration
Committee
Company Secretary
James O’Neill, Group General Counsel and Company Secretary, joined RPMGlobal Holdings Limited in December
2012. Qualifications: Bachelor of Laws and Bachelor of Information Technology from Queensland University of
Technology, Graduate Diploma in Applied Corporate Governance from the Governance Institute of Australia,
Solicitor and Member of the Queensland Law Society and Associate Member of the Governance Institute of
Australia (AGIA) and Chartered Institute of Secretaries (ACIS).
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
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DIRECTORS’ REPORT
10. Meetings of Directors
The number of meetings of the Company’s Board of Directors and of each Board Committee held during the year
ended 30 June 2017 and the number of meetings attended by each Director were:
Full meetings
of Board of Directors
Audit & Risk
Committee
HR & Remuneration
Committee
Attended
Held
Attended
Held
Attended
Held
Allan Brackin
Dr Ian Runge
Ross Walker
Richard Mathews
9
8
9
9
11.
Insurance of Officers
9
9
9
9
4
2
4
-
4
4
4
-
2
-
2
2
2
-
2
2
The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as
a Director or Executive, for which they may be personally liable, except where there is a lack of good faith.
During the financial year, the Company paid insurance premiums to insure the Directors and Officers of the
Company against certain risks associated with their activities as Officers of the Company. The terms of that policy
prohibit disclosure of the nature of liability covered, the limit of such liability and the premium paid.
12.
Shares Under Option
Unissued ordinary shares of RPMGlobal Holdings Limited under option at the date of this report are as follows:
Date options granted
29/11/20131
31/03/2014
31/10/2014
03/03/20151
15/07/2015
08/09/20151
31/10/2015
03/03/2016
29/08/2016
29/11/2016
09/02/20171
08/06/2017
Expiry date
29/11/2018
31/03/2019
31/10/2019
03/03/2020
15/07/2020
08/09/2020
31/10/2020
03/03/2021
29/08/2021
29/11/2021
09/02/2022
08/06/2022
Issue price of shares
$0.68
$0.73
$0.61
$0.59
$0.57
$0.56
$0.54
$0.39
$0.49
$0.54
$0.59
$0.57
Number under option
918,000
250,000
100,000
4,187,000
250,000
3,430,000
50,000
300,000
325,000
1,100,000
3,000,000
340,000
14,250,000
1 Included in these options were options granted as remuneration to the five highest remunerated officers during
the year. Details of options granted to the five highest remunerated officers who are also key management
personnel are disclosed in section 20E of the Remuneration Report. There are no Officers in the Company who are
not also identified as key management personnel.
No option holder has any right under the options to participate in any other share issue of the Company or any
other entity.
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DIRECTORS’ REPORT
13.
Shares issued on the exercise of options
As at the date of this report, 71,666 shares have been issued following exercise of the options granted on 8
September 2015 and 116,666 shares have been issued following exercise of the options granted on 3 March 2015.
14.
Environmental Legislation
RPMGlobal Holdings Limited and its controlled entities are not subject to any particular and significant
environmental regulation under a law of the Commonwealth or of a State or Territory.
15.
Non-audit Services
Details of the amounts paid or payable to the Company’s auditor and related practices of the auditor for audit and
non-audit services provided during the year are set out below.
The Board has considered the position and in accordance with advice received from the Audit Committee, is
satisfied that the provision of non-audit services is compatible with the general standard of independence of
auditors imposed by the Corporations Act 2001.
BDO (QLD) Pty Ltd
2017
$
2016
$
Preparation of Income tax return and other taxation services
12,414
14,725
16.
Indemnity of Auditors
The Company has agreed to indemnify and hold harmless its auditors, BDO Audit Pty Ltd, against any and all losses,
claims, costs, expenses, actions, demands, damages, liabilities or any other proceedings whatsoever incurred by
the auditors in respect of any claim by a third party arising from or connected to any breach by the Company.
17.
Auditor’s Independence Declaration
In accordance with Section 307C of the Corporations Act 2001, a copy of the auditor’s independence declaration is
enclosed on page 22.
18.
Directors’ Interests
The relevant interest of each director in the shares and options issued by the Company, as notified by the Directors
to the ASX in accordance with section 205G(1) of the Corporations Act 2001, at the date of this report is as follows:
A Brackin
Dr I Runge
R Walker
R Mathews 1
RPMGlobal Holdings Limited
Ordinary
shares
1,098,311
16,368,817
958,333
8,220,138
Options over
ordinary shares
-
-
-
-
1 Includes 175,560 shares held by R Mathews as trustee under a bare trust arrangement for a third party.
19.
Rounding of Amounts
The Company is a type of company referred to in ASIC Corporations (Rounding in Financial/Directors' Reports)
Instrument 2016/191 and therefore the amounts contained in this report and in the financial report have been
rounded to the nearest $1,000, or in certain cases, the nearest dollar.
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DIRECTORS’ REPORT
20.
Remuneration Report - Audited
The remuneration report is set out under the following main headings:
A.
B.
C.
D.
E.
F.
20A.
Principles used to determine the nature and amount of remuneration;
Service agreements;
Details of remuneration;
Bonus and share-based compensation benefits;
Equity instruments held by key management personnel; and
Other transactions with key management personnel.
Principles Used to Determine the Nature and Amount of Remuneration
Remuneration and compensation have the same meaning in this report.
This report discusses the Group’s policies in regard to compensation of key management personnel (KMP). The
identified KMP have authority and responsibility for planning, directing and controlling the activities of the Group.
In addition to the Directors, the Company assessed the Chief Financial Officer, Group General Counsel & Company
Secretary and the Executive General Managers of the Software Division (who ceased to be a key management
person during the year) and Advisory Division as having authority and responsibility for planning, directing and
controlling all activities of the Group, directly or indirectly, during the 2017 financial year.
The Board has established a HR and Remuneration Committee to assist with remuneration and incentive policies
enabling the Group to attract and retain KMP and Directors who will create value for shareholders and support the
Group’s mission. The HR and Remuneration Committee obtains independent advice if required on the
appropriateness of compensation packages given trends in comparative companies. In the 2017 financial year the
Committee did not use a remuneration consultant. The Group’s Corporate Governance Statement provides further
information on the role of this Committee.
The compensation structures explained below are designed to attract suitably qualified candidates, reward the
achievement of strategic, operational objectives and achieve the broader outcome of creation of value for
shareholders.
Executive Director and other Key Management Personnel
The compensation structures take into account:
• The capability and experience of the KMP;
• Their ability to control the relevant segment’s performance; and
• The segment or Group earnings.
Compensation packages include a mix of fixed and short-term and long-term performance-based incentives. In
addition to their salaries, the Group also provides non-cash benefits to its KMP and contributes to a defined
contribution superannuation plan (or equivalent pension plan) on their behalf.
Fixed Compensation
Fixed compensation is calculated on a total cost basis and includes salary, allowances, non-cash benefits, employer
contributions to superannuation funds and any fringe benefits tax charges related to employee benefits, including
motor vehicles.
Compensation levels are reviewed using an individual approach, based on evaluation of the individual, and a
comparison to the market. A KMP compensation is also reviewed on promotion.
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DIRECTORS’ REPORT
20.
Remuneration Report - Audited (Continued)
20A.
Principles Used to Determine the Nature and Amount of Remuneration (Continued)
Performance Linked Compensation
Performance linked compensation includes both short-term and long-term incentives and is designed to reward
KMP for meeting and exceeding their Key Performance Objectives (KPOs). The Short-Term Incentive (STI) is an ‘at
risk’ incentive provided in the form of cash, while the Long-Term Incentive (LTI) is provided as options over ordinary
shares of the Company under the rules of the Employee Share Option Plan (ESOP) (see note 24 to the financial
statements). The current long-term performance incentive structure was first implemented in the 2013 year and
was most recently approved by shareholders at the 24 November 2016 Annual General Meeting.
The table below sets out the performance based compensation paid to KMP together with earnings for the same
period. Performance based compensation consists of STI cash bonus and LTI share-based payments.
Performance based compensation
Year ended
30 June
2013
2014
2015
2016
2017
STI
$’000
-
-
1,072
112
968
LTI
$’000
(71)
33
90
230
70
Total
$’000
(71)
33
1,162
342
1,038
EBITDA1
$’000
1,850
(945)
2,600
(3,224)
4,582
Dividends
$’000
2,482
-
-
-
-
Share price
$
0.47
0.58
0.56
0.41
0.55
1 Earnings before Interest, Tax, Depreciation, Impairment and Restructuring costs
Short-term Incentive Bonus
Effective 1 July 2012, the Group implemented a variable pay structure, referred to as the Executive General
Manager Incentive Plan (EGMIP). Each of the identified KMP has a portion of their remuneration linked to the
EGMIP. The key objective of the EGMIP is to create clear alignment between individual and business performance
and remuneration by providing a performance-based reward to participants in line with their relative contribution
to the Group. The EGMIP achieves the alignment by focusing participants on achieving goals which contribute to
sustainable shareholder value, and providing a clear link between performance and the Group financial result. In
2017 R Mathews, M Kochanowski, J O’Neill, C Halliday (Software – who ceased to be a key management person
during the year) and P Baudry (Advisory) had 100% of their STI based on the Company’s adjusted EBITA
performance. Cash bonuses are paid, provided for or forfeited in the year to which they relate.
The Board assessed performance of the KMP against the EGMIP’s for the 2017 Financial Year as shown in the table
below:
Fixed Compensation
R Mathews
M Kochanowski
J O’Neill
C Halliday
P Baudry
50%
83%
83%
50%
50%
Variable
Compensation
50%
17%
17%
50%
50%
STI awarded
STI forfeited
100%
100%
100%
-
100%
-
-
-
100%
-
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DIRECTORS’ REPORT
20.
Remuneration Report - Audited (Continued)
20A.
Principles Used to Determine the Nature and Amount of Remuneration (Continued)
Long-term Incentive
Options were issued in the 2012, 2013, 2014, 2015, 2016 and 2017 financial years under the Company’s Employee
Share Option Plan (ESOP) to KMP at the discretion of the Board. Consistent with the current ESOP plan terms last
approved by shareholders at the Company’s 2016 Annual General Meeting, the rules of the ESOP Plan enable the
Board to determine the applicable vesting criteria and to set a timetable for vesting of options in the Offer
Document, including vesting in tranches over a defined period. The Board has the discretion on whether or not to
set performance hurdles for vesting or to link vesting solely to a defined service period in order to drive key staff
retention and reward longevity of service. The options issued since November 2013 vest in tranches over a three
year period from the date of grant, have vesting conditions linked to the holder maintaining employment with the
Group over that period and are issued at an exercise price based on the volume weighted average price of the
Company’s shares in the five days prior to each grant.
The Board has a Margin Loan policy that restricts Directors and Executives of the Group from entering into financial
contracts secured by shares and other securities of the Company. This policy requires the approval of the Chairman
of the Board for any financial arrangements or facilities related to Company shares held by the Directors and
Executives.
Non-executive Directors
Fees and payments to Non-executive Directors reflect the demands which are made on, and the responsibilities of
the Directors. Non-executive Directors’ fees and payments are reviewed periodically by the Board and are
determined within an aggregate Directors’ fee pool limit, which is periodically recommended for approval by
shareholders. The pool currently stands at $500,000, unchanged since it was approved in the 2009 Annual General
Meeting.
Non-executive Directors’ base remuneration was last reviewed with effect from 31 December 2014. Both the
Chairman’s and Non-executive Directors’ remuneration is inclusive of committee fees.
20B.
Service Agreements
Details of contracts with Directors and KMP of the Group are set out below.
Termination benefit
Notice Period
Terms of agreement
A Brackin
Dr I Runge
R Walker
R Mathews
M Kochanowski
J O’Neill
C Halliday 1
P Baudry 2
1 Australian dollar equivalent, salary of C Halliday set and paid in US Dollars. C Halliday ceased to be a KMP during the year.
2 Australian dollar equivalent, salary of P Baudry is set and paid in Chinese Yuan and Russian Rubles.
Unlimited in term
Unlimited in term
Unlimited in term
Unlimited in term
Unlimited in term
Unlimited in term
Unlimited in term
Unlimited in term
Nil
Nil
Nil
6 months
3 months
2 months
1 month
1 month
Nil
Nil
Nil
6 months
3 months
2 months
1 month
1 month
Base salary including
superannuation
$100,000
$80,000
$70,000
$502,293
$280,000
$280,000
$493,828
$340,179
The KMP are also entitled to receive upon termination of employment their statutory entitlements of accrued
annual and long service leave (where applicable), together with any superannuation benefits (where applicable).
Compensation levels are reviewed each year to meet the principles of the remuneration policy.
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DIRECTORS’ REPORT
20.
Remuneration Report - Audited (Continued)
20C. Details of Remuneration
Directors
Chairman (Non-executive)
Allan Brackin
Executive Directors
Richard Mathews – CEO and Managing Director
Non-executive Directors
Dr Ian Runge
Ross Walker
Other Key Management Personnel
In addition to executive Directors mentioned above, the following persons were assessed by the Company as the
executives who had the greatest authority and responsibility for planning, directing and controlling all activities of
the Group, directly or indirectly, during the 2017 financial year:
Name
Position
Michael Kochanowski
Chief Financial Officer
James O’Neill
Craig Halliday
Group General Counsel and Company Secretary
Executive General Manager – Software Division (ceased to be KMP during the year)
Philippe Baudry
Executive General Manager - Advisory Division
Details of remuneration of each Director of RPMGlobal Holdings Limited and each of the other KMP of the Group
are set out in the following tables.
Short-term benefits
Cash salary
and fees
Movement
in leave
entitle-
ments
STI
cash bonus
Non –
monetary
benefits 1
Post -
employ
ment
benefits
Share-
based
payment
(options)
Total
Proportion
of remun-
eration
perform-
ance
related
$
$
$
$
$
$
$
%
Value of
options
as
propor-
tion of
remun-
eration
%
91,324
80,000
70,000
467,553
708,877
-
-
-
-
-
-
-
-
-
8,676
-
-
89,476
89,476
502,293
10,296
502,293
10,296
34,740
43,416
100,000
-
80,000
-
-
70,000
- 1,104,358
- 1,354,358
-
-
-
45%
37%
-
-
-
-
-
2017
Directors
A Brackin
Dr I Runge
R Walker
R Mathews
Other Key Management Personnel
M Kochanowski
J O’Neill
C Halliday 2
P Baudry
255,708
255,708
326,240
375,278
1,212,934
1,921,811
337,563
465,417
Total
967,710
1 Includes car park and health insurance
10,196
3,424
(9,615)
25,464
29,469
118,945
63,927
63,927
10,296
10,296
- 20,827
12,090
53,509
63,805
24,292
24,292
13,216
-
394,433
30,014
387,434
29,787
308,380
(42,288)
52,167
802,562
69,680 1,892,809
69,680 3,247,167
24%
24%
-14%
49%
28%
32%
61,800
105,216
2 Ceased to be key management personnel during the year
8%
8%
-14%
7%
4%
2%
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DIRECTORS’ REPORT
20.
Remuneration Report - Audited (Continued)
20C. Details of Remuneration (Continued)
Short-term benefits
Cash salary
and fees1
$
91,324
80,000
70,000
467,293
708,617
Movement
in leave
entitle-
ments
$
-
-
-
(39,075)
(39,075)
2016
Directors
A Brackin
Dr I Runge
R Walker
R Mathews
Share-
based
payment
Options
Post -
employm
ent
benefits
Total
Proportio
n of
remun-
eration
perform-
ance
related
Value of
options
as
propor-
tion of
remun-
eration
STI
cash
bonus
Non –
monetary
benefits 2
$
$
$
$
$
%
%
-
-
-
-
-
-
-
-
9,994
9,994
8,676
-
-
35,000
43,676
-
-
-
-
-
100,000
80,000
70,000
473,212
723,212
Other Key Management Personnel
M Kochanowski
J O’Neill
C Halliday
P Baudry
235,945
235,945
481,057
394,842
1,347,790
Total
2,056,407
1 Includes movement in accrued leave entitlements
21,750
4,538
2,497
(760)
28,024
(11,051)
-
-
112,190
-
112,190
112,190
40,330
41,064
65,615
82,820
9,994
9,994
30,786
12,433
63,207
73,201
22,415
22,415
24,875
-
69,705
113,381
2 Includes car park and health insurance
330,434
313,956
717,020
489,335
229,829 1,850,745
229,829 2,573,957
-
-
-
-
-
12%
13%
25%
17%
18%
13%
-
-
-
-
-
12%
13%
9%
17%
12%
9%
The termination benefit includes contractual termination benefit and superannuation (where applicable).
20D.
Bonuses and Share-based Compensation Benefits
All options refer to options over ordinary shares of RPMGlobal Holdings Limited, which are exercised on a one-for-
one basis under the ESOP Plan.
The assessed fair value at grant date of options granted to the individuals is allocated equally over the period from
grant date to vesting date, based on an estimate of the number of options likely to vest, and the amount is included
in the remuneration tables above. Fair values at grant date are determined using Trinominal Lattice and Hoadley’s
Hybrid models that take into account the exercise price, the term of the option, the share price at grant date and
expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the
term of the option. Model inputs for options granted during the year are disclosed in note 25 in the financial report.
Details of options over ordinary shares in the Company provided as remuneration to each director and each of the
KMP and the Group are set out below. When exercisable, each option is convertible into one ordinary share of
RPMGlobal Holdings Limited. Further information on the options is set out in note 25 to the financial statements.
Options granted under the ESOP plan carry no dividend or voting rights until the options vest, are exercised and
converted to ordinary shares whereupon those ordinary shares carry dividend and voting rights consistent with all
other ordinary shares of the Company.
The assessed fair value at grant date of options granted to the individuals is allocated equally over the period
from grant date to vesting date, and the amount is included in the remuneration tables above.
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DIRECTORS’ REPORT
20.
Remuneration Report - Audited (Continued)
20D.
Bonuses and Share-based Compensation Benefits (Continued)
Number of options granted
during the year
Number of options vested
during the year 2
Value of options at
grant date 1
$
-
-
-
-
30,350
30,350
-
30,350
A Brackin
Dr I Runge
R Walker
R Mathews
M Kochanowski
J O’Neill
C Halliday
P Baudry
1 The value at grant date calculated in accordance with AASB 2 Share-based Payment of options granted during the year as
-
-
-
-
150,000
150,000
-
150,000
149,999
150,000
-
283,333
-
-
-
-
part of remuneration.
2 Options granted in November 2013 vested in November 2016 with an exercise price of $0.68 cents expiring in November
2018 and to-date no options in this grant have been exercised by the KMP. Options granted in March 2015 vested in March
2016 with an exercise price of $0.59 cents expiring in March 2020 and to-date no options in this grant have been exercised
by the KMP. Options granted in September 2015 vested in September 2016 with an exercise price of $0.56 cents expiring in
September 2020 and to-date no options in this grant have been exercised by the KMP.
Details of remuneration: Bonuses and share-based compensation benefits
The terms and conditions of each grant of options affecting remuneration in the current or a future reporting
period are as follows:
Grant date
29/11/2013
29/11/2013
29/11/2013
03/03/2015
03/03/2015
03/03/2015
8/09/2015
8/09/2015
8/09/2015
09/02/2017
09/02/2017
09/02/2017
Vesting and exercise
date
30/11/2014
30/11/2015
30/11/2016
03/03/2016
03/03/2017
03/03/2018
8/09/2016
8/09/2017
8/09/2018
09/02/2018
09/02/2019
09/02/2020
Expiry date
29/11/2018
29/11/2018
29/11/2018
03/03/2020
03/03/2020
03/03/2020
8/09/2020
8/09/2020
8/09/2020
09/02/2022
09/02/2022
09/02/2022
Exercise
Price
$
0.68
0.68
0.68
0.59
0.59
0.59
0.56
0.56
0.56
0.59
0.59
0.59
Value per
option at grant date
$0.21
$0.23
$0.25
$0.19
$0.23
$0.25
$0.17
$0.19
$0.21
$0.17
$0.21
$0.23
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DIRECTORS’ REPORT
20.
Remuneration Report - Audited (Continued)
20D.
Bonuses and Share-based Compensation Benefits (Continued)
Details of options over ordinary shares in the Company provided as remuneration to key management personnel
are shown below. The vesting conditions are set out in Section 20A. The table also shows the percentages of the
options granted that vested and were forfeited during the year. Further information on the options is set out in
note 25 to the financial statements.
Year
(FY) of
grant
Years in
which
option may
vest
Number of
options
granted
Value of
option at
grant date 1
A Brackin
Dr I Runge
R Walker
R Mathews
M Kochanowski
J O’Neill
C Halliday
P Baudry
-
-
-
-
2014
2015
2016
2017
2014
2015
2016
2017
2014
2015
2016
2014
2015
2016
2017
-
-
-
-
2015-2017
2016-2018
2017-2019
2018-2020
2015-2017
2016-2018
2017-2019
2018-2020
2015-2017
2016-2018
2017-2019
2015-2017
2016-2018
2017-2019
2018-2020
-
-
-
-
50,000
200,000
200,000
150,000
50,000
225,000
175,000
150,000
500,000
100,000
400,000
50,000
550,000
250,000
150,000
-
-
-
-
$0.21 - $0.25
$0.19 - $0.25
$0.17 – $0.21
$0.17 – $0.23
$0.21 - $0.25
$0.19 - $0.25
$0.17 – $0.21
$0.17 – $0.23
$0.21 - $0.25
$0.19 - $0.25
$0.17 – $0.21
$0.21 - $0.25
$0.19 - $0.25
$0.17 – $0.21
$0.17 – $0.23
Number
of
options
vested
during
the year
-
-
-
-
16,667
66,666
66,666
-
16,667
75,000
58,333
-
-
-
-
16,667
183,333
83,333
-
Vested
%
Number
of
options
forfeited
during
the year
Value at
date of
forfeiture 2
Forfeited
%
-
-
-
-
33%
33%
33%
-
33%
33%
33%
-
-
-
-
33%
33%
33%
-
-
-
-
-
-
-
-
-
-
-
-
-
500,000
100,000
400,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100%
100%
100%
-
-
-
-
1 The value at grant date calculated in accordance with AASB 2 Share-based Payment of options granted during the year as part of remuneration
2 The value of the options that were granted as part of remuneration and that were forfeited (lapsed) during the year because a vesting condition was not
satisfied was determined at the time of lapsing, but assuming the condition was satisfied.
20E.
Equity Instruments held by Key Management Personnel
No shares were granted as compensation in 2017 (2016: nil). The number of shares and options over shares in
the Company held during the financial year by each Director of RPMGlobal Holdings Limited and each of the
other key management personnel of the Group, including their personally-related entities, is set out below:
(i)
Options
Name
Balance at the
start of the year
Granted as
compensation
Forfeited,
exercised and
expired
Balance at the
end of the year
Vested and
exercisable
A Brackin
Dr I Runge
R Walker
R Mathews
M Kochanowski
J O’Neill
C Halliday
P Baudry
-
-
-
-
450,000
450,000
1,000,000
850,000
-
-
-
-
150,000
150,000
-
-
-
-
-
-
-
1,000,000
-
-
-
-
-
-
-
-
600,000
600,000
-
249,998
258,333
-
150,000
-
1,000,000
499,999
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
|20
For personal use only
DIRECTORS’ REPORT
20.
Remuneration Report - Audited (Continued)
20E.
Equity Instruments held by Key Management Personnel (Continued)
(ii)
Ordinary Shares
Balance at the
start of the year
Sold during
the year
Exercise of
Options
Acquired during the
year (on market)
Balance at the end of
the year
Directors
A Brackin
Dr I Runge
R Walker
R Mathews 1
1,064,978
16,335,484
925,000
8,186,805
Other key management personnel of the Group
M Kochanowski
150,000
-
-
-
-
-
-
-
-
-
-
30,000
J O’Neill
C Halliday 1
P Baudry
1 Includes 175,560 shares held by R Mathews as trustee under a bare trust arrangement for C Halliday.
2 Acquired at A$0.45 under Share Purchase Plan announced on 28 September 2016
3 Acquired at A$0.45 under Institutional Placement announced on 28 September 2016
2,966,115
273,909
-
-
-
-
-
-
33,333 2
33,333 2
33,333 2
33,333 2
33,333 2
10,000 2
1,111,112 3
33,333 2
1,098,311
16,368,817
958,333
8,220,138
183,333
40,000
4,077,227
307,242
No options were exercised during the 2017 year by the KMP.
20F. Other Transactions with Key Management Personnel
The Group employs the services of Pitcher Partners Chartered Accountants, an entity associated with Ross Walker.
Pitcher Partners received $31,632 (2016: nil) for advisory and valuation services. Amount payable at year end is nil
(2016: nil).
Aggregate amounts of each of the above types of other transactions with key management personnel of RPMGlobal
Holdings Limited:
Amounts recognised as expense
Professional fees
2017
$
31,632
31,632
2016
$
-
-
No other transactions with Key Management Personnel occurred during the 2017 financial year.
2016 Annual General Meeting (AGM)
The Company’s 2016 remuneration report was unanimously adopted by show of hands at 2016 AGM. The Company
did not receive any specific feedback at the AGM or throughout the year on its remuneration practices.
Remuneration report - End
This report is made in accordance with a resolution of the Directors.
Allan Brackin
Chairman
Dated: 28 August 2017
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
|21
For personal use only
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek St
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia
DECLARATION OF INDEPENDENCE BY T R MANN TO THE DIRECTORS OF RPMGLOBAL HOLDINGS
LIMITED
As lead auditor of RPMGlobal Holdings Limited for the year ended 30 June 2017, I declare that, to the
best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of RPMGlobal Holdings Limited and the entities it controlled during the
period.
T R Mann
Director
BDO Audit Pty Ltd
Brisbane, 28 August 2017
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd,
a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme
approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.
For personal use only
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2017
Notes
2017
$’000
2016
$’000
Revenue from continuing operations
Services
Licence sales
Software maintenance
Other revenue
Revenue
Rechargeable expenses
Net Revenue
Expenses
Amortisation
Depreciation
Employee benefits expense
Commissions and incentives
Other employee costs
Office expenses
Professional services
Rent
Acquisition reorganisation costs
Impairment of goodwill
Redundancy costs
Travel expenses
Other expenses
Profit/(Loss) before finance costs and income tax
Finance income
Finance costs
Net finance costs
Profit/(Loss) before income tax
Income tax benefit/(expense)
Profit/(Loss) after income tax
32,315
23,728
17,451
1,297
74,791
(8,016)
66,775
(1,982)
(831)
(43,516)
(5,165)
(672)
(3,120)
(1,763)
(3,621)
(465)
-
(766)
(2,658)
(1,679)
(66,238)
538
269
(24)
245
783
(739)
44
30,026
11,752
15,010
338
57,126
(4,476)
52,650
(931)
(948)
(41,479)
(1,067)
(726)
(3,033)
(1,596)
(3,886)
-
(4,055)
(361)
(2,166)
(1,920)
(62,168)
(9,518)
335
(38)
297
(9,221)
(42)
(9,263)
13
12
5
13
6
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
|23
For personal use only
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2017
Notes
2017
$’000
2016
$’000
44
(9,263)
Profit/(Loss)
Other comprehensive income
Items that will not be classified subsequently to profit or loss:
Remeasurements of retirement benefit obligations
Items that may be classified subsequently to profit or loss:
Foreign currency translation differences
Other comprehensive income / (loss), net of tax
Total comprehensive income
Earnings per share
Basic earnings per share (cents)
Diluted earnings per share (cents)
24
24
(43)
(714)
(757)
(713)
0.02
0.02
-
(69)
(69)
(9,332)
(5.3)
(5.3)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
|24
For personal use only
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2017
Notes
2017
$’000
2016
$’000
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Work in progress
Current tax receivable
Other assets
Total current assets
Non-current assets
Trade and other receivables
Investments accounted for using the equity method
Property, plant and equipment
Deferred tax assets
Intangible assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Provisions
Current tax liabilities
Other Liabilities
Total current liabilities
Non-current liabilities
Provisions
Deferred tax liabilities
Other Liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained earnings
Total equity
8
9
10
11
9
27(c)
12
7
13
14
15
16
15
7
16
17
18
18
20,278
24,814
1,784
285
1,607
48,768
215
-
2,096
9,195
33,985
45,491
94,259
8,588
3,546
608
14,620
27,362
1,545
30
3,521
5,096
32,458
61,800
18,142
12,648
1,471
239
1,658
34,158
283
26
2,137
8,656
17,499
28,601
62,759
5,210
3,049
183
8,480
16,922
1,691
17
475
2,183
19,105
43,654
85,175
(2,995)
(20,380)
61,800
67,048
(3,013)
(20,381)
43,654
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
|25
For personal use only
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2017
Balance at 1 July 2016
Profit for the year
Other comprehensive income
Total comprehensive income
Contributed
equity
$'000
67,048
-
-
-
$'000
(3,013)
-
(714)
(714)
Transactions with owners in their capacity as owners
Contributions of equity, net of transaction costs
18,127
-
Reserves
Retained profits
Total equity
$'000
(20,381)
44
(43)
1
-
-
-
(11,118)
(9,263)
-
(9,263)
-
-
-
$'000
43,654
44
(757)
(713)
18,127
732
18,859
61,800
54,919
(9,263)
(69)
(9,332)
(2,846)
913
(1,933)
43,654
(2,995)
(20,380)
69,894
(3,857)
-
18,127
85,175
-
-
-
(2,846)
-
(2,846)
67,048
732
732
-
(69)
(69)
-
913
913
(3,013)
(20,381)
Employee share options
Balance at 30 June 2017
Balance at 1 July 2015
Loss for the year
Other comprehensive income
Total comprehensive income
Transactions with owners in their capacity as owners
Share buyback, net of transaction costs
Employee share options
Balance at 30 June 2016
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
|26
For personal use only
CONSOLIDATED STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 30 JUNE 2017
Notes
2017
$'000
2016
$'000
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Finance costs
Redundancies
Onerous leases payments
Acquisition reorganisation costs
Income taxes refunded
Income taxes paid
Net cash (outflow) / inflow from operating activities
22
Cash flows from investing activities
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Payments for acquisitions of subsidiaries net of cash acquired
Payments for intangible assets
Net cash outflow from investing activities
Cash flows from financing activities
Share buyback
Contributions of equity
Transaction costs
Net cash inflow/(outflow) from financing activities
17
Net increase/(decrease) in cash and cash equivalents held
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 the end of the financial year
8
70,892
(71,680)
(788)
269
(24)
(766)
(353)
(371)
-
(1,032)
(3,065)
(625)
-
(6,672)
(1,580)
(8,877)
64,184
(63,909)
275
335
(38)
(608)
(626)
-
167
(301)
(796)
(563)
22
-
(241)
(782)
-
(2,847)
14,730
(361)
14,369
2,427
18,142
(291)
20,278
-
-
(2,847)
(4,425)
22,557
10
18,142
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
|27
For personal use only
SELECTED NOTES TO THE FINANCIAL STATEMENTS
1.
Summary of Significant Accounting Policies
The principal accounting policies adopted in the preparation of the financial report are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated.
RPMGlobal Holdings Limited is a listed public company, incorporated and domiciled in Australia.
The financial report comprises the consolidated entity (“Group”) consisting of RPMGlobal Holdings Limited and
its subsidiaries.
The Company’s name was changed from RungePincockMinarco Limited to RPMGlobal Holdings Limited on 31
March 2017 following shareholder approval at the Extraordinary General Meeting on 27 March 2017.
(a)
Basis of Preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting
Standards and interpretations issued by the Australian Accounting Standards Board and the Corporations Act
2001. RPMGlobal Holdings Limited is a for-profit entity for the purposes of preparing the financial statements.
Compliance with IFRS
The consolidated financial statements of RPMGlobal Holdings Limited also comply with International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
Historical cost convention
These financial statements have been prepared under the historical cost convention.
(b)
Principles of Consolidation
The consolidated financial statements incorporate the assets and liabilities of all entities controlled by RPMGlobal
Holdings Limited as at 30 June 2017 and the results of all controlled entities for the year then ended. RPMGlobal
Holdings Limited and its controlled entities together are referred to in this financial report as the “consolidated
entity” or the “Group”.
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls
an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-
consolidated from the date that control ceases.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group (refer to
note 1(k)).
Intercompany transactions, balances and unrealised gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of
the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
|28
For personal use only
SELECTED NOTES TO THE FINANCIAL STATEMENTS
1.
(c)
Summary of Significant Accounting Policies (Continued)
Income Tax
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based
on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and to unused tax losses.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However,
the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a
transaction other than a business combination that at the time of the transaction affects neither accounting nor
taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or
substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax
asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses in the tax
jurisdiction in which they arose.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and
tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal
of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and
tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a
net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in
other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive
income or directly in equity, respectively.
Tax consolidation legislation
RPMGlobal Holdings Limited and its wholly owned Australian controlled entities have implemented the tax
consolidation legislation.
The head entity, RPMGlobal Holdings Limited, and the controlled entities in the tax consolidated group account
for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax
consolidated group continues to be a standalone taxpayer in its own right.
In addition to its own current and deferred tax amounts, RPMGlobal Holdings Limited also recognises the current
tax liabilities or assets and the deferred tax assets arising from the unused tax losses and unused tax credits
assumed from controlled entities in the tax consolidated group.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as
amounts receivable or payable to other entities in the Group. Details about the tax funding agreements are
disclosed in note 6.
Any difference between the amounts assumed and amounts receivable or payable under the tax funding
agreement are recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
|29
For personal use only
SELECTED NOTES TO THE FINANCIAL STATEMENTS
1.
(d)
Summary of Significant Accounting Policies (Continued)
Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operational decision maker. The chief operating decision maker, who is responsible for allocating resources and
assessing performance of the operating segments, has been identified as the Managing Director.
The assets and liabilities of the Group are regularly reviewed on a consolidated basis but are not regularly reported
to the chief operating decision maker at a segment level. As such this information has not been included in the
Operating Segment note 2.
(e)
i)
Foreign Currency Translation
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency
of the primary economic environment in which the entity operates (‘the functional currency’). The
consolidated financial statements are presented in Australian dollars, which is RPMGlobal Holdings
Limited’s functional and presentation currency.
ii)
Transactions and balances
Foreign currency transactions are initially translated into the functional currency using the exchange rates
prevailing at the date of the transaction. Foreign exchange gains and losses resulting from the settlement
of such transactions and from the translation at year end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in profit or loss, except when they are deferred in
equity as qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of
the net investment in a foreign operation.
Non-monetary items that are measured at fair value in a foreign currency are translated using the
exchange rates at the date when the fair value was determined. Translation differences on assets and
liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation
differences on non-monetary assets and liabilities such as equities held at fair value through profit or loss
are recognised in profit or loss as part of the fair value gain or loss and translation differences on non-
monetary assets such as equities whose changes in the fair value are presented in other comprehensive
income are recognized in other comprehensive income.
iii)
Group entities
The results and financial position of all the Group entities (none of which has the currency of a
hyperinflationary economy) that have a functional currency different from the presentation currency are
translated into the presentation currency as follows:
•
•
•
assets and liabilities on consolidation are translated at the closing rate at the reporting date;
income and expenses are translated at the exchange rates prevailing at the dates of the
transaction; and
all resulting exchange differences are recognised in other comprehensive income.
In disposal of a foreign operation, the component of other comprehensive income relating to that
particular foreign operation is recognised in profit and loss.
Fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of
the foreign entities and translated at the closing rate.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
|30
For personal use only
SELECTED NOTES TO THE FINANCIAL STATEMENTS
1.
(f)
i)
Summary of Significant Accounting Policies (Continued)
Revenue Recognition
Sale of licences
Revenue from the sale of licences is recognised when the amount can be reliably measured and all
significant risks and rewards of ownership have been transferred to the buyer. In most cases this
coincides with the transfer of legal title or the passing of possession to the buyer.
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as
revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third parties.
The Group completed a transaction for the sale of $6,295,000 of perpetual licenses to a customer on 30
June 2017. The transaction included multiple elements and required management judgement on
allocation of the value to the different revenue components as well as assessing whether the Group has
transferred to the buyer significant risks and rewards of ownership due to the inclusion of a
reconfiguration right (between licences and maintenance) that is only exercisable in limited specified
circumstances. The Group is confident that these rights can be reliably estimated and the significant
risks and rewards have transferred to the customer.
The Group has deferred revenue allocated to the rights to future upgrades and reliably measured
reconfiguration. As a result an amount of $2,833,000 of revenue has been deferred resulting in the
recognition of $3,462,000 of revenue in the 30 June 2017 year. Deferred revenue will be recognised as
revenue when it satisfies the Company’s revenue recognition policies.
ii)
Consulting
Revenue from the provision of consulting services is recognised on an accruals basis in the period in which
the consulting service is provided. Revenue from the provision of these services is calculated with
reference to the professional staff hours incurred on each client assignment adjusted for any time that
may not be recoverable.
iii)
Software maintenance
When the outcome of a transaction involving software maintenance can be estimated reliably, revenue
associated with the transaction is recognised on a straight-line basis over the service period.
iv)
Interest revenue
Interest revenue is recognised using the effective interest method. It includes the amortisation of any
discount or premium.
(g)
Trade Receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less provision for impairment. Trade receivables are generally due for settlement
within 30 days. They are presented as current assets unless collection is not expected for more than 12 months
after the reporting date.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are
written off by reducing the carrying amount directly. An allowance for impairment of trade receivables 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. Significant financial difficulties of the debtor, probability that the debtor
will enter bankruptcy or financial reorganisation and default or delinquency in payments are considered indicators
that the trade receivable may be impaired. The amount of the provision is the difference between the asset’s
carrying amount and the present value of estimated future cash flows, discounted at the original effective interest
rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
|31
For personal use only
SELECTED NOTES TO THE FINANCIAL STATEMENTS
1.
Summary of Significant Accounting Policies (Continued)
(g)
Trade Receivable (Continued)
The amount of the allowance is recognised in other expenses in profit or loss. Subsequent recoveries of amounts
previously written off are credited against other expenses in profit or loss.
(h) Work in Progress
Work in progress represents costs incurred and profit recognised on client assignments and services that are in
progress at balance date. Work in progress is valued at net realisable value after providing for any foreseeable
losses.
(i)
Investments and Other Financial Assets
Equity investments that are held for trading are measured at fair value through profit or loss. For all other equity
investments, the group can make an irrevocable election at initial recognition of each investment to recognise
changes in fair value through other comprehensive income (OCI) rather than profit or loss.
All current investments in equity investments are classified as at fair value through other comprehensive income.
Such investments are initially and subsequently measured at fair value, with the initial fair value being cost.
Unrealised gains or losses on investments in an equity instrument are recognised in a reserve until the investment
is sold, collected or otherwise disposed of, at which time the cumulative gain or loss is transferred to the Asset
Realisation Reserve.
The Company derecognises an investment in an equity instrument when it is sold or it transfers the investment
and the transfer qualifies for derecognition in accordance with AASB 9. Upon derecognition, unrealised
gains/losses net of tax relating to the investment are transferred from the revaluation reserve to the realisation
reserve.
Interest bearing investments are recognised initially at fair value and are subsequently measured at amortised
cost. Amortised cost is calculated with any difference between cost and redemption value being recognised in
the statement of comprehensive income over the period of the investment on an effective interest basis.
(j)
Leases
Leases of property, plant and equipment, where the Group as lessee has substantially all the risks and rewards of
ownership, are classified as finance leases. Finance leases are capitalised at the lease’s inception at the fair value
of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental
obligations, net of finance charges, are included in other short-term and long-term borrowings. Each lease
payment is allocated between the liability and finance cost.
The finance cost is charged to the profit or loss over the lease period so as to produce a constant periodic rate of
interest on the remaining balance of the liability for each period. The property, plant and equipment acquired
under finance leases is depreciated over the shorter of the asset’s useful life and the lease term.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as
lessee are classified as operating leases. Payments made under operating leases (net of any incentives received
from the lessor) are charged to the profit or loss on a straight line basis over the period of the lease.
Lease income from operating leases where the Group is a lessor is recognised in income on a straight line basis
over the lease term.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
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SELECTED NOTES TO THE FINANCIAL STATEMENTS
1.
(k)
Summary of Significant Accounting Policies (Continued)
Business Combinations
The acquisition method of accounting is used to account for all business combinations, including business
combinations involving entities or businesses under common control, regardless of whether equity instruments
or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair
values of the assets transferred, the liabilities incurred and the equity interests issued by the Group.
The consideration transferred also includes the fair value of any contingent consideration arrangement and the
fair value of any pre-existing equity interest in the subsidiary.
Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at
the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in
the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net
identifiable assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the
acquisition date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share
of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the
net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the
difference is recognised directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted
to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing
rate, being the rate at which a similar borrowing could be obtained from an independent financier under
comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial
liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss.
(l)
Impairment of Non-Financial Assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested
annually for impairment, or more frequently if events or changes in circumstances indicate that they might be
impaired. Other assets are reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the
asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair
value less costs of disposal and value in use.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets
(cash generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for
possible reversal of the impairment at each reporting date.
(m)
Cash and Cash Equivalents
For statement of cashflow presentation purposes, cash and cash equivalents include cash on hand, deposits held
at call with financial institutions, other short-term, highly liquid investments with original maturities of three
months or less that are readily converted to known amounts of cash and which are subject to an insignificant risk
of changes in value and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the
consolidated statement of financial position.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
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SELECTED NOTES TO THE FINANCIAL STATEMENTS
1.
(n)
Summary of Significant Accounting Policies (Continued)
Property, Plant and Equipment
Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure
that is directly attributable to the acquisition of the items. Depreciation is calculated on a straight line basis to
write off the net cost of each item of property, plant and equipment over its estimated useful life to the
consolidated entity, or in case of lease hold improvements, the shorter lease term. Estimates of remaining useful
lives are made on a regular basis for all assets.
The estimated useful lives for plant and equipment is ranging between 2 and 20 years. Gains and losses on
disposals are determined by comparing proceeds with the carrying amount of the assets. These are included in
profit or loss.
(o)
i)
Intangible Assets
Software developed or acquired for sales and licensing
Research expenditure is recognised as an expense as incurred. Costs incurred on development projects
(relating to the design and testing of new areas of products) are recognised as intangible assets when it
is probable that the project will, after considering its commercial and technical feasibility, be completed
and generate future economic benefits and its costs can be measured reliably. The expenditure
capitalised comprises all directly attributable costs, including costs of materials, services, direct labour
and an appropriate proportion of overheads. Other development expenditures that do not meet these
criteria are recognised as an expense as incurred. Development costs previously recognised as an
expense are not recognised as an asset in a subsequent period. Capitalised development costs and
acquired software are recorded as intangible assets and amortised from the point at which the asset is
ready for use on a straight line basis over its useful life, which varies from three to five years.
ii)
Software – internal management systems
Software licences used in internal management systems, whether acquired or internally developed are
stated at cost less amortisation. They are amortised on a straight line basis over the useful life from 2.5
to 5 years.
iii)
Patents and trademarks
Costs associated with patents and trademarks are expensed as incurred.
iv)
Customer Contracts and Relationships
The net assets acquired as a result of a business combination may include intangible assets other
than goodwill. Any such intangible assets are amortised in a straight line over their expected future
lives. The estimated useful lives of customer contracts is 5 years.
Goodwill
v)
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of
the net identifiable assets of the acquired subsidiary/business at the date of acquisition. Goodwill on
acquisition is included in intangible assets. Goodwill is not amortised. Instead, goodwill is tested for
impairment annually or more frequently if events or circumstances indicate that it might be impaired and
is carried at cost less accumulated impairment losses.
Goodwill is allocated to cash generating units for the purposes of impairment testing. The allocation is
made to those cash generating units or groups of cash generating units that are expected to benefit from
business combination in which goodwill arose, identified according to operating segments or components
of operating assets (note 2).
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
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SELECTED NOTES TO THE FINANCIAL STATEMENTS
1.
(p)
Summary of Significant Accounting Policies (Continued)
Trade and Other Payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial
year and which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.
(q)
Borrowing Costs
Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that
is required to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed.
(r)
i)
Employee Benefits
Short term obligations
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave
expected to be settled within 12 months after the end of the period in which the employees render the
related service are recognised in respect of employees' services up to the end of the reporting period and
are measured at the amounts expected to be paid when the liabilities are settled. The liability for annual
leave and long service leave is recognised in the provision for employee benefits.
Other long-term employee benefit obligations
The liability for long service leave and other benefits which is not expected to be settled within 12 months
after the end of the period in which the employees render the related service is recognised in the provision
for employee benefits and measured as the present value of expected future payments to be made in
respect of services provided by employees up to the end of the reporting period using the projected unit
credit method. Consideration is given to expected future wage and salary levels, experience of employee
departures and periods of service. Expected future payments are discounted using market yields at the end
of the reporting period on national government bonds with terms to maturity and currency that match, as
closely as possible, the estimated future cash outflows.
The obligations are presented as current liabilities in the consolidated statement of financial position if the
entity does not have an unconditional right to defer settlement for at least twelve months after the
reporting period, regardless of when the actual settlement is expected to occur.
ii)
Bonus plans
The Group recognises a liability and an expense for bonuses and profit-sharing based on a formula that
takes into consideration the profit attributable to the Company’s shareholders after certain adjustments.
The Group recognises a provision where contractually obliged or where there is a past practice that has
created a constructive obligation.
Liabilities for bonus plans are expected to be settled within 12 months and are measured at the amounts
expected to be paid when they are settled.
iii)
Superannuation
The Group has a defined contribution superannuation plan for its eligible employees. Contributions to the
defined contribution fund are recognised as an expense as they become payable. Prepaid contributions are
recognised as an asset to the extent that a cash refund or a reduction in future payments is available.
iv)
Share-based payments
Share-based compensation benefits are provided to employees via the RPMGlobal Holdings Limited
employee share option plan (ESOP) and an employee share purchase plan. Information relating to these
schemes is set out in note 25.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
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SELECTED NOTES TO THE FINANCIAL STATEMENTS
1.
(s)
Summary of Significant Accounting Policies (Continued)
Employee Benefits (Continued)
The fair value of options granted under the ESOP is recognised as an employee benefit expense with a
corresponding increase in equity. The total amount to be expensed is determined by reference to the fair
value of the options granted, which includes any market performance conditions, but excludes the impact
of any service and non-market performance vesting conditions. Non-market vesting conditions are included
in assumptions about the number of options that are expected to vest. The total expense is recognised over
the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied.
At the end of each period, the entity revises its estimates of the number of options that are expected to
vest based on the non-market vesting conditions. It recognises the impact of the revision to original
estimates, if any, in profit or loss, with a corresponding adjustment to equity.
(s)
Value Added Taxes (Including Goods and Services Tax)
Revenues, expenses and assets are recognised net of the amount of Value Added Tax (VAT), except where the
amount of VAT is not recoverable from the relevant tax authority. In these circumstances the VAT is recognised
as part of the cost of acquisition of the asset or as part of the item as expense.
Receivables and payables are stated with the amount of VAT included. The net amount of VAT recoverable from,
or payable to, the relevant tax authority is included as a current asset or liability in the consolidated statement of
financial position.
Cash flows are presented on a gross basis. The VAT components of the cash flows arising from investing and
financing activities which are recoverable from, or payable to, the relevant tax authority are classified as operating
cash flows.
(t)
Contributed Equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
(u)
i)
Earnings per Share
Basic earnings per share
Basic earnings per share is calculated by dividing:
•
•
the profit attributable to owners of the Company, excluding any costs of servicing equity other than
ordinary shares
by the weighted average number of ordinary shares outstanding during the financial year.
ii)
Diluted earnings per share
Dilutive earnings per share adjusts the figures used in determination of basic earnings per share to take into
account:
•
•
the after income tax effect of interest and other financing costs associated with dilutive potential
ordinary shares
the weighted average number of additional ordinary shares that would have been outstanding
assuming the conversion of all dilutive potential ordinary shares.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
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SELECTED NOTES TO THE FINANCIAL STATEMENTS
1.
(v)
Summary of Significant Accounting Policies (Continued)
Financial Guarantee Contracts
Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability
is initially measured at fair value and subsequently at the higher of the amount determined in accordance with
AASB 137 Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less
cumulative amortisation, where appropriate.
(w)
Rounding of Amounts
The parent entity has applied the relief available to it under ASIC Corporations (Rounding in Financial/Directors
Reports) Instrument 2016/191 and accordingly, amounts in the financial statements and directors’ report have
been rounded off to the nearest $1,000, or in certain cases, the nearest dollar.
(x)
Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in
presentation for the current financial year.
(y)
Critical Accounting Estimates and Significant Judgments
The preparation of the financial report in conformity with Australian Accounting Standards requires the use of
certain critical accounting estimates. It also requires management to exercise judgment in the process of applying
the accounting policies. The notes in the financial statements set out areas involving a higher degree of judgment
or complexity, or areas where assumptions are significant to the financial report such as:
•
•
•
•
intangible assets, including goodwill (note 13),
impairment of receivables (note 9, 23(a) and note 1(g)),
deferred tax assets (note 7).
revenue recognition (note 1f).
Estimates and judgments are continually evaluated and are based on historical experience and other factors,
including reasonable expectations of future events. Management believes the estimates used in preparation of
the financial report are reasonable.
(aa)
Parent Entity Financial Information
The financial information for the parent entity, RPMGlobal Holdings Limited, disclosed in note 27 has been prepared
on the same basis as the consolidated financial statements, except as set out below:
(i)
Investments in subsidiaries
Investment in subsidiaries are accounted for at cost in the financial statements of RPMGlobal Holdings
Limited.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
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SELECTED NOTES TO THE FINANCIAL STATEMENTS
1.
Summary of Significant Accounting Policies (Continued)
(bb) New Accounting Standards and Interpretations Not Yet Adopted
Relevant accounting standards and interpretations that have recently been issued or amended but are not yet
effective and have not been adopted for the annual reporting period ended 30 June 2017, are as follows:
(i)
IFRS 15 Revenue from Contracts with Customers
This standard and its consequential amendments are currently applicable to annual reporting periods beginning on
or after 1 January 2018. This standard requires recognised 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 those goods or services. This means that revenue will be recognised when control of goods or services
is transferred, rather than on transfer of risks and rewards as is currently the case under IAS 18 Revenue. The Group
has not yet evaluated the impact adoption of this standard will have.
(j)
AASB16 Leases
This standard and its consequential amendments are currently applicable to annual reporting periods beginning
on or after 1 January 2019. When effective, this standard will replace the current accounting requirements
applicable to leases in AASB117 Leases and related interpretations. AASB16 introduces a single lessee accounting
model that eliminates the requirement for leases to be classified as operating or finance leases. This means that
for all leases, a right-to-use asset and a liability will be recognised, with the right-to-use asset being depreciated
and the liability being unwound in principal and interest components over the life of the lease. The Group has
not yet evaluated the impact adoption of this standard will have.
(k)
AASB 9: Financial Instruments and associated Amending Standards
The Standard will be applicable retrospectively (subject to the provisions on hedge accounting outlined below)
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 applicable to annual reporting periods beginning on or after 1 January 2018.
The key changes that may affect the Group on initial application include certain simplifications to the classification
of financial assets, simplifications to the accounting of embedded derivatives, upfront accounting for expected
credit loss, and the irrevocable election to recognise gains and losses on investments in equity instruments that
are not held for trading in other comprehensive income. AASB 9 also introduces a new model for hedge accounting
that will allow greater flexibility in the ability to hedge risk, particularly with respect to hedges of non-financial
items. Should the entity elect to change its hedge policies in line with the new hedge accounting requirements of
the Standard, the application of such accounting would be largely prospective.
Although, the directors anticipate that the adoption of AASB 9 may have an impact on the Group’s financial
instruments, it is impracticable at this stage to provide a reasonable estimate of such impact.
(cc)
New and amended standards adopted by the Group
The Group has adopted all new Accounting Standards and Interpretations effective for the year ended 30 June
2017.
The adoption of these standards did not have any material impact on the current or any prior period and is not
likely to materially affect future periods.
Early adoption of standards
The Group has not elected to apply any pronouncements before their operative date.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
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SELECTED NOTES TO THE FINANCIAL STATEMENTS
2.
Operating Segments
Operating segments are reported in a manner consistent with the internal reporting provided to the CEO in order
to make decisions about resource allocations and to assess performance of the Group. The reports are split into
functional divisions: Software Division, Advisory Division and GeoGAS.
Software Division provides all of the Group’s Software offerings, including maintenance (support), training and
implementation services to mining companies.
Advisory Division provides consulting and advisory services which cover technical and economic analysis and
assessment of mining activities and resources on behalf of mining companies, financial institutions, customers
of mining companies (e.g. coal fired electricity generators), lessors and potential lessors of mineral rights to
mining companies, government departments and agencies and suppliers to mining companies and projects.
GeoGAS provides services to coal mining clients in respect of gas content testing and relevant consulting
services.
Segment revenue, expenses and results include transfers between segments. Such transfers are priced on an
“arms-length” basis and are eliminated on consolidation.
Information about reportable segments
2017
2016
Software
Division
Advisory
Division
GeoGAS
Total
Software
Division
Advisory
Division
GeoGAS
Total
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Revenue
External Sales
50,208
20,377
3,154
73,739
33,388
20,291
Inter-segment sales
Total Revenue
Inter-segment expenses
Rechargeable expenses
430
50,638
(1,061)
(3,340)
1,063
21,440
(467)
(4,599)
37
3,191
(2)
(77)
1,530
75,269
(1,530)
(8,016)
603
287
33,991
20,578
(262)
(698)
(1,333)
(3,009)
3,208
104
3,312
(34)
(134)
3,144
56,887
994
57,881
(994)
(4,476)
52,411
Net revenue
Total Expenses
46,237
16,374
3,112
65,723
32,396
16,871
(22,710)
(15,331)
(2,012)
(40,053)
(17,699)
(16,228)
(2,428)
(36,355)
Software Development
(12,825)
-
-
(12,825)
(10,361)
Segment profit/(loss)
10,702
1,044
1,100
12,845
4,336
-
643
-
(10,361)
716
5,695
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
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SELECTED NOTES TO THE FINANCIAL STATEMENTS
2.
Operating Segments (Continued)
Reconciliation of segment profit to reported net profit:
Segment result
Adjustments:
Foreign exchange gains/(losses)
Employment benefits – corporate and IT
Other unallocated costs – corporate and IT
Acquisition reorganisation costs
Impairment
Redundancy costs
Depreciation and amortisation
Net finance costs
Unallocated income
Profit/(Loss) before income tax
Income tax benefit
Net Profit/(Loss)
Geographical Information
2017
$'000
2016
$'000
12,845
5,695
-
(5,130)
(4,185)
(465)
-
(766)
(2,812)
245
1,051
783
(739)
44
(82)
(3,883)
(5,192)
-
(4,055)
(361)
(1,879)
297
239
(9,221)
(42)
(9,263)
Segment revenue is based on the geographical location of customers and segment assets are based on the
geographical location of the assets.
2017
2016
Revenues
$’000
Non-current
assets1
$’000
Revenues
$’000
Non-current
assets1
$’000
Australia
Asia
Americas
Africa & Europe
Operating Segment
Unallocated Revenue
Reported
1Excludes financial instruments and deferred tax assets.
3.
Business Combinations
20,385
16,764
18,168
18,422
73,739
1,052
74,791
35,712
227
223
134
36,296
-
36,296
19,789
12,995
14,889
9,214
56,887
239
57,126
19,260
287
236
162
19,945
-
19,945
On 1 July 2016 the Group acquired 100% of the issued share capital of iSolutions International Pty Ltd and
iSolutions Holdings Pty Ltd (iSolutions Group), a leading global asset management software company with over
20 years’ experience in the provision of asset management, life cycle costing and budgeting software solutions to
the mining industry. The addition of iSolutions software products extended RPM’s leadership in the areas of mine
planning, scheduling, execution, simulation and financial costing and budgeting.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
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SELECTED NOTES TO THE FINANCIAL STATEMENTS
3.
Business Combinations (Continued)
The fair values of the assets and liabilities of iSolutions as at date of acquisition are as follows:
Purchase consideration
Cash
Ordinary shares
Deferred consideration
Contingent consideration
Total Purchase Consideration
$000
8,000
3,758
1,064
7,087
19,909
The fair value of the 9,166,666 shares issued as part of the consideration paid for the iSolutions Group
($3,758,000) was based on the closing share price on 1 July 2016 of $0.41 per share.
Deferred consideration comprises retention payments to the staff of iSolutions payable over two financial years,
which will revert to the sellers in the event of staff resignations.
Contingent consideration comprises successful collection of debtors and ongoing retention and growth of annuity
revenues by iSolutions. The potential undiscounted amount of future payments was estimated at $8,000,000.
The fair value of the contingent consideration of $7,087,000 has been estimated by calculating the present value
of the future expected cash outflows based on a discount rate of 4%.
Acquisition related costs are shown separately in the statement of comprehensive income amount to $465,000
and include staff redundancies, onerous leases, stamp duty and professional fees.
The fair values of the assets and liabilities recognised as at the date of the acquisition are as follows:
Cash and cash equivalents
Trade and other receivables
Other assets
Property, plant and equipment
Software acquired for sale
Customer contracts
Other intangible assets
Trade and other payables
Provisions
Current tax liabilities
Other Liabilities
Net Assets
Goodwill
$000
3,562
1,609
45
208
4,555
257
19
(547)
(406)
(159)
(1,290)
7,853
12,056
The goodwill is attributable to the significant synergies that are expected to arise after the acquisition.
Revenue from Licences, Maintenance and Consulting services solely relating to the AMT products which were
acquired amounted to $7,221,000 in the current financial year. It is impracticable to determine the net profit
contribution from the iSolutions business since the start of the financial year due to its staff and costs being
absorbed into three separate divisions (Software, Software Development and Corporate) and eight subsidiaries
of the Group in four countries.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
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SELECTED NOTES TO THE FINANCIAL STATEMENTS
4.
Loss Before Income Tax
Loss before income tax includes the following specific expenses / (income)
Defined contributions superannuation expense – related party
Rental expense relating to operating leases - Minimum lease payments
Foreign exchange (gains) / losses
Impairment losses – Trade receivables
Impairment gains – Trade receivables
5.
Acquisition and Restructure Costs
iSolutions Acquisition costs:
Employment termination costs
Onerous lease obligations
Professional fees and transaction costs
6.
Income Tax Benefit / (Expense)
Tax Recognised in profit or loss
Income tax benefit/(expense)
Current tax
Deferred tax
Adjustments to prior periods
Income tax expense
Numerical reconciliation of income tax expense to prima facie tax
Profit/(Loss) before income tax
Tax at the Australian tax rate of 30% (2016: 30%)
Tax effect of amounts which are not taxable/(deductible)
in calculating taxable income:
Non-deductible expense/non-assessable income
Research and development deduction
Unutilised foreign tax credits
Unrecognised deferred tax assets
Difference in overseas tax rates
Foreign Exchange movements
Over/(under) provision in prior years
Income tax benefit / (expense)
2017
$'000
2016
$'000
2,495
3,400
-
247
(302)
175
112
178
465
(1,130)
387
4
(739)
783
(235)
(74)
425
(596)
(320)
(800)
(16)
73
4
(739)
2,225
3,676
82
1,317
(1,021)
-
-
-
-
(246)
61
143
(42)
(9,221)
2,766
(210)
600
(13)
(3,316)
(173)
(73)
61
143
(42)
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
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SELECTED NOTES TO THE FINANCIAL STATEMENTS
6. Income Tax Benefit / (Expense) (Continued)
Tax consolidation legislation
RPMGlobal Holdings Limited and its wholly-owned Australian controlled entities implemented the tax
consolidation regime from 13 March 2007. On adoption of the tax consolidation legislation, the entities in the tax
consolidated Group entered into a tax sharing agreement which, in the opinion of the Directors, limits the joint
and several liabilities of the wholly-owned entities in the case of a default by the head entity, RPMGlobal Holdings
Limited. The entities have also entered into a tax funding agreement under which the wholly-owned entities fully
compensate RPMGlobal Holdings Limited for any current tax payable assumed and are compensated for any
current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are
transferred to RPMGlobal Holdings Limited under the tax consolidated legislation. The funding amounts are
determined by reference to the amounts recognised in the wholly-owned entities’ financial statements.
Significant Estimates – Deferred Tax Assets
An assessment of the recoverability of the net deferred tax assets has been made to determine the carrying value.
Completion of restructure in Australia significantly lowers the Company’s cost base and it is expected to have
taxable profits in the future. At each reporting period, the recoverability of the net deferred tax assets will be
reassessed. This may lead to the recognition of this unrecognized tax benefit in future reporting periods or the
de-recognition of deferred tax assets that are currently recognised on the consolidated statement of financial
position.
Deferred Tax Assets and Liabilities
7.
Deferred tax assets and liabilities are attributable to the following:
Provision for impairment of receivables
Employee benefits provision
Lease incentive liabilities
Tax loss
Unearned income
Accrued expenses
Share capital raising costs
Intangibles
Work in progress
Property, plant and equipment
Prepayments
Unrealised foreign exchange
Other deferred tax liabilities
Deferred tax assets
Deferred tax liabilities
Net Deferred tax assets
2017
$'000
2016
$'000
148
2,461
221
1,285
426
502
4,632
6,405
1,420
439
27
249
491
(88)
(27)
(230)
(322)
(22)
9,195
(30)
9,165
105
171
249
(69)
(39)
(192)
(368)
(70)
8,656
(17)
8,639
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
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SELECTED NOTES TO THE FINANCIAL STATEMENTS
7. Deferred Tax Assets and Liabilities (Continued)
Movements
Balance at 1 July
Recognised in profit or loss
Recognised in other comprehensive income
Recognised in equity
Over/(under) provision in prior years
Balance at 30 June
Unrecognised deferred tax assets
Foreign tax credits
Tax losses
Capital losses
Deductible temporary differences
Unrecognised deferred tax assets
Unrecognised gross temporary differences
2017
$'000
2016
$'000
8,639
8,639
387
(15)
152
2
61
(49)
-
(12)
9,165
8,639
284
5,817
485
271
5,498
485
5,118
5,072
11,704
11,326
42,451
40,516
The group has not recognised deferred tax assets for a portion of tax losses in the parent entity and its
subsidiaries located in China, Russia, Chile, Brazil and USA because it is not probable that sufficient future
taxable profit will be available. Foreign tax credits will expire in 2018. Capital losses do not expire,
however, it is not probable that the Group would generate capital gains to utilise the benefit. Deductible
temporary differences in subsidiaries located in China, Russia, Chile, Brazil and USA have not been
recognised because it is not probable that sufficient future taxable profit will be available.
8.
Cash and Cash Equivalents
Cash at bank
Short-term bank deposits
9.
Trade and Other Receivables
Current
Trade receivables
Provision for impairment of receivables
Other receivables
Non-current
Other receivables and deposits
10. Work in Progress
Work in progress
9,143
11,135
20,278
25,816
(1,014)
24,802
12
24,814
215
215
9,412
8,730
18,142
15,116
(2,468)
12,648
-
12,648
283
283
1,784
1,471
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SELECTED NOTES TO THE FINANCIAL STATEMENTS
11.
Other Assets
Prepayments
12.
Property, Plant and Equipment
Plant and equipment - at cost
Less: accumulated depreciation
Balance at 1 July
Exchange differences
Additions
Acquisition of subsidiary
Disposals
Depreciation
Balance at 30 June
13.
Intangible Assets
Software for sale and licensing – at cost
Less: accumulated amortisation
Software for internal use – at cost
Less: accumulated amortisation
Customer relationships – at cost
Less: accumulated amortisation
Goodwill – at cost
Less: impairment losses
23
2017
$'000
1,607
7,331
(5,234)
2,096
2016
$'000
1,658
6,526
(4,389)
2,137
2,137
2,564
3
625
171
(9)
(831)
2,096
11,678
(4,620)
7,058
4,783
(4,595)
188
257
(51)
206
36,824
(10,291)
26,533
33,985
(35)
563
-
(7)
(948)
2,137
5,594
(2,865)
2,729
4,717
(4,424)
293
-
-
-
24,829
(10,352)
14,477
17,499
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SELECTED NOTES TO THE FINANCIAL STATEMENTS
13.
Intangible Assets (Continued)
Customer
relationships
$'000
Software For
Sales to
Customers 1
$'000
Software For
Internal Use
Goodwill
$'000
$'000
Total
$'000
-
-
257
(51)
206
-
-
-
-
-
-
2,729
1,437
4,555
(1,663)
7,058
3,318
135
-
-
(724)
2,729
293
144
19
(267)
188
407
105
(12)
-
(207)
293
14,477
-
12,056
-
26,533
18,532
-
-
(4,055)
-
14,477
17,499
1,580
16,886
(1,981)
33,985
22,257
240
(12)
(4,055)
(931)
17,499
Balance at 1 July 2016
Additions
Acquisition of subsidiaries
Amortisation
Balance at 30 June 2017
Balance at 1 July 2015
Additions
Exchange differences
Impairment 2
Amortisation
Balance at 30 June 2016
1 Software consists of capitalised development costs.
2 The carrying amount of intangible assets has been reduced to its recoverable amount through recognition of an
impairment loss against goodwill. This loss has been disclosed separately in the consolidated statement of comprehensive
income.
(a)
Impairment Tests for Goodwill
Goodwill is allocated to the Group's cash generating units (CGUs) according to business unit. A segment level
summary of the goodwill is presented below.
Software Division
GeoGAS
2017
$'000
21,612
4,921
26,533
2016
$'000
9,556
4,921
14,477
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
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SELECTED NOTES TO THE FINANCIAL STATEMENTS
13.
Intangible Assets (Continued)
(b)
Key assumptions used for value-in-use calculations
In the current and prior years the recoverable amount of the CGUs has been determined by value-in-use
calculations. These calculations were based on the following key assumptions:
Advisory Division
Software Division
GeoGAS
Margin1
Growth Rate2
Discount Rate3
2017
8%
55%
33%
2016
4%
49%
35%
2017
2.5%
2.5%
1.5%
2016
2.5%
2.5%
-
2017
14%
12%
12%
2016
14%
13%
11%
1 Budgeted gross margin
2 Weighted average growth rate used to extrapolate cash flows beyond the budget period
3 In performing the value-in-use calculations for each CGU, the group has applied post-tax discount rates to discount the
forecast future attributable post-tax cash flows. The equivalent pre-tax discount rates are disclosed above
These assumptions have been used for the analysis of each CGU. Cash flows were projected based on approved
financial budgets and management projections over a five year period. Management determined budgeted gross
margin based on past performance and its expectations for the future. The weighted average growth rates used
are consistent with forecasts included in industry reports. The discount rates used reflect specific risks relating to
the relevant segments.
(c)
Impact of possible changes in key assumptions
20% changes to any of the key assumptions do not indicate impairment for GeoGAS and Software Goodwill.
14.
Trade and Other Payables
Current
Trade payables
Other payables and accruals
Provisions
15.
Current
Onerous sublease contracts
Employee benefits
Non-current
Make good obligations
Onerous sublease contracts
Employee benefits
2017
$'000
2016
$'000
2,071
6,517
8,588
277
3,269
3,546
369
360
816
2,541
2,669
5,210
265
2,784
3,049
352
626
713
1,545
1,691
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SELECTED NOTES TO THE FINANCIAL STATEMENTS
16.
Other Liabilities
Current
Unearned income - software maintenance and licences
Unearned income - consulting and other
Contingent consideration
Deferred consideration
Property lease incentives and straightlining
Non-current
Contingent consideration
Property lease incentives and straightlining
2017
$'000
2016
$'000
10,069
1,823
2,302
274
150
14,620
3,179
342
3,521
6,632
1,778
-
-
70
8,480
-
475
475
17.
Contributed Equity
Share capital
2017
Number
2016
Number
2017
$'000
2016
$'000
Ordinary shares
- fully paid
212,368,012
170,468,892
85,175
67,048
Ordinary Shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in
proportion to the number of and amounts paid on the shares held. On a showing of hands every holder of ordinary
shares present at a meeting, in person or by proxy, is entitled to one vote and upon a poll each share is entitled
to one vote. Ordinary shares have no par value and the Company does not have a limited amount of authorised
capital.
Options
Information relating to the RPMGlobal Holdings Limited Employee Share Option Plan (ESOP), including details of
options issued, exercised and lapsed during the financial year and options outstanding at the end of financial year,
is set out in note 25.
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SELECTED NOTES TO THE FINANCIAL STATEMENTS
Contributed Equity (Continued)
17.
Movements in Share Capital:
Date
30/06/2015
Balance
Share buyback at $0.39 per share
Costs of buyback
30/06/2016
Balance
Shares issued for acquisition of iSolutions
Costs of issue
Ordinary shares
Number
$’000
177,653,062
(7,184,170)
-
170,468,892
9,166,666
69,894
(2,811)
(35)
67,048
3,758
(20)
13,005
(301)
1,722
(39)
3
(1)
212,368,012
85,175
Placement of Shares at $0.45 per share
28,900,000
Costs of issue
Share Purchase Plan at $0.45 per share
3,827,454
Costs of issue
Exercise of Options at $0.56 per share
5,000
Costs of issue
30/07/2017
Capital Risk Management
The Group’s objectives when managing capital include safeguarding the ability to continue as a going concern, so
they continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Group does not
have any externally imposed capital requirements.
Consistent with the industry practice, the Group monitors capital on the basis of the gearing ratio. This ratio is
calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including ‘borrowings’
and ‘trade and other payables’ as shown in the consolidated statement of financial position) less cash and cash
equivalents. Total capital is calculated as ‘equity’ as shown in the statement of financial position plus net debt.
As the Group does not have any debt, the gearing ratios at 30 June 2017 and 30 June 2016 were not applicable:
Total borrowings, trade and other payables
Less: cash and cash equivalents
Net (cash) / debt
Total equity
Total capital
Notes
7
2017
$'000
2016
$'000
14,343
(20,278)
(5,935)
61,233
55,298
5,210
(18,142)
(12,932)
43,654
30,722
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SELECTED NOTES TO THE FINANCIAL STATEMENTS
18.
Reserves and Retained Profits
Reserves
Share-based payments (i)
Foreign currency translation (ii)
Financial assets revaluation reserve (iii)
Revaluation surplus
Reserve arising from an equity transaction (iv)
Nature and Purpose of Reserves
(i)
Share-based payments
2017
$'000
2016
$'000
2,770
(2,630)
(1,601)
18
(1,552)
(2,995)
2,038
(1,916)
(1,601)
18
(1,552)
(3,013)
The fair value of options issued to employees is recognised as an employment cost during the option vesting
period with corresponding increase in equity recognised in this reserve.
(ii)
Foreign currency translation
Exchange differences arising on translation of the foreign controlled entities are taken to the foreign currency
translation reserve, as described in accounting policy note 1(e).
(iii) Financial assets revaluation reserve
Changes in the fair value of investments are recognised in equity securities in other comprehensive income. These
changes are accumulated in a separate reserve within equity. The entity has a policy on transferring amounts from
this reserve to an asset realization reserve.
(iv) Reserve arising from an equity transaction
Arose from the acquisition of an additional interest in the controlled entity, MRM Mining Services (Pty) Ltd.
Movement in Reserves
Balance at 1 July
Options expensed
Foreign currency translation
Balance at 30 June
Share-based payments
2017
$'000
2016
$'000
2,038
732
-
2,770
1,125
913
-
2,038
Foreign Currency
Translation
2017
$'000
(1,916)
-
(714)
(2,630)
2016
$'000
(1,846)
-
(69)
(1,916)
There were no other movements in reserves in 2017 and 2016.
Retained Profits
Balance at 1 July
Net profit / (loss) for the year
Other comprehensive income
Balance at 30 June
2017
$'000
2016
$'000
(20,381)
(44
(43)
(20,380)
(11,118)
(9,263)
-
(20,381)
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SELECTED NOTES TO THE FINANCIAL STATEMENTS
19.
Dividends
Fully paid ordinary shares
Cents per share
Total
2017
Cents
2016
Cents
2017
$'000
2016
$'000
-
-
-
-
No dividend was declared in respect of the current financial year. Parent’s franking account balance is nil (2016:
nil).
20.
Remuneration of Auditors
During the year the following fees were paid or payable for services provided by the auditors of the Group, its
related entities, its network forms and unrelated firms.
Audit services - Audit and review of the financial reports:
2017
2016
Auditor of the parent entity:
BDO Audit Pty Ltd
Auditors of subsidiaries:
BDO South Africa (network firm)
BDO Hong Kong (network firm)
BDO Indonesia (network firm)
$
$
175,500
166,561
27,704
22,236
17,913
23,270
24,461
17,504
243,353
231,796
During the year the company related to the Auditor of the parent entity BDO (QLD) Pty Ltd provided the following
services and received the following fees:
Preparation of Income tax return and other taxation services
12,414
14,725
21.
(a)
Commitments
Non-cancellable Operating Leases
The Group leases various offices under non-cancellable operating leases expiring within one to seven years. The
leases have varying terms, escalation clauses and renewal rights. On renewal the terms of the lease are generally
renegotiated. Excess office space is sub-let to third parties also under non-cancellable operating leases.
Commitments for minimum lease payments in relation to non-cancellable operating leases are payable:
2017
$'000
2016
$'000
Within one year
Later than one year but not later than 5 years
Later than 5 years
Commitments not recognised in the financial statements
2,766
4,301
-
7,067
Sub-lease payments
Future minimum lease payments to be received in relation to non-cancellable sub-leases of operating leases:
Within one year
Later than one year but not later than 5 years
Commitments not recognised in the financial statements
(183)
-
(183)
2,594
5,657
-
8,251
(134)
(30)
(164)
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SELECTED NOTES TO THE FINANCIAL STATEMENTS
22.
Reconciliation of Net Profit to Net Cash Inflow / (outflow) from Operating Activities
Net profit/(loss)
Depreciation and amortisation
Net (gain)/ loss on sale of property, plant and equipment
Impairments and fair value movements
Net exchange differences
Employee share options
Change in operating assets and liabilities
Decrease / (increase) in trade and other receivables
Decrease / (increase) in current tax asset
Decrease / (increase) in deferred tax asset
Decrease / (increase) in work in progress
Decrease / (increase) in other assets
Increase / (decrease) in trade and other payables
Increase / (decrease) in other liabilities
Increase / (decrease) in current tax liabilities
Increase / (decrease) in deferred tax liability
Increase / (decrease) in provisions
Net cash inflow / (outflow) from operating activities
23.
Financial Risk Management
2017
$'000
2016
$'000
44
2,813
34
(367)
11
732
(10,489)
(1)
(538)
(313)
51
2,319
2,414
266
13
(54)
(3,065)
(9,263)
1,879
38
4,055
(82)
913
4,869
(134)
(17)
(323)
-
(2,794)
262
110
17
(326)
(796)
The Group has exposure to the following risks from its use of financial instruments:
•
•
•
credit risk;
liquidity risk; and
market risk.
This note presents information about the Group’s exposure to each of the above risks, the objectives, policies and
processes for measuring and managing risk.
The Board of Directors is ultimately responsible for reviewing, ratifying and monitoring systems of internal
controls and risk management. The Board has established an Audit and Risk Committee, which is responsible for
overseeing risk management systems. The Group’s overall risk management program focuses on the
unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance
of the Group. The Group’s finance division is responsible for development and maintenance of policies which deal
with each type of risk related to use of financial instruments.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
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SELECTED NOTES TO THE FINANCIAL STATEMENTS
23.
Financial Risk Management (Continued)
The Group holds the following financial instruments:
Financial assets
Cash and cash equivalents
Trade and other receivables 1
Financial liabilities
Trade and other payables 2
Contingent and deferred consideration3
1 Loans and receivables
2 At amortised cost
3 At amortised cost and fair value
(a)
Credit Risk
2017
$'000
2016
$'000
20,278
24,814
45,092
8,588
5,755
14,343
18,142
12,648
30,790
5,210
-
5,210
Credit risk is the risk of financial loss to the Group if a customer or a counter party to a financial instrument fails
to meet its contractual obligations and arises principally from the Group’s cash and cash equivalents and its
receivables from customers.
The Group does not require guarantees or collateral of its trade and other receivables. In some foreign regions
the Group works on a prepayment basis to avoid credit risk.
The Group has established an allowance for impairment that represents an estimate of incurred losses in respect
of trade receivables. This allowance is determined based on the specific information regarding conditions of a
particular individual debt. The information regarding the receivables ageing is monitored by both finance and
operations management.
The maximum credit risk exposure of financial assets of the Group is represented by the carrying amounts of
financial assets set out above. The Group had no significant concentrations of credit risk with any single
counterparty or group of counterparties, other than banks or financial institutions. The Group holds its cash with
AA-rated banks, except for the banks located in Brazil (B), China (A), Chile (A), Mongolia (B) and South Africa (BBB).
The Group assesses the credit risk by the country where the debt is located. The maximum exposure to credit risk
for trade receivables at the reporting date by geographic region was:
Australia
Americas
Asia
Africa and Europe
2017
$'000
2016
$'000
4,611
5,507
3,609
11,087
24,814
4,961
3,419
1,877
2,391
12,648
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
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SELECTED NOTES TO THE FINANCIAL STATEMENTS
23.
(a)
Financial Risk Management (Continued)
Credit Risk (Continued)
As at 30 June 2017, trade receivables of $7,059,000 (2016: $4,788,000) were past due but not impaired. These
relate to a number of independent customers for whom there is no recent history of default. The ageing of the
trade receivables past due at the reporting date but not impaired was:
2017
$'000
2016
$'000
Past due less than 30 days
Past due between 31-90 days
Past due more than 90 days
The movement in the provision for impairment of trade receivables was as follows:
Balance at 1 July
Provision no longer required
Unearned Income moved to provision
Impairment loss recognised
Effect of foreign exchange
Balance at 30 June
1,898
2,473
2,687
7,059
2,467
(1,820)
37
470
(140)
1,014
1,253
1,846
1,689
4,788
1,909
(1,021)
177
1,317
85
2,467
The provision for impairment of trade receivables in 2017 and 2016 relates to receivables that are past due for
more than 90 days, which are not considered recoverable.
(b)
Liquidity Risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. 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 regularly reviews cashflow forecasts, maintains sufficient cash on demand and has unutilised
borrowing facilities disclosed in note 23(c) below.
Contractual maturities of the Group’s financial liabilities, including interest thereon, are as follows:
2017
Carrying
amount
Contractual
cash flows
6 mths or
less
6-12 mths
1-2 years
2-5 years
$'000
$'000
$'000
$'000
$'000
$'000
Trade and other payables
Deferred consideration
Contingent consideration
8,588
274
5,481
8,588
274
5,481
8,588
-
2,302
Total
2016
14,343
14,343
10,890
-
274
-
274
-
-
3,179
3,179
Trade and other payables
5,210
5,210
5,210
-
-
-
-
-
-
-
More
than 5
years
$'000
-
-
-
-
-
The Group manages its exposure to interest rate and foreign currency fluctuations through a policy approved by
the Board of Directors. There are no other significant market risks affecting the Group.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
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SELECTED NOTES TO THE FINANCIAL STATEMENTS
Market Risk
(c)
Currency Risk
The current policy is not to take any forward positions. At 30 June 2017 and 30 June 2016 the Group had not
entered into any derivative contracts to hedge these exposures. The Group does not engage in any significant
transactions which are speculative in nature.
As a multinational corporation, the Group maintains operations in foreign countries and as a result of these
activities, the Group is exposed to changes in exchange rates which affect its results of operations and cash flows.
The Group’s exposure to foreign currency risk at balance date expressed in Australian Dollars was as follows:
2017
Cash and deposits
Trade and other receivables
Trade and other payables
Net balance sheet exposure
2016
Cash and deposits
Trade and other receivables
Trade and other payables
Net balance sheet exposure
USD
$’000
CAD
$’000
ZAR
$’000
Other
$’000
Total
$’000
6,625
15,410
(1,075)
20,960
5,097
6,735
(784)
11,048
908
1,139
(175)
1,872
981
1,000
(141)
1,840
3,883
2,046
(717)
5,212
1,159
788
(471)
1,476
1,343
1,456
(390)
2,408
1,810
675
(654)
1,831
12,758
20,050
(2,357)
30,452
9,047
9,198
(2,050)
16,195
A 10 percent strengthening of the Australian dollar against the above currencies at 30 June 2017 based on assets
and liabilities at 30 June 2017 would have increased/(decreased) equity and profit and loss by the amounts shown
below. This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is
performed on the same basis for 2016.
2017
2016
Equity
$'000
Profit/(Loss)
$'000
Equity
$'000
Profit/(Loss)
$'000
(1,398)
(1,654)
(697)
(923)
A 10 percent weakening of the Australian dollar against the above currencies at 30 June 2017 would have had
equal but opposite effect on the above currencies to the amounts shown above.
Interest rate risk
Details of the Group’s borrowing facilities are presented below.
Borrowing
facilities
Other facilities
Bank guarantee
Bank guarantee
Currency
Nominal
interest
rate
2017
2016
Maturity
Facility
$’000
Utilised
$’000
Facility
$’000
Utilised
$’000
AUD
EUR
1.95%
2.50%
n/a
n/a
1,000
70
870
70
1,000
70
925
70
In both 2017 and 2016 financial years bank guarantees were secured by the Group’s term deposits.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
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SELECTED NOTES TO THE FINANCIAL STATEMENTS
23.
Financial Risk Management (Continued)
(d)
Fair Value of financial instruments
Fair value hierarchy
AASB 13 Fair Value Measurement requires disclosure of fair value measurements by level in the fair value
measurement hierarchy as follows:
- Level 1 - the instrument has quoted prices (unadjusted) in active markets for identical assets or liabilities
- Level 2 - a valuation technique is used using inputs other than quoted prices within level 1 that are
observable for the financial instrument, either directly (i.e. as prices), or indirectly (i.e. derived from prices)
- Level 3 - a valuation technique is used using inputs that are not observable based on observable market
data (unobservable inputs).
Recurring fair value measurements
The following financial instruments are subject to recurring fair value measurements:
Contingent consideration – level 3
2017
$'000
2016
$'000
5,481
-
The fair value of the contingent consideration of $5,481,000 has been estimated by calculating the present value
of the future expected cash outflows for the annuity of $5,673,000 based on a discount rate of 4%.
Changes to discount rate by 100 basis points would result in a change of the contingent consideration by $48,000.
Changes to the annuity revenue by 10% would result in change of the contingent consideration by $541,000.
Reconciliation of level 3 movements
The following table sets out the movements in level 3 fair values for contingent consideration payable.
Opening balance 1 July
Recognised on business combination
Payments of contingent consideration
Fair value adjustment – Other Revenue
Closing balance 30 June
Valuation processes for level 3 fair values
2017
$'000
2016
$'000
-
7,087
(1,453)
(153)
5,481
-
-
-
-
-
Valuations are performed every six months to ensure that they are current for the half-year and annual financial
statements. Valuations are reviewed and approved by the audit committee.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
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NOTES ON THE FINANCIAL STATEMENTS
24.
Earnings Per Share
Basic earnings per share
Diluted earnings per share
Earnings used in Calculating Earnings Per Share
Profit / (loss) attributable to the ordinary equity holders used in calculating
earnings per share
Weighted average number of ordinary shares used as the
denominator in calculating basic earnings per share
Dilutive options
Weighted average number of ordinary shares used as the
denominator in calculating diluted earnings per share
25.
Share Based Payments
Tax Exempt Share Plan
2017
Cents
0.02
0.02
2017
$’000
2016
Cents
(5.3)
(5.3)
2016
$’000
44
(9,263)
203,294,989
175,135,174
13,455,432
-
216,750,421
175,135,174
The Employee Share Scheme enables the Board to issue up to $1,000 of shares tax free per employee of the
Group each year.
There were no shares issued under the $1,000 Share Purchase Plan in FY2017 or FY2016.
Eligibility for the tax exempt share plan is approved by the board having regard to individual circumstances and
performance. No directors or key management personnel are eligible for the Tax Exempt Share Plan.
Employee Share Option Plan (ESOP)
The Employee Share Option Plan (ESOP) was approved by the Board of Directors on 5 February 2008, amended
on 7 October 2009, 28 October 2011, 29 October 2013 and most recently on 24 November 2016 following
approval of shareholders at the Company’s 2016 Annual General Meeting.
Eligible participants of the ESOP include any person who is employed by, or is a director, officer or executive (or
their approved permitted nominee), of the Group and whom the Board or its nominee determines is eligible to
participate in the Option Plan. A permitted nominee includes a company controlled by the employee, a trust in
which the employee has, or may have entitlements or such other entity as approved by the Board. Options are
granted at the discretion of the Board of Directors.
All options under the ESOP are to be offered to eligible employees for no consideration. The offer to the eligible
participant must be in writing and specify amongst other things, the number of options for which the eligible
employee may apply, the period within which the options may be exercised, any conditions to be satisfied before
exercise, the option expiry date and the exercise price of the options, as determined by the Board. The Board can
impose any restrictions on the exercise of options as it considers fit.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
|57
For personal use only
NOTES ON THE FINANCIAL STATEMENTS
25.
Share Based Payments (Continued)
The rules of the ESOP plan enable the Board to determine the applicable vesting criteria and to set a timetable
for vesting of options in the offer document, including vesting in tranches over a defined period. The Board has
the discretion on whether or not to set performance hurdles for vesting or to link vesting solely to a defined
service period in order to drive key staff retention and reward longevity of service.
The options may be exercised, in part or full, subject to the employee continuing to be employed at the relevant
vesting dates, by the participant giving a signed notice to the Company and paying the exercise price in full. The
Company will apply for official quotation of any Shares issued on exercise of any options.
The rules of the plan allow the Board to set the exercise price per Option in the offer document.
Subject to the accelerated expiry terms set out in the ESOP plan (explained further below), options will expire five
years after the date of grant subject to the option holder remaining employed by the Group. Unexercised options
will automatically lapse upon expiry. Unless determined otherwise by the Board, in the event of stated events
detailed in the plan, including termination of employment or resignation, redundancy, death or disablement or
in the event of a change of control of an employee’s permitted nominee, unvested options shall lapse and the
expiry date of any vested options will be adjusted in accordance with the accelerated timetables set out in the
ESOP plan rules (subject to the Board’s discretion to extend the term of exercise in restricted cases).
Once shares are allotted upon exercise of the options the participant will hold the shares free of restrictions. The
shares will rank equally for dividends declared on or after the date of issue but will carry no right to receive any
dividend before the date of issue. Should the Company undergo a reorganisation or reconstruction of capital or
any other such change, the terms of the options (including number or exercise price or both) will be
correspondingly changed to the extent necessary to comply with the Listing Rules. With this exception, the terms
for the exercise of each Option remains unchanged. In the event of a change of control of the Company, all options
will vest immediately and may be exercised by the employee (regardless of whether the vesting conditions have
been satisfied). A holder of options is not entitled to participate in dividends, a new or bonus issue of Shares or
other securities made by the Company to Shareholders merely because he or she holds options.
The Options are not transferable, assignable or able to be encumbered, without Board consent and the options
will immediately lapse upon any assignment, transfer or encumbrance, with the exception of certain dealings in
the event of death of the option holder.
The ESOP plan will be administered by the Board which has an absolute discretion to determine appropriate
procedures for its administration and resolve questions of fact or interpretation and formulate terms and
conditions (subject to the Listing Rules) in addition to those set out in the ESOP plan.
The ESOP plan may be terminated or suspended at any time by the Board. The ESOP plan may be amended or
modified at any time by the Board except where the amendment reduces the rights of the holders of options,
unless required by the Corporations Act or the Listing Rules, to correct any manifest error or mistake or for which
the option holder consents. The Board may waive or vary the application of the ESOP plan rules in relation to any
eligible employee at any time.
Employee Benefits expense
Share-based payment expense recognised during the financial year
Options issued under employee option plan
2017
$’000
2016
$’000
732
732
913
913
The vesting conditions attached to the options are set out in the Remuneration Report (20A) of the Directors’
Report.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
|58
For personal use only
NOTES ON THE FINANCIAL STATEMENTS
25.
Share Based Payments (Continued)
Grant
date
2017
Vesting
Expiry
Exercise Number
Granted
Forfeited
Exercised Share Number
date
date
Price
beginning
$
of year
Price
$1
at end
of year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Options granted to management
29/11/13 30/11/14 29/11/18
29/11/13 30/11/15 29/11/18
29/11/13 30/11/16 29/11/18
19/02/14 19/02/15 19/02/19
19/02/14 19/02/16 19/02/19
19/02/14 19/02/17 19/02/19
31/03/14 31/03/15 31/03/19
31/03/14 31/03/16 31/03/19
31/03/14 31/03/17 31/03/19
31/10/14 31/10/15 31/10/19
31/10/14 31/10/16 31/10/19
31/10/14 31/10/17 31/10/19
3/03/15
3/03/16
3/03/20
3/03/15
3/03/17
3/03/20
3/03/15
3/03/18
3/03/20
15/07/15 15/07/16 15/07/20
15/07/15 15/07/17 15/07/20
15/07/15 15/07/18 15/07/20
8/09/15
8/09/16
8/09/20
8/09/15
8/09/17
8/09/20
8/09/15
8/09/18
8/09/20
31/10/15 31/10/16 31/10/20
31/10/15 31/10/17 31/10/20
31/10/15 31/10/18 31/10/20
3/03/16
3/03/17
3/03/21
3/03/16
3/03/18
3/03/21
3/03/16
3/03/19
3/03/21
29/08/16 29/08/17 29/08/21
29/08/16 29/08/18 29/08/21
29/08/16 29/08/19 29/08/21
29/11/16 29/11/17 29/11/21
29/11/16 29/11/18 29/11/21
29/11/16 29/11/19 29/11/21
9/02/17
9/02/18
9/02/22
9/02/17
9/02/19
9/02/22
9/02/17
9/02/20
9/02/22
0.68
0.68
0.68
0.67
0.67
0.67
0.73
0.73
0.73
0.61
0.61
0.61
0.59
0.59
0.59
0.57
0.57
0.57
0.56
0.56
0.56
0.54
0.54
0.54
0.39
0.39
0.39
0.49
0.49
0.49
0.54
0.54
0.54
0.59
0.59
0.59
530,989
531,003
531,008
66,666
66,666
33,334
83,333
83,333
83,334
33,332
33,334
33,334
1,610,643
1,593,977
1,594,046
83,333
83,333
83,334
1,444,976
1,444,976
1,445,048
16,667
16,667
16,666
100,000
100,000
100,000
-
-
-
-
-
-
-
-
(224,998)
(225,000)
(225,002)
(66,666)
(66,666)
(33,334)
-
-
-
-
-
-
(149,998)
(133,332)
(133,336)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
305,991
306,003
306,006
0
0
0
83,333
83,333
83,334
33,332
33,334
33,334
- 1,460,645
- 1,460,645
- 1,460,710
-
-
-
83,333
83,333
83,334
(233,332)
(5,000)
0.61 1,206,644
(233,332)
(233,336)
-
-
-
-
-
-
241,666
(133,334)
241,667
(133,333)
241,667
(133,333)
399,997
399,997
400,006
999,985
999,985
- 1,000,030
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- 1,211,644
- 1,211,712
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16,667
16,667
16,666
100,000
100,000
100,000
108,332
108,334
108,334
399,997
399,997
400,006
999,985
999,985
- 1,000,030
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
|59
For personal use only
NOTES ON THE FINANCIAL STATEMENTS
25.
Share Based Payments (Continued)
Grant
date
2017
Vesting
Expiry
Exercise
Number
Granted
Forfeited
Exercised Share
Number
date
date
Price
beginning
$
of year
Price
$
at end
of year
Options granted to management (cont.)
8/06/17
8/06/18 8/06/22
8/06/17
8/06/19 8/06/22
8/06/17
8/06/20 8/06/22
0.57
0.57
0.57
Total
Weighted average exercise
price, $
113,331
113,331
113,338
113,331
113,331
113,338
11,843,332 5,265,000
(2,358,332)
(5,000)
14,745,000
0.59
0.56
0.60
0.56
0.61
0.58
1 Weighted average share price at the exercise date
Vesting
Expiry
Exercise Number Granted
Forfeited
Exercised Weighted Number
Grant
date
date
date
Price
beginning
$
of year
2016
Options granted to management
29/11/13 30/11/14 29/11/18
29/11/13 30/11/15 29/11/18
29/11/13 30/11/16 29/11/18
19/02/14 19/02/15 19/02/19
19/02/14 19/02/16 19/02/19
19/02/14 19/02/17 19/02/19
31/03/14 31/03/15 31/03/19
31/03/14 31/03/16 31/03/19
31/03/14 31/03/17 31/03/19
31/10/14 31/10/15 31/10/19
31/10/14 31/10/16 31/10/19
31/10/14 31/10/17 31/10/19
3/03/15
3/03/16
3/03/20
3/03/15
3/03/17
3/03/20
3/03/15
3/03/18
3/03/20
15/07/15 15/07/16 15/07/20
15/07/15 15/07/17 15/07/20
15/07/15 15/07/18 15/07/20
8/09/15
8/09/16
8/09/20
8/09/15
8/09/17
8/09/20
8/09/15
8/09/18
8/09/20
0.68
0.68
0.68
0.67
0.67
0.67
0.73
0.73
0.73
0.61
0.61
0.61
0.59
0.59
0.59
0.57
0.57
0.57
0.56
0.56
0.56
575,987
571,004
571,009
116,666
116,666
116,668
83,333
83,333
83,334
33,332
33,334
33,334
1,692,308
1,692,308
1,692,384
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
83,333
83,333
-
83,334
- 1,503,308
- 1,503,308
- 1,503,384
44,998
40,001
40,001
50,000
50,000
83,334
-
-
-
-
-
-
81,665
98,331
98,338
-
-
-
58,332
58,332
58,336
at end
of year
Average
Share
Price
at the exer-
cise date
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
530,989
531,003
531,008
66,666
66,666
33,334
83,333
83,333
83,334
33,332
33,334
33,334
- 1,610,643
- 1,593,977
- 1,594,046
-
-
83,333
83,333
-
83,334
- 1,444,976
- 1,444,976
- 1,445,048
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
|60
For personal use only
NOTES ON THE FINANCIAL STATEMENTS
25.
Share Based Payments (Continued)
Grant
date
date
date
Price
beginning
$
of year
Vesting
Expiry
Exercise Number Granted
Forfeited
Exercised Weighted Number
at end
of year
Average
Share
Price
at the
exer-
cise date
-
-
-
-
-
-
-
-
-
-
-
-
-
16,667
16,667
16,666
100,000
100,000
100,000
- 11,843,332
0.59
Options granted to management (cont.)
31/10/15
31/10/16 31/10/20
31/10/15
31/10/17 31/10/20
31/10/15
31/10/18 31/10/20
3/03/16
3/03/16
3/03/16
Total
3/03/17
3/03/21
3/03/18
3/03/21
3/03/19
3/03/21
0.54
0.54
0.54
0.39
0.39
0.39
-
-
-
-
-
-
16,667
16,667
16,666
100,000
100,000
100,000
-
-
-
-
-
-
7,495,000 5,110,000
(761,668)
Weighted average exercise price
0.62
0.55
0.62
The weighted average remaining contractual life of share options outstanding at the end of the period was 3.4
years (2016: 2.6 years).
The fair values at grant date for the options were estimated using a Trinomial Lattice model which defines the
conditions under which employees are expected to exercise their options after vesting in terms of the stock
price reaching a specified multiple of the exercise price.
The model inputs for options granted during the 2017, 2016, 2015, 2014 financial years included:
Grant
date
Vesting
date
Share
price
$
With market hurdles
14/12/10 31/08/12
14/12/10 31/08/13
14/12/10 31/08/14
With non-market hurdles
14/12/10 31/08/12
14/12/10 31/08/13
14/12/10 31/08/14
1/09/14
29/05/12
1/09/14
3/05/13
26/08/13
1/09/14
29/11/13 30/11/14
29/11/13 30/11/15
29/11/13 30/11/16
19/02/14 19/02/15
19/02/14 19/02/16
19/02/14 19/02/17
31/03/14 31/03/15
31/03/14 31/03/16
31/03/14 31/03/17
0.57
0.57
0.57
0.57
0.57
0.57
0.40
0.60
0.50
0.68
0.68
0.68
0.65
0.65
0.65
0.72
0.72
0.72
Exercise
Expected Weighted
Expected
Risk-free
Fair value
price
volatility
average
dividends
$
0.57
0.57
0.57
0.57
0.57
0.57
0.40
0.40
0.40
0.68
0.68
0.68
0.67
0.67
0.67
0.73
0.73
0.73
%
70
70
70
70
70
70
50
50
38
40
40
40
50
50
50
50
50
50
life, years
%
3.8
3.8
3.8
3.8
3.8
3.8
3.8
3.3
3.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5
5
5
5
5
5
6
4
4
nil
nil
nil
nil
nil
nil
nil
nil
nil
interest
rate1,%
at grant
Date, $
5.31
5.31
5.31
5.31
5.31
5.31
2.60
2.50
2.75
3.44
3.44
3.44
3.42
3.42
3.42
3.44
3.44
3.44
0.20
0.19
0.19
0.24
0.25
0.24
0.12
0.20
0.10
0.21
0.23
0.25
0.22
0.25
0.27
0.24
0.27
0.30
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
|61
For personal use only
NOTES ON THE FINANCIAL STATEMENTS
25.
Share Based Payments (Continued)
Grant
date
Vesting
date
Share
price
$
0.60
0.56
0.56
0.56
0.57
0.57
0.57
0.55
0.55
0.55
0.53
0.53
0.53
0.36
0.36
0.36
0.51
0.51
0.51
0.50
0.50
0.50
0.63
0.63
0.63
0.54
0.54
0.54
Exercise
price
$
0.61
0.59
0.59
0.59
0.57
0.57
0.57
0.56
0.56
0.56
0.54
0.54
0.54
0.39
0.39
0.39
0.49
0.49
0.49
0.54
0.54
0.54
0.59
0.59
0.59
0.57
0.57
0.57
Expected Weighted
average
volatility
life, years
%
5.0
55
5.0
55
5.0
55
5.0
55
5.0
46
5.0
46
5.0
46
5.0
46
5.0
46
5.0
46
5.0
46
5.0
46
5.0
46
5.0
46
5.0
46
5.0
46
5.0
43
5.0
43
5.0
43
5.0
43
5.0
43
5.0
43
5.0
43
5.0
43
5.0
43
5.0
43
5.0
43
5.0
43
Expected
dividends
%
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
Risk-free
interest
rate1,%
2.81
1.84
1.84
1.84
2.29
2.29
2.29
2.04
2.04
2.04
2.04
2.04
2.04
2.08
2.08
2.08
1.57
1.57
1.57
2.16
2.16
2.16
2.12
2.12
2.12
1.95
1.95
1.95
Fair value
at grant
Date, $
0.21
0.19
0.23
0.25
0.18
0.20
0.22
0.17
0.19
0.21
0.17
0.19
0.20
0.10
0.10
0.09
0.13
0.16
0.18
0.11
0.14
0.16
0.17
0.21
0.23
0.12
0.15
0.17
31/10/14 31/10/15
3/03/16
3/03/15
3/03/17
3/03/15
3/03/15
3/03/18
15/07/15 15/07/16
15/07/15 15/07/17
15/07/15 15/07/18
8/09/16
8/09/15
8/09/17
8/09/15
8/09/15
8/09/18
31/10/15 31/10/16
31/10/15 31/10/17
31/10/15 31/10/18
3/03/17
3/03/16
3/03/18
3/03/16
3/03/16
3/03/19
29/08/16 29/08/17
29/08/16 29/08/18
29/08/16 29/08/19
29/11/16 29/11/17
29/11/16 29/11/18
29/11/16 29/11/19
9/02/18
9/02/17
9/02/19
9/02/17
9/02/20
9/02/17
8/06/18
8/06/17
8/06/19
8/06/17
8/06/20
8/06/17
1 based on government bonds
The expected price volatility is based on the historic volatility compared to that of similar listed companies and
the remaining life of the options.
26. Contingent liabilities and contingent assets
On 9 August 2017, RPM received advice from its Russian counsel that a Russian Advisory client had been
awarded approximately $0.8 million in damages, interest and refund of fees previously paid to RPM. RPM’s legal
counsel have recommended that RPM appeal the judgement and the quantum and basis of the award against
RPM. As the matter continues before the courts RPM is not able to provide further details at this time.
There are no other contingent liabilities or contingent assets that require disclosure in the financial report.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
|62
For personal use only
NOTES ON THE FINANCIAL STATEMENTS
27. Parent Entity Disclosures
As at and throughout the financial year ending 30 June 2017 the parent entity of the Group was RPMGlobal
Holdings Limited.
Summary financial information
The individual financial statements for the parent entity show the following aggregation:
Result of parent entity
Profit/(loss)
Other comprehensive income
Total comprehensive income
Financial position of parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of the parent entity comprising of:
Issued capital
Share-based Payments Reserve
Revaluation Surplus Reserve
Reserve Arising From an Equity Transaction
Retained profits
Total equity
Contingent liabilities
Contractual commitments for the acquisition or property, plant or equipment
2017
$000
2016
$000
(2,245)
(8,778)
-
-
(2,245)
(8,778)
51,077
81,557
18,515
19,805
85,175
2,770
18
(600)
(25,611)
61,752
-
-
23,449
57,776
10,669
12,638
67,048
2,038
18
(600)
(23,366)
45,138
-
-
The parent entity has provided guarantees to third parties in relation to the performance and obligations of its
subsidiary, GeoGAS Pty Ltd in respect of property lease rentals. The guarantees are for the terms of the leases
and total $37,125 (2016: $98,000). The periods covered by the guarantees range from two to three years.
No deficiency of net assets existed in the controlled entities covered by guarantees at 30 June 2017 or 30 June
2016. No liability was recognised by the parent entity in relation to these guarantees, as the fair value of the
guarantee is immaterial.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
|63
For personal use only
NOTES ON THE FINANCIAL STATEMENTS
28. Interests in other entities
(a) Material subsidiaries
The Group’s principal subsidiaries at 30 June 2017 are set out below. All subsidiaries have share capital consisting
solely of ordinary shares that are 100% held directly by the Group, and the proportions of ownership interests
held equals the voting rights held by the Group. The country of incorporation or registration is also their principal
place of business.
Name of entity
GeoGAS Pty Ltd
RPM Software Pty Ltd
RPM Advisory Services Pty Ltd
RPM Software International Pty Ltd (previously Runge
Indonesia Technology Pty Ltd)
RPMGlobal USA, Inc.
RPM Software USA, Inc.
RPMGlobal Canada Ltd (previously RungePincockMinarco
(Canada) Limited)
PT RungePincockMinarco
RPMGlobal Asia Limited (previously Runge Asia Limited t/as
RungePincockMinarco)
Core Global Mining Solutions Beijing Co. Ltd
RPMGlobal LLC (previously RungePincockMinarco LLC)
Place of
business/
incorporation
Australia
Australia
Australia
Australia
USA
USA
Canada
Indonesia
Hong Kong
China
Mongolia
Principal Activities
Laboratory Services
Software Sales and Services
Advisory Services
Software Sales and Services
Software and Advisory Services
Software Sales and Services
Software Sales and Services
Advisory Services
Advisory Services
Advisory Services
Advisory Services
CJSC Runge
Russia
Software and Advisory Services
RPMGlobal Africa (Pty) Ltd (previously MRM Mining Services
(Pty) Ltd t/as RungePincockMinarco)
South Africa
RPMGlobal Chile Limitada (previously RungePincockMinarco
Limitada)
RPMGlobal Software Do Brasil Ltda (previously Runge Servios
De Consultoria Do Brasil Ltda)
iSolutions International Pty Ltd
iSolutions Holdings Pty Ltd
RPM Global Turkey Danışmanlık Hizmetleri ve Ticaret A.Ş.
Chile
Brazil
Australia
Australia
Turkey
Software Sales and Services
Software Sales and Services
Software Sales and Services
Software Sales and Services
Software Sales and Services
Advisory Services
All entities other than GeoGAS Pty Ltd trade as RPM and RPMGlobal.
(b) Significant Restrictions
Cash and Short term deposits held in Chile, Brazil, South Africa, China, Indonesia, Mongolia and Russia are subject
to local exchange control regulations. These regulations provide restrictions on exporting capital from those
countries other than through normal trading transactions or dividends.
The carrying amount of cash included within the consolidated financial statements to which these restrictions
apply is $6,682,000 (2016: $5,058,000).
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
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NOTES ON THE FINANCIAL STATEMENTS
28.
Interest in other entities (Continued)
(c) Interests in joint ventures
The Group has a 49% interest in RungePincockMinarco India Pte Ltd, an entity registered in India, which is
accounted for using the equity method.
The Group is in the process of winding up the legal entity in India. The summary of amounts in the reports for this
entity is disclosed below:
Carrying Amount
Group’s share of:
Profit/(loss) from continuing operations
Other comprehensive income
Total comprehensive income
29. Key Management Personnel Disclosures
(a) Compensation
Short term employee benefits
Post-employment benefits
Share-based payments
2017
$'000
2016
$'000
-
-
-
-
26
-
-
-
2017
$
2016
$
3,072,271
2,230,747
105,216
69,680
113,381
229,829
3,247,167
2,573,957
(b) Other Transactions with Key Management Personnel
The Group employs the services of Pitcher Partners Chartered Accountants, an entity associated with Ross
Walker. Pitcher Partners received $31,632 (2016: nil) for advisory and valuation services. Amount payable at year
end is nil (2016: nil).
Aggregate amounts of each of the above types of other transactions with key management personnel of
RPMGlobal Holdings Limited:
Amounts recognised as expense
Professional fees
31,632
31,632
-
-
No other transactions with Key Management personal occurred during the year.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
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NOTES ON THE FINANCIAL STATEMENTS
30. Events occurring after the reporting period
Since 30 June 2017 the Group has agreed to acquire 100% of the issued shares in MineOptima Holdings Limited
and MineOptima Operations Limited (MineOptima). This transaction has not completed as at the date of these
financial statements.
As further detailed in Note 26, on 9 August 2017, RPM received advice from its Russian counsel that a Russian
Advisory Client had been awarded approximately $0.8 million in damages, interest and refund of fees previously
paid to RPM. RPM’s legal counsel have recommended that RPM appeal the judgement and the quantum and basis
of the award against RPM. As the matter continues before the courts RPM is not able to provide further details
at this time.
No other matter or circumstance has arisen since 30 June 2017 that has significantly affected the Group’s
operations, results or state of affairs, or may do so in the future years.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
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DIRECTORS’ DECLARATION
In the directors' opinion:
•
•
•
•
•
the attached financial statements and notes thereto comply with the Corporations Act 2001, the
Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements;
the attached financial statements and notes thereto comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board as described in note 1 (a) to the
financial statements;
the attached financial statements and notes thereto give a true and fair view of the consolidated entity's
financial position as at 30 June 2017 and of its performance for the financial year ended on that date;
the remuneration disclosures included in pages 14 to 21 of the directors’ report (as part of audited
Remuneration Report), for the year ended 30 June 2017, comply with section 300A of the Corporations
Act 2001; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors
Allan Brackin,
Chairman
Dated this 28 day of August 2017
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
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Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek St
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of RPMGlobal Holdings Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of RPMGlobal Holdings Limited (the Company) and its subsidiaries
(the Group), which comprises the consolidated statement of financial position as at 30 June 2017, the
consolidated statement of comprehensive income, the consolidated statement of changes in equity and
the consolidated statement of cash flows for the year then ended, and notes to the financial report,
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:
(i)
(ii)
Giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its
financial performance for the year ended on that date; and
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 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 confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
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 period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional
Standards Legislation, other than for the acts or omissions of financial services licensees.
For personal use only
Acquisition of iSolutions
Key audit matter
How the matter was addressed in our audit
The Group’s disclosures about the acquisition of
Our audit procedures included, amongst others:
iSolutions are included in Note 3, which details the
accounting treatment of the acquisition and the
determination of the fair value of the assets and
liabilities acquired.
The acquisition of iSolutions is a key audit matter due
to the significance of the consideration (purchase
consideration of $19,909,000 including contingent
consideration of $7,087,000) and the complexity of
the allocation of the purchase price to identifiable
intangible assets.
•
•
Assessing management’s determination of
whether the acquisition was a business
combination or an asset acquisition
Challenging management’s calculation of
contingent consideration in accordance with
requirements of AASB 3 Business
Combinations. This involved evaluating the
assumptions and inputs applied to the
contingent consideration including those
relating to expected maintenance invoicing,
Management have completed a process to determine
discount rates, customer attrition rates and
the purchase consideration and the fair value of the
growth rates and evaluating the
identifiable net assets acquired, including software
mathematical accuracy of the model used
and customer relationships and the allocation of the
difference to goodwill. This process involved
estimation and judgement to calculate both the
contingent consideration and the fair value of
identified intangible assets.
•
Evaluating management’s assessment of the
fair value of the identifiable assets and
liabilities acquired including:
o Obtaining management's external
valuation of the identifiable assets and
liabilities acquired
o Assessing the professional competence and
objectivity of the valuer
o
Evaluating the appropriateness of the
methods and assumptions used
o Challenging management in relation to the
inputs and assumptions used by the valuer
o Providing the external valuation to BDO’s
internal experts to assess the
reasonableness of the structure and
assumptions applied in the model
including the discount rate.
•
Assessing the disclosures related to the
acquisition by comparing these disclosures to
our understanding of the matter and the
applicable accounting standards.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional
Standards Legislation, other than for the acts or omissions of financial services licensees.
For personal use only
Carrying Value of Goodwill – Impairment Assessment
Key audit matter
How the matter was addressed in our audit
The Group’s disclosures about goodwill impairment are
Our audit procedures included, amongst others:
included in Note 13, which details the allocation of
goodwill to the groups various Cash Generating Units
(CGU’s), sets out the key assumptions for value-in-use
calculations and the impact of possible changes in
these assumptions.
This annual impairment test was significant to our
audit because the balance of $26,533,000 as of 30 June
2017 is material to the financial statements.
In addition, management’s assessment process is
complex, highly judgmental and is based on
assumptions such as margins, growth rates, and
discount rates that are affected by expected future
market or economic conditions.
• Obtaining an understanding of the 'Value in
Use' models and critically evaluating
management's methodologies and their key
assumptions
•
•
•
•
Assessing management’s allocation of
goodwill and assets and liabilities, including
corporate assets to CGU's
Evaluating the inputs used in the value in use
calculation including the growth rates,
discount rates and underlying cash flows
applied by management
Involving our internal specialists to assess the
discount rates and terminal growth rates
against comparable market information
Assessing the disclosures related to the
goodwill and the impairment assessment by
comparing these disclosures to our
understanding of the matter and the
applicable accounting standards.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional
Standards Legislation, other than for the acts or omissions of financial services licensees.
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Revenue Recognition
Key audit matter
How the matter was addressed in our audit
The group generates revenue from multiple streams
Our audit procedures included:
including software sales & maintenance services as
disclosed in Note 1 (f).
The amount of revenue recognised during the year for
software sales is dependent on the appropriate
identification on the timing of transfer of the
significant risks and rewards of ownership to the buyer.
•
•
Assessing the Group’s revenue recognition
policy’s for compliance with Australian
Accounting Standards
Selecting a sample of license sales,
maintenance services and consulting fees
recognised as revenue in the general ledger
The amount of revenue recognised for maintenance
and agreeing to supporting invoices, signed
services is dependent on identifying the maintenance
customer contracts and proof of delivery
portion and period in each sales contract.
where applicable
In our view, revenue recognition is significant to our
•
Evaluating whether a significant transaction
audit due to the significance of revenue to the
that had been entered into by the group met
financial report and the complex nature of accounting
the requirements to be recognised as a sale
for the appropriate timing of revenue related to the
at 30 June 2017 and assessing the allocation
sale of software and related maintenance services.
of the transaction price between the various
elements of the transaction being the sale of
licenses, upgrade protection and
reconfiguration right. This included
assessment of whether the significant risks
and rewards of ownership had passed to the
buyer given the existence of the
reconfiguration right
• Obtaining and evaluating credit notes issued
post year end and the first and last invoices
issued post and pre year end, to ensure an
appropriate cut-off was achieved at balance
date
•
•
Analytical review procedures on all
significant revenue streams on a
disaggregated basis and against expected
trends and prior year
Selecting a sample of receipts and
maintenance invoices from the clients’
income in advance schedule and
recalculating the appropriate deferred
portion of maintenance revenue.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional
Standards Legislation, other than for the acts or omissions of financial services licensees.
For personal use only
Recognition of Deferred Tax Assets
Key audit matter
How the matter was addressed in our audit
Refer to Note 7.
Our audit procedures included:
The Group’s recognised net deferred tax assets of
$8,597,000 at 30 June 2017 which includes temporary
differences and brought forward tax losses.
Australian Accounting Standards require deferred tax
assets to be recognised only to the extent that it is
probable that sufficient future taxable profits will be
generated in order for the benefits of the deferred tax
assets to be realised. These benefits are realised by
reducing tax payable in future taxable profits.
This was a key audit matter as the assessment of the
future taxable profits involves judgement by
management.
•
•
•
•
Evaluating managements forecast of future
taxable profits and assessing whether it is
probable that there will be sufficient future
profits to utilise the deferred tax assets
recognised
Assessing the key assumptions used in the
forecast period including revenue,
expenditure and growth rates applied against
actual results achieved
Comparing the taxable income generated for
the year ended 30 June 2017 with the
forecast taxable income provided during the
30 June 2016 audit
Assessing the disclosures related to the
recognition of the deferred tax assets and
unrecognised deferred tax assets
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2017, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and 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
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.
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.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional
Standards Legislation, other than for the acts or omissions of financial services licensees.
For personal use only
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.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 14 to 22 of the directors’ report for the
year ended 30 June 2017.
In our opinion, the Remuneration Report of RPMGlobal Holdings Limited, for the year ended 30 June
2017, 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.
BDO Audit Pty Ltd
T R Mann
Director
Brisbane, 28 August 2017
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional
Standards Legislation, other than for the acts or omissions of financial services licensees.
For personal use only
CORPORATE GOVERNANCE STATEMENT
Corporate Governance Statement – Year Ended 30 June 2017
The Board and Management consider that it is crucial to the Group’s long term performance and sustainability
and to protect and enhance the interests of the Company’s shareholders and other stakeholders, that it adopts
an appropriate corporate governance framework pursuant to which the Company and its related companies
globally will conduct its operations in Australia and internationally with integrity, accountability and in a
transparent and open manner.
The Company regularly reviews its governance arrangements as well as developments in market practice,
expectations and regulation.
The Company’s Corporate Governance Statement has been approved by the Board of RPMGlobal Holdings
Limited and explains how the Group addresses the requirements of the Corporations Act 2001, the ASX Listing
‘Corporate Governance Principles and
Rules 2001 and the ASX Corporate Governance Council’s
Recommendations - 3rd Edition’ (the ‘ASX Principles and Recommendations’) and is current as at 30 June 2017.
The Company’s ASX Appendix 4G, which is a checklist cross-referencing the ASX Principles and Recommendations
to the relevant disclosures in the statement Corporate Governance Statement, the Company’s 2017 Annual
Report and other relevance governance documents and materials on the Company’s website, are provided in the
corporate governance section of the Company’s website at http://www.rpmglobal.com/about-us/investor-
centre/corporate-governance/. The Company’s Corporate Governance Statement together with the ASX
Appendix 4G and this Annual Report, were also lodged with the ASX on 28 August 2017.
The Board of the Company strives to meet the highest standards of Corporate Governance, but recognises that it
is also crucial that the Company’s governance framework appropriately reflects the current size, operations and
industry in which the Company operates.
The Company has complied with the majority of recommendations of the ASX Principles and Recommendations
with the exception of a few. The Board believes the areas of non-conformance, which are explained in the
Corporate Governance Statement and the ASX Appendix 4G do not materially impact on the Company’s ability to
achieve the highest standards of Corporate Governance, whilst at the same time ensuring the Company is able to
achieve the expectations of its shareholders and other stakeholders.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
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SHAREHOLDER INFORMATION
The shareholder information set out below was applicable as at 18 August 2017.
A.
Distribution of Equity Securities
Analysis of number of equity security holders by size of holding:
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
Ordinary Shares
Options
80
275
143
267
111
876
-
-
2
45
32
79
The number of shareholdings held in less than marketable parcels of 715 shares is 72 (Close Price 18 August
$0.70).
B.
Equity Security Holders
The names of the twenty largest holders of quoted equity securities are listed below:
Name
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMINEES PTY LTD
RUNGE INTERNATIONAL PTY LTD
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
PAUA PTY LTD
ONE MANAGED INVESTMENT FUNDS LIMITED
ELGIE INVESTMENTS PTY LTD
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
FEYDER INVESTMENTS PTY LTD
CITICORP NOMINEES PTY LIMITED
MR STEPHEN JOHN BALDWIN + MRS ANDREA MAREE BALDWIN
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LTD
MR JOHN CRAIG HALLIDAY
BNP PARIBAS NOMS PTY LTD
THE RIDGE NZ PTY LTD
MS TRACY ROWLANDS
BOND STREET CUSTODIANS LIMITED
MRS DONNA MARGARET LUXTON
Number held
Percentage
of issued
47,230,404
25,053,772
16,678,366
15,810,389
13,328,680
10,826,897
6,795,753
5,348,100
4,604,416
4,182,055
2,889,333
2,817,055
2,642,511
2,300,000
2,247,653
1,676,952
1,424,385
1,234,891
1,161,804
1,123,001
22.23
11.79
7.85
7.44
6.27
5.10
3.20
2.52
2.17
1.97
1.36
1.33
1.24
1.08
1.06
0.79
0.67
0.58
0.55
0.53
Unquoted equity securities
14,250,000 options over unissued shares (as at the date of this report): for further details see note 25.
169,376,417
79.74
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
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SHAREHOLDER INFORMATION
C.
Substantial Holders
The names of the substantial shareholders listed in the holding register as at 30 June 2017 are:
Estimated beneficial holdings as at 31 July 2017
Number held
Percentage
Ruffer LLP
IOOF Holdings Limited (Perennial Value)
Discovery Asset Management Pty Ltd
Paradice Investment Management
Runge International Pty Ltd (Ian Runge)
D.
Voting Rights
Refer to note 17 for voting rights attached to ordinary shares.
26,766,010
26,278,596
16,850,218
16,750,850
16,368,817
12.60
12.37
7.93
7.89
7.71
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
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CORPORATE DIRECTORY
Directors
Allan Brackin
Chairman
Richard Mathews
Managing Director
Dr Ian Runge
Non-executive Director
Ross Walker
Non-executive Director
Company Secretary
Registered Office
Level 2, 295 Ann Street
Brisbane QLD 4000
Ph:
+61 7 3100 7200
Fax: +61 7 3100 7297
Web: www.rpmglobal.com
Auditor
BDO Audit Pty Ltd
Level 10, 12 Creek St
Brisbane QLD 4000
Share Registry
Computershare Investor Services Pty Limited
117 Victoria Street
West End QLD 4101
James O’Neill
Group General Counsel and Company Secretary
Stock Exchange Listing
The Company is listed on the Australian Securities
Exchange Limited (ASX: RUL)
ABN 17 010 672 321
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2017
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Level 2, 295 Ann St, Brisbane QLD 4000
P: +61 7 3100 7200 F: +61 7 3100 7297
www.rpmglobal.com
For personal use only