OBJECTIVE CORPORATION LIMITED ABN: 16 050 539 350 APPENDIX 4D HALF-YEAR REPORT For the half-year ended 31 December 2012 (Previous corresponding period being the half-year ended 31 December 2011) Objective Corporation Limited ABN: 16 050 539 350 Page 1
RESULTS FOR ANNOUNCEMENT TO THE MARKET KEY INFORMATION ON Half-year ended Dec-12 A$'000 Half-year ended Dec-11 A$'000 % Change Revenue from ordinary activities 19,041 20,166 (6%) Profit from ordinary activities after income tax attributable to members 821 2,837 (71%) Net profit for the half-year attributable to members 821 2,837 (71%) DIVIDENDS Amount per security Franked amount per security Interim dividend - - Previous corresponding period - - The dividends paid during the half year and shown in the consolidated statement of changes in equity were the final and special dividend paid in respect of the year ended 30 June 2012. EARNINGS PER SHARE S Dec-12 Dec-11 Earnings per share (EPS) 0.8 cents 2.4 cents NET TANGIBLE ASSETS PER SHARE S Dec-12 Dec-11 Net tangible assets per share (NTA) 4.3 cents 3.7 cents The information contained in this report should be read in conjunction with the 30 June 2012 Annual Report of Objective Corporation Limited. Objective Corporation Limited ABN: 16 050 539 350 Page 2
COMMENTS BY DIRECTORS Objective Corporation (ASX: OCL), a specialist provider of content, collaboration and process management solutions, today announced that its financial results are in line with the preliminary announcement on 2 nd January 2013. Net profit after tax for the six months to 31 December 2012 was $0.8 million (FY12 H1: $2.8 million). Revenue was $19.0 million (FY12 H1: $20.2 million). The company achieved a strong operating cash flow of $6.8 million in the half. At 31 December 2012, the company s balance sheet remained strong with $17.4 million in cash and cash equivalents and no debt compared to $11.6 million at 31 December 2011. Consistent with prior years, an interim dividend was not declared, however the company expects to declare franked dividends with the full financial year results. FINANCIAL SUMMARY Results summary for half year ended 31 Dec 2012 31 Dec 2011 Change (%) $m $m Revenue 19.0 20.2 (6%) Net profit after tax 0.8 2.8 (71%) Asia Pacific revenue 15.7 16.6 (5%) European revenue 2.8 3.1 (10%) Earnings per share 0.8 cps 2.4 cps (67%) EBITDA 0.4 3.7 (89%) R & D Expense 4.8 4.5 7% No interim dividend was declared Mr Tony Walls, CEO, Objective Corporation said: It is very disappointing to be providing this half year result when it is not representative of the company s underlying performance. Key contracts that were expected to be completed by 31st December have slipped to the second half. These slippages have had a material effect on the first half revenue and profitability. Apart from the contract delays outlined above, our ECM business is performing well. During the first half we secured many new customers including the Port of Melbourne, to replace an EMC Documentum system, Gisborne District Council (New Zealand) to replace an Open Text system and the Australian Pesticides and Veterinary Medicines Authority to replace a RecFind system. Evidence would suggest that our competitive position continues to strengthen. During the first half we were also engaged on a multitude of customer projects including customers upgrading to the latest Objective 8 release. Clearly, Objective s long term commitment to our customers is being recognised. The company s research and development continued at a pace. R&D investment was $4.8 million, approximately 25 per cent of revenue (FY12 H1: $4.5million) and substantially above the industry average. Objective Corporation Limited ABN: 16 050 539 350 Page 3
During the current period, the company launched Objective Connect, a cloud based, highly secure document sharing solution which was built to the unique and stringent requirements of the public sector. This innovative solution has been a significant undertaking over the past year and, within the first 60 days from launch, Objective Connect had in excess of 1,000 users. All research and development and start-up marketing costs have been expensed. Objective Connect revenue is recognised on a subscription basis, and as such, did not to make any meaningful contribution to the company s results in the period. The company signed new government customers for its cloud based Objective Policy Lifecycle Management solutions. However, particularly important was the signing of a multi-year contract with QBE Insurance. In the near term, we expect to announce a new go-to-market partner for the insurance sector both domestically and internationally. AUDIT REVIEW The half-year financial report has been subject to review and the independent auditor s review report is attached to the report. The remainder of the information requiring disclosure to comply with listing rule 4.2A.3 is contained in the attached halfyear financial report. Objective Corporation Limited ABN: 16 050 539 350 Page 4
HALF-YEAR FINANCIAL REPORT OBJECTIVE CORPORATION LIMITED AND ITS CONTROLLED ENTITIES ABN 16 050 539 350 31 DECEMBER 2012 Objective Corporation Limited ABN: 16 050 539 350 Page 5
DIRECTORS REPORT Your directors present their report together with the financial statements of the consolidated entity consisting of Objective Corporation Limited and the entities it controlled, for the half-year ended 31 December 2012 and the independent auditor s review report thereon. DIRECTORS The following persons were directors of Objective Corporation Limited at any time during or since the end of the halfyear: Tony Walls Gary Fisher Leigh Warren Nick Kingsbury PRINCIPAL ACTIVITIES The principal activities of the consolidated entity during the half-year were the supply of information technology software and services. There was no significant change in the nature of the consolidated entity s activities during the half-year. REVIEW OF OPERATIONS Revenue The consolidated revenue from sales and services for the half was $18,541,000 (FY12 H1: $19,691,000). Asia Pacific operations revenue from sales and services decreased to $15,698,000 (FY12 H1: $16,551,000). European operations revenue from sales and services decreased to $2,800,000 (FY12 H1: $3,061,000). Total revenue for the half was $19,041,000, which decreased from $20,166,000, in the previous corresponding period. Operating Result The consolidated operating result after tax attributable to members for the half was a profit of $821,000 (FY12 H1: $2,837,000). AUDITOR S INDEPENDENCE DECLARATION A copy of the auditor s independence declaration is provided with this report. ROUNDING OF AMOUNTS The Company is an entity to which ASIC class order 98/100 applies and accordingly, amounts in the financial statements and Directors Report have been rounded to the nearest thousand dollars, unless specifically stated to be otherwise. Signed in accordance with a resolution of the directors. Tony Walls Director Date: 22 February 2013 Objective Corporation Limited ABN: 16 050 539 350 Page 6
OBJECTIVE CORPORATION LIMITED AND CONTROLLED ENTITIES CONSOLIDATED INCOME STATEMENT FOR THE HALF-YEAR ENDED 31 DECEMBER ER 2012 Note Half-year ended Dec-12 Half-year ended Dec-11 Revenue 2 19,041 20,166 Cost of sales (395) (400) Gross profit 18,646 19,766 Distribution expenses (10,382) (9,099) Administrative expenses (2,888) (2,499) Research and development expenses (4,786) (4,470) Foreign exchange (loss)/gain (6) 97 Finance expenses (2) (59) Profit from continuing operations before income tax 582 3,736 Income tax benefit (expense) 239 (899) Profit after tax attributable to members of the Company 821 2,837 Cents Cents Basic earnings per share 5 0.8 2.4 Diluted earnings per share 5 0.8 2.4 The above consolidated income statement should be read in conjunction with the accompanying notes. Objective Corporation Limited ABN: 16 050 539 350 Page 7
OBJECTIVE CORPORATION LIMITED AND CONTROLLED ENTITIES CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 31 DECEMBER ER 2012 Dec-12 Half-year ended Dec-11 Profit for the t period 821 2,837 Other comprehensive income Items that may be reclassified subsequently to profit and loss Foreign currency translation differences for foreign operations, net of tax 135 18 Total comprehensive income for the period 956 2,855 Attributable to members of the Company 956 2,855 The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes. Objective Corporation Limited ABN: 16 050 539 350 Page 8
OBJECTIVE CORPORATION LIMITED AND CONTROLLED ENTITIES CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER ER 2012 Dec-12 30-Jun Jun-12 Note Current Assets Cash and cash equivalents 17,420 13,533 Receivables 5,610 10,923 Current tax receivable 374 - Total Current Assets 23,404 24,456 Non Current Assets Property, plant and equipment 886 766 Deferred tax assets 345 439 Intangible assets 6,193 6,190 Total Non Current Assets 7,424 7,395 Total Assets 30,828 31,851 Current Liabilities Payables 4,541 6,582 Current tax liabilities 622 697 Provisions 638 611 Other 11,402 8,562 Total Current Liabilities 17,203 16,452 Non Current Liabilities Other 1,613 1,800 Provisions 1,151 1,180 Total Non Current Liabilities 2,764 2,980 Total Liabilities 19,967 19,432 Net Assets 10,861 12,419 Equity Contributed equity 4 1,826 1,826 Retained profits and reserves 9,035 10,593 Total Equity 10,861 12,419 The above consolidated statement of financial position should be read in conjunction with the accompanying notes. Objective Corporation Limited ABN: 16 050 539 350 Page 9
OBJECTIVE CORPORATION LIMITED AND CONTROLLED ENTITIES CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER ER 2012 Dec-12 Dec-11 Balance at 1 July 12,419 13,693 Profit for the half-year 821 2,837 Exchange differences on translation of foreign operations 135 18 Total comprehensive income for the half-year 956 2,855 Transactions with members in their capacity as members: Acquisitions of equity, net of transaction costs - (4,216) Dividends provided for or paid (2,514) (1,811) Total equity at the end of the half-year 10,861 10,521 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. Objective Corporation Limited ABN: 16 050 539 350 Page 10
OBJECTIVE CORPORATION LIMITED AND CONTROLLED ENTITIES CONSOLIDATED CASH FLOW STATEMENT FOR THE HALF-YEAR ENDED 31 DECEMBER ER 2012 Dec-12 Dec-11 Cash flow from operating activities Receipts from customers (inclusive of GST) 28,743 25,861 Payments to suppliers and employees (inclusive of GST) (22,444) (19,741) Interest received 460 435 Interest paid (2) (59) Income tax (paid)/refund 6 3 Net cash provided in operating activities 6,763 6,499 Cash flow from investing activities Payments for plant & equipment (340) (96) Net cash used in investing activities (340) (96) Cash flow from financing activities Share Buy Back - (3,647) Finance lease payments - (21) Cash dividend paid (2,514) (1,811) Net cash used in financing activities (2,514) (5,479) Net increase in cash held 3,909 924 Cash at the beginning of the half-year 13,533 10,709 Net foreign exchange differences (22) (13) Cash at the end of the half-year 17,420 11,620 The above consolidated cash flow statement should be read in conjunction with the accompanying notes. Objective Corporation Limited ABN: 16 050 539 350 Page 11
OBJECTIVE CORPORATION LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL AL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER ER 2012 Note 1. Summary of significant ificant accounting policies A. Basis of preparation of the half-year financial report This general purpose financial report for the interim half year reporting period ended 31 December 2012 has been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001. This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2012 and any public announcements made by Objective Corporation Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001. The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period. B. Restatement of Comparatives - Correction of prior period financial statements In accordance with accounting standards, the financial statements of the group as at 31 December 2011 have been restated to reflect an adjustment to the carrying value of intangible assets of foreign controlled subsidiaries due to changes in the foreign currency exchange rate since acquisition. Consolidated Income Statement for the previous comparative period 2011 Reported Adjustment Restated Administration expenses (2,534) 35 (2,499) Profit after Tax attributable to members of the Company 2,802 35 2,837 Consolidated Statement of Comprehensive Income for the previous comparative period 2011 Reported Adjustment Restated Profit for the half year 2,802 35 2,837 Foreign currency translation differences for foreign operations Total comprehensive income for the half year (13) 31 18 2,789 66 2,855 Objective Corporation Limited ABN: 16 050 539 350 Page 12
Note 1. 1 Summary of significant accounting policies (continued) B. Restatement of Comparatives - Correction of prior period financial statements (continued) Consolidated Statement of Changes in Equity 2011 Reported Adjustment Restated Balance at 1 July 16,113 (2,420) 13,693 Profit for the half-year 2,802 35 2,837 Foreign currency translation differences for foreign operations Total comprehensive income for the half-year Total equity at the end of the halfyear (13) 31 18 2,789 66 2,855 12,875 (2,354) 10,521 Note 2. Revenue Dec-12 Dec-11 Sales and services revenue 18,541 19,691 Interest revenue 460 435 Sundry revenue 40 40 Total revenue 19,041 20,166 Objective Corporation Limited ABN: 16 050 539 350 Page 13
Note 3. Segment information (a) Geographic segments Asia/Pacific Europe Unallocated Consolidated For half-year ended $'000 $'000 $'000 $'000 31 December 2012 Segment Revenue Sales and Services Revenue 15,698 2,800 43 18,541 Interest revenue - - 460 460 Sundry revenue 40 - - 40 Total Revenue 15,738 2,800 503 19,041 Expenses(not including R & D) 9,715 2,719 1,237 13,671 Profit(loss) before R & D 6,023 81 (734) 5,370 R & D expenses - - 4,786 4,786 Interest Expense - - 2 2 Income tax expense/(benefit) - - (239) (239) Net profit (loss) 6,023 81 (5,283) 821 Asia/Pacific Europe Unallocated Consolidated For half-year ended $'000 $'000 $'000 $'000 31 December 2011 Segment Revenue Sales and Services Revenue 16,551 3,061 79 19,691 Interest revenue - - 435 435 Sundry revenue 40 - - 40 Total Revenue 16,591 3,061 514 20,166 Expenses (not including R & D) 8,445 2,728 728 11,901 Profit (loss) before R & D 8,146 333 (214) 8,265 R & D expenses - - 4,470 4,470 Interest Expense - - 59 59 Income tax expense/(benefit) - - 899 899 Net profit (loss) 8,146 333 (5,642) 2,837 (b) Industry segments The consolidated entity operates in the information technology software and services industry. Objective Corporation Limited ABN: 16 050 539 350 Page 14
Note 4. Contributed equity Dec-12 30-June June-12 Dec-12 30-June June-12 Number Number Ordinary Shares 100,753,277 100,753,277 1,826 1,826 Total contributed equity 100,753,277 100,753,277 1,826 1,826 Options issued during the half year During the half-year ended 31 December 2012, no options in the Company were issued pursuant to the Employee Incentive Plan. No options were exercised and no options were cancelled during the period. 45,000 options lapsed during the period. Dec-12 Dec-11 Options on issue at balance date Number Expiry Date Number Expiry Date Employee Options exercisable at $0.50-02/10/2012 50,000 02/10/2012 Employee Options exercisable at $1.00-30/06/2012 100,000 30/06/2012 Employee Options exercisable at $1.00 790,000 30/06/2014 790,000 30/06/2014 Employee Options exercisable at $1.00-30/06/2014 100,000 30/06/2014 Employee Options exercisable at $0.50 100,000 30/06/2014 100,000 30/06/2014 Employee Options exercisable at $0.50 500,000 31/12/2014 500,000 31/12/2014 Employee Options exercisable at $0.50 300,000 30/06/2015 300,000 30/06/2015 Employee Options exercisable at $0.50 500,000 01/11/2015 500,000 01/11/2015 Employee Options exercisable at $0.50 1,200,000 15/07/2016 1,200,000 15/07/2016 Employee Options Exercisable at $0.50 657,000 01/09/2016 657,000 01/09/2016 Employee Options Exercisable at $0.50 200,000 25/10/2016 200,000 25/10/2016 Total options on issue 4,247,000 4,497,000 Objective Corporation Limited ABN: 16 050 539 350 Page 15
Note 5. Earnings per share Dec-12 Cents Dec-11 Cents Basic earnings per share 0.8 2.4 Diluted earnings per share 0.8 2.4 Net profit used in calculating basic and diluted earnings per share 821 2,837 Weighted average number of shares used as the denominator in Number Number calculating basic earnings per share 100,753,277 118,796,755 Weighted average number of shares used as the denominator in Number Number calculating diluted earnings per share 100,753,277 118,796,755 Objective Corporation Limited ABN: 16 050 539 350 Page 16
DIRECTORS DECLARATION The directors declare that the attached financial statements and notes thereto: (a) comply with Australian Accounting Standard AASB 134 Interim Financial Reporting and (b) Corporations Regulations 2001; and gives a true and fair view of the consolidated entity s financial position as at 31 December 2012 and of its performance, as represented by the results of its operations and its cash flows, for the halfyear ended on that date. In the directors opinion (a) (b) the financial statements are in accordance with the Corporation 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. This declaration is made in accordance with a resolution of the directors. Tony Walls Director Dated 22 February 2013 Objective Corporation Limited ABN: 16 050 539 350 Page 17
Level 22 MLC Centre Postal Address: 19 Martin Place GPO Box 1615 Sydney NSW 2000 Sydney NSW 2001 Australia Australia Tel: +61 2 9221 2099 Fax: +61 2 92231762 www.pitcher.com.au partners@pitcher-nsw.com.au Pitcher Partners is an association of independent firms Melbourne Sydney Perth Adelaide Brisbane AUDITOR'S INDEPENDENCE DECLARATION To the Directors of Objective Corporation Limited I declare that, to the best of my knowledge and belief there has been: (i) (ii) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and no contraventions of any applicable code of professional conduct in relation to the review. M A GODLEWSKI Partner PITCHER PARTNERS Sydney 22 February 2013 An independent New South Wales Partnership. ABN 35 415 759 892 Liability limited by a scheme approved under Professional Standards Legislation
Level 22 MLC Centre Postal Address: 19 Martin Place GPO Box 1615 Sydney NSW 2000 Sydney NSW 2001 Australia Australia Tel: +61 2 9221 2099 Fax: +61 2 92231762 www.pitcher.com.au partners@pitcher-nsw.com.au Pitcher Partners is an association of independent firms Melbourne Sydney Perth Adelaide Brisbane Report on the Half-Year Financial Report INDEPENDENT AUDITOR'S REVIEW REPORT TO THE MEMBERS OF OBJECTIVE CORPORATION LIMITED We have reviewed the accompanying half-year financial report of Objective Corporation Limited and controlled entities, which comprises the consolidated statement of financial position as at 31 December 2012, and the consolidated statement of comprehensive income, consolidated income statement, consolidated statement of changes in equity and consolidated cash flow statement for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration. Directors' Responsibility for the Half-Year Financial Report The directors of the Objective Corporation Limited are responsible for the preparation of the half-year 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 half-year financial report that is free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity s financial position as at 31 December 2012 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Objective Corporation Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report. A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. An independent New South Wales Partnership. ABN 35 415 759 892 Liability limited by a scheme approved under Professional Standards Legislation
Independence In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. Conclusion Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Objective Corporation Limited is not in accordance with the Corporations Act 2001 including: (a) giving a true and fair view of the consolidated entity s financial position as at 31 December 2012 and of its performance for the half-year ended on that date; and (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001. M A GODLEWSKI Partner 22 February 2013 PITCHER PARTNERS Sydney