Adslot Ltd and Controlled Entities
ABN 70 001 287 510
ADSLOT LTD (ABN 70 001 287 510)
RESULTS FOR ANNOUNCEMENT TO THE MARKET
Appendix 4E - Final report
Details of the reporting period and the previous corresponding period.
Reporting Period
Previous Corresponding Period
Financial Year ended
Financial Year ended
30 June 2015
30 June 2014
The amount and percentage change up or down from the previous corresponding period of revenue from ordinary activities
(Appendix 4E item 2.1)
Revenue from ordinary activities
Previous corresponding period
Percentage change up or down from the previous corresponding
period of revenue from ordinary activities
$
$
%
7,175,494
5,693,662
26.03%
The amount and percentage change up or down from the previous corresponding period of profit (loss) from ordinary activities
after tax attributable to members (Appendix 4E item 2.2)
Loss from ordinary activities after tax
Previous corresponding period
Percentage change up or down from the previous corresponding
period of loss from ordinary activities after tax attributable to
members
$
$
%
(9,205,521)
(10,095,562)
8.82%
The amount and percentage change up or down from the previous corresponding period of net profit (loss) for the period
attributable to members (Appendix 4E item 2.3).
Loss attributable to members
Previous corresponding period
Percentage change up or down from the previous corresponding
period of net loss for the period attributable to members
$
$
%
(9,205,521)
(10,095,562)
8.82%
The amount per security and franked amount per security of final and interim dividends or a statement that it is not proposed to
pay dividends (Appendix 4E items 2.4 and 2.5).
No dividends proposed relating to the reporting period
Net tangible assets per security with the comparative figure for the previous corresponding period.
Reporting Period
Previous Corresponding Period
cents
cents
0.45
0.34
1
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Explanation of income (Appendix 4E item 2.6)
Revenue by Principal Activity
Adslot Ltd derives revenue from three principal activities:
1. Trading Technology - comprises Adslot, a leading global media trading technology, and Symphony,
market-leading workflow automation technology, purpose built for digital media agencies.
2. Services - comprising marketing services that are provided by the company’s Webfirm division to SME
clients and project-based customisation of Trading Technology.
3. Adserving - technology that enables advertisers to deliver and measure the performance of online
display advertising (including impressions, clicks and online sales).
The strategic importance, growth potential and growth trajectory of the Group’s three principal revenue
activities varies, with the contribution of Trading Technology continuing to grow both in real terms and as a
percentage of total revenue.
Principal Activity
Profile
FY15
Revenue
($)
FY14
Revenue
($)
YOY
Growth
Rate
Trading Technology Global opportunity, rapidly emerging, highly
2,652,086
1,568,673
69%
Services
Adserving
strategic and key growth driver
Complimentary to Trading Technology,
stand-alone non-strategic but profitable
Complimentary to Trading Technology,
stand-alone non-strategic but profitable
2,396,948
2,449,584
(2%)
1,251,174
808,536
55%
Explanation of profit/(loss) from ordinary activities and net profit/(loss) after tax attributable to
members (Appendix 4E item 2.6)
The current reporting period loss after tax of $9,205,521 is a decrease to the loss of $10,095,562 from the
previous corresponding period, as discussed in the Review of Operations found on pages 7 to 9.
Audited results
This report is based on the following financial statements that have been the subject of an independent audit
and are not subject to any dispute or qualification.
Other Appendix 4E disclosures
Additional Appendix 4E disclosures can be found in the attached Adslot Ltd financial statements.
Specifically we draw readers’ attention to the Review of Operations and Likely Developments found on
pages 7 and 9 respectively.
2
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
ADSLOT LTD
ABN 70 001 287 510
FINANCIAL STATEMENTS
for the year ended 30 June 2015
CONTENTS
Directors’ Report
Remuneration Report
Auditors Independence Declaration
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Audit Report to the Members
Corporate Governance Statement
Shareholder Information
Corporate Directory
Page
4
13
22
23
24
25
26
27
71
72
75
75
76
3
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Directors’ Report
Your Directors present their report, together with the financial report of Adslot Ltd ACN 001 287 510 (‘the
Company’) and its controlled entities (‘the Group’) for the financial year ended 30 June 2015 and the
auditor’s report thereon.
Information on Directors
Mr Andrew Barlow, Mr Ian Lowe, Mr Ben Dixon, Mr Adrian Giles, Mr Geoff Dixon and Mr Quentin George
were directors for the whole financial year and up to the date of this report. Ms Sarah Morgan was appointed
as director on 27 January 2015.
Mr Andrew Barlow
Non-Executive
Chairman
(Age 42)
is
the
founder of Adslot and an experienced
Andrew Barlow
technology
entrepreneur. Prior to Adslot, Mr Barlow co-founded Hitwise with Adrian Giles in
1997, was Chairman and Managing Director of Hitwise from 1997 – 2000, and
Director of R&D from 2000 – 2002. Hitwise was ranked one of the Top 10 fastest
growing companies by Deloitte for five years running, before being sold to Experian
Group (LSX.EXPN) in May 2007. Mr Barlow is also the Founder of Venturian, a
privately-owned venture capital fund with investments in early-stage technology
companies with unique IP, highly scalable business models and global market
potential. Mr Barlow was also Founder and CEO of Max Super, an online retail
superannuation fund sold to Orchard Funds Management in 2007.
Mr Barlow is a director of Nitro Software, Inc.
Mr Adrian Giles
Non-Executive Director
(Age 41)
Adrian Giles is an entrepreneur with business interests in Internet, information
technology and intellectual property. In 1997 Mr Giles co-founded Sinewave
Interactive which researched and pioneered the concept of marketing a website
using search engines and was the first company in Australia to offer Search Engine
Optimisation (SEO) as a service.
In 1997 Mr Giles co-founded Hitwise which grew over 10 years to become one of
the most recognised global internet measurement brands operating successfully in
the USA, UK, Australia, NZ, Hong Kong, and Singapore. Whilst positioning the
company for a NASDAQ listing in early 2007 Hitwise was sold to Experian (LSX:
EXPN) in one of Australia’s most successful venture backed Internet trade sales.
Mr Giles is also Chairman of Market Engine, a global retailing platform and support
company offering Western brands direct access to half a billion new customers in
China.
Mr Giles is Chair of the Remuneration Committee.
Ian Lowe is one of Australia’s most experienced digital media executives, having
built and run a number of successful global media technology companies from
Australia. He has also forged an impeccable reputation in the advertising, media
and technology community domestically and internationally, and has a deep
(supply-side)
understanding of both agency
businesses.
(demand-side) and publisher
Mr Lowe previously held the role of Chief Executive Officer of Facilitate Digital Ltd,
and prior to that, worked for and managed numerous other media and media
technology businesses including Traffion, Red Sheriff, PMP Limited, and George
Patterson Bates.
Mr Ian Lowe
CEO and Executive
Director
(Age 45)
4
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Mr Ben Dixon
Executive Director
(Age 42)
Mr Geoff Dixon
Non-Executive Director
(Age 75)
Ben Dixon’s career in the advertising industry goes back over 17 years and
includes roles at several large multinational agency groups including DDB and
Mojo. He has wide experience across both the media buying and account
management fields having held senior positions directing accounts for advertisers
such as Telstra and Kraft Foods. In particular he was responsible for the
development and implementation of eCommerce and online strategies across a
number of advertisers.
In late 1999 Ben conceptualised and then co-founded Facilitate Digital Pty Ltd,
assuming the role of General Manager. In the subsequent 3 years he played an
integral role in steering the business through an industry collapse to a position of
strength. Ben was appointed Chief Executive Officer of Facilitate when Adslot
acquired it in December 2013.
Geoff Dixon is an experienced and successful corporate executive with a
background in the media, mining, aviation and tourism sectors at executive and
board level. He was Managing Director and Chief Executive Officer of Qantas
Airways Limited for eight years until 2008 and Chairman of Tourism Australia for six
years until July 2015. He is Chairman of the Garvan Medical Research Foundation
and Chairman of the privately held Australian Pub Fund. He is on the board of the
publicly listed Crown Limited and the board of the Museum of Contemporary Art
Australia, and is an Ambassador for the Australian Indigenous Education
Foundation.
Directorships of other Australian Listed Companies during the past 3 years:
Consolidated Media Holdings Limited from 31 May 2006 to 19 November 2012.
Crown Limited from 7 July 2007 to present.
Mr Quentin George
Non-Executive Director
(Age 45)
Quentin George is one of the advertising industry’s most credentialed and
respected thought leaders. Based in the United States, Mr George has previously
served as the Chief Digital and Innovation Officer at IPG Mediabrands, where he
was responsible for overseeing $2B in digital media spend across global media
agency networks, as well as specialist digital agencies for Fortune 500 brands.
Mr George has also previously held the positions of Global Head of Digital Media
and Strategic Innovation, and President, Global at Universal McCann. In 2008, Mr
George led the team that architected and built the industry’s first ever, standalone
programmatic media-buying agency, Cadreon, which he successfully grew into a
multi-national organisation encompassing North America, Europe and Asia-Pacific.
Mr George has also previously served on the customer advisory boards of Google,
Microsoft Advertising, Yahoo! and AOL. He has also served on high-profile industry
advisory boards including the Internet Advertising Bureau (IAB) and the American
Association of Advertising Agencies (AAAA’s), and has held senior leadership roles
at digital agencies such as Razorfish and Organic.
Ms Sarah Morgan
Non-Executive Director
(Age 45)
Sarah Morgan has over 19 years corporate finance experience, predominantly as a
Director of independent corporate advisory firm Grant Samuel. Over this time Ms
Morgan was involved in a large number of transactions including public company
M&A, IPOs, capital raisings (debt & equity), asset acquisitions and divestments,
and company and business valuations, across a broad range of industries.
Ms Morgan is a non-executive director of Hong Kong based Luxe City Guides, and
is on the advisory board of Melbourne University's entrepreneurship program - the
Melbourne Accelerator Program.
Directorships of other Australian Listed Companies during the past 3 years:
Hansen Technologies Limited (ASX:HSN) from October 2014 to current
Future Generation Global Investment Company (ASX:FGG) from July 2015 to
current.
Ms Morgan is Chair of the Audit and Risk Committee.
5
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Mr Brendan Maher
Company Secretary
(Age 47)
Brendan Maher joined the Company in 2010 as a qualified Chartered Accountant
with 23 years’ experience gained both in Australia and overseas with Arthur
Andersen, National Westminster Bank and Skilled Group Limited.
Mr Maher has extensive experience in financial reporting, corporate transactions
and was Company Secretary at ASX listed Skilled Group Limited (ASX:SKE) prior
to joining Adslot.
Mr Maher is a member of the Institute of Chartered Accountants in Australia and
also a member of the Australian Institute of Company Directors.
Directorships of other listed companies
Other than those disclosed on pages 4 to 6 of this Annual Report no director holds a Directorship in any
other listed companies in the three year period immediately before the end of the financial year.
Director’ shareholdings
The following table sets out each director’s relevant interest in shares or options in shares of the Company
as at the date of this report.
Directors
Ordinary Shares
Share Rights
ESOP Shares
#
#
#
Mr Andrew Barlow
Mr Adrian Giles
Mr Ian Lowe
Mr Ben Dixon
Mr Geoff Dixon
Mr Quentin George
Ms Sarah Morgan
57,803,769
19,633,409
11,461,929
35,119,513
86,252,015
-
-
-
-
17,000,000
-
-
-
-
-
-
3,000,000
-
-
1,000,000
-
ESOP Shares
Performance
Rights
#
-
-
-
750,000
-
-
-
Remuneration of directors and senior management
Information about the remuneration of directors and senior management is set out in the remuneration report
of this directors’ report.
Principal activities
Adslot Ltd derives revenue from three principal activities:
1. Trading Technology - comprises Adslot, a leading global media trading technology, and Symphony,
market-leading workflow automation technology, purpose built for digital media agencies.
2. Services - comprising marketing services that are provided by the company’s Webfirm division to SME
clients and project-based customisation of Trading Technology.
3. Adserving - technology that enables advertisers to deliver and measure the performance of online
display advertising (including impressions, clicks and online sales).
6
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Operating Results
Consolidated Group revenues from continuing operations for the FY15 period of $6,495,312 realised an
increase of 28% versus the prior year result of $5,066,180.
The consolidated operating loss before interest, income tax, depreciation and amortisation (EBITDA) is
$3,647,611, an improvement of 32% compared to a loss for the prior year of $5,336,412.
The consolidated operating loss after income tax is $9,205,521, a 9% improvement compared to a loss for
the prior year of $10,095,562.
Review of Operations
The 12 months to 30 June 2015 was a pivotal year in which Adslot achieved unambiguous validation of our
technology and the value it creates for the media industry. In the process, the Company has established a
growing revenue stream (Trading Technology), the future growth of which is expected to accelerate as
adoption momentum continues.
Significant Achievements
Revenue Growth
Revenue from continuing operations in the 12 months to 30 June 2015 grew 28% YoY, which saw Total
Income and EBITDA improve by a corresponding 26% and 32% respectively. The Trading Technology
revenue segment was the key growth driver, increasing by 69% against the prior corresponding period to
become the largest contributing revenue segment for the Group.
Validation of Adslot Trading Technology
Market validation of Adslot’s trading technology is evident in the form of:
Growth in the value of media transacted via Adslot. In the 12 months to 30 June 2015, the dollar
value of media transacted via Adslot increased by 437% against the prior corresponding
period;
Growth in the number of transactions (more media buyers transacting via Adslot more frequently);
Growth in the average value per transaction (media buyers transacting larger campaign budgets as
they become more familiar and confident with Adslot); and
A majority of transactions are being derived from repeat usage (as new users transact via Adslot, a
significant majority of these return to execute future trades via the platform). This demonstrates
growing user confidence in the Adslot platform, and in combination with securing new users, should
drive continued revenue growth.
Market validation in the form of transaction growth is also being seen across all key regions of operation (US,
Europe and ANZ).
7
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Media Spend (Demand) executed via Symphony in Strong Growth
In the 12 months to 30 June 2015, the annualised value of display ad spend executed via Symphony grew
by 39% from $1.65b to $2.3b, and is expected to exceed $2.5b by the end of calendar year 2015.
This growth is significant for the following reasons:
It is driven largely from winning and successfully deploying Symphony for large new agency customers in
US, Europe and ANZ; and
Via the Adslot-Symphony integration released earlier this year, media spend executed via Symphony
have access to an increasingly integrated trading experience with the publishers they value most. As
adoption of this integrated trading capability builds, Adslot will directly benefit in the form of Transaction
Fee revenues.
Adslot’s Trading Platform is ‘Best in Class’
The Company continues to believe that best in class technology is central to our success. A number of
major platform enhancements were successfully released in the 12 months to 30 June 2015, including:
The integration of Adslot and Symphony was achieved via two major deployments undertaken in August
2014 and April 2015. First trading activity using this integration has since been undertaken by five major
media agencies. Trading activity secured via the Adslot-Symphony integration is expected to grow
significantly in the next 12 months and beyond;
Consistent with the strategic priorities communicated at the 2014 AGM, Adslot has pursued feature
enhancements to demonstrate that a campaign traded via Adslot will perform better than a campaign that
is not traded via Adslot. In the 12 months to 30 June 2015, a number of enhancements were released
that allow buyers and sellers to collaboratively evaluate campaign performance data, and then optimise
campaign performance quickly and easily via the platform;
Viewability, or the ability for a consumer to actually view a display advertisement, has recently become a
critical issue for the online display advertising industry. In 2H FY15, Adslot released an enhancement
that permits the reporting of viewability to the buyer and seller, in the process becoming a trusted source
of this valuable information, whilst also informing trading and optimisation decisions for buyers and
sellers;
To underwrite the Company’s partnership strategy, Application Programming Interfaces (API’s) were
developed and released in the 12 months to 30 June 2015. These included a supply-side API (allowing
supply partners to expose publisher inventory to Adslot buyers), and a demand-side API (allowing
demand partners access to and the ability to purchase this inventory). During the 12 months to 30 June
2015, integrations with Kantar Media and Symphony were completed using this API capability. Additional
partner integrations are expected to be announced;
In 2H FY15, Adslot released an integration with AI Match, a leading adserving product provided by SAS,
one of the world’s leading software and data technology companies. This integration allows the growing
number of large publishers that use AI Match to automate both the release of inventory to media buyers
using Adslot, and the acceptance and fulfilment of orders from these buyers; and
In 1H FY15, Adslot released an integration of audience data from Nielsen. This release allows media
buyers to profile thousands of inventory sources by audience profile, and then model this audience on a
blended basis across multiple publishers.
8
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Coalition of Partnerships is growing
Throughout the 12 months to 30 June 2015, Adslot announced it had secured partnership agreements with a
number of organisations, including:
Microsoft (supply partner);
Operative (supply partner);
PubMatic (supply partner); and
Yahoo! (supply partner).
These partnerships compliment demand partnerships secured via Kantar Media, MediaMath, Bionic and
Symphony. As acceptance of Adslot and similar trading technology expands, leading industry bodies such
as the Internet Advertising Bureau (IAB) are actively consulting with vendors such as Adslot to formulate
technical standards. These standards will allow Adslot and its partners to accelerate integration projects to
conclusion, and in the process allow Adslot to bring supply and demand together at scale.
The Company expects to announce developments in this area.
Matters subsequent to the end of the financial year
There has not been any matter or circumstance occurring subsequent to the end of the financial year that
has significantly affected, or may significantly affect, the operations of the Group, the results of those
operations or the state of affairs of the Group in future years.
Likely developments and business strategies
Revenues Will Continue to Grow
The now established theme of revenue growth derived from Trading Technology is expected to continue.
Moreover, Trading Technology revenue growth is expected to accelerate - a view supported by a significant
increase in the Company’s sales pipeline (in terms of both the number of agencies and the continued lift in
average transaction size), and industry analyst projections of a rapid increase in industry acceptance and
adoption over the remainder of CY15, CY16 and beyond.
Leading analysts such as IDC and eMarketer have projected a material and ongoing increase in the volume of display
advertising transactions undertaken via Automated Guaranteed technology such as Adslot.
Adslot expects to generate Trading Technology growth in the form of both Transaction Fees and Licence
Fees.
9
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Demand Captured via Symphony Will Continue to Grow
As the global agency community becomes increasingly attuned to the data asset, operational and
practitioner benefits Symphony provides, the Company anticipates building on the already strong client base
of media agency customers by signing a number of new clients in the coming year.
In addition to generating new revenues, this will likely see the dollar value of annualised display advertising
demand exceed $3b by the end of FY16, and ensures the Company is well positioned to further capitalise in
coming quarters on the Adslot-Symphony integration strategy.
The Integration of Adslot and Symphony Will Become Increasingly Seamless
A number of projects are planned for FY16 that will see the integration of Adslot and Symphony become
increasingly seamless. The Company’s objective for FY16 is to advance the integration to the point where
any obvious distinction between the two platforms is removed.
This objective will also realise additional feature benefits for buyers and sellers, and provides tactical sales
benefits for Adslot.
Additional Partner Integrations Will be Deployed
As usage and adoption of Automated Guaranteed technology continues to expand, particularly in key
markets such as the United States, the Company expects to see a number of developments including:
Industry collaboration to formulate technical standards that will make integrations more scalable for all
participants;
Appetite from existing Adslot partners to prioritise the opportunity integration creates; and
Appetite from other companies to partner with Adslot.
These factors will combine to advance Adslot’s partnership strategy significantly in FY16.
Environmental regulations
The Group’s operations are not subject
Commonwealth, State or any other country in which the entity operates.
to any significant environmental regulations under
the
Dividends
The Directors do not recommend the declaration of a dividend. No dividend has been declared or paid during
the year.
Shares under option
There were no unissued shares or interests under option as at the date of signing this report.
During or since the end of the financial year, the Company issued 200,000 ordinary shares as a result of the
exercise of options which were granted on 14 October 2010 and exercised at 11.6 cents.
10
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Shares subject to rights
Details of unissued shares or interests subject to rights as at the date of signing this report are:
CEO Sign on Rights
Share price required (a)
Number of rights
Right to receive ordinary shares
Right to receive ordinary shares
Right to receive ordinary shares
Right to receive ordinary shares
Total
$0.200
$0.300
$0.400
$0.500
3,000,000
4,000,000
5,000,000
5,000,000
17,000,000
(a) Share price required to trade above a 30 day VWAP before entitlement to Right
Executive Performance Rights
Issue Type
Performance
Rights
Issue or
Acquisition
Date
Issue
Price
$
Balance at
beginning of the
year
(Number)
Issued during
the year
(Number)
Transfers
during the
year
(Number)
Balance at
end of the
year
(Number)
26/11/14
Nil
-
-
10,750,000
10,750,000
-
-
10,750,000
10,750,000
Indemnification and Insurance of Officers
The Company has during the financial year, in respect of each person who is or has been an officer of the
company or a related body Corporate, made a relevant agreement for indemnifying against a liability incurred
as an officer, including costs and expenses in successfully defending legal proceedings.
Since the end of the financial year, the Company has paid premiums to insure all directors and officers of
Adslot Ltd and the Adslot Group of companies, against costs incurred in defending any legal proceedings
arising out of their conduct as a director and officer of the Company, other than for conduct involving a wilful
breach of duty or a contravention of Sections 232(5) or (6) of the Corporations Act 2011, as permitted by
section 241A(3) of the Corporations Act. Disclosure of the premium amount is prohibited by the insurance
contract.
Directors’ Meetings
The following table sets out the number of meetings of the Company’s Directors held during the year ended
30 June 2015 and the number of meetings attended by each Director.
Directors
Held
Attended
Held
Attended
Held
Attended
Board of Directors
Remuneration Committee
Audit and Risk
Committee
Mr Andrew Barlow
Mr Ian Lowe
Mr Adrian Giles
Mr Geoff Dixon
Mr Ben Dixon
Mr Quentin George
Ms Sarah Morgan
8
8
8
8
8
8
2
8
8
8
6
7
8
2
2
-
2
-
-
2
-
2
-
2
-
-
2
-
-
-
1
1
-
-
1
-
-
1
1
-
-
1
11
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the company, or to intervene in any proceedings to which the company is a party,
for the purpose of taking responsibility on behalf of the company for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the company with leave of the Court under
section 237 of the Corporations Act 2001.
Auditor’s Independence Declaration
The auditor’s independence declaration for the year ended 30 June 2015 has been received and can be
found on page 22 of the financial report. Details of amounts paid or payable to the auditor for non-audit
services provided during the year are outlined in Note 21 to the financial statements.
The Directors are satisfied that the provision of non-audit services, during the year by the auditor is
compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.
12
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
REMUNERATION REPORT
The remuneration report is set out under the following headings:
Section 1:
Non-executive directors’ remuneration
Section 2:
Executive remuneration
Section 3:
Details of remuneration
Section 4:
Executive contracts of employment
Section 5:
Equity-based compensation
Section 6:
Equity holdings and transactions
Section 7:
Other transactions with key management personnel
Section 1: Non-executive directors’ remuneration
Non-executive directors’ fees are reviewed annually and are determined by the Board. In making its
determination it takes into account fees paid to other non-executive directors of comparable companies.
Non-executive directors’ fees are within the maximum aggregate limit of $350,000 per annum agreed to by
shareholders at the Annual General Meeting held on 30 November 2009. To preserve the independence
and integrity of their position, non-executive directors do not receive performance-based bonuses.
The Chairman’s fees are $75,000 per annum. Non-executive directors fees are $50,000 per annum. In
addition, the Chair of the Audit & Risk Committee receives a further $25,000 in recognition of the additional
workload of that position.
Section 2: Executive remuneration
The Board of Directors are responsible for determining and reviewing compensation arrangements for key
management personnel and the executive team. In June 2011, the Company established a Remuneration
Committee who now makes recommendations on remuneration of key management personnel to the Board.
The Board assesses the appropriateness of the nature and amount of emoluments of these employees on a
periodic basis by reference to relevant employment market conditions with the overall objective of ensuring
maximum stakeholder benefit from the retention of high quality executives. Executives’ remuneration
consists of a fixed cash component, short-term incentives in the form of cash bonuses, and long-term
incentives in the form of equity-based compensation linked to the long term prospects and future
performance of the Company. The inclusion of equity-based compensation in executives’ remuneration
provides a direct link between their remuneration and shareholder wealth, otherwise there are no direct
relationships.
In providing the Company’s performance and benefits for shareholder wealth, the Board have regard to the
following indices in respect of the current financial year and the previous four financial years:
Item
EPS (cents)
Net loss ($)
2015
2014
2013
2012
2011
(0.89)
(1.20)
(0.94)
(1.08)
(1.66)
9,205,521
10,095,562
6,460,947
7,331,658
10,341,309
Share price at 30 June ($)
0.090
0.115
0.044
0.035
0.090
13
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
REMUNERATION REPORT (Continued)
Section 3: Details of remuneration
Details of the remuneration of the directors and the key management of the Company and its controlled
entities are set out in the following tables.
The key management personnel of Adslot Ltd and its controlled entities include the following directors and
executive officers:
Directors
Position
Mr Adrian Giles
Non-Executive Director
Mr Andrew Barlow
Non-Executive Director
Non-Executive Chairman
Mr Ian Lowe
Chief Executive Officer
Executive Director
Mr Ben Dixon
Executive Director
Mr Geoff Dixon
Non-Executive Director
Mr Quentin George
Non-Executive Director
Ms Sarah Morgan
Non-Executive Director
Executive Officers
Date appointed/resigned
Appointed 26 November 2013
Appointed 16 February 2010
Appointed 26 November 2013
Appointed 8 October 2012
Appointed 8 October 2012
Appointed 23 December 2013
Appointed 23 December 2013
Appointed 14 June 2014
Appointed 27 January 2015
Mr Brendan Maher
Company Secretary / Chief Financial Officer
Appointed 15 November 2010
Mr Tom Peacock
Group Commercial Director
Appointed 23 December 2013
14
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
REMUNERATION REPORT (Continued)
Section 3: Details of remuneration (Continued)
Group
2015
Name
Short-term benefits
Long Term
Benefits
Post-
employment
benefits
Share-based payment
Salary
& fees
$
Bonus
$
Other
$
Long
Service
Leave
$
Super-
annuation
$
Shares1
$
Rights1
$
Total
$
Executive directors
Mr I Lowe
Mr B Dixon
309,000
20,531
175,397
5,000
Non-executive directors
Mr A Giles
50,000
Mr A Barlow
Mr G Dixon
Mr Q George
Ms S Morgan (i)
68,493
45,662
50,000
29,680
-
-
-
-
-
Other key management personnel
Mr B Maher
Mr T Peacock
266,862
200,000
15,000
10,000
Totals
1,195,094
50,531
-
-
-
-
-
-
-
-
-
-
-
5,663
18,783
17,599
12,123
113,384
_
7,253
473,821
210,912
-
-
-
-
-
-
6,507
4,338
-
-
-
-
60,683
2,820
-
-
-
-
-
-
50,000
75,000
50,000
110,683
32,500
11,101
3,722
20,208
18,783
51,280
134,381
12,089
9,671
376,540
376,557
20,486
89,038
258,467
142,397
1,756,013
1 Awards of Shares and Rights are governed by the rules of the Company’s ESOP. Given the forfeiture conditions
contained in that Plan, these awards are in substance rights issues.
(i)
from 27 January 2015
Bonuses
Bonuses appearing in the table above were paid for the year ended 30 June 2015 (but relate to the
performance from the prior year) as follows:
Name
Amount
available in
future
periods
Total Bonus
Opportunity
Amount Paid
$
$
$
Assessment Criteria
Mr I Lowe
20,531
-
125,000 Company performance to budget, product development and
Mr B Dixon
Mr B Maher
5,000
15,000
Mr T Peacock
10,000
launch, and client & partnership signings.
19,000
55,000 Performance related KPI’s.
-
-
45,063 Division performance, governance, reporting and performance
related KPI’s.
N/A (a) Performance related KPI’s.
(a)
Not applicable as total bonus opportunity is based on a percentage of the Group’s performance.
No portion of the total bonus opportunity for key management personnel was forfeited.
15
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
REMUNERATION REPORT (Continued)
Section 3: Details of remuneration (Continued)
Group
2014
Name
Short-term benefits
Long Term
Benefits
Post-
employment
benefits
Share-based payment
Salary
& fees
$
Bonus
$
Other
$
Long
Service
Leave
$
Super-
annuation
$
Shares1
$
Rights1
$
Total
$
Executive directors
Mr I Lowe
300,000
53,215
Mr B Dixon (i)
91,734
Non-executive directors
Mr A Giles
Mr A Barlow
Mr C Morris (ii)
Ms T Fuller (iii)
Mr G Dixon (i)
60,165
60,844
32,583
71,666
24,097
Mr Q George (iv)
Other key management personnel
-
-
-
-
-
-
-
-
Mr B Maher
259,089
45,063
Mr T Peacock (i)
104,839
-
Totals
1,005,017
98,278
-
-
-
-
-
-
-
-
-
-
-
-
1,737
17,775
8,485
68,739
159,493
-
-
-
-
-
-
-
4,086
-
-
2,229
-
2,158
17,775
9,698
63,537
38,706
-
-
-
-
-
-
-
1,707
599,222
101,956
60,165
64,930
32,583
71,666
26,326
2,158
385,464
154,950
-
-
-
-
-
-
-
-
-
3,444
60,048
173,140
159,493
1,499,420
1 Awards of Shares and Rights to Mr I Lowe and Awards of Shares to Mr B Maher are governed by the rules of the
Company’s ESOP. Given the forfeiture conditions contained in that Plan, these awards are in substance rights issues.
(i)
(ii)
(iii)
(iv)
from 23 December 2013
to 21 February 2014
to 14 June 2014
from 16 June 2014
Bonuses
Bonuses appearing in the table above were paid for the year ended 30 June 2014 (but relate to the
performance from the prior year) as follows:
Name
Amount
available in
future
periods
Total Bonus
Opportunity
Amount Paid
$
$
$
Assessment Criteria
Mr I Lowe
53,215
Mr B Maher
45,063
-
-
125,000 Company performance to budget, product development and
launch, and client & partnership signings.
45,063 Division performance, governance, reporting and performance
related KPI’s.
No portion of the bonuses paid to key management personnel were forfeited.
16
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
REMUNERATION REPORT (Continued)
Section 4: Executive contracts of employment
Formal contracts of employment for all members of the key management personnel are in place.
Contractual terms for most executives are similar but do, on occasions, vary to suit different needs. The
following table summarises the key contractual terms for all key management personnel.
Length of contract
Open ended
Fixed Remuneration
Remuneration comprises salary and statutory employer superannuation
contributions.
Incentive Plans
Notice Period
Resignation
Retirement
Eligible to participate. Incentive criteria and award opportunities vary for each
executive.
Members of the key management, including executive directors, have notice
periods ranging from three weeks to three months. The Chief Executive Officer
and Chief Financial Officer have notice periods of 3 months. Other Executives
have notice periods ranging from 3 weeks to 1 month.
Employment may be terminated by giving notice consistent with the notice period.
There are no financial entitlements due from the Company on retirement of an
executive.
Termination by the
Company
The Company may terminate the employment agreement by providing notice
consistent with the notice period or payment in lieu of the notice period.
Redundancy
Payments for redundancy are discretionary and are determined having regard to
the particular circumstances. There are no contractual commitments to pay
redundancy over and above any statutory entitlement.
Termination for
serious misconduct
The Company may terminate the employment agreement at any time without
notice, and the executive will be entitled to payment of remuneration only up to
the date of termination.
17
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
REMUNERATION REPORT (Continued)
Section 5: Equity-based compensation
Employee share ownership plan (ESOP)
In November 2012 the Company gained approval to establish an employee incentive scheme comprising the
Adslot Limited Share Option Plan and the Adslot Employee Share Trust.
Rights to shares are available to be issued to eligible employees based on the performance against agreed
key performance indicators. Any rights awarded are subject to a two-year service period and if this service
period is not met, the rights to shares will be forfeited by the eligible employee. Shares held by the Trust
under the scheme will have voting and dividend rights, and the right to participate in further issues pro-rata to
all ordinary shareholders.
No ESOP rights were granted to directors and senior management under the ESOP in the current financial
year ended 30 June 2015.
The following table shows grants of share-based compensation to directors and senior management under
the ESOP during prior year ending 30 June 2014:
During the Financial year
ESOP Series
Number
Granted
Number
Vested
% of Grant
Vested
% of Grant
Forfeited
% of
Compensation
for the year
Consisting of
Shares
Dec 2011
Sept 2013
March 2014
Jan 2014
March 2014
-
763,602
561,526
176,928
2,823,072
413,511
-
-
-
-
100%
-
-
-
-
-
-
-
-
-
16%
25%
Name
Mr B Maher
Mr T Peacock
ESOP Series
Number of
Shares
Vesting Date
Sept 2013
Jan 2014
March 2014
763,602
176,928
3,384,598
05-Sep-2015
28-Jan-2016
04-Mar-2016
Value of
shares
at grant date
$
Expensed in
FY 2014
$
Fair Value
Per Share
$
Date vested
and
exercisable
45,816
21,231
304,045
371,092
18,703
4,450
41,573
64,726
0.060
0.120
0.090
-
-
-
18
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
REMUNERATION REPORT (Continued)
Section 5: Equity-based compensation (continued)
Performance Rights over Shares
Shareholders approved at the November 2014 Annual General Meeting the creation of Performance Rights
over Shares which enables the Board to offer eligible employees the right to Performance Rights which
convert to shares subject to the executive’s performance against certain performance criteria. No amounts
are paid or payable by the recipient on receipt of the right. The rights carry no voting rights. All rights are
subject to service periods which require the employees remain an employee of the Company.
The following table shows grants of share-based compensation to directors and senior management under
the Performance Rights Plan during the current financial year:
Name
Brendan Maher
Tom Peacock
Series
Nov 14
Nov 14
Balance at
beginning
of the year
(Number)
Granted
during the
year
(Number)
Expired
during the
year
(Number)
Exercised
during the
year
(Number)
Balance at
the end of
the year
(Number)
-
-
-
1,250,000
1,000,000
2,250,000
-
-
-
- 1,250,000
- 1,000,000
- 2,250,000
Rights over Shares
Upon commencement of employment (8 October 2012) Mr Lowe was granted the right to receive the
following shares after the share price of the Company trades above a 30 day volume-weighted average price
(VWAP) as per the table below. Each right would convert into one ordinary share of Adslot Ltd when the
VWAP criteria is met. No amounts are paid or payable by the recipient on receipt of the right. The rights carry
no voting rights. Some rights are subject to escrow per the below table and all rights are subject to Mr Lowe
remaining an employee of the Company.
Rights over shares movements during the financial year are summarised below:
Issue Type
Rights over shares
Rights over shares
Rights over shares
Rights over shares
Required
VWAP
Price $
Balance at
beginning
of the year
(Number)
Granted
during the
year
(Number)
Expired
during the
year
(Number)
Exercised
during the
year
(Number)
Balance at
the end of
the year
(Number)
0.200
0.300
0.400
0.500
3,000,000
4,000,000
5,000,000
5,000,000
17,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,000,000
4,000,000
5,000,000
5,000,000
- 17,000,000
The following table shows grants of rights over shares to directors and senior management during prior year
ending 30 June 2014:
Issue Type
Rights over shares
Rights over shares
Rights over shares
Rights over shares
Rights over shares
Required
VWAP
Price $
Balance at
beginning
of the year
(Number)
Granted
during the
year
(Number)
Expired
during the
year
(Number)
Exercised
during the
year
(Number)
Balance at
the end of
the year
(Number)
0.100
0.200
0.300
0.400
0.500
3,000,000
3,000,000
4,000,000
5,000,000
5,000,000
20,000,000
-
-
-
-
-
-
-
-
-
-
-
-
3,000,000
-
-
-
-
-
3,000,000
4,000,000
5,000,000
5,000,000
3,000,000 17,000,000
19
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
REMUNERATION REPORT (Continued)
Section 5: Equity-based compensation (continued)
Details of ESOP and other rights to ordinary shares in the Company provided as remuneration of directors
and the key management personnel of the Company are set out below:
Name
2015
2014
2015
2014
Number
$
Number
$
Number
$
Number
$
Rights Granted During the Year
Rights Vested During the Year
Directors
Mr Adrian Giles
Mr Ian Lowe
Mr Andrew Barlow
Mr B Dixon (i)
Mr G Dixon (i)
Mr Q George (ii)
Ms S Morgan (iii)
-
-
-
-
-
-
750,000
78,750
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,000,000
105,000
-
-
-
-
-
-
1,500,000
165,000
1,500,000
88,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Other Key Management Personnel
Mr B Maher
Mr T Peacock (i)
1,250,000
131,250
1,325,128
91,861
1,674,872
245,109
413,511
21,916
1,000,000
105,000
3,000,000
264,015
-
-
-
-
(i)
(ii)
(iii)
from 23 December 2013
from 16 June 2014
from 27 January 2015
The assessed fair value at issue date of the options granted to the executive is allocated equally over the
period from issue date to vesting date, and the amount is included in the remuneration tables above. Fair
values at issue date are independently determined using the binomial option pricing model that takes into
account the exercise price, the term of the option, the share price at issue date and the expected price
volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the
option.
The model inputs for Performance rights to shares granted during the year ended 30 June 2015 included:
Model Input
Grant Date
Assessment period
Exercise Price
Probability of Conversion to Shares
Price at Grant Date
PR # 15-2
26/11/2014
2 years
-
25%
$0.105
There were no Performance rights to shares granted during the year ended 30 June 2014.
There were no ESOP rights to shares granted during the year ended 30 June 2015.
The model inputs for ESOP rights to shares granted during the year ended 30 June 2014 included:
Model Input
ESOP #14-1
ESOP #14-2
ESOP #14-3
ESOP #14-4
ESOP #14-5
ESOP #14-6
Grant Date
Escrow End Date
Exercise Price
Price at Grant Date
9/07/13
9/07/15
-
$0.042
5/09/13
5/09/15
-
$0.061
28/01/14
28/01/16
-
$0.120
06/03/14
04/03/16
-
$0.090
15/06/14
15/06/15
-
$0.105
15/06/14
2015-2018
-
$0.105
20
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
REMUNERATION REPORT (Continued)
Section 6: Equity holdings and transactions
The number of shares in the Company held during the financial year by each Director of Adslot Ltd and other
key management personnel of the Group, including their personally related parties, are set out below:
2015
Balance
at the start
of the year
Received during
the year on
exercise of
options
Received during
the year as
compensation
Net other changes
during the year
Balance
at the end
of the year
Name
(Number)
(Number)
(Number)
(Number)
(Number)
Directors
Mr A Giles
Mr A Barlow
Mr I Lowe
Mr B Dixon
Mr G Dixon
Mr Q George
Ms S Morgan (i)
Mr B Maher
Mr T Peacock
Totals
19,633,409
62,803,769
9,961,929
35,119,513
86,252,015
-
-
-
742,642
214,513,277
Other key management personnel
-
-
-
-
-
-
-
-
-
-
-
-
1,500,000
-
-
-
-
-
(5,000,000)
-
-
-
-
-
19,633,409
57,803,769
11,461,929
35,119,513
86,252,015
-
-
1,674,872
(1,400,000)
-
-
274,872
742,642
3,174,872
(6,400,000)
211,288,149
(i)
from 27 January 2015
Section 7: Other transactions with Key Management Personnel
Transactions with Directors and their personally related entities:
During the year digital marketing services to the value of $2,175 were provided to entities related to Mr
Adrian Giles and Mr Andrew Barlow on normal commercial terms and conditions.
During the year advertising inventory to the value of $905 was traded on the Adslot platform by an entity
related to Mr Ben Dixon and Mr Geoff Dixon on normal commercial terms and conditions.
This marks the end of the audited remuneration report.
This report is made in accordance with a resolution of directors.
Andrew Barlow
Chairman
26 August 2015
21
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Auditors Independence Declaration
Declaration to be provided by Grant Thornton
22
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Consolidated Statement of Profit or
Loss and Other Comprehensive Income
For the year ended 30 June 2015
Total revenue from continuing operations
Other income
Total revenue and other income
Hosting & other related technology costs
Salaries and employment related costs
Directors’ fees
Marketing costs
Lease – rental premises
Impairment of receivables
Listing & registrar fees
Legal fees
Travel expenses
Audit and accountancy fees
Finance costs
Other expenses
Share based payment expense
Depreciation and amortisation expenses
Total expenses
Loss before income tax expense
Income tax benefit / (expense)
Loss after income tax expense
Net loss attributable to members
Other comprehensive income / (loss)
Items that may be reclassified subsequently to profit or loss
Foreign exchange translation
Write off available for sale investment
Total other comprehensive income / (loss)
Notes
3
4
4
4
5
2015
$
6,495,312
680,182
7,175,494
(1,094,477)
(5,954,451)
(259,568)
(246,726)
(820,431)
37,440
(117,301)
(35,993)
(396,234)
(182,837)
(76)
(854,617)
(702,806)
2014
$
5,066,180
627,482
5,693,662
(1,207,632)
(5,539,323)
(259,220)
(362,838)
(595,430)
(3,145)
(177,291)
(278,490)
(283,510)
(222,915)
(3,451)
(1,300,586)
(560,307)
(5,731,779)
(5,025,021)
(16,359,856)
(15,819,159)
(9,184,362)
(10,125,497)
(21,159)
29,935
(9,205,521)
(10,095,562)
(9,205,521)
(10,095,562)
53,065
-
53,065
35,515
(106,335)
(70,820)
Total comprehensive loss attributable to the members
(9,152,456)
(10,166,382)
Earnings per share (EPS) from loss from continuing operations
attributable to the ordinary equity holders of the company
Basic earnings per share
Diluted earnings per share
16
16
2015
Cents
(0.89)
(0.89)
2014
Cents
(1.20)
(1.20)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
23
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Consolidated Statement of Financial Position
As at 30 June 2015
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Total current assets
NON-CURRENT ASSETS
Property, plant & equipment
Deferred tax assets
Intangible assets
Total non-current assets
Total assets
CURRENT LIABILITIES
Trade and other payables
Other liabilities
Provisions
Total current liabilities
NON-CURRENT LIABILITIES
Provisions
Deferred tax liabilities
Total non-current liabilities
Total liabilities
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
Notes
2015
$
2014
$
7
8
9
5
10
11
12
13
13
5
14
15
4,441,226
4,430,402
3,354,051
3,582,201
8,871,628
6,936,252
74,296
39,677
100,078
39,677
30,289,099
33,941,462
30,403,072
34,081,217
39,274,700
41,017,469
2,853,010
2,422,088
683,148
507,747
667,707
462,287
4,043,905
3,552,082
242,671
39,677
282,348
232,494
39,677
272,171
4,326,253
3,824,253
34,948,447
37,193,216
115,100,833
108,515,858
1,187,988
1,242,375
(81,340,374)
(72,565,017)
34,948,447
37,193,216
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
24
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Consolidated Statement of Changes in Equity
For the year ended 30 June 2015
2015
Balance at 1 July 2014
Notes
Issued
Capital
$
108,515,858
Movement in foreign exchange translation reserve
15
Decrease in available for sale investment reserve
Other comprehensive income
Loss attributable to members of the company
Total comprehensive income
Transactions with equity holders in their capacity
as equity holders
Contributions of equity, net of transaction costs
Reclassification of lapsed options to retained earnings
Reclassification of vested ESOP
Increase in employees share based payments reserve
14
15
15
15
Reserves
$
Accumulated
Losses
$
Total
Equity
$
1,242,375
53,065
-
53,065
(72,565,017)
37,193,216
-
-
-
53,065
-
53,065
-
53,065
(9,205,521)
(9,205,521)
(9,205,521)
(9,152,456)
6,204,881
-
380,094
-
6,584,975
-
(430,164)
(380,094)
702,806
(107,452)
-
6,204,881
430,164
-
-
-
-
702,806
430,164
6,907,687
Balance 30 June 2015
115,100,833
1,187,988
(81,340,374)
34,948,447
2014
Issued
Capital
$
Reserves
$
Accumulated
Losses
$
Total
Equity
$
Notes
Balance at 1 July 2013
76,871,148
Movement in foreign exchange translation reserve
15
Decrease in available for sale investment reserve
Other comprehensive income
Loss attributable to members of the company
Total comprehensive income
Transactions with equity holders in their capacity
as equity holders
Contributions of equity, net of transaction costs
Reclassification of lapsed options to retained earnings
Reclassification of vested ESOP
Increase in employees share based payments reserve
14
15
15
15
1,039,039
35,515
(106,335)
(70,820)
(62,589,935)
15,320,252
-
-
-
35,515
(106,335)
(70,820)
-
(10,095,562)
(10,095,562)
(70,820)
(10,095,562)
(10,166,382)
31,479,039
-
165,671
-
31,644,710
-
(120,480)
(165,671)
560,307
274,156
-
31,479,039
120,480
-
-
-
-
560,307
120,480
32,039,346
-
-
-
-
-
-
-
-
-
Balance 30 June 2014
108,515,858
1,242,375
(72,565,017)
37,193,216
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
25
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Consolidated Statement of Cash Flows
For the year ended 30 June 2015
Notes
2015
$
2014
$
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from trade and other debtors
Interest received
Government grants
8,278,552
184,099
436,152
4,774,215
337,769
427,932
Payments to trade creditors, other creditors and employees
(12,046,481)
(11,135,733)
Income tax paid
Interest paid
(19,868)
(8,130)
(7,329)
(3,445)
Net cash outflows from operating activities
24
(3,175,676)
(5,606,591)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment
Proceeds from sale of fixed assets
Net cash acquired via business acquisition
Receipt from R&D tax incentive
Payments for intangible assets
Net cash outflows from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Payments of equity raising costs
Net cash inflows from financing activities
Net increase / (decrease) in cash held
Cash at the beginning of the financial year
Effects of exchange rate changes on cash
(40,786)
-
-
1,741,136
(3,638,707)
(1,938,357)
6,523,200
(370,441)
6,152,759
1,038,726
3,354,051
48,449
(15,622)
1,477
503,593
1,870,561
(2,458,170)
(98,161)
-
-
-
(5,704,752)
9,132,037
(73,234)
CASH AT THE END OF THE FINANCIAL YEAR
7
4,441,226
3,354,051
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
26
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements
For the year ended 30 June 2015
1.
Summary of Significant Accounting Policies
The financial report covers Adslot Ltd (‘the Company’) and controlled entities (‘the Group’). Adslot Ltd
is a listed public company, incorporated and domiciled in Australia. The financial report is for the
financial year ended 30 June 2015 and is presented in Australian dollars.
The principal accounting policies adopted in the preparation of these consolidated financial statements
are summarised below. These policies have been consistently applied to all the years presented,
unless otherwise stated.
(a) Basis of preparation
This general purpose financial report has been prepared in accordance with Australian Accounting
Standards, other authoritative pronouncements of the Australian Accounting Standards Board
(AASB) and the Corporations Act 2001.
Compliance with IFRS
Australian Accounting Standards include International Financial Reporting Standards as adopted in
Australia. Compliance with Australian Accounting Standards ensures that the financial statements
and notes of Adslot Ltd comply with International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board (IASB). Adslot Ltd is a for-profit entity for the
purpose of preparing the financial statements.
Historical cost convention
These financial statements have been prepared under the historical cost convention as modified by
the revaluation of available-for-sale financial assets. Under the historical cost convention assets
are recorded at the amount of cash or cash equivalents paid or the fair value of the consideration
given to acquire them at the time of their acquisition. Liabilities are recorded at the amount of
proceeds received in exchange for the obligation, or in some circumstances at the amounts of cash
or cash equivalents expected to be paid to satisfy the liability in the normal course of business.
Critical accounting estimates
The preparation of financial statements in conformity with Australian Accounting Standards requires
the use of certain critical accounting estimates. It also requires management to exercise its
judgement in the process of applying the Group’s accounting policies. The estimates and
associated assumptions are based on historical experience and other factors that are considered
relevant. Actual results may differ from these estimates. The estimates and associated
assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised if the revision affects only that period or in the period
of the revision and future periods if the revision affects both current and future periods.
27
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
1.
Summary of Significant Accounting Policies (Continued)
(b) Going concern
Management continue to invest resources to successfully launch the Adslot products in multiple
geographies. The Group has incurred net cash outflows from operations of $3.2m for the year, and
management anticipate incurring further net cash outflows from operations until such time as
sufficient revenue growth is achieved.
The ability of the Group to continue as a going concern is dependent upon revenue growth and
levels of cash reserves. During FY 2015 the Company increased the earnings from its Trading
Technology revenues which is represented by the Adslot and Symphony products. During FY 2016
the Company expects to further increase revenues from these two products on a stand-alone basis
and also from the integration of these two products.
Despite this, the Company anticipates net operating cash flows from operations will continue to be
negative in FY 2016. However the Directors believe the Group can continue to pay its debts as
and when the fall due for the following reasons:
The Group had a cash position as at 30 June 2015 of $4.4m;
The Group expects to receive $2.1m in grants for Research & Development relating to
prior year expenditure within the next four months;
The Webfirm division is expected to make continued positive net cash flows from its
operations during FY 2016; and
Management could reduce the level of resources dedicated to expanding the business if
so required.
Accordingly the Directors believe there exists a reasonable expectation that the Group can continue
to pay its debts as and when they fall due, and the financial report has been prepared on a going
concern basis.
(c) Principles of consolidation
Subsidiaries
The consolidated financial statements comprise those of the Company, and the entities it controlled
at the end of, or during, the financial year. The Company controls a subsidiary if it is exposed, or
has rights, to variable returns from its involvement with the subsidiary and has the ability to affect
those returns through its power over the subsidiary.
All intra-group transactions, balances, income and expenses between entities in the Group
included in the financial statements have been eliminated in full. Where unrealised losses on intra-
group asset sales are reversed on consolidation, the underlying asset is also tested for impairment
from a group perspective. Where an entity either began or ceased to be controlled during the year,
the results are included only from the date control commenced or up to the date control ceased.
The accounting policies adopted in preparing the financial statements have been consistently
applied by entities in the Group.
Investments in subsidiaries are accounted for at cost less impairment losses in the parent entity
information in Note 26.
28
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
1.
Summary of Significant Accounting Policies (Continued)
(c) Principles of consolidation (Continued)
Business combinations
Acquisition of subsidiaries and businesses are accounted for using the acquisition method. The
consideration for each acquisition is measured at the aggregate of the fair values (at the date of
exchange) of assets given, liabilities incurred or assumed and equity instruments issued by the
Group in exchange for control of the acquiree. Acquisition related costs are recognised in profit or
loss as incurred.
The Group recognises identifiable assets and liabilities assumed in the business combination
regardless of whether they have been previously recognised in the acquiree’s financial statements
prior to acquisition. Assets acquired and liabilities assumed are generally measured at their
acquisition date fair values. Goodwill is stated after separate recognition of identifiable intangible
assets calculated as the excess of the sum of the fair value of the consideration transferred over
the acquisition date fair value of identifiable net assets. If the identifiable net assets exceed the
consideration transferred, the excess amount is recognised in profit or loss immediately.
Any deferred settlement of cash consideration is discounted to its present value as at the date of
acquisition. The discount rate used is the incremental borrowing rate that the Group can obtain
from an independent financier under comparable terms and conditions.
Foreign Currency Exchange
In preparing the financial statements of the individual entities, transactions in currencies other than
the entity’s functional currency are recorded at the rates of exchange prevailing on the dates of the
transactions. At each reporting date, monetary items denominated in foreign currencies are
retranslated at the rates prevailing at the reporting date. Exchange differences are recognised in
the Consolidated Statement of Profit or Loss and Other Comprehensive Income in the period in
which they arise.
On consolidation, the assets and liabilities of the Group’s foreign operations are translated into
Australian dollars at exchange rates prevailing on the reporting date. Income and expense items
are translated at the average exchange rates for the period. Exchange differences arising, if any,
are charged/credited to other comprehensive income and recognised in the Group’s foreign
currency translation reserve in equity. On disposal of a foreign operation the cumulative translation
difference recognised in equity are reclassified to profit or loss and recognised as part of the gain
or loss on disposal.
(d) Cash and cash equivalents
For the purposes of the Statement of Cash Flows, cash includes cash on hand and deposits at call
which are readily convertible to cash and are not subject to significant risk of changes in value, net
of bank overdrafts.
Publisher Account Cash represents share of advertising revenue held before release to Adslot
Publishers.
29
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
1. Summary of Significant Accounting Policies (Continued)
(e) Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any
impairment in value. The carrying values of property, plant and equipment are reviewed for
impairment when events or changes in circumstances indicate the carrying value may not be
recoverable. Leasehold improvements are depreciated over the estimated useful life using the
straight-line method with any balance written off at termination of lease.
Depreciation is calculated on a straight line basis for all plant and equipment. The estimated useful
lives, residual values and depreciation method are reviewed at the end of each annual reporting
period, with the effect of any changes recognised on a prospective basis.
The gain or loss arising on disposal or retirement of an item of property, plant and equipment is
determined as the difference between the sales proceeds and the carrying amount of asset and is
recognised in profit or loss. The following depreciation rates are used for each class of depreciable
asset:
Computer Equipment
Plant & Equipment
20 – 40% per annum
20 – 25% per annum
Leasehold Improvements
20 – 30% per annum
(f) Receivables
Trade receivables are recognised initially at fair value and thereafter are measured at amortised
cost, less provision for impairment. They are non-derivative financial assets with fixed or
determinable amounts not quoted in an active market. Trade accounts receivable are generally
settled between 14 and 60 days and carried at amounts recoverable.
Collectability of trade receivables is reviewed on an ongoing basis. Debts that are known to be
uncollectible are written off. A provision for doubtful receivables is established when there is
objective evidence that the Group will not be able to collect all amounts due according to the
original terms of the receivables. The amount of the provision is the difference between the asset’s
carrying amount and the present value of estimated future cash flows, discounted at the effective
interest rate. The amount of the provision is recognised in profit or loss. Subsequent recoveries of
amounts previously written off are credited against the allowance account.
(g) Investments and other financial assets
Financial assets are recognised when the group entity becomes a party to the contractual
provisions of the instrument.
At initial recognition, the group measures a financial asset at its fair value plus, in the case of a
financial asset not at fair value through profit or loss, transaction costs that are directly attributable
to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value
through profit or loss are expensed through profit or loss.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market. Loans and receivables are measured subsequent to recognition
at amortised cost using the effective interest method, less provision for impairment. Discounting is
omitted where the effect of discounting is immaterial.
Available-for-sale financial assets are non-derivative financial assets that are either designated to
this category or do not qualify for inclusion in any other category of financial assets. Available-for-
sale financial assets are measured at fair value. Gains or losses arising from changes in available-
for-sale financial assets are presented in other comprehensive income in the period in which they
arise.
30
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
1. Summary of Significant Accounting Policies (Continued)
(h) Trade and other creditors – financial liabilities
Trade accounts payable and other creditors represent liabilities for goods and services provided to
the Group prior to the end of the financial year and which are unpaid. The amounts are unsecured
and are usually paid within 45 days of recognition.
Financial liabilities are measured subsequently at amortised cost using the effective interest
method.
(i) Borrowings
Borrowings are initially recognised at fair value (less transaction costs) and subsequently
measured at amortised cost. Any difference between the proceeds and the redemption amount is
recognised in profit or loss over the period of the borrowing using the effective interest method.
(j) Finance costs
Finance costs are recognised as expenses in the period in which they are incurred except where
they are incurred in the construction of a qualifying asset in which case the finance costs are
capitalised as part of the asset.
(k) Income tax
The income tax expense or revenue for the period is the tax payable on the current period’s taxable
income based on the national income tax rate for each jurisdiction adjusted by changes in deferred
tax assets and liabilities attributable to temporary differences between the tax bases of assets and
liabilities and their carrying amounts in the financial statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates
expected to apply when the assets are recovered or liabilities are settled, based on those tax rates
which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are applied
to the cumulative amounts of deductible and taxable temporary differences to measure the
deferred tax asset or liability. An exception is made for certain temporary differences arising from
the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in
relation to these 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. Deferred tax liabilities are always provided for in full.
Deferred tax liabilities and assets are not recognised for temporary differences between the
carrying amount and tax bases of investments in controlled entities where the parent entity is able
to control the timing of the reversal of the temporary differences and it is probable that the
differences will not reverse in the foreseeable future.
Current and deferred tax balances attributable to amounts recognised directly in equity are also
recognised directly in equity.
31
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
1. Summary of Significant Accounting Policies (Continued)
(k) Income tax (Continued)
Tax consolidation legislation
Adslot Ltd and its wholly-owned Australian controlled entities have implemented the tax
consolidation legislation. The head entity, Adslot Ltd, and the controlled entities in the tax
consolidated group account for their own current and deferred tax amounts. These tax amounts are
measured as if each entity in the tax consolidated group continues to be a stand-alone taxpayer in
its own right.
To the extent that it is not probable that taxable profit will be available in the foreseeable future
against which the unused tax losses or unused tax credits can be utilised, the deferred tax assets
of its own and its controlled entities are not recognised by Adslot Ltd.
(l) Employee benefits
Wages and salaries, annual leave and sick leave
Short-term employee benefits are current liabilities included in employee benefits, measured at the
undiscounted amount that the Group expects to pay as a result of the unused entitlement. Annual
leave is included in ‘provisions’. The Group does not discount the leave liability calculations as the
Group expects all annual leave for all employees to be used wholly within 12 months of the end of
reporting period.
Long service leave
The liability for long service leave expected to be settled within 12 months of the reporting date is
recognised in provisions for employee entitlements and is measured at the amount expected to be
paid when the liabilities are settled. The liability for long service leave expected to be settled more
than 12 months from the reporting date, is recognised in the non-current provision for employee
benefits and is measured as the present value of the estimated future cash outflows to be made by
the Group in respect of services provided by employees up to reporting date.
Share-based compensation benefits
Equity-settled share-based payments with employees and others providing similar services are
measured at the fair value of the equity instrument at the grant date. The fair value at grant date is
determined using a binomial option pricing model that takes into account the exercise price, the
term of the option, the impact of dilution, the share price at grant date, the expected price volatility
of the underlying share, the expected dividend yield and the risk-free interest rate for the term of
the option.
The fair value determined at the grant date of the equity-settled share-based payments is
recognised as an expense, with a corresponding increase in equity (share-based payments
reserve) on a straight line basis over the vesting period.
Upon the exercise of options, the balance of the share-based payments reserve relating to those
options is transferred to share capital while the proceeds received, net of any directly attributable
transaction costs, are credited to share capital.
32
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
1. Summary of Significant Accounting Policies (Continued)
(m) Intangible Assets
Goodwill
Goodwill arising in a business combination is recognised as an asset at the date that control is
acquired (acquisition date). Goodwill is measured as the excess of the fair value of consideration
paid over the fair value of the identifiable net assets of the entity or operations acquired. Goodwill
acquired in business combinations is not amortised. Instead, goodwill is tested for impairment
annually, being allocated to the cash flows of the relevant cash generating unit and is carried at
cost less accumulated impairment losses. An impairment loss for goodwill is recognised
immediately in profit or loss and is not reversed in a subsequent period.
Research & development expenditure
Research costs are expensed as incurred. An intangible asset arising from development
expenditure on an internal project is recognised only when the Group can demonstrate the
technical feasibility of completing the intangible asset so that it will be available for use or sale, its
intention to complete and its ability to use or sell the asset, how the asset will generate future
economic benefits, the availability of resources to complete the development and the ability to
measure reliably the expenditure attributable to the intangible asset during its development.
Following the initial recognition of the development expenditure, the cost model is applied requiring
the assets to be carried at cost less any accumulated amortisation and accumulated impairment
losses. Any expenditure so capitalised is amortised over the period of expected benefits from the
related project.
The carrying value of an intangible asset arising from development costs is tested for impairment
annually when the asset is not yet available for use or more frequently when an indicator of
impairment arises during the reporting period.
Intellectual property
The intellectual property relates to the names, platform technology, branding and domains acquired
as a result of the acquisition of Adslot, Adimise, Full Circle Online, QDC IP Technology and
Facilitate Digital businesses. Where the useful life is assessed as indefinite, assets are not
amortised and the carrying value is tested for impairment annually or more frequently if events or
changes in circumstances indicate impairment. It is carried at cost less impairment losses. For
those assets assessed as having a finite life, they are amortised on a straight-line basis over the
estimated useful life of the asset. The expected accounting useful life of intellectual property
relating to the Adslot, Adimise, QDC IP Technology and Facilitate Digital business is 4 to 5 years.
Domain name
Acquired domain names are accounted for at cost, useful life is assessed as indefinite and the
assets are not amortised. The carrying value is tested for impairment annually or more frequently if
events or changes in circumstances indicate impairment. They are carried at cost less impairment
losses.
Software
Software represents internally developed software platforms capitalised according to accounting
standards. Software is assessed as having a finite life and is amortised on a straight-line basis over
the estimated useful life of the asset. The expected accounting useful life of software is 5 years.
The carrying value of the software is tested for impairment when an indicator of impairment arises
during the reporting period.
33
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
1. Summary of Significant Accounting Policies (Continued)
(n) Leased assets
Leases of assets under which the Group assumes substantially all the risks and benefits of
ownership are classified as finance leases. This is distinct from operating leases under which the
lessor effectively retains substantially all such risks and benefits. Property, plant and equipment
acquired by finance leases are capitalised at the present value of the minimum lease payments as
a finance lease asset and as a corresponding lease liability from date of inception of the lease.
Lease assets are amortised over the period the entity is expected to benefit from the use of the
assets or the term of the lease, whichever is shorter. Finance lease liabilities are reduced by the
component of principal repaid. Lease payments are allocated between the principal component of
the liability and interest expense.
Operating lease payments are charged to statement of profit or loss and other comprehensive
income on a straight-line basis over the period of the lease term. Associated costs such as
maintenance and insurance are expensed as incurred.
(o) Goods and services tax
Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST),
except:
i. Where the amount of GST incurred is not recoverable from the taxation authority, it is
recognised as part of the cost of acquisition of an asset or as part of an item of expense; or
ii. For receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of
receivables or payables.
34
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
1. Summary of Significant Accounting Policies (Continued)
(p) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts
disclosed as revenue are net of returns, allowances, duties and taxes paid.
Revenue is recognised for the major business activities as follows:
Rendering of services
Service revenue is recognised on an accruals basis as and when the service has been passed
onto the customer.
Website development revenue is recorded based on project delivery. All projects are assigned
percentages of project completion (based on actual work in progress) and all website development
revenue applicable to percentage of incomplete work is recorded as unearned revenue.
Website hosting, SSL certificate and domain name registration revenue is recorded over a one
year duration. While 30% of search engine optimisation renewal revenue is recorded as earned in
first month of renewal contract, the remaining 70% revenue is recognised over a one year duration.
Prepaid revenue calculated in this regard is excluded from revenue and is being treated as
unearned revenue in the Consolidated Statement of Financial Position.
Adslot Publisher revenue is accounted for in accordance with AASB 118 Revenue such that only
the portion of the media campaign that is retained by Adslot for their services is recorded as
revenue. Where underlying campaigns selected by advertisers are served over a period a time,
the portion that extends beyond the reporting period is not taken up as revenue. Where the funds
for these campaigns are prepaid by advertisers those amounts are treated as unearned revenue in
the Consolidated Statement of Financial Position.
Funds collected from advertisers and due to publisher clients are separated from company funds
and are disclosed in the accounts as “Cash held on behalf of Publishers” and “Publisher Creditors”.
Interest revenue
Interest revenue is recognised when it is probable that the economic benefits will flow to the Group
and the amount can be measured reliably, taking into account the effective yield on the financial
asset.
Government grants
Government grants are recognised at fair value where there is reasonable assurance that the grant
will be received and all grant conditions will be met. Grants relating to expense items are
recognised as income over the periods necessary to match the grant to the costs they are
compensating. Grants relating to assets are credited to deferred income and are amortised on a
straight line basis over the expected lives of the assets.
Sale of non-current assets
The net gain from the sale of non-current asset sales is recognised as income at the date control of
the asset passes to the buyer, usually when the signed contract of sale becomes unconditional.
(q) Leasehold improvements
The cost of improvements to leasehold properties is amortised over the unexpired period of the
lease or the estimated useful life of the improvement to the Group, whichever is the shorter.
35
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
1. Summary of Significant Accounting Policies (Continued)
(r) Earnings per share
Basic earnings per share
Basic earnings per share for continuing operations and total operations attributable to members of
the Company are determined by dividing net profit after income tax from continuing operations and
the net profit attributable to members of the Company respectively, excluding any costs of servicing
equity other than ordinary shares, by the weighted average number of ordinary shares outstanding
during the financial period. The number of shares used in the calculation at any time during the
period is based on the physical number of shares issued.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per
share to take into account the after income tax effect of interest and other financing costs
associated with dilutive potential ordinary shares and the weighted average number of shares
assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
(s) Dividends
Provision is made for the amount of any dividend determined or recommended by the directors on
or before the end of the financial year but not distributed at reporting date.
(t) Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and
are tested annually for impairment or more frequently if events or changes in circumstances
indicate that they might be impaired. Other assets are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell
and value in use. For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash inflows which are largely independent of the
cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets
other than goodwill that suffered impairment are reviewed for possible reversal of the impairment
at each reporting date.
(u) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the
chief operating decision maker. The chief operating decision maker has been identified as the
Chief Executive Officer.
Each of the operating segments is managed separately as each of these service lines requires
different technologies, service different clients and sells different products. All inter-segment
transactions are carried out at arm’s length prices.
The Group reports its segments based on geographical locations:
APAC – Australia, New Zealand and Asia;
EMEA – Europe, the Middle East and Africa; and
The Americas – North, Central and South America.
36
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
1.
Summary of Significant Accounting Policies (Continued)
(v) Critical accounting judgements and key sources of estimation uncertainty
Critical judgements in applying the entity’s accounting policies
The following are the critical judgements (apart from those involving estimations, which are dealt
with below), that management has made in the process of applying the Group’s accounting
policies and that have the most significant effect on the amounts recognised in the financial
statements:
Revenue recognition
In web development and web hosting business operations, management assesses stage of
completion of each project and recognises revenue in the period in which development work is
undertaken. In making its judgement, management considered the standard duration of such
contracts, stage of progress in contracts and commencement date of such contracts. Accordingly,
management has deferred recognising some web development and web hosting revenue of an
estimated value of services to be rendered in the future.
Key sources of estimation uncertainty
The following are the key assumptions concerning the future and other key estimation uncertainty
at the reporting date, that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year.
Impairment of goodwill and intangible assets
Determining whether goodwill and intangible assets are impaired requires an estimation of the
value in use of the cash-generating units to which goodwill and intangible assets have been
allocated. The value in use calculation requires the entity to estimate the future cash flows
expected to arise from the cash-generating unit and a suitable discount rate in order to calculate
the present value. The future cash flows included in the assessments are predicated largely on:
the adoption of the integrated Adslot-Symphony Platform;
the continued adoption of the Adslot Marketplace product; and
the growth of Symphony.
In the event that these products do not generate revenues as planned an impairment of the related
intangible assets may result.
The carrying amount of goodwill and intangible assets at the reporting date was $30,289,099
(2014: $33,941,462) and there were no impairment losses (2014: nil) recognised during the current
financial year. Refer to Note 10 for further details.
Capitalisation of internally developed software
Distinguishing the research and development phases of software projects and determining
whether the recognition requirements for the capitalisation of development costs are met, requires
judgement. After capitalisation, management monitors whether the recognition requirements
continue to be met and whether there are any indicators that capitalised costs may be impaired.
Share based payments
The calculation of the fair value of options issued requires significant estimates to be made in
regards to several variables such as volatility and the probability of options reaching their vesting
period. The estimations made are subject to variability that may alter the overall fair value
determined. The share based payment expense for the year was $702,806 (2014: $560,307).
37
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
1.
Summary of Significant Accounting Policies (Continued)
(v) Critical accounting judgements and key sources of estimation uncertainty (Continued)
Unrecognised deferred tax assets
As disclosed in Note 5, the Group recognises deferred tax assets relating to temporary differences,
capital losses or operating losses when it is probable that they will be able to be utilised in future
reporting periods. Due to the continuing operating losses, the Directors have determined it not
appropriate to recognise deferred tax assets until a point in time where it is probable that future
taxable income is going to be available to utilise the assets. The tax benefit of deferred tax assets
not recognised is $8,635,840 (2014: $7,228,777).
Research and development tax concessions
A receivable of $2,184,913 (2014: $2,041,942) has been recognised in relation to a research and
development tax concession for the 2015 financial year. The actual claim is yet to be submitted
with the Australian Tax Office and therefore there remains some uncertainty in regards to the
quantum of the concession to be received. The financial statements reflect the Directors’ estimate
of the receivable after taking into account the likelihood of each component of the claim being
received.
(w) New standards and interpretations issued but not effective
The following new or amendments to existing standards have been published and are mandatory
for accounting periods beginning on or after 1 July 2015 or later periods, but have not been
adopted. The Group is yet to undertake a detailed assessment of the impact of these standards.
However, based on the Group’s preliminary assessment, the Standards are not expected to have a
material impact on the transactions till the year ending 30 June 2018.
AASBs
Summary
AASB 9 Financial Instruments and
related AASB 2014-1 and AASB 2014-7
Amendments to Australian Accounting
Standards – Financial Instruments
AASB 9 includes requirements for the
classification and measurement of
financial assets.
AASB 15 Revenue from Contracts with
Customers and related AASB 2014-5
Amendments to Australian Accounting
Standards arising from AASB 15
AASB 15 establishes a new revenue
recognition model and changes the
bases for deciding whether revenue is
to be recognised over time or at a
point in time.
AASB 2015-2 Amendments to
Australian Accounting Standards –
Disclosure Initiative: Amendments to
AASB 101
These amendments clarify the
materiality requirements, where
entities should not be disclosing
immaterial information in a manner
that obscures useful information.
Application
date for Group
1 July 2018
1 July 2018
1 July 2016
AASB 2015-3 Amendments to
Australian Accounting Standards from
the Withdrawal of AASB 1031
Materiality
The Standard completes the AASB’s
project to remove Australian guidance
on materiality from Australian
Accounting Standards.
1 July 2015
38
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
2.
Segment Information
2015
Operating segments
APAC
EMEA The Americas
Total
External sales (i)
Segment result from continuing operations
Depreciation included in segment result (Note 9)
Amortisation included in segment result (Note 10)
Additions to non-current assets (PP&E) (Note 9)
Impairment of intangibles
5,533,327
(5,303,162)
71,494
5,653,652
47,810
-
246,101
(694,383)
3,237
-
1,754
-
497,309
(835,464)
3,396
-
2,575
-
6,276,737
(6,833,009)
78,127
5,653,652
52,139
-
Statement of Financial Position
Segment assets
Segment liabilities
2014
Operating segments
41,329,869
(15,603,752)
161,477
(182,714)
138,660
(191,365)
41,630,006
(15,977,831)
APAC
EMEA The Americas
Total
External sales (i)
Segment result from continuing operations
Depreciation included in segment result (Note 9)
Amortisation included in segment result (Note 10)
Additions to non-current assets (PP&E) (Note 9)
Impairment of intangibles
4,551,808
(7,708,784)
66,256
4,950,368
10,758
-
155,785
(711,268)
5,600
-
1,281
-
136,625
(1,225,821)
2,797
-
2,949
-
4,844,218
(9,645,873)
74,653
4,950,368
14,988
-
Statement of Financial Position
Segment assets
Segment liabilities
43,803,054
(14,937,538)
203,673
(234,137)
185,753
(157,338)
44,192,480
(15,329,013)
Segment revenue reconciles to total revenue from continuing operations as follows:
Revenue
Total segment revenue
Head office revenue
Interest revenue
Intersegment eliminations
Total revenue from continuing operations
(i) Refer to Note 3 for a description of product lines from external customers.
2015
$
2014
$
6,276,737
4,844,218
23,755
195,104
(284)
-
239,387
(17,425)
6,495,312
5,066,180
39
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
2.
Segment Information (Continued)
A reconciliation from segment result to operating profit before income tax is provided as follows:
Segment Result
Total segment result
Interest revenue
Other revenue
Share option expenses
Gain / (Loss) on foreign exchange
Income tax benefit/(expense)
Profit on sale of fixed assets
Loss on write off of asset
Other head office income/(expenses) not allocated in segment result
2015
$
2014
$
(6,833,009)
(9,645,873)
195,104
680,182
(702,806)
60,352
(21,159)
-
-
(2,584,185)
239,387
627,482
(560,307)
(42,090)
29,935
32
(106,329)
(637,799)
Loss before income tax from continuing operations
(9,205,521)
(10,095,562)
Reportable segment assets are reconciled to total assets as follows:
Segment assets
Total segment assets
Head office assets
Intersegment eliminations
2015
$
41,630,006
49,019,570
(51,374,876)
2014
$
44,192,480
48,310,079
(51,485,090)
Total assets as per the statement of financial position
39,274,700
41,017,469
Reportable segment liabilities are reconciled to total liabilities as follows:
Segment liabilities
Total segment liabilities
Head office liabilities
Intersegment eliminations
2015
$
(15,977,831)
(718,948)
12,370,526
2014
$
(15,329,013)
(865,766)
12,370,526
Total liabilities as per the statement of financial position
(4,326,253)
(3,824,253)
40
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
2.
Segment Information (Continued)
The Group’s revenues (which includes revenue from external customers, grant income and interest income)
and its non-current assets (other than financial instruments) are divided into the following geographical
areas:
Australia (Domicile)
New Zealand
USA
Other countries
Total
2015
$
2014
$
Revenue
Non-Current Assets
Revenue
Non-Current Assets
5,114,063
693,217
497,309
870,905
7,175,494
30,349,986
1,018
2,723
49,345
30,403,072
4,850,986
398,713
136,625
307,338
5,693,662
34,069,371
510
3,376
7,960
34,081,217
Revenues from external customers in the Group’s domicile, Australia, as well as its major markets, New
Zealand and the USA, have been identified on the basis of the customer’s geographical location. Non-
current assets are allocated based on their physical location.
Notes to and forming part of the segment information
Business segments
The Group reports its segments based on geographical locations:
APAC – Australia, New Zealand and Asia;
EMEA – Europe, the Middle East and Africa; and
The Americas – North, Central and South America.
Accounting policies
The accounting policies of the reportable segments are the same as the Group’s accounting policies
described in Note 1.
Segment revenues, expenses, assets and liabilities are those that are directly attributable to a segment and
the relevant portion that can be allocated to the segment on a reasonable basis. Segment profit represents
the profit earned by each segment without investment revenue, finance costs and income tax expense. This
is the measure reported to the chief operating decision maker for the purposes of resource allocation and
assessment of segment performance.
Segment assets include all assets used by a segment and consist primarily of operating cash, receivables,
capitalised R&D and other intangible assets, net of related provisions but do not include non-current inter-
entity assets and liabilities which are considered quasi-equity in substance.
Segment liabilities consist primarily of trade and other creditors, employee benefits and sundry provisions
and accruals. Segment assets and liabilities do not include income taxes.
Inter-segment transfers
Segment revenue reported above represents revenue generated from external customers. Inter segment
revenue transfers of $284 (2014: $17,425), and corresponding expenses have been eliminated on
consolidation.
Major customers
The Group provides services to and derives revenue from a number of customers across all the divisions.
During the year, the Group did not derive revenue that was greater than 10% of consolidated revenue from
continuing operations from one customer.
41
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
3.
Revenue and Other Income
Revenue
Revenue from Trading Technology
Revenue from Services
Revenue from Adserving
Total revenue for services rendered
Interest income
Total revenue
Other income
Grant income
Total revenue and other income
2015
$
2014
$
2,652,086
2,396,948
1,251,174
6,300,208
195,104
6,495,312
1,568,673
2,449,584
808,536
4,826,793
239,387
5,066,180
680,182
680,182
627,482
627,482
7,175,494
5,693,662
Revenue derived from the three product lines are described as follows:
Trading Technology
Comprises Adslot, a leading global media trading technology, and Symphony, market-leading workflow
automation technology, purpose built for digital media agencies.
Services
Comprising marketing services that are provided by the company’s Webfirm division to SME clients and
project-based customisation of Trading Technology.
Adserving
Technology that enables advertisers to deliver and measure the performance of online display advertising
(including impressions, clicks and online sales).
42
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
4.
Expenses
Loss before income tax includes the following
specific expenses:
Depreciation and amortisation
Amortisation – Leasehold improvements
Amortisation – Software development costs
Depreciation – Plant & equipment
Total depreciation and amortisation
Finance costs
2015
$
2014
$
28,340
5,653,652
49,787
5,731,779
14,175
4,950,368
60,478
5,025,021
Interest paid/payable to unrelated entities
76
3,451
Other charges against assets
Impairment / (recovery) of trade receivables
(37,440)
3,145
Rental expense – operating leases
Defined contribution superannuation expense
Loss on write off of available for sale asset
(Profit) / Loss on sale of PP&E & internally
developed software
Foreign currency (gain) / loss
820,431
601,939
-
-
595,430
420,676
106,329
(32)
(60,352)
42,090
43
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
5.
Income Tax Expense
a) Numerical reconciliation of income tax expense to prima facie tax
benefit
Loss before income tax
2015
$
2014
$
(9,184,362)
(10,125,497)
Prima facie tax benefit on loss before income tax at 30% (2014: 30%)
(2,755,309)
(3,037,649)
Tax effect of:
Other non-allowable items
Share options expensed during year
Research & development tax concession
7,475
210,842
1,443,457
6,854
168,092
995,706
Income tax benefit attributable to entity
(1,093,535)
(1,866,997)
Deferred tax income relating to utilisation of unused tax losses
Deferred tax assets relating to tax losses not recognised
Other – adjustments and net foreign exchange differences
Income tax (benefit)/expense attributable to entity
-
1,407,063
(292,369)
21,159
(39,677)
1,876,739
-
(29,935)
b) Movement in deferred tax balances
Balance at
1 July 2014
$
Recognised
in Profit &
Loss
$
Acquired in
Business
combination
$
Trade and other receivables
(125,957)
Property, plant and equipment
Intangible assets
Unused tax losses
Net tax (assets) / liabilities
199
165,435
(39,677)
-
-
-
-
-
-
-
-
-
-
-
Recognised
in Profit &
Loss
$
Acquired in
Business
combination
$
Trade and other receivables
Property, plant and equipment
Intangible assets
Unused tax losses
Net tax (assets) / liabilities
Balance at
1 July 2013
$
-
-
-
-
-
-
-
-
(39,677)
(39,677)
Balance at 30 June 2015
Net Deferred tax
assets
Deferred tax
liabilities
$
(125,957)
199
165,435
(39,677)
$
-
-
-
(39,677)
$
(125,957)
199
165,435
-
-
(39,677)
39,677
Balance at 30 June 2014
Net Deferred tax
assets
Deferred tax
liabilities
$
(125,957)
(125,957)
199
199
165,435
165,435
$
-
-
-
$
(125,957)
199
165,435
-
-
(39,677)
(39,677)
39,677
-
(39,677)
39,677
44
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
5.
Income Tax Expense (Continued)
c) Deferred tax assets not brought to account
Deferred tax assets not brought to account, the benefits of which will only be realised if the conditions for
deductibility set out on Note 1(k) occur.
Temporary differences
Tax Losses:
Operating losses
Capital losses
Potential tax benefit (30%)
2015
$
2014
$
(5,119,749)
(3,217,981)
33,667,624
27,182,025
238,258
131,879
28,786,133
24,095,923
8,635,840
7,228,777
The Company and its wholly-owned Australian resident entities have formed a tax-consolidated group
and are therefore taxed as a single entity. The head entity within the tax-consolidated group is Adslot Ltd.
6.
Dividends
The Company did not declare any dividends in the current year or prior year. There are no franking
credits available to shareholders of the Company.
7.
Cash and Cash Equivalents
Cash at bank and on hand
Publisher account
2015
$
3,416,910
1,024,316
4,441,226
2014
$
3,140,845
213,206
3,354,051
45
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
8.
Trade and Other Receivables
Current:
Trade debtors
Less: Allowance for impairment
Other receivables
Prepayments
2015
$
2,261,222
(241,074)
2,020,148
2,227,608
182,646
4,430,402
The average age of the Company’s trade receivables is 57 days (2014: 61 days).
(a) Ageing of past due but not impaired
0 – 30 days
31 – 60 days
61 – 90 days
Over 91 days
(b) Movement in the provision for impairment
Balance at beginning of the year
Impairment recognised during the year
Impairment recognised during the year from
receivables acquired through business combinations
Amounts written off as uncollectible
Amounts recovered during the year
Net foreign exchange differences
Balance at the end of the year
2014
$
1,725,119
(413,987)
1,311,132
2,060,296
210,773
3,582,201
2014
$
85,161
43,775
63,117
65,450
257,503
2014
$
20,480
15,108
2015
$
107,949
382,112
86,493
107,330
663,884
2015
$
413,987
20,294
-
408,309
(118,408)
(116,161)
41,362
(22,122)
(7,788)
-
241,074
413,987
In determining the recoverability of a trade receivable, the Company considers any recent history of
payments and the status of the projects to which the debt relates. No payment terms have been
renegotiated. The concentration of credit risk is limited due to the customer base being large and
unrelated. Accordingly, the Directors believe that there is no further provision required in excess of the
allowance for impairment.
Fair value of receivables
Fair value of receivables at year end is measured to be the same as receivables net of the allowance for
impairment.
46
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
9.
Non-Current Assets – Property, Plant and Equipment
Leasehold improvements – at cost
Less: Accumulated amortisation
Plant and equipment – at cost
Less: Accumulated depreciation
Computer equipment – at cost
Less: Accumulated depreciation
Total carrying amount of property, plant and equipment
2015
$
104,280
(87,020)
17,260
148,841
(129,223)
19,618
326,045
(288,627)
37,418
74,296
2014
$
91,320
(58,680)
32,640
182,107
(143,615)
38,492
432,398
(403,452)
28,946
100,078
Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning
and end of the current financial year are set out below:
2015
Carrying amount at 1 July 2014
Additions
Leasehold
Plant and
Computer
Improvements
Equipment
Equipment
$
32,640
12,960
$
38,492
1,735
$
28,946
37,444
Depreciation / amortisation expense
(28,340)
(20,609)
(29,178)
Net foreign exchange differences
-
-
206
Carrying amount at 30 June 2015
17,260
19,618
37,418
2014
Carrying amount at 1 July 2013
Additions
Additions through business combinations
Disposals / write offs
Leasehold
Plant and
Computer
Improvements
Equipment
Equipment
$
$
21,514
58,946
-
25,301
-
-
-
-
$
49,619
14,988
12,002
(8,578)
Total
$
100,078
52,139
(78,127)
206
74,296
Total
$
130,079
14,988
37,303
(8,578)
Depreciation / amortisation expense
(14,175)
(20,454)
(40,024)
(74,653)
Net foreign exchange differences
-
-
939
939
Carrying amount at 30 June 2014
32,640
38,492
28,946
100,078
47
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
10.
Non-Current Assets – Intangible Assets
Year ended 30 June 2015
Opening net book amount
Acquisitions
Acquisitions through business
combinations
Amortisation
Impairment of assets
Internally
Developed
Software
$
1,516,737
2,001,289
-
(527,083)
-
Domain
Name
$
Intellectual
Property
$
Goodwill
$
Total
$
38,267
17,224,519
15,161,939
33,941,462
-
-
-
-
-
-
(5,126,569)
-
-
-
-
-
2,001,289
-
(5,653,652)
-
Carrying amount at 30 June 2015
2,990,943
38,267
12,097,950
15,161,939
30,289,099
At 30 June 2015
Cost
Accumulated amortisation and
impairment
Carrying amount at 30 June 2015
4,103,169
(1,112,226)
38,267
29,316,305
20,543,592
54,001,333
-
(17,218,355)
(5,381,653)
(23,712,234)
2,990,943
38,267
12,097,950
15,161,939
30,289,099
Year ended 30 June 2014
Opening net book amount
Acquisitions
Acquisitions through business
combinations
Amortisation
Impairment of assets
Internally
developed
Software
$
548,834
1,311,519
-
(343,616)
-
Domain
Name
$
Intellectual
Property
$
Goodwill
$
Total
$
38,267
5,184,544
-
-
-
5,771,645
1,311,519
16,646,727
15,161,939
31,808,666
(4,606,752)
-
-
-
(4,950,368)
-
-
-
-
-
Carrying amount at 30 June 2014
1,516,737
38,267
17,224,519
15,161,939
33,941,462
At 30 June 2014
Cost
Accumulated amortisation and
impairment
Carrying amount at 30 June 2014
2,101,880
38,267
29,316,305
20,543,591
52,000,043
(585,143)
-
(12,091,786)
(5,381,652)
(18,058,581)
1,516,737
38,267
17,224,519
15,161,939
33,941,462
48
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
10. Non-Current Assets – Intangible Assets (Continued)
Internally Developed Software
Internally developed software represents a number of software platforms developed within the Adslot and
Webfirm divisions.
During the year a net $949,624 (2014: $844,201) of innovation research & development wage costs
arising from the development of the Adslot Publisher platform was capitalised. Associated R&D Grant
claims of $776,965 (2014: $690,710) arising from the capitalised costs offset the gross amount of
expenditure. Research and development costs of $417,778 (2014: $860,850) were recognised in profit or
loss.
During the year a net $819,248 (2014: $467,318) of innovation research & development wage costs
arising from the development of the Symphony platform was capitalised. Associated R&D Grant claims of
$670,294 (2014: $457,656) arising from the capitalised costs offset the gross amount of expenditure.
Research and development costs of $658,959 (2014: $403,185) were recognised in profit or loss.
During the year a net $232,418 (2014: nil) of innovation and research & development wage costs arising
from the development of the integrated Adslot-Symphony Platform was capitalised. Associated R&D
Grant claims of $190,160 (2014: nil) arising from the capitalised costs offset the gross amount of
expenditure. Research and development costs of $139,917 (2014: nil) were recognised in profit or loss.
The Directors have assessed the accounting useful life of these internally developed software systems,
for accounting purposes, to be five years. This assessment has given regard to the expected financial
benefits of the technology.
Domain names
Domain names opening carrying value of $38,267 (2014: $38,267) relates to the various domain names
held by Webfirm and Adslot. The Directors have assessed that this intellectual property has an indefinite
useful life on the basis that the Directors do not believe that there is a foreseeable limit on the period over
which this asset is expected to generate cash inflows for the entity.
Intellectual property
Adslot Technologies Pty Ltd (“Adslot”) holds valuable copyright and patent licences (“Licences”) in
respect of Combinatorial Auction Platform Technology (“CAP” or “Core IP”) owned by Enterprise Point Pty
Ltd and its controlled entities (“Enterprise”). $5,932,006 (2014: $5,932,006) of the opening balance
relates to this “CAP” technology. Accumulated amortisation of this asset as at 30 June 2015 was
$5,932,006 (2014: $5,190,504). This asset was fully amortised during the year.
Adimise Pty Ltd (“Adimise”) holding online ad-serving technology had $271,055 (2014: $271,055) of Ad-
serving IP in the opening balance and attached to the Adslot CGU. Accumulated amortisation of this
asset as at 30 June 2015 was $271,055 (2014: $216,845). This asset was fully amortised during the year.
QDC IP Technology (“QDC”) holding creative ad building and video advertising technology had licences
to the Core IP valued at $6,466,517 (2014: $6,466,517) in the opening balance and attached to the Adslot
CGU. Accumulated amortisation of this asset as at 30 June 2015 was $5,904,904 (2014: $4,611,601).
This asset has a remaining useful life for accounting purposes of six months.
The Symphony platform technology was acquired as part of the Facilitate Digital Holdings Limited
acquisition. The fair value attributable to the Symphony technology platform intellectual property was
$16,191,496 (2014: $16,191,496). Accumulated amortisation of this asset at 30 June 2015 was
$4,936,872 (2014: $2,013,126). This asset has a remaining useful life for accounting purposes of three
and a half years.
49
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
10. Non-Current Assets – Intangible Assets (Continued)
Intellectual property (Continued)
The Facilitate for Agencies (“FFA”) platform technology was acquired as part of the Facilitate Digital
Holdings Limited acquisition. The fair value attributable to the FFA technology platform intellectual
property was $455,231 (2014: $455,231). Accumulated amortisation of this asset at 30 June 2015 was
$173,518 (2014: $59,710). This asset has a remaining useful life for accounting purposes of two and a
half years.
With the exception of FFA, the Directors have assessed the accounting useful life of all of the above
technologies for accounting purposes to be five years. This assessment has given regard to the
expected financial benefits of the technologies to be potentially well beyond a five year period, together
with the risk that competitors could replicate these technologies and in light of the Company’s ongoing
commitment to research and development of the Core IP. FFA has an accounting useful life of four years.
Goodwill
The Goodwill balance relating to the acquisition of Facilitate has an attributed fair value of $15,161,939
and has not been impaired.
(a) Cash Generating Units (CGUs)
The goodwill has been allocated to the Adslot-Symphony Integration CGU as this is the area of operation
in which opportunities for deriving revenue synergies from the acquisition exist. A summary of the
carrying amount of goodwill and intangible assets with indefinite useful lives is detailed below:
CGU
2015
2014
Intangible assets
with indefinite
useful lives
$
Goodwill
$
Intangible assets
with indefinite
useful lives
$
Goodwill
$
Adslot-Symphony Integration
15,161,939
-
15,161,939
-
50
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
10.
Non-Current Assets – Intangible Assets (Continued)
Intellectual property (Continued)
(b)
Impairment testing and key assumptions
The Group tests whether goodwill and other intangible assets have suffered any impairment in
accordance with the Group’s accounting policies. The recoverable amounts of assets and CGUs have
been determined using a value-in-use approach based on discounted cash flows projections.
The most significant judgement relates to the forecast cash flows within the impairment model, in
particular the forecast revenue growth. As the Adslot-Symphony Integration is a relatively new innovation
for the Group, the lack of historical revenues across this platform has required the Group to make
significant estimations of the revenue growth that can be expected across the forecast period.
The cash flow projections have been derived from management forecasts based on the 2016 budget as
approved by the Board of Directors, with assumptions relating to growth in revenues and expenses being
made across the remaining forecast period. The revenue growth rates observed for the first two years
are significantly higher than the remainder of the model reflecting the initial adoption of the integrated
Adslot-Symphony Platform post launch.
In determining the budget for 2016, assumptions were made in relation to the following key areas:
The proportion of the market share captured by the Integration platform from existing customers;
Expected growth from new customers;
Average service fees received from each customer; and
The costs that will be incurred to support the growth of the revenue.
Other key assumptions
Adslot-Symphony Integration
Discounted cash flow
7
14
Valuation method
Years of
projected
cash flows
Post-tax
discount rate
%
A forecast period of greater than 5 years has been adopted without the use of a terminal value. This
is considered appropriate given the expected timeframe upon which the current version of the
integrated product will be able to generate revenues. Revenue growth forecast in the final two
periods of the model are lower than the average growth forecast within the model.
(c) Sensitivity analysis
Future net cash flows of CGUs are based on the key assumptions noted above, which are subject to
some uncertainty. Any reasonable change in the key assumptions would not result in the carrying
amounts exceeding their recoverable amounts.
51
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
11.
Trade and Other Payables
Trade creditors
Publisher creditors (i)
Other creditors
(i) Refer to Note 1(p) for further information on publisher creditors.
12.
Other Liabilities
Current:
Unearned revenue (i)
2015
$
2014
$
214,195
1,024,316
1,614,499
311,703
213,206
1,897,179
2,853,010
2,422,088
2015
$
2014
$
683,148
683,148
667,707
667,707
(i) Unearned revenue relates to website development and hosting invoices that are rendered based on full contract
terms at the contracts’ inception, however performed over stages which straddle the reporting date, and
advertising campaigns that have been purchased but whose delivery will occur after the reporting date.
13.
Provisions
Current:
Employee benefits
Non-current:
Employee benefits
2015
$
2014
$
507,747
462,287
242,671
232,494
52
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
14.
Contributed equity
2015
Number
2014
Number
2015
$
2014
$
Ordinary Shares – Fully Paid
1,041,695,054
969,952,370
115,100,833
108,515,858
Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion
to the numbers of shares.
At the shareholders meeting each ordinary share is entitled to one vote when a poll is called, otherwise
each shareholder has one vote on a show of hands.
Movements in Paid-Up Capital
Date
Details
30-Jun-13
Balance (including Treasury shares)
24-09-2013
Issue of shares – employee ESOP
23-12-2013 Scheme consideration – Facilitate Digital acquisition
23-12-2013
Issue of shares – employee ESOP
16-06-2014
Issue of shares – employee ESOP
30-Jun-14
Less: Treasury shares
30-Jun14
Balance
01-Jul-14
Balance
10-07-2014 Share Placement
25-09-2014 Exercise of Options
01-05-2015
Issue of shares – employee ESOP
30-Jun-15
Less: Treasury shares
30-Jun15
Balance
Number of
shares
Number
703,741,287
3,828,691
273,730,778
6,250,000
1,000,000
988,550,756
(18,598,386)
969,952,370
Issue
price
$
0.059
0.115
0.115
0.105
Capital
raising
costs
$
Value
$
(933,903)
77,461,855
-
-
-
-
225,893
31,479,039
718,750
105,000
(933,903)
109,990,537
-
(1,474,679)
(933,903)
108,515,858
988,550,756
(933,903)
109,990,537
65,000,000
$0.10
(316,665)
6,183,335
200,000
3,000,000
$0.116
$0.09
(1,654)
21,546
270,000
1,056,750,756
(15,055,702)
1,041,695,054
(1,252,222)
116,465,418
(1,364,585)
(1,252,222)
115,100,833
53
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
14.
Contributed equity (Continued)
Treasury Shares
Treasury shares are shares in Adslot Ltd that are held by the Adslot Employee Share Trust, which
administers the Adslot Employee Share Ownership Plan (ESOP). This Trust has been consolidated in
accordance with Note 1(c). Shares held by the Trust on behalf of eligible employees are shown as
treasury shares in the financial statements. Shares issued under this scheme will, subject to the
provision of the Trust deed, rank equally in all respects and will have the same rights and entitlements as
ordinary shares under the Constitution of the Company.
Treasury Shares movements during the financial year are summarised below:
Issue or
Acquisition
Date
Issue Type
Employee ESOP
14/09/12
Employee ESOP
10/10/12
Employee ESOP
24/09/14
Employee ESOP
23/12/14
Employee ESOP
16/06/14
Employee ESOP
1/05/15
Issue
Price
$
0.046
0.059
0.059
0.115
0.105
0.090
Balance at
beginning of the
year
(Number)
Issued during
the year
(Number)
Transfers
during the
year
(Number)
Balance at
end of the
year
(Number)
6,019,695
1,500,000
3,828,691
6,250,000
1,000,000
-
-
-
-
-
-
3,000,000
(5,042,684)
977,011
(1,500,000)
-
-
-
-
-
3,828,691
6,250,000
1,000,000
3,000,000
18,598,386
3,000,000
(6,542,684)
15,055,702
Options movements during the financial year are summarised below:
Issue Type
Expiry Date
Exercise
Price
$
Balance at
beginning of the
year
(Number)
Issued
during the
year
(Number)
Expired
during the
year
(Number)
Exercised
during the
year
(Number)
Balance at
end of the
year
(Number)
Ordinary options
Ordinary options
Ordinary options
08/07/14
30/09/14
30/09/14
0.151
0.116
0.190
2,000,000
2,000,000
300,000
4,300,000
-
-
-
-
(2,000,000)
-
(1,800,000)
(200,000)
(300,000)
-
(4,100,000)
(200,000)
-
-
-
-
54
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
14.
Contributed equity (Continued)
Rights over shares movements during the financial year are summarised below:
Issue Type
Rights over shares
Rights over shares
Rights over shares
Rights over shares
Required
VWAP
Price $
Balance at
beginning
of the year
(Number)
Granted
during the
year
(Number)
Expired
during the
year
(Number)
Vested
during the
year
(Number)
Balance at
the end of
the year
(Number)
0.200
0.300
0.400
0.500
3,000,000
4,000,000
5,000,000
5,000,000
17,000,000
-
-
-
-
-
-
-
-
-
-
- 3,000,000
- 4,000,000
- 5,000,000
- 5,000,000
- 17,000,000
Performance rights movements during the financial year are summarised below:
Issue or
Acquisition
Date
Issue
Price
$
Balance at
beginning of the
year
(Number)
Issued during
the year
(Number)
Transfers
during the
year
(Number)
Balance at
end of the
year
(Number)
Issue Type
Performance
Rights
26/11/14
Nil
-
-
10,750,000
10,750,000
-
-
10,750,000
10,750,000
55
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
15.
Reserves
Reserves
Share–based payments reserve
Available for sale investment reserve
Foreign currency translation reserve
Share–based payments reserve
Opening balance
Reclassification of lapsed options
Reclassification vested ESOP
Share based payment expense
Closing balance
Available for sale investment reserve
Opening balance
Decrease in available for sale investment reserve
Closing balance
Foreign currency translation reserve
Opening balance
Movement on currency translation
Closing balance
2015
$
2014
$
1,069,631
1,177,083
-
118,357
-
65,292
1,187,988
1,242,375
1,177,083
902,927
(430,164)
(380,094)
702,806
(120,480)
(165,671)
560,307
1,069,631
1,177,083
-
-
-
106,335
(106,335)
-
65,292
53,065
118,357
29,777
35,515
65,292
The Share-based payments reserve is used to record the value of options accounted for in accordance
with AASB2: Share Based Payments.
The available-for sale investment reserve is used to record net gain/loss arising on revaluation of
available-for sale financial assets in accordance with AASB 139: Financial Instruments: Recognition and
Measurement.
The foreign currency translation reserve is used to record the value of aggregate movements in the
translation of foreign currency in accordance with AASB 121: The Effects of Changes in Foreign
Exchange Rates.
56
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
16.
Earnings Per Share
(a) Basic earnings per share
Loss attributable to the ordinary equity holders of the Company
(b) Diluted earnings per share
2015
Cents
2014
Cents
(0.89)
(1.20)
Loss attributable to the ordinary equity holders of the Company
(0.89)
(1.20)
(c) Reconciliation of earnings used on calculating earnings per share (i)
Loss from continuing operations attributable to the members of the Company used on
calculating basic and diluted earnings per share
(9,205,521)
(10,095,562)
2015
$
2014
$
(d) Weighted average number of shares used as the denominator
Weighted average number of shares on issue used in the calculation of basic EPS
1,038,969,447
844,352,084
2015
Number
2014
Number
(e) Weighted average number of shares used as the denominator
Weighted average number of shares on issue used in the calculation of diluted EPS
1,038,969,447
844,352,084
(i) During 2015 and 2014 there were no discontinued operations or values attributable to minority interests.
2015
Number
2014
Number
Weighted average number of options that could potentially dilute basic earnings per
share in the future, but are not included in the calculation of diluted EPS because they
are anti-dilutive for the period presented.
2015
Number
2014
Number
29,320,440
32,490,393
57
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
17.
Discontinued Operations
There were no discontinued operations during the year ended 30 June 2015.
18.
Business Combinations
There were no business combinations during the year ended 30 June 2015.
19.
Contingencies
No contingent assets or liabilities are noted.
20.
Commitments
Operating lease commitments
Total operating lease expenditure contracted for at reporting date but not
capitalised in the financial statements payable:
Within 1 year
Between 1 and 5 years
2015
$
2014
$
608,550
299,561
908,111
640,432
788,260
1,428,692
The lease commitments detailed above relate to rental premises and lease rental of printer/copier.
Capital commitments
The Group and the Company have not entered any capital expenditure contracts at reporting date that
are not recognised as liabilities on the Statement of Financial Position.
21.
Remuneration of auditors
During the year the following fees were paid/payable to the auditor of the Company:
Audit services
Audit and review of financial reports
During the year the following fees were paid/payable to a related entity of the
auditor of the company:
Other services
Taxation compliance and Research & Development grant advice
2015
$
2014
$
105,000
115,500
40,250
145,250
-
115,500
58
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
22.
Key Management Personnel Disclosures
Directors
The following persons were directors of the Company during the financial year:
Mr Andrew Barlow (Non-Executive Chairman)
Mr Adrian Giles (Non-Executive Director)
Mr Ian Lowe (Executive Director & CEO)
Mr Ben Dixon (Executive Director)
Mr Geoff Dixon (Non-Executive Director)
Mr Quentin George (Non-Executive Director)
Ms Sarah Morgan (Non-Executive Director)
(from 27 January 2015)
Other key management personnel
The following persons also had authority and responsibility for planning, directing and controlling the
activities of the Group, directly or indirectly, during the financial year:
Name
Mr Brendan Maher
Mr Tom Peacock
Position
Chief Financial Officer and Company Secretary
Group Commercial Director
Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Other long-term employee benefits
Termination benefits
Share based payments
Total compensation (a)
2015
$
1,245,625
89,038
20,486
-
2014
$
1,103,295
60,048
3,444
-
400,864
332,633
1,756,013
1,499,420
a) There were 9 key management personnel throughout 2015, some of whom have a part year of
service (2014: 10).
Business Acquisitions:
There were no related party transactions during the year ended 30 June 2015.
Transactions with Directors and their personally related entities:
During the year digital marketing services to the value of $2,175 were provided to entities related to two
Directors on normal commercial terms and conditions.
During the year advertising inventory to the value of $905 was traded on the Adslot platform by an entity
related to two Directors on normal commercial terms and conditions.
59
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
23.
Share Based Payments
Employee Option Plan
Between 2009 and October 2010 the Company operated an options based scheme for executives and
senior employees of the Group. Each share option converted into one ordinary share of Adslot Ltd on
exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry no
voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry,
subject to the individual remaining an employee of the Company. The plan rules allow departed
employees to retain their options for a period of time based on the length of their service with the
Company and the nature of their separation from the Company. The board considered these conditions
appropriate to ensure the objective of maintaining key staff within the Company. The issue of share
options are not subject to performance conditions.
There were no options granted during the years ended 30 June 2015 and 30 June 2014. Options for the
reporting period were:
2015
Grant
Date
Expiry
Date
Exercise
Price $
Balance
at start of
the year
Granted
during
the year
Exercised
during
the year
Lapsed
during the
year
Forfeited
during the
year
(Number)
(Number)
(Number)
(Number)
(Number)
Balance at
end of the
year
(Number)
Vested and
exercisable
at the end of
the year
(Number)
28/07/10
08/07/14
0.151
2,000,000
14/10/10
30/09/14
0.116
2,000,000
14/10/10
30/09/14
0.190
300,000
Total
Weighted average
exercise price
4,300,000
$0.137
-
-
-
-
-
-
2,000,000
200,000
1,800,000
-
300,000
200,000
4,100,000
$0.116
$0.138
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Options analysis for the prior period were:
2014
Grant
Date
Expiry
Date
Exercise
Price $
Balance
at start of
the year
Granted
during
the year
Exercised
during
the year
Lapsed
during the
year
Forfeited
during the
year
(Number)
(Number)
(Number)
(Number)
(Number)
Balance at
end of the
year
(Number)
Vested and
exercisable
at the end of
the year
(Number)
28/07/10
08/07/14
0.151
2,000,000
14/10/10
30/09/14
0.116
3,000,000
14/10/10
30/09/14
0.190
300,000
Total
Weighted average
exercise price
5,300,000
$0.133
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,000,000)
2,000,000
2,000,000
2,000,000
2,000,000
-
300,000
200,000
(1,000,000)
4,300,000
4,200,000
$0.116
$0.137
$0.137
Weighted average remaining contractual life at 30 June 2014 (days)
53
60
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
23. Share Based Payments (continued)
Employee Share Ownership Plan (ESOP)
In November 2012 the Company gained approval to establish an employee incentive scheme comprising
the Adslot Limited Share Option Plan and the Adslot Employee Share Trust.
Awards of rights to shares are available to be issued to eligible employees based on the performance
against agreed key performance indicators. Any rights awarded are subject to a two-year service period
and if this service period is not met, the rights to shares will be forfeited by the eligible employee. Shares
held by the Trust under the scheme will have voting and dividend rights, and the right to participate in
further issues pro-rata to all ordinary shareholders.
The following table shows grants of share-based compensation to employees under the ESOP for the
current financial year:
2015
Grant
Date
Escrow
End Date
Valuation
Price $
Balance at
start of the
year
Granted
during
the year
Transferred
during the
year
Forfeited
during the
year
(Number)
(Number)
(Number)
(Number)
Balance at
end of the
year
(Number)
Vested at
the end of
the year
(Number)
14/09/12
13/09/14
10/10/12
09/10/14
09/07/13
09/07/15
05/09/13
05/09/15
24/12/13
24/12/15
28/01/14
24/01/16
06/03/14
04/03/16
15/06/14
15/06/15
15/06/14
2015-2018
10/07/14
08/07/16
08/09/14
07/09/16
01/05/15
01/05/16
01/05/15
01/05/17
01/05/15
01/05/18
0.046
0.059
0.042
0.061
Converted
Right
0.120
0.090
0.105
0.105
0.100
0.155
0.090
0.090
0.090
5,042,685
1,500,000
666,667
2,902,935
3,000,000
176,928
7,845,045
250,000
750,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
666,667
96,523
1,000,000
1,000,000
1,000,000
5,042,685
1,500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
666,667
2,902,935
3,000,000
176,928
3,000,000
4,845,045
-
-
-
-
-
-
-
-
-
-
-
1,000,000
1,000,000
1,000,000
250,000
750,000
666,667
96,523
-
-
-
250,000
-
-
-
-
-
-
Total
22,134,260
3,763,190
6,542,685
6,000,000
13,354,765
250,000
Weighted average share price
$0.061
$0.093
$0.049
$0.090
$0.064
Weighted average remaining contractual life at 30 June 2015 (days)
200
61
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
23. Share Based Payments (continued)
2014
Grant
Date
Escrow
End Date
Valuation
Price $
Balance at
start of the
year
Granted
during
the year
Transferred
during the
year
Forfeited
during the
year
(Number)
(Number)
(Number)
(Number)
Balance at
end of the
year
(Number)
Vested at
the end of
the year
(Number)
01/12/11
30/11/13
13/12/11
12/12/13
19/01/12
18/01/14
14/09/12
13/09/14
10/10/12
09/10/13
10/10/12
09/10/14
09/07/13
09/07/15
05/09/13
05/09/15
24/12/13
24/12/15
28/01/14
24/01/16
06/03/14
04/03/16
15/06/14
15/06/15
15/06/14
2015-2018
0.053
0.064
0.060
0.046
0.059
0.059
0.042
0.061
Converted
Right
0.120
0.090
0.105
0.105
413,511
833,333
833,333
6,229,054
1,500,000
1,500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
666,667
3,580,744
3,000,000
176,928
7,845,045
250,000
750,000
(413,511)
(833,333)
(833,333)
-
-
-
-
-
-
(209,359)
(977,010)
5,042,685
(1,500,000)
-
-
-
-
-
-
-
-
-
-
-
1,500,000
666,667
(677,809)
2,902,935
-
-
-
-
-
3,000,000
176,928
7,845,045
250,000
750,000
Total
11,309,231
16,269,384
(3,789,536)
(1,654,819)
22,134,260
Weighted average share price
$0.052
$0.081
$0.060
$0.052
$0.061
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Weighted average remaining contractual life at 30 June 2014 (days)
416
The model inputs for ESOP rights to shares granted during the year ended 30 June 2015 included:
Model Input
ESOP #15-1
ESOP #15-2
ESOP #15-3
ESOP #15-4
ESOP #15-5
Grant Date
10/07/14
8/09/14
1/05/15
1/05/15
1/05/15
Escrow End Date
8/07/16
7/09/16
1/05/16
1/05/17
1/05/18
Exercise Price
-
-
-
-
-
Price at Grant Date
$0.010
$0.155
$0.090
$0.090
$0.090
62
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
23. Share Based Payments (continued)
The model inputs for ESOP rights to shares granted during the year ended 30 June 2014 included:
Model Input
ESOP #14-1 ESOP #14-2 ESOP #14-3 ESOP #14-4 ESOP #14-5 ESOP #14-6
Grant Date
9/07/13
5/09/13
28/01/14
06/03/14
15/06/14
15/06/14
Escrow End Date
9/07/15
5/09/15
28/01/16
04/03/16
15/06/15
2015-2018
Exercise Price
-
-
-
-
-
-
Price at Grant Date
$0.042
$0.061
$0.120
$0.090
$0.105
$0.105
ESOP rights to shares are valued using the Binomial option-pricing model.
The volatility calculation is based upon historical share price information for the same period as the option
life to the date that the options were granted.
Performance Rights over Shares
Shareholders approved at the November 2014 Annual General Meeting the creation of Performance
Rights over Shares which enables the Board to offer eligible employees the right to Performance Rights
which convert to shares subject to the employee’s performance against certain performance criteria. No
amounts are paid or payable by the recipient on receipt of the right. The rights carry no voting rights. All
rights are subject to service periods which require the employees remain an employee of the Company.
The following table shows grants of share-based compensation to employees under the Performance
Rights Plan during the current financial year:
Grant Date
Assessment
period
Valuation
Price $
26/11/14
2 years
0.105
Total
Balance at
start of the
year
Granted
during the
year
Forfeited
during the
year
(Number)
(Number)
(Number)
Balance at end
of the year
(Number)
Vested at the
end of the
year
(Number)
-
-
10,750,000
10,750,000
-
-
10,750,000
10,750,000
-
-
There were no Performance Rights over Shares issued in 2014.
The model inputs for Performance Rights to shares grated during the year ended 30 June 2015 included:
Model Input
Grant Date
PR # 15-1
PR # 15-2
PR # 15-3
PR # 15-4
26/11/14
26/11/14
26/11/14
26/11/14
Assessment Period
2 years
2 years
2 years
2 years
Exercise Price
-
Probability of Conversion to Shares
10%
-
25%
-
50%
-
75%
Price at Grant Date
$0.105
$0.105
$0.105
$0.105
63
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
23. Share Based Payments (continued)
Rights over Shares
No Rights over Shares were issued in 2015. The following table shows movement in the Rights over
Shares for the current financial year:
2015
Required
VWAP
Price
Issue Date
$
8-Oct-2012
8-Oct-2012
8-Oct-2012
8-Oct-2012
Total
0.20
0.30
0.40
0.50
Escrow
Required
from
award
2 years
-
-
-
2014
Required
VWAP
Price
Issue Date
$
8-Oct-2012
8-Oct-2012
8-Oct-2012
8-Oct-2012
8-Oct-2012
Total
0.10
0.20
0.30
0.40
0.50
Escrow
Required
from
award
2 years
2 years
-
-
-
Balance at
start of the
year
Granted
during the
year
Vested
during
the year
Forfeited
during
the year
Valuation
Price
$
(Number)
(Number)
(Number)
(Number)
64,500
66,000
73,000
63,500
3,000,000
4,000,000
5,000,000
5,000,000
267,000
17,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at
start of the
year
Granted
during the
year
Vested
during
the year
Forfeited
during
the year
Valuation
Price
$
(Number)
(Number)
(Number)
(Number)
93,000
64,500
66,000
73,000
63,500
3,000,000
3,000,000
4,000,000
5,000,000
5,000,000
360,000
20,000,000
-
-
-
-
-
-
(3,000,000)
-
-
-
-
(3,000,000)
-
-
-
-
-
-
Balance at
end of the
year
(Number)
3,000,000
4,000,000
5,000,000
5,000,000
17,000,000
Balance at
end of the
year
(Number)
-
3,000,000
4,000,000
5,000,000
5,000,000
17,000,000
64
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
24.
Cash Flow reconciliation
Reconciliation of Net Cash Flows from Operating
Activities to Loss for the year
Loss for the year after income tax
Depreciation and amortisation
Share based payment
Impairment of receivables
(Profit)/Loss on asset write off
Unrealised foreign currency loss / (gain)
Movements in receivables relating to investing activities
Changes in assets and liabilities (net of effects of
acquisition and disposal of entities)
(Increase)/Decrease in receivables
(Increase)/Decrease in deferred taxes
(Decrease)/Increase in payables and other provisions
2015
$
2014
$
(9,205,521)
(10,095,562)
5,731,779
702,806
(37,440)
-
(60,352)
39,253
(848,201)
-
502,000
5,025,021
560,307
3,145
(32)
42,089
(547,238)
419,632
(39,677)
(974,276)
Net cash outflow from operating activities
(3,175,676)
(5,606,591)
25.
Financial Risk Management
The Group’s operations expose it to various financial risks including market, credit, liquidity and cash flow
risks. Risk management programmes and policies are employed to mitigate the potential adverse effects
of these exposures on the results of the Group.
Financial risk management is carried out by the Chief Financial Officer with oversight provided by the
Audit & Risk Committee and Board.
(a) Market risks
Market risks include foreign exchange risk, interest rate risk and other price risk. The Group’s activities
expose it to the financial risks of changes in foreign currency, interest rate risk relating to interest earned
on cash and cash equivalents.
Disclosures relating to foreign currency risks are covered in Note 25(d) and interest rate risk is covered in
Note 25(e). The Group does not have formal policies that address the risks associated with changes in
interest rates or changes in fair values on available-for-sale financial assets.
(b) Credit risk
Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted.
The credit risk on financial assets, other than investments, of the Group which have been recognised in
the Consolidated Statement of Financial Position is the carrying amount net of any provision for doubtful
debts.
The Group has no significant concentrations of credit risk. As disclosed in Note 8(a), ‘Impairment of
receivables’, the Group has policies in place to ensure that sales of services are made to customers with
appropriate credit history. Before accepting any new customers, the Group internally reviews the
potential customer’s credit quality. A substantial deposit on contract in website development and hosting
segment of the Group mitigates initial credit risk.
65
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
25. Financial Risk Management (Continued)
The Group held the following financial assets with potential credit risk exposure:
Financial assets
Cash and cash equivalents
Trade and other receivables
(c) Liquidity risk
Financial liabilities
Trade and other payables
2015
$
2014
$
4,441,226
4,488,830
3,354,051
3,785,415
8,930,056
7,139,466
2,853,010
2,422,088
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the
availability of funding through an adequate amount of committed credit facilities and the ability to close-
out market positions. Due to the dynamic nature of the underlying business, the Board aims at
maintaining flexibility in funding by keeping committed credit lines and sufficient cash available.
All financial liabilities are expected to be settled within 12 months of the reporting date, per the contractual
terms of the obligations.
66
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
25. Financial Risk Management (Continued)
(d) Foreign currency risk
Most of the Group’s transactions are carried out in Australian Dollars (AUD). Exposures to currency
exchange rates arise from the Group’s overseas operations which are primarily denominated in US
dollars (USD), Pound Sterling (GBP), Euros (EUR), New Zealand dollars (NZD), Chinese Yuan (CNY)
and Malaysian Ringgit (MYR).
Foreign currency exposure is monitored by the Board on a monthly basis.
Foreign currency denominated financial assets and liabilities which expose the Group to currency risk are
disclosed below. The amounts shown are those reported to key management translated into AUD at the
closing rate:
USD
A$
GBP
A$
EUR
A$
NZD
A$
CNY
A$
MYR
A$
30 June 2015
Financial Assets
1,102,446
161,270
161,097
188,063
39,913
4,245
Financial Liabilities
(783,412)
(356,742)
(41,333)
(47,936)
(30,456)
-
Total Exposure
319,034
(195,472)
119,764
140,127
9,457
4,245
30 June 2014
Financial Assets
511,862
69,656
136,906
203,710
1,319
Financial Liabilities
(157,338)
(112,051)
(102,306)
(39,313)
(7,256)
Total Exposure
354,524
(42,395)
34,600
164,397
(5,937)
-
-
-
The following table illustrates the sensitivity of profit in regards to the Group’s financial assets and
financial liabilities and the USD/AUD exchange rate, GBP/AUD exchange rate, EUR/AUD exchange rate,
NZD/AUD exchange rate and CNY/AUD exchange rate ‘all other things being equal’. It assumes a +/-
10% change of the following exchange rates for the year ended 30 June 2015 (30 June 2014:10%).
These percentages have been determined based on the average market volatility in exchange rates in
the previous 12 months. There is no Equity exposure to foreign currency risk.
67
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
25. Financial Risk Management (Continued)
+10%
30 June 2015
30 June 2014
USD
A$
(29,003)
(32,229)
GBP
A$
EUR
A$
NZD
A$
17,770
(10,888)
(12,739)
3,854
(3,145)
(14,945)
30 June 2015
30 June 2014
USD
A$
35,448
39,391
GBP
A$
(21,719)
(4,711)
EUR
A$
13,307
3,844
-10%
NZD
A$
15,570
18,266
CNY
A$
(860)
540
CNY
A$
1,051
(660)
MYR
A$
(386)
Total
A$
(36,106)
-
(45,925)
MYR
A$
472
-
Total
A$
44,129
56,130
(e) Cash flow and interest rate risk
As the Group has no significant interest-bearing assets or liabilities (except cash), the Group’s income
and operating cash flows are not materially exposed to changes in market interest rates.
Interest rate sensitivity analysis
The sensitivity analysis below has been determined based on exposure to interest rates on interest
bearing bank balances throughout the reporting period. A 100 basis point increase or decrease is used
when reporting interest rate risk internally to key management personnel and represents management’s
assessment of the possible change in interest rates (also comparable to movement in interest rates
during the reporting year).
At reporting date, if interest rates had been 100 basis points higher or lower and all other variables were
held constant, the Group’s net profit would:
30 June 2015
+1%
$
64,035
-1%
$
(62,093)
30 June 2014
68,693
(61,810)
This is mainly attributable to the Group’s exposure to interest rate on its bank balances bearing interest.
(f) Net fair value of financial assets and liabilities
The net fair value of cash and cash equivalents and other short-term financial assets and financial
liabilities of the Group approximates their carrying value.
The net fair value of other financial assets and financial liabilities is based upon market prices where a
market exists or by discounting the expected future cash flows by the current interest rates for assets and
liabilities with similar risk profiles.
68
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
26.
Parent Entity Information
The following details of information are related to the parent entity, Adslot Ltd, at 30 June 2015. This
information has been prepared using consistent accounting policies as presented in Note 1.
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Contributed equity
Share-based payments reserve
Retained losses
Total equity
Loss for the year
Total comprehensive loss for the year
2015
$
3,638,842
2014
$
2,794,138
45,285,866
45,363,941
48,924,708
48,158,079
163,707
154,127
-
-
163,707
154,127
116,465,418
109,990,537
1,069,631
1,177,084
(68,774,048)
(63,163,669)
48,761,001
48,003,952
(6,040,543)
(7,330,213)
(6,040,543)
(7,330,213)
The Commitments Note 20 includes commitments incurred by the parent entity related to leases of the
head office premises at 85 Coventry Street, South Melbourne for an amount of $330,658 (2014:
$330,999).
27.
Related Party Transactions
Other than the transactions disclosed in Note 22 relating to key management personnel, there have been
no related party transactions that have occurred during the current or prior financial year.
28.
Events Subsequent to Reporting Date
There has not been any matter or circumstance occurring subsequent to the end of the financial year that
has significantly affected, or may significantly affect, the operations of the Group, the results of those
operations or the state of affairs of the Group in future years.
69
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Notes to the Financial Statements (Continued)
For the year ended 30 June 2015
29.
Consolidated Entities
Name
Parent entity
Adslot Ltd
Controlled entities
Adslot Technologies Pty Ltd
Ansearch.com.au Pty Ltd
Ansearch Group Services Pty Ltd
Webfirm Pty Ltd
Adimise Pty Ltd
Full Circle Online Pty Ltd
QDC IP Technologies Pty Ltd
Webfirm Media Pty Ltd (a)
Searchworld Pty Ltd (a)
Adslot UK Limited
Adslot Inc.
Symphony International Solutions Limited (b)
Symphony Workflow Pty Ltd (c)
Symphony Media Pty Ltd
Facilitate Digital (Shanghai) Software Services Co. Ltd
Facilitate Digital Limited
Facilitate Digital Trust
Facilitate Digital, LLC
Facilitate Digital UK Limited
Facilitate Digital Deutschland GmbH
Facilitate Digital Europe Marketing Technology Ltd
Country of
Incorporation
Ordinary Share
Consolidated Equity Interest
2015
%
2014
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
United Kingdom
United States
Australia
Australia
Australia
China
New Zealand
New Zealand
United States
United Kingdom
Germany
Republic of Ireland
100
100
100
100
100
100
100
-
-
100
100
100
100
100
100
100
100
100
100
100
100
(a) Deregistered 23 February 2015.
(b) Formerly Facilitate Digital Holdings Limited. This name change occurred on 30 April 2015.
(c) Formerly Facilitate Digital Pty Ltd. This name change occurred on 30 April 2015.
Equity interests in all controlled entities are by way of ordinary shares.
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
70
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Directors’ Declaration
The directors declare that the financial statements, comprising the statement of profit or loss and other
comprehensive income, statement of financial position, statement of changes in equity, statement of cash
flows, accompanying notes, as set out on pages 23 to 70 are in accordance with the Corporations Act 2001
and:
(a) comply with Australian Accounting Standards, the Corporations Regulations 2001 and other
mandatory professional reporting requirements in Australia;
(b) give a true and fair view of the group’s financial position as at 30 June 2015 and of its performance,
as represented by the results of its operations and its cash flows, for the financial year ended on that
date; and
(c) the company has included in the notes to the financial statements an explicit and unreserved
statement of compliance with International Financial Reporting Standards.
In the directors’ opinion:
(a) there are reasonable grounds to believe that the company will be able to pay its debts as and when
they become due and payable.
(b) the audited remuneration disclosures set out on pages 13 to 21 of the Directors’ Report comply with
section 300A of the Corporations Act 2001.
The directors have been given the declaration by the Chief Executive Officer and Chief Financial Officer
required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
Andrew Barlow
Chairman
Adslot Ltd
26 August 2015
71
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
[Audit report to be inserted by Grant Thornton] – page 1
72
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
[Audit report to be inserted by Grant Thornton] – page 2
73
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
[Audit report to be inserted by Grant Thornton] – page 3
74
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Corporate Governance Statement
In accordance with Listing Rule 4.10.3 Adslot’s Corporate Governance Statement can be found at
http://www.adslot.com/investor-relations/corporate-governance/
Shareholder Information
Additional information required by the Australian Securities Exchange Limited and not shown elsewhere in
this report is as follows. The information is current as at 24 August 2015.
Distribution of equity securities
The number of shareholders by size of shareholding are:
Ordinary Shares
Number of Holders Number of Shares
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 +
TOTAL
The number of shareholders holding less than a marketable parcel of
shares (6,250 shares):
Twenty largest shareholders
The names of the twenty largest holders of quoted shares are:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
DAWNIE DIXON PTY LTD
FINICO PTY LTD
VENTURIAN PTY LTD
NATIONAL NOMINEES LIMITED
AMBLESIDE VENTURES PTY LTD
ANDAMA HOLDINGS PTY LTD
CITICORP NOMINEES PTY LIMITED
ZERO NOMINEES PTY LTD
J P MORGAN NOMINEES AUSTRALIA LIMITED
ANSEARCH COM AU PTY LTD
G & D DIXON INVESTMENTS PTY LTD
NAVIGATOR AUSTRALIA LTD
COTU INVESTMENTS PTY LTD
FINICO PTY LIMITED
CAPITAL ACCRETION PTY LTD
IAN LOWE + BEN DIXON
SISUG PTY LTD
MR PETER JOHN DIAMOND + MRS DIANA ELIZABETH DIAMOND
PERSHING AUSTRALIA NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
Total Top 20 holders of Ordinary Shares
Remaining holders balance
184
460
796
2,129
1,044
4,613
811
19,640
1,654,509
6,552,334
86,962,676
961,561,597
1,056,750,756
2,632,155
Listed Ordinary Shares
Number of
Shares
% of
Shares
72,452,688
55,148,796
45,803,769
45,673,985
31,607,563
25,500,000
22,491,411
21,500,000
15,935,978
14,389,035
12,302,184
10,329,340
9,200,000
9,179,849
8,000,000
6,938,729
6,194,236
6,000,000
6,000,000
5,866,283
430,513,846
626,236,910
6.86
5.22
4.33
4.32
2.99
2.41
2.13
2.03
1.51
1.36
1.16
0.98
0.87
0.87
0.76
0.66
0.59
0.57
0.57
0.56
40.74
59.26
Classes of Shares - Adslot Ltd has only one class of share on issue, being fully paid ordinary shares.
Substantial Shareholders
Geoff Dixon
Chris Morris
Andrew Barlow
Shares
86,252,015
70,410,696
57,803,769
% Shares
8.16%
6.66%
5.47%
Voting Rights - All ordinary shares carry one vote per share without restrictions.
75
Adslot Ltd and Controlled Entities
ABN 70 001 287 510
Corporate Directory
Directors
Mr Andrew Barlow – Chairman
Mr Ian Lowe – Executive Director
Mr Ben Dixon – Executive Director
Mr Adrian Giles – Non-Executive Director
Mr Geoff Dixon – Non-Executive Director
Mr Quentin George – Non Executive Director
Ms Sarah Morgan – Non Executive Director
Chief Executive Officer
Mr Ian Lowe
Company Secretary
Mr Brendan Maher
Auditors
Grant Thornton Australia
The Rialto
Level 30, 525 Collins Street
MELBOURNE VIC 3000
Bankers
National Australia Bank Limited
424 St Kilda Road
St Kilda VIC 3004
Share Register
Computershare Registry Services Pty Ltd
Yarra Falls
452 Johnston Street
Abbotsford, VIC 3001
Home Stock Exchange
Australian Securities Exchange Limited
Level 45, South Tower
Rialto, 525 Collins St
Melbourne, VIC 3000
ASX Code: ADJ
Website
www.adslot.com
Registered Office
Adslot Ltd
Level 2, 85 Coventry Street
South Melbourne Vic 3205 Australia
Phone: + 61 3 8695 9199
Fax: + 61 3 9696 0700
Toll free 1300 852 722
Head Office
Adslot Ltd
Level 2, 85 Coventry Street
South Melbourne Vic 3205 Australia
Phone: + 61 3 8695 9199
Fax: + 61 3 9696 0700
Toll free 1300 852 722
Asia Pacific Offices
Level 6, 241 Commonwealth Street
Surry Hills NSW 2010
Australia
1-231, Shanghai 1933
No 10 Shajing Road
Shanghai 200080
China
Level 3, 48-52 Wyndham Street
Auckland 1010
New Zealand
North America Offices
41 E 11th Street, 11th Floor
New York, NY 10003
United States of America
156 2nd Street
San Francisco, CA 94105
United States of America
European Offices
79 Wardour Street
Soho, London W1D 6QB
United Kingdom
Hamburg Business Center
Poststrasse 33
20354 Hamburg
Germany
76