APPENDIX 4D HALF-YEAR INFORMATION GIVEN TO THE ASX UNDER LISTING RULE 4.2A ABN 91 112 452 436 HALF-YEAR ENDED 31 DECEMBER 2016 The information provided in this report should be read in conjunction with the most recent annual financial statements and ASX announcements.
Results for Announcement to the Market Half-year Ended Key Information 31 Dec 2016 Restated Half-year Ended 31 Dec 2015 Revenue from ordinary activities 72,451 66,402 Operating Profit 1,442 574 EBITDA 684 (254) Net profit/(loss) attributable to members 15 (772) Dividends Paid and Proposed No dividend was paid or proposed during the period. Net Tangible Assets per Share Net tangible assets per ordinary share 13.46 cents (30 June 2016: 13.99 cents) Control Gained or Lost over Entities in the Half-year Control gained over entities during the period Loss of control of entities during the period Nil Nil Investments in Associates and Joint Venture Entities Equity accounted associates and joint venture entities Aggregate share of Profit / (losses) of associates and joint venture entities Nil Nil Brief Explanation of Results For the half year ended 31 December 2016, Group Revenue was $72.5m, up 9% compared to the prior year comparative period with Licensing Revenue being $70m, up 12% year on year. Prior year comparatives have been restated to reflect a consistent treatment of rebates received from software vendors which from 1 July 2016 are included in cost of sales instead of being treated as revenue. The significant majority of rhipe s revenue growth during the half year ended 31 December 2016 is in the form of monthly annuity based licensing revenue generated from more than 2,000 technology service provider customers. The growth has been primarily driven from our customer base excluding the largest top 10 customers which provides more than 90% of our gross margin and which has grown more than 20% year on year. This strong growth rate in these more profitable customers has resulted in the gross margin in licensing increasing from 15.2% to 15.8% year on year and gross margin in our Licensing business increased 15% year on year to $11m in the six months to 31 December 2016. Group reported EBITDA for the six months ended 31 December 2016 has increased by 369% from a loss of $254k to a profit of $684k and EBITDA excluding non-cash share based payments, non-recurring due diligence costs and non-recurring one off costs was $1.3m, up 122% compared to the prior year. However this result masks the differences in the relative financial performance of the first quarter and second quarter of FY 2017. During Q1 FY17 rhipe s reported EBITDA was a loss of $0.5m primarily driven by a loss in our Solutions business whereas for Q2 FY17 we delivered reported EBITDA of $1.2m. rhipe delivered a positive net profit of $15k compared to a net loss of ($772k) in the prior year comparative period. The table below highlights the trading performance of the Group for the period to 31 December 2016. 1
The company s return to profit follows a period of significant investment in a number of key strategic initiatives including investment in its growing operations across South East Asia as well as its investment in the Indirect Microsoft Cloud Solutions Provider (CSP) program in Australia and South East Asia regions. Key operating highlights in the 6 months to 31 December 2016 included: Licensing revenue growth of 12% year on year with growth of more than 20% in the more profitable customer (which excludes the largest top 10 customers); Strong growth in CSP operations with revenue of $5.2m in the 6 months to 31 December 2016 compared to $0.5m in the previous corresponding period (pcp), with a current annualised run-rate revenue of more than $14m; Revenue growth from customers based in South East Asia of 75% and 29% in New Zealand compared to pcp; Licensing gross margin grew 15% year on year to $11m for the period; We restructured our business unit, rhipe Solutions, in the first quarter of the financial year with the aim of eliminating losses incurred in prior year periods. While this resulted in some restructuring costs in Q1, it has provided the ability for rhipe to improve group operating profit and EBITDA in future periods; Group operating expenses fell by 5% year on year, due to the restructuring in our Solutions business unit and tight management of the cost base; Cash at 31 December 2016 was $11.4m with an average cash balance in Q2 FY17 of $13.3m; rhipe continues to evaluate and sign up new vendor licensing relationships with a number of smaller complementary software vendors to allow strategic bundled offers to our customer base; and rhipe has been awarded Microsoft SPLA and CSP licences for South Korea in early 2017, a market which is second only in size to Australia in Asia Pacific (excluding Japan) for SPLA. 2
Rhipe Limited ABN 91 112 452 436 Interim Financial Report for the period ended 31 December 2016
INTERIM FINANCIAL REPORT Contents Directors report 2 Auditor s independence declaration 6 Independent auditor s report 7 Consolidated statement of profit or loss and other comprehensive income 9 Consolidated statement of financial position 10 Consolidated statement of changes in equity 11 Consolidated statement of cash flow 12 Notes to the financial statements 13 Directors declaration 20 Corporate information 21 1
Directors report The directors of Rhipe Limited ( Rhipe, Group or the Company ) are pleased to submit herewith the financial statements of the Group for the six month ended 31 December 2016. Directors The names and details of the Company s directors in office during the half-year and until the date of this report are as follows: Mike Hill Dominic O Hanlon Dawn Edmonds Executive Chairman until 27 January 2017, thereafter Non-Executive Chairman Managing Director and Chief Executive Officer Executive Director and Chief Operating Officer until 31 December 2016, thereafter Non-Executive Director Non-Executive Director Non-Executive Director Laurence Sellers Mark Pierce Michael Everett Non-Executive Director, resigned 27 January 2017 Michael Tierney Non-Executive Director, appointed 27 January 2017 Directors were in office for this entire period unless otherwise stated. Review of operations The results presented in this financial report reflect the operations of rhipe Limited and all subsidiaries for the six months from 1 July 2016 to 31 December 2016 (together the Group ). The results for the comparative period reflect the operations of rhipe Limited and all its subsidiaries. The Board is pleased to report strong underlying measures of profit for 1H FY17, as revenue in our most profitable customer base continues to drive growth, while Group operating expenses have reduced as the business has increased focus on cost management. For the half year ended 31 December 2016, Group Revenue was $72.5m, up 9% compared to the prior year comparative period with Licensing Revenue being $70m, up 12% year on year. Prior year comparatives have been restated to reflect a consistent treatment of rebates received from software vendors which from 1 July 2016 are included in cost of sales instead of being treated as revenue. The significant majority of rhipe s revenue growth during the half year ended 31 December 2016 is in the form of monthly annuity based licensing revenue generated from more than 2,000 technology service provider customers. The growth has been primarily driven from our customer base excluding the largest top 10 customers which provides more than 90% of our gross margin and which has grown more than 20% year on year. This strong growth rate in these more profitable customers has resulted in the gross margin in licensing increasing from 15.2% to 15.8% year on year and gross margin in our Licensing business increased 15% year on year to $11m in the six months to 31 December 2016. Group reported EBITDA for the six months ended 31 December 2016 has increased by 369% from a loss of $254k to a profit of $684k and EBITDA excluding non-cash share based payments, non-recurring due diligence costs and non-recurring one off costs was $1.3m, up 122% compared to the prior year. However this result masks the differences in the relative financial performance of the first quarter and second quarter of FY 2017. During Q1 FY17 rhipe s reported EBITDA was a loss of $0.5m primarily driven by a loss in our Solutions business whereas for Q2 FY17 we delivered reported EBITDA of $1.2m. rhipe delivered a positive net profit of $15k compared to a net loss of ($772k) in the prior year comparative period. The table 1, below highlights the trading performance of the Group for the period to 31 December 2016. 2
Table 1. Financial Summary 1H FY17 1H FY16 Change Revenue 72,451 66,402 +9.1% Gross Margin 13,282 12,967 +2.4% Operating Profit (1) 1,442 574 +151% EBITDA ex SBP and one off items (2) 1,271 554 +129% Reported EBITDA 684 (254) +369% Profit/(loss) after tax (3) 15 (772) +102% (1) Operating profit is gross margin less operating expenses and excludes any FX gains or losses, share base payments and one off cost including restructuring or due diligence costs (2) Excludes impact of non-cash Share Based Payments and one off expenses including restructuring and due diligence costs (3) Further detail of this is shown in Table 2 below The company s return to profit follows a period of significant investment in a number of key strategic initiatives including investment in its growing operations across South East Asia as well as its investment in the Indirect Microsoft Cloud Solutions Provider (CSP) program in Australia and South East Asia regions. Key operating highlights in the 6 months to 31 December 2016 included: Licensing revenue growth of 12% year on year with growth of more than 20% in the more profitable customer (which excludes the largest top 10 customers); Strong growth in CSP operations with revenue of $5.2m in the 6 months to 31 December 2016 compared to $0.5m in the previous corresponding period (pcp), with a current annualised run-rate revenue of more than $14m; Revenue growth from customers based in South East Asia of 75% and 29% in New Zealand compared to pcp; Licensing gross margin grew 15% year on year to $11m for the period; We restructured our business unit, rhipe Solutions, in the first quarter of the financial year with the aim of eliminating losses incurred in prior year periods. While this resulted in some restructuring costs in Q1, it has provided the ability for rhipe to improve group operating profit and EBITDA in future periods; Group operating expenses fell by 5% year on year, due to the restructuring in our Solutions business unit and tight management of the cost base; Cash at 31 December 2016 was $11.4m with an average cash balance in Q2 FY17 of $13.3m; rhipe continues to evaluate and sign up new vendor licensing relationships with a number of smaller complementary software vendors to allow strategic bundled offers to our customer base; and rhipe has been awarded Microsoft SPLA and CSP licences for South Korea in early 2017, a market which is second only in size to Australia in Asia Pacific (excluding Japan) for SPLA. rhipe helps multinational software vendors to migrate their traditional I.T. channel customers from on premise software infrastructure to cloud computing business models with subscription based software as a service (SAAS). rhipe s Licensing division includes key software vendor relationships with Microsoft, VMWare, Citrix, Datacore, Red Hat, Trend Micro, and Veeam. rhipe sells and manages subscription software to Channel customers including Managed Service Providers (MSPs), Independent Software Vendors (ISVs) and System Integrators (SIs). Importantly, over the last 18 months rhipe was awarded a number of new licensing programs with key vendors such as Microsoft to expand its offering into the Public Cloud market. Prior to these appointments, rhipe largely provided licensing solutions to the Private Cloud and some Hybrid Cloud opportunities. This has significantly increased the available market size for rhipe. Investment into these new programs, such as CSP, through building dedicated teams of specialists to advise and sell the complex licensing solutions to customers has already shown positive results and builds a new subscription based recurring revenue stream for the Company. 3
While much of rhipe s revenue continues to come from its heritage geographies of Australia and New Zealand, this has been complemented in recent years by expansion into the hight growth geography of South East Asia. rhipe s Asia business continues to build momentum in Cloud licensing and is expanding with vendor relationships across multiple countries. Microsoft acknowledges rhipe as a significant and fast growing regional partner for its Cloud Subscription licensing business. The table 2, below outlines the underlying EBITDA contribution from the Group for the six month period to 31 December 2016: Table 2. Earnings reconciliation 31 Dec 2016 31 Dec 2015 Operating profit 1,442 574 Foreign exchange loss (171) (20) EBITDA pre non cash and non recurring costs 1,271 554 Non cash and non recurring costs: Non recurring transaction costs incurred (365) (239) Non cash share based payments expensed in accordance with accounting standards (222) (569) EBITDA Reported 684 (254) Interest 21 68 Depreciation (299) (155) Profit/(loss) before tax 406 (341) Tax expense (1) (391) (431) Profit after tax 15 (772) (1) The tax expense for period is $391,000 on a profit before income tax of $406,000. Income tax benefits in SEA entities are not taken into account for the purpose of tax expense calculation as is not probable the benefit will be realised. 4
Directors report (continued) Events after the reporting date No events have occurred after the reporting date that impacts the financial statements. Auditor independence and non-audit services The auditor s independence declaration under s307c of the Corporations Act 2001 is set out on page 6 for the half-year ended 31 December 2016. Signed in accordance with a resolution of the directors. Mike Hill Chairman Sydney 17 February 2017 5
Auditor s Independence Declaration under Section 307C of the Corporations Act 2001 to the directors of Rhipe Limited I declare that, to the best of my knowledge and belief, during the half-year ended 31 December 2016 there have been: (i) (ii) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review, and no contraventions of any applicable code of professional conduct in relation to the review. ShineWing Australia Chartered Accountants Rami Eltchelebi Partner Melbourne, 17 February 2017 ShineWing Australia ABN 39 533 589 331. Liability limited by a scheme approved under Professional Standards Legislation. ShineWing Australia is an independent member of ShineWing International Limited members in principal cities throughout the world.
INDEPENDENT AUDITOR S REVIEW REPORT TO THE MEMBERS OF Report on the Half-Year Financial Report We have reviewed the accompanying interim financial report of Rhipe Limited and controlled entities (the consolidated entity ) which comprises the consolidated statement of financial position as at 31 December 2016, and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and explanatory information and the directors declaration. Directors Responsibility for the Half-Year Financial Report The directors of Rhipe Limited ( the company ) are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) 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 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 prepared, in all material aspects, in accordance with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Act 2001. As the auditor of Rhipe 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. Independence In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. ShineWing Australia ABN 39 533 589 331. Liability limited by a scheme approved under Professional Standards Legislation. ShineWing Australia is an independent member of ShineWing International Limited members in principal cities throughout the world.
Conclusion Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that the half-year financial report of Rhipe Limited and controlled entities is not in accordance with the Corporations Act 2001 including: (i) giving a true and fair view of the consolidated entity s financial position as at 31 December 2016 and of its performance for the half-year ended on that date; and (ii) complying with AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. Matters Relating to the Electronic Publication of the Financial Report This auditor s review report relates to the financial report of Rhipe Limited and controlled entities for the period ended 31 December 2016 included on Rhipe Limited s website. The company s directors are responsible for the integrity of Rhipe Limited s website. We have not been engaged to report on the integrity of the Rhipe Limited s website. The auditor s review report refers only to the subject matter described above. It does not conclude on any other information which may have been hyperlinked to/from these statements. If users of the financial report are concerned with the inherent risks arising from publication on a website, they are advised to refer to the hard copy of the audited financial report to confirm the information contained in this website version of the financial report. ShineWing Australia Chartered Accountants Rami Eltchelebi Partner Melbourne, 17 February 2017
Consolidated statement of profit or loss and other comprehensive income For the half-year ended 31 December 2016 Consolidated Group Note 31 Dec 2016 Restated 31 Dec 2015 Sales Revenue (1d) 72,451 66,402 Cost of Sales licensing fees including rebates (1d) (59,169) (53,435) Gross Profit 13,282 12,967 Interest income 21 93 Employee benefits expense (8,605) (8,638) Share base payments expense (222) (569) Marketing expense (814) (1,130) Office administration, IT and travel cost (2,786) (2,757) Depreciation and amortisation (299) (155) Write down of assets held for sale - (132) Foreign exchange loss (171) (20) Total expenses less interest earned (12,876) (13,308) Profit/(loss) before income tax 406 (341) Tax expense (391) (431) Profit/(loss) after tax for the period attributable to owners of the parent entity 15 (772) Other comprehensive (loss)/income Items that will be reclassified subsequently to profit or loss when specific conditions are met: Revaluation of investment in LiveTiles Limited (net of tax) (243) 2,275 Unrealised exchange differences on translating foreign operations (363) 74 Other comprehensive (loss)/income for the period (606) 2,349 Total comprehensive (loss)/income for the period attributable to owners of the parent entity (591) 1,577 Earnings per share From continuing and discontinued operations: - Basic earnings per share (cents) 3 0.01 (0.58) - Diluted earnings per share (cents) 3 0.01 (0.58) The accompanying notes form part of these financial statements. 9
Consolidated statement of financial position As at 31 December 2016 Consolidated Group 31 Dec 2016 30 Jun 2016 Note ASSETS CURRENT ASSETS Cash and cash equivalents 4 11,387 13,761 Trade and other receivables 5 34,662 28,754 Other assets 2,655 3,559 TOTAL CURRENT ASSETS 48,704 46,074 NON-CURRENT ASSETS Other financial assets 6 486 833 Property, plant and equipment 700 773 Deferred tax assets 906 828 Intangible assets 7 21,584 21,102 TOTAL NON-CURRENT ASSETS 23,676 23,536 TOTAL ASSETS 72,380 69,610 LIABILITIES CURRENT LIABILITIES Trade and other payables 28,365 25,295 Unearned revenue 1,541 2,302 Current tax liabilities 846 342 Provisions 824 870 TOTAL CURRENT LIABILITIES 31,576 28,809 NON-CURRENT LIABILITIES Deferred tax liabilities 656 688 Provisions 113 116 TOTAL NON-CURRENT LIABILITIES 769 804 TOTAL LIABILITIES 32,345 29,613 NET ASSETS 40,035 39,997 EQUITY Issued capital 8(a) 40,340 39,089 Reserves 2,018 3,246 Accumulated losses (2,323) (2,338) TOTAL EQUITY 40,035 39,997 The accompanying notes form part of these financial statements. 10
Consolidated statement of changes in equity For the half-year ended 31 December 2016 SHARE CAPITAL Ordinary Accumulated Losses Foreign Currency Translation Reserve Investment Revaluation Reserve RESERVES Reserve Equity Settled Employee Benefits Reserve Balance at 1 July 2015 38,714 (2,209) (3) - (27) 1,985 38,460 Loss for the period - (772) - - - - (772) Revaluation of investment in LiveTiles, net of - - - 2,275 - - 2,275 tax Unrealised foreign exchange on consolidation - - 74 - - - 74 Total comprehensive loss for the period - (772) 74 2,275 - - 1,577 Shares issued during the period 355 - - - - 70 425 Transaction costs, net of tax (5) - - - - - (5) Share based payments - - - - - 569 569 Balance at 31 December 2015 39,064 (2,981) 71 2,275 (27) 2,624 41,026 Total Balance at 1 July 2016 39,089 (2,338) (25) 280 (27) 3,018 39,997 Profit for the period - 15 - - - - 15 Revaluation of investment in LiveTiles, net of - - - (243) - - (243) tax Unrealised foreign exchange on consolidation - - (363) - - - (363) Total comprehensive loss for the period - 15 (363) (243) - - (591) Shares issued during the period 413 - - - - - 413 Transaction costs, net of tax (6) - - - - - (6) Share based payments - - - - - 222 222 Transfer from SBP Reserves-options exercised 844 - - - - (844) - Balance at 31 December 2016 40,340 (2,323) (388) 37 (27) 2,396 40,035 The accompanying notes form part of these financial statements. 11
Consolidated statement of cash flows For the half-year ended 31 December 2016 Consolidated Group 31 Dec 2016 31 Dec 2015 Cash flows from operating activities Receipts from customers 67,221 65,241 Payments to suppliers and employees (69,075) (70,269) Interest received 21 93 Interest paid - (26) Income tax paid (256) (538) Net cash used in operating activities (2,089) (5,499) Cash flows from investing activities Purchase of property, plant and equipment (53) (156) Proceeds from sale of asset held for sale - 83 Payment for intangibles (655) (214) Net cash outflow on acquisition of subsidiary - (320) Net cash used in investing activities (708) (607) Cash flows from financing activities Proceeds from issue of shares 413 425 Costs associated with issue of shares (6) (5) Net cash provided by financing activities 407 420 Net decrease in cash and cash equivalents (2,390) (5,686) Cash and cash equivalents at beginning of period 13,761 12,423 Effect of exchange rates on cash holdings in foreign currencies 16 33 Cash and cash equivalents at end of period 11,387 6,770 The accompanying notes form part of these financial statements. 12
Notes to the financial statements For the half-year ended 31 December 2016 1. Summary of significant accounting policies a. Basis of preparation These general purpose interim financial statements for half-year reporting period ended 31 December 2016 have been prepared in accordance with requirements of the Corporations Act 2001 and Australian Accounting Standard AASB 134: Interim Financial Reporting. The Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards. This interim financial report is intended to provide users with an update on the latest annual financial statements of Rhipe Limited and its controlled entities (referred to as Rhipe, Group or the Company ). As such, it does not contain information that represents relatively insignificant changes occurring during the half-year within the Group. It is therefore recommended that this financial report be read in conjunction with the annual financial statements of the Group for the year ended 30 June 2016, together with any public announcements made during the following half-year. These interim financial statements were authorised for issue on the 17 February 2017. b. Basis of accounting The consolidated financial statements have been prepared on the basis of historical cost, except for financial instruments that are measured at revalued amounts or fair values at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair values of the consideration given in exchange for goods and services. All amounts are presented in Australian dollars, unless otherwise noted. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis. In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and Level 3 inputs are unobservable inputs for the asset or liability. c. Accounting policies The same accounting policies and methods of computation have been followed in this interim financial report as were applied in the most recent annual financial statements, other than detailed in note 1(d). The Group has considered the implications of new and amended Accounting Standards but determined that their application to the financial statements is either not relevant or not material. d. Rebates metholodogy To ensure consistency with accounting standards, the company has changed the accounting treament of rebates in the consolidated statement of Profit and Loss. Prior to 1 July 2016 rebates received from vendors were part of total revenue while from 1 July 2016 rebates are now included as part of the Cost of Sales. The impact of this restatement for the six months ending 31 December 2015 is as follows: 31 Dec 2015 Adjustment Restated 31 Dec 2015 Sales Revenue 69,505 (3,103) 66,402 Cost of Sales licensing fees (56,538) 3,103 (53,435) Gross Profit 12,967-12,967 13
Notes to the financial statements (continued) The impact on the 30 June 2016 financial year is as follows: 30 Jun 2016 Adjustment Restated 30 Jun 2016 Sales Revenue 143,043 (5,923) 137,120 Cost of Sales licensing fees (117,276) 5,923 (111,353) Gross Profit 25,767-25,767 31 Dec 2016 Restated 31 Dec 2015 Licensing revenue 70,016 62,760 Solutions revenue 2,435 3,642 Total revenue 72,451 66,402 2. Segment information The Group has identified its operating segments based on the internal reports that are reviewed and used by the Managing Director (chief operating decision maker) in assessing performance and determining the allocation of resources. The Managing Director manages the Group s activities as one business segment providing cloud based licencing programs and cloud solutions for its key software vendors across the Asia Pacific region. Revenue derived from countries in the Asia Pacific region include: Restated 31 Dec 2016 31 Dec 2015 Australia 43,692 39,517 South East Asia 18,863 19,516 New Zealand 8,744 6,200 Other 1,152 1,169 72,451 66,402 3. Earnings per share The following reflects the income used in the basic earnings per share computation. 31 Dec 2016 31 Dec 2015 Net loss attributable to ordinary equity holders of the parent: (a) Reconciliation of earnings to profit or loss Profit/(Loss) 15 (772) Earnings used to calculate basic EPS 15 (772) Earnings used in calculation of dilutive EPS 15 (772) 14
Notes to the financial statements (continued) (a) Weighted average number of shares used as the denominator 31 Dec 2016 31 Dec 2015 Number Number Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS Weighted average number of dilutive options outstanding 135,958,691 3,877,174 133,469,785 - Weighted average number of ordinary shares outstanding during the year used in calculating dilutive EPS 139,835,865 133,469,785 4. Cash and cash equivalents 31 Dec 2016 30 Jun 2016 Cash at bank and on hand 11,359 13,734 Short term bank deposits 28 27 11,387 13,761 The effective interest rate on short-term bank deposits was 1.40% (Jun 2016: 1.40%); these deposits have an average maturity of 31 days (Jun 2016: 31 days). 5. Trade and other receivables 31 Dec 2016 30 Jun 2016 CURRENT Note Trade receivable 20,346 15,381 Provision for Impairment 5(a) (411) (248) Indirect taxes 1,439 658 Accrued Revenue 13,288 12,963 34,662 28,754 (a) Provision For Impairment of Receivables Movement in provision for impairment of receivables is as follows: OPENING BALANCE 1 Jul 2016 IMPAIRMENT FOR THE PERIOD AMOUNTS WRITTEN OFF 31 Dec 2016 CLOSING BALANCE 31 Dec 2016 Current trade receivables 248 175 (12) 411 248 175 (12) 411 15
Notes to the financial statements (continued) 6. Other financial assets 31 Dec 2016 30 Jun 2016 Investment at cost 16 16 Investment at fair value (LiveTiles Limited) 470 817 486 833 At 30 June 2016 the Group held 4,085,380 shares, approximately 1% of their issued capital, in LiveTiles Limited an ASX listed software vendor. Due to the availability of quoted prices in active markets, the asset is level 1 financial asset and revalued according to its fair value at reporting date. The movmeent between 30 June 2016 and 31 December 2016 of $347,000 is the change in fair value which has been recognised in equity. 7. Intangible assets 31 Dec 2016 30 Jun 2016 Goodwill Cost and net carrying amount 19,897 19,897 Trademarks & Licensing Cost and net carrying amount 10 10 Capitalised development Cost 2,174 1,519 Accumulated amortisation (497) (324) Net carrying amount 1,677 1,195 Total intangibles 21,584 21,102 Total capitalised software development costs for the 6 month period were $655,000 and relate to cost of external consultants and internal IT team costs incurred in developing our new partner usage portal and billing system, Prime Portal. Amortisation amount for the period was $173,000 with the company commencing amortisation of Prime Portal from August 2016. Impairment Goodwill is allocated to cash-generating units which are based on the Group s reporting segments. 31 Dec 2016 30 Jun 2016 Asia Pacific segment 19,897 19,897 Total 19,897 19,897 16
Notes to the financial statements (continued) Goodwill impairment testing No impairment indicators were identified in the review of goodwill for the period ended 31 December 2016. 8. Contributed equity (a) Issued capital 31 Dec 2016 30 Jun 2016 137,116,614 (2016: 135,049,948) fully paid ordinary shares 40,340 39,089 No. Value Rhipe Limited shares as at 30 June 2016 135,049,948 39,089 Shares issued upon exercise of $0.20 options 2,066,666 413 Transfer from equity settled employee benefits reserve upon exercise of options - 844 Share issue costs, net tax - -6 Closing balance at 31 December 2016 137,116,614 40,340 Ordinary shares participate in dividends and the proceeds on winding-up of the parent entity in proportion to the number of shares held. At the shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands. 17
Notes to the financial statements (continued) Contributed equity (continuted) (b) Options As at 31 December 2016, there were 5,450,834 unissued ordinary shares under option (30 June 2016: 6,847,500). These options are exercisable as follows: DETAILS NO OF OPTIONS DATE OF EXPIRY EXERCISE PRICE ($) Management incentive options issued prior to completion of reverse takeover by NewLease Pty 125,000 12/03/2018 0.20 Limited Management incentive options 975,000 10/04/2017 0.20 1,458,334 10/04/2019 0.20 300,000 11/08/2018 0.75 300,000 11/08/2020 0.75 67,500 67,500 67,500 67,500 15/09/2018 15/09/2021 01/10/2018 01/10/2021 0.75 0.75 0.75 0.75 200,000 01/07/2018 0.75 200,000 01/07/2021 0.75 126,250 18/03/2017 1.25 126,250 18/03/2018 1.25 700,000 400,000 135,000 135,000 01/01/2019 01/12/2017 01/11/2020 01/11/2023 1.25 1.25 0.94 0.94 5,450,834 The weighted average exercise price of the above options is $0.625 ($0.448 at 30 June 2016) 31 Dec 2016 No. Balance at beginning of the period 6,847,500 Granted during the period 670,000 Exercised during the period (2,066,666) Expired during the period - Closing balance at 31 December 2016 5,450,834 For the half-year ended 31 December 2016 (c) Performance Rights As at 31 December 2016, there were 1,000,000 performance rights to acquire shares (30 June 2016: 1,000,000). These performance rights are exercisable as follows: DETAILS NO OF PERFORMANCE RIGHTS DATE OF EXPIRY EXERCISE PRICE ($) Management performance rights 500,000 11/08/2017 (i) Nil 500,000 11/08/2019 (i) Nil 1,000,000 (i) These performance rights will expire on this date if vesting conditions are not met. 31 Dec 2016 No. Balance at beginning of the period and closing balance at 31 December 2016 1,000,000 18
Notes to the financial statements (continued) 9. Events after the reporting period There has not been any matter or circumstance occurring subsequent to the end of the financial year that has significantly affected, or may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years. 19
Directors' Declaration In accordance with a resolution of the directors of Rhipe Limited, the directors of the Company declare that: (a) The financial statements and notes, as set out on pages 9 to 19 are in accordance with the Corporations Act 2001, including: (i) (ii) complying with Australian Accounting Standard AASB 134: Interim Financial Reporting, and giving a true and fair view of the financial position of the consolidated entity s financial position as at 31 December 2016 and of its performance for the half-year ended on that date. (b) In the directors opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. On behalf of the Directors Mike Hill Chairman Sydney 17 February 2017 20
Corporate Information ABN 91 112 452 436 Directors Mike Hill Dominic O Hanlon Dawn Edmonds Executive Chairman until 27 January 2017, thereafter Non-Executive Chairman Managing Director and Chief Executive Officer Executive Director and Chief Operating Officer until 31 December 2016, thereafter Non-Executive Director Non-Executive Director Non-Executive Director Laurence Sellers Mark Pierce Michael Everett Non-Executive Director, resigned 27 January 2017 Michael Tierney Non-Executive Director, appointed 27 January 2017 Joint Company Secretary Andrew Whitten and Maggie Niewidok Registered Office & Principal Place of Business Level 2, 460 Bourke Street Melbourne Victoria 3000 Telephone +61 3 9642 8695 Share Register Link Market Services Limited Level 1, 333 Collins Street Melbourne VIC 3000 Tel 1300 554 474 Auditors ShineWing Australia Level 10 530 Collins Street Melbourne VIC 3000 Solicitors Whittens Lawyers and Consultants Level 5 137 139 Bathurst Street Sydney NSW 2000 Stock Exchange Listing Securities of Rhipe Limited are listed on the Australian Securities Exchange (ASX). ASX Code: RHP Web Site: www.rhipe.com 21