Financial Statements Disclaimer: These financials include illustrative disclosures for a listed public company and are not intended to be and are not comprehensive in relation to its subject matter. This document is not a substitute for reading technical pronouncements relating to the preparation of financial statements. To the extent permitted by law, CaseWare Australia and New Zealand, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences arising from the reliance on the information contained in this document or for any decisions based on it.
CONTENTS PAGE Corporate Governance Statement...1 Directors' Report...11 Auditor's Independence Declaration under Section 307C of the Corporations Act 2001...22 Primary Statements...23 Statement of Profit or Loss and Other Comprehensive Income...23 Statement of Financial Position...24 Statement of Changes in Equity...25 Statement of Cash Flows...26...27 Directors' Declaration...61 Independent Audit Report...62 Additional Information for Listed Public Companies...64
Corporate Governance Statement 30 June 2017 The Board is committed to achieving and demonstrating the highest standards of corporate governance. The Board continues to refine and improve the governance framework and practices in place to ensure they meet the interests of shareholders. The Company complies with the Australian Securities Exchange (ASX) Corporate Governance Council s Corporate Governance Principles and Recommendations (the Principles). Copies of CaseWare Listed's Board and Board committee charters and key corporate governance policies or summaries are available in the Corporate Governance section of the website at www.example.com.au. Principle 1: Lay solid foundations for management and oversight Role of the Board and Management The Board of Directors is responsible for the corporate governance of the Company. The Board provides strategic guidance for the Company, and effective oversight of management. The Board guides and monitors the business and affairs of CaseWare Listed on behalf of the shareholders by whom they are elected and to whom they are accountable. The Board has adopted a Charter that details its roles and responsibilities, which is available on our website. The Board has delegated responsibility for day-to-day management of the Company to the Chief Executive Officer (CEO) and there is a formal delegations structure in place which sets out the powers delegated to the CEO and those specifically retained by the Board, these delegations are reviewed on a regular basis. Responsibilities of the Board The Board is responsible for: Overseeing the Company, including its control and accountability systems; Appointing and removing the CEO; Where appropriate, ratifying the appointment and removal of senior executives; Providing input into and final approval of management s development of corporate strategy and performance objectives; Reviewing, ratifying and monitoring systems of risk management and internal controls, codes of conduct and legal compliance; Monitoring senior executives performance and implementation of strategy; Ensuring appropriate resources are available to senior executives; Approving and monitoring the operating budgets and progress of major capital expenditure, capital management and acquisitions and divestitures; and Monitoring the effectiveness of the Company's governance practices. Allocation of individual responsibilities Formal letters of appointment are provided to all new Directors and Senior Executives setting out key terms and conditions of their appointment. 1
Corporate Governance Statement 30 June 2017 Responsibilities of management Management are responsible for implementing the strategic objectives of the Company and operating within the risk appetite set by the Board as well as other aspects of the day-to-day running of the Company. Management is also responsible for providing the Board with accurate, timely clear information to enable the Board to perform its responsibilities. Induction All new Directors participate in a formal induction process co-ordinated by the Company Secretary. This induction process includes briefings on the Company s financial, strategic, operational and risk management position, the Company s governance framework and key developments in the Company and the industry and environment in which it operates. Role and accountability of the Company Secretary The Company Secretary is appointed by the Board and is responsible for: Advising the Board and its Committees on Governance matters; Monitoring compliance with Board policies and procedures; Co-ordinating Board papers; Accurately recording decisions and discussions from Board meetings; and Co-ordinating the induction and professional development of Directors. Ongoing training Directors identify additional training needs on an ongoing basis and attend these as necessary to ensure they have the appropriate skills and knowledge to perform their role. Evaluation of Directors and Senior Executives A performance evaluation for Directors and Senior Executives take place at least annually, the last review took place in April 2017 in compliance with the established evaluation process. The Company s policy for Directors and Senior Executive evaluation is available on the Company s website. Additional development opportunities have been identified for Directors following the evaluations. Appointment of Board Members Prior to appointing or putting forward a candidate for election to the Board, appropriate checks such as character, experience, criminal records and education are performed. All material information in the Company's possession is provided to security holders to allow them to make an informed decision about the suitability of the candidate. Diversity policy In respect of diversity, the Board considers that diversity includes differences that relate to gender, age, ethnicity and cultural background. It also includes differences in background and life experience, communication styles, interpersonal skills, education and problem solving skills. 2
Corporate Governance Statement 30 June 2017 The Board seeks to develop a culture of diversity within the Company whereby a mix of skills and diverse backgrounds are employed by the Company at all levels through structuring the recruitment processes at all levels so that a diverse range of candidates are considered and there are no excuses or unconscious biases that might discriminate against certain candidates. The Company strives to: 1. develop and maintain a diverse and skilled workforce through transparent recruitment processes. 2. promote an inclusive workplace culture that values and utilises the contributions of all employees backgrounds, experiences and perspective though improved awareness of the benefits of workforce diversity. 3. facilitate diversity in the workplace by developing programs that promote growth for all employees, so each employee may reach their full potential, and providing maximum benefit for the Company. 4. set measurable objectives to encourage diversity within the Company. Target % Actual % Proportion of: Women employees in the whole organisation 40.00 42.00 Women in senior executive positions 30.00 60.00 Women on the board 25.00 20.00 CaseWare Listed considers the key management personnel, excluding Directors, to be the senior executives of the Company. Principle 2: Structure the Board to add Value The Board s policy is that the Board needs to have an appropriate mix of skills, experience, expertise and diversity to be well equipped to help the Company navigate the range of challenges faced by the Company. The names, independence status and terms of service of the members of the Board as at the date of this report are set out below: Directors Name Independence Status Length of Service Andrew Ball Non-Independent Executive 10 years Jeremy Smith Independent Non-Executive 3 years Anthony Locke Non-Independent Executive 5 years Mark Christian Independent Non-Executive 2 years Sarah McBride Independent Non-Executive 4 years Details of the Board member s experience, expertise and qualifications are set out in the directors' report. The majority of the Board are independent. 3
Corporate Governance Statement 30 June 2017 Composition of the Board The Board s composition is determined based on criteria set out in the Company s constitution and the Board Charter. The Board seeks to ensure that: At any point in time, its membership represents an appropriate balance between directors with experience and knowledge of the Company and directors with an external or fresh perspective; There is a sufficient number of directors to serve on Board committees without overburdening the directors or making it difficult for them to fully discharge their responsibilities; and The size of the Board is appropriate to facilitate effective discussion and efficient decision making. In accordance with the ASX Listing Rules, the Company must hold an election of Directors each year. Board committees To ensure that the responsibilities of the Board are upheld and executed to the highest level, the Board has established the following Board committees: Audit Committee Remuneration Committee Nomination Committee Each of these committees has established charters and operating procedures in place, which are reviewed on a regular basis. The Board may establish other committees from time to time to deal with matters of special importance. The Committees have access to the Company s executives and senior management as well as independent advice. Copies of the minutes of each Committee meeting are made available to the full Board, and the Chairman of each Committee provides an update on the outcomes at the Board meeting that immediately follows the Committee meeting. Board skills summary The key skills required by the Board are highlighted below, the Board believes that there is sufficient directors with these skills and there are no deficiencies in these skills in the current board. Risk and compliance: Identify key risks to the Company related to each key areas of operations. Ability to monitor risk and compliance and knowledge of legal and regulatory requirements. Financial and Audit: Experience in accounting and finance to analyse statements, assess financial viability, contribute to financial planning, overseas budgets and funding arrangements. Strategy: Ability to identify and critically assess strategic opportunities and threats to the organisation. Develop strategies in context to our policies and business objectives. Policy development: Ability to identify key issues for the organisation and develop appropriate policy parameters within which the Company should operate. 4
Corporate Governance Statement 30 June 2017 Independent decision making The Board recognises the important contribution that independent Directors make to good corporate governance. All Directors, whether independent or not, are required to act in the best interests of the Company and to exercise unfettered and independent judgment. A Director is considered to be independent if he or she is free of any interest, position, association or relationship that might influence or reasonably be perceived to influence, in a material respect, his or her capacity to bring an independent judgement to bear on issues before the Board and to act in the best interests of the Company and its security holders generally. If any Director believes there is a change in their independence status, they are required to notify the Board as soon as possible. The Board has adopted specific principles in relation to directors independence and considers the following, at least annually, when determining if a Director is independent: Whether the Director: Is a substantial shareholder of the Company or an officer of, or otherwise associated directly with, a substantial shareholder of the Company. Is employed, or has previously been employed in an executive capacity by the Company or another group member, and there has not been a period of at least three years between ceasing such employment and serving on the Board. Has within the last three years been a principal of a material professional adviser or a material consultant to the Company or another group member, or an employee materially associated with the service provided. Is a material supplier or customer of the Company or other group member, or an officer of or otherwise associated directly or indirectly with a material supplier or customer. Has a material contractual relationship with the Company or another group member other than as a director. Role of the Chair The Chair of the Board is responsible for leadership of the Board and for the efficient organisation and conduct of the Board s functioning. The Chair facilitates the effective contribution of all directors and promotes constructive and respectful relations between directors and between Board and management. Nomination Committee The Nomination Committee meets as required during the year to assist the Board in fulfilling its corporate governance responsibilities in regard to: Board appointments, re-elections and performance and general succession planning for Board / Senior Management; Directors induction and continuing development; 5
Corporate Governance Statement 30 June 2017 Board Committee membership; and Endorsement of Executive appointments. The Nomination Committee s Charter which is available in the Corporate Governance section of the Company s website, sets out the Committee s responsibilities which include making recommendations to the Board on the appropriate skill mix, personal qualities, expertise and diversity of each position following the annual assessment of the Board. When a vacancy exists or there is a need for particular skills, the Committee, in consultation with the Board, determines the selection criteria based on the skills deemed necessary. Board appointees must stand for election at the next Annual General Meeting of shareholders. The Committee also makes recommendations to the Board and oversees implementation of the procedure for evaluating the Board s performance, as well as oversees and makes recommendations to the Board in respect of on going training requirements of Directors. The names of the members of the Nominations Committee as at the date of this report are set out below: Sarah McBride (Chair) Mark Christian Andrew Ball The Nomination Committee met once during the year. Access to information The Board is provided with the information it needs to discharge its responsibilities effectively and all Directors have complete access to senior management through the CEO or Company Secretary at any time. In certain circumstances, each Director has the right to seek independent professional advice at the Company s expense, within specified limits, or with the prior approval of the Board. Principle 3: Act ethically and responsibly Code of conduct The Board acknowledges and emphasises the importance of all directors and employees maintaining the highest standards of corporate governance practice and ethical conduct. A code of conduct has been established requiring directors and employees to: Act in the best interest of the Company; Act honestly and with high standards of personal integrity; Exercise due care and diligence in fulfilling the functions of office; Avoid conflicts and make full disclosure of any possible conflicts of interest; Comply with the laws and regulations that apply to the Company and its operations; 6
Corporate Governance Statement 30 June 2017 Not knowingly participate in any illegal or unethical activity; and Comply with the share trading policy outlined in the Code of Conduct. A copy of the Code of Conduct is available from the Company s website. Principle 4: Safeguard integrity in corporate reporting Audit Committee The Audit Committee assists the Board in fulfilling its corporate governance responsibilities in regard to: the adequacy of the Company's corporate reporting processes; whether the Company's financial statements reflect the understanding of the committee members of, and otherwise provide a true and fair view of, the financial position and performance of the Company; the appropriateness of the accounting judgements or choices exercised by management in preparing the Company's financial statements; the appointment or removal, rotation, independence and performance of the external auditor; the scope and adequacy of the external audit and any non-audit services; The members of the Audit Committee are: Name Executive / Non-Executive Independent? Jeremy Smith Non-Executive Yes Sarah McBride Non-Executive Yes Mark Christian Non-Executive Yes The qualifications and experience of the Audit Committee members and their attendance at meetings is included in the directors' report. The Audit Committee reports to the full Board after every meeting on all matters relevant to the committee s roles and responsibilities. The Audit Committee charter is available on the Company's website. External auditor The Audit Committee oversees the relationship with the external auditor. In accordance with the Corporations Act 2001, the lead Audit Partner on the audit is required to rotate at the completion of a 5 year term. The external auditor attends the AGM and is available to answer your shareholder questions about the conduct of the audit and the preparation and content of the auditor s report. 7
Corporate Governance Statement 30 June 2017 The Board have received from its Chief Executive Officer and Chief Financial Officer a declaration that, in their opinion, the financial records of the Company have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the Company and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively. Internal control The Board is responsible for reviewing the Company s policies on risk oversight and management and satisfying itself that management has developed and implemented a sound system of risk management and internal control. The Board has received assurance from the Chief Executive Officer and the Chief Financial Officer that the declaration provided in accordance with section 295A of the Corporations Act 2001 is founded on a system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks. Principle 5: Make timely and balanced disclosure CaseWare Listed has established policies and procedures to ensure timely and balanced disclosures of all material matters concerning the Company, and to ensure that all investors have equal and timely access to information on the Company s financial performance. These policies and procedures include a comprehensive disclosure policy that includes identification of matters that may have a material effect on the price on the Company s securities, quality control procedures over announcements, notifying them to the ASX, posting relevant information on the Company s website and issuing media releases. The policy is available on the Company's website. The Annual Report includes relevant information about the operations of the Company during the year, key financial information, changes in the state of affairs and indications of future developments. The Annual Reports for the current year and for previous years are available under the Investor Relations section of the Company website. The half year and full year financial results are announced to the ASX and are available to shareholders via the Company and ASX websites. All announcements made to the market, and related information (including presentations to investors and information provided to analysts or the media during briefings) are made available to all shareholders under the investor relations section of the Company website after they are released to the ASX. All ASX announcements, media releases and financial information are available on Company website within one day of public release. Principle 6: Respect the rights of security holders The Company Secretary has been nominated as the person responsible for communications with the ASX. All Executive Management have an ongoing obligation to advise the Company Secretary of any material non-public information which may need to be communicated to the market. The Company has an Investor Relations Program which promotes effective communication with shareholders, encourages participation at general meetings and encourages communications throughout the year. The Company engages with its security holders through: Giving them ready access to information about the Company and its governance via the Company website; Communicating openly and honestly with them; 8
Corporate Governance Statement 30 June 2017 Encouraging and facilitating their participation in meetings of security holders; and Providing an email address on all communication for security holders who wish to contact the Company. The Company makes all ASX announcements available via its website. In addition, shareholders who are registered receive email notification of announcements. The Notice of Annual General Meeting (AGM) will be provided to all shareholders and posted on the Company s website. Notices for general meetings and other communications with shareholders are drafted to ensure that they are honest, accurate and not misleading and that the nature of the business of the meeting is clearly stated and explained where necessary. The Board encourages full participation by shareholders at the Annual General Meeting to ensure a high level of Director accountability to shareholders and shareholder identification with the Company s strategy and goals. For shareholders unable to attend, an AGM question form will accompany the Notice of Meeting, giving shareholders the opportunity to forward questions and comments to the Company or the external auditor prior to the AGM. Principle 7: Recognise and manage risk The Board considers identification and management of key risks associated with the business as vital to maximise shareholder wealth. A yearly assessment of the business' risk profile is undertaken and reviewed by the Board, covering all aspects of the business from the operational level through to strategic level risks. The CEO has been delegated the task of implementing internal controls to identify and manage risks for which the Audit Committee and the Board provides oversight. The effectiveness of these controls is monitored and reviewed regularly. The recent economic environment has emphasised the importance of managing and reassessing its key business risks. The Audit Committee review the risk register and discuss any updates in identified risks at each meeting as a standard agenda item. The yearly assessment of the business risk profile was performed on 15 May 2017. The Board is responsible for reviewing the Company s policies on risk oversight and management and satisfying itself that management has developed and implemented a sound system of risk management and internal control. The Board requires management to design and implement the risk management and internal control system to manage the Company's material business risks and report to it on whether those risks are being managed effectively. The Board has received a report from management as to the effectiveness of the Company's management of its material business risks. The Company does not have an internal audit function. The evaluation of the risk management and internal control process is the responsibility of the Audit Committee and is performed in conjunction with senior executives. External consultants may be used in certain circumstances, however have not been used during the financial year. A summary of the Company s risk related policies can be found with other corporate governance policies under the Corporate Governance section of the Company s website. Principle 8: Remunerate fairly and responsibly The Company s remuneration policy is designed in such as way that it: motivates senior executives to pursue the long-term growth and success of the Company and demonstrates a clear relationship between senior executives performance and remuneration. 9
Corporate Governance Statement 30 June 2017 The remuneration policy, which sets the terms and conditions for the key management personnel (KMP) was developed by the Remuneration Committee after seeking professional advice from independent consultants and was approved by the Board. All executives receive a base salary, superannuation, fringe benefits, performance incentives and retirement benefits. The Remuneration Committee reviews executive packages annually by reference to Company performance, executive performance, comparable information from industry sectors and other listed corporations and independent advice. The performance of executives is measured against criteria agreed half yearly which are based on the forecast growth of the Company s profits and shareholder value. The policy is designed to attract the highest calibre executives and reward them for performance which results in long-term growth in shareholder value. The Board expects that the remuneration structure implemented will result in the Company being able to attract and retain the best executives. It will also provide executives with the necessary incentives to work to grow long-term growth in shareholder value. The payment of bonuses, options and other incentive payments are reviewed by the Remuneration Committee annually as part of the review of executive remuneration and a recommendation is put to the Board for approval. All bonuses, options and incentives must be linked to predetermined performance criteria. The Board can exercise its discretion in relation to approving incentives, bonuses and options and can recommend changes to the committee s recommendations. Any changes must be justified by reference to measurable performance criteria. Further information about the Company s remuneration strategy and policies and their relationship to Company performance can be found in the Remuneration Report which forms part of the directors' report, together with details of the remuneration paid to key management personnel. Remuneration Committee The responsibilities of the Remuneration Committee include a review of and recommendation to the Board on: the Company s remuneration, recruitment, retention and termination policies and procedures for senior executives senior executives remuneration and incentives superannuation arrangements the remuneration framework for directors remuneration by gender. Each member of the Remuneration Committee: is familiar with the legal and regulatory disclosure requirements in relation to remuneration has adequate knowledge of executive remuneration issues, including executive remuneration issues, including executive retention and termination policies and short term and long term incentive arrangements. 10
Directors' Report 30 June 2017 The directors present their report on CaseWare Listed for the financial year ended 30 June 2017. Information on directors The names, qualifications, experience and special responsibilities of each person who has been a director during the year and to the date of this report are: Andrew Ball Qualifications Experience Interest in shares and options Shares: 74,286 Options: 25,356 Special responsibilities Managing Director Other current directorships in None listed entities Jeremy Smith Qualifications Experience BCom (Hons), FCA Andrew has over 23 years experience in senior management positions. He has spent a number of years overseas which provides knowledge and experience in the markets in which CaseWare Listed operate. BEc, LLB Jeremy is an investment banker and fund manager as well as an experienced corporate adviser and company director. Interest in shares and options Shares: 10,001 Special responsibilities Non-Executive Chairman and Remuneration Committee Chair Other current directorships in listed entities - Director of Jordan Ltd (since 2013) - Director of Ayton Ltd (since 2014) Anthony Locke Qualifications Experience Interest in shares and options Shares: 53,000 Options: 30,222 Special responsibilities Chief Executive Officer Other current directorships in None listed entities BEng, BSc Anthony has over 25 years of experience in operational roles in listed and unlisted businesses in Australia, Asia and Europe. Anthony has successfully implemented initiatives for export, logistics, business development and research and development. Mark Christian Qualifications Experience BBus (Acc), CA Mark was based in the UK for 12 years working as a Chartered Accountant in Banks Accountants' London office until moving back to Australia. His speciality is strategic business planning growth and management. Interest in shares and options Shares: 3,500 Special responsibilities Audit Committee Chair Other current directorships in Non-Executive Chairman of TX Ltd since 2011 listed entities 11
Directors' Report 30 June 2017 Information on directors continued Sarah McBride Qualifications Experience Interest in shares and options Shares: 5,000 Special responsibilities Nomination Committee Chair Other current directorships in listed entities BSc Sarah has been working as an advisor to listed companies on environmental issues for the last 6 years both in Australia and overseas to reduce carbon footprint of entities. Her knowledge of the current carbon emissions debate is invaluable to the company going forward. - Non-Executive Director of XD Ltd (since 2012) - Non- Executive Chairman of Croz Ltd (since 2013) Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. Principal activities and significant changes in nature of activities The principal activities of CaseWare Listed during the financial year was the manufacture and retail of safety equipment and clothing to a range of industries as well as training on occupational health and safety issues. There were no significant changes in the nature of CaseWare Listed's principal activities during the financial year. Operating results The profit of the Company amounted to 2,736,632, after providing for income tax. This was as a result of increased sales during the year arising from the introduction of new product lines and improved marketing campaigns. The cash balance of the Company also increased during the year which improves the liquidity and an increase in net assets to 29,477,730 puts the Company in a strong financial position for the future. Significant changes in state of affairs There have been no significant changes in the state of affairs of the Company during the year. Dividends paid or recommended Final franked ordinary dividend of 5 cents per share declared on 14 July 2017 to be paid on 15 September 2017 150,175 2016 final franked dividend declared in the prior year, paid on 15 July 2016 120,000 All dividends paid were fully franked. Events after the reporting date A dividend of 5 cents per share was declared on 14 July 2017 to be paid on 15 September 2017. Except for the above, no other matters or circumstances have arisen since the end of the financial year which significantly affected or could significantly affect the operations of the Company, the results of those operations or the state of affairs of the Company in future financial years. 12
Directors' Report 30 June 2017 Future developments and results The Company will focus on increasing market share and ensuring that the products offered remain relevant in key customer industries through targeted market research and increased spending on research and development. In addition, further overseas markets are being investigated. Environmental issues The Company's operations are not regulated by any significant environmental regulations under a law of the Commonwealth or of a state or territory of Australia. Company secretary The following person held the position of Company secretary at the end of the financial year: Lisa Jones (BA, MBA) has been the company secretary since 2010. Prior to this role, Lisa Jones was the Company Secretary and Chief Financial Officer for another listed public company for 10 years. Meetings of directors During the financial year, 17 meetings of directors (including committees of directors) were held. Attendances by each director during the year were as follows: Directors' Meetings Number eligible to attend Number attended Audit Committee Number eligible to attend Number attended Remuneration Committee Number eligible to attend Number attended Nomination Committee Number eligible to attend Number attended Andrew Ball 11 11 - - 1 1 1 1 Jeremy Smith 11 11 4 3 1 1 - - Anthony Locke 11 10 4 4 - - - - Mark Christian 11 11 4 4 1 1 1 1 Sarah McBride 11 11 - - 1 1 1 1 Indemnification and insurance of officers and auditors No indemnities have been given or insurance premiums paid, during or since the end of the financial year, for any person who is or has been an officer or auditor of CaseWare Listed. Options At the date of this report, the unissued ordinary shares of CaseWare Listed under option are as follows: Grant Date Date of Expiry Exercise Price Number under Option 01 January 2013 01 January 2018 2.40 6,500 01 April 2016 01 January 2021 7.00 62,000 01 March 2017 01 March 2022 8.00 85,000 Option holders do not have any rights to participate in any issues of shares or other interests in the Company. For details of options issued to directors and other key management personnel as remuneration, refer to the remuneration report. 13
Directors' Report 30 June 2017 During the year ended 30 June 2017, the following ordinary shares of CaseWare Listed were issued on the exercise of options granted. No further shares have been issued since that date. No amounts are unpaid on any of these shares. Grant Date Exercise Price Number of Shares Issued 1 April 2017 01 January 2013 2.40 3,500 No person entitled to exercise the option had or has any right by virtue of the option to participate in any share issue of any other body corporate. Non-audit services The Board of Directors, in accordance with advice from the audit committee, is satisfied that the provision of nonaudit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the services disclosed below did not compromise the external auditor's independence for the following reasons: all non-audit services are reviewed and approved by the audit committee prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and the nature of the services provided do not compromise the general principles relating to auditor independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board. The following fees were paid or payable to the external auditors for non-audit services provided during the year ended 30 June 2017: 2017 2016 Taxation services - Tax compliance work 10,123 10,000 Auditor's independence declaration The auditor's independence declaration in accordance with section 307C of the Corporations Act 2001 for the year ended 30 June 2017 has been received and can be found on page 22 of the financial report. Remuneration report (audited) Remuneration policy The remuneration policy of CaseWare Listed has been designed to align key management personnel (KMP) objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long-term incentives based on key performance areas affecting CaseWare Listed's financial results. The Board of CaseWare Listed believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best key management personnel to run and manage CaseWare Listed, as well as create goal congruence between directors, executives and shareholders. The Board's policy for determining the nature and amount of remuneration for key management personnel of CaseWare Listed is as follows: The remuneration policy has been developed by the Remuneration Committee and approved by the Board following professional advice from independent external consultants. All key management personnel receive a base salary (which is based on factors such as length of service and experience), superannuation, fringe benefits, and performance incentives. 14
Directors' Report 30 June 2017 Remuneration report (audited) continued Remuneration policy continued Performance incentives are based on predetermined key performance indicators. Incentives paid in the form of options or rights are intended to align the interests of the KMP and the Company with those of the shareholders. In this regard, key management personnel are prohibited from limiting risk attached to those instruments by use of derivatives or other means. The Remuneration Committee reviews key management personnel packages annually by reference to CaseWare Listed s performance, executive performance and comparable information from industry sectors. The performance of key management personnel is measured against criteria agreed bi-annually with each executive and is based predominantly on the forecast growth of CaseWare Listed s profits and shareholders value. All bonuses and incentives must be linked to predetermined performance criteria. The Board may, however, exercise its discretion in relation to approving incentives, bonuses and options, and can recommend changes to the Committee s recommendations. Any changes must be justified by reference to measurable performance criteria. The policy is designed to attract the highest calibre of executives and reward them for performance that results in long-term growth in shareholder wealth. Key management personnel receive a superannuation guarantee contribution required by the law, which is currently 9.5%, and do not receive any other retirement benefits. Some individuals, however, have chosen to sacrifice part of their salary to increase payments towards superannuation. Upon retirement, key management personnel are paid employee benefit entitlements accrued to the date of retirement. Key management personnel are paid a percentage of between 5-10% of their salary in the event of redundancy. Any options not exercised before or on the date of termination will lapse. All remuneration paid to key management personnel is valued at the cost to the Company and expensed. The Board's policy is to remunerate non-executive directors at market rates for time, commitment and responsibilities. The Remuneration Committee determines payments to the non-executive directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting, the current maximum is 550,000 which was approved at the 2016 AGM. Key management personnel are also entitled and encouraged to participate in the employee share and option arrangements to align their interests with shareholders' interests. Options granted under these arrangements do not carry dividend or voting rights. Each option is entitled to be converted into one ordinary share and is valued using the Black-Scholes methodology. Key management personnel who are subject to these arrangements are subject to a policy governing the use of external hedging arrangements. Such personnel are prohibited from entering into hedge arrangements, i.e. put options, on unvested shares and options which form part of their remuneration package. Terms of employment signed by such personnel contain details of such restrictions. Relationship between remuneration policy and company performance The remuneration policy has been tailored to increase goal congruence between shareholders, directors and executives. Two methods have been applied to achieve this aim, the first being a performance-based bonus based on key performance indicators, and the second being the issue of options to directors and executives to encourage the alignment of personal and shareholder interests. The Company believes this policy has been effective in increasing shareholder wealth over the past 5 years. 15
Directors' Report 30 June 2017 Remuneration report (audited) continued The following table shows the gross revenue, profits and dividends for the last five years for the Company, as well as the share prices at the end of the respective financial years. 2017 2016 2015 2014 2013 Revenue 63,489,011 61,811,141 59,453,114 58,929,653 58,124,961 Net Profit 2,736,632 2,673,160 2,014,918 1,563,572 1,482,979 Share Price at Year-end 5.98 5.05 4.10 3.20 1.35 Dividends Paid (cents) 20.00 35.00-30.00 - Performance conditions linked to remuneration The key performance indicators (KPIs) are set annually, with a certain level of consultation with key management personnel to ensure support. The measures are specifically tailored to the area each individual is involved in and has a level of control over. The KPIs target areas the Board believes hold greatest potential for the Company expansion and profit, covering financial and non-financial as well as short and long-term goals. The level set for each KPI is based on budgeted figures for CaseWare Listed and respective industry standards. Performance in relation to the KPIs is assessed annually, with bonuses being awarded depending on the number and deemed difficulty of the KPIs achieved. Following the assessment, the KPIs are reviewed by the Remuneration Committee in light of the desired and actual outcomes, and their efficiency is assessed in relation to CaseWare Listed's goals and shareholder wealth, before the KPIs are set for the following year. The satisfaction of the financial performance conditions are based on a review of the audited financial statements of CaseWare Listed, as such figures reduce any risk of contention relating to payment eligibility. The Board does not believe that performance conditions should include a comparison with factors external to CaseWare Listed at this time. Employment details of members of key management personnel The following table provides employment details of persons who were, during the financial year, members of key management personnel of CaseWare Listed. The table also illustrates the proportion of remuneration that was performance based and the proportion of remuneration received in the form of options. Performance based remuneration Bonus % Options / rights Directors Position Andrew Ball Managing Director 26 6 Jeremy Smith Non-Executive Chairman - - Anthony Locke Chief Executive Officer 25 10 Mark Christian Non-Executive Director - - Sarah McBride Non-Executive Director - - KMP Paul Mason Chief Operating Officer 4 16 Andrea Kent General Manager - Sales 5 2 Michael Chamberlain General Manager - Manufacturing - 11 Elizabeth Fitzlane Chief Finance Officer 7 9 Katherine Peters Chief Information Officer - 5 % 16
Directors' Report 30 June 2017 Remuneration report (audited) continued Service Agreements On appointment to the Board, all non-executive directors enter into a service agreement with the Company in the form of a letter of appointment. The letter summarises the Board policies and terms, including remuneration, relevant to the office of director. The remuneration and other terms of employment for the Managing Director and senior executives are set out in formal service agreements as summarised below. All service agreements are for an unlimited duration. The agreements for executives (other than the Managing Director, Chief Executive Officer and Chief Finance Officer which require three months notice) may be terminated by giving six weeks notice (except in cases of termination for cause where termination is immediate). In cases of resignation, no separation payment is made to the executive, except for amounts due and payable up to the date of ceasing employment, including accrued leave entitlements. Remuneration details for the year ended 30 June 2017 The following table of benefits and payment details, in respect to the financial year, the components of remuneration for each member of the key management personnel of CaseWare Listed. Table of benefits and payments 2017 Directors cash salary fees short term bonus non monetary post employment pension and superannuation other post employment Andrew Ball 158,077 89,000 65,110 312,187 15,017 20,000 347,204 Jeremy Smith 62,680 - - 62,680 5,955-68,635 Anthony Locke 180,769 95,000 50,400 326,169 17,173 40,000 383,342 Mark Christian 37,996 - - 37,996 3,609-41,605 Sarah McBride 37,996 - - 37,996 3,609-41,605 KMP Paul Mason 150,000 10,000 14,000 174,000 14,250 35,000 223,250 Andrea Kent 135,228 10,000 40,000 185,228 12,847 5,000 203,075 Michael Chamberlain 132,350 - - 132,350 12,573 18,000 162,923 Elizabeth Fitzlane 126,500 11,500-138,000 12,018 15,000 165,018 Katherine Peters 137,000-21,000 158,000 13,015 9,000 180,015 1,158,596 215,500 190,510 1,564,606 110,066 142,000 1,816,672 17
Directors' Report 30 June 2017 Remuneration report (audited) continued Remuneration details for the year continued ended 30 June 2017 short term 2016 Directors cash salary fees bonus non monetary post employment pension and superannuation other post employment Andrew Ball 148,555 60,000 62,000 270,555 14,113 20,000 304,668 Jeremy Smith 60,000 - - 60,000 6,000-66,000 Anthony Locke 180,769 95,000 50,400 326,169 16,269 12,000 354,438 Mark Christian 35,000 - - 35,000 3,325-38,325 Sarah McBride 35,000 - - 35,000 3,325-38,325 KMP Paul Mason 142,000 8,000 14,000 164,000 13,490 25,000 202,490 Andrea Kent 130,000 8,000 35,000 173,000 12,350 5,000 190,350 Michael Chamberlain 125,000 - - 125,000 11,875 15,000 151,875 Elizabeth Fitzlane 128,000 5,500 3,000 136,500 12,160 2,000 150,660 Katherine Peters 129,000-15,000 144,000 12,255 8,000 164,255 1,113,324 176,500 179,400 1,469,224 105,162 87,000 1,661,386 Securities received that are not performance related No members of key management personnel are entitled to receive securities which are not performance-based as part of their remuneration package. Cash performance-related bonuses The terms and conditions relating to bonuses granted as remuneration during the year to key management personnel during the year are as follows: % paid / % Bonus paid vested in forfeited Cash bonuses the period in period Directors Andrew Ball 89,000 90 10 Jeremy Smith 95,000 85 15 KMP Paul Mason 10,000 80 20 Andrea Kent 10,000 75 25 Michael Chamberlain 11,500 80 20 Each of the bonuses described in the table above were awarded in accordance with the terms of the scheme and the relevant key performance indicators. No amounts vest in future financial years in respect of the bonus schemes for the current financial year. The amounts forfeited are due to the performance or service criteria not being met in relation to the current financial year. 18
Directors' Report 30 June 2017 Remuneration report (audited) continued Description of options/rights granted as remuneration Details of the options granted as remuneration to those key management personnel and executives during the year: Share-based payments Number of options Grant date % % vested forfeited in period in period Vesting date Directors Andrew Ball 20,000 11,111 1/03/2017 - - 1/03/2020 Jeremy Smith 40,000 22,222 1/03/2017 - - 1/03/2020 KMP Paul Mason 35,000 19,444 1/03/2017 - - 1/03/2020 Andrea Kent 5,000 2,778 1/03/2017 - - 1/03/2020 Michael Chamberlain 18,000 10,000 1/03/2017 - - 1/03/2020 Elizabeth Fitzlane 15,000 8,333 1/03/2017 - - 1/03/2020 Katherine Peters 9,000 5,000 1/03/2017 - - 1/03/2020 Option values at grant date were determined using the Black-Scholes method. All options were issued by CaseWare Listed and entitle the holder to ordinary shares in CaseWare Listed for each option exercised. There have not been any alterations to the terms or conditions of any share based payment arrangements since grant date. Equity instruments granted as a result of exercise of options Details of ordinary shares in the Company provided as a result of the exercise of remuneration options to each KMP of CaseWare Listed are set out below: # of shares issued as Amount paid result of per share options Paul Mason 2,900 2.40 Andrea Kent 600 2.40 19
Directors' Report 30 June 2017 Remuneration report (audited) continued Key management personnel options and rights holdings 30 June 2017 Balance at beginning of year Granted as remuneration Exercised Other changes Balance at the end of year Vested during the year Vested and exercisable Directors Andrew Ball 14,245 11,111 - - 25,356 2,000 2,000 Anthony Locke 10,000 22,222 (2,900) - 29,322 653 653 KMP Paul Mason 16,806 19,444 - - 36,250 1,500 1,500 Andrea Kent 4,061 2,778 - - 6,839 1,000 1,000 Michael Chamberlain 9,184 10,000 - - 19,184 - - Elizabeth Fitzlane 1,224 8,333 - - 9,557 - - Katherine Peters 5,498 5,000 (600) - 9,898 - - 61,018 78,888 (3,500) - 136,406 5,153 5,153 Key management personnel shareholdings The number of ordinary shares in CaseWare Listed held by each key management person of CaseWare Listed during the financial year is as follows: Other 30 June 2017 Balance at beginning of year On exercise of options changes during the year Balance at end of year Directors Andrew Ball 74,286 - - 74,286 Jeremy Smith 10,001 - - 10,001 Anthony Locke 51,000 2,900-53,900 Mark Christian 2,000-1,500 3,500 Sarah McBride 5,000 - - 5,000 KMP Paul Mason 5,000 - - 5,000 Andrea Kent 4,357 - - 4,357 Michael Chamberlain 936 - - 936 Elizabeth Fitzlane 101,000 - - 101,000 Katherine Peters 3,000 600-3,600 256,580 3,500 1,500 261,580 20