HANSEN TECHNOLOGIES LIMITED - Annual Report 2017

HANSEN TECHNOLOGIES LTD ABN 90 090 996 455 AND CONTROLLED ENTITIES

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FINANCIAL INFORMATION FOR THE YEAR ENDED 30 JUNE 2017 PROVIDED TO THE ASX UNDER LISTING RULE 4.3A

- Rule 4.3A

Appendix 4E Final Report

Hansen Technologies Limited and its Controlled Entities

ABN or equivalent company reference: ABN: 90 090 996 455

1. Reporting period

Report for the financial year ended: 30 June 2017 Previous corresponding period is 30 June 2016 the financial year ended:

2. Results for announcement to the market

. Results for announcement to the market	. Results for announcement to the market	. Results for announcement to the market

$A’000 Revenues from ordinary activities Up 17.3% to 174,672 Profit from ordinary activities after tax attributable to members Down 8.4% to 23,888
	Amount per security	Franked amount per security
Final Dividend
Final dividend for the year ended 30 June 2017	3.0¢	3.0¢
Final dividend for previous corresponding period1	4.0¢	4.0¢
Payment date for the final dividend for the year ended 30 June 2017	28 September 2017
Record date for determining entitlement to the future dividend	5 September 2017
Interim Dividend
Interim dividend for the 2017 fiscal year	3.0¢	3.0¢
Interim dividend for previous corresponding period 3.0¢ 2.5¢ A final dividend of 3 cents per share, fully franked, has been declared, bringing the total dividend for the year to 6 cents per share, fully franked. Please refer to the attached financial report for the year ended 30 June 2017 and the accompanying press release for more detail.	3.0¢	2.5¢

1The final dividend paid of 4 cents per share, franked to 4 cents, comprised of a regular dividend of 3 cents per share, together with a special dividend of 1 cent per share.

3. Statement of Comprehensive Income

Refer to the attached statement and relevant notes.

4. Statement of Financial Position

Refer to the attached statement and relevant notes.

5. Statement of Cash Flows

Refer to the attached statement and relevant notes.

6. Statement of retained earnings

	Consolidated Entity
	2017 2016
	$’000 $’000
Balance at the beginning of year	44,912 29,489 23,888 26,083
Net profit attributable to members of the
parent entity
Total available for appropriation	68,800 55,572
Dividends paid	(12,702) (10,660)
Balance at end of year	56,098 44,912

7. Dividends

Four cent final dividend – year ended 30 June 20161 Three cent interim dividend – year ended 30 June 2017 Three cent final dividend – year ended 30 June 2017	Date of payment	Total amount of dividend
	30 September 2016	$7,251,614
	31 March 2017	$5,450,243
	28 September 2017	$5,872,000

Amount per security

Amount per security
	Amount per security	Franked amount per security at % tax	Amount per security of foreign sourced dividend
Total dividend: Current year(interim)	3.0¢	100%	0¢
Previous year (interim)	3.0¢	83%	0¢
Current year (final)	3.0¢	100%	0¢
Previous year(final)1	4.0¢	100%	0¢

1The final dividend paid of 4 cents per share, franked to 4 cents, comprised of a regular dividend of 3 cents per share, together with a special dividend of 1 cent per share.

Total dividend paid on all securities

otal dividend paid on all securities
Ordinary securities Total	Within the current financial year $'000	Previous financial year $'000
	12,702	10,660
	12,702	10,660

8. Details of dividend or distribution reinvestment plans in operation are described below

A Dividend Reinvestment Plan has been established to provide shareholders with the opportunity to reinvest dividends in new shares rather than receiving cash. Detail of Hansen’s Dividend Reinvestment Plan including the share pricing methodology is available on line at www.hsntech.com/investors/shareholderinformation

The price for shares to be applied for in accordance with the DRP plan for this dividend shall be the full undiscounted value as prescribed by the plan.

The conduit foreign income component of this final dividend is nil.

The last date for receipt of election notices for participation in 6 September 2017 the dividend or distribution reinvestment plan

9. Net tangible assets per security

Net tangible asset backing per ordinary security

Current period	Previous corresponding period
15.4 Cents	16.1 Cents

10. Details of entities over which control has been gained during the period

Hansen Technologies Limited gained control of PPL Solutions LLC on 1 July 2016 and DST Billing Solutions Limited on 1 November 2016 during the period. Further details of the acquisitions are disclosed in the attached financial report.

11. Details of associates and joint venture entities

None

12. Significant information relating to the entity’s financial performance and financial position

Results from Operations for the full year ended 30 June 2017:

	FY17 A$’000	FY16 A$’000	Variance %
Operating revenue	174,672	148,961	Up 17.3%
EBITDA	45,145	45,457	Down 0.7%
Profit before tax	32,833	36,424	Down 9.9%
Income tax expense	(8,945)	(10,341)	Down 13.5%
Net profit after tax from continuing operations	23,888	26,083	Down 8.4%
Basic Earnings per share	13.2 cents	14.7 cents	Down 10.2%

Please refer to the attached statements and relevant notes.

13. The financial information provided in the Appendix 4E is based on the financial report (attached), which has been prepared in accordance with Australian Accounting Standards.

14. Commentary on the results for the period

Please refer to the attached financial report.

15. Audit of the financial report

The consolidated financial report for the year ended 30 June 2017 has been audited and contains the independent auditor’s report which included an unqualified audit opinion.

Other information requiring disclosure to comply with Listing Rule 4.3A is contained in, and should be read in conjunction with, the notes to the Consolidated Financial Statements and the Directors’ Report for the year ended 30 June 2017.

Hansen Technologies Ltd and Controlled Entities ABN 90 090 996 455

Annual Report

For the Financial Year Ended 30 June 2017

Hansen Technologies Ltd

Hansen Technologies Ltd and Controlled Entities

Annual Report for the Financial Year Ended 30 June 2017

Contents	Page Number
Chairman and Chief Executive Officer Joint Report	3
Information on Directors and CompanySecretary	6
Directors’ Report	8
Remuneration Report	14
Auditor’s Independence Declaration	26
Financial Report	27
Directors' Declaration	71
Independent Auditor's Review Report	72

Hansen Technologies Ltd

CHAIRMAN AND CHIEF EXECUTIVE OFFICER JOINT REPORT

It is with great pride that we present Hansen Technologies’ Annual Report for fiscal 2017.

Hansen has grown as a global business specialising in customer care and billing for the energy, water, pay-tv and telco sectors. Our business now employs over 1,000 people representing more than 40 nationalities across offices in Australia, USA, New Zealand, China, Denmark, Finland, Norway, Germany, Argentina, India, the United Kingdom and South Africa.

The diversity and reach of our team continues to expand as our newly acquired businesses add subject matter and technical experts to our global talent pool. Once again, we would like to extend our congratulations and gratitude to the entire Hansen team who have delivered strongly to our business strategy, laying a solid foundation for continued success.

During the year we commenced a number of exciting projects with our existing customers to assist them to improve their business operations, upgrade their technical approach and adapt to the changing regulatory environment.

We continued to execute on the company’s acquisition strategy closing two acquisitions across the reporting period. The acquisition of PPL Solutions (PPLS) and HiAffinity have expanded our CIS capability in both the US and UK markets. Both of these acquisitions have delivered to our expectations across the period.

Located in Pennsylvania, PPLS delivers a billing solution for energy consumers and offers our clients a total solution from customer care and invoicing to cash collection. This end-to-end business process enables our clients to outsource their back office administration, allowing them to focus on growing their revenue cost effectively. With a focus on deregulated markets, PPLS is well placed to address opportunities from within this emerging market.

Located in London, HiAffinity delivers billing solutions focusing in water utilities and with customers across Europe, Australia, and Africa, is a natural addition to the Hansen product suite.

2016-17 financial performance

Operating revenue of $174.7 million for the year was up 17.3% on the previous year. Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) of $45.1 million was flat over the prior period, reflecting the impact of some currency headwinds and a year of further investment as we build out our global platform.

Net profit after tax (NPAT) was $23.9 million and Basic Earnings Per Share (EPS) was 13.2 cents compared to $26.1 million and 14.7 cents last year, respectively. This deterioration in EPS is largely due to the increase in amortisation associated with the acquisition of intangibles in the businesses discussed above.

Following the release of the full year’s operating results, the directors declared a three cent per share fully franked final dividend. When combined with the interim dividend of three cents per share fully franked, the total distribution of six cents per share is consistent with the Board’s capital management policy that balances on-going investment against the payment of franked dividends.

Year-on-year comparison (A$m)

The 2017 Financial Year commenced as expected with the conclusion of our relationship with a long standing superannuation client resulting in a $3m reduction in revenue. Importantly, Hansen did not own the intellectual property in the superannuation solution provided to that client, further highlighting the importance of the decision taken many years ago to own the intellectual property in the solutions we provide. Following a very strong year in 2016, a more modest amount of underlying organic revenue growth was achieved throughout the year after adjusting for the impact of the strengthening Australian Dollar.

Specific items that impacted our results when compared to the prior year’s performance include:

The strong appreciation of the AUD against most major currencies. The most notable event was Brexit where the British pound depreciated approximately 20% when compared to levels in FY16, impacting revenue earned from our UK customer base. With some of the direct costs associated with these customers based in Australia, this increased the impact in the movement in currency on margins.
The customer care and billing division of PPLS has met our expectations since its acquisition in July 2016. However, legacy call-centre only business that was acquired as part of the transaction continues to trade at very low EBITDA margins in contrast to typical Hansen levels.
We have continued to invest, with a number of programmes affecting this year’s profitability while strengthening the company’s foundation for continued growth. Such items include:
A heightened level of costs associated with acquisitions. We have undertaken the acquisition and integration of two businesses during the year and completed due diligence activities on a third business.

Hansen Technologies Ltd

Investment in company infrastructure across Sales and Marketing, Human Resource Management and IT Services.

Who we are

Hansen’s core business is focused on the provision of customer care, billing and data management systems. Our modular products service four major industry sectors (energy, water, pay-tv and telco) each with industry-specific and geographic needs. We have proprietary solutions that address the specific requirements of customers within the differing segments of the sectors we service. As an example, for the energy sector we have software solutions designed for large customers focused on retail consumers, for power distribution companies, and for customers requiring complex, commercial billing. We also have products that deal with meter and market data management.

Hansen has an extensive understanding of the sectors and markets in which it operates and continues to evolve its product offering in readiness for compelling events and market opportunities, including those from high growth emerging markets.

Our strategic approach

Hansen’s specialised product offering and strong multi-industry expertise provides benefits including:

Best-fit solutions designed to exceed the industries’ requirements whilst delivering on the specific business needs of the customer.
Stable global platform – Hansen’s business is not exposed to a single customer, industry segment, product or geographic region. While influenced by the market, the mission-critical role of our software ensures a relatively stable operating environment.
Product Focus - Our recent acquisitions have expanded our comprehensive set of customer care, billing and data management systems, and allowed us to enter new markets with a market presence that is referenceable.
Our People – Hansen continues to offer great opportunities for learning and development. Our HR programmes assist us to retain a pool of very talented staff across all aspects of the business. Our reputation as a global employer that invests in staff development assists us to attract talented young people to the team. This constantly refreshes our thinking and ensures we remain at the forefront of emerging technologies and trends.

The global market

Hansen’s approach to the global market continues to be driven by a strong focus on servicing its clients’ needs, targeting strategic opportunities for new business and acquiring businesses that complement and bolster our core business.

The combination of a local in-market presence and the depth of experience that comes from our global exposure to evolving industry and technological change places us in a unique position when assisting our customers to address a business need within their home market. Gaining and maintaining customer confidence as we assist our customers to grow their business is common across all industries and all markets in which we operate.

Market differentiation

Competing internationally with the world’s largest software houses, our competition commonly targets full enterprise solutions using system integrators to deliver the outcome. We differentiate ourselves by:

Focussing on specific markets and delivering directly into the markets ourselves or in partnership with a local industry partner.
Delivering best of breed solutions under a collaborative approach working directly with our clients.
Delivering a business outcome on time and on budget by adopting an agile approach.
Offering the security of a global, full-service organisation while maintaining the flexibility to deliver tailored client driven outcomes.
Investing in foundation technologies to ensure our solutions remain current, industry-specific and efficient.
Offering the flexibility of an on premise, hosted or cloud based solution.

Hansen Technologies Ltd

Mergers and acquisitions

Hansen maintains a consistent targeted approach to its acquisitions. Targets must meet the following strict criteria to be considered:

Business must be within, or adjacent to, our core competency;
Revenue streams must be recurring or annually based; and
The business must have strong ownership of its intellectual property.

The opportunity must extend Hansen’s footprint into:

A new market;
A new geography; and/or
A new industry sector.

On 1 July 2017, Hansen executed an agreement to secure ownership of the Enoro Group of Companies.

Enoro is a leading European software provider for the utility sector, providing Customer Information Systems (CIS) and Meter and Energy Data Management (MDM/EDM) solutions. Based in the Nordic countries, the world’s most advanced energy markets, Enoro has market leading positions with around 300 customers and over 270 employees. Enoro Group has offices in Finland, Netherlands, Norway, Sweden and Switzerland.

(Please note: Enoro was acquired subsequent to the end of the financial year and has been reported as a subsequent event.)

Corporate Governance Statement

Hansen Group and the board are committed to achieving and demonstrating the highest standards of corporate governance. Hansen has reviewed its corporate governance practices against the Corporate Governance Principles and Recommendations (3rd edition) published by the ASX Corporate Governance Council.

The 2017 corporate governance statement is dated as at 30 June 2017 and reflects the corporate governance practices in place throughout the 2017 financial year. The 2017 corporate governance statement was approved by the board on 21 August 2017. A description of the group's current corporate governance practices is set out in the group's corporate governance statement, which can be viewed at http://www.hsntech.com/investors/corporate-governance/.

Hansen Technologies Ltd

INFORMATION ON DIRECTORS AND COMPANY SECRETARY

The qualifications, experience and special responsibilities of each person who has been a Director of Hansen Technologies Ltd at any time during or since the end of the financial year are provided below, together with details of the Company Secretary as at the year end.

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Mr David Trude Non-Executive Director

Chairman since 2011

Director since 2011

Age 69

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Mr Andrew Hansen Managing Director and CEO

Managing Director since 2000

Age 57

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Mr Bruce Adams Non-Executive Director

Director since 2000

Member of the Remuneration Committee

Age 57

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Mr Peter Berry Non-Executive Director

Director since 2012

Chair of the Remuneration Committee

Member of the Audit and Risk Committee

Age 57

Resigned 6 December 2016

David has extensive experience in a variety of financial services roles within the banking and securities industries. He holds a degree in commerce from the University of Queensland and is a Member of many professional associations including the Stockbrokers and Financial Advisers Association of Australia and the Australian Institute of Company Directors. He is also Chairman of Baillieu Holst Limited, a Director of CHI-X Australia Limited and Director of ASX listed Acorn Capital Investment Fund and MSL Solutions Limited.

Andrew has over 30 years’ experience in the IT industry, joining Hansen in 1990. Prior to Hansen, he held senior management positions with AmfacChemdata, a software provider in the health industry. Andrew is responsible for implementing the Group’s strategic direction and overseeing the everyday affairs of the Hansen Group.

Bruce has over 25 years’ experience as a commercial lawyer. He has practised extensively in the areas of information technology law and mergers and acquisitions and has considerable experience advising listed public companies. In early 2002, after more than 10 years as a partner of two Melbourne law firms, Bruce took up a position as general counsel of Club Assist Corporation Pty Ltd, a worldwide motoring club service provider. Bruce holds degrees in Law and Economics from Monash University.

Peter has been an investment banker in excess of 25 years, specialising in mergers and acquisitions and project financing. Peter’s career has focused on the energy sector, including sector reform and privatisation, as well as renewable energy and infrastructure more broadly.

He is currently a Director of Collgar Wind Farm and of Campus Living Villages, and an adviser to investors in infrastructure. Peter was a Director of Metgasco Ltd until 21 January 2015. Previously, Peter practised as a corporate lawyer in both Melbourne and New York and holds degrees in Bachelor of Laws and Bachelor of Commerce (majoring in accounting) from Melbourne University.

Hansen Technologies Ltd

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Ms Sarah Morgan Non-Executive Director

Director since 2014

Chair of the Audit and Risk Committee

Member of the Remuneration Committee

Age 47

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Mr David Osborne Non-Executive Director

Director since 2006

Member of the Audit and Risk Committee

Age 68

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Ms Jennifer Douglas Non-Executive Director

Director Since 2017

Chair of the Remuneration Committee

Member of the Audit and Risk Committee

Age 50

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Ms Julia Chand General Counsel and Company Secretary

Company Secretary since 2014

Age 47

Sarah has extensive experience in the finance industry, primarily as part of independent corporate advisory firm Grant Samuel. Sarah has been involved in public and private company mergers and acquisitions, as well as equity and debt capital raisings across a broad range of industries.

Sarah is also NonExecutive Director and Chair of the Audit and Risk Committee of Adslot Limited, an ASX listed media and technology business, and NonExecutive Director of Future Generation Global Investment Company Limited, an ASX listed investment company.

David is a Fellow of the Institute of Chartered Accountants, and a Fellow of the Australian Institute of Company Directors, with over 40 years of financial management, taxation and accounting experience in public practice. David’s experience includes having been the Audit Partner of his accounting practice and a Registered Company Auditor for over 25 years. He also has experience in the various aspects of risk management. David has a long-standing association with Hansen, having been a Board member for some years prior to the Company’s listing on the ASX in June 2000.

Jennifer is an experienced executive who has worked in the technology and media industries for over twenty years. After starting her career as a lawyer with Allens and Mallesons, she has held key executive roles spanning diverse functions at Sensis and Telstra. Her roles at Telstra included responsibility for its $3 billion fixed voice business, establishment of Telstra’s technology support business Platinum and responsibility for Telstra's customer strategy and advocacy. Jennifer was a director of Telstra security and smart solutions business SNP Monitoring from 2014 to 2016 and has also held not for profit board positions. Jennifer holds degrees in Law and Science from Monash University and a Masters of Law and Masters of Business Administration from Melbourne University. She is also a Graduate of AICD.

Julia joined Hansen Technologies in 2007 and plays a strategic role as General Counsel as well as Company Secretary. Julia has significant legal experience in IT, financial services and retail organisations. As Company Secretary she is responsible for the Company’s corporate and ASX obligations.

Unless stated, no Directors of Hansen Technologies Ltd held any other Directorships of listed companies at any time during the three years prior to 30 June 2017.

Hansen Technologies Ltd

DIRECTORS’ REPORT

The Directors present their report together with the Financial Report of the consolidated entity, consisting of Hansen Technologies Ltd and the entities it controlled for the financial year ended 30 June 2017, and Auditor’s Report thereon. This Financial Report has been prepared in accordance with Australian Accounting Standards.

Principal activities

The principal activities of the consolidated entity during the financial year were the development, integration and support of billing systems software for the utilities, energy, pay-tv and telco sectors. Other activities undertaken by the consolidated entity include IT outsourcing services and the development of other specific software applications.

OPERATING AND FINANCIAL REVIEW

Review of operations

The Group’s operating performance for the fiscal year compared to last year is as follows:

	2017 A$ Million 2016 A$ Million Variance %
Operating revenue	174.7 149.0 17.3
EBITDA	45.1 45.4 (0.7)
Profit before tax	32.8 36.4 (9.9)
NPAT	23.9 26.1 (8.4)
Basic Earnings per share (cents)	13.2 14.7 (10.2)

The Directors believe the information additional to IFRS measures included in the report is relevant and useful in measuring the financial performance of the Group.

The 2017 financial year was one of consolidation and investment with revenue growth generated from a combination of acquisition activity and organic growth. The overall earnings for the year were adversely affected by lower margins being delivered from the call centre associated with the PPLS business, the effect of a stronger Australian dollar across the reporting period and the increased investment in people and infrastructure as our global operations expand.

The year has benefited from the Company’s continuing acquisition strategy with 2 acquisitions making a first time contribution to the Group’s results.

PPL Solutions LLC (PPLS), acquired on 1 July 2016, has made a valuable contribution to the results while transitioning from its highly integrated operations within Pennsylvania Power and Light to an active business within the Hansen group of companies. While the business performed in line with expectations, the legacy call-centre only business that was acquired as part of the transaction continues to trade at very low margins.
DST Billing Solutions Limited (“HiAffinity”), acquired on 1 November 2016, has made a good contribution to the results, exceeding our expectations at the time of the acquisition, and has now been integrated into the Hansen UK operations.

Subsequent to year end, Hansen announced the acquisition of Enoro, a leading European software provider for the utility sector providing Customer Information Systems (CIS) and Meter and Energy Data Management (MDM/EDM) solutions.

Billing segment

The Billing segment represents a major part of Hansen’s business operations, delivering $168.9m revenue in 2017 compared to $139.9m in 2016, which translates into a 20.6% increase. Profit before tax was $34.2m in 2017 compared to $33.9m in 2016. The revenue growth was driven mainly via the PPLS and HiAffinity acquisitions.

The Billing segment operates globally within the following sectors: energy, water, pay-tv and telco.

Outsourcing

The Outsourcing segment represents our traditional data hosting business, which is mostly operated in Australia. It recorded revenues of $5.6m in 2017 versus $6.3m in 2016, representing an 11% decrease for the year. Profit before tax was $1.5m compared to $2.8m in 2016. This 46% decrease resulted from a number of existing customers rationalising their computer hardware over the year resulting in less space required within our outsourcing environment.

Hansen Technologies Ltd

DIRECTORS’ REPORT

Other

The Other segment relates to the provision of software and services in the superannuation administration market. As expected, due to the finalisation of customer contracts resulting in the discontinuation of this service, there has been a decline in the results of this segment for the year; revenue in 2017 was $0.1m versus $2.7m in 2016 with profit before tax being $55k in 2017 versus $1.1m in 2016.

Significant changes in the state of affairs

There have been no significant changes in the consolidated entity’s state of affairs during the financial year.

After balance date event

The Company’s subsidiary, Hansen Holdings Europe Ltd, acquired 100% of the share capital of Enoro Holding AS and its controlled entities (“Enoro”), the Nordic market-leading provider of Customer Information Systems and Meter Data Management systems for the energy sector, for a consideration of approximately $71.0 million. The transaction is effective from 1 July 2017.

No other matters have arisen between the end of the financial year and the date of this report that have 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 years.

Opportunities and Business Risks

This year’s performance shows the Group remains resilient to global economic volatility. This resilience is due to our distributed business model, having geographically diverse customers and breadth of products.

Hansen has a robust risk framework and continually monitors the business and market place for opportunities as well as identifies and manages business risks.

Opportunities within the business for above trend performance include:

A higher than expected demand for services from customers from changing business and market conditions.
Above budgeted levels of “new logo” customers.
Greater take up of product upgrades from existing customers.
Favourable foreign exchange rates from international operations to the reporting currency of the group being Australian dollars.

We manage risks by monitoring our market place and global conditions.

Risks to the business include:

Security or data incidents. As a technology-focused business, managing security and taking care of consumer and customer data is essential. To manage the risk of damaging security incidents, we have appropriate data management, security and compliance policies, procedures and practices in place.
Loss of customers. While loss of customers due to market competition is a risk to the business, we manage this risk by ensuring we are focused on meeting our customers’ expectations for system performance and service delivery, and by having a globally diverse customer base across various industry sectors.
Decline in international market conditions. As a business with international operations, we have exposure to currency fluctuations, which we monitor and manage.
Investment opportunities. The Group has an active M&A program. Potential investments may carry execution and integration risks and this is managed via maintaining a highly experienced M&A team with a proven track record of business integration and value generation.

Outlook and likely developments for FY2018

The Company will continue to pursue its operating strategy of providing billing and related data management solutions to our targeted industries while assessing appropriate acquisitions to enhance shareholder value.

Our strategic approach and view of the global market has been described above.

Our approach to business remains solid and unchanged and we will maintain a well-disciplined method of growing a profitable business into the future.

Offering technically-driven solutions that deliver a positive business outcome supports our philosophy of putting clients’ needs at the forefront of our business.

Our strategy with respect to acquisitions remains successful as we extend the global reach of Hansen Technologies.

Investing in the organisation remains paramount to ensure our business foundations are resilient and our intellectual property continues to be recognised as a high-end solution.

Changes to or greater take up of technologies in the market such as smart metering or regulation changes that result in increased services demand from our customers.

Hansen Technologies Ltd

DIRECTORS’ REPORT

Environment regulations

The consolidated entity’s operations are not subject to any significant environmental Commonwealth or State regulations or laws.

Dividend paid, recommended and declared

A fully franked dividend of 3 cents per share has been declared. The final dividend was announced to the market on 21 August 2017 with payment to be made on 28 September 2017.

The amount declared has not been recognised as a liability in the accounts of Hansen Technologies Ltd as at 30 June 2017.

Dividends paid during the year:

3 cent per share fully franked interim dividend paid 31 March 2017, totalling $5,450,243; and
4 cent per share fully franked final dividend paid 30 September 2016, totalling $7,251,614.

Share options and rights

Options and rights over shares may be issued to key management personnel (KMP) as an incentive for motivating/rewarding performance as well as encouraging longevity of employment. The issuing of options is intended to enhance the alignment of KMP with the primary shareholder objective of increasing shareholder value. Options over unissued ordinary shares granted by Hansen Technologies Ltd during or since the end of the financial year to the KMP as part of their remuneration are as follows:

	Options Granted Number	Grant Date Rights Granted Number	Grant Date Rights Granted Number	Grant Date
Executives
A Hansen	535,714(1)	22/12/2016	116,972(1)
C Hunter	121,746	22/12/2016	25,824	2/7/2017
D Meade	115,220	22/12/2016	25,157	2/7/2017
G Taylor	108,718	22/12/2016	24,869	2/7/2017
N Fernando	102,603	22/12/2016	24,613	2/7/2017
Total	984,001		217,435(2)

(1) The Board has resolved to issue 535,714 indeterminate rights as part of the FY17 LTI plan and 116,972 rights as part of the FY18 LTI plan to Andrew Hansen, the Chief Executive Officer, as part of the FY18 LTI. The issue of these rights is subject to shareholder approval at the company’s Annual General Meeting in November 2017.

(2) The number of rights granted is based on achievement of targets under the LTI plan. Refer to Remuneration Report for further details.

All grants of options/rights are subject to the achievement of performance measurements. Further details regarding options/rights granted as remuneration are provided in the Remuneration Report.

Hansen Technologies Ltd

DIRECTORS’ REPORT

Shares under options/rights

Unissued ordinary shares of Hansen Technologies Ltd under option/right at the date of this report are as follows:

Grant Date	Exercise Date	Expiry Date	Exercise Price	Number of Options / Rights at Date of Report
2 July 2013	2 July 2016	2 July 2018	$0.92	295,000
2 July 2014	2 July 2017	2 July 2019	$1.30	760,000
2 July 2015	2 July 2018	2 July 2020	$2.67	1,000,000
22 Dec 2016	31 August 2019	22 Dec 2021	$3.59	1,323,730(1)
2 July 2017	31 August 2020	2 July 2022	Nil	217,435(2)

1 Included in the number of options/rights unissued is 535,714 indeterminate rights to Andrew Hansen relating to his FY17 LTI which is subject to shareholder approval at the Company’s Annual General Meeting in November 2017.

2 Included in the number of options/rights unissued is 116,972 indeterminate rights to Andrew Hansen relating to his FY18 LTI which is subject to shareholder approval at the Company’s Annual General Meeting in November 2017.

3 The number of rights granted is based on achievement of targets under the LTI plan. Refer to Remuneration Report for further details.

If the Company makes a bonus issue of securities to ordinary shareholders, each unexercised option will, on exercise, entitle its holder to receive the bonus securities as if the option had been exercised before the record date for the bonus issue.

Shares issued on exercise of options

The following ordinary shares of Hansen Technologies Ltd were issued during or since the end of the financial year as a result of the exercise of an option:

Date Issued	Number of Ordinary Shares Issued	Amount Paid Per Share
05-Jul-16	40,000	0.92
12-Aug-16	40,000	0.92
24-Aug-16	75,000	0.92
05-Sep-16	75,000	0.92
05-Sep-16	350,000	1.06
05-Sep-16	350,000	1.11
05-Sep-16	350,000	1.16
05-Sep-16	175,000	0.92
13-Sep-16	75,000	0.92
21-Oct-16	150,000	0.92
18-Apr-17	20,000	0.92
22-Jun-17	30,000	0.92
5-Jul-17	75,000	1.30
27-Jul-17	40,000	0.92
7-Aug-17	40,000	1.30
Total	1,885,000

There are no amounts unpaid on shares issued on exercise of options.

Hansen Technologies Ltd

DIRECTORS’ REPORT

Indemnification and insurance of Directors, officers and auditors

Indemnification

The Company has agreed to indemnify all of the current and former Directors and officers of the Company and its controlled entities against all liabilities to another person (other than the Company or a related body corporate) that may arise from their position as Directors and officers of the Company and its controlled entities, except where the liability arises out of conduct involving a lack of good faith. The agreement stipulates that the Company will meet the full amount of any such liabilities, including costs and expenses. The Company has not entered into any agreement to indemnify its auditors against any claims that might be made by third parties arising from their report on the annual Financial Report.

Insurance

Since the end of the previous financial year, the Company has paid insurance premiums in respect of Directors’ and officers’ liability and legal expenses and insurance policies for current and former Directors and officers, including executive officers of the Company and Directors, executive officers and secretaries of its controlled entities. The Directors have not included details of the nature of the liabilities covered or the amount of the premium paid in respect of the Directors’ and officers’ liability and legal expenses insurance contracts as such disclosures are prohibited under the terms of the contract.

No insurance premium is paid in relation to the auditors.

Rounding of amounts

In accordance with ASIC Corporations (Rounding in Financial/ Directors’ Reports) Instrument 2016/191, the amounts in the Directors’ Report and in the Financial Report have been rounded to the nearest one thousand dollars, or in certain cases, to the nearest dollar (where indicated).

Directors’ meetings

The number of meetings of the Board of Directors and of each Board Committee held during the financial year and the numbers of meetings attended by each Director were:

Director	Board Meetings Audit Committee Meetings Remuneration Committee Meetings
	Eligible Attended Eligible Attended Eligible Attended
Mr David Trude Mr Bruce Adams Mr Peter Berry Mr Andrew Hansen Ms Sarah Morgan Mr David Osborne Ms Jennifer Douglas	13 13 - - - - 13 13 - - 3 3 6 6 2 2 1 1 13 12 - - - - 13 13 5 5 3 3 13 12 5 5 - - 5 5 2 2 2 2

Directors’ interests in shares or options

Directors’ relevant interests in shares of Hansen Technologies Ltd or options/rights over shares in the Company as at the date of this report are detailed below:

Directors’ Relevant Interests in:	Ordinary Shares	Options/Rights over Shares
	of Hansen Technologies Ltd	in Hansen Technologies Ltd
D Trude	107,491	-
B Adams	152,304	-
P Berry	15,304	-
A Hansen	38,248,078	652,686(1)
S Morgan	20,000	-
D Osborne	384,984	-

1 Included in the options/rights over shares is the issue of 535,714 indeterminate rights to Andrew Hansen relating to his FY17 LTI and 116,972 indeterminate rights to Andrew Hansen relating to his FY18 LTI which is subject to shareholder approval at the Company’s Annual General Meeting in November 2017.

Hansen Technologies Ltd

DIRECTORS’ REPORT

Proceedings on behalf of the company

No person applied for leave of Court to bring proceedings on behalf of Hansen Technologies Ltd or any of its subsidiaries.

Directors’ interests in contracts

Directors’ interests in contracts with the Company are limited to the provision of leased premises on arm’s length terms and are disclosed in Note 23 to the financial statements.

Auditor’s Independence Declaration

A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 in relation to the audit for the financial year is provided with this report.

Non-audit services

Non-audit services are approved by resolution of the Audit Committee and approval is provided in writing to the Board of Directors.

Non-audit services were provided by the auditors of entities in the consolidated Group during the year, namely Pitcher Partners Melbourne, network firms of Pitcher Partners and other non-related audit firms as detailed below. The Directors are satisfied that the provision of the non-audit services during the year by the auditors is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.

	Consolidated
	2017 $ 2016 $
Amounts paid and payable to Pitcher Partners Melbourne for non-audit services: – taxation services – compliance services	- 27,110 - -
	- 27,110
Amounts paid and payable to network firms of Pitcher Partners for non-audit services: – taxation services – compliance services	7,672 6,321 117,062 148,949
	124,734 155,270
Amounts paid and payable to non-related auditors of Group entities for non-audit services: – taxation services – compliance services	52,784 22,390 34,744 -
	87,528 22,390
Total auditors’ remuneration for non-audit services	212,262 204,710

Hansen Technologies Ltd

REMUNERATION REPORT

Dear Shareholder,

On behalf of the Board of Directors, I am pleased to present Hansen Technologies’ Remuneration Report for the 2017 financial year.

Hansen Technologies’ remuneration framework is designed to support and reinforce its business strategy. Linking remuneration to the drivers that support the business strategy ensures that remuneration outcomes for senior executives are aligned with the creation of a strong sustainable business that delivers value for shareholders.

During FY16 and early 2017, the Board conducted a full review of Executive remuneration, which was completed by Godfrey Remuneration Group Pty Ltd. As a result of the review, a number of amendments were made to the 2017 remuneration policy, impacting fixed remuneration, and the Short Term Incentive (STI) and the Long Term Incentive (LTI) programs, including:

More formalised remuneration policy and market pay positioning;
Increases to fixed remuneration for executive incumbents whose fixed remuneration fell significantly below market benchmarks for their role;
Changes to the mix of incentives to improve the links between performance and reward, and to focus executives on short and long term outcomes consistent with the level and nature of their roles; and
Changes to the STI and LTI programs implementing performance criteria to ensure alignment with shareholder value, reflect market best practices and drive better motivational impacts.

Under both the STI and LTI programs, the amount that could be earned/awarded is determined as a percentage of total fixed remuneration (TFR) and is linked to the following performance conditions:

Short Term Incentive

The proportion of the STI linked to financial related performance conditions was increased as a percentage of the amount that could be earned to be the greatest weighting, with the balance linked to non-financial related key performance indicators (KPIs); and
A STI “gateway”, was introduced whereby a minimum threshold of performance must be achieved before any entitlement to an STI payment occurs.

Long Term Incentive

The granting of options associated with the LTI program was tied to two performance conditions:
a) Total Shareholder Return (50%); and
b) Earnings Per Share (EPS) growth (50%).
LTI performance conditions are now assessed over a three year measurement period, aligning these measures with sustained company performance over the long term.

Additional changes are planned in FY18 to further improve the framework and will be detailed in next year's report. These include the use of performance rights instead of options in the LTI scheme and removal of the STI performance gateway on non-financial KPIs to ensure we reward strategically important activity.

The overarching intent of these changes is to create a clearer link between the remuneration framework, meeting short term financial targets and the generation of long term shareholder value. Many of these changes are discussed in further detail in this report. The Board remains committed to the ongoing review and improvement of the Company’s Remuneration Framework to ensure it achieves its objectives and the company is well placed to attract new talent while retaining and motivating the Executive team.

Yours sincerely,

==> picture [194 x 86] intentionally omitted <==

Jennifer Douglas Chair of the Remuneration Committee

Hansen Technologies Ltd

REMUNERATION REPORT

Our detailed remuneration report (Audited)

The Remuneration Report for the year ended 30 June 2017 outlines key aspects of our remuneration framework, and has been prepared and audited in accordance with the Corporations Act 2001.

Our Remuneration Report contains the following sections:

Persons to whom this report covers
Overview of our remuneration framework
How reward was linked to performance
Remuneration expenses for executive Key Management Personnel (KMP)
Contractual arrangements with executive KMP
Share based remuneration
Non-executive Director arrangements
Directors and executive KMP shareholding
Other statutory disclosures

1. Persons to whom this report covers

The remuneration disclosures in the Report cover the following persons who were classified as the Key Management Personnel of the consolidated Group during the 2017 financial year:

Non-executive Directors

David Trude Chair and Independent Non-executive Director Bruce Adams Non-executive Director Peter Berry[(1)] Independent Non-executive Director Jennifer Douglas[(2)] Independent Non-executive Director Sarah Morgan Independent Non-executive Director David Osborne Non-executive Director

Executive KMP[(3)]

Executive KMP(3)
Andrew Hansen	Managing Director and Chief Executive Officer (CEO)
Cameron Hunter	Chief Operating Officer
Darren Meade	Group Head of Delivery
Graeme Taylor	Chief Financial Officer
Niv Fernando	Chief Commercial Officer

(1) Peter Berry resigned as a Non-executive Director on 6 December 2016.

(2) Jennifer Douglas was appointed as a Non-executive Director effective 15 February 2017.

(3) These executives of the group were classified as KMP during the 2017 financial year and unless stated otherwise were KMP for the entire year.

At the Company’s most recent Annual General Meeting (AGM), a resolution to adopt the prior year Remuneration Report was put to the vote and at least 75% of ‘yes’ votes were cast for adoption of that report. No comments were made on the Remuneration Report considered at the AGM.

Hansen Technologies Ltd

REMUNERATION REPORT

2. Overview of our remuneration framework

Our Philosophy

People are at the heart of Hansen’s success, enabling us to deliver on our vision and long-term goals. Our remuneration framework focuses on providing competitive fixed pay and variable pay that rewards achievement of the company’s annual objectives and long-term growth in shareholder value.

Remuneration outcomes are aligned with both individual and company performance, ensuring that employees are rewarded for overall company achievement as well as their individual contribution to the company’s success. This aligns remuneration to both individual performance and value creation for shareholders.

Remuneration Governance

The Board annually reviews our remuneration principles, practices, strategy and approach to ensure they support the company’s long-term business strategy and are appropriate for a listed company of our size and nature.

The Board has delegated to the Remuneration Committee the responsibility to make recommendations to the Board for determining and reviewing compensation arrangements for the Directors, executive KMP and the balance of the CEO’s direct reports. As at 30 June 2017 the Remuneration Committee was made up of three Non-Executive Directors, Chair Jennifer Douglas, Bruce Adams, and Sarah Morgan. The CEO and other Directors attend meetings as required at the invitation of the Committee Chair.

The Remuneration Committee assesses the appropriateness of both the nature and amount of the remuneration of the executive KMP on an annual basis by reference to market conditions and current remuneration practices, with the overall objective of ensuring maximum shareholder benefit from the retention of a quality Board and Executive team. The Committee also engages professional support as required to ensure remuneration practices remain in step with the market as well as the size and nature of the business.

Total Fixed Remuneration (TFR)

At the end of each financial year the CEO assesses each Senior Executive’s performance considering actual outcomes relative to agreed targets, general performance and market conditions. Based on this assessment, the CEO makes a recommendation to the Remuneration Committee for Board approval of the amount of TFR for each Senior Executive.

The Remuneration Committee considers the CEO Recommendation with respect to the Senior Executive Team and assesses the actual performance of each Executive. The CEO’s performance is also considered by the Remuneration Committee against agreed targets. Based on this assessment and consideration of any other relevant factors by the Remuneration Committee a recommendation is then made to the Board regarding the appropriate TFR for the coming financial year.

Approval: Short Term Incentive (STI)

At the end of each financial year the CEO assesses each Senior Executive’s performance considering actual outcomes relative to agreed STI targets and general performance. Based on this assessment, the CEO makes a recommendation to the Remuneration Committee for Board approval of the amount of STI to award to each Senior Executive.

The Remuneration Committee considers the CEO Recommendation with respect to the Senior Executive Team and assesses the actual performance of each Executive. The CEO’s performance is also considered by the Remuneration Committee against agreed targets. Based on this assessment and consideration of any other relevant factors by the Remuneration Committee, a determination is then made regarding the appropriate STI payments before a formal recommendation is passed to the Board for approval.

Approval: Long Term Incentive (LTI)

At the end of the measurement period for each LTI Plan individual LTI outcomes are reviewed against the measurement criteria by the Remuneration Committee with the CEO and a recommendation is passed to the Board for approval.

Directors Remuneration

Director’s remuneration is governed by resolutions passed at a General Meeting of the Shareholders. The maximum remuneration payable for non-executive directors was set at the 2013 AGM at $430,000. This approval limit is yet to be reached.

Hansen Technologies Ltd

REMUNERATION REPORT

Recommendations to provide equity/option-based remuneration to the Managing Director or any other Director are required to be approved by resolution at a General Meeting of shareholders. A Director or any associate of a Director is excluded from voting on a resolution to approve the issue of equity-based remuneration to a Director.

Independent Advice

Commencing in the 2016 financial year and completing in the 2017 financial year, the Board engaged an external remuneration consulting organisation, Godfrey Remuneration Group Pty Ltd (GRG) to review and provide recommendations on the remuneration level and structure of STI and LTI arrangements for executives and to review the 2016 draft Remuneration Report. Some of these recommendations were implemented in FY16, and other recommendations have been implemented in FY17. The Board has taken the view that the advice received from GRG was independent because GRG applies a process independent of Executives and the Chair of the Remuneration Committee approves all interactions between GRG and the Executive. The fee payable to GRG was $55,000 in the FY16 and FY17 combined.

Hansen Technologies Ltd

REMUNERATION REPORT

Summary of Remuneration Structure

Total Fixed Remuneration (TFR)

TFR typically includes base salary and superannuation contributions and may include, at the discretion of the Board, other benefits such as a motor vehicle (aggregated with associated fringe benefits tax to represent the total employment cost to the Company).

Objective:

The objective of TFR is to provide a base level of remuneration that is commensurate with the skills required for and responsibilities associated with the role, and within the context of external market levels.

Fixed remuneration is determined with reference to available market data, the scope of an individual’s role and the qualifications and experience of the individual. TFR is reviewed annually to account for market movements and individual performance outcomes. See page 8 for summaries of executive KMP contracts.

2017 Short Term Incentive (STI)

Objective:	STIs are annual cash bonuses that seek to align the rewards attainable by executive KMPs with the achievement of particular annual objectives of the Company and the creation of shareholder value. A key focus of the Board is the achievement of the Company’s annual budget and the STI links performance measures to specific elements of the budget by: a) linking 70% of the STI to a financial measure that is linked to the Company’s performance against its annual budget; b) linking 30% of the STI to specific non-financial Key Performance Indicators (KPI) that link executive KMP achievements to short and long-term objectives of the Company; c) non-financial KPIs are selected based on their importance to achieving the Company’s strategic and operational plan and building shareholder value; d) imposing a gate condition aligned to budgeted revenue and budgeted EBITDA which, if not satisfied, will result in the forfeiture of STI; e) rewarding over achievement of financial targets with up to 150% of target STI payable where maximum over achievement targets are achieved; and f) the Board retains final discretion over STI payments to ensure outcomes appropriately reflect performance and achieve objectives of the STI scheme.
STI:	The target STI benefit is set as follows:  CEO STI: 40% of TFR; and  KMP STI: 25% of TFR
Change of approach from 2016:	Under the previous STI plan:  less emphasis was placed on financial performance – previously comprising between 30% to 50% of STI compensation;  there was no performance gate below which no incentive is payable; and  there was no overachievement opportunity.

Hansen Technologies Ltd

REMUNERATION REPORT

2017 Long Term Incentive (LTI)

Objective: LTIs are designed to align the rewards attainable by executive KMPs with the achievement of particular long-term objectives of the Company and achievement of shareholder value. Eligibility to participate in the LTI scheme is determined by the Board and is targeted at senior executives whose role contributes significantly to the performance of the Company.

LTI may be delivered as options or cash. Options issued under the 2017 LTI plan have a three year vesting period and must be exercised within two years of when they vest. Vesting is dependent on continuing employment with the Company and the Company meeting the following specific performance measures over a three year period. The LTI is linked to long term growth in shareholder value by:

a) tying 50% of the LTI to relative Total Shareholder Return (TSR) with an entitlement payable where the company ranks at a level greater than the 50th percentile against its peers;
b) tying 50% of the LTI to Earnings Per Share (EPS) growth where the EPS growth is measured on a compounding basis over the term where an approved threshold must be obtained;
c) rewarding over achievement of targets with up to 150% of target LTI payable where maximum over achievement targets are achieved; and
d) the Board has discretion to increase or reduce the amount awarded if the Board considers the outcome to be misaligned given the circumstances that prevailed over the relevant measurement period and the experience of shareholders.

Options will lapse if performance conditions are not met.

Where options have been issued, the price payable to convert the options to shares is specified at the original date of issue as being a price per share not less than the volume weighted average price (VWAP) at the date on which the options were originally issued.

The benefit to the employee arises where the pre-specified exercise price is less than the market price when the options vest at the end of the vesting/qualifying period.

Once an option has vested at the end of the qualifying period, the employee may elect to exercise the option in which event:

the employee must pay in cash to the Company the previously specified exercise price multiplied by the number of options received e.g. for 100,000 options with an exercise price of $3.00 per share the employee will be required to pay the Company $300,000 to convert the options to shares;
in addition and regardless of whether the employee has exercised the options or not, the employee will be required to declare for tax purposes a taxable revenue gain to the extent the VWAP at the vesting date exceeds the exercise price; and
pay tax to the relevant tax authority on this gain as if it was normal personal income, e.g. for 100,000 options with an exercise price of $3.00 per share and a VWAP at the date of vesting of $4.00, the employee would be required to declare as income for tax purposes $100,000 and pay to the tax authority the applicable tax on this income.

Options issued to executives are not able to be traded on the ASX. They do not qualify for receipt of dividends or have any voting rights until they have been exercised and converted to shares by the employee paying the required exercise price to the Company.

The Company prohibits executive KMP from entering into arrangements to protect the value of unvested equity awards. The prohibition includes entering into contracts to hedge their exposure to options awarded as part of their remuneration package.

The Company does not provide any loans or financial support to executives to assist them in the funding of the amount required to exercise options.

Hansen Technologies Ltd

REMUNERATION REPORT

The LTI benefit is set as follows:

LTI: The LTI benefit is set as follows:  CEO LTI: 50% of TFR delivered as indeterminate rights that may be satisfied by a cash payment or grant of options; and  KMP LTI: 25% of TFR delivered as options subject to vesting conditions. Change of approach Under the previous LTI plan: from 2016:  there was no vesting condition linked to long term performance (eg TSR or EPS); and  measurement was conducted in the year of issue with vesting in a future period as a means of retention.

3. How reward was linked to performance

As detailed above in section 2, various elements of the Company’s remuneration policy (both STI and LTI) are linked to Company performance, in particular achievement of the annual budget and demonstrable long-term growth in shareholder value. Details are outlined above but, in summary:

An STI is payable if actual revenue and/or EBITDA exceeds the Company’s budgeted revenue and/or EBITDA thresholds, “the gate” and an additional STI is payable where the executive KMP achieves their individual KPIs.
An LTI is payable where predetermined relative TSR and EPS thresholds are met at the end of the three year performance period.

A summary of key measurement criteria of the group’s financial performance over the last five years are shown below:

Year ended 30 June 2013 2014 2015 2016	2017
Revenue (A$m) 63.8 86.0 106.3 149.0 EBITDA (A$m) 15.7 24.1 31.3 45.4 NPAT (A$m) 9.1 14.8 16.9 26.1 Basic Earnings Per Share (cents) 5.7 9.2 10.3 14.7 Dividends (cents per share) 6.0 6.0 6.0 7.0 ASX share price at 30 June $0.91 $1.27 $2.62 $3.39	174.7
	45.1
	23.9
	13.2
	6.0
	$4.04
Total shareholder return 5.4% 45.6% 111.9% 31.7%	21.2%

*EBITDA is a non IFRS term that relates to Earnings before Interest Tax, Depreciation and Amortisation.

STI

For FY17, budget targets were established for group Revenue and EBITDA, and the STI gate was set with respect to these targets. Notwithstanding the growth in revenue during the year, as the EBITDA gate applying to the STI was not met, no STIs linked to financial performance were paid to executive KMPs. The Board exercised its discretion to award a small percentage of STI’s to those Executive Team members (excluding the CEO) who achieved KPI’s important to the long term strategy and growth of the company. Those executive KMP’s only achieved the portion of their STI relating to individual performance.

LTI

Options granted in prior years (under the previous LTI program) vested in 2017 where performance conditions relating to these LTIs were met. See section 6 for a summary of options that met the vesting conditions in 2017.

Options granted in 2017 have performance conditions attached that will be measured over three years. Assessment and vesting (where conditions are satisfied) will happen after the completion of FY2019. See section 6 for a summary of options granted during 2017.

Hansen Technologies Ltd

REMUNERATION REPORT

4. Remuneration expenses for executive KMP

Details of executive KMP remuneration for the 2016 and 2017 financial years are set out in the table below.

			Fixed	Fixed		Variable Remuneration Total	Variable Remuneration Total
			Remuneration
Executive KMP	Year	Cash Salary $ Super $	Non- monetary benefits $ Annual & long service leave $	Total $	STI(1) $	LTI(2) fair value $	Total $ Perform -ance related
Andrew Hansen	2017	768,972 34,998	18,699 107,620	930,289	351,030	297,500(3)	1,578,819 41%
	2016	745,104 34,999	- 53,663	833,766	313,420(5)	213,844(4)	1,361,030 39%
Cameron Hunter	2017	357,415 34,999	13,830 -11,907(8)	394,337	63,927	68,581	526,845 25%
	2016	392,253(6) 30,968	- -20,136(8)	403,085	54,794	23,483	481,362 16%
Darren Meade	2017	336,269 34,999	- 693	371,961	59,360	64,660	495,981 25%
	2016	325,199 34,999	- 1,670	361,868	54,794	21,352	438,014 17%
Graeme Taylor	2017	316,507(7) 34,999	- 7,834	359,340	68,493	62,081	489,914 27%
	2016	270,928 29,208	2,377 15,633	318,146	36,529	18,956	373,631 15%
Niv Fernando	2017	299,933 29,999	- 11,014	340,946	45,662	60,988	447,596 24%
	2016	290,801 29,999	- 14,322	335,122	54,794	20,288	410,204 18%
Total	2017	2,079,096 169,994	32,529 115,254	2,396,873	588,472	553,810	3,539,155 32%
	2016	2,024,285 160,173	2,377 65,152	2,251,987	514,331	297,923	3,064,241 27%

(1) The STI payments represent (a) cash payments made during FY17 relating to FY16 performance and (b) cash payments made during FY16 relating to FY15 performance, unless otherwise stated. No bonuses were accrued in respect of the FY17 STI plan as conditions for payment were not met at 30 June 2017.

(2) Options granted as remuneration are valued at grant date in accordance with AASB 2 Share-based payments and amortised over vesting period.
(3) Andrew Hansen’s LTI has two parts: (a) a cash LTI granted in relation to the 2015 and 2016 financial years with the value of $85,000 in FY17 (b) indeterminate rights granted in 2016 (with a fair value of $212,500 related to FY17).
(4) In 2016, Andrew Hansen’s LTI comprised $165,000 of cash related to the LTI program in the 2015 and 2016 financial years and share based payment expense of $48,844 which is measured in accordance with AASB 2 Share-based payments.
(5) Andrew Hansen was paid a bonus of $306,375 in FY16 that related to FY14 (the amount was accrued in FY15 but not paid). He was also paid a bonus of $313,420 relating to FY15.
(6) Cameron Hunter’s total salary in FY16 was made up of his base salary (excluding superannuation) of $330,579 and cashed out annual leave of $61,674.
(7) Graeme Taylor’s base salary was adjusted in FY17 as part of market remuneration analysis.
(8) Cameron Hunter received a cash payment to reduce his annual leave due to its high value from a historical build-up from his long tenure at the company.

Performance based measures granted and forfeited during the 2017 year

	Total STI bonus LTI Options
2017 Total Opportunity $ Awarded 70% Financial Awarded 30% KPIs Total Forfeited % Value granted Value exercised*
Andrew Hansen 340,000 0% 0% 100% - $3,559,080 Cameron Hunter 96,586 0% 50% 85% $48,293 $357,960 Darren Meade 91,407 0% 67% 80% $45,704 $244,028 Graeme Taylor 86,250 0% 67% 80% $43,125 - Niv Fernando 81,339(1) 0% 100% 70% $40,699 -

The value at grant date, calculated in accordance with AASB2 Share-based Payments, of options granted during the year as part of remuneration.

** The value of options (at the exercise date) granted as part of remuneration that were exercised during FY17 has been determined as the intrinsic value of the options at that date (being the difference between the exercise price and the underlying share price at the date of exercise).

(1) The board has exercised its discretion to award an additional STI payment of $15,000 to Niv Fernando for his role as the project lead in successfully completing the Enoro transaction which was additional to his agreed KPI’s.

Hansen Technologies Ltd

REMUNERATION REPORT

5. Contractual arrangements with executive KMP

Remuneration and other conditions of employment are set out in each executive’s employment contract. The key elements of these employment contracts are summarised below:

Component	Approach for CEO Approach for other executive KMP
Total Fixed Remuneration	$850,000 Range between $330,000 and
	$406,000
Contract duration	Ongoing Ongoing
Notice by individual / company	6 months 1 months
Termination of employment	The Board has discretion to allow some or all STI entitlements to be paid out on a
(without cause)	pro-rata basis aligned to time, where termination occurs by way of resignation or
	dismissal.
	In other without cause terminations, the STI will be reduced proportionately to reflect
	the portion of the Measurement Period, but there is no other impact to the
	executive’s entitlement.
	The Board has discretion to allow unvested LTIs to vest on a pro-rate basis aligned
	to time. Where this discretion is not exercised, such unvested options will lapse
Termination of employment	STI is forfeited.
(with cause)	All unvested LTIs and vested but unexercised LTIs are forfeited.

6. Share based remuneration

The terms and conditions of each grant of options affecting the remuneration in the current or future reporting period are as follows.

Grant date	Vesting date	Expiry date	Exercise price	Value per option at grant date	Performance achieved	% Vested
2 July 2013	2 July 2016	2 July 2018	$0.92	$0.12	100%	100%
2 July 2014	2 July 2017	2 July 2019	$1.30	$0.20	100%	-
2 July 2015	2 July 2018	2 July 2020	$2.67	$0.56	100%	-
22 Dec 2016	31 August 2019(1)	22 Dec 2021	$3.59	$1.19	-	-

(1) The vesting date for options granted on 22 December 2016 is the date on which the Board notifies the executive that the options have vested, after the outcomes for the Measurement Period have been determined and satisfaction of performance conditions have been assessed.

The number of options over unissued ordinary shares in the company provided as remuneration to executive KMP’s is shown in the table below. The options carry no dividend or voting rights. See section 2 for the conditions that must be satisfied for the FY17 granted options to vest.

Once an option has vested at the end of the qualifying period but before the expiry date, the employee may elect to exercise the option in which event the employee must pay in cash to the Company the previously specified exercise price multiplied by the number of options received.

Hansen Technologies Ltd

REMUNERATION REPORT

Options granted to executive KMP which remain unvested at 30 June 2017 and outstanding are detailed below:

Executive KMP	Grant Date Balance 30/6/2016 Granted as remun- eration Exercise Price Vested Forfeited Exercised in FY17 Balance 30/6/2017
Andrew Hansen	12 Dec 2013 350,000 - $1.06 350,000 (350,000) - 12 Dec 2013 350,000 - $1.11 350,000 (350,000) - 12 Dec 2013 350,000 - $1.16 350,000 (350,000) -
	Total 1,050,000 - 1,050,000 (1,050,000) -
Cameron Hunter	1 Jul 2016 121,746 $3.59 - - 121,746 2 Jul 2015 100,000 - $2.67 - - 100,000 2 Jul 2014 100,000 - $1.30 - - 100,000 2 Jul 2013 100,000 - $0.92 100,000 (100,000) -
	Total 300,000 121,746 100,000 (100,000) 321,746
Darren Meade	1 Jul 2016 115,219 $3.59 - - 115,220 2 Jul 2015 100,000 - $2.67 - - 100,000 2 Jul 2014 75,000 - $1.30 - - 75,000 2 Jul 2013 75,000 - $0.92 75,000 (75,000) -
	Total 250,000 115,219 75,000 (75,000) 290,220
Graeme Taylor	1 Jul 2016 130,462 $3.59 108,718 2 Jul 2015 100,000 - $2.67 100,000 2 Jul 2014 75,000 - $1.30 - - - 75,000
	Total 175,000 130,462 - - - 283,718
Niv Fernando	1 Jul 2016 68,402 $3.59 - - - 102,603 2 Jul 2015 100,000 - $2.67 - - - 100,000 2 Jul 2014 100,000 - $1.30 - - - 100,000
	Total 200,000 68,402 - - - 302,603
Total	1,975,000 448,287 1,225,000 1,225,000 1,198,287

The Board resolved to issue 535,714 indeterminate rights to Andrew Hansen (the Chief Executive Officer) as part of his FY17 LTI. The LTI may be satisfied in options (pending shareholder approval) or cash, at the end of the measurement period, where performance conditions have been met. The issue of options to Andrew Hansen relating to the FY17 LTI is subject to shareholder approval at the company’s Annual General Meeting in November 2017.

When reviewing the LTI plan for FY18 the Board concluded that the plan would include the same three year performance vesting criteria as FY17. However, in line with the recommendation of GRG, best market practice and the benefits of rights over options a decision was made to grant rights, replacing options under the FY 18 LTI Plan. Rights allow an executive KMP to receive shares without financial burden encouraging them to hold an ongoing equity stake in the company, better aligning their long incentive with the long term value of shareholders. Rights are also less dilutive to shareholders as a smaller number are issued.

Subsequent to year end, a grant of rights was made to executive KMP in respect of the FY18- FY21 measurement period.

A summary of the grant to executive KMP is provided below:

Executive KMP	Grant	Rights	Fair value	Vesting	Expiry
	Date	granted	per Right $(1)	date(1)	date
Cameron Hunter	2 Jul 2017	25,824	3.815	2 July 2020	2 July 2022
Darren Meade	2 Jul 2017	25,157	3.815	2 July 2020	2 July 2022
Graeme Taylor	2 Jul 2017	24,869	3.815	2 July 2020	2 July 2022
Niv Fernando	2 Jul 2017	24,613	3.815	2 July 2020	2 July 2022

(1) The fair value of the rights has been determined by an independent external valuation expert.

(2) The vesting date for rights granted on 2 July 2017 is the date on which the Board notifies the executive that the options have vested, after the outcomes for the measurement period have been determined and satisfaction of performance conditions have been assessed. This is likely to be 31 August 2020.

*The Board has resolved to issue 116,972 rights to Andrew Hansen, the Chief Executive Officer, as part of the FY18 LTI. The issue of these rights is subject to shareholder approval at the company’s Annual General Meeting in November 2017.

Hansen Technologies Ltd

REMUNERATION REPORT

7. Non-executive Director arrangements

Non-executive Directors enter into service agreements through a letter of appointment. Non-executive Director fees are determined with reference to market levels and the need to attract high quality Directors. The company currently has a policy of not paying separate committee fees for committee participation.

Non-executive Directors do not receive any variable or performance-based remuneration.

The non-executive director fee pool has a maximum value of $430,000 per annum, as approved by shareholders at the 2013 AGM.

The annual fees provided to Non-executive Directors, inclusive of superannuation, are shown below:

	2017 2016
Chairman Other Non-executive Directors	105,640 102,232 64,556 62,473

			Fixed Remuneration
Non – Executive Director	Year	Salary and Fees Super	Non-monetary benefits Total
David Trude	2017	96,475 9,165	- 105,640
	2016	93,363 8,869	- 102,232
Bruce Adams	2017	58,955 5,601	- 64,556
	2016	57,053 5,420	- 62,473
Peter Berry	2017	24,918 2,367	27,285
	2016	57,053 5,420	- 62,473
Jennifer Douglas	2017	22,273 2,335	- 24,608
	2016	- -	- -
Sarah Morgan	2017	58,955 5,601	- 64,556
	2016	57,053 5,420	- 62,473
David Osborne	2017	29,606 34,950	- 64,556
	2016	57,053 5,420	- 62,473
Total	2017	291,182 60,019	- 351,201
	2016	321,575 30,549	- 352,124

Hansen Technologies Ltd

REMUNERATION REPORT

8. Directors and executive KMP shareholding

The number of shares in the company held by each Non-executive Director and executive KMP during the year, including their related parties, is summarised below:

		Received during
	Balance	the year on	Other changes	Balance
	30 June 2016	exercise of	during the year	30 June 2017
		options
Non-executive Directors
David Trude	105,579	-	1,912	107,491
Bruce Adams	152,304	-	-	152,304
Peter Berry(1)	15,304	-		15,304
Jennifer Douglas(2)	-	-	-	-
Sarah Morgan	20,000	-	-	20,000
David Osborne	384,984	-	-	384,984
Executive KMP
Andrew Hansen	41,194,235	1,050,000	(3,996,157)	38,248,078
Cameron Hunter	903,691	100,000	2,191	1,005,882
Darren Meade	2,642	75,000	(74,714)	2,928
Graeme Taylor	3,432	-	50,032	53,464
Niv Fernando	7,082	-	286	7,368
Total	42,789,253	1,225,000	(4,016,450)	39,997,803

(1) Peter Berry resigned as a Non-executive Director on 6 December 2016.

(2) Jennifer Douglas was appointed as a Non-executive Director effective 15 February 2017.

9. Other statutory disclosures

Lease agreement with the CEO

The company leases its Melbourne head office and York Street office from an entity in which the CEO is a Director and shareholder. The terms and conditions of the lease and other property arrangements are no more favourable than those available, or which might reasonably be expected to be available, from others on an arm’s length basis. The total lease rental payments during the 2017 financial year were $1,314,045.

Signed in accordance with a resolution of the Directors.

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David Trude Andrew Hansen Director Director Melbourne 21 August 2017

Hansen Technologies Ltd

AUDITOR’S INDEPENDENCE DECLARATION

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To the Directors of Hansen Technologies Ltd

In relation to the independent audit for the year ended 30 June 2017, to the best of my knowledge and belief there have been:

(i) No contraventions of the auditor independence requirements of the Corporations Act 2001; and
(ii) No contraventions of the Accounting Professional and Ethical Standards Board APES 110 Code of Ethics for Professional Accountants.

This declaration is in respect of Hansen Technologies Ltd and the entities it controlled during the year.

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S D WHITCHURCH

PITCHER PARTNERS

Partner Melbourne

21 August 2017

An independent Victorian Partnership ABN 27 975 255 196 Level 19, 15 William Street, Melbourne VIC 3000 Liability limited by a scheme approved under Professional Standards Legislation

Hansen Technologies Ltd

Financial Report

Financial Report	Financial Report
Consolidated Statement of Comprehensive Income		28
Consolidated Statement of Financial Position		29
Consolidated Statement of Changes in Equity		30
Consolidated Statement of Cash Flows		31
Notes to the Financial Statements		32
1.	Statement of significant accounting policies	32
2.	Critical accountingestimates andjudgements	39
3.	Financial risk management	40
4.	Revenue and other Income	43
5.	Profit from continuingoperations	43
6.	Income tax	44
7.	Dividends	46
8.	Cash and cash equivalents	46
9.	Receivables	47
10.	Other current assets	47
11.	Plant, equipment and leasehold improvements	48
12.	Intangible assets	48
13.	Payables	50
14.	Borrowings	50
15.	Provisions	51
16.	Contributed capital	52
17.	Reserves and retained earnings	54
18.	Share-basedpayments	54
19.	Cash flow information	57
20.	Commitments	58
21.	Earningsper share	59
22.	Directors’ and executives’ compensation	59
23.	Relatedpartydisclosures	60
24.	Auditor’s remuneration	61
25.	Parent entityinformation	62
26.	Segment information	63
27.	Business Combination	66
28.	Deed of crossguarantee	68
29.	Subsequent events	70

Hansen Technologies Ltd

Consolidated Statement of Comprehensive Income

For the Year Ended 30 June 2017

Note	Consolidated Entity 2017 2016 $'000 $'000
Revenue 4 Other income 4	174,672 148,961 370 295
Total revenue and other income	175,042 149,256
Employee benefit expenses 5 Depreciation expense 5 Amortisation expense 5 Property and operating rental expenses 5 Contractor and consultant expenses Software licence expenses Hardware and software expenses Travel expenses Communication expenses Professional expenses Finance costs 5 Other expenses 5	(87,357) (74,249) (3,015) (2,547) (9,368) (6,489) (7,329) (5,891) (8,875) (4,057) (4,450) (1,035) (7,064) (6,071) (4,267) (4,955) (3,010) (2,042) (2,415) (1,915) (43) (59) (5,016) (3,522)
Total expenses	(142,209) (112,832)
Profit before income tax expense Income tax expense 6(b)	32,833 36,424 (8,945) (10,341)
Profit after income tax from continuingoperations	23,888 26,083
Other comprehensive income/(expense) Items that may be reclassified subsequently to profit and loss Exchange differences on translation of foreign entities 17(a)	(1,971) 2,221
Other comprehensive income/(expense) for the year	(1,971) 2,221
Total comprehensive income for theyear attributable to members of the parent	21,917 28,304
Basic earnings(cents)per share for continuingoperations 21	13.2 14.7
Total basic earnings (cents) per share Diluted earnings(cents)per sharefor continuing operations 21	13.2 14.7 13.0 14.4
Total diluted earnings(cents) per share	13.0 14.4

The consolidated statement of comprehensive income is to be read in conjunction with the notes to the financial statements set out on pages 32 to 70.

Hansen Technologies Ltd

Consolidated Statement of Financial Position

As at 30 June 2017

Note	Consolidated Entity 2017 2016 $'000 $'000
Current assets Cash and cash equivalents 8 Receivables 9 Other current assets 10	15,013 30,203 37,685 21,507 7,643 6,923
Total current assets	60,341 58,633
Non-current assets Plant, equipment & leasehold improvements 11 Intangible assets 12 Deferred tax assets 6(d)	8,912 6,743 125,479 106,059 4,821 4,030
Total non-current assets	139,212 116,832
Total assets	199,553 175,465
Current liabilities Payables 13 Borrowings 14 Current tax payable 6(c) Provisions 15 Unearned income	9,653 12,229 101 95 1,051 2,187 10,122 9,497 19,435 11,171
Total current liabilities	40,362 35,179
Non-current liabilities Deferred tax liabilities 6(d) Borrowings 14 Provisions 15	6,707 4,810 190 291 678 203
Total non-current liabilities	7,575 5,304
Total liabilities	47,937 40,483
Net assets	151,616 134,982
Equity Share capital 16 Foreign currency translation reserve 17(a) Options granted reserve 17(b) Retained earnings 17(c)	85,350 78,650 8,196 10,167 1,972 1,253 56,098 44,912
Total equity	151,616 134,982

The consolidated statement of financial position is to be read in conjunction with the notes to the financial statements set out on pages 32 to 70.

Hansen Technologies Ltd

Consolidated Statement of Changes in Equity

For the Year Ended 30 June 2017

Consolidated entity Note	Consolidated Entity Contributed Equity Reserves Retained Earnings $'000 $'000 $'000	Consolidated Entity Contributed Equity Reserves Retained Earnings $'000 $'000 $'000	Total Equity $'000
Balance as at 1 July 2016 Profit for the year Movement in carrying amount of foreign entities due to currencytranslation 17(a)	78,650 11,418	44,912	134,980
	- -	23,888	23,888
	- (1,971)	-	(1,971)
Total comprehensive income for the year	- (1,971)	23,888	21,917
Transactions with owners in their capacity as owners: Employee share plan 16(b) Options exercised 16(b) Employee share options 17(b) Equity issued under dividend reinvestment plan 16(b) Shares issued on contingent liability settlement 16(b) Share purchase plan offer 16(b) Dividends paid 7
	175 -	-	175
	1,791 -	-	1,791
	- 721	-	721
	1,325 -	-	1,325
	3,409 -	-	3,409
	- -	-	-
	- -	(12,702)	(12,702)
Total transactions with owners in their capacity as owners	6,700 721	(12,702)	(5,281)
Balance as at 30 June 2017 16, 17	85,350 10,168	56,098	151,616

			Consolidated Entity	Consolidated Entity
		Contributed		Retained	Total
		Equity	Reserves	Earnings	Equity
Consolidated entity	Note	$'000	$'000	$'000	$'000
Balance as at 1 July 2015		75,127	8,913	29,489	113,529
Profit for the year		-	-	26,083	26,083
Movement in carrying amount of foreign entities due to
currencytranslation	17(a)	-	2,221	-	2,221
Total comprehensive income for the year		-	2,221	26,083	28,304
Transactions with owners in their capacity as owners:
Employee share plan	16(b)	161	-	-	161
Options exercised	16(b)	2,238	-	-	2,238
Employee share options	17(b)	-	286	-	286
Equity issued under dividend reinvestment plan	16(b)	1,154	-	-	1,154
Share purchase plan offer	16(b)	(30)	-	-	(30)
Dividends paid	7	-	-	(10,660)	(10,660)
Total transactions with owners in their capacity as owners		3,523	286	(10,660)	(6,851)
Balance as at 30 June 2016	16,17	78,650	11,420	44,912	134,982

The consolidated statement of changes in equity is to be read in conjunction with the notes to the financial statements set out on pages 32 to 70.

Hansen Technologies Ltd

Consolidated Statement of Cash Flows

For the Year Ended 30 June 2017

Note	Consolidated Entity 2017 2016 $'000 $'000
Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received 4 Finance costs 5 Transaction costs relating to acquisition of subsidiary 27 Income tax paid	180,592 154,984 (140,021) (109,929) 114 62 (43) (59) (228) - (9,321) (11,600)
Net cash provided byoperatingactivities 19(a)	31,093 33,458
Cash flows from investing activities Proceeds from sale of plant and equipment Payment for acquisition of business net of cash assumed 27 Payment for plant and equipment 11 Payment for acquisition of customer contract 27 Payment for capitalised development costs 12	8 - (20,525) - (5,211) (1,810) (2,165) - (7,750) (5,488)
Net cash used in investing activities	(35,643) (7,298)
Cash flows from financing activities Proceeds from share issue 16 Proceeds from options exercised 16 Proceeds from borrowing Repayment of borrowings Dividends paid net of dividend re-investment	175 161 1,791 2,238 4,000 - (4,000) (10,000) (11,377) (9,506)
Net cash used in financing activities	(9,411) (17,107)
Net(decrease)/increase in cash and cash equivalents	(13,961) 9,053
Cash and cash equivalents at beginningofyear	30,203 21,985
Effects of exchange rate changes on cash and cash equivalents	(1,229) (835)
Cash and cash equivalents at end of the year	15,013 30,203

The consolidated statement of cash flows is to be read in conjunction with the notes to the financial statements set out on pages 32 to 70.

Hansen Technologies Ltd

Notes to the Financial Statements

30 June 2017

1. Statement of significant accounting policies

The following is a summary of significant accounting policies adopted by the consolidated entity in the preparation and presentation of the Financial Report. The accounting policies have been consistently applied, unless otherwise stated.

(a) Basis of preparation of the Financial Report

This Financial Report is a general purpose Financial Report that has been prepared in accordance with Australian Accounting Standards, Interpretations and other applicable authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

The Financial Report covers Hansen Technologies Ltd and controlled entities as a consolidated entity. Hansen Technologies Ltd is a company limited by shares, incorporated and domiciled in Australia. The address of Hansen Technologies Ltd registered office and principle place of business is 2 Frederick St Doncaster. Hansen Technologies Ltd is a for-profit entity for the purpose of preparing the financial statements.

This Financial Report was authorised for issue by the Directors on 21 August 2017.

Compliance with IFRS

The consolidated financial statements of Hansen Technologies Ltd also comply with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

Historical cost convention

The Financial Report has been prepared under the historical cost convention, as modified by revaluations to fair value for certain classes of assets and liabilities as described in the accounting policies.

Significant accounting estimates

The preparation of the Financial Report requires the use of certain estimates and judgments in applying the entity’s accounting policies. Those estimates and judgments significant to the Financial Report are disclosed in Note 2.

(b) Principles of consolidation

The consolidated financial statements are those of the consolidated entity, comprising the financial statements of the parent entity, Hansen Technologies Ltd, and of all entities, which the parent controls. The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies, which may exist.

All inter-company balances and transactions, including any unrealised profits or losses, have been eliminated on consolidation. Subsidiaries are consolidated from the date that control is established.

(c) Revenue

Revenue from the provision of services to customers is recognised upon delivery of the service to the customer. Maintenance and support revenue when invoiced in advance is initially recognised as an unearned income liability until the service is performed. Accrued revenue is recognised on a percentage of completion basis in order to record revenues against incurred effort and expense.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Risks and rewards of ownership are considered to have passed to the buyer at the time of delivery of the goods to the customer.

Interest revenue is recognised when it becomes receivable on a proportional basis, taking into account the interest rates applicable to the financial assets.

All revenue is measured net of the amount of goods and services tax (GST).

Hansen Technologies Ltd

Notes to the Financial Statements

30 June 2017

1. Statement of significant accounting policies (continued)

(d) Cash and cash equivalents

Cash and cash equivalents include cash on hand and at banks, short term deposits with an original maturity of six months or less held at call with financial institutions and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position.

(e) Plant, equipment and leasehold improvements

Cost and valuation

All classes of plant, equipment and leasehold improvements are stated at cost less depreciation and any accumulated impairment losses.

Depreciation

The depreciable amounts of all fixed assets are depreciated on a straight-line basis over their estimated useful lives commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

either the unexpired period of the lease or the estimated useful lives of the	improvements.
The useful lives for each class of assets are:	2017 2016
Plant, equipment and leasehold improvements Leased plant and equipment	2.5 to 12years 2.5 to 12 years 2.5 to 12years 2.5 to 12 years

(f) Leases

Leases are classified at their inception as either operating or finance leases based on the economic substance of the agreement so as to reflect the risks and benefits incidental to ownership.

Finance leases

Leases of fixed assets, where substantially all of the risks and benefits incidental to ownership of the asset but not the legal ownership are transferred to the consolidated entity, are classified as finance leases. Finance leases are capitalised, recording an asset and liability equal to the present value of the minimum lease payments, including any guaranteed residual values.

The interest expense is calculated using the interest rate implicit in the lease and is included in finance costs in the consolidated statement of comprehensive income.

Leased assets are depreciated on a straight-line basis over their estimated useful lives where it is likely the consolidated entity will obtain ownership of the asset, or over the term of the lease. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period.

Operating leases

Lease payments for operating leases are recognised as an expense on a straight-line basis over the term of the lease.

(g) Business combinations

A business combination is a transaction or other event in which an acquirer obtains control of one or more businesses and results in the consolidation of the assets and liabilities acquired. Business combinations are accounted for by applying the acquisition method.

The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued or liabilities incurred by the acquirer to former owners of the acquiree. Deferred consideration payable is measured at its acquisition date fair value. At each reporting date subsequent to the acquisition, contingent consideration payable is measured at its fair value with any changes in the fair value recognised in profit or loss unless the contingent consideration is classified as equity, in which case the contingent consideration is carried at the acquisition-date fair value.

Goodwill is recognised initially at the excess of:

(a) The aggregate of the consideration transferred, the fair value of the non-controlling interests and the acquisition date fair value of the acquirers previously held equity interest; over (b) the net fair value of the identifiable assets acquired and liabilities assumed.

Acquisition-related costs are expensed as incurred.

Hansen Technologies Ltd

30 June 2017

Notes to the Financial Statements

1. Statement of significant accounting policies (continued)

(h) Intangibles

Goodwill

Goodwill represents the future economic benefits arising from other assets acquired in a business combination that are not individually identifiable or separately recognised. Refer to Note 1(g) for a description of how goodwill arising from a business combination is initially measured.

Technology, trademarks and customer contracts

Technology, trademarks and customer contracts are recognised at cost and are amortised over their estimated useful lives, which range from 5 to 10 years for technology and trademarks and the term of the contract for customer contracts. Technology, trademarks and customer contracts are carried at cost less accumulated amortisation and any impairment losses.

Research and development

Expenditure on research activities is recognised as an expense when incurred.

Development costs are capitalised when the entity can demonstrate all of the following: the technical feasibility of completing the asset so that it will be available for use or sale; the intention to complete the asset and use or sell it; the ability to use or sell the asset; how the asset will generate probable future economic benefits; the availability of adequate technical, financial and other resources to complete the development and to use or sell the asset; and the ability to measure reliably the expenditure attributable to the asset during its development.

Capitalised development expenditure is carried at cost less any accumulated amortisation and any accumulated impairment losses. Amortisation is calculated using a straight–line method to allocate the cost of the intangible asset over its estimated useful life, which range from 5 to 10 years. Amortisation commences when the intangible asset is available for use.

Other development expenditure is recognised as an expense when incurred.

(i) Impairment of non-financial assets

Assets with an indefinite useful life are not amortised but are tested at least annually for impairment in accordance with AASB 136. Assets subject to annual depreciation or amortisation are reviewed for impairment whenever events or circumstances arise that indicate that the carrying amount of the asset may be impaired. An impairment loss is recognised where the carrying amount of the asset exceeds its recoverable amount. The recoverable amount of an asset is defined as the higher of its fair value less costs of disposal and value in use.

(j) Income tax

Current income tax expense is the tax payable on the current period’s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities.

Deferred tax balances

Deferred tax assets and liabilities are recognised for temporary differences at the applicable tax rates when the assets are expected to be recovered or liabilities settled. No deferred tax asset or liability is recognised in relation to temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.

Hansen Technologies Ltd

Notes to the Financial Statements 30 June 2017

1. Statement of significant accounting policies (continued)

Tax consolidation

The consolidated entity is subject to income taxes in Australia and jurisdictions in which it has foreign operations. In some of these jurisdictions, namely Australia, the USA, and Denmark, the immediate parent entity and entities it controls have formed local income tax consolidated groups that are taxed as a single entity in their relevant jurisdiction. Each tax consolidated group has entered a tax funding agreement whereby each entity in the tax consolidated group recognises the assets, liabilities, expenses and revenues in relation to its own transactions, events and balances only. This means that:

the parent entity recognises all current and deferred tax amounts relating to its own transactions, events and balances only;
the subsidiaries recognise current or deferred tax amounts arising in respect of their own transactions, events and balances; and
the current tax liabilities and deferred tax assets arising in respect of tax losses, are transferred from the subsidiary to the head entity as inter-company payables or receivables.

Each tax consolidated group also has a tax sharing agreement in place to limit the liability of subsidiaries in the tax consolidated group arising under the joint and several liability requirements of the tax consolidation system, in the event of default by the parent entity to meet its payment obligations. This means that under the tax sharing agreement, the subsidiaries are legally liable to the income tax payable in proportion to their contribution to the net profit before tax of the tax consolidated group.

(k) Provisions

Provisions are recognised when the consolidated entity has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

(l) Employee benefits

(i) Short term employee benefit obligations

Liabilities arising in respect of wages and salaries, annual leave, long service leave and any other employee benefits expected to be settled within 12 months of the reporting date are measured at the amounts based on remuneration rates that are expected to be paid when the liability is settled. The expected cost of short term employee benefits in the form of compensated absences such as annual leave and long service leave is recognised in the provision for employee benefits. All other short term employee benefit obligations are presented as payables.

(ii) Other long term employee benefit obligations

The provision for other long term employee benefits, including obligations for long service leave and annual leave, which are not expected to be settled wholly before twelve months after the end of the reporting period, are measured at the present value of the estimated future cash outflow to be made in respect of the services provided by employees up to the reporting date. Expected further payments incorporate anticipated future wage and salary levels, durations of service and employee turnover, and are discounted at rates determined by reference to market yields at the end of the reporting period on high quality corporate bonds that have maturity dates that approximate the terms of the obligations. Any remeasurements for changes in assumptions of obligations for other long-term employee benefits are recognised in profit or loss in the periods in which the change occurs.

Other long-term employee benefit obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting date, regardless of when the actual settlement is expected to occur. All other long-term employee benefit obligations are presented as non-current liabilities in the consolidated statement of financial position.

(iii) Retirement benefit obligations

The consolidated entity makes superannuation contributions (currently 9.50% of the employee’s average ordinary salary) to the employee’s defined contribution superannuation plan of choice in respect of employee services rendered during the year. These superannuation contributions are recognised as an expense in the same period when the related employee services are received. The group’s obligation with respect to employee’s defined contributions entitlements is limited to its obligation for any unpaid superannuation guarantee contributions at the end of the reporting period. All obligations for unpaid superannuation guarantee contributions are measured at the (undiscounted) amounts expected to be paid when the obligation is settled and are presented as current liabilities in the consolidated statement of financial position.

Hansen Technologies Ltd

Notes to the Financial Statements 30 June 2017

1. Statement of significant accounting policies (continued)

(iv) Share-based payments

The consolidated entity operates share-based payment employee share and option schemes. The fair value of the equity to which employees become entitled is measured at grant date and recognised as an expense over the vesting period, with a corresponding increase to an equity account. The fair value of shares is measured at the market bid price at grant date. In respect of share-based payments that are dependent on the satisfaction of performance conditions, the number of shares and options expected to vest is reviewed and adjusted at each reporting date. The amount recognised for services received as consideration for these equity instruments granted is adjusted to reflect the best estimate of the number of equity instruments that eventually vest.

(v) Bonus plan

The consolidated entity recognises a provision when a bonus is payable in accordance with the employee’s contract of employment or review letter and the amount can be reliably measured.

(vi) Termination benefits

The Group recognises an obligation and expense for termination benefits at the earlier of: (a) the date when the Group can no longer withdraw the offer for termination benefits; and (b) when the Group recognises costs for restructuring and the costs include termination benefits. In either case, the obligation and expense for termination benefits is measured on the basis of the best estimate of the number of employees expected to be affected. Termination benefits that are expected to be settled wholly before twelve months after the annual reporting period in which the benefits are recognised are measured at the (undiscounted) amounts expected to be paid. All other termination benefits are accounted for on the same basis as other long-term employee benefits.

(m) Borrowing costs

Borrowing costs can include interest expense calculated using the effective interest method and finance charges in respect of finance leases. Borrowing costs are expensed as incurred except for borrowing costs incurred as part of the construction of a qualifying asset, in which case the costs are capitalised until the asset is ready for its intended use or sale.

(n) Financial instruments

Classification

The consolidated entity classifies its financial assets in the following categories: loans and receivables; and financial liabilities. The classification depends on the nature of the item and the purpose for which the instruments were acquired. Management determines the classification of its financial instruments at initial recognition.

Initial recognition and measurement

Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions of the instrument. For financial assets, this is equivalent to the date that the entity commits itself to either the purchase or sale of the asset (ie. trade date accounting is adopted).

Financial instruments are initially measured at fair value adjusted for transaction costs, except where the instrument is classified as fair value through profit or loss, in which case transaction costs are immediately recognised as expenses in profit or loss.

Fair value through profit or loss

Financial assets are classified at fair value through profit or loss when they are held for trading for the purpose of shortterm profit taking, are derivatives not held for hedging purposes, or when they are designated as such to avoid an accounting mismatch or to enable performance evaluation by key management personnel. Investments in listed securities are carried at fair value through profit or loss. They are measured at their fair value at each reporting date and any increment or decrement in fair value from the prior period is recognised in profit or loss of the current period. Fair value of listed investments are based on closing bid prices at the reporting date.

Loans and receivables

Loans and receivables are measured at fair value at inception and subsequently at amortised cost using the effective interest rate method.

Hansen Technologies Ltd

Notes to the Financial Statements 30 June 2017

1. Statement of significant accounting policies (continued)

Financial liabilities

Financial liabilities include trade payables, other creditors and loans from third parties. Financial liabilities are classified as current liabilities unless the consolidated entity has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

(o) Foreign currencies translations and balances

Functional and presentation currency

The financial statements of each entity within the consolidated Group are measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars, which is the consolidated entity’s functional and presentation currency.

Transactions and balances

Transactions in foreign currencies of entities within the consolidated Group are translated into functional currency at the rate of exchange ruling at the date of the transaction.

Foreign currency monetary items that are outstanding at the reporting date (other than monetary items arising under foreign currency contracts where the exchange rate for that monetary item is fixed in the contract) are translated using the spot rate at the end of the financial year.

All resulting exchange differences arising on settlement or re-statement are recognised as revenues or expenses for the financial year.

Foreign subsidiaries

Subsidiaries that have a functional currency different to the presentation currency of the consolidated Group are translated as follows:

assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;
income and expenses are translated at actual exchange rates or average exchange rates for the period, where appropriate; and
all resulting exchange differences arising on translation of foreign operations are transferred directly to the Group’s foreign currency translation reserve as a separate component of equity in the balance sheet.

Exchange differences arising on the reduction of a foreign subsidiary’s equity continues to be recognised in the Group’s foreign currency translation reserve until such time that the foreign subsidiary is disposed of.

(p) Sales tax (including GST and VAT)

Revenues, expenses and assets are recognised net of the amount of sales tax, except where the amount of sales tax incurred is not recoverable from the Tax Office. In these circumstances the sales tax is recognised as part of the acquisition of the asset or as part of an item of the expense. Receivables and payables in the consolidated statement of financial position are shown inclusive of sales tax.

Cash flows are presented in the consolidated statement of cash flows on a gross basis, except for the sales tax component of investing and financing activities, which are disclosed as operating cash flows.

(q) Comparatives

Where necessary, comparative information has been reclassified and repositioned for consistency with current year disclosures.

(r) Rounding amounts

The parent entity and the consolidated entity have applied the relief available under ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 and, accordingly the amounts in the consolidated financial statements and in the Directors’ Report have been rounded to the nearest thousand dollars, or in certain cases to the nearest dollar.

(s) Going concern

The Financial Report has been prepared on a going concern basis.

Hansen Technologies Ltd

Notes to the Financial Statements

30 June 2017

1. Statement of significant accounting policies (continued)

(t) Adoption of new and amended accounting standards that are first operative at 30 June 2017

There are no new or amended accounting standards effective for the financial year, beginning 1 July 2016, that have affected any amounts recorded in the current or prior year.

(u) Accounting standards and interpretations issued but not operative at 30 June 2017

The following standards and interpretations have been issued at the reporting date but are not yet effective. The Directors’ assessment of the impact of these standards and interpretations is set out on the following page.

Title of standard	AASB 15 Revenue from Contracts with Customers
Nature of change	The AASB has issued a new standard for the recognition of revenue. This will replace AASB 118 which covers revenue arising from the sale of goods and the rendering of services and AASB 111 which covers construction contracts. The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer. The standard permits either a full retrospective or a modified retrospective approach for the adoption.
Impact	Management is currently assessing the effects of applying the new standard on the Group’s financial statements and has identified the following areas that are likely to be affected: accounting for license, maintenance and service revenue – the application of AASB 15 may result in the identification of separate performance obligations, which could affect the timing of the recognition of revenue. AASB 15 requires that the total consideration received must be allocated to the separate performance obligations based on relative stand-alone selling prices rather than based on the residual value method; this could result in different amounts being allocated to the different revenue streams which could affect the timing of the recognition of a portion of the revenue. accounting for certain costs incurred in fulfilling a contract – certain costs which are currently expensed may need to be recognised as an asset under AASB 15. At this stage, the Group is not able to estimate the effect of the new rules on the Group’s financial statements. The Group will make more detailed assessments of the effect over the next twelve months.
Mandatory application date/ Date of adoption by Group	Mandatory for financial years commencing on or after 1 January 2018, but available for early adoption. Expected date of adoption by the Group: 1 July 2018.
Title of standard	AASB 9 Financial Instruments
Nature of change	AASB 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets.
Impact	AASB 9 makes significant revisions to the classification and measurement of financial assets, reducing the number of categories and simplifying the measurement choices, including the removal of impairment testing of assets measured at fair value. The amortised cost model is available for debt assets meeting both business model and cash flow characteristics tests. All investments in equity instruments using AASB 9 are to be measured at fair value. AASB 9 amends measurement rules for financial liabilities that the entity elects to measure at fair value through profit and loss. Changes in fair value attributable to changes in the entity’s own credit risk are presented in other comprehensive income. Impairment of assets is now based on expected losses in AASB 9, which requires entities to measure:  the 12-month expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or  full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).

Hansen Technologies Ltd

Notes to the Financial Statements 30 June 2017

Mandatory application date/ Date of adoption by Group	Must be applied for financial years commencing on or after 1 January 2018. Based on the transitional provisions in the completed AASB 9, early adoption in phases was only permitted for annual reporting periods beginning before 1 February 2015. After that date, the new rules must be adopted in their entirety. The Group does not intend to adopt AASB 9 before its mandatory date.
Title of standard	AASB 16 Leases
Nature of change	AASB 16 was issued in February 2016. It will result in almost all leases being recognised on the balance sheet, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognised. The only exceptions are short-term and low-value leases.
Impact	The standard will affect primarily the accounting for the Group’s operating leases. As at the reporting date, the Group has non-cancellable operating lease commitments of $19.40 million, see Note 20. However, the Group has not yet determined to what extent these commitments will result in the recognition of an asset and a liability for future payments and how this will affect the Group’s profit and classification of cash flows. Some of the commitments may be covered by the exception for short-term and low value leases and some commitments may relate to arrangements that will not qualify as leases under AASB 16.
Mandatory application date/ Date of adoption by Group	Mandatory for financial years commencing on or after 1 January 2019. At this stage, the Group does not intend to adopt the standard before its effective date.

Other standards and interpretations have been issued at the reporting date but are not yet effective. When adopted, these standards and interpretations are likely to impact on the financial information presented; however, the assessment of impact has not yet been completed.

2. Critical accounting estimates and judgements

The Group makes certain estimates and assumptions concerning the future which, by definition, will seldom represent actual results. Estimates and assumptions based on future events have a significant inherent risk and where future events are not as anticipated, there could be a material impact on the carrying amounts of the assets and liabilities discussed on the following page.

(a) Impairment of goodwill

The Group tests whether goodwill has suffered any impairment on an annual basis. The recoverable amount of a cash generating unit (CGU) is determined based on value-in-use calculations which require the use of assumptions. The calculations use cash flow projections based on financial budgets approved by the Board covering a five-year period.

Goodwill is monitored by management at the level of operating segments identified in Note 26. The entire goodwill is allocated to the Billing segment.

Cash flows beyond the five-year forecast period are extrapolated using the estimated terminal growth rates stated below.

Key assumptions used in the value-in-use calculations for the billing segment:

provides for a constant 3% growth rate (2016: 5%) for the remainder of the forecast period;
utilises a 12% (2016:12%) weighted cost of capital discount rate;
a terminal growth rate of 2% (2016: 2%) at the end of the forecast period.

(b) Impairment of non-financial assets other than goodwill

All assets are assessed for impairment at each reporting date by evaluating whether indicators of impairment exist in relation to the continued use of the asset by the consolidated entity. Impairment triggers include declining product or manufacturing performance, technology changes, adverse changes in the economic or political environment or future product expectations. If an indicator of impairment exists the recoverable amount of the asset is determined.

Hansen Technologies Ltd

Notes to the Financial Statements

30 June 2017

(c) Research and development

Development costs incurred are assessed for each research and development project and a percentage of the expenditure is capitalised when technical feasibility studies demonstrate that the project will deliver future economic benefits and those benefits can be measured reliably.

There has been investment in research and development expenditure incurred in relation to HUB, ICC, Banner and NaviBilling software in the 2017 year. Returns are expected to be derived from this investment over coming years.

3. Financial risk management

The consolidated entity is exposed to a variety of financial risks comprising:

a) interest rate risk;
b) credit risk;
c) liquidity and foreign exchange risk; and
d) fair values.

The Board of Directors has overall responsibility for identifying and managing operational and financial risks.

(a) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate as a result of changes in market interest rates.

The consolidated entity’s exposure to interest rate risk in relation to future cash flows and the effective weighted average interest rates on classes of financial assets and financial liabilities is as follows:

Financial Instruments Note	Interest bearing $’000 Non-Interest Bearing $’000	Total Carrying Amount $’000 Weighted Avg Effective Interest Rate %	Fixed/ Variable Rate
2017 Financial assets Cash and cash equivalents 8 Receivables 9 Other current assets 10

	15,013 -	15,013 0.95	variable
	- 37,685	37,685
	- 66	66
	15,013 37,751	52,764
Financial liabilities Payables 13 Deferred consideration at fair value through the profit and loss 13 Borrowings 14	- 9,653	9,653
	- -	-
	291 -	291 1.39	variable
	291 9,653	9,944

2016 Financial assets Cash and cash equivalents 8 Receivables 9 Other current assets 10

	30,203 -	30,203 1.53	variable
	- 21,507	21,507
	- -	-
	30,203 21,507	51,710
Financial liabilities Payables 13 Deferred consideration at fair value through the profit and loss 13 Borrowings 14
	- 8,820	8,820
	- 3,409	3,409
	386 -	386 1.39	variable
	386 12,229	12,615

Management is comfortable with the risk associated with using variable interest rates due to the current level of borrowings. No other financial assets or liabilities are expected to be exposed to interest rate risk.

Hansen Technologies Ltd

Notes to the Financial Statements

30 June 2017

(b) Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.

The maximum exposure to credit risk, excluding the value of any collateral or other security at balance date of recognised financial assets, is the carrying amount of those assets net of any provisions for impairment of those assets, as disclosed in the consolidated statement of financial position and notes to the consolidated financial statements.

The consolidated entity does not have any material credit risk exposure to any single debtor or group of debtors under financial instruments entered into by the consolidated entity.

The consolidated entity minimises concentrations of credit risk in relation to trade receivables by undertaking transactions with a large number of customers. Concentrations of credit risk on trade debtors (by industry) are with customers in the following industries: utilities 43% (2016: 30%), telecommunications 32% (2016: 38%), Pay TV 23% (2016: 30%) and other 2% (2016: 2%).

The ageing analysis of trade and other receivables is provided in Note 9. As the consolidated entity undertakes transactions with a large number of customers and regularly monitors payment in accordance with credit terms, the financial assets that are past due but not impaired, are expected to be received in accordance with the credit terms.

(c) Liquidity and foreign exchange risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Group has historically been able to generate and retain strong positive cash flows and in addition a multi-currency line of credit has been established with the Group’s bankers to provide increased capacity for strategic growth objectives.

The Group operates internationally and as such has exposure to foreign currency movements as part of its day-to-day operational activities.

The Group has expanded its international operations substantially in recent years to the extent that in excess of 75% of its revenue is now earned in foreign currency designated transactions. The Group has a number of offices located internationally and more than 68% of its work force is located overseas and paid in foreign currencies. Accordingly, the Group has an in-built natural hedge against major currency fluctuation and with the exception of significant sudden change, is protected in part by its corporate structure against currency movements so that the impact is largely limited to the margin.

The Group’s borrowings are predominantly made up of lease liabilities of $0.291 million which are due for repayment by January 2020. Trade creditors are due for repayment within six months.

(d) Fair value measurements

The fair value of financial assets and financial liabilities approximates their carrying amounts as disclosed in the consolidated statement of financial position and notes to the consolidated financial statements.

At 30 June 2016, included in ‘Other Payables’ was a liability for deferred consideration measured at fair value on a recurring basis in relation to a business combination dated 1 May 2015. This amount was settled on 1 July 2016 by the Group issuing 921,290 shares to the value of $3.409 million.

At 30 June 2017, there are no assets or liabilities carried at fair value on a recurring basis.

Fair value hierarchy

Asset and liabilities measured and recognised at fair value have been determined by the following fair value measurement hierarchy:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Input other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Inputs for the asset or liability that are not based on observable market data.

At 30 June 2016, deferred consideration liabilities totalling $3.409 million were measured and recognised at fair value and determined to be a recurring Level 2 financial liability. This was subsequently settled in full on 1 July 2016.

Hansen Technologies Ltd

Notes to the Financial Statements

30 June 2017

Valuation techniques and significant unobservable inputs

The deferred consideration (referred to above) was based on management’s best and most probable estimate of the business performance targets. In determining the fair value of the deferred consideration, management considered the probability of business targets being met by comparison to budget. A fair value was placed on the option that the seller has to receive, either cash or shares in Hansen Technologies Ltd at a pre-determined price using the Black-Scholes model.

The entire deferred consideration payment was dependent on performance criteria being met. Under the arrangement the minimum deferred consideration amount was $nil and the maximum was dependent on the movement in the Hansen share price from the pre-determined price per share (which was included in the contract) and the value as at the date the amount became payable.

Transfers between level 2 and 3

On 30 June 2016 the group transferred the entire carrying amount of deferred consideration on acquisition of TeleBilling A/S from Level 3 fair value to Level 2 of the fair value hierarchy as there were no longer any significant unobservable inputs. Consistent with the Group’s policy on transfers, the timing of the transfer coincided with confirmation that all service and performance criteria had been achieved, leaving observable inputs as the only significant inputs for measuring the fair value of the liability for the consideration. As disclosed above, the liability for deferred consideration was extinguished shortly after the reporting date by the Group issuing shares.

Hansen Technologies Ltd

Notes to the Financial Statements

30 June 2017

4. Revenue and other income

4. Revenue and other income
	Consolidated Entity 2017 2016 $'000 $'000
Revenues from continuing operations Revenue from sale of goods and services	174,672 148,961
	174,672 148,961
Other income: From operating activities Interest received Other income	114 62 256 233
Total other income	370 295
Total revenue and other income from continuingoperations	175,042 149,256
5. Profit from continuing operations Note	Consolidated Entity 2017 2016 $'000 $'000
Profit from continuing operations before income tax has been determined after the following specific expenses: Employee benefit expenses Wages and salaries Superannuation costs Share-based payments	80,524 68,587 6,112 5,378 721 284
Total employee benefit expenses	87,357 74,249
Depreciation expense Plant, equipment and leasehold improvements 11	3,015 2,547
Total depreciation of non-current assets	3,015 2,547
Amortisation of non-current assets Technology, trademarks and customer contracts 12 Research and development 12	5,425 3,572 3,943 2,917
Total amortisation of non-current assets	9,368 6,489
Property and operating rental expenses Rental charges	7,329 5,891
Total property and operating rental expenses	7,329 5,891
Finance charges Finance costs	43 59
Total finance costs Net foreign exchange losses	43 59 919 59

Hansen Technologies Ltd

Notes to the Financial Statements

30 June 2017

6. Income tax

6. Income tax
	Consolidated Entity 2017 2016 $'000 $'000
(a) Components of income tax expense: Current tax Deferred tax Under/(over) provision in prior years	7,733 9,635 812 367 400 339
Total income tax expense	8,945 10,341
(b) Prima facie tax payable The prima facie tax payable on profit before income tax reconciled to the income tax expense is as follows: Prima facie income tax payable on profit before income tax at 30% Add/(less) tax effect of: Impact of tax rates on foreign subsidiaries Research and development allowances Non-deductible share-based payments Under/(over) provision in prior years Gain on foreign exchange assessable/(non-assessable) Deferred tax not previously brought to account Other non-allowable items	9,850 10,927 (469) 249 (842) (1,494) 177 52 400 339 - 407 (154) - (17) (139)
Income tax expense attributable to profit	8,945 10,341
(c) Current tax payable Current tax relates to the following: Current tax liabilities/(assets) Opening balance Liability from acquisition Prior year under/(over) provision Income tax expense Income tax paid Other	2,187 3,813 31 - 400 340 7,733 9,635 (9,321) (11,600) 21 (1)
	1,051 2,187

Hansen Technologies Ltd

Notes to the Financial Statements

30 June 2017

6. Income tax continued

6. Income tax continued
	Consolidated Entity 2017 2016 $'000 $'000
(d) Deferred tax Deferred tax relates to the following: Deferred tax assets balance comprises: Difference in depreciation and amortisation of plant and equipment for accounting and income tax purposes Other payables Employee benefits	942 520 1,380 1,155 2,499 2,355
Deferred tax liabilities balance comprises: Research and development expenditure Difference in depreciation and amortisation of plant, equipment and intangibles for accounting and income tax purposes Other income not yet assessable	4,821 4,030 (4,976) (3,504) (1,731) (1,108) - (198)
	(6,707) (4,810)
Net deferred tax	(1,886) (780)
(e) Deferred income tax (revenue)/expense included in income tax expense comprises: Increase in deferred tax assets Decrease in deferred tax liabilities Increase from acquisition	(791) (431) 1,897 798 (294) -
	812 367
(f) Deferred tax assets not brought to account Tax effect of capital losses Tax effect of operating losses	847 847 878 806
	1,725 1,653

Hansen Technologies Ltd

Notes to the Financial Statements

30 June 2017

7. Dividends

2017

A regular dividend of 3 cents per share has been declared. This final dividend of 3 cents per share, fully franked, was announced to the market on 21 August 2017. The amount declared has not been recognised as a liability in the accounts of Hansen Technologies Ltd as at 30 June 2017.

announced to the market on 21 August 2017. The amount declared has not been recognised as of Hansen Technologies Ltd as at 30 June 2017.	a liability in the accounts
	Consolidated Entity 2017 2016 $'000 $'000
Dividends provided for or paid during the year 4 cent per share final dividend paid 30 September 2016 – fully franked 3 cent per share final dividend paid 30 September 2015 – fully franked 3 cent per share interim dividend paid 31 March 2017 – fully franked 3 cent per share interim dividend paid 31 March 2016 – franked to 2.5 cents	7,252 5,307 5,450 5,353
	12,702 10,660
Proposed dividend not recognised at the end of theyear	5,872 7,252
Dividends franking account 30% franking credits, on a tax paid basis, are available to shareholders of Hansen Technologies Ltd for subsequent financialyears	4,482 5,513

The above available amounts are based on the balance of the dividend franking account at year end adjusted for:

(a) franking credits that will arise from the payment of any current tax liability;

(b) franking debits that will arise from the payment of any dividends recognised as a liability at year end;

(d) franking credits that the entity may be prevented from distributing in subsequent years.

The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends.

8. Cash and cash equivalents

8. Cash and cash equivalents
	Consolidated Entity 2017 2016 $'000 $'000
Current Cash at bank and on hand Interest bearingdeposits	15,011 29,644 2 559
	15,013 30,203

Hansen Technologies Ltd

Notes to the Financial Statements

30 June 2017

9. Receivables

9. Receivables
	Consolidated Entity 2017 2016 $'000 $'000
Current Trade receivables Less: provision for impairment	37,083 20,821 - (31)
Sundryreceivables	37,083 20,790 602 717
	37,685 21,507

As at 30 June 2017, trade receivables of $9,409,000 (2016: $6,136,000) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing analysis of these trade receivables is as follows:

receivables is as follows:
Trade receivables ageinganalysis at 30 June:	Gross 2017 $'000	Impairment Gross Impairment 2017 2016 2016 $'000 $'000 $'000
Not past due Past due 1– 30 days Past due 31– 60 days Past due more than 61 days	27,674	- 14,685 - - 1,416 - - 803 - - 3,917 31
	4,799
	1,470
	3,140
	37,083	- 20,821 31

The sundry receivables do not contain impaired assets and are not past due. Based on the credit history of these receivables, it is expected that these amounts will be received when due and thus, no provision for impairment has been recorded. The Group does not hold any collateral in relation to these receivables.

recorded. The Group does not hold any collateral in relation to these receivables.
	2017 2016 $'000 $'000
Movements in the provision for impairment were: Opening balance at 1 July Movement for the year Amounts written off Foreign exchange translation	31 470 - (439) (31) - - -
Closing balance at 30 June	- 31

10. Other current assets

10. Other current assets
	Consolidated Entity 2017 2016 $'000 $'000
Current Prepayments Other assets Accrued revenue	2,910 2,341 66 - 4,667 4,582
	7,643 6,923

Hansen Technologies Ltd

Notes to the Financial Statements

30 June 2017

11. Plant, equipment and leasehold improvements

11. Plant, equipment and leasehold improvements
	Consolidated Entity 2017 2016 $'000 $'000
Plant, equipment and leasehold improvements at cost Accumulated depreciation	38,042 33,504 (29,130) (26,761)
Total plant, equipment and leasehold improvements	8,912 6,743

Reconciliation

Reconciliation of the carrying amounts of plant, equipment and leasehold improvements at the beginning and end of the current financial year.

current financial year.
Note	Consolidated Entity 2017 2016 $'000 $'000
Plant, equipment and leasehold improvements at cost Carrying amount at 1 July Additions Acquired Disposals Depreciation expense 5 Net foreign currency movements arising from foreign operations	6,743 7,556 5,211 1,810 74 - (51) (117) (3,015) (2,547) (50) 41
Carryingamount at 30 June	8,912 6,743

12. Intangible assets

12. Intangible assets
	Consolidated Entity 2017 2016 $'000 $'000
Goodwill at cost Accumulated impairment	89,058 84,196 (1,562) (1,575)
	87,496 82,621
Technology, trademarks and customer contracts at cost Accumulated amortisation and impairment	38,729 22,496 (16,391) (11,119)
	22,338 11,377
Software development at cost Accumulated amortisation and impairment	42,568 35,141 (26,923) (23,080)
	15,645 12,061
Total intangible assets	125,479 106,059

Hansen Technologies Ltd

Notes to the Financial Statements

30 June 2017

12. Intangible assets continued

12. Intangible assets continued
Note	Consolidated Entity 2017 2016 $'000 $'000
Reconciliation of goodwill at cost Carrying amount at 1 July Increase due to acquisition 27 Net foreign currency movements arising from foreign operations	84,196 81,888 6,064 - (1,202) 2,308
Carryingamount at 30 June	89,058 84,196
Accumulated impairment at beginning of year Net foreign currency movements arising from foreign operations	(1,575) (1,454) 13 (121)
Accumulated impairment at end ofyear	(1,562) (1,575)
Reconciliation of technology, trademarks and customer contracts at cost Carrying amount at 1 July Increase due to acquisition 27 Additions Net foreign currencymovements arisingfrom foreign operations	22,496 21,740 14,421 - 2,165 - (353) 756
Carryingamount at 30 June	38,729 22,496
Accumulated amortisation and impairment at beginning of year Amortisation of technology, trademarks and customer contracts Net foreign currency movements arising from foreign operations	(11,119) (7,487) (5,425) (3,572) 153 (60)
Accumulated amortisation and impairment at end of year	(16,391) (11,119)
Reconciliation of software development at cost Carrying amount at 1 July Expenditure capitalised in current period Net foreign currency movements arising from foreign operations	35,141 29,574 7,750 5,488 (323) 79
Carrying amount at 30 June	42,568 35,141
Accumulated amortisation at beginning of year Current year charge Net foreign currencymovements arisingfrom foreign operations	(23,080) (20,158) (3,943) (2,917) 100 (5)
Accumulated amortisation at end ofyear	(26,923) (23,080)

Hansen Technologies Ltd

Notes to the Financial Statements

30 June 2017

13. Payables

13. Payables
	Consolidated Entity 2017 2016 $'000 $'000
Current Trade payables Other payables	3,572 2,061 6,081 10,168
	9,653 12,229

Included in other payables as at 30 June 2016 was a liability for contingent consideration related to a business combination dated 1 May 2015. This liability was settled on 1 July 2016. Refer to Note 3(d) for further information regarding fair value calculations.

14. Borrowings

14. Borrowings
	Consolidated Entity 2017 2016 $'000 $'000
Current Secured Lease liability	101 95
	101 95
Non-current Secured Lease liability	190 291
	190 291

The Company has a lease liability relating to IT equipment due for repayment in full by January 2020.

The Company has a secured A$30 million multi-currency three year term facility with its external bankers to provide additional funding as required for acquisitions and general corporate purposes. This facility expires on 9 May 2018 and will be subject to renewal upon negotiation with its external bankers.

The facility is secured by 90% of Group assets. As at 30 June 2017 the remaining unutilised portion of the facility is A$30 million.

As at 29 June 2017, the Company entered into a new facility agreement with a new external banker. This new facility of A$105 million replaces the A$30 million multi-currency three year term facility and can only be activated upon termination of the A$30 million multi-currency facility. As at 30 June 2017, the A$105 million facility was undrawn and uncommitted. Refer to Note 29 for further details.

Hansen Technologies Ltd

Notes to the Financial Statements

30 June 2017

15. Provisions

15. Provisions
	Consolidated Entity 2017 2016 $'000 $'000
Current Employee benefits Other	9,618 9,201 504 296
	10,122 9,497
Non-current Employee benefits	678 203
	678 203
Aggregate employee benefits liability	10,296 9,404
Other – current
Carrying amount at beginning of year Net provisions (payments) made during the year	296 276 208 20
Carryingamount at end ofyear	504 296

Provision for Employee Benefits

Provision for employee benefits represents amounts accrued for annual leave and long service leave. The current portion for this provision includes the total amount accrued for annual leave entitlements and the amounts accrued for long service leave entitlements that have vested due to employees having completed the required period of service.

Based on past experience, the Group does not expect the full amount of annual leave or long service leave balances classified as current liabilities to be settled within the next 12 months. These amounts are presented as current liabilities since the Group does not have an unconditional right to defer the settlement of these amounts in the event employees wish to use their leave entitlement.

The following amounts reflect leave that is not expected to be taken or paid within the next 12 months.

	2017 2016 $'000 $'000
Current leave obligations expected to be settled after 12 months	962 606

In calculating the present value of future cash flows in respect of long service leave, the probability of long service leave being taken is based on historical data. The measurement and recognition criteria relating to employee benefits have been discussed in Note 1(l).

Hansen Technologies Ltd

Notes to the Financial Statements

30 June 2017

16. Contributed capital

16. Contributed capital
	Consolidated Entity 2017 2016 $'000 $'000
(a) Issued and paid up capital Ordinary shares, fully paid	85,350 78,650

	Consolidated Entity Consolidated Entity 2017 2017 2016 2016 No. of Shares $'000 No. of Shares $'000	Consolidated Entity Consolidated Entity 2017 2017 2016 2016 No. of Shares $'000 No. of Shares $'000
	2017
	No. of Shares
(b) Movements in shares on issue Balance at beginning of the financial year Shares issued under dividend reinvestment plan Shares issued under employee share plan Options exercised under employee share plan Shares issued on contingent liability settlement Share purchase plan offer		78,650 176,195,333 75,127 1,325 377,199 1,154 175 46,529 161 1,791 2,295,000 2,238 3,409 - - - - (30)
	178,914,061
	344,943
	50,050
	1,730,000
	921,290
	-
Balance at end of the financial year	181,960,344	85,350 178,914,061 78,650

(c) Rights of each type of share

Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held. At shareholders meetings each ordinary share is entitled to one vote when a poll is called.

(d) Employee Share Plan

The Employee Share Plan (ESP) was approved by shareholders at the Company’s AGM on 9 November 2001. The ESP is available to all eligible employees to acquire ordinary shares in the Company.

Shares to be issued or transferred under the ESP will be valued at the volume weighted average share price of shares traded on the ASX in the ordinary course of trading during the five business days immediately preceding the day the shares are issued or transferred to qualifying employees or participants.

The Board has discretion as to how the shares are to be issued or transferred to participants. Such shares may be acquired on or off market or the Company may allot shares or they may be obtained by any combination of the foregoing.

On application, employees pay no application monies. The amount of the consideration to be provided by qualifying employees to acquire the shares can be foregone from future remuneration (before tax).

To qualify, employees must be full-time or permanent part-time employees of the Company or any subsidiary of the Company. Shares issued under the ESP will rank equally in all respects with all existing shares from the date of allotment.

A participant must not sell, transfer or otherwise dispose of any shares issued or transferred to the participant under the ESP until the earlier of:

the end of the period of three years (or if a longer period is specified by the Board in the offer, the end of that period) commencing on the date of the issue or transfer of the shares to the participant; and
the date on which the participant is no longer employed by the Company or a related body corporate of the Company.

Hansen Technologies Ltd

Notes to the Financial Statements 30 June 2017

16. Contributed capital (continued)

Details of the movement in employee shares under the ESP are as follows:

Details of the movement in employee shares under the ESP are as follows:
	Consolidated Entity 2017 2016 No. of Shares No. of Shares
Number of shares at beginning of year Number of shares distributed to employees Number of shares transferred to main share registryand/or disposed of	219,578 329,326 50,050 46,529 (132,401) (156,277)
Number of shares at year end	137,227 219,578

The consideration for the shares issued 3 May 2017 was $3.50 (4 May 2016: $3.46).

The amounts recognised in the financial statements of the consolidated entity and the Company in relation to the ESP during the year were:

during the year were:
	Consolidated Entity
	2017	2016
	$'000	$'000
Current receivables	44	40
Issued ordinary share capital	175	161

The market value of ordinary Hansen Technologies Ltd shares closed at $4.04 on 30 June 2017 ($3.39 on 30 June 2016).

(e) Capital risk management

The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, increase debt or sell assets to reduce debt or a combination of these activities.

Hansen Technologies Ltd

Notes to the Financial Statements

30 June 2017

17. Reserves and retained earnings

17. Reserves and retained earnings
Note	Consolidated Entity 2017 2016 $'000 $'000
Foreign currencytranslation reserve 17(a)	8,196 10,167
Options granted reserve 17(b)	1,972 1,253
Retained earnings 17(c)	56,098 44,912
(a) Foreign currency translation reserve This reserve is used to record the exchange differences arising on translation of a foreign entity. Movements in reserve Balance at beginning of year Adjustment to carrying value of overseas interests due to currency fluctuation	10,167 7,946 (1,971) 2,221
Balance at end of year	8,196 10,167
(b) Options granted reserve This reserve is used to record the fair value of options issued to employees as part of their remuneration. Movements in reserve Balance at beginning of year Value of options expensed during the year	1,251 967 721 286
Balance at end of year	1,972 1,253
(c) Retained earnings Balance at beginning of year Dividends paid during the year Net profit attributable to members of Hansen Technologies Ltd	44,912 29,489 (12,702) (10,660) 23,888 26,083
Balance at end of year	56,098 44,912

18. Share-based payments

Employee Share Option Plan

The Employee Share Option Plan (the Plan) was approved by shareholders at the Company’s AGM on 9 November 2001 and reaffirmed at the AGM on 24 November 2011.

The maximum number of options on issue under the Plan must not at any time exceed 7.5% of the total number of ordinary shares on issue at that time. The Board may issue options under the Plan to any employee of the Company and its subsidiaries, including Executive Directors, but excluding Non-Executive Directors.

Options will be issued free of charge, unless the Board determines otherwise. Each option is to subscribe for one ordinary share and, when issued, the shares will rank equally with other shares. The options are not transferable. Quotation of the options on the ASX will not be sought, but the Company will apply to the ASX for official quotation of shares issued on the exercise of options. Options may be granted subject to conditions specified by the Board, which must be satisfied before the option can be exercised.

Unless the terms on which an option was offered specified otherwise, an option may be exercised at any time after the vesting date. An option may also be exercised in special circumstances, that is, at any time within six months after the employee’s death, total and permanent disablement, retirement or retrenchment. An option lapses 28 days after termination of the employee’s employment with the Company and, unless the terms of the offer of the option specify otherwise, lapses five years after the date upon which it was granted. The Directors have the discretion to vary the terms of the options as deemed appropriate.

Hansen Technologies Ltd

Notes to the Financial Statements 30 June 2017

The exercise price per share for an option will be the amount determined by the Board at the time of the grant of the option. Option holders will not be entitled to participate in any new issue of securities in the Company unless they exercise their options prior to the record date for the determination of entitlements to the new issue. If the Company makes a bonus issue of securities to ordinary shareholders, each unexercised option will, on exercise, entitle its holder to receive the bonus securities as if the option had been exercised before the record date for the bonus issue.

If the Company makes a pro-rata rights issue of ordinary shares for cash to its ordinary shareholders, the exercise price of unexercised options may be adjusted to reflect the diluting effect of the issue. If there is any reorganisation of the capital of the Company, the exercise price of the options will be adjusted in accordance with the Listing Rules.

Options issued under the Employee Share Option Plan are valued on the same basis as those issued to KMP.

Options issued and not yet exercised at 30 June 2017:

						Options
				No. of		Exercised
Grant	Exercise	Expiry	Exercise Price	Options at	Options	or	No. of Options
Date	Date	Date	$	Beg. of Year	Granted	Lapsed	at End of Year
Consolidated 2017
2 July 2012	2 July 2015	2 July 2017	0.92	220,000		180,000	40,000
2 July 2013	2 July 2016	2 July 2018	0.92	795,000		500,000	295,000
12 December 2013	2 July 2016	2 July 2018	1.06	350,000		350,000	-
12 December 2013	2 July 2016	2 July 2018	1.11	350,000		350,000	-
12 December 2013	2 July 2016	2 July 2018	1.16	350,000		350,000	-
2 July 2014	2 July 2017	2 July 2019	1.30	875,000		-	875,000
2 July 2015	2 July 2018	2 July 2020	2.67	1,000,000		-	1,000,000
22 December 2016	31 Aug 2019	22 December 2021	3.59	-	1,323,7301	-	1,323,730
Total				3,940,000	1,323,730	1,730,000	3,533,730

1 Included in the options granted during the year is the issue of 535,714 indeterminate rights to Andrew Hansen relating to his FY17 LTI which is subject to shareholder approval at the Company’s Annual General Meeting in November 2017.

Options issued and not yet exercised at 30 June 2016:

				No. of		Options
Grant		Expiry	Exercise Price	Options at	Options	Exercised	No. of Options
Date	Exercise Date	Date	$	Beg. of Year	Granted	or Lapsed	at End of Year
Consolidated 2016
1 January 2011	1 Jan 2014	2 July 2016	0.75	75,000	-	75,000	-
2 July 2011	2 July 2014	2 July 2016	0.91	295,000	-	295,000	-
2 December 2011	2 July 2014	2 July 2016	0.91	40,000	-	40,000
2 July 2012	2 July 2015	2 July 2017	0.92	785,000	-	565,000	220,000
1 December 2012	2 July 2015	2 July 2017	0.92	70,000	-	70,000	-
1 December 2012	2 July 2015	2 July 2017	0.97	350,000	-	350,000	-
1 December 2012	2 July 2015	2 July 2017	1.02	350,000	-	350,000	-
1 December 2012	2 July 2015	2 July 2017	1.07	350,000	-	350,000	-
2 July 2013	2 July 2016	2 July 2018	0.92	895,000	-	100,000	795,000
12 December 2013	2 July 2016	2 July 2018	1.06	350,000	-	-	350,000
12 December 2013	2 July 2016	2 July 2018	1.11	350,000	-	-	350,000
12 December 2013	2 July 2016	2 July 2018	1.16	350,000	-	-	350,000
2 July 2014	2 July 2017	2 July 2019	1.30	1,075,000		200,000	875,000
2 July2015	2 July2018	2 July2020	2.67	-	1,000,000	-	1,000,000
Total				5,335,000	1,000,000	2,395,000	3,940,000

The weighted average share price for share options exercised during the period was $1.05 (2016: $0.98). The weighted average remaining contractual life for share options outstanding at the end of the period was 3.11 years (2016: 0.68 years).

Hansen Technologies Ltd

Notes to the Financial Statements

30 June 2017

(a) Employee Share Option Plan – FY2017

			No. of		Options	No. of Options at
Grant	Expiry	Exercise Price	Options at	Options	Exercised	End of Year
Date	Date	$	Beg. of Year	Granted	or Lapsed	Issued
Consolidated
2017
22 December 2016	22 December 2021	3.59	-	1,323,7301	-	1,323,730
Total			-	1,323,730	-	1,323,730

Under the 2017 new option plan, participants are granted options which only vest if certain performance conditions are met. The performance conditions for the 2017 options are:

50% of the award will vest based on Hansen’s total return to shareholder (TSR)’s ranking within a peer group of ASX 200 Small Industrials Index listed companies over a three-year period (TSR options); and
50% of the award will vest based on target earnings per share (EPS) growth over a three-year performance period (EPS options).

(b) Fair value of options granted

(i) Fair value of options granted – FY2016

Share-based payments represent a value attributed to options over ordinary shares issued to executives. They expire during the period up to 2 July 2020. Each option entitles the holder to purchase one ordinary share in the Company. The share-based payment value disclosed above is calculated at the date of grant using the Black-Scholes model. For those options issued to key management personnel in 2016, the Black Scholes model applied the following assumptions to determine a weighted average fair value for the options issued as at grant date of $0.560 cents per option:

share price volatility factor in respect of the Company’s historical share price movement compared with the industry average, for a period equal to the three-year option vesting period of 25%;
share price at grant date of $2.67;
a compounding risk-free interest rate of 3.05%; and
a probability factor for the likelihood of the options being exercised based on historical trends of 80%.

(ii) Fair value of options granted – FY2017

The assessed fair value at grant date of options granted during the year ended 30 June 2017 was $1.38 per TSR option and $1.00 per EPS options. The fair value of TSR options at grant date is independently determined using an adjusted form of the Black Scholes Model which includes a Monte Carlo simulation model that takes into account the exercise price, the term of the option, the impact of dilution (where material), the share price at grant date and expected price volatility of the underlying share, the expected dividend yield, the risk free interest rate for the term of the option and the correlations and volatilities of the peer group companies.

The model inputs for options granted during the year ended 30 June 2017 included:

grant date: 22 December 2016
expiry date: 22 December 2021
share price at grant date: $3.79
expected price volatility of the company’s shares: 35%
expected dividend yield: 2.0%
risk-free interest rate: 2.18%

The expected price volatility is based on the historic volatility (based on the life of the options), adjusted for any expected changes to future volatility due to publicly available information.

Hansen Technologies Ltd

Notes to the Financial Statements 30 June 2017

18. Share-based payments (continued)

Expenses arising from share-based payment transactions

	2017 2016 $ $
Options issued under employee option plan Options issued under employee option plan FY2017	209,011 286,449 512,231 -
	721,242 286,449
19. Cash flow information Note	Consolidated Entity 2017 2016 $'000 $'000
(a) Reconciliation of the net profit after tax to net cash flows from operations Net profit from ordinary activities after income tax Add/(less) items classified as investing/financing activities: Net (Profit)/loss on sale of non-current assets Add/(less) non-cash items: Amortisation and depreciation Share-based payment expense 18(c) Unrealised foreign exchange Adjustment to fair value on contingent liabilities Employee share scheme	23,888 26,083 43 - 12,383 9,036 721 286 568 22 - 1,589 131 121
Net cash provided byoperatingactivities before change in assets and liabilities	37,734 37,137
Changes in assets and liabilities adjusted for effects of purchase of controlled entities during the year: (Increase)/decrease in trade receivables (Increase)/decrease in sundry debtors and other assets Increase/(decrease) in trade payables Increase/(decrease) in other creditors and accruals Increase/(decrease) in provisions (Increase)/decrease in deferred taxes Increase/(decrease)in income tax payable	(12,447) (1,557) 1,762 (1,721) 1,181 414 3,721 (254) (482) 698 791 367 (1,167) (1,626)
Net cash provided byoperatingactivities	31,093 33,458
(b) Reconciliation of cash Cash at bank	15,013 30,203
(c) Loan facilities Loan facility Amount utilised	30,000 30,000 - -
Unused loan facility	30,000 30,000

Refer to Note 14 for details of the loan facility.

Hansen Technologies Ltd

Notes to the Financial Statements

30 June 2017

20. Commitments

20. Commitments
	Consolidated Entity 2017 2016 $'000 $'000
Lease expenditure commitments Operating leases (non-cancellable): Not later than one year Later than one year and not later than five years Later than fiveyears	4,977 4,617 11,798 13,486 2,625 3,251
Aggregate lease expenditure contracted for at reporting date	19,400 21,354
Finance lease commitments Not later than one year Later than one year and not later than five years	101 82 190 291
Total minimum lease payments Less: Future finance charges	291 373 - -
Present value of minimum lease payment	291 373
Lease liabilities provided for in the financial statements: Current Non-current	101 82 190 291
Total lease liabilities	291 373

Operating leases (non-cancellable)

The consolidated entity leases property under non-cancellable operating leases expiring from one to five years. Leases generally provide the consolidated entity with a right of renewal at which time all terms are renegotiated. Contingent rental provisions within the lease agreements require the minimum lease payments to be increased by CPI per annum.

Finance lease commitments

The consolidated entity leases IT equipment under finance leases expiring from three to five years. At the end of the lease term, the consolidated entity has the option to return the assets to the lessor or to renew the lease agreements.

Hansen Technologies Ltd

Notes to the Financial Statements

30 June 2017

21. Earnings per share

21. Earnings per share
		Consolidated Entity 2017 2016 $’000 $’000
Reconciliation of earnings used in calculating earnings per share: Basic earnings – ordinary shares		23,888 26,083
Diluted earnings – ordinary shares		23,888 26,083
	2017 2016 No. of Shares No. of Shares
Weighted average number of ordinary shares used in calculating basic earnings per share: Number for basic earnings per share – ordinary shares	181,363,788 177,557,079
Number for diluted earnings per share – ordinary shares	184,262,852 181,491,615
	2017 2016 Cents Per Share Cents Per Share
Basic earnings(cents)per share from continuingoperations	13.2 14.7
Total basic earnings(cents)per share	13.2 14.7
Diluted earnings (cents) per share from continuing operations	13.0 14.4
Total diluted earnings (cents) per share	13.0 14.4

Classification of securities as potential ordinary shares

The securities that have been classified as potential ordinary shares and included in diluted earnings per share are only options outstanding under the Employee Share Option Plan.

22. Directors’ and executives’ compensation

22. Directors’ and executives’ compensation
	Consolidated Entity 2017 $ 2016 $
Short term employment benefits Post-employment benefits Share-based payments	3,106,533 2,927,720 230,013 190,722 553,810 297,923
	3,890,356 3,416,365

Detailed remuneration disclosures are provided in the remuneration report on pages 16 to 26.

Hansen Technologies Ltd

Notes to the Financial Statements 30 June 2017

23. Related party disclosures

(a) The consolidated financial statements include the financial statements of Hansen Technologies Ltd and its controlled entities

			Ordinary Share	Ordinary Share
			Consolidated Entity
			Interest
			2017	2016
Name	Note	Countryof Incorporation	%	%
Parent entity
Hansen Technologies Ltd		Australia
Subsidiaries of Hansen Technologies Ltd
Hansen Corporation Pty Ltd		Australia
Hansen Corporation Investments Pty Ltd		Australia	100	100
Hansen Holdings (Asia) Pty Ltd		Australia	100	100
Utilisoft Pty Ltd		Australia	100	100
Hansen Technologies (Shanghai) Company Ltd		China	100	100
Hansen Technologies Denmark A/S	(i)	Denmark	100	100
TeleBilling Systems A/S	(ii)	Denmark	-	100
Hansen Customer Support India Private Limited	(iii)	India	100	100
Hansen New Zealand Limited		New Zealand	100	100
Hantech Singapore Pte Ltd	(iv)	Singapore	100	100
Hansen Corporation Europe Limited		United Kingdom	100	100
Hansen Holdings Europe Limited		United Kingdom	100	100
Hansen Billing Solutions Limited		United Kingdom	100	-
Hansen Solutions LLC		United States	100	-
Hansen Technologies North America, Inc.		United States	100	100
Hansen ICC, LLC		United States	100	100
Hansen Banner, LLC		United States	100	100
Peace Software Inc.		United States	100	100

Notes

(i) Officially changed the company name from TeleBilling A/S to Hansen Technologies Denmark A/S 1 June 2016.

(ii) Merged into Hansen Technologies Denmark A/S and de-registered.

(iii) Incorporated 2 June 2016

(iv) Incorporated 28 January 2016

(b) Transactions with key management personnel of the entity or its parent and their personally related entities

The terms and conditions of the transactions with Directors and their Director-related entities were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-Directorrelated entities on an arm’s length basis.

The following table provides the total amount of transactions that were entered into with related parties in respect of leased premises for the relevant financial year:

related entities on an arm’s length basis. The following table provides the total amount of transactions that were entered into with related leased premises for the relevant financial year:	parties in respect of	parties in respect of
	Consolidated Entity
	2017	2016
	$	$
A related party to Andrew Hansen – lease rental payments	1,314,045	1,110,113

Hansen Technologies Ltd

Notes to the Financial Statements 30 June 2017

24. Auditor’s remuneration

24. Auditor’s remuneration
	Consolidated Entity 2017 2016 $ $
(a) Amounts paid and payable to Pitcher Partners (Melbourne) for: (i) Audit and other assurance services – an audit and/or review of the Financial Report of the entity and any other entity in the consolidated entity (ii) Other non-audit services – taxation services – compliance services	340,346 340,969 - 27,110 - -
	- 27,110
Total remuneration of Pitcher Partners (Melbourne)	340,346 368,079
(b) Amounts paid and payable to network firms of Pitcher Partners for: (i) Audit and other assurance services – an audit and/or review of the Financial Report of the entities in the consolidated entity (ii) Other non-audit services – taxation services – compliance services	118,363 25,249 7,672 6,231 117,062 148,949
	124,734 155,180
Total remuneration of network firms of Pitcher Partners	243,097 180,429
(c) Amounts paid and payable to non-related auditors of Group entities for: (i) Audit and other assurance services – an audit and/or review of the Financial Report of other entities in the consolidated entity (ii) Other non-audit services – taxation services – compliance services	126,442 84,882 52,784 22,390 34,744 -
	87,528 22,390
Total remuneration of non-related auditors ofgroup entities	213,970 107,272
Total auditors’ remuneration	797,413 655,780

Hansen Technologies Ltd

Notes to the Financial Statements 30 June 2017

25. Parent entity information

Summarised presentation of the parent entity, Hansen Technologies Ltd’s, financial statements:

25. Parent entity information Summarised presentation of the parent entity, Hansen Technologies Ltd’s, financial statements:
	Parent Entity 2017 2016 $'000 $'000
(a) Summarised statement of financial position Assets Current Assets Non-current assets	1,274 96 95,309 91,966
Total Assets	96,583 92,062
Liabilities Current liabilities Non-current liabilities	1,077 4,163 - -
Total Liabilities	1,077 4,163
Net assets	95,506 87,899
Equity Share capital Accumulated profits Share based payments reserve	85,350 78,650 8,184 7,998 1,972 1,251
Total equity	95,506 87,899
	Parent Entity 2017 2016 $'000 $'000
(b) Summarised statement of comprehensive income Profit for the year	12,887 12,968
Total comprehensive income for the year	12,887 12,968

A dividend was paid from Hansen Corporation Pty Ltd to Hansen Technologies Ltd of $13.0m during the financial year.

(c) Parent entity guarantees

Hansen Technologies Ltd, being the parent entity, has entered into a guarantee in regard to the loan facility (refer Note 14). In addition, there are cross guarantees given by Hansen Technologies Ltd and Hansen Corporations Pty Ltd as described in Note 28. No deficiencies of assets exist in any of these companies.

Hansen Technologies Ltd

Notes to the Financial Statements

30 June 2017

26. Segment information

(a) Description of segments

Inter-segment pricing is determined on an arm’s length basis.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

Business segments

The consolidated entity comprises the following main business segments, based on the consolidated entity’s management reporting system:

Billing: Represents the sale of billing applications and the provision of consulting services in regard to billing systems.

IT outsourcing: Represents the provision of various IT outsourced services covering facilities management, systems and operations support, network services and business continuity support.

Other: Represents software and service provision in superannuation administration.

Geographical segments

In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers. Segment assets are based on the geographical location of the assets.

The consolidated entity’s business segments operate geographically as follows:

APAC: Sales and services throughout Australia and Asia.

Americas: Sales and services throughout the Americas.

EMEA: Sales and services throughout Europe, the Middle East and Africa.

(b) Segment information

(b) Segment information
2017	Billing $'000	2017 Financial Year Outsourcing Other $'000 $'000	Total $'000
Segment revenue Total segment revenue
	168,886	5,644 142	174,672
Segment revenue from external source	168,886	5,644 142	174,672
Segment result Total segment result
	34,236	1,537 55	35,828
Segment result from external source	34,236	1,537 55	35,828
Items included within the segment result: Depreciation expense Amortisation expense
	2,513	155 -	2,668
	9,368	- -	9,368

Total segment assets	180,716	1,778 44	182,538
Additions to non-current assets	4,754	- -	4,754
Total segment liabilities	46,216	1,732 44	47,991

Hansen Technologies Ltd

Notes to the Financial Statements 30 June 2017

		2016 Financial Year	2016 Financial Year
	Billing	Outsourcing	Other	Total
2016	$'000	$'000	$'000	$'000
Segment revenue
Total segment revenue	139,939	6,310	2,712	148,961
Segment revenue from external source	139,939	6,310	2,712	148,961
Segment result
Total segment result	33,874	2,811	1,085	37,770
Segment result from external source	33,874	2,811	1,085	37,770
Items included within the segment result:
Depreciation expense	2,063	169	4	2,236
Amortisation expense	6,489	-	-	6,489
Total segment assets	140,716	1,669	717	143,102
Additions to non-current assets	1,035	-	-	1,035
Total segment liabilities	34,231	1,464	629	36,324
(i) Reconciliation of segment revenue from external source to the consolidated statement of			comprehensive income
			2017	2016
			$'000	$'000
Segment revenue from external source			174,672	148,961
Other revenue			256	233
Interest revenue			114	62
Total revenue			175,042	149,256
Revenue from external source attributed to individual countries is detailed as		follows:
			2017	2016
			$'000	$'000
APAC			39,383	41,167
Americas			62,887	35,184
EMEA			72,402	72,610
Total revenue			174,672	148,961

Hansen Technologies Ltd

Notes to the Financial Statements 30 June 2017

26. Segment information continued

(ii) Reconciliation of segment result from the external source to the consolidated statement of comprehensive income

	2017 2016 $'000 $'000
Segment result from external source Interest revenue Interest expense Depreciation and amortisation Other expense	35,828 37,770 114 62 (43) (59) (347) (311) (2,719) (1,038)
Total profit before income tax	32,833 36,424

(iii) Reconciliation of segment assets to the consolidated statement of financial position

(iii) Reconciliation of segment assets to the consolidated statement of financial position
	2017 2016 $'000 $'000
Segment assets	182,538 143,102
Unallocated assets – Cash – Other	15,013 30,203 2,002 2,160
Total unallocated assets	17,015 32,363
Total assets	199,553 175,465
Total assets attributed to individual countries is detailed as follows:	2017 2016 $'000 $'000
APAC Americas EMEA	55,997 52,130 83,694 75,372 59,862 47,963
Total assets	199,553 175,465

(iv) Reconciliation of segment liabilities to the consolidated statement of financial position

(iv) Reconciliation of segment liabilities to the consolidated statement of financial position
	2017 2016 $'000 $'000
Segment liabilities	47,991 36,324
Unallocated liabilities – Bank facility – Other	- - (54) 4,161
Total unallocated liabilities	(54) 4,161
Total liabilities	47,937 40,485

Hansen Technologies Ltd

Notes to the Financial Statements

30 June 2017

27. Business Combination

(1) Acquisition of PPL Solutions LLC

The Company’s subsidiary, Hansen Technologies North America, Inc. acquired 100% of the share capital of PPL Solutions LLC (renamed Hansen Solutions LLC) with effect from 1 July 2016. PPL Solutions is a strategically attractive business that is strongly aligned with the Company’s key acquisition criteria. It sits within our core billing & customer care business, owns the intellectual property in its billing software and extends the Company’s footprint into a new market segment in the US.

Details of the purchase consideration:

segment in the US. Details of the purchase consideration:
	$'000
Cash paid	14,169
Total purchase consideration	14,169

Assets and liabilities acquired as a result of the business combination were:

	Fair value $'000
Assets acquired: Receivables Other current assets Plant and equipment Deferred tax asset
	2,674
	2,149
	74
	497
Total assets acquired	5,394
Liabilities acquired: Payables Accruals Provisions Current tax liability
	2,473
	170
	1,346
	31
Total liabilities acquired	4,020
Net identifiable assets acquired	1,374
Add: intangible assets Technology Customer contracts Goodwill
	5,518
	4,372
	2,905
Total purchase consideration	14,169

Goodwill arose on the acquisition of PPL Solutions LLC due to the combination of the consideration paid for the business and the net assets acquired, less values attributed to other intangibles in the form of customer contracts and technology. The value of goodwill represents the future benefit arising from the expected future earnings, synergies and personnel assumed via the acquisition. The goodwill is expected to be deductible for tax purposes in the US.

(a) Transaction costs

Transaction costs of $87,922 were incurred in relation to the acquisition. These costs are included with “Professional Expenses” in the consolidated statement of comprehensive income.

(b) Contribution since acquisition

Since the acquisition date of 1 July 2016 which is the beginning of the reporting period, PPL Solutions has contributed revenue of $29.059 million and a profit after tax of $1.694 million which is included within the consolidated results. The profit after tax contribution included integration costs incurred to enable the entity to operate as part of the Hansen consolidated group.

Hansen Technologies Ltd

Notes to the Financial Statements 30 June 2017

27. Business Combination (continued)

(2) Acquisition of DST Billing Solutions Limited

The Company’s subsidiary, Hansen Holdings Europe Ltd, acquired 100% of the share capital of DST Billing Solutions Limited (renamed Hansen Billing Solutions Limited), which owns the HiAffinity customer care and billing system (“HiAffinity”). The transaction was effective from 1 November 2016.

DST Billing Solutions Limited is focused on the water billing industry with clients in the United Kingdom, Australia, Africa and the Americas and is headquartered in Surbiton in London with around 31 billing subject matter experts employed in the business. The acquisition will further enhance the Company’s reputation as a global billing system specialist.

Details of the purchase consideration:

Details of the purchase consideration:
	$'000
Cash paid	7,403
Total purchase consideration	7,403
	Fair value $'000
Assets acquired: Cash Receivables Other current assets Deferred tax asset
	1,047
	1,066
	334
	95
Total assets acquired	2,542
Liabilities acquired: Deferred income Accruals Provisions
	1,610
	79
	235
Total liabilities acquired	1,924
Net identifiable assets acquired	618
Add: intangible assets Technology Customer contracts Deferred tax liability Goodwill
	1,358
	3,173
	(905)
	3,159
Total purchase consideration	7,403

Goodwill arose on the acquisition of DST Billing Solutions Limited due to the combination of the consideration paid for the business and the net assets acquired, less values attributed to other intangibles in the form of customer contracts and technology. The value of goodwill represents the future benefit arising from the expected future earnings, synergies and personnel assumed via the acquisition. None of the goodwill is expected to be deductible for tax purposes.

(a) Acquisition related costs

Transaction costs of $140,484 were incurred in relation to the acquisition. These costs are included with “Professional Expenses” in the consolidated statement of comprehensive income.

(b) Contribution since acquisition

Since the acquisition date of 1 November 2016, DST Billing Solutions Limited has contributed revenue of $5.521 million and a profit after tax of $1.258 million which is included within the consolidated results. It is impracticable to disclose the results of DST Billing Solutions Limited as though the acquisition date had occurred at 1 July 2016 as the historical financial information for the four months prior to acquisition of the standalone business is not available.

Purchase consideration – cash outflow:

Since the acquisition date of 1 November 2016, DST Billing Solutions Limited has contributed revenue of and a profit after tax of $1.258 million which is included within the consolidated results. It is impracticable results of DST Billing Solutions Limited as though the acquisition date had occurred at 1 July 2016 as the financial information for the four months prior to acquisition of the standalone business is not available. Purchase consideration – cash outflow:	$5.521 million to disclose the historical
	$'000
Outflow of cash to acquire subsidiary, net of cash acquired Cash consideration Less: Cash balance acquired
	7,403
	(1,047)
Net outflow of cash – investing activities	6,356

Hansen Technologies Ltd

Notes to the Financial Statements 30 June 2017

27. Business Combination (continued)

(c) Transaction recognised separately from business combination

Shortly after the acquisition date, DST Billing Solutions Limited entered into an arrangement with a related party of the seller, DST Process Solutions Limited to acquire the rights to specific Australian and South African customer contracts for a consideration of $2.165 million. This transaction is recognised separately from business combination and a customer contract intangible asset of $2.165 million has been recognised (refer to Note 12).

28. Deed of cross guarantee

Hansen Technologies Ltd and Hansen Corporation Pty Ltd are parties to a deed of cross guarantee under which each company guarantees the debts of the others. By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare a financial report and directors’ report under ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 issued by the Australian Securities and Investments Commission.

(a) Consolidated statement of comprehensive income

The above companies represent a ‘closed group’ for the purposes of the Class Order, and as there are no other parties to the deed of cross guarantee that are controlled by Hansen Technologies Ltd, they also represent the ‘extended closed group’. Set out below is a consolidated statement of comprehensive income for the year ended 30 June 2017 of the closed group consisting of Hansen Technologies Ltd and Hansen Corporation Pty Ltd.

	2017 2016 $'000 $'000
Revenue Other income	41,510 41,499 12,332 17,141
Total revenue and other income	53,842 58,640
Employee benefit expenses Depreciation expense Amortisation expense Property and operating rental expenses Contractor and consultant expenses Software licence expenses Hardware and software expenses Travel expenses Communication expenses Professional expenses Finance cost Other expenses	(26,641) (24,596) (1,310) (1,072) (2,559) (2,462) (2,306) (2,130) (261) (77) (1,019) (554) (2,399) (2,146) (1,249) (1,575) (690) (656) (605) (623) (33) (154) (2,205) (2,175)
Total expenses	(41,277) (38,220)
Profit before income tax Income tax expense	12,565 20,420 (3,315) (6,088)
Profit after income tax from continuing operations Other comprehensive income/(expense) Items that may be reclassified subsequently to profit and loss Exchange differences on translation of foreign entities	9,250 14,332 - - - -
Other comprehensive income/(expense)for theyear	- -
Total comprehensive income for theyear	9,250 14,332

Hansen Technologies Ltd

Notes to the Financial Statements 30 June 2017

28. Deed of cross guarantee (continued)

(b) Consolidated statement of financial position

Set out below is a consolidated statement of financial position as at 30 June 2017 of the closed group consisting of Hansen Technologies Ltd and Hansen Corporation Pty Ltd.

Hansen Technologies Ltd and Hansen Corporation Pty Ltd.
	2017 2016 $'000 $'000
Current assets Cash and cash equivalents Receivables Current tax asset Other current assets	4,214 7,445 9,227 3,152 1,128 1,458 1,992 -
Total current assets	16,561 12,055
Non-current assets Plant, equipment & leasehold improvements Intangible assets Other non-current assets Deferred tax assets	3,789 3,690 21,297 20,194 87,523 87,618 3,323 3,388
Total non-current assets	115,932 114,890
Total assets	132,493 126,945
Current liabilities Payables Current tax payable Provisions Unearned income	3,511 3,624 - 2,932 5,898 5,697 6,984 4,531
Total current liabilities	16,393 16,784
Non-current liabilities Deferred tax liabilities Other non-current liabilities Provisions	2,064 1,542 8,937 7,480 195 206
Total non-current liabilities	11,196 9,228
Total liabilities	27,589 26,012
Net assets	104,904 100,933

	2017 2016 $’000 $’000
Equity Share capital Other reserves Options granted reserve Retained earnings	85,350 78,650 (3,475) (3,477) 1,974 1,253 21,055 24,507
Total equity	104,904 100,933

Hansen Technologies Ltd

Notes to the Financial Statements

30 June 2017

29. Subsequent events

(a) Acquisition of Enoro Holding AS

The Company’s subsidiary, Hansen Holdings Europe Ltd, acquired 100% of the share capital of Enoro Holding AS and its controlled entities (“Enoro”), the Nordic market-leading provider of Customer Information Systems and Meter Data Management systems for the energy sector, for a consideration of approximately $71 million. The total enterprise value is $96 million. The transaction is effective from 1 July 2017.

The acquisition will further expand the Company’s energy footprint into a number of European countries namely Norway, Sweden, Finland, Germany, Netherlands, Switzerland and Austria and positions the Company to support further deregulation of the energy markets across Eastern Europe.

(i) Details of the purchase consideration

Total purchase consideration was approximately $71 million. The purchase consideration was partly funded via $50 million of equity raising, comprising a $40 million underwritten institutional placement completed on 4 July 2017 and a $10 million share purchase plan. The equity raise resulted in the issue of 10.8 million new shares at $3.70 from the institutional placement and 2.8 million new shares at $3.70 from the share purchase plan, which rank equally with existing Hansen shares. Funds from the equity raise was used to partially fund the acquisition and for working capital purposes.

The remaining consideration was settled via drawdown of new bank facilities. As at 29 June 2017, the Company entered into a new facility agreement, which would allow the Company access up to $105 million as part of securing funding for the Enoro acquisition. As at 30 June 2017, the $105 million facility was undrawn and uncommitted. Subsequent to yearend, an amount of approximately $46 million was drawn along with internal cash reserves to settle the remaining purchase consideration and to repay Enoro’s acquired external borrowings of approximately $25 million.

The A$30 million multi-currency three year term facility was terminated on 5 July 2017.

(ii) Information not disclosed as not yet available

At the time the financial statements were authorised for issue, the Company had not yet completed the accounting for the acquisition of Enoro. In particular, it is impracticable to provide detailed information about the fair values of the assets and liabilities of the acquired group as the independent valuations have not been finalised and the carrying value of Enoro’s assets and liabilities as at the date of acquisition were being accounted in Norway in compliance with local accounting standards resulting in different accounting treatments to IFRS.

(b) Other events

Please refer to Note 7 for the final dividend recommended by the directors, to be paid on 28 September 2017.

There has been no other matter or circumstance, which has arisen since 30 June 2017 that has significantly affected or may significantly affect:

(i) the operations, in financial years subsequent to 30 June 2017, of the consolidated entity; or

(ii) the results of those operations; or

(iii) the state of affairs, in financial years subsequent to 30 June 2017, of the consolidated entity.

Hansen Technologies Ltd

DIRECTORS' DECLARATION

The Directors declare that the financial statements and notes set out on pages 28 to 70 in accordance with the Corporations Act 2001:

(a) comply with Accounting Standards and the Corporations Regulations 2001, and other mandatory professional reporting requirements;

(b) as stated in Note 1(a), the consolidated financial statements also comply with International Financial Reporting Standards; and

(c) give a true and fair view of the financial position of the consolidated entity as at 30 June 2017 and of its performance for the year ended on that date.

In the Directors’ opinion there are reasonable grounds to believe that Hansen Technologies Ltd will be able to pay its debts as and when they become due and payable.

At the date of this declaration, there are reasonable grounds to believe that the members of the extended closed group identified in Note 28 will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee described in Note 28.

This declaration has been made after receiving the declarations required to be made by the Chief Executive Officer and Chief Financial Officer to the Directors in accordance with sections 295A of the Corporations Act 2001 for the financial year ended 30 June 2017.

This declaration is made in accordance with a resolution of the Directors.

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David Trude

Andrew Hansen

Director

Melbourne 21 August 2017

Hansen Technologies Ltd

INDEPENDENT AUDITOR'S REVIEW REPORT

to the Members of Hansen Technologies Ltd

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Report on the Audit of the Financial Report

Opinion

We have audited the financial report of Hansen Technologies Ltd (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2017, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration.

In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001 , including:

(i) giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial performance for the year then ended; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001 .

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We confirm that the independence declaration required by the Corporations Act 2001 , which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

An independent Victorian Partnership ABN 27 975 255 196 Level 19, 15 William Street, Melbourne VIC 3000 Liability limited by a scheme approved under Professional Standards Legislation

Hansen Technologies Ltd

Key Audit Matter

How our audit addressed the key audit matter

Revenue Recognition

Refer to Note 1(c) and Note 4

The Group’s revenue is primarily derived from the provision of customer care and billing technologies and the maintenance and support for this technology.

Some of the contracts that account for revenue are based on the stage of completion of individual contracts, calculated on the proportion of total costs incurred at the reporting date compared to management’s estimation of total costs of the contract.

The accurate recording of revenue is highly dependent on the following key factors:

a detailed knowledge of the individual contract characteristics, including; the status of contracts, the judgements and estimation regarding the cost to complete, location of the project, complexity of the project; and
the number and nature of variations on the original contract terms.

Our testing of revenue transactions focused on revenue recognition and evidencing that the underlying transaction had occurred in the period.

Our procedures included, amongst others:

Review of the Group’s terms and conditions of sale;
For a sample of revenue transactions, substantiation to supporting documentation including or receipt of monies;
A review and analysis of general journals impacting revenue;
For a sample of revenue transactions, we agreed to underlying customer contracts; and
For a sample of revenue transactions which were recognised on a percentage completion basis, we tested that the calculations of costs to complete the contract and costs incurred were based on supportable assumptions by:
assessing the forecast costs to complete through challenging Group finance and operational management assessments;
assessing the Group’s ability to deliver contracts within budgeted margins by analysing the historical accuracy of forecasting margins and the relationship of cost versus billing status on contracts; and,
reading the contract terms and conditions and any applicable variations to evaluate whether the individual characteristics of each contract were reflected in management’s estimate.

An independent Victorian Partnership ABN 27 975 255 196 Level 19, 15 William Street, Melbourne VIC 3000 Liability limited by a scheme approved under Professional Standards Legislation

Hansen Technologies Ltd

Key Audit Matter

How our audit addressed the key audit matter

Impairment of Goodwill

Refer to Note 1(h), Note 2(a) and Note 12.

At 30 June 2017 the Group’s balance sheet includes goodwill amounting to $87.5 million, allocated to one cash generating unit (CGU).

The assessment of impairment of the Group’s goodwill balance incorporated significant judgement in respect of factors such as:

revenue;
expenses;
capital expenditure; and
economic assumptions such as, discount rates and terminal growth.

A key audit matter was identified as to whether the Group’s value-in-use model for impairment included appropriate consideration and support for significant estimates and judgements and the selection of key external and internal inputs.

Our procedures included, amongst others:

We assessed management’s determination of the Group’s CGUs based on our understanding of the nature of the Group’s business and the economic environment in which the segments operate. We also reviewed the internal reporting of the Group to assess how earnings streams are monitored and reported;
We evaluated management’s process regarding valuation of the Group’s goodwill assets to determine any asset impairments including the procedures around the preparation and review of forecasts.
We challenged the Group’s assumptions and estimates used to determine the recoverable value of its assets, including those relating to forecast revenue, expenses and capital expenditure.
Used an auditors expert to corroborate the key market related assumptions to external data;
We checked the mathematical accuracy of the cash flow models and agreed relevant data to the latest forecasts;
We assessed the historical accuracy of budgeting and forecasting of the Group; and
We performed sensitivity analysis in two main areas. These included the discount rate and terminal growth assumptions.

An independent Victorian Partnership ABN 27 975 255 196 Level 19, 15 William Street, Melbourne VIC 3000 Liability limited by a scheme approved under Professional Standards Legislation

Hansen Technologies Ltd

Key Audit Matter

How our audit addressed the key audit matter

Calculation of Capitalised Software Development Expenditure Refer to Note 1(h), Note 2(d) and Note 12.

At 30 June 2017 the Group’s balance sheet includes a carrying value of Internally Capitalised Software Development Expenditure of $15.6 million which included $7.8 million which was capitalised during the year ended 30 June 2017.

The assessment of the Capitalised Software Development Expenditure incorporated significant judgement in respect of factors such as:

probability of future benefit; and
the accuracy of inputs such as wage rate and overhead calculations.

A key audit matter was identified for the application of the Group’s capitalisation policy; in particular when capitalising wages and overheads relating to the development of a new product or additional functionality to an existing product.

Our procedures included, amongst others:

For a sample of projects agreeing time incurred relating to the project back to employee timesheets;
Challenging management on the basis for capitalisation and expected future benefit for a sample of projects capitalised;
Testing on a sample basis for impairment of projects previously capitalised by obtaining an update on the current status of a sample of projects from management’s review of sales of product during the current year;
Substantiating wage rates used in capitalisation back to salaries of employees in the development team;
Agreeing overhead allocation of fixed costs;
• Reviewing the overhead expense percentages allocated to capitalised software development; and
Testing the mathematical accuracy of the amortisation of previously capitalised amounts in line with the Group policy.

An independent Victorian Partnership ABN 27 975 255 196 Level 19, 15 William Street, Melbourne VIC 3000 Liability limited by a scheme approved under Professional Standards Legislation

Hansen Technologies Ltd

Key Audit Matter How our audit addressed the key audit matter Acquisition of Hansen Solutions LLC (PPL) and Hansen Billing Solutions Limited (HiAffinity) Refer to Note 27.

During the year the Group acquired Hansen Our procedures included, amongst others: Solutions LLC (PPL) and Hansen Billing Solutions Limited (HiAffinity) for gross purchase • We read the sale and purchase agreements to consideration of $10.6m USD ($14.2m AUD) and understand key terms and conditions; £4.6m GBP ($7.4m AUD) respectively. Management • We evaluated the assumptions and considered these to be significant purchases for the methodology in management’s models, such as Group. forecast revenues, operating costs and contributory assets used to determine the value Accounting for this transaction is a complex and of customer contracts. judgemental exercise, requiring management to • We evaluated the work of the independent determine the fair value of acquired assets and expert in respect of the purchase price liabilities, in particular determining the allocation of allocation; purchase consideration to goodwill and separately • We used our internal valuation specialists to identifiable intangible assets such as customer compare these valuation assumptions with contracts and relationships. external benchmarks (for example discount rates) and to consider the assumptions based on It is due to the size of the acquisition and the our knowledge of the Group and its industries; estimation process involved in accounting for it that • We considered the Group’s determination of the this is a key area of audit focus. final fair value adjustments at 30 June 2017 and compared them to the provisionally reported values at 31 December 2016. We performed testing on the fair value adjustments to confirm that they related to new information obtained about facts and circumstances that existed on acquisition date, therefore were eligible for recognition;

We separately considered the reasonableness of the purchased entities opening balances on the acquisition date of each entity; and
We assessed the adequacy of the Group’s disclosures in respect of business acquisitions.

An independent Victorian Partnership ABN 27 975 255 196 Level 19, 15 William Street, Melbourne VIC 3000 Liability limited by a scheme approved under Professional Standards Legislation

Hansen Technologies Ltd

The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2017, but does not include the financial report and our auditor’s report thereon.

Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors for the Financial Report

The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control;
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors;
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern;
Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation; and
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible

An independent Victorian Partnership ABN 27 975 255 196 Level 19, 15 William Street, Melbourne VIC 3000 Liability limited by a scheme approved under Professional Standards Legislation

Hansen Technologies Ltd

for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in pages 14 to 25 of the directors’ report for the year ended 30 June 2017. In our opinion, the Remuneration Report of Hansen Technologies Ltd., for the year ended 30 June 2017, complies with section 300A of the Corporations Act 2001 .

Responsibilities

The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

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S D WHITCHURCH

PITCHER PARTNERS

Melbourne, 21 August 2017

An independent Victorian Partnership ABN 27 975 255 196 Level 19, 15 William Street, Melbourne VIC 3000 Liability limited by a scheme approved under Professional Standards Legislation

Hansen Technologies Ltd

AI assistant

HANSEN TECHNOLOGIES LIMITED — Annual Report 2017

65073_rns_2017-08-20_c6b885cc-1bd5-409e-a522-39e1ad1bf29d.pdf

HANSEN TECHNOLOGIES LTD ABN 90 090 996 455 AND CONTROLLED ENTITIES

Appendix 4E Final Report

Hansen Technologies Limited and its Controlled Entities

1. Reporting period

2. Results for announcement to the market

3. Statement of Comprehensive Income

4. Statement of Financial Position

5. Statement of Cash Flows

6. Statement of retained earnings

7. Dividends

Amount per security

Total dividend paid on all securities

9. Net tangible assets per security

10. Details of entities over which control has been gained during the period

11. Details of associates and joint venture entities

12. Significant information relating to the entity’s financial performance and financial position

13. The financial information provided in the Appendix 4E is based on the financial report (attached), which has been prepared in accordance with Australian Accounting Standards.

14. Commentary on the results for the period

15. Audit of the financial report

Annual Report

Hansen Technologies Ltd and Controlled Entities

CHAIRMAN AND CHIEF EXECUTIVE OFFICER JOINT REPORT

It is with great pride that we present Hansen Technologies’ Annual Report for fiscal 2017.

2016-17 financial performance

Year-on-year comparison (A$m)

Who we are

Our strategic approach

The global market

Market differentiation

Mergers and acquisitions

The opportunity must extend Hansen’s footprint into:

Corporate Governance Statement

INFORMATION ON DIRECTORS AND COMPANY SECRETARY

DIRECTORS’ REPORT

Principal activities

OPERATING AND FINANCIAL REVIEW

Review of operations

Billing segment

Outsourcing

DIRECTORS’ REPORT

Other

Significant changes in the state of affairs

After balance date event

Opportunities and Business Risks

Outlook and likely developments for FY2018

Environment regulations

Dividend paid, recommended and declared

Share options and rights

DIRECTORS’ REPORT

Shares under options/rights

Shares issued on exercise of options

DIRECTORS’ REPORT

Indemnification and insurance of Directors, officers and auditors

Indemnification

Insurance

Rounding of amounts

Directors’ meetings

Directors’ interests in shares or options

Proceedings on behalf of the company

Directors’ interests in contracts

Auditor’s Independence Declaration

Non-audit services

REMUNERATION REPORT

Dear Shareholder,

Short Term Incentive

Long Term Incentive

REMUNERATION REPORT

Our detailed remuneration report (Audited)

1. Persons to whom this report covers

Non-executive Directors

Executive KMP[(3)]

REMUNERATION REPORT

2. Overview of our remuneration framework

Our Philosophy

Remuneration Governance

Total Fixed Remuneration (TFR)

Approval: Short Term Incentive (STI)

HANSEN TECHNOLOGIES LIMITED Annual Report 2017