Table of Contents
Chairman’s Report
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
2
4
12
21
22
23
24
25
26
63
64
67
67
68
Chairman’s Report
Dear Shareholder,
The 2018 financial year was a disappointing one for the company. Business performance did not meet expectations.
Licence Fees and Trading Fees were both slightly down, and combined with the anticipated decline in ad serving revenues,
meant overall revenues were down 11%.
Furthermore, the Company’s increased investment in R&D was not delivering meaningful commercial returns in FY18.
As a result, the Board undertook an in-depth strategic review of the Company’s operations in January and February 2018.
The review resulted in a number of changes within the business.
Ian Lowe stepped down as CEO, and Executive Director, Ben Dixon, was appointed interim CEO. I also stepped back into
the business full-time to support Ben and the executive team, becoming Executive Chairman.
We narrowed the strategic focus of the business on two core opportunities:
•
•
Protecting and growing the Symphony business to drive Licence Fees; and,
Doubling down on the US market opportunity for Adslot Media in order to drive Trading Fees.
We also implemented a significant cost-reduction program. The workforce was reduced by 20%. Savings totalled more
than $2 million on a per annum basis.
The narrowing of focus saw the long-awaited Adslot-Symphony integration put on hold, while the Company stabilised and
focused on returning the existing Symphony business to growth.
I am pleased to say that with more stream-lined business disciplines, processes and reporting in place, the Company has
subsequently made much positive progress.
The Company successfully deployed Symphony to the Indian market on-time in June 2018, which in addition to the
deployments of Turkey and Belgium earlier in the financial year, brought the total number of markets deployed for Group
M in FY18 to three.
Symphony has serviced 55 agencies in 16 countries around the world to date, with more than 13,500 individual users
having registered on the platform since inception. More than 58,000 individual campaigns, valued at more than $3 Billion
in value, were managed by the Symphony platform in FY18.
Following a review and agreed amendments to the Company’s global Symphony contract with GroupM, the Company was
pleasingly able to provide guidance that Symphony Licence Fees, on a normalised basis, will increase by an expected
38.7% from $4M to $5.5M in financial year 2019. These are fixed, contracted revenues, with additional revenues to be
derived with the launch of each individual market for GroupM, of which five are anticipated in the 2019 financial year.
With regards to Adslot Media and Trading Fees, the Company decided to invest aggressively in the US and UK markets,
recognising this was the best opportunity to grow this part of the business.
Since taking this decision, the Company saw an increase in the value of media traded on the Adslot Media platform in the
second half of FY18, and has subsequently seen a significant increase in media traded on the platform in the September
quarter just gone, where trading activity increased some 295% from $1.38m in the June 2018 quarter, to more than $5.46m
in the September 2018 quarter.
The most pleasing aspect of this increased trading activity is the fact that the vast majority of the September quarter trades
were repeat trades, emanating from agencies both large and small from the US, UK, Europe and Australia. The agencies
involved represent some of the world’s largest global brands, who are advertising on some of the biggest publisher websites
globally.
From a corporate perspective, the Company made a number of announcements during the 2018 financial year, including
the appointment of Felicity Conlan as Chief Financial Officer in July 2017, and Company Secretary in October 2017. The
Company also announced the appointment of Andrew Dyer as non-executive director at the end of May 2018.
Subsequent to financial year end, the Company also completed a placement of $3.5M to mostly existing sophisticated and
institutional investors.
In summary, although it was a challenging year for the Company in the first half, the second half saw much positive change
and we are now starting to see real evidence of definitive progress.
The Board and the Executive Team will continue to work tirelessly to maintain and grow the Symphony and Adslot Media
businesses, returning the Company to consistent revenue growth and ultimately profitability.
2
In closing, I’d like to take this opportunity to first thank all our loyal shareholders who have not only stuck with the Company
during its darkest hour, but supported the Company through further investment via the placement and on-market buying
when the risks were high, and the results far from certain.
I would also like to acknowledge the commitment of the executive team, who similarly chose to stay and support the
Company throughout what has been a difficult and challenging period, from which we have emerged stronger, and with an
exciting year now ahead of us.
Yours sincerely,
Andrew Barlow
Executive Chairman
Adslot Ltd
09 October 2018
3
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 2018 and the auditor’s report thereon.
Information on Directors
Mr Andrew Barlow, Mr Adrian Giles, Mr Ben Dixon, Mr Quentin George and Ms Sarah Morgan were directors for the whole
financial year and up to the date of this report.
Mr Ian Lowe resigned from his appointment as director on 27 February 2018.
Mr Andrew Dyer was appointed as a director on 28 May 2018.
Mr Andrew Barlow
Executive Chairman
(Age 45)
Andrew Barlow is the founder and Executive Chairman of Adslot, and an experienced technology
entrepreneur. Prior to Adslot, Mr Barlow co-founded online competitive intelligence company,
Hitwise, with Adrian Giles in 1997. 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 was also Founder and CEO of Max Super, an online retail superannuation fund sold to
Orchard Funds Management in 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 is currently a director of Nitro Software, Inc., a leading provider of PDF creation,
conversion and editing software and e-signing cloud services.
Mr Barlow was appointed as Executive Chairman of Adslot on 27 February 2018. He was the Non-
Executive Chairman prior to 27 February 2018.
Mr Adrian Giles
Non-Executive Director
(Age 44)
Adrian Giles is an entrepreneur in the Internet and Information Technology industries. In 1997 Mr
Giles co-founded Sinewave Interactive which 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 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 capital backed trade sales.
Mr Giles is also Chairman of Market Engine, a global retailing platform for Asian marketplaces and
Chairman of Proquo, an Australian small business marketplace joint venture between Telstra and
NAB.
Mr Giles is Chair of the Remuneration Committee.
Mr Ben Dixon
Interim CEO and Executive Director
(Age 44)
Mr Ben Dixon’s career in the advertising industry goes back over 19 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 e-commerce 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.
Mr. Dixon was interim Company Secretary from 15 July 2018 to 9 October 2018. He was appointed
as the interim CEO on the 27 February 2018.
4
Mr Quentin George
Non-Executive Director
(Age 48)
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 48)
Sarah has extensive experience in the finance industry, primarily as part of independent corporate
advisory firm Grant Samuel. Sarah has been involved in public and private company mergers and
acquisitions, as well as equity and debt capital raisings. Sarah holds a degree in Engineering and a
Master of Business Administration from the University of Melbourne and is a Graduate of Australian
Institute of Company Directors. Sarah is also Non-Executive Director of the National Gallery of
Victoria Foundation.
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.
Mr Andrew Dyer
Non-Executive Director
(Age 54)
Andrew Dyer is a Senior Partner and Director of The Boston Consulting Group (BCG). Mr Dyer has
held local, regional and global leadership positions, including leading BCG’s People & Organization
and Enablement Practices. He has also been a member of BCG’s global Executive Committee and
held various roles on a number of BCG Board Committees and initiatives.
Mr Dyer has over 24 years' consulting experience supporting senior executives in leading companies
around the world, with a particular focus on financial and other services businesses.
Prior to joining BCG in 1994, Mr Dyer worked for the Commonwealth Bank and the Australian
Federal Government.
Mr Dyer was appointed as a director on 28 May 2018.
Ms Felicity Conlan
Company Secretary
(Age 52)
Ms Conlan brings to the Company extensive experience in the media/advertising and technology
sectors where she has held General Manager - Finance and CFO roles with companies including
M&C Saatchi, Network Ten, Beattie McGuinness Bungay (London) and Genero Media.
Ms Conlan is a member of CPA Australia and a member of the Australian Institute of Company
Directors.
Ms Conlan was appointed as Chief Financial Officer on 30 August 2017 and Company Secretary on
9 October 2017.
Mr. Ian Lowe resigned as CEO and Executive Director on 27 February 2018.
Mr. Brendan Maher resigned as Company Secretary as of 14 July 2017.
5
Directors’ Report (Continued)
Directorships of other listed companies
Other than those disclosed on pages 2 to 5 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.
Directors’ 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
Mr Andrew Barlow
Mr Adrian Giles
Mr Ben Dixon
Mr Quentin George
Ms Sarah Morgan
Mr Andrew Dyer
Ordinary Shares
#
Share Rights
#
35,674,668
7,551,452
37,353,660
-
200,500
21,659,342
-
-
-
-
-
-
Share
Options
#
-
-
1,000,000
-
-
4,000,000
ESOP Shares
#
-
-
-
1,000,000
-
-
Performance
Rights
#
-
-
250,000
-
-
-
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.
Directors’ Meetings
The following table sets out the number of meetings of the Company’s Directors held during the year ended 30 June 2018
and the number of meetings attended by each Director.
Directors
Mr Andrew Barlow
Mr Ian Lowe (i)
Mr Adrian Giles
Mr Ben Dixon
Mr Quentin George
Ms Sarah Morgan
Mr Andrew Dyer (ii)
Board of Directors
Held
Attended
Remuneration Committee
Held
Attended
Audit and Risk Committee
Attended
Held
14
9
14
14
14
14
2
14
9
14
14
13
14
2
3
-
3
-
3
-
-
3
-
3
-
1
-
-
-
-
4
-
-
4
-
-
-
4
-
-
4
-
(i) Mr. Lowe resigned as Director on 27 February 2018.
(ii) Mr Dyer was appointed as Director on 28 May 2018. Mr Dyer has also been appointed a member of the Company’s Audit and Risk Committee.
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 for media agencies.
2. Services - comprises digital marketing services - provided by the Company’s Webfirm division - and project-based
customisation of Trading Technology.
3. Adserving - technology that enables advertisers to deliver, measure and optimise the performance of online display
advertising. For strategic reasons the Company decided to discontinue providing Adserving services in the first quarter of
the financial year.
Operating Results
Group revenues for the FY18 period were $8,013,289, a decrease of 11% versus the year prior ($9,007,016).
The Consolidated Group operating loss before interest, income tax, depreciation and amortisation (EBITDA) of $6,340,479,
an increased loss versus prior year of $4,239,255 or 50%.
The Consolidated Group operating loss of $11,653,319 is 35% higher than the loss for the prior year of $8,630,187.
6
Review of Operations
The financial year ended 30 June 2018 was a challenging one for the Company. Total group revenue of $8.0m represented
an 11% decrease on the prior financial year. Revenue declines were driven in part by the cessation of the Company’s non-
strategic ad serving platform (a reduction of $521k) and lower interest income (a reduction of $164k). Revenues generated
from Trading Technology were modestly down by 4% compared to the prior financial year.
YoY Revenue by Segment
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$0
FY13
FY14
FY 15
FY16
FY17
FY18
Trading Technology
Services
Adserving
Other
In response to business performance, the Board undertook a strategic review of operations in February 2018 with the
objective of identifying a path to returning the business to growth and ultimately profitability. This review identified the
following items as key priorities for the business:
1. Maintain the Symphony product and grow its user base;
2. Focus on the US market for Trading Fees; and
3.
Implement a cost reduction plan.
The subsequent six months have shown considerable progress towards these three objectives, and as a result, the
Company commences the 2019 financial year better placed to deliver revenue growth and improved cash flows over the
coming year.
Key Objective
Progress
1. Symphony Growth
Forecast growth of 38.7% in Symphony License Fees in FY19.
Updated agreement with GroupM.
2. US Market Trading
Fees
Strong improvement in the value of media traded via Adslot Media in the US market driven
by increased engagement with advertisers, agencies and publishers..
3. Cost Reductions
Reduction in Q4 FY18 outgoing cash costs (excluding publisher payments) of $829k,
including savings on employment costs of $643k.
7
Review of Operations (Continued)
Trading Technology
The strategic focus of the business remains Trading Technology revenues. These revenues are comprised of:
Licence Fees – derived mostly from Symphony, a market-leading workflow automation tool, but also from Adslot
customised legacy solutions (eg. Suburb Sponsorship tool for REA); and
Trading Fees – fees charged as a percentage of media traded via the stand alone Adslot Media platform and
also via Symphony. Adslot earns a higher average Trading Fee (% of trade value) from media traded via Adslot
Media on a standalone basis.
Symphony
Significant events for the past year for Symphony include:
Successful deployment of Symphony for GroupM into two new markets in Europe (Turkey and Belgium); and
Successful deployment of Symphony for GroupM into India, which is anticipated to be the second largest
deployment of the Symphony platform to date.
Subsequent to the end of the financial year, the Company also completed a re-negotiation of the Company’s agreement
with the world’s largest media buyer, GroupM. The updated terms of this agreement include:
Agreement on five new markets for deployment in FY19; and
Anticipated growth in Symphony License Fees from $3.96m to $5.50m (38.7%) in FY19.
Total License Fee revenues were $4.47m in FY18, representing a modest decline of 3% on the prior financial year.
Additional License Fees for newly deployed markets were offset by a reduction in License Fees from legacy clients in the
US market ending Symphony contracts in the prior financial year.
8
Adslot Media
Significant events for the past year for Adslot Media include:
A renewed focus on the US market as the likely source of strong growth in Trading Fee revenues;
A successful pilot with a top 5 US advertiser for use of the Adslot Media platform;
Continued success in signing top tier US publishers to the Adslot Media platform; and
Development and deployment of the Audience First capability. This unique feature allows advertisers to leverage
their own 1st party data assets in a forward guaranteed manner with premium publishers.
Trading Fee revenues of $670k in FY18 were disappointing and did not represent the significant investment and progress
made in developing the US market opportunity.
Subsequent to financial year end, and as disclosed in the Company’s trading update of 29 August 2018, this improved
performance has seen:
The value of media traded via the stand alone Adslot Media platform for the quarter to date (as at 29 August
2018) represent 190% of the total 4th quarter of FY18; and
Additional high quality publishers being onboarded to the Adslot Media platform as well as existing publishers
adopting the Audience First capability.
Services
Services revenue is derived predominantly from Webfirm, the Company’s Australian-based digital marketing services
business, providing website design, hosting, search engine optimisation (SEO), search engine marketing (SEM) and social
media marketing services ($1.69m). Services revenue is also derived to a lesser extent custom development work for
Symphony customers.
86% of the Company’s Services revenue is recurring subscription revenue derived mostly from web hosting, SEO and
SEM.
FY18 saw a 5.6% decline in Services revenue, due to reduced performance in the Webfirm business.
Adserving
The Company’s non-strategic Adserving business was wound down and closed on Q2 FY18. The Company will no longer
report on Adserving revenue.
9
Review of Operations (Continued)
Matters Subsequent to the End of the Financial Year
On 3 August 2018 the Company successfully completed a $3.50 million share placement (Placement). The Placement
involved the issue of 140,000,000 new, fully paid ordinary shares (New Shares) at $0.025 per New Share (Offer Price) to
raise $3.50 million (before costs). The Placement was conducted in two tranches. The first tranche comprising 118,000,000
New Shares at the Offer Price ($2.95 million) placed to sophisticated and institutional investors completed in August 2018.
The second tranche comprising 22,000,000 New Shares at the Offer Price ($0.55 million) will be placed to Directors and
related parties subject to shareholder approval at a General Meeting to be held on 14 September 2018. The details of this
capital raising are disclosed on note 27.
Environmental regulations
The Group’s operations are not subject to any significant environmental regulations under the Commonwealth, State or
any other country in which the entity operates.
Dividends
The Directors do not recommend the declaration of a dividend. No dividend has been declared or paid during the year.
Shares under option
Details of unissued shares or interests under option as at the date of signing this report are.
Expiry
Date
Exercise
Price
$
Balance at
beginning of
the year
(Number)
Issued during
the year
(Number)
Forfeited
during the
year
(Number)
Exercised
during the
year
(Number)
Balance at end of
the year
(Number)
Issue Type
Ordinary options
4/10/21
0.073
Ordinary options
25/11/21
0.060
Ordinary options
25/02/22
0.035
Ordinary options
15/05/22
0.034
Ordinary options
27/05/22
0.036
-
-
-
-
-
-
3,000,000
-
6,550,000
(750,000)
25,750,000
(2,250,000)
12,700,000
4,000,000
-
-
52,000,000
(3,000,000)
-
-
-
-
-
-
3,000,000
5,800,000
23,500,000
12,700,000
4,000,000
49,000,000
Shares subject to rights
Details of unissued shares or interests subject to rights as at the date of signing this report are:
Executive Performance Rights
Issue or
Acquisition
Date
Issue
Price
$
Balance at
beginning of
the year
(Number)
Issued
during the
year
(Number)
Issue Type
Performance Rights
26/08/15
Performance Rights
27/06/16
Performance Rights
01/09/16
Nil
Nil
Nil
1,090,000
400,000
7,750,000
9,240,000
-
-
-
-
Transfers
during the
year
(Number)
(790,000)
(400,000)
Forfeited
during the
year
(Number)
(300,000)
-
Balance at end
of the year
(Number)
-
-
(2,687,500)
(2,937,500)
2,125,000
(3,877,500)
(3,237,500)
2,125,000
10
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.
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 2018 has been received and can be found on page 21
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 20 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.
11
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:
Long Term Incentives (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.
For the 2018 financial year, the Chairman’s fees were $100,000 per annum. Non-executive directors’ fees were $50,000
per annum. In addition, the Chair of the Audit & Risk Committee and the Remuneration Committee received a further
$25,000 in recognition of the additional workload of those positions.
Section 2: Executive remuneration
The Board of Directors are responsible for determining and reviewing compensation arrangements for key management
personnel and the executive team. The Remuneration Committee makes recommendations on remuneration of key
management personnel to the Board.
The Board assesses the appropriateness of the nature and amount of emoluments of these employees on a periodic basis
by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit
by:
a) Attracting the highest quality employees;
b) Retaining the best performing employees
c) Aligning the employees with shareholder outcomes;
d) Aligning employee motivation to a cascading set of key performance indicators that drive the most optimal
strategic outcomes for the business; and
e) Ensuring it aligns with the latest industry best practice.
Executives’ remuneration consists of a fixed cash component, short-term incentives in the form of cash bonuses, and long-
term incentives in the form of equity-based compensation linked to the long term prospects and future performance of the
Company. The inclusion of equity-based compensation in executives’ remuneration provides a direct link between their
remuneration and shareholder wealth, otherwise there are no direct relationships.
In providing the Company’s performance and benefits for shareholder wealth, the Board have regard to the following
indices in respect of the current financial year and the previous four financial years:
Item
EPS (cents)
Net loss ($)
2018
(0.91)
2017
(0.70)
2016
(0.77)
2015
(0.89)
2014
(1.20)
11,653,319
8,630,187
8,138,485
9,205,521
10,095,562
Share price at 30 June ($)
0.026
0.051
0.110
0.090
0.115
The above indices are below the Committee’s expectations, and accordingly no short-term incentives were paid to KMP
during the year.
12
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 Andrew Barlow
Executive Chairman
Non-Executive Chairman
Non-Executive Director
Mr Ben Dixon
Interim Chief Executive Officer
Interim Company Secretary
Executive Director
Date appointed/resigned
Appointed 27 February 2018
Appointed 26 November 2013
Appointed 16 February 2010
Appointed 27 February 2018
15 July to 9 October 2017
Appointed 23 December 2013
Mr Andrew Dyer
Non-Executive Director
Appointed 28 May 2018
Mr Quentin George
Non-Executive Director
Appointed 14 June 2014
Mr Adrian Giles
Non-Executive Director
Appointed 26 November 2013
Mr Ian Lowe
Chief Executive Officer
Resigned 27 February 2018
Ms Sarah Morgan
Non-Executive Director
Appointed 27 January 2015
Executive Officers
Ms Felicity Conlan
Company Secretary
Chief Financial Officer
Appointed 9 October 2017
Appointed 30 August 2017
Mr Brendan Maher
Company Secretary / Chief Financial Officer
Resigned 14 July 2017
Mr Tom Peacock
Group Commercial Director
Appointed 23 December 2013
13
Remuneration Report (Continued)
Section 3: Details of remuneration (Continued)
Group
2018
Name
Short-term benefits
Salary &
fees
$
Short
Term
Incentive Other
$
$
Executive directors
Mr A Barlow (i)
Mr B Dixon
Mr I Lowe (ii)
Non-executive directors
Mr A Giles
Mr Q George
Ms S Morgan
Mr A Dyer (iii)
141,324
206,000
360,000
75,000
50,000
68,493
-
Other key management personnel
Ms F Conlan (iv)
Mr T Peacock
Mr B Maher (v)
211,956
224,000
20,538
Totals
1,357,311
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Long Term
Benefits
Long
Service
Leave
$
-
3,975
-
-
-
-
-
-
Post-
employment
benefits
Share-based payment
Super-
annuation
$
Share
Options
$
Performance
Rights
$
Total
$
8,676
19,570
20,049
-
6,817
13,635
-
-
6,507
-
4,095
-
-
32,392
-
150,000
53,125
289,487
-
-
-
-
-
-
393,684
75,000
54,095
75,000
32,392
264,352
83,097
370,290
-
22,309
17,360
8,108
20,049
-
1,771
35,036
35,036
-
12,083
93,982
127,011
136,222
1,726,609
(i)
(ii)
(iii)
(iv)
(v)
includes $50,000 consultancy fees incurred since his appointment as an Executive Chairman.
resigned as CEO and Executive Director on 27 February. Continued to be a key management personnel for the rest of the year.
Figures represent annual remuneration.
from 28 May 2018.
from 30 August 2017.
to 14 July 2017.
Short Term Incentives
No Short Term Incentives (STIs) were paid in the year ended 30 June 2018 relating to the 2017 financial year. The total
2017 STI opportunity is outlined in the table below:
Name
Amount
Paid
Total 2017
STI
Opportunity Assessment Criteria
$
$
Mr I Lowe
Mr B Dixon
Mr B Maher
Mr T Peacock
-
-
-
-
150,000 Company performance to budget, product development and launch, and client & partnership
signings.
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.
14
Group
2017
Name
Short-term benefits
Salary &
fees
$
Short
Term
Incentive Other
$
$
Executive directors
Mr I Lowe
Mr B Dixon
355,750
206,000
20,623
10,000
Non-executive directors
Mr A Giles
Mr A Barlow
Mr G Dixon (i)
Mr Q George
Ms S Morgan
50,000
68,493
19,026
50,000
68,493
-
-
-
-
-
Other key management personnel
Mr B Maher (ii)
Mr T Peacock
264,296
206,000
10,000
10,000
Totals
1,288,058
50,623
-
-
-
-
-
-
-
-
-
-
Long Term
Benefits
Long
Service
Leave
$
-
3,975
-
-
-
-
-
(16,322)
7,744
Post-
employment
benefits
Super-
annuation
Share-based payment
Shares1
Rights1
Total
$
$
$
$
19,616
19,308
-
6,507
1,807
-
-
-
-
-
-
12,321
6,507
19,616
19,308
-
-
-
-
395,989
18,300
257,583
-
-
-
-
-
50,000
75,000
20,833
62,321
75,000
19,600
22,553
297,190
265,605
(4,603)
92,669
12,321
60,453
1,499,521
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)
(ii)
to 01 December 2016
includes a long service leave provision reversal brought forward from 2016. Mr Maher tendered his resignation as CFO in April 2017,
as such will not be entitled to any long service leave payout based on Long Service Leave Act 1992 No. 83 of the Victoria State
legislation.
Short Term Incentives
Short Term Incentives appearing in the table above were paid in the year ended 30 June 2017 (but relate to the
performance from the prior year) as follows:
Name
Amount
Paid
Amount
available in
future
periods
Total 2016
STI
Opportunity Assessment Criteria
$
$
$
Mr I Lowe
20,623
Mr B Dixon
Mr B Maher
Mr T Peacock
10,000
10,000
10,000
-
-
-
-
150,000 Company performance to budget, product development and launch, and client
& partnership signings.
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
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 four weeks
to four months. The Chief Executive Officer and Chief Financial Officer have notice periods of four months
and three months respectively. Other Executives have notice periods ranging from four weeks to three
months.
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.
Section 5: Long Term Incentives (equity-based compensation)
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 specific individual financial and non-financial 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 Performance Rights over Shares Plan was replaced by the Incentive Option Plan in financial year 2018 and as such
there have been no new Performance Rights granted during the year ending 30 June 2018. The Performance Rights over
Shares Plan will conclude by 30 June 2019.
The following table shows grants of share-based compensation to directors and senior management under the
Performance Rights over Shares Plan during the 2018 financial year:
Name
Ben Dixon
Brendan Maher
Tom Peacock
Series
Sep 16
Sep 16
Sep 16
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)
500,000
750,000
750,000
-
-
-
-
(250,000)
250,000
(750,000)
-
-
-
(375,000)
375,000
2,000,000
-
(750,000) (625,000)
625,000
The final assessment of the balance of Performance Rights will occur in second quarter of FY 2018.
No Performance rights to shares were granted to KMP during the year ended 30 June 2018.
16
The following table shows grants of share-based compensation to directors and senior management under the
Performance Rights over Shares Plan during the prior year ending 30 June 2017:
Name
Ben Dixon
Brendan Maher
Tom Peacock
Ben Dixon
Brendan Maher
Tom Peacock
Series
Nov 14
Nov 14
Nov 14
Sep 16
Sep 16
Sep 16
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)
500,000
833,333
666,667
-
-
-
-
-
-
(250,000)
(416,666)
(333,333)
(250,000)
(416,667)
(333,334)
500,000
750,000
750,000
-
-
-
-
-
-
-
-
-
500,000
750,000
750,000
2,000,000
2,000,000
(999,999)
(1,000,001)
2,000,000
The model inputs for Performance rights to shares granted during the year ended 30 June 2017 included:
Model Input
Grant Date
Assessment period
Exercise Price
Probability of Conversion to Shares
Price at Grant Date
PR # 17-1
01/09/16
2 years
-
50%
$0.125
Employee share option 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.
The ESOP was replaced by the Performance Rights over Shares Plan in financial year 2015 and as such there have been
no new ESOP rights granted during the years ending 30 June 2015 to 30 June 2018.
There was no vesting of ESOP share-based compensation to directors and senior management under the ESOP for the
current financial year ended June 2018 (2017: nil).
Rights over Shares under the Company’s previous ESOP
Upon commencement of his employment on 8 October 2012 Mr Lowe was granted the right to receive up to 17,000,000
shares after the share price of the Company trades above certain 30 day volume-weighted average price (VWAP) hurdles.
Each right would convert into one ordinary share of Adslot Ltd when the VWAP criteria was met.
In the event of a Change of Control of the Company some of the Rights over Shares would have vested on a sliding scale
between the take-over price and required VWAP of the next eligible series.
No amounts would have been paid or payable by the recipient on receipt of the right. The rights carried no voting rights.
Mr Lowe has signed a Separation and Exit Deed with the Company with a separation date of 27 August 2018. All of Mr
Lowe's Share Rights will automatically lapse on the separation date.
17
Remuneration Report (Continued)
Section 5: Long Term Incentives (continued)
Incentive Option Plan
At the November 2017 Annual General Meeting, shareholders approved the creation of the Company’s Incentive Option
Plan which enables the Board to offer eligible employees and directors the right to options which convert to fully-paid
ordinary shares upon exercise, subject to meeting certain vesting criteria.
The objective of the Incentive Option Plan is to attract, motivate and retain key employees and the Company considers
that the adoption of the Incentive Option Plan and the future issue of options under the Incentive Option Plan will provide
selected employees and directors with the opportunity to participate in the future growth of the Company.
Part of the strategic review of operations included a review of the incentives for key executives to ensure their efforts are
aligned with company growth and shareholder outcomes. Adslot continues to operate within a highly competitive
employment environment for experienced people in the technology and software field. Whilst the performance of the
business and our related cost reduction plan limited our ability to incentivise by increasing base or short term cash
incentives across executives we were instead able to provide an option allocation to the management team designed to
provide a strong incentive to continued commitment to the business and increasing shareholder value.
No amounts are paid or payable by the recipient on the receipt of the options. The options carry no voting rights. All options
are subject to service periods which require the employees remain an employee or Director of the Company.
The following table shows grants and movements of share-based compensation to directors and senior management under
the Incentive Option Plan during the current financial year:
Name
Ian Lowe (i)
Ben Dixon
Felicity Conlan
Tom Peacock
Felicity Conlan
Tom Peacock
Series
OP # 18-1
OP # 18-1
OP # 18-2
OP # 18-2
OP # 18-3
OP # 18-3
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)
Vested and
exercisable at the
end of the year
(Number)
-
2,000,000
- 1,000,000
-
-
-
2,000,000
-
1,000,000
-
-
-
-
1,000,000
1,000,000
6,500,000
6,500,000
-
-
-
-
-
-
-
-
1,000,000
1,000,000
6,500,000
6,500,000
-
-
-
-
-
-
Andrew Dyer (ii)
OP # 18-5
- 4,000,000
-
-
4,000,000
2,000,000
-
22,000,000
-
-
22,000,000
2,000,000
(i) Based on the Separation and Exit Deed signed with the Company, Mr Lowe is entitled to retain the 2,000,000 options issued to him. The Board
has agreed to exercise its discretion to waive the vesting condition that Mr Lowe remains an employee. If a strategic project Mr Lowe is engaged
in is completed on or before 27 September 2018, the Board has further agreed to exercise its discretion to bring forward the vesting date from
November 2019.
In conjunction with his appointment as Director, Mr Dyer was granted 4 million options. The exercise price of each Option is $0.036 and the
Options expire on 27 May 2022. 2 million of the options vested immediately. The remaining 2 million vest in four equal tranches in 6 month
intervals from the date of appointment. Mr Dyer has agreed to waive his annual base director fees of $50,000 per annum for the first two years
of his directorship.
(ii)
The options are valued using the Black-Scholes pricing model. The model inputs for options granted during the year
ended 30 June 2018 included:
Model Input
Grant Date
Expiry Date
Exercise Price $
5 day VWAP at Grant Date $
Expected Volatility
Risk Free Interest rate
OP # 18-1
OP # 18-2
OP # 18-3
OP # 18-5
5/10/17
4/10/21
0.073
0.050
62.62%
1.83%
26/11/17
25/11/21
0.060
0.041
61.92%
1.83%
26/02/18
25/02/22
0.035
0.024
69.20%
1.99%
28/05/18
27/05/22
0.036
0.025
86.58%
2.02%
18
Details of Share Options, 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
2018 (Options)
2017(Rights)
2018 (Rights)
2017 (Rights)
Number
$
Number
$
Number
$
Number
$
Options/Rights Granted During the Year
Rights Vested During the Year
Directors
Mr Adrian Giles
Mr Ian Lowe
Mr Andrew Barlow
Mr B Dixon
Mr Q George
Ms S Morgan
Mr A Dyer
Other Key Management Personnel
Ms F Conlan
Mr B Maher
Mr T Peacock
-
-
-
-
-
-
-
-
2,000,000 39,200
-
-
- -
-
-
-
-
-
-
-
-
-
-
1,000,000
19,600
500,000 62,500
250,000 31,250
250,000
26,250
-
-
-
-
4,000,000
55,208
7,500,000
84,722
-
-
7,500,000
84,722
-
-
-
-
-
-
-
-
750,000
750,000
93,750
93,750
-
-
-
-
-
-
-
-
-
-
-
-
-
-
416,667
375,000
46,875
333,334
-
-
-
-
43,750
35,000
The assessed fair value at issue date of the rights, and the assessed fair value at grant date of the options, granted to the
executive are allocated equally over the period from issue/grant date to vesting date, and the amount is included in the
remuneration tables above.
19
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:
2018
Name
Directors
Mr A Giles
Mr A Barlow
Mr I Lowe (i)
Mr B Dixon
Mr Q George
Ms S Morgan
Mr A Dyer (ii)
Other key management personnel
Ms F Conlan
Mr T Peacock
Totals
Balance at the start
of the year
(Number)
Received during the
year as compensation
(Number)
Net other changes
during the year
(Number)
Balance at the end
of the year
(Number)
20,069,707
50,050,000
14,552,838
37,103,660
-
170,000
-
-
-
-
-
250,000
-
-
-
-
(12,518,255)
(14,375,332)
(3,897,596)
-
-
30,500
21,659,342
7,551,452
35,674,668
10,655,242
37,353,660
-
200,500
21,659,342
500,000
500,000
4,409,309
375,000
(1,555,502)
3,228,807
126,355,514
625,000
(10,156,84
3)
116,823,671
(i) Mr Lowe resigned as a director on 27 February 2018
(ii) Mr Dyer was appointed as a director on 28 May 2018.
Section 7: Other transactions with Key Management Personnel
Transactions with Directors and their personally related entities:
During the years ending 30 June 2018 and 30 June 2017 there were no transactions with Directors and their personally
related entities.
This marks the end of the audited remuneration report.
This report is made in accordance with a resolution of directors.
Andrew Barlow
Executive Chairman
29 August 2018
20
Collins Square, Tower 1
727 Collins Street
Docklands VIC 3008
Correspondence to:
GPO Box 4736
Melbourne VIC 3001
T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
To the Directors of Adslot Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Adslot
Limited for the year ended 30 June 2018, I declare that, to the best of my knowledge and belief, there have been:
a
b
no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
Grant Thornton Audit Pty Ltd
Chartered Accountants
Michael Climpson
Partner - Audit & Assurance
Melbourne, 29 August 2018
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International
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Liability limited by a scheme approved under Professional Standards Legislation.
21
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2018
Total revenue from continuing operations
Other income
Total revenue and other income
Hosting & other related technology costs
Employee benefits expense
Directors’ fees
Recruitment fees
Advertising expense
Lease – rental premises
Impairment of receivables
Listing & registrar fees
Legal fees
Travel expenses
Consultancy fees
Audit and accountancy fees
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
Total other comprehensive income / (loss)
Notes
3
3
3
4,10
4
4
4
22
4
5
2018
$
7,072,464
940,825
8,013,289
(832,936)
(8,943,887)
(350,000)
(99,935)
(221,407)
(958,707)
(4,537)
(92,392)
(140,071)
(420,995)
(264,869)
(185,744)
(900,468)
(777,804)
2017
$
7,574,682
1,432,334
9,007,016
(686,624)
(8,139,988)
(270,833)
(238,350)
(160,424)
(1,074,702)
(17,747)
(119,299)
(49,507)
(488,180)
(212,775)
(196,936)
(936,303)
(330,467)
(5,442,959)
(4,685,082)
(19,636,711)
(17,607,217)
(11,623,422)
(8,600,201)
(29,897)
(11,653,319)
(11,653,319)
(29,986)
(8,630,187)
(8,630,187)
(4,136)
(4,136)
3,194
3,194
Total comprehensive loss attributable to the members
(11,657,455)
(8,626,993)
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
17
17
2018
Cents
(0.91)
(0.91)
2017
Cents
(0.70)
(0.70)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
22
Consolidated Statement of Financial Position
As at 30 June 2018
Notes
2018
$
2017
$
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
Lease Incentive Liability
Provisions
Total current liabilities
Non- current liabilities
Lease Incentive Liability
Provisions
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
7
8
9
5
10
11
12
13
14
13
14
5
15
16
4,775,331
14,320,147
5,471,925
4,685,621
10,247,256
19,005,768
832,833
36,370
243,744
36,370
23,202,768
24,747,821
24,071,971
25,027,935
34,319,227
44,033,703
2,925,743
445,491
60,248
587,150
2,252,581
583,759
-
605,590
4,018,632
3,441,930
555,463
360,763
36,370
952,596
-
325,473
36,370
361,843
4,971,228
3,803,773
29,347,999
40,229,930
138,397,710
137,949,047
712,654
389,929
(109,762,365)
(98,109,046)
29,347,999
40,229,930
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
23
Consolidated Statement of Changes in Equity
For the year ended 30 June 2018
2018
Balance at 1 July 2017
Movement in foreign exchange translation
reserve
Other comprehensive income
Loss attributable to members of the Company
Total comprehensive income/(loss)
Transactions with equity holders in their
capacity as equity holders
Contributions of equity, net of transaction costs
Reclassification of vested performance rights
Net movement in treasury shares
Increase in employees share based payments
reserve
Notes
Issued
Capital
$
Reserves
$
Accumulated
Losses
$
Total
Equity
$
137,949,047
389,929
(98,109,046)
40,229,930
16
15
15
16
-
(4,136)
(4,136)
-
-
(4,136)
(4,136)
-
(11,653,319)
(11,653,319)
(4,136)
(11,653,319)
(11,657,455)
-
-
-
-
412,119
36,544
-
-
(414,399)
(36,544)
777,804
448,663
326,861
-
-
-
-
-
-
(2,280)
-
777,804
775,524
Balance 30 June 2018
138,397,710
712,654
(109,762,365)
29,347,999
2017
Balance at 1 July 2016
Movement in foreign exchange translation
reserve
Other comprehensive income
Loss attributable to members of the Company
Total comprehensive income/(loss)
Notes
16
Issued
Capital
$
Reserves
$
Accumulated
Losses
$
Total
Equity
$
120,693,650
404,736
(89,478,859)
31,619,527
-
-
-
-
3,194
3,194
-
3,194
-
-
3,194
3,194
(8,630,187)
(8,630,187)
(8,630,187)
(8,626,993)
Transactions with equity holders in their
capacity as equity holders
Contributions of equity, net of transaction costs
Reclassification of vested performance rights
Net movement in treasury shares
Increase in employees share based payments
reserve
15
16
16
16,910,710
-
344,479
(348,260)
208
-
(208)
330,467
17,255,397
(18,001)
-
-
-
-
-
16,910,710
(3,781)
-
330,467
17,237,396
Balance 30 June 2017
137,949,047
389,929
(98,109,046)
40,229,930
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
24
Consolidated Statement of Cash Flow
As at 30 June 2018
Notes
2018
$
2017
$
Cash flows from operating activities
Receipts from trade and other debtors
Interest received
Receipt of R&D tax incentive and other Grants
8,276,865
11,028,575
157,478
768,439
326,488
775,241
Payments to trade creditors, other creditors and employees
(14,476,555)
(16,251,884)
Income tax received/ (paid)
Interest paid
-
(60)
-
(594)
Net cash outflows from operating activities
23
(5,273,833)
(4,122,174)
Cash flows from investing activities
Payments for property, plant and equipment
Proceeds from sale of fixed assets
Receipt of R&D tax incentive relating to capitalised assets
Payments for intangible assets
(134,740)
330
1,921,946
(6,068,636)
(177,950)
2,750
1,583,175
(4,524,194)
Net cash outflows from investing activities
(4,281,100)
(3,116,219)
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
-
-
-
(9,554,933)
14,320,147
10,117
18,054,640
(1,219,342)
16,835,298
9,596,905
4,745,969
(22,727)
Cash at the end of the financial year
7
4,775,331
14,320,147
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
25
Notes to the Financial Statement
For the year ended 30 June 2018
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
2018 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.
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.
Going concern
Management continues to invest resources to support growth in trading fees in the US market, and the anticipated
market deployments and growth in Symphony licence fees. The Group has incurred net cash outflows of $9.6m for
the year, and management anticipate incurring further net cash outflows from operations until such time as sufficient
revenue growth is achieved.
As previously disclosed, and consistent with its stated focus on software development companies, AusIndustry has
commenced a review of the Company’s FY2016 R&D claim. Management believe its FY2016 R&D claim is
consistent with the criteria of the scheme.
If a delay in expected revenues and/or a negative outcome of AusIndustry’s review of the FY2016 R&D claim was
to occur, this has the potential to create a cash flow risk to the Group which could affect its ability to pay its debts
as and when they fall due, and to realise its assets in the normal course of business.
However, the Directors believe the Group will be able to continue to pay its debts as and when they fall due for the
following reasons:
the Group had a cash position of $4.8 million at 30 June 2018;
on 3 August 2018 the Company raised $3.5 million (before costs and including $0.55 million to be approved at
an EGM in mid-September) via a share placement;
the Group expects to receive $3.3 million in R&D grants in the December 2018 quarter, relating to R&D
expenditure incurred in FY2018;
as previous announced, a 38.7% or $1.5 million increase to Symphony licence fees in FY2019;
a cost reduction plan which was implemented at the end of February 2018, and the full effects of which are
expected to be realised in FY2019;
the opportunity to implement further cost reductions; and
the ability to raise additional capital.
Accordingly, the Directors believe there exists a reasonable expectation that the Company can continue to pay its
debts as and when they fall due, and the financial report has been prepared on a going concern basis.
26
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
25.
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.
Cash and cash equivalents
For the purposes of the Consolidated 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.
27
Notes to the Financial Statements (Continued)
1. Summary of Significant Accounting Policies (Continued)
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 using
the straight-line method over the remaining period of the underlying 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
33– 40% per annum
20 – 33% per annum
Leasehold Improvements
20 – 100% per annum
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.
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.
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.
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.
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.
28
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.
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.
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, and are
credited to share capital.
29
Notes to the Financial Statements (Continued)
1. Summary of Significant Accounting Policies (Continued)
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 at least on an annual basis. An impairment loss for goodwill is recognised
immediately in profit or loss and is not reversed in a subsequent period.
Research and 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 platform technology, branding and domains acquired as a result of the
acquisition of Adslot, 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, 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.
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.
30
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.
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:
Revenue from Trading Technology - Licence Fees
Licence Fee revenue is recognised monthly on invoicing as all relevant activities to ensure access and functionality
of the platform have been performed by the Company. Revenue is recognised over the duration of the agreement.
Revenue from Trading Technology – Trading Fees
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 disclosed in the accounts as “Cash held on behalf
of Publishers”. “Publisher Creditors” represents “Cash held on behalf of Publishers” and amounts due from
advertisers that needs to be repaid to the publishers.
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.
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
In accordance with AASB 120, 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. Where appropriate grants relating to expense
items are recognised as either other income or deducted in reporting the related expense, 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.
31
Notes to the Financial Statements (Continued)
1. Summary of Significant Accounting Policies (Continued)
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.
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.
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.
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.
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.
32
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 fair value less costs
to sell of the cash-generating units to which goodwill and intangible assets have been allocated. Under the market-
based approach for fair value less costs to sell calculations, the entity is required to estimate the amount obtainable
from the sale of an asset or CGU in an arm’s length transaction between knowledgeable, willing parties, less the
costs of disposal.
The Company’s shares are traded on the Australian Stock Exchange, and in the absence of a binding sale
agreement, the year-end share price is used to calculate the asset’s market value.
In the event the share price falls an impairment of the related intangible assets may result.
The carrying amount of goodwill and intangible assets at the reporting date was $ 23,202,768 (2017: $24,747,821)
and there were no impairment losses (2017: 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.
The capitalisation of internally developed software amount for the year was $3,666,409 (2017: $2,605,280). Refer
to Note 10 for further details.
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 $ 777,804 (2017: $ 330,467).
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 is 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 $10,541,711 (2017: $ 9,562,457). Refer to Note 5 for further
details.
Research and development tax concessions
A receivable of $ 3,279,573 (2017: $ 2,706,250) has been recognised in relation to a research and development
tax concession for the 2018 financial year. Refer to Note 8 for further details. 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.
33
Notes to the Financial Statements (Continued)
1. Summary of Significant Accounting Policies (Continued)
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 2018 or later periods, but have not yet been adopted by the Company.
AASB 9 Financial Instruments
AASB 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities,
introduces new rules for hedge accounting and a new impairment model for financial assets.
The new standard has no impact on the Group’s current classification, measurement and derecognition of financial
assets and liabilities.
The Group does not have any debt instruments, available-for sale financial assets or any hedging agreements. For
trade and other receivable the Group applies the simplified approach permitted by AASB 9, whereby the loss
allowance is measured at an amount equal to lifetime expected credit losses. Lifetime expected credit loss is the
amount the Group expects to lose due to default events that are possible over the life of the financial instrument.
AASB 15 Revenue from Contracts with Customers
AASB 15 will replace AASB 118 which covers revenue arising from the sale of goods and the rendering of services
and AASB 111 which covers construction contracts. The new standard is based on the principle that revenue is
recognised when control of a good or service transfers to a customer. The standard permits either a full retrospective
or a modified retrospective approach for the adoption.
Management has assessed the effects of applying the new standard on the Group’s financial statements and has
identified Services revenue from following products will be affected:
Search Engine Optimization (SEO) revenues.
The Group has historically recognised 30% of annual SEO contracts upfront to reflect the initial work involved.
However, there is no specific performance obligation nor is there an identifiable transaction price for this initial work.
As such as per AASB 15 this upfront work needs to be recognised over time as clients simultaneously receive the
service and Webfirm satisfies its obligation to perform. When initially adopted on 1 July 2018, the Group needs to
increase deferred revenue by $117,195 and adjust the retained earnings by the same amount.
Domain Name Registration (DNR) and SSL Certification revenues
DNR services is provided by the Group where the client’s domain name is registered for 2 years with a 3rd party
registry. SSL Certification services involves obtaining annual SSL Certificates on behalf of the client from a 3rd
party and installing in the client’s website. Historically these revenues have been recognised over time.
For both DNR and SSL certification, on initial set up the service has been transferred in full to the customer; and
the customer is able to realize benefit from service received without further involvement from the Group.
Furthermore, the Group separately prices and sells these products. There are no further performance obligations
for the Group. Therefore, as per AASB 15, the Group needs to recognize revenue at a point of time not over a
period of time. On 1 July 2018 initial adoption the Group will reduce deferred revenue by; $ 25,620 for Domain
Names Registration and $ 6,450 for SSL certification and adjust the retained earnings.
AASB 16 Leases
AASB 16 was issued in February 2016. It will result in almost all leases being recognised on the balance sheet, as
the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to
use the leased item) and a financial liability to pay rentals are recognised. The only exceptions are short term and
low-value leases.
The standard will affect primarily the accounting for the Group’s operating leases. As at the reporting date, the
Group has non-cancellable operating lease commitments of $3,604,816, see note 19. The Group estimates that
approximately 5% of these relate to payments for short-term and low value leases which will be recognised on a
straight-line basis as an expense in profit or loss.
However, the Group has not yet assessed what other adjustments, if any, are necessary for example because of
the change in the definition of the lease term and the different treatment of variable lease payments and of extension
and termination options. It is therefore not yet possible to estimate the amount of right-of-use assets and lease
liabilities that will have to be recognised on adoption of the new standard and how this may affect the Group’s profit
or loss and classification of cash flows going forward.
AASB 9, AASB 15 and AASB 16 are available for early adoption but have not been applied in this financial report.
34
Segment Information
2018
Operating segments
APAC
$
EMEA
$
The
Americas
$
Total
$
Revenue for services rendered (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)
6,464,519
(5,591,454)
223,593
5,211,462
18,208
275,999
(555,384)
772
-
-
171,929
(1,710,534)
7,132
-
2,316
6,912,447
(7,857,372)
231,498
5,211,462
20,524
Statement of financial position
Segment assets
Segment liabilities
2017
Operating segments
35,834,855
15,726,667
123,351
97,445
178,056
130,848
36,136,262
15,954,960
APAC
$
EMEA
$
The
Americas
$
Total
$
Revenue for services rendered (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)
6,702,466
(5,184,422)
62,665
4,617,026
232,293
217,631
(1,487,849)
997
-
1,372
330,449
(1,600,122)
4,394
-
12,810
7,250,546
(8,272,393)
68,056
4,617,026
246,475
Statement of financial position
Segment assets
Segment liabilities
36,201,990
(15,257,765)
232,452
(103,487)
525,257
(146,682)
36,959,699
(15,507,934)
Segment revenue reconciles to total revenue from continuing operations as follows:
Revenue
Total segment revenue
Head office revenue
Interest revenue
2018
$
6,912,447
-
160,017
2017
$
7,250,546
-
324,136
Total revenue from continuing operations
7,072,464
7,574,682
(i) Refer to Note 3 for a description of Revenue.
35
Notes to the Financial Statements (Continued)
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/ (Loss) on sale/write off of asset
Other head office income/(expenses) not allocated in segment result
2018
$
2017
$
(7,857,372)
(8,272,393)
160,017
940,825
(777,804)
44,611
(12,755)
182
(4,151,024)
324,136
1,432,334
(330,467)
(13,090)
(11,842)
2,549
(1,761,414)
Loss before income tax from continuing operations
(11,653,319)
(8,630,187)
Reportable segment assets are reconciled to total assets as follows:
Segment assets
Total segment assets
Head office assets
Intersegment eliminations
2018
$
36,136,262
48,289,359
(50,106,394)
2017
$
36,959,699
57,425,836
(50,351,832)
Total assets as per the statement of financial position
34,319,227
44,033,703
Reportable segment liabilities are reconciled to total liabilities as follows:
Segment liabilities
Total segment liabilities
Head office liabilities
Intersegment eliminations
2018
$
(15,954,960)
(845,451)
11,829,183
2017
$
(15,507,934)
(669,670)
12,373,831
Total liabilities as per the statement of financial position
(4,971,228)
(3,803,773)
The Company’s Total Revenue and Other Income (Note 3) and its non-current assets (other than financial instruments)
are divided into the following geographical areas:
Australia (Domicile)
New Zealand
USA
Other countries
Total
2018
$
2017
$
Revenue
Non-Current Assets
Revenue
Non-Current Assets
6,657,110
161,008
171,929
1,023,242
8,013,289
24,052,355
571
9,284
9,761
24,071,971
7,184,931
496,203
330,449
995,433
9,007,016
25,007,283
1,411
12,975
6,266
25,027,935
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.
36
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. There were no Inter segment
revenue transfers or expenses to be eliminated on consolidation (2017: nil)
Major customers
The Group provides services to and derives revenue from a number of customers across all the divisions. The Group had
certain customers whose revenue individually represented 10% or more of the Company’s total revenue
For the year to 30 June 2018, one customer accounted for 10% or more of revenue (2017: one).
37
Notes to the Financial Statements (Continued)
Revenue and Other Income
Revenue
Revenue from Trading Technology
Revenue from Services
Total revenue for services rendered
Interest revenue
Total revenue from continuing operations
Other income
Grant income
Revenue from Adserving
Total Other Income
Total revenue and other income
2018
$
2017
$
5,146,669
1,765,778
6,912,447
160,017
7,072,464
853,859
86,967
940,825
8,013,289
5,379,387
1,871,159
7,250,546
324,136
7,574,682
823,640
608,694
1,432,334
9,007,016
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). For strategic reasons the Company decided to discontinue providing Adserving
services in the first quarter of the financial year.
38
Expenses
Loss before income tax includes the following specific
expenses:
Depreciation and amortisation
Amortisation – Software development costs
Amortisation – Leasehold improvements
Depreciation – Computer & Equipment
Depreciation – Plant & equipment
Total depreciation and amortisation
Other charges against assets
Impairment of trade receivables
Employee benefits expense
Total capitalised development wages
Employee benefits included in Share based payment expense
Total employee benefits
Defined contribution superannuation expense included in Employee
benefit expense
Capitalised development wages (net of related grants)
Capitalised development wages included in the R&D grant
Total capitalised development wages
Rental expense – operating leases
Foreign currency (gain) / loss included in Other expenses
2018
$
2017
$
5,211,462
4,617,026
125,802
102,215
3,480
5,848
55,178
7,030
5,442,959
4,685,082
4,537
17,747
8,943,887
6,068,635
741,317
8,139,988
4,527,222
318,146
15,753,839
12,985,356
1,026,983
780,067
3,666,409
2,402,226
6,068,635
958,707
(44,611)
2,605,280
1,921,942
4,527,222
1,074,702
13,090
39
Notes to the Financial Statements (Continued)
Income Tax Expense
a) Numerical reconciliation of income tax expense to prima facie tax benefit
Loss before income tax
2018
$
2017
$
(11,623,422)
(8,600,201)
Prima facie tax benefit on loss before income tax at 27.5% (2017: 27.5%)
(3,196,441)
(2,365,055)
Tax effect of:
Other non-allowable items
Share based expensed during year
Research and development tax concession
Income tax benefit attributable to entity
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
b) Movement in deferred tax balances
Balance at
1 July
2017
$
Recognised
in Profit &
Loss
$
Acquired in
Business
combination
$
Trade and other receivables
(125,957)
Property, plant and equipment
Intangible assets
Unused tax losses
199
165,435
(39,677)
10,496
(17)
(13,786)
3,307
Net tax (assets) / liabilities
-
-
-
-
-
-
-
Balance at
1 July
2016
$
Recognised
in Profit &
Loss
$
Acquired in
Business
combination
$
Trade and other receivables
(125,957)
Property, plant and equipment
Intangible assets
Unused tax losses
199
165,435
(39,677)
10,496
(17)
(13,786)
3,307
Net tax (assets) / liabilities
-
-
-
-
-
-
-
14,661
213,896
2,073,293
(894,591)
-
979,254
(114,560)
(29,897)
11,789
90,878
1,710,848
(551,540)
-
667,198
(145,644)
(29,986)
Balance at 30 June 2018
Net
$
Deferred
tax assets
$
Deferred tax
liabilities
$
(115,461)
182
151,649
-
-
-
(36,370)
(36,370)
(115,461)
182
151,649
-
-
(36,370)
36,370
Balance at 30 June 2017
Net
$
Deferred
tax assets
$
Deferred tax
liabilities
$
(115,461)
182
151,649
-
-
-
(36,370)
(36,370)
(115,461)
182
151,649
-
-
(36,370)
36,370
40
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 (27.5% 2017: 27.5%)
2018
$
2017
$
(5,344,713)
(4,512,568)
43,439,948
39,046,882
238,258
238,258
38,333,493
10,541,711
34,772,572
9,562,457
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.
Deferred tax liabilities from temporary differences of $1,469,769 (2017: $1,240,956) have not been recognised as they
have been offset with deferred tax assets of the same value.
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.
Cash and Cash Equivalents
Cash at bank and on hand
Cash held on behalf of Publishers
2018
$
3,755,744
1,019,587
4,775,331
2017
$
13,681,124
639,023
14,320,147
Included in the Cash at Bank is $615,289 (2017: $833,097) of funds held on term deposit as guarantee for our corporate
credit card facilities and for the benefit of landlords under office lease agreements.
41
Notes to the Financial Statements (Continued)
8.
Trade and Other Receivables
Current:
Trade debtors
Less: Allowance for impairment
Research and Development grant receivable
Other receivables (i)
Prepayments
2018
$
2,042,744
(2,370)
2,040,374
3,279,573
(93,219)
245,197
5,471,925
(i)
Includes $116,821erroneously received in June from a trade debtor. This amount was refunded in July.
The average age of the Company’s trade debtors is 49 days (2017: 49 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
Amounts written off as uncollectible
Amounts recovered during the year
Net foreign exchange differences
Balance at the end of the year
2018
$
255,626
228,540
53,267
66,031
603,464
2018
$
2,814
2,370
-
(2,814)
-
2,370
2017
$
1,526,780
(2,814)
1,523,966
2,706,250
176,002
279,403
4,685,621
2017
$
141,220
70,035
24,600
517
236,372
2017
$
161,683
54,852
(206,031)
(7,690)
-
2,814
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.
42
9.
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
2018
$
815,965
(126,466)
689,499
90,307
(79,054)
11,253
531,109
(399,028)
132,081
2017
$
133,010
(110,020)
22,990
156,190
(131,481)
24,709
497,285
(301,240)
196,045
Total carrying amount of property, plant and equipment
832,833
243,744
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:
2018
Carrying amount at 1 July 2017
Additions
Disposals/ Write Offs
Depreciation / amortisation expense
Net foreign exchange differences
Leasehold
Plant and
Computer
Improvements
Equipment
Equipment
$
$
$
22,990
792,311
-
(125,802)
24,709
196,045
(8,537)
(1,449)
(3,480)
33,456
1,197
(102,215)
(231,497)
-
10
3,598
3,608
Total
$
243,744
817,230
(252)
Carrying amount at 30 June 2018
689,499
11,253
132,081
832,833
2017
Carrying amount at 1 July 2016
Additions
Depreciation / amortisation expense
Net foreign exchange differences
Leasehold
Plant and
Computer
Improvements
Equipment
Equipment
$
108
28,730
(5,848)
-
$
3,901
27,838
(7,030)
-
$
61,509
189,907
(55,178)
(193)
Carrying amount at 30 June 2017
22,990
24,709
196,045
Total
$
65,518
246,475
(68,056)
(193)
243,744
43
Notes to the Financial Statements (Continued)
10.
Intangible Assets
Internally
Developed
Software
$
Domain
Name
$
Intellectual
Property
$
Goodwill
$
Total
$
Year ended 30 June 2018
Opening net book amount
4,721,903
38,267
4,825,712
15,161,939
24,747,821
Additions
Amortisation
3,666,409
(1,925,477)
-
-
-
(3,285,985)
-
-
3,666,409
(5,211,462)
Carrying amount at 30 June
2018
6,462,835
38,267
1,539,727
15,161,939
23,202,768
At 30 June 2018
Cost
Accumulated amortisation and
impairment
Carrying amount at 30 June
2018
11,607,437
38,267
29,045,251
15,161,939
55,852,894
(5,144,602)
-
(27,505,524)
-
(32,650,126)
6,462,835
38,267
1,539,727
15,161,939
23,202,768
Year ended 30 June 2017
Opening net book amount
Additions
Amortisation
Carrying amount at 30 June
2017
At 30 June 2017
Cost
Accumulated amortisation and
impairment
Carrying amount at 30 June
2017
Internally
Developed
Software
$
3,375,131
2,605,280
(1,258,508)
Domain
Name
$
Intellectual
Property
$
Goodwill
$
Total
$
38,267
8,184,230
15,161,939
26,759,567
-
-
-
(3,358,518)
-
-
2,605,280
(4,617,026)
4,721,903
38,267
4,825,712
15,161,939
24,747,821
7,941,028
38,267
29,045,250
15,161,939
52,186,484
(3,219,125)
-
(24,219,538)
-
(27,438,663)
4,721,903
38,267
4,825,712
15,161,939
24,747,821
44
Internally Developed Software
Internally developed software represents a number of software platforms developed within the Company. The following
table shows the portion of platform development costs that are capitalised and expensed for the current financial year,
2018:
Platform
Capitalised Wages
R&D grants offsetting
capitalised wages
Net Capitalised
Wages
Adslot Publisher and Marketplace
Symphony
$
1,432,707
4,635,928
6,068,635
$
(623,227)
(1,778,999)
(2,402,226)
$
809,480
2,856,929
3,666,409
The following table shows the portion of platform development costs that are capitalised and expensed for the prior financial
year, 2017:
Platform
Capitalised Wages
R&D grants offsetting
capitalised wages
Net Capitalised
Wages
$
$
$
Adslot Publisher and Marketplace
1,169,600
(508,776)
660,824
Symphony
3,357,629
(1,413,173)
1,944,456
4,527,229
(1,921,949)
2,605,280
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 (2017: $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 (2017: $5,932,006) of the opening balance relates to this “CAP” technology. Accumulated
amortisation of this asset as at 30 June 2018 was $5,932,006 (2017: $5,932,006). This asset has been fully amortised.
QDC IP Technology (“QDC”) is creative ad building and video advertising technology with licences to the Core IP valued
at $6,466,517 (2017: $6,466,517) in the opening balance and attached to the Adslot CGU. Accumulated amortisation of
this asset as at 30 June 2018 was $6,466,517 (2017: $5,904,904). This asset has been fully amortised.
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 (2017: $16,191,496).
Accumulated amortisation of this asset at 30 June 2018 was $14,651,770 (2017: $11,413,471). This asset has a remaining
useful life for accounting purposes of six months.
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 (2017: $455,231).
Accumulated amortisation of this asset at 30 June 2018 was $455,231 (2017: $407,545). This asset was fully amortised
during the year.
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.
45
Notes to the Financial Statements (Continued)
10.
Intangible Assets (Continued)
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)
For the purpose of impairment testing, goodwill has been allocated to the group of CGUs that are expected to benefit from
the acquisition, being both the Adslot and Symphony CGUs. A summary of the carrying amount of goodwill and intangible
assets with indefinite useful lives is detailed below:
CGU
2018
2017
Intangible
assets with
indefinite useful
lives
$
Goodwill
$
Intangible
assets with
indefinite useful
lives
$
Goodwill
$
Adslot and Symphony CGUs
15,161,939
-
15,161,939
-
(b) Impairment testing and key assumptions
The Company tests whether goodwill and other intangible assets have suffered any impairment in accordance with the
Company’s accounting policies. The recoverable amounts of assets and CGUs have been determined using a fair value
less costs to sell approach. The directors have assessed the fair value having regard to a market-based approach and
have determined the goodwill is not impaired.
The directors’ determination of fair value using a market based approach is the market capitalisation of the Company, less
the value attributed to business units that are not part of the group of CGUs attributed to goodwill, less other net assets.
The most significant judgements and key assumptions pertaining to the calculation are:
the Company’s share price (ASX: ADJ as at 30 June 2018);
a 4x valuation multiple on EBITDA to estimate the value of the business unit (Webfirm) that is not part of the group of
CGUs attributed to goodwill; and
costs to sell including a transaction fee (3.5% of total value) plus estimate of legal, account and other consultant costs
($200k).
The Company’s directors appointed an independent expert to review the approach adopted by management in assessing
the carrying value of the intangible assets of the Company as at 30 June 2018. The review supported the selection of
methodology and the assessment of the value of the Company under the primary quoted security price approach.
(c) Sensitivity analysis
The Company’s share price forms the basis of the market-based approach. A material adverse change in the Company’s
share price would likely result in the carrying amount exceeding the recoverable amount.
On 3rd August 2018 Adslot Limited announced the successful closing of a $3.5 million share placement to institutional and
sophisticated investors. While the placement occurred post 30 June 2018, it is a reference point as a binding sale
agreement in an arm’s length transaction.
Sensitivity Analysis has been performed using the placement offer price of $0.025, a recalculation of the Costs to Sell and
all other elements of the 30 June calculation remaining equal. The result also shows a surplus fair value over carrying
value of the intangible assets at a share price of $0.025, albeit with less headroom.
There are no other material sensitivities involved in the directors’ determination of fair value using a market based
approach.
46
11. Trade and Other Payables
Trade creditors
Publisher creditors (i)
Other creditors
(i) Refer to Note 1(p) for further information on publisher creditors.
Other Liabilities
Current: Unearned revenue
2018
$
546,024
1,514,495
2017
$
417,008
807,179
865,224
1,028,394
2,925,743
2,252,581
2018
$
2017
$
445,491
583,759
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, licence fees billed in advance
and advertising campaigns that have been purchased but whose delivery will occur after the reporting date.
Lease Incentives Liabilities
Current: Lease Incentives Liability
Non-current: Lease Incentives Liability
2018
$
60,248
555,463
2017
$
-
-
The lease agreements for some premises included a free fit-out provided by the lessor as a lease incentive. The assets
obtained by the Group have been recognised as leasehold improvements at fair value and are depreciated over the lease
term (see Note9). A corresponding liability is presented as part of the lease liabilities and is reversed on a straight-line
basis over the lease term.
Provisions
Current: Employee benefits
Non-current: Employee benefits
2018
$
587,150
360,763
2017
$
605,590
325,473
47
Notes to the Financial Statements (Continued)
15. Contributed Equity
2018
Number
2017
Number
2018
$
2017
$
Ordinary Shares – Fully Paid
1,284,950,994
1,280,918,427
138,397,710
137,949,047
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
01-Jul-16
Balance (including Treasury shares)
Number of
shares
Number
1,116,771,133
Issue
price
$
Capital
raising
costs
$
Value
$
(1,472,056)
121,032,092
01-Sep-16
Issue of shares – Performance Rights vesting
3,424,524
$0.102
(3,781)
344,479
28-Sep-16
Share Placement
24-Oct-16
Rights Issue
30-Jun-17
Less: Treasury shares
30-Jun17
Balance
101,900,000
$0.110
(651,251)
10,557,749
62,233,112
$0.110
(492,681)
6,352,961
1,284,328,769
(3,410,342)
1,280,918,427
(2,619,769)
138,287,281
-
(338,234)
(2,619,769)
137,949,047
01-Jul-17
Balance (including Treasury shares)
1,284,328,769
(2,619,769)
138,287,281
11-Oct-17
Issue of shares – Performance Rights vesting
3,677,500
$0.113
(2,278)
412,119
30-Jun-18
Less: Treasury shares
30-Jun18
Balance
Treasury Shares
1,288,006,269
(3,055,275)
1,284,950,994
(2,622,047)
138,699,400
-
(301,690)
(2,622,047)
138,397,710
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 Type
Issue or
Acquisition
Date
Employee ESOP
16/06/14
Employee ESOP
1/05/15
Employee ESOP
27/08/15
Employee ESOP
01/09/16
Issue
Price
$
0.105
0.090
0.080
0.125
Balance at
beginning of the
year
(Number)
1,000,000
2,142,775
67,567
200,000
3,410,342
Issued during
the year
(Number)
Transfers
during the year
(Number)
Balance at end
of the year
(Number)
-
-
-
-
-
-
(200,000)
(67,567)
(87,500)
1,000,000
1,942,775
-
112,500
(355,067)
3,055,275
48
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
Balance at
beginning of the
year
Granted
during the
year
Expired during
the year
Vested during
the year
Balance at
end of the
year
(Number)
(Number)
(Number)
(Number)
(Number)
Required
VWAP Price $
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 Type
Issue or
Acquisition
Date
Performance Rights
26/08/15
Performance Rights
27/06/16
Performance Rights
01/09/16
Issue
Price
$
Nil
Nil
Nil
Balance at
beginning of
the year
(Number)
Issued
during the
year
(Number)
1,090,000
400,000
7,750,000
9,240,000
-
-
-
-
Transfers
during the
year
(Number)
(790,000)
(400,000)
Forfeited
during the
year
(Number)
(300,000)
-
Balance at end
of the year
(Number)
-
-
(2,687,500)
(2,937,500)
2,125,000
(3,877,500)
(3,237,500)
2,125,000
Options movements during the financial year are summarised below:
Exercise
Price
Issue Type
Expiry Date
$
Ordinary options
4/10/21
Ordinary options
25/11/21
Ordinary options
25/02/22
Ordinary options
15/05/22
Ordinary options
27/05/22
0.073
0.060
0.035
0.034
0.036
Balance at
beginning of
the year
(Number)
Issued
during the
year
(Number)
Forfeited
during the
year
(Number)
Exercised
during the
year
(Number)
Balance at end
of the year
(Number)
-
-
-
-
-
-
3,000,000
-
6,550,000
(750,000)
25,750,000
(2,250,000)
12,700,000
4,000,000
-
-
52,000,000
(3,000,000)
-
-
-
-
-
-
3,000,000
5,800,000
23,500,000
12,700,000
4,000,000
49,000,000
49
Notes to the Financial Statements (Continued)
16. Reserves
Reserves
Share–based payments reserve
Foreign currency translation reserve
Share–based payments reserve
Opening balance
Reclassification of Treasury Shares
Reclassification vested Performance Rights
Share based payment expense
Closing balance
Foreign currency translation reserve
Opening balance
Movement on currency translation
Closing balance
2018
$
605,978
106,676
712,654
2017
$
279,117
110,812
389,929
279,117
(36,544)
(414,399)
777,804
297,118
(208)
(348,260)
330,467
605,978
279,117
110,812
(4,136)
106,676
107,618
3,194
110,812
The Share-based payments reserve is used to record the value of options accounted for in accordance with AASB2: Share
Based Payments.
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.
50
17. Earnings Per Share
(a) Basic earnings per share
2018
Cents
2017
Cents
Loss attributable to the ordinary equity holders of the Company
(0.91)
(0.70)
(b) Diluted earnings per share
Loss attributable to the ordinary equity holders of the Company
(0.91)
(0.70)
(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
(11,653,319)
(8,630,187)
2018
$
2017
$
(d) Weighted average number of shares used as the denominator
Weighted average number of shares on issue used in the calculation of basic EPS
1,283,691,139
1,235,331,383
2018
Number
2017
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
1,283,691,139
1,235,331,383
(i) During 2018 and 2017 there were no discontinued operations or values attributable to minority interests.
2018
Number
2017
Number
Weighted average number of rights and 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.
2018
Number
2017
Number
17,186,327
1,080,115
51
Notes to the Financial Statements (Continued)
18. Contingencies
No contingent assets or liabilities are noted.
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
2018
$
2017
$
917,155
555,047
2,687,661
1,273,533
3,604,816
1,828,580
The lease commitments detailed above relate to rental premises and lease rental of printer/copier.
Capital commitments
The Group has not entered any capital expenditure contracts at reporting date that are not recognised as liabilities on the
Statement of Financial Position.
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, groupm compliance audit, ASIC special purpose accounts
for Symphony International Solutions Limited, ESS advice and Research and
Development grant advice
2018
$
2017
$
112,000
109,000
119,070
64,300
231,070
173,300
52
21. Key Management Personnel Disclosures
Directors
The following persons were directors of the Company during the financial year:
Mr Andrew Barlow (Executive Chairman) (i)
Mr Adrian Giles (Non-Executive Director)
Mr Quentin George (Non-Executive Director)
Ms Sarah Morgan (Non-Executive Director)
Mr Andrew Dyer (Non-Executive Director)
Mr Ian Lowe (Executive Director & CEO) (ii)
Mr Ben Dixon (Executive Director & interim CEO) (iii)
Appointed 27 February 2018
Appointed 28 May 2018
Resigned 27 February 2018
Appointed 27 February 2018
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
Ms Felicity Conlan (iv)
Mr Brendan Maher (v)
Mr Tom Peacock
Position
Chief Financial Officer and Company Secretary
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
Share based payments
Total compensation (a)
2018
$
1,357,311
93,982
12,083
263,233
2017
$
1,338,681
92,669
(4,603)
72,774
1,726,609
1,499,521
(i) Mr Barlow was a Non-Executive Chairman prior to 27 February 2018.
(ii) Mr Lowe continued to be a key management personnel post 27 February 2018.
(iii) Mr Dixon was an Executive Director for the entire financial year. He was interim Company Secretary from 15 July
2017 to 9 October 2017 and was appointed as interim CEO on 27 February 2018
(iv) Ms Conlan was appointed as the Chief Financial Officer on 30 August 2017 and Company Secretary on 9 October
2017.
(v) Mr Maher ceased to be the Chief Financial Officer and Company Secretary on 14 July 2017.
(a) There were 10 key management personnel throughout 2018, some of whom have a part year of service (2017: 9).
Business Acquisitions:
There were no related party transactions during the year ended 30 June 2018.
Transactions with Directors and their personally related entities:
During the year there were no transactions with Directors and their personally related entities (2017: nil).
53
Notes to the Financial Statements (Continued)
22. Share Based Payments
Employee Share Option 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 and 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.
ESOP rights to shares are valued at fair value at the date the options were granted.
The ESOP was replaced by the Performance Rights over Shares Plan in financial year 2015 and as such there have been
no new ESOP rights granted during the years ending 30 June 2015 to 30 June 2018. The remaining ESOP shares vested
at the end of the financial year and have subsequently been transferred to the employees.
The following tables shows the movement of share-based compensation to employees under the ESOP for the period.
2018
Grant
Date
Escrow
End
Date
Valuation
Price $
Balance
at start of
the year
Granted
during
the year
Transferre
d 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)
15/06/14
15/06/15
15/06/14
2016-2018
27/08/15
07/09/17
Total
0.105
0.105
0.080
250,000
750,000
67,567
1,067,567
Weighted average share price
$0.103
-
-
-
-
-
-
-
(67,567)
(67,567)
$0.080
-
-
-
-
-
250,000
750,000
-
250,000
750,000
-
1,000,000
1,000,000
$0.105
$0.105
Weighted average remaining contractual life at 30 June 2018 (days)
-
2017
Grant
Date
Escrow
End
Date
Valuation
Price $
Balance
at start of
the year
Granted
during
the year
Transferre
d 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)
15/06/14
15/06/15
15/06/14
2016-2018
27/08/15
07/09/16
27/08/15
07/09/17
Total
0.105
0.105
0.080
0.080
250,000
750,000
67,567
67,567
1,135,134
Weighted average share price
$0.102
-
-
-
-
-
-
-
-
(67,567)
-
(67,567)
$0.080
-
-
-
-
-
-
250,000
750,000
-
67,567
250,000
499,992
-
-
1,067,567
749,992
$0.103
$0.105
Weighted average remaining contractual life at 30 June 2017 (days)
159
54
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 and movements of share-based compensation to employees under the Performance
Rights over Shares Plan during the current financial year:
2018
Grant
Date
Assessment
period
Valuation
Price $
Balance at
start of
the year
Granted
during the
year
Transferre
d during
the year
Forfeited
during the
year
Balance at
end of the
year
Vested at
the end of
the year
(Number)
(Number)
(Number)
(Number)
(Number)
(Number)
26/08/15
27/06/16
01/09/16
01/09/16
Total
2 years
2 years
1 year
2 years
0.074
0.100
0.125
0.125
1,090,000
400,000
250,000
7,500,000
9,240,000
-
-
-
-
-
(790,000)
(300,000)
(400,000)
(250,000)
-
-
-
-
-
(2,437,500)
(2,937,500)
2,125,000
(3,877,500)
(3,237,500)
2,125,000
-
-
-
-
No Performance Rights over Shares were granted during the financial year 2018
2017
Grant
Date
Assessment
period
Valuation
Price $
Balance at
start of
the year
Granted
during the
year
Transferre
d during
the year
Forfeited
during the
year
Balance at
end of the
year
Vested at
the end of
the year
(Number)
(Number)
(Number)
(Number)
(Number)
(Number)
26/11/14
26/08/15
27/06/16
01/09/16
01/09/16
Total
2 years
2 years
2 years
1 year
2 years
0.105
0.074
0.100
0.125
0.125
5,309,523
1,955,000
600,000
-
-
-
-
-
250,000
8,050,000
(3,059,524)
(2,249,999)
-
(365,000)
(200,000)
-
-
(500,000)
1,090,000
-
-
400,000
250,000
(550,000)
7,500,000
7,864,523
8,300,000
(3,624,524)
(3,299,999)
9,240,000
-
-
-
-
-
The model inputs for Performance Rights to shares granted during the year ended 30 June 2017 included:
Model Input
Grant Date
Assessment Period
Exercise Price
Probability of Conversion to Shares
Price at Grant Date
PR # 17-1
PR # 17-2
PR # 17-3
PR # 17-4
01/09/16
2 years
-
50%
$0.125
01/09/16
2 years
-
50%
$0.125
01/09/16
2 years
-
10%
$0.125
01/09/16
1 year
-
25%
$0.125
55
Notes to the Financial Statements (Continued)
22. Share Based Payments (Continued)
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. In the event of a Change of
Control of the Company some of these Rights would vest on a sliding scale between the take over price and required
VWAP of the next eligible series.
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.
No Rights over Shares were issued in 2018 (2017: nil). The following table shows movement in the Rights over Shares for
the current financial year (no change in the last two years):
Required
VWAP
Price
$
0.20
0.30
0.40
0.50
Escrow
Required
from
award
2 years
-
-
-
Valuation
Price
$
64,500
66,000
73,000
63,500
Balance
at start of
the year
(Number)
3,000,000
4,000,000
5,000,000
5,000,000
267,000
17,000,000
Issue
Date
8-Oct-2012
8-Oct-2012
8-Oct-2012
8-Oct-2012
Total
Granted
during
the year
(Number)
-
Vested
during
the year
(Number)
-
Forfeited
during the
year
(Number)
-
Balance at
end of the
year
(Number)
3,000,000
-
-
-
-
-
-
-
-
-
-
-
-
4,000,000
5,000,000
5,000,000
17,000,000
56
Employee Option Plan
Shareholders approved at the November 2017 Annual General Meeting the creation of Incentive Option Plan which enables
the Board to offer eligible employees and directors the right to options which can be exercised to shares subject to the
certain vesting criteria.
The objective of the Option Plan is to attract, motivate and retain key employees and it is considered by the Company that
the adoption of the Option Plan and the future issue of Options under the Option Plan will provide selected employees and
directors with the opportunity to participate in the future growth of the Company.
No amounts are paid or payable by the recipient on the receipt of the options. The options carry no voting rights. All options
are subject to service periods which require the employees remain an employee or Director or the Company.
The following table shows grants and movements of share-based compensation to employees under the Employee Option
Plan during the current financial year:
Grant
Date
05/10/17
Expiry
Date
04/10/21
Exercise
Price $
0.073
26/11/17
25/11/21
26/02/18
25/02/22
16/05/18
15/05/22
28/05/18
27/05/22
0.060
0.035
0.034
0.036
Total
Weighted average exercise price
Balance at
start of the
year
(Number)
-
-
-
-
-
-
-
Granted
during the
year
(Number)
3,000,000
6,550,000
25,750,000
12,700,000
4,000,000
52,000,000
$0.040
Exercised
during the
year
(Number)
-
Lapsed
during the
year
(Number)
-
-
-
-
-
-
-
-
-
-
-
-
-
Forfeited
during the
year
(Number)
-
Balance at
end of the
year
(Number)
3,000,000
(750,000)
5,800,000
(2,250,000)
23,500,000
Vested and
exercisable
at the end of
the year
(Number)
-
-
-
-
-
12,700,000
1,000,000
4,000,000
2,000,000
(3,000,000)
49,000,000
3,000,000
$0.041
$0.040
$0.035
The options are valued using the Black-Scholes pricing model. The model inputs for options granted during the year
ended 30 June 2018 included:
Model Input
Grant Date
Expiry Date
Exercise Price $
5 day VWAP at Grant Date $
Expected Volatility
Risk Free Interest rate
OP # 18-1
OP # 18-2
OP # 18-3
OP # 18-4
OP # 18-5
5/10/17
4/10/21
0.073
0.050
62.62%
1.83%
26/11/17
25/11/21
0.060
0.041
61.92%
1.83%
26/02/18
25/02/22
0.035
0.024
69.20%
1.99%
16/05/18
15/05/22
0.034
0.023
85.12%
2.02%
28/05/18
27/05/22
0.036
0.025
86.58%
2.02%
57
Notes to the Financial Statements (Continued)
23. Cash Flow reconciliation
Reconciliation of Net Cash Flows from Operating Activities to Loss for the year
Add/(less) non-cash and other items:
Loss for the year after income tax
Depreciation and amortisation
Cash Based: Depreciated Leasehold Fitout
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
(Decrease)/Increase in payables and other provisions
Net cash outflow from operating activities
2018
$
2017
$
(11,653,319)
(8,630,187)
5,442,959
4,685,082
(107,260)
777,804
4,537
(182)
15,908
480,280
-
330,467
17,747
(2,549)
8,240
338,771
(786,304)
(329,634)
551,744
(540,111)
(5,273,833)
(4,122,174)
24. 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 0(d) and interest rate risk is covered in Note 24(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.
The Group held the following financial assets with potential credit risk exposure:
Financial assets
Cash and cash equivalents
Trade debtors and Other receivables (Note 8)
2018
$
2017
$
4,775,331
14,320,147
5,471,925
4,685,621
10,247,256
19,005,768
58
(c) Liquidity risk
Financial liabilities
Trade and other payables
2,925,743
2,252,581
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.
(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:
30 June 2018
Financial Assets
USD
A$
1,716,774
GBP
A$
78,689
EUR
A$
91,938
NZD
A$
40,636
CNY
A$
31,220
MYR
A$
3,857
Financial Liabilities
(796,334)
(193,004)
(44,996)
(1,452)
(29,907)
-
Total Exposure
920,440
(114,315)
46,942
39,184
1,313
3,857
30 June 2017
Financial Assets
1,337,881
207,753
30,483
54,144
25,103
9,165
Financial Liabilities
(468,983)
(167,148)
(24,221)
(43,490)
(23,432)
-
Total Exposure
868,898
40,605
6,262
10,654
1,671
9,165
The following table illustrates the sensitivity on profit and equity in relation to the Group’s financial assets and 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 2018 (30 June 2017:10%).
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.
30 June 2018
USD
A$
GBP
A$
Impact on Profit
(131,245)
(4,318)
Impact on Reserves
Impact on Equity
30 June 2017
Impact on Profit
Impact on Reserves
Impact on Equity
47,569
(83,676)
14,710
10,392
(46,353)
(32,638)
(78,991)
4,151
(7,842)
(3,691)
EUR
A$
(2,091)
(2,176)
(4,267)
(363)
(206)
(569)
+10%
NZD
A$
-
(3,562)
(3,562)
CNY
A$
(373)
MYR
A$
(351)
Total
A$
(138,378)
254
-
56,795
(119)
(351)
(81,583)
6
(975)
(969)
102
(254)
(152)
(833)
(43,290)
-
(41,915)
(833)
(85,205)
59
Notes to the Financial Statements (Continued)
24. Financial Risk Management (Continued)
30 June 2018
Impact on Profit
USD
A$
160,410
GBP
A$
5,278
Impact on Reserves
(58,139)
(17,980)
Impact on Equity
102,271
(12,702)
30 June 2017
Impact on Profit
Impact on Reserves
Impact on Equity
56,653
39,891
96,544
(5,074)
9,586
4,512
(e) Cash flow and interest rate risk
-10%
NZD
A$
-
4,354
4,354
(7)
1,191
1,184
EUR
A$
2,556
2,660
5,216
443
253
696
CNY
A$
456
(310)
146
(124)
310
186
MYR
A$
429
Total
A$
169,129
-
(69,415)
429
99,714
1,018
-
52,909
51,231
1,018
104,140
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 2018
30 June 2017
+1%
$
68,461
138,479
-1%
$
(64,993)
(136,171)
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.
60
25. Parent Entity Information
The following details of information are related to the parent entity, Adslot Ltd, at 30 June 2018. 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
2018
$
3,667,011
2017
$
12,808,996
44,919,847
44,289,745
48,586,858
57,098,741
447,356
555,463
236,351
-
1,002,819
236,351
138,699,400
138,287,281
605,975
279,115
(91,721,336)
(81,704,006)
47,584,039
56,862,390
(10,014,024)
(7,999,100)
(10,014,024)
(7,999,100)
The Commitments Note 19 includes commitments by the parent entity related to leases of the Melbourne office premises
at 425 Collins Street, Melbourne (46 ½ months) for an amount of $1,063,969 (2017: $1,565,583) and the Sydney office
premises at 10-14 Waterloo Street, Surry Hills (54 months) for an amount of $2,358,486 (2017: nil)
26. Related Party Transactions
Other than the transactions disclosed in Note 21 relating to key management personnel, there have been no related party
transactions that have occurred during the current or prior financial year.
27. Events Subsequent to Reporting Date
On 3 August 2018 the Company successfully completed a $3.50 million share placement (Placement). The Placement
involved the issue of 140,000,000 new, fully paid ordinary shares (New Shares) at $0.025 per New Share (Offer Price) to
raise $3.50 million (before costs). The Placement was conducted in two tranches. The first tranche comprising 118,000,000
New Shares at the Offer Price ($2.95 million) placed to sophisticated and institutional investors completed in August 2018.
The second tranche comprising 22,000,000 New Shares at the Offer Price ($0.55 million) will be placed to Directors and
related parties subject to shareholder approval at a General Meeting to be held on 14 September 2018.
61
Country of
Incorporation
Ordinary Share Consolidated
Equity Interest
2018
%
2017
%
Notes to the Financial Statements (Continued)
28. 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
QDC IP Technologies Pty Ltd
Adslot UK Limited
Adslot Inc.
Symphony International Solutions Limited
Symphony Workflow Pty Ltd
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
Equity interests in all controlled entities are by way of ordinary shares.
Australia
Australia
Australia
Australia
Australia
Australia
United Kingdom
United States
Australia
Australia
Australia
China
New Zealand
New Zealand
United States
United Kingdom
Germany
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
62
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 22 to 62 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 2018 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 12 to 20 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
29 August 2018
63
Collins Square, Tower 1
727 Collins Street
Docklands VIC 3008
Correspondence to:
GPO Box 4736
Melbourne VIC 3001
T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
Independent Auditor’s Report
To the Members of Adslot Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Adslot Limited (the Company) and its subsidiaries (the Group), which comprises
the consolidated statement of financial position as at 30 June 2018, the consolidated statement of profit or loss and other
comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the
year then ended, and notes to the consolidated financial statements, including a summary of significant accounting
policies, and the Directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
a giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its financial performance for
the year then ended; and
b Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 1 in the financial statements, which indicates that the Group incurred net cash outflows of $9.6m for
the year, and management anticipate incurring further net cash outflows from operations until such time as sufficient revenue
growth is achieved. The Directors are forecasting improved results for the 2019 financial year from a combination of revenue
growth and reduced costs, however cash flow risk could exist. These events or conditions, along with other matters and
mitigating factors as set forth in Note 1, indicate that a material uncertainty exists that may cast doubt on the Company’s ability
to continue as a going concern. Our opinion is not modified in respect of this matter.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International
Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are
delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one
another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to
Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to
Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
64
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
In addition to the matter described in the going concern section, we have determined the matters described below to be the
key audit matters to be communicated in our report.
Key audit matter
How our audit addressed the key audit matter
Intangible assets and goodwill impairment testing
Note 10
At 30 June 2018, the Group’s statement of financial position
includes goodwill and other intangibles amounting to $23.2m.
AASB 136 Impairment of Assets requires that an entity shall
assess at the end of each reporting period whether there is any
indication that an asset may be impaired. If any indication exists,
the entity shall estimate the recoverable amount of the asset.
Goodwill and intangible assets impairment testing is a key audit
matter due to the high degree of estimation and judgement
required by management and the subjectivity relating to
assumptions and key inputs.
Our procedures included, amongst others:
Reviewing the impairment model for compliance with AASB
136 Impairment of Assets;
Assessing management's determination of the Group's cash
generating units based on our understanding of the nature of
the Group's business, the economic environment in which
segments operate and the Group's internal reporting structure;
Testing the mathematical accuracy and appropriateness of the
methodology of the underlying model calculations;
Reviewing the valuation expert’s report and assessing the
reasonableness of inputs and assumptions used in the market
based model;
Performing a sensitivity analysis of the key assumptions in
model; and
Reviewing relevant disclosures for adequacy in the financial
statements.
Research and development grants and capitalised wages
Note 1(v)
At 30 June 2018, the Group recognised $3.6m relating to
capitalised developments costs as intangible assets. The Group
also claims associated research and development (R&D) grants
from Aus. Industry under the R&D Tax Incentive Scheme, a
receivable to the value of $3.3m for estimated and submitted R&D
claims at year end.
A high level of judgement is required to determine whether the
criteria for capitalising R&D costs are met and there is a risk that
the costs capitalised do not meet the criteria for capitalisation in
accordance with AASB 138 Intangible Assets.
In addition, AASB 120 Accounting for Government Grants and
Disclosure of Government Assistance require grants received
relating to costs that are capitalised to be offset against the
capitalised amount, and grants relating to costs that are not
capitalised expenses to be recognised as income. A receivable is
recognised for R&D grant claims submitted but not yet received
pertaining to costs incurred in the previous financial year, and for
the estimated R&D grant claim pertaining to costs incurred during
the 2018 financial year.
This is a key audit matter due to the subjectivity and management
judgement applied in the assessment of whether costs meet the
recognition criteria of AASB 138.
Our procedures included, amongst others:
Obtaining an understanding of the capitalisation process and
how costs are allocated to the project;
Reviewing compliance with criteria for capitalisation of costs
under AASB 138 Intangible Assets;
Assessing the reasonableness of total development costs
against expectations, having regard to prior year costs and
current year budgeted costs;
Testing on a sample basis, capitalised development costs
incurred to underlying supporting documentation;
Ensuring the above sample meets the recognition
requirements of accounting standing AASB 138;
Tracing the R&D receivable to submitted claims and where
applicable, subsequent cash receipt;
Testing the mathematical accuracy of R&D grant claims
accrued for;
Obtaining an understanding of the current status of discussions
with AusIndustry in relation to R&D claims;
Engaging with Adslot's R&D specialist to review the
reasonableness of the methodology and inclusion of expenses
in the calculation; and
Assessing the appropriateness of the disclosures in the
financial statements.
65
Information Other than the Financial Report and Auditor’s Report Thereon
The Directors are responsible for the other information. The other information comprises the information included in the
Group’s annual report for the year ended 30 June 2018, but does not include the financial report and our auditor’s report
thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact.
Responsibilities of the Directors for the Financial Report
The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors
determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance
Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 12 to 20 of the directors’ report for the year ended 30 June 2018
In our opinion, the Remuneration Report of Adslot Limited, for the year ended 30 June 2018, complies with section 300A of the
Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance
with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report,
based on our audit conducted in accordance with Australian Auditing Standards.
Grant Thornton Audit Pty Ltd
Chartered Accountants
Michael Climpson
Partner – Audit & Assurance
Melbourne, 29 August 2018
66
Corporate Governance Statement
In accordance with Listing Rule 4.10.3, Adslot’s Corporate Governance Statement can be
http://www.adslot.com/investor-relations/governance/
found at
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 23 August 2018.
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 (14,706 shares):
Twenty largest shareholders
The names of the twenty largest holders of quoted shares are:
1
2
NATIONAL NOMINEES LIMITED
MR PETER JOHN DIAMOND + MRS DIANA ELIZABETH DIAMOND
J P MORGAN NOMINEES AUSTRALIA LIMITED
DAWNIE DIXON PTY LTD
INVIA CUSTODIAN PTY LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
VENTURIAN PTY LTD
ANDAMA HOLDINGS PTY LTD
AMBLESIDE VENTURES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CAPITAL ACCRETION PTY LTD
3
4
5
6
7
8
9
10
11
12
13 MR RICHARD ARMSTRONG CALDOW
14
15 MDJD PTY LTD
16 MR VLADIMIR ANTHONY VITEZ & MS CATHERINE MARY DOWLAN
CHARMED5 PTY LTD
17
18 WALLOON SECURITIES PTY LTD
19
20
INVIA CUSTODIAN PTY LIMITED
SLADE TECHNOLOGIES PTY LTD
Total Top 20 holders of Ordinary Shares
Remaining holders balance
Classes of Shares
Adslot Ltd has only one class of share on issue, being fully paid ordinary shares.
Substantial Shareholders
Peter Diamond
Geoff Dixon
Private Portfolio Managers Pty Ltd
Voting Rights
All ordinary shares carry one vote per share without restrictions.
206
345
530
1,396
929
3,406
1,331
22,179
1,155,863
4,241,570
54,480,530
1,346,106,127
1,406,006,269
8,477,873
Listed Ordinary Shares
Number of
Shares
% of
Shares
123,555,337
116,481,307
96,759,549
76,046,522
52,252,850
46,190,795
42,665,548
35,674,668
34,400,000
33,091,710
30,932,167
20,647,827
16,000,000
12,302,184
11,500,000
11,000,000
10,000,000
9,931,935
9,689,841
9,000,000
8.79
8.28
6.88
5.41
3.72
3.29
3.03
2.54
2.45
2.35
2.20
1.47
1.14
0.87
0.82
0.78
0.71
0.71
0.69
0.64
798,122,240
607,884,029
56.77
43.23
Shares
116,481,307
89,845,849
87,908,300
% Shares
8.28
6.39
6.25
67
Corporate Directory
Directors
Mr Andrew Barlow – Executive Chairman
Mr Ben Dixon – Chief Executive Director
Mr Adrian Giles – Non-Executive Director
Mr Quentin George – Non-Executive Director
Ms Sarah Morgan – Non-Executive Director
Mr Andrew Dyer – Non-Executive Director
Chief Executive Officer
Mr Ben Dixon
Company Secretary
Ms Felicity Conlan
Auditors
Grant Thornton Australia
Collins Square, Tower 1
727 Collins Street
Melbourne VIC 3008 Australia
Bankers
National Australia Bank Limited
330 Collins Street,
Melbourne VIC 3000 Australia
Share Register
Computershare Registry Services Pty Ltd
Yarra Falls
452 Johnston Street
Abbotsford, VIC 3001 Australia
Home Stock Exchange
Australian Securities Exchange Limited
Level 45, South Tower
Rialto, 525 Collins Street
Melbourne, VIC 3000 Australia
ASX Code: ADJ
Website
www.adslot.com
Registered Office
Adslot Ltd
Level 2, 419 Collins Street,
Melbourne VIC 3000 Australia
Phone: + 61 3 8695 9100
Fax: + 61 3 9696 0700
Head Office
Adslot Ltd
Level 2, 419 Collins Street,
Melbourne VIC 3000 Australia
Phone: + 61 3 8695 9100
Fax: + 61 3 9696 0700
Asia Pacific Offices
Level 8, 10-14 Waterloo Street
Surry Hills NSW 2010 Australia
1-231, Shanghai 1933
No 10 Shajing Road
Shanghai 200080
China
301S Botany Road
Botany Downs, Auckland
New Zealand
North America Offices
79 Madison Avenue
New York, NY 10016
United States of America
European Offices
Three Tuns House
109 Borough High Street
London, SE1 1NL
United Kingdom
8th Floor 33
Theatinerstrasse 11
80333 Munchen Bayern
Germany
68