ANNUAL REPORT
2018
For personal use only
RPMGlobal Holdings Limited
ABN 17 010 672 321
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 our business
continue to execute on its strategy of being the
leading provider of world class technology
solutions to the mining industry. At the same
time we have not lost focus on the value and
strength of our Advisory and GeoGAS
businesses which both continue to perform at
a very high level.
Revenue from our Advisory division grew
increased
strongly during the year with
utilisation of our professional staff. In the
second half of Financial Year 2018 (FY2018)
this division started
to add additional
headcount and capability. While pricing
remained competitive in the low to medium
sized projects, clients recognise value for
transactional and complex multi-asset projects
(which we specialise in).
The GeoGAS division also grew strongly during
the year as the number of coal gas tests for
both compliance and exploration increased
year on year.
We expect to see continued improvement in
both of these divisions in Financial Year 2019
(FY2019) assuming commodity prices remain
at current levels.
software
investment by RPM
FY2018 was another year of above industry
average
in software
development. This investment delivered two
products
new
(Underground Metals and Steeply Dipping
Coal) as well as significant enhancements to
RPM’s Enterprise,
Simulation,
Scheduling, Execution and Asset Maintenance
suite of products.
scheduling
Financial,
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 our strategic move away from the
desktop and up into the enterprise was the
right one.
The breadth and depth of our software
offering along with the innovative nature of
them has seen 25 new customers start to use
our software for the first time in FY2018. While
all of these customers have purchased
software modules to address a specific need,
we hope that over time they will purchase and
roll out our full suite of integrated products.
In Financial Year 2017 (FY2017) the Company
raised capital to provide RPM with the capacity
to continue to expand the business through
further investments in its software products,
including potential
acquisition
opportunities to accelerate the delivery of
these solutions for our customers.
strategic
Consistent with that objective, the capital
raised in the prior year enabled the Company
to achieve the following in FY2018:
Acquire MineOptima, a private Australian
company with more than 20 years’
experience developing software
applications, which are recognised as the
standard in the industry, for designing the
optimal equipment access layouts for
underground mines.
Acquire MinVu, a private Australian
company who, during the past 18 years,
has become the industry’s leading
provider of mine-wide operational
reporting and analytics software
solutions.
RPM maintains a strong balance sheet with
over $23 million of cash in the bank (as at 30
June 2018) and no debt. During FY2018 the
Company paid out the post completion
payments for the iSolutions acquisition and
cash considerations for both the MineOptima
and MinVu acquisitions.
On 30 June, Dr. Ian Runge announced his
retirement as a non-executive director 41
years after founding the company (then
Runge Associates) in 1977. Ian’s worldwide
knowledge of mining, insights into the culture
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CHAIRMAN’S REPORT
of the industry and of particular companies in
the industry, has been invaluable to the Board
and on behalf of my fellow directors and all
RPM staff and customers we all wish Ian the
very best in his retirement and in furthering
his interests in the economics side of the
mining industry.
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
perform especially well. The Board is
particularly pleased with 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 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 2019
and beyond.
Allan Brackin
Chairman
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MANAGING DIRECTOR’S REPORT
Market Commentary
High Level Financial Results
Pleasingly for the industry commodity prices
remained relatively stable during FY2018.
Mining companies that have been able to
reduce their cost structure over the last five
years, are now reporting solid profits and are
starting
replacing and
expanding their reserves.
think about
to
The number of new brownfield expansions has
increased along with an increase in exploration
and drilling expenditure.
Miners are reporting that the cost of mining is
starting to rise again as labour shortages
combined with increasing service provider
costs start to impact on capital and operational
costs.
While we are expecting mining companies to
stay focused on keeping their operational costs
as low as possible, at some stage they will have
to increase their capital expenditure in order to
maintain and replace production capacity.
From a mining technology perspective, while
there have been numerous articles written
about
the next wave of productivity
improvements in the mining industry being
delivered through software innovation and
integration, the mining companies themselves
remain slow to embrace change.
Mining companies prefer to be “fast followers”
rather than “innovators” and “test pilots”,
however, once you can demonstrate the value
associated with change they will, we believe,
welcome it.
By way of an example, we are seeing a real
interest by miners and mining contractors in
projecting the cost of maintenance across the
lifecycle of their entire mobile mining fleet and
identifying potential strategies to reduce their
maintenance cost.
This focus resulted in a strong rise in our asset
maintenance software sales during the year.
Net revenue for the year increased by $0.8
million to $67.6 million (FY2017: $66.8 million).
increased
in
The company
Research and Development by $1.2 million to
$14.0 million (FY2017: $12.8 million).
investment
its
EBITDA for the full year finished at $4.4
million down $0.2 million on the previous
year’s result ($4.6 million).
Software Division
In FY2018 the company reported a decrease in
software license revenue of $9.8 million to
$13.6 million (FY2017: $23.4 million).
It is worth noting in that comparison almost
50% of software license revenue in FY2017 was
attributable to one singular customer. In
FY2018, this customer turned their focus from
procuring RPM software (through a number of
in FY2017) to
large software transactions
implementing various RPM software products
into 17 of its operating businesses during
financial year 2018. We expect this customer
to continue to purchase additional software
products during FY2019.
Excluding this single customer, the company
sold $12.9 million of software license revenue
to all other customers (FY2017: $12.4 million)
which represents a 4% increase over the prior
year.
In October 2017 the company announced that
it would
introduce a subscription pricing
option whilst maintaining its existing perpetual
offering. As a direct result of this decision the
company has for the first time reported
subscription revenue as a separate line item.
in FY2018 was $0.8
Subscription revenue
million (FY2017: $0.5 million).
The current run rate of monthly subscription
revenue is now $135,000.
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MANAGING DIRECTOR’S REPORT
Ensuring customers receive high quality and
local support during and after a
timely
software implementation project continues to
be a focus for the company. As a result, the
company
registered new wholly owned
subsidiaries in both Kazakhstan and Colombia
during the year.
Software support revenue finished the year at
$19.6 million (FY2017: $17.3 million) a 13%
year on year increase.
The company recorded software consulting
revenue of $10.7 million in FY2018 (FY2017:
$9.0 million) a 19% increase over the previous
year.
FY2018 again saw the company continue to
invest heavily in its software business with
$14.0 million (FY2017: $12.8 million) invested
in internal software development, all of which
was expensed in the year it was incurred. This
we believe, will provide significant benefit over
the next few years as these new products and
enhancements attract new customers.
The acquisition of the AMT product suite
continues to outperform our expectations. As
a result of this growth we have increased the
earn out provision in our financial statements
to the outgoing iSolutions shareholders which
is not something that you see very often in
software acquisitions.
At the start of the year we released our
Underground Metals solution. We now have a
customer who has fully implemented this new
product into four of their underground mines.
This is an important product for us as it fills
what was previously a large gap in our product
offering. We are in the final development
cycles of incorporating Stope Optimiser and
Decline
into
Underground Metals which will significantly
improve the competiveness of this product.
functionality
Optimiser
In late April 2018 we released our new Steeply
Dipping Coal Solution and have already sold
this solution to two large mining companies
who will each pilot the solution in their
operating mines. This product is focused on a
market niche which, to our knowledge, has not
been specifically addressed by any technical
software vendor given
complexity
associated with steeply dipping coal seams.
We have high expectations for this solution
given customer feedback to date.
the
The acquisition of MinVu continues our push
into the shift operations of mining companies.
Customers use the MinVu products to make
operational decisions on a real time basis. It is
clear (having owned the Minvu business for six
months now) that MinVu customers are
fiercely loyal and thoroughly committed to this
product set. We expect that our global reach
will see the MinVu products grow strongly in a
similar manner to that experienced following
our acquisition of the AMT product from
iSolutions.
list of
We are quickly realising the benefits from the
extensive
integration application
program interfaces (API’s) included in the
MinVu acquisition as we continue to integrate
our products with other large technology
providers to the mining industry.
Advisory Division
Demand for our mining advisory services
increased significantly during FY2018. This
division is now positively contributing to the
financial results of the business. There is no
doubt that resisting the urge to compete for
lower and risker projects during the downturn
and instead focusing on delivering the highest
quality services (sometimes with little financial
return), was the right approach.
reputation
Our advisory division’s
for
independent assessment and financier due
diligence roles remains second to none, which
positions us well for the larger and more
complex projects now being evaluated by the
finance community.
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MANAGING DIRECTOR’S REPORT
Our mining advisory market share again
increased during FY2018, particularly in the
metals space where we believe we are now
one of the top suppliers of advisory services in
that sector of the industry. We continue to
remain the clear leader in the coal space.
The Advisory team continue to be engaged to
provide advice on the larger Merger and
Acquisition activities and IPO’s, most of which
are sourced from North Asian clients for assets
right across the globe.
Our previously reported dispute with a Russian
mining company (which dates back to June
2015) continues to work its way through the
Russian court system. The Russian litigation
provision of $0.3 million which was taken up in
the second half of the 2018 financial year
relates solely to this legal process.
GeoGAS Division
coal
industry has seen a real pickup
The
in
and
underground
development as a result of coal prices for both
thermal coal and coking coal remaining
relativity high by historical standards.
exploration
Underground Coal miners are beginning to
invest again in increasing the size of their
longwall float (buffer between development
activities and operational mining). There are
only two ways to increase a longwall float - do
more development work (exploration) or stop
production - which given the current prices is
unlikely to happen.
increase
The ramp up in coal exploration has resulted in
in coal gas testing
a significant
undertaken by our two laboratories in Mackay
(Queensland) and Wollongong (New South
Wales). Given the variable cost structure of
this division, as the number of tests increases,
so does the margin per test.
Whilst coal prices stay strong we expect the
laboratories to remain busy.
Company Expenses
Operating expenses (excluding Research and
Development costs) for the full year came in at
$49.2 million, $0.2 million lower than FY2017
($49.4 million). The FY2018 number includes
$0.7 million in costs attributable to the MinVu
business which was acquired at the start of
February 2018.
No one off restructuring costs were reported in
the 2018 financial accounts (FY2017: $0.8
million)
Net cash inflows from operations during the
2018 financial year was $7.0 million (FY2017:
outflows of $3.0 million).
Future Outlook
While commodity prices remain stable we
expect to see growth in our Advisory and
GeoGAS divisions.
We also expect to see growth in our software
support, software consulting and software
subscriptions revenues in FY2019.
It is always difficult to predict how much
software license revenue the company will
book early in the year, given this revenue line
is always backend loaded. We note that over
the last 12 months, the company has:
Invested $14.0 million internally in
software development
Fully integrated the MinVu business
intellectual property
Acquired the
rights to the MineOptima suite of
products,
two
scheduling
Released
solutions (Underground Metals and
Steeply Dipping Coal), and
new
software
24 major
Completed
upgrades and 51 major functional
upgrades
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MANAGING DIRECTOR’S REPORT
All of which provide us with a more complete
and richer set of software products than we
had this time last year. As such, we remain
enthusiastic about the potential for our
software products to become the software of
choice for the mining industry.
It is also clear that the competitive advantage
that our asset maintenance products have in
the heavy mobile equipment space, can also
cross-over
intensive
industries.
into other
asset
Richard Mathews
Managing Director and Chief Executive Officer
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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 2018.
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 – retired effective 30 June 2018
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
Net revenue in the 2018 financial year grew by 1.2% to $67.6 million (2017: $66.8 million). Whilst Advisory and
GeoGAS revenues increased by 17.2% and 43.8% respectively, Software revenue decreased by 11.2%.
Software
- Licence Sales One Customer
- Licence Sales – Other Customers
- Licence subscriptions
- Maintenance
- Consulting
Total Software
Advisory
GeoGAS
Other Revenue
Total Revenue
Direct Costs
Net Revenue
2018
$m
0.7
12.9
0.8
19.6
10.7
44.7
23.9
4.6
0.5
73.7
(6.1)
67.6
2017
$m
11.0
12.4
0.5
17.3
9.0
50.2
20.4
3.2
1.0
74.8
(8.0)
66.8
Change
%
(93.6%)
4.0%
60.0%
13.3%
18.9%
(11.2%)
17.2%
43.8%
(50.0%)
(1.5%)
(23.8%)
1.2%
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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
Russian Litigation Provision
iSolutions Earn out Provision
Net Finance (costs)/income
Profit/(Loss) before income tax
Income tax benefit/(expense)
Profit/(Loss)
Earnings Per Share (cents per share)
2018
$m
67.6
(63.2)
4.4
(3.4)
-
-
(0.3)
(0.3)
0.2
0.6
(0.4)
0.2
0.11
2017
$m
66.8
(62.2)
4.6
(2.8)
(0.8)
(0.4)
-
-
0.2
0.8
(0.8)
-
0.02
Change
%
1.2%
1.6%
(4.3%)
21.4%
-
-
-
-
0.0%
(25.0%)
(50.0%)
-
450%
1 Earnings before Interest, Tax, Depreciation, Amortisation, Impairment, Litigation provisions and Redundancies is a non-IFRS
disclosure. In the opinion of the Directors, the Group’s EBITDA reflects the results generated from ongoing operating
activities and is calculated in accordance with AICD/Finsia principles. The non-operating adjustments outlined above are
considered to be non-cash and/or non-recurring in nature. These items are included in the Group’s consolidated statutory
result but excluded from the underlying result. EBITDA has not been audited or reviewed.
Improved performances from Advisory, GeoGAS, Software consulting and support offset a $10.3 million decrease
in software license revenue year-on-year from one global customer.
Investment in Research and Development (which are all expensed) grew $1.2 million (9%) to finish the year at $14.0
million (2017: $12.8 million).
As a result of this investment EBITDA (Earnings before Interest, Tax, Depreciation, Amortisation, Litigation and
Redundancies) reduced by $0.2 million to $4.4 million (2017: $4.6 million).The Group produced $7.0 million net
operating cashflow and had cash reserves of $23.3 million (2017: $20.3 million) and no bank debt at the end of the
financial year.
During the year the Group paid out $4.1 million for software acquisitions and earn-out payments for prior
acquisitions.
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.
Net Software revenue decreased by 11.2%.
As detailed in the 2017 Annual Report, in 2017 the company sold and recognised $11.0 million of revenue derived
from software sold to one global customer and also held $2.8 million in deferred revenue against that same
customer who purchased and paid for the software licences in advance of them being deployed.
In 2018, the company recognised $0.7 million out of the $2.8 million in revenue deferred last year and still carries
$2.1 million on the balance sheet in deferred revenue against this customer.
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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 $14.0 million which included $0.7 million of costs attributable to the
MinVu acquisition. The major development projects during Financial Year 2018 included:
Follow-on enhancements to Underground Metals
Development of the Steeply Dipping Coal Solution
Redevelopment of the AMT integration adaptors
In October 2017 the Company announced that it would offer customers purchasing software licences a subscription
option alongside a traditional perpetual license offering for their consideration. Recurring software subscriptions
recognised in the year increased to $0.8 million, compared to $0.5 million in the prior year. Currently the Group
receives $135,000 per month in committed and recurring subscription licence revenue.
On 31 August 2017 the Group concluded its acquisition of MineOptima.
On 31 January 2018 the Company acquired the MinVu business.
The company welcomed 25 customers who purchased RPM software for the first time. We expect these customers
to expand their use of our software as they become more familiar with our suite of integrated products.
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 grew by 17% to $23.9 million (2017: $20.4 million).
The company has taken up a provision of $0.3 million during the year towards the approximately $0.8 million
damages order awarded against RPM’s Russian subsidiary CJSC Runge in August 2017. This matter, the
background of which was detailed in the 2017 Annual Report, remains under appeal before the courts and as
such RPM is not able to provide further details at this time.
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 increased by 44% to $4.6 million (2017: $3.2 million).
Operating Expenses
Total Operating expenses increased by 1.6% ($1.0 million) to $63.2 million during the year (2017: $62.2 million).
Software Development costs were $14.0 million a $1.2 million increase on the previous year (2017: $12.8 million).
5.
Likely Future Developments - Business Strategies and Prospects for Future Financial Years
Software Division
As a Board and management team we remain fully invested in growing our suite of software products.
In 2019 we will complete the last of our dedicated scheduling solutions when we release our fully upgraded
Underground Coal solution. This will bring to an end a seven year development programme during which we will
have developed and released 10 commodity based scheduling solutions each one addressing a different mining
method.
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DIRECTORS’ REPORT
5.
Likely Future Developments - Business Strategies and Prospects for Future Financial Years (Continued)
Software Division (Continued)
We also expect to complete the final key functional feature for XERAS enterprise which will again conclude a six
year development programme.
During Financial Year 2019 we will merge Operations Manager into MinVu Shift Manager. The company will
continue to expand its shift operations functionality and operational reporting.
We now have the majority of the integration adapters that we need to provide a comprehensive enterprise
integration framework to our customers. 2019 will see us bundle up additional complementary adapters based on
business processes and vendor configurations.
Continuing to build on the strong foundations of the past five years, which have seen us deliver innovative
enterprise applications to the mining industry we look forward to further extending our suite of products and
services as opportunities present themselves.
It has now been eight months since we started to offer subscription style agreements to customers who are looking
to purchase our software and during that time we have learnt a lot about how to best structure these agreements
in a mining environment with respect to the most appropriate metrics to use. As we move our sales representatives
across to subscription type commission plans we would expect to see a greater percentage of subscription license
sold in 2019 than was sold in 2018.
Advisory and GeoGAS
The near term outlook for these businesses remains positive. We remain 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. The
division continues to expand its service offerings to leverage the value provided by our existing and recently
acquired software products in order to assist its clients with operational advisory demand. We continue to see the
value of advisory as a great introducer to RPM’s software offerings.
With respect to our GeoGAS business, if coal prices remain firm we are very confident this division will have another
great year. We are looking at expanding the products and services that this division provides to the industry during
2019.
6.
Legal Proceedings on Behalf of the Group
No person has applied for leave of the 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
No matter or circumstance has arisen since 30 June 2018 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
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. 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: Wagners Holding
Company Limited since its IPO in December 2017
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: None in the last three
years. Richard is a director on the Telstra Health Pty Ltd Board and also
previously sat on the Board of METS Ignited.
Special
responsibilities
Chairman
Member and
Chairman – HR and
Remuneration
Committee
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
Dr Ian Runge who was a non-executive director for Financial Year 2018 retired effective 30 June 2018.
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).
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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 2018 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 1
Ross Walker
Richard Mathews
9
9
9
9
9
9
9
9
5
5
5
-
5
5
5
-
1
-
1
-
1
-
1
-
1 Dr Ian Runge who was a non-executive director for the Financial Year 2018 retired effective 30 June 2018.
11.
Indemnity and Insurance of Officers
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
15/07/20151
08/09/20151
31/10/2015
29/08/2016
29/11/2016
09/02/20171
08/06/2017
19/09/20171
1/10/20171
15/03/2018
Expiry date
29/11/2018
31/03/2019
31/10/2019
03/03/2020
15/07/2020
08/09/2020
31/10/2020
29/08/2021
29/11/2021
09/02/2022
08/06/2022
19/09/2022
31/10/2022
15/03/2023
Issue price of shares
$0.68
$0.73
$0.61
$0.59
$0.57
$0.56
$0.54
$0.49
$0.54
$0.59
$0.57
$0.67
$0.77
$0.67
Number under option
893,000
250,000
100,000
3,918,500
250,000
3,163,332
50,000
125,000
900,000
2,786,665
290,000
200,000
3,480,000
620,000
17,026,497
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.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
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DIRECTORS’ REPORT
13.
Shares issued on the exercise of options
During the year 178,332 shares have been issued following exercise of the options granted on 8 September 2015,
100,000 shares have been issued following exercise of the options granted on 3 March 2016 and 293,498 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
2018
$
2017
$
Preparation of Income tax return and other taxation services
8,117
12,414
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 23.
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 1
R Walker
R Mathews 2
RPMGlobal Holdings Limited
Ordinary
shares
1,098,311
16,368,817
958,333
8,220,138
Options over
ordinary shares
-
-
-
-
1 Dr Ian Runge who was a non-executive director for Financial Year 2018 retired effective 30 June 2018.
2 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.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
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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 Manager of the Advisory Division as having authority and responsibility for
planning, directing and controlling all activities of the Group, directly or indirectly, during the 2018 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 2018 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, 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.
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DIRECTORS’ REPORT
20.
Remuneration Report - Audited (Continued)
20A.
Principles Used to Determine the Nature and Amount of Remuneration (Continued)
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’s compensation is also reviewed on promotion.
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 23 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
2014
2015
2016
2017
2018
STI
$’000
-
1,072
112
968
-
LTI
$’000
33
90
230
70
46
Total
$’000
33
1,162
342
1,038
46
EBITDA1
$’000
(945)
2,600
(3,224)
4,582
4,369
Dividends
$’000
Share price
$
-
-
-
-
-
0.58
0.56
0.41
0.55
0.62
1 Earnings before Interest, Tax, Depreciation, Impairment and Restructuring costs (non-IFRS disclosure)
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
2018 R Mathews, M Kochanowski, J O’Neill 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.
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DIRECTORS’ REPORT
20.
Remuneration Report - Audited (Continued)
20A.
Principles Used to Determine the Nature and Amount of Remuneration (Continued)
The Board assessed performance of the KMP against the EGMIP’s for the 2018 Financial Year as shown in the table
below:
Fixed Compensation
R Mathews
M Kochanowski
J O’Neill
P Baudry
50%
83%
83%
50%
Variable
Compensation
50%
17%
17%
50%
STI awarded
STI forfeited
-
-
-
-
100%
100%
100%
100%
Long-term Incentive
Options were issued in the 2014, 2015, 2016, 2017 and 2018 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.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
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DIRECTORS’ REPORT
20.
Remuneration Report - Audited (Continued)
20B.
Service Agreements
Details of contracts with Directors and KMP of the Group are set out below.
Terms of agreement
A Brackin
Dr I Runge 1
R Walker
R Mathews
M Kochanowski
J O’Neill
P Baudry 2
1Dr Ian Runge who was a non-executive director for the Financial Year 2018 retired effective 30 June 2018.
2 Australian dollar equivalent, salary of P Baudry is set and paid in Chinese Yuan and Russian Roubles.
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
3 months
3 months
Base salary including
superannuation
$100,000
$80,000
$70,000
$650,000
$280,000
$280,000
$386,262
Termination benefit
Notice Period
Nil
Nil
Nil
6 months
3 months
3 months
3 months
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.
20C. Details of Remuneration
Directors
Chairman (Non-executive)
Allan Brackin
Executive Directors
Richard Mathews – CEO and Managing Director
Non-executive Directors
Dr Ian Runge (resigned 30 June 2018)
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 2018 financial year:
Name
Position
Michael Kochanowski
Chief Financial Officer
James O’Neill
Group General Counsel and Company Secretary
Philippe Baudry
Executive General Manager - Advisory Division
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DIRECTORS’ REPORT
20.
Remuneration Report - Audited (Continued)
20C. Details of Remuneration (Continued)
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
639,167
880,491
-
-
-
19,935
19,935
-
-
-
-
-
-
- 10,608
- 10,608
8,676
-
-
10,833
19,509
-
-
-
-
-
100,000
80,000
70,000
680,543
930,543
-
-
-
-
-
Other Key Management Personnel
M Kochanowski
J O’Neill
P Baudry
255,708
255,708
361,336
872,752
1,753,242
Total
13,464
19,717
15,734
48,914
68,850
- 10,608
- 10,608
- 11,587
- 32,803
- 43,410
1 Includes car park and health insurance
24,292
24,292
-
48,584
68,094
322,236
18,165
328,379
18,054
10,236
398,893
46,455 1,049,508
46,455 1,980,051
2 Dr Ian Runge who was a non-executive director for
Financial Year 2018 retired effective 30 June 2018.
6%
5%
3%
4%
2%
-
-
-
-
-
6%
5%
3%
4%
2%
2018
Directors
A Brackin
Dr I Runge 2
R Walker
R Mathews
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
502,293
10,296
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%
The termination benefit includes contractual termination benefit and superannuation (where applicable).
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
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DIRECTORS’ REPORT
20.
Remuneration Report - Audited (Continued)
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 model 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 23 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 23 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.
A Brackin
Dr I Runge 3
R Walker
R Mathews
M Kochanowski
J O’Neill
P Baudry
Number of options granted
during the year
-
-
-
-
150,000
150,000
-
Value of options at
grant date 1
$
-
-
-
-
34,325
34,325
-
Number of options vested
during the year 2
-
-
-
-
183,334
183,333
316,667
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 third (final) tranche of options granted in March 2015 vested in March 2018 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. The second tranche of options granted in September 2015
vested in September 2017 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. The first tranche of options granted in February 2017 vested in February 2018 with an exercise price of $0.59 cents
expiring in February 2022 and to-date no options in this grant have been exercised by the KMP. The Options granted on 27 October 2017
with an exercise price of $77 cents expiring in October 2022 have yet to vest.
3 Dr Ian Runge who was a non-executive director for Financial Year 2018 retired effective 30 June 2018.
Details of options over ordinary shares in the Company provided as remuneration to key management personnel
are shown in the table on the following page. 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 including valuation inputs and assumptions are set out in note 23 to the
financial statements.
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DIRECTORS’ REPORT
20.
Remuneration Report - Audited (Continued)
20D.
Bonuses and Share-based Compensation Benefits (Continued)
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
P Baudry
-
-
-
-
2014
2015
2016
2017
2018
2014
2015
2016
2017
2018
2014
2015
2016
2017
-
-
-
-
2015-2017
2016-2018
2017-2019
2018-2020
2019-2021
2015-2017
2016-2018
2017-2019
2018-2020
2019-2021
2015-2017
2016-2018
2017-2019
2018-2020
-
-
-
-
50,000
200,000
200,000
150,000
150,000
50,000
225,000
175,000
150,000
150,000
50,000
550,000
250,000
150,000
-
-
-
-
$0.21 - $0.25
$0.19 - $0.25
$0.17 – $0.21
$0.17 – $0.23
$0.19 – $0.26
$0.21 - $0.25
$0.19 - $0.25
$0.17 – $0.21
$0.17 – $0.23
$0.19 – $0.26
$0.21 - $0.25
$0.19 - $0.25
$0.17 – $0.21
$0.17 – $0.23
Number
of
options
vested
during
the year
-
-
-
-
-
66,668
66,666
50,000
-
-
75,000
58,333
50,000
-
-
183,334
83,333
50,000
Vested
%
-
-
-
-
-
33%
33%
33%
-
-
33%
33%
33%
-
-
33%
33%
33%
Number
of
options
forfeited
during
the year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Value at
date of
forfeiture 2
Forfeited
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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.
The terms and conditions of each grant of options affecting remuneration of a KMP 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
26/10/2017
26/10/2017
26/10/2017
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
26/10/2018
26/10/2019
26/10/2020
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
26/10/2022
26/10/2022
26/10/2022
Exercise
Price, $
Value per
option at grant date
0.68
0.68
0.68
0.59
0.59
0.59
0.56
0.56
0.56
0.59
0.59
0.59
0.77
0.77
0.77
$0.21
$0.23
$0.25
$0.19
$0.23
$0.25
$0.17
$0.19
$0.21
$0.17
$0.21
$0.23
$0.19
$0.23
$0.26
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
|20
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DIRECTORS’ REPORT
20.
Remuneration Report - Audited (Continued)
20E.
Equity Instruments held by Key Management Personnel
No shares were granted as compensation in 2018 (2017: 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 1
R Walker
R Mathews
M Kochanowski
J O’Neill
P Baudry
(ii)
Ordinary Shares
-
-
-
-
-
-
-
-
600,000
600,000
1,000,000
150,000
150,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
750,000
750,000
1,000,000
433,332
441,666
816,666
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 1
R Walker
R Mathews 2
1,098,311
16,368,817
958,333
8,220,138
Other key management personnel of the Group
M Kochanowski
183,333
-
-
-
-
-
-
-
-
-
-
40,000
J O’Neill
P Baudry 3
1 Dr Ian Runge who was a non-executive director for Financial Year 2018 retired effective 30 June 2018.
2 Includes 175,560 shares held by R Mathews as trustee under a bare trust arrangement for a third party.
3 One share cancelled under the unmarketable parcel buy-back completed on 18 July 2017
307,242
(1)
-
-
-
-
-
-
-
-
-
-
1,098,311
16,368,817
958,333
8,220,138
183,333
40,000
307,241
No options were exercised during the 2018 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 $2,500 (2017: $31,632) for advisory and valuation services. Amount payable at year end
is $2,500 (2017: 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
2018
$
2,500
2,500
2017
$
31,632
31,632
No other transactions or loans with Key Management Personnel during the 2018 financial year.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
|21
For personal use only
DIRECTORS’ REPORT
20.
Remuneration Report - Audited (Continued)
20J. 2017 Annual General Meeting (AGM)
The Company’s 2017 remuneration report was unanimously adopted by show of hands at 2017 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: 29 August 2018
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
|22
For personal use only
AUDITOR'S INDEPENDENCE DECLARATION
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 2018, 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, 29 August 2018
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.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
|23
For personal use only CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2018
Notes
2018
$’000
2017
$’000
Revenue from continuing operations
Services
Licence sales
Software maintenance
Licence subscription
Other revenue
Revenue
Rechargeable expenses
Net Revenue
Expenses
Amortisation
Depreciation
Employee benefits expense
Commissions and incentives
Other employee costs
Office expenses
Professional services
Professional services – Russian litigation
Rent
Acquisition reorganisation costs
Redundancy costs
Travel expenses
Other expenses
Profit/(Loss) before finance costs and income tax
Finance income
Finance costs
Fair value adjustments
Net finance costs
Profit/(Loss) before income tax
Income tax benefit/(expense)
Profit/(Loss) after income tax
39,158
13,605
19,606
778
557
73,704
(6,136)
67,568
(2,659)
(739)
(46,921)
(3,960)
(775)
(2,632)
(1,396)
(273)
(3,418)
-
-
(2,537)
(1,560)
(66,870)
698
272
(32)
(314)
(74)
624
(380)
244
32,315
23,368
17,264
547
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)
(24)
245
783
(739)
44
11
10
4
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
|24
For personal use only
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2018
Notes
2018
$’000
2017
$’000
244
44
Profit/(Loss)
Other comprehensive income
Items that will not be classified subsequently to profit or loss:
Re-measurements 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)
22
22
11
(166)
(155)
89
0.11
0.11
(43)
(714)
(757)
(713)
0.02
0.02
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
|25
For personal use only
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2018
Notes
2018
$’000
2017
$’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
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
Accumulated losses
Total equity
6
7
8
9
7
10
5
11
12
13
14
13
5
14
15
16
16
23,319
21,388
3,133
328
1,213
49,381
233
1,876
9,145
37,140
48,394
97,775
7,521
4,650
129
16,486
28,786
1,416
16
2,258
3,690
32,476
65,299
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
87,708
(2,284)
(20,125)
65,299
85,175
(2,995)
(20,380)
61,800
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
|26
For personal use only
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2018
Contributed
equity
$'000
85,175
-
-
-
Reserves
$'000
(2,995)
-
(166)
(166)
Accumulated
losses
$'000
(20,380)
244
11
255
Balance at 1 July 2017
Profit for the year
Other comprehensive income
Total comprehensive income
Transactions with owners in their capacity as owners
Contributions of equity, net of transaction costs
2,533
-
-
2,533
87,708
877
877
-
-
-
(2,284)
(20,125)
Employee share options
Balance at 30 June 2018
Balance at 1 July 2016
Profit for the year
Other comprehensive income
Total comprehensive income
67,048
(3,013)
(20,381)
43,654
-
-
-
-
(714)
(714)
44
(43)
1
-
-
-
Transactions with owners in their capacity as owners
Contributions of equity, net of transaction costs
18,127
-
Employee share options
Balance at 30 June 2017
-
18,127
85,175
732
732
(2,995)
(20,380)
Total equity
$'000
61,800
244
(155)
89
2,533
877
3,410
65,299
44
(757)
(713)
18,127
732
18,859
61,800
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
|27
For personal use only
CONSOLIDATED STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 30 JUNE 2018
Notes
2018
$'000
2017
$'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 paid
Net cash (outflow) / inflow from operating activities
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
20
10
3(a)
11
15
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
6
81,432
(73,700)
7,733
272
(32)
-
(147)
-
(793)
7,033
(512)
-
(3,089)
(1,005)
(4,607)
(9)
312
(20)
283
2,709
20,278
333
23,319
70,892
(71,680)
(788)
269
(24)
(766)
(353)
(371)
(1,032)
(3,065)
(625)
-
(6,672)
(1,580)
(8,877)
-
14,730
(361)
14,369
2,427
18,142
(291)
20,278
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
|28
For personal use only
NOTES ON 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 financial report was authorised for issue on 29 August 2018.
(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 2018 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(l)).
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 2018
|29
For personal use only
NOTES ON 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 4.
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 2018
|30
For personal use only
NOTES ON 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 2018
|31
For personal use only
NOTES ON THE FINANCIAL STATEMENTS
1.
(f)
i)
Summary of Significant Accounting Policies (Continued)
Revenue Recognition
Sale of licences
Revenue from the sale of perpetual 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.
In 2017 the Group completed a transaction for the sale of $6,295,000 of perpetual licenses to a customer.
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 the 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 was confident that these rights could be reliably estimated and the significant risks and rewards
had transferred to the customer as at 30 June 2017. As a result, in 2017 the Group deferred revenue of
$2,833,000 against the rights to future upgrades and reliably measured reconfiguration and recognized
revenue of $3,462,000.
During 2018 year the Group has recognised a further $746,000 from this deferred revenue leaving the
balance unrecognised at $2,087,000. The remaining deferred revenue will be recognised as revenue when
it satisfies the Group’s revenue recognition policies.
ii)
Software subscriptions
Revenue from the sale of term licences is recognised on a straight-line basis over the subscription period.
iii)
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.
iv)
Software support (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.
v)
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.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
|32
For personal use only
NOTES ON THE FINANCIAL STATEMENTS
1.
Summary of Significant Accounting Policies (Continued)
(g)
Trade Receivable (Continued)
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.
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)
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 2018
|33
For personal use only
NOTES ON THE FINANCIAL STATEMENTS
1.
(k)
Summary of Significant Accounting Policies (Continued)
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.
(l)
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.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
|34
For personal use only
NOTES ON THE FINANCIAL STATEMENTS
1.
(m)
Summary of Significant Accounting Policies (Continued)
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.
(n)
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.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
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NOTES ON THE FINANCIAL STATEMENTS
1.
(o)
iv)
Summary of Significant Accounting Policies (Continued)
Intangible Assets (Continued)
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.
v)
Goodwill
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).
(p)
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.
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NOTES ON THE FINANCIAL STATEMENTS
1.
(r)
ii)
Summary of Significant Accounting Policies (Continued)
Employee Benefits (Continued)
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 23.
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.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
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NOTES ON THE FINANCIAL STATEMENTS
1.
(u)
i)
Summary of Significant Accounting Policies (Continued)
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.
(v)
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 11),
impairment of receivables (note 7, 21(a) and note 1(g)),
deferred tax assets (note 5),
contingent consideration (note 21(d)),
revenue recognition (note 1(f)).
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
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NOTES ON THE FINANCIAL STATEMENTS
1.
Summary of Significant Accounting Policies (Continued)
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.
(z)
Parent Entity Financial Information
The financial information for the parent entity, RPMGlobal Holdings Limited, disclosed in note 24 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.
(aa)
New Accounting Standards and Interpretations Not Yet Adopted
As at 30 June 2018, certain new relevant accounting standards and interpretations that will become mandatory
in future periods have recently been issued or amended but are not yet effective and have not been adopted
for the annual reporting period ended 30 June 2018. These are as follows:
(i)
IFRS 15 Revenue from Contracts with Customers
This standard and its consequential amendments are currently applicable to annual reporting period of the Group
beginning on 1 July 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.
Based on the Company’s analysis the amendments are not expected to have a material impact as the company
already recognises revenues or accruals when performance obligations are satisfied for perpetual licence sales
or rateable over the period when the performance obligations are satisfied for Advisory, Software and
laboratory services and Software subscriptions and maintenance.
However the standard would change disclosure both from the quantitative and qualitative aspect which are in
the process of being assessed.
(j)
AASB16 Leases
This standard and its consequential amendments are currently applicable to annual reporting period of the Group
beginning on 1 July 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.
Under the standard key non-IFRS metrics of earnings before tax, depreciation and amortization (EBITDA) will be
affected as well as lease payments will be represented in the financing activities of the cash flow statement. As
at the reporting date, the group has non-cancellable operating lease commitments of $5,494,000. However, the
group has not yet determined to what extent these commitments will result in the recognition of an asset and a
liability for future payments and how this will affect the group’s profit and classification of cash flows.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
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NOTES ON THE FINANCIAL STATEMENTS
1.
Summary of Significant Accounting Policies (Continued)
(aa)
New Accounting Standards and Interpretations Not Yet Adopted (Continued)
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 period of the Group beginning on 1 July 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.
The Group does not anticipate that the adoption of AASB 9 will have a material impact on the classification and
measurement Group’s financial instruments.
(bb)
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
2018.
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.
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 support (maintenance), 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.
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(973)
(6,136)
-
(118)
4,578
NOTES ON THE FINANCIAL STATEMENTS
2.
Operating Segments (Continued)
Information about reportable segments
2018
2017
Software
Division
Advisory
Division
GeoGAS
Total
Software
Division
Advisory
Division
GeoGAS
Total
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Revenue
External Sales
44,671
23,885
4,613
73,169
50,208
20,377
3,154
73,739
Inter-segment sales
734
156
83
973
Total Revenue
45,405
24,041
4,696
74,142
Inter-segment expenses
(156)
(817)
Rechargeable expenses
(2,956)
(3,062)
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)
Net revenue
Total Expenses
42,293
20,162
67,033
46,237
16,374
3,112
65,723
(20,936)
(17,245)
(2,475)
(40,656)
(22,710)
(15,331)
(2,012)
(40,053)
Software Development
(14,011)
-
-
(14,011)
(12,825)
-
-
(12,825)
Segment profit/(loss)
7,346
2,917
2,103
12,366
10,702
1,044
1,100
12,845
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
Professional services - Russian Litigation
Redundancy costs
Depreciation and amortisation
Net finance costs
Unallocated income
Profit/(Loss) before income tax
Income tax benefit
Net Profit/(Loss)
2018
$'000
2017
$'000
12,366
12,845
268
(4,941)
(3,588)
-
(273)
-
(3,398)
(74)
265
625
(380)
244
-
(5,130)
(4,185)
(465)
-
(766)
(2,812)
245
1,051
783
(739)
44
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NOTES ON THE FINANCIAL STATEMENTS
2.
Operating Segments (Continued)
Geographical Information
Segment revenue is based on the geographical location of customers and segment assets are based on the
geographical location of the assets.
2018
2017
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
27,955
13,208
20,041
11,944
73,147
557
73,704
38,775
189
196
90
39,250
-
39,250
20,385
16,764
18,168
18,422
73,739
1,052
74,791
35,712
227
223
134
36,296
-
36,296
On 31 January 2018 the Group acquired 100% of the issued share capital of Minvu Holdings Pty Ltd and Kurilpa
Investments Pty Ltd and their related subsidiaries (MinVu Group), a leading global provider of mine-wide
operational reporting and analytics software solutions to the mining industry. MinVu products connect and
extract real-time data from operational mining systems and turn this data into meaningful transaction based
information.
Integration with operational mining systems will benefit RPM products not only to deliver plan vs actual analysis
but to adjust planning parameters in its Ultra short term planning product XECUTE, strategic maintenance
product AMT and simulation HAULSIM and SIMULATE products.
The fair values of the assets and liabilities of MinVu as at date of acquisition are as follows:
Purchase consideration
Cash
Ordinary shares
Contingent consideration
Total Purchase Consideration
$000
1,200
2,250
1,293
4,743
The fair value of the 3,000,000 shares issued as part of the consideration paid for the MinVu Group ($2,250,000)
was based on the closing share price on 31 January 2018 of $0.75 per share. Contingent consideration is for the
ongoing retention of annuity revenues by the MinVu Business. The potential undiscounted amount of future
payments was estimated at $1,400,000. The fair value of the contingent consideration of $1,293,000 has been
estimated by calculating the present value of the future expected cash outflows based on a discount rate of 5%.
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NOTES ON THE FINANCIAL STATEMENTS
3.
Business Combinations (Continued)
Acquisition related costs are shown in the statement of comprehensive income amount to $7,000 and are
included in 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
Intangible assets
Trade and other payables
Provisions
Current tax liabilities
Other Liabilities
Net Assets
$000
779
367
4,809
(133)
(209)
(41)
(829)
4,743
Revenue from Licences, Support and Consulting services solely relating to the MinVu products which were
acquired amounted to $1,072,000 in the current financial year. It is impracticable to determine the net profit
contribution from the MinVu business since acquisition due to its staff and costs being absorbed into three
separate divisions (Software, Software Development and Corporate) of the Group.
(a)
Purchase consideration - Cash outflow
Cash consideration
Contingent Consideration - related to iSolutions acquisition
Deferred Consideration - related to iSolutions acquisition
Less Balances Acquired
Outflow of cash to acquire subsidiaries, net of cash acquired
4.
Income Tax Expense
Tax Recognised in profit or loss
Income tax benefit/(expense)
Current tax
Deferred tax
Adjustments to prior periods
Income tax expense
2018
$'000
1,200
2,335
333
(779)
3,089
2017
$'000
8,000
1,453
781
(3,562)
6,672
(221)
71
(230)
(380)
(1,130)
387
4
(739)
RPMGlobal Holdings Limited and its wholly-owned Australian controlled entities implemented the tax
consolidation regime. Under 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.
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NOTES ON THE FINANCIAL STATEMENTS
4.
Income Tax Expense (Continued)
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)
Deferred Tax Assets and Liabilities
5.
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
2018
$'000
2017
$'000
624
(187)
(488)
510
(8)
(163)
(336)
189
(3)
(230)
(380)
783
(235)
(74)
425
(596)
(320)
(800)
(16)
73
4
(739)
135
2,411
148
2,461
335
426
4,664
4,632
1,172
34
162
1,102
(76)
(27)
(274)
(481)
(28)
9,145
(16)
9,129
1,420
27
249
491
(88)
(27)
(230)
(322)
(22)
9,195
(30)
9,165
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
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NOTES ON THE FINANCIAL STATEMENTS
5.
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
2018
$'000
2017
$'000
9,165
8,639
71
2
-
(109)
9,129
660
6,705
493
3,621
11,479
40,567
387
(15)
152
2
9,165
284
5,817
485
5,118
11,704
42,451
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. 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, Kazakhstan, Turkey
and USA have not been recognised because it is not probable that sufficient future taxable profit will be available.
Significant Estimates – Deferred Tax Assets
The recognition of the deferred tax asset of $9,129,000 is dependent on future taxable profits in excess of the
profits arising from the reversal of existing taxable temporary differences. Included in this value are tax losses
of $4,664,000 that relate to the Australian tax consolidated group which has incurred a tax loss in the 2018
financial year. The Group has completed an assessment of the recoverability of the net deferred tax assets. As
at 30 June 2018 the Group is forecasting that the tax losses recognised in the deferred tax assets will be utilised
within three years from balance date. 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.
6.
Cash and Cash Equivalents
Cash at bank
Short-term bank deposits
11,953
11,367
23,319
9,143
11,135
20,278
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NOTES ON THE FINANCIAL STATEMENTS
7.
Trade and Other Receivables
Current
Trade receivables
Provision for impairment of receivables
Other receivables
Non-current
Other receivables and deposits
8.
Work in Progress
Work in progress
9.
Other Assets
Prepayments
10.
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
2018
$'000
2017
$'000
22,096
(717)
21,379
9
21,388
233
233
25,816
(1,014)
24,802
12
24,814
215
215
3,133
1,784
1,213
1,607
7,633
(5,757)
1,876
2,096
7
512
-
-
(739)
1,876
7,331
(5,234)
2,096
2,137
3
625
171
(9)
(831)
2,096
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NOTES ON THE FINANCIAL STATEMENTS
11.
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
2018
$'000
2017
$'000
17,400
(7,123)
10,277
4,805
(4,699)
106
333
(109)
224
36,897
(10,364)
26,533
37,140
11,678
(4,620)
7,058
4,783
(4,595)
188
257
(51)
206
36,824
(10,291)
26,533
33,985
Customer
relationships
$'000
Software For
Sales to
Customers 1
$'000
Software For
Internal Use
Goodwill
Total
$'000
$'000
$'000
206
-
76
(58)
224
-
-
257
(51)
206
7,058
983
4,733
(2,497)
10,277
2,729
1,437
4,555
(1,663)
7,058
188
22
-
(104)
106
293
144
19
(267)
188
26,533
-
-
-
26,533
14,477
-
12,056
-
26,533
33,985
1,005
4,809
(2,659)
37,140
17,499
1,580
16,886
(1,981)
33,985
Balance at 1 July 2017
Additions
Acquisition of subsidiaries
Amortisation
Balance at 30 June 2018
Balance at 1 July 2016
Additions
Acquisition of subsidiaries
Amortisation
Balance at 30 June 2017
1 Software also includes capitalised development costs.
(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
2018
$'000
21,612
4,921
26,533
2017
$'000
21,612
4,921
26,533
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
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NOTES ON THE FINANCIAL STATEMENTS
11.
(b)
Intangible Assets (Continued)
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:
Margin1
Growth Rate2
Discount Rate3
Software Division
GeoGAS
2018
53%
50%
2017
55%
33%
2018
2.5%
1.5%
2017
2.5%
1.5%
2018
12.0%
12.0%
2017
12.0%
12.0%
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 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.
12.
Trade and Other Payables
Current
Trade payables
Other payables and accruals
Provisions
13.
Current
Onerous sublease contracts
Russian Litigation
Employee benefits
Non-current
Make good obligations
Onerous sublease contracts
Employee benefits
2018
$'000
2017
$'000
2,374
5,147
7,521
300
273
4,077
4,650
375
93
949
1,416
2,071
6,517
8,588
277
-
3,269
3,546
369
360
816
1,545
The group also operates defined contribution plans in Australia, Canada and USA which receive fixed
contributions from group companies. The group’s legal or constructive obligation for these plans is limited to the
contributions. The expense recognised in the current period in relation to these contributions was $2,872,000
(2017: $2,495,000).
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
|48
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NOTES ON THE FINANCIAL STATEMENTS
14.
Other Liabilities
Current
Unearned income - software maintenance and licences
Unearned income - consulting and other
Contingent consideration – at fair value
Deferred consideration
Property lease incentives and straightlining
Non-current
Contingent consideration – at fair value
Property lease incentives and straightlining
2018
$'000
2017
$'000
10,669
2,878
2,744
-
195
16,486
2,082
176
2,258
10,069
1,823
2,302
274
150
14,620
3,179
342
3,521
15.
Contributed Equity
Share capital
2018
Number
2017
Number
2018
$'000
2017
$'000
Ordinary shares
- fully paid
215,925,031
212,368,012
87,708
85,175
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 23.
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.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
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NOTES ON THE FINANCIAL STATEMENTS
15.
Contributed Equity (Continued)
Capital Risk Management (continued)
As the Group does not have any debt, the gearing ratios at 30 June 2018 and 30 June 2017 were not applicable:
Total borrowings, trade and other payables
Less: cash and cash equivalents
Net (cash) / debt
Total equity
Total capital
Movements in Share Capital:
Date
30/06/2016
Balance
Shares issued for acquisition of iSolutions
Costs of issue
30/06/2017
Costs of issue
Buyback of shares
Exercise of Options at $0.59 per share
Costs of issue
Exercise of Options at $0.56 per share
Costs of issue
Exercise of Options at $0.39 per share
Costs of issue
Shares issued for acquisition of Minvu
Costs of issue
30/06/2018
Balance
Notes
6
2018
$'000
2017
$'000
12,347
(23,319)
(10,972)
65,299
54,327
14,343
(20,278)
(5,935)
61,800
55,865
Ordinary shares
Number
$’000
170,468,892
9,166,666
67,048
3,758
(20)
13,005
(301)
1,722
(39)
3
(1)
212,368,012
85,175
(14,811)
293,498
178,332
100,000
(9)
173
(5)
100
(4)
39
(2)
3,000,000
215,925,031
2,250
(9)
87,708
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
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
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NOTES ON THE FINANCIAL STATEMENTS
16.
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
2018
$'000
2017
$'000
3,647
(2,796)
(1,601)
18
(1,552)
(2,284)
2,770
(2,630)
(1,601)
18
(1,552)
(2,995)
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, RPMGlobal Africa (Pty) Ltd.
Movement in Reserves
Balance at 1 July
Options expensed
Foreign currency translation
Balance at 30 June
Share-based payments
2018
$'000
2017
$'000
2,770
877
-
3,647
2,038
732
-
2,770
Foreign Currency
Translation
2018
$'000
(2,630)
-
(166)
(2,796)
2017
$'000
(1,916)
-
(714)
(2,630)
There were no other movements in reserves in 2018 and 2017.
Retained Profits
Balance at 1 July
Net profit / (loss) for the year
Other comprehensive income
Balance at 30 June
2018
$'000
2017
$'000
(20,380)
244
11
(20,125)
(20,381)
44
(43)
(20,380)
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NOTES ON THE FINANCIAL STATEMENTS
17.
Dividends
Fully paid ordinary shares
Cents per share
Total
2018
Cents
2017
Cents
2018
$'000
2017
$'000
-
-
-
-
No dividend was declared in respect of the current financial year. Parent’s franking account balance is nil (2017:
nil).
18.
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:
2018
2017
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)
$
$
184,448
175,500
40,249
19,693
13,310
27,704
22,236
17,913
257,700
243,353
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
8,117
12,414
19.
(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:
Within one year
Later than one year but not later than 5 years
Later than 5 years
Commitments not recognised in the financial statements
Rental expense relating to operating leases
Minimum lease payments
2018
$'000
2017
$'000
2,356
3,138
-
5,494
2,766
4,301
-
7,067
3,219
3,400
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
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NOTES ON THE FINANCIAL STATEMENTS
19.
(b)
Commitments (Continued)
Sublease payments
Future minimum lease payments to be received in relation to non-cancellable sub-leases of operating leases:
2018
$'000
2017
$'000
Within one year
Later than one year but not later than 5 years
Commitments not recognised in the financial statements
(118)
(40)
(158)
20.
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
Non-cash Investing and Financing Activities
244
3,398
-
(314)
118
877
3,775
(31)
50
(1,349)
394
(907)
432
(407)
(14)
767
7,033
(183)
-
(183)
44
2,813
34
(367)
11
732
(10,489)
(1)
(538)
(313)
51
2,319
2,414
266
13
(54)
(3,065)
Shares issued as part consideration for the acquisition of the MinVu Group are disclosed in note 3 and options
issued to employees under for no cash consideration are shown in note 23.
21.
Financial Risk Management
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.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
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NOTES ON THE FINANCIAL STATEMENTS
21.
Financial Risk Management (Continued)
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.
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
Deferred consideration3
Contingent consideration3
1 Loans and receivables
2 At amortised cost
3 At fair value
(a)
Credit Risk
2018
$'000
2017
$'000
23,319
21,388
44,708
7,521
-
4,826
12,347
20,278
24,814
45,092
8,588
274
5,481
14,343
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 and A-rated banks, except for the banks located in Brazil (B), Kazakhstan (B), Mongolia (B), Turkey (BB) and
South Africa (BB).
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
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NOTES ON THE FINANCIAL STATEMENTS
21.
(a)
Financial Risk Management (Continued)
Credit Risk (Continued)
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
2018
$'000
2017
$'000
7,937
3,812
3,816
5,824
21,388
4,611
5,507
3,609
11,087
24,814
As at 30 June 2018, trade receivables of $8,911,000 (2017: $7,059,000) 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:
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
3,610
2,398
2,904
8,911
1,014
(459)
-
149
13
717
1,898
2,473
2,687
7,059
2,467
(1,820)
37
470
(140)
1,014
The provision for impairment of trade receivables in 2018 and 2017 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 21(c) below.
Contractual maturities of the Group’s financial liabilities, including interest thereon, are as follows:
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
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NOTES ON THE FINANCIAL STATEMENTS
21.
(b)
2018
Financial Risk Management (Continued)
Liquidity Risk (Continued)
Carrying
amount
Contractual
cash flows
6 mths or
less
6-12 mths
1-2 years
2-5 years
$'000
$'000
$'000
$'000
$'000
$'000
More
than 5
years
$'000
Trade and other payables
Contingent consideration
7,521
4,826
7,521
4,947
Total
2017
12,347
12,468
Trade and other payables
Deferred consideration
Contingent consideration
8,588
274
5,481
8,588
274
5,481
7,521
2,088
9,609
8,588
-
2,302
Total
14,343
14,343
10,890
-
671
671
-
274
-
274
-
2,188
2,188
-
-
3,179
3,179
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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.
Market Risk
(c)
Currency Risk
The current policy is not to take any forward positions. At 30 June 2018 and 30 June 2017 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:
2018
Cash and deposits
Trade and other receivables
Trade and other payables
Net balance sheet exposure
2017
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
8,105
10,472
(570)
18,006
6,625
15,410
(1,075)
20,960
1,491
481
(64)
1,908
908
1,139
(175)
1,872
3,769
1,709
(511)
4,968
3,883
2,046
(717)
5,212
2,041
1,557
(560)
3,038
1,343
1,456
(390)
2,408
15,406
14,219
(1,704)
27,920
12,758
20,050
(2,357)
30,452
A 10 percent strengthening of the Australian dollar against the above currencies at 30 June 2018 based on assets
and liabilities at 30 June 2018 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 2017.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
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NOTES ON THE FINANCIAL STATEMENTS
21.
(c)
Financial Risk Management (Continued)
Market Risk (Continued)
2018
2017
Equity
$'000
Profit/(Loss)
$'000
Equity
$'000
Profit/(Loss)
$'000
(2,002)
(774)
(1,398)
(1,654)
A 10 percent weakening of the Australian dollar against the above currencies at 30 June 2018 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
2018
2017
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
870
70
In both 2018 and 2017 financial years bank guarantees were secured by the Group’s term deposits.
(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
2018
$'000
2017
$'000
4,826
5,481
Contingent consideration has been recognised on the acquisition of the MinVu Group and the acquisition of
iSolutions in the prior year. The fair value of the contingent consideration of $4,826,000 has been estimated by
calculating the present value of the future expected cash outflows for the annuity of $4,947,000 based on a
discount rate of 4%. Should the businesses exceed the forecast results the liability may increase.
Changes to discount rate by 100 basis points would result in a change of the contingent consideration by $31,000.
Changes to the annuity revenue by 10% would result in change of the contingent consideration by $466,000.
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NOTES ON THE FINANCIAL STATEMENTS
21.
Financial Risk Management (Continued)
(d) Fair Value of financial instruments (Continued)
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
2018
$'000
2017
$'000
5,481
1,293
(2,335)
387
4,826
-
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.
22.
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
23.
Share Based Payments
Tax Exempt Share Plan
2018
Cents
0.11
0.11
2018
$’000
2017
Cents
0.02
0.02
2017
$’000
244
44
214,012,921
203,294,989
2,625,709
13,455,432
216,638,630
216,750,421
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 2018 or 2017.
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.
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NOTES ON THE FINANCIAL STATEMENTS
23.
Share Based Payments (Continued)
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.
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.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
|59
For personal use only
NOTES ON THE FINANCIAL STATEMENTS
23.
Share Based Payments (Continued)
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
2018
$’000
2017
$’000
878
878
732
732
The vesting conditions attached to the options are set out in the Remuneration Report (20A) of the Directors’
Report.
Vesting
Expiry
Exercise
Number
Granted
Forfeited Exercised Share Number
Grant
date
2018
date
date
Price
beginning
$
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
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
3/03/15
3/03/15
3/03/16
3/03/17
3/03/18
3/03/20
3/03/20
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
8/09/15
8/09/15
8/09/16
8/09/17
8/09/20
8/09/20
8/09/18
8/09/20
31/10/15
31/10/16
31/10/20
31/10/15
31/10/17
31/10/20
0.68
0.68
0.68
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
305,991
306,003
306,006
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
1,206,644
1,211,644
1,211,712
16,666
16,667
(8,333)
(8,333)
(8,334)
Price
$1
at end
of year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
297,658
297,670
297,672
83,333
83,333
83,334
33,332
33,334
33,334
(6,666)
(129,999)
0.72 1,323,980
(6,666)
(129,999)
0.72 1,323,980
(131,670)
(33,500)
0.64 1,295,540
-
-
-
-
-
-
83,333
83,333
83,334
(16,999)
(122,999)
0.68 1,066,646
(89,665)
(55,333)
0.70 1,066,646
(120,004)
-
-
-
- 1,091,708
-
-
16,666
16,667
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
|60
For personal use only
NOTES ON THE FINANCIAL STATEMENTS
Granted
Forfeited
Exercised Share
Number
Number
beginnin
g
of year
16,667
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
113,331
113,331
113,338
23.
Share Based Payments (Continued)
Exercise
Vesting
Expiry
Grant
date
date
date
Price
2018
Options granted to management (cont.)
31/10/15
31/10/18 31/10/20
3/03/16
3/03/16
3/03/16
3/03/17
3/03/21
3/03/18
3/03/21
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
9/02/17
9/02/17
8/06/17
8/06/17
8/06/17
9/02/18
9/02/22
9/02/19
9/02/22
9/02/20
9/02/22
8/06/18
8/06/22
8/06/19
8/06/22
8/06/20
8/06/22
19/09/17
19/09/18 19/09/22
19/09/17
19/09/19 19/09/22
19/09/17
19/09/20 19/09/22
31/10/17
31/10/18 31/10/22
31/10/17
31/10/19 31/10/22
31/10/17
31/10/20 31/10/22
15/03/18
15/03/19 15/03/23
15/03/18
15/03/20 15/03/23
15/03/18
15/03/21 15/03/23
$
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
0.67
0.67
0.67
0.77
0.77
0.77
0.67
0.67
0.67
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(100,000)
(100,000)
-
(66,667)
(66,667)
(99,999)
(99,999)
(100,002)
(49,999)
(49,999)
(50,002)
(16,666)
(16,666)
(16,668)
-
-
191,666
(125,000)
191,667
(125,000)
-
191,667
- 1,189,989
- 1,189,998
- 1,190,013
-
206,670
-
-
206,670
206,660
(125,000)
-
-
-
-
-
-
Price
at end
$
of year
-
-
16,667
(100,000)
0.72
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
108,332
41,667
41,667
299,998
299,998
300,004
949,986
949,986
950,028
96,665
96,665
96,670
66,666
66,667
66,667
1,189,989
1,189,998
1,190,013
206,670
206,670
206,660
Total
14,745,000 4,765,000 (1,605,004)
(571,830)
- 17,333,166
Weighted average exercise price, $
0.58
0.74
0.56
0.55
0.70
0.63
2017
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
0.68
0.68
0.68
0.67
0.67
0.67
0.73
530,989
531,003
531,008
66,666
66,666
33,334
83,333
-
-
-
-
-
-
-
(224,998)
(225,000)
(225,002)
(66,666)
(66,666)
(33,334)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
305,991
306,003
306,006
0
0
0
83,333
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
|61
For personal use only
NOTES ON THE FINANCIAL STATEMENTS
23.
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
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
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
0.73
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
0.57
0.57
0.57
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(149,998)
(133,332)
(133,336)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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
-
-
-
113,331
113,331
113,338
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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
113,331
113,331
113,338
Total
11,843,332 5,265,000
(2,358,332)
(5,000)
14,745,000
Weighted average exercise price,
$
0.59
0.56
0.60
0.56
0.61
0.58
1 Weighted average share price at the exercise date
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
|62
For personal use only
NOTES ON THE FINANCIAL STATEMENTS
23.
Share Based Payments (Continued)
The weighted average remaining contractual life of share options outstanding at the end of the period was 2.8
years (2017: 3.4 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 2018, 2017, 2016, 2015, 2014 financial years included:
Grant
date
Vesting
date
Share
price
29/11/13 30/11/14
29/11/13 30/11/15
29/11/13 30/11/16
31/03/14 31/03/15
31/03/14 31/03/16
31/03/14 31/03/17
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
8/06/17
8/06/20
19/09/17 19/09/18
19/09/17 19/09/19
19/09/17 19/09/20
$
0.68
0.68
0.68
0.72
0.72
0.72
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
0.67
0.67
0.67
Exercise
Expected Weighted
Expected
Risk-free
Fair value
price
volatility
average
dividends
$
0.68
0.68
0.68
0.73
0.73
0.73
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
0.67
0.67
0.67
%
40
40
40
50
50
50
55
55
55
55
46
46
46
46
46
46
46
46
46
46
46
46
43
43
43
43
43
43
43
43
43
43
43
43
42
42
42
life, years
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
%
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
nil
nil
nil
nil
nil
nil
nil
nil
nil
interest
rate1,%
3.44
3.44
3.44
3.44
3.44
3.44
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
2.39
2.39
2.39
at grant
Date, $
0.21
0.23
0.25
0.24
0.27
0.30
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
0.17
0.20
0.23
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
|63
For personal use only
NOTES ON THE FINANCIAL STATEMENTS
23.
Share Based Payments (Continued)
Grant
date
Vesting
date
31/10/17 31/10/18
31/10/17 31/10/19
31/10/17 31/10/20
15/03/18 15/03/19
15/03/18 15/03/20
15/03/18 15/03/21
1 based on government bonds
Share
price
$
0.77
0.77
0.77
0.67
0.67
0.67
Exercise
price
$
0.77
0.77
0.77
0.67
0.67
0.67
Expected Weighted
average
volatility
life, years
%
5.0
42
5.0
42
5.0
42
5.0
42
5.0
42
5.0
42
Expected
dividends
%
nil
nil
nil
nil
nil
nil
Risk-free
interest
rate1,%
2.24
2.24
2.24
2.30
2.30
2.30
Fair value
at grant
Date, $
0.19
0.23
0.26
0.17
0.20
0.23
The expected price volatility is based on the historic volatility compared to that of similar listed companies and
the remaining life of the options.
24.
Parent Entity Disclosures
As at and throughout the financial year ending 30 June 2018 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
Accumulated losses
Total equity
Contingent liabilities
Contractual commitments for the acquisition or property, plant or equipment
2018
$000
(1,628)
-
(1,628)
44,223
75,071
10,614
11,536
87,708
3,648
18
(600)
(27,239)
63,535
-
-
2017
$000
(2,245)
-
(2,245)
51,077
81,557
18,515
19,805
85,175
2,770
18
(600)
(25,611)
61,752
-
-
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 (2017: $37,125). The periods covered by the guarantees range from two to three years.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
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NOTES ON THE FINANCIAL STATEMENTS
24.
Parent Entity Disclosures (Continued)
No deficiency of net assets existed in the controlled entities covered by guarantees at 30 June 2018 or 30 June
2017. No liability was recognised by the parent entity in relation to these guarantees, as the fair value of the
guarantee is immaterial.
25. Interests in other entities
(a) Material subsidiaries
The Group’s principal subsidiaries at 30 June 2018 are set out below. All subsidiaries have share capital consisting
solely of ordinary shares that are 100% (2017: 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
RPMGlobal USA, Inc.
RPM Software USA, Inc.
RPMGlobal Canada Ltd
PT RungePincockMinarco
RPMGlobal Asia Limited
RPMGlobal China Limited
RPMGlobal LLC
CJSC Runge
RPMGlobal Africa (Pty) Ltd
RPMGlobal Chile Limitada
RPMGlobal Software Do Brasil Ltda
iSolutions International Pty Ltd
iSolutions Holdings Pty Ltd
MineOptima Holdings Pty Ltd
MineOptima Operations Pty Ltd
Minvu Pty Ltd
Minvu Holdings Pty Ltd
Kurilpa Investments Pty Ltd
RPM Global Turkey Danışmanlık Hizmetleri ve Ticaret A.Ş.
Place of
business/
incorporation
Australia
Australia
Australia
Australia
USA
USA
Principal Activities
Laboratory Services
Software Sales and Services
Advisory Services
Software Sales and Services
Advisory Services
Software Sales and Services
Canada
Software Sales and Services
Indonesia
Hong Kong
China
Mongolia
Advisory Services
Advisory Services
Advisory Services
Advisory Services
Russia
Software and Advisory Services
South Africa
Software Sales and Services
Chile
Brazil
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Turkey
Software Sales and Services
Software Sales and Services
Software Sales and Services
Software Sales and Services
Software Sales and Services
Software Sales and Services
Software Sales and Services
Software Sales and Services
Software Sales and Services
Advisory Services
RPMGlobal Kazakhstan LLP
RPMGlobal Colombia SAS
Kazakhstan
Software Sales and Services
Colombia
Software Sales and Services
All entities other than GeoGAS Pty Ltd trade as RPM and RPMGlobal.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
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NOTES ON THE FINANCIAL STATEMENTS
25.
Interests in other entities (Continued)
(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 $8,826,000 (2017: $6,682,000).
26.
Key Management Personnel Disclosures
(a) Compensation
Short term employee benefits
Post-employment benefits
Share-based payments
2018
$
2017
$
1,865,502
3,072,271
68,094
46,455
105,216
69,680
1,980,051
3,247,167
(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 $2,500 (2017: 31,632) for advisory and valuation services. Amount payable at
year end is 2,500 (2017: 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
2,500
2,500
31,632
31,632
No other transactions with Key Management personal occurred during the year.
27.
Events occurring after the reporting period
No matter or circumstance has arisen since 30 June 2018 that has significantly affected the Group’s operations,
results or state of affairs, or may do so in the future years.
28.
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 subsequently
appealed this decision and was notified that the appeal had been unsuccessful in July 2018. RPM’s legal counsel
have recommended that RPM appeal the updated judgement and the quantum and basis of the award against
RPM. The Group has provided for $273,000 in the 2018 financial year. 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 2018
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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 2018 and of its performance for the financial year ended on that date;
the remuneration disclosures included in pages 14 to 22 of the directors’ report (as part of audited
Remuneration Report), for the year ended 30 June 2018, 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 29 day of August 2018
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
|67
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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 (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2018, 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 2018 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.
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
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.
Revenue Recognition
Key audit matter
How the matter was addressed in our audit
The group generates revenue from
Our audit procedures included:
multiple streams 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.
The amount of revenue recognised for
maintenance services is dependent on
identifying the maintenance portion and
period in each sales contract.
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 and agreeing to supporting invoices, signed
customer contracts and proof of delivery where
applicable
Evaluating the deferral of revenue recorded as at 30 June
2018 for a significant transaction that had been entered
into by the group in the prior year. This included
comparing the revenue recognised for the year ended 30
June 2018 with the forecast allocation provided during
In our view, revenue recognition is
the 30 June 2017 audit and an assessment of the
significant to our audit due to the
allocation of revenue between the various elements of
significance of revenue to the financial
the transaction being the sale of licenses, upgrade
report and the complex nature of
protection and reconfiguration right
accounting for the appropriate timing of
revenue related to the sale of software
and related maintenance services.
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
Carrying Value of Goodwill – Impairment Assessment
Key audit matter
How the matter was addressed in our audit
The Group’s disclosures about goodwill
Our audit procedures included, amongst others:
impairment are included in Note 11, 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 goodwill as of 30 June 2018 is
material to the financial statements. In
addition, management’s assessment
process is complex and highly judgmental
and is based on assumptions, specifically
forecast future cash flows, growth rate,
and discount rate, which are affected by
expected future market or economic
conditions.
Recognition of Deferred Tax Assets
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.
Key audit matter
How the matter was addressed in our audit
Refer to Note 5.
Our audit procedures included:
The Group’s recognised a material net
deferred tax asset 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 2018 with the forecast taxable income
provided during the 30 June 2017 audit
Assessing the disclosures related to the recognition of the
deferred tax assets and unrecognised deferred tax assets
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 the MinVu Group
Key audit matter
How the matter was addressed in our audit
The Group’s disclosures about the
Our audit procedures included, amongst others:
acquisition of the MinVu Group 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 the MinVu Group is
considered a significant transaction for
the group. The presentation,
measurement and disclosures around this
transaction are important in the users’
understanding of the financial statements.
The transaction is material in the context
of the audit and involved significant
auditor effort, and was therefore key to
our audit.
Management have completed a process to
determine the purchase consideration and
the fair value of the identifiable net
assets acquired, including software and
customer contracts. This process involved
estimation and judgement to calculate
both the consideration and the fair value
of identified intangible assets.
Assessing management’s determination of whether the
acquisition was a business combination or an asset
acquisition
Evaluating management’s assessment of the purchase
consideration including contingent consideration
arrangements
Evaluating management’s assessment of the fair value of
the identifiable assets and liabilities acquired including:
o Obtaining management's internal valuation of the
identifiable assets and liabilities acquired
o
Evaluating the appropriateness of the methods
and assumptions used
o Challenging management in relation to the inputs
and assumptions used
o
Providing the internal 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.
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 2018, 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.
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
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
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.
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
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 2018.
In our opinion, the Remuneration Report of RPMGlobal Holdings, for the year ended 30 June 2018,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit Pty Ltd
T R Mann
Director
Brisbane, 29 August 2018
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 2018
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 2018.
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 2018 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 https://www.rpmglobal.com/investor-centre/. The
Company’s Corporate Governance Statement together with the ASX Appendix 4G and this Annual Report, were
also lodged with the ASX on 30 August 2018.
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 2018
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SHAREHOLDER INFORMATION
The shareholder information set out below was applicable as at 17 August 2018.
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
136
692
427
575
123
1953
-
-
-
38
55
93
The number of shareholdings held in less than marketable parcels of 814 shares is 97 (Close Price 17 August 2018
$0.615).
B.
Equity Security Holders
The names of the twenty largest holders of quoted equity securities (as at 17 August 2018) are listed below:
Name
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
RUNGE INTERNATIONAL PTY LTD
BNP PARIBAS NOMINEES PTY LTD
J P MORGAN NOMINEES AUSTRALIA LIMITED
NATIONAL NOMINEES LIMITED
PAUA PTY LTD
BNP PARIBAS NOMS PTY LTD
MR STEPHEN JOHN BALDWIN + MRS ANDREA MAREE BALDWIN
MR JOHN CRAIG HALLIDAY
FEYDER INVESTMENTS PTY LTD
THE RIDGE NZ PTY LTD
J & M DONOHUE SUPER PTY LTD
MR MICHAEL ANTHONY TAYLOR + MS JAN MARGARET JACKSON-MARTIN
BOND STREET CUSTODIANS LIMITED
MRS DONNA MARGARET LUXTON
MR IAN JAMES LUXTON
BRETTON PTY LTD
MRS ANDRE JOAN PHILLIPS
MR FREDRICK PARKER
Number held
Percentage
of issued
shares
58,918,403
25,694,553
15,810,389
14,463,763
11,583,307
8,947,298
6,795,753
5,516,939
2,642,511
2,247,653
1,889,333
1,424,385
1,398,461
1,398,461
1,161,804
1,026,009
982,934
958,333
885,508
879,664
164,625,461
27.28
11.90
7.32
6.70
5.36
4.14
3.15
2.55
1.22
1.04
0.87
0.66
0.65
0.65
0.54
0.48
0.46
0.44
0.41
0.41
76.22
Unquoted equity securities
17,026,497 options over unissued shares (as at the date of this report): for further details see note 23.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
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SHAREHOLDER INFORMATION
C.
Substantial Holders
The names of the substantial shareholders listed in the holding register as at 30 June 2018 are:
Estimated beneficial holdings as at 31 July 2017
Number held
Percentage
Ruffer LLP
IOOF Holdings Limited (Perennial Value Management)
Runge International Pty Ltd (Ian Runge)
Discovery Asset Management
Colonial First State – Growth
SG Hiscock & Co
D.
Voting Rights
Refer to note 15 for voting rights attached to ordinary shares.
26,766,010
23,170,756
16,368,817
14,203,160
14,267,674
11,206,667
12.57
10.88
7.69
6.67
6.70
5.26
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
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CORPORATE DIRECTORY
Directors
Allan Brackin
Chairman
Richard Mathews
Managing Director
Ross Walker
Non-executive Director
Company Secretary
James O’Neill
Group General Counsel and 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
Stock Exchange Listing
The Company is listed on the Australian Securities
Exchange Limited (ASX: RUL)
RPMGlobal Holdings Limited
ABN 17 010 672 321
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
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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
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2018
For personal use only