2019 Annual Report.
VISION.
TO ENRICH
RELATIONSHIPS
AND SIMPLIFY
ADVERTISING.
CONTENTS.
2 Chairman’s Report
6 CEO’S Message
8 Directors’ Report
15 Remuneration Report
26 Auditors Independence Declaration
27 Consolidated Statement of Profit or Loss
and Other Comprehensive Income
28 Consolidated Statement of Financial Position
29 Consolidated Statement of Changes in Equity
30 Consolidated Statement of Cash Flows
31 Notes to the Financial Statements
83 Directors’ Declaration
84 Independent Audit Report to the Members
88 Corporate Governance Statement
88 Shareholder Information
89 Corporate Directory
CHAIRMAN’S
REPORT.
Dear Shareholder,
As most of you know, the Company
narrowed the strategy of the business
to focus on three key strategic
priorities in FY19.
Specif ically, in relation to the f irst
objective, I am delighted to report
that following a full year of Licence
Fees from GroupM India and further
successful deployments of Symphony
into Thailand, Indonesia, the
The f irst was to turn around the
Philippines and South Africa in FY19,
Company’s enterprise SaaS business,
Symphony Licence Fees exceeded
Symphony, which had actually
guidance, growing 58% from $3.8M
declined in FY18, and return it to
to $6.1M in FY19. Overall (combined)
strong growth in Licence Fee revenue.
Licence Fees grew 49% to $6.7M
This would be achieved by focussing
on more efficient deployments of
(exceeding guidance of 43.1% Licence
Fee growth).
the Symphony platform to GroupM
In regards to the second objective, I
agencies around the world.
am also pleased to report that Adslot
The second objective was to focus
on the US and UK markets, to
validate and grow the value of media
traded on the Adslot Media stand-
alone platform, driving Trading Fee
revenue.
And the third was to implement a
cost reduction program to reduce the
Company’s operating cost base and
quarterly cash burn.
I am pleased to report that FY19
saw successful execution on all key
objectives, and we saw a turnaround
of the business, with the Company
delivering strong revenue growth
and increased business performance
across all strategic revenue
Media successfully achieved pilot
validation with large agencies in the
US and UK markets, with the value
of media traded via the stand alone
Adslot Media platform growing 295%
from $3.9M in FY18 to $15.4M in FY19.
It was also a record year for the
number of transactions booked via
the Adslot Media platform, which
grew 396% from 143 to 709 campaign
bookings.
As a result, Trading Fees were
up 104% in FY19 versus the prior
corresponding period. Adslot Media’s
ecosystem also strengthened both in
terms of the number and quality of
demand and supply participants.
segments, compared to the prior
Combined with a 10% reduction
financial year.
This, in combination with a reduced
cost base, also saw the Company
achieve signif icant reductions in
in operating costs, the Company’s
EBITDA loss reduced by 59% f rom
($6.34M) in FY18 to ($2.62M) in FY19,
with a 40% improvement in NPAT.
EBITDA and NPAT losses, which had
FY19 also saw a significant increase
been steadily increasing up until the
in cash receipts, which grew 110%
end of FY18.
from $8.3M in FY18 to $17.4M in FY19.
2
Adslot 2019 Annual Report
Net operating cash outflows reduced
And the third is to continue our focus
by 79% from ($5.3M) in FY18 to ($1.1M)
on cost management due to capital
in FY19.
constraints.
The Company held a closing cash
balance of $8.2M at year end,
supplemented by two small capital
raisings supported by key major
shareholders during the year.
Despite the Company’s turnaround
and vastly improved financial results
in FY19, there is still much to do.
In summary, we adopted new
business disciplines across the
organisation in FY19 which allowed us
to execute efficiently and effectively
on our strategic objectives.
We successfully turned the business
around, and set it back on the right
path. In doing so, we have positioned
the Company in readiness to realise
material trading fees f rom Adslot
Media in FY20 via the execution
of MSAs with agency holding
companies, and the subsequent
activation of demand f rom those
agencies.
In closing, I’d like to take this
opportunity to f irst thank all
our loyal shareholders who have
continued to support the Company
through further investment via the
placements and on-market buying.
I would also like to acknowledge the
commitment of the board and the
In FY20, the Company is now focused
executive team, who are singularly
on three new key strategic objectives.
focussed and committed to realising
With meaningful pilot validation
achieved in FY19, the first objective is
to execute Master Service Agreements
(MSAs) with as many of the six
global agency holding companies as
possible, and activate their demand
on the Adslot Media platform.
The second objective is to expand
sources of supply (premium
strong Trading Fee revenue growth
in the Adslot Media business in the
year ahead.
Yours sincerely,
publisher inventory) on the Adslot
Media platform to meet that growing
Andrew Barlow
Executive Chairman, Adslot Ltd
demand.
09 October 2019
Adslot 2019 Annual Report
3
“
I am pleased to
report that FY19
saw successful
execution on all
key objectives”
PERFORMANCE.
GROUP.
GROUP REVENUE
$10.3m ↑ 28%
TRADING TECHNOLOGY REVENUES
$8.0m ↑ 56%
LICENCE FEE REVENUES
$6.7m ↑ 49%
TRADING FEES
$1.4m ↑ 104%
EBITDA LOSS
$2.6m ↓ 59%
2019 results including comparison to prior period
4
Adslot 2019 Annual Report
ADSLOT MEDIA.
MEDIA TRADED
$15.4m ↑ 295%
TRADING FEE REVENUE
$1.1m ↑ 153%
TRANSACTIONS BOOKED
709 ↑ 396%
SYMPHONY.
LICENCE FEE REVENUE
$6.1m ↑ 58%
Four new markets - Thailand, Indonesia, Philippines and South Africa
Currently deployed to 83 individual agencies
Deployed in 17 countries
$4.1b campaigns managed on the platform
Adslot 2019 Annual Report
5
CEO’S
MESSAGE.
2019 was a year of considerable
This has undeniably provided
progress for the Company. Our
benef its for certain use cases, in
objectives of returning Symphony to
particular the monetisation of unsold
revenue growth and focussing on the
(remnant) inventory by publishers.
US market for trading fee revenues
It has however created a number
has begun to show progress. The
of fundamental challenges for both
focus for the Company in the coming
buyers and sellers, particularly for
year is to continue this trajectory of
premium media sold under a forward
growth with a continuing focus on
guaranteed model.
the US to drive trading fees.
• Many of the key value propositions
Critical to executing against this
of media agencies – scale,
strategy is the Company’s relationship
buying power, strategic insight
with the large global agency holding
– are reduced in a world of
companies. These six organisations
anonymous auctions and multiple
account for a substantial portion of
intermediaries.
digital advertising spend and are best
positioned to adopt transformative
technology solutions such as the
Adslot Media platform.
• Publishers’ yield is reduced as a
significant percentage of the media
value is absorbed by the various
intermediaries. In the case of
Fortunately, the Company is well
media purchased under a forward
positioned to take advantage of
guaranteed model, the value
a number of dynamics that are
provided by these intermediaries
emerging in the digital media
can be negligible despite the cost.
landscape globally.
As a result of the above, there is a strong
• The maintenance of direct
desire for agencies and publishers to
relationships between buyers and
maintain direct relationships between
sellers
• Automation of media trading via
platforms
• Commercial transparency in media
transactions
Direct Relationships
The emergence of programmatic
and real time bidding (RTB) media
buying has seen a preponderance
of intermediaries inserted in to the
transactional workflow between a
buyer and seller of media. Rather
than an agency simply purchasing
each other; despite an increasingly
fragmented landscape.
The Adslot Media platform maintains
the direct relationship between
buyers and sellers.
Automation via Platforms
In an increasingly competitive
world, agencies are looking for ways
of bringing greater eff iciency and
effectiveness to their operations.
A key focus of this is the use of
platforms to manage media buying
and other internal processes.
media f rom a publisher, the
Firstly, the use of platforms offers
transaction is routed via a series of
greater efficiency by automating many
demand side platforms, sell side
of the manual processes associated
platforms and exchanges.
with media buying including the
6
Adslot 2019 Annual Report
interactions between buyers and
process. This includes the various
sellers. This reduction in manual
costs and fees associated with
process allows either a reduction in
agencies, data providers, media
headcount or a re-focus of resources
exchanges, demand and sell side
to activities providing greater value to
platforms, etc.
clients. In addition, platforms can be
used to apply greater standardisation
and process to the agency’s workflow.
This includes the creation of valuable
data assets by virtue of the consistent
manner in which buying activity is
classified and recorded.
When applied across an
There has historically been
considerable transparency in
media purchased under a forward
guaranteed model, although this has
usually come without the benefits of
addressability and platform buying.
By contrast, the RTB ecosystem
provides considerable addressability
and efficiency benefits, but with a
commercial framework that might
best be described as opaque.
Advertisers are increasingly
demanding that the transparency of
forward guaranteed buying, and the
addressability and efficiency benefits
of platforms, need not be mutually
exclusive. As a result, agencies, in
particular the large global holding
companies, are looking for solutions
that can provide this “best of both
worlds” outcome for their clients.
organisation, the collective benefits
Adslot Media provides a transparent
of “platforming” the media buying
method of buying forward
process can be substantial and
guaranteed media via a platform.
transformative for agencies.
In summary, we believe that the
Adslot Media enables agencies
Adslot Media platform is a solution
to manage forward guaranteed
purpose-built to address the issues
media buying via a purpose built,
conf ronting buyers and sellers of
sophisticated and integrated
premium media today. Our strong
platform.
Transparency
At the end of the day, all media
transactions are funded by the
ultimate buyer of the media, the
advertiser or brand. Not surprisingly,
advertisers are increasingly
coverage of the tier 1 publisher
market in the US and our ongoing
progress with the global agency
holding companies would suggest
that they agree.
We look forward with excitement to
the year ahead.
insisting upon greater commercial
Ben Dixon
transparency in the media buying
CEO and Executive Director.
Adslot 2019 Annual Report
7
“
2019 was a year
of considerable
progress for the
Company.”
Director’s
Report
DIRECTORS’
REPORT.
Your Directors present
their report, together with
Mr Andrew Barlow
Executive Chairman
Mr Ben Dixon
CEO and Executive Director
Mr Adrian Giles
Non-Executive Director
the financial report of
Adslot Ltd ACN 001 287 510
Andrew Barlow is the
Mr Ben Dixon’s career in
Adrian Giles is an
(‘the Company’) and its
founder and Executive
the advertising industry
entrepreneur in the internet
controlled entities (‘the
Chairman of Adslot, and an
goes back over 19 years
and Information Technology
Group’) for the financial
experienced technology
and includes roles at
industries. In 1997 Mr Giles
year ended 30 June 2019
entrepreneur. Prior to
several large multinational
co-founded Sinewave
and the auditor’s report
Adslot, Mr Barlow co-
agency groups including
Interactive which pioneered
thereon.
founded online competitive
DDB and Mojo. He has
the concept of marketing
intelligence company,
wide experience across
a website using search
Hitwise, with Adrian Giles
both the media buying
engines and was the first
in 1997. Hitwise was ranked
and account management
company in Australia to offer
one of the Top 10 fastest
fields having held senior
Search Engine Optimisation
growing companies by
positions directing
(SEO) as a service.
Deloitte for five years
accounts for advertisers
In 1997 Mr Giles co-founded
running, before being sold
such as Telstra and Kraft
Hitwise which grew over
to Experian Group (LSX.
Foods. In particular
10 years to become one of
EXPN) in May 2007. Mr
he was responsible
the most recognised global
Barlow was also Founder
for the development
internet measurement
and CEO of Max Super, an
and implementation of
brands in the USA, UK,
online retail superannuation
e-commerce and online
Australia, NZ, Hong Kong,
fund sold to Orchard Funds
strategies across a number
and Singapore. Whilst
Management in 2007. Mr
of advertisers.
positioning the company
Barlow is also the Founder of
In late 1999 Ben conceptualised
for a NASDAQ listing in
Venturian, a privately-owned
and then co-founded
early 2007 Hitwise was sold
venture capital fund with
Facilitate Digital Pty Ltd,
to Experian (LSX: EXPN)
investments in early-stage
assuming the role of General
in one of Australia’s most
technology companies with
Manager. In the subsequent
successful venture capital
unique IP, highly scalable
business models and global
3 years he played an integral
role in steering the business
backed trade sales.
Mr Giles is also Chairman
market potential.
through an industry collapse
of ORDER Esports - an
Mr Barlow is currently a
to a position of strength.
Australian esports team
director of Nitro Software,
Ben was appointed Chief
and Chairman of Fortress
Inc., a leading provider of
Executive Officer of Facilitate
Esports - an esports and
PDF creation, conversion
when Adslot acquired it in
video game entertainment
and editing software and
December 2013.
company.
e-signing cloud services.
Mr. Dixon was appointed
Mr Giles is Chair of the
as the interim CEO on the
Remuneration Committee
27 February 2018. He was
and a member of the Audit
made permanent CEO on
& Risk Committee.
1 January 2019.
8
Adslot 2019 Annual Report
Ms Sarah Morgan
Non-Executive Director
Mr Quentin George
Non-Executive Director
Mr Andrew Dyer
Non-Executive Director
Ms Felicity Conlan
Company Secretary
Sarah has extensive
Quentin George is one of the
Andrew Dyer is a Senior
Ms Conlan brings to the
experience in the finance
advertising industry’s most
Partner and Director of
Group extensive experience
industry, primarily as part
credentialed and respected
The Boston Consulting
in the media/advertising
of independent corporate
thought leaders. Based in the
Group (BCG). Mr Dyer has
and technology sectors
advisory firm Grant Samuel.
United States, Mr George has
held local, regional and
where she has held General
Sarah has been involved in
previously served as the Chief
global leadership positions,
Manager - Finance and
public and private company
Digital and Innovation Officer at
including leading BCG’s
CFO roles with companies
mergers and acquisitions,
IPG Mediabrands, where he was
People & Organization and
including M&C Saatchi,
as well as equity and debt
responsible for overseeing $2b
Enablement Practices. He
Network Ten, Beattie
capital raisings. Sarah holds
in digital media spend across
has also been a member
McGuinness Bungay
a degree in Engineering
global media agency networks,
of BCG’s global Executive
(London) and Genero Media.
and a Master of Business
as well as specialist digital
Committee and held various
Ms Conlan is a member
Administration from the
agencies for Fortune 500 brands.
roles on a number of BCG
of CPA Australia and a
University of Melbourne and
Mr George has also previously
Board Committees and
member of the Australian
is a Graduate of Australian
held the positions of Global
initiatives.
Institute of Company
Institute of Company
Head of Digital Media and
Mr Dyer has over 25 years'
Directors.
Directors. Sarah is also
Strategic Innovation, and
consulting experience
Non-Executive Director
President, Global at Universal
supporting senior executives
of Hansen Technologies
McCann. In 2008, Mr George
in leading companies
Limited, Future Generation
led the team that architected
around the world, with
Global Investment Company
and built the industry’s first
a particular focus on
Limited and Whispir Limited.
ever, standalone programmatic
financial and other services
Ms Morgan is Chair of the
media-buying agency, Cadreon,
businesses.
Audit and Risk Committee.
which he successfully grew into
Prior to joining BCG in
a multi-national organisation
1994, Mr Dyer worked for
encompassing North America,
the Commonwealth Bank
Europe and Asia-Pacific.
Mr George has also previously
and the Australian Federal
Government.
Information on Directors
Mr Andrew Barlow,
served on the customer
Andrew Dyer is a member of
advisory boards of Google,
the Audit & Risk Committee
Mr Adrian Giles,
Mr Ben Dixon,
Microsoft Advertising, Yahoo!
and was also appointed
Mr Quentin George,
and AOL. He has also served on
to the Remuneration
high-profile industry advisory
Committee on 2 August
boards including the Internet
2019.
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. Mr
George is currently a Senior
Advisor at McKinsey & Company.
Mr. George resigned as a
Director on 16 July 2019.
Ms Sarah Morgan and
Mr Andrew Dyer were
directors for the whole
financial year and, with
the exception of
Mr Quentin George, up to
the date of this report.
Mr Quentin George resigned
subsequent to year end on
16 July 2019.
Adslot 2019 Annual Report
9
Directors’ Report
Operating Results
Group revenues for FY19 were $10,271,629, an increase of 28% versus FY18 ($8,013,289).
The Consolidated Group operating loss before interest, income tax, depreciation and amortisation (EBITDA)
in FY19 was $2,619,402, a 59% reduction in losses versus FY18 ($6,340,479).
The Consolidated Group operating loss of $7,042,755 is 40% lower than the loss for the prior year of
$11,653,319.
Review of Operations
The financial year ended 30 June 2019 saw strong revenue growth for the Company. Total group revenue of
$10.3m represented a 28% increase on the prior financial year (FY18: $8.0m). Revenue growth was
primarily driven by a $2.2m (+58%) increase in Symphony licence fee revenue, supported by a $0.7m
(+153%) growth in Adslot trading fee revenue. Revenues generated from Trading Technology (licence fees
and trading fees combined) grew $2.9m (+56%) compared to the prior financial year.
The Company’s return to revenue growth and increased business performance was due to the continued
focus on the following key strategies for the business in FY19:
1. Continued investment in the Symphony product and a focus on new market deployments;
2. Focus on the US market for generating Trading Fees from the Adslot Media platform; and
3. Ongoing cost management.
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 for Media
Agencies, and also from customised solutions developed for Publishers; and,
• Trading Fees – fees charged as a percentage of media traded via the stand alone Adslot Media
platform and also via Symphony. Trading fees generated via the stand alone Adslot Media platform
attract a higher % fee and represent a significant majority of Trading Fees.
Licence Fees
Significant events for the past year for Symphony include:
• Successful deployment of Symphony for GroupM into four new markets, including three in the APAC
region (Thailand, Indonesia and Philippines) and one in the EMEA region (South Africa);
• A full year of Licence Fees from GroupM India (deployed in June 2018) with further individual
agencies activated in the Indian market during the financial year; and,
• Renegotiation of certain key terms of the Company’s agreement with GroupM that resulted in an
increase in Licence Fees for some previously deployed markets.
Total Licence Fee revenues across Symphony and Adslot Media were $6.7m in FY19, representing strong
Total Licence Fee revenues across Symphony and Adslot Media were $6.7m in FY19, representing strong
Total Licence Fee revenues across Symphony and Adslot Media were $6.7m in FY19, representing strong
growth of 49% on the prior financial year (FY18: $4.5m).
growth of 49% on the prior financial year (FY18: $4.5m).
growth of 49% on the prior financial year (FY18: $4.5m).
Total Licence Fees (Normalised)
Total Licence Fees (Normalised)
Total Licence Fees (Normalised)
FY16 -FY19
FY16 -FY19
FY16 -FY19
8,000,000
8,000,000
8,000,000
7,000,000
7,000,000
7,000,000
6,000,000
6,000,000
6,000,000
5,000,000
5,000,000
5,000,000
4,000,000
4,000,000
4,000,000
3,000,000
3,000,000
3,000,000
2,000,000
2,000,000
2,000,000
1,000,000
1,000,000
1,000,000
-
-
-
FY16
FY16
FY16
FY17
FY17
FY17
FY18
FY18
FY18
FY19
FY19
FY19
Note: Symphony Licence Fee revenues for FY17 and FY18 are normalised to allow for the reversal of a one-
Note: Symphony Licence Fee revenues for FY17 and FY18 are normalised to allow for the reversal of a one-
Note: Symphony Licence Fee revenues for FY17 and FY18 are normalised to allow for the reversal of a one-
off payment, as outlined in the 20 July 2018 Symphony Outlook release.
off payment, as outlined in the 20 July 2018 Symphony Outlook release.
off payment, as outlined in the 20 July 2018 Symphony Outlook release.
Trading Fees
Trading Fees
Trading Fees
The value of media traded via the stand alone Adslot Media platform grew 295% from $3.9m in 2018 to
The value of media traded via the stand alone Adslot Media platform grew 295% from $3.9m in 2018 to
The value of media traded via the stand alone Adslot Media platform grew 295% from $3.9m in 2018 to
$15.4m in 2019. This increased trading activity resulted in a 153% increase in Trading Fees derived from the
$15.4m in 2019. This increased trading activity resulted in a 153% increase in Trading Fees derived from the
$15.4m in 2019. This increased trading activity resulted in a 153% increase in Trading Fees derived from the
Adslot Media platform from $0.5m in 2018 to $1.1m in 2019.
Adslot Media platform from $0.5m in 2018 to $1.1m in 2019.
Adslot Media platform from $0.5m in 2018 to $1.1m in 2019.
Adslot Media Stand Alone
Value of Media Traded & Trading Fees -
Adslot Media Stand Alone
Adslot Media Stand Alone
Value of Media Traded & Trading Fees -
Value of Media Traded & Trading Fees -
FY18 vs FY19
FY18 vs FY19
FY18 vs FY19
18,000,000
18,000,000
18,000,000
16,000,000
16,000,000
16,000,000
14,000,000
14,000,000
14,000,000
12,000,000
12,000,000
12,000,000
10,000,000
10,000,000
10,000,000
8,000,000
8,000,000
8,000,000
6,000,000
6,000,000
6,000,000
4,000,000
4,000,000
4,000,000
2,000,000
2,000,000
2,000,000
-
-
-
1,200,000
1,200,000
1,200,000
1,000,000
1,000,000
1,000,000
800,000
800,000
800,000
600,000
600,000
600,000
400,000
400,000
400,000
200,000
200,000
200,000
-
-
-
FY18
FY18
FY18
FY19
FY19
FY19
Adslot Media: $ Traded
Adslot Media: $ Traded
Adslot Media: $ Traded
Adslot Trading Fees
Adslot Trading Fees
Adslot Trading Fees
10
Adslot 2019 Annual Report
1
2
2
2
Total Licence Fee revenues across Symphony and Adslot Media were $6.7m in FY19, representing strong
Total Licence Fee revenues across Symphony and Adslot Media were $6.7m in FY19, representing strong
Total Licence Fee revenues across Symphony and Adslot Media were $6.7m in FY19, representing strong
growth of 49% on the prior financial year (FY18: $4.5m).
growth of 49% on the prior financial year (FY18: $4.5m).
growth of 49% on the prior financial year (FY18: $4.5m).
Total Licence Fees (Normalised)
Total Licence Fees (Normalised)
Total Licence Fees (Normalised)
Total Licence Fees (Normalised)
FY16 -FY19
FY16 - FY19
FY16 -FY19
FY16 -FY19
FY16
FY16
FY16
FY17
FY17
FY17
FY18
FY18
FY18
FY19
FY19
FY19
8,000,000
8,000,000
8,000,000
7,000,000
7,000,000
7,000,000
6,000,000
6,000,000
6,000,000
5,000,000
5,000,000
5,000,000
4,000,000
4,000,000
4,000,000
3,000,000
3,000,000
3,000,000
2,000,000
2,000,000
2,000,000
1,000,000
1,000,000
1,000,000
-
-
-
Note: Symphony Licence Fee revenues for FY17 and FY18 are normalised to allow for the reversal of a one-
Note: Symphony Licence Fee revenues for FY17 and FY18 are normalised to allow for the reversal of a one-
Note: Symphony Licence Fee revenues for FY17 and FY18 are normalised to allow for the reversal of a one-
off payment, as outlined in the 20 July 2018 Symphony Outlook release.
off payment, as outlined in the 20 July 2018 Symphony Outlook release.
off payment, as outlined in the 20 July 2018 Symphony Outlook release.
Trading Fees
Trading Fees
Trading Fees
The value of media traded via the stand alone Adslot Media platform grew 295% from $3.9m in 2018 to
The value of media traded via the stand alone Adslot Media platform grew 295% from $3.9m in 2018 to
The value of media traded via the stand alone Adslot Media platform grew 295% from $3.9m in 2018 to
$15.4m in 2019. This increased trading activity resulted in a 153% increase in Trading Fees derived from the
$15.4m in 2019. This increased trading activity resulted in a 153% increase in Trading Fees derived from the
$15.4m in 2019. This increased trading activity resulted in a 153% increase in Trading Fees derived from the
Adslot Media platform from $0.5m in 2018 to $1.1m in 2019.
Adslot Media platform from $0.5m in 2018 to $1.1m in 2019.
Adslot Media platform from $0.5m in 2018 to $1.1m in 2019.
Adslot Media Stand Alone
Adslot Media Stand Alone
Adslot Media Stand Alone
Value of Media Traded & Trading Fees -
Value of Media Traded & Trading Fees -
Value of Media Traded & Trading Fees -
FY18 vs FY19
FY18 vs FY19
FY18 vs FY19
18,000,000
18,000,000
18,000,000
16,000,000
16,000,000
16,000,000
14,000,000
14,000,000
14,000,000
12,000,000
12,000,000
12,000,000
10,000,000
10,000,000
10,000,000
8,000,000
8,000,000
8,000,000
6,000,000
6,000,000
6,000,000
4,000,000
4,000,000
4,000,000
2,000,000
2,000,000
2,000,000
-
-
-
1,200,000
1,200,000
1,200,000
1,000,000
1,000,000
1,000,000
800,000
800,000
800,000
600,000
600,000
600,000
400,000
400,000
400,000
200,000
200,000
200,000
-
-
-
FY18
FY18
FY18
FY19
FY19
FY19
Adslot Media: $ Traded
Adslot Media: $ Traded
Adslot Media: $ Traded
Adslot Trading Fees
Adslot Trading Fees
Adslot Trading Fees
Adslot 2019 Annual Report
2
2
2
11
The total gross value of media transactions (Adslot Media and Symphony combined) from which the Group
derives Trading Fee revenues was $27.2m, an increase of 50% compared to the prior year (FY18: $18.1m).
Services
The trading fees derived from media transactions (Adslot Media and Symphony combined) grew 104% from
$0.7m in 2018 to $1.4m in FY19.
Total Value of Media Traded & Total
Trading Fees
FY18 vs FY19
30,000,000
25,000,000
20,000,000
15,000,000
10,000,000
5,000,000
-
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
-
FY18
FY19
Total Value of Media Traded
Total Trading Fees
The Group continues to make significant progress in growing adoption and sales pipelines across all active
regions, including the US, UK, Europe and Australia.
The Company’s growth strategy has seen a focus on securing Master Services Agreements (MSAs) with the
six largest global media agency holding companies for the US market. During the year the Group announced
the first of these MSAs with Cadreon, the programmatic trading division of the Interpublic Group of
Companies. The Group has subsequently announced that it has secured verbal indications from two
additional agency holding companies of their intention to execute an MSA.
During the financial year The Group continued to add premium publishers to its Adslot Media marketplace
around the world. These included Bloomberg, Business Insider, CBS, Priceline, Telegraph (UK), BBC and
Match Media. In addition the Group entered in to agreements with publishers that see Adslot as a preferred
or mandated channel for certain transactions. These included:
o The Group executed an agreement with leading Australian property website Domain. This
relationship sees the Adslot Media platform as a preferred method for non-real estate direct
bookings by non-programmatic advertisers.
o The Group commenced a similar project with UK publisher the Financial Times (FT) in FY19. The FT
commenced a project to automate all direct campaigns within a nominated transaction size from both
direct advertisers and agencies through the Adslot Media platform, creating operational efficiencies.
Cost Management
EBITDA
Cash Management
Services revenue is derived predominantly from Webfirm, the Group’s Australian-based digital marketing
services business, providing website design, hosting, search engine optimisation (SEO), search engine
marketing (SEM) and social media marketing services (FY19: $1.7m). Services revenue is also derived to a
lesser extent from custom development work for Symphony and Adslot Media customers.
Webfirm underwent a strategic review in FY19, pivoting the business towards its higher margin search
marketing services and targeting larger clients.
FY19 Services revenue at $1.8m was essentially flat year on year (a nominal 2% increase).
Total operating costs of $12.8m for FY19 represents a $1.4m (-10%) reduction in costs on FY18 ($14.2m).
This is primarily driven by salary savings that are $1.1m (-13%) down on the prior period.
Cost reductions were targeted to ensure continued investment in strategic and revenue generating product
development and no disruption to existing client relationships.
The growth in revenue combined with tight cost control has seen a 59% reduction ($3.7m) in EBITDA losses
from $6.3m in FY18 to $2.6m loss for the 2019 financial year.
Key major shareholders supported the Group in two capital raises in FY19 in August 2018 ($3.5m) and May
2019 ($4.0m) contributing net cash inflows from financing activities of $7.1m (after transaction costs).
Net cash outflows from operating activities for FY19 were $1.1m, a $4.2m reduction on the prior period
(FY18: $5.3m net cash outflow). Cash receipts for FY19 were $17.4m, a 110% increase of $9.1m on the
prior period (FY18: $8.3m). Cash payments for operating activities at $19.3m were a 33% increase of $4.8m
on the prior period (FY18: $14.5m).
Cash as at 30 June 2019 was $8.2m (FY18: $4.8m).
Matters Subsequent to the End of the Financial Year
There has not been any matter or circumstance occurring subsequent to the end of the financial year that
has significantly affected, or may significantly affect, the operations of the Group, the results of those
operations or the state of affairs of the Group in future years.
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 year.
The Directors do not recommend the declaration of a dividend. No dividend has been declared or paid during
12
Adslot 2019 Annual Report
3
4
Services
Services revenue is derived predominantly from Webfirm, the Group’s Australian-based digital marketing
services business, providing website design, hosting, search engine optimisation (SEO), search engine
marketing (SEM) and social media marketing services (FY19: $1.7m). Services revenue is also derived to a
lesser extent from custom development work for Symphony and Adslot Media customers.
Webfirm underwent a strategic review in FY19, pivoting the business towards its higher margin search
marketing services and targeting larger clients.
FY19 Services revenue at $1.8m was essentially flat year on year (a nominal 2% increase).
Cost Management
Total operating costs of $12.8m for FY19 represents a $1.4m (-10%) reduction in costs on FY18 ($14.2m).
This is primarily driven by salary savings that are $1.1m (-13%) down on the prior period.
Cost reductions were targeted to ensure continued investment in strategic and revenue generating product
development and no disruption to existing client relationships.
EBITDA
The growth in revenue combined with tight cost control has seen a 59% reduction ($3.7m) in EBITDA losses
from $6.3m in FY18 to $2.6m loss for the 2019 financial year.
Cash Management
Key major shareholders supported the Group in two capital raises in FY19 in August 2018 ($3.5m) and May
2019 ($4.0m) contributing net cash inflows from financing activities of $7.1m (after transaction costs).
Net cash outflows from operating activities for FY19 were $1.1m, a $4.2m reduction on the prior period
(FY18: $5.3m net cash outflow). Cash receipts for FY19 were $17.4m, a 110% increase of $9.1m on the
prior period (FY18: $8.3m). Cash payments for operating activities at $19.3m were a 33% increase of $4.8m
on the prior period (FY18: $14.5m).
Cash as at 30 June 2019 was $8.2m (FY18: $4.8m).
Matters Subsequent to the End of the Financial Year
There has not been any matter or circumstance occurring subsequent to the end of the financial year that
has significantly affected, or may significantly affect, the operations of the Group, the results of those
operations or the state of affairs of the Group in future years.
Environmental regulations
The Group’s operations are not subject
Commonwealth, State or any other country in which the entity operates.
to any significant environmental regulations under
the
Dividends
The Directors do not recommend the declaration of a dividend. No dividend has been declared or paid during
the year.
Adslot 2019 Annual Report
4
13
Shares under option
Details of unissued shares or interests under option as at the date of signing this report are.
Issue Type
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)
Ordinary options
04/10/2021
0.073
3,000,000
Ordinary options
25/11/2021
0.060
5,800,000
Ordinary options
25/02/2022
0.035
23,500,000
Ordinary options
15/05/2022
0.034
12,700,000
Ordinary options
27/05/2022
0.036
4,000,000
-
-
-
-
-
Ordinary options
30/01/2023
0.060
-
5,800,000
-
(200,000)
-
(1,300,000)
-
-
49,000,000
5,800,000
(1,500,000)
-
-
-
-
-
-
-
3,000,000
5,600,000
23,500,000
11,400,000
4,000,000
5,800,000
53,300,000
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 Type
Issue or
Acquisition
Date
Performance Rights
01/09/2016
Issue
Price
$
Nil
Balance at
beginning of
the year
(Number)
2,125,000
Issued
during the
year
(Number)
Transfers
during the
year
(Number)
Forfeited
during the
year
(Number)
Balance at end
of the year
(Number)
-
(1,925,000)
(200,000)
-
Indemnification and Insurance of Officers
The Group has during the financial year, in respect of each person who is or has been an officer of the
Group 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 Group 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 Group, 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 Group
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Group, or to intervene in any proceedings to which the Group is a party, for the
purpose of taking responsibility on behalf of the Group for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Group 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 2019 has been received and can be
found on page 26 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.
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 2019 financial year, the Chairman’s fees were $100,000 per annum. Non-executive directors’ fees
were $50,000 per annum. Mr Andrew Dyer waived his non-executive director fees for the 2019 year. In
addition, the Chair of the Audit & Risk Committee and the Remuneration Committee received a further
$25,000 in recognition of the additional workload of those positions.
Section 2: Executive remuneration
The Board of Directors are responsible for determining and reviewing compensation arrangements for key
management personnel and the executive team. The Remuneration Committee makes recommendations on
remuneration of key management personnel to the Board.
The Board assesses the appropriateness of the nature and amount of emoluments of these employees on a
periodic basis by reference to relevant employment market conditions with the overall objective of ensuring
maximum stakeholder benefit by:
a) Attracting the highest quality employees;
b) Retaining the best performing employees
c) Aligning the employees with shareholder outcomes;
optimal strategic outcomes for the business; and
e) Ensuring it aligns with the latest industry best practice.
d) Aligning employee motivation to a cascading set of key performance indicators that drive the most
Executives’ remuneration consists of a fixed cash component, short-term incentives in the form of cash
bonuses, and long-term incentives in the form of equity-based compensation linked to the long term
prospects and future performance of the Group. The inclusion of equity-based compensation in executives’
remuneration provides a direct link between their remuneration and shareholder wealth, otherwise there are
no direct relationships.
In providing the Group’s performance and benefits for shareholder wealth, the Board have regard to the
following indices in respect of the current financial year and the previous four financial years:
Item
EPS (cents)
Net loss ($)
2019
(0.49)
2018
(0.91)
2017
(0.70)
2016
(0.77)
2015
(0.89)
7,042,755
11,653,319
8,630,187
8,138,485
9,205,521
Share price at 30 June ($)
0.028
0.026
0.051
0.110
0.090
14
Adslot 2019 Annual Report
5
6
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 2019 financial year, the Chairman’s fees were $100,000 per annum. Non-executive directors’ fees
were $50,000 per annum. Mr Andrew Dyer waived his non-executive director fees for the 2019 year. In
addition, the Chair of the Audit & Risk Committee and the Remuneration Committee received a further
$25,000 in recognition of the additional workload of those positions.
Section 2: Executive remuneration
The Board of Directors are responsible for determining and reviewing compensation arrangements for key
management personnel and the executive team. The Remuneration Committee makes recommendations on
remuneration of key management personnel to the Board.
The Board assesses the appropriateness of the nature and amount of emoluments of these employees on a
periodic basis by reference to relevant employment market conditions with the overall objective of ensuring
maximum stakeholder benefit by:
a) Attracting the highest quality employees;
b) Retaining the best performing employees
c) Aligning the employees with shareholder outcomes;
d) Aligning employee motivation to a cascading set of key performance indicators that drive the most
optimal strategic outcomes for the business; and
e) Ensuring it aligns with the latest industry best practice.
Executives’ remuneration consists of a fixed cash component, short-term incentives in the form of cash
bonuses, and long-term incentives in the form of equity-based compensation linked to the long term
prospects and future performance of the Group. The inclusion of equity-based compensation in executives’
remuneration provides a direct link between their remuneration and shareholder wealth, otherwise there are
no direct relationships.
In providing the Group’s performance and benefits for shareholder wealth, the Board have regard to the
following indices in respect of the current financial year and the previous four financial years:
Item
EPS (cents)
Net loss ($)
2019
(0.49)
2018
(0.91)
2017
(0.70)
2016
(0.77)
2015
(0.89)
7,042,755
11,653,319
8,630,187
8,138,485
9,205,521
Share price at 30 June ($)
0.028
0.026
0.051
0.110
0.090
Adslot 2019 Annual Report
6
15
Remuneration Report (Continued)
Section 3: Details of remuneration
Details of the remuneration of the directors and the key management of the Group 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
Date appointed/resigned
Appointed 27 February 2018
Appointed 26 November 2013
Appointed 16 February 2010
Mr Ben Dixon
Chief Executive Officer
Appointed 1 January 2019
Interim Chief Executive Officer
27 February to 31 December 2018
Interim Company Secretary
15 July to 9 October 2017
Executive Director
Appointed 23 December 2013
Mr Andrew Dyer
Non-Executive Director
Mr Quentin George
Non-Executive Director
Appointed 28 May 2018
Appointed 14 June 2014
Resigned 16 July 2019
Mr Adrian Giles
Non-Executive Director
Appointed 26 November 2013
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 Tom Peacock
Group Commercial Director
Appointed 23 December 2013
Group
2019
Name
Short-term benefits
employment
Share-based payment
Short
Term
Incentive Other
annuation
Options
Super-
Share
Performance
Post-
Benefits
benefits
Long
Term
Long
Service
Leave
Executive directors
Mr A Barlow (i)
Mr B Dixon
Non-executive directors
Mr A Giles
Mr Q George
Ms S Morgan
Mr A Dyer
Ms F Conlan
Mr T Peacock
Mr I Lowe (ii)
Salary
& fees
$
228,262
253,000
75,000
50,000
68,493
-
250,000
231,500
67,509
Other key management personnel
$
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
$
8,676
-
-
-
6,507
$
-
-
-
-
18,402
Rights
$
Total
$
-
-
-
-
-
-
-
-
-
236,938
349,925
75,000
50,000
75,000
18,402
320,811
309,239
153,094
594
7,522
20,531
49,686
20,531
49,686
5,133
20,452
60,000
50,000
16,648
20,051
10,226
Totals
1,223,764
50,000
60,000
24,764
81,429
148,452
-
1,588,409
(i)
(ii)
includes $136,938 consultancy fees incurred since his appointment as an Executive Chairman.
resigned as CEO and Executive Director on 27 February 2018. Continued to be a key management
personnel until 27 July 2018.
Short Term Incentives
Short Term Incentives (STIs) paid in the year, along with the total STI opportunity in each year, relating to the
2018 and 2019 financial years, are outlined in the table below:
Name
Amount
Paid
Total 2018
STI
Opportunity
Amount
Paid
Total 2019
Opportunity
STI
Assessment Criteria
Mr B Dixon
Ms F Conlan
Mr T Peacock
$
$
$
100,000
50,000
100,000
Group performance to budget and executive
management to achieve KPIs.
50,000
N/A (a)
-
-
50,000 Performance related KPI’s
N/A (a) Performance related KPI’s
Mr I Lowe
N/A
-
Bonus for completion of strategic project
80,000 to
160,000
(a)
Not applicable as total bonus opportunity is based on a percentage of the Group’s performance.
No STIs were paid in relation to the 2018 financial year. Mr Dixon was the only key management personnel
entitled to be paid an STI in the 2019 financial year, which was paid during the 2019 financial year.
$
-
-
-
-
16
Adslot 2019 Annual Report
7
8
Long
Term
Benefits
Post-
employment
benefits
Share-based payment
Super-
annuation
$
Share
Options
$
Performance
Rights
$
Group
2019
Name
Short-term benefits
Salary
& fees
$
Short
Term
Incentive Other
$
$
Executive directors
Mr A Barlow (i)
Mr B Dixon
228,262
253,000
-
50,000
Non-executive directors
Mr A Giles
Mr Q George
Ms S Morgan
Mr A Dyer
75,000
50,000
68,493
-
Other key management personnel
Ms F Conlan
Mr T Peacock
Mr I Lowe (ii)
250,000
231,500
67,509
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
60,000
Long
Service
Leave
$
-
16,648
-
-
-
-
8,676
-
20,051
10,226
-
-
6,507
-
-
-
-
18,402
594
7,522
-
20,531
49,686
20,531
49,686
5,133
20,452
Total
$
236,938
349,925
75,000
50,000
75,000
18,402
320,811
309,239
153,094
-
-
-
-
-
-
-
-
-
Totals
(i)
(ii)
1,223,764
50,000
60,000
24,764
81,429
148,452
-
1,588,409
includes $136,938 consultancy fees incurred since his appointment as an Executive Chairman.
resigned as CEO and Executive Director on 27 February 2018. Continued to be a key management
personnel until 27 July 2018.
Short Term Incentives
Short Term Incentives (STIs) paid in the year, along with the total STI opportunity in each year, relating to the
2018 and 2019 financial years, are outlined in the table below:
Name
Amount
Paid
Total 2018
STI
Opportunity
Amount
Paid
Total 2019
STI
Opportunity
Assessment Criteria
Mr B Dixon
Ms F Conlan
Mr T Peacock
Mr I Lowe
$
-
-
-
-
$
$
$
100,000
50,000
100,000
Group performance to budget and executive
management to achieve KPIs.
50,000
N/A (a)
-
-
50,000 Performance related KPI’s
N/A (a) Performance related KPI’s
N/A
-
80,000 to
160,000
Bonus for completion of strategic project
(a)
Not applicable as total bonus opportunity is based on a percentage of the Group’s performance.
No STIs were paid in relation to the 2018 financial year. Mr Dixon was the only key management personnel
entitled to be paid an STI in the 2019 financial year, which was paid during the 2019 financial year.
Adslot 2019 Annual Report
8
17
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.
executive.
period.
executive.
Incentive Plans
Eligible to participate. Incentive criteria and award opportunities vary for each
Notice Period
Key Management Personnel, including executive directors, have notice periods
ranging from three to four months. The Chief Executive Officer has a notice
period of four months and the Chief Financial Officer and Chief Commercial
Officer have notice periods of three months. Other Executives have notice
periods ranging from four weeks to three months.
Resignation
Employment may be terminated by giving notice consistent with the notice
Retirement
There are no financial entitlements due from the Group on retirement of an
Termination by the
The Group may terminate the employment agreement by providing notice
consistent with the notice period or payment in lieu of the notice period.
Group
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 Group 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.
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)
Totals
211,956
224,000
20,538
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
-
-
150,000
19,570
6,817
53,125
289,487
20,049
13,635
-
-
6,507
-
4,095
-
-
32,392
17,360
35,036
-
-
-
-
-
-
393,684
75,000
54,095
75,000
32,392
264,352
8,108
-
20,049
35,036
83,097
370,290
1,771
-
-
22,309
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 2018 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 Group 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 STIs were paid in relation to the 2017 financial year.
18
Adslot 2019 Annual Report
9
10
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.
Key Management Personnel, including executive directors, have notice periods
ranging from three to four months. The Chief Executive Officer has a notice
period of four months and the Chief Financial Officer and Chief Commercial
Officer have notice periods of three months. 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 Group on retirement of an
executive.
Termination by the
Group
The Group 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 Group 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.
Adslot 2019 Annual Report
10
19
Remuneration Report (Continued)
Incentive Option Plan
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 Group.
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 2019. The
Performance Rights over Shares Plan concluded during the 2019 financial year.
At the November 2017 Annual General Meeting, shareholders approved the creation of the Group’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 Group
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 Group.
Adslot continually reviews its operations, performance and the broader market conditions to ensure that
incentives offered to key executives are aligned with the growth of the Group and shareholder outcomes
whilst ensuring it can attract and retain experienced talent in a competitive industry. Adslot continues to
operate within a highly competitive employment environment for experienced people in the technology and
The following table shows grants of share-based compensation to directors and senior management under
the Performance Rights over Shares Plan during the 2019 financial year:
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
Name
Ben Dixon
Tom Peacock
Series
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)
250,000
375,000
-
-
-
-
(250,000)
(375,000)
625,000
-
- (625,000)
-
-
-
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 2018:
Name
Ben Dixon
Brendan Maher
Tom Peacock
Series
Sep 16
Sep 16
Sep 16
Balance at
beginning of the
year
(Number)
500,000
750,000
750,000
2,000,000
Granted during
the year
(Number)
Expired during
the year
(Number)
Exercised
during the year
(Number)
Balance at the
end of the year
(Number)
-
-
-
-
-
(250,000)
250,000
(750,000)
-
-
-
(375,000)
375,000
(750,000)
(625,000)
625,000
No Performance rights to shares were granted to KMP during the year ended 30 June 2019 and 30 June
2018.
Rights over Shares under the Group’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 Group 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 Group 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 Group with a separation date of 27
August 2018. All of Mr Lowe's Share Rights automatically lapsed on the separation date.
software field.
of the Group.
year:
2019
The following tables show grants and movements of share-based compensation to directors and senior
management under the Incentive Option Plan during the current financial year and the previous financial
Balance at
Exercised
beginning of
Granted during
Expired during
during the
Balance at the
the year
(Number)
the year
(Number)
the year
(Number)
year
end of the year
(Number)
(Number)
-
-
-
-
-
2,000,000
-
1,000,000
-
Name
Series
Ian Lowe (i)
Ben Dixon
OP # 18-1
2,000,000
OP # 18-1
1,000,000
Felicity Conlan
OP # 18-2
1,000,000
Tom Peacock
OP # 18-2
1,000,000
Felicity Conlan
OP # 18-3
6,500,000
Tom Peacock
OP # 18-3
6,500,000
Andrew Dyer (ii)
OP # 18-5
4,000,000
-
-
-
4,000,000
3,000,000
22,000,000
22,000,000
16,000,000
-
-
-
-
-
-
-
-
-
-
1,000,000
1,000,000
6,500,000
6,500,000
-
-
-
-
-
Vested and
exercisable at
the end of the
year
(Number)
-
-
-
6,500,000
6,500,000
(i) Based on the Separation and Exit Deed signed with the Group, 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.
(ii)
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.
There were no new options granted to key management personnel under the Incentive Option Plan during
the year ended 30 June 2019.
20
Adslot 2019 Annual Report
11
12
Incentive Option Plan
At the November 2017 Annual General Meeting, shareholders approved the creation of the Group’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 Group
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 Group.
Adslot continually reviews its operations, performance and the broader market conditions to ensure that
incentives offered to key executives are aligned with the growth of the Group and shareholder outcomes
whilst ensuring it can attract and retain experienced talent in a competitive industry. Adslot continues to
operate within a highly competitive employment environment for experienced people in the technology and
software field.
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 Group.
The following tables show grants and movements of share-based compensation to directors and senior
management under the Incentive Option Plan during the current financial year and the previous financial
year:
2019
Name
Series
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)
Ian Lowe (i)
Ben Dixon
OP # 18-1
2,000,000
OP # 18-1
1,000,000
Felicity Conlan
OP # 18-2
1,000,000
Tom Peacock
OP # 18-2
1,000,000
Felicity Conlan
OP # 18-3
6,500,000
Tom Peacock
OP # 18-3
6,500,000
-
-
-
-
-
2,000,000
-
1,000,000
-
-
-
-
-
-
-
-
-
-
-
-
1,000,000
1,000,000
6,500,000
6,500,000
Vested and
exercisable at
the end of the
year
(Number)
-
-
-
-
6,500,000
6,500,000
Andrew Dyer (ii)
OP # 18-5
4,000,000
-
-
-
4,000,000
3,000,000
22,000,000
-
-
-
22,000,000
16,000,000
(i) Based on the Separation and Exit Deed signed with the Group, 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.
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)
There were no new options granted to key management personnel under the Incentive Option Plan during
the year ended 30 June 2019.
Adslot 2019 Annual Report
12
21
Remuneration Report (Continued)
Section 5: Long Term Incentives (Continued)
2018
Name
Ian Lowe (i)
Ben Dixon
Felicity Conlan
Tom Peacock
Felicity Conlan
Tom Peacock
Andrew Dyer (ii)
Balance at
beginning of
the year
Granted during
the year
Expired during
the year
Exercised
during the
year
Balance at the
end of the year
Series
(Number)
(Number)
(Number)
(Number)
(Number)
Vested and
exercisable at
the end of the
year
(Number)
OP # 18-1
OP # 18-1
OP # 18-2
OP # 18-2
OP # 18-3
OP # 18-3
OP # 18-5
-
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
-
-
-
-
-
4,000,000
-
-
4,000,000
2,000,000
-
22,000,000
-
-
22,000,000
2,000,000
(ii)
(i) Based on the Separation and Exit Deed signed with the Group, 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.
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.
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
05/10/17
04/10/21
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%
Details of Share Options, ESOP and other rights to ordinary shares in the Group provided as remuneration of
directors and the key management personnel of the Group are set out below:
Name
2019 (Options)
2018 (Options)
2019 (Rights)
2018 (Rights)
Number
$
Number
$
Number
$
Number
$
Options Granted During the Year
Rights Vested During the Year
Directors
Mr A Giles
Mr A Barlow
Mr B Dixon
Mr Q George
Ms S Morgan
Mr A Dyer
Ms F Conlan
Mr T Peacock
Mr I Lowe
Other Key Management Personnel
-
1,000,000
19,600
250,000 31,250
250,000 31,250
-
-
-
-
-
-
-
-
4,000,000
55,208
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,500,000
84,722
-
-
7,500,000
84,722
375,000
46,875
375,000
46,875
-
2,000,000
39,200
- - - -
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.
22
Adslot 2019 Annual Report
13
14
Details of Share Options, ESOP and other rights to ordinary shares in the Group provided as remuneration of
directors and the key management personnel of the Group are set out below:
Name
2019 (Options)
2018 (Options)
2019 (Rights)
2018 (Rights)
Number
$
Number
$
Number
$
Number
$
Options Granted During the Year
Rights Vested During the Year
Directors
Mr A Giles
Mr A Barlow
Mr B Dixon
Mr Q George
Ms S Morgan
Mr A Dyer
Other Key Management Personnel
Ms F Conlan
Mr T Peacock
Mr I Lowe
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,000,000
19,600
250,000 31,250
250,000 31,250
-
-
-
-
-
-
-
-
-
4,000,000
55,208
7,500,000
84,722
7,500,000
84,722
-
2,000,000
39,200
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
375,000
46,875
- - - -
375,000
46,875
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.
Adslot 2019 Annual Report
14
23
Remuneration Report (Continued)
Section 6: Equity holdings and transactions
The number of shares in the Group 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:
Other Director’s Report Disclosures
Directors
Andrew Barlow
Executive Chairman
Adrian Giles
Non-Executive Director
2019
Name
Balance at the
start of the year
Received during
the year on
exercise of an
option or right
Net other changes
during the year
Balance at the
end of the year
(Number)
(Number)
(Number)
(Number)
Directors
Mr A Giles
Mr A Barlow
Mr B Dixon
Mr Q George
Ms S Morgan
Mr A Dyer
7,571,452
35,674,668
37,353,660
-
200,500
21,659,342
Other key management personnel
Ms F Conlan
Mr T Peacock
500,000
3,228,807
-
-
250,000
1,000,000
-
-
-
2,000,000
9,571,452
12,428,000
48,102,668
-
37,603,660
-
-
1,000,000
200,500
14,000,000
35,659,342
-
500,000
375,000
(228,807)
3,375,000
Totals
106,188,429
1,625,000
28,199,193
136,012,622
Section 7: Other transactions with Key Management Personnel
Transactions with Directors and their personally related entities:
During the years ending 30 June 2019 and 30 June 2018 there were no transactions with Directors and their
personally related entities.
Information about the remuneration of directors and senior management is set out in the remuneration report
This marks the end of the audited remuneration report.
This report is made in accordance with a resolution of directors.
Andrew Barlow
Chairman
22 August 2019
24
Adslot 2019 Annual Report
15
16
Ben Dixon
Sarah Morgan
Andrew Dyer
CEO & Executive Director
Non-Executive Director
Non-Executive Director
Mr Andrew Barlow, Mr Adrian Giles, Mr Ben Dixon, Mr Quentin George, Ms Sarah Morgan and Mr Andrew
Dyer were directors for the whole financial year and, with the exception of Mr Quentin George, up to the date
of this report. Mr Quentin George resigned subsequent to year end on 16 July 2019.
Directorships of other listed companies
Other than those disclosed on page 8 to 9 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.
The following table sets out each director’s relevant interest in shares or options in shares of the Group as at
Directors’ shareholdings
the date of this report.
Directors
Mr Andrew Barlow
Mr Adrian Giles
Mr Ben Dixon
Mr Quentin George (i)
Ms Sarah Morgan
Mr Andrew Dyer
Ordinary
#
48,102,668
9,571,452
37,603,660
1,000,000
200,500
35,659,342
Shares
Share Rights
Share Options
ESOP Shares
Performance
Rights
#
-
-
-
-
-
-
#
-
-
-
-
1,000,000
4,000,000
#
-
-
-
-
-
-
(i)
Mr. George resigned as a Director on 16 July 2019.
Remuneration of directors and senior management
of this directors’ report.
Directors’ Meetings
The following table sets out the number of meetings of the Group’s Directors held during the year ended 30
June 2019 and the number of meetings attended by each Director.
Directors
Held
Attended
Held
Attended
Held
Attended
Board of Directors
Remuneration Committee
Audit and Risk
Committee
Mr Andrew Barlow
Mr Adrian Giles
Mr Ben Dixon
Mr Quentin George
Ms Sarah Morgan
Mr Andrew Dyer
Principal activities
8
8
8
8
8
8
7
8
8
7
8
8
4
4
-
4
-
-
4
4
-
4
-
-
-
5
-
-
5
3
Adslot Ltd derives revenue from two principal activities:
1. Trading Technology - comprises Adslot, a leading global media trading technology platform, and
Symphony, market-leading workflow automation technology for media agencies.
2. Services - comprises digital marketing services - provided by the Group’s Webfirm division - and project-
based customisation of Trading Technology.
#
-
-
-
-
-
-
-
5
-
-
5
5
Other Director’s Report Disclosures
Directors
Andrew Barlow
Executive Chairman
Adrian Giles
Non-Executive Director
Ben Dixon
CEO & Executive Director
Sarah Morgan
Non-Executive Director
Andrew Dyer
Non-Executive Director
Mr Andrew Barlow, Mr Adrian Giles, Mr Ben Dixon, Mr Quentin George, Ms Sarah Morgan and Mr Andrew
Dyer were directors for the whole financial year and, with the exception of Mr Quentin George, up to the date
of this report. Mr Quentin George resigned subsequent to year end on 16 July 2019.
Directorships of other listed companies
Other than those disclosed on page 8 to 9 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 Group as at
the date of this report.
Directors
Mr Andrew Barlow
Mr Adrian Giles
Mr Ben Dixon
Mr Quentin George (i)
Ms Sarah Morgan
Mr Andrew Dyer
Ordinary
Shares
#
48,102,668
9,571,452
37,603,660
1,000,000
200,500
35,659,342
Share Rights
Share Options
ESOP Shares
Performance
Rights
#
-
-
-
-
-
-
#
-
-
1,000,000
-
-
4,000,000
#
-
-
-
-
-
-
#
-
-
-
-
-
-
(i)
Mr. George resigned as a Director on 16 July 2019.
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 Group’s Directors held during the year ended 30
June 2019 and the number of meetings attended by each Director.
Directors
Held
Attended
Held
Attended
Held
Attended
Board of Directors
Remuneration Committee
Audit and Risk
Committee
Mr Andrew Barlow
Mr Adrian Giles
Mr Ben Dixon
Mr Quentin George
Ms Sarah Morgan
Mr Andrew Dyer
Principal activities
8
8
8
8
8
8
7
8
8
7
8
8
4
4
-
4
-
-
4
4
-
4
-
-
-
5
-
-
5
5
-
5
-
-
5
3
Adslot Ltd derives revenue from two principal activities:
1. Trading Technology - comprises Adslot, a leading global media trading technology platform, and
Symphony, market-leading workflow automation technology for media agencies.
2. Services - comprises digital marketing services - provided by the Group’s Webfirm division - and project-
based customisation of Trading Technology.
Adslot 2019 Annual Report
16
25
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
For the year ended 30 June 2019
Collins Square, Tower 5
727 Collins Street
Melbourne Victoria 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 Ltd
for the year ended 30 June 2019, 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
M J Climpson
Partner – Audit & Assurance
Melbourne, 22 August 2019
Items that may be reclassified subsequently to profit or loss
Foreign exchange translation
Total other comprehensive income / (loss)
Total comprehensive loss attributable to the members
(6,935,164)
(11,657,455)
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
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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.
Earnings per share (EPS) from loss from continuing operations
attributable to the ordinary equity holders of the Group
Basic earnings per share
Diluted earnings per share
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
26
Adslot 2019 Annual Report
Total revenue for services rendered
Interest revenue
Other income
Total revenue from continuing operations
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)
Notes
4,10
3
3
3
3
3
4
4
4
22
4
5
17
17
2019
$
9,839,017
55,144
9,894,161
377,468
10,271,629
(1,214,754)
(7,817,748)
(436,938)
(106,649)
(258,976)
(1,024,336)
(3,489)
(87,620)
(65,835)
(367,553)
(218,638)
(196,012)
(919,212)
(118,127)
107,591
107,591
2019
Cents
(0.49)
(0.49)
2018
$
6,912,447
160,017
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)
(4,136)
(4,136)
2018
Cents
(0.91)
(0.91)
18
(4,367,983)
(5,442,959)
(17,203,870)
(19,636,711)
(6,932,241)
(11,623,422)
(110,514)
(29,897)
(7,042,755)
(11,653,319)
(7,042,755)
(11,653,319)
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
For the year ended 30 June 2019
Total revenue for services rendered
Interest revenue
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
3
3
4,10
4
4
4
22
4
5
2019
$
9,839,017
55,144
9,894,161
377,468
10,271,629
(1,214,754)
(7,817,748)
(436,938)
(106,649)
(258,976)
(1,024,336)
(3,489)
(87,620)
(65,835)
(367,553)
(218,638)
(196,012)
(919,212)
(118,127)
2018
$
6,912,447
160,017
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)
(4,367,983)
(5,442,959)
(17,203,870)
(19,636,711)
(6,932,241)
(11,623,422)
(110,514)
(29,897)
(7,042,755)
(11,653,319)
(7,042,755)
(11,653,319)
107,591
107,591
(4,136)
(4,136)
Total comprehensive loss attributable to the members
(6,935,164)
(11,657,455)
Earnings per share (EPS) from loss from continuing operations
attributable to the ordinary equity holders of the Group
Basic earnings per share
Diluted earnings per share
17
17
2019
Cents
(0.49)
(0.49)
2018
Cents
(0.91)
(0.91)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
Adslot 2019 Annual Report
18
27
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
As at 30 June 2019
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
Contract 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
Notes
2019
$
2018
$
7
8
9
5
10
11
12
13
14
13
14
5
15
16
8,165,544
6,424,659
4,775,331
5,471,925
14,590,203
10,247,256
601,239
36,370
832,833
36,370
22,886,434
23,202,768
23,524,043
24,071,971
38,114,246
34,319,227
6,538,788
2,925,743
374,781
146,300
658,736
445,491
60,248
587,150
7,718,605
4,018,632
323,110
439,041
36,370
798,521
555,463
360,763
36,370
952,596
8,517,126
4,971,228
29,597,120
29,347,999
145,838,216
138,397,710
649,149
712,654
(116,890,245)
(109,762,365)
29,597,120
29,347,999
For the year ended 30 June 2019
2019
Balance at 1 July 2018
138,397,710
712,654
(109,762,365)
29,347,999
Adjustment from adoption of AASB 15
Adjusted balance at 1 July 2018
-
(85,125)
(85,125)
138,397,710
712,654
(109,847,490)
29,262,874
Notes
1(a)
Issued
Capital
$
Reserves
$
Accumulated
Losses
$
Total
Equity
$
Movement in foreign exchange translation reserve
16
Other comprehensive income
Loss attributable to members of the Group
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
15
16
Net movement in treasury shares
Increase in employees share based payments reserve
16
107,591
107,591
-
-
107,591
107,591
-
(7,042,755)
(7,042,755)
107,591
(7,042,755)
(6,935,164)
7,151,283
184,223
105,000
-
7,440,506
-
(184,223)
(105,000)
118,127
(171,096)
-
-
-
-
-
7,151,283
-
-
118,127
7,269,410
Balance 30 June 2019
145,838,216
649,149
(116,890,245)
29,597,120
2018
Balance at 1 July 2017
137,949,047
389,929
(98,109,046)
40,229,930
Issued
Capital
$
Reserves
$
Accumulated
Losses
$
Total
Equity
$
Notes
Movement in foreign exchange translation reserve
16
Other comprehensive income
Loss attributable to members of the Group
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
15
16
Net movement in treasury shares
Increase in employees share based payments reserve
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
448,663
-
(414,399)
(36,544)
777,804
326,861
-
-
-
-
-
(2,280)
-
-
777,804
775,524
Balance 30 June 2018
138,397,710
712,654
(109,762,365)
29,347,999
-
-
-
-
-
-
-
-
-
-
-
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
28
Adslot 2019 Annual Report
19
20
Consolidated Statement of Changes in Equity
For the year ended 30 June 2019
2019
Issued
Capital
$
Reserves
$
Accumulated
Losses
$
Total
Equity
$
Notes
Balance at 1 July 2018
138,397,710
712,654
(109,762,365)
29,347,999
Adjustment from adoption of AASB 15
1(a)
-
-
(85,125)
(85,125)
Adjusted balance at 1 July 2018
138,397,710
712,654
(109,847,490)
29,262,874
Movement in foreign exchange translation reserve
16
Other comprehensive income
Loss attributable to members of the Group
Total comprehensive income/(loss)
-
-
-
-
107,591
107,591
-
-
107,591
107,591
-
(7,042,755)
(7,042,755)
107,591
(7,042,755)
(6,935,164)
Transactions with equity holders in their capacity
as equity holders
Contributions of equity, net of transaction costs
Reclassification of vested performance rights
15
16
Net movement in treasury shares
Increase in employees share based payments reserve
16
7,151,283
184,223
105,000
-
7,440,506
-
(184,223)
(105,000)
118,127
(171,096)
-
-
-
-
-
7,151,283
-
-
118,127
7,269,410
Balance 30 June 2019
145,838,216
649,149
(116,890,245)
29,597,120
2018
Balance at 1 July 2017
137,949,047
389,929
(98,109,046)
40,229,930
Issued
Capital
$
Reserves
$
Accumulated
Losses
$
Total
Equity
$
Notes
Movement in foreign exchange translation reserve
16
Other comprehensive income
Loss attributable to members of the Group
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
15
16
Net movement in treasury shares
Increase in employees share based payments reserve
16
-
-
-
-
-
412,119
36,544
-
448,663
(4,136)
(4,136)
-
-
(4,136)
(4,136)
-
(11,653,319)
(11,653,319)
(4,136)
(11,653,319)
(11,657,455)
-
(414,399)
(36,544)
777,804
326,861
-
-
-
-
-
-
(2,280)
-
777,804
775,524
Balance 30 June 2018
138,397,710
712,654
(109,762,365)
29,347,999
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Adslot 2019 Annual Report
20
29
Consolidated Statement of Cash Flows
For the year ended 30 June 2019
Notes
2019
$
2018
$
Cash flows from operating activities
Receipts from trade and other debtors
Interest received
Receipt of R&D tax incentive and other Grants
17,401,152
8,276,865
56,077
733,145
157,478
768,439
Payments to trade creditors, other creditors and employees
(19,300,249)
(14,476,555)
Interest paid
-
(60)
Net cash outflows from operating activities
23
(1,109,875)
(5,273,833)
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
(33,109)
(134,740)
-
2,265,149
(5,021,387)
330
1,921,946
(6,068,636)
Net cash outflows from investing activities
(2,789,347)
(4,281,100)
The adoption of AASB 15 has affected the following areas which are associated with the Webfirm business:
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
7,500,000
(392,949)
7,107,051
3,207,829
4,775,331
182,384
-
-
-
(9,554,933)
14,320,147
10,117
Cash at the end of the financial year
7
8,165,544
4,775,331
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
30
Adslot 2019 Annual Report
21
22
Notes to the Financial Statements
For the year ended 30 June 2019
1.
Sum m ary 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 2019 and is presented in Australian dollars.
The principal accounting policies adopted in the preparation of these consolidated financial statements are
summarised below. These policies have been consistently applied to all the years presented, unless
otherwise stated.
(a)
New or amended Accounting Standards and Interpretations adopted
The group has adopted all of the new, revised or amended Accounting Standards and Interpretations issued
by the Australian Accounting Standards Board (AASB) that are mandatory for the current reporting period.
The adoption of these Accounting Standards and Interpretations did not have any significant impact on the
financial performance or position of the group.
Any new, revised or amended Accounting Standards or Interpretations that are not yet mandatory have not
been early adopted.
AASB 15 Revenue from Contracts with Customers
AASB 15 replaced AASB 118 which covered revenue arising from the sale of goods and the rendering of
services and AASB 111 which covered 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 was
adopted on 1 July 2018 using the modified retrospective approach.
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, and in accordance with AASB 15, revenue arising from this upfront work needs
to be recognised over time as clients simultaneously receive the service and the Group satisfies its
performance obligations. On initial adoption on 1 July 2018, the Group increased deferred revenue by
$117,195 and adjusted 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 third-
party registry. SSL Certification services involves obtaining annual SSL Certificates on behalf of the client
from a third 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 delivered 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 recognise revenue at a point of
time, not over a period of time. On initial adoption on 1 July 2018 the Group reduced deferred revenue by
$25,620 for Domain Names Registration and $6,450 for SSL certification and adjusted the retained earnings
by the same amounts.
Notes to the Financial Statements
For the year ended 30 June 2019
1.
Sum m ary 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 2019 and is presented in Australian dollars.
The principal accounting policies adopted in the preparation of these consolidated financial statements are
summarised below. These policies have been consistently applied to all the years presented, unless
otherwise stated.
(a)
N ew or amended Accounting Standards and Interpretations adopted
The group has adopted all of the new, revised or amended Accounting Standards and Interpretations issued
by the Australian Accounting Standards Board (AASB) that are mandatory for the current reporting period.
The adoption of these Accounting Standards and Interpretations did not have any significant impact on the
financial performance or position of the group.
Any new, revised or amended Accounting Standards or Interpretations that are not yet mandatory have not
been early adopted.
AASB 15 Revenue from Contracts with Customers
AASB 15 replaced AASB 118 which covered revenue arising from the sale of goods and the rendering of
services and AASB 111 which covered 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 was
adopted on 1 July 2018 using the modified retrospective approach.
The adoption of AASB 15 has affected the following areas which are associated with the Webfirm business:
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, and in accordance with AASB 15, revenue arising from this upfront work needs
to be recognised over time as clients simultaneously receive the service and the Group satisfies its
performance obligations. On initial adoption on 1 July 2018, the Group increased deferred revenue by
$117,195 and adjusted 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 third-
party registry. SSL Certification services involves obtaining annual SSL Certificates on behalf of the client
from a third 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 delivered 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 recognise revenue at a point of
time, not over a period of time. On initial adoption on 1 July 2018 the Group reduced deferred revenue by
$25,620 for Domain Names Registration and $6,450 for SSL certification and adjusted the retained earnings
by the same amounts.
Adslot 2019 Annual Report
22
31
Notes to the Financial Statements
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
For the year ended 30 June 2019
Going concern
Summary of Significant Accounting Policies (Continued)
1.
1. Summary of Significant Accounting Policies (Continued)
(a) New or amended Accounting Standards and Interpretations adopted (Continued)
(c)
On the date of the initial application of AASB15, 1 July 2018, the impact to retained earnings of the Group is
as follows:
Management continues to invest resources to support growth in trading fees, primarily from holding
companies in the US market. In August 2018 ($3.5m) and May 2019 ($4.0m) the Group successfully raised
$7.5 million via share placements, resulting in $7.1 million net cash inflows from financing activities.
$
Combined with the net cash outflows from operating and investing activities of $3.9million, the net cash
inflow for the year was $3.2 million. Management anticipate incurring further net cash outflows from
-
operations until such time as sufficient revenue growth is achieved.
Accumulated Losses
Search Engine Optimization (SEO)
Other Equity
Total Equity
Impact Area
(117,195)
(117,195)
$
$
SSL Certification
Domain Name Registration (DNR)
-
As previously disclosed, the Group received a notification of finding of ineligible R&D activities in relation to
-
the FY16 claim. The Group has requested an internal review of the decision which is ongoing. Management
-
believe its FY16 R&D claim is consistent with the criteria of the scheme.
(85,125)
(85,125)
25,620
25,620
Total
6,450
6,450
If a delay in expected growth in revenues and/or a negative outcome of AusIndustry’s review of the FY16
On 1 July 2018 unearned income under Other Liabilities were reclassified as Contract Liabilities; as such
R&D claim was to occur, this has the potential to create a cash flow risk to the Group which could affect its
other liabilities decreased by $445,491 and contract liabilities increased by $360,366.
ability to pay its debts as and when they fall due, and to realise its assets in the normal course of business.
The tables below highlight the impact of AASB 15 on the Group’s statement of profit or loss and other
However, the Directors believe the Group will be able to continue to pay its debts as and when they fall due
comprehensive income and the statement of financial position for the period ending 30 June 2019. The
for the following reasons:
adoption of AASB 15 did not have an impact on the Group’s statement of cash flows.
Consolidated Statement of Profit or Loss and
Other Comprehensive Income (Extract)
the Group had a cash position of $8.2 million at 30 June 2019;
strong Symphony licence fees to continue in FY20;
the ongoing cost management program;
the opportunity to implement further cost reductions; and
the ability to raise additional capital.
Amounts under
AASB 118 & 111
$
Total revenue from continuing operations
•
•
•
•
•
9,855,289
Loss after income tax expense
(7,081,627)
Adjustments
$
38,872
38,872
Amounts under
AASB 15
$
9,894,161
(7,042,755)
Total comprehensive income for the year
(6,935,164)
Accordingly, the Directors believe there exists a reasonable expectation that the Group can continue to pay
its debts as and when they fall due, and the financial report has been prepared on a going concern basis.
(6,974,036)
38,872
Consolidated Statement of Financial
Position (Extract)
(d)
Principles of consolidation
Amounts under AASB
118 & 111
$
Adjustments
$
Amounts under
AASB 15
$
Subsidiaries
CURRENT LIABILITIES
Unearned income
The consolidated financial statements comprise those of the Group, and the entities it controlled at the end
of, or during, the financial year. The Group 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.
374,781
Contract liabilities
(328,528)
328,528
374,781
-
NET ASSETS
TOTAL LIABILITIES
8,517,126
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
29,597,120
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.
(116,890,245)
Accumulated losses
(116,843,992)
29,643,373
EQUITY
8,470,873
(46,253)
(46,253)
46,253
29,597,120
TOTAL EQUITY
Investments in subsidiaries are accounted for at cost less impairment losses in the parent entity information
in Note 25.
29,643,373
(46,253)
32
Adslot 2019 Annual Report
25
23
24
Notes to the Financial Statements
For the year ended 30 June 2019
AASB 9 Financial Instruments
AASB 9 Financial Instruments replaces AASB 139 Financial Instruments: Recognition and Measurement
requirements. It 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
The group adopted AASB 9 using a modified retrospective approach. 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 receivables 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. There was no impact on the impairment of trade receivables on adoption of
assets.
AASB 9.
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
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
(b)
Basis of preparation
the Corporations Act 2001.
Compliance with IFRS
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.
Notes to the Financial Statements
For the year ended 30 June 2019
AASB 9 Financial Instruments
AASB 9 Financial Instruments replaces AASB 139 Financial Instruments: Recognition and Measurement
requirements. It 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 group adopted AASB 9 using a modified retrospective approach. 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 receivables 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. There was no impact on the impairment of trade receivables on adoption of
AASB 9.
(b)
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.
Adslot 2019 Annual Report
24
33
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
For the year ended 30 June 2019
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
1. Summary of Significant Accounting Policies (Continued)
1. Summary of Significant Accounting Policies (Continued)
Business combinations
(c)
(c)
Going concern
Going concern
Management continues to invest resources to support growth in trading fees, primarily from holding
Management continues to invest resources to support growth in trading fees, primarily from holding
companies in the US market. In August 2018 ($3.5m) and May 2019 ($4.0m) the Group successfully raised
companies in the US market. In August 2018 ($3.5m) and May 2019 ($4.0m) the Group successfully raised
$7.5 million via share placements, resulting in $7.1 million net cash inflows from financing activities.
$7.5 million via share placements, resulting in $7.1 million net cash inflows from financing activities.
Combined with the net cash outflows from operating and investing activities of $3.9million, the net cash
Combined with the net cash outflows from operating and investing activities of $3.9million, the net cash
inflow for the year was $3.2 million. Management anticipate incurring further net cash outflows from
inflow for the year was $3.2 million. Management anticipate incurring further net cash outflows from
operations until such time as sufficient revenue growth is achieved.
operations until such time as sufficient revenue growth is achieved.
As previously disclosed, the Group received a notification of finding of ineligible R&D activities in relation to
As previously disclosed, the Group received a notification of finding of ineligible R&D activities in relation to
the FY16 claim. The Group has requested an internal review of the decision which is ongoing. Management
the FY16 claim. The Group has requested an internal review of the decision which is ongoing. Management
believe its FY16 R&D claim is consistent with the criteria of the scheme.
believe its FY16 R&D claim is consistent with the criteria of the scheme.
If a delay in expected growth in revenues and/or a negative outcome of AusIndustry’s review of the FY16
If a delay in expected growth in revenues and/or a negative outcome of AusIndustry’s review of the FY16
R&D claim was to occur, this has the potential to create a cash flow risk to the Group which could affect its
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.
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
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:
for the following reasons:
•
•
•
•
•
•
•
•
•
•
the Group had a cash position of $8.2 million at 30 June 2019;
the Group had a cash position of $8.2 million at 30 June 2019;
strong Symphony licence fees to continue in FY20;
strong Symphony licence fees to continue in FY20;
the ongoing cost management program;
the ongoing cost management program;
the opportunity to implement further cost reductions; and
the opportunity to implement further cost reductions; and
the ability to raise additional capital.
the ability to raise additional capital.
Accordingly, the Directors believe there exists a reasonable expectation that the Group can continue to pay
Accordingly, the Directors believe there exists a reasonable expectation that the Group can continue to pay
its debts as and when they fall due, and the financial report has been prepared on a going concern basis.
its debts as and when they fall due, and the financial report has been prepared on a going concern basis.
(d)
(d)
Principles of consolidation
Principles of consolidation
Subsidiaries
Subsidiaries
The consolidated financial statements comprise those of the Group, and the entities it controlled at the end
The consolidated financial statements comprise those of the Group, and the entities it controlled at the end
of, or during, the financial year. The Group controls a subsidiary if it is exposed, or has rights, to variable
of, or during, the financial year. The Group 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
returns from its involvement with the subsidiary and has the ability to affect those returns through its power
over the subsidiary.
over the subsidiary.
All intra-group transactions, balances, income and expenses between entities in the Group included in the
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
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.
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
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 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.
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
Investments in subsidiaries are accounted for at cost less impairment losses in the parent entity information
in Note 25.
in Note 25.
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
closing 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.
(e)
C ash 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.
34
Adslot 2019 Annual Report
25
25
26
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
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
closing 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.
(e)
C ash 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.
Adslot 2019 Annual Report
26
35
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
For the year ended 30 June 2019
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
1. Summary of Significant Accounting Policies (Continued)
1. Summary of Significant Accounting Policies (Continued)
(j)
Finance costs
(c)
(f)
Going concern
Property, plant and equipment
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
33– 40% per annum
20 – 33% per annum
Property, plant and equipment are stated at cost less accumulated depreciation and any impairment in value.
Management continues to invest resources to support growth in trading fees, primarily from holding
The carrying values of property, plant and equipment are reviewed for impairment when events or changes
companies in the US market. In August 2018 ($3.5m) and May 2019 ($4.0m) the Group successfully raised
in circumstances indicate the carrying value may not be recoverable. Leasehold improvements are
$7.5 million via share placements, resulting in $7.1 million net cash inflows from financing activities.
depreciated using the straight-line method over the remaining period of the underlying lease.
Combined with the net cash outflows from operating and investing activities of $3.9million, the net cash
Depreciation is calculated on a straight-line basis for all plant and equipment. The estimated useful lives,
inflow for the year was $3.2 million. Management anticipate incurring further net cash outflows from
residual values and depreciation method are reviewed at the end of each annual reporting period, with the
operations until such time as sufficient revenue growth is achieved.
effect of any changes recognised on a prospective basis.
As previously disclosed, the Group received a notification of finding of ineligible R&D activities in relation to
The gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined
the FY16 claim. The Group has requested an internal review of the decision which is ongoing. Management
as the difference between the sales proceeds and the carrying amount of asset and is recognised in profit or
believe its FY16 R&D claim is consistent with the criteria of the scheme.
loss. The following depreciation rates are used for each class of depreciable asset:
If a delay in expected growth in revenues and/or a negative outcome of AusIndustry’s review of the FY16
Computer Equipment
R&D claim was to occur, this has the potential to create a cash flow risk to the Group which could affect its
Plant & Equipment
ability to pay its debts as and when they fall due, and to realise its assets in the normal course of business.
asset.
(k)
Income tax
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income
based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and
liabilities attributable to temporary differences between the tax bases of assets and liabilities and their
carrying amounts in the financial statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply
when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or
substantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of
deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is
made for certain temporary differences arising from the initial recognition of an asset or a liability. No
deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a
transaction, other than a business combination, that at the time of the transaction did not affect either
accounting profit or taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities are always provided for in full.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount
and tax bases of investments in controlled entities where the parent entity is able to control the timing of the
reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised
future.
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.
Leasehold Improvements
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:
20 – 100% per annum
Receivables
the Group had a cash position of $8.2 million at 30 June 2019;
strong Symphony licence fees to continue in FY20;
the ongoing cost management program;
the opportunity to implement further cost reductions; and
the ability to raise additional capital.
•
(g)
•
•
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.
Accordingly, the Directors believe there exists a reasonable expectation that the Group can continue to pay
Collectability of trade receivables is reviewed on an ongoing basis. Debts that are known to be uncollectible
its debts as and when they fall due, and the financial report has been prepared on a going concern basis.
are written off. The Group makes use of a simplified approach in accounting for trade receivables and
records the loss allowance at the amount equal to the expected lifetime credit losses. In using this practical
expedient, the Group uses its historical experience, external indicators and forward-looking information to
calculate the expected credit losses. The amount of the expected credit loss is recognised in profit or loss.
(d)
Subsequent recoveries of amounts previously written off are credited against the allowance account.
Principles of consolidation
Subsidiaries
Trade and other creditors – financial liabilities
The consolidated financial statements comprise those of the Group, and the entities it controlled at the end
(h)
of, or during, the financial year. The Group 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
Trade accounts payable and other creditors represent liabilities for goods and services provided to the Group
over the subsidiary.
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.
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
Financial liabilities are measured subsequently at amortised cost using the effective interest method.
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
(i)
the financial statements have been consistently applied by entities in the Group.
Borrowings
Borrowings are initially recognised at fair value (less transaction costs) and subsequently measured at
Investments in subsidiaries are accounted for at cost less impairment losses in the parent entity information
amortised cost. Any difference between the proceeds and the redemption amount is recognised in profit or
in Note 25.
loss over the period of the borrowing using the effective interest method.
36
Adslot 2019 Annual Report
25
27
28
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
(j)
Finance costs
Finance costs are recognised as expenses in the period in which they are incurred except where they are
incurred in the construction of a qualifying asset in which case the finance costs are capitalised as part of the
asset.
(k)
Income tax
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income
based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and
liabilities attributable to temporary differences between the tax bases of assets and liabilities and their
carrying amounts in the financial statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply
when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or
substantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of
deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is
made for certain temporary differences arising from the initial recognition of an asset or a liability. No
deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a
transaction, other than a business combination, that at the time of the transaction did not affect either
accounting profit or taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities are always provided for in full.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount
and tax bases of investments in controlled entities where the parent entity is able to control the timing of the
reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable
future.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised
directly in equity.
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.
Adslot 2019 Annual Report
28
37
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
For the year ended 30 June 2019
1. Summary of Significant Accounting Policies (Continued)
1. Summary of Significant Accounting Policies (Continued)
(c)
(l)
Going concern
Employee benefits
Wages and salaries, annual leave and sick leave
Management continues to invest resources to support growth in trading fees, primarily from holding
Short-term employee benefits are current liabilities included in employee benefits, measured at the
companies in the US market. In August 2018 ($3.5m) and May 2019 ($4.0m) the Group successfully raised
undiscounted amount that the Group expects to pay as a result of the unused entitlement. Annual leave is
$7.5 million via share placements, resulting in $7.1 million net cash inflows from financing activities.
included in ‘provisions’. The Group does not discount the leave liability calculations as the Group expects all
Combined with the net cash outflows from operating and investing activities of $3.9million, the net cash
annual leave for all employees to be used wholly within 12 months of the end of reporting period.
inflow for the year was $3.2 million. Management anticipate incurring further net cash outflows from
operations until such time as sufficient revenue growth is achieved.
Long service leave
The liability for long service leave expected to be settled within 12 months of the reporting date is recognised
As previously disclosed, the Group received a notification of finding of ineligible R&D activities in relation to
in provisions for employee entitlements and is measured at the amount expected to be paid when the
the FY16 claim. The Group has requested an internal review of the decision which is ongoing. Management
liabilities are settled. The liability for long service leave expected to be settled more than 12 months from the
believe its FY16 R&D claim is consistent with the criteria of the scheme.
reporting date, is recognised in the non-current provision for employee benefits and is measured as the
If a delay in expected growth in revenues and/or a negative outcome of AusIndustry’s review of the FY16
present value of the estimated future cash outflows to be made by the Group in respect of services provided
R&D claim was to occur, this has the potential to create a cash flow risk to the Group which could affect its
by employees up to reporting date.
ability to pay its debts as and when they fall due, and to realise its assets in the normal course of business.
Share-based compensation benefits
However, the Directors believe the Group will be able to continue to pay its debts as and when they fall due
Equity-settled share-based payments with employees and others providing similar services are measured at
for the following reasons:
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.
Accordingly, the Directors believe there exists a reasonable expectation that the Group can continue to pay
Upon the exercise of options, the balance of the share-based payments reserve relating to those options is
its debts as and when they fall due, and the financial report has been prepared on a going concern basis.
transferred to share capital while the proceeds received, net of any directly attributable transaction costs, are
credited to share capital.
the Group had a cash position of $8.2 million at 30 June 2019;
strong Symphony licence fees to continue in FY20;
the ongoing cost management program;
the opportunity to implement further cost reductions; and
the ability to raise additional capital.
(d)
Principles of consolidation
Subsidiaries
The consolidated financial statements comprise those of the Group, and the entities it controlled at the end
of, or during, the financial year. The Group 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.
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
(m)
Intangible Assets
Goodwill
Goodwill arising in a business combination is recognised as an asset at the date that control is acquired
(acquisition date). Goodwill is measured as the excess of the fair value of consideration paid over the fair
value of the identifiable net assets of the entity or operations acquired. Goodwill acquired in business
combinations is not amortised. Instead, goodwill is tested for impairment 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
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
project.
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
Software
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 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.
38
Adslot 2019 Annual Report
25
29
30
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
(m)
Intangible Assets
Goodwill
Goodwill arising in a business combination is recognised as an asset at the date that control is acquired
(acquisition date). Goodwill is measured as the excess of the fair value of consideration paid over the fair
value of the identifiable net assets of the entity or operations acquired. Goodwill acquired in business
combinations is not amortised. Instead, goodwill is tested for impairment 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.
Adslot 2019 Annual Report
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39
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
For the year ended 30 June 2019
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
1. Summary of Significant Accounting Policies (Continued)
1. Summary of Significant Accounting Policies (Continued)
(p)
Revenue recognition
(c)
(n)
Going concern
Leased assets
Leases of assets under which the Group assumes substantially all the risks and benefits of ownership are
Management continues to invest resources to support growth in trading fees, primarily from holding
classified as finance leases. This is distinct from operating leases under which the lessor effectively retains
companies in the US market. In August 2018 ($3.5m) and May 2019 ($4.0m) the Group successfully raised
substantially all such risks and benefits. Property, plant and equipment acquired by finance leases are
$7.5 million via share placements, resulting in $7.1 million net cash inflows from financing activities.
capitalised at the present value of the minimum lease payments as a finance lease asset and as a
Combined with the net cash outflows from operating and investing activities of $3.9million, the net cash
corresponding lease liability from date of inception of the lease. Lease assets are amortised over the period
inflow for the year was $3.2 million. Management anticipate incurring further net cash outflows from
the entity is expected to benefit from the use of the assets or the term of the lease, whichever is shorter.
operations until such time as sufficient revenue growth is achieved.
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.
As previously disclosed, the Group received a notification of finding of ineligible R&D activities in relation to
Operating lease payments are charged to statement of profit or loss and other comprehensive income on a
the FY16 claim. The Group has requested an internal review of the decision which is ongoing. Management
straight-line basis over the period of the lease term. Associated costs such as maintenance and insurance
believe its FY16 R&D claim is consistent with the criteria of the scheme.
are expensed as incurred.
If a delay in expected growth in revenues and/or a negative outcome of AusIndustry’s review of the FY16
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.
(o)
However, the Directors believe the Group will be able to continue to pay its debts as and when they fall due
Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except:
for the following reasons:
Goods and services tax
the Group had a cash position of $8.2 million at 30 June 2019;
strong Symphony licence fees to continue in FY20;
part of the cost of acquisition of an asset or as part of an item of expense; or
the ongoing cost management program;
the opportunity to implement further cost reductions; and
the ability to raise additional capital.
•
i. Where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as
•
•
•
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.
Accordingly, the Directors believe there exists a reasonable expectation that the Group can continue to pay
its debts as and when they fall due, and the financial report has been prepared on a going concern basis.
(d)
Principles of consolidation
Subsidiaries
The consolidated financial statements comprise those of the Group, and the entities it controlled at the end
of, or during, the financial year. The Group 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.
The Group derives revenue from trading technology and services. To determine whether to recognise
revenue, the Group follows a 5-step process:
1.
2.
Identifying the contract with a customer
Identifying the performance obligations
3. Determining the transaction price
4. Allocating the transaction price to the performance obligations
5. Recognising revenue when/as performance obligation(s) are satisfied
The Group often enters into transactions involving a range of the Group’s products and services. In all cases,
the total transaction price for a contract is allocated amongst the various performance obligations based on
their relative stand-alone selling prices. The transaction price for a contract excludes any amounts collected
on behalf of third parties.
Revenue is recognised either at a point in time or over time, when (or as) the Group satisfies performance
obligations by transferring the promised services to its customers.
The Group recognises contract liabilities for consideration received in respect of unsatisfied performance
obligations and reports these amounts as contract liabilities in the statement of financial position. Similarly, if
the Group satisfies a performance obligation before it receives the consideration, the Group recognises
either a contract asset or a receivable in its statement of financial position, depending on whether something
other than the passage of time is required before the consideration is due.
Revenue is recognised for the major business activities as follows:
Revenue from Trading Technology - Licence Fees
Adslot and Symphony licence fees are derived by providing customers access to the Group’s technology
platforms. The fee is based on either annual contracted amounts, the number of users, a tier system based
on historical volumes traded on the platform, and/or resources allocated. The contracts are ongoing but
cancellable with defined notice periods. The Group is expected to maintain its performance obligations
throughout the contracted period for the client to achieve the benefits of the platforms. As per AASB 15,
revenue is recognised over time; since the promise to grant a licence as a performance obligation is satisfied
over time. The client simultaneously receives and consumes the benefit from the Group’s performance of
providing access to the platforms.
Revenue from Trading Technology – Trading Fees
Adslot Publisher revenues are recognised over time. Only the portion of the media campaign that is retained
by the Group for their services is recorded as revenue. This is typically a percentage of the total media
transacted on the Adslot platform. Where media campaigns are realised over a period a time, the portion that
extends beyond the reporting period is not taken up as revenue as the performance obligations have not
been satisfied. Where the funds for these campaigns are prepaid by advertisers those amounts are treated
as contract liabilities in the Consolidated Statement of Financial Position. As the fees are usage-based
revenues the revenue is recognised over time when the usage occurs and the performance obligations are
satisfied.
Funds collected or collectable from advertisers and due to be repaid to publisher clients are disclosed in the
accounts as publisher creditors and categorised under Trade and other payables in the Consolidated
Statement of Financial Position.
Symphony trading fees are charged for the use of the Symphony platform as a workflow solution. The fee is
based on a percentage fee calculated from the total transacted value of campaigns. As per AASB 15,
revenue is recognised over time when the usage occurs and the performance obligations are satisfied.
40
Adslot 2019 Annual Report
25
31
32
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
(p)
Revenue recognition
The Group derives revenue from trading technology and services. To determine whether to recognise
revenue, the Group follows a 5-step process:
Identifying the contract with a customer
Identifying the performance obligations
1.
2.
3. Determining the transaction price
4. Allocating the transaction price to the performance obligations
5. Recognising revenue when/as performance obligation(s) are satisfied
The Group often enters into transactions involving a range of the Group’s products and services. In all cases,
the total transaction price for a contract is allocated amongst the various performance obligations based on
their relative stand-alone selling prices. The transaction price for a contract excludes any amounts collected
on behalf of third parties.
Revenue is recognised either at a point in time or over time, when (or as) the Group satisfies performance
obligations by transferring the promised services to its customers.
The Group recognises contract liabilities for consideration received in respect of unsatisfied performance
obligations and reports these amounts as contract liabilities in the statement of financial position. Similarly, if
the Group satisfies a performance obligation before it receives the consideration, the Group recognises
either a contract asset or a receivable in its statement of financial position, depending on whether something
other than the passage of time is required before the consideration is due.
Revenue is recognised for the major business activities as follows:
Revenue from Trading Technology - Licence Fees
Adslot and Symphony licence fees are derived by providing customers access to the Group’s technology
platforms. The fee is based on either annual contracted amounts, the number of users, a tier system based
on historical volumes traded on the platform, and/or resources allocated. The contracts are ongoing but
cancellable with defined notice periods. The Group is expected to maintain its performance obligations
throughout the contracted period for the client to achieve the benefits of the platforms. As per AASB 15,
revenue is recognised over time; since the promise to grant a licence as a performance obligation is satisfied
over time. The client simultaneously receives and consumes the benefit from the Group’s performance of
providing access to the platforms.
Revenue from Trading Technology – Trading Fees
Adslot Publisher revenues are recognised over time. Only the portion of the media campaign that is retained
by the Group for their services is recorded as revenue. This is typically a percentage of the total media
transacted on the Adslot platform. Where media campaigns are realised over a period a time, the portion that
extends beyond the reporting period is not taken up as revenue as the performance obligations have not
been satisfied. Where the funds for these campaigns are prepaid by advertisers those amounts are treated
as contract liabilities in the Consolidated Statement of Financial Position. As the fees are usage-based
revenues the revenue is recognised over time when the usage occurs and the performance obligations are
satisfied.
Funds collected or collectable from advertisers and due to be repaid to publisher clients are disclosed in the
accounts as publisher creditors and categorised under Trade and other payables in the Consolidated
Statement of Financial Position.
Symphony trading fees are charged for the use of the Symphony platform as a workflow solution. The fee is
based on a percentage fee calculated from the total transacted value of campaigns. As per AASB 15,
revenue is recognised over time when the usage occurs and the performance obligations are satisfied.
Adslot 2019 Annual Report
32
41
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
For the year ended 30 June 2019
1. Summary of Significant Accounting Policies (Continued)
1. Summary of Significant Accounting Policies (Continued)
(p) Revenue recognition (Continued)
Going concern
(c)
Rendering of services
Management continues to invest resources to support growth in trading fees, primarily from holding
Service revenue is recognised at a point in time or over time based on when the performance obligations are
companies in the US market. In August 2018 ($3.5m) and May 2019 ($4.0m) the Group successfully raised
met, and the customer can realise benefit from service received without further involvement from the Group.
$7.5 million via share placements, resulting in $7.1 million net cash inflows from financing activities.
Symphony services revenue is derived as a once off Symphony activation fee or custom development work.
Combined with the net cash outflows from operating and investing activities of $3.9million, the net cash
The revenue is recognised at a point in time when the Group has completed its performance obligation and
inflow for the year was $3.2 million. Management anticipate incurring further net cash outflows from
the customer has obtained the ability to direct the use of, and obtain substantially all of the remaining
operations until such time as sufficient revenue growth is achieved.
benefits from, the work carried out.
As previously disclosed, the Group received a notification of finding of ineligible R&D activities in relation to
Website development revenue is recorded based on project delivery revenue over time as the project is
the FY16 claim. The Group has requested an internal review of the decision which is ongoing. Management
completed. All projects are assigned percentages of project completion (based on actual work in progress)
believe its FY16 R&D claim is consistent with the criteria of the scheme.
and all website development revenue applicable to percentage of incomplete work is recorded as contract
liabilities . As such revenue is recognised over time when the performance obligations are met and when the
If a delay in expected growth in revenues and/or a negative outcome of AusIndustry’s review of the FY16
Group receives a right to payment for performance completed to date.
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.
Search Engine Optimisation and Search Engine Advertising attempts to improve search engine rankings of
the client’s website or bid on certain keywords in order for their clickable ads to appear in search results.
However, the Directors believe the Group will be able to continue to pay its debts as and when they fall due
These are ongoing contracts and can be cancelled with 90 days’ notice. The Group needs to continuously
for the following reasons:
manage these campaigns; as such the revenue is recognised over time as the clients simultaneously receive
•
the service and the Group satisfies its performance obligations.
•
Hosting revenue is derived for hosting the client’s websites in third party cloud servers managed by the
•
Group. These contracts are ongoing and can be cancelled with 90 days’ notice. Clients may pay upfront
•
annually. The Group needs to continually satisfy the performance obligations of hosting the site and provide
•
customer support, as and when required. Therefore, revenue is recognised over time.
the Group had a cash position of $8.2 million at 30 June 2019;
strong Symphony licence fees to continue in FY20;
the ongoing cost management program;
the opportunity to implement further cost reductions; and
the ability to raise additional capital.
For Domain Names Registration and SSL Certification at the time of initial activation the service has been
Accordingly, the Directors believe there exists a reasonable expectation that the Group can continue to pay
transferred in full to the customer; and the customer is able to realise benefits from services received without
its debts as and when they fall due, and the financial report has been prepared on a going concern basis.
further involvement from the Group. Furthermore, the Group separately prices and sells these products.
There is no further performance obligation for the Group. As such revenue needs to be recognised at a point
in time.
(d)
Interest revenue
Principles of consolidation
Subsidiaries
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.
The consolidated financial statements comprise those of the Group, and the entities it controlled at the end
of, or during, the financial year. The Group controls a subsidiary if it is exposed, or has rights, to variable
Government grants
returns from its involvement with the subsidiary and has the ability to affect those returns through its power
In accordance with AASB 120, government grants are recognised at fair value where there is reasonable
over the subsidiary.
assurance that the grant will be received and all grant conditions will be met. Where appropriate grants
All intra-group transactions, balances, income and expenses between entities in the Group included in the
relating to expense items are recognised as other income in reporting the related expense, over the periods
financial statements have been eliminated in full. Where unrealised losses on intra-group asset sales are
necessary to match the grant to the costs they are compensating. Grants relating to assets are credited to
reversed on consolidation, the underlying asset is also tested for impairment from a group perspective.
deferred income and are amortised on a straight line basis over the expected lives of the assets.
Where an entity either began or ceased to be controlled during the year, the results are included only from
Sale of non-current assets
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.
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.
Investments in subsidiaries are accounted for at cost less impairment losses in the parent entity information
in Note 25.
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
(q)
Financial Instruments
Recognition and derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual
provisions of the financial instrument and are measured initially at fair value adjusted by transactions costs,
except for those carried at fair value through the profit or loss statement, and which are measured initially at
fair value. Subsequent measurement of financial assets and financial liabilities are described below.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset
expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial
liability is derecognised when it is extinguished, discharged, cancelled or expires.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are measured
at the transaction price in accordance with AASB 15, all financial assets are initially measured at fair value
adjusted for transaction costs (where applicable).
Subsequent measurement of financial assets
For the purpose of subsequent measurement, financial assets, other than those designated and effective as
hedging instruments, are classified as financial assets at amortised cost.
Classifications are determined by both:
• The entity’s business model for managing the financial asset; and
• The contractual cash flow characteristics of the financial assets.
All income and expenses relating to financial assets that are recognised in profit or loss are presented within
finance costs, finance income or other financial items, except for impairment of trade receivables which is
presented within other expenses.
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not
designated as financial assets at fair value through profit and loss):
they are held within a business model whose objective is to hold the financial assets and collect its
•
•
contractual cash flows; and
the contractual terms of the financial assets give rise to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
After initial recognition, these are measured at amortised cost using the effective interest method.
Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents,
trade and most other receivables fall into this category of financial instruments as well as government bonds.
Trade and other receivables and contract assets
The Group makes use of a simplified approach in accounting for trade and other receivables as well as
contract assets and records the loss allowance at the amount equal to the expected lifetime credit losses. In
using this practical expedient, the Group uses its historical experience, external indicators and forward-
looking information to calculate the expected credit losses.
Trade and other receivables and contract assets are subject to review at least at each reporting date to
identify expected credit losses.
other than trade and other receivables.
At reporting date and throughout the reporting period the Group did not have any other financial instruments
42
Adslot 2019 Annual Report
25
33
34
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
(q)
Financial Instruments
Recognition and derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual
provisions of the financial instrument and are measured initially at fair value adjusted by transactions costs,
except for those carried at fair value through the profit or loss statement, and which are measured initially at
fair value. Subsequent measurement of financial assets and financial liabilities are described below.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset
expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial
liability is derecognised when it is extinguished, discharged, cancelled or expires.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are measured
at the transaction price in accordance with AASB 15, all financial assets are initially measured at fair value
adjusted for transaction costs (where applicable).
Subsequent measurement of financial assets
For the purpose of subsequent measurement, financial assets, other than those designated and effective as
hedging instruments, are classified as financial assets at amortised cost.
Classifications are determined by both:
• The entity’s business model for managing the financial asset; and
• The contractual cash flow characteristics of the financial assets.
All income and expenses relating to financial assets that are recognised in profit or loss are presented within
finance costs, finance income or other financial items, except for impairment of trade receivables which is
presented within other expenses.
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not
designated as financial assets at fair value through profit and loss):
•
•
they are held within a business model whose objective is to hold the financial assets and collect its
contractual cash flows; and
the contractual terms of the financial assets give rise to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
After initial recognition, these are measured at amortised cost using the effective interest method.
Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents,
trade and most other receivables fall into this category of financial instruments as well as government bonds.
Trade and other receivables and contract assets
The Group makes use of a simplified approach in accounting for trade and other receivables as well as
contract assets and records the loss allowance at the amount equal to the expected lifetime credit losses. In
using this practical expedient, the Group uses its historical experience, external indicators and forward-
looking information to calculate the expected credit losses.
Trade and other receivables and contract assets are subject to review at least at each reporting date to
identify expected credit losses.
At reporting date and throughout the reporting period the Group did not have any other financial instruments
other than trade and other receivables.
Adslot 2019 Annual Report
34
43
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
For the year ended 30 June 2019
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
1. Summary of Significant Accounting Policies (Continued)
1. Summary of Significant Accounting Policies (Continued)
(v)
Segment reporting
(c)
(r)
Going concern
Leasehold improvements
The cost of improvements to leasehold properties is amortised over the unexpired period of the lease or the
Management continues to invest resources to support growth in trading fees, primarily from holding
estimated useful life of the improvement to the Group, whichever is the shorter.
companies in the US market. In August 2018 ($3.5m) and May 2019 ($4.0m) the Group successfully raised
$7.5 million via share placements, resulting in $7.1 million net cash inflows from financing activities.
Combined with the net cash outflows from operating and investing activities of $3.9million, the net cash
inflow for the year was $3.2 million. Management anticipate incurring further net cash outflows from
(s)
operations until such time as sufficient revenue growth is achieved.
Basic earnings per share
Earnings per share
As previously disclosed, the Group received a notification of finding of ineligible R&D activities in relation to
Basic earnings per share for continuing operations and total operations attributable to members of the Group
the FY16 claim. The Group has requested an internal review of the decision which is ongoing. Management
are determined by dividing net profit after income tax from continuing operations and the net profit
believe its FY16 R&D claim is consistent with the criteria of the scheme.
attributable to members of the Group 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
If a delay in expected growth in revenues and/or a negative outcome of AusIndustry’s review of the FY16
number of shares used in the calculation at any time during the period is based on the physical number of
R&D claim was to occur, this has the potential to create a cash flow risk to the Group which could affect its
shares issued.
ability to pay its debts as and when they fall due, and to realise its assets in the normal course of business.
Diluted earnings per share
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:
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
•
the Group had a cash position of $8.2 million at 30 June 2019;
ordinary shares and the weighted average number of shares assumed to have been issued for no
•
strong Symphony licence fees to continue in FY20;
consideration in relation to dilutive potential ordinary shares.
•
the ongoing cost management program;
•
the opportunity to implement further cost reductions; and
•
the ability to raise additional capital.
(t)
Dividends
Provision is made for the amount of any dividend determined or recommended by the directors on or before
Accordingly, the Directors believe there exists a reasonable expectation that the Group can continue to pay
the end of the financial year but not distributed at reporting date.
its debts as and when they fall due, and the financial report has been prepared on a going concern basis.
Impairment of assets
Principles of consolidation
(u)
(d)
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are
Subsidiaries
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
The consolidated financial statements comprise those of the Group, and the entities it controlled at the end
indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount
of, or during, the financial year. The Group controls a subsidiary if it is exposed, or has rights, to variable
by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher
returns from its involvement with the subsidiary and has the ability to affect those returns through its power
of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets
over the subsidiary.
are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely
All intra-group transactions, balances, income and expenses between entities in the Group included in the
independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial
financial statements have been eliminated in full. Where unrealised losses on intra-group asset sales are
assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at
reversed on consolidation, the underlying asset is also tested for impairment from a group perspective.
each reporting date.
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.
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.
(w)
Provisions, contingent assets and contingent liabilities
Provisions for product warranties, legal disputes, onerous contracts or other claims are recognised when the
Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow
of economic resources will be required from the Group and amounts can be estimated reliably. The timing or
amount of the outflow may still be uncertain.
Restructuring provisions are recognised only if a detailed formal plan for the restructuring exists and
management has either communicated the plan’s main features to those affected or started implementation.
Provisions are not recognised for future operating losses.
Provisions are measured at the estimated expenditure required to settle the present obligation, based on the
most reliable evidence available at the reporting date, including the risks and uncertainties associated with
the present obligation. Where there are a number of similar obligations, the likelihood that an outflow will be
required in settlement is determined by considering the class of obligations as a whole. Provisions are
discounted to their present values, where the time value of money is material.
Any reimbursement that the Group is virtually certain to collect from a third party with respect to the
obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related
provision.
No liability is recognised if an outflow of economic resources as a result of present obligations is not
probable. Such situations are disclosed as contingent liabilities unless the outflow of resources is remote.
(x)
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.
44
Adslot 2019 Annual Report
25
35
36
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
(v)
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.
(w)
Provisions, contingent assets and contingent liabilities
Provisions for product warranties, legal disputes, onerous contracts or other claims are recognised when the
Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow
of economic resources will be required from the Group and amounts can be estimated reliably. The timing or
amount of the outflow may still be uncertain.
Restructuring provisions are recognised only if a detailed formal plan for the restructuring exists and
management has either communicated the plan’s main features to those affected or started implementation.
Provisions are not recognised for future operating losses.
Provisions are measured at the estimated expenditure required to settle the present obligation, based on the
most reliable evidence available at the reporting date, including the risks and uncertainties associated with
the present obligation. Where there are a number of similar obligations, the likelihood that an outflow will be
required in settlement is determined by considering the class of obligations as a whole. Provisions are
discounted to their present values, where the time value of money is material.
Any reimbursement that the Group is virtually certain to collect from a third party with respect to the
obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related
provision.
No liability is recognised if an outflow of economic resources as a result of present obligations is not
probable. Such situations are disclosed as contingent liabilities unless the outflow of resources is remote.
(x)
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.
Adslot 2019 Annual Report
36
45
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
For the year ended 30 June 2019
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
1. Summary of Significant Accounting Policies (Continued)
1.
Summary of Significant Accounting Policies (Continued)
(y)
New standards and interpretations issued but not effective
(x) Critical accounting
(c)
(Continued)
Going concern
judgements and key sources of estimation uncertainty
The following new or amendments to existing standards have been published and are mandatory for
accounting periods beginning on or after 1 July 2019 or later periods, but have not yet been adopted by the
Management continues to invest resources to support growth in trading fees, primarily from holding
Key sources of estimation uncertainty
companies in the US market. In August 2018 ($3.5m) and May 2019 ($4.0m) the Group successfully raised
The following are the key assumptions concerning the future and other key estimation uncertainty at the
$7.5 million via share placements, resulting in $7.1 million net cash inflows from financing activities.
reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets
Combined with the net cash outflows from operating and investing activities of $3.9million, the net cash
and liabilities within the next financial year.
inflow for the year was $3.2 million. Management anticipate incurring further net cash outflows from
operations until such time as sufficient revenue growth is achieved.
Impairment of goodwill and intangible assets
Determining whether goodwill and intangible assets are impaired requires an estimation of the fair value less
As previously disclosed, the Group received a notification of finding of ineligible R&D activities in relation to
costs to sell of the cash-generating units to which goodwill and intangible assets have been allocated. Under
the FY16 claim. The Group has requested an internal review of the decision which is ongoing. Management
the market-based approach for fair value less costs to sell calculations, the entity is required to estimate the
believe its FY16 R&D claim is consistent with the criteria of the scheme.
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.
If a delay in expected growth in revenues and/or a negative outcome of AusIndustry’s review of the FY16
R&D claim was to occur, this has the potential to create a cash flow risk to the Group which could affect its
The Group’s shares are traded on the Australian Stock Exchange, and in the absence of a binding sale
ability to pay its debts as and when they fall due, and to realise its assets in the normal course of business.
agreement, the year-end share price is used to calculate the asset’s market value.
However, the Directors believe the Group will be able to continue to pay its debts as and when they fall due
In the event the share price falls an impairment of the related intangible assets may result.
for the following reasons:
The carrying amount of goodwill and intangible assets at the reporting date was $22,886,434 (2018:
•
the Group had a cash position of $8.2 million at 30 June 2019;
$23,202,768) and there were no impairment losses (2018: nil) recognised during the current financial year.
•
strong Symphony licence fees to continue in FY20;
Refer to Note 10 for further details.
•
the ongoing cost management program;
Capitalisation of internally developed software
•
the opportunity to implement further cost reductions; and
•
the ability to raise additional capital.
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
Accordingly, the Directors believe there exists a reasonable expectation that the Group can continue to pay
there are any indicators that capitalised costs may be impaired.
its debts as and when they fall due, and the financial report has been prepared on a going concern basis.
The capitalisation of internally developed software amount for the year was $3,792,752 (2018: $3,666,409).
Refer to Note 10 for further details.
Principles of consolidation
Share based payments
(d)
The calculation of the fair value of options issued requires significant estimates to be made in regards to
Subsidiaries
several variables such as volatility and the probability of options reaching their vesting period. The
The consolidated financial statements comprise those of the Group, and the entities it controlled at the end
estimations made are subject to variability that may alter the overall fair value determined. The share based
of, or during, the financial year. The Group controls a subsidiary if it is exposed, or has rights, to variable
payment expense for the year was $118,127 (2018: $777,804).
returns from its involvement with the subsidiary and has the ability to affect those returns through its power
Unrecognised deferred tax assets
over the subsidiary.
As disclosed in Note 5, the Group recognises deferred tax assets relating to temporary differences, capital
All intra-group transactions, balances, income and expenses between entities in the Group included in the
losses or operating losses when it is probable that they will be able to be utilised in future reporting periods.
financial statements have been eliminated in full. Where unrealised losses on intra-group asset sales are
Due to the continuing operating losses, the Directors have determined it is not appropriate to recognise
reversed on consolidation, the underlying asset is also tested for impairment from a group perspective.
deferred tax assets until a point in time where it is probable that future taxable income is going to be
Where an entity either began or ceased to be controlled during the year, the results are included only from
available to utilise the assets. The tax benefit of deferred tax assets not recognised is $9,600,762 (2018:
the date control commenced or up to the date control ceased. The accounting policies adopted in preparing
$10,541,711). Refer to Note 5 for further details.
the financial statements have been consistently applied by entities in the Group.
Research and development tax concessions
Investments in subsidiaries are accounted for at cost less impairment losses in the parent entity information
in Note 25.
A receivable of $2,051,661 (2018: $3,279,573) has been recognised in relation to a research and
development tax concession for the 2019 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.
Group.
AASB 16 Leases
balance sheet.
AASB 16 was issued in February 2016 and is applicable for reporting periods beginning on or after 1
January 2019. The new standard replaces the current standard AASB 117 Leases and for lessees will
eliminate the classifications of operating leases and finance leases. The objective of AASB 16 is to improve
transparency on financial leverage and capital employed by bringing all lease assets and liabilities onto the
Subject to exceptions, a 'right-of-use' asset and lease liability are recognised at the commencement of the
lease. The right-of-use asset is recognised at an amount that is equivalent to the initial measurement of the
lease liability, adjusted for lease prepayments, lease incentives received, initial direct costs incurred, and an
estimate of any future restoration, removal or dismantling costs.
The lease liability is recognised at the present value of future lease payments comprising fixed lease
payments less incentives, variable lease payments, residual guarantees payable, payment of purchase
options where exercise is reasonably certain, and any anticipated termination penalties. The lease payments
are discounted at the rate implicit in the lease, or where not readily determinable, the entity's incremental
borrowing rate.
The exceptions relate to short-term leases of 12 months or less and leases of low-value assets (such as
personal computers and small office furniture) where an accounting policy choice exists whereby either a
'right-of-use' asset is recognised or lease payments are expensed to profit or loss as incurred.
Straight-line operating lease expense recognition will be replaced with a depreciation charge for the leased
asset (included in operating costs) and an interest expense on the recognised lease liability (included in
finance costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16
will be higher when compared to lease expenses under AASB 117. However, EBITDA (Earnings Before
Interest, Tax, Depreciation and Amortisation) results will be improved as the operating expense is replaced
by interest expense and depreciation in profit or loss under AASB 16. For classification within the statement
of cash flows, the lease payments will be separated into both a principal (financing activities) and interest
(either operating or financing activities) component.
For lessor accounting, the standard does not substantially change how a lessor accounts for 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.
A preliminary assessment of the transition to AASB 16 indicates that majority of the Group’s operating
leases at 30 June 2019 will be exempted from being classified as a lease under AASB16 they 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.
The operating leases for the office premises in Sydney and Melbourne will meet the definition of a lease
under AASB 16, and on adoption on 1 July 2019 the Group will recognise the lease liability and the right of
use of an asset for these leases.
46
Adslot 2019 Annual Report
25
37
38
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
(y)
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 2019 or later periods, but have not yet been adopted by the
Group.
AASB 16 Leases
AASB 16 was issued in February 2016 and is applicable for reporting periods beginning on or after 1
January 2019. The new standard replaces the current standard AASB 117 Leases and for lessees will
eliminate the classifications of operating leases and finance leases. The objective of AASB 16 is to improve
transparency on financial leverage and capital employed by bringing all lease assets and liabilities onto the
balance sheet.
Subject to exceptions, a 'right-of-use' asset and lease liability are recognised at the commencement of the
lease. The right-of-use asset is recognised at an amount that is equivalent to the initial measurement of the
lease liability, adjusted for lease prepayments, lease incentives received, initial direct costs incurred, and an
estimate of any future restoration, removal or dismantling costs.
The lease liability is recognised at the present value of future lease payments comprising fixed lease
payments less incentives, variable lease payments, residual guarantees payable, payment of purchase
options where exercise is reasonably certain, and any anticipated termination penalties. The lease payments
are discounted at the rate implicit in the lease, or where not readily determinable, the entity's incremental
borrowing rate.
The exceptions relate to short-term leases of 12 months or less and leases of low-value assets (such as
personal computers and small office furniture) where an accounting policy choice exists whereby either a
'right-of-use' asset is recognised or lease payments are expensed to profit or loss as incurred.
Straight-line operating lease expense recognition will be replaced with a depreciation charge for the leased
asset (included in operating costs) and an interest expense on the recognised lease liability (included in
finance costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16
will be higher when compared to lease expenses under AASB 117. However, EBITDA (Earnings Before
Interest, Tax, Depreciation and Amortisation) results will be improved as the operating expense is replaced
by interest expense and depreciation in profit or loss under AASB 16. For classification within the statement
of cash flows, the lease payments will be separated into both a principal (financing activities) and interest
(either operating or financing activities) component.
For lessor accounting, the standard does not substantially change how a lessor accounts for 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.
A preliminary assessment of the transition to AASB 16 indicates that majority of the Group’s operating
leases at 30 June 2019 will be exempted from being classified as a lease under AASB16 they 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.
The operating leases for the office premises in Sydney and Melbourne will meet the definition of a lease
under AASB 16, and on adoption on 1 July 2019 the Group will recognise the lease liability and the right of
use of an asset for these leases.
Adslot 2019 Annual Report
38
47
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
For the year ended 30 June 2019
1. Summary of Significant Accounting Policies (Continued)
1.
Summary of Significant Accounting Policies (Continued)
•
•
•
•
Going concern
(y) New standards and interpretations issued but not effective (Continued)
(c)
The Group will adopt the standard from 1 July 2019 and will opt to apply the simplified approach.
Management continues to invest resources to support growth in trading fees, primarily from holding
As at 1 July 2019, it is anticipated that the impact on the financial statement would be;
companies in the US market. In August 2018 ($3.5m) and May 2019 ($4.0m) the Group successfully raised
Initial recognition;
$7.5 million via share placements, resulting in $7.1 million net cash inflows from financing activities.
Combined with the net cash outflows from operating and investing activities of $3.9million, the net cash
right of use assets of $2,792,597 including the net book value of the leasehold improvement of
inflow for the year was $3.2 million. Management anticipate incurring further net cash outflows from
$689,499 capitalised at 30 June 2019 to be recognised,
operations until such time as sufficient revenue growth is achieved.
lease liabilities of $2,472,799 to be recognised,
reversal of existing lease incentive liability of $469,411 (merging with lease liability),
As previously disclosed, the Group received a notification of finding of ineligible R&D activities in relation to
creation of a make good provision liability of $165,859 which is the present value of estimated make
the FY16 claim. The Group has requested an internal review of the decision which is ongoing. Management
good cost at end of the leases,
believe its FY16 R&D claim is consistent with the criteria of the scheme.
reversal of the existing make good provision of $49,591 included in accrued expenses,
increasing the retained losses by $16,557.
If a delay in expected growth in revenues and/or a negative outcome of AusIndustry’s review of the FY16
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.
AASB 16 is available for early adoption but have not been applied in this financial report.
However, the Directors believe the Group will be able to continue to pay its debts as and when they fall due
There are no other standards that are not yet effective and that are expected to have a material impact on
for the following reasons:
the Group in the current or future accounting periods.
•
•
•
•
•
the Group had a cash position of $8.2 million at 30 June 2019;
strong Symphony licence fees to continue in FY20;
the ongoing cost management program;
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 Group can continue to pay
its debts as and when they fall due, and the financial report has been prepared on a going concern basis.
(d)
Principles of consolidation
Subsidiaries
The consolidated financial statements comprise those of the Group, and the entities it controlled at the end
of, or during, the financial year. The Group 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.
48
Adslot 2019 Annual Report
25
39
40
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
2.
Segm ent Inform ation
2019
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)
8,711,221
(1,971,143)
251,096
4,109,086
23,208
1,228
-
3,784
$
$
$
477,541
(348,518)
650,255
9,839,017
(1,310,843)
(3,630,504)
$
-
-
6,573
258,897
4,109,086
26,992
Statement of financial position
Segment assets
Segment liabilities
2018
Operating segments
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)
Statement of financial position
Segment assets
Segment liabilities
39,658,875
19,555,388
295,844
127,145
180,112
131,484
40,134,831
19,814,017
APAC
EMEA The Americas
Total
$
$
$
$
6,464,519
(5,591,454)
223,593
5,211,462
18,208
275,999
(555,384)
171,929
6,912,447
(1,710,534)
(7,857,372)
772
-
-
7,132
231,498
-
5,211,462
2,316
20,524
35,834,855
15,726,667
123,351
97,445
178,056
130,848
36,136,262
15,954,960
Segment revenue reconciles to total revenue from continuing operations as follows:
Revenue
Total segment revenue
Head office revenue
Interest revenue
9,839,017
6,912,447
2019
$
-
55,144
2018
$
-
160,017
Total revenue from continuing operations
9,894,161
7,072,464
(i) Refer to Note 3 for a description Revenue.
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
2.
Segm ent Inform ation
2019
Operating segments
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)
Statement of financial position
Segment assets
Segment liabilities
2018
Operating segments
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)
Statement of financial position
Segment assets
Segment liabilities
APAC
EMEA The Americas
Total
$
$
$
$
8,711,221
(1,971,143)
251,096
4,109,086
23,208
477,541
(348,518)
650,255
(1,310,843)
1,228
-
3,784
6,573
-
-
9,839,017
(3,630,504)
258,897
4,109,086
26,992
39,658,875
19,555,388
295,844
127,145
180,112
131,484
40,134,831
19,814,017
APAC
EMEA The Americas
Total
$
$
$
$
6,464,519
(5,591,454)
223,593
5,211,462
18,208
275,999
(555,384)
171,929
(1,710,534)
772
-
-
7,132
-
2,316
6,912,447
(7,857,372)
231,498
5,211,462
20,524
35,834,855
15,726,667
123,351
97,445
178,056
130,848
36,136,262
15,954,960
Segment revenue reconciles to total revenue from continuing operations as follows:
Revenue
Total segment revenue
Head office revenue
Interest revenue
Total revenue from continuing operations
(i) Refer to Note 3 for a description Revenue.
2019
$
2018
$
9,839,017
6,912,447
-
55,144
-
160,017
9,894,161
7,072,464
Adslot 2019 Annual Report
40
49
2019
$
2018
$
Segment Result
(32,263)
44,611
Gain / (Loss) on foreign exchange
As previously disclosed, the Group received a notification of finding of ineligible R&D activities in relation to
the FY16 claim. The Group has requested an internal review of the decision which is ongoing. Management
believe its FY16 R&D claim is consistent with the criteria of the scheme.
Income tax benefit/(expense)
Profit/ (Loss) on sale/write off of asset
(12,755)
182
732
(3,083)
Total segment result
Management continues to invest resources to support growth in trading fees, primarily from holding
companies in the US market. In August 2018 ($3.5m) and May 2019 ($4.0m) the Group successfully raised
$7.5 million via share placements, resulting in $7.1 million net cash inflows from financing activities.
Combined with the net cash outflows from operating and investing activities of $3.9million, the net cash
inflow for the year was $3.2 million. Management anticipate incurring further net cash outflows from
operations until such time as sufficient revenue growth is achieved.
Interest revenue
Other revenue
Share option expenses
940,825
(777,804)
377,468
(118,127)
(7,857,372)
(3,630,504)
160,017
55,144
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
For the year ended 30 June 2019
1. Summary of Significant Accounting Policies (Continued)
2.
Segment Information (Continued)
A reconciliation from segment result to operating profit before income tax is provided as follows:
(c)
Going concern
based on their physical location.
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
Revenues from external customers in the Group’s domicile, Australia, as well as its major markets the USA,
have been identified on the basis of the customer’s geographical location. Non-current assets are allocated
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
described in Note 1.
The accounting policies of the reportable segments are the same as the Group’s accounting policies
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
Segment revenue reported above represents revenue generated from external customers. There were no
Inter segment revenue transfers or expenses to be eliminated on consolidation (2018: nil).
Major customers
revenue.
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 Group’s total
For the year to 30 June 2019, one customer accounted for 10% or more of revenue (2018: one).
Other head office income/(expenses) not allocated in segment result
If a delay in expected growth in revenues and/or a negative outcome of AusIndustry’s review of the FY16
R&D claim was to occur, this has the potential to create a cash flow risk to the Group which could affect its
(11,653,319)
ability to pay its debts as and when they fall due, and to realise its assets in the normal course of business.
Loss before income tax from continuing operations
(7,042,755)
(3,692,122)
(4,151,024)
However, the Directors believe the Group will be able to continue to pay its debts as and when they fall due
Reportable segment assets are reconciled to total assets as follows:
for the following reasons:
Segment assets
the Group had a cash position of $8.2 million at 30 June 2019;
strong Symphony licence fees to continue in FY20;
the ongoing cost management program;
the opportunity to implement further cost reductions; and
the ability to raise additional capital.
Total segment assets
Head office assets
Intersegment eliminations
•
•
•
•
•
2019
$
40,134,831
48,085,810
(50,106,395)
2018
$
36,136,262
48,289,359
(50,106,394)
Total assets as per the statement of financial position
38,114,246
34,319,227
and accruals. Segment assets and liabilities do not include income taxes.
Accordingly, the Directors believe there exists a reasonable expectation that the Group can continue to pay
its debts as and when they fall due, and the financial report has been prepared on a going concern basis.
Reportable segment liabilities are reconciled to total liabilities as follows:
Inter-segment transfers
Segment liabilities
(d)
Principles of consolidation
Total segment liabilities
Head office liabilities
Subsidiaries
2019
$
19,814,017
491,016
2018
$
15,954,960
845,451
Intersegment eliminations
Total liabilities as per the statement of financial position
(11,829,183)
The consolidated financial statements comprise those of the Group, and the entities it controlled at the end
of, or during, the financial year. The Group 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.
The Group’s Total Revenue and Other Income (Note 3) and its non-current assets (other than financial
instruments) are divided into the following geographical areas:
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.
Australia (Domicile)
USA
23,511,419
3,084
24,052,355
9,284
6,657,110
171,929
7,526,723
650,255
Non-Current Assets
Non-Current Assets
2018
$
2019
$
4,971,228
(11,787,907)
8,517,126
Revenue
Revenue
Other countries
Investments in subsidiaries are accounted for at cost less impairment losses in the parent entity information
in Note 25.
1,184,250
2,094,651
10,332
9,540
8,013,289
24,071,971
23,524,043
10,271,629
Total
50
Adslot 2019 Annual Report
25
41
42
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
Revenues from external customers in the Group’s domicile, Australia, as well as its major markets the USA,
have been identified on the basis of the customer’s geographical location. Non-current assets are allocated
based on their physical location.
Notes to and forming part of the segment information
Business segments
The Group reports its segments based on geographical locations:
• APAC – Australia, New Zealand and Asia;
• EMEA – Europe, the Middle East and Africa; and
• The Americas – North, Central and South America.
A ccounting 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 (2018: 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 Group’s total
revenue.
For the year to 30 June 2019, one customer accounted for 10% or more of revenue (2018: one).
Adslot 2019 Annual Report
42
51
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
For the year ended 30 June 2019
1. Summary of Significant Accounting Policies (Continued)
3.
Revenue and Other Incom e
(c)
Going concern
2019
$
2018
$
4.
Expenses
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
Management continues to invest resources to support growth in trading fees, primarily from holding
Revenue
companies in the US market. In August 2018 ($3.5m) and May 2019 ($4.0m) the Group successfully raised
Revenue from Trading Technology
$7.5 million via share placements, resulting in $7.1 million net cash inflows from financing activities.
Revenue from Services
Combined with the net cash outflows from operating and investing activities of $3.9million, the net cash
inflow for the year was $3.2 million. Management anticipate incurring further net cash outflows from
Total revenue for services rendered
operations until such time as sufficient revenue growth is achieved.
Interest revenue
8,038,425
1,800,592
9,839,017
1,765,778
5,146,669
6,912,447
160,017
55,144
Total revenue from continuing operations
As previously disclosed, the Group received a notification of finding of ineligible R&D activities in relation to
the FY16 claim. The Group has requested an internal review of the decision which is ongoing. Management
believe its FY16 R&D claim is consistent with the criteria of the scheme.
Other income
If a delay in expected growth in revenues and/or a negative outcome of AusIndustry’s review of the FY16
Grant income
R&D claim was to occur, this has the potential to create a cash flow risk to the Group which could affect its
86,967
Revenue from Adserving
ability to pay its debts as and when they fall due, and to realise its assets in the normal course of business.
940,825
Total Other Income
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:
Total revenue and other income
10,271,629
8,013,289
377,468
853,859
377,468
9,894,161
7,072,464
-
•
•
•
•
•
Revenue derived from the two product lines are described as follows:
the Group had a cash position of $8.2 million at 30 June 2019;
strong Symphony licence fees to continue in FY20;
the ongoing cost management program;
the opportunity to implement further cost reductions; and
the ability to raise additional capital.
Trading Technology
Comprises Adslot, a leading global media trading technology, and Symphony, market-leading workflow
automation technology, purpose built for digital media agencies.
Accordingly, the Directors believe there exists a reasonable expectation that the Group can continue to pay
its debts as and when they fall due, and the financial report has been prepared on a going concern basis.
Services
Comprising marketing services that are provided by the Group’s Webfirm division to SME clients and
project-based customisation of Trading Technology.
(d)
Principles of consolidation
Subsidiaries
The consolidated financial statements comprise those of the Group, and the entities it controlled at the end
of, or during, the financial year. The Group 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.
52
Adslot 2019 Annual Report
25
43
44
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
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
2019
$
2018
$
4,109,086
163,354
90,090
5,453
5,211,462
125,802
102,215
3,480
4,367,983
5,442,959
3,489
4,537
7,817,748
5,288,455
99,726
8,943,887
6,068,635
741,317
13,205,929
15,753,839
3,792,752
1,495,703
5,288,455
3,666,409
2,402,226
6,068,635
1,024,336
958,707
32,264
(44,611)
Defined contribution superannuation expense included in Employee
840,297
1,026,983
benefit expense
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
4.
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
2019
$
2018
$
4,109,086
163,354
90,090
5,453
5,211,462
125,802
102,215
3,480
4,367,983
5,442,959
3,489
4,537
7,817,748
5,288,455
99,726
8,943,887
6,068,635
741,317
13,205,929
15,753,839
840,297
1,026,983
3,792,752
1,495,703
5,288,455
3,666,409
2,402,226
6,068,635
1,024,336
958,707
32,264
(44,611)
Adslot 2019 Annual Report
44
53
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
c) Deferred tax assets not brought to account
In the course of periodic reviews, an inconsistency was identified in relation to the treatment of R&D
accounting expenditure for the tax returns for the 2014, 2015 and 2016 income years. Adjustments have
been made to correct the understatement of the add-back of R&D accounting expenditure, reducing the
carried forward tax loss balances in each income year. These adjustments impact the deferred tax assets
not brought to account only and do not impact the financial statements.
Adjustment
1,442,834
1,813,806
1,740,723
4,997,363
2016
2015
2014
Total
statements.
In January 2019 Adslot made a voluntary disclosure to AusIndustry in relation to the ineligibility of a small
sub-set of activities in the 2016 R&D claim. This adjustment increases the carried forward tax loss balances
by $219,923. A provision for a refund of $164,280 was included in the December 2018 interim financial
Above adjustments have been included in the Deferred tax assets not brought to account calculations for
2019. These tax assets 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% 2018: 27.5%)
2019
$
2018
$
(6,121,877)
(5,344,713)
40,795,482
43,439,948
238,258
238,258
34,911,863
9,600,762
38,333,493
10,541,711
The Group 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 $1,683,516 (2018: $1,469,769) have not been
recognised as they have been offset with deferred tax assets of the same value.
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
For the year ended 30 June 2019
1. Summary of Significant Accounting Policies (Continued)
5.
(c)
Incom e Tax Expense
Going concern
2019
$
2018
$
(3,196,441)
(6,932,241)
(1,906,366)
(11,623,422)
Management continues to invest resources to support growth in trading fees, primarily from holding
a) Numerical reconciliation of income tax expense to prima facie tax benefit
companies in the US market. In August 2018 ($3.5m) and May 2019 ($4.0m) the Group successfully raised
Loss before income tax
$7.5 million via share placements, resulting in $7.1 million net cash inflows from financing activities.
Combined with the net cash outflows from operating and investing activities of $3.9million, the net cash
Prima facie tax benefit on loss before income tax at 27.5% (2018: 27.5%)
inflow for the year was $3.2 million. Management anticipate incurring further net cash outflows from
Tax effect of:
operations until such time as sufficient revenue growth is achieved.
Other non-allowable items
As previously disclosed, the Group received a notification of finding of ineligible R&D activities in relation to
Share based expensed during year
the FY16 claim. The Group has requested an internal review of the decision which is ongoing. Management
Research and development tax concession
believe its FY16 R&D claim is consistent with the criteria of the scheme.
Income tax benefit attributable to entity
If a delay in expected growth in revenues and/or a negative outcome of AusIndustry’s review of the FY16
R&D claim was to occur, this has the potential to create a cash flow risk to the Group which could affect its
Deferred tax income relating to utilisation of unused tax losses
ability to pay its debts as and when they fall due, and to realise its assets in the normal course of business.
Deferred tax assets relating to tax losses not recognised
However, the Directors believe the Group will be able to continue to pay its debts as and when they fall due
Other – adjustments and net foreign exchange differences
for the following reasons:
Income tax benefit/(expense) attributable to entity
•
•
•
•
•
the Group had a cash position of $8.2 million at 30 June 2019;
strong Symphony licence fees to continue in FY20;
the ongoing cost management program;
the opportunity to implement further cost reductions; and
the ability to raise additional capital.
b) Movement in deferred tax balances
2,073,293
1,297,027
(110,514)
(114,560)
(564,088)
(894,591)
Balance at 30 June 2019
(29,897)
979,254
433,327
213,896
20,247
12,766
14,661
32,485
-
-
Recognised
Deferred tax
in Profit &
Accordingly, the Directors believe there exists a reasonable expectation that the Group can continue to pay
liabilities
Loss
its debts as and when they fall due, and the financial report has been prepared on a going concern basis.
$
$
Acquired in
Business
combination
$
Balance at
1 July 2018
$
Deferred
tax assets
$
Net
$
Trade and other receivables
(125,957)
Principles of consolidation
Property, plant and equipment
(d)
Intangible assets
Subsidiaries
Unused tax losses
199
165,435
(39,677)
10,496
(17)
(13,786)
3,307
-
-
-
-
(115,461)
182
151,649
-
-
-
(36,370)
(36,370)
(115,461)
182
151,649
-
-
-
-
-
(36,370)
The consolidated financial statements comprise those of the Group, and the entities it controlled at the end
36,370
Net tax (assets) / liabilities
of, or during, the financial year. The Group 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.
Balance at 30 June 2018
Balance at
1 July 2017
$
Recognised
All intra-group transactions, balances, income and expenses between entities in the Group included in the
in Profit &
Deferred tax
Loss
liabilities
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
(115,461)
10,496
Trade and other receivables
the date control commenced or up to the date control ceased. The accounting policies adopted in preparing
182
Property, plant and equipment
the financial statements have been consistently applied by entities in the Group.
151,649
(13,786)
Intangible assets
Investments in subsidiaries are accounted for at cost less impairment losses in the parent entity information
-
Unused tax losses
in Note 25.
Net tax (assets) / liabilities
Acquired in
Business
combination
$
Deferred
tax assets
$
(115,461)
(125,957)
Net
$
151,649
(36,370)
(36,370)
(36,370)
(39,677)
165,435
3,307
36,370
182
(17)
199
-
-
-
-
-
-
-
-
-
-
-
54
Adslot 2019 Annual Report
25
45
46
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
c) Deferred tax assets not brought to account
In the course of periodic reviews, an inconsistency was identified in relation to the treatment of R&D
accounting expenditure for the tax returns for the 2014, 2015 and 2016 income years. Adjustments have
been made to correct the understatement of the add-back of R&D accounting expenditure, reducing the
carried forward tax loss balances in each income year. These adjustments impact the deferred tax assets
not brought to account only and do not impact the financial statements.
2016
2015
2014
Total
Adjustment
1,442,834
1,813,806
1,740,723
4,997,363
In January 2019 Adslot made a voluntary disclosure to AusIndustry in relation to the ineligibility of a small
sub-set of activities in the 2016 R&D claim. This adjustment increases the carried forward tax loss balances
by $219,923. A provision for a refund of $164,280 was included in the December 2018 interim financial
statements.
Above adjustments have been included in the Deferred tax assets not brought to account calculations for
2019. These tax assets 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% 2018: 27.5%)
2019
$
2018
$
(6,121,877)
(5,344,713)
40,795,482
43,439,948
238,258
238,258
34,911,863
9,600,762
38,333,493
10,541,711
The Group 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 $1,683,516 (2018: $1,469,769) have not been
recognised as they have been offset with deferred tax assets of the same value.
Adslot 2019 Annual Report
46
55
$
$
2019
2018
1,019,587
4,775,331
3,755,744
2,390,417
8,165,544
5,775,127
Cash at bank and on hand
Cash held on behalf of Publishers
Cash and Cash Equivalents
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
For the year ended 30 June 2019
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
1. Summary of Significant Accounting Policies (Continued)
6.
Dividends
8.
Trade and Other Receivables
The Group did not declare any dividends in the current year or prior year. There are no franking credits
(c)
available to shareholders of the Group.
Going concern
As previously disclosed, the Group received a notification of finding of ineligible R&D activities in relation to
the FY16 claim. The Group has requested an internal review of the decision which is ongoing. Management
believe its FY16 R&D claim is consistent with the criteria of the scheme.
If a delay in expected growth in revenues and/or a negative outcome of AusIndustry’s review of the FY16
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.
Included in the Cash at Bank is $509,605 (2018: $615,289) of funds held on term deposit as guarantee for
However, the Directors believe the Group will be able to continue to pay its debts as and when they fall due
our corporate credit card facilities and for the benefit of landlords under office lease agreements.
for the following reasons:
Management continues to invest resources to support growth in trading fees, primarily from holding
companies in the US market. In August 2018 ($3.5m) and May 2019 ($4.0m) the Group successfully raised
$7.5 million via share placements, resulting in $7.1 million net cash inflows from financing activities.
7.
Combined with the net cash outflows from operating and investing activities of $3.9million, the net cash
inflow for the year was $3.2 million. Management anticipate incurring further net cash outflows from
operations until such time as sufficient revenue growth is achieved.
(i) Based on a finding made by Innovation Australia in relation to the FY16 R&D activities, the Group expects the ATO
to amend the R&D Tax Incentive Offset for FY16 and seek repayment of $1.5m previously paid to the Group. It is
expected the FY19 claim will be paid less any outstanding amounts owed to the ATO at time of payment.
(ii) 2018 balance included $116,821 erroneously received in June 2018 from a trade debtor. This amount was refunded
in July 2018.
The average age of the Group’s trade debtors is 40 days (2018: 49 days).
(a)
Ageing of trade debtors not impaired
Current:
Trade debtors
Less: Allowance for impairment
Trade debtors not impaired
Research and Development grant receivable (i)
Other receivables (ii)
Prepayments
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
Balance at the end of the year
2019
$
4,260,637
(2,782)
4,257,855
1,887,381
56,165
223,258
2018
$
2,042,744
(2,370)
2,040,374
3,279,573
(93,219)
245,197
6,424,659
5,471,925
3,034,440
1,436,910
4,257,855
2,040,374
2019
$
81,287
136,628
1,005,500
2019
$
2,370
2,782
(2,370)
-
2,782
2018
$
255,626
228,540
119,298
2018
$
2,814
2,370
-
(2,814)
2,370
In determining the recoverability of a trade receivable, the Group 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
impairment.
Fair value of receivables at year end is measured to be the same as receivables net of the allowance for
•
•
•
•
•
the Group had a cash position of $8.2 million at 30 June 2019;
strong Symphony licence fees to continue in FY20;
the ongoing cost management program;
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 Group can continue to pay
its debts as and when they fall due, and the financial report has been prepared on a going concern basis.
(d)
Principles of consolidation
Subsidiaries
The consolidated financial statements comprise those of the Group, and the entities it controlled at the end
of, or during, the financial year. The Group 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.
56
Adslot 2019 Annual Report
25
47
48
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
8.
Trade and Other Receivables
Current:
Trade debtors
Less: Allowance for impairment
Trade debtors not impaired
Research and Development grant receivable (i)
Other receivables (ii)
Prepayments
2019
$
4,260,637
(2,782)
4,257,855
1,887,381
56,165
223,258
2018
$
2,042,744
(2,370)
2,040,374
3,279,573
(93,219)
245,197
6,424,659
5,471,925
(i) Based on a finding made by Innovation Australia in relation to the FY16 R&D activities, the Group expects the ATO
to amend the R&D Tax Incentive Offset for FY16 and seek repayment of $1.5m previously paid to the Group. It is
expected the FY19 claim will be paid less any outstanding amounts owed to the ATO at time of payment.
(ii) 2018 balance included $116,821 erroneously received in June 2018 from a trade debtor. This amount was refunded
in July 2018.
The average age of the Group’s trade debtors is 40 days (2018: 49 days).
(a)
Ageing of trade debtors 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
Balance at the end of the year
2019
$
2018
$
3,034,440
1,436,910
81,287
136,628
1,005,500
255,626
228,540
119,298
4,257,855
2,040,374
2019
$
2,370
2,782
(2,370)
-
2,782
2018
$
2,814
2,370
-
(2,814)
2,370
In determining the recoverability of a trade receivable, the Group 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.
Adslot 2019 Annual Report
48
57
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
For the year ended 30 June 2019
1. Summary of Significant Accounting Policies (Continued)
9.
(c)
Property, Plant and Equipm ent
Going concern
2019
2018
Management continues to invest resources to support growth in trading fees, primarily from holding
companies in the US market. In August 2018 ($3.5m) and May 2019 ($4.0m) the Group successfully raised
Leasehold improvements – at cost
$7.5 million via share placements, resulting in $7.1 million net cash inflows from financing activities.
Less: Accumulated amortisation
Combined with the net cash outflows from operating and investing activities of $3.9million, the net cash
inflow for the year was $3.2 million. Management anticipate incurring further net cash outflows from
operations until such time as sufficient revenue growth is achieved.
(289,915)
(126,466)
526,146
816,061
689,499
815,965
$
$
As previously disclosed, the Group received a notification of finding of ineligible R&D activities in relation to
Plant and equipment – at cost
the FY16 claim. The Group has requested an internal review of the decision which is ongoing. Management
Less: Accumulated depreciation
believe its FY16 R&D claim is consistent with the criteria of the scheme.
(84,527)
(79,054)
93,119
90,307
If a delay in expected growth in revenues and/or a negative outcome of AusIndustry’s review of the FY16
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.
531,109
Computer equipment – at cost
However, the Directors believe the Group will be able to continue to pay its debts as and when they fall due
Less: Accumulated depreciation
for the following reasons:
(399,028)
(379,529)
446,030
8,592
11,253
•
the Group had a cash position of $8.2 million at 30 June 2019;
•
strong Symphony licence fees to continue in FY20;
Total carrying amount of property, plant and equipment
•
the ongoing cost management program;
•
the opportunity to implement further cost reductions; and
•
the ability to raise additional capital.
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:
Accordingly, the Directors believe there exists a reasonable expectation that the Group can continue to pay
its debts as and when they fall due, and the financial report has been prepared on a going concern basis.
2019
832,833
601,239
66,501
132,081
(d)
Principles of consolidation
Carrying amount at 1 July 2018
Subsidiaries
Additions
Leasehold
Plant and
Computer
Improvements
Equipment
Equipment
$
$
$
689,499
11,253
132,081
-
2,757
30,257
Total
$
832,833
33,014
Disposals/ Write Offs
The consolidated financial statements comprise those of the Group, and the entities it controlled at the end
of, or during, the financial year. The Group 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.
Depreciation / amortisation expense
Net foreign exchange differences
(258,897)
(163,354)
(90,090)
(6,059)
(5,453)
(6,059)
348
36
312
-
-
-
Carrying amount at 30 June 2019
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.
2018
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.
Improvements
Equipment
Equipment
Leasehold
Computer
Plant and
526,145
601,239
66,501
8,593
Total
$
$
$
$
Carrying amount at 1 July 2017
Investments in subsidiaries are accounted for at cost less impairment losses in the parent entity information
in Note 25.
196,045
243,744
24,709
22,990
Additions
792,311
(8,537)
33,456
817,230
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
10.
Intangible Assets
Internally
Developed
Software
$
Domain
Name
$
Intellectual
Property
$
Goodwill
$
Total
$
Year ended 30 June 2019
Opening net book amount
6,462,835
38,267
1,539,727
15,161,939
23,202,768
Additions
Amortisation
3,792,752
(2,569,359)
-
-
-
(1,539,727)
-
-
3,792,752
(4,109,086)
Carrying amount at 30 June 2019
7,686,228
38,267
-
15,161,939
22,886,434
At 30 June 2019
Cost
Accumulated amortisation and
impairment
15,400,189
38,267
29,045,251
15,161,939
59,645,646
(7,713,961)
-
(29,045,251)
-
(36,759,212)
Carrying amount at 30 June 2019
7,686,228
38,267
-
15,161,939
22,886,434
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
impairment
Accumulated amortisation and
(5,144,602)
-
(27,505,524)
-
(32,650,126)
11,607,437
38,267
29,045,251
15,161,939
55,852,894
Carrying amount at 30 June 2018
6,462,835
38,267
1,539,727
15,161,939
23,202,768
Disposals/ Write Offs
Depreciation / amortisation expense
Net foreign exchange differences
-
(125,802)
(1,449)
(3,480)
1,197
(252)
(102,215)
(231,497)
-
10
3,598
3,608
Carrying amount at 30 June 2018
689,499
11,253
132,081
832,833
58
Adslot 2019 Annual Report
25
49
50
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
10.
Intangible Assets
Internally
Developed
Software
$
Domain
Name
$
Intellectual
Property
$
Goodwill
$
Total
$
Year ended 30 June 2019
Opening net book amount
6,462,835
38,267
1,539,727
15,161,939
23,202,768
Additions
Amortisation
3,792,752
(2,569,359)
-
-
-
(1,539,727)
-
-
3,792,752
(4,109,086)
Carrying amount at 30 June 2019
7,686,228
38,267
-
15,161,939
22,886,434
At 30 June 2019
Cost
Accumulated amortisation and
impairment
15,400,189
38,267
29,045,251
15,161,939
59,645,646
(7,713,961)
-
(29,045,251)
-
(36,759,212)
Carrying amount at 30 June 2019
7,686,228
38,267
-
15,161,939
22,886,434
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
11,607,437
38,267
29,045,251
15,161,939
55,852,894
(5,144,602)
-
(27,505,524)
-
(32,650,126)
Carrying amount at 30 June 2018
6,462,835
38,267
1,539,727
15,161,939
23,202,768
Adslot 2019 Annual Report
50
59
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
10. Intangible Assets (Continued)
Intellectual property (Continued)
The Facilitate for Agencies (“FFA”) platform technology was acquired as part of the Facilitate Digital Holdings
Limited acquisition. The fair value attributable to the FFA technology platform intellectual property was
$455,231 (2018: $455,231). Accumulated amortisation of this asset at 30 June 2019 was $455,231 (2018:
$455,231). This asset has been fully amortised.
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 Group’s ongoing commitment to research and development of
the Core IP.
Goodwill
has not been impaired.
(a) Cash Generating Units (CGUs)
The Goodwill balance relating to the acquisition of Facilitate has an attributed fair value of $15,161,939 and
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:
2019
2018
Intangible assets
with indefinite
useful lives
Goodwill
$
$
-
Goodwill
$
15,161,939
Intangible assets
with indefinite
useful lives
$
-
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
For the year ended 30 June 2019
1. Summary of Significant Accounting Policies (Continued)
10. Intangible Assets (Continued)
Internally Developed Software
(c)
Going concern
Internally developed software represents a number of software platforms developed within the Group. The
Management continues to invest resources to support growth in trading fees, primarily from holding
following table shows the portion of platform development costs that are capitalised and expensed for the
companies in the US market. In August 2018 ($3.5m) and May 2019 ($4.0m) the Group successfully raised
current financial year, 2019:
$7.5 million via share placements, resulting in $7.1 million net cash inflows from financing activities.
Combined with the net cash outflows from operating and investing activities of $3.9million, the net cash
Platform
inflow for the year was $3.2 million. Management anticipate incurring further net cash outflows from
operations until such time as sufficient revenue growth is achieved.
R&D grants offsetting
capitalised wages
Net Capitalised
Wages
Capitalised Wages
Adslot Publisher and
As previously disclosed, the Group received a notification of finding of ineligible R&D activities in relation to
Marketplace
the FY16 claim. The Group has requested an internal review of the decision which is ongoing. Management
believe its FY16 R&D claim is consistent with the criteria of the scheme.
2,778,005
3,696,193
(918,188)
Symphony
$
1,592,262
$
(577,515)
$
1,014,747
If a delay in expected growth in revenues and/or a negative outcome of AusIndustry’s review of the FY16
R&D claim was to occur, this has the potential to create a cash flow risk to the Group which could affect its
The following table shows the portion of platform development costs that are capitalised and expensed for
ability to pay its debts as and when they fall due, and to realise its assets in the normal course of business.
the prior financial year, 2018:
However, the Directors believe the Group will be able to continue to pay its debts as and when they fall due
Platform
for the following reasons:
Capitalised Wages
R&D grants offsetting
capitalised wages
Net Capitalised
Wages
5,288,455
(1,495,703)
3,792,752
•
•
Adslot Publisher and
•
Marketplace
•
Symphony
•
the Group had a cash position of $8.2 million at 30 June 2019;
strong Symphony licence fees to continue in FY20;
the ongoing cost management program;
the opportunity to implement further cost reductions; and
the ability to raise additional capital.
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
Accordingly, the Directors believe there exists a reasonable expectation that the Group can continue to pay
The Directors have assessed the accounting useful life of these internally developed software systems, for
its debts as and when they fall due, and the financial report has been prepared on a going concern basis.
accounting purposes, to be five years. This assessment has given regard to the expected financial benefits
of the technology.
CGU
Adslot and Symphony CGUs
15,161,939
Principles of consolidation
Domain names
(d)
Domain names opening carrying value of $38,267 (2018: $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
Subsidiaries
life on the basis that the Directors do not believe that there is a foreseeable limit on the period over which
The consolidated financial statements comprise those of the Group, and the entities it controlled at the end
this asset is expected to generate cash inflows for the entity.
of, or during, the financial year. The Group 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
Intellectual property
over the subsidiary.
Adslot Technologies Pty Ltd (“Adslot”) holds valuable copyright and patent licences (“Licences”) in respect of
All intra-group transactions, balances, income and expenses between entities in the Group included in the
Combinatorial Auction Platform Technology (“CAP” or “Core IP”) owned by Enterprise Point Pty Ltd and its
financial statements have been eliminated in full. Where unrealised losses on intra-group asset sales are
controlled entities (“Enterprise”). $5,932,006 (2018: $5,932,006) of the opening balance relates to this “CAP”
reversed on consolidation, the underlying asset is also tested for impairment from a group perspective.
technology. Accumulated amortisation of this asset as at 30 June 2019 was $5,932,006 (2018: $5,932,006).
Where an entity either began or ceased to be controlled during the year, the results are included only from
This asset has been fully amortised.
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.
QDC IP Technology (“QDC”) is creative ad building and video advertising technology with licences to the
Core IP valued at $6,466,517 (2018: $6,466,517) in the opening balance and attached to the Adslot CGU.
Investments in subsidiaries are accounted for at cost less impairment losses in the parent entity information
Accumulated amortisation of this asset as at 30 June 2019 was $6,466,517 (2018: $6,466,517). This asset
in Note 25.
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 (2018: $16,191,496). Accumulated amortisation of this asset at 30 June 2019 was $16,191,496
(2018: $14,651,770). This asset was fully amortised during the year.
60
Adslot 2019 Annual Report
25
51
52
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
10. Intangible Assets (Continued)
Intellectual property (Continued)
The Facilitate for Agencies (“FFA”) platform technology was acquired as part of the Facilitate Digital Holdings
Limited acquisition. The fair value attributable to the FFA technology platform intellectual property was
$455,231 (2018: $455,231). Accumulated amortisation of this asset at 30 June 2019 was $455,231 (2018:
$455,231). This asset has been fully amortised.
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 Group’s ongoing commitment to research and development of
the Core IP.
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
2019
2018
Intangible assets
with indefinite
useful lives
$
Goodwill
$
Intangible assets
with indefinite
useful lives
$
Goodwill
$
Adslot and Symphony CGUs
15,161,939
-
15,161,939
-
52
Adslot 2019 Annual Report
61
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
For the year ended 30 June 2019
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
1. Summary of Significant Accounting Policies (Continued)
10.
Intangible Assets (Continued)
11.
Trade and Other Payables
Intellectual property (Continued)
(c)
Going concern
the group of CGUs attributed to goodwill; and
the Group’s share price (ASX: ADJ as at 30 June 2019 of $0.028);
Management continues to invest resources to support growth in trading fees, primarily from holding
(b) Impairment testing and key assumptions
companies in the US market. In August 2018 ($3.5m) and May 2019 ($4.0m) the Group successfully raised
The Group tests whether goodwill and other intangible assets have suffered any impairment in accordance
$7.5 million via share placements, resulting in $7.1 million net cash inflows from financing activities.
with the Group’s accounting policies. The recoverable amounts of assets and CGUs have been determined
Combined with the net cash outflows from operating and investing activities of $3.9million, the net cash
using a fair value less costs to sell approach. The directors have assessed the fair value having regard to a
inflow for the year was $3.2 million. Management anticipate incurring further net cash outflows from
market-based approach and have determined the goodwill is not impaired.
operations until such time as sufficient revenue growth is achieved.
The directors’ determination of fair value using a market based approach is the market capitalisation of the
Group, less the value attributed to business units that are not part of the group of CGUs attributed to
As previously disclosed, the Group received a notification of finding of ineligible R&D activities in relation to
goodwill, less other net assets.
the FY16 claim. The Group has requested an internal review of the decision which is ongoing. Management
believe its FY16 R&D claim is consistent with the criteria of the scheme.
The most significant judgements and key assumptions pertaining to the calculation are:
If a delay in expected growth in revenues and/or a negative outcome of AusIndustry’s review of the FY16
•
R&D claim was to occur, this has the potential to create a cash flow risk to the Group which could affect its
• a 4x valuation multiple on EBITDA to estimate the value of the business unit (Webfirm) that is not part of
ability to pay its debts as and when they fall due, and to realise its assets in the normal course of business.
Trade creditors
Publisher creditors (i)
Other creditors
12.
Other Liabilities
Current: contract liabilities
(i) Refer to Note 1(p) for further information on publisher creditors.
Contract liabilities 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.
13.
Lease Incentives Liabilities
Current: Lease Incentives Liability
Non-current: Lease Incentives Liability
14.
Provisions
Current: Employee benefits
Non-current: Employee benefits
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 Note 9). A corresponding liability is presented as part of the lease
liabilities and is reversed on a straight-line basis over the lease term.
2019
$
518,498
2018
$
546,024
5,154,892
1,514,495
865,398
865,224
6,538,788
2,925,743
2019
$
374,781
2018
$
445,491
2019
$
146,300
323,110
2018
$
60,248
555,463
2019
$
658,736
439,041
2018
$
587,150
360,763
However, the Directors believe the Group will be able to continue to pay its debts as and when they fall due
• costs to sell including a transaction fee (3.5% of total value) plus estimate of legal, account and other
for the following reasons:
consultant costs ($200k).
•
The Group’s directors appointed an independent expert to review the approach adopted by management in
•
assessing the carrying value of the intangible assets of the Group as at 30 June 2018. The review supported
•
the selection of methodology and the assessment of the value of the Group under the primary quoted
security price approach. The director’s determined the same methodology be adopted for the tests at 30
•
June 2019.
•
the Group had a cash position of $8.2 million at 30 June 2019;
strong Symphony licence fees to continue in FY20;
the ongoing cost management program;
the opportunity to implement further cost reductions; and
the ability to raise additional capital.
(c) Sensitivity analysis
Accordingly, the Directors believe there exists a reasonable expectation that the Group can continue to pay
its debts as and when they fall due, and the financial report has been prepared on a going concern basis.
The Group’s share price forms the basis of the market-based approach. A material adverse change in the
Group’s share price would likely result in the carrying amount exceeding the recoverable amount.
Principles of consolidation
On 9 May 2019 Adslot Limited announced the successful closing of a $4.0 million share placement to
institutional and sophisticated investors. The placement is a reference point as a binding sale agreement in
(d)
an arm’s length transaction.
Subsidiaries
Sensitivity Analysis has been performed using the placement offer price of $0.025, a recalculation of the
The consolidated financial statements comprise those of the Group, and the entities it controlled at the end
Costs to Sell and all other elements of the 30 June calculation remaining equal. The result also shows a
of, or during, the financial year. The Group controls a subsidiary if it is exposed, or has rights, to variable
surplus fair value over carrying value of the intangible assets at a share price of $0.025, albeit with less
returns from its involvement with the subsidiary and has the ability to affect those returns through its power
headroom. Calculations show that only when the share price falls below $0.020, and all other variables
over the subsidiary.
remain constant, does a deficit occur.
All intra-group transactions, balances, income and expenses between entities in the Group included in the
There are no other material sensitivities involved in the directors’ determination of fair value using a market
financial statements have been eliminated in full. Where unrealised losses on intra-group asset sales are
based approach.
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.
62
Adslot 2019 Annual Report
25
53
54
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
11.
Trade and Other Payables
Trade creditors
Publisher creditors (i)
Other creditors
(i) Refer to Note 1(p) for further information on publisher creditors.
12.
Other Liabilities
Current: contract liabilities
2019
$
518,498
2018
$
546,024
5,154,892
1,514,495
865,398
865,224
6,538,788
2,925,743
2019
$
374,781
2018
$
445,491
Contract liabilities 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.
13.
Lease Incentives Liabilities
Current: Lease Incentives Liability
Non-current: Lease Incentives Liability
2019
$
146,300
323,110
2018
$
60,248
555,463
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 Note 9). A corresponding liability is presented as part of the lease
liabilities and is reversed on a straight-line basis over the lease term.
14.
Provisions
Current: Employee benefits
Non-current: Employee benefits
2019
$
658,736
439,041
2018
$
587,150
360,763
Adslot 2019 Annual Report
54
63
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
For the year ended 30 June 2019
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
15.
1. Summary of Significant Accounting Policies (Continued)
Contributed equity
(c)
Going concern
2019
Number
2018
Number
2019
$
2018
$
Ordinary Shares – Fully Paid
145,838,216
1,284,950,994
1,587,875,994
Management continues to invest resources to support growth in trading fees, primarily from holding
companies in the US market. In August 2018 ($3.5m) and May 2019 ($4.0m) the Group successfully raised
$7.5 million via share placements, resulting in $7.1 million net cash inflows from financing activities.
Combined with the net cash outflows from operating and investing activities of $3.9million, the net cash
Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to
inflow for the year was $3.2 million. Management anticipate incurring further net cash outflows from
the numbers of shares.
operations until such time as sufficient revenue growth is achieved.
At the shareholders meeting each ordinary share is entitled to one vote when a poll is called, otherwise each
As previously disclosed, the Group received a notification of finding of ineligible R&D activities in relation to
shareholder has one vote on a show of hands.
the FY16 claim. The Group has requested an internal review of the decision which is ongoing. Management
believe its FY16 R&D claim is consistent with the criteria of the scheme.
Movements in Paid-Up Capital
If a delay in expected growth in revenues and/or a negative outcome of AusIndustry’s review of the FY16
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.
Value
Capital
raising
costs
Number of
shares
Issue
price
138,397,710
Balance (including Treasury shares)
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:
01-Jul-17
•
11-Oct-17
•
30-Jun-18
•
•
•
30-Jun18
the Group had a cash position of $8.2 million at 30 June 2019;
strong Symphony licence fees to continue in FY20;
the ongoing cost management program;
the opportunity to implement further cost reductions; and
the ability to raise additional capital.
Issue of shares – Performance Rights vesting
Less: Treasury shares
1,284,950,994
1,288,006,269
1,284,328,769
138,699,400
138,397,710
138,287,281
(2,622,047)
(2,622,047)
(2,619,769)
(3,055,275)
(301,690)
3,677,500
Balance
Number
412,119
(2,278)
Details
$0.113
Date
-
$
$
$
Accordingly, the Directors believe there exists a reasonable expectation that the Group can continue to pay
01-Jul-18
its debts as and when they fall due, and the financial report has been prepared on a going concern basis.
2,852,695
09-Aug-18
Balance (including Treasury shares)
Share Placement
1,288,006,269
138,699,400
118,000,000
(2,622,047)
(97,305)
$0.025
Treasury Shares
Treasury shares are shares in Adslot Ltd that are held by the Adslot Employee Share Trust, which
administers the Adslot Employee Share Ownership Plan (ESOP). This Trust has been consolidated in
accordance with Note 1(d). 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 Group.
Treasury Shares movements during the financial year are summarised below:
Issue or
Acquisition
Date
Issue Type
Employee ESOP
16/06/14
Employee ESOP
01/05/15
Employee ESOP
01/09/16
Issue
Price
$
0.105
0.090
0.125
Balance at
year
(Number)
1,000,000
1,942,775
112,500
3,055,275
beginning of the
Issued during
Transfers
Balance at end
the year
(Number)
during the year
(Number)
of the year
(Number)
-
-
-
-
(1,000,000)
(1,812,500)
(112,500)
130,275
-
-
(2,925,000)
130,275
Rights over shares movements during the financial year are summarised below:
Issue Type
Price $
year (Number)
year (Number)
Required VWAP
beginning of the
during the
the year
(Number)
Vested during the
year (Number)
of the year
(Number)
Balance at
Granted
Expired during
Balance at end
Rights over shares
Rights over shares
Rights over shares
Rights over shares
0.200
0.300
0.400
0.500
3,000,000
4,000,000
5,000,000
5,000,000
3,000,000
4,000,000
5,000,000
5,000,000
-
-
-
-
-
17,000,000
17,000,000
-
-
-
-
-
-
-
-
-
-
Balance
The consolidated financial statements comprise those of the Group, and the entities it controlled at the end
30-Jun19
of, or during, the financial year. The Group 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.
1,587,875,994
145,838,216
(2,970,764)
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.
64
Adslot 2019 Annual Report
25
55
56
22,000,000
160,000,000
1,588,006,269
(130,275)
$0.025
$0.025
(18,142)
531,858
(233,270)
3,766,730
(2,970,764)
145,850,683
-
(12,467)
Share Placement
Principles of consolidation
09-May-19
(d)
30-Jun-19
Subsidiaries
19-Sep-18
Share Placement
Less: Treasury shares
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
Treasury Shares
Treasury shares are shares in Adslot Ltd that are held by the Adslot Employee Share Trust, which
administers the Adslot Employee Share Ownership Plan (ESOP). This Trust has been consolidated in
accordance with Note 1(d). 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 Group.
Treasury Shares movements during the financial year are summarised below:
Issue or
Acquisition
Date
Issue Type
Employee ESOP
16/06/14
Employee ESOP
01/05/15
Employee ESOP
01/09/16
Issue
Price
$
0.105
0.090
0.125
Balance at
beginning of the
year
(Number)
1,000,000
1,942,775
112,500
3,055,275
Issued during
the year
(Number)
Transfers
during the year
(Number)
Balance at end
of the year
(Number)
-
-
-
-
(1,000,000)
(1,812,500)
(112,500)
-
130,275
-
(2,925,000)
130,275
Rights over shares movements during the financial year are summarised below:
Issue Type
Rights over shares
Rights over shares
Rights over shares
Rights over shares
Required VWAP
Price $
Balance at
beginning of the
year (Number)
Granted
during the
year (Number)
Expired during
the year
(Number)
Vested during the
year (Number)
Balance at end
of the year
(Number)
0.200
0.300
0.400
0.500
3,000,000
4,000,000
5,000,000
5,000,000
17,000,000
-
-
-
-
-
3,000,000
4,000,000
5,000,000
5,000,000
17,000,000
-
-
-
-
-
-
-
-
-
-
Adslot 2019 Annual Report
56
65
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
For the year ended 30 June 2019
1. Summary of Significant Accounting Policies (Continued)
15. Contributed equity (Continued)
Going concern
(c)
Performance rights movements during the financial year are summarised below:
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
Management continues to invest resources to support growth in trading fees, primarily from holding
companies in the US market. In August 2018 ($3.5m) and May 2019 ($4.0m) the Group successfully raised
$7.5 million via share placements, resulting in $7.1 million net cash inflows from financing activities.
Combined with the net cash outflows from operating and investing activities of $3.9million, the net cash
inflow for the year was $3.2 million. Management anticipate incurring further net cash outflows from
Nil
operations until such time as sufficient revenue growth is achieved.
Balance at
beginning of
the year
(Number)
Balance at end
of the year
(Number)
Forfeited
during the
year
(Number)
Issued
during the
year
(Number)
Transfers
during the
year
(Number)
Issue or
Acquisition
Date
Issue Type
Issue
Price
(1,925,000)
2,125,000
(200,000)
01/09/16
Performance Rights
$
-
-
2,125,000
-
(1,925,000)
(200,000)
-
As previously disclosed, the Group received a notification of finding of ineligible R&D activities in relation to
the FY16 claim. The Group has requested an internal review of the decision which is ongoing. Management
believe its FY16 R&D claim is consistent with the criteria of the scheme.
Options movements during the financial year are summarised below:
If a delay in expected growth in revenues and/or a negative outcome of AusIndustry’s review of the FY16
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.
Exercise
Price
Balance at
beginning of
the year
(Number)
Issued
during the
year
(Number)
Forfeited
during the
year
(Number)
Issue Type
Expiry Date
$
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:
Ordinary options
04/10/21
•
Ordinary options
•
•
Ordinary options
•
Ordinary options
•
Ordinary options
0.073
the Group had a cash position of $8.2 million at 30 June 2019;
0.060
strong Symphony licence fees to continue in FY20;
the ongoing cost management program;
the opportunity to implement further cost reductions; and
15/05/22
the ability to raise additional capital.
27/05/22
23,500,000
12,700,000
11,400,000
23,500,000
(1,300,000)
3,000,000
5,800,000
4,000,000
3,000,000
5,600,000
4,000,000
(200,000)
25/11/21
25/02/22
0.035
0.034
0.036
-
-
-
-
-
-
-
-
-
-
-
-
-
Exercised
during the year
(Number)
Balance at end of
the year
(Number)
Ordinary options
5,800,000
Accordingly, the Directors believe there exists a reasonable expectation that the Group can continue to pay
its debts as and when they fall due, and the financial report has been prepared on a going concern basis.
53,300,000
(1,500,000)
49,000,000
5,800,000
5,800,000
30/01/23
0.060
-
-
-
-
(d)
Principles of consolidation
Subsidiaries
The consolidated financial statements comprise those of the Group, and the entities it controlled at the end
of, or during, the financial year. The Group 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.
66
Adslot 2019 Annual Report
25
57
58
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
2019
$
434,882
214,267
649,149
2018
$
605,978
106,676
712,654
605,978
(105,000)
(184,223)
118,127
279,117
(36,544)
(414,399)
777,804
434,882
605,978
106,676
110,812
107,591
(4,136)
214,267
106,676
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.
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
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
2019
$
434,882
214,267
649,149
2018
$
605,978
106,676
712,654
605,978
(105,000)
(184,223)
118,127
279,117
(36,544)
(414,399)
777,804
434,882
605,978
106,676
110,812
107,591
(4,136)
214,267
106,676
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.
Adslot 2019 Annual Report
58
67
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
For the year ended 30 June 2019
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
1. Summary of Significant Accounting Policies (Continued)
17.
Earnings Per Share
18.
Contingencies
(c)
Going concern
2019
Cents
2018
Cents
In April 2019, the Group received a Certificate of Finding from Innovation and Science Australia regarding
review of the Group’s R&D tax incentive claim for the 2016 financial year (FY16).
Basic earnings per share
Loss attributable to the ordinary equity holders of the Group
(a)
Management continues to invest resources to support growth in trading fees, primarily from holding
companies in the US market. In August 2018 ($3.5m) and May 2019 ($4.0m) the Group successfully raised
(0.91)
$7.5 million via share placements, resulting in $7.1 million net cash inflows from financing activities.
Combined with the net cash outflows from operating and investing activities of $3.9million, the net cash
inflow for the year was $3.2 million. Management anticipate incurring further net cash outflows from
(b)
operations until such time as sufficient revenue growth is achieved.
Diluted earnings per share
(0.49)
Loss attributable to the ordinary equity holders of the Group
(0.91)
As previously disclosed, the Group received a notification of finding of ineligible R&D activities in relation to
the FY16 claim. The Group has requested an internal review of the decision which is ongoing. Management
believe its FY16 R&D claim is consistent with the criteria of the scheme.
Reconciliation of earnings used on calculating earnings per share (i)
2018
If a delay in expected growth in revenues and/or a negative outcome of AusIndustry’s review of the FY16
$
R&D claim was to occur, this has the potential to create a cash flow risk to the Group which could affect its
(c)
ability to pay its debts as and when they fall due, and to realise its assets in the normal course of business.
(11,653,319)
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:
Loss from continuing operations attributable to the members of the Group used
on calculating basic and diluted earnings per share
2019
$
(7,042,755)
(0.49)
•
•
•
•
•
(d) Weighted average number of shares used as the denominator
the Group had a cash position of $8.2 million at 30 June 2019;
strong Symphony licence fees to continue in FY20;
the ongoing cost management program;
the opportunity to implement further cost reductions; and
the ability to raise additional capital.
2019
Number
2018
Number
favour.
Weighted average number of shares on issue used in the calculation of basic
EPS
Accordingly, the Directors believe there exists a reasonable expectation that the Group can continue to pay
its debts as and when they fall due, and the financial report has been prepared on a going concern basis.
1,283,691,139
1,432,078,391
The Certificate of Finding determined certain core and supporting activities claimed by the Group in FY16
as non-compliant with the terms of the scheme. This opinion relates to a sub-set of activities claimed.
The Group disagrees with the position provided by Innovation and Science Australia and believes the
activities to be compliant with the terms of the scheme. In order to defend its position, the Group lodged a
request with the Board of Innovation and Science Australia to reconsider the decision under Division 5 of
the IR&D Act, for which the Group may ultimately be required to repay up to $1,527,734 plus potential
penalties and interest.
The ultimate outcome of this review is still pending and cannot be predicted with certainty.
In order to defend its position, the Group may initiate proceedings in the Administrative Appeals Tribunal to
dispute the finding made by Innovation Australia in relation to the FY16 claim.
These amounts have not been brought to account as the potential repayment of the FY16 R&D claim is
only a possible obligation that is payable contingent upon further review by up to two independent bodies
that are outside the Group’s control.
Based on the April 2019 finding made by Innovation Australia in relation to the FY16 R&D claim, it is
expected the ATO will amended the Research & Development Tax Incentive Offsets for the 2016 income
year and seek repayment of amounts previously paid to the Group in respect of the FY16 R&D Claim. The
ATO may claim interest and penalties should the matter be found in Innovation and Science Australia’s
19.
Com m itm ents
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
2019
$
2018
$
963,533
917,155
1,874,982
2,687,661
2,838,515
3,604,816
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.
All intra-group transactions, balances, income and expenses between entities in the Group included in the
2018
financial statements have been eliminated in full. Where unrealised losses on intra-group asset sales are
Number
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
17,186,327
the financial statements have been consistently applied by entities in the Group.
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.
2019
Number
50,428,767
Investments in subsidiaries are accounted for at cost less impairment losses in the parent entity information
in Note 25.
68
Adslot 2019 Annual Report
25
59
60
Weighted average number of shares on issue used in the calculation of
diluted EPS
1,283,691,139
The consolidated financial statements comprise those of the Group, and the entities it controlled at the end
of, or during, the financial year. The Group controls a subsidiary if it is exposed, or has rights, to variable
(i) During 2019 and 2018 there were no discontinued operations or values attributable to minority interests.
returns from its involvement with the subsidiary and has the ability to affect those returns through its power
over the subsidiary.
1,432,078,391
Principles of consolidation
(d)
(e) Weighted average number of shares used as the denominator
Subsidiaries
2019
Number
2018
Number
Operating lease commitments
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
18.
Contingencies
In April 2019, the Group received a Certificate of Finding from Innovation and Science Australia regarding
review of the Group’s R&D tax incentive claim for the 2016 financial year (FY16).
The Certificate of Finding determined certain core and supporting activities claimed by the Group in FY16
as non-compliant with the terms of the scheme. This opinion relates to a sub-set of activities claimed.
The Group disagrees with the position provided by Innovation and Science Australia and believes the
activities to be compliant with the terms of the scheme. In order to defend its position, the Group lodged a
request with the Board of Innovation and Science Australia to reconsider the decision under Division 5 of
the IR&D Act, for which the Group may ultimately be required to repay up to $1,527,734 plus potential
penalties and interest.
The ultimate outcome of this review is still pending and cannot be predicted with certainty.
In order to defend its position, the Group may initiate proceedings in the Administrative Appeals Tribunal to
dispute the finding made by Innovation Australia in relation to the FY16 claim.
These amounts have not been brought to account as the potential repayment of the FY16 R&D claim is
only a possible obligation that is payable contingent upon further review by up to two independent bodies
that are outside the Group’s control.
Based on the April 2019 finding made by Innovation Australia in relation to the FY16 R&D claim, it is
expected the ATO will amended the Research & Development Tax Incentive Offsets for the 2016 income
year and seek repayment of amounts previously paid to the Group in respect of the FY16 R&D Claim. The
ATO may claim interest and penalties should the matter be found in Innovation and Science Australia’s
favour.
19.
Com m itm ents
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
2019
$
2018
$
963,533
917,155
1,874,982
2,687,661
2,838,515
3,604,816
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.
Adslot 2019 Annual Report
60
69
$
$
96,503
231,070
211,503
112,000
115,000
119,070
Management continues to invest resources to support growth in trading fees, primarily from holding
companies in the US market. In August 2018 ($3.5m) and May 2019 ($4.0m) the Group successfully raised
During the year the following fees were paid/payable to the auditor of the Group:
$7.5 million via share placements, resulting in $7.1 million net cash inflows from financing activities.
Audit services
Combined with the net cash outflows from operating and investing activities of $3.9million, the net cash
inflow for the year was $3.2 million. Management anticipate incurring further net cash outflows from
Audit and review of financial reports
operations until such time as sufficient revenue growth is achieved.
During the year the following fees were paid/payable to a related entity of the auditor
of the Group:
As previously disclosed, the Group received a notification of finding of ineligible R&D activities in relation to
Other services
the FY16 claim. The Group has requested an internal review of the decision which is ongoing. Management
believe its FY16 R&D claim is consistent with the criteria of the scheme.
Taxation compliance, GroupM compliance audit and Research and Development
grant advice
If a delay in expected growth in revenues and/or a negative outcome of AusIndustry’s review of the FY16
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.
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
For the year ended 30 June 2019
1. Summary of Significant Accounting Policies (Continued)
20.
(c)
Rem uneration of auditors
Going concern
2019
2018
The following persons were directors of the Group during the financial year:
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
21.
Key Managem ent Personnel Disclosures
Directors
Mr Andrew Barlow (Executive Chairman)
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 Ben Dixon (Executive Director & CEO) (i)
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
Mr Tom Peacock
Mr Ian Lowe (ii)
Position
Chief Financial Officer and Company Secretary
Group Commercial Director
Former CEO
Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Other long-term employee benefits
Share based payments
Total compensation (a)
1,333,764
1,357,311
2019
$
81,429
24,764
2018
$
93,982
12,083
148,452
263,233
1,588,409
1,726,609
(i) Mr Dixon was an Executive Director for the entire financial year. He was appointed as the CEO on 1 January 2019
having performed as the interim CEO since 27 February 2018.
(ii) Mr Lowe’s resigned as CEO and Executive Director on 27 February 2018. Continued to be a key management
personnel until 27 July 2018.
(a) There were 9 key management personnel throughout 2019, some of whom have a part year of service
(2018: 10).
Business Acquisitions:
There were no related party transactions during the year ended 30 June 2019.
Transactions with Directors and their personally related entities:
During the year there were no transactions with Directors and their personally related entities (2018: nil).
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 $8.2 million at 30 June 2019;
strong Symphony licence fees to continue in FY20;
the ongoing cost management program;
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 Group can continue to pay
its debts as and when they fall due, and the financial report has been prepared on a going concern basis.
(d)
Principles of consolidation
Subsidiaries
The consolidated financial statements comprise those of the Group, and the entities it controlled at the end
of, or during, the financial year. The Group 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.
70
Adslot 2019 Annual Report
25
61
62
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
21.
Key Managem ent Personnel Disclosures
Directors
The following persons were directors of the Group during the financial year:
Mr Andrew Barlow (Executive Chairman)
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 Ben Dixon (Executive Director & CEO) (i)
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
Mr Tom Peacock
Mr Ian Lowe (ii)
Position
Chief Financial Officer and Company Secretary
Group Commercial Director
Former CEO
Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Other long-term employee benefits
Share based payments
Total compensation (a)
2019
$
1,333,764
81,429
24,764
2018
$
1,357,311
93,982
12,083
148,452
263,233
1,588,409
1,726,609
(i) Mr Dixon was an Executive Director for the entire financial year. He was appointed as the CEO on 1 January 2019
having performed as the interim CEO since 27 February 2018.
(ii) Mr Lowe’s resigned as CEO and Executive Director on 27 February 2018. Continued to be a key management
personnel until 27 July 2018.
(a) There were 9 key management personnel throughout 2019, some of whom have a part year of service
(2018: 10).
Business Acquisitions:
There were no related party transactions during the year ended 30 June 2019.
Transactions with Directors and their personally related entities:
During the year there were no transactions with Directors and their personally related entities (2018: nil).
Adslot 2019 Annual Report
62
71
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
For the year ended 30 June 2019
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
1. Summary of Significant Accounting Policies (Continued)
22.
Share Based Paym ents
Performance Rights over Shares
Going concern
Employee Share Option Plan (ESOP)
(c)
In November 2012 the Group gained approval to establish an employee incentive scheme comprising the
Management continues to invest resources to support growth in trading fees, primarily from holding
Adslot Limited Share Option Plan and the Adslot Employee Share Trust.
companies in the US market. In August 2018 ($3.5m) and May 2019 ($4.0m) the Group successfully raised
Awards of rights to shares are available to be issued to eligible employees and are subject to a two-year
$7.5 million via share placements, resulting in $7.1 million net cash inflows from financing activities.
service period and if this service period is not met, the rights to shares will be forfeited by the eligible
Combined with the net cash outflows from operating and investing activities of $3.9million, the net cash
employee. Shares held by the Trust under the scheme will have voting and dividend rights, and the right to
inflow for the year was $3.2 million. Management anticipate incurring further net cash outflows from
participate in further issues pro-rata to all ordinary shareholders.
operations until such time as sufficient revenue growth is achieved.
ESOP rights to shares are valued at fair value at the date the options were granted.
As previously disclosed, the Group received a notification of finding of ineligible R&D activities in relation to
The ESOP was replaced by the Performance Rights over Shares Plan in financial year 2015 and as such
the FY16 claim. The Group has requested an internal review of the decision which is ongoing. Management
there have been no new ESOP rights granted during the years ending 30 June 2015 to 30 June 2019. The
believe its FY16 R&D claim is consistent with the criteria of the scheme.
remaining ESOP shares vested at the end of the financial year and have subsequently been transferred to
If a delay in expected growth in revenues and/or a negative outcome of AusIndustry’s review of the FY16
the employees.
R&D claim was to occur, this has the potential to create a cash flow risk to the Group which could affect its
The following tables shows the movement of share-based compensation to employees under the ESOP for
ability to pay its debts as and when they fall due, and to realise its assets in the normal course of business.
the period.
However, the Directors believe the Group will be able to continue to pay its debts as and when they fall due
2019
for the following reasons:
•
•
•
•
•
15/06/14
Grant
Date
the Group had a cash position of $8.2 million at 30 June 2019;
Balance at
Granted
strong Symphony licence fees to continue in FY20;
start of the
during
the ongoing cost management program;
year
the year
the opportunity to implement further cost reductions; and
the ability to raise additional capital.
Transferred
during the
year
Valuation
Price $
Escrow
End Date
(Number)
(Number)
(Number)
Forfeited
during the
year
(Number)
Balance at
end of the
year
(Number)
Vested at
the end
of the
year
(Number)
15/06/15
0.105
250,000
-
(250,000)
-
-
-
15/06/14
-
Accordingly, the Directors believe there exists a reasonable expectation that the Group can continue to pay
its debts as and when they fall due, and the financial report has been prepared on a going concern basis.
2016-2018
(750,000)
750,000
0.105
-
-
-
1,000,000
-
(1,000,000)
-
-
-
Total
Weighted average share price
$0.105
-
$0.105
-
-
(d)
Principles of consolidation
Weighted average remaining contractual life at 30 June 2019 (days)
-
-
Subsidiaries
2018
The consolidated financial statements comprise those of the Group, and the entities it controlled at the end
of, or during, the financial year. The Group 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.
Balance at
start of the
year
Granted
during
the year
Transferred
during the
year
Forfeited
during the
Grant
Date
Escrow
End Date
Valuation
Price $
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
15/06/14
-
the date control commenced or up to the date control ceased. The accounting policies adopted in preparing
15/06/14
-
750,000
-
the financial statements have been consistently applied by entities in the Group.
27/08/15
-
67,567
-
Investments in subsidiaries are accounted for at cost less impairment losses in the parent entity information
Total
-
in Note 25.
2016-2018
(Number)
1,067,567
1,000,000
1,000,000
(Number)
(Number)
(Number)
(Number)
15/06/15
07/09/17
(67,567)
(67,567)
250,000
250,000
250,000
750,000
750,000
year
0.080
0.105
0.105
-
-
-
-
-
-
Balance at
end of the
year
(Number)
Vested at
the end
of the
year
Weighted average share price
$0.103
-
$0.080
-
$0.105
$0.105
Weighted average remaining contractual life at 30 June 2018 (days)
-
72
Adslot 2019 Annual Report
25
63
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 Group.
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:
2019
2018
Grant
Date
Assessme
nt period
Valuation
Price $
Balance at
start of the
year
Granted
during
the year
Transferred
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)
01/09/16
2 years
0.125
2,125,000
(1,925,000)
(200,000)
Total
2,125,000
(1,925,000)
(200,000))
No Performance Rights over Shares were granted during the financial year 2019.
Balance at
start of the
year
Granted
during
the year
Transferred
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)
Grant
Date
Assessme
nt period
Valuation
Price $
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)
(400,000)
(250,000)
(300,000)
-
-
(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.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
64
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
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 Group.
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:
2019
Grant
Date
Assessme
nt period
Valuation
Price $
Balance at
start of the
year
Granted
during
the year
Transferred
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)
01/09/16
2 years
0.125
2,125,000
Total
2,125,000
-
-
(1,925,000)
(200,000)
(1,925,000)
(200,000))
-
-
-
-
No Performance Rights over Shares were granted during the financial year 2019.
2018
Grant
Date
Assessme
nt period
Valuation
Price $
Balance at
start of the
year
Granted
during
the year
Transferred
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)
(400,000)
(250,000)
(300,000)
-
-
-
-
-
(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.
Adslot 2019 Annual Report
64
73
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
For the year ended 30 June 2019
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
1. Summary of Significant Accounting Policies (Continued)
22. Share Based Payments (continued)
Employee Option Plan
Rights over Shares
(c)
Going concern
Upon commencement of employment (8 October 2012) Mr Lowe was granted the right to receive the
Management continues to invest resources to support growth in trading fees, primarily from holding
following shares after the share price of the Group trades above a 30-day volume-weighted average price
companies in the US market. In August 2018 ($3.5m) and May 2019 ($4.0m) the Group successfully raised
(VWAP) as per the table below. Each right would convert into one ordinary share of Adslot Ltd when the
$7.5 million via share placements, resulting in $7.1 million net cash inflows from financing activities.
VWAP criteria is met. In the event of a Change of Control of the Group some of these Rights would vest on a
Combined with the net cash outflows from operating and investing activities of $3.9million, the net cash
sliding scale between the take over price and required VWAP of the next eligible series.
inflow for the year was $3.2 million. Management anticipate incurring further net cash outflows from
No amounts are paid or payable by the recipient on receipt of the right. The rights carry no voting rights.
operations until such time as sufficient revenue growth is achieved.
Some rights are subject to escrow per the below table and all rights are subject to Mr Lowe remaining an
employee of the Group.
As previously disclosed, the Group received a notification of finding of ineligible R&D activities in relation to
the FY16 claim. The Group has requested an internal review of the decision which is ongoing. Management
No Rights over Shares were issued in 2019 (2018: nil). These shares were forfeited with the departure of Mr
believe its FY16 R&D claim is consistent with the criteria of the scheme.
Lowe during the year. The following tables shows movement in the Rights over Shares for the current
financial year (no change in the last two years):
If a delay in expected growth in revenues and/or a negative outcome of AusIndustry’s review of the FY16
R&D claim was to occur, this has the potential to create a cash flow risk to the Group which could affect its
2019
ability to pay its debts as and when they fall due, and to realise its assets in the normal course of business.
Balance at
end of the
year
Balance at
However, the Directors believe the Group will be able to continue to pay its debts as and when they fall due
start of the
for the following reasons:
year
Granted
during the
year
Forfeited
during
the year
Vested
during
the year
Valuation
Required
VWAP
Price
$
Escrow
Required
from
the Group had a cash position of $8.2 million at 30 June 2019;
award
$
strong Symphony licence fees to continue in FY20;
2 years
64,500
the ongoing cost management program;
66,000
-
4,000,000
the opportunity to implement further cost reductions; and
-
5,000,000
the ability to raise additional capital.
•
Issue Date
•
8-Oct-2012
•
•
•
(Number)
3,000,000
Price
8-Oct-2012
8-Oct-2012
73,000
0.40
0.20
0.30
8-Oct-2012
0.50
-
63,500
5,000,000
(Number)
-
(Number)
-
(Number)
3,000,000
(Number)
-
-
-
-
-
-
-
4,000,000
5,000,000
5,000,000
-
-
-
Total
Accordingly, the Directors believe there exists a reasonable expectation that the Group can continue to pay
17,000,000
its debts as and when they fall due, and the financial report has been prepared on a going concern basis.
17,000,000
267,000
-
-
-
2018
(d)
Principles of consolidation
Subsidiaries
Required
VWAP
Price
$
Escrow
Required
from
award
2 years
Valuation
Price
The consolidated financial statements comprise those of the Group, and the entities it controlled at the end
Issue Date
of, or during, the financial year. The Group controls a subsidiary if it is exposed, or has rights, to variable
8-Oct-2012
returns from its involvement with the subsidiary and has the ability to affect those returns through its power
over the subsidiary.
(Number)
3,000,000
(Number)
3,000,000
(Number)
-
(Number)
-
(Number)
-
$
64,500
8-Oct-2012
4,000,000
4,000,000
66,000
0.30
0.20
-
-
-
-
Balance at
start of the
year
Granted
during the
year
Vested
during
the year
Forfeited
during
the year
Balance at
end of the
year
8-Oct-2012
0.40
-
73,000
5,000,000
-
-
-
5,000,000
0.50
8-Oct-2012
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.
17,000,000
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.
17,000,000
5,000,000
5,000,000
267,000
63,500
Total
-
-
-
-
-
-
-
Investments in subsidiaries are accounted for at cost less impairment losses in the parent entity information
in Note 25.
74
Adslot 2019 Annual Report
25
65
66
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
Group 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 Group.
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
The following table shows grants and movements of share-based compensation to employees under the
Employee Option Plan during the current financial year:
or the Group.
2019
Balance at
Exercise
start of the
Price
year
Granted
during
the year
Exercised
during the
Lapsed
Forfeited
during the
during the
Balance at
end of the
year
year
year
year
Vested and
exercisable
at the end of
the year
$
(Number)
(Number)
(Number)
(Number)
(Number)
(Number)
(Number)
Grant
Date
Expiry
Date
05/10/17
04/10/21
0.073
3,000,000
26/11/17
25/11/21
0.060
5,800,000
26/02/18
25/02/22
0.035
23,500,000
16/05/18
15/05/22
0.034
12,700,000
28/05/18
27/05/22
0.036
4,000,000
-
-
-
-
-
31/01/19
30/01/23
0.060
-
5,800,000
3,000,000
(200,000)
5,600,000
23,500,000
23,500,000
(1,300,000)
11,400,000
11,400,000
4,000,000
3,000,000
5,800,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
49,000,000
5,800,000
(1,500,000)
53,300,000
37,900,000
Weighted average exercise
price
$0.040
$0.060
$0.037
$0.042
$0.035
The options are valued using the Black-Scholes pricing model. The model inputs for options granted during
the year ended 30 June 2019 included:
Model Input
Grant Date
Expiry Date
Exercise Price $
5-day VWAP at Grant Date $
Expected Volatility
Risk Free Interest rate
OP # 191
30/01/19
30/01/23
0.060
0.041
92.93%
0.99%
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
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
Group 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 Group.
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 Group.
The following table shows grants and movements of share-based compensation to employees under the
Employee Option Plan during the current financial year:
2019
Exercise
Price
Balance at
start of the
year
Granted
during
the year
Exercised
during the
year
Lapsed
during the
year
Forfeited
during the
year
Balance at
end of the
year
Vested and
exercisable
at the end of
the year
$
(Number)
(Number)
(Number)
(Number)
(Number)
(Number)
(Number)
Grant
Date
Expiry
Date
05/10/17
04/10/21
0.073
3,000,000
26/11/17
25/11/21
0.060
5,800,000
26/02/18
25/02/22
0.035
23,500,000
16/05/18
15/05/22
0.034
12,700,000
28/05/18
27/05/22
0.036
4,000,000
-
-
-
-
-
31/01/19
30/01/23
0.060
-
5,800,000
Total
49,000,000
5,800,000
Weighted average exercise
price
$0.040
$0.060
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,000,000
(200,000)
5,600,000
-
-
-
23,500,000
23,500,000
(1,300,000)
11,400,000
11,400,000
-
-
4,000,000
3,000,000
5,800,000
-
(1,500,000)
53,300,000
37,900,000
$0.037
$0.042
$0.035
The options are valued using the Black-Scholes pricing model. The model inputs for options granted during
the year ended 30 June 2019 included:
Model Input
Grant Date
Expiry Date
Exercise Price $
5-day VWAP at Grant Date $
Expected Volatility
Risk Free Interest rate
OP # 191
30/01/19
30/01/23
0.060
0.041
92.93%
0.99%
Adslot 2019 Annual Report
66
75
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
For the year ended 30 June 2019
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
1. Summary of Significant Accounting Policies (Continued)
22. Share Based Payments (continued)
23.
Cash Flow reconciliation
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
Total
Weighted average exercise
However, the Directors believe the Group will be able to continue to pay its debts as and when they fall due
$0.035
price
for the following reasons:
$0.040
$0.040
$0.041
27/05/22
2,000,000
If a delay in expected growth in revenues and/or a negative outcome of AusIndustry’s review of the FY16
28/05/18
R&D claim was to occur, this has the potential to create a cash flow risk to the Group which could affect its
3,000,000
ability to pay its debts as and when they fall due, and to realise its assets in the normal course of business.
(3,000,000)
4,000,000
49,000,000
4,000,000
52,000,000
0.036
25/11/21
-
26/11/17
As previously disclosed, the Group received a notification of finding of ineligible R&D activities in relation to
26/02/18
-
-
the FY16 claim. The Group has requested an internal review of the decision which is ongoing. Management
believe its FY16 R&D claim is consistent with the criteria of the scheme.
1,000,000
-
16/05/18
25,750,000
12,700,000
23,500,000
12,700,000
(2,250,000)
5,800,000
6,550,000
(750,000)
25/02/22
15/05/22
0.060
0.035
0.034
Going concern
(c)
2018
Management continues to invest resources to support growth in trading fees, primarily from holding
Vested and
companies in the US market. In August 2018 ($3.5m) and May 2019 ($4.0m) the Group successfully raised
exercisable
$7.5 million via share placements, resulting in $7.1 million net cash inflows from financing activities.
at the end of
the year
Combined with the net cash outflows from operating and investing activities of $3.9million, the net cash
(Number)
(Number)
inflow for the year was $3.2 million. Management anticipate incurring further net cash outflows from
operations until such time as sufficient revenue growth is achieved.
05/10/17
-
Balance at
start of the
year
Balance at
end of the
year
Exercised
during the
year
Granted
during the
year
Forfeited
during the
year
Lapsed
during the
year
Exercise
Price
Expiry
Date
Grant
Date
3,000,000
3,000,000
(Number)
(Number)
(Number)
(Number)
(Number)
4/10/21
0.073
Reconciliation of Net Cash Flows from Operating Activities to Loss for the
Adjustment from adoption of AASB 15 (movement in contract liabilities)
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
24.
Financial Risk Managem ent
2019
$
2018
$
(7,042,755)
(11,653,319)
(85,125)
4,367,983
(146,300)
118,127
3,489
3,083
(31,327)
(1,036,515)
-
5,442,959
(107,260)
777,804
4,537
(182)
15,908
480,280
(952,734)
(786,304)
3,692,199
551,744
(1,109,875)
(5,273,833)
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
cash and cash equivalents.
(b) Credit risk
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
Disclosures relating to foreign currency risks are covered in Note 24(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.
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 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
•
the Group had a cash position of $8.2 million at 30 June 2019;
strong Symphony licence fees to continue in FY20;
the ongoing cost management program;
the opportunity to implement further cost reductions; and
the ability to raise additional capital.
OP # 18-5
OP # 18-3
OP # 18-4
OP # 18-1
OP # 18-2
Grant Date
Accordingly, the Directors believe there exists a reasonable expectation that the Group can continue to pay
27/05/22
Expiry Date
its debts as and when they fall due, and the financial report has been prepared on a going concern basis.
0.036
Exercise Price $
04/10/21
25/11/21
25/02/22
15/05/22
05/10/17
26/11/17
16/05/18
26/02/18
28/05/18
0.035
0.034
0.073
0.060
5-day VWAP at Grant Date $
Expected Volatility
Risk Free Interest rate
(d)
Principles of consolidation
0.050
62.62%
1.83%
0.041
61.92%
1.83%
0.024
69.20%
1.99%
0.023
85.12%
2.02%
0.025
86.58%
2.02%
Subsidiaries
The consolidated financial statements comprise those of the Group, and the entities it controlled at the end
of, or during, the financial year. The Group 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.
76
Adslot 2019 Annual Report
25
67
68
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
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
Adjustment from adoption of AASB 15 (movement in contract liabilities)
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
24.
Financial Risk Managem ent
2019
$
2018
$
(7,042,755)
(11,653,319)
(85,125)
4,367,983
(146,300)
118,127
3,489
3,083
(31,327)
(1,036,515)
-
5,442,959
(107,260)
777,804
4,537
(182)
15,908
480,280
(952,734)
(786,304)
3,692,199
551,744
(1,109,875)
(5,273,833)
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 24(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.
Adslot 2019 Annual Report
68
77
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
For the year ended 30 June 2019
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
24. Financial Risk Management (Continued)
1. Summary of Significant Accounting Policies (Continued)
24. Financial Risk Management (Continued)
The Group held the following financial assets with potential credit risk exposure:
(c)
Going concern
Financial assets
Management continues to invest resources to support growth in trading fees, primarily from holding
companies in the US market. In August 2018 ($3.5m) and May 2019 ($4.0m) the Group successfully raised
$7.5 million via share placements, resulting in $7.1 million net cash inflows from financing activities.
Combined with the net cash outflows from operating and investing activities of $3.9million, the net cash
inflow for the year was $3.2 million. Management anticipate incurring further net cash outflows from
operations until such time as sufficient revenue growth is achieved.
2019
$
8,165,544
2018
$
4,775,331
Trade debtors and Other receivables (Note 8)
Cash and cash equivalents
5,471,925
6,424,659
As previously disclosed, the Group received a notification of finding of ineligible R&D activities in relation to
the FY16 claim. The Group has requested an internal review of the decision which is ongoing. Management
(c) Liquidity risk
believe its FY16 R&D claim is consistent with the criteria of the scheme.
14,590,203
10,247,256
Financial liabilities
If a delay in expected growth in revenues and/or a negative outcome of AusIndustry’s review of the FY16
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.
Trade and other payables
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:
2019
$
6,538,788
2018
$
2,925,743
the Group had a cash position of $8.2 million at 30 June 2019;
strong Symphony licence fees to continue in FY20;
the ongoing cost management program;
the opportunity to implement further cost reductions; and
the ability to raise additional capital.
•
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.
Accordingly, the Directors believe there exists a reasonable expectation that the Group can continue to pay
its debts as and when they fall due, and the financial report has been prepared on a going concern basis.
(d) Foreign currency risk
Principles of consolidation
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
(d)
Malaysian Ringgit (MYR).
Subsidiaries
Foreign currency exposure is monitored by the Board on a periodic basis.
The consolidated financial statements comprise those of the Group, and the entities it controlled at the end
Foreign currency denominated financial assets and liabilities which expose the Group to currency risk are
of, or during, the financial year. The Group controls a subsidiary if it is exposed, or has rights, to variable
disclosed below. The amounts shown are those reported to key management translated into AUD at the
returns from its involvement with the subsidiary and has the ability to affect those returns through its power
closing rate:
over the subsidiary.
USD
A$
GBP
A$
EUR
A$
30 June 2019
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.
Financial Liabilities
Financial Assets
(4,670,052)
7,473,794
(365,601)
(105,015)
310,516
159,241
(34,406)
47,189
63,779
(6,511)
2,746
-
CNY
A$
MYR
A$
NZD
A$
Total Exposure
Investments in subsidiaries are accounted for at cost less impairment losses in the parent entity information
in Note 25.
30 June 2018
2,803,742
(55,085)
54,226
57,268
12,783
2,746
Financial Assets
1,716,774
78,689
91,938
40,636
31,220
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
78
Adslot 2019 Annual Report
25
69
70
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 2019 (30 June 2018:10%).
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 2019
USD
A$
GBP
A$
EUR
A$
Impact on Profit
(250,745)
15,674
(6,185)
-
Impact on Reserves
(4,141)
(10,666)
1,255
(5,206)
CNY
A$
(357)
(805)
MYR
Total
A$
A$
(250)
(241,863)
-
(19,563)
Impact on Equity
(254,886)
5,008
(4,930)
(5,206)
(1,162)
(250)
(261,426)
+10%
NZD
A$
30 June 2018
Impact on Profit
(131,245)
(4,318)
(2,091)
-
(373)
(351)
(138,378)
Impact on Reserves
47,569
14,710
(2,176)
(3,562)
254
-
56,795
Impact on Equity
(83,676)
10,392
(4,267)
(3,562)
(119)
(351)
(81,583)
30 June 2019
USD
A$
GBP
A$
Impact on Profit
306,466
(19,157)
Impact on Reserves
5,061
13,037
(1,535)
CNY
MYR
Total
A$
437
983
A$
305
A$
295,611
-
23,909
Impact on Equity
311,527
(6,120)
6,025
1,420
305
319,520
EUR
A$
7,560
-10%
NZD
A$
-
6,363
6,363
30 June 2018
Impact on Profit
160,410
5,278
Impact on Reserves
(58,139)
(17,980)
Impact on Equity
102,271
(12,702)
2,556
2,660
5,216
-
4,354
4,354
456
(310)
146
429
169,129
-
(69,415)
429
99,714
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
24. Financial Risk Management (Continued)
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 2019 (30 June 2018:10%).
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 2019
USD
A$
GBP
A$
EUR
A$
+10%
NZD
A$
Impact on Profit
(250,745)
15,674
(6,185)
-
Impact on Reserves
(4,141)
(10,666)
1,255
(5,206)
CNY
A$
(357)
(805)
MYR
Total
A$
A$
(250)
(241,863)
-
(19,563)
Impact on Equity
(254,886)
5,008
(4,930)
(5,206)
(1,162)
(250)
(261,426)
30 June 2018
Impact on Profit
(131,245)
(4,318)
(2,091)
-
(373)
(351)
(138,378)
Impact on Reserves
47,569
14,710
(2,176)
(3,562)
254
-
56,795
Impact on Equity
(83,676)
10,392
(4,267)
(3,562)
(119)
(351)
(81,583)
30 June 2019
USD
A$
GBP
A$
Impact on Profit
306,466
(19,157)
EUR
A$
7,560
Impact on Reserves
5,061
13,037
(1,535)
Impact on Equity
311,527
(6,120)
6,025
-10%
NZD
A$
-
6,363
6,363
CNY
MYR
Total
A$
437
983
A$
305
A$
295,611
-
23,909
1,420
305
319,520
30 June 2018
Impact on Profit
160,410
5,278
Impact on Reserves
(58,139)
(17,980)
Impact on Equity
102,271
(12,702)
2,556
2,660
5,216
-
4,354
4,354
456
(310)
146
429
169,129
-
(69,415)
429
99,714
Adslot 2019 Annual Report
70
79
30,800
-1%
$
+1%
$
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:
30 June 2019
(28,163)
At reporting date, if interest rates had been 100 basis points higher or lower and all other variables were
If a delay in expected growth in revenues and/or a negative outcome of AusIndustry’s review of the FY16
held constant, the Group’s net profit would:
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.
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
For the year ended 30 June 2019
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
1. Summary of Significant Accounting Policies (Continued)
24. Financial Risk Management (Continued)
25.
Parent Entity Inform ation
(c)
Going concern
(e) Cash flow and interest rate risk
Interest rate sensitivity analysis
Management continues to invest resources to support growth in trading fees, primarily from holding
As the Group has no significant interest-bearing assets or liabilities (except cash), the Group’s income
companies in the US market. In August 2018 ($3.5m) and May 2019 ($4.0m) the Group successfully raised
and operating cash flows are not materially exposed to changes in market interest rates.
$7.5 million via share placements, resulting in $7.1 million net cash inflows from financing activities.
Combined with the net cash outflows from operating and investing activities of $3.9million, the net cash
inflow for the year was $3.2 million. Management anticipate incurring further net cash outflows from
operations until such time as sufficient revenue growth is achieved.
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
As previously disclosed, the Group received a notification of finding of ineligible R&D activities in relation to
assessment of the possible change in interest rates (also comparable to movement in interest rates
the FY16 claim. The Group has requested an internal review of the decision which is ongoing. Management
during the reporting year).
believe its FY16 R&D claim is consistent with the criteria of the scheme.
The following details of information are related to the parent entity, Adslot Ltd, at 30 June 2019. 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
2019
$
2018
$
3,630,511
3,667,011
44,463,013
44,919,847
48,093,524
48,586,858
306,357
323,111
629,468
447,356
555,463
1,002,819
145,850,683
138,699,400
434,880
605,975
(98,821,507)
(91,721,336)
47,464,056
47,584,039
(7,118,262)
(10,014,024)
(7,118,262)
(10,014,024)
The Commitments Note 19 includes commitments by the parent entity related to leases of the Melbourne
office premises at 425 Collins Street, Melbourne (34 ½ months) for an amount of $801,574 (2018:
$1,063,969) and the Sydney office premises at 10-14 Waterloo Street, Surry Hills (42 months) for an amount
of $1,844,115 (2018: $2,358,486).
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
There has not been any matter or circumstance occurring subsequent to the end of the financial year that
has significantly affected, or may significantly affect, the operations of the Group, the results of those
operations or the state of affairs of the Group in future years.
•
•
•
•
•
68,461
30 June 2018
the Group had a cash position of $8.2 million at 30 June 2019;
strong Symphony licence fees to continue in FY20;
the ongoing cost management program;
This is mainly attributable to the Group’s exposure to interest rate on its bank balances bearing interest.
the opportunity to implement further cost reductions; and
the ability to raise additional capital.
(f) Net fair value of financial assets and liabilities
(64,993)
The net fair value of cash and cash equivalents and other short-term financial assets and financial
Accordingly, the Directors believe there exists a reasonable expectation that the Group can continue to pay
liabilities of the Group approximates their carrying value.
its debts as and when they fall due, and the financial report has been prepared on a going concern basis.
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.
Principles of consolidation
(d)
Subsidiaries
The consolidated financial statements comprise those of the Group, and the entities it controlled at the end
of, or during, the financial year. The Group 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.
80
Adslot 2019 Annual Report
25
71
72
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
25.
Parent Entity Inform ation
The following details of information are related to the parent entity, Adslot Ltd, at 30 June 2019. 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
2019
$
3,630,511
2018
$
3,667,011
44,463,013
44,919,847
48,093,524
48,586,858
306,357
323,111
629,468
447,356
555,463
1,002,819
145,850,683
138,699,400
434,880
605,975
(98,821,507)
(91,721,336)
47,464,056
47,584,039
(7,118,262)
(10,014,024)
(7,118,262)
(10,014,024)
The Commitments Note 19 includes commitments by the parent entity related to leases of the Melbourne
office premises at 425 Collins Street, Melbourne (34 ½ months) for an amount of $801,574 (2018:
$1,063,969) and the Sydney office premises at 10-14 Waterloo Street, Surry Hills (42 months) for an amount
of $1,844,115 (2018: $2,358,486).
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
There has not been any matter or circumstance occurring subsequent to the end of the financial year that
has significantly affected, or may significantly affect, the operations of the Group, the results of those
operations or the state of affairs of the Group in future years.
Adslot 2019 Annual Report
72
81
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
For the year ended 30 June 2019
For the year ended 30 June 2019
1. Summary of Significant Accounting Policies (Continued)
28.
Consolidated Entities
(c)
Name
Going concern
Country of
Incorporation
Ordinary Share Consolidated
Equity Interest
and:
Australia
2019
%
2018
%
Management continues to invest resources to support growth in trading fees, primarily from holding
companies in the US market. In August 2018 ($3.5m) and May 2019 ($4.0m) the Group successfully raised
Parent entity
$7.5 million via share placements, resulting in $7.1 million net cash inflows from financing activities.
Adslot Ltd
Combined with the net cash outflows from operating and investing activities of $3.9million, the net cash
Controlled entities
inflow for the year was $3.2 million. Management anticipate incurring further net cash outflows from
Adslot Technologies Pty Ltd
operations until such time as sufficient revenue growth is achieved.
Ansearch.com.au Pty Ltd
As previously disclosed, the Group received a notification of finding of ineligible R&D activities in relation to
Ansearch Group Services Pty Ltd
the FY16 claim. The Group has requested an internal review of the decision which is ongoing. Management
Webfirm Pty Ltd
believe its FY16 R&D claim is consistent with the criteria of the scheme.
QDC IP Technologies Pty Ltd
If a delay in expected growth in revenues and/or a negative outcome of AusIndustry’s review of the FY16
Adslot UK Limited
R&D claim was to occur, this has the potential to create a cash flow risk to the Group which could affect its
Adslot Inc.
ability to pay its debts as and when they fall due, and to realise its assets in the normal course of business.
Symphony International Solutions Limited
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:
Symphony Workflow Pty Ltd
United Kingdom
United States
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Symphony Media Pty Ltd
•
•
Facilitate Digital (Shanghai) Software Service Co., Ltd
•
Facilitate Digital Limited
•
Facilitate Digital Trust
•
Facilitate Digital, LLC
the Group had a cash position of $8.2 million at 30 June 2019;
strong Symphony licence fees to continue in FY20;
the ongoing cost management program;
the opportunity to implement further cost reductions; and
the ability to raise additional capital.
New Zealand
New Zealand
United States
Australia
China
100
100
100
100
100
100
100
100
100
100
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 27 to 82 are in accordance with the Corporations Act 2001
(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 Company’s financial position as at 30 June 2019 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 15 to 24 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.
Facilitate Digital UK Limited
Accordingly, the Directors believe there exists a reasonable expectation that the Group can continue to pay
Facilitate Digital Deutschland GmbH
its debts as and when they fall due, and the financial report has been prepared on a going concern basis.
United Kingdom
Germany
100
100
100
100
Equity interests in all controlled entities are by way of ordinary shares.
(d)
Principles of consolidation
Subsidiaries
The consolidated financial statements comprise those of the Group, and the entities it controlled at the end
of, or during, the financial year. The Group 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.
Andrew Barlow
Chairman
Adslot Ltd
22 August 2019
82
Adslot 2019 Annual Report
25
73
74
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 27 to 82 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 Company’s financial position as at 30 June 2019 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 15 to 24 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
22 August 2019
Adslot 2019 Annual Report
74
83
Independent Auditor’s Report
To the Members of Adslot Limited
Report on the audit of the financial report
Opinion
Collins Square, Tower 5
727 Collins Street
Melbourne 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
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 2019, 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:
Impairment testing of goodwill and intangible assets requires a
utilised by the model;
a giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its performance for the year
ended on that date; 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 (c) in the financial statements, which indicates that the Group incurred net loss of $7.04 million for
the year, and management anticipate incurring further net losses from operations until such time as sufficient revenue growth
is achieved. As stated in Note 1 (c), these events or conditions, along with other matters as set forth in Note 1 (c), indicate that
a material uncertainty exists that may cast doubt on the Group’s ability to continue as a going concern. Our opinion is not
modified in respect of this matter.
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.
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.
84
Adslot 2019 Annual Report
In addition to the matter described in the Material uncertainty related to 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 2019, goodwill and other intangibles included within
Our procedures included, amongst others:
the Group’s statement of financial position amounted to $22.9m.
Reviewing the impairment model for compliance with AASB
The requirement per AASB 136 Impairment of Assets is for an
entity to assess at the end of each reporting period whether there
is any indication that an asset may be impaired. Should any
indication of impairment exist, the entity shall estimate the
recoverable amount of the asset.
136 ;
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 completeness and accuracy of the source data
high degree of estimation and judgement by management and
Testing the mathematical accuracy and appropriateness of the
there is subjectivity involved relating to assumptions and key
methodology of the underlying model calculations;
inputs. Due to these reasons, this has been assessed as a key
audit matter.
Assessing the reasonableness of inputs and assumptions
used in the market based model prepared by management;
Performing a sensitivity analysis of the key assumptions in
Reviewing relevant disclosures for adequacy in the financial
model; and
statements.
Research and development grants and capitalised wages
Note 1(x)
The Group has recognised $3.8m relating to capitalised
Our procedures included, amongst others:
developments costs as intangible assets as at 30 June 2019. The
Group has also claimed associated research and development
(R&D) grants from AusIndustry to the value of $2.1m under the
R&D Tax Incentive Scheme, for estimated and submitted R&D
claims at year end.
Determining whether the criteria for capitalising R&D costs are
met requires a high level of judgement and there is a risk that the
criteria for capitalised development costs in accordance with
AASB 138 Intangible Assets are not achieved.
Further to the above, AASB 120 Accounting for Government
Grants and Disclosure of Government Assistance also requires
grants received relating to costs that are capitalised to be offset
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;
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
against the capitalised amount, while grants relating to costs that
are not capitalised to be recognised as income. R&D grant claims
accrued for;
Obtaining an understanding of the current status of discussions
with AusIndustry in relation to R&D claims; and
Assessing the appropriateness of the disclosures in the
financial statements.
submitted but not yet received relating to costs incurred in the
previous financial year and for the estimated R&D grant claim
pertaining to costs incurred during the 2019 financial year, are to
be recognised as a receivable,.
Given the subjectivity and management judgement applied in
assessing whether costs meet the recognition criteria of AASB
138, this has been assessed as a key audit matter.
In addition to the matter described in the Material uncertainty related to 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 2019, goodwill and other intangibles included within
the Group’s statement of financial position amounted to $22.9m.
The requirement per AASB 136 Impairment of Assets is for an
entity to assess at the end of each reporting period whether there
is any indication that an asset may be impaired. Should any
indication of impairment exist, the entity shall estimate the
recoverable amount of the asset.
Impairment testing of goodwill and intangible assets requires a
high degree of estimation and judgement by management and
there is subjectivity involved relating to assumptions and key
inputs. Due to these reasons, this has been assessed as a key
audit matter.
Research and development grants and capitalised wages
Note 1(x)
The Group has recognised $3.8m relating to capitalised
developments costs as intangible assets as at 30 June 2019. The
Group has also claimed associated research and development
(R&D) grants from AusIndustry to the value of $2.1m under the
R&D Tax Incentive Scheme, for estimated and submitted R&D
claims at year end.
Determining whether the criteria for capitalising R&D costs are
met requires a high level of judgement and there is a risk that the
criteria for capitalised development costs in accordance with
AASB 138 Intangible Assets are not achieved.
Further to the above, AASB 120 Accounting for Government
Grants and Disclosure of Government Assistance also requires
grants received relating to costs that are capitalised to be offset
against the capitalised amount, while grants relating to costs that
are not capitalised to be recognised as income. R&D grant claims
submitted but not yet received relating to costs incurred in the
previous financial year and for the estimated R&D grant claim
pertaining to costs incurred during the 2019 financial year, are to
be recognised as a receivable,.
Given the subjectivity and management judgement applied in
assessing whether costs meet the recognition criteria of AASB
138, this has been assessed as a key audit matter.
Our procedures included, amongst others:
Reviewing the impairment model for compliance with AASB
136 ;
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 completeness and accuracy of the source data
utilised by the model;
Testing the mathematical accuracy and appropriateness of the
methodology of the underlying model calculations;
Assessing the reasonableness of inputs and assumptions
used in the market based model prepared by management;
Performing a sensitivity analysis of the key assumptions in
model; and
Reviewing relevant disclosures for adequacy in the financial
statements.
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;
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; and
Assessing the appropriateness of the disclosures in the
financial statements.
Adslot 2019 Annual Report
85
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
M J Climpson
Partner – Audit & Assurance
Melbourne, 22 August 2019
Information other than the financial report and auditor’s report thereon
Responsibilities
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 2019, 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 we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the financial report
The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors
determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the 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 21 of the Directors’ report for the year ended 30 June
2019.
15 to 24
In our opinion, the Remuneration Report of Adslot Limited, for the year ended 30 June 2019 complies with section 300A
of the Corporations Act 2001.
86
Adslot 2019 Annual Report
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
M J Climpson
Partner – Audit & Assurance
Melbourne, 22 August 2019
Adslot 2019 Annual Report
87
Corporate Governance Statement
In accordance with Listing Rule 4.10.3, Adslot’s Corporate Governance Statement can be found at
http://www.adslot.com/investor-relations/governance/
Shareholder Information
Additional information required by the Australian Securities Exchange Limited and not shown elsewhere in
this report is as follows. The information is current as at 16 August 2019.
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 (17,858 shares):
Twenty largest shareholders
The names of the twenty largest holders of quoted shares are:
NATIONAL NOMINEES LIMITED
MR PETER JOHN DIAMOND + MRS DIANA ELIZABETH DIAMOND
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
DAWNIE DIXON PTY LTD
INVIA CUSTODIAN PTY LIMITED
ANDAMA HOLDINGS PTY LTD
VENTURIAN PTY LTD
CAPITAL ACCRETION PTY LTD
AMBLESIDE VENTURES PTY LTD
SAPEAME PTY LTD
1
2
3
4
5
6
7
8
9
10
11 MR RICHARD ARMSTRONG CALDOW
12 MDJD PTY LTD
13
14
15
16 MR VLADIMIR ANTHONY VITEZ & MS CATHERINE MARY DOWLAN
17
18
19 WALLOON SECURITIES PTY LTD
20
HILLBOI NOMINEES PTY LTD
CITICORP NOMINEES PTY LIMITED
G & D DIXON INVESTMENTS PTY LTD
CHARMED5 PTY LTD
DAK DRAFTING SERVICES PTY LTD
BRISPOT NOMINEES PTY LTD
Total Top 20 holders of Ordinary Shares
Remaining holders balance
205
322
491
1,250
908
3,176
1,347
22,939
1,068,211
3,935,663
48,899,441
1,534,080,015
1,588,006,269
9,441,734
Listed Ordinary Shares
Number of
Shares
% of
Shares
184,756,486
140,000,000
107,721,356
76,046,522
52,252,850
48,940,000
48,102,668
40,000,000
33,091,710
27,300,000
16,000,000
15,000,000
13,702,951
12,361,631
12,302,184
11,000,000
10,692,376
10,000,000
10,000,000
9,937,705
879,149,339
708,856,930
11.63
8.82
6.78
4.79
3.29
3.08
3.03
2.52
2.08
1.72
1.01
0.94
0.86
0.78
0.77
0.69
0.67
0.63
0.63
0.63
55.36
44.64
Corporate Directory
Directors
Mr Andrew Barlow – Executive Chairman
Mr Ben Dixon – Chief Executive Director
Mr Adrian Giles – 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 5
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 Office
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
Classes of Shares - Adslot Ltd has only one class of share on issue, being fully paid ordinary shares.
Substantial Shareholders
Peter Diamond
Private Portfolio Managers Pty Ltd
Geoff Dixon
Shares
155,000,000
96,091,818
95,599,666
% Shares
9.76
6.05
6.02
Voting Rights - All ordinary shares carry one vote per share without restrictions.
88
Adslot 2019 Annual Report
78
79
Corporate Directory
Directors
Mr Andrew Barlow – Executive Chairman
Mr Ben Dixon – Chief Executive Director
Mr Adrian Giles – 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 5
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 Office
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
Adslot 2019 Annual Report
89
79
ADSLOT.COM