Urbanise.com Annual Report 2019

4. Significant accounting judgements, estimates and assumptions (continued) Management have constructed a detailed 3-year forecast including: –– Revenue: The actual current recurring income and then added all the known and relatively certain changes and some organic growth in existing client to the current revenues, both recurring and non-recurring –– Employee cost based on current level of employees plus additional staff as identified in the budget, adjusted for annual increases (July each year) –– Other expenses based on current expense base with escalations –– Working capital changes: This include receipts from increase/decrease to debtors based on increased/decrease sales of the prior period and changes to payables. Result It is forecasted that Urbanise has enough cash on hand to fund the business at the forecasted levels of revenue and cost. The forecast is dependent on: –– Forecasted sales being realised –– Cost increases must not exceed forecasted levels –– No unusual or unexpected cash outflow higher than the current levels –– Timing of cash inflows not delayed –– Achieving working capital improvements The forecast assumes significant sales as well as revenue growth consistent with recent years and modest cost growth reflecting a relatively fixed base of operating costs. In the absence of the factors above, there is the existence of a material uncertainty which may cast doubt on the Company’s ability to continue as a going concern. Successfully executing the above strategies are material to the Group’s ability to continue as a going concern. The directors are confident that they will be able to achieve the Group’s projected cash flow to ensure that the Group meet its minimum expenditure commitments and support its planned level of overhead expenditures, and therefore that it is appropriate to prepare the financial statements on the going concern basis. On this basis no adjustments have been made to the financial report relating to the recoverability and classification of the carrying amount of assets or the amount and classification of liabilities that might be necessary should the Group not continue as a going concern. Accordingly, the financial report has been prepared on a going concern basis. Should the Group be unable to achieve its cash flows with the initiatives detailed above then, the Group may in the future not be able to continue as a going concern and may therefore be required to realise assets and extinguish liabilities other than in the ordinary course of business with the amount realised being different from those shown in the financial statement. b. Revenue from contracts with customers Contracts with customers often include promises to deliver multiple products and services. Determining whether such bundled products and services are considered i. distinct performance obligations that should be separately recognised, or ii. non-distinct and therefore should be combined with another good or service and recognised as a combined unit of accounting may require significant judgment. In general, the Company’s professional services are capable of being distinct as they could be performed by third party service providers or self-delivered by the customer, and do not involve significant customization of the hosted software. The determination of stand-alone selling prices for distinct performance obligations can also require judgment and estimates. The Group allocates the transaction price based on the relative stand-alone selling prices of the platform licence and activation fees and professional services. The Group applied the following judgements that significantly affect the determination of the amount and timing of revenue from contracts with customers: Notes to the Consolidated Financial Statements for the year ended 30 June 2019 (continued) 55