ANNUAL REPORT
2020
For personal use only
CONTENTS
RPMGlobal Holdings Limited
ABN 17 010 672 321
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,
I am pleased to report that after years of heavy
investment
software
in our enterprise
products we are starting to see them achieve
real traction in the market.
Even in a year in which the last four months
were negatively affected by COVID-19, we saw
an 85% increase in total contracted software
sales over the previous year. Of the $34.5
million in total contracted subscription sales
signed during the year, $6.1 million was
recognised in FY2020 with the balance of $28.4
million to be reported in future financial years.
licenses
software
The successful transition from selling once-off
to offering
perpetual
subscription licenses over multiple years will
continue to reduce the volatility
in the
company’s annual financial results. At 30 June
2020, the company had total annual recurring
software revenue of $33.2 million, from a
combination of software subscriptions and the
renewal of support (maintenance) revenue
from perpetual product sales concluded in
previous years.
The strong lift in software sales delivered a
corresponding increase in the company’s share
price over the same period (from 59 cents to
$1.05) which increased the company’s market
capitalisation by over $100 million to $235
million.
RPM has not been immune to the global
economic impact of COVID-19 and, while we
may see a contraction in the growth of new
software sales in FY2021, we do expect to
increase our software market share strongly
over the next three to four years. The company
will also benefit from having $33.2 million in
pre-contracted revenue this year to assist in
offsetting any impact from a slow-down in new
contract commitments due to COVID-19 in the
short to medium term.
Although we remain excited by the market
response to our latest software offerings, we
have not lost focus on the value and strength
of our Advisory and GeoGAS businesses which
both contributed positively to the FY2020
financial result.
International travel restrictions have impacted
our Advisory business and will continue to do
so until they are lifted. However, our GeoGAS
business has felt only limited impact from
COVID-19 as coal production in Australia is
regarded as an essential service.
The software division had another strong year
in terms of new customer’s acquiring our
software products for the first time. The
breadth and depth of our software offering,
along with the
innovative nature of our
solutions, resulted in 28 new customers signing
on to start to use our new software for the first
time during FY2020 (FY2019: 15).
With many of our key products having gone
through development cycles which have now
been mostly completed, we will continue to
see our software development spend slowly
decrease as a percentage of sales. Last year we
made strong progress on our new design
products where the beta versions are receiving
excellent feedback from the customers who
are partnering with us to test these innovative
solutions. The Board firmly believes the new
parametric design nature of these products
will provide significant financial returns to their
users who will be able to optimise the future
value of their mine much earlier in the design
process.
is
further covered
report. The
In July 2020, the company completed the
acquisition of Revolution Mining Software
in the
(RMS) which
Managing Directors’
initial
consideration of $0.5 million has now been
paid while there is also a working capital
adjustment in three months and an earn-out to
be paid over two years post completion based
on new software sales. Total consideration to
be paid for the acquisition is expected to be in
the order of $1.3 million.
Management continues to look at potential
acquisition opportunities which have the
potential to add further operational and
financial value to the business.
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times. Many of our staff, particularly outside of
Australia, are based in COVID-19 hotspots
around the world and have been in total lock
down since COVID-19 started spreading
throughout their communities. We continue to
do everything we can to support their health
and wellbeing and appreciate the sacrifices
they are making to enable our business to
operate to the best of its ability.
The Board is particularly pleased with the
ability of our management and staff to execute
on a clearly defined strategy that we believe
will continue to 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 software
investments made by the
company will support the business in 2021 and
beyond.
Ross Walker
Interim Chairman
CHAIRMAN’S REPORT
There have been a number of Board changes
during FY2020 with Stewart Butel leaving in
January 2020 and, after 8 years as Chairman,
Allan Brackin departed on 30 June 2020. In July,
the Board appointed Stephen Baldwin as a
non-executive director. He has extensive
Board experience across multiple industries,
having been a director of approximately 30
companies over the past 25 years. Stephen
holds a Bachelor of Commerce (Honours) from
the University of Cape Town and is a qualified
chartered accountant.
RPM maintains a strong balance sheet with
over $40 million of cash in the bank as at 30
June 2020 and no debt. During FY2020, the
remaining post
company paid out
completion payments for previous acquisitions
of iSolutions ($1.8 million) and MinVu ($0.8
million).
the
The company’s share price started the year at
$0.59 and increased by 78% to close the year
at $1.05.
At the beginning of FY2020 the company had
19,140,831 options on issue (8.85% of the
shares on issue at that time). During the year
7,869,487 options were
exercised by
employees (and 600,002 lapsed) and therefore
by the end of the financial year there were
10,671,342 options on issue (4.76% of the
issue). No share options were
shares on
granted during FY2020.
The company had 216,369,197 shares on issue
as at 1 July 2019 and during the course of the
year through the exercise of options the
company finished the year with 224,238,684
shares on issue.
The share price increase and increase of shares
issue through options being exercised
on
resulted
company’s market
capitalisation increasing by $108 million (85%)
during the year.
the
in
The Board has resolved not to pay a dividend
this financial year.
I would like to acknowledge the effort and
commitment of our staff who continue to
perform especially well during these difficult
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MANAGING DIRECTOR’S REPORT
Market Commentary
gold
FY2020 saw commodity prices drop to some of
their lowest levels in a decade particularly in
energy and base metals sectors. Only precious
Iron Ore bucked the trend,
metals and
especially in the later part of the financial year,
towards
when
started
in
USD$2,000/ounce. This general drop
commodity price was driven by increasing
levels of economic upheaval arising out of the
China and USA trade war which resulted in a
drop in consumer confidence in the world’s
two largest economies.
heading
Globally the impact of COVID-19 on miners was
sudden and sharp with some regions, such as
Australia, faring better than the rest of the
world. The first three months of this calendar
year saw the closure of 265 mines globally,
only half of which were back in operation by
the end of June 2020. Exploration expenditure
is forecast to drop by 29% in 2020 to a 15-year
low, with M&A activity also reaching one of its
lowest points in a decade.
to
forecasts
long-term consensus
Most
for
FY2021 show a moderately positive trend as
restart
stimulus packages necessary
economies post the COVID-19 lock downs are
expected to result in increased demands,
especially for base metals. Bulk commodities
are expected to remain flat with iron ore
expected to drop over time with increased
demand offset by increases in capacity as Brazil
recent Vale
ramps back up after
shutdowns.
the
Precious metals are forecast to continue to
remain strong with the long-term consensus
for gold of USD$1,600 – USD$1,700/ ounce
forecast to continue beyond 2022. This strong
price, especially in AUD terms, will allow
precious metals miners to continue to invest in
both grass root project development and
organic growth through M&A.
Ongoing pressure from public sentiment on
thermal coal as a source of energy for power
generation in mature regions will continue to
increase, forcing countries to investigate lower
greenhouse emission options
for power
generation. This is not however the case in
central and south east Asian countries with
large scale mine to mouth power projects
continuing to be under study as they look for
cheap domestic sources of power.
Green financing of select battery minerals and
fertilizer projects will continue to increase.
Larger global miners are anticipated to
continue their transition away from carbon
intensive assets.
Mining Technology
In previous Annual Reports I have commented
that “mining companies remain slow to
embrace technology” and while that continued
to be true prior to COVID-19’s emergence
things have changed dramatically since then.
Mining companies, like all companies, now
fully appreciate how
in
uncertain times to be able to operate their
businesses “remotely” through technology
enablement.
important
is
it
Over the last seven years RPM has worked hard
at building enterprise software solutions which
by their very nature are “remotely enabled”.
This gives us a huge advantage and head start
over a number of competitors (especially the
smaller private companies) who have not had
the strategic vision and resources to invest in
moving their products off the desktop and into
the enterprise let alone to the cloud.
Because of the advanced architecture within
our new products, we can (and have already
begun) moving our products to the cloud.
High Level Summary of Financial Results
Total revenue for the year increased by $0.6
million to $80.7 million (2019: $80.1 million).
During the 2020 financial year RPM sold $34.5
million
(TCV)
in Total Contracted Value
subscription revenue up $24.2 million (235%)
on the previous year (2019: $10.3 million). Of
the $34.5 million sold in FY2020 only $6.1
million was accounted for in the FY2020
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MANAGING DIRECTOR’S REPORT
financial accounts and as such the remaining
$28.4 million will be spread across the duration
of the contracts, which in most cases is three
years.
The company started FY2019 with an annual
Research and Development expenses run rate
of $13.1 million and finished the year with an
annual run rate of $11.3 million.
the
the
term of
Prior to the spread of COVID-19 we were
seeing
subscriptions
lengthening however when the spread of the
virus accelerated
in February/March, the
customer appetite for longer term committed
contract durations shortened significantly.
Now four months on we are starting to see the
duration terms stretch out again as our
customers realise the value of technological
resilience and continuity to their operations.
The significant increase in subscription take-
up, as expected, resulted in our perpetual
license sales reducing from $12.1 million in
FY2019 down to $6.9 million in FY2020.
This $5.2 million decrease in perpetual license
sales has had a direct impact on EBITDAR
(Earnings before Interest, Tax, Depreciation,
Amortisation and Rent) which fell by $1.8
million to $7.3 million (2019: $9.1 million).
However, the positive impact of moving to a
subscription model is that the company has
future contracted subscription revenue of
$34.7 million at the start of FY2021 ($10.7
million at 1 July 2020) to be received and
recognised in future years.
Software Division
revenue
software
Total
remained
comparatively constant with the prior year at
$48.8 million even though there was a
significant shift between perpetual and
subscription licensing.
Software support and maintenance revenue
reduced by $1.2 million due to lower perpetual
licenses sales and some customers electing to
terminate their existing perpetual licenses and
buy subscription licenses.
Software consulting revenue decreased by
$1.2 million mainly due to travel restrictions
coming into effect in the second half of the
year.
During the year, the company continued work
on its new Design Products, two of which are
now in beta testing at customer sites. We
expect to begin selling these products in Q2 of
FY2021.
These new design products apply the very
latest parametric design capabilities and use
the most advanced software technology and
enterprise architecture. They will compete
with desktop products that are currently
available in the market which are generally
based on the same historical principles and
underlying code base which has been adapted,
reformed, tailored and customised over many,
many years.
The breadth and depth of our innovative
software offering has seen 28 new customers
sign up in FY2020. While all of these customers
have purchased software to address a specific
need, our expectation is that over time they
will purchase and roll out additional products
from our integrated suite of products.
In July 2020 we acquired the business of
Revolution Mining Software
(RMS). This
purchase was driven by our desire to own
RMS’s flagship Schedule Optimisation Tool
(SOT), a
scheduling
cutting-edge mine
optimisation software solution used by tier
one miners around the globe.
SOT is the industry’s only off-the-shelf strategic
financial optimisation tool for underground
mines used by a majority of the major mine
planning vendors that enables mine planners
to improve productivity and profitability by
optimising the Net Present Value (NPV) of their
mine schedules.
This scheduling program adds value to mining
operations in several ways, by generating life-
of-mine schedules that adhere to all specified
precedence and operational constraints, while
optimising the NPV based on the user’s
financial model.
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MANAGING DIRECTOR’S REPORT
This acquisition also included the following
software solutions:
complex projects when they come back to
market.
- Attain, which ensures operational mine
planning is systematically aligned with the
long-range plan; and
-
SurfaceSOT, which works for all types of
mining operations to maximise their NPV
by optimising their long-range schedules
including management of stockpiles and
product blending while minimising the re-
handling of materials.
The benefit of SOT, Attain and SurfaceSOT
solutions is that they will extend the strategic
capability of our scheduling solutions and
bolster our industry leading data optimisation
capabilities which are becoming more sought
after by our customers.
Advisory Division
Demand for our mining advisory services was
very strong for the first three quarters of
international
FY2020. Unfortunately, once
travel restrictions were introduced our staff
were not able to have physical “boots on the
ground” which is important when performing
resource and reserve related work and
valuations.
While the division contributed positively to the
FY2020 financial result we currently expect it
to breakeven in FY2021 assuming international
travel restrictions remain in place for the full
financial year.
We will again resist the urge to compete for
low value and high-risk projects during this
period and continue to focus on delivering high
quality services. We will also look to utilise any
available advisory capability to put our new
beta software products through their paces,
given that our advisory professionals will use
these products in their project engagements.
for
Our advisory division’s
independent assessment and
lender due
diligence roles remains second to none, which
positions us well for the larger and more
reputation
GeoGAS Division
GeoGAS had another solid year. While
revenues were down by $0.5 million to $4.2
million (2019: $4.7 million) costs were also
down on last year resulting in an overall
contribution of $2.5 million, consistent with
FY2019.
Company Expenses
Operating expenses (excluding rent) finished
the full year at $66.6 million, $2.5 million
(3.9%) higher than last year (2019: $64.1
million).
This increase was largely due to higher salary
costs from commissions and incentives paid as
a result of the 235% increase in subscription
software sales during the year.
As a result of COVID-19 the company incurred
$0.4 million in once off restructuring costs and
increased the provision for accounts receivable
by $0.4m.
Net cash inflows from operations for FY2020
was $15.8 million (2019: $7.3 million) and at 30
June 2020 the company had $40 million cash in
the bank and no debt after paying out the last
remaining acquisition earnouts amounting to
$2.6 million during the year.
Future Outlook
RPM,
like most companies currently, are
striving to be flexible and adaptable given the
continued spread of COVID-19.
While we were very pleased with the growth in
software subscriptions
in FY2020, we are
experiencing a slowdown in software sales as
miners re-prioritise both their capital and
operating expenditure due to COVID-19. This is
resulting in continued delays in new sales
contracts being awarded.
We believe that our commitment to investing
heavily in our new software products during
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MANAGING DIRECTOR’S REPORT
this time will see our products become even
more competitive given their ability to be used
remotely.
The company invested another $11.6 million
on its software products during the year which
has resulted in a more complete and richer set
of products than we had this time last year.
We expect the Asset Management suite to
have another stellar year in FY2021 and it will
be interesting to see the progress we can
achieve with the new Design suite of products.
the
to a
journey
While our
full software
subscription company will not be complete (in
our minds) until the backlog of contracted
subscription revenue ($34.7m) starts flowing
income statement and thereby
into our
reported
company’s
accelerates
profitability (which it should over the next
three years) the rollout of our subscription-
based pricing model is now complete and while
there will still be some customers and
countries where perpetual licenses will be sold,
they will be the exception to the rule. This
change in model has been remarkably smooth
over the last two years and has set the
company up to be more resilient during this
global pandemic and stronger when we come
out the other side.
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” or “RPM”) and its subsidiaries
(referred to hereafter as the “Group”) for the year ended 30 June 2020.
1.
Directors
The Directors of RPMGlobal Holdings Limited at any time during or since the end of the period were:
Non-executive
Ross Walker – interim Chairman (from 30 June 2020)
Stephen Baldwin – effective 1 July 2020
Allan Brackin – Chairman (resigned 30 June 2020)
Stewart Butel (resigned 31 January 2020)
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 maintenance;
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 (2019: nil).
4.
Review and Results of Operations
Revenue in the 2020 financial year grew by 0.7% to $80.7 million (2019: $80.1 million).
Software
- Licence Sales
- Licence subscriptions
- Maintenance
- Consulting
Total Software
Advisory
GeoGAS
Other Revenue
Total Revenue
Direct Costs
Net Revenue
2020
$m
6.9
10.0
20.6
11.3
48.8
25.8
4.2
1.9
80.7
(6.8)
73.9
2019
$m
12.1
2.4
21.8
12.5
48.8
25.9
4.7
0.7
80.1
(6.9)
73.2
Change
%
-43.0%
316.7%
-5.5%
-9.6%
0.0%
-0.4%
-10.6%
171.4%
0.7%
-1.4%
1.0%
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DIRECTORS’ REPORT
4.
Review and Results of Operations (Continued)
Reconciliation between IFRS and non-IFRS financial performance items used in the Directors Report is presented
below:
Net Revenue
Operating Expenses
EBITDAR1
Rent
Depreciation and Amortisation
iSolutions Earn out Provision
Net Finance (costs)/income
Profit/(Loss) before income tax
Income tax expense
Profit/(Loss)
Earnings Per Share (cents per share)
2020
$m
73.9
(66.6)
7.3
(0.4)
(6.7)
(0.3)
0.1
0.0
(0.7)
(0.7)
(0.3)
2019
$m
73.2
(64.1)
9.1
(3.4)
(4.0)
(0.3)
0.3
1.7
(7.6)
(5.9)
(2.7)
Change
%
1.0%
3.9%
-19.8%
88.2%
-67.5%
0.0%
-66.7%
N/A
90.8%
88.1%
88.9%
1 Earnings before Interest, Tax, Depreciation, Amortisation and Rent is a non-IFRS disclosure. In the opinion of the Directors, the Group’s
EBITDAR 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. EBITDAR has not been audited or reviewed. EBITDAR, unlike
operating profit and EBITDA is unaffected by the change in leasing standards, and therefore removes the volatility arising under IFRS 16.
During FY2020 the Group continued the transition of its software revenue model from one-off perpetual licence
sales to subscription licences which run over multiple years. This transition has impacted reported earnings as
subscription licence revenue is recognised over the term of the contract (typically 3 – 5 years) whereas perpetual
licence sales are recognised when the software is delivered with annual maintenance revenue recognised over the
12 month maintenance term. Although the software subscription model results in lower revenue during the
transition period, it has the benefit of securing committed contracted subscription revenue which will be reported
in future financial years from sales made in the current year.
From a management viewpoint, we monitor software subscription revenue in terms of Total Contracted Value
(TCV) being the total revenue to be received over the committed term of each contract. While only a portion of the
TCV is recognised as revenue during the financial year, we incentivise our sales team on TCV and monitor our
financial performance on TCV. As such, we often refer to subscription sales during the year in terms of TCV rather
than the amount of subscription revenue received or recognised as revenue during that financial year.
Licence sales and subscription revenue recognised during the year was $16.9 million compared to $14.5 million in
the previous year. However, more importantly, total contracted licence revenue was $41.4 million, comprising TCV
subscription of $34.5 million and perpetual software licence sales of $6.9 million, compared to total contracted
licence revenue of $22.4 million in the prior year.
Other revenue included $1.7 million from government COVID-19 subsidies from around the world. As a result of
COVID-19 the company incurred once-off restructuring costs of $0.4 million, which were offset by savings in travel
and professional fees.
Foreign exchange movement towards the end of the year resulted in $0.3 million loss (2019: $0.5 million gain).
EBITDAR (Earnings before Interest, Tax, Depreciation, Amortisation, Rent) decreased by $1.8 million to $7.3 million
(2019: $9.1 million).
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DIRECTORS’ REPORT
4.
Review and Results of Operations (Continued)
The Group’s loss after tax of $0.7 million was a $5.2 million improvement over the prior year due to a significant
reduction in tax expense which was impacted in the prior year by derecognising deferred tax assets.
The Group delivered $15.8 million in net operating cash inflows and had cash reserves of $40.0 million (2019: $28.2
million) and no bank debt at the end of the financial year.
During the year, the Group paid out the last $2.6 million for software acquisitions and earn-out payments for prior
acquisitions and received $4.6 million in payments from employees exercising employee share options granted in
previous years.
Software Division
The Software division provides mine operations, 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.
Software revenue was comparatively flat on last year; however, the revenue mix was very different as the Group
moved ahead on its journey towards subscription licence sales.
Subscription revenue increased by $7.6 million (317%) to $10.0 million (2019: $2.4 million) and perpetual licences
reduced by $5.2 million (43%) to $6.9 million (2019: $12.1 million). Maintenance revenue decreased by $1.2 million
to $20.6 million (2019: $21.8 million) as a number of customers decided to give up their perpetual licences and
purchase subscription licences.
The Annual Recurring Revenue (ARR) run rate for subscription software licences as at year end was $12.7 million
(June 2019: $4.3 million).
Consulting revenue reduced by $1.2 million to $11.3 million (2019: $12.5 million) due to COVID-19 related travel
restrictions in the last quarter of the year.
The Group decreased its investment in R&D to $11.6 million (2019: $13.7 million).
The Company concluded agreements during the financial year with 28 new customers who purchased RPM
software for the first time.
Advisory Division
The Advisory division provides independent consulting and advisory services which cover technical and economic
analysis and assessment of mining activities and resources on behalf of mining companies, financial institutions,
government agencies and suppliers to mining projects. The market for Advisory services is heavily reliant on
expansion, development, financing and transacting of mining assets and projects.
Revenue from Advisory services for the year was flat at $25.8 million (2019: $25.9 million). The division’s
performance was growing strongly for the first three quarters until travel restrictions came into force in the last
quarter.
GeoGAS
The GeoGAS business provides mine gas consulting and laboratory testing services primarily to the coal industry on
the East Coast of Australia.
Revenue from the GeoGAS business decreased by 11% to $4.2 million (2019: $4.7 million), however, the business
still delivered $2.5 million EBITDAR contribution (2019: $2.7 million).
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DIRECTORS’ REPORT
5.
Likely Future Developments - Business Strategies and Prospects for Future Financial Years
RPM, like most companies, are currently being flexible and adaptable given the continued spread of COVID-19
across the world. The Board and Management firmly believe our commitment to investing heavily in our new
software products during this time will see our products become even more competitive given their ability to be
used remotely. The Company invested another $11.6 million on its software products during the year which has
resulted in a more complete and richer set of products than we had this time last year. As our software products
become more competitive and integrated, we expect our market share to increase strongly over the next three to
four years.
We expect the Asset Management suite to have another stellar year in FY2021 and it will be interesting to see the
progress we can make with the new Design suite of products.
Our journey to a subscription-based pricing model is now complete and while there will still be some customers
and countries where perpetual license will be sold, they will be the exception to the rule. This journey has been
remarkably smooth over the last two years and has set the company up to be more resilient during this global
pandemic and stronger when we come out the other side.
The near-term outlook for our Advisory business remains cautiously positive however the Board expects the
division to breakeven in FY2021 on the basis international travel restrictions remain in place for the full financial
year. Our advisory division’s reputation for independent assessment and financier due diligence roles remains
second to none, which positions us well for the larger and more complex projects when they come back to market.
With respect to our GeoGAS business, if coal prices remain firm, we are confident this division will have another
solid year.
6.
Information on Current Directors and Company Secretary
Directors
Ross
Walker
Richard
Mathews
Experience
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
Other unlisted company directorships in last three years: Sovereign Cloud
Holdings Limited since December 2017
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.
Special
responsibilities
Interim Chairman
Non-executive
Director
Member and
Chairman – Audit
and Risk
Committee
Member – HR and
Remuneration
Committee
Executive
Managing
Director
Member – HR and
Remuneration
Committee
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DIRECTORS’ REPORT
6.
Information on Current Directors and Company Secretary (Continued)
Directors Experience
Stephen
Baldwin
Non-executive Director. Joined the Board effective 1 July 2020. Stephen is a
professional company director and currently sits on the Board of five companies
(Axicom, Taumata, Tiaki, Wameja Ltd, Lignor Ltd). Stephen started his career as
a chartered accountant with Price Waterhouse (now PwC), working in three
different countries over a decade. He then went into funds management,
initially with Hambro-Grantham and subsequently with Colonial First State
where he rose to become that group’s Head of Private Equity. Stephen currently
represents one of Australia’s larger superannuation funds (UniSuper) as a
director on the Boards of three of their private market investments.
Qualifications: Bachelor of Commerce (Honours), ACA.
Other listed company directorships in last three years: Wameja Ltd (ASX:WJA)
Company Secretary
Special
responsibilities
Non-executive
Director
Member –
Audit and Risk
Committee
Chairman – HR
and
Remuneration
Committee
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).
7. 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 2020 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
Stewart Butel 1
Ross Walker
Richard Mathews
9
5
9
9
9
5
9
9
4
1
4
4
4
1
4
4
2
1
2
2
2
1
2
2
1 Stewart Butel commenced as Director on 1 September 2018 and resigned effective 31 January 2020 and attended all meetings that he
was eligible to attend before his resignation.
8.
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:
RPMGlobal Holdings Limited
R Walker
R Mathews 1
S Baldwin
Ordinary
shares
958,333
8,220,138
3,272,987
Options over
ordinary shares
-
-
1 Includes 175,560 shares held by R Mathews as trustee under a bare trust arrangement for a third party.
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DIRECTORS’ REPORT
9.
Shares Under Option
Unissued ordinary shares of RPMGlobal Holdings Limited under option at the date of this report are as follows:
Date options granted
08/09/20151
29/11/2016
09/02/20171
08/06/2017
1/10/20171
15/03/2018
14/09/20181
14/12/20181
15/03/2019
7/06/2019
Expiry date
08/09/2020
29/11/2021
09/02/2022
08/06/2022
31/10/2022
15/03/2023
14/09/2023
14/12/2023
15/03/2024
07/06/2024
Issue price of shares
$0.56
$0.54
$0.59
$0.57
$0.77
$0.67
$0.61
$0.58
$0.58
$0.60
Number under option
1,173,332
100,000
1,335,000
116,668
1,938,335
336,667
2,875,170
783,002
1,246,667
300,000
10,204,841
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.
10.
Shares issued on the exercise of options
During the financial year the following shares were issued following exercise of previously issued share options:
Option Grant Date
31/10/2014
3/03/2015
15/07/2015
8/09/2015
29/08/2016
29/11/2016
9/02/2017
8/06/2018
31/10/2017
15/03/2018
13/09/2018
14/12/2018
Number of shares issued
100,000
3,541,000
88,500
1,565,000
125,000
400,000
926,664
133,332
499,998
25,000
371,661
93,332
Exercise price paid, $
61,000
2,089,190
50,445
876,400
61,250
216,000
546,732
75,999
384,998
16,750
226,713
54,133
11.
Indemnity and Insurance of Officers
The Company has indemnified the Directors and Officers of the Company for costs incurred, in their capacity as a
Director or Officer, 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.
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DIRECTORS’ REPORT
12.
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.
13. 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 & Risk 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.
BDO (QLD) Pty Ltd
Preparation of Income tax return and other taxation advice
14.
Indemnity of Auditors
2020
$
2019
$
18,412
9,100
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.
15. 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.
16.
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.
17.
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.
18. Matters Subsequent to the End of the Financial Year
As detailed in the ASX announcements released by the company on 9 July and 31 July, the company has
successfully completed the acquisition of 100% of the issued share capital of Sudbury, Canada headquartered
mine scheduling optimisation company, Revolution Mining Software. The initial consideration for the acquisition
of $0.5 million has been paid from RPM’s existing cash reserves. Future consideration includes a working capital
adjustment three months after completion and an earn-out paid over two years post completion based upon any
sales of perpetual or short-term (twelve month or less) subscription rental software license sales of the
Revolution Mining Software Inc. products during that two year earn-out period. The total consideration to be
paid for the acquisition is expected to be $1.3 million. The Directors considered the impact of COVID-19 and
disclosed it in section 5 of the Directors Report. Other than the above, no matter or circumstance has arisen since
30 June 2020 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
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.
20. Remuneration Report - Audited
The remuneration report is set out under the following main headings:
A.
B.
C.
D.
E.
F.
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.
20A.
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 2020 financial year.
The Executive General Manager of the Advisory Division, whilst remaining employed by the Group, ceased authority
and responsibility for planning, directing and controlling all activities of the Group, directly or indirectly, in April
2020 resulting in the company reassessing his position as ceasing to be a KMP.
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 2020 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 parking provided.
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
each 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 15 October 2019 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
2016
2017
2018
2019
2020
STI
$’000
112
968
-
217
867
LTI
$’000
230
70
46
119
68
Total
$’000
342
1,038
46
336
935
EBITDA1
$’000
(3,224)
4,582
4,369
5,877
6,913 2
EPS
cents
(5.3)
0.02
0.11
(2.7)
(0.3)
Share price
$
0.41
0.55
0.62
0.59
1.05
1 Earnings before Interest, Tax, Depreciation, Impairment and Restructuring costs (non-IFRS disclosure)
2 Includes the impact of changes following the adoption of AASB16 Leases on the Group’s financial statements. Refer to details in note 2 of
the financial report
Short-term Incentive
Effective 1 July 2012, the Group implemented a variable pay structure, referred to as the Executive Incentive Plan
(EIP). Each of the identified KMP has a portion of their remuneration linked to the EIP. The key objective of the EIP
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 EIP 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.
During 2019 the business began transitioning from selling once-off perpetual software licenses to offering
subscription licenses. In FY2020 as a reflection of the strategic importance of growing subscription revenue, the
Board introduced a software sales Total Contracted Value (TCV) target as a significant part of the EIP.
There is, and remains, a clear correlation between the growth in TCV from software subscription sales and the
increase in shareholder value through the positive movement in the company’s share price.
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DIRECTORS’ REPORT
20. Remuneration Report - Audited (Continued)
20A. Principles Used to Determine the Nature and Amount of Remuneration (Continued)
Because of this, the Board’s logic was if management could grow the company’s TCV which delivers committed
revenue to the company over future years, then there should be a corresponding increase in the company’s share
price and therefore financial return to shareholders.
This logic proved to be correct. In 2020 the company’s software TCV from subscriptions increased by 235% and the
company’s share price increased by 78% (from 59 cents to $1.05). This share price increase helped the company’s
market capitalisation increase by $108 million (85%) during the 2020 financial year.
The 235% increase in software subscription TCV effectively resulted in the management targets in the EIP being
achieved and therefore 100% of the EIP was awarded.
Cash bonuses are paid, provided for or forfeited in the year to which they relate.
The Board assessed performance of the KMP for the 2020 Financial Year as shown in the table below:
Fixed Compensation
R Mathews
M Kochanowski
J O’Neill
Long-term Incentive
50%
74%
74%
Variable
Compensation
50%
26%
26%
STI awarded
STI forfeited
100%
100%
100%
-
-
-
Options were issued in the 2015, 2016, 2017, 2018 and 2019 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 2019 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 solely 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.
There was no Long-Term incentive in the 2020 financial year.
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.
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DIRECTORS’ REPORT
20. Remuneration Report - Audited (Continued)
20B. Service Agreements
Non-executive Directors’ base remuneration was last reviewed with effect from 1 July 2018. Both the Chairman’s
and Non-executive Directors’ remuneration is inclusive of committee fees.
Details of contracts with the current Directors and KMP of the Group that received remuneration during the 2020
financial year are set out below.
R Walker
R Mathews
M Kochanowski
J O’Neill
Terms of agreement
Unlimited in term
Unlimited in term
Unlimited in term
Unlimited in term
Base salary including
superannuation
$80,000
$650,000
$339,450
$339,450
Termination benefit 1
Notice Period
Nil
6 months
3 months
3 months
Nil
6 months
3 months
3 months
1 Termination benefit includes notice period at Base salary rate including superannuation plus statutory entitlements
20C. Details of Remuneration
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.
Directors
Executive Directors
Richard Mathews – CEO and Managing Director
Non-executive Directors
Ross Walker - Interim Chairman
Allan Brackin – Chairman (resigned 30 June 2020)
Stewart Butel – (resigned 31 January 2020)
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 2020 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 (ceased to be KMP in April 2020)
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.
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DIRECTORS’ REPORT
20C. Details of Remuneration (Continued)
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
$
$
$
$
$
$
$
%
2020
Directors
A Brackin2
S Butel3
R Walker
R Mathews
91,324
42,618
80,000
644,027
857,969
-
-
-
63,849
63,849
Other Key Management Personnel
M Kochanowski
J O’Neill
P Baudry4
314,878
314,878
338,646
968,402
Total
1,826,371
1 Includes car park and health insurance
3 Stewart Butel resigned 31 January 2020.
22,219
28,338
11,302
61,859
125,708
-
-
-
650,000
650,000
108,500
108,500
-
217,000
867,000
-
-
-
10,910
10,910
10,910
10,910
9,106
30,926
41,836
8,676
4,049
-
6,000
18,725
100,000
-
46,667
-
80,000
-
- 1,374,786
- 1,601,453
-
-
-
47%
41%
24,600
24,600
-
49,200
67,925
513,911
32,804
520,030
32,804
21,085
380,139
86,693 1,414,080
86,693 3,015,533
2 Allan Brackin resigned 30 June 2020.
4 Philippe Baudry ceased being KMP in April 2020
27%
27%
6%
21%
32%
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
$
$
$
$
$
$
$
%
91,324
60,883
80,000
644,000
876,207
-
-
-
(50,673)
(50,673)
-
-
-
-
-
-
-
-
11,055
11,055
8,676
5,784
-
6,000
20,460
-
-
-
-
-
100,000
66,667
80,000
610,382
857,049
-
-
-
-
-
2019
Directors
A Brackin
S Butel2
R Walker
R Mathews
Other Key Management Personnel
M Kochanowski
J O’Neill
P Baudry
273,927
273,927
438,254
986,108
Total
1,862,315
1 Includes car park and health insurance
21,049
31,413
32,991
85,453
34,780
-
-
217,000
217,000
217,000
11,055
11,055
11,448
33,558
44,613
26,023
26,023
-
52,046
72,506
43,777
43,582
31,563
375,831
386,000
731,256
118,922 1,493,087
118,922 2,350,136
12%
11%
34%
22%
14%
2 Stewart Butel started 1 September 2018.
Value of
options
as
propor-
tion of
remun-
eration
%
-
-
-
-
-
6%
6%
6%
6%
3%
Value of
options
as
propor-
tion of
remun-
eration
%
-
-
-
-
-
12%
11%
4%
8%
6%
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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 below.
Grant
date
Vesting
date
Share
price
3/03/16
3/03/15
3/03/17
3/03/15
3/03/18
3/03/15
8/09/16
8/09/15
8/09/17
8/09/15
8/09/18
8/09/15
9/02/18
9/02/17
9/02/19
9/02/17
9/02/20
9/02/17
31/10/17 31/10/18
31/10/17 31/10/19
31/10/17 31/10/20
13/09/18 13/09/19
13/09/18 13/09/20
13/09/18 13/09/21
14/12/18 14/12/19
14/12/18 14/12/20
14/12/18 14/12/21
$
0.56
0.56
0.56
0.55
0.55
0.55
0.63
0.63
0.63
0.77
0.77
0.77
0.65
0.65
0.65
0.58
0.58
0.58
Exercise
Expected Weighted
Expected
Risk-free
Fair value
price
volatility
average
dividends
$
0.59
0.59
0.59
0.56
0.56
0.56
0.59
0.59
0.59
0.77
0.77
0.77
0.61
0.61
0.61
0.58
0.58
0.58
%
55
55
55
46
46
46
43
43
43
42
42
42
41
41
41
41
41
41
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
%
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
interest
rate1,%
1.84
1.84
1.84
2.04
2.04
2.04
2.12
2.12
2.12
2.24
2.24
2.24
2.22
2.22
2.22
2.14
2.14
2.14
at grant
Date, $
0.19
0.23
0.25
0.17
0.19
0.21
0.17
0.21
0.23
0.19
0.23
0.26
0.17
0.21
0.23
0.14
0.17
0.19
1 based on government bonds.
The expected price volatility is based on the historic volatility compared to that of similar listed companies and the
remaining life of the options.
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.
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.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
|19
For personal use only
DIRECTORS’ REPORT
20. Remuneration Report - Audited (Continued)
20D. Bonuses and Share-based Compensation Benefits (Continued)
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
S Butel
R Walker
R Mathews
M Kochanowski
J O’Neill
P Baudry
Number of options granted
during the year
-
-
-
-
-
-
-
Number of options vested
during the year
-
-
-
-
199,999
199,999
149,999
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.
The options issued since November 2013 vest in tranches over a three year period from the date of grant, have
vesting conditions solely 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 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
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
13/09/2018
13/09/2018
13/09/2018
14/12/2018
14/12/2018
14/12/2018
Vesting and exercise
date
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
13/09/2019
13/09/2020
13/09/2021
14/12/2019
14/12/2020
14/12/2021
Expiry date
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
13/09/2023
13/09/2023
13/09/2023
14/12/2023
14/12/2023
14/12/2023
Exercise
Price, $
Value per
option at grant date
0.59
0.59
0.59
0.56
0.56
0.56
0.59
0.59
0.59
0.77
0.77
0.77
0.61
0.61
0.61
0.58
0.58
0.58
$0.19
$0.23
$0.25
$0.17
$0.19
$0.21
$0.17
$0.21
$0.23
$0.19
$0.23
$0.26
$0.17
$0.20
$0.23
$0.14
$0.17
$0.19
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
|20
For personal use only
DIRECTORS’ REPORT
20. Remuneration Report - Audited (Continued)
20E. Equity Instruments held by Key Management Personnel
Year
(FY) of
grant
Years in
which
option may
vest
Number of
options
granted
Value of
option at
grant date 1
R Walker
R Mathews
M Kochanowski
J O’Neill
P Baudry
-
-
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
2015
2016
2017
2019
-
-
2016-2018
2017-2019
2018-2020
2019-2021
2020-2023
2016-2018
2017-2019
2018-2020
2019-2021
2020-2023
2016-2018
2017-2019
2018-2020
2020-2023
-
-
200,000
200,000
150,000
150,000
300,000
225,000
175,000
150,000
150,000
300,000
550,000
250,000
150,000
300,000
-
-
$0.19 - $0.25
$0.17 – $0.21
$0.17 – $0.23
$0.19 – $0.26
$0.14 – $0.23
$0.19 - $0.25
$0.17 – $0.21
$0.17 – $0.23
$0.19 – $0.26
$0.14 – $0.23
$0.19 - $0.25
$0.17 – $0.21
$0.17 – $0.23
$0.14 – $0.23
Number
of
options
vested
during
the year
-
-
-
-
50,000
50,000
99,999
-
-
50,000
50,000
99,999
-
-
50,000
99,999
Vested
%
-
-
-
-
25%
25%
50%
-
-
25%
25%
50%
-
-
33%
67%
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.
No shares were granted as compensation in 2020 (2019: 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
A Brackin
S Butel
R Walker
R Mathews
M Kochanowski
J O’Neill
P Baudry
Balance at the
start of the
year
Granted as
compensation
Forfeited,
exercised and
expired
Balance at the
end of the
year
Vested and
exercisable
Average
Value at
exercise
date
-
-
-
-
1,000,000
1,000,000
1,250,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(200,000)
(400,000)
(966,666)
800,000
600,000
283,334
549,999
349,999
83,333
$0.32
$0.29
$0.60
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
|21
For personal use only
DIRECTORS’ REPORT
20.
Remuneration Report - Audited (Continued)
20E. Equity Instruments held by Key Management Personnel
(ii)
Ordinary Shares
Balance at the
start of the year
Exercise of
Options
Sold During
the year
Acquired during the
year (on market)
Balance at the end of
the year
Directors
A Brackin
S Butel 1
R Walker
R Mathews 2
1,098,311
100,000
958,333
8,220,138
-
-
-
-
Other key management personnel of the Group
M Kochanowski
183,333
200,000
J O’Neill
P Baudry 3
40,000
307,241
400,000
966,666
-
-
-
-
(47,000)
(400,000)
(500,000)
-
-
-
-
-
-
-
1,098,311
100,000
958,333
8,220,138
336,333
40,000
773,907
1 S Butel resigned 31 January 2020, ending balance as at the resignation date.
2 Includes 175,560 shares held by R Mathews as trustee under a bare trust arrangement for a third party.
3 P Baudry ceased being KMP in April 2020, ending balance as at this date.
20F. Loans and Other Transactions with Key Management Personnel and their related parties
There were no transactions or loans with Key Management Personnel and their related parties during the 2020
financial year.
20J. 2019 Annual General Meeting (AGM)
The Company’s 2019 remuneration report was unanimously adopted by show of hands at 2019 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.
Ross Walker
Interim Chairman
Dated: 24 August 2020
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
|22
For personal use only Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek St
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia
DECLARATION OF INDEPENDENCE BY T R MANN TO THE DIRECTORS OF RPMGLOBAL HOLDINGS
LIMITED
As lead auditor of RPMGlobal Holdings Limited for the year ended 30 June 2020, 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
24 August 2020
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.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
| 23
For personal use only
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2020
Notes
2020
$’000
2019
$’000
Revenue from contracts with customers
Services
Licence sales
Software maintenance
Software subscription
Total revenue from contracts with customers
Other income
Rechargeable expenses
Net Revenue
Expenses
Amortisation
Depreciation –Right-of-use assets
Depreciation – Plant and Equipment
Employee benefits expense
Commissions and incentives
Foreign exchange losses
Impairment of receivables
Other employee costs
Office expenses
Professional services
Rent
Travel expenses
Other expenses
Total Expenses
41,216
6,909
20,604
10,014
78,743
1,960
(6,782)
73,921
(3,156)
(2,726)
(810)
(51,685)
(4,546)
(277)
(938)
(849)
(2,556)
(1,531)
(395)
(2,270)
(1,962)
(73,701)
43,114
12,061
21,807
2,390
79,372
721
(6,889)
73,204
(3,143)
-
(877)
(49,797)
(3,242)
-
(829)
(994)
(2,512)
(2,024)
(3,426)
(2,842)
(1,846)
(71,532)
3
11
10
10
2(a)
Profit/(Loss) before finance costs and income tax
220
1,672
Finance income/(costs)
Finance income
Finance costs – Right-of-use lease liabilities
Finance costs - Other
Fair value adjustments
Net finance income/(costs)
Profit/(Loss) before income tax
Income tax expense
Profit/(Loss) after income tax
2(a)
21(d)
4
306
(208)
(17)
(248)
(167)
53
(767)
(714)
363
-
(18)
(272)
73
1,745
(7,598)
(5,853)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
|24
For personal use only CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2020
Profit/(Loss)
Other comprehensive income
Items that will not be classified subsequently to profit or loss:
Re-measurements of defined 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
2020
$’000
2019
$’000
(714)
(5,853)
(20)
(661)
(681)
(1,395)
(0.3)
(0.3)
3
(208)
(205)
(6,058)
(2.7)
(2.7)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
|25
For personal use only CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2020
Notes
2020
$’000
2019
$’000
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Contract assets
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
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
14
15
16
40,004
14,224
1,858
1,270
4,900
62,256
203
6,473
2,693
31,376
40,745
103,001
10,257
4,248
401
20,479
35,385
1,280
3,002
4,282
39,667
63,334
94,399
(5,067)
(25,998)
63,334
28,207
20,785
3,062
208
2,414
54,676
196
1,675
2,729
34,245
38,845
93,521
7,864
4,543
370
19,634
32,411
1,291
142
1,433
33,844
59,677
87,936
(1,788)
(26,471)
59,677
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
|26
For personal use only CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
Contributed
equity
Reserves
Accumulated
losses
Total equity
$'000
$'000
$'000
$'000
Balance at 30 June 2019
Adoption of AASB 16 (note 2(a))
Balance at 1 July 2019
Loss for the year
Other comprehensive income/(expense)
Total comprehensive income
Transactions with owners in their capacity as owners
Contributions of equity, net of transaction costs
Employee share options expensed (note 16)
Employee share options transferred (note 16)
Balance at 30 June 2020
Balance at 30 June 2018
Adoption of AASB 9
Balance at 1 July 2018
Loss for the year
Other comprehensive income/(expense)
Total comprehensive income
Transactions with owners in their capacity as owners
Contributions of equity, net of transaction costs
Employee share options
87,936
-
87,936
-
-
-
4,637
-
1,826
6,463
94,399
87,708
-
87,708
-
-
228
-
228
(1,788)
-
(1,788)
-
(661)
(661)
-
603
(3,221)
(2,618)
(5,067)
(2,284)
-
(2,284)
-
(208)
(208)
-
704
704
(26,471)
(188)
(26,659)
(714)
(20)
(734)
-
-
1,395
1,395
(25,998)
(20,125)
(496)
(20,621)
(5,853)
3
(5,850)
-
-
-
59,677
(188)
59,489
(714)
(681)
(1,395)
4,637
603
-
5,240
63,334
65,299
(496)
64,803
(5,853)
(205)
(6,058)
228
704
932
Balance at 30 June 2019
87,936
(1,788)
(26,471)
59,677
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
|27
For personal use only CONSOLIDATED STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 30 JUNE 2020
Notes
2020
$'000
2019
$'000
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Finance costs
Onerous leases payments
Income taxes paid
Net cash 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 contingent consideration
Payments for intangible assets
Net cash outflow from investing activities
Cash flows from financing activities
Contributions of equity
Transaction costs
Repayment of right-of-use lease liabilities
Net cash inflow from financing activities
20
10
21(d)
11
15
15
2(a)
Net increase 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
94,962
(77,458)
17,504
306
(225)
-
(1,762)
15,823
(1,262)
-
(2,639)
(288)
(4,189)
4,665
(28)
(2,932)
1,705
13,339
28,207
(1,542)
40,004
87,216
(79,079)
8,147
363
(47)
(293)
(839)
7,331
(670)
31
(2,644)
(251)
(3,534)
241
(13)
-
228
4,025
23,319
863
28,207
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
|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 24 August 2020.
(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 (Cth). 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 2020 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(j)).
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 2020
|29
For personal use only NOTES ON THE FINANCIAL STATEMENTS
1.
Summary of Significant Accounting Policies (Continued)
(c)
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 reporting 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 2020
|30
For personal use only NOTES ON THE FINANCIAL STATEMENTS
1.
Summary of Significant Accounting Policies (Continued)
(d)
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 26.
(e)
Foreign Currency Translation
i)
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 or 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.
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NOTES ON THE FINANCIAL STATEMENTS
1.
Summary of Significant Accounting Policies (Continued)
(f)
Revenue Recognition
i)
License Sales
Revenue from the sale of perpetual licences is recognised at a point in time when the customer gains
access and thus control of the software and where the licences are considered distinct from other services
provided to the customer.
ii)
Software subscription
Revenue from the sale of term (subscription) licences are recognised over time on a straight-line basis
over the subscription term.
iii)
Consulting
Revenue from the provision of consulting services is recognised typically over time as the Group’s
performance does not create an asset with an alternative use to the Group and the Group has an
enforceable right to payment for its performance completed to date.
iv)
Software maintenance
Revenue for software maintenance is recognised over time on a straight line basis over the service period
as performance obligations require the Company to respond to requests made by customers to provide
technical product support and unspecified updates, upgrades and enhancements on a when-available
and if-available basis.
v)
Laboratory testing revenue
Revenue from sample testing is recognised at a point in time when the laboratory completes testing and
the customer receives testing results for their samples.
vi)
Customer contract with multiple performance obligations
The Group frequently enters into multiple contracts with the same customer and where that occurs the
Company treats those arrangements as one contract if the contracts are entered into at or near the same
time and are commercially interrelated. The Group does not consider contracts closed more than three
months apart as a single contract.
The Group’s subscription contracts are combining an obligation to receive a licence, software support
services and other services obligations. The provision of services and sale of licences is treated as a single
performance obligation and recognised over time on a straight-line basis over the subscription term.
In all other cases, the total transaction price for a customer contract is allocated amongst the distinct
performance obligations based on their relative stand-alone selling prices. Where the stand-alone prices
are highly variable the Group applies a residual approach.
vii)
Incremental Costs of obtaining Customer Contracts
Commissions on software subscriptions are capitalised and amortised over the term, where the term is
greater than 12 months.
viii) Trade Receivables and Contract Assets
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary
course of business. They are generally due for settlement within 30 days and therefore are all classified
as current. Trade receivables are recognised initially at the amount of consideration that is unconditional
unless they contain significant financing components, when they are recognised at fair value.
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NOTES ON THE FINANCIAL STATEMENTS
1.
Summary of Significant Accounting Policies (Continued)
(f)
Revenue Recognition (Continued)
The Group holds the trade receivables with the objective to collect the contractual cash flows and
therefore measures them subsequently at amortised cost using the effective interest method.
A contract asset is the right to consideration in exchange for goods or services transferred to the
customer. If the Group performs by transferring goods or services to a customer before the customer
pays consideration or before payment is due, a contract asset is recognised for the earned consideration
that is conditional.
ix)
Contract liability
A contract liability is the obligation to transfer goods or services to a customer for which the Group has
received consideration (or an amount of consideration is due) from the customer. If a customer pays
consideration before the Group transfers goods or services to the customer, a contract liability is
recognised when the payment is made, or the payment is due (whichever is earlier). Contract liabilities
are recognised as revenue when the Group performs under the contract.
x)
Financing components
The Group does not recognise adjustments to transition prices or Contract balances where the period
between the transfer of promised goods or services to the customer and payment by customer does not
exceed one year.
The Group reviewed its prior year contracts and did not identify material adjustments in timing and
amounts recognised as revenue in prior years.
xi)
Interest income
Revenue is recognised as interest accrues using the effective interest method. This is a method of
calculating the amortised cost of a financial asset and allocating the interest income over the relevant
period using the effective interest rate, which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset to the net carrying amount of the financial asset.
(g)
Investments and Other Financial Assets
Classification
The Group classifies its financial assets in the following measurement categories:
•
•
those to be measured subsequently at fair value (either through OCI, or through profit or loss); and
those to be measured at amortised cost.
The classification depends on the Group’s business model for managing the financial assets and the contractual
terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments
in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable
election at the time of initial recognition to account for the equity investment at fair value through other
comprehensive income (FVOCI).
The Group reclassifies debt investments when and only when its business model for managing those assets
changes.
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NOTES ON THE FINANCIAL STATEMENTS
1.
Summary of Significant Accounting Policies (Continued)
(g)
Investments and Other Financial Assets (Continued)
Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not
at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the
financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash
flows are solely payment of principal and interest.
Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset
and the cash flow characteristics of the asset. There are three measurement categories into which the Group
classifies its debt instruments:
• Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows
represent solely payments of principal and interest are measured at amortised cost. Interest income from
these financial assets is included in finance income using the effective interest rate method. Any gain or
loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses),
together with foreign exchange gains and losses. Impairment losses are presented as separate line item
in the statement of profit or loss.
• FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets,
where the assets’ cash flows represent solely payments of principal and interest, are measured at FVOCI.
Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains
or losses, interest revenue and foreign exchange gains and losses which are recognised in profit or loss.
When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is
reclassified from equity to profit or loss and recognised in other gains/(losses). Interest income from these
financial assets is included in finance income using the effective interest rate method. Foreign exchange
gains and losses are presented in other gains/(losses) and impairment expenses are presented as
separate line item in the statement of profit or loss.
• FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or
loss on a debt investment that is subsequently measured at FVPL is recognised in profit or loss and
presented net within other gains/(losses) in the period in which it arises.
Impairment
The Group assesses on a forward-looking basis the expected credit losses associated with its debt instruments
carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been
a significant increase in credit risk.
For trade receivables, the Group applies the simplified approach permitted by AASB 9, which requires expected
lifetime losses to be recognised from initial recognition of the receivables.
(h)
Cash and Cash Equivalents
For statement of cashflows 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.
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NOTES ON THE FINANCIAL STATEMENTS
1.
Summary of Significant Accounting Policies (Continued)
(i)
Leases
As explained in note 2(a), the Group has changed its accounting policy for leases where the Group is the lessee.
The new policy is described in note 2(a) and the impacts of the statement is detailed in note 10 and note 14.
Until 30 June 2019, leases of property, plant and equipment where the Group, as lessee, had substantially all the
risks and rewards of ownership were classified as finance leases. Finance leases were 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, were included in other short-term and long-term
payables. Each lease payment was allocated between the liability and finance cost. The finance cost was charged
to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining
balance of the liability for each period. The property, plant and equipment acquired under finance leases was
depreciated over the asset’s useful life, or over the shorter of the asset’s useful life and the lease term if there is
no reasonable certainty that the group will obtain ownership at the end of the lease term.
Leases in which a significant portion of the risks and rewards of ownership were not transferred to the group as
lessee were classified as operating leases (note 19). Payments made under operating leases (net of any incentives
received from the lessor) were charged to profit or loss on a straight-line basis over the period of the lease.
(j)
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.
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NOTES ON THE FINANCIAL STATEMENTS
1.
Summary of Significant Accounting Policies (Continued)
(k)
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.
(l)
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.
(m)
Intangible Assets
i)
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.
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NOTES ON THE FINANCIAL STATEMENTS
1.
Summary of Significant Accounting Policies (Continued)
(m)
Intangible Assets (Continued)
iv)
Customer Contracts and Relationships
The net assets acquired as a result of a business combination may include intangible assets other than
goodwill. Any such intangible assets are amortised in a straight line over their expected future lives. The
estimated useful lives of customer contracts is 5 years.
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 26).
(n)
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.
(o)
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.
(p)
Employee Benefits
i)
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.
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NOTES ON THE FINANCIAL STATEMENTS
1.
Summary of Significant Accounting Policies (Continued)
(p) Employee Benefits (Continued)
The obligations are presented as current liabilities in the consolidated statement of financial position if the
entity does not have an unconditional right to defer settlement for at least twelve months after the
reporting period, regardless of when the actual settlement is expected to occur.
ii)
Incentives
The Group recognises a liability and an expense for incentives 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 incentive 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.
(q) 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.
(r)
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.
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NOTES ON THE FINANCIAL STATEMENTS
1.
Summary of Significant Accounting Policies (Continued)
(s)
Earnings per Share
i)
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.
(t)
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 loss allowance and the amount initially
recognised less cumulative amortisation, where appropriate.
(u)
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.
(v)
Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in
presentation for the current financial year.
(w) 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),note 1(g) and note 1(f) (viii)));
deferred tax assets (note 5); and
revenue recognition (note 1(f)).
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NOTES ON THE FINANCIAL STATEMENTS
1.
Summary of Significant Accounting Policies (Continued)
(w) Critical Accounting Estimates and Significant Judgments (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.
(x)
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.
(y) New Accounting Standards and Interpretations Not Yet Adopted
The following new accounting standards and interpretations have been published and are not mandatory for 30
June 2020 reporting periods. The Consolidated Group has decided against early adoption of these standards. The
Consolidated Group has not finalised an assessment as to the impact of these new standards and interpretations:
• AASB 2018-6 (Issued December 2018): Amendments to Australian Accounting Standards – Definition of a
business
• AASB 2020-1 (Issued March 2020): Amendments to Australian Accounting Standards – Classification of
liabilities as current or non-current
• AASB 2019-5 (Issued November 2019): Amendments to Australian Accounting Standards – Disclosures of
the effect of new IFRS standards not yet issued in Australia
Other standards issued but not yet effective are not expected to have a material impact on the entity.
(z) New and amended standards adopted by the Group
A number of new or amended standards became applicable for the current reporting period and the group had to
change its accounting policies as a result of adopting AASB 16 Leases. The impact of the adoption of the leasing
standard and the new accounting policies are disclosed in note 2 below. The other standards did not have any impact
on the group’s accounting policies and did not require retrospective adjustments.
Early adoption of standards
The Group has not elected to apply any pronouncements before their operative date.
2.
Changes in Accounting Policies
This note explains the impact of the adoption of AASB 16 Leases on the group’s financial statements and discloses
the new accounting policies that have been applied from 1 July 2019 in note 2(a) below.
The group has adopted AASB 16 from 1 July 2019 using the modified retrospective approach, as permitted under
the specific transitional provisions in the standard. The reclassifications and the adjustments arising from the new
leasing rules are therefore recognised in the opening balance sheet on 1 July 2019.
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NOTES ON THE FINANCIAL STATEMENTS
2. Changes in Accounting Policies (continued)
2 (a) Adjustments recognised on adoption of AASB 16
On adoption of AASB 16, the group recognised lease liabilities in relation to leases which had previously been
classified as ‘operating leases’ under the principles of AASB117 Leases. These liabilities were measured at the
present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of 1
July 2019. The weighted average of lessee’s incremental borrowing rate applied to the lease liabilities on 1 July
2019 was 3.7%.
Operating lease commitments disclosed as at 30 June 2019
Leases committed as at 30 June 2019, but not commenced
Operating expenses with lease components
Effect of discounting using incremental borrowing rate at the date of initial recognition
Lease liability recognised as at 1 July 2019
Of which are:
Current
Non-current
Right-of Use Assets recognised as at 1 July 2019
Deferred tax asset recognised as at 1 July 2019
Property lease incentives and straightlining liabilities derecognised as at 1 July 2019
$’000
5,457
(517)
401
(216)
5,125
2,569
2,556
4,612
-
(299)
The Group has elected to use the transition practical expedient allowing the standard to be applied only to
contracts that were previously identified as leases, Applying AASB 117 at the date of initial application. Therefore,
the definition of a lease in accordance with AASB 117 and interpretation 4 Determining whether an arrangement
contains a Lease will continue to be applied for those leases entered into or modified before 1 July 2019. The
Group did not apply other practical expedients on transition.
Applying AASB 16 for all leases the Group:
(i)
(ii)
(iii)
Recognises right-of-use assets as if the Standard had been applied since the commencement date,
but discounted using the lessee’s incremental borrowing rate at the date of initial application;
Recognises depreciation of right-of-use assets and interest on lease liabilities in the consolidated
statement of comprehensive income; and
Separates the total amount of cash paid into a principal portion and interest in the statement of cash
flows.
Lease incentives are recognised as part of the measurement of the right-of-use assets and lease liabilities whereas
under AASB 117 they resulted in the recognition of lease incentive liability, amortised as a reduction of rental
expense on a straight-line basis.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined,
the lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the
funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and
conditions.
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NOTES ON THE FINANCIAL STATEMENTS
2. Changes in Accounting Policies (continued)
2 (a). Adjustments recognised on adoption of AASB 16 (Continued)
Right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability
• any lease payments made at or before the commencement date less any lease incentives received
• any initial direct costs and restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a
straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is
depreciated over the underlying asset’s useful life.
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis
as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value
assets comprise IT-equipment and small items of office furniture.
When the group revises its estimate of the term of any lease (because, for example, it re-assesses the probability
of a lessee extension or termination option being exercised), it adjusts the carrying amount of the lease liability
to reflect the payments to make over the revised term, which are discounted using a revised discount rate. The
carrying value of lease liabilities is similarly revised when the variable element of future lease payments
dependent on a rate or index is revised, except the discount rate remains unchanged. In both cases an equivalent
adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being
amortised over the remaining (revised) lease term. If the carrying amount of the right-of-use asset is adjusted to
zero, any further reduction is recognised in profit or loss.
The Group did not recognise any expenses relating to the leases of low-value assets or variable lease payments
not included in the measurement of lease liabilities. The Group does not have any commitments relating to short
term leases, as disclosed in note 20(a), and there are no future cash outflows that the Group believe they are
potentially exposed to that are not reflected in the measurement of lease liabilities.
The tables below show the impact AASB 16 has on the year ended 30 June 2020:
Pre Application
of AASB16
Impact of AASB
16
As reported
$'000
$'000
$'000
Impact on the Consolidated Statements of Comprehensive
Income for year ended 30 June 2020
Depreciation expense – Right-of-use assets
Finance costs – lease liabilities
Rent expense
Profit / (loss) before income tax
Basic earnings per share (cents)
Diluted earnings per share (cents)
-
-
(3,479)
(97)
(0.3)
(0.3)
Impact on the Consolidated Statement of Financial Position as at 30 June 2020
Non-current assets
Property Plant and Equipment - Right-of-use asset
Deferred tax asset
Total assets
-
2,641
98,629
(2,726)
(2,726)
(208)
3,084
150
-
-
4,424
(52)
4,372
(208)
(395)
53
(0.3)
(0.3)
4,424
2,693
103,001
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
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NOTES ON THE FINANCIAL STATEMENTS
2. Changes in Accounting Policies (continued)
2 (a). Adjustments recognised on adoption of AASB 16 (Continued)
Impact on the Consolidated Statements of Comprehensive
Income for year ended 30 June 2020
Current liabilities
Other Liabilities - Lease liabilities
Other Liabilities – Property lease incentives and straightlining
Non-current liabilities
Other Liabilities - Lease liabilities
Other Liabilities – Property lease incentives and straightlining
Total Liabilities
Net Assets/Liabilities
Payments to suppliers and employees
Finance costs
Net cash inflow from operating activities
Cash flows from financing activities
Repayment of Right-of-Use lease liabilities
Net cash inflow from financing activities
3.
Other income
Foreign exchange gains
Rent and make good provisions
Government Covid-19 subsidies
Other revenue
Pre Application
of AASB16
Impact of AASB
16
As reported
$'000
$'000
$'000
-
57
-
128
35,068
63,561
(80,598)
(17)
12,891
1,782
(57)
3,002
(128)
4,599
(227)
3,140
(208)
2,932
-
4,637
(2,932)
2,932
1,782
-
3,002
-
39,667
63,334
(77,458)
(225)
15,823
(2,932)
1,705
2020
$'000
2019
$'000
-
286
1,674
1,960
550
171
-
721
Government subsidies relating mostly to Australian Jobkeeper of $1,674k (2019: nil) are included within the ‘other
income’ line of the Consolidated Statement of Comprehensive Income. There are no unfulfilled conditions or
other contingencies attached to these grants.
Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to
match them with the costs that they are intended to compensate.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
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NOTES ON THE FINANCIAL STATEMENTS
4.
Tax Expense
Tax Recognised in profit or loss
Current tax
Deferred tax
Adjustments to prior periods
Tax expense
Numerical reconciliation of income tax expense to prima facie tax
Profit before income tax
Tax at the Australian tax rate of 30% (2019: 30%)
Tax effect of amounts which are not taxable/(deductible)
in calculating taxable income:
Non-deductible expense/non-assessable income
Unutilised foreign tax credits
Derecognised deferred tax assets
Unrecognised deferred tax assets
Difference in overseas tax rates
Foreign Exchange movements
Over/(under) provision in prior years
Income tax expense
2020
$'000
(872)
74
31
(767)
53
(16)
(347)
(114)
-
(842)
(1,319)
340
177
35
(767)
2019
$'000
(977)
(6,375)
(246)
(7,598)
1,745
(524)
(373)
(4)
(2,329)
(4,344)
(7,574)
230
(17)
(237)
(7,598)
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.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
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NOTES ON THE FINANCIAL STATEMENTS
5.
Deferred Tax Assets and Liabilities
Deferred tax assets and liabilities are attributable to the following:
Provision for impairment of receivables
Employee benefits provision
Lease incentive liabilities
Tax loss
Contract liability
Accrued expenses
Share capital raising costs
Intangibles
Contract asset
Property, plant and equipment
Prepayments
Unrealised foreign exchange
Other deferred tax liabilities
Deferred tax assets
Deferred tax liabilities
Net Deferred tax assets
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
2020
$'000
249
2,824
883
865
617
41
97
(396)
(24)
(1,312)
(843)
(308)
-
2,693
-
2,693
2,729
74
(108)
42
(44)
2,693
2019
$'000
254
2,089
235
2,335
937
41
115
(2,051)
(4)
(28)
(435)
(757)
(2)
2,729
-
2,729
9,129
(6,375)
18
-
(43)
2,729
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
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For personal use only
NOTES ON THE FINANCIAL STATEMENTS
5. Deferred Tax Assets and Liabilities (continued)
Unrecognised deferred tax assets
Foreign tax credits
Tax losses
Capital losses
Deductible temporary differences
Unrecognised deferred tax assets
Unrecognised gross temporary differences
2020
$'000
2019
$'000
666
12,863
493
3,812
17,834
61,312
691
13,451
493
4,117
18,752
65,337
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 $2,693,000 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 $865,000 that relate to the Australian tax consolidated group which has incurred a tax loss in the 2020
financial year. The Group has completed an assessment of the recoverability of the net deferred tax assets. As
at 30 June 2020 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 derecognition 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
7.
Trade and Other Receivables
Current
Trade receivables
Allowance for expected credit loss
Other receivables
Non-current
Other receivables and deposits
23,714
16,290
40,004
15,613
(1,910)
13,703
521
14,224
203
203
14,798
13,409
28,207
22,670
(1,885)
20,785
-
20,785
196
196
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
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For personal use only
NOTES ON THE FINANCIAL STATEMENTS
8.
Contract assets
Work in progress
Allowance for expected credit loss
Contract assets
2020
$'000
2,174
(316)
1,858
2019
$'000
3,343
(281)
3,062
Contract assets have decreased as the group has provided fewer services ahead of the agreed payment schedules
for fixed-price contracts. The group also recognised a loss allowance for contract assets in accordance with AASB
9, see note 1(g) and 21(a) for further information.
9.
Other Assets
Inventory
Asset recognised from costs incurred to fulfil a contract
Prepayments
376
2,534
1,990
4,900
214
581
1,619
2,414
Asset recognised from costs incurred to fulfil a contract
The group recognised an asset in relation to sales commissions and 3rd party royalty costs. The asset is amortised
on a straight-line basis over the term of the specific subscription contract it relates to which ranges between 1
and 5 years, consistent with the pattern of recognition of the associated revenue.
10. Property, Plant and Equipment
Plant and equipment - at cost
Less: accumulated depreciation
Leased building at cost - Right-of-use asset
Less: accumulated depreciation
Plant and equipment
Balance at 1 July
Exchange differences
Additions
Disposals
Depreciation
Balance at 30 June
9,444
(7,395)
2,049
7,001
(2,577)
4,424
6,473
1,675
(78)
1,262
-
(810)
2,049
8,339
(6,664)
1,675
-
-
-
1,675
1,876
15
670
(9)
(877)
1,675
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
|47
For personal use only
NOTES ON THE FINANCIAL STATEMENTS
10.
Property, Plant and Equipment (Continued)
Right-of-use asset
Adoption of AASB16
Exchange differences
Additions
Depreciation
Balance at 30 June
11.
Intangible Assets
Software developed and acquired for sale and licensing – at cost
Less: accumulated amortisation
Software internal management systems – at cost
Less: accumulated amortisation
Customer contracts and relationships – at cost
Less: accumulated amortisation
Goodwill – at cost
Less: impairment losses
2020
$'000
4,612
(209)
2,747
(2,726)
4,424
17,833
(13,151)
4,682
4,940
(4,870)
70
333
(242)
91
37,042
(10,509)
26,533
31,376
2019
$'000
-
-
-
-
-
17,546
(10,129)
7,417
4,958
(4,820)
138
333
(176)
157
37,006
(10,473)
26,533
34,245
Customer
relationships
$'000
Software For
Sales to
Customers 1
$'000
Software For
Internal Use
Goodwill
$'000
$'000
Total
$'000
157
-
-
(66)
91
224
-
-
(67)
157
7,417
288
-
(3,023)
4,682
10,277
146
-
(3,006)
7,417
138
-
(1)
(67)
70
106
105
(3)
(70)
138
26,533
34,245
-
-
-
26,533
26,533
-
-
-
26,533
288
(1)
(3,156)
31,376
37,140
251
(3)
(3,143)
34,245
Balance at 1 July 2019
Additions
Exchange differences
Amortisation
Balance at 30 June 2020
Balance at 1 July 2018
Additions
Exchange differences
Amortisation
Balance at 30 June 2019
1 Software also includes capitalised development costs.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
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For personal use only
NOTES ON THE FINANCIAL STATEMENTS
11.
Intangible Assets (Continued)
(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
2020
$'000
21,612
4,921
26,533
2019
$'000
21,612
4,921
26,533
(b) Key assumptions used for value-in-use calculations
In the current and prior years the recoverable amount of the CGUs has been determined by value-in-use
calculations. These calculations were based on the following key assumptions:
Margin1
Growth Rate2
Discount Rate3
Software Division
GeoGAS
2020
55%
62%
2019
47%
48%
2020
2.5%
1.5%
2019
2.5%
1.5%
2020
12.8%
13.5%
2019
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 both pre-tax and post-tax discount rates to discount
the forecast future attributable pre-tax and post-tax cash flows. The 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 including current economic conditions.
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
2020
$'000
2019
$'000
2,792
7,465
10,257
3,132
4,732
7,864
Trade payables are amounts due to suppliers for goods purchased or services provided in the ordinary course of
business. Trade payables are generally due for settlement within 30 days and therefore are all classified as
current.
Other payables and accruals generally arise from normal transactions within the usual operating activities of the
Group and comprise items such as employee taxes, incentives, employee on costs, GST and other recurring items.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
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NOTES ON THE FINANCIAL STATEMENTS
13. Provisions
Current
Onerous sublease contracts
Make good obligations
Employee benefits
Non-current
Make good obligations
Employee benefits
2020
$'000
2019
$'000
-
160
4,088
4,248
119
1,161
1,280
93
206
4,244
4,543
279
1,012
1,291
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 $3,095,000
(2019: $3,022,000).
14. Other Liabilities
Current
Contract liabilities - software maintenance and licences
Contract liabilities - consulting and other
Contingent consideration – at fair value
Lease liabilities
Property lease incentives and straightlining
Non-current
Lease liabilities
Property lease incentives and straightlining
14,091
4,572
34
1,782
-
20,479
3,002
-
3,002
12,343
4,709
2,425
-
157
19,634
-
142
142
Contract liabilities consist of unearned income for software maintenance, subscriptions, licences and consulting
and advisory services. These have increased in line with revenue growth for these revenue lines compared to
2019. The contract liabilities in 2020 have increased in line with the increase in revenue growth noted for each
respective stream compared to 2019, as noted in note 26(a).
From the opening contract liability balances of $17,052,000 the group has recognised $15,812,000 in the
current reporting period. The group expects to recognise approximately all contract liabilities in its 2020
revenues.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
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NOTES ON THE FINANCIAL STATEMENTS
15. Contributed Equity
Share capital
2020
Number
2019
Number
2020
$'000
2019
$'000
Ordinary shares
- fully paid
224,238,684
216,369,197
94,399
87,936
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.
As the Group does not have any debt, the gearing ratios at 30 June 2020 and 30 June 2019 were not applicable:
Total borrowings, trade and other payables
Less: cash and cash equivalents
Net (cash) / debt
Total equity
Total capital
Notes
6
2020
$'000
2019
$'000
10,291
(40,004)
(29,713)
63,334
33,621
10,289
(28,207)
(17,918)
59,677
41,759
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
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NOTES ON THE FINANCIAL STATEMENTS
15.
Contributed Equity (Continued)
Movements in Share Capital:
Details
Opening balance 1 July 2019
Exercise of options - proceeds received
Exercise of options - transferred from share option reserve
Less: Transaction costs arising on share issues
Deferred tax credit recognised directly in equity
Balance 30 June 2020
Opening balance 1 July 2018
Exercise of options - proceeds received
Less: Transaction costs arising on share issues
Balance 30 June 2019
16. 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
Notes
Number of shares
$'000
216,369,197
7,869,487
-
-
-
224,238,684
87,936
4,665
1,826
(70)
42
94,399
215,925,031
87,708
444,166
-
216,369,197
241
(13)
87,936
2020
$'000
2019
$'000
1,734
(3,665)
(1,601)
18
(1,553)
(5,067)
4,352
(3,004)
(1,601)
18
(1,553)
(1,788)
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 realisation reserve.
(iv) Reserve arising from an equity transaction
Arose from the acquisition of an additional interest in the controlled entity, RPMGlobal Africa (Pty) Ltd.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
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NOTES ON THE FINANCIAL STATEMENTS
16. Reserves (Continued)
Movement in Reserves
Balance at 1 July
Options expensed
Options exercised reclassified to share capital
Options lapsed reclassified to retained losses
Foreign currency translation
Balance at 30 June
Share-based payments
2020
$'000
2019
$'000
4,352
603
(1,826)
(1,395)
-
1,734
3,647
705
-
-
-
4,352
Foreign Currency
Translation
2020
$'000
(3,004)
-
(661)
(3,665)
2019
$'000
(2,796)
-
-
-
(208)
(3,004)
There were no other movements in reserves in 2020 and 2019.
17. Dividends
Fully paid ordinary shares
Cents per share
Total
2020
Cents
2019
Cents
2020
$'000
2019
$'000
-
-
-
-
No dividend was declared in respect of the current financial year (2019: nil). The parent’s franking account balance
is nil (2019: 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.
Auditors of the Group – BDO and related network firms:
Audit and review of the financial statements:
Group
Auditors of subsidiaries
Total audit and review of the financial statements
Non -audit services
Taxation advice
Taxation compliance services
Total non-audit services
Total services provided by BDO
2020
$
2019
$
193,523
77,509
271,032
9,612
8,800
18,412
289,444
179,830
86,205
266,035
9,100
9,100
275,135
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
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NOTES ON THE FINANCIAL STATEMENTS
19.
Commitments
(a)
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. From 1
July 2019, the group has recognised right-of-use assets for these leases, except for short term and low-value
leases, see note 2(a) and note 14 for further information.
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
(b)
Sublease payments
2020
$'000
2019
$'000
-
-
-
-
-
(2,640)
(2,817)
-
(5,457)
3,178
Future minimum lease payments to be received in relation to non-cancellable sub-leases of operating leases:
Within one year
Later than one year but not later than 5 years
Commitments not recognised in the financial statements
-
-
-
40
-
40
(c)
Software Subscription payments
The Group sold its software under non-cancellable software subscription agreements expiring within one to
five years. The agreements have varying terms and renewal rights. On renewal the terms of the subscriptions
lease are generally renegotiated.
Future minimum payments to be received in relation to non-cancellable software subscriptions:
Within one year
Later than one year but not later than 5 years
Commitments not recognised in the financial statements
10,998
18,332
29,330
3,235
5,650
8,885
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
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For personal use only NOTES ON THE FINANCIAL STATEMENTS
20.
Reconciliation of Net Profit to Net Cash Inflow 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 contract asset
Decrease / (increase) in other assets
Increase / (decrease) in trade and other payables
Increase / (decrease) in contract liabilities
Increase / (decrease) in other liabilities
Increase / (decrease) in current tax liabilities
Increase / (decrease) in deferred tax liability
Increase / (decrease) in provisions
Net cash inflow from operating activities
21.
Financial Risk Management
2020
$'000
(714)
6,691
10
1,186
372
603
6,553
(1,062)
36
1,204
(2,486)
2,393
1,611
(299)
31
-
(306)
15,823
2019
$'000
(5,853)
4,020
(31)
(195)
(910)
704
425
120
6,416
(424)
(987)
343
3,505
205
241
(16)
(232)
7,331
The Group has exposure to the following risks from its use of financial instruments:
•
•
•
credit risk;
liquidity risk; and
market risk.
This note presents information about the Group’s exposure to each of the above risks, the objectives, policies
and processes for measuring and managing risk.
The Board of Directors is ultimately responsible for reviewing, ratifying and monitoring systems of internal
controls and risk management. The Board has established an Audit and Risk Committee, which is responsible for
overseeing risk management systems. The Group’s overall risk management program focuses on the
unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance
of the Group. The Group’s finance division is responsible for development and maintenance of policies which deal
with each type of risk related to use of financial instruments.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
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For personal use only NOTES ON THE FINANCIAL STATEMENTS
21.
Financial Risk Management (Continued)
The Group holds the following financial instruments:
Financial assets
Cash and cash equivalents
Trade and other receivables 1
Financial liabilities
Trade and other payables 1
Contingent consideration 2
1 At amortised cost
2 At fair value
(a)
Credit Risk
2020
$'000
2019
$'000
40,004
14,224
54,228
10,257
34
10,291
28,207
20,785
48,992
7,864
2,425
10,289
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 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. The Group holds its cash with AA and A-rated banks, except for the
banks located in Brazil (B), Kazakhstan (B), Mongolia (BB), Turkey (BB) and South Africa (BB), Colombia (B), China
(B) and Russia (B).
The group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables and contract assets.
To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared
credit risk characteristics and the days past due. The contract assets relate to unbilled work in progress and have
substantially the same risk characteristics as the trade receivables for the same types of contracts.
The group has therefore concluded that the expected loss rates for trade receivables are a reasonable
approximation of the loss rates for the contract assets.
The expected loss rates are based on the payment profiles of sales over a period of 60 months before 30 June
2020 and the corresponding historical credit losses experienced within this period. The historical loss rates are
adjusted to reflect current and forward-looking information on macroeconomic factors including COVID-19 that
affect the ability of the customers to settle the receivables.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
|56
For personal use only NOTES ON THE FINANCIAL STATEMENTS
21.
(a)
Financial Risk Management (Continued)
Credit Risk (Continued)
On that basis the loss allowance as at 30 June 2020 was determined as follows:
30 June 2020
Expected loss rate
Gross carrying amount - trade receivables
Gross carrying amount – contract asset
Loss Allowance
30 June 2019
Expected loss rate
Gross carrying amount - trade receivables
Gross carrying amount – contract asset
Loss Allowance
Current
1 - 30 days
past due
3.36%
7,635
2,187
330
0.29%
1,562
-
5
Current
1 - 30 days
past due
2.25%
10,627
3,343
315
0.47%
4,749
-
22
30 - 90
days past
due
More than
90 days
past due
0.54%
1,556
-
8
63.12%
2,983
-
1,883
30 - 90
days past
due
0.78%
2,387
-
19
More than
90 days
past due
36.88%
4,907
-
1,810
TOTAL
13,737
2,187
2,226
TOTAL
22,670
3,343
2,166
The closing loss allowances for trade receivables and contract assets as at 30 June 2020 reconcile to the opening
loss allowances as follows:
Opening loss allowance as at 1 July
Increase in loss allowance recognised in profit or loss during the period
Effects of foreign exchange
Impairment losses written off
Unearned income moved to provision
Impairment losses recovered
At 30 June
2020
$'000
2019
$'000
2,166
1,354
(157)
(721)
-
(416)
2,226
1,213
889
(23)
-
147
(60)
2,166
Of the above impairment losses $1,354,000 (2019 - $889,000) relate to receivables arising from contracts with
customers.
(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 and maintains sufficient cash on demand.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
|57
For personal use only NOTES ON THE FINANCIAL STATEMENTS
21.
Financial Risk Management (Continued)
Contractual maturities of the Group’s financial liabilities, including interest thereon, are as follows:
2020
Carrying
amount
Contractual
cash flows
6 mths or
less
6-12 mths
1-2 years
2-5 years
$'000
$'000
$'000
$'000
$'000
$'000
Trade and other payables
Lease Liabilities
Contingent consideration
10,257
4,784
34
10,257
5,114
34
10,257
1,162
34
Total
2019
15,075
15,405
11,453
Trade and other payables
7,864
7,864
7,864
Lease Liabilities
Contingent consideration
Total
-
2,425
10,289
-
2,454
10,318
-
1,758
9,622
-
778
-
778
-
-
696
696
-
-
1,457
1,717
-
-
1,457
1,717
-
-
-
-
-
-
-
-
More
than 5
years
$'000
-
-
-
-
-
-
-
-
(c)
Market Risk
Currency Risk
The current policy is not to take any forward positions. At 30 June 2020 and 30 June 2019, 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 reporting date expressed in Australian Dollars was as follows:
2020
Cash and deposits
Trade and other receivables
Trade and other payables
Net exposure
2019
Cash and deposits
Trade and other receivables
Trade and other payables
Net exposure
USD
$’000
CAD
$’000
ZAR
$’000
Other
$’000
Total
$’000
16,291
6,612
(1,627)
21,276
8,359
9,720
(1,186)
16,893
3,174
705
(316)
3,563
1,818
561
(226)
2,153
5,501
538
(387)
5,652
5,857
3,519
(543)
8,833
3,957
367
(285)
4,039
2,812
1,130
(429)
3,513
28,923
8,222
(2,615)
34,530
18,846
14,930
(2,384)
31,392
A 10 percent strengthening of the Australian dollar against the above currencies at 30 June 2020 based on assets
and liabilities at 30 June 2020 would have increased/(decreased) equity and profit or loss by the amounts shown
in the table below on the next page. This analysis assumes that all other variables, in particular interest rates,
remain constant. The analysis is performed on the same basis for 2019.
The Group manages its exposure to interest rate and foreign currency fluctuations through a policy approved by
the Board of Directors. There are no other significant market risks affecting the Group.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
|58
For personal use only NOTES ON THE FINANCIAL STATEMENTS
21.
Financial Risk Management (Continued)
(c) Market Risk (Continued)
2020
2019
Equity
$'000
Profit/(Loss)
$'000
Equity
$'000
Profit/(Loss)
$'000
(385)
(1,451)
(2,260)
(665)
A 10 percent weakening of the Australian dollar against the above currencies at 30 June 2020 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
Bank guarantee
Currency
Nominal
interest
rate
2020
2019
Maturity
Facility
$’000
Utilised
$’000
Facility
$’000
Utilised
$’000
AUD
AUD
EUR
1.95%
1.30%
2.50%
n/a
n/a
n/a
1,100
1,084
1,050
1,038
-
-
-
-
45
67
45
67
In both 2020 and 2019 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
2020
$'000
2019
$'000
34
2,425
Contingent consideration has been recognised on the acquisition of iSolutions in the prior years. The fair value
of the contingent consideration of $34,000 has been estimated by calculating the present value of the future
expected cash outflows for the annuity of $34,000 undiscounted.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
|59
For personal use only 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
Purchase price adjustments
Fair value adjustments
Closing balance 30 June
Valuation processes for level 3 fair values
2020
$'000
2,425
-
2019
$'000
4,826
-
(2,639)
(2,644)
-
248
34
(29)
272
2,425
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
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
2020
Cents
(0.3)
(0.3)
2020
$’000
2019
Cents
(2.7)
(2.7)
2019
$’000
(713)
(5,853)
219,513,406
216,174,318
-
-
219,513,406
216,174,318
Options are anti-dilutive when converted to ordinary shares as they reduce loss per share.
23.
Share Based Payments
Tax Exempt Share Plan
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 2020 or 2019.
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.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
|60
For personal use only 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, 24 November 2016 and most recently following approval
of shareholders at the Company’s 2019 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 2020
|61
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
2020
$’000
2019
$’000
603
603
704
704
The options issued vest in tranches over a three year period from the date of grant, with vesting conditions
solely 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.
Grant
Vesting
Expiry
Exercise
Number Granted
Forfeited
Exercised
Share Number
date
date
date
Price
$
beginning
of year
2020
Options granted to employees
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
0.61
0.61
0.61
33,332
33,334
33,334
3/03/15
3/03/16
3/03/20
0.59 1,243,982
3/03/15
3/03/17
3/03/20
0.59 1,229,650
3/03/15
3/03/18
3/03/20
0.59 1,207,368
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
0.57
0.57
0.57
0.56
0.56
33,333
33,333
33,334
991,649
991,649
8/09/15
8/09/18
8/09/20
0.56 1,011,702
29/08/16 29/08/17 29/08/21
29/08/16 29/08/18 29/08/21
29/08/16 29/08/19 29/08/21
29/11/16 29/11/17 29/11/21
29/11/16 29/11/18 29/11/21
29/11/16 29/11/19 29/11/21
9/02/17
9/02/18
9/02/22
9/02/17
9/02/19
9/02/22
9/02/17
9/02/20
9/02/22
0.49
0.49
0.49
0.54
0.54
0.54
0.59
0.59
0.59
41,666
41,667
41,667
166,665
166,665
166,670
809,989
809,989
776,688
Price
at end
$ 1
of year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(33,332)
(33,334)
(33,334)
(38,329)
(1,205,653)
(38,333)
(1,191,317)
(63,338)
(1,144,030)
-
-
-
(3,333)
(3,333)
(3,334)
-
-
-
-
-
-
(33,333)
(33,333)
(21,834)
(518,326)
(518,326)
(528,348)
(41,666)
(41,667)
(41,667)
(133,332)
(133,332)
(133,336)
(20,000)
(304,995)
(20,000)
(304,995)
(16,668)
(316,674)
0.89
0.89
0.89
1.06
1.05
1.06
0.85
0.83
0.89
0.91
0.91
0.91
0.76
0.76
0.76
1.04
1.04
1.04
0.97
0.97
0.98
-
-
-
-
-
-
-
-
11,500
469,990
469,990
480,020
-
-
-
33,333
33,333
33,334
484,994
484,994
443,346
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
|62
For personal use only NOTES ON THE FINANCIAL STATEMENTS
23.
Share Based Payments (Continued)
Grant
date
Vesting
Expiry
Exercise
Number
Granted
Forfeited
Exercised Share Number
date
date
Price
beginning
$
of year
Price
$ 1
at end
of year
2020
Options granted to employees (cont.)
8/06/18
8/06/18
8/06/22
8/06/18
8/06/19
8/06/22
8/06/18
8/06/20
8/06/22
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
0.57
0.57
0.57
0.77
0.77
0.77
0.67
0.67
0.67
96,665
96,665
96,670
951,658
851,665
851,676
140,003
140,003
139,994
13/09/18 13/09/19 13/09/23
0.61 1,135,038.00
13/09/18 13/09/20 13/09/23
0.61 1,135,038.00
13/09/18 13/09/21 13/09/23
0.61 1,135,090.00
15/03/18 15/03/19 15/03/23
14/12/19 14/12/18 14/12/23
14/12/20 14/12/18 14/12/23
14/12/21 14/12/18 14/12/23
15/03/19 15/03/20 15/03/24
15/03/19 15/03/21 15/03/24
15/03/19 15/03/22 15/03/24
7/06/19
7/06/20
7/06/24
7/06/19
7/06/21
7/06/24
7/06/19
7/06/22
7/06/24
TOTAL
Weighted average exercise price, $
2019
Options granted to employees
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
3/03/16
3/03/20
3/03/15
3/03/17
3/03/20
0.67
0.58
0.58
0.58
0.58
0.58
0.58
0.60
0.60
0.60
0.68
0.68
0.68
0.73
0.73
0.73
0.61
0.61
0.61
0.59
0.59
140,003
297,659.00
297,669.00
297,672.00
426,663.00
426,667.00
426,670.00
100,000.00
100,000.00
100,000.00
19,140,831
0.61
297,658
297,670
297,672
83,333
83,333
83,334
33,332
33,334
33,334
1,323,980
1,323,980
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(13,333)
(49,999)
(13,333)
(49,999)
-
(33,334)
(99,999)
(249,998)
-
(250,000)
0.94
0.94
1.06
0.91
0.89
33,333
33,333
63,336
601,661
601,665
(50,001)
-
-
801,675
(8,333)
(25,000)
1.12
106,670
(25,000)
(25,000)
-
-
-
-
115,003
114,994
(8,333)
(371,661)
0.88
755,044
(74,998)
(75,004)
-
-
- 1,060,040
- 1,060,086
(8,333)
(25,000)
-
-
-
-
-
-
-
-
-
(93,332)
-
-
-
-
-
-
-
-
1.12
1.05
-
-
-
-
-
-
-
-
106,670
204,327
297,669
297,672
426,663
426,667
426,670
100,000
100,000
100,000
(600,002) 7,869,487
0.99 10,671,342
0.65
0.59
0.63
(297,658)
(297,670)
(297,672)
(83,333)
(83,333)
(83,334)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
33,332
33,334
33,334
(71,665)
(8,333)
0.65 1,243,982
(71,665)
(22,665)
0.65 1,229,650
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
|63
For personal use only NOTES ON THE FINANCIAL STATEMENTS
23.
Share Based Payments (Continued)
Grant
date
Vesting
Expiry
Exercise
Number Granted
Forfeited
Exercised Share
Number
date
date
Price
beginning
$
of year
Price
$ 1
at end
of year
2019
Options granted to employees (cont.)
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
8/06/18
8/06/18
8/06/22
8/06/18
8/06/19
8/06/22
8/06/18
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
0.59
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
0.77
0.77
0.77
0.67
0.67
0.67
1,295,540
83,333
83,333
83,334
1,066,646
1,066,646
1,091,708
16,666
16,667
16,667
-
-
-
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(71,670)
(16,502)
0.65
1,207,368
(50,000)
(50,000)
(50,000)
-
-
-
-
-
-
(53,331)
(21,666)
(53,331)
(21,666)
(60,004)
(20,002)
0.60
0.60
0.62
33,333
33,333
33,334
991,649
991,649
1,011,702
(16,666)
(16,667)
(16,667)
-
-
-
-
-
-
-
-
(133,334)
(139,997)
(139,997)
(173,340)
-
-
-
(66,666)
(66,667)
(66,667)
(238,331)
(338,333)
(338,337)
(66,667)
(66,667)
(66,666)
-
-
-
-
-
-
-
-
-
-
-
-
(66,666)
0.60
-
-
-
-
(133,333)
(133,333)
0.55
0.58
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
41,666
41,667
41,667
166,665
166,665
166,670
809,989
809,989
776,688
96,665
96,665
96,670
-
-
-
951,658
851,665
851,676
140,003
140,003
-
-
139,994
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
|64
For personal use only
NOTES ON THE FINANCIAL STATEMENTS
23.
Share Based Payments (Continued)
Grant
date
Vesting
Expiry
Exercise
Number
Granted
Forfeited
Exercised Share
Number
date
date
Price
beginning
$
of year
Price
$ 1
at end
of year
2019
Options granted to employees (cont.)
13/09/18 13/09/19 13/09/23
13/09/18 13/09/20 13/09/23
13/09/18 13/09/21 13/09/23
14/12/18 14/12/19 14/12/23
14/12/18 14/12/20 14/12/23
14/12/18 14/12/21 14/12/23
15/03/19 15/03/20 15/03/24
15/03/19 15/03/21 15/03/24
15/03/19 15/03/22 15/03/24
7/06/19
7/06/22
7/06/24
7/06/19
7/06/21
7/06/24
7/06/19
7/06/22
7/06/24
0.61
0.61
0.61
0.58
0.58
0.58
0.58
0.58
0.58
0.6
0.6
0.6
-
-
-
-
-
-
-
-
-
-
-
-
1,285,036
(149,998)
1,285,036
(149,998)
1,285,094
(150,004)
314,325
314,336
314,339
459,996
460,000
460,004
100,000
100,000
100,000
(16,666)
(16,667)
(16,667)
(33,333)
(33,333)
(33,334)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,135,038
1,135,038
1,135,090
297,659
297,669
297,672
426,663
426,667
426,670
100,000
100,000
100,000
TOTAL
17,333,166 6,478,166
(4,226,335)
(444,166)
0.58 19,140,831
Weighted average exercise price, $
0.63
0.60
0.66
0.54
0.61
1 Weighted average share price at the exercise date
The weighted average remaining contractual life of share options outstanding at the end of the period was 2.5
years (2019: 2.7 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 2019, 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
$
0.68
0.68
0.68
0.72
0.72
0.72
0.60
0.56
0.56
0.56
0.57
0.57
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
%
40
40
40
50
50
50
55
55
55
55
46
46
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
%
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
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
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
|65
For personal use only NOTES ON THE FINANCIAL STATEMENTS
23.
Share Based Payments (Continued)
Grant
date
Vesting
date
Share
price
15/07/15 15/07/18
8/09/16
8/09/15
8/09/17
8/09/15
8/09/15
8/09/18
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
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
13/09/18 13/09/19
13/09/18 13/09/20
13/09/18 13/09/21
14/12/18 14/12/19
14/12/18 14/12/20
14/12/18 14/12/21
15/03/19 15/03/20
15/03/19 15/03/21
15/03/19 15/03/22
7/06/20
7/06/19
7/06/21
7/06/19
7/06/22
7/06/19
$
0.57
0.55
0.55
0.55
0.51
0.51
0.51
0.50
0.50
0.50
0.63
0.63
0.63
0.54
0.54
0.54
0.77
0.77
0.77
0.67
0.67
0.67
0.65
0.65
0.65
0.58
0.58
0.58
0.55
0.55
0.55
0.59
0.59
0.59
Exercise
Expected Weighted
Expected
Risk-free
Fair value
price
volatility
average
dividends
$
0.57
0.56
0.56
0.56
0.49
0.49
0.49
0.54
0.54
0.54
0.59
0.59
0.59
0.57
0.57
0.57
0.77
0.77
0.77
0.67
0.67
0.67
0.61
0.61
0.61
0.58
0.58
0.58
0.58
0.58
0.58
0.60
0.60
0.60
%
46
46
46
46
43
43
43
43
43
43
43
43
43
43
43
43
42
42
42
42
42
42
41
41
41
41
41
41
41
41
41
41
41
41
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
%
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,%
2.29
2.04
2.04
2.04
1.57
1.57
1.57
2.16
2.16
2.16
2.12
2.12
2.12
1.95
1.95
1.95
2.24
2.24
2.24
2.30
2.30
2.30
2.22
2.22
2.22
2.14
2.14
2.14
1.60
1.60
1.60
1.14
1.14
1.14
at grant
Date, $
0.22
0.17
0.19
0.21
0.13
0.16
0.18
0.11
0.14
0.16
0.17
0.21
0.23
0.12
0.15
0.17
0.19
0.23
0.26
0.17
0.20
0.23
0.17
0.21
0.23
0.14
0.17
0.19
0.12
0.15
0.17
0.14
0.16
0.19
1 based on government bonds
The expected price volatility is based on the historic volatility compared to that of similar listed companies and
the remaining life of the options.
There was no share options granted in 2020.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
|66
For personal use only NOTES ON THE FINANCIAL STATEMENTS
24.
Parent Entity Disclosures
As at and throughout the financial year ending 30 June 2020 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
2020
$000
2019
$000
(1,612)
-
(1,612)
46,175
73,859
10,987
13,282
94,399
1,734
18
(600)
(34,974)
60,577
-
-
2,611
-
2,611
50,526
77,389
9,662
10,311
87,936
4,352
18
(600)
(32,628)
59,078
-
-
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 $92,445 (2019: $92,445). The periods covered by the guarantees range from two to three years.
No deficiency of net assets existed in the controlled entities covered by guarantees at 30 June 2020 or 30 June
2019. 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 2020 are set out below. All subsidiaries have share capital consisting
solely of ordinary shares that are 100% (2019: 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.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
|67
For personal use only NOTES ON THE FINANCIAL STATEMENTS
25.
Interests in other entities (Continued)
(a) Material subsidiaries (Continued)
Name of entity
Place of business/
incorporation
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 LLC
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.
Australia
Australia
Australia
Australia
USA
USA
Canada
Indonesia
Hong Kong
China
Mongolia
Russia
Russia
Principal Activities
Laboratory Services
Software Sales and Services
Advisory Services
Software Sales and Services
Advisory Services
Software Sales and Services
Software Sales and Services
Advisory Services
Advisory Services
Advisory Services
Advisory Services
Software and Advisory Services
Software Sales and 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
Colombia
Software Sales and Services
Software Sales and Services
All entities other than GeoGAS Pty Ltd trade as RPM and RPMGlobal.
(b) Significant Restrictions
Cash and short term deposits held in Chile, Brazil, South Africa, China, Indonesia, Mongolia and Russia are subject
to local exchange control regulations. These regulations provide restrictions on exporting capital from those
countries other than through normal trading transactions or dividends. The carrying amount of cash included
within the consolidated financial statements to which these restrictions apply is $12,721,000 (2019: $10,574,000).
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
|68
For personal use only NOTES ON THE FINANCIAL STATEMENTS
26. 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.
(a)
Information about reportable segments
2020
2019
Software
Division
Advisory
Division
GeoGAS
Total
Software
Division
Advisory
Division
GeoGAS
Total
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Revenue
External Sales
48,852
25,762
4,174
78,788
48,826
25,899
4,683
79,408
Inter-segment sales
242
107
38
387
523
292
319
1,134
Total Revenue
49,094
25,869
4,212
79,175
49,349
26,191
5,002
80,542
Inter-segment expenses
(107)
(280)
-
(387)
(231)
(843)
Rechargeable expenses
(1,373)
(5,302)
(107)
(6,782)
(2,055)
(4,659)
(60)
(175)
(1,134)
(6,889)
Net revenue
Rent
47,614
20,287
4,105
72,006
47,063
20,689
4,767
72,519
40
(28)
(76)
(64)
(837)
(982)
(337)
(2,156)
Other Expenses
(24,615)
(17,656)
(1,588)
(43,859)
(23,880)
(16,707)
(1,981)
(42,568)
Software Development - Rent
Software Development – Other
-
(11,620)
-
-
-
-
-
(11,620)
(867)
(12,795)
-
-
-
-
(867)
(12,795)
Segment profit/(loss)
11,419
2,603
2,441
16,463
8,684
3,000
2,449
14,133
(b)
Disaggregation of revenue from contracts with customers
Revenue
Segment Revenue
49,094
25,869
4,212
79,175
49,349
26,191
5,002
80,542
Leases and asset disposal
-
-
Inter-segment revenue
(242)
(107)
(10)
(38)
(10)
(387)
-
-
(523)
(292)
(36)
(319)
(36)
(1,134)
Revenue from external
customers
Timing of revenue recognition
48,852
25,762
4,164
78,778
48,826
25,899
4,647
79,372
At a point in time
6,909
-
3,175
10,084
12,061
-
Over time
41,943
25,762
989
68,694
36,765
25,899
3,320
1,327
15,381
63,991
Revenue from external
customers
48,852
25,762
4,164
78,778
48,826
25,899
4,647
79,372
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
|69
For personal use only NOTES ON THE FINANCIAL STATEMENTS
26. Operating Segments (Continued)
Segment revenue is based on the geographical location of customers and segment assets are based on the
geographical location of the assets.
(c) Geographical Information
2020
2019
Australia
Asia
Americas
Africa & Europe
Operating Segment
Unallocated Income
Total Revenue
Revenues
$’000
Non-current
assets1
$’000
Revenues
$’000
Non-current
assets1
$’000
25,901
14,915
22,215
15,757
78,788
1,915
80,703
34,869
750
1,761
673
38,053
-
-
27,480
13,531
22,259
16,138
79,408
685
80,093
35,543
172
309
92
36,116
-
-
1 Excludes financial instruments and deferred tax assets
(d) 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
Depreciation and amortisation
Professional services – Russian Litigation
Net finance costs
Unallocated income
Profit/(Loss) before income tax
Income tax benefit
Net Profit/(Loss)
27.
Key Management Personnel Disclosures
(a) Compensation
Short term employee benefits
Post-employment benefits
Share-based payments
2020
$'000
2019
$'000
16,463
14,133
(277)
(6,990)
(4,200)
(6,692)
(167)
1,916
53
(767)
(714)
550
(5,084)
(3,856)
(4,020)
(185)
73
134
1,745
(7,598)
(5,853)
2020
$
2019
$
2,860,915
2,158,708
67,925
86,693
72,506
118,922
3,015,533
2,350,136
No other transactions with Key Management personal occurred during the year.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
|70
For personal use only NOTES ON THE FINANCIAL STATEMENTS
28.
Events occurring after the reporting period
On 31 July 2020, the Group acquired 100% of the issued share capital of Revolution Mining Software Inc (RMS), a
mine scheduling optimisation company located in Sudbury, Canada. RMS has over six years’ experience in
developing and selling its Schedule Optimisation Tool (SOT), a cutting-edge mine scheduling optimisation
software solution for tier one miners around the globe. The financial effects of this transaction have not been
brought to account at 30 June 2020. The operating results, assets and liabilities of the company will be
consolidated from 31 July 2020.
The provisionally determined fair values of the assets and liabilities of RMS as at the date of acquisition are as
follows:
Purchase consideration
Cash
Contingent consideration
$000
522
777
1,299
Contingent consideration comprises an adjustment for net monetary assets and ongoing retention and growth of
annuity revenues by RMS. The potential undiscounted value of future retention payments was estimated at
$400,000. The fair value was calculated as $385,000 by discounting this value of future payments by 3.5%.
The amount of contingent consideration is subject to an independent valuation which was not completed by the
date of this report.
Acquisition related costs will be included in professional fees and other expenses in profit and loss in the reporting
period ended 30 June 2020. The provisionally determined fair values of the assets and liabilities recognised as at
the date of the acquisition are as follows:
Purchase consideration
Cash and cash equivalents
Trade and other receivables
Property, plant and equipment
Intangible assets
Contract liabilities
Net identifiable assets acquired
Goodwill
Net Assets Acquired
$000
284
107
5
977
(74)
1,299
-
1,299
At the time the financial statements were authorised for issue, the group had not yet completed the accounting
for the acquisition of RMS. In particular, the fair values of the assets and liabilities disclosed above have only been
determined provisionally as the independent valuations have not been finalised. It is also not yet possible to
provide detailed information about each class of acquired receivables and any contingent liabilities of the
acquired entity.
No other matter or circumstance other than COVID-19 related matters have arisen since 30 June 2020 that has
significantly affected the Group’s operations, results or state of affairs, or may do so in the future years.
29.
Contingent liabilities and contingent assets
There are no contingent liabilities or contingent assets that require disclosure in the financial report.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
|71
For personal use only 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 2020 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 2020, 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
Ross Walker,
Interim Chairman
Dated this 24th day of August 2020
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
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For personal use only Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek St
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of RPMGlobal Holdings Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of RPMGlobal Holdings Limited (the Company) and its subsidiaries
(the Group), which comprises the consolidated statement of financial position as at 30 June 2020, 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)
Giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its
financial performance for the year ended on that date; and
(ii)
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 (including Independence Standards) (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.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
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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 multiple streams,
Our audit procedures included:
including: software sales (perpetual and SaaS),
maintenance, advisory and consultancy.
Assessing the revenue recognition policy for
compliance with AASB 15 Revenue from Contracts
The Group has transitioned its software sales from a
with Customers.
predominantly one-off perpetual licence sale to
focusing on recurring subscription sales. This shift has
increased importance under the requirements of AASB
15 Revenue from Contracts with Customers and the
way that subscription revenue is recognised.
Selecting significant software licence contracts,
and reconciling the contract from inception to
reporting, alongside the revenue recognition
under AASB 15. This included a focus on new
subscription sales and the recognition of revenue
The Group’s disclosures about revenue recognition are
‘over time’.
included in Note 1 (f), which detail the accounting
policies applied under the requirements of AASB 15
Revenue from Contracts with Customers.
Selecting a sample of licence sales, maintenance
services and consulting fees recognised as
revenue, and agreeing to supporting invoices,
The assessment of the Group’s revenue recognition was
signed customer contracts and proof of delivery
significant to our audit due to the significant of
where available.
revenue to the financial report, and the complex
nature of accounting for the appropriate timing of
revenue related to the sale of software and related
maintenance services under the requirements of AASB
15 Revenue from Contracts with Customers.
Obtaining and evaluating credit notes issued post
year-end, and the auditing the first and last
invoices post and pre year-end, to ensure an
appropriate revenue cut-off was achieved at
balance sheet date.
Analytical review procedures on all significant
revenue streams on a disaggregated balance
against expected trends and prior year levels.
Selecting a sample of receipts and maintenance
invoices from the clients’ income in advance
schedule and recalculating appropriate deferred
portion of revenue.
Assessing the adequacy of the Group’s revenue
recognition disclosures within the financial
statements.
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.
RPMGLOBAL HOLDINGS LIMITED // ANNUAL REPORT 2020
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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 on Goodwill impairment are
Our audit procedures included, amongst others:
included in Note 11, detailing the allocation of
Goodwill to the Group’s various Cash Generating Units
(‘CGUs’), setting out the key assumptions for value-in-
use calculations and the impact possible changes in
these assumptions would have.
This annual impairment test is significant to our audit
given the material balance of Goodwill as of 30 June
Obtaining an understanding of the ‘value-in-use’
models, and critically evaluations management’s
methodologies and their key assumptions.
Assessing management’s allocation of Goodwill
and assets and liabilities, including corporate
assets, to CGU’s.
2020, and its importance to the financial statements.
Evaluating the inputs used in the value-in-use
The impact of COVID-19 on inputs used in
management’s assessment required significant auditor
attention.
calculations, including growth rates, discount
rates and underlying cash flows applied by
management. Specific consideration was made as
to the COVID-19 environment and the impact on
In addition, management’s assessment process is
forecast results.
complex and highly judgemental, based on
assumptions, specifically forecast future cash flows,
growth rates and discount rates, which are affected by
expected future market and economic conditions.
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 impairment assessment 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 2020, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of
BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member
firms. Liability limited by a scheme approved under Professional Standards Legislation.
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For personal use only In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included on pages 14 to 22 of the directors’ report for the
year ended 30 June 2020.
In our opinion, the Remuneration Report of RPMGlobal Holdings Limited, for the year ended 30 June
2020, 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, 24 August 2020
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.
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For personal use only CORPORATE GOVERNANCE STATEMENT
Corporate Governance Statement – Year Ended 30 June 2020
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 – 4th Edition’ (the ‘ASX Principles and Recommendations’) and is current as at 30 June 2020.
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 2020 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 24 August 2020.
The Board of the Company strives to meet the highest standards of Corporate Governance and 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.
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SHAREHOLDER INFORMATION
The shareholder information set out below was applicable as at 18 August 2020.
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
No. Holders
Options
1,638
2,321
854
903
147
5,863
-
-
3
36
28
67
The number of shareholdings held in less than marketable parcels of 419 shares is 129 (Close Price 17 August
2020 $1.195).
B.
Equity Security Holders
The names of the twenty largest holders of quoted equity securities (as at 18 August 2020) are listed below:
Name
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
RUNGE INTERNATIONAL PTY LTD
PAUA PTY LTD
BOND STREET CUSTODIANS LIMITED
ANACACIA PTY LTD
BNP PARIBAS NOMS PTY LTD
MR STEPHEN JOHN BALDWIN + MRS ANDREA MAREE BALDWIN
BNP PARIBAS NOMINEES PTY LTD
TODD GLOBAL INVESTMENTS PTY LTD
THE RIDGE NZ PTY LTD
BNP PARIBAS NOMINEES PTY LTD
MR JOHN CRAIG HALLIDAY
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
FEYDER INVESTMENTS PTY LTD
MR IAN JAMES LUXTON
BRETTON PTY LTD
MRS ANDRE JOAN PHILLIPS
Number held
Percentage
of issued
shares
37,274,239
26,492,233
25,290,360
14,340,622
13,591,450
6,795,753
6,500,000
3,537,840
2,925,867
2,642,511
2,079,140
1,919,009
1,424,385
1,278,318
1,247,653
1,130,438
989,333
982,934
958,333
837,142
152,237,560
16.6
11.8
11.26
6.39
6.05
3.03
2.89
1.58
1.3
1.18
0.93
0.85
0.63
0.57
0.56
0.5
0.44
0.44
0.43
0.37
67.8
Unquoted equity securities
10,204,841 options over unissued shares (as at the date of this report): for further details see note 23.
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SHAREHOLDER INFORMATION
C.
Substantial Holders
The names of the substantial shareholders listed in the holding register as at 30 June 2020 are:
Estimated beneficial holdings as at 30 June 2020
Perennial Value Management
First Sentier Investors
Forager Funds Management
Runge, Ian
Clime Asset Management
D.
Voting Rights
Refer to note 15 for voting rights attached to ordinary shares.
Number held
18,138,287
17,903,836
14,712,027
14,149,878
Percentage
8.09%
7.98%
6.56%
6.31%
11,978,991
5.34%
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CORPORATE DIRECTORY
Directors
Richard Mathews
Managing Director
Ross Walker
Non-executive Director
Interim Chairman
Stephen Baldwin
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
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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 2020
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